11. Stock-based Compensation

In September 2014, the Board of Directors adopted the 2014 Stock Plan (the 2014 Plan). In June 2015, the Board of Directors adopted the 2015 Equity Incentive Plan (the 2015 Plan), which became effective upon the Company’s initial public offering in September 2015. The 2015 Plan replaced the 2014 Plan, and as of the effective date of the 2015 Plan, no further awards may be issued under the 2014 Plan. Any options or awards outstanding under the 2014 Plan as of the effective date of the 2015 Plan remained outstanding and effective. The number of authorized shares under the 2015 Plan automatically increases annually on the first business day of each fiscal year, by the lesser of (i) 4% of the total number of shares of common stock outstanding on December 31 of the prior year, or (ii) a number of common shares determined by the Board of Directors. As of December 31, 2024, the total number of shares of common stock authorized for issuance under the 2015 Plan and the 2014 Plan was 19,118,989, of which 1,512,367 remained available for future grants under the 2015 Plan. An additional 1,981,975 shares were authorized for issuance under the 2015 Plan effective in January 2025.

The 2014 Plan and 2015 Plan provide for the issuance of stock options, stock appreciation rights, restricted and unrestricted stock and unit awards, and performance cash awards to employees, members of the Board of Directors and consultants of the Company. Since the inception of the plans, the Company has issued only stock options and restricted stock units under the plans. Stock options under the 2014 Plan and 2015 Plan generally expire 10 years following the date of grant. Options typically vest over a four-year period, but vesting provisions can vary by award based on the discretion of the Board of Directors. Certain stock option

awards granted by the Company may include performance conditions that must be achieved in order for vesting to occur. Stock options under the 2014 Plan and 2015 Plan have an exercise price at least equal to the estimated fair value of the Company’s common stock on the date of grant. Restricted stock units typically vest over a four-year period, but vesting provisions can vary by award based on the discretion of the Board of Directors. Upon vesting, restricted stock units are settled in common stock of the Company.

Shares of common stock underlying awards previously issued under the 2014 Plan and 2015 Plan which are reacquired by the Company, withheld by the Company in payment of the purchase price, exercise price or withholding taxes, expired, cancelled due to forfeiture or otherwise terminated other than by exercise or settlement, are added to the number of shares of common stock available for issuance under the 2015 Plan. Shares available for issuance under the 2015 Plan may be either authorized but unissued shares of the Company’s common stock or common stock reacquired by the Company and held in treasury. The 2015 Plan expires in June 2025, 10 years from the date it was adopted by the Board of Directors, unless earlier terminated.

Stock-based Compensation Expense

The Company’s stock-based compensation expense by award type was as follows (in thousands):

 

 

 

Years Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Stock options

 

$

23,518

 

 

$

28,863

 

 

$

34,444

 

Restricted stock units

 

 

14,455

 

 

 

10,748

 

 

 

5,569

 

Employee stock purchase plan

 

 

490

 

 

 

656

 

 

 

775

 

 

 

$

38,463

 

 

$

40,267

 

 

$

40,788

 

 

As of December 31, 2024, the Company had $59.7 million of unrecognized stock-based compensation expense related to stock options, restricted stock units and the 2015 Employee Stock Purchase Plan (the 2015 ESPP), which is expected to be recognized over a weighted-average period of 2.3 years.

The Company recorded aggregate stock-based compensation expense in the consolidated statements of operations and comprehensive loss as follows (in thousands):

 

 

Years Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Research and development

 

$

17,985

 

 

$

20,568

 

 

$

21,368

 

General and administrative

 

 

20,478

 

 

 

19,699

 

 

 

19,420

 

 

 

$

38,463

 

 

$

40,267

 

 

$

40,788

 

 

Stock Options

The following table summarizes stock option activity under the 2014 Plan and 2015 Plan (in thousands, except per share data):

 

 

 

 

 

 

 

 

Weighted-

 

 

 

 

 

 

 

 

 

 

 

 

average

 

 

 

 

 

 

 

 

 

Weighted-

 

 

Remaining

 

 

 

 

 

 

 

 

 

average

 

 

Contractual

 

 

Aggregate

 

 

 

 

 

 

Exercise

 

 

Life

 

 

Intrinsic

 

 

 

Shares

 

 

Price

 

 

(Years)

 

 

Value (a)

 

Outstanding at December 31, 2023

 

 

8,581

 

 

$

32.62

 

 

 

6.2

 

 

$

7,011

 

Granted

 

 

2,310

 

 

$

16.11

 

 

 

 

 

 

 

Exercised

 

 

(291

)

 

$

5.20

 

 

 

 

 

 

 

Cancelled or forfeited

 

 

(606

)

 

$

34.73

 

 

 

 

 

 

 

Outstanding at December 31, 2024

 

 

9,994

 

 

$

29.48

 

 

 

5.9

 

 

$

240

 

Exercisable at December 31, 2024

 

 

6,837

 

 

$

34.20

 

 

 

4.8

 

 

$

240

 

Vested and expected to vest at December 31, 2024

 

 

9,994

 

 

$

29.48

 

 

 

5.9

 

 

$

240

 

 

(a)
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the common stock for the options that were in the money at the dates reported.

The weighted-average grant date fair value per share of options granted during the years ended December 31, 2024, 2023 and 2022 was $9.98, $13.66 and $19.43, respectively. During the years ended December 31, 2024, 2023 and 2022, the total number of stock options exercised was 290,753, 222,935 and 331,912, respectively, resulting in total proceeds of $1.5 million, $1.5 million and $2.8 million, respectively. The total intrinsic value of options exercised during the years ended December 31, 2024, 2023 and 2022 was $3.1 million, $2.9 million and $6.9 million, respectively.

The fair values of options granted were estimated at each grant date using the Black-Scholes valuation model with the following weighted-average assumptions:

 

 

Years Ended December 31,

 

 

 

2024

 

 

2023

 

 

2022

 

Expected volatility

 

 

64

%

 

 

65

%

 

 

66

%

Expected term (years)

 

 

6.0

 

 

 

6.0

 

 

 

6.0

 

Risk-free interest rate

 

 

4.0

%

 

 

3.9

%

 

 

1.7

%

Expected dividend yield

 

 

0.0

%

 

 

0.0

%

 

 

0.0

%

Restricted Stock Units

The following table summarizes restricted stock unit activity under the 2015 Plan (in thousands, except per share data):

 

 

 

 

 

 

Weighted-average

 

 

 

 

 

 

Grant Date

 

 

 

Shares

 

 

Fair Value

 

Unvested balance at December 31, 2023

 

 

1,309

 

 

$

25.89

 

Granted

 

 

1,217

 

 

$

16.07

 

Vested

 

 

(395

)

 

$

27.17

 

Forfeited

 

 

(89

)

 

$

22.15

 

Unvested balance at December 31, 2024

 

 

2,042

 

 

$

19.95

 

 

The total intrinsic value of restricted stock units vested during the years ended December 31, 2024, 2023 and 2022 was $6.7 million, $3.9 million and $2.2 million, respectively.

Employee Stock Purchase Plan

In June 2015, the Board of Directors adopted the 2015 ESPP, which became effective upon the Company’s initial public offering in September 2015. The number of authorized shares reserved for issuance under the 2015 ESPP automatically increases on the first business day of each fiscal year by the lesser of (i) 1% of the shares of common stock outstanding on the last business day of the prior fiscal year; or (ii) the number of shares determined by the Board of Directors. Unless otherwise determined by the administrator of the 2015 ESPP, two offering periods of six months’ duration will begin each year on January 1 and July 1. As of December 31, 2024, the total number of shares of common stock authorized for issuance under the 2015 ESPP was 1,426,994, of which 912,964 remained available for future issuance. During the years ended December 31, 2024, 2023 and 2022, 105,400, 103,388 and 75,733 shares of common stock, respectively, were issued under the 2015 ESPP.

About Stock Compensation Disclosures

Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.

Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.