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Stock-Based Compensation | 3 Months Ended
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Mar. 31, 2024
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation | Stock-Based Compensation As of March 31, 2024, there were 7,497,782 shares subject to outstanding options and restricted stock units (RSUs) under the 2006 Equity Incentive Plan (2006 Plan) and the Amended and Restated 2016 Equity Incentive Plan (2016 Plan, and together with the 2006 Plan, Plans). The 2006 Plan expired by its terms in April 2016, and the Company adopted the 2016 Plan. Outstanding options under the 2006 Plan remain in effect and the terms of the 2006 Plan continue to apply, but no additional awards can be granted under the 2006 Plan. In June 2016, the Company’s stockholders approved the 2016 Plan. The 2016 Plan has been amended a number of times since to increase the number of shares reserved for issuance, among other administrative changes. Each of the amendments to the 2016 Plan was approved by the Company’s stockholders. There is a total of 13,790,000 shares of common stock authorized for issuance under the 2016 Plan, 3,059,300 shares of which remained available for future grant as of March 31, 2024. Stock Options The Company has granted option awards under the Plans with service conditions (service option awards) that are subject to terms and conditions established by the compensation committee of the board of directors. Service option awards have 10-year contractual terms. Service option awards granted to employees and new directors upon their election vest and become exercisable over four years, with the first 25% of the shares subject to service option awards vesting on the first anniversary of the grant date and the remaining 75% of the shares subject to the service option awards in 36 equal monthly installments thereafter. Subsequent annual service option awards granted to directors vest and become exercisable in full on the first anniversary of the grant date. Service option awards granted to executive officers and certain other employees provide for partial acceleration of vesting if the executive officer or employee is subject to an involuntary termination, and full acceleration of vesting if the executive officer or employee is subject to an involuntary termination within 24 months after a change in control of the Company. Service option awards granted to directors provide for accelerated vesting if there is a change in control of the Company or if the director’s service terminates as a result of the director’s death or total and permanent disability. As of March 31, 2024, $5.0 million of unrecognized compensation costs related to unvested service option awards are expected to be recognized over a weighted average period of 1.0 years. No option awards are classified as a liability as of March 31, 2024. A summary of option activity under the Plans for the three months ended March 31, 2024 follows:
(in thousands, except for share and per share amounts) | Number of Shares |  | Weighted Average Exercise Price at Grant Date |  | Weighted Average Remaining Term (Years) |  | Aggregate Intrinsic Value
Outstanding at December 31, 2023 | 4,792,506 |  |  | $ | 12.95 |  |  | 6.00 |  | $ | — |
Expired | (16,000) |  |  | 12.28 |  |  |  |  |
Outstanding at March 31, 2024 | 4,776,506 |  |  | 12.95 |  |  | 5.77 |  | — |
Exercisable at March 31, 2024 | 3,586,512 |  |  | 14.05 |  |  | 4.89 |  | — |
Vested and expected to vest at March 31, 2024 | 4,670,652 |  |  | 13.06 |  |  | 5.70 |  | — |
There were no options granted for the three months ended March 31, 2024. The weighted average grant date fair value of options granted was $3.57 per share for the three months ended March 31, 2023. There were no proceeds from the exercise of stock options for the three months ended March 31, 2024 and 2023. Restricted Stock Units An RSU is a stock award that entitles the holder to receive shares of the Company’s common stock as the award vests. The fair value of each RSU is based on the closing price of the Company’s stock on the date of grant. The Company has granted RSUs under the Plans with service conditions (service RSUs) that are subject to terms and conditions established by the compensation committee of the board of directors. Service RSUs granted to employees and new directors upon their election vest in four equal annual installments. Subsequent annual service RSUs granted to directors vest on the first anniversary of the date of grant. Service RSUs granted to executive officers and certain other employees provide for accelerated vesting if the executive officer or employee is subject to an involuntary termination within 24 months after a change in control. Service RSUs granted to directors provide for accelerated vesting if there is a change in control of the Company. As of March 31, 2024, $17.6 million of unrecognized compensation costs related to unvested service RSUs are expected to be recognized over a weighted average period of 1.8 years. No RSUs are classified as a liability as of March 31, 2024. A summary of RSU activity for the Plans for the three months ended March 31, 2024 is as follows:
| Number of Shares |  | Weighted Average Grant Date Fair Value
Unvested at December 31, 2023 | 1,905,310 |  |  | $ | 10.87 |
Granted | 1,494,900 |  |  | 4.37 |
Forfeited | (16,910) |  |  | 12.43 |
Vested | (662,024) |  |  | 12.17 |
Unvested at March 31, 2024 | 2,721,276 |  |  | 6.98 |
The grant date fair value for the 662,024 shares underlying RSUs that vested during the three months ended March 31, 2024 was $8.1 million. Stock-Based Compensation Expense Stock-based compensation expense recognized for the three months ended March 31, 2024 and 2023 was comprised of the following:
| Three Months Ended |  |  |  |
(in thousands) | March 31, 2024 |  | March 31, 2023 |  |  |  |  |  |  |  |
Research and development | $ | 864 |  |  | $ | 1,066 |  |  |  |  |  |  |  |  |
Selling, general and administrative | 2,720 |  |  | 3,285 |  |  |  |  |  |  |  |  |
Total stock-based compensation expense | $ | 3,584 |  |  | $ | 4,351 |  |  |  |  |  |  |  |  |
The fair value of each option award is estimated on the date of grant using the Black-Scholes-Merton option pricing model that uses the assumptions noted in the following table. Expected volatility rates are based on the historical volatility of the Company’s publicly traded common stock and other factors. The expected terms are determined based on a combination of historical exercise data and hypothetical exercise data for unexercised stock options. The risk-free interest rates are based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. The Company has never paid cash dividends to its stockholders and does not plan to pay dividends in the foreseeable future. No options were granted during the three months ended March 31, 2024. Assumptions used in the Black-Scholes-Merton option pricing model for employee and director stock options granted during the three months ended March 31, 2023 were as follows:
|  |  | Three Months Ended
|  |  | March 31, 2023
Expected dividend yield |  |  | 0 | %
Weighted average expected volatility |  |  | 47 | %
Weighted average expected term (years) |  |  | 6.15
Weighted average risk-free rate |  |  | 3.92 | %

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