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Stock-based Compensation

12 Months Ended

Dec. 31, 2023

Share-Based Payment Arrangement [Abstract]

9. Stock-based Compensation

Stock‑based compensation expense recognized was as follows (in thousands):


	Year Ended December 31,
	2023		2022
Research and development	$	4,003	$	3,217
General and administrative		6,620		7,389
Total stock-based compensation expense	$	10,623	$	10,606

Valuation Assumptions

The fair value of stock options was determined using the Black-Scholes option-pricing model and the assumptions below. Each of these inputs is subjective and generally required significant judgment.

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Fair Value of Common Stock—The fair value of each share of common stock is based on the closing price of the Company’s common stock on the date of grant, or other relevant determination date, as reported on The Nasdaq Global Select Market.

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Risk-Free Interest Rate—The risk-free interest rate is based on the U.S. Treasury zero coupon issues in effect at the time of grant for periods corresponding with the expected term of the option.

•

Expected Volatility—Because the Company was previously privately held and did not have any trading history for its common stock, the expected volatility was estimated based on the average volatility for comparable publicly traded life sciences companies over a period equal to the expected term of the stock option grants. The comparable companies were chosen based on the similar size, stage in life cycle or area of specialty. The Company will continue to apply this process until a sufficient amount of historical information regarding the volatility of its own stock price becomes available.

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Expected Term—The expected term represents the period that the stock-based awards are expected to be outstanding and is determined using the simplified method (based on the midpoint between the vesting date and the end of the contractual term) as the Company has limited history of relevant stock option exercise activity.

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Expected Dividend Yield—The Company has never paid dividends on its common stock and has no plans to pay dividends going forward. Therefore, it used an expected dividend yield of zero.

The fair value of each stock option was estimated using the Black‑Scholes option‑pricing model with the following weighted-average assumptions:


	Year Ended December 31,
	2023			2022
Risk-free interest rate		3.54	%		2.15	%
Expected volatility		99.18	%		92.95	%
Expected term (in years)		5.84			6.02
Expected dividend yield		—			—

The grant date fair value of restricted stock units is based upon the fair market value of the Company’s common stock based on its closing price as reported on the date of grant on the Nasdaq Global Select Market.

The fair value of options granted during the years ended December 31, 2023 and 2022 were $9.8 million and $16.3 million, respectively. The fair value of restricted stock units granted during the year ended December 31, 2023 and 2022 was $0.5 million and $0.1 million, respectively.

Stock Option Activity

Changes in shares available for grant under the 2020 Plan during the year ended December 31, 2023 were as follows:


	Shares Available for Grant
Shares available for grant at December 31, 2022		4,253,854
2020 Plan reserve increase on January 1, 2023		1,893,869
Options and restricted stock units granted		(3,834,783	)
Options and restricted stock units forfeited, cancelled, or expired		845,154
Shares available for grant at December 31, 2023		3,158,094

A summary of option activity for the year ended December 31, 2023 was as follows:


	Shares			Weighted- Average Exercise price per Share		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Balance at December 31, 2022		4,033,522		$	11.75	8.40		$	827
Granted		3,696,783			3.34
Exercised		(128,534	)		1.29
Forfeited/expired		(780,902	)		6.72
Balance at December 31, 2023		6,820,869		$	7.97		8.24	$	387
Expected to vest		4,000,554		$	6.41		8.72	$	—
Options exercisable		2,820,315		$	10.18		7.56	$	387

The total fair value of options granted that vested during the years ended December 31, 2023 and 2022 was $9.8 million and $6.8 million, respectively.

The aggregate intrinsic value in the table above is calculated as the difference between the exercise price of the underlying options and the estimated fair value of the Company’s common stock underlying all options that were in-the-money at December 31, 2023. The aggregate intrinsic value of options exercised was $0.2 million and $3.0 million during the year ended December 31, 2023 and 2022, respectively, determined as of the date of option exercise. As of December 31, 2023, there was $16.0 million of total unrecognized compensation cost related to non-vested stock options. The Company expects to recognize this cost over a remaining weighted-average period of 1.99 years. The Company utilizes newly issued shares to satisfy option exercises.

Stock options outstanding and exercisable consisted of the following at December 31, 2023:



Exercise Price ($)	Shares Outstanding		Shares Exercisable
0.16 to 4.22		3,709,593		1,005,785
8.93 to 19.94		2,759,028		1,615,758
20.55 to 29.41		352,248		198,772
Total		6,820,869		2,820,315

Restricted Stock Unit Activity

A summary of RSU activity for the year ended December 31, 2023 is as follows:


	Share Equivalent			Weighted- Average Grant Date Fair Value
Non-vested at December 31, 2022		236,339		$	15.16
Granted		138,000			3.28
Cancelled		(64,252	)		7.63
Vested		—			—
Non-vested at December 31, 2023		310,087		$	11.44

Employee Stock Purchase Plan

Under the ESPP, eligible employees can authorize payroll deductions for amounts up to the lesser of 15% of their qualifying wages or the statutory limit under the U.S. Internal Revenue Code. The ESPP provides for offering periods of six months in duration with one purchase period per offering period beginning May 18 and November 18 of each year. Participants in an offering period will be granted the right to purchase shares of our common stock at a price per share that is 85% of the lesser of the fair market value of the shares at (1) the first day of the offering period or (2) the end of each purchase period within the offering period. A maximum of 10,000 shares of common stock may be purchased by each participant at the purchase date during the offering period. The fair market value of the ESPP options granted is determined using the Black-Scholes model and is amortized on a straight-line basis. Stock-based compensation expense recognized during the years ended December 31, 2023 and 2022 associated with the ESPP was $0.1 million and $0.2 million, respectively. During the year ended December 31, 2023, the Company issued 166,682 shares of common stock to employees under the ESPP.