Quarterly report pursuant to Section 13 or 15(d)

STOCK BASED AWARDS

v3.22.2.2
STOCK BASED AWARDS
9 Months Ended
Sep. 30, 2022
Share-Based Payment Arrangement [Abstract]  
STOCK BASED AWARDS

13. STOCK BASED AWARDS

 

In April 2014, the Company adopted the Corbus Pharmaceuticals Holdings, Inc. 2014 Equity Incentive Plan (the “2014 Plan”). Pursuant to the 2014 Plan, the Company’s Board of Directors (the "Board") may grant incentive and nonqualified stock options and restricted stock to employees, officers, directors, consultants and advisors.

 

Pursuant to the terms of an annual evergreen provision in the 2014 Plan, the number of shares of common stock available for issuance under the 2014 Plan shall automatically increase on January 1 of each year by at least seven percent (7%) of the total number of shares of common stock outstanding on December 31st of the preceding calendar year, or, pursuant to the terms of the 2014 Plan, in any year, the Board may determine that such increase will provide for a lesser number of shares.

 

In accordance with the terms of the 2014 Plan, and pursuant to the annual evergreen provision contained in the 2014 Plan, effective as of January 1, 2022, the number of shares of common stock available for issuance under the 2014 Plan increased by 8,766,162 shares, which was seven percent (7%) of the outstanding shares of common stock on December 31, 2021. As of January 1, 2022, the 2014 Plan had a total reserve of 34,337,004 shares and there were 16,760,151 shares available for future grants. As of September 30, 2022 there were 13,121,151 shares available for future grants.

 

In accordance with the terms of the 2014 Plan, and pursuant to the annual evergreen provision contained in the 2014 plan, effective as of January 1, 2021, the number of shares of common stock available for issuance under the 2014 Plan increased by 2,500,000 shares, which was less than seven percent (7%) of the outstanding shares of common stock on December 31, 2020. As of January 1, 2021, there was a total of 25,570,842 shares reserved for issuance under the 2014 plan and there were 9,869,051 shares available for future grants. As of September 30, 2021 there were 6,071,775 shares available for future grants.

 

Share-based Compensation

 

For stock options awarded and outstanding and restricted stock awards for the three months ended September 30, 2022 and 2021, respectively, the Company recorded non-cash, stock-based compensation expense of $1,345,526 and $2,599,247, net of estimated forfeitures. For stock options awarded and outstanding for the nine months ended September 30, 2022 and 2021, respectively, the Company recorded non-cash, stock-based compensation expense of $4,450,361 and $7,686,921, respectively, net of estimated forfeitures.

 

Stock-based compensation expense was classified in the consolidated statements of operations and comprehensive loss as follows:

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Research and development expenses

 

$

141,933

 

 

$

986,406

 

 

$

465,777

 

 

$

2,786,486

 

General and administrative expenses

 

 

1,203,593

 

 

 

1,612,841

 

 

 

3,984,584

 

 

 

4,900,435

 

Total stock-based compensation

 

$

1,345,526

 

 

$

2,599,247

 

 

$

4,450,361

 

 

$

7,686,921

 

 

The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model that uses the assumptions noted in the following table. The Company uses historical data, as well as subsequent events occurring prior to the issuance of the financial statements, to estimate option exercises and employee terminations in order to estimate its forfeiture rate. The expected term of options granted under the 2014 Plan, all of which qualify as “plain vanilla” per SEC Staff Accounting Bulletin 107, is determined based on the simplified method due to the Company’s limited operating history, and is 6.25 years based on the average between the vesting period and the contractual life of the option. For non-employee options, the expected term is the contractual term. The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the option.

 

The weighted average assumptions used principally in determining the fair value of options granted to employees were as follows:

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

2021

 

Risk free interest rate

 

 

1.89

%

 

 

0.71

%

Expected dividend yield

 

 

0

%

 

 

0

%

Expected term in years

 

 

6.25

 

 

 

6.23

 

Expected volatility

 

 

97.88

%

 

 

103.43

%

Estimated forfeiture rate

 

 

12.16

%

 

 

8.78

%

 

A summary of option activity for the nine months ended September 30, 2022 and is presented below:

 

Options

 

Shares

 

 

Weighted
 Average
Exercise
 Price

 

 

Weighted Average
 Remaining Contractual
Term in Years

 

 

Aggregate
Intrinsic
Value

 

Outstanding at December 31, 2021

 

 

15,326,105

 

 

$

4.06

 

 

 

 

 

 

 

Granted

 

 

5,298,503

 

 

 

0.44

 

 

 

 

 

 

 

Forfeited

 

 

(1,404,071

)

 

 

3.97

 

 

 

 

 

 

 

Expired

 

 

(305,432

)

 

 

4.34

 

 

 

 

 

 

 

Outstanding at September 30, 2022

 

 

18,915,105

 

 

$

3.05

 

 

 

6.89

 

 

$

10,981,693

 

Vested at September 30, 2022

 

 

10,619,178

 

 

$

4.33

 

 

 

5.33

 

 

$

3,055,619

 

Vested and expected to vest at September 30, 2022

 

 

17,740,623

 

 

$

3.19

 

 

 

6.75

 

 

$

9,640,583

 

 

The weighted average grant-date fair value of options granted during the nine months ended September 30, 2022 and 2021 was $0.35 and $2.02 per share, respectively. The aggregate intrinsic value of options exercised during the nine months ended September 30, 2022 and 2021 was approximately $0 and $1,769,714, respectively. The total fair value of options that were vested as of September 30, 2022 and 2021 was $35,118,543 and $38,806,156, respectively. As of September 30, 2022, there was approximately $7,623,461 of total unrecognized compensation expense, related to non-vested share-based option compensation arrangements. The unrecognized compensation expense is estimated to be recognized over a period of 2.18 years as of September 30, 2022.

 

In January 2022, the Company granted a restricted stock award of 50,000 shares which vested in 25% increments upon issuance and at the end of each of the three quarters following the grant. During the three and nine months ended September 30, 2022, 12,500 and 50,000 of restricted stock awards vested under the 2014 Plan, respectively. No restricted stock awards were granted in the three and nine months ended September 30, 2021.