STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2020

Redeemable Convertible Preferred Stock

Upon closing of the IPO, all outstanding redeemable convertible preferred stock converted into an aggregate of 14,641,997 shares of common stock. The holders of the Company’s preferred stock had certain voting, dividend, and redemption rights, as well as liquidation preferences and conversion privileges. All rights, preferences, and privileges associated with the preferred stock were terminated at the time of the Company’s IPO in conjunction with the conversion of all outstanding shares of preferred stock into shares of common stock.

2020 Follow-on Offering

On May 18, 2020, the Company completed a public offering pursuant to which the Company issued an aggregate of 12,650,000 shares of its common stock, which included the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $4.75 per share, before deducting underwriting discounts and commissions. The Company received net proceeds of approximately $55.9 million after deducting the underwriting discounts, commissions, and other offering expenses.

At-the-Market Offering

On June 5, 2020, the Company entered into a sales agreement with SVB Leerink LLC (“SVB Leerink”) pursuant to which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $35 million from time to time through SVB Leerink, acting as its agent (the “ATM Offering”). During the three and nine months ended September 30, 2020, the Company sold an aggregate of 1,253,597 and 1,658,861 shares, respectively, of its common stock under the ATM Offering for net cash proceeds of $6.9 million and $9.0 million, respectively, after deducting commissions and expenses of $0.2 million and $0.4 million, respectively.

2019 Stock Option and Incentive Plan

The 2019 Stock Option and Incentive Plan (the "2019 Plan") provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock units, restricted stock awards, unrestricted stock awards and cash-based awards to the Company's officers, employees, directors and consultants. The number of shares available for future grant under the 2019 Plan was 747,299 as of September 30, 2020.

2019 Employee Stock Purchase Plan

The 2019 Employee Stock Purchase Plan (the "2019 ESPP") provides participating employees with the opportunity to purchase shares of common stock. As of September 30, 2020, the total number of shares that may be issued under the 2019 ESPP was 469,069 shares. As of September 30, 2020, no shares have been issued under the 2019 ESPP.

Fair Value of Stock Awards

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Risk-free interest rate	0.38	%	1.43% - 1.95%		1.12	%	1.43% - 2.50%
Expected option life (in years)	6.06		0.34 - 6.25		5.93		0.25 - 6.25
Expected dividend yield	0	%	0	%	0	%	0	%
Expected volatility	75.5	%	73.4	%	73.6	%	73.4	%

Stock Option Activity

The following table summarizes the Company’s stock option activity for the nine months ended September 30, 2020:


	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Life (in Years)	Intrinsic Value (in thousands)
Outstanding as of January 1, 2020	5,176,944	$	7.35
Granted	801,890	4.44
Exercised	(4,071)	1.12
Canceled	(812,963)	8.93
Outstanding as of September 30, 2020	5,161,800	$	6.65	7.52	$	1,772
Exercisable as of September 30, 2020	2,835,131	$	6.98	6.71	$	1,151
Vested or expected to vest as of September 30, 2020	5,136,800	$	6.65	7.52	$	1,772

The intrinsic value of options exercised was nominal during both the nine months ended September 30, 2020 and 2019.

The weighted-average grant date fair value of the options granted during the nine months ended September 30, 2020 and 2019, was $2.83 and $6.73 per share, respectively.

Restricted Stock Units

The fair values of restricted stock units are based on the market value of our stock on the date of grant. The following table summarizes the Company's restricted stock unit activity for the nine months ended September 30, 2020:


	Number of Shares	Weighted Average Grant Date Fair Value per Share
Outstanding as of January 1, 2020	66,801	$	3.40
Granted	336,166	4.61
Vested	—	—
Forfeited	(108,371)	3.68
Outstanding as of September 30, 2020	294,596	$	4.67

Stock-Based Compensation Expense

Stock-based compensation expense was classified in the statements of operations and comprehensive loss as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Research and development	$	532	$	659	$	2,129	$	1,727
General and administrative	840		1,019		2,798		2,595
Total stock compensation expense	$	1,372	$	1,678	$	4,927	$	4,322

As of September 30, 2020, there was $8.3 million of unrecognized compensation expense related to unvested stock options that is expected to be recognized over a weighted-average period of approximately 2.1 years and $0.8 million of unrecognized compensation expense related to unvested restricted stock units that is expected to be recognized over a weighted-average period of approximately 1.8 years.