Stock-Based Compensation and Employee Benefit Plans

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation and Employee Benefit Plans

Stock Options and Performance Stock Options

In 2012, Private Lumos adopted the 2012 Equity Incentive Plan (“2012 Plan”), and in 2016 it adopted the 2016 Stock Plan (“2016 Plan” and together with the 2012 Plan, the “Plans”). In connection with the Merger, all outstanding options under the Plans were assumed and such assumed options may be exercised to purchase common stock of the Company after the Merger. Subsequent to the Merger, the Plans were terminated as to future awards.

In connection with the Merger, the Company assumed NewLink’s 2009 Equity Incentive Plan which was effective since July 2009 and was subsequently amended on May 9, 2019 (the “2019 Plan”). The 2019 Plan has a 10 year term from the Board

adoption date of March 22, 2019 and on January 1 of each year through January 1, 2029, in accordance with an “evergreen provision”, a number of shares of common stock in an amount equal to 3% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year or such lesser amount of shares (or no shares) approved by the Board, will be added to the shares reserved under the 2019 Plan. The 2019 Plan provides for the grant of incentive stock options, nonstatutory stock options, restricted stock awards and stock appreciation rights to officers, employees, members of the Board, advisors, and consultants to the Company. As of December 31, 2021, we had 455,532 shares available for grant under the 2019 Plan.

In connection with the Merger, the Company re-valued the assumed stock options, and it did not result in a material incremental expense for the year ended December 31, 2020.

The table below summarizes the stock option activity, including options with market and performance conditions, for the year ended December 31, 2021:


	Number of options	Weighted average exercise price		Weighted average remaining contractual term (years)
Outstanding at beginning of period	958,945	$	9.59	7.5
Options granted	376,844	14.55
Options exercised	(26,922)	2.40
Options forfeited	(23,101)	13.04
Options expired	(84,557)	16.31
Outstanding at end of period	1,201,209	$	10.77	7.3
Options exercisable at end of period	617,269	$	9.90	6.1

The weighted-average assumptions used to value the stock options using the Black-Scholes option-pricing were as follows:

Year Ended December 31,

2021

2020

Risk-free interest rate

0.56% to 1.05%

0.35% to 0.49%

Expected dividend yield

—%

Expected volatility

77.2% to 90.3%

86.1% to 89.5%

Expected term (in years)

5.4 to 7.7

5.8 to 6.1

Weighted-average grant-date fair value per share

$10.65

$5.96

Restricted Stock Units

The table below summarizes the restricted stock units activity for the year ended December 31, 2021:


	Number of restricted shares	Weighted average grant date fair value
Unvested at beginning of period	73,754	$	7.86
Granted	41,903	10.32
Vested	(33,933)	8.39
Forfeited/cancelled	(709)	7.78
Unvested at end of period	81,015	$	8.91

The following summarizes the weighted average fair value at the date of grant:


	Year Ended December 31,
	2021		2020
Per grant of restricted stock unit	$	10.32	$	7.90

2010 Non-Employee Directors’ Stock Award Plan

In connection with the Merger, the Company assumed NewLink’s 2010 Non-Employee Directors’ Stock Award Plan (the “Directors’ Plan”) which was effective on November 10, 2011. As of December 31, 2021, 5,624 shares remain available for grant under the Directors’ Plan.

2010 Employee Stock Purchase Plan

In connection with the Merger, the Company assumed NewLink’s 2010 Employee Stock Purchase Plan, as amended (the "2010 Purchase Plan"), which was effective on November 10, 2011. As of December 31, 2021, 60,000 shares remain available for issuance under the 2010 Purchase Plan. On July 22, 2021, the Board approved an amendment and restatement of the 2010 Purchase Plan (the “A&R ESPP”), and established a special offering period under the A&R ESPP beginning September 1, 2021 and lasting until June 30, 2023, subject to restart provisions as described within the A&R ESPP. The A&R ESPP is fully contingent upon stockholder approval at the 2022 Annual Meeting of Stockholders. The A&R ESPP provides for an increase in the number of shares reserved for issuance under the A&R ESPP by 60,000 shares. The purchase rights granted to employees for the special offering period under the A&R ESPP are exercisable only if the Company’s shareholders approve the A&R ESPP at the Company’s 2022 Annual Meeting of Stockholders.

Share-Based Compensation Expense

Stock-based compensation expenses included in the Company’s consolidated statements of operations for the year ended December 31, 2021 and 2020 were (in thousands):


	Year Ended December 31,
	2021		2020
Research and development	$	809	$	132
General and administrative	2,070		942
Total	$	2,879	$	1,074

See Note 11 for additional discussion regarding stock compensation expense related to the accelerated vesting of certain non-vested equity awards. As of December 31, 2021, we had unrecognized compensation cost of $4.5 million and the weighted-average period over which it is expected to be recognized is 2.8 years.

Employee Benefit Plans

The Company sponsors a 401(k) plan that provides for a defined annual employer contribution. The Company’s defined contribution was $0.3 million and $0.2 million for the years ended December 31, 2021 and 2020, respectively. The Company also made a discretionary contribution to the plan of $0.1 million and $0.1 million for the years ended December 31, 2021 and 2020, respectively.