Stockholders' Equity

6 Months Ended

Jun. 30, 2022

Equity [Abstract]

Stockholders' Equity

Note 12. Stockholders’ Equity

Capital Structure

In December 2019, the Company entered into the December 2019 Sales Agreement with SVB Leerink, pursuant to which the Company may sell up to $80 million in shares of the Company’s common stock from time to time through SVB Leerink, acting as the Company’s sales agent, in one or more at-the-market offerings utilizing the 2019 Shelf Registration Statement. SVB Leerink is entitled to receive a commission of 3.0% of the gross proceeds for any shares sold under the December 2019 Sales Agreement. The December 2019 Sales Agreement was replaced by the March 2022 Sales Agreement (see below).

In March 2022, the Company entered into the March 2022 Sales Agreement with SVB Leerink, pursuant to which the Company may sell up to $200 million in shares of the Company’s common stock from time to time through SVB Leerink, acting as the Company’s sales agent, in one or more at-the-market offerings utilizing the 2019 Shelf Registration Statement. SVB Leerink is entitled to receive a commission of 3.0% of the gross proceeds for any shares sold under the March 2022 Sales Agreement. The March 2022 Sales Agreement supersedes the December 2019 Sales Agreement, dated December 5, 2019, by and between the Company and SVB Leerink LLC.

Under the December 2019 Sales Agreement and March 2022 Sales Agreement, for the six months ended June 30, 2022, the Company received approximately $58.6 million in gross proceeds through the sale of 1,914,747 shares, of which net proceeds were approximately $56.8 million.

Upon the closing of the Second Amendment, Hercules also purchased 152,487 of the Company’s unregistered common stock for a total consideration of $5.0 million at a share price equal to $32.79 per share, pursuant to a share transfer agreement.

The holders of shares of common stock are entitled to one vote for each share of common stock held at all meetings of stockholders and written actions in lieu of meetings. The holders of shares of common stock are entitled to receive dividends, if and when declared by the board of directors.

Shelf Registration Statement

On December 5, 2019, the Company filed an automatic shelf registration statement (“2019 Shelf Registration”) with the Securities and Exchange Commission (“SEC”) for the issuance of common stock, preferred stock, warrants, rights, debt securities and units. It became effective upon filing with the SEC and is currently the Company’s only active shelf registration. Through the date of this report, the Company has issued common stock of approximately $292.9 million pursuant to such shelf registration statement.

Under SEC rules, the 2019 Shelf Registration Statement allows for the potential future offer and sale by the Company, from time to time, in one or more public offerings, of an indeterminate amount of the Company’s common stock, preferred stock, debt securities, and units at indeterminate prices. At the time any of the securities covered by the 2019 Shelf Registration Statement are offered for sale, a prospectus supplement will be prepared and filed with the SEC containing specific information about the terms of any such offering.

Equity Incentive Plans

There were 3,341,813 shares available for the issuance of stock options or stock-based awards under the Company’s 2015 Omnibus Incentive Compensation Plan at June 30, 2022.

Stock Options

The following table sets forth the stock option activity for the six months ended June 30, 2022:

	​Number of shares			​Weighted average exercise price		Weighted average contractual term		​Aggregate intrinsic value
Outstanding at December 31, 2021		5,090,377		$	28.89
Granted		1,590,426			31.62
Exercised		(24,706	)		14.49
Forfeited		(111,376	)		41.51
Expired		(22,160	)		46.50
Outstanding at June 30, 2022		6,522,561		$	28.98		7.5	$	95,081,479
Vested and expected to vest at June 30, 2022		6,522,561		$	28.98		7.5	$	95,081,479
Exercisable at June 30, 2022		3,170,564		$	17.70		5.8	$	76,800,643

The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model. The expected term of the Company’s stock options has been determined utilizing the “simplified” method as described in the SEC’s Staff Accounting Bulletin No. 107 relating to stock-based compensation. The simplified method was chosen because the Company has limited historical option exercise experience due to its short operating history. The risk-free interest rate is based on the U.S. Treasury yield in effect at the time of grant for a period approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. Expected volatility is based on historical volatilities of similar entities within the Company’s industry which were commensurate with the Company’s expected term assumption.

The weighted average grant date fair value of options granted was $23.70 per option for the six months ended June 30, 2022. As of June 30, 2022, there was $90.3 million of total unrecognized compensation cost related to non-vested stock options which is expected to be recognized over a weighted average period of 3.1 years. These amounts do not include 6,169 options outstanding as of June 30, 2022, which are performance-based and vest upon the achievement of certain corporate milestones. Stock‑based compensation will be measured and recorded if and when it is probable that the milestone will occur.

Restricted Stock Units

In 2020, the Company began granting RSUs covering an equal number of its shares of common stock to employees. The fair value of RSUs is determined on the date of the grant based on the market price of its shares of common stock as of that date. The fair value of the RSUs is recognized as an expense ratably over the vesting period of four years. As of June 30, 2022, total compensation cost not yet recognized related to unvested RSUs was $19.2 million, which is expected to be recognized over a weighted-average period of 3.3 years.

The following table sets forth the RSU activity for the six months ended June 30, 2022:

	Number of shares			Weighted average grant date fair value
Outstanding at December 31, 2021		302,764		$	42.93
Granted		482,793			23.85
Vested		(63,330	)		42.19
Forfeited		(8,916	)		40.51
Outstanding at June 30, 2022		713,311		$	30.12

Stock-based compensation expense recognized for the three and six months ended June 30, 2022 and 2021 was allocated as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Research and development	$	2,679,848	$	2,302,504	$	4,489,325	$	3,836,899
General and administrative		7,481,830		3,153,738		13,270,682		5,350,440
Total	$	10,161,678	$	5,456,242	$	17,760,007	$	9,187,339

Warrants

The following table summarizes warrant activity for the six months ended June 30, 2022:

			Weighted
			average
	Warrants		exercise price
Outstanding at December 31, 2021		15,541	$	80.43
Issued		35,255		31.91
Exercised		—		—
Outstanding at June 30, 2022		50,796	$	46.75

Outstanding Warrants

In connection with the entry into the Second Amendment, Hercules received warrants to purchase an aggregate 35,255 shares of the Company’s common stock at an exercise price of $31.91 per share ("2022 warrants") and in connection with the first advance of the 2020 Term Loan, Hercules received warrants to purchase an aggregate 15,541 shares of the Company’s common stock at an exercise price of $80.43 per share ("2020 warrants").

Both the 2022 warrants and 2020 warrants were priced using the volume weighted average price of the Company’s common stock over the ten-day trading period immediately preceding the initial closing, subject to certain limited adjustments as specified in the warrant. The warrants are exercisable for seven years from the date of issuance. The warrants were classified as a component of stockholders’ equity. The relative fair value of the warrants of approximately $0.8 million for the 2022 warrants and $0.9 million for the 2020 warrants at the time of issuance, which was determined using the Black-Scholes option-pricing model, was recorded as additional paid-in capital and reduced the carrying value of the debt. The discount on the debt is being amortized to interest expense over the term of the debt utilizing the effective interest rate method.