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Note M - Stock-based Compensation | 12 Months Ended
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Dec. 31, 2024
Notes to Financial Statements |
Share-Based Payment Arrangement [Text Block] |
M. | Stock-Based Compensation
The Company maintains a stock-based compensation plan (the “Incentive Stock Plan”) that governs stock awards made to employees and directors prior to completion of the IPO. In November 2014, the Board of Directors of the Company ("the Board"), and in April 2015, the Company’s stockholders, approved the Company’s 2014 Equity Incentive Plan (the “2014 Plan”), which became effective in April 2015. The 2014 Plan provides for the grant of stock options, other forms of equity compensation, and performance cash awards. In June 2021, the Company's stockholders approved an Amended and Restated 2014 Equity Incentive Plan (the "A&R 2014 Plan"), following its adoption by the Board in April 2021, which among other things added 4,900,000 shares to the maximum number of shares of common stock to be issued under the plan and extended the annual automatic increases (discussed further below) until January 1, 2031 and eliminated individual grant limits that applied under the 2014 Plan to awards that were intended to comply with the exemption for "performance-based compensation" under Code Section 162(m). The maximum number of shares of common stock that may be issued under the A&R 2014 Plan was 9,932,883 as of December 31, 2024. The number of shares of common stock reserved for issuance under the A&R 2014 Plan will automatically increase on January 1 of each year, beginning on January 1, 2016, and ending on and including January 1, 2031, by 4% of the total number of shares of the Company’s capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by the Board. Pursuant to the terms of the A&R 2014 Plan, on January 1, 2025, the common stock reserved for issuance under the A&R 2014 Plan automatically increased by 2,146,828 shares. During the years ended December 31, 2024, and 2023, 1,177,545 and 7,500 stock options were exercised, respectively. In January 2023, the Board approved the 2023 Employment Inducement Award Plan (as amended, the “2023 Plan”). The maximum number of shares of common stock that may be issued under the 2023 Plan is 4,500,000 as of December 31, 2024. Stock-based compensation expense recorded under the Incentive Stock Plan, A&R 2014 Plan, and 2023 Plan is included in the following line items in the accompanying consolidated statements of operations (in thousands):
|  | Year ended December 31, |
|  | 2024 |  |  | 2023 |
Research and development |  | $ | 5,819 |  |  | $ | 2,664 |
General and administrative |  |  | 9,087 |  |  |  | 3,290 |
Total stock-based compensation expense |  | $ | 14,906 |  |  | $ | 5,954 |
There was $2.5 million of stock-based compensation expense related to performance-based awards recognized during the year ended December 31, 2024. There was no stock-based compensation expense related to performance-based awards recognized during the year ended December 31, 2023. As a result of transition agreements entered into with certain former employees, the vesting for certain stock options was accelerated, resulting in a net increase in stock-based compensation expense of $2.4 million for the year ended December 31, 2024. The effects of this accelerated vesting are reflected in the table above within research and development expenses. As a result of transition agreements entered into with certain former employees, certain stock options were modified, resulting in a net decrease in stock-based compensation expense of $1.2 million for the year ended December 31, 2023. The effects of those modifications are reflected in the table above within selling, general, and administrative expenses. In June 2021, the Company's stockholders approved an Employee Stock Purchase Plan (the "ESPP"), following its adoption by the Board in April 2021. The maximum number of shares of common stock that may be issued under the ESPP is 1,500,000. The first offering period under the ESPP began on October 1, 2021, and the first purchase date occurred on May 31, 2022. As of December 31, 2024, 351,988 shares have been issued under the ESPP. Stock Option Awards The Company estimates the fair value of stock options using the Black-Scholes option-pricing model, which requires the use of subjective assumptions, including the expected term of the option, the expected stock price volatility, expected dividend yield and the risk-free interest rate for the expected term of the option. The expected term represents the period of time the stock options are expected to be outstanding. Due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected term of the stock options, the Company uses the simplified method to estimate the expected term for its “plain vanilla” stock options. Under the simplified method, the expected term of an option is presumed to be the mid-point between the vesting date and the end of the contractual term. Some options, for example those that have exercise prices in excess of the fair value of the underlying stock, are not considered “plain vanilla” stock options. For these options, the Company uses an expected term equal to the contractual term of the option. Expected volatility is based on the Company’s historical volatility over the estimated expected term of the stock options. The Company assumes no dividend yield because dividends are not expected to be paid in the near future, which is consistent with the Company’s history of not paying dividends. The Company recognizes compensation expense related to stock-based payment transactions upon satisfaction of the requisite service or vesting requirements. Forfeitures are estimated at the time of grant and revised based on actual forfeitures, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Using the Black-Scholes option-pricing model, the weighted-average fair value of awards granted during the years ended December 31, 2024, and 2023, fair value was $5.74 and $3.65 per share, respectively. The assumptions used to estimate fair value are as follows:
|  | Year Ended December 31, |
|  | 2024 |  |  | 2023 |
Risk-free interest rate |  |  | 3.82% - 4.50% |  |  |  | 3.34% - 4.79% |
Expected term (in years) |  |  | 5.50 - 6.25 |  |  |  | 5.50 - 10.00 |
Expected volatility |  |  | 89.85% - 91.32% |  |  |  | 89.48% - 93.67% |
Expected dividend yield |  |  | 0 |  |  |  | 0 |
The activity under the Incentive Stock Plan, A&R 2014 Plan, and 2023 Plan for the year ended December 31, 2024, is summarized as follows:
|  |  |  |  |  | Weighted |  |  | Weighted Avg |  |  | Aggregate |
|  | Number of |  |  | Average |  |  | Remaining |  |  | Intrinsic |
|  | Options |  |  | Exercise Price |  |  | Contractual Term |  |  | Value |
Outstanding balance at January 1, 2024 |  |  | 7,275,197 |  |  | $ | 8.40 |  |  |  | 8.68 |  |  | $ | 11,089 |
Granted |  |  | 962,700 |  |  | $ | 5.74 |  |  |  | - |  |  |  | - |
Exercised or released |  |  | 1,162,705 |  |  | $ | 5.30 |  |  |  | - |  |  | $ | 1,966 |
Canceled or forfeited |  |  | 314,250 |  |  | $ | 4.90 |  |  |  | - |  |  |  | - |
Expired |  |  | 809,542 |  |  | $ | 22.52 |  |  |  | - |  |  |  | - |
Outstanding balance at December 31, 2024 |  |  | 5,951,400 |  |  | $ | 7.25 |  |  |  | 6.79 |  |  | $ | 17,448 |
Exercisable at December 31, 2024 |  |  | 2,399,305 |  |  | $ | 10.25 |  |  |  | 4.47 |  |  | $ | 6,302 |
Vested and expected to vest at December 31, 2024 |  |  | 5,764,166 |  |  |  |  |  |  |  | 6.75 |  |  | $ | 16,783 |
Information regarding currently outstanding and exercisable options as of December 31, 2024, is as follows:
|  | Options Outstanding |  |  | Options Exercisable |
|  |  |  |  |  | Weighted Avg |  |  |  |  |  |  | Weighted Avg |
|  | Number of |  |  | Remaining |  |  | Number of |  |  | Remaining |
Exercise Price |  | Shares |  |  | Contractual Term |  |  | Shares |  |  | Contractual Term |
$2.848 to $10.00 |  | 5,841,257 |  |  | 6.91 |  |  | 2,289,162 |  |  | 4.69 |
$10.01 to $30.00 |  | 1,875 |  |  | 4.31 |  |  | 1,875 |  |  | 4.37 |
$30.01 to $50.00 |  | 39,218 |  |  | 2.67 |  |  | 39,218 |  |  | 2.71 |
$50.01 to $70.00 |  | 21,958 |  |  | 1.60 |  |  | 21,958 |  |  | 1.63 |
$70.01 to $327.20 |  | 47,092 |  |  | 1.36 |  |  | 47,092 |  |  | 8.34 |
|  |  | 5,951,400 |  |  |  |  |  |  |  | 2,399,305 |  |  |  |  |
The total fair value of stock options vested during the years ended December 31, 2024 and 2023, was$8.1 million and $9.2 million, respectively. Unvested stock options as of December 31, 2024 and 2023, were as follows:
|  | Number of Unvested Shares |
|  | December 31, |
Exercise Price |  | 2024 |  |  | 2023 |
$2.848 to $10.00 |  |  | 3,552,095 |  |  |  | 5,614,977 |
Total number of unvested stock options |  |  | 3,552,095 |  |  |  | 5,614,977 |
As of December 31, 2024 there was $9.5 million of total unrecognized compensation cost related to unvested share-based compensation arrangements granted under the A&R 2014 Plan and 2023 Plan. Restricted stock units The following table summarizes the restricted stock unit activity under the A&R 2014 and 2023 Plan:
|  | Shares |  |  | Weighted-average grant date fair value |
Unvested balance at December 31, 2023 |  |  | 747,945 |  |  | $ | 4.33 |
Granted |  |  | 2,012,958 |  |  |  | 5.52 |
Vested |  |  | 765,945 |  |  |  | 4.77 |
Forfeited |  |  | 156,700 |  |  |  | 5.83 |
Unvested balance at December 31, 2024 |  |  | 1,838,258 |  |  | $ | 5.32 |
As of December 31, 2024 there was $7.1 million of total unrecognized compensation cost related to restricted stock units.

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