Stock-Based Compensation

12 Months Ended

Dec. 31, 2022

Stock-Based Compensation

Stock-Based Compensation

9. Stock-Based Compensation

Equity Incentive Plans

In September 2012, the Company adopted the 2012 Equity Incentive Plan (the “2012 Plan”), as amended, which provides designated employees of the Company and its affiliates, certain consultants and advisors who perform services for the Company and its affiliates, and nonemployee members of the Board of Directors of the Company and its affiliates with the opportunity to receive grants of incentive stock options, nonqualified stock options and stock awards. During the year ended December 31, 2022, the 2012 Equity Plan expired.

On January 20, 2017, the Company’s stockholders approved the 2016 Equity Incentive Plan (the “2016 Plan”). Beginning on January 1, 2018, the number of shares of common stock authorized for issuance pursuant to the 2016 Plan was increased each January 1 by an amount equal to four percent (4%) of the Company’s outstanding common stock as of the end of the immediately preceding calendar year or such other amount as determined by the compensation committee of the Company’s board of directors. During the year ended December 31, 2019, the compensation committee of the board of directors authorized an additional 3,000,000 shares of common stock to be added to the shares authorized for issuance under the 2016 Plan.

On June 16, 2022, the Company’s stockholders approved the 2022 Equity Incentive Plan (the “2022 Plan”), which provides for a total of 7,500,000 new shares of the Company’s common stock to be granted.

As of December 31, 2022, there were 5,400,921 shares available for grant under the Company’s Equity Incentive Plans, which excludes the 2012 Plan which expired during the year ended December 31, 2022.

9. Stock-Based Compensation (continued)

A summary of stock option activity under the Company’s Equity Incentive Plans is as follows:

		Weighted
		Average		Weighted	Aggregate
		Exercise Price		Average Remaining	Intrinsic
	Options	Per Share		Life in Years	Value
Outstanding at December 31, 2020	6,393,853		5.29	7.96		1,961
Granted	2,482,650		2.19
Exercised	(2,292)		1.55
Forfeited	(348,593)		3.17
Outstanding at December 31, 2021	8,525,618		4.48	7.58		7,673
Granted	4,024,900		1.50
Forfeited	(633,187)		2.17
Outstanding at December 31, 2022	11,917,331		3.59	7.47
Options exercisable at December 31, 2022	7,543,973		4.74	6.46
Options vested and expected to vest at December 31, 2022	11,917,331		3.59	7.47

The grant date fair value of the options granted during the years ended December 31, 2022 and 2021 was estimated at the date of grant using the Black-Scholes option valuation model. The expected life was estimated using the “simplified” method as defined by the SEC’s Staff Accounting Bulletin 107, Share-Based Payment. The expected volatility was based on the historical volatility of comparable public companies from a representative peer group selected based on industry and market capitalization data. The risk-free interest rate was based on the continuous rates provided by the U.S. Treasury with a term approximating the expected life of the option. The expected dividend yield was 0% because the Company does not expect to pay any dividends for the foreseeable future. The Company elected the straight-line attribution method in recognizing the grant date fair value of options issued over the requisite service periods of the awards, which are generally the vesting periods.

The weighted average grant date fair value for the stock options granted during the years ended December 31, 2022 and 2021 was $1.08 and $1.37 per share, respectively.

The assumptions that the Company used to determine the grant-date fair value of stock options granted to employees and directors during the years ended December 31, 2022 and 2021 were as follows, presented on a weighted average basis:

	Year Ended December 31,
	2022		2021
Expected volatility	82.70	%	67.64	%
Weighted average risk-free interest rate	3.10	%	0.82	%
Expected dividend yield	0.00	%	0.00	%
Expected term (in years)	6.42		6.82

Stock options generally vest over a three or four year period, as determined by the compensation committee of the board of directors at the time of grant. The options expire ten years from the grant date. As of December 31, 2022, there was approximately $4,644 of unrecognized compensation cost related to non-vested stock options, which is expected to be recognized over a remaining weighted-average period of approximately 2.21 years.

9. Stock-Based Compensation (continued)

Restricted Stock Units

During the years ended December 31, 2022 and 2021, the Company granted 2,650,000 and 275,000, respectively, RSUs to executive officers that will cliff vest and will be settled after three years of continuous service, or upon a change of control of the Company, whichever is earlier, pursuant to the 2016 Plan. During the years ended December 31, 2022 and 2021, the Company recognized $2,086 and $530, respectively, of stock based compensation expense related to these equity classified RSUs.

The following table presents RSU activity under the 2016 Plan as of December 31, 2022:

		Weighted
	Number of	Average Grant
	Shares	Date Fair Value
Outstanding at December 31, 2020	753,106	$	1.52
Awarded	275,000	$	2.57
Settled in cash	(92,500)	$	1.97
Outstanding at December 31, 2021	935,606	$	1.76
Awarded	2,650,000	$	1.94
Outstanding at December 31, 2022	3,585,606	$	1.89

As of December 31, 2022, there were 3,585,606 shares outstanding covered by RSUs that were vested and expected to vest with a weighted average grant date fair value of $1.89 per share and an aggregate grant date fair value of $6,777. As of December 31, 2022, there was approximately $3,898 of unrecognized compensation costs related to RSUs granted to employees, which are expected to be recognized as expense over a remaining weighted average period of 2.01 years.

The Company recognized stock-based compensation expense related to the issuance of stock option awards and RSUs to employees and non-employees in the consolidated statements of operations during the years ended December 31, 2022 and 2021 as follows:

Stock Based Compensation Expense

	Year Ended
	December 31,
	2022		2021
Research and development	$	2,540	$	1,641
General and administrative		2,640		2,045
Total	$	5,180	$	3,686