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Note 6 - Equity Incentive Plans | 12 Months Ended
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Dec. 31, 2024
Disclosure Text Block [Abstract] |
Equity Incentive Plans | 6. Equity Incentive Plans In 2013, LBS adopted the 2013 Employee, Director, and Consultant Equity Incentive Plan, (as amended and restated, the “2013 Plan”). No further awards will be made under the 2013 Plan. In April 2021, the Company’s shareholders approved the Palisade Bio, Inc. 2021 Equity Incentive Plan (the “2021 EIP”). As of December 31, 2024, there were 37,586 share s of the Company's common stock reserved for future issuance as equity-based awards under the 2021 EIP, which excludes the subsequent evergreen share increase in the number of shares of common stock reserved for issuance under the 2021 EIP that occurred on January 1, 2025. Also in April 2021, the Company's shareholder approved the ESPP. All employees are eligible to participate in the 2021 ESPP while employed by the Company. The 2021 ESPP permits eligible employees to purchase common stock through payroll deductions, which may not exceed $25,000 in a calendar year or 5,000 shares of the Company's shares of common stock each offering period, as defined in the 2021 ESPP, at a price equal to 85% of the fair value of the Company's common stock at the beginning or end of the offering period, whichever is lower. The 2021 ESPP is intended to qualify under Section 423 of the Internal Revenue Code. As of December 31, 2024, there have been 4,501 shares of the Company's common stock issued under the 2021 ESPP. As of December 31, 2024, there were 19,086 shares of the Company's common stock reserved for future issuance under the 2021 ESPP, which excludes the subsequent evergreen share increases in the number of shares of common stock reserved for future issuance under the 2021 ESPP that occurred on January 1, 2025. Compensation expense associated with the 2021 ESPP for the year ended December 31, 2024 and December 31, 2023 was approximately $19,000 a nd $18,000, respectively. In November 2021, the Company's compensation committee of the Company's Board of Directors ("Board") adopted the Palisade Bio, Inc. 2021 Inducement Award Plan (the "2021 Inducement Plan"). The 2021 Inducement Plan was adopted in order to grant equity-based awards to individuals not previously employed by the Company, as an inducement to join the Company. On August 7, 2023, the Company's compensation committee of the Board approved an increase in the shares of the Company's common stock authorized and available for issuance to 66,666 shares. As of December 31, 2024, there were 52,941 shares of the Company's common stock reserved for future issuance as equity-based awards under the 2021 Inducement Plan. Stock Options The Company believes that stock options align the interests of its employees and directors with the interests of its stockholders. Stock option awards are generally granted with an exercise price equal to the market price of Company’s stock at the date the grants are awarded and a term as determined by the Company's Board but generally not to exceed ten-years. Stock option awards to employees vest in equal proportions each quarter over three years and stock option awards to directors of the Company's Board cliff vest after a period of one year. Vesting could be accelerated in the event of retirement, disability, or death of a participant, or change in control of the Company, as defined in the individual stock option agreements or employment agreements. Stock-based awards are valued as of the measurement date, which is the grant date, and are generally amortized on a straight-line basis over the requisite vesting period for all awards. The Company's equity incentive plans allow for the issuance of both incentive stock options and non-statutory stock options. The fair value of options granted during the years ended December 31, 2024 and December 31, 2023 is estimated as of the grant date using the Black-Scholes option pricing model using the assumptions in the following table:
|  | Year Ended December 31, |
|  | 2024 |  |  | 2023 |
Weighted-average exercise price per share |  | $ | 4.54 |  |  | $ | 20.85 |
Weighted-average expected term (years) |  |  | 5.65 |  |  |  | 5.66 |
Weighted-average risk-free interest rate |  |  | 4.03 | % |  |  | 4.08 | %
Weighted-average expected dividend yield |  |  | — |  |  |  | — |
Weighted-average volatility |  |  | 111.74 | % |  |  | 78.35 | %
Risk-free interest rate. The Company bases the risk-free interest rate assumption on observed interest rates appropriate for the expected term of the stock option grants. Expected dividend yield. The Company bases the expected dividend yield assumption on the fact that it has never paid cash dividends and has no present intention to pay cash dividends. Expected volatility. Due to the Company’s limited operating history and lack of company-specific historical or implied volatility, the expected volatility assumption is based on historical volatilities of a peer group of similar companies whose share prices are publicly available. The peer group was developed based on companies in the biopharmaceutical industry. Expected term. The expected term represents the period of time that options are expected to be outstanding. As the Company does not have sufficient historical exercise behavior, it determines the expected life assumption using the simplified method, which is an average of the contractual term of the option and its vesting period. The following table summarizes stock option activity and related information under the 2013 Plan, the 2021 EIP and the 2021 Inducement Plan for the year ended December 31, 2024:
|  | Number of Options |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Life (Years) |  |  | Aggregate Intrinsic Value (in thousands) |
Outstanding at December 31, 2023 |  |  | 44,276 |  |  | $ | 233.09 |  |  |  | 6.08 |  |  | $ | — |
Granted |  |  | 12,300 |  |  |  | 4.54 |  |  |  | — |  |  |  | — |
Exercised |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
Forfeited, expired or cancelled |  |  | (5,902 | ) |  |  | 335.18 |  |  |  | — |  |  |  | — |
Outstanding at December 31, 2024 |  |  | 50,674 |  |  |  | 166.48 |  |  |  | 8.75 |  |  |  | — |
Vested and expected to vest at December 31, 2024 |  |  | 50,674 |  |  |  | 166.48 |  |  |  | 8.75 |  |  |  | — |
Exercisable at December 31, 2024 |  |  | 22,825 |  |  |  | 349.89 |  |  |  | 8.44 |  |  |  | — |
The weighted-average grant date fair value of options granted during the years ended December 31, 2024 and December 31, 2023 was $3.80 per share an d $12.33 per share, re spectively. The grant date fair value of the options vested during each the years ended December 31, 2024 and December 31, 2023 was approximatel y $0.4 million a nd $0.3 million, respectively. Restricted Stock Units During the year ended December 31, 2024, the Company granted no RSUs. As of December 31, 2024, there were no RSUs that remained outstanding. The following table summarizes RSU activity and related information under the 2021 EIP and the 2021 Inducement Plan for the year ended December 31, 2024:
|  | Number of Restricted Stock Units |  |  | Weighted Average Grant Date Fair Value Per Share |  |  | Weighted Average Remaining Contractual Life (Years) |
Non-vested at December 31, 2023 |  |  | 24,195 |  |  | $ | 17.30 |  |  |  | 2.17 |
Granted |  |  | — |  |  |  | — |  |  |  | — |
Vested |  |  | (23,067 | ) |  |  | 17.23 |  |  |  | — |
Forfeited |  |  | (1,128 | ) |  |  | 18.84 |  |  |  | — |
Non-vested at December 31, 2024 |  |  | — |  |  |  | — |  |  |  | — |
The grant date fair value of the RSUs vested during the years ended December 31, 2024 and December 31, 2023 was approximately $0.1 million in each year. Performance Based Stock Units On February 6, 2023, the Company granted to certain members of management a total of 4,580 market-based PSUs, which vest (a) 50% when the volume weighted average price of the Company’s common stock over 20 consecutive trading days is $48.00 or greater ("vesting Tranche 1"), and (b) 50% when such volume weighted average price of the Company’s common stock over 20 consecutive trading days is $63.75 or greater ("vesting Tranche 2"). The PSUs were conditional subject to shareholder approval, which such approval was received at the Company's annual shareholder meeting held on June 8, 2023. The fair value of each of the market-based vesting tranches of the PSUs was determined using a Monte Carlo simulation model that considered a variety of potential share prices for the Company's common stock. The weighted-average grant date fair value per share of vesting Tranche 1 and vesting Tranche 2 of the PSUs was $22.50 per award share and $22.05 per award share, respectively, and was determined using the following key assumptions: (i) a risk-free interest rate of 3.74%, (ii) expected stock price volatility of 76.6%, (iii) a cost of equity of 27.99%, and (iv) an expected contractual life of 9.66 years. As shareholder approval of the PSUs was received, the Company is recognizing the share-based compensation expense associated with the PSUs ratably over the derived service period of 1.75 years for vesting Tranche 1 and 2.48 years for vesting Tranche 2, regardless of whether the market condition for vesting is satisfied. As of December 31, 2023, a total of 4,144 PSUs remained unvested and outstanding. None of the PSUs vested during the year ended December 31, 2024 and 1,192 PSUs were forfeited during the year. As of December 31, 2024, a total of 2,952 PSUs remain unvested and outstanding. Share-Based Compensation Expense The allocation of stock-based compensation for all stock option, RSU and PSU awards is as follows (in thousands):
|  | Year Ended December 31, |
|  | 2024 |  |  | 2023 |
Research and development expense |  | $ | 263 |  |  | $ | 240 |
General and administrative expense |  |  | 370 |  |  |  | 366 |
Total |  | $ | 633 |  |  | $ | 606 |
To reduce the ongoing administrative burden and expense associated with the quarterly vesting of the Company's time-based RSUs, on May 28, 2024, the Company's Board approved the immediate accelerated vesting of all unvested time-based RSUs issued to employees that were outstanding as of that date. The accelerated vesting was accounted for as a Type I modification under ASC 718 and accordingly, in the second quarter of 2024 the Company recognized share-based compensation expense associated with the time-based RSUs subject to immediate vesting of approximately $129,000 in general and administrative expenses and approximately $125,000 in research and development expenses. As of December 31, 2024, the unrecognized compensation expense related to outstanding options was $0.2 million, which is expected to be recognized over a weighted-average period of approximately 1.49 years. As of December 31, 2024 there is no unrecognized compensation expense related to outstanding service-based RSUs as there are no outstanding non-vested service-based RSUs as of that date and the unrecognized compensation expense related to outstanding PSUs is immaterial.

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