Note 9 - Stock-based Compensation

12 Months Ended

Dec. 31, 2025

Notes to Financial Statements

Share-Based Payment Arrangement [Text Block]

9.	Stock-Based Compensation

Stock-based compensation expense for the years ended December 31, 2025 and 2024 was classified in the consolidated statements of operations as follows:

		Year Ended December 31,
		2025				2024
		(000's)
Research and development		$	3,346			$	2,971
General and administrative			5,022				5,589
Total		$	8,368			$	8,560

2020 Stock Option and Incentive Plan

In June 2020, the Company’s board of directors adopted the 2020 Plan and reserved 2.9 million shares of common stock for issuance under this plan. The 2020 Plan provides that the number of shares reserved and available for issuance under the 2020 Plan will automatically increase each January 1, beginning on January 1, 2021, by the lesser of 4% of the outstanding number of shares of our common stock on the immediately preceding December 31 or such number of shares as determined by the plan administrator no later than the immediately preceding December 31. As of December 31, 2025, 5.3 million shares remain available for future grant. On January 1, 2026, an additional 7.1 million shares became available for issuance based on 4% of the outstanding shares of common stock, for a total of 12.4 million shares available for issuance.

The 2020 Plan authorizes the board of directors or a committee of the board to grant incentive stock options, nonqualified stock options, restricted stock awards and restricted stock units ("RSUs") to eligible officers, employees, consultants and directors of the Company. Options generally vest over a period of four years and have a contractual life of ten years from the date of grant.

Stock Options:

The following table summarizes the stock option activity for the 2020 Plan:

		Options (000's)				Weighted Average Exercise Price Price Per Share				Weighted Average Remaining Contractual Life (in years)				Aggregate Intrinsic Value (000's)
Outstanding at December 31, 2023			7,876			$	3.81				8.05			$	11
Granted			6,193			$	1.58				7.10			$	—
Exercised			—			$	—				—			$	—
Forfeited/cancelled			(7	)		$	3.04				—			$	—
Outstanding at December 31, 2024			14,062			$	2.83				6.23			$	579
Granted			4,777			$	3.63				8.76			$	2
Exercised			(545	)		$	2.34				—			$	1,214
Forfeited/cancelled			(1,942	)		$	2.40				—			$	2,341
Outstanding at December 31, 2025			16,352			$	3.13				6.69			$	36,614
Vested at December 31, 2025			9,513			$	3.38				5.24			$	18,932

For the year ended December 31, 2025, the weighted average grant date fair value for options granted was $2.69. The aggregate intrinsic value for options vested and outstanding as of December 31, 2025 and 2024 was $36.6 million and $579 thousand, respectively. As of December 31, 2025, the unrecognized compensation cost related to outstanding options was $13.7 million, expected to be recognized over a weighted average period of approximately 1.4 years.

The weighted average assumptions used in the Black-Scholes option pricing model to determine the fair value of stock options granted to employees and directors during the years ended December 31, 2025 and 2024 were as follows:

		Year Ended December 31,
		2025				2024
Expected term (in years)			6.0				6.0
Risk-free rate			4.26	%			3.92	%
Expected volatility			86	%			81	%

RSUs:

The following table summarizes the RSU activity for the 2020 Plan:

		Shares (000's)				Weighted Average Price Per Share				Weighted Average Fair Value (000's)
Unvested, December 31, 2023			1,500			$	3.83			$	5,745
Granted			2,791				1.89				5,275
Vested			(525	)			3.87				(2,032	)
Forfeited or canceled			—				—				—
Unvested, December 31, 2024			3,766			$	2.41			$	9,076
Granted			—			$	—			$	—
Vested			(1,073	)			2.59				(2,779	)
Forfeited or canceled			(1,665	)			2.34				(3,896	)
Unvested, December 31, 2025			1,028			$	2.33			$	2,395

Weighted average price per share is the weighted grant price based on the closing market price of each of the stock grants. The weighted average fair value is the weighted average share price times the number of shares.

As of December 31, 2025, remaining unrecognized compensation cost related to RSUs to be recognized in future periods totaled $1.6 million, which is expected to be recognized over a weighted average period of 1.2 years. As of December 31, 2025, the total unrecognized compensation cost from all plans to be recognized in future periods totaled approximately $15.3 million.

2025 Inducement Plan

In December 2025, the Company’s board of directors adopted the Compass Therapeutics, Inc. 2025 Inducement Plan (the “Inducement Plan”). The purpose of the Inducement Plan is to enable the Company to grant equity awards to induce highly-qualified prospective officers and employees to accept employment and provide them with a proprietary interest in the Company. The Company intends that the Inducement Plan be reserved for persons to whom the Company may issue securities without stockholder approval as an inducement pursuant to Rule 5635(c)(4) of the Marketplace Rules of The NASDAQ Stock Market LLC. The maximum number of shares of Stock reserved and available for issuance under the Inducement Plan is four million shares. As of December 31, 2025, no equity had been granted or outstanding with the Inducement Plan. On January 1, 2026, a total of two million options were granted as part of the Inducement Plan to two new officers as a material inducement for those officers to join the Company.