Stock Incentive Plans

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

STOCK INCENTIVE PLANS

Stock Options and Restricted Stock Units (“RSU”)

The following table summarizes option and RSU activity under the Company’s 2014 Equity Incentive Plan, 2016 Inducement Equity Incentive Plan, and 2019 Inducement Equity Incentive Plan, and related information:


	Shares Available for Grant	Stock Options Outstanding	Weighted- Average Exercise Price		Number of RSU Shares	Weighted- Average Grant Date Fair Value
Balance—December 31, 2020	672,968	2,670,398	$	21.92	1,884,866	$	28.42
Additional shares authorized	1,977,647	—	—		—	—
Common stock awards for services	(1,339)	—	—		—	—
RSUs granted	(246,379)	—	—		246,379	82.62
RSUs vested	—	—	—		(207,881)	24.06
Options granted	(127,925)	127,925	81.06		—	—
Options exercised	—	(139,579)	13.99		—	—
Repurchase of common stock under employee incentive plans	74,434	—	—		—	—
RSUs forfeited	69,945	—	—		(69,945)	29.32
Options forfeited	66,213	(66,213)	25.70		—	—
Options expired	250	(250)	22.59		—	—
Balance—March 31, 2021	2,485,814	2,592,281	$	25.17	1,853,419	$	36.14

The total intrinsic value of options exercised was $9.1 million and $0.7 million for the three months ended March 31, 2021 and 2020, respectively.

As of March 31, 2021, the total intrinsic value of outstanding RSUs was approximately $126.2 million and there were $50.7 million of unrecognized compensation costs related to RSUs, which are expected to be recognized over a weighted-average period of 1.91 years.

Options outstanding that have vested and are expected to vest at March 31, 2021 are as follows:


	Number of Shares Issued (In thousands)	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Life (Years)	Aggregate Intrinsic Value (In thousands)
Vested	1,045	$	16.09	6.54	$	54,318
Expected to vest	1,398	31.91		8.68	52,508
Total	2,443				$	106,826

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock options and the fair value of the Company’s common stock at March 31, 2021 for stock options that were in-the-money.

The total fair value of options that vested during the three months ended March 31, 2021 was $2.7 million. As of March 31, 2021, there were approximately $25.2 million of unrecognized compensation costs related to stock options, which are expected to be recognized over a weighted-average period of 2.89 years.

2014 Employee Stock Purchase Plan

The Company has an Employee Stock Purchase Plan (the “ESPP”), under which employees can purchase shares of its common stock based on a percentage of their compensation, but not greater than 15% of their respective earnings; provided, however, an eligible employee’s right to purchase shares of the Company’s common stock may not accrue at a rate which exceeds $25,000 of the fair market value of such shares for each calendar year in which such rights are outstanding. The ESPP has consecutive offering periods of approximately six months in length. The purchase price per share must be equal to the lower of 85% of the fair value of the common stock on the first day of the offering period or on the exercise date.

During the offering period in 2020 that ended on December 31, 2020, 24,052 shares were purchased for aggregate proceeds of $0.8 million from the issuance of shares, which occurred on January 4, 2021.

Valuation Assumptions

The estimated fair values of employee stock options and ESPP shares were estimated using the Black-Scholes option pricing model based on the following weighted average assumptions:


	Three Months Ended March 31,
	2021	2020
Employee stock options
Expected term (in years)	6.0	6.0
Expected volatility	77.69%	74.00%
Risk-free interest rate	0.68%	1.35%
Expected dividend yield	—%	—%
Employee stock purchase plan
Expected term (in years)	0.5	0.5
Expected volatility	53.10%	62.56%
Risk-free interest rate	0.09%	1.57%
Expected dividend yield	—%	—%

Risk-free Interest Rate: The Company based the risk-free interest rate over the expected term of the award based on the constant maturity rate of U.S. Treasury securities with similar maturities as of the date of grant.

Volatility: The Company used an average historical stock price volatility of its own stock and those comparable public companies that were deemed to be representative of future stock price trends.

Expected Term: The expected term represents the period for which the Company’s stock-based compensation awards are expected to be outstanding and is based on analyzing the vesting and contractual terms of the awards and the holders’ historical exercise patterns and termination behavior.

Expected Dividends: The Company has not paid and does not anticipate paying any dividends in the near future.

Stock-Based Compensation Expense

The following table summarizes stock-based compensation expense relating to employee and non-employee stock-based awards for the three months ended March 31, 2021 and 2020, included in the condensed consolidated statements of operations as follows (in thousands):


	Three Months Ended March 31,
	2021		2020
Cost of testing services	$	395	$	247
Cost of product	76		59
Cost of digital and other	108		59
Research and development	1,358		810
Sales and marketing	1,659		971
General and administrative	2,951		2,113
Total	$	6,547	$	4,259

No tax benefit was recognized related to stock-based compensation expense since the Company has never reported taxable income and has established a full valuation allowance to offset all of the potential tax benefits associated with its deferred tax assets. In addition, no amounts of stock-based compensation expense were capitalized for the periods presented.