Stock-Based Compensation

6 Months Ended

Jun. 30, 2025

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

12. Stock-Based Compensation

Equity Plans

At the closing of the Merger, the Company assumed the 2019 Plan.

In connection with the Merger, AlloVir’s stockholders approved an amendment to AlloVir's 2020 Stock Option and Grant Plan (as amended, the “2020 Plan” and together with the 2019 Plan, the “Equity Plans”) to increase the number of shares reserved for

future issuance under the 2020 Plan, which is subject to an annual increase on January 1 of each year from 2026 and thereafter, such that the number of shares of common stock reserved and available for issuance under the 2020 Plan is cumulatively increased by 5% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or such lesser number of shares as approved by the plan administrator; to establish the maximum aggregate number of shares of stock that may be issued in the form of incentive stock options (“ISOs”) shall not exceed 15,250,000 and to extend the term of the 2020 Plan to the tenth anniversary of the closing of the Merger.

Under the Equity Plans, the Company may grant ISOs, nonqualified stock options (“NSO”), restricted stock awards (“RSAs”), restricted stock unit awards and other stock awards to the Company’s employees, officers, non-employee directors, consultants, and advisors. Options to purchase common stock may be granted at a price not less than the fair market value as established by the board of directors in the case of both NSOs and ISOs. Stock option grants under the Equity Plans generally vest over four years. All options expire no later than ten years from the date of grant. The exercise price of ISOs granted to an employee who owns more than 10% of the voting power of all classes of stock of the Company shall be no less than 110% of the estimated fair market value of the underlying common stock on the grant date, and the contractual term is no longer than five years.

As of June 30, 2025, 1,588,703 shares of common stock had been authorized for issuance and 222,724 shares were available for future grants under the 2019 Plan and 2,269,474 shares of common stock had been authorized for issuance and 1,264,410 shares were available for future grants under the 2020 Plan.

Stock Options

The Black-Scholes option pricing model, used to estimate the fair value of stock-based awards, requires the use of the following assumptions:

•Fair Value of Common Stock. Prior to the Merger, the fair market value of Legacy Kalaris' common stock was determined by the board of directors of Legacy Kalaris with assistance from management of Legacy Kalaris and external valuation experts. The approach to estimating the fair market value of common stock is consistent with the methods outlined in the American Institute of Certified Public Accountants’ Accounting and Valuation Guide, Valuation of Privately- Held-Company Equity Securities Issued as Compensation (the “Practice Aid”). After the closing of the Merger, the fair value of common stock is the Company’s closing price per share on the Nasdaq Global Market on the grant date.

•Expected Term. The expected term of options granted represents the period of time that the options are expected to be outstanding. Due to the lack of historical exercise history, the expected term of the Company’s employee and non-employee stock options has been determined by calculating the midpoint of the contractual term of the options and the weighted-average vesting period.

•Expected Volatility. The expected stock price volatility assumption was determined by examining the historical volatilities for comparable public companies, as the Company did not have any trading history for the common stock.

•Risk-Free Interest Rate. The risk-free interest rate assumption is based on the U.S. Treasury zero-coupon issued in effect at the time of grant for periods corresponding with the expected term of the option.

•Dividends. The Company has not paid any dividends on its common stock since inception and does not anticipate paying any dividends in the foreseeable future. Consequently, an expected dividend yield of zero was used.

A summary of option activity under the Equity Plans for the six months ended June 30, 2025 is as follows:

	Outstanding Awards
	Number of Shares		Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2024		1,144,690	$	0.81		9.23	$	20,160
Options granted		843,943		7.31
Outstanding as of June 30, 2025		1,988,633	$	3.57		9.17	$	2,128
Vested and expected to vest as of June 30, 2025		1,988,633	$	3.57		9.17	$	2,128
Exercisable as of June 30, 2025		497,265	$	0.93		8.54	$	920

RSAs

In February 2022, the Company issued RSAs to its former president for 203,670 shares and a consultant for 13,577 shares, in each case, at a purchase price of $0.005 per share under the 2019 Plan. The shares related to the former president’s award vest monthly over four years starting from January 2021, while the shares related to the consultant’s award vest monthly over six years starting from January 2020. If and when a RSA vests, the Company will issue one share of common stock for each whole RSA that has vested, subject to satisfaction of the employee's tax withholding obligations. The unvested RSAs are subject to the Company’s right of repurchase upon termination of services at a repurchase price equal to their original purchase price. Shares purchased pursuant to these awards participate in dividends and voting, are legally outstanding, and are presented as outstanding shares; however, for accounting purposes, shares purchased by employees pursuant to RSAs are not considered issued until they vest according to their respective vesting schedules. Unvested awards are excluded from the calculation of net loss attributable to common stockholders as these are considered contingently issuable shares and require services to be performed as these shares continue to vest. Proceeds received from the issuance of RSAs are recorded as a share repurchase liability within accrued expenses and other current liabilities on the condensed consolidated balance sheet and reclassified to additional paid-in capital as such awards vest.

A summary of RSAs activity under the 2019 Plan for the six months ended June 30, 2025 is as follows:

	Restricted Stock Awards			Weighted Average Grant Date Fair Value
Unvested as of December 31, 2024		1,839		$	1.71
Vested		(848	)		1.71
Unvested as of June 30, 2025		991		$	1.71

2020 Employee Stock Purchase Plan

The Company can issue common stock shares to its employees under the 2020 Employee Stock Purchase Plan (the “2020 ESPP”). The number of shares of common stock reserved and available for issuance under the 2020 ESPP is cumulatively increased on each January 1 by the lesser of (i) 53,161 shares of common stock, (ii) 1% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, and (iii) such number of shares of common stock as determined by the plan administrator. On June 30, 2025, there was an aggregate of 119,326 shares reserved for future issuance under the 2020 ESPP.

The ESPP allows eligible employees to authorize payroll deductions of up to 15% of their base salary or wages up to $25,000 annually to be applied toward the purchase of shares of the Company's common stock on the last trading day of the offering period. Participating employees will purchase shares of the Company's common stock at a discount of up to 15% on the lesser of the closing price of the Company's common stock on the Nasdaq Global Market (i) on the first trading day of the offering period or (ii) the last day of any offering period. The Company utilizes the Black Scholes option pricing model to compute the fair market value of the shares and stock-based compensation expense is recognized over the offering period. Six-month offering periods commence each January 1 and July 1 during the term of the plan, with the plan administrator having the right to establish different offering periods.

The Company did not issue shares of common stock under the 2020 ESPP during the three and six months ended June 30, 2025.

Stock-Based Compensation Expense

Stock-based compensation expense included in the Company’s condensed consolidated statements of operations for the three and six months ended June 30, 2025 and 2024 is as follows (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2025		2024		2025		2024
Research and development expenses	$	213	$	143	$	307	$	150
General and administrative expenses		378		179		658		203
Total stock-based compensation expense	$	591	$	322	$	965	$	353