Equity Incentive Plan

The Company estimates the fair value of stock options and stock appreciation rights (“SARs”) using the Black-Scholes valuation model. Fair value of restricted stock awards (“RSAs”) and restricted stock units (“RSUs”) are measured by the grant-date price of the Company’s shares. The fair value of each stock option award during the

three

-month periods ended

March 31, 2018

and

2017

was estimated on the grant date using the Black-Scholes option-pricing model with the following assumptions:

	Three Months Ended March 31,
	2018					2017
Risk free interest rate		2.15%	-	2	.37%		1.70%	-	1.78%
Expected volatility		38.74%	-	40.81%			43.47%	-	44.30%
Expected life (years)			4.5					4.0
Expected dividend yield			0.00%					0.00%

The Company recorded

$7.6

million and

$1.2

million of stock-based compensation expense for equity compensation awards for the

three

-month periods ended

March 31, 2018

and

2017,

respectively. Upon the retirement of the Company’s former Chief Executive Officer on

March 9, 2018,

all of his outstanding stock-based compensation awards vested in full and became exercisable in accordance with their terms, resulting in a

one

-time expense of

$6.2

million that was fully recognized during the

three

-month period ended

March 31, 2018.

The Company presents the expenses related to stock-based compensation awards in the same expense line items as cash compensation paid to each of its employees as follows:

	Three Months Ended March 31,
	2018			2017
Cost of product revenue	$	(216	)	$	97
Research & development		210			10
Selling, general & administrative		7,571			1,075
Total stock-based compensation expense	$	7,565		$	1,182

The decrease in stock-based compensation expense within the cost of product revenue line item during the

three

months ended

March 31, 2018

is due to forfeitures associated with unvested stock option awards from the resignation of a former executive.

During the

three

-month periods ended

March 31, 2018

and

2017,

the Company granted stock option awards to employees of

192,300

and

392,005

shares, respectively, which become exercisable or vest ratably over

four

-year and

three

-year periods, respectively. For the

three

-month period ended

March 31, 2018,

the Company granted

64,578

shares subject to RSAs. In addition, the Company executed its annual grant of RSUs to non-employee directors, and

8,130

and

9,970

RSUs were granted to non-employee directors in

January 2018

and

2017,

respectively, each of which vests over a

one

-year period. On

March 9, 2018,

upon the vesting of certain RSAs,

32,541

shares with a total fair value of

$1.7

million were withheld for taxes and retired.