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) income for the three and nine-month periods indicated below (in thousands):

On February 22, 2021, the Company adopted the Company’s 2021 Inducement Plan (as amended, the “Inducement Plan”), pursuant to which the Company originally 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.

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 other stock-based awards.

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 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, 2024, 1,198,875 shares were added to the 2020 Plan as a result of its evergreen provision.

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.

During the three and nine months ended September 30, 2024, zero and 1,021,166 stock options were granted to directors, officers, employees and consultants, respectively, generally vesting over a one- to four-year period with monthly, quarterly and annual vesting tranches. During the three and nine months ended September 30, 2023, 30,000 and 793,578 stock options were granted to directors, officers, employees and consultants, respectively, generally vesting over a five (5) to forty-eight (48) month period.

The Company recognized $474,000 and $400,000 in stock-based compensation expense related to stock options during the three months ended September 30, 2024 and 2023, respectively, and $1,431,000 and $2,087,000 during the nine months ended September 30, 2024 and 2023, respectively. Stock-based compensation expense during the nine-month period ended September 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.

The weighted average fair value per share of options granted during the nine months ended September 30, 2024 was $1.95. The weighted average fair value per share of options granted during the three and nine months ended September 30, 2023 was $3.30 and $2.85, 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.

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Expected stock price volatility		—	%		96.4	%		97.7	%		95.3	%
Expected life of options (years)		—			6.1			5.9			6.1
Expected dividend yield		—	%		0	%		0	%		0	%
Risk free interest rate		—	%		4.2	%		4.2	%		3.7	%

During the three and nine months ended September 30, 2024, 79,725 and 386,097 stock options vested, respectively. During the three and nine months ended September 30, 2023, 94,347 and 715,171 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 second quarter of 2023.

During the three and nine months ended September 30, 2024, 114,425 and 583,360 options were forfeited, respectively. During the three and nine months ended September 30, 2023, 5,267 and 260,233 options were forfeited, respectively, 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 second quarter of 2023.

During the three and nine months ended September 30, 2024, the Company granted zero and 592,222 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 nine months ended September 30, 2024 was $2.24. The vesting period of the RSUs ranges 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 nine months ended September 30, 2023, the Company granted an aggregate of zero and 416,464 RSUs, respectively, to the Board, officers, employees and consultants under the 2020 Plan. The weighted average grant date per unit fair value of the RSUs granted during the nine months ended September 30, 2023 was $3.98. The vesting period of the RSUs ranges from a one year period to a four year period where 25% 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 nine months ended September 30, 2024, zero and 144,162 RSUs vested, respectively, and 36,660 and 119,330 RSUs were forfeited during the three and nine months ended September 30, 2024, respectively. The total expense for the three and nine months ended September 30, 2024 related to these RSUs was $302,000 and $891,000, respectively.

During the three and nine months ended September 30, 2023, zero and 33,614 RSUs vested, respectively, and zero and 100,842 RSUs were forfeited during the three and nine months ended September 30, 2023, respectively, attributed solely to the departure of the Company’s former Chief Executive Officer. The total expense for the three and nine months ended September 30, 2023 related to these RSUs was $173,000 and $437,000, respectively.

The Company granted stock for services in the amount of zero and 81,234 common shares during the three and nine months ended September 30, 2024, respectively, to board members who elected to receive their board retainers in the form of stock for services with a weighted grant date fair value of $3.01 per share. The Company granted stock for services in the amount of zero and 72,986 common shares during the three and nine months ended September 30, 2023, respectively, to board members who elected to receive their board retainers in the form of stock for services with a weighted grant date fair value of $3.77 per share.

The stock-based compensation related to these services amounted to zero and during the three months ended September 30, 2024 and 2023, and $245,000 and $275,000 during the nine months ended September 30, 2024 and 2023, respectively.

As of September 30, 2024, 1,747,911 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 $6.1 million as of September 30, 2024. The unrecognized stock-based expense is expected to be recognized over a weighted average period of 1.6 years.