Stock Based Compensation

6 Months Ended

Jun. 30, 2024

Share-Based Payment Arrangement [Abstract]

Stock Based Compensation

10. Stock Based Compensation

2023 Omnibus Incentive Plan

The 2023 Omnibus Incentive Plan was approved by Catalyst’s stockholders in August 2023 and ratified by Gyre’s board of directors (the “Board”) in October 2023. The 2023 Omnibus Incentive Plan became effective on October 30, 2023. The 2023 Omnibus Incentive Plan permits the Company to issue up to 17,845,496 shares of common stock and will automatically increase by the lesser of (i) 5% of the total number of outstanding shares of common stock on December 31st of the preceding calendar year and (ii) such smaller number of shares of common stock as determined by the Board on the first day of each fiscal year beginning on January 1, 2024. On January 1, 2024, pursuant to the automatic increase in the number of shares reserved, an additional 3,829,780 shares of common stock were reserved and made available for issuance under the 2023 Omnibus Incentive Plan.

The following table summarizes stock option activity considering the conversion of Gyre Pharmaceuticals options to Gyre options to purchase shares of Gyre common stock upon completion of the Contributions:

	Number of Shares Underlying Outstanding Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)
Outstanding — December 31, 2023		18,280,548		$	1.49		6.9
Options granted		1,866		$	17.86
Options exercised		(174,825	)	$	5.33
Options forfeited and cancelled		(3,622	)	$	22.85
Outstanding — June 30, 2024		18,103,967		$	1.45		6.6
Exercisable — June 30, 2024		18,092,771		$	1.44		6.6

Valuation Assumptions

The Company estimated the fair value of stock options granted using the Black-Scholes option-pricing formula and a single option award approach. Due to its limited relevant historical data, the Company estimated its volatility considering a number of factors, including the use of the volatility of comparable public companies. The expected term of options granted under the 2023 Omnibus Incentive Plan, all of which qualify as “plain vanilla” per SEC Staff Accounting Bulletin 107, is determined based on the simplified method due to the Company’s limited relevant history. The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the option. This fair value is being amortized ratably over the requisite service periods of the awards, which is generally the vesting period.

Since no stock options were granted during the six months ended June 30, 2023, all weighted-average assumptions for that period were not applicable. The fair value of employee stock options granted during the three and six months ended June 30, 2024 and 2023 was estimated using the following weighted-average assumptions:

	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024			2023
Risk-free interest rate (%)	n/a	n/a		4.2	%	n/a
Expected option life (in years)	n/a	n/a		6.0		n/a
Expected dividend yield (%)	n/a	n/a		—	%	n/a
Volatility (%)	n/a	n/a		84.3	%	n/a
Weighted average share price of the Company (USD per share)	n/a	n/a	$	17.86		n/a

Total stock-based compensation expense recognized was as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
General and administrative	$	16	$	—	$	27	$	—
Total stock-based compensation expense	$	16	$	—	$	27	$	—

As of June 30, 2024, the Company had an unrecognized stock-based compensation expense of $0.1 million, related to unvested stock option awards, which is expected to be recognized over an estimated weighted-average period of 2.5 years.