Note 6 - Stockholders’ Equity

Registration Statements

On May 31, 2024, the Company filed a shelf registration statement on Form S-3 (File No. 333-279891) (the “2024 S-3”), which was declared effective on June 12, 2024. Under the 2024 S-3, the Company may sell up to a total of $40.0 million of its securities. As of March 31, 2025, approximately $34.2 million of the 2024 S-3 remains available for sales of securities.

As of the filing of this Form 10-Q, the Company is subject to the General Instruction I.B.6 to Form S-3, known as the “baby shelf rules,” which limit the amount of securities it can sell under its registration statements on Form S-3 in any 12-month period.

February 2025 Equity Offering

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On February 5, 2025, the Company commenced a best efforts public offering (the “February 2025 Offering”) of an aggregate of (i) 495,000 shares (the “Shares”) of its common stock, par value $0.0001 per share, (ii) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to an aggregate of 2,162,807 shares of common stock (the “Pre-Funded Warrant Shares”), (iii) Series C-1 warrants (the “Series C-1 Warrants”) to purchase up to an aggregate of 2,657,807 shares of common stock (the “Series C-1 Warrant Shares”), and (iv) Series C-2 warrants (the “Series C-2 Warrants,” and together with the Series C-1 Warrants, the “Warrants”) to purchase up to an aggregate of 2,657,807 shares of common stock (the “Series C-2 Warrant Shares,” and together with the Series C-1 Warrant Shares, the “Warrant Shares”). Each Share or Pre-Funded Warrant was sold together with one Series C-1 Warrant to purchase one share of common stock and one Series C-2 Warrant to purchase one share of common stock. The combined public offering price for each Share and accompanying Warrants was $3.01, and the combined public offering price for each Pre-Funded Warrant and accompanying Warrants was $3.0099. The Pre-Funded Warrants have an exercise price of $0.0001 per share, were exercisable immediately upon issuance and will expire when exercised in full. Each Warrant has an exercise price of $3.01 per share and became exercisable beginning on the effective date of stockholder approval of the issuance of the Warrant Shares (the “Warrant Stockholder Approval”). The Series C-1 warrants will expire five years from the Warrant Stockholder Approval and the Series C-2 warrants will expire twenty-four months from the Warrant Stockholder Approval.

The net proceeds of the February 2025 Offering, after deducting the fees and expenses of the Placement Agent (as defined below), described in more detail below, and other offering expenses payable by the Company, but excluding the net proceeds, if any, from the exercise of the Warrants, were approximately $6.8 million. The February 2025 Offering closed on February 10, 2025.

Pursuant to an Engagement Letter (the “Engagement Letter”) with H.C. Wainwright & Co., LLC (“Wainwright” or the “Placement Agent”), the Company agreed to pay the Placement Agent in connection with the February 2025 Offering (i) a cash fee equal to 7.0% of the aggregate gross proceeds raised in the February 2025 Offering, (ii) a management fee equal to 1.0% of the aggregate gross proceeds raised in the February 2025 Offering, (iii) up to $100,000 for fees and expenses of the Placement Agent’s counsel and other out of pocket expenses, (iv) a non-accountable expense allowance of $25,000, (v) up to $3,500 for road show expenses, and (vi) $15,950 for the clearing expenses.

Also pursuant to the Engagement Letter, the Company, in connection with the February 2025 Offering, agreed to issue to the Placement Agent or its designees warrants (the “Placement Agent Warrants”) to purchase up to an aggregate of 159,468 shares of common stock (the “Placement Agent Warrant Shares”) (which represented 6.0% of the Shares and Pre-Funded Warrants sold in the February 2025 Offering). The Placement Agent Warrants became exercisable beginning on the effective date of the Warrant Stockholder Approval, have an exercise price of $3.7625 (125% of the combined public offering price per share of common stock and accompanying Warrants) and will terminate on the five-year anniversary of commencement of sales in the Offering.

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At-the-Market Offering

On May 31, 2024, the Company entered into an At-the-Market Offering Agreement (the “ATM Agreement”) with Wainwright (the “Manager”) under which the Company may offer and sell, from time to time at its sole discretion, shares of its common stock through or to the Manager pursuant to the 2024 S-3. Under the ATM Agreement, the Company pays the Manager a commission of 3.0% of the gross proceeds from the sales of any shares of common stock. The Company will also reimburse the Manager for certain expenses incurred in connection with the ATM Agreement. The Company and the Manager may each terminate the ATM Agreement at any time upon specified prior written notice.

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During the three months ended March 31, 2025, the Company issued approximately 54,000 shares of common stock at an average price of $11.55 for gross proceeds of $0.6 million under the ATM Agreement. In connection with these sales, the Company paid aggregate fees of approximately $27,000.

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Warrants

A summary of warrant activities for the three months ended March 31, 2025, is presented below:

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Upon the exercise of warrants, the Company will issue new shares of common stock. In connection with the February 2025 Offering on February 10, 2025, the Company issued pre-funded warrants to purchase up to 2,162,807 shares of common stock and issued two series of warrants to purchase up to 5,315,614 shares of common stock. In connection with this offering, Wainwright received Placement Agent Warrants to purchase up to 159,468 shares of common stock.

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During the three months ended March 31, 2025, 670,000 of the pre-funded warrants were exercised at an exercise price of $0.0001 per share. As of March 31, 2025, 1,492,807 pre-funded warrants were outstanding.

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Equity Incentive Plan

The Company has in effect the Mustang Bio, Inc. 2016 Incentive Plan (the “Incentive Plan”). The Incentive Plan was adopted in 2016 by the Company’s stockholders and the compensation committee of the Company’s board of directors and is authorized to grant stock-based awards to directors, officers, employees and consultants. The plan initially authorized grants to issue up to 2,666 shares of authorized but unissued common stock, expires 10 years from adoption, and limits the term of each option to no more than 10 years from the date of grant. In June 2018, the Company’s stockholders approved an amendment to the Incentive Plan to increase the number of authorized shares issuable by 4,000 shares, for a total of 6,666 shares. In June 2021, the Company’s stockholders approved an amendment to the Incentive Plan to increase the number of authorized shares issuable by 4,000 shares, for a total of 10,666 shares. In June 2022, the Company’s stockholders approved an amendment to the Incentive Plan to increase the number of authorized shares issuable by 4,000 shares, for a total of 14,666 shares.

As of March 31, 2025, 6,958 shares were available for future issuance under the Incentive Plan.

Stock Options

The following table summarizes stock option activities for the three months ended March 31, 2025:

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As of March 31, 2025, the Company had no unrecognized stock-based compensation expense related to options. The Company accounts for forfeited awards as they occur.

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Restricted Stock

The following table summarizes restricted stock award activities for the three months ended March 31, 2025:

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As of March 31, 2025, the Company had unrecognized stock-based compensation expense related to restricted stock of $0.1 million, which is expected to be recognized over the remaining weighted average vesting period of approximately 0.8 years.

Restricted Stock Units

Certain employees and consultants have been awarded restricted stock units with time-based vesting. The following table summarizes restricted stock units’ activities for the three months ended March 31, 2025:

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As of March 31, 2025, the Company had unrecognized stock-based compensation expense related to restricted stock units of approximately $13,000, which is expected to be recognized over the remaining weighted average vesting period of approximately 1.3 years.

The following table summarizes stock-based compensation expense for the three months ended March 31, 2025 and 2024 (in thousands):

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⁽¹⁾ Credit reflects the forfeitures of restricted stock units and the reversal of previously incurred stock-based compensation expense.

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Employee Stock Purchase Plan

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Eligible employees can purchase the Company’s common stock at the end of a predetermined offering period at 85% of the lower of the fair market value at the beginning or end of the offering period.  

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As of March 31, 2025, 2,662 shares have been purchased, and 6,671 shares are available for future sale under the Company’s ESPP.