Stock-based Compensation |
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| Stock-based Compensation [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock-based Compensation |
Stock-based
compensation expense was included in general and administrative and research and development costs as follows in the accompanying condensed statements of comprehensive loss for the three and six-month periods indicated below (in thousands):
Inducement Plan
On February 22, 2021, the Company adopted the
Ocuphire Pharma, Inc. 2021 Inducement Plan (as amended, the “Inducement Plan”), which was amended on November 1, 2023, pursuant to which the Company reserved 2,325,258 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
In November 2020, the stockholders of the Company approved the 2020 Equity Incentive Plan
(the “2020 Plan”) for stock-based awards. 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. 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 31 of the preceding calendar year. The 2020 Plan permits the granting of
incentive and nonstatutory stock options, appreciation rights, restricted stock, restricted stock units, performance stock and cash awards, and other stock-based awards. On January 1, 2024, 1,198,875 shares were added to the 2020 Plan as a result of its evergreen provision.
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.
Stock Options
During the three and six months ended June 30, 2024, 259,086 and 1,021,166 stock
options were granted, respectively, to directors, officers, employees and consultants, generally vesting over a -
to four-year period with monthly, quarterly and annual vesting tranches. During the three and six months ended June 30, 2023, 98,195 and 763,578 stock
options were granted, respectively, to directors, officers, employees and consultants, generally vesting over a five- (5) to forty-eight (48) month period.
The Company recognized $510,000 and $1,186,000 in
stock-based compensation expense related to stock options during the three months ended June 30, 2024 and 2023, respectively, and $957,000
and $1,686,000 during the six months ended June 30, 2024 and 2023, respectively. Stock-based compensation expense during
the three and six-month periods ended June 30, 2023 included a one-time charge of $0.4 million attributed to the
modification of stock options for Mina Sooch, the Company’s former Chief Executive Officer, with respect to their exercisability provisions.
There were no stock option exercises during the three and six months ended June 30, 2024 and 2023.
As of June 30, 2024 and December 31, 2023, 4,962,489 and 4,410,258
stock options were outstanding, respectively.
The weighted average fair value per share of options granted during the three and six
months ended June 30, 2024 was $1.35 and $1.95, respectively. The weighted average fair value per share of options granted during the three and six months ended June 30, 2023 was $3.36 and $2.83, respectively. The Company measures
the fair value of stock options with service-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 an internal 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 and six months ended June 30, 2024 and 2023:
During the three and six months ended June 30, 2024, 141,817 and 306,372 stock options vested, respectively. During the three and six months ended June 30, 2023, 374,757 and 620,824 stock options vested, respectively, inclusive of the vesting acceleration of stock options attributed to the departure of Mina Sooch, the Company’s former Chief Executive Officer, in the amount of 145,418.
During the three and six
months ended June 30, 2024, 124,030 and 468,935 options were forfeited, respectively. During the three and six months ended June 30, 2023, 254,966
options were forfeited, inclusive of the stock option forfeited in connection with the departure of Mina Sooch, the Company’s former Chief Executive Officer, in the amount of 249,633.
Restricted Stock Units
During the three and six months ended June 30, 2024, the Company granted an aggregate of 278,858 and 592,222 restricted stock units (“RSUs”), respectively, to the board of directors and certain officers, employees and consultants under the
2020 Plan. The weighted average grant date per unit fair value of the RSUs granted during the three and six months ended June 30, 2024 was $1.73
and $2.24, respectively. The vesting period of the RSUs range from a one-year period to a four-year period during which
25 percent of the RSUs vest annually on each anniversary of the grant date, subject to the recipient’s continued service on
such dates.
During the three and six months ended June 30, 2023, the Company granted an aggregate of 124,880 and 416,464 RSUs, respectively, to the
board of directors and certain officers and employees under the 2020 Plan. The weighted average grant date per unit fair value of the RSUs granted during the three and six months ended June 30, 2023 was $5.09 and $3.98,
respectively. The vesting period of the RSUs range from a one-year period to a four-year period during which 25 percent of the
RSUs vest annually on each anniversary of the grant date, subject to the recipient’s continued service on such dates.
During the three and six months ended June 30, 2024, 104,880 and 144,162 RSUs vested, respectively, and zero and 82,670 RSUs were
forfeited during the three and six months ended June 30, 2024, respectively.
During the three and six months ended June 30, 2023, 33,614 RSUs vested and 100,842 RSUs were forfeited, both
attributed solely to the departure of Mina Sooch, the Company’s former Chief Executive Officer.
The total expense for the three and six months ended June 30, 2024 related to these RSUs was $296,000 and $589,000, respectively. The total expense
for the three and six months ended June 30, 2023 related to these RSUs was $208,000 and $265,000, respectively.
Common Stock Issued for Services
The Company granted stock for services in the amount of 81,234 common shares during the six months ended June 30, 2024 to board members who elected to receive their board retainers in the form of
stock for services with a grant date fair value of $3.01 per share.
The Company granted stock for services in the amount of 4,340 and 72,986 common
shares during the three and six months ended June 30, 2023, respectively, to board members who elected to receive their board retainers in the form of stock for services with a grant date fair value of $6.38 and $3.77 per share,
respectively.
The stock-based compensation related to these services
amounted to zero and $28,000
during the three months ended June 30, 2024 and 2023, respectively, and $245,000 and $275,000 during the six months ended June 30, 2024 and 2023, respectively.
General
As of June 30, 2024, 1,596,826 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 $7.3 million as of June 30, 2024. The unrecognized stock-based expense is expected to be recognized over a weighted average period of 1.75 years.
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