Equity Incentive Plans

The Anika Therapeutics, Inc. 2017 Omnibus Incentive Plan (the “2017 Plan”) was approved by the Company’s stockholders on June 13, 2017 and subsequently amended on June 18, 2019, June 16, 2020, June 16, 2021, June 8, 2022 and June 14, 2023. On June 14, 2023, the Company’s stockholders approved an amendment to the 2017 Plan increasing the number of shares by 435,000 shares from 4,850,000 shares to 5,285,000 shares. The 2017 Plan provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights (“SARs”), restricted stock awards, performance restricted stock units (“PSUs”), restricted stock units (“RSUs”), total shareholder return options (“TSRs”) and performance options that may be settled in cash, stock, or other property. In accordance with the 2017 Plan approved by the Company’s stockholders, including the amendments thereto, each share award other than stock options or SARs will reduce the number of total shares available for grant by two shares. Subject to adjustment for specified types of changes in the Company’s capitalization, no more than 5.3 million shares of common stock may be issued under the 2017 Plan. There were 1.0 million shares available for future grant at March 31, 2025 under the 2017 Plan.

The Anika Therapeutics, Inc. 2021 Inducement Plan (the “Inducement Plan”) was adopted by the Company’s board of directors on November 4, 2021 and subsequently amended on December 22, 2023 and May 2, 2024. On May 2, 2024, the Company’s board of directors approved an amendment to the Inducement Plan increasing the number of shares by 100,000 shares. The Inducement Plan reserves 350,000 shares of common stock for issuance pursuant to equity-based awards granted under the Inducement Plan. Such awards may be granted only to an individual who was not previously an employee of the Company or director with the Company. The Inducement Plan provides for the grant of awards under terms substantially similar to the 2017 Plan (as amended). There were 0.1 million shares available for future grant at March 31, 2025 under the Inducement Plan.

The Company may satisfy share-settled awards upon exercise, or upon fulfillment of the vesting requirements for other equity-based awards, with either newly issued shares or shares reacquired by the Company. Stock-based awards are granted with an exercise price equal to or greater than the market price of the Company’s stock on the date of grant. Awards contain service conditions or service and performance conditions, and they generally become exercisable ratably over three years with a maximum contractual term of ten years.

The Company presents the expenses related to stock-based compensation awards in the same expense line items as cash compensation paid to each of its employees as follows (in thousands):

Stock Options

Stock options are granted to purchase common shares at prices that are equal to the fair market value of the shares on the date the options are granted or, in the case of premium options, are granted with an exercise price at 110% of the market price of the Company’s common stock on the date of grant. Options generally vest in equal annual installments over a period of three years and expire 10 years after the date of grant. The grant-date fair value of options is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period.

The following summarizes the activity under the Company’s stock option plans:

The aggregate intrinsic value of options exercised for the three-month period ended March 31, 2025 was immaterial. The Company did not grant any stock options during the three-months ended March 31, 2025.

The Company uses the Black-Scholes pricing model to determine the fair value of options granted. The calculation of the fair value of stock options is affected by the stock price on the grant date, the expected volatility of the Company’s common stock over the expected term of the award, the expected life of the award, the risk-free interest rate and the dividend yield.

Listed below are the assumptions used in the Black-Scholes pricing model for options granted during the three months ended March 31, 2024. There were no options granted during the three months ended March 31, 2025. The assumptions were as follows:

As of March 31, 2025, there was $4.6 million of unrecognized compensation cost related to unvested stock options. This expense is expected to be recognized over a weighted average period of 1.8 years.

Restricted Stock Units (“RSUs”)

RSUs generally vest in equal annual installments over a three-year period. The grant-date fair value of RSUs is recognized as expense on a straight-line basis over the requisite service period, which is generally the vesting period. The Company determines the fair value of RSUs based on the closing price of its common stock on the date of grant.

RSU activity for the three-month period ended March 31, 2025 was as follows:

The weighted-average grant-date fair value per share of RSUs granted was $15.03 and $25.44 for the three-month periods ended March 31, 2025 and 2024, respectively. The total fair value of RSUs vested was $5.5 million and $7.7 million for the three-month periods ended March 31, 2025 and 2024, respectively. As of March 31, 2025, there was $3.3 million of unrecognized compensation cost related to time-based RSUs, which was expected to be recognized over a weighted-average period of 1.2 years.

The Company’s annual grants of RSU awards in March 2024 and 2025 can be settled at vesting in cash or shares at the Company’s election. The Company has recorded these RSUs as a liability due to the expectation that the Company will settle the vesting of these RSU awards in cash due to a potential shortage of shares in the 2017 Plan at the time of vesting. As a result, these RSUs will be subject to change in value at the time of each reporting period. The first tranche of the March 2024 RSU awards, 106,550 shares, vested in March 2025 and were settled in shares. As of March 31, 2025, the Company had 665,921 shares outstanding for which a liability of $0.2 million was recorded in Accrued Expenses and Other Liabilities and there is unrecorded compensation cost of $9.8 million which is to be recognized over a weighted-average period of 2.7 years.

Performance Stock Units (“PSUs”)

PSU activity for the three-month period ended March 31, 2025 was as follows:

The weighted-average grant-date fair value per share of PSUs granted was $14.04 for the three-month period ended March 31, 2025. There were no PSUs granted for the three-month period ended March 31, 2024.

The Company’s annual grants of PSU awards in March 2025 can be settled at vesting in cash or shares at the Company’s election. The Company has recorded these PSUs as a liability due to the expectation that the Company will settle the vesting of these PSU awards in cash due to a potential shortage of shares in the 2017 Plan at the time of vesting. As a result, these PSUs will be subject to change in value at the time of each reporting period. As of March 31, 2025, the Company had 290,792 shares outstanding for which a liability of $0.1 million was recorded in Accrued Expenses and Other Liabilities and there is unrecorded compensation cost of $4.0 million which is to be recognized over a weighted-average period of 3.0 years.

On March 14, 2025, the Company granted 290,792 PSUs to certain senior management employees. The Company granted two types of PSU awards. One PSU award is a market-based award in which the number of shares can vest between 50-200% of target based on the Company’s stock price achieving certain price targets from March 14, 2025 through March 1, 2028.  No shares will vest if these stock price targets are not achieved.  If the price targets are achieved, vesting will occur on March 14, 2028. The Company estimated the fair value of these PSUs using a Monte-Carlo simulation model at grant date and will update at each reporting period. The second type of PSUs are awards that may vest upon achievement of certain strategic performance objectives based on regulatory milestones and financial targets. These awards vest annually on each anniversary date of the grant date over three years if the performance milestones are met.  The Company recognizes stock-based compensation based on the probability outcomes of achieving these milestones.