M.EQUITY-BASED COMPENSATION

We currently maintain four equity compensation plans, namely our Third Amended and Restated 2007 Equity Incentive Plan, as amended (the “2007 Plan”), our Amended and Restated 2000 Stock Plan (the “2000 Plan”) (under which we no longer grant awards), 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 (discussed below) 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 September 30, 2015, there were 2,221,192 shares remaining available for issuance under the 2007 Plan, including 1,700,000 shares which were added to the 2007 Plan upon approval by our stockholders of an amendment to our 2007 Plan at our Meeting of Stockholders held on May 21, 2015 (the “Annual Meeting”). Such 2,221,192 amount does not include 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 September 30, 2015, there were 2,650 shares remaining available for issuance under the Lumara Health 2013 Plan, which are available for grants to certain employees, officers, directors, consultants, and advisors of AMAG and our subsidiaries who are newly-hired or who previously performed services for Lumara Health. All outstanding options under the Lumara Health 2013 Plan have a ten-year term.

At our Annual Meeting, our stockholders approved our 2015 ESPP, which authorizes the issuance of up to 200,000 shares of our common stock to eligible employees. The terms of the 2015 ESPP permit eligible employees to purchase shares (subject to certain plan and tax limitations) in semi-annual offerings through payroll deductions of up to an annual maximum of 10% of the employee’s “compensation” as defined in the 2015 ESPP. Shares are purchased at a price equal to 85% of the fair market value of our common stock on either the first or last business day of the offering period, whichever is lower. As of September 30, 2015, no shares have been issued under our 2015 ESPP.

During the nine months ended September 30, 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 nine months ended September 30, 2015:


	2007 Equity	2000 Equity	2013 Lumara
	Plan	Plan	Equity Plan	Total
Outstanding at December 31, 2014	2,051,017	35,266	44,000	2,130,283
Granted	840,475	—	76,000	916,475
Exercised	(652,181)	(21,226)	—	(673,407)
Expired or terminated	(257,146)	—	—	(257,146)
Outstanding at September 30, 2015	1,982,165	14,040	120,000	2,116,205

Restricted Stock Units

The following table summarizes RSU activity in our equity plans for the nine months ended September 30, 2015:


	2007 Equity	2000 Equity	2013 Lumara
	Plan	Plan	Equity Plan	Total
Outstanding at December 31, 2014	360,826	—	20,000	380,826
Granted	253,954	—	60,225	314,179
Vested	(72,832)	—	—	(72,832)
Expired or terminated	(95,243)	—	(2,875)	(98,118)
Outstanding at September 30, 2015	446,705	—	77,350	524,055

Other Equity Compensation Grants

During the nine months ended September 30, 2015, our Board or Compensation Committee granted options to purchase 220,000 shares of our common stock and 82,250 RSUs to certain new-hire employees to induce them to accept employment with us (collectively, “Inducement Awards”). 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 grants will vest in three equal annual installments beginning on the first anniversary of the respective grant dates. 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. As of September 30, 2015, there were 873,100 options and 187,575 RSUs outstanding under Inducement Awards.

Equity-based compensation expense

Equity-based compensation expense for the three and nine months ended September 30, 2015 and 2014 consisted of the following (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Cost of product sales	$	159	$	32	$	254	$	89
Research and development		1,028		466		2,071		1,274
Selling, general and administrative		3,701		1,448		9,247		4,790
Total equity-based compensation expense	$	4,888	$	1,946	$	11,572	$	6,153
Income tax effect		(871)		—		(3,464)		—
After-tax effect of equity-based compensation expense	$	4,017	$	1,946	$	8,108	$	6,153

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.

As a result of our historical net losses, we did not provide an income tax effect incurred during the three and nine months ended September 30, 2014.