Stock-based Compensation

9 Months Ended

Sep. 30, 2021

Share-based Payment Arrangement [Abstract]

Stock-based Compensation

Note 11 - Stock-based Compensation

Stock Options

Stock options are generally issued with a per share exercise price equal to no less than fair market value of our common stock on the date of grant. Options granted under the 2018 Plan generally vest over a twelve- to 36-month period coinciding with their respective service periods. Options under the 2018 Plan generally have a term of five years. Certain stock options provide for accelerated vesting upon a change in control.

As of September 30, 2021, the Company had 2,857,184 shares of common stock available for issuance under the 2018 Plan.

The Company measures the fair value of stock options with service-based vesting criteria to employees, directors and consultants on the date of grant using the Black-Scholes option pricing model. The Black-Scholes valuation model requires the Company to make certain estimates and assumptions, including assumptions related to the expected price volatility of the Company’s stock, the period during which the options will be outstanding, the rate of return on risk-free investments, and the expected dividend yield for the Company’s stock.

The weighted-average assumptions used in the Black-Scholes option-pricing model used to calculate the fair value of options granted during the nine months ended September 30, 2021 were as follows:

Expected volatility	96.5	%
Expected dividend yield	—
Expected term (in years)	2.99
Risk-free interest rate	0.44	%

The weighted average grant date fair value of options granted during the nine months ended September 30, 2021 was $0.98 per share, as per the table above. 

Due to the Company’s limited operating history and lack of company-specific historical or implied volatility, the expected volatility assumption was determined based on historical volatilities from traded options of biotech companies of comparable size and stability, whose share prices are publicly available. The expected term of options granted to employees is calculated based on the mid-point between the vesting date and the end of the contractual term according to the simplified method as described in SEC Staff Accounting Bulletin 110 because the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term due to the limited period of time its awards have been outstanding. For non-employee options, the expected term of options granted is the contractual term of the options. The risk-free interest rate is determined by reference to the implied yields of U.S. Treasury securities with a remaining term equal to the expected term assumed at the time of grant. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company has not paid and does not intend to pay dividends.

The following table summarizes the stock option activity for the periods indicated as follows: 

	Number of Options			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (years)		Aggregate Intrinsic Value (1)
Outstanding at December 31, 2020		496,471		$	8.63		3.9	$	—
Granted		575,565		$	1.65		4.8	$	—
Exercised		—		$	—		—	$	—
Forfeited		(3,300	)	$	—		—	$	—
Expired		—		$	—		—	$	—
Outstanding at September 30, 2021		1,068,736		$	4.73		2.1	$	—
Exercisable at September 30, 2021		519,125		$	6.95		1.9	$	—

(1) The aggregate intrinsic value in the table was calculated based on the difference between the estimated fair market value of the Company’s stock and the exercise price of the underlying options. The estimated stock values used in the calculation were $1.73 and $1.51 per share for the year ended December 31, 2020 and the nine months ended September 30, 2021, respectively.

Restricted Stock Units

The following table summarizes restricted stock unit activity for the nine months ended September 30, 2021: 

	Number  of Units			Weighted Average Grant-Date Fair Value Per Unit
Outstanding as of December 31, 2020		32,072		$	2.01
Granted		—		$	—
Vested		(31,405	)	$	1.97
Forfeited		—		$	—
Outstanding as of September 30, 2021		667		$	1.80

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The stock-based compensation expense was recorded as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Research and development	$	1	$	2	$	2	$	7
Selling, general and administrative		213		160		548		446
Total stock-based compensation expense	$	214	$	162	$	550	$	453

The allocation between research and development and selling, general and administrative expense was based on the department and services performed by the employee or non-employee.

At September 30, 2021, the total compensation cost related to restricted stock units and unvested options not yet recognized was $782, which will be recognized over a weighted average period of 32 months, assuming the employees and non-employees complete their service period required for vesting.