Stock-Based Compensation

9 Months Ended

Sep. 30, 2013

Stock-Based Compensation

Stock-Based Compensation

9. Stock-Based Compensation

As of December 31, 2012, there were 1.3 million shares of common stock available to be issued under the 2011 Stock Incentive Plan, (the “2011 Plan”). The 2011 Plan is administered by the Board of Directors of the Company and permits the Company to grant incentive and non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards.

In January 2013, 3.4 million shares of common stock became available for grant to employees, officers, directors and consultants under the 2011 Plan. During the nine months ended September 30, 2012 and 2013, the Company issued options to purchase 3.2 million shares of common stock in each period. At September 30, 2013, there were 1.7 million shares remaining available for grant under the 2011 Plan.

The range of assumptions used to estimate the fair value of options granted to employees and directors at the date of grant for the three and nine months ended September 30, 2013 were as follows:

	Three months ended September 30,		Nine months ended September 30,
	2012	2013	2012	2013
Risk-free interest rate	0.7-0.9%	1.9%	0.7-1.1%	0.1-1.9%
Expected dividend yield	0%	0%	0%	0%
Expected term	5.3-5.9 years	5.9 years	5.3-5.9 years	5.3-5.9 years
Expected volatility	66-68%	67-68%	66-72%	67-68%

These options generally vest over a three-year period for employees. The Company recognized stock-based compensation expense as follows for the three and nine months ended September 30, 2012 and 2013:

	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2012		2013			2012		2013
Employee awards:
Research and development	$	1,119	$	1,517		$	2,972	$	4,453
General and administrative	681		1,212			1,544		3,609
Stock-based compensation for employee awards	1,800		2,729			4,516		8,062
Stock-based compensation for non-employee awards	383		(192		)	416		(109		)
Total stock-based compensation	$	2,183	$	2,537		$	4,932	$	7,953

The stock-based compensation for non-employee awards recognized during the three and nine months ended September 30, 2013 was negative due to the change in fair value of the options granted during previous periods.

The following table summarizes stock option activity during the nine months ended September 30, 2013:

(in thousands, except per share amounts)	Number of Shares		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding, December 31, 2012	18,066		$	3.50	6.54	$	51,486
Granted	3,212		$	6.12
Exercised	(665	)	$	2.34
Forfeited	(258	)	$	6.08
Outstanding, September 30, 2013	20,355		$	3.91	6.36	$	20,411
Exercisable, September 30, 2013	15,243		$	3.02	5.45	$	20,336
Vested and expected to vest, September 30, 2013	20,007		$	3.87	6.31	$	20,406

The aggregate intrinsic value was calculated as the difference between the exercise price of the stock options and the fair value of the underlying common stock as of the respective balance sheet date.