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Stock-based Compensation | 3 Months Ended
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Mar. 31, 2024
Share-Based Payment Arrangement [Abstract] |
Stock-based Compensation | Stock-based Compensation 2017 Stock Incentive Plan Legacy Carisma adopted the CARISMA Therapeutics Inc. 2017 Stock Incentive Plan, as amended (the Legacy Carisma Plan), that provided for the grant of incentive stock options to employees, directors, and consultants. The maximum term of options granted under the Legacy Carisma Plan was ten years, and stock options typically vested over a four-year period. The Company’s stock options vest based on the terms in the awards agreements and generally vest over four years. Upon completion of the Merger, the Company assumed the Legacy Carisma Plan and the outstanding and unexercised options issued thereunder, and ceased granting awards under the Legacy Carisma Plan. 2014 Stock Incentive Plan The Sesen Bio, Inc. Amended and Restated 2014 Stock Incentive Plan, as amended (the Sesen Bio 2014 Plan), provides for the grant of incentive and non-qualified stock options, restricted stock awards and restricted stock units, stock appreciation rights and other stock-based awards to the Company’s employees, officers, directors, consultants, and advisors, with amounts and terms of grants determined by the Company’s board of directors at the time of grant. Stock options outstanding under the Sesen Bio 2014 Plan generally vest over a four-year period at the rate of 25% of the grant vesting on the first anniversary of the date of grant and 6.25% of the grant vesting at the end of each successive three-month period thereafter. Stock options granted under the Sesen Bio 2014 Plan are exercisable for a period of ten years from the date of grant. On March 7, 2023, the Company amended and restated the Sesen Bio 2014 Plan to (i) change the name of the plan to the Carisma Therapeutics Inc. 2014 Amended and Restated Stock Incentive Plan (the 2014 Plan) and (ii) adopt a new form of stock option agreement and a new form of restricted stock unit agreement for the grant of options and restricted stock units under the 2014 Plan. On June 6, 2023, the Company’s stockholders approved an amendment and restatement of the Company’s 2014 Plan, which amendment and restatement had previously been adopted by the Company’s board of directors, subject to stockholder approval. The 2014 Plan provides for increases to the number of shares reserved for issuance thereunder each January, 1 equal to 4% of the total shares of the Company's common stock outstanding as of immediately preceding December 31, unless a lesser amount is stipulated by the Company's board of directors. Accordingly, 1,624,397 shares were added to the reserve as of January 1, 2024. As of March 31, 2024, approximately 4.3 million shares of common stock remained available for issuance. 2014 Employee Stock Purchase Plan The Sesen Bio 2014 Employee Stock Purchase Plan (the Sesen Bio 2014 ESPP) provides employees with the opportunity to purchase shares of common stock at a 15% discount to the market price through payroll deductions or lump sum cash investments. The purpose of the Sesen Bio 2014 ESPP is to enhance employee interest in the success and progress of the Company by encouraging employee ownership of common stock. On March 7, 2023, the Company amended and restated the Sesen Bio 2014 ESPP to (i) change the name of the plan to Carisma Therapeutics Inc. 2014 Employee Stock Purchase Plan and (ii) restate and integrate all prior amendments thereto. As of March 31, 2024, 0.2 million shares of common stock remained available for issuance. The following table summarizes stock option activity for the three months ended March 31, 2024:
| Options |  | Weighted average exercise price |  | Weighted average remaining contractual term (years) |  | Aggregate Intrinsic Value (in thousands)
Outstanding as of December 31, 2023 | 6,023,370 |  | $ | 3.94 |  |  |  |  |
Exercised | (1,579) |  | 1.42 |  |  |  |  | $ | 2 |
Granted | 2,226,000 |  | 2.10 |  |  |  |  |
Forfeited | (37,244) |  | 5.58 |  |  |  |  |
Outstanding as of March 31, 2024 | 8,210,547 |  | $ | 3.43 |  |  | 8.20 |  | $ | 4,241 |
Exercisable as of March 31, 2024 | 2,737,710 |  | $ | 1.24 |  |  | 6.00 |  | $ | 3,443 |
Vested and expected to vest at March 31, 2024 | 8,210,547 |  | $ | 3.43 |  |  | 8.20 |  | $ | 4,241 |
The weighted-average grant-date per share fair values of options granted during the three months ended March 31, 2024 and 2023 were $1.72 and $2.64, respectively. The fair values in the three months ended March 31, 2024 and 2023 were estimated using the Black-Scholes option-pricing model based on the following assumptions:
| Three Months Ended March 31,
| 2024 |  | 2023
Risk-free interest rate | 3.77% - 3.89% |  | 2.92% - 4.03%
Expected term | 6 years |  | 6 years
Expected volatility | 103.39% - 105.96% |  | 57.77% - 62.65%
Expected dividend yield | — |  |  | — |
Stock-Based Compensation Expense The Company recorded stock-based compensation expense in the following expense categories in its accompanying unaudited interim consolidated statements of operations:
|  |  | Three Months Ended March 31,
|  |  |  |  | 2024 |  | 2023
Research and development |  |  |  |  | $ | 436 |  |  | $ | 10 |
General and administrative |  |  |  |  | 621 |  |  | 255 |
|  |  |  |  | $ | 1,057 |  |  | $ | 265 |
The Company recognized stock-based compensation expense of $0.2 million related to the modification of Sesen Bio options assumed in connection with the Merger during three months ended March 31, 2023. Compensation cost for awards not vested as of March 31, 2024 was $13.9 million and will be expensed over a weighted-average period of 3.2 years

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