Stock-Based Compensation

Equity Plans

In October 2013, we adopted the 2013 Equity Incentive Plan (the 2013 Incentive Plan) and the 2013 Unit Option and Grant Plan (the 2013 Option Plan), which provided for the grant of incentive units, non-qualified unit options, and restricted and unrestricted unit awards to our employees, officers, directors, advisors, and outside consultants. Historically, we also granted restricted stock to founders, officers, directors, and advisors outside any of the Plans.

In August 2016, we adopted the 2016 Stock Option and Grant Plan (the 2016 Equity Plan), which replaced the 2013 Option Plan and the 2013 Incentive Plan. The 2016 Equity Plan and provided for the grant of incentive stock options, non-qualified stock options, restricted stock, unrestricted stock, and restricted stock units to our employees, officers, directors, consultants, and other key persons.

In connection with the IPO, we adopted the 2018 Stock Option and Incentive Plan (the 2018 Equity Plan) in November 2018. The 2018 Equity Plan became effective on the date immediately prior to the effective date of the IPO and replaced our 2016 Plan. The 2018 Equity Plan provides flexibility to our compensation committee to use various equity-based incentive awards as compensation tools to motivate our workforce. We have initially reserved 13,000,000 shares of our common stock for the issuance of awards under the 2018 Equity Plan. The 2018 Equity Plan provides that the number of shares reserved and available for issuance under the plan will automatically increase each January 1, beginning on January 1, 2019, by 4% of the outstanding number of shares of our common stock on the immediately preceding December 31, or such lesser number of shares as determined by our compensation committee. The shares of common stock underlying any awards that are forfeited, canceled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by us prior to vesting, satisfied without any issuance of stock, expire or are otherwise terminated (other than by exercise) under the 2018 Equity Plan and the 2016 Plan will be added back to the shares of common stock available for issuance under the 2018 Equity Plan.

The terms and conditions of stock-based awards are defined at the sole discretion of our Board of Directors. We issue service-based awards, vesting over a defined period of service, and performance-based awards, vesting upon achievement of defined conditions. Service based awards generally vest over a four-year period, with the first 25% of such awards vesting following twelve months of continued employment or service. The remaining awards vests in twelve quarterly installments over the following twelve quarters. Stock options granted under the 2016 Equity Plan expire ten years from the date of grant and the exercise price must be at least equal to the fair market value of common stock on the grant date.

As of December 31, 2019, we had a total of 64.9 million shares reserved for future issuance under our Equity Plans, of which 46.8 million shares were reserved for equity awards previously granted, and 18.1 million shares were available for future grants under the 2018 Equity Plan. No additional awards will be granted under the 2016 Equity Plan as it was replaced by the 2018 Equity Plan.

Options

We have granted options generally through the 2018 Equity Plan and 2016 Equity Plan. The following table summarizes our option activity as of December 31, 2019 and 2018:



	Number of Options		Weighted Average Exercise Price per Share	Weighted Average Grant Date Fair Value per Share	Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value⁽¹⁾ (in thousands)
Outstanding at December 31, 2018	50,821,132		12.16	6.59	7.1 years	220,434
Granted	7,354,268		19.58	11.35
Exercised	(6,945,306	)	6.86	4.47
Canceled/forfeited	(5,693,179	)	15.17	8.67
Outstanding at December 31, 2019	45,536,915		13.82	7.35	7.2 years	286,310
Exercisable at December 31, 2019	22,872,221		10.13	4.86	5.9 years	216,241
Expected to vest at December 31, 2019	22,664,694		17.54	9.86	8.6 years	70,069

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⁽¹⁾Aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of common stock for those options in the money as of December 31, 2019.

The total intrinsic value of options exercised was $75.6 million, $5.3 million and less than $0.1 million for the years ended December 31, 2019, 2018 and 2017, respectively. The total consideration recorded as a result of stock option exercises was approximately $47.2 million for the year ended December 31, 2019.

Restricted Common Stock

We have granted restricted stock awards generally through the 2016 Equity Plan. The following table summarizes our restricted stock activity during the year ended December 31, 2019:



	Number of Shares		Weighted Average Grant Date Price per Share
Outstanding, non-vested at December 31, 2018	198,597		$	12.15
Issued	—		—
Vested	(162,717	)	12.15
Canceled/forfeited	(35,880	)	12.15
Outstanding, non-vested at December 31, 2019	—		—

The aggregate fair value of restricted stock awards vested during the years ended December 31, 2019, 2018 and 2017, were $2.3 million, $11.9 million, $21.1 million, respectively.

Restricted Common Stock Units

We have granted restricted stock awards generally through the 2016 Equity Plan. The following table summarizes our restricted stock unit activity during the year ended December 31, 2019:



	Number of Units		Weighted Average Grant Date Price per Unit
Outstanding, non-vested at December 31, 2018	458,715		$	11.93
Issued	1,283,662		19.12
Vested	(57,344	)	11.93
Canceled/forfeited	(106,413	)	20.25
Vested in prior year and settled during the period	(401,371	)	11.93
Outstanding, non-vested at December 31, 2019	1,177,249		19.01

2018 Employee Stock Purchase Plan

In November 2018, we adopted the 2018 Employee Stock Purchase Plan (the ESPP), which became effective on December 5, 2018. The ESPP initially reserves and authorizes the issuance of up to a total of 810,000 shares of common stock to participating employees. We will make one or more offerings, consisting of one or more purchase periods, each year to our employees to purchase shares under the ESPP. Offerings will usually begin every six months and will continue for six-month periods, referred to as offering periods. The purchase price at which shares are sold under the ESPP will be equal to 85% of the lower of the fair market value of the shares on the first business day of the offering period or the last business day of the purchase period. Employees are generally eligible to participate through payroll deductions of between 1% to 50% of their compensation and may not purchase more than 3,000 shares of common stock during each purchase period or $25,000 worth of shares of common stock in any calendar year. We began our first ESPP offering on June 1, 2019. There were 171,343 shares of common stock sold at an average price of $16.87 per share under the ESPP during the year ended December 31, 2019. As of December 31, 2019, 0.6 million shares were available for future issuance under the ESPP.

Valuation and Stock-Based Compensation Expense

Stock-based compensation for options granted under our Equity Plans and share purchases under our ESPP is determined using the Black-Scholes option pricing model. The weighted-average assumptions used to estimate the fair value of options granted and ESPP for the years ended December 31, 2019, 2018 and 2017 are as follows:



	Weighted Average
	Years Ended December 31,
	2019			2018			2017
Options:
Risk-free interest rate	2.29		%	2.76		%	2.02		%
Expected term	6.07 years			6.27 years			6.21 years
Expected volatility	61		%	63		%	63		%
Expected dividends	—		%	—		%	—		%
Weighted average fair value per share	$	11.35		$	9.33		$	7.96

ESPP:
Risk-free interest rate	1.95		%	*			*
Expected term	0.50 years			*			*
Expected volatility	53		%	*			*
Expected dividends	—		%	*			*
Weighted average fair value per share	$	5.98		*			*

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* - Not applicable

Stock-Based Compensation Expense

The following table presents the components and classification of stock-based compensation expense for the years ended December 31, 2019, 2018 and 2017 as follows (in thousands):



	Years Ended December 31,
	2019		2018		2017
Options	$	74,780	$	63,288	$	31,724
Restricted common stock and units	5,125		9,277		8,331
Employee stock purchase plan	1,217		—		—
Total	$	81,122	$	72,565	$	40,055
Research and development	$	48,259	$	37,659	$	21,679
General and administrative	32,863		34,906		18,376
Total	$	81,122	$	72,565	$	40,055

For the years ended December 31, 2019, 2018 and 2017, we recognized stock-based compensation expense of $9.8 million, $10.6 million and $0.8 million, respectively, related to performance-based awards, including awards with vesting or commencement contingent upon the IPO, for which achievement of such performance-based condition was deemed probable. Stock-based compensation expenses related to non-employee awards were immaterial for the years ended December 31, 2019, 2018 and 2017.

As of December 31, 2019, there were $194.8 million of total unrecognized compensation cost related to non-vested stock-based compensation with respect to options and restricted stock granted. That cost is expected to be recognized over a weighted-average period of 3.1 years at December 31, 2019.