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Stock-Based Compensation | 6 Months Ended
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Jun. 30, 2023
Stock-Based Compensation [Abstract] |
STOCK-BASED COMPENSATION | NOTE 10. STOCK-BASED COMPENSATION On September 23, 2021, the 2021 Equity Incentive Plan (“2021 Plan”) and the 2021 Employee Stock Purchase Plan (“ESPP”) became effective. The 2021 Plan and ESPP provide for annual automatic increases in the number of shares reserved under each plan on January 1 of each year, beginning on January 1, 2022 and through January 1, 2031. The number of shares available for issuance under the 2021 Plan will increase annually in an amount equal to the least of (i) 2,750,000 shares, (ii) a number of shares equal to 4% of the total number of shares of all classes of common stock of the Company outstanding on the last day of the immediately preceding fiscal year, or (iii) such lesser number of shares determined by the Company’s Board of Directors (“Board”) no later than the last day of the immediately preceding fiscal year. The number of shares of common stock available for issuance under the ESPP will increase annually in an amount equal to the least of (i) 550,000 shares of common stock, (ii) a number of shares of common stock equal to 1% of the total number of shares of all classes of common stock of the Company on the last day of the immediately preceding fiscal year, or (iii) such number of shares determined by the Board. As of June 30, 2023, 6,453,566 shares were reserved for issuance under the 2021 Plan, of which 855,464 shares were available for future grant and 5,598,102 shares were subject to outstanding options and restricted stock units (“RSUs”), including performance-based awards. As of June 30, 2023, 124,435 shares have been issued under the ESPP and 1,184,572 shares were reserved and available for future issuance. On March 14, 2022, the Compensation Committee of the Board adopted the 2022 Inducement Equity Incentive Plan (the “2022 Inducement Plan”) under which the Company may grant equity awards to new employees. The only persons eligible to receive grants under the 2022 Inducement Plan are individuals who satisfy the standards for inducement grants under Nasdaq guidance. As of June 30, 2023, 5,500,000 shares were reserved for issuance under the 2022 Inducement Plan, of which 2,301,841 shares were available for future grant and 3,198,159 shares were subject to outstanding stock options. Subsequent to June 30, 2023, pursuant to the 2022 Inducement Plan, the Company awarded options to purchase an aggregate of 555,000 shares to new employees as inducements material to entering into employment with the Company. Under the 2021 Plan, the Company can grant incentive stock options, nonstatutory stock options, restricted stock awards, stock appreciation rights, restricted stock units, performance awards and other awards to employees, directors and consultants. Under the 2022 Inducement Plan, the Company can grant nonstatutory stock options, restricted stock awards, stock appreciation rights, RSUs, performance awards and other awards, but only to an individual, as a material inducement to such individual to enter into employment with the Company or an affiliate of the Company, who (i) has not previously been an employee or director of the Company or (ii) is rehired following a bona fide period of non-employment with the Company. Under the ESPP, the Company can grant purchase rights to employees to purchase shares of common stock at a purchase price which is equal to 85% of the fair market value of common stock on the offering date or on the exercise date, whichever is lower. Stock options under the 2021 Plan and the 2022 Inducement Plan may be granted for periods of up to 10 years and at prices no less than 100% of the fair market value of the shares on the date of grant, provided, however, that the exercise price of an ISO (which cannot be granted pursuant to the 2022 Inducement Plan) granted to a 10% stockholder may not be less than 110% of the fair market value of the shares. Stock options granted to employees and non-employees generally vest ratably over four years. Stock Option Activity The following table summarizes the stock option activity, including performance-based stock options, under the 2021 Plan, the 2022 Inducement Plan and the Company’s 2019 Equity Incentive Plan (the “2019 Plan”) for the six months ended June 30, 2023:
|  | Options Outstanding |  |  | Weighted - |  |  |  |
|  | Number of Shares |  |  | Weighted Average Exercise Price |  |  | Average Remaining Contractual Life (Years) |  |  | Aggregate Intrinsic Value (in thousands) |
Balance, January 1, 2023 |  |  | 6,169,180 |  |  | $ | 2.25 |  |  |  | 7.80 |  |  | $ | — |
Options granted |  |  | 4,375,696 |  |  | $ | 1.76 |  |  |  |  |  |  |  |  |
Options exercised |  |  | (495,816 | ) |  | $ | 0.71 |  |  |  |  |  |  |  |  |
Options cancelled/forfeited |  |  | (703,523 | ) |  | $ | 1.65 |  |  |  |  |  |  |  |  |
Balance, June 30, 2023 |  |  | 9,345,537 |  |  | $ | 2.15 |  |  |  | 8.75 |  |  | $ | 1,132 |
Vested and expected to vest, June 30, 2023 |  |  | 9,345,537 |  |  | $ | 2.15 |  |  |  | 8.75 |  |  | $ | 1,132 |
Exercisable, June 30, 2023 |  |  | 2,786,521 |  |  | $ | 1.95 |  |  |  | 7.50 |  |  | $ | 1,007 |
The aggregate intrinsic value represents the difference between the estimated fair value of the underlying common stock and the exercise price of outstanding, in-the-money options. The total intrinsic value of the options exercised during each of the three and six months ended June 30, 2023 was $0.4 million and during the three and six months ended June 30, 2022 was less than $0.1 million and $0.1 million, respectively. The total fair value of options that vested during the six months ended June 30, 2023 and 2022 was $2.1 million and $0.8 million, respectively. The weighted-average grant date fair value of options granted during the six months ended June 30, 2023 and 2022 was $1.44 and $1.91 per share, respectively. Unamortized stock-based compensation for granted options as of June 30, 2023 was $10.5 million, which is expected to be recognized over a weighted-average period of 3.0 years, including $0.1 million related to performance-based stock options, which is expected to be recognized over a weighted-average period of 0.4 years. Performance-based stock options The following table summarizes the performance-based stock options activity under the 2021 Plan and the 2019 Plan, which are included in the stock option activity table above, for the six months ended June 30, 2023:
|  | Options Outstanding |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Life (Years) |  |  | Aggregate Intrinsic Value |
Balance, January 1, 2023 |  |  | 463,959 |  |  | $ | 1.42 |  |  |  | 8.06 |  |  | $ | — |
Options granted |  |  | 50,000 |  |  | $ | 1.92 |  |  |  |  |  |  |  |  |
Options cancelled/forfeited |  |  | (16,650 | ) |  | $ | 1.92 |  |  |  |  |  |  |  |  |
Balance, June 30, 2023 |  |  | 497,309 |  |  | $ | 1.45 |  |  |  | 7.70 |  |  | $ | 202 |
Vested and expected to vest, June 30, 2023 |  |  | 497,309 |  |  | $ | 1.45 |  |  |  | 7.70 |  |  | $ | 202 |
Exercisable, June 30, 2023 |  |  | 313,959 |  |  | $ | 0.78 |  |  |  | 6.96 |  |  | $ | 202 |
Restricted Stock Units (“RSUs”) The following table provides a summary of RSUs activity under the 2021 Plan during the six months ended June 30, 2023:
|  | Number of Shares |  |  | Weighted Average Grant Date Fair Value |
Unvested restricted stock units at January 1, 2023 |  |  | 2,617,445 |  |  | $ | 0.79 |
Granted |  |  | 50,000 |  |  | $ | 1.50 |
Vested |  |  | (1,309,356 | ) |  | $ | 0.79 |
Forfeited |  |  | (178,318 | ) |  | $ | 0.79 |
Unvested restricted stock units at June 30, 2023 |  |  | 1,179,771 |  |  | $ | 0.82 |
Vested and unreleased |  |  | — |  |  | $ | — |
Outstanding restricted stock units at June 30, 2023 |  |  | 1,179,771 |  |  | $ | 0.82 |
The total fair value of RSUs that vested during the six months ended June 30, 2023 was $1.0 million. Unamortized stock-based compensation for restricted stock units as of June 30, 2023 was $0.5 million, which is expected to be recognized over a weighted-average period of 0.3 years. Employee Stock Purchase Plan The Company issued 65,001 shares of common stock under the ESPP and recognized less than $0.1 million compensation expense related to the ESPP during each of the three and six months ended June 30, 2023. Unamortized stock-based compensation for shares issuable under the ESPP as of June 30, 2023 was $0.1 million, which is expected to be recognized over a weighted-average period of 0.4 years. The Company recorded less than $0.1 million in accrued expenses and other current liabilities related to contributions withheld as of June 30, 2023. Stock-Based Compensation Expense The following table presents stock-based compensation expenses related to options and RSUs granted to employees and non-employees, ESPP awards and restricted common stock shares issued to founders (in thousands):
|  | Three Months Ended June 30, |  |  | Six Months Ended June 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
General and administrative |  | $ | 900 |  |  | $ | 480 |  |  | $ | 1,699 |  |  | $ | 1,036 |
Research and development |  |  | 491 |  |  |  | 585 |  |  |  | 959 |  |  |  | 807 |
Total |  | $ | 1,391 |  |  | $ | 1,065 |  |  | $ | 2,658 |  |  | $ | 1,843 |
The Company recognized stock-based compensation expense related to performance-based options and RSUs of $0.1 million during each of the three and six months ended June 30, 2023 and less than $0.1 million during each of the three and six months ended June 30, 2022. Valuation of Stock Options The grant date fair value of stock options was estimated using a Black-Scholes option-pricing model with the following assumptions:
|  |  | Three Months Ended June 30, |  |  |  | Six Months Ended June 30, |
|  |  | 2023 |  |  |  | 2022 |  |  |  | 2023 |  |  |  | 2022 |
Expected term (in years) |  |  | 5.44-6.08 |  |  |  | 2.68-6.07 |  |  |  | 5.25-6.08 |  |  |  | 1.00-6.08 |
Expected volatility |  |  | 103.31%-108.98% |  |  |  | 83.30%-85.19% |  |  |  | 103.31%-108.98% |  |  |  | 63.41%-88.27% |
Risk-free interest rate |  |  | 3.49% - 4.05% |  |  |  | 2.72% - 2.84% |  |  |  | 3.45% - 4.25% |  |  |  | 1.40% – 2.84% |
Expected dividend yield |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Valuation of ESPP Awards The grant date fair value of ESPP awards was estimated using a Black-Scholes option-pricing model with the following assumptions:
|  | Three and Six Months Ended June 30, |
|  | 2023 |  |  | 2022 |
Expected term (in years) |  |  | 0.50 |  |  |  | 0.50 |
Expected volatility |  |  | 266.24 | % |  |  | 75.60 | %
Risk-free interest rate |  |  | 5.39 | % |  |  | 1.81 | %
Expected dividend yield |  |  | — |  |  |  | — |

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