Equity Plans and Stock-Based Compensation

9 Months Ended

Sep. 30, 2016

Equity Plans and Stock-Based Compensation

8. Equity Plans and Stock-Based Compensation

Option activity under our stock-based compensation plans during the nine months ended September 30, 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		1,351			19.95
Options exercised		(16	)		13.81
Options cancelled:
Options forfeited (unvested)		(36	)		19.22
Options cancelled (vested)		(54	)		42.90
Balance at September 30, 2016		4,136			22.06		6.76	$	182
Vested and expected to vest at September 30, 2016		4,098			22.10		6.74	$	182
Exercisable at September 30, 2016		1,755			25.70		5.30	$	182

Restricted stock unit activity under our stock-based compensation plans during the nine months ended September 30, 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		387		$	21.35
Vested		(26	)	$	15.59
Forfeited or expired		(13	)	$	20.33
Non-vested as of September 30, 2016		543		$	20.28

The aggregate intrinsic value of the restricted stock units outstanding as of September 30, 2016, based on our stock price on that date, was $5.7 million.

As of September 30, 2016, approximately 200,000 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 September 30, 2016.

Under our stock-based compensation plans, option awards generally vest over a three or four-year period contingent upon continuous service, and expire seven to 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						Stock Options						Employee Stock Purchase Plan
	Three Months Ended						Nine Months Ended						Nine Months Ended
	September 30,						September 30,						September 30,
	2016			2015			2016			2015			2016			2015
Weighted-average fair value	$	8.90		$	17.63		$	9.67		$	13.23		$	7.86		$	9.18
Risk-free interest rate		1.1	%		1.7	%		1.4	%		1.7	%		0.6	%		0.4	%
Expected life (in years)		4.5			5.8			4.9			5.9			1.2			1.2
Volatility		0.7			0.7			0.7			0.7			0.6			0.6

We recognized stock-based compensation expense of $3.7 million and $2.6 million for the three months ended September 30, 2016 and 2015, respectively. We recognized stock-based compensation expense of $10.0 million and $6.5 million for the nine months ended September 30, 2016 and 2015, respectively. The components of stock-based compensation expense were (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2016		2015		2016		2015
Research and development	$	1,639	$	1,232	$	4,490	$	2,985
General and administrative		2,022		1,398		5,540		3,517
Total	$	3,661	$	2,630	$	10,030	$	6,502

As of September 30, 2016, the total unrecognized compensation cost related to non-vested equity awards including all awards with time-based vesting amounted to $24.4 million, which is expected to be recognized over the remaining weighted-average vesting period of 2.4 years. Additionally, as of September 30, 2016, the total unrecognized compensation cost related to equity awards with performance-based vesting criteria not deemed probable of vesting amounted to $7.2 million.

Employee Stock Purchase Plan

The 2014 Employee Stock Purchase Plan, as amended, (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 September 30, 2016, employees have acquired 45,547 shares of our common stock under the Purchase Plan and 182,474 shares of our common stock remained available for future purchases under the Purchase Plan.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References + Details