Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.20.1
Stock-Based Compensation
3 Months Ended
Mar. 31, 2020
Stock-Based Compensation  
Stock-Based Compensation

Note 9. 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 March 31, 2020, there were 3,294,956 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 vesting terms determined by the board of directors, which is generally four years.

The fair value of options granted during the three months ended March 31, 2020 was estimated using the Black-Scholes option-pricing model with the following assumptions.

 

 

 

 

 

 

 

 

 

 

 

For the

 

 

 

Three Months Ended

 

 

    

March 31, 2020

  

Exercise price per share

 

$

13.60

 

-

$

32.48

 

Expected stock price volatility

 

 

78.25

%

-

 

80.76

%

Risk-free rate of interest

 

 

1.17

%

-

 

2.38

%

Fair value of grants per share

 

$

9.04

 

-

$

23.58

 

Expected Term (years)

 

 

4.7

 

-

 

7.0

 

 

Prior to the Company’s IPO, it did 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 under the 2017 Stock Plan for the three months ended March 31, 2020 (in thousands, except share and per share data):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

Number

 

Weighted Average

 

Total

 

Remaining

 

 

of

 

Exercise

 

Intrinsic

 

Contractual

 

  

Shares

  

Price per Share

  

Value

  

Life (in years)

Outstanding as of January 1, 2020

 

3,058,349

 

$

3.26

 

$

34,725

 

8.0

Options granted

 

100,000

 

$

17.18

 

$

 —

 

9.8

Options forfeited

 

(334)

 

$

10.28

 

$

 —

 

 

Options exercised

 

(95,000)

 

$

0.41

 

$

 —

 

 

Outstanding as of March 31, 2020

 

3,063,015

 

$

3.80

 

$

56,901

 

7.8

 

 

 

 

 

 

 

 

 

 

 

Options vested and exercisable as of March 31, 2020

 

2,132,356

 

$

2.06

 

$

43,269

 

7.6

 

There were 231,941 shares available for grant as of March 31, 2020.

The Company recognized stock-based compensation expense under the 2017 Stock Plan of $768  and $659 for the three months ended March 31, 2020 and 2019, respectively.

The total grant-date fair value of options was $1,195 for the three months ended March 31, 2020.

Unrecognized compensation expense related to unvested awards as of March 31, 2020 was $3,198 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 1.2 years.

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 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.

Share based compensation expense (income), net of forfeitures, recognized by the Company in its statements of operations related to BioXcel equity awards totaled approximately $8 and $23 for the three months ended March 31, 2020 and 2019, respectively.

Total share based compensation charges were approximately $776 and $682 for the three months ended March 31, 2020 and 2019, respectively. The Company charged $466 and 310 to research and development and general and administrative expense for the three months ended March 31, 2020, respectively. The Company charged $453 and 229 to research and development and general and administrative expense for the three months ended March 31, 2019, respectively.