Arbutus Biopharma CorpABUS
Arbutus Biopharma Corp Stock Compensation Disclosure
Stock-based compensation
Awards outstanding and available for issuance
During the year ended December 31, 2024, the Company had stock options outstanding under the following plans (collectively, the Plans): the 2016 Omnibus Share and Incentive Plan (the 2016 Plan), the 2011 Omnibus Share Compensation Plan (the 2011 Plan); the 2023 and 2019 inducement grants; and the OnCore Option Plan. During the year ended December 31, 2024, the Company had restricted stock units outstanding under the 2016 Plan.
As of December 31, 2024, the aggregate number of shares authorized for awards under all Plans was 41,790,202. As of December 31, 2024, the Company had 15,451,687 options and 1,493,136 restricted stock units outstanding and 16,674,175 awards available for issuance under the Plans.
The Company issues new common shares of stock to settle options exercised.
The 2011 Plan expired in June 2021. Under the 2016 Plan, the Board may grant options, and other types of awards, to employees, directors and consultants of the Company. The exercise price of the options is determined by the Board but will be at least equal to the closing market price of the common shares on the date of grant and the term may not exceed 10 years. Options granted generally vest over four years for employees and for directors’ initial grants, and immediately for directors’ annual grants.
In June 2019, the Company provided an inducement grant of 1,112,000 options to its newly hired Chief Executive Officer. These options were awarded in a separate plan as non-qualified awards and were governed by the substantially the same terms as the 2016 Plan. As of December 31, 2024, there were no options outstanding under this separate plan, as all options under this plan were exercised during 2024. In July 2023, the Company provided an inducement grant of 500,000 options in connection with the hiring of its General Counsel and Chief Compliance Officer, which is governed by substantially the same terms as the 2016 Plan.
Hereafter, information on options governed by the 2016 Plan, the 2011 Plan and the 2023 and 2019 inducement grants (the Arbutus Plans) is presented on a consolidated basis as the terms of the plans are similar.
Stock options under the Arbutus Plans
The following table summarizes activity related to the Company’s equity-classified stock options for the year ended December 31, 2024:
| Number | Weighted-Average Exercise Price | ||||||||||
| Balance as of December 31, 2023 | 19,064,165 | $ | 3.47 | ||||||||
| Options granted | 4,163,000 | $ | 2.50 | ||||||||
| Options exercised | (2,877,664) | $ | 2.58 | ||||||||
| Options forfeited, canceled or expired | (4,897,814) | $ | 3.02 | ||||||||
| Balance as of December 31, 2024 | 15,451,687 | $ | 3.37 | ||||||||
The intrinsic value of options exercised under the Arbutus Plans during 2024 and 2023 are $1.4 million and less than $0.1 million, respectively. The weighted average grant-date fair value of stock options granted during the year ended December 31, 2024 and 2023 was $1.87 and $2.15, respectively.
The following table summarizes additional information related to the Company’s equity-classified stock options as of December 31, 2024:
| As of December 31, 2024 | |||||
| Options outstanding and expected to vest | |||||
| Number of stock options outstanding | 15,451,687 | ||||
| Weighted-average exercise price | $ | 3.37 | |||
| Intrinsic value (in $000s) | $ | 6,182 | |||
| Weighted-average term remaining | 6.7 years | ||||
| Vested stock options | |||||
| Number of vested stock options | 10,777,302 | ||||
| Weighted-average exercise price | $ | 3.70 | |||
| Intrinsic value (in $000s) | $ | 3,033 | |||
| Weighted-average term remaining | 5.9 years | ||||
The assumptions used in the Black-Scholes option-pricing for grants made during the years ended December 31, 2024 and 2023 are as follows:
| December 31, 2024 | December 31, 2023 | ||||||||||
| Expected average option term | 5.6 years | 5.6 years | |||||||||
| Expected volatility (historical) | 92.0 | % | 97.1 | % | |||||||
| Expected dividends | — | % | — | % | |||||||
| Risk-free interest rate | 3.84 | % | 3.57 | % | |||||||
The Company considers all available information when estimating the fair value of its stock option grants.
Stock options under the other plans
As of December 31, 2024, the Company had no liability option awards outstanding and no stock option awards outstanding under the OnCore Option Plan, as the last of these stock option awards expired or were fully exercised, respectively, during 2024.
Restricted Stock Units under the 2016 Plan
The following table summarizes activity related to the Company’s restricted stock units, for the year ended December 31, 2024:
| Number | Weighted-Average Grant-Date Fair Value | ||||||||||
| Balance as of December 31, 2023 | 1,231,450 | $ | 2.90 | ||||||||
| Restricted stock units granted | 1,316,200 | $ | 2.40 | ||||||||
| Restricted stock units vested | (410,482) | $ | 2.90 | ||||||||
| Restricted stock units forfeited, canceled or expired | (644,032) | $ | 2.65 | ||||||||
| Balance as of December 31, 2024 | 1,493,136 | $ | 2.57 | ||||||||
The restricted stock units vest over three years in equal annual installments beginning one year from the grant date. The weighted average grant-date fair value of restricted stock units granted during the years ended December 31, 2024 and 2023 was $2.40 and $2.90, respectively.
Employee Stock Purchase Plan
In May 2020, the Company’s stockholders approved the 2020 Employee Stock Purchase Plan (the ESPP) which became effective on May 28, 2020. A total of 1,500,000 common shares were reserved for issuance under the ESPP. Company employees contribute funds via payroll deductions, which are used to buy Company common shares at a discount of up to 15% based on the lower of the price at the start of the offering period and at the end of the relevant purchase period within such offering period. The initial offering period under the ESPP was September 1, 2020 through August 31, 2021 with purchase dates set on February 26, 2021 and August 31, 2021, with subsequent offering periods beginning on September 1 and ending on August 31. The Company issued 227,333 and 290,438 shares under its ESPP for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, there were 614,668 shares remaining for issuance under the ESPP. For both of the years ended December 31, 2024 and 2023, the Company recognized $0.1 million of stock-based compensation expense related to the ESPP. The fair value of the right to acquire stock at a discounted price under the ESPP is calculated using the Black-Scholes valuation model and recorded as stock-based compensation. Expense is recognized over the period the employee contributes to the plan through payroll deductions.
Stock-based compensation expense
Total stock-based compensation expense was comprised of the vesting of options and restricted stock units awarded to employees under the Arbutus and OnCore Plans calculated in accordance with the fair value method as described above and amortization of compensation cost related to the ESPP.
The Company recognizes forfeitures as they occur, and the effects of forfeitures are reflected in stock-based compensation expense.
Stock-based compensation has been recorded in the consolidated statement of operations and comprehensive loss as follows:
| Year Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| (in thousands) | |||||||||||
| Research and development | $ | 3,647 | $ | 3,684 | |||||||
| General and administrative | 5,339 | 5,617 | |||||||||
| Total | $ | 8,986 | $ | 9,301 | |||||||
At December 31, 2024, there remained $8.4 million and $2.4 million of unrecognized compensation expense related to unvested equity employee stock options and restricted stock units, respectively, to be recognized as expense over weighted-average periods of approximately 2.2 years and 1.8 years, respectively.
For each of the years ended December 31, 2024 and 2023, the Company had zero performance-based stock compensation expense.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 27, 2025 | Showing above |
| 2020 | Mar 4, 2021 | |
| 2019 | Mar 5, 2020 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.