NOTE 9—STOCK BASED COMPENSATION

In 2009, the Company established an equity incentive plan (the “Plan”) pursuant to which incentives may be granted to officers, employees, directors, consultants and advisors. Incentives under the Plan may be granted in any one or a combination of the following forms: (a) incentive stock options and non-statutory stock options; (b) stock appreciation rights; (c) stock awards; (d) restricted stock; and (e) performance shares.

The Plan is administered by the Board of Directors of the Company or a committee appointed by the Board of Directors, which determines the types of awards to be granted, including the number of shares subject to the awards, the exercise price and the vesting schedule. As of December 31, 2013, the number of shares of common stock, which may be granted under the Plan, shall not exceed 4,625,000. In March 2014, the Board of Directors approved an amendment to increase the shares of common stock issuable under the Plan to 6,500,000 shares.

In June 2014, the Board of Directors approved an amendment and restatement of the Plan, increasing the shares of common stock issuable under the Plan to 9,150,000 shares as well as allowing for an automatic annual increase (the “evergreen provision”) to the shares issuable under the Plan to the lower of (i) 5% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year; or (ii) a lower number determined by the Board of Directors (which can also be zero). The term of any stock option granted under the Plan cannot exceed 10 years. Options shall not have an exercise price less than 100% of the fair market value of the Company’s common stock on the grant date, and generally vest over a period of four years. If the individual possesses more than 10% of the combined voting power of all classes of stock of the Company, the exercise price shall not be less than 110% of the fair market value of a common share of stock on the date of grant.

In January 2015, the number of shares of common stock available for issuance under the Plan was automatically increased in accordance with the evergreen provision by 2,201,772 shares of common stock, for a total number of shares of common stock issuable under the Plan of 11,351,772 shares.

A summary of the status of the options issued under the Plan as of June 30, 2015, and information with respect to the changes in options outstanding is as follows:

				OPTIONS OUTSTANDING
									WEIGHTED-
							WEIGHTED-		AVERAGE
	SHARES			OUTSTANDING			AVERAGE		REMAINING		AGGREGATE
	AVAILABLE			STOCK			EXERCISE		CONTRACTUAL		INTRINSIC
	FOR GRANT			OPTIONS			PRICE		LIFE (YEARS)		VALUE
Balance at January 1, 2015		1,009,150			5,338,707		$	14.01		9.2	$	64,704,526
Authorized under the Plans		2,201,772			—			—
Granted under the Plans		(1,842,000	)		1,842,000			60.44
Exercised		—			(290,695	)		3.10
Surrendered/Cancelled		210,001			(210,001	)		60.29
Balance at June 30, 2015		1,578,923			6,680,011		$	21.15		9.0	$	237,459,824
Exercisable at June 30, 2015					1,628,142		$	3.81		8.3	$	93,093,140

The fair value of each stock option granted has been determined using the Black-Scholes option pricing model. The material factors incorporated in the Black-Scholes model in estimating the fair value of the options granted during the six months ended June 30, 2015 and 2014 included the following:

	SIX MONTHS ENDED JUNE 30,
	2015		2014
Risk-free interest rate	1.19% - 1.75%		1.62% - 1.72%
Expected volatility	72.0% - 80.0%		74.5% - 76.4%
Stock price	$50.02 - $72.42		$1.35 - $17.00
Expected life	6 years		6 years
Expected dividend yield		0%		0%

Due to the Company’s lack of sufficient history as a publicly traded company, management’s estimate of expected volatility is based on the average volatilities of a sampling of five companies with similar attributes to the Company, including: industry, stage of life cycle, size and financial leverage.

Stock-based compensation for the three and six months ended June 30, 2015 and 2014 is as follows (in thousands):

	THREE MONTHS ENDED				SIX MONTHS ENDED
	JUNE 30,				JUNE 30,
	2015		2014		2015		2014
Research and development	$	4,765	$	4,760	$	7,544	$	4,806
General and administrative		4,616		2,284		8,514		2,435
Total	$	9,381	$	7,044	$	16,058	$	7,241

The weighted-average grant date fair value per share of options granted under the Plan was $35.47 for the three months ended June 30, 2015, and $10.36 for the three months ended June 30, 2014. The weighted-average grant date fair value per share of options granted under the Plan was $40.28 for the six months ended June 30, 2015, and $7.74 for the six months ended June 30, 2014.

As of June 30, 2015, total compensation expense not yet recognized related to stock option grants amounted to approximately $121.9 million which will be recognized over the next four years. Additionally, 1,387,580 options that were early exercised for a total proceeds of $1.6 million were unvested, and were recorded as a current and long term liability, based on their vesting date, on the condensed consolidated balance sheets.

The following table summarizes information about stock options outstanding as of June 30, 2015:

	OUTSTANDING						EXERCISABLE
			WEIGHTED-
			AVERAGE		WEIGHTED-				WEIGHTED-
			REMAINING		AVERAGE				AVERAGE
EXERCISE PRICE	TOTAL SHARES		CONTRACTUAL LIFE		EXERCISE PRICE		TOTAL SHARES		EXERCISE PRICE
0.38		346,542		6.6	$	0.38		281,542	$	0.38
0.70		956,543		8.4		0.70		617,688		0.70
1.35		1,180,377		8.7		1.35		410,886		1.35
6.89		837,092		8.9		6.89		182,117		6.89
17.00 - 32.56		868,157		9.2		26.06		94,659	17.00
40.30 - 51.96		779,300		9.4		50.16		30,000	51.43
53.90 - 59.23		730,000		9.6		54.89		1,875	54.47
60.61 - 65.50		847,000		9.7		63.97		9,375	63.52
71.45		125,000		9.5		71.45		—		—
72.42		10,000		9.6		72.42		—		—
Total		6,680,011		9.0	$	21.15		1,628,142	$	3.81