SHARE-BASED COMPENSATION

6 Months Ended

Jun. 30, 2025

SHARE-BASED COMPENSATION

SHARE-BASED COMPENSATION

9. SHARE-BASED COMPENSATION

On February 23, 2021, the Company approved the 2021 Equity Incentive Plan (“2021 Plan”), in which a maximum aggregate number of shares of common stock that may be issued under the 2021 Plan is 65,000 shares. Subject to the adjustment provisions of the 2021 Plan, the number of shares of the Company’s common stock available for issuance under the 2021 Plan will also include an annual increase on the first day of each fiscal year beginning with 2022 fiscal year and ending on the Company’s 2031 fiscal year in an amount equal to the least of: 1) 65,000 shares of the Company’s common stock; 2) four percent (4%) of the outstanding shares of the Company’s common stock on the last day of the immediately preceding fiscal year; or 3) such number of shares of the Company’s common stock as the administrator may determine.

At the 2023 Annual Meeting, the Company’s stockholders approved an amendment (the “2023 Plan Amendment”) to the Company’s 2021 Plan, increasing the number of the shares of common stock reserved for issuance under the 2021 Plan from 125,045 shares to 743,106 shares. The Company’s Board of Directors had previously approved the 2023 Plan Amendment, subject to stockholder approval.

At the 2025 Annual Meeting, the Company’s stockholders approved an amendment (the “2025 Plan Amendment”) to the Company’s 2021 Plan, (i) increasing the number of the shares of common stock, reserved for issuance thereunder from 843,692 shares to 1,643,692 shares, and (ii) setting the “evergreen” share amount to 4% of the outstanding shares of common stock. The Company’s Board of Directors had previously approved the 2025 Plan Amendment, subject to stockholder approval.

Determining the appropriate fair value of share-based awards requires the input of subjective assumptions, including the fair value of the Company’s common stock, and for share options, the expected life of the option, and expected share price volatility. The Company uses the Black-Scholes option pricing model to value its share option awards. The assumptions used in calculating the fair value of share-based awards represent management’s best estimates and involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and management uses different assumptions, the share-based compensation expense could be materially different for future awards. Options granted under the 2021 Plan for six months ended June 30, 2025 and 2024, were valued using the Black-Scholes option-pricing model with the following assumptions:

	Six Months Ended June 30,
	2025	2024
Expected term (years)	5.75	5.73
Risk-free interest rate	4.04%	4.21%
Expected volatility	50%	50%
Expected dividend yield	0%	0%

During the six months ended June 30, 2025, the Company issued options for 710,268 shares of common stock to employees, directors and consultants. The options vest over a period of three years, have an exercise price of $2.51 and expire on the ten-year anniversary of the grant date.

The following table reflects share activity under the share option plans for the six months ended June 30, 2025:

				Weighted-
				Average
		Weighted-		Remaining	Weighted-		Aggregate
		Average		Contractual	Average		Intrinsic
	Number of	Exercise		Term	Fair Value at		Value
	Shares	Price		(Years)	Grant Date		(in thousands)
Options outstanding at January 1, 2025	619,910	$	12.31	9.06	$	3.54
Granted	710,268		2.51
Exercised	—		—
Cancelled/Forfeited	(8,002)		10.48
Expired	—		—
Options outstanding at June 30, 2025	1,322,176	$	7.06	9.28	$	1.65
Options exercisable at June 30, 2025	545,401	$	10.64	8.99			$	6.80

Stock-based compensation is included in the unaudited interim condensed consolidated statements of operations as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2025		2024		2025		2024
Research and development	$	75	$	54	$	147	$	96
General and administration		184		153		362		218
Total	$	259	$	207	$	509	$	314

Total compensation cost related to non-vested stock option awards not yet recognized as of June 30, 2025 was $2.1 million and will be recognized on a straight-line basis through the end of the vesting periods in June 2028. The amount of future stock option compensation expense could be affected by any future option grants or by any forfeitures.