Stock-Based Compensation

3 Months Ended

Mar. 31, 2017

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

7. Stock-Based Compensation

Stock Option Plans

On December 15, 2016, the Board of Directors of the Company approved the 2016 Inducement Equity Plan (the “2016 Stock Option Plan”). The 2016 Stock Option Plan provides for the grant of equity awards to individuals who have not previously been an employee or a non-employee director of the Company to induce them to accept employment and to provide them with a proprietary interest in the Company.

As of March 31, 2017, the total number of shares reserved under the 2016 Stock Option Plan and the 2014 Stock Option and Incentive Plan (the “2014 Stock Option Plan”) was 8,283,295, and the Company had 2,798,233 shares available for future issuance under such plans.

The 2014 Stock Option Plan provides for an annual increase, to be added on the first day of each year, by up to 4% of the Company’s issued and outstanding shares of common stock on the last day of the prior year. On January 1, 2017, 1,488,886 shares of common stock, representing 4% of the Company’s issued and outstanding shares of common stock as of December 31, 2016, were added to the 2014 Stock Option Plan.

During the three months ended March 31, 2017 and 2016, the Company granted 449,208 and 74,039 options, respectively, to employees to purchase shares of common stock that contain performance-based vesting criteria, primarily related to the achievement of certain clinical and regulatory development milestones related to product candidates. Recognition of stock-based compensation expense associated with these performance-based stock options commences when the performance condition is considered probable of achievement, using management’s best estimates.

During the three months ended March 31, 2017 and 2016, the achievement of none of the remaining milestones that are criteria for performance-based stock options were considered probable, nor met, and therefore no expense has been recognized related to these awards for the three months ended March 31, 2017 and 2016.

Stock-based compensation expense recognized during the three months ended March 31, 2017 and 2016 was as follows:

	Three Months Ended March 31,
	2017		2016
	(in thousands)
Research and development	$	3,596	$	1,611
General and administrative		2,612		2,103
	$	6,208	$	3,714

The weighted average grant date fair value per share relating to outstanding stock options granted under the Company’s stock option plans during the three months ended March 31, 2017 and 2016 was $34.61 and $21.87, respectively.

The table below summarizes activity related to stock options:

	Shares			Weighted Average Exercise Price		Weighted Average Remaining Life (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2016		4,231,807		$	29.99		8.24	$	92,843
Granted		1,370,800			49.74
Exercised		(97,513	)		8.53
Forfeited		(51,632	)		37.12
Outstanding as of March 31, 2017		5,453,462		$	35.27		8.47	$	195,365
Exercisable as of March 31, 2017		1,940,608		$	25.03		7.47	$	89,484

At March 31, 2017, the Company had unrecognized stock-based compensation expense related to its unvested service-based stock option awards of $62.7 million, which is expected to be recognized over the remaining weighted average vesting period of 2.99 years. The total fair value of options vested for the three months ended March 31, 2017 and 2016 was $6.1 million and $4.1 million, respectively. In addition, the Company granted 691,654 performance-based stock options that are both outstanding and unvested, and the total unrecognized stock-based compensation expense related to those awards was $14.9 million at March 31, 2017.

Restricted Stock Units

During the three months ended March 31, 2017, the Company granted 32,500 restricted stock units to employees of the Company. The Company did not grant restricted stock units prior to January 1, 2017.  During the three months ended March 31, 2017, the Company recorded $0.1 million of stock-based compensation expense related to its restricted stock units. These restricted stock units vest ratably over two years, with a 50% cliff vesting at both the one year and two year anniversary of the grant.