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Stock-Based Compensation

3 Months Ended

Mar. 31, 2023

Stock-Based Compensation

Stock-Based Compensation

Note 11. Stock-Based Compensation

2017 Equity Incentive Plan

The Company’s 2017 Plan became effective in August 2017. Following the effective date of the Company's 2020 Plan, the Company ceased granting awards under the 2017 Plan, however, the terms and conditions of the 2017 Plan continue to govern any outstanding awards granted thereunder.

2020 Incentive Award Plan

The Company’s 2020 Plan was approved and became effective at the Company’s 2020 annual meeting of stockholders on May 20, 2020, and unless earlier terminated by the Board of Directors, will remain in effect until March 26, 2030. The 2020 Plan originally authorized for issuance the sum of (i) 911 shares of the Company’s common stock and (ii) 233 shares of the Company’s common stock, which represents the number of shares that remained available for issuance under the 2017 Plan immediately prior to the approval of the 2020 Plan by the Company’s stockholders. Any shares of common stock which, immediately prior to the approval of the 2020 Plan by the Company’s stockholders, were subject to awards granted under the 2017 Plan that are forfeited or lapse unexercised and are not issued under the 2017 Plan will increase the number of shares of common stock available for grant under the 2020 Plan. In addition, the number of shares available for issuance under the 2020 Plan will increase on the first day of each calendar year, beginning January 1, 2021 and ending on and including January 1, 2030, by a number of shares equal to the lesser of (A) 4% of the aggregate number of shares of the Company’s common stock outstanding on the final day of the immediately preceding calendar year and (B) such smaller number of shares of common stock as determined by the Board of Directors. The shares available for issuance under the 2020 Plan increased by 1,126 shares and 1,119 shares on January 1, 2023 and 2022, respectively.

Stock-based awards granted under the 2020 Plan have a term of ten years. The vesting schedule of all awards granted under the 2020 Plan is determined by the Board of Directors, which is generally four years.

As of March 31, 2023, there were 660 shares available to be granted under the 2020 Plan.

Restricted stock units

The table below summarizes activity relating to BTI RSUs.



		Number of
		shares

Outstanding as of January 1, 2023		119
Granted		131
Vested		(25)
Outstanding as of March 31, 2023		225

During the first quarter 2023, the Company granted 131 time-based RSUs to certain employees. All of the RSUs vest over four years, with 25% vesting at the one-year anniversary of the grant date and the balance vesting ratably over the remaining 12 quarters of the vesting period. The grant date fair value per share for the RSUs was $19.60. Unrecognized stock-based compensation expense related to these awards was approximately $2,539 as of March 31, 2023.

In 2022, the Company granted 122 (119, net of forfeitures) time-based RSUs to certain employees and consultants. The majority of RSUs granted to employees vest over four years, with 25% vesting at the one-year anniversary of the grant date and the balance vesting ratably over the remaining 12 quarters of the vesting period. 25 RSUs granted to employees in May 2022 cliff-vest 100% at the one-year anniversary of the grant date. RSUs granted to a third-party consultant vest 50% on each of the first and second anniversaries of the grant date. The grant date fair value per share for the RSUs granted in March and May 2022 was $15.31 and $10.76, respectively. Unrecognized stock-based compensation expense related to these awards was approximately $1,067 as of March 31, 2023.

OnkosXcel profit sharing units

The table below summarizes activity relating to profits interests (the “profit sharing units” or “PSUs”) associated with OnkosXcel.



				Weighted average
		Number of		price per unit
		units		(in whole dollars)

Outstanding as of January 1, 2023		1,310		$	5,506
Granted		15		$	10,176
Outstanding as of March 31, 2023		1,325

Vested units as of March 31, 2023		333		$	5,506

During 2022 and the first quarter of 2023, the Company granted 1,325 individual (not in thousands) time-based PSUs related to OnkosXcel to certain employees and consultants of the Company in consideration for services provided to OnkosXcel. The PSUs represent indirect equity interests in OnkosXcel. All PSUs, other than those granted to certain executive employees of the Company, vest ratably over 48 months. PSUs granted to certain executive employees of the Company, vest ratably over 24 months.

The fair values of PSUs granted in the first quarter of 2023 of $8 per unit were estimated at the date of grant using a Black-Scholes option pricing model and assumptions below.



		2023 grant profit share unit valuation inputs

Expected volatility		97.4	%
Risk-free rate of interest		3.6	%
Expected dividend yield		—	%
Expected term		5.8	years

Unrecognized stock-based compensation expense related to these awards was $4,219 at March 31, 2023.

OnkosXcel restricted stock units

The table below summarizes activity relating to restricted stock units associated with OnkosXcel (the “OnkosXcel RSUs”).



		Number of
		units

Outstanding as of January 1, 2023		—
Granted		225
Outstanding as of March 31, 2023		225

In the first quarter of 2023, the Company granted 225 individual (not in thousands) time-based OnkosXcel RSUs to certain employees and a consultant. 125 of the OnkosXcel RSUs vest upon the earlier to occur of (a) 180 days after an initial public offering of OnkosXcel, or (b) a change in control of OnkosXcel. The remaining OnkosXcel RSUs vest over four years, with 25% vesting at the one-year anniversary of the grant date and the balance vesting ratably over the remaining 12 quarters of the vesting period. The weighted average grant date fair value per unit for the OnkosXcel RSUs was approximately $10. Unrecognized stock-based compensation expense related to these awards was approximately $2,194 as of March 31, 2023.

Stock options

A summary of the Company’s stock option activity for the three months ended March 31, 2023 is presented below.



		Number of		Weighted average
		shares		price per share

Outstanding as of January 1, 2023		4,882		$	17.23
Granted		958		$	19.76
Forfeited		(19)		$	18.02
Cancelled		(4)		$	19.04
Exercised		(173)		$	1.50
Outstanding as of March 31, 2023		5,644		$	18.14

Options vested and exercisable as of March 31, 2023		3,112		$	15.28

As of March 31, 2023, the intrinsic value of options outstanding was $36,070. The intrinsic value for stock options is calculated based on the difference between the exercise prices of the underlying awards and the quoted stock price of the Company’s common stock as of the reporting date.

The total intrinsic value of stock options exercised for the three months ended March 31, 2023 was $3,576. No stock options were exercised for the three months ended March 31, 2022. The total intrinsic value of stock options exercisable as of March 31, 2023 and 2022 was $31,617 and $41,577, respectively.

The weighted average grant date fair value per share of options granted during the three months ended March 31, 2023 and 2022 was $15.87 and $12.38, respectively.

The weighted average grant date fair value per share of options vested as of March 31, 2023 was $11.31.

The weighted average remaining contractual life is 5.8 years for options exercisable as of March 31, 2023. The weighted average remaining contractual life was 7.3 years for options outstanding as of March 31, 2023.

Stock-Based Compensation

The fair value of BTI stock options granted during the three months ended March 31, 2023 and 2022 was estimated using the Black-Scholes pricing model with the following assumptions:



		Three months ended							Three months ended
			March 31, 2023						March 31, 2022

Expected term			5.5	years	-	6.1	years		5.5	years	-	6.1	years
Expected stock price volatility			97.0	%	-	97.9	%		92.7	%	-	96.7	%
Risk-free rate of interest			3.6	%	-	4.2	%		1.5	%	-	2.6	%
Expected dividend yield			0.0	%	-	0.0	%		0.0	%	-	0.0	%

In 2023, the Company began using the historical volatility of its common stock to estimate volatility. Prior to 2023, volatility was estimated using a combination of the historical volatility of publicly traded peer companies and that of the Company’s common stock. The expected term of the awards is estimated based on the simplified method, which calculates the expected term based upon the midpoint of the life of the award and the vesting period. The Company uses the simplified method because it does not have sufficient option exercise data to provide a reasonable basis upon which to estimate the expected term. The expected dividend yield is zero percent as the Company has no history of paying dividends nor does management expect to pay dividends over the contractual terms of these options. The risk-free interest rates are determined by reference to the U.S. Treasury yield curve in effect at the time of grant, with maturities approximating the expected term of the stock options. The fair value of the underlying common stock is generally determined as the closing price of the Company’s common stock on The Nasdaq Capital Market on the grant date, with consideration of whether there is material nonpublic information that could impact that estimated fair value when it is released.

The Company recognized stock-based compensation expense related to awards issued under the 2017 Plan and the 2020 Plan, as well as the OnkosXcel RSUs and PSUs, of $4,877 and $3,825 for the three months ended March 31, 2023 and 2022, respectively, which were comprised as follows:


		Three Months Ended March 31,
		2023			2022

Research and development		$	1,297		$	1,001
Selling, general and administrative			3,580			2,824
Total		$	4,877		$	3,825

Unrecognized compensation expense related to unvested BTI stock option awards as of March 31, 2023, was $28,849 and will be recognized over the remaining vesting periods of the underlying awards. The weighted-average period over which such compensation is expected to be recognized is 1.9 years.

2020 Employee Stock Purchase Plan

The Company’s 2020 Employee Stock Purchase Plan (the “ESPP”) was also approved and became effective at the Company’s 2020 annual meeting of stockholders on May 20, 2020. The ESPP is designed to assist eligible employees of the Company with the opportunity to purchase the Company’s common stock at a discount through accumulated payroll deductions during successive offering periods. The aggregate number of shares that may be issued pursuant to rights granted under the ESPP is 100 shares of common stock. In addition, the number of shares available for issuance under the ESPP will increase on the first day of each calendar year, beginning on January 1, 2021 and ending on and including January 1, 2030, by a number of shares of common stock equal to the lesser of (a) 1% of the shares outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares as determined by the Board of Directors. The number of shares that may be issued or transferred pursuant to rights granted under the component of the ESPP that is intended to qualify for favorable U.S. federal tax treatment under Section 423 of the Internal Revenue Code (the “Section 423 Component”) shall not exceed 500 shares. The purchase price will be

determined by the administrator of the ESPP and, for purposes of the Section 423 Component, shall not be less than 85% of the fair value of a share on the first trading day or on the last trading day of the applicable offering period, whichever is lower. The shares available for issuance under the ESPP increased by 281 shares and 280 shares on January 1, 2023 and 2022, respectively. To date, no shares have been sold under the ESPP.