In 2011, the Company established its 2011 stock option plan (the “2011 Plan”) that provided for the granting of stock options to employees and nonemployees of the Company.

In July 2021, the Company’s Board of Directors and stockholders adopted and approved the 2021 Equity Incentive Plan, (the “2021 Plan”). The Company’s 2011 Stock Plan was terminated in connection with the IPO and no further grants will be made under the 2011 Plan from the date that the 2021 Plan became effective. Under the 2011 Plan, the Company had the ability to issue incentive stock options ("ISOs"), nonqualified stock options ("NSOs"), stock appreciation rights, dividend equivalent rights, restricted stock awards, and restricted stock unit awards. Options under the 2011 Plan could be granted for periods of up to 10 years. For incentive stock options granted to a grantee who, at the time the option is granted, owns stock representing more than 10% of the voting power of all classes of stock of the Company or any parent or subsidiary of the Company, the term of the incentive stock option may be granted for periods of up to five years. The ISOs and NSOs will be granted at a price per share not less than the fair value at the date of grant. The exercise price of an ISO granted to a 10% stockholder shall not be less than 110% of the estimated fair value of the shares on the date of grant, as determined by the board of directors. Options granted to new hires generally vest over a four-year period, with 25% vesting at the end of one year and the remaining vesting monthly thereafter; options granted as merit awards generally vest monthly over a four-year period. The Company reserved 5,200,000 shares of common stock for future issuance under the 2021 Plan.

At September 30, 2021 and December 31, 2020, there were 5,331,595 shares and 451,670 shares, respectively, of common stock available for issuance under the 2021 Plan and 2011 Plan, respectively.

Activity under the 2011 Plan and 2021 Plan is set forth below:


	Shares Available for Grant			Number of Shares			Weighted-Average Exercise Price		Weighted-Average Contractual Term (in years)		Average Intrinsic Value (in thousands)
Balances as of December 31, 2020		451,670			3,137,776		$	0.94		6.8	$	18,656
Additional shares reserved		7,260,000
Grants		(2,487,203	)		2,487,203			11.13
Forfeited/cancelled		107,128			(107,128	)		2.89
Exercised/released					(264,882	)		1.01
Balances as of September 30, 2021		5,331,595			5,252,969		$	5.72		7.6	$	89,340
Vested and exercisable as of September 30, 2021					2,054,954		$	1.46		5.2	$	43,650
Vested and expected to vest as of September 30, 2021					5,222,969		$	5.75		7.7	$	88,662

The weighted-average grant-date fair values of options granted during the nine months ended September 30, 2021 and 2020 was $10.56 and $2.31 per share, respectively. The aggregate intrinsic value of options exercised were $4.2 million during the nine months ended September 30, 2021. The aggregate intrinsic value was calculated as the difference between the exercise prices of the underlying options and the estimated fair value of the common stock on the date of exercise. As of September 30, 2021, the unrecognized stock-based compensation of unvested options was $25.1 million, which is expected to be recognized over a weighted-average period of 3.5 years.

The Company estimated the fair value of stock options using the Black-Scholes option-pricing model. The fair value of stock options is recognized on a straight-line basis over the requisite service periods of the awards. The fair value of stock options was estimated using the following weighted-average assumptions:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2021	2020	2021	2020
Expected term (in years)	5.90 – 6.07	6.02	5.00 – 6.08	5.85 – 6.09
Expected volatility	60.3% – 60.7%	55.6%	56.8% – 60.8%	48.3% – 55.6%
Risk-free interest rate	0.95% – 1.16%	0.34%	0.48% – 1.16%	0.33% – 1.77%
Dividend yield	–	–	–	–

The expected term is calculated using the simplified method, which is available if there is insufficient historical data about exercise patterns and post vesting employment termination behavior. The simplified method is based on the vesting period and the contractual term for each grant or for each vesting tranche for awards with graded vesting. The midpoint of the vesting date and the maximum contractual expiration date is used as the expected term under this method. For awards with multiple vesting tranches, the time from grant until the midpoints for each of the tranches may be averaged to provide an overall expected term.

The Company used an average historical stock price volatility of a peer group of publicly traded companies to be representative of its expected future stock price volatility, as the Company did not have any trading history for its common stock. For purposes of identifying these peer companies, the Company considered the industry, stage of

development, size, and financial leverage of potential comparable companies. For each grant, the Company measured historical volatility over a period equivalent to the expected term.

The risk-free interest rate is based on the implied yield currently available on US Treasury zero-coupon issues with remaining terms equivalent to the expected term of a stock award.

The Company has not paid, and does not anticipate paying, any dividends in the near future. Accordingly, the Company has estimated the dividend yield to be 0%.

RSUs are share awards that entitle the holder to receive freely tradable shares of the Company’s common stock upon vesting. The RSUs cannot be transferred, and the awards are subject to forfeiture if the holder’s employment terminates prior to the release of the vesting restrictions. The RSUs generally vest over a four-year period with straight-line vesting in equal amounts on an annual basis, provided the employee remains continuously employed with the Company. The fair value of the RSUs is equal to the closing price of the Company’s common stock on the grant date.

In September 2021, the Company granted 23,800 RSUs at a grant-date fair value of $22.70 per share. There were no RSUs granted prior to September 2021. During the three months ended September 30, 2021, the Company recorded stock-based compensation of less than $0.1 million related to the RSUs. As of September 30, 2020, there was $0.5 million of total unrecognized compensation cost related to the RSUs that is expected to be recognized over a weighted-average period of 3.9 years.

The following is a summary of stock-based compensation expense by function (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Cost of goods sold	$	22	$	6	$	46	$	11
Research and development		169		28		307		51
Selling, general and administrative		1,708		131		2,754		229
Total stock-based compensation expense	$	1,899	$	165	$	3,107	$	291

In July 2021, the Board of Directors and stockholders also adopted and approved the 2021 Employee Stock Purchase Plan (the “ESPP”). The Company reserved 850,000 shares of common stock for future issuance under the ESPP.

As of September 30, 2021, no shares of common stock have been purchased under the ESPP.