Annual report pursuant to Section 13 and 15(d)

Stock-Based Compensation

v3.19.1
Stock-Based Compensation
12 Months Ended
Dec. 31, 2018
Stock-Based Compensation  
Stock-Based Compensation

Note 10. Stock-Based Compensation

Stock Options

The Company’s 2017 Stock Incentive Plan (the “2017 Stock Plan”) became effective in August 2017 and will expire in August 2027. Under the 2017 Stock Plan, the Company may grant incentive stock options, non-statutory stock options, restricted stock awards and other stock-based awards.

As of December 31, 2018, there were 3,444,894 shares of the Company’s common stock authorized for issuance under the 2017 Stock Plan. Options granted under the 2017 Stock Plan have a term of ten years with the vesting term determined by the board of directors, which is generally four years.

The fair value of options granted during the year ended December 31, 2018 was estimated using the Black-Scholes option-pricing model with the following assumptions. Stock‑based awards to non‑employees are re‑measured at fair value each financial reporting date until performance is complete.

The weighted average fair value of options granted in 2018 and 2017 was $7.64 and $0.41 per option, respectively and were determined using the following assumptions:

Employees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the

 

 

 

Year Ended

 

 

    

December 31, 2018

  

Exercise price per share

 

$

0.41

 

-

$

11.00

 

Expected stock price volatility

 

 

77.12

%

-

 

81.49

%

Risk-free rate of interest

 

 

2.68

%

-

 

3.12

%

Fair value of grants per share

 

$

3.41

 

-

$

10.82

 

Expected Term (years)

 

 

4.7

 

-

 

7.0

 

 

Non-Employees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For the

 

 

 

Year Ended

 

 

    

December 31, 2018

  

Exercise price per share

 

$

0.41

 

-

$

11.00

 

Expected stock price volatility

 

 

76.03

%

-

 

82.91

%

Risk-free rate of interest

 

 

2.43

%

-

 

2.68

%

Fair value of grants per share

 

$

2.37

 

-

$

7.16

 

Expected Term (years)

 

 

0.3

 

-

 

9.8

 

 

Since the Company completed its IPO within the last year, it does not have a history of market prices of its common stock and, as such, volatility was estimated using historical volatilities of similar public companies. The expected term of the employee awards is estimated based on the simplified method, which calculates the expected term based upon the midpoint of the term 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 term of non-employee awards represents the awards contractual term. The expected dividend yield is 0% 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 based on the United States Treasury yield curve in effect at the time of grant, with maturities approximating the expected term of the stock options.

The following table summarizes information about stock option activity during the period the Plan was in effect (in thousands, except share and per share data):

Employee Options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

Number

 

Weighted Average

 

Total

 

Remaining

 

 

of

 

Exercise

 

Intrinsic

 

Contractual

 

  

Shares

  

Price per Share

  

Value

  

Life (in years)

Employee options granted during 2017

 

1,813,524

 

$

0.65

 

$

13,894,762

 

9.7

Outstanding as of December 31, 2017

 

1,813,524

 

$

0.65

 

$

13,894,762

 

9.7

Employee options granted

 

400,648

 

$

9.77

 

$

 —

 

9.5

Options reclassified from Non-employee

 

154,178

 

$

2.45

 

$

429,266

 

9.3

Options reclassified to Non-employee

 

(62,094)

 

$

0.41

 

$

 —

 

 —

Outstanding as of December 31, 2018

 

2,306,256

 

$

2.36

 

$

6,182,252

 

8.8

 

 

 

 

 

 

 

 

 

 

 

Options vested and exercisable as of December 31, 2018

 

1,517,151

 

$

0.51

 

$

5,075,412

 

8.7

 

Non-Employee Options

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

Number

 

Weighted Average

 

Total

 

Remaining

 

 

of

 

Exercise

 

Intrinsic

 

Contractual

 

  

Shares

  

Price per Share

  

Value

  

Life (in years)

Non-employee options granted during 2017

 

496,515

 

$

0.41

 

$

3,922,238

 

9.6

Outstanding as of December 31, 2017

 

496,515

 

$

0.41

 

$

3,922,238

 

9.6

Non-employee options granted

 

111,465

 

$

9.50

 

$

 —

 

9.2

Non-employee options forfeited

 

(60,323)

 

$

0.41

 

$

 —

 

 —

Non-employee options reclassified to Employee

 

(154,178)

 

$

2.45

 

$

 —

 

 —

Non-employee options exercised

 

(17,676)

 

$

0.41

 

$

 —

 

 —

Options reclassified from Employee

 

62,094

 

$

0.41

 

$

8,904

 

8.9

Outstanding as of December 31, 2018

 

437,897

 

$

2.16

 

$

1,228,838

 

8.8

 

 

 

 

 

 

 

 

 

 

 

Options vested and exercisable as of December 31, 2018

 

131,934

 

$

0.51

 

$

442,206

 

8.5

 

There were 700,741 shares available for grant as of December 31, 2018.

The Company recognized stock-based compensation expense under the 2017 Stock Plan of $2,872 and $1,168 for the years ended December 31, 2018 and 2017, respectively.

Unrecognized compensation expense related to unvested awards as of December 31, 2018 was $2,846 for employees and $527 for non-employees 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 1.7 years for employees and 1.2 years for non-employees.

BioXcel Charges

BioXcel has granted stock options to its employees under its own Equity Incentive Plan (“BioXcel Plan”). Stock-based compensation expense from the BioXcel Plan is allocated to the Company over the period over which those stock option awards vest and are based the on the percentage of time spent on Company activities compared to BioXcel activities, which is the same basis used for allocation of salary costs. The BioXcel stock option awards are valued at fair value on the date of grant and that fair value is recognized over the requisite service period. The estimated fair value of these BioXcel stock option awards was determined using the Black Scholes option pricing model on the date of grant. Significant judgment and estimates were used to estimate the fair value of these awards, as they are not publicly traded.

Stock based compensation expense (income), net of forfeitures, recognized by the Company in its statements of operations related to BioXcel equity awards totaled approximately $210 and $439 for the years ended December 31, 2018 and 2017, respectively.

Total stock based compensation charges were approximately $3,082 and $1,606 for the years ended December 31, 2018 and 2017, respectively.