Equity-Based Compensation

6 Months Ended

Jun. 30, 2019

Share-based Payment Arrangement [Abstract]

Equity-Based Compensation

EQUITY‑BASED COMPENSATION

We currently maintain three equity compensation plans; our 2019 Equity Incentive Plan (the “2019 Plan”), which was approved by our stockholders at our 2019 annual meeting and replaced our Fourth Amended and Restated 2007 Equity Incentive Plan (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”). 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 six months ended June 30, 2019:

	2019 Equity	2007 Equity		2013 Lumara		Inducement
	Plan	Plan		Equity Plan		Grants		Total
Outstanding at December 31, 2018	—	2,781,786		124,450		810,343		3,716,579
Granted	145,408	465,009		34,700		49,166		694,283
Exercised	—	(2,025	)	—		—		(2,025	)
Expired or terminated	—	(482,768	)	(26,275	)	(68,250	)	(577,293	)
Outstanding at June 30, 2019	145,408	2,762,002		132,875		791,259		3,831,544

Restricted Stock Units

The following table summarizes RSU activity for the six months ended June 30, 2019:

	2019 Equity	2007 Equity		2013 Lumara		Inducement
	Plan	Plan		Equity Plan		Grants		Total
Outstanding at December 31, 2018	—	1,041,141		2,101		85,293		1,128,535
Granted	64,928	1,023,847		1,100		13,385		1,103,260
Vested	—	(348,845	)	(533	)	(29,076	)	(378,454	)
Expired or terminated	—	(231,855	)	—		—		(231,855	)
Outstanding at June 30, 2019	64,928	1,484,288		2,668		69,602		1,621,486

In February 2019, we granted RSUs under our 2007 Plan to certain members of our senior management covering a maximum of 365,591 shares of common stock. These performance-based RSUs will vest, if at all, on February 24, 2022, 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 June 30, 2019, the maximum shares of common stock that may be issued under these awards is 347,591. The maximum aggregate total fair value of these RSUs is $4.5 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 six months ended June 30, 2019 and 2018 consisted of the following (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2019		2018		2019		2018
Cost of product sales	$	198	$	107	$	401	$	307
Research and development	680		608		1,360		1,328
Selling, general and administrative	3,656		4,077		6,981		7,948
Total equity-based compensation expense	4,534		4,792		8,742		9,583
Income tax effect	—		835		—		—
After-tax effect of equity-based compensation expense	$	4,534	$	5,627	$	8,742	$	9,583

In addition to the equity-based compensation expense presented in the table above, we incurred $0.7 million of equity-based compensation expense related to the restructuring activities during the first quarter of 2019, which is classified within restructuring expense on our condensed consolidated statement of operations for the six months ended June 30, 2019.