Share-based Compensation

6 Months Ended

Jun. 30, 2021

Share-based Payment Arrangement [Abstract]

The Company and the Centessa Predecessor Group recorded share-based compensation expense in the following expense categories in the unaudited interim consolidated and combined statements of operations and comprehensive loss (in thousands):


	Successor				Predecessor
	Three Months Ended June 30, 2021		Period from January 30, 2021 through June 30, 2021		Period from January 1, 2021 through January 29, 2021		Three Months Ended June 30, 2020		Six Months Ended June 30, 2020
Research and development	$	924	$	2,041	$	—	$	90	$	153
General and administrative	2,305		3,919		—		—		—
	$	3,229	$	5,960	$	—	$	90	$	153

Centessa Pharmaceuticals plc (Successor) Stock Options

In January 2021, the Company’s board of directors approved the 2021 Equity Incentive Plan (the 2021 Plan). The number of shares authorized under the 2021 Plan was increased in May 2021 at the time of the IPO, whereby the total number of shares authorized under the 2021 Plan was 19,192,910 of which 8,662,500 shares were available for future grants as of June 30, 2021. The Plan provides for the granting of ordinary shares, incentive stock options, non-qualified stock options, restricted share awards, and/or share appreciation rights to employees, directors, and other persons, as determined by the Company’s board of directors. The Company’s stock options vest based on the terms in each award agreement, generally over four-year periods, and have a contractual term of ten years.

The following table summarizes stock option activity for the period from January 30, 2021 through June 30, 2021:


	Number of Shares	Weighted-Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term
Balance at January 30, 2021	—
Granted	11,414,307	$	6.89
Exercised	(50,000)	$	5.84
Forfeited	(833,897)	$	5.84
Balance at June 30, 2021	10,530,410	$	6.98	9.6
Exercisable at June 30, 2021	518,857	$	4.40	7.6

The weighted-average grant date fair value of options granted was $6.98 per share for the period from January 30, 2021 through June 30, 2021. As of June 30, 2021, the total unrecognized compensation expense related to unvested stock option awards was $41.8 million, which the Company expects to recognize over a weighted-average period of 2.4 years.

Based on the trading price of $21.22 per ADS, which is the closing price as of June 30, 2021, the aggregate intrinsic value of options as of June 30, 2021 was $160.4 million, of which $9.2 million is related to vested options.

During the period from January 30, 2021 through June 30, 2021, the fair value of each option was estimated on the date of grant using the weighted average assumptions in the table below:


Expected term (in years)	5.84
Expected stock price volatility	65.51	%
Risk-free interest rate	0.85	%
Expected dividend yield	0	%
Estimated fair value of ordinary share	$6.98

Restricted Share Awards

In connection with the acquisition of the Centessa Subsidiaries, the Company issued 379,905 ordinary shares subject to future vesting. In the three months ended June 30, 2021, the Company issued 833,897 ordinary shares subject to future vesting to an employee. The fair value of the awards are based upon the estimated fair value of the Company’s ordinary shares at the time of grant.

The following table summarizes ordinary share activity for the period from January 30, 2021 through June 30, 2021:


	Number of Shares	Weighted-Average Grant Date Fair Value Per Share
Unvested at January 30, 2021	—
Granted	1,213,802	$	15.57
Vested	(225,460)	$	5.84
Unvested at June 30, 2021	988,342	$	17.79

As of June 30, 2021, the total unrecognized compensation expense related to unvested ordinary shares was $16.7 million, which the Company expects to recognize over a weighted-average period of 2.5 years.