Stock Based Compensation

12 Months Ended

Dec. 31, 2021

Stock Based Compensation

Stock Based Compensation

7. Stock-Based Compensation

2021 Plan

In September 2021 the Company’s board of directors adopted, and in October 2021 the Company’s stockholders approved, the 2021 Plan, which became effective as of the date immediately prior to the date of the effectiveness of the registration statement for the IPO. The 2021 Plan allows the board of directors to grant incentive stock options or non-qualified stock options, restricted stock, restricted stock units, and other equity awards to the Company’s officers, employees, directors, and other key persons. In addition, the 2021 Plan includes a provision that allows for an automatic annual increase of 4% in the number of shares of common stock available for issuance under the 2021 Plan. The 2021 Plan replaced the 2016 Plan and no additional awards will be granted under the 2016 Plan following the closing of the IPO. The 2016 Plan will continue to govern the outstanding equity awards granted thereunder. The total number of shares of common stock authorized for issuance under the 2021 Plan as of December 31, 2021 was 3,986,270 shares. There were no shares of common stock authorized for issuance under the 2021 Plan as of December 31, 2020.

As of December 31, 2021, the Company had issued only stock options under the 2021 Plan. Stock options issued comprise of service-based awards granted to employees. Vesting of stock options is subject to the recipient’s continued employment or service. The maximum term of options granted under the 2021 Plan is ten years, and stock options typically vest over a four-year period.

2021 Employee Stock Purchase Plan

In September 2021, the Company’s board of directors adopted, and in October 2021 the Company’s stockholders approved, the ESPP, which became effective as of the date immediately prior to the date of the effectiveness of the registration statement for the IPO. The ESPP is administered by the person or persons appointed by the Company’s board of directors for such purpose. The ESPP initially provides participating employees with the opportunity to purchase up to an aggregate of 278,762 shares of common stock. The number of shares of common stock reserved for issuance under the ESPP will automatically increase on January 1st of each year beginning in 2022 and continuing through and including 2031 by the least of (i) 1% of the outstanding number of shares of our common stock of the immediately preceding December 31, (ii) 557,524 shares or (iii) such number of shares as determined by the ESPP administrator. As of December 31, 2021, no offering periods have commenced under the 2021 ESPP and 278,762 shares remained available for issuance.

2016 Plan

The 2016 Plan provides for the Company to grant incentive stock options or non-qualified stock options, restricted stock, restricted stock units, and other equity awards to employees, directors, and consultants of the Company. The 2016 Plan is administered by the board of directors of the Company or, at the discretion of the board of directors, by a committee of the board of directors. The exercise prices, vesting, and other restrictions are determined at the discretion of the board of directors, or its committee if so delegated. The 2016 Plan allows for early exercise of all stock option grants if authorized by the board of directors at the time of grant. The shares of common stock issued from the early exercise of stock options are restricted and continue to vest over the original service based vesting condition of the original stock option award. The Company has the option to repurchase any unvested shares at the original purchase price upon any voluntary or involuntary termination.

The total number of shares of common stock authorized for issuance under the 2016 Plan as of December 31, 2021 and 2020 was 2,318,855 shares and 1,997,099 shares, respectively.

Stock-Based Compensation

For the years ended December 31, 2021 and 2020, the Company recorded stock-based compensation expense of $2.5 million and $0.3 million. Stock compensation expense for 2021 and 2020 included less than $0.1 million related to restricted stock in both years and $2.5 million and $0.3 million related to stock options in 2021 and 2020, respectively.

Stock-based compensation expense recorded as research and development and general and administrative expenses in the consolidated statements of operations is as follows (in thousands):

	Year Ended December 31,
	2021		2020
Research and development expenses	$	878	$	107
General and administrative expenses		1,648		218
Total	$	2,526	$	325

Stock Option Valuation

The following table presents, on a weighted-average basis, the assumptions used in the Black-Scholes option-pricing model to determine the fair value of stock options granted for the years then ended:

	December 31,		December 31,
	2021		2020
Risk‑free interest rate	1.15	%	0.53	%
Expected volatility	73	%	75	%
Expected dividend yield	—		—
Expected term (in years)	6.01		5.99

Early Exercise of Unvested Stock Options

Shares purchased by employees pursuant to the early exercise of stock options are not deemed, for accounting purposes, to be outstanding shares until those shares vest according to their respective vesting schedules. Cash received from employee exercises of unvested options is included in current liabilities on the balance sheet. Amounts recorded are reclassified to common stock and additional paid-in capital as the shares vest. Vesting can occur in the year of exercise and thereafter. There were 111,756 and 27,869 unvested shares related to early exercises of stock options as of December 31, 2021 and December 31, 2020, respectively. In the years ended December 31, 2021 and 2020, the liability associated with the unvested early exercise of stock options was $0.3 million and less than $0.1 million, respectively.

Stock Options

The following table summarizes the Company’s stock option activity since December 31, 2020:

		Weighted‑		Weighted‑
		Average		Average	Aggregate
	Number of	Exercise		Contractual	Intrinsic
	Shares	Price		Term	Value (2)
				(in years)	(in thousands)
Outstanding as of December 31, 2020	1,625,256	$	1.88
Granted	2,311,485		14.67
Exercised	(431,687)		2.17
Forfeited	(43,184)		3.14
Outstanding as of December 31, 2021	3,461,870	$	10.38	9.12	$	26,730
Exercisable as of December 31, 2021 (1)	2,359,876	$	5.84	8.79	$	26,730
(1) This represents the number of vested and unvested options exercisable as of December 31, 2021.
(2) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the estimated fair value of the common stock for the options that were in the money as of December 31, 2021.

The aggregate intrinsic value of stock options exercised during the years ended December 31, 2021 and 2020 was $2.8 million and $0.1 million, while the company received $0.9 million and $0.2 million in proceeds for the exercise of these options, respectively.

The weighted-average grant-date fair value of stock options granted during the years ended December 31, 2021 and 2020 was $9.39 per share and $1.56 per share, respectively. As of December 31, 2021, there was $20.9 million of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 3.5 years.

Restricted Stock Awards

The Company issued restricted stock to its founders and certain officers of the Company. In general, the shares of restricted stock vest over a four-year period, with 25% of the shares vesting after one year, followed by monthly vesting over the remaining three years.

If the holders of the above restricted stock cease to have a business relationship with the Company, the Company may reacquire any unvested shares of restricted stock held by these individuals for the original purchase price or fair value, whichever is lower at the time of repurchase. The amounts received to date for the purchase price of restricted stock are immaterial. The unvested shares of restricted stock are not considered outstanding shares for accounting purposes until the shares vest.

A summary of unvested restricted stock during the year ended December 31, 2021 is as follows:

		Weighted‑
		Average
		Grant‑Date
	Shares	Fair Value
Unvested as of December 31, 2020	11,537	$	0.007
Vested	(11,537)		0.007
Unvested as of December 31, 2021	—	$	—

The total fair value of restricted stock vested during each of the years ended December 31, 2021 and 2020 was less than $0.1 million.