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Stockholders’ Equity and Stock Options
 12 Months Ended
Dec. 31, 2024
Stockholders' Equity Note [Abstract]  
Stockholders' Equity and Stock Options
7.
Stockholders’ Equity and Stock Options

Common Stock and Prefunded warrants

On May 28, 2020, the Company entered into a securities purchase agreement with certain accredited investors (the “Purchasers”) for the sale by the Company in a private placement of 6,105,359 shares of the Company’s common stock and prefunded warrants to purchase an aggregate of 628,403 shares of the Company’s common stock, for a price of $11.88 per share of the common stock and $11.87 per prefunded warrant. The prefunded warrants were exercisable at an exercise price of $0.01 and were exercisable indefinitely. In August 2023, the 628,403 shares of prefunded warrants were exercised and the Company received cash proceeds of six thousand two hundred and eighty-four dollars. The private placement closed on June 1, 2020. The aggregate gross proceeds for the issuance and sale of the common stock and prefunded warrants were $80.0 million, transaction costs totaled $4.6 million and resulted in net proceeds of $75.4 million. The Company’s Registration Statement on Form S-3, filed with the SEC on June 26, 2020, registered the resale of 6,105,359 shares of common stock sold and the 628,403 shares of common stock underlying the prefunded warrants. MTS Health Partners served as placement agent to the Company in connection with the private placement. As partial compensation for these services, the Company issued MTS Health Partners 35,260 shares of common stock.

As of December 31, 2024, the Company’s Amended and Restated Certificate of Incorporation, authorized the Company to issue up to 115,000,000 shares of $0.001 par value common stock, of which 63,815,065 shares were issued and outstanding, and up to 5,000,000 shares of $0.001 par value undesignated preferred stock, of which no shares were issued or outstanding. The voting, dividend and liquidation rights of the holders of the Company’s common stock are subject to and qualified by the rights, powers and preferences of the holders of the preferred stock. Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends, as may be declared by the board of directors of the Company (the “Board”), if any. No cash dividends have been declared or paid to date.

In February 2024, the Company sold 19,736,842 shares of its common stock in an underwritten public offering price of $8.74 per share and received net proceeds of approximately $161.8 million.

2022 ATM Agreement

In November 2022, the Company entered into a sales agreement (the "2022 ATM Agreement") with a Guggenheim Securities, LLC in connection with the establishment of an “at-the-market” offering program under which the Company could sell up to an aggregate of $50.0 million of shares of common stock (the “ATM Shares”) from time to time.

In February 2024, in connection with the underwritten public offering described above, the Company terminated the 2022 ATM Agreement. No ATM Shares were ever sold pursuant to the 2022 ATM Agreement.

 

In May 2024, the Company entered into a sales agreement (the "ATM Agreement") with Guggenheim Securities, LLC in connection with the establishment of an “at-the-market” offering program under which the Company could sell up to an aggregate of $100 million of shares of common stock (the “ATM Shares”) from time to time. To date, no sales of common stock have been made under this ATM Agreement.

2020 Equity Incentive Plan

The Board adopted the 2020 Equity Incentive Plan (the "2020 Plan") on July 16, 2020 and the stockholders of the Company approved the 2020 Plan on September 29, 2020. The 2020 Plan replaced the predecessor plans (the "Prior Plans") that the Company assumed following its merger with Zafgen in May 2020. Options outstanding under the Prior Plans will remain outstanding, unchanged, and subject to the terms of the Prior Plans and the respective award agreements, and no further awards will be made under the Prior Plans. However, if any award previously granted under the Prior Plans, expires, terminates, is canceled, or is forfeited for any reason after the approval of the 2020 Plan, the shares subject to that award will be added to the 2020 Plan share pool so that they can be utilized for new grants under the 2020 Plan.

The 2020 Plan provides for the grant of incentive stock options (“ISOs”), nonstatutory stock options (“NSOs”), stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based restricted stock units, and cash or other stock-based awards. ISOs may be granted only to the Company’s employees, including the Company’s officers, and the employees of the Company’s affiliates. All other awards may be granted to the Company’s employees, including the Company’s officers, the Company’s non-employee directors and consultants, and the employees and consultants of the Company’s affiliates.

The maximum number of shares that may be issued in respect of any awards under the 2020 Plan is the sum of: (i) 1,700,000 shares plus (ii) an annual increase on January 1, 2021 and each anniversary of such date thereafter through January 1, 2030, equal to the lesser of (A) 4% of the shares issued and outstanding on the last day of the immediately preceding fiscal year, or (B) such smaller number of shares as determined by the Board (collectively, the “Plan Limit”). The maximum aggregate number of shares that may be issued under the 2020 Plan is 8,000,000 over the ten-year term of the 2020 Plan.

As permitted by the 2020 Plan, the Company added 2,552,603 and 1,756,363 shares available for grant to the 2020 Plan on January 1, 2025 and January 1, 2024, respectively, increasing the maximum number of shares of the Company’s common stock that may be issued under the 2020 Plan as of January 1, 2025 to 3,179,529 shares.

During the twelve months ended December 31, 2024 and 2023, respectively, options to purchase 1,242 and 224,437 shares issued under the Prior Plans were canceled and became available for grant under the 2020 Plan. In addition, as of December 31, 2024, 626,926 shares of common stock were available for grant under the 2020 Plan.

Stock Valuation

The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted to employees:

 

 

 

2024

 

2023

Risk-free interest rate

 

4.12%

 

3.72%

Expected term (in years)

 

6.22

 

6.23

Expected volatility

 

95%

 

94%

Dividend yield

 

0.00%

 

0.00%

Stock Options

The following table summarizes the Company’s stock option activity for the twelve months ended December 31, 2024 (amounts in millions, except for share and per share data):

 

 

 

 

 

 

Weighted

 

 

Weighted Average

 

 

Aggregate

 

 

 

 

 

 

Average

 

 

Remaining

 

 

Intrinsic

 

 

 

Number of

 

 

Exercise

 

 

Contractual

 

 

Value (a)

 

 

 

Shares

 

 

Price

 

 

Term (in years)

 

 

(in millions)

 

Outstanding as of December 31, 2023

 

 

4,273,502

 

 

$

9.06

 

 

 

7.8

 

 

 

 

Granted

 

 

2,235,377

 

 

 

5.35

 

 

 

 

 

 

 

Exercised

 

 

(15,404

)

 

 

5.00

 

 

 

 

 

 

 

Forfeited/Expired

 

 

(57,088

)

 

 

10.08

 

 

 

 

 

 

 

Outstanding as of December 31, 2024

 

 

6,436,387

 

 

$

7.78

 

 

 

7.6

 

 

$

0.4

 

Exercisable as of December 31, 2024

 

 

3,094,992

 

 

$

10.45

 

 

 

6.3

 

 

$

0.2

 

Vested and expected to vest as of December 31, 2024

 

 

6,436,387

 

 

$

7.78

 

 

 

7.6

 

 

$

0.4

 
(a)
The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of the common stock for the options that were in the money at December 31, 2024.

2024 Option Grants

During the twelve months ended December 31, 2024, the Company granted options to purchase 2,235,377 shares of common stock to employees and directors under the 2020 Plan. The options have an exercise price equal to the closing stock price as of the grant date. Of the 2,235,377 options granted, 2,140,377 were granted to employees and vest over four years, with 25% vesting on the first anniversary of the grant and the remainder vesting in equal monthly installments thereafter. The remaining 95,000 options were annual grants to the Company's directors and vest one year from the grant date. The weighted-average grant date fair value of options granted under the 2020 Plan during the twelve months ended December 31, 2024 was $4.25.

As of December 31, 2024, total unrecognized compensation expense related to unvested stock options granted under the 2020 Plan was $10.7 million, which is expected to be recognized over a weighted average period of 2.63 years.

Inducement Stock Option Grant

There were no inducement awards granted in the twelve months ended December 31, 2024.

As of December 31, 2024, total unrecognized compensation expense related to unvested inducement options granted under the 2020 Plan was $0.7 million, which is expected to be recognized over a weighted average period of 2.28 years.

Restricted Stock Units

RSUs were granted under the 2020 Plan to the Company's employees in order to maintain retention of key employees. The value of an RSU award is based on the Company's stock price on the date of the grant. The shares underlying the RSUs are not issued until the RSUs vest.

Activity with respect to the Company's RSUs during the twelve months ended December 31, 2024 was as follows (in millions, except share, contractual term, and per share data):

 

 

 

 

 

 

Weighted

 

 

Weighted Average

 

 

Aggregate

 

 

 

 

 

 

Average

 

 

Remaining

 

 

Intrinsic

 

 

 

Number of

 

 

Grant Date

 

 

Contractual

 

 

Value (a)

 

 

 

Shares

 

 

Fair Value

 

 

Term (in years)

 

 

(in millions)

 

Outstanding as of December 31, 2023

 

 

615,000

 

 

$

4.94

 

 

 

1.6

 

 

 

 

Restricted stock units granted

 

 

245,372

 

 

 

4.21

 

 

 

 

 

 

 

Restricted stock units vested

 

 

(153,750

)

 

 

4.94

 

 

 

 

 

 

 

Restricted stock units forfeited

 

 

(7,619

)

 

 

4.64

 

 

 

 

 

 

 

Outstanding as of December 31, 2024

 

 

699,003

 

 

$

4.69

 

 

 

1.2

 

 

$

2.7

 

Unvested and expected to vest as of December 31, 2024

 

 

699,003

 

 

$

4.69

 

 

 

1.2

 

 

$

2.7

 

Restricted Stock Unit Grants

During the twelve months ended December 31, 2024, the Company granted 245,372 shares of RSUs to employees under the 2020 Plan. The RSUs vest annually over four years and have a weighted-average grant date fair value during the twelve months ended December 31, 2024 of $4.21.

As of December 31, 2024, total unrecognized compensation expense for RSUs was $2.3 million, which is expected to be recognized over a weighted-average period of 2.4 years.

January 2025 Option, Restricted Stock Unit Grants and Performance-Based Restricted Stock Units

On January 22, 2025, the Company granted options to purchase 2,084,162 shares of common stock, 347,360 shares of restricted stock units and 200,000 Performance-based restricted stock units to employees under the 2020 Plan. The options have an exercise price equal to the closing stock price as of the grant date, and vest over four years, with 25% vesting on the first anniversary of the grant and the remainder vesting in equal monthly installments thereafter. The shares of restricted stock will vest annually over four years. The performance-based restricted stock units were granted to the Company's named executive officers. The grants included two performance milestones. The fist milestone, which relates to 20% of each grant, will vest if the FDA accepts the filing of a biologic license application for accelerated approval of nomlabofusp by December 31, 2026. The second milestone, representing 80% of each grant will vest if the FDA approves the Company nomlabofusp BLA within 12 months of the BLA acceptance (no later than December 31, 2027.) If the first milestone is not achieved by December 31, 2026, the full grant will be forfeited.

Stock-Based Compensation

Stock-based compensation expense was classified in the consolidated statements of operations as follows:

 

 

 

Year Ended December 31,

 

 

 

 

2024

 

 

2023

 

 

 

 

(in thousands)

 

 

Research and development

 

$

4,053

 

 

$

3,077

 

 

General and administrative

 

 

4,743

 

 

 

4,538

 

 

 

$

8,796

 

 

$

7,615