Stock-based Compensation Expense

9 Months Ended

Sep. 30, 2011

Stock-based Compensation Expense

Stock-based Compensation Expense

C. Stock-based Compensation Expense

        The Company issues stock options, restricted stock and restricted stock units with service conditions, which are generally the vesting periods of the awards. The Company also has issued, to certain members of senior management, restricted stock and restricted stock units that vest upon the earlier of the satisfaction of (i) a market or performance condition or (ii) a service condition, and stock options that vest upon the earlier of the satisfaction of (a) performance conditions or (b) a service condition. In addition, the Company issues shares pursuant to an employee stock purchase plan ("ESPP").

        The effect of stock-based compensation expense during the three and nine months ended September 30, 2011 and 2010 was as follows:

		Three Months Ended September 30,					Nine Months Ended September 30,
		2011			2010		2011			2010
		(in thousands)
Stock-based compensation expense by type of award:
	Stock options	$	20,610		$	16,177	$	64,137		$	47,380
	Restricted stock and restricted stock units		7,878			6,164		21,543			16,654
	ESPP share issuances		1,220			1,427		4,322			3,516
	Less stock-based compensation expense capitalized to inventory		(294	)		—		(830	)		—
Total stock-based compensation expense included in costs and expenses		$	29,414		$	23,768	$	89,172		$	67,550
Stock-based compensation expense by line item:
	Research and development expenses	$	18,652		$	16,979	$	57,654		$	49,034
	Sales, general and administrative expenses		10,762			6,789		31,518			18,516
Total stock-based compensation expense included in costs and expenses		$	29,414		$	23,768	$	89,172		$	67,550

        The Company capitalized $0.3 million and $0.8 million, respectively, of stock-based compensation expense to inventory in the three and nine months ended September 30, 2011, all of which is attributable to employees who support the Company's manufacturing operations related to INCIVEK.

        The following table sets forth the Company's unrecognized stock-based compensation expense, net of estimated forfeitures, as of September 30, 2011 by type of award, and the weighted-average period over which that expense is expected to be recognized:

		As of September 30, 2011
		Unrecognized Expense, Net of Estimated Forfeitures		Weighted-average Recognition Period
		(in thousands)		(in years)
Type of award:
	Stock options	$	151,698		2.77
	Restricted stock and restricted stock units		48,720		2.50
	ESPP share issuances		1,160		0.40

        The following table summarizes information about stock options outstanding and exercisable at September 30, 2011:

	Options Outstanding						Options Exercisable
Range of Exercise Prices	Number Outstanding		Weighted-average Remaining Contractual Life		Weighted-average Exercise Price		Number Exercisable		Weighted-average Exercise Price
	(in thousands)		(in years)		(per share)		(in thousands)		(per share)
$9.02-$20.00		2,832		3.31	$	15.54		2,698	$	15.37
$20.01-$30.00		1,640		5.13		28.08		1,585		28.14
$30.01-$40.00		14,428		7.38		35.70		7,493		35.11
$40.01-$50.00		317		9.11		45.36		50		44.24
$50.01-$57.27		2,174		9.69		52.15		175		53.91