We adopted an equity incentive plan in 2009 (“2009 Plan”) that provided for the issuance of incentive and nonqualified common stock options and other share-based awards for employees, directors and consultants. Under the 2009 Plan, the exercise price for incentive and nonqualified stock options were not to be less than the fair market value of our common stock at the date of grant. Stock options granted under this plan expire no later than ten years from the grant date and vesting was established at the time of grant. Pursuant to the terms of the 2019 Plan, any shares subject to outstanding stock options originally granted under the 2009 Plan that terminate, expire or lapse for any reason without the delivery of shares to the holder thereof shall become available for issuance pursuant to awards granted under the 2019 Plan. While no shares are available for future issuance under the 2009 Plan, it continues to govern outstanding equity awards granted thereunder.

The 2019 Plan became effective immediately prior to the closing of our initial public offering in July 2019. The 2019 Plan provides for the issuance of awards in the form of stock options and other share-based awards for employees, directors and consultants. Under the 2019 Plan, the stock option exercise price per share shall not be less than the fair market value of a share of stock on the effective date of grant, as defined by the 2019 Plan, unless explicitly qualified under the provisions of Section 409A or Section 424(a) of the Internal Revenue Code of 1986. Additionally, unless otherwise specified, stock options granted under this plan expire no later than ten years from the grant date and vesting is established at the time of grant. Except for certain stock option and restricted stock unit grants made to non-employee directors, stock options and restricted stock units granted under the 2019 Plan generally vest over a four-year period, subject to continuous service through each applicable vesting date. As of September 30, 2022, we had 29,217,365 shares of common stock authorized for issuance under the 2019 Plan.

Changes in shares available for grant during the nine months ended September 30, 2022 were as follows:


	Shares Available for Grant
Shares available for grant at December 31, 2021		22,299,923
Stock options and restricted stock units granted and the maximum market-based restricted stock units granted eligible to be earned		(10,823,237	)
Stock options and restricted stock units forfeited, cancelled or expired		3,470,226
Shares available for grant at September 30, 2022		14,946,912

Stock option activity under the 2009 Plan and 2019 Plan during the nine months ended September 30, 2022 was as follows:


	Shares Subject to Outstanding Stock Options			Weighted-Average Exercise Price per Share		Aggregate Intrinsic Value (in thousands)
Stock options outstanding at December 31, 2021		12,778,984		$	19.72
Stock options granted	4,423,644				11.67
Stock options forfeited or cancelled		(1,554,973	)		28.64
Stock options expired		(496,457	)		33.05
Stock options exercised		(1,361,891	)		5.55
Stock options outstanding at September 30, 2022		13,789,307		$	17.05	$	4,183
Stock options vested and exercisable at September 30, 2022	7,226,163			$	14.42	$	4,178

The weighted-average remaining contractual life for stock options outstanding as of September 30, 2022 was 7.2 years. The weighted-average remaining contractual life for vested and exercisable stock options as of September 30, 2022 was 5.6 years.

Of the $23.4 million proceeds from the exercise of stock options included on the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2021, $0.3 million related to options exercised prior to but settled during the nine months ended September 30, 2021. As of September 30, 2021, there was $0.1 million in unsettled cash proceeds related to options exercised during the nine months ended September 30, 2021.

Restricted stock unit activity under the 2019 Plan during the nine months ended September 30, 2022 was as follows:


	Restricted Stock Units Outstanding			Weighted-Average Grant Date Fair Value per Share
Nonvested restricted stock units outstanding at December 31, 2021		1,211,191		$	37.41
Restricted stock units granted		5,905,359			11.72
Restricted stock units forfeited or cancelled		(1,418,796	)		16.44
Restricted stock units vested		(231,371	)		39.40
Nonvested restricted stock units outstanding at September 30, 2022		5,466,383		$	15.01

In addition to the restricted stock units described above, our board of directors approved an award of market-based restricted stock units to our chief executive officer in March 2022. The shares of common stock that may be earned under the award, ranging from zero shares to 494,234 shares, are calculated based upon our total shareholder return during a three-year performance period as measured against that of the group of companies comprising the S&P Biotechnology Select Industry Index as of the grant date, subject to certain adjustments to such index group. Except as expressly provided in the terms of the award agreement, vesting is subject to our chief executive officer's continuous service through the end of the three-year performance period.

Grant Date Fair Value of Stock Options, Restricted Stock Units and Market-Based Restricted Stock Units Granted

The estimated grant date fair values of stock options granted during the nine months ended September 30, 2022 and 2021 were estimated using the Black-Scholes option-pricing model with the following assumptions:


	Nine Months Ended September 30,
	2022		2021
Fair value of common stock	$7.30 - $14.95		$30.86 - $66.50
Expected term (in years)	5.27 - 6.08		5.27 - 6.08
Risk-free interest rate	1.7% - 3.0%		0.5% - 1.1%
Expected volatility	68.2% - 71.0%		67.1% - 70.0%
Expected dividend yield		—		—

The determination of the grant date fair value of stock options granted using a Black-Scholes option-pricing model is affected by the fair value of our common stock, as well as assumptions regarding a number of variables that are complex, subjective and generally require significant judgment to determine. The valuation assumptions were determined as follows:

Fair value of common stock—The fair value of each share of common stock is based on the closing price of our common stock on the date of grant, or other relevant determination date, as reported on The Nasdaq Global Select Market.

Expected term—The expected term of stock options granted to employees and non-employee directors is determined using the “simplified” method, as illustrated in ASC Topic 718, Compensation—Stock Compensation, as we do not have sufficient exercise history to determine a better estimate of expected term. Under this approach, the expected term is based on the midpoint between the vesting date and the end of the contractual term of the stock option.

Risk-free interest rate—We utilize a risk-free interest rate in the option valuation model based on U.S. Treasury zero-coupon issues with remaining terms similar to the expected terms of the stock options.

Expected volatility—As we do not have sufficient trading history for our common stock, expected volatility is based on the historical volatility of our publicly traded industry peers utilizing a period of time consistent with our estimate of expected term.

Expected dividend yield—We do not anticipate paying any cash dividends in the foreseeable future and, therefore, use an expected dividend yield of zero in the option valuation model.

The weighted-average grant date fair value per share of stock options granted during the nine months ended September 30, 2022 and 2021 was $7.36 and $25.25, respectively.

The grant date fair value of restricted stock units granted is based on the closing price of our common stock on the date of grant, or other relevant determination date, as reported on The Nasdaq Global Select Market. The weighted-average grant date fair value per share of restricted stock units granted during the nine months ended September 30, 2022 and 2021 was $11.72 and $40.21, respectively.

The grant date fair value of the market-based restricted stock units granted in March 2022 is $18.89 and was determined using a Monte Carlo valuation model, which uses assumptions such as volatility, risk-free interest rate and dividend estimated for the performance period. The related share-based compensation expense of $4.7 million is recognized on a straight-line basis over the three-year performance period, which is also the requisite service period. Attainment of the market condition and the number of shares earned and vested does not impact the related share-based compensation expense recognized. Share-based compensation expense will be reversed only if our chief executive officer does not provide continuous service through the performance period for reasons other than those expressly provided in the terms of the award.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Cost of revenue	$	1,058	$	650	$	2,807	$	1,386
Research and development		4,382		3,637		13,370		10,311
Sales and marketing		3,357		3,369		10,170		9,166
General and administrative		5,345		3,987		14,836		10,513
Total share-based compensation expense	$	14,142	$	11,643	$	41,183	$	31,376

As of September 30, 2022, unrecognized share-based compensation expense and the remaining weighted-average recognition period were as follows:


	Unrecognized Share-Based Compensation Expense (in thousands)		Remaining Weighted-Average Recognition Period (in years)
Nonvested stock options	$	74,954		2.65
Nonvested restricted stock units		69,624		3.22
Nonvested market-based restricted stock units		3,774		2.43