10. Equity Incentive Plans

2019 Equity Incentive Plan

The Company’s board of directors adopted and our stockholders approved our 2019 Equity Incentive Plan, (the “2019 Plan”), on June 2, 2019, and June 7, 2019, respectively. The 2019 Plan became effective on June 19, 2019, and no further grants will be made under the Company’s 2010 Equity Incentive Plan. The purpose of the 2019 Plan, through the grant of stock awards including stock options and other stock-based awards, including restricted stock units (“RSUs”), is to help us secure and retain the services of eligible award recipients, provide incentives for such persons to exert maximum efforts for our success and that of our affiliates, and provide a means by which the eligible recipients may benefit from increases in the value of our Class A common stock. Under the 2019 Plan, 6,141,842 shares of the Company’s Class A common stock have been reserved for issuance to employees, directors and consultants. Additionally, the number of shares of our Class A common stock reserved for issuance under our 2019 Plan will automatically increase on January 1 of each year, beginning on January 1, 2020 and continuing through and including January 1, 2029, 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.

Stock option activity under the Plan is as follow (in thousands, except share and per share data and years):


	Options Outstanding
				Weighted-
				Average	Aggregate
		Weighted-		Remaining	Intrinsic
	Number	Average		Contractual	Value
	of Shares	Exercise Price		Life (years)	(in thousands)
Balances, December 31, 2017	567,319	$	3.96	8.1	$	694
Granted	1,609,086		6.66
Exercised	(27,832)		1.68
Cancelled	(12,282)		4.92
Balances, December 31, 2018	2,136,291	$	6.06	8.9	$	12,881
Granted	1,764,713		13.63
Exercised	(77,368)		3.94
Cancelled	(81,492)		9.80
Balances, December 31, 2019	3,742,144	$	9.58	8.6	$	22,910
Vested and expected to vest at December 31, 2019	3,742,144	$	9.58	8.6	$	22,910
Exercisable at December 31, 2019	1,793,254	$	5.87	7.7	$	17,211
Vested at December 31, 2019	1,168,118	$	6.27	7.5	$	10,747

Additional information regarding the Company’s stock options outstanding and vested and exercisable as of December 31, 2019 is summarized below:


	Options Outstanding				Options Exercisable
		Weighted-
		Average				Weighted-
		Remaining	Weighted-			Average
	Number of	Contractual	Average		Shares Subject	Exercise
	Stock Options	Life	Exercise Price		to Stock	Price per
Exercise Prices	Outstanding	(Years)	per Share		Options	Share
Up to $0.66	48,984	2.9	$	0.17	48,984	$	0.17
$4.56-$5.16	1,474,367	7.7	$	5.00	1,450,561	$	5.00
$9.94-$12.95	1,720,981	9.1	$	11.56	293,709	$	11.13
$16.10-$22.06	497,812	9.5	$	17.18	—		—
	3,742,144	8.6	$	9.58	1,793,254	$	5.87

The weighted‑average grant date fair value of options granted to employees and non‑employees in the year ended December 31, 2019 and 2018 was $10.35 and $5.16, respectively. The fair value of each option is estimated on the date of grant using the Black‑Scholes option pricing model, assuming no expected dividends and the following weighted average assumptions:


	Year Ended December 31,
	2019		2018
Expected life (in years)	6.02		6.01
Volatility	81.0	%	78.3	%
Risk-free interest rate	2.16	%	2.88	%

Expected volatility is based on volatilities of public companies operating in the Company’s industry. The expected life of the options is estimated using the simplified method detailed in SEC Staff Accounting Bulletin No. 107. The simplified method calculates the expected term as the mid-point between the weighted-average time to vesting and the contractual maturity. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant. The Company has elected to account for forfeitures as they occur, rather than estimate expected forfeitures.

2019 Employee Stock Purchase Plan

The Company’s board of directors adopted the 2019 Employee Stock Purchase Plan, (“ESPP”), on June 2, 2019, and the Company’s stockholders approved the ESPP on June 7, 2019. The ESPP became effective on June 19, 2019. The Company’s board of directors authorized 283,333 shares of Class A common stock to be reserved for future issuance under the ESPP. The number of shares of our Class A common stock reserved for issuance will automatically increase on January 1 of each calendar year, from January 1, 2020 through January 1, 2029, by the lesser of (1) 1% of the total number of shares of our Class A common stock outstanding on December 31 of the preceding calendar year, and (2) 416,666 shares; provided, that prior to the date of any such increase, the Company’s board of directors may determine that such increase will be less than the amount set forth in clauses (1) and (2). During the year ended December 31, 2019, the expense related to the ESPP was $348,000. The fair value of each ESPP is estimated on the date of grant using the Black‑Scholes option pricing model, assuming no expected dividends and the following range of assumptions:


	Year Ended December 31,
	2019		2018
Expected life (in years)	0.2 - 2.0		—
Volatility	74.5 - 101.6	%	—	%
Risk-free interest rate	1.50 - 2.15	%	—	%

The Company recognized $6.1 million and $1.4 million of stock‑based compensation expense related to options and the ESPP granted to employees and non‑employees for the years ended December 31, 2019 and 2018, respectively. The compensation expense is allocated on a departmental basis, based on the classification of the option holder as follows (in thousands):


	Year Ended December 31,
	2019		2018
Research and development	$	2,977	$	631
General and administrative		3,079		788
	$	6,056	$	1,419

No income tax benefits have been recognized in the statements of operations for stock‑based compensation arrangements and no stock‑based compensation costs have been capitalized as property and equipment as of December 31, 2019.

Unrecognized estimated compensation expense as of December 31, 2019, totaled $20.0 million related to non‑vested stock options with a remaining requisite service period of 3.1 years.