Stock Based Compensation

3 Months Ended

Mar. 31, 2020

Share-based Payment Arrangement [Abstract]

Stock Options

The following table summarizes stock option activity under our 2013 Equity Incentive Plan (the “2013 Plan”) and our Inducement Plan, and related information during the three months ended March 31, 2020:



	Shares Subject to Outstanding Options		Weighted- Average Exercise Price Per Share
Balance at December 31, 2019	7,548,436		$	32.21
Options granted	1,689,360		12.32
Options exercised	(35,654	)	9.12
Options canceled	(401,547	)	31.49
Balance at March 31, 2020	8,800,595		$	28.52

Performance Stock Options (“PSOs”)

In January 2020, the Compensation Committee of our board of directors approved a program to award PSOs of an aggregate of up to 575,625 shares of our common stock to members of our management team, based on the achievement of certain net revenue goals. The following table summarizes PSO activities under our 2013 Plan and related information during the three months ended March 31, 2020:



	Shares Subject to Outstanding PSOs		Weighted- Average Exercise Price Per Share
Balance at December 31, 2019	552,010		$	31.43
Options granted	575,625		12.79
Options exercised	(2,293	)	23.76
Options canceled	(430,799	)	33.29
Balance at March 31, 2020	694,543		$	14.85

Restricted Stock Units (“RSUs”)

The following table summarizes RSU activity under our 2013 Plan and our Inducement Plan, and related information during the three months ended March 31, 2020:



	Shares Subject to Outstanding RSUs		Weighted- Average Grant Date Fair Value Per Share
Balance at December 31, 2019	1,274,217		$	29.86
RSUs granted	947,442		12.42
RSUs released	(355,665	)	31.35
RSUs canceled	(78,246	)	26.53
Balance at March 31, 2020	1,787,748		$	20.46

Performance Stock Units (“PSUs”)

In January 2020, the Compensation Committee of our board of directors approved an aggregate of 865,500 shares of Market-based PSU ("M-PSU") awards to members of our management team. Each M-PSU represents a contingent right to receive one share of our common stock upon achievement of market-based performance criteria and subject to the recipient’s continued employment. At any time during the three years following the date of the grant: i) one-third of the shares subject to the M-PSUs will vest any time after one year from the grant date if the average closing price of our common stock on the NASDAQ Global Select Market for 20 consecutive trading days has increased 50% per share compared to the grant date closing price, ii) another

one-third of the shares subject to the M-PSUs will vest any time after two years from the grant date if the average closing price of our common stock on the NASDAQ Global Select Market for 20 consecutive trading days has increased 100% per share compared to the grant date closing price, and iii) the last one-third of the shares subject to the M-PSUs will vest three years from the grant date if the average closing price of our common stock on the NASDAQ Global Select Market for 20 consecutive trading days has increased 150% per share compared to the grant date closing price. The estimated M-PSU expense is being recognized on an accelerated basis over the estimated requisite service period, with no adjustments in the future periods based upon our actual common stock price.

The following table summarizes PSU activity under our 2013 Plan and related information during the three months ended March 31, 2020:



	Subject to Outstanding PSUs		Weighted- Average Grant Date Fair Value Per Share
Balance at December 31, 2019	11,925		$	32.66
PSUs granted	865,500		13.06
PSUs released	(11,925	)	32.66
Balance at March 31, 2020	865,500		$	13.06

Stock-Based Compensation

The table below sets forth the functional classification of stock-based compensation expense for the periods presented (in thousands):



	Three Months Ended March 31,
	2020			2019
Research and development	$	2,599		$	10,137
Selling, general and administrative	6,881			7,757
Stock-based compensation expense included in total expenses	$	9,480		$	17,894

Capitalized stock-based compensation costs	$	(327	)	$	(242	)