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Stock-based compensation
 6 Months Ended
Jun. 30, 2023
Share-Based Payment Arrangement [Abstract]  
Stock-based compensation Stock-based compensation
Stock incentive plans
Prior to its initial public offering, the Company granted stock options pursuant to the Company’s 2007 Stock Incentive Plan (the "2007 Plan"). The 2007 Plan expired in June 2017. Any cancellations or forfeitures of options granted under the 2007 Plan will increase the options available under the 2017 Stock Incentive Plan (the "2017 Plan"), as described below.
In June 2017, the Company’s stockholders approved the 2017 Plan. Under the 2017 Plan, shares of common stock could be granted to the Company's employees, officers, directors, consultants and advisors in the form of options, RSUs or other stock-based awards. The number of shares of common stock issuable under the 2017 Plan will be cumulatively increased annually on January 1 by the lesser of (a) 4% of the outstanding shares on the immediately preceding December 31 or (b) such other amount specified by the Board. The terms of the awards are determined by the Board, subject to the provisions of the 2017 Plan. Any cancellations or forfeitures of options granted under the 2007 Plan, which expired in June 2017, would increase the number of shares that could be granted under the 2017 Plan. On January 1, 2023, the number of shares of common stock issuable under the 2017 Plan was increased by 4,205,794 shares. During the six months ended June 30, 2023, the Company granted 4,566,682 RSUs and options to purchase shares of common stock to employees under the 2017 Plan. As of June 30, 2023, there were 1,718,690 shares available for future issuance under the 2017 Plan.
Under the 2017 Plan, with respect to both incentive stock options and nonqualified stock options, the exercise price per share will not be less than the fair market value of the common stock on the date of grant and the vesting period for options granted to employees is generally four years. Options granted under the 2017 Plan expire no later than 10 years from the date of grant. Options under the 2007 Plan were granted at an exercise price established by the Board (or an authorized committee thereof) that was not less than the fair market value of the underlying common stock on the date of grant and subject to such vesting provisions determined by the Board (or an authorized committee thereof). The Board may accelerate vesting or otherwise adjust the terms of granted options in the case of a merger, consolidation, dissolution, or liquidation of the Company.
Inducement awards
From time to time, the Company grants to its employees, upon approval by the Board or an authorized committee thereof, options to purchase shares of common stock and/or RSUs as an inducement to employment in accordance with Nasdaq Listing Rule 5635(c)(4). Prior to February 2022, only options were granted, and they were granted outside of an existing equity incentive plan. These options are subject to terms substantially the same as the 2017 Plan.
In February 2022, the Board adopted the Company's 2022 Inducement Stock Incentive Plan (the "Inducement Plan"), which provides for the grant of nonstatutory options, stock appreciation rights, restricted stock, RSUs and other stock-based awards, with respect to an aggregate of 2,000,000 shares of the Company's common stock (subject to adjustment as provided in the Inducement Plan). During the six months ended June 30, 2023, the Company granted 677,905 RSUs and options to purchase shares of common stock to newly hired employees under the Inducement Plan. As of June 30, 2023, there were 664,270 shares available for future issuance under the Inducement Plan.
As of June 30, 2023, there were options to purchase 757,500 shares of common stock outstanding which were granted as inducement awards prior to the establishment of the Inducement Plan.
Stock option activity
A summary of stock option activity is as follows:
Number
of Shares		Weighted-
Average
Exercise Price
Outstanding at January 1, 202310,051,283 $9.84 
Granted2,864,451 $6.11 
Exercised(97,596)$4.37 
Cancelled(458,953)$11.15 
Outstanding at June 30, 202312,359,185 $8.97 
Exercisable at June 30, 20236,591,352 $9.21 
The weighted-average grant date fair value of options granted during the six months ended June 30, 2023 and 2022 was $4.88 and $3.95 per share, respectively. The total intrinsic value of options exercised during the six months ended June 30, 2023 and 2022 was $0.3 million and immaterial, respectively. The aggregate intrinsic value represents the difference between the exercise price and the selling price received by option holders upon the exercise of stock options during the period.
Cash received from the exercise of stock options was $0.4 million and immaterial, respectively, for the six months ended June 30, 2023 and 2022.
Restricted stock units
The Company periodically issues RSUs with a service condition to certain officers and other employees that typically vest between one year and four years from the grant date.
A summary of the RSU activity is as follows:
Number of Shares
Unvested at January 1, 20231,870,791 
Granted2,380,136 
Vested(460,981)
Forfeited(118,793)
Unvested at June 30, 20233,671,153 
Employee stock purchase plan
During the year ended December 31, 2017, the Board adopted, and the Company’s stockholders approved the 2017 employee stock purchase plan (the "2017 ESPP"). The number of shares of common stock issuable under the 2017 ESPP was increased by 450,000 on January 1, 2023. The Company issued 291,260 and 154,235 shares, respectively, under the 2017 ESPP during the six months ended June 30, 2023 and 2022. As of June 30, 2023, there were 454,531 shares available for issuance under the 2017 ESPP.
Stock-based compensation expense
The Company uses the provisions of ASC 718, Stock Compensation, to account for all stock-based awards to employees and non-employees.
Stock-based compensation expense is recognized over the requisite service period, which is generally the vesting period, using the straight-line method.
The following table presents stock-based compensation expense by award type included within the Company’s condensed consolidated statements of operations and comprehensive loss:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2023202220232022
Stock options$4,288 $3,933 $8,507 $8,051 
Restricted stock units2,060 1,258 3,953 2,467 
Employee stock purchase plan295 157 590 315 
Stock-based compensation expense included in total operating expenses$6,643 $5,348 $13,050 $10,833 
The following table presents stock-based compensation expense as reflected in the Company’s condensed consolidated statements of operations and comprehensive loss:
Three Months Ended June 30,Six Months Ended June 30,
(in thousands)2023202220232022
Research and development$3,396 $2,746 $6,728 $5,679 
General and administrative3,247 2,602 6,322 5,154 
Stock-based compensation expense included in total operating expenses$6,643 $5,348 $13,050 $10,833 
As of June 30, 2023, there was $33.9 million and $21.2 million of unrecognized stock-based compensation expense related to unvested stock options and unvested RSUs, respectively, that is expected to be recognized over a weighted-average period of 2.0 years and 2.9 years, respectively.
The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:
Three Months Ended
June 30,		Six Months Ended June 30,
2023202220232022
Risk-free interest rate3.7 %2.9 %3.6 %2.0 %
Expected dividend yield— %— %— %— %
Expected term (years)5.845.846.045.99
Expected stock price volatility100 %90 %99 %87 %
Expected volatility for the Company’s common stock is determined based on its historical volatility. The risk-free interest rate is based on the yield of U.S. Treasury securities consistent with the expected term of the option. No dividend yield was assumed as the Company has not historically and does not expect to pay dividends on its common stock. The expected term of the options granted is based on the use of the simplified method, in which the expected term is presumed to be the mid-point between the vesting date and the end of the contractual term.
The fair value of RSUs is determined based on the closing price of the Company’s common stock on the date of grant.