In April 2026, the Company's Board of Directors adopted the Korro Bio, Inc. 2026 Inducement Plan (the "Inducement Plan"). The Inducement Plan provides for the grant of non-qualified stock options, stock appreciation rights, restricted stock units, restricted stock awards, unrestricted stock awards, and dividend equivalent rights. Awards under the Inducement Plan may only be granted to new employees who were not previously an employee or director of the Company or are commencing employment with the Company following a bona fide period of non-employment, in either case, as an inducement material to the individual's entering into employment with the Company and in accordance with the requirements of Nasdaq Listing Rule 5635(c)(4). A total of 100,000 shares of common stock were reserved for issuance under the Inducement Plan.

The Company also grants stock-based awards under its 2023 Stock Option and Incentive Plan (the "2023 Plan"), which was approved by the Company’s stockholders in November 2023. The Company also has outstanding stock option awards under the Korro Bio Ops, Inc. 2019 Plan (the "Legacy Korro 2019 Plan"), the Frequency 2014 Stock Incentive Plan (the "2014 Plan"), and the Frequency 2019 Incentive Award Plan (the "Frequency 2019 Plan"), but is no longer granting awards under these plans. The Company also has the option to issue shares under the 2023 Employee Stock Purchase Plan (the "2023 ESPP"), which was approved by the Company’s stockholders in November 2023.

Total stock-based compensation expense recognized in the consolidated statements of operations and comprehensive loss for the three and six months ended June 30, 2026 and 2025 was as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2026		2025		2026		2025
Research and development	$	916	$	791	$	1,715	$	1,421
General and administrative		1,787		1,207		3,719		2,338
Total stock-based compensation expense	$	2,703	$	1,998	$	5,434	$	3,759

The fair value of stock options granted during the six months ended June 30, 2026 and 2025 was calculated on the date of grant using the following weighted-average assumptions:


	Six Months Ended June 30,
	2026			2025
Risk-free interest rate		4.0	%		4.3	%
Expected dividend yield		—	%		—	%
Expected term (in years)		6.0			6.0
Expected volatility		78.1	%		73.6	%

Using the Black-Scholes option pricing model, the weighted-average grant date fair value of stock options granted during the six months ended June 30, 2026 and 2025 was $8.62 and $19.42 per share, respectively.

The following table summarizes changes in stock option activity during the six months ended June 30, 2026 (in thousands, except per share amounts):


	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at December 31, 2025		1,647,077		$	26.49		7.3	$	—
Granted		426,062		$	12.32
Exercised		(1,487	)	$	11.68
Forfeited		(124,939	)	$	29.65
Cancelled		(72,672	)	$	25.56
Outstanding as of June 30, 2026		1,874,041		$	22.62		7.4	$	754
Exercisable at June 30, 2026		979,116		$	24.70		6.1	$	389

Compensation cost of $2.7 million and $3.8 million related to the options was recognized during the six months ended June 30, 2026 and 2025, respectively. Compensation cost of $1.4 million and $2.0 million related to the options was recognized during the three months ended June 30, 2026 and 2025, respectively.

The aggregate intrinsic value of options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the common stock as of the end of the period. The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2026 and 2025 was $0.0 million and $0.3 million, respectively.

As of June 30, 2026, there was unrecognized stock-based compensation expense related to unvested stock options of $11.2 million, which the Company expects to recognize over a weighted-average period of approximately 2.6 years.

During the six months ended June 30, 2026, the Company granted Restricted Stock Units ("RSUs") to employees of the Company. RSUs are valued at the market price of a share of the Company’s stock on the date of grant. Compensation expense for RSUs is recognized on a straight-line basis over the service period. Forfeitures are recorded in the period in which they occur.

The following table summarizes changes in RSU activity during the six months ended June 30, 2026 (in thousands, except per share amounts):


	Shares			Weighted- Average Grant Date Fair Value Per Share
Unvested restricted stock unit awards as of December 31, 2025		506,981		$	7.96
Issued		40,000		$	13.05
Vested		(233,075	)	$	7.96
Forfeited		(43,295	)	$	7.96
Unvested restricted stock unit awards as of June 30, 2026		270,611		$	8.71

Compensation cost of $2.0 million and $0.0 million related to the RSUs was recognized during the six months ended June 30, 2026 and 2025, respectively. Compensation cost of $1.0 million and $0.0 million related to the RSUs was recognized during the three months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, there was unrecognized stock-based compensation expense related to unvested RSUs of $2.0 million, which the Company expects to recognize over a weighted-average period of approximately 0.3 years.

During the six months ended June 30, 2026, the Company granted Performance Stock Units ("PSUs") to an employee of the Company.

PSUs are valued at the market price of a share of the Company’s stock on the date of grant. Compensation expense for PSUs is recognized on a straight-line basis over the requisite service periods when the achievement of the performance condition is determined to be probable, using management's best estimate. If a performance condition is not determined to be probable or is not met, no stock-based compensation expense is recognized, and any previously recognized expense is reversed. Forfeitures are recorded in the period in which they occur.

The following table summarizes changes in PSU activity during the six months ended June 30, 2026 (in thousands, except per share amounts):


	Shares			Weighted- Average Grant Date Fair Value Per Share
Unvested performance stock unit awards as of December 31, 2025		—		$	—
Issued		120,000		$	13.05
Vested		(50,000	)	$	13.05
Forfeited		—		$	—
Unvested performance stock unit awards as of June 30, 2026		70,000		$	13.05

Compensation cost of $0.7 million and $0.0 million related to the PSUs was recognized during the six months ended June 30, 2026 and 2025, respectively. Compensation cost of $0.2 million and $0.0 million related to the PSUs was recognized during the three months ended June 30, 2026 and 2025, respectively. As of June 30, 2026, there was unrecognized stock-based compensation expense related to unvested PSUs of $0.9 million.