Note 11 - Equity Incentive Plans

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

NOTE 11.  Equity Incentive Plans

On April 23, 2019, the Company’s stockholders approved the adoption of the 2019 Equity Incentive Plan (the “2019 Plan”), under which the Company is authorized to issue incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, RSUs, other stock awards and performance awards that may be settled in cash, stock, or other property. The 2019 Plan is designed to secure and retain the services of employees, directors and consultants, provide incentives for the Company’s employees, directors and consultants to exert maximum efforts for the success of the Company and its affiliates, and provide a means by which employees, directors and consultants may be given an opportunity to benefit from increases in the value of the Company’s common stock. Following adoption of the 2019 Plan, all previous plans were frozen, and on forfeiture, cancellation and expiration, awards under those plans are not assumed by the 2019 Plan.

The aggregate number of shares of common stock authorized for issuance under the 2019 Plan was initially 1,600,000 shares, which was increased through an amendment to the 2019 Plan adopted by the Company’s stockholders (a “Plan Amendment”) on June 8, 2020, to 8,000,000, by a Plan Amendment on June 16, 2021, to 16,900,000, and by a Plan Amendment on August 4, 2022, to 28,900,000. Further amendments to the 2019 Plan to increase the share reserve would require stockholder approval. Awards that are forfeited or canceled generally become available for issuance again under the 2019 Plan. Awards have a maximum term of ten years from the grant date and may vest over varying periods, as specified by the Company’s board of directors for each grant.

A summary of stock option and RSU transactions for the years ended December 31, 2023 and 2022 follows:

							Weighted					Weighted
	Shares			Number of			Option Average		Number of			RSU Average
	Available			Options			Exercise		RSUs			Grant Date
	For Grant			Outstanding			Price		Outstanding			Fair Value
Balance at January 1, 2022		5,582,742			10,216,106		$	4.96		—		$	—
Authorized under 2019 Plan Amendment		12,000,000			—		$	—		—		$	—
Granted		(7,291,935	)		6,376,657		$	4.10		915,278		$	3.58
Exercised		—			(180,336	)	$	1.24		—		$	—
Forfeited		1,625,133			(1,518,230	)	$	6.19		(106,968	)	$	3.62
Canceled		158,752			(168,936	)	$	7.17		—		$	—
Balance at December 31, 2022		12,074,692			14,725,261		$	4.48		808,310		$	3.57
Granted		(10,631,320	)		7,399,849		$	0.78		3,231,471		$	0.78
Exercised		—			(54,720	)	$	0.31		(1,608,809	)	$	1.09
Forfeited		2,444,486			(2,139,887	)	$	5.00		(304,599	)	$	2.42
Canceled		1,797,948			(1,991,777	)	$	4.51		—		$	—
Balance at December 31, 2023		5,685,806			17,938,726		$	2.90		2,126,373		$	1.37

As of December 31, 2023, there were 17,938,726 options outstanding with a weighted average exercise price of $2.90, a weighted average remaining contractual term of 8.18 years and an aggregate intrinsic value of $26,000. Of these options, 9,667,285 were vested, with a weighted average exercise price of $3.17, a weighted average remaining contractual term of 7.70 years and an aggregate intrinsic value of $26,000.

The Company received $17,000 for the 54,720 options exercised in the year ended December 31, 2023, which had an intrinsic value of $31,000. The aggregate intrinsic value represents the total pre-tax value (i.e., the difference between the Company’s stock price and the exercise price) of stock options outstanding as of December 31, 2023, based on the Company’s common stock closing price of $0.57 on December 29, 2023, the prior business day, which would have been received by the option holders had all their in-the-money options been exercised as of that date. The Company received $223,000 for the 180,336 options exercised during the year ended December 31, 2022, which had an intrinsic value of $481,000.

The weighted average grant date fair value of options awarded in the years ended December 31, 2023 and 2022, was $0.78 and $4.10, respectively. Fair values were estimated using the following assumptions:

	Year Ended December 31,
	2023			2022
Risk-free interest rate		3.45% - 4.15	%		1.62% - 4.02	%
Expected term (in years)		5.50 - 6.00			5.42 - 6.08
Expected volatility		128% - 134	%		125% - 131	%
Dividend yield		—	%		—	%

The Company measures the fair value of all stock-based awards on the grant date and records the fair value of these awards, net of estimated forfeitures, to compensation expense over the service period. Total stock-based compensation recognized for options was as follows (in thousands):

	Year Ended December 31,
	2023		2022
Research and development	$	8,362	$	9,183
General and administrative		5,770		4,404
Total stock-based compensation	$	14,132	$	13,587

As of December 31, 2023, the unrecognized stock-based compensation cost related to outstanding stock options and RSUs expected to vest was $20.5 million, which the Company expects to recognize over an estimated weighted average period of 2.13 years.

On August 4, 2022, the 2022 Employee Stock Purchase Plan (the “2022 ESPP”) was approved by the Company’s stockholders and the Company reserved 1,800,000 shares of the Company’s common stock for purchase under the 2022 ESPP. The 2022 ESPP has a 6-month offering period comprised of one purchase period. The purchase price of the stock is equal to 85% of the lesser of the market value of such shares at the beginning of the 6-month offering period or the end of such offering period. During the year ended December 31, 2023, the Company received $0.6 million and issued 734,675 shares under the 2022 ESPP. As of December 31, 2023, 1,065,325 shares are available and reserved for future issuance under the 2022 ESPP.

The estimated fair value used for the six-month offering period beginning December 1, 2023 and ending May 31, 2024, was $0.27 per share. The estimated fair value used for the six-month offering period beginning June 1, 2023 and ending November 30, 2023, was $0.54 per share. The estimated fair value used for the six-month offering period beginning December 1, 2022 and ending May 31, 2023 was $0.46 per share. Stock-based compensation expense related to the ESPP for the years ended December 31, 2023 and 2022, was $0.4 million and zero, respectively. As of December 31, 2023, the unrecognized stock-based compensation cost related to outstanding ESPP expected to be recognized is $0.1 million by May 2024. The fair value of the ESPP shares was estimated using the Black-Scholes option pricing model using the following assumptions:

	Six-Month Offering Period Ending May 31, 2024			Six-Month Offering Period Ended November 30, 2023			Six-Month Offering Period Ended May 31, 2023
Risk-free interest rate		5.26	%		5.37	%		4.60	%
Expected term (in years)		0.50			0.50			0.50
Expected volatility		75.20	%		98.55	%		84.66	%
Dividend yield		—	%		—	%		—	%