11.	Stock-Based Compensation

A summary of the Company’s stock option activity and related information is as follows:

				Options Outstanding
	Shares Available for Grant			Number of Stock Options Outstanding			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
											(In thousands)
Balance at December 31, 2017		969,783			8,592,747		$	3.69		7.4	$	47,864
Additional options authorized		8,326,158			—
Options granted		(5,716,505	)		5,716,505			8.66
Options exercised		—			(1,607,108	)		2.22
Options canceled		801,933			(801,933	)		6.00
RSUs granted		(1,767,542	)		—
Balance at September 30, 2018		2,613,827			11,900,211		$	6.12		7.3	$	39,509
Vested and exercisable at September 30, 2018					4,731,731		$	3.57		5.1	$	27,404
Vested and expected to vest at September 30, 2018					11,397,852		$	6.06		7.2	$	38,576

The weighted-average grant date fair value of options granted to employees was $5.02 and $3.18 per share during the nine months ended September 30, 2018 and 2017, respectively. The grant date fair value of options vested was $4.3 million and $2.9 million during the nine months ended September 30, 2018 and 2017, respectively.

Aggregate intrinsic value represents the difference between the estimated fair value of the underlying common stock and the exercise price of outstanding, in-the-money options. The aggregate intrinsic value of options exercised was $11.6 million and $1.8 million during the nine months ended September 30, 2018 and 2017, respectively.

At September 30, 2018, total unrecognized compensation cost related to stock options granted to employees, net of estimated forfeitures, was $28.9 million which is expected to be recognized over a weighted-average period of 3.3 years.

Determination of Fair Value

The determination of the fair value of stock options on the date of grant using an option-pricing model is affected by the estimated fair value of the Company’s common stock, as well as assumptions regarding a number of complex and subjective variables. The variables used to calculate the fair value of stock options using the Black-Scholes option-pricing model include actual and projected employee stock option exercise behaviors, expected price volatility of the Company’s common stock, the risk-free interest rate and expected dividends. Each of these inputs is subjective and generally requires significant judgment to determine.

The fair value of employee stock option is estimated at the date of grant using a Black-Scholes option-pricing model with the following weighted-average assumptions:

	Nine Months Ended September 30,
	2018		2017
Expected term (in years)		6.0		6.0
Expected volatility%	60.4%		66.9%
Risk-free interest rate%	2.8%		2.1%
Expected dividend yield%		0.0%		0.0%

Restricted Stock Units

From time to time, the Company grants Restricted Stock Units, or RSUs, to its board of directors for their services. These RSUs are either fully vested upon issuance or vest over a period of time from the grant date and will be released and settled upon termination of the board member’s services or the occurrence of a change in control event. In November 2017, the Company granted RSUs to one executive officer upon his termination, and these RSUs were fully vested upon issuance. In July 2018, the Company granted RSUs to two new executive officers, and these RSUs vest in equal annual installments over three years from the grant date. The fair value of RSUs is based on the closing market price of the Company’s common stock on the grant date.

	RSUs
	Number of Shares			Weighted Average Grant Date Fair Value
Unvested at December 31, 2017		—		$	—
RSUs granted		1,767,542			9.65
RSUs vested		(20,109	)		10.31
Unvested at September 30, 2018		1,747,433		$	9.64
Vested and unreleased		130,889
Outstanding at September 30, 2018		1,878,322

For the nine months ended September 30, 2018, the Company granted 1.8 million shares of RSUs, and recorded $1.2 million in stock-based compensation expense related to the issuance of RSUs. For the nine months ended September 30, 2017, no RSUs were issued and no stock-based compensation expense was recorded related to RSUs.

As of September 30, 2018, total unrecognized stock-based compensation cost related to RSUs was $14.6 million, which is expected to be recognized over a weighted-average period of 2.8 years. As of September 30, 2018, 1,627,261 shares of RSUs are expected to vest.

Stock-Based Compensation Expense

Total stock-based compensation expense recognized in the Company’s condensed consolidated statements of operations and comprehensive loss is classified as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Research and development	$	511	$	221	$	1,061	$	602
Selling and marketing		234		70		555		193
General and administrative		6,434		693		8,436		1,971
Total stock-based compensation expense	$	7,179	$	984	$	10,052	$	2,766

During the three and nine months ended September 30, 2018 and 2017, there was no stock-based compensation expense capitalized as a component of inventory or recognized in cost of revenue. Stock-based compensation relating to stock-based awards granted to consultants was insignificant during the three and nine months ended September 30, 2018 and 2017.

Modification of Certain Stock-based Awards

In connection with the resignation of certain key executives during the third quarter of fiscal year 2018, the Company entered into separation and consulting agreements with each resigning executive. Pursuant to their separation and consulting agreements, the individuals will continue to vest in any unvested equity awards that would otherwise have vested in up to the twelve-month period, for one individual, and the six-month period, for the other two individuals, following their respective termination dates. The modification of the original option agreements resulted in total incremental stock-based compensation expense of $3.7 million, which was recognized upon the respective termination dates during the third quarter of fiscal 2018.