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STOCK-BASED COMPENSATION
 12 Months Ended
Dec. 31, 2023
Share-Based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION

 

11. STOCK-BASED COMPENSATION

 

The Company’s 2007 Equity Incentive Plan (the “2007 Plan) expired in March 2017, however all options and warrants outstanding at the time of the expiration remained outstanding and exercisable by their term. As of December 31,2023, options to purchase approximately 1.5 million shares of common stock remain outstanding under the 2007 Plan.

 

In May 2017, the Company’s shareholders approved its 2017 Stock Incentive Plan (the “2017 Plan”). The 2017 Plan provides for the grant of non-qualified stock options and incentive stock options to purchase shares of the Company’s common stock and for the grant of restricted and unrestricted share grants. The Company reserved a total of 3,750,000 shares of common stock for issuance under the 2017 Plan. All employees, officers, directors, consultants, advisors and other persons who provide services to the Company or any subsidiaries of the Company are eligible to receive incentive awards under the 2017 Plan. As of December 31, 2023, awards of approximately 3.7 million shares of common stock had been granted under the 2017 Plan, net of forfeited restricted stock and option awards and approximately 25,000 shares of common stock are reserved for issuance.

 

In May 2023, the Company’s shareholders approved its 2023 Stock Incentive Plan (the “2023 Plan”). The 2017 Plan provides for the grant of non-qualified stock options and incentive stock options to purchase shares of the Company’s common stock and for the grant of restricted and unrestricted share grants. The Company reserved a total of 2,000,000 shares of common stock for issuance under the 2023 Plan. All employees, officers, directors, consultants, advisors and other persons who provide services to the Company or any subsidiaries of the Company are eligible to receive incentive awards under the 2023 Plan. As of December 31, 2023, awards of approximately 78,000 shares of common stock had been granted under the 2023 Plan, net of forfeited restricted stock and option awards and approximately 1.9 million shares of common stock are reserved for issuance.

  

The following table summarizes the stock-based compensation expense recorded in the Company’s results of operations during the years ended December 31, 2023 and 2022 for stock options and restricted stock (in thousands):

        
   Year Ended December 31, 
   2023   2022 
Research and development  $1,408   $1,153 
General and administrative   2,265    1,965 
Selling and Marketing   340    249 
Total  $4,013   $3,367 

  

As of December 31, 2023, there was approximately $6.6 million of total unrecognized compensation expense related to non-vested share-based compensation arrangements that are expected to vest. This cost is expected to be recognized over a weighted-average period of 2.5 years.

 

The Company records compensation expense for employee awards with graded vesting using the straight-line method. The Company records compensation expense for non-employee awards with graded vesting using the accelerated expense attribution method. The Company recognizes compensation expense over the requisite service period applicable to each individual award, which generally equals the vesting term. The Company estimates the fair value of each option award using the Black-Scholes-Merton option pricing model. Forfeitures are recognized when realized.

 

The fair value of employee stock options issued was estimated using the following weighted-average assumptions:

         
   Year Ended December 31, 
   2023   2022 
Exercise price:  $6.54   $14.21 
Grant date fair value per share:  $4.94   $10.37 
Assumptions:          
Expected volatility   82.59%    83.18% 
Weighted average expected term (in years)   6.82    6.51 
Risk-free interest rate   4.03%    1.96% 
Expected dividend yield   0.0%    0.0% 

 

The risk-free interest rate was obtained from U.S. Treasury rates for the applicable periods. The Company’s expected volatility was based upon the historical volatility of the Company. The expected life of the Company’s options was determined using the simplified method as a result of limited historical data regarding the Company’s activity. The dividend yield considers that the Company has not historically paid dividends and does not expect to pay dividends in the foreseeable future.

 

The following table summarizes stock option activity (in thousands except exercise prices and contractual terms):

                
  

Number of

Shares

  

Weighted-

Average

Exercise

Prices

  

Weighted-Average

Remaining

Contractual

Term
(In Years)

   Intrinsic Value 
Outstanding at January 1, 2023   3,009   $7.07           
Granted   393   $6.54           
Exercised   (33)  $3.90           
Outstanding at December 31, 2023   3,369   $7.04    4.66   $3,437 
Exercisable at December 31, 2023   2,862   $6.64    3.95   $3,190 

  

During the year ended December 31, 2023, the Company granted options under its 2017 Plan and 2023 Plan to purchase approximately 393,000 shares of its common stock to its employees. The fair value of these options was approximately $1.9 million.

  

The Company issues restricted stock to employees, directors and consultants and estimates the fair value based on the closing price on the day of grant. The following table summarizes restricted stock activity (in thousands except per share data):

        
   Number of Shares   Weighted-Average Grant Date Fair Value 
Outstanding at January 1, 2023   340   $10.78 
Granted   357   $7.00 
Vested   (258)  $8.27 
Forfeited   (20)  $8.63 
Outstanding non-vested shares at December 31, 2023   419   $9.21