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Equity Incentive Plans | 9 Months Ended
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Sep. 30, 2023
Share-Based Payment Arrangement [Abstract] |
Equity Incentive Plans | 9. Equity Incentive Plans 2020 and 2014 Equity Incentive Plans In June 2020, our Board adopted, and our stockholders approved, the 2020 Plan, which became effective on June 11, 2020. Under the 2020 Plan, we may grant stock options, appreciation rights, restricted stock and restricted stock units (“RSUs”) to employees, consultants and directors. Stock options granted under the 2020 Plan may be either incentive stock options or nonqualified stock options. Incentive stock options may be granted only to our employees, including officers and directors who are also employees. Nonqualified stock options may be granted to our employees, officers, directors, consultants and advisors. The exercise price of stock options granted under the 2020 Plan must be at least equal to the fair market value of the common stock on the date of grant, except that an incentive stock option granted to an employee who owns more than 10% of the shares of our common stock shall have an exercise price of no less than 110% of the fair value per share on the grant date and expire five years from the date of grant. The maximum term of stock options granted under the 2020 Plan is 10 years, unless subject to the provisions regarding 10% stockholders. Our stock options granted to new employees generally vest over four years at a rate of 25% upon the first anniversary of the vesting commencement date and monthly thereafter. Our other stock options granted to employees generally vest on terms consistent with stock options granted to new employees or monthly over four years from the vesting commencement date. Our RSUs granted to new employees generally vest over four years at a rate of 25% upon one year from the grant date, then 12.5% every six months thereafter. Our other RSUs granted to employees generally vest over three and a half years at a rate of 25% upon six months from the grant date, then 12.5% every six months thereafter. A total of 10,150,000 shares of common stock were approved to be initially reserved for issuance under the 2020 Plan. The number of shares that remained available for issuance under the 2014 Plan as of the effective date of the 2020 Plan and shares subject to outstanding awards under the 2014 Plan as of the effective date of the 2020 Plan that are subsequently canceled, forfeited or repurchased by us will be added to the shares reserved under the 2020 Plan. In addition, the number of shares of common stock available for issuance under the 2020 Plan will be automatically increased on the first day of each calendar year during the ten-year term of the 2020 Plan, beginning with January 1, 2021 and ending with January 1, 2030, by an amount equal to 5% of the outstanding number of shares of our common stock on December 31 of the preceding calendar year or such lesser amount as determined by our Board. Effective January 1, 2023, the number of shares of common stock available under the 2020 Plan increased by 3,973,533 shares pursuant to the evergreen provision. As of September 30, 2023, an aggregate of 6,408,390 shares of common stock were available for issuance under the 2020 Plan. Our 2014 Plan permitted the granting of incentive stock options, non-statutory stock options, restricted stock and other stock-based awards. Subsequent to the adoption of the 2020 Plan, no additional equity awards can be made under the 2014 Plan. As of September 30, 2023, 7,577,134 shares and 2,380,439 shares of common stock were subject to outstanding options and RSUs under the 2020 Plan and 2014 Plan, respectively. The terms of the 2014 Plan permit the exercise of options granted prior to vesting, subject to required approvals. The unvested shares are subject to our lapsing repurchase right upon termination of employment at the original purchase price. Shares purchased by employees pursuant to the early exercise of stock options are not deemed, for accounting purposes, to be issued until those shares vest according to their respective vesting schedules. Cash received for early exercised stock options is recorded as other liabilities on the condensed balance sheet and is reclassified to common stock and additional paid-in capital as such shares vest. At September 30, 2023 and December 31, 2022, 927 and 3,705 shares, respectively, remained subject to our right of repurchase as a result of the early exercised stock options. The remaining liabilities related to early exercised shares as of September 30, 2023 and December 31, 2022 were both less than $0.1 million and were recorded in other liabilities. Stock Options and Restricted Stock Units Activity Stock options and RSUs activity under our 2020 Plan and 2014 Plan, which excludes options to purchase 36,710 shares granted outside of the 2020 Plan and 2014 Plan, was as follows:
|  |  |  |  |  | Options Outstanding |
Stock Options and Restricted Stock Units Activity |  | Options and Restricted Stock Units Available for Grant |  |  |  | Number of Options |  |  | Weighted- Average Exercise Price Per Share |  |  | Weighted- Average Remaining Contractual Term (Years) |  |  | Aggregate Intrinsic Value |
Balances — December 31, 2022 |  |  | 4,679,598 |  |  |  |  | 7,715,494 |  |  |  |  |  |  |  |  |  |
Additional shares authorized |  |  | 3,973,533 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Options granted |  |  | (2,048,852 | ) |  |  |  | 2,048,852 |  |  | $ | 43.29 |  |  |  |  |  |  |
Options exercised |  |  | 1,080 |  | (1) |  |  | (316,813 | ) |  | $ | 11.33 |  |  |  |  |  |  |
Options forfeited |  |  | 190,378 |  |  |  |  | (190,378 | ) |  | $ | 32.50 |  |  |  |  |  |  |
Restricted stock units granted |  |  | (500,953 | ) |  |  |  |  |  |  |  |  |  |  |  |  |
Restricted stock units withheld |  |  | 72,941 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Restricted stock units forfeited |  |  | 40,665 |  |  |  |  |  |  |  |  |  |  |  |  |  |
Balances — September 30, 2023 |  |  | 6,408,390 |  |  |  |  | 9,257,155 |  |  | $ | 24.11 |  |  |  | 7.90 |  |  | $ | 248,913 |
Vested and expected to vest — September 30, 2023 |  |  |  |  |  |  | 9,257,155 |  |  | $ | 24.11 |  |  |  | 7.90 |  |  | $ | 248,913 |
Exercisable at September 30, 2023 |  |  |  |  |  |  | 4,334,997 |  |  | $ | 14.83 |  |  |  | 6.87 |  |  | $ | 156,754 |
(1) Net exercise – shares returned to the 401(k) Plan (as defined below). During the three months ended September 30, 2023 and 2022, options to purchase 144,818 and 222,358 shares, respectively, were exercised for cash at a weighted-average price per share of $14.89 and $7.90, respectively. The weighted-average grant date fair value of options granted for the three months ended September 30, 2023 and 2022 was $30.65 and $18.01, respectively. The intrinsic value of the stock options exercised was $5.0 million and $4.0 million for the three months ended September 30, 2023 and 2022, respectively. During the nine months ended September 30, 2023 and 2022, options to purchase 315,733 and 390,467 shares, respectively, were exercised for cash at a weighted-average price per share of $11.33 and $6.06, respectively. The weighted-average grant date fair value of options granted for the nine months ended September 30, 2023 and 2022 was $28.04 and $16.39, respectively. The intrinsic value of the stock options exercised was $11.3 million and $7.4 million for the nine months ended September 30, 2023 and 2022, respectively. In March 2022, our Board authorized the issuance of RSUs under our 2020 Plan and adopted a form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Award Agreement (the “RSU Agreement”), which is intended to serve as a standard form agreement for RSU grants issued to employees. RSU activity for the nine months ended September 30, 2023 was as follows:
|  | Shares |  |  | Weighted- Average Grant-Date Fair Value |
Unvested at December 31, 2022 |  |  | 456,766 |  |  | $ | 26.70 |
Granted |  |  | 500,953 |  |  |  | 43.93 |
Vested and released |  |  | (216,636 | ) |  |  | 30.64 |
Cancelled |  |  | (40,665 | ) |  |  | 40.19 |
Unvested at September 30, 2023 |  |  | 700,418 |  |  | $ | 37.02 |
The weighted-average grant date fair value of RSUs granted during the three and nine months ended September 30, 2023 was $49.82 and $43.93, respectively. The aggregate fair value of unvested RSU is calculated using the closing price of our common stock on the grant date. As of September 30, 2023, the unrecognized stock-based compensation cost of unvested RSUs was $24.3 million, which is expected to be recognized over a weighted-average period of 2.8 years. 2020 Employee Stock Purchase Plan In June 2020, our Board adopted, and our stockholders approved, the 2020 Employee Stock Purchase Plan (the “2020 ESPP”), which became effective on June 11, 2020. The 2020 ESPP permits participants to purchase common stock through payroll deductions of up to 15% of their eligible compensation. Employees enrolled in the 2020 ESPP purchase shares of common stock at a price per share equal to 85% of the lower of the fair market value at the start or end of the six-month purchase periods within the two-year offering period. A total of 650,000 shares of common stock were approved to be initially reserved for issuance under the 2020 ESPP. In addition, the number of shares of common stock available for issuance under the 2020 ESPP will be automatically increased on the first day of each calendar year during the ten-year term of the 2020 Plan, beginning with January 1, 2021 and ending with January 1, 2030, by an amount of 1% of the outstanding number of shares of our common stock on December 31 of the preceding calendar year or such lesser amount as determined by our Board. Activity under our 2020 ESPP was as follows:
|  | Shares |
Balance – December 31, 2022 |  |  | 1,539,314 |
Additional shares authorized |  |  | 794,706 |
Shares purchased |  |  | (43,060 | )
Balance – September 30, 2023 |  |  | 2,290,960 |
Effective January 1, 2023, the number of shares of common stock available under the 2020 ESPP increased by 794,706 shares pursuant to the evergreen provision of the 2020 ESPP. Stock-based Compensation We estimated the fair value of employee stock options using the Black-Scholes option-pricing model for the three and nine months ended September 30, 2023 and 2022 using the following weighted-average assumptions:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2023 |  | 2022 |  | 2023 |  | 2022
Fair Value Assumptions |  |  |  |  |  |  |  |
Expected volatility |  | 71.3% - 72.1% |  | 80.4% - 80.6% |  | 71.3% - 74.0% |  | 78.1% - 81.2%
Expected dividend yield |  | 0% |  | 0% |  | 0% |  | 0%
Expected term (in years) |  | 5.4 |  | 5.5 |  | 5.3 - 5.4 |  | 5.4 - 5.5
Risk-free interest rate |  | 4.2% - 4.4% |  | 2.7% - 4.0% |  | 3.5% - 4.4% |  | 1.6% - 4.0%
We estimated the fair value of shares under the 2020 ESPP using the Black-Scholes option-pricing model for the three and nine months ended September 30, 2023 and 2022 using the following weighted-average assumptions:
|  | Three Months Ended September 30, |  | Nine Months Ended September 30,
|  | 2023 |  | 2022 |  | 2023 |  | 2022
Fair Value Assumptions |  |  |  |  |  |  |  |
Expected volatility |  | 74.0% - 79.6% |  | 78.8% - 82.0% |  | 74.0% - 99.7% |  | 78.8% - 97.5%
Expected dividend yield |  | 0% |  | 0% |  | 0% |  | 0%
Expected term (in years) |  | 0.5 - 2.0 |  | 0.5 - 2.0 |  | 0.5 - 2.0 |  | 0.5 - 2.0
Risk-free interest rate |  | 4.2% - 5.4% |  | 1.6% - 2.7% |  | 4.2% - 5.4% |  | 0.1% - 2.7%
We recorded total stock-based compensation expense for the three and nine months ended September 30, 2023 and 2022 related to the 2014 Plan, the 2020 Plan and the 2020 ESPP in the condensed statements of operations and allocated the amounts as follows:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
|  | (in thousands) |  |  | (in thousands) |
Research and development |  | $ | 6,335 |  |  | $ | 2,682 |  |  | $ | 16,774 |  |  | $ | 6,804 |
General and administrative |  |  | 6,885 |  |  |  | 3,966 |  |  |  | 18,639 |  |  |  | 9,837 |
Total |  | $ | 13,220 |  |  | $ | 6,648 |  |  | $ | 35,413 |  |  | $ | 16,641 |

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