Stock-based Compensation

9 Months Ended

Sep. 30, 2022

Share-based Payment Arrangement [Abstract]

Stock Incentive Plan

The Company previously maintained the 2010 Stock Incentive Plan (the “2010 Plan”) for employees, consultants, advisors and directors, as amended in March 2013, June 2014 and June 2017.

In April 2019, the Company’s board of directors adopted the 2019 Equity Incentive Plan (as amended, the “2019 Plan”) and on June 12, 2019 the stockholders approved the 2019 Plan at the Annual Meeting of Stockholders. The 2019 Plan provides similar terms as the 2010 Plan, including: (i) a provision for the grant of equity awards such as stock options and restricted stock; (ii) that the exercise price of incentive stock options cannot be less than 100% of the fair market value of the common stock on the date of the grant for participants who own less than 10% of the total combined voting power of stock of the Company and not less than 110% for participants who own more than 10% of the total combined voting power of the stock of the Company; (iii) that options and restricted stock granted under the 2019 Plan vest over periods as determined by the Company's board of directors, which generally are equal to four years; and (iv) that options granted under the 2019 Plan expire over periods as determined by the Company’s board of directors, which generally are ten years from the date of grant. In April 2020, the Company's board of directors adopted an amendment to the 2019 Plan to increase the total number of shares reserved under the Plan by 1,300,000 shares, among other things. This amendment was approved by stockholders on June 10, 2020 at the Company’s 2020 annual meeting of stockholders. In April 2021, the Company's board of directors adopted an additional amendment to the 2019 Plan to increase the total number of shares reserved under the Plan by 2,200,000. This amendment was approved by stockholders on June 9, 2021 at the Company’s 2021 annual meeting of stockholders. In April 2022, the Company's board of directors adopted an additional amendment to the 2019 Plan to increase the total number of shares reserved under the 2019 Plan by 4,000,000. This amendment was approved by stockholders on June 7, 2022 at the Company’s 2022 annual meeting of stockholders.

Awards may be made under the 2019 Plan for up to the sum of (i) 8,500,000 shares of common stock and (ii) such additional number of shares of common stock (up to 1,068,901 shares) as is equal to (x) the number of shares of common stock reserved for issuance under the 2010 Plan that were available for grant under the 2010 Plan immediately prior to the date the 2019 Plan was approved by the Company’s stockholders and (y) the number of shares of common stock subject to awards outstanding under the 2010 Plan, which awards expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by the Company pursuant to a contractual repurchase right. As of September 30, 2022, there were 4,164,254 shares of common stock available for future issuance under the 2019 Plan and no shares of common stock available for future issuance under the 2010 Plan.

Upon the closing of the pending acquisition by LG Chem, each stock option to purchase shares of the Company’s stock granted pursuant to the 2010 Plan and the 2019 Plan (“Company Option Award”) that is outstanding and unexercised shall be cancelled and converted into the right to receive an amount of cash equal to the product of (i) the aggregate number of Shares underlying such Company Option Award at the effective time of the Merger multiplied by (ii) the excess (if any) of the Merger Consideration over the per share exercise price of such Company Option Award less any applicable withholding taxes.

The following table summarizes stock option activity during the nine months ended September 30, 2022:


	Options	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term	Aggregate Intrinsic Value
Outstanding at January 1, 2022	3,156,379	$	9.45	7.55	$	5,720
Granted	2,427,816	3.89
Exercised	(9,833)	5.28
Forfeited	(190,956)	11.02
Outstanding at September 30, 2022	5,383,406	$	6.90	7.92	$	13,282,059
Exercisable at September 30, 2022	2,133,881	$	9.29	6.35	$	3,269,563

The aggregate intrinsic value is based upon the Company’s closing stock price of $8.23 on September 30, 2022.

The fair value of stock options, subject only to service or performance conditions, that are granted to employees is estimated on the date of grant using the Black-Scholes option-pricing model. The following tables summarize the

assumptions used in the Black-Scholes option-pricing model in the three and nine months ended September 30, 2022 and 2021:


	Three Months Ended September 30,
	2022	2021
Volatility factor	97.71% - 97.85%	98.46% - 101.21%
Expected term (in years)	6.25	5.50 - 6.25
Risk-free interest rates	2.65% - 3.66%	0.07% - 1.15%
Dividend yield	—	—


	Nine Months Ended September 30,
	2022	2021
Volatility factor	97.19% - 102.52%	56.17% - 102.66%
Expected term (in years)	5.50 - 6.25	0.25 - 6.25
Risk-free interest rates	1.69% - 3.66%	0.06% - 1.17%
Dividend yield	—	—

Based upon these assumptions, the weighted-average grant date fair value of stock options granted during the nine months ended September 30, 2022 and 2021 was $3.08 and $6.76, respectively.

As of September 30, 2022, there was $13.1 million of total unrecognized stock-based compensation expense related to stock options granted to employees under the Plan. The expense is expected to be recognized over a weighted-average period of 2.87 years.

Employee Stock Purchase Plan

In February 2010, the Company's board of directors adopted the 2010 Employee Stock Purchase Plan, as amended in March 2013 and in November 2017, (the “ESPP”). In April 2021, the Company's board of directors adopted an amended and restated ESPP (the “A&R ESPP”) to, among other things, increase the total number of shares reserved under the ESPP by 500,000 shares. Pursuant to the A&R ESPP the Company may sell up to an aggregate of 576,400 shares of Common Stock. The A&R ESPP was approved by stockholders on June 9, 2021 at the Company’s 2021 annual meeting of stockholders. In April 2022, the Company's board of directors adopted an amendment to the A&R ESPP to increase the total number of shares reserved under the A&R ESPP by 300,000 shares, pursuant to which the Company may sell up to an aggregate of 876,400 shares of Common Stock. This amendment was approved by stockholders on June 7, 2022 at the Company’s 2022 annual meeting of stockholders. The A&R ESPP allows eligible employees to purchase common stock at a price per share equal to 85% of the lower of the fair market value of the common stock at the beginning or end of each six-month period during the term of the A&R ESPP. As of September 30, 2022, there were 575,834 shares available for future issuance under the A&R ESPP.

Pursuant to the A&R ESPP, the Company sold a total of 136,569 and 13,220 shares of common stock during the nine months ended September 30, 2022 and 2021, respectively, at a purchase price of $3.39 and $4.38, respectively, which represents 85% of the closing price of the Company's common stock on the applicable purchase date. The total stock-based compensation expense recorded as a result of the A&R ESPP was $0.1 million and $0.3 million during the three and nine months ended September 30, 2022, respectively. The total stock-based compensation expense recorded as a result of the A&R ESPP was a nominal amount during the three and nine months ended September 30, 2021.