Stock-based Compensation

6 Months Ended

Jun. 30, 2020

Stock-based compensation expense included in the Company’s condensed consolidated statements of comprehensive loss is allocated as follows (in thousands):



	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Research and development	$	825	$	472	$	1,611	$	693
General and administrative	1,537		776		3,278		1,421
Sales and marketing	1,454		627		2,849		903
	$	3,816	$	1,875	$	7,738	$	3,017

Stock Option Activity

The option awards issued under the 2014 Stock Option Plan (the 2014 Plan) and the 2018 Omnibus Incentive Plan (the 2018 Plan) were measured based on fair value. The Company’s fair value calculations were made using the Black-Scholes option pricing model with the following assumptions:



	Three Months Ended June 30,		Six Months Ended June 30,
	2020	2019	2020	2019
Expected term (in years)	—	5.07 - 6.08	6.05	5.07 - 6.16
Stock volatility	—	70.02% - 71.38%	72.01%	70.02% - 71.38%
Risk-free interest rate	—	1.76% - 2.36%	1.37%	1.76% - 2.56%
Dividend rate	—	—	—	—

The Company used the simplified method of determining the expected term of stock options. The expected stock price volatility assumption was determined by examining the historical volatilities for industry peers, as the Company did not have sufficient trading history for the Company’s common stock. The Company will continue to analyze the historical stock price volatility and expected term assumption as more historical data for the Company’s

common stock becomes available. The risk-free interest rate assumption is based on the U.S. Treasury instruments, whose term was consistent with the expected term of the Company’s stock options. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The assumptions regarding the expected term of the options and the expected volatility of the stock price are subjective, and these assumptions have a significant effect on the estimated fair value amounts. There were no stock option grants for the three months ended June 30, 2020. The weighted-average grant date fair value of options granted was $18.56 for the six months ended June 30, 2020. The weighted-average grant date fair value of options granted was $21.10 and $12.49 for the three and six months ended June 30, 2019, respectively.

As of June 30, 2020 and December 31, 2019, there was $15.4 million and $19.5 million, respectively, of total unrecognized compensation cost related to unvested stock options that is expected to be recognized over a weighted-average period of approximately 2.8 years and 3.2 years, respectively.

The following table summarizes stock option activity under the 2014 and 2018 Plans (in thousands, except share and per share data):



	Number of Options		Weighted-Average Exercise Price Per Share		Aggregate Intrinsic Value
Outstanding at December 31, 2019	2,847,101		$	13.22
Options granted	5,000		29.03
Options exercised	(501,136	)	2.70		$	15,864	⁽¹⁾
Options forfeited	(41,135	)	23.73
Outstanding at June 30, 2020	2,309,830		$	15.35	$	45,896	⁽²⁾

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(1)	Represents the total difference between the Company’s closing stock price at the time of exercise and the stock option exercise price, multiplied by the number of options exercised.


(2)	Represents the total difference between the Company’s closing stock price on the last trading day of the second quarter of 2020 and the stock option exercise price, multiplied by the number of in-the-money options as of June 30, 2020. The amount of intrinsic value will change based on the fair market value of the Company’s stock.

The weighted-average remaining contractual term of options outstanding and exercisable is 8.0 years and 7.6 years at June 30, 2020 and December 31, 2019, respectively.

Restricted Shares Awards Activity

As of June 30, 2020 and December 31, 2019, there was $14.8 million and $11.8 million, respectively, of total unrecognized compensation cost related to unvested restricted shares awards that is expected to be recognized over a weighted-average period of approximately 3.3 years.

The following table summarizes restricted shares awards activity:



	Number of Restricted Shares Awards		Weighted-Average Fair Value Per Share at Grant Date
Outstanding at December 31, 2019	586,166		$	23.59
Restricted shares awards granted	228,000		26.39
Restricted shares awards vested	(109,193	)	20.34
Restricted shares awards forfeited	(24,062	)	23.76
Outstanding at June 30, 2020	680,911		$	25.04

Restricted Stock Units Activity

As of June 30, 2020 and December 31, 2019, there was $2.8 million and $4.3 million, respectively, of total unrecognized compensation cost related to unvested restricted stock units that is expected to be recognized over a weighted-average period of approximately 1.1 years and 1.5 years, respectively.

The following table summarizes restricted stock units activity:



	Number of Restricted Stock Units		Weighted-Average Fair Value Per Share at Grant Date
Outstanding at December 31, 2019	248,104		$	21.48
Restricted stock units granted	8,000		29.03
Restricted stock units vested	(46,336	)	14.19
Outstanding at June 30, 2020	209,768		$	23.37

Warrant Exercise

On July 16, 2019, the Company issued and sold 32,529 shares of its common stock to SVB Financial Group (SVB) in connection with the exercise by SVB of its right to purchase 40,000 shares of common stock under that certain warrant, dated as of February 6, 2018. The exercise price per share was $7.50, and was paid by SVB via forfeiture of shares pursuant to a cashless exercise provision in the warrant.

On May 29, 2019, the Company issued and sold 31,071 shares of its common stock to Life Science Loans II, LLC (Life Science Loans) in connection with the exercise by Life Science Loans of its right to purchase 40,000 shares of common stock under that certain warrant, dated as of February 6, 2018. The exercise price per share was $7.50, and was paid by Life Science Loans via forfeiture of shares pursuant to a cashless exercise provision in the warrant.

No warrants were outstanding at June 30, 2020.