9. Stock-based Compensation

In 2017, the Company adopted the 2017 Stock Incentive Plan (the “2017 Plan”). Under the 2017 Plan, a total of 537,914 shares of the Company’s common stock were reserved for the issuance of stock options to employees, directors, and consultants under terms and provisions established by the Board of Directors (the “Board”). Under the terms of the 2017 Plan, options were granted at an exercise price not less than fair market value. The terms of options granted under the 2017 Plan may not exceed ten years. The Board determined the terms and conditions of a Restricted Stock Award, including the conditions for vesting and repurchase (or forfeiture) and the issue price, if any. On October 11, 2017, the Company increased the number of shares of common stock available for issuance under the 2017 Plan from 537,914 shares to 630,662 shares. On November 29, 2017, the Company increased the number of shares of common stock available for issuance under the 2017 Plan from 630,662 shares to 1,866,009 shares.

In connection with the Company’s IPO, the Board adopted and the Company’s stockholders approved the 2018 Stock Incentive Plan (“2018 Plan”), which became effective on the date immediately preceding the date on which the Company’s registration statement became effective. The 2018 Plan provides for the grant of incentive stock options, nonstatutory stock options, restricted stock awards, restricted stock units, stock appreciation rights, and other stock-based awards. The Company’s employees, officers, directors, consultants and advisors are eligible to receive awards under the 2018 Plan. The number of shares of common stock that are reserved for issuance under the 2018 Plan are 2,200,260 shares. The 2018 Plan provides that the number of shares reserved and available for issuance under the plan will automatically increase each January 1, beginning on January 1, 2019, by 4% of the outstanding number of shares of the Company’s common stock on the immediately preceding December 31 or such lesser number of shares as determined by the Board.

Since the date of effectiveness of the 2018 Plan, the Company has not and will not grant any further awards under the 2017 Plan. However, any shares of common stock subject to awards under the 2017 Plan that expire, terminate, or otherwise are surrendered, canceled, forfeited or repurchased without having been fully exercised or resulting in any common stock being issued will become available for issuance under the 2018 Plan.

Stock-based Compensation Expense

Total stock-based compensation expense is recognized for stock options granted to employees and non-employees and has been reported in the Company’s consolidated statements of operations as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Research and development	$	229	$	47	$	955	$	152
General and administrative		400		44		1,257		149
Total stock-based compensation expense	$	629	$	91	$	2,212	$	301

Stock Options

The following table summarizes stock option activity under the Plans:

	Shares Available for Grant			Number of Options Outstanding		Weighted- Average Exercise Price per Option		Weighted- Average Remaining Contract Term		Aggregate Intrinsic Value
										(In thousands)
Outstanding, December 31, 2017		1,670,341			195,668	$	4.49		9.67
Shares reserved for issuance		641,239
Options granted⁽¹⁾		(871,010	)		871,010		13.09
Restricted stock granted		(2,000	)
Restricted stock units granted		(24,960	)
Outstanding, September 30, 2018		1,413,610			1,066,678		11.52		9.43	$	3,901
Exercisable, September 30, 2018					25,487		0.79		8.70		366
Vested and expected to vest, September 30, 2018					1,066,678		11.52		9.43		3,901

(1)	The Company granted 7,200 stock options to non-employees during the nine months ended September 30, 2018.

The aggregate intrinsic values of options outstanding, exercisable, vested and expected to vest were calculated as the difference between the exercise price of the options and the fair value of the Company’s common stock as of September 30, 2018. No options were exercised, cancelled or forfeited during the nine months ended September 30, 2018.

During the nine months ended September 30, 2018, the Company granted options to employees and directors to purchase an aggregate of 863,810 common shares with a weighted-average grant date fair value of $9.20 per share. During the nine months ended September 30, 2018, the Company granted options to non-employees to purchase an aggregate of 7,200 common shares with a weighted-average grant date fair value of $12.51 per share. The expense related to options granted to employees and directors for the three and nine months ended September 30, 2018 was $0.6 million and $1.2 million, respectively. The expense related to options granted to non-employees for the three and nine months ended September 30, 2018 was $37,000 and $64,000, respectively. During the nine months ended September 30, 2017, the Company granted options to employees to purchase an aggregate of 64,460 common shares at a weighted-average grant date fair value of $0.53 per share. During the nine months ended September 30, 2017, the Company granted options to non-employees to purchase an aggregate of 46,860 common shares at a weighted-average grant date fair value of $0.67 per share. The expense related to options granted to employees and non-employees was $3,000 and $2,000, respectively, for the three and nine months ended September 30, 2017, respectively.

As of September 30, 2018, the total unrecognized compensation expense related to unvested options granted to employees and directors was $7.4 million, which the Company expects to recognize over an estimated weighted-average period of 3.40 years. As of September 30, 2018, the total unrecognized compensation expense related to unvested non-employee options was $0.4 million, which the Company expects to recognize over an estimated weighted-average period of 2.87 years.

The fair value of stock options for employees and non-employees was estimated using a Black-Scholes option pricing model with the following assumptions:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2018		2017		2018		2017
Employees:
Fair value of common stock	$9.03 - $13.94		$0.79		$8.57 - $15.45		$0.79
Expected term (in years)	5.9 - 6.1			6.1	5.8 - 6.6			6.1
Expected volatility	89.8% - 90.6%		74.4%		75.9% - 90.6%		74.4%
Risk-free interest rate	2.8% - 2.9%		1.9%		2.4% - 2.9%		1.9%
Expected dividend yield	0.0%		0.0%		0.0%		0.0%
Non-employees:
Fair value of common stock		—	$1.00		$15.45		$0.79 - $1.00
Expected term (in years)		—		10.0		10.0		10.0
Expected volatility		—	76.9%		77.9%		74.6% - 76.9%
Risk-free interest rate		—	2.3%		2.7%		2.3%
Expected dividend yield		—	0.0%		0.0%		0.0%

Restricted Stock

On July 11, 2016, certain founders purchased 3,772,726 common shares that were subject to a repurchase right upon termination or cessation of services at the original purchase price of $0.0001 per share, or $483. The repurchase right lapsed as vesting occurred. Compensation expense of such unvested shares was remeasured at fair value until vested at each reporting date. On April 4, 2017, the non-employee directors became employees of the Company and as a result, compensation expense of the unvested shares was remeasured at fair value and fixed and was being recognized over the remaining vesting period. Upon the closing of the Series A preferred financing, a portion of the unvested shares accelerated and vested in full. Upon the Company’s IPO, the remaining unvested shares accelerated and vested in full.

On April 17, 2018, the Company granted 2,000 shares of restricted stock to a consultant. The restrictions will lapse in four equal quarterly installments and will be fully vested on the first anniversary of such grant. Compensation expenses of such unvested shares will be remeasured at fair value until vested at each reporting date.

The summary of restricted stock activity and related information follows:

	Number of Restricted Shares Outstanding
Unvested shares — December 31, 2017		1,096,449
Granted		2,000
Vested		(1,096,949	)
Unvested shares — September 30, 2018		1,500

The Company recognized $11,000, $86,000, $0.9 million and $0.3 million of stock-based compensation expense related to restricted shares during the three and nine months ended September 30, 2018 and 2017, respectively. As of September 30, 2018, there was $12,000 of unrecognized stock-based compensation expense related to unvested restricted stock. This amount is expected to be recognized over a remaining weighted-average period of 0.55 years.

Restricted Stock Units

During the nine months ended September 30, 2018, the Company granted 24,960 restricted stock units to an employee with a weighted-average grant date fair value of $9.03 per share.

The summary of restricted stock unit activity and related information follows:

	Number of Restricted Stock Units Outstanding
Unvested shares — December 31, 2017		—
Granted		24,960
Unvested shares — September 30, 2018		24,960

The Company recognized $14,000 and $20,000 of stock-based compensation expense related to restricted stock units during the three and nine months ended September 30, 2018, respectively. As of September 30, 2018, there was $0.2 million of unrecognized stock-based compensation expense related to unvested restricted stock units. This amount is expected to be recognized over a remaining weighted-average period of 3.64 years. There were no restricted stock units granted to employees or non-employees during the three and nine months ended September 30, 2017.

2018 Employee Stock Purchase Plan

The Board adopted and the Company’s stockholders approved the 2018 Employee Stock Purchase Plan (“2018 ESPP”), which became effective on the date immediately preceding the date on which the Company’s registration statement became effective. The 2018 ESPP enables eligible employees to purchase shares of the Company’s Common Stock at a discount. The number of shares of common stock that are reserved for issuance under the 2018 ESPP are 275,030 shares. The 2018 ESPP provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2019 and increasing each January 1 thereafter through January 1, 2028, by the least of (i) 1% of the outstanding number of shares of the Company’s common stock on the immediately preceding December 31; (ii) 543,926 shares or (iii) such number of shares as determined by the ESPP administrator.