Prior to the Reorganization, the LLC’s 2016 Equity Incentive Plan (the 2016 Plan) provided for the grant of Non-Voting Incentive Units to employees, consultants, advisors and directors, as determined by the board of directors. Vesting was determined by the board of directors. Awards typically provided for vesting of 25% of units at the end of the first year of service with the remaining 75% vesting ratably on a monthly basis over the following three-year period. Unvested Non-Voting Incentive Units may not be sold or transferred by the holder and are subject to repurchase by the LLC if service terminates prior to vesting at a price equal to the amount the recipient paid for the Non-Voting Incentive Units. These restrictions lapse according to the time-based vesting conditions of each award. Non-Voting Incentive Units were granted at a price of not less than the fair value of the Common Unit on the date of grant.

The Non-Voting Incentive Units are subject to ASC 718 and are classified within equity. On the grant date, the fair value of the LLC’s Common Units for accounting purposes was determined by the board of directors, with input from management. Compensation expense is recognized on the Non-Voting Incentive Units using the fair value on the date of grant of $0.0001 per unit. Given the early stage nature of the underlying technology and inherent risks associated with obtaining regulatory approval and achieving commercialization, the Company used the current value method to fair value the Non-Voting Incentive Units granted since inception.

In October 2020, the Board of Directors adopted the 2020 Unit Option and Grant Plan and decreased the number of units available for future grants under the 2016 Equity Incentive Plan such that no more Non-Voting Incentive Units could be issued under the plan. The Company did not issue any Non-Voting Incentive Units during the year ended December 31, 2020.

As part of the Reorganization in January 2021, the total outstanding Non-Voting Incentive Units were cancelled and 1,689,949 shares of the Company’s common stock were issued in exchange. The amounts presented for Non-Voting Incentive Units included unvested outstanding awards that were exchanged for restricted stock of the Company.

The following table summarizes the Non-Voting Incentive Unit activities for the years ended December 31, 2021 and 2020 as if the Non-Voting Incentive Units were converted to restricted common stock of the Company at the earliest period presented:


	Number of Shares			Weighted Average Grant Date Fair Value Per Share
Outstanding unvested as of December 31, 2019		580,334		$	0.0001
Vested		(407,844	)		0.0001
Outstanding unvested as of December 31, 2020		172,490			0.0001
Vested		(172,490	)		0.0001
Outstanding unvested as of December 31, 2021		—			0.0001
Outstanding vested as of December 31, 2021		1,689,949		$	0.0001

For the years ended December 31, 2021 and 2020, compensation expense and unrecognized compensation costs were nominal based on the grant date fair value of $0.0001 per share. All Non-Voting Incentive Units exchanged for restricted common stock were vested as of December 31, 2021.

Prior to the Reorganization, the respective boards of directors of certain subsidiaries have authorized equity incentive plans for the grant of stock options and restricted stock awards in the subsidiaries to employees, consultants, advisors and directors. Vesting is determined by each subsidiaries’ board of directors. Awards typically provide for vesting of 25% of units at the end of the first year of service with the remaining 75% vesting ratably on a monthly basis over the following three-year period. Unvested restricted shares may not be sold or transferred by the holder and are subject to repurchase by the subsidiaries if service terminates prior to vesting at a price equal to the amount the recipient paid for the restricted stock. These restrictions lapse according to the time-based vesting conditions of each award. Restricted common stocks are granted at a price of not less than the fair value of the common stock on the date of grant.

The restricted stock and stock options are subject to ASC 718 and are classified within equity. The fair values of Pearl common stock in 2018, and of Amber and Florentine common stock in 2019, for accounting purposes was determined by their respective boards of directors, with input from management, at $0.0001 per share.

In November 2020, the LLC entered into the Contribution Agreements with each holder of restricted stock of Amber, Florentine and Pearl. Pursuant to the Contribution Agreements, each holder contributed their respective shares of the restricted stock of the subsidiaries and in exchange, received in aggregate 2,231,363 restricted common units of the LLC entity under the 2020 Unit Option and Grant Plan with an aggregate value equal to the value of the restricted stock contributed to the LLC (the Restricted Stock Contribution). The LLC exchanged 368,974 units of the LLC restricted stock for 511,530 units of Amber restricted stock, 513,656 units of the LLC restricted stock for 728,678 units of Florentine restricted stock and 1,348,733 units of the LLC restricted stock for 1,869,834 units of Pearl restricted stock pursuant to the Contribution Agreements.

Simultaneous with the Restricted Stock Contribution, the board of directors of each of Amber, Florentine and Pearl accelerated the vesting of the unvested restricted stock immediately prior to the Restricted Stock Contribution. The acceleration facilitated the exchange of the units between the subsidiaries and the LLC. Subsequent to the exchange, all restricted common units of the LLC reverted to the original vesting schedule of the respective awards at the subsidiaries. Lastly, the board of directors of each of Amber, Florentine and Pearl terminated their respective stock option and grant plans. The remaining shares reserved for issuance under each respective stock option and grant plan for Amber and Florentine were retired to the status of authorized and unissued shares and in the case of Pearl, issued to the LLC in exchange for their fair value.

The Contribution Agreement is determined to be a cancellation of the restricted stock issued at the subsidiaries with a concurrent grant of a replacement award at the LLC and is accounted for as a modification.

In November 2020, the board of directors of Cullinan Pearl authorized the entry into a Common Unit Purchase Agreement (Unit Purchase Agreement) with the LLC pursuant to which Pearl purchased 22,868 common units of the LLC for a purchase price of $0.61 per common unit, for an aggregate purchase price of less than $0.1 million. Pearl then transferred those common units to two directors of Pearl in exchange for the cancellation of an aggregate 93,000 subsidiary stock options issued to those directors.

The common unit purchase between Pearl and the LLC and the subsequent exchange of the purchased units for the stock options issued to the directors is determined to be a cancellation of the stock options issued at Pearl with a concurrent grant of a replacement award at the LLC. The cancellation and concurrent grant of a replacement is accounted for as a modification.

Pursuant to the Contribution and Unit Purchase Agreements, the LLC exchanged 2,254,231 units of the LLC for restricted stocks and stock options held by employees, consultants, advisors and directors of the subsidiaries. The exchange provided for $1.2 million in excess fair value and on the effective date of the exchange, the Company recognized $0.2 million and $0.1 million of modification expense within research and development expense and general and administrative expense, respectively, in the consolidated statements of operations and comprehensive loss. The remaining excess fair value will be recognized over the vesting terms.

As part of the Reorganization in January 2021, all of the LLC units exchanged for restricted stock or stock options of the Subsidiaries were cancelled and 320,228 shares of the Company’s common stock were issued in exchange. The amounts presented for the exchange number of shares included unvested outstanding awards that were exchanged for restricted stock of the Company.

For the years ended December 31, 2021 and 2020, the Company recognized $0.4 million and $0.2 million of equity-based compensation expense relating to the excess fair value within research and development expense and general and administrative expense categories, respectively, in the consolidated statements of operations and comprehensive loss.

As of December 31, 2021 and 2020, there were $0.3 million and $0.7 million in unrecognized compensation cost expected to be recognized over estimated weighted-average amortization periods of 1.48 and 2.41 years, respectively.

The following table summarizes the restricted common unit activities for the years ended December 31, 2021 and 2020 as if the restricted common units were converted to restricted common stock of the Company at the earliest period presented:


	Number of Shares			Incremental Fair Value Per Share
Total units exchanged as of November 4, 2020		320,228		$	3.87
Vested		(128,358	)		3.87
Outstanding unvested as of December 31, 2020		191,870		$	3.87
Vested		(102,987	)		3.87
Outstanding unvested as of December 31, 2021		88,883		$	3.87
Outstanding vested as of December 31, 2021		231,345		$	3.87

The Company’s 2021 Stock Option and Incentive Plan (the 2021 Stock Plan) was adopted by the board of directors in December 2020 and the stockholders approved the plan in January 2021, prior to the completion of the Company’s IPO. The 2021 Stock Plan became effective on the day immediately prior to the effectiveness of the Company’s registration statement. The purpose of the 2021 Stock Plan is to encourage and enable the officers, employees, directors, consultants and other key persons of the Company whose judgment, initiative and efforts the Company largely depends on for the successful conduct of its business, to acquire a proprietary interest in the Company. The term of the options may be up to 10 years, and options are exercisable in cash or is net exercised. The exercise price of the options are determined based on the fair market value of the Company’s common stock on the date of grant with 25% of the awards issued vesting on the first anniversary of the vesting commencement date, with the remaining portion of the awards vesting over the following 36 months in equal monthly installments.

The 2020 Unit Option and Grant Plan (2020 Plan) was terminated once the 2021 Stock Plan was effective. As part of the Reorganization, all common unit options granted under the 2020 Unit Option and Grant Plan were cancelled and exchanged for stock options under the 2021 Stock Plan with the same vesting terms and conditions. This was considered a modification

of the common unit options previously issued with no incremental fair value as there were no changes to the terms and conditions of the awards.

The Company initially reserved 12,546,386 shares of common stock for issuance of awards under the 2021 Stock Plan, which included (i) split-adjusted 320,228 shares of restricted stock issued in exchange for restricted stock and stock options granted at the Subsidiaries, as referenced above, and (ii) split-adjusted equity awards comprised of 4,616,187 shares of common stock issuable upon the exercise of stock options at a weighted average exercise price of $4.30 that were issued in exchange for common unit options cancelled under the 2020 Unit Option and Grant Plan.

The 2021 Stock Plan provides that the number of shares reserved and available for issuance under the 2021 Stock Plan will automatically increase each January 1, beginning on January 1, 2022, by 5% of the outstanding number of shares of the Company’s common stock on the immediately preceding December 31 or such lesser number of shares as determined by the Company’s board or compensation committee. This number is subject to adjustment in the event of a stock split, stock dividend or other change in capitalization.

The following table summarizes the activity related to stock option grants to employees and non-employees for the years ended December 31, 2021 and 2020 under the 2021 Stock Plan. This also includes the common unit options issued under the 2020 Plan that were cancelled and exchanged into stock options under the 2021 Stock Plan with the number of options issued and weighted average exercise price presented as if the Reorganization occurred at the earliest period presented:


	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (Years)
Outstanding as of December 31, 2019		—		$	—		—
Granted		4,616,187			4.30		—
Exercised		(13,050	)		4.30		—
Outstanding as of December 31, 2020		4,603,137		$	4.30		9.84
Granted		5,481,816			23.82		—
Exercised		(763,000	)		4.30		—
Forfeited		(63,214	)		17.23		—
Outstanding as of December 31, 2021		9,258,739		$	15.77		9.22
Options exercisable as of December 31, 2021		3,271,196		$	7.65		8.90
Options unvested as of December 31, 2021		5,987,543		$	20.20		9.39

As of December 31, 2021 and 2020, there were $75.8 million and $14.2 million, respectively, in unrecognized compensation cost that are expected to be recognized over an estimated weighted-average amortization period of 3.15 and 2.68 years, respectively. As of December 31, 2021, the aggregate intrinsic value of options outstanding and options exercisable based on a fair value per share of $15.43 was $42.5 million and $29.1 million, respectively. As of December 31, 2020, the aggregate intrinsic value of options outstanding and options exercisable based on a fair value per share of $18.02 was $63.1 million and $28.6 million, respectively.

The fair value of options is estimated using the Black-Scholes option pricing model, which takes into account inputs such as the exercise price, the value of the underlying common stock at the grant date, expected term, expected volatility, risk-free interest rate and dividend yield. The fair value of each grant of options during the years ended December 31, 2021 and 2020 were determined using the methods and assumptions discussed below:

For the years ended December 31, 2021 and 2020, the weighted average grant date fair value of the options granted were $15.73 and $6.19 per share, respectively. The grant date fair value was estimated at the time of grant using the Black-Scholes option-pricing model using the following weighted average assumptions:


	Year Ended December 31, 2021			Year Ended December 31, 2020
Weighted average risk-free interest rate		1.02	%		0.51	%
Expected term (in years)		6.00			5.98
Expected volatility		76.22	%		77.40	%
Expected dividend yield		0.00	%		0.00	%

For the year ended December 31, 2021, the Company recorded $8.7 million and $15.2 million of equity-based compensation expense within the research and development and general and administrative expense categories, respectively. For the year ended December 31, 2020, the Company recorded $5.6 million and $8.8 million of equity-based compensation expense within the research and development and general and administrative expense categories, respectively. These amounts are included in the consolidated statements of operations and comprehensive loss.

The 2021 Employee Stock Purchase Plan (the ESPP) was adopted by our board of directors in December 2020 and the stockholders approved the plan in January 2021, prior to the completion of the Company’s IPO. The ESPP became effective on the day immediately prior to the effectiveness of the Company’s IPO. The Company has initially reserved 416,665 shares of common stock for issuance to participating employees.

The ESPP provides that the number of shares reserved and available for issuance under the ESPP will automatically increase each January 1, beginning on January 1, 2022, by the lesser of 833,330 shares of our common stock, 1% of the outstanding number of shares of the Company’s common stock on the immediately preceding December 31, or such lesser number of shares as determined by the Company’s compensation committee. This number is subject to adjustment in the event of a stock split, stock dividend or other change in capitalization.

For the twelve months ended December 31, 2021, the Company issued 12,977 shares of its common stock and recorded less than $0.1 million of equity-based compensation expense pursuant the ESPP.

The Company recorded equity-based compensation in the following expense categories in the consolidated statements of operations and comprehensive loss:


	Year ended December 31,
	2021		2020
	(in thousands)
Research and development	$	8,914	$	5,912
General and administrative		15,461		8,998
Total equity-based compensation	$	24,375	$	14,910