Equity

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Equity Distribution Agreements

In August 2021, the Company entered into an Equity Distribution Agreement with Piper Sandler & Company (“Piper Sandler”) and Cantor Fitzgerald & Co. (“Cantor”), as agents, pursuant to which the Company may offer and sell from time to time, through the agents, up to $300.0 million of the common stock registered under the Company's universal shelf registration statement pursuant to one or more “at-the-market" offering. During the six months ended June 30, 2022, no shares were issued under this agreement.

Share-based Compensation

2018 Employee Stock Purchase Plan

In September 2018, the Company adopted the 2018 Employee Stock Purchase Plan (the “2018 ESPP”), with the first offering period under the 2018 ESPP commencing on January 1, 2020, by initially providing participating employees with the opportunity to purchase an aggregate of 311,850 shares of the Company’s common stock. The number of shares of the Company’s common stock reserved for issuance under the 2018 ESPP increase, pursuant to the terms of the 2018 ESPP, by additional shares equal to 1% of the Company’s then-outstanding common stock, effective as of January 1 of each year. As of June 30, 2022, 2,005,714 shares remained available for purchase. During the six months ended June 30, 2022 and 2021, the Company issued 5,749 and 12,050 shares, respectively, of common stock under the 2018 ESPP.

Incentive Share Plan

In the Fourth Amendment to the Company’s Incentive Share Plan (the “Incentive Plan”) adopted in March 2018, the Company was authorized to issue up to an aggregate of 6,199,477 incentive units pursuant to the terms of the Incentive Plan. Generally, incentive units were granted at no less than fair value as determined by the board of managers and had vesting periods ranging from one to four years. The Incentive Plan was terminated in September 2018.

2018 Stock Incentive Plan

In September 2018, the Company’s board of directors adopted, and the Company’s stockholders approved, the 2018 Stock Incentive Plan (the “2018 Plan”), which became effective upon the effectiveness of the registration statement on Form S-1 for the Company’s initial public offering. The number of common shares initially available for issuance under the 2018 Plan equaled the sum of (1) 4,067,007 shares of common stock; plus (2) the number of shares of common stock (up to 1,277,181) issued in respect of incentive units granted under the Incentive Plan that were subject to vesting immediately prior to the effectiveness of the registration statement expired, terminated or were otherwise surrendered, cancelled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right; plus (3) an annual increase on the first day of each fiscal year beginning with the fiscal year ended December 31, 2019 and continuing to, and including, the fiscal year ending December 31, 2028, equal to the lesser of 4,989,593 shares of the Company’s common stock, 4% of the number of shares of the Company’s common stock outstanding on the first day of the year or an amount determined by the Company’s board of directors. As of June 30, 2022,

2,589,218 shares remained available for issuance under the 2018 Plan. Common shares subject to outstanding equity awards that expire or are terminated, surrendered, or canceled without having been fully exercised or are forfeited in whole or in part are available for future grants of awards.

Compensation Expense

During the three months ended June 30, 2022 and 2021, the Company recognized compensation expense of $20.0 million and $14.6 million, respectively, relating to the issuance of incentive awards. During the six months ended June 30, 2022 and 2021, the Company recognized compensation expense of $36.6 million and $24.9 million, respectively.

At June 30, 2022, there was $84.3 million of unrecognized compensation expense that is expected to be amortized over a weighted average period of approximately two years.

Stock Options

The fair value of the stock options granted during the six months ended June 30, 2022 and 2021 was determined using the Black-Scholes option pricing model with the following assumptions:


	June 30, 2022		June 30, 2021
Expected volatility	73.2 - 76.0%		75.9 - 78.0%
Expected term (years)	5.5 - 7.0		5.5 - 7.0
Risk free interest rate	1.5% - 3.3%		0.5% - 1.2%
Expected dividend yield	0	%	0	%
Exercise price	$36.79 - $78.91		$66.82 - $82.21

Given the Company’s common stock has not been trading for a sufficient period of time, the Company calculates volatility of its common stock by utilizing a weighted average of a collection of peer company volatilities and its own common stock volatility. The expected term is calculated utilizing the simplified method.

A summary of the stock option activity under the 2018 Plan during the six months ended June 30, 2022 is presented below. These amounts include stock options granted to employees and directors.


(dollars in millions, except weighted average exercise price)	Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at December 31, 2021	5,343,254	$	44.98
Granted	1,464,743	$	62.88
Exercised	(147,409)	$	17.61
Forfeited	(123,827)	$	58.27
Outstanding at June 30, 2022	6,536,761	$	49.36	8.1	$	54.2
Exercisable at June 30, 2022	3,071,122	$	33.89	7.1	$	47.1

The weighted-average grant date fair value of options granted during the six months ended June 30, 2022 was $41.41. The total intrinsic value of options exercised during the six months ended June 30, 2022 was $7.1 million.

At June 30, 2022, there were 6,211,843 stock options under the 2018 Plan that have vested or are expected to vest.

Restricted Stock Awards

A summary of restricted stock award activity under the Incentive Plan during the six months ended June 30, 2022 is presented below. These amounts include restricted stock granted to employees and directors.


	Shares	Weighted Average Grant Date Fair Value Per Share
Unvested restricted stock at December 31, 2021	30,625	$	16.00
Vested	(29,305)	$	16.00
Cancelled	(1,320)	$	16.00
Unvested restricted stock at June 30, 2022	—	$	16.00

Restricted Stock Units

A summary of restricted stock unit activity under the 2018 Plan during the six months ended June 30, 2022 is presented below. These amounts include restricted stock units granted to employees.


	Shares	Weighted Average Grant Date Fair Value Per Share
Unvested restricted stock units at December 31, 2021	88,307	$	20.02
Granted	222,213	$	63.03
Vested	(38,490)	$	19.36
Cancelled	(5,114)	$	35.21
Unvested restricted stock units at June 30, 2022	266,916	$	55.63

At June 30, 2022, there were 221,552 restricted stock units under the 2018 Plan that have vested or are expected to vest.