Stock-based compensation expense was included in general and administrative and research and development costs as follows in the accompanying condensed consolidated statements of comprehensive loss for the three-month periods indicated below (in thousands):

 

Ocuphire Stock Options

 

Inducement Plan

On February 22, 2021, the Company adopted the Ocuphire Pharma, Inc. Inducement Plan (the “Inducement Plan”), pursuant to which the Company reserved 325,258 shares of its common stock to be used exclusively for grants of awards to individuals who were not previously employees or directors of the Company, as an inducement material to the individual’s entry into employment with the Company within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules.

2020 Equity Incentive Plan

 

The stockholders of the Company approved the 2020 Equity Incentive Plan (the “2020 Plan”) for stock-based awards. The 2020 Plan became effective on November 5, 2020.  Under the 2020 Plan, (i) 1,000,000 new shares of common stock were reserved for issuance and (ii) up to 70,325 additional shares of common stock may be issued, consisting of (A) shares that remain available for the issuance of awards under prior equity plans and (B) shares of common stock subject to outstanding stock options or other awards covered by prior equity plans that have been cancelled or expire on or after the date that the 2020 Plan became effective. The 2020 Plan permits the grant of incentive and nonstatutory stock options, appreciation rights, restricted stock, restricted stock units, performance stock and net loss awards, and other stock‑based awards.

 

2018 Equity Incentive Plan

 

Prior to the 2020 Plan, the Company had adopted a 2018 Equity Incentive Plan (the “2018 Plan”) in April 2018 under which 1,175,000 shares of the Company’s common stock were reserved for issuance to employees, directors and consultants. Upon the effective date of the 2020 Plan, no additional shares were available for issuance under the 2018 Plan.

 

2020 Plan Evergreen Provision

 

Under the 2020 Plan, the shares reserved automatically increase on January 1 of each year, for a period of not more than ten years from the date the 2020 Plan is approved by the stockholders of the Company, commencing on January 1, 2021 and ending on (and including) January 1, 2030, by an amount equal to 5% of the shares of common stock outstanding as of December 31st of the preceding calendar year. Notwithstanding the foregoing, the Board of  Directors may act prior to January 1st of a given year to provide that there will be no January 1 increase in the share reserve for such year or that the increase in the share reserve for such year will be a lesser number of shares of common stock than would otherwise occur pursuant to the preceding sentence. On January 1, 2022, 942,291 shares were added to the 2020 Plan as a result of the evergreen provision.

 

General

During the three months ended March 31, 2022 and 2021, 552,305 and 41,800 options were granted to officers, and employees and consultants, respectively, generally vesting over a six (6) to forty-eight (48) month period. The Company recognized $417,000 and $446,000 in stock-based compensation expense related to stock options during the three months ended March 31, 2022 and 2021, respectively. As of March 31, 2022 and December 31, 2021, 2,616,544 and 2,096,836 stock options were outstanding, respectively.

 

The weighted average fair value per share of options granted during the three months ended March 31, 2022 and 2021 was $2.29 and $6.71, respectively. The Company measures the fair value of stock options with service‑based and performance‑based vesting criteria to employees, directors, consultants and directors on the date of grant using the Black‑Scholes option pricing model. The Company does not have sufficient share trading history to support a calculation of volatility and expected term. As such, the Company has used a weighted average volatility considering the volatilities of several guideline companies.

 

For purposes of identifying similar entities, the Company considered characteristics such as industry, length of trading history, and stage of life cycle. The assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future. The average expected life of the options was based on the contractual term for agreements that allow for exercise of vested options through the end of the contractual term upon termination of continuous service, and for all other agreements, was based on the midpoint between the vesting date and the end of the contractual term according to the “simplified method” as described in Staff Accounting Bulletin 110. The risk-free interest rate is determined by reference to implied yields available from U.S. Treasury securities with a remaining term equal to the expected life assumed at the date of grant. The Company records forfeitures when they occur.

The weighted average assumptions used in the Black‑Scholes option pricing model are as follows during the three months ended March 31, 2022 and 2021:

 

During the three months ended March 31, 2022 and 2021, 62,698 and 118,217 stock options vested, respectively. The weighted average fair value per share of options vesting during the three months ended March 31, 2022 and 2021 was $2.90 and $3.66, respectively. During the three months ended March 31, 2022 and 2021, 24,309 and 7,386 stock options were exercised, respectively, with an intrinsic value of $59,000 and $74,000, respectively. During the three months ended March 31, 2022 and 2021, 8,288 and zero options were forfeited, respectively. As of March 31, 2022, 1,280,792 shares were available for future issuance under the 2020 Plan and Inducement Plan in the aggregate. No shares were available for future issuance under the 2018 Plan.

 

Unrecognized stock-based compensation cost was $3.3 million as of March 31, 2022. The unrecognized stock-based expense is expected to be recognized over a weighted average period of 1.5 years.

 

Ocuphire Restricted Stock Awards

 

The Company did not grant any restricted stock awards (RSAs) during any of the periods presented. The RSAs granted in previous periods were subject to various vesting schedules.  During the three months ended March 31, 2022 and 2021, zero and 40,000 RSAs vested, respectively, and no RSAs were forfeited during the periods presented. The stock-based compensation expense attributed to the RSAs during the three months ended March 31, 2022 and 2021 was zero and $22,000, respectively.

 

Common Stock Issued for Services

 

The Company granted stock for services in the amount of 8,024 and 4,474 common shares to two board members who elected to receive their board retainers in the form of stock for services performed during the three months ended March 31, 2022 and 2021, respectively. The stock-based compensation related to these services amounted to $28,000 and $26,000 during the three months ended March 31, 2022 and 2021, respectively.

 

There were 82 outstanding, unexercised and vested options to purchase common stock granted under the Rexahn Pharmaceuticals Stock Option Plan, as amended (the “Rexahn 2003 Plan”), as of March 31, 2022 and December 31, 2021.  The exercise prices related to the outstanding options granted under the Rexahn 2003 Plan was $182.40 per share with an average remaining contractual life of 0.2 years.