STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

11. STOCK-BASED COMPENSATION

The following table summarizes the Company’s stock awards granted for each of the periods indicated:


	For the Three Months Ended March 31,
	2023				2022
	Grants		Weighted Average Grant Date Fair Value		Grants		Weighted Average Grant Date Fair Value
Stock options		1,030,349	$	72.80		1,291,537	$	46.99
Restricted stock units*		1,075,911	$	154.91		712,435	$	79.98

*Included in restricted stock units (“RSUs”) for the three months ended March 31, 2023 and 2022 are 502,225 and 38,500 shares, respectively, with performance conditions which are related to regulatory approval of certain of the Company's product candidates. As of March 31, 2023, none of the performance conditions are probable of being achieved. If the performance milestones are achieved within the required time frame, the Company may recognize up to $78.3 million of stock-based compensation related to these grants. Stock options and the remaining RSUs granted during the periods presented in the table have only service-based criteria and vest over four years.

Grant Modification

In June 2017, the Company granted its Chief Executive Officer 3,300,000 options with service and market conditions which were subject to a five-year cliff vesting schedule. On April 19, 2022 (the “Effective Date”), the Company entered into an agreement with its Chief Executive Officer to modify the vesting conditions of the options. Under the agreement, one-third of the options vested (the “Vested Tranche”) on the Effective Date with no required service or market conditions. Subject to the Chief Executive Officer's continued service through each applicable vesting date and the compound annual growth rate of the Company's common stock exceeding that of the Nasdaq Biotech Index in varying percentages, the remaining two-thirds of the options (the “Unvested Tranche”) shall vest in varying increments at any time between the Effective Date and June 26, 2025 (the “Measurement Period”) when (and if) the average of the closing price of the Company’s common stock during any consecutive 20 trading day period during the Measurement Period reaches certain pre-determined target stock prices.

The Unvested Tranche represents awards with market conditions only. Both the pre- and post-modification fair values for the Unvested Tranche are determined by a lattice model with Monte Carlo simulations. The incremental compensation costs related to varying increments of the Unvested Tranche will be recognized as stock-based compensation expense over their respective derived service periods, an output from the Monte Carlo simulation, and will be fully recognized over a 1.3 year period from the Effective Date.

During the three months ended March 31, 2023, 550,110 options relating to the Unvested Tranche met the conditions for vesting as the average closing price of the Company's common stock exceeded $128.65 during 20 consecutive trading days in March 2023 and the compound annual growth rate of the Company's common stock exceeded that of the Nasdaq Biotech Index by greater than 5%. For the three months ended March 31, 2023, the Company recorded $8.4 million of stock-based compensation expense in total related to the Chief Executive Officer's awards. As of March 31, 2023, the Company is expected to recognize incremental compensation cost of $5.0 million over approximately the next four months associated with the Unvested Tranche.

Stock-based Compensation Expense

For the three months ended March 31, 2023 and 2022, total stock-based compensation expense was $41.3 million and $29.2 million, respectively. The following table summarizes stock-based compensation expense by function included within the unaudited condensed consolidated statements of operations and comprehensive loss:


		For the Three Months Ended March 31,
		2023		2022
	(in thousands)
Research and development		$	16,413	$	13,068
Selling, general and administrative			24,837		16,130
Total stock-based compensation expense		$	41,250	$	29,198

The following table summarizes stock-based compensation expense by grant type included within the unaudited condensed consolidated statements of operations and comprehensive loss:


		For the Three Months Ended March 31,
		2023		2022
	(in thousands)
Stock options		$	23,830	$	16,406
Restricted stock units			16,140		11,365
Employee stock purchase plan			1,280		1,427
Total stock-based compensation expense		$	41,250	$	29,198