Company: CNTB
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001835268-25-000035
Chunk: 49

Company: Connect Biopharma Holdings Ltd
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 8
Chunk 49
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 cost related to non-vested, share-based payment awards granted under all of our equity compensation plans. Total unrecognized compensation cost will be adjusted for forfeitures. We expect to recognize this compensation cost over a weighted-average period of 3.2 years.On January 1, 2025, we began using the Black-Scholes option pricing model to estimate the fair value of each option grant on the grant date, in order to better align with our peers. Prior to 2025, we estimated the fair value of each option grant on the grant date using the Binomial option pricing model. In connection with our change in method of estimating the fair value per share, we also began estimating the expected term of each option grant based on the simplified method described in SEC Staff Accounting Bulletin No. 107, Share-Based Payment. We believe the simplified method is appropriate, as all of our stock option grants would be considered “plain-vanilla” and we have a limited history of option exercise activity.

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The following are the weighted-average assumptions for stock options:For the Three Months Ended March 31,20252024Risk-free interest rate4.4 %4.2 %Dividend yield0.0 %0.0 %Volatility109.6 %101.9 %Expected life (years)6.110Early exercise multiple (years)— 2.2 - 2.8The weighted-average fair value of options granted was $0.81 and $0.90 for the three months ended March 31, 2025 and 2024, respectively.We estimate the fair value of each purchase right granted under our Employee Stock Purchase Plan at the beginning of each new offering period using the Black-Scholes option pricing model. There were no new offering periods during the three months ended March 31, 2025 or 2024.

11. Income Taxes

For the three months ended March 31, 2025 and 2024, we recorded income tax expense of $54,000 and $30,000, respectively. Our effective tax rate for the three months ended March 31, 2025 and 2024 was (0.5)% and (0.3)%, respectively.  The effective tax rate in both periods was primarily driven by the full valuation allowance maintained against the Company’s deferred tax assets.For the three months ended March 31, 2025, the Company’s provision for income taxes was based on its worldwide estimated annualized effective tax rate,