Equity Incentive Plan - Stock-Based Compensation Expense and Common Warrants

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Equity Incentive Plan - Stock-Based Compensation Expense and Common Warrants

7. Equity Incentive Plan - Stock-Based Compensation Expense and Common Warrants

2021 Omnibus Equity Incentive Plan

On July 19, 2021, the Company’s Board of Directors adopted the RenovoRx, Inc. 2021 Omnibus Equity Incentive Plan (the “2021 Plan”). The 2021 Plan, which became effective immediately prior to the closing of the IPO, initially reserved 2,185,832 shares of common stock, which included 10,832 shares of common shares reserved but unissued under the Amended and Restated 2013 Equity Incentive Plan (the “2013 Plan”). The Company’s 2013 Plan was terminated immediately prior to the closing of the IPO; however, shares subject to awards granted under the 2013 Plan will continue to be governed by the 2013 Plan. In accordance with the terms of the 2021 Plan, on January 1, 2023, the number of shares reserved and available for issuance increased by 272,931 shares.

A summary of the stock option activity for the six months ended June 30, 2023 is as follows:

	Number of Stock Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life		Aggregate Intrinsic Value
Outstanding as of December 31, 2022		1,399,252		$	2.40		7.79	$	928
Granted		412,851		$	3.12		-	$	-
Exercised		(7,747	)	$	0.97		-	$	-
Forfeited		(39,000	)	$	2.93		-	$	-
Expired		-		$	-		-	$	-
Outstanding as of June 30, 2023		1,765,356		$	2.56		7.85	$	851
Exercisable as of June 30, 2023		820,717		$	2.03		6.19	$	797
Vested and expected to vest as of June 30, 2023		1,765,356		$	2.56		7.85	$	851

As of June 30, 2023, there was $0.8 million of unrecognized stock-based compensation expense related to options granted but not yet amortized, which will be recognized over a weighted-average period of approximately 3.02 years.

For the six months ended June 30, 2023, and 2022, the Company utilized the Black-Scholes option-pricing model for estimating the fair value of the stock option granted. The Company estimated the fair value of each option grant on the grant date using the Black-Scholes option pricing model with the following weighted-average assumptions:

	Six Months Ended June 30,
	2023			2022
Expected volatility		99.49% – 106.69	%		101.54% – 102.96	%
Expected term (years)		6.02 – 10.0			5.27 – 6.08
Risk-free interest rate		3.51% – 4.28	%		1.93% – 1.95	%
Dividend rate		–	%		–	%

During the three months ended June 30, 2023, and 2022, the Company recognized $257,000 and $169,000, respectively, in stock-based compensation expense from stock option grants. During the six months ended June 30, 2023, and 2022, the Company recognized $501,000 and $337,000, respectively, in stock-based compensation expense from stock option grants. The compensation expense is allocated on a departmental basis, based on the classification of the option holder. No income tax benefits have been recognized in the condensed statements of operations and comprehensive loss for stock-based compensation arrangements.

The following table summarizes the components of stock-based compensation expense recognized in the Company’s Condensed Statements of Operations and Comprehensive Loss during the three and six months ended June 30, 2023, and 2022 (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2023		2022		2023		2022
Research and development	$	67	$	37	$	109	$	82
General and administrative		190		132		392		255
Total stock-based compensation expense	$	257	$	169	$	501	$	337

Restricted Stock

In March 2023, the Board approved the issuance of 30,000 shares of restricted stock to an entity as consideration for a commercial contract, vested immediately, in a private placement. The shares were issued outside the 2021 Plan and the Company recognized $117,000 of stock-based compensation expense for the restricted stock.

Common Warrants

In August 2021, in connection with the IPO, the Company issued warrants to purchase 3,035,195 shares of the Company’s common stock. Warrants to purchase 198,875 shares of the Company’s common stock expire on August 25, 2026 and warrants to purchase 2,588,120 shares of the Company’s common stock expire on August 31, 2026.

On April 3, 2023, in connection with the March 2023 Offering, the Company issued 557,632 Pre-Funded Warrants and 1,947,040 Common Warrants to purchase the Company’s Common Stock. The Pre-Funded Warrants were exercised in June 2023 and the Common Warrants expire on October 3, 2028.

The following is a summary of the common stock warrant activity during the six months ended June 30, 2023.

	Shares Issuable Upon Exercise of Outstanding Warrants			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life		Aggregate Intrinsic Value (In thousands)
Outstanding as of December 31, 2022		2,786,995		$	10.80		3.67	$	30,100
Issued		2,504,672		$	3.21		5.50	$
Exercised		(557,632	)	$	3.21		-	$
Expired		-		$	-		-	$
Outstanding as of June 30, 2023		4,734,035		$	7.68		4.13	$	36,350