Stock-Based Compensation

6 Months Ended

Jun. 30, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

11. Stock-Based Compensation

As of December 31, 2015, there were 2.5 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 February 2016, 4.1 million additional shares of common stock became available for grant to employees, officers, directors and consultants under the 2011 Plan. At June 30, 2016, there were 3.3 million shares remaining available for grant under the 2011 Plan.

During the six months ended June 30, 2016 and 2015, the Company issued options to purchase 3.8 million and 2.7 million shares of common stock, respectively. These options generally vest over a three-year period for employees. Options granted to directors vest immediately.

The fair value of stock options granted to employees during the three and six months ended June 30, 2016 and 2015 was estimated at the date of grant using the following assumptions:

	Three Months Ended June 30,		Six Months Ended June 30,
	2016	2015	2016	2015
Risk-free interest rate	1.1 – 1.5%	1.5 – 1.8%	1.1 – 1.5%	1.5 – 1.8%
Expected dividend yield	0%	0%	0%	0%
Expected term	5.0 – 5.8 years	5.0 – 5.9 years	5.0 – 5.8 years	5.0 – 5.9 years
Expected volatility	67 – 69%	66 – 67%	67 – 69%	66 – 67%

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 Company recognized stock-based compensation expense during the three and six months ended June 30, 2016 and 2015 as follows:

	Three Months Ended June 30,					Six Months Ended June 30,
(in thousands)	2016			2015		2016			2015
Employee awards:
Research and development expense	$	1,804		$	2,369	$	3,672		$	4,335
Selling, general and administrative expense		2,773			2,576		4,438			3,954
Stock-based compensation expense for    employee awards		4,577			4,945		8,110			8,289
Stock-based compensation expense for    non-employee awards		—			22		1			48
Less: stock-based compensation expense   capitalized to inventory		(90	)		—		(220	)		—
Total stock-based compensation expense	$	4,487		$	4,967	$	7,891		$	8,337

The following table summarizes stock option activity during the six months ended June 30, 2016:

						Weighted-Average Remaining		Aggregate
(in thousands, except per share amounts)	Shares			Weighted-Average Exercise Price		Contractual Term (in years)		Intrinsic Value
Outstanding at December 31, 2015		19,211		$	5.72		6.24	$	47,963
Granted		3,772		$	5.61
Exercised		(752	)	$	3.45
Forfeited		(584	)	$	7.05
Outstanding at June 30, 2016		21,647		$	5.75		6.38	$	16,475
Vested and expected to vest at June 30, 2016		21,260		$	5.73		6.32	$	16,470
Exercisable at June 30, 2016		15,797		$	5.31		5.37	$	16,224

The weighted-average grant date fair value per share of stock options granted during the three months ended June 30, 2016 and 2015 was $3.73 and $6.95, respectively. The weighted-average grant date fair value per share of stock options granted during the six months ended June 30, 2016 and 2015 was $3.35 and $5.75, respectively.

The aggregate intrinsic value is 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 stock options exercised during the three months ended June 30, 2016 and 2015 was $0.6 million and $10.3 million, respectively. The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2016 and 2015 was $2.7 million and $23.8 million, respectively.

As of June 30, 2016, there was $20.9 million of total unrecognized stock-based compensation expense related to unvested employee stock awards. The Company expects to recognize this expense over a weighted-average period of approximately 2.0 years.