Common Stock Equity Incentive Plan

In April 2000, the stockholders approved the Company's 2000 Equity Incentive Plan (the “2000 Plan”), and in July 2009, the stockholders approved the Company's 2009 Equity Incentive Plan (the “2009 Plan”). Following the approval of the 2009 Plan, all options outstanding under the 2000 Plan are effectively included under the 2009 Plan. Under the provisions of the 2009 Plan, the Company may grant the following types of common stock awards:


•	Incentive Stock Options


•	Nonstatutory Stock Options


•	Restricted Stock Awards


•	Stock Appreciation Rights

Awards under the 2009 Plan, as amended, may be made to officers, employees, members of the Board of Directors, advisors, and consultants to the Company. Shares are added to the reserve of shares available for issuance pursuant to an “evergreen provision” on January 1 of each year, from 2012 to (and including) 2019, in an amount equal to 4% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year. As of September 30, 2014, there were 6,799,854 shares of common stock authorized for the 2009 plan and 1,056,883 shares remained available for issuance.

On January 1, 2013, an additional 838,375 shares of common stock were added to the shares reserved for future issuance under the 2009 Plan. On January 1, 2014 an additional 1,066,340 shares of common stock were added to the shares reserved for future issuance under the 2009 Plan.

Under the terms of the Company’s 2010 Non-Employee Directors’ Stock Award Plan (Directors’ Plan), which became effective on November 10, 2011, 238,095 shares of common stock were reserved for future issuance. On May 9, 2013, an additional 161,905 shares of common stock were added to the shares reserved for future issuance under the Directors' Plan. As of September 30, 2014, 207,327 shares remained available for issuance under the plan.

Under the terms of the Company’s 2010 Employee Stock Purchase Plan (2010 Purchase Plan), which became effective on November 10, 2011, 214,285 shares of common stock were reserved for future issuance. On May 9, 2013 an additional 185,715 shares of common stock were added to the shares reserved for future issuance under the 2010 Purchase Plan. As of September 30, 2014, 283,998 shares remained available for issuance under the plan.

Share-based Compensation

Share-based compensation expense for the three and nine months ended September 30, 2014 and the three and nine months ended September 30, 2013 was $3.3 million, $6.9 million, $1.1 million, and $3.1 million, respectively, and is allocated between research and development and general and administrative expenses within the consolidated statements of operations, giving rise to related tax benefits for the three and nine months ended September 30, 2014 and the three and nine months ended September 30, 2013 of $782,000, $1.6 million, $0 and $0, respectively.

As of September 30, 2014, the total compensation cost related to nonvested option awards not yet recognized was $11.4 million and the weighted average period over which it is expected to be recognized is 2.8 years.

The following table summarizes the stock option activity for the nine months ended September 30, 2014:



	Number of options		Weighted average exercise price		Weighted average remaining contractual term (years)
Outstanding at beginning of period	4,486,564		$	5.89
Options granted	628,805		23.26
Options exercised	(291,517	)	5.45
Options forfeited	(27,545	)	16.21
Options expired	—		—
Outstanding at end of period	4,796,307		$	8.14	6.3
Options exercisable at end of period	3,601,927		$	5.31	5.5

The following table summarizes options that were granted during the nine months ended September 30, 2014, and the range of assumptions used to estimate the fair value of those stock options using a Black-Scholes valuation model:



Risk-free interest rate		1.86%-2.24%
Expected dividend yield		—%
Expected volatility		57.4%-63.5%
Expected term (in years)		6.0-7.0
Weighted average grant-date fair value per share		$13.67

The intrinsic value of options exercised during the nine months ended September 30, 2014 was $7.3 million. The fair value of awards vested during the nine months ended September 30, 2014 was $6.5 million, which includes $1.7 million in share-based compensation resulting from the vesting in full of one employee's options upon the employee's termination that occurred during the three months ended September 30, 2014.

Restricted stock is common stock that is subject to restrictions, including risks of forfeiture, determined by the plan committee of the Board of Directors in its sole discretion, for so long as such common stock remains subject to any such restrictions. A holder of restricted stock has all rights of a stockholder with respect to such stock, including the right to vote and to receive dividends thereon, except as otherwise provided in the award agreement relating to such award. Restricted stock awards are equity classified within the consolidated balance sheets. The fair value of each restricted stock grant is estimated on the date of grant using the closing price of Company's Common Stock on the The NASDAQ Stock Market on the date of grant.

During the nine months ended September 30, 2014 and 2013, respectively, there were 138,420 and 0 shares of restricted stock granted. These restricted stock grants had a weighted average fair value (per share) at date of grant of $21.82. At September 30, 2014, and December 31, 2013, there were 92,720 and 0 shares of unvested restricted stock outstanding, respectively. Compensation expense is determined for the issuance of restricted stock by amortizing over the requisite service period, or the vesting period, the aggregate fair value of the restricted stock awarded based on the closing price of the Company’s common stock on the date of grant.

A summary of the Company’s unvested restricted stock at September 30, 2014 and changes during the nine months ended September 30, 2014 is as follows:



	Restricted Stock		Weighted Average Grant Date Fair Value
Unvested at December 31, 2013	—		$	—
Granted	138,420		21.82
Vested	(45,700	)	21.38
Forfeited/cancelled	—		—
Unvested restricted stock at September 30, 2014	92,720		$	22.04

As of September 30, 2014, the total remaining unrecognized compensation cost related to issuances of restricted stock was approximately $1.6 million and is expected to be recognized over a weighted-average period of 3.0 years.