Annual report pursuant to Section 13 and 15(d)

Stockholders' Equity

v3.20.4
Stockholders' Equity
12 Months Ended
Dec. 31, 2020
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stockholders' Equity

10.

Stockholders’ Equity

Our authorized capital stock consists of 520,000,000 shares, all with a par value of $0.0001 per share, of which 500,000,000 shares are designated as common stock and 20,000,000 shares are designated as preferred stock. There were no shares of preferred stock outstanding as of December 31, 2020 and 2019.

Equity Offerings

In January 2018, we completed an underwritten public offering of 7,675,072 shares of common stock at an offering price of $18.25 per share and received net proceeds of $131.4 million, after deducting underwriting discounts and commissions and offering expenses payable by us. Further, in March 2018, we completed an underwritten public offering of 4,928,571 shares of common stock at an offering price of $35.00 per share and received net proceeds of $161.9 million, after deducting underwriting discounts and commissions and offering expenses payable by us.

In July 2019, we issued and sold 6,871,727 shares of common stock at a public offering price of $15.28 per share and pre-funded warrants to purchase 2,945,026 shares of common stock at an offering price of $15.2799 per warrant in an underwritten public offering pursuant to a shelf registration on Form S-3. The gross proceeds from this public offering were $150.0 million, resulting in aggregate net proceeds of $140.7 million, after deducting underwriting discounts and commissions and offering expenses payable by us.

 

Each pre-funded warrant entitles the holder to purchase one share of common stock at an exercise price of $0.0001 per share and expires seven years from the date of issuance. These warrants were recorded as a component of stockholders’ equity within additional paid-in capital. Per the terms of the warrant agreement, a holder of the outstanding warrants is not entitled to exercise any portion of any pre-funded warrant if, upon exercise of the warrant, the holder’s ownership (together with its affiliates) of our common stock or combined voting power of our securities beneficially owned by such holder (together with its affiliates) would exceed 9.99% after giving effect to the exercise (“Maximum Ownership Percentage”). Upon at least 61 days’ prior notice to us by the holder, any holder may increase or decrease the Maximum Ownership Percentage to any other percentage not to exceed 19.99%. As of December 31, 2020, 2,888,526 of the pre-funded warrants from the July 2019 underwritten public offering were outstanding.

In the second quarter of 2020, we issued and sold 12,633,039 shares of common stock at a public offering price of $11.32 per share and pre-funded warrants to purchase 2,866,961 shares of common stock at a public offering price of $11.3199 per warrant in an underwritten public offering pursuant to a shelf registration on Form S-3. We granted the underwriters an option to purchase up to 2,325,000 additional shares of our common stock at a public offering price of $11.32, less underwriting discounts and commissions. The full option was exercised by the underwriters in June 2020. The gross proceeds from this public offering were $201.8 million, resulting in net proceeds of $189.3 million, after deducting underwriting discounts and commissions and offering expenses payable by us. The terms of the pre-funded warrants issued and sold as part of this public offering were similar to those above.

In December 2020, we issued and sold 5,102,041 shares of common stock at a public offering price of $24.50 per share and pre-funded warrants to purchase 2,040,816 shares of common stock at a public offering price of $24.4999 per warrant in an underwritten public offering pursuant to a shelf registration on Form S-3. The gross proceeds from this public offering were $175.0 million, resulting in net proceeds of $164.3 million, after deducting underwriting discounts and commissions and estimated offering expenses payable by us.

As of December 31, 2020, all of the pre-funded warrants issued and sold as part of the 2020 underwritten public offerings were outstanding.

ATM Facilities

In March 2017, we entered into a sales agreement (the “2017 ATM Facility”) with Cowen and Company, LLC (“Cowen”), which provided for the sale, in our sole discretion, of shares of our common stock, in the aggregate offering price of up to $75.0 million through Cowen, as our sales agent. We paid a commission of up to 3.0% of the gross sales proceeds of any common stock sold under the 2017 ATM Facility.

In February 2019, we terminated the 2017 ATM Facility and entered into a new sales agreement (the “2019 ATM Facility”) with Cowen, which provided for the sale, in our sole discretion, of shares of our common stock having an aggregate offering price of up to $100.0 million through Cowen, as our sales agent. We paid a commission of up to 3.0% of gross sales proceeds of the common stock sold under the 2019 ATM Facility.

In February 2020, we entered into a new sales agreement (the “2020 ATM Facility”) with Cowen, which provides for the sale, in our sole discretion, of shares of our common stock having an aggregate offering price of up to $100.0 million through Cowen, as our sales agent. The 2020 ATM Facility is separate from and does not replace the 2019 ATM Facility in any way. We pay a commission of up to 3.0% of gross sales proceeds of any common stock sold under the 2020 ATM Facility.

During the fiscal year ended December 31, 2020, we sold an aggregate of 4,785,514 shares of common stock under the ATM facilities, at an average price of $14.60 per share, for gross proceeds of $69.9 million and net proceeds of $68.0 million, after deducting commissions and other offering expenses payable by us. During the fiscal year ended December 31, 2019, we sold an aggregate of 3,135,347 shares of common stock under the 2019 ATM Facility, at an average price of $16.09 per share, for gross proceeds of $50.5 million and net proceeds of $48.9 million, after deducting commissions and other offering expenses payable by us. Approximately $1.2 million of the $48.9 million net proceeds was received on January 3, 2020. The issuance and sale of these shares by us pursuant to the ATM facilities are deemed “at the market” offerings as defined in Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), and are registered under the Securities Act.

As of December 31, 2020, we had fully utilized the 2019 ATM Facility, and $79.7 million of common stock remained available to be sold under the 2020 ATM Facility, subject to certain conditions as specified in the agreement.

Equity Incentive Plans

In March 2014, we adopted the 2014 Equity Incentive Plan (“2014 EIP”), which was amended and restated on October 15, 2014 upon the pricing of our initial public offering (“IPO”).

The 2014 EIP provides for annual increases in the number of shares available for issuance thereunder on the first business day of each fiscal year, beginning with 2015 and ending in 2024, equal to five percent of the number of shares of the Company’s common stock outstanding as of such date or a lesser number of shares as determined by our board of directors.

Under the terms of the 2014 EIP, we may grant stock options, RSAs and RSUs to employees, directors, consultants and other service providers. RSUs generally vest over four years. In 2020, we granted performance-based awards to certain of our employees that provide for the issuance of common stock if specified Company performance criteria related to our clinical programs are achieved. The number of performance-based awards that ultimately vests depends upon if, when and which performance criteria are achieved, as well as the employee’s continuous service, as defined in the 2014 EIP, through the date of vesting. The fair value of RSUs, including those with performance conditions, is determined as the closing stock price on the date of grant. Stock options are granted at prices no less than 100% of the estimated fair value of the shares on the date of grant as determined by the board of directors, provided, however, that the exercise price of an option granted to a 10% shareholder cannot be less than 110% of the estimated fair value of the shares on the date of grant. Options granted generally vest over four years and expire in seven to ten years. As of December 31, 2020, a total of 13,545,106 shares of common stock were reserved for issuance under the 2014 EIP, of which 2,764,225 shares were available for future grant and 10,780,881 shares were subject to outstanding options and RSUs, including performance-based awards.

In February 2018, we adopted the 2018 Inducement Plan (“Inducement Plan”), under which we may grant options, stock appreciation rights, RSAs and RSUs to new employees. In September 2020, we amended the Inducement Plan to reserve an additional 1,500,000 shares of the Company’s common stock for issuance under the Inducement Plan, as amended. As of December 31, 2020, 2,634,836 shares of common stock were reserved for issuance under the Inducement Plan, of which 1,734,211 shares were available for future grant and 900,625 shares were subject to outstanding options and RSUs.

Restricted Stock Units

The weighted average grant date fair value of RSUs granted during the years ended December 31, 2020, 2019 and 2018 was $12.19, $27.04 and $36.83, respectively. The estimated fair value of RSUs that vested in the years ended December 31, 2020, 2019 and 2018 was $23.6 million, $13.8 million and $10.8 million, respectively. As of December 31, 2020, there was $39.4 million of unrecognized stock-based compensation expense related to RSUs that is expected to be recognized over a weighted average period of 2.3 years. This excludes unrecognized stock-based compensation expense for performance-based RSUs that were deemed not probable of vesting in accordance with U.S. GAAP. The aggregate intrinsic value of the RSUs outstanding as of December 31, 2020 was $75.2 million.

The following is a summary of RSU activity under our 2014 EIP and Inducement Plan:

 

 

 

RSUs

 

 

 

Shares

 

 

Weighted

Average

Grant Date

Fair Value

 

Balance as of December 31, 2019

 

 

1,910,764

 

 

$

26.93

 

Granted

 

 

3,973,991

 

 

$

12.19

 

Forfeited

 

 

(836,190

)

 

$

18.39

 

Vested

 

 

(1,218,945

)

 

$

19.34

 

Balance as of December 31, 2020

 

 

3,829,620

 

 

$

15.91

 

 

Under our RSU settlement procedures, for some of the RSUs granted to our employees, we withhold shares at settlement to cover the estimated payroll withholding tax obligations. During 2020, we settled 1,218,945 shares underlying RSUs, of which 276,822 shares underlying RSUs were net settled by withholding 106,459 shares. The value of the shares underlying RSUs withheld was $1.5 million, based on the closing price of our common stock on the settlement date. During 2019, we settled 574,168 shares underlying RSUs, of which 488,964 shares underlying RSUs were net settled by withholding 212,879 shares. The value of the shares underlying RSUs withheld was $6.7 million, based on the closing price of our common stock on the settlement date. The value of RSUs withheld in each period was remitted to the appropriate taxing authorities and has been reflected as a financing activity in our consolidated statements of cash flows.

Stock Options

The following is a summary of stock option activity under our 2014 EIP and Inducement Plan. The table below also includes the activity relating to options for 275,000 shares of our common stock which were issued in 2017 outside of these plans:

 

 

 

Shares

 

 

Weighted Average Exercise Price

 

 

Weighted Average

Remaining

Contractual

Term (Years)

 

 

Aggregate

Intrinsic Value

(in thousands)

 

Balance as of December 31, 2019

 

 

6,934,262

 

 

$

28.25

 

 

 

5.9

 

 

$

4,103

 

Granted

 

 

2,641,125

 

 

 

12.01

 

 

 

 

 

 

 

 

 

Exercised

 

 

(268,938

)

 

 

14.75

 

 

 

 

 

 

 

 

 

Forfeited or expired

 

 

(1,454,563

)

 

 

30.17

 

 

 

 

 

 

 

 

 

Balance as of December 31, 2020

 

 

7,851,886

 

 

$

22.89

 

 

 

6.4

 

 

$

26,834

 

Vested and expected to vest as of

   December 31, 2020

 

 

7,851,886

 

 

$

22.89

 

 

 

6.4

 

 

$

26,834

 

Exercisable as of December 31, 2020

 

 

3,747,718

 

 

$

26.74

 

 

 

4.5

 

 

$

6,214

 

 

Aggregate intrinsic value represents the difference between the closing stock price of our common stock on December 31, 2020 and the exercise price of outstanding, in-the-money options. As of December 31, 2020, there was $48.8 million of unrecognized stock-based compensation expense related to stock options that is expected to be recognized over a weighted average period of 2.6 years.

Options for 268,938, 347,716 and 1,051,180 shares of our common stock were exercised during the years ended December 31, 2020, 2019 and 2018, with an intrinsic value of $1.0 million, $3.8 million and $19.2 million, respectively. As we believe it is more likely than not that no stock option related tax benefits will be realized, we do not record any net tax benefits related to exercised options.

The fair value of each option issued was estimated at the date of grant using the Black-Scholes valuation model. The following table summarizes the weighted-average assumptions used as inputs to the Black-Scholes model and resulting weighted-average grant date fair values of stock options granted during the periods indicated:

 

 

 

Year ended December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

Assumptions:

 

 

 

 

 

 

 

 

 

 

 

 

Expected term (years)

 

 

6.0

 

 

 

5.9

 

 

 

4.6

 

Expected volatility

 

 

76.8

%

 

 

76.1

%

 

 

73.5

%

Risk-free interest rate

 

 

0.8

%

 

 

2.1

%

 

 

2.7

%

Expected dividend yield

 

 

0.0

%

 

 

0.0

%

 

 

0.0

%

Fair Value:

 

 

 

 

 

 

 

 

 

 

 

 

Weighted-average estimated grant date fair value per share

 

$

7.96

 

 

$

18.06

 

 

$

22.96

 

Options granted

 

 

2,641,125

 

 

 

2,535,425

 

 

 

2,998,650

 

Total estimated grant date fair value

 

$

21,023,000

 

 

$

45,790,000

 

 

$

68,849,000

 

 

The estimated fair value of stock options that vested in the years ended December 31, 2020, 2019 and 2018 was $29.4 million, $31.6 million and $16.2 million, respectively.

Employee Stock Purchase Plan

 

In May 2014, we adopted the 2014 Employee Stock Purchase Plan (“2014 ESPP”), which became effective on October 15, 2014 upon the pricing of our IPO. The 2014 ESPP permits eligible employees to purchase common stock at a discount through payroll deductions during defined offering periods. Eligible employees can purchase shares of the Company’s common stock at 85% of the lower of the fair market value of the common stock at (i) the beginning of a 12-month offering period, or (ii) at the end of one of the two related 6-month purchase periods. No participant in the 2014 ESPP may purchase shares of common stock valued at more than $25,000 per calendar year. The first offering under the 2014 ESPP commenced on June 1, 2016, and subsequent offerings commence on each anniversary of this date. The Company recorded $1.8 million, $1.3 million and $1.2 million of expense related to the 2014 ESPP in the years ended December 31, 2020, 2019 and 2018, respectively. A total of 282,514, 139,466 and 109,193 shares were purchased under the ESPP during the years ended December 31, 2020, 2019 and 2018, respectively.

 

As of December 31, 2020, there was $0.6 million of unrecognized stock-based compensation expense related to the ESPP that is expected to be recognized by the end of second quarter of 2021.

 

The 2014 ESPP provides for annual increases in the number of shares available for issuance thereunder on the first business day of each fiscal year, beginning with 2015 and ending in 2024, equal to the lower of (i) one percent of the number of shares of our common stock outstanding as of such date, (ii) 230,769 shares of our common stock, or (iii) a lesser number of shares as determined by our board of directors. As of December 31, 2020, there were 1,586,742 shares authorized under the 2014 ESPP.

 

Reserved Shares

The following shares of common stock were reserved for future issuance under our equity incentive plans as of December 31, 2020:

 

 

 

Total Shares Reserved

 

2014 Equity Incentive Plan

 

 

13,545,106

 

2018 Inducement Plan

 

 

2,634,836

 

2014 Employee Stock Purchase Plan

 

 

950,803

 

Total reserved shares of common stock

 

 

17,130,745

 

 

 

Stock-based Compensation Expense

Total stock-based compensation expense related to all stock awards was as follows:

 

 

 

Year Ended December 31,

 

 

 

2020

 

 

2019

 

 

2018

 

 

 

(in thousands)

 

Research and development

 

$

31,527

 

 

$

26,773

 

 

$

16,211

 

General and administrative

 

 

19,824

 

 

 

24,923

 

 

 

17,606

 

Total stock-based compensation expense

 

$

51,351

 

 

$

51,696

 

 

$

33,817