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Equity Incentive Plans | 3 Months Ended
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Mar. 31, 2024
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 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 ("RSUs"). Options under the 2021 Plan can typically be granted for periods of up to ten years. For stock options granted to a grantee who, at the time the option is granted, owned 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 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 a stock option granted to a 10% stockholder shall be not less than 110% of the grant date fair value of the shares. Options granted to new hires generally vest over a four-year period, with 25% of the shares vesting on the first anniversary of the grant date and the remaining shares vesting in 36 equal monthly installments thereafter; options granted as merit awards generally vest in 48 equal monthly installments following the grant date. RSUs granted generally vest over a four-year period with straight-line vesting in equal amounts. The Company initially reserved 5,200,000 shares of common stock for future issuance under the 2021 Plan. This initial reserve is subject to annual increase on the first day of each calendar year beginning on January 1, 2022 and ending on and including January 1, 2031. These annual increases are 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. Pursuant to the evergreen provision, the initial share reserve was increased by 2,456,568 shares and 2,414,907 shares on January 1, 2024 and 2023, respectively. The 2011 Plan was superseded by the 2021 Plan at the time of the IPO and no further grants have been 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. As of March 31, 2024 and December 31, 2023 there were 5,939,266 shares and 6,033,176 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 during the periods presented:
|  | Number of Shares |  |  | Weighted-Average Exercise Price |  |  | Weighted-Average Contractual Term (in years) |  |  | Average Intrinsic Value (in thousands) |
Balances as of December 31, 2023 |  |  | 4,980,190 |  |  | $ | 9.00 |  |  |  | 7.4 |  |  | $ | 5,924 |
Grants |  |  | 7,377 |  |  |  | 4.43 |  |  |  |  |  |  |
Forfeited/cancelled |  |  | (116,730 | ) |  |  | 8.41 |  |  |  |  |  |  |
Exercised/released |  |  | (132,958 | ) |  |  | 1.09 |  |  |  |  |  |  |
Balances as of March 31, 2024 |  |  | 4,737,879 |  |  | $ | 9.23 |  |  |  | 7.5 |  |  | $ | 5,363 |
Vested and exercisable as of March 31, 2024 |  |  | 2,662,119 |  |  | $ | 9.22 |  |  |  | 6.7 |  |  | $ | 3,283 |
Vested and expected to vest as of March 31, 2024 |  |  | 4,737,879 |  |  | $ | 9.23 |  |  |  | 7.5 |  |  | $ | 5,363 |
During the three months ended March 31, 2024 and 2023, the Company recorded stock-based compensation expense of $1.9 million and $2.2 million related to stock option awards, respectively. The weighted-average grant-date fair values of options granted during the three months ended March 31, 2024 and 2023 was $2.71 and $6.91 per share, respectively. The aggregate intrinsic value of options exercised was $0.5 million during the three months ended March 31, 2024. 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 March 31, 2024, the unrecognized stock-based compensation expense relating to unvested options was $12.2 million, which is expected to be recognized over a weighted-average period of 1.6 years. Determination of Fair Value The Company estimated the grant date fair value of stock options using the Black-Scholes option-pricing model, which requires the use of high subjective and complex valuation assumptions to determine the fair value of stock-based awards, including the option’s expected term, the expected volatility of the underlying stock, the risk-free interest rate, and the expected dividend yield. For the purposes of the Black-Scholes valuation model, the Company used the simplified method for determining the expected term of the granted options. The simplified method was used since the Company does not have adequate historical data to utilize in calculating the expected term of options. The fair value for options granted was calculated using the following weighted average assumptions:
|  | Three Months Ended March 31, |
|  | 2024 |  | 2023 |
Expected term (in years) |  | 6.13 |  | 5.60 – 6.02 |
Expected volatility |  | 61.67% |  | 79.73% |
Risk-free interest rate |  | 4.28% |  | 3.66% – 3.67% |
Dividend yield |  | – |  | – |
Restricted Stock Units RSUs are share awards that entitle the holder to receive shares of 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, 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:
|  | Number of Shares |  |  | Weighted-Average Grant Date Fair Value Per Share |
Outstanding, December 31, 2023 |  |  | 2,721,361 |  |  | $ | 7.61 |
Grants |  |  | 2,700,788 |  |  |  | 4.29 |
Forfeited/cancelled |  |  | (40,957 | ) |  |  | 7.64 |
Vested |  |  | (301,694 | ) |  |  | 11.86 |
Outstanding, March 31, 2024 |  |  | 5,079,498 |  |  | $ | 5.58 |
During the three months ended March 31, 2024 and 2023, the Company recorded stock-based compensation expense of $2.3 million and $1.1 million, respectively, related to the RSUs. As of March 31, 2024, there was $25.2 million of total unrecognized stock-based compensation expense relating 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 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. This initial reserve is subject to annual increase 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) 1% 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. Pursuant to the evergreen provision, the initial share reserve was increased by 491,313 and 482,981 shares on January 1, 2024 and 2023, respectively. The Company has two offering periods annually, running for six-months, with the first offering period beginning in the second quarter, and the second offering period beginning in the fourth quarter. The purchase of shares for participants in the ESPP occurs at the conclusion of each offering period. During the three months ended, March 31, 2024, there were no purchases made under the ESPP. As of March 31, 2024, the Company has collected payroll withholdings of $0.4 million in the current offering period for the purchase of shares under the ESPP. The Company recorded stock-based compensation expense associated with the ESPP of $0.2 million and $0.2 million for the three months ended March 31, 2024 and 2023, respectively. As of March 31, 2024, there were 1,979,540 shares of common stock available for issuance under the ESPP. The fair value of shares to be issued under the ESPP was estimated using the Black-Scholes valuation model with the following assumptions for the three months ended March 31, 2024 and 2023, respectively:
|  | Three Months Ended March 31, |
|  | 2024 |  | 2023 |
Expected term (in years) |  | 0.49 |  | 0.48 |
Expected volatility |  | 197.51% |  | 97.38% |
Risk-free interest rate |  | 5.40% |  | 4.62% |
Dividend yield |  | – |  | – |
Stock-Based Compensation The following is a summary of stock-based compensation expense by function (in thousands):
|  | Three Months Ended March 31, |  |
|  | 2024 |  |  | 2023 |  |
Cost of goods sold |  | $ | 106 |  |  | $ | 59 |  |
Research and development |  |  | 605 |  |  |  | 529 |  |
Selling, general and administrative |  |  | 3,795 |  |  |  | 2,935 |  |
Total stock-based compensation expense |  | $ | 4,506 |  |  | $ | 3,523 |  |

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