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STOCK-BASED COMPENSATION (Tables)
 12 Months Ended
Dec. 31, 2017
Summary of Stock Option Activity

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

 

 

 

For the Year Ended December 31,

 

 

 

2017

 

 

2016

 

 

2015

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

Average

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

 

 

Exercise

 

 

 

 

 

 

Exercise

 

 

 

 

 

 

Exercise

 

 

 

Shares

 

 

 

 

Price

 

 

Shares

 

 

Price

 

 

Shares

 

 

Price

 

Grants outstanding at beginning of

   the period

 

 

5,436,951

 

 

 

 

$

22.70

 

 

 

6,515,976

 

 

$

23.91

 

 

 

5,216,203

 

 

$

24.45

 

Granted

 

 

4,805,722

 

 

(1

)

 

35.09

 

 

 

1,285,051

 

 

 

14.89

 

 

 

2,830,078

 

 

 

20.28

 

Exercised

 

 

(792,845

)

 

 

 

 

17.40

 

 

 

(1,056,821

)

 

 

18.31

 

 

 

(816,696

)

 

 

12.26

 

Cancelled

 

 

(643,624

)

 

 

 

 

25.44

 

 

 

(1,307,255

)

 

 

24.61

 

 

 

(713,609

)

 

 

26.78

 

Grants outstanding at end of the period

 

 

8,806,204

 

 

 

 

$

29.74

 

 

 

5,436,951

 

 

$

22.70

 

 

 

6,515,976

 

 

$

23.91

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Grants exercisable at end of the period

 

 

3,288,712

 

 

 

 

$

24.76

 

 

 

2,942,624

 

 

$

24.42

 

 

 

2,617,167

 

 

$

23.85

 

Grants vested and expected to vest at end

   of the period

 

 

6,910,022

 

 

 

 

$

28.49

 

 

 

5,116,409

 

 

$

22.83

 

 

 

5,908,213

 

 

$

23.94

 

 

 

(1)

In June 2017, the Company granted its new CEO 3,300,000 options with service and market conditions. These options have a five-year cliff vesting schedule. The fair value of $13.48 for these options was determined by a lattice model with Monte Carlo simulations. The remaining are service-based options which have a four-year vesting schedule with 25% vesting on the first anniversary and 1/48 monthly thereafter.

 

The weighted-average grant date fair value per share of stock options granted during the years ended December 31, 2017, 2016 and 2015 was $14.78, $12.46 and $14.98, respectively. 

 

 

 

 

 

 

 

Weighted

 

 

 

Aggregate

 

 

Average

 

 

 

Intrinsic

 

 

Remaining

 

 

 

Value

 

 

Contractual

 

 

 

(in thousands)

 

 

Life (Years)

 

Options outstanding at December 31, 2017

 

$

228,081

 

 

7.6

 

Options exercisable at December 31, 2017

 

$

101,559

 

 

 

5.1

 

Options vested and expected to vest at December 31, 2017

 

$

187,582

 

 

7.1

 

 
Summary of Company's Stock Options Vested and Exercised

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

 

 

 

For the Year Ended December 31,

 

 

 

2017

 

 

2016

 

 

2015

 

 

 

(in thousands)

 

Aggregate grant date fair value of stock options vested

 

$

18,225

 

 

$

30,651

 

 

$

27,858

 

Aggregate intrinsic value of stock options exercised

 

$

20,922

 

 

$

30,610

 

 

$

18,138

 

 
Summary of Stock Appreciation Rights Activity

The following table summarizes the Company’s SAR activity for each of the periods indicated:

 

 

 

For the Year Ended December 31,

 

 

 

2017

 

 

2016

 

 

2015

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

Average

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

Exercise

 

 

 

 

 

 

Exercise

 

 

 

 

 

 

Exercise

 

 

 

Shares

 

 

Price

 

 

Shares

 

 

Price

 

 

Shares

 

 

Price

 

Grants outstanding at beginning of

   the period

 

 

100,000

 

 

$

23.85

 

 

 

170,000

 

 

$

18.18

 

 

 

170,000

 

 

$

18.18

 

Exercised

 

 

—

 

 

 

—

 

 

 

(67,812

)

 

 

10.08

 

 

 

—

 

 

 

—

 

Forfeited

 

 

—

 

 

 

—

 

 

 

(2,188

)

 

 

10.08

 

 

 

—

 

 

 

—

 

Grants outstanding at end of the period

 

 

100,000

 

 

$

23.85

 

 

 

100,000

 

 

$

23.85

 

 

 

170,000

 

 

$

18.18

 

Grants exercisable at end of the period

 

 

100,000

 

 

$

23.85

 

 

 

100,000

 

 

$

23.85

 

 

 

141,249

 

 

$

17.59

 

Grants vested and expected to vest at end of

   the period

 

 

100,000

 

 

$

23.85

 

 

 

100,000

 

 

$

23.85

 

 

 

167,813

 

 

$

18.29

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Aggregate

 

 

Average

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Intrinsic

 

 

Remaining

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

 

Contractual

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands)

 

 

Life (Years)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SARs outstanding, exercisable and vested at

   December 31, 2017

 

$

3,179

 

 

4.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
Summary of Employee Stock Purchase Plan Activity and Expense

The following table summarizes the Company’s ESPP activity for each of the periods indicated:

 

 

 

For the Year Ended December 31,

 

 

 

 

2017

 

 

2016

 

 

2015

 

 

Number of shares purchased

 

 

102,698

 

 

 

137,113

 

 

 

75,539

 

 

Proceeds received (in millions)

 

$

1.4

 

 

$

1.6

 

 

$

0.9

 

 

 
Summary of Stock-Based Compensation Expense by Function Included within Consolidated Statement of Operations and Comprehensive Loss

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,

 

 

 

2017

 

 

2016

 

 

2015

 

 

 

(in thousands)

 

Research and development

 

$

8,542

 

 

$

9,499

 

 

$

10,403

 

Selling, general and administrative

 

 

21,923

 

 

 

20,463

 

 

 

21,714

 

Total stock-based compensation

 

$

30,465

 

 

$

29,962

 

 

$

32,117

 

 
Summary of Stock-Based Compensation Expense by Grant Type Included within Consolidated Statement of Operations and Comprehensive Loss

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,

 

 

 

2017

 

 

2016

 

 

2015

 

 

 

(in thousands)

 

Stock options

 

$

23,416

 

 

$

26,320

 

 

$

29,014

 

Employee stock purchase plan

 

 

1,754

 

 

 

2,380

 

 

 

2,165

 

Restricted stock awards/units

 

 

5,295

 

 

 

872

 

 

 

446

 

Other

 

 

—

 

 

 

390

 

 

 

492

 

Total stock-based compensation

 

$

30,465

 

 

$

29,962

 

 

$

32,117

 

 
Restricted Stock Awards (RSAs) [Member]  
Summary of Restricted Stock Award and Restricted Stock Units Activity

The following table summarizes the Company’s RSA activity for each of the periods indicated:

 

 

For the Year Ended December 31,

 

 

 

2017

 

 

2016

 

 

2015

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

Average

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

Exercise

 

 

 

 

 

 

Exercise

 

 

 

 

 

 

Exercise

 

 

 

Shares

 

 

Price

 

 

Shares

 

 

Price

 

 

Shares

 

 

Price

 

Grants outstanding at beginning of

   the period

 

 

153,170

 

 

$

34.53

 

 

 

161,320

 

 

$

21.50

 

 

 

6,000

 

 

$

34.92

 

Granted

 

 

341,500

 

 

 

34.58

 

 

 

117,553

 

 

 

41.22

 

 

 

181,783

 

 

 

20.80

 

Vested

 

 

(63,264

)

 

 

14.60

 

 

 

(59,703

)

 

 

13.62

 

 

 

(24,463

)

 

 

20.21

 

Forfeited

 

 

(19,625

)

 

 

43.02

 

 

 

(66,000

)

 

 

33.51

 

 

 

(2,000

)

 

 

13.90

 

Grants outstanding at end of the period

 

 

411,781

 

 

$

37.23

 

 

 

153,170

 

 

$

34.53

 

 

 

161,320

 

 

$

21.50

 

 
Restricted Stock Units (RSUs) [Member]  
Summary of Restricted Stock Award and Restricted Stock Units Activity

The following table summarizes the Company’s RSU activity for the period indicated:

 

 

For the Year Ended December 31, 2017

 

 

 

 

 

 

 

Weighted

 

 

 

 

 

 

 

Average

 

 

 

 

 

 

 

Exercise

 

 

 

Shares

 

 

Price

 

Granted

 

 

181,029

 

 

$

33.03

 

Vested

 

 

(78,017

)

 

 

32.63

 

Forfeited

 

 

(36,460

)

 

 

32.63

 

Grants outstanding at end of the period

 

 

66,552

 

 

$

33.72

 

 
Stock Options [Member]  
Assumptions for Measuring Fair Values of Stocks

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

 

 

 

For the Year Ended December 31,

 

 

2017

 

2016

 

2015

Risk-free interest rate (1)

 

1.6 - 2.1%

 

1.1 – 1.8%

 

1.1 – 1.7%

Expected dividend yield (2)

 

—

 

—

 

—

Expected terms (3)

 

4.2 - 4.8 years

 

4.2 – 4.8  years

 

4.7 – 5.0  years

Expected volatility (4)

 

54.0 - 63.0%

 

78.2 – 137.1 %

 

94.3 – 111.1 %

 

(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 terms are estimated using historical exercise behavior.

(4)

Upon commercialization of EXONDYS 51 in the U.S., the Company’s future risk profile changed. As a result, starting January 1, 2017, the Company estimates expected volatility by using only implied volatility in exchange-traded options of the Company’s common stock. Prior to January 1, 2017, the expected volatility was estimated using a blend of calculated volatility of the Company’s common stock over a historical period and implied volatility in exchange-traded options of the Company’s common stock.