Quarterly report pursuant to Section 13 or 15(d)

Stock Option and Incentive Plans

Stock Option and Incentive Plans

6 Months Ended

Jun. 30, 2022

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

10. Stock Option and Incentive Plans

Amended and Restated 2008 Equity Incentive Plan

In July 2008, the Company adopted the 2008 Equity Incentive Plan (the “Plan”). On February 26, 2013, the board of directors approved an amended and restated plan (the “Amended Plan”) under which the number of shares of common stock available for issuance was 157,143. For new awards, the period that vested awards would remain exercisable upon termination of service was reduced from ten years to two years. The board of directors also increased the number of shares of common stock available under the Company’s Amended Plan on February 24, 2014 and April 29, 2014 to 185,714 and 235,714, respectively. As of the closing of the Company’s IPO, there were no further grants made under the Amended Plan.

2014 Omnibus Incentive Plan

In April 2014, the Company’s board of directors adopted the 2014 Omnibus Incentive Plan (the “2014 Plan”). The 2014 Plan was approved by the Company’s stockholders on July 3, 2014. The 2014 Plan allows for the granting of incentive and

non-qualified

stock options, restricted stock and stock unit awards, stock appreciation rights and other performance-based awards to the Company’s employees, members of the board of directors and consultants of the Company. On July 28, 2014, the effective date of the 2014 Plan, the number of shares of common stock reserved pursuant to the 2014 Plan was 57,143. The 2014 Plan provides for an annual increase, to be added on the first day of each fiscal year, beginning with the fiscal year ended December 31, 2015 and ending on January 1, 2024, equal to the lesser of (i) 4% of the outstanding shares of common stock on December 31 immediately preceding such date or (ii) a lesser amount determined by the Company’s board of directors. Consistent with the provision for an annual increase, an additional 4,268,682 shares of common stock have been reserved under the 2014 Plan as of January 1, 2022.

2021 Omnibus Incentive Plan

In September 2021, the Company’s board of directors adopted the 2021 Employment Incentive Omnibus Incentive Plan (the “2021 Plan”). The 2021 Plan allows for the granting of

non-qualified

stock options, restricted stock and stock unit awards, stock appreciation rights and other performance-based awards to new employees of the Company. On September 13, 2021, the effective date of the 2021 Plan, 1,000,000 shares of common stock were reserved under the 2021 Plan.

The Company recognized compensation expense for stock-based compensation based on the fair value of the underlying instrument. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. A summary of stock option activity for the six months ended June 30, 2022, is summarized as follows:


	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)		Aggregate Intrinsic Value
Options outstanding at December 31, 2021		2,899,694		$	9.12
Granted		1,674,000			3.33
Exercised		—			—
Expired		(36,788	)		12.10
Forfeited		(87,937	)		4.54

Options outstanding at June 30, 2022		4,448,969			7.01		8.46	$	—

Vested and exercisable at June 30, 2022		1,972,774			10.54		6.97	$	—

The fair value of each option grant is estimated on the date of the grant using the Black-Scholes option-pricing model. The weighted average grant date fair value of options granted during the three months ended June 30, 2022 and 2021 was $3.32 and $4.22, respectively, and during the six months ended June 30, 2022 and 2021 was $3.33 and $4.35, respectively. Total compensation expense recognized amounted to $1.0 million and $0.9 million for the three months ended June 30, 2022 and 2021, respectively, and $1.9 million and $1.5 million for the six months ended June 30, 2022 and 2021, respectively. As of June 30, 2022, the total remaining unrecognized compensation cost related to unvested stock options was approximately $7.2 million which will be recognized over a weighted average period of approximately 2.35 years.

The following assumptions were used to compute the fair value of stock options granted during the period:


	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Risk free interest rate		2.94	%		0.85	%		2.15	%		0.84	%
Expected dividend yield		—			—			—			—
Expected term (in years)		5.52			5.97			5.95			5.98
Expected volatility		91.0	%		94.3	%		91.2	%		94.5	%

Risk-free interest rate

—The Company estimated the risk-free interest rate in reference to yield on U.S. Treasury securities with a maturity date commensurate with the expected term of the associated award.

Expected dividend yield—

The Company estimated the expected dividend yield based on consideration of its historical dividend experience and future dividend expectations. The Company has not historically declared or paid dividends to common stockholders. Moreover, it does not intend to pay dividends in the future, but instead expects to retain any earnings to invest in its continued growth.

Expected term—

The Company based expected term on the midpoint of the vesting period and the contractual term of each respective option grant

Expected volatility—

The Company estimated the expected volatility based on the Company’s historical volatility data.