Other
Under our agreement with RTI Surgical, Inc. (RTI) to develop and commercialize biologic implants using our technology for certain orthopedic
applications in the bone graft substitutes market, we are eligible to receive royalties on worldwide commercial sales of implants using our technologies and cash payments upon the achievement of certain commercial milestones. No milestone revenues
have been received in 2018.
In January 2017, we received an option fee related to an agreement with a global leader in the animal health business segment
to evaluate our cell therapy technology for application in an animal health area. Under the terms of the agreement, we received the payment in exchange for an exclusive period to evaluate our cell therapy technology with an option to negotiate for a
license for the development and commercialization of the technology for the animal health area. The nonrefundable option fee, which was initially recorded as deferred revenue, was recognized in the second quarter of 2018 as the agreement had
expired. The evaluation of our technology for animal health applications continues.
7. Stock-based Compensation
We have an incentive plan that authorized an aggregate of 20,035,000 shares of common stock for awards to employees, directors and consultants. The equity
incentive plan authorizes the issuance of equity-based compensation in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance shares and units, and other stock-based awards. In the three-month
period ended September 30, 2018, we granted 90,192 stock options to our employees. As of September 30, 2018, a total of 4,915,082 shares (including 248,703 shares related to an expired incentive plan) of common stock have been issued under
our equity incentive plans.
As of September 30, 2018, a total of 3,699,221 shares were available for issuance under our equity incentive plan, and
stock-based awards to purchase 12,600,393 shares (including 930,993 shares related to an expired incentive plan) of common stock were outstanding. For the three-month periods ended September 30, 2018 and 2017, stock-based compensation expense
was approximately $1.1 million and $0.8 million, respectively. At September 30, 2018, total unrecognized estimated compensation cost related to unvested stock-based awards was approximately $9.3 million, which is expected to be
recognized by the end of 2022 using the straight-line method.
8. Stockholders Equity
Equity IssuanceHealios
In March 2018, Healios
purchased 12,000,000 shares of our common stock for $21.1 million, or approximately $1.76 per share, and the Healios Warrant to purchase up to an additional 20,000,000 shares. In connection with this investment, we entered into an Investor
Rights Agreement that governs certain rights of Healios and us relating to Healios ownership of our common stock. The Investor Rights Agreement provides for customary standstill and voting obligations, transfer restrictions and registration
rights for Healios. Additionally, we agree to provide notice to Healios of certain equity issuances and to allow Healios to participate in certain issuances in order maintain its proportionate ownership of our common stock as of the time of such
issuance. We further agreed that during such time as Healios beneficially owns more than 5.0% but less than 15.0% of our outstanding common stock, our Board of Directors (the Board) will nominate a Healios nominee suitable to us to
become a member of the Board, and during such time as Healios beneficially owns 15.0% or more of our outstanding common stock, our Board will nominate two suitable Healios nominees to become members of the Board, at each annual election of
directors. Healios nominated an individual to the Board, who was elected at the 2018 annual stockholders meeting. As a result of Healios investment, Healios became a related party, and the transactions with Healios are separately
identified within these financial statements as related party transactions.
15