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Stock-Based Compensation Plans | 3 Months Ended
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Mar. 31, 2025
Share-Based Payment Arrangement [Abstract] |
Stock-Based Compensation Plans | Stock-Based Compensation Plans 2021 Employee Stock Purchase Plan On April 25, 2021, the Company adopted the 2021 Employee Stock Purchase Plan ("ESPP"), which was approved by stockholder vote at the 2021 Annual Meeting of Stockholders held on June 10, 2021. The ESPP provides eligible employees of the Company with an opportunity to purchase common stock of the Company through accumulated payroll deductions, which are included in other current liabilities until they are used to purchase Company shares. Eligible employees participating in the bi-annual offering period can choose to have up to the lesser of 15% of their annual base earnings or the IRS annual share purchase limit of $25,000 in aggregate market value to purchase shares of the Company’s common stock. The purchase price of the stock is the lesser of (i) 85% of the closing market price on the date of purchase and (ii) the closing market price at the beginning of the bi-annual offering period. The maximum number of shares initially reserved for delivery under the plan was 200,000 shares. An increase of 1 million shares to 1.2 million shares was approved by stockholders of the Company at the Company's Special Meeting of stockholders held on March 4, 2024. The first enrollment period under the plan commenced on August 1, 2021 and the Company has issued 271,842 shares life-to-date under the ESPP. The Company recognized $26,000 and $0 of stock based compensation expense related to the plan during the three months ended March 31, 2025 and 2024, respectively. Stock Option Programs In July 2019, the Company’s stockholders approved the 2019 Omnibus Equity Incentive Plan, (as amended, the “2019 Plan”), which was adopted by the Board of Directors (the "Board") with an effective date of June 14, 2019. The 2019 Plan allows for the grant of equity awards to employees, consultants and non-employee directors. An initial maximum of 1,500,000 shares of the Company’s common stock were available for grant under the 2019 Plan. The 2019 Plan included an evergreen provision that allowed for the annual addition of up to 4% of the Company’s fully-diluted outstanding stock, with a maximum allowable increase of 4,900,000 shares over the term of the 2019 Plan. In accordance with this provision, the shares available for grant were increased in 2020 through 2023 by a total of 4,408,871 shares. At the Company's Annual Stockholders meeting on June 28, 2023, stockholders voted to increase the allowable shares under the 2019 plan by 4,440,000 shares as well as to eliminate the evergreen provision. On March 4, 2024, the stockholders voted at the Company's Special Meeting to increase the allowable shares under the 2019 plan by 9,100,000 shares. The 2019 Plan (as amended on June 28, 2023 and March 4, 2024) is currently administered by the Board, or, at the discretion of the Board, by a committee of the Board, which determines the exercise prices, vesting schedules and other restrictions of awards under the 2019 Plan at its discretion. Options to purchase stock may not have an exercise price that is less than the fair market value of underlying shares on the date of grant, and may not have a term greater than ten years. Incentive stock options granted to employees typically vest over four years. Non-statutory options granted to employees, officers, members of the Board, advisors, and consultants of the Company typically vest over three or four years. Shares that are expired, terminated, surrendered or canceled under the 2019 Plan without having been fully exercised will be available for future awards. At the Company’s 2025 Annual Meeting of Stockholders to be held on June 4, 2025, the Company’s stockholders will vote on a proposal to amend the terms of the 2019 Plan to, among other things, increase the allowable shares under the 2019 plan by 7,000,000. Stock Option Repricing On March 4, 2024, the Company's stockholders voted to approve the repricing of outstanding stock options having an exercise price above $3.00 per share to $1.72 per share. All other terms of the grant remained the same. There were 3,317,596 stock options that were repriced to $1.72 per share. The repricing will result in an addition $1.2 million of stock compensation being recognized by the Company over the remaining term of the repriced grants and $0.1 million and $0.9 million of this amount was recognized in the three months ended March 31, 2025 and 2024, respectively. Corporate Transaction Option Acceleration Plan On February 4, 2025, the Company established a Corporate Transaction Option Acceleration Plan, pursuant to which in the case of a merger or consolidation of the Company with or into another corporation or a sale of substantially all of the stock of the Company each option award held by an eligible employee will become fully vested upon the occurrence of a Corporate Transaction. Movements during the year The following table summarizes stock option activity for the three months ended March 31, 2025 and 2024, respectively, for the 2019 Plan:
| Options |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value
Outstanding as of January 1, 2025 | 16,136,045 |  |  | $ | 1.52 |  |  |  |  |
Granted | 195,000 |  |  | $ | 1.02 |  |  |  |  |
Exercised | — |  |  | $ | — |  |  |  |  |
Forfeited or expired | (122,454) |  |  | $ | 1.57 |  |  |  |  |
Outstanding as of March 31, 2025 | 16,208,591 |  |  | $ | 1.52 |  |  | 8.29 |  | $ | 16,635 |
Options exercisable as of March 31, 2025 | 6,295,718 |  |  | $ | 1.84 |  |  | 7.14 |  | $ | 3,397 |
| Options |  | Weighted- Average Exercise Price |  | Weighted- Average Remaining Contractual Term (Years) |  | Aggregate Intrinsic Value
Outstanding as of January 1, 2024 | 6,196,140 |  |  | $ | 7.15 |  |  |  |  |
Granted | 4,175,349 |  |  | $ | 1.21 |  |  |  |  |
Exercised | — |  |  | $ | — |  |  |  |  |
Repricing modification | — |  |  | $ | 9.55 |  |  |  |  |
Forfeited or expired | (53,166) |  |  | $ | 5.25 |  |  |  |  |
Outstanding as of March 31, 2024 | 10,318,323 |  |  | $ | 1.68 |  |  | 8.64 |  | $ | 462,223 |
Options exercisable as of March 31, 2024 | 3,224,039 |  |  | $ | 2.21 |  |  | 7.23 |  | $ | 5,500 |
Measurement The weighted-average assumptions used in the BSM option pricing model to determine the fair value of the employee and non-employee stock option grants relating to the 2019 Plan were as follows: Risk-Free Interest Rate The risk-free rate assumption is based on U.S. Treasury instruments with maturities similar to the expected term of the stock options. Expected Dividend Yield The Company has not issued any dividends and does not expect to issue dividends over the life of the options. As a result, the Company has estimated the dividend yield to be zero. Expected Volatility Due to the Company’s limited operating history and a lack of company specific historical and implied volatility data, the Company estimates expected volatility based on the historical volatility of its own stock combined with a group of comparable 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. Expected Term The expected term of options is estimated considering the vesting period at the grant date, the life of the option and the average length of time similar grants have remained outstanding in the past. The weighted-average grant date fair value of stock options granted under the 2019 Plan (excluding the repriced stock options) during the three months ended March 31, 2025 and 2024 was $0.65 and $0.97, respectively. The weighted average grant date fair value of the stock options repriced during the three months ended March 31, 2024 was $1.22. The following are the underlying assumptions used in the Black-Scholes option pricing model to determine the fair value of stock options granted to employees and to non-employees under this stock plan. The expected term of the options for the three months ended March 31, 2025 includes a grant to a non-employee consultant where the term of the option is five years compared to employee grants that are ten years:
| Three Months Ended March 31, |
| 2025 | 2024 |
Risk-free interest rate | 4.36% | 4.05% |
Expected dividend yield | 0% | 0% |
Expected volatility | 95.2% | 100.0% |
Expected term of options (years) | 3.50 | 6.02 |
Stock-Based Compensation Expense Total stock-based compensation expense for all stock awards recognized in the accompanying unaudited condensed consolidated statements of operations is as follows:
|  |  | Three Months Ended March 31,
|  |  |  |  | 2025 |  | 2024
Research and development |  |  |  |  | $ | 833,000 |  |  | $ | 1,163,000 |
General and administrative |  |  |  |  | 1,209,000 |  |  | 1,587,000 |
Total |  |  |  |  | $ | 2,042,000 |  |  | $ | 2,750,000 |
As of March 31, 2025, there was $11.5 million in total unrecognized compensation expense relating to the 2019 Plan, to be recognized over a weighted average period of 2.95 years. There was $0.6 million and $0.3 million of stock-based compensation expense during the three months ended March 31, 2024 related to the repricing included in general and administrative and research and development expense on the Consolidated Statements of Operations, respectively. There was $27,000 and $24,000 of stock-based compensation expense during the three months ended March 31, 2025 related to the repricing included in general and administrative and research and development expense on the Consolidated Statements of Operations, respectively. Summary of Equity Incentive Plans Assumed from Vital Therapies, Inc. Upon completion of the Transaction with Vital Therapies, inc. ("Vital") on April 12, 2019, Vital’s 2012 Stock Option Plan (the “2012 Plan”), Vital’s 2014 Equity Incentive Plan (the “2014 Plan”) and Vital’s 2017 Inducement Equity Incentive Plan (the “Inducement Plan”), were assumed by the Company. All awards granted under these plans have either been forfeited or expired. There are no longer any shares available for grant under the 2014 Plan as of March 31, 2025. On September 2017, Vital’s board of directors approved the Inducement Plan, which was amended and restated in November 2017. Under the Inducement Plan 46,250 shares of Vital’s common stock were reserved to be used exclusively for non-qualified grants to individuals who were not previously employees or directors as an inducement material to a grantee's entry into employment within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules. No expense was recorded for the plans assumed from Vital during the three months ended March 31, 2025 and 2024, respectively.

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