13.

Stock-Based Compensation

The Company awards stock options and other equity-based instruments to its employees, directors and consultants and provides employees the right to purchase common stock (collectively “share-based payments”), pursuant to stockholder approved plans. The Company’s statements of operations included total compensation cost from share-based payments for the three-month and six-month periods ended June 30, 2013 and 2012, as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
*In thousands*	2013		2012		2013		2012
Compensation cost from:
Stock options	$	4,751	$	1,803	$	8,112	$	4,692
Stock and stock units		9,445		1,671		11,592		3,646
Purchases of common stock at a discount		121		57		224		106

	$	14,317	$	3,531	$	19,928	$	8,444


Compensation cost included in:
Research and development expenses	$	5,762	$	1,675	$	8,416	$	4,191
Selling, general and administrative expenses		8,555		1,856		11,512		4,253

	$	14,317	$	3,531	$	19,928	$	8,444

Stock Options

Stock options are granted with an exercise price equal to the closing market price of the Company’s common stock on the date of grant. Stock options generally vest ratably over three or four years and have contractual terms of ten years. Stock options are valued using the Black-Scholes option valuation model and compensation cost is recognized based on such fair value over the period of vesting on a straight-line basis.

Stock option activity under the Company’s stock plans for the six-month period ended June 30, 2013 was as follows:


	Number of Shares			Weighted Average Exercise Price Per Share
Options outstanding, January 1, 2013		8,228,334		$	10.20
Granted		2,812,015		$	18.68
Forfeited		(69,839	)	$	16.86
Exercised		(330,790	)	$	5.10

Options outstanding, June 30, 2013		10,639,720		$	12.55

Stock and Stock Unit Grants

Stock and stock unit grants carry restrictions as to resale for periods of time or vesting provisions over time as specified in the grant. Stock and stock unit grants are valued at the closing market price of the Company’s common stock on the date of grant and compensation expense is recognized over the requisite service period, vesting period or period during which restrictions remain on the common stock or stock units granted.

Stock and stock unit activity under the Company’s stock plans for the six-month period ended June, 2013 was as follows:


	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding, January 1, 2013		1,903,445		$	9.55
Granted		1,104,535		$	19.87
Forfeited		(9,234	)	$	9.79
Vested or restrictions lapsed		(926,157	)	$	7.41

Outstanding, June 30, 2013		2,072,589		$	16.00

Included in stock and stock units outstanding in the above table are 190,250 performance share units, awarded in April 2011, that will vest in December 2013, one year after the FDA approval of Iclusig in December 2012. Stock and stock units outstanding also included 343,000 performance share units awarded in 2012 and 373,000 performance share units awarded in 2013. The number of shares that may vest, if any, related to the 2012 and 2013 performance share unit awards is dependent on the achievement, and timing of the achievement, of the performance criteria defined for each award. The compensation costs for such performance-based stock awards will be based on the awards that ultimately vest and the grant date fair value of those awards.

The Company begins to recognize compensation expense related to these performance share units when achievement of the performance condition is probable. On July 2, 2013, the Company announced that it was granted marketing authorization for Iclusig by the European Commission, which was the performance condition for the 2012 awards. As of June 30, 2013, it was probable that approval would be received from the European Commission. Based upon the achievement of this performance condition, an additional 206,000 performance share units, which are not included in the table above, are eligible to vest over the remaining service period in accordance with the terms of the award. Compensation expense of $5.9 million related to these performance share units was recorded in the three-month period ended June 30, 2013, and $2.3 million will be recognized over the remaining service period, if all remaining service conditions are met.

In the three-month period ended June 30, 2013, the Company concluded that it was probable that the performance condition related to the 2013 performance share unit awards would be met. The performance condition is based upon continued success in specific research and development initiatives. As a result, the Company recorded $1.0 million of compensation expense in the three-month period ended June 30, 2013, and will expense $6.8 million over the remaining service period, if the performance condition and all remaining service conditions are met. The total compensation expense for these performance share units may be up to 60% higher if the performance condition for this award is met prior to December 31, 2014.