Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.8.0.1
Stock-Based Compensation
3 Months Ended
Mar. 31, 2018
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 and restricted stock units to certain of our employees and nonemployees, as well as certain employees and nonemployees of Cellectis.

The options granted under the Existing Plan and the Omnibus Plan, which were only eligible for exercise following the completion of the IPO on July 25, 2017, have an exercise price equal to the estimated fair value of the stock at the grant date for the Omnibus Plan and the grant date for the Existing Plan, respectively.

The following table presents stock-based compensation expense included in the Company’s condensed statements of operations (in thousands) for stock options and restricted stock unit awards under the plans:

 

     Three Months Ended
March 31
 
     2018      2017  

Stock-based compensation expense/(benefit) for:

     

Employee stock options

   $ 298      $ —    

Employee restricted stock units

     435        —    

Nonemployee stock options

     (712      —    

Nonemployee restricted stock units

     (89      —    
  

 

 

    

 

 

 
   $ (68    $ —    
  

 

 

    

 

 

 
     Three Months Ended
March 31
 
     2018      2017  

Stock-based compensation expense/(benefit) in operating expenses:

     

Selling, general and administrative

   $ 369      $ —    

Research and development

     (437      —    
  

 

 

    

 

 

 
   $ (68    $ —    
  

 

 

    

 

 

 

The Company treats stock-based compensation awards granted to employees of Cellectis as dividends, which are recorded quarterly. The Company recorded $712 thousand and $0 in a deemed dividend to Cellectis in the three months ended March 31, 2018 and 2017, respectively, for RSUs and stock options granted to employees of Cellectis.

Equity instruments issued to non-employees include RSUs and options to purchase shares of the Company’s common stock. These RSUs and options vest over a certain period during which services are provided. The Company expenses the fair market value of the awards over the period in which the related services are received. Unvested awards are remeasured to fair value until they vest.

 

Stock Options

The following table summarizes stock option activity for the three months ended March 31, 2018:

 

     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, 2017

     3,883,432      $ 9.16      $ 49,965        8.8  

Granted

     79,875      $ 10.39        

Exercised

     (196,801    $ 3.77      $ 3,260     

Canceled

     (147,000    $ 13.29        
  

 

 

          

Outstanding at March 31, 2018

     3,619,506      $ 9.60      $ 14,617        8.6  
  

 

 

          

Exercisable at March 31, 2018

     1,125,083      $ 5.41      $ 9,386        7.9  
  

 

 

          

The weighted average grant date fair value for stock options granted during the three months ended March 31, 2018 was $10.39. No stock options were granted during the three months ended March 31, 2017. The total fair value of stock options vested during the three months ended March 31, 2018 and 2017 was $475 thousand and $0, respectively. The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2018 and 2017 was $3.3 million and $0, respectively. At March 31, 2018, the total unrecognized stock-based compensation expense related to non-vested stock options is approximately $3.7 million, which is expected to be recognized over a weighted-average period of 4.3 years.

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 contained 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:

 

     Three Months Ended
March 31
     2018    2017

Expected dividend yield

   0%    0%

Risk-free interest rate

   2.45-2.72%    1.28%

Expected volatility

   40.9%-53.7%    25%

Expected life (in years)

   6.46-9.21    5.75-6.25

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, 2017

     1,373,933      $ 8.00  

Granted

     26,625      $ 23.39  

Canceled

     (102,900    $ 8.00  
  

 

 

    

Unvested balance at March 31, 2018

     1,297,658      $ 8.32  
  

 

 

    

 

The weighted average grant date fair value for RSUs granted during the three months ended March 31, 2018 was $23.39. No RSUs were granted during the three months ended March 31, 2017. No RSUs vested during the three months ended March 31, 2018 or 2017. As of March 31, 2018, the Company had approximately $5.3 million of unrecognized stock-based compensation expense related to restricted stock units that is expected to be recognized over a weighted-average period of 4.7 years.

Cellectis Equity Incentive Plan

Cellectis granted stock options to employees of Calyxt. Compensation costs related to the grant of Cellectis awards to Calyxt’s employees has been recognized in the statements of operations with a corresponding credit to stockholders’ equity, representing Cellectis’ 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 Cellectis awards:

 

     Three Months Ended
March 31
     2018    2017

Expected dividend yield

   0%    0%

Risk-free interest rate

   0.03%-0.94%    0.00%-0.42%

Expected volatility

   59.09%-65.64%    59.8%-63.2%

Expected life (in years)

   6.00-6.12    6.11-6.12

The Company recognized stock-based compensation expense related to Cellectis’ grants of stock options and warrants to Calyxt employees and consultants of $108 thousand and $134 thousand for the three-month periods ended March 31, 2018 and 2017, respectively. The following table summarizes the stock-based compensation expense for Cellectis awards (in thousands), which was recognized in the Company’s statements of operations:

 

     Three Months Ended
March 31
 
     2018      2017  

Stock-based compensation expense in operating expenses:

     

Selling, general and administrative

   $ 54      $ 3  

Research and development

     54        131  
  

 

 

    

 

 

 
   $ 108      $ 134