SELLAS Life Sciences Group, Inc.SLS
SELLAS Life Sciences Group, Inc. Stock Compensation Disclosure
Stock-Based Compensation
2017 Equity Incentive Plan
On December 29, 2017, the 2017 Equity Incentive Plan was approved by the stockholders of the Company, and currently allows for issuance of up to approximately 17,000 shares of common stock underlying stock options granted prior to September 10, 2019. The 2017 Equity Incentive Plan was terminated upon the approval of the 2019 Incentive Plan subject to outstanding stock options granted under the 2017 Equity Incentive Plan that remain exercisable through maturity for the Company's employees and directors.
2023 Amended and Restated Equity Incentive Plan
On September 10, 2019, the 2019 Equity Incentive Plan ("2019 Equity Plan") was approved by the stockholders of the Company in connection with the grant of stock-based awards, including stock options, restricted stock, restricted stock units, stock appreciation rights and other types of awards as deemed appropriate.
On June 20, 2023, an amendment to the 2019 Equity Plan was approved by the stockholders of the Company, which amended and restated the 2019 Equity Plan (as amended and restated, the "2023 Amended and Restated Equity Incentive Plan") to increase the number of shares of common stock authorized for issuance under the 2019 Equity Plan by 3,000,000 shares. The 2023 Amended and Restated Equity Incentive Plan currently allows for issuance of up to approximately 6,036,000 shares of common stock.
As of December 31, 2024, approximately 3,414,000 shares of common stock were reserved for future grants under the 2023 Amended and Restated Equity Incentive Plan.
The following table summarizes the components of stock-based compensation expense in the consolidated statements of operations for the years ended December 31, 2024 and 2023, respectively (in thousands):
| Years Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Research and development | $ | 346 | $ | 352 | |||||||
| General and administrative | 1,218 | 1,742 | |||||||||
| Total stock-based compensation | $ | 1,564 | $ | 2,094 | |||||||
Options to Purchase Shares of Common Stock
The Company uses the Black-Scholes option-pricing model to estimate the fair value of stock-based awards and the following assumptions were used for stock options granted during the years ended December 31, 2024 and 2023, respectively:
| Years Ended December 31, | |||||||||||
| 2024 | 2023 | ||||||||||
| Risk free interest rate | 4.01 | % | 3.78 | % | |||||||
| Volatility | 130.41 | % | 127.77 | % | |||||||
| Expected term (years) | 6.19 | 6.20 | |||||||||
| Expected dividend yield | — | % | — | % | |||||||
The weighted-average grant date fair value of options granted during the years ended December 31, 2024 and 2023 was $0.48 and $2.88, respectively.
The Company’s expected common stock price volatility assumption is based upon the Company's own implied volatility in combination with the implied volatility of a basket of comparable companies. The expected life assumptions for employee grants were based upon the simplified method, which averages the contractual term of the Company’s options of 10 years with the average vesting term of four years for an average of six years. The expected life assumptions for non-employees were based upon the contractual term of the option. The dividend yield assumption is zero because the Company has never paid cash dividends and presently has no intention to do so. The risk-free interest rate used for each grant was also based upon prevailing short-term interest rates. The Company accounts for forfeitures as they occur, therefore, outstanding stock options equal vested and expected to vest stock options.
As of December 31, 2024, there was $1.3 million of unrecognized compensation cost related to outstanding stock options that is expected to be recognized as a component of the Company’s operating expenses over a weighted-average period of 1.88 years.
The following table summarizes stock option activity of the Company for the years ended December 31, 2024 and 2023, respectively:
| Total Number of Shares (in thousands) | Weighted Average Exercise Price Per Share | Weighted Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value (in thousands) | ||||||||||||||||||||
| Outstanding at January 1, 2023 | 1,040 | $ | 7.57 | ||||||||||||||||||||
| Granted | 682 | 3.20 | |||||||||||||||||||||
| Canceled | (115) | 4.68 | |||||||||||||||||||||
| Outstanding at December 31, 2023 | 1,607 | 5.92 | |||||||||||||||||||||
| Granted | 671 | 0.53 | |||||||||||||||||||||
| Canceled | (441) | 4.97 | |||||||||||||||||||||
| Outstanding at December 31, 2024 | 1,837 | $ | 4.18 | 7.74 | $ | 301 | |||||||||||||||||
| Vested and exercisable at December 31, 2024 | 894 | $ | 6.77 | 6.82 | $ | — | |||||||||||||||||
The aggregate intrinsic values of outstanding and exercisable stock options at December 31, 2024 were calculated based on the closing price of the Company’s common stock as reported on the Nasdaq Capital Market on December 31, 2024 of $1.04 per share. The aggregate intrinsic value equals the positive difference between the closing fair market value of the Company’s common stock and the exercise price of the underlying stock options.
Time-Vested RSUs and RSUs with Performance Conditions
The Company granted RSUs pursuant to the Company's 2023 Amended and Restated Equity Incentive Plan that will settle in shares of common stock. As of December 31, 2024, there was $0.7 million of unrecognized compensation cost related to outstanding RSUs that is expected to be recognized as a component of the Company’s operating expenses over a weighted-average period of 1.82 years.
The following table summarizes RSU activity of the Company for the years ended December 31, 2024 and 2023, respectively:
| Total Number of Shares (in thousands) | Weighted Average Grant Date Fair Value Per Share | |||||||||||||
| Unvested at January 1, 2023 | 255 | $ | 3.25 | |||||||||||
| Granted | 195 | $ | 3.34 | |||||||||||
| Vested | (85) | $ | 4.37 | |||||||||||
| Canceled | (27) | $ | 3.61 | |||||||||||
| Unvested at December 31, 2023 | 338 | $ | 2.99 | |||||||||||
| Granted | 429 | $ | 0.52 | |||||||||||
| Vested | (172) | $ | 1.86 | |||||||||||
| Canceled | (123) | $ | 1.84 | |||||||||||
| Unvested at December 31, 2024 | 472 | $ | 1.46 | |||||||||||
2021 Employee Stock Purchase Plan
On April 22, 2021, the Board of Directors adopted the 2021 Employee Stock Purchase Plan ("2021 ESPP") which was approved by the Company's stockholders on June 8, 2021. The 2021 ESPP allows employees to contribute up to 20% of their cash earnings, subject to a maximum of $25,000 per year under Internal Revenue Service rules, to be used to purchase shares of the Company's common stock on semi-annual purchase dates. The 2021 ESPP allows eligible employees to purchase shares of common stock at a price per share equal to 85% of the
lower of the fair market value of the common stock at the beginning or end of each six-month offering period during the term of the 2021 ESPP.
During the years ended December 31, 2024 and 2023, 103,853 and 91,454 shares of common stock, respectively, were purchased by employees under the 2021 ESPP for proceeds of approximately $0.1 million. There are approximately 80,000 shares of common stock reserved for issuance under the 2021 ESPP as of December 31, 2024.Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2024 | Mar 20, 2025 | Showing above |
| 2023 | Mar 28, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 31, 2022 | |
| 2020 | Mar 23, 2021 | |
| 2019 | Mar 13, 2020 | |
| 2018 | Mar 22, 2019 | |
| 2016 | Mar 15, 2017 | |
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.