On December 12, 2018, the Company adopted the Aura Biosciences, Inc. 2018 Equity Incentive Plan (the “2018 Plan”). The 2018 Plan will expire in 2028. Under the 2018 Plan, Aura may grant incentive stock options, non-qualified stock options, restricted and unrestricted stock awards and stock right. The Board of Directors (the "Board") has determined not to make any further awards under the 2018 Plan as of November 2, 2021. However, the 2018 Plan will continue to govern outstanding equity awards granted thereunder.

The 2021 Stock Option and Incentive Plan, (the "2021 Plan"), was adopted by the Board on October 7, 2021, approved by the Company’s stockholders on October 22, 2021 and became effective on November 1, 2021. The 2021 Plan permits the granting of both options to purchase common stock intended to qualify as incentive stock options under Section 422 of the Code and options that do not so qualify. The number of shares initially reserved for issuance under the 2021 Plan was 3,352,166, which increased on January 1, 2022 and will continue to increase each January 1 thereafter, by 5% of the outstanding number of shares of common stock on the immediately preceding December 31 or such lesser number of shares as determined by the Company’s compensation committee. The maximum number of shares of common stock that may be issued in the form of incentive stock options shall not exceed the initial limit, cumulatively increased on January 1, 2022 and on each January 1 thereafter by the lesser of the annual increase for such year or 3,352,166 shares of common stock. On January 1, 2022, the shares reserved for issuance was increased to 4,812,748 shares.

The 2021 Employee Stock Purchase Plan, (the "ESPP"), was adopted by the Board on October 7, 2021, approved by the Company’s stockholders on October 22, 2021 and became effective on November 1, 2021. A total of 335,217 shares of common stock were initially reserved for issuance under this plan, which increased on January 1, 2022 and will continue to increase each January 1 thereafter through January 1, 2031, by the least of (i) 335,217 shares of common stock, (ii) 1% of the outstanding number of shares of common stock on the immediately preceding December 31 or (iii) such lesser number of shares of common stock as determined by the administrator of the ESPP. On January 1, 2022, the shares reserved for issuance was increased to 627,333 shares. The first offering period has not yet been decided by the Company’s Board of Directors or designated committee of the Company’s Board of Directors.

With the transfer of the available options from the 2018 Plan to the 2021 Plan, there were 3,447,892 options available for grant under the 2021 Plan at March 31, 2022.

The Board is authorized to administer the 2021 Plan. In accordance with the provisions of the 2021 Plan, the Board determines the terms of Aura options and other awards issued pursuant thereto, including the following:

In addition, the Board may award restricted shares of common stock and restricted stock units to participants subject to such conditions and restrictions as it may determine. The Board or any committee to which the Board delegates authority may, with the consent of the affected plan participants, re-price or otherwise amend outstanding awards consistent with the terms of the 2021 Plan.

The following table summarizes stock option activity under the 2018 Plan and 2021 Plan for the three months ended March 31, 2022:


	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at December 31, 2021		4,232,991		$	7.43		8.66	$	40,437
Granted		98,897			18.56
Exercised		(5,593	)		2.97
Cancelled/Forfeited		(43,433	)		12.18
Outstanding at March 31, 2022		4,282,862		$	7.64		8.52	$	61,492
Exercisable at March 31, 2022		1,341,363		$	4.10		6.82	$	24,015

The weighted-average grant date fair value of stock options granted during the three months ended March 31, 2022 and 2021 is $11.98 and $3.56 per share, respectively. The total intrinsic value of options exercised was $0.1 million and $0.01 million for the three months ended March 31, 2022 and 2021, respectively.

The Company has elected to use the Black-Scholes option pricing model to determine the fair value of options granted and generally recognizes the compensation cost of stock-based awards on a straight-line basis over the vesting period of the award.

The determination of the fair value of stock-based payment awards utilizing the Black-Scholes option pricing model is affected by the estimated fair value of the Company’s common stock and a number of other assumptions, including expected volatility, expected life, risk-free interest rate, and expected dividends.

The fair value of the stock options issued for the three months ended March 31, 2022 and 2021 was measured with the following weighted-average assumptions:


	Three Months Ended March 31,
	2022			2021
Risk-free interest rate, %		1.56	%		1.02	%
Expected term		6.01			6.08
Expected volatility of the underlying stock, %		73.02	%		73.16	%
Expected dividend rate, %		—	%		—	%

Restricted Stock Units

The Company has granted restricted stock units with service vesting based conditions. Unvested shares of restricted common stock may not be sold or transferred by the holder. They are legally issued and outstanding. These restrictions lapse accordingly to the time-based vesting of each award.

A summary of the restricted stock units activity during the three months ended March 31, 2022 is as follows:


	Restricted Stock Units			Weighted- Average Grant Date Fair Value
Unvested at December 31, 2021		231,920		$	14.00
Granted		—
Forfeited		(4,066	)		14.00
Unvested at March 31, 2022		227,854		$	14.00

As a result of the 2021 Equity Incentive Plan, the Company granted restricted stock units which vest in increments of 25% annually over a period of four years. No restricted stock units vested during the three months ended March 31, 2022.

The Company recorded stock-based compensation expense as follows (in thousands):


	Three Months Ended March 31,
	2022		2021
Research and development	$	555	$	44
General and administrative		1,039		141
Total	$	1,594	$	185

As of March 31, 2022, there was $16.0 million of unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 3.14 years.

As of March 31, 2022, there was $2.9 million of unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a weighted-average period of 3.58 years.