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Stock-Based Compensation

12 Months Ended

Dec. 31, 2022

Stock-Based Compensation

Stock-Based Compensation

(9) Stock-Based Compensation

Effective upon the closing of the Company’s IPO on January 31, 2020, the Company’s 2019 Equity Incentive Plan (the “2019 Plan”) became effective, succeeding the Company’s previous equity incentive plan. No new options may be issued under the previous plan, although shares subject to grants which are cancelled or forfeited will again be available under the 2019 Plan. Effective June 1, 2021, the 2019 Plan was amended to increase the number of shares authorized to be issued from 1,000,000 to 2,000,000. As of December 31, 2022, 392,874 shares were available for future grants.

The 2019 Plan provides for grants to employees, members of the Board, consultants and advisors to the Company, in the form of stock options, stock awards and other equity-based awards. The amount and terms of grants are determined by the Board. Stock options have a maximum term of 10 years after date of grant and are exercisable in cash or as otherwise determined by the Board.

Stock-based compensation expense in the statements of operations, including the fair value of stock awards to consultants and advisors for services rendered, for the years ended December 31, 2022 and 2021 was as follows:


		Year Ended
		December 31,
		2022			2021
General and administrative		$	5,778,117		$	2,680,882
Research and development			3,374,403			2,016,745
		$	9,152,520		$	4,697,627

Stock option activity for the years ended December 31, 2022, and 2021, was as follows:


							Weighted
							Average
							Remaining
				Weighted			Contractual		Aggregate
		Number of		Average			Term		Intrinsic
		Shares		Exercise Price			(Years)		Value
Outstanding at December 31, 2020		1,111,466			$ 2.57
Granted		538,095			$ 33.78
Exercised		(159,813)			$ 2.83
Forfeited		—			$ -
Outstanding at December 31, 2021		1,489,748			$ 13.82
Granted		348,294			$ 15.90
Exercised		(70,101)			$ 1.97
Forfeited		(110,599)			$ 25.93
Outstanding at December 31, 2022		1,657,342			$ 13.95		6.2		$ 9,907,660
Exercisable at December 31, 2022		1,310,667			$ 11.64		5.4		$ 9,591,460

The aggregate intrinsic value of options exercised during the years ended December 31, 2022 and 2021 was $803,357 and $11,163,998, respectively. As of December 31, 2022, there was $4,089,400 unrecognized compensation expense related to unvested options. That cost is expected to be recognized over a weighted-average period of 1.39 years.

During the years ended December 31, 2022 and 2021, the Company issued 348,294 and 538,095 options, respectively. Under the grant agreements for the 2022 stock option grants, 10,000 of the options vested immediately, 9,947 of the options vested on March 29, 2022, 9,947 of the options vest on March 31, 2023, 43,333 of the options vest on August 29, 2023, and 255,067 of the options vest in substantially equal quarterly installments over two years from the date of grant. 20,000 of the options have performance-based vesting conditions. As of December 31, 2022, it was not considered probable that the performance conditions would be achieved, and no compensation expense was recognized during the period related to these options. Under the grant agreements for the 2021 stock option grants, 143,391 of the options vested immediately, 155,253 of the options vested on March 31, 2022, 155,251 of the options vest on March 31, 2023 and 84,200 of the options vest in substantially equal quarterly installments over two years from the date of grant. All of the options have a 10-year term.

The weighted average grant date fair value of options issued during the years ended December 31, 2022 and 2021 was $13.24 per share and $27.13 per share, respectively. The fair value was estimated using the Black Sholes option pricing model. The expected life of options was estimated using the simplified method, as the Company has limited historical information to develop reasonable expectations about future exercise patterns and post-vesting employment. The risk-free rate was based on the interest rate payable on U.S. Treasury securities at the time of grant for a period that is commensurate with the expected term of the option. Given the lack of

a public market for the Company’s common stock prior to the IPO, the expected stock price volatility was based on a weighted approach that incorporates the historic daily volatility of the Company’s common stock since the IPO and the historic daily volatility of similar companies that have been publicly traded for a period commensurate with the expected term of the option. The expected dividend yield is 0% because the Company has not historically paid and does not expect for the foreseeable future to pay a dividend on its common stock. The weighted average assumptions used in the valuation of options granted were as follows:


		Year Ended			Year Ended
		December 31, 2022			December 31, 2021
Risk-free interest rate		2.24	%		1.17	%
Expected life		5.9			5.3
Expected volatility		112	%		113	%
Expected dividend yield		—			—

During the year ended December 31, 2022, previously issued stock options were modified for an employee who is no longer employed with the Company. As a result of this modification, $1,219,572 was recognized as stock option modification expense and included in general and administrative expenses on the accompanying statement of operations.