Stock Option Plan

12 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

In September 2019, the Company's Board of Directors adopted, and the Company's stockholders approved, the 2019 Incentive Award Plan (the 2019 Plan). A total of (i) 2,011,832 shares of common stock plus (ii) shares subject to awards granted under the 2013 Plan on or before the effective date of the 2019 Plan became available for issuance under the 2019 Plan and was initially be reserved for issuance under the 2019 Plan. Under the 2019 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units and other awards to individuals who are then employees, officers, non-employee directors or consultants of the Company or its subsidiaries. The options generally expire ten years after the date of grant and are exercisable to the extent vested. Vesting is established by the Board of Directors and is generally four years from the date of grant. The 2019 Plan contains an "evergreen provision" that allows annual increases in the number of shares available for issuance on the first day of each calendar year through January 1, 2029 in an amount equal to the lesser of: (i) 4% of the outstanding capital stock on each December 31st, or (ii) such lesser amount determined by the Board of Directors. As of December 31, 2020, 1,139,323 shares remained available for future awards. Under the evergreen provision, on January 1, 2021, an additional 506,092 shares became available for issuance under the 2019 Plan.

Activity under the Company's stock option plans is set forth below:


	Number of Options	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding, December 31, 2019	1,375,542	$	8.33	9.16	$	23,654
Granted	951,031	$	16.02
Exercised	(47,549)	$	0.27
Forfeited	(293,412)	$	10.46
Expired	(9,851)	$	29.02
Outstanding, December 31, 2020	1,975,761	$	11.81	8.71	$	6,750
Vested and expected to vest, December 31, 2020	1,975,761	$	11.81	8.71	$	6,750
Options exercisable, December 31, 2020	464,606	$	6.75	8.01	$	3,362

The weighted-average grant date fair value per share of employee options granted to employees during the years ended December 31, 2020 and 2019 was $7.55 and $7.79, respectively. The intrinsic value is calculated as the difference between the fair value of the Company's common stock and the exercise price of the stock options. The fair value of the Company's common stock is $13.20 and $25.40 per share at December 31, 2020 and 2019, respectively. The intrinsic value of options exercised for the years ended December 31, 2020 and 2019 was $1.0 million and an immaterial amount, respectively.

Stock-Based Compensation Expense

The fair value of employee stock options was estimated using the following assumptions to determine the fair value of stock options granted:


	Years Ended December 31,
		2020	2019
Expected volatility		47%-53%	46%-59%
Risk-free interest rate		0.4%-1.7%	1.6%-2.6%
Dividend yield		—	—
Expected term (in years)		5.50-6.08	5.75-6.08

Employee Stock Purchase Plan

In September 2019, the Board of Directors adopted the Employee Stock Purchase Plan (the ESPP). The ESPP became effective on the day the ESPP was adopted by the Company's Board of Directors. The ESPP permits participants to purchase common stock through payroll deductions of up to 20% of their eligible compensation. A total of 120,000 shares of common stock was initially reserved for issuance under the ESPP. In addition, the number of shares of common stock available for issuance under the ESPP will be annually increased on the first day of each fiscal year during the term of the ESPP, beginning with the 2020 calendar year through January 1, 2029 in an amount equal to the lesser of (i) 1% of the outstanding capital stock on December 31st, or (ii) such lesser amount determined by the Board of Directors. Under the evergreen provision, on January 1, 2021, an additional 126,523 shares became available for issuances under the ESPP. Stock-based compensation expense for the ESPP was an immaterial amount for the year ended December 31, 2020.

The following assumptions were used to calculate the stock-based compensation for each stock purchase right granted under the ESPP:


	Years Ended December 31,
		2020
Expected volatility		58%-83%
Risk-free interest rate		0.1%-1.1%
Dividend yield		—
Expected term (in years)		0.5

Total non-cash stock-based compensation expense recorded related to options granted and stock purchase rights granted under the ESPP in the statement of operations is as follows (in thousands):


	Years Ended December 31,
		2020		2019
Cost of revenue		$	33	$	9
Selling, general and administrative		2,419		445
Research and development		242		118
Total		$	2,694	$	572

As of December 31, 2020, total unrecognized compensation cost was $8.5 million, which is expected to be recognized over a remaining weighted-average vesting period of 2.8 years.

Common stock reserved for future issuance consists of the following at December 31, 2020:


Warrants to purchase common stock						426,827
Common stock option grants issued and outstanding						1,975,761
Common shares available for grant under the stock option plan						1,139,323
Common shares available for future issuance under ESPP						233,961
Total						3,775,872