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Stock-Based Compensation
 12 Months Ended
Dec. 31, 2021
Share-based Payment Arrangement [Abstract]  
Stock-Based Compensation Stock-Based Compensation
Stock Plans
In October 2018, the Company’s board of directors and stockholders adopted and approved the 2018 Equity Incentive Plan (the “2018 Plan”), which is a successor to and continuation of the Amended and Restated 2002 Stock Plan (the "2002 Plan"). No further grants will be made under the 2002 Plan.
Initially, the maximum number of shares of the Company’s common stock that may be issued under the 2018 Plan was 3,231,626 shares. As of December 31, 2021, the Company had 817,722 shares available for grant under the 2018 Plan. The number of shares of common stock reserved for issuance under the 2018 Plan automatically increases on January 1 of each calendar year, starting on January 1, 2019 through January 1, 2028, in an amount equal to 3% of the total number of shares of the Company’s capital stock outstanding on the last day of the calendar month before the date of each automatic increase, or a lesser number of shares determined by the Company’s board of directors. In April 2021, the board of directors of the Company approved an amendment to the 2018 Plan to increase the automatic increase to the share reserve that occurs on January 1st of each calendar year until (and including) January 1, 2028 from 3% to 4% of the total number of shares of capital stock outstanding on December 31st of the preceding calendar year. Subject to this provision, the Company added 1,927,624 shares available for grant to the 2018 Plan effective January 1, 2022.
The following table summarizes stock option activity for the 2002 Plan and 2018 Plan for the year ended December 31, 2021:
Total
Options
Weighted-
Average
Exercise
Price Per
Share
Weighted-
Average
Remaining
Contractual
Term (in years)
Aggregate
Intrinsic
Value
Outstanding at December 31, 20192,577,718 $3.29 7.9$7,914,459 
Granted
1,227,159 $5.09 
Exercised
(51,572)$1.85 
Cancelled or expired
(155,145)$4.89 
Outstanding at December 31, 20203,598,160 $3.85 7.5$1,737,432 
Granted
1,271,836 $3.91 
Exercised
(209,751)$1.88 
Cancelled or expired
(193,444)$4.53 
Outstanding at December 31, 20214,466,801 $3.93 7.2$700,875 
Vested and expected to vest at December 31, 20214,466,801 $3.93 7.2$700,875 
Vested and exercisable at December 31, 20212,559,327 $3.75 6.2$676,046 
The weighted-average grant date fair value per share of options granted was $2.46 and $3.20 for the years ended December 31, 2021 and 2020, respectively. The aggregate intrinsic value of options exercised was $0.3 million and $0.1 million for the years ended December 31, 2021 and 2020, respectively.
As of December 31, 2021, the total unrecognized compensation expense related to unvested employee and non-employee stock option awards was $4.0 million, which is expected to be recognized in expense over a weighted-average period of 2.5 years.
In October 2018, the Company’s board of directors and stockholders approved the ESPP. The purpose of the ESPP is to secure the services of new employees, to retain the services of existing employees and to provide incentives for such individuals to exert maximum efforts toward the Company’s success and that of the Company’s affiliates. The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Code for United States employees.
Initially, the ESPP authorized the issuance of 196,000 shares of the Company’s common stock under purchase rights granted to the Company’s employees or to employees of any of the Company’s designated affiliates. As of December 31, 2021, the Company had 822,051 shares available for issuance under the ESPP. The number of shares of common stock reserved for issuance automatically increases on January 1 of each calendar year, beginning on January 1, 2019 through January 1, 2028, by the lesser of (1) 1% of the total number of shares of the Company’s common stock outstanding on the last day of the calendar month before the date of the automatic increase, and (2) 490,000 shares; provided that before the date of any such increase, the Company’s board of directors may determine that such increase will be less than the amount set forth in clauses (1) and (2). Subject to this provision, the Company added 481,906 shares available for issuance to the ESPP effective January 1, 2022.
In March 2020, the Company began allowing eligible employees to participate in the ESPP. Under the ESPP, eligible employees are granted rights to purchase shares of the Company's common stock, which are funded through payroll deductions that cannot exceed 15% of each employee's compensation. The ESPP generally provides for a 24-month offering period, which includes four six-month purchase periods. At the end of each purchase period, eligible employees are permitted to purchase shares of the Company's common stock at 85% of the lower of fair market value at the beginning of the offering period or fair market value at the end of the purchase period. The ESPP is considered a compensatory plan, and the Company recorded stock-based compensation expense of $0.3 million and $0.1 million for the years ended December 31, 2021 and 2020, respectively. During the year ended December 31, 2021, 138,952 shares of common stock were issued under the ESPP at a weighted-average price of $2.42 per share. During the year ended December 31, 2020, 62,063 shares of common stock were issued under the ESPP at a weighted average price of $3.00 per share.
As of December 31, 2021, the total unrecognized compensation expense related to the ESPP was $0.1 million, which is expected to be recognized over a weighted-average period of approximately 0.5 years.
See "Note 18. Subsequent Events" for a description of the Company's 2022 Inducement Plan.
Determining Fair Value of Stock Options
The fair value of each grant of stock options was determined by the Company using the methods and assumptions discussed below. Certain of these inputs are subjective and generally require judgment to determine.
Expected Term—The expected term of stock options represents the weighted-average period the stock options are expected to be outstanding. The Company uses the simplified method for estimating the expected term. The simplified method calculates the expected term as the average time-to-vesting and the contractual life of the options.
Expected Volatility—Due to the Company’s limited operating history and lack of company-specific historical or implied volatility, the expected volatility assumption was determined by examining the historical volatilities of a group of industry peers whose share prices are publicly available.
Risk-Free Interest Rate—The risk-free rate assumption is based on the United States Treasury instruments, the terms of which were consistent with the expected term of the Company’s stock options.
Expected Dividend—The Company has not paid and does not intend to pay dividends.
The fair value of each option was estimated on the date of grant using the weighted-average assumptions in the table below:
Year Ended December 31,
20212020
Risk-free interest rate
0.88 %1.37 %
Expected term (in years)
6.06.0
Expected volatility
72 %71 %
Expected dividend yield
— — 
Fair value of common stock
$3.91 $5.09 
Stock-based compensation expense has been reported in the Company’s statements of operations for the years ended December 31, 2021 and 2020 as follows (in thousands):
Year Ended December 31,
20212020
General and administrative$1,509 $1,594 
Research and development759 643 
Total stock-based compensation$2,268 $2,237