Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.20.2
Stock-Based Compensation
6 Months Ended
Jun. 30, 2020
Stock-Based Compensation  
Stock-Based Compensation

Note 9. Stock-Based Compensation

Stock Options

The Company’s 2017 Stock Plan) became effective in August 2017. Following the effective date of the Company's 2020 Stock Plan (as defined below), the Company ceased granting awards under the 2017 Stock Plan; however the terms and conditions of the 2017 Stock Plan continue to govern any outstanding awards granted thereunder.

The Company’s 2020 Incentive Award Plan (the “2020 Stock Plan”) was approved and became effective at the Company’s 2020 annual meeting of Shareholders on May 20, 2020. The 2020 Stock Plan authorizes for issuance the sum of (i) 911,000 shares of the Company’s common stock authorized for issuance and 231,941 shares of the Company’s common stock which represents the number of shares that remained available for issuance under the 2017 Stock Plan immediately prior to the approval of the 2020 Stock Plan by the Company’s shareholders. Any shares of Common Stock which, as of immediately prior to the approval of the 2020 Stock Plan by the Company’s shareholders, are subject to awards granted under the 2017 Stock Plan that are forfeited or lapse unexercised and are not issued under the 2017 Stock Plan will increase the number of shares of common stock available for grant under the 2020 Stock Plan. In addition, the number of shares available for issuance under the 2020 Stock Plan will increase on the first day of each calendar year beginning January 1, 2021 and ending on and including January 1, 2030 by a number of shares equal to the lesser of (A) 4% of the aggregate number of shares of the Company’s common stock outstanding of the immediately preceding calendar year and (B) such smaller number of shares of common stock as is determined by the Board of Directors.

The Company’s 2020 Employee Stock Purchase Plan (“ESPP”) was also approved and became effective at the Company’s 2020 annual meeting of Shareholders on May 20, 2020. The ESPP is designed to assist eligible employees of the Company with the opportunity to purchase the Company’s common stock at a discount through accumulated payroll deductions during successive offering periods.  The aggregate number of Shares that may be issued pursuant to rights granted under the ESPP is 100,000 shares of common stock. In addition, the number of shares available for issuance under the ESPP will increase on the first day of each calendar year beginning on January 1, 2021 and ending on and including January 1, 2030 by a number of shares of common stock equal to the lesser of  (a) 1% of the shares outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares as determined by the Board. The number of shares that may be issued or transferred pursuant to rights granted under the component of the ESPP that is intended to qualify for favorable U.S. federal tax treatment under Section 423 of the Code (the “Section 423 Component”) shall not exceed 500,000 shares. The purchase price will be determined by the administrator of the ESPP and, for purposes of the Section 423 Component, shall not be less than 85% of the fair market value of a share on the first trading day or on the last trading day of the applicable offering period, whichever is lower. To date, no shares have been sold under the ESPP.

As of June 30, 2020, there were 4,020,516 shares of the Company’s common stock authorized for issuance under the 2017 Stock Plan and the 2020 Stock Plan (collectively, the “Stock Compensation Plans”). Options granted under the Stock Compensation Plans 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 six months ended June 30, 2020 was estimated using the Black-Scholes option-pricing model with the following assumptions.

 

 

 

 

 

 

 

 

 

 

 

For the

 

 

 

Six Months Ended

 

 

    

June 30, 2020

  

Exercise price per share

 

$

13.60

 

-

$

56.97

 

Expected stock price volatility

 

 

78.25

%

-

 

86.06

%

Risk-free rate of interest

 

 

0.36

%

-

 

2.38

%

Fair value of grants per share

 

$

9.04

 

-

$

42.71

 

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 options granted to employees 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 options granted to non-employee service providers represents the contractual term of the option. 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 Stock Compensation Plans for the six months ended June 30, 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

 

958,100

 

$

44.76

 

$

8,144

 

9.9

Options forfeited

 

(4,866)

 

$

5.55

 

$

 —

 

 

Options exercised

 

(280,440)

 

$

2.44

 

$

 —

 

 

Outstanding as of June 30, 2020

 

3,731,143

 

$

13.97

 

$

145,895

 

8.1

 

 

 

 

 

 

 

 

 

 

 

Options vested and exercisable as of June 30, 2020

 

2,099,733

 

$

2.26

 

$

106,553

 

7.4

 

There were 289,373 shares available for grant as of June 30, 2020.

The Company recognized stock-based compensation expense under the Stock Compensation Plans of $2,717  and $1,669 for the six months ended June 30, 2020 and 2019, respectively.

The total grant-date fair value of options was $30,336 for the six months ended June  30, 2020.

Unrecognized compensation expense related to unvested awards as of June 30, 2020 was $30,350 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.

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 $15 and $43 for the six months ended June 30, 2020 and 2019, respectively.

Total share based compensation charges were approximately $2,732 and $1,712 for the six months ended June 30, 2020 and 2019, respectively. The Company charged $1,384 and $1,348 to research and development and general and administrative expense for the six months ended June 30, 2020, respectively. The Company charged $1,009 and $703 to research and development and general and administrative expense for the six months ended June 30, 2019, respectively.