In 2019, Cyclerion adopted share-based compensation plans. Specifically, Cyclerion adopted the 2019 Employee Stock Purchase Plan (“2019 ESPP”) and the 2019 Equity Incentive Plan (“2019 Equity Plan”). Under the 2019 ESPP, eligible employees may use payroll deductions to purchase shares of stock in offerings under the plan, and thereby acquire an interest in the future of the Company. The 2019 Equity Plan provides for stock options, restricted stock awards ("RSAs") and restricted stock units (“RSUs”).

Cyclerion also mirrored two of Ironwood Pharmaceuticals, Inc. ("Ironwood") existing plans, the Amended and Restated 2005 Stock Incentive Plan (“2005 Equity Plan”) and the Amended and Restated 2010 Employee, Director and Consultant Equity Incentive Plan (“2010 Equity Plan"). These mirror plans were adopted to facilitate the exchange of Ironwood equity awards for Cyclerion equity awards upon the Separation as part of the equity conversion. As a result of the Separation and in accordance with the EMA, employees of both companies retained their existing Ironwood vested options and received a pro-rata share of Cyclerion options, regardless of which company employed them post-Separation. For employees that were ultimately employed by Cyclerion, unvested Ironwood options and RSUs were converted to unvested Cyclerion options and RSUs.

The following table provides share-based compensation reflected in the Company’s consolidated statements of operations and comprehensive loss for the years ended December 31, 2024 and 2023 (in thousands):


	Year Ended December 31,
	2024		2023
Research and development	$	91	$	421
General and administrative		534		646
	$	625	$	1,067

Stock options granted under the Company’s equity plans generally have a ten-year term and vest over a period of four years, provided the individual continues to serve at the Company through the vesting dates. Options granted under all equity plans are exercisable at a price per share not less than the fair market value of the underlying common stock on the date of grant. The estimated fair value of options, including the effect of estimated forfeitures, is recognized over the requisite service period, which is typically the vesting period of each option.


						Weighted
				Weighted		Average		Average
				Average		Remaining		Intrinsic
	Number			Exercise		Contractual		Value (in
	of Options			Price		Term (Years)		thousands)
Outstanding as of December 31, 2023		291,368		$	189.09		4.6	$	—
Granted		55,849		$	3.30
Exercised		—		$	—
Cancelled or forfeited		(11,769	)	$	165.74
Outstanding as of December 31, 2024		335,448		$	158.98		4.7	$	—
Exercisable at December 31, 2024		258,558		$	199.26		3.5	$	—

During the years ended December 31, 2024 and 2023, the Company granted stock options to purchase an aggregate of 55,849 shares and 4,000 shares, respectively, at weighted average grant date fair values per option share of $2.80 and $2.95 respectively.

There were no options exercised during the year ended December 31, 2024 and 2023.

As of December 31, 2024, the unrecognized share-based compensation expense, net of estimated forfeitures, related to all unvested time-based stock options held by the Company’s employee and non-employees is $0.4 million and the weighted average period over which that expense is expected to be recognized is 3.64 years.

The weighted-average Black-Scholes assumptions used in estimating the fair value of the stock options granted by Cyclerion during the years ended December 31, 2024 and 2023 were as follows:


	Year ended December 31,
	2024			2023
Weighted average risk-free interest rate		3.64	%		3.47	%
Expected dividend yield		—			—
Expected option term (in years)		6.0			6.0
Expected stock price volatility		111.97	%		93.19	%

For the years ended December 31, 2024 and 2023, expected volatility was estimated using an average of the historical volatility of the common stock of a group of similar companies that were publicly traded. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available.

The Company has granted certain employees performance-based options to purchase shares of common stock. These options are subject to performance-based milestone vesting. During the year ended December 31, 2024 and 2023, there were no shares that vested as a result of performance milestone achievements. No share-based compensation expense related to these performance-based options was recognized during the years ended December 31, 2024, and 2023, respectively.

The Company also has previously granted to certain employees stock options containing market conditions that vest upon the achievement of specified price targets of the Company’s share price for a period through December 31, 2024. Vesting is measured based upon the average closing price of the Company’s share price for any thirty consecutive trading days, subject to certain service requirements. Stock compensation cost is expensed on a straight-line basis over the derived service period for each stock price target within the award, ranging from approximately 4.0 to 4.6 years. The Company accelerates expense when a stock price target is achieved prior to the derived service period. The Company does not reverse expense recognized when the share price target(s) are ultimately not achieved but expense is reversed when a stock award recipient has a break in service prior to the completion of the derived service period. During the year ended December 31, 2024, 7,500 stock options containing market conditions were forfeited and there were no outstanding stock options containing market conditions as of December 31, 2024.

A summary of stock awards containing market conditions activity for the year ended December 31, 2024 is as follows:


						Weighted
				Weighted		Average		Aggregate
				Average		Remaining		Intrinsic
	Number of			Exercise		Contractual		Value (in
	Options			Price		Term (years)		thousands)
Outstanding as of December 31, 2023		7,500		$	40.20		5.9	$	—
Granted		—			—		—		—
Exercised		—			—		—		—
Cancelled or forfeited		(7,500	)	$	40.20		—	$	—
Outstanding as of December 31, 2024		—		$	—		—	$	—
Exercisable at December 31, 2024		—		$	—		—	$	—

No stock options containing market conditions were granted during the years ended December 31, 2024 and 2023.

The Company granted 65,000 and 200,000 RSAs during the year ended December 31, 2024 and 2023, respectively. The fair value of all RSAs is based on the market value of the Company’s common stock on the date of grant. Compensation expense, including the effect of estimated forfeitures, is recognized over the applicable service period.

A summary of RSA activity for the years ended December 31, 2024 is as follows:


				Weighted Average
	Number			Grant Date
	of Shares			Fair Value
Unvested as of December 31, 2023		170,937		$	2.28
Granted		65,000			3.35
Vested		(71,763	)		2.61
Forfeited		—			—
Unvested as of December 31, 2024		164,174		$	2.55

As of December 31, 2024, the unrecognized share-based compensation expense, net of estimated forfeitures, related to all unvested RSAs held by the Company’s directors is $0.4 million and the weighted average period over which that expense is expected to be recognized is 2.68 years.