The 2018 Omnibus Incentive Compensation Plan (the “2018 Plan”) was unanimously approved by the Company’s Board of Directors on May 24, 2018 and was approved by the Company’s stockholders on June 27, 2018.

Under the 2018 Plan, the Company may grant incentive stock options, non-qualified stock options, stock awards, stock units, stock appreciation rights and other stock-based awards to employees, non-employee directors and consultants, and advisors. The maximum aggregate number of shares of the Company’s common stock that may be issued under the 2018 Plan is 26,823.

The 2018 Plan was amended and restated following unanimous approval of the Company’s Board of Directors on April 24, 2019 and was approved by the Company’s shareholders on June 17, 2019. The amended 2018 Plan (the “Amended 2018 Plan”) allowed for an additional 39,300 shares of the Company’s common stock that may be issued under the Amended 2018 Plan with respect to awards made on and after June 17, 2019.

The 2021 Incentive Compensation Plan (the “2021 Plan”) was unanimously approved by the Company’s shareholders on July 30, 2021. Upon stockholders’ approval of the 2021 Plan, no further awards will be made under the Amended 2018 Plan. Under the 2021 Plan, the Company may grant incentive stock options, non-qualified stock options, stock awards, stock units, stock appreciation rights and other stock-based awards to employees, non-employee directors and consultants, and advisors. The maximum aggregate number of shares of the Company’s common stock that may be issued under the 2021 Plan is 1,300,000. At December 31, 2021, there were 902,101 shares available for future issuance.

Stock-based compensation expense includes stock options granted to employees and non-employees and has been reported in the Company’s statements of operations and comprehensive loss in either research and development expenses or general and administrative expenses depending on the function performed by the optionee. No net tax benefits related to the stock-based compensation costs have been recognized since the Company’s inception. The Company recognized stock-based compensation expense related to stock options and restricted stock units as follows for the years ended December 31, 2021 and 2020:

A summary of stock option activity for the twelve months ended December 31, 2021 is as follows:

The Company accounts for all stock-based payments made to employees, non-employees and directors using an option pricing model for estimating fair value. Accordingly, stock-based compensation expense is measured based on the estimated fair value of the awards on the date of grant. Compensation expense is recognized for the portion that is ultimately expected to vest over the period during which the recipient renders the required services to the Company using the straight-line single option method.

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 assumptions related to the expected price volatility of the 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 stock.

As of December 31, 2021, there was $1,597,000 of unrecognized compensation expense related to the unvested stock options which is expected to be recognized over a weighted-average period of approximately 2.22 years.

The weighted-average assumptions underlying the Black-Scholes calculation of grant date fair value include the following:


	Year ended December 31,
	2021			2020
Risk-free interest rate		0.89	%		0.45	%
Expected volatility		133.77	%		105.14	%
Expected term		5.93	years		6.00	years
Expected dividend yield		0	%		0	%
Weighted average grant date fair value	$	4.60		$	0.25

On August 2, 2021, the compensation committee of the board of directors approved restricted stock unit grants to the Company’s employees (“2021 RSU”). An aggregate of 104,700 service-based RSUs were issued at a grant date fair value of $5.19. The 2021 RSU awards will be settled in stock, vest 33% on each of the first and second anniversary of the date of grant, and vest 34% on the third anniversary of the date of grant. The 2021 RSU awards were granted under the 2021 Plan. There were no vesting events, expirations, forfeitures, or cancelations of the 2021 RSUs during the period. At December 31, 2021, the unrecognized compensation cost related to unvested service-based RSUs was $468,000, which will be recognized over the remaining service period. During the twelve months ended December 31, 2021, the Company recognized $75,000 of stock-based compensation expense related to the 2021 RSUs, which is included in additional paid-in capital.

Grants of PSUs and SARs

On July 9, 2020, the compensation committee of the board of directors and the board approved a cash bonus program of cash-settled stock appreciation right (“2020 SAR”) awards and cash-settled performance stock unit (“2020 PSU”) awards to the Company’s employees. An aggregate of 2020 SAR awards with respect to 256,713 shares of common stock and 2020 PSU awards with respect to 124,220 shares of common stock were granted to the Company’s employees. The 2020 SAR awards will be settled in cash, vest 33% on the first anniversary of the date of grant, and the remaining 67% monthly over the next 24 months, have a per-share base amount of $8.40, which was the closing sales price of a share of the Company’s common stock on the grant date, and are in all cases subject to the terms and conditions of the Company’s form of SAR award agreement. The 2020 SAR awards are cash-settled and were granted outside of the 2018 Plan and the 2021 Plan.

The 2020 PSU awards vest 50% upon the submission of a new drug application (“NDA”) to the U.S. FDA for rigosertib in higher-risk myelodysplastic syndromes (“HR-MDS”) and 50% upon U.S. FDA approval of rigosertib for HR-MDS. The 2020 PSU awards have a maximum value of $21.60 per share. The maximum price per share is the per-share value based on the Company’s market capitalization at $250 million and the Company’s outstanding shares of common stock, which was 11,611,829 shares on July 9, 2020. In all cases, the 2020 PSU awards are subject to the terms and conditions of the Company’s form of PSU award agreement. The 2020 PSU awards are cash-settled and were granted outside of the 2018 Plan and the 2021 Plan.

In addition, on July 9, 2020, based on the recommendation of the compensation committee, the board approved a change in the non-employee director compensation policy that would provide for an annual SAR award (“2020 Director SAR”) with respect to 8,333 shares of common stock for each of the Company’s non-employee directors. No other changes to the non-employee director compensation policy were approved and, on July 9, 2020, the Board approved the initial 8,333 2020 Director SAR award to each of the non-employee directors for an aggregate total of 58,333 2020 Directors SAR awards granted. The 2020 Director SAR awards vest on the first anniversary of grant subject to the director’s continued service and will be settled in cash, have a per-share base amount of $8.40, and are in all cases subject to the terms and conditions of the Company’s form of 2020 Director SAR award agreement.

Each SAR subject to a 2020 SAR award represents the right to a cash payment equal to the excess, if any, of (i) the fair market value of each underlying share of the Company’s common stock, determined on the date of exercise of the SAR minus (ii) the base amount. Pursuant to the terms of the SAR awards, in no event may the cash payment for each SAR exceed $13.20, which is the maximum price per share of $21.60, minus the base amount of $8.40, subject to adjustment in accordance with the terms of the Stock Appreciation Right Award Agreement. The maximum price per share is the per-share value based on the Company’s market capitalization at $250 million and the Company’s outstanding shares of common stock, which was 11,611,829 shares on July 9, 2020.

On February 17, 2021, the compensation committee of the board of directors and the board approved a cash bonus program of cash-settled stock appreciation right (“2021 SAR”) awards and cash-settled performance stock unit (“2021 PSU”) awards to the Company’s employees. An aggregate of 2021 SAR awards with respect to 100,000 shares of common stock and 2021 PSU awards with respect to 100,000 shares of common stock were granted to the Company’s

employees. The 2021 SAR awards will be settled in cash, vest 33% on the first anniversary of the date of grant, and the remaining 67% monthly over the next 24 months, have a per-share base amount of $22.65, which was the closing sales price of a share of the Company’s common stock on the grant date, and are in all cases subject to the terms and conditions of the Company’s form of SAR award agreement. Each SAR subject to a 2021 SAR award represents the right to a cash payment equal to the excess, if any, of (i) the fair market value of each underlying share of the Company’s common stock, determined on the date of exercise of the 2021 SAR minus (ii) the base amount. Pursuant to the terms of the 2021 SAR awards, in no event may the cash payment for each SAR exceed $15.45, which is the maximum price per share of $38.10, minus the base amount of $22.65, subject to adjustment in accordance with the terms of the Stock Appreciation Right Award Agreement. The maximum price per share is the per-share value based on the Company’s market capitalization at $600 million and the Company’s outstanding shares of common stock, which was 15,767,492 shares on February 17, 2021. The 2021 SAR awards are cash-settled and were granted outside of the 2018 Plan and the 2021 Plan.

The 2021 PSU awards vest 20% upon the initiation of a new clinical program with an in-licensed compound, 20% for reaching the recommended Phase 2 dose for any compound, 20% for the first patient enrolled in the expansion cohort of the Phase 1 ON123300 clinical trial, 20% for the first patient enrolled in a registrational study for any compound, and 20% for the topline data of a registrational study for any compound. The 2021 PSU awards have a maximum value of $38.10 per share. The maximum price per share is the per-share value based on the Company’s approximate market capitalization at $600 million and the Company’s outstanding shares of common stock, which was 15,767,492 shares on February 17, 2021. In all cases, the 2021 PSU awards are subject to the terms and conditions of the Company’s form of PSU award agreement. The 2021 PSU awards are cash-settled and were granted outside of the 2018 Plan and the 2021 Plan.

The fair value of the 2021 and 2020 SARs granted has been estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions:


	Year ended December 31,
	2021			2020
Risk-free interest rate		0.95	%		0.30	%
Expected volatility		129.79	%		111.57	%
Expected term		6.50	years		6.35	years
Expected dividend yield		0	%		0	%
Weighted average grant date fair value	$	0.62		$	0.47

During the years ended December 31, 2021 and 2020, the Company recognized $519,000 and $67,000, respectively, of compensation expense related to the SARs and PSUs. Included in compensation expense related to SARs in 2021 is $442,000 of expense resulting from the exercise of 2020 SARs during February 2021. As of December 31, 2021, the SARs and PSUs liability was $66,000 and is included in accrued expenses. As of December 31, 2021, there was $19,000 of unrecognized compensation cost related to the 2020 SARs and PSUs and $233,000 of unrecognized compensation cost related to the 2021 SARs and PSUs.