M.EQUITY-BASED COMPENSATION

We currently maintain three equity compensation plans, including our Third Amended and Restated 2007 Equity Incentive Plan (the “2007 Plan”), our Amended and Restated 2000 Stock Plan (the “2000 Plan”) (under which we no longer grant awards) and the Lumara Health Inc. Amended and Restated 2013 Incentive Compensation Plan (the “Lumara Health 2013 Plan”). All outstanding stock options granted under each of our equity compensation plans have an exercise price equal to the closing price of a share of our common stock on the grant date.

In November 2007, the 2000 Plan was succeeded by our 2007 Plan and, accordingly, no further grants may be made under the 2000 Plan. Any shares that remained available for issuance under the 2000 Plan as of the date of adoption of the 2007 Plan are included in the number of shares that may be issued under the 2007 Plan. Any shares subject to outstanding awards granted under the 2000 Plan that expire or terminate for any reason prior to exercise will be added to the total number of shares available for issuance under the 2007 Plan. As of March 31, 2015, there were 1,087,015 shares remaining available for issuance under the 2007 Plan, not including shares subject to outstanding awards under the 2000 Plan. Further, all outstanding options under the 2007 Plan have either a seven or ten-year term and all outstanding options under the 2000 Plan have a ten-year term.

In November 2014, we assumed the Lumara Health 2013 Plan in connection with the acquisition of Lumara Health. The total number of shares issuable pursuant to awards under this plan as of the effective date of the acquisition and after taking into account any adjustments as a result of the acquisition, was 200,000 shares. As of March 31, 2015, there were 2,525 shares remaining available for issuance under the Lumara Health 2013 Plan. All outstanding options under the Lumara Health 2013 Plan have a ten-year term.

During the three months ended March 31, 2015, we also granted equity through inducement grants outside of the equity plans, as discussed below, to certain newly hired executive officers and employees.

Stock Options

The following table summarizes stock option activity in our equity plans for the three months ended March 31, 2015:

	2007 Equity Plan		2000 Equity Plan		2013 Lumara Equity Plan	Total
Outstanding at December 31, 2014	2,051,017		35,266		44,000	2,130,283
Granted	347,600		—		73,250	420,850
Exercised	(295,334	)	(8,637	)	—	(303,971	)
Expired or terminated	(46,576	)	—		—	(46,576	)
Outstanding at March 31, 2015	2,056,707		26,629		117,250	2,200,586

Restricted Stock Units

The following table summarizes RSU activity in our equity plans for the three months ended March 31, 2015:

	2007 Equity Plan		2000 Equity Plan	2013 Lumara Equity Plan	Total
Outstanding at December 31, 2014	360,826		—	20,000	380,826
Granted	215,300		—	60,225	275,525
Exercised	(37,100	)	—	—	(37,100	)
Expired or terminated	(5,750	)	—	—	(5,750	)
Outstanding at March 31, 2015	533,276		—	80,225	613,501

Other Equity Compensation Grants

During the three months ended March 31, 2015, our Board granted options to purchase 20,500 shares of our common stock and 2,500 RSUs to certain new-hire employees to induce them to accept employment with us. The options were granted at an exercise price equal to the fair market value of a share of our common stock on the respective grant dates and will be exercisable in four equal annual installments beginning on the first anniversary of the respective grant dates. The RSU grant will vest in three equal annual installments beginning on the first anniversary of the respective grant date. The foregoing grants were made pursuant to inducement grants outside of our stockholder approved equity plans as permitted under the NASDAQ Stock Market listing rules. We assessed the terms of these awards and determined there was no possibility that we would have to settle these awards in cash and therefore, equity accounting was applied.

Equity-based compensation expense

Equity-based compensation expense for the three months ended March 31, 2015 and 2014 consisted of the following (in thousands):

	Three Months Ended March 31,
	2015			2014
Cost of product sales	$	41		$	28
Research and development	478			449
Selling, general and administrative	2,149			1,453
Total equity-based compensation expense	2,668			1,930
Income tax effect	(1,035		)	—
After-tax effect of equity-based compensation expense	$	1,633		$	1,930

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.