Stock-based Compensation

3 Months Ended

Mar. 31, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-based Compensation

12. Stock-based Compensation

Stock‑based compensation expense recognized was as follows (in thousands):

	Three Months Ended March 31,
	2021		2020
Research and development	$	260	$	10
General and administrative		714		48
Total stock-based compensation expense	$	974	$	58

Valuation Assumptions

The fair value of stock options was determined using the Black-Scholes option-pricing model and the assumptions below. Each of these inputs is subjective and generally required significant judgment.

• Fair Value of Common Stock—The grant date fair market value of the shares of common stock underlying stock options has historically been determined by the Company’s board of directors. Because previously there was no public market for the Company’s common stock, the board of directors exercised reasonable judgment and considered a number of objective and subjective factors to determine the best estimate of the fair market value, which include contemporaneous valuations performed by an independent third party, important developments in the Company’s operations, sales of convertible preferred stock, the rights, preferences and privileges of its convertible preferred stock relative to those of its common stock, lack of marketability of its common stock, actual operating results, financial performance, the progress of clinical development, the likelihood of achieving a liquidity event for its security holders, the trends, development and conditions in the life sciences and biotechnology sectors, the economy in general, and the stock price performance and volatility of comparable public companies.

• 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.

• Expected Volatility—Because the Company was previously privately held and did not have any trading history for its common stock, the expected volatility was estimated based on the average volatility for comparable publicly traded life sciences 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 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.

• Expected Term—The expected term represents the period that the stock-based awards are expected to be outstanding and is determined using the simplified method (based on the midpoint between the vesting date and the end of the contractual term) as the Company has limited history of relevant stock option exercise activity.

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

The fair value of each stock option was estimated using the Black‑Scholes option‑pricing model with the following weighted-average assumptions:

	Three Months Ended March 31,
	2021			2020
Risk-free interest rate		0.79	%		1.34	%
Expected volatility		89.13	%		78.17	%
Expected term (in years)		6.17			6.87
Expected dividend yield		—			—

The weighted-average grant-date fair value of options granted to employees and directors during the three months ended March 31, 2021 and 2020 were $9.3 million and $32,000 respectively. No options were granted to advisors during the three months ended March 31, 2021. The remeasured weighted-average fair value of options granted to advisors during the three months ended March 31, 2020 was $17,000.

Stock Option Activity

Changes in shares available for grant during the three months ended March 31, 2021 were as follows:

	Shares Available for Grant
Shares available for grant at December 31, 2020		3,742,235
2020 Plan reserve increase on January 1, 2021		1,624,259
Options and restricted stock units granted		(601,044	)
Shares available for grant at March 31, 2021		4,765,450

A summary of stock option activity for the three months ended March 31, 2021 was as follows:

	Shares			Weighted- Average Exercise price per Share		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Balance at December 31, 2020		1,974,870		$	9.31	7.98		$	49,275
Granted		597,892			21.07
Exercised		(62,951	)		1.11
Forfeited/expired		—			—
Balance at March 31, 2021		2,509,811		$	12.32		8.27	$	17,291
Expected to vest		1,840,595		$	16.26		9.39	$	5,933
Options exercisable		669,216		$	1.46		5.19	$	11,359

The total fair value of options granted to employees, directors, and advisors that vested during the three months ended March 31, 2021 was $133,000, which included $113,000 for options granted to employees and directors and $20,000 for options granted to advisors. The total fair value of options that vested during the three months ended March 31, 2020 was $86,000, which included $58,000 for options granted to employees and directors and $28,000 for options granted to advisors.  

The aggregate intrinsic value in the table above is calculated as the difference between the exercise price of the underlying options and the estimated fair value of the Company’s common stock underlying all options that were in-the-money at March 31, 2021. The aggregate intrinsic value of options exercised was $1.1 million and $0.1 million during the three months ended March 31, 2021 and 2020, respectively, determined as of the date of option exercise. As of March 31, 2021, there was $12.4 million of total unrecognized compensation cost related to unvested stock options. The Company expects to recognize this cost over a remaining weighted-average period of 1.83 years. The Company utilizes newly issued shares to satisfy option exercises.

Stock options outstanding and exercisable consisted of the following at March 31, 2021:

	Employees and Directors				Non-employees
Exercise Price ($)	Shares Outstanding		Shares Exercisable		Shares Outstanding		Shares Exercisable
0.16		75,660		75,660		12,610		12,610
0.48		151,320		151,320		—		—
1.00		—		—		37,830		37,830
1.04		66,931		66,931		31,525		31,525
1.19		26,825		21,465		34,677		34,677
1.31		63,050		63,050		—		—
1.35		290,974		68,509		97,727		63,049
1.49		31,525		21,016		—		—
17.00		737,052		19,263		195,453		—
19.29		27,742		—		—		—
21.15		558,150		—		—		—
21.40		9,600		—		—		—
21.62		2,400		—		—		—
22.22		29,618		—		—		—
23.79		1,400		—		—		—
29.41		27,742		2,311		—		—
Total		2,099,989		489,525		409,822		179,691

Restricted Stock Award Activity

In 2018, the Company issued a restricted stock award (“RSA”) to an advisor under the 2014 Plan. The restricted stock award vests over three years and requires continued service to the Company during the vesting period. The vesting provisions of individual awards may vary as approved by the board of directors. If continued service terminates for any reason, the Company has the right to repurchase the unvested shares for no consideration. There were 4,204 shares subject to repurchase as of March 31, 2021 and December 31, 2020, all of which were related to non-employee RSAs.

A summary of RSA activity for the three months ended March 31, 2021 was as follows:

	Share Equivalent		Weighted- Average Grant Date Fair Value
Non-vested at December 31, 2020		4,204	$	1.35
Granted		—		—
Vested		—		—
Non-vested at March 31, 2021		4,204	$	1.35

Restricted Stock Unit Activity

During the three months ended March 31, 2021, the Company issued a restricted stock unit (“RSU”) award to an advisor under the 2020 Plan. The restricted stock units will vest in full on August 3, 2021, subject to continued service to the Company during the vesting period.

A summary of RSU activity for the three months ended March 31, 2021 was as follows:

	Share Equivalent			Weighted- Average Grant Date Fair Value
Non-vested at December 31, 2020		—		$	—
Granted		3,152			21.15
Vested		(1,576	)		21.15
Non-vested at March 31, 2021		1,576		$	21.15