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Stock-based Compensation
 12 Months Ended
Dec. 31, 2021
Share-based Payment Arrangement [Abstract]  
Stock-based Compensation Stock-based Compensation
Employee Stock Purchase Plan
In May 2017, the Company’s stockholders approved the 2016 Employee Stock Purchase Plan (the 2016 ESPP). The 2016 ESPP is structured as a qualified employee stock purchase plan under Section 423 of the Internal Revenue Code of 1986, as amended, and is not subject to the provisions of the Employee Retirement Income Security Act of 1974. The Company reserved 800,000 shares of common stock for issuance under the 2016 ESPP. The 2016 ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 10% of their eligible compensation, subject to any plan limitations. The 2016 ESPP provides for six-month offering periods ending on May 31 and November 30 of each year. At the end of each offering period, employees are able to purchase shares at 85% of the fair market value of the Company’s common stock on the last day of the offering period. During the year ended December 31, 2021,
employees purchased 34,922 shares of common stock under the 2016 ESPP for net proceeds to the Company of approximately $0.7 million.
Employee Stock Incentive Plans
Effective February 2003, the Company implemented the 2003 Equity Incentive Plan (2003 Plan), and it was amended and approved by the Company's stockholders in 2005. Stock options granted under the 2003 Plan may be either incentive stock options as defined by the Internal Revenue Code (IRC), or non-qualified stock options. In 2013, the 2003 Plan was terminated, and no further awards may be issued under the plan. Any shares of common stock subject to awards under the 2003 Plan that expire, terminate, or are otherwise surrendered, canceled, forfeited or repurchased without having been fully exercised, or resulting in any common stock being issued, will become available for issuance under the 2013 Stock Incentive Plan (2013 Plan), up to a specified number of shares. As of December 31, 2021, under the 2003 Plan, there were options to purchase an aggregate of 187,543 shares of common stock outstanding at a weighted average exercise price of $2.96 per share.
In October 2013, the Company implemented the 2013 Plan. The 2013 Plan provides for the grant of stock options and other stock-based awards, as well as cash-based performance awards. The aggregate number of shares of common stock initially available for issuance pursuant to awards under the 2013 Plan was 1,960,168 shares. The number of shares of common stock reserved for issuance will automatically increase on January 1 of each year from January 1, 2014 through and including January 1, 2023, by the lesser of (a) 1,960,168 shares, (b) 4.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, or (c) the number of shares of common stock determined by the Board of Directors. During the year ended December 31, 2021, the maximum number of shares of common stock authorized to be issued by the Company under the 2013 Plan was increased to 13,856,781. If an option expires or terminates for any reason without having been fully exercised, if any shares of restricted stock are forfeited, or if any award terminates, expires or is settled without all or a portion of the shares of common stock covered by the award being issued, such shares are available for the grant of additional awards. However, any shares that are withheld (or delivered) to pay withholding taxes or to pay the exercise price of an option are not available for the grant of additional awards. As of December 31, 2021, under the 2013 Plan, there were options to purchase an aggregate of 8,186,378 shares of common stock outstanding at a weighted average exercise price of $21.90 per share.
The following stock-based compensation amounts were recognized for the periods indicated (in thousands):
Year Ended December 31,
202120202019
Research and development$11,337 $10,833 $10,023 
Selling, general and administrative11,789 9,843 9,548 
Total stock-based compensation expense$23,126 $20,676 $19,571 
Employee Stock Options
The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model using the assumptions in the following table:
Year Ended December 31,
202120202019
Expected dividend yield0%0%0%
Expected volatility
86.2% -87.4%
67.3% - 109%
74% - 76%
Risk-free interest rate
0.64% - 1.55%
0.4% - 1.8%
1.4% - 2.6%
Expected term6.25 years6.25 years
6.25 years
Expected Dividend Yield – The Company has never declared or paid dividends and has no plans to do so in the foreseeable future.
Expected Volatility – Volatility is a measure of the amount by which a financial variable such as a share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. For periods through December 31, 2019, the computation of expected volatility is based on the historical volatility of several public entities of similar size, complexity and stage of development, as the Company did not have sufficient history of its own volatility. As of December 31, 2019, the Company had sufficient company-specific historical and implied volatility information. As such, beginning the first quarter of 2020, the computation of expected volatility is based only on the historical volatility of the Company’s common stock.
Risk-Free Interest Rate – This is the U.S. Treasury rate for the week of each option grant during the year, having a term that most closely resembles the expected life of the option.
Expected Term – This is the period of time that the options granted are expected to remain unexercised. Options granted have a maximum term of ten years. The Company uses a simplified method to calculate the average expected term.
In addition to the assumptions above, the Company estimates the forfeiture rate based on turnover data with further consideration given to the class of the employees to whom the options were granted. The forfeiture rate is the estimated percentage of options granted that is expected to be forfeited or canceled on an annual basis before becoming fully vested.
The following table summarizes stock option activity for 2021:
Shares
Weighted-Average
Exercise Price
Weighted-Average
Remaining
Contractual Term
(Years)
Aggregate Intrinsic Value
(in thousands)
Outstanding, December 31, 20207,258,353 $21.48 6.8
Granted1,941,671 20.83 
Exercised(332,767)17.55 
Forfeited or expired(493,336)21.05 
Outstanding, December 31, 20218,373,921 $21.47 6.6$7,841 
As of December 31, 2021:
Exercisable5,546,382 $22.61 5.6$4,764 
Vested and expected to vest8,010,695 $21.58 6.5$7,468 
During 2021, 2020 and 2019 the Company issued 332,767, 504,445 and 219,045 net shares of common stock, respectively, in conjunction with stock option exercises. The Company received cash proceeds from the exercise of stock options of approximately $5.8 million, $5.3 million and $0.7 million during 2021, 2020 and 2019, respectively.
The weighted-average grant-date fair value of options granted during 2021, 2020 and 2019 was $15.20, $10.68 and $13.98 per share, respectively. The total intrinsic value of options exercised during 2021, 2020 and 2019 was approximately $3.3 million, $4.3 million and $2.9 million, respectively. The total fair value of stock options which vested during 2021, 2020 and 2019 was $20.2 million, $16.7 million and $17.7 million, respectively. As of December 31, 2021, the total unrecognized compensation expense related to non-vested stock options, net of related forfeiture estimates, was $31.1 million, which the Company expects to recognize over a weighted-average period of approximately 2.5 years.
Restricted Stock Units
During 2019, the Company awarded RSUs under the 2013 Plan to all employees with at least six months of service as of the date of grant except executive officers. Each RSU entitled the holder to receive one share of the Company's common stock when the RSU vested. The RSUs vested in two equal installments on the first and second anniversary of the grant date and have all vested as of December 31, 2021. The Company also grants RSUs to employees from time to time as a component of their compensation. Compensation expense related to RSUs is recognized on a straight-line basis.
The following table summarizes RSU activity for 2021:
Shares
Weighted-Average
Grant Date Fair Value
Outstanding, December 31, 2020209,250 $15.92 
Granted16,500 26.27 
Vested(184,100)15.66 
Forfeited or expired(20,150)16.04 
Outstanding, December 31, 202121,500 $25.97 
At December 31, 2021, there was $0.4 million of total unrecognized compensation cost related to unvested RSUs, which the Company expects to recognize over a remaining weighted-average period of 2.3 years.