Equity Plans and Stock-Based Compensation

3 Months Ended

Mar. 31, 2016

Equity Plans and Stock-Based Compensation

8. Equity Plans and Stock-Based Compensation

Option activity under our stock-based compensation plans during the three months ended March 31, 2016 was as follows (in thousands except per share amounts):

	Shares Underlying Outstanding Options (in thousands)			Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (in thousands)
Balance at December 31, 2015		2,891		$	23.34
Options granted		229			21.48
Options exercised		(12	)		13.69
Options cancelled:
Options forfeited (unvested)		(9	)		17.87
Options cancelled (vested)		(36	)		49.30
Balance at March 31, 2016		3,063			22.97		7.02	$	4,835
Vested and expected to vest at March 31, 2016		2,996			23.09		6.98	$	4,663
Exercisable at March 31, 2016		1,509			26.49		5.11	$	2,204

Restricted stock unit activity under our stock-based compensation plans during the three months ended March 31, 2016 was as follows (in thousands except per share amounts):

	Number of Shares (In thousands)			Weighted-Average Grant-Date Fair Value
Non-vested as of December 31, 2015		195		$	17.52
Granted		379		$	21.48
Vested		(23	)	$	15.55
Forfeited or expired		(1	)	$	16.00
Non-vested as of March 31, 2016		550		$	20.34

The aggregate intrinsic value of the restricted stock units outstanding as of March 31, 2016, based on our stock price on that date, was $10.6 million.

As of March 31, 2016, approximately 189,000 shares underlying stock options and restricted stock units awards with performance-based vesting criteria were outstanding. Vesting criteria for these performance-based awards have not been met as of March 31, 2016.

Under our stock-based compensation plans, option awards generally vest over a four-year period contingent upon continuous service and expire ten years from the date of grant (or earlier upon termination of continuous service). The fair value-based measurement of each option is estimated on the date of grant using the Black-Scholes option valuation model.

The fair value-based measurements and weighted-average assumptions used in the calculations of these measurements are as follows:

	Stock Options						Employee Stock Purchase Plan
	Three Months Ended						Three Months Ended
	March 31,						March 31,
	2016			2015			2016			2015
Weighted-average fair value	$	13.11		$	10.85		$	8.18		$	17.32
Risk-free interest rate		1.5	%		1.6	%		0.6	%		0.4	%
Expected life (in years)		5.6			5.8			1.2			1.2
Volatility		0.7			0.8			0.6			2.4

We recognized stock-based compensation expense of $3.2 million and $2.0 million for the three months ended March 31, 2016 and 2015, respectively. The components of stock-based compensation expense were (in thousands):

	Three Months Ended
	March 31,
	2016		2015
Research and development	$	1,515	$	885
General and administrative		1,729		1,069
Total	$	3,244	$	1,954

As of March 31, 2016, the total unrecognized compensation cost related to non-vested equity awards including all awards with time-based vesting amounted to $22.1 million, which is expected to be recognized over the remaining weighted-average vesting period of 2.6 years. Additionally, as of March 31, 2016, the total unrecognized compensation cost related to equity awards with performance-based vesting criteria not deemed probable of vesting amounted to $5.9 million.

Employee Stock Purchase Plan

In May 2014, stockholders of the Company approved the 2014 Employee Stock Purchase Plan (the “Purchase Plan”), pursuant to which the Company may issue up to 50,000 shares of its common stock, subject to adjustment, to its employees. The Purchase Plan provides for the purchase of common stock by eligible employees and became effective on May 28, 2014. The purchase price per share is the lesser of (i) 85% of the fair market value of the common stock on the commencement of the offer period (generally, the sixteenth day in February or August) or (ii) 85% of the fair market value of the common stock on the exercise date, which is the last day of a purchase period (generally, the fifteenth day in February or August). As of March 31, 2016, employees have acquired 40,670 shares of our common stock under the Purchase Plan and 9,330 shares of our common stock remained available for future purchases under the Purchase Plan.