CG Oncology, Inc. Stock Compensation Disclosure
In 2015, the Company established the 2015 Plan, under which the Company may grant options and restricted stock to its employees and certain non-employees. As of December 31, 2025, there were 646,116 shares of common stock subject to outstanding awards under the 2015 Plan. In 2022, the Company established the 2022 Plan, under which the Company may grant options, restricted stock units, restricted stock, stock appreciation rights, dividend equivalents and other stock and cash-based awards to its employees and certain non-employees. As of December 31, 2025, there were 3,206,430 shares of common stock subject to outstanding awards under the 2022 Plan.
On January 11, 2024, the Company’s board of directors and stockholders approved the 2024 Equity Incentive Plan (the 2024 Plan), which became effective on the date immediately preceding the date on which the Company’s registration statement with respect to its initial public offering was declared effective by the SEC. The 2024 Plan replaced the 2022 Plan, as the Company’s board of directors has determined to not make additional grants under the 2022 Plan following the closing of the offering. However, the 2015 and 2022 Plan will continue to govern outstanding equity awards granted under the 2015 and 2022 Plans. The 2024 Plan allows the Company to make equity-based and cash-based incentive awards to its officers, employees, directors and consultants. The number of shares initially available for issuance under awards granted pursuant to the 2024 Plan is (1) 8,246,565 shares, plus (2) any shares subject to outstanding awards under the 2015 Plan and 2022 Plan as of the effective date of the 2024 Plan that become available for issuance under the 2024 Plan thereafter in accordance with its terms. As of December 31, 2025, there were 4,105,673 shares of common stock subject to outstanding awards and 4,066,835 shares of common stock remaining and available for issuance under the 2024 Plan.
The Company may grant options to purchase authorized but unissued shares of the Company’s common stock. Options granted under the 2015 Plan, 2022 Plan and 2024 Plan include incentive stock options that can be granted only to the Company’s employees and non-statutory stock options that can be granted to the Company’s employees, consultants, advisors and directors.
The exercise prices, vesting and other restrictions of the awards to be granted under the 2015 Plan, 2022 Plan and 2024 Plan are determined by the Board, except that no stock option may be issued with an exercise price less than the fair market value of the common stock at the date of the grant or have a term in excess of ten years. Options granted under the 2015 Plan, 2022 Plan and 2024 Plan are exercisable in whole or in part at any time subsequent to vesting.
Stock Options
The following table summarizes stock option activity for the year ended December 31, 2025 (in thousands, except share and per share amounts):
|
|
Number of |
|
|
Weighted |
|
|
Weighted |
|
|
Aggregate |
|
||||
|
|
|
|
|
|
|
|
(Years) |
|
|
|
|
||||
Balance at December 31, 2024 |
|
|
6,574,580 |
|
|
$ |
14.19 |
|
|
|
8.20 |
|
|
$ |
108,155 |
|
Granted |
|
|
2,704,280 |
|
|
$ |
22.10 |
|
|
|
|
|
|
|
||
Exercised |
|
|
(598,547 |
) |
|
$ |
8.70 |
|
|
|
|
|
|
|
||
Forfeited/Expired |
|
|
(722,094 |
) |
|
$ |
21.90 |
|
|
|
|
|
|
|
||
Balance at December 31, 2025 |
|
|
7,958,219 |
|
|
$ |
16.59 |
|
|
|
7.96 |
|
|
$ |
198,545 |
|
Vested and expected to vest at December 31, 2025 |
|
|
7,958,219 |
|
|
$ |
16.59 |
|
|
|
7.96 |
|
|
$ |
198,545 |
|
Exercisable at December 31, 2025 |
|
|
3,500,670 |
|
|
$ |
11.38 |
|
|
|
7.14 |
|
|
$ |
105,496 |
|
The aggregate intrinsic value is calculated as the difference between the exercise price of the stock options and the fair value of the Company's common stock. The aggregate intrinsic value of options exercised during the years ended December 31, 2025, 2024 and 2023 was $12.8 million, $33.2 million, and $4.9 million, respectively.
The weighted-average grant-date fair value of the options granted was $15.16, $22.53 and $4.27 per share for the years ended December 31, 2025, 2024 and 2023, respectively. The aggregate grant-date fair value of options vested during the years ended December 31, 2025, 2024 and 2023 was $27.1 million, $6.6 million and $0.9 million, respectively.
The following table provides the assumptions used in determining the fair value of option awards for the years ended December 31, 2025, 2024 and 2023:
|
|
Year Ended December 31, |
||||
|
|
2025 |
|
2024 |
|
2023 |
Expected volatility |
|
67.88% - 77.58% |
|
77.34% - 84.50% |
|
81.6% |
Risk-free interest rate |
|
3.7% - 4.5% |
|
3.46% - 4.62% |
|
3.58% - 4.77% |
Expected dividend yield |
|
0% |
|
0% |
|
0% |
Expected term (in years) |
|
5.25 - 6.1 |
|
6.0 - 6.1 |
|
6 |
The Company has recorded stock-based compensation expense related to stock options of $23.7 million, $9.5 million, and $1.5 million for the years ended December 31, 2025, 2024 and 2023, respectively. The Company had an aggregate $62.3 million of gross unrecognized stock-based compensation expense related to stock options as of December 31, 2025. This remaining expense is expected to be amortized over a weighted-average period of 2.9 years.
Performance-Based Restricted Stock Units
A Performance Stock Unit (PSU) represents one equivalent share of the Company's common stock to be issued after achievement of the performance metrics specified in the grant. The following table summarizes the Company's PSU activity for the year ended December 31, 2025:
|
|
Number of Shares |
|
|
Weighted Average Grant Date Fair Value |
|
||
|
|
|
|
|
|
|
||
Nonvested at December 31, 2024 |
|
|
— |
|
|
$ |
— |
|
Granted |
|
|
173,964 |
|
|
$ |
39.57 |
|
Vested |
|
|
(7,622 |
) |
|
$ |
43.25 |
|
Nonvested at December 31, 2025 |
|
|
166,342 |
|
|
$ |
39.40 |
|
Expected to vest at December 31, 2025 |
|
|
166,342 |
|
|
$ |
39.40 |
|
The Company estimates the fair value of a PSU based upon the expected achievement of the performance metrics specified in the grant and the closing market price of the Company's common stock on the date of grant. The aggregate fair value of PSUs vested during the year ended December 31, 2025 was approximately $0.3 million.
Stock-based compensation expense associated with these PSUs is recognized if achievement of the underlying performance condition is considered probable of achievement based on the Company’s best estimates. The Company has recorded stock-based compensation expense related to PSUs of $0.3 million for the year ended December 31, 2025. As of December 31, 2025, the Company had an aggregate $6.6 million of gross unrecognized stock-based compensation expense related to unvested PSUs to be recognized over a weighted average period of 1.5 years, including the expense attributable to PSUs for which achievement is not considered probable and no current expense is being recognized.
Stock-based compensation expense related to stock awards and the 2024 Employee Stock Purchase Plan (see Note 13) recorded in the accompanying statements of operations for the years ended December 31, 2025, 2024 and 2023 was as follows (in thousands):
|
Year Ended December 31, |
|
|||||||||
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Research and development |
$ |
9,481 |
|
|
$ |
3,736 |
|
|
$ |
795 |
|
General and administrative |
|
17,195 |
|
|
|
7,666 |
|
|
|
733 |
|
Total stock-based compensation expense |
$ |
26,676 |
|
|
$ |
11,402 |
|
|
$ |
1,528 |
|
The Company has not recognized and does not expect to recognize in the near future, any tax benefit related to employee stock-based compensation expense as a result of the full valuation allowance related to its net deferred tax assets
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.