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Stock-based Compensation | 12 Months Ended
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Dec. 31, 2022
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, 2022, employees purchased 105,986 shares of common stock under the 2016 ESPP for net proceeds to the Company of approximately $0.4 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, 2022, under the 2003 Plan, there were options to purchase an aggregate of 65,103 shares of common stock outstanding at a weighted average exercise price of $5.90 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, 2022, the maximum number of shares of common stock authorized to be issued by the Company under the 2013 Plan was increased to 15,816,949. 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, 2022, under the 2013 Plan, there were options to purchase an aggregate of 10,033,826 shares of common stock outstanding at a weighted average exercise price of $18.66 per share. The following stock-based compensation amounts were recognized for the periods indicated (in thousands):
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Research and development | $ | 10,094 |  |  | $ | 11,337 |  |  | $ | 10,833 |
Selling, general and administrative | 10,343 |  |  | 11,789 |  |  | 9,843 |
Total stock-based compensation expense | $ | 20,437 |  |  | $ | 23,126 |  |  | $ | 20,676 |
Employee Stock Options The Company accounts for stock-based compensation to employees and non-employee directors in accordance with ASC Topic 718, Compensation – Stock Compensation. The Company estimates the fair value of stock option awards using the Black-Scholes option pricing model on the date of grant using the assumptions in the table below. Stock options granted to employees generally vest over four years and have a term of ten years. Stock-based compensation expense for stock options is recognized as expense over the requisite service period, which is the vesting period. As the Company has not paid dividends since inception, nor does it expect to pay any dividends for the foreseeable future, the expected dividend yield assumption is zero. The expected volatility is based on the historical stock volatility of the Company’s own common stock over a period equal to the expected term of the options. The risk-free rate of the stock options is based on the U.S. Treasury rate in effect at the time of grant for the expected term of the stock options. The Company used the simplified method to calculate expected term during 2020 and 2021. Beginning in 2022, the computation of expected term was determined based on the historical experience with similar awards, giving consideration to the contractual terms of the share-based awards, vesting schedules and expectations of future employee behavior. In addition, the Company estimates the expected forfeiture rate and only recognizes expense for those shares expected to vest. The Company estimates the forfeiture rate based on historical experience and its expectations regarding future pre-vesting termination behavior of employees. The Company reviews its estimate of the expected forfeiture rate annually, and stock-based compensation expense is adjusted accordingly.
| Year Ended December 31,
| 2022 |  | 2021 |  | 2020
Expected dividend yield | 0% |  | 0% |  | 0%
Expected volatility | 88% -92% |  | 86% - 87% |  | 67% - 109%
Risk-free interest rate | 1.4% - 4.0% |  | 0.6% - 1.6% |  | 0.4% - 1.8%
Expected term | 5.95 years |  | 6.25 years |  | 6.25 years
The following table summarizes stock option activity for 2022:
| Shares |  | Weighted-Average Exercise Price |  | Weighted-Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value (in thousands)
Outstanding, December 31, 2021 | 8,373,921 |  |  | $ | 21.47 |  |  | 6.6 |  |
Granted | 2,794,997 |  |  | 9.32 |  |  |  |  |
Exercised | (120,900) |  |  | 1.43 |  |  |  |  |
Forfeited | (509,569) |  |  | 15.82 |  |  |  |  |
Expired | (439,520) |  |  | 22.77 |  |  |  |  |
Outstanding, December 31, 2022 | 10,098,929 |  |  | $ | 18.58 |  |  | 6.5 |  | $ | 1,094 |
As of December 31, 2022: |  |  |  |  |  |  |
Exercisable | 6,694,068 |  |  | $ | 21.35 |  |  | 5.5 |  | $ | 424 |
Vested and expected to vest | 9,456,075 |  |  | $ | 18.91 |  |  | 6.4 |  | $ | 1,009 |
During 2022, 2021 and 2020 the Company issued 120,900, 332,767 and 504,445 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 $0.2 million, $5.8 million and $5.3 million during 2022, 2021 and 2020, respectively. The weighted-average grant-date fair value of options granted during 2022, 2021 and 2020 was $6.84, $15.20 and $10.68 per share, respectively. The total intrinsic value of options exercised during 2022, 2021 and 2020 was approximately $0.6 million, $3.3 million and $4.3 million, respectively. The total fair value of stock options which vested during 2022, 2021 and 2020 was $19.6 million, $20.2 million and $16.7 million, respectively. As of December 31, 2022, the total unrecognized compensation expense related to non-vested stock options, net of related forfeiture estimates, was $24.3 million, which the Company expects to recognize over a weighted-average period of approximately 1.3 years. The stock options outstanding and exercisable by exercise price at December 31, 2022 are as follows:
|  | Stock Options Outstanding |  | Stock Options Exercisable
Range of Exercise Prices |  | Number of Shares |  | Weighted-Average Remaining Contractual Life in Years |  | Weighted-Average Exercise Price Per Share |  | Number of Shares |  | Weighted-Average Exercise Price Per Share
$0.94 - $5.00 |  | 357,628 |  |  | 8.8 |  | $ | 3.70 |  |  | 143,268 |  |  | $ | 3.76 |
$5.01 - $15.00 |  | 3,355,424 |  |  | 8.4 |  | 10.51 |  |  | 1,211,129 |  |  | 10.96 |
$15.01 - $25.00 |  | 4,041,994 |  |  | 6.1 |  | 20.21 |  |  | 3,152,550 |  |  | 20.39 |
$25.01 - $40.21 |  | 2,343,883 |  |  | 4.3 |  | 29.59 |  |  | 2,187,121 |  |  | 29.64 |
|  | 10,098,929 |  |  | 6.5 |  | $ | 18.58 |  |  | 6,694,068 |  |  | $ | 21.35 |
Restricted Stock Units The Company awards RSUs to employees. RSUs are valued based on the closing price of the Company’s common stock on the date of the grant. The fair value of RSUs is recognized and amortized on a straight-line basis over the requisite service period of the award. The following table summarizes RSU activity for 2022:
| Shares |  | Weighted-Average Grant Date Fair Value
Outstanding, December 31, 2021 | 21,500 |  |  | $ | 25.97 |
Granted | 476,772 |  |  | 8.42 |
Vested | (10,445) |  |  | 25.65 |
Forfeited or expired | (72,743) |  |  | 8.74 |
Outstanding, December 31, 2022 | 415,084 |  |  | $ | 8.83 |
At December 31, 2022, there was $2.0 million of total unrecognized compensation cost related to unvested RSUs, which the Company expects to recognize over a remaining weighted-average period of one year.

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