Stock-based compensation expense for the three and nine months ended September 30, 2020 and 2019 was classified in the consolidated statement of operations and comprehensive loss as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Research and development	$	374	$	103	$	486	$	278
General and administrative		2,162		146		2,480		411
Total	$	2,536	$	249	$	2,966	$	689

The fair value of each equity award was determined by the Company on the date of grant and by using the methods and assumptions discussed below. Certain of these inputs are subjective and generally require judgment to determine.

Expected Term: The expected term of the equity award represents the weighted average period the award is expected to be outstanding. The Company uses the simplified method for estimating the expected term as provided by the Securities and Exchange Commission. The simplified method calculates the expected term as the average time to vesting and the contractual life of the award.

Expected volatility – Due to the Company’s limited operating history and lack of company-specific historical or implied volatility, the expected volatility assumption was determined by examining the historical volatilities of a group of industry peers whose share prices are publicly available.

Risk-free interest rate – The risk-free rate assumption is based on the U.S. Treasury instruments, the terms of which were consistent with the expected term of the Company’s equity award.

Expected dividend – The Company has not paid and does not intend to pay dividends.

Following the closing of the Merger and upon establishing a public trading market for the Company’s securities, the fair value of the Company’s common stock used to value equity awards will be based on the closing price of the Company’s common stock as reported on the date of the grant.

Prior to the Merger, Compass LLC maintained an incentive pool of unit-based awards that were granted to board members, employees and consultants and accounted for as unit-based compensation. Upon consummation of the Merger, all outstanding vested profits interests units were converted into shares of the Company’s common stock. Unvested units were converted into restricted shares of the Company’s common stock and will continue to vest under the same terms as the original profits interests.

A summary of the Company’s restricted share activity during the nine months ended September 30, 2020 is as follows:

Weighted Average				Estimated
Grant Date				Fair Value
Fair Value	Shares			Per Share
Nonvested, January 1, 2020		2,038,955		$	2.04
Granted		879		$	2.34
Vested		(277,815	)	$	1.51
Forfeited or canceled		(666,227	)	$	1.78
Nonvested, September 30, 2020		1,095,792		$	2.34

The weighted-average grant-date fair value for Compass LLC profits interests granted was $2.34 per unit. No restricted share awards have been granted following the Merger. As of September 30, 2020, remaining unrecognized compensation cost related to unvested restricted stock awards to be recognized in future periods totaled $1.8 million, which is expected to be recognized over a weighted average period of 1.9 years.

The fair value of each profits interest was estimated on the date of grant using the weighted average assumptions in the table below:

	Nine Months Ended September 30,
	2020			2019
Expected term (in years)		6.0			6.0
Risk-free rate		0.36	%		1.75	%
Expected volatility		140.45	%		65.06	%
Expected dividend yield		0	%		0	%

In June 2020, the Company’s board of directors adopted the 2020 Stock Option and Incentive Plan (the “2020 Plan”) and reserved 2,930,836 shares of common stock for issuance under this plan and subject to automatic annual increases as defined in the plan. As of September 30, 2020, 1,305,367 shares remain available for future grant.

The 2020 Plan authorizes the board of directors or a committee of the board to grant incentive stock options, nonqualified stock options and restricted stock awards to eligible officers, employees, consultants and directors of the Company. Options generally vest over a period of four years and have a contractual life of ten years from the date of grant.

							Weighted
				Weighted			Average
	Number of			Average			Remaining
	Nonvested			Exercise Price			Contractual
	Options			Per Share		Life (in years)
Outstanding at January 1, 2020		—		$	—
Granted		1,633,000		$	5.00
Exercise		—		$	—
Forfeited/cancelled		(7,531	)	$	5.00
Outstanding at September 30, 2020		1,625,469		$	5.00			9.9
Vested at September 30, 2020		647,707		$	5.00			9.8

For the nine months ended September 30, 2020, the weighted average grant date fair value for options granted was $3.42. The aggregate intrinsic value for options vested and outstanding as of and for the nine months ended September 30, 2020 was de minimis. As of September 30, 2020, the unrecognized compensation cost related to outstanding options was $3.3 million, expected to be recognized over a weighted average period of approximately 2.1 years.

The weighted average assumptions used in the Black-Scholes option pricing model to determine the fair value of stock options granted to employees and directors during the nine months ended September 30, 2020 were as follows:

	September 30,
	2020
Expected term (in years)		5.4
Risk-free rate		0.22	%
Expected volatility		86.2	%
Expected dividend yield		0.00	%