Note 7 - Equity

In August 2020, the Company entered into the Capital on Demand™ Sales Agreement with JonesTrading Institutional Services LLC, or JonesTrading, pursuant to which the Company may sell, from time to time, through or to JonesTrading, up to an aggregate of $200 million of its common stock. Shares of common stock are offered pursuant to a shelf registration statement on Form S-3 filed with the SEC on August 7, 2020. For the year ended December 31, 2022, the Company sold 3.5 million shares of common stock, resulting in gross proceeds of $23.9 million and net proceeds of $23.2 million. For the year ended December 31, 2021, the Company sold 4.6 million shares of common stock, resulting in gross proceeds of $36.5 million and net proceeds of $35.3 million.

On June 28, 2022, the Company entered into an Amendment and Restated Capital on Demand™ Sales Agreement (the “A&R Sales Agreement”) with JonesTrading and B. Riley Securities, Inc. (“B. Riley Securities”). The A&R Sales Agreement modifies the original Capital on Demand™ Sales Agreement to include B. Riley Securities as an additional sales agent thereunder.

2019 Amended and Restated Stock Plan

In December 2019, the Company’s 2019 Stock Plan was established. The expiration date of the plan is October 18, 2029 and the total number of shares of the Company’s common stock available for grant to employees, directors and consultants of the Company was 333,333 shares. After a number of amendments approved by stockholders, the number of shares authorized under the plan was 5,833,333 shares. At the Company’s Annual Meeting of Stockholders held on December 30, 2022, its stockholders authorized an increase in the number of shares authorized under the plan, resulting in the number of shares authorized in the plan to be 9,333,333 shares.

2013 Amended and Restated Stock Plan

In September 2013, the Company’s 2013 Stock Plan was established. The expiration date of the plan is September 9, 2023 and at the time of approval, the total number of shares of the Company’s common stock available for grant to employees, directors and consultants of the Company under the plan was 91,666 shares. After a number of amendments approved by stockholders, the number of shares authorized under the plan is 758,333 shares.

2013 Equity Incentive Plan

In September 2013, the Company’s 2013 Equity Incentive Plan was established. The expiration date of the plan is September 9, 2023 and the total number of shares of the Company’s common stock available for grant to employees, directors and consultants of the Company under the plan was 15,000 shares. In December 2013, the shareholders of the Company approved the plan and increased the number of shares authorized under the plan to 33,333 shares.

Stock Options

Following is a summary of stock option activity for the years ended December 31, 2022 and 2021:

During 2022, the Company granted its employees and members of the Board of Directors options to purchase 2.1 million shares of common stock with an exercise price ranging from $4.96 to $13.54 per share, a term of 10 years, and a vesting period from 4 to 4.2 years. The options have an aggregated fair value of $7.7 million that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate range from 1.5% to 4.3% (2) expected life of 6 years, (3) expected volatility range from 78.8% to 81.1%, and (4) zero expected dividends.

During 2021, the Company granted its employees and members of the Board of Directors options to purchase 881 thousand shares of common stock with an exercise price ranging from $6.02 to $9.25 per share, a term of 10 years, and a vesting period from 4 to 4.2 years. The options have an aggregated fair value of $3.9 million that was calculated using the Black-Scholes option-pricing model. Variables used in the Black-Scholes option-pricing model include: (1) discount rate range from 0.65% to 1.28% (2) expected life of 6 years, (3) expected volatility range from 79.8% to 85.1%, and (4) zero expected dividends. 

During the years ended December 31, 2022 and 2021, options to purchase 60 thousand and 333 thousand common shares were cancelled, respectively, upon the termination of employment. During 2021, 1 thousand options were exercised for shares of common stock. There were no exercises of options during 2022.

The fair values of all options issued and outstanding are being amortized over their respective vesting periods. The unrecognized compensation expense at December 31, 2022 was $10.0 million related to unvested options, which is expected to be expensed over a weighted average of 3.3 years. During 2022 and 2021, the Company recorded total option expense of $2.5 million and $1.5 million, respectively.

Restricted Stock Units

The Company issued 325 thousand restricted stock units (“RSUs”) to employees during 2022:

The RSUs vest at the earliest of a change of control event, the termination of the recipient’s continuous service status for any reason other than by the Company for cause and the third anniversary of the date of the grant. The fair value of the RSUs, $1.9 million, was determined based on the stock prices on the dates of the grants and is being recognized over three years. The unrecognized compensation expense at December 31, 2022 of $1.7 million is expected to be expensed over 2.4 years. During 2022, the Company recorded compensation expense related to RSUs of $0.2 million.

Warrants

Following is a summary of warrant activities for the years ended December 31, 2022 and 2021:

On August 2, 2022, warrants to purchase an aggregate of 0.6 million shares of common stock expired. These warrants were issued on August 2, 2017, when the Company completed an underwritten offering of 0.7 million shares of common stock and warrants to purchase 0.6 million shares of common stock at a price of $22.50 per share and related warrant. The warrants were exercisable for a period of 5 years at an exercise price of $31.50 per share.

During the years ended December 31, 2022 and 2021, the Company recorded stock-based compensation expense related to warrants of $6 thousand and $16 thousand, respectively.