Stock-Based Compensation

9 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION

Stock Plans

The Company has two plans that provide for equity-based compensation under the 2013 and the 2021 plans. Under the 2013 Incentive Plan (the “2013 Plan”), 2,924,586 shares of the Company’s common stock are reserved for grants of stock options and restricted stock awards to employees and directors as of June 30, 2024.

Under the 2021 Incentive Plan (the “2021 Plan”), 8,000,000 shares (subject to certain adjustments) of the Company’s common stock are reserved for grants of stock options, stock appreciation rights, restricted and unrestricted stock, performance awards, cash awards and other awards convertible into or otherwise based on shares of the Company’s common stock. The maximum number of shares authorized under the 2021 Plan will be (i) reduced by any shares subject to awards made under the 2013 Plan after January 1, 2021, and (ii) increased by any shares subject to outstanding awards under the 2013 Plan as of January 1, 2021 that, after January 1, 2021, are canceled, expired, forfeited or otherwise not issued under such awards (other than as a result of being tendered or withheld to pay the exercise price or withholding taxes in connection with any such awards) or settled in cash. As of June 30, 2024, the total number of shares available for issuance was 4,565,727 shares, which includes 158,928 and 154,139 shares that were forfeited under the 2013 and 2021 Plans, respectively, and 3,697,189 shares have been granted under the 2021 Plan.

In addition, there were 665,020 shares reserved for options and 616,638 shares reserved for restricted stock units issued as inducement grants to new employees granted outside of the Company’s equity-based compensation plans under Rule 5635(c)(4) of the Nasdaq Listing Rules.

The following table presents a summary of awards outstanding:

	As of June 30, 2024
	2013 Plan	2021 Plan	Inducement Awards	Total
Granted and outstanding awards:
Options	1,315,326	32,151	665,020	2,012,497
Restricted stock units	1,609,260	2,804,026	616,638	5,029,924
Total	2,924,586	2,836,177	1,281,658	7,042,421

The following table summarizes stock-based compensation expenses included in operating expenses:

	Three Months Ended June 30,				Nine Months Ended June 30,
	2024		2023		2024		2023
Research and development	$	6,221	$	8,982	$	21,634	$	26,129
General and administrative	8,490		10,965		27,350		33,820
Total	$	14,711	$	19,947	$	48,984	$	59,949

Stock Option Awards

The following table presents a summary of the stock option activity for the nine months ended June 30, 2024:

	Shares	Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding at September 30, 2023	2,263,477	$	22.68
Granted	—	—
Cancelled or expired	(53,582)	36.62
Exercised	(197,398)	10.98
Outstanding at June 30, 2024	2,012,497	$	23.22	3.8	$	22,486,304
Exercisable at June 30, 2024	2,001,968	$	23.05	3.8	$	22,486,304

The aggregate intrinsic values represent the amount by which the market price of the underlying stock exceeds the

exercise price of the option. The total intrinsic value of the options exercised during the three months ended June 30, 2024 and 2023 was $0.7 million and $6.5 million, respectively. The total intrinsic value of the options exercised during the nine months ended June 30, 2024 and 2023 was $3.8 million and $10.1 million, respectively.

Stock-based compensation expense related to stock options outstanding for the three months ended June 30, 2024 and 2023, was $0.4 million and $2.1 million, respectively. Stock-based compensation expense related to stock options outstanding for the nine months ended June 30, 2024 and 2023, was $2.5 million and $6.7 million, respectively.

As of June 30, 2024, the pre-tax compensation expense for all outstanding unvested stock options in the amount of $0.4 million will be recognized in the Company’s results of operations over a weighted average period of 3 months.

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option pricing model. The Black-Scholes option pricing model was developed for use in estimating the fair value of traded options, which do not have vesting restrictions and are fully transferable. The determination of the fair value of each stock option is affected by the Company’s stock price on the date of grant, as well as assumptions regarding a number of highly complex and subjective variables. Because the Company’s employee stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options.

The following table provides the assumptions used in the calculation of grant-date fair values of these stock options based on the Black-Scholes option pricing model:

	Nine Months Ended June 30,
	2024(5)	2023
Expected dividend yield(1)	N/A	—
Risk-free interest rate(2)	N/A	3.69%
Expected volatility(3)	N/A	86.4%
Expected term (in years)(4)	N/A	6.25
Weighted average grant date fair value per share of options granted	N/A	$24.80

(1) The dividend yield is zero as the Company currently does not pay a dividend.

(2) The risk-free interest rate is based on that of the U.S. Treasury yields with equivalent terms in effect at the time of the grant.

(3) Volatility is estimated based on volatility average of the Company’s common stock price.

(4) The computation of expected term was determined based on safe harbor rules, considering the contractual terms of the awards and vesting schedules.

(5) No options were granted during the nine months ended June 30, 2024.

Visirna ESOP: On October 1, 2023, Visirna, a subsidiary of the Company, granted 7,500,000 stock options to its employees from the Employee Stock Option Plan (the “Visirna ESOP”), which authorizes 20,000,000 shares for issuance. The Visirna ESOP is independently managed by Visirna, including the valuation process. For the three and nine months ended June 30, 2024, stock-based compensation expense related to the Visirna ESOP was $2.3 million and $5.5 million, respectively.

Restricted Stock Units

Restricted Stock Units (“RSUs”), including market-based, time-based and performance-based awards, have been granted under the Company’s 2013 and 2021 Plans and as inducements grants granted outside of the Company’s equity-based compensation plans. At vesting, each outstanding RSU will be exchanged for one share of the Company’s common stock. RSU awards generally vest subject to the satisfaction of service requirements or the satisfaction of both service requirements and achievement of certain performance targets.

The following table summarizes the activity of the Company’s RSUs:

	Number of RSUs	Weighted- Average Grant Date Fair Value Per Share
Outstanding at September 30, 2023	4,241,640	$	58.43
Granted	1,876,825	30.67
Vested	(927,766)	53.16
Forfeited	(160,775)	41.75
Outstanding at June 30, 2024	5,029,924	$	49.58

The fair value of RSUs was determined based on the closing price of the Company’s common stock on the grant date, with consideration given to the probability of achieving service and/or performance conditions for awards.

For the three months ended June 30, 2024 and 2023, the Company recorded $14.3 million and $17.8 million of expense related to RSUs, respectively. For the nine months ended June 30, 2024 and 2023, the Company recorded $46.5 million and $53.2 million of expense related to RSUs, respectively. As of June 30, 2024, there was $96.3 million of total unrecognized compensation cost related to RSUs that is expected to be recognized over a weighted-average period of 1.6 years.