Stock Incentive Plans

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock Incentive Plans

11. Stock Incentive Plans

The Company maintains the 2008 Stock Incentive Plan, or the 2008 Plan, for employees, consultants, advisors, and directors. The 2008 Plan provided for the granting of incentive and non-qualified stock option and restricted stock awards as determined by the Board.

In June 2016, the Company’s stockholders approved the 2016 Incentive Award Plan, or the 2016 Plan, which authorized 1,210,256 shares of common stock for future issuance under the 2016 Plan and the Company ceased granting awards under the 2008 Plan. Upon the effective date of the 2016 Plan, awards issued under the 2008 Plan remain subject to the terms of the 2008 Plan. Awards granted under the 2008 Plan that expire, lapse or terminate become available under the 2016 Plan as shares available for future grants.

Additionally, pursuant to the terms of the 2016 Plan, the Board is authorized to grant awards with respect to common stock, and may delegate to a committee of one or more members of the Board or executive officers of the Company the authority to grant options and restricted stock units. On December 9, 2020, the Board established a Stock Option Committee authorized to grant awards to certain employees and consultants subject to conditions and limitations within the 2016 Plan. In January 2023, the number of shares of common stock that may be issued under the 2016 Plan was increased by 6,121,697 shares. As of June 30, 2023, 2,587,797 shares remain available for future issuance under the 2016 Plan.

In September 2018, the Company’s 2018 Employment Inducement Incentive Award Plan, or the 2018 Inducement Incentive Award Plan was adopted by the Board without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Stock Market LLC listing rules, which authorized 1,175,000 shares of its common stock for issuance. In March 2019, the Board approved the amendment and restatement of the 2018 Inducement Incentive Award Plan to reserve an additional 2,000,000 shares of the Company’s common stock for issuance thereunder. As of June 30, 2023, there are 425,858 shares available for future grant under the 2018 Inducement Incentive Award Plan.

Stock-Based Compensation Expense

Stock-based compensation expense by classification included within the consolidated statements of operations and comprehensive income (loss), including $1.5 million recognized as stock-based compensation expense upon the achievement of a technical milestone by Ginkgo Bioworks Holdings, Inc., or Ginkgo, during the three and six months ended June 30, 2023 and $1.0 million recognized as stock-based compensation expense upon the issuance of common stock to Ginkgo during the three and six months ended June 30, 2022 as described in Note 14, was as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Research and development	$	2,677	$	2,021	$	3,869	$	3,039
General and administrative		1,106		1,543		2,190		3,278
Total stock-based compensation expense	$	3,783	$	3,564	$	6,059	$	6,317

Stock Options

The estimated grant date fair values of employee stock option awards granted under the 2016 Plan and the 2018 Inducement Incentive Award Plan were calculated using the Black-Scholes option pricing model, based on the following weighted-average assumptions:

	Three Months Ended June 30,						Six Months Ended June 30,
	2023			2022			2023			2022
Risk-free interest rate		3.38	%		3.26	%		3.95	%		1.63	%
Dividend yield		—			—			—			—
Expected term		6.00			6.05			5.94			6.03
Expected volatility		94.40	%		92.03	%		94.64	%		91.85	%
Weighted-average fair value of common stock	$	1.31		$	1.29		$	1.15		$	3.10

The expected term of the Company’s stock options granted to employees has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. Under the simplified method, the expected term is presumed to be the midpoint between the vesting date and the end of the contractual term. The Company utilizes this method due to lack of historical exercise data and the plain nature of its stock-based awards.

The weighted average grant date fair value of stock options granted to employees was $1.02 and $0.99 during the three months ended June 30, 2023 and 2022, respectively, and $0.90 and $2.33 during the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, total unrecognized compensation expense related to unvested employee stock options was $13.2 million, which is expected to be recognized over a weighted average period of 2.7 years.

The following table summarizes the stock option activity under the 2008 Plan, the 2016 Plan, and the 2018 Inducement Incentive Award Plan:

	Number of options			Weighted-average exercise price ($)		Weighted-average remaining contractual term (in years)		Aggregate intrinsic value (in thousands)
Employees
Outstanding at December 31, 2022		15,578,412		$	3.44		7.57	$	4
Granted		5,477,200		$	1.15
Forfeited		(1,207,712	)	$	2.84
Outstanding at June 30, 2023		19,847,900		$	2.85		7.93	$	1
Vested at June 30, 2023		8,956,975		$	3.92		6.68	$	1
Vested and expected to vest at June 30, 2023		18,564,837		$	2.93		7.84	$	1
Non-employee consultants
Outstanding at December 31, 2022		266,239		$	8.05		5.08	$	—
Outstanding at June 30, 2023		266,239		$	8.05		4.58	$	—
Vested at June 30, 2023		266,239		$	8.05		4.58	$	—
Vested and expected to vest at June 30, 2023		266,239		$	8.05		4.58	$	—

Restricted Stock Units

During the six months ended June 30, 2023, the Company granted 1,054,600 restricted stock awards with a weighted average fair value of $1.13 per share based on the closing price of the Company’s common stock on the date of grant to employees under the 2016 Plan, which will vest over a four-year term. Forfeitures are estimated at the time of grant and are adjusted, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company has estimated a forfeiture rate of 10% for restricted stock awards to employees based on historical experience.

Unrecognized compensation expense for all restricted stock units was $3.1 million as of June 30, 2023, which is expected to be recognized over a weighted average period of 2.5 years.

The following table summarizes the Company’s restricted stock units under the 2016 Plan and 2018 Inducement Incentive Award Plan:

	Number of shares			Weighted average grant date fair value ($)
Unvested at December 31, 2022		1,705,558		$	2.62
Granted		1,054,600			1.13
Vested		(277,193	)		3.22
Forfeited		(71,173	)		1.99
Unvested at June 30, 2023		2,411,792		$	1.92

Employee Stock Purchase Plan

In June 2016, the Company approved the 2016 Employee Stock Purchase Plan, or the ESPP, which authorized 173,076 shares of common stock for future issuance under the ESPP to participating employees. In January 2023, the number of shares of common stock authorized for issuance under the ESPP was increased by 1,530,424 shares. During the six months ended June 30, 2023, the Company issued 108,068 shares of common stock under the ESPP. As of June 30, 2023, 5,060,074 shares remain available for future issuance under the ESPP.

For each of the three and six months ended June 30, 2023 and 2022, the Company recognized less than $0.1 million of stock-based compensation expense under the ESPP.