Effective August 21, 2020, the Company adopted an equity-based compensation plan, the 2020 Employee, Director and Consultant Equity Incentive Plan (as amended from time to time, “2020 Incentive Plan”). The 2020 Incentive Plan is administered by the Company’s supervisory board. The plan is intended to encourage ownership of shares by employees, directors and certain consultants to the Company in order to attract and retain such individuals, to induce them to work for the benefit of the Company and to provide additional incentive for them to promote the success of the Company. The 2020 Incentive Plan enables the Company to grant incentive stock options or nonqualified stock options, restricted stock awards and other stock-based awards to executive officers, directors and employees and consultants of the Company.

The Company has reserved up to 22,658,192 shares of common stock, excluding any shares issued under its Hurdle Share Option Program ("HSOP") described below, for issuance to executive officers, directors, other employees and consultants of the Company pursuant to the 2020 Incentive Plan. Shares that are expired, terminated, surrendered, or canceled without having been fully exercised will be available for future awards. As of June 30, 2022, there were no shares available for future grants under the 2020 Incentive Plan and any shares subject to outstanding options originally granted under the 2020 Equity Incentive Plan that terminate, expire or lapse for any reason without the delivery of shares to the holder thereof shall become available for issuance pursuant to the atai Life Sciences 2021 Incentive Award Plan discussed below.

Effective April 23, 2021, the Company adopted and the atai shareholders approved the 2021 Incentive Award Plan (“2021 Incentive Plan”). The 2021 Incentive Plan is administered by the Company’s supervisory board. The plan is intended to encourage ownership of shares by employees, directors, and certain consultants to the Company in order to attract and retain such individuals, to induce them to work for the benefit of the Company or of an affiliate and to provide additional incentive for them to promote the success of the Company. The 2021 Incentive Plan enables the Company to grant incentive stock options or nonqualified stock options, restricted stock awards and other stock-based awards to executive officers, directors and other employees and consultants of the Company.

The Company has reserved up to 46,738,794 shares of common stock, for issuance to executive officers, directors and employees and consultants of the Company pursuant to the 2021 Incentive Plan. In accordance with the evergreen clause in the Company's 2021 Incentive Plan, effective as of January 1, 2022, the number of shares initially available for issuance was increased by 8,033,850 shares of common stock. Shares that are expired, terminated, surrendered, or canceled without having been fully exercised will be available for future awards. As of June 30, 2022, 34,131,065 shares were available for future grants under the 2021 Incentive Plan.

The stock options outstanding noted below consist primarily of both service and performance-based options to purchase Common Stock. These stock options have a five-year contractual term. These awards are subject to the risk of forfeiture until vested by virtue of continued employment or service to the Company.

The following is a summary of stock option activity from December 31, 2021 to June 30, 2022:


	Number of Options				Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding as of December 31, 2021		26,687,620			$	6.85		4.85	$	74,525
Granted		9,670,493		(1)		5.49		—		—
Exercised		(90,784	)			2.77		—		—
Cancelled or forfeited		(1,856,558	)			10.50		—		—
Outstanding as of June 30, 2022		34,410,771		(2)	$	6.28		5.80	$	20,402
Options exercisable as of June 30, 2022		13,375,570			$	4.03		3.46	$	18,236

(1)

Includes (a) 7,930,027 stock options that will vest over a four-year service period, (b) 754,910 stock options that will vest immediately upon the satisfaction of specified performance-based vesting conditions, which were not considered probable of achievement as of June 30, 2022, (c) 601,556 stock options that partially vest on date of grant, then over a three-year service period and upon the satisfaction of specified performance-based vesting conditions, which were not considered probable of achievement as of June 30, 2022, and (d) 384,000 stock options that will vest on the one-year anniversary of the date of grant.

(2)

The 21,035,201 outstanding unvested stock options balance includes (a) 16,203,479 that will continue to vest over a one to four-year service period, (b) 2,908,034 that will continue to vest over a three to four-year service period and upon the satisfaction of specified performance-based vesting conditions, (c) 200,000 stock options that will continue to vest over a two-year service period and upon the satisfaction of specified market-based conditions tied to price of the Company's publicly traded shares, (d) 754,910 stock options that will vest immediately upon the satisfaction of specified performance-based vesting conditions, which were not considered probable of achievement as of June 30, 2022, (e) 584,778 stock options that will continue to vest over a three-year service period and upon the satisfaction of specified performance-based vesting conditions, which were not considered probable of achievement as of June 30, 2022, and (f) 384,000 stock options that will vest on the one-year anniversary of the date of grant.

The weighted-average grant-date fair value of options granted during the six months ended June 30, 2022 was $3.48.

For the three months ended June 30, 2022 and 2021, the Company recorded stock-based compensation expense of $8.1 million and $20.6 million, respectively. For the six months ended June 30, 2022 and 2021, the Company recorded stock-based compensation expense of $16.7 million and $20.6 million, respectively.

As of June 30, 2022, total unrecognized compensation cost related to the unvested stock-based awards was $87.5 million, which is expected to be recognized over a weighted average period of 2.11 years.

On August 21, 2020, the Partnership (as defined below) approved and implemented an employee stock option plan for selected executives, employees, and consultants of the Partnership (the so-called Hurdle Share Options Program or “HSOP Plan”), which became effective on January 2, 2021, the date the first grants under the HSOP Plan were made (the “HSOP Options”). This plan is primarily aimed at German-based executives, employees, and consultants of the Company (collectively, the “HSOP Participants”). The purpose of the HSOP Plan is to permit these individuals to indirectly participate in the appreciation in value of the Company through a German law private partnership,

ATAI Life Sciences HSOP GbR (the “Partnership”). The HSOP Plan was established under the Partnership Agreement of the Partnership. The HSOP Plan requires the exercise price to be equal to the fair value of the shares on the date of grant.

The Partnership acquired 7,281,376 shares of atai common stock (“HSOP Shares”) pursuant to the HSOP Plan. HSOP Options that are canceled or forfeited without having been fully exercised will be available for future awards. As of June 30, 2022, 132,752 HSOP Options were available for future grants under the HSOP Plan.

The HSOP Plan mimics the economics of a typical stock option plan, however, with the HSOP Shares to which the HSOP Options refer already being issued to the Partnership. Each HSOP Option contains both service and performance-based vesting conditions, including a liquidity-based condition, and gives the holder the option to request the distribution of HSOP Shares under its vested HSOP Options. The nominal amount paid at the grant date is refundable if the HSOP Options do not vest or are forfeited. Otherwise, the nominal amount is refundable until the later of the occurrence of a Liquidity Event (as defined in the “HSOP Plan”) or the exercise date.

The HSOP Shares issued under the HSOP Plan to the Partnership are indirectly owned by HSOP Participants (being the holders of HSOP Options) via their interest in the Partnership. The grantee is required to pay a nominal value (€0.06 per share) for the shares upon grant (“Nominal Upfront Payment”). Accordingly, the HSOP Shares issued to the Partnership and allocated to the HSOP Options holders are not considered outstanding for accounting purposes. Therefore, the Company accounted for the Nominal Upfront Payment as an in-substance early exercise provision under ASC 718 as the nominal amount is deducted from the exercise price upon exercise. As of June 30, 2022, the remaining $0.5 million Nominal Upfront Payment was recorded as an Other liability on the consolidated balance sheets.

The HSOP Options outstanding noted below consist of service and performance-based options to request the distribution of HSOP Shares. These HSOP Options have a fifteen-year contractual term. These HSOP Options vest over a three to four-year service period, only if and when a “Liquidity Event” (as defined in the Partnership agreement) occurs within fifteen years of the date of grant. If a Change in Control (as defined in the Partnership agreement) or in the event the holder’s service with the Partnership is terminated due to his death or disability by June 30, 2021 or December 31, 2021, an additional 25% or 12.5%, respectively, HSOP Options will accelerate and vest upon the occurrence of the transaction. These awards are subject to the risk of forfeiture until vested by virtue of continued employment or service to the Company.

The liquidity-based performance condition contingent upon the achievement of a Liquidity Event was satisfied in June of 2021, therefore, the Company began recognizing expense for all associated options that were previously deemed improbable of vesting.

The following is a summary of stock option activity for from December 31, 2021 to June 30, 2022:


	Number of Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding as of December 31, 2021		7,046,496		6.64		14.01	$	6,961
Granted		—		—		—		—
Exercised		—		—		—		—
Cancelled or forfeited		—		—		—		—
Outstanding as of June 30, 2022		7,046,496	$	6.64		13.51	$	—
Options exercisable as of June 30, 2022		5,537,474	$	6.64		13.51

For the three months ended June 30, 2022 and 2021, the Company recorded stock-based compensation expense of $1.2 million and $16.7 million, respectively. For the six months ended June 30, 2022 and 2021, the Company recorded stock-based compensation expense of $2.5 million and $16.7 million, respectively.

As of June 30, 2022, total unrecognized compensation cost related to the unvested stock-based awards was $5.6 million which is expected to be recognized over a weighted average period of 0.8 years.

Certain controlled subsidiaries of the Company adopted their own equity incentive plans (each, an “EIP”). Each EIP is generally structured so that the applicable subsidiary, and its affiliates’ employees, directors, officers and consultants are eligible to receive non-qualified and incentive stock options and restricted stock unit awards under their respective EIP. Standard option grants have time-based vesting requirements, generally vesting over a period of four years with a contractual term of ten years. Such time-based stock options use the Black-Scholes option pricing model to determine grant date fair value. Certain awards issued to employees partially vest on date of grant,

then over a three-year service period and upon the satisfaction of specified performance-based vesting conditions, which are not considered probable of achievement as of June 30, 2022.

For the three months ended June 30, 2022 and 2021, the Company recorded share-based compensation expense of $0.2 million and $0.2 million, respectively, in relation to subsidiary EIPs. For the six months ended June 30, 2022 and 2021, the Company recorded share-based compensation expense of $0.4 million and $0.4 million, respectively, in relation to subsidiary EIPs. As of June 30, 2022, there was $8.2 million of total unrecognized stock-based compensation expense related to unvested EIP awards to employees and non-employee directors expected to be recognized over a weighted-average period of approximately 3.0 years.

Stock-based compensation expense is allocated to either Research and development or general and administrative expense on the condensed consolidated statements of operations based on the cost center to which the option holder belongs.

The following table summarizes the total stock-based compensation expense by function for the three months ended June 30, 2022, which includes expense related to stock options and restricted stock awards (in thousands):


	Three Months Ended June 30, 2022
	Atai ESOP		Atai HSOP		Other Subsidiaries Equity Plan		Total
Research and development	$	3,717	$	—	$	149	$	3,866
General and administrative		4,395		1,176		74	$	5,645
Total share based compensation expense	$	8,112	$	1,176	$	223	$	9,511

The following table summarizes the total stock-based compensation expense by function for the three months ended June 30, 2021, which includes expense related to stock options and restricted stock awards (in thousands):


	Three Months Ended June 30, 2021
	Atai ESOP		Atai HSOP		Other Subsidiaries Equity Plan		Total
Research and development	$	8,698	$	—	$	161	$	8,859
General and administrative		11,940		16,650		63	$	28,653
Total share based compensation expense	$	20,638	$	16,650	$	224	$	37,512

The following table summarizes the total stock-based compensation expense by function for the six months ended June 30, 2022, which includes expense related to stock options and restricted stock awards (in thousands):


	Six Months Ended June 30, 2022
	Atai ESOP		Atai HSOP		Other Subsidiaries Equity Plan		Total
Research and development	$	7,344	$	—	$	296	$	7,640
General and administrative		9,402		2,526		152	$	12,080
Total share based compensation expense	$	16,746	$	2,526	$	448	$	19,720

The following table summarizes the total stock-based compensation expense by function for the six months ended June 30, 2021, which includes expense related to stock options and restricted stock awards (in thousands):


	Six Months Ended June 30, 2021
	Atai ESOP		Atai HSOP		Other Subsidiaries Equity Plan		Total
Research and development	$	8,698	$	—	$	310	$	9,008
General and administrative		11,940		16,650		125	$	28,715
Total share based compensation expense	$	20,638	$	16,650	$	435	$	37,723