Stock-Based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation and Employee Benefit Plans

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 stock on December 31st of the preceding calendar year. The Board 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, 2023, there were 3,983,756 shares of common stock available for future grants. On January 1, 2024, the share reserve automatically increased by 1,890,404 shares. The 2020 Plan permits the granting of options, stock appreciation rights, RSUs, performance stock, and performance cash awards. The terms of the agreements under the 2020 Plan are determined by the Board. The Company’s awards generally vest over four years and have a term of 10 years. In 2023, the Company granted 165,050 options that vest in equal tranches based on the Company achieving a closing share price of equal to or greater than $4.00, $5.00, and $6.00 for 30 consecutive trading days on or before the fourth anniversary of the grant date. In 2022, the Company granted 178,150 options that vest based on the Company achieving a closing share price of equal to or greater than $18.00 for 30 consecutive trading days on or before the fourth anniversary of the grant date.

2020 Employee Stock Purchase Plan

The 2020 Employee Stock Purchase Plan (the“2020 ESPP”) became effective in connection with the Company’s initial public offering (“IPO”) and as of December 31, 2023, a total of 1,204,874 shares of common stock are 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. On January 1, 2024, the share reserve increased by 472,601 shares of common stock. During the years ended December 31, 2023 and 2022, the Company issued 23,020 and 13,088 shares of common stock for aggregate cash proceeds of $0.1 million and $0.1 million, respectively.

The Company recorded stock-based compensation expense in the following expense categories of its accompanying audited statements of operations and comprehensive loss (in thousands):


	Year Ended December 31,
	2023		2022
Research and development	$	3,462	$	3,574
General and administrative	3,477		2,888
Total stock-based compensation	$	6,939	$	6,462

The following table summarizes option activity under the 2020 Plan:


	Options	Weighted Average Exercise Price		Weighted Average Remaining Life (Years)
Balance at December 31, 2022	4,209,255	$	8.29	8.07
Granted	1,462,535	3.41
Exercised	(135,254)	3.26
Forfeited	(594,372)	6.41
Balance at December 31, 2023	4,942,164	$	7.21	7.62
Vested and expected to vest	4,787,518	$	7.27	7.47
Exercisable at the end of the period	2,696,018	$	8.34	6.47

Options granted during the years ended December 31, 2023 and 2022 had weighted-average grant-date fair values of $2.50 and $4.03 per share, respectively. As of December 31, 2023, the unrecognized compensation cost for options issued was $8.0 million and will be recognized over an estimated weighted-average amortization period of 1.94 years. The total intrinsic

value of options exercised during the years ended December 31, 2023 and 2022 was $0.40 million and $0.1 million, respectively. The aggregate intrinsic value of options outstanding and exercisable as of December 31, 2023 was $6.6 million.

Restricted Stock Units

The following table summarizes employee RSU activity for the year ended December 31, 2023:


	Awards	Weighted Average Grant Date Fair Value
Unvested RSUs at December 31, 2022	309,477	$	7.22
Granted	460,925	3.54
Vested	(77,312)	7.22
Forfeited	(102,687)	4.62
Balance at December 31, 2023	590,403	$	4.80

The Company recognized $0.8 million and $0.6 million of stock-based compensation related to RSUs as of December 31, 2023 and December 31, 2022. As of December 31, 2023, the unrecognized compensation cost for RSUs issued was $2.0 million and will be recognized over an estimated weighted-average amortization period of 2.70 years. The fair values of RSUs is based on the fair value of the Company's common stock on the date of the grant.

Fair Value of Stock Options and Shares Issued

The Company accounts for stock-based compensation by measuring and recognizing as compensation expense the fair value of all share-based payment awards made to employees, including employee stock options and restricted stock awards. The Company uses the Black-Scholes option pricing model to estimate the fair value of employee stock options that only have service or performance conditions. The Company uses the Monte Carlo pricing model to estimate the fair value of options that have market-based conditions. The inputs to both pricing models require a number of management estimates such as the expected term, 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 assumption is based on the historical volatilities of the common stock of a peer group of publicly traded companies as well as the historical volatility of the Company's common stock since the Company began trading subsequent to the IPO in October 2020 over the period corresponding to the expected life as of the grant date. The historical volatility data was computed using the daily closing prices during the equivalent period of the calculated expected term of the stock-based awards. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of the Company's stock price becomes available, or until circumstances change, such that the identified entities are no longer comparable companies. In the latter case, other suitable, similar entities whose share prices are publicly available would be utilized in the calculation.

•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 dividends on its common stock.

•Prior to the Company’s IPO, the 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 calculated using the Black-Scholes option pricing model granted under the Company’s 2020 Plan were estimated using the following weighted-average assumptions:


	Year Ended December 31,
	2023		2022
2020 Plan
Expected term - years	6.08		6.08
Expected volatility	84.8	%	82.4	%
Risk-free interest rate	3.6	%	2.4	%
Expected dividends	—		—

The grant-date fair value of options calculated using the Monte Carlo option pricing model granted under the Company’s 2020 Plan were estimated using the following assumptions:


	Year Ended December 31,
	2023		2022
2020 Plan
Expected term - years	4.00		4.00
Expected volatility	80.0	%	80.0	%
Risk-free interest rate	3.6	%	1.4	%
Expected dividends	—		—

The grant-date fair value of shares issued calculated using the Black-Scholes option pricing model under the Company’s 2020 ESPP were estimated using the following weighted-average assumptions:


	Year Ended December 31,
	2023		2022
2020 ESPP
Expected term - years	0.5		0.5
Expected volatility	85.5	%	82.9	%
Risk-free interest rate	4.0	%	2.5	%
Expected dividends	—		—

Employee Benefit Plans

The Company sponsors a 401(k) retirement plan in which substantially all of its full-time employees are eligible to participate. Participants may contribute a percentage of their annual compensation to this plan, subject to statutory limitations. The Company made matching contributions of $0.7 million and $0.5 million to the plan for the years ended December 31, 2023 and 2022, respectively.