Stock-Based Awards

6 Months Ended

Jun. 30, 2022

Share-Based Payment Arrangement [Abstract]

Stock-Based Awards

11. Stock-Based Awards

Equity Incentive Plan Awards

In September 2021, our shareholders approved the Lineage Cell Therapeutics, Inc. 2021 Equity Incentive Plan (the “2021 Plan”), which became effective upon such approval. The 2021 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, RSUs, and other stock awards. All of our employees (including those of our affiliates), non-employee directors and consultants are eligible to participate in the 2021 Plan.

Subject to adjustment for certain changes in our capitalization, the aggregate number of our common shares that may be issued under the 2021 Plan will not exceed the sum of (i) 15,000,000 shares and (ii) the number of shares subject to awards granted under the Lineage Cell Therapeutics Inc. 2012 Equity Incentive Plan (the “2012 Plan”) that were outstanding when the 2021 Plan became effective and are not issued because such awards expire or otherwise terminate. As of June 30, 2022, there were 10,492,107 shares available for grant under the 2021 Plan.

As a result of the approval of the 2021 Plan by our shareholders, no additional awards will be granted under the 2012 Plan or the Asterias 2013 Equity Incentive Award (the “Asterias Equity Plan”).

A summary of activity under the 2021 Plan is as follows (in thousands, except per share amounts):

	Number of Options Outstanding			Number of RSUs Outstanding			Weighted Average Exercise Price
December 31, 2021	-			-			$	-
Options granted		5,731			-			1.39
Options expired/forfeited/cancelled		(496	)		-			1.40
RSUs granted (1)		-			994			-
RSUs forfeited		-			(27	)		-
June 30, 2022		5,235			967		$	1.39
Options exercisable at June 30, 2022		-					$	-

(1) On February 11, 2022, Lineage granted 694,424 RSUs to certain employees, including the Company’s executive officers, to further align management with the achievement of certain development milestones under the Roche Agreement. For each RSU, half of the common shares subject to the RSU will vest in four equal annual installments beginning on the first anniversary of the grant date. The other half of the common shares will vest in connection with the achievement of certain development milestones set forth in the Roche Agreement. Additionally, on March 10, 2022, Lineage granted 300,000 RSUs to Brian Culley, its Chief Executive Officer. 100,000 of these RSUs will vest on or prior to March 9, 2023, and 100,000 will vest on each of the second and third anniversaries of such date, upon the achievement of certain per share performance targets, calculated based on the trailing 20-day volume weighted average price of the Company’s common shares as of the date of determination.

A summary of activity of the 2012 Plan and 2018 inducement option (issued outside of all equity plans) is as follows (in thousands, except per share amounts):

	Number of Options Outstanding			Number of RSUs Outstanding			Weighted Average Exercise Price
December 31, 2021		14,643			31		$	1.84
RSUs vested		-			(31	)		-
Options exercised		(251	)		-			0.79
Options expired/forfeited/cancelled		(795	)		-			1.84
June 30, 2022		13,597			-		$	1.86
Options exercisable at June 30, 2022		8,027					$	1.75

A summary of activity under the Asterias Equity Plan is as follows (in thousands, except per share amounts):

	Number of Options Outstanding			Weighted Average Exercise Price
December 31, 2021		241		$	1.57
Options forfeited		(241	)		1.57
June 30, 2022		-		$	-
Options exercisable at June 30, 2022		-		$	-

Stock-based compensation expense

The fair value of each stock option is estimated on the date of grant using a Black-Scholes option pricing model applying the weighted-average assumptions noted in the following table:

	Six Months Ended June 30, (unaudited)
	2022			2021
Expected life (in years)		6.25			6.24
Risk-free interest rates		2.03	%		1.06	%
Volatility		73.4	%		73.1	%
Dividend yield		-	%		-	%

Operating expenses include stock-based compensation expense as follows (in thousands):

	Three Months Ended June 30, (unaudited)				Six Months Ended June 30, (unaudited)
	2022		2021		2022		2021
Research and development	$	141	$	243	$	356	$	377
General and administrative		1,094		676		1,985		1,081
Total stock-based compensation expense	$	1,235	$	919	$	2,341	$	1,458

As of June 30, 2022, total unrecognized compensation costs related to unvested stock options and unvested RSUs under all equity plans (including the 2018 inducement option), were $10.9 million, which is expected to be recognized as expense over a weighted average period of approximately 2.9 years.