9. Stock option plans

In October 2016, the Board of Directors adopted the 2016 Amended and Restated Stock Option Program (the “2016 Plan”), which provided for the grant of stock options to the Company’s employees, officers, directors, and outside consultants for the purchase of up to 1,224,824 shares of the Company’s common stock. During 2017, the 2016 Plan was amended to provide up to 1,946,849 shares of the Company’s common stock. During 2018, the 2016 Plan was further amended to provide up to 3,069,999 shares of the Company’s common stock. Holders of stock options shall be entitled to exercise the vested portion of the stock option provided that a trade sale, as defined in the plan, or initial public offering has occurred. The holders of stock options may also exercise the vested portion of the stock option within six months of termination of employment. Stock options generally vested over a four-year period and were scheduled to expire in October 2026.

In September 2019, the Company’s Board of Directors approved the 2019 Equity Incentive Plan (the “2019 Plan) and each outstanding option to purchase Aprea AB ordinary shares pursuant to the 2016 Plan was cancelled and the Company issued to each holder of such Aprea AB option, a substitute option to purchase, on the same terms and conditions as were applicable to such Aprea AB option, shares of the Company’s common stock pursuant to the 2019 Plan. There were no outstanding options under the 2016 Plan.

The Board of Directors has the discretion to provide for accelerated vesting under the 2019 Plan. At December 31, 2020, there were 1,580,804 shares available for future grant under the 2019 Plan.

The Company recorded stock-based compensation expense of $4,983,023, $1,345,722 and $329,814 during the years ended December 31, 2020, 2019 and 2018, respectively. As of December 31, 2020, there was $16,359,450 of unrecognized compensation cost related to nonvested share-based compensation arrangements granted under the 2019 Plan, which is expected to be recognized over a weighted-average period of approximately 2.9 years.

The fair value of each option award is estimated on the date of grant using Black-Scholes, with the assumptions noted in the table below. Expected volatility for the Company’s common stock was determined based on an average of the historical volatility of a peer group of similar public companies. The expected term of options granted to employees was calculated using the simplified method, which represents the average of the contractual term of the option and the weighted-average vesting period of the option. The Company uses the simplified method because it does not have sufficient historical option exercise data to provide a reasonable basis upon which to estimate expected term. The contractual life of the option was used for the expected life of options granted to non-employee. The assumed dividend yield is based upon the Company’s expectation of not paying dividends in the foreseeable future. The risk-free rate for periods within the expected life of the option is based upon the Swedish Government Bond Rate in effect at the time of grant.

In determining the exercise prices for options granted prior to completion of the Company’s IPO, the Company’s Board of Directors has considered the fair value of the common stock as of the measurement date. The fair value of the common stock at each award grant date was based upon a variety of factors, including the results obtained from an independent third-party valuation, the Company’s financial position and historical financial performance, the status of technological developments within the Company’s proposed products, an evaluation or benchmark of the Company’s competition, the current business climate in the marketplace, the illiquid nature of the common stock, arm’s length sales of the Company’s capital stock, including Preferred Stock, the effect of the rights and preferences of the preferred shareholders, and the prospects of a liquidity event, among others.

The assumptions used in Black-Scholes are as follows:


	Year ended December 31,
	2020	2019	2018
Expected volatility	78.9% ‑83.8%	73.5% ‑74.5%	71.5%
Risk‑free rate	0.36% ‑1.43%	1.53% ‑2.63%	2.9%
Expected dividend yield	0%	0%	0%
Expected term in years	5.50-6.08	6.08-7.59	8.20

A summary of option activity under the Plan during the years ended December 31, 2020, 2019 and 2018 are as follows:


			Weighted‑		Weighted
			average		average
			exercise		remaining	Aggregate
	Number of		price per		contractual	intrinsic
	options		share		term (in years)	value
Outstanding at January 1, 2018		1,897,206	$	1.46	8.3
Granted		24,067		1.01
Exercised		(2,306)		0.92
Cancelled/Forfeited		(74,779)		17.31
Outstanding at December 31, 2018		1,844,188	$	0.82	7.6
Granted		2,018,796		8.82
Exercised		(322,267)		0.23
Cancelled/Forfeited		(40,783)		0.99
Outstanding at December 31, 2019		3,499,934	$	5.49	7.5
Granted		446,800		35.16
Exercised		(164,075)		0.92
Cancelled/Forfeited		(11,200)		38.78
Outstanding at December 31, 2020		3,771,459	$	9.10	6.8	$	6,945,112
Exercisable at December 31, 2020		1,968,116	$	3.52	6.1	$	5,602,168
Vested or expected to vest at December 31, 2020		3,771,459	$	9.10	6.8	$	6,945,112

The weighted-average grant date fair value of options granted during the years ended December 31, 2020, 2019 and 2018, was $24.20, $6.68, and $0.69 per share, respectively.