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Share-Based Compensation

6 Months Ended

Jun. 30, 2020

Share-based Payment Arrangement [Abstract]

7. Share-Based Compensation

The Company sponsors the Pulmatrix, Inc. 2013 Employee, Director and Consultant Equity Incentive Plan (the “2013 Plan). As of June 30, 2020, the 2013 Plan provides for the grant of up to 4,060,000 shares of common stock, of which 1,011,381 shares remain available for future grant.

In addition, the Company has two legacy plans: The Pulmatrix Operating’s 2013 Employee, Director and Consultant Equity Incentive Plan (the “Original 2013 Plan”) and Pulmatrix Operating’s 2003 Employee, Director, and Consultant Stock Plan (the “2003 Plan”). As of June 30, 2020, a total of 8,627 shares of common stock may be delivered under options outstanding under the Original 2013 Plan and the 2003 Plan, however no additional awards may be granted under the Original 2013 Plan or the 2003 Plan.

Stock Options

During the three months ended June 30, 2020, the Company granted 105,000 options to employees and directors. The awards vest over four years, expire ten years from the grant date and on the date of the grant have a fair value of $117.

During the six months ended June 30, 2020, the Company granted 2,249,104 options to employees, directors, and consultants. The awards vest over four years, expire ten years from the grant date and on the date of grant have a fair value of $2,615.

During the three and six months ended June 30, 2019, the Company granted 651,600 options to employees and directors. The awards vest over four years, expire ten years from the grant date and on the date of the grant have a fair value of $456.

The following table summarizes stock option activity for the six months ended June 30, 2020:

	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value
Outstanding — December 31, 2019		900,003		$	11.63		8.52	$	—
Granted		2,249,104		$	1.53
Exercised		(22,497	)	$	1.06
Forfeited or expired		(146,178	)	$	27.27
Outstanding — June 30, 2020		2,980,432		$	3.32		9.21	$	727
Exercisable — June 30, 2020		637,993		$	9.55		8.50	$	134

The estimated fair values of employee stock options granted during the three months and six months ended June 30, 2020 and 2019, were determined on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Expected option life (years)		6.03			6.02			5.92			6.02
Risk-free interest rate		0.45	%		2.22	%		1.62	%		2.22	%
Expected volatility		94.40	%		74.14	%		93.90	%		74.14	%
Expected dividend yield		0	%		0	%		0	%		0	%

The risk-free interest rate was obtained from U.S. Treasury rates for the applicable periods. The Company’s expected volatility was based upon the average of the historical volatility for industry peers and its own volatility. The expected life of the Company’s options was determined using the simplified method as a result of limited historical data regarding the Company’s activity. The dividend yield considers that the Company has not historically paid dividends and does not expect to pay dividends in the foreseeable future.

As of June 30, 2020, there was $2,711 of unrecognized stock-based compensation expense related to unvested stock options granted under the Company’s stock award plans. This expense is expected to be recognized over a weighted-average period of approximately 3.0 years.

The following table presents total stock-based compensation expense for the three and six months ended June 30, 2020 and 2019:

	Three Months Ended June 30,				Six Months Ended June 30,
	2020		2019		2020		2019
Research and development	$	49	$	18	$	96	$	67
General and administrative		217		1,073		513		1,483
Total share-based compensation expense	$	266	$	1,091	$	609	$	1,550