Stockholders' Equity

12 Months Ended

Dec. 31, 2021

Stockholders' Equity

Stockholders' Equity

8. Stockholders’ Equity

In 2005, we adopted the 2005 Stock Option and Incentive Plan (2005 Plan) that authorizes us to grant options, restricted stock and other equity-based awards. As of December 31, 2021, 577 options to purchase shares of common stock were outstanding pursuant to grants in connection with the 2005 Plan. No additional shares are available for issuance under the 2005 Plan. The amount, terms of grants, and exercisability provisions are determined and set by our board of directors.

Effective August 2014, we adopted our 2014 Equity Incentive Plan, as amended (2014 Plan) that authorizes us to grant options, restricted stock, and other equity-based awards, subject to adjustment in accordance with the 2014 Plan. As of December 31, 2021, 3,268,048 options to purchase shares of common stock and 26,025 restricted shares of common stock were outstanding pursuant to grants in connection with the 2014 Plan, and 1,012,869 shares of common stock were available for future issuance. The amount, terms of grants, and exercisability provisions are determined and set by our board of directors. In accordance with the 2014 Plan, on January 1, 2022, the shares of common stock available for future grants under the 2014 Plan was increased to 2,521,079.

In addition, during the years ended December 31, 2021 and 2020, we granted 772,117 and 852,024 options, respectively, to purchase shares of common stock outside of our 2014 Plan as inducement grants material to new employees entering into employment agreements with us pursuant to Nasdaq Listing Rule 5635(c)(4). The amount, terms of grants, and exercisability provisions of these grants are determined and set by our board of directors, and are largely consistent with the terms and exercisability provisions of grants under our 2014 Plan.

Stock Options

Total compensation cost recognized for all stock option awards in the statements of operations is as follows (in thousands):

	Year Ended December 31,
	2021		2020
Research and development	$	4,482	$	2,938
General and administrative		9,106		4,521
Total	$	13,588	$	7,459

Options issued under both the 2005 Plan and 2014 Plan and the inducement grants have a contractual life of up to 10 years and may be exercisable in cash or as otherwise determined by the board of directors. Vesting generally occurs over a period of not greater than four years. A summary of activity for the years ended December 31, 2021 and 2020 is presented below (in thousands, except share and per share amounts):

		Weighted‑
		Average		Aggregate
		Exercise Price		Intrinsic
	Shares	Per Share		Value
Outstanding—December 31, 2019	2,135,070	$	15.80
Granted	1,905,850		9.17
Exercised	(198,475)		5.16
Forfeited	(180,107)		11.04
Expired	(154,700)		25.16
Outstanding—December 31, 2020	3,507,638	$	12.64
Granted	1,868,066		13.49
Exercised	(176,194)		6.80
Forfeited	(225,726)		11.85
Expired	(234,929)		32.81
Outstanding—December 31, 2021	4,738,855	$	12.23	$	9,531
Exercisable—December 31, 2021	2,450,061	$	12.56	$	6,521

The weighted average remaining contractual term of options outstanding and exercisable as of December 31, 2021 is 8.2 years and 7.6 years, respectively.

Intrinsic value in the table above was determined by calculating the difference between the market value of our common stock on the last trading day of 2021 of $11.88 per share and the exercise price, for any in-the-money options.

The weighted-average grant date fair value of options granted was $11.54 and $7.81 per share in 2021 and 2020, respectively, and was estimated at the date of grant using the Black-Scholes option-pricing model with the following ranges of weighted-average assumptions:

	2021				2020
Expected stock price volatility	115	-	124	%	116	-	122	%
Expected term of options	5.0	-	6.1	years	5.3	-	6.1	years
Risk‑free interest rate	0.44	-	1.33	%	0.31	-	1.73	%
Expected annual dividend yield			0	%			0	%

The weighted-average valuation assumptions were determined as follows:

● Expected stock price volatility: The expected volatility is based on historical volatility of our stock price.

● Expected term of options: We estimated the expected term of our stock options with service-based vesting using the “simplified” method, as prescribed in SAB No. 107, whereby the expected life equals the average of the vesting tranches and the original contractual term of the option due to our lack of sufficient historical data.

● Risk-free interest rate: We base the risk-free interest rate on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the assumed expected option term.

● Expected annual dividend yield: The estimated annual dividend yield is 0% because we have not historically paid, and do not expect for the foreseeable future to pay, a dividend on our common stock.

As of December 31, 2021, there was $21.0 million of total unrecognized compensation expense related to unvested stock options. That expense is expected to be recognized over the next four years as follows, in thousands:

2022	$	9,716
2023		7,315
2024		3,186
2025		768
	$	20,985

Restricted Stock

All issued and outstanding restricted shares of common stock are time-based and become vested within two years after the grant date, pursuant to the 2014 Plan. Compensation expense is recorded ratably over the requisite service period. Compensation expense related to restricted stock is measured based on the fair value using the closing market price of our common stock on the date of the grant.

A summary of activity for the years ended December 31, 2021 and 2020 is presented below:

		Weighted‑average
		Grant Date
	Shares	Fair Value per Share
Outstanding—December 31, 2019	8,100	$	4.84
Granted	34,000		12.93
Vested	(17,475)		10.04
Outstanding—December 31, 2020	24,625		11.41
Granted	18,400		13.48
Vested	(17,000)		12.93
Outstanding—December 31, 2021	26,025	$	12.75
Expected to vest—December 31, 2021	26,025	$	12.75

As of December 31, 2021, there was $0.3 million in unrecognized compensation cost related to unvested restricted stock.

Total compensation cost recognized for all restricted stock awards in the statements of operations for the years ended December 31, 2021 and 2020 is as follows (in thousands):

	Year Ended
	December 31,
	2021		2020
Research and development	$	3	$	—
General and administrative		276		183
Total	$	279	$	183

Equity Distribution Agreement

In October 2017, we entered into an Equity Distribution Agreement (Prior EDA) with JMP Securities LLC (JMP), under which JMP, as our exclusive agent, at our discretion and at such times that we may determine from time to time, may sell over a three-year period from the execution of the agreement up to a maximum of $50 million of shares of our common stock. During the year ended December 31, 2020, we issued 78,807 shares of its common stock pursuant to the Prior EDA for aggregate net proceeds of $0.5 million. On July 9, 2020, we entered into a new Equity Distribution Agreement (New EDA) with JMP to create an at the market equity program under which we from time to time may offer and sell shares of our common stock having an aggregate offering price of up to $60.0 million through or to JMP. Subject to the terms and conditions of the New EDA, JMP will use its commercially reasonable efforts to sell shares of our common stock from time to time, based upon our instructions. JMP will be entitled to a commission of up to 3.0% of the gross proceeds from each sale of shares of our common stock. The New EDA superseded and terminated the Prior EDA effective immediately upon effectiveness of our shelf registration statement on Form S-3 (File No. 333-239780) filed with the Securities and Exchange Commission on July 9, 2020 and declared effective by the Securities and Exchange Commission on July 27, 2020. We did not sell any shares of our common stock during the year ended December 31, 2021 under the New EDA.

Public Offerings

In connection with the closing of an equity financing in December 2020, we issued a total of 5,000,000 shares of common stock in an underwritten public offering resulting in aggregate net proceeds, after underwriting discounts and commissions in the public offering and other estimated offering expenses, of $64.8 million.

In connection with the closing of an equity financing in June 2020, we issued a total of 4,600,000 shares of common stock in an underwritten public offering resulting in aggregate net proceeds, after underwriting discounts and commissions in the public offering and other estimated offering expenses, of $43.0 million.