Sensei Biotherapeutics, Inc. Stock Compensation Disclosure
9. STOCK-BASED COMPENSATION
2018 Equity Incentive Plan
The Company’s 2018 Stock Incentive Plan (the “2018 Plan”), provided for the Company to grant qualified incentive options, nonqualified options, stock grants and other stock-based awards to employees and non-employees to purchase the Company’s
common stock. Upon the effectiveness of the 2021 Plan (as defined below), the Company ceased issuing new awards under the 2018 Plan.
2021 Equity Incentive Plan
The Company’s 2021 Equity Incentive Plan (the “2021 Plan”) became effective in February 2021. The 2021 Plan provides for the grant of incentive stock options to employees, including employees of any parent or subsidiary corporations, and for the grant of nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance awards and other forms of stock awards to employees, directors, and consultants, including employees and consultants of the Company’s affiliates. The number of shares initially reserved for issuance under the 2021 Plan was 5,000,000, which began automatically increasing on January 1 of each calendar year, starting on January 1, 2022 through January 1, 2031, in an amount equal to 4.0% of the total number of shares of the Company’s capital stock outstanding on the last day of the calendar month before the date of each automatic increase, or a lesser number of shares determined by the board of directors. As of December 31, 2024, 1,182,021 shares remained available for issuance pursuant to the 2021 Plan.
2021 Employee Stock Purchase Plan
The 2021 Employee Stock Purchase Plan (the “2021 ESPP”) became effective in February 2021. A total of 333,333 shares of common stock were initially reserved for issuance under the 2021 ESPP, which will automatically increase on January 1 of each calendar year, beginning on January 1, 2022 through January 1, 2031, by an amount equal to 1.0% of the total shares of common stock outstanding on December 31st of the preceding calendar year. The purchase price of the shares under the 2021 ESPP are at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the purchase date. As of December 31, 2024, the Company had issued 225,011 shares under the 2021 ESPP, and 972,354 shares were available to be issued under the same plan.
Stock Options
The Company has granted options to purchase shares of common stock to employees and nonexecutive directors pursuant to the 2021 Plan at a weighted average fair value of $0.49 per share and $0.99 per share during the years ended December 31, 2024 and 2023, respectively. The Company uses the Black-Scholes option-pricing model to estimate the fair value of the stock options on the applicable grant dates.
The following is a summary of the stock option award activity during the year ended December 31, 2024:
|
|
Number |
|
|
Weighted- |
|
|
Weighted- |
|
|
Aggregate |
|
||||
Outstanding at December 31, 2023 |
|
|
3,419,306 |
|
|
$ |
7.12 |
|
|
|
7.29 |
|
|
$ |
— |
|
Granted |
|
|
2,732,646 |
|
|
$ |
0.67 |
|
|
|
|
|
|
|
||
Forfeited |
|
|
(517,721 |
) |
|
$ |
2.54 |
|
|
|
|
|
|
|
||
Expired |
|
|
(338,419 |
) |
|
$ |
6.74 |
|
|
|
|
|
|
|
||
Outstanding at December 31, 2024 |
|
|
5,295,812 |
|
|
$ |
4.80 |
|
|
|
7.22 |
|
|
$ |
40.82 |
|
Vested or expected to vest as of as of December 31, 2024 |
|
|
5,295,812 |
|
|
$ |
4.80 |
|
|
|
7.22 |
|
|
$ |
40.82 |
|
Exercisable at December 31, 2024 |
|
|
3,048,712 |
|
|
$ |
7.60 |
|
|
|
5.67 |
|
|
$ |
— |
|
No stock options were exercised in the years ended December 31, 2023 and 2024, respectively.
The total fair value of options vested during the years ended December 31, 2024 and 2023 was $3.3 million and $4.4 million, respectively.
At December 31, 2024, there was approximately $1.5 million of unrecognized stock-based compensation expense associated with the stock options, which is expected to be recognized over a weighted-average period of 1.62 years.
At December 31, 2023, there was approximately $4.1 million of unrecognized stock-based compensation expense associated with the stock options, which is expected to be recognized over a weighted-average period of 1.52 years.
Restricted Stock Units
The Company has granted restricted stock units with service-based vesting conditions.
The following is a summary of the restricted stock unit activity during the year ended December 31, 2024:
|
|
Restricted Stock Units |
|
|
Weighted- |
|
||
Unvested at December 31, 2023 |
|
|
232,958 |
|
|
$ |
2.53 |
|
Vested |
|
|
(90,177 |
) |
|
$ |
2.41 |
|
Forfeited |
|
|
(59,340 |
) |
|
$ |
2.40 |
|
Unvested at December 31, 2024 |
|
|
83,441 |
|
|
$ |
2.75 |
|
Pursuant to the 2021 Plan, the Company granted restricted stock units which vest annually over a period of , , or four years.
At December 31, 2024, there was approximately $0.1 million of unrecognized stock-based compensation expense associated with the restricted stock units which is expected to be recognized over a weighted-average period of 1.44 years.
At December 31, 2023, there was approximately $0.4 million of unrecognized stock-based compensation expense associated with the restricted stock units which is expected to be recognized over a weighted-average period of 2.26 years.
Common Stock Warrants
The following is a summary of the common stock warrant activity during the years ended December 31, 2024:
|
|
Number |
|
|
Weighted- |
|
|
Weighted- |
|
|
Aggregate |
|
||||
Outstanding and exercisable at December 31, 2023 |
|
|
56,692 |
|
|
$ |
6.19 |
|
|
|
1.16 |
|
|
$ |
— |
|
Expired |
|
|
(52,082 |
) |
|
$ |
5.76 |
|
|
|
— |
|
|
|
— |
|
Outstanding and exercisable at December 31, 2024 |
|
|
4,610 |
|
|
$ |
11.04 |
|
|
|
3.00 |
|
|
$ |
— |
|
As of December 31, 2024, there was no unrecognized stock-based compensation expense associated with the common stock warrants.
During the years ended December 31, 2024 and 2023, the Company utilized the Black-Scholes option-pricing model for estimating the fair value of the stock options and common stock warrants granted. The following table presents the assumptions and the Company’s methodology for developing each of the assumptions used:
|
|
For the Year Ended December 31, |
||
|
|
2024 |
|
2023 |
Volatility |
|
91%-94% |
|
93%-97% |
Expected term (years) |
|
4.9-6.0 |
|
5.5-7.0 |
Risk-free interest rate |
|
3.8%–4.6% |
|
3.6%-4.7% |
Dividend rate |
|
—% |
|
—% |
Stock-based compensation expense was recorded in the following line items in the consolidated statements of operations for the years ended December 31, 2024 and 2023 (in thousands):
|
|
Year Ended December 31, |
|
|||||
|
|
2024 |
|
|
2023 |
|
||
Research and development |
|
$ |
846 |
|
|
$ |
1,022 |
|
General and administrative |
|
|
2,289 |
|
|
|
3,432 |
|
Total stock-based compensation expense |
|
$ |
3,135 |
|
|
$ |
4,454 |
|
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.