The Company’s 2020 Equity Incentive Plan (the “2020 Plan”) provides for the Company to grant incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units and other stock-based awards to employees, members of the board of directors and consultants. 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 board of directors may also delegate to one or more officers of the Company the power to grant awards to employees and certain officers of the Company. The exercise prices, vesting and other restrictions are determined at the discretion of the board of directors, or its committee or any such officer if so delegated.

The exercise price for stock options granted may not be less than the fair market value of the Company’s common stock on the date of grant, as determined by the board of directors, or at least 110% of the fair market value of the Company’s common stock on the date of grant in the case of an incentive stock option granted to an employee who owns stock representing more than 10% of the voting power of all classes of stock as determined by the board of directors as of the date of grant. Prior to the IPO, the Company’s board of directors determined the fair value of the Company’s common stock, taking into consideration its most recently available valuation of common stock performed by third parties as well as additional factors which may have changed since the date of the most recent contemporaneous valuation through the date of grant. Stock options granted under the 2020 Plan expire after ten years and typically vest over a four-year period with the first 25% vesting upon the first anniversary of a specified vesting commencement date and the remainder vesting in 36 equal monthly installments over the succeeding three years, contingent on the recipient’s continued employment or service. Certain awards of stock options permit the holders to exercise the option in whole or in part prior to the full vesting of the option in exchange for unvested shares of restricted common stock with respect to any unvested portion of the option so exercised.

As of June 30, 2022, there were 11,600,938 shares authorized to be issued upon the exercise of outstanding stock option grants and no shares reserved for future issuance under the 2020 Plan.

In July 2021, the Company’s board of directors adopted, and its stockholders approved, the 2021 Equity Incentive Plan (the “2021 Plan”), which became effective immediately prior to and contingent upon the execution of the underwriting agreement related to the Company’s IPO. The 2021 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards. The number of shares reserved for issuance under the 2021 Plan was equal to 35,075,122, which is the sum of 11,413,572 new shares; plus the number of shares (not to exceed 23,661,550 shares), which represents (i) the number of shares that remained available for issuance under the 2020 Plan, at the time the 2021 Plan became effective, and (ii) any shares subject to outstanding stock options or other stock awards that were granted under the 2020 Plan that are forfeited, terminate, expire or are otherwise not issued. In addition, the number of shares of the Company’s common stock reserved for issuance under the 2021 Plan will automatically increase on the first day of each calendar year, beginning on January 1, 2022 and continuing through January 1, 2031, in an amount equal to 5% of the shares of common stock outstanding on the last day of the calendar month before the date of each automatic increase, or a lesser number of shares determined by the board of directors. On January 1, 2022, 5,539,145 shares of common stock were automatically added to the shares authorized for issuance under the 2021 Plan pursuant to the terms of the 2021 Plan. The shares of common stock underlying any awards that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, repurchased or are otherwise terminated by the Company under the 2021 Plan will be added back to the shares of common stock available for issuance under the 2021 Plan.

As of June 30, 2022, there were 43,085,402 shares authorized to be issued, which includes 23,149,318 shares reserved for future issuance under the 2021 Plan.

The fair value of stock option grants is estimated using the Black-Scholes option-pricing model. Prior to its IPO in August 2021, the Company had been a private company. Due to the proximity to the IPO, the Company continues to lack sufficient 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 and expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. For options with service-based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method. 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:


	Three Months Ended June 30,			Three Months Ended June 30,			Six Months Ended June 30,			Six Months Ended June 30,
	2022			2021			2022			2021
Expected term (in years)		5.8			6.1			6.0			6.0
Expected volatility		74.6	%		73.3	%		72.7	%		73.4	%
Risk-free interest rate		3.1	%		1.0	%		2.0	%		0.9	%
Expected dividend yield		—	%		—	%		—	%		—	%

The following table summarizes the Company’s stock option activity since December 31, 2021:


	Number of Shares			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term		Aggregate Intrinsic Value
						(in years)		(in thousands)
Outstanding at December 31, 2021		18,871,592		$	10.15		9.3	$	24,897
Granted		6,574,509		$	6.01
Exercised		(148,353	)	$	0.83
Forfeited		(5,361,664	)	$	10.62
Outstanding at June 30, 2022		19,936,084		$	8.73		9.0	$	6,972
Vested and expected to vest at June 30, 2022		19,936,084		$	8.73		9.0	$	6,972
Options exercisable at June 30, 2022		4,272,473		$	6.12		8.4	$	2,976

The weighted-average grant date fair value of stock options granted during the three and six months ended June 30, 2022 was $2.07 and $3.88, respectively, per share. The weighted-average grant date fair value of stock options granted during the three and six months ended June 30, 2021 was $6.75 and $5.96, respectively, per share.

The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying options and the fair market value of the common stock for the options that were in the money at June 30, 2022 and December 31, 2021.

The total intrinsic value of stock options exercised was $0.3 million and $0.6 million for the three and six months ended June 30, 2022, respectively.

In July 2022, David Hering, M.B.A. was appointed as the Company's Chief Executive Officer and as a Class III director on the Board of Directors. In conjunction with Mr. Hering's appointment, he was granted a stock option to purchase 2,000,000 shares of common stock, which will vest monthly in equal installments over 48 months. Mr. Hering is also eligible to receive an additional stock option to purchase up to 1,000,000 shares of common stock (the "Additional Option Grant") if certain goals approved by the Board of Directors, on the recommendation of the Compensation Committee, are achieved on or prior to December 31, 2022, with such achievement to be determined by the Board of Directors, upon the recommendation of the Compensation Committee. If such performance goals are partially achieved on or prior to December 31, 2022, then Mr. Hering may receive a partial amount of the Additional Option Grant, with such partial amount to be determined by the Board of Directors, in its sole and absolute discretion. The Additional Option Grant would vest monthly in equal installments over a 48-month period commencing on the applicable grant date.

The Company’s restricted stock activity during the six months ended June 30, 2022 is solely due to shares of restricted common stock issued pursuant to the permitted early exercise of stock options. Shares of common stock issued upon exercise of unvested stock options are restricted and continue to vest in accordance with the original vesting schedule applicable to the associated stock option award. The Company has the right to repurchase any unvested shares of restricted common stock, at the original purchase price, upon any voluntary or involuntary termination of the service relationship during the vesting period.

A summary of the Company’s unvested common stock from option early exercises that is subject to repurchase by the Company is as follows:


	Number of Shares
Unvested restricted stock at December 31, 2021		3,082,175
Issued		—
Vested		(450,995	)
Repurchased		(2,150,737	)
Unvested restricted stock at June 30, 2022		480,443

Proceeds from the early exercise of stock options are recorded as an early-exercise liability on the condensed consolidated balance sheets. The liability for unvested common stock subject to repurchase is then reclassified to common stock and additional paid-in capital as the Company’s repurchase right lapses. Shares issued pursuant to the early exercise of stock options are not considered to be outstanding for accounting purposes until the shares vest. As of June 30, 2022 and December 31, 2021 the liability related to the payments for unvested shares from early-exercised options was less than $0.1 million.

The Company recorded stock-based compensation expense (service-based stock options and employee stock purchase plan) in the following expense categories of its condensed consolidated statements of operations and comprehensive loss (in thousands):


	Three Months Ended June 30,		Three Months Ended June 30,		Six Months Ended June 30,		Six Months Ended June 30,
	2022		2021		2022		2021
Research and development	$	3,382	$	1,152	$	6,535	$	1,431
Selling, general and administrative		2,979		2,190		1,809		2,498
	$	6,361	$	3,342	$	8,344	$	3,929

In February 2022, Tillman U. Gerngross, Ph.D., resigned as Chief Executive Officer and President and as a member of the Company's board of directors. In accordance with his resignation, Dr. Gerngross's outstanding stock options were forfeited, resulting in a reversal of selling, general and administrative related stock-based compensation expense of approximately $4.6 million.

As of June 30, 2022, total unrecognized stock-based compensation expense related to unvested stock-based awards was $86.4 million, which is expected to be recognized over a weighted-average period of 3.0 years.

In July 2021, the Company’s board of directors adopted, and its stockholders approved, the 2021 Employee Stock Purchase Plan (the ‘‘2021 ESPP’’), which became effective immediately prior to and contingent upon the execution of the underwriting agreement related to the Company’s IPO. A total of 1,342,773 shares of common stock were initially reserved for issuance under the 2021 ESPP. There were no shares issued under the 2021 ESPP as of June 30, 2022. The number of shares of common stock that may be issued under the 2021 ESPP will automatically increase on the first day of each calendar year, beginning on January 1, 2022 and continuing through January 1, 2031, by an amount equal to the lesser of (i) 1% of the shares of common stock outstanding on the last day of the calendar month before the date of each automatic increase, (ii) 2,685,546 shares and (iii) an amount determined by the Company’s board of directors. The number of shares to be issued under the 2021 ESPP did not increase on January 1, 2022 as determined by the Company's board of directors. During the three and six months ended June 30, 2022, the Company recognized less than $0.1 million in related stock-based compensation expense.