As of March 31, 2019, the authorized capital stock of the Company included 175,000,000 shares of common stock, par value $0.00001 per share, of which 117,122,262 and 116,887,518 shares were issued and outstanding at March 31, 2019 and December 31, 2018, respectively; and 25,000,000 shares of undesignated preferred stock, par value $0.00001 per share, of which 0 shares were issued and outstanding at March 31, 2019 and December 31, 2018.

In May 2016, the Company established an at-the-market, or ATM, equity offering program pursuant to which it was able to offer and sell up to $75.0 million of common stock at the then current market prices from time to time. Through December 31, 2018, the Company sold 1,775,214 shares of common stock under this program with net proceeds of $22.6 million, of which 694,306 shares were sold in the three months ended March 31, 2018 for net proceeds of approximately $10.5 million. During the three months ended March 31, 2019, the Company did not complete any sales of common stock under this program.

From April 1, 2019 through May 9, 2019, the Company sold 1,365,787 shares of common stock under the ATM program with net proceeds of $9.3 million.

In March 2018, the Company completed a follow-on public equity offering, whereby the Company sold 8,500,000 shares of common stock at a public offering price of $10.50 per share. The aggregate net proceeds received by the Company from the offering were approximately $84.8 million, net of underwriting discounts and commissions and estimated offering expenses payable by the Company.

On February 28, 2014, the Company’s Board of Directors adopted its 2014 Incentive Plan and its 2014 Employee Stock Purchase Plan, or the ESPP, which were subsequently approved by its shareholders and became effective upon the closing of the Company’s initial public offering on March 25, 2014. The Company’s 2014 Incentive Plan was subsequently amended on December 11, 2018, which amendment did not require shareholder approval. The Company’s 2014 Incentive Plan, as amended, is referred to as the 2014 Plan. The 2014 Plan replaced the Company’s Amended and Restated 2008 Equity Incentive Plan, the 2008 Plan; however, options or other awards granted under the 2008 Plan prior to the adoption of the 2014 Plan that have not been settled or forfeited remain outstanding and effective. In May 2016, the Company’s Board of Directors approved an inducement award program that was separate from the Company’s equity plans and which, consistent with Nasdaq Listing Rule 5635(c)(4), did not require shareholder approval, or the Inducement Award Program. For 2019, the Company authorized the issuance of up to 3,150,000 shares for the purpose of granting options to purchase shares of the Company’s common stock to new hires under the Inducement Award Program, of which 299,700 options to purchase Akebia Shares were granted during the three months ended March 31, 2019 and 299,700 options to purchase Akebia Shares remained outstanding at March 31, 2019.

The 2014 Plan allows for the granting of stock options, stock appreciation rights, or SARs, restricted stock, unrestricted stock, RSUs, performance awards and other awards convertible into or otherwise based on shares of the Company’s common stock. Dividend equivalents may also be provided in connection with an award under the 2014 Plan. The Company’s employees, officers, directors and consultants and advisors are eligible to receive awards under the 2014 Plan. The Company initially reserved 1,785,000 shares of its common stock for the issuance of awards under the 2014 Plan. The 2014 Plan provides that the number of shares reserved and available for issuance under the 2014 Plan will automatically increase annually on January 1 of each calendar year, by an amount equal to three percent (3%) of the number of Akebia Shares outstanding on a fully diluted basis as of the close of business on the immediately preceding December 31, or the 2014 Plan Evergreen Provision. The Company’s Board of Directors may act prior to January 1 of any year to provide that there will be no automatic increase in the number of Akebia Shares available for grant under the 2014 Plan for that year (or that the increase will be less than the amount that would otherwise have automatically been made). On December 12, 2018, in connection with the consummation of the Merger, the Company assumed outstanding and unexercised options to purchase Keryx Shares, as adjusted by the Exchange Multiplier pursuant to the terms of the Merger Agreement, under the following Keryx equity plans, or the Keryx Equity Plans: the Keryx 1999 Share Option Plan, the Keryx 2004 Long-Term Incentive Plan, the Keryx 2007 Incentive Plan, the Keryx Amended and Restated 2013 Incentive Plan, and the Keryx 2018 Equity Incentive Plan, or the Keryx 2018 Plan. In addition, the number of Keryx Shares available for issuance under the Keryx 2018 Plan, as adjusted by the Exchange Multiplier pursuant to the terms of the Merger Agreement, may be used for awards granted by the Company under its 2014 Plan, or the Assumed Shares, provided that the Company uses the Assumed Shares for individuals who were not employees or directors of the Company prior to the consummation of the Merger. During the three months ended March 31, 2019, the Company granted 2,028,625 options to purchase Akebia Shares to employees under the 2014 Plan, 299,700 options to purchase Akebia Shares to employees under the Inducement Award Program, 1,390,000 Akebia RSUs to employees under the 2014 Plan, and no options to purchase Akebia Shares to directors under the 2014 Plan.

The ESPP provides for the issuance of options to purchase shares of the Company’s common stock to participating employees at a discount to their fair market value. The maximum aggregate number of shares of the Company’s common stock available for purchase pursuant to the exercise of options granted under the ESPP will be the lesser of (a) 262,500 shares, increased on each anniversary of the adoption of the ESPP by one percent (1%) of the total shares of common stock then outstanding, the ESPP Evergreen Provision, and (b) 739,611 shares, which is equal to five percent (5%) of the total shares of common stock outstanding on the date of the adoption of the ESPP on a fully diluted, as converted basis. Under the ESPP, each offering period is six months, at the end of which employees may purchase shares of the Company’s common stock through payroll deductions made over the term of the offering. The per-share purchase price at the end of each offering period is equal to the lesser of eighty-five percent (85%) of the closing price of the Company’s common stock at the beginning or end of the offering period.

The Company has reserved for future issuance the following number of shares of common stock:

	March 31, 2019		December 31, 2018
Common stock options and RSUs outstanding ⁽¹⁾		12,320,514		9,309,204
Shares available for issuance under Akebia equity plans ⁽²⁾		8,027,219		4,526,563
Warrant to purchase common stock		509,611		509,611
Shares available for issuance under the ESPP ⁽³⁾		563,545		603,522
Total		21,420,889		14,948,900

⁽¹⁾	Includes awards granted under the 2014 Plan and the Inducement Award Program and awards issued in connection with the Merger.

⁽²⁾

On January 1, 2019, January 1, 2018 and January 1, 2017, the shares reserved for future grants under the 2014 Plan increased by 3,801,198, 1,575,329 and 1,265,863 shares, respectively, pursuant to the 2014 Plan Evergreen Provision. On December 12, 2018, the shares reserved for future grants under the 2014 Plan increased by 2,323,213 shares as a result of the Company’s addition of the Assumed Shares to the 2014 Plan. On December 19, 2017, the Company’s Board of Directors approved 750,000 shares for issuance as option awards in fiscal year 2018 under the Inducement Award Program. Additionally, on January 30, 2019, the Company’s Board of Directors approved 3,150,000 shares for issuance as option awards in fiscal year 2019 under the Inducement Award Program, or the 2019 Inducement Shares.

⁽³⁾

On February 28, 2018 and February 28, 2017, the shares reserved for future issuance under the ESPP remained unchanged. There were no increases in the shares reserved for future issuance pursuant to the ESPP Evergreen Provision subsequent to February 28, 2016 as the maximum aggregate number of shares available for purchase had reached its cap of 739,611.

On February 28, 2019, as part of the Company’s annual grant of equity, the Company issued 2,028,625 stock options to employees. In addition, the Company issues stock options to directors, new hires and occasionally to other employees not in connection with the annual grant process. Options granted by the Company vest over periods of between 12 and 48 months, subject, in each case, to the individual’s continued service through the applicable vesting date. Options vest either 100% on the first anniversary of the grant date or in installments of (i) 25% at the one year anniversary and (ii) 12 equal quarterly installments beginning after the one year anniversary of the grant date, subject to the individual’s continuous service with the Company. Options generally expire ten years after the date of grant. The Company recorded approximately $1.1 million and $1.9 million of stock-based compensation expense related to stock options during the three months ended March 31, 2019 and 2018, respectively.

On December 12, 2018, pursuant to the Merger Agreement, each outstanding and unexercised performance-based option to acquire Keryx Shares granted under a Keryx equity plan converted into a service-based option or performance-based option to acquire Akebia Shares, with the number of shares and exercise price adjusted by the Exchange Multiplier. As a result, the Company issued 233,954 performance-based options related to the Merger. The Company did not have any performance based-options outstanding in fiscal year 2018 prior to the consummation of the Merger. The potential range of shares issuable pursuant to the Company’s performance-based options range from 0% to 100% of the target shares based on financial measures. Performance-based options vest up to 50% upon achievement of performance condition and up to 50% one year following achievement of the performance condition.

On February 28, 2019, as part of the Company’s annual grant of equity, the Company issued 1,384,775 RSUs to employees. In addition, the Company occasionally issues RSUs not in connection with the annual grant process to employees. RSUs granted by the Company vest in one of the following ways: 100% of each RSU grant vests on either the first or the third anniversary of the grant date, or one third of each RSU grant vests on the first, second and third anniversaries of the grant date, subject, in each case, to the individual’s continued service through the applicable vesting date. The expense recognized for these awards is based on the grant date fair value of the Company’s common stock multiplied by the number of units granted and recognized on a straight-line basis over the vesting period. The Company recorded approximately $0.9 million and $0.2 million of stock-based compensation expense related to the Akebia employee RSUs during the three months ended March 31, 2019 and 2018, respectively.

The first offering period under the ESPP opened on January 2, 2015. The Company issued 39,977 shares during the three months ended March 31, 2019. The Company recorded approximately $48,000 and $61,000 of stock-based compensation expense related to the ESPP during the three months ended March 31, 2019 and 2018, respectively.

The Company has classified its stock-based compensation expense related to share-based awards as follows:

	Three Months Ended
	March 31, 2019		March 31, 2018
	(in thousands)
Research and development	$	878	$	618
Selling, general and administrative		1,216		1,614
Total	$	2,094	$	2,232

	Three Months Ended
	March 31, 2019		March 31, 2018
	(in thousands)
Stock options	$	1,112	$	1,941
Restricted stock units		934		230
Employee stock purchase plan		48		61
Total	$	2,094	$	2,232