Mineralys Therapeutics, Inc.MLYS
Mineralys Therapeutics, Inc. Stock Compensation Disclosure
Stock-Based Compensation
2023 Incentive Award Plan
In February 2023, the Company’s board of directors adopted and stockholders approved the 2023 Incentive Award Plan that became effective upon the closing of the IPO (2023 Plan), under which the Company may grant stock options, restricted stock awards (RSAs), dividend equivalents, restricted stock units, stock appreciation rights, and other stock or cash-based awards to its employees, consultants, and directors. The number of shares of the Company’s common stock initially available for issuance under awards granted pursuant to the 2023 Plan was the sum of (i) 4,650,000 shares of the Company’s common stock, plus (ii) any shares subject to outstanding awards under the 2020 Plan described below as of the effective date of the 2023 Plan that become available for issuance under the 2023 Plan thereafter in accordance with its terms.
The number of shares initially available for issuance will be increased on January 1 of each calendar year beginning in 2024 and ending in 2033, by an amount equal to the lesser of (i) 4% of the shares of the Company’s common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares as determined by the Company’s board of directors. No more than 100,000,000 shares of the Company’s common stock may be issued upon the exercise of incentive stock options under the 2023 Plan. Shares issued under the 2023 Plan may be authorized but unissued shares, shares purchased on the open market, or treasury shares.
2020 Equity Incentive Plan
On July 7, 2020, the board of directors adopted, and the Company’s stockholders approved, the 2020 Equity Incentive Plan. The 2020 Equity Incentive Plan, as amended and restated (the 2020 Plan), provided for the grant of incentive stock options to employees of the Company, and for the grant of non-statutory stock options, RSAs, restricted stock unit awards, and other forms of stock awards to employees, directors, and consultants of the Company.
Subsequent to the closing of the IPO, no additional awards will be granted under the 2020 Plan. However, the 2020 Plan will continue to govern the terms and conditions of the outstanding awards granted
under it. Shares of the Company’s common stock subject to awards granted under the 2020 Plan that expire, lapse, or are terminated, exchanged for cash, surrendered, repurchased, or forfeited following the effective date of the 2020 Plan will be available for issuance under the 2023 Plan in accordance with its terms.
The board of directors or a designated committee of the board of directors is responsible for the administration of the 2023 Plan, and previously the 2020 Plan, and determines the term, exercise price, and vesting terms of each award. Under the terms of existing awards, all stock option grants expire ten years from the grant date. New option grants could not have an exercise price less than 100% of the fair market value of the Company’s common stock on the grant date and generally vested over a period of four years. The Company issues new shares of common stock upon exercise of stock options or issuance of RSAs.
As of December 31, 2024, the Company had the following balances by plan:
| Options Outstanding | Unvested RSAs | Shares Available for Grant | |||||||||||||||
| 2023 Plan | 3,793,940 | — | 2,510,030 | ||||||||||||||
| 2020 Plan | 766,352 | 370,106 | — | ||||||||||||||
| Total | 4,560,292 | 370,106 | 2,510,030 | ||||||||||||||
Stock Options
The following is a summary of the Company’s stock option activity under its 2023 Plan and 2020 Plan:
| Shares | Weighted-Average Exercise Price | Total Intrinsic Value (in thousands) | Weighted-Average Remaining Contractual Life (Years) | ||||||||||||||||||||
| Options outstanding as of December 31, 2023 | 2,540,279 | $ | 9.10 | $ | 8,291 | 8.8 | |||||||||||||||||
| Options granted | 2,709,800 | $ | 12.83 | ||||||||||||||||||||
| Options exercised | (321,942) | $ | 0.92 | ||||||||||||||||||||
| Options forfeited or expired | (367,845) | $ | 10.77 | ||||||||||||||||||||
| Options outstanding as of December 31, 2024 | 4,560,292 | $ | 11.76 | $ | 9,756 | 8.6 | |||||||||||||||||
| Options vested and exercisable as of December 31, 2024 | 1,221,180 | $ | 9.64 | $ | 5,217 | 8.0 | |||||||||||||||||
As of December 31, 2024, the Company had $27.2 million of unrecognized share-based compensation expense related to stock option awards that is expected to be recognized over a weighted-average period of approximately 1.5 years. For the years ended December 31, 2024 and 2023, the total fair value of options vested was $8.9 million and $1.5 million, respectively. The aggregate intrinsic value of options exercised for the years ended December 31, 2024 and 2023 was $4.2 million and $3.2 million, respectively.
The weighted-average grant date fair value per share for options granted during the years ended December 31, 2024 and 2023 was $9.55 and $12.41, respectively. The following table presents the weighted-
average assumptions used in the Black-Scholes option pricing model to determine the fair value of stock options granted during the following periods:
| Year Ended | |||||||||||
| December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Exercise price | $ | 12.83 | $ | 15.19 | |||||||
| Expected term (years) | 6.04 years | 6.01 years | |||||||||
| Expected stock price volatility | 87.0 | % | 104.6 | % | |||||||
| Risk-free rate of interest | 4.2 | % | 3.9 | % | |||||||
| Expected dividend yield | — | % | — | % | |||||||
Restricted Stock Awards
RSAs granted by the Company have varying vesting terms depending on the terms of the grant. Holders of unvested RSAs have the same rights as those of common stockholders including voting rights and non-forfeitable dividend rights. However, ownership of unvested RSAs cannot be transferred until vested. Upon a participant’s termination of continuous service for any reason, any shares subject to RSAs held by the participant that have not vested as of such termination date may be forfeited to or repurchased by the Company.
The following is a summary of the Company’s RSA activity under its 2023 Plan and 2020 Plan:
| Shares | Weighted-Average Grant Date Fair Value | ||||||||||
| Unvested as of December 31, 2023 | 1,007,930 | $ | 1.6338 | ||||||||
| Vested | (637,824) | $ | 1.5466 | ||||||||
| Unvested as of December 31, 2024 | 370,106 | $ | 1.7842 | ||||||||
As of December 31, 2024, the Company had $0.6 million of unrecognized share-based compensation expense related to RSAs that is expected to be recognized over a weighted-average period of approximately 0.8 years. For the years ended December 31, 2024 and 2023, the total fair value of RSAs vested was $1.0 million and $0.1 million, respectively.
2023 Employee Stock Purchase Plan
In February 2023, the Company’s board of directors and stockholders approved the 2023 Employee Stock Purchase Plan (ESPP), which became effective upon the closing of the Company’s IPO. The ESPP permits eligible employees who elect to participate in an offering under the ESPP to have up to a specified percentage of their eligible compensation withheld, subject to certain limitations, to purchase shares of common stock pursuant to the ESPP. A total of 400,000 shares of the Company’s common stock was initially reserved for issuance under the ESPP. The first ESPP offering period commenced on July 1, 2023, with each new six-month offering period beginning each January 1 and July 1. ESPP purchases of common stock occur at a price equal to 85% of the lower of (i) the closing price on the first trading day of the offering period or (ii) the closing price on the last trading day of the offering period. As of December 31, 2024, the Company had 775,722 shares available for issuance and 35,617 cumulative shares had been issued under the ESPP.
In addition, the number of shares available for issuance under the ESPP will be annually increased on January 1 of each calendar year beginning in 2024 and ending in and including 2033, by an amount equal to the lesser of (i) 1% of the shares outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares as is determined by the Company’s board of directors, provided that no more than 15,000,000 shares of the Company’s common stock may be issued under the ESPP.
Total stock-based compensation expense reported in the statements of operations was allocated as follows (in thousands):
| Year Ended | |||||||||||
| December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Research and development | $ | 5,008 | $ | 2,263 | |||||||
| General and administrative | 6,328 | 2,797 | |||||||||
Total | $ | 11,336 | $ | 5,060 | |||||||
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.