STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

STOCK-BASED COMPENSATION

NOTE 10 – STOCK-BASED COMPENSATION

The Company previously granted stock options under its 2005 Equity Incentive Plan (the “2005 Incentive Plan”), under which no further grants can be made. In addition, prior to May 17, 2023, the Company had previously granted stock options and stock awards under the Abeona Therapeutics Inc. 2015 Equity Incentive Plan (the “2015 Incentive Plan”). As of May 17, 2023, no further grants can be made under the 2015 Incentive Plan. The Company now grants stock options and stock awards under the Abeona Therapeutics Inc. 2023 Equity Incentive Plan (the “2023 Incentive Plan”) which was approved by stockholders on May 17, 2023. As of December 31, 2023, there were 156,591 shares available to be granted under the 2023 Incentive Plan. In addition, in 2023, the Company’s board of directors approved various restricted stock awards granted to certain new hires as inducement grants. On October 10, 2023, the Company’s board of directors approved the Abeona Therapeutics Inc. 2023 Employment Inducement Equity Incentive Plan (the “Inducement Plan”). As of December 31, 2023, there were 859,400 shares available to be granted under the Inducement Plan.

The following table summarizes stock-based compensation (in thousands):

	For the year ended December 31,
	2023		2022
Research and development	$	1,085	$	925
General and administrative		3,683		2,126
Total stock-based compensation expense	$	4,768	$	3,051

Stock Options

The Company estimates the fair value of each option award on the date of grant using the Black-Scholes option-pricing model. The Company then recognize the grant date fair value of each option as compensation expense ratably using the straight-line attribution method over the service period (generally the vesting period). The Black-Scholes model incorporates the following assumptions:

● Expected volatility – the Company estimates the volatility of the share price at the date of grant using a “look-back” period which coincides with the expected term, defined below. The Company believes using a “look-back” period which coincides with the expected term is the most appropriate measure for determining expected volatility.

● Expected term – the Company estimates the expected term using the “simplified” method, as outlined in SEC Staff Accounting Bulletin No. 107, “Share-Based Payment.”

● Risk-free interest rate – the Company estimates the risk-free interest rate using the U.S. Treasury yield curve for periods equal to the expected term of the options in effect at the time of grant.

● Dividends – the Company uses an expected dividend yield of zero because the Company has not declared nor paid a cash dividend, nor are there any plans to declare a dividend.

The Company estimated the fair value of stock options granted in the periods presented utilizing a Black-Scholes option-pricing model utilizing the following assumptions:

	For the year ended December 31,
	2023*		2022
Expected volatility (%)		n/a		95.1% - 96.0%
Expected term (years)		n/a		6.07 - 6.08 years
Risk-free interest rate (%)		n/a		1.7% - 3.3%
Expected dividend yield (%)		n/a		0%

* the Company did not grant any stock options in the year ended December 31, 2023.

The Company accounts for forfeitures as they occur, which may result in the reversal of compensation costs in subsequent periods as the forfeitures arise.

The following table summarizes stock option activity for the 2015 Incentive Plan and the 2005 Incentive Plan during (there were no stock options granted under the 2023 Incentive Plan or the Inducement Plan during the year ended December 31, 2023):

	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2021		317,394		$	38.40		7.57	$	—
Granted		7,760		$	5.30		—	$	—
Cancelled/forfeited		(84,384	)	$	39.25		—	$	—
Exercised		—		$	—		—	$	—
Outstanding at December 31, 2022		240,770		$	37.04		6.42	$	—
Granted		—		$	—		—	$	—
Cancelled/forfeited		(61,769	)	$	32.59		—	$	—
Exercised		—		$	—		—	$	—
Outstanding at December 31, 2023		179,001		$	38.58		6.83	$	3
Exercisable		135,271		$	38.49		6.64	$	1
Unvested		43,730		$	38.85		7.43	$	2

The aggregate intrinsic value of options is calculated as the difference between the exercise price of the underlying options and the fair value of the Company’s common stock for those options that had exercise prices lower than the fair value of the Company’s common stock. As of December 31, 2023, the total compensation cost related to non-vested option awards not yet recognized was $1.4 million with a weighted average remaining vesting period of 1.3 years.

As of December 31, 2023, there are no options outstanding under the 2005 Incentive Plan. Further information regarding options outstanding under the 2015 Incentive Plan as of December 31, 2023 is summarized below:

						Weighted-Average						Weighted-Average
Range of Exercise Prices				Number of Options Outstanding		Remaining Life in Years		Exercise Price		Number of Options Exercisable		Remaining Life in Years		Exercise Price
$	4.00	$	22.75		20,240		8.0	$	16.52		10,117		7.9	$	17.47
	25.50		47.00		106,081		6.5		33.45		88,874		6.3		33.09
	54.50		58.50		52,480		7.2		56.98		36,080		7.2		56.98
	164.75		183.50		200		5.1		164.75		200		5.1		164.75
					179,001						135,271

Restricted Stock:

The following table summarizes restricted stock award activity:

	Number of Awards			Weighted Average Grant Date Fair Value Per Unit
Outstanding at December 31, 2021		97,260		$	46.50
Granted		779,722		$	3.12
Cancelled/forfeited		(32,498	)	$	38.80
Vested		(27,526	)	$	48.63
Outstanding at December 31, 2022		816,958		$	5.35
Granted		1,958,159		$	3.99
Cancelled/forfeited		(56,398	)	$	4.32
Vested		(270,550	)	$	5.59
Outstanding at December 31, 2023		2,448,169		$	4.25

As of December 31, 2023, there was $7.9 million of total unrecognized compensation expense related to unvested restricted stock awards, which is expected to be recognized over a weighted average vesting period of 2.3 years. The total fair value of restricted stock awards that vested was $1.5 million and $1.3 million during the years ended December 31, 2023 and 2022, respectively.