Outlook Therapeutics, Inc. Stock Compensation Disclosure
11. Stock-Based Compensation
2024 Equity Incentive Plan
In December 2015, the Company adopted the 2015 Equity Incentive Plan (the “2015 Plan”). The 2015 Plan provided for the grant of stock options, stock appreciation rights, restricted stock awards, RSU awards, performance stock awards and other forms of equity compensation to Company employees, directors and consultants. In August 2024, the Company’s stockholders approved the amendment and restatement of the 2015 Plan and, in connection with amending and restating the 2015 Plan, the name of the 2015 Plan was updated to the Outlook Therapeutics, Inc. 2024 Equity Incentive Plan (the “2024 Plan”). The 2024 Plan provides for the grant of stock options, stock appreciation rights, restricted stock awards, RSU awards, performance stock awards and other forms of equity compensation to Company employees, directors and consultants. The aggregate number of shares of common stock authorized for issuance pursuant to the Company’s 2024 Plan is 7,293,901. As of September 30, 2025, 4,357,084 shares remained available for grant under the 2024 Plan.
Stock options and RSUs granted under the Company's 2024 Plan generally vest over a period of to four years from the date of grant and, in the case of stock options, have a term of 10 years. The Company recognizes the grant date fair value of each option and share of RSU over its vesting period.
The Company recorded stock-based compensation expense in the following expense categories of its consolidated statements of operations for the years ended September 30, 2025 and 2024:
Year ended September 30, | ||||||
| 2025 | | 2024 | |||
Research and development | $ | 379,604 | $ | 800,956 | ||
General and administrative | 8,480,292 | 4,584,168 | ||||
Total | $ | 8,859,896 | $ | 5,385,124 | ||
During the year ended September 30, 2025, the Company capitalized stock-based compensation of $37,991 as part of inventory costs. This amount relates to stock-based compensation expense for employees directly involved in manufacturing activities.
Stock options
The following table summarizes all of the Company’s stock option activity for the year ended September 30, 2025:
Weighted | ||||||||||
Average | ||||||||||
Weighted | Remaining | |||||||||
Number of | Average | Contractual | Aggregate | |||||||
| Shares | | Exercise Price | | Term (Years) | | Intrinsic Value | |||
Balance at September 30, 2024 | 1,946,646 | $ | 19.51 | 7.3 | $ | 53,985 | ||||
Granted | 2,046,599 | 3.69 | ||||||||
Forfeited | (356,167) | 10.46 | ||||||||
Expired | (25,716) | 30.48 | ||||||||
Balance at September 30, 2025 | 3,611,362 | $ | 11.36 | 7.9 | $ | — | ||||
Vested and exercisable at September 30, 2025 | 1,579,487 | $ | 20.87 | 6.2 | $ | — | ||||
The aggregate intrinsic value represents the total amount by which the fair market value of the common stock subject to options exceeds the exercise price of the related options.
The Company estimated the fair value of each stock option award on the grant date using the Black-Scholes option pricing model, wherein expected volatility is based on the Company’s historical volatility. The expected term calculation is based on the “simplified” method described in Staff Accounting Bulletin (“SAB”) No. 107, Share-Based Payment, and SAB No. 110, Share-Based Payment, since the simplified method provides a reasonable estimate in comparison to actual experience. The risk-free interest rate is based on the United States Treasury yield at the date of grant for an instrument
with a maturity that is commensurate with the expected term of the stock options. The dividend yield is zero since the Company has never paid cash dividends on its common stock and has no present intention to pay cash dividends. Options granted under the 2024 Plan generally vest over to four years and have a term of 10 years.
The weighted average grant date fair value of the options awarded to employees and directors for the years ended September 30, 2025 and 2024 was $3.30 and $6.04 per option, respectively. The fair value of the options was estimated on the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:
Year ended September 30, | |||||
2025 | | 2024 | |||
Risk-free interest rate | | 3.7 | % | 4.3 | % |
Expected term (years) | 5.7 | 6.0 | |||
Expected volatility | 132.0 | % | 131.4 | % | |
Expected dividend yield | — | — | |||
As of September 30, 2025, there was $2,016,949 of unrecognized compensation expense that is expected to be recognized over a weighted-average period of 0.9 years.
Performance-based stock options
The Company granted certain officers of the Company option awards where vesting was contingent upon meeting certain company-wide performance goals. The performance stock options were granted “at-the-money” and have a term of 10 years.
The fair value of each option grant under the performance share option plan was estimated on the date of grant using the same option valuation model used for non-statutory options above. Compensation expense for performance-based stock options is only recognized when management determines it is probable that the awards will vest.
The following table summarizes all of the Company’s performance-based stock option activity for the year ended September 30, 2025.
Weighted | ||||||||||
Average | ||||||||||
Weighted | Remaining | |||||||||
Number of | Average | Contractual | Aggregate | |||||||
| Shares | | Exercise Price | | Term (Years) | | Intrinsic Value | |||
Balance at September 30, 2024 | 666,500 | $ | 7.94 | 9.3 | $ | — | ||||
Granted | — | — | ||||||||
Forfeited | (541,000) | 6.78 | ||||||||
Balance at September 30, 2025 | 125,500 | $ | 12.92 | 7.6 | $ | — | ||||
Vested and exercisable at September 30, 2025 | 35,000 | $ | 28.80 | 5.3 | $ | — | ||||
During the year ended September 30, 2025, no expense was recognized because the performance conditions were not considered probable of achievement. The assessment was based on the relevant facts and circumstances and therefore no compensation costs were recognized. The fair value of the options was estimated on the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:
Year ended September 30, | |||||
| 2025 | | 2024 | ||
Risk-free interest rate | — | % | 4.3 | % | |
Expected term (years) | 10.0 | ||||
Expected volatility | — | % | 125.6 | % | |
Expected dividend yield | — | — | |||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Dec 19, 2025 | Showing above |
| 2020 | Dec 23, 2020 | |
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.