Stock-based Compensation

6 Months Ended

Jun. 30, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

8. STOCK-BASED COMPENSATION

2018 Equity Incentive Plan

On May 7, 2018, the Company established and adopted the 2018 Equity Incentive Plan (the “2018 Plan”) providing for the granting of stock awards for employees, directors and consultants to purchase shares of the Company’s common stock. A total of 2,101,478 shares were authorized under the 2018 Plan and 476,840 and 854,320 shares are available for granting of stock awards as of June 30, 2021 and December 31, 2020, respectively. The 2018 Plan provides for the granting of the following types of stock awards: (i) incentive stock options, (ii) non-statutory stock options, (iii) stock appreciation rights, (iv) restricted stock awards, (v) restricted stock unit awards and (vi) other stock awards. Incentive stock options may be granted only to employees of the Company. Stock awards other than incentive stock options may be granted to employees, directors and consultants who are providing continuous service to the Company.

The following is a summary of the stock option award activity during the six months ended June 30, 2021:


	Number of Stock Options		Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2020		1,247,158	$	5.16		9.34	$	1,486
Granted		305,132		5.36
Exercised		—		—
Cancelled		—		—
Outstanding at June 30, 2021		1,552,290	$	5.20		9.15	$	1,486
Exercisable at June 30, 2021		238,172	$	2.77		8.13	$	715
Options expected to vest as of June 30, 2021		1,314,118	$	5.64		9.15	$	771

Generally, options are granted with an exercise price at, or in excess of, the fair value of common stock at the date of issuance. Options typically vest over a one- to four-year period in equal increments. The original term of all options is 10 years.

The weighted-average grant date fair value of options granted during the six months ended June 30, 2021 and 2020 is $4.02 and $0.96, respectively. The aggregate intrinsic value is calculated as the difference between the exercise price and the estimated fair value of the Company’s common stock at the end of the reporting period.

Stock-Based Compensation Expense

For the six months ended June 30, 2021 and 2020, the Company utilized the Black-Scholes option-pricing model for estimating the fair value of the stock options and common stock warrants granted. The following table presents the assumptions and the Company’s methodology for developing each of the assumptions used:


	June 30, 2021	June 30, 2020
Volatility	88.78%	83.3%
Expected life (years)	6.08	6.08
Risk-free interest rate	0.67%	0.45%-1.4%
Dividend rate	—%	—%

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Volatility—The Company estimates the expected volatility of its common stock at the date of grant based on the historical volatility of comparable public companies over the expected term.

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Expected life—The expected life is estimated as the contractual term.

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Risk-free interest rate—The risk-free rate for periods within the estimated life of the stock award is based on the U.S. Treasury yield curve in effect at the time of grant.

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Dividend rate—The assumed dividend yield is based upon the Company’s expectation of not paying dividends in the foreseeable future.

Stock-based compensation expense was recorded in the following line items in the condensed statements of operations for the three and six months ended June 30, 2021 and 2020 (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Research and development	$	180	$	17	$	348	$	33
General and administrative		212		3		405		5
Total stock-based compensation expense	$	392	$	20	$	753	$	38

No related tax benefits from stock-based compensation expense were recognized for the three and six months ended June 30, 2021 and 2020. As of June 30, 2021, there was $4.7 million in unrecognized stock-based compensation cost, which is expected to be recognized over a weighted-average period of 3.0 years.