Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

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Stockholders' Equity
9 Months Ended
Sep. 30, 2014
Equity [Abstract]  
Stockholders' Equity
Stockholders’ Equity

The Company grants options and awards to employees, non-employee consultants, and non-employee directors. Only new shares of common stock are issued upon the exercise of stock options. Non-employee directors are accounted for as employees. Options and restricted stock granted to certain directors vest in equal monthly installments over the one-year period following the date of grant. Options granted to employees vest 1/8 on the six month anniversary of the date of grant, and 1/48 each month thereafter for 42 months. Option awards generally expire ten years from the date of grant.

Stock Option Activity

The following is a summary of the Company’s 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 as of December 31, 2013
1,746,709

 
$
16.79

 
7.6
 
$
62,705

Granted
366,184

 
73.81

 
 
 
 
Exercised
(262,820
)
 
15.43

 
 
 
 
Forfeited
(49,967
)
 
16.69

 
 
 
 
Cancelled
(4,414
)
 
80.81

 
 
 
 
Balance as of September 30, 2014
1,795,692

 
28.46

 
7.5
 
$
43,200

Exercisable as of September 30, 2014
1,052,706

 
20.00

 
7.5
 
$
30,339

Options vested and expected to vest as of September 30, 2014
1,795,692

 
28.46

 
6.8
 
$
43,200



The weighted-average grant date fair value of all stock options granted during the nine months ended September 30, 2014 was $47.44 per share. The total intrinsic value of all options exercised during the nine months ended September 30, 2014 and 2013 was approximately $14.7 million and $3.6 million, respectively. As of September 30, 2014, there was $14.6 million of total unrecognized compensation cost related to nonvested stock options. That cost is expected to be recognized over a weighted-average period of 2.3 years.

Net cash received from options exercised during the nine months ended September 30, 2014 and 2013 was approximately $4.1 million and $2.3 million, respectively. There is no current tax benefit related to options exercised because of net operating losses for which a full valuation allowance has been established.

As of September 30, 2014, 1.1 million shares were available for future option grants or direct issuance under the Company's 2002 Stock Incentive Plan, as amended.

Restricted Stock Activity

Restricted stock activity for the nine months ended September 30, 2014 was as follows:

 
Shares
 
Weighted-
Average Grant
Date Fair Value
Nonvested at December 31, 2013
115,386

 
$
21.93

Granted
41,671

 
72.50

Vested
(74,312
)
 
25.21

Cancelled
(3,972
)
 
18.42

Nonvested at September 30, 2014
78,773

 
$
45.77



Restricted stock awards generally vest over three years. As of September 30, 2014, there was $2.3 million of total unrecognized compensation cost related to nonvested restricted stock. That cost is expected to be recognized over a weighted-average period of 1.5 years.

Employee Stock Purchase Plan

The Company's Employee Stock Purchase Plan, as amended and restated (the "Amended ESPP") allows participants to purchase up to 1,250 shares of Ligand common stock during each offering period, but in no event may a participant purchase more than 1,250 shares of common stock during any calendar year. The length of each offering period is six months, and employees are eligible to participate in the first offering period beginning after their hire date.

The Amended ESPP allows employees to purchase Ligand common stock at the end of each six month period at a price equal to 85% of the lesser of fair market value on either the start date of the period or the last trading day of the period (the "Lookback Provision"). The 15% discount and the Lookback Provision make the Amended ESPP compensatory.  There were 2,230 and 5,016 shares of common stock issued under the amended ESPP during the nine months ended September 30, 2014 and 2013, respectively. The Company recorded compensation expense related to the ESPP of $43,515 and $37,000 for the nine months ended September 30, 2014 and 2013, respectively. As of September 30, 2014, 77,285 shares were available for future purchases under the Amended ESPP.

Public Offerings

During the three and nine months ended September 30, 2014 and 2013, the Company did not issue any common shares pursuant to its at-the-market equity issuance plan.
Corporate Share Repurchases
In August 2014, the Company's Board of Directors authorized the Company to repurchase up to $200.0 million of its common stock for a period of up to one year. During the three and nine months ended September 30, 2014 the Company repurchased 692,800 common shares pursuant to the repurchase program for an aggregate purchase price of approximately $38.5 million. Subsequent to the end of the quarter through October 30, 2014, the Company repurchased an additional 110,000 common shares for an aggregate purchase price of approximately $5.0 million.