STOCK-BASED COMPENSATION

The Company’s stock-based compensation generally includes stock options, restricted stock units (RSUs), performance share units (PSUs), and purchases under the Company’s employee stock purchase plan (ESPP).

The following table presents stock‑based compensation expense recognized for stock options, RSUs, PSUs, and the ESPP in the Company’s consolidated statements of comprehensive income (in thousands):



	Years Ended December 31,
	2019		2018		2017
Cost of sales	$	106	$	30	$	98
Research and development expenses	693		446		710
Selling, general and administrative expenses	9,797		9,963		12,157
Restructuring charges	—		2,146		51
Total	$	10,596	$	12,585	$	13,016

There is no stock‑based compensation recorded within inventory in any of the years presented. The recognized tax benefits on total stock-based compensation expense during the years ended December 31, 2019, 2018 and 2017 was $0.6 million, $0.7 million and $0.4 million, respectively.

At December 31, 2019, the Company had $9.2 million, $4.4 million, and $1.1 million of total unrecognized compensation expense related to RSUs, PSUs, and stock option grants, respectively, that will be recognized over a weighted average vesting period of 1.78, 1.71, and 1.32 years, respectively.

The Company did not grant any options during 2019. The weighted‑average grant date fair value of options granted during the years ended December 31, 2018 and 2017 was $4.32 and $5.55, respectively. The company used the following assumptions to calculate the fair value of option grants for the years ended December 31, 2019, 2018 and 2017:



	2018	2017
Employee and Director Stock Options
Risk-free interest rate	2.17%	1.65 - 1.93%
Expected option term (in years)	4.34	4.24 - 4.30
Expected stock price volatility	61.94%	51.67 - 59.59%

Stock options exercised during 2019 were immaterial. The total intrinsic value of options exercised during the years ended December 31, 2018 and 2017 was $0.6 million and $5.0 million, respectively. Cash received from stock option exercises for the years ended December 31, 2018 and 2017 was $1.5 million and $7.0 million, respectively. The total grant date fair value of options that vested during the years ended December 31, 2019, 2018 and 2017 was $1.4 million, $2.3 million and $4.7 million, respectively.

The weighted‑average grant date fair value of stock purchase rights granted under the ESPP during the years ended December 31, 2019, 2018 and 2017 was $1.15, $1.73 and $2.97, respectively. The company used the following assumptions to calculate the fair value of option grants and stock purchase rights granted under the ESPP for the years ended December 31, 2019, 2018 and 2017:



	2019	2018	2017
Employee Stock Purchase Plan
Risk-free interest rate	1.63 - 2.35%	2.05 - 2.50%	1.07 - 1.45%
Expected option term (in years)	0.5	0.5	0.5
Expected stock price volatility	57.2 - 132.2%	56.1 - 58.6%	52.2 - 82.0%

2004 Equity Incentive Plan

The Company’s 2004 Equity Incentive Plan (2004 Plan) was adopted by the Board of Directors and approved by the shareholders in May 2004. The 2004 Plan provides for the grant to employees of the Company, including officers, of incentive stock options, and for the grant of non-statutory stock options to employees, directors and consultants of the Company. The number of shares authorized under the 2004 Plan was 14,450,000 shares and there were no more shares available for future issuance at December 31, 2019.

Generally, the exercise price of all incentive stock options and non-statutory stock options granted under the 2004 Plan must be at least 100% and 85%, respectively, of the fair value of the common stock of the Company on the grant date. The term of incentive and non-statutory stock options may not exceed 10 years from the date of grant. An option shall be exercisable on or after each vesting date in accordance with the terms set forth in the option agreement. The right to exercise an option generally vests over four years at the rate of at least 25% by the end of the first year and then ratably in monthly installments over the remaining vesting period of the option.

The following tables summarize the activity for the year ended December 31, 2019 under the 2004 Plan:



	Shares		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in thousands)
Options outstanding at December 31, 2018	1,169,412		$	7.57
Options granted	—		—
Options exercised	(13,691	)	1.83
Options forfeited	—		—
Options expired	(810,515	)	—
Options outstanding at December 31, 2019	345,206		$	7.29	2.58	$	—
Options vested and expected to vest at December 31, 2019	345,206		$	7.29	2.58	$	—
Options exercisable at December 31, 2019	345,206		$	7.29	2.58	$	—

There were no restricted stock units granted under the 2004 Equity Incentive Plan.

2014 Omnibus Incentive Plan

The Company’s 2014 Omnibus Incentive Plan (2014 Plan) was adopted by the Board of Directors and approved by the shareholders in May 2014. The 2014 Plan provides for the grant of stock options, stock appreciation rights, stock awards, cash awards and performance award to the employees, non-employee directors and consultants of the Company. The number of shares authorized under the 2014 Plan is 15,780,000 shares, of which 7,233,105 were available for future issuance at December 31, 2019.

Incentive Stock Options

Generally, the exercise price of all incentive stock options and non-statutory stock options granted under the 2014 Plan must be the fair value of the common stock of the Company on the grant date. The term of incentive and non-statutory stock options may not exceed 10 years from the date of grant. An option shall be exercisable on or after each vesting date in accordance with the terms set forth in the option agreement. The right to exercise an option generally vests over four years at the rate of at least 25% by the end of the first year and then ratably in monthly installments over the remaining vesting period of the option. The following table summarize the options activity for the year ended December 31, 2019 under the 2014 Plan:



	Number of Shares		Weighted Average Exercise Price		Weighted- Average Remaining Contractual Term (years)	Aggregate Intrinsic Value (in thousands)
Options outstanding at December 31, 2018	1,461,469		$	12.90
Options granted	—		—
Options exercised	—		—
Options forfeited	(102,669	)	13.86
Options expired	(180,755	)	14.01
Options outstanding at December 31, 2019	1,178,045		$	12.64	6.15	$	—
Options vested and expected to vest at December 31, 2019	1,178,045		$	12.64	6.15	$	—
Options exercisable at December 31, 2019	892,730		$	13.50	5.77	$	—

Restricted Stock Units

RSUs generally vest over three or four years, with 33% or 25% of each award vesting annually, respectively. The following table summarizes the RSUs activity for the year ended December 31, 2019 under the 2014 Plan:



	Number of Shares		Weighted Average Grant Date Fair Value Per Share		Weighted Average Remaining Contractual Term (in years)
Non-vested restricted stock units at December 31, 2018	1,938,788		$	6.94
Granted	2,750,408		3.84
Vested	(873,784	)	8.08
Forfeited	(878,697	)	5.40
Non-vested restricted stock units at December 31, 2019	2,936,715		$	4.64	1.05

The total fair value of RSUs that vested during the years ended December 31, 2019, 2018 and 2017 was $3.1 million, $3.1 million, and $3.9 million, respectively.

Performance-based Restricted Stock Units

During the twelve months ended December 31, 2019, the Company granted PSUs with an aggregate target award of 643,266 units and a weighted-average grant-date fair value of $6.87 per unit. The PSUs vest in annual cliffs over a three year period based on the Relative Total Shareholder Return (TSR) of the Company’s common stock against the Russell 3000 Pharmaceuticals Total Return Index over the period. The ultimate award, which is determined at the end of the three-year cycle, can range from zero to 200% of the target. The recipients of the PSU awards will have voting rights and the right to receive a dividend once the underlying shares have been issued. The grant-date fair value is based upon the Monte Carlo simulation method. The following table summarizes the PSU activity for the year ended December 31, 2019 under the 2014 Plan (in thousands, except per share data):



	Number of Shares		Weighted Average Grant Date Fair Value Per Share		Weighted Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value (in thousands)
Non-vested performance-based restricted stock units at December 31, 2018	374,824		$	10.14
Granted	643,266		6.87
Vested	—		—
Forfeited	(34,247	)	6.87
Non-vested performance-based restricted stock units at December 31, 2019	983,843		$	8.11	1.71	$	1,230

Equity Match Program

On December 6, 2017, the Company Board of Directors approved a one-time incentive program (the Equity Match Program) for the Company’s Chief Executive Officer (the CEO). The Equity Match Program was intended to provide an incentive for the CEO to purchase shares of the Company’s common stock, no par value (the Common Stock), through open-market purchases between December 5, 2017 and February 3, 2018 (the Purchase Period). Under the terms of the Equity Match Program, for each $100,000 of Common Stock purchased by the CEO during the Purchase Period (up to $600,000 in total), the Company granted the CEO an award of restricted stock units (the Matching Units) under the Company’s 2014 Omnibus Incentive Plan with a grant-date value equal to the purchase price of the Common Stock purchased by the CEO (rounded down to the nearest $100,000). The Matching Units were granted on the first business day following the earlier of: (i) the CEO’s purchase of a total of $600,000 of Common Stock, or (ii) the end of the Purchase Period. The Matching Units will vest in full on the third anniversary of the first day during the Purchase Period that the CEO purchased Common Stock in the open market, subject to the CEO’s continued employment through such date. Notwithstanding the foregoing, the Matching Units may vest in full upon a termination without cause or resignation for good reason (including following a change of control of the Company), or upon the CEO’s death or total and permanent disability. Under the Equity Match Program 75,000 shares of the Company Common Stock were purchased by the CEO at an average price per share of $8.16 and Matching Units of 73,529 shares were awarded, with a fair value of $8.16 at the grant date.