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Stock-Based Compensation
 12 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
2015 Equity Incentive Plan
In 2015, the Board of Directors adopted, and our stockholders approved, the 2015 Plan. The 2015 Plan, as amended, permits the grant of incentive stock options to the company’s employees, and the grant of non-statutory stock options, restricted stock, RSUs, stock appreciation rights, performance units and performance shares to the company’s employees, directors, and consultants. In addition, the number of shares reserved for future grant under the 2015 Plan include shares subject to stock options granted under the 2014 Plan that expire or terminate without having been exercised in full and shares issued pursuant to awards granted under the 2014 Plan that are forfeited to or repurchased by us (provided that the maximum number of shares that may be added to the 2015 Plan pursuant to this provision is approximately 346,840 shares as of December 31, 2023). Pursuant to the Merger, we assumed 7,121,110 RSUs (adjusted for the Exchange Ratio) issued under the NC 2015 Plan.
As of December 31, 2023, the 2015 Plan is the only equity plan available for grant of equity awards to employees, directors, and consultants of the company. As of December 31, 2023, approximately 13.1 million shares were available for future grants under the 2015 Plan.
Stock-Based Compensation
The following table presents stock-based compensation included on the consolidated statements of operations (in thousands):
Year Ended December 31,
202320222021
Stock-based compensation expense:
Stock options$13,884 $13,280 $11,623 
RSUs35,279 26,899 45,558 
$49,163 $40,179 $57,181 
Stock-based compensation expense in operating expenses:
Research and development$17,341 $11,669 $18,819 
Selling, general and administrative31,822 28,510 38,362 
$49,163 $40,179 $57,181 
Stock Options
The following table summarizes stock option activity and related information for the year ended December 31, 2023:
 
Number of
Options
Weighted-
Average
Exercise
Price
Aggregate
Intrinsic
Value
(in thousands)
Weighted-
Average
Remaining
Contractual
Life
(in years)
Outstanding as of December 31, 2022
9,262,926 $9.87 $4,848 7.2
Granted949,578 $2.99 
Exercised(184,362)$1.59 
Expired/forfeited(207,707)$5.53 
Outstanding as of December 31, 2023
9,820,435 $9.46 $6,046 6.6
Vested and exercisable as of December 31, 2023
5,867,252 $11.54 $4,118 5.4
As of December 31, 2023, the unrecognized compensation cost related to outstanding stock options was $8.4 million, which is expected to be recognized over a remaining weighted-average period of 1.0 years.
During the year ended December 31, 2023, the total intrinsic value of stock options exercised was $0.3 million. During the years ended December 31, 2023, 2022 and 2021, cash proceeds received from stock option exercises were $0.3 million, $0.1 million, and $5.4 million, respectively.
As of December 31, 2022, a total of 3,445,499 vested and exercisable stock options were outstanding.
The fair value of stock options issued was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:
Year Ended December 31,
202320222021
Expected term5.50 years5.69 years5.90 years
Risk-free interest rate4.0 %2.6 %0.7 %
Expected volatility116.2 %101.8 %101.0 %
Dividend yield— %— %— %
Weighted-average grant date fair value$2.53$4.20$16.80
The expected term was estimated using the average of the contractual term and the weighted-average vesting term of the options. The risk-free interest rate was based on the U.S. Treasury’s rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued. The expected volatility was estimated based on the historical volatility of our common stock. The assumed dividend yield was based on our expectation of not paying dividends for the foreseeable future.
Restricted Stock Units
The following table summarizes RSU activity during the year ended December 31, 2023:
Number of
Units
Weighted-
Average
Grant Date
Fair Value
Nonvested balance as of December 31, 2022
6,551,388 $18.27 
Granted6,407,432 $1.72 
Vested(4,545,644)$7.33 
Forfeited/canceled(909,197)$7.99 
Nonvested balance as of December 31, 2023
7,503,979 $12.01 
As of December 31, 2023, there was $38.2 million of unrecognized stock-based compensation expense related to RSUs that is expected to be recognized over a weighted-average period of 2.2 years. During the year ended December 31, 2023, the total intrinsic value of RSUs vested was $11.1 million.
Effective as of August 25, 2023, the Compensation Committee of the Board of Directors granted 5,727,159 RSUs to eligible employees of the company, with the intention of retaining such employees (the “retention award”). The retention award vests according to the following schedule: ½ (one-half) was to vest and vested on September 1, 2023 and ½ (one-half) will vest on January 31, 2024, subject to the recipients continuing to be a “service provider” (as defined in the 2015 Plan) through each applicable vesting date. With respect to RSUs granted, compensation cost was measured using the grant date fair value of $1.65 per share, the closing price of the company’s common stock on August 25, 2023.
RSUs awarded to employees and consultants of affiliated companies are accounted for as stock-based compensation in accordance with FASB ASU 2018-07, Compensation—Stock Compensation (Topic 718), as the compensation was in exchange for continued support or services expected to be provided to the company over the vesting periods under the NantWorks shared services agreement discussed in Note 11, Related-Party Agreements. We have evaluated the associated benefit of these awards to the affiliated companies under common control and determined that the benefit is limited to the retention of their employees. We estimated such benefit at the grant date fair value of $4.0 million. During the years ended December 31, 2023 and 2022, we recorded $0.4 million, respectively, and $0.9 million of deemed dividends during the year ended December 31, 2021 in additional paid-in capital, on the consolidated balance sheets, with a corresponding credit to stock-based compensation expense.
Related-Party Warrants
In connection with the Merger, warrants issued to NantWorks, a related party, in connection with NantCell’s acquisition of Altor were assumed by the company. After applying the Exchange Ratio at the Effective Time of the Merger, a total of 1,638,000 warrants with an exercise price of $3.24 per share were outstanding as of December 31, 2023. The fair value of $18.0 million assigned to the warrants will be recognized in equity upon achievement of a performance-based vesting condition pertaining to building manufacturing capacity to support supply requirements for one of our product candidates.