Stock-based Compensation

6 Months Ended

Jun. 30, 2023

Stock-Based Compensation

Stock-Based Compensation

7. Stock-based Compensation

Stock-based compensation expense was included in general and administrative and research and development costs as follows in the accompanying condensed consolidated statements of operations and comprehensive loss:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
		2023		2022		2023		2022
General and administrative	$	24	$	211	$	(61)	$	418
Research and development		-		-		11		-
Total stock-based compensation	$	24	$	211	$	(50)	$	418

Stock Options

In December 2019, the Company adopted the 2019 Equity Incentive Plan (the “2019 Plan”), and in November 2021 and December 2022, the Company adopted the 2021 Inducement Plan and 2022 Equity Incentive Plan (the “2022 Plan”), respectively. The stock option plans provide for the grant of stock options, restricted stock and other equity awards of the Company's common stock to employees, officers, consultants, and directors. Options expire within a period of not more than ten years from the date of grant.

The following table summarizes the Company’s activity related to its stock options for the six months ended June 30, 2023:

				Weighted‑
		Weighted		Average	Aggregate
		Average		Remaining	Intrinsic
	Number of	Exercise		Contractual	Value
	Options	Price		Term (years)	(in thousands)
Outstanding at December 31, 2022	36,493	$	99.62	8.5	$	—
Granted	25,000	$	0.67	—	$	—
Exercised	-	$	—	—	$	—
Forfeited/Cancelled	(21,221)	$	59.72	—	$	—
Outstanding at June 30, 2023	40,272	$	59.21	8.9	$	-
Vested and expected to vest at June 30, 2023	40,272	$	59.21	8.9	$	-
Options exercisable at June 30, 2023	38,734	$	58.09	8.9	$	-

There were no stock options granted for the three months ended June 30, 2023. During the six months ended June 30, 2023, 25,000 stock options were granted to a non-employee consultant that vested in March 2023 upon the Company’s filing of an IND with the FDA for DA-1241. During the three and six months ended June 30, 2022, there were 4,662 and 5,995 stock options granted to non-employee directors that vested over a period of one to three years,. The weighted average fair value per share of options granted during the six months ended June 30, 2023 and 2022 was $0.45 and

$12.43, respectively. The weighted average fair value per share of the options granted during the six months ended June 2022 was $9.99.

The Company measures the fair value of stock options on the date of grant using the Black-Scholes option pricing model. The Company does not have history to support a calculation of volatility and expected term. As such, the Company has used a weighted-average volatility considering the volatilities of several guideline companies.

For purposes of identifying similar entities, the Company considered characteristics such as industry, length of trading history, and stage of life cycle. The assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future. The average expected life of the options was determined based on the mid-point between the vesting date and the end of the contractual term according to the “simplified method” as described in Staff Accounting Bulletin 110. The risk-free interest rate is determined by reference to implied yields available from U.S. Treasury securities with a remaining term equal to the expected life assumed at the date of grant. The Company records forfeitures when they occur.

The assumptions used in the Black-Scholes option-pricing model are as follows:

	Six Months Ended
	June 30,
	2023			2022
Expected stock price volatility		82.9	%		80.7-85.2	%
Expected life of options (years)		5.0			5.5-5.8
Expected dividend yield		—	%		—	%
Risk free interest rate		3.54	%		1.72-3.08	%

During the three months ended June 30, 2023 and 2022, 4,273 and 779 stock options vested respectively. During the six months ended June 30, 2023 and 2022, 29,719 and 1,576 stock options vested, respectively.  During the three months ended June 30, 2023 and 2022, 8,888 and 889 stock options were forfeited, respectively.  During the six months ended June 30, 2023 and 2022, 21,221 and 2,000 stock options were forfeited, respectively.

As of June 30, 2023, 5,087,721 shares in the aggregate were available for future issuance under the 2021 Inducement Plan and the 2022 Plan. Unrecognized stock-based compensation cost for the stock options issued under all stock incentive plans was $0.1 million as of June 30, 2023. The unrecognized stock-based expense is expected to be recognized over a weighted average period of 1.4 years.