14. Stock-Based Compensation

In 2008, the Company adopted the 2008 Stock Incentive Plan (as amended, the “2008 Plan”) for employees, officers, directors, consultants and advisors. 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-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. Additional shares also become available for grant by reason of the forfeiture, cancellation, expiration or termination of existing awards. The Company registered 0.4 million, 0.4 million and 0.4 million of additional shares of common stock related to the 2011 Plan in February 2016, February 2015 and March 2014, respectively. As of December 31, 2017, there were 0.4 million shares remaining available for grant under the 2011 Plan.

The Board of Directors authorized and declared a special cash dividend of $140.0 million on the Company's common stock, which was payable on May 26, 2017 to stockholders of record as of the close of business on May 17, 2017. The Board of Directors determined, in accordance with the adjustment provision of each of the Company’s 1999 Stock Option Plan, as amended, the 2008 Plan and the 2011 Plan (collectively, the “Equity Plans”), that the special cash dividend was unusual and non-recurring and that appropriate adjustment to the stock options to purchase shares of the Corporation’s common stock outstanding under the Equity Plans was required. The Company treated this adjustment as a modification to the original stock option grant because the terms of the agreements were modified in order to preserve the value of the option awards after a large non-recurring cash dividend. The calculation of the incremental compensation expense is based on the excess of the fair value of the award measured immediately before and after the modification. As a result, the Company recognized an incremental compensation expense of $6.9 million associated with the modification that occurred for the year ended December 31, 2017.

On August 11, 2017, the Company’s stockholders approved an amendment to the Company's certificate of incorporation to effect the Reverse Split. On September 5, 2017, the Company filed an amendment to its certificate of incorporation to effect the Reverse Split, and on September 6, 2017, the Reverse Split was effective for trading purposes. As a result of the Reverse Split, every ten shares of common stock issued and outstanding was converted into one share of common stock, reducing the number of issued and outstanding shares of common stock from approximately 132.8 million shares to approximately 13.28 million shares. No fractional shares were issued in connection with the Reverse Split. The amendment to the certificate of incorporation also proportionately reduced the number of authorized shares of common stock from 200 million to 20 million. The Reverse Split did not change the par value of the common stock. The Reverse Split did not change the number of authorized shares or par value of the Company’s preferred stock, of which there are no shares issued or outstanding. All outstanding stock options and Convertible Notes entitling their holders to purchase shares of common stock or acquire shares of common stock upon conversion, as the case may be, were adjusted as a result of the Reverse Split, as required by the terms of these securities.

During the years ended December 31, 2017, 2016 and 2015, the Company issued options to purchase 2.1 million, 0.4 million and 0.4 million shares of common stock, respectively. These options generally vest over a three-year period for employees. Options granted to directors generally vest immediately.

The fair value of stock options granted to employees during the years ended December 31, 2017, 2016 and 2015 was estimated at the date of grant using the following assumptions:

	Years Ended December 31,
	2017	2016	2015
Risk-free interest rate	1.7 – 2.2%	1.1 – 2.0%	1.5 – 1.8%
Expected dividend yield	0%	0%	0%
Expected term	5.0 – 6.1 years	5.0 – 5.8 years	5.0 – 5.9 years
Expected volatility	64 – 68%	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 the expected term of its stock options. Under this approach, the expected term is calculated to be the average of the ten-year contractual term of the option and the weighted-average vesting term of the option, taking into consideration multiple vesting tranches. 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 years ended December 31, 2017, 2016 and 2015 as follows:

	Years Ended December 31,
(in thousands)	2017		2016		2015
Employee awards:
Research and development expense	$	6,902	$	6,083	$	7,711
General and administrative expense		5,886		4,685		5,392
Restructuring expense		—		1,371		—
Stock-based compensation expense for employee awards		12,788		12,139		13,103
Stock-based compensation expense for non-employee awards		—		1		58
Total stock-based compensation expense	$	12,788	$	12,140	$	13,161

The following table summarizes stock option activity during the year ended December 31, 2017:

(in thousands, except per share amounts)	Options			Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at December 31, 2016		1,902		$	57.70		5.97	$	7,564
Granted		2,111		$	23.69
Exercised		(323	)	$	20.70
Forfeited		(2,074	)	$	56.60
Outstanding at December 31, 2017		1,616		$	22.07		6.65	$	60,031
Vested and expected to vest at December 31, 2017		1,615		$	22.07		6.64	$	60,031
Exercisable at December 31, 2017		996		$	26.43		4.96	$	59,689

The weighted-average grant date fair value of stock options granted during the years ended December 31, 2017, 2016 and 2015 was $4.07, $58.00 and $34.10, respectively.

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 during the years ended December 31, 2017, 2016 and 2015 was $2.4 million, $5.6 million and $30.9 million, respectively.

As of December 31, 2017, there was $5.0 million of total unrecognized stock-based compensation expense related to unvested employee stock options. The Company expects to recognize this expense over a weighted-average period of approximately 2.58 years.