Stock-Based Compensation

9 Months Ended

Sep. 30, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

9. Stock-Based Compensation

As of December 31, 2013, there were 1.7 million shares of common stock available to be granted under the Company’s 2011 Stock Incentive Plan (the “2011 Plan”). The 2011 Plan is administered by the Company’s board of directors 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 2014, 3.6 million additional 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, 2014 and 2013, the Company issued options to purchase 3.7 million and 3.2 million shares of common stock, respectively. At September 30, 2014, there were 2.0 million shares remaining available for grant under the 2011 Plan.

The 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, 2014 were as follows:

	Three months ended September 30,		Nine months ended September 30,
	2014	2013	2014	2013
Risk-free interest rate	1.8-2.0%	1.9%	1.6-2.0%	0.1-1.9%
Expected dividend yield	0%	0%	0%	0%
Expected term	5.8-5.9 years	5.9 years	5.0-5.9 years	5.3-5.9 years
Expected volatility	67-72%	67-68%	64-72%	67-68%

Options granted to directors during the three and nine months ended September 30, 2014 vested immediately. Options granted to directors during the three and nine months ended September 30, 2013 vested over a one year period. Options granted to employees generally vest over a three year period. The Company recognized stock-based compensation expense as follows for the three and nine months ended September 30, 2014 and 2013:

	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2014		2013			2014		2013
Employee awards:
Research and development	$	1,663	$	1,517		$	5,185	$	4,453
General and administrative		1,143		1,212			4,596		3,609
Stock-based compensation for employee awards		2,806		2,729			9,781		8,062
Stock-based compensation for non-employee awards		44		(192	)		160		(109	)
Total stock-based compensation	$	2,850	$	2,537		$	9,941	$	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 options granted during previous periods.

The following table summarizes stock option activity during the nine months ended September 30, 2014:

(in thousands, except per share amounts and years)	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding, December 31, 2013		20,107		$	3.93		6.11	$	38,348
Granted		3,704		$	5.45
Exercised		(2,793	)	$	2.27
Forfeited		(471	)	$	6.30
Outstanding, September 30, 2014		20,547		$	4.37		6.38	$	90,628
Vested and expected to vest, September 30, 2014		20,220		$	4.35		6.33	$	89,628
Exercisable, September 30, 2014		15,313		$	3.84		5.50	$	75,699

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.