In March 2019, subsequent to the Merger, the Company sold 1,491,072 shares of the Company’s common stock to Frazier.

In March 2019, the founders granted the Company a repurchase right for the 3,373,408 shares of common stock originally purchased in 2018. The Company has the right, but not the obligation, to repurchase unvested shares in the event the founder’s relationship with the Company is terminated, subject to certain limitations, at the original purchase price of the stock. The repurchase right lapsed for 843,352 shares in March 2019 and the repurchase right for the remaining 2,530,056 shares lapses in equal monthly amounts over the following 48-month period ending in March 2023. The fair value of the founder shares at the date the repurchase right was granted is being recognized as stock-based compensation expense on a straight-line basis over the vesting period. As of September 30, 2020, 1,581,285 shares of common stock were subject to repurchase by the Company and the associated repurchase liability was not significant. The amount of recognized and unrecognized stock-based compensation related to the founder stock was immaterial for all periods presented.

In May 2019, the Company issued Takeda 1,084,000 shares of common stock in connection with the Takeda License.

For the period from January 1, 2019 to May 6, 2019, the Company issued 2,524,852 shares of common stock to various employees and consultants of the Company for aggregate proceeds of approximately $1,000. Upon issuance, these shares were subject to a repurchase option by the Company at the original purchase price of the shares. The repurchase rights generally lapse as to 25% of the shares on the first anniversary of the vesting commencement date, and the repurchase right lapses as to 1/48th of the shares each one-month period thereafter, subject to the purchaser remaining continuously an employee, consultant or director of the Company. In November 2019, the Company repurchased 17,560 shares at the original purchase price for an aggregate purchase price of $5.20. As of September 30, 2020, 1,467,128 shares remain available for repurchase by the Company and the associated repurchase liability was not significant.

On October 29, 2019, upon completion of the IPO, the Company sold 10,997,630 shares of common stock, which included the exercise in full by the underwriters of their option to purchase 1,434,473 additional shares at a public offering price of $19.00 per share. The net proceeds were approximately $191.5 million, after deducting underwriting discounts, commissions and offering costs.

For accounting purposes, unvested shares of common stock are considered issued, but not outstanding until they vest.

	September 30, 2020
Common stock warrants		7,604,446
Stock options and performance-based awards outstanding		2,740,255
Shares available for issuance under the 2019 Incentive Plan		2,518,853
Shares available for issuance under the ESPP Plan		559,645
Balance at September 30, 2020		13,423,199

The Company is authorized to issue up to 40 million shares of preferred stock. As of September 30, 2020, and December 31, 2019, there were no shares of preferred stock issued or outstanding.

The Company’s 2019 Equity Incentive Plan (the “Existing Incentive Plan”) provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, and other stock awards to eligible recipients, including employees, directors or consultants of the Company. The Company had 2,231,739 shares of common stock authorized for issuance under the Existing Incentive Plan, of which, 1,400,528 stock options and 16,260 restricted stock awards were granted in 2019. As a result of the adoption of the 2019 Incentive Award Plan (the “2019 Plan”) in October 2019, no further shares are available for issuance under the Existing Incentive Plan.

In October 2019, the board of directors adopted, and the Company’s stockholders approved the 2019 Plan, which became effective in connection with the IPO. Under the 2019 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units and other awards to individuals who are then employees, officers, non-employee directors or consultants of the Company or its subsidiaries. The number of shares initially available for issuance will be increased by (i) the number of shares subject to stock options or similar awards granted under the Existing Incentive Plan that expire or otherwise terminate without having been exercised in full after the effective date of the 2019 Plan and unvested shares issued pursuant to awards granted under the Existing Incentive Plan that are forfeited to or repurchased by the Company after the effective date of the 2019 Plan, with the maximum number of shares to be added to the 2019 Plan pursuant to clause (i) above equal to 1,416,788 shares, and (ii) an annual increase on January 1 of each calendar year beginning in 2020 and ending in 2029, equal to the lesser of (a) 5% of the shares of common stock outstanding on the final day of the immediately preceding calendar year and (b) such smaller number of shares as determined by the board of directors. The Company initially had 2,700,000 shares of common stock available for issuance under the 2019 Plan, of which, 1,134,977 stock options were granted and 204,750 performance-based units were granted during the nine months ended September 30, 2020. As of September 30, 2020, 2,518,853 shares remain available for issuance, which includes the annual increase of 1,158,580 shares that were authorized on January 1, 2020.

In July 2020, the Company granted 204,750 performance-based stock units (“PSU”) whereby vesting depends upon the approval by the U.S. Food and Drug Administration ("FDA") of vonoprazan for H. pylori and then, or concurrent with, erosive esophagitis. As of September 30, 2020, the PSU milestones had not been achieved. As of September 30, 2020, no related compensation cost had been recognized. The following table summarizes PSU activity under the 2019 Incentive Award Plan during the nine months ended September 30, 2020.

	Number of Stock Units		Weighted- Average Grant Date Fair Value Per Share
Unvested balance at December 31, 2019		—	$	—
Granted		204,750		32.06
Vested		—		—
Forfeited		—		—
Unvested balance at September 30, 2020		204,750	$	32.06

As of September 30, 2020, there was approximately $6.6 million of related unrecognized compensation cost, which will begin to be recognized when vesting is probable.

In October 2019, the board of directors adopted, and the Company’s stockholders approved, the Employee Stock Purchase Plan (the “ESPP”), which became effective in connection with the IPO. The ESPP permits participants to purchase common stock through payroll deductions of up to 20% of their eligible compensation, which includes a participant’s gross base compensation for services to the Company, including overtime payments and excluding sales commissions, incentive compensation, bonuses, expense reimbursements, fringe benefits and other special payments. A total of 270,000 shares of common stock was initially reserved for issuance under the ESPP. In addition, the number of shares available for issuance under the ESPP will be annually increased on January 1 of each calendar year beginning in 2020 and ending in 2029, by an amount equal to the lesser of: (i) 1% of the shares outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares as is determined by the board of directors. As of September 30, 2020, 559,645 shares of common stock remain available for issuance, which includes the annual increase of 289,645 shares that were authorized on January 1, 2020.

The ESPP is considered a compensatory plan, and the Company recorded related stock-based compensation of $0.1 million for the three and nine months ended September 30, 2020. The weighted-average assumptions used to estimate the fair value of ESPP awards using the Black-Scholes option valuation model were as follows:

	Nine Months Ended September 30,
	2020			2019
Assumptions:
Expected term (in years)		1.00			—
Expected volatility		76.25	%		—
Risk free interest rate		0.15	%		—
Dividend yield		—			—

The estimated weighted-average fair value of ESPP awards during 2020 was $13.66. As of September 30, 2020, the total unrecognized compensation expense related to the ESPP was $0.4 million, which is expected to be recognized over a weighted-average period of approximately 1 year.

As of September 30, 2020, no shares of common stock had been issued under the ESPP.

The fair value of each employee and non-employee stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model. The Company, prior to the IPO on October 29, 2019, was a private company and lacked company-specific historical and implied volatility information. Therefore, it estimated its expected volatility based on the historical volatility of a publicly traded set of peer companies. Due to the lack of historical exercise history, the expected term of the Company’s stock options for employees was determined utilizing the “simplified” method for awards. The expected term of stock options granted to non-employees was equal to the contractual term of the option award. The risk-free interest rate was 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 was zero 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.

A summary of the Company’s stock option activity and related information is as follows:

	Options Outstanding		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value (in thousands)
Balance at December 31, 2019		1,400,528	$	9.10		9.69	$	30,874
Options granted		1,134,977		32.14
Options exercised and shares vested		—		—
Options cancelled		—		—
Balance at September 30, 2020		2,535,505	$	19.41		9.27	$	43,767
Options exercisable as of September 30, 2020		141,367	$	12.58		8.98	$	3,405

The estimated weighted-average fair value of employee and nonemployee director stock options granted during 2020 was $18.68. As of September 30, 2020, the Company had $24.7 million of unrecognized stock-based compensation expense, which is expected to be recognized over a weighted-average period of 3.8 years.

The weighted-average assumptions used to estimate the fair value of stock options using the Black-Scholes option valuation model were as follows:

	Nine Months Ended September 30,
	2020			2019
Assumptions:
Expected term (in years)		5.23			6.07
Expected volatility		56.24	%		60.17	%
Risk free interest rate		0.36	%		1.58	%
Dividend yield		—			—

Stock-based compensation expense recognized for all equity awards, including founder stock, has been reported in the statements of operations as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Research and development expense	$	604	$	8	$	842	$	8
General and administrative expense		1,466		29		2,619		58
Total	$	2,070	$	37	$	3,461	$	66