We granted options under our 2006 Equity Incentive Award Plan, as amended (2006 Plan) until the adoption of our 2010 Plan (discussed below) in November 2010, which serves as the successor plan to the 2006 Plan. While no further grants may be made from the 2006 Plan, outstanding options to purchase 20,218 shares of common stock as of December 31, 2019 remained subject to the terms under the 2006 Plan.

Our 2010 Equity Incentive Award Plan (2010 Plan), which was previously amended in June 2012, provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units and rights to purchase restricted stock to eligible recipients. Service-based options granted pursuant to the 2010 Plan has a contractual term of ten years and generally vest over four years. Performance-based awards are subject to the employee’s continued service and become vested based on the completion of the applicable performance conditions.

On May 21, 2019, our stockholders approved the amendment and restatement of our 2010 Plan (2010 Restated Plan). The 2010 Restated Plan included the following material changes: (1) the aggregate number of shares available for issuance under the plan increased from 7.5 million to 11.5 million shares; (2) the evergreen provision that provided for automatic annual increases based on 4% of common stock issued and outstanding as of each January 1 was eliminated; and (3) the extension of the expiration date of the plan to March 2029.

As of December 31, 2019, 4,907,684 shares remained available for future grants. Subsequent to the 2010 Restated Plan's effective date on May 21, 2019, all future equity awards will be issued from this plan (other than shares available for purchase under our 2010 Employee Stock Purchase Plan).

In December 2013, our board of directors adopted the Employment Inducement Equity Incentive Award Plan (Inducement Plan) and initially reserved 337,500 shares of common stock for issuance, which was subsequently increased to 637,500 shares in May 2018. The Inducement Plan is a non-shareholder approved stock plan adopted pursuant to the “inducement exception” provided under Nasdaq listing rules. The Inducement Plan was used exclusively for the issuance of non-statutory stock options and restricted stock units to certain new hires who satisfy the requirements to be granted inducement grants under Nasdaq rules as an inducement material to the individual’s entry into employment with us. The terms of the Inducement Plan are substantially similar to the terms of our 2010 Restated Plan. Subsequent to the effective date of our 2010 Restated Plan on May 21, 2019, we no longer issue grants under the Inducement Plan.

In November 2010, our board of directors adopted the 2010 Employee Stock Purchase Plan (ESPP), which allows employees to purchase shares of our common stock during specified offering periods at a discount to the fair market value at the time of purchase. The ESPP has a term of 10 years and will expire in November 2020. The ESPP is implemented by overlapping, twelve-month offering periods and each offering period may contain up to two purchase periods of six months each. At any one time, there may be up to two offering periods under the ESPP. In general, a new twelve-month offering period commences on each June 1st and December 1st of a calendar year.

Common stock may be purchased under the ESPP at a price equal to 85% of the fair market value of our common stock on either the date of purchase or the first day of an offering period, whichever is lower. Eligible employees may elect to withhold up to 20% of their compensation through payroll deductions during an offering period for the purchase of stock. The ESPP contains a reset provision whereby if the price of our common stock on the first day of a new offering period is less than the price on the first day of any preceding offering period, all participants in a preceding offering period with a higher first day price will be automatically withdrawn from such offering periods and re-enrolled in the new offering period. The reset feature, when triggered, will be accounted for as a modification to the original offering period, resulting in incremental expense to be recognized over the twelve-month period of the new offering.

The ESPP limits the maximum number of shares that may be purchased by any one participant in an offering period to 2,500 shares. In addition, the Internal Revenue Code limits purchases under an ESPP to $25,000 worth of stock in any one calendar year, valued as of the first day of an offering period. As of December 31, 2019, 18,347 shares of common stock were available for purchase, which number increased by 31,250 shares as of January 1, 2020 in accordance with the evergreen provision under the ESPP.


	Shares (in thousands)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2018	3,744	$	20.69
Granted	1,247	$	48.88
Exercised	(647)	$	14.49
Canceled	(91)	$	35.17
Outstanding at December 31, 2019	4,253	$	29.59	6.8	$	96,524
Exercisable at December 31, 2019	2,556	$	21.24	5.6	79,083


	Shares (in thousands)	Weighted Average Fair Value per RSU at Grant Date
Nonvested at December 31, 2018	289	$	25.56
Granted	235	50.46
Vested	(37)	43.10
Canceled	(48)	29.71
Nonvested at December 31, 2019	439	36.97

The total intrinsic value of RSUs vested during 2019 and 2018 was $1.9 million and $4.2 million, respectively. There were no RSUs vested during 2017. As of December 31, 2019, outstanding RSUs included approximately 130,000 shares granted in March 2017 to employees and executives that are performance-based. These performance-based RSUs vest upon FDA approval of our NDA for Fintepla, provided such approval occurs within five years following the grant date. Since obtaining FDA approval involves numerous risks and uncertainties, many of which are outside of our control, this performance condition is not deemed to be probable until the event actually occurs. Accordingly, no compensation expense has been recognized to date. As of December 31, 2019, total unrecognized compensation costs related to such awards were $1.4 million.

As of December 31, 2019, restricted stock units outstanding not subject to a performance condition had a weighted average remaining contractual term of 1.5 years with an intrinsic value of $16.1 million.

In October 2015, we granted employees certain performance-based stock options for retention purposes. The stock options would vest upon satisfaction of a specified regulatory milestone within three years of the date of grant. In 2017, management determined the achievement of the performance condition was no longer probable and the cumulative compensation expense previously recognized of $0.7 million was reversed. In September 2018, these awards were modified to allow for 90% of such options outstanding at the modification date to vest immediately. The remaining 10% of the awards were canceled in October 2018 since the performance condition was not met. This improbable to probable modification resulted in the calculation and recognition of incremental stock-based compensation expense of $3.5 million in 2018.

We use the Black-Scholes option-pricing model for determining the estimated fair value and stock-based compensation related to stock options and ESPP awards. A summary of the assumptions used to estimate the fair values of stock option grants for the years presented is as follows:

Year Ended December 31,

2019

2018

2017

Risk free interest rate

1.4% to 2.6%

2.3% to 3.0%

1.8% to 2.3%

Expected term

5.3 to 6.1 years

5.1 to 6.1 years

Expected volatility

73.5% to 82.3%

80.1% to 85.2%

75.1% to 85.8%

Expected dividend yield

—%

Weighted-average fair value of option on grant date

$32.64

$30.87

$7.43


	Year Ended December 31,
	2019		2018		2017
Cost of contract manufacturing	$	—	$	—	$	71
Research and development	8,293		6,317		1,933
Selling, general and administrative	12,954		9,175		4,151
Total	$	21,247	$	15,492	$	6,155