Stock-Based Compensation

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

8. Stock-Based Compensation

Stock-based compensation expense recognized for all equity awards has been reported in the statements of operations and comprehensive loss as follows (in thousands):


	Three Months Ended March 31,
	2021		2020
Research and development expense	$	1,925	$	31
General and administrative expense		2,360		16

Total stock-based compensation expense	$	4,285	$	47

As of March 31, 2021, the total unrecognized stock-based compensation expense was $59.6 million, which is expected to be recognized over a remaining weighted-average period of approximately 3.16 years.

Stock Option Awards

As of March 31, 2021, the Company’s equity incentive plans authorized a total of

9,564,798 shares, of which 3,152,910 shares are available for future grant, and 6,308,582 shares are outstanding. Not included in the outstanding option balance are 76,293 shares pursuant to stock options that were early exercised and subject to repurchase under the 2016 Plan that remain unvested as of March 31, 2021.

A summary of the Company’s stock option activity for the three months ended March 31, 2021 is as follows (in thousands, except share and per share data and years):


	Stock Options Outstanding
	Shares Subject to Options Outstanding			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Balance at December 31, 2020		6,316,569		$	10.93		9.5	$	223,647
Granted		93,973		$	48.03
Exercised		(101,960	)	$	2.18			$	4,227
Cance l led		—		$	—

Balance at March 31, 2021		6,308,582		$	11.63		9.3	$	202,325

Vested at March 31, 2021		708,833		$	6.97		8.7	$	25,956

The total fair value of shares vested during the three months ended March 31, 2021 and 2020 was $3.6 million and less than $0.1 million, respectively. The aggregate intrinsic value in the table above is calculated as the difference between the exercise price of the underlying options and the estimated fair value of the Company’s common stock for all options that were

in-the-money

at March 31, 2021.

The weighted-average grant date fair value per share of option grants for the three months ended

March 31, 2021 was $33.32

. There were no grants during the three months ended March 31, 2020.

The grant date fair value of stock options was estimated using a Black-Scholes option pricing model with the following weighted-average assumptions:


		Three Months Ended March 31, 2021
Expected term (in years)		6.0
Expected volatility		83%
Risk-free interest rate		0.72%
Expected dividend yield		—

The fair value of stock options was determined using the Black-Scholes option-pricing model and the assumptions below. Each of these inputs is subjective and generally requires significant judgement.

Fair Value of Common Stock.

The grant date fair market value of the shares of common stock underlying stock options is determined by the Company’s board of directors. Following the closing of the Company’s IPO, the fair market value of our common stock is based on its closing price as reported on the date of grant on the primary stock exchange on which the Company’s common stock is traded. Prior to the Company’s IPO, because there was no public market for the Company’s common stock, the board of directors exercised reasonable judgment and considered a number of objective and subjective factors to determine the best estimate of the fair market value, which included contemporaneous valuations performed by an independent third-party, the Company’s results of operations and financial position, including its levels of available capital resources, its stage of development and material risks related to the Company’s business, progress of the Company’s research and development activities, the Company’s business conditions and projections, the lack of marketability of the Company’s common stock and preferred stock as a private company, the prices at which the Company sold shares of its redeemable convertible preferred stock to outside investors in arms-length transactions, the rights, preferences and privileges of the Company’s redeemable convertible preferred stock relative to those of its common stock, the analysis of IPOs and the market performance of similar companies in the biopharmaceutical industry, the likelihood of achieving a liquidity event for the Company’s securityholders, such as an IPO or a sale of the company, given prevailing market conditions, the hiring of key personnel and the experience of management, trends and developments in the Company’s industry and external market conditions affecting the life sciences and biotechnology industry sectors.

Expected Term.

The expected term represents the period that the options granted are expected to be outstanding. The expected term of stock options issued is determined using the simplified method (based on the

mid-point

between the vesting date and the end of the contractual term) as the Company has concluded that its stock option exercise history does not provide a reasonable basis upon which to estimate expected term.

Expected Volatility.

Given the Company’s limited historical stock price volatility data, the Company derived the expected volatility from the average historical volatilities over a period approximately equal to the expected term of comparable publicly traded companies within its peer group that were deemed to be representative of future stock price trends as the Company has limited trading history for its common stock. The Company will continue to apply this process 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 U.S. Treasury rate, with maturities similar to the expected term of the stock options.

Expected Dividend Yield.

The Company has never paid dividends on its common stock and does not anticipate paying any dividends in the foreseeable future. Therefore, the Company uses an expected dividend yield of zero.