Stockholders' Equity | 9 . Stockholders’ Equity Our authorized capital stock consists of 520,000,000 shares, all with a par value of $0.0001 per share, of which 500,000,000 shares are designated as common stock and 20,000,000 shares are designated as preferred stock. There were no shares of preferred stock outstanding as of . 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. In July 2019, we issued and sold 6,871,727 shares of common stock at a public offering price of $15.28 per share and pre-funded warrants to purchase 2,945,026 shares of common stock at an offering price of $15.2799 per warrant in an underwritten public offering pursuant to a shelf registration on Form S-3. The gross proceeds from this public offering were $150.0 million, resulting in aggregate net proceeds of $140.7 million, after deducting underwriting discounts and commissions and offering expenses payable by us. Each pre-funded warrant entitles the holder to purchase one share of common stock at an exercise price of $0.0001 per share and expires seven years from the date of issuance. These warrants were recorded as a component of stockholders’ equity within additional paid-in capital. Per the terms of the warrant agreement, a holder of the outstanding warrants is not entitled to exercise any portion of any pre-funded warrant if, upon exercise of the warrant, the holder’s ownership (together with its affiliates) of our common stock or combined voting power of our securities beneficially owned by such holder (together with its affiliates) would exceed 9.99% after giving effect to the exercise (“Maximum Ownership Percentage”). Upon at least 61 days’ prior notice to us by the holder, any holder may increase or decrease the Maximum Ownership Percentage to any other percentage not to exceed 19.99%. As of December 31, 2019, none of the pre-funded warrants had been exercised. ATM Facilities In March 2017, we entered into a sales agreement (the “2017 ATM Facility”) with Cowen and Company, LLC (“Cowen”), which provided for the sale, in our sole discretion, of shares of our common stock, in the aggregate offering price of up to $75.0 million through Cowen, as our sales agent. We paid a commission of up to 3.0% of the gross sales proceeds of any common stock sold under the 2017 ATM Facility. In February 2019, we terminated the 2017 ATM Facility and entered into a new sales agreement (the “2019 ATM Facility”) with Cowen, which provides for the sale, in our sole discretion, of shares of our common stock having an aggregate offering price of up to $100.0 million through Cowen, as our sales agent. During the fiscal year ended December 31, 2019 December 31, 2018 The issuance and sale of these shares by us pursuant to the 2019 ATM Facility and 2017 ATM Facility are deemed “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), and are registered under the Securities Act. As of December 31, 2019 In February 2020, we entered into a new sales agreement (the “2020 ATM Facility”) with Cowen, which provides for the sale, in our sole discretion, of shares of our common stock having an aggregate offering price of up to $100.0 million through Cowen, as our sales agent. The 2020 ATM Facility is separate from and does not replace the 2019 ATM Facility in any way. The issuance and sale of these shares by us pursuant to the 2020 ATM Facility are deemed “at the market” offerings and are registered under the Securities Act of 1933, as amended. We will pay a commission of up to 3.0% of gross sales proceeds of any common stock sold under the 2020 ATM Facility. Equity Incentive Plan s In March 2014, we adopted the 2014 Equity Incentive Plan (“2014 EIP”), which was amended and restated on October 15, 2014 upon the pricing of our initial public offering, or IPO. The 2014 EIP provides for annual increases in the number of shares available for issuance thereunder on the first business day of each fiscal year, beginning with 2015 and ending in 2024, equal to five percent of the number of shares of the Company’s common stock outstanding as of such date or a lesser number of shares as determined by our board of directors. Under the terms of the 2014 EIP, we may grant stock options, RSAs and RSUs to employees, directors, consultants and other service providers. RSUs generally vest over four years. Stock options are granted at prices no less than 100% of the estimated fair value of the shares on the date of grant as determined by the board of directors, provided, however, that the exercise price of an option granted to a 10% shareholder cannot be less than 110% of the estimated fair value of the shares on the date of grant. Options granted generally vest over four years and expire in seven to ten years. As of December 31, 2019 In February 2018, we adopted the 2018 Inducement Plan (“Inducement Plan”), under which we may grant options, stock appreciation rights, RSAs and RSUs to new employees. As of December 31, 2019 Restricted Stock Units 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 during the years ended December 31, 2019 December 31, 2019 December 31, 2019 December 31, 2019 The following is a summary of RSU activity under our 2014 EIP and Inducement Plan: RSUs Shares Weighted Average Grant Date Fair Value Unvested as of December 31, 2018 1,405,460 $ 26.94 Granted 1,591,888 $ 27.04 Forfeited (514,516 ) $ 30.37 Vested (572,068 ) $ 24.16 Outstanding as of December 31, 2019 1,910,764 $ 26.93 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 2019 , we settled shares underlying RSUs, of which shares underlying RSUs were net settled by withholding shares. The value of the shares underlying RSUs withheld was $ million, based on the closing price of our common stock on the settlement date. During 2018 , we settled shares underlying RSUs, of which shares underlying RSUs were net settled by withholding shares. The value of the shares underlying RSUs withheld was $ 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 consolidated statements of cash flows. Stock Options The following is a summary of stock option activity under our 2014 EIP and Inducement Plan. The table below also includes the activity relating to options for 275,000 shares of our common stock which were issued in 2017 outside of these plans: Shares Weighted Weighted Average Remaining Contractual Term (Years) Aggregate Intrinsic Value (in thousands) Outstanding as of December 31, 2018 6,276,999 $ 28.15 Granted 2,535,425 26.97 Exercised (347,716 ) 14.84 Forfeited or expired (1,530,446 ) 28.76 Outstanding as of December 31, 2019 6,934,262 $ 28.25 5.9 $ 4,103 Vested and expected to vest as of December 31, 2019 6,934,262 $ 28.25 5.9 $ 4,103 Exercisable as of December 31, 2019 2,932,449 $ 26.89 4.0 $ 1,689 Aggregate intrinsic value represents the difference between the closing stock price of our common stock on December 31, 2019 December 31, 2019 Options for 347,716, 1,051,180 and 60,125 shares of our common stock were exercised during the years ended December 31, 2019 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: Year ended December 31, 2019 2018 2017 Assumptions: Expected term (years) 5.9 4.6 4.5 Expected volatility 76.1 % 73.5 % 71.3 % Risk-free interest rate 2.1 % 2.7 % 1.9 % Expected dividend yield 0.0 % 0.0 % 0.0 % Fair Value: Weighted-average estimated grant date fair value per share $ 18.06 $ 22.96 $ 9.01 Options granted 2,535,425 2,998,650 1,694,000 Total estimated grant date fair value $ 45,790,000 $ 68,849,000 $ 15,263,000 The estimated fair value of stock options that vested in the years ended December 31, 2019 Employee Stock Purchase Plan In May 2014, we adopted the 2014 Employee Stock Purchase Plan (“2014 ESPP”), which became effective on October 15, 2014 upon the pricing of our IPO. The 2014 ESPP permits eligible employees to purchase common stock at a discount through payroll deductions during defined offering periods. Eligible employees can purchase shares of the Company’s common stock at 85% of the lower of the fair market value of the common stock at (i) the beginning of a 12-month offering period, or (ii) at the end of one of the two related 6-month purchase periods. No participant in the 2014 ESPP may purchase shares of common stock valued at more than $25,000 per calendar year. The first offering under the 2014 ESPP commenced on June 1, 2016, and subsequent offerings commence on each anniversary of this date. The Company recorded $1.3 million, $1.2 million and $0.6 million of expense related to the 2014 ESPP in the years ended December 31, 2019, December 31, 2019 As of December 31, 2019, there was $0.5 million of unrecognized stock-based compensation expense related to the ESPP that is expected to be recognized by the end of second quarter of 2020. The 2014 ESPP provides for annual increases in the number of shares available for issuance thereunder on the first business day of each fiscal year, beginning with 2015 and ending in 2024, equal to the lower of (i) one percent of the number of shares of our common stock outstanding as of such date, (ii) 230,769 shares of our common stock, or (iii) a lesser number of shares as determined by our board of directors. As of December 31, 2019, there were 1,355,973 shares authorized under the 2014 ESPP. Reserved Shares The following shares of common stock were reserved for future issuance as of December 31, 2019 Total Shares Reserved 2014 Equity Incentive Plan 11,935,558 2018 Inducement Plan 1,213,760 2014 Employee Stock Purchase Plan 1,002,548 Options outside the equity plans 109,666 Total reserved shares of common stock 14,261,532 Stock-based Compensation Expense Total stock-based compensation expense related to all stock awards was as follows: Year Ended December 31, 2019 2018 2017 (in thousands) Research and development $ 26,773 $ 16,211 $ 8,778 General and administrative 24,923 17,606 14,322 Total stock-based compensation expense $ 51,696 $ 33,817 $ 23,100 |