Stock-Based Compensation

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

NOTE 8 – 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 September 30, 2021, 353,734 shares remain available to be issued under the 2020 Inducement 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. 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. As of September 30, 2021, 436,154 shares remain available to be issued under the Amended 2014 Plan.

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. On January 1, 2021, pursuant to the increase per the 2014 ESPP, the number of shares authorized under the 2014 ESPP was increased by 7,025 shares to 25,037 shares. As of September 30, 2021, the authorized number of shares under the 2014 ESPP is 25,037 and the number of shares available for issuance is 20,365. During the nine months ended September 30, 2021 and 2020, no shares were issued under the 2014 ESPP.

Restricted Stock Units

The following table summarizes restricted stock unit (“RSU”) activities for the nine months ended September 30, 2021:

	Restricted Stock Units			Weighted Average Grant Date Fair Value
Non-vested 1/1/2021		274,616		$	29.95
Granted		10,500			-
Forfeited		-			-
Vested		(171,686	)		29.40
Non-vested 9/30/2021		113,430		$	29.04

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 September 30, 2021, the unamortized value of RSUs was $2,385. As of September 30, 2021, the weighted average remaining amortization period was 2.27 years. As of September 30, 2021 and December 31, 2020, 269,689 and 132,709 RSUs, respectively, have vested that have not yet been settled into shares of Common Stock.

During the nine months ended September 30, 2021, the Company issued 23,891 shares of Common Stock from the net settlement of 34,706 RSUs. The Company paid $228 in connection with the net share settlement of these RSUs.

Stock Option Grants

Options to Directors

During the nine months ended September 30, 2021, the Board of Directors granted options for the purchase of 121,750 shares of Common Stock to members of the board of directors. These options were granted under the Company’s 2014 Equity Incentive Plan, had exercise prices ranging from $10.51 to $17.98 per share and a term of 10 years. These options vest ratably over one to three years. The options had a grant date fair value of $1,059.

Options to Employees

During the nine months ended September 30, 2021, the Company granted options for the purchase of 658,550 shares of Common Stock to employees of the Company. These options were granted under the Company’s 2014 Equity Incentive Plan and the 2020 Inducement Plan, had exercise prices ranging from $8.23 to $19.82 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 $9,380.

Stock Options

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

	For the nine months ended September 30,
	2021	2020
Exercise price	$ 8.23 - $ 19.82	$ 20.51 - $ 51.12
Dividend yield	0.00%	0.00%
Expected volatility	91.00% - 98.00%	95.00% - 101.00%
Risk-free interest rate	0.45% - 1.14%	0.28% - 1.69%
Expected life (in years)	5.27 - 6.08	5.27 - 6.08

Expected Term — The expected term represents the period that the stock-based awards are expected to be outstanding. As the Company does not have sufficient historical experience for determining the expected term of the stock option awards granted, the Company based its expected term for awards issued to employees and directors using the simplified method, which is presumed to be the midpoint between the vesting date and the end of the contractual term.

Risk-Free Interest Rate — The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant for zero-coupon U.S. Treasury constant maturity notes with terms approximately equal to the stock-based awards’ expected term.

Expected Volatility — Since the Company does not have sufficient trading history of common stock, the expected volatility was derived from the average historical stock volatilities of the common stock of several public companies within the industry that the Company considers to be comparable to its business over a period equivalent to the expected term of the stock-based awards.

Dividend Rate — The expected dividend rate is zero as the Company has not paid and does not anticipate paying any dividends in the foreseeable future.

Fair Value of Common Stock — The fair value of the Common Stock is determined by the public market on the date of grant.

The following table summarizes stock option activities for the nine months ended September 30, 2021:

	Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding 1/1/2021		674,039		$	25.23		9.06	$	2,311
Granted		780,300			17.31		-		-
Exercised		-			-		-		-
Forfeited		(60,696	)		21.74		-		-
Expired		(7,788	)		25.29		-		-
Outstanding 9/30/2021		1,385,855		$	20.92		8.89	$	-
Exercisable as of 9/30/2021		329,046		$	22.76		8.13	$	-

The weighted average grant date fair value of the options granted during the nine months ended September 30, 2021 and 2020 was $13.38 per share and $23.23 per share, respectively. The fair value of stock options is amortized on a straight-line basis over the requisite service periods of the respective awards. As of September 30, 2021, the unamortized value of stock options was $14,892. As of September 30, 2021, the weighted average remaining amortization period was 2.88 years.

Summary of Stock-Based Compensation Expense

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

	For the three months ended September 30,				For the nine months ended September 30,
	2021		2020		2021		2020
Restricted Stock Units	$	1,307	$	1,307	$	3,970	$	5,051
Stock options		1,409		1,474		4,484		2,356
Total	$	2,716	$	2,781	$	8,454	$	7,407

Stock-based compensation expense was reflected within the condensed consolidated statements of operations and comprehensive loss as:

	For the three months ended September 30,				For the nine months ended September 30,
	2021		2020		2021		2020
Research and development	$	392	$	158	$	1,114	$	568
General and administrative		2,324		2,623		7,340		6,839
Total	$	2,716	$	2,781	$	8,454	$	7,407