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Stock-based Compensation | 12 Months Ended
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Dec. 31, 2022
Share-Based Payment Arrangement [Abstract] |
Stock-based Compensation | 13. Stock-based Compensation The 2010 Plan and 2011 Plan In 2010, the Company adopted its 2010 Stock Incentive Plan (the “2010 Plan”) which provided for the granting of stock options to employees, directors and consultants of the Company. Options granted under the 2010 Plan were either incentive stock options (“ISOs”) or nonqualified stock options (“NSOs”). In February 2012, the Company adopted its 2011 Stock Incentive Plan (the “2011 Plan”). The 2011 Plan is divided into two separate equity programs, an option and stock appreciation rights grant program and a stock award program. In conjunction with adopting the 2011 Plan, the Company discontinued the 2010 Plan and released the shares reserved and still available under that plan. In connection with the consummation of the IPO in October 2015, the board of directors adopted the Company’s 2015 Equity Incentive Plan (the “2015 Plan” and collectively with the 2010 Plan and 2011 Plan, the “Plans”). In conjunction with adopting the 2015 Plan, the Company discontinued the 2011 Plan with respect to new equity awards. The 2015 Plan The 2015 Plan authorized the board of directors to grant incentive stock options, non-statutory stock options and RSUs to employees, directors, non-employee directors and consultants of the Company. Sto ck options under the 2015 Plan may be granted for periods of up to ten years. All stock options issued to date have had a 10-year life. Under the terms of the 2015 Plan, stock options may be granted at an exercise price not less than the estimated fair value of the Company’s common stock on the date of grant, as determined by the Company’s board of directors. For employees holding more than 10% of the voting rights of all classes of stock, the exercise price of ISOs and NSOs may not be less than 110% of the estimated fair value of the shares on the date of grant, as determined by the board of directors. To date, stock options granted under the 2015 Plan generally vest over four years and vest at a rate of 25% upon the first anniversary of the issuance date and 1/48 th per month thereafter. The initial number of shares of common stock available for future issuance under the 2015 Plan was 2,444,735. Beginning on January 1, 2016 and continuing until the expiration of the 2015 Plan, the total number of shares of common stock available for issuance under the 2015 Plan will automatically increase annually on January 1 by 4% of the total number of issued and outstanding shares of common stock as of January 1 of the same year. As of December 31, 2022 and 2021, 1,932,345 shares and 2,276,341 shares of common stock, respectively, were available for future issuance under the 2015 Plan. The 2019 Plan In September 2019, the Board of Directors adopted the 2019 Employment Inducement Incentive Plan (the “2019 Plan”) which provides for the grant of stock options and other equity awards to any employee who has not previously been an employee or director of the Company or who is commencing employment with the Company following a bona fide period of nonemployment by the Company. Awards granted under the 2019 Plan are intended to constitute “employment inducement awards” under Nasdaq Listing Rule 5635(c)(4). Options granted under the 2019 Plan are nonqualified stock options (“NSOs”) which may be exercisable for periods of up to ten years and the options shall be granted at an exercise price of not less than 100% of the fair market value of the Company’s common stock on the date of grant. The initial number of shares of common stock available for future issuance under the 2019 Plan was 1,815,000. During 2021, t he total number of shares of common stock available for issuance under the 2019 Plan has increased by 1,000,000 shares. As of December 31, 2022 and 2021, 1,120,740 shares and 486,234 shares, respectively, of common stock were available for future issuance under the 2019 Plan. The following table summarizes the Company's stock option activities:
|  |  |  |  | Options Outstanding |  |  |  |
|  | Number of Shares |  |  | Weighted- Average Exercise Price Per Share |  |  | Weighted- Average Remaining Contractual Life (years) |  |  | Aggregate Intrinsic Value |
|  |  |  |  |  |  |  |  |  |  | (in thousands) |
Balances at December 31, 2021 |  |  | 12,192,216 |  |  | $ | 9.42 |  |  |  |  |  |  |
Options granted |  |  | 4,991,018 |  |  |  | 2.93 |  |  |  |  |  |  |
Options exercised |  |  | (102,221 | ) |  |  | 0.98 |  |  |  |  |  |  |
Options cancelled |  |  | (3,791,175 | ) |  |  | 7.25 |  |  |  |  |  |  |
Balances at December 31, 2022 |  |  | 13,289,838 |  |  |  | 7.67 |  |  |  | 6.2 |  |  | $ | 29.3 |
Options Exercisable—December 31, 2022 |  |  | 7,429,335 |  |  | $ | 10.22 |  |  |  | 5.0 |  |  | $ | 10.3 |
The aggregate intrinsic values of options outstanding, exercisable, vested and expected to vest were calculated as the difference between the exercise price of the options and the quoted market price of the underlying common stock as of December 31, 2022. The aggregate intrinsic value of stock options exercised in the years ended December 31, 2022 and 2021 was $0.1 million and $2.2 million, respectively. The options granted in the years ended December 31, 2022 and 2021 had weighted-average per share grant-date fair values of $1.77 and $3.97, respectively. As of December 31, 2022, the unrecognized compensation expense with respect to options granted was $14.25 million and is expected to be recognized over 2.5 years. Time-based RSUs ("TRSU") The following table summarizes the Company's TRSU activities:
|  | Number of Shares |  |  | Weighted- Average Remaining Contractual Life (years) |  |  | Aggregate Intrinsic Value (in thousands) |  |  | Weighted Average Grant Date Fair Value Per Share |
Balance at December 31, 2021 |  |  | 433,250 |  |  |  |  |  |  |  |  | $ | 5.34 |
RSUs awarded |  |  | 1,314,210 |  |  |  |  |  |  |  |  |  | 2.74 |
RSUs vested |  |  | (134,125 | ) |  |  |  |  |  |  |  |  | 5.34 |
RSUs cancelled |  |  | (400,451 | ) |  |  |  |  |  |  |  |  | 4.45 |
Balance at December 31, 2022 |  |  | 1,212,884 |  |  |  | 1.2 |  |  | $ | 1,941 |  |  | $ | 2.81 |
The Company recorded $1.2 million and $0.2 million of stock-based compensation expense related to the TRSUs for the year ended December 31, 2022 and 2021, respectively. As of December 31, 2022, the unrecognized compensation expense with respect to the TRSUs was $2.8 million which is expected to be recognized over 1.85 years. The Company began granting TRSUs in the fourth quarter of 2021 and the TSRUs generally vest ratably over two to four years. Performance-based RSUs ("PSU") In October 2021, the Company granted 435,000 PSUs to executive employees with an aggregated grant date fair value of $2.3 million. Vesting for 50% of the PSUs granted will occur within one year of the grant date upon achievement of certain specific milestones ("2021-Tranche 1") and the remaining 50% will vest within two years of the grant date upon achievement of additional company objectives ("2021-Tranche 2"). The Company determined that it is not probable that the performance conditions will be satisfied for each of these Tranches and hence no compensation cost was recorded for these awards for the year ended December 31, 2021. In July 2022, the Company determined that the performance condition for 2021-Tranche 1 was met and recorded $1.0 million of stock-based compensation expense for the year ended December 31, 2022. As the achievement of the milestones for Tranche 2 was not considered probable, no compensation cost was recorded for 2021-Tranche 2 of these awards for the year ended December 31, 2022. In August 2022, the Company granted 250,000 PSUs to executive employees with an aggregated grant date fair value of approximately $0.4 million. Vesting for 50% of the PSUs granted will occur upon attaining certain specific milestones by December 2023 (“2022-Tranche 1”), and the remaining 50% will vest upon attaining certain specific milestones by December 2024 (“2022-Tranche 2”). As of December 31, 2022, the Company determined that it is probable that the performance conditions for 2022-Tranche 1 will be satisfied and hence recorded $55,000 compensation cost for those awards for the year ended December 31, 2022. As of December 31, 2022, the Company determined that it is not probable that the performance conditions for 2022-Tranche 2 will be satisfied and hence recorded no compensation cost for those awards for the year ended December 31, 2022. The following table summarizes the Company's PSU activities:
|  | Number of Shares |  |  | Weighted- Average Remaining Contractual Life (years) |  |  | Aggregate Intrinsic Value (in thousands) |  |  | Weighted Average Grant Date Fair Value Per Share |
Balance at December 31, 2021 |  |  | 435,000 |  |  |  |  |  |  |  |  | $ | 5.34 |
PSUs awarded |  |  | 250,000 |  |  |  |  |  |  |  |  |  | 1.59 |
PSUs vested |  |  | (193,750 | ) |  |  |  |  |  |  |  |  | 5.34 |
PSUs cancelled |  |  | (107,500 | ) |  |  |  |  |  |  |  |  | 5.12 |
Balance at December 31, 2022 |  |  | 383,750 |  |  |  | 1.3 |  |  | $ | 614 |  |  | $ | 2.96 |
As of December 31, 2022, the unrecognized compensation expense with respect to PSUs granted was $0.1 million and is expected to be recognized over 1.25 years. Employee Stock Purchase Plan Concurrent with the completion of the IPO in October 2015, the Company’s Employee Stock Purchase Plan (“ESPP”) became effective. The ESPP allows eligible employees to purchase shares of the Company’s common stock at a discount through payroll deductions of up to 15% of their eligible compensation, subject to any plan limitations. The ESPP generally provides for six-month offering periods, and at the end of each offering period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last trading day of the offering period. The Company issued 405,192 shares and 183,865 shares of common stock under the ESPP in 2022 and 2021, respectively. Shares available for future purchase under the ESPP were 1,346,626 shares and 1,751,818 shares at December 31, 2022 and 2021, respectively. The compensation expense related to the ESPP was $0.6 million, $0.4 million for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, there was $0.2 million of unrecognized compensation cost related to the ESPP, which the Company expects to recognize over 5 months. Stock Based Compensation Total stock-based compensation recorded related to stock options, TRSUs, PSUs and the ESPP was as follows (in thousands):
|  | Year Ended December 31, |
|  | 2022 |  |  | 2021 |
Research and development |  | $ | 5,544 |  |  | $ | 5,797 |
General and administrative |  |  | 7,581 |  |  |  | 7,370 |
Total stock-based compensation expense |  | $ | 13,125 |  |  | $ | 13,167 |
The Company estimated the fair value of employee stock options and ESPP using the Black-Scholes valuation model based on the date of grant with the following assumptions:
|  | Options |  | ESPP
|  | Year Ended December 31, |  | Year Ended December 31,
|  | 2022 |  | 2021 |  | 2022 |  | 2021
Expected volatility |  | 74.6% - 83.3% |  | 69.6% - 74.8% |  | 93.3% - 96.1% |  | 46.9% - 69.6%
Risk-free interest rate |  | 1.6% - 4.3% |  | 0.5% - 1.3% |  | 1.6% - 4.7% |  | 0.04% - 0.10%
Dividend yield |  | — % |  | — % |  | — % |  | — %
Expected term (in years) |  | 4.3 - 4.6 |  | 4.5 - 4.8 |  | 0.5 |  | 0.5
Expected term. The expected term of stock options represents the period that the stock options are expected to remain outstanding and is based on vesting terms, exercise term and contractual lives of the options. The expected term of the ESPP shares is equal to the six-month look-back period. Expected volatility. The expected stock price volatility for the Company’s stock options is based on the historical stock price volatility which is commensurate with the estimated expected term of the stock awards. Volatility for ESPP shares is equal to the Company’s historical volatility over a six-month offering period. Risk-free interest rate. The risk-free interest rate is based on the U.S. Treasury yield with a maturity equal to the expected term of the stock options in effect at the time of grant. Dividend yield. The expected dividend is assumed to be zero as the Company has never paid dividends and has no current plan to pay any dividends on its common stock.

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