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Stock-Based Compensation
3 Months Ended
Mar. 31, 2020
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock-Based Compensation

10.

Stock-Based Compensation

Stock Plans

2015 Equity Incentive Plan

As of March 31, 2020, the aggregate number of shares of common stock that may be issued pursuant to stock awards under the 2015 Equity Incentive Plan, or 2015 Plan, was 18,500,000 shares. The 2015 Plan also provides for the grant of nonstatutory stock options, or NSOs, incentive stock options, or ISOs, stock appreciation rights, restricted stock awards and restricted stock unit awards, or RSUs. At March 31, 2020, a total of 10,645,227 stock options were outstanding, of which 3,463,767 were exercisable, 1,535,512 RSU awards were outstanding, and 1,479,402 shares were available for future grant under the 2015 Plan.

2017 Employee Stock Purchase Plan

On January 1, 2020, 500,000 shares of common stock were added to the 2017 Employee Stock Purchase Plan, or 2017 ESPP. In accordance with the provisions of our 2017 ESPP, the number of shares of our common stock reserved for issuance under the 2017 ESPP automatically increases on January 1st of each calendar year. Under the 2017 ESPP, participating employees can elect to have a portion of their base pay withheld during a consecutive payment period for the purchase of shares of our common stock. At the conclusion of each offering period, participating employees can purchase shares of our common stock at 85% of the lesser of the closing price at the beginning or at the end of the period. As of March 31, 2020, the aggregate number of shares of common stock reserved under the 2017 ESPP was 2,000,000 and we had 1,893,951 shares available for future issuance under the 2017 ESPP. During the three months ended March 31, 2020, 34,774 shares were issued under our 2017 ESPP. At March 31, 2020, accrued compensation included $0.1 million of 2017 ESPP contributions for which we anticipate issuing the related shares in the third quarter of 2020.

Stock-based Compensation Expense

We measure stock-based compensation expense for equity-classified awards related to stock options, RSUs and stock purchase rights under our 2017 ESPP based on the estimated fair value of the award on the date of grant. We recognize the value of the portion of the award that we ultimately expect to vest as stock-based compensation expense over the requisite service period in our condensed consolidated statement of operations. We reduce stock-based compensation expense for estimated forfeitures at the time of grant and revise in subsequent periods if actual forfeitures differ from those estimates.

We use the Black-Scholes model to estimate the fair value of stock options granted and stock purchase rights under our 2017 ESPP. The expected term of stock options granted represents the period of time that we expect them to be outstanding. As we do not have sufficient historical information, we use the simplified method for estimating the expected term. Under the simplified method, we calculate the expected term as the average time-to-vesting and the contractual life of the options. As we gain additional historical information, we will transition to calculating our expected term based on our exercise patterns. For the three months ended March 31, 2020 and 2019, we used the following weighted-average assumptions in our Black-Scholes calculations:

 

Employee Stock Options:

 

 

 

Three Months Ended

March 31,

 

 

 

2020

 

 

2019

 

Risk-free interest rate

 

 

1.5

%

 

 

2.5

%

Dividend yield

 

 

0.0

%

 

 

0.0

%

Volatility

 

 

73.6

%

 

 

76.4

%

Expected life

 

6.1 years

 

 

6.1 years

 

 

Board of Directors Stock Options (1):

 

 

 

Three Months Ended

March 31,

 

 

 

2020

 

Risk-free interest rate

 

 

1.5

%

Dividend yield

 

 

0.0

%

Volatility

 

 

73.3

%

Expected life

 

6.3 years

 

 

 

(1)

We did not grant stock options to our Board of Directors in the first quarter of 2019.

2017 ESPP:

 

 

 

Three Months Ended

March 31,

 

 

 

2020

 

 

2019

 

Risk-free interest rate

 

 

1.0

%

 

 

2.5

%

Dividend yield

 

 

0.0

%

 

 

0.0

%

Volatility

 

 

71.9

%

 

 

64.1

%

Expected life

 

6 months

 

 

6 months

 

 

 

The following table summarizes stock-based compensation expense for the three months ended March 31, 2020 and 2019 (in thousands):

 

 

 

Three Months Ended

March 31,

 

 

 

2020

 

 

2019

 

Cost of sales - product

 

$

237

 

 

$

118

 

Research and development expenses

 

 

1,349

 

 

 

3,921

 

Selling, general and administrative expenses

 

 

5,696

 

 

 

14,521

 

Total

 

$

7,282

 

 

$

18,560

 

 

As of March 31, 2020, total unrecognized, estimated non-cash stock-based compensation expense related to non-vested stock options and RSUs was $42.9 million and $18.9 million, respectively. We will adjust total unrecognized compensation cost for future forfeitures. We expect to recognize the cost of non-cash stock-based compensation expense related to non-vested stock options and RSUs over a weighted average amortization period of 1.6 years and 2.8 years, respectively.