Share-based compensation

12 Months Ended

Dec. 31, 2022

Share-based compensation

Share-based compensation

12. Share-based compensation

On September 18, 2020, the Company adopted the Equity Incentive Plan, or the 2020 Plan, which supersedes all prior equity incentive plans. Under the 2020 Plan, the number of shares of 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 the Company’s 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 December 31, 2022, there were 1,325,192 shares available for future issuance under the 2020 Plan. On January 1, 2023, the number of shares available for future issuance under the 2020 Plan increased by 485,153 shares.

The Company also adopted the 2020 Employee Stock Purchase Plan, or the 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. As of December 31, 2022, there were 352,445 shares available under the ESPP. No shares of common stock have been issued under the ESPP as of December 31, 2022. On January 1, 2023, the number of shares available for future issuance under the ESPP increased by 121,288 shares.

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 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 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 2020 Plan.

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

	Year Ended December 31,
In thousands)	2022		2021
General and administrative	$	3,471	$	2,071
Research and development		1,861		1,377
	$	5,332	$	3,448

Unrecognized compensation cost related to unvested options was $9.2 million as of December 31, 2022 and will be recognized over an estimated weighted average period of 2.6 years.

Stock options

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

	Year ended December 31,
	2022			2021
Expected volatility		85.6	%		83.0	%
Risk-free interest rate		2.7	%		1.0	%
Expected term (in years)		6.0			6.0
Expected dividend yield		—			—
Fair value of common stock	$	3.63		$	23.04

A summary of option activity under the 2020 Plan and prior Plans during the year ended December 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	563,900		3.63	9.19
Forfeited	(24,990)		11.97	—
Expired	(6,791)		17.54	—
Exercised	(18,470)		1.76	6.62
Outstanding at December 31, 2022	2,519,405		9.60	7.90
Exercisable at December 31, 2022	1,239,114		8.86	7.30

The weighted-average grant date fair value per share of stock options granted during the years ended December 31, 2022 and 2021 was $2.65 and $16.49, respectively. The aggregate intrinsic value of stock options exercised during the year ended December 31, 2022 was $0.2 million. The aggregate intrinsic value for options exercisable at December 31, 2022 was $0.8 million. The aggregate intrinsic value of stock options outstanding at December 31, 2022 was $0.9 million.

Restricted Stock Awards

During August 2021, the Company granted 13,500 fully vested restricted stock awards. The Company recorded share-based compensation expense of $0.2 million for the year ended December 31, 2021 related to the restricted stock awards granted. No such transaction occurred for the year ended December 31, 2022.