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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2024
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | Stock-Based Compensation The Company maintains two stock-based incentive plans: (i) The Axogen, Inc. Third Amended and Restated 2019 Long-Term Incentive Plan ("2019 Plan") which provides incentives through the grants of stock options, non-qualified stock options, PSUs and RSUs to employees, directors and consultants which replaced the Company's 2010 Stock Incentive Plan and (ii) The Axogen 2017 Employee Stock Purchase Plan (“2017 ESPP”). At the June 5, 2024 Annual Shareholder Meeting, approval was received to increase the number of shares available under the 2019 Plan from 8,000,000 to 10,500,000. As of December 31, 2024, t here were 2,949,495 shares of common stock available for future grant under the 2019 Plan. Additionally, the Company issued 18,700 options, 330,000 RSUs and 600,000 PSUs as inducement grants to certain employees in accordance with Nasdaq Listing Rule 5635(c)(4). Stock-based compensation expense is included in the following line items on the accompanying Consolidated Statements of Operations for the years ended:
| December 31,
(in thousands) |  | 2024 |  | 2023 |  | 2022
Cost of goods sold |  | $ | 1,752 |  |  | $ | 796 |  |  | $ | 215 |
Sales and marketing |  | 3,175 |  |  | 2,982 |  |  | 2,341 |
Research and development |  | 3,417 |  |  | 3,875 |  |  | 2,640 |
General and administrative |  | 7,562 |  |  | 6,764 |  |  | 10,395 |
Total stock-based compensation expense |  | $ | 15,906 |  |  | $ | 14,418 |  |  | $ | 15,591 |
Stock Options Stock options granted to employees typically vest 50% two years after the grant date and 12.5% every six months thereafter for the remaining two-year period until fully vested after four years. Stock options granted to directors and certain options granted from time to time to certain executive officers vest ratably over three years or 25% per quarter over one year. Options typically have terms ranging from seven to ten years. The Company estimates the fair value of each option award on the date of grant using a multiple-point Black-Scholes option-pricing model. In addition, the Company estimates the grant date fair value of stock options granted to employees at a premium price based on market conditions, such as the trading price of the Company’s common stock, using a Monte Carlo simulation option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s Consolidated Statements of Operations. The expense is reduced for forfeitures as they occur. The following weighted-average assumptions were used in the calculation of fair value for stock options granted for the following periods:
|  | Year Ended December 31,
|  | 2024 |  | 2023 |  | 2022
Expected term (in years) |  | 5.48 |  | 5.40 |  | 6.01
Expected volatility |  | 65.60 | % |  | 59.32 | % |  | 61.17 | %
Risk free interest rate |  | 4.19 | % |  | 3.52 | % |  | 2.31 | %
Expected dividends |  | — | % |  | — | % |  | — | %
The following table summarizes the Company's stock option activity for the year ended December 31, 2024:
| Options |  | Weighted Average Exercise Price |  | Weighted Average Remaining Contractual Life (Years) |  | Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2023 | 4,372,243 |  |  | $ | 12.87 |  |  | 6.43 |  | $ | 87 |
Granted (1) | 164,684 |  |  | $ | 7.35 |  |  |  |  |
Forfeited (2) | (455,144) |  |  | $ | 16.46 |  |  |  |  |
Exercised | (154,831) |  |  | $ | 8.63 |  |  |  |  |
Outstanding at December 31, 2024 | 3,926,952 |  |  | $ | 12.39 |  |  | 4.56 |  | $ | 22,692 |
Exercisable at December 31, 2024 | 2,574,651 |  |  | $ | 14.37 |  |  | 3.53 |  | $ | 11,933 |
(1) Options granted include 18,700 inducement shares in accordance with Nasdaq Listing Rule 5635(c)(4). (2) Options forfeited include 65,800 inducement shares in accordance with Nasdaq Listing Rule 5635(c)(4). The weighted-average grant-date fair value of stock options granted during the years ended December 31, 2024, 2023 and 2022 was $4.33, $4.72 and $4.65, respectively. The total intrinsic value of options exercised for the years ended December 31, 2024, 2023 and 2022 was $2,031, $1,710 and $2,643, respectively. As of December 31, 2024, there was approximatel y $2,365 o f total unrecognized compensation costs related to unvested stock options. These costs are expected to be recognized over a weighted-average period of 1.5 years. Restricted Stock Units RSUs granted to employees have a requisite service period of four years. The RSUs granted to directors and certain RSUs granted from time to time to certain executive officers and vice presidents have a requisite service period of three years, while certain of these RSUs have a requisite service period of one year. The Company estimates the fair value of RSU grants based upon the grant date closing market price of the Company’s common stock. The Company expenses the fair value of RSUs on a straight-line basis over the requisite service period. The following table summarizes the activity for RSUs for the year ended December 31, 2024:
| Outstanding Restricted Stock Units
| Restricted Stock Units |  | Weighted Average Fair Value at Date of Grant per Share |  | Weighted Average Remaining Vesting Life (Years) |  | Aggregate Intrinsic Value (in thousands)
Unvested at December 31, 2023 | 2,335,230 |  |  | $ | 9.00 |  |  | 1.39 |  | $ | 15,950 |
Granted (1) | 1,010,671 |  |  | $ | 8.79 |  |  |  |  |
Vested and released | (703,060) |  |  | $ | 9.45 |  |  |  |  |
Forfeited (2) | (284,518) |  |  | $ | 9.04 |  |  |  |  |
Unvested at December 31, 2024 | 2,358,323 |  |  | $ | 8.77 |  |  | 1.17 |  | $ | 38,865 |
(1) RSUs granted include 330,000 inducement shares in accordance with Nasdaq Listing Rule 5635(c)(4). (2) RSUs forfeited include 37,500 inducement shares in accordance with Nasdaq Listing Rule 5635(c)(4). The weighted-average grant-date fair value of RSUs granted during the years ended December 31, 2024, 2023 and 2022 was $8.79, $8.10 and $8.40, respectively. As of December 31, 2024, there was approximately $11,576 of total unrecognized compensation costs related to unvested restricted stock. These costs are expected to be recognized over a weighted-average period of 2.2 years. Performance Stock Units The Company estimates the fair value of PSUs based on its closing stock price at the time of grant and its estimate of achieving the applicable performance target goals and records compensation expense as the milestones are achieved. The number of shares delivered to recipients and the related compensation cost recognized as an expense will be based on the actual performance metrics as set forth in the applicable PSU award agreement. The amount actually awarded will be based upon achievement of the performance measures. The Company's TSR PSUs generally have a requisite service period of three years and are subject to graded vesting conditions based on goals defined within the award. The grant date fair value of the TSR PSUs is calculated using a Monte Carlo simulation. The Company expenses their fair value over the requisite service period. Over the performance period, the number of shares of common stock that will ultimately vest and be issued and the related compensation expense will be adjusted based upon the Company’s estimate of achieving such performance target. PSUs issued in 2017 and 2019 tied to the achievement of certain milestones have performance periods through December 31, 2025 and a requisite service period of one year after the milestone achievement date but not sooner than one year after the grant date. PSUs issued in 2018 tied to the achievement of certain milestones have performance periods through January 1, 2025 and a requisite service period of one year after the milestone achievement date but not sooner than one year after the grant date. PSUs issued in 2024 tied to the achievement of certain milestones have performance periods through December 31, 2025 and requisite service periods through the date of the milestone achievement but not sooner than one year after the grant date. The Company expenses the fair value upon the achievement of such milestone and subsequent requisite period. The following table summarizes the activity for PSUs for the year ended December 31, 2024:
| Outstanding Performance Stock Units
| Performance Stock Units |  | Weighted Average Fair Value at Date of Grant per Share |  | Weighted Average Remaining Vesting Life (Years) |  | Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2023 | 1,257,412 |  |  | $ | 11.69 |  |  | 1.76 |  | $ | 8,588 |
Granted (1) | 1,904,668 |  |  | $ | 9.11 |  |  |  |  |
Released | (9,681) |  |  | $ | 25.14 |  |  |  |  |
Forfeited | (190,107) |  |  | $ | 14.05 |  |  |  |  |
Outstanding as of December 31, 2024 | 2,962,292 |  |  | $ | 9.84 |  |  | 1.64 |  | $ | 48,819 |
Vested and deferred | 728,749 |  |  | $ | 8.24 |  |  | — |  |  | $ | 12,010 |
(1) PSUs granted include 600,000 inducement shares in accordance with Nasdaq Listing Rule 5635(c)(4). The weighted-average grant-date fair value of PSUs granted during the years ended December 31, 2024, 2023 and 2022 was $9.11, $8.29 and $8.23, respectively. As of December 31, 2024, there was approximately $8,826 of to tal unrecognized compensation costs related to unvested PSU awards, excluding the PSU awards for milestones not achieved described in the paragraph below. These costs are expected to be recognized over a weighted-average period of 1.7 years. During 2017, 2018 and 2019, the Company issued PSU awards to certain employees related to their work on the Company’s Biologics License Application ("BLA"). The number of shares was allocated to certain milestones related to the BLA submission to and approval by the FDA. The performance measure is based upon achieving each of the specific milestones and will vest 50% upon achieving each of the milestones and 50% one year later. As of December 31, 2024, 10% of the awards issued related to achieving the BLA submission milestone; 5% vested upon submission of the BLA during the third quarter of 2024 and 5% will vest in the third quarter of 2025. During 2024, the Company issued PSU awards to certain officers and employees related to their work on the Company’s BLA. The number of shares was allocated to certain milestones related to the BLA submission to and approval by the FDA. The performance measure is based upon achieving each of the specific milestones and will vest upon achieving each of the milestones but not sooner than one year after the grant date. As of December 31, 2024, 10% of the awards issued related to achieving the BLA submission milestone and will vest one year after the respective grant dates. The Company recognizes expense on these milestones upon the achievement. As of December 31, 2024, there was approximately $10,187 of to tal unrecognized compensation costs related to unvested milestones. During 2022, the Company issued PSU awards to certain officers and employees tied to revenue from 2022 to 2024 with a pay-out range from 0% to 150% upon achievement of specific revenue targets. These awards were achieved at 99.2%, vested in the fourth quarter of 2024 and will be released in the first quarter of 2025. During 2023, the Company issued PSU awards to certain officers and employees tied to revenue from 2023 to 2025 with a pay-out range from 0% to 150% upon achievement of specific revenue targets. During 2024, the Company issued TSR PSU awards to certain officers and employees tied to the Company's share price targets with a pay-out range from 0% to 200% upon achievement of specific average share prices over a 30 day trading period immediately preceding the end of a performance period of February 2, 2024 through February 22, 2027. Employee Stock Purchase Plan The 2017 ESPP allows eligible employees to acquire shares of the Company's common stock through payroll deductions at a discount to market price (currently 15.0%) of the lesser of the closing price of the Company’s common stock on the first day or last day of the offering period. The offering period is currently 6 months. Participants may not purchase more than $25 or 3,000 shares of the Company’s common stock in a calendar year through the ESPP. The Company estimates the grant date fair value, and the resulting stock-based compensation expense, using a Black-Scholes option pricing model for each purchase period. Stock-based compensation expense related to the 2017 ESPP, included in total stock-based compensation expense, was $371, $333 and $844 for the years ended December 31, 2024, 2023 and 2022, respectively. The following are the weighted average assumptions used in the valuation of ESPP options for the years ended December 31:
|  | December 31,
|  | 2024 |  | 2023 |  | 2022
Expected term (in years) |  | 0.5 |  | 0.5 |  | 0.5
Expected volatility |  | 70.2% |  |  | 53.6% |  |  | 66.5% |
Risk-free interest rate |  | 5.3% |  |  | 5.1% |  |  | 1.1% |
Expected dividends |  | —% |  |  | —% |  |  | —% |
The weighted-average grant-date fair value of ESPP options during the years ended December 31, 2024, 2023 and 2022 was $2.34, $2.84 and $2.87, respectively.

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