On December 12, 2018, the Company adopted the Aura Biosciences, Inc. 2018 Equity Incentive Plan (the “2018 Plan”). The 2018 Plan will expire in 2028. Under the 2018 Plan, Aura may grant incentive stock options, non-qualified stock options, restricted and unrestricted stock awards and stock right. The Board has determined not to make any further awards under the 2018 Plan as of November 2, 2021. However, the 2018 Plan will continue to govern outstanding equity awards granted thereunder.

The 2021 Stock Option and Incentive Plan, (the "2021 Plan"), was adopted by the Board on October 7, 2021, approved by the Company’s stockholders on October 22, 2021 and became effective on November 1, 2021. The 2021 Plan permits the granting of both options to purchase common stock intended to qualify as incentive stock options under Section 422 of the Code and options that do not so qualify. The number of shares initially reserved for issuance under the 2021 Plan was 3,352,166, which will automatically increase on January 1, 2022 and each January 1 thereafter, by 5% of the outstanding number of shares of common stock on the immediately preceding December 31 or such lesser number of shares as determined by the Company’s compensation committee. The maximum number of shares of common stock that may be issued in the form of incentive stock options shall not exceed the initial limit, cumulatively increased on January 1, 2022 and on each January 1 thereafter by the lesser of the annual increase for such year or 3,352,166 shares of common stock.

The 2021 Employee Stock Purchase Plan, (the "ESPP"), was adopted by the Board on October 7, 2021, approved by the Company’s stockholders on October 22, 2021 and became effective on November 1, 2021. A total of 335,217 shares of common stock were initially reserved for issuance under this plan, which will automatically increase on January 1, 2022 and each January 1 thereafter through January 1, 2031, by the least of (i) 335,217 shares of common stock, (ii) 1% of the outstanding number of shares of common stock on the immediately preceding December 31 or (iii) such lesser number of shares of common stock as determined by the administrator of the ESPP.

On March 18, 2021, the Board approved an increase to the 2018 Plan available option pool of 2,346,228 options. As mentioned above, the 2021 Plan was initiated in November 2021. With the transfer of the available options from the 2018 Plan to the 2021 Plan, there were 2,042,774 options available for grant under the 2021 Plan at December 31, 2021.

The Board is authorized to administer the 2021 Plan. In accordance with the provisions of the 2021 Plan, the Board determines the terms of Aura options and other awards issued pursuant thereto, including the following:

In addition, the Board may award restricted shares of common stock and restricted stock units to participants subject to such conditions and restrictions as it may determine. The Board or any committee to which the Board delegates authority may, with the consent of the affected plan participants, re-price or otherwise amend outstanding awards consistent with the terms of the 2021 Plan.

The following table summarizes stock option activity under the 2021 Plan for the year ended December 31, 2021:


	Options			Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (years)		Aggregate Intrinsic Value
Outstanding at December 31, 2020		1,512,129		$	3.84		7.77	$	1,174
Granted		2,970,708			9.03
Exercised		(69,959	)		4.99
Cancelled/Forfeited		(179,887	)		4.59
Outstanding at December 31, 2021		4,232,991		$	7.43		8.66	$	40,437
Exercisable at December 31, 2021		1,174,871		$	3.95		6.82	$	15,304
Unvested as of December 31, 2021		3,058,120		$	8.78		9.30	$	25,133

The weighted-average grant date fair value of stock options granted during the years ended December 31, 2021 and 2020 was $5.84 and $2.74 per share, respectively. The total intrinsic value of options exercised was $0.1 million and $0.02 million for the years ended December 31, 2021 and 2020, respectively.

The Company has elected to use the Black-Scholes option pricing model to determine the fair value of options granted and generally recognizes the compensation cost of stock-based awards on a straight-line basis over the vesting period of the award.

The determination of the fair value of stock-based payment awards utilizing the Black-Scholes option pricing model is affected by the fair value of the Company’s common stock and a number of other assumptions, including expected volatility, expected life, risk-free interest rate, and expected dividends.

The fair value of the stock options issued as of December 31, 2021 and 2020 was measured with the following weighted-average assumptions:


	December 31, 2021			December 31, 2020
Risk-free interest rate, %		1.15	%		0.55	%
Expected term		6.03			6.02
Expected volatility of the underlying stock, %		73.87	%		74.04	%
Expected dividend rate, %		—	%		—	%

The Company has granted restricted stock units with service vesting based conditions. Unvested shares of restricted common stock may not be sold or transferred by the holder. They are legally issued and outstanding. These restrictions lapse accordingly to the time-based vesting of each award.

A summary of the restricted stock unit activity during the year ended December 31, 2021 is as follows:


	Restricted Stock Units			Weighted- Average Grant Date Fair Value
Granted at December 31, 2020		—		$	—
Granted		232,111			14.00
Forfeited		(191	)		14.00
Granted at December 31, 2021		231,920		$	14.00

As a result of the 2021 Equity Incentive Plan, the Company granted restricted stock units which vest in increments of 25% annually over a period of four years. No restricted stock units vested during the year ended December 31, 2021.

The Company recorded stock-based compensation as follows (in thousands):


	Year Ended December 31,
	2021		2020
Research and development	$	702	$	193
General and administrative		1,605		543
Total	$	2,307	$	736

As of December 31, 2021, there was $16.5 million of unrecognized compensation expense related to stock options, which is expected to be recognized over a weighted-average period of 3.33 years.

As of December 31, 2021, there was $3.1 million of unrecognized compensation expense related to restricted stock units, which is expected to be recognized over a weighted-average period of 3.82 years.