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Stock-Based Compensation
 12 Months Ended
Dec. 31, 2025
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation

9. Stock-Based Compensation

 

Equity Incentive Plans

 

Upon completion of the Business Combination on September 12, 2023, the Company adopted the 2023 Equity Incentive Plan (the “2023 Plan”). The 2023 Plan reserved the right for the Compensation Committee or by the Board of Directors acting as the Compensation Committee, as the administrator of the plan (the “Administrator”) to issue up to 32,815 equity awards, including stock options (“Options”), restricted stock awards (“Restricted Stock”), dividend equivalents awards, stock payment awards, restricted stock units (“RSUs”) and/or stock appreciation rights (“SARs”, together with Options, Restricted Stock and RSUs, “Awards”), according to its discretion. On July 9, 2025, the Company’s stockholders approved an amendment to the 2023 Plan to increase the aggregate number of shares of common stock authorized for grant under the 2023 Plan from 32,815 to 282,815. Awards may be granted under the 2023 Plan to our employees, directors, and consultants. As of December 31, 2025, the Administrator has issued RSUs and stock options under the 2023 Plan.

 

Under the 2023 Plan, Awards may vest and thereby become exercisable, subject to forfeiture restrictions, (1) on the date of grant, (2) in periodic installments, (3) upon the attainment of performance goals, or (4) upon the occurrence of specified events depending on the Administrator’s discretion. The Administrator has broad authority to determine the terms and conditions of any Award granted pursuant to the 2023 Plan including, but not limited to, the exercise price, grant price, or purchase price, any reload provision, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof as the Administrator, in its sole discretion may determine.

 

 

No Awards may be granted under the 2023 Plan with a term of more than ten years and no Awards granted may be exercised after the expiration of ten years from the date of grant.

 

On July 15, 2024 and August 4, 2025, the Company effected a 1-for-10 Reverse Stock Split and a 1-for-12 Reverse Stock Split, respectively. As a result of each respective Reverse Stock Split, proportionate adjustments were made to the per share exercise price and the number of shares of common stock that may be purchased upon exercise of outstanding stock options granted by the Company, and the number of shares of common stock reserved for future issuance under the Company’s 2023 Plan. All stock option activity presented in these statements has been retrospectively adjusted to reflect the Reverse Stock Split.

 

2023 Employee Stock Purchase Plan (“ESPP”)

 

On August 28, 2023, the Company approved the 2023 Employee Stock Purchase Plan (the “2023 ESPP”), which became effective on the consummation of the FLAG Merger. Under the 2023 ESPP, eligible employees may purchase a limited number of shares of common stock at a discount of up to 15% of the market value of such stock at pre-determined and plan-defined dates. There have been no issuances of common stock under the 2023 ESPP to date.

 

Stock Options

 

Options granted under the 2023 Plan may be either “incentive stock options” within the meaning of Section 422(b) of the Internal Revenue Code of 1986, as amended (the “Code”), or “non-qualified” stock options that do not qualify incentive stock options. Incentive stock options may be granted only to the Company’s employees and employees of domestic subsidiaries, as applicable. The exercise price of stock options shall be equal to or greater than the fair market value of common stock on the date the option is granted. In the case of an optionee who, at the time of grant, owns more than 10% of the combined voting power of all classes of stock, the exercise price of any incentive stock option must be at least 110% of the fair market value of the common stock on the grant date, and the term of the option may be no longer than five years. The aggregate fair market value of common stock (determined as of the grant date of the option) with respect to which incentive stock options become exercisable for the first time by an optionee in any calendar year may not exceed $0.1 million, otherwise it will be classified as a non-qualified stock option.

 

The exercise price of an option may be payable in cash or in common stock, or in a combination of cash and common stock, or other legal consideration for the issuance of stock as the Board or Administrator may approve.

 

Generally, options vest over four years and will be exercisable only while the optionee remains an employee, director or consultant, or during the three months thereafter, but in the case of the termination of an optionee’s services due to death or disability, the period for exercising a vested option shall be extended to the earlier of twelve months after termination or the expiration date of the option.

 

Employee Benefit Plans Securities Registration Statement

 

On October 1, 2024, the Company filed a Registration Statement on Form S-8, which includes a Reoffer Prospectus which may be used for reoffers and resales of shares of the Company. The Reoffer Prospectus covers the shares issuable to the holders pursuant to awards granted by the Company under the 2023 Plan. The Company will not receive any proceeds from the sale of the shares offered by the Reoffer Prospectus.

 

 

Option Awards Activity

 

A summary of the 2023 Plan option activity and related information follows (in thousands, except weighted averages):

 

  

Number of

Options

Outstanding

  

Weighted

Average

Exercise Price

  

Weighted-

Average

Remaining

Contractual

Life

(Years)

  

Aggregate

Intrinsic Value

 
Outstanding at January 1, 2025   77   $220.92    5.67   $          5 
Options granted   217    4.23           
Options exercised   —    -            
Options forfeited or cancelled   (17)   252.37           
Outstanding at December 31, 2025   277   $49.57    8.39   $— 
Exercisable at December 31, 2025   78   $160.73    5.54   $— 

 

Restricted Stock Units

 

A summary of the 2023 Plan restricted stock unit (RSU) activity and related information follows (in thousands, except weighted average grant date fair value):

 

  

Number of

Units

Outstanding

  

Weighted

Average

Grant-Date Fair Value

 
Balance at January 1, 2025             2   $13.80 
Vested and released   (2)   13.80 
Balance at December 31, 2025   —   $— 

 

The Company recorded stock-based compensation expense in the following categories on the accompanying consolidated statements of operations for the periods presented (in thousands):

 

   2025   2024 
   Year Ended December 31, 
   2025   2024 
Research and development  $426   $751 
General and administrative   1,682    2,206 
Total stock-based compensation expense  $2,108   $2,957 

 

On January 18, 2023, the Board approved a repricing of approximately 0.2 million stock options previously granted at an exercise price of $1,112.40 per share to the then current fair value of $853.20 per share pursuant to an updated valuation report. For each of the years ended December 31, 2025 and 2024, the Company recorded a noncash compensation charge of approximately $0.1 million in connection with this repricing. The stock option repricing and the acceleration of vesting were accounted for as a modification.

 

As of December 31, 2025, the total unamortized stock-based compensation expense related to stock options was approximately $0.8 million, expected to be amortized over an estimated weighted average life of 1.9 years. The weighted-average estimated fair value of stock options with service-conditions granted during the year ended December 31, 2025 and 2024 was $3.11 and $17.28 per share, respectively, using the Black-Scholes option pricing model with the following weighted-average assumptions:

 

   Year Ended December 31, 
   2025   2024 
Expected volatility   87.84%   85.63%
Risk-free interest rate   3.93%   4.21%
Expected option life (in years)   5.78    5.64 
Expected dividend yield   0.0%   0.0%

 

The Company does not recognize deferred income taxes for incentive stock option compensation expense and records a tax deduction only when a disqualified disposition has occurred.