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Stockholders' Equity
 3 Months Ended
Mar. 31, 2024
Share-Based Payment Arrangement [Abstract]  
Stockholders' Equity Stockholders’ Equity
Common Stock
On November 8, 2022, the Company entered into a sales agreement (the 2022 Sales Agreement) with Cowen and Company, LLC (the Sales Agent). Under the 2022 Sales Agreement, the Company may, from time to time, sell shares of its common stock having an aggregate offering price of up to $200.0 million through the Sales Agent. Sales of the shares of common stock, if any, will be made at prevailing market prices at the time of sale, or as otherwise agreed with the Sales Agent. The Company is not obligated to sell, and the Sales Agent is not obligated to buy or sell, any shares of common stock under the 2022 Sales Agreement. During the three months ended March 31, 2024 and 2023, the Company sold 418,408 and 943,461 shares of its common stock, respectively, pursuant to the 2022 Sales Agreement and received net proceeds of $5.6 million and $22.4 million, respectively, after deducting offering-related transaction costs and commissions.
On March 4, 2024, the Company sold 15,224,773 unregistered shares of its common stock and pre-funded warrants in lieu of common stock to purchase up to an aggregate of 9,030,851 shares of its common stock to investors in a private placement at an offering price of $16.50 per share and $16.499 per pre-funded warrant, which represents the offering price per share of common stock less an exercise price of $0.001 per share. The Company valued the common stock at the offering price, concluding that the offering price approximated fair value. The net proceeds from the private placement were $379.8 million after deducting placement fees and offering costs of $20.4 million. The resale of the shares, including the shares issuable upon exercise of the pre-funded warrants, were subsequently registered on an automatically effective Registration Statement on Form S-3 filed with the SEC on April 2, 2024.
The pre-funded warrants are a freestanding instrument that do not meet the definition of a liability pursuant to ASC 480 and do not meet the definition of a derivative pursuant to ASC 815. The Company valued the pre-funded warrants at the offering price, concluding that the offering price approximated fair value. The pre-funded warrants meet the equity classification criteria and were accounted for as a component of additional paid-in capital. The pre-funded warrants are immediately exercisable and do not expire.
One of the investors who participated in the private placement met the criteria of a related party as such investor was a principal owner of more than 10% of the voting interest in the Company (the Principal Owner). The Principal Owner purchased 2,121,213 shares of the Company's common stock for $35.0 million. The purchase of common stock under the private placement by the Principal Owner was carried out at arm's length as substantiated by the fact that the per share purchase price equaled the price paid by other participants. No amounts were due from the Principal Owner as of March 31, 2024.
Stock Options
Stock option activity for employee and non-employee awards and related information is as follows (in thousands, except per share data):
Number of
Options		Weighted-
Average
Exercise
Price Per
Share
Outstanding at December 31, 202312,495$14.91 
Granted1,76710.37 
Exercised(541)7.21 
Forfeited/expired(236)16.83 
Outstanding at March 31, 202413,485$14.59 
Restricted Stock Units and Performance Stock Units
During the three months ended March 31, 2024, the Company granted restricted stock units (RSUs) to employees of the Company under the 2020 Incentive Award and the 2022 Employment Inducement Incentive Award Plans. RSUs are valued at the market price of a share of the Company’s stock on the date of grant. RSUs vest ratably on an annual basis over a four-year service period and are payable in shares of common stock on the vesting date. Compensation expense for RSUs is recognized on a straight-line basis over the four-year service period. Forfeitures are recorded in the period in which they occur.
The following table summarizes the RSU activity for the three months ended March 31, 2024 (in thousands, except per share data):
Number of SharesWeighted-Average Grant Date Fair Value
Unvested at December 31, 2023758 $18.73 
Granted845 10.53 
Vested(135)22.42 
Forfeited(53)15.69 
Unvested at March 31, 2024
1,415 $13.60 
The total fair value of shares vested during the three months ended March 31, 2024 was $1.5 million. No RSUs vested during the three months ended March 31, 2023.
As of December 31, 2023, the Company had 750,000 Performance Stock Options (PSUs) at a weighted-average grant date fair value of $6.57 per share. As of March 31, 2024, no PSUs were vested and no stock-based compensation expense has been recognized as the performance conditions were not deemed probable.
Employee Stock Purchase Plan
The Company did not issue shares of common stock under the Employee Stock Purchase Plan (ESPP) during the three months ended March 31, 2024 and 2023, respectively. The Company had an outstanding liability of $0.6 million at March 31, 2024, which is included in accounts payable and accrued liabilities on the condensed balance sheet, for employee contributions to the ESPP for shares pending issuance at the end of the current offering period. As of March 31, 2024, 372,517 shares of common stock were available for issuance under the ESPP.
Stock-Based Compensation Expense
The assumptions used in the Black-Scholes-Merton model to determine the fair value of stock option grants were as follows:
Options
Three Months Ended March 31,
20242023
Risk-free interest rate
3.9% - 4.3%
3.5% - 4.0%
Expected volatility
79% - 80%
81% - 82%
Expected term (in years)
6.0 - 6.1
6.0 - 6.1
Expected dividend yield—%—%
Risk-Free Interest Rate. The Company bases the risk-free interest rate assumption for equity awards on the rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the expected term of the award being valued.
Expected Volatility. The expected volatility of stock options is estimated based on the average historical volatilities of common stock of comparable publicly traded companies and the Company's own volatility. The comparable companies are chosen based on their size and stage in the life cycle. 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. Prior to 2023, the Company exclusively used peer group companies to determine expected volatility.
Expected Term. The Company's limited option exercise history does not provide a reasonable basis for estimating expected term, therefore the Company has estimated the expected life of its stock options using the simplified method, whereby the expected life equals the average of the vesting term and the original contractual term of the option. The expected life assumption for employee stock purchases under the ESPP is six months to conform with the six-month ESPP offering period.
Expected Dividend Yield. The Company’s expected dividend yield assumption is zero as it has never paid dividends and has no present intention to do so in the future.
The allocation of stock-based compensation expense for stock option, RSU awards, PSU awards, and shares purchasable under the ESPP was as follows (in thousands):
Three Months Ended March 31,
20242023
Research and development expense$5,737 $5,272 
General and administrative expense4,569 3,832 
Total stock-based compensation expense$10,306 $9,104 
As of March 31, 2024, the unrecognized compensation cost related to outstanding time-based options and RSUs was $67.9 million and $18.0 million, respectively, which is expected to be recognized over a weighted-average period of 2.69 years and 3.48 years, respectively. Unrecognized compensation cost related to PSUs was $4.9 million. As of March 31, 2024, the unrecognized compensation cost related to stock purchase rights under the ESPP was $0.2 million, which is expected to be recognized over a weighted-average period of 0.21 years.