Stock-based Compensation

12 Months Ended

Dec. 31, 2020

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

10. Stock-based compensation

The Company’s Amended and Restated 2018 Equity Incentive Plan (the “Equity Incentive Plan”) provides for the grant of stock options (both incentive and non-statutory), restricted stock awards, restricted stock unit awards, stock appreciation rights, and other forms of stock-based awards to employees, consultants and directors.

During the years ended December 31, 2020, 2019, and 2018, the Company granted stock options that vest over four years and have a maximum contractual term of ten years. Vesting is subject to the holder’s continuous service with the Company. The Company reserved a total of 7,565,938 shares of common stock for issuance under the Equity Incentive Plan with 5,978,143 available for future issuance, which amount includes shares issuable upon the exercise of outstanding options.

Stock option valuation

The fair value of each stock option grant was estimated using the Black-Scholes option-pricing model as of the date of grant. The fair value of the Company’s option awards granted during the years ended December 31, 2020, 2019, and 2018 was estimated using the following assumptions:

	December 31,
	2020			2019			2018
Risk-free rate of interest	0.32 - 1.64		%	1.45 - 2.52		%		2.87	%
Expected term (years)		5.50	years	5.50 - 6.24		years		6.00	years
Expected stock price volatility	62.50 - 68.41		%	62.50 - 84.61		%		83.30	%
Dividend yield		0.00	%		0.00	%		0.00	%
Weighted average fair value of common stock	$	40.85		$	13.75		$	2.84

Stock options

The following table summarizes the Company’s stock option activity:

	Number Of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)
Outstanding at December 31, 2017		—			—		—
Granted		2,485,650			2.84		9.25
Outstanding at December 31, 2018		2,485,650			2.84		9.25
Granted		1,460,520			13.75		—
Exercised		(535,363	)		2.84		—
Cancelled		(123,550	)		3.96		—
Outstanding at December 31, 2019		3,287,257			7.65		8.82
Granted		1,585,147			40.85		—
Exercised		(301,486	)		4.46		—
Cancelled		(299,134	)		21.79		—
Outstanding at December 31, 2020		4,271,784			19.20		—
Exercisable at December 31, 2020		1,234,933			6.13		7.61
Vested and expected to vest at December 31, 2020		4,271,784			19.20		8.31

The weighted average grant date fair value per share of options granted during the years ended December 31, 2020, 2019, and 2018 was $22.43, $9.25, and $1.99, respectively.

The aggregate intrinsic value of options exercised during year ended December 31, 2020 was approximately $11,652. The aggregate intrinsic value of options vested and expected to vest as of December 31, 2020 was approximately $78,961. The aggregate intrinsic value of options vested and exercisable as of December 31, 2020 was approximately $36,848.

As of December 31, 2020, there was approximately $35,141 total unrecognized compensation expense, related to the unvested stock options, which is expected to be recognized over a weighted average period of 2.99 years.

Restricted common stock

The following table summarizes the information about restricted stock awards (“RSA”) activity:

	Number of Awards			Grant-Date Fair Value
Outstanding at December 31, 2017		—		$	—
Granted		757,577		$	2.84
Outstanding at December 31, 2018		757,577		$	2.84
Granted		—			—
Vested/Released		(378,789	)	$	2.84
Cancelled		(6,631	)	$	2.84
Unvested as of December 31, 2019		372,157		$	2.84
Granted		—			—
Vested/Released		(372,157	)		2.84
Cancelled		—			—
Unvested as of December 31, 2020		—		$	—

All restricted stock was vested as of December 31, 2020.

Stock-based Compensation

Stock-based compensation expense was comprised of the following:

	December 31,
	2020		2019		2018
Research and development	$	5,771	$	1,820	$	935
Selling, general and administrative		6,457		1,805		944
Total stock-based compensation expense	$	12,228	$	3,625	$	1,879

Viela Bio, Inc. 10-K