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Stock-Based Compensation
 9 Months Ended
Sep. 30, 2023
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation

11. Stock-based Compensation

Stock-based Compensation Expense

Total stock-based compensation expense recognized was as follows (in thousands):

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Research and development

 

$

2,545

 

 

$

1,745

 

 

$

7,132

 

 

$

5,319

 

General and administrative

 

 

3,015

 

 

 

2,446

 

 

 

8,216

 

 

 

7,557

 

Total stock-based compensation

 

$

5,560

 

 

$

4,191

 

 

$

15,348

 

 

$

12,876

 

Stock Options

A summary of stock option activity for the nine months ended September 30, 2023 is set forth below:

 

 

 

Number of
Shares
Underlying
Outstanding
Options

 

 

Weighted
Average
Exercise
Price

 

 

Weighted-
Average
Remaining
Contractual
Term
(in years)

 

 

Aggregate
Intrinsic
Value
(in thousands)

 

Outstanding, December 31, 2022

 

 

6,203,020

 

 

$

14.44

 

 

 

8.4

 

 

$

780

 

Options granted

 

 

4,167,242

 

 

$

5.48

 

 

 

 

 

 

 

Options exercised

 

 

(946

)

 

$

4.76

 

 

 

 

 

 

 

Options forfeited or cancelled

 

 

(619,818

)

 

$

12.35

 

 

 

 

 

 

 

Outstanding, September 30, 2023

 

 

9,749,498

 

 

$

10.74

 

 

 

8.4

 

 

$

—

 

Options exercisable, September 30, 2023

 

 

3,602,027

 

 

$

13.87

 

 

 

7.6

 

 

$

—

 

Vested and expected to vest, September 30, 2023

 

 

9,749,498

 

 

$

10.74

 

 

 

8.4

 

 

$

—

 

The assumptions used in the Black Scholes Model to calculate stock-based compensation are as follows:

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2023

 

2022

 

2023

 

2022

Fair value of common stock

 

$1.37 - $3.38

 

$14.16 - $16.89

 

$1.37 - $9.15

 

$11.49 - $19.97

Expected term (years)

 

5.5 - 6.1

 

6.0 - 6.1

 

5.5 - 6.1

 

5.5 - 6.1

Volatility

 

84.7% - 87.3%

 

79.5% - 80.7%

 

83.3% - 87.3%

 

77.4% - 80.7%

Risk free rates

 

4.1% - 4.6%

 

2.7% - 4.0%

 

3.5% - 4.6%

 

1.6% - 4.0%

Dividend rate

 

0.0%

 

0.0%

 

0.0%

 

0.0%

Restricted Stock Units

The summary of RSU activity and related information for the nine months ended September 30, 2023 is set forth below:

 

 

 

Number of Units Outstanding

 

 

Weighted Average
Grant Date Fair Value

 

Outstanding, December 31, 2022

 

 

197,580

 

 

$

7.8

 

RSUs granted

 

 

513,700

 

 

$

7.6

 

RSUs vested

 

 

(69,955

)

 

$

7.6

 

RSUs forfeited

 

 

(54,525

)

 

$

7.2

 

Outstanding, September 30, 2023

 

 

586,800

 

 

$

7.8

 

Option repricing

On August 8, 2023, the board of directors approved a stock option repricing (the Option Repricing) to be effective on August 14, 2023 (the Effective Date) in accordance with the terms of the Company’s 2015 Stock Incentive Plan and 2018 Plan (together, the Plans). Pursuant to the Option Repricing, the exercise price of each stock option previously granted under the Plans, totaling 6,431,077 options, was amended to reduce the exercise price of such options to $2.14 per share, the closing price of the Company’s common stock on the Nasdaq Global Market on the Effective Date. Under the terms of the Option

Repricing, a repriced option will revert to its original exercise price if, prior to the one year anniversary of the Effective Date, (a) the option holder’s employment is terminated by the Company with cause or by the option holder or (b) the option is exercised.

The repriced options otherwise retained their existing terms and conditions as set forth in the Plans and applicable award agreements. The stock option modification resulted in $4.6 million of incremental compensation cost, which was calculated using the Black-Scholes option-pricing model. Of the incremental compensation cost, $0.4 million was recognized in the three months ended September 30, 2023, and $4.2 million will be recognized on the straight-line basis over the remaining vesting period of the repriced options. The incremental cost is included in general and administrative expense and research and development expense on the condensed consolidated statements of operations and comprehensive loss.

In addition, as of the Effective Date, the Company issued 1,418,042 options to purchase shares of common stock under the 2018 Plan to eligible employees who held inducement awards as of August 8, 2023. These new options were issued to eligible employees because their inducement awards granted under Nasdaq Listing Rule 5635(c)(4) are not eligible for repricing. The prior inducement awards remain outstanding under their original terms.