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Equity Incentive Plans and Stock-Based Compensation
 9 Months Ended
Sep. 30, 2022
Share-Based Payment Arrangement [Abstract]  
Equity Incentive Plans and Stock-Based Compensation Equity Incentive Plans and Stock-Based Compensation
In August 2015, the Company's board of directors adopted the 2015 Equity Incentive Plan (as amended, the “2015 Plan”), which provides for the grant of incentive stock options, nonqualified stock options or other awards including stock appreciation rights and restricted stock awards to the Company’s employees, officers, directors, advisors, and consultants for the purchase of up to 1.5 million shares of the Company’s common stock. In July 2018 and January 2019, the 2015 Plan was amended to increase the number of shares reserved thereunder by 1.0 million and 0.4 million shares, respectively. In March 2020, the Company’s board of directors and stockholders voted to increase the number of shares reserved for issuance under the 2015 Plan by 1.4 million shares. In May 2020, the board of directors adopted the 2020 Stock Options and Incentive Plan (the “2020 Plan”). The 2015 Plan was suspended and no further grants may be issued under the 2015 Plan.
The 2020 Plan provides for the grant of incentive stock options, nonqualified stock options or other awards including stock appreciation rights, restricted stock awards and restricted stock units to the Company’s employees, officers, directors, advisors, and consultants for the purchase of up to 4.2 million shares of the Company’s common stock. In addition, to the extent that awards outstanding under the 2020 Plan or the 2015 Plan are cancelled, forfeited or held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without any issuance of stock, expire or are otherwise terminated (other than by exercise) subsequent to May 2020, the shares of common stock reserved for issuance pursuant to such awards will become available for issuance as shares of common stock under the 2020 Plan. The 2020 Plan provides that an additional number of shares will automatically be added to the shares authorized for issuance under the 2020 Plan on January 1 of each year beginning January 1, 2021. The number of shares added each January 1 will be equal to the lesser of: (i) 5% of the outstanding shares on the immediately preceding December 31 or (ii) such amount as determined by the administrator of the 2020 Plan, which is the compensation committee of the board of directors of the Company. As of September 30, 2022, 3.1 million shares remained available for issuance under the 2020 Plan.
Prior to the adoption of the 2020 Plan, options under the 2015 Plan could be granted for periods of up to 10 years and at prices no less than 100% of the estimated fair value of the shares on the date of grant as determined by our board of directors, provided, however, that the exercise price of an incentive stock option granted to a person owning (or deemed to own) stock possessing more than ten percent of the total combined voting power of all classes of stock of the Company or any affiliate of the Company (a "10% shareholder") could not be less than 110% of the estimated fair value of the shares on the date of grant and the option was not exercisable after the expiration of five years from the date of grant.
Equity awards under the 2020 Plan may be granted for periods of up to 10 years and at prices no less than the market price of the Company’s common stock on the date of grant, provided, however, that the exercise price of an incentive
stock option granted to a 10.0% shareholder shall not be less than 110.0% of the estimated fair value of the shares on the date of grant and the option is not exercisable after the expiration of five years from the date of grant.
Restricted Common Stock Awards
The Company granted restricted stock awards under the 2015 Plan. The purchase price of the restricted common stock awards was the estimated fair value as determined by the Company's board of directors at the issuance date. The shares vest from one to four years and vesting could be accelerated upon a change in control. A holder of an award may pay a total purchase price or a part of the purchase price for granted shares at any time during the vesting periods. Upon termination of employment, the Company has the right to repurchase any unvested restricted shares. The repurchase price for unvested shares of common stock will be the lower of (i) the fair market value on the date of repurchase or (ii) their original purchase price. During the vesting term, holders of restricted stock awards are deemed to be common stock shareholders and have dividends and voting rights.
The Company accounted for restricted stock awards as early exercised options and recognized a liability in other liabilities when cash was received for the purchase of shares of restricted stock. As shares of restricted stock vested, the Company reclassified the liability to common stock and additional paid in capital. As of September 30, 2022 and December 31, 2021, the Company recorded a liability included in accrued expenses and other liabilities of $0 and $2,000, respectively.
There were no grants of restricted stock awards for the nine months ended September 30, 2022 and 2021.
The following table summarizes restricted stock activity during the nine months ended September 30, 2022:
  Number
of
Shares		Weighted-
Average
Grant Date
fair value
Outstanding and unvested, as of December 31, 202121,841 $2.16 
Vested(21,841)$2.16 
Outstanding and unvested, as of September 30, 2022— $— 
As of September 30, 2022, there were no unrecognized compensation costs related to restricted stock awards. The aggregate fair value of restricted stock awards vested during the nine months ended September 30, 2022 was $47,000.
Incentive Stock Options and Nonqualified Stock Options
Stock options issued under either the 2015 Plan or the 2020 Plan generally vest over four years and expire ten years from the date of grant. Certain options provide for accelerated vesting if there is a change in control, as defined in the respective plans.
The Company used Black-Scholes option pricing model to estimate stock-based compensation expense for stock option awards with the following assumptions:
  Nine Months Ended
September 30,
 20222021
Expected volatility
73.78% - 79.53%
74.95% - 76.31%
Risk-free interest rate
1.64% - 3.59%
0.61% - 1.07%
Expected dividend——
Expected term (in years)
5.33 - 6.08
5.44 - 6.08
Underlying common stock fair value
4.92 - 24.23
18.85 - 38.23
The Company granted 229,014 stock options under the 2020 Plan during the three months ended September 30, 2022.
A summary of option activity under the 2015 Plan and the 2020 Plan is as follows:
  Number
of
Options		Weighted-
Average Exercise
Price per Share		Weighted-
Average
Remaining
Contractual
Term (in Years)		Aggregate
Intrinsic
Value
Outstanding as of December 31, 20213,620,180 $14.56 8.25$16,735 
Granted2,343,884 $10.94 
Exercised(126,299)$4.90 
Forfeited(363,419)$17.26 
Outstanding as of September 30, 20225,474,346 $13.05 8.25$50,755 
Exercisable as of September 30, 20222,167,500 $11.88 7.38$23,172 
Vested and expected to vest as of September 30, 20225,474,346 $13.05 8.25$50,755 

As of September 30, 2022, there was $28.6 million of unrecognized compensation costs that is expected to be recognized over the weighted-average period of 2.62 years related to stock options. Aggregate intrinsic value represents the difference between the fair value of the underlying common stock and the exercise price as of September 30, 2022. The weighted-average grant date fair value of options granted during the nine months ended September 30, 2022 was $7.27 per share.
Restricted Stock Units
The service-based condition for restricted stock units ("RSUs") is generally satisfied over two years. The following table sets forth the outstanding RSUs and related activity for the nine months ended September 30, 2022:

Restricted Stock UnitsWeighted Average Grant Date Fair Value
Unvested and outstanding at December 31, 2021— — 
Granted525,825 17.43 
Forfeited(2,350)17.30 
Unvested and outstanding at September 30, 2022523,475 17.43 
As of September 30, 2022, the Company had $8.3 million of unrecognized stock-based compensation expense related to outstanding RSUs expected to be recognized over a weighted-average period of 1.83 years.
Performance-Based Restricted Stock Units
Performance-based restricted stock units ("PSUs") vest upon the achievement of market and performance conditions. Market conditions include the Company's total shareholder return ("TSR") relative to the NASDAQ Biotechnology Index over the term of the award ending on June 30, 2024, and performance conditions consist of multiple clinical development milestones associated with progressing a label-enabling study related to PLN-74809 (bexotegrast). The performance vesting conditions generally must be satisfied with a two-year period and are forfeited if the vesting conditions are not met. Additionally, the number of shares of common stock issued upon vesting will range from 0% to 200% of the PSUs based on achievement of certain targets. The PSUs granted in the three months ended September 30, 2022 were allocated evenly between the market based, TSR, awards and those with performance conditions associated with clinical development milestones. The PSUs with clinical development milestones performance conditions were not considered probable of vesting as of September 30, 2022.
The fair value of PSUs associated with clinical development vesting conditions were determined to be equal to the fair market value of the Company's share price on the date of grant. The fair value of the TSR PSUs were derived from a Monte Carlo simulation model that used the following key assumptions:
Valuation date share price$17.57 
Award term (years)1.92
Volatility70.62 %
Correlation coefficient0.3508
Average peer group volatility79.69 %
Average peer group correlation coefficient0.4397
Risk free interest rate2.84 %
The following table sets forth the outstanding PSUs and related activity for the nine months ended September 30, 2022:
Performance Stock UnitsWeighted Average Grant Date Fair Value
Unvested and outstanding at December 31, 2021— — 
Granted*709,064 23.36 
Unvested and outstanding at September 30, 2022*709,064 23.36 
*PSUs granted and outstanding based on target level of achievement of 100%.

As of September 30, 2022, the Company had $15.6 million of unrecognized stock-based compensation expense related to outstanding PSUs expected to be recognized over a remaining weighted-average period of 1.83 years.
Stock-Based Compensation Expense
The following table presents the components and classification of stock-based compensation expense for the Company’s stock-based awards for the three and nine months ended September 30, 2022 and 2021 (in thousands):
Three Months Ended
September 30,		Nine Months Ended
September 30,
2022202120222021
Restricted stock awards$— $47 $36 $149 
Stock options and ESPP3,087 2,764 9,986 7,520 
Restricted stock units$800 $— $800 $— 
Performance-based restricted stock units$921 $— $921 $— 
Total stock-based compensation expense$4,808 $2,811 $11,743 $7,669 
Research and development expenses$2,999 $915 $6,675 $2,953 
General and administrative expenses$1,809 $1,896 $5,068 $4,716 
2020 Employee Stock Purchase Plan
In June 2020, the Company adopted the Company's 2020 Employee Stock Purchase Plan (the "2020 ESPP"). The Company reserved 700,000 shares of common stock for future issuance under the plan. The 2020 ESPP provides that the number of shares reserved and available for issuance will automatically increase on January 1 of each calendar year, beginning January 1, 2021, by the least of (1) 1.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, (2) 700,000 shares or (3) such lesser amount as determined by the administrator of the 2020 ESPP, which is the compensation committee of the board of directors of the Company.
Under the 2020 ESPP, eligible employees may purchase shares of our common stock through payroll deductions that cannot exceed 15% of each employee’s salary. The 2020 ESPP provides for a six-month offering period. At the end of the purchase period, eligible employees are permitted to purchase shares of common stock at the lower of 85% of the fair market value at the beginning of the offering period or 85% of the fair market value at the end of the purchase period, subject to tax limitations on the total value of the purchase. The 2020 ESPP is considered a compensatory plan, and the Company recorded $0.1 million and $0.2 million in stock-based compensation expense for the three and nine months ended September 30, 2022. There was $0.1 million and $0.5 million in stock-based compensation expense attributed to the 2020 ESPP for the three and nine months ended September 30, 2021, respectively. During the nine months ended September 30, 2022, 85,969 shares of common stock were issued under the 2020 ESPP with 888,184 shares remaining available for issuance under
the 2020 ESPP. The Company used Black-Scholes option pricing model to estimate stock-based compensation expense for the 2020 ESPP with the following assumptions:
 Nine Months Ended
September 30,
 20222021
Risk-free interest rate
0.60% - 3.34%
0.06% - 0.07%
Expected term of options (in years)
0.50
0.50
Expected stock price volatility
63.17% - 82.02%
67.16% - 89.51%
Expected dividends
—
—