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Common Stock and Stock-Based Compensation | 3 Months Ended
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Mar. 31, 2021
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] |
Common Stock and Stock-Based Compensation |
5. | Common Stock and Stock-Based Compensation
As of each balance sheet date, the Company had reserved shares of common stock for issuance in connection with the following:
|  | March 31, 2021 |  |  | December 31, 2020 |
Conversion of outstanding shares of convertible preferred stock |  |  | — |  |  |  | 16,079,230 |
Options outstanding under incentive award plans |  |  | 2,544,778 |  |  |  | 2,466,670 |
Shares available for future grant under incentive award plans |  |  | 2,327,433 |  |  |  | 17,556 |
Shares available for future grant under employee stock purchase plans |  |  | 240,000 |  |  |  | — |
Total shares reserved |  |  | 5,112,211 |  |  |  | 18,563,456 |
Each share of common stock entitles the holder to one vote on all matters submitted to a vote of the Company’s stockholders. Common stockholders are entitled to receive dividends, if any, as may be declared by the Company’s board of directors, subject to the preferential dividend rights of the convertible preferred stock. Through March 31, 2021, no cash dividends have been declared or paid by the Company. Stock-Based Compensation The Company has two stock-based compensation plans, the 2017 Incentive Award Plan (the “2017 Plan”) and the 2021 Incentive Award Plan (the “2021 Plan”) which was adopted in February 2021. Each plan, while effective, authorizes the granting of equity awards to employees and directors of the Company, as well as non-employee consultants. Stock options granted to employees and nonemployees under the plans generally vest over four years and allows the holder of the option to purchase common stock at a stated exercise price. Options granted under the plans generally expire ten years after the date of grant. The Company recognizes the stock-based compensation expense over the requisite service period of the individual grantees, which generally equals the vesting period. 2021 Incentive Award Plan In January 2021, the Company's board of directors approved the 2021 Plan which permits the granting of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance bonus awards, performance stock unit awards and other stock awards to employees, directors, officers and consultants. In February 2021, 2,400,007 shares were authorized for issuance under the 2021 Plan. The 2021 Plan is successor to the 2017 Incentive Award Plan and no additional awards may be issued from the 2017 Plan. However, the 2017 Plan will continue to govern the terms and conditions of the outstanding awards granted under this plan. Shares of common stock subject to awards granted under the 2017 Plan that are forfeited or lapse unexercised and which following the effective date of the 2021 Plan are not issued under the 2017 Plan will be available for issuance under the 2021 Plan. As of March 31, 2021, 2,327,433 shares of the Company’s common stock were available for future grants under the 2021 Plan. 2021 Employee Stock Purchase Plan The 2021 Employee Stock Purchase Plan (the “2021 ESPP”) was approved by the Company’s board of directors in January 2021. In February 2021, a total of 240,000 shares were initially reserved for issuance under this plan, which shall be cumulatively increased on the first day of each year beginning in 2022 and ending in 2031 equal to the lesser of (i) 1% of the shares outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year and (ii) such number of shares as may be determined by the Board. Stock Options The following table summarizes the stock option activity for all stock plans during the quarter ended March 31, 2021:
|  | Number of Shares |  |  | Weighted- Average Exercise Price |  |  | Weighted- Average Remaining Contractual Term |  |  | Aggregate Intrinsic Value |
|  |  |  |  |  |  |  |  |  | (in years) |  |  | (in thousands) |
Outstanding as of December 31, 2020 |  |  | 2,466,670 |  |  | $ | 8.03 |  |  |  | 9.61 |  |  | $ | 21,678 |
Granted |  |  | 106,000 |  |  |  | 20.12 |  |  |  |  |  |  |  | — |
Forfeited |  |  | (27,892 | ) |  |  | 7.18 |  |  |  |  |  |  |  | — |
Outstanding as of March 31, 2021 |  |  | 2,544,778 |  |  | $ | 8.57 |  |  |  | 8.64 |  |  | $ | 33,976 |
Exercisable, March 31, 2021 |  |  | 2,009,995 |  |  | $ | 8.16 |  |  |  | 8.67 |  |  | $ | 27,742 |
Vested and expected to vest, March 31, 2021 |  |  | 2,544,778 |  |  | $ | 8.57 |  |  |  | 8.64 |  |  | $ | 33,976 |
The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. As of March 31, 2021, there was $26.0 million of unrecognized stock-based compensation expense related to unvested stock options which is estimated to be recognized over a period of 3.53 years. The Company estimated the fair value of options granted using a Black-Scholes option pricing model with the following assumptions presented on a weighted average basis:
|  | Three Months Ended March 31, |
|  | 2021 |  |  | 2020 |
Expected option life |  |  | 5.95 |  |  |  | 5.88 |
Expected volatility |  |  | 66.70 | % |  |  | 59.95 | %
Risk-free interest rate |  |  | 0.76 | % |  |  | 0.58 | %
Expected dividend yield |  |  | — | % |  |  | — | %
Fair value of underlying common stock |  | $ | 20.13 |  |  | $ | 9.24 |
Fair value of option |  | $ | 11.94 |  |  | $ | 5.67 |
Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future. Restricted Stock The following table summarizes the stock award activity for all stock plans during the quarter ended March 31, 2021:
|  | Number of Shares |  |  | Grant-Date Fair Value |
Unvested restricted common stock as of December 31, 2020 |  |  | 83,334 |  |  | $ | 1.96 |
Forfeited |  |  | (11,905 | ) |  |  | 1.96 |
Unvested restricted common stock as of March 31, 2021 |  |  | 71,429 |  |  | $ | 1.96 |
As of March 31, 2021, unrecognized stock-based compensation expense related to restricted stock granted by the Company was nominal and is estimated to be recognized over a period of 0.02 years. Stock-Based Compensation Expense Stock-based compensation expense was classified in the condensed consolidated statements of operations and comprehensive loss as follows:
|  | Three Months Ended March 31, |
(in thousands) |  | 2021 |  |  | 2020 |
Research and development expense |  | $ | 482 |  |  | $ | 78 |
General and administrative expense |  |  | 1,350 |  |  |  | 124 |
Total stock-based compensation expense |  | $ | 1,832 |  |  | $ | 202 |

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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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