STOCK-BASED COMPENSATION
The following table shows total stock-based compensation expense recognized in the accompanying Consolidated Statements of Operations (in thousands): | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2024 | | 2023 | | |
| Research and development | $ | 5,698 | | | $ | 15,215 | | | |
| General and administrative | 6,684 | | | 12,148 | | | |
| Total stock-based compensation expense | $ | 12,382 | | | $ | 27,363 | | | |
As of December 31, 2024, total stock-based compensation expense to be recognized in future periods related to unvested stock options was $2.4 million, which is expected to be expensed over a weighted-average period of 1.1 years. As of December 31, 2024, total stock-based compensation expense to be recognized in future periods related to unvested RSUs was $5.0 million, which is expected to be expensed over a weighted-average period of 1.1 years. There was no capitalized stock-based employee compensation expense as of December 31, 2024 and 2023.
Valuation Assumptions
Employee stock-based compensation expense was determined using the Black-Scholes option valuation model for stock options and employee share purchases under the ESPP. Option valuation models require the input of subjective assumptions and these assumptions can vary over time. The fair value of RSUs was based on the closing price of the underlying common stock on the date of grant.
The Company bases its determination of expected volatility through its assessment of the historical volatility of its common stock. The Company relied on its historical exercise and post-vested termination activity for estimating its expected term for use in determining the fair value of these options.
The weighted-average estimated fair value per share of options granted during the years ended December 31, 2024 and 2023 was $0.40 and $1.53, respectively, based upon the assumptions used in the Black-Scholes valuation model. The
assumptions used for estimating the fair value of the employee stock options were as follows: | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2024 | | 2023 | | |
| Risk-free interest rate | 4.35% | | 3.44-4.00% | | |
| Expected term (in years) | 5.36 | | 5.47-5.56 | | |
| Expected dividend yield of stock | — | | | — | | | |
| Expected volatility | 82.98% | | 72.18-76.05% | | |
Employees purchased 747,692 and 1,346,849 shares of common stock through the ESPP at a weighted-average exercise price of $0.39 and $0.69 per share during the years ended December 31, 2024 and 2023, respectively. The weighted-average estimated fair values of shares purchased under the Company’s ESPP during the years ended December 31, 2024 and 2023 were $0.21 and $0.91, respectively, based upon the assumptions used in the Black-Scholes valuation model.
The assumptions used for estimating the fair value of the ESPP purchase rights are as follows: | | | | | | | | | | | | | |
| Year Ended December 31, |
| 2024 | | 2023 | | |
| Risk-free interest rate | 4.13-5.32% | | 4.28-5.37% | | |
| Expected term (in years) | 0.5-2.0 | | 0.5-2.0 | | |
| Expected dividend yield of stock | — | | | — | | | |
| Expected volatility | 99.27-153.06% | | 65.71-100.60% | | |
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.