Stock options expire seven to 10 years from the date of grant. Generally, the exercise price of all stock options will be equal to the closing market price on The Nasdaq Global Market of one share of the Company’s common stock on the date of grant, or if no closing price is reported for such date, the closing price on the next immediately preceding date for which a closing price is reported. The stock options generally vest 25% upon the one-year anniversary of the service inception date and then ratably each month over the remaining 36 months. Upon termination of service, any unvested stock options are automatically returned to Company. Vested stock options that are not exercised within the specified period, according to the terms and conditions of the option plan, following the termination as an employee, consultant, or service provider to the Company are surrendered back to the Company. Those stock options are added back to the pool and made available for future grants.

The Company’s 2019 Stock Option and Grant Plan (the "2019 Plan") provided for the Company to grant stock options and other stock-based awards to employees and non-employees to purchase the Company’s common stock. Total authorized options under the 2019 Stock Option and Grant Plan is 3,464,316. The 2020 Plan (as defined below) replaced the 2019 Plan and no further issuances will be made under the 2019 Plan. However, the 2019 Plan continues to govern outstanding equity awards granted thereunder.

On July 15, 2020, the Company’s board of directors approved an amendment to stock options outstanding under the 2019 Stock Option and Grant Plan to provide for immediate 100% vesting for all outstanding options under the plan upon the consummation of a Sale Event, as defined by the amendment.

The 2020 Stock Option and Incentive Plan (the "2020 Plan") was approved by the Company's board of directors on July 15, 2020, and the Company’s stockholders on July 20, 2020 and became effective on July 22, 2020. On April 21, 2022, our board of directors adopted an amendment to the 2020 Plan, the amended and restated 2020 Stock Option and Incentive Plan (the "Amended 2020 Plan") to increase the limit on total annual compensation (equity and cash) to non-employee directors. The Amended 2020 Plan was approved by the Company's stockholders and became effective on June 9, 2022. The Amended 2020 Plan provides for the grant of incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock units, restricted stock awards, unrestricted stock awards, cash-based awards and dividend equivalent rights to the Company’s officers, employees, directors and consultants. The number of shares of common stock reserved for issuance as of December 31, 2022 under the Amended 2020 Plan was 7,335,355 and will be increased each January 1 by 5% of the number of shares of the Company’s common stock outstanding on the

immediately preceding December 31 or such lesser number of shares as determined by the compensation committee of the Company's board of directors. Accordingly, on January 1, 2023, the number of shares of common stock reserved and available for issuance under the Amended 2020 Plan increased by 1,780,560. The number of shares of common stock reserved for issuance as of September 30, 2023 under the Amended 2020 Plan was 9,115,915.

The 2020 Employee Stock Purchase Plan (the "2020 ESPP") was approved by the Company's board of directors on July 15, 2020, and the Company’s stockholders on July 20, 2020, and became effective on July 22, 2020. The number of shares of common stock reserved for issuance as of September 30, 2023 under the 2020 ESPP was 650,191. The ESPP provides that the number of shares reserved and available for issuance will automatically increase each January 1 thereafter by the lesser of 634,969 shares of common stock, 1% 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. There was no increase to the number of shares of common stock reserved and available for issuance under the 2020 ESPP on January 1, 2023. There were no shares issued under the 2020 ESPP during the three months ended September 30, 2023. 15,052 shares were issued under the 2020 ESPP during the nine months ended September 30, 2023. The purchase price of the stock is equal to 85% of the lesser of the market value of such shares at either first date of the offering period or the last date of the offering period. The estimated fair value of the purchase options relating to the ESPP shares purchased in the nine months ended September 30, 2023 was $7.65. The estimated fair value of the purchase options for the offering period that was open during the three months ended September 30, 2023 was $6.64 per share. The assumptions utilized to estimate the fair value are include in the assumption table below.

Stock-based compensation expense is classified in the condensed consolidated statements of operations and comprehensive income (loss) as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	2023		2022		2023		2022
Research and development	$	1,809	$	1,127	$	4,694	$	2,883
General and administrative		5,248		4,596		15,134		12,793
Total stock-based compensation expense	$	7,057	$	5,723	$	19,828	$	15,676

Of the $7.1 million of stock-based compensation expense recognized during the three months ended September 30, 2023, $6.8 million related to stock options, $0.2 million related to restricted stock units, and $0.1 million related to ESPP awards. Of the $19.8 million of stock-based compensation expense recognized during the nine months ended September 30, 2023, $19.1 million related to stock options, $0.6 million related to restricted stock units, and $0.1 million related to ESPP awards.

The following table summarizes stock option activity for the nine months ended September 30, 2023:


	Stock Options
	Shares			Weighted average exercise price		Weighted average remaining contractual life (in years)		Aggregate intrinsic value (in thousands)
Outstanding as of December 31, 2022		6,401,987		$	18.50	7.1
Granted		1,970,131			16.15
Forfeited		(229,714	)		25.33
Exercised		(154,937	)		3.86
Outstanding as of September 30, 2023		7,987,467		$	18.01		6.7	$	16,181
Exercisable at September 30, 2023		4,474,638		$	15.60		5.6	$	14,373

The weighted-average grant-date fair value of options awarded during the nine months ended September 30, 2023 and 2022 was $12.35 per share and $24.06 per share, respectively. As of September 30, 2023, there was a total of $51.2

million of unrecognized employee compensation costs related to non-vested stock option awards expected to be recognized over a weighted average period of 2.4 years.

The Company estimates the fair value of stock-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables, such as expected term, volatility, risk-free interest rate, and expected dividends. Each of these inputs is subjective and generally requires significant judgment to determine.

The following table summarizes the range of key assumptions used to determine the fair value of stock options granted during:


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
Stock Options:
Risk-free interest rate	4.11% - 4.20%			2.65% - 3.38%			3.46% - 4.22%			1.37% - 3.38%
Expected term (in years)		6			6		5.5 - 6			5.5 - 6
Expected volatility		82	%		93	%	82% - 96%			86% - 93%
Expected dividend yield		0	%	0%				0	%	0%
Estimated fair value of common stock	$13.36 - $13.81			$20.87 - $24.09			$13.36 - $21.15			$17.50 - $46.56
ESPP Awards:
Risk-free interest rate		5.44	%		-			5.44	%		-
Expected term (in years)		0.5			-			0.5			-
Expected volatility		95	%		-			95	%		-
Expected dividend yield		0	%		-			0	%		-
Estimated fair value of common stock	$15.85				-		$15.85				-

The Company issued restricted stock units during the nine months ended September 30, 2023, which vest over a two-year period. The following table summarizes the Company’s restricted stock unit activity:


	Shares			Weighted average grant date fair value
Unvested as of December 31, 2022		10,000		$	35.86
Issued		83,500			20.00
Vested		(3,750	)		35.86
Cancelled		—			—
Unvested as of September 30, 2023		89,750		$	21.10

As of September 30, 2023, there was $1.4 million of unrecognized stock-based compensation expense related to restricted stock units that are expected to vest. These costs are expected to be recognized over a weighted-average period of 1.5 years.