STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

15. STOCK-BASED COMPENSATION

In June 2013, the Company’s stockholders approved the 2013 Employee Stock Purchase Plan (the “2013 ESPP”) which authorized 0.3 million shares of common stock available to be issued. In June 2016 and 2019, the Company’s stockholders approved an additional 0.3 million and 0.5 million shares, respectively, of common stock available for issuance under the 2013 ESPP. As of December 31, 2021, 0.4 million shares of common stock remain available for future grant under the 2013 ESPP.

In September 2014, the Company initiated the 2014 Employment Commencement Incentive Plan (the “2014 Plan”). The 2014 Plan, which authorized 0.6 million shares of common stock to be issued and allows for the grant of stock options, SARs, RSAs, RSUs, performance shares and performance units. As of December 31, 2021, 7.0 million shares have been added to the Company's 2014 Plan. As of December 31, 2021, 1.5 million shares of common stock remain available for future grant under the 2014 Plan.

In June 2018, the Company’s stockholders approved the 2018 Equity Incentive Plan (the “2018 Plan”). The 2018 Plan, which authorized 2.9 million shares of common stock to be issued, allows for the grant of stock options, SARs, RSAs, RSUs, performance shares and performance units. In June 2020, an additional 3.8 million shares of common stock were approved by the Company’s stockholders and added to the 2018 Plan. Together with the roll-over shares from the Company’s 2011 Equity Incentive Plan, 4.2 million shares of common stock remain available for future grant under the 2018 Plan as of December 31, 2021.

Stock Options

In general, stock options have a ten-year term and vest over a four-year period, with one-fourth of the underlying shares vesting on the first anniversary of the grant and 1/48th of the underlying shares vesting monthly thereafter, such that the underlying shares will be fully vested on the fourth anniversary of the grant, subject to the terms of the applicable plan under which they were granted.

The fair values of stock options granted during the periods presented are measured on the date of grant using the Black-Scholes-Merton option-pricing model, with the following assumptions:


	For the Year Ended December 31,
	2021	2020	2019
Risk-free interest rate (1)	0.4 - 1.3%	0.1 - 1.3%	1.4 - 2.5%
Expected dividend yield (2)	—	—	—
Expected term (3)	4.99 years	5.00 years	5.04 years
Expected volatility (4)	60.1 - 70.8%	57.3 - 68.2%	52.5 - 68.9%

(1)

The risk-free interest rate is estimated using an average of Treasury bill interest rates over a historical period commensurate with the expected term of the option that correlates to the prevailing interest rates at the time of grant.

(2)

The expected dividend yield is zero as the Company has not paid any dividends to date and does not expect to pay dividends in the future.

(3)

The expected term is estimated using historical exercise behavior.

(4)

The expected volatility is the implied volatility in exchange-traded options of the Company’s common stock.

The amounts estimated according to the Black-Scholes-Merton option-pricing model may not be indicative of the actual values realized upon the exercise of these options by the holders.

The following tables summarize the Company’s stock option activity for each of the periods indicated:


	For the Year Ended December 31,
	2021
				Weighted
				Average
				Exercise
	Shares			Price
Grants outstanding at beginning of the period		7,844,947		$	70.61
Granted		1,685,860			86.41
Exercised		(283,622	)		45.71
Cancelled and forfeited		(1,050,264	)		112.18
Grants outstanding at end of the period		8,196,921		$	69.39

Grants exercisable at end of the period		2,532,438		$	84.71
Grants vested and expected to vest at end of the period		7,867,722		$	68.17

The weighted-average grant date fair value per share of stock options granted during the years ended December 31, 2021, 2020 and 2019 was $48.16, $61.38 and $70.93, respectively.


			Weighted
	Aggregate		Average
	Intrinsic		Remaining
	Value		Contractual
	(in thousands)		Life (Years)
Options outstanding at December 31, 2021	$	248,479		6.4
Options exercisable at December 31, 2021	$	59,069		5.6
Options vested and expected to vest at December 31, 2021	$	247,434		6.3

The following table summarizes the Company’s stock options vested and exercised for each of the periods indicated:


	For the Year Ended December 31,
	2021		2020		2019
	(in thousands)
Aggregate grant date fair value of stock options vested	$	79,068	$	80,355	$	50,878
Aggregate intrinsic value of stock options exercised	$	10,622	$	144,750	$	109,707

As of December 31, 2021, there were 3,300,000 options with service and market conditions included in the grants outstanding for the Company’s CEO, which have a five-year cliff vesting schedule and a grant date fair value of $13.48 determined by a lattice model with Monte Carlo simulations. These options have an exercise price of $34.65 and were granted in June 2017.

Restricted Stock Awards

The Company has granted RSAs to members of its board of directors and certain employees. The following table summarizes the Company’s RSA activity for each of the periods indicated:


	For the Year Ended December 31,
	2021
				Weighted
				Average
				Grant Date
	Shares			Fair Value
Grants outstanding at beginning of the period		48,875		$	50.11
Granted		—			—
Vested		(48,875	)		50.11
Forfeited		—			—
Grants outstanding at end of the period		—		$	—

Restricted Stock Units

The Company grants RSUs to members of its board of directors and employees. The following table summarizes the Company’s RSU activity for the periods indicated:


	For the Year Ended December 31,
	2021
				Weighted
				Average
				Grant Date
	Shares			Fair Value
Grants outstanding at beginning of the period		947,079		$	121.46
Granted		987,464			85.32
Vested		(276,980	)		119.54
Forfeited		(337,357	)		106.37
Grants outstanding at end of the period		1,320,206		$	98.69

2013 Employee Stock Purchase Plan

Under the Company’s 2013 ESPP, participating employees purchase common stock through payroll deductions. The purchase price is equal to 85% of the lower of the closing price of the Company’s common stock on the first business day and the last business day of the relevant purchase period. The 24-month offering period will end on August 31, 2023. The following table summarizes the Company’s ESPP activity for each of the periods indicated:


	For the Year Ended December 31,
	2021		2020		2019
Number of shares purchased		111,171		102,031		92,086
Proceeds received (in millions)	$	7.8	$	7.5	$	5.1

Stock-based Compensation Expense

The following table summarizes stock-based compensation expense by function included within the consolidated statements of operations and comprehensive loss:


	For the Year Ended December 31,
	2021		2020		2019
	(in thousands)
Research and development	$	50,526	$	41,671	$	27,681
Selling, general and administrative		63,417		66,399		50,921
Total stock-based compensation	$	113,943	$	108,070	$	78,602

The following table summarizes stock-based compensation expense by grant type included within the consolidated statements of operations and comprehensive loss:


	For the Year Ended December 31,
	2021		2020		2019
	(in thousands)
Stock options	$	68,995	$	68,832	$	53,427
Restricted stock awards/units		40,055		33,457		20,103
Employee stock purchase plan		4,893		5,781		5,072
Total stock-based compensation	$	113,943	$	108,070	$	78,602

As of December 31, 2021, there was $175.7 million of total unrecognized stock-based compensation expense related to the Company’s stock-based compensation plans. The expense is expected to be recognized over a weighted-average period of approximately 3 years. Of this amount, $92.4 million relates to options with service conditions only, $4.3 million relates to awards with service and market conditions, and the remaining $79.0 million related to restricted stock units with service conditions only.