Stock-based Compensation

6 Months Ended

Jun. 30, 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 June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Research and development	$	285	$	9	$	545	$	20
General and administrative		824		40		1,538		87
Total stock-based compensation expense	$	1,109	$	49	$	2,083	$	107

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:

	Six Months Ended June 30,
	2021			2020
Risk-free interest rate		0.80	%		1.43	%
Expected volatility		89.34	%		78.15	%
Expected term (in years)		6.10			6.61
Expected dividend yield		—			—

The weighted-average grant-date fair value of options granted to employees and directors during the six months ended June 30, 2021 and 2020 was $10.2 million and $32,000 respectively. No options were granted to advisors during the six months ended June 30, 2021. The remeasured weighted-average fair value of options granted to advisors during the six months ended June 30, 2020 was $10,000.

Stock Option Activity

Changes in shares available for grant under the 2020 Plan during the six months ended June 30, 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		(661,928	)
Options forfeited, cancelled, or expired		2,400
Shares available for grant at June 30, 2021		4,706,966

A summary of stock option activity under the 2020 Plan for the six months ended June 30, 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		658,776			20.96
Exercised		(148,544	)		1.27
Forfeited/expired		(2,400	)		21.40
Balance at June 30, 2021		2,482,702		$	12.87		8.17	$	7,700
Expected to vest		1,855,435		$	16.54		9.19	$	2,210
Options exercisable		627,267		$	2.01		5.18	$	5,491

The total fair value of options granted to employees, directors, and advisors that vested during the six months ended June 30, 2021 was $297,000, which included $261,000 for options granted to employees and directors and $36,000 for options granted to advisors. The total fair value of options that vested during the six months ended June 30, 2020 was $124,000, which included $72,000 for options granted to employees and directors and $52,000 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 June 30, 2021. The aggregate intrinsic value of options exercised was $1.3 million during each of the six months ended June 30, 2021 and 2020, determined as of the date of option exercise. As of June 30, 2021, there was $12.2 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 1.60 years. The Company utilizes newly issued shares to satisfy option exercises.

Stock options outstanding and exercisable under the 2020 Plan consisted of the following at June 30, 2021:

	Employees and Directors				Non-employees
Exercise Price ($)	Shares Outstanding		Shares Exercisable		Shares Outstanding		Shares Exercisable
0.16 to 1.00		226,980		226,980		—		—
1.04 to 1.49		468,273		240,028		142,014		121,522
17.00 to 19.94		819,872		33,028		195,453		—
20.55 to 29.41		630,110		5,709		—		—
Total		2,145,235		505,745		337,467		121,522

Restricted Stock Award Activity

In 2018, the Company issued a restricted stock award (“RSA”) to an advisor under the Company’s 2014 Equity Incentive 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 Company’s 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 June 30, 2021 and December 31, 2020, all of which were related to non-employee RSAs. No RSAs were granted or vested during the six months ended June 30, 2021.

Restricted Stock Unit Activity

During the six months ended June 30, 2021, the Company issued a restricted stock unit (“RSU”) award to an advisor under the 2020 Plan. The RSUs 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 six months ended June 30, 2021 is 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 June 30, 2021		1,576		$	21.15