Stock Compensation

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

10. STOCK COMPENSATION

In April 2021, the Company adopted the 2021 Employee Stock Purchase Plan (ESPP) and the 2021 Equity Incentive Plan (2021 EIP), each of which became effective in connection with the IPO. The Company has reserved 429,934 and 3,260,753 shares of Class A common stock for issuance under the ESPP and 2021 EIP, respectively.

The Company may not grant any additional awards under the 2017 Equity Incentive Plan (2017 EIP). The 2017 EIP will continue to govern outstanding equity awards granted thereunder. As of September 30, 2022, there were 1,162,962 shares available for issuance under the 2021 EIP.

2017 EIP and 2021 EIP

Stock option activity under the 2017 EIP and 2021 EIP was as follows:


	NUMBER OF OPTIONS			WEIGHTED- AVERAGE EXERCISE PRICE PER SHARE		WEIGHTED- AVERAGE REMAINING CONTRACTUAL LIFE (YEARS)		AGGREGATE INTRINSIC VALUE (000s)
Outstanding as of December 31, 2021		2,924,521		$	5.62		9.11	$	61,712
Granted		1,072,802			18.96
Exercised		(231,158	)		4.18
Cancelled and forfeited		—			—
Outstanding as of September 30, 2022		3,766,165			9.51		8.69		44,608
Options exercisable as of September 30, 2022		1,103,154			6.51		8.42		16,341
Vested and expected to vest as of September 30, 2022		3,766,165			9.51		8.69		44,608

The aggregate intrinsic value of stock options exercised during the three and nine months ended September 30, 2022, was $3.1 million and $3.5 million, respectively. The weighted-average grant date fair value of options granted during the three and nine months ended September 30, 2022, was $15.46 and $13.70 per share.

ESPP

The ESPP enables eligible employees to purchase shares of the Company's Class A common stock at the end of each offering period at a price equal to 85% of the fair market value of the shares on the first trading day or the last trading day of the offering period, whichever is lower. Eligible employees generally include all employees. Share purchases are funded through payroll deductions of at least 1% and up to 15% of an employee's eligible compensation for each payroll period. The number of shares reserved for issuance under the ESPP increase automatically on the first day of each fiscal year, beginning on January 1, 2022, by a number equal to the lesser of 440,502 shares, 1% of the total number of shares of the Company's capital stock (including all classes of the Company's common stock) outstanding on the last day of the calendar month prior to the date of the increase, or such lower number of shares (including no shares) approved by the Company's board of directors. As of September 30, 2022, 15,328 shares have been issued pursuant to the ESPP. The ESPP generally provides for six-month consecutive offering periods beginning on September 14, 2021. The ESPP is a compensatory plan as defined by the authoritative guidance for stock compensation. As such, stock-based compensation expense has been recorded for the three and nine months ended September 30, 2022.

Stock-Based Compensation Expense

The following tables summarize the stock-based compensation expense for stock options, restricted stock awards, and restricted stock units granted to employees and nonemployees and for ESPP stock-based compensation that was recorded in the Company’s condensed statements of operations and comprehensive loss for the three and nine months ended September 30, 2022 and 2021.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Research and development	$	1,255	$	313	$	3,226	$	606
General and administrative		1,197		620		2,913		1,444
Total stock-based compensation expense	$	2,452	$	933	$	6,139	$	2,050


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Employees	$	1,637	$	776	$	3,976	$	1,878
Nonemployees		815		157		2,163		172
Total stock-based compensation expense	$	2,452	$	933	$	6,139	$	2,050

As of September 30, 2022, the Company had $19.2 million of unrecognized stock-based compensation expense related to unvested stock options, which is expected to be recognized over a weighted-average period of approximately 2.6 years.

The fair value of stock options granted during the three and nine months ended September 30, 2022 and 2021 was estimated using the Black-Scholes option pricing model based on the following weighted-average assumptions.


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Expected term (in years)	6.1	6.1	5.5 – 6.1	5.5 – 6.1
Expected volatility	76.7% – 77.6%	75.4% – 75.8%	75.8% – 77.6%	75.4% – 76.6%
Risk-free rate	2.7% – 4.1%	0.9% – 1.0%	1.8% – 4.1%	0.6% – 1.1%
Dividend yield	—	—	—	—

Restricted Stock Awards

In October 2020, in conjunction with the Company's issuance of Series C redeemable convertible preferred stock (which subsequently converted into Class A and Class B common stock), the Company restricted 49,636 shares of fully issued and outstanding Class A common stock held by the Company’s Chief Executive Officer and founder. The restriction allowed the Company to repurchase shares that had not vested. The vesting term of restricted stock was one year. These restricted stock awards fully vested in October 2021. The grant date fair value of the restricted stock was $6.37 per share.

For the nine months ended September 30, 2021, the Company recognized $0.2 million of stock-based compensation expense related to the restricted stock awards that vested during the period. No stock-based compensation expense related to restricted stock awards was recognized in 2022.

Restricted Stock Units

The Company grants restricted stock units (RSU) pursuant to the 2021 EIP and satisfies such grants through the issuance of the Company's Class A common stock. The following table shows RSU activity for the period ending September 30, 2022.


	NUMBER OF SHARES			WEIGHTED- AVERAGE GRANT DATE FAIR VALUE PER SHARE
Unvested balance at December 31, 2021		77,719		$	23.99
Granted		215,750			18.38
Vested		(58,289	)		23.99
Cancelled and forfeited		—			—
Unvested balance at September 30, 2022		235,180			18.84

For the nine months ended September 30, 2022, the Company recognized $1.6 million of stock-based compensation for restricted stock units.

As of September 30, 2022, the Company had $4.2 million of unrecognized stock-based compensation expense related to unvested restricted stock units, which is expected to be recognized over a weighted-average period of approximately 1.87 years.