In March 2021, the Company’s Board of Directors adopted the Company’s 2021 Equity Incentive Plan (2021 Plan), which is the successor to the Company’s 2014 Equity Incentive Plan (2014 Plan). As of the effective date of the 2021 Plan, awards granted under the 2014 Plan that are forfeited or otherwise become available under the 2014 Plan will be included and available for issuance under the 2021 Plan. Under the 2021 Plan, the Company may grant stock options, stock appreciation rights, restricted stock awards, restricted stock units, and other awards to individuals who are employees, officers, directors or consultants of the Company and its affiliates.

Under the 2014 Plan, certain employees were granted the ability to early exercise their options. The shares of common stock issued pursuant to the early exercise of unvested stock options are restricted and continue to vest over the requisite service period after issuance. The Company has the option to repurchase any unvested shares at the original purchase price upon any voluntary or involuntary termination. The shares purchased by the employees pursuant to the early exercise of stock options are not deemed, for accounting purposes, to be outstanding until those shares vest. As of March 31, 2024, there were no unvested shares of common stock outstanding that were issued pursuant to the early exercise of stock options.

As of March 31, 2024, the Company had reserved shares of its common stock for future issuance as follows:


	Shares Reserved
Common stock options outstanding		4,798,794
Unvested restricted stock units		311,500
Available for future grants under the 2021 Equity Incentive Plan		4,296,163
Available for future grants under the 2021 Employee Stock Purchase Plan		780,098
Total shares of common stock reserved		10,186,555

A summary of the Company’s stock option activity and related information for the three months ended March 31, 2024 is as follows:


	Options Outstanding			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2023		5,301,254		$	4.76		6.9	$	—
Forfeited/Expired		(502,460	)	$	4.85
Outstanding at March 31, 2024		4,798,794		$	4.75		6.9	$	—
Vested at March 31, 2024		3,105,675		$	4.90		6.4	$	—
Exercisable at March 31, 2024		3,369,189		$	4.90		6.4	$	—

Options exercisable at March 31, 2024 include vested options and options eligible for early exercise. All outstanding options as of March 31, 2024 are expected to vest.

Unrecognized stock-based compensation expense as of March 31, 2024 was $4.4 million, which is expected to be recognized over a weighted-average vesting term of 1.8 years.

The Company estimates stock awards fair value on the date of grant using the Black-Scholes valuation, with the vesting being subject to service requirements. The Company accounts for forfeitures when they occur. The Company did not grant any stock options during the three months ended March 31, 2024. The fair value of the options granted during the three months ended March 31, 2023 were estimated at the date of grant with the following assumptions: risk-free interest rate of 3.9%, expected volatility of 85.1%, expected life of 6.1 years, and expected dividend yield of 0%.

Risk-free interest rate. The Company bases the risk-free interest rate assumption on the U.S. Treasury’s rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued.

Expected volatility. The expected volatility assumption was based on the volatilities of a peer group of similar companies whose share prices are publicly available and the Company’s own stock. The peer group was developed based on companies in the biotechnology industry.

Expected term. The expected term represents the period of time that options are expected to be outstanding. Because the Company does not have historical exercise behavior, it determines the expected life assumption using the simplified method, which is an average of the contractual term of the option and its vesting period.

Expected dividend yield. The Company bases the expected dividend yield assumption on the fact that it has never paid cash dividends and has no present intention to pay cash dividends.

RSUs consist of time-based units (TSUs), performance-based units (PSUs) and market-based units (MSUs). The following table summarizes RSU activities during the three months ended March 31, 2024:


	Number of RSUs			Weighted-Average Grant Date Fair Value
Unvested at December 31, 2023		326,500		$	5.90
Cancelled		(15,000	)	$	6.98
Unvested at March 31, 2024		311,500		$	5.85

TSUs typically vest over four years, with 25% vesting on the one-year anniversary of the employee’s hire date and the remainder vesting monthly or quarterly over the following three years subject to the employee’s continued employment with the Company through the vesting dates. The fair value of the awards was based on the value of the Company’s common stock at the grant date of the award and expense is recognized on a straight-line basis. The Company had 57,000 unvested shares underlying TSUs as of March 31, 2024. The stock-based compensation expense related to such TSUs for the three months ended March 31, 2024 was immaterial. Unrecognized stock-based compensation expense as of March 31, 2024 was $0.3 million, which is expected to be recognized over a weighted-average vesting term of 3.4 years.

The vesting of the PSUs is based on the Company achieving certain regulatory milestones and is subject to the employee’s continued employment with the Company through the achievement date. The fair value of the awards was based on the value of the Company’s common stock at the grant date of the award and expense recognition is based on the probability of achieving the performance conditions. Stock-based compensation expense is adjusted in future periods for subsequent changes in the expected outcome of the performance conditions. The Company had 134,500 unvested shares underlying PSUs as of March 31, 2024. The Company concluded that achievement of the performance conditions was not probable as of March 31, 2024 and 2023, and therefore no stock-based compensation expense was recognized for the three months ended March 31, 2024 and 2023 in connection with the PSUs. As of March 31, 2024, there was $1.1 million of unrecognized stock-based compensation expense related to PSUs that were deemed not probable of vesting.

The vesting of the MSUs is based on the Company’s closing stock price trading above $20 per share for 30 consecutive trading days subject to the employee’s continued employment with the Company through the date of achievement. The share price of the Company’s common stock on the date of issuance of the MSUs was $2.78 per share. The fair value was based on Monte Carlo simulation model on the grant date. Stock-based compensation expense is recognized over the derived service period of approximately 3 years. The Company had 120,000 unvested shares underlying MSUs as of March 31, 2024. Stock-based compensation expense related to the MSUs during the three months ended March 31, 2024 and 2023 was immaterial. As of March 31, 2024, unrecognized stock-based compensation expense related to the MSUs was immaterial.

In connection with the CEO’s employment agreement, he is entitled to receive a Performance Award in the amount of $7.5 million, payable in cash, common stock or a combination of cash and common stock, at the election of the Company, in the event that (i) the Company’s market value exceeds $750.0 million utilizing the volume-weighted average of the closing sale price of its common stock on the Nasdaq Stock Market or other principal exchange for each of the 30 trading days immediately prior to the measurement date, or (ii) the fair market value of the net proceeds available for distribution to the Company’s stockholders in connection with a change in control as defined in the Company’s severance benefit plan, as determined in good faith by its Board of

Directors, exceeds $750.0 million. The Company has determined that the Performance Award is subject to ASC 718, Compensation – Stock Compensation and includes both market and performance conditions. Since the Company’s initial public offering (IPO), neither of the events have yet been satisfied. The Company estimated the fair value of the Performance Award at each reporting period using the Monte Carlo simulation (Note 4), which is recognized as stock-based compensation expense over the derived service period. For the three months ended March 31, 2024, stock-based compensation expense was immaterial. For the three months ended March 31, 2023, the Company recognized approximately $0.3 million in stock-based compensation expense as a direct result of the increased value of the Performance Award primarily caused by the increase in the Company’s common stock price.

In March 2021, the Company’s Board of Directors adopted the Company’s 2021 Employee Stock Purchase Plan (ESPP), which became effective immediately prior to the execution of the underwriting agreement in connection with the Company’s IPO. As of March 31, 2024, 288,466 shares have been issued under the ESPP.

In September 2021, the compensation committee of the Company’s Board of Directors (Compensation Committee) adopted the Company’s 2021 UK Sharesave Sub-plan (SAYE). An allocation of 25,875 shares of common stock from the ESPP reserve pool was approved and reserved for issuance under the SAYE. The Compensation Committee terminated the SAYE in January 2024 and the reserved shares were returned to the ESPP reserve pool. No shares were issued under the SAYE prior to its termination.

The stock-based compensation expense related to the ESPP and the SAYE for the three months ended March 31, 2024 and 2023, was immaterial.

The following table summarizes stock-based compensation expense, including expense associated with options, TSUs, MSUs and award modifications for unvested options, reflected in the consolidated statements of operations and comprehensive loss (in thousands):


	Three Months Ended March 31,
	2024		2023
Research and development	$	253	$	473
General and administrative		825		684
Total	$	1,078	$	1,157