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Stock-based compensation | 9 Months Ended
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Sep. 30, 2022
Share-Based Payment Arrangement [Abstract] |
Stock-based compensation | Stock-based compensation Stock incentive plans As of June 30, 2017, there were 3,141,625 stock options outstanding under the Company’s 2007 Stock Incentive Plan (the "2007 Plan"). The 2007 Plan expired in June 2017. Any cancellations or forfeitures of options granted under the 2007 Plan will increase the options available under the 2017 Stock Incentive Plan (the "2017 Plan"), as described below. In June 2017, the Company’s stockholders approved the 2017 Plan. Under the 2017 Plan initially, up to 2,255,000 shares of common stock could be granted to the Company's employees, officers, directors, consultants and advisors in the form of options, RSUs or other stock-based awards. The number of shares of common stock issuable under the 2017 Plan will be cumulatively increased annually on January 1 by the lesser of (a) 4% of the outstanding shares on the immediately preceding December 31 or (b) such other amount specified by the Board. The terms of the awards are determined by the Board, subject to the provisions of the 2017 Plan. Any cancellations or forfeitures of options granted under the 2007 Plan, which expired in June 2017, would increase the number of shares that could be granted under the 2017 Plan. On January 1, 2022, the number of shares of common stock issuable under the 2017 Plan was increased by 2,948,362 shares. As of September 30, 2022, there were 1,372,006 shares available for future issuance under the 2017 Plan. During the nine months ended September 30, 2022, the Company granted 3,532,433 RSUs and options to purchase shares of common stock to employees and non-employee directors under the 2017 Plan. Under the 2017 Plan, both with respect to incentive stock options and nonqualified stock options, the exercise price per share will not be less than the fair market value of the common stock on the date of grant and the vesting period is generally four years. Options granted under the 2017 Plan expire no later than 10 years from the date of grant. Options under the 2007 Plan were granted at an exercise price established by the Board (or a committee thereof) that was not less than the fair market value of the underlying common stock on the date of grant and subject to such vesting provisions determined by the Board (or a committee thereof). The Board may accelerate vesting or otherwise adjust the terms of granted options in the case of a merger, consolidation, dissolution, or liquidation of the Company. Inducement awards From time to time, the Company grants to its employees, upon approval by the Board or an authorized committee thereof, options to purchase shares of common stock as an inducement to employment in accordance with Nasdaq Listing Rule 5635(c)(4). Prior to February 2022, these options were granted outside of an existing equity incentive plan. These options are subject to terms substantially the same as the 2017 Plan. In February 2022, the Board adopted the Company's 2022 Inducement Stock Incentive Plan (the "Inducement Plan"), which provides for the grant of nonstatutory options, stock appreciation rights, restricted stock, RSUs and other stock-based awards, with respect to an aggregate of 2,000,000 shares of the Company's common stock (subject to adjustment as provided in the Inducement Plan). During the nine months ended September 30, 2022, the Company granted 612,450 RSUs and options to purchase shares of common stock to newly hired employees under the Inducement Plan. As of September 30, 2022, there were 1,403,975 shares available for future issuance under the Inducement Plan. As of September 30, 2022, there were 757,500 options to purchase shares of common stock outstanding which were granted as inducement awards prior to the establishment of the Inducement Plan. Stock option activity A summary of stock option activity is as follows:
| Number of Shares |  | Weighted- Average Exercise Price
Outstanding at January 1, 2022 | 8,342,429 |  |  | $ | 11.25 |
Granted | 2,765,034 |  |  | 5.41 |
Exercised | (54,299) |  |  | 3.81 |
Cancelled | (528,384) |  |  | 13.33 |
Outstanding at September 30, 2022 | 10,524,780 |  |  | $ | 9.65 |
Vested and expected to vest at September 30, 2022 | 10,524,780 |  |  | $ | 9.65 |
Exercisable at September 30, 2022 | 5,339,351 |  |  | $ | 8.96 |
The weighted-average grant date fair value of options granted during the nine months ended September 30, 2022 and 2021 was $3.96 and $12.37 per share, respectively. The total intrinsic value of options exercised during the nine months ended September 30, 2022 and 2021 was $0.1 million and $3.9 million, respectively. The aggregate intrinsic value represents the difference between the exercise price and the selling price received by option holders upon the exercise of stock options during the period. Cash received from the exercise of stock options was $0.2 million and $1.5 million for the nine months ended September 30, 2022 and 2021, respectively. Restricted stock units The Company periodically issues RSUs with a service condition to certain officers and other employees that typically vest between one year and four years from the grant date. A summary of the RSU activity is as follows:
| Number of Shares
Unvested at January 1, 2022 | 817,609 |
Granted | 1,379,849 |
Vested | (190,841) |
Forfeited | (135,935) |
Unvested at September 30, 2022 | 1,870,682 |
Stock-based compensation expense The Company uses the provisions of ASC 718, Stock Compensation, to account for all stock-based awards to employees and non-employees. Stock-based compensation expense is recognized over the requisite service period, which is generally the vesting period, using the straight-line method. The following table presents stock-based compensation expense by award type included within the Company’s condensed consolidated statements of operations and comprehensive loss:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(in thousands) | 2022 |  | 2021 |  | 2022 |  | 2021
Stock options | $ | 3,901 |  |  | $ | 3,986 |  |  | $ | 11,952 |  |  | $ | 10,617 |
Restricted stock units | 1,365 |  |  | 881 |  |  | 3,832 |  |  | 2,636 |
Employee stock purchase plan | 109 |  |  | 61 |  |  | 424 |  |  | 296 |
Stock-based compensation expense included in total operating expenses | $ | 5,375 |  |  | $ | 4,928 |  |  | $ | 16,208 |  |  | $ | 13,549 |
The following table presents stock-based compensation expense as reflected in the Company’s condensed consolidated statements of operations and comprehensive loss:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(in thousands) | 2022 |  | 2021 |  | 2022 |  | 2021
Research and development | $ | 2,890 |  |  | $ | 2,607 |  |  | $ | 8,569 |  |  | $ | 7,410 |
General and administrative | 2,485 |  |  | 2,321 |  |  | 7,639 |  |  | 6,139 |
Stock-based compensation expense included in total operating expenses | $ | 5,375 |  |  | $ | 4,928 |  |  | $ | 16,208 |  |  | $ | 13,549 |
As of September 30, 2022, there was $34.5 million and $12.6 million of unrecognized stock-based compensation expense related to unvested stock options and unvested RSUs, respectively, that is expected to be recognized over a weighted-average period of 2.2 years and 2.8 years, respectively. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Risk-free interest rate | 2.9 | % |  | 1.0 | % |  | 2.0 | % |  | 0.8 | %
Expected dividend yield | — | % |  | — | % |  | — | % |  | — | %
Expected term (years) | 6.11 |  | 6.11 |  | 5.99 |  | 6.05
Expected stock price volatility | 94 | % |  | 82 | % |  | 88 | % |  | 83 | %
Expected volatility for the Company’s common stock is determined based on the historical volatility of comparable publicly traded companies. The risk-free interest rate is based on the yield of U.S. Treasury securities consistent with the expected term of the option. No dividend yield was assumed as the Company has not historically and does not expect to pay dividends on its common stock. The expected term of the options granted is based on the use of the simplified method, in which the expected term is presumed to be the mid-point between the vesting date and the end of the contractual term. The fair value of RSUs is determined based on the closing price of the Company’s common stock on the date of grant. Employee stock purchase plan During the year ended December 31, 2017, the Board adopted, and the Company’s stockholders approved the 2017 employee stock purchase plan (the "2017 ESPP"). The Company issued 154,235 shares under the 2017 ESPP during the nine months ended September 30, 2022 and issued 36,198 shares under the 2017 ESPP during the nine months ended September 30, 2021. As of September 30, 2022, there were 412,330 shares available for issuance under the 2017 ESPP.

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