CATALYST PHARMACEUTICALS, INC. Stock Compensation Disclosure
For the years ended December 31, 2025, 2024 and 2023, the Company recorded stock-based compensation expense as follows (in thousands):
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Research and development |
|
$ |
2,205 |
|
|
$ |
1,779 |
|
|
$ |
1,481 |
|
Selling, general and administrative |
|
|
22,573 |
|
|
|
20,472 |
|
|
|
12,769 |
|
Total stock-based compensation |
|
$ |
24,778 |
|
|
$ |
22,251 |
|
|
$ |
14,250 |
|
The Company may issue stock options, restricted stock, stock appreciation rights and restricted stock units (collectively, the Awards) to employees, directors, and consultants of the Company under the 2018 Stock Incentive Plan (2018 Plan). Under the 2018 Plan, 26,000,000 shares are reserved for issuance and as of December 31, 2025, 5,278,300 shares remain available for future issuance.
Stock Options
The Company has granted stock options to employees, officers, directors, and consultants generally at exercise prices equal to the market price of the common stock at grant date. Option awards generally vest over a period of to five years of continuous service and have contractual terms of 7 years. Certain awards provide for accelerated vesting if there is a change in control. The Company issues new shares as shares are required to be delivered upon exercise of outstanding stock options.
During the years ended December 31, 2025, 2024 and 2023, options to purchase 2,501,519, 3,429,184 and 1,651,345 shares, respectively, of the Company’s common stock were exercised with gross proceeds to the Company of approximately $14.7 million, $13.5 million and $2.8 million, respectively. During the years ended December 31, 2025, 2024 and 2023, no options to purchase shares of the Company’s common stock were exercised on a “cashless” basis.
During the years ended December 31, 2025, 2024 and 2023, the Company recorded non-cash stock-based compensation expense related to stock options totaling approximately $20.1 million, $16.8 million and $11.1 million, respectively.
During the years ended December 31, 2025, 2024 and 2023, the Company granted seven-year options to purchase an aggregate of 2,030,033, 2,476,946 and 3,598,535 shares, respectively, of the Company’s common stock to certain of the Company’s officers, employees, directors, and consultants.
Stock option activity under the Company’s 2018 Plan for the year ended December 31, 2025 is summarized as follows:
|
|
Number of |
|
|
Weighted |
|
|
Weighted |
|
|
Aggregate |
|
||||
Outstanding at beginning of year |
|
|
13,076,789 |
|
|
$ |
10.76 |
|
|
|
|
|
|
|
||
Granted |
|
|
2,030,033 |
|
|
|
22.85 |
|
|
|
|
|
|
|
||
Exercised or released |
|
|
(2,501,519 |
) |
|
|
5.86 |
|
|
|
|
|
|
|
||
Forfeited or cancelled |
|
|
(431,762 |
) |
|
|
18.23 |
|
|
|
|
|
|
|
||
Expired |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Outstanding at end of year |
|
|
12,173,541 |
|
|
$ |
13.52 |
|
|
|
4.1 |
|
|
$ |
119,771 |
|
Exercisable at end of year |
|
|
7,134,041 |
|
|
$ |
9.74 |
|
|
|
2.9 |
|
|
$ |
96,996 |
|
Other information pertaining to stock option activity during the years ended December 31, 2025, 2024 and 2023 was as follows:
|
|
2025 |
|
|
2024 |
|
|
2023 |
|
|||
Weighted–average fair value of granted stock options |
|
$ |
10.58 |
|
|
$ |
9.53 |
|
|
$ |
8.66 |
|
Total fair value of vested stock options (in thousands) |
|
$ |
19,635 |
|
|
$ |
12,860 |
|
|
$ |
8,278 |
|
Total intrinsic value of exercised stock options |
|
$ |
40,049 |
|
|
$ |
53,230 |
|
|
$ |
22,265 |
|
As of December 31, 2025, there was approximately $39.1 million of unrecognized compensation expense related to non-vested stock option awards granted under the 2018 Plan. That cost is expected to be recognized over a weighted average period of approximately 2.5 years.
The Company utilizes the Black-Scholes option-pricing model to determine the fair value of stock options on the date of grant. This model derives the fair value of stock options based on certain assumptions related to the expected stock price volatility, expected option life, risk-free interest rate and dividend yield. Expected volatility is based on reviews of historical volatility of the Company’s common stock. The Company estimates the expected option life for options granted to employees and directors based upon the simplified method. Under this method, the expected life is presumed to be the mid-point between the vesting date and the end of the contractual term. The Company will continue to use the simplified method until it has sufficient historical exercise data to estimate the expected life of the options. The risk-free interest rate assumption is based upon the U.S. Treasury yield curve appropriate for the estimated life of the stock option awards. The expected dividend rate is zero. Forfeitures are recognized as a reduction of stock-based compensation expense as they occur.
Assumptions used during the years ended December 31, 2025, 2024 and 2023 were as follows:
|
|
2025 |
|
2024 |
|
2023 |
Risk free interest rate |
|
3.6% to 4.4% |
|
3.7% to 4.7% |
|
3.6% to 4.9% |
Expected term |
|
4.5 to 5.0 years |
|
4.5 to 5.0 years |
|
4.5 to 5.2 years |
Expected volatility |
|
49.9% to 52.5% |
|
54.1% to 61.5% |
|
68.0% to 71.0% |
Expected dividend yield |
|
—% |
|
—% |
|
—% |
Expected forfeiture rate |
|
—% |
|
—% |
|
—% |
Restricted Stock Units
Under the 2018 Plan, participants may be granted restricted stock units, each of which represents a conditional right to receive shares of common stock in the future. The restricted stock units granted under this plan generally vest ratably over a three-year period. Upon vesting, the restricted stock units will convert into an equivalent number of shares of common stock. The amount of expense relating to the restricted stock units is based on the closing market price of the Company’s common stock on the date of grant and is amortized on a straight-line basis over the requisite service period. Restricted stock unit activity for the year ended December 31, 2025 was as follows:
|
|
Number of |
|
|
Weighted |
|
||
Nonvested balance at beginning of year |
|
|
708,960 |
|
|
$ |
15.63 |
|
Granted |
|
|
395,121 |
|
|
|
22.86 |
|
Vested |
|
|
(333,865 |
) |
|
|
14.87 |
|
Forfeited |
|
|
(17,590 |
) |
|
|
18.21 |
|
Nonvested balance at end of year |
|
|
752,626 |
|
|
$ |
19.71 |
|
During the years ended December 31, 2025, 2024 and 2023, the Company recorded non-cash stock-based compensation expense related to restricted stock units totaling $4.7 million, $5.5 million and $3.2 million, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 25, 2026 | Showing above |
| 2024 | Feb 26, 2025 | |
| 2023 | Feb 28, 2024 | |
| 2022 | Mar 15, 2023 | |
| 2021 | Mar 16, 2022 | |
| 2020 | Mar 15, 2021 | |
| 2019 | Mar 16, 2020 | |
| 2018 | Mar 18, 2019 | |
| 2017 | Mar 14, 2018 | |
| 2016 | Mar 15, 2017 | |
| 2015 | Mar 15, 2016 | |
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.