8.
Stock-Based Compensation
A
summary of stock option activity for the six months ended June 30, 2023, is presented below (in thousands, except per share and
contractual life data).
Summary of Stock Option Activity
| |
|
Number
of
Shares |
|
|
Weighted
Average
Exercise
Price
Per Share |
|
|
Weighted
Average
Remaining
Contractual
Life (in Years) |
|
| Options outstanding as of
December 31, 2022 |
|
|
5,272 |
|
|
$ |
3.07 |
|
|
|
7.15 |
|
| Granted |
|
|
1,122 |
|
|
$ |
1.25 |
|
|
|
|
|
| Exercised |
|
|
(101 |
) |
|
$ |
0.44 |
|
|
|
|
|
| Forfeited or expired |
|
|
(154 |
) |
|
$ |
2.78 |
|
|
|
|
|
| Options outstanding, vested and expected to
vest as of June 30, 2023 |
|
|
6,139 |
|
|
$ |
2.79 |
|
|
|
7.03 |
|
| Options exercisable as of June 30, 2023 |
|
|
3,941 |
|
|
$ |
3.29 |
|
|
|
5.94 |
|
The
estimated aggregate intrinsic value of stock options exercisable as of June 30, 2023, was $0.3 million. As of June 30, 2023, there
was $2.4 million of total unrecognized compensation cost related to outstanding stock options that will be recognized over a weighted
average period of 1.2 years.
During
the six months ended June 30, 2023, we granted stock options to purchase 1,121,817
shares of common stock to certain employees and board members. The options are exercisable for a period of ten
years from the date of grant at a weighted average price of $1.25
per share, which was calculated at the fair value of our common stock on the respective grant date. The options
generally vest over a period of four
years. The fair value of options subject to only service conditions are valued using the Black-Scholes option pricing
model, while those subject to performance or market conditions are valued using the Monte-Carlo Simulation model. During the
six-months ended June 30, 2023, 200,000
options were issued and valued at $0.1
million using the Monte-Carlo model using the following assumptions:
| ● | Beginning Stock Price. We utilized the Company's
publicly traded share price as of the Valuation Date as the beginning stock value. At the Valuation Date, the publicly traded
common share price was $1.09 per share. |
| ● | Drift Rate. In determining the value of the instrument
in the risk-neutral framework, riskfree rates were estimated based on the applicable treasury rate for the projection period.
For each simulation, the term of the risk-free rate was based on the term from the Valuation Date through the latest date on which
the award could vest (i.e., two years following the Performance Period End Date). Please note that, for the purposes of calculating
the service period associated with the Subject Interest, the Company’s cost of equity was utilized as the drift rate. |
| ● | Volatility. The total equity volatility (standard
deviation) was based on a total equity volatility analysis. |
| ● | Period. The period was measured as the number
of years from the Valuation Date through the PSO expiration date (10 years following the date of grant). |
| ● | Dividends. The Company has not historically paid
dividends. In addition, the Company does not expect to pay dividends going forward. As such, no dividends were considered in our
analysis. |
During
the six-months ended June 30, 2023, 921,817 options were issued and valued at $0.9 million using the Black-Scholes
option-pricing model using the following assumptions: expected term of 4.00
to 6.20
years, volatility of 100%,
risk-free interest rate of 3.99%
to 4.45%,
and expected dividend rate of 0.0%.
We also granted 402,500 RSU’s (as defined below) during
the quarter. These RSUs had market conditions which required our stock price to exceed $3.15 per share for three consecutive days
in the four years from grant date for the RSUs to vest.
The
following table summarizes restricted stock unit (“RSU”) activity for the six months ended June 30, 2023 (in thousands,
except per share data):
Summary of Restricted Stock Unit
| |
|
Number
of
Shares
|
|
|
Weighted
Average
Grant
Date
Fair Value
Per
Share
|
|
| Outstanding as of
December 31, 2022 |
|
|
— |
|
|
$ |
— |
|
| Awarded |
|
|
403 |
|
|
|
0.93 |
|
| Vested and released |
|
|
— |
|
|
|
— |
|
| Forfeited/canceled |
|
|
— |
|
|
|
— |
|
| Outstanding
as of June 30, 2023 |
|
|
403 |
|
|
$ |
0.93 |
|
As
of June 30, 2023, there was $0.2 million of total unrecognized compensation cost related to the outstanding RSUs that will be
recognized over a weighted average period of 1.2 years.
Stock-based
compensation expense recognized for stock-based awards in the condensed consolidated statements of operations for the three and
six months ended June 30, 2023, and 2022 was as follows (in thousands):
Stock-based Compensation Expense
| | |
Three Months Ended
June 30, | | |
Six Months Ended
June 30, | |
| | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| Research and development | |
$ | 284 | | |
$ | 324 | | |
$ | 532 | | |
$ | 514 | |
| General and administrative | |
| 240 | | |
| 70 | | |
| 361 | | |
| 220 | |
| Total | |
$ | 524 | | |
$ | 394 | | |
$ | 893 | | |
$ | 734 | |
|