Entrada Therapeutics, Inc.TRDA
Entrada Therapeutics, Inc. Stock Compensation Disclosure
Stock-Based Compensation
2021 Plan
In September 2021 the Company’s board of directors adopted, and in October 2021 the Company’s stockholders approved, the 2021 Plan, which became effective as of the date immediately prior to the date of the effectiveness of the registration statement for the IPO. The 2021 Plan allows the board of directors to grant incentive stock options or non-qualified stock options, restricted stock, restricted stock units and other equity awards to the Company’s officers, employees, directors and other key persons. In addition, the 2021 Plan includes a provision that allows for an automatic annual increase of 4% in the number of shares of common stock available for issuance under the 2021 Plan. Upon the adoption of the 2021 Plan, the Company ceased granting awards under the 2016 Plan. The total number of shares of common stock authorized for issuance under the 2021 Plan as of December 31, 2025 was 8,171,259 shares and was 7,230,834 shares as of December 31, 2024.
As of December 31, 2025, the Company had issued stock options, restricted stock units (“RSUs”), and performance stock units ("PSUs") under the 2021 Plan. Both stock options and RSUs issued are comprised of service-based
awards granted to employees and typically vest over a four-year period. PSUs vest upon achievement of certain milestones and continued employment or service thereafter.
2016 Plan
Prior to the adoption of the 2021 Plan, the 2016 Plan provided for the Company to grant incentive stock options or non-qualified stock options, restricted stock, restricted stock units and other equity awards to employees, directors and consultants of the Company. The 2016 Plan was administered by the board of directors of the Company or, at the discretion of the board of directors, by a committee of the board of directors. The exercise prices, vesting and other restrictions were determined at the discretion of the board of directors, or its committee if so delegated. The 2016 Plan allows for early exercise of all stock option grants if authorized by the board of directors at the time of grant. The shares of common stock issued from the early exercise of stock options are restricted and continue to vest over the original service based vesting condition of the original stock option award. The Company has the option to repurchase any unvested shares at the original purchase price upon any voluntary or involuntary termination.
The 2016 Plan will continue to govern the outstanding equity awards granted thereunder. The total number of shares of common stock authorized for issuance under the 2016 Plan as of December 31, 2025 and 2024 was 1,705,566 shares and 1,776,694 shares, respectively. As of both dates, all shares of common stock authorized for issuance under the 2016 Plan relate to outstanding stock options.
2021 Employee Stock Purchase Plan (the “ESPP”)
In September 2021, the Company’s board of directors adopted, and in October 2021 the Company’s stockholders approved, the ESPP, which became effective as of the date immediately prior to the date of the effectiveness of the registration statement for the IPO. The ESPP is administered by the person or persons appointed by the Company’s board of directors for such purpose. The number of shares of common stock reserved for issuance under the ESPP will automatically increase on January 1st of each year and continuing through and including 2031 by the lesser of (i) 1% of the outstanding number of shares of our common stock of the immediately preceding December 31, (ii) 557,524 shares or (iii) such number of shares as determined by the ESPP administrator. The total number of shares of common stock authorized for issuance under the ESPP as of December 31, 2025 and 2024 was 1,429,601 shares and 1,128,095 shares, respectively.
Compensation expense for discounted purchases under the ESPP is measured using the Black-Scholes model to compute the fair value of the lookback provision plus the purchase discount and is recognized as compensation expense over the course of the offering period.
2025 Inducement Equity Plan, as amended (the “2025 Inducement Plan”)
In March 2025, the Company's board of directors adopted the 2025 Inducement Equity Plan. The 2025 Inducement Plan provides for the grant of non-qualified stock options, stock appreciation rights, restricted stock awards, restricted stock units, unrestricted stock awards, and dividend equivalent rights with respect to an aggregate of 270,000 shares of Common Stock (subject to adjustment as provided in the 2025 Inducement Plan). Awards under the 2025 Inducement Plan may only be granted to new employees who were not previously employed by the Company or its affiliates, as an inducement material to such new employees' entry into employment with the Company or its affiliates, in accordance with the requirements of Nasdaq Stock Market Rule 5635(c)(4).
As of December 31, 2025, 270,000 shares were authorized for issuance under the 2025 Inducement Plan. As of December 31, 2025, the Company had issued stock options and RSUs under the 2025 Inducement Plan. Both stock options and RSUs issued are comprised of service-based awards granted to employees and typically vest over a four-year period.
Stock-Based Compensation
The Company recognized stock-based compensation expense in the consolidated statements of operations and comprehensive loss, by award type, as follows (in thousands):
| Year ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Stock Options | $ | 9,699 | $ | 10,712 | |||||||
| Restricted Stock Units | 9,729 | 6,978 | |||||||||
| ESPP | 181 | 225 | |||||||||
| Total | $ | 19,609 | $ | 17,915 | |||||||
Stock-based compensation expense recorded as research and development and general and administrative expenses in the consolidated statements of operations and comprehensive loss is as follows (in thousands):
| Year ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Research and development expenses | $ | 8,708 | $ | 7,846 | |||||||
| General and administrative expenses | 10,901 | 10,069 | |||||||||
| Total | $ | 19,609 | $ | 17,915 | |||||||
Stock Option Valuation
The following table presents, on a weighted-average basis, the assumptions used in the Black-Scholes option-pricing model to determine the fair value of stock options granted for the years then ended:
| December 31, 2025 | December 31, 2024 | ||||||||||
| Risk‑free interest rate | 4.02% | 4.13% | |||||||||
| Expected volatility | 80% | 75% | |||||||||
| Expected dividend yield | — | — | |||||||||
| Expected term (in years) | 6.00 | 6.01 | |||||||||
Early Exercise of Unvested Stock Options
Shares purchased by employees pursuant to the early exercise of stock options are not deemed, for accounting purposes, to be outstanding shares until those shares vest according to their respective vesting schedules. Cash received from employee exercises of unvested options is included in current liabilities on the balance sheet. Amounts recorded are reclassified to common stock and additional paid-in capital as the shares vest. Vesting can occur in the year of exercise and thereafter. There were no unvested shares and 1,676 unvested shares related to early exercises of stock options as of December 31, 2025 and December 31, 2024, respectively. As of December 31, 2025, there was no liability associated with the unvested early exercise of stock options. As of December 31, 2024, the liability associated with the unvested early exercise of stock options was less than $0.1 million.
Stock Options
The following table summarizes the Company’s stock option activity during the year ended December 31, 2025:
| Number of Shares | Weighted‑Average Exercise Price | Weighted‑Average Remaining Contractual Term | Aggregate Intrinsic Value(1) | ||||||||||||||||||||
| (in years) | (in thousands) | ||||||||||||||||||||||
Outstanding as of December 31, 2024 | 5,336,407 | $ | 11.87 | ||||||||||||||||||||
| Granted | 906,750 | 10.97 | |||||||||||||||||||||
| Exercised | (62,170) | 6.93 | |||||||||||||||||||||
| Forfeited | (219,998) | 13.28 | |||||||||||||||||||||
Outstanding as of December 31, 2025 | 5,960,989 | $ | 11.73 | 6.54 | $ | 8,661 | |||||||||||||||||
Exercisable as of December 31, 2025 | 4,437,734 | $ | 11.61 | 5.84 | $ | 8,141 | |||||||||||||||||
(1)The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the closing price of the Company's common stock at December 31, 2025 for the options that were in the money as of December 31, 2025.
The aggregate intrinsic value of stock options exercised during the years ended December 31, 2025 and 2024 was $0.3 million and $3.1 million, while the company received $0.4 million and $2.8 million in proceeds for the exercise of these options, respectively.
The weighted-average grant-date fair value of stock options granted during the years ended December 31, 2025 and 2024 was $7.76 per share and $9.69 per share, respectively. As of December 31, 2025, there was $10.8 million of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 2.34 years.
Restricted Stock Units (“RSUs”)
During the year ended December 31, 2025, RSUs were granted to employees with vesting conditions based on continued service over time. Accordingly, stock-based compensation expense for such awards is recognized using a straight-line attribution model over the vesting term of each RSU. The fair value of each RSU is based on the closing price of the Company's common stock on the date of grant. For the majority of RSUs, the restricted stock vests over a four-year period, with 25% of the shares vesting on each anniversary of the grant date.
The following table summarizes the Company’s restricted stock activity during the year ended December 31, 2025:
| Shares | Weighted‑ Average Grant‑Date Fair Value | ||||||||||
Unvested as of December 31, 2024 | 1,968,374 | $ | 14.14 | ||||||||
| Issued | 1,276,315 | 11.15 | |||||||||
Vested | (571,581) | 14.06 | |||||||||
| Forfeited | (388,831) | 13.39 | |||||||||
Unvested as of December 31, 2025 | 2,284,277 | $ | 12.76 | ||||||||
As of December 31, 2025, there was $22.6 million of unrecognized stock-based compensation expense related to unvested RSUs, which is expected to be recognized over a weighted-average remaining vesting period of 2.47 years.
Performance Stock Units (“PSUs”)
During the year ended December 31, 2024, the Company granted 438,500 PSUs to employees of the Company at a weighted-average grant date fair value of $14.86 per share. All 438,500 PSUs were outstanding as of December 31, 2025. The PSUs will vest upon achievement of certain clinical milestones and continued employment thereafter. Compensation
expense for PSUs is recognized over the requisite service period using the accelerated attribution method once the achievement of the performance condition is deemed probable. If a performance condition is not determined to be probable or is not met, no stock-based compensation expense is recognized. Forfeitures are recognized as a reduction of stock-based compensation expense in the period in which they occur.
As of December 31, 2025, no PSUs were vested and no stock-based compensation expense was recognized as the performance conditions were not deemed probable. As of December 31, 2025, there was $6.5 million of unrecognized stock-based compensation expense related to unvested PSUs.
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.