Stock-Based Compensation

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-Based Compensation

Summary of Equity Incentive Plans

2010 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) an increase in the aggregate number of shares available for issuance under the plan from 7.5 million to 11.5 million shares; (2) elimination of the evergreen provision that provided for automatic annual increases based on 4% of common stock issued and outstanding as of each January 1; and (3) the extension of the expiration date of the plan to March 2029.

As of December 31, 2020, approximately 3.4 million 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).

Inducement 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.

Employee Stock Purchase Plan

In November 2010, our board of directors adopted an 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. In May 2020, our shareholders approved an amendment and restatement of the ESPP, which became effective on May 29, 2020. The ESPP was amended to increase the aggregate number of shares authorized for issuance from 375,000 to 875,000 shares and to eliminate the annual evergreen feature, which automatically added 31,250 shares to the aggregate shares authorized for issuance on January 1 of each year under the plan. In addition, the expiration date of the ESPP was modified from October 2020 to the date that all shares authorized have been issued.

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 5,000 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, 2020, approximately 0.5 million shares of common stock were available for future purchase.

Equity Incentive Plan Activity

The following sections summarize activity under our equity incentive plans.

Stock Options

The following table summarizes our stock option activity for 2020:

	Shares (in thousands)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2019	4,253	$	29.59	6.8	$	96,524
Granted	1,647	$	27.41
Exercised	(274)	$	16.06
Canceled	(315)	$	38.00
Outstanding at December 31, 2020	5,311	$	29.12	7.1	$	14,131
Exercisable at December 31, 2020	3,061	$	25.08	5.8	$	13,515

The total intrinsic value of options exercised during 2020, 2019 and 2018 was $5.1 million, $22.4 million and $11.8 million, respectively. 

Restricted Stock Units (RSUs)

The following table summarizes the Company’s restricted stock unit activity for 2020:

	Shares (in thousands)	Weighted Average Fair Value per RSU at Grant Date
Nonvested at December 31, 2019	439	$	36.97
Granted	218	$	27.34
Vested	(220)	$	26.39
Canceled	(44)	$	38.15
Nonvested at December 31, 2020	393	$	37.68

The total intrinsic value of RSUs vested during 2020, 2019 and 2018 was $5.7 million, $1.9 million and $4.2 million, respectively. In June 2020, approximately 128,000 shares of performance-based restricted stock units (PSU’s) granted in March 2017 vested upon satisfaction of both a service-period condition and a performance condition, the latter of which was satisfied following the FDA’s approval of Fintepla in June 2020. As a result, a $1.4 million charge representing the PSUs’ fair value on the date of grant was expensed upon satisfaction of the performance condition. Previously, no compensation expense for such PSUs was recognized as we determined the performance condition is not probable of achievement until the event actually occurs.

ESPP

Employees purchased 51,745 shares, 28,146 shares and 32,679 shares under our ESPP during 2020, 2019 and 2018, respectively.

Valuation of Equity Awards

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,
	2020	2019	2018
Risk free interest rate	0.3% to 1.8%	1.4% to 2.6%	2.3% to 3.0%
Expected term	5.3 to 6.1 years	5.3 to 6.1 years	5.3 to 6.1 years
Expected volatility	73.2% to 76.7%	73.5% to 82.3%	80.1% to 85.2%
Expected dividend yield	—%	—%	—%
Weighted-average fair value of option on grant date	$17.86	$32.64	$30.87

The fair value of ESPP awards was not material for all periods presented.

Stock-Based Compensation Expense Allocation

The following table summarizes the components of total stock-based compensation expense included in the consolidated statements of operations for the periods presented:

	Year Ended December 31,
(In thousands)	2020		2019		2018
Research and development	12,139		8,293		6,317
Selling, general and administrative	17,037		12,954		9,175
Total	$	29,176	$	21,247	$	15,492

As of December 31, 2020, there was approximately $60.6 million of total unrecognized compensation costs related to outstanding equity awards scheduled to be recognized over a weighted average period of 2.7 years.