Stock-Based Compensation

12 Months Ended

Dec. 31, 2022

Stock-Based Compensation

Stock-Based Compensation

(12) Stock-Based Compensation

The Company has the following stock-based compensation plans: the 2004 Employee Stock Purchase Plan (the “2004 ESPP Plan”), the 2008 Stock Option and Incentive Plan (the “2008 Plan”) and the 2021 Omnibus Equity Incentive Plan (the “2021 Plan”). There are no shares available for future grant under the 2008 Plan. Outstanding options under the 2008 Plan will be rolled into the 2021 Plan if canceled.

Employee Stock Purchase Plan

At December 31, 2022, a total of 276,666 shares of common stock are reserved for issuance under the 2004 ESPP Plan. Under the 2004 ESPP Plan, each participating employee may purchase shares of common stock through payroll deductions at a purchase price equal to 85% of the lower of the fair market value of the common stock at either the beginning of the offering period or the applicable exercise date. During the years ended December 31, 2022, 2021 and 2020, the Company issued 12,243, 21,867 and 39,817 shares under the 2004 ESPP Plan, respectively. At December 31, 2022, 176,232 shares were available for issuance under the 2004 ESPP Plan.

Employee Stock Option Plan

The 2021 Plan permits the granting of incentive stock options (intended to qualify as such under Section 422A of the Internal Revenue Code of 1986, as amended), non-qualified stock options, stock appreciation rights, performance share units, restricted stock and other awards of restricted stock in lieu of cash bonuses to employees, consultants and non-employee directors.

The 2021 Plan allows for grants of new awards until April 19, 2031. As of December 31, 2022, there were 2,227,595 shares outstanding under the 2008 Plan that will be rolled into the 2021 Plan if canceled. The Company’s Board of Directors determines the term of each option, option price, and number of shares for which each option is granted and the rate at which each option vests. Options generally vest over a period not to exceed four years. The term of each option cannot exceed ten years (five years for options granted to holders of more than 10% of the voting stock of the Company), and the exercise price of stock options cannot be less than the fair market value of the common stock at the date of grant (110% of fair market value for incentive stock options granted to holders of more than 10% of the voting stock of the Company). Vesting of all employee and non-employee director stock option awards may accelerate upon a change in control as defined in the 2021 Plan.

A summary of stock option activity for the year ended December 31, 2022 is as follows:

		Weighted		Weighted
		Average		Average
		Exercise		Remaining
		Price		Contractual
	Shares	Per Share		Term (In Years)
Options outstanding at December 31, 2021	4,077,667	$	30.02	8.0
Granted	1,620,000	$	23.19	—
Exercised	(458,254)	$	8.22	—
Canceled	(153,751)	$	48.36	—
Options outstanding at December 31, 2022	5,085,662	$	29.26	7.9
Options vested and expected to vest at December 31, 2022	4,970,769	$	29.40	7.8
Options exercisable at December 31, 2022	2,100,491	$	40.05	6.6
Shares available for grant under the 2021 Plan	1,837,968		—	—

The total intrinsic value of stock options exercised during the years ended December 31, 2022, 2021 and 2020 was $12.8 million, $9.4 million and $0.8 million, respectively. The weighted average grant-date fair value of stock options granted during the years ended

December 31, 2022, 2021 and 2020 was $17.60, $22.16 and $8.08, respectively. The total fair value of stock options vested during the years ended December 31, 2022, 2021 and 2020 was $15.6 million, $5.9 million and $2.4 million, respectively.

The aggregate intrinsic value of stock options outstanding at December 31, 2022 was $122.6 million. The aggregate intrinsic value of stock options vested and expected to vest at December 31, 2022 was $120.1 million. The aggregate intrinsic value of stock options exercisable at December 31, 2022 was $54.1 million. As of December 31, 2022, total compensation cost related to non-vested employee and non-employee director stock options not yet recognized was approximately $42.9 million, net of estimated forfeitures, which is expected to be recognized as expense over a weighted average period of 2.6 years.

Valuation and Expenses Information

Stock-based compensation expense for the years ended December 31, 2022, 2021 and 2020 was recorded as follows:

	2022		2021		2020
	(In thousands)
Research and development	$	8,082	$	4,525	$	1,933
General and administrative		7,529		4,428		1,982
Total stock-based compensation expense	$	15,611	$	8,953	$	3,915

The fair values of employee and director stock options granted during the years ended December 31, 2022, 2021 and 2020 were valued using the Black-Scholes option pricing model with the following assumptions:

	2022	2021	2020
Expected stock price volatility	90 - 97%	97 - 98%	91 - 98%
Expected option term	6.0 Years	6.0 Years	6.0 Years
Risk-free interest rate	1.7 - 4.2%	0.8 - 1.4%	0.5 - 0.7%
Expected dividend yield	None	None	None

The Company estimates expected term based on historical exercise patterns. The Company uses its historical stock price volatility consistent with the expected term of grant as the basis for its expected volatility assumption. The risk-free interest rate is based upon the yield of U.S. Treasury securities consistent with the expected term of the option. The dividend yield assumption is based on the Company’s history of zero dividend payouts and expectation that no dividends will be paid in the foreseeable future.