8. Stock-Based Compensation

2018 Equity Incentive Plan

On July 6, 2018, the Company’s board of directors adopted, and its stockholders approved, the 2018 Plan, which became effective on July 16, 2018. The 2018 Plan provides for the grant of incentive stock options, non-qualified options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards. The number of shares initially reserved for issuance under the 2018 Plan is 5,708,931, which shall be cumulatively increased on January 1,

2019 and each January 1 thereafter by 4% of the number of shares of the Company’s common stock outstanding on the immediately preceding December 31 or such lesser number of shares determined by the Company’s board of directors or compensation committee of the board of directors. The shares of common stock underlying any awards that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by the Company prior to vesting, satisfied without the issuance of stock, expire or are otherwise terminated (other than by exercise) under the 2018 Plan. As of December 31, 2021, 3,290,353 shares remained available for issuance under the 2018 Plan. The number of authorized shares reserved for issuance under the 2018 Plan was increased by 3,152,231 shares effective as of January 1, 2022.

2018 Employee Stock Purchase Plan

On July 6, 2018, the Company’s board of directors adopted and its stockholders approved the 2018 Employee Stock Purchase Plan (the “ESPP”), which became effective on July 16, 2018. A total of 951,488 shares of common stock were reserved for issuance under this plan. In addition, the number of shares of common stock that may be issued under the ESPP will automatically increase on January 1, 2019, and each January 1 thereafter through January 1, 2028, by the least of (i) 951,488 shares of common stock, (ii) 1% of the number of shares of the Company’s common stock outstanding on the immediately preceding December 31 or (iii) such lesser number of shares as determined by the administrator of the Company’s ESPP. As of December 31, 2021, 1,717,392 shares remained available for issuance under the 2018 ESPP. The number of authorized shares reserved for issuance under the ESPP was not increased on January 1, 2022.

Stock Option Valuation

Service-Based and Performance-Based Stock Options

The fair value of stock option grants with service-based and performance-based vesting conditions is estimated using the Black-Scholes option-pricing model. The Company estimates expected volatility based on the historical volatility of publicly traded peer companies. The Company expects to continue to do so until such time as it has adequate historical data regarding the volatility of its traded stock price following our July 2018 IPO. For options with service-based vesting conditions, the expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

The following table presents, on a weighted average basis, the assumptions used in the Black-Scholes option-pricing model to determine the fair value of stock-based awards granted to employees, directors, and non-employees:

​

​

​
​
​
​
​
​
​
​​

The following table summarizes the Company’s service-based and performance-based option activity since December 31, 2021:

​

​

The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than the fair value of the Company’s common stock. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2021, 2020 and 2019 was $34.6 million, $5.7 million and $17.7 million, respectively.

The weighted average grant-date fair value of stock options granted during the years ended December 31, 2021, 2020 and 2019 was $10.55 per share, $4.51 per share and $8.58 per share, respectively.

Market-Based Stock Options

The fair value of stock option grants with market-based vesting conditions is estimated using a Monte Carlo simulation model.

​

In October 2018, the Company granted to an executive officer an option to purchase 164,400 shares of common stock (“Option A”) at an exercise price of $16.43 per share, vesting upon the achievement of a specified thirty-day average closing price of its common stock and the satisfaction of service-based vesting conditions, and an option to purchase 193,400 shares of common stock (“Option B”) at an exercise price of $16.43 per share, vesting upon the achievement of a specified thirty-day average closing price of its common stock and the achievement of certain other performance-based vesting conditions. The Company used a Monte Carlo simulation model to estimate the grant-date fair value of the awards. Assumptions and estimates utilized in the model include the risk-free interest rate, dividend yield, expected stock volatility based on a combination of the Company’s historical stock volatility since its July 2018 IPO and the historical volatility of a publicly traded set of peer companies and the estimated period to achievement of the market condition. Stock-based compensation expense for Option A is being recognized using the graded-vesting method over the longer of the derived service period from the market condition or the explicit service period required to be completed for each vesting tranche. Stock-based compensation expense for Option B is being recognized using the graded-vesting method over the longer of the derived service period from the market condition or the estimated achievement of performance-based conditions. For Option B, stock-based compensation expense is recognized when the achievement of each performance-based vesting condition becomes probable regardless of whether the market condition has been achieved. The aggregate grant date fair value of these options was $4.3 million. During the years ended December 31, 2021, 2020 and 2019 the Company recorded stock-based compensation expense on Option A of $0.2 million, $0.6 million and $0.9 million, respectively. During the years ended December 31, 2021 and 2020, the Company recorded stock-based compensation expense on Option B of $1.1 million and $1.1 million, respectively, as a performance-based vesting condition was determined to be probable during each year. No stock-based compensation expense on Option B was recorded during the year ended December 31, 2019.

The Company did not grant market-based stock options during the years ended December 31, 2021, 2020 and 2019. During the years ended December 31, 2021, 2020 and 2019, none of the outstanding stock options with market-based vesting conditions were exercised, forfeited or vested and they had no intrinsic value at December 31, 2021.

Restricted Stock Units

The Company has also granted restricted stock units to its employees. During the years ended December 31, 2021 and 2019, the Company granted restricted stock units to employees that were subject to time-based vesting conditions that lapse over four years and three years, respectively, from date of grant. No restricted stock units were granted during the year ended December 31, 2020. Restricted stock units with time-based vesting conditions are valued on the grant date using the grant date market price of the underlying shares. The following table summarizes the Company’s restricted stock unit activity since December 31, 2021:

​

​

Stock-Based Compensation

The Company recorded stock-based compensation expense in the following expense categories of its consolidated statements of operations and comprehensive loss (in thousands):

​

As of December 31, 2021, total unrecognized compensation cost related to unvested stock-based awards was $57.3 million, which is expected to be recognized over a weighted average period of 2.5 years.