Stock-Based Compensation

6 Months Ended

Jun. 30, 2024

Stock-based compensation expense included in the Company’s unaudited condensed consolidated statements of comprehensive income (loss) is allocated as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Research and development	$	1,343	$	2,414	$	3,031	$	4,618
General and administrative	1,474		3,059		3,288		5,885
Sales and marketing	5,794		5,731		11,843		11,415
	$	8,611	$	11,204	$	18,162	$	21,918

Stock Option Activity

The option awards issued under the 2014 Stock Option Plan (the 2014 Plan) and the 2018 Omnibus Incentive Plan (the 2018 Plan) were measured based on fair value. The Company used the simplified method of determining the expected term of stock options as the Company believes this represents the best estimate of the expected term of a new option. The expected stock price volatility assumption was determined by examining the historical volatilities for industry peers, as the Company did not have sufficient trading history for the Company’s common stock. The Company will continue to analyze the historical stock price volatility and expected term assumption as more historical data for the Company’s common stock becomes available. The risk-free interest rate assumption is based on the U.S. Treasury instruments, whose term was consistent with the expected term of the Company’s stock options. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The assumptions regarding the expected term of the options and the expected volatility of the stock price are subjective, and these assumptions have a significant effect on the estimated fair value amounts. There were no stock option grants for the three and six months ended June 30, 2024 and 2023.

As of June 30, 2024, there was $0.1 million of total unrecognized compensation cost related to unvested stock options that is expected to be recognized over a weighted-average period of approximately 0.6 years.

The following table summarizes stock option activity for the six months ended June 30, 2024 under the 2014 and 2018 Plans (in thousands, except share and per share data):


	Number of Options	Weighted-Average Exercise Price Per Share		Aggregate Intrinsic Value
Outstanding at December 31, 2023	814,780	$	18.47	$	35,652

Options exercised	(24,593)	19.93		$	1,183	(1)
Options forfeited	(979)	48.54
Outstanding at June 30, 2024	789,208	$	18.39	$	38,545	(2)

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(1) Represents the total difference between the Company’s closing stock price at the time of exercise and the stock option exercise price, multiplied by the number of options exercised.

(2) Represents the total difference between the Company’s closing stock price on the last trading day of the second quarter of 2024 and the stock option exercise price, multiplied by the number of in-the-money options as of June 30, 2024. The amount of intrinsic value will change based on the fair market value of the Company’s stock.

The weighted-average remaining contractual term of options outstanding and exercisable was 4.7 years at June 30, 2024.

Restricted Shares Awards Activity

As of June 30, 2024, there was $39.1 million of total unrecognized compensation cost related to unvested restricted shares awards that is expected to be recognized over a weighted-average period of approximately 1.6 years.

The following table summarizes restricted shares awards activity for the six months ended June 30, 2024:


	Number of Restricted Shares Awards	Weighted-Average Fair Value Per Share at Grant Date
Outstanding at December 31, 2023	1,303,704	$	55.86
Restricted shares awards granted	30,400	67.88
Restricted shares awards vested	(369,733)	50.56
Restricted shares awards forfeited	(17,685)	59.75
Outstanding at June 30, 2024	946,686	$	58.25

Restricted Stock Units Activity

As of June 30, 2024, there was $1.6 million of total unrecognized compensation cost related to unvested restricted stock units that is expected to be recognized over a weighted-average period of approximately 0.6 years.

The following table summarizes restricted stock units activity for the six months ended June 30, 2024:


	Number of Restricted Stock Units	Weighted-Average Fair Value Per Share at Grant Date
Outstanding at December 31, 2023	230,700	$	70.20
Restricted stock units granted	38,450	73.16
Restricted stock units vested	(206,734)	65.77

Outstanding at June 30, 2024	62,416	$	86.70

Axonics, Inc. 10-Q