In December 2013, the Company adopted the 2013 Equity Incentive Plan (as subsequently amended and restated, the “Plan”), which provides for the issuance of options, stock appreciation rights, stock awards and stock units.

Stock option activity for employees and non-employees for the six months ended June 30, 2023 is as follows:


	Shares Issuable Pursuant to Stock Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Terms (years)		Total Intrinsic Value (in thousands)
Outstanding January 1, 2023		700,929	$	15.69		8.6	$	—

Granted		—	$	—
Exercised		—	$	—
Forfeited		—	$	—
Outstanding June 30, 2023		700,929	$	15.69		8.1	$	2,022
Exercisable June 30, 2023		314,128	$	29.04		6.8	$	252
Available for future grant		118,666

The weighted average grant-date fair value of stock options outstanding on June 30, 2023 was $10.75 per share. Total unrecognized compensation costs related to non-vested stock options at June 30, 2023 were approximately $1.3 million and are expected to be recognized within future operating results over a weighted-average period of 2.5 years. The total intrinsic value of the options exercised during the six months ended June 30, 2023 and 2022 was zero.

The expected term of the employee-related options was estimated using the “simplified” method as defined by the SEC’s Staff Accounting Bulletin No. 107, Share-Based Payment. The volatility assumption was determined by examining the historical volatilities for industry peer companies, as the Company did not have sufficient trading history for its common stock. The risk-free interest rate assumption is based on the U.S. Treasury instruments, the term of which was consistent with the expected term of the options. The dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company has never paid dividends on its common stock and does not anticipate paying dividends on its common stock in the foreseeable future. Accordingly, the Company has assumed no dividend yield for the purposes of estimating the fair value of the options.

The Company uses the Black-Scholes model to estimate the fair value of stock options granted. For stock options granted during the six months ended June 30, 2023 and 2022, the Company utilized the following assumptions:


	Six Months Ended
	June 30, 2023	June 30, 2022
Expected term (years)	—	5.50-6.25
Risk free interest rate	—	1.96%-3.25%
Volatility	—	76%-97%
Dividend yield	—	0%
Weighted average grant date fair value per share of common stock	—	$4.78

On August 6, 2021, options to purchase 953,980 shares of the Company’s common stock were exchanged for 476,640 PRSUs. Options surrendered in the one-time stock option exchange program (the “Exchange Program”) were cancelled and shares subject to the cancelled options again became available for issuance under the Plan. The Exchange Program was treated as a Type II modification (Probable-to improbable) under ASC 718.

The Company will recognize the unrecognized grant-date fair value of the pre-modification stock options as well as any incremental non-cash compensation cost of the PRSUs granted in the Exchange Program, if the vesting conditions of the PRSUs are achieved or if they become probable. The incremental cost was measured as the excess of the fair value of each new PRSU, measured as of the date the new PRSUs were granted, over the fair value of the stock options surrendered in exchange for the new PRSU, measured immediately prior to the cancellation.

The Company is using the pre-modification stock options for determining the compensation cost related to the PRSUs as the vesting conditions remain uncertain for the outstanding PRSUs. The total unrecognized compensation costs related to non-vested stock options at June 30, 2023 were approximately $0.5 million and are expected to be recognized within future operating results over a weighted-average period of 0.5 year.

On April 28, 2023, the Compensation Committee of the Company’s board of directors certified the achievement of a performance condition occurring upon FDA acceptance of the NDA for roluperidone. As a result, 50% of the shares of common stock underlying the Company’s PRSUs vested. The remaining PRSUs vest upon roluperidone receiving FDA marketing approval, provided that such approval occurs within five years after the August 6, 2021 grant date. As of June 30, 2023, 228,213 PRSUs have vested, 20,218 have been cancelled, and 228,209 remain outstanding. As a result of the PRSUs vesting, the Company recognized approximately $0.2 million in non-cash compensation expense for the period ending June 30, 2023, representing 50% of the incremental cost of the PRSUs granted under the Exchange Program.

The following table presents stock-based compensation expense included in the Company’s consolidated statements of operations:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Research and development	$	297,756	$	514,806	$	482,483	$	1,015,979
General and administrative		311,159		556,799		502,891		1,108,282
Total	$	608,915	$	1,071,605	$	985,374	$	2,124,261