Stockholders' Equity

6 Months Ended

Jun. 30, 2024

Equity [Abstract]

Stockholders' Equity

Note 10. Stockholders’ Equity

Public Offerings

At-the-Market Offerings

In December 2019, the Company entered into a sales agreement (the “December 2019 Sales Agreement”) with SVB Securities LLC (now known as Leerink Partners LLC) (“Leerink”), pursuant to which the Company may sell up to $80 million in shares of the Company’s common stock from time to time through Leerink, acting as the Company’s sales agent, in one or more at-the-market offerings utilizing an automatic shelf registration statement (the “2019 Shelf Registration Statement”) the Company filed with the U.S. Securities and Exchange Commission (the “SEC”) on December 5, 2019 for the issuance of common stock, preferred stock, warrants, rights, debt securities and units. Leerink is entitled to receive a commission of 3.0% of the gross proceeds for any shares sold under the December 2019 Sales Agreement. The December 2019 Sales Agreement was replaced by the March 2022 Sales Agreement (as defined below).

In March 2022, the Company entered into a sales agreement (the “March 2022 Sales Agreement”) with Leerink and filed a prospectus supplement, pursuant to which the Company could sell up to $200 million in shares of the Company’s common stock from time to time through Leerink, acting as the Company’s sales agent, in one or more at-the-market offerings utilizing the 2019 Shelf Registration Statement. Leerink is entitled to receive a commission of up to 3.0% of the gross proceeds for any shares sold under the March 2022 Sales Agreement. The March 2022 Sales Agreement supersedes the December 2019 Sales Agreement, dated December 5, 2019, by and between the Company and Leerink. The Company exhausted sales of shares of the Company’s common stock under its prior at-the-market offering program.

In August 2022, the Company filed a prospectus supplement to the 2019 Shelf Registration Statement for the issuance and sale, if any, of up to an additional $250 million in shares of the Company’s common stock. The Company will pay Leerink a commission of up to 3.0% of the gross sales proceeds of any shares sold through Leerink, acting as sales agent, under the March 2022 Sales Agreement.

In December 2022, in connection with the 2022 Shelf Registration Statement (as defined below), the Company filed a new sales agreement prospectus to replace the prior prospectus supplement filed in August 2022 associated with the expired 2019 Shelf Registration Statement. The new sales agreement prospectus covered the issuance and sale by the Company of up to the same $250 million of the Company’s common stock that may be issued and sold from time to time through Leerink, as the Company’s sales agent, under the March 2022 Sales Agreement.

Under the March 2022 Sales Agreement, for the three months ended June 30, 2024, the Company received approximately $11.3 million in gross proceeds through the sale of 148,875 shares, of which net proceeds were approximately $11.0 million. The Company did not utilize the March 2022 Sales Agreement with Leerink during the three months ended March 31, 2024.

The Company did not utilize the March 2022 Sales Agreement with Leerink during the year ended December 31, 2023. Under the December 2019 Sales Agreement and March 2022 Sales Agreement, the Company received approximately $238.8 million in gross proceeds through the sale of 5,167,973 shares, of which net proceeds were approximately $231.8 million for the year ended December 31, 2022. Under the December 2019 Sales Agreement, the Company received approximately $7.4 million in gross proceeds through the sale of 110,296 shares, of which net proceeds were approximately $7.2 million for the year ended December 31, 2021.

Upon the closing of the Second Amendment, which occurred in March 2022, Hercules also purchased 152,487 of the Company’s unregistered common stock for a total consideration of $5.0 million at a share price equal to $32.79 per share, pursuant to a share transfer agreement.

The holders of shares of common stock are entitled to one vote for each share of common stock held at all meetings of stockholders and written actions in lieu of meetings. The holders of shares of common stock are entitled to receive dividends, if and when declared by the Board.

June 2023 Public Offering

In June 2023, the Company completed an underwritten public offering of its common stock (the “June 2023 Public Offering”). The Company sold 3.0 million shares of its common stock at a public offering price of $75.00 per share. The net proceeds were $211.3 million, net of underwriting discounts and commissions of $13.5 million and other offering costs of $0.2 million. Additionally, in connection with this public offering, in July 2023, the underwriters fully exercised their option to purchase 450,000 additional shares of the Company's common stock at a public offering price of $75.00 per share. The net proceeds from the exercise of the option were $31.7 million, net of underwriting discounts and commissions of $2.0 million and other minimal offering costs.

Shelf Registration Statement

On December 2, 2022, the Company filed an automatic shelf registration statement (the “2022 Shelf Registration Statement”) with the SEC for the issuance of common stock, preferred stock, warrants, rights, debt securities and units. It became effective upon filing with the SEC and is currently the Company’s only active shelf registration.

Under SEC rules, the 2022 Shelf Registration Statement allows for the potential future offer and sale by the Company, from time to time, in one or more public offerings of an indeterminate amount of the Company’s common stock, preferred stock, debt securities, and units at indeterminate prices. At the time any of the securities covered by the 2022 Shelf Registration Statement are offered for sale, a prospectus supplement will be prepared and filed with the SEC containing specific information about the terms of any such offering.

Equity Incentive Plan

In November 2015, the 2015 Omnibus Incentive Compensation Plan (the “2015 Plan”) was adopted by the Company’s stockholders. As of June 30, 2024, there were 1,183,992 shares available for future grant under the 2015 Plan.

Stock Options

The following table sets forth stock option activity as of June 30, 2024:

	​Number of shares			​Weighted average exercise price		Weighted average contractual term		​Aggregate intrinsic value
Outstanding at December 31, 2023		8,462,294		$	41.48
Granted		1,047,180			83.23
Exercised		(193,125	)		32.59
Forfeited/Canceled		(377,542	)		59.88
Outstanding at June 30, 2024		8,938,807		$	45.79		6.8	$	314,480
Vested and expected to vest at June 30, 2024		8,938,807		$	45.79		6.8	$	314,480
Exercisable at June 30, 2024		5,066,333		$	32.08		5.3	$	245,888

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. The expected term of the Company’s stock options has been determined utilizing the “simplified” method as described in the SEC’s Staff Accounting Bulletin No. 107 relating to stock-based compensation. The simplified method was chosen because the Company has limited historical option exercise experience due to its short operating history. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for a period approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. In prior years, expected volatility was based on historical volatilities of similar entities within the Company’s industry which were commensurate with the Company’s expected term assumption. Currently, expected volatility is based on historical volatility information of the Company's common stock since the Company's initial public offering in 2015.

The weighted average grant date fair value of options granted was $64.42 per option for the six months ended June 30, 2024. As of June 30, 2024, there was $177.5 million of total unrecognized compensation cost related to non-vested stock options which is expected to be recognized over a weighted average period of 2.7 years.

Restricted Stock Units

The fair value of RSUs is determined on the date of the grant based on the market price of its shares of common stock as of that date. The fair value of the RSUs is recognized as an expense ratably over the vesting period of four years. As of June 30, 2024, total compensation cost not yet recognized related to unvested RSUs was $44.8 million, which is expected to be recognized over a weighted-average period of 2.8 years. The intrinsic value of RSUs lapsed during the six months ended June 30, 2024 was $7.6 million.

The following table sets forth the RSU activity for the six months ended June 30, 2024:

	Number of shares			Weighted average grant date fair value
Outstanding at December 31, 2023		804,150		$	41.36
Granted		397,237			75.23
Vested		(226,323	)		37.11
Forfeited		(82,009	)		49.83
Outstanding at June 30, 2024		893,055		$	56.74

Employee Stock Purchase Plan

The ESPP allows eligible employees to purchase shares of the Company’s common stock. The purchase price is equal to 85% of the lower of the closing price of the Company’s common stock on (1) the first day of the offering period or (2) the last day of the offering period. The ESPP has consecutive offering periods that begin on or about June 1st of each year with a duration of 12 months. The Company commenced the first offering period pursuant to the ESPP on June 1, 2023, and such offering ended on May 31, 2024.

As of June 30, 2024, 52,368 common shares have been purchased and issued pursuant to the ESPP, and $0.4 million and $0.8 million of expense was recorded for the three and six months ended June 30, 2024.

Stock-based Compensation Expense

Stock-based compensation expense recognized was as follows:

	Three months ended June 30,				Six months ended June 30,
	2024		2023		2024		2023
Research and development	$	5,072	$	3,238	$	9,640	$	5,652
Selling, general and administrative		16,310		12,684		31,932		23,213
Total	$	21,382	$	15,922	$	41,572	$	28,865

Stock-based compensation expense capitalized into inventory totaled $0.3 million and $0.7 million for the three and six months ended June 30, 2024, respectively, and $0.9 million and $1.6 million for the three and six months ended June 30, 2023, respectively. The Company started capitalizing stock-based compensation to inventory in the third quarter of 2022. Capitalized stock-based compensation is recognized as an expense in cost of product sales when the related product is sold or in selling, general and administrative expense when the related product is dispensed as a physician sample.