Stock-Based Compensation |
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Share-Based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | 8. Stock-Based Compensation Equity Incentive Plans In February 2019, the Company adopted its 2019 Equity Incentive Plan (the “2019 Plan”). In October 2021, the 2019 Plan was terminated as to new awards upon the adoption of the 2021 Equity Incentive Plan (the “2021 Plan”), which became effective on October 19, 2021. The 2021 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units and performance awards to employees, directors or consultants of the Company. The number of common shares available for issuance under the 2021 Plan is 5,612,000 shares of common stock plus any common shares subject to stock options, restricted stock units or similar awards granted under the 2019 Plan that expire, are forfeited or otherwise terminate without having been exercised in full, are tendered to or withheld by the Company for payment of an exercise price or for tax withholding obligations or are forfeited to or repurchased by the Company due to failure to vest, with the maximum number of common shares to be added to the 2021 Plan equal to 4,978,561 common shares. Additionally, shares available for issuance under the 2021 Plan increase on the first day of each fiscal year, beginning with the Company’s 2023 fiscal year, equal to the lesser of 5,102,000 common shares, 5% of the outstanding common shares on the last day of the immediately preceding fiscal year, or such number of common shares determined by the board of directors. On January 1, 2024 and 2023, the number of shares of common stock that may be issued under the 2021 Plan was automatically increased by 2,962,617 and 2,851,292 shares, respectively. Options granted under the 2019 Plan and 2021 Plan (collectively, the “Plans”) generally vest over a period of between and and expire ten years from grant date. As of December 31, 2023 and 2022, the Company had 9,018,173 and 6,161,504 shares, respectively, authorized for issuance under the Plans, and 317,001 and 1,195,138 shares, respectively, remained available for grant. Total share-based compensation expense was comprised of the following (in thousands):
Stock-based compensation expense by type of share-based award (in thousands):
Stock Options The following table summarizes stock option activity for the year ended December 31, 2023:
The weighted average grant date fair value of stock options granted during the years ended December 31, 2023 and 2022 was $13.44 and $11.36 per share, respectively. The intrinsic value of a stock option is the difference between the market price of the common stock at measurement date and the exercise price of the option. The total intrinsic value of stock options exercised during the year ended December 31, 2023 and 2022 was $23.8 million and $17.7 million, respectively. The fair value of each option award is estimated on the date of grant using the Black-Scholes model. The following assumptions were used in the Black-Scholes option pricing model to estimate the fair value of stock options granted to employees under the Company’s Plans during the periods presented:
Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for zero coupon U.S. Treasury bonds with maturities similar to the expected term of the award being valued. Expected volatility. Given the Company’s limited historical stock price volatility data, the expected volatility assumption is based on volatilities of a peer group of similar companies whose share prices are publicly available. The peer group was developed based on companies in the biotechnology industry. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available. Expected term. The expected term represents the period of time that options are expected to be outstanding. Because the Company does not have historical exercise behavior, it determined the expected life assumption using the simplified method for employees, which is an average of the contractual term of the option and its vesting period. The expected term for nonemployee options is generally the contractual term. Expected dividend yield. The Company bases the expected dividend yield assumption on the fact that it has never paid cash dividends and has no present intention to pay cash dividends and, therefore, used an expected dividend yield of zero. During the year ended December 31, 2023, the Company recorded a net decrease to stock-based compensation expense of approximately $1.4 million pertaining to the net impact of the modification of stock options in connection with the termination of five employees and the related reversal of estimated expenses associated with unvested awards upon the modification date. During the year ended December 31, 2022, the Company recorded incremental stock-based compensation expense of approximately $0.3 million pertaining to the modification of stock options in connection with the termination of two employees. The modifications provided for an acceleration of unvested options, resulting in additional compensation expense that was immediately recognized. As of December 31, 2023, unrecognized stock-based compensation was $54.4 million which is expected to be recognized over the weighted average period of 3.0 years. Restricted Stock Awards The Company grants restricted stock awards pursuant to the Plans and satisfies such grants through the issuance of new shares. Restricted stock awards generally vest over a period of 3 years. Upon the termination of service of a restricted stockholder, the Company has the option to repurchase any unvested shares and based on this, restricted stock awards are not included in outstanding common stock until fully vested. During the years ended December 31, 2023 and 2022, the Company did not repurchase any unvested shares, respectively. The following table summarizes restricted stock award activity for the year ended December 31, 2023:
The Company records a liability for unvested restricted stock awards subject to repurchase and reduces the liability as the underlying shares vest. The liability was immaterial as of December 31, 2023 and 2022. The total fair value of restricted stock awards vested during the years ended December 31, 2023 and 2022 was immaterial. As of December 31, 2023, there was an immaterial amount of unrecognized stock-based compensation cost pertaining to restricted stock awards that will be recognized over a weighted average period of 0.3 years. Restricted Stock Units The Company grants restricted stock units pursuant to the Plans and satisfies such grants through the issuance of new shares as they vest. Restricted stock units generally vest over a period of 4 years. The following table summarizes restricted stock unit activity for the year ended December 31, 2023:
As of December 31, 2023, $9.3 million of unrecognized stock-based compensation cost pertaining to restricted stock units that will be recognized over a weighted average period of 2.4 years. Employee Stock Purchase Plan In October 2021, the board of directors and stockholders approved the 2021 Employee Stock Purchase Plan which became effective on October 19, 2021. The maximum number of shares of common stock that will be made available for sale under the 2021 ESPP is equal to 510,000 shares of common stock. In addition, the number of shares of common stock available for issuance under the 2021 ESPP will be increased on the first day of each fiscal year, beginning with fiscal year 2023, in an amount equal to the lesser of 1,020,000 shares of common stock, 1% of the outstanding shares of common stock on the last day of the immediately preceding fiscal year or such number of common shares determined by the board of directors. On January 1, 2024 and 2023, the number of shares of common stock that are available for sale under the 2021 ESPP was automatically increased by 592,523 and 570,258 shares, respectively. Participating employees purchase stock under the 2021 ESPP at a price equal to the lower of 85% of the closing price on the applicable offering commencement date or 85% of the closing price on the applicable offering termination date. The 2021 ESPP provides for two offering periods of six months’ duration with purchase periods terminating on either May 15 or November 15. Contributions under the 2021 ESPP are limited to a maximum of 15% of an employee’s eligible compensation and a maximum of 3,000 shares during each purchase period. During the years ended December 31, 2023 and 2022, total stock-based compensation expense recognized related to the 2021 ESPP was $0.2 million. Additionally, during the years ended December 31, 2023 and 2022, a total of 27,440 and 21,157 shares of common stock were issued under the 2021 ESPP at an average per share price of $9.09 and $12.62, respectively. |