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Note 6 - Stockholders' Equity and Stock-based Compensation | 9 Months Ended
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Sep. 30, 2025
Notes to Financial Statements |
Share-Based Payment Arrangement [Text Block] | 6. Stockholders’ Equity and Stock-Based Compensation 2024 Rights Offering and Subscription Rights On March 28, 2024, the Company announced that its Board unanimously approved plans to initiate a rights offering, whereby the Company would distribute non-transferable subscription rights at no charge to all holders of the Company's common stock, par value $0.001 per share (the "Common Stock"), as of the close of business on a record date to be determined. On May 20, 2024, the Company announced that the Board had set May 31, 2024 as the record date (the "Record Date"). All holders of Common Stock as of the Record Date received non-transferable subscription rights to purchase up to an aggregate of six million units (the "2024 Units") with an aggregate offering value of up to $60 million (the "2024 Rights Offering") at a price per 2024 Unit equal to the lesser of: (i) $10 (the "Initial Price") and (ii) the volume weighted average price of the Common Stock for the ten trading day period through and including the expiration date, June 26, 2024 (the "Expiration Date"), of the Rights Offering (the "Alternate Price"). Each subscription right entitled the holder to purchase 0.10864186 2024 Units for each share of Common Stock owned as of the Record Date. Each 2024 Unit consisted of one share of Common Stock and two warrants, each being a warrant to purchase one-half of one share of Common Stock. The subscription rights were to expire and have no value if they were not exercised prior to the Expiration Date. The Company determined that the equity-classified subscription rights represent a pro-rata distribution issued to existing stockholders as of the Record Date, which is based on a purchase price of $10 per 2024 Unit as compared to (1) the price of $11.55 per one share of Common Stock on the Record Date, plus (2) the value of the warrants on the Record Date. The Company determined the fair value of the equity-classified subscription rights as of the Record Date, which involved the use of a Monte Carlo simulation model to value the underlying warrants. The Monte Carlo simulation model was based on certain significant unobservable inputs, such as a risk-free interest rate, stock price volatility, dividend yield, and expected term of the rights offering. The fair value of the equity-classified subscription rights was $47.7 million and was recorded in equity on the balance sheet as part of additional paid-in capital. The deemed pro-rata distribution to shareholders of $47.7 million was reflected as an offsetting reduction in additional paid-in capital. The Company is in an accumulated deficit position and has elected a policy of recognizing the deemed pro-rata distribution to shareholders as a reduction to additional paid-in capital rather than a further increase to its accumulated deficit. On July 3, 2024, the Company announced the closing of its 2024 Rights Offering. The 2024 Rights Offering resulted in the sale of six million 2024 Units, at a price of $10.00 per 2024 Unit. Each 2024 Unit consisted of one share of the Company’s common stock, par value $0.001 per share, and two warrants, each being a warrant to purchase one-half of one share of common stock. The common stock and warrants comprising the 2024 Units separated upon the closing of the 2024 Rights Offering and were issued individually. A total of 5,999,998 shares of common stock and warrants to acquire up to approximately an additional six million shares of common stock were issued in the offering. The Company received aggregate gross proceeds from the 2024 Rights Offering of $60 million. See 2024 Rights Offering Warrants below for additional details of the warrants. Robert W. Duggan, the Company’s majority stockholder and Co-Chairman, purchased approximately 88% of the units offered through the 2024 Rights Offering. Common Stock Warrants 2024 Rights Offering Warrants In connection with the 2024 Rights Offering, the Company issued 2024 Rights Offering Warrants to purchase a total of 5,999,999 shares of its common stock at an exercise price of $11.00 per whole share, which equaled 110% of the subscription price for the Units. The aggregate number of shares of our common stock issuable upon the exercise of each set of warrants included in a given subscription for Units was rounded up to the nearest whole share. Warrants are exercisable immediately and will expire on the fifth anniversary of the closing of the 2024 Rights Offering. Half of the warrants issued in the rights offering were redeemable for $0.01 per underlying share of common stock, on not less than thirty days’ written notice, if the volume-weighted average price ("VWAP") of the Company’s common stock equaled or exceeded 150% of the exercise price for the warrants, or $16.50, for twenty consecutive trading days. In December 2024, the Company delivered an irrevocable notice of redemption to redeem this first tranche of common stock warrants because the VWAP of the Company's common stock over the twenty consecutive trading days before the notice was $18.85. Accordingly, pursuant to the 150% redemption feature, the Company redeemed 18,221 warrants on the redemption date, February 5, 2025, and none of these warrants are still outstanding. The other half of the warrants issued in the rights offering remain redeemable for $0.01 per underlying share of common stock, on not less than thirty days’ written notice, but only if the VWAP of the Company’s common stock equals or exceeds 200% of the exercise price for the warrants, or $22.00, for twenty consecutive trading days. As of September 30, 2025, there were no outstanding 2024 Rights Offering Warrants subject to the 150% redemption feature and there were 411,907 outstanding 2024 Rights Offering Warrants subject to the 200% redemption feature, entitling holders to purchase up to approximately 205,953 shares of common stock. During the nine-months ended September 30, 2025, we have received a total of $14.1 million in gross proceeds from exercises of the 2024 Rights Offering Warrants. Cumulatively, as of September 30, 2025, we have received a total of $63.5 million in gross proceeds from exercises of the 2024 Rights Offering Warrants. Equity Plans 2017 Equity Incentive Plan and 2017 Inducement Equity Incentive Plan The Board previously adopted, and the Company’s stockholders approved, the Company’s 2017 Equity Incentive Plan (the “2017 Plan”). The 2017 Plan has a 10-year term and provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units ("RSUs"), performance units, and performance shares to employees, directors and consultants of the Company and any parent or subsidiary of the Company, as the Compensation Committee of the Board may determine. Subject to an annual evergreen increase and adjustment in the case of certain capitalization events, the Company initially reserved 1,500,000 shares of the Company’s common stock for issuance pursuant to awards under the 2017 Plan. In addition, shares remaining available under the Company’s 2015 Equity Incentive Plan, as amended (the “2015 Plan”), and shares reserved but not issued pursuant to outstanding equity awards that expire or terminate without being exercised or that are forfeited or repurchased by the Company will be added to the shares of common stock available for issuance under the 2017 Plan. The 2017 Plan is administered by the Board’s Compensation Committee. Effective at both January 1, 2025 and 2024, the number of shares of common stock available under the 2017 Plan increased by 1,200,000, respectively, pursuant to the evergreen provision of the 2017 Plan. Under the evergreen provision of the 2017 Plan, the share increase is determined based on the least of (i) 1,200,000 shares, (ii) 4% of the Company’s common stock outstanding at December 31 of the immediately preceding year, or (iii) such number of shares as determined by the Board. Additionally, the number of shares of common stock available under the 2017 Plan increased by 1,375,000 shares as a result of a stockholder vote held at a special meeting of stockholders in December 2023. On September 30, 2025, the Company's stockholders approved an amendment to the 2017 Plan, which provided for an increase in the number of shares of common stock reserved for issuance thereunder by 2,000,000 shares. As of September 30, 2025, a total of 1,072,564 of common stock remained available for issuance under the 2017 Plan. During November 2017, the Board adopted the 2017 Inducement Equity Incentive Plan (the “Inducement Plan”) and reserved 1,000,000 shares of the Company’s common stock for issuance pursuant to equity awards granted under the Inducement Plan. The Inducement Plan was adopted without stockholder approval. The Inducement Plan has a 10-year term and provides for the grant of equity-based awards, including non-statutory stock options, RSUs, restricted stock, stock appreciation rights, performance shares, and performance units, and its terms are substantially similar to the 2017 Plan, including with respect to treatment of equity awards in the event of a “merger” or “change in control” as defined under the Inducement Plan. Options issued under the Inducement Plan may have a term up to ten years and have variable vesting provisions. New hire stock option grants to non-executive employees generally vest 25% per year starting upon the first anniversary of the grant. New hire stock option grants to executive employees may contain time-based, performance-based, and/or market-based vesting. Equity-based awards issued under the Inducement Plan are only issuable to individuals not previously engaged as employees or individuals returning to employment with the Company following a bona-fide period of non-employment. In May 2021, the Board approved an amendment to the Inducement Plan to reserve an additional 1,000,000 shares of the Company’s common stock for issuance pursuant to the Inducement Plan. And, in March 2024, the Board approved a second amendment to the Inducement Plan to reserve an additional 2,000,000 shares of the Company’s common stock for issuance pursuant to the Inducement Plan. As of September 30, 2025, 2,328,709 shares of common stock remained available for issuance under the Inducement Plan. A summary of stock option activity under the 2015 Plan, 2017 Plan, and Inducement Plan for the nine-months ended September 30, 2025 is presented below:
|  | Stock Options Outstanding |
|  | Number of shares |  |  | Weighted average exercise price |  |  | Weighted average remaining life (in years) |
Balances — December 31, 2024 |  |  | 10,979,332 |  |  | $ | 9.59 |  |  |  | 7.11 |
Options granted |  |  | 2,884,343 |  |  |  | 18.67 |  |  |  |  |
Options exercised |  |  | (493,431 | ) |  |  | 4.26 |  |  |  |  |
Options canceled |  |  | (66,500 | ) |  |  | 13.13 |  |  |  |  |
Options expired |  |  | — |  |  |  | — |  |  |  |  |
Balances — September 30, 2025 |  |  | 13,303,744 |  |  | $ | 11.74 |  |  |  | 7.24 |
Exercisable — September 30, 2025 |  |  | 4,806,075 |  |  | $ | 13.44 |  |  |  | 5.20 |
Time-based Options The Company awards time-based options which vest and become exercisable, subject to the individual’s continued employment or service through the applicable vesting date. Time-based options can have various vesting schedules, most commonly new hire grants which generally vest 25% per year starting upon the first anniversary of the grant. As of September 30, 2025, and December 31, 2024, time-based options outstanding were 8,939,677 and 8,075,265 shares, respectively. During the nine-months ended September 30, 2025, the Company granted 1,424,343 time-based options with an aggregate grant date fair value of $20.9 million. Performance-based Options Certain stock options awarded by the Company contain performance conditions related to certain financial measures and achievements of strategic and operational milestones. Once a specific performance condition is fulfilled, the associated options will fully vest and become exercisable. As of September 30, 2025 and December 31, 2024, performance-based options outstanding were 442,678 shares. There were no performance-based options granted during the nine-months ended September 30, 2025. The fair value of time-based and performance-based stock options granted were determined using the Black-Scholes option pricing model. The following summarizes the range of assumptions used in calculating the fair value of the awards:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Expected term in years |  |  | 5.2 - 6.3 |  |  |  | 5.0 - 6.3 |  |  |  | 5.0 - 6.9 |  |  |  | 5.0 - 6.3 |
Expected volatility |  |  | 93% - 95% |  |  |  | 93% - 97% |  |  |  | 93% - 100% |  |  |  | 91% - 97% |
Risk-free interest rate |  |  | 4.0% - 4.1% |  |  |  | 4.5% |  |  |  | 4.0% - 4.6% |  |  |  | 4.0% - 4.5% |
Dividend yield |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Market-based Options Certain stock options awarded by the Company contain market conditions related to achievement of certain market capitalization targets. The options will vest and become exercisable once the specific market capitalization targets are fulfilled. As of September 30, 2025, and December 31, 2024, market-based options outstanding were 2,721,389 and 2,461,389 shares, respectively. During the nine-months ended September 30, 2025, the Company granted 260,000 market-based options with an aggregate grant date fair value of $4.0 million. The fair value of market-based stock options granted were determined using the Monte Carlo simulation model. The following summarizes the range of assumptions used in calculating the fair value of the awards:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Expected term in years |  |  | 2.2 - 4.5 |  |  |  | 2.2 - 4.2 |  |  |  | 2.2 - 7.0 |  |  |  | 2.2 - 5.8 |
Expected volatility |  |  | 90% |  |  |  | 90% |  |  |  | 90% |  |  |  | 90% |
Risk-free interest rate |  |  | 3.9% |  |  |  | 3.9% |  |  |  | 3.9% - 4.6% |  |  |  | 3.9% - 4.4% |
Dividend yield |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Market and Performance-based Options Certain stock options awarded by the Company contain market conditions related to the achievement of certain market capitalization targets as well as the achievement of certain revenue and margin metrics. The options will vest and become exercisable once both the specific market capitalization targets as well as the specific revenue and margin targets are fulfilled. As of September 30, 2025, market and performance-based options outstanding were 1,200,000 shares. There were no market and performance-based options outstanding as of December 31, 2024. During the nine-months ended September 30, 2025, the Company granted 1,200,000 market and performance-based options with an aggregate grant date fair value of $18.9 million. There were no market and performance-based options granted during the three-months ended September 30, 2025. As of September 30, 2025, the Company determined it is not probable that any of the performance conditions in these grants will be achieved and therefore did not recognize any associated stock-based compensation expense during the nine-months ended September 30, 2025. The Company will reassess the probability of these performance conditions at each reporting period. The fair value of market-based stock options granted was determined using the Monte Carlo simulation model. The following summarizes the range of assumptions used in calculating the fair value of the awards:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Expected term in years |  |  | — |  |  |  | — |  |  |  | 6.1 - 8.9 |  |  |  | — |
Expected volatility |  |  | — |  |  |  | — |  |  |  | 90% |  |  |  | — |
Risk-free interest rate |  |  | — |  |  |  | — |  |  |  | 4.4% - 4.6% |  |  |  | — |
Dividend yield |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
2017 Employee Stock Purchase Plan The Board previously adopted, and the Company's stockholders approved, the Company’s 2017 Employee Stock Purchase Plan (the “2017 ESPP”). The 2017 ESPP is a broad-based plan that provides employees of the Company and its designated affiliates with the opportunity to become stockholders through periodic payroll deductions that are applied towards the purchase of Company common shares at a discount from the then-current market price. Subject to adjustment in the case of certain capitalization events, a total of 250,000 common shares of the Company were available for purchase at adoption of the 2017 ESPP. Pursuant to the 2017 ESPP, the annual share increase pursuant to the evergreen provision is determined based on the least of (i) 450,000 shares, (ii) 1.5% of the Company’s common stock outstanding at December 31 of the immediately preceding year, or (iii) such number of shares as determined by the Board. In January 2025 and 2024, the Company reserved an additional 450,000 shares, respectively, under the 2017 ESPP pursuant to the evergreen provision. During the nine-months ended September 30, 2025, the Company issued 44,596 shares of common stock under the 2017 ESPP. As of September 30, 2025, 851,183 shares of common stock remained available for issuance under the 2017 ESPP. The fair value of ESPP grants was determined using the Black-Scholes option pricing model. The following summarizes the range of assumptions used in calculating the fair value of the awards:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Expected term in years |  |  | 0.5 - 1.0 |  |  |  | 0.5 - 1.0 |  |  |  | 0.5 - 1.0 |  |  |  | 0.5 - 1.0 |
Expected volatility |  |  | 98% |  |  |  | 98% |  |  |  | 98% |  |  |  | 98% |
Risk-free interest rate |  |  | 3.8% - 4.0% |  |  |  | 4.4% - 5.3% |  |  |  | 3.8% - 4.3% |  |  |  | 4.9% - 5.3% |
Dividend yield |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Stock-based Compensation Total stock-based compensation expense consisted of the following (in thousands):
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Cost of product revenue |  | $ | 52 |  |  | $ | — |  |  | $ | 52 |  |  | $ | — |
Research and development |  |  | 2,232 |  |  |  | 1,108 |  |  |  | 7,329 |  |  |  | 3,058 |
Selling, general and administrative |  |  | 3,333 |  |  |  | 1,874 |  |  |  | 9,106 |  |  |  | 3,735 |
Total stock-based compensation expense |  | $ | 5,617 |  |  | $ | 2,982 |  |  | $ | 16,487 |  |  | $ | 6,793 |
As of September 30, 2025, none of the performance conditions of the performance-based and market and performance-based options are probable to be achieved, and as such, no expense has been recognized during the three and nine-months ended September 30, 2025. Total stock-based compensation expense by award type was as follows (in thousands):
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Time-based options |  | $ | 3,937 |  |  | $ | 2,131 |  |  | $ | 11,623 |  |  | $ | 4,609 |
Performance-based options |  |  | — |  |  |  | 5 |  |  |  | — |  |  |  | 27 |
Market-based options |  |  | 1,577 |  |  |  | 788 |  |  |  | 4,581 |  |  |  | 1,978 |
ESPP |  |  | 103 |  |  |  | 58 |  |  |  | 283 |  |  |  | 179 |
Total stock-based compensation expense |  | $ | 5,617 |  |  | $ | 2,982 |  |  | $ | 16,487 |  |  | $ | 6,793 |

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