Stock-Based Compensation

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

10. Stock-Based Compensation

Equity Incentive Plan

In May 2014, the Company adopted and the shareholders approved the 2014 Equity Incentive Plan (the 2014 Plan). Under the 2014 Plan, 233,722 shares of the Company’s common stock were initially reserved for the issuance of stock options to employees, directors, and consultants, under terms and provisions established by the Board of Directors. Under the terms of the 2014 Plan, options may be granted at an exercise price not less than fair market value. For employees holding more than 10% of the voting rights of all classes of stock, the exercise prices for incentive stock options may not be less than 110% of fair market value, as determined by the Board of Directors. The terms of options granted under the 2014 Plan may not exceed ten years.

In June 2020, the adoption of an amendment to the 2014 Plan to eliminate the evergreen provision and set the number of shares of common stock reserved for issuance thereunder to 2,183,692 shares was approved by the Company’s stockholders.

In June 2022, the shareholder approved an additional 750,000 shares to be reserved for the issuance of stock options to employees, directors, and consultants, under terms and provisions established by the Board of Directors.

Stock Options

The number of shares, terms, and vesting periods are determined by the Company’s Board of Directors or a committee thereof on an option by option basis. Options generally vest ratably over service periods of up to four years and expire ten years from the date of grant.

Stock option activity for the nine months ended September 30, 2023 is represented in the following table:

			Options Outstanding
	Shares					Weighted- Average
	Available		Number of			Exercise
	for Grant		Shares			Price
Balances at December 31, 2022	396,014		2,111,379		$	7.36
Options granted	(54,000	)	54,000		$	0.46
Options cancelled	113,060		(62,435	)	$	1.72
Balances at March 31, 2023	455,074		2,102,944		$	7.35
Options granted	(377,500	)	377,500		$	0.16
Options cancelled	167,868		(157,868	)	$	0.16
Balances at June 30, 2023	245,442		2,322,576		$	6.18
Options granted	(185,000	)	185,000		$	0.08
Options cancelled	65,827		(45,827	)	$	1.66
Balances at September 30, 2023	126,269		2,322,576		$	6.27

The Company estimated the fair value of options using the BSM option valuation model. The fair value of options is being amortized on a straight-line basis over the requisite service period of the awards. The fair value of the options granted during the three and nine month periods ended September 30, 2023 and 2022 were estimated using the following assumptions:

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2023			2022			2023			2022
Expected term (in years)		6.00			6.00			6.00			6.00
Expected volatility		99%-100	%		99%-100	%		99%- 100	%		99%- 100	%
Risk-free interest-rate		4.43	%		2.44% - 3.03	%		3.31% - 4.43	%		1.72% - 3.03	%
Dividend yield		0	%		0	%		0	%		0	%

During the three and nine month periods ended September 30, 2023, the Company granted options to purchase 185,000 and 616,500 shares, respectively, with a weighted-average grant date fair value of $0.08 and $0.16 per share, respectively. During the three and nine month periods ended September 30, 2022, the Company granted options to purchase 35,000 and 379,569 shares with a weighted-average grant date fair value of $1.53 and $1.00 per share, respectively.

There were no options exercised during the three and nine month periods ended September 30, 2023 and 2022.

Stock-Based Compensation

The following table presents stock-based compensation expense related to stock options and RSUs (in thousands):

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2023		2022		2023		2022
	(unaudited)		(unaudited)		(unaudited)		(unaudited)
Research and development	$	135	$	159	$	428	$	385
General and administrative		65		190		227		776
Total	$	200	$	349	$	655	$	1,161

As of September 30, 2023, total unrecognized stock-based compensation expenses related to unvested stock options and RSUs was approximately $0.6 million, which is expected to be recognized on a straight-line basis over a weighted-average period of approximately 2.3 years.