Common Stock Equity Incentive Plan

2009 Equity Incentive Plan

In April 2000, the stockholders approved the Company's 2000 Equity Incentive Plan, or the 2000 Plan, and in July 2009, the stockholders approved the Company's 2009 Equity Incentive Plan, or 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. As of June 30, 2017, there were 10,238,220 shares of common stock authorized for the 2009 Plan and 806,050 shares remained available for issuance.

The following table summarizes the authorized increases of common stock under the 2009 Plan:



Date Authorized		Authorized Shares Added
May 15, 2010		1,238,095
January 7, 2011		714,286
January 1, 2013		838,375
January 1, 2014		1,066,340
January 1, 2015		1,119,255
January 1, 2016		1,152,565
January 1, 2017		1,166,546

The increases in the authorized shares of common stock under the 2009 Plan in 2010 and 2011 were approved by the Company’s stockholders. The increases in the authorized shares of common stock under the 2009 Plan in 2012 through 2017 were made pursuant to an “evergreen provision,” in accordance with which, on January 1 of each year, from 2012 to (and including) 2019, a number of shares of common stock in an amount equal to 4% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, or such lesser amount of shares (or no shares) approved by the Company's Board of Directors, was added or will be added to the shares reserved under the 2009 Plan.

2010 Non-Employee Directors' Stock Award Plan

Under the terms of the Company’s 2010 Non-Employee Directors’ Stock Award Plan, or the 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 June 30, 2017, no shares remained available for issuance under the Directors' Plan.

2010 Employee Stock Purchase Plan

Under the terms of the Company’s 2010 Employee Stock Purchase Plan, or the 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 June 30, 2017, 120,784 shares remained available for issuance under the 2010 Purchase Plan.

Share-based Compensation

Share-based compensation expense for the three months ended June 30, 2017 and 2016 was $4.6 million and $4.5 million, respectively, and was $10.6 million and $9.2 million, respectively, for six months ended June 30, 2017 and 2016. Share-based compensation expense is allocated between research and development and general and administrative expenses within the condensed consolidated statements of operations.

As of June 30, 2017, the total compensation cost related to nonvested option awards not yet recognized was $26.9 million and the weighted-average period over which it is expected to be recognized is 2.3 years.

Stock Options and Performance Stock Options

The following table summarizes the stock option activity, including options with performance conditions, for the six months ended June 30, 2017:



	Number of options		Weighted average exercise price		Weighted average remaining contractual term (years)
Outstanding at beginning of period	6,278,542		$	14.93	5.8
Options granted	1,435,687		11.79
Options exercised	(15,821	)	8.12
Options forfeited	(14,569	)	27.62
Options expired	(15,913	)	41.92
Outstanding at end of period	7,667,926		$	14.28	6.1
Options exercisable at end of period	5,292,758		$	12.16	4.8

The Company estimates the fair value of each stock option grant on the date of grant using a Black-Scholes option pricing model. For stock option grants issued with a market condition, the Company used a Monte Carlo simulation valuation model to determine the grant date fair value.

The following table summarizes the range of assumptions used to estimate the fair value of stock options granted, including those options granted with a market condition, during the six months ended June 30, 2017:



Risk-free interest rate		1.9% to 2.2%
Expected dividend yield		—%
Expected volatility		68.9% to 73.2%
Expected term (in years)		6.5 to 7.8
Weighted-average grant-date fair value per share		$7.82

The intrinsic value of options exercised during the six months ended June 30, 2017 was $138,762. The fair value of awards vested during the six months ended June 30, 2017 was $8.9 million.

During the six months ended June 30, 2017, the Company’s Board of Directors approved and granted 388,144 shares of compensation and equity awards to certain executives with either market or performance conditions. The compensation and equity awards had a weighted average grant date fair value per share of $6.73. The compensation and equity awards will vest upon the achievement of certain performance conditions. During the six months ended June 30, 2017, certain conditions were met which resulted in the vesting of 194,070 shares and the recognition of $1.2 million in stock compensation expense.

Restricted Stock and Performance Restricted Stock

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 as 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 classified as equity 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 the Company's common stock on the NASDAQ Stock Market on the date of grant.

A summary of the Company's unvested restricted stock, including restricted stock with performance conditions, at June 30, 2017 and changes during the six months ended June 30, 2017 are as follows:



	Number of restricted stock shares		Weighted average grant date fair value
Unvested at beginning of period	288,964			$	34.94
Granted	—			—
Vested	(73,189	)		35.35
Forfeited/cancelled	(19,566	)		34.73
Unvested at end of period	196,209			$	34.80

As of June 30, 2017, the total remaining unrecognized compensation cost related to restricted stock was approximately $5.5 million and is expected to be recognized over a weighted-average period of 1.9 years. As of June 30, 2017, there remains approximately $680,000 of unrecognized compensation cost related to the issuance of performance restricted stock. The fair value of awards vested during the six months ended June 30, 2017 was $768,000.

The Company does not have a formal policy regarding the source of shares issued upon exercise of stock options or issuance of restricted stock. The Company expects shares issued to be issued from treasury shares or new shares.