Stockholders’ Equity

12 Months Ended

Dec. 31, 2022

8. Stockholders’ Equity

2021 Underwritten Public Offering

On March 30, 2021, we entered into an underwriting agreement (the “Underwriting Agreement”) with Jefferies LLC, Credit Suisse Securities (USA) LLC and Cantor, as representatives of the several underwriters, in connection with the public offering of 5,000,000 shares of our common stock. In addition, we granted the underwriters a 30-day option to purchase an additional 750,000 shares of our common stock. The initial offering closed on April 5, 2021. On May 3, 2021, we closed on the sale of an additional 427,017 shares of our common stock related to the exercise of the underwriters’ 30-day option. The aggregate gross proceeds from the sale of the 5,427,017 shares in the offering, inclusive of the additional shares purchased by the underwriters, were approximately $100.4 million. The net proceeds from this offering, after deducting underwriting discounts and offering costs, were approximately $94.2 million.

Controlled Equity Offering

On December 31, 2020, the Company entered into a Sales Agreement with Cantor, under which the Company could issue and sell, from time-to-time, shares of the Company’s common stock, having an aggregate gross sales price of up to $100.0 million through Cantor, as the sales agent. On April 14, 2022, the Company filed a prospectus in respect of the Sales Agreement which provides the Company with the ability to offer and sell shares of common stock having an aggregate offering price of up to an additional $75.0 million. During the year ended December 31, 2022, under the Sales Agreement, the Company issued and sold 55,052,506 shares of its common stock for net proceeds of $41.8 million, after deducting fees and expenses. During the year ended December 31, 2021, the Company issued and sold 6,408,087 shares of common stock pursuant to the Sales Agreement and received net proceeds of approximately $65.7 million. No shares have been sold under the Sales Agreement subsequent to December 31, 2022.

2020 Equity Plan

On July 27, 2020, the Board unanimously approved, and recommended that the Company’s stockholders approve, the 2020 Equity Plan, to ensure that the Board and its compensation committee (the “Compensation Committee”) will be able to make the types of awards, and covering the number of shares, as necessary to meet the Company’s compensatory needs. On July 29, 2020, the 2020 Equity Plan was approved by the holders of approximately 63% of the Company’s outstanding shares of common stock on that date. The 2020 Equity Plan became effective on September 11, 2020.

A total of 7,000,000 shares of the Company’s common stock were reserved for issuance under the 2020 Equity Plan. The Board or Compensation Committee may grant the following types of awards under the 2020 Equity Plan: stock options, stock appreciation rights, restricted stock, stock awards, restricted stock units, performance shares, performance units, cash-based awards and substitute awards. The 2020 Equity Plan will remain in effect until the tenth anniversary of its effective date, unless terminated earlier by the Board. For options, the per share exercise price may not be less than the fair market value of a Company common share on the date of grant. Options generally vest and become exercisable over three years and expire 10 years from the date of grant.

As of December 31, 2022, there were 1,948,135 shares available for grant under the 2020 Equity Incentive Plan.

2012 Equity Plan

The 2020 Equity Plan replaced the 2012 Equity Plan, under which no further grants will be made. However, any outstanding awards under the 2012 Equity Plan will continue in accordance with the terms of the 2012 Equity Plan and any award agreement executed in connection with such outstanding awards. Under the 2012 Equity Plan, the Company could grant shares, stock units, stock appreciation rights, performance cash awards and/or options to employees, directors, consultants, and other service providers.

As of December 31, 2022, there were no shares available for grant under the 2012 Equity Incentive Plan.

The Company has reserved the following shares of common stock for issuance as of December 31, 2022:

Warrants to purchase common stock			31,238
Options:
Outstanding under the 2020 Equity Incentive Plan			5,018,389
Outstanding under the 2012 Equity Incentive Plan			2,453,667
Available for future grants under the 2020 Equity Incentive Plan			1,948,135
			9,451,429

Stock Option Activity

The following table summarizes stock option activity for the years ended December 31, 2022 and 2021:

	Number of Shares			Weighted Average Exercise Price (per share) (1)		Weighted-Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value ($000's) (2)
Outstanding at January 1, 2021		3,732,149		$	5.57
Granted		1,444,176			12.58
Exercised		(582,936	)		3.98
Cancelled (forfeited)		(81,711	)		7.09
Cancelled (expired)		(81,772	)		13.71
Outstanding at December 31, 2021		4,429,906		$	7.89
Granted		4,708,969			0.57
Exercised		-			-
Cancelled (forfeited)		(1,568,912	)		2.94
Cancelled (expired)		(97,907	)		14.45
Outstanding at December 31, 2022		7,472,056		$	4.23		7.6	$	-

Options vested and expected to vest		7,237,665		$	4.32		7.6	$	-
Exercisable		3,435,577		$	6.70		5.6	$	-

______________________

(1)	The weighted average price per share is determined using exercise price per share for stock options.

(2)	The aggregate intrinsic value is calculated as the difference between the exercise price of the option and the fair value of the Company’s common stock for in-the-money options at December 31, 2022.

The stock options outstanding and exercisable by exercise price at December 31, 2022 are as follows:

	Stock Options Outstanding					Stock Options Exercisable

Range of Exercise Prices		Number of Shares	Weighted- Average Remaining Contractual Life In Years		Weighted- Average Exercise Price Per Share		Number of Shares		Weighted- Average Exercise Price Per Share
$0.38 - $0.38		3,221,367	9.6	$	0.38		0		-
$1.90 - $2.99		455,915	8.1	$	2.60		216,795		2.16
$3.33 - $3.33		1,894,168	4.8		3.33		1,894,168		3.33
$3.5 - $16.07		1,607,002	7.6		11.12		1,051,427		11.02
$16.90 - $16.90		248,604	3.4		16.90		248,604		16.90
$17.79 - $17.79		25,000	8.2		17.79		14,583		17.79
$20.00 - $20.00		20,000	8.4		20.00		10,000		20.00
		7,472,056	7.6	$	4.23		3,435,577	$	6.70

The total fair value of options vested for the years ended December 31, 2022 and 2021 was $0.7 million and $2.3 million, respectively.

Stock-Based Compensation

The Company’s stock-based compensation expense for stock options is estimated at the grant date based on the award’s fair value as calculated by the Black-Scholes option pricing model and is recognized as expense over the requisite service period. The Black-Scholes option pricing model requires various highly judgmental assumptions including expected volatility and expected term. The expected volatility is based on the combined historical stock volatilities of the Company’s own common stock and that of its publicly listed peers over a period equal to the expected terms of the options as the Company does not have a sufficient trading history to rely solely on the volatility of its own common stock. To estimate the expected term, the Company has opted to use the simplified method, which is the use of the midpoint of the vesting term and the contractual term. If any of the assumptions used in the Black-Scholes option pricing model changes significantly, stock-based compensation expense may differ materially in the future from that recorded in the current period. In addition, the Company is required to estimate the expected forfeiture rate and only recognize expense for those shares expected to vest. The Company estimates the forfeiture rate based on historical experience and its expectations regarding future pre-vesting termination behavior of employees. The Company reviews its estimate of the expected forfeiture rate annually, and stock-based compensation expense is adjusted accordingly.

The weighted-average fair value-based measurement of stock options granted under the Company’s stock plans in the years ended December 31, 2022 and 2021 was $0.47 and $10.32 per share, respectively. The fair value-based measurement of stock options granted under the Company’s stock plans was estimated at the date of grant using the Black-Scholes model with the following assumptions:

	Year Ended December 31,
	2022		2021
Expected term	6 years		5 - 6 years
Expected volatility		104% - 109%		104% - 109%
Risk-free interest rate		1.59% - 2.89%		0.98% - 1.35%
Expected dividend yield		0%		0%

Total expense for stock option grants recognized was as follows:

	Year Ended December 31,
	2022		2021
General and administrative	$	5,111	$	4,028
Research and development		699		1,340
Total stock-based compensation	$	5,810	$	5,368

At December 31, 2022, the Company had $5.9 million of total unrecognized compensation expense, net of estimated forfeitures, related to outstanding stock options that will be recognized over a weighted-average period of 1.4 years.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-URI https://asc.fasb.org/topic&trid=2208762

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.3-04)
-URI https://asc.fasb.org/extlink&oid=120397183&loc=d3e187085-122770

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (g)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (h)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 14
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496171-112644

Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 18
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496189-112644

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 16
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496180-112644

Reference 14: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 505
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (i)
-URI https://asc.fasb.org/extlink&oid=126973232&loc=SL123496158-112644

Reference 15: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(e)(1))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Reference 16: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 815
-SubTopic 40
-Section 50
-Paragraph 6
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126731327&loc=SL126733271-114008

+ Details

HUMANIGEN, INC 10-K