Stock-Based Compensation

6 Months Ended

Mar. 31, 2024

Stock-Based Compensation

Stock-Based Compensation

10.  Stock-Based Compensation

2011 Equity Incentive Plan

The Company’s 2011 Equity Compensation Plan (the “2011 Plan”) provided for the Company to sell or issue restricted common stock, RSUs, performance-based awards (“PSUs”), cash-based awards or to grant stock options for the purchase of common stock to officers, employees, consultants and directors of the Company. The 2011 Plan was administered by the board of directors or, at the discretion of the board of directors, by a committee of the board. As of March 31, 2024, PSUs representing 123 shares of the Company’s common stock were outstanding under the 2011 Plan. Effective with the December 2015 adoption of the 2015 Equity Incentive Plan, (the “2015 Plan”), no future awards under the 2011 Plan will be granted.

2015 Equity Incentive Plan

In December 2015, the Company adopted the 2015 Plan. The 2015 Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, RSU awards, performance stock awards and other forms of equity compensation to Company employees, directors and consultants. The aggregate number of shares of common stock authorized for issuance pursuant to the Company’s 2015 Plan is 2,503,677. As of March 31, 2024, there were no shares available for grant under the 2015 Plan.

Stock options and RSUs are granted under the Company’s 2015 Plan and generally vest over a period of one to four years from the date of grant and, in the case of stock options, have a term of 10 years. The Company recognizes the grant date fair value of each option and RSU over its vesting period.

The Company recorded stock-based compensation expense in the following expense categories of its unaudited interim consolidated statements of operations for the three and six months ended March 31, 2024 and 2023:

	Three months ended March 31,				Six months ended March 31,
	2024		2023		2024		2023
Research and development	$	236,960	$	322,268	$	468,376	$	612,924
General and administrative		1,073,547		1,061,137		2,114,742		2,162,874
	$	1,310,507	$	1,383,405	$	2,583,118	$	2,775,798

Stock options

As of March 31, 2024, options to purchase common stock of the Company outstanding under the 2015 Plan were as follows:

				Weighted
				Average
		Weighted		Remaining
	Number of	Average		Contractual	Aggregate
	Shares	Exercise Price		Term (Years)	Intrinsic Value
Balance at October 1, 2023	1,197,774	$	28.72
Granted	799,729		6.70
Forfeited	(29,605)		27.93
Expired	(8,333)		33.60
Balance at March 31, 2024	1,959,565	$	19.72	8.2	$	4,219,550
Exercisable at March 31, 2024	875,865	$	27.62	7.0	$	383,313
Vested and expected to vest at March 31, 2024	1,959,565	$	19.72	8.2	$	4,219,550

The aggregate intrinsic value represents the total amount by which the fair value of the common stock subject to options exceeds the exercise price of the related options.

The weighted average grant date fair value of the options awarded to employees for the six months ended March 31, 2024 and 2023 was $6.06 and $19.20 per option, respectively. The fair value of the options was estimated on the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:

	Six months ended March 31,
	2024		2023
Risk-free interest rate	4.3	%	3.7	%
Expected term (years)	6.0		5.7
Expected volatility	131.3	%	112.4	%
Expected dividend yield	—		—

As of March 31, 2024, there was $10,784,269 of unrecognized compensation expense that is expected to be recognized over a weighted-average period of 1.6 years.

Performance-based stock options

The Company granted certain officers of the Company option awards whose vesting is contingent upon meeting company-wide performance goals. The performance stock options were granted “at-the-money” and have a term of 10 years.

The fair value of each option grant under the performance share option plan was estimated on the date of grant using the same option valuation model used for non-statutory options above. Compensation expense for performance-based stock options is only recognized when management determines it is probable that the awards will vest.

A summary of the activity under the performance share option plan as of March 31, 2024 and changes during the six months then ended are presented below.

				Weighted
				Average
		Weighted		Remaining
	Number of	Average		Contractual	Aggregate
	Shares	Exercise Price		Term (Years)	Intrinsic Value
Balance at October 1, 2023	35,000	$	28.80
Granted	634,000		6.78
Balance at March 31, 2024	669,000	$	7.93	9.9	$	3,271,440
Exercisable at March 31, 2024	35,000	$	28.80	7.7	$	—
Vested and expected to vest at March 31, 2024	669,000	$	7.93	9.9	$	3,271,440

The vesting of the performance-based stock options is conditional upon FDA approval of ONS-5010. The expense for the performance-based stock options is not recognized until the performance conditions are deemed probable of achievement. The Company did not record any expense related to the performance-based stock options during the three and six months ended March 31, 2024 as the performance conditions were not deemed probable of being met. The weighted average grant date fair value of the performance stock options awarded during the six months ended March 31, 2024, was $6.52 per option. As of March 31, 2024, the Company assessed that the performance conditions related to the performance options granted were not probable of achievement. The assessment was based on the relevant facts and circumstances and therefore

no compensation costs were recognized. The fair value of the options was estimated on the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:

	Six months ended March 31,
	2024		2023
Risk-free interest rate	4.3	%	3.8	%
Expected term (years)	10.0		10.0
Expected volatility	125.6	%	91.3	%
Expected dividend yield	—		—

Performance-based stock units

The Company has issued PSUs, which generally have a ten-year term from the date of grant. Upon exercise, the PSU holder receives common stock or cash at the Company’s discretion.

The following table summarizes the activity related to PSUs during the six months ended March 31, 2024:

				Weighted
				Average
	Number	Exercise		Remaining
	of	Price		Contractual	Aggregate
	PSUs	Per PSU		Term (Years)	Intrinsic Value
Balance at October 1, 2023	123	$	999.40
Forfeitures	—		—
Balance at March 31, 2024	123	$	999.40	0.3	$	—
Exercisable at March 31, 2024	123	$	999.40	0.3	$	—
Vested and expected to vest at March 31, 2024	123	$	999.40	0.3	$	—