The Company’s Board of Directors and stockholders adopted and approved the Company’s 2021 Equity Incentive Plan (the “2021 Plan”) in May 2021, which was amended in July 2022. The 2021 Plan replaced the Company’s 2016 Equity Incentive Plan adopted in September 2016 (the “2016 Plan”); however, awards outstanding under the 2016 Plan will continue to be governed by their existing terms. The number of shares of the Company’s common stock that were initially available for issuance under the 2021 Plan equaled the sum of 7,500,000 shares plus 585,720 shares that were then available for issuance under the 2016 Plan. The 2021 Plan provides for the following types of awards: incentive and nonqualified stock options, stock appreciation rights, restricted shares and restricted stock units. As of December 31, 2023, 3,810,957 shares of common stock remained available for future grants under the 2021 Plan.

The number of shares of common stock reserved for issuance under the 2021 Plan are increased automatically on the first business day of each fiscal year, commencing in 2022 and ending in 2031, by a number equal to the lesser of: (i) 5% of the shares of common stock outstanding on the last business day of the prior fiscal year; or (ii) the number of shares determined by the Company’s Board of Directors. In general, to the extent that any awards under the 2021 Plan are forfeited, terminated, expired or lapsed without the issuance of shares, or if the Company reacquires the shares subject to awards granted under the 2021 Plan, those shares will again become available for issuance under the 2021 Plan, as will shares applied to pay the exercise or purchase price of an award or to satisfy tax withholding obligations related to an award.

Stock-based awards are governed by agreements between the Company and the recipients. Incentive stock options and nonqualified stock options may be granted under the 2021 Plan (and previously the 2016 Plan) at an exercise price of not less than 100% of the fair market value of the Company’s common stock on the date of grant. The grant date is the date the terms of the award are formally approved by the Company’s Board of Directors or its designee.

In August 2022, the Company completed an exchange of 984,291 options owned by eligible non-executive employees with exercise prices ranging from $10.99 to $26.23 for the same number of options with an exercise price of $3.60. The requisite service period and the contractual term of the new options were not changed from the exchanged options, and the exchanged options were cancelled. The exercise price of $3.60 was the volume-weighted average price of the Company’s common stock for the 20-day period immediately prior to the exchange. The exchange was treated as an option modification under GAAP, and the total incremental expense resulting from the exchange will be $1.2 million, of which $0.4 million was recognized in 2022, $0.2 million was recognized in 2023, and the remaining will be recognized over a weighted-average period of approximately 0.9 years from December 31, 2023. The Company will continue to recognize the grant-date fair value of the exchanged options over the remaining service period.

The following table summarizes stock option activity during the year ended December 31, 2023:


		Number of Options			Weighted-Average Exercise Price (per Share)		Weighted-Average Remaining Contract Term (in Years)		Aggregate Intrinsic Value (in Thousands)
Outstanding at December 31, 2022			9,637,022		$	5.35
Exercisable at December 31, 2022			4,066,881			4.17
	Granted		3,167,750			1.08
	Exercised		(23,479	)		0.56
	Canceled or forfeited		(1,029,544	)		5.56
Outstanding at December 31, 2023			11,751,749		$	4.19		8.0	$	93
Exercisable at December 31, 2023			6,045,163		$	4.55		7.3	$	52

Options outstanding as of December 31, 2023 consist of options vested and expected to vest. Aggregate intrinsic value in the table above is the total in-the-money value of the options above as of December 31, 2023, which is the aggregate of the difference between the Company’s last closing stock price per share of $0.46 as of December 31, 2023 and the exercise price of each option that has an exercise price of lower than $0.46.

The intrinsic value of options exercised during the years ended December 31, 2023 and 2022, calculated based on the stock price on the date of each exercise, was $31 thousand and $1.3 million, respectively.

The 2016 Plan allows for the early exercise of awards to plan participants subject to the right of repurchase by the Company at the lower of the original exercise price or fair market value for unvested awards. As of December 31, 2023 and December 31, 2022, the Company had a liability for the cash received from the early exercise of stock options in the amount of $0.1 million and $0.5 million, respectively. The Company reduces the liability as the underlying shares vest in accordance with the vesting terms of the awards or when the Company repurchases unvested awards.

At December 31, 2023 and December 31, 2022, there were 34,384 and 526,660, respectively, of early exercised stock options that remain subject to the Company’s repurchase right.

Restricted stock units (“RSUs”) represent the right to receive common stock, subject to vesting for continued service to the Company. The following table summarizes RSU activity during the year ended December 31, 2023:


		Number of Units			Weighted-Average Grant Date Fair Value (per Unit)
Outstanding at December 31, 2022			-		$	-
	Granted		4,743,850			1.13
	Vested		(415,528	)		1.78
	Canceled		(250,873	)		1.88
Outstanding at December 31, 2023			4,077,449		$	1.02

In May 2021, the Company’s Board of Directors approved the 2021 Employee Stock Purchase Plan (the “ESPP”). A total of 730,000 shares of common stock was initially reserved for issuance under the ESPP. The price at which common stock is purchased by employees under the ESPP is equal to 85% of the fair market value of the common stock on the first day of the offering period or purchase date, whichever is lower.

During the year ended December 31, 2023, 1,058,431 shares of common stock were purchased by the Company’s employees under the ESPP.

The classification of stock-based compensation expense is summarized as follows (in thousands):


	Year Ended December 31,
	2023		2022
Research and development	$	3,748	$	3,970
Selling, general and administrative		7,656		9,699
Total stock-based compensation expense	$	11,404	$	13,669

As of December 31, 2023, total unrecognized stock-based compensation expense was $19.5 million and is expected to be recognized over a weighted-average period of approximately 2.3 years.

The following table shows the weighted-average assumptions used to compute the fair value of the awards granted to employees and nonemployees using the Black-Scholes option pricing model during the periods below:


	Year Ended December 31,
Assumption	2023	2022
Expected volatility	72.47%	57.56%
Expected term (years)	5.3−6.1	5.2−6.1
Expected dividend yield	0.00%	0.00%
Risk-free interest rate	4.15%	1.98%

Common stock reserved for future issuance under equity incentive plans consisted of the following as of December 31, 2023:


Stock options and restricted stock units issued and outstanding under all Plans			15,829,198
Authorized for future grants under the 2021 Plan			3,810,957
Authorized for future purchases under the ESPP			540,679
Total as of December 31, 2023			20,180,834

The table above does not include 34,384 of common stock for early exercised stock options that remain subject to the Company’s repurchase right.