Without deducting forfeitures, our three-year average burn rate for the 2020-2022 fiscal
years was 5.25%. This compares to a median burn rate of 4.50% in our peer group in calendar year 2021, the most recent year for which comparable data is available.
Our Equity Award Overhang Reflects 9+ Years Without Dilutive Equity Financings
In making its determinations, the Compensation Committee also considered the total number of shares reserved for outstanding stock options and
other equity awards. As of December 31, 2022, we had shares reserved for outstanding equity awards covering a total of 5,251,871 shares, consisting of stock options to purchase a total of 4,510,600 shares, restricted stock units for 439,141
shares, and performance unit awards targeting a total of 302,130 shares, with 560,008 shares remaining reserved for future issuance. Our overhang reflects the fact that we have not issued any shares of our common stock in an equity financing since
the closing of our initial public offering in March 2013. Most biotechnology companies in that period of time would have done several rounds of follow-on equity financings, substantially reducing the
percentage of shares represented by outstanding equity awards. In Enantas case, this dilution was avoided because we have received over $1 billion in milestone payments and royalties on sales of products containing our HCV protease
inhibitors since our 2013 IPO, and we had $278.5 million in our cash and cash equivalent reserves at September 30, 2022.
The Proposed Increase Is Projected to Enable Needed Recruitment and Retention into 2024
After a review of our historical practices and in the context of our current and expected future growth, the Compensation Committee has
determined that the proposed increase of 975,000 shares, which represents the equivalent of 4.68% of our shares of common stock outstanding as of December 31, 2022, is appropriate to cover our anticipated requirements for
recruitment of new employees and retention of our personnel until at least the 2024 annual meeting of stockholders. The proposed increase is made in the context of our need to recruit more employees primarily in support of our research and the
advancement of our clinical-stage pipeline into larger clinical trials. The Compensation Committee believes that the proposed addition to the share reserve is essential to the Companys ability to continue to grant equity incentives for at
least the next year, which is vital to our efforts to attract and retain the highly skilled individuals required to support our continued growth in the extremely competitive labor markets in which we compete.
The closing price of our common stock on the Nasdaq Global Select Market on December 31, 2022, was $46.52 per share. Based solely on the
closing price of our common stock on December 31, 2021, the aggregate intrinsic value of the proposed additional 975,000 shares of common stock, which would be newly reserved for issuance under the 2019 Equity Plan, is $ 45,357,000.
Stockholder Approval Requirements
Approval of the proposed amendment to the 2019 Equity Plan by our stockholders is required under the listing rules of the Nasdaq Stock Market.
Stockholder approval will also ensure favorable federal income tax treatment for awards of incentive stock options, if any, that may be made under Section 422 of the Internal Revenue Code of 1986, as amended (the Code).
General Description of 2019 Equity Plan
The purpose of the 2019 Equity Plan is to attract and retain employees, directors and consultants and to provide an incentive for these
individuals to achieve long-range performance goals. The 2019 Equity Plan permits us, under the direction of the Compensation Committee, to grant equity awards to our employees, directors and consultants, including incentive and non-statutory stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based and cash-based awards. Under the 2019 Equity Plan to date, we have awarded only non-statutory stock options, time-based restricted stock units, performance share units and relative total stockholder return units.
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