Share-based compensation

9 Months Ended

Sep. 30, 2024

Share-based compensation

Share-based compensation

11. Share-based compensation

2020 Equity Incentive Plan

In September 2020, the Company adopted the 2020 Equity Incentive Plan, or the 2020 Plan, which supersedes all prior equity incentive plans. No further awards will be granted under the 2018 Equity Incentive Plan, or 2018 Plan. Awards forfeited, cancelled, or repurchased from the above plans are returned to the pool of shares of common stock available for issuance under the 2020 Plan. On January 1, 2024, the shares of common stock authorized for issuance under the 2020 Plan increased by 1,730,071 shares. As of September 30, 2024, there were 1,077,406 shares available for issuance under the 2020 Plan.

On October 2, 2023, the Morphimmune 2020 Equity Incentive Plan, or the Morphimmune Plan, was assumed by the Company in conjunction with the Merger (Note 7). There were 940,871 shares available for issuance under the Morphimmune Plan as of September 30, 2024.

Stock Options Granted for Chief Executive Officer

On June 28, 2023, Clay Siegall was granted 2,137,080 options to purchase shares of the Company’s common stock at an initial exercise price of $5.91 per share, or the Inducement Grant. The options vest over time during Dr. Siegall’s continued employment, which commenced on October 2, 2023, in connection with the closing of the Merger. 25% of the options granted vest after one year of employment with the Company, and the remaining 75% vest monthly over the 36 months immediately following the one-year anniversary. The Inducement Grant, the Morphimmune Plan and the 2020 Plan are collectively referred to as the Plans.

2020 Employee Stock Purchase Plan

The Company adopted the 2020 Employee Stock Purchase Plan, or ESPP, in September 2020. On January 1, 2024, the shares of common stock authorized for issuance under the ESPP increased by 432,518 shares. As of September 30, 2024, there were 906,251 shares available for issuance under the ESPP. No shares of common stock have been issued under the ESPP as of September 30, 2024.

Stock options

A summary of option activity under the Plans during the nine months ended September 30, 2024 is as follows:

				Weighted
		Weighted		average	Aggregate
		average		remaining	Intrinsic
	Number of	exercise price		contractual	Value
	shares	per share		term (years)	(in thousands)
Outstanding at December 31, 2023	7,978,291	$	6.15	8.62	$	45,360
Granted	5,172,469		15.12
Exercised	(566,548)		3.13
Forfeited	(895,548)		8.18
Expired	(236,808)		24.42
Outstanding at September 30, 2024	11,451,856	$	9.81	8.75	$	65,609
Exercisable at September 30, 2024	2,813,140	$	4.91	6.89	$	29,667

Aggregate intrinsic value in the above table is calculated as the difference between the exercise price of the options and the Company’s fair value of its common stock as of period end.

The weighted-average grant date fair value of stock options granted during the nine months ended September 30, 2024 and 2023 was $11.47 and $3.67 per share, respectively. The aggregate intrinsic value of options exercised during the nine months ended September 30, 2024 and 2023 was $8.1 million and $0.1 million, respectively.

The weighted average assumptions used in the Black-Scholes option-pricing model for stock options granted were:

	Nine Months Ended September 30,
	2024			2023
Expected volatility		89.8	%		88.5	%
Risk-free interest rate		4.0	%		3.8	%
Expected term (in years)		6.06			6.03
Expected dividend yield		—	%		—	%

Share-based compensation expense recorded in the condensed consolidated statements of operations and comprehensive loss is as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Research and development	$	1,820	$	466	$	3,244	$	1,323
General and administrative		3,072		617		7,034		2,017
Total share-based compensation expense	$	4,892	$	1,083	$	10,278	$	3,340

Unrecognized share-based compensation related to stock options was $72.2 million as of September 30, 2024 and is expected to be recognized over a weighted average period of 3.5 years.