In September 2021, the Company's Board of Directors adopted, and its stockholders approved, the 2021 Incentive Award Plan (the 2021 Plan). Upon the adoption of the 2021 Plan, the Company restricted the grant of future equity awards under the 2020 Equity Incentive Plan (the 2020 Plan).

The 2021 Plan provides for the grants of stock options and other equity-based awards to employees, non-employee directors, and consultants of the Company. A total of 5,570,000 shares of the Company’s common stock were initially reserved for issuance pursuant to the 2021 Plan, consisting of 4,537,850 shares reserved under the 2021 Plan and 1,032,150 shares of the Company’s common stock that remained available for issuance under the 2020 Plan. The 2021 Plan share reserve will be increased by the number of shares under the 2020 Plan that are repurchased, forfeited, expired or cancelled after the effective date of the 2021 Plan. In addition, the number of shares of the Company’s common stock available for issuance under the 2021 Plan automatically increases on the first day of each fiscal year, beginning with the Company’s 2022 fiscal year, in an amount equal to the lesser of (1) 5% of the outstanding shares of the Company’s common stock on the last day of the immediately preceding fiscal year, or (2) such smaller amount as determined by the Company’s Board of Directors. As of September 30, 2023, 3,886,847 shares were available for future grant under the 2021 Plan.

A summary of the Company’s stock option activity for the period ended September 30, 2023 is as follows (in thousands, expect share and per share data and years):


	Options			Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Term		Aggregate Intrinsic Value
Outstanding at December 31, 2022		5,890,869		$	7.91		8.8	$	13,492
Granted		2,883,689		$	13.32
Exercised		(364,547	)	$	2.25
Cancelled		(299,441	)	$	10.29
Outstanding at September 30, 2023		8,110,570		$	10.00		8.5	$	39,978
Exercisable at September 30, 2023		2,721,726		$	8.07		7.6	$	19,786
Vested and expected to vest as of September 30, 2023		8,110,570		$	10.00		8.5	$	39,978

As of September 30, 2023, 67,074 performance-based stock options were both outstanding and unvested. During the three and nine months ended September 30, 2023, the Company recognized $0.7 million and $0.8 million, respectively, in expenses related to these options as the achievement of certain performance conditions was deemed probable to occur. As of September 30, 2023, the unrecognized stock-based compensation expense related to the performance-based options was $0.5 million.

The Company estimated the fair value of stock options using the Black-Scholes valuation model. The Company accounts for forfeitures of options when they occur. Previously recognized compensation expense for an award is reversed in the period that the award is forfeited. The fair value of stock options was estimated using the following assumptions (excluding option modifications):


	Nine Months Ended September 30,
	2023	2022
Risk-free rate of interest	3.5 - 4.3%	1.6 - 3.6%
Expected term (years)	5.2 - 6.1	5.1 - 6.1
Expected stock price volatility	87.0 - 92.3%	82.3 - 90.4 %
Dividend yield	—	—

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


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Research and development expense	$	2,811	$	651	$	5,749	$	3,732
General and administrative expense		1,566		368		3,590		3,947
Total	$	4,377	$	1,019	$	9,339	$	7,679

The weighted-average grant date fair value of options granted for the nine months ended September 30, 2023 and 2022 was $10.01 and $5.59 per share, respectively.

For nine months ended September 30, 2023, forfeitures resulted in the reversal of compensation expense totaling $0.1 million. For nine months ended September 30, 2022, forfeitures resulted in the reversal of compensation expense totaling $1.1 million, of which $1.0 million related to compensation expense for performance-based options, previously recorded in 2022.

As of September 30, 2023, the unrecognized compensation cost related to outstanding employee and nonemployee options was $42.3 million, and is expected to be recognized as expense over a weighted-average period of approximately 2.6 years.

In September 2021, the Company’s Board of Directors and stockholders approved and adopted the 2021 Employee Stock Purchase Plan (ESPP). The ESPP became effective on the business day immediately prior to the effective date of the Company’s first registration statement. A total of 380,000 shares of the Company’s common stock were initially reserved for issuance pursuant to the ESPP. In addition, the number of shares of the Company’s common stock available for issuance under the ESPP will automatically increase on the first day of each fiscal year, beginning with the Company’s 2022 fiscal year, in an amount equal to the lesser of (1) 1% of the outstanding shares of the Company’s common stock on the last day of the immediately preceding fiscal year, or (2) such smaller amount as determined by the Company’s Board of Directors. On January 1, 2022, the number of shares reserved for issuance under the ESPP was increased to 805,361 shares and on January 1, 2023, the number of shares reserved for issuance under the ESPP was increased to 1,231,705 shares.

The ESPP permits eligible employees who elect to participate in an offering under the ESPP to have up to 15% of their eligible earnings withheld, subject to certain limitations, to purchase shares of common stock pursuant to the ESPP. The price of common stock purchased under the ESPP is equal to 85% of the lower of the fair market value of the common stock at the commencement date of each offering period or the relevant date of purchase. Each offering period is 24 months, with new offering periods commencing every six months on or about the dates of March 15 and September 15 of each year. During the nine months ended September 30, 2023 and 2022, the Company issued 56,387 and 45,919 shares, respectively, of common stock in connection with the ESPP. As of September 30, 2023, there were 1,129,399 shares available for future purchase under the ESPP.

The Company recognized compensation expense of $0.1 million and $0.1 million for the three months ended September 30, 2023 and 2022, respectively, and $0.4 million and $0.4 million for the nine months ended September 30, 2023 and 2022, respectively, related to the ESPP. As of September 30, 2023, the remaining unrecognized compensation expense related to the ESPP was $0.3 million, and is expected to be recognized as expense over a weighted-average period of approximately 1.2 years.

Certain individuals were granted the ability to early exercise their stock options prior to the IPO. The shares of common stock issued from the early exercise of unvested stock options are restricted and continue to vest in accordance with the original vesting schedule. The Company has the option to repurchase any unvested shares at the original purchase price upon any voluntary or involuntary termination. The shares purchased by the employees and non-employees pursuant to the early exercise of stock options are not deemed, for accounting purposes, to be outstanding until those shares vest. The cash received in exchange for exercised and unvested shares related to stock options granted is recorded as a liability for the early exercise of stock options on the accompanying condensed balance sheets and will be transferred into common stock and additional paid-in capital as the shares vest. As of September 30, 2023 and December 31, 2022, 124,644 and 277,081 unvested shares issued under early exercise provisions were subject to repurchase by the Company, respectively. As of September 30, 2023 and December 31, 2022, the Company recorded $0.1 million and $0.2 million, respectively, associated with early exercised stock options in other long-term liabilities.