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Note 10 - Share-based Compensation

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Text Block]

(10)

Share-Based Compensation

BioCardia Lifesciences adopted, and the BioCardia Lifesciences shareholders approved, the 2002 Stock Plan in 2002 (the “2002 Plan”), and the Company assumed the 2002 Plan in the Merger. The Company has not granted or does not intend to grant any additional awards under the 2002 Plan following the Merger. In 2016, BioCardia Lifesciences adopted, and the BioCardia Lifesciences shareholders approved, the 2016 Equity Incentive Plan (the “2016 Plan”), and the Company assumed the 2016 Plan in the Merger. BioCardia has granted awards, including incentive stock options and non-qualified stock options, under the 2016 Plan following the Merger. Under the 2002 Plan and the 2016 Plan, the number of shares, terms, and vesting periods are determined by the Company’s board of directors or a committee thereof on an option-by-option basis. Options generally vest ratably over service periods of four years and expire ten years from the date of grant. The per share exercise price shall be no less than the fair market value on the date of grant. Compensation cost for employee share-based awards is based on the grant-date fair value and is recognized over the vesting period of the applicable award on a straight-line basis. The number of shares reserved for issuance or transfer pursuant to awards under the 2016 Plan will be increased by (i) the number of shares represented by awards outstanding under 2016 Plan that are returned to the plan because they are either forfeited or lapse unexercised or that are repurchased for the original purchase price thereof, (ii) if approved by the Administrator of the 2016 Plan, an annual increase on the first day of each fiscal year equal to the lessor of (A) 4% of the shares of common stock outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year; (B) 268,997 shares (1,000,000 shares effective January 1, 2021). As of December 31, 2021, 133,330 shares have been authorized and available for awards under the 2016 Plan.

The Company recognizes in the consolidated statements of operations the grant-date fair value of stock options and other equity-based compensation. Share-based compensation expense for the years ended December 31, 2021 and 2020 was recorded as follows (in thousands):

	Years ended
	December 31,
	2021		2020
Research and development	$	795	$	1,369
Selling, general and administrative		866		1,583
Total share-based compensation	$	1,661	$	2,952

On January 29, 2020 (the “repricing date”), the Company’s Board of Directors repriced certain previously granted and still outstanding vested and unvested stock option awards held by employees, executives, and certain service providers of the Company; as a result, the exercise price was lowered to $5.32 per share. No other terms of the repriced stock options were modified, and the repriced stock options will continue to vest according to their original vesting schedules and will retain their original expiration dates. As a result of the repricing, 515,036 vested and unvested stock options outstanding with original exercise prices ranging from $10.05 to $97.21, were repriced.

The repricing on January 29, 2020 resulted in incremental stock-based compensation expense of $569,000, of which $412,000 related to vested employee stock option awards and was expensed on the repricing date, and $157,000 related to unvested stock option awards and is being amortized on a straight-line basis over the approximately three year remaining weighted average vesting period of those awards.

The following table summarizes activity under the Company’s stock option plans, including the 2002 Plan and the 2016 Plan and related information (in thousands, except share and per share amounts and term):

	Options outstanding
	Number of shares			Weighted average exercise price		Weighted average remaining contractual term (years)		Aggregate intrinsic value (in thousands)

Balance, December 31, 2020		1,114,306		$	5.89		7.5	$	177.1
Stock options granted		772,435			3.56
Stock options exercised		(1,580	)		2.49
Stock options forfeited		(235,350	)		4.49
Stock options expired		(125	)		5.32
Balance, December 31, 2021		1,649,686		$	5.00		7.6	$	—
Exercisable, December 31, 2021		762,867		$	6.62		6.0	$	—
Options vested and expected to vest		1,649,686		$	5.00		7.6	$	—

The aggregate intrinsic value represents the difference between the total pre-tax value (i.e., the difference between the Company’s stock price and the exercise price) of stock options outstanding as of December 31, 2021, based on the Company’s common stock closing price of $1.94 per share, which would have been received by the option holders had all their in-the-money options been exercised as of that date.

The total intrinsic value of options exercised was $3,000 and zero in the years ended December 31, 2021 and 2020, respectively. The weighted average grant-date BSM fair value of options granted during the years ended December 31, 2021 and 2020 was $3.10 and $1.73 per share, respectively.

Employee, Director and Non-employee Share-Based Compensation

During the years ended December 31, 2021 and 2020, the Company granted stock options to certain employees, non-employee directors and non-employees to purchase 772,435 and 342,232 shares of common stock, respectively. The fair value of each option grant was estimated on the date of the grant using the BSM option pricing model with the following assumptions:

	Years ended
	December 31,
	2021			2020
Risk-free interest rate	0.6	-	1.6%	0.4	-	1.6%
Volatility	110	-	120%	107	-	112%
Dividend yield	None			None
Expected term (in years)	6.25	-	10.0	6.25	-	10.0

Unrecognized share-based compensation for employees, non-employee directors and non-employee options granted through December 31, 2021 is approximately $2.5 million to be recognized over a remaining weighted average service period of 2.8 years.

Share-Based Compensation (RSUs)

During the years ended December 31, 2021 and 2020, respectively, the Company granted to certain members of management 112,583 and 113,976 restricted stock units, or RSUs in lieu of paying bonuses. The fair value of each RSU is estimated on the closing market price of the Company’s common stock on the grant date.

During the year ended December 31, 2020, the Company granted 122,977 RSUs to board members to settle $613,000 of board compensation earned from April 2018 to March 30, 2020. The associated compensation expense was recognized when earned. During the year ended December 31, 2020, the Company granted 69,321 RSUs to board members and recognized approximately $190,000 in stock compensation expense for board service from April 1, 2020 to December 31, 2020. The RSUs were granted on a quarterly basis and were calculated based on $92,500 divided by the greater of $4 or the closing share price of the Company’s common stock on the last trading day of the fiscal quarter. These RSUs represent a contingent right to receive one share of common stock, but for which delivery of the stock will occur on the earlier of the two-year anniversary of the grant, the board member’s separation from the Company, a change in control as defined by the 2016 Equity Incentive Plan or the board member’s death.

The following table summarizes the activity for RSUs during the years ended December 31, 2021 and 2020:

				Weighted
				average
				grant date
	*Number of*			*fair value*
	*shares*			*per share*
Balance, December 31, 2020		224,311		$	4.12
RSUs granted		131,375			3.61
RSUs released		(118,472	)		3.73
RSUs forfeited		(36,943	)		3.49
Balance, December 31, 2021		200,271		$	4.13

RSUs vested and settled are converted into the Company’s common stock on a one-for-one basis. RSUs are generally subject to forfeiture if employment terminates prior to the release of vesting restrictions. Of the 200,271 RSUs outstanding on December 31, 2021, 194,803 RSUs are vested and have not been settled and 5,468 have not yet vested. The related compensation expense, which is based on the grant date fair value of the Company’s common stock multiplied by the number of units granted, is recognized ratably over the period during which the vesting restrictions lapse. Unrecognized share-based compensation for RSUs granted through December 31, 2021 was approximately $61,000 to be recognized over a remaining weighted average service period of 0.4 years.