STOCK-BASED COMPENSATION

3 Months Ended

Mar. 31, 2024

11)	STOCK-BASED COMPENSATION

Stock Options

During the three months ended March 31, 2024 and 2023, the Company granted the following stock options (in thousands):

	Three months ended March 31,
	2024		2023
Stock options granted		1,874		212

On January 1, 2024, Sanjeev Luther was appointed as President, Chief Executive Officer and a director of the Company. Upon his appointment, he was granted a non-qualified stock option to purchase approximately 1,685,000 shares of the Company’s common stock. The stock option has an exercise price of $1.80 per share, which was equal to the fair market value (as defined in the 2020 Restated Equity Incentive Plan) of the Company’s common stock on the date of grant, will vest over four years, with 25% of the shares vesting on the first anniversary of the grant date and the remaining 75% of the shares vesting in equal monthly installments over the three years thereafter, in each case, subject to continued service. The stock option was granted pursuant to the terms of Mr. Luther’s employment agreement and as a material inducement to his joining the Company in accordance with Nasdaq Listing Rule 5635(c)(4).

On April 26, 2024, the vesting terms of Mr. Luther’s stock option award was amended so that the stock option vests over three years, with 25% of the shares vesting on the first anniversary of the grant date and the remaining 75% of the shares will vest in equal monthly installments over the remaining two years, in each case, subject to continued service.

The Company recognizes stock-based compensation expense for stock options granted to employees, directors and certain consultants. The Company estimates the fair value of stock options using the Black-Scholes option pricing model. The fair value of stock options granted is recognized as expense over the requisite service period on a straight-lined basis.

The following weighted-average assumptions were used for stock options granted during the three months ended March 31, 2024 and 2023:

	Three months ended March 31,
	2024			2023
Weighted average risk-free rate		4.49	%		3.86	%
Weighted average volatility		99.13	%		95.04	%
Dividend yield		0.00	%		0	%
Expected term	6.08 years			5.36 years

The per-share weighted average grant-date fair value of stock options granted during the three months ended March 31, 2024 and 2023 was $1.45 and $3.15, respectively.

Vesting of all stock option grants is subject to continuous service with the Company through the applicable vesting date. As of March 31, 2024, there were approximately 2,085,000 stock options outstanding.

Restricted Stock Units

The Company recognizes the fair value of RSUs as expense on a straight-line basis over the requisite service period. For performance-based RSUs, the Company begins recognizing the expense once the achievement of the related performance goal is determined to be probable.

Outstanding RSUs are settled in an equal number of shares of common stock on the vesting date of the award. An RSU award is settled only to the extent vested. Vesting generally requires the continued employment or service by the award recipient through the applicable vesting date. Because RSUs are settled in an equal number of shares of common stock without any offsetting payment by the recipient, the measurement of cost is based on the quoted market price of the stock at the measurement date, which is the grant date.

In lieu of paying cash to satisfy withholding taxes due upon the settlement of vested RSUs, at the Company’s discretion, an employee may elect to have shares of common stock withheld that would otherwise be issued at settlement, the value of which is equal to the amount of withholding taxes payable. No RSUs vested during either of the three months ended March 31, 2024 and 2023.

The Company did not grant RSUs during either of the three months ended March 31, 2024 and 2023.

Stock-Based Compensation Expense

For the three months ended March 31, 2024 and 2023, the Company recognized stock-based compensation expense as follows (in thousands):

	Three months ended March 31,
	2024			2023
Research and development		$	46		$	64
General and administrative			236			625
Total		$	282		$	689