9. Stock‑Based Compensation

2016 Stock Plan

The Company’s 2016 Stock 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 or, at the discretion of the board of directors, by a committee of the board of directors. The board of directors may also delegate to one or more officers of the Company the power to grant awards to employees and certain officers of the Company. The exercise prices, vesting, and other restrictions are determined at the discretion of the board of directors, or its committee or any such officer if so delegated.

Stock options granted under the 2016 Plan with service‑based vesting conditions generally vest over four years and expire after ten years.

As of December 31, 2019, the total number of shares of common stock that were issuable under the 2016 Plan was 1,508,669 shares, of which 363,350 shares remained available for future issuance as of December 31, 2019. During the nine months ended September 30, 2020 the Company increased the number of shares of common stock authorized for issuance under the 2016 Plan from 1,508,669 shares to 3,722,685 shares. As of September 30, 2020, no shares remained available for future issuance under the 2016 Plan.

2020 Stock Plan

On May 28, 2020, the Company's board of directors adopted, and on June 17, 2020 its stockholders approved, the 2020 Stock Plan (the "2020 Plan"). The 2020 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other stock-based awards. The number of shares initially reserved for issuance under the 2020 Plan is the sum of 4,294,594, plus the number of shares (up to 3,622,691 shares) equal to the sum of (i) the number of shares remaining available for issuance under the 2016 Plan upon the effectiveness of the 2020 Plan and (ii) the number of shares of common stock subject to outstanding awards granted under the 2016 Plan that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right. The number of shares of common stock that may be issued under the 2020 Plan will automatically increase on the first day of each fiscal year, beginning with the fiscal year ending December 31, 2021 and continuing for each fiscal year until, and including, the fiscal year ending December 31, 2030, equal to the lowest of (i) 2,728,610 shares, (ii) 4% of the number of shares of common stock outstanding on such date, and (iii) an amount determined by the Company's board of directors. The shares of common stock underlying any awards that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, repurchased or are otherwise terminated by the Company under the 2020 Plan will be added back to the shares of common stock available for issuance under the 2020 Plan.

As of September 30, 2020, the total number of shares of common stock available for issuance under the 2020 Plan is 5,035,409 shares.

2020 Employee Stock Purchase Plan

On May 28, 2020, the Company's board of directors adopted, and on June 17, 2020 its stockholders approved, the 2020 Employee Stock Purchase Plan (the "2020 ESPP"). A total of 360,651 shares of common stock were initially reserved for issuance under this plan. The number of shares of common stock that may be issued under the 2020 ESPP will automatically increase on the first day of each fiscal year, beginning with the fiscal year commencing on January 1, 2021 and continuing for each fiscal year until, and including, the fiscal year commencing on January 1, 2031, equal to the lowest of (i) 640,630 shares, (ii) 1% of the number of shares of common stock outstanding on such date, and (iii) an amount determined by the Company's board of directors.

Stock Option Valuation

The fair value of stock option grants is estimated using the Black‑Scholes option‑pricing model. The Company historically has been a private company and lacks company‑specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. For options with service‑based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain‑vanilla” options. 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.

Stock Options

The following table summarizes the Company’s stock option activity since December 31, 2019:


		Weighted‑		Weighted‑
		Average		Average	Aggregate
	Number of	Exercise		Contractual	Intrinsic
	Shares	Price		Term	Value
				(in years)	(in thousands)
Outstanding as of December 31, 2019	961,751	$	1.69	9.5	$	524
Granted	1,989,654		8.67
Exercised	(32,511)		1.27
Forfeited	(57,766)		3.32
Outstanding as of September 30, 2020	2,861,128	$	6.54	9.2	$	46,726
Vested and expected to vest as of September 30, 2020	2,861,128	$	6.54	9.2	$	46,726
Options exercisable as of September 30, 2020	349,736	$	3.58	8.6	$	6,745

The weighted‑average grant‑date fair value of stock options granted during the three months ended September 30, 2020 and 2019 was $17.81 per share and $1.22 per share respectively, and during the nine months ended September 30, 2020 and 2019 was $7.08 per share and $1.10 per share, respectively.

Early Exercise of Stock Options into Restricted Stock

Certain option grants permit option holders to elect to exercise unvested options in exchange for unvested common stock. The options that are exercised prior to vesting will continue to vest according to the respective option agreement, and such unvested shares are subject to repurchase by the Company at the optionee’s original exercise price in the event the optionee’s service with the Company voluntarily or involuntarily terminates.

A summary of the Company’s unvested common stock from option early exercises that is subject to repurchase by the Company is as follows:


		Shares
Unvested restricted common stock as of December 31, 2019		102,896
Vested		(48,615)
Unvested restricted common stock as of September 30, 2020		54,281

Proceeds from the early exercise of options are recorded as a liability within accrued expenses and other current liabilities on the condensed consolidated balance sheet. The liability for unvested common stock subject to repurchase is then reclassified to additional paid‑in capital as the Company’s repurchase right lapses. The shares purchased by the employees and directors pursuant to the early exercise of stock options are not deemed, for accounting purposes, to be outstanding until those shares have vested. As of September 30, 2020, the liability related to the payments for unvested shares from early‑exercised options was less than $0.1 million. As of December 31, 2019 the liability related to the payments for unvested shares from early‑exercised options was $0.1 million.

Restricted Common Stock Awards

The Company has both (i) granted restricted stock awards, with the recipient not paying for the shares of common stock, and (ii) issued and sold restricted stock, with the recipient purchasing the common stock at its fair value per share. In both circumstances, the restricted shares of common stock have service‑based vesting conditions and unvested shares are either subject to forfeiture by the employee or subject to repurchase by the Company, at the lesser of holder’s original purchase price or fair value, in the event the holder’s service with the Company voluntarily or involuntarily terminates. Service‑based restricted stock awards generally vest over four years.

Proceeds from the issuance and sale of restricted common stock are recorded as a liability within accrued expenses and other current liabilities on the condensed consolidated balance sheet. The liability for unvested common stock subject to repurchase is then reclassified to additional paid‑in capital as the Company’s repurchase right lapses. Shares of restricted common stock granted or sold to employees and directors are not deemed, for accounting purposes, to be outstanding until those shares have vested.

The Company did not grant or sell restricted common stock awards during 2019 or the nine months ended September 30, 2020. As of September 30, 2020 and December 31, 2019, the liability related to the payments received for shares of unvested restricted stock was less than $0.1 million.

The following table summarizes the Company’s restricted common stock award activity for the nine months ended September 30, 2020:


		Weighted‑
		Average
		Grant‑Date
	Shares	Fair Value
Unvested restricted common stock as of December 31, 2019	209,742	$	0.0443
Vested	(87,986)		0.0400
Unvested restricted common stock as of September 30, 2020	121,756	$	0.0500

The total fair value of restricted common stock vested during the three and nine months ended September 30, 2020 was less than $0.1 million.

Stock‑Based Compensation

The Company records compensation cost for all share‑based payment arrangements, including employee, director, and consultant stock options and restricted stock.

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


	Three Months Ended					Nine Months Ended
	September 30,					September 30,
	2020		2019		2020		2019

Research and development expenses	$	399	$	12	$	617	$	30
General and administrative expenses		1,677		9		2,060		27
	$	2,076	$	21	$	2,677	$	57

In connection with the termination of an employee in July 2020, the Company accelerated the vesting of 1,541 shares of restricted stock and 60,948 unvested options, of which 22,684 shares are held by such employee. The modification of these awards resulted in the recognition of $1.1 million of stock-based compensation expense during the three and nine months ended September 30, 2020, which was classified as general and administrative expenses.

As of September 30, 2020, there was $13.6 million of unrecognized compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 2.25 years.