14. Stock-Based Compensation

Prior to 2008, the Company granted equity awards to employees, officers and consultants under the 1999 Stock Option Plan (as amended, the “1999 Plan”). In 2008, the Company adopted the 2008 Stock Incentive Plan (as amended, the “2008 Plan”) for employees, officers, directors, consultants and advisors and decided that no additional shares of common stock would be issued under the 1999 Plan. The 2011 Stock Incentive Plan (the “2011 Plan”) became effective upon closing of the Company’s initial public offering in April 2012. Upon effectiveness of the 2011 Plan, no further awards were available to be issued under the 2008 Plan. The 2011 Plan is administered by the Board of Directors of the Company and permits the Company to grant incentive and non-qualifiedstock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. The 2011 Plan increased the total number of shares of common stock available to be issued by 3.5 million, for a total of 4.3 million shares. Additional shares also become available for grant by reason of the forfeiture, cancellation, expiration or termination of existing awards. In February 2013, the Company registered 3.4 million additional shares of common stock related to the 2011 Plan. As of December 31, 2013, there were 1.7 million shares of common stock available to be issued under the 2011 Plan.

During the years ended December 31, 2013, 2012 and 2011, the Company issued options to purchase 3.3 million, 3.3 million and 2.3 million shares of common stock, respectively. These options generally vest over a three-year period for employees. Prior to the closing of the Company’s initial public offering in April 2012, options previously granted to directors had vested immediately. After the closing of the Company’s initial public offering in April 2012, options granted to directors vest over a one-year period. During the years ended December 31, 2013, 2012 and 2011, the Company also issued options to purchase less than 0.1 million shares of common stock to non-employees in each period. The assumptions used to estimate the fair value of options granted to non-employees at the date of grant were materially consistent with those used for employee and director grants.

The Company recognized stock-based compensation expense as follows:


	Years ended December 31,
(in thousands)	2013			2012		2011
Employee awards:
Research and development	$	5,954		$	4,234	$	3,597
General and administrative		4,808			2,510		2,875

Stock-based compensation for employee awards		10,762			6,744		6,472
Stock-based compensation for non-employee awards		(29	)		145		480

Total stock-based compensation	$	10,733		$	6,889	$	6,952

The stock-based compensation for non-employee awards recognized during the year ended December 31, 2013 was negative due to the change in fair value of the options granted during previous periods.

The fair value of employee options granted during the years ended December 31, 2013, 2012 and 2011 was estimated at the date of grant using the following assumptions:


	Years ended December 31,
	2013			2012			2011
Risk-free interest rate		0.1 – 1.9	%		0.7 – 1.1	%		1.3 –2.5	%
Expected dividend yield		0	%		0	%		0	%
Expected term		5.3 – 5.9 years			5 – 5.9 years			5 – 5.9 years
Expected volatility		67 – 70	%		66 – 72	%		71 – 73	%

The Company uses the simplified method to calculate the expected term, as it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The computation of expected volatility is based on the historical volatility of comparable companies from a representative peer group selected based on industry and market capitalization. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected life of the stock options. Management estimates expected forfeitures based on historical experience and recognizes compensation costs only for those equity awards expected to vest.

The following table summarizes stock option activity:


	Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at December 31, 2012		18,066		$	3.50		6.54	$	51,486
Granted		3,286		$	6.04
Exercised		(913	)	$	2.23
Cancelled		(332	)	$	6.02

Outstanding at December 31, 2013		20,107		$	3.93		6.11	$	38,348
Vested and expected to vest at December 31, 2013		19,829		$	3.89		6.07	$	38,307
Exercisable at December 31, 2013		15,672		$	3.19		5.33	$	37,861

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. The aggregate intrinsic value of options exercised in 2013, 2012 and 2011 was $2.7 million, $13.7 million and $1.4 million, respectively.

As of December 31, 2013, there was $15.9 million of total unrecognized compensation cost related to nonvested employee stock awards. As of December 31, 2013, the Company expects to recognize those costs over a weighted average period of approximately 1.8 years.