7. SHARE-BASED COMPENSATION |
7. SHARE-BASED COMPENSATION
Share-Based Compensation
We issue share-based compensation to employees
in the form of stock options, restricted stock units (RSUs), and performance stock units (PSUs). We account for the share-based
awards by recognizing the fair value of share-based compensation expense on a straight-line basis over the service period of the
award, net of estimated forfeitures. The fair value of stock options is estimated on the grant date using the Black-Scholes option
pricing model. The fair value of RSUs and non-executive PSUs is based on the closing price of our common stock on the grant date.
Executive PSUs are valued using a Monte Carlo simulation model using the following inputs: stock price, volatility, and risk-free
interest rates. Changes in estimated inputs or using other option valuation methods may result in materially different option values
and share-based compensation expense.
The following table summarizes the amount of share-based
compensation expense by line item on the statements of operations:
Share-based
Compensation Expense by Line Item
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Share-based compensation expense |
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Three Months Ended |
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Nine Months Ended |
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September 30, |
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September 30, |
(in thousands) |
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2022 |
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2021 |
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2022 |
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2021 |
Research and development expense |
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$ |
1,831 |
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$ |
1,371 |
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$ |
5,681 |
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$ |
4,758 |
Sales, marketing, general and administrative expense |
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2,250 |
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1,439 |
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6,254 |
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7,587 |
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$ |
4,081 |
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$ |
2,810 |
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$ |
11,935 |
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$ |
12,345 |
Options activity and positions
The following table summarizes shares, weighted-average
exercise price, weighted-average remaining contractual term and aggregate intrinsic value of options outstanding and options exercisable
as of September 30, 2022:
Option Positions
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Weighted- |
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Weighted- |
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Average |
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Average |
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Remaining |
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Aggregate |
Options |
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Exercise |
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Contractual |
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Intrinsic |
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Shares |
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Price |
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Term (years) |
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Value |
Outstanding as of September 30, 2022 |
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945,000 |
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$ |
1.26 |
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5.9 |
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$ |
2,302,000 |
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Exercisable as of September 30, 2022 |
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941,000 |
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$ |
1.26 |
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5.9 |
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$ |
2,288,000 |
As of September 30, 2022, our unrecognized share-based
employee compensation related to stock options was $1,000 which we plan to expense over the next 1.4 years.
Restricted stock activity and positions
The following table summarizes activity and positions
with respect to RSUs and PSUs for the nine months ended September 30, 2022:
Restricted Stock Unit Activity
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Weighted-average |
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Shares |
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price |
Unvested as of December 31, 2021 |
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2,625,000 |
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$ |
13.05 |
Granted |
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9,083,000 |
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2.45 |
Vested |
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(1,019,000) |
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10.59 |
Forfeited |
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(1,098,000) |
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7.34 |
Unvested as of September 30, 2022 |
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9,591,000 |
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$ |
3.93 |
In June 2022, we issued 6.0 million PSUs to our executive officers. The
PSUs are subject to the achievement of performance goals and time-based vesting. The PSUs will become eligible to vest if the closing
price of our common stock reaches or exceeds specified price thresholds for at least 20 consecutive trading days during
the performance period through December 31, 2025. If the performance goals are met, the portion of the PSUs deemed earned will become
subject to time-based vesting in equal quarterly installments over two years starting from the date on which the goal is achieved. These
PSUs were valued using a Monte Carlo simulation model using the following inputs: stock price, volatility, and risk-free interest rates.
During the nine months ended September 30, 2022, we issued 2.4 million PSUs to
non-executive employees subject to the achievement of development goals. These shares were valued based on the closing price of our common
stock on the dates of grant. These shares vest quarterly over two years from the achievement of established performance criteria.
During
the nine months ended September 30, 2022, we issued 511,000
time-based RSUs to non-executive employees for promotion, retention, and new hire grants. These shares were valued based on the
closing price of our common stock on the dates of grant. These shares vest over three or four years from the date of
grant.
As of September 30, 2022, our unrecognized share-based compensation related
to RSUs was $15.9 million which we plan to expense over the next 1.8 years. Our unrecognized share-based compensation related to the executive
PSUs was $8.5 million, which we plan to expense over the next 2.9 years and our unrecognized share-based compensation related to the non-executive
PSUs was $4.0 million, which we plan to expense over the next 1.2 years.
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