SHARE-BASED COMPENSATION AND WARRANTS

12 Months Ended

Jun. 30, 2025

SHARE-BASED COMPENSATION AND WARRANTS

SHARE-BASED COMPENSATION AND WARRANTS

NOTE 8 — SHARE-BASED COMPENSATION AND WARRANTS

Equity Incentive Plans

Presented below is a summary of the number of shares authorized, outstanding, and available for future grants under the Company’s equity incentive plans as of June 30, 2025:

	Number of Shares
Description	Authorized	Outstanding	Available
2015 Plan	15,500	15,500	—
2016 Plan	122,900	122,900	—
2019 Plan	200,000	200,000	—
2021 Plan	13,879,670	13,321,094	558,576
Inducement Awards	1,500,000	425,000	1,075,000
Total	15,718,070	14,084,494	1,633,576

The Company currently has one active equity incentive plan approved by shareholders which is the 2021 Plan. On December 5, 2024, the Company’s shareholders approved an amendment to the 2021 Plan, increasing the number of shares of common stock to be issued under the plan up to 14,450,000 shares of common stock, before accounting for any reductions due to exercises. The 2021 Plan terminates on March 31, 2030. Pursuant to the 2021 Plan, no awards may be granted under the three legacy equity incentive plans shown in the table above, but all outstanding awards previously granted under those plans shall remain outstanding and subject to the terms of the respective plans. Awards outstanding under these plans expire pursuant to their contractual provisions on various dates through 2035.

In addition, inducement awards are allowed for grants of options pursuant to Nasdaq Listing Rule 5635(c)(4) whereby the underlying shares are not authorized under any of the Company’s equity incentive plans. As of June 30, 2025, the Board of Directors has granted inducement awards for a total of 425,000 shares. The Board of Directors also has discretion to issue an additional 1,075,000 shares for future inducement awards.

2022 Employee Stock Purchase Plan

On June 16, 2022, the Company’s shareholders approved the adoption of the 2022 Employee Stock Purchase Plan (the “2022 ESPP”). The 2022 ESPP provides an opportunity for employees to purchase shares of the Company’s common stock through accumulated payroll deductions.

The 2022 ESPP permits consecutive offering periods that begin approximately every 6 months commencing on the first trading day on or after July 1 and terminating on the last trading day of the offering period ending on December 31 and commencing on the first trading day on or after January 1 and terminating on the last trading day of the offering period ending on June 30. The 2022 ESPP reserves 0.5 million shares for purchases. There have been no offering periods under the 2022 ESPP through June 30, 2025.

Stock Options Outstanding

The following table sets forth a summary of the combined stock option activity under the Company’s equity incentive plans and inducement awards, for the fiscal years ended June 30, 2025 and 2024:

	2025					2024
	Shares		Price (1)		Term (2)	Shares		Price (1)		Term (2)
Outstanding, beginning of fiscal year	10,890,540		$	3.82	8.1	8,745,400		$	4.56	8.8
Granted	3,246,300			4.57		2,641,500			1.31
Exercised	(488,742)	(3)		2.85		(81,588)	(3)		3.02
Expired	(69,666)			12.17		(111,059)			6.11
Forfeited	(550,438)			3.08		(303,713)			2.63
Outstanding, end of fiscal year	13,027,994	(4)		4.03	7.7	10,890,540	(4)		3.82	8.1
Vested, end of fiscal year	7,127,835	(5)		4.48	6.9	4,891,745	(5)		5.39	7.7

(1) Represents the weighted average exercise price.

(2) Represents the weighted average remaining contractual term until the stock options expire.

(3) The total intrinsic value (the amount by which the fair market value exceeded the exercise price) of stock options exercised during the year ended June 30, 2025 and 2024, was $0.9 million and $0.1 million, respectively.

(4) As of June 30, 2025 and 2024, the intrinsic value of outstanding stock options was approximately $14.9 million and $14.6 million, respectively.

(5) As of June 30, 2025 and 2024, the aggregate intrinsic value of vested stock options was approximately $8.5 million and $4.1 million, respectively.

For the fiscal year ended June 30, 2025, the aggregate fair value of stock options granted for approximately 3.2 million shares of common stock amounted to $10.8 million or approximately $3.32 per share as of the grant dates. For the fiscal year ended June 30, 2024, the aggregate fair value of stock options granted for approximately 2.6 million shares of common stock amounted to $2.6 million or approximately $1.02 per share as of the grant dates. Unrecognized share-based compensation expense related to outstanding options was approximately $14.5 million as of June 30, 2025. This amount is expected to be recognized over a weighted average period of 1.6 years. Fair value of stock options was computed using the BSM option-pricing model and will result in the recognition of compensation expense ratably over the expected vesting period of the stock options. The determination of the fair value of share-based awards utilizing the BSM model is affected by the share price and a number of assumptions as of the grant date, including expected volatility, expected term, risk-free interest rate and expected dividends. The Company determined the expected volatility by using share price information of similar sized biotechnology entities who are in similar stages of clinical development and whose share prices are publicly available. Due to the lack of a meaningful history of exercise behavior of stock options, the expected term of the awards is determined by the simplified method that uses the midpoint between the vesting date and the end of the contractual term for each grant of stock options. The risk-free interest rate assumption is based on observed interest rates appropriate for the expected terms of the awards. The dividend yield assumption is based on past practices and the expectation that no dividends will be paid in the future.

The fair value of stock options was estimated on the dates of grant using the BSM option-pricing model, with the following weighted-average assumptions for the fiscal years ended June 30, 2025 and 2024:

	2025			2024
Market price of common stock on grant date	$	4.57		$	1.31
Expected volatility		84	%		99	%
Risk free interest rate		4.2	%		4.2	%
Expected term (years)		5.9			5.6
Dividend yield		0	%		0	%

Restricted Stock Units (“RSUs”)

The following table sets forth a summary of the RSU activity under the Company’s 2021 Plan, for the fiscal years ended June 30, 2025 and 2024:

	2025			2024
	Shares	Price (1)		Shares	Price (1)
Unvested, beginning of fiscal year	—	$	—	—	$	—
Granted	1,056,500		4.55	—		—
Vested	—		—	—		—
Forfeited	—		—	—		—
Unvested, end of fiscal year	1,056,500		4.55	—		—

(1) Represents the weighted average grant price based on the closing market price of each of the RSU grants.

For the fiscal year ended June 30, 2025, the aggregate fair value of RSUs granted for approximately 1.1 million shares of common stock amounted to $4.8 million. RSUs granted vest over a period of one to three years after the grant dates. Fair value is based on the closing market price on the date of grant and will result in the recognition of compensation cost ratably over the vesting period of the RSUs. Unrecognized share-based compensation expense related to RSUs is approximately $4.2 million as of June 30, 2025. This amount is expected to be recognized over a weighted average period of 2.4 years.

Share-Based Compensation Expense

Share-based compensation expense is included under the following captions in the consolidated statements of operations for the fiscal years ended June 30, 2025 and 2024 (in thousands):

	2025		2024
Research and development	$	3,502	$	3,379
General and administrative		3,619		3,981
Total	$	7,121	$	7,360

The aggregate unrecognized share-based compensation expense for stock options and RSUs as of June 30, 2025 was approximately $18.7 million. This amount is expected to be recognized over a remaining weighted average period of 1.7 years.

Inducement Grant

In connection with the hiring of an employee of the Company in November 2024, the Board of Directors granted a stock option exercisable for the purchase of 150,000 shares of the Company’s common stock at an exercise price of $5.04 per share. This stock option is considered an inducement grant (the “Inducement Grant”) pursuant to Nasdaq Listing Rule 5635(c)(4) whereby the underlying shares were not authorized under any of the Company’s equity incentive plans. The Inducement Grant is exercisable until November 2034 and vests for (i) one-fourth of the option shares on the one-year anniversary of the employee start date, and (ii) one thirty-sixth of the remaining option shares vest on the same day of each month thereafter until the Inducement Grant is 100% vested. The fair value of the Inducement Grant of $0.6 million was computed using the BSM option pricing model.

Pre-Funded Warrants

PFWs are outstanding for a total of 16.4 million and 15.0 million shares as of June 30, 2025 and 2024, respectively. Please refer to Note 7 for additional information about outstanding PFWs and Note 13 for treatment of PFWs in the calculation of earnings per share.

Legacy Warrants

In connection with an equity financing in October 2020, the Company issued warrants entitling the holders to purchase approximately 0.8 million shares of common stock. The warrants are exercisable at $19.50 per share for a period of seven years, may be exercised on a cash or cashless basis at the election of the holders, and the holders are entitled to share in any dividends or distributions payable to holders of common stock on an as-converted basis (the “Participating Warrants”). Additionally, the Company has issued warrants to purchase shares of common stock in conjunction with other debt and equity financings and for services. As of June 30, 2025 and 2024, all of the warrants were vested. The Participating Warrants and other warrants are collectively referred to as the “Legacy Warrants.”

For the fiscal years ended June 30, 2025 and 2024, no Legacy Warrants were granted or exercised. The following table sets forth a summary of activity related to the Legacy Warrants for the fiscal years ended June 30, 2025 and 2024:

	2025				2024
	Shares	Price (1)		Term (2)	Shares	Price (1)		Term (2)
Outstanding, beginning of fiscal year	860,562	$	20.28	3.2	888,238	$	22.10	4.1
Expirations	(10,120)		52.20		(27,676)		78.60
Outstanding, end of fiscal year	850,442		19.90	2.3	860,562		20.28	3.2

(1) Represents the weighted average exercise price.

(2) Represents the weighted average remaining contractual term for the number of years until the warrants expire.