7. Equity Based Compensation

In connection with the Company’s initial public offering in July 2019, the Company adopted the 2019 Equity Incentive Plan (the “2019 Plan”) in June 2019, which replaced the 2018 Stock Incentive Plan. The 2019 Plan provides for the grant of stock options, restricted stock awards, stock bonus awards, cash awards, stock appreciation right, RSUs, and performance awards to directors, officers and employees of the Company, as well as consultants and advisors of the Company. On January 1, 2020, the number of shares of common stock available for issuance under the 2019 Plan increased by 1,204,410 shares as a result of the automatic increase provision of the 2019 Plan. As of March 31, 2020, there were a total of 1,796,999 shares available for future award grants under the 2019 Plan.

The Company recognized equity-based compensation expense in the condensed consolidated statements of operations and comprehensive loss, by award type, as follows (in thousands):


	Three Months Ended
	March 31,
	2020		2019
ESPP	$	110	$	—
Restricted stock		562		187
Stock option		1,872		312
	$	2,544	$	499

The following table summarizes the allocation of equity-based compensation expense in the condensed consolidated statements of operations and comprehensive loss, by expense category:


	Three Months Ended
	March 31,
	2020		2019
Research and development expense	$	1,792	$	282
General and administrative expense		752		217
	$	2,544	$	499

Restricted Common Stock

The following table summarizes the restricted stock awards activity during the three months ended March 31, 2020:


		Weighted
		Average Fair
	Number	Value per Share
	of Shares	at Issuance
Unvested restricted common stock as of December 31, 2019	379,770	$	4.32
Granted	—		—
Vested	(84,247)		4.32
Forfeited	(12,694)		4.32
Unvested restricted common stock as of March 31, 2020	282,829	$	4.32

As of March 31, 2020, the Company had unrecognized equity‑based compensation expense of $752,000 related to the restricted stock awards, which is expected to be recognized over a weighted average period of 0.6 years.

Restricted Stock Units

During the three months ended March 31, 2020, the Company granted restricted stock units. The following table summarizes the restricted stock units activity during the three months ended March 31, 2020:


		Weighted
		Average Fair
	Number	Value per Share
	of Shares	at Issuance
Unvested restricted common stock units as of December 31, 2019	—	$	—
Granted	66,216		10.84
Vested	—		—
Forfeited	—		—
Unvested restricted common stock units as of March 31, 2020	66,216	$	10.84

As of March 31, 2020, the Company had unrecognized equity‑based compensation expense of $708,000 related to the restricted stock units, which is expected to be recognized over a weighted average period of 3.2 years.

Stock Options

The following table summarizes the Company’s stock option activity during the three months ended March 31, 2020:


				Weighted
		Weighted		Average
	Number of	Average		Remaining	Aggregate
	Shares	Exercise Price		Contractual Term	Intrinsic Value
				(in years)	(in thousands)
Outstanding as of December 31, 2019	2,987,403	$	8.67	9.22	$	26,254
Granted	1,468,885		14.68	—		—
Exercised	(35,822)		4.67	—		—
Forfeited	(64,917)		6.24	—		—
Outstanding as of March 31, 2020	4,355,549	$	10.77	9.19	$	20,121
Options vested and expected to vest as of March 31, 2020	4,355,549	$	10.77	9.19	$	20,121
Options exercisable as of March 31, 2020	655,162	$	5.31	8.28	$	6,165

As of March 31, 2020, the Company had unrecognized equity‑based compensation expense of $27.5 million related to stock options issued to employees and non-employees, which is expected to be recognized over a weighted average period of 3.2 years.

The weighted average grant‑date fair value per share of stock options granted to employees and non-employees for stock option awards with service‑based vesting conditions during the three months ended March 31, 2020 was $10.02 per share.

The following table summarizes assumptions used in determining the fair value of the options granted during the three months ended March 31, 2020:


	Three months ended
	March 31,
	2020
Risk‑free interest rate	0.48%
Expected dividend yield	-
Expected term (in years)	6.0
Expected Volatility	80.85%

The Company determined the volatility for options granted in 2020 based on reported data for a guideline group of companies that issued options with substantially similar terms. The risk-free interest rate is based on a zero-coupon United States Treasury instrument with terms consistent with the expected life of the stock options. The expected term of options granted by the Company has been determined based upon the simplified method, because the Company does not have sufficient historical information regarding its options to derive the expected term. Under this approach, the expected term is the mid-point between the weighted average of vesting period and the contractual term. The Company has not paid and does not anticipate paying cash dividends on shares of common stock; therefore, the expected dividend yield is assumed to be zero.

ESPP

In June 2019, the Company adopted the 2019 Employee Stock Purchase Plan (“ESPP”), which became effective on June 26, 2019. The Company initially reserved 300,000 shares of common stock for sale under the ESPP. On January 1, 2020, the number of shares of common stock available for issuance under the ESPP increased by 301,102 shares as a result of the automatic increase provision of the ESPP. The ESPP is a qualified, compensatory plan under Section 423 of the Internal Revenue Code and offers substantially all employees opportunity to purchase up to $25,000 of common stock per year at 15% discount to the lower of the beginning of the offering period price or the end of the offering period price.

Compensation expense for discounted purchases under the ESPP is measured using the Black-Scholes model to compute the fair value of the lookback provision plus the purchase discount and is recognized as compensation expense over the course of the offering period.

During the three months ended March 31, 2020, the Company granted awards with a weighted average grant date fair value of $6.37.