In July 2020, the Company’s board of directors and stockholders adopted and approved the 2020 Incentive Award Plan, or the 2020 Plan, and the Employee Stock Purchase Plan, or the ESPP, which became effective in connection with the IPO.

The Company may not grant any additional awards under the 2011 Equity Incentive Plan, or the 2011 Plan. The 2011 Plan will continue to govern outstanding equity awards granted thereunder.

The number of shares of common stock reserved for issuance under the 2020 Plan automatically increase on the first day of January, in an amount equal to 4% of the total number of shares of the Company’s capital stock outstanding on the last day of the preceding year, or a lesser number of shares determined by the Company’s board of directors.

Awards granted under the 2020 Plan expire no later than ten years from the date of grant. For the Incentive Stock Options, or ISOs, and Nonstatutory Stock Options, or NSOs, the option price shall not be less than 100% of the estimated fair value on the date of grant. Options granted typically vest over a four-year period but may be granted with different vesting terms. As of December 31, 2021, there were 2,039,951 shares available for issuance under the 2020 Plan.

	Number of Shares			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Balances as of December 31, 2020		3,909,873		$	10.78		8.40	$	56,128
Additional shares authorized
Stock options granted		2,871,400		$	25.54
Stock options exercised		(391,349	)	$	4.11
Stock options cancelled		(727,100	)	$	24.41
Balances as of December 31, 2021		5,662,824		$	16.98		8.26	$	10,186
Exercisable as of December 31, 2021		2,065,942		$	11.34		7.08	$	8,120

The total intrinsic value of options exercised during the years ended December 31, 2021 and 2020 was $6.4 million and $0.2 million, respectively. The intrinsic value is the difference between the fair value of the Company’s common stock at the time of exercise and the exercise price of the stock option.

The weighted-average grant date fair value of options granted to employees during the years ended December 31, 2021 and 2020 was $18.83 and $12.33 per share, respectively.

As of December 31, 2021, the total unrecognized stock-based compensation cost related to outstanding unvested stock options that are expected to vest was $51.9 million, which the Company expects to recognize over an estimated weighted-average period of 3.03 years.

RSUs are share awards that entitle the holder to receive freely tradeable shares of the Company’s common stock upon vesting. The RSUs cannot be transferred and the awards are subject to forfeiture if the holder’s employment terminates prior to the release of the vesting restrictions. The RSUs generally vest over a three-year period in equal amounts on an annual basis, provided the employee remains continuously employed with the Company. The fair value of the RSUs is equal to the closing price of the Company’s common stock on the grant date.

A summary of RSU activity under our equity incentive plan and related information is as follows:

	Number of Shares		Weighted-Average Grant Date Fair Value Per Share
Unvested as of December 31, 2020		—	$	—
Granted		50,000		12.84
Unvested as of December 31, 2021		50,000	$	12.84

As of December 31, 2021, unrecognized stock-based compensation expense related to outstanding unvested RSUs was $0.6 million, which is expected to be recognized over a weighted-average period of 2.98 years.

The ESPP enables eligible employees to purchase shares of the Company's common stock at the end of each offering period at a price equal to 85% of the fair market value of the shares on the first business day or the last business day of the offering period, whichever is lower. Eligible employees generally included all employees. Share purchases are funded through payroll deductions of at least 1%, and up to 15% of an employee’s eligible compensation for each payroll period. The number of shares reserved for issuance under the ESPP increase automatically on the first day of each fiscal year, by a number equal to, 1% of the shares of common stock outstanding on the last day of the immediately preceding fiscal year, or such number of shares determined by the Company’s board of directors. As of December 31, 2021, 729,775 shares were available for future purchase. The ESPP generally provides for six-month consecutive offering periods beginning on May 15^th and November 15^th of each year. The ESPP is a compensatory plan as defined by the authoritative guidance for stock compensation. As such, stock-based compensation expense has been recorded for the years ended December 31, 2021 and 2020.

The total stock-based compensation expense recognized was as follows (in thousands):

	Year Ended December 31,
	2021		2020
Research and development	$	8,610	$	2,274
General and administrative		7,652		2,614
Total stock-based compensation expense	$	16,262	$	4,888

The stock-based compensation expense related to the ESPP for the years ended December 31, 2021 and 2020 were $0.1 million and $0.1 million, respectively.

To determine the value of stock option awards for stock-based compensation purposes, the Company uses the Black-Scholes option pricing model and the assumptions discussed below.

Fair Value of Common Stock—Historically, for all periods prior to the IPO in July 2020, fair values of the shares of common stock underlying the Company’s share-based awards were estimated on each grant date by the Company’s board of directors. The board of directors considered, among other things, valuations of the Company’s common stock which were prepared by an independent third-party valuation firm in accordance with the guidance provided by the American Institute of Certified Public Accountants 2013 Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation. After the completion of the IPO, the fair value of each share of underlying common stock is based on the closing price of the Company’s common stock as reported on the date of grant on the Nasdaq Global Select Market.

Expected Term—The Company’s expected term represents the period that the Company’s stock-based awards are expected to be outstanding. The Company’s historical share option exercise information is limited due to a lack of sufficient data points, and did not provide a reasonable basis upon which to estimate an expected term. The expected

term for option grants is therefore determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term).

Expected Volatility—Because the Company does not have sufficient trading history for its common stock, the expected volatility was estimated based on the average volatility for comparable publicly traded life science companies over a period equal to the expected term of the stock option grants. The comparable companies were chosen based on the similar size, stage in the life cycle, or area of specialty. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available and to align with the Company’s expected term.

Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the option.

Dividend Yield—The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock. Therefore, the Company used an expected dividend yield of zero.

The fair value of each award issued was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

	Year Ended December 31,
	2021		2020
Expected term (in years)	4.33-6.08		5.00-6.08
Expected volatility	88%-91%		85%-93%
Risk-free interest rate	0.35%-1.31%		0.33%-1.45%
Dividend yield		—		—