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Stock-Based Awards | 9 Months Ended
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Sep. 30, 2020
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Stock-Based Awards |
1 3. | Stock-Based Awards
Stock Option Activity Activity under the Company’s stock option plans is set forth below:
|  | Number of Options |  |  | Weighted Average Exercise Price |  |  | Weighted Average Remaining Contractual Term |  |  | Aggregate Intrinsic Value |
|  |  |  |  |  |  |  |  |  | (Years) |  |  | (in thousands) |
Outstanding at December 31, 2019 |  |  | 7,186,298 |  |  | $ | 5.25 |  |  |  | 8.5 |  |  |  |  |
Granted |  |  | 4,175,235 |  |  | $ | 32.53 |  |  |  |  |  |  |  |  |
Exercised |  |  | (1,387,629 | ) |  | $ | 2.55 |  |  |  |  |  |  |  |  |
Forfeited |  |  | (514,889 | ) |  | $ | 13.78 |  |  |  |  |  |  |  |  |
Outstanding at September 30, 2020 |  |  | 9,459,015 |  |  | $ | 17.22 |  |  |  | 8.7 |  |  | $ | 174,230 |
Vested and expected to vest at September 30, 2020 |  |  | 9,459,015 |  |  | $ | 17.22 |  |  |  | 8.7 |  |  | $ | 174,230 |
Vested and exercisable at September 30, 2020 |  |  | 2,194,929 |  |  | $ | 4.52 |  |  |  | 7.8 |  |  | $ | 65,422 |
As of September 30, 2020, the Company expects to recognize the remaining unamortized stock-based compensation expense of $107.9 million related to stock options, over an estimated weighted average period of 2.7 years. Stock Options Granted to Employees The fair value of stock options granted to employees was estimated on the date of grant using the Black-Scholes option-pricing model using the following assumptions:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
Expected term of options (in years) |  | 5.0 - 6.1 |  |  |  | 6.0 |  |  | 5.0 - 6.1 |  |  | 5.9 - 6.0 |
Expected stock price volatility |  | 99.7% - 108.6% |  |  | 88.5% |  |  | 88.8% - 108.6% |  |  | 88.5% - 89.4% |
Risk-free interest rate |  | 0.3% - 0.4% |  |  | 1.9% |  |  | 0.3% - 1.2% |  |  | 1.9% - 2.5% |
Expected dividend yield |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |
The valuation assumptions were determined as follows: Expected Term— The expected term represents the period that the options granted are expected to be outstanding and 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— The expected volatility was determined by examining the historical volatilities for industry peers and using an average of historical volatilities of the Company’s industry peers as the Company does not have a sufficient historical trading history for its own 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 Company based the risk-free interest rate over the expected term of the options based on the constant maturity rate of U.S. Treasury securities with similar maturities as of the date of the grant. Expected Dividend Rate— The expected dividend is zero as the Company has not paid nor does it anticipate paying any dividends on its profit interest units in the foreseeable future. Restricted Stock Activity The following table summarizes restricted stock activity:
|  | Number of Shares |  |  | Weighted Average Fair Value at Date of Grant per Share |
Unvested as of December 31, 2019 |  |  | 2,075,511 |  |  | $ | 0.95 |
Vested |  |  | (1,791,880 | ) |  |  | 0.91 |
Unvested as of September 30, 2020 |  |  | 283,631 |  |  | $ | 1.15 |
The shares of restricted stock have not been included in the shares issued and outstanding. In January 2017, the Company entered into a restricted stock purchase agreement with an executive officer and a restricted stock purchase agreement with a director whereby the executive officer and the director purchased an aggregate of 3,624,355 shares of restricted stock. The consideration for the restricted stock was the issuance of promissory notes which are non-recourse in nature and are accounted for as in-substance stock options. The Company measured compensation cost for these in-substance options based on their estimated fair value on the grant date using the Black-Scholes pricing model. The Company is recognizing compensation cost over the requisite service period with an offsetting credit to additional paid-in capital. In August 2019, under the terms of the notes, the Company received $3.3 million as repayment of the outstanding promissory notes and accrued interest. The Company has a liability of $0.1 million for the portion of the promissory note repayment which relates to restricted common stock subject to future vesting through October 31, 2020. The Company will reduce the restricted stock liability as the common stock vests. As of September 30, 2020, there was $0.2 million of total unrecognized compensation cost related to unvested restricted stock, all of which is expected to be recognized over a remaining weighted-average period of 0.6 years. Stock-Based Compensation Expense The following table sets forth the total stock-based compensation expense for all awards granted to employees and non-employees, including shares sold through the issuance of non-recourse promissory notes of which all the shares are considered to be options for accounting purposes in the Company’s consolidated statements of operations:
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2020 |  |  | 2019 |  |  | 2020 |  |  | 2019 |
|  | (in thousands) |  |  | (in thousands) |
Research and development |  | $ | 4,181 |  |  | $ | 926 |  |  | $ | 8,369 |  |  | $ | 1,925 |
General and administrative |  |  | 4,401 |  |  |  | 1,262 |  |  |  | 8,930 |  |  |  | 4,115 |
Total stock-based compensation |  | $ | 8,582 |  |  | $ | 2,188 |  |  | $ | 17,299 |  |  | $ | 6,040 |

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- Definition The entire disclosure for share-based payment arrangement. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -URI http://asc.fasb.org/topic&trid=2228938 + Details
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