Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.7.0.1
Stock-Based Compensation
6 Months Ended
Jun. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation

8. Stock-Based Compensation

Calyxt, Inc. Equity Incentive Plan

The Company adopted the Calyxt, Inc. Equity Incentive Plan, or the Existing Plan, which allows for the grant of stock options to attract and retain highly qualified employees. In June 2017, the Company also adopted an omnibus incentive plan, or the Omnibus Plan, under which the Company granted stock options, with an exercise price equal to the estimated fair value of the stock at the grant date, and restricted stock unit awards.

The awards granted under the Existing Plan are only exercisable upon a triggering event or initial public offering as defined by the plan. Because no triggering events occurred during the three and six months ended June 30, 2017 and 2016, the Company did not recognize any compensation expense for awards granted under the Existing Plan in these respective periods.

In June 2017, the Company granted stock options and restricted stock units to certain of our employees, nonemployees, and certain employees and nonemployees of the Parent under the Omnibus Plan. Stock option awards under the Omnibus Plan are only exercisable upon a triggering event or initial public offering as defined by the plan. Because no triggering event or initial public offering occurred in the three and six months ended June 30, 2017, the Company did not recognize any compensation expense for stock options granted under the Omnibus Plan in these respective periods. The following table presents stock-based compensation expense included in the Company’s condensed statements of operations (in thousands) for restricted stock unit awards under the Omnibus Plan:

 

     Three Months Ended June 30      Six Months Ended June 30  
     2017      2016      2017      2016  

Stock-based compensation expense for:

           

Employee stock options

   $ —        $ —        $ —        $ —    

Employee restricted stock units

     435        —          435        —    

Nonemployee stock options

     —          —          —          —    

Nonemployee restricted stock units

     8        —          8        —    
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 443      $ —        $ 443      $ —    
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Three Months Ended June 30      Six Months Ended June 30  
     2017      2016      2017      2016  

Stock-based compensation expense in operating expenses:

           

Selling, general and administrative

   $ 422      $ —        $ 422      $ —    

Research and development

     21        —          21        —    
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 443      $ —        $ 443      $ —    
  

 

 

    

 

 

    

 

 

    

 

 

 

The Company treats stock-based compensation awards granted to employees of the Parent as dividends, which are recorded quarterly. The Company recorded $69 thousand in a deemed dividend to the Parent in the three and six months ended June 30, 2017 for restricted stock units granted to employees of the Parent in June 2017. No dividends for stock-based compensation awards granted to employees of the Parent were recorded in the three and six months ended June 30, 2016.

 

Stock Options

The following table summarizes stock option activity for the six months ended June 30, 2017:

 

     Number of Shares      Weighted-
Average
Exercise Price
Per Share
     Aggregate
Intrinsic
Value (in
thousands)
     Weighted-
Average
Remaining
Contractual
Life

(in years)
 

Outstanding at December 31, 2016

     1,930,600      $ 4.45           9.1  

Granted

     2,119,699      $ 13.29        

Canceled

     (20,825    $ 5.85        
  

 

 

          

Outstanding at June 30, 2017

     4,029,474      $ 9.09      $ 8,018        9.3  
  

 

 

          

Exercisable at June 30, 2017

     0           
  

 

 

          

At June 30, 2017, the total unrecognized stock-based compensation expense related to non-vested stock options is approximately $9.2 million, which is expected to be recognized over a weighted-average period of 3.1 years.

At June 30, 2017, the Company had 1,159,266 stock options that will vest as a result of the IPO. The stock-based compensation expense related to these awards will be recorded upon the consummation of this offering and is estimated to be approximately $5.6 million.

The fair value of each stock option is estimated using the Black-Scholes option pricing model at each measurement date. The fair value of stock options under the Black-Scholes model requires management to make assumptions regarding projected employee stock option exercise behaviors, risk-free interest rates, volatility of the stock price, and expected dividends. The awards currently outstanding were granted with vesting terms between two and six years. Certain awards contain a 25% acceleration vesting clause upon a triggering event or initial public offering as defined in the Existing Plan.

The Company has not historically paid cash dividends to its stockholders and currently does not anticipate paying any cash dividends in the foreseeable future. As a result, the Company has assumed a dividend yield of 0%. The risk-free interest rate is based upon the rates of U.S. Treasury bills with a term that approximates the expected life of the option. The Company uses the simplified method, or the lattice method when appropriate, to reasonably estimate the expected life of its option awards. Expected volatility is based upon the volatility of comparable public companies.

The following table provides the assumptions used in the Black-Scholes model for the stock option awards:

 

Expected dividend yield

   0%

Risk-free interest rate

   1.25% - 2.31%

Expected volatility

   27.4% - 42.3%

Expected life (in years)

   1.22 – 10.00

Restricted Stock Units

The following table summarizes the activity of restricted stock units:

 

     Number of
Restricted Stock
Units Outstanding
     Weighted-Average
Grant Date Fair
Value
 

Unvested balance at December 31, 2016

     —        $ —    

Granted

     1,452,333      $ 8.00  

Vested

     (39,200   
  

 

 

    

Unvested balance at June 30, 2017

     1,413,133      $ 8.00  
  

 

 

    

As of June 30, 2017, the Company had approximately $7.4 million of unrecognized stock-based compensation expense related to restricted stock units that is expected to be recognized over a weighted-average period of 5.4 years.

Parent Awards

The Company’s Parent granted stock options to employees of Calyxt. Compensation costs related to the grant of the Parent company awards to Calyxt’s employees has been recognized in the statements of operations with a corresponding credit to stockholder’s equity, representing the Parent’s capital contribution to the Company. The fair value of each stock option is estimated at the grant date using the Black-Scholes option pricing model. The fair value of stock options under the Black-Scholes model requires management to make assumptions regarding projected employee stock option exercise behaviors, risk-free interest rates, volatility of the Company’s stock price, and expected dividends.

The following table provides the range of assumptions used in the Black-Scholes model for the Parent awards:

 

Expected dividend yield

   0%

Risk-free interest rate

   2.16% - 2.31%

Expected volatility

   37.5% - 42.3%

Expected life (in years)

   7.43 – 10.00

In 2015, the Company’s Parent granted to certain consultants of Calyxt warrants to purchase Cellectis stock in exchange for services provided to the Company. The Company recorded the fair value of the warrants as a dividend paid to the Parent in exchange for the warrants issued to consultants.

The Company recognized stock-based compensation expense related to its Parent’s grants of stock options and warrants to Calyxt employees and consultants of $115 thousand and $277 thousand for the three-month periods ended June 30, 2017 and 2016, respectively. The Company recognized stock-based compensation expense related to its Parent’s grants of stock options and warrants to Calyxt employees and consultants of $249 thousand and $595 thousand for the six-month periods ended June 30, 2017 and 2016, respectively. The following table summarizes the stock-based compensation expense, which was recognized in the statements of operations for Parent awards (in thousands):

 

     Three Months Ended June 30      Six Months Ended June 30  
     2017      2016      2017      2016  

Stock-based compensation expense in operating expenses:

           

Selling, general and administrative

   $ 10      $ 6      $ 13      $ 12  

Research and development

     105        271        236        583  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 115      $ 277      $ 249      $ 595