In January 2023, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with the institutional accredited investors named therein (the “Investors”), pursuant to which the Company issued and sold to the Investors in a private placement (the “Private Placement”) pre-funded warrants (the “Pre-Funded Warrants”) to purchase an aggregate of 3,090,908 shares (the “Warrant Shares”) of the Company’s common stock. Each Pre-Funded Warrant has an exercise price of $0.10 per Warrant Share. The purchase price per Pre-Funded Warrant was $5.40. The Company received net proceeds of $16.6 million in the Private Placement, after deducting $0.1 million of offering expenses.

The Pre-Funded Warrants issued in the Private Placement provide that the holder of the Pre-Funded Warrants will not have the right to exercise any portion of its Pre-Funded Warrants if such holder, together with its affiliates and any other persons whose beneficial ownership of common stock would be aggregated with the holder for purposes of Section 13(d) or Section 16 of the Securities Exchange Act of 1934, as amended, would beneficially own in excess of 35% of the number of shares of common stock outstanding immediately after giving effect to such exercise. The Warrant Shares will also be subject to certain registration rights under the Company’s Amended and Restated Investors’ Rights Agreement. As of December 31, 2023, none of the Pre-Funded Warrants have been exercised.

In February 2023, in connection with entering into the Purchase Agreement with its founder, a related party who is the former chief executive officer of the Company and a greater than 5% owner of the Company's common stock at the time of the transaction, and other stockholders, the Company repurchased 908,644 shares of common stock for an aggregate price of $3.0 million. The repurchased common stock was subsequently retired in March 2023. The Company recorded the shares repurchased using the cost method.

In December 2019, the board of directors of the Company (the “Board”) adopted the 2019 Equity Incentive Plan (the “2019 Plan”). The 2019 Plan provides for the grant of share-based awards, including stock options and restricted stock units, to employees, directors, and non-employee service providers of the Company. As of December 31, 2023, there are approximately 613,877 shares available for future grants. The number of shares of common stock reserved for issuance under the 2019 Plan automatically increases on January 1 of each calendar year, starting on January 1, 2020 and continuing through January 1, 2029, in an amount equal to the least of (i) 5% of the total number of shares of the Company’s capital stock issued and outstanding on the last day of the calendar month before the date of each automatic increase; (ii) 182,490 shares; or (iii) a lesser number of shares determined by the Company’s board of directors. Subject to this provision, the Company added 155,836 shares available for grant to the 2019 Plan effective January 1, 2024.

In January 2021, the Board adopted the 2021 Employee Stock Purchase Plan (the “2021 ESPP”). The purpose of the 2021 ESPP is to secure the services of new employees, to retain the services of existing employees and to provide incentives for such individuals to exert maximum efforts toward the Company’s success. The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Code for United States employees. As of December 31, 2023, there were approximately 119,378 shares available for future grants under the 2021 ESPP. The number of shares of common stock reserved for issuance under the 2021 ESPP automatically increases on January 1 of each calendar year, starting on January 1, 2022 and continuing through January 1, 2031, in an amount equal to the lesser of (i) 1% of the total number of shares of the Company’s capital stock issued and outstanding on the last day of the calendar month before the date of each automatic increase; or (ii) a lesser number of shares determined by the Board. Subject to this provision, the Company added 31,167 shares available for grant to the 2021 ESPP effective January 1, 2024. As of December 31, 2023, no shares of common stock had been purchased under the 2021 ESPP.

In March 2022, the Board adopted the 2022 Inducement Plan. The 2022 Inducement Plan is a non-stockholder approved stock plan under which the Company may grant equity awards to induce highly-qualified prospective officers and employees who are not currently employed by the Company to accept employment and provide them with a proprietary interest in the Company. The Company intends that the 2022 Inducement Plan be reserved for persons to whom the Company may issue securities without stockholder approval as an inducement pursuant to Nasdaq Marketplace Rule 5635(c)(4). The number of shares of common stock reserved for issuance under the 2022 Inducement Plan was initially determined to be 100,000 shares. As of December 31, 2023, there were 100,000 shares available for future grants under the 2022 Inducement Plan.

A summary of the Company’s stock option activity is as follows:


	Number of Shares			Weighted Average Exercise Price		Weighted Remaining Contract Term (in years)		Aggregate Intrinsic Value (in thousands)
Balance as of December 31, 2022		330,860		$	16.49		9.1	$	—
Granted		164,247			3.83
Exercised		—			—
Forfeited/Expired		(2,069	)		7.19
Balance as of December 31, 2023		493,038		$	12.31		8.3	$	5,436
Exercisable and vested at December 31, 2023		163,388		$	22.58		8.1	$	427
Vested and expected to vest as of December 31, 2023		493,038		$	12.31		8.3	$	5,436

The weighted average fair value of options to purchase common stock granted in the years ended December 31, 2023 and 2022 was $2.83 and $6.41, respectively.

The fair value of each stock option award is estimated on the grant-date using the Black-Scholes option pricing model. The inputs used below are subjective and require significant judgment to determine.


	Years Ended December 31,
	2023			2022
Expected term (in years)		6.0			6.0
Risk-free interest rate		4.1	%		3.2	%
Expected volatility		84.9	%		81.8	%
Dividend rate	—%			—%
Fair value of common stock	$	2.8		$	6.4

Risk-free interest rate. The Company bases the risk‑free interest rate assumption on the United States Treasury’s rates for United States Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued.

Expected volatility. Due to our limited operating history and lack of Company-specific historical or implied volatility, the expected volatility assumption was determined by examining the historical volatilities of a group of industry peers whose share prices are publicly available, and is calculated based on a period consistent with the expected term of the option.

Expected term. The expected term represents the period of time that options are expected to be outstanding. Because the Company does not have historical exercise behavior, it determines the expected life assumption using the simplified method, which is an average of the contractual term of the option and its vesting period.

Expected dividend yield. The Company bases the expected dividend yield assumption on the fact that it has never paid cash dividends and has no present intention to pay cash dividends.

The 2019 Plan provides for the award of restricted stock units. During the year ended December 31, 2023, the Company granted restricted stock units to employees that were subject to time-based vesting conditions that lapse between two and three years from date of grant, assuming continued employment.

A summary of the Company’s restricted stock unit activity from January 1, 2023 to December 31, 2023 is as follows:


	Number of Shares			Weighted Average Grant Date Fair Value
Unvested as of December 31, 2022		—		$	—
Granted		99,807			3.70
Exercised		—			—
Forfeited/Expired		(1,240	)		3.70
Unvested as of December 31, 2023		98,567		$	3.70

The allocation of stock-based compensation expense was as follows (in thousands):


	Years Ended December 31,
	2023		2022
Research and development	$	340	$	638
General and administrative		631		1,333
Total stock-based compensation expense	$	971	$	1,971

At December 31, 2023, the unrecognized compensation cost related to outstanding time-based options was $1.5 million and is expected to be recognized as expense over approximately 2.6 years.

At December 31, 2023, the total compensation cost related to unvested restricted stock units granted under the 2019 Plan but not yet recognized was approximately $0.3 million, which is expected to be recognized over a weighted-average period of approximately 2.2 years.