Note 10 - Stock-based Compensation

9 Months Ended

Sep. 30, 2024

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

10. Stock-Based Compensation

2016 Omnibus Incentive Plan

Prior to the Merger, NRx maintained its 2016 Omnibus Incentive Plan (the “2016 Plan”), under which NeuroRx granted incentive stock options, restricted stock awards, other stock-based awards, or other cash-based awards to employees, directors, and non-employee consultants. The maximum aggregate shares of Common Stock that were subject to awards and issuable under the 2016 Plan was 347,200.

In connection with the Merger, each option of NeuroRx that was outstanding and unexercised immediately prior to the Effective Time (whether vested or unvested) was assumed by BRPA and converted into an option to acquire an adjusted number of shares of Common Stock at an adjusted exercise price per share, based on the Exchange Ratio (of 0.316:1).

Upon the closing of the Merger, the outstanding and unexercised NeuroRx stock options became options to purchase an aggregate 289,542 shares of the Company’s Common Stock at an average exercise price of $51.00 per share.

2021 Omnibus Incentive Plan

As of  September 30, 2024, 955,281 shares of Common Stock are authorized for issuance pursuant to awards under the Company’s 2021 Omnibus Incentive Plan (the “2021 Plan”). As of January 1, 2024, 83,920 shares were added to the 2021 Plan under an evergreen feature that automatically increases the reserve with additional shares of Common Stock for future issuance under the Incentive Plan each calendar year, beginning January 1, 2022 and ending on and including January 1, 2031, equal to the lesser of (A) 1% of the shares of Common Stock outstanding on the final day of the immediately preceding calendar year or (B) a smaller number of shares determined by the Board. On December 28, 2023 the first amendment to the 2021 Omnibus Plan was executed which increased the maximum number of shares (i) available for issuance under the Plan, by an additional 200,000 shares, and (ii) that may be delivered pursuant to the exercise of Incentive Stock Options granted under the Plan to be equal to 100% of the Share Pool. As of September 30, 2024, an aggregate 585,099 shares have been awarded net of forfeitures, and 370,182 shares remain available for issuance under the 2021 Plan. The 2021 Plan permits the granting of incentive stock options, restricted stock awards, other stock-based awards or other cash-based awards to employees, directors, and non-employee consultants.

Option Awards

The fair value of each employee and non-employee stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company is a public company and has limited company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the limited company-specific historical volatility and implied volatility. The expected term of the Company’s stock options for employees has been determined utilizing the “simplified” method for awards. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve. Expected dividend yield is zero based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. Additionally, certain options granted contain terms that require all unvested options to immediately vest a) upon the approval of an NDA by the FDA for NRX‑101, or b) immediately preceding a change in control of the Company, whichever occurs first.

The Company issued no stock options during the three or nine months ended September 30, 2024.

The following table summarizes the Company’s employee and non-employee stock option activity under the 2021 Plan for the following periods:

	Number of shares			Weighted average exercise price		Weighted average remaining contractual life (in years)		Aggregate intrinsic value (in thousands)
Outstanding as of December 31, 2023		264,983		$	18.30		7.7	$	75
Expired/Forfeited		(89,546	)
Outstanding as of March 31, 2024		175,437		$	18.60		8.4	$	40
Expired/Forfeited		(14,000	)
Outstanding as of June 30, 2024		161,437		$	21.18		7.5	$	—
Expired/Forfeited		(29,604	)
Outstanding as of September 30, 2024		131,833		$	21.01		7.4	$	—
Options vested and exercisable as of September 30, 2024		109,399		$	24.13		7.1	$	—

Stock-based compensation expense related to stock options was $0.1 million and $0.4 million for the three and nine months ended September 30, 2024, respectively.

At September 30, 2024, the total unrecognized compensation related to unvested employee and non-employee stock option awards granted, was $0.1 million, which the Company expects to recognize over a weighted-average period of approximately 0.9 years.

Restricted Stock Awards

The following table presents the Company’s Restricted Stock Activity:

	Awards			Weighted Average Grant Date Fair Value
Balance as of December 31, 2023 (unvested)		124,166		$	5.20
Vested		(57,500	)		4.64
Balance as of March 31, 2024 (unvested)		66,666			5.66
Vested		—			—
Balance as of June 30, 2024 (unvested)		66,666			5.66
Vested		(33,333	)		2.08
Balance as of September 30, 2024 (unvested)		33,333		$	5.66

On July 12, 2022, the Board granted an award of 100,000 restricted shares of the Company (“RSAs”) as an inducement to the newly appointed CEO, pursuant to a separate Restricted Stock Award Agreement. The RSAs will vest in approximately equal installments over three (3) years from the grant date, subject to continued service through the applicable vesting date.

On December 28, 2023, the Company was authorized to grant 57,500 RSAs to a consultant for services provided. The RSAs vested after six months from September 4, 2023, the date the services began. The shares were valued on the grant date based on the quoted price of $4.60 or approximately $0.3 million which was amortized over the vesting term.

Stock-based compensation expense related to RSAs was less than $0.1 million for the three and nine months ended September 30, 2024 respectively.

Subsequent to September 30, 2024, the Company's CEO announced his resignation and as a result, all unvested RSAs were forfeited. Accordingly, the Company does not expect to recognize any further stock-based compensation expense for the balance of unvested RSAs as of September 30, 2024.

The following table summarizes the Company’s recognition of stock-based compensation for the following periods (in thousands):

	Three months ended September 30,				Nine months ended September 30,
	2024		2023		2024		2023
	(Unaudited)
Stock-based compensation expense
General and administrative	$	82	$	261	$	365	$	1,295
Research and development		22		90		78		295
Total stock-based compensation expense	$	104	$	351	$	443	$	1,590