11. Stock incentive plan

In October 2015, the Company established a stock option plan (“2015 Plan”) to provide for the issuance of shares of common stock pursuant to stock options, stock appreciation rights, stock purchase rights, restricted stock agreements and long‑term performance awards granted to key employees, directors and consultants of the Company.

On June 5, 2018, the Company’s stockholders approved the 2018 Stock Option and Incentive Plan (the “2018 Plan”), which became effective on June 20, 2018. The number of shares available for grant under the Company’s 2018 Plan as of December 31, 2019 was 3079,544, which includes 505,046 shares of the Company’s common stock reserved under the Company’s 2015 Plan that became available for issuance upon the effectiveness of the 2018 Plan. No future issuance will be made under the 2015 Plan.

The number of shares available for grant under the Company’s stock option plan were as follows (in thousands):


Available for grant as of January 1, 2018		2,419
Plan amendment		3,899
Grants		(2,515)
Forfeitures and cancellations		14
Available for grant as of December 31, 2018		3,817
Plan amendment		1,341
Grants		(2,955)
Forfeitures and cancellations		878
Available for grant as of December 31, 2019		3,081

Stock‑based compensation expense

Non‑cash stock‑based compensation expense recognized in the accompanying statements of operations relating to both stock options and restricted stock awards for the years ended December 31, 2019 and 2018 are as follows (in thousands):


	Year ended
	December 31,
	2019		2018
Research and development	$	2,442	$	866
General and administrative		6,594		2,452
Total stock‑based compensation expense	$	9,036	$	3,318

Restricted stock awards

In 2015, the Company granted 1.5 million restricted stock awards with a weighted‑average grant date fair value per share of $1.10. The restricted stock awards generally vest over four years, or a change in the control of the Company, subject to continued employment with the Company. In the event of a change in control, the unvested restricted stock awards will be accelerated and fully vested immediately prior to the change in control. There are no performance‑based features or market conditions in the Company’s outstanding restricted stock awards. The fair value of restricted stock awards is determined based on the number of restricted stock awards granted and the fair value of the Company’s stock on the date of grant.

Non-cash restricted stock award expense recognized in the accompanying statements of operations was $0.2 million and $0.3 million for the years ended December 31, 2019 and 2018, respectively. The total fair value of shares that vested in 2019 was $0.2 million. As of December 31, 2018, there were approximately 195,000 shares of unvested restricted stock outstanding which all subsequently vested in 2019

Restricted stock units

In May 2019, the Company issued an aggregate of 1,183,400 shares of restricted stock units to employees. The restricted stock units vest in two years from the date of grant. The Company at any time may accelerate the vesting of the restricted stock units. Such shares are not accounted for as outstanding until they vest. There are 21,764 shares of common stock underlying restricted stock outstanding as of December 31, 2019.

The table below summarizes activity related to restricted stock units (in thousands, except per share amounts):


		Weighted‑
		average
		grant date
		fair value
	Shares	per share
Unvested as of December 31, 2018	-	$	-
Issued	1,183	$	3.63
Vested	(26)		3.63
Forfeited and canceled	(125)		3.63
Unvested as of December 31, 2019	1,032	$	3.63

Non-cash restricted stock unit award expense recognized in the accompanying statements of operations was $1.3 million for the year ended December 31, 2019. At December 31, 2019, there was $2.6 million of unrecognized compensation cost that will be recognized as expense over a weighted-average period of 1.38 years.

Stock options

During the years ended December 31, 2019 and 2018, the Company granted 1.8 million and 2.5 million stock options, respectively. The options have a ten‑year life and generally vest over a period of four years, subject to continuous employment.

The weighted‑average grant date fair value per share of each option granted during the years ended December 31, 2019 and 2018 was $7.98 and $7.03, respectively. As of December 31, 2019, there was $17.5 million of unrecognized compensation cost related to non‑vested stock options which is expected to be recognized over a weighted‑average period of 2.68 years.

The fair value of each option award is estimated on the date of grant using a Black‑Scholes option pricing valuation model that uses various assumptions regarding the: (1) expected volatility, (2) expected life of the option, (3) expected dividend yield, and (4) risk‑free interest rate. The Company uses the historical volatility of the share values of publicly traded companies within the biotech industry as a surrogate for the expected volatility of the Company’s common stock. A zero-dividend yield is also assumed in the stock option fair value computations. The expected life of the options represents the period of time that the options granted are expected to be outstanding and has been calculated utilizing the “simplified method” for awards that qualify as “plain vanilla” options. The risk‑free rate is based on the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award.

The specific assumptions used to determine the fair value of the stock options granted during the years ended December 31, 2019 and 2018 were as follows:


	Year ended December 31,
	2019	2018

Expected volatility	71%-75%	75%
Expected dividends	None	None
Expected option life	5.00 - 6.08 Years	6.08 Years
Risk-free rate	1.38 – 2.72%	2.81 – 3.06%

The table below summarizes activity related to stock options (in thousands, except per share amounts):


				Weighted‑
		Weighted‑		average
		average		remaining	Aggregate
		exercise		contractual	intrinsic
Options	Shares	price		term	value
Outstanding, January 1, 2018	1,498	$	2.48	8.93	$	4,146
Granted	2,515		10.40
Exercised	(40)		2.57
Forfeited and canceled	(14)		4.79
Outstanding, December 31, 2018	3,959	$	7.46	8.79	$	35,984
Granted	1,772		12.19
Exercised	(181)		2.07
Forfeited and canceled	(752)		11.70
Outstanding, December 31, 2019	4,798	$	8.75	8.29	$	1,159
Vested and expected to vest at December 31, 2019	4,798	$	8.75	8.29	$	1,159
Exercisable at December 31, 2019	2,139	$	5.64	7.87	$	928

Employee stock purchase plan

On June 5, 2018, the Company's stockholders approved the 2018 Employee Stock Purchase Plan (the "ESPP"), which became effective upon the completion of the Company's initial public offering. A total of 314,697 shares of common stock were reserved for issuance under this plan. In addition, the number of shares of common stock that may be issued under the ESPP automatically increase on January 1 of each year through January 1, 2028, by the lesser of (i) 1% of the number of shares of the Company's common stock outstanding on the immediately preceding December 31 and (ii) such lesser number of shares as determined by the administrator of the Company's ESPP.