13. Stock Benefit Plans

The following table summarizes the expense recognized for share-based compensation arrangements in the consolidated statements of operations (in thousands):

	Years Ended December 31,

	2013		2012		2011
Employee stock options	$	17,981	$	16,582	$	10,904
Restricted stock awards		552		429		431
Non-employee stock options		271		60		152
Employee stock purchase plan		995		472		215
Stock award		30		30		30

	$	19,829	$	17,573	$	11,732

Share-based compensation is reflected in the consolidated statements of operations as follows for the years ended December 31, 2013, 2012 and 2011 (in thousands):

	Years Ended December 31,

	2013		2012		2011
Research and development	$	9,178	$	9,080	$	6,071
Selling, general and administrative		10,651		8,493		5,661

	$	19,829	$	17,573	$	11,732

Stock Benefit Plans

The Company has two share-based compensation plans pursuant to which awards are currently being made: the Amended and Restated 2010 Employee, Director and Consultant Equity Incentive Plan ("2010 Equity Plan") and the Amended and Restated 2010 Employee Stock Purchase Plan ("2010 Purchase Plan"). The Company also has two share-based compensation plans under which there are outstanding awards, but from which no further awards will be made: the Amended and Restated 2005 Stock Incentive Plan ("2005 Equity Plan") and the Amended and Restated 2002 Stock Incentive Plan ("2002 Equity Plan"). At December 31, 2013, there were 7,868,767 shares available for future grant under all such plans.

2010 Equity Plan

During 2010, the Company's stockholders approved the 2010 Equity Plan under which stock options, restricted stock, restricted stock units, and other stock-based awards may be granted to employees, officers, directors, or consultants of the Company. There were 6,000,000 shares of common stock initially reserved for issuance under the 2010 Equity Plan. The number of shares available for future grant may be increased on the first day of each fiscal year by an amount equal to the lesser of: (i) 6,600,000; (ii) 4% of the number of outstanding shares of common stock on the first day of each fiscal year; and (iii) an amount determined by the board of directors. Awards that are returned to the Company's other equity plans as a result of their expiration, cancellation, termination or repurchase are automatically made available for issuance under the 2010 Equity Plan. At December 31, 2013, there were 7,263,256 shares available for future grant under the 2010 Equity Plan.

2010 Purchase Plan

During 2010, the Company's stockholders approved the 2010 Purchase Plan, which gives eligible employees the right to purchase shares of common stock at the lower of 85% of the fair market value on the first or last day of an offering period. Each offering period is six months. There were 400,000 shares of common stock initially reserved for issuance pursuant to the 2010 Purchase Plan. The number of shares available for future grant under the 2010 Purchase Plan may be increased on the first day of each fiscal year by an amount equal to the lesser of: (i) 1,000,000 shares, (ii) 1% of the Class A shares of common stock outstanding on the last day of the immediately preceding fiscal year, or (iii) such lesser number of shares as is determined by the board of directors. At December 31, 2013, there were 574,658 shares available for future grant under the 2010 Purchase Plan.

2005 Equity Plan and 2002 Equity Plan

The 2005 Equity Plan and 2002 Equity Plan provided for the granting of stock options, restricted stock, restricted stock units, and other share-based awards to employees, officers, directors, consultants, or advisors of the Company. At December 31, 2013, there were 30,853 shares available for future grant under the 2005 Equity Plan and no shares available for future grant under the 2002 Equity Plan.

Restricted Stock

In 2009, the Company granted an aggregate of 515,549 shares of common stock to independent members of the board of directors under restricted stock agreements in accordance with the terms of the 2005 Equity Plan and the Company's director compensation program, effective in October 2009. 115,549 shares of this restricted common stock vested on December 31, 2009 and the remainder vested ratably over a four-year period ended December 31, 2013. In 2013, upon election of a new independent member of the Company's board of directors, the Company granted 8,333 shares of common stock in accordance with the terms of the 2010 Equity Plan and the Company's director compensation program. Of this restricted common stock, 833 shares vested on March 31, 2013 and the remainder vested ratably over the period ended December 31, 2013.

A summary of the unvested shares of restricted stock as of December 31, 2013 is presented below:

			Weighted-Average Grant Date Fair Value

Unvested at December 31, 2012	80,000		$	5.72
Granted	8,333		$	14.94
Vested	(88,333	)	$	6.59
Forfeited	—		$	0.00

Unvested at December 31, 2013	—		$	0.00

Stock Options

Stock options granted under the Company's equity plans generally have a ten-year term and vest over a period of four years, provided the individual continues to serve at the Company through the vesting dates. Options granted under all equity plans are exercisable at a price per share not less than the fair market value of the underlying common stock on the date of grant. The estimated fair value of options, including the effect of estimated forfeitures, is recognized over the vesting period of each option.

The weighted average assumptions used to estimate the fair value of the stock options using the Black-Scholes option pricing model were as follows for the years ended December 31, 2013, 2012 and 2011:

	Years Ended December 31,

	2013			2012			2011
Fair value of common stock	$	12.57		$	13.44		$	11.98
Expected volatility		46.3	%		49.2	%		49.8	%
Expected term (in years)		6.5			6.5			6.5
Risk-free interest rate		1.6	%		1.2	%		2.4	%
Expected dividend yield		—	%		—	%		—	%

Prior to February 3, 2010, the Company was not publicly traded and therefore had no trading history. Therefore, the Company uses a blended volatility rate that blends its own historical volatility with that of comparable public companies. For purposes of identifying comparable companies, the Company selected publicly-traded companies that are in the biopharmaceutical industry, have products or product candidates in similar therapeutic areas and stages of nonclinical and clinical development, have sufficient trading history to derive a historic volatility rate and have similar vesting terms as the Company's options. The expected term is estimated using the "simplified method" since the Company has limited historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. The risk-free interest rate used for each grant is based on a zero-coupon U.S. Treasury instrument with a remaining term similar to the expected term of the share-based award. The Company has not paid and does not anticipate paying cash dividends on its shares of common stock in the foreseeable future; therefore, the expected dividend yield is assumed to be zero.

The Company's Class B Common Stock is issuable upon exercise of options granted prior to the closing of the Company's IPO under the 2002 Equity Plan and the 2005 Equity Plan, and Class A Common Stock is issuable upon exercise of all options granted after the closing of the Company's IPO under the Company's equity plans. At December 31, 2013, options exercisable into 7,918,040 shares of Class B Common Stock and 13,009,834 shares of Class A Common Stock were outstanding.

Subject to approval by the board of directors, option grantees under the 2002 Equity Plan and the 2005 Equity Plan may have the right to exercise an option prior to vesting. The exercise of these shares is not substantive and as a result, the cash paid for the exercise prices is considered a deposit or prepayment of the exercise price and is recorded as a liability. Amounts received upon the exercise of these shares were not material to the consolidated financial statements at December 31, 2013 and 2012.

The Company, from time to time, issues certain time-accelerated stock options to certain employees. The vesting of these options accelerates upon the achievement of certain performance-based milestones. If these criteria are not met, such options will vest between six and ten years after the date of grant. During the year ended December 31, 2013, 253,334 shares vested as a result of milestone or service period achievements. At December 31, 2013 and 2012, there were 570,000 and 823,334 shares, respectively, issuable under the unvested time-accelerated options. When achievement of the milestone is not deemed probable, the Company recognizes compensation expense associated with time-accelerated stock options initially over the vesting period of the respective stock option. When deemed probable of achievement, the Company expenses the remaining unrecognized compensation over the implicit service period. The Company recorded share-based compensation related to these time-accelerated options of less than $0.1 million, approximately $0.5 million and approximately $0.8 million during the years ended December 31, 2013, 2012 and 2011, respectively. At December 31, 2013, the Company had approximately $0.2 million in unrecognized share-based compensation, net of estimated forfeitures, related to these options.

The Company also grants to certain employees performance-based options to purchase shares of common stock. These options are subject to performance-based milestone vesting. During the year ended December 31, 2013, 15,000 shares vested as a result of performance milestone achievements. The Company recorded share-based compensation related to these performance-based options of approximately $0.1 million, approximately $1.0 million and approximately $0.5 million, respectively, during the years ended December 31, 2013, 2012 and 2011. At December 31, 2013, the unrecognized share-based compensation related to these performance-based options was approximately $3.9 million.

The following table summarizes stock option activity under the Company's share-based compensation plans, including performance-based options:

			Weighted- Average Exercise Price		Weighted- Average Contractual Life		Aggregate Intrinsic Value

					(in years)		(in thousands)
Outstanding at December 31, 2012	19,539,429		$	7.75		6.33	$	79,140
Granted	3,857,370		$	12.57
Exercised	(1,823,141	)	$	3.37
Cancelled	(645,784	)	$	12.50

Outstanding at December 31, 2013	20,927,874		$	8.87		6.14	$	71,616


Vested or expected to vest at December 31, 2013	19,873,836		$	8.82		6.07	$	68,903
Exercisable at December 31, 2013⁽¹⁾	11,537,396		$	6.89		4.77	$	59,014

(1): All stock options granted under the 2002 Equity Plan and the 2005 Equity Plan contain provisions allowing for the early exercise of such options into restricted stock. The exercisable shares disclosed above represent those that were vested as of December 31, 2013.

The weighted-average grant date fair value per share of options granted during the years ended December 31, 2013, 2012 and 2011 was $5.96, $6.62 and $6.21, respectively. The total intrinsic value of options exercised during the years ended December 31, 2013, 2012 and 2011 was approximately $19.7 million, approximately $8.6 million, and approximately $17.4 million, respectively. The intrinsic value was calculated as the difference between the fair value of the Company's common stock and the exercise price of the option issued.

As of December 31, 2013, there was approximately $34.8 million of unrecognized share-based compensation, net of estimated forfeitures, related to stock option grants with time-based vesting, which is expected to be recognized over a weighted average period of approximately 2.78 years. The total unrecognized share-based compensation cost will be adjusted for future changes in estimated forfeitures. There was no unrecognized share-based compensation related to restricted stock awards as of December 31, 2013.