Share-based compensation

3 Months Ended

Mar. 31, 2022

Share-based compensation

Share-based compensation

9. 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 non-qualified 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 2018 Equity Incentive Plan (the 2018 Plan and collectively with the 2008 Plan, the Prior 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. On September 24, 2020, the 2018 Plan was terminated and replaced with the 2020 Equity Incentive Plan (2020 Plan). Additionally, the number of shares of our common stock reserved for issuance under the 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 the Company’s Board of Directors. As of March 31, 2022, there were 1,836,212 shares available for future issuance under the 2020 Plan.

The Company also adopted the 2020 Employee Stock Purchase Plan (“ESPP”) 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. The maximum number of shares of common stock that may be issued under the ESPP will not exceed 125,000 shares of common stock, plus the number of shares of common stock that are automatically added on January 1 of each calendar year for a period of up to ten years, commencing on the first January 1 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 31 of the preceding calendar year, and (ii) 1,000,000 shares of common stock. No shares of common stock have been issued under the ESPP as of March 31, 2022.

The 2020 Plan and the ESPP are administered by the Board of Directors subject to the Board’s right to delegate to a committee. The exercise prices, vesting and other restrictions are determined at the discretion of the Board of Directors. Stock options awarded under the Prior Plans and the 2020 Plan generally expire 10 years after the grant date unless the Board of Directors sets a shorter term. Vesting periods for awards under the Prior Plans and the 2020 Plan are determined at the discretion of the Board of Directors. Stock options granted to employees, officers, members of the Board of Directors and consultants of the Company typically vest over one to four years. Certain options provide for accelerated vesting if there is a change in control, as defined in the Prior 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 (in thousands):

	Three Months Ended March 31,
(In thousands)	2022		2021
Research and development	$	445	$	171
General and administrative		865		154
	$	1,310	$	325

Unrecognized compensation cost related to unvested options was $12.1 million as of March 31, 2022 and will be recognized over an estimated weighted average period of 3.5 years.

Stock options

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

	Three Months Ended March 31,
	2022			2021
Expected volatility		83.5	%		83.5	%
Risk-free interest rate		1.7	%		1.1	%
Expected term (in years)		6.08			6.10
Expected dividend yield		—			—
Fair value of common stock	$	10.58		$	31.83

A summary of option activity under the Plans and 2020 Plan during the three months ended March 31, 2022 is as follows:

				Weighted
		Weighted		average
		average		remaining
	Number of	exercise price		contractual
	shares	per share		term (years)
Outstanding at January 1, 2022	2,005,756	$	11.26	8.50
Granted	21,100		10.58	9.82
Forfeited	—		—	—
Exercised	(17,012)		1.87	8.11
Outstanding at March 31, 2022	2,009,844		11.33	8.27
Exercisable at March 31, 2022	779,707		5.40	7.57
Vested or expected to vest at March 31, 2022	2,009,844		11.33	8.27

The weighted-average grant date fair value per share of stock options granted during the three months ended March 31, 2022 and 2021 was $7.52 and $22.46, respectively. The aggregate intrinsic value of stock options exercised during the three months ended March 31, 2022 was $0.1 million. The aggregate intrinsic value of stock options outstanding at March 31, 2022 is $4.0 million.