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Stock Plan | 9 Months Ended
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Sep. 30, 2024
Share-Based Payment Arrangement [Abstract] |
Stock Plan | 8. Stock Plan 2020 Equity Incentive Plan The 2020 Equity Incentive Plan (the “2020 Plan”) was approved by the board of directors on September 24, 2020. The 2020 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units, restricted stock awards, unrestricted stock awards, cash-based awards and dividend equivalent rights to the Company’s officers, employees, directors, and consultants. The number of shares of common stock initially reserved for issuance under the 2020 Plan was 4,406,374, which shall be increased, upon approval by the board of directors, on January 1, 2021 and each January 1 thereafter, in an amount equal to the least of (i) 4,406,374 shares of common stock, (ii) five percent (5%) of the outstanding common stock on the immediately preceding December 31, or (iii) such number of common stock determined by the board of directors no later than the immediately preceding December 31. For 2024, the board’s compensation committee, as the 2020 Plan administrator, exercised its discretion under clause (ii) to increase the number of shares of common stock reserved for issuance under the 2020 Plan by 2,572,174 shares, effective as of January 1, 2024. As of September 30, 2024, there were 5,329,431 shares available for issuance under the 2020 Plan. On September 9, 2022, the Company granted 374,899 Restricted Stock Units (“RSUs”) to employees pursuant to an employee retention program approved by the board’s compensation committee. The RSUs have graded vesting on an annual basis for two years of continuous service, as per the 2020 Plan. As of September 30, 2024, the RSUs were fully vested and common stock was issued upon the settlement of the RSUs. On January 18, 2024, the Company granted 952,665 RSUs to employees VP-level or higher, pursuant to an employee retention program approved by the compensation committee of the Company’s board of directors. The RSUs are scheduled to vest on June 30, 2025, based on approximately one and a half years of continuous service, as per the 2020 Plan. 2020 Employee Stock Purchase Plan The 2020 Employee Stock Purchase Plan (the “2020 ESPP”) was approved by the board of directors on September 24, 2020. A total of 400,752 shares of common stock were initially reserved for issuance under this plan, which shall be increased, upon approval by the board of directors, on January 1, 2021 and each January 1 thereafter, to the lesser of (i) 801,504 shares of common stock, (ii) 1% of the outstanding shares of common stock on the last day of the immediately preceding fiscal year, or (i ii) an amount determined by the board of directors or any of its committees no later than the last day of the immediately preceding fiscal year. For 2024, the 2020 ESPP reserved shares were increased under clause (ii) by 514,434 shares, effective as of January 1, 2024. As of September 30, 2024, 275,497 shares are issued or outstanding, and there were 1,136,410 shares available for issuance, under the 2020 ESPP. Stock Options On July 16, 2024, the Company filed with the Securities and Exchange Commission a Tender Offer Statement on Schedule TO defining the terms and conditions of a one-time voluntary stock option exchange to its employees of certain options to purchase up to an aggregate of 2,820,491 shares of the Company’s common stock (the “Option Exchange”). On August 13, 2024, the completion date of the Option Exchange, stock options covering an aggregate of 2,786,691 shares of common stock were tendered by eligible employees, and the Company granted new options at an exercise price of $1.48, the Company’s closing stock price on August 13, 2024, covering an aggregate of 2,786,691 shares of common stock under the 2020 Equity Incentive Plan in exchange for the tendered options. As a result of the Option Exchange, the Company will recognize incremental stock-based compensation expense of $1,370 over the requisite service period of the new stock options, which is three or four years. The Company will recognize the sum of the incremental stock-based compensation expense and the remaining unrecognized compensation expense for the original awards on the modification date, over the requisite service period of the new stock options. The following table summarizes option activity for the nine-month period ended September 30, 2024:
|  |  |  |  | Options Outstanding |
|  |  |  |  |  |  |  |  |  |  | Weighted- |  |  |  |
|  |  |  |  |  |  |  | Weighted |  |  | Average |  |  | Aggregate |
|  | Shares |  |  |  |  |  | Average |  |  | Remaining |  |  | Intrinsic |
|  | Available |  |  | Number of |  |  | Exercise |  |  | Contractual Life |  |  | Value |
|  | for Grant |  |  | Options |  |  | Price |  |  | (in years) |  |  | (in 000s) |
Balances at December 31, 2023 |  |  | 4,474,411 |  |  |  | 6,973,464 |  |  | $ | 9.44 |  |  |  | 7.01 |  |  | $ | 990 |
Shares reserved for issuance |  |  | 2,572,174 |  |  |  | — |  |  |  | — |  |  |  |  |  |  |
Options granted |  |  | (6,261,885 | ) |  |  | 6,261,885 |  |  | $ | 1.64 |  |  |  |  |  |  |
Options forfeited / cancelled |  |  | 4,544,731 |  |  |  | (4,544,731 | ) |  | $ | 11.25 |  |  |  |  |  |  |
Options exercised |  |  | — |  |  |  | (3,111 | ) |  |  | 1.80 |  |  |  |  |  |  |
Balances at September 30, 2024 (unaudited) |  |  | 5,329,431 |  |  |  | 8,687,507 |  |  | $ | 2.87 |  |  |  | 8.06 |  |  | $ | 190 |
At September 30, 2024 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Vested and expected to vest |  |  |  |  |  | 8,687,507 |  |  | $ | 2.87 |  |  |  | 8.06 |  |  | $ | 190 |
Exercisable |  |  |  |  |  | 3,008,229 |  |  | $ | 5.11 |  |  |  | 5.11 |  |  | $ | 162 |
At September 30, 2024, the total compensation cost related to nonvested awards not yet recognized was $14,534. The weighted-average period over which the nonvested awards is expected to be recognized was 3.4 years. The Company estimated the fair value of the options using the Black-Scholes options valuation model. The fair value of the options is being amortized on a straight-line basis over the requisite service period of the awards. The fair value was estimated using the following assumptions:
|  | Nine Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2024 |  |  | 2023 |
Risk-free interest rate |  |  | 3.58% - 4.69% |  |  |  | 3.45% - 4.18% |
Expected life (in years) |  |  | 5.50 - 6.25 |  |  |  | 5.50 - 6.44 |
Dividend yield |  |  | 0% |  |  |  | 0% |
Expected volatility |  |  | 85.55% - 127.07% |  |  |  | 75.2% - 77.7% |
The weighted average assumptions used to estimate the fair value of stock purchase rights under the ESPP are as follows:
|  | Nine Months Ended |  |  | Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2024 |  |  | 2023 |
Risk-free interest rate |  |  | 5.43% |  |  |  | 5.36% |
Expected life (in years) |  |  | 0.50 |  |  |  | 0.49 |
Dividend yield |  |  | 0% |  |  |  | 0% |
Expected volatility |  |  | 85.55% |  |  |  | 76.50% |
Risk Free Interest Rate: The risk-free rate is based on the U.S. Treasury yields in effect at the time of grant for periods corresponding with the expected term of the option. Expected Term: The Company uses the simplified method to calculate expected term described in the SEC’s Staff Accounting Bulletin No. 107, which takes into account vesting term and expiration date of the options. Dividend Yield: The Company has never declared or paid any cash dividends and does not plan to pay cash dividends in the foreseeable future, and therefore, used an expected dividend yield of zero in the valuation model. Volatility: Volatility is based on the historical volatility of the Company’s publicly traded shares for the expected term. Restricted Stock Units The following table presents RSU activity under the 2020 Plan as of September 30, 2024:
|  | Number of Stock Units |  |  | Weighted-Average Grant Date Fair Value |
Unvested shares at December 31, 2023 |  |  | 236,296 |  |  | $ | 13.60 |
Granted |  |  | 952,665 |  |  |  | 1.80 |
Vested |  |  | (227,379 | ) |  |  | 13.62 |
Forfeited |  |  | (53,916 | ) |  |  | 3.75 |
Unvested shares at September 30, 2024 |  |  | 907,666 |  |  | $ | 1.80 |
As of September 30, 2024, there was $845 of unrecognized compensation cost related to RSUs that are expected to vest. These costs are expected to be recognized over a weighted average remaining vesting period of 0.8 years. Stock-based compensation expense recorded under ASC 718 related to stock options granted and common stock issued under the 2020 ESPP were allocated to research and development and general and administrative expense as follows:
|  | For the Three Months Ended |  |  | For the Nine Months Ended |
|  | September 30, |  |  | September 30, |  |  | September 30, |  |  | September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Research and development |  | $ | 1,009 |  |  | $ | 1,500 |  |  | $ | 3,245 |  |  | $ | 4,139 |
General and administrative |  |  | 1,215 |  |  |  | 1,824 |  |  |  | 4,356 |  |  |  | 5,270 |
Total stock-based compensation |  | $ | 2,224 |  |  | $ | 3,324 |  |  | $ | 7,601 |  |  | $ | 9,409 |
Stock-based compensation expense by award type included within the condensed consolidated statements of operations is as follows:
|  | For the Three Months Ended |  |  | For the Nine Months Ended |
|  | September 30, |  |  | September 30, |  |  | September 30, |  |  | September 30, |
|  | 2024 |  |  | 2023 |  |  | 2024 |  |  | 2023 |
Stock options |  | $ | 1,447 |  |  | $ | 2,644 |  |  | $ | 5,515 |  |  | $ | 7,414 |
Restricted stock units |  |  | 719 |  |  |  | 625 |  |  |  | 1,918 |  |  |  | 1,832 |
Employee stock purchase plan |  |  | 58 |  |  |  | 55 |  |  |  | 168 |  |  |  | 163 |
Total stock-based compensation |  | $ | 2,224 |  |  | $ | 3,324 |  |  | $ | 7,601 |  |  | $ | 9,409 |

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