Stock-Based Compensation

12 Months Ended

Dec. 31, 2021

Share-based Payment Arrangement [Abstract]

2016 Stock Incentive Plan

The Company’s 2016 Stock Incentive Plan, (the “2016 Plan”) provided for the Company to grant incentive stock options or nonqualified stock options and other equity awards to employees, directors and consultants of the Company. Upon the effectiveness of the 2020 Equity Incentive Plan (the “2020 Plan”) in October 2020, the Company ceased granting additional awards under the 2016 Plan.

2020 Equity Incentive Plan

The 2020 Plan provides for the grant of incentive stock options, non-qualified options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards. The number of shares initially reserved for issuance under the 2020 Plan was (i) 2,200,000 shares (the “share pool”), plus (ii) the number of shares of common stock available for issuance under the 2016 Plan as of the effective date of the 2020 Plan, plus the number of shares of common stock underlying awards under the 2016 Plan that on or after the date of adoption expire or become unexercisable without delivery of shares, are forfeited to, or repurchased for cash, are settled in cash, or otherwise become available again for grant under the 2016 Plan, in each case, in accordance with its terms (up to an aggregate of 5,078,295 shares). As of December 31, 2021, 2,271,847 shares remained available for future grant under the 2020 Plan.

The share pool will automatically increase on January 1 of each year from 2021 to 2030 by the lesser of (i) four percent of the number of shares of our common stock outstanding as of the close of business on the immediately preceding December 31 and (ii) the number of shares determined by the board of directors on or prior to such date for such year. The number of shares reserved for issuance under the 2020 Plan was increased by 1,651,989 shares effective January 1, 2022.

The 2020 Plan is administered by the board of directors or, at the discretion of the board of directors, by a committee of the board of directors. The exercise prices, vesting and other restrictions are determined at the discretion of the board of directors, or its committee if so delegated. Stock options granted with service-based vesting conditions generally vest over four years and expire after ten years. The exercise price for stock options granted is not less than the fair value of common stock on the date of grant. The Company bases fair value of common stock on the quoted market price. Prior to the IPO, the board of directors determined the value the Company’s common stock, taking into consideration its most recently available valuation of common stock performed by third parties as well as additional relevant factors which may have changed since the date of the most recent contemporaneous valuation through the date of grant.

2020 Employee Stock Purchase Plan

On October 21, 2020, the Company’s board of directors adopted and its stockholders approved the 2020 Employee Stock Purchase Plan (the “ESPP”), which became effective on October 21, 2020. The aggregate number of shares of common stock

available for purchase pursuant to the exercise of options under the ESPP is 360,000 shares, plus an automatic annual increase, as of January 1 of each year from 2021 to 2030, equal to the lesser of one percent of the number of shares of common stock outstanding as of the close of business on the immediately preceding December 31 and (ii) the number of shares determined by the board of directors on or prior to such date for such year (up to a maximum of 3,220,520 shares). The number of shares reserved for issuance under the ESPP was increased by 367,894 shares to 780,891 shares effective January 1, 2022.

The first offering period commenced under the ESPP on September 1, 2021. For the year ended December 31, 2021, the Company recognized a de minimis amount of expense related to the ESPP.

Stock option valuation

The fair value of stock option grants is estimated using the Black-Scholes option-pricing model. The Company currently lacks company-specific historical and implied volatility information. Therefore, it estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is 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 is 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.

The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the grant-date fair value of stock options granted during the years ended December 31, 2021 and 2020 which was as follows:


	Year Ended December 31,
	2021		2020
Risk-free interest rate	0.7	%	0.4	%
Expected volatility	78.8	%	78.5	%
Expected dividend yield	—		—
Expected term (in years)	6.0		6.1

The following table summarizes the Company’s option activity during the year ended December 31, 2021 which was as follows:


	Number of Shares	Weighted Average Exercise Price		Weighted Average Contractual Term	Aggregate Intrinsic Value
				(in years)	(in thousands)
Outstanding as of December 31, 2020	5,016,460	$	4.93	8.5	$	76,941
Granted	1,719,563	15.41
Exercised	(508,774)	2.79
Forfeited	(306,740)	10.22
Outstanding as of December 31, 2021	5,920,509	$	7.88	7.9	$	88,720
Vested and expected to vest as of December 31, 2021	5,920,509	$	7.88	7.9	$	88,720
Options exercisable as of December 31, 2021	2,435,439	$	3.62	7.0	$	46,882

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2021 and 2020 was $5.3 million and $3.5 million, respectively.

The weighted average grant-date fair value of stock options granted during the years ended December 31, 2021 and 2020 was $10.40 per share and $6.01 per share, respectively.

Restricted common stock

During 2015, the Company issued and sold 4,459,459 shares of restricted common stock at par value to the scientific founders of the Company. The shares were subject to vesting over a period of five years and began vesting in April 2016 and were fully vested as of December 31, 2020.

The aggregate fair value of restricted stock that vested during the years ended December 31, 2020 was $4.8 million, respectively.

Stock-based compensation

The Company recorded stock-based compensation expense related to common stock options and restricted common stock in the following expense categories of its consolidated statements of operations and comprehensive loss during the years ended December 31, 2021 and 2020 which was as follows (in thousands):


	Year Ended December 31,
	2021		2020
Research and development expenses	$	4,324	$	1,724
General and administrative expenses	4,060		1,237
	$	8,384	$	2,961

As of December 31, 2021, total unrecognized compensation cost related to unvested options was $20.8 million, which is expected to be recognized over a weighted average period of 2.7 years.