Stock-Based Compensation

12 Months Ended

Dec. 31, 2016

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

Note 11 — Stock-Based Compensation

We issue stock-based awards from our equity incentive plans, which are more fully described in Note 9. Stock-based compensation expense was recognized as follows (in thousands):

	Year Ended December 31,
	2016		2015		2014
Cost of goods sold	$	1,620	$	1,142	$	1,161
Research and development		13,093		9,207		7,528
General and administrative		11,137		9,320		8,328
Total stock-based compensation	$	25,850	$	19,669	$	17,017

As of December 31, 2016, total unrecognized compensation costs of $71.2 million related to unvested stock-based compensation arrangements are expected to be recognized as expense over a weighted-average period of 1.8 years.

Black-Scholes Assumptions

The following table lists the Black-Scholes option-pricing model assumptions used to calculate the fair value of employee and director stock options.

	Year Ended December 31,
	2016			2015			2014
Average risk-free interest rate		1.4	%		1.6	%		1.6	%
Dividend yield		0.0	%		0.0	%		0.0	%
Average volatility factor		51.7	%		50.8	%		51.6	%
Average weighted average expected life	5.3 years			5.3 years			5.2 years

The average risk-free interest rate is based on the U.S. treasury yield curve in effect at the time of grant for periods commensurate with the expected life of the stock-based award. We have never paid dividends, nor do we expect to pay dividends in the foreseeable future; therefore, we used a dividend yield of 0.0%. Our estimate of expected volatility is based on the daily historical trading data of our common stock at the time of grant over a historical period commensurate with the expected life of the stock-based award. We estimated the weighted-average expected life based on the contractual and vesting terms of the stock options, as well as historical cancellation and exercise data.

Stock-based compensation expense resulting from our ESPP was not material in the years ended December 31, 2016, 2015, and 2014.

Summary of Stock Option Activity

The table below presents a summary of stock option activity under our equity incentive plans (in thousands, except for price per share and contractual life information):

	Number of Shares			Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Life (in Years)		Aggregate Intrinsic Value(1)
Outstanding at December 31, 2015		18,782		$	11.22
Options granted		3,368			13.92
Options exercised		(2,337	)		8.03
Options forfeited & canceled		(400	)		13.97
Outstanding at December 31, 2016		19,413		$	12.01		4.61	$	26,513
Vested and expected to vest at December 31, 2016		18,970		$	11.97		4.55	$	26,485
Exercisable at December 31, 2016		12,783		$	10.94		3.49	$	25,684

(1) Aggregate intrinsic value represents the difference between the exercise price of the option and the closing market price of our common stock on December 31, 2016.

The weighted-average grant-date fair value per share of options granted during the years ended December 31, 2016, 2015, and 2014 was $6.54, $6.55, and $6.50, respectively. The total intrinsic value of options exercised during the years ended December 31, 2016, 2015, and 2014 was $17.9 million, $20.5 million, and $25.9 million, respectively. The estimated fair value of options vested during the years ended December 31, 2016, 2015, and 2014 was $16.7 million, $16.8 million, and $15.2 million, respectively.

Summary of RSU Activity

During the years ended December 31, 2016 and 2015, we granted RSUs to officers, employees and non-employee directors.  No RSUs vested during 2015 and no RSUs were granted during 2014. Most of our RSU awards have a strictly time-based vesting schedule while some RSU awards vest upon achievement of pre-determined performance milestones along with a time-based vesting schedule. We expense the grant date fair value of the RSUs expected to vest ratably over the expected service or performance period.  The fair value of an RSU is equal to the closing price of our common stock on the grant date. 

A summary of RSU award activity is as follows (in thousands except for per share amounts):

	Units Issued			Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value(1)
Balance at December 31, 2015		1,306		$	15.30
Granted		1,493			12.50
Vested and released		(491	)		14.96
Forfeited and canceled		(60	)		14.87
Balance at December 31, 2016		2,248		$	13.53	$	27,593

(1) Aggregate intrinsic value represents the difference between the grant price of the award, which is zero, and the closing market price of our common stock on December 31, 2016.