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Equity Plans and Stock-Based Compensation | 9 Months Ended
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Sep. 30, 2023
Share-Based Payment Arrangement, Noncash Expense [Abstract] |
Equity Plans and Stock-Based Compensation | 11. Equity Plans and Stock-Based Compensation In January 2021, we adopted the Dynavax Technologies Corporation 2021 Inducement Award Plan (“2021 Inducement Plan”), pursuant to which we reserved 1,500,000 shares of common stock for issuance under the plan to be used exclusively for grants of awards to individuals who were not previously our employees or directors. In June 2021, we amended the 2021 Inducement Plan (“Amended 2021 Inducement Plan”) to increase the number of shares of common stock reserved under the 2021 Inducement Plan to 3,250,000. The Amended 2021 Inducement Plan was terminated effective as of April 3, 2022 and, therefore, there are no shares of our common stock available for grant. In May 2022, our stockholders approved the amendment and restatement of our 2018 Equity Incentive Plan (the “Amended 2018 EIP”) to, among other things, increase the authorized number of shares of common stock by 15,000,000. The maximum number of shares of common stock that may be issued under the Amended 2018 EIP will not exceed 32,600,000 shares of common stock. As of September 30, 2023, the Amended 2018 EIP and the Amended and Restated 2014 Employee Stock Purchase Plan are our active plans. The Amended 2018 EIP is administered by our Board of Directors, or a designated committee of the Board of Directors, and awards granted under the Amended 2018 EIP have a term of seven years unless earlier terminated by the Board of Directors. As of September 30, 2023, there were 9,659,145 shares of common stock reserved for issuance under the Amended 2018 EIP. Under our Amended 2018 EIP, we may grant stock options, RSUs, performance-based awards, and other awards that are settled in shares of our common stock. Our equity awards generally vest over a three-year period contingent upon continuous service and unless exercised, expire seven or ten years from the date of grant (or earlier upon termination of continuous service). Activity under our stock plans is set forth below: Stock Options The following table summarizes the activity of stock options for the nine months ended September 30, 2023:
|  | Shares Underlying Outstanding Options (in thousands) |  |  | Weighted- Average Exercise Price Per Share |  |  | Weighted- Average Remaining Contractual Term (years) |  |  | Aggregate Intrinsic Value (in thousands) |
Balance as of December 31, 2022 |  |  | 9,339 |  |  | $ | 10.70 |  |  |  | 4.61 |  |  | $ | 16,291 |
Options granted |  |  | 1,968 |  |  |  | 11.14 |  |  |  |  |  |  |
Options exercised |  |  | (556 | ) |  |  | 7.80 |  |  |  |  |  |  |
Options cancelled: |  |  |  |  |  |  |  |  |  |  |  |
Options forfeited (unvested) |  |  | (83 | ) |  |  | 10.96 |  |  |  |  |  |  |
Options expired (vested) |  |  | (260 | ) |  |  | 21.42 |  |  |  |  |  |  |
Balance as of September 30, 2023 |  |  | 10,408 |  |  | $ | 10.66 |  |  |  | 4.38 |  |  | $ | 46,599 |
Vested and expected to vest as of September 30, 2023 |  |  | 10,211 |  |  | $ | 10.65 |  |  |  | 4.35 |  |  | $ | 45,949 |
Exercisable as of September 30, 2023 |  |  | 6,843 |  |  | $ | 10.17 |  |  |  | 3.64 |  |  | $ | 34,772 |
Restricted Stock Units The following table summarizes the activity of RSUs for the nine months ended September 30, 2023:
|  | Number of Shares (in thousands) |  |  | Weighted-Average Grant-Date Fair Value Per Share |
Non-vested as of December 31, 2022 |  |  | 3,479 |  |  | $ | 11.00 |
Granted |  |  | 2,497 |  |  |  | 11.16 |
Vested (1) |  |  | (1,456 | ) |  |  | 10.08 |
Forfeited |  |  | (218 | ) |  |  | 11.49 |
Non-vested as of September 30, 2023 |  |  | 4,302 |  |  | $ | 11.38 |
(1) Inclusive of approximately 582,838 RSUs for the nine months ended September 30, 2023, which were not converted into shares due to net share settlement in order to cover the required amount of employee withholding taxes. The value of the withheld shares was classified as a reduction to additional paid-in capital. Market-based Performance Stock Units We granted market-based performance restricted stock units (“PSUs”) to certain executives. These PSUs vest upon a specified market condition. The summary of PSU activities for the nine months ended September 30, 2023 is as follows:
|  | Number of Shares (in thousands) |  |  | Weighted-Average Grant-Date Fair Value Per Share |
Non-vested as of December 31, 2022 |  |  | 193 |  |  | $ | 11.62 |
Granted |  |  | 364 |  |  |  | 18.25 |
Non-vested as of September 30, 2023 |  |  | 557 |  |  | $ | 15.95 |
Performance-based Options As of September 30, 2023, approximately 36,000 shares underlying performance-based options were outstanding. Significant Assumptions in Estimating Fair Value The fair value of each time-based option is estimated on the date of grant using the Black-Scholes option valuation model. The fair value of each RSU is determined at the date of grant using our closing stock price. The fair value of each PSU is estimated using the Monte Carlo simulation method on the date of grant. The weighted-average assumptions used in the calculations of these fair value measurements are as follows:
|  | Stock Options |  |  | Stock Options |  |  | Market-Based Performance Stock Units (“PSUs”) |
|  | Three Months Ended |  |  | Nine Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |  |  | September 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Weighted-average fair value per share |  | $ | 8.61 |  |  | $ | - |  |  | $ | 7.30 |  |  | $ | 7.97 |  |  | $ | 18.25 |  |  | $ | 11.62 |
Risk-free interest rate |  |  | 4.2 | % |  |  | - |  |  |  | 4.0 | % |  |  | 2.01 | % |  |  | 4.3 | % |  |  | 1.7 | %
Expected life (in years) |  |  | 4.5 |  |  |  | - |  |  |  | 4.5 |  |  |  | 4.5 |  |  |  | 2.9 |  |  |  | 2.9 |
Volatility |  |  | 0.8 |  |  |  | - |  |  |  | 0.8 |  |  |  | 0.8 |  |  |  | 0.9 |  |  |  | 0.9 |
Stock-based Compensation Compensation expense is based on awards ultimately expected to vest and reflects estimated forfeitures. For equity awards with time-based vesting, the fair value is amortized to expense on a straight-line basis over the vesting periods. We have also granted performance-based equity awards to certain of our employees. For equity awards with performance-based vesting criteria, the fair value is amortized to expense when the achievement of the vesting criteria becomes probable. We recognized $0.7 million and $1.8 million of stock-based compensation expense for PSUs during the three and nine months ended September 30, 2023, respectively. We recognized $0.2 million and $0.6 million of stock-based compensation expense for PSUs during the three and nine months ended September 30, 2022, respectively. The following table summarizes stock-based compensation expense recorded in each component of operating expenses in our condensed consolidated statements of operations, and amounts capitalized to our inventories (in thousands):
|  | Three Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Research and development |  | $ | 2,339 |  |  | $ | 1,532 |  |  | $ | 6,752 |  |  | $ | 4,271 |
Selling, general and administrative |  |  | 7,320 |  |  |  | 6,019 |  |  |  | 21,353 |  |  |  | 17,043 |
Cost of sales - product |  |  | 369 |  |  |  | 323 |  |  |  | 1,463 |  |  |  | 626 |
Inventories |  |  | 659 |  |  |  | 739 |  |  |  | 1,715 |  |  |  | 2,248 |
Total |  | $ | 10,687 |  |  | $ | 8,613 |  |  | $ | 31,283 |  |  | $ | 24,188 |

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