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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2023
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | Stock-Based Compensation 2016 Long Term Incentive Plan Upon the effectiveness of the 2020 Stock Incentive Plan, no additional grants will be made under the 2016 Long Term Incentive Plan, (the “2016 Plan”) and any outstanding awards continue with their original terms. 2020 Stock Award Plan In September 2020, the Company’s Board of Directors approved the 2020 Stock Incentive Plan (the “2020 Plan”), which became effective on September 21, 2020. The 2020 plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. A total of 8,000,000 shares of common stock were initially reserved for issuance under the 2020 Plan. Additionally, up to 5,000,000 shares of common stock, including RSUs can be added to the 2020 Plan for future issuance from options that expire, lapse or are terminated from the 2016 Plan or any other predecessor plans. The number of shares of common stock that may be issued under the 2020 Plan will automatically increase on each January 1, beginning in 2021 and continuing for each fiscal year until, and including, the fiscal year ending December 31, 2030, equal to the lesser of (i) 6,400,000 shares of common stock, (ii) 4% of the common shares outstanding on the final day of the immediately preceding calendar year and (iii) an amount as determined by the Company’s Board of Directors. On July 27, 2022, the Company held a Special Meeting of Stockholders (the “Special Meeting”) whereby the following matters were submitted to a vote of the Company’s stockholders at the Special Meeting and the Board of Directors resolved the following: (i) an amendment to the Company’s Restated Certificate of Incorporation, dated September 18, 2020, to increase the number of authorized shares of common stock by 100,000,000 (from 250,000,000 to 350,000,000); and (ii) an amendment to the Summit Therapeutics Inc. 2020 Stock Incentive Plan (the “Plan”) to increase the number of shares of the Company’s common stock issuable under the Plan by 8,000,000 shares. On October 12, 2023, the Company held a Special Meeting of Stockholders (the “October Special Meeting”) whereby the following matter was submitted to a vote of the Company’s stockholders at the Special Meeting and the Board of Directors resolved the following: an amendment to the Summit Therapeutics Inc. 2020 Stock Incentive Plan to increase the number of shares of the Company’s common stock issuable under the Plan by 70,000,000 shares. As of December 31, 2023, there are 3,261,496 shares available to be issued under the 2020 Plan. 2020 Employee Stock Purchase Plan The 2020 Employee Stock Purchase Plan (the “2020 ESPP”) was adopted by the Board of Directors and approved by the Company’s shareholders on July 17, 2020 and approved by the predecessor company shareholders on August 19, 2020 and is qualified under Section 423 of the Internal Revenue Code. The 2020 ESPP initially authorized the issuance of up to 1,000,000 shares of common stock to participating employees. The number of common shares that may be issued under the 2020 ESPP automatically increases on each fiscal year commencing January 1, 2021 and continuing for each fiscal year until, and including the fiscal year commencing on, January 1, 2030 equal to the lesser of (i) 1,600,000 shares of common stock, (ii) 1% of the common shares outstanding on such date and (iii) an amount as determined by the Company’s Board of Directors. As of December 31, 2022, there were 2,628,893 shares available to be issued under the 2020 ESPP. The first offering period of the 2020 ESPP plan consisted of seven months, commencing on August 2, 2021 and completed on February 28, 2022. The second offering period commenced on March 1, 2022 and was completed on August 31, 2022. Offering periods thereafter will be six months in duration and will commence immediately proceeding the end of the previous offering period, unless otherwise determined by the Board of Directors or Compensation Committee. Under the 2020 ESPP, eligible employees can purchase shares of common stock through payroll deductions of up to 15% of their compensation received during the plan period or such shorter period during which deductions from payroll are made, up to a defined maximum amount. The option price is determined based on the lesser of the closing price of common stock on (i) the first business day of the plan period or (ii) the exercise date, or shall be based solely on the closing price of the common stock on the exercise date; provided that such option price shall be at least 85% of the applicable closing price. In the absence of a determination by the Board of Directors or the Compensation Committee, the option price is 85% of the lesser of the closing price of the common stock on (i) the first business day of the plan period or (ii) the exercise date. The closing price is the (a) the closing price (for the primary trading session) on the Nasdaq Global Select Market or (b) the average of the closing bid and asked prices in the over-the-counter-market, whichever is applicable, as published in the Wall Street Journal or another source selected by the Board or the Committee. During the fiscal year ended December 31, 2023 and 2022, 392,175 and 176,857 shares, respectively, were issued under the 2020 ESPP Plan. Stock Options Time-based Stock Options The Company estimates the fair value of stock options granted to employees and directors using the Black-Scholes valuation model. Stock options granted under the 2016 and 2020 Plans generally vest over three or four years and expire after ten years. This valuation methodology utilizes several key assumptions as highlighted below. The assumptions used in the Company’s valuation are summarized as follows, presented on a weighted average basis:
|  | Year Ended December 31, 2023 |  | Year Ended December 31, 2022
Risk-free interest rate |  | 4.59 | % |  | 3.11 | %
Expected term (in years) |  | 4.8 |  | 5.9
Expected volatility |  | 98.1 | % |  | 91.2 | %
Expected annual dividends per share |  | — | % |  | — | %
The following table summarizes the Company’s time-based stock option activity for the year ended December 31, 2023:
|  | Number of share options |  | Weighted average exercise price |  | Weighted average remaining contractual term |  | Aggregate intrinsic value
Outstanding as of December 31, 2022 |  | 12,712,359 |  | $ | 4.83 |  | 8.4 years |  | $ | 8,702 |
Granted |  | 44,135,170 |  | $ | 1.72 |  |  |  |
Forfeited |  | (2,433,943) |  | $ | 5.56 |  |  |  |
Exercised |  | (204,297) |  | $ | 2.20 |  |  |  |
Outstanding as of December 31, 2023 |  | 54,209,289 |  | $ | 2.28 |  | 9.3 years |  | $ | 42,574 |
Outstanding as of December 31, 2023 - vested and expected to vest |  | 49,407,492 |  | $ | 2.31 |  | 9.3 years |  | $ | 38,406 |
Exercisable at December 31, 2023 |  | 5,716,319 |  | $ | 4.89 |  | 7.2 years |  | $ | 892 |
Performance and Market-based Stock Options The Compensation Committee of the Company’s Board of Directors and management approved 40,835,220 option grants to its executives and certain employees of the Company during the year ended December 31, 2023, which will vest based upon certain revenue and market-based performance conditions. The fair value of performance and market-based stock options that include a market condition is determined using a Monte Carlo valuation model, which utilizes multiple input variables to estimate the probability that the market condition will be achieved. The following table summarizes the Company’s performance and market-based stock option activity for the year ended December 31, 2023:
|  | Number of share options |  | Weighted average exercise price |  | Weighted average remaining contractual term |  | Aggregate intrinsic value
Outstanding as of December 31, 2022 |  | 6,764,000 |  | $ | 1.15 |  | 9.6 years |  | $ | 20,955 |
Granted |  | 40,835,220 |  | $ | 1.69 |  |  |  |
Forfeited |  | (945,000) |  | $ | 1.20 |  |  |  |
Exercised |  | — |  | $ | — |  |  |  |
Outstanding as of December 31, 2023 |  | 46,654,220 |  | $ | 1.62 |  | 9.6 years |  | $ | 46,237 |
Outstanding as of December 31, 2023 - vested and expected to vest |  | 8,397,760 |  | $ | 1.62 |  | 9.6 years |  | $ | 8,323 |
Exercisable at December 31, 2023 |  | — |  | $ | — |  | — |  | $ | — |
The weighted-average grant-date fair value of stock options granted during the years ended December 31, 2023 and 2022 was $1.41 and $0.87, per share, respectively. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2023 and 2022 was $474 and $142, respectively. The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. As of December 31, 2023, total unrecognized compensation cost related to unvested stock option grants was approximately $61,162. This amount is expected to be recognized over a weighted average period of approximately 2.2 years. Warrants The fair value of warrants is estimated on the date of grant using the Black-Scholes valuation methodology. Expected volatilities are based on historical share price performance, weighted to exclude periods of unusually high volatility. The Company assumed the warrants to be exercised immediately on vesting. The risk-free rate is equal to the prevailing U.K. Gilts rate at grant date that most closely matches the expected term of the grant, as the warrants were issued when the Company was domiciled in the U.K.. Expected dividend yield is zero, and consistent with the Board of Directors’ view that the Company’s business model is to generate value through capital growth rather than the payment of dividends. Each warrant entitles the warrant holder to subscribe in cash for one share. Shares of common stock allotted pursuant to the exercise of the warrant will rank in full for all dividends and other distributions with a record date after the exercise date with the shares of common stock in issue at that date. Refer to Note 20 for the Company’s warrants activity for the year ended December 31, 2023. At December 31, 2023, there was no unrecognized compensation expense related to warrants. Stock-Based Compensation Stock‑based compensation expense related to stock options is recorded within the consolidated statements of operations and comprehensive loss as follows:
|  | Year Ended December 31, 2023 |  | Year Ended December 31, 2022
Research and development |  | $ | 4,408 |  |  | $ | 4,303 |
General and administrative |  | 9,700 |  |  | $ | 7,645 |
Total stock-based compensation |  | $ | 14,108 |  | $ | 11,948
The following table summarizes share-based compensation expense associated with each of our share-based compensation arrangements:
|  | Year Ended December 31, 2023 |  | Year Ended December 31, 2022
Time-based stock options |  | $ | 12,606 |  |  | $ | 11,630 |
Performance and market-based stock options |  | 1,318 |  |  | 84 |
Employee stock purchase plan |  | 184 |  | 234
Total stock-based compensation |  | $ | 14,108 |  | $ | 11,948

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