Stockholders' Equity

12 Months Ended

Dec. 31, 2016

Stockholders' Equity

5. Stockholders’ Equity

Common Stock and Warrants

On April 6, 2007, the Company issued warrants to an individual at Scripps to purchase up to 150,000 shares of common stock at $0.01 per share, as discussed in Note 10. The warrants have a seven-year term and are exercisable based on performance criteria as detailed in the warrant agreement during 2014. The warrant expired prior to the performance criteria being achieved.

Stock-Based Compensation

The Company recorded stock-based compensation expense of approximately $4,595,000, $3,598,000 and $1,766,000 for the years ended December 31, 2016, 2015 and 2014, respectively, for share-based awards granted under the Second Amended and Restated 2001 Repligen Corporation Stock Plan (the “2001 Plan”) and the Repligen Corporation 2012 Stock Option and Incentive Plan (the “2012 Plan,” and collectively with the 2001 Plan and the 1992 Repligen Corporation Stock Option Plan, the “Plans”).

The following table presents stock-based compensation expense in the Company’s consolidated statements of operations (in thousands):

	Years ended December 31,
	2016		2015		2014
Cost of product revenue	$	341	$	213	$	128
Research and development		537		336		185
Selling, general and administrative		3,717		3,049		1,453
Total	$	4,595	$	3,598	$	1,766

During 2016, the Company modified certain stock option grants for its former senior vice president of research and development in conjunction with his retirement. As part of the April 2016 transition agreement, all outstanding equity awards continued to vest through December 31, 2016, and fifty percent (50%) of the option awards that are unvested on February 28, 2017 immediately vested and became exercisable as of that date. As a result of these modifications to his share-based payment arrangements, the Company incurred stock compensation expense of $292,000 for the year ended December 31, 2016. This expense was recorded to research and development expense on the Company’s consolidated statement of operations.

During 2015, the Company modified certain stock option grants for its former president and chief executive officer in conjunction with his retirement. As part of the January 2015 transition agreement, all outstanding equity awards continued to vest through December 31, 2015, and fifty percent (50%) of the option awards that are unvested on December 31, 2015 immediately vested and became exercisable as of that date. As a result of these modifications to his share-based payment arrangements, the Company incurred stock compensation expense of $826,000 for the year ended December 31, 2015. This expense was recorded to selling, general and administrative expense on the Company’s consolidated statement of operations.

The 2012 Plan allows for the granting of incentive and nonqualified options to purchase shares of common stock, restricted stock and other equity awards. Incentive options granted to employees under the Plans generally vest over a three to five-year period, with 20%-33% vesting on the first anniversary of the date of grant and the remainder vesting in equal yearly installments thereafter. Nonqualified options issued to non-employee directors and consultants under the Plans generally vest over one year. Options granted under the Plans have a maximum term of ten years from the date of grant and generally, the exercise price of the stock options equals the fair market value of the Company’s common stock on the date of grant. At December 31, 2016, options to purchase 1,236,586 shares were outstanding under the Plans. At December 31, 2016, 1,821,576 shares were available for future grant under the 2012 Plan.

The Company uses the Black-Scholes option pricing model to calculate the fair value of share-based awards on the grant date. The fair value of share-based awards granted during the years ended December 31, 2016, 2015 and 2014 were calculated using the following estimated assumptions:

	2016	2015	2014
Expected term (years)	6.7 – 7.1	6.6 – 7.2	6.5
Volatility	50.85 – 51.01%	50.09 – 51.89%	51.00 – 51.71%
Risk-free interest rate	1.51 – 2.37%	1.67 – 2.03%	1.88 – 2.11%
Expected dividend yield	—	—	—

Information regarding option activity for the year ended December 31, 2016 under the Plans is summarized below:

	Options Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (in years)		(in thousands) Aggregate Intrinsic Value
Options outstanding at December 31, 2015		1,054,584		$	12.28
Granted		183,619			27.12
Exercised		(266,863	)		7.72
Forfeited/cancelled		(88,592	)		10.97
Options outstanding at December 31, 2016		882,748		$	16.88		6.75	$	12,733
Options exercisable at December 31, 2016		427,310		$	11.11		5.23	$	8,617
Vested and expected to vest at December 31, 2016(1)		837,660		$	16.82		6.70	$	12,140

(1) Represents the number of vested options as of December 31, 2016 plus the number of unvested options expected to vest as of December 31, 2016 based on the unvested outstanding options at December 31, 2016 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing price of the common stock on December 30, 2016, the last business day of 2016, of $30.82 per share and the exercise price of each in-the-money option) that would have been received by the option holders had all option holders exercised their options on December 31, 2016. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2016, 2015 and 2014 was approximately $5,043,000, $3,638,000 and $9,656,000, respectively.

The weighted average grant date fair value of options granted during the years ended December 31, 2016, 2015 and 2014 was $14.16, $16.05 and $9.45, respectively. The total fair value of stock options that vested during the years ended December 31, 2016, 2015 and 2014 was approximately $1,713,000, $1,536,000 and $751,000, respectively.

Information regarding restricted stock unit activity for the year ended December 31, 2016 under the Plans is summarized below:

	Options Outstanding			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (in years)		(in thousands) Aggregate Intrinsic Value
Restricted stock units outstanding at December 31, 2015		186,351		$	—
Granted		251,384			—
Exercised		(63,017	)		—
Forfeited/cancelled		(20,880	)		—
Restricted stock units outstanding at December 31, 2016		353,838		$	—		9.01	$	10,905
Restricted stock units exercisable at December 31, 2016		—		$	—		—	$	—
Vested and expected to vest at December 31, 2016(1)		309,229		$	—		9.01	$	9,530

(1) Represents the number of vested restricted stock units as of December 31, 2016 plus the number of unvested restricted stock units expected to vest as of December 31, 2016 based on the unvested outstanding restricted stock units at December 31, 2016 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (equal to the closing price of the common stock on December 30, 2016, the last business day of 2016, of $30.82 per share, as restricted stock units do not have an exercise price) that would have been received by the restricted stock unit holders had all holders exercised on December 31, 2016. The aggregate intrinsic value of restricted stock units exercised during the years ended December 31, 2016, 2015 and 2014 was approximately $1,671,000, $1,304,000 and $819,000, respectively.

The weighted average grant date fair value of restricted stock units granted during the years ended December 31, 2016, 2015 and 2014 was $27.25, $29.07 and $16.79, respectively. The total fair value of restricted stock units that vested during the years ended December 31, 2016, 2015 and 2014 was approximately $1,474,000, $781,000 and $333,000, respectively.

As of December 31, 2016, there was $9,555,000 of total unrecognized compensation cost related to unvested share-based awards. This cost is expected to be recognized over a weighted average remaining requisite service period of 2.97 years. The Company expects 719,579 unvested options and restricted stock units to vest over the next five years.