PepGen Inc. Stock Compensation Disclosure

10. Stock-Based Compensation

The Company maintains four equity compensation plans; the 2020 Stock Plan, or the 2020 Plan, the 2022 Stock Option and Incentive Plan, or the 2022 Plan, the 2022 Employee Stock Purchase Plan, or the ESPP, and the 2024 Inducement Plan, or the Inducement Plan. As of the Company's IPO in May 2022, the Company's board of directors determined that no further awards would be made under the 2020 Plan. The number of shares of common stock that may be issued under the 2022 Plan is subject to increase by the number of shares under any outstanding stock options forfeited and not exercised under the 2020 Plan. Additionally, the number of shares reserved for issuance under the 2022 Plan automatically increases on the first day of each fiscal year in an amount equal to the lower of (1) 5% of the shares of common stock outstanding on such date and (2) an amount determined by the Company’s board of directors. The 2022 Plan allows the board of directors to grant incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, unrestricted stock awards, cash-based awards, and dividend equivalent rights to the Company’s officers, employees, directors and other key persons. The number of shares reserved for issuance under the ESPP automatically increases on the first day of each fiscal year in an amount equal to the lower of (1) 1% of the shares of common stock outstanding on such date and (2) an amount determined by the Company’s board of directors. In August 2024, the Company's board of directors adopted the Inducement Plan. The Inducement Plan provides for the grant of non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, unrestricted stock awards, dividend equivalent rights and other stock-based awards with respect to an aggregate of 1,000,000 shares of common stock (subject to adjustment as provided in the Inducement Plan). Awards under the Inducement Plan may only be granted to new employees who were not previously employed by the Company or its affiliates in accordance with the requirements of Nasdaq Stock Market Rule 5635(c)(4).

As of December 31, 2025, 1,914,063 shares remained available for grant under the 2022 Plan, 532,579 shares remained available for issuance under the ESPP, and 637,184 shares remained available for issuance under the Inducement Plan.

Stock Option Repricing

On November 4, 2025, the Company’s board of directors approved an option repricing, or the Repricing, effective as of November 4, 2025, or the Effective Date. The Repricing was undertaken in accordance with, and as permitted by, the Company’s 2020 Plan, 2022 Plan, and Inducement Plan. Pursuant to the Repricing, all options granted pursuant to the 2020 Plan, 2022 Plan and Inducement Plan that are held by current employees, or Eligible Participants, were repriced, to the extent such options had an exercise price in excess of the 52-week high fair market value per share of the Company’s common stock on the Nasdaq Global Select Market determined as of November 4, 2025, or Eligible Options.

The new exercise price for the Eligible Options is $4.53. However, in order to exercise the repriced options at the reduced exercise price, Eligible Participants are required to remain in service with the Company through the Retention Period (as defined herein). The “Retention Period” begins on the Effective Date and ends on the earliest of the following: (i) March 31, 2027; (ii) with respect to Eligible Options granted under the 2020 Plan, the occurrence of a Sale of the Company (as defined therein), or (iii) with respect to Eligible Options granted under the 2022 Plan and the Inducement Plan, the occurrence of a Sale Event (as defined therein).

As of the date of approval of the Repricing, the total number of shares underlying all Eligible Options is 3,557,903 shares. The Eligible Options previously had exercise prices ranging from $8.89 to $17.91 per share. There were no changes to the number of shares, the vesting schedule or the expiration date of the Eligible Options.

The effect of the option repricing resulted in a total incremental non-cash stock-based compensation expense of $3.4 million, which was calculated using the Black-Scholes option-pricing model, which will be recognized ratably through the 17-month Retention Period.

During the year ended December 31, 2025, the Company recognized incremental stock-based compensation expense of $0.4 million associated with the option repricing which is included in general and administrative and research and development expense in the consolidated statement of operations and comprehensive loss. There was no incremental stock-based compensation expense recognized for year ended December 31, 2024.

Stock Option Valuation

In determining the fair value of the stock options granted, the Company uses Black-Scholes and the assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment.

Expected Term—The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding. For stock options with service-based vesting periods, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options.

Expected Volatility—The Company has historically been a private company and lacks significant company-specific historical and implied volatility information. The expected volatility is estimated based on a blend of the Company's own volatility and the average historical volatilities for comparable publicly traded biotechnology companies over a period equal to the expected term of the stock option grants. The comparable companies were chosen based on their similar size, stage in the life cycle and area of specialty. The Company will continue to apply this process until enough 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 zero coupon issues in effect at the time of grant for periods corresponding with the expected term of option.

Expected Dividend Yield—The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock. Therefore, the Company used an expected dividend yield of zero.

The weighted average assumptions utilized for the Repricing were a risk-free interest rate of 3.63%, an expected volatility of 145.05%, an expected term of 1.40 years, and no expected dividend yield.

Stock Option Activity

The aggregate intrinsic value of stock options is calculated as the difference between the exercise prices of the stock options and the fair value of the Company's common stock for those stock options that had exercises prices lower than the fair value of the Company's common stock. The total intrinsic value of the stock options exercised during the years ended December 31, 2025 and 2024 was $0.1 million and $1.0 million, respectively. The intrinsic value is the difference between the estimated fair value of the Company’s common stock at the time of exercise and the exercise price of the stock option. During the years ended December 31, 2025 and 2024, the total proceeds to the Company from stock option exercises was $0.1 million and $2.2 million, respectively.

The weighted-average grant date fair value of stock options granted during the years ended December 31, 2025 and 2024 was $2.06 and $10.19 per share, respectively.

As of December 31, 2025, total unrecognized compensation expense related to stock options, inclusive of the repricing, was $15.8 million. This amount is expected to be recognized over a weighted average period of approximately 2.21 years.

Restricted Stock Units

A restricted stock unit, or RSU, represents the right to receive one share of common stock upon vesting of the RSU. In February 2024, the Company granted employees a one-time RSU award that vested in full on the one-year anniversary of the grant date, provided that the employee remained employed with the Company through the date of vesting. Certain employees, including employees who are executive officers of the Company, received a one-time RSU award that vests upon the achievement of certain performance-based clinical development milestones, or PSUs, provided that the employee remains employed with the Company through the date of vesting. Such awards could not vest in less than one year, regardless of when the performance milestone was achieved. This milestone was achieved and all PSUs vested on February 24, 2025. During the year ended December 31, 2025 the Company recognized $0.3 million in expense associated with the achievement of the performance milestone.

Beginning in 2025, the Company introduced RSU grants which generally vest over four years, provided the employee remains employed by the Company through the vesting dates. No PSUs remain outstanding as of December 31, 2025. As of December 31, 2025, there are no RSUs with performance-based vesting conditions outstanding. A summary of the Company’s RSU and PSU activity and related information for the year ended December 31, 2025 is as follows:

The weighted average grant date fair value of the time-based RSUs and the PSUs granted during the year ended December 31, 2025 and 2024 was $3.02 and $10.64, respectively. During the year ended December 31, 2025, 101,280 RSUs and PSUs vested with a total fair value of $0.2 million. During the year ended December 31, 2024, no RSUs vested. As of December 31, 2025, there was $0.7

million of unrecognized compensation costs related to unvested time-based RSUs, which are expected to be recognized over a weighted-average period of 3.29 years.

Stock-Based Compensation Expense