Share-based compensation

6 Months Ended

Jun. 30, 2021

Share-based compensation

Share-based compensation

8. Share-based compensation

In July 2008 the board of directors adopted the 2008 Equity Incentive Plan (the 2008 Plan) which provided for the grant of qualified incentive stock options and nonqualified stock options, restricted stock or other awards to the Company’s employees, officers, directors, advisors, and outside consultants for the issuance or purchase of shares of the Company’s common stock. The 2008 Plan was replaced in July 2018 with the Immunome, Inc. 2018 Equity Incentive Plan (the 2018 Plan and collectively with the 2008 Plan, the Plans). At the time that the 2008 Plan was terminated, there were 388,748 shares available for grant that were transferred to the 2018 Plan. Any additional shares that become available for grant under the 2008 Plan are automatically transferred to and made available for grant under the 2018 Plan. On September 24, 2020, the 2018 Plan was terminated and replaced with the 2020 Equity Incentive Plan (the 2020 Plan). Additionally, the number of shares of our common stock reserved for issuance under our 2020 Plan will automatically increase on January 1 of each year, beginning on January 1, 2021 and continuing through and including January 1, 2030, by 4% of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by our board of directors. As of June 30, 2021, there were 1,591,121 shares available for future issuance under the 2020 Plan.

The Company also adopted the 2020 Employee Stock Purchase Plan (the ESPP Plan) on September 18, 2020 which provides for the grant of purchase rights to purchase shares of the Company’s common stock to eligible employees, as defined by the ESPP Plan. The maximum number of shares of common stock that may be issued under the ESPP Plan will not exceed 125,000 shares of common stock, plus the number of shares of common stock that are automatically added on January 1st of each calendar year for a period of up to ten years, commencing on the first January 1st following the year in which an IPO occurs and ending on, and including, January 1, 2030, in an amount equal to the lesser of (i) 1% of the total number of shares of common stock outstanding on December 31st of the preceding calendar year, and (ii) 1,000,000 shares of common stock. No awards have been granted under the ESPP Plan as of June 30, 2021.

The 2020 Plan and the ESPP Plan are administered by the board of directors. The exercise prices, vesting and other restrictions are determined at the discretion of the board of directors. Stock options awarded under the Plans generally expire 10 years after the grant date unless the board of directors sets a shorter term. Vesting periods for awards under the Plans and the 2020 Plan are determined at the discretion of the board of directors. Incentive stock options and non-statutory stock options granted to employees, officers, members of the board of directors and consultants of the Company typically vest over two to four years. Certain options provide for accelerated vesting if there is a change in control, as defined in the Plans and the 2020 Plan.

Share-based compensation expense recorded as research and development and general and administrative expenses in the condensed statements of operations is as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
In thousands)	2021		2020		2021		2020
Research and development	$	368	$	8	$	522	$	55
General and administrative		381		31		552		130
	$	749	$	39	$	1,074	$	185

Unrecognized compensation cost related to unvested options was $12.9 million as of June 30, 2021, and will be recognized over an estimated weighted average period of 3.6 years.

Stock options

The weighted average assumptions used in the Black-Scholes option-pricing model for stock options granted were:

	Six Months Ended June 30,
	2021			2020
Expected volatility		83.1	%		80.0	%
Risk-free interest rate		1.1	%		0.8	%
Expected term (in years)		6.04			5.64
Expected dividend yield		—			—
Fair value of common stock	$	25.60		$	1.62

A summary of option activity during the six months ended June 30, 2021 is as follows:

				Weighted
		Weighted		average
		average		remaining
	Number of	exercise price		contractual
	shares	per share		term (years)
Outstanding at January 1, 2021	1,472,840	$	3.14	8.51
Granted	581,231	$	25.60
Forfeited	(5,505)	$	8.10
Exercised	(32,530)	$	0.82
Outstanding at June 30, 2021	2,016,036	$	9.64	8.54
Exercisable at June 30, 2021	705,784	$	1.13	7.14
Vested or expected to vest at June 30, 2021	2,016,036	$	9.64	8.54

The weighted-average grant date fair value per share of stock options granted during the six months ended June 30, 2021 and 2020 was $18.00 and $1.32, respectively. The aggregate intrinsic value of stock options exercised during the six months ended June 30, 2021 was $0.8 million. The aggregate intrinsic value of stock options outstanding at June 30, 2021 is $20.3 million.

In August 2020, the Company granted stock options exercisable for a total of up to 92,169 shares of common stock to two of its officers, which option awards included both performance-based and service-based vesting conditions. These option awards were subsequently modified in September 2020 to eliminate the performance-based criteria. As a result of

the modification, only service-based vesting conditions remained. All other terms and conditions of these option awards remain unchanged. Since the performance condition was not considered probable of being achieved prior to the modification, no share-based compensation expense was recorded prior to the modification. At the time of the modification, the fair value of these options awards was recalculated at $8.69 per option.