EQUITY‑BASED COMPENSATION

We currently maintain three equity compensation plans; our Fourth Amended and Restated 2007 Equity Incentive Plan, as amended (the “2007 Plan”), the Lumara Health Inc. Amended and Restated 2013 Incentive Compensation Plan (the “Lumara Health 2013 Plan”) and our 2015 Employee Stock Purchase Plan (“2015 ESPP”). In June 2018 at our annual meeting of stockholders, our stockholders approved (a) an amendment to our 2007 Plan to, among other things, increase the number of shares of our common stock available for issuance thereunder by 1,043,000 shares and (b) an amendment to our 2015 ESPP to increase the maximum number of shares of our common stock that will be made available for sale thereunder by 500,000 shares. All outstanding stock options granted under each of our equity compensation plans other than our 2015 ESPP have an exercise price equal to the closing price of a share of our common stock on the grant date.

Stock Options

The following table summarizes stock option activity for the nine months ended September 30, 2018:



	2007 Equity		2013 Lumara		Inducement
	Plan		Equity Plan		Grants		Total
Outstanding at December 31, 2017	2,590,373		125,536		815,450		3,531,359
Granted	836,846		35,400		102,393		974,639
Exercised	(133,547	)	(2,812	)	—		(136,359	)
Expired or terminated	(549,156	)	(30,675	)	(90,000	)	(669,831	)
Outstanding at September 30, 2018	2,744,516		127,449		827,843		3,699,808

Restricted Stock Units

The following table summarizes RSU activity for the nine months ended September 30, 2018:



	2007 Equity		2013 Lumara		Inducement
	Plan		Equity Plan		Grants		Total
Outstanding at December 31, 2017	966,623		11,611		91,541		1,069,775
Granted	752,797		1,600		48,418		802,815
Vested	(370,388	)	(10,650	)	(47,764	)	(428,802	)
Expired or terminated	(306,234	)	(460	)	(2,502	)	(309,196	)
Outstanding at September 30, 2018	1,042,798		2,101		89,693		1,134,592

In March 2018, we granted RSUs under our 2007 Plan to certain members of our senior management covering a maximum of 206,250 shares of common stock. These performance-based RSUs will vest, if at all, on March 1, 2021, based on our total shareholder return performance measured against the median total shareholder return of a defined group of companies over a three-year period. As of September 30, 2018, the maximum shares of common stock that may be issued under these awards is 188,250. The maximum aggregate total fair value of these RSUs is $3.5 million, which is being recognized as expense over a period of three years from the date of grant, net of any actual forfeitures.

Equity-Based Compensation Expense

Equity-based compensation expense for the three and nine months ended September 30, 2018 and 2017 consisted of the following (in thousands):



	Three Months Ended September 30,					Nine Months Ended September 30,
	2018		2017			2018		2017
Cost of product sales	$	281	$	432		$	588	$	690
Research and development	568		799			1,896		2,651
Selling, general and administrative	4,202		4,410			12,149		12,037
Total equity-based compensation expense	5,051		5,641			14,633		15,378
Income tax effect	—		(1,674		)	—		(4,569		)
After-tax effect of equity-based compensation expense	$	5,051	$	3,967		$	14,633	$	10,809

We reduce the compensation expense being recognized to account for estimated forfeitures, which we estimate based primarily on historical experience, adjusted for unusual events such as corporate restructurings, which may result in higher than expected turnover and forfeitures. Under current accounting guidance, forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. We adopted ASU No. 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting during the first quarter of 2017. We will continue to use the current method of estimated forfeitures each period rather than accounting for forfeitures as they occur.