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Stock Based Compensation | 3 Months Ended
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Mar. 31, 2023
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Stock Based Compensation |
6. | Stock Based Compensation
2018 Omnibus Incentive Plan In June 2018, stockholders of the Company approved the Company’s 2018 Omnibus Incentive Plan (the “2018 Plan”). The 2018 Plan had previously been approved by the Company’s Board of Directors (the “Board”) and the Compensation Committee (the “Committee”) of the Board, subject to stockholder approval. The 2018 Plan became effective on June 13, 2018. On June 9, 2021, the stockholders of the Company approved an amendment previously approved by the Board to increase the number of shares of common stock reserved for issuance under the 2018 Plan by 2,500,000 to a total of 5,300,000 shares. The amendment became effective immediately upon stockholder approval. After the option modification (as discussed below), the number of shares of common stock reserved for issuance under the 2018 Plan increased to a total of 31,456,403. As of March 31, 2023, there were 25,521,867 shares of common stock available for future grant. Performance-Based Stock Option Grants In June 2022, the Committee approved the issuance of an option grant to purchase 400,000 shares (2,457,917 shares after the option modification discussed below) of common stock to the Chief Executive Officer pursuant to the 2018 Plan, which will vest upon (a) the achievement of a specified performance goal and (b) the grantee’s continued employment during the service period. During the three months ended March 31, 2023, this award was cancelled. Prior to cancellation, no expense has been recognized related to this award and no options have vested. Special Cash Dividend On January 12, 2023, the Company paid a special, one-time cash dividend of $7.6 million (or $0.24 per share) to the Company’s common stockholders of record as of the close of business on January 5, 2023. The Company determined, in accordance with the adjustment provision of the 2018 Plan, that the special cash dividend was unusual and non-recurring and that appropriate adjustment to the stock options to purchase shares of the Company’s common stock outstanding under the 2018 Plan was required. The Company treated this adjustment as a modification to the original stock option grants because the terms of the agreements were modified in order to preserve the value of the option awards after a large non-recurring cash dividend. These options were amended to decrease the exercise price and increase the number of shares subject to the stock option on a proportionate basis. No incremental value was provided to the option holders as a result of the modification and no additional compensation cost was recorded by the Company. The following table summarizes stock option activity under the Company’s 2018 Plan and related information:
|  | Number of Shares Underlying Outstanding Options |  |  | Weighted- Average Exercise Price |  |  | Weighted- Average Remaining Contractual Term (Years) |
Outstanding — December 31, 2022 |  |  | 8,678,767 |  |  | $ | 1.42 |  |  |  | 7.47 |
Options granted (1) |  |  | 14,008,093 |  |  | $ | 0.86 |  |  |  |  |
Options forfeited and cancelled (1) |  |  | (14,210,119 | ) |  | $ | 0.91 |  |  |  |  |
Options expired |  |  | (12,174 | ) |  | $ | 36.16 |  |  |  |  |
Outstanding — March 31, 2023 |  |  | 8,464,567 |  |  | $ | 1.30 |  |  |  | 6.01 |
Exercisable — March 31, 2023 |  |  | 7,306,692 |  |  | $ | 1.40 |  |  |  |  |
| (1) | Includes options that were cancelled and re-granted as part of the option modification from the special cash dividend, as further discussed above.
Valuation Assumptions The Company estimated the fair value of stock options granted using the Black-Scholes option-pricing formula and a single option award approach. Due to its limited relevant historical data, the Company estimated its volatility considering a number of factors including the use of the volatility of comparable public companies. The expected term of options granted under the Plan, all of which qualify as “plain vanilla” per SEC Staff Accounting Bulletin 107, is determined based on the simplified method due to the Company’s limited relevant history. The risk-free rate is based on the yield of a U.S. Treasury security with a term consistent with the option. This fair value is being amortized ratably over the requisite service periods of the awards, which is generally the vesting period. The only options granted during the quarter ended March 31, 2023 were as a result of the option modification. Since no new stock options were granted during the quarter ended March 31, 2023, all weighted-average assumptions for the period were not applicable. The fair value of employee stock options was estimated using the following weighted-average assumptions:
|  | Three Months Ended March 31, |
|  | 2023 |  |  | 2022 |
Employee Stock Options: |  |  |  |  |  |  |  |
Risk-free interest rate |  |  | — |  |  |  | 1.87 | %
Expected term (in years) |  |  | — |  |  |  | 6.1 |
Dividend yield |  |  | — |  |  |  | — |
Volatility |  |  | — |  |  |  | 91.54 | %
Weighted-average fair value of stock options granted |  | $ | — |  |  | $ | 0.39 |
Total stock-based compensation expense recognized was as follows (in thousands):
|  | Three Months Ended March 31, |
|  | 2023 |  |  | 2022 |
Research and development |  | $ | 66 |  |  | $ | 128 |
General and administrative(1) |  |  | 144 |  |  |  | 387 |
Total stock-based compensation expense |  | $ | 210 |  |  | $ | 515 |
| (1) | No shares of common stock were issued to board members for the three months ended March 31, 2023.

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