Quarterly report pursuant to Section 13 or 15(d)

Stock-based Compensation

v3.2.0.727
Stock-based Compensation
 6 Months Ended
Jun. 30, 2015
Stock-based Compensation [Abstract]  
Stock-based Compensation
8.
Stock-based Compensation

In the first half of 2015, the Board of Directors of the Company approved grants under the Company’s Long Term Incentive Plan for stock options to purchase an aggregate of 1,636,639 shares and an aggregate of 1,586,017 RSUs to certain employees of the Company. The stock options vest monthly over four years, and the RSUs vest annually over three years, in equal increments.

In May 2015, the Company’s stockholders approved the Employee Stock Purchase Plan (the “2015 ESPP”). Under the 2015 ESPP, the Company reserved 300,000 shares of common stock for issuance as of its effective date of July 1, 2015, subject to adjustment in the event of a stock split, stock dividend, combination or reclassification or similar event. The 2015 ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 10% of their eligible compensation, subject to any plan limitations. The 2015 ESPP provides for six-month offering periods ending on May 31 and November 30 of each year, with the exception of the first offering period, which lasts from July 1, 2015 through November 30, 2015, as transition from the Company’s legacy employee stock purchase plan.  At the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last day of the offering period.

The Company recognizes compensation expense for all stock-based payment awards made to the Company’s employees, consultants and directors based on estimated fair values. Compensation expense is recognized from the grant date to the earlier of the retirement-eligible date or the vesting date.  The valuation of stock option awards is determined at the date of grant using the Black-Scholes Model. This model requires inputs such as the expected term of the option, expected volatility and risk-free interest rate. To establish an estimate of expected term, the Company considers the vesting period and contractual period of the award and its historical experience of stock option exercises, post-vesting cancellations and volatility. The estimate of expected volatility is based on the Company’s historical volatility. The risk-free rate is based on the yield available on U.S. Treasury zero-coupon issues. The forfeiture rate impacts the amount of aggregate compensation for both stock options and RSUs. To establish an estimate of forfeiture rate, the Company considers its historical experience of option forfeitures and terminations.

The fair value of the stock options granted during the three and six months ended June 30, 2015 and 2014, was estimated based on the following weighted average assumptions:

   
Three Months Ended June 30,
    
Six Months Ended June 30,
  
   
2015
    
2014
    
2015
    
2014
  
Dividend yield
    
0
%
    
0
%
    
0
%
    
0
%
Expected volatility
    
81
%
    
91
%
    
82
%
    
93
%
Risk-free interest rate
    
1.65
%
    
1.68
%
    
1.40
%
    
1.71
%
Expected term
  
5.6 years
    
5.6 years
    
5.6 years
    
5.6 years
  

Stock option activity for the six months ended June 30, 2015, was as follows:

   
Options
    
Weighted Average Exercise Price Per Share
    
Weighted Average Remaining Contractual Life
 (in years)
    
Aggregate
Intrinsic
Value
 (in thousands)
  
Outstanding at January 1, 2015
    
7,702,309
    
$
8.15
    
   
 
Granted
    
1,636,639
      
3.74
    
   
 
Exercised
    
(104,438
)
    
1.54
    
   
 
Forfeited, expired or cancelled
    
(771,854
)
    
21.84
    
   
 
Outstanding at June 30, 2015
    
8,462,656
    
$
6.13
      
7.24
    
$
4,107
  
Vested and expected to vest at June 30, 2015
    
8,118,591
    
$
6.20
      
7.16
    
$
4,054
  
Exercisable at June 30, 2015
    
5,172,965
    
$
7.15
      
6.20
    
$
3,179
  

The valuation of RSUs is determined at the date of grant using the closing stock price.

Unvested RSU activity for the six months ended June 30, 2015, is summarized below:

   
Number of
Shares
    
Weighted-
Average Grant-
Date Fair Value
  
Unvested balance at January 1, 2015
    
1,953,879
    
$
5.46
  
Granted
    
1,586,017
      
3.78
  
Vested
    
(881,832
)
    
4.86
  
Forfeited
    
139,308
      
4.54
  
Unvested balance at June 30, 2015
    
2,797,372
    
$
4.65
  
 
The following table shows total stock-based compensation expense included in the condensed consolidated statements of comprehensive loss for the three and six months ended June 30, 2015 and 2014 (in thousands): 

   
Three Months Ended June 30
    
Six Months Ended June 30,
  
   
2015
    
2014
    
2015
    
2014
  
Research and development
  
$
1,399
    
$
953
    
$
3,595
    
$
3,359
  
Selling, general and administrative
    
1,290
      
1,471
      
2,759
      
2,989
  
Total stock-based compensation expense
  
$
2,689
    
$
2,424
    
$
6,354
    
$
6,348