Quarterly report pursuant to Section 13 or 15(d)

STOCK-BASED COMPENSATION

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STOCK-BASED COMPENSATION
9 Months Ended
Sep. 30, 2022
Share-Based Payment Arrangement [Abstract]  
STOCK-BASED COMPENSATION

NOTE 9 – STOCK-BASED COMPENSATION

 

The Company has two stock-based compensation plans: (1) Abeona Therapeutics Inc. 2015 Equity Incentive Plan (the “2015 Incentive Plan”), which was approved by stockholders on May 7, 2015 and last amended on May 20, 2020 and (2) Abeona Therapeutics Inc. 2005 Equity Incentive Plan (the “2005 Incentive Plan”), under which no further grants can be made.

 

The following table summarizes stock-based compensation expense for the three and nine months ended September 30, 2022 and 2021 (in thousands):

 

   

For the three months ended

September 30,

   

For the nine months ended

September 30

 
    2022     2021     2022     2021  
                         
Research and development   $ 173     $ 688     $ 729     $ 2,935  
General and administrative     459       1,849       1,489       3,980  
Total stock-based compensation expense   $ 632     $ 2,537     $ 2,218     $ 6,915  

 

Stock Options: The Company estimates the fair value of each option award on the date of grant using the Black-Scholes option valuation model. The Company then recognize the grant date fair value of each option as compensation expense ratably using the straight-line attribution method over the service period (generally the vesting period). The Black-Scholes model incorporates the following assumptions:

 

  Expected volatility – the Company estimates the volatility of the share price at the date of grant using a “look-back” period which coincides with the expected term, defined below. The Company believes using a “look-back” period which coincides with the expected term is the most appropriate measure for determining expected volatility.
  Expected term – the Company estimates the expected term using the “simplified” method, as outlined in SEC Staff Accounting Bulletin No. 107, “Share-Based Payment.”
  Risk-free interest rate – the Company estimates the risk-free interest rate using the U.S. Treasury yield curve for periods equal to the expected term of the options in effect at the time of grant.
  Dividends – the Company uses an expected dividend yield of zero because the Company has not declared nor paid a cash dividend, nor are there any plans to declare a dividend.

 

 

The Company estimated the fair value of stock options granted in the periods presented utilizing a Black-Scholes option-valuation model utilizing the following assumptions:

 

      For the nine months ended September 30,  
      2022       2021  
                 
Expected volatility     95.1% - 96.0%       91.8% - 99.8%  
Expected term     6.07 - 6.08 years       5.25 - 6.08 years  
Risk-free interest rate     1.7% - 3.3%       0.8% - 1.2%  
Expected dividend yield            

 

The following table summarizes stock option activity for the 2015 Incentive Plan during the nine months ended September 30, 2022: 

    Number of Options     Weighted Average Exercise Price    

Weighted Average Remaining

Contractual

Term (years)

    Aggregate Intrinsic Value (in thousands)  
                         
Outstanding at December 31, 2021     314,194     $ 38.48       7.63     $  
Granted     7,760     $ 5.30           $  
Cancelled/forfeited     (82,510 )   $ 39.31           $  
Exercised         $           $  
Outstanding at September 30, 2022     239,444     $ 37.10       6.71     $  
Exercisable     140,414     $ 36.67       5.39     $  
Unvested     99,030     $ 37.72       8.58     $  

 

The aggregate intrinsic value of options is calculated as the difference between the exercise price of the underlying options and the fair value of the Company’s common stock for those options that had exercise prices lower than the fair value of the Company’s common stock. As of September 30, 2022, the total compensation cost related to non-vested option awards not yet recognized was approximately $3.3 million with a weighted average remaining vesting period of 2.3 years.

 

The following table summarizes stock option activity for the 2005 Incentive Plan during the nine months ended September 30, 2022:

 

    Number of Options     Weighted Average Exercise Price    

Weighted Average Remaining

Contractual Term (years)

    Aggregate Intrinsic Value (in thousands)  
                         
Outstanding at December 31, 2021     3,200     $ 32.00       1.80     $  
Cancelled/forfeited         $           $  
Exercised         $           $  
Outstanding at September 30, 2022     3,200     $ 32.00       1.04     $  
Exercisable     3,200     $ 32.00       1.04     $  
Unvested         $           $  

 

 

Restricted Stock:

 

The following table summarizes restricted stock award activity during the nine months ended September 30, 2022:

 

   

Number of

Awards

    Weighted Average Grant Date Fair Value  
             
Outstanding at December 31, 2021     97,260     $ 46.59  
Granted     779,722     $ 3.12  
Cancelled/forfeited     (30,742 )   $ 40.65  
Vested     (24,971 )   $ 50.66  
Outstanding at September 30, 2022     821,269     $ 5.42  

 

As of September 30, 2022, there was approximately $4.1 million of total unrecognized compensation expense related to unvested restricted stock awards, which is expected to be recognized over a weighted average vesting period of 3.1 years. The total fair value of restricted stock awards that vested during the nine months ended September 30, 2022 was $1.3 million.