Jasper Therapeutics, Inc. Stock Compensation Disclosure

NOTE 10. STOCK-BASED COMPENSATION

 

On June 6, 2024, the Company’s 2024 Equity Incentive Plan (the “2024 Plan”) and the 2024 Employee Stock Purchase Plan (the “2024 ESPP”) were approved by its stockholders and became effective, superseding and replacing the Company’s 2021 Equity Incentive Plan (the “2021 Plan”) and the 2021 Employee Stock Purchase Plan (the “2021 ESPP”), respectively. No further awards or purchase rights will be granted under the 2021 Plan or the 2021 ESPP.

 

Under the 2024 Plan, the Company can grant incentive stock options, nonstatutory stock options, restricted stock awards, stock appreciation rights, restricted stock units (“RSUs”), performance restricted stock units (“PSUs”), and other stock-based awards to employees, directors, and consultants. Under the 2024 ESPP, the Company can grant purchase rights to employees to purchase shares of common stock at a purchase price which is equal to 85% of the fair market value of common stock on the offering date or on the exercise date, whichever is lower.

 

On March 14, 2022, the Compensation Committee of the Board (the “Compensation Committee”) adopted the 2022 Inducement Equity Incentive Plan (the “2022 Inducement Plan”) and on June 2, 2023, the Compensation Committee approved an amendment and restatement of the 2022 Inducement Plan. Under the 2022 Inducement Plan, the Company may grant nonstatutory stock options, restricted stock awards, stock appreciation rights, RSUs, performance awards and other awards, but only to an individual, as a material inducement to such individual to enter into employment with the Company or an affiliate of the Company, who (i) has not previously been an employee or director of the Company or (ii) is rehired following a bona fide period of non-employment with the Company.

Stock options under the 2024 Plan and the 2022 Inducement Plan may be granted for periods of up to 10 years and at prices no less than 100% of the fair market value of the shares on the date of grant, provided, however, that the exercise price of an incentive stock option (which cannot be granted pursuant to the 2022 Inducement Plan) granted to a 10% stockholder may not be less than 110% of the fair market value of the shares. Stock options granted to employees and non-employees generally vest ratably over four years. 

 

As of December 31, 2024, 2,762,719 shares were reserved for issuance under the 2024 Plan, of which 1,791,291 shares were available for future grant and 971,428 shares were subject to outstanding options and RSUs, including performance-based awards of 65,894. As of December 31, 2024, options to purchase 143,835 shares of common stock remained outstanding and unexercised, and continue to be governed by the 2019 Equity Incentive Plan (the “2019 EIP”). As of December 31, 2024, 29,802 shares have been issued under the 2021 ESPP and 18,630 shares under the 2024 ESPP. As of December 31, 2024, 1,000,000 shares were reserved under the 2024 ESPP, of which 981,370 shares were available for future issuance. As of December 31, 2024, 550,000 shares were reserved for issuance under the 2022 Inducement Plan, of which 16,885 shares were available for future grant and 533,115 shares were subject to outstanding stock options.

 

Stock Option Activity

 

The following table summarizes the stock option activities, including performance-based stock options, under the 2024 Plan, the 2021 Plan, the 2022 Inducement Plan and the 2019 EIP for the year ended December 31, 2024:

 

		Options Outstanding				Weighted Average Exercise Price				Weighted Average Remaining Contractual Life (Years)				Aggregate Intrinsic Value (in thousands)
Balance, December 31, 2023			1,040,875			$	19.82				8.55			$	237
Options granted			698,817			$	19.87
Options exercised			(33,735	)		$	9.79
Options cancelled/forfeited			(77,579	)		$	25.26
Balance, December 31, 2024			1,628,378			$	19.79				8.31			$	6,608
Vested and expected to vest, December 31, 2024			1,628,378			$	19.79				8.31			$	6,608
Exercisable, December 31, 2024			566,167			$	20.45				7.22			$	3,131

 

The aggregate intrinsic value represents the difference between the estimated fair value of the underlying common stock and the exercise price of outstanding, in-the-money options. The total intrinsic value of the options exercised during the years ended December 31, 2024 and 2023 was $0.5 million and $0.4 million, respectively.

 

The total fair value of options that vested during the years ended December 31, 2024 and 2023 was $5.5 million and $3.4 million, respectively. The weighted-average grant date fair value of options granted during the years ended December 31, 2024 and 2023 was $16.89 and $12.82 per share, respectively.

 

Unamortized stock-based compensation expense as of December 31, 2024 was $14.3 million, which is expected to be recognized over a weighted-average period of 2.64 years, including less than $0.1 million related to performance-based stock options, which is expected to be recognized over a weighted-average period of 0.3 years.

Performance-based stock options 

 

The following table summarizes the performance-based stock options activity under the 2024 Plan and 2021 Plan for the year ended December 31, 2024:

 

		Options Outstanding				Weighted Average Exercise Price				Weighted Average Remaining Contractual Life (Years)				Aggregate Intrinsic Value (in thousands)
Balance, December 31, 2023			46,394			$	14.19				7.06			$	24
Options granted			—
Options cancelled/forfeited			(500	)			35.40
Balance, December 31, 2024			45,894				13.95				6.04				438
Vested and expected to vest, December 31, 2024			45,894				13.95				6.04				438
Exercisable, December 31, 2024			30,893				7.33				5.43				438

 

Restricted Stock Units (RSUs)

 

As of December 31, 2024, the Company had no unvested outstanding RSUs and no RSUs were granted during the year ended December 31, 2024.

 

The total fair value of RSUs that vested during the year ended December 31, 2023 was $1.9 million. There was no unamortized stock-based compensation for RSUs as of December 31, 2023. 

 

Performance Restricted Stock Units (PSUs)

 

The following table provides a summary of PSU activity under the 2024 Plan during the year ended December 31, 2024:

 

		Number of Share				Weighted- Average Grant Date Fair Value
Unvested performance-based restricted stock units at December 31, 2023			—			$	—
Granted			20,000				21.90
Unvested performance-based restricted stock units at December 31, 2024			20,000				21.90
Outstanding performance-based restricted stock units at December 31, 2024			20,000				21.90

 

In June 2024, the Company granted PSUs for 20,000 shares that will vest in full if the closing price of the Company’s common stock on the Nasdaq Capital Market reaches or exceeds $35.00 per share (subject to adjustment for recapitalizations, stock splits and similar transactions) for thirty consecutive calendar days within two years from the grant date. If the vesting condition is not met within two years from the grant date, the PSUs will be forfeited. The Company concluded that issued PSUs are equity-based awards and include a market based vesting condition. The Company used a Monte Carlo simulation model to estimate the fair value of the PSUs with the following assumptions: common stock fair value of $23.95, which was the closing market price of the Company’s common stock at the grant date, volatility of 133.00%, risk free rate of 4.87%, and vesting term of 2.0 years. Total estimated fair value of $0.4 million was recognized as stock-based compensation expense over 0.4 years, the derived requisite service period from the grant date.

Employee Stock Purchase Plan

 

The Company issued 29,491 and 12,999 shares of common stock under the 2021 ESPP and 2024 ESPP during the years ended December 31, 2024 and 2023, respectively, and recognized $0.2 million and $0.1 million compensation expense related to the 2021 ESPP and 2024 ESPP during the years ended December 31, 2024 and 2023, respectively. There was no unamortized stock-based compensation for shares issuable under the 2021 ESPP as of December 31, 2024. There was $0.7 million unamortized stock-based compensation for shares issuable under the 2024 ESPP as of December 31, 2024, which is expected to be recognized over a weighted-average period of 1.5 years. The Company recorded $0.1 million in accrued expenses and other current liabilities related to contributions withheld as of December 31, 2024. 

 

Stock-Based Compensation Expense

 

The following table presents stock-based compensation expenses related to options, PSUs and RSUs granted to employee and non-employees, ESPP awards and restricted common stock shares issued to founders (in thousands):

 

		Year Ended December 31,
		2024				2023
General and administrative		$	4,580			$	3,607
Research and development			2,039				1,604
Total		$	6,619			$	5,211

 

The Company recognized $0.5 million and less than $0.1 million of stock-based compensation expense related to performance-based options and RSUs during the years ended December 31, 2024 and 2023, respectively.

 

Valuation of Stock Options

 

The grant date fair value of stock options was estimated using a Black-Scholes option-pricing model with the following assumptions:

  

			Year Ended December 31,
			2024				2023
Expected term (in years)			5.50 – 6.08				5.25 – 6.08
Expected volatility			95.8% - 123.1%				103.31% – 112.30%
Risk-free interest rate			3.63% - 4.50%				3.45% – 4.71%
Expected dividend yield			—				—

 

The determination of the fair value of stock options on the date of grant using a Black-Scholes option-pricing model is affected by the estimated fair value of the Company’s common stock, as well as assumptions regarding a number of variables that are complex, subjective and generally require significant judgment to determine. The Company estimates the fair value of its common stock based on the closing quoted market price of its common stock as reported on the Nasdaq Capital Market.

 

Expected Term

 

The expected term represents the period that the options granted are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term) as the Company has concluded that its stock option exercise history does not provide a reasonable basis upon which to estimate expected term.

 

Expected Volatility

 

The Company derived the expected volatility from the average historical volatilities over a period approximately equal to the expected term of comparable publicly traded companies within its peer group that were deemed to be representative of future stock price trends. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available.

Risk-Free Interest Rate

 

The risk-free interest rate is based on the U.S. Treasury rate, with maturities similar to the expected term of the stock options.

  

Expected Dividend Yield

 

The Company does not anticipate paying any dividends in the foreseeable future and, therefore, uses an expected dividend yield of zero. 

 

Valuation of ESPP Awards

 

The grant date fair value of ESPP awards was estimated using a Black-Scholes option-pricing model with the following assumptions:

 

		Year Ended December 31,
		2024				2023
Expected term (in years)			0.38 – 2.00				0.50
Expected volatility			67.74% - 154.96%				77.80%  - 266.24%
Risk-free interest rate			4.13% - 5.36%				5.39% - 5.40%
Expected dividend yield			—				—