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Stockholders' Equity | 7. Stockholders' Equity
Common Stock In November 2021, the Company entered into an Open Market Sale Agreement (the "Sales Agreement") with Jefferies LLC ("Jeffries") as the Company's sales agent, and filed a universal shelf registration statement on Form S-3 (the "2021 Shelf Registration Statement") that included a prospectus relating to the Sales Agreement and pursuant to which, from time to time, the Company could offer and sell shares of its common stock having an aggregate offering price of up to $150.0 million in an "at-the-market" offering. On January 4, 2024, the Company notified Jefferies that it was suspending and terminating the prospectus filed under the 2021 Shelf Registration Statement relating to the Sales Agreement for the Company's "at-the-market" offering program.
On March 5, 2024, the Company filed a shelf registration statement on Form S-3 with the SEC, (the “2024 Shelf Registration Statement”) and included a prospectus relating to the Sales Agreement (the “2024 ATM Prospectus”). Under the 2024 Shelf Registration Statement, the Company may offer and sell debt securities, common stock, preferred stock, units and/or warrants from time to time at an indeterminate aggregate offering price in one or more offerings. Under the 2024 ATM Prospectus, in accordance with the Sales Agreement, the Company may offer and sell shares of its common stock having an aggregate offering price of up to $200.0 million in an “at-the-market” offering.
During the three months ended March 31, 2024, the Company issued and sold an aggregate of 3,800,465 shares of common stock pursuant to the Sales Agreement for aggregate net proceeds of $97.9 million, after deducting fees and offering expenses payable by the Company. The Company sold such shares at a weighted average price of $26.86 per share. In addition, on March 27, 2024, the Company sold 925,925 shares of common stock pursuant to the Sales Agreement. However, the sale of such shares was not settled until April 2024, the shares were not issued until April 2024 and the Company did not receive the proceeds until April 2024. The Company sold such shares at a weighted average price of $27.00 and received net proceeds of $24.3 million after deducting fees and offering expenses payable by the Company. The $24.3 million in net proceeds related to these sales is recorded in prepaid expenses and other current assets as of March 31, 2024.
In January 2024, the Company completed a follow-on public offering, pursuant to which the Company issued and sold 19,722,500 shares of the Company’s common stock. The Company received net proceeds of $323.9 million, after deducting underwriting discounts and commissions and offering expenses payable by the Company.
Forbion Capital Fund IV Cooperatief U.A. and related affiliated entities (collectively, “Forbion”) were a beneficial owner of 9.0% of the Company's outstanding common stock as of March 31, 2024. Two members of the Company's board of directors are partners at Forbion. In the January 2024 offering, the Company issued and sold 1,714,285 shares of common stock that Forbion and related affiliated entities purchased at the public offering price of $17.50 per share for aggregate gross proceeds of $30.0 million. The shares were purchased on the same terms as the other shares that were offered and sold in the offering.
2020 Stock Incentive Plan
In August 2020 the Company’s board of directors adopted and the Company’s stockholders approved the 2020 Stock Incentive Plan, (the "2020 Plan"), which became effective on September 16, 2020. The 2020 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards to employees, directors, consultants and advisors of the Company. The 2020 Plan is administered by the Company’s board of directors or by a committee appointed by the board of directors. Upon the effectiveness of the 2020 Plan, the Company ceased granting awards under the 2018 Stock Incentive Plan.
As of March 31, 2024, 5,259,821 shares remained available for future issuance under the 2020 Plan.
2024 Inducement Stock Incentive Plan In March 2024, the Company's board of directors adopted the 2024 Inducement Stock Incentive Plan (the "2024 Inducement Plan"). The 2024 Inducement Plan provides for the grant of nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards with respect to an aggregate of 900,000 shares of Common Stock (subject to adjustment as provided in the 2024 Inducement Plan). Awards under the 2024 Inducement Plan may only be granted to new employees who were not previously an employee or director of the Company or are commencing employment with the Company following a bona fide period of non-employment, in either case, as an inducement material to the individual’s entering into employment with the Company and in accordance with the requirements of Nasdaq Stock Market Rule 5635(c)(4).
As of March 31, 2024, 220,147 shares remained available for future issuance under the 2024 Inducement Plan.
Stock option valuation
The fair value of stock option grants is estimated using the Black-Scholes option-pricing model. The fair value is determined based upon the quoted price of the Company’s common stock. The Company lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. For options with service-based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods 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.
The assumptions that the Company used to determine the grant-date fair value of options granted were as follows:
Stock option activity A summary of the Company’s stock option activity and related information for the three months ended March 31, 2024 is as follows:
The intrinsic value of options exercised for the three months ended March 31, 2024 and 2023 totaled $32.5 million and $2.2 million, respectively. The weighted-average grant date fair value of the options granted during the three months ended March 31, 2024 and 2023 was $16.06 and $8.22 per share, respectively. As of March 31, 2024 there was $35.1 million of unrecognized compensation expense, which the Company expects to recognize over a weighted-average period of 2.5 years.
In March 2024, the Company entered into separation and consulting agreements with its former chief executive officer resulting in the acceleration of vesting and modification of previously issued stock option awards. The acceleration of vesting and modification resulted in the recognition of $3.2 million of stock-based compensation expense for the three months ended March 31, 2024. The expense was recorded within general and administrative expenses on the condensed consolidated statement of operations and comprehensive loss. Based upon the terms of the separation and consulting agreements, 223,533 stock option awards were forfeited in March 2024.
Restricted stock units A restricted stock unit (“RSU”) represents the right to receive one share of common stock upon vesting of the RSU. The Company grants RSUs with service conditions that vest in four equal annual installments provided that the employee remains employed with the Company, RSUs with service conditions that vest in sixteen equal quarterly installments provided that the employee remains employed with the Company and RSUs with performance-based vesting conditions. As of March 31, 2024, there are no RSUs with performance-based vesting conditions outstanding. The fair value of each RSU is based on the closing price of the Company’s common stock on the date of grant. A summary of the Company’s RSU activity and related information for the three months ended March 31, 2024 is as follows:
As of March 31, 2024, there was $28.3 million of unrecognized compensation costs related to unvested RSUs, which are expected to be recognized over a weighted-average period of 3.4 years.
In March 2024, the Company entered into separation and consulting agreements with its former chief executive officer resulting in the acceleration of vesting and modification of previously issued restricted stock unit awards. The acceleration of vesting and modification resulted in the recognition of $10.5 million of stock-based compensation expense for the three months ended March 31, 2024. The expense was recorded within general and administrative expenses on the condensed consolidated statement of operations and comprehensive loss.
The Company recorded stock-based compensation expense in the following expense categories of its condensed consolidated statements of operations and comprehensive loss:
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