Stock-Based Compensation

12 Months Ended

Dec. 31, 2023

Stock-Based Compensation

Stock-Based Compensation

10. Stock-Based Compensation

Equity Incentive Plans

2020 Stock Incentive Plan

Under the 2020 Stock Incentive Plan (as amended, the “2020 Plan”), the Company was authorized to issue shares of common stock to the Company’s employees, officers, directors, consultants and advisors in the form of options, restricted stock awards or other stock-based awards.

2021 Stock Incentive Plan

In September 2021, the Company’s board of directors and stockholders adopted the 2021 Stock Incentive Plan (the “2021 Plan”), which became effective immediately prior to the IPO in October 2021. Upon effectiveness of the 2021 Plan, the Company ceased granting awards under the 2020 Plan. The 2021 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards. The Company initially reserved 6,579,016 shares of common stock under the 2021 Plan. The 2021 Plan provides that the number of shares reserved and available for issuance under the 2021 Plan will be cumulatively increased on January 1 of each calendar year by 5% of the number of shares of common stock outstanding on such date or such lesser amount determined by the Company’s board of directors. On January 1, 2024, the number of shares reserved for issuance under the 2021 Plan automatically increased by 1,380,663 shares. As of December 31, 2023, there were 1,780,442 shares available for future grant under the 2021 Plan.

2022 Inducement Plan

In 2022, the Company’s board of directors adopted the 2022 Inducement Stock Incentive Plan pursuant to Nasdaq Rule 5635(c)(4) (the “2022 Inducement Plan”). In accordance with Rule 5635(c)(4), stock-based incentive awards under the 2022 Inducement Plan may only be made to a newly hired employee who has not previously been a member of the Company’s board of directors, or an employee who is being rehired following a bona fide period of non-employment by the Company as a material inducement to the employee’s entering into employment with the Company. An aggregate of 275,000 shares of the Company’s common stock has been reserved for issuance under the 2022 Inducement Plan. As of December 31, 2023, there were 220,000 shares available for future grant under the 2022 Inducement Plan.

2021 Employee Stock Purchase Plan

In 2021, the Company’s board of directors and stockholders adopted the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), which became effective immediately prior to the IPO in October 2021. The Company initially reserved 292,031 shares of common stock for issuance under the 2021 ESPP. The 2021 ESPP provides that the number of shares of common

stock reserved for issuance under the 2021 ESPP will be cumulatively increased on January 1 of each calendar year by 1% of the number of shares of the Company’s common stock outstanding on such date or such lesser amount determined by the Company’s board of directors (up to a maximum increase of 584,062 shares of common stock per year). On January 1, 2024, the number of shares reserved for issuance under the 2021 ESPP was increased by 276,132 shares. The Company issued 140,192 shares under the 2021 ESPP during the year ended December 31, 2023 and no shares under the 2021 ESPP  during the year ended December 31, 2022. As of December 31, 2023, there were 701,244 shares available for future issuance under the 2021 ESPP.

Total Stock-Based Compensation Expense

During the years ended December 31, 2023 and 2022, the Company recorded compensation expense related to stock options and restricted common stock for employees and non-employees, which was allocated as follows in the consolidated statements of operations and comprehensive loss:

	Year Ended December 31,
	2023		2022
Research and development expense	$	2,189	$	2,427
General and administrative expense		5,193		5,997
Total stock-based compensation expense	$	7,382	$	8,424

Stock Options

A summary of stock option activity under the Company’s Stock Incentive Plans is as follows:

				Weighted
				Average
				Remaining	Aggregate
		Weighted		Contractual	Intrinsic
	Number of	Average		Term	Value (1)
	Stock Options	Exercise Price		(In years)	(In thousands)
Outstanding as of December 31, 2022	4,960,553	$	8.04	8.6	$	89
Granted	3,738,555	$	2.75
Exercised	(2,757)	$	2.82
Cancelled/forfeited	(1,240,556)	$	7.26
Outstanding as of December 31, 2023	7,455,795	$	5.52	8.0	$	-
Exercisable as of December 31, 2023	3,103,732	$	7.04	6.6	$	-

(1) The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock as of the end of the period.

Using the Black-Scholes option pricing model, the weighted average fair value of options granted to employees and directors during the years ended December 31, 2023 and 2022 was $2.02 per share and $5.58 per share, respectively. The Company satisfies stock option exercises with newly issued shares of common stock. The aggregate intrinsic value of stock options exercised during each of the years ended December 31, 2023 and 2022 was less than $0.1 million.

The following assumptions were used in determining the fair value of options granted to employees during the years ended December 31, 2023 and 2022:

	Year Ended December 31,
	2023			2022
Risk-free interest rate		3.57 - 4.40	%		1.47 – 4.22	%
Expected dividend yield		0	%		0	%
Expected term (in years)		5.5 - 6.1			5.3 – 6.1
Expected volatility		81.7 - 87.3	%		80.8 – 87.6	%

As of December 31, 2023, the Company had unrecognized stock-based compensation expense of $12.5 million related to stock options issued to employees and directors, which is expected to be recognized over a weighted average period of 2.0 years.

Restricted Stock

A summary of the Company’s restricted stock activity and related information is as follows:

	Number	Weighted
	of Shares	Average
	of Restricted	Grant Date
	Stock	Fair Value
Unvested as of December 31, 2022	46,160	$	5.51
Vested	(39,250)	$	5.51
Canceled/Forfeited	(1,293)	$	5.51
Unvested as of December 31, 2023	5,617	$	5.51

In June 2020, the Company granted 552,546 shares of common stock underlying restricted stock awards, and the Company has not subsequently granted any additional restricted stock awards. The Company recorded stock-based compensation expense for restricted stock granted to employees, directors and non-employees of $0.3 million and $0.4 million for the years ended December 31, 2023 and 2022. During the years ended December 31, 2023 and 2022, the aggregate fair value of the restricted stock awards that vested was $0.1 million and $0.3 million, respectively. As of December 31, 2023, total unrecognized compensation cost related to unvested restricted stock awards was less than $0.1 million, which is expected to be recognized during the first quarter of 2024.