XML 26 R15.htm IDEA: XBRL DOCUMENT
v3.22.2.2

Equity Incentive Plans | 9 Months Ended
--- | ---
Sep. 30, 2022
Share-Based Payment Arrangement [Abstract] |
Equity Incentive Plans | Note 8. Equity Incentive Plans 2011 Stock Option Plan and 2021 Incentive Award Plan In 2011, the Company established its 2011 Stock Option Plan (the “2011 Plan”) that provided for the granting of stock options to employees and nonemployees of the Company. In July 2021, the Company’s Board of Directors and stockholders adopted and approved the 2021 Incentive Award Plan, (the “2021 Plan”). Under the 2021 Plan, the Company has the ability to issue incentive stock options ("ISOs"), nonqualified stock options ("NSOs"), stock appreciation rights, dividend equivalent rights, restricted stock awards, and restricted stock unit awards. Options under the 2021 Plan can be granted for periods of up to 10 years. For incentive stock options granted to a grantee who, at the time the option is granted, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any parent or subsidiary of the Company, the term of the incentive stock option may be granted for periods of up to five years. The ISOs and NSOs will be granted at a price per share not less than the fair value at the date of grant. The exercise price of an ISO granted to a 10% stockholder shall 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. Options granted to new hires generally vest over a four-year period, with 25% vesting at the end of one year and the remaining vesting monthly thereafter; options granted as merit awards generally vest monthly over a four-year period. The Company initially reserved 5,200,000 shares of common stock for future issuance under the 2021 Plan. This initial reserve will be increased annually on the first day of each calendar year beginning on January 1, 2022 and ending on and including January 1, 2031. These annual increases shall be equal to the lesser of (i) 5% of the aggregate number of shares of Common Stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares of Common Stock as determined by the Board, subject to certain limitations. The Company’s 2011 Stock Plan was terminated in connection with the IPO and no further grants will be made under the 2011 Plan from the date the 2021 Plan became effective. The terms under the 2011 Plan are consistent with those described above for the 2021 Plan. The Company had the ability to issue ISOs, NSOs, stock appreciation rights, dividend equivalent rights, restricted stock awards, and restricted stock unit awards. At September 30, 2022 and December 31, 2021 there were 6,431,924 and 5,321,687 shares, respectively, of common stock available for issuance under the 2021 Plan. Stock Option Awards The following table summarizes stock option activity under the 2021 Plan:
|  | Number of Shares |  |  | Weighted-Average Exercise Price |  |  | Weighted-Average Contractual Term (in years) |  |  | Average Intrinsic Value (in thousands) |
Balances as of December 31, 2021 |  |  | 4,996,945 |  |  | $ | 6.05 |  |  |  | 7.6 |  |  | $ | 58,420 |
Grants |  |  | 1,375,700 |  |  |  | 17.09 |  |  |  |  |  |  |
Forfeited/cancelled |  |  | (763,040 | ) |  |  | 6.97 |  |  |  |  |  |  |
Exercised/released |  |  | (581,539 | ) |  |  | 0.74 |  |  |  |  |  |  |
Balances as of September 30, 2022 |  |  | 5,028,066 |  |  | $ | 9.54 |  |  |  | 8.0 |  |  | $ | 8,138 |
Vested and exercisable as of September 30, 2022 |  |  | 2,188,978 |  |  | $ | 6.20 |  |  |  | 6.9 |  |  | $ | 6,437 |
Vested and expected to vest as of September 30, 2022 |  |  | 5,028,066 |  |  | $ | 9.54 |  |  |  | 8.0 |  |  | $ | 8,138 |
During the three and nine months ended September 30, 2022, the Company recorded stock-based compensation of $2.4 million and $7.5 million related to stock option awards, respectively. During the three and nine months ended September 30, 2021, the Company recorded stock-based compensation of $1.9 million and $3.0 million related to stock option awards, respectively. The weighted-average grant-date fair values of options granted during the nine months ended September 30, 2022 and 2021 was $9.58 and $10.56 per share, respectively. The aggregate intrinsic value of options exercised was $1.7 million and $4.6 million during the three and nine months ended September 30, 2022, respectively. The aggregate intrinsic value was calculated as the difference between the exercise prices of the underlying options and the estimated fair value of the common stock on the date of exercise. As of September 30, 2022, the unrecognized stock-based compensation of unvested opti ons was $25.3 million, which is expected to be recognized over a weighted-average period of 2.8 years. Determination of fair value The Company estimated the fair value of stock options using the Black-Scholes option-pricing model. The fair value of stock options is recognized on a straight-line basis over the requisite service periods of the awards. The fair value of stock options was estimated using the following weighted-average assumptions:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2022 |  | 2021 |  | 2022 |  | 2021
Expected term (in years) |  | 5.91 – 6.06 |  | 5.90 – 6.07 |  | 5.38 – 6.94 |  | 5.00 – 6.08
Expected volatility |  | 64.12% – 64.61% |  | 60.33% – 60.68% |  | 58.74% – 64.61% |  | 56.75% – 60.81%
Risk-free interest rate |  | 3.25% – 3.97% |  | 0.95% – 1.16% |  | 1.34% – 3.97% |  | 0.48% – 1.16%
Dividend yield |  | – |  | – |  | – |  | –
Expected Term The expected term is calculated using the simplified method, which is available if there is insufficient historical data about exercise patterns and post vesting employment termination behavior. The simplified method is based on the vesting period and the contractual term for each grant or for each vesting tranche for awards with graded vesting. The midpoint of the vesting date and the maximum contractual expiration date is used as the expected term under this method. For awards with multiple vesting tranches, the time from grant until the midpoints for each of the tranches may be averaged to provide an overall expected term. Expected Volatility The Company used an average historical stock price volatility of a peer group of publicly traded companies to be representative of its expected future stock price volatility, as the Company did not have any trading history for its common stock. For purposes of identifying these peer companies, the Company considered the industry, stage of development, size, and financial leverage of potential comparable companies. For each grant, the Company measured historical volatility over a period equivalent to the expected term. Risk-Free Interest Rate The risk-free interest rate is based on the implied yield currently available on US Treasury zero-coupon issues with remaining terms equivalent to the expected term of a stock award. Expected Dividend Rate The Company has not paid, and does not anticipate paying, any dividends in the near future. Accordingly, the Company has estimated the dividend yield to be 0%. Restricted Stock Units RSUs are share awards that entitle the holder to receive freely tradable shares of the Company’s common stock upon vesting. The RSUs cannot be transferred, and the awards are subject to forfeiture if the holder’s employment terminates prior to the release of the vesting restrictions. The RSUs generally vest over a four-year period with straight-line vesting in equal amounts on an annual basis, provided the employee remains continuously employed with the Company. The fair value of the RSUs is equal to the closing price of the Company’s common stock on the grant date. The following table summarizes restricted share award activity under the 2021 Plan:
|  | Number of Shares |  |  | Weighted-Average Grant Date Fair Value Per Share |
Outstanding, December 31, 2021 |  |  | 53,250 |  |  | $ | 22.91 |
Grants |  |  | 767,323 |  |  |  | 15.39 |
Forfeited/cancelled |  |  | (114,985 | ) |  |  | 17.62 |
Vested |  |  | (4,715 | ) |  |  | 21.27 |
Outstanding, September 30, 2022 |  |  | 700,873 |  |  | $ | 15.54 |
During the three and nine months ended September 30, 2022, the Company recorded stock-based compensation of $0.7 million and $2.0 million related to the RSUs. During both the three and nine months ended September 30, 2021, the Company recorded stock-based compensation of $0.1 million related to the RSUs. As of September 30, 2022, there was $9.0 million of total unrecognized compensation cost related to the RSUs that is expected to be recognized over a weighted-average period of 3.1 years. Employee Stock Purchase Plan In July 2021, the Board of Directors and stockholders also adopted and approved the 2021 Employee Stock Purchase Plan (the “ESPP”). The Company initially reserved 850,000 shares of common stock for future issuance under the ESPP. During the second quarter of fiscal year 2022, the Company's first six month offering period began, with the first purchase of shares to occur during the fourth quarter of fiscal year 2022. As of September 30, 2022, the Company has collected withholdings of $0.6 million for purchase of shares under the ESPP. The Company recorded $0.1 million and $0.2 million of compensation expense for the three and nine months ended September 30, 2022, respectively. There was no compensation expense associated with the Company's ESPP for the three and nine months ended September 30, 2021. As of September 30, 2022, no shares of common stock had been purchased under the ESPP and there were 1,325,047 shares of common stock available for issuance under the ESPP. The fair value of shares to be issued under the Company's 2021 ESPP was estimated using the Black-Scholes valuation model with the following assumptions for the three and nine-months ended September 30, 2022:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30, |
|  | 2022 |
Expected term (in years) |  | 0.50 |  | 0.50 |
Expected volatility |  | 76.50% |  | 76.50% |
Risk-free interest rate |  | 1.51% |  | 1.51% |
Dividend yield |  | – |  | – |
Stock Based Compensation The following is a summary of stock-based compensation expense by function (in thousands):
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2022 |  |  | 2021 |  |  | 2022 |  |  | 2021 |
Cost of goods sold |  | $ | 39 |  |  | $ | 22 |  |  | $ | 117 |  |  | $ | 46 |
Research and development |  |  | 259 |  |  |  | 169 |  |  |  | 1,012 |  |  |  | 307 |
Selling, general and administrative |  |  | 2,925 |  |  |  | 1,708 |  |  |  | 8,600 |  |  |  | 2,754 |
Total stock-based compensation expense |  | $ | 3,223 |  |  | $ | 1,899 |  |  | $ | 9,729 |  |  | $ | 3,107 |

X
- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (a) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI https://asc.fasb.org/topic&trid=2228938 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (l) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 Reference 4: http://www.xbrl.org/2003/role/exampleRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (a)(1) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (h)(2)(i) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -Subparagraph (h)(2) -URI https://asc.fasb.org/extlink&oid=128089324&loc=d3e5070-113901 + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration

X
- References No definition available. + Details
Name: | us-gaap_DisclosureOfCompensationRelatedCostsSharebasedPaymentsAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration