The Company’s 2017 Equity Incentive Plan (the 2017 Plan) provided for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, and restricted stock awards to the Company's employees, directors, and consultants. The 2017 Plan terminated one business day prior to effectiveness of the 2022 Equity Incentive Plan (the 2022 Plan) with respect to the grant of future awards. The 2022 Plan became effective on February 3, 2022 and provides for the grant of incentive stock options to the Company's employees and for the grant of nonstatutory stock options, stock appreciation rights, restricted stock, restricted stock units (RSUs), and performance awards to the Company's employees, directors, and consultants.

The aggregate number of shares of common stock that may be issued pursuant to equity awards under the 2022 Plan is 4,296,875 shares, plus shares subject to awards granted under the 2017 Plan that expire or otherwise terminate without having been exercised in full or are forfeited to or repurchased by the Company (provided that the maximum number of shares that may be added to the 2022 Plan pursuant to awards under the 2017 Plan is 6,269,300 shares). The number of shares of common stock reserved for issuance under the 2022 Plan shall be cumulatively increased on the first day of each fiscal year, beginning with the Company’s 2023 fiscal year and ending on the ten year anniversary of the date the Company’s board of directors approves the 2022 Plan equal to the least of 4,296,875 shares, 5% of the total number of shares of common stock outstanding as of the last day of the immediately preceding fiscal year, or a lesser number of shares determined by the administrator of the 2022 Plan.

Share-based compensation expense by type of award was as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Stock options	$	4,398	$	1,235	$	7,428	$	1,992
Restricted stock units		948		—		1,645		—
Restricted stock units - executive officer		598		—		1,352		—
Total share-based compensation expense	$	5,944	$	1,235	$	10,425	$	1,992

The Company recognized $5.9 million in share-based compensation expense during the three months ended June 30, 2022, of which $2.4 million was included in research and development and $3.5 million was included in general and administrative in the accompanying condensed consolidated statements of operations. The Company recognized $1.2 million in share-based compensation expense during the three months ended June 30, 2021, of which $0.3 million was included in research and development and $0.9 million was included in general and administrative in the accompanying condensed consolidated statements of operations.

The Company recognized $10.4 million in share-based compensation expense during the six months ended June 30, 2022, of which $3.7 million was included in research and development and $6.7 million was included in general and administrative in the accompanying condensed consolidated statements of operations. The Company recognized $2.0 million in share-based compensation expense during the six months ended June 30, 2021, of which $0.5 million was included in research and development and $1.5 million was included in general and administrative in the accompanying condensed consolidated statements of operations.

Stock options granted under the 2017 Plan and the 2022 Plan vest over three or four years and expire after 10 years. The Company uses the Black Scholes option pricing model to determine the grant date fair value of stock options.

A summary of stock option activity for awards under the 2017 Plan and the 2022 Plan is presented below:


	Options Outstanding and Exercisable
	Number of Shares			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value (1) (in thousands)
Outstanding as of January 1, 2022		5,598,830		$	5.36		8.9	$	7,349
Granted		3,048,158			14.54
Forfeited		(95,495	)		9.94
Exercised		(324,467	)		1.32
Outstanding as of June 30, 2022		8,227,026		$	8.87		8.9	$	75,703
Exercisable as of June 30, 2022		2,406,207		$	5.74		8.1	$	29,687

(1)

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the estimated fair value of the common stock for the options that were in the money as of June 30, 2022.

RSUs granted under the 2022 Plan generally vest annually over three or four years. The Company uses the market price of the Company’s common shares on the date of grant to determine the fair value of RSUs.

A summary of RSU activity for awards under the 2022 Plan is presented below:


	Number of Shares			Weighted Average Grant Date Fair Value
Outstanding as of January 1, 2022		—		$	—
Granted		845,067			16.76
Vested		—			—
Forfeited		(16,663	)		17.84
Outstanding as of June 30, 2022		828,404		$	16.74

In June 2021, the Company granted 952,804 RSUs to an executive officer subject to service, performance, and market conditions. In December 2021, the Company added alternative performance conditions for vesting of the same RSUs (the RSU Award). These additional performance conditions provided alternative paths to vesting and the original award from June 2021 and its vesting conditions remained the same, i.e., the original award was not modified.

Each RSU granted in the RSU Award entitles the recipient to one share of common stock upon vesting subject to the service, performance, and market conditions. All 952,804 RSUs were outstanding as of June 30, 2022 and December 31, 2021 and no RSUs were vested as of June 30, 2022 and December 31, 2021.

The service condition to vesting of the RSU Award requires the executive officer’s continued employment with the Company through the achievement of any of the performance conditions and the market condition.

The performance conditions to vesting of the RSU Award include (i) the consummation of a change in control event as defined in the 2017 Plan (Change in Control), (ii) the consummation of the first firm commitment underwritten public offering covering the offer and sale of Company shares, the consummation of the direct listing or direct placement of Company shares on a publicly traded exchange, or the completion of a merger or consolidation with a special purpose acquisition company in which the shares of the surviving or parent entity are listed on a national securities exchange (IPO), or (iii) a Change in Control following an IPO.

The market condition to vesting of the RSU Award involves Company value thresholds depending upon which of the three performance condition scenarios is applicable at the time of measurement.

The Company value on a Change in Control is measured on the date of the Change in Control and is the aggregate amount of deal consideration paid at the closing of a Change in Control by an acquirer for the Company shares of common stock in connection with such Change in Control (Change in Control Market Capitalization). Upon a Change in Control, (i) one-sixth of the RSU Award will vest if a minimum Change in Control Market Capitalization of $2.5 billion is achieved, (ii) all of the RSU Award will vest if a $5.0 billion Change in Control Market Capitalization is achieved, and (iii) a portion of the RSU Award will vest based on a straight-line interpolation if a Change in Control Market Capitalization of between $2.5 billion and $5.0 billion is achieved based on a straight-line interpolation.

The Company value in the event of an IPO is measured each June 30 and December 31 following an IPO (subject to applicable lock-up period) and represents the Company's Enterprise Value. The Company's Enterprise Value is determined using the total market capitalization of the Company based the average closing trading price of one share of the Company over the 60-day period ending on the day prior to the applicable IPO measurement date, less cash. Upon an IPO, (i) one-sixth of the RSU Award will vest if a minimum Enterprise Value of $2.5 billion is achieved, (ii) all the RSU Award will vest if a $5.0 billion Enterprise Value is achieved, and (iii) a portion of the RSU Award will vest based on a straight-line interpolation if an Enterprise Value of between $2.5 billion and $5.0 billion is achieved.

The Company utilized Monte Carlo simulation models to estimate the fair value of the RSU Award on the date of grant in each of the three performance condition scenarios.

Upon completion of the IPO in February 2022, the performance condition of the RSU Award was satisfied and the Company began recognizing share-based compensation expense on an accelerated attribution basis over the anticipated service period (10 years) and based on the fair value (aggregate $10.3 million) according to the IPO scenario as no other performance condition was deemed probable at the time of the IPO. The Company recognized $0.6 million and $1.4 million in share-based compensation expense related to this RSU Award during the three and six months ended June 30, 2022.