In January 2021, the Board adopted the 2021 Equity Incentive Plan (the “2021 Plan”). The stockholders approved the 2021 Plan in January 2021, and it became effective upon the execution of the underwriting agreement for the IPO on February 4, 2021. Under the 2021 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock or cash-based awards to individuals who are then employees, officers, directors or consultants of the Company. A total of 5,200,000 shares of common stock were approved to be initially reserved for issuance under the 2021 Plan. In addition, the number of shares of common stock available for issuance under the 2021 Plan will be automatically increased on the first day of each calendar year during the ten-year term of the 2021 Plan, beginning with January 1, 2022 and ending with January 1, 2031, by an amount equal to 5% of the outstanding number of shares of common stock on December 31 of the preceding calendar year or such lesser amount as determined by the Board. On January 1, 2022, the number of shares available for issuance under the 2021 Plan was automatically increased by 1,983,182 shares.

In April 2022, the Board approved the 2022 Inducement Plan, (the “Inducement Plan”) a non-stockholder approved stock plan, in order to award stock options, restricted stock units and other awards as allowed under the Inducement Plan as an inducement to potential new employees and directors of the Company. Under the Inducement Plan, 3,500,000 shares were approved and available for future issuance. As of June 30, 2022, 20,825 awards had been granted or were outstanding.

The stock-based compensation expense for the Company’s equity incentive plans was allocated as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Cost of products sold	$	134	$	208	$	390	$	260
Research and development		586		291		1,097		421
Selling, general and administrative		1,016		446		1,937		792
Total	$	1,736	$	945	$	3,424	$	1,473

Stock-based compensation expense excludes amounts capitalized to inventory. During the three and six months ended June 30, 2022, the Company capitalized stock-based compensation expense of $0.5 million and $0.9 million to inventory, respectively, and during the three and six months ended June 30, 2021, the Company capitalized $0.2 million and $0.3 million of stock-based compensation expense to inventory, respectively.

Total stock-based compensation expense by type of award was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Stock options	$	386	$	528	$	725	$	964
Restricted stock units		1,620		334		3,057	$	375
Employee Stock Purchase Plan		77		83		166	$	134
Total	$	2,083	$	945	$	3,948	$	1,473

Total compensation costs as of June 30, 2022 related to non-vested awards to be recognized in future periods was $23.9 million and is expected to be recognized over the weighted-average period of 2.9 years.

A summary of stock option activity for the six months ended June 30, 2022 is as follows:


	Number of Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Balance as of December 31, 2021		3,712,274		$	3.30		8.1	$	23,150
Granted		416,213		$	1.85		—		—
Exercised		(60,494	)	$	1.42		—		—
Cancelled		(119,422	)	$	7.39		—		—
Balance as of June 30, 2022		3,948,571		$	3.05		7.2	$	1,542
Options vested and expected to vest as of June 30, 2022		3,948,571		$	3.05		7.2	$	1,542
Options vested and exercisable as of June 30, 2022		1,928,654		$	2.40		6.8	$	1,132

Total options vested during the six months ended June 30, 2022 was 578,211, with an aggregate fair value of $1.2 million. The aggregate intrinsic value of options exercised was $0.3 million for the six months ended June 30, 2022. Total compensation costs as of June 30, 2022 related to option awards to be recognized in future periods was $3.3 million and is expected to be recognized over the weighted average period of 2.0 years.

The weighted-average grant date fair value of the options granted during the six months ended June 30, 2022 and 2021 was $1.25 and $7.52 per share, respectively, as calculated using the Black-Scholes option-pricing model with the following assumptions on a weighted-average basis:


	Six Months Ended June 30,
	2022			2021
Fair value of common stock	$	1.85		$	17.00
Expected term (in years)		5.5			6.0
Risk-free interest rate		3.0	%		0.6	%
Dividend yield		—			—
Volatility		79.5	%		46.9	%

Common stock fair value—Prior to the IPO the fair value of the Company’s common stock was determined by the Board with assistance from management. The Board determined the fair value of common stock by considering independent valuation reports and a number of objective and subjective factors, including valuations of comparable companies, sales of redeemable convertible preferred stock, operating and financial performance, the lack of liquidity of the Company’s common stock and the general and industry-specific economic outlook. Following the closing of the IPO, the fair value of the Company’s common stock on the date of grant is the closing price of the common stock as reported on the Nasdaq Global Select Market.

Risk-free interest rates—The Company applied the risk-free interest rate based on the U.S. Treasury yield for the expected term of the option.

Expected term—The Company calculated the expected term as the average of the contractual term of the option and the vesting period for its employee stock options.

Expected volatility—Since the Company does not have sufficient stock price history to estimate the expected volatility of its shares, the expected volatility is calculated based on the average volatility for a peer group in the industry in which the Company does business.

Restricted stock units (“RSUs”) are generally subject to a 4 year vesting period, with 25% of the shares vesting approximately one year from the vesting commencement date and quarterly thereafter over the remaining vesting term.

The Company had the following activity for RSUs for the six months ended June 30, 2022:


	Underlying Shares			Weighted- Average Grant Date Fair Value
Balance as of December 31, 2021		3,387,505		$	7.57
Granted		574,414		$	3.94
Vested		(279,514	)	$	6.59
Canceled or forfeited		(314,305	)	$	7.84
Balance as of June 30, 2022		3,368,100		$	7.00

Total compensation costs as of June 30, 2022 related to RSUs to be recognized in future periods was $20.6 million and is expected to be recognized over the weighted average period of 3.5 years.

The Employee Stock Purchase Plan (the “ESPP), provides eligible employees with an opportunity to purchase common stock from the Company at a discount through accumulated payroll deductions. Under the ESPP, the Board may specify offerings but generally provides for a duration of six months, currently for which each six-month offering periods are February and August. In February 2021, the Company’s employees enrolled in the offering period (the “first offering”) to purchase a variable number of shares of its common stock under the ESPP at the purchase date.

The purchase price is specified pursuant to each offering, but cannot, under the terms of the ESPP, be less than 85% of the lower of the fair market value per share of the Company's common stock on either the offering date or on the purchase date. The ESPP also includes a six month look-back provision for the purchase price of the stock price on the purchase date is less than the stock price on the offering date.

In January 2022, the number of shares available for issuance under the ESPP was automatically increased by 396,636 shares. As of June 30, 2022, the Company had 1,029,014 shares available for issuance under the ESPP. Pursuant to the ESPP, the Company issued 77,811 shares of common stock at a weighted average price per share of $3.86 during the six months ended June 30, 2022. Cash received from purchases under the ESPP for the six months ended June 30, 2022 was $0.3 million.

The fair value of shares to be issued under the Company’s ESPP was estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions on a weighted-average basis for the six months ended June 30, 2022 and 2021:


	Six Months Ended June 30,
	2022			2021
Fair value of common stock	$	4.54		$	17.00
Expected term (in years)		0.5			0.5
Risk-free interest rate		0.1	%		0.6	%
Dividend yield		—			—
Volatility		90.5	%		46.9	%