The Company adopted the 2020 Equity Incentive Plan (the “2020 Plan”) on December 18, 2020. The 2020 Plan reserved 4,327,799 shares of common stock to grant stock-based compensation awards, including stock options and restricted stock awards, to employees and non-employees.

In April 2021, the Company adopted the 2021 Equity Incentive Plan (the “2021 Plan”). As of April 9, 2021, the Company ceased granting awards under the 2020 Plan. However, 2020 Plan awards will remain subject to the terms of the 2020 Plan. Under the 2021 Plan, no more than 25,000,000 shares may be issued pursuant to the exercise of Incentive Stock Options.

The Company adopted a 2021 Employee Stock Purchase Plan (“ESPP”) in April 2021. The ESPP enables eligible employees of the Company and designated affiliates to purchase shares of common stock at a discount of 15%. No more than 4,500,000 shares may be issued under the ESPP Plan. As of June 30, 20201, no shares have been issued under the ESPP plan.

The Company’s measures stock options and other stock-based awards granted to directors, employees and non-employees based on their fair value on the date of the grant and recognizes the corresponding compensation expense of those awards over the requisite service period, which is generally the vesting period of the respective award. The Company has only issued stock options and restricted share awards with service-based vesting conditions and records the expense for these awards using the straight-line method. Forfeitures are accounted for as they occur.

The Company granted its first restricted stock awards in the fourth quarter of 2020. The Company has determined the fair value of restricted stock awards granted based on the fair value of its common stock.

There were no stock options outstanding as of December 31, 2020. The Company issued its first stock options in the first quarter of 2021. The Company estimates the fair value of each stock option grant using the Black-Scholes option pricing model, which uses as inputs the following assumptions:

Expected term—The expected term represents the period that the stock-based awards are expected to be outstanding. The Company uses the simplified method to determine the expected term, which is based on the average of the time-to-vesting and the contractual life of the options.

Expected volatility—Because the Company has been privately held and does not have any trading history for its common stock, the expected volatility was estimated based on the average volatility for comparable publicly traded biotechnology companies over a period equal to the expected term of the stock option grants. The comparable companies were chosen based on the similar size, stage in life cycle or area of specialty. The Company will continue to take this approach until a sufficient amount of historical information regarding the volatility of its own stock price becomes available.

Risk-free interest rate—The risk-free interest rate is based on the yield of the U.S. Treasury notes as of the grant date with terms commensurate with the expected term of the awards.

Dividend yield—The Company has never paid dividends on its common stock and has no plans to pay dividends on its common stock. Therefore, the Company used an expected dividend yield of zero.

Total stock-based compensation expense recorded in the condensed statements of operations and allocated as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Research and development	$	611	$	—	$	924	$	—
General and administrative		852		—		1,458		—
Total stock-based compensation expense	$	1,463	$	—	$	2,382	$	—

				Outstanding Options
	Shares Available for Grant			Shares			Weighted- Average Exercise		Weighted- Average Remaining Contractual Term (Years)
Balance—December 31, 2020		4,327,799			—		$	—
Granted		(2,068,111	)		2,068,111		$	6.47
Balance—March 31, 2021		2,259,688			2,068,111		$	6.47		9.8
Authorized for Issuance under the 2021 Plan		25,000,000
Granted		(646,738	)		646,738		$	17.89
Exercised					(43,850	)	$	5.14
Balance—June 30, 2021		24,353,262			2,670,999		$	9.25		9.8

The fair value of employee stock options was estimated using the following weighted-average assumptions:

	Three Months Ended			Six Months Ended
	June 30, 2021			June 30, 2021
Expected term in years		6.0			6.0
Expected volatility		91	%		91	%
Risk-free interest rate		1.0	%		0.9	%
Dividend yield		—			—
Weighted average fair value of share-based awards granted	$	13.27		$	6.93

The Company has granted 824,429 restricted stock awards to employees and non-employees during the fourth quarter of 2020 that vest quarterly over four years. Restricted stock awards are share awards that entitle the holder to receive freely tradeable shares of the Company’s common stock. The underlying shares are outstanding as of the issuance date. Any unvested shares are subject to forfeiture in the case that the grantee’s service terminates prior to vesting of the restricted stock. As of December 31, 2020, a total of 74,594 restricted shares had vested, and 749,835 restricted common stock shares remained unvested subject to repurchase. As of June 30, 2021, a total of 179,360 restricted shares had vested, and 645,069 restricted common shares remained unvested subject to repurchase. There were no restricted shares issued during the six months ended June 30, 2021.