Stockholders' Equity

3 Months Ended

Mar. 31, 2020

Stockholders’ Equity

Shares Reserved for Future Issuance

The following shares of the Company’s common stock were reserved for future issuance as of March 31, 2020 (in thousands):



Shares underlying outstanding warrants	705
Shares underlying outstanding stock options	6,684
Shares authorized for future equity award grants	2,961
Shares authorized for issuance pursuant to awards granted under the ESPP	1,692
	12,042

Common Stock Warrants

As of March 31, 2020, there were Series A warrants outstanding to purchase 415,200 shares of the Company’s common stock at an exercise price of $3.50 per share, which were issued in connection with a financing in October 2017, and which expire in October 2022. Also outstanding as of March 31, 2020, were warrants to purchase 193,788 shares of the Company’s common stock at an exercise price of $23.50 per share, which were issued in March 2017, and which expire in March 2027, and warrants to purchase 95,781 shares of the Company’s common stock at an exercise price of $73.73 per share, which were issued between August 2011 and August 2012, and which expire between August 2021 and August 2022. The Company issued 2,320 shares of its common stock upon the exercise of warrants during the three months ended March 31, 2020, and 18,285 shares of its common stock upon the exercise of warrants during the three months ended March 31, 2019.

Stock Plans

The Company issued 672,442 and 408,964 shares, respectively, of its common stock upon the exercise of stock options during the three months ended March 31, 2020 and 2019.

The ESPP enables eligible employees to purchase shares of the Company’s common stock using their after-tax payroll deductions, subject to certain conditions. Generally, offerings under the ESPP consist of a two-year offering period with four six-month purchase periods which begin in May and November of each year. There were no shares of common stock purchased under the ESPP in the three months ended March 31, 2020 and 2019.

Stock-Based Compensation

The Company granted options to purchase 229,911 shares and 1,294,053 shares of common stock, respectively, under the 2013 Plan during the three months ended March 31, 2020 and 2019. These options have an exercise price equal to the closing price of the Company’s common stock on the applicable award date, and generally vest as to 25% of the underlying shares on the first anniversary of the award, with the balance of the options vesting monthly over the following three years.

In addition, during the three months ended March 31, 2019, the Company awarded stock options to purchase 1,035,000 shares of common stock, which were subject to and conditioned upon the approval by its stockholders of an increase in the number of shares of common stock reserved for issuance under our 2013 Plan prior to December 31, 2019. No stock-based compensation expense was recognized for these contingent stock option grants during the three months ended March 31, 2019, because the approval by our stockholders of the increase in the number of shares of common stock reserved for issuance under our 2013 Plan did not occur until June 2019.

The assumptions used in the Black-Scholes option-pricing model are as follows:



	Stock Options
	Three Months Ended March 31,
	2020		2019
Weighted average grant date fair value (per share)	$43.40		$32.51
Risk-free interest rate	1.1	%	2.5	%
Expected dividend yield	0.0	%	0.0	%
Expected volatility	72.5	%	71.6	%
Expected term (in years)	6.1		6.1

The Company records stock-based compensation expense associated with the ESPP using the Black-Scholes option-pricing model. Valuations are performed on the grant date at the beginning of the purchase period, which generally occurs in May and November of each year.

The following table summarizes the allocation of stock-based compensation expense included in the consolidated statement of operations (in thousands):



	Three Months Ended March 31,
	2020		2019
Cost of sales	$	2,164	$	1,139
Selling, general & administrative	11,501		7,000
Research and development	2,200		1,695
Total	$	15,865	$	9,834

The total stock-based compensation expense capitalized as part of the cost of the Company’s inventories was $1.3 million and $1.3 million as of March 31, 2020 and December 31, 2019, respectively.