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Equity Incentive Plans
12 Months Ended
Dec. 31, 2022
Share-Based Payment Arrangement [Abstract]  
Equity Incentive Plans

8. Equity Incentive Plans

2010 Plan

In 2010, the Company adopted the 2010 Equity Incentive Plan, or the 2010 Plan. Under the 2010 Plan, shares of the Company’s common stock have been reserved for the issuance of stock options to employees, directors, and consultants under terms and provisions established by the Board of Directors. Under the terms of the 2010 Plan, options were granted at an exercise price not less than fair market value. For employees holding more than 10% of the voting rights of all classes of stock, the exercise prices for incentive and nonstatutory stock options were not less than 110% of fair market value, as determined by the Board of Directors. The terms of options granted under the 2010 Plan did not exceed ten years. The vesting schedule of option grants was typically four years. The Company granted options under the 2010 Plan until October 2014 when it was terminated as to future awards, although it continues to govern the terms of options that remain outstanding under the 2010 Plan. As of December 31, 2022, approximately 13,500 shares of common stock are subject to options outstanding under the 2010 Plan.

2014 Plan

In September 2014, the Company’s Board of Directors and stockholders approved the 2014 Equity Incentive Plan, or the 2014 Plan, which became effective in October 2014, at which time the 2010 Plan was terminated. The 2014 Plan provides for the grant of stock options, other forms of equity compensation, and performance cash awards. The number of shares of common stock reserved for issuance under the 2014 Plan will automatically increase on January 1 of each year, beginning on January 1, 2015 and ending on and including January 1, 2024, by 4% of the total number of shares of the Company’s capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by the Company’s Board of Directors.

As of December 31, 2022, approximately 664,600 shares of common stock were reserved for issuance under the 2014 Plan and there were approximately 197,200 shares of common stock available for future grant. The Company issues new shares upon the exercise of options and restricted stock units. The maximum term of options granted under the 2014 Plan is ten years. The vesting schedule of option grants are typically four years.

2018 Inducement Plan

In January 2018, the Company’s Board of Directors approved the 2018 Inducement Plan, a non-stockholder approved stock plan, in order to award nonstatutory options and restricted stock unit 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. As of December 31, 2022, there were 50,000 shares reserved for issuance under the 2018 Inducement Plan and there were approximately 48,000 shares of common stock available for future grant. The maximum term of options granted under the 2018 Inducement Plan is ten years. The vesting schedule of option grants are typically four years.

Stock Options

The following summarizes option activity (in thousands, except price per option data):

 

 

 

Options Outstanding

 

 

 

Number of Shares Underlying Outstanding Options

 

 

Weighted-Average Exercise Price per Option

 

 

Aggregate
Intrinsic
Value

 

Outstanding — December 31, 2021

 

 

416

 

 

$

123.57

 

 

 

 

Options granted

 

 

158

 

 

$

8.25

 

 

 

 

Options cancelled

 

 

(118

)

 

$

105.86

 

 

 

 

Outstanding — December 31, 2022

 

 

456

 

 

$

88.24

 

 

$

 

Exercisable — December 31, 2022

 

 

272

 

 

$

127.45

 

 

$

 

Vested and expected to vest — December 31, 2022

 

 

456

 

 

$

88.24

 

 

$

 

 

The aggregate intrinsic values of options outstanding, exercisable, vested and expected to vest were calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock of $3.26 per share as of December 31, 2022.

The weighted-average fair value per share of employee options granted during the years ended December 31, 2022, 2021, and 2020 were $6.05, $2.07, and $5.09, respectively. The total fair value of options that vested during the years ended December 31, 2022, 2021, and 2020 was $5.4 million, $9.4 million, and $6.9 million, respectively. The aggregate intrinsic value of options exercised was $0, $23,000, and $0.2 million for the years ended December 31, 2022, 2021, and 2020, respectively.

As of December 31, 2022, the weighted-average remaining contractual life was 5.40 years and 6.73 years for exercisable options and vested and expected to vest options, respectively.

Stock Awards

During the year ended December 31, 2022, the Company issued 710 restricted stock units, or RSUs, to its employees. The RSUs vest 25% annually over 4 years commencing on the date of grant. The RSUs are measured at grant date fair value, at the market price of the Company’s common stock on the grant date. The Company records stock-based compensation expense related to the RSUs ratably over the employee respective requisite service period.

On January 20, 2021, the Company granted 80,378 performance-based restricted stock units, or PSUs, to employees. The PSUs vest 20% on January 3, 2022 and 80% upon the achievement of two goals that were achieved by January 3, 2022. The PSUs were measured at grant date fair value, using the market price of the Company’s common stock on the grant date of $59.60. The Company estimated that all vesting conditions were probable of being achieved and elected to recognize compensation expense for the PSUs as one aggregate award using the straight-line method over the estimated implicit service period from the grant date to January 3, 2022. The Company monitored the probability of achievement of the goals each reporting period and adjusted its estimates accordingly. During the year ended December 31, 2022 and 2021, the Company recorded approximately $6,000 and $3.9 million of expense, respectively, related to the PSUs.

A summary of restricted stock unit activity was as follows (in thousands, except weighted-average grant-date fair value and contractual term amounts):

 

Stock Awards (PSUs and RSUs)

 

 

Shares

 

 

Weighted-
Average
Grant-Date Fair Value

 

 

Weighted-
Average
Remaining
Contractual
Term
(Years)

 

 

Aggregate
Intrinsic Value

 

Outstanding — December 31, 2021

 

35

 

 

$

57.24

 

 

 

 

 

 

 

PSUs and RSUs — Awarded

 

1

 

 

$

10.15

 

 

 

 

 

 

 

PSUs and RSUs — Vested

 

(18

)

 

$

58.46

 

 

 

 

 

 

 

PSUs and RSUs — Cancelled

 

(4

)

 

$

56.52

 

 

 

 

 

 

 

Outstanding — December 31, 2022

 

14

 

 

$

53.61

 

 

 

1.16

 

 

$

47

 

 

 

 

 

 

 

 

 

 

 

 

 

The total fair value of restricted stock unit awards that vested during the year ended December 31, 2022 and 2021 was $1.0 million and $3.2 million, respectively. No restricted stock unit awards were granted or vested prior to 2021.

Stock-Based Compensation Expense

Total stock-based compensation recognized related to the 2010 Plan, 2014 Plan and 2018 Inducement Plan was as follows (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Research and development

 

$

1,792

 

 

$

5,462

 

 

$

3,742

 

General and administrative

 

 

2,208

 

 

 

4,643

 

 

 

3,867

 

Total stock-based compensation

 

$

4,000

 

 

$

10,105

 

 

$

7,609

 

 

As of December 31, 2022, the total unrecognized compensation expense related to unvested awards was $4.3 million, with an estimated weighted-average remaining recognition period of 2.2 years.

In each of the periods presented, the exercise price per share for each stock option was the same as the fair value of the Company’s common stock on the date of grant.

Stock options are recorded at fair value as of the grant date using the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment to determine. Restricted stock awards are measured at grant date fair value, at the market price of the Company’s common stock on the grant date.

Expected Term—The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding and is determined using the simplified method (based on the midpoint between the vesting date and the end of the contractual term) since the Company does not have adequate historical exercise data to estimate the expected term.

Expected Volatility—The expected volatility was estimated based on a weighted volatility using both the Company’s trading history for its common stock and the average volatility for comparable publicly traded biopharmaceutical companies over a period equal to the expected term of the stock option grants. The comparable companies were chosen based on their similar size, stage in the life cycle, or area of specialty.

Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option.

Expected Dividend—The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock. Therefore, the Company used an expected dividend yield of zero.

The fair value of stock option awards was estimated using a Black-Scholes option-pricing model with the following assumptions:

 

 

Year Ended December 31,

 

2022

 

2021

 

2020

Expected term

5.3 ─ 6.1 years

 

5.3 ─ 6.1 years

 

5.3 ─ 6.1 years

Volatility

86.2% ─ 95.1%

 

81.9% ─ 88.0%

 

85.2% ─ 89.8%

Risk-free interest rate

1.6% ─ 2.9%

 

0.63% ─ 1.36%

 

0.31% ─ 1.69%

Expected dividend rate

─%

 

─%

 

─%

 

ESPP

In September 2014, the Company’s Board of Directors and stockholders approved the 2014 Employee Stock Purchase Plan, or the ESPP, which became effective in October 2014. The number of shares of common stock reserved for issuance under the ESPP will increase automatically each year, beginning on January 1, 2015 and continuing through and including January 1, 2024, by the lesser of (1) 1% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year; (2) 12,500 shares of common stock; or (3) such lesser number as determined by the Company’s Board of Directors.

The ESPP allows eligible employees to purchase shares of the Company's common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to certain plan limitations. The ESPP provides for 6-month offering periods and a 6-month purchase period, and at the end of each purchase period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last day of the purchase period. As of December 31, 2022, 60,013 shares of common stock have been issued to employees participating in the ESPP and 40,819 shares were available for issuance under the ESPP. The ESPP is a compensatory plan as defined by the authoritative guidance for stock compensation. As such, stock-based compensation expense has been recorded for the years ended December 31, 2022, 2021, and 2020.

Total stock-based compensation expense recognized related to the ESPP was as follows (in thousands):

 

 

 

Year Ended December 31,

 

 

 

2022

 

 

2021

 

 

2020

 

Research and development

 

$

 

24

 

 

$

 

115

 

 

$

 

343

 

General and administrative

 

 

 

6

 

 

 

 

44

 

 

 

 

108

 

Total stock-based compensation

 

$

 

30

 

 

$

 

159

 

 

$

 

451

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The Company used the following assumptions to estimate the fair value of stock offered under the ESPP for the years ended December 31, 2022, 2021, and 2020:

 

 

Year Ended December 31,

 

2022

 

2021

 

2020

Expected term

0.50 years

 

0.50 years

 

0.24 ─ 0.50 years

Volatility

109.3% ─ 142.9%

 

103.1% ─ 126.6%

 

54.3% ─ 125.5%

Risk-free interest rate

2.25% ─ 4.78%

 

0.04% ─ 0.11%

 

0.08% ─ 1.59%

Expected dividend rate

─%

 

─%

 

─%