Stock-Based Compensation

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

We have various equity incentive plans under which we grant employees and non-employee directors stock options, time-based restricted stock units (RSUs) and performance-based stock units (PSUs). Options granted generally have a contractual term of ten years and have a per share exercise price equal to the closing price of our common stock on the date of grant. Options and RSUs typically vest over a four-year period from the date of grant. We also grant broad-based PSUs to employees, including executive officers, that vest upon the satisfaction of both time-based and performance-based vesting conditions. The following is a description of our various equity incentive plans.

Summary of Stock-Based Compensation Plans

2010 Plan

The 2010 Equity Incentive Award Plan (2010 Plan) was adopted by our board of directors and became effective in November 2010. The 2010 Plan was amended and restated in each of June 2012, May 2019 and May 2021. The May 2019 amendment was approved by our stockholders at our 2019 Annual Meeting of Stockholders and provided for an increase to the aggregate number of shares authorized for issuance under the plan from 7,500,000 to 11,500,000. In addition, the expiration date of the plan was extended to March 2029. The May 2021 amendment was approved by our stockholders at our 2021 Annual Meeting of Stockholders and provided for an increase to the aggregate number of shares authorized for issuance under the plan to 16,000,000 shares. In addition, the expiration date of the plan was extended to May 2031.

The 2010 Plan provides for the issuance of incentive and non-statutory stock options, restricted shares, performance shares, stock appreciation rights, RSUs, PSUs and other stock-based incentives to officers, employees and others.

2013 and 2021 Inducement Plans

In December 2013 and May 2021, our board of directors adopted the 2013 Employment Inducement Equity Incentive Award Plan (2013 Inducement Plan) and the 2021 Employment Inducement Equity Incentive Award Plan (2021 Inducement Plan), respectively. Both inducement plans are non-shareholder approved stock plans adopted pursuant to the “inducement exception” provided under Nasdaq listing rules. The inducement plans are 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 both inducement plans are substantially similar to the terms of our 2010 Plan. The 2013 Inducement Plan was adopted in December 2013 and initially reserved 337,500 shares of common stock for issuance, which was subsequently increased to 637,500 shares in May 2018. In connection with seeking stockholder approval of the amended and restated 2010 Plan in May 2019, we agreed not to make further awards under the 2013 Inducement Plan. The 2021 Inducement Plan was adopted in May 2021 and initially reserved 1,000,000 shares of common stock for issuance.

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 provided for an increase to 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 (IRC) 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, 2021, 6,528,510 common shares were available for future equity award grants under the 2010 Plan and 2021 Inducement Plan and 385,515 common shares were available for issuance under the ESPP.

Stock-Based Compensation Plan Activity

The following sections summarize activity under our stock-based compensation plans.

Stock Options

The following table summarizes our stock option activity for the year ended December 31, 2021:


	Shares (in thousands)	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2020	5,311	$	29.12
Granted	1,833	17.79
Exercised	(58)	10.08
Canceled	(401)	28.71
Outstanding at December 31, 2021	6,685	$	26.20	6.9	$	7,926
Exercisable at December 31, 2021	4,101	$	27.00	5.7	$	7,232

The total intrinsic value of options exercised for the years ended December 31, 2021, 2020 and 2019 was $0.4 million, $5.1 million and $22.4 million, respectively.

Stock Unit Awards

The following table summarizes our stock unit awards activity for the year ended December 31, 2021:


	RSUs			PSUs
	Shares (in thousands)	Weighted Average Grant Date Fair Value		Shares (in thousands)	Weighted Average Grant Date Fair Value
Nonvested at December 31, 2020	393	$	37.68	—	$	—
Granted	616	17.66		494	19.53
Vested	(144)	39.98		(152)	19.85
Canceled	(61)	25.24		(42)	19.99
Nonvested at December 31, 2021	804	$	22.85	300	$	19.30

The total intrinsic value of stock unit awards vested for the years ended December 31, 2021, 2020 and 2019 was $5.0 million, $5.7 million and $1.9 million, respectively.

ESPP

Employees purchased 112,337 shares, 51,745 shares and 28,146 shares under our ESPP for the years ended December 31, 2021, 2020 and 2019, 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. 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,

2021

2020

2019

Risk free interest rate

0.5% to 1.4%

0.3% to 1.8%

1.4% to 2.6%

Expected term

5.3 to 6.1 years

Expected volatility

70.0% to 73.7%

73.2% to 76.7%

73.5% to 82.3%

Expected dividend yield

—%

Weighted-average fair value of option on grant date

$11.36

$17.86

$32.64

The fair value of RSUs and PSUs are based on the closing price of our common stock on the date of grant. The fair value of ESPP awards issued 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)	2021		2020		2019


Research and development	12,962		12,139		8,293
Selling, general and administrative	22,501		17,037		12,954
Total	$	35,463	$	29,176	$	21,247

Stock-based compensation of $1.0 million was capitalized into inventory for the year ended December 31, 2021.

As of December 31, 2021, there was approximately $54.4 million of total unrecognized compensation costs related to outstanding equity awards scheduled to be recognized over a weighted average period of 2.6 years.