The Company’s 2019 Equity Incentive Plan (the “2019 Plan”) permits the Company to sell or issue awards of common stock or restricted common stock or to grant awards of incentive stock options or nonqualified stock options for the purchase of common stock, restricted stock units, performance units, stock appreciation rights or other cash incentive awards, to employees, members of the board of directors and consultants of the Company. The number of shares of common stock that may be issued under the 2019 Plan is subject to increase by the number of shares forfeited under any options forfeited and not exercised under the 2019 Plan or any predecessor plans such as the 2012 Equity Incentive Plan or the 1995 Equity Incentive Plan. As of September 30, 2019, 1,879 shares remained available for future awards under the 2019 Plan.

The 2019 Plan replaces and is the successor to the 2012 Equity Incentive Plan (the “2012 Plan”) and the 1995 Equity Incentive Plan (the “1995 Plan”). The 2012 and 1995 Plans provided for the Company to sell or issue awards of common stock or restricted common stock, or to grant awards of incentive stock options or nonqualified stock options for the purchase of common stock, to employees, members of the board of directors and consultants of the Company. Sales, issuances or grants of shares entitle the holder to purchase common stock from the Company, for a specified exercise price, during a period specified by the applicable equity award agreement. Upon the closing of the Company’s initial public offering, all remaining shares reserved for issuance under the 1995 Plan were transferred to the 2012 Plan and no further awards were made under the 1995 Plan. Upon the approval of the 2019 Plan by the Company’s shareholders in February 2019, all remaining shares reserved for issuance under the 2012 Plan were transferred to the 2019 Plan and no further awards have been made under the 2012 Plan.

Under the Company’s Employee Stock Purchase Plan (“ESPP”) a total of 186 shares of common stock are reserved for issuance. As of September 30, 2019, the Company had not commenced any offering under the ESPP and no ESPP shares have been issued.

The Company applies the fair value recognition provisions for all stock-based awards granted or modified. In the case of service-based awards, the compensation cost is recorded over the requisite service period of the award on the straight-line method based on the grant-date fair value. The requisite service period for service-based option awards is generally four years. Options granted under the 2019 Plan to employees generally vest over four years and to non-employee directors over one year, and expire after ten years.

The fair value of each stock option award is determined on the date of grant using the Black-Scholes option-pricing model. During the years ended September 30, 2018 and 2017, the Company estimated expected volatility based on a combination of the Company’s historical stock volatility since its March 2013 IPO and the historical volatility of publicly traded peer companies. During the year ended September 30, 2019, the Company began utilizing the volatility of the Company’s traded stock price following our March 2013 IPO to estimate expected volatility. The expected term of the Company’s options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. The expected dividend yield is zero on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. As required under our equity plans, the exercise price for awards granted is not to be less than the fair value of common shares as estimated by the Company as of the date of grant. The relevant data used to determine the value of the stock option awards are as follows, presented on a weighted average basis:

	Years Ended September 30,
	2019			2018			2017
Risk-free interest rate		2.76	%		2.29	%		1.97	%
Expected term (in years)		6.05			6.05		6.05
Expected volatility		55	%		57	%		60	%
Expected dividends		0	%		0	%		0	%

The following table summarizes stock option activity, including aggregate intrinsic value for the year ended September 30, 2019:

	Shares Issuable Under Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term in years		Aggregate Intrinsic Value
	(in thousands)							(in thousands)
Outstanding as of September 30, 2018		2,624		$	36.65		7.1	$	129,115
Granted		653			82.41
Exercised		(231	)		29.68
Forfeited		(79	)		63.68
Outstanding as of September 30, 2019		2,967		$	46.54		6.7	$	57,336
Options vested and expected to vest as of September 30, 2019		2,967		$	46.54		6.7	$	57,336
Options exercisable as of September 30, 2019		1,954		$	37.09		5.7	$	48,839

The aggregate intrinsic value of options is calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock. The following tables summarize additional exercise and grant date information:

	Years Ended September 30,
	2019		2018		2017
	(in thousands)
Aggregate intrinsic value of stock options exercised	$	13,855	$	14,180	$	1,503
Proceeds to Company from stock options exercised	$	6,848	$	6,243	$	1,079

In March 2013, the Company granted to certain executives options to purchase 167 shares that would vest upon the achievement of certain performance-based targets. The aggregate grant date fair value of these options was $2,479. During the year ended September 30, 2017, certain performance-based targets were achieved and the Company recorded stock-based compensation expense of $413 related to achievement of those targets. No stock-based compensation expense related to these options was recognized during the years ended September 30, 2019 and 2018 as the performance period for these options ended during the year ended September 30, 2017.

The Company awards both performance share units, or PSUs, and relative total stockholder return units, or rTSRUs, to its executive officers.

The PSUs vest and result in issuance, or settlement, of common shares for each recipient, based upon the recipient’s continued employment with the Company through the settlement date of the award and the Company’s achievement of specified research and development milestones. The requisite service period of the PSUs is generally 2 years.

The rTSRUs vest and result in the issuance of common stock based upon the recipient’s continuing employment with the Company through the settlement date of the award and the relative ranking of the total stockholder return, or TSR, of the Company’s common stock in relation to the TSR of the component companies in the NASDAQ Biotech Index over two specified periods that are two years apart, based on a comparison of average closing stock prices in specified periods noted in the award agreement. The number of market-based rTSRUs awarded represents the target number of shares of common stock that may be earned; however, the actual number of shares that may be

earned ranges from 0% to 150% or 200% of the target number, depending on the award agreement and the year of the award. The Company used a Monte Carlo model to estimate the grant-date fair value of the rTSRUs. Assumptions and estimates utilized in the calculation of the fair value of the rTSRUs include the risk-free interest rate, dividend yield, expected volatility based on the historical volatility of publicly traded peer companies and the remaining performance period of the award. The table below sets forth the weighted average grant date fair value assumptions used to value the rTSRUs:

	Years Ended September 30,
	2019			2018			2017
Risk-free interest rate		2.65	%		2.18	%		1.24	%
Dividend yield		0	%		0	%		0	%
Expected volatility		62	%		62	%		66	%
Remaining performance period (years)		2.03			1.83			1.99

The following table summarizes PSU and rTSRU activity (at target) for the year ended September 30, 2019:

	PSUs					rTSRUs
	Shares			Weighted Average Grant Date Fair Value per Share		Shares			Weighted Average Grant Date Fair Value per Share
	(in thousands, except per share data)
Unvested at September 30, 2018		70		$	50.97		70		$	59.96
Granted		21			67.13		21			47.42
Vested		(36	)		35.89		(45	)		46.11
Cancelled		(14	)		49.20		(5	)		68.13
Unvested at September 30, 2019		41		$	73.02		41		$	67.76

A total of 80% of target PSUs and 192.91% of target rTSRUs granted in December 2015 vested during the year ended September 30, 2018, resulting in the issuance of an aggregate of 68 common shares, net of share withholding for income taxes. A total of 80% of target PSUs and 200% of target rTSRUs granted in January 2017 vested during the year ended September 30, 2019, resulting in the issuance of an aggregate of 125 common shares, net of share withholding for income taxes.

In November 2016, the Company awarded restricted stock units to its employees, which vest as to 50% of the units on the third anniversary of the award and 50% on the fourth anniversary of the award, provided the employee remains employed with the Company at the time of vesting. The fair value of these awards was determined based on the fair value of the stock on the date of grant and is recognized as stock-based compensation expense over the requisite service period. The following table summarizes the restricted stock unit activity for the year to date period ending September 30, 2019:

	Restricted Stock Units			Weighted Average Grant Date Fair Value per Share
	(in thousands, except per share data)
Unvested at September 30, 2018		109		$	30.00
Granted		—			—
Vested		—			—
Cancelled		(14	)		30.00
Unvested at September 30, 2019		95		$	30.00

The Company recorded the following stock-based compensation expense for the years ended September 30, 2019, 2018, and 2017:

	Years Ended September 30,
	2019		2018		2017
	(in thousands)
Research and development	$	8,833	$	6,160	$	4,078
General and administrative		10,393		9,685		8,993
	$	19,226	$	15,845	$	13,071

	Years Ended September 30,
	2019		2018		2017
	(in thousands)
Stock options	$	15,854	$	12,694	$	10,442
rTSRUs		1,568		1,721		1,267
PSUs		1,278		641		668
Restricted stock units		526		789		694
	$	19,226	$	15,845	$	13,071

As of September 30, 2019, the Company had an aggregate of $38,298 of unrecognized stock-based compensation cost, which is expected to be recognized over a weighted average period of 2.5 years.