On April 20, 2018, the Company adopted the 2018 Stock Plan (the 2018 Plan). The 2018 Plan, as amended, provided for the issuance of up to 2,902,738 shares of common stock to employees, officers, directors, consultants, and advisors in the form of nonqualified and incentive stock options, unvested stock awards, and other stock-based awards.

The 2021 Equity Incentive Plan (the 2021 Plan) was approved by the Company’s Board on April 22, 2021 and became effective immediately, although no awards were permitted to be granted under the 2021 Plan until July 15, 2021. The 2021 Plan replaced the 2018 Plan. However, awards outstanding under the 2018 Plan continue to be governed by their existing terms. There were 3,278,048 shares of common stock initially reserved for issuance under the 2021 Plan, plus up to 268,397 shares reserved for issuance under, or issued pursuant to or subject to awards granted under, the 2018 Plan. As of December 31, 2021, there were 2,848,904 shares of common stock available for issuance under the 2021 Plan. The number of shares reserved for issuance under the 2021 Plan will be increased automatically on the first business day of each fiscal year, commencing in 2022 and ending in 2031. The aggregate number of common shares that may be issued under the 2021 Plan shall automatically increase by a number equal to the lesser of (a) 4% of the total number

of shares of common stock actually issued and outstanding on the last day of the preceding fiscal year or (b) a number of shares common stock determined by the Company’s Board.

The 2021 Employee Stock Purchase Plan (the "2021 ESPP") was approved by the Company’s Board on April 22, 2021 and became effective immediately, although no awards were permitted to be granted under the 2021 Plan until July 15, 2021. A total of 254,390 shares of common stock were initially reserved for issuance under the 2021 ESPP. As of December 31, 2021, there were 254,390 shares of common stock available for issuance under the 2021 ESPP. The number of shares reserved for issuance will automatically be increased on the first business day of each fiscal year, commencing on January 1, 2022 and ending on January 1, 2041. The aggregate number of shares of common stock that may be issued under the 2021 ESPP shall automatically increase by a number equal to the least of (i) one percent (1%) of the total number of shares of common stock actually issued and outstanding on the last day of the preceding fiscal year, or (ii) a number of shares of common stock determined by the Company’s Board. Shares issued under the 2021 ESPP will be compensatory.

In general, stock options typically vest over four years and have a maximum term of 10 years. Also, the Company typically grants stock options to employees and non-employees at exercise prices deemed by the Board to be equal to the fair value of the common stock at the time of grant. The fair value of the common stock has been determined by the Board at each measurement date based on a variety of different factors, including the results obtained from third party appraisals, the Company’s financial position and historical financial performance, the status of development of the Company’s services, the current climate in the marketplace, the illiquid nature of the common stock, the effect of the rights and preferences of the preferred stockholders, and the prospects of a liquidity event, among others.

Stock-based compensation expense for the year ended December 31, 2021 and 2020 was classified in the consolidated statement of operations as follows (in thousands):


	Year Ended December 31,
	2021		2020
Research and development	$	878	$	248
General and administrative		1,638		267
Total stock-based compensation expense	$	2,516	$	515

The Company utilized the Black-Scholes option-pricing model to estimate the fair value of stock options awarded to employees. The Black-Scholes option-pricing model requires several key assumptions. The key assumptions used to apply this pricing model were as follows:


	Year Ended December 31,
	2021			2020
Risk free interest rate		0.79	%		0.85	%
Expected term (in years)		6.05			6.05
Expected dividend yield		0	%		0	%
Expected volatility of underlying common stock		75	%		73	%

The risk-free interest rate was based on rates associated with U.S. Treasury issues approximating the expected life of the stock options. The expected term of stock options granted to employees was determined using the simplified method, which represents the midpoint of the contractual term of the stock option and the weighted-average vesting period of the option. The Company uses the simplified method because it does not have sufficient historical stock option exercise data to provide a reasonable basis upon which to estimate the expected term. The expected dividend-yield assumption was based on the Company’s expectation of no future dividend payments. The expected volatility of the underlying stock was based on the average historical volatility of comparable publicly traded companies based on weekly price returns as reported by a pricing service, as the Company does not have a trading history for its common stock.

The following table summarizes the stock option activity under the 2018 Plan and 2021 Plan:


	Stock Options			Weighted Average Exercise Price		Weighted Average Remaining Life (in Years)		Intrinsic Value (in thousands)
Outstanding January 1, 2021		1,445,426		$	2.62		8.74	$	3,799
Granted		1,981,311			8.70
Exercised		(167,390	)		2.13
Canceled		(239,871	)		3.73
Outstanding December 31, 2021		3,019,476		$	6.55		8.61	$	2,120
Options vested or expected to vest as of December 31, 2021		3,019,476		$	6.55		8.61	$	2,120
Stock options exercisable as of December 31, 2021		610,182		$	2.63		7.08	$	2,120

Other information related to the option activity for the years ended December 31, 2021 and 2020:


	Year Ended December 31,
	2021		2020
Weighted-average fair value of options granted	$	5.74	$	2.38
Intrinsic value of options exercised (in thousands)	$	1,174	$	148

As of December 31, 2021, the unrecognized compensation cost related to outstanding options was $10.0 million, which is expected to be recognized over a weighted-average period of 2.94 years.

The Company has granted restricted common stock with service based vesting conditions. Unvested shares of restricted common stock may not be sold or transferred by the holder, except for transfers for estate planning purposes in which the transferee agrees to remain bound by all restrictions set forth in the original common stock purchase agreement. They are legally issued and outstanding but only accounted for as outstanding when vested. These restrictions lapse over the four year vesting term of each award. The purchase price of each share of restricted common stock was $0.001 per share. A summary of the activity for the year ended December 31, 2021 is as follows:


	Number of Shares			Weighted Average Grant Date Fair Value
Unvested restricted stock as of January 1, 2021		438,280			-
Vested		(321,410	)		-
Unvested restricted stock as of December 31, 2021		116,870			-

The aggregate fair value of restricted stock awards that vested during the year ended December 31, 2021 was nominal.