Our 401(k) plan is a deferred salary arrangement under Section 401(k) of the Internal Revenue Code. Under the 401(k) plan, participating U.S. employees may defer a portion of their pretax earnings, up to the U.S. Internal Revenue Service annual contribution limit. We match 100% of a participating employee’s deferral contributions up to 3% of annual compensation, limited to $4,500 of matching contributions. Our contributions to the 401(k) plan totaled $51,000 and $32,000 for the three months ended June 30, 2022 and 2021, respectively, and $0.1 million and $0.1 million for the six months ended June 30, 2022 and 2021, respectively.

The 2020 Stock Plan reserves 12,000,000 shares of Common Stock for issuance thereunder, all of which may be issued pursuant to incentive stock options or any other type of award under the 2020 Stock Plan. Selected employees, officers, directors, and consultants of the Company are eligible to participate in the 2020 Stock Plan. The purpose of the 2020 Stock Plan is to enable us to offer competitive equity compensation packages in order to attract and retain talent and align the interests of management with those of stockholders. The 2020 Stock Plan is administered by the Board. The exercise prices, vesting periods, and other restrictions are determined at the discretion of the Board, except that the exercise price per share of stock options may not be less than 100% of the fair market value of the Common Stock on the date of grant. Stock options expire ten years after the grant date unless the Board sets a shorter term. Stock options granted to employees, officers, directors, and consultants generally vest over a four-year period. If an option or award granted under the 2020 Stock Plan expires, or is terminated, forfeited, repurchased, or cancelled, the unissued shares subject to that option or award shall again be available under the 2020 Stock Plan. As of June 30, 2022, the Board granted 7,659,218 stock options and rights to restricted stock awards under the 2020 Stock Plan, and 4,340,782 shares remained available for future grant.

The 2014 Stock Plan is administered by the Board. Stock options granted under the 2014 Stock Plan expire ten years after the grant date. Stock options and restricted stock awards granted to employees, officers, directors, and consultants generally vest over a four-year period. Effective as of the closing of the Reverse Recapitalization, no additional awards may be granted under the 2014 Stock

Plan and as a result, if any award granted under the 2014 Stock Plan expires, or is terminated, forfeited, repurchased, cancelled, or tendered by a participant to us to exercise an award, the unissued shares subject to that award will not be available for future awards.

Stock-Based Compensation Expense

Stock-based compensation expense recorded in research and development expense and general and administrative expense for the three and six months ended June 30, 2022 and 2021 was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
General and administrative	$	1,351	$	2,647	$	2,809	$	4,517
Research and development		833		1,608		1,577		3,003
Total stock-based compensation expense	$	2,184	$	4,255	$	4,386	$	7,520

Stock-based compensation expense by award type for the three and six months ended June 30, 2022 and 2021 was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands)	2022		2021		2022		2021
Stock options	$	2,184	$	1,253	$	4,386	$	1,513
Restricted stock awards		—		3,002		—		6,007
Total stock-based compensation expense	$	2,184	$	4,255	$	4,386	$	7,520

Outstanding stock options and related activity for the six months ended June 30, 2022 was as follows:


(in thousands, except share, per share, and term data)	Number of Options			Weighted Average Exercise Price Per Share		Weighted Average Remaining Term (Years)		Intrinsic Value
Outstanding - December 31, 2021		10,395,027			3.35		6.32		21,082
Granted		2,755,973			3.01		9.65		—
Exercised		(1,044,448	)		0.27		—		2,348
Forfeited		(35,276	)		5.07		—		—
Outstanding - June 30, 2022		12,071,276		$	3.54		6.97	$	8,718
Vested and exercisable - June 30, 2022		6,161,852		$	2.10		4.84	$	8,711
Vested, exercisable or expected to vest - June 30, 2022		12,071,276		$	3.54		6.97	$	8,718

As of June 30, 2022 and December 31, 2021, we had approximately $20.1 million and $18.3 million, respectively, of unrecognized stock-based compensation costs related to non-vested stock options which is expected to be recognized over a weighted-average period of 2.82 years and 3.05 years, respectively.

Stock options are valued using a Black-Scholes option-pricing model. Due to the limited trading history of our Common Stock, the expected volatility is derived from the average historical stock volatilities of several unrelated comparable public companies within our industry, over a period equivalent to the expected term of the stock option grants. The risk-free interest rate for periods within the contractual life of the stock options is based on the U.S. Treasury yield curve in effect on the grant date. The expected dividend is assumed to be zero as we have never paid a dividend and have no plans to do so. The expected term represents the period the stock options are expected to be outstanding. For stock options that are considered to be in the ordinary course, we determine the expected term using the simplified method, which considers the term to be the average of the time-to-vesting and the contractual life of the stock options. For other stock option grants, we estimate the expected term using historical data on employee exercises and post-vesting employment termination behavior, while also considering the contractual life of the award.

The assumptions used to calculate the fair value of stock options granted during the six months ended June 30, 2022 and 2021 were as follows:


	Six Months Ended June 30,
	2022	2021
Expected stock price volatility	89.57% – 93.38%	84.80% – 87.70%
Risk-free interest rate	1.65% – 3.00%	0.59% – 1.90%
Expected dividend yield	0.00%	0.00%
Expected term of options	5.00 – 6.98 years	6.00 years

The weighted-average grant-date fair value of stock options granted during the six months ended June 30, 2022 and 2021 was $2.24 and $6.44, respectively.

In connection with the Reverse Recapitalization, the following outstanding and unvested rights to restricted stock awards were granted to various employees and non-employee directors:

•

370,101 shares which vest on various dates between June 30, 2021 and July 15, 2022, subject to the holder’s continuous employment through such vesting date. The award represents 5% of the converted stock options under the 2014 Stock Plan as a result of the Reverse Recapitalization and complements the 5% closing payment shares held in escrow for Clene Nanomedicine common stockholders. The grant-date fair value of these awards was $4.0 million based on the closing price of our Common Stock on Nasdaq of $10.82 per share on December 30, 2020. As of June 30, 2022, there were 80,076 outstanding and unvested shares.

•

454,781 shares which are eligible to vest based on certain market conditions, subject to the holder’s continuous employment through such vesting date. The award complements the Milestone 1 earn-out share entitlement of Clene Nanomedicine stockholders and vests based on the same market condition (see Note 3). The grant-date fair value of these awards, using a Monte Carlo valuation model, was $4.3 million. Based on the outcome of the market condition as of the June 30, 2022 and December 31, 2021 measurement dates, no shares were vested.

•

341,090 shares which are eligible to vest based on certain market conditions, subject to the holder’s continuous employment through such vesting date. The award complements the Milestone 2 earn-out share entitlement of Clene Nanomedicine stockholders and vests based on the same market condition (see Note 3). The grant-date fair value of these awards, using a Monte Carlo valuation model, was $3.5 million. Based on the outcome of the market condition as of the June 30, 2022 and December 31, 2021 measurement dates, no shares were vested.

Outstanding rights to restricted stock awards and related activity for the six months ended June 30, 2022 was as follows:


	Number of Restricted Stock Awards			Weighted Average Grant Date Fair Value
Unvested balance as of December 31, 2021		916,603		$	10.00
Converted to shares of Common Stock upon vesting		(65,363	)		—
Forfeited		(2,025	)		9.84
Unvested balance as of June 30, 2022		849,215		$	9.93

As of June 30, 2022 and December 31, 2021, there was no unrecognized compensation cost related to unvested rights to restricted stock awards.