Stock-Based Compensation

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

NOTE 9 – STOCK-BASED COMPENSATION

2020 Inducement Plan

On March 26, 2020, the Compensation Committee of the Board of Directors (the "Compensation Committee") approved the ArTara Therapeutics, Inc. Inducement Plan (the "2020 Inducement Plan") in order to award nonstatutory stock options, restricted stock awards, restricted stock unit awards and other stock-based awards to persons not previously an employee or director of the Company, or following a bona fide period of non-employment, as an inducement material to such persons entering into employment with the Company.

The 2020 Inducement Plan provides for a total of 600,000 shares for the issuance of the Company's Common Stock. The Compensation Committee also adopted a form of stock option grant notice and stock option agreement and forms of restricted stock unit grant notice and restricted stock unit agreement for use with the Inducement Plan.

As of December 31, 2020, 460,650 shares remain available to be issued under the 2020 Inducement Plan.

2017 Equity Incentive Plan

On August 10, 2017, Private ArTara, its Board of Directors and its shareholders approved the ArTara Therapeutics, Inc. 2017 Equity Incentive Plan (the "2017 Equity Incentive Plan") to enable Private ArTara and its affiliates to recruit and retain highly qualified personnel and to incentivize personnel for productivity and growth.

The 2017 Equity Incentive Plan provided for the grant of a total of 2,000,000 shares for the issuance of stock options, stock appreciation rights, restricted stock and restricted stock units to among others, members of the Board of Directors, employees, consultants and service providers to the Company and its affiliates. As of January 9, 2020, in connection with the Merger, no additional awards will be made under the 2017 Equity Incentive Plan.

2014 Equity Incentive Plan

On October 3, 2014, the stockholders approved the 2014 Plan. On June 20, 2017, the Company's Board of Directors amended the 2014 Plan (the "Amended 2014 Plan"). On July 31, 2017, the stockholders approved this amendment.

The Amended 2014 Plan provides for the grant of incentive and non-statutory stock options, stock appreciation rights, restricted stock and stock unit awards, performance units, stock grants and qualified performance-based awards. The 2014 Plan provides that the number of shares reserved and available for issuance under the 2014 Plan will automatically increase each January 1, beginning January 1, 2015 by four percent of the outstanding shares of Common Stock on the immediately preceding December 31 or such lesser number of shares as determined by the Company's Board of Directors prior to each such January 1st. The Amended 2014 Plan clarifies that the number of shares for purposes of calculating the evergreen feature includes the number of shares of Common Stock issuable upon conversion of any security that the Company may issue that is convertible into or exchangeable for Common Stock, including, but not limited to, preferred stock or warrants. Pursuant to a special meeting of the Proteon stockholders held on January 9, 2020, the number of shares available for issuance under the Amended 2014 Plan increased by 900,002 shares from 148,298 shares to 1,048,300 shares on January 1, 2020. As of December 31, 2020, 227,850 shares remain available to be issued under the Amended 2014 Plan. On January 1, 2021, pursuant to the Amended 2014 Plan's annual evergreen feature, the number of shares authorized under the Amended 2014 Plan was increased by 812,889 shares to 1,861,189 shares.

Terms of the stock awards, including vesting requirements, are determined by the Board of Directors, subject to the provisions of the plans. Certain awards provide for accelerated vesting if there is a change in control as defined in the plans.

2014 Employee Stock Purchase Plan

On October 3, 2014, the stockholders approved the 2014 Employee Stock Purchase Plan (the "2014 ESPP"). The 2014 ESPP initially authorized the issuance of up to 3,513 shares of Common Stock. The number of shares increases each January 1, commencing on January 1, 2015 and ending on (and including) January 1, 2024, by an amount equal to the lesser of one percent of the outstanding shares as of the end of the immediately preceding fiscal year, 7,025 shares or any lower amount determined by the Company's Board of Directors prior to each such January 1st. As of December 31, 2020, the authorized number of shares under the 2014 ESPP is 18,012 and the number of shares available for issuance is 13,340. During the years ended December 31, 2020 and 2019, no shares were issued under the 2014 ESPP. On January 1, 2021, pursuant to the increase per the 2014 ESPP, the number of share authorized under the 2014 ESPP was increased by 7,025 shares to 25,037 shares.

Restricted Stock Units

Awards to Directors

The following restricted stock units ("RSUs") were granted pursuant to the Amended 2014 Plan. Settlement for the RSUs is deferred until the earliest to occur of (i) the director's termination of service, (ii) death, (iii) disability or (iv) a change in control of the Company. In the event of a change in control of the Company, the RSUs will vest in full.

During the year ended December 31, 2020, the Board of Directors granted an aggregate of 316,000 RSUs to directors of the Company. Of these RSUs, 254,000 vest 12.5% on the date of grant and in twenty-one equal monthly installments thereafter and the remaining 62,000 RSUs vest 50% on the one year anniversary of the grant date and the remainder vest in 12 equal monthly installments thereafter. The grant date fair value of these RSUs was $9,480.

Awards to Others

During the year ended December 31, 2019, the Board of Directors granted of 5,245 RSUs to a consultant. The RSUs were granted under the Company's 2017 Equity Incentive Plan. The RSUs vested in five equal installments of 1,049 units on the 15th and 30th of each month, beginning on October 30, 2019. The grant date fair value of this RSU was $36.

During the year December 31, 2020, Board of Directors granted an aggregate of 163,325 RSUs to employees of the Company. These RSUs will vest 25% on each of the first, second, third and fourth year anniversaries of the date of grant. The grant date fair value of these RSUs was $4,887.

Following is a summary of restricted stock unit activities for the year ended December 31, 2020:

	Restricted Stock Units			Weighted Average Grant Date Fair Value
Non-vested 1/1/2020		-		$	-
Granted		479,325			29.97
Forfeited		(56,375	)		30.00
Vested		(148,334	)		30.00
Non-vested 12/31/2020		274,616		$	29.95

The fair value of restricted stock units is amortized on a straight line basis over the requisite service periods of the respective awards. As of December 31, 2020, the unamortized value of RSUs was $6,299. As of December 31, 2020, the weighted average remaining amortization period was 1.81 years. As of December 31, 2020 and 2019, 132,709 and 5,245 RSUs, respectively, have vested that have not yet been settled into shares of the Company's Common Stock.

During the year ended December 31, 2020, the Company issued 20,870 shares of Common Stock from the settlement of RSUs.

Restricted Stock Units Modification

On July 23, 2020, the Company agreed to accelerate the vesting of 5,687 RSUs of a former executive. The Company recorded a charge of $152 during the year ended December 31, 2020 to research and development expense within the Company's consolidated statements of operations in connection with the modification of this award.

Stock Option Grants

Options to Directors

During the year ended December 31, 2019, the Board of Directors granted options for the purchase of 47,114 shares of the Company's common stock to members of the board of directors. These options were granted under the Company's 2017 Equity Incentive Plan, had an exercise price of $9.18 per share and a term of 10 years. These options vest ratably over approximately four years. The options had a grant date fair value of $317.

During the year ended December 31, 2020, the Board of Directors granted options for the purchase of 80,250 shares of the Company's common stock to members of the board of directors. These options were granted under the Company's 2014 Equity Incentive Plan, had an exercise price ranging from $26.70 to $35.00 per share and a term of 10 years. These options vest ratably over approximately one year. The options had a grant date fair value of $1,903.

Options to Employees

During the year ended December 31, 2019, the Board of Directors granted options for the purchase of 50,549 shares of the Company's common stock to employees of the Company. These options were granted under the Company's 2017 Equity Incentive Plan, had an exercise price of $9.18 per share and a term of 10 years. These options vest ratably over approximately four years. The options had a grant date fair value of $322.

During the year ended December 31, 2020, the Board of Directors granted options for the purchase of 484,850 shares of the Company's common stock to employees of the Company. These options were granted under the Company's 2014 Equity Incentive Plan, had an exercise price ranging from $17.84 to $51.12 per share and a term of 10 years. These options vest ratably over approximately four years. The options had a grant date fair value of $10,867.

Stock Option Modifications

Effective July 20, 2020, a former director notified the Company of his resignation from the Company's Board of Directors. In connection with his resignation, the Compensation Committee approved the accelerated vesting of all stock options issued to him prior to the Merger, and to extend the post-termination exercise period of vested options to 12 months from the date of resignation. Due to the modification of his options, the Company recorded the incremental value of $501 during the year ended December 31, 2020 to general and administrative expense within the Company's consolidated statements of operations.

Stock Options

The Company determined the fair value of stock options granted based upon the assumptions as provided below.

	For the Years Ended December 31,
	2020	2019
Stock price	$ 17.84 - $ 51.12	$ 6.81 - $ 8.65
Exercise price	$ 17.84 - $ 51.12	$ 9.18
Dividend yield	0.00%	0.00%
Expected volatility	95.00% - 101.00%	97.00%
Risk-free interest rate	0.28% - 1.69%	1.71% - 2.37%
Expected life (in years)	5.27 - 6.08	5.58 - 6.02

Following is a summary of stock option activities for the year ended December 31, 2020:

	Options			Weighted Average Grant Date Fair Value		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding 1/1/2020		219,592		$	7.29	$	9.18		9.72	$	-
Granted		565,100			22.61		29.23		-		-
Exercised		(57,767	)		6.72		9.18		-		-
Forfeited		(52,886	)		14.08		18.91		-		-
Outstanding 12/31/2020		674,039		$	20.60	$	25.23		9.06	$	2,311
Exercisable as of 12/31/2020		109,117		$	11.44	$	15.63		8.25	$	1,201

The weighted average grant date fair value of the options granted during the year ended December 31, 2019 was $6.55 per share. The fair value of stock options is amortized on a straight line basis over the requisite service periods of the respective awards. As of December 31, 2020, the unamortized value of stock options was $9,973. As of December 31, 2020, the weighted average remaining amortization period was 3.00 years.

Summary of Stock-Based Compensation Expense

The following tables summarize total stock-based compensation costs recognized:

	For the Years Ended December 31,
	2020		2019
Restricted stock	$	-	$	75
RSUs		6,357		36
Stock options		3,389		313
Total	$	9,746	$	424

Stock-based compensation expense was reflected within the statements of operations as:

	For the Years Ended December 31,
	2020		2019
Research and development	$	741	$	200
General and administrative		9,005		224
Total	$	9,746	$	424