Annual report pursuant to Section 13 and 15(d)

Equity Incentive Plan

Equity Incentive Plan
12 Months Ended
Dec. 31, 2023
Equity Incentive Plan  
Equity Incentive Plan

5. Equity Incentive Plan


Under the Company’s 2021 Omnibus Equity Incentive Plan (the “2021 Plan”), as amended, the Company may grant options to purchase shares of Common Stock, restricted stock awards, performance stock awards, incentive bonus awards, other cash-based awards or directly issue shares of Common Stock to employees, directors, and consultants of the Company. Effective January 1, 2022, an evergreen provision contained in the Company’s 2021 Plan increased the total number of shares of common shares issuable under the 2021 Plan in an amount equal to one percent of the Company’s common shares outstanding as of December 31, 2021. This evergreen provision resulted in an additional 7,701 and 5,205 shares of Common Stock issuable pursuant to the 2021 Plan as of January 1, 2023, and 2022, respectively. At the Company’s 2023 Annual Meeting of Stockholders held on August 3, 2023, the Company’s stockholders approved an amendment to the Company’s 2021 Plan to increase the number of shares of common stock authorized for issuance thereunder by 513,150 shares to 629,069 shares.


Stock awards may be granted at an exercise price per share of not less than 100% of the fair market value at the date of grant. Stock awards granted are exercisable over a maximum term of 10 years from the date of grant and generally vest over a period of four years for employees and one year for directors of the Company’s Board and consultants.


As of December 31, 2023, there remain 513,277 shares reserved for issuance under the 2021 Plan, as amended. See Note 9 for a discussion of cancellation of stock options during the first quarter of 2024.

Fair Value Measurement


The Company uses the Black-Scholes option valuation model, which requires the use of highly subjective assumptions, to determine the fair value of stock-based awards. The fair value of each employee stock option is estimated on the grant date under the fair value method using the Black-Scholes model. The estimated fair value of each stock option is then expensed over the requisite service period, which is generally the vesting period. The assumptions and estimates that the Company uses in the Black-Scholes model are as follows:




Fair Value of Common Stock. The estimated fair value of the Common Stock underlying the Company’s stock option plan was determined by management by considering various factors as discussed below. All options to purchase shares of the Company’s Common Stock are intended to be exercisable at a price per share not less than the per-share fair value of the Company’s Common Stock underlying those options on the date of grant. The fair value of Common Stock is measured as the Company’s closing price of Common Stock on the date of grant.






Risk-Free Interest Rate. The Company bases the risk-free interest rate used in the Black-Scholes valuation model on the implied yield available on U.S. Treasury zero-coupon issues with a term equivalent to that of the expected term of the options.






Expected Term. The expected term represents the period that the Company’s stock-based awards are expected to be outstanding, which is calculated using the simplified method, as the Company has insufficient historical information to provide a basis for an estimate. The simplified method calculates the expected term as the average of the vesting term plus the contractual life of the options. 




Volatility. The Company determines the price volatility based on the historical volatilities of industry peers as it has limited trading history for its Common Stock price. Industry peers consist of several public companies in the biotechnology industry with comparable characteristics, including clinical trials progress and therapeutic indications.






Dividend Yield. The expected dividend assumption is based on the Company’s current expectations about its anticipated dividend policy. To date, the Company has not declared any dividends to common shareholders and, therefore, the Company has used an expected dividend yield of zero.


The following table presents the weighted-average assumptions used for stock options granted during the following periods:




Year Ended December 31,









Grant date fair value


$ 4.23



$ 23.36


Risk-free interest rate



3.9 %



1.5 %

Dividend yield



0.00 %



0.00 %

Expected life in years









Expected volatility



112 %



123 %

Stock-based Compensation Expense


In general, stock-based compensation is allocated to research and development expense or general and administrative expense according to the classification of cash compensation paid to the employee, director, or consultant to whom the stock award was granted.


In December 2021, the Board authorized a stock option grant in lieu of a cash bonus for the Company’s Chairman and Chief Executive Officer. The stock-based compensation expense of $0.4 million related to the stock option grant was booked to the fiscal year ended December 31, 2021; however, the impact to additional paid-in capital was not booked until the first quarter of 2022, when the stock option award was granted.


The following table summarizes the total stock-based compensation expense related to stock options and RSUs included in the Company’s statements of operations:




Year Ended

December 31,









Research and development


$ 193,700



$ 218,324


General and administrative











$ 522,082



$ 930,325



 Stock Option Award Activity


A summary of the Company’s 2021 Plan stock option activity is as follows:




Number of















Term (in



Balance at December 31, 2022






$ 60.32






Options granted













Options exercised













Options cancelled













Balance at December 31, 2023






$ 40.77



















Options exercisable at December 31, 2023






$ 63.51






The aggregate intrinsic value of options exercisable as of December 31, 2023, is calculated as the difference between the exercise price of the underlying options and the closing market price of the Company’s Common Stock on that date, which was $0.61 per share. The intrinsic value of options outstanding and exercisable as of December 31, 2023, was zero.


As of December 31, 2023, total unrecognized compensation cost related to stock options was approximately $0.6 million and the weighted average period over which this cost is expected to be recognized is 1.8 years. 


Restricted Stock Units


During the year ended December 31, 2022, the Company issued 219,634 restricted stock units, or RSUs, as partial compensation to certain members of the Board for their services during 2022. The Company recognized stock-based compensation expense of approximately $0.2 million for the year ended December 31, 2022, related to the RSU awards. There were no RSUs issued or outstanding for the year ended December 31, 2023, and there is no unrecognized compensation expense related to RSUs as of December 31, 2023.