In 2015, the Company adopted the FLX Bio, Inc. 2015 Stock Plan (the “2015 Plan”).

In connection with the consummation of the IPO in November 2019, the Company’s board of directors adopted the Company’s 2019 Equity Incentive Plan (the “2019 Plan” and collectively with the 2015 Plan, the “Option Plans”). Upon the effectiveness of the 2019 Plan, the Company’s 2015 Plan terminated and no further grants may be made thereunder. However, the 2015 Plan will continue to govern the terms and conditions of the outstanding awards previously granted thereunder. As of December 31, 2021, the Company had 2,688,372 shares of common stock available for grant under the Option Plans. In addition, the number of shares reserved for issuance under the Company’s 2019 Plan will automatically increase on January 1 of each year beginning January 1, 2020 by a number equal to (i) 4% of the shares of common stock outstanding on the last business day of the prior fiscal year or (ii) the number of shares determined by the Company’s board of directors.

The Company’s Option Plans provided for the granting of incentive and non-statutory stock options and restricted shares of common stock options to eligible employees, officers, directors, advisors and consultants. Terms of the stock option agreements, including vesting requirements, are determined by the board of directors, subject to the provisions of the Options Plans. Options granted generally vest over four years and expire no later than ten years from the date of grant. As a private company, the estimated fair value of the Company’s underlying common stock was determined by the board of directors. Following the Company’s IPO in November 2019 the fair value of the Company’s common stock is based on the closing price of its common stock on the date of grant.

In October 2019, the Company adopted the 2019 Employee Stock Purchase Plan (the “2019 ESPP”). The Company reserved 240,336 shares of common stock pursuant to purchase rights to be granted to the Company’s employees. The 2019 ESPP provides that the number of shares reserved and available for issuance will automatically increase on January 1 of each calendar year, beginning January 1, 2020, by the lesser of (1) 1.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, (2) 240,336 shares or (3) a number determined by the board of directors that is less than (1) and (2). As of January 1, 2021, an additional 240,336 shares of common stock were authorized for issuance pursuant to the annual automatic increase to the authorized shares under the 2019 ESPP.

Under the 2019 ESPP, eligible employees are granted rights to purchase shares of common stock, which can be funded through payroll deductions that cannot exceed 15% of each employee’s compensation. The 2019 ESPP generally provides for a 24-month offering period, which includes four six-month purchase periods. At the end of each purchase period, eligible employees are permitted to purchase shares of common stock at 85% of the lower of fair market value at the beginning of the offering period or fair market value at the end of the purchase period. During the years ended December 31, 2021 and 2020, employees purchased 76,424 shares at weighted average price of $10.80 and 87,325 shares at a weighted average exercise price of $10.27, respectively. The 2019 ESPP is considered a compensatory plan and the Company recorded stock-based compensation expense of $2.5 million and $2.7 million for the years ended December 31, 2021 and 2020, respectively.

Stock option activity under the Options Plan is set forth below for the year ended December 31, 2021:

	Number of Shares Outstanding			Weighted Average Exercise Price Per Share		Weighted Average Remaining Contractual Term (Years)		Aggregate Intrinsic Value (in thousands)
Balances at December 31, 2020		1,481,100		$	16.13		8.36	$	11,123
Stock options granted		794,095			21.62
Stock options exercised		(120,178	)		9.88
Stock options forfeited		(130,336	)		21.30
Balances at December 31, 2021		2,024,681		$	18.33		8.04	$	38,417
Vested and expected to vest at December 31, 2021		2,024,681		$	18.33		8.04	$	38,417
Exercisable at December 31, 2021		1,028,650		$	14.75		7.41	$	23,142

The aggregate intrinsic values of options outstanding, exercisable, vested and expected to vest were calculated as the difference between the exercise price of the options and the estimated fair value of the Company’s common stock, as determined by the board of directors, as of December 31, 2021.

The options granted in the years ended December 31, 2021 and 2020 had a weighted average per share grant-date fair value of $15.04 and $24.57, respectively, and a total grant date fair value of $11.9 million and $8.7 million.

The aggregate intrinsic value of stock options exercised in the years ended December 31, 2021 and 2020 was $2.4 million and $2.4 million, respectively.

The aggregate fair value of options that vested in the years ended December 31, 2021 and 2020 was $6.8 million and $5.4 million, respectively.

Restricted Stock Units (“RSU”) activity under the 2019 Plan is set forth below for the year ended December 31, 2021:

	Number of Shares Outstanding			Weighted Average Grant Price Fair Value Per Share
RSUs outstanding at December 31, 2020		56,500			44.66
RSUs awarded		—			—
RSUs released		(14,125	)		44.66
RSUs forfeited		(1,875	)		44.66
RSUs outstanding at December 31, 2021		40,500			44.66

Prior to the Company’s IPO, the grant date fair value of the shares of common stock underlying stock options was determined by the Company’s board of directors with the assistance of management and an independent third-party valuation specialist. The grant date fair value of common stock was determined using valuation methodologies by considering a number of objective and subjective factors including important developments in the Company’s operations, valuations performed by independent third parties, sales of convertible preferred stock, actual operating results and financial performance, the conditions in the biotechnology industry and the economy in general, the stock price performance and volatility of comparable public companies and the lack of liquidity of the Company’s common stock, among other factors.

In determining the fair value of the options granted, the Company uses the Black-Scholes option-pricing model and assumptions discussed below. Each of these inputs is subjective and generally requires significant judgment to determine.

The expected term represents the period that the Company’s options granted are expected to be outstanding and is determined using the simplified method (based on the mid-point between the vesting date and the end of the contractual term). The Company has very limited historical information to develop reasonable expectations about future exercise patterns and post-vesting employment termination behavior for its stock option grants.

Since the Company recently became a public company and has only a limited trading history for its common stock, the expected volatility was estimated based on the average historical volatility for comparable publicly traded biopharmaceutical companies and our historical volatility over a period, where available, equal to the expected term of the stock option grants. The comparable companies were chosen based on their similar size, life cycle stage or area of specialty.

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 options.

The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock. Therefore, the Company used an expected dividend yield of zero.

The assumptions used to value employee and non-employee stock option awards granted under the Option Plans during the years ended December 31, 2021 and 2020, using the Black-Scholes option pricing model, were as follows:

	Year Ended December 31,
	2021	2020
Expected term (in years)	3.93 - 6.05	5.19 - 6.07
Volatility	81.0% - 86.9%	84.0% - 87.0%
Risk-free interest rate	0.55% - 1.26%	0.28% - 1.43%
Dividend yield	—	—

The fair value of the rights granted to employees under the 2019 ESPP was estimated using a Black-Scholes option-pricing model with the following valuation assumptions:

	Year Ended December 31,
	2021	2020
Expected term (in years)	0.25 - 2.00	0.25 - 2.00
Volatility	71.3% - 92.9%	84.0%
Risk-free interest rate	0.05% - 1.55%	0.11% - 1.57%
Dividend yield	—	—

The terms of the 2015 Plan permitted option holders to exercise stock options before they are vested, subject to certain limitations. Such unvested shares were subject to repurchase by the Company at the original exercise price in the event the option holder’s service to the Company was terminated either voluntarily or involuntarily. As a result of early exercises under the 2015 Plan, approximately 0 and 3,000 shares were subject to repurchase as of December 31, 2021 and 2020, respectively. The Company treats cash received from the exercise of unvested options as a refundable deposit and classifies such amounts as a liability in its balance sheet. As of December 31, 2021 and 2020, the Company included cash received for the early exercise of unvested options of $0 and $6,000, respectively, in other current liabilities. Amounts included in liabilities were transferred into common stock and additional paid-in capital as the shares vested, which was generally over a period of 48 months.

Total stock-based compensation expense recognized for stock options and RSUs granted to both employees and non-employees and for the employee stock purchase plan was as follows (in thousands):

	Year Ended December 31,
	2021		2020
Research and development	$	5,310	$	4,637
General and administrative		4,642		4,049
Total stock-based compensation expense	$	9,952	$	8,686

As of December 31, 2021, unrecognized stock-based compensation cost related to outstanding unvested stock options and RSUs that are expected to vest was $15.7 million. This unrecognized stock-based compensation cost is expected to be recognized over 2.6 years.