Stock-Based Compensation

12 Months Ended

Dec. 31, 2021

Disclosure Of Compensation Related Costs Share Based Payments [Abstract]

Stock-Based Compensation

14. Stock-Based Compensation

2019 Inducement Plan

In October 2019, the Company’s Board of Directors adopted the 2019 Inducement Plan, or the 2019 Plan, which is a non-stockholder approved stock plan adopted pursuant to the “inducement exception” provided under Nasdaq Listing Rule 5635(c)(4), or Rule 5635, for the purpose of awarding (i) non-statutory stock options, (ii) restricted stock awards, (iii) restricted stock unit awards, (iv) other stock awards (collectively, the Inducement Awards) to new employees of the Company, as inducement material to such new employees entering into employment with the Company. On November 20, 2019, the Company filed a Registration Statement on Form S-8 with the SEC covering the offering of up to 300,000 shares of its common stock, par value $0.001, pursuant to the Company’s 2019 Plan. No stock options were granted under the 2019 Inducement Plan during the years ended December 31, 2021 and 2020. During the year ended December 31, 2019, the Company granted 47,500 stock options under the 2019 Plan to new employees. Initial grants of Inducement Awards made to employees vest as to 25% on the first anniversary of the date of grant and the balance ratably over the next 36 months and subsequent grants vest monthly over a period of four years from the grant date.

2014 Equity Incentive Plan

The Company’s 2014 Equity Incentive Plan, or the 2014 Plan, is administered by the Company’s Board of Directors or a duly authorized committee thereof, referred to as the Plan administrator. The 2014 Plan provides for the grant of incentive stock options, non-statutory stock options, restricted stock awards, restricted stock unit awards, stock appreciation rights, performance stock awards and other forms of equity compensation, collectively referred to as Stock Awards. Additionally, the 2014 Plan provides for the grant of performance cash awards. Incentive stock options may be granted only to employees. All other awards may be granted to employees, including officers, non-employee directors, and consultants. No incentive stock options may be granted under the 2014 Plan after the tenth anniversary of the effective date of the 2014 Plan. Stock Awards granted under the 2014 Plan vest at the rate specified by the Plan administrator. Initial grants of Stock Awards made to employees and non-employee consultants generally vest as to 25% on the first anniversary of the date of grant and the balance ratably over the next 36 months and subsequent grants vest monthly over a period of four years from the grant date. Stock options initially granted to members of the Company’s Board of Directors vest over a period of three years in equal quarterly installments from the date of the grant, subject to the option holder’s continued service as a Director through such date. Subsequent grants to Directors that are made automatically at Annual Meetings of Stockholders vest fully on the earlier of the first anniversary of the date of grant and the next Annual Meeting of Stockholders. The Plan administrator determines the term of Stock Awards granted under the 2014 Plan up to a maximum of ten years.

The aggregate number of shares of the Company’s common stock reserved for issuance under the 2014 Plan has automatically increased on January 1 of each year, beginning on January 1, 2015 and will continue to increase on January 1 of each year through and including January 1, 2024, by 3% of the total number of shares of the Company’s 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. On January 1, 2022, the aggregate number of shares of common stock that may be issued pursuant to Stock Awards under the 2014 Plan automatically increased from 8,984,679 to 10,589,103. The maximum number of shares that may be issued pursuant to the exercise of incentive stock options under the 2014 Plan is 30,000,000 shares.

Restricted Stock Units

On December 17, 2021, the Compensation Committee of the Company’s Board of Directors approved and granted a total of 63,573 time-based restricted stock units to certain executive officers under the 2014 Plan with a grant date fair value of $12.45 per share. The restricted stock units vest in two equal installments on December 15, 2022 and June 15, 2023. As a result, the Company recognizes compensation expense associated with these restricted stock units ratably over the 18-month vesting period following the grant date. For the year ended December 31, 2021, the Company recognized $20 of stock compensation expense, with $8 recorded in R&D expense and $12 in G&A expense. As of December 31, 2021, none of the 63,573 restricted stock units were vested or settled in shares of the Company’s common stock.

On October 29, 2021, the Compensation Committee of the Company’s Board of Directors also approved and granted 147,942 time-based restricted stock units in connection with the appointment of the Company’s new Chief Executive Officer, or CEO, under the 2014 Plan with a grant date fair value of $16.83 per share. The first tranche of 142,000 restricted stock units vests 25% on the first anniversary of the date of grant and the balance quarterly over the next 36 months. The second tranche of 5,942 restricted stock units fully vests on March 31, 2022. As a result, the Company recognizes compensation expense associated with these two restricted stock unit tranches ratably over their respective vesting periods following the grant date. For the year ended December 31, 2021, stock compensation expense of $144 was recognized in G&A expense. As of December 31, 2021, none of the 147,942 restricted stock units were vested or settled in shares of the Company’s common stock.

Pursuant to the Company’s non-employee director compensation policy, an aggregate of 43,200 restricted stock units were granted to non-employee directors on June 3, 2021, the date of the Company’s 2021 Annual Meeting of Stockholders, under the 2014 Plan with a grant date fair value of $13.06 per share. The restricted stock units will vest on the earlier of (i) June 3, 2022 and (ii) immediately prior to the Company’s next Annual Meeting of Stockholders following the grant date, subject to the recipient’s continued service through such date. As a result, the Company recognizes compensation expense associated with these restricted stock units ratably over the one-year vesting period following the grant date. For the year ended December 31, 2021, stock compensation expense of $326 was recognized in G&A expense. As of December 31, 2021, none of the 43,200 restricted stock units were vested or settled in shares of the Company’s common stock.

On March 30, 2021, the Compensation Committee of the Company’s Board of Directors approved and granted a total of 176,000 restricted stock units to executive officers under the 2014 Plan with a grant date fair value of $20.59 per share. Vesting of the restricted stock units is contingent on the achievement of certain performance targets related to clinical and regulatory milestones, subject to the recipient’s continuous service through each performance target. Recognition of compensation expense associated with these awards begins when, and to the extent, the performance criteria is probable of achievement and the employee has met the service conditions. In August 2021, performance targets relating to 44,002 restricted stock units had been achieved and thus restricted stock units vested and the awards were settled in shares of common stock. For the year ended December 31, 2021, the Company recognized $906 of stock compensation expense, with $329 recorded in R&D expense and $577 recorded in G&A expense. As of December 31, 2021, 44,002 of the 176,000 restricted stock units vested and were settled in shares of the Company’s common stock.

Additionally on March 30, 2021, the Compensation Committee of the Company’s Board of Directors also approved and granted a total of 100,000 time-based restricted stock units to certain executive officers under the 2014 Plan with a grant date fair value of $20.59 per share. The restricted stock units vest in three equal installments annually from the date of the grant. As a result, the Company recognizes compensation expense associated with these restricted stock units ratably over the three-year vesting period following the grant date. For the year ended December 31, 2021, the Company recognized $592 of stock compensation expense, with $166 recorded in R&D expense and $426 in G&A expense. G&A amounts recorded in the period included $75 of stock compensation expense relating to the modification

of restricted stock units on November 1, 2021 (see Stock Award Modifications below). As of December 31, 2021, none of the 100,000 restricted stock units were vested or settled in shares of the Company’s common stock.

Pursuant to the Company’s non-employee director compensation policy, an aggregate of 36,000 restricted stock units were granted to non-employee directors on June 4, 2020, the date of the Company’s 2020 Annual Meeting of Stockholders, under the 2014 Plan with a grant date fair value of $15.62 per share. The restricted stock units fully vested on June 3, 2021. As a result, the Company has recognized compensation expense associated with these restricted stock units ratably over the one-year vesting period following the grant date. For the years ended December 31, 2021 and 2020, $239 and $323, respectively, of stock compensation expense relating to these restricted stock units was recognized in G&A expense. All of the 36,000 restricted stock units vested and were settled in shares of the Company’s common stock as of December 31, 2021.

In February 2020, the Compensation Committee of the Company’s Board of Directors approved and granted a total of 138,000 restricted stock units to executive officers under the 2014 Plan with a grant date fair value of $16.36 per share. Vesting of the restricted stock units is contingent on the achievement of certain performance targets related to clinical and regulatory milestones, subject to the recipient’s continuous service through each performance target. Recognition of compensation expense associated with these awards begins when, and to the extent, the performance criteria is probable of achievement and the employee has met the service conditions. In February and March 2021, performance targets relating to 36,750 and 40,000 restricted stock units, respectively, had been achieved and thus restricted stock units vested and the awards were settled in shares of common stock. For the year ended December 31, 2021, the Company recognized $1,256 of stock compensation expense relating to the vesting of these restricted stock units, with $524 recorded in R&D expense and $732 in G&A expense. As a result of the achievement of a performance target relating to its NDA filing in December 2020, the Company recognized $601 of stock compensation expense, with $196 recorded in R&D expense and $405 in G&A expense for the year ended December 31, 2020. As of December 31, 2021, 113,500 of the 138,000 restricted stock units vested and were settled in shares of the Company’s common stock.

Additionally in February 2020, the Compensation Committee of the Company’s Board of Directors also approved and granted a total of 98,000 time-based restricted stock units to executive officers under the 2014 Plan with a grant date fair value of $16.36 per share. The restricted stock units vest in three equal installments annually from the date of the grant. As a result, the Company recognizes compensation expense associated with these restricted stock units ratably over the three-year vesting period following the grant date. In February 2021, 32,669 of these restricted stock units vested and were settled in shares of the Company’s common stock in satisfaction of the first year of vesting. For the year ended December 31, 2021, the Company recognized $607 of stock compensation expense, with $174 recorded in R&D expense and $433 recorded in G&A expense. G&A amounts for 2021 included $73 of stock compensation expense relating to the modification of restricted stock units on November 1, 2021 (see Stock Award Modifications below). For the year ended December 31, 2020, the Company recognized $455 of stock compensation expense, with $149 recorded in R&D expense and $306 in G&A expense. As of December 31, 2021, 32,669 of the 98,000 restricted stock units vested and were settled in shares of the Company’s common stock.

Pursuant to the terms of the Company’s non-employee director compensation policy, an aggregate of 24,000 restricted stock units were granted to non-employee directors on June 4, 2019, the date of the Company’s 2019 Annual Meeting of Stockholders, under the 2014 Plan with a grant date fair value of $20.47 per share. As a result, the Company recognized compensation expense associated with these restricted stock units ratably over the one-year vesting period following the grant date and were fully vested in June 2020. For the years ended December 31, 2020 and 2019, the Company recognized $205 and $287, respectively, of stock compensation expense relating to these restricted stock units in G&A expense. As of December 31, 2021, all of the 24,000 restricted stock units vested and were settled in shares of the Company’s common stock.

In March 2019, the Compensation Committee of the Company’s Board of Directors approved and granted a total of 215,000 restricted stock units to executive officers under the 2014 Plan with a grant date fair value of $16.10 per share. Vesting of the restricted stock units was contingent on the achievement of certain performance targets related to clinical milestones, subject to the recipient’s continuous service through the vesting events. Recognition of compensation expense associated with these awards begins when, and to the extent, the performance criteria is probable of achievement and the employee has met the service conditions. In April and June 2020, performance targets relating to 65,834 and 30,000 restricted stock units, respectively, had been achieved and thus such restricted stock units vested, and the awards were settled in shares of common stock. During the year ended December 31, 2020, the Company recognized $1,543 of stock compensation expense relating to the vesting of these restricted stock units, with $1,087 recorded in R&D expense and $456 in G&A expense. In December 2019 and May 2019, performance targets relating to 36,666 and 74,166 restricted stock units, respectively, had been achieved and thus such restricted stock units vested, and the awards were settled in shares of common stock. Also in December 2019, 8,334 restricted stock units were forfeited. During the year ended December 31, 2019, the Company recognized $1,784 of stock compensation expense relating to the vesting of these restricted stock units, with $1,180 recorded in G&A expense and $604 in R&D expense. During the year ended December 31, 2020, all of the 215,000 restricted stock units either vested and were settled in shares of the Company’s common stock or were forfeited.

A summary of restricted stock unit activity related to employees and non-employee members of the Company’s Board of Directors as of and for the year ended December 31, 2021 is as follows:

		Weighted
	Number of	Average Grant
	Units	Date Fair Value
Outstanding, December 31, 2020	235,250	$	16.25
Awarded	530,715		17.95
Vested and released	(189,421)		17.20
Outstanding, December 31, 2021	576,544	$	17.50
Restricted stock units exercisable (vested and deferred), December 31, 2021	—

Stock Options

A summary of the Company’s stock option activity related to employees, non-employee members of the Board of Directors and non-employee consultants for the 2019 Plan and the 2014 Plan as of and for the year ended December 31, 2021 is as follows:

		Weighted		Aggregate
	Number of	Average Exercise		Intrinsic
	Shares	Price		Value
Outstanding, December 31, 2020	5,469,393	$	15.02
Granted	1,422,750		17.82
Exercised	(136,787)		11.98
Forfeited	(239,457)		18.01
Expired	(3,619)		24.93
Outstanding, December 31, 2021	6,512,280	$	15.58	$	3,537
Weighted average remaining contractual life as of December 31, 2021 (in years)	6.88
Options exercisable, December 31, 2021	4,120,917	$	14.73	$	3,525
Weighted average remaining contractual life as of December 31, 2021 (in years)	5.79
Options vested and expected to vest as of December 31, 2021	6,449,787	$	15.39	$	3,537
Weighted average remaining contractual life as of December 31, 2021 (in years)	6.06

The total fair value of options vested during the years ended December 31, 2021, 2020 and 2019 was $12,844, $12,819, and $10,074, respectively. The intrinsic value of options exercised during the years ended December 31, 2021, 2020 and 2019 was $965, $152, and $5,741, respectively.

During the years ended December 31, 2021, 2020 and 2019, the Company granted 1,422,750, 1,377,850 and 1,324,000 stock options, respectively, to employees and non-employee members of the Board of Directors. There were no options granted to nonemployee consultants during the years ended December 31, 2021, 2020 and 2019. The fair values of the stock options granted to those groups were estimated using the Black-Scholes option valuation model with the following ranges of assumptions (see Note 2, Summary of Significant Accounting Policies – Stock-Based Compensation):

	Year Ended December 31,
	2021		2020		2019
Risk-free interest rate	0.66% - 1.41	%	0.35% - 1.57	%	1.55% - 2.62	%
Expected volatility	71.6% - 83.5	%	71.8% - 74.8	%	71.1% - 75.2	%
Expected dividend yield	0	%	0	%	0	%
Expected life of employee and Board options (in years)	6.25		6.25		6.25

The weighted average grant date fair value of options granted to employees and non-employee members of the Board of Directors for their Board service during the years ended December 31, 2021, 2020 and 2019 was $12.00, $10.33, and $11.67, respectively.

During the years ended December 31, 2021, 2020 and 2019, the Company recognized compensation expense relating to stock options as follows:

	Year Ended December 31,
	2021		2020		2019
Research and development	$	7,126	$	6,765	$	5,206
General and administrative		9,569		4,943		5,094
Total stock option expense	$	16,695	$	11,708	$	10,300

The following were excluded from the table above as they are not related to stock options: compensation expense for i) the vesting of executives’ restricted stock units for $1,201, $1,432 and $604 in R&D expense for the years ended December 31, 2021, 2020 and 2019, respectively, and $2,324, $1,167 and $1,180 in G&A expense for the years ended December 31, 2021, 2020 and 2019, respectively; ii) compensation expense relating to the Board of Directors’ restricted stock units for $565, $528 and $287 in G&A expense for the years ended December 31, 2021, 2020 and 2019, respectively; and iii) the issuance of common stock relating to the consulting agreement for $197 in G&A expense for the year ended December 31, 2019.

As of December 31, 2021, the total compensation expense relating to unvested options granted to employees and non-employee members of the Board of Directors that had not yet been recognized was $24,418, which is expected to be realized over a weighted average period of 2.58 years. The Company will issue shares upon exercise of options from common stock reserved.

The Company does not expect to realize any tax benefits from its stock option activity or the recognition of stock-based compensation expense because the Company currently has net operating losses and has a full valuation allowance against its deferred tax assets. Accordingly, no amounts related to excess tax benefits have been reported in cash flows from operations or cash flows from financing activities for the years ended December 31, 2021, 2020 and 2019.

Stock Award Modifications

In November 2021, the Company and the former President and CEO mutually agreed to a transition from CEO to a consulting role through June 30, 2022, if not terminated earlier per the terms of the consulting agreement. As a result, the Company modified the terms of its former CEO’s outstanding Stock Awards to (1) automatically vest any unvested stock options or time-based restricted stock units that would have vested in the twelve month period following the end of the consulting period if continuous service is achieved with the Company during such twelve-month period; (2) extend the period during which the vested stock options may be exercised through the earlier of (i) eighteen months following the separation date (November 8, 2021); or (ii) the original expiration date applicable to each of the stock options, unless terminated earlier in accordance with the 2014 Plan, if continuous service is achieved with the Company; and (3) extend the period in which performance-based vesting milestones for restricted stock units may be achieved through March 31, 2022, if continuous service is achieved with the Company.

The Company determined that vested Stock Awards which had modifications due to the extension of the exercise period were Type 1 modifications pursuant to ASC 718 because those Stock Awards would have vested before and after the modification. Acceleration of vesting for the Stock Awards that would have vested in the twelve-month period following the consulting term was determined to be a Type 3 modification requiring stock compensation expense pursuant to ASC 718 because absent the modification terms, those Stock Awards would have been forfeited as of the last day that the former CEO provided continuous service as a consultant. Performance-based restricted stock units were not considered probable of achieving performance targets on the modification date, or as of December 31, 2021, which resulted in no stock compensation expense being recorded on these performance-based restricted stock units.

During the year ended December 31, 2021, total incremental stock compensation expense relating to modifications of stock options and time-based restricted stock units of the former CEO were $5,056, which is included in G&A expense. Of that total amount, $4,908 is included in G&A expense in the stock option compensation expense table above.