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Stock-based compensation
9 Months Ended
Sep. 30, 2020
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]  
Stock-based compensation

Note 8. Stock-based compensation

2019 Stock Option and Grant Plan

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.  On March 24, 2020, the Board of Directors approved an increase to the total authorized options under the 2019 Stock Option and Grant Plan to 3,464,316. Upon the effectiveness of the 2020 Plan (as defined below), no further issuances will be made under the 2019 Plan.

On July 15, 2020, the Company’s Board of Directors approved an amendment 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.

2020 Stock Option and Incentive Plan

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, the date immediately prior to the date on which the registration statement for the Company’s IPO became effective. The 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 initially reserved for issuance under the 2020 Plan is 3,809,818 which shall be cumulatively increased on January 1, 2021 and each January 1 thereafter 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 Company’s compensation committee of the board of directors. The 2020 Plan replaced the 2019 Plan, as the Company’s board of directors is not expected to make additional awards under the 2019 Plan following the completion of the IPO. However, the 2019 Plan will continue to govern outstanding equity awards granted thereunder.

Employee Stock Purchase Plan

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 date immediately prior to the date on which the registration statement for the Company’s IPO was declared effective. The ESPP initially reserved and authorized the issuance of up to a total 317,484 shares of common stock to participating employees. The ESPP provides that the number of shares reserved and available for issuance will automatically increase on January 1, 2021 and 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. As of September 30, 2020, no shares had been issued under the 2020 ESPP.

Stock-Based Compensation Expense

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

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

(in thousands)

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Research and development

 

81

 

 

42

 

 

$

198

 

 

$

128

 

General and administrative

 

 

1,633

 

 

159

 

 

 

2,052

 

 

 

481

 

Total stock-based compensation expense

 

$

1,714

 

 

$

201

 

 

$

2,250

 

 

$

609

 

 

The following table summarizes stock option activity for the nine months ended September 30, 2020:

 

 

 

Stock Options

 

 

 

Shares

 

 

Weighted

average

exercise

price

 

 

Weighted

average

remaining

contractual

life (in

years)

 

 

Aggregate

intrinsic

value (in

thousands)

 

Outstanding as of December 31, 2019

 

 

1,387,003

 

 

$

4.62

 

 

4.8

 

 

 

 

 

Granted

 

 

3,278,998

 

 

 

9.48

 

 

 

 

 

 

 

 

 

Forfeited

 

 

(59,076

)

 

 

5.20

 

 

 

 

 

 

 

 

 

Exercised

 

 

(236,459

)

 

 

2.77

 

 

 

 

 

 

 

 

 

Outstanding as of September 30, 2020

 

 

4,370,466

 

 

$

8.36

 

 

 

8.3

 

 

$

71,284

 

Exercisable at September 30, 2020

 

 

747,745

 

 

$

5.11

 

 

 

5.0

 

 

$

14,629

 

 

The weighted-average grant-date fair value of options awarded during the nine month periods ended September 30, 2020 and 2019 was approximately $7.00 per share and $1.49 per share, respectively. As of September 30, 2020, there was a total of $21.8 million of unrecognized employee compensation costs related to non-vested stock option awards expected to be recognized over a weighted average period of 3.5 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. Stock-based compensation is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period, which is generally the vesting period of the respective award.

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,

 

 

 

2020

 

 

2019

 

2020

 

 

2019

 

Risk-free interest rate

 

0.36%

 

 

N/A

 

0.36% - 1.35%

 

 

 

2.51

%

Expected term (in years)

 

5.5 - 6.0

 

 

N/A

 

5.5 - 6.0

 

 

 

5

 

Expected volatility

 

92%

 

 

N/A

 

90% - 92%

 

 

 

93

%

Expected dividend yield

 

 

 

 

N/A

 

 

 

 

 

 

Estimated fair value of common stock

 

$19.00

 

 

N/A

 

$2.95 - $19.00

 

 

$

2.38