Annual report pursuant to Section 13 and 15(d)

Equity Incentive Plans and Stock Based Compensation

v3.20.1
Equity Incentive Plans and Stock Based Compensation
12 Months Ended
Dec. 31, 2019
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Equity Incentive Plans and Stock Based Compensation

 

NOTE 12—EQUITY INCENTIVE PLANS AND STOCK-BASED COMPENSATION

2018 Equity Incentive Plan

In May 2018, the Company adopted the 2018 Equity Incentive Plan (“2018 Plan”). The 2018 Plan serves as a successor to the 2004 Equity Incentive Plan (“2004 Plan”), 2009 Equity Incentive Plan (“2009 Plan”) and 2014 Equity Incentive Plan (“2014 Plan”) with any forfeited awards under those plans being absorbed into the 2018 plan for future issuance. The terms of the 2018 Plan provide for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, other stock awards, and performance awards that may be settled in cash, stock, or other property. Stock options may be granted under the 2018 Plan with an exercise price not less than 100% of the fair market value of the common stock on the date of grant. Stock options under the 2018 Plan may be granted with terms of up to ten years and generally vest over a period of four years, with the exception of grants to non-employee directors and consultants where the vesting period is or may be shorter. The total number of shares of the Company’s common stock initially reserved for issuance under the 2018 Plan was equal to the sum of (i) 2,000,000 newly reserved shares, which included, as of April 30, 2018, 104,184 shares reserved and unallocated under the 2009 Stock Plan, as amended, and 335,040 shares reserved and unallocated under the 2014 Equity Incentive Plan, as amended, plus (ii) up to 2,885,121 additional shares that may be added to the 2018 Plan in connection with the forfeiture or expiration of awards outstanding under the 2014 Plan, the 2009 Plan and the 2004 Plan as of May 31, 2018. Additionally, the number of shares of common stock that may be issued under the 2018 Plan will automatically increase on each January 1, beginning with January 1, 2019, and continuing with January 1, 2028 by an amount equal to the lesser of (i) 4% of the number of outstanding shares of common stock on that date and (ii) an amount determined by the Company’s board of directors or compensation committee; provided, however, that in no event will the number of shares available for issuance under the 2018 Plan be increased to the extent such increase, in addition to any other increases proposed by the board of directors in the number of shares available for issuance under all other employee or director stock plan would result in the total number of shares then available for issuance under all employee and director stock plans exceeding 20% of the outstanding shares of the Company’s common stock on the first day of the applicable fiscal year. As of December 31, 2019, options to purchase 736,916 shares of common stock were available for future grants under the 2018 Plan.

2004 Employee Stock Purchase Plan

On January 1, 2017 an additional 9,091 shares were authorized for issuance under the 2004 Employee Stock Purchase Plan (“2004 Purchase Plan”) pursuant to the annual automatic increase to the authorized shares under the 2004 Purchase Plan. The 2004 Purchase Plan contains consecutive, overlapping 24 month offering periods. Each offering period includes four six-month purchase periods. The price of the common stock purchased will be the lower of 85% of the fair market value of the common stock at the beginning of an offering period or at the end of the purchase period. For the years ended December 31, 2019 and December 31, 2018, no shares were purchased by employees under the 2004 Purchase Plan. At December 31, 2019 and 2018, 8,636 were authorized and available for issuance under the 2004 Purchase Plan.

The following table summarizes information about stock option activity for years ended December 31, 2019 and 2018:

 

 

 

Outstanding Options

Number of Shares

 

 

Weighted Average

Exercise Price

 

 

Weighted Average

Remaining

Contractual Term

 

 

Aggregate Intrinsic

Value of

December 31, 2018

(in millions):

 

Balances, December 31, 2017

 

 

2,768,711

 

 

$

12.07

 

 

 

5.6

 

 

$

11.0

 

Options granted

 

 

1,844,787

 

 

 

6.98

 

 

 

 

 

 

 

 

 

Options exercised

 

 

(407,682

)

 

 

0.70

 

 

 

 

 

 

 

 

 

Options canceled

 

 

(202,817

)

 

 

20.83

 

 

 

 

 

 

 

 

 

Balances, December 31, 2018

 

 

4,002,999

 

 

$

10.43

 

 

 

6.4

 

 

$

1.5

 

Options granted

 

 

2,003,600

 

 

 

6.01

 

 

 

 

 

 

 

 

 

Options exercised

 

 

(286,479

)

 

 

6.10

 

 

 

 

 

 

 

 

 

Options canceled

 

 

(976,130

)

 

 

22.37

 

 

 

 

 

 

 

 

 

Balances, December 31, 2019

 

 

4,743,990

 

 

$

6.37

 

 

 

8.2

 

 

$

36.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vested and expected to vest

   December 31, 2019

 

 

4,743,990

 

 

$

6.37

 

 

 

8.2

 

 

$

36.5

 

Exercisable at December 31, 2019

 

 

1,779,916

 

 

$

5.98

 

 

 

7.0

 

 

$

14.6

 

 

At December 31, 2019, stock options outstanding and exercisable by exercise price were as follows:

 

 

 

 

Options Outstanding

 

 

Options Exercisable

 

Range of

Exercise

Prices

 

Number

Outstanding

 

 

Weighted

Average

Remaining

Contractual

Life (Years)

 

 

Weighted

Average

Exercise

Price

 

 

Number

Exercisable

 

 

Weighted

Average

Exercise

Price

 

$

0.42 - 1.85

 

 

478,366

 

 

 

3.80

 

 

$

1.07

 

 

 

475,308

 

 

$

1.06

 

$

4.04 - 4.28

 

 

6,681

 

 

 

7.72

 

 

$

4.22

 

 

 

4,191

 

 

$

4.20

 

$

4.66 - 4.66

 

 

1,030,126

 

 

 

9.11

 

 

$

4.66

 

 

 

105,638

 

 

$

4.66

 

$

4.74 - 5.81

 

 

428,825

 

 

 

8.93

 

 

$

5.06

 

 

 

73,716

 

 

$

5.16

 

$

6.31 - 6.31

 

 

1,227,849

 

 

 

8.41

 

 

$

6.31

 

 

 

531,659

 

 

$

6.31

 

$

6.54 - 8.21

 

 

537,662

 

 

 

8.78

 

 

$

7.63

 

 

 

123,674

 

 

$

8.03

 

$

8.35 - 9.28

 

 

134,450

 

 

 

9.56

 

 

$

8.53

 

 

 

7,499

 

 

$

9.24

 

$

9.40 - 9.40

 

 

537,500

 

 

 

7.77

 

 

$

9.40

 

 

 

348,437

 

 

$

9.40

 

$

10.78 - 61.27

 

 

360,713

 

 

 

8.71

 

 

$

12.58

 

 

 

107,976

 

 

$

13.22

 

$

70.29 - 70.29

 

 

1,818

 

 

 

2.37

 

 

$

70.29

 

 

 

1,818

 

 

$

70.29

 

$

0.42 - 70.29

 

 

4,743,990

 

 

 

8.16

 

 

 

 

 

 

 

1,779,916

 

 

$

5.98

 

 

The total intrinsic value of stock options exercised during the years ended December 31, 2019 and 2018 were $0.6 million and $2.6 million, respectively, determined at the date of the option exercise. Cash received from stock option exercises were $1.7 million and $0.3 million for the years ended December 31, 2019 and 2018, respectively. The Company issues new shares of common stock upon exercise of options. In connection with these exercises, there was no tax benefit realized by the Company due to its current loss position.

Stock-based Compensation

Stock-based compensation expense, which consists of the compensation cost for employee stock options and the value of options issued to non-employees for services rendered, was allocated to research and development and general and administrative in the consolidated statements of operations as follows (in thousands):

 

 

 

Years Ended December 31,

 

 

 

2019

 

 

2018

 

Stock-based compensation expense:

 

 

 

 

 

 

 

 

Research and development

 

$

2,398

 

 

$

1,192

 

General and administrative

 

 

3,461

 

 

 

2,800

 

 

 

$

5,859

 

 

$

3,992

 

 

Employee Stock-based Compensation Expense

Valuation Assumptions

The fair value of employee stock options was estimated using the following weighted-average assumptions for the years ended December 31, 2019 and 2018:

 

 

 

Years Ended December 31,

 

 

 

2019

 

 

2018

 

Employee Stock Options

 

 

 

 

 

 

 

 

Risk-free interest rate

 

 

2.37

%

 

 

2.79

%

Expected life (in years)

 

 

6.08

 

 

 

6.03

 

Dividend yield

 

 

 

 

 

 

Volatility

 

 

108.70

%

 

 

107.15

%

Weighted-average fair value of stock options granted

 

$

5.00

 

 

$

5.79

 

 

As of December 31, 2019, the total unrecognized compensation cost related to unvested stock-based awards granted to employees under the Company’s equity compensation plans was approximately $15.0 million. This cost will be recorded as compensation expense ratably over the remaining weighted average requisite service period of approximately 2.71 years.