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Stock-Based Compensation
 12 Months Ended
Dec. 31, 2021
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
2020 Equity Incentive Plan
In September 2020, the Company adopted the 2020 Stock Incentive Plan (the “2020 Plan”) which, as of the adoption date, replaced the 2016 Stock Incentive Plan. Under the 2020 Plan, the share reserve automatically increases on January 1st of each year beginning in 2021 and ending with a final increase on January 1, 2030 in an amount equal to 4% of the Company’s outstanding common shares on December 31st of the preceding calendar year. The Board of Directors may provide that there will be no increase in the share reserve for any such year or that the increase in the share reserve may be smaller than would otherwise occur. As of December 31, 2021, there were 3,912,408 shares available for future grants under the 2020 Plan and on January 1, 2022, the share reserve automatically increased by 1,693,555 shares. The 2020 Plan permits the granting of options and restricted stock. The terms of the agreements under the 2020 Plan are determined by the Company’s Board of Directors. The Company’s awards vest based on the terms in the agreements and generally vest over four years and have a term of 10 years.
2020 Employee Stock Purchase Plan
The 2020 Employee Stock Purchase Plan (“2020 ESPP”) became effective in connection with the Company’s IPO. A total of 395,795 shares of common stock were reserved for issuance under the 2020 ESPP. Eligible employees may purchase shares of common stock under the 2020 ESPP at 85% of the lower of the fair market value of the Company’s common stock as of the first or the last day of each offering period. Employees are limited to contributing 15% of the employee’s eligible compensation and may not purchase more than $25,000 of stock during any calendar year or more than 600 shares during any one purchase period. The 2020 ESPP share reserve automatically increases on January 1st of each calendar year, for ten years, commencing on January 1, 2021, in an amount equal to 1% of the total number of shares of common stock outstanding on December 31st of the preceding calendar year. The Board may act prior to January 1st of a given year to provide that there will be no January 1st increase of the share reserve for such year or that the increase in the share reserve for such year will be a smaller number of shares of common stock than would otherwise occur pursuant to the preceding sentence. As of December 31, 2021 there were 393,689 shares available for future purchases and on January 1, 2022, the share reserve automatically increased by 423,388 shares. Under the 2020 ESPP, the Company issued 2,106 shares of common stock for aggregate cash proceeds of $0.1 million during the year ended December 31, 2021. There were no shares of common stock issued during the year ended December 31, 2020.
The Company recorded stock-based compensation expense in the following expense categories of its accompanying audited statements of operations and comprehensive loss (amounts in thousands):
Year Ended December 31,
20212020
Research and development$2,200 $531 
General and administrative3,267 735 
Total stock-based compensation$5,467 $1,266 
The following table summarizes option activity under the 2020 Plan and the 2016 Stock Incentive Plan:
Options
Weighted
Average
Exercise Price
Weighted
Average
Remaining Life
(Years)
Balance at January 1, 20212,742,022 $7.95 8.82
Granted325,671 23.60 
Exercised(557,609)3.40 
Forfeited(61,408)12.13 
Balance at December 31, 20212,448,676 $10.96 8.08
Vested and expected to vest2,418,923 $10.88 8.07
Exercisable at the end of the period1,259,440 $6.44 7.55
Options granted during the years ended December 31, 2021 and 2020 had weighted-average grant-date fair values of $16.38 and $8.93 per share, respectively. As of December 31, 2021, the unrecognized compensation cost was $11.4 million and will be recognized over an estimated weighted-average amortization period of 2.48 years. The aggregate intrinsic value of options exercised as of December 31, 2021 and 2020 was $10.8 million and $49.7 million, respectively. The aggregate intrinsic value of options outstanding and exercisable as of December 31, 2021 was $5.9 million.
The fair value of each option is estimated on the date of grant using a Black-Scholes option pricing model which takes into account inputs such as the exercise price, the estimated fair value of the underlying common stock at grant date, expected term, expected stock price volatility, risk-free interest rate and dividend yield. The fair value of stock options was determined using the methods and assumptions discussed below.
•The expected term of employee stock options with service-based vesting is determined using the “simplified” method, whereby the expected life equals the arithmetic average of the vesting term and the original contractual term of the option due to the Company’s lack of sufficient historical data.
•The expected stock price volatility is based on historical volatilities of comparable public entities within the Company’s industry.
•The risk-free interest rate is based on the interest rate payable on U.S. Treasury securities in effect at the time of grant for a period that is commensurate with the expected term.
•The expected dividend yield is 0% because the Company has not historically paid, and does not expect, for the foreseeable future, to pay a dividend on its common stock.
•Prior to the Company’s IPO, its Board periodically estimated the fair value of the Company’s common stock considering, among other things, contemporaneous valuations of its common stock prepared by an unrelated third-party valuation firm. Subsequent to the Company’s IPO, options are issued with a strike price no less than the market price on date of grant.
The grant-date fair value of options granted under the Company’s 2020 Plan were estimated throughout the year using the Black-Scholes option-pricing model using the following weighted-average assumptions:
Year Ended December 31,
20212020
Expected term - years6.085.94
Expected volatility81.4 %75.3 %
Risk-free interest rate1.1 %0.5 %
Expected dividends— — 
The restricted shares are considered the issuance of share-based payments as opposed to the sale of stock and as such, the Company has recognized compensation expense for these awards based on the fair value of the award on the date of grant.
The following table summarizes the activity relating to these shares:
Awards
Outstanding at December 31, 202011,752 
Vested(11,752)
Outstanding at December 31, 2021— 
The grant-date fair value of shares issued under the Company’s 2020 ESPP were estimated throughout the year using the Black-Scholes option-pricing model using the following weighted-average assumptions:
Year Ended December 31,
20212020
Expected term - years0.500.00
Expected volatility81.3 %— %
Risk-free interest rate0.9 %— %
Expected dividends— —