Stock Option Plan

6 Months Ended

Jun. 30, 2013

Stock Option Plan

Stock Option Plan

7. Stock Option Plan

The Company’s 2012 Stock Equity Incentive Plan (the “2012 Plan”), which was adopted by the board of directors and approved by the stockholders in July 2012, became effective immediately prior to the closing of the Company’s initial public offering. In addition, the 2004 Plan was terminated effective immediately prior to the closing of the Company’s initial public offering. The 1,819,839 options to purchase common stock and 34,507 restricted stock awards executed prior to the effective date of such termination remain in full force and effect pursuant to their terms and the terms of the 2004 Plan. The 2012 Plan initially authorized the Company to grant up to 1,663,727 shares of common stock to eligible employees, directors, consultants and advisors to the Company in the form of options to purchase common stock in the Company at a price not less than the estimated fair value at the date of grant. Under the provisions of the 2012 Plan, no option will have a term in excess of 10 years.

Subsequent to the closing of the IPO, certain options and restricted stock began to vest to directors, consultants and key employees. The Company recorded approximately $1.4 million of stock-based compensation expense associated with 573,424 options with a weighted average exercise price of $2.38 and 8,625 shares of restricted stock that fully vested upon consummation of an IPO. In addition, 281,895 options commenced vesting based upon the consummation of the IPO and the Company will record $1.8 million on the vesting of these options over their expected lives.

The following is a summary of stock option activity under the 2012 and 2004 Plans through June 30, 2013:

	Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life	Aggregate Intrinsic Value
Outstanding at December 31, 2012	1,819,839		$	2.76
Options granted	141,500		18.96
Options exercised	(23,038	)	2.50
Options forfeited	(58,728	)	3.24
Outstanding at June 30, 2013	1,879,573		$	3.97	6.24	$	37,426,040
Options exercisable at June 30, 2013	1,322,795		$	2.96	5.16	$	27,616,536

The following is a summary of restricted stock activity under the 2012 and 2004 Plans through June 30, 2013:

	Restricted Stock	Aggregate Intrinsic Value
Outstanding at December 31, 2012	34,507
Shares granted	231,614
Shares forfeited	—
Outstanding at June 30, 2013	266,121	$	6,344,325
Vested shares at June 30, 2013	17,252	$	411,288

In March 2013, the Company granted various consultants and advisors options to purchase an aggregate of 61,500 shares of common stock. The options were granted at an exercise price of $11.27 per share, the fair market value of the Company’s common stock on the date of grant as determined by the closing price on the date of grant. The options were immediately vested.

In April 2013, the Company granted an employee an aggregate of 149,614 shares of restricted common stock. The restricted stock was granted with a fair market value of the Company’s common stock on the date of grant of $13.11 per share as determined by the closing price on the date of grant. Of the 149,614 shares of restricted stock, 112,212 shares vest ratably over 5 years and 37,402 shares vest based on meeting certain market capitalization thresholds.

In June 2013, the Company granted employees and directors an aggregate of 82,000 shares of restricted common stock and options to purchase an aggregate of 80,000 shares of common stock. The restricted stock was granted with a fair market value of the Company’s common stock on the date of grant of $24.88 per share as determined by the closing price on the date of grant. The restricted stock vests over 4 years and the Company will record a charge to operating expenses of approximately $2.0 million over the vesting period. The options were granted at an exercise price of $24.88 per share, the fair market value of the Company’s common stock on the date of grant as determined by the closing price on the date of grant.

Total unrecognized compensation expense is $7.4 million, which will be recognized over a weighted average period of 1.5 years.