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):
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 and six months ended June 30, 2023, 98,195 and 763,578 stock
options were granted to directors, officers, employees and consultants, respectively, generally vesting over a five (5) to
forty-eight (48) month period. During the three and six months ended June 30, 2022, 174,000 and 726,305 stock options were granted to
directors, officers, employees and consultants, respectively, generally vesting over a twelve (12) to forty-eight (48) month period.
The Company recognized $1,186,000 and $418,000 in
stock-based compensation expense related to stock options during the three months ended June 30, 2023 and 2022, respectively, and $1,686,000
and $835,000 during the six months ended June 30, 2023 and 2022, 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 the Company’s former Chief Executive Officer’s stock options with respect to their exercisability provisions.
During the six months ended June 30, 2022, 24,309 stock options were exercised with an intrinsic value of $59,000. There were no exercises during the three and six months
ended June 30, 2023.
As of June 30, 2023 and December 31, 2022, 3,444,656 and 2,936,044
stock options were outstanding, 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 weighted average fair value per share of options granted during the three and six months ended June 30, 2022 was $1.71 and $2.15, 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, 2023 and 2022:
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 the Company’s former Chief Executive Officer in the amount of 145,418. During the three and six months ended June 30, 2022, 204,406 and 267,103 stock options vested, 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 the Company’s former Chief Executive Officer in the amount of 249,633. During the three and six months
ended June 30, 2022, 6,000 and 14,288
options were forfeited, respectively.
Restricted Stock Units
During the three and six months ended June 30, 2023, the Company granted an aggregate of 124,880
and 416,464 restricted stock units (“RSUs”), respectively, to 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 where 25 percent of the RSUs vest annually on each anniversary of the grant date, subject to the recipient’s continued service on such dates. There were no RSUs granted during the comparable periods in the prior year.
During the three and six months ended June 30, 2023, 33,614 RSUs vested and 100,842 RSUs were forfeited during the three and six months ended June 30, 2023, respectively, attributed solely to the departure of the Company’s former Chief Executive Officer. 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 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 Company granted stock for services in the amount of 14,147 and 22,171 common shares during the three and six months ended June 30, 2022, 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 $1.92 and $2.40 per share, respectively.
The stock-based compensation related to these services
amounted to $28,000 and $27,000
during the three months ended June 30, 2023 and 2022, respectively, and $275,000 and $55,000 during the six months ended June 30, 2023 and 2022, respectively.
General
As of June 30, 2023, 1,040,766 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 $4.0 million as of June 30, 2023. The unrecognized stock-based expense is expected to be recognized over a weighted average period of 1.4 years.
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