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Note 7 - Stockholders' Equity and Stock-based Compensation Expense

6 Months Ended

Jun. 30, 2024

Notes to Financial Statements

Shareholders' Equity and Share-Based Payments [Text Block]

Note 7. Stockholders’ Equity and Stock-Based Compensation Expense

Common Stock Warrant Distribution

See Notes 2 and 12 regarding the distribution of common stock warrants on January 3, 2024.

At-the-Market Common Stock Offering

On May 1, 2023, the Company entered into an at-the-market offering program (“ATM”) to sell, from time to time, shares of Company common stock having an aggregate offering price of up to $200 million in common stock pursuant to a shelf registration statement that was filed with the U.S. Securities and Exchange Commission (the “SEC”) on May 1, 2023 and became effective immediately upon filing. The Company is obligated to pay a commission of up to 3% of the gross proceeds from the sale of shares of common stock in the offering. The Company is not obligated to sell any shares in the offering.

There were no common stock sales under the ATM during the three and six months ended June 30, 2024.

In March 2020, the Company entered into an at-the-market offering program (“2020 Program”) to sell, from time to time, shares of Company common stock having an aggregate offering price of up to $100 million in transactions pursuant to a shelf registration statement that was declared effective by the SEC on May 5, 2020. The Company gave notice of termination for the 2020 Program on April 26, 2023, which was effective May 1, 2023. There were no common stock sales under the 2020 Program through its termination.

Stock Option and Performance Award Activity in 2024

During the six months ended June 30, 2024, stock options and unvested Performance Awards outstanding under the Company’s stock option plans changed as follows:

		*Stock Options*				*Performance Awards*
Outstanding as of December 31, 2023			3,039,029				7,142
Options granted			193,000				—
Options exercised			—				—
Options forfeited/canceled			(154,700	)			—
Outstanding as of June 30, 2024			3,077,329				7,142

The weighted average exercise price per share of options outstanding at June 30, 2024 was $14.57. As outstanding options vest over the current remaining vesting period of 2.4 years, the Company expects to recognize stock-based compensation expense of $22.6 million. If and when outstanding Performance Awards vest, the Company will recognize stock-based compensation expense of $0.1 million over the implicit service period.

During the three and six months ended June 30, 2024, there were no stock options exercised.

During the three months ended June 30, 2023, there were 262,158 stock options exercised. Of the stock options exercised, 92,066 stock options were net settled in satisfaction of the exercise price, with no cash proceeds received. Cash proceeds to the Company for options not net settled totaled $889,000 during the three months ended June 30, 2023.

During the six months ended June 30, 2023, there were 281,175 stock options exercised. Of the stock options exercised, 97,205 stock options were net settled in satisfaction of the exercise price, with no cash proceeds received. Cash proceeds to the Company for options not net settled totaled $953,000 during the six months ended June 30, 2023.

Stock-based Compensation Expense in 2024

During the three and six months ended June 30, 2024 and 2023, the Company’s stock-based compensation expense was as follows (in thousands):

		*Three months ended*								*Six months ended*
		*June 30,*								*June 30,*
		*2024*				*2023*				*2024*				*2023*
Research and development		$	972			$	392			$	1,945			$	781
General and administrative			1,632				443				2,994				727
Total stock-based compensation expense		$	2,604			$	835			$	4,939			$	1,508

2018 Equity Incentive Plan

The Company’s Board of Directors (the “Board”) or a designated committee of the Board is responsible for administration of the Company’s 2018 Omnibus Incentive Plan, as amended (the “2018 Plan”) and determines the terms and conditions of each option granted, consistent with the terms of the 2018 Plan. The Company’s employees, directors, and consultants are eligible to receive awards under the 2018 Plan, including grants of stock options and Performance Awards. Share-based awards generally expire 10 years from the date of grant. The 2018 Plan, as amended in May 2022, provides for issuance of up to 5,000,000 shares of common stock, par value $0.001 per share, subject to adjustment as provided in the 2018 Plan.

When stock options or Performance Awards are exercised net of the exercise price and taxes, the number of shares of stock issued is reduced by the number of shares equal to the amount of taxes owed by the award recipient and that number of shares are cancelled. The Company then uses its cash to pay tax authorities the amount of statutory taxes owed by and on behalf of the award recipient.