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Stock-Based Compensation | 9 Months Ended
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Sep. 30, 2021
Share-based Payment Arrangement [Abstract] |
Stock-Based Compensation | STOCK-BASED COMPENSATION Summary of Plans— The Company has the following equity incentive plans: •The X4 Pharmaceuticals Inc. 2015 Employee, Director and Consultant Equity Incentive Plan, as amended (the “2015 Plan”); •The X4 Pharmaceuticals Inc. 2017 Equity Incentive Plan (the “2017 Plan”); and •The X4 Pharmaceuticals Inc. 2019 Inducement Equity Incentive Plan (the “2019 Plan”) The Company also has the following employee stock purchase plan: •The X4 Pharmaceutical Inc. 2017 Employee Stock Purchase Plan (the “2017 ESPP”) These plans are administered by the Board of Directors or by a committee of the Board of Directors. The exercise prices, vesting and other restrictions are determined at the discretion of the Board of Directors, or its committee if so delegated, except that the exercise price per share of stock options may not be less than 100% of the fair market value of the share of common stock on the date of grant and the term of the stock option may not be greater than ten years. Incentive stock options granted to employees and restricted stock awards granted to employees, officers, members of the board of directors, advisors, and consultants of the Company typically vest over four years. Non-statutory options granted to employees, officers, members of the board of directors, advisors, and consultants of the Company typically vest over three or four years. Shares that are expired, terminated, surrendered or canceled under the Plans without having been fully exercised will be available for future awards. 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. As of September 30, 2021, there are an aggregate of approximately 725,000 shares of common stock available for future issuance under the Company’s equity incentive plans. Approximately 200,000 shares of common stock remain available for issuance under the 2017 ESPP. Stock Option Valuation— The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted to employees, directors and non-employees.
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Risk-free interest rate | 1.1 | % |  | 0.4 | % |  | 1.0 | % |  | 0.6 | %
Expected term (in years) | 6.1 |  | 6.1 |  | 6.0 |  | 6.0
Expected volatility | 95.7 | % |  | 95.1 | % |  | 97.6 | % |  | 94.9 | %
Expected dividend yield | 0 | % |  | 0 | % |  | 0 | % |  | 0 | %
Stock Options The following table summarizes the Company’s stock option activity for the nine months ended September 30, 2021:
| Number of Shares |  | Weighted Average Exercise Price |  | Weighted Average Contractual Term (Years) |  | Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2020 | 1,874,514 |  |  | $ | 12.94 |  |  | 8.3 |  | $ | 7 |
Granted | 336,750 |  |  | 6.98 |  |  |  |  |
Exercised | (5,860) |  |  | 7.08 |  |  |  |  |
Forfeited and Expired | (252,513) |  |  | 15.21 |  |  |  |  |
Outstanding as of September 30, 2021 | 1,952,891 |  |  | $ | 11.64 |  |  | 7.9 |  | $ | 9 |
Exercisable as of September 30, 2021 | 919,423 |  |  | $ | 15.45 |  |  | 6.7 |  | $ | — |
Vested and expected to vest as of September 30, 2021 | 1,702,001 |  |  | $ | 11.92 |  |  | 7.8 |  | $ | 5 |
The aggregate intrinsic value of stock options exercised during the nine months ended September 30, 2021 and 2020 was $13 thousand and $43 thousand, respectively. The weighted average grant-date fair value per share of stock options granted during the nine months ended September 30, 2021 and 2020 was $5.39 and $6.93, respectively. Restricted Stock Units— The following table summarizes the Company's restricted stock unit activity for the nine months ended September 30, 2021:
| Number of Shares
Unvested as of December 31, 2020 | 572,460 |
Granted | 649,478 |
Vested | (205,185) |
Forfeited | (109,880) |
Unvested as of September 30, 2021 | 906,873 |
During the nine months ended September 30, 2021, the Company granted time-based restricted stock units to employees. These restricted stock units vest annually over three years. In 2020, the Company granted performance-based restricted stock units, which vest in part based on the Company’s achievement of operational milestones and over time thereafter for the subsequent two years as the grantee continues to provide services to the Company. As of September 30, 2021, all performance criteria had been met. Stock-based compensation expense is being recognized for these performance-based awards using the accelerated attribution model based on the fair value of the awards as of the date of grant and the vesting dates, less estimated forfeitures. Stock-Based Compensation— As of September 30, 2021, total unrecognized compensation expense related to unvested stock options and restricted stock units was $8.6 million, which is expected to be recognized over a weighted average period of 2.3 years. Stock-based compensation expense was classified in the condensed consolidated statements of operations as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2021 |  | 2020 |  | 2021 |  | 2020
Research and development expense | $ | 633 |  |  | $ | 1,006 |  |  | $ | 2,008 |  |  | $ | 1,711 |
General and administrative expense | 883 |  |  | 1,238 |  |  | 2,563 |  |  | 2,319 |
Total stock-based compensation | $ | 1,516 |  |  | $ | 2,244 |  |  | 4,571 |  |  | 4,030 |

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