Stock-based Compensation

The Company recorded stock-based compensation expense related to stock options and shares issued under the Company's 2017 Employee Stock Purchase Plan (2017 Plan) in the following expense categories of its accompanying consolidated statements of operations for the three and nine months ended September 30, 2018 and 2017:



	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Cost of product sales	$	3	$	—	$	6	$	—
Research and development	329		411		734		919
General and administrative	1,870		360		5,585		881
	$	2,202	$	771	$	6,325	$	1,800

In addition, stock-based compensation expense of $72 and $6 is included within inventory and prepaid expenses and other assets, respectively, as of September 30, 2018, which represents the total stock-based compensation expense incurred related to employees involved in the manufacturing process of finished goods and samples during the period.

Stock Options

The Company has issued serviced-based and performance-based stock options that generally have a contractual life of up to 10 years and may be exercisable in cash or as otherwise determined by the Company's board of directors. Vesting generally occurs over a period of not greater than four years. Performance-based options may vest upon the achievement of certain milestones in connection with the Company's development programs. Additionally, the Company has issued stock options in excess of the fair market value of Common Stock on the issuance date that were only exercisable upon a change in control or upon or after an initial public offering. As of September 30, 2018, all of the performance conditions related to performance-based stock options issued by the Company have been achieved.

The following table summarizes the activity related to stock option grants to employees and nonemployees for the nine months ended September 30, 2018:



	Shares		Weighted average exercise price per share		Weighted average remaining contractual life
Outstanding at December 31, 2017	6,251,576		$	9.34	6.67
Granted	423,892		20.35
Exercised	(491,654	)	3.22
Expired	—		—
Forfeited	(45,441	)	8.81
Outstanding at September 30, 2018	6,138,373		$	10.60	6.71
Exercisable at September 30, 2018	3,228,993		$	6.91	4.70
Vested and expected to vest at September 30, 2018	6,138,373		$	10.60	6.71

During the nine months ended September 30, 2018, stock options to purchase 423,892 shares of Common Stock were granted to employees and directors and generally vest over four years. The stock options had an estimated weighted average grant date fair value of $20.35. During the nine months ended September 30, 2017, stock options to purchase 524,147 shares of Common Stock were granted to employees that generally vest over four years. The stock options had an estimated weighted average grant date fair value of $5.90.

The grant date fair value of each stock option grant was estimated at the time of grant using the Black-Scholes option-pricing model using the following weighted average assumptions:



	Nine Months Ended September 30,
	2018			2017
Risk free interest rate	2.71		%	2.01		%
Expected term (in years)	5.93			6.08
Expected volatility	74.61		%	74.06		%
Annual dividend yield	0.00		%	0.00		%
Fair value of common stock	$	13.50		$	3.90

At September 30, 2018, the unrecognized compensation cost related to unvested stock options expected to vest was $22,269. This unrecognized compensation will be recognized over an estimated weighted-average amortization period of 2.90 years.

2017 Employee Stock Purchase Plan

Under the 2017 Plan, shares of Common Stock may be purchased by eligible employees who elect to participate in the 2017 Plan at 85% of the lower of the fair market value of Common Stock on the first or last day of designated offering periods.The Company recognized stock-based compensation expense of $84 and $363 during the three and nine months ended September 30, 2018, respectively, related to the 2017 Plan.

In July 2018, the Company issued 53,137 shares of Common Stock related to the offering periods ended June 30, 2018.