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EQUITY INCENTIVE PLAN

9 Months Ended

Sep. 30, 2021

10. EQUITY INCENTIVE PLAN

The Company currently issues stock awards under its 2017 Stock Option and Incentive Plan, as amended (the "2017 Plan") which will expire on June 5, 2027. The shares authorized for issuance under the 2017 Plan were 2,717,431 at September 30, 2021, of which 68,767 were available for future grant. The shares authorized under the 2017 Plan were increased by 925,000 shares by stockholder vote on June 18, 2021 and are subject to annual increases on January 1 by 5% of the number of shares of common stock issued and outstanding on the immediately preceding December 31, or such lessor number of shares determined by the Company’s Board of Directors or Compensation Committee. During the nine months ended September 30, 2021, the shares authorized for issuance increased by 1,803,845 shares.

Stock Options.

The Company accounts for all stock-based compensation payments to employees and directors, including grants of employee stock options, at fair value at the date of grant and expenses the benefit in operating expense in the condensed consolidated statements of operations over the service period of the awards. The Company records the expense for stock-based compensation awards subject to performance-based milestone vesting over the remaining service period when management determines that achievement of the milestone is probable based on the expected satisfaction of the performance conditions as of the reporting date. The fair value of each stock option granted is estimated on the date of grant using the Black-Scholes option pricing model, which requires various assumptions including estimating stock price volatility, expected life of the stock option, risk free interest rate and estimated forfeiture rate.

During the nine months ended September 30, 2021, the Company granted stock options to purchase up to 1,907,347 shares of common stock at a weighted average exercise price of $2.89 per share. The following table summarizes stock option activity under our plans during the nine months ended September 30, 2021:


	Number of	Weighted-Average
	Options	Exercise Price
Outstanding at January 1, 2021	822,992	$	4.46
Granted	1,907,347		2.89
Exercised	(1,229)		2.04
Forfeited	(81,594)		2.83
Outstanding at September 30, 2021	2,647,516	$	3.38
Exercisable at September 30, 2021	633,027	$	4.91

As of September 30, 2021, there were 1,972,128 options that were vested or expected to vest with an aggregate intrinsic value of $0.7 million and a remaining weighted average contractual life of 8.9 years.

During the nine months ended September 30, 2020, there were 393,050 options granted with a weighted average exercise price of $1.99 per share and 75,135 options forfeited with a weighted average exercise price of $13.86 per share.

For the three and nine months ended September 30, 2021, we recorded compensation expense for all stock awards of $0.5 million and $1.3 million, respectively, within operating expense in the accompanying statements of operations. For the three and nine months ended September 30, 2020, we recorded compensation expense for all stock awards of $0.2 million and $0.5 million, respectively. As of September 30, 2021, the unrecognized compensation expense related to unvested stock awards was $5.4 million, which is expected to be recognized over a weighted-average period of 3.0 years.