Equity Incentive Plans

3 Months Ended

Mar. 31, 2023

Share-Based Payment Arrangement [Abstract]

EQUITY INCENTIVE PLANS

As of March 31, 2023, there are 14,570,948 shares of Class A common stock reserved for issuance under the 2020 Equity Incentive Plan, 4,581,459 of which shares are available for issuance in connection with grants of future awards.

Stock Options

Stock option activity for the three months ended March 31, 2023 is as follows:


	Options Outstanding	Weighted Average Exercise Price
Balance at December 31, 2022	10,214,430	$	13.90
Options granted	2,247,900	4.60
Options exercised	(13,595)	2.20
Options forfeited	(101,825)	12.77
Balance at March 31, 2023	12,346,910	$	12.23
Vested and exercisable, March 31, 2023	5,241,662	$	8.76

Market Condition Options

During the three months ended March 31, 2023, the Company granted options to purchase an aggregate of 1,794,000 shares of the Company’s Class A common stock to certain Company executives, with vesting subject to market conditions (Market Condition Options). The Market Condition Options become eligible to vest if the average of the closing sales prices of a share of Class A common stock over a trailing twenty trading day period within seven years from the date of grant reaches a stock price of $6.885 per share (the Market Price Milestone). If the Market Price Milestone is achieved, 25% of each Market Condition Option will vest upon certification of such achievement, subject to the recipient’s continued service through the Market Price Milestone achievement date, and an additional 25% of each Market Condition Option will then vest on each of the one-, two- or three-year anniversaries of the Market Price Milestone achievement date, respectively, subject to the recipient’s continued service through the applicable anniversary date. In the event of the Company’s change in control during the seven-year performance period, the performance period will be shortened, achievement of the Market Price Milestone will be assessed based on the per share value of consideration that stockholders receive in the transaction (the CIC Price), and if the Market Price Milestone is achieved on that basis, each Market Condition Option will vest in full as of immediately prior to the change in control, subject to the recipient’s continued service as of immediately prior to the change in control.

The Market Condition Option has a grant date fair value of approximately $5.2 million determined using a lattice-binomial option-pricing model based on a Monte Carlo simulation. The following assumptions were used to determine the grant date fair value of $2.80 - $3.02: (i) risk-free interest rate: 3.94%; (ii) expected volatility: 83.1%; and (iii) expected dividend yield: 0.0%. Compensation expense is recognized using an accelerated attribution method based on the derived service periods for each of the tranches. Failure to meet the market condition for an award does not result in reversal of previously recognized expense, so long as the service is provided for the duration of the respective derived service period.

The Company recognized compensation expense of $0.5 million related to the Market Condition Options for the three months ended March 31, 2023. As of March 31, 2023, there was $4.8 million in unrecognized compensation related to unvested Market Condition Options, which the Company expects to recognize over a remaining weighted-average period of 2.08 years.

Restricted Stock Awards

Certain stock options granted provide stock option holders the right to exercise unvested stock options in exchange for restricted shares of Class A common stock. The Company has also issued restricted shares of Class A common stock to employees and directors. There were 65,251 shares and 60,787 shares of restricted stock that were unvested and subject to repurchase as of March 31, 2023 and December 31, 2022, respectively.

Restricted Stock Units

RSU activity for the three months ended March 31, 2023 is as follows:


	Restricted Stock Units	Weighted-Average Grant Date Fair Value
Balance at December 31, 2022	1,650,976	$	18.23
Granted	2,110,570	4.59
Vested	(314,678)	22.08
Forfeited	(17,718)	10.97
Balance at March 31, 2023	3,429,150	$	9.52

Employee Stock Purchase Plan

A total of 1,829,437 shares of Class A common stock are reserved for issuance under the 2020 Employee Stock Purchase Plan (ESPP) as of March 31, 2023. During the three months ended March 31, 2023 and 2022, no shares of Class A common stock were issued under the ESPP.

Stock-Based Compensation

The following table summarizes the components of stock-based compensation recognized in the Company’s condensed consolidated statements of operations and comprehensive loss (in thousands):


	Three Months Ended March 31,
	2023		2022
Cost of revenue	$	328	$	208
Research and development	2,549		2,001
Selling, general and administrative	5,847		5,853
Total stock-based compensation	$	8,724	$	8,062

In February 2022, in connection with a leave of absence taken by one of our executives, a total of 1,330,892 share-based awards were modified to extend the overall term and change the timing of the vesting of the awards. The total incremental stock-based compensation associated with the modification is $0.9 million, which will be recognized over the next eight years. Effective on September 30, 2022, the executive resigned from his position as President of the Company and the Company’s Board of Directors.

On June 21, 2022, the Board of Directors approved an option repricing to reduce the exercise price of certain vested, outstanding, and unexercised stock options with an exercise price greater than $19.00 per share that were held by employees who were not members of the Board or Director or officers for purposes of Section 16 of the Securities

Exchange Act of 1934, as amended (“Non-Section 16 employees”) to $19.00 per share, which was the Company’s initial public offering price. The Board of Directors also approved the repricing of certain unvested, outstanding, and unexercised stock options with an exercise price greater than $19.00 per share that were held by Non-Section 16 employees to $7.40 per share, which was the closing price of the Company’s Class A common stock on the Nasdaq Global Select Market on the date of the approval of the repricing. Except for the exercise price, the amended stock options have the same terms and conditions (including vesting schedule, number of shares, and expiration date) and will continue to be governed by the terms of the 2020 Equity Incentive Plan. As a result of the option repricing, the Company recorded $2.0 million of stock-based compensation expense for the three months ended March 31, 2023. The total unrecognized stock-based compensation associated with the option repricing is $1.6 million, which will be recognized over the next three years.