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Stock-based compensation | 12 Months Ended
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Mar. 31, 2021
Stock-based compensation |
Stock-based compensation | 9. Stock‑based compensation Stock-based compensation expense The following table summarizes the classification of stock-based compensation expense in the consolidated statements of operations for the years ended March 31, 2021 and 2020 as follows:
|  | Twelve Months Ended
|  | March 31,
|  | 2021 |  | 2020
Research and development |  | $ | 5,749 |  | $ | 3,689
General and administrative |  |  | 6,041 |  |  | 4,052
|  | $ | 11,790 |  | $ | 7,741
The following table summarizes stock-based compensation expense by award type for the years ended March 31, 2021 and 2020 as follows:
|  | Twelve Months Ended
|  | March 31,
|  | 2021 |  | 2020
Stock options |  | $ | 11,778 |  | $ | 7,741
Restricted stock units |  |  | 12 |  |  | —
|  | $ | 11,790 |  | $ | 7,741
2015 Enterprise Management Incentive Share Option Plan The 2015 Enterprise Management Incentive Share Option Plan of Replimune UK (the “2015 Plan”) provided for Replimune UK to grant incentive stock options, non‑statutory stock options, stock awards, stock units, stock appreciation rights and other stock‑based awards. Incentive stock options are granted only to the Company’s employees, including officers and directors who are also employees. Non‑statutory stock options are granted to employees, members of the board of directors, outside advisors and consultants of the Company. 2017 Equity Compensation Plan In July 2017, in conjunction with the Reorganization, the 2015 Plan was terminated, and all awards were cancelled with replacement awards issued under the 2017 Equity Compensation Plan (the “2017 Plan”). Subsequent to the Reorganization, no additional grants will be made under the 2015 Plan and any outstanding awards under the 2015 Plan will continue with their original terms. The Company concluded that the cancellation of the 2015 Plan and issuance of replacement awards under the 2017 Plan was a modification with no change in the material rights and preferences and therefore no recorded change in the fair value of each respective award. The Company’s 2017 Plan provides for the Company to grant incentive stock options or non‑statutory stock options, stock awards, stock units, stock appreciation rights and other stock‑based awards. Incentive stock options may be granted only to the Company’s employees, including officers and directors who are also employees. Restricted stock awards and non‑statutory stock options may be granted to employees, officers, members of the board of directors, advisors and consultants of the Company. The maximum number of common shares that may be issued under the 2017 Plan was 2,659,885 of which none remained available for future grants as of March 31, 2021. Shares with respect to which awards have expired, terminated, surrendered or cancelled under the 2017 Plan without having been fully exercised will be available for future awards under the 2017 Plan. In addition, shares of common stock that are tendered to the Company by a participant to exercise an award are added to the number of shares of common stock available for the grant of awards. 2018 Omnibus Incentive Compensation Plan On July 9, 2018, the Company’s board of directors adopted, and the Company’s stockholders approved the 2018 Omnibus Incentive Compensation Plan (the “2018 Plan”), which became effective immediately prior to the effectiveness of the registration statement for the Company’s initial public offering. The 2018 Plan provides for the issuance of incentive stock options, non‑qualified stock options, stock awards, stock units, stock appreciation rights and other stock‑based awards. The number of shares initially reserved for issuance under the 2018 Plan is 3,617,968 shares. If any options or stock appreciation rights, including outstanding options and stock appreciation rights granted under the 2017 Plan (up to 2,520,247 shares), terminate, expire, or are canceled, forfeited, exchanged, or surrendered without having been exercised, or if any stock awards, stock units or other stock‑based awards, including outstanding awards granted under the 2017 Plan, are forfeited, terminated, or otherwise not paid in full in shares of common stock, the shares of the Company’s common stock subject to such grants will be available for purposes of our 2018 Plan. The number of shares reserved for issuance under the 2018 Plan will increase automatically on the first day of each April equal to 4.0% of the total number of shares of Company stock outstanding on the last trading day in the immediately preceding fiscal year, or such lesser amount as determined by the Board. On April 1, 2020, the number of shares reserved for issuance under the 2018 Plan automatically increased by 1,466,749 shares pursuant to the terms of the 2018 Plan. On April 1, 2019, the number of shares reserved for issuance under the 2018 Plan automatically increased by 1,266,278 shares pursuant to the terms of the 2018 Plan. As of March 31, 2021, 1,282,506 shares remained available for future grants under the 2018 Plan. The 2015 Plan, the 2017 Plan and the 2018 Plan was administered by the board of directors or, at the discretion of the board of directors, by a committee of the board of directors. However, the board of directors shall administer and approve all grants made to non‑employee directors. The exercise prices, vesting and other restrictions are determined at the discretion of the board of directors, except that the exercise price per share of incentive stock options may not be less than 100% of the fair market value of the common stock on the date of grant (or 110% of fair value in the case of an award granted to employees who hold more than 10% of the total combined voting power of all classes of stock at the time of grant) and the term of stock options may not be greater than five years for an incentive stock option granted to a 10% stockholder and greater than ten years for all other options granted. Stock options awarded under both plans expire ten years after the grant date, unless the board of directors sets a shorter term. Vesting periods for both plans are determined at the discretion of the board of directors. Incentive stock options granted to employees and non‑statutory options granted to employees, officers, members of the board of directors, advisors, and consultants of the Company typically vest over four years. In 2021 the board of directors initiated the award of restricted stock units, or RSUs, under the 2018 Plan in addition to stock option awards available as part of the Company's equity incentive for employees, officers, advisors and consultants of the Company. The RSUs typically vest over four roughly equal installments on the approximate anniversary date of the date of grant. Employee Stock Purchase Plan On July 9, 2018, the Company’s board of directors adopted and the Company’s stockholders approved the Employee Stock Purchase Plan (the “ESPP”), which became effective immediately prior to the effectiveness of the registration statement for the Company’s IPO. The total shares of common stock initially reserved for issuance under the ESPP is limited to 348,612 shares. In addition, as of the first trading day of each fiscal year during the term of the ESPP (excluding any extensions), an additional number of shares of the Company’s common stock equal to 1% of the total number of shares outstanding on the last trading day in the immediately preceding fiscal year or 697,224 shares, whichever is less (or such lesser amount as determined by the Company’s board of directors) will be added to the number of shares authorized under the ESPP. In accordance, on April 1, 2020 and 2019, the number of shares reserved for issuance under the ESPP automatically increased by 366,687 and 316,569 shares, respectively, for a total of 1,031,868 shares reserved for the ESPP. If the total number of shares of common stock to be purchased pursuant to outstanding purchase rights on any particular date exceed the number of shares then available for issuance under the ESPP, then the plan administrator will allocate the available shares pro‑rata and refund any excess payroll deductions or other contributions to participants. The Company's ESPP is not currently active. Stock option valuation The fair value of stock option grants is estimated using the Black-Scholes option-pricing model. The Company lacks company-specific historical and implied volatility information. Therefore, it estimated its expected stock volatility based on the historical volatility of a publicly traded set of peer companies. For options with service-based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The expected term of stock options granted to non-employees is equal to the contractual term of the option award. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. The estimated grant-date fair value of the Company’s stock options issued to employees was calculated using the Black-Scholes option-pricing model. The following table presents, on a weighted-average basis, the assumptions used in the Black-Scholes model, for the stock options granted to employees and directors:
|  | Twelve Months Ended |
|  | March 31, |
|  | 2021 |  | 2020 |
Risk-free interest rate |  | 0.93 | % | 2.12 | %
Expected term (in years) |  | 6.3 |  | 6.0 |
Expected volatility |  | 75.4 | % | 71.4 | %
Expected dividend yield |  | 0 | % | 0 | %
Stock options A summary of stock option activity under the Company’s equity incentive plans for the year ended March 31, 2021 is as follows:
|  |  |  | Weighted |  | Weighted Average |  |
|  | Number of |  | Average |  | Contractual Term |  | Aggregate
|  | Shares |  | Exercise Price |  | (Years) |  | Intrinsic Value
Outstanding as of March 31, 2020 |  | 4,964,381 |  | $ | 9.78 |  | 8.03 |  | $ | 15,345
Granted |  | 2,622,519 |  |  | 18.10 |  | 9.22 |  |  |
Exercised |  | (794,477) |  |  | 7.23 |  | 6.41 |  | $ | 24,859
Cancelled |  | (332,239) |  |  | 14.00 |  |  |  |  |
Outstanding as of March 31, 2021 |  | 6,460,184 |  |  | 13.26 |  | 7.95 |  | $ | 116,193
Options exercisable as of March 31, 2020 |  | 2,117,721 |  | $ | 5.67 |  | 7.20 |  | $ | 11,733
Options exercisable as of March 31, 2021 |  | 2,698,708 |  | $ | 8.38 |  | 6.79 |  | $ | 59,717
As of March 31, 2021 and 2020, there was $35.6 million and $18.7 million of unrecognized compensation cost related to unvested common stock options, which is expected to be recognized over a weighted average period of 3.00 years. The weighted average grant-date fair value of stock options granted during the years ended March 31, 2021 and 2020 was $12.03 and $9.70, respectively. The total fair value of options vested during the years ended March 31, 2021 and 2020 was $10,182 and $5,440, respectively. The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company's common stock for those stock options that had exercise prices lower than the fair value of the Company's common stock. The intrinsic value of stock options exercised during the years ended March 31, 2021 and 2020 was $24.9 million and $2.3 million, respectively. Restricted stock units During the year ended March 31, 2021, the Company instituted RSU awards as a component of its overall employee benefit program and granted its first RSU award to a member of the executive team, which included 15,975 shares at an average grant date fair value of $34.15 per share. These RSUs vest in four substantially equal installments beginning approximately on the first anniversary of the grant date and continuing on each of the next three anniversaries thereof, subject to the employee’s continued employment with, or services to, the Company on each vesting date. Each RSU represents the right to receive one share of the Company’s common stock when and if the applicable vesting conditions are satisfied. A summary of the changes in the Company’s RSUs during the year ended March 31, 2021 is as follows:
|  |  |  | Weighted
|  | Number of |  | Average
|  | Restricted |  | Grant Date
|  | Shares |  | Fair Value
Outstanding as of March 31, 2020 |  | — |  | $ | —
Granted |  | 15,975 |  |  | 34.15
Vested |  | — |  |  | —
Cancelled |  | — |  |  | —
Outstanding as of March 31, 2021 |  | 15,975 |  |  | 34.15
At March 31, 2021 there was $0.5 million of total unrecognized compensation cost related to unvested RSUs, which will be recognized over a weighted-average period of 3.9 years. There was no unrecognized compensation cost related to unvested RSUs as of March 31, 2020.

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