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Note 6 - Stock-based Compensation

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Text Block]

6.	Stock-Based Compensation

2015 Equity Plan

The 2015 Equity Plan provides for increases to the number of shares reserved for issuance thereunder each January 1 equal to 4.0% of the total shares of the Company’s common stock outstanding as of the immediately preceding December 31, unless a lesser amount is stipulated by the Compensation Committee of the Company's board of directors. Accordingly, 2,560,618 shares were added to the reserve as of January 1, 2021, which shares may be issued in connection with the grant of stock-based awards, including stock options, restricted stock, restricted stock units, stock appreciation rights and other types of awards as deemed appropriate, in each case, in accordance with the terms of the 2015 Equity Plan. As of September 30, 2021, there were 407,333 shares available for future issuance under the 2015 Equity Plan.

The Company recorded stock-based compensation expense in the following expense categories of its unaudited interim consolidated statements of operations for the periods indicated:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Research and development	$	18,811	$	19,838	$	111,378	$	136,236
General and administrative		145,581		259,635		531,574		448,061
Total stock-based compensation expense	$	164,392	$	279,473	$	642,952	$	584,297

The following table summarizes the activity related to all stock option grants for the nine months ended September 30, 2021:

	Number of Options			Weighted average exercise price per share		Weighted average remaining contractual life (in years)		Aggregate intrinsic value
Balance at January 1, 2021		2,240,204		$	8.28
Granted		1,732,515			0.91
Forfeited		(172,904	)		1.76
Outstanding at September 30, 2021		3,799,815		$	5.22		8.79	$	33,791
Exercisable at September 30, 2021		1,839,079		$	9.85		8.17	$	30,113
Vested and expected to vest at September 30, 2021		3,542,971		$	5.51		8.74	$	33,791

The weighted average grant date fair value of stock option awards granted during the nine months ended September 30, 2021 was $0.87. The total fair value of options vested during the three months ended September 30, 2021 and 2020 was $0.3 million and $0.3 million, respectively. The total fair value of options vested during the nine months ended September 30, 2021 and 2020 was $0.6 million and $0.6 million, respectively. No options were exercised during any of the periods presented. At September 30, 2021, there was $1.2 million of unrecognized compensation expense that will be recognized over a weighted-average period of 1.80 years. During the nine months ended September 30, 2021, the Company granted 385,267 performance-based stock options with an exercise price of $1.11 per share, subject to vesting based on the satisfaction of specified performance criteria. Compensation expense for the performance-based awards is recorded over the estimated service period for each milestone when the performance conditions are deemed probable of achievement. The Company recorded stock-based compensation expense of approximately $0.1 million nine months ended September 30, 2021, for service-based awards and performance conditions deemed probable of achievement and/or achieved. For performance-based awards containing performance conditions which were not deemed probable of achievement at September 30, 2021, no stock compensation expense was recognized and any previously recognized expense related to those awards originally deemed probable was reversed.

Options granted were valued using the Black-Scholes option-pricing model and the weighted average assumptions used to value the options granted during the nine months ended September 30, 2021 and 2020 were as follows:

	2021			2020
Expected term (in years)		10			7.75
Risk-free interest rate		1.5	%		0.9	%
Expected volatility		123.8	%		119.7	%
Dividend yield		—	%		—	%

Restricted Stock Unit Awards

The Company issues restricted stocks ("RSU") to newly elected, non-executive members of the board of directors that vest in six, tri-monthly installments beginning 18 months after the respective grant date. The fair value of an RSU is equal to the fair market value price of the Company’s common stock on the date of grant. RSU expense is recorded on a straight-line basis over the service period.

The following table summarizes activity related to RSU stock-based payment awards:

	Number of shares		Weighted-average grant date fair value
Unvested balance at January 1, 2021		153,000	$	0.65
Granted		138,800	$	0.72
Unvested balance at September 30, 2021		291,800	$	0.69

The Company recognized approximately $16,000 and $4,000 in expense related to these awards during the three months ended September 30, 2021 and 2020, respectively. The Company recognized approximately $27,000 and $12,000 in expense related to these awards during the nine months ended September 30, 2021 and 2020, respectively. At September 30, 2021, there was approximately $0.1 million of unrecognized compensation cost that will be recognized over a weighted average period of 2.35 years.