Convertible Preferred Stock and Stockholders' Equity | 8. Convertible Preferred Stock and Stockholders’ Equity Convertible Preferred Stock Series A Convertible Preferred Stock In January 2017, the Company converted from a Delaware limited liability company to a Delaware corporation. In connection with the conversion to a corporation, 100,000 shares of Series A Convertible Preferred Stock of the Company were issued to stockholders upon conversion of all outstanding shares of Series A-1 Convertible Preferred Stock of the limited liability company. In January 2017, the Company entered into a Series A Convertible Preferred Stock Purchase Agreement, which was amended and restated in April 2017 (as amended and restated, the “Series A Agreement”) under which it agreed to issue up to 48,750,000 shares of Series A Convertible Preferred Stock in two tranches. Under the Series A Agreement, the Company initially issued 27,083,333 shares at a price of $ 1.00 per share for net cash proceeds of $ 26.7 million from January 2017 through May 2017. The Series A Agreement provided for a second tranche closing based on the achievement of a defined milestone (the “Tranche Right”), pursuant to which the investors were required to purchase, and the Company to sell, an additional 21,666,667 shares of Series A Convertible Preferred Stock at a price of $ 1.00 per share upon the achievement of the defined milestone or waiver of the milestone. In November 2018, the Company sold 21,666,667 shares of Series A Convertible Preferred Stock at a price of $ 1.00 per share for proceeds of $ 21.6 million. The Company concluded that the Tranche Right met the definition of a freestanding financial instrument, as the Tranche Right was legally detachable and separately exercisable from the Series A Convertible Preferred Stock. Therefore, the Company allocated the net proceeds between the Tranche Right and the Series A Convertible Preferred Stock. Since the Series A Convertible Preferred Stock was contingently redeemable upon the occurrence of a deemed liquidation event, the Tranche Right was classified as a liability under ASC Topic 480 Distinguishing Liabilities from Equity and was initially recorded at fair value. The estimated fair value of the Tranche Right was determined using a Black-Scholes option-pricing model. The Tranche Right was remeasured at fair value at each reporting period prior to settlement in November 2018, with changes in fair value recorded as a component of other income (expense) in the consolidated statements of operations and comprehensive loss. The fair value of the Tranche Right was reclassified to Series A Convertible Preferred Stock at settlement. Series A-2 Convertible Preferred Stock In November 2018, the Company entered into a Series A-2 Convertible Preferred Stock Purchase Agreement, which was amended in March 2019 (as so amended, the “Series A-2 Agreement”) under which it agreed to issue up to 47,132,862 shares of Series A-2 Convertible Preferred Stock. Under the Series A-2 Agreement, the Company initially issued 7,482,515 shares at a price of $ 1.43 per share for net proceeds of $ 10.4 million in November 2018 and 16,083,916 shares at a price of $ 1.43 per share for net proceeds of $ 22.9 million in March 2019. The Series A-2 Agreement provided for a second tranche closing, pursuant to which the investors were required to purchase, and the Company to sell, an additional 23,566,431 shares of Series A-2 Convertible Preferred Stock at $ 1.43 per share upon the achievement of the defined milestone, or earlier upon board of directors and requisite stockholder approval to waive such requirement. The Company concluded that the second tranche did not meet the definition of a freestanding financial instrument and therefore did not require separate accounting. In June 2020, the board of directors and requisite stockholders approved such waiver and the Company issued 23,566,431 shares of Series A-2 Convertible Preferred Stock at a price of $ 1.43 per share for net proceeds of $ 33.6 million. In July 2020, the Company increased the number of authorized shares of Series A-2 Convertible Preferred Stock from 47,132,862 to 55,427,222 . In July 2020, the Company issued 8,294,360 shares of Series A-2 Convertible Preferred Stock to Alexion Pharmaceuticals, Inc. (“Alexion”) in consideration for the sale and assignment to the Company of specified patent rights and other specified assets related to ENPP1. In July 2020, the Company eliminated the per share and gross proceeds thresholds for a firm-commitment underwritten public offering that triggers the automatic conversion of all outstanding shares of preferred stock into common stock. On July 28, 2020, upon the closing of the Company’s IPO, all 104,277,222 shares of then outstanding preferred stock automatically converted into 13,953,850 shares of common stock. In addition, on July 28, 2020, the Company amended and restated its certificate of incorporation to authorize 200,000,000 shares of common stock and 5,000,000 shares of preferred stock, which shares of preferred stock are currently undesignated. The Company did no t have any outstanding preferred stock as of December 31, 2021 or as of December 31, 2020. There have been no dividends declared on preferred stock or common stock by the Company’s board of directors as of December 31, 2021. Open Market Sale Agreement On August 11, 2021, the Company filed a universal shelf registration statement on Form S-3, which was declared effective on August 23, 2021, (the "Registration Statement"). Under the Registration Statement, the Company may offer and sell up to $ 200.0 million of a variety of securities, including common stock, preferred stock, depositary shares, debt securities, warrants, subscription rights or units from time to time pursuant to one or more offerings at prices and terms to be determined at the time of the sale. In connection with the filing of the Registration Statement, the Company entered into an Open Market Sale Agreement with Jefferies LLC, as sales agent, pursuant to which the Company may offer and sell shares of its common stock with an aggregate offering price of up to $ 50.0 million under an “at-the-market” offering program. During the year ended December 31, 2021, the Company did not sell any securities under the Open Market Sale Agreement. Equity Incentive Plans In January 2017, the Company’s board of directors and stockholders adopted the 2017 Equity Incentive Plan, which was amended and restated in July 2017, (as so amended and restated, the “2017 Plan”), which provided for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards and other stock awards. The maximum number of shares of common stock that were authorized for issuance under the 2017 Plan was 2,730,496 . On July 17, 2020, the Company’s stockholders approved the 2020 Stock Incentive Plan (the “2020 Plan”), which became effective on July 23, 2020. The 2020 Plan provides for the grant of incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock units and other stock-based awards. The number of shares of the Company’s common stock reserved for issuance under the 2020 Plan was 1,588,315 shares, plus the 426,065 shares of common stock remaining available for issuance under the 2017 Plan as of July 23, 2020. The number of shares reserved under the 2020 Plan will be annually increased on each January 1 through January 1, 2030 by the lower of (i) 4 % of the number of shares of common stock outstanding on the first day of such fiscal year and (ii) an amount determined by the Company’s board of directors. As of the effective date of the 2020 Plan, no further awards will be made under the 2017 Plan. Any options or awards outstanding under the 2017 Plan are governed by their existing terms. The shares of the Company’s common stock subject to outstanding awards under the 2017 Plan that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right will be added back to the shares of common stock available for issuance under the 2020 Plan. No more than 1,588,315 shares of the Company’s common stock may be granted subject to incentive stock options under the 2020 Plan. As of December 31, 2021 , 904,016 shares of common stock remain available for future issuance under the 2020 Plan. On January 1, 2022 and 2021, the number of shares of common stock reserved under the 2020 Plan was increased by 946,749 shares and 935,398 shares, respectively. The following table summarizes stock option activity under the Company’s equity incentive plans since December 31, 2020: Options Weighted- Weighted- Aggregate (in years) (in thousands) Outstanding at December 31, 2020 3,064,457 $ 7.28 8.76 $ 41,680 Granted 1,314,504 17.16 Exercised ( 283,778 ) 2.15 Forfeited ( 512,570 ) 12.05 Outstanding at December 31, 2021 3,582,613 $ 10.63 8.32 $ 7,428 Exercisable at December 31, 2021 1,427,662 $ 7.09 7.55 $ 4,816 Vested and expected to vest at December 31, 2021 3,582,613 $ 10.63 8.32 $ 7,428 (1) 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 weighted average grant date fair value of stock options granted in the years ended December 31, 2021 and 2020 was $ 12.86 per share and $ 9.15 per share, respectively. The aggregate intrinsic value of stock options exercised during the year ended December 31, 2021 was $ 3.0 million. The aggregate intrinsic value of stock options exercised during the year ended December 31, 2020 was $ 0.7 million. For purposes of calculating stock-based compensation expense, the Company estimates the fair value of stock options using the Black-Scholes option-pricing model. This model incorporates various assumptions, including the expected volatility, expected term, and interest rates. The underlying assumptions used to value stock options granted to participants using the Black-Scholes option-pricing were as follows: Years Ended December 31, 2021 2020 Risk-free interest rate range 0.48 % to 1.37 % 0.36 % to 0.55 % Dividend yield 0 % 0 % Expected term of options (years) 5.37 to 6.48 6.08 to 6.78 Volatility rate range 88.41 % to 91.19 % 86.54 % to 99.85 % Expected Term —The expected term of stock options represents the weighted average period the stock options are expected to be outstanding. The Company uses the simplified method for estimating the expected term, which calculates the expected term as the average time-to-vesting and the contractual life of the options for stock options issued to participants. Expected Volatility —Due to the Company’s limited operating history and lack of company-specific historical or implied volatility, the expected volatility assumption was determined by examining the historical volatilities of a group of industry peers whose share prices are publicly available. The Company expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded stock price. Risk-Free Interest Rate —The risk-free rate assumption is based on U.S. Treasury instruments, the terms of which were consistent with the expected term of the Company’s stock options. Expected Dividend —The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The Company has not paid and does not intend to pay dividends. Fair Value of Common Stock —Historically, the fair value of the shares of common stock underlying the stock options has been determined by the Company’s board of directors. Because there was no public market for the Company’s common stock prior to the Company’s IPO, the board of directors determined fair value of common stock at the time of grant of the option by considering a number of objective and subjective factors including independent third-party valuations of the Company’s common stock, sales of convertible preferred stock to unrelated third parties, operating and financial performance, the lack of liquidity of capital stock and the general and industry specific economic outlook, among other factors. Following the Company’s IPO, the fair value of the Company’s common stock has been determined based on the closing price of the Company’s common stock on the Nasdaq Global Select Market on the grant date, with consideration of whether there is material nonpublic information that could impact that estimated fair value when it is released. For the year ended December 31, 2021 , the Company recognized employee-related stock-based compensation expense of $ 5.5 million and non-employee stock-based compensation expense of $ 1.6 million. For the year ended December 31, 2020 , the Company recognized employee-related stock-based compensation expense of $ 1.8 million and non-employee stock-based compensation expense of $ 0.5 million. The fair value of shares vested for the years ended December 31, 2021 and 2020 was $ 6.5 million and $ 1.3 million, respectively. The total unrecognized compensation cost related to outstanding employee awards as of December 31, 2021 was $ 19.3 million and is expected to be recognized over a weighted average period of 2.8 years. Employee Stock Purchase Plan On July 17, 2020, the Company’s stockholders approved the 2020 Employee Stock Purchase Plan (the “ESPP”), which became effective on July 23, 2020. The ESPP initially provides participating employees with the opportunity to purchase up to an aggregate of 198,539 shares of the Company’s common stock. The number of shares of common stock reserved for issuance under the ESPP will automatically increase on January 1, 2021 and each January 1 thereafter through January 1, 2031, in an amount equal to the lowest of (1) 397,079 shares of the Company’s common stock, (2) 1 % of the number of shares of the Company’s common stock outstanding on the first day of such fiscal year and (3) an amount determined by the Company’s board of directors. As of December 31, 2021 , no shares have been purchased by employees under the ESPP. On January 1, 2022 and 2021, the number of shares of common stock reserved under the ESPP was increased by 236,687 shares and 233,849 shares, respectively. |