Stockholders' Equity

12 Months Ended

Dec. 31, 2019

Stockholders' Equity

9. Stockholders’ Equity

Public Offerings of Common Stock

On July 19, 2019, the Company completed a public offering in which 1,587,000 shares of its common stock, including the underwriters’ exercise in full of an option to purchase an additional 207,000 shares, were sold to the public at a price of $87.00 per share (the “July Stock Offering”). The net proceeds of the Stock Offering, after deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company, were approximately $131.1 million.

On May 3, 2019, the Company completed a public offering in which 3,144,531 shares of its common stock, including the underwriters’ full exercise of an option to purchase up to an additional 410,156 shares, were sold to the public at a price of $64.00 per share. The total proceeds received by the Company from this offering, net of underwriting discounts and commissions and other estimated offering expenses payable by the Company, totaled approximately $189.6 million.

On July 3, 2017, the Company completed a public offering in which 2,807,017 shares of its common stock were sold to the public at a price of $42.75 per share. The underwriters were granted an option, which they exercised in full, to purchase an additional 421,052 shares of the Company’s common stock. The total proceeds from this offering, net of underwriting discounts, commissions and other offering expenses, totaled $129.3 million.

Stock Option and Incentive Plans

At the Company’s 2018 Annual Meeting of Stockholders held on May 16, 2018, the Company’s shareholders approved the 2018 Stock Option and Incentive Plan (the “2018 Plan”). Under the 2018 Plan the number of shares of the Company’s common stock that are reserved and available for issuance shall be 2,778,000 plus the number of shares of common stock available for issuance under the Company’s Amended and Restated 2012 Stock Option and Incentive Plan (the “2012 Plan”). The shares of common stock underlying any awards under the 2018 Plan, 2012 Plan and the Second Amended and Restated 2001 Repligen Corporation Stock Plan (the “2001 Plan,” and together with the 2018 Plan and 2012 Plan, the “Plans”) that are forfeited, canceled or otherwise terminated (other than by exercise) shall be added back to the shares of stock available for issuance under the 2018 Plan. At December 31, 2019, 2,555,281 shares were available for future grant under the 2018 Plan.

Stock-Based Compensation

The Company recorded stock-based compensation expense of $12.8 million, $10.2 million and $6.7 million for the years ended December 31, 2019, 2018 and 2017, respectively, for share-based awards granted under the Plans. The following table presents stock-based compensation expense in the Company’s consolidated statements of comprehensive income:

	For the Years Ended December 31,
	2019		2018		2017
	(Amounts in thousands)
Cost of product revenue	$	1,368	$	1,019	$	704
Research and development		1,373		917		481
Selling, general and administrative		10,106		8,256		5,562
Total stock-based compensation	$	12,847	$	10,192	$	6,747

The 2018 Plan allows for the granting of incentive and nonqualified options to purchase shares of common stock, restricted stock and other equity awards. Except for the grant to the Company’s Chief Executive Officer (“CEO”) in 2018 mentioned below, employee grants under the Plans generally vest over a three- to five-year period, with 20%-33% vesting on the first anniversary of the date of grant and the remainder vesting in equal yearly installments thereafter. Nonqualified options issued to non-employee directors and consultants under the Plans generally vest over one year. In the first quarter of 2018, to create a longer-term retention incentive, the Company’s Compensation Committee granted long-term incentive compensation awards to its CEO which consisted of both stock options and restricted stock units that are subject to time-based vesting over nine years. Options granted under the Plans have a maximum term of ten years from the date of grant and generally, the exercise price of the stock options equals the fair market value of the Company’s common stock on the date of grant. At December 31, 2019, options to purchase 957,559 shares and 734,984 stock units were outstanding under the Plans.

The Company uses the Black-Scholes option pricing model to calculate the fair value of stock option awards on the grant date, and the Company uses the value of the common stock as of the grant date to value stock units. The Company measures stock-based compensation cost at the grant date based on the estimated fair value of the award. The Company recognizes expense on awards with service-based vesting over the employee’s requisite service period on a straight-line basis. In the third quarter of 2017, the Company issued performance stock units to certain employees related to the Spectrum Acquisition which were tied to the achievement of certain 2018 revenue and gross margin metrics and the passage of time. Additionally, in the first quarter of 2018 and again in the first quarter of 2019, the Company issued performance stock units to certain individuals which are tied to the achievement of certain annual revenue and return on invested capital metrics. The Company recognizes expense on performance-based awards over the vesting period based on the probability that the performance metrics will be achieved. The Company recognizes stock-based compensation expense for options that are ultimately expected to vest, and accordingly, such compensation expense has been adjusted for estimated forfeitures.

The fair value of share-based awards granted during the years ended December 31, 2019, 2018 and 2017 were calculated using the following estimated assumptions:

	For the Years Ended December 31,
	2019		2018		2017
Expected term (in years)		5.5-6.5		5.5-7.5		6.1
Expected volatility (range)		45.14 – 50.87%		45.14 – 50.87%		51.48%
Risk-free interest rate		1.55 – 2.56%		2.63 – 2.96%		1.88 – 1.99%
Expected dividend yield		0%		0%		0%

Information regarding option activity for the year ended December 31, 2019 under the Plans is summarized below:

	Shares			Weighted average exercise price		Weighted- Average Remaining Contractual Term (in Years)		Aggregate Intrinsic Value (in Thousands)
Options outstanding at December 31, 2018		998,226		$	27.54
Granted		54,996		$	64.14
Exercised		(87,663	)	$	13.30
Forfeited/expired/cancelled		(8,000	)	$	43.60
Options outstanding at December 31, 2019		957,559		$	30.81		6.69	$	59,073
Options exercisable at December 31, 2019		513,577		$	24.44		5.39	$	34,954
Vested and expected to vest at December 31, 2019(1)		923,355					6.63	$	57,235

(1) Represents the number of vested options as of December 31, 2019 plus the number of unvested options expected to vest as of December 31, 2019 based on the unvested outstanding options at December 31, 2019 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the closing price of the common stock on December 31, 2019, the last business day of 2019, of $92.50 per share and the exercise price of each in-the-money option) that would have been received by the option holders had all option holders exercised their options on December 31, 2019. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2019, 2018 and 2017 was $5.5 million, $5.3 million and $5.3 million, respectively.

The weighted average grant date fair value of options granted during the years ended December 31, 2019, 2018 and 2017 was $31.27, $18.90 and $16.94, respectively. The total fair value of stock options that vested during the years ended December 31, 2019, 2018 and 2017 was $3.1 million, $2.3 million and $2.2 million, respectively.

The fair value of stock units is calculated using the closing price of the Company’s common stock on the date of grant. Information regarding stock unit activity, which includes activity for restricted stock units and performance stock units, for the year ended December 31, 2019 under the Plans is summarized below:

	Shares			Weighted- Average Remaining Contractual Term (in Years)		Aggregate Intrinsic Value (in Thousands)
Unvested at December 31, 2018		705,413
Awarded		328,812
Vested		(251,776	)
Forfeited/expired/cancelled		(47,465	)
Unvested at December 31, 2019		734,984			3.81	$	67,986
Vested and expected to vest at December 31, 2019(1)		675,618			3.34	$	62,495

(1) Represents the number of vested stock units as of December 31, 2019 plus the number of unvested stock units expected to vest as of December 31, 2019 based on the unvested outstanding stock units at December 31, 2019 adjusted for estimated forfeiture rates of 8% for awards granted to non-executive level employees and 3% for awards granted to executive level employees.

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (equal to the closing price of the common stock on December 31, 2019, the last business day of 2019, of $92.50 per share, as stock units do not have an exercise price) that would have been received by the stock unit holders had all holders exercised on December 31, 2019. The aggregate intrinsic value of stock units vested during the years ended December 31, 2019, 2018 and 2017 was $17.5 million, $6.2 million and $4.0 million, respectively.

The weighted average grant date fair value of stock units granted during the years ended December 31, 2019, 2018 and 2017 was $49.68, $30.30 and $26.03, respectively. The total fair value of stock units that vested during the years ended December 31, 2019, 2018 and 2017 was $8.5 million, $4.6 million and $4.0 million, respectively.

As of December 31, 2019, there was $36.4 million of total unrecognized compensation cost related to unvested share-based awards. This cost is expected to be recognized over a weighted average remaining requisite service period of 4.09 years. The Company expects 1,688,497 unvested options and stock units to vest over the next five years.