As of December 31, 2021, the Company has granted service-based awards, which vest over a defined period of service, and performance-based and market-based awards, which vest upon the achievement of defined conditions. Service-based awards generally vest over a four-year period, with the first 25% vesting following twelve months of continued employment or service, and the remainder vesting in twelve quarterly installments over the following three years.

The 2020 Stock Option and Incentive Plan (the 2020 Plan), was adopted by the Company’s board of directors in October 2020, approved by the Company’s stockholders in October 2020 and became effective as of October 12, 2020. The 2020 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards. The number of shares of the Company’s common stock initially reserved for issuance under the 2020 Plan was 1,043,402 shares. The number of shares reserved shall be annually increased on the first day of each calendar year beginning on January 1, 2021 and ending on and including January 1, 2030, equal to the lesser of 5% of the number of shares of common stock outstanding on the final day of the immediately preceding calendar year or such lesser number of shares determined by the compensation committee. As of January 1, 2022, 1,119,192 additional shares of common stock were reserved for issuance under the 2020 Plan.

The shares of the Company’s common stock, subject to outstanding awards under the 2015 Plan that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right, will be added back to the shares of common stock available for issuance under the 2020 Plan.

The Company’s stock options expire after approximately ten years from the date of grant. As of December 31, 2021, the Company does not hold any treasury shares. Upon stock option exercise, the Company issues new shares and delivers them to the participant.

The Company’s 2020 Employee Stock Purchase Plan, (the ESPP) was adopted by our board of directors in October 2020, approved by the Company’s stockholders in October 2020 and became effective October 12, 2020. The ESPP initially provides participating employees with the opportunity to purchase up to an aggregate of 208,680 shares of the Company’s common stock. The number of shares of common stock reserved for issuance under the ESPP will automatically increase on each January 1st, beginning on January 1, 2021 and ending on January 1, 2030, by the lesser of (i) 834,720 shares of common stock, (ii) 0.5% of the outstanding shares of common stock on the immediately preceding December 31st or (iii) such lesser number of shares as determined by the administrator of the ESPP.

The following table summarizes the Company’s stock option activity during the twelve months ended December 31, 2021:


	NUMBER OF SHARES			WEIGHTED AVERAGE EXERCISE PRICE PER SHARE		WEIGHTED AVERAGE REMAINING CONTRACTUAL TERM		AGGREGATE INTRINSIC VALUE (1)
						(In years)		(In thousands)
Outstanding as of December 31, 2020		4,543,318		$	8.52		7.22	$	108,048
Granted		1,449,400			23.26
Exercised		(433,751	)		8.62
Forfeited/Cancelled		(795,478	)		11.10
Outstanding as of December 31, 2021		4,763,489			12.56		6.44		10,370
Exercisable as of December 31, 2021		2,688,532			8.02		5.41		9,372
Vested and expected to vest as of December 31, 2021		4,763,489			12.56		6.44		10,370

(1)

Aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair value of common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock as of December 31, 2021 and 2020.

The weighted average grant date fair value per share of options granted during the years ended December 31, 2021 and 2020 was $14.33 and $8.30, respectively.

The aggregate intrinsic value of stock options exercised during the year ended December 31, 2021 and 2020 was $5.2 million and $0.4 million, respectively.

The key assumptions used in the Black-Scholes option pricing model on the date of grant for options with service-based vesting conditions granted to employees, directors and non-employees, were as follows, presented on a weighted average basis:


	YEAR ENDED DECEMBER 31,
	2021			2020
Risk-free interest rate		0.83	%		0.68	%
Expected term (in years)		6.20		6.18
Expected volatility		68.21	%		68.75	%
Expected dividend yield		0.00	%		0.00	%
Fair value per share of common stock	$	14.37		$	13.52

The Company did not grant any performance-based awards during the years ended December 31, 2021 or December 31, 2020.

The following table presents the components and classification of stock-based compensation expense (in thousands):


	YEAR ENDED DECEMBER 31,
	2021		2020
Research and development	$	4,733	$	3,563
General and administrative		5,409		3,517
Gain on disposition		535		-
	$	10,677	$	7,080

Employee	$	9,862	$	6,547
Non-employee		815		533
	$	10,677	$	7,080

The Company recognized stock-based compensation of $0.5 million, related to the Lonza transaction (Note 3) as a component of gain on disposition, which is recorded in other income (expense). The Company recognized expense of $0.3 million during the year ended December 31, 2020, related to performance-based awards that vested upon achievement of their underlying performance condition. As of December 31, 2021, all stock-based compensation expense related to previously granted performance-based awards has been recognized.

As of December 31, 2021, the total unrecognized compensation expense related to the Company’s option awards was $20.3 million, which the Company expects to recognize over a weighted-average period of approximately 2.69 years

On November 12, 2021, the Company amended certain terms applicable to outstanding option awards previously issued to the Transferred Employees in connection with the disposition transaction with Lonza. The Company modified the option awards previously granted to the Transferred Employees that were unvested as of November 12, 2021 to allow the individuals to continue to vest in outstanding awards subsequent to their termination of service. Additionally, the Company extended the post-termination exercise period for vested option awards previously granted to the Transferred Employees. The modifications affected awards previously granted to 12 individuals. None of the Transferred Employees have any continuing contractual relationship deemed to be substantial with the Company beyond November 12, 2021. The modifications were made in consideration of the termination of the Transferred Employees from the Company and the employment of the Transferred Employees by Lonza.

The Company accounted for the changes made to the stock option awards held by Transferred Employees as modifications under ASC 718. The modification of the vesting condition associated with the unvested stock options was deemed a Type 3 modification because the options would have otherwise forfeited on the date of termination pursuant to the original terms of the awards. Accordingly, the Company measured compensation cost associated with these tranches based on the fair value of the modified awards as of November 12, 2021. The Company recognized stock-based compensation expense of approximately $0.4 million in connection with this modification. The Company recognized the impact in full on November 12, 2021 because the awards do not have an on-going service condition. The Company accounted for the modification to extend the exercise period for the vested stock options as a Type 1 modification. As a result, the incremental fair value of the modified options over the fair value of the original options on the modification date was calculated based on the assumptions in effect on November 12, 2021. The additional compensation cost totaling approximately $0.1 million was recognized in its entirety on November 12, 2021 since the modified share options are fully vested.

The Company presented the impact of the modifications totaling approximately $0.5 million against the gain recognized upon the derecognition of the group of assets associated with the exosome manufacturing business that was transferred to Lonza.