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Stock-Based Compensation

3 Months Ended

Mar. 31, 2021

6. Stock Based Compensation

Our Board of Directors (the Board) and the requisite stockholders previously approved the 2010 Equity Incentive Plan (the 2010 Plan). In October 2013, the Board approved the 2013 Equity Incentive Plan (the 2013 Plan), and in November 2013, our stockholders approved the 2013 Plan, which became effective as of December 3, 2013. As of December 2, 2013, we suspended the 2010 Plan, and no additional awards may be granted under the 2010 Plan. Any shares of common stock covered by awards granted under the 2010 Plan that terminate after December 2, 2013 by expiration, forfeiture, cancellation or other means without the issuance of such shares will be added to the 2013 Plan reserve.

As of March 31, 2021, the total number of shares of common stock available for issuance under the 2013 Plan is 13,445,524, which includes 2,684,456 shares of common stock that were available for issuance under the 2010 Plan as of the effective date of the 2013 Plan. Unless otherwise determined by the Board, beginning January 1, 2014, and continuing until the expiration of the 2013 Plan, the total number of shares of common stock available for issuance under the 2013 Plan will automatically increase annually on January 1 of each year by 4% of the total number of issued and outstanding shares of common stock as of December 31 of the immediately preceding year. Pursuant to approval by the Board, the total number of shares of common stock available for issuance under the 2013 Plan was increased by 2,314,937 shares on January 1, 2021. As of March 31, 2021, a total of 11,894,756 options have been granted under the 2013 Plan.

In November 2013, the Board and our stockholders approved the 2013 Employee Stock Purchase Plan (ESPP), which became effective as of December 5, 2013. We have reserved a total of 581,286 shares of common stock for issuance under the ESPP. Unless otherwise determined by the Board, beginning on January 1, 2014, and continuing until the expiration of the ESPP, the total number of shares of common stock available for issuance under the ESPP will automatically increase annually on January 1 by the lesser of (i) 1% of the total number of issued and outstanding shares of common stock as of December 31 of the immediately preceding year, or (ii) 621,814 shares of common stock. Pursuant to approval by our Board of Directors, there was no increase in the number of authorized shares in the ESPP from 2015 to 2020. As of March 31, 2021, we have issued a total of 467,595 shares of common stock under the ESPP.

During the three months ended March 31, 2021, the Company awarded 247,050 restricted stock units (RSUs) to certain employees. The standard vesting of these awards is generally in three equal annual installments and is contingent on continued service to the Company. The fair value of these awards is determined based on the intrinsic value of the stock on the date of grant and will be recognized as stock-based compensation expense over the requisite service period. As of March 31, 2021, we have granted a total of 700,837 shares of common stock issuable upon the vesting of RSUs.

Total employee, director and non-employee stock-based compensation expense recognized for the three months ended March 31, 2021 and 2020 are as follows (in thousands):


	Three Months Ended
	March 31,
	2021		2020
General and administrative	$	2,737	$	2,291
Research and development		5,556		4,221
	$	8,293	$	6,512

	Three Months Ended
	March 31,
	2021		2020
Stock options	$	6,530	$	5,882
ESPP		248		194
RSUs		1,515		436
	$	8,293	$	6,512

The following table summarizes option activity under our stock plans and related information:


		Weighted		Weighted
		Average		Average
	Number of	Exercise		Remaining		Aggregate
	Shares Subject	Price		Contractual		Intrinsic
	to Outstanding	(Per		Term		Value
	Options	Share)		(in years)		(in thousands)
Balance at December 31, 2020	7,751,789	$	26.23		7.00	$	134,941
Options granted	1,321,917	$	43.24
Options forfeited	(64,824)	$	33.00
Options exercised	(230,701)	$	23.14
Balance at March 31, 2021	8,778,181	$	28.82		7.25	$	125,395
Exercisable	4,963,607	$	22.73		5.95	$	100,938

We calculate the intrinsic value as the difference between the exercise price of the options and the closing price of common stock of $43.06 per share as of March 31, 2021.

Weighted-average fair value of options granted during the three-month periods ended March 31, 2021 and 2020 were $22.83 and $16.64 per share, respectively. There were 1,137,420 options granted during the three-month period ended March 31, 2020. We estimated the fair value of each stock option using the Black-Scholes option-pricing model based on the date of grant of such stock option with the following weighted average assumptions for the three months ended March 31, 2021 and 2020:


	Options
	Three Months Ended
	March 31,
	2021		2020
Expected term (years)	6.2		6.3
Expected volatility	55.6	%	53.9	%
Risk-free interest rate	1.02	%	1.71	%
Expected dividend yield	—	%	—	%


	ESPP
	Three Months Ended
	March 31,
	2021		2020
Expected term (years)	0.5 - 2.0		0.5 - 2.0
Expected volatility	50.8 - 66.4	%	50.8	%
Risk-free interest rate	0.09 - 1.65	%	1.56 - 1.65	%
Expected dividend yield	—	%	—	%

As of March 31, 2021, the unamortized compensation expense related to unvested stock options was $71.4 million. The remaining unamortized compensation expense will be recognized over the next 3.0 years. As of March 31, 2021, the unamortized compensation expense under our ESPP was $0.7 million. The remaining unamortized expense will be recognized over the next 0.7 years.

The following table summarizes the RSU activity for the three-month period ended March 31, 2021:


		Weighted
	Restricted	Average Grant
	Stock	Date Fair Value
	Units	(Per unit)

Unvested RSUs at December 31, 2020	358,825	$	33.04
Granted	247,050		43.11
Vested	(117,808)		31.75
Forfeited	(9,071)		32.36
Unvested RSUs at March 31, 2021	478,996	$	38.56

As of March 31, 2021, the unamortized compensation expense related to unvested RSUs was $17.3 million. The remaining unamortized expense will be recognized over the next 2.6 years.