STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

Equity Incentive Plans

The Company’s 2009 Equity Incentive Plan, as amended and restated (the “2009 Plan”), provides for the Company to sell or issue common stock or restricted common stock, or to grant incentive stock options or nonqualified stock options for the purchase of common stock, to employees, members of the board of directors, and consultants of the Company. At December 31, 2019, the total shares authorized under the 2009 Plan were 1,634,655 shares. The board of directors or a designated committee of the board of directors is responsible for the administration of the 2009 Plan and determines the term, exercise price, and vesting terms of each option. Options granted under the 2009 Plan have an exercise price equal to the market value of the common stock at the date of grant and expire ten years from the date of grant. At December 31, 2019, a total of 59,011 shares were available for grant under the 2009 Plan.

In connection with the Merger, the Company adopted Vical’s Equity Incentive Plan (the “Vical Plan”). At December 31, 2019, the total shares authorized under the Vical Plan were 413,710 shares. The Vical Plan, as amended, provides for the Company to sell or issue common stock or restricted common stock, or to grant incentive stock options or nonqualified stock options for the purchase of common stock, to employees, members of the board of directors, and consultants of the Company. The plan provides for the grant of incentive and nonstatutory stock options and the direct award or sale of shares, including restricted stock. The exercise price of stock options must equal at least the fair market value of the underlying common stock on the date of grant. The maximum term of options granted under the plan is ten years. The Vical Plan also limits the number of options that may be granted to any plan participant in a single calendar year to 1,300,000 shares. At December 31, 2019, a total of 86,584 shares were available for grant under the Vical Plan.

A summary of stock option activity under the 2009 Plan and the Vical Plan is as follows, as converted associated with stock split and conversion:



	Shares		Weighted Average Exercise Price		Total Intrinsic Value		Weighted Average Remaining Contractual Life (In Years)
Outstanding at December 31, 2018	696,842		$	13.21
Acquired under Vical Plan	184,087		$	75.98
Granted	1,088,260		$	4.67
Exercised	—		$	—
Forfeited or expired	(175,587	)	$	28.22
Outstanding at December 31, 2019	1,793,602		$	13.00	$	4,971	8.49
Options vested and exercisable at December 31, 2019	525,665		$	28.41	$	73,878	5.97

Share-based Compensation Expense

Total stock-based compensation expense related to stock options granted under the 2009 Plan and the Vical Plan was allocated as follows (in thousands):



	Year Ended December 31,
	2019		2018
Research and development	$	349	$	340
General and administrative	1,183		371
Total stock-based compensation expense	$	1,532	$	711

As of December 31, 2019, the Company had $5.7 million of total unrecognized share-based compensation expense, which is expected to be recognized over a period of approximately 3.32 years years.

Fair Value Assumptions

The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock-based awards. The determination of the fair value of stock-based awards on the date of grant using an option-pricing model is affected by the value of the Company’s stock price, as well as assumptions regarding subjective variables. These variables include expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rate, and expected dividends.

Because the Company has a limited history of stock purchase and sale activity, the Company estimates expected volatility of the common stock by using the average share fluctuations of companies similar in size, operations, and life cycle. The expected term of stock options granted to employees, including members of the board of directors, is determined as the midpoint between the vesting date and the contractual end of the option grant. The expected term of all other stock options granted is based on the Company’s historical share option exercise experience, which approximates the midpoint between the vesting date and the contractual end of the option grant. The risk-free interest rates used in the valuation model are based on U.S. Treasury yield issues in effect at the time of grant for a period commensurate with the expected term of the grant. The Company does not anticipate paying any dividends in the foreseeable future and therefore uses an expected dividend yield of zero.

Management has estimated a forfeiture rate of 7% based on past experience, forfeiture rates, and the individuals receiving the options. The Company monitors actual forfeiture experience and periodically updates forfeiture estimates based on actual experience.

Stock Options Granted to Employees

During the year ended December 31, 2019 and 2018, the Company granted 982,890 stock options and 252,681 stock options, respectively, to employees and non-employee directors to purchase shares of common stock with a weighted-average grant date

fair value of $3.24 and $4.16 per share, respectively, and a weighted-average exercise price of $4.58 and $5.68 per share, respectively.

The assumptions used to calculate the fair value of stock options granted to employees and non-employee directors under the 2009 Plan are as follows, presented on a weighted average basis:



	Year Ended December 31,
	2019		2018
Expected term (in years)	6.1		6.1
Expected volatility	83.22	%	85.43	%
Risk free interest rate	1.44	%	2.77	%
Expected dividend yield	—	%	—	%

Stock Options Granted to Non-employees

During the year ended December 31, 2019 and 2018, the Company granted 105,370 stock options and 15,188 stock options, respectively, to persons other than employees and non-employee members of the Company’s board of directors with a weighted-average exercise price of $5.53 and $5.68 per share, respectively.

The assumptions used to calculate the fair value of stock options granted to non-employees under the 2009 Plan are as follows, presented on a weighted average basis:



	Year Ended December 31,
	2019		2018
Expected term (in years)	6.02		9.96
Expected volatility	82.82	%	86.17	%
Risk free interest rate	1.49	%	2.69	%
Expected dividend yield	—	%	—	%