Quarterly report pursuant to Section 13 or 15(d)

Stockholders' Equity

v3.21.2
Stockholders' Equity
9 Months Ended
Sep. 30, 2021
Stockholders' Equity  
Stockholders' Equity

5. Stockholders’ Equity

Equity Offerings

Under its certificate of incorporation, the Company was authorized to issue up to 200,000,000 shares of common stock as of September 30, 2021. The Company also was authorized to issue up to 5,000,000 shares of preferred stock as of September 30, 2021. The Company is required, at all times, to reserve and keep available out of its authorized

but unissued shares of common stock sufficient shares to effect the conversion of the shares of the preferred stock and all outstanding stock options and warrants.

Registered Underwritten Public Offering

In August 2020, the Company closed a registered underwritten public offering of 25,000,000 shares of its common stock at a public offering price of $2.30 per share for net proceeds to the Company of approximately $53.7 million, after deducting underwriting discounts and commissions and offering expenses.

ATM Programs

In April 2019, the Company entered into a Common Stock Sales Agreement with H.C. Wainwright & Co., LLC, or Wainwright, pursuant to which the Company may offer and sell through Wainwright, from time to time at the Company’s sole discretion, shares of its common stock, having an aggregate offering price of up to $50.0 million, or the HCW ATM Program. Sales of the shares of common stock are deemed to be “at-the-market offerings,” as defined in Rule 415 under the Securities Act. In December 2020, the Company and Wainwright entered into Amendment No. 1 to Common Stock Sales Agreement, or the Amendment, to amend the Common Stock Sales Agreement to, among other things, update the reference to the registration statement pursuant to which the shares of common stock may be sold and to include an additional $50.0 million of shares of common stock in the HCW ATM Program. There were no sales under the HCW ATM Program in the third quarter of 2021. As of September 30, 2021, there was approximately $41.9 million remaining available for future issuances under the HCW ATM Program.

Registered Direct Offering and Concurrent Warrant Issuance

In January 2019, the Company entered into securities purchase agreements with two institutional investors wherein the Company agreed to sell to the investors an aggregate of 10,000,000 shares of its common stock, at an offering price of $1.00 per share, in a registered direct offering made pursuant to the Company’s existing registration statement on Form S-3. The net proceeds to the Company from the offering were $9.2 million, after deducting fees and the expenses of the placement agent. Pursuant to a letter agreement dated January 28, 2019, the Company engaged H.C. Wainwright & Co., LLC, or Wainwright, to act as its exclusive placement agent in connection with the issuance and sale of the shares. The Company paid Wainwright 7.0% of the aggregate gross proceeds in the offering and $50,000 for certain expenses, and it issued warrants to purchase 500,000 shares of common stock to certain designees of Wainwright. These warrants have a term of five years, are immediately exercisable and have an exercise price of $1.25 per share. During the year ended December 31, 2020, 327,500 of these warrants were exercised in a cashless exercise for 201,925 common shares. The warrants are classified as equity and were recorded at fair value as of the date of issuance on the Company’s Consolidated Balance Sheets and no further adjustments to their valuation are made. The letter agreement also includes indemnification obligations of the Company and other provisions customary for transactions of this nature.

Equity Incentive Plans

In 2008, the Company adopted the 2008 Equity Incentive Plan, as amended on February 29, 2008, January 7, 2010, July 8, 2010, December 10, 2010, June 23, 2011 and June 17, 2013, collectively, the 2008 Plan, that authorized the Company to grant restricted stock and stock options to eligible employees, directors and consultants to the Company.

In 2013, the Company adopted the 2013 Equity Incentive Plan, as amended on May 14, 2014, collectively, 2013 Plan. The 2013 Plan became effective upon the Company’s entry into the underwriting agreement related to its IPO in January 2014 and, as of such date, no further grants were permitted under the 2008 Plan. The 2013 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based stock awards and other forms of equity compensation (collectively, stock awards), all of which may be granted to employees, including officers, non-employee directors and consultants of the Company. Additionally, the 2013 Plan provides for the grant of cash and stock-based performance awards. The 2013 Plan contains an “evergreen” provision, pursuant to which the number of shares of common stock available for issuance under the plan automatically increases on January 1 of each year beginning in 2015.

On December 15, 2016, the Company adopted the Trevena, Inc. Inducement Plan, or the Inducement Plan, effective January 1, 2017, pursuant to which the Company reserved 500,000 shares of the Company’s common stock for

issuance under the Inducement Plan. The Inducement Plan provides for nonstatutory stock options and restricted stock unit awards. The only persons eligible to receive grants of awards under the Inducement Plan are individuals who satisfy the standards for inducement grants under Nasdaq Marketplace Rule 5635(c)(4) and the related guidance under Nasdaq IM 5635-1, including individuals who were not previously an employee or director of the Company or are following a bona fide period of non-employment, in each case as an inducement material to such individual’s agreement to enter into employment with the Company.

Under all such plans, the amount, terms of grants and exercisability provisions are determined by the board of directors or its designee. The term of the options may be up to 10 years, and options are exercisable in cash or as otherwise determined by the board of directors or its designee. Vesting generally occurs over a period of not greater than four years. For performance-based stock awards, the Company recognizes expense when achievement of the performance condition is probable, over the requisite service period.

The estimated grant-date fair value of the Company’s stock-based awards is amortized on a straight-line basis over the awards’ service periods. Stock-based compensation expense recognized was as follows (in thousands):

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2021

    

2020

    

2021

    

2020

    

Research and development

$

279

$

203

$

787

$

616

Selling, general and administrative

 

690

 

584

 

2,455

 

1,828

Cost of goods sold

9

29

Total stock-based compensation

$

978

$

787

$

3,271

$

2,444

Stock Options

A summary of stock option activity and related information through September 30, 2021 follows:

Options Outstanding

    

    

    

Weighted 

Average 

Weighted 

Remaining 

Average 

Contractual 

Number of 

Exercise 

Term 

Shares

Price

(in years)

Balance, December 31, 2020

 

9,564,519

$

3.07

 

7.17

Granted

 

2,657,642

 

1.86

Exercised

 

(146,559)

 

1.28

Forfeited/Cancelled

 

(521,726)

 

2.77

Balance, September 30, 2021

 

11,553,876

$

2.83

 

6.99

Vested or expected to vest at September 30, 2021

 

11,553,876

$

2.83

 

6.99

Exercisable at September 30, 2021

 

6,917,596

$

3.45

 

5.69

The aggregate intrinsic value of options exercisable as of September 30, 2021 was $0.5 million, based on the difference between the Company’s closing stock price of $1.23 and the exercise price of each stock option. At September 30, 2021, there was $5.9 million of total unrecognized compensation expense related to unvested options that will be recognized over the weighted average remaining vesting period of 3.01 years.

The Company uses the Black-Scholes option pricing model to estimate the fair value of stock options at the grant date. The Black-Scholes model requires the Company to make certain estimates and assumptions, including estimating the fair value of the Company’s common stock, assumptions related to the expected price volatility of the Company’s common stock, the period during which the options will be outstanding, the rate of return on risk-free investments and the expected dividend yield for the Company’s common stock.

The per-share weighted-average grant date fair value of the options granted to employees and directors during the nine months ended September 30, 2021 and 2020 was estimated at $1.45 and $0.73 per share, respectively, on the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions:

September 30, 

    

2021

    

2020

    

    

Expected term of options (in years)

 

6.1

 

5.7

 

 

Risk-free interest rate

 

0.9

%  

0.7

%  

 

Expected volatility

 

97.8

%  

96.1

%  

 

Dividend yield

 

%  

%  

 

Restricted Stock Units

RSU-related expense is recognized on a straight-line basis over the vesting period. Upon vesting, these awards may be settled on a net-exercise basis to cover any required withholding tax with the remaining amount converted into an equivalent number of shares of common stock.

The following is a summary of changes in the status of non-vested RSUs during the year:

    

    

Weighted 

Average 

Number of 

Grant Date

Awards

Fair Value

Non-vested at December 31, 2020

 

3,771,342

$

1.66

Granted

 

27,500

1.20

Vested

 

(143,750)

0.85

Forfeited

 

(624,075)

1.61

Non-vested at September 30, 2021

 

3,031,017

$

1.71

For the nine months ended September 30, 2021, the Company recorded $1.4 million in stock-based compensation expense related to RSUs, which is reflected in the statement of operations and comprehensive loss.

As of September 30, 2021, there was $3.8 million of total unrecognized compensation expense related to unvested RSUs that will be recognized over the weighted average remaining period of 3.08 years.

Shares Available for Future Grant

At September 30, 2021, the Company has the following shares available to be granted under its equity incentive plans:

    

    

Inducement 

2013 Plan

Plan

Available at December 31, 2020

 

4,053,501

 

252,500

Authorized

 

6,399,997

Granted

 

(2,685,142)

Shares withheld for taxes not issued

49,915

Forfeited/Cancelled

 

1,145,801

Available at September 30, 2021

 

8,964,072

 

252,500

Shares Reserved for Future Issuance

At September 30, 2021, the Company has reserved the following shares of common stock for issuance:

Stock options outstanding under 2013 Plan

    

11,306,376

Restricted stock units outstanding under 2013 Plan

3,031,017

Shares reserved for future issuance under 2013 Plan

 

8,964,072

Stock options outstanding under Inducement Plan

 

247,500

Shares reserved for future issuance under Inducement Plan

 

252,500

Shares reserved for future issuance under 2013 Employee Stock Purchase Plan

 

225,806

Warrants outstanding

 

295,591

Total shares of common stock reserved for future issuance

 

24,322,862