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Note 6 - Stockholders' Equity and Stock-based Compensation Expense

3 Months Ended

Mar. 31, 2025

Notes to Financial Statements

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

Note 6. Stockholders’ Equity and Stock-Based Compensation Expense

Common Stock Warrant Distribution

See Notes 2 and 11 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. The Company is obligated to pay a commission of up to 3% of the gross proceeds from the sale of shares of common stock under the ATM. However, the Company is no longer a Well-Known Seasoned Issuer, as defined by the SEC. Thus, the Company is not eligible to sell securities under the ATM under its existing “automatic” shelf registration statement on Form S-3 unless and until it files a new Form S-3 that is declared effective by the SEC.

There were no common stock sales under the ATM during the three months ended March 31, 2025 and 2024.

Stock Option and Performance Award Activity in 2025

During the three months ended March 31, 2025, 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, 2024			4,463,028				7,142
Options granted			—				—
Options exercised			(225,209	)			—
Options forfeited/canceled			(959,051	)			—
Outstanding as of March 31, 2025			3,278,768				7,142

The weighted average exercise price per share of options outstanding at March 31, 2025 was $22.95. As outstanding options vest over the current remaining vesting period of 2.2 years, the Company expects to recognize stock-based compensation expense of $31.8 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 months ended March 31, 2025, there were 225,209 stock options exercised. Of the stock options exercised, 120,492 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 $90,000 during the three months ended March 31, 2025.

Subsequent to March 31, 2025, there were 1.3 million stock options granted to officers and employees of the Company at an exercise price of approximately $1.44 per share. The stock options vest in four equal annual installments (25% each year) with the initial 25% one year from the date of grant.

Stock-based Compensation Expense in 2025

During the three months ended March 31, 2025 and 2024, the Company’s stock-based compensation expense was as follows (in thousands):

		*Three months ended*
		*March 31,*
		*2025*				*2024*
Research and development		$	2,372			$	973
General and administrative			2,853				1,362
Total stock-based compensation expense		$	5,225			$	2,335

The Company estimates forfeitures for each award in determining stock-based compensation expense. The Company recorded $0.8 million of estimated forfeitures during the three months ended March 31, 2025. There were no estimated forfeitures during the three months ended March 31, 2024.

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 in May 2022 (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 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.