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Stock-Based Compensation

12 Months Ended

Dec. 31, 2021

(10) Stock-Based Compensation

Effective upon the closing of the Company’s IPO on January 31, 2020, the Company’s 2019 Equity Incentive Plan (the “2019 Plan”) became effective, succeeding the Company’s previous equity incentive plan. No new options may be issued under the previous plan, although shares subject to grants which are cancelled or forfeited will again be available under the 2019 Plan. Effective June 1, 2021, the 2019 Plan was amended to increase the number of shares authorized to be issued from 1,000,000 to 2,000,000. As of December 31, 2021, 630,569 shares were available for future grants.

The 2019 Plan provides for grants to employees, members of the Board, consultants and advisors to the Company, in the form of stock options, stock awards and other equity-based awards. The amount and terms of grants are determined by the Board. Stock options have a maximum term of 10 years after date of grant and are exercisable in cash or as otherwise determined by the Board.

Stock-based compensation expense in the statements of operations, including the fair value of stock awards to consultants and advisors for services rendered, for the years ended December 31, 2021 and 2020 was as follows:


	Year Ended
	December 31,
	2021		2020

Research and development	$	2,016,745	$	138,704
General and administrative		2,680,882		1,726,209
	$	4,697,627	$	1,864,913

Stock option activity for the years ended December 31, 2021, and 2020, was as follows:


				Weighted
				Average
				Remaining
		Weighted		Contractual	Aggregate
	Number of	Average		Term	Intrinsic
	Shares	Exercise Price		(Years)	Value
Outstanding at December 31, 2019	352,282		$ 0.19
Granted	810,000		3.46
Exercised	(48,435)		0.19
Forfeited	(2,381)		0.14
Outstanding at December 31, 2020	1,111,466		2.57
Granted	538,095		33.78
Exercised	(159,813)		2.83
Outstanding at December 31, 2021	1,489,748		13.82	8.4	$ 14,325,377
Exercisable at December 31, 2021	1,105,568		5.87	7.9	$ 14,325,377

The aggregate intrinsic value of options exercised during the years ended December 31, 2021 and 2020 was $11,163,998 and $196,976, respectively. As of December 31, 2021 there was $9,933,691 unrecognized compensation expense related to unvested options. That cost is expected to be recognized over a weighted-average period of 1.4 years.

During the years ended December 31, 2021 and 2020, the Company issued 538,095 and 810,000 options, respectively. Under the grant agreements for the 2021 stock option grants, 143,391 of the options vested immediately, 155,253 of the options vest on March 31, 2022, 155,251 of the options vest on March 31, 2023 and 84,200 of the options vest in substantially equal quarterly installments over two years from the date of grant. Under the grant agreements for the 2020 stock option grants, 50,000 of the options vested after one year and the remainder of the options were vested and exercisable upon grant. All of the options have a 10-year term.

The weighted average grant date fair value of options issued during the years ended December 31, 2021 and 2020 was $27.13 per share and $2.19 per share, respectively. The fair value was estimated using the Black Sholes option pricing model. The expected life of options was estimated using the simplified method, as the Company has limited historical information to develop reasonable expectations about future exercise patterns and post-vesting employment. The risk-free rate was based on the interest rate payable on U.S. Treasury securities at the time of grant for a period that is commensurate with the expected term of the option. Given the lack of a public market for the Company’s common stock prior to the IPO, the expected stock price volatility was based on a weighted approach that incorporates the historic daily volatility of the Company’s common stock since the IPO and the historic daily volatility of similar companies that have been publicly traded for a period commensurate with the expected term of the option. 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. The weighted average assumptions used in the valuation of options granted were as follows:


	Year Ended		Year Ended
	December 31, 2021		December 31, 2020
Risk-free interest rate	1.17	%	0.38	%
Expected life	5.3		5.0
Expected volatility	113	%	80	%
Expected dividend yield	—		—

During the year ended December 31, 2020, the Company granted stock awards totaling 25,000 shares to consultants and advisors for services rendered which vested upon grant. These awards had a weighted-average grant date fair value of $4.91 per share and an aggregate fair value of $122,750, which was recognized in stock-based compensation expense upon grant. No stock awards were issued during the year ended December 31, 2021. As of December 31, 2021, there were no unvested stock awards and there was no unrecognized compensation expense related to stock awards.