Quarterly report pursuant to Section 13 or 15(d)

Stock-Based Compensation

v3.10.0.1
Stock-Based Compensation
9 Months Ended
Sep. 30, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock-Based Compensation
8.

Stock-Based Compensation

Calyxt, Inc. Equity Incentive Plans

The Company adopted the Calyxt, Inc. Equity Incentive Plan, or the Initial 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 the Company’s employees and nonemployees, as well as certain employees and nonemployees of Cellectis.

 

The options granted under the Initial 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 Initial 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
September 30,
     Nine Months Ended
September 30,
 
     2018      2017      2018      2017  

Stock-based compensation expense for:

           

Employee stock options

   $ 150      $ 3,891      $ 726      $ 3,891  

Employee restricted stock units

     (26      706        794        1,141  

Nonemployee stock options

     (132      4,209        293        4,209  

Nonemployee restricted stock units

     693        385        1,096        393  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ 685      $ 9,191      $ 2,909      $ 9,634  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

     Three Months
Ended
September 30,
     Nine Months Ended
September 30,
     2018      2017      2018      2017

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

           

Research and development

   $ (10    $ 4,652      $ 878      $4,673

Selling, general and administrative

     695        4,539        2,031      4,961
  

 

 

    

 

 

    

 

 

    

 

   $ 685      $ 9,191      $ 2,909      $9,634
  

 

 

    

 

 

    

 

 

    

 

For accounting purposes, the Company treats stock-based compensation awards granted to employees of Cellectis as deemed dividends to Cellectis, which are recorded quarterly. The Company recorded $415 thousand and $1,790 thousand and $2,769 thousand and $2,838 thousand in deemed dividends to Cellectis in the three and nine months ended September 30, 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 nine months ended September 30, 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

     295,443      $ 18.84        

Exercised

     (461,200    $ 4.62      $ 6,416     

Canceled

     (576,853    $ 12.42        
  

 

 

          

Outstanding at September 30, 2018

     3,140,822      $ 10.14      $ 17,718        8.2  
  

 

 

          

Exercisable at September 30, 2018

     1,314,939      $ 7.01      $ 11,429        7.7  
  

 

 

          

 

The weighted average grant date fair value for stock options granted during the nine months ended September 30, 2018 and 2017 was $9.60 and $2.17, respectively. The total fair value of stock options vested during the nine months ended September 30, 2018 and 2017 was $2.5 million and $10.2 million, respectively. The aggregate intrinsic value of stock options exercised during the nine months ended September 30, 2018 and 2017 was $6.4 million and $1.0 million, respectively. At September 30, 2018, the total unrecognized stock-based compensation expense related to non-vested stock options is approximately $4.1 million, which is expected to be recognized over a weighted-average period of 3.6 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 Initial Plan.

The Company has not historically paid dividends to its stockholders and currently does not anticipate paying any 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:

 

     Nine Months Ended
September 30,
 
     2018     2017  

Expected dividend yield

     0     0

Risk-free interest rate

     2.18% – 2.82     1.25% – 2.31

Expected volatility

     40.86% – 57.2     27.4% – 45.1

Expected life (in years)

     5.57 – 10.00       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, 2017

     1,373,933      $ 8.00  

Granted

     276,625      $ 16.95  

Vested

     (191,627    $ 8.00  

Canceled

     (358,926    $ 8.00  
  

 

 

    

Unvested balance at September 30, 2018

     1,100,005      $ 10.35  
  

 

 

    

The weighted average grant date fair value for RSUs granted during the nine months ended September 30, 2018 and 2017 was $16.95 and $8.00, respectively. The total fair value of RSUs vested during the nine months ended September 30, 2018 and 2017 was $1.7 million and $0.3 million, respectively. As of September 30, 2018, the Company had approximately $6.3 million of unrecognized stock-based compensation expense related to restricted stock units that is expected to be recognized over a weighted-average period of 4.0 years.

Cellectis Equity Incentive Plans

Cellectis grants stock options to certain 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 entry 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 Cellectis’ stock price, and expected dividends.

 

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

 

     Nine Months Ended
September 30,
 
     2018     2017  

Expected dividend yield

     0     0

Risk-free interest rate

     0.03%-0.94     2.16%-2.31

Expected volatility

     59.09%-65.64     37.5%-42.3

Expected life (in years)

     6.0-6.12       7.43-10  

The Company recognized a reduction to compensation expense related to Cellectis’ grants of stock options and warrants to its employees and consultants of $96 thousand for the three months ended September 30, 2018 and the Company recognized share-based compensation expense related to Cellectis’ grants of stock options and warrants to Calyxt’s employees and consultants of $98 thousand for the three months ended September 30, 2017. The Company recognized stock-based compensation expense related to Cellectis’ grants of stock options and warrants to Calyxt employees and consultants of $107 thousand and $347 thousand for the nine-month periods ended September 30, 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
September 30,
     Nine Months
Ended
September 30,
 
     2018      2017      2018      2017  

Stock-based compensation expense in operating expenses:

           

Selling, general and administrative

   $ (115    $ 2      $ (9    $ 7  

Research and development

     19        96        116        340  
  

 

 

    

 

 

    

 

 

    

 

 

 
   $ (96    $ 98      $ 107      $ 347