Stock-based Compensation |
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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-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 non-statutory 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, 2023, 1,043,066 shares were added to the 2020 Plan as a result of the evergreen provision.
Stock Options
During the three months ended March 31, 2023 and 2022, 665,383 and 552,305 options were
granted to officers, employees and consultants, respectively, generally vesting over a five (5) to forty-eight (48) month period. The Company recognized $500,000
and $417,000 in stock-based compensation expense related to stock options during the three months ended March 31, 2023 and 2022,
respectively. As of March 31, 2023 and December 31, 2022, 3,601,427 and 2,936,044 stock options were outstanding, respectively.
The weighted average fair value per share of options
granted during the three months ended March 31, 2023 and 2022 was $2.75 and $2.29, 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 months ended March 31, 2023 and 2022:
During the
three months ended March 31, 2023 and 2022, 246,068 and 62,698 stock options vested, respectively. The weighted average fair value per share of options vesting during the three months ended March 31, 2023 and 2022 was $2.44 and $2.90, respectively. During the three months ended March 31, 2023 and 2022, zero and 24,309 stock options were exercised, respectively, with an intrinsic value of zero and $59,000, respectively. During the three months ended
March 31, 2023 and 2022, zero and 8,288
options were forfeited, respectively.
Restricted
Stock Units
During the
three months ended March 31, 2023, the Company granted an aggregate of 291,584 restricted stock units (“RSUs”) to certain
officers and employees under the 2020 Plan. The weighted average grant date fair value of the RSUs granted during the three months ended March 31, 2023 was $3.50 per unit. The RSUs vest over a four year period with 25 percent vesting annually on each anniversary of the grant date, subject to the recipient’s continued service on such dates.
During the
three months ended March 31, 2023, no RSUs vested and no RSUs were forfeited during this period. The total expense for the three months ended March 31, 2023 related to these RSUs was $57,000.
Common Stock Issued for Services
The Company
granted stock for services in the amount of 68,646 and 8,024 common shares during the three months ended March 31, 2023 and 2022, respectively, to four and two board members during these periods, respectively, who
elected to receive their board retainers in the form of stock for services. The stock-based compensation related to these services amounted to $247,000
and $28,000 during the three months ended March 31, 2023 and 2022, respectively.
General
As of March
31, 2023, 912,373 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 $4.9 million as of March 31, 2023. The unrecognized stock-based expense is expected to be recognized over a weighted average period of 1.7 years.
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