Annual report pursuant to Section 13 and 15(d)

Stockholders' Equity

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Stockholders' Equity
12 Months Ended
Dec. 31, 2018
Equity [Abstract]  
Stockholders' Equity Stockholders’ Equity
Share-based Compensation Expense

The following table summarizes share-based compensation expense (in thousands):
December 31,
2018 2017 2016
Share-based compensation expense as a component of:
Research and development expenses $ 8,352  $ 14,235  $ 8,836 
General and administrative expenses 12,494  10,680  10,057 
$ 20,846  $ 24,915  $ 18,893 

Stock Plans

In May 2012 and May 2016, our 2002 Stock Incentive Plan was amended to increase the number of shares available for issuance by 1.8 million  and 0.9 million shares, respectively. As of December 31, 2018, there were 0.6 million shares available for future option grants or direct issuance under the Amended 2002 Plan.
Following is a summary of our stock option plan activity and related information:
 
Shares
Weighted
Average
Exercise
Price
Weighted
Average
Remaining
Contractual
Term in
Years
Aggregate
Intrinsic
Value
(In  thousands)
Balance at December 31, 2017 1,876,332  $ 53.17  5.77 $ 157,340 
Granted 228,362  162.00 
Exercised (358,162) 55.24 
Forfeited (10,228) 114.53 
Balance at December 31, 2018 1,736,304  66.71  5.47 125,858 
Exercisable at December 31, 2018 1,313,374  47.03  4.56 117,314 
Options vested and expected to vest as of December 31, 2018 1,734,304  $ 66.71  5.47 $ 125,858 

The weighted-average grant-date fair value of all stock options granted during 2018, 2017 and 2016 was $66.71, $53.17 and $46.53 per share, respectively. The total intrinsic value of all options exercised during 2018, 2017 and 2016 was approximately $51.9 million, $13.3 million and $12.0 million, respectively.
Cash received from options exercised, net of fees paid, in 2018, 2017 and 2016 was $19.8 million, $4.7 million and $6.2 million, respectively.
Following is a further breakdown of the options outstanding as of December 31, 2018:
 
Range of exercise prices
Options
outstanding
Weighted
average
remaining  life
in years
Weighted average
exercise price
Options
exercisable
Weighted average
exercise price
$8.58 - $10.05 184,702  1.87 $ 10.00  184,702  $ 10.00 
$10.12 - $12.81 46,510  2.92 11.40  46,510  11.40 
$14.47 - $14.47 217,616  3.11 14.47  203,616  14.47 
$16.14 - $17.88 38,790  0.17 16.36  38,790  16.36 
$21.92 - $21.92 200,372  4.13 21.92  200,372  21.92 
$32.00 - $56.26 182,767  5.70 50.38  174,470  50.10 
$63.58 - $67.53 20,434  5.44 67.42  20,153  67.47 
$74.42 - $74.42 190,825  5.12 74.42  190,825  74.42 
$85.79 - $100.38 299,282  7.57 93.32  157,872  91.62 
$101.15 - $195.91 353,006  8.79 148.50  96,064  131.77 
1,734,304  5.47 $ 66.71  1,313,374  $ 47.03 

The assumptions used for the specified reporting periods and the resulting estimates of weighted-average grant date fair value per share of options granted:

  Year Ended December 31,
  2018 2017 2016
Risk-free interest rate 2.7%-3.0% 2.0%-2.2% 1.3%-1.9%
Expected volatility 33%-36% 43%-47% 48%-50%
Expected term 5.1 to 5.8 years 6.5 to 6.8 years 6.6 to 6.7 years

As of December 31, 2018, there was $20.4 million of total unrecognized compensation cost related to non-vested stock options. That cost is expected to be recognized over a weighted average period of 2.39 years.
Restricted Stock Activity
The following is a summary of our restricted stock activity and related information:
 
Shares
Weighted-Average
Grant Date Fair
Value
Outstanding at December 31, 2017 133,294  $ 91.60 
Granted 62,133  169.92 
Vested (61,989) 86.19 
Forfeited (1,165) 125.16 
Outstanding at December 31, 2018 132,273  $ 130.63 
As of December 31, 2018, unrecognized compensation cost related to non-vested stock awards amounted to $9.2 million. That cost is expected to be recognized over a weighted average period of 1.38 years.

Employee Stock Purchase Plan

As of December 31, 2018, 64,008 shares of our common stock are available for future issuance under the Amended Employee Stock Purchase Plan, or ESPP. The ESPP permits eligible employees to purchase up to 1,250 shares of Ligand common stock per calendar year at a discount through payroll deductions. The price at which stock is purchased under the ESPP is equal to 85% of the fair market value of the common stock on the first of a six month offering period or purchase date, whichever is lower. There were 3,386, 3,061 and 1,961 shares issued under the ESPP in 2018, 2017 and 2016, respectively.

Share Repurchases
In May 2018, in conjunction with our 2023 Notes debt offering, we repurchased 260,000 shares of our common stock at a cost of $191.14 per share. In September 2018, the board of directors authorized us to repurchase up to $200.0 million of our common stock from time to time over a period of up to three years (the “Repurchase Program”). As of December 31, 2018, $125.2 million remains available for repurchase under the authorized program. On January 23, 2019, the board of directors elected to increase the Repurchase Program, authorizing us to repurchase up to a maximum of $350.0 million of our outstanding common stock under the Repurchase Program. The Repurchase Program will expire, as originally scheduled, on September 20, 2021. Since December 31, 2018 and as of February 28, 2019, we acquired 400,177 additional shares during 2019, and the maximum dollar value of shares that may yet be purchased under the Repurchase Program was $225.9 million.During the years ended December 31, 2018, 2017 and 2016, we repurchased 782,248 shares for $127.5 million, 14,000 shares for $2.0 million, and 40,500 shares for $3.9 million, respectively.