Stock-based Compensation

9 Months Ended

Sep. 30, 2022

Stock-based Compensation

Stock Based Compensation

12. Stock-based Compensation

2013 Equity Incentive Plan

Effective November 1, 2013, the Company's BOD and sole stockholder adopted the Jaguar Health, Inc. 2013 Equity Incentive Plan (the “2013 Plan”). The 2013 Plan allows the Company's BOD to grant stock options, restricted stock awards and restricted stock unit awards to employees, officers, directors and consultants of the Company. Following the effective date of the IPO and after effectiveness of any grants under the 2013 Plan that were contingent on the IPO, no additional stock awards will be granted under the 2013 Plan. Outstanding grants continue to be exercisable; however, any unissued shares under the plan and any forfeitures of outstanding options do not rollover to the 2014 Stock Incentive Plan. There were 123 option shares outstanding at September 30, 2022 and December 31, 2021.

2014 Stock Incentive Plan

Effective May 12, 2015, the Company adopted the Jaguar Health, Inc. 2014 Stock Incentive Plan (“2014 Plan”). The 2014 Plan provides for the grant of options, restricted stock and restricted stock units to eligible employees, directors and consultants to purchase the Company's common stock. The term of an incentive stock option may not exceed 10 years, except that with respect to any participant who owns more than 10% of the voting power of all classes or our outstanding stock, the term must not exceed 5 years. The 2014 Plan that provides for automatic share increases on the first day of each fiscal year in the amount of 2% of the outstanding number of shares of the Company's common stock on the last day of the preceding calendar year. The 2014 Plan replaced the 2013 Plan except that all outstanding options under the 2013 Plan remain outstanding until exercised, canceled or expired.

As of September 30, 2022, there were 2,318,948 options outstanding and 172,550 options available for grant. As of December 31, 2021, there were 2,348,076 options outstanding and 619,480 options available for grant.

2020 New Employee Inducement Award Plan

Effective June 16, 2020, the Company adopted the Jaguar Health, Inc. New Employee Inducement Award Plan (“2020 Inducement Award Plan”) and, subject to the adjustment provisions of the Inducement Award Plan, reserved 166,666 shares of the Company’s common stock for issuance pursuant to equity awards granted under the Inducement Award Plan. The term of an incentive stock option may not exceed 10 years, except that with respect to any participant who owns more than 10% of the voting power of all classes or our outstanding stock, the term must not exceed 5 years. The 2020 Inducement Award Plan provides for the grant of non-statutory stock options, restricted stock units, restricted stock, and performance shares. The 2020 Inducement Award Plan was adopted without stockholder approval pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules. The terms and conditions of the 2020 Inducement Award Plan are substantially similar to the Company’s 2014 Stock Incentive Plan, but with such other terms and conditions intended to comply with the Nasdaq inducement award rules. In accordance with Rule 5635(c)(4) of the Nasdaq Listing Rules, the only persons eligible to receive grants of equity awards under the Inducement Award Plan are individuals who were not previously an employee or director of the Company, or following a bona fide period of non-employment, as an inducement material to such persons entering into employment with the Company.

On April 13, 2022, the Board of Directors of the Company approved an amendment to the 2020 Inducement Award Plan to reserve an additional 471,833 shares of the Company’s common stock for issuance pursuant to equity awards granted under the Inducement Award Plan, thereby increasing the number of shares of the Company’s common stock issuable thereunder from 500,000 shares to 971,833 shares.

As of September 30, 2022, there were 116,434 options outstanding and 522,065 options available for grant. As of December 31, 2021, there were 154,876 options outstanding and 11,790 options available for grant.

Stock Options and Restricted Stock Units (“RSUs”)

The following table summarizes incentive plan activity for the three and nine months ended September 30, 2022 (unaudited):

				Weighted		Weighted Average
	Shares	Stock		Average		Remaining	Aggregate
	Available	Options	RSUs	Stock Option		Contractual Life	Intrinsic
(in thousands, except share and per share data)	for Grant	Outstanding	Outstanding	Exercise Price		(Years)	Value*
Outstanding at December 31, 2021	631,270	2,503,075	487,456	$	9.44	8.35	$	3
Additional shares authorized	2,889,495	—	—		—			—
Options granted	(3,333)	3,333	—		0.31			—
Options exercised	—	—	—		—			—
Options canceled	70,903	(70,903)	—		3.92			—
RSUs granted	(2,893,720)	—	2,893,720		—			—
Outstanding at September 30, 2022	694,615	2,435,505	3,381,176	$	9.59	7.59	$	—
Exercisable at September 30, 2022		1,925,768		$	10.76	7.36	$	—
Vested and expected to vest at September 30, 2022		2,379,802		$	9.69	7.57	$	—

*Fair market value of JAGX common stock on September 30, 2022 was $0.16 per share.

The intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair market value of the Company's common stock for options that were in-the-money.

The number of options exercised during the nine months ended September 30, 2022, and 2021 were zero and 3,147, respectively.

The weighted average grant date fair value of stock options granted was $0.29 and $5.25 per share during the nine months ended September 30, 2022, and 2021, respectively.

The number of options that vested in the nine months ended September 30, 2022, and 2021 was 516,972 and 495,023, respectively. The grant date weighted average fair value of options that vested in the nine months ended September 30, 2022, and 2021 was $4.17 and $4.55, respectively.

Stock-Based Compensation

The following table summarizes stock-based compensation expense related to stock options, inducement stock options and RSUs for the three and nine months ended September 30, 2022, and 2021, and are included in the unaudited condensed consolidated statements of operations as follows:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2022		2021		2022		2021
	(unaudited)				(unaudited)
Research and development expense	$	354	$	404	$	1,067	$	935
Sales and marketing expense		32		88		234		208
General and administrative expense		455		673		1,620		1,689
Total	$	841	$	1,165	$	2,921	$	2,832

As of September 30, 2022, the Company had $2.2 million of unrecognized stock-based compensation expense for options, inducement options and restricted stock units outstanding, which is expected to be recognized over a weighted-average period of 1.41 years.

The fair value of options granted during the three and nine months ended September 30, 2022, and 2021, respectively, were calculated using the range of assumptions set forth below:

	Nine Months Ended
	September 30,
	2022	2021
	(unaudited)
Volatility	164.0%	163.8 - 164.0 %
Expected term (years)	5.0	5.0
Risk-free interest rate	3.2%	0.5 - 1.0 %
Expected dividend yield	—	—

401(k) Plan

The Company sponsors a 401(k) defined contribution plan covering all employees. There were no employer contributions to the plan from plan inception through September 30, 2022.