In connection with our acquisition of Sequenta in January 2015, we assumed Sequenta’s Equity Incentive Plan (“2008 Plan”), including all outstanding options and shares available for future issuance under the 2008 Plan, which, prior to the completion of our initial public offering, were all exercisable for Series E-1 convertible preferred stock. Upon completion of our initial public offering, outstanding options are now exercisable for common stock. While no shares are available for future issuance under this plan, the 2008 Plan continues to govern outstanding equity awards granted thereunder.

We adopted an equity incentive plan in 2009 (“2009 Plan”) that provided for the issuance of incentive and nonqualified common stock options, and other share-based awards for employees, directors and consultants. Under the 2009 Plan, the option exercise price for incentive and nonqualified stock options were not to be less than the fair market value of our common stock at the date of grant as determined by our board of directors. Options granted under this plan expire no later than ten years from the grant date, and vesting was established at the time of grant. Pursuant to the terms of the 2019 Plan, any shares subject to outstanding options originally granted under the 2009 Plan that terminate, expire or lapse for any reason without the delivery of shares to the holder thereof shall become available for issuance pursuant to awards granted under the 2019 Plan. While no shares are available for future issuance under the 2009 Plan, it continues to govern outstanding equity awards granted thereunder.

The 2019 Plan was approved by our shareholders on June 13, 2019 and, pursuant to the resolutions adopted by our board of directors, became effective with an initial reserve of 15,519,170 shares immediately prior to and contingent upon the closing of our initial public offering. The 2019 Plan provides for the issuance of awards in the form of options and other share-based awards for employees, directors and consultants. Under the 2019 Plan, the option exercise price per share shall not be less than the fair market value of a share of stock on the grant date of the option, as defined by the 2019 Plan, unless explicitly qualified under the provisions of Section 409A or Section 424(a) of the Internal Revenue Code of 1986. Additionally, unless otherwise specified, options granted under this plan expire no later than ten years from the grant date, and vesting is established at the time of grant. Except for certain option grants made to non-employee directors, stock options granted under the 2019 Plan generally vest over a four-year period, subject to continuous service through each applicable vesting date. As of December 31, 2019, we have authorized 15,704,914 shares of common stock for issuance under the 2019 Plan.

Changes in shares available for grant during the year ended December 31, 2019 were as follows:

Stock option activity under the 2008 Plan, 2009 Plan and 2019 Plan during the year ended December 31, 2019, 2018 and 2017 was as follows:

	Shares Subject to Outstanding Options			Weighted- Average Exercise Price per Share		Aggregate Intrinsic Value (in thousands)
Options outstanding at December 31, 2016		12,919,342		$	3.28	$	41,952
Options granted		1,604,496			6.27
Options forfeited or cancelled		(2,207,933	)		5.51
Options exercised		(226,211	)		0.98
Options outstanding at December 31, 2017		12,089,694			3.56		36,165
Options granted		4,764,625			6.55
Options forfeited or cancelled		(929,519	)		4.86
Options exercised		(766,870	)		1.66
Options outstanding at December 31, 2018		15,157,930			4.52		41,690
Options granted		4,194,491			9.72
Options forfeited or cancelled		(412,357	)		6.24
Options exercised		(2,293,410	)		1.97
Options outstanding at December 31, 2019		16,646,654		$	6.14	$	398,379
Options vested and exercisable at December 31, 2019		10,101,496		$	4.58	$	255,939

The weighted-average remaining contractual life for options outstanding at December 31, 2019 was 6.8 years. The weighted-average remaining contractual life for vested and exercisable options outstanding at December 31, 2019 was 5.5 years.

The weighted-average grant date fair value of options granted was $6.87, $4.15 and $4.00 during the years ended December 31, 2019, 2018 and 2017, respectively. The total intrinsic value of options exercised was $39.1 million, $3.8 million and $1.3 million during the years ended December 31, 2019, 2018 and 2017, respectively.

As of December 31, 2019, $0.5 million was included in the prepaid expenses and other current assets line item on our balance sheet for unsettled cash proceeds related to options exercised during the year ended December 31, 2019.

As of December 31, 2016, there were 880,487 RSUs outstanding. During the year ended December 31, 2017, these RSUs were forfeited due to the related employee’s termination prior to the occurrence of both a service and an event condition. During the year ended December 31, 2019, we granted 12,810 shares of RSUs at a weighted-average grant date fair value per share of $41.63; 8,310 of those shares, with a weighted-average grant date fair value per share of $41.63, vested. As of December 31, 2019, 4,500 shares of RSUs, with a weighted-average grant date fair value per share of $41.63, remain nonvested and outstanding.

For valuations of RSU grants made after the closing of our initial public offering, our board of directors determines the fair value of each share of common stock based on the closing price of our common stock on the date of grant or other relevant determination date, as reported on The Nasdaq Global Select Market.

The estimated fair value of options granted during the year ended December 31, 2019, 2018 and 2017 was estimated using the Black-Scholes option-pricing model with the following assumptions:

	Year Ended December 31,
	2019		2018		2017
Grant date fair value	$7.80 - $47.81		$6.55		$6.27 - $6.32
Expected term (in years)	5.27 - 6.08		6.08 - 10.00		6.08 - 10.00
Risk-free interest rate	1.4% - 2.5%		2.6% - 3.0%		1.9% - 2.4%
Expected volatility	64.3% - 72.9%		65.0% - 69.2%		67.3% - 70.5%
Expected dividend yield		—		—		—

The weighted-average volatility used in the fair value calculations of options granted during the year ended December 31, 2019, 2018 and 2017 was 68.1%, 68.1% and 70.2%, respectively.

The determination of the fair value of stock options on the date of grant using a Black-Scholes option-pricing model is affected by the estimated fair value of our common stock, as well as assumptions regarding a number of variables that are complex, subjective and generally require significant judgment to determine. The valuation assumptions were determined as follows:

Fair value of common stock—Prior to the closing of our initial public offering, the grant date fair value of our common stock was determined by our board of directors with input from management using valuation methodologies which utilize certain assumptions, including probability weighting of events, volatility, time to liquidation, a risk-free interest rate and an assumption for a discount for lack of marketability (Level 3 inputs). In determining the fair value of our common stock, the methodologies used to estimate the enterprise value were performed using methodologies, approaches and assumptions consistent with the American Institute of Certified Public Accountants Accounting and Valuation Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. For valuations of grants made after the closing of our initial public offering, our board of directors determines the fair value of each share of common stock based on the closing price of our common stock on the date of grant or other relevant determination date, as reported on The Nasdaq Global Select Market.

Expected term—The expected term of options granted to employees and non-employee directors is determined using the “simplified” method, as illustrated in ASC Topic 718, Compensation—Stock Compensation, as we do not have sufficient exercise history to determine a better estimate of expected term. Under this approach, the expected term is based on the midpoint between the vesting date and the end of the contractual term of the option.

Risk-free interest rate—We utilize a risk-free interest rate in the option valuation model based on U.S. Treasury zero-coupon issues, with remaining terms similar to the expected term of the options.

Expected volatility—As we do not have sufficient trading history for our common stock, the expected volatility is based on the historical volatility of our publicly traded industry peers utilizing a period of time consistent with our estimate of the expected term.

Expected dividend yield—We do not anticipate paying any cash dividends in the foreseeable future and, therefore, use an expected dividend yield of zero in the option valuation model.

Share-based compensation expense of $13.1 million, $11.1 million and $7.0 million was recognized during the year ended December 31, 2019, 2018 and 2017, respectively.

The compensation costs related to stock options and RSUs for the year ended December 31, 2019, 2018 and 2017, respectively, are included on our statements of operations as follows (in thousands):

	Year Ended December 31,
	2019		2018		2017
Cost of revenue	$	555	$	398	$	237
Research and development		3,934		2,896		2,375
Sales and marketing		3,480		2,891		1,344
General and administration		5,155		4,964		3,053
Total share-based compensation expense	$	13,124	$	11,149	$	7,009

During the year ended December 31, 2018, there was one employee option modification to extend the option exercise period which resulted in incremental stock compensation of $0.5 million. The total grant date fair value of the stock options and RSUs that vested during the years ended December 31, 2019, 2018 and 2017, excluding the impact of modifications, approximated the share-based compensation expense recorded during the respective periods.

At December 31, 2019, unrecognized share-based compensation expense related to unvested stock options was $33.3 million, which is expected to be recognized over a remaining weighted-average period of 2.9 years. Additionally, at December 31, 2019, unrecognized share-based compensation expense related to unvested RSUs was $0.2 million, which is expected to be recognized over a remaining weighted-average period of 0.5 years.