Moleculin Biotech, Inc. Stock Compensation Disclosure
6. Stock Based Compensation
Stock Plan, Stock-based Compensation and Outstanding Awards
In October 2024, the Company’s Board of Directors approved the Moleculin Biotech, Inc. 2024 Equity Incentive Plan (the “2024 Stock Plan”), which replaced the Company’s 2015 Stock Plan. The 2024 Stock Plan provides for the grant of stock options, stock awards, stock unit awards, and stock appreciation rights to employees, non-employee directors, and consultants of the Company.
All share and per share amounts presented herein reflect the effect of the Company’s 1-for-25 reverse stock split completed on December 1, 2025.
As initially approved, 40,000 shares of the Company’s common stock were reserved for issuance under the 2024 Stock Plan. In August 2025, the Company’s stockholders approved an amendment to the 2024 Stock Plan to increase the number of shares authorized for issuance from 40,000 shares to 280,000 shares of the Company’s common stock. As of December 31, 2025, there were 22,105 shares available for future issuance under the 2024 Stock Plan.
Stock-based compensation expense for the years ended December 31, 2025 and 2024 is as follows (in thousands):
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| General and administrative | $ | 1,181 | $ | 1,310 | ||||
| Research and development | 483 | 416 | ||||||
| Total stock-based compensation | $ | 1,664 | $ | 1,726 | ||||
Each of the Company’s stock-based compensation arrangements are discussed below.
Stock Options
Stock option awards are generally granted with an exercise price equal to the market price of the Company’s stock at the date of grant. Stock option awards generally have a 10-year contractual term and vest over a 4-year period for employees and over a 1 to -year period for directors from the grant date on a straight-line basis over the requisite service period. The grant-date fair value of stock options is determined using the Black-Scholes option-pricing model (BSM). Additionally, the Company’s stock options provide for full vesting of unvested outstanding options, in the event of a change of control of the Company.
The fair value of each stock option is estimated on the date of grant using the BSM model that uses the assumptions noted below. The expected term of the stock option awards was computed using the plain vanilla method as prescribed by the Securities and Exchange Commission Staff Accounting Bulletin 107 because the Company does not have sufficient data regarding employee exercise behavior to estimate the expected term. Beginning in 2020, the Company used the volatility of its own stock in the BSM as it now has sufficient historic data in its stock price. The risk-free rate for periods within the contractual life of the option is based on the US Treasury yield curve in effect at the time of grant.
The fair value of the option grants has been estimated, with the following weighted-average assumptions:
| Year Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Risk-free interest rate | 3.8 | % | 4.0% to 4.5% | |||||
| Volatility | 111.8% to 116.8% | 89.1% to 98.9% | ||||||
| Expected life (years) | 6.25 | 5.1 to 6.3 | ||||||
| Expected dividend yield | — | % | — | % | ||||
Stock option activity for the year ended December 31, 2025 is as follows:
| Number of Shares | Weighted Average Grant Date Fair Value | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value | ||||||||||||||||
| Outstanding, December 31, 2024 | 31,381 | $ | 375.75 | $ | 490.00 | 7.5 | $ | — | ||||||||||||
| Granted | 161,860 | $ | 9.54 | $ | 11.72 | |||||||||||||||
| Forfeited | (1,204 | ) | $ | 59.13 | $ | 73.19 | ||||||||||||||
| Expired | (183 | ) | $ | 1,207.64 | $ | 1,541.48 | ||||||||||||||
| Outstanding, December 31, 2025 | 191,854 | $ | 68.57 | $ | 88.89 | 9.5 | $ | — | ||||||||||||
| Exercisable, December 31, 2025 | 14,059 | $ | 741.35 | $ | 974.40 | 7.0 | $ | — | ||||||||||||
Options granted during 2025 and 2024 have an aggregated grant date fair value of $1.5 million and $1.1 million, respectively, that was calculated using the Black-Scholes option-pricing model. At December 31, 2025, total compensation cost not yet recognized was $2.5 million and the weighted average period over which this amount is expected to be recognized is 3.9 years. The aggregate fair value of options vested was $1.1 million and $1.2 million in the years ended December 31, 2025 and 2024, respectively.
The Company recorded stock compensation expense for the non-employee consulting agreements of $88,000 and $120,000 for the years ended December 31, 2025 and 2024, respectively. At December 31, 2025, there was $8,000 of unrecognized stock compensation expense related to the Company's equity-classified warrants.
Restricted Stock Units
Restricted stock units (RSU) are granted with a grant date fair value determined using the closing price of the Company's common stock on the grant date. Restricted stock units vest annually in equal installments. Additionally, the Company's restricted stock unit agreements provide for full vesting of the restricted stock award in the event of a change of control of the Company.
RSU activity for the year ended December 31, 2025 is as follows:
| Number of Shares | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term (years) | ||||||||||
| Unvested Shares, December 31, 2024 | 13,361 | $ | 117.62 | 2.5 | ||||||||
| Granted | — | $ | — | - | ||||||||
| Vested | (3,730 | ) | $ | 165.74 | 2.3 | |||||||
| Unvested Shares, December 31, 2025 | 9,631 | $ | 98.99 | 2.6 | ||||||||
As of December 31, 2025, total compensation cost for RSUs not yet recognized was $0.7 million and the weighted average period over which this amount is expected to be recognized is 2.6 years.
Performance-Based Restricted Stock Units
Performance-based restricted stock units (PSU) are granted primarily to our executive officers and only vest when specific conditions are met based on pre-established performance goals for the Company. PSUs are expensed only when meeting those conditions are deemed probable.
PSU activity for the year ended December 31, 2025 is as follows:
| Number of Shares | Weighted Average Grant Date Fair Value | Weighted Average Remaining Contractual Term (years) | ||||||||||
| Unvested Shares, December 31, 2024 | 2,935 | $ | 8.8 | |||||||||
| Granted | 62,000 | $ | 9.9 | |||||||||
| Unvested Shares, December 31, 2025 | 64,935 | $ | 9.9 | |||||||||
As of December 31, 2025, total compensation cost for PSUs not yet recognized was $1.7 million. The weighted average remaining contract term for these awards is 9.9 years.
In November 2025, the Company granted 62,000 PSUs to executive officers. Each PSU vests in equal tranches upon the achievement of specified clinical and operational milestones related to the Company’s MIRACLE clinical trial, including patient enrollment thresholds, achievement of defined clinical data outcomes, and advancement to subsequent study phases. Vesting of each tranche is subject to certification by the Company’s board of directors or its compensation committee. Stock-based compensation expense for these performance-based awards is recognized when achievement of the applicable performance conditions is considered probable, based on management’s best estimates, which incorporate the inherent risks and uncertainties associated with achieving the underlying milestones. As of the issuance date and through December 31, 2025, none of the performance conditions were considered probable; accordingly, no compensation expense was recognized for these performance-based vesting awards.
In December 2023, the Company granted 2,935 PSUs to executive officers. Each PSU will vest upon the first of the following to occur: (a) a licensing transaction with a valuation, at the time, in excess of $150 million, which valuation shall be determined by the Board; (b) the filing of a new drug application; or (c) upon a Change in Control (as defined in the Plan), in each case subject to the respective executive officer's continued service with the Company as of each such vesting date. Recognition of stock-based compensation expense associated with these performance-based stock options commences when the performance condition is considered probable of achievement, using management’s best estimates, which consider the inherent risk and uncertainty regarding the future outcomes of the milestones. As of the date of issuance and through December 31, 2025, none of the performance goals were deemed probable, and as a result, no expense was recognized for these performance-based vesting awards.
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.