Note 6 - Stock Based Compensation

12 Months Ended

Dec. 31, 2024

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

6. Stock Based Compensation 

Stock Plan, Stock-based Compensation and Outstanding Awards

In October 2024, the Board of Directors of the Company approved the Company’s 2024 Stock Plan (the "2024 Stock Plan"), which replaced the 2015 Stock Plan. The awards under the 2024 Stock Plan can be in the form of stock options, stock awards, stock unit awards, or stock appreciation rights. All figures herein are taking into account the one-for-fifteen reverse stock split completed March 22, 2024.

Under the terms of the Company’s 2024 Stock Plan, as amended, and approved by its stockholders in October 2024, 1,000,000 shares of the Company’s common stock are available for grant to employees, non-employee directors and consultants. The 2024 Stock Plan provides for the grant of stock options, stock awards, stock unit awards, or stock appreciation rights. As of December 31, 2024, there were 119,166 shares remaining to be granted under the 2024 Stock Plan.

Stock-based compensation expense for the years ended December 31, 2024 and 2023 is as follows (in thousands):

	Year Ended December 31,
	2024		2023
General and administrative	$	1,310	$	1,439
Research and development		416		545
Total stock-based compensation	$	1,726	$	1,984

Each of the Company’s stock-based compensation arrangements are discussed below.

Stock Options

Stock option awards are generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant. Stock option awards generally have a 10-year contractual term and vest over a 4-year period for employees and over a 1 to 3-year period for directors from the grant date on a straight-line basis over the requisite service period. The grant-date fair value of stock options is determined using the Black-Scholes option-pricing model. Additionally, the Company’s stock options provide for full vesting of unvested outstanding options, in the event of a change of control of the Company.

The fair value of each stock option is estimated on the date of grant using the BSM model that uses the assumptions noted below. The expected term of the stock option awards was computed using the plain vanilla method as prescribed by the Securities and Exchange Commission Staff Accounting Bulletin 107 because the Company does not have sufficient data regarding employee exercise behavior to estimate the expected term. Beginning in 2020, the Company used the volatility of its own stock in the BSM as it now has sufficient historic data in its stock price. The risk-free rate for periods within the contractual life of the option is based on the US Treasury yield curve in effect at the time of grant.

The fair value of the option grants has been estimated, with the following weighted-average assumptions:

	Year Ended December 31,
	2024		2023
Risk-free interest rate		4.0% to 4.5%		3.9% to 4.6%
Volatility		89.1% to 98.9%		96.0% to 101.2%
Expected life (years)		5.1 to 6.3		5.5 to 6.3
Expected dividend yield		—%		—%

Stock option activity for the year ended December 31, 2024 is as follows:

	Number of Shares			Weighted Average Grant Date Fair Value		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding, December 31, 2023		249,492		$	43.35	$	56.70		7.9	$	378,606
Granted		542,667		$	2.01	$	2.52
Forfeited		(6,664	)	$	13.90	$	16.50
Expired		(967	)	$	15.44	$	18.30
Outstanding, December 31, 2024		784,528		$	15.03	$	19.60		8.9	$	—
Exercisable, December 31, 2024		156,413		$	60.35	$	80.04		6.2	$	—

Options granted during 2024 and 2023 have an aggregated grant date fair value of $1.1 million and $0.7 million, respectively, that was calculated using the Black-Scholes option-pricing model. At December 31, 2024, total compensation cost not yet recognized was $1.9 million and the weighted average period over which this amount is expected to be recognized is 2.7 years. The aggregate fair value of options vested was $1.2 million and $1.3 million in the years ended December 31, 2024 and 2023, respectively. 

The Company recorded stock compensation expense for the non-employee consulting agreements of $120,000 and $196,000 for the years ended December 31, 2024 and 2023, respectively. At December 31, 2024, there was $234,000 of unrecognized stock compensation expense related to the Company's equity-classified warrants.

Restricted Stock Units and Performance Restricted Stock Units

Restricted stock units (RSU) are granted with a grant date fair value determined using the closing price of the Company's common stock on the grant date. Restricted stock units vest annually in four equal installments. Additionally, the Company's restricted stock unit agreements provide for full vesting of the restricted stock award in the event of a change of control of the Company. 

Performance-based restricted stock units (PSU) are granted primarily to our executive officers and only vest when specific conditions are met based on pre-established performance goals for the Company. PSUs are expensed only when meeting those conditions are deemed probable.

RSU and PSU activity for the year ended December 31, 2024 is as follows:

	Number of Shares			Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Term (years)
Unvested Shares, December 31, 2023		93,895		$	15.49		7.3
Granted		340,834		$	2.48
Vested		(27,348	)	$	19.65
Unvested Shares, December 31, 2024		407,381		$	4.32		2.9

As of December 31, 2024, total compensation cost not yet recognized was $1.3 million and the weighted average period over which this amount is expected to be recognized is 2.9 years. In June 2023, the Company granted 65,292 shares of restricted stock units with a weighted average fair value of $9.00 per share at the date of grant (taking into account the reverse stock splits we have completed), which vest annually in four installments. In June 2022, the Company granted 30,156 shares of restricted stock units with a weighted average fair value of $22.35 per share (taking into account the reverse stock splits we have completed) at the date of grant, which vest annually in four equal installments. 

In December 2023, the Company granted to the Company's executive officers 73,334 performance-based restricted stock units (taking into account the reverse stock splits we have completed). Each PSU will vest upon the first of the following to occur: (a) a licensing transaction with a valuation, at the time, in excess of $150 million, which valuation shall be determined by the Board; (b) the filing of a new drug application; or (c) upon a Change in Control (as defined in the Plan), in each case subject to the respective executive officer's continued service with the Company as of each such vesting date. Recognition of stock-based compensation expense associated with these performance-based stock options commences when the performance condition is considered probable of achievement, using management’s best estimates, which consider the inherent risk and uncertainty regarding the future outcomes of the milestones. As of the date of issuance and through December 31, 2024, none of the performance goals were deemed probable, and as a result, no expense was recognized for these performance-based vesting awards.