Common Stock and Stockholders' Equity

12 Months Ended

Dec. 31, 2016

Equity [Abstract]

Common Stock and Stockholders’ Equity

Common Stock and Stockholders’ Equity

Common Stock

As of December 31, 2016, there were 52,924,805 shares of common stock outstanding. Each share of common stock is entitled to one vote. The holders of the common stock are also entitled to receive dividends whenever funds are legally available and when declared by our Board of Directors.

Shares Reserved for Future Issuance

The following shares of common stock were reserved for future issuance as of December 31, 2016:

Common stock options outstanding	8,931,498
Common stock available for future grant under the 2012 Plan	718,299
Employee Stock Purchase Plan	1,594,452
Total common shares reserved for future issuance	11,244,249

The following table summarizes our stock option activity under all equity incentive plans for the year ended December 31, 2016 (shares and aggregate intrinsic value in thousands): 

	Number of options		Weighted average exercise price		Weighted average remaining contractual term	Aggregate intrinsic value
Options outstanding at December 31, 2015	5,126		$	8.91
Granted	4,966		$	4.93
Exercised	(90	)	$	3.45
Canceled/forfeited/expired	(1,071	)	$	9.32
Options outstanding at December 31, 2016	8,931		$	6.70	8.14	$	34,680
Vested or expected to vest at December 31, 2016	8,278		$	6.82	8.04	$	31,463
Exercisable at December 31, 2016	2,882		$	7.58	5.99	$	9,688

The weighted average grant date fair value per share of employee stock options granted during the years ended December 31, 2016, 2015 and 2014 was $3.47, $7.47 and $8.37, respectively.

The total intrinsic value of stock options exercised was $0.2 million, $21.4 million and $12.1 million during the years ended December 31, 2016, 2015 and 2014, respectively. Cash received from the exercise of stock options was approximately$0.3 million, $6.7 million and $2.2 million for the years ended December 31, 2016, 2015 and 2014, respectively.

Stock-Based Compensation

The following table summarizes the weighted average assumptions used to estimate the fair value of stock options and performance stock awards granted to employees under our 2012 Equity Incentive Plan and 2015 Inducement Plan and the shares purchasable under our 2012 Employee Stock Purchase Plan during the periods presented:

	Year ended December 31,
	2016		2015		2014
Stock options
Risk-free interest rate	1.5	%	1.8	%	1.8	%
Volatility	82.7	%	78.9	%	74.3	%
Dividend yield	—		—		—
Expected term (years)	6.0		6.1		6.1
Performance stock options
Risk-free interest rate	1.4	%	1.8	%	2.1	%
Volatility	82.4	%	76.7	%	69.6	%
Dividend yield	—		—		—
Expected term (years)	5.9		6.0		6.3
Employee stock purchase plan shares
Risk-free interest rate	0.5	%	0.1	%	0.1	%
Volatility	93.7	%	76.1	%	69.8	%
Dividend yield	—		—		—
Expected term (years)	0.5		0.5		0.5

Risk-free interest rate - The risk-free interest rate assumption was based on observed interest rates appropriate for the expected term of the stock option grants.

Expected dividend yield - The expected dividend yield assumption was based on the fact that we have never paid cash dividends and have no present intention to pay cash dividends.

Expected volatility - The expected volatility assumption for the years ended December 31, 2016 and 2015 was based on the historical volatility of the trading price of our common stock. The expected volatility assumption for the year ended December 31, 2014 was based on a combination of volatility of a peer group of similar companies whose share prices were publicly available and the historical volatility of the trading price of our common stock. The peer group was developed based on companies in the biotechnology industry.

Expected term - The expected term represents the period of time that options are expected to be outstanding. Because we do not have sufficient historical exercise behavior data, we determine the expected life using the simplified method, which was an average of the contractual term of the option and its ordinary vesting period.

Forfeitures - We reduce stock-based compensation expense for estimated forfeitures. Forfeitures are estimated at the time of grant based upon historical information and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Our estimated forfeiture rates ranged from 3% to 7% for the years ended December 31, 2016 and 2015.

The following table summarizes the allocation of our stock-based compensation expense for all stock awards during the periods presented (in thousands):

	Year ended December 31,
	2016		2015		2014
Research and development	$	5,458	$	8,075	$	3,939
General and administrative	7,414		7,293		3,100
Total	$	12,872	$	15,368	$	7,039

The total compensation cost related to non-vested awards not yet recognized was $12.3 million as of December 31, 2016. The weighted-average period over which this expense is expected to be recognized is approximately 1.5 years.

Employee Stock Purchase Plan

In October 2012, we adopted the 2012 Employee Stock Purchase Plan (“2012 Purchase Plan”), which enables participants to contribute up to 15% of such participant’s eligible compensation during a defined six-month period to purchase our common stock. The purchase price of common stock under the 2012 Purchase Plan will be the lesser of: (i) 85% of the fair market value of our common stock at the inception of the enrollment period or (ii) 85% of the fair market value of our common stock at the applicable purchase date. We issued 165,684 shares of common stock under the 2012 Purchase Plan for the year ended December 31, 2016. As of December 31, 2016, 321,184 shares of our common stock were issued and 1,594,452 shares of our common stock were reserved for future issuance and have been authorized for purchase under the 2012 Purchase Plan.

Inducement Plan

On July 17, 2015, the Company’s Board of Directors adopted an Inducement Plan, which became effective immediately. Stockholder approval of the Inducement Plan was not required pursuant to Rule 5635 (c)(4) of the NASDAQ Listing Rules. The Inducement Plan initially reserved 1,000,000 shares of common stock and provides for the grant of NSOs that was used exclusively for grants to individuals that were not previously employees or directors of the Company, as an inducement material to the individual’s entry into employment with the Company.

Under the Inducement Plan, options were granted with varying vesting terms, but typically vest over four years, with 25% of the total grant vesting on the first anniversary of the effective date of the option grant and the remaining grant vesting monthly thereafter over the following 36 months. All options granted under the Inducement Plan expire ten years from the date of grant.

As of December 31, 2016, all shares reserved under the Inducement Plan had been granted.