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Stockholders' Equity
 12 Months Ended
Dec. 31, 2022
Equity [Abstract]  
Stockholders' Equity Stockholders’ Equity
Common Stock
As of December 31, 2022 and December 31, 2021, the Company’s certificate of incorporation authorized the Company to issue up to 200,000,000 shares of common stock. Common stockholders are entitled to dividends as and when declared by the Board of Directors, subject to the rights of holders of all classes of stock outstanding having priority rights as to dividends. There have been no dividends declared to date. The holder of each share of common stock is entitled to one vote.
Shares Reserved for Future Issuance
The Company has reserved shares of common stock for future issuances as follows:
December 31,
20222021
Common stock options issued and outstanding
2,495,528 2,145,131 
Common stock restricted stock units issued and outstanding
998,473 442,428 
Common stock available for future grants
3,765,706 3,751,115 
Common stock available for ESPP1,212,109 932,458 
Total8,471,816 7,271,132 

Stock Option Plan
As of December 31, 2022, the Company reserved 12,747,171 shares of its common stock under its 2000 Stock Plan (the “2000 Stock Plan”), the 2010 Stock Plan (the “2010 Stock Plan”), the 2020 Stock Plan (the “2020 Stock Plan”), and the 2020 Equity Incentive Plan (the “2020 Equity Incentive Plan” and, together with the 2000 Stock Plan, the 2010 Stock Plan and the 2020 Stock Plan, the “Stock Plans”). Options granted under the Stock Plans may be either incentive stock options or nonqualified stock options. Incentive stock options (“ISO”) may be granted only to the Company employees (including officers and directors). Nonqualified stock options (“NSO”) may be granted to the Company employees and consultants. As of December 31, 2022 and December 31, 2021, no shares of common stock remain available for issuance to officers, directors, employees and consultants pursuant to the 2000 Stock Plan. In January 2023, the number of shares of common stock available for issuance under the 2020 Equity Incentive Plan was increased by 1,502,223 shares as a result of the automatic increase provision in the 2020 Equity Incentive Plan.
Options to purchase the Company’s common stock may be granted at a price not less than 100% of the fair market value in the case of ISO or NSO, except for an employee or non-employee with options who owns more than 10% of the voting power of all classes of stock of the Company in which case the exercise price shall be no less than 110% of the fair market value per share on the grant date. Fair market value is determined by the Board of Directors. Options vest as determined by the Board of Directors ranging from immediately upon grant to a rate of 25% per annum over four years from the grant date. Options expire as determined by the Board of Directors but not more than ten years after the date of grant.
Activity under the Stock Plans is set forth below:
Outstanding Options
Number of SharesWeighted Average Exercise Price
Balance, December 31, 20202,923,403 $4.72 
Options granted
421,200 43.79 
Options exercised
(1,065,567)1.77 
Options canceled
(133,905)11.44 
Balance, December 31, 20212,145,131 $13.44 
Options granted
765,900 24.09 
Options exercised
(297,463)2.13 
Options canceled
(118,040)28.30 
Balance, December 31, 20222,495,528 $17.35 

The aggregate intrinsic value of options exercised during the years ended December 31, 2022 and December 31, 2021 was $4.6 million and $43.8 million, respectively.
The aggregate intrinsic value of options outstanding as of December 31, 2022 and December 31, 2021 was $6.9 million and $45.3 million, respectively. The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying stock options and the fair value of the Company’s common stock for stock options that were in-the-money as of December 31, 2022 and December 31, 2021.
December 31, 2022
Number of Shares
Weighted Average Exercise Price
Weighted Average Contractual Life (in Years)
Options vested1,107,541$13.67 7.12
Options vested and expected to vest2,495,528$17.35 7.86
Total intrinsic value of options vested as of December 31, 2022 and December 31, 2021 was $4.1 million and $18.9 million, respectively.
Early Exercise of Stock Options
Under the terms of the individual option grants, options granted from the 2000 Stock Plan, the 2010 Stock Plan and the 2020 Stock Plan are fully exercisable on the grant date, subject to the Company’s repurchase right at the original exercise price. Accordingly, options granted under these plans may be exercised prior to vesting. The shares are subject to the Company’s lapsing repurchase right upon termination of employment or over the options’ vesting period of generally four years at the original purchase price. The proceeds initially are recorded in other liabilities from the early exercise of stock options and are reclassified to additional paid-in capital as the Company’s repurchase right lapses. During the years ended December 31, 2022 and 2021, the Company repurchased 14,459 and 12,945 shares of common stock for less than $0.1 million and less than $0.1 million, respectively. As of December 31, 2022 and December 31, 2021, 77,782 and 223,195 shares were subject to repurchase, with an aggregate exercise price of $0.1 million and $0.4 million, respectively, and were recorded in accrued liabilities on the consolidated balance sheets.
Restricted Stock Units
Activity with respect to restricted stock units was as follows:
Number of Shares Underlying Outstanding Restricted StockWeighted Average Grant Date Fair Value
Unvested, January 1, 2021— $— 
Granted503,110 42.49 
Vested
(40,908)43.40 
Canceled
(19,774)43.60 
Unvested, December 31, 2021442,428 42.36 
Granted937,400 23.63 
Vested
(251,133)35.09 
Canceled
(130,222)33.85 
Unvested, December 31, 2022998,473 $27.72 
The aggregate intrinsic value of restricted stock units outstanding as of December 31, 2022 and December 31, 2021 was $8.4 million and $14.2 million, respectively.
Stock-Based Compensation for Employees and Non-Employees
The weighted average grant-date fair value of the stock options granted during the years ended December 31, 2022, December 31, 2021 was $10.74 and $18.81 per share, respectively.
The Company uses the Black-Scholes Merton option-pricing model to determine the fair value of stock options. The determination of the fair value of stock-based payment awards on the date of grant is affected by the stock price as well as assumptions regarding a number of complex and subjective variables. These variables include expected stock price volatility over the term of the awards, actual and projected employee stock option exercise behaviors, risk-free interest rates and expected dividends. The estimated grant date fair values of employee stock options were calculated using the following assumptions:
Years Ended December 31,
20222021
Weighted average expected term (in years)
6.0 - 6.1
5.0 - 6.3
Volatility
44.5% - 44.8%
44.0% - 44.5%
Risk-free interest rate
1.6% - 3.6%
0.6% - 1.0%
Dividend yield——
Expected Term
The expected term is calculated using the simplified method, which is available where 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 mid-point between 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 periods from grant until the mid-point for each of the tranches are averaged to provide an overall expected term.
Volatility
The expected stock price volatility assumptions for the Company’s stock options for the years ended December 31, 2022 and December 31, 2021 was determined by examining the historical volatilities for industry peers, referred to as “guideline” companies, as the Company had limited trading history for the Company’s common stock. In evaluating similarity, the Company considered factors such as industry, stage of life cycle and size.
Risk-Free Rate
The risk-free interest rate assumption is based on the U.S. Treasury instruments whose term was consistent with the expected term of the Company’s stock options.
Dividend Yield
The expected dividend assumption is based on the Company’s history and expectation of dividend payouts.
Fair Value of Common Stock
The fair value of the Company’s common stock is determined based on its closing market price on the date of grant.
2020 Employee Share Purchase Plan
In September 2020, the Company adopted the ESPP, which became effective on the business day prior to the effectiveness of the registration statement relating to the IPO. A total of 720,000 shares of common stock were initially reserved for issuance under the ESPP. The ESPP permits eligible employees to acquire shares of the Company’s common stock through periodic payroll deductions of up to 15% of base compensation. No employee may purchase more than 2,500 shares during an offering period. In addition, no employee may purchase more than $25,000 worth of stock, determined by the fair market value of the shares at the time such option is granted, in one calendar year. At the end of each purchase period, employees are able to purchase shares at 85% of the lower of the fair market value of the Company’s common stock on the first trading day of the offering period or on the last trading day of the offering period. The Company entered into a new offering period beginning August 16, 2022 and ending February 15, 2023.
The Company issued 89,666 and 144,479 shares under the ESPP for the years ended December 31, 2022 and December 31, 2021, respectively. As of December 31, 2022, there were 1,212,109 shares authorized for future purchase under the ESPP. In January 2023, the number of shares of common stock available for issuance under the ESPP was increased by 375,556 shares as a result of the automatic increase provision in the ESPP.
Compensation expense is calculated using the fair value of the employees' purchase rights under the Black-Scholes model.
Years Ended December 31,
20222021
Weighted average expected term (in years)0.50.5
Volatility
37.8% - 42.8%
36.1% - 42%
Risk-free interest rate
0.7% - 3.1%
0.1%
Dividend yield——
Total Stock-Based Compensation
Stock-based compensation expense is reflected in the statements of operations and comprehensive loss as follows (in thousands):
Years Ended December 31,
20222021
Cost of goods sold$686 

$587 
Research and development2,190 

1,278 
Selling, general and administrative13,569 8,665 
Total$16,445 $10,530 
The above stock-based compensation expense related to the following equity-based awards:
Years Ended December 31,
20222021
Stock options and restricted stock units$15,807 $7,959 
ESPP638 2,571 
Total$16,445 $10,530 
Stock-based compensation of $1.2 million and $1.0 million was capitalized into inventory for the years ended December 31, 2022 and 2021, respectively. Stock-based compensation capitalized in prior periods of $0.7 million and $0.6 million was recognized as cost of sales in the years ended December 31, 2022 and 2021, respectively.
As of December 31, 2022, there was $41.6 million of unrecognized compensation costs related to non-vested common stock options and restricted stock units, expected to be recognized over a weighted-average period of 2.73 years. The total grant date fair value of shares and restricted stock units vested during the years ended December 31, 2022 and December 31, 2021 was $15.5 million and $8.3 million, respectively.
As of December 31, 2022, the Company had unrecognized employee stock-based compensation relating to ESPP awards of approximately $0.1 million, which is expected to be recognized over a weighted-average period of 0.1 years.