Share-based Compensation

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement, Noncash Expense [Abstract]

The following table summarized share-based compensation expense included in our condensed consolidated statements of income related to share-based awards (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Research and development	$	3,159	$	2,695	$	9,931	$	7,168
Selling, general and administrative	6,208		4,102		17,025		10,006
Total share-based compensation expense	$	9,367	$	6,797	$	26,956	$	17,174

Share-based compensation expense by type of share-based award (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Stock options	$	4,290	$	2,801	$	11,935	$	7,924
RSUs, PSUs and ESPP	5,077		3,996		15,021		9,250
Total share-based compensation expense	$	9,367	$	6,797	$	26,956	$	17,174

We granted stock options to purchase approximately 0.2 million and 0.1 million shares of common stock during the three months ended September 30, 2023 and 2022, respectively and 1.8 million and 1.6 million shares of common stock during the nine months ended September 30, 2023 and 2022, respectively. The exercise price of stock options granted is equal to the closing price of the common stock on the date of grant. The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing model (“Black-Scholes model”). Expected volatility is based on historical volatility of our common stock. The expected term of options granted is based on analyses of historical employee termination rates and option exercises. The risk-free interest rate is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. The dividend yield assumption is based on the expectation of no future dividend payments. The assumptions used in the Black-Scholes model were as follows:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2023	2022	2023	2022
Expected volatility	40.70 - 40.82%	40.37 - 50.80%	39.68-40.82%	40.37-50.80%
Average expected term (in years)	4.9	4.7	4.8	4.7
Risk-free interest rate	4.19 - 4.29%	2.66 - 3.39%	3.37-4.29%	1.37-3.39%
Expected dividend yield	—	—	—	—

In February 2021, our Board of Directors approved our 2021 ESPP and our stockholders approved the plan in May 2021. The ESPP enables eligible employees to purchase shares of our common stock at the end of each offering period at a price equal to 85% of the fair market value of the shares on the first business day or the last business day of the offering period, whichever is lower. Share purchases are funded through payroll deduction of at least 1% and up to 15% of an employee’s compensation for each payroll period, and no employee may purchase shares under the ESPP that exceeds $25,000 worth of our common stock for a calendar year. As of September 30, 2023, 2,630,346 shares were available for future purchase. The offering period is generally for a six-month period and the first offering period commenced on June 16, 2021. Offering periods shall commence on or about the sixteenth day of June and December of each year and end on or about the fifteenth day of the next December and June, respectively, occurring thereafter. During the nine months ended September 30, 2023, 19,757 shares were issued pursuant to the ESPP.

Total unrecognized estimated compensation cost by type of award and the weighted-average remaining requisite service period over which such expense is expected to be recognized was as follows (in thousands, unless otherwise noted):


	September 30, 2023
	Unrecognized Expense		Remaining Weighted-Average Recognition Period (years)
Stock options	$	41,893	2.75

RSUs	36,721		2.51
PSUs	7,153		1.68
ESPP	110		0.21