8. Stock Based Compensation

Stock based compensation has been reported within expense line items on the consolidated statement of operations for the three months ended March 31, 2020 and 2021 as shown in the following table (in $000s):


	Three Months Ended
	March 31,
	2020		2021
Research and development	$	35	$	81
General and administrative		56		174
Stock-based compensation costs before income taxes	$	91	$	255

2018 Plan

In May 2018, the Company’s stockholders approved the 2018 Equity Incentive Plan (the “2018 Plan”), under which Cyclacel may make equity incentive grants to its officers, employees, directors and consultants. The 2018 Plan replaces the 2015 Equity Incentive Plan (the “2015 Plan”).

The 2018 Plan allows for the issuance of up to 775,000 shares of the Company’s common stock pursuant to various types of award grants, including stock options and restricted stock units. In addition, the 2018 Plan allows up to 35,494 additional shares to be issued if awards outstanding under the 2018 Plan are cancelled or expire on or after the date of the Company’s 2018 annual meeting of stockholders.

As of March 31, 2021, the Company has reserved 254,366 shares of the Company’s common stock under the 2018 Plan, including shares that were available under the 2015 Plan and carried forward to the 2018 Plan. Stock option awards granted under the Company’s equity incentive plans have a maximum life of 10 years and generally vest over a one to four-year period from the date of grant.

2020 Inducement Equity Incentive Plan

In October 2020, the Inducement Equity Incentive Plan (the “Inducement Plan”), became effective. Under the Inducement Plan, Cyclacel may make equity incentive grants to new senior level Employees (persons to whom the Company may issue securities without stockholder approval). The Inducement Plan allows for the issuance of up to 200,000 shares of the Company’s common stock (or the equivalent of such number). As of March 31, 2021, 120,000 shares under the Inducement Plan have been issued, leaving a remaining reserve of 80,000 shares.

Option Grants

There were no options granted during the three months ended March 31, 2020. There were 73,669 options granted during the three months ended March 31, 2021. These options had a grant date fair value ranging between $5.40-$6.14 per option. The fair value of the stock options granted is calculated using the Black-Scholes option-pricing model as prescribed by ASC 718 using the following assumptions:



		Three Months Ended
		March 31, 2021
Expected term (years)		5 – 6
Risk free interest rate		0.420% – 0.585%
Volatility		99 – 102%
Expected dividend yield over expected term		0.00%
Resulting weighted average grant date fair value		$6.45

There were no stock options exercised during each of the three months ended March 31, 2020 and 2021, respectively. The Company does not expect to be able to benefit from the deduction for stock option exercises that may occur because the company has tax loss carryforwards from prior periods that would be expected to offset any potential taxable income.

Outstanding Options

A summary of the share option activity and related information is as follows:


				Weighted
		Weighted		Average
	Number of	Average		Remaining	Aggregate
	Options	Exercise		Contractual	Intrinsic
	Outstanding	Price Per Share		Term (Years)	Value ($000)
Options outstanding at December 31, 2020	602,683	$	11.01	9.39	$	1,861
Granted	73,669	$	6.45	—		—
Exercised	—		—	—		—
Cancelled/forfeited	—	$	—	—		—
Options outstanding at March 31, 2021	676,352	$	10.51	9.22	$	1,553

Unvested at March 31, 2021	564,622	$	4.78	9.60	$	1,458
Vested and exercisable at March 31, 2021	111,730	$	39.47	7.30	$	95

Restricted Stock Units

The Company issued 14,000 restricted stock units to employees during the year ended December 31, 2019. The Company issued 3,938 additional restricted stock units to employees during the quarter ended March 31, 2020, of which 1,414 units have been forfeited. The vesting of the remaining 16,524 outstanding restricted stock units is dependent upon the fulfillment of certain clinical conditions. The Company determined that the satisfaction of the clinical conditions was not probable at March 31, 2021 and, as a result, recorded no compensation expense related to restricted stock units for the quarter ended March 31, 2021. The restricted stock units were valued based on their fair value at the date of grant, which is equivalent to the market price of a share of the Company’s common stock. Summarized information for restricted stock units’ activity for the quarter ended March 31, 2021 is as follows:


		Weighted
		Average
	Restricted	Grant Date
	Stock Units	Value Per Share
Restricted Stock Units outstanding at March 31, 2021	16,524	$	11.30

Unvested at March 31, 2021	16,524	$	11.30
Vested and exercisable at March 31, 2021	—	$	—