Stock-Based Compensation

12 Months Ended

Dec. 31, 2018

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Note 11 — Stock-Based Compensation

We issue stock-based awards from our equity incentive plans, which are more fully described in Note 9. Stock-based compensation expense was recognized as follows (in thousands):

	Year Ended December 31,
	2018		2017		2016
Cost of goods sold	$	4,629	$	2,333	$	1,620
Research and development		56,193		21,252		13,093
General and administrative		27,279		13,030		11,137
Total stock-based compensation	$	88,101	$	36,615	$	25,850

As of December 31, 2018, total unrecognized compensation costs of $258.4 million related to unvested stock-based compensation arrangements are expected to be recognized as expense over a weighted-average period of 1.9 years.

Stock-based compensation expense resulting from our ESPP was not significant in the years ended December 31, 2018, 2017, and 2016.

Black-Scholes Assumptions

The following table lists the Black-Scholes option-pricing model assumptions used to calculate the fair value of employee and director stock options:

	Year Ended December 31,
	2018			2017			2016
Average risk-free interest rate		2.8	%		2.0	%		1.4	%
Dividend yield		0.0	%		0.0	%		0.0	%
Average volatility factor		61.0	%		54.2	%		51.7	%
Average weighted average expected life	5.1 years			5.3 years			5.3 years

The average risk-free interest rate is based on the U.S. treasury yield curve in effect at the time of grant for periods commensurate with the expected life of the stock-based award. We have never paid dividends, nor do we expect to pay dividends in the foreseeable future; therefore, we used a dividend yield of zero. Our estimate of expected volatility is based on the daily historical trading data of our common stock at the time of grant over a historical period commensurate with the expected life of the stock-based award. We estimated the weighted-average expected life based on the contractual and vesting terms of the stock options, as well as historical cancellation and exercise data.

Summary of Stock Option Activity

The table below presents a summary of stock option activity under our equity incentive plans (in thousands, except for price per share and contractual life information):

	Number of Shares			Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Life (in Years)		Aggregate Intrinsic Value(1)
Outstanding at December 31, 2017		18,826		$	20.35
Options granted		1,846			55.35
Options exercised		(4,374	)		13.24
Options forfeited & canceled		(368	)		27.75
Outstanding at December 31, 2018		15,930		$	26.18		4.96	$	214,525

Exercisable at December 31, 2018		9,393			16.16		3.69	$	173,436

(1)	Aggregate intrinsic value represents the difference between the exercise price of the option and the closing market price of our common stock on December 31, 2018.

The weighted-average grant-date fair value per share of options granted during the years ended December 31, 2018, 2017, and 2016 was $29.86, $20.08, and $6.54, respectively. The total intrinsic value of options exercised during the years ended December 31, 2018, 2017, and 2016 was $303.4 million, $84.0 million, and $17.9 million, respectively. The estimated fair value of options vested during the years ended December 31, 2018, 2017, and 2016 was $39.0 million, $19.3 million, and $16.7 million, respectively.

Summary of RSU Activity

A summary of RSU award activity is as follows (in thousands except for per share amounts):

	Units Issued			Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value(1)
Balance at December 31, 2017		2,578		$	35.52
Granted		2,125			41.67
Vested and released		(1,255	)		29.44
Forfeited and canceled		(128	)		40.39
Balance at December 31, 2018		3,320		$	41.57	$	109,125

(1)	Aggregate intrinsic value represents the difference between the grant price of the award, which is zero, and the closing market price of our common stock on December 31, 2018.

The fair value of restricted stock that vested in the years ended December 31, 2018, 2017 and 2016 totaled $80.4 million, $22.3 million and $7.7 million, respectively.