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Stock-Based Compensation | 12 Months Ended
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Dec. 31, 2024
Share-Based Payment Arrangement [Abstract] |
Stock-based Compensation | 9. Stock-Based Compensation Stock Option Plan In 2015, the Company adopted the FLX Bio, Inc. 2015 Stock Plan (the “2015 Plan”). In November 2019, the Company’s board of directors adopted the 2019 Equity Incentive Plan (the “2019 Plan” and collectively with the 2015 Plan, the “Option Plans”). Upon the effectiveness of the 2019 Plan, the 2015 Plan terminated and no further grants may be made thereunder. However, the 2015 Plan will continue to govern the terms and conditions of the outstanding awards previously granted thereunder. In addition, the number of shares reserved for issuance under the 2019 Plan automatically increases on January 1 of each year beginning January 1, 2020 by a number equal to (i) 4% of the shares of common stock outstanding on the last business day of the prior fiscal year or (ii) the number of shares determined by the Company’s board of directors. As of January 1, 2024, an additional 1,375,932 shares of common stock were reserved for issuance pursuant to the automatic increase to the authorized shares under the 2019 Plan. The Option Plans provide for the granting of incentive and non-statutory stock options and restricted shares of common stock options to eligible employees, officers, directors, advisors and consultants. Terms of the stock option agreements, including vesting requirements, are determined by the board of directors, subject to the provisions of the Options Plans. Options granted generally vest over four years and expire no later than ten years from the date of grant. As a private company, the estimated fair value of the Company’s underlying common stock was determined by the board of directors. Following its initial public offering, the fair value of the Company’s common stock is based on the closing price of its common stock on the date of grant. Employee Stock Purchase Plan In October 2019, the Company adopted the 2019 Employee Stock Purchase Plan (the “2019 ESPP”). The Company reserved 240,336 shares of common stock pursuant to purchase rights to be granted to the Company’s employees. The 2019 ESPP provides that the number of shares reserved and available for issuance automatically increases on January 1 of each calendar year, beginning January 1, 2020, by the lesser of (1) 1.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, (2) 240,336 shares or (3) a number determined by the board of directors that is less than (1) and (2). As of January 1, 2024, 240,336 shares of common stock were authorized for issuance pursuant to the annual automatic increase to the authorized shares under the 2019 ESPP. Under the 2019 ESPP, eligible employees are granted rights to purchase shares of common stock, which can be funded through payroll deductions that cannot exceed 15% of each employee’s compensation. The 2019 ESPP generally provides for a 24-month offering period, which includes four six-month purchase periods. At the end of each purchase period, eligible employees are permitted to purchase shares of common stock at 85% of the lower of fair market value at the beginning of the offering period or fair market value at the end of the purchase period. During the years ended December 31, 2024 and 2023, employees purchased 158,551 shares at weighted average price of $4.91 and 87,671 shares at a weighted average exercise price of $12.34, respectively. The 2019 ESPP is considered a compensatory plan and the Company recorded stock-based compensation expense of $1.1 million and $1.3 million for the years ended December 31, 2024 and 2023, respectively. Stock Options Stock option activity under the 2019 Plan is set forth below for the year ended December 31, 2024:
|  |  |  |  | Weighted |  |  | Average |  |  |  |
|  |  |  |  | Average |  |  | Remaining |  |  | Aggregate |
|  | Number of |  |  | Exercise |  |  | Contractual |  |  | Intrinsic |
|  | Shares |  |  | Price Per |  |  | Term |  |  | Value |
|  | Outstanding |  |  | Share |  |  | (Years) |  |  | (in thousands) |
Balances at December 31, 2023 |  |  | 4,099,947 |  |  | $ | 21.00 |  |  |  | 7.6 |  |  | $ | 23,206 |
Stock options granted |  |  | 1,648,459 |  |  |  | 21.74 |  |  |  |  |  |  |
Stock options exercised |  |  | (14,374 | ) |  |  | 4.67 |  |  |  |  |  |  |
Stock options forfeited |  |  | (728,712 | ) |  |  | 23.36 |  |  |  |  |  |  |
Balances at December 31, 2024 |  |  | 5,005,320 |  |  | $ | 20.94 |  |  |  | 7.2 |  |  | $ | 1 |
Vested and expected to vest at December 31, 2024 |  |  | 5,005,320 |  |  |  | 20.94 |  |  |  | 7.2 |  |  | $ | 1 |
Exercisable at December 31, 2024 |  |  | 3,224,884 |  |  |  | 19.65 |  |  | 6.5 |  |  |  | — |
The aggregate intrinsic values of options outstanding, exercisable, vested and expected to vest were calculated as the difference between the exercise price of the underlying awards and the quoted price of the Company’s common stock for options that were in-the-money as of December 31, 2024. The options granted in the years ended December 31, 2024 and 2023 had a weighted average per share grant-date fair value of $17.48 and $20.20, respectively, and a total grant date fair value of $28.8 million and $24.6 million, respectively. The aggregate intrinsic value of stock options exercised in the years ended December 31, 2024 and 2023 was $0.1 million and $0.7 million, respectively. Cash received from stock option exercises were $67,000 and $0.5 million for the years ended December 31, 2024 and 2023, respectively. The Company issues new shares of common stock upon exercise of options. In connection with these exercises, there was no tax benefit realized by the Company due to its current loss position. The aggregate fair value of options that vested in the years ended December 31, 2024 and 2023 was $18.8 million and $15.2 million, respectively. Restricted Stock Units Restricted Stock Units (“RSU”) activity under the 2019 Plan is set forth below for the year ended December 31, 2024:
|  |  |  |  | Weighted |
|  |  |  |  | Average |
|  | Number of |  |  | Grant Date |
|  | Shares |  |  | Fair Value |
|  | Outstanding |  |  | Per Share |
Balances at December 31, 2023 |  |  | 13,500 |  |  | $ | 44.66 |
RSUs granted |  |  | — |  |  |  | — |
RSUs vested and settled |  |  | (13,500 | ) |  |  | 44.66 |
RSUs forfeited |  |  | — |  |  |  | — |
Balances at December 31, 2024 |  |  | — |  |  | $ | — |
Employee stock option valuation In determining the fair value of the options granted, the Company uses the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment to determine. Expected term The expected term represents the period that the Company’s options granted are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term). The Company has very limited historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants. Expected volatility Since the Company recently became a public company and has only a limited trading history for its common stock, the expected volatility was estimated based on the average historical volatility for comparable publicly traded biopharmaceutical companies and our historical volatility over a period, where available, equal to the expected term of the stock option grants. The comparable companies were chosen based on their similar size, life cycle stage or area of specialty. Risk-free interest rate The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the options. Expected dividend The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock. Therefore, the Company used an expected dividend yield of zero. The assumptions used to value employee and non-employee stock option awards granted under the Option Plans during the years ended December 31, 2024 and 2023, using the Black-Scholes option pricing model, were as follows:
|  | For the Year Ended December 31,
|  | 2024 |  | 2023
Fair value |  | $1.16 - $24.75 |  | $11.25 - $23.70
Expected term (in years) |  | 5.88 - 6.06 |  | 5.87 - 6.06
Volatility |  | 99.6% - 110.7% |  | 94.9% - 97.8%
Risk-free interest rate |  | 3.93% - 4.64% |  | 3.46% - 4.71%
Dividend yield |  | — |  | —
Employee stock purchase plan The fair value of the rights granted to employees under the 2019 ESPP was estimated using a Black-Scholes option-pricing model with the following valuation assumptions:
|  | For the Year Ended December 31,
|  | 2024 |  | 2023
Fair value |  | $0.91 - $5.90 |  | $4.79 - $12.12
Expected term (in years) |  | 0.50 - 2.00 |  | 0.50 - 2.00
Volatility |  | 95.6% - 165.3% |  | 64.3% - 93.2%
Risk-free interest rate |  | 4.21% - 5.53% |  | 4.14% - 5.51%
Dividend yield |  | — |  | —
Stock-based compensation expense Total stock-based compensation expense recognized for stock options and RSUs granted to both employees and non-employees and for the employee stock purchase plan was as follows (in thousands):
|  | For the Year Ended December 31, |
|  | 2024 |  |  | 2023 |
Research and development |  | $ | 9,203 |  |  | $ | 7,941 |
General and administrative |  |  | 10,732 |  |  |  | 9,150 |
Total stock-based compensation expense |  | $ | 19,935 |  |  | $ | 17,091 |
As of December 31, 2024, unrecognized stock-based compensation cost related to outstanding unvested stock options that are expected to vest was $32.7 million. This unrecognized stock-based compensation cost is expected to be recognized over 2.4 years. Repricing of stock options On November 12, 2024, the Compensation Committee (the “Committee”) of the Board of Directors of the Company approved an option repricing, which was effective on November 13, 2024 (the “Effective Date”). The repricing generally applies to options to purchase shares of the Company’s common stock that: (i) were granted under the Company’s 2019 Plan; (ii) as of the Effective Date, are held by the Company’s then-current employees and consultants (subject to the caveat below) (each, an “Eligible Participant”); and (iii) have an exercise price per share greater than $8.00 (the “Eligible Options”). The Eligible Options include options held by certain of the Company's executive officers. Options held by non-employee members of the Board were not eligible for the repricing program. As of the Effective Date, the Eligible Options were immediately repriced such that the exercise price per share for such options was reduced to the closing price of the Company’s common stock per share on the Effective Date, subject to certain retention requirements outlined below. The closing price of the Company’s common stock per share on the Effective Date was $1.57, which became the reduced exercise price per share for the Eligible Options. If an employee exercises Eligible Options in advance of the end of the retention period as described below, the employee will be required to pay a premium exercise price equal to the original exercise price per share of the Eligible Options. There were no changes to the number of shares underlying the Eligible Options or to the vesting schedules or expiration dates of the Eligible Options. In order to exercise the Eligible Options at the reduced exercise price, holders of the Eligible Options are required to remain in service with the Company through the end of the relevant retention period. The retention period begins on the Effective Date and ends on the earliest of the following: (i) the date 12 months following the Effective Date; (ii) a Change in Control (as defined in the 2019 Plan) if the Eligible Options are not assumed or continued by the successor or acquiror entity (or its parent company) in such Change in Control or substituted for a similar award of the successor or acquiror entity (or its parent company); or (iii) the option holder’s termination of Continuous Service (as defined in the 2019 Plan) (a) due to such individual’s death or disability, (b) by the Company (or successor entity in a Change in Control) other than for Cause (as defined in the applicable 2019 Plan) or (c) due to such option holder’s resignation on or following a Change in Control under certain circumstances. As of the Effective Date, the total number of shares underlying all Eligible Options was 3.9 million shares. The effect of the repricing resulted in total incremental stock-based compensation expense of $1.6 million, $0.5 million of which will be recognized on a straight-line basis through the end of the retention period, while the remaining $1.1 million will be recognized on a straight-line basis over the original vesting period for those options that vest after the end of the retention period. The incremental stock-based compensation expense was calculated using the Monte Carlo option-pricing model. For the year ended December 31, 2024, the Company recognized incremental stock-based compensation expense totaling $0.1 million associated with the option repricing, which is included in general and administrative and research and development expense on the statement of operations.

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