Stock-Based Compensation

3 Months Ended

Dec. 31, 2024

Stock-Based Compensation

Stock-Based Compensation

10.  Stock-Based Compensation

2024 Equity Incentive Plan

In December 2015, the Company adopted the 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan provided for the grant of stock options, stock appreciation rights, restricted stock awards, restricted stock units (“RSUs”) awards, performance stock awards and other forms of equity compensation to Company employees, directors and consultants. In August 2024, the Company’s stockholders approved the amendment and restatement of the 2015 Plan and, in connection with amending and restating the 2015 Plan, the name of the 2015 Plan was updated to the Outlook Therapeutics, Inc. 2024 Equity Incentive Plan (the “2024 Plan”). The 2024 Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, RSU awards, performance stock awards and other forms of equity compensation to Company employees, directors and consultants. The aggregate number of shares of common stock authorized for issuance pursuant to the Company’s 2024 Plan is 7,303,677. As of December 31, 2024, there were 4,287,050 shares available for grant under the 2024 Plan.

Stock options and RSUs are granted under the Company’s 2024 Plan and generally vest over a period of one to four years from the date of grant and, in the case of stock options, have a term of 10 years. The Company recognizes the grant date fair value of each option and RSU over its vesting period.

The Company recorded stock-based compensation expense in the following expense categories of its unaudited interim consolidated statements of operations for the three December 31, 2024 and 2023:

	Three months ended December 31,
	2024		2023
Research and development	$	110,029	$	231,416
General and administrative		3,562,391		1,041,195
	$	3,672,420	$	1,272,611

Stock options

As of December 31, 2024, options to purchase common stock of the Company outstanding under the 2024 Plan were as follows:

				Weighted
				Average
		Weighted		Remaining
	Number of	Average		Contractual	Aggregate
	Shares	Exercise Price		Term (Years)	Intrinsic Value
Balance at October 1, 2024	1,946,646	$	19.51
Granted	1,179,276		5.22
Forfeited	(304,636)		10.25
Expired	(4,435)		46.78
Balance at December 31, 2024	2,816,851	$	14.49	8.2	$	—
Vested and exercisable at December 31, 2024	1,375,258	$	22.83	6.7	$	—

The aggregate intrinsic value represents the total amount by which the fair value of the common stock subject to options exceeds the exercise price of the related options.

The weighted average grant date fair value of the options awarded to employees for the three months ended December 31, 2024 and 2023 was $4.67 and $5.20 per option, respectively. The fair value of the options was estimated on the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:

	Three months ended December 31,
	2024		2023
Risk-free interest rate	3.5	%	4.6	%
Expected term (years)	5.5		5.5
Expected volatility	134.0	%	130.6	%
Expected dividend yield	—		—

As of December 31, 2024, there was $6,496,794 of unrecognized compensation expense that is expected to be recognized over a weighted-average period of 0.8 years.

Performance-based stock options

The Company granted certain officers of the Company option awards whose vesting is contingent upon meeting company-wide performance goals. The performance stock options were granted “at-the-money” and have a term of 10 years.

The fair value of each option grant under the performance share option plan was estimated on the date of grant using the same option valuation model used for non-statutory options above. Compensation expense for performance-based stock options is only recognized when management determines it is probable that the awards will vest.

A summary of the activity under the performance share option plan as of December 31, 2024 and changes during the three months then ended are presented below.

				Weighted
				Average
		Weighted		Remaining
	Number of	Average		Contractual	Aggregate
	Shares	Exercise Price		Term (Years)	Intrinsic Value
Balance at October 1, 2024	666,500	$	7.94
Granted	—		—
Forfeited	(476,500)		6.78
Balance at December 31, 2024	190,000	$	10.85	8.6	$	—
Vested and exercisable at December 31, 2024	35,000	$	28.80	6.1	$	—

The vesting of the performance-based stock options is conditional upon FDA approval of ONS-5010/LYTENAVA. The expense for the performance-based stock options is not recognized until the performance conditions are deemed probable of achievement. The Company did not record any expense related to the performance-based stock options during the three months ended December 31, 2024 as the performance conditions were not deemed probable of being met. As of December 31, 2024, the Company assessed that the performance conditions related to the performance options granted were not probable of achievement. The assessment was based on the relevant facts and circumstances and therefore no compensation costs were recognized.