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Stockholders' Equity and Stock Options | 9 Months Ended
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Sep. 30, 2025
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 September 30, 2025, the Company’s Ninth Amended and Restated Certificate of Incorporation, as amended, authorized the Company to issue up to 115,000,000 shares of common stock, par value $0.001 per share, of which 85,590,392 shares were issued and outstanding, and up to 5,000,000 shares of undesignated preferred stock, par value $0.001 per share, 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 completed an underwritten public offering in which the Company issued and sold 19,736,842 shares of its common stock at a public offering price of $8.74 per share. The Company received net proceeds of approximately $161.8 million after deducting underwriting discounts, commissions and other offering expenses. In July 2025, the Company completed an underwritten public offering in which the Company issued and sold 21,562,500 shares of its common stock including the exercise in full of the underwriters’ option to purchase additional shares of common stock, at a public offering price of $3.20 per share. The Company received net proceeds of approximately $65.0 million, after deducting underwriting discounts, commissions and other offering expenses. ATM Agreement In November 2022, the Company entered into a sales agreement (the “2022 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 $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“2024 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 the 2024 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. As of September 30, 2025, 483,960 shares of common stock were available for grant under the 2020 Plan. During the nine months ended September 30, 2025 and twelve months ended December 31, 2024, options to purchase 1,333 and 1,242 shares, respectively, issued under the Prior Plans were cancelled and became available for grant under the 2020 Plan. Stock Option 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 during the nine months ended September 30, 2025:
|  | September 30,
|  | 2025
Risk-free interest rate |  | 4.43%
Expected term (in years) |  | 6.22
Expected volatility |  | 94%
Dividend yield |  | 0.00%
Stock Options The following table summarizes the Company’s stock option activity for the nine months ended September 30, 2025 (amounts in millions, except for share, contractual term, 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, 2024 |  |  | 6,436,387 |  |  | $ | 7.78 |  |  |  | 7.6 |  |  |  |
Options granted |  |  | 2,417,137 |  |  |  | 3.33 |  |  |  |  |  |  |
Options forfeited/expired |  |  | (245,183 | ) |  |  | 8.49 |  |  |  |  |  |  |
Outstanding as of September 30, 2025 |  |  | 8,608,341 |  |  | $ | 6.51 |  |  |  | 7.5 |  |  | $ | 0.4 |
Exercisable as of September 30, 2025 |  |  | 4,332,406 |  |  | $ | 8.82 |  |  |  | 6.3 |  |  | $ | 0.1 |
Vested and expected to vest as of September 30, 2025 |  |  | 8,608,341 |  |  | $ | 6.51 |  |  |  | 7.5 |  |  | $ | 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 September 30, 2025. Option Grants During the nine months ended September 30, 2025, the Company granted options to purchase 2,417,137 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 2,417,137 options granted, 2,322,137 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 on the earlier of (i) one year from the grant date or (ii) the date of the Company's next annual meeting of stockholders. The options have an exercise price equal to the closing stock price as of the grant date. The weighted-average grant date fair value of options granted under the 2020 Plan during the nine months ended September 30, 2025 was $2.64. As of September 30, 2025, total unrecognized compensation expense related to unvested stock options granted under the 2020 Plan was $12.2 million, which is expected to be recognized over a weighted average period of 2.53 years. Inducement Stock Option Grant There were no inducement awards granted in the nine months ended September 30, 2025. As of September 30, 2025, total unrecognized compensation expense related to unvested inducement options granted was $0.5 million, which is expected to be recognized over a weighted average period of 1.54 years. Restricted Stock Units In January 2025, RSUs were granted under the 2020 Plan to certain of the Company's employees in order to retain key employees. The value of an RSU award is based on the Company's stock price on the date of grant. The shares underlying the RSUs are not issued until the RSUs vest. Activity with respect to the Company's RSUs and performance-based RSUs during the nine months ended September 30, 2025 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, 2024 |  |  | 699,003 |  |  | $ | 4.69 |  |  |  | 1.2 |  |  |  |
Restricted stock units granted |  |  | 544,988 |  |  |  | 3.46 |  |  |  |  |  |  |
Restricted stock units vested |  |  | (212,827 | ) |  |  | 4.73 |  |  |  |  |  |  |
Restricted stock units forfeited |  |  | (21,373 | ) |  |  | 4.27 |  |  |  |  |  |  |
Outstanding as of September 30, 2025 |  |  | 1,009,791 |  |  | $ | 4.02 |  |  |  | 1.4 |  |  | $ | 3.3 |
Unvested and expected to vest as of September 30, 2025 |  |  | 1,009,791 |  |  | $ | 4.02 |  |  |  | 1.4 |  |  | $ | 3.3 |
Restricted Stock Unit Grants During the nine months ended September 30, 2025, the Company granted 344,988 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 of $3.46 per unit. As of September 30, 2025, total unrecognized compensation expense for RSUs was $2.5 million, which is expected to be recognized over a weighted average period of 2.32 years. Performance-Based Restricted Stock Unit Grants In January 2025, the Company granted performance-based RSUs (the “January 2025 PSU Awards”) " to each of the four executive officers of the Company under the 2020 Plan. Each award was expressed as a target number of RSUs. With respect to the January 2025 PSU Awards, the Board established specified regulatory-related performance criteria and a corresponding performance period over which such performance criteria must be achieved, the satisfaction of which are conditions to earning the January 2025 PSU Awards and vesting of the underlying RSUs. As of September 30, 2025, the January 2025 PSU Awards were outstanding covering 200,000 common stock underlying RSUs. The grant date fair value of the performance-based RSUs was $3.46 per unit based on the grant date closing price per share. As of September 30, 2025, the underlying performance criteria of the January 2025 PSU Awards were determined to be not probable of achievement for accounting purposes, and no stock-based compensation expense was recognized for the three and nine months ended September 30, 2025. Stock-Based Compensation Stock-based compensation expense was classified in the condensed consolidated statements of operations as follows:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Research and development |  | $ | 883 |  |  | $ | 918 |  |  | $ | 2,733 |  |  | $ | 2,816 |
General and administrative |  |  | 902 |  |  |  | 1,039 |  |  |  | 2,714 |  |  |  | 3,570 |
|  | $ | 1,785 |  |  | $ | 1,957 |  |  | $ | 5,447 |  |  | $ | 6,386 |

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