STOCK-BASED COMPENSATION

6 Months Ended

Jun. 30, 2022

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION

5. Stock-Based Compensation

Stock-based compensation for the periods presented was as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Selling, general and administrative	$	1,933	$	1,772	$	4,672	$	3,825
Research and development		458		534		926		1,120
Total stock-based compensation expense	$	2,391	$	2,306	$	5,598	$	4,945

In March 2022, our Board of Directors approved to extend the exercise period of the stock option grants made to our two former Board of Directors whose terms expired in May 2022. As a result of this modification, we recorded an incremental stock-based compensation expense of approximately $0.8 million in the first quarter of 2022. The amount was included within selling, general and administrative expense in the condensed statement of operations.

During the six months ended June 30, 2022, we granted stock options to purchase 5,299,247 shares of common stock with weighted-average grant-date fair value of $1.63 per share, and 433,318 stock options were exercised. As of June 30, 2022, there were 33,081,045 stock options outstanding, of which, 2,535,000 are outstanding performance-based stock options wherein the achievement of the corresponding corporate-based milestones were not considered probable as of June 30, 2022. Accordingly, none of the $5.0 million grant date fair value for these awards has been recognized as stock-based compensation expense through June 30, 2022.

The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model. The following table summarizes the weighted-average assumptions relating to options granted pursuant to our Equity Incentive Plans (2018 Equity Incentive Plan and Inducement Plan) for the periods presented:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Risk-free interest rate	2.9	%	1.3	%	1.9	%	1.0	%
Expected term (in years)	6.5		6.6		6.5		6.5
Dividend yield	0.0	%	0.0	%	0.0	%	0.0	%
Expected volatility	70.3	%	70.5	%	70.0	%	70.6	%

During the six months ended June 30, 2022, we granted 1,181,362 restricted stock units (RSUs) with a grant-date weighted-average fair value of $2.36 per share, and 203,750 RSUs were released. The RSUs granted generally vest over 4 years. As of June 30, 2022, there were 1,190,532 RSUs outstanding.

As of June 30, 2022, there was approximately $18.3 million of unrecognized stock-based compensation which is expected to be recognized over a remaining weighted-average period of 2.94 years related to time-based stock options, RSUs and performance-based stock options where achievement of the corresponding corporate-based milestones was considered probable as of June 30, 2022.

In January 2022 and April 2022, our Board of Directors approved the increase of 610,000 shares and 626,000 shares, respectively, of common stock reserved for issuance under the Inducement Plan. In May 2022 at the annual stockholders meeting, our stockholders approved to amend our 2018 Equity Incentive Plan (2018 Plan), among other items, add an additional 5,000,000 shares to the number of shares of common stock authorized for issuance under the 2018 Plan. As of June 30, 2022, there were 11,940,095 shares of common stock available for future grant under our Equity Incentive Plans.

Employee Stock Purchase Plan

Our Purchase Plan permits our eligible employees to purchase common stock at a discount through payroll deductions during the offering period. Our Purchase Plan provides for a twenty-four-month offering period comprised of four six-month purchase periods with a look-back option. A look-back option is a provision in our Purchase Plan under which eligible employees can purchase shares of our common stock at a price per share equal to the lesser of 85% of the fair market value on the first day of the offering period or 85% of the fair market value on the purchase date. Our Purchase Plan also includes a feature that provides for a new offering period to begin when the fair market value of our common stock on any purchase date during an offering period falls below the fair market value of our common stock on the first day of such offering period. This feature is called a “reset.” Participants are automatically enrolled in the new offering period.

Our twenty-four-month offering period under our Purchase Plan ended on June 30, 2022 and a new twenty-four-month offering period begins on July 1, 2022. As of June 30, 2022, no unrecognized stock-based compensation cost related to our Purchase Plan.

During the six months ended June 30, 2022, there were 597,042 shares purchased under the Purchase Plan. As of June 30, 2022, there were 3,987,442 shares reserved for future issuance under the Purchase Plan.