Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

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Stockholders' Equity
3 Months Ended
Mar. 31, 2015
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, 2014
1,800,697

 
$
28.78

 
7.3
 
$
51,558

Granted
243,469

 
56.40

 
 
 
 
Exercised
(42,489
)
 
18.35

 
 
 
 
Balance as of March 31, 2015
2,001,677

 
32.36

 
7.4
 
$
89,578

Exercisable as of March 31, 2015
1,183,763

 
21.39

 
6.4
 
$
65,956

Options vested and expected to vest as of March 31, 2015
2,001,677

 
32.36

 
7.4
 
$
89,578



The weighted-average grant date fair value of all stock options granted during the three months ended March 31, 2015 was $32.30 per share. The total intrinsic value of all options exercised during the three months ended March 31, 2015 and 2014 was approximately $1.9 million and $12.1 million, respectively. As of March 31, 2015, there was $17.8 million of total unrecognized compensation cost related to nonvested stock options. That cost is expected to be recognized over a weighted-average period of 2.6 years.

Net cash received from options exercised during the three months ended March 31, 2015 and 2014 was approximately $0.8 million and $3.2 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 March 31, 2015, 0.7 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 three months ended March 31, 2015 was as follows:

 
Shares
 
Weighted-
Average Grant
Date Fair Value
Nonvested at December 31, 2014
82,673

 
$
45.76

Granted
93,978

 
56.34

Vested
(39,174
)
 
34.75

Nonvested at March 31, 2015
137,477

 
$
56.13



Restricted stock awards generally vest over three years. As of March 31, 2015, there was $5.7 million of total unrecognized compensation cost related to nonvested restricted stock. That cost is expected to be recognized over a weighted-average period of 2.2 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 no shares of common stock issued under the amended ESPP during either of the three months ended March 31, 2015 and 2014. The Company recorded compensation expense related to the ESPP of $21,000 and $13,000 for the three months ended March 31, 2015 and 2014, respectively. As of March 31, 2015, 75,741 shares were available for future purchases under the Amended ESPP and shares of common stock had been issued under the Amended ESPP to employees. For shares purchased under the Company's Amended ESPP, a weighted-average expected volatility of 36% and 38% and an expected term of 6 months was used for the period ended March 31, 2015 and 2014, respectively.