On June 28, 2017, the Company’s shareholders approved the 2017 Stock Incentive Plan (the “2017 Plan”). The 2017 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock grants and stock-based awards. The 2017 Plan is administered by the board of directors, or at the discretion of the board of directors, by a committee of the board. The exercise prices, vesting and other restrictions are determined at the discretion of the board of directors, or their committee if so delegated, except that the exercise price per share of stock options may not be less than 100% of the fair market value of the share of common stock on the date of grant and the term of stock option may not be greater than ten years. The number of shares initially reserved for issuance under the 2017 Plan was 1,785,416 shares of common stock. The shares of common stock underlying any awards that are forfeited, cancelled, repurchased or are otherwise terminated by the Company under the 2017 Plan will be added back to the shares of common stock available for issuance under the 2017 Plan.

On October 18, 2017, the Company’s shareholders approved an amendment to the 2017 Plan, which became effective upon the completion of the Company’s initial public offering, to increase the total number of shares reserved for issuance under the 2017 Plan from 1,785,416 to 2,696,401. Additionally, the number of shares of common stock that may be issued under the 2017 Plan would be automatically increased on each January 1, beginning with the fiscal year ending December 31, 2019 and continuing for each fiscal year until, and including, the fiscal year ending December 31, 2027, equal to the lowest of (i) 607,324 shares of common stock, (ii) 4% of the outstanding shares of common stock on such date and (iii) an amount determined by the Company’s board of directors or compensation committee.

On August 17, 2021, the Company's shareholders approved amendments to the 2017 Plan. The amendments provided for the following: (i) increased the number of shares of the Company’s common stock authorized for issuance under the 2017 Plan by 3,170,254 shares, (ii) removed the “evergreen” provision historically included in the 2017 Plan, and (iii) made certain other amendments.

As of December 31, 2021, there were 2,685,972 shares remaining available to be issued under the 2017 Plan, as amended.

On March 11, 2019, the Company adopted the 2019 Inducement Equity Incentive Plan (the “2019 Inducement Plan”) to reserve 331,500 shares of its common stock to be used exclusively for grants of awards to individuals that were not previously employees or directors of the Company as a material inducement to such individuals’ entry into employment with Spero within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules. The terms and conditions of the 2019 Inducement Plan are substantially similar to those of the 2017 Plan.

In June 2020, the board of directors approved an amendment to the 2019 Inducement Plan to increase the number of shares of common stock authorized for issuance under the 2019 Inducement Plan by 700,000 shares.

As of December 31, 2021, there were 9,252 shares remaining available to be issued under the 2019 Inducement Plan, as amended.

The following table summarizes stock option activity for all of our plans during 2021:


	2017 Plan			2019 Inducement Plan			Total Number of Stock Options
Outstanding as of December 31, 2020		3,137,233			545,000			3,682,233
Granted		1,161,309			547,400			1,708,709
Exercised		(140,537	)		(20,137	)		(160,674	)
Forfeited or cancelled		(264,400	)		(75,152	)		(339,552	)
Outstanding as of December 31, 2021		3,893,605			997,111			4,890,716

As of December 31, 2021, a total of 8,720,127 shares have been authorized and reserved for issuance under all equity plans and 2,695,224 shares were available for future issuance under such plans.

During 2019, the Company granted 100,000 options and 50,000 restricted stock units (“RSUs”) containing the same performance-based vesting criteria. The 100,000 options are included in the table above but the 50,000 RSU’s are excluded from the table. These options and RSUs (the “Performance Awards”) were subject to performance-based vesting eligibility and a subsequent partial time-based vesting schedule. Specifically, the Performance Awards were eligible for vesting based on the achievement of performance criteria, each representing a 25% vesting opportunity if achieved within a specified time during the performance period (the “Performance Period”), and relating to (i) the release of tebipenem HBr top-line data; (ii) FDA acceptance of a tebipenem HBr New Drug Application; (iii) non-dilutive financing; and (iv) equity financing. Following the Performance Period, Performance Awards determined to be eligible for vesting as a result of achievement of the performance criteria will vest as follows: (a) 50% of the eligible award will vest immediately, and (b) the remaining eligible award will vest (i) in the case of options, in equal monthly installments ending two years after the Performance Period expiration, and (ii) in the case of RSUs, on such two year anniversary.

In January 2021, the Company cancelled the performance-based awards due to the non-achievement of the performance-based vesting criteria, and the awards were added back to the shares of common stock available for issuance under the 2017 Plan. None of the outstanding options had vested and no compensation expense associated with performance-based awards was recognized as of December 31, 2021.

The following table summarizes the activity of options and RSUs under the 2017 Plan containing performance-based vesting criteria during the year ended December 31, 2021:


	Number of Performance Based Option Shares			Number of Performance Based RSU Shares
Outstanding as of December 31, 2020		63,107			30,561
Granted		—			—
Exercised		—			—
Forfeited or cancelled		(63,107	)		(30,561	)
Outstanding as of December 31, 2021		—			—

The fair value of stock options is estimated using the Black-Scholes option-pricing model. The Company does not have sufficient company-specific historical and implied volatility information and it therefore estimates its expected share volatility based on the historical volatility of a set of publicly traded peer companies. The Company expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded share price. The Company has estimated the expected term of the Company’s stock option awards utilizing the “simplified” method for awards that qualify as “plain-vanilla.” The risk-free interest rate is determined by reference to 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. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

The assumptions that the Company used in the Black-Scholes option-pricing model to determine the fair value of stock option awards granted to employees and directors were as follows, presented on a weighted average basis:


	Year Ended December 31,
	2021			2020
Risk-free interest rate		0.8	%		1.1	%
Expected term (in years)		6.2			6.2
Expected volatility		92.6	%		82.7	%
Expected dividend yield		0.0	%		0.0	%

The following table summarizes details regarding stock options granted under our equity incentive plans for the year ended December 31, 2021:


	Number of Shares			Weighted Average Exercise Price		Weighted Average Contractual Term		Aggregate Intrinsic Value
						(in years)		(in thousands)
Outstanding as of December 31, 2020		3,682,233		$	9.10		7.84	$	37,881
Granted		1,708,709			17.62		—		—
Exercised		(160,674	)		9.02		—		—
Forfeited or cancelled		(339,552	)		13.81		—		—
Outstanding as of December 31, 2021		4,890,716		$	11.75		7.62	$	24,263
Outstanding as of December 31, 2021 - vested and expected to vest		4,890,716		$	11.75		7.62	$	24,263
Exercisable at December 31, 2021		2,524,419		$	8.54		6.44	$	18,904

The weighted average grant-date fair value of stock options granted during the year ended December 31, 2021 was $13.37 per share. The weighted average grant-date fair value of awards granted during the year ended December 31, 2020 was $7.79 per share. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2021 and 2020 was approximately $1.2 million and $2.3 million, respectively. The Company satisfies stock option exercises with newly issued shares of its common stock.

As of December 31, 2021, total unrecognized compensation cost related to unvested stock option grants was approximately $25.3 million. This amount is expected to be recognized over a weighted average period of approximately 2.8 years.

The Company granted 516,790 RSUs to employees during the year ended December 31, 2021.

The following table summarizes RSU activity under all equity plans (excluding performance-based RSUs) during the year months ended December 31, 2021:

As of December 31, 2021, there was approximately $8.1 million of total unrecognized compensation expense related to RSUs, which is expected to be recognized over a weighted-average period of approximately 3.7 years.

The fair value of the RSUs is determined on the date of grant based on the market price of the Company’s ordinary shares on that date. Each RSU represents the right to receive one share of the Company’s common stock, $0.001 par value per share, upon vesting. The RSUs vest in four equal annual installments, subject to the individual’s continued service to the Company through the applicable vesting date, and are subject to the terms and conditions of the Company’s form of RSU agreement under the 2017 Plan.

The Company recorded share-based compensation expense, for both RSUs and stock options in the following expense categories of its consolidated statements of operations and comprehensive loss (in thousands):


	Year Ended December 31,
	2021		2020

Research and development expenses	$	4,163	$	2,229
General and administrative expenses		5,267		2,659
Total	$	9,430	$	4,888