9. Net Loss per Share

On July 8, 2020, the Company’s board of directors and its Series C preferred stockholders approved an amendment to the conversion preferences and rights of the Company's Series C preferred stock, which, among other changes, resulted in a reduction in the conversion price of the Series C preferred stock from $3.21 to $3.027603. The changes to the conversion feature were considered to be a significant change to the substantive contractual terms of the Company's Series C preferred stock and, therefore, the Company accounted for the change as an extinguishment and reissuance of the Company's Series C preferred stock. In accordance with SEC staff guidance codified in ASC 260-10-S99-2, when equity classified preferred shares are extinguished, the difference between (1) the fair value of the consideration transferred to the holders of the preferred shares and (2) the carrying amount of the preferred shares, net of issuance costs, is subtracted from (or added back to) net income to arrive at income available to common stockholders in the calculation of earnings per share. This difference between the fair value of consideration transferred and carrying amount of the preferred shares, also referred to as a deemed dividend, was, therefore, added back to net loss above to derive net loss attributable to common stockholders.

The Company excluded the following potentially dilutive securities, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share for the years ended December 31, 2022, 2021, and 2020, as the effect would be anti-dilutive and reduce the net loss per share calculated for each period. Therefore, the weighted-average number of shares of common stock outstanding used to calculate both basic and diluted net loss per share is the same.

The following tables present information about the Company’s financial assets and liabilities measured at fair value on a recurring basis and indicate the level of the fair value hierarchy utilized to determine such fair values:

8. Stock Compensation

In 2016, the Company adopted the 2016 Stock Plan. Subsequent to July 2020, no further awards have been granted under the 2016 Stock Plan and all equity-based awards have been and will continue to be granted under the 2020 Stock Option and Incentive Plan (the “2020 Stock Plan”). To the extent outstanding options granted under the 2016 Stock Plan are cancelled,

forfeited, or otherwise terminated without being exercised and would otherwise have been returned to the share reserve under the 2016 Stock Plan, the number of shares underlying such awards will be available for future grant under the 2020 Stock Plan.

In 2020, the Company’s stockholders approved the 2020 Stock Plan. All of the Company’s employees, officers, directors, and consultants are eligible to be granted options, restricted stock units, and other stock-based awards under the terms of the 2020 Stock Plan, which originally provided for the issuance of up to 8,376,080 of stock-based awards. The 2020 Stock Plan is also subject to annual increases to be added on the first day of each fiscal year, commencing on January 1, 2021, equal to 5% of the number of outstanding shares on the immediately preceding December 31 or such lesser number of shares approved by the Company’s board of directors or compensation committee of the board of directors. On January 1, 2022, the number of shares available for issuance under the 2020 Stock Plan was increased by 5,410,515 shares of common stock. There were 10,783,577 stock-based awards available for grant at December 31, 2022 under the 2020 Stock Plan.

In 2020, the Company adopted an Employee Stock Purchase Plan (“ESPP”) that permits eligible employees to enroll in six-month offering periods. Participants may purchase shares of the Company’s common stock, through payroll deductions, at a price equal to 85% of the fair market value of the common stock on the first or last day of the applicable six-month offering period, whichever is lower. Purchase dates under the ESPP occur on or about June 30 and December 31 each year, with the initial purchase date under the ESPP on December 31, 2021. The Company’s stockholders originally authorized 1,092,532 shares for issuance pursuant to the ESPP, which is subject to annual increases to be added on the first day of each fiscal year, commencing on January 1, 2021, equal to the lesser of 2,185,064 shares of the Company’s common stock, 1% of the number of outstanding shares on the immediately preceding December 31, or an amount determined by the Company’s board of directors. On January 1, 2022, the number of shares available for issuance under the ESPP was increased by 1,082,103 shares of common stock. There were 2,906,999 shares available for grant at December 31, 2022 under the ESPP.

Time-Based Stock Options

The Company has historically granted stock options to employees, directors, and consultants with vesting conditions based on continued service over time. Accordingly, stock-based compensation expense for such awards is recognized using a straight-line attribution model over the vesting term of each option.

The total intrinsic value of time-based stock options exercised was $15.5 million, $32.4 million, and $2.4 million for the years ended December 31, 2022, 2021, and 2020, respectively.

The fair value of each time-based stock option granted is estimated on the date of grant using the Black-Scholes option pricing model, pursuant to which the weighted-average grant date fair values were $13.67, $22.95, and $14.77 during the years ended December 31, 2022, 2021, and 2020, respectively. The following table summarizes the assumptions used in calculating the fair value of the time-based stock options granted.

The Company uses the simplified method to calculate the expected term, as it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term for time-based stock options granted. The expected term is applied to the time-based stock option grant group as a whole, as the Company does not expect substantially different exercise or post-vesting termination behavior among the Company’s employees, directors, and consultants. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The Company’s stock price volatility assumption is based on historical volatility of a group of companies with similar characteristics to the Company and who have similar risk profiles and positions within the industry. The Company accounts for forfeitures as they occur.

As of December 31, 2022, the total unrecognized stock-based compensation related to unvested time-based stock options was $66.7 million, which the Company expects to recognize over a weighted-average period of approximately 1.47 years.

Performance-Based Stock Options

In March 2020 and September 2021, the Company granted options to certain employees with performance-based vesting conditions. In both instances, the commencement of vesting is based on the achievement of various scientific and operational milestones during specified periods, subject to the discretion and approval of either the Company’s board of directors or President and Chief Executive Officer.

For the performance-based stock options, the Company applies variable accounting until the performance criteria are determined to be achieved, at which time vesting commences over contractual service periods. Furthermore, because (a) the awards were authorized prior to the accounting grant date in the context of ASC 718, Stock Compensation, (b) the recipients were providing service prior to the accounting grant date, and (c) there were performance conditions that, if not met by the accounting grant date, would have resulted in the forfeiture of the award, the service inception dates preceded the accounting grant date. Ultimately, the stock-based compensation expense for the options is determined based on the fair value of the awards on the accounting grant date, which is then recognized using an accelerated attribution model over the vesting term commencing upon the actual or expected accounting grant date.

For the performance-based stock options granted in March 2020, all performance conditions have been resolved and the grant date was set at or prior to December 31, 2020. For the performance-based stock options granted in September 2021, all performance conditions have been resolved and the grant date was set at or prior to December 31, 2022.

The total intrinsic value of performance-based stock options exercised was $0.4 million, $1.1 million, and immaterial for the years ended December 31, 2022, 2021, and 2020, respectively.

The fair value of each performance-based stock option granted is estimated on the accounting grant date, or at the end of each reporting period if variable accounting is applied, using the Black-Scholes option-pricing model, pursuant to which the grant date fair values were $20.28 and $37.48 during the years ended December 31, 2021 and 2020, respectively. There were no

performance-based stock options granted during the year ended December 31, 2022. The assumptions and methodologies used in calculating the fair value of performance-based stock options was similar to the assumptions and methodologies used in calculating the fair value of time-based stock options granted during the years ended December 31, 2021 and 2020.

As of December 31, 2022, the total unrecognized stock-based compensation related to unvested performance-based stock options was $8.5 million, which the Company expects to recognize over a weighted-average period of approximately 0.79 years.

Restricted Stock Units

Starting in 2021, the Company granted restricted stock units (“RSUs”) to employees, directors, and consultants under the 2020 Stock Plan. Each of the RSUs represents the right to receive one share of the Company’s common stock upon vesting. The majority of RSUs granted to date have vesting conditions based on continued service over time. Accordingly, stock-based compensation expense for the majority of such awards is recognized using a straight-line attribution model over the vesting term of each RSU. The fair value of each RSU is based on the closing price of the Company’s common stock on the date of grant.

The fair value of restricted shares that vested during the year ended December 31, 2022 was $8.6 million.

As of December 31, 2022, the total unrecognized compensation related to unvested RSUs granted was $35.0 million, which the Company expects to recognize over a weighted-average period of approximately 1.55 years.

Employee Stock Purchase Plan

As of December 31, 2022, there was no unrecognized stock-based compensation expense related to ESPP, since the purchase for the offering period between July 1, 2022 and December 31, 2022 was transacted on December 31, 2022.

4. Investments

6. Accrued Expenses