Annual report pursuant to Section 13 and 15(d)

Stockholders' equity

v3.23.3
Stockholders' equity
 12 Months Ended
Jun. 30, 2023
Equity [Abstract]  
Stockholders' equity
10. Stockholders’ equity
Common Stock
Warrants
On December 6, 2019, the Investors were issued 4 Purchase Warrants that were exercisable into 12,600 fully paid shares of common stock should the Purchase Warrants be exercised in full (“Purchase Warrants”). The exercise price for the Purchase Warrants is US$178.50 per share issued on exercise of a Purchase Warrant. The Purchase Warrants are exercisable, in whole or in part, any time from the date of issue until the fifth anniversary of the date of issue (December 6, 2024). On April 22, 2020, the Company issued 2,201 shares of common stock in connection with a cashless exercise of Purchase Warrants exercisable for 6,300 shares of common stock. The Company did not have an effective registration statement registering the resale of the Warrant Shares by the Holder at the time the Holder wanted to exercise the warrant; therefore, the Holder carried out a cashless exercise. The formula for conducting a cashless exercise was outlined in the Warrant agreement. Based on this formula, the Holder would have been entitled to receive 6,300 shares of common stock if they had exercised the Purchase Warrants for cash. Because of the cashless exercise, the holder received 2,201 shares.
On September 15, 2022, we closed an underwritten public offering in which we issued and sold (i) 1,037,521 shares of the Company’s common stock, (ii) 715,978
pre-funded
warrants, with each
pre-funded
warrant immediately exercisable for one share of common stock at an exercise price of $0.0017 per share until exercised in full and (iii) 29,809,471 outstanding Series 2 warrants (the “Series 2 Warrants”) which are currently exercisable into 1,753,503 shares of common stock after giving effect to the Reverse Stock Split at an exercise price of $11.22 per share. The Series 2 warrants sold in the offering became exercisable commencing December 9, 2022, the date on which the Company had both (a) received approval from its stockholders to increase the number of shares of common stock it is authorized to issue and (b) effected such stockholder approval by filing with the Secretary of State of the State of Delaware a certificate of amendment to its Amended and Restated Certificate of Incorporation, and will expire on the fifth anniversary of such initial exercise date. The combined purchase price for each share of common stock and accompanying common warrant was $10.20, which was allocated as $10.03 per share of common stock and $0.17 per common warrant. The Series 2 Warrants contain an exercise price adjustment mechanism providing that certain issuances of common stock (or common stock equivalents), if made at a price lower than the then existing exercise price of such Series 2 Warrants, would reset the exercise price to such lower price. As a result of the August 11, 2023 public offering, the exercise price of the Series 2 Warrants has been automatically reset as of the closing time of such public offering to $1.9299.
On October 17, 2022 and October 27, 2022, investors exercised 117,939 and 9,804
pre-funded
warrants, respectively, at an exercise price of $0.0017 per share.
As of June 30, 2023, there were 2,348,039 warrants outstanding.
 
The activity related to warrants during for the fiscal years ended June 30, 2023 and 2022, is summarized as follows:
 
    
Common
Stock from
Warrants
     
Weighted
Average
Exercise
Price (per
share)
  
Outstanding at July 1, 2022
      6,300      $ 178.50  
Pre-funded warrants issued September 15, 2022
      715,979      $ 0.0017  
Series 2 warrants issued September 16, 2022
      1,753,503      $ 11.22  
Pre-funded warrants exercised
      127,743      $ 0.0017  
 
 
 
 
 
 
 
 
 
Outstanding at June 30, 2023
      2,348,039      $ 8.86  
 
 
 
 
 
 
 
 
 
Exercisable at June 30, 2023
      2,348,039      $ 8.86  
Effective as of the closing of the August 2023 underwritten public offering conducted by the Company, the exercise price of the Series
2 warrants issued
September 16, 2022 was automatically adjusted to $1.9299 as required by the terms of such warrants.
Equity Incentive Plan
Employee Share Option Plan
Upon the
Re-domiciliation,
the Company assumed BBL’s obligations with respect to the settlement of options that were issued by BBL prior to the
Re-
domiciliation pursuant to the Benitec Officers’ and Employees’ Share Option Plan (the “Plan”). This includes the Company’s assumptions of the Plan and all award agreements pursuant to which each of the options were granted. Each option when exercised entitles the option holder to one share in the Company. Options are exercisable on or before an expiry date, do not carry any voting or dividend rights and are not transferable except on death of the option holder or in certain other limited circumstances . Employee options vest one third
on
each anniversary of the applicable grant date for three years. If an employee dies, retires or otherwise leaves the organization, and certain other conditions have been satisfied, generally the employee has 12 months to exercise their options, or the options are cancelled. After the
Re-domiciliation,
no new options have been or will be issued under the Plan.
Equity and Incentive Compensation Plan
On December 9, 2020, the Company’s stockholders approved the Company’s 2020 Equity and Incentive Compensation Plan (the “2020 Plan”). The 2020 Plan provides for the grant of various equity awards. Currently, only stock options are outstanding under the 2020 Plan. Each option when exercised entitles the option holder to one share of the Company’s common stock. Options are exercisable on or before an expiry date, do not carry any voting or dividend rights, and are not transferable except on death of the option holder or in certain other limited circumstances. Employee stock options vest in increments of
one-third
on each anniversary of the applicable grant date over three years.
Non-employee
director options vest in increments of
one-third
on the day prior to each of the Company’s next three annual stockholder meetings following the grant date. If an option holder dies or terminates employment or service due to Disability (as defined in the 2020 Plan), the option holder generally has 12 months to exercise their vested options, or the options are cancelled. If an option holder otherwise leaves the Company, other than for a termination by the Company for Cause (as defined in the 2020 Plan), the option holder generally has 90 days to exercise their vested options, or the options are cancelled. The maximum contractual term of options granted under the 2020 Plan is ten years. Upon the consummation of a Change in Control (as defined in the 2020 Plan), all unvested stock options will immediately vest as of immediately prior to the Change in Control.
 
On December 8, 2021, the Company’s stockholders approved an amendment to the 2020 Plan, which increased the number of shares of the Company’s common stock reserved under the 2020 Plan to 1,850,000. For the fiscal year ended June 30, 2023, our named executive officers (“NEO’s”) were each granted equity incentive awards under the 2020 Plan.
Equity Awards
The activity related equity awards, which are comprised of stock options, during the fiscal years ended June 30, 2023 and 2022, respectively, is summarized as follows:
 
    
Stock

Options
     
Weighted

Average Exercise
Price
     
Weighted
Average
Remaining
Contractual

Term
     
Aggregate
Intrinsic

Value
  
Outstanding at July 1, 2021
      41,298      $ 121.72        8.07 years           
Granted
      2,118        50.83        9.45 years           
    
 
 
     
 
 
     
 
 
           
Outstanding at June 30, 2022
      43,416      $ 118.15        7.18 years           
Granted
      66,868        3.88        9.94 years           
Expired
      (2,291 )       848.12        —             
    
 
 
     
 
 
     
 
 
           
Outstanding at June 30, 2023
      107,993      $ 31.88        8.96 years      $ 11,888  
Exercisable at June 30, 2023
      27,135      $ 88.79        7.22 years           
Equity-based Compensation Expense
The weighted-average grant-date fair value of stock options granted during the years ended June 30, 2023 and June 30, 2022 was $3.34 and $44.20, respectively.
The Company estimated the fair value of each employee equity award on the grant date using the Black-Scholes option-pricing model with the following assumptions:
 
    
Fiscal Year Ended

June 30,
  
    
2023
    
2022
  
Expected volatility
      115.6 %      122.1 % 
Expected term
      6 years       6 years  
Risk-free interest rate
      3.96 %      1.36 % 
Expected dividend yield
      —   %      —   % 
Expected Volatility. Due to the lack of Company-specific historical or implied volatility data, the Company has based its estimate of expected volatility on the historical volatility of a group of similar public companies in the life sciences industry. The Company selected the peer group based on comparable characteristics, including development stage, product pipeline and enterprise value. The Company computed historical volatility data using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of the equity-based awards. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own share price becomes available.
Expected Term. The expected term represents the period that the equity awards are expected to be outstanding. For stock options with service conditions, it is based on the “simplified method” for developing the estimate of the expected life. Under this approach, the expected term is presumed to be the midpoint between the average vesting date and the end of the contractual term.
 
Risk-free
Interest Rate. The Company bases the risk-free interest rate assumption on U.S. Treasury constant maturities with maturities similar to those of the expected term of the equity award being valued.
Expected Dividend Yield. The Company bases the expected dividend yield assumption on the fact that it has never paid dividends and does not expect to pay dividends in the foreseeable future.
In addition to assumptions used in the Black-Scholes option-pricing model, the Company estimates a forfeiture rate to calculate the equity-based compensation expense for equity awards. The forfeiture rate is based on an analysis of actual and estimated forfeitures.
Share-Based
Compensation Expense
The classification of share-based compensation expense for the years ended:
 
(US$’000)
   
June 30,
  
    
2023
     
2022
  
Research and development
    $ 161      $ 257  
General and administrative
      291        613  
    
 
 
     
 
 
  
Total share-based compensation expense
    $ 452      $ 870  
    
 
 
     
 
 
  
As of June 30, 2023 and 2022, there was $350,000 and $522,000,
respectively, of unrecognized share-based compensation expense related to stock options granted under the Plan and 2020 Plan. Unrecognized expense as of June 30, 2023 is expected to be recognized over a weighted average period of 2.11 years.
Employee option awards-related stock-based compensation expense for the years ended June 30, 2021 and 2022, and the nine months ended March 31, 2023 was understated by a total of
$34 thousand. The Company determined that this understatement is immaterial to the previously issued consolidated financial statements for the years ended June 30, 2021 and 2022, and the nine months ended March 31, 2023, and corrected it as of June 30, 2023.