Stockholders' Equity |
Note 6 – Stockholders’ Equity In April 2021, the Company filed a certificate of amendment to its certificate of incorporation, which authorized 260,000,000 shares of capital stock, consisting of 250,000,000 shares of common stock, par value $0.001 per share, and 10,000,000 shares of undesignated preferred stock, par value $0.001 per share that may be issued from time to time by the Company’s board of directors (the “Board of Directors”) in one or more series. Of the 250,000,000 shares of common stock, 200,000,000 shares were designated as “Common Stock” and 50,000,000 shares were designated as “Non-Voting Common Stock.” Equity Incentive Plan In August 2020, the Board of Directors amended the Amended and Restated 2018 Stock Option—Stock Issuance Plan (the “2018 Plan”) to increase the maximum number of shares of common stock that may be issued over the term of the plan. The 2018 Plan provided for the grant of stock options, non-statutory stock options, incentive stock options and stock issuances to employees, nonemployees and consultants of the Company. In April 2021, the Company’s 2021 Equity Incentive Plan (the “2021 Plan”) was approved by the Board of Directors and became effective on April 15, 2021. Upon the effectiveness of the 2021 Plan, no further grants may be made under the 2018 Plan. The 2021 Plan allows the Company to grant equity-based awards to its officers, employees, directors and other key persons (including consultants). The Company initially reserved up to 3,246,120 shares of common stock for issuance under the 2021 Plan, plus (i) 1,722 shares that remained available for the issuance of awards under the 2018 Plan at the time the 2021 Plan became effective, and (ii) any shares subject to outstanding options or other share awards that were granted under the 2018 Plan that terminate or expire prior to exercise or settlement; are forfeited because of the failure to vest; or are reacquired or withheld (or not issued) to satisfy a tax withholding obligation or the purchase or exercise price. The 2021 Plan provides that the number of shares reserved and available for issuance under the plan will automatically increase each January 1, beginning on January 1, 2022 and each January 1 thereafter through January 31, 2032, by 4.0% of the outstanding number of shares of common stock on the immediately preceding December 31, or such lesser number of shares as determined by the Board of Directors. As a result, the number of shares of common stock reserved for issuance under the 2021 Plan increased by 1,451,611 shares on January 1, 2023. Stock Options A summary of the Company’s stock option activities during the six months ended June 30, 2023 is as follows: | | | | | | | | | | | | | | | Weighted- | | Weighted- | | | | | | | Average | | Average | | Aggregate | | | | | Exercise | | Remaining | | Intrinsic | | | | | Price Per | | Contract Term | | Value | | | Total Options | | Share | | (in years) | | (in millions) | Outstanding as of December 31, 2022 | | 2,593,761 | | $ | 8.08 | | 8.2 | | $ | — | Granted | | 1,312,762 | | $ | 9.43 | | | | | | Exercised | | (20,757) | | $ | 3.59 | | | | | | Forfeited or cancelled | | (1,009,324) | | $ | (9.36) | | | | | | Outstanding as of June 30, 2023 | | 2,876,442 | | $ | 8.27 | | 7.2 | | $ | — | Vested and expected to vest as of June 30, 2023 | | 2,876,442 | | $ | 8.27 | | 7.2 | | $ | — | Vested and exercisable as of June 30, 2023 | | 1,476,242 | | $ | 7.07 | | 5.5 | | $ | — |
The weighted-average grant date fair values of option grants during the six months ended June 30, 2023 and 2022 were $7.75 and $7.33 per share, respectively. The weighted-average grant date fair values of options forfeited during the six months ended June 30, 2023 and 2022 were $7.99 and $12.05 per share, respectively. Restricted Stock Units A summary of the Company’s RSU activities during the six months ended June 30, 2023 is as follows: | | | | | | | | | | | | | Weighted- | | Aggregate | | | Total | | Average | | Intrinsic | | | Restricted | | Grant Date | | Value | | | Stock Units | | Fair Values | | (in millions) | Outstanding as of December 31, 2022 | | 8,945 | | $ | 6.25 | | $ | — | Granted | | 95,333 | | $ | 9.59 | | | | Vested | | — | | $ | — | | | | Forfeited or cancelled | | (41,906) | | $ | 9.35 | | | | Outstanding as of June 30, 2023 | | 62,372 | | $ | 9.27 | | $ | 0.1 |
No RSUs vested during the six months ended June 30, 2023. Employee Stock Purchase Plan The ESPP was approved by the Board of Directors and became effective on April 15, 2021. The ESPP initially reserved and authorized the issuance of up to 259,689 shares of common stock to participating employees. Under the ESPP, eligible employees can contribute up to 15% of their eligible compensation, as defined in the ESPP, towards the purchase of the Company’s common stock at a price of 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last trading day of the offering period. The ESPP provides for twenty-four-month offering periods with four six-month purchase periods in each offering period. The ESPP provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2022 and each January 1 thereafter through January 31, 2032, by 1.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year. As a result, the number of shares of common stock reserved for issuance under the ESPP increased by 362,902 shares on January 1, 2023. Under the ESPP, the Company issued 32,622 shares of common stock for aggregate cash proceeds of $0.1 million during the six months ended June 30, 2023. Stock-Based Compensation Expense The Company recognized stock-based compensation expense as follows (in thousands): | | | | | | | | | | | | | | | Three Months Ended June 30, | | Six Months Ended June 30, | | | 2023 | | 2022 | | 2023 | | 2022 | Research and development | | $ | 534 | | $ | 1,203 | | $ | 1,660 | | $ | 2,093 | General and administrative | | | 266 | | | 214 | | | 708 | | | 566 | Restructuring charges | | | 37 | | | - | | | 37 | | | - | Total stock-based compensation expense | | $ | 837 | | $ | 1,417 | | $ | 2,405 | | $ | 2,659 |
As of June 30, 2023, the total unrecognized compensation cost was $11.2 million and is expected to be recognized as expense over approximately 2.8 years. The weighted-average assumptions used in the Black-Scholes option pricing model to determine the fair value of the stock option grants were as follows: | | | | | | | | | | | | | | | | Three Months Ended June 30, | | | Six Months Ended June 30, | | | | 2023 | | | 2022 | | | 2023 | | | 2022 | Risk-free interest rate | | | 3.5% | | | 2.9% - 3.0% | | | 3.5% - 4.3% | | | 1.6% - 3.0% | Expected volatility | | | 115.4% | | | 88.1% - 90.2% | | | 102.8% - 115.4% | | | 88.1% - 112.1% | Expected term (in years) | | | 6.1 | | | 6.1 | | | 6.1 | | | 5.3 - 6.1 | Expected dividend yield | | | 0% | | | 0% | | | 0% | | | 0% |
The determination of the fair value of share-based payment awards utilizing the Black-Scholes option-pricing model is affected by the Company’s stock price and the following assumptions: Risk-free interest rate. The risk-free interest rate assumption is based on the U.S. Treasury instruments, the terms of which were consistent with the expected term of the Company’s stock-based awards. Expected volatility. Due to the Company’s limited operating history and lack of company-specific historical or implied volatility, the expected volatility assumption was determined by examining the historical volatilities of a group of industry peers whose share prices are publicly available. Expected term. The expected term represents the weighted-average period the stock-based awards are expected to be outstanding. The Company uses the simplified method for estimating the expected term. The simplified method calculates the expected term as the average of the time-to-vesting and the contractual life of the stock-based awards. Expected dividend yield. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company has not paid and does not intend to pay dividends. Forfeitures. The Company reduces stock-based compensation expense for actual forfeitures during the period. Common Stock Reserved for Future Issuance Common stock reserved for future issuance consist of the following: | | | | | | | As of June 30, 2023 | | As of December 31, 2022 | Stock options | | 2,876,442 | | 2,593,761 | Restricted stock units | | 62,372 | | 8,945 | Reserved for future equity award grants | | 4,179,478 | | 3,084,732 | Reserved for future ESPP issuances | | 824,065 | | 466,585 | Common stock reserved for future issuance | | 7,942,357 | | 6,154,023 |
|