Stockholders' Equity

9 Months Ended

Sep. 30, 2023

Stockholders' Equity

Stockholders' Equity

8. Stockholders’ Equity

In 2005, we adopted the 2005 Stock Option and Incentive Plan (2005 Plan) that authorizes us to grant stock options, restricted stock and other equity-based awards. As of September 30, 2023, 577 options to purchase shares of common stock were outstanding pursuant to grants in connection with the 2005 Plan. No additional shares are available for issuance under the 2005 Plan. The amount, terms of grants, and exercisability provisions are determined and set by our board of directors.

Effective August 2014, we adopted our 2014 Equity Incentive Plan, as amended (2014 Plan), that authorizes us to grant stock options, restricted stock, and other equity-based awards, subject to adjustment in accordance with the 2014 Plan. As of September 30, 2023, 5,063,925 options to purchase shares of common stock were outstanding pursuant to grants in connection with the 2014 Plan, and 775,794 shares of common stock were available for future issuance. The amount, terms of grants, and exercisability provisions are determined and set by our board of directors. In accordance with the 2014 Plan, on January 1, 2023, the shares of common stock available for future grants under the 2014 Plan was increased by 2,020,111.

Stock Options

There were 7,188,661 stock options outstanding as of September 30, 2023 at a weighted average exercise price of $9.75 per share, including 2,124,159 stock options outstanding outside of the 2014 Plan, granted as inducements to new employees. During the nine months ended September 30, 2023, 1,971,291 options were granted to employees and directors at a weighted average exercise price of $6.34 per share. Of the options granted, 1,550,766 options were granted pursuant to the 2014 Plan and 420,525 were granted outside of the 2014 Plan as inducements for new employees.

Restricted Stock and Restricted Stock Units

All issued and outstanding restricted shares of common stock are time-based, and become vested within two years of the grant date, pursuant to the 2014 Plan. Compensation expense is recorded ratably over the requisite service period. Compensation expense related to restricted stock is measured based on the fair value using the closing market price of our common stock on the date of the grant. As of September 30, 2023, we did not have any restricted shares of common stock outstanding.

During the nine months ended September 30, 2023, we granted 974,940 restricted stock units, which vest within three years of the grant date, pursuant to the 2014 Plan. As of September 30, 2023, we had 1,265,316 restricted stock units outstanding.

Total compensation cost recognized for all stock options, restricted stock awards and restricted stock units in the statements of operations is as follows (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
Research and development	$	1,519	$	1,394	$	4,329	$	4,069
Selling, general and administrative		2,487		2,501		7,309		7,022
Total	$	4,006	$	3,895	$	11,638	$	11,091

Preferred Stock

As of September 30, 2023 all shares of our Series A Convertible Preferred Stock (Preferred Stock) had been converted and none remained outstanding. In the nine months ended September 30, 2023, 4,300 shares of our Preferred stock were converted into 860,000 shares of our common stock.

Stock Issued in Connection with Ovid License Agreement

On March 29, 2022, pursuant to an exclusive patent license agreement with Ovid Therapeutics Inc. (Ovid), we issued 123,255 shares of our common stock to Ovid. The shares were issued in reliance upon the exemption from the registration requirements of the Securities Act of 1933, as amended (the Securities Act) provided by Section 4(a)(2) of the Securities Act and Regulation D thereunder as sales by an issuer not involving any public offering (see Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds). The fair value of these shares is reflected in operating expenses for the nine months ended September 30, 2022.

Underwritten Public Offering

In connection with an underwritten public offering in November 2022 and the closing of the related exercise of the underwriters’ option in December 2022, we issued a total of 12,421,053 shares of common stock and 2,105,264 pre-funded warrants (the Pre-funded Warrants) resulting in aggregate net proceeds, after underwriting discounts and commissions in the public offering and fees, of $64.5 million. The exercise price and the number of shares of common stock issuable upon exercise of each Pre-funded Warrant are subject to appropriate adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the

common stock as well as upon any distribution of assets, including cash, stock or other property, to our stockholders. The Pre-funded Warrants are exercisable at any time, will not expire and are exercisable in cash or by means of a cashless exercise. A holder of Pre-funded Warrants may not exercise such Pre-funded Warrants if the holder, together with its affiliates, would beneficially own more than 9.99% of the number of shares of common stock outstanding immediately after giving effect to such exercise. A holder of Pre-funded Warrants may increase or decrease this percentage not in excess of 19.99% by providing at least 61 days’ prior notice to us.

Sales Pursuant to Equity Distribution Agreement

On July 9, 2020, we entered into an Equity Distribution Agreement (EDA) with JMP Securities LLC (JMP), as amended by the March 31, 2023 Amendment No. 1 to the EDA (Amended Agreement), to create an at the market equity program under which we from time to time may offer and sell shares of our common stock without a maximum aggregate offering price. The Amended Agreement was entered into in connection with our filing of a Registration Statement on Form S-3 (File No. 333-271041) with the SEC (the 2023 Registration Statement), which includes a prospectus supplement covering the offering, issuance and sale by us of up to $75,000,000 of shares of common stock that may be issued and sold under the Amended Agreement. Subject to the terms and conditions of the Amended Agreement, JMP will be entitled to a commission of up to 3.0% of the gross proceeds from each sale of shares of our common stock. In the nine months ended September 30, 2023, we sold approximately 3.7 million shares of our common stock pursuant to the Amended Agreement, which consisted of net proceeds of approximately $25.9 million. We did not sell any shares of our common stock during the nine months ended September 30, 2022 under the EDA.