Equity Transactions and Share-based Compensation

9 Months Ended

Sep. 30, 2024

Share-Based Payment Arrangement [Abstract]

Equity Transactions and Share-based Compensation

At-The-Market Equity Offering; Shelf Registration Statement

On February 29, 2024, we entered into an Open Market Sale AgreementSM (Jefferies Sales Agreement) with Jefferies LLC, as agent, pursuant to which we may offer and sell, from time to time through Jefferies, up to $75 million of shares of our common stock. On the same day, we filed a shelf registration statement on Form S-3 with the SEC, which contains a base prospectus, covering up to a total aggregate offering price of $250 million of our common stock, preferred stock, debt securities and warrants to purchase any of such securities, and a sales agreement prospectus, covering the offering, issuance and sale of up to a maximum aggregate offering price of $75 million of our common stock that may be issued and sold from time to time under the Jefferies Sales Agreement. The $75 million of shares that may be issued and sold from time to time under the Jefferies Sales Agreement is included in the $250 million of securities that may be offered, issued and sold by us pursuant to our shelf registration statement. As of September 30, 2024, no sales have been made under the shelf registration statement or the Jefferies Sales Agreement.

Stock Options

The Company maintains a 2024 Equity Incentive Plan (the 2024 Plan) and previously maintained a 2013 Equity Incentive Plan (the 2013 Plan). The 2024 Plan serves as the successor to and continuation of the 2013 Plan and provides for the grant of incentive stock options (ISOs), non-statutory stock options (NSOs), stock appreciation rights, restricted stock awards, restricted stock unit (RSU) awards, performance-based stock awards, and other forms of equity compensation (collectively, stock awards), all of which may be granted to employees, including officers, non-employee directors and consultants of the Company and its affiliates. Following shareholder approval in June 2024 of the 2024 Plan, any shares then available for future grants under the 2013 Plan were allocated to the 2024 Plan. No further grants will be made under the 2013 Plan. As of September 30, 2024, there was a total of 10.2 million shares reserved for future issuance under the 2024 Plan. The Company issued no shares and 2,000 shares of common stock pursuant to the exercise of stock options during the three and nine months ended September 30, 2024. The Company issued no shares of common stock pursuant to the exercise of stock options during the three and nine months ended September 30, 2023.

Employee Stock Purchase Plan

The Company maintains a 2013 Employee Stock Purchase Plan (ESPP), which provides for the issuance of shares of common stock pursuant to purchase rights granted to the Company’s employees or to employees of any of its designated affiliates. The Company has reserved a total of 4.8 million shares of common stock to be purchased under the ESPP, of which 1.5 million shares remained available for purchase as of September 30, 2024. The number of shares of common stock reserved for issuance automatically increased on January 1, 2023, by an additional 422,535 shares, pursuant to an “evergreen” provision contained in the ESPP commencing on January 1, 2014 and ending on (and including) January 1, 2023.

The ESPP provides for an automatic reset feature to start participants on a new twenty-four-month participation period in the event that the common stock market value on a purchase date is less than the common stock value on the first day of the twenty-four-month offering period. Eligible employees may authorize an amount up to 15% of their salary to purchase common stock at the lower of a 15% discount to the beginning price of their offering period or a 15% discount to the ending price of each six-month purchase interval. The Company issued approximately 297,000 and 717,000 shares of common stock pursuant to the ESPP during the three and nine months ended September 30, 2024, respectively. The Company issued approximately 121,000 and 429,000 shares of common stock pursuant to the ESPP during the three and nine months ended September 30, 2023, respectively. Compensation expense for shares purchased under the ESPP related to the purchase discount and the “look-back” option and were determined using a Black-Scholes option pricing model.

Restricted Stock Units (RSUs)

The Company has issued RSUs to certain employees which vest based on service criteria. When vested, the RSU represents the right to be issued the number of shares of the Company’s common stock that is equal to the number of RSUs granted. The grant date fair value for RSUs is based upon the market price of the Company’s common stock on the date of the grant. The fair value is then amortized to compensation expense over the requisite service period or vesting term. The Company issued approximately 6,000 and approximately 287,000 shares of common stock pursuant to the vesting of RSUs during the three and nine months ended September 30, 2024, respectively. The Company issued approximately 187,000 and approximately 408,000

shares of common stock pursuant to the vesting of RSUs during the three and nine months ended September 30, 2023, respectively.

Share-based Compensation

For awards with only service conditions and graded-vesting features, the Company recognizes compensation expense on a straight-line basis over the requisite service period. Total share-based compensation expense recognized related to stock options, the ESPP and RSUs was as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Research and development expense	$	1,350	$	1,739	$	4,636	$	5,619
General and administrative expense	1,039		6,141		2,695		9,585
Total share-based compensation expense	$	2,389	$	7,880	$	7,331	$	15,204

In December 2022, the Company announced a reduction in workforce. As a result, certain vested stock options were modified to extend their exercise period from 90 days to 12 months. In addition, certain outstanding stock option and RSU grants received accelerated vesting as if the service period of the terminated employee continued for up to an additional 12-month period. The Company recorded expense ratably from the announcement date through the date of termination with approximately $0.4 million being recognized during the twelve months ended December 31, 2022 and an additional $0.6 million being recognized during the nine months ended September 30, 2023.

In January 2023, the Company extended the post-termination exercise period from 90 days to three years for stock option grants made to non-employee members of our Board of Directors. This extension applies to all future grants as well as all then-outstanding grants. Related to this extension, the Company recorded approximately $0.3 million of expense during the nine months ended September 30, 2023.

In November 2023 and April 2024, the Company granted stock options covering up to a total of 950,000 and 223,000 shares, respectively, of our common stock in connection with the hiring of new employees. These stock options are subject to the terms of the Company's 2013 Plan, but were granted outside of the 2013 Plan, as they constituted inducement grants in accordance with Nasdaq Stock Market Listing Rule 5635(c)(4). In July and August 2024, the Company granted stock options covering up to a total of 120,000 and 150,000 shares, respectively, of our common stock in connection with the hiring of new employees. These stock options are subject to the terms of the 2024 Plan, but were granted outside of the 2024 Plan, as they constituted inducement grants in accordance with Nasdaq Stock Market Listing Rule 5635(c)(4). The totality of these grants were non-statutory stock options, have a 10-year term and will vest over four years, with one-fourth vesting on the one-year anniversary of the date of hire and remaining three-fourths vesting over the following three years in equal monthly installments.