Share Based Compensation

12 Months Ended

Dec. 31, 2024

Share Based Compensation

Share Based Compensation

9 Share-Based Compensation

Stock Options

Under the Company’s 2019 Equity Incentive Plan (the 2019 Plan) and the Company’s Stock Option Plan (the 2011 Plan), unless otherwise decided by the Board of Directors, options vest and are exercisable as follows: 25% vest and are exercisable on the one year anniversary of the grant date and one thirty-sixth (1/36^th) of the remaining options vest and are exercisable each month thereafter, such that options are vested in full on four-year anniversary of the grant date.

On January 1, 2024, the number of the Company’s common shares reserved for issuance under the 2019 Plan automatically increased by 1,339,324 common shares. In addition, 125,323 options have been forfeited under the 2011 Plan since the adoption of the 2019 Plan and have become available for issuance under the 2019 Plan. Further, since the adoption of the plan, 561,000 of previously issued options were cancelled and were made available for future grants. As of December 31, 2024, there were 9,522,270 common shares available for issuance under the 2019 Plan, of which 922,575 common shares were available for future grants.

On November 10, 2021, the Company established a 2021 Inducement Plan under Nasdaq Marketplace Rules through the granting of awards. This 2021 Inducement Plan is intended to help the Company provide an inducement material for certain individuals to enter into employment with the Company, incentives for such persons to exert maximum efforts for the success of the Company and provide a means by which employees may benefit from increases in value of the common shares. As of December 31, 2024, there were 1,000,000 shares available for issuance under the 2021 Inducement Plan, of which 504,000 shares were available for future grants.

The total outstanding and exercisable options from the 2011 Plan, 2019 Plan and Inducement Plan as of December 31 were as follows:

	2024
								Weighted
	Number							average
	of shares							exercise
	2019 Plan			Inducement Plan	2011 Plan		Total	price
Outstanding at beginning of year - 2011 Plan		—		—		1,694,233	1,694,233	$	2.09
Outstanding at beginning of year - 2019 Plan		6,406,897		—		—	6,406,897		5.82
Outstanding at beginning of year - Inducement Plan		—		625,000		—	625,000		5.74
Granted - 2019 Plan		1,652,000		—		—	1,652,000		1.62
Exercised - 2011 Plan		—		—		(50,476)	(50,476)		1.04
Forfeited - Inducement Plan		—		(98,250)		—	(98,250)		4.33
Forfeited - 2019 Plan		(386,053)		—		—	(386,053)		4.42
Expired - 2019 Plan		(68,238)		—		—	(68,238)		7.42
Expired - 2011 Plan		—		—		(11,272)	(11,272)		4.01
Expired - Inducement Plan		—		(30,750)		—	(30,750)		6.22
Outstanding at end of year		7,604,606		496,000		1,632,485	9,733,091	$	4.54
Outstanding at end of year - Weighted average exercise price	$	4.97	$	5.99	$	2.11
Exercisable at end of year		4,850,552		319,291		1,632,485	6,802,328	$	5.14
Exercisable at end of year - Weighted average exercise price	$	6.09	$	6.24	$	2.11

	2023
								Weighted
	Number							average
	of shares							exercise
	2019 Plan			Inducement Plan	2011 Plan		Total	price
Outstanding at beginning of year - 2011 Plan		—		—		1,802,672	1,802,672	$	2.05
Outstanding at beginning of year - 2019 Plan		5,314,312		—		—	5,314,312		8.35
Outstanding at beginning of year - Inducement Plan		—		503,000		—	503,000		6.41
Granted - 2019 Plan		1,875,400		—		—	1,875,400		3.61
Granted - Inducement Plan		—		122,000		—	122,000		2.98
Exercised - 2019 Plan		(7,000)		—		—	(7,000)		3.74
Exercised - 2011 Plan		—		—		(107,103)	(107,103)		1.52
Forfeited - 2019 Plan		(156,198)		—		—	(156,198)		6.13
Expired - 2019 Plan		(58,617)		—		—	(58,617)		11.52
Expired - 2011 Plan		—		—		(1,336)	(1,336)		0.91
Cancelled - 2019 Plan		(561,000)		—		—	(561,000)		21.73
Outstanding at end of year		6,406,897		625,000		1,694,233	8,726,130	$	5.09
Outstanding at end of year - Weighted average exercise price	$	5.82	$	5.74	$	2.09
Exercisable at end of year		3,228,422		221,833		1,694,233	5,144,488	$	5.32
Exercisable at end of year - Weighted average exercise price	$	6.93		6.42	$	2.09

The weighted average remaining contractual life was 6.71 and 6.55 years for outstanding options as of December 31, 2024 and 2023, respectively. The weighted average remaining contractual life was 5.92 and 5.93 years for vested options, as of December 31, 2024 and 2023, respectively.

There was $5.1 million and $11.4 million of total unrecognized compensation cost related to non-vested share options as of December 31, 2024 and 2023, respectively. The share options are expected to be recognized over a remaining weighted average vesting period of 1.48 years and 2.27 years as of December 31, 2024 and 2023, respectively.  

Options granted are valued using the Black-Scholes option pricing model. Amortization of the fair value of the options over vesting years has been expensed and credited to additional paid-in capital in shareholders’ equity. The non-vested options as of December 31 were as follows:

	2024
	Number							Weighted
	of options							average
	2019 Plan		Inducement Plan		2011 Plan		Total	fair value
Non-vested share options at beginning of year - 2019 Plan		3,178,475		—		—	3,178,475		3.64
Non-vested share options at beginning of year - Inducement Plan		—		403,167		—	403,167		4.07
Granted - 2019 Plan		1,652,000		—		—	1,652,000		1.26
Vested, outstanding - 2019 Plan		(1,690,368)		—		—	(1,690,368)		3.48
Vested, outstanding - Inducement Plan		—		(128,208)		—	(128,208)		4.48
Forfeited - Inducement Plan		—		(98,250)		—	(98,250)		3.31
Forfeited - 2019 Plan		(386,053)		—		—	(386,053)		3.47
Non-vested share options at end of year		2,754,054		176,709		—	2,930,763	$	2.45
Non-vested share options at end of year - Weighted average fair value	$	2.33	$	4.19	$	—

	2023
	Number							Weighted
	of options							average
	2019 Plan		Inducement Plan		2011 Plan		Total	fair value
Non-vested share options at beginning of year - 2011 Plan		—		—		2,126	2,126	$	6.64
Non-vested share options at beginning of year - 2019 Plan		2,923,763		—		—	2,923,763		5.30
Non-vested share options at beginning of year - Inducement Plan		—		503,000		—	503,000		4.84
Granted - 2019 Plan		1,875,400		—		—	1,875,400		2.87
Granted - Inducement Plan		—		122,000		—	122,000		2.30
Vested, outstanding - 2011 Plan		—		—		(2,126)	(2,126)		6.64
Vested, outstanding - 2019 Plan		(1,504,329)		—		—	(1,504,329)		5.88
Vested, outstanding - Inducement Plan		—		(221,833)		—	(221,833)		4.85
Forfeited - 2019 Plan		(116,359)		—		—	(116,359)		3.96
Non-vested share options at end of year		3,178,475		403,167		—	3,581,642.00	$	3.69
Non-vested share options at end of year - Weighted average fair value	$	3.64	$	4.07	$	—

The following table summarizes information with respect to share options outstanding as of December 31, 2024:

	Options outstanding				Options exercisable
		Weighted				Weighted
		average	Weighted			average	Weighted
		remaining	average			remaining	average
	Number	contractual	exercise		Number	contractual	exercise
Exercise price	of options	life (years)	price		of options	life (years)	price
$0.84-$1.73	1,623,845	5.74		1.46	1,089,175	3.83		1.46
$1.74-$3.2	1,725,554	7.06		2.16	733,262	4.04		2.61
$3.21-$5.25	2,128,500	7.40		3.67	1,393,090	7.02		3.70
$5.26-$6.36	3,368,756	6.68		5.90	2,857,032	6.63		5.95
$6.37-$8.5	527,000	7.06		6.82	379,083	6.98		6.80
$8.51-$15.5	53,086	5.49		9.08	44,336	5.06		9.19
$15.51-$20.5	65,100	4.84		17.21	65,100	4.84		17.21
$20.51-$22.45	241,250	5.06		21.48	241,250	5.06		21.48
Total	9,733,091	6.71	$	4.54	6,802,328	5.92	$	5.14

The fair value of options is measured using Black-Scholes valuation model. This model also requires assumptions, including expected option life, volatility, risk-free interest rate and dividend yield, which greatly affect the calculated values:

	Year ended December 31,
	2024			2023
Exercise price	$	1.62		$	3.58
Share price	$	1.62		$	3.58
Volatility		96	%		97	%
Risk-free interest rate		4.17	%		3.97	%
Expected life		5.66 years			6.01 years
Dividend		0	%		0	%

Expected volatility is determined using comparable companies for which the information is publicly available. The risk-free interest rate is determined based on the U.S. sovereign rates benchmark in effect at the time of grant with a remaining term equal to the expected life of the option. Expected option life is determined based on the simplified method as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The simplified method is an average of the contractual term of the options and its ordinary vesting period. Dividend yield is based on the share option’s exercise price and expected annual dividend rate at the time of grant. The total grant date fair value for options granted during the year ended December 31, 2024 and 2023 was $2.1 million and $5.5 million, respectively.

Performance Stock Options

On May 6, 2024, the Company, pursuant to the 2019 Plan, awarded 924,000 performance stock options to employees. The performance stock options were granted “at-the-money” and have a term of 10 years.

The original grant-date fair value of each option was estimated on the date of grant using the same option valuation model used for the options outlined above. The original grant-date fair value of $1.3 million was determined using an expected volatility of 98.5%, term of 5.82 years, strike price of $1.74, and risk-free rate of 4.43%. Compensation expense for performance-based stock options is only recognized when management determines it is probable that the awards will vest.

The vesting of the performance-based stock options is conditional upon the U.S. Food and Drug Administration, or “FDA,” approval of etripamil. Subject to the option holders continuous service as of each such date, 50% of the option shares will vest on the six-month anniversary of the approval date and the remaining 50% of the option shares will vest on the one-year anniversary of such approval date. The expense for the performance-based stock options is not recognized until the performance conditions are deemed probable of achievement. The Company did not record any expense related to the performance-based stock options during the year ended December 31, 2024, as the performance conditions were not deemed probable of being met. The weighted average grant date fair value of the performance stock options awarded during the year ended December 31, 2024, was $1.38 per option.

Employee Stock Purchase Plan

On July 15, 2022, the Company offered an ESPP, in which participation is available to our employees in the United States and Canada who meet certain service eligibility requirements. Eligible employees may authorize an amount up to 15% of their salary to purchase common stock at the lower of a 15% discount to the beginning price of the participation period or a 15% discount to the ending price of each six-month purchase interval. The ESPP also provides for an automatic reset feature to start participants on a new twelve-month participation period in the event that the common stock market value on a purchase date is less than the common stock value on the first day of the twelve-month offering period.

On January 1, 2024, the number of common shares reserved for issuance under the ESPP automatically increased by 334,831 shares. As of December 31, 2024, the Company has 1,798,766 common shares available for issuance under the ESPP, of which 295,736 shares of common stock have been issued. Compensation expense for purchase rights under the

ESPP related to the purchase discount and the “look-back” option was determined using a Black-Scholes option pricing model.

Performance Share Units

On May 6, 2024, the Company, pursuant to the 2019 Plan, awarded 924,000 Performance Share Units, or “PSUs,” to employees. The PSUs vest subject to the satisfaction of certain performance conditions established by the Company’s Compensation Committee. The FDA approval of etripamil represents the performance condition for the vesting of these performance share units.

A summary of the Company’s PSU activity for the years ended December 31 is as follows:

	2024		2023
Beginning balance	$	—	$	—
Granted		924,000		—
Vested		—		—
Forfeited		—		—
Ending balance	$	924,000	$	—

The number of PSUs granted represents the total number of common shares that may be earned. However, the actual number of shares earned will be based on the satisfaction of the performance criteria. Upon satisfaction of the performance criteria, 100% of the earned shares will vest. Stock-based compensation costs associated with these PSUs are reassessed each reporting period based on estimated performance achievement. The Company did not record any expense related to the PSUs during the year ended December 31, 2024, as the performance conditions were not deemed probable of being met. The weighted average grant date fair value of the PSUs granted during the year ended December 31, 2024, was $1.74.

Share-Based Compensation Expense

The Company recognized share-based compensation expense for all plans as follows for the years ended December 31:

	2024		2023
Administration	$	3,171	$	4,849
Research and development		1,874		3,281
Commercial activities		731		1,404
Total	$	5,776	$	9,534