11. Share-Based Payments

Incentive Award Plans

The 2013 Incentive Award Plan, or the 2013 Plan, initially became effective on June 11, 2013, the date the Company received stockholder approval for the plan. Also on June 11, 2013, the 2004 Stock Incentive Plan terminated except with respect to awards previously granted under that plan. No further awards will be granted under the 2004 Stock Incentive Plan.

The 2013 Plan allows for the granting of stock options (both incentive stock options and nonstatutory stock options), restricted stock, stock appreciation rights, performance awards, dividend equivalents, stock payments and restricted stock units to employees, consultants and members of the Company's board of directors.

Incentive stock options are granted only to employees of the Company. Incentive stock options granted to employees who own more than 10% of the total combined voting power of all classes of stock are granted with exercise prices no less than 110% of the fair market value of the Company's common stock on the date of grant. Incentive stock options generally vest ratably over four years. Non-statutory stock options and restricted stock awards may be granted to employees, consultants and members of the Company's board of directors. Non-statutory stock options granted have varying vesting schedules. Restricted stock awards generally vest ratably over four years. Incentive and non-statutory stock options generally expire ten years after the date of grant. Restricted stock awards have been granted only to employees of the Company.

The total number of shares reserved for issuance under the 2013 Plan before giving effect to the amendment and restatement described below equaled the sum of: (a) 5,100,000, (b) one share for each share subject to a stock option that was granted through December 31, 2012 under the 2004 Stock Incentive Plan and the Amended and Restated 2002 Stock Incentive Plan (together, the "Prior Plans") that subsequently expires, is forfeited or is settled in cash (up to a maximum of 4,337,882 shares) and (c) 1.35 shares for each share subject to an award other than a stock option that was granted through December 31, 2012 under the Prior Plans and that subsequently expires, is forfeited, is settled in cash or repurchased (up to a maximum of 950,954 shares).

On March 11, 2015, the board of directors approved an amendment and restatement of the 2013 Plan subject to and effective upon stockholder approval. At the Company's 2015 Annual Meeting of Stockholders, held on June 9, 2015 (the "Annual Meeting"), stockholders approved the amendment and restatement of the 2013 Plan. The amendment and restatement increased (1) the number of shares of common stock available for issuance under the 2013 Plan by 2,550,000 shares and (2) the fungible ratio under the 2013 Plan such that any shares subject to awards granted under the 2013 Plan on or after June 9, 2015 or that, on or after such date, become available for grant under the 2013 Plan upon forfeiture, expiration or cash settlement of awards granted under the Plan on or after June 9, 2015 or awards granted under the Prior Plans, in each case, other than awards that are options or stock appreciation rights, are counted against or, as applicable, added to the aggregate number of shares available for issuance under the 2013 Plan as 1.67 shares for every one share granted.

The following table is a roll-forward of shares available for issuance under the 2013 Plan for the period beginning June 11, 2013 through the year ended December 31, 2015 (in thousands):

	Shares Available for Issuance
Shares reserved for issuance at June 11, 2013		3,300
Add:
Stockholder-approved increase in share pool in 2014		1,800
Stockholder-approved increase in share pool in 2015		2,550
Stock options and restricted stock awards forfeited or expired under prior plans		630
Stock options and awards forfeited under 2013 Plan		278
Less:
Stock options and awards granted under 2013 Plan		(4,009	)

Shares reserved for issuance at December 31, 2015		4,549

Share-Based Compensation

The Company records compensation cost for all share-based payment arrangements, including employee, director and consultant stock options, restricted stock and the employee stock purchase plan.

The following table summarizes share-based compensation expense recorded in the years ended December 31, 2015, 2014 and 2013 (in millions):

	2015		2014		2013
Outstanding employee and non-employee stock option grants	$	10.5	$	9.7	$	8.1
Outstanding restricted stock awards		0.5		3.5		4.3
Employee stock purchase plan		0.4		0.4		0.4

Total compensation cost	$	11.4	$	13.6	$	12.8

During the year ended December 31, 2015, the Company granted 1,635,796 stock options, of which 1,190,146 were granted in connection with annual merit awards, 124,250 were granted to the Company's board of directors, and 321,400 were primarily granted to new hires. The average grant date fair value of options granted was calculated using the Black-Scholes-Merton option-pricing model and the weighted average assumptions noted in the table below.

The following table summarizes the weighted average assumptions the Company used in its fair value calculations at the date of grant:

	Weighted Average Assumptions
	Stock Options									Employee Stock Purchase Plan
	2015			2014			2013			2015			2014			2013
Expected volatility		59	%		66	%		63	%		59	%		63	%		64	%
Expected dividends		—			—			—			—			—			—
Expected life (years)		6.1			6.1			6.0			0.5			0.5			0.5
Risk-free interest rate		1.9	%		2.2	%		1.5	%		0.1	%		0.1	%		0.1	%

The following table presents stock option activity of the 2013 Plan and Prior Plans for the year ended December 31, 2015:

	Number of Stock Options (in thousands)			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2014		7,110		$	14.43
Granted		1,635			14.61
Exercised		(1,737	)		13.57
Forfeited		(157	)		14.71
Expired		(240	)		18.52

Outstanding at December 31, 2015		6,611		$	14.54		6.45	$	9,041


Exercisable at December 31, 2015		4,211		$	14.09		5.21	$	6,507


Vested or expected to vest at December 31, 2015		6,362		$	14.52		6.35	$	8,777

The weighted average grant date fair value of option awards granted during 2015, 2014 and 2013 was $8.11, $10.51 and $7.62 per option, respectively. The total intrinsic value of options exercised during 2015, 2014 and 2013 was $11.4 million, $1.3 million and $2.7 million, respectively. At December 31, 2015, the total remaining unrecognized compensation cost related to nonvested stock option awards amounted to $16.3 million, including estimated forfeitures, which will be recognized over the weighted average remaining requisite service period of 2.4 years. The total fair value of options vested during 2015, 2014 and 2013 was $9.9 million, $10.1 million and $8.3 million, respectively.

Cash received from option exercises for 2015, 2014 and 2013 was $23.6 million, $2.2 million and $4.2 million, respectively.

Restricted Stock Awards

The Company has also made awards of time-based and performance-based restricted common stock to employees and officers. During the year ended December 31, 2015, the Company awarded 255,087 shares of time-based restricted common stock primarily to its officers in connection with its annual merit grant. The time-based restricted common stock vest as to 25% on the one year anniversary of the grant date and as to 6.25% quarterly over three years that follow the grant date. The time-based awards are generally forfeited if the employment relationship terminates with the Company prior to vesting. Between 2011 and early 2013, the Company awarded 949,620 shares of performance-based restricted common stock to employees and officers. The performance-based restricted common stock was scheduled to vest upon FDA approval of the GLATOPA ANDA on or before the performance deadline date of March 28, 2015 according to the following schedule: 50% of the shares vest upon FDA approval and 50% vest upon the one-year anniversary of FDA approval. The Company had historically determined that the performance condition was probable of being achieved by March 28, 2015 and, as a result, had recognized approximately $10.5 million of stock compensation costs related to the awards. On March 11, 2015, the Board of Directors approved an amendment to the awards that extended the performance deadline date to September 1, 2015 and provided for the forfeiture of 15% of the number of shares originally subject to each award on the 29th of each month, beginning March 29, 2015 until the shares vested or were forfeited in full. On March 29, 2015, 117,898 shares of performance-based restricted common stock were forfeited pursuant to the modified awards. The Company evaluated the modification and determined it was a Type III modification or "Improbable to Probable" pursuant to ASC 718 as the awards, on the date of modification, were no longer deemed to be probable of being earned by March 28, 2015. As a result, the Company reversed the cumulative compensation cost related to the original awards of $10.5 million in the first quarter of 2015. Also, in accordance with ASC 718, the Company re-measured the modified awards with a measurement date of March 11, 2015, and determined the aggregate compensation was $9.8 million. The FDA approved GLATOPA on April 16, 2015. The Company is recognizing the compensation cost attributed to the modified awards as follows: the first 50% of the awards was expensed over the period beginning on March 11, 2015 and ending on April 16, 2015, the date of FDA approval, and the remaining 50% of the awards expected to vest will be expensed over the period beginning on March 11, 2015 and ending on April 16, 2016, the one year anniversary of FDA approval. Accordingly, approximately $8.1 million of stock compensation cost was recognized in the period beginning March 11, 2015 and ending December 31, 2015. As of December 31, 2015, the total remaining unrecognized compensation cost related to the nonvested portion of the modified awards amounted to $1.2 million, which is expected to be recognized over the weighted average remaining requisite service period of 0.3 years.

As of December 31, 2015, the total remaining unrecognized compensation cost related to nonvested restricted stock awards amounted to $6.8 million, which is expected to be recognized over the weighted average remaining requisite service period of 1.7 years.

A summary of the status of nonvested shares of restricted stock as of December 31, 2015 and the changes during the year then ended are presented below (in thousands, except fair values):

	Number of Shares			Weighted Average Grant Date Fair Value
Nonvested at January 1, 2015		1,174		$	15.15
Granted		255			13.19
Vested		(517	)		15.15
Forfeited		(151	)		14.55

Nonvested at December 31, 2015		761		$	14.61

Nonvested shares of restricted stock that have time-based or performance-based vesting schedules as of December 31, 2015 are summarized below (in thousands):

Vesting Schedule	Nonvested Shares
Time-based		449
Performance-based		312

Nonvested at December 31, 2015		761

The total fair value of shares of restricted stock vested during 2015, 2014 and 2013 was $7.9 million, $2.0 million and $2.0 million, respectively.

Employee Stock Purchase Plan

In 2004, the Company's Board of Directors adopted the 2004 Employee Stock Purchase Plan, or ESPP. An aggregate of 1,024,652 shares of common stock have been reserved for issuance under the ESPP.

The ESPP is generally available to all employees who work more than 20 hours per week and five months per year. Under the ESPP, eligible participants purchase shares of the Company's common stock at a price equal to 85% of the lesser of the closing price of the Company's common stock on the first business day and the final business day of the applicable plan purchase period. Plan purchase periods begin on February 1 and August 1 of each year, with purchase dates occurring on the final business day of the given purchase period. To pay for the shares, each participant authorizes periodic payroll deductions of up to 15% of his or her eligible cash compensation. All payroll deductions collected from the participant during a purchase period are automatically applied to the purchase of common stock on that period's purchase date provided the participant remains an eligible employee and has not withdrawn from the ESPP prior to that date and subject to certain limitations imposed by the ESPP and the Internal Revenue Code. The Company issued 109,506 shares of common stock to employees under the ESPP during the year ended December 31, 2015. As of December 31, 2015, 637,474 shares of common stock have been issued to the Company's employees under the ESPP, and 387,178 shares remain available for future issuance. The fair value of each ESPP award is estimated on the first day of the offering period using the Black-Scholes-Merton option-pricing model. The weighted average assumptions the Company used in its fair value calculations and the expense recorded are noted in the table above under the heading Share-Based Compensation. The Company recognizes share-based compensation expense equal to the fair value of the ESPP awards on a straight-line basis over the offering period. At December 31, 2015, subscriptions were outstanding for an estimated 32,533 shares at a fair value of approximately $6.49 per share. The weighted average grant date fair value of the offerings during 2015, 2014 and 2013 was $4.05, $4.51 and $4.73 per share, respectively. Cash received from the ESPP for 2015, 2014 and 2013 was approximately $1.0 million, $1.1 million and $0.9 million, respectively