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Liabilities, Convertible Preferred Stock and Stockholders' (Deficit) Equity
 9 Months Ended
Sep. 30, 2023
Share-Based Payment Arrangement [Abstract]  
Liabilities, Convertible Preferred Stock and Stockholders' (Deficit) Equity Liabilities, Convertible Preferred Stock and Stockholders' (Deficit) Equity
Registered Direct Offering
In May 2022, the Company issued and sold 430,107 shares of common stock at an offering price of $40.00 per share and pre-funded warrants to purchase up to 694,892 shares of common stock at an offering price of $39.9975 per warrant (representing the price per share of common stock sold in the offering minus the $0.0025 exercise price per warrant) in a registered direct offering pursuant to a shelf registration statement on Form S-3. The net proceeds to the Company from this offering were approximately $42.9 million, after deducting placement agent fees and offering costs of $2.1 million.
Pre-Funded Warrants
In February 2019, April 2020 and May 2022, the Company issued pre-funded warrants to purchase the Company’s common stock in underwritten public offerings at the offering price of the common stock, less the $0.0025 per share exercise price of each warrant. The warrants were recorded as a component of stockholders’ (deficit) equity within additional paid-in capital and have no expiration date. Per the terms of the warrant agreements, the outstanding warrants to purchase shares of common stock may not be exercised if the holder’s ownership of the Company’s common stock would exceed 4.99% (“Maximum Ownership Percentage”), or 9.99% for certain holders. By written notice to the Company, each holder may increase or decrease the Maximum Ownership Percentage to any other percentage (not in excess of 19.99% for the majority of such warrants). The revised Maximum Ownership Percentage would be effective 61 days after the notice is received by the Company.
As of September 30, 2023, the following pre-funded warrants for common stock were issued and outstanding:
Issue DateExpiration DateExercise PriceNumber of Warrants Outstanding
February 8, 2019None$0.0025 —
April 30, 2020None$0.0025 —
May 20, 2022None$0.0025 250,000
Total pre-funded warrants250,000
Stock-Based Compensation
2016 Equity Incentive Plan
The 2016 Equity Incentive Plan (“2016 Plan”) provides for an automatic increase in the number of shares reserved for issuance thereunder on January 1 of each year for the remaining term of the plan (through 2028) equal to (a) 4.0% of the number of issued and outstanding shares of common stock on December 31 of the immediately preceding year, or (b) a lesser amount as approved by the Board each year. As a result of this provision, on January 1, 2023 and January 1, 2022, an additional 104,560 and 78,968 shares, respectively, became available for issuance under the 2016 Plan.
In July 2020, the Company granted 9,128 restricted stock units ("RSUs") to certain employees, with vesting terms subject to regulatory, commercial, and clinical milestones, in addition to a service condition. As of September 30, 2023, none of these RSUs had vested and all RSUs were forfeited since the performance milestones were not met within the required time frame. No stock-based compensation expense was recognized on these awards.
On June 22, 2023, concurrent with the closing of the Asset Acquisition, the Board approved an amendment of the 2016 Plan to eliminate the per-participant annual award limits originally intended to comply with the qualified performance-based compensation exception set forth in Section 162(m) of the Internal
Revenue Code, in light of the repeal of such exception pursuant to the Tax Cuts and Jobs Act of 2017. In addition, the Company approved 2,720,033 options contingent on stockholder approval to certain members of the Board, legacy Aeglea employees and consultants under the 2016 Plan. These awards are in excess of the shares available for issuance under the 2016 Plan and require stockholder approval before being granted. Accordingly, no expense has been recognized on these contingent awards since they are contingent on stockholder approval.
As of September 30, 2023, the 2016 Plan had 293,497 shares available for future issuance.
2018 Equity Inducement Plan
During the nine months ended September 30, 2023, the Board approved an increase of 2,800,000 in the number of shares reserved for issuance to the 2018 Equity Inducement Plan and granted 3,583,880 inducement awards to new hires. The grant-date fair value of these inducement awards will be recognized as expense on a pro-rata basis over the vesting period.
The awards have an exercise price equal to the grant date closing price of the Company's common stock, vest ratably over four years, and have a ten-year exercise period from the grant date.
Spyre 2023 Equity Incentive Plan
On June 22, 2023, in connection with the Asset Acquisition, the Company assumed the Amended and Restated Spyre 2023 Equity Incentive Plan (the "Spyre Equity Plan") and its outstanding and unexercised stock options, which were converted to options to purchase 2,734 shares of Aeglea common stock. The acquisition-date fair value of these grants will be recognized as an expense on a pro-rata basis over the vesting period.
Parapyre Option Obligation
On June 22, 2023, in connection with the Asset Acquisition, the Company assumed the Parapyre Option Obligation which provided for an annual equity grant of options to purchase 1% of the then outstanding shares of Spyre's common stock, on a fully diluted basis, on the last business day of each calendar year during the term of the Paragon Agreement, at the fair market value determined by the board of directors of Spyre. As a result of the Asset Acquisition the Parapyre Option Obligation shall continue and Parapyre shall be entitled to receive the equivalent shares of the Company with the same terms. As of September 30, 2023, the pro-rated estimated fair value of the options to be granted on December 31, 2023, was approximately $3.0 million, of which $0.1 million was recognized as part of the liabilities assumed with the Asset Acquisition. For the three and nine months ended September 30, 2023, $2.7 million and $2.9 million, respectively, was recognized as stock compensation expense related to the Parapyre Option Obligation. As of September 30, 2023, the unamortized expense related to the Parapyre Option Obligation was $2.1 million.
The following table summarizes the Company’s stock awards granted under all plans for each of the periods indicated:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
GrantsWeighted Average Grant Date Fair ValueGrantsWeighted Average Grant Date Fair ValueGrantsWeighted Average Grant Date Fair ValueGrantsWeighted Average Grant Date Fair Value
Stock options1,044,667$14.50 50,806$16.75 3,867,366$9.65 153,686$52.50 
2016 Employee Stock Purchase Plan
Under the Company’s 2016 Employee Stock Purchase Plan (“2016 ESPP”), the Company issued and sold 2,496 shares for aggregate cash proceeds of less than $0.1 million during the nine months ended September 30, 2023. There were 6,073 shares issued and sold under the 2016 ESPP for aggregate cash proceeds of $0.2 million during the nine months ended September 30, 2022.
Stock-based Compensation Expense
Total stock-based compensation expense related to all plans was as follows (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
Research and development (1)
$2,965 $639 $4,136 $2,031 
General and administrative1,820 926 4,269 3,653 
Total stock-based compensation expense$4,785 $1,565 $8,405 $5,684 
(1) For the three and nine months ended September 30, 2023, $2.7 million and $2.9 million, respectively, was recognized as stock compensation expense related to the Parapyre Option Obligation. There were no such expenses for the three and nine months ended September 30, 2022.
The following table summarizes the weighted-average Black-Scholes option pricing model assumptions used to estimate the fair value of stock options granted under the Company’s 2016 Plan, and the shares purchasable under the 2016 ESPP during the periods presented:
Three Months Ended
September 30,		Nine Months Ended
September 30,
2023202220232022
2016 Plan
Expected term (in years)6.086.026.045.96
Expected volatility101%85%111%83%
Risk-free interest4.28%3.16%4.07%2.43%
Dividend yield————
 
2016 ESPP
Expected term (in years)0.500.500.490.49
Expected volatility222%95%181%84%
Risk-free interest5.293.264.99%1.95%
Dividend yield————