Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.8.0.1
Stock-Based Compensation
9 Months Ended
Sep. 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 and restricted stock units to certain of our employees, nonemployees, and certain employees and nonemployees of the Parent.

The options granted under the Existing Plan and the Omnibus Plan were only exercisable upon a triggering event or initial public offering as defined by the plan. Accordingly, with the completion of the IPO on July 25, 2017, the Company recognized compensation expense of $5.6 million for stock options granted under the plans for the three and nine month periods ended September 30, 2017. The stock options issued under the plans had an exercise price equal to the estimated fair value of the stock at the grant date.

 

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 September 30      Nine Months Ended September 30  
     2017      2016      2017      2016  

Stock-based compensation expense for:

           

Employee stock options

   $ 3,891      $ —        $ 3,891      $ —    

Employee restricted stock units

     706        —          1,141        —    

Nonemployee stock options

     4,209        —          4,209        —    

Nonemployee restricted stock units

     385        —          393        —    
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 9,191      $ —        $ 9,634      $ —    
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Three Months Ended September 30      Nine Months Ended September 30  
     2017      2016      2017      2016  

Stock-based compensation expense in operating expenses:

           

Selling, general and administrative

   $ 4,539      $ —        $ 4,961      $ —    

Research and development

     4,652        —          4,673        —    
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 9,191      $ —        $ 9,634      $ —    
  

 

 

    

 

 

    

 

 

    

 

 

 

The Company treats stock-based compensation awards granted to employees of the Parent as dividends, which are recorded quarterly. The Company recorded $2,769 and $2,838 thousand in a deemed dividend to the Parent in the three and nine months ended September 30, 2017 for restricted stock units and stock options granted to employees of the Parent.

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 nine months ended September 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

     2,120,347      $ 13.29        

Exercised

     (43,130    $ 4.14        

Canceled

     (20,825    $ 5.85        
  

 

 

          

Outstanding at September 30, 2017

     3,986,992      $ 9.15      $ 61,172        9.1  
  

 

 

          

Exercisable at September 30, 2017

     1,193,700      $ 5.21      $ 23,010        8.3  
  

 

 

          

At September 30, 2017, the total unrecognized stock-based compensation expense related to non-vested stock options is approximately $6.7 million, which is expected to be recognized over a weighted-average period of 4.3 years.

The Company had 1,159,914 stock options that vested upon the completion of the IPO. The stock-based compensation expense related to these awards that was recorded upon the consummation of this offering was $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 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:

 

Expected dividend yield

   0%

Risk-free interest rate

   1.25% - 2.31%

Expected volatility

   27.4% - 45.1%

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 September 30, 2017

     1,413,133      $ 8.00  
  

 

 

    

As of September 30, 2017, the Company had approximately $8.5 million of unrecognized stock-based compensation expense related to restricted stock units that is expected to be recognized over a weighted-average period of 5.1 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 $98 thousand and $212 thousand for the three-month periods ended September 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 $347 thousand and $807 thousand for the nine-month periods ended September 30, 2017 and 2016, respectively. The following table summarizes the stock-based compensation expense for Parent awards (in thousands), which was recognized in the Company’s statements of operations:

 

     Three Months Ended September 30      Nine Months Ended September 30  
     2017      2016      2017      2016  

Stock-based compensation expense in operating expenses:

           

Selling, general and administrative

   $ 2      $ 5      $ 7      $ 17  

Research and development

     96        207        340        790  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 98      $ 212      $ 347      $ 807