Note 8 - Stock-based Compensation

6 Months Ended

Jun. 30, 2023

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

8.         Stock-Based Compensation

Stock-based compensation expense for the three and six months ended June 30, 2023 and 2022 was classified in the condensed consolidated statement of operations as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Research and development	$	146	$	174	$	229	$	548
General and administrative		1,482		1,270		2,666		2,470
Total	$	1,628	$	1,444	$	2,895	$	3,018

As of June 30, 2023, remaining unrecognized stock-based compensation cost from all plans to be recognized in future periods totaled $17.4 million.

Restricted Stock:

Prior to the adoption of the 2020 Plan, the Company issued restricted stock. A summary of the Company’s restricted stock activity during the three and six months ended June 30, 2023 is as follows:

	Shares			Fair Value
Weighted Average Fair Value	(In thousands)			Per Share
Unvested, December 31, 2022		193		$	1.74
Granted		—		$	—
Vested		(122	)	$	1.71
Forfeited or canceled		—		$	—
Unvested, June 30, 2023		72		$	1.79

As of June 30, 2023, the total unrecognized compensation cost related to stock compensation expense for restricted stock is $0.1 million, expected to be recognized over a weighted average period of 0.5 years.

2020 Plan

In June 2020, the Company’s board of directors adopted the 2020 Stock Option and Incentive Plan (the “2020 Plan”) and reserved 2.9 million shares of common stock for issuance under this plan. The 2020 Plan includes automatic annual increases. The increase on January 1, 2023 was 5.1 million shares. As of June 30, 2023, 5.2 million shares remain available for grant.

The 2020 Plan authorizes the board of directors or a committee of the board to grant incentive stock options, nonqualified stock options, restricted stock awards and restricted stock units ("RSUs") to eligible officers, employees, consultants and directors of the Company. Options generally vest over a period of four years and have a contractual life of ten years from the date of grant.

Stock Options:

The following table summarizes the stock option activity for the 2020 Plan:

				Weighted		Weighted
	Number of			Average		Average		Aggregate
	Unvested			Exercise		Remaining		Intrinsic
	Options			Price		Contractual		Value
	(In thousands)			Per Share		Term (In years)		(In thousands)
Outstanding at December 31, 2022		5,378		$	3.89		8.24	$	6,316
Granted		2,613		$	3.80		9.64
Exercised		(12	)	$	2.43
Forfeited/canceled		(228	)	$	4.75
Outstanding at June 30, 2023		7,751		$	3.84		8.51	$	1,814
Vested at June 30, 2023		3,233		$	4.34		7.75	$	569

For the six months ended June 30, 2023, the weighted average grant date fair value for options granted was $2.85. The intrinsic value for options vested as of June 30, 2023, was $0.6 million. As of June 30, 2023, the total unrecognized compensation cost related to outstanding options was $11.3 million, to be recognized over a weighted average period of 3 years.

For the six months ended June 30, 2022, the weighted average grant date fair value for options granted was $2.29. The intrinsic value for options vested as of June 30, 2022, was $47 thousand.

The weighted average assumptions used in the Black-Scholes pricing model to determine the fair value of stock options granted during the six months ended June 30, 2023 and 2022 were as follows:

	Six Months Ended June 30,
	2023			2022
Expected term (in years)		6.0			5.8
Risk-free rate		3.8	%		1.9	%
Expected volatility		88	%		90	%
Expected dividend yield		—			—

As of January 2023, the Company used the historical price of only its own stock to determine the expected volatility. Prior to this, a group of industry peers including the Company’s stock price was used.

RSUs:

The following table summarizes the RSU activity for the 2020 Plan:

	Shares (In thousands)		Weighted Average Price Per Share		Weighted Average Fair Value (In thousands)
Unvested, December 31, 2022		900	$	3.83	$	3,447
Granted		900		3.93		3,537
Vested		—		—		—
Forfeited or canceled		—		—		—
Unvested, June 30, 2023		1,800	$	3.88	$	6,984

The weighted average price per share is the weighted grant price based on the closing market price of each of the stock grants. The weighted average fair value is the weighted average share price times the number of shares.

As of June 30, 2023, remaining unrecognized compensation cost related to RSUs to be recognized in future periods totaled $5.9 million, which is expected to be recognized over a weighted average period of 3 years.