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Employee Equity-Based Compensation
 9 Months Ended
Sep. 30, 2020
Share-based Payment Arrangement [Abstract]  
Employee Equity-Based Compensation
NOTE 13. EMPLOYEE EQUITY-BASED COMPENSATION

The following table summarizes option activity under all plans for the nine months ended September 30, 2020:

Number of SharesWeighted Average Exercise Price per Share
Options Outstanding January 1, 202010,132,562 $12.28 
Granted1,693,083 8.55 
Forfeited(486,864)13.86 
Exercised(2,219,281)2.01 
Expired(167,187)19.83 
Options Outstanding September 30, 20208,952,313 $13.89 
The table below summarizes the resulting weighted average inputs used to calculate the estimated fair value of options awarded for the three months ended September 30, 2020 and 2019:

Three Months Ended September 30,
20202019
Expected term (in years)6.146.46
Volatility62 %59 %
Expected dividends— — 
Risk free interest rates0.42 %1.47 %
Weighted average fair value$8.10 $9.66 

The following table shows summary information for outstanding options and options that are exercisable (vested) as of September 30, 2020:

Options
Outstanding		Options
Exercisable
Number of options8,952,313 4,767,274 
Weighted average remaining contractual term (in years)6.264.51
Weighted average exercise price$13.89 $13.28 
Weighted average fair value$8.73 $8.60 
Aggregate intrinsic value (in thousands)$15,514 $12,387 

The following table summarizes RSU and restricted stock award activity for the nine months ended September 30, 2020:

Number of SharesWeighted Average Grant Date Fair Value per Share
Outstanding January 1, 202014,332 $16.66 
Granted807,751 11.47 
Forfeited(31,307)9.72 
Vested/released(68,641)9.85 
Outstanding September 30, 2020722,135 $11.80 

The table below summarizes equity-based compensation expense for the three and nine months ended September 30, 2020 and 2019 (in thousands):

Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Cost of sales$119 $65 $249 $172 
Research and development1,349 897 2,807 3,226 
Sales, general and administrative3,208 2,169 9,235 6,011 
$4,676 $3,131 $12,291 $9,409 
The table below summarizes share-based compensation cost capitalized to inventory or inventory transferred to property and equipment (also referred to as instruments) for the three and nine months ended September 30, 2020 and 2019 (in thousands):


Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Cost capitalized to inventory
$61 $92 $199 $332 

As of September 30, 2020, unrecognized equity-based compensation expense related to unvested stock options and unvested RSUs was $17.4 million and $3.9 million, respectively. This is expected to be recognized over the years 2020 through 2025.

Included in the above-noted stock options outstanding and stock compensation expense are performance-based stock options which vest only upon the achievement of certain targets. Performance-based stock options are generally granted at-the-money, contingently vest over a period of 1 to 2 years, depending on the nature of the performance goal, and have contractual lives of 10 years. These options were valued in the same manner as the time-based options, with the assumption that performance goals will be achieved. The inputs for expected volatility, expected dividends, and risk-free rate used in estimating those options’ fair value are the same as the time-based options issued under the plan. The expected term for performance-based stock options is 5 to 7 years. However, the Company only recognizes stock compensation expense to the extent that the targets are determined to be probable of being achieved, which triggers the vesting of the performance options.

In August 2018, the Company granted 225,000 performance-based stock options. Of these performance-based stock options performance obligations had been met for 75,000 options which became exercisable in the prior year. The remaining 150,000 options were forfeited for the performance targets not being achieved. Of the total options forfeited, 50,000 of those options were forfeited during the nine months ended September 30, 2020. No stock compensation expense for the forfeited performance-based stock options was recognized. The stock compensation expense for the vested options was recorded in prior periods.

During the nine months ended September 30, 2020, the Company granted another 105,000 performance-based stock options. During the three and nine months ended September 30, 2020, 22,500 performance-based stock options vested due to the performance obligations being achieved. None of these options have been forfeited as of September 30, 2020.

The table below summarizes share-based compensation cost in connection with performance-based stock options for the nine months ended September 30, 2020 and 2019 (in thousands):


Nine Months Ended September 30,
20202019
Performance-based stock option expense
$109 $107 

Included in the above-noted RSU and restricted stock award outstanding amount are performance-based RSU's which vest only upon the achievement of certain targets. Performance-based RSU's contingently vest over a period of 1 to 3 years, depending on the nature of the performance goal, and have contractual lives of 10 years. These units were valued in the same manner as other RSUs, based on the published closing market price on the day before the grant date. However, the Company only recognizes stock compensation expense to the extent that the targets are determined to be probable of being achieved, which triggers the vesting of the performance options.

During the nine months ended September 30, 2020, the Company granted 361,338 performance-based RSU's. During the three and nine months ended September 30, 2020, 40,500 performance-based RSU's were released due to the performance obligations being achieved. At September 30, 2020 306,785 performance-based RSU's were outstanding. None of these performance-based RSU have been forfeited due to performance obligations not being achieved.
The table below summarizes share-based compensation cost in connection with performance-based stock options for the nine months ended September 30, 2020 and 2019 (in thousands):

Nine Months Ended September 30,
20202019
Performance-based RSU expense
$401 $—