Stock-Based Compensation

6 Months Ended

Jun. 30, 2024

Stock-Based Compensation [Abstract]

STOCK-BASED COMPENSATION

NOTE 10. STOCK-BASED COMPENSATION

On June 6, 2024, the Company’s 2024 Equity Incentive Plan (“2024 Plan”) and the 2024 Employee Stock Purchase Plan (“2024 ESPP”) were approved by its stockholders and became effective, superseding and replacing the Company’s 2021 Equity Incentive Plan (the “2021 Plan”) and the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), respectively. No further awards or purchase rights will be granted under the 2021 Plan or the 2021 ESPP.

Under the 2024 Plan, the Company can grant incentive stock options, nonstatutory stock options, restricted stock awards, stock appreciation rights, restricted stock units (“RSUs”), performance restricted stock units (“PSUs”), and other stock-based awards to employees, directors, and consultants. Under the 2024 ESPP, the Company can grant purchase rights to employees to purchase shares of common stock at a purchase price which is equal to 85% of the fair market value of common stock on the offering date or on the exercise date, whichever is lower.

On March 14, 2022, the 2022 Inducement Equity Incentive Plan became effective and it was amended on June 2, 2023 to increase the maximum number of shares available for grant thereunder (as amended, the “2022 Inducement Plan”). Under the 2022 Inducement Plan, the Company may grant nonstatutory stock options, restricted stock awards, stock appreciation rights, RSUs, performance awards and other awards, but only to an individual, as a material inducement to such individual to enter into employment with the Company or an affiliate of the Company, who (i) has not previously been an employee or director of the Company or (ii) is rehired following a bona fide period of non-employment with the Company.

Stock options under the 2024 Plan and the 2022 Inducement Plan may be granted for periods of up to 10 years and at prices no less than 100% of the fair market value of the shares on the date of grant, provided, however, that the exercise price of an incentive stock option (which cannot be granted pursuant to the 2022 Inducement Plan) granted to a 10% stockholder may not be less than 110% of the fair market value of the shares. Stock options granted to employees and non-employees generally vest ratably over four years.

As of June 30, 2024, 2,764,111 shares were reserved for issuance under the 2024 Plan, of which 1,880,221 shares were available for future grant and 883,890 shares were subject to outstanding awards including performance-based awards. As of June 30, 2024, 29,802 shares have been issued under the 2021 ESPP and 1,000,000 shares were reserved and available for future issuance under the 2024 ESPP. As of June 30, 2024, 550,000 shares were reserved for issuance under the 2022 Inducement Plan, of which 15,885 shares were available for future grant and 534,115 shares were subject to outstanding stock options.

Stock Option Activity

The following table summarizes the stock option activities, including performance-based stock options, under the 2024 Plan, 2021 Plan, the 2022 Inducement Plan and the Company’s 2019 Equity Incentive Plan for the six months ended June 30, 2024:

	Options Outstanding			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value (in thousands)
Balance, December 31, 2023		1,040,875		$	19.82		8.55	$	237
Options granted		590,517		$	19.69
Options exercised		(30,543	)	$	9.52
Options cancelled/forfeited		(57,097	)	$	25.59
Balance, June 30, 2024		1,543,752		$	19.76		8.63	$	8,091
Vested and expected to vest, June 30, 2024		1,543,752		$	19.76		8.63	$	8,091
Exercisable, June 30, 2024		452,181		$	20.88		7.27	$	2,840

 The aggregate intrinsic value represents the difference between the estimated fair value of the underlying common stock and the exercise price of outstanding, in-the-money options. The total intrinsic value of the options exercised during the three and six months ended June 30, 2024 was $0.1 million and $0.5 million, respectively, and during each of the three and six months ended June 30, 2023 was $0.4 million.

The total fair value of options that vested during the six months ended June 30, 2024 and 2023 was $3.2 million and $2.1 million, respectively. The weighted-average grant date fair value of options granted during the six months ended June 30, 2024 and 2023 was $16.88 and $14.45 per share, respectively.

Unrecognized stock-based compensation for stock options as of June 30, 2024 was $16.0 million, which is expected to be recognized over a weighted-average period of 3.0 years, including less than $0.1 million related to performance-based stock options, which is expected to be recognized over a weighted-average period of 0.5 years.

Performance-Based Stock Options 

The following table summarizes the performance-based stock options activity under the 2024 Plan and 2021 Plan for the six months ended June 30, 2024:

	Options Outstanding		Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value (in thousands)
Balance, December 31, 2023		46,394	$	14.19		7.06	$	24
Options granted		—	$
Options cancelled/forfeited		—	$
Balance, June 30, 2024		46,394	$	14.19		6.56	$	478
Vested and expected to vest, June 30, 2024		46,394	$	14.19		6.56	$	478
Exercisable, June 30, 2024		31,393	$	7.78		5.96	$	478

Restricted Stock Units (RSUs)

As of December 31, 2023 the Company had no unvested outstanding RSUs and no RSUs were granted during the six months ended June 30, 2024.

Performance Restricted Stock Units (PSUs)

The following table provides a summary of PSU activity under the 2024 Plan during the six months ended June 30, 2024:

	Number of Share		Weighted- Average Grant Date Fair Value
Unvested performance-based restricted stock units at December 31, 2023		—	$	—
Granted		20,000	$	21.90
Unvested performance-based restricted stock units at June 30, 2024		20,000	$	21.90
Outstanding performance-based restricted stock units at June 30, 2024		20,000	$	21.90

In June 2024, the Company granted PSUs for 20,000 shares that will vest in full if the closing price of the Company’s common stock on the Nasdaq Capital Market reaches or exceeds $35.00 per share (subject to adjustment for recapitalizations, stock splits and similar transactions) for thirty consecutive calendar days within two years from the grant date. If the vesting condition is not met within two years from the grant date, the PSUs will be forfeited. The Company concluded that issued PSUs are equity-based awards and include a market based vesting condition. The Company used a Monte Carlo simulation model to estimate the fair value of the PSUs with the following assumptions: common stock fair value of $23.95, which was the closing market price of the Company’s common stock at the grant date, volatility of 133.00%, risk free rate of 4.87%, vesting term of 2.0 years. Total estimated fair value of $0.4 million is recognized as stock-based compensation expense over the 0.4 years, the implied requisite service period from the grant date.

Employee Stock Purchase Plan

The Company issued 10,861 shares and 6,498 shares of common stock under the 2021 ESPP during the three and six months ended June 30, 2024 and 2023, respectively and recognized less than $0.1 million compensation expense related to the 2021 ESPP during each of the three and six months ended June 30, 2024 and 2023. The Company did not issue any shares of common stock under the 2024 ESPP during the three and six months ended June 30, 2024 and 2023 and did not recognize any compensation expense related to the 2024 ESPP during each of the three and six months ended June 30, 2024 and 2023. There was no unamortized stock-based compensation for shares issuable under the 2021 ESPP and 2024 ESPP as of June 30, 2024. The Company did not record any accrued expenses and other current liabilities related to contributions withheld as of June 30, 2024.  

Stock-Based Compensation Expense

The following table presents stock-based compensation expenses related to options, PSUs and RSUs granted to employees and non-employees, employee stock purchase plan awards and restricted common stock shares issued to founders (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
General and administrative	$	1,009	$	900	$	1,829	$	1,699
Research and development		473		491		822		959
	$	1,482	$	1,391	$	2,651	$	2,658

The Company recognized less than $0.1 million of stock-based compensation expense related to performance-based options, PSUs and RSUs during each of the three and six months ended June 30, 2024 and 2023.

Valuation of Stock Options

The grant date fair value of stock options was estimated using a Black-Scholes option-pricing model with the following assumptions:

	Three Months Ended June 30,		Six Months Ended June 30,
	2024	2023	2024	2023
Expected term (in years)	5.50-6.08	5.44-6.08	5.50-6.08	5.25-6.08
Expected volatility	116.56%-117.93%	103.31%-108.98%	112.09%-117.93%	103.31%-108.98%
Risk-free interest rate	4.23%-4.50%	3.49% - 4.05%	3.93%-4.50%	3.45% - 4.25%
Expected dividend yield	—	—	—	—

Valuation of Employee Stock Purchase Plan Awards

No 2021 ESPP and 2024 ESPP awards were granted during the three and six months ended June 30, 2024. The grant date fair value of 2021 ESPP awards granted during the three and six months ended June 30, 2023 was estimated using a Black-Scholes option-pricing model with the following assumptions:

	Three and Six Months Ended June 30,
	2024		2023
Expected term (in years)		—		0.5
Expected volatility		—		266.24	%
Risk-free interest rate		—		5.39	%
Expected dividend yield		—		—