Stockholders' Equity

3 Months Ended

Mar. 31, 2016

Equity [Abstract]

Stockholders' Equity

Note 6—Stockholders’ Equity:

Stock-Based Compensation:

The Company’s 2011 Incentive Award Plan, or the 2011 Plan, was adopted by the Board of Directors on September 15, 2011.  Pursuant to the 2011 Plan, the Company may grant incentive stock options and nonqualified stock options, as well as other forms of equity-based compensation. Incentive stock options may be granted only to employees, while consultants, employees, officers and directors are eligible for the grant of nonqualified options under the 2011 Plan. The maximum term of stock options granted under the 2011 Plan is 10 years. The exercise price of incentive stock options granted under the 2011 Plan must be at least equal to the fair value of such shares on the date of grant. Through March 31, 2016, a total of 10,529,412 shares of the Company’s common stock have been reserved for issuance under the 2011 Plan.

Employee stock-based compensation for the three months ended March 31, 2016 and 2015 were as follows (in thousands, except share and per share data):

	Three Months Ended March 31,
	2016		2015
Stock-based compensation:
Options -
Research and development, or R&D	$	23,556	$	15,254
General and administrative, or G&A		5,882		4,704
Performance shares - R&D		72		145
Total stock-based compensation expense	$	29,510	$	20,103
Impact on basic and diluted net loss per share	$	0.91	$	0.64
Weighted average shares (basic and diluted)		32,478,408		31,588,315

Performance Shares:

During January 2014, performance share awards that provide for a maximum of 28,411 common stock shares to be issued were granted to certain employees. These shares vest over three years on the first, second and third anniversary of December 15, 2013. On each vesting date, if the Company’s closing common stock price is equal to $102.46 per share, one-third of the 28,411 shares will be awarded. If the Company’s closing common stock price is either lesser or greater than $102.46 per share, the number of common stock shares to be issued will be adjusted to be less than one-third of the 28,411 shares. No shares will be awarded if the Company’s closing common stock price is less than $47.53 per share at the vesting dates. The performance shares are valued on the grant date and the fair value of the performance award is equal to the market price of the Company’s common stock on the grant date. The performance share expense is recognized based on the Company’s estimate of a range of probabilities that the Company’s closing common stock price will be lower or higher than $102.46 on the vesting dates. Based on the range of probabilities, the expense is calculated and recognized over the three-year vesting period.  On December 15, 2015, the second vesting occurred and the calculations were performed.  As a result, 6,530 shares of common stock were issued to the employees and 2,943 performance shares were cancelled.  The third and final vesting event will occur on December 15, 2016.

			Weighted
			Average
			Grant-Date
Performance shares	Shares		Fair Value
Nonvested shares at December 31, 2015		9,469	$	102.46
Granted		—		—
Vested/Issued		—		—
Cancelled		—		—
Nonvested shares at March 31, 2016		9,469	$	102.46

Stock Options:

The fair value of options granted to employees was estimated using the Black-Scholes Option Pricing Method (see Note 2—Significant Accounting Policies) with the following weighted-average assumptions used during the three months ended March 31, 2016 and 2015:

	2016			2015
Dividend yield		0.0	%		0.0	%
Expected volatility		66.1	%		63.1	%
Risk-free interest rate		1.6	%		1.6	%
Expected life in years		5.85			5.85

Activity with respect to options granted under the 2011 Plan is summarized as follows:

	Shares			Weighted Average Exercise Price		WeightedAverage Remaining Contractual Term (years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2015		5,542,285		$	105.59		8.6	$	87,632
Granted		249,750		$	60.82
Forfeited		(89,392	)	$	121.08
Exercised		(26,250	)	$	8.46			$	920
Expired		(1,000	)	$	106.41
Outstanding at March 31, 2016		5,675,393		$	103.83		8.4	$	17,190
Nonvested at March 31, 2016		3,433,496		$	118.33		9.2	$	—
Exercisable at March 31, 2016		2,241,897		$	81.62		7.2	$	17,190

At March 31, 2016, total estimated unrecognized employee compensation cost related to nonvested stock options and performance shares granted prior to that date were approximately $202.5 million and $0.4 million, respectively. These unrecognized expenses are expected to be recognized over a weighted-average period of 2.0 years for stock options and 0.7 years for performance shares. The weighted-average grant date fair value of options granted during the three months ended March 31, 2016 and 2015, were $36.28 per share and $125.41 per share, respectively.

				Weighted
				Average
				Grant-Date
Stock options	Shares			Fair Value
Nonvested shares at December 31, 2015		3,572,202		$	73.59
Granted		249,750			36.28
Vested/Issued		(299,064	)		95.25
Forfeited		(89,392	)		74.51
Nonvested shares at March 31, 2016		3,433,496			70.72