Stock-Based Compensation

12 Months Ended

Dec. 31, 2019

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Note 12—Stock-Based Compensation

Our stock option plans provide for the grant of incentive and non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, performance shares and other stock and cash awards to employees, directors and consultants and subsidiary corporations’ employees and consultants. Stock options must be granted with exercise prices not less than the fair market value of the common stock subject to the stock option on the date of the grant and the options may not exceed 10 years. Any unvested stock options granted which are subsequently canceled become available for future grant.

As of December 31, 2019, a total of 16.9 million shares were reserved for issuance under our stock plans and outstanding warrants, of which 5.4 million were available for future grants which includes shares registered in June 2019 under the Omeros Corporation 2017 Omnibus Incentive Compensation Plan, as amended and restated effective June 7, 2019. [In March 2020, annual stock option grants totaling approximately 1.6 million shares with an exercise price of $11.91 per share were granted to all eligible employees. The options vest monthly on a straight-line basis over four years.]

Stock-based compensation expense is as follows:

	Year Ended December 31,
	2019		2018		2017
	(In thousands)
Research and development	$	6,095	$	4,961	$	5,240
Selling, general and administrative		7,690		6,752		7,448
Total	$	13,785	$	11,713	$	12,688

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The following assumptions were applied to stock option grants during the periods ended:

	Year Ended December 31,
	2019			2018			2017
Estimated weighted-average fair value	$	9.93		$	10.32		$	8.66
Weighted-average assumptions:
Expected volatility		80	%		78	%		74	%
Expected term, in years		6.0			6.0			6.0
Risk-free interest rate		2.41	%		2.68	%		2.05	%
Expected dividend yield		—	%		—	%		—	%

During the years ended December 31, 2019 and 2018, we granted to non-employees options to purchase 20,000 shares and 20,000 shares of common stock, respectively. In connection with the non-employee options, we recognized expense of $0.2 million, $0.2 million, and $0.5 million during the years ended December 31, 2019, 2018 and 2017, respectively.

Stock option activity for all stock plans is as follows:

		Weighted-
		Average			Aggregate
		Exercise		Remaining	Intrinsic
	Options	Price per		Contractual Life	Value
	Outstanding	Share		(In years)	(In thousands)
Balance at December 31, 2018	10,313,138	$	11.22
Granted	2,098,705		14.23
Exercised	(799,815)		9.50
Forfeited	(404,097)		16.28
Balance at December 31, 2019	11,207,931	$	11.72	6.0	$	31,912
Vested and expected to vest at December 31, 2019	10,876,043	$	11.65	6.0	$	31,661
Exercisable at December 31, 2019	8,212,177	$	10.87	5.1	$	29,546

The total intrinsic value of options exercised during the years ended December 31, 2019, 2018 and 2017 was $5.4 million, $11.4 million and $16.4 million, respectively.

At December 31, 2019, there were 3.0 million unvested options outstanding that will vest over a weighted-average period of 2.6 years. The remaining estimated compensation expense to be recognized in connection with these unvested options is $24.2 million.