Shareholders’ Equity

2017 Common Stock Offering

In March 2017, the Company offered and sold an aggregate of 3,731,344 shares of common stock in an underwritten public offering at a price of $33.50 per share, with gross proceeds of approximately $125.0 million. The Company received proceeds of approximately $117.5 million, net of approximately $7.5 million in underwriting commissions, discounts and other issuance costs.

Share-Based Compensation Expense

Total share-based compensation expense related to all share-based awards for the three and nine months ended September 30, 2017 and 2016 was comprised of the following (in thousands):



	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
Research and development:
Stock options	$	3,068	$	1,678	$	8,083	$	4,154
Restricted stock	—		—		—		30
Warrants	24		10		58		25
Research and development share-based compensation expense	3,092		1,688		8,141		4,209
General and administrative:
Stock options	2,203		1,666		6,151		4,934
Restricted stock	—		516		409		1,645
Warrants	187		56		475		183
General and administrative share-based compensation expense	2,390		2,238		7,035		6,762
Total share-based compensation expense included in expenses	$	5,482	$	3,926	$	15,176	$	10,971

Share-based compensation expense recognized for the three and nine months ended September 30, 2017 and 2016, was reduced by actual forfeitures in the period that the forfeiture occurred.

As of September 30, 2017, there was $55.3 million of total unrecognized share-based compensation expense related to non-vested stock options. The Company expects to recognize this expense over a weighted-average period of 3.0 years.

Stock Option Valuation

The fair value of each stock option award is estimated on the grant date using a Black-Scholes option pricing model (Black-Scholes model), which uses the assumptions noted in the following table. Expected volatility is based on historical volatility of the Company’s common stock. In determining the expected life of employee stock options, the Company uses the “simplified” method. The expected life assumptions for non-employee options are based upon the contractual term of the stock options. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the stock options in effect at the time of the grants. The dividend yield assumption is based on the expectation of no future dividend payments by the Company.

The Company estimated the fair value of each stock option grant on the grant date using the Black-Scholes model with the following weighted-average assumptions:



	Nine Months Ended September 30,
	2017		2016
Expected volatility	143	%	141	%
Expected life	6.19 years		5.74 years
Risk-free interest rate	2.0	%	1.3	%
Dividend yield	—		—

Stock Option Activity

The Company’s 2013 Equity Plan stock option activity for the nine months ended September 30, 2017 was comprised of the following:



	Outstanding Stock Options and 2013 Equity Plan
	Shares Underlying Stock Options		Weighted- Average Exercise Price per Share
Outstanding at December 31, 2016	2,627,462		$	21.07
Granted	1,879,925		$	22.97
Exercised	(152,342	)	$	15.48
Forfeited	(93,608	)	$	21.77
Outstanding at September 30, 2017	4,261,437		$	22.09

As of September 30, 2017, there were 3,673,883 shares of common stock available for future grants under the 2013 Equity Plan, and the Company has reserved an additional 4,201,437 shares of common stock for future issuance upon exercise of all outstanding stock options granted under the 2013 Equity Plan.

During the nine months ended September 30, 2017, stock options to purchase 152,342 shares of common stock were exercised with an intrinsic value of $2.9 million.

Restricted Stock Award Activity

The Company’s restricted stock award activity for the nine months ended September 30, 2017 was comprised of the following:



	Number of Shares		Weighted- Average Grant Date Fair Market Value
Unvested at December 31, 2016	542,680		$	13.22
Vested	(542,680	)	$	13.22
Unvested at September 30, 2017	—		$	—

Warrants

At September 30, 2017, the Company had outstanding warrants to purchase 93,013 shares of common stock. In January 2017, the Company issued a warrant to purchase up to 25,013 shares of the Company’s common stock to an outside third party at an exercise price equal to the fair market value of the Company’s common stock on the grant date.