Stockholders' Deficit

6 Months Ended

Jun. 30, 2024

Reverse Recapitalization

As described in Note 2, Summary of Significant Accounting Policies, all historical equity data, including stock option data, in these unaudited condensed consolidated financial statements has been retrospectively adjusted by the Exchange Ratio to reflect the reverse recapitalization that occurred on September 29, 2023.

Common Stock

As of June 30, 2024, the Company had authorized 500,000,000 shares of common stock, par value $0.0001 per share. As of June 30, 2024, 25,771,132 shares of common stock were issued and outstanding, and 474,228,868 shares of common stock were reserved for future issuance.

Preferred Stock

As of June 30, 2024, the Company had authorized 10,000,000 shares of preferred stock, par value $0.0001. As of June 30, 2024, zero shares of preferred stock were issued or outstanding.

Employee Stock Purchase Plan

Upon consummation of the Business Combination, the Company adopted an employee stock purchase plan (“ESPP”). The maximum number of shares of the Company’s common stock that may be issued under the ESPP is 3.0% of the fully diluted common stock of the Company, determined as of immediately following Closing. Such maximum number of shares is subject to automatic annual increases. The Company’s employees and the employees of any designated affiliates may participate in the ESPP. The purchase price of the ESPP shares is 85.0% of the lesser of the fair market value of the Company’s common stock on the first day of an offering or on the applicable date of purchase. As of June 30, 2024, there were no transactions with respect to the ESPP. 

2019 Equity Incentive Plan

The Company’s 2019 equity incentive plan (“2019 Plan”) became effective on October 23, 2019. The 2019 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock unit awards and performance share awards to employees, directors, and consultants of the Company.

Stock options granted under the 2019 Plan expire no later than ten years from the date of grant and generally vest over a four-year period, with vesting occurring at a rate of 25.0% at the end of the first and thereafter in 36 equal monthly installments, or in the case of awards granted to board members, on a monthly basis over three or four years. In general, vested options expire if not exercised within three months after termination of service.

2023 Equity Incentive Plan

Upon consummation of the Business Combination, the Company adopted the 2023 equity incentive plan (“2023 Plan”). The maximum number of shares of common stock that may be issued under the 2023 Plan is 12.0% of the fully diluted common stock of the Company, determined as of immediately following Closing. Such maximum number of shares is subject to automatic annual increases. Under the 2023 Plan, restricted shares and stock options with service or performance based conditions may be granted to employees and nonemployees.

Upon the effective date of the 2023 Plan, the Company may not grant any additional awards under the 2019 Plan. As of June 30, 2024, certain awards to executives and non-employee directors were granted under the 2023 Plan. Stock options granted under the 2023 Plan expire no later than ten years from the date of grant and generally vest on a monthly basis over three or four years. In general, vested options expire if not exercised within three months after termination of service.

The fair value of each employee and non-employee stock option grant under the 2019 Plan and 2023 Plan are estimated on the date of grant using the Black-Scholes option-pricing model. Due to the Company’s limited operating history and a lack of company-specific historical and implied volatility data, the Company estimated expected volatility based on the historical volatility of a group of similar companies that are publicly traded. The historical volatility data was computed using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of the stock-based awards. Due to the lack of historical exercise history, the expected term of the Company’s stock options for employees has been determined utilizing the “simplified” method for awards. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. The expected dividend yield is zero since the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

A summary of the Company’s stock option activity for the six months ended June 30, 2024 is as follows:


	Stock Options Outstanding	Weighted Average Exercise Price
Outstanding as of December 31, 2023	2,078,986	$	6.25
Granted	2,295,000	1.62
Forfeited	(125,810)	6.65
Exercised	—	—
Outstanding as of June 30, 2024	4,248,176	$	3.74

The weighted average assumptions used in the Black-Scholes option pricing model to determine the fair value of stock option grants for the six months ended June 30, 2024 were as follows:


	2023 Plan
Common stock fair value	$	1.62
Risk-free interest rate	4.2 %
Expected volatility	92.0 %
Expected term (in years)	6.87
Expected dividend yield	0.0		%

Stock options outstanding, vested and expected to vest and exercisable as of June 30, 2024 are as follows:


	Number of Stock Options	Weighted Average Remaining Contractual Life (Years)	Weighted- Average Exercise Price		Total Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2023	2,078,986	8.86	$	6.25	$	317
Outstanding as of June 30, 2024	4,248,176	9.04	$	3.74	$	124
Vested and expected to vest as of June 30, 2024	4,248,176	9.04	$	3.74	$	124
Exercisable as of June 30, 2024	1,307,233	8.59	$	4.19	$	124

Intrinsic value is calculated as the difference between the exercise price of the underlying options and the estimated fair value of the common stock for the options that had exercise prices that were lower than the per share fair value of the common stock on the related measurement date. The aggregate fair value of stock options vested during the six months ended June 30, 2024 was $4.9 million.

As of June 30, 2024, the total unrecognized stock-based compensation related to unvested stock option awards granted was $11.2 million, which the Company expects to recognize over a remaining weighted-average period of approximately 2.8 years.

Stock-based compensation expense, recognized in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss for the 2019 Plan and 2023 Plan was recorded as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023
Research and development	$	177	$	208	$	322	$	538
General and administrative	920		774		1,892		1,702
Total stock-based compensation expense	$	1,097	$	982	$	2,214	$	2,240