v3.23.3

Stockholders’ Equity and Stock-Based Compensation | 9 Months Ended
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Sep. 30, 2023
Share-Based Payment Arrangement [Abstract] |
Stockholders’ Equity and Stock-Based Compensation | Stockholders’ Equity and Stock-Based Compensation Reverse Stock Split On August 4, 2023, the Company completed a reverse stock split of its outstanding shares of common stock pursuant to which every 10 shares of issued and outstanding common stock were exchanged for one share of common stock. No fractional shares were issued in the reverse stock split. Instead, the Company paid cash (without interest) equal to such fraction multiplied by $5.90 per share (a price equal to the average of the closing sales prices of the common stock on The Nasdaq Capital Market during regular trading hours for the five consecutive trading days immediately preceding August 4, with such average closing sales prices being adjusted to give effect to a Reverse Stock Split). All share and per share amounts included within these condensed consolidated financial statements have been retrospectively adjusted to reflect the reverse stock split. Cowen At-the-Market Facility On March 23, 2021, the Company entered into a Sales Agreement with Cowen and Company, LLC (“Cowen”) which provides for the sale, in the Company’s sole discretion, of shares of common stock having an aggregate offering price of up to $350.0 million through or to Cowen, acting as sales agent or principal, which was amended on March 9, 2023 to decrease the maximum aggregate offering price to $200.0 million for sales made on and after the date of the amendment (the “Cowen ATM”). The Company agreed to pay Cowen a commission of up to 3.0% of the aggregate gross proceeds from each sale of shares, reimburse legal fees and disbursements and provide Cowen with customary indemnification and contribution rights. In August 2022, the Company sold approximately 0.7 million shares of common stock under the Cowen ATM at an average share price of $34.59 per share, and received gross proceeds of approximately $23.1 million before deducting offering costs of $0.6 million. During the nine months ended September 30, 2023, the Company sold approximately 5.6 million shares of common stock under the Cowen ATM at an average share price of $8.28 per share, and received gross proceeds of approximately $46.5 million before deducting offering costs of $1.2 million. Stock Warrants A summary of the Company’s warrant activity during the nine months ended September 30, 2023 was as follows:
| Shares of Stock under Warrants |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Term |  | Aggregate Intrinsic Value
Outstanding at January 1, 2023 | 436,000 |  |  | $ | 59.60 |  |  | 0.76 |  | $ | 273,000 |
Granted | — |  |  | — |  |  | — |  |  | — |
Exercised | — |  |  | — |  |  | — |  |  | — |
Canceled | (396,000) |  |  | — |  |  | — |  |  | — |
Outstanding at September 30, 2023 | 40,000 |  |  | $ | 653.98 |  |  | 1.25 |  | $ | — |
Stock Options A summary of the Company’s stock option activity during the nine months ended September 30, 2023 was as follows:
| Shares of Stock under Stock Options |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Term |  | Aggregate Intrinsic Value
Outstanding at January 1, 2023 | 2,402,000 |  |  | $ | 32.80 |  |  | 8.50 |  | $ | 2,068,000 |
Granted | 1,427,000 |  |  | 12.23 |  |  | — |  |  |
Exercised | (4,000) |  |  | 5.49 |  |  | — |  |  | 25,000 |
Canceled | (298,000) |  |  | 28.85 |  |  | — |  |  |
Outstanding at September 30, 2023 | 3,527,000 |  |  | $ | 24.86 |  |  | 8.52 |  | $ | 6,000 |
Vested and exercisable at September 30, 2023 | 1,308,000 |  |  | $ | 31.94 |  |  | 7.75 |  | $ | — |
For the three months ended September 30, 2023, the weighted-average grant date fair value of stock options granted was $2.32 per share. For the nine months ended September 30, 2023, the weighted-average grant date fair value of stock options granted was $8.24 per share. Stock-Based Compensation The Company recognized stock-based compensation expense for the periods presented as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
2023 |  | 2022 |  | 2023 |  | 2022
Cost of product revenue | $ | 139,000 |  |  | $ | — |  |  | $ | 395,000 |  |  | $ | — |
Cost of service and other revenue | 48,000 |  |  | — |  |  | 136,000 |  |  | $ | — |
Research and development | 1,249,000 |  |  | 3,606,000 |  |  | 3,907,000 |  |  | $ | 10,401,000 |
General and administrative | 2,556,000 |  |  | 2,453,000 |  |  | 7,368,000 |  |  | 6,537,000 |
Total stock-based compensation expense | $ | 3,992,000 |  |  | $ | 6,059,000 |  |  | $ | 11,806,000 |  |  | $ | 16,938,000 |
The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the employee stock option grants during the periods presented were as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
2023 |  | 2022 |  | 2023 |  | 2022
Risk-free interest rate | 4.3 | % |  | 3.1 | % |  | 4.0 | % |  | 2.2 | %
Expected volatility | 78.9 | % |  | 71.0 | % |  | 75.2 | % |  | 70.3 | %
Expected term (in years) | 6.1 |  | 6.1 |  | 5.9 |  | 6.0
Expected dividend yield | 0.0 | % |  | 0.0 | % |  | 0.0 | % |  | 0.0 | %
Restricted Stock A restricted stock award in the amount of 0.5 million shares with a grant date fair value of $52.00 a share was granted as part of the acquisition of BioDiscovery. One-third of the Restricted Shares was scheduled to vest on October 18, 2022 and one-twelfth of the Restricted Shares was scheduled to vest every three months following October 18, 2022, subject to continuous service of the key employee. The fair value of the restricted stock award was based on the market value of common stock as of the date of grant and was amortized to stock-based compensation expense over the service period. On October 4, 2022, the restricted stock award was modified due to the change in employment status of the key employee from full time to emeritus. As a result of the modification, the restricted stock award vested in full on October 4, 2022. The award was revalued on the modification date, resulting in a modified grant date fair value of $20.40 a share ($15.8 million less than the initial grant date fair value of the award). The fair value of the modified restricted stock award was based on the market value of common stock as of the modification date. Restricted Stock Units and Performance Stock Units The following table summarizes RSU activity during the nine months ended September 30, 2023:
| Stock Units |  | Weighted- Average Grant Date Fair Value per Share
Outstanding at January 1, 2023 | 10,000 |  |  | $ | 47.40 |
Granted | 287,000 |  |  | 14.40
Released | (10,000) |  |  | 47.40 |
Forfeited | (21,000) |  |  | 16.30 |
Outstanding at September 30, 2023 | 266,000 |  | $ | 16.30
The total intrinsic value of the RSUs that vested during the nine months ended September 30, 2023 was $0.5 million, determined as of the date of vesting. The weighted average remaining contractual term for the RSUs is 3.2 years as of September 30, 2023. The following table summarizes PSU activity during the nine months ended September 30, 2023:
| Stock Units |  | Weighted- Average Grant Date Fair Value per Share
Outstanding at January 1, 2023 | 29,000 |  | $ | 47.4 |
Granted | — |  | —
Released | — |  | —
Forfeited | — |  | —
Outstanding at September 30, 2023 | 29,000 |  | $ | 47.4
The weighted average remaining contractual term for the PSUs is 0.3 years as of September 30, 2023. Executive Option Grants and RSUs On February 15, 2023, the compensation committee of the Company’s board of directors granted various executive officers stock options to purchase an aggregate of 0.3 million shares of common stock at an exercise price of $16.30 per share, and RSUs amounting to 0.1 million shares of common stock at a grant date fair value of $16.30 per share, in each case with an effective grant date and vesting commencement date of February 15, 2023 (the “Grant Date”). These stock option grants and RSUs were issued from the 2018 Equity Incentive Plan. The shares subject to the option shall vest monthly over 48 months beginning on the one-month anniversary of the Grant Date, such that the option shall be fully vested and exercisable on the four-year anniversary of the Grant Date. The RSUs shall vest annually over four years beginning one year after the Grant Date, and the balance of the shares vest in a series of three successive equal annual installments measured from the first anniversary of the Grant Date, such that the RSU shall be fully vested on the four-year anniversary of the Grant Date. Series A Preferred Stock On April 13, 2023, the Company entered into an agreement with David Barker, the Chair of the Company’s board of directors, pursuant to which the Company agreed to issue and sell one share of the Company’s Series A Preferred Stock, par value $0.0001 per share for a purchase price of $100.00. The closing of the sale and purchase of the share of Series A Preferred was completed on April 13, 2023. The share of Series A Preferred was entitled 3.0 billion votes, but had the right to vote only on a proposal submitted to the stockholders of the Company to adopt an amendment, or a series of alternate amendments, to the Company’s Amended and Restated Certificate of Incorporation, as amended, to combine the outstanding shares of common stock into a smaller number of shares of common stock at a ratio specified in or determined in accordance with the terms of such amendment or series of alternate amendments (“Reverse Stock Split Proposal”), and had no voting rights (i) except with respect to a Reverse Stock Split Proposal and the votes of the share of Series A Preferred were required to be cast for and against such Reverse Stock Split Proposal in the same proportion as shares of common stock were voted for and against such Reverse Stock Split Proposal (with any shares of common stock that were not voted, whether due to abstentions, broker non-votes or otherwise not counted as votes for or against a Reverse Stock Split Proposal) and (ii) unless the holders of one-third (1/3rd) of the outstanding shares of common stock were present and voted, in person or by proxy, at the meeting of stockholders at which the Reverse Stock Split Proposal was submitted for stockholder approval (or any adjournment thereof). The share of Series A Preferred voted together with the common stock as a single class on the Reverse Stock Split Proposal at the Company’s 2023 Annual Meeting of Stockholders held on June 14, 2023. The Series A Preferred had no other voting rights, except as may have been required by the General Corporation Law of the State of Delaware. The outstanding share of Series A Preferred was redeemed in whole, for a redemption price of $100.00, paid out of funds lawfully available therefor automatically immediately following the approval by the stockholders of the Reverse Stock Split Proposal on June 14, 2023.

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