STOCK-BASED COMPENSATION

12 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

2017 Equity Incentive Plan

The Company’s 2017 Employee, Director and Consultant Equity Incentive Plan, as amended (the “2017 Plan”), provides for the Company to grant qualified incentive options, nonqualified options, stock grants and other stock-based awards to employees and non-employees to purchase the Company’s common stock. 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 of directors.

The total number of shares of common stock that may be issued under the 2017 Plan was 1,795,102 as of December 31, 2018 and 8,336,573 as of December 31, 2019, of which 1,563,187 and 138,603 shares remained available for future grant as of December 31, 2018 and 2019, respectively.

The exercise price for incentive options is determined at the discretion of the board of directors. All incentive options granted to any person possessing less than 10% of the total combined voting power of all classes of stock may not have an exercise price of less than 100% of the fair market value of the common stock on the grant date. All incentive options granted to any person possessing more than 10% of the total combined voting power of all classes of stock may not have an exercise price of less than 110% of the fair market value of the common stock on the grant date. The option term for incentive awards may not be greater than ten years from the date of the grant. Incentive options granted to persons possessing more than 10% of the total combined voting power of all classes of stock may not have an option term of greater than five years from the date of the grant. The vesting period for equity-based awards is determined at the discretion of the board of directors, which is generally four years. For awards granted to employees and non-employees with four-year vesting terms, 25% of the option vests on the first anniversary of the grant date and the remaining stock vest equally each month for three years thereafter.

Shares that are expired, terminated, surrendered or canceled under the 2017 Plan without having been fully exercised will be available for future awards.

2020 Stock Option and Incentive Plan

The 2020 Stock Option and Incentive Plan (the “2020 Plan”) was approved by our board of directors on December 5, 2019, and the Company’s stockholders on January 14, 2020 and became effective on the date immediately prior to the date on which the registration statement for the Company’s IPO was declared effective. The 2020 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units, restricted stock awards, unrestricted stock awards, cash-based awards and dividend equivalent rights to the Company’s officers, employees, directors and consultants. The number of shares initially reserved for issuance under the 2020 Plan is 6,665,891, which shall be cumulatively increased on January 1, 2021 and each January 1 thereafter by 4% of the number of shares of the Company’s common stock outstanding on the immediately preceding December 31 or such lesser number of shares determined by the Company’s board of directors or compensation, nomination, and corporate governance committee of the board of directors.

2020 Employee Stock Purchase Plan

The 2020 Employee Stock Purchase Plan (the “2020 ESPP”) was approved by the Company’s board of directors on December 5, 2019, and our stockholders on January 14, 2020, and became effective on the date immediately prior to the date on which the registration statement for the Company’s IPO was declared effective. A total of 326,364 shares of common stock were initially reserved for issuance under this plan, which shall be cumulatively increased on January 1, 2021 and each January 1 thereafter by 1% of the number of shares of the Company’s common stock outstanding on the immediately preceding December 31 or such lesser number of shares determined by the Company’s board of directors or compensation, nomination and corporate governance committee of the board of directors.

Option valuation

The assumptions that the Company used to determine the grant-date fair value of options granted to employees and directors were as follows, presented on a weighted-average basis:


	December 31,
	2019		2018
Risk-free interest rate	1.68	%	2.87	%
Expected term (in years)	6.0		6.1
Expected volatility	62.2	%	58.4	%
Expected dividend yield	0	%	0	%

The assumptions that the Company used to determine the fair value of options granted to non-employees were as follows, presented on a weighted-average basis:


	December 31,
	2019		2018
Risk-free interest rate	1.68	%	2.87	%
Expected term (in years)	6.0		9.7
Expected volatility	62.2	%	58.4	%
Expected dividend yield	0	%	0	%

Options

Through December 31, 2019, all options granted by the Company under the 2017 Plan were for the purchase of shares of common stock. The following table summarizes option activity under the 2017 Plan since December 31, 2018 (in thousands, except share and per share amounts):


	Options	Weighted Average Exercise Price		Weighted Average Remaining Life (in Years)	Intrinsic Value (in thousands)
Outstanding December 31, 2018	47,735	$	0.66	9.5	$	121
Granted	2,330,739	$	8.18
Outstanding December 31, 2019	2,378,474	$	8.03	9.7	$	6,722
Options vested or expected to vest as of December 31, 2019	2,378,474	$	8.03	9.7	$	6,722
Options exercisable as of December 31, 2019	111,633	$	4.98	9.2	$	656

The aggregate intrinsic value of options is calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock for those options that had exercise prices lower than the fair value of the Company’s common stock.

The weighted-average grant-date fair value per share of options granted during the years ended December 31, 2018 and 2019 was $0.39 and $4.82, respectively.

The total fair value of options vested during the years ended December 31, 2018 and 2019 was $7 and $319, respectively.

Restricted stock

Under terms of the restricted stock agreements covering the common stock, shares of restricted common stock are subject to a vesting schedule. The majority of restricted stock vests over a three-year period during which time all unvested stock will immediately be forfeited to the Company if the relationship between the recipient and the Company ceases. Subject to the continued employment (or other engagement of the recipient by the Company as described in the restricted stock agreements), all shares of restricted common stock become fully vested within three years of the vesting commencement date. On December 5, 2019 the Company’s board of directors approved the acceleration of vesting for all unvested shares of restricted stock so that they were fully vested as of December 5, 2019.

The following table summarizes restricted stock activity since December 31, 2017:


	Number of shares	Weighted average grant date fair value
Unvested restricted common stock as of December 31, 2017	91,680	$	0.30
Granted	92,497	$	0.72
Vested	(51,532)	$	0.30
Unvested restricted common stock as of December 31, 2018	132,645	$	0.51
Granted	62,988	$	5.22
Vested	(195,633)	$	5.94
Unvested restricted common stock as of December 31, 2019	—	$	—

The aggregate fair value of restricted stock that vested during the years ended December 31, 2018 and 2019 was $40 and $420, respectively.

The Company recorded stock-based compensation expense for restricted stock of $53 and $1,973, during the years ended December 31, 2018 and 2019, respectively.

Stock-based compensation expense

The Company recorded stock-based compensation expense in the following expense categories of its consolidated statements of operations (in thousands):


	December 31,
	2019		2018
Research and development	$	3,171	$	62
General and administrative	472		1
	$	3,643	$	63

For options granted in June 2019, the board of directors determined that the fair value of the Company’s common stock was $3.20 per share as of the grant date. However, the fair value of the Company’s common stock at the date of the grant was adjusted to $4.13 per share in connection with a retrospective fair value assessment solely for accounting purposes. Accordingly, stock-based compensation recorded during the year ended December 31, 2019 was based on the adjusted fair value for the options granted in June 2019.

As of December 31, 2018 and 2019, total unrecognized compensation cost related to the unvested stock-based awards was $335 and $11,315, respectively, which is expected to be recognized over a weighted average period of 3.3 and 3.5 years, respectively.