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Stock-Based Compensation

12 Months Ended

Dec. 31, 2024

Stock-Based Compensation

Stock-Based Compensation

11.Stock-Based Compensation

2020 Plan

On August 21, 2020, the Company’s sole director and member approved the Zenas BioPharma (Cayman) Limited 2020 Equity Incentive Plan (the “2020 Plan”). Upon effectiveness of the 2024 Plan (as defined below), the Company ceased granting additional awards under the 2020 Plan. The 2020 Plan allowed the Company to grant stock options, restricted stock awards (“RSAs”), restricted stock units, and other stock-based awards to employees, officers, directors and consultants of the Company and its subsidiaries.

Since inception of the 2020 Plan, the Company has granted RSAs and stock options which generally vest over four years, with 25% of the total shares granted vesting on the anniversary of the vesting commencement date and the remaining 75% vesting in equal monthly installments over the subsequent thirty-six (36) months.

The 2020 Plan was subsequently amended by the Board and provided for the issuance of 2,560,401 shares of common stock as of December 31, 2023, of which 60,792 shares of common stock remained available for future grant under the 2020 Plan. Upon effectiveness of the 2024 Plan (as defined below), the remaining available shares for future grant were transferred to the 2024 Plan.

2024 Plan

On September 3, 2024, the Board adopted the 2024 Equity Incentive Plan (the “2024 Plan”), which became effective immediately prior to the effectiveness of the registration statement for the Company’s IPO. The 2024 Plan provides for the award of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, unrestricted stock, restricted stock units and other stock-based awards.

Upon the effectiveness of the 2024 Plan, the number of shares of common stock initially reserved for issuance was 4,775,477 shares of common stock which is equal to 12% of the number of shares of common stock issued and outstanding immediately following the consummation of the Company’s IPO. The number of shares reserved and available for issuance under the 2024 Plan will automatically increase each January 1, beginning on January 1, 2025 through January 1, 2034, by the number of shares equal to the lesser of (a) five percent of the aggregate number of shares of common stock outstanding as of such date, and (b) a number of shares as may be determined by the Board on or prior to such date.

As of December 31, 2024, there were 359,399 shares available for issuance under the 2024 Plan. On January 1, 2025, the shares available for issuance under the 2024 Plan was increased to 2,449,069.

Restricted Stock Awards

The following table presents a summary of the Company’s RSA activity and related information:


					Weighted-
		Number of			Average Grant-Date
		Shares			Fair Value
Unvested as of December 31, 2023			27,200		$	2.71
Vested			(6,028)			0.01
Repurchased			(21,172)			3.48
Unvested as of December 31, 2024			—		$	—

There were no RSAs granted during the year ended December 31, 2024. As of December 31, 2024, there was no compensation cost related to unvested RSAs as all were fully vested.

Stock Options

The Company has granted stock-based awards with either service or performance based vesting conditions. Compensation expense related to awards to employees and directors with service based vesting conditions is recognized on a straight-line basis based on the grant date fair value over the associated service period of the award, which is generally the vesting term. Compensation expense related to awards to employees with performance based vesting conditions is recognized based on the grant date fair value once the achievement of the performance condition is probable.

The table below presents the weighted-average assumptions used in estimating the fair values of stock options granted during the years ended December 31, 2024 and 2023:


			December 31,

			2024			2023
Risk-free interest rate			3.80	%		4.13	%
Expected term (in years)			6.07			6.04
Expected volatility			94.31	%		87.86	%
Expected dividend yield			0.00	%		0.00	%

The following table presents a summary of the Company’s stock option activity and related information:


								Weighted-Average			Aggregate
								Remaining			Intrinsic
		Number of Shares			Weighted - Average Exercise Price			Contractual Term (in years)			Value (in thousands)
Outstanding - December 31, 2023			2,382,933		$	8.51					$	8,084
Granted			6,736,822			14.67
Exercised			(38,427)			7.11						231
Forfeited or cancelled			(375,131)			10.29
Outstanding - December 31, 2024			8,706,197		$	13.21			8.76		$	2,104
Options vested and exercisable as of December 31, 2024			1,294,162		$	7.64			5.51		$	1,901
Options vested and expected to vest as of December 31, 2024			8,706,197		$	13.21			8.76		$	2,104

The aggregate intrinsic value of the stock options is calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock for those stock options that had an exercise price lower than the fair value of the Company’s common stock as of the measurement date of December 31, 2024. There were 38,427 options exercised for the year ended December 31, 2024, resulting in total proceeds of $0.3 million and 27,579 options exercised for the year ended December 31, 2023, resulting in total proceeds of $0.1 million.

The weighted-average grant date fair value of options granted during the years ended December 31, 2024 and 2023, was $11.38 and $8.11 per share, respectively. The fair value is being expensed over the associated service period of the award on a straight-line basis based on the grant date fair value or once the achievement of the performance condition is probable.

As of December 31, 2024, unrecognized compensation was $74.4 million, which is expected to be recognized over a weighted average period of 3.6 years. The total fair value of options vested during the years ended December 31, 2024 and 2023 was $4.6 million and $2.6 million, respectively.

The Company recognized stock-based compensation expense related to the issuance of equity awards to employees in the consolidated statement of operations as follows (in thousands):


		December 31,
		2024			2023
Research and development		$	4,066		$	1,600
General and administrative			6,755			1,895
Total stock-based compensation expense		$	10,821		$	3,495

Employee Stock Purchase Plan

On September 3, 2024, the Board adopted the 2024 Employee Stock Purchase Plan (the “ESPP”), which became effective immediately prior to the effectiveness of the registration statement for the Company’s IPO. The Company initially reserved 397,956 shares for issuance under the ESPP. The number of shares of common stock available under the ESPP will automatically increase on January 1^st of each year, beginning on January 1, 2025 through January 2034, by the number of shares equal to the lesser of (a) one percent of the aggregate number of shares of common stock outstanding as of such date, and (b) a number of shares as may be determined by the Board on or prior to such date, up to a maximum of 1,000,000 shares in the aggregate per year. On January 1, 2025, the shares of common stock reserved for issuance under the ESPP was increased to 815,890.

As of December 31, 2024, no shares of common stock have been issued and no stock-based compensation has been recognized related to the ESPP.