Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

v3.10.0.1
Stockholders' Equity
9 Months Ended
Sep. 30, 2018
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stockholders' Equity

8.

Stockholders’ Equity

Equity Offerings

In January 2018, we completed an underwritten public offering of 7,675,072 shares of common stock at an offering price of $18.25 per share and received net proceeds of $131.4 million, after deducting underwriting discounts and commissions and offering expenses payable by us. Further, in March 2018, we completed an underwritten public offering of 4,928,571 shares of common stock at an offering price of $35.00 per share and received net proceeds of $161.9 million, after deducting underwriting discounts and commissions and offering expenses payable by us.

ATM Facility

 

In March 2017, we entered into a sales agreement (the “ATM Facility”) with Cowen and Company, LLC (“Cowen”) for the sale, in our sole discretion, of shares of our common stock, having an aggregate offering price of up to $75.0 million through Cowen, as our sales agent. We pay Cowen a commission of up to 3.0% of the gross sales proceeds of any common stock sold under the ATM Facility. The issuance and sale of these shares by us pursuant to the ATM Facility are deemed “at the market” offerings and are registered under the Securities Act of 1933, as amended.

During the nine months ended September 30, 2018, we sold an aggregate of 1,007,806 shares of common stock under the ATM Facility, at an average price of approximately $48.52 per share, for gross proceeds of $48.9 million and net proceeds of $47.6 million, after deducting commissions and other offering expenses. No shares were sold under the ATM Facility in the third quarter of 2018. As of September 30, 2018, $6.1 million of common stock remained available to be sold under this facility, subject to certain conditions as specified in the agreement.

 

Equity Incentive Plans

Under the terms of the 2014 Equity Incentive Plan (“2014 EIP”), we may grant stock options, restricted stock awards (“RSAs”) and RSUs to employees, directors, consultants and other service providers. As of September 30, 2018, a total of 10,540,933 shares of common stock were reserved for issuance under the 2014 EIP, of which 3,457,163 shares were available for future grant and 7,083,770 shares were subject to outstanding options and RSUs.

In February 2018, we adopted the 2018 Inducement Plan (“2018 IP”), under which we may grant options, stock appreciation rights, RSAs and RSUs to new employees. As of September 30, 2018, 1,250,000 shares of common stock were reserved for issuance under the 2018 IP, of which 720,000 shares were available for future grant and 530,000 shares were subject to outstanding options and RSUs.

Restricted Stock Units

The following is a summary of RSU activity under our 2014 EIP and 2018 IP:

 

 

 

RSUs

 

 

 

Shares

 

 

Weighted

Average

Grant Date Fair Value

 

Unvested as of December 31, 2017

 

 

1,685,000

 

 

$

16.90

 

Granted

 

 

836,487

 

 

$

34.61

 

Forfeited

 

 

(469,613

)

 

$

20.93

 

Vested

 

 

(619,983

)

 

$

17.33

 

Unvested as of September 30, 2018

 

 

1,431,891

 

 

$

31.86

 

Vested and unreleased

 

 

2,617

 

 

 

 

 

Outstanding as of September 30, 2018

 

 

1,434,508

 

 

 

 

 

 

The fair value of RSUs is determined as the closing stock price on the date of grant. The weighted average grant date fair value of RSUs granted was $34.61 and $15.07 for the nine months ended September 30, 2018 and 2017, respectively. As of September 30, 2018, there was $33.0 million of unrecognized stock-based compensation expense related to RSUs that is expected to be recognized over a weighted average period of 2.7 years. The aggregate intrinsic value of the RSUs outstanding as of September 30, 2018 was $59.3 million.  

 

Under our RSU net settlement procedures, for most of our employees, we withhold shares at settlement to cover the minimum payroll withholding tax obligations. During the nine months ended September 30, 2018, we settled 634,851 RSUs, of which 439,986 RSUs were net settled by withholding 189,951 shares.  The value of the RSUs withheld was $7.5 million, based on the closing price of our common stock on the settlement date. During the nine months ended September 30, 2017, we settled 290,534 RSUs, of which 51,592 RSUs were net settled by withholding 21,895 shares.  The value of the RSUs withheld was $0.4 million, based on the closing price of our common stock on the settlement date. The value of RSUs withheld in each period was remitted to the appropriate taxing authorities and has been reflected as a financing activity in our condensed consolidated statements of cash flows.

 

Stock Options

The following is a summary of stock option activity under our 2014 EIP and 2018 IP. The table below also includes 275,000 stock options which were issued in 2017 outside of these plans:

 

 

 

Shares

 

 

Weighted Average

Exercise Price

 

 

Weighted Average

Remaining

Contractual Term

(Years)

 

 

Aggregate Intrinsic

Value

(in thousands)

 

Outstanding as of December 31, 2017

 

 

5,229,648

 

 

$

21.06

 

 

 

 

 

 

 

 

 

Granted

 

 

2,633,950

 

 

 

38.55

 

 

 

 

 

 

 

 

 

Exercised

 

 

(781,191

)

 

 

22.53

 

 

 

 

 

 

 

 

 

Forfeited or expired

 

 

(750,208

)

 

 

30.00

 

 

 

 

 

 

 

 

 

Outstanding as of September 30, 2018

 

 

6,332,199

 

 

$

27.10

 

 

 

5.4

 

 

$

92,326

 

Vested and expected to vest as of

   September 30, 2018

 

 

6,332,199

 

 

$

27.10

 

 

 

5.4

 

 

$

92,326

 

Exercisable as of September 30, 2018

 

 

2,258,774

 

 

$

21.26

 

 

 

4.0

 

 

$

45,458

 

 

Aggregate intrinsic value represents the difference between the closing stock price of our common stock on September 30, 2018 and the exercise price of outstanding, in-the-money options. As of September 30, 2018, there was $67.9 million of unrecognized stock-based compensation expense related to stock options that is expected to be recognized over a weighted average period of 3.1 years.

Options for 781,191 shares of our common stock were exercised during the nine months ended September 30, 2018, with an intrinsic value of $13.9 million. No options were exercised during the nine months ended September 30, 2017. As we believe it is more likely than not that no stock option related tax benefits will be realized, we do not record any net tax benefits related to exercised options.

 

The fair value of each option issued was estimated at the date of grant using the Black-Scholes valuation model. The following table summarizes the weighted-average assumptions used as inputs to the Black-Scholes model, and resulting weighted-average grant date fair values of stock options granted to employees during the periods indicated:

 

 

Nine months ended

September 30, 2018

 

 

Nine months ended

September 30, 2017

 

Assumptions:

 

 

 

 

 

 

 

Expected term (years)

 

4.6

 

 

 

4.5

 

Expected volatility

 

73.4

%

 

 

69.1

%

Risk-free interest rate

 

2.7

%

 

 

1.8

%

Expected dividend yield

 

0.0

%

 

 

0.0

%

Fair Value:

 

 

 

 

 

 

 

Weighted-average estimated

   grant date fair value per share

$

22.86

 

 

$

8.88

 

Options granted

 

2,633,950

 

 

 

1,155,900

 

Total estimated grant date fair value

$

60,212,000

 

 

$

10,264,000

 

 

The estimated fair value of stock options that vested in the nine months ended September 30, 2018 and 2017 was $12.7 million and $10.9 million, respectively.

 

Employee Stock Purchase Plan

 

As of September 30, 2018, there were 943,338 shares available for purchase under the 2014 Employee Stock Purchase Plan (“2014 ESPP”). The Company recorded $0.5 million and $0.4 million of expense related to the 2014 ESPP in the nine months ended September 30, 2018 and 2017, respectively. 77,100 and 43,962 shares were purchased under the 2014 ESPP during the nine months ended September 30, 2018 and 2017, respectively.

Reserved Shares

The following shares of common stock were reserved for future issuance as of September 30, 2018:

 

 

Total Shares

Reserved

 

2014 Equity Incentive Plan

 

10,540,933

 

2018 Inducement Plan

 

1,250,000

 

2014 Employee Stock Purchase Plan

 

943,338

 

Options granted outside the equity plans

 

258,666

 

Total reserved shares of common stock

 

12,992,937

 

 

Stock-based Compensation Expense

Total stock-based compensation expense related to all employee and non-employee stock awards was as follows:

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

 

(in thousands)

 

 

(in thousands)

 

Research and development

$

4,682

 

 

$

2,136

 

 

$

10,997

 

 

$

6,260

 

General and administrative

 

4,570

 

 

 

3,864

 

 

 

13,267

 

 

 

10,743

 

Total stock-based compensation expense

$

9,252

 

 

$

6,000

 

 

$

24,264

 

 

$

17,003