Annual report pursuant to Section 13 and 15(d)

Stock-Based Compensation

v3.20.4
Stock-Based Compensation
12 Months Ended
Dec. 31, 2020
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock-Based Compensation

9. 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 (“RSUs”) and other stock-based awards. As of December 31, 2020, options to purchase 2,689,068 shares of common stock were outstanding under the 2018 Plan and 1,286,960 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 the 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 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 December 31, 2020, options to purchase 1,800,054 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 “Code”). 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 December 31, 2020, 137,668 shares of common stock had been issued under the ESPP and 445,556 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 November 16, 2020.

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, 2019

 

 

3,107,066

 

 

$

7.19

 

 

 

8.2

 

 

$

3,151

 

Options granted

 

 

1,503,876

 

 

$

3.87

 

 

 

 

 

 

 

 

 

Options exercised

 

 

(56,653

)

 

$

1.95

 

 

 

 

 

 

$

185

 

Options cancelled/forfeited

 

 

(65,167

)

 

$

7.84

 

 

 

 

 

 

 

 

 

Outstanding at December 31, 2020

 

 

4,489,122

 

 

$

6.14

 

 

 

7.8

 

 

$

7,134

 

Vested and exercisable at December 31, 2020

 

 

2,358,197

 

 

$

5.62

 

 

 

7.0

 

 

$

4,627

 

 

The weighted average grant date fair value of options granted during the years ended December 31, 2020 and 2019 was $2.76 and $9.33 per share, respectively. The aggregate intrinsic value of exercised stock options during the years ended December 31, 2020 and 2019 was $185,000 and $292,000, 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.

Early Exercise Stock Options

The 2015 Plan allows for early exercisable option grants, which permit the holder to exercise a stock option for the purchase of common stock before the requisite service is provided (i.e., before the award is vested under its original terms); however, such arrangements permit the Company to subsequently repurchase at the exercise price any shares of common stock for which the applicable vesting conditions have not been satisfied. Under the 2015 Plan, the Company only made such early exercisable option grants to non-employee members of our board of directors.

As of December 31, 2020 and 2019, there were 8,859 and 30,027 shares, respectively, of nonvested common stock outstanding that were exercised early and remain subject to repurchase by the Company at the original issuance price upon termination of the stockholder’s services. The right to repurchase these shares generally lapses with respect to 25% of the shares underlying the option one year after the applicable vesting commencement date and 1/48 of the shares underlying the option each month for 36 months thereafter. The shares purchased pursuant to the early exercise of stock options are not deemed, for accounting purposes, to be issued until those shares vest. The cash received in exchange for exercised and nonvested shares related to stock options granted is recorded as a liability for the early exercise of stock options on the balance sheets with the corresponding par value in common

stock and an offset in additional paid-in capital. As of December 31, 2020 and 2019, the Company recorded in other current liabilities $21,000 and $62,000, respectively, associated with shares issued upon the early exercise of stock options that are subject to repurchase.

Stock-Based Compensation Expense

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

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

Research and development

 

$

2,102

 

 

$

1,777

 

 

$

842

 

General and administrative

 

 

2,841

 

 

 

2,230

 

 

 

1,151

 

Total stock-based compensation expense

 

$

4,943

 

 

$

4,007

 

 

$

1,993

 

 

As of December 31, 2020, the unrecognized stock-based compensation cost was $9.6 million with an estimated weighted average amortization period of 2.4 years.

 

The fair value of the employee stock options granted and the ESPP rights to purchase common stock of the Company is calculated using the Black-Scholes option-pricing model with the following weighted-average assumptions:

 

 

 

Options

 

 

ESPP Rights

 

 

 

Year Ended December 31,

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

 

2020

 

 

2019

 

 

2018

 

Expected term (years)

 

5.5 - 6.0

 

 

5.8 - 5.9

 

 

5.5 - 6.1

 

 

 

0.5

 

 

 

0.5

 

 

 

0.5

 

Expected volatility

 

83.8 - 91.9%

 

 

78.7 - 83.7%

 

 

82.0 - 83.2%

 

 

101.7 - 114.3%

 

 

73.7 - 109.9%

 

 

 

74.3

%

Risk-free interest rate

 

0.4 - 1.6%

 

 

1.5 - 2.6%

 

 

2.6 - 3.1%

 

 

0.1 - 0.2%

 

 

1.6 - 2.4%

 

 

 

2.5

%

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.