Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.21.2
Stock-Based Compensation
6 Months Ended
Jun. 30, 2021
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock-Based Compensation

8. Stock-Based Compensation

Stock Incentive Plans

2018 Equity Incentive Plan

In June 2018, the Company’s board of directors adopted and its stockholders approved the 2018 Equity Incentive Plan (the “2018 Plan”), which became effective as of June 20, 2018, at which point no further grants could be made under the 2015 Equity Incentive Plan (the “2015 Plan”) described below. Under the 2018 Plan, the Company may grant incentive stock options (“ISOs”), nonstatutory stock options (“NSOs”), stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards. As of June 30, 2021, options to purchase 5,518,256 shares of common stock were outstanding and 757,664 shares were available for future issuance under the 2018 Plan.

Initially, subject to adjustment as provided in the 2018 Plan, the aggregate number of shares of the Company’s common stock authorized for issuance pursuant to stock awards under the 2018 Plan was 4,000,000 shares, which is the sum of (i) 1,600,692 shares plus (ii) the number of shares reserved and available for issuance under the 2015 Plan at the time the 2018 Plan became effective and (iii) the number of shares subject to stock options or other stock awards granted under the 2015 Plan that expire, terminate are forfeited or otherwise not issued, or are withheld to satisfy a tax withholding obligation in connection with an award or to satisfy a purchase or exercise price of an award (such as upon the expiration or termination of a stock award prior to vesting). The number of shares of the Company’s common stock reserved for issuance under the 2018 Plan automatically increases on January 1 of each year, beginning on January 1, 2019 and continuing through and including January 1, 2028, by 5% of the total number of shares of capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by the Company’s board of directors prior to such increase. The maximum number of shares that may be issued upon the exercise of ISOs under the 2018 Plan is 12,500,000 shares.

2015 Equity Incentive Plan

The Company’s 2015 Plan provided for the granting of ISOs and NSOs to employees, directors and consultants at the discretion of its board of directors. The 2015 Plan was terminated as to future awards in June 2018, although it continues to govern the terms of options that remain outstanding under the 2015 Plan.

No additional stock awards will be granted under the 2015 Plan, and all outstanding stock awards granted under the 2015 Plan that are repurchased, forfeited, expire or are cancelled will become available for grant under the 2018 Plan in accordance with its terms.

Options granted under the 2015 Plan expire no later than 10 years from the date of grant. Options granted under the 2015 Plan vest over periods determined by the Company’s board of directors, generally over four years. The 2015 Plan allows for early exercise of certain options prior to vesting. Upon termination of employment, the unvested shares are subject to repurchase at the original exercise price. As of June 30, 2021, options to purchase 1,793,606 shares of common stock were outstanding under the 2015 Plan.

2018 Employee Stock Purchase Plan

In June 2018, the Company’s board of directors adopted and its stockholders approved the 2018 Employee Stock Purchase Plan (the “ESPP”), which became effective as of June 20, 2018. The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the U.S. Internal Revenue Code of 1986, as amended. The number of shares of common stock initially reserved for issuance under the ESPP was 200,000 shares. The ESPP provides for an annual increase on January 1 of each year, beginning on January 1, 2019 and continuing through and including January 1, 2028, equal to the lesser of (i) 1% of the shares of common stock outstanding on the last day of the prior fiscal year or (ii) 375,000 shares, or a lesser number of shares determined by the Company’s board of directors prior to such increase. As of June 30, 2021, 193,890 shares of common stock had been issued under the ESPP and 764,334 shares remained available for future issuance under the ESPP. The price per share of common stock to be paid by an ESPP participant on the applicable purchase date of an offering period shall be equal to 85% of the lesser of the fair market value of a share of common stock on (i) the applicable offering date or (ii) the applicable purchase date. The Company’s board of directors authorized an initial six-month offering period beginning on November 16, 2018 and ending on May 15, 2019. The Company’s board of directors has subsequently authorized additional six-month offering periods, with the most recent offering period beginning on May 16, 2021.

Stock Option Activity

The following table summarizes activity under the Company’s stock option plans and related information (in thousands, except share and per share amounts):

 

 

 

Number of

Options

Outstanding

 

 

Weighted

Average

Exercise Price

 

 

Weighted

Average

Remaining

Contractual

Term (Years)

 

 

Aggregate

Intrinsic Value

 

Outstanding at December 31, 2020

 

 

4,489,122

 

 

$

6.14

 

 

 

7.8

 

 

$

7,134

 

Options granted

 

 

3,192,000

 

 

$

5.49

 

 

 

 

 

 

 

 

 

Options exercised

 

 

(24,543

)

 

$

3.24

 

 

 

 

 

 

$

66

 

Options cancelled/forfeited

 

 

(344,717

)

 

$

6.21

 

 

 

 

 

 

 

 

 

Outstanding at June 30, 2021

 

 

7,311,862

 

 

$

5.86

 

 

 

7.9

 

 

$

7,395

 

Vested and exercisable at June 30, 2021

 

 

3,175,152

 

 

$

5.79

 

 

 

6.5

 

 

$

5,617

 

 

The weighted average grant date fair value of options granted during the six months ended June 30, 2021 was $3.97 per share. The aggregate intrinsic value of exercised stock options during the three and six months ended June 30, 2021 was $25,000 and $66,000, respectively. The aggregate intrinsic value is calculated as the difference between the exercise price and the estimated fair value of the Company’s common stock at the date of exercise.

 

Stock-Based Compensation Expense

Total stock-based compensation expense recognized by function was as follows (in thousands):

 

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

 

2021

 

 

2020

 

 

2021

 

 

2020

 

Research and development

 

$

808

 

 

$

518

 

 

$

1,590

 

 

$

982

 

General and administrative

 

 

1,129

 

 

 

701

 

 

 

2,275

 

 

 

1,410

 

Total stock-based compensation expense

 

$

1,937

 

 

$

1,219

 

 

$

3,865

 

 

$

2,392

 

 

As of June 30, 2021, the unrecognized stock-based compensation cost was $17.0 million with an estimated weighted average amortization period of 2.9 years.

 

The fair value of the stock options granted is calculated using the Black-Scholes option-pricing model with the following range of assumptions:

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2021

 

2020

 

2021

 

2020

 

Expected term (years)

 

5.5 - 6.1

 

5.5 - 6.0

 

5.5 - 6.1

 

5.0 - 6.0

 

Expected volatility

 

87.1 - 87.7

%

88.1 - 90.8

%

87.1 - 88.1

%

83.8 - 90.8

%

Risk-free interest rate

 

1.0 - 1.1

%

0.4 - 0.5

%

0.5 - 1.1

%

0.4 - 1.6

%

Expected dividend yield

 

 

 

 

 

 

The expected term of options granted represents the period of time that options granted are expected to be outstanding and was determined by calculating the midpoint between the date of vesting and the contractual life of each option. The expected term of the ESPP rights is equal to the six-month look-back period. Volatility is based on the average historical volatility of a peer group of public companies over the expected term. The peer group was selected on the basis of operational and economic similarity with the Company’s principal business operations. The risk-free interest rate for the expected term of the options is based on the U.S. Treasury yield curve with a maturity equal to the expected term in effect at the time of grant. The Company has not paid, and does not anticipate paying, cash dividends on its shares of common stock; therefore, the expected dividend yield is zero.