STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

The Company has stockholder-approved equity incentive plans that provide for the granting of service-based restricted stock units (RSUs), market-based RSUs, performance-based RSUs, stock options and other types of awards to its employees, officers and non-employee directors. Compensation expense included in the Company’s Condensed Consolidated Statements of Comprehensive Income (Loss) for all stock-based compensation arrangements was as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2020		2019		2020		2019
Cost of sales	$	4,955	$	3,717	$	10,039	$	8,536
Research and development	15,917		14,943		29,628		28,776
Selling, general and administrative	24,090		21,169		52,289		45,278
Total stock-based compensation expense	$	44,962	$	39,829	$	91,956	$	82,590

Stock-based compensation of $5.5 million and $10.0 million was capitalized into inventory for the three and six months ended June 30, 2020, respectively. Stock-based compensation of $4.3 million and $8.1 million was capitalized into inventory for the three and six months ended June 30, 2019, respectively. Capitalized stock-based compensation is recognized as cost of sales when the related product is sold.

Restricted Stock Unit Awards with Market Conditions

In March 2020, the Compensation Committee and Board approved the grant of 126,710 RSUs with market-based vesting conditions (base TSR-RSUs) to certain executives. These base TSR-RSUs vest, if at all, in full following a three-year service period only if certain total shareholder return (TSR) results relative to the Nasdaq Biotechnology Index comparative companies are achieved. The number of shares that may be earned range between 0% and 200% of the base TSR-RSUs, with a ceiling achievement level of 100% of the base TSR-RSUs in the event the Company’s absolute TSR multiplier is above the 50th percentile but the Company’s TSR multiplier is negative on an absolute basis. The Company utilized a Monte Carlo simulation model to determine the grant date fair value of $112.12 per base TSR-RSU. Compensation expense for awards with market conditions is recognized over the service period using the straight-line method and is not reversed if the market condition is not met.

Restricted Stock Unit Awards with Performance Conditions

In March 2020, the Compensation Committee and Board approved the grant of 63,400 RSUs with performance-based vesting conditions (base RSUs) and a grant date fair value of $73.82 per RSU. This award is contingent upon the achievement of a three-year Non-GAAP income target and the awarded RSUs, if any, vest ratably over a three-year service period. The Company evaluated the target in the context of its current long-range financial plan and determined that attainment of the target was probable for accounting purposes commencing in the first quarter of 2020. The number of shares that may be earned range between 50% and 200% of the base RSUs.

In March 2020, the Compensation Committee and Board approved the grant of 63,400 RSUs with performance-based vesting conditions (base RSUs) and a grant date fair value of $73.82 per RSU. This award is contingent upon the achievement of a three-year strategic goal target and the awarded RSUs, if any, vest ratably over a three-year service period. The Company evaluated the target in the context of its product candidate development pipeline and planned regulatory activity and determined that attainment of the target was probable for accounting purposes commencing in the first quarter of 2020. The number of shares that may be earned range between 50% and 200% of the base RSUs.