5. Stock-Based Compensation

The Company and the Advisor entered into the Engagement Letter on October 18, 2024. The Company agreed to issue 796,937 shares of the Company’s common stock, of which 50% was fully vested upon issuance with an aggregate grant date fair value of $467 thousand to the Advisor as compensation for advisory services. The grant date fair value per share was determined based upon the price per share from recent stock issuances to certain investors at that time. The Company determined that this issuance of vested shares in return for future service met the criteria for capitalization as a prepaid expense and was amortized on a straight-line basis over 13 months. The remaining 50% is vested contingent upon a public listing of the Company’s common stock. As of March 31, 2026, the remaining 50% was fully vested as the Company’s common stock began trading on Nasdaq on February 2, 2026. As such, the Company recorded $467 thousand to stock-based compensation within general and administrative expense in the statements of operations and comprehensive loss. For the three months ended March 31, 2026 and 2025, total stock-based compensation expense under this Engagement Letter was $467 thousand and $108 thousand recorded as general and administrative expense, respectively.

2022 Equity Incentive Plan

In March 2022, the Board approved the Company’s 2022 Equity Incentive Plan (the “Incentive Plan”). The Incentive Plan provides for the grant of options, stock appreciation rights, restricted stock units, restricted stock, and other stock-based awards and for incentive bonuses, which may be paid in cash, shares of common stock, or a combination thereof. The aggregate number of shares of common stock issuable under the Incentive Plan initially is 1,590,573 shares, plus a 4% annual increase on January 1 of each year beginning in 2023 and ending on January 1, 2032, subject to Board approval (the “Share Pool”). In October 2024, the Board increased the Share Pool to 6.3 million shares of common stock. As of December 31, 2025, there were 2,063,861 shares available to be issued pursuant to the Incentive Plan. In advance of the direct listing offering, the Company adopted the Polaryx Therapeutics, Inc. 2025 Equity Incentive Plan (the “2025 Plan”) in December 2025. Upon adoption of the 2025 Plan the Incentive Plan was terminated and no further awards will be granted under the Incentive Plan.

2025 Equity Incentive Plan

In December 2025, the Company adopted the 2025 Plan. The 2025 Plan allows for the grant of stock options, both incentive stock options and “non-qualified” stock options; stock appreciation rights, alone or in conjunction with other awards; restricted stock and restricted stock units; incentive bonuses, which may be paid in cash, stock, or a combination thereof; and other stock-based awards. We refer to these collectively herein as “Awards.”

The 2025 Plan provides that the maximum number of shares of common stock that may be issued under the 2025 Plan will not exceed 1,500,000 shares (the “2025 Plan Share Pool”); however, the 2025 Plan Share Pool will be increased on January 1 of each calendar year beginning in 2026 by a number of shares equal to 5% of the outstanding shares of common stock on the immediately preceding December 31 (or such lesser amount as approved by the administrator). As such, the 2025 Plan Share Pool was increased by 2,367,158 shares on January 1, 2026. The 2025 Plan Share Pool is subject to certain adjustments in the event of a change in our capitalization and was adjusted to reflect the Reverse Stock Split. Following the Reverse Stock Split and taking into account the increase to the 2025 Plan Share Pool on January 1, 2026, the 2025 Plan Share Pool is 3,867,158 shares.

Fair Value Inputs

The calculation of the fair value of Awards requires an estimate of the Company’s equity value. As the Company historically has been a privately held company with no trading history for its common stock until February 2, 2026, the estimated fair value of the Company’s common stock has been determined by management and approved by the Board. To determine the fair value, management considered the price per share from recent stock issuances to certain investors at that time and an assessment of additional objective and subjective factors that it believed were relevant and which may have changed from the date of the most recent valuation through the date of the grant. Additional factors include, among others, the nature and history of the Company’s business; the Company’s stage of development and commercialization; external market conditions; valuations of the Company’s industry peers; and the likelihood of achieving a liquidity event, such as an initial public offering or sale of the Company.

Restricted Stock Units

As of March 31, 2026, there were 4,186,139 restricted stock units outstanding. These restricted stock units vest over time but are only deliverable upon a change in control of the Company that occurs within seven years following the applicable date of grant. Vesting of the restricted stock units is contingent upon the recipient’s services to the Company through three or four installments on the first three or four anniversaries of the vesting commencement date. The change in control requirement represents a performance condition that is recognized when it is probable, and therefore no compensation expense will be recorded, nor inclusion of the shares within the basic and diluted net income (loss) per share calculations, until the occurrence of a change in control of the Company.

The Company measures restricted stock compensation costs based on the stock price at the grant date less forfeitures as incurred.

The following table presents a summary of our restricted stock activity for the years ended December 31, 2025 and for the three months ended March 31, 2026:

As of March 31, 2026, there was $7.6 million of total unrecognized compensation cost related to restricted stock units that will be recognized over a remaining weighted average service period of 2.7 years and upon a change in control of the Company. In connection with the amendment executed on July 31, 2025, the transaction was treated as a type IV modification (improbable to improbable) in accordance with ASC 718. As such, the Company calculated a new grant date fair value for the amended restricted stock units. The unrecognized compensation expense associated with these restricted stock units reflects the new grant date fair value as of the modification date. The fair value was equal to price per share from recent stock issuances to certain investors at that time which was $1.78 per share.

The Company recognized a total of $467 thousand stock-based compensation related to the shares issued to Maxim Group LLC, which is included within general and administrative expenses, in the statement of operations and comprehensive loss for the three months ended March 31, 2026. The Company recognized a total of $4.4 million stock-based compensation related to the Incentive Plan, shares issued to Maxim Group LLC, and shares issued for the gene therapy license, of which $4.3 million and $108 thousand are included within research and development expenses and general and administrative expenses, respectively, in the condensed statement of operations and comprehensive loss for the three months ended March 31, 2025.