MetaVia Inc. Stock Compensation Disclosure

10. Stock‑Based Compensation (in thousands)

Stock-based compensation expense was included in general and administrative and research and development costs as follows in the accompanying statements of comprehensive loss (in thousands):

 

Stock Options

2018 Stock Plan

 

In December 2018, Private NeuroBo adopted the NeuroBo Pharmaceuticals, Inc. 2018 Stock Plan (the "2018 Plan") and in December 2019 in connection with the 2019 Merger, the Company adopted the 2019 Equity Incentive Plan (the “2019 Plan”). 2018 Plan options to purchase Private NeuroBo common stock outstanding as of immediately prior to the 2019 Merger were assumed by the Company upon the 2019 Merger and became options to purchase the Company’s common stock, as adjusted by the Exchange Ratio. The 2018 Plan and 2019 Plan provide for the grant of stock options, restricted stock and other equity awards of the Company's common stock to employees, officers, consultants, and directors. Options expire within a period of not more than ten years from the date of grant. During the years ended December 31, 2020 and 2019, 420,000 and 960,204 stock options were granted, respectively, to employees and non-employee consultants with both service and performance conditions. The options granted with service conditions vest over a period between one year and three years.

 

As of December 31, 2020, 3,623,708 and 1,497,891 shares were authorized under the 2019 Plan and 2018 Plan, respectively, for issuance under these plans.

The following table summarizes the Company’s stock option plan activity for the years ended December 31, 2020 as follows:

 

The weighted average fair value per share of options granted during the year ended December 31, 2020 and 2019 was $5.35 and $0.50,  respectively. 

The Company measures the fair value of stock options with service‑based and performance‑based vesting criteria to employees, consultants and directors on the date of grant using the Black‑Scholes option pricing model. The Company does not have history to support a calculation of volatility and expected term. As such, the Company has used a weighted‑average volatility considering the volatilities of several guideline companies.

For purposes of identifying similar entities, the Company considered characteristics such as industry, length of trading history, and stage of life cycle. The assumed dividend yield was based on the Company’s expectation of not paying dividends in the foreseeable future. The average expected life of the options was determined based on the mid‑point between the vesting date and the end of the contractual term according to the “simplified method” as described in SEC Staff Accounting Bulletin 110, or the contractual term in cases where the “simplified method” was precluded. The risk‑free interest rate is determined by reference to implied yields available from U.S. Treasury securities with a remaining term equal to the expected life assumed at the date of grant. The Company records forfeitures when they occur.

The weighted‑average assumptions used in the Black‑Scholes option‑pricing model are as follows:

 

Evergreen provision

 

Under the 2019 Plan, the shares reserved automatically increase on January 1st of each year, for a period of not more than ten years commencing on January 1, 2020 and ending on (and including) January 1, 2029, to an amount equal to the lesser of 4% of the common shares outstanding as of January 1, or a lesser amount as determined by the Board. The aggregate maximum number of shares of common stock that may be issued pursuant to the 2019 Plan under the evergreen provision is 6,680,000 shares of common stock. On January 1, 2020, 623,708 shares were added to the 2019 Plan as a result of the evergreen provision. See Note 16 - Subsequent Events.

 

During the years ended December 31, 2020 and 2019, 145,485 and 231,478 stock options vested, respectively. The weighted average fair value per share of options vesting during the years ended December 31, 2020 and 2019 was $4.23 and $0.50, respectively During the years ended December 31, 2020 and 2019, 48,333 and 325,784 stock options were forfeited, respectively. As of December 31, 2020, 4,115,512 shares in the aggregate were available for future issuance under the 2019 Plan and 2018 Plan.  

Unrecognized stock‑based compensation cost for the stock options issued under the both the Company’s 2019 Plan and 2018 Plan was $1.3 million as of December 31, 2020. The unrecognized stock‑based expense is expected to be recognized over a weighted average period of 2.1 years.