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Stockholders’ Equity | 6 Months Ended
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Jun. 30, 2023
Share-Based Payment Arrangement [Abstract] |
Stockholders’ Equity | STOCKHOLDERS’ EQUITY Stock-based Compensation We have several equity incentive plans under which we granted stock options and restricted stock units (RSUs), including performance-based restricted stock units (PSUs), to employees and directors. As of June 30, 2023, 27,115,890 sh ares were available for grant under the Exelixis, Inc. 2017 Equity Incentive Plan (as amended and restated, the 2017 Plan). The share reserve is reduced by 1 share for each share issued pursuant to a stock option and 2 shares for full value awards, including RSUs and PSUs. We allocated the stock-based compensation expense for our equity incentive plans and our Employee Stock Purchase Plan (ESPP) as follows (in thousands):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2023 |  | 2022 |  | 2023 |  | 2022 |  |
Research and development | $ | 9,589 |  |  | $ | 9,549 |  |  | $ | 12,841 |  |  | $ | 18,448 |  |  |
Selling, general and administrative | 15,311 |  |  | 15,073 |  |  | 28,720 |  |  | 25,933 |  |  |
Total stock-based compensation expense | $ | 24,900 |  |  | $ | 24,622 |  |  | $ | 41,561 |  |  | $ | 44,381 |  |  |
Stock-based compensation expense for each type of award under our equity incentive plans and ESPP were as follows (in thousands):
| Three Months Ended June 30, |  | Six Months Ended June 30,
| 2023 |  | 2022 |  | 2023 |  | 2022
Stock options | $ | 1,877 |  |  | $ | 3,493 |  |  | $ | 4,084 |  |  | $ | 7,171 |
Restricted stock units | 19,757 |  |  | 18,928 |  |  | 32,364 |  |  | 32,001 |
Performance stock units | 1,872 |  |  | 1,581 |  |  | 2,666 |  |  | 3,290 |
ESPP | 1,394 |  |  | 620 |  |  | 2,447 |  |  | 1,919 |
Total stock-based compensation expense | $ | 24,900 |  |  | $ | 24,622 |  |  | $ | 41,561 |  |  | $ | 44,381 |
During the six months ended June 30, 2023, we granted 197,233 stock options with a weighted average exercise price of $19.33 per share and a weighted average grant date fair value of $9.06 per share. Stock options granted during the six months ended June 30, 2023 have vesting conditions and contractual lives of a similar nature to those described in “Note 8. Employee Benefit Plans” of the “Notes to Consolidated Financial Statements” included in Part II, Item 8 of our Fiscal 2022 Form 10-K. As of June 30, 2023, there were 9,573,036 stock options outstanding and $12.7 million of related unrecognized compensation expense. In April 2023, we awarded to certain employees an aggregate of 849,866 RSUs (the target amount) that are subject to a total shareholder return (TSR) market condition (the 2023 TSR-based RSUs). The TSR market condition is based on our relative TSR percentile rank compared to companies in the NASDAQ Biotechnology Index during the performance period, which is December 31, 2022 through January 2, 2026. Depending on the results relative to the TSR market condition, the holders of the 2023 TSR-based RSUs may earn up to 175% of the target amount of shares. 50% of the shares earned pursuant to the TSR-based RSU awards will vest at the end of the performance period, and the remainder will vest approximately one year later, subject to an employee’s continuous service. These 2023 TSR-based RSUs will be forfeited if the market condition at or above a threshold level is not achieved at the end of the performance period on January 2, 2026. We used a Monte Carlo simulation model and the following assumptions to determine the grant date fair value of $26.05 per share for the 2023 TSR-based RSUs:
Fair value of Exelixis common stock on grant date | $ | 19.48 |
Expected volatility | 40.26 | %
Risk-free interest rate | 3.75 | %
Dividend yield | — | %
The Monte Carlo simulation model assumed correlations of returns of the stock prices of the Company’s common stock and the common stock of a peer group of companies and historical stock price volatility of the peer group of companies. The valuation model also used terms based on the length of the performance period and compound annual growth rate goals for TSR based on the provisions of the award. During the six months ended June 30, 2023, we granted 2,226,214 service-based RSUs with a weighted average grant date fair value of $18.90 per share. As of June 30, 2023, there were 12,502,834 RSUs outstanding, including RSUs that are subject to a TSR market condition, and $199.7 million of related unrecognized compensation expense. Service-based RSUs granted to employees during the six months ended June 30, 2023 have vesting conditions and contractual lives of a similar nature to those described in “Note 8. Employee Benefit Plans” of the “Notes to Consolidated Financial Statements” included in Part II, Item 8 of our Fiscal 2022 Form 10-K. As of June 30, 2023, there were 4,667,911 PSUs outstanding, of which 1,276,181 PSUs relate to awards that we either achieved the performance goal or determined that attainment of the performance goal was probable. Expense recognition for PSUs commences when it is determined that attainment of the performance goal is probable. As of June 30, 2023, the remaining unrecognized stock-based compensation expense for the PSUs either achieved or deemed probable of achievement was $7.1 million. The total unrecognized compensation expense for the PSUs for which we have not yet determined that attainment of the performance goal is probable was $75.8 million. For more information about our PSUs, see “Note 8. Employee Benefit Plans” of the “Notes to Consolidated Financial Statements” included in Part II, Item 8 of our Fiscal 2022 Form 10-K. Common Stock Repurchases In March 2023, our Board of Directors authorized a stock repurchase program to acquire up to $550 million of our outstanding common stock before the end of 2023. During the three and six months ended June 30, 2023, we repurchased 6,607,962 shares of common stock under our stock repurchase program for an aggregate purchase price of $127.0 million. As of June 30, 2023, approximately $423.0 million remained available for future stock repurchases pursuant to our stock repurchase program. The timing and amount of any stock repurchases under the stock repurchase program will be based on a variety of factors, including ongoing assessments of the capital needs of the business, alternative investment opportunities, the market price of our common stock and general market conditions. Stock repurchases under the program may be made from time to time through a variety of methods, which may include open market purchases, in block trades, accelerated stock repurchase transactions, 10b5-1 trading plans, exchange transactions, or any combination of such methods. The program does not obligate us to acquire any particular amount of our common stock, and the stock repurchase program may be modified, suspended or discontinued at any time without prior notice.

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