7.	Share capital:

(a)

Financing:

On November 10, 2014, the Company completed an IPO of 4,600,000 of its common shares at a purchase price of $9.00 per share. On November 10, 2014, the Company also completed a private placement, in which the Company issued 495,000 of its common shares to an affiliate of Genentech at a price of $9.00 per share. The Company received $38.5 million of proceeds, net of underwriting discounts and commissions but before offering expenses, from the IPO and $4.1 million of proceeds, net of underwriters’ fees but before offering expenses, from the concurrent private placement.

Immediately prior to the closing of the IPO, all outstanding Series A and B redeemable convertible preferred shares were converted into common shares on a 1:1 basis and Series E redeemable convertible preferred shares were converted into common shares on a 1:1.2 basis, subject to certain adjustments. These adjustments differed for some of the Company’s outstanding Series E preferred shares depending on the date of issue, resulting in different conversion ratios for different Series E preferred shares. All outstanding convertible preferred shares were converted into 7,725,924 common shares and 10,201 outstanding subscription rights were converted into 10,201 common shares. Following the IPO, there were no preferred shares or subscription rights outstanding.

(b)

Authorized share capital:

Prior to the IPO, the Company had authorized 1,205,761 Series A preferred shares, 1,028,806 Series B preferred shares, 4,620 Series C preferred shares, 9,376 Series D preferred shares and 4,370,920 Series E preferred shares. Holders of Series A, Series B and Series E preferred shares were entitled to receive non-cumulative cash dividends, in preference to any dividend payable on the common shares, at a rate of 8% per annum of the issue price of the preferred share when and as declared by the Board, but only if any dividends were declared on the common shares. In addition, holders of the Series A, Series B and Series E preferred shares would have been entitled to receive, when and as declared by the Board, dividends in an amount equal to any dividend per common share declared by the Board on the common shares multiplied by the number of common shares that would have been issued in exchange for the Series A, Series B and Series E preferred shares upon conversion. No dividends were declared prior to the conversion of the Series A, Series B and Series E preferred shares into common shares in connection with the closing of the IPO.

Immediately prior to the closing of the Company’s IPO, the Company’s articles were amended to remove all references to Series A, B, C, D and E preferred shares. As of December 31, 2014, no Series A, B, C, D or E convertible preferred shares were outstanding.

Post IPO, the Company’s authorized share capital consists of an unlimited number of common and preferred shares without par value.

(c)

Stock based compensation:

The Company’s 2014 Equity Incentive Plan (the “2014 Plan”) permits the grant of stock-based compensation awards to directors, officers, employees and consultants of the Company. The Company’s pre-existing stock option plan (the “Amended and Restated Stock Option Plan”) was limited to the granting of stock options as equity incentive awards whereas the 2014 Plan also allows for the issuance of restricted shares, restricted share units, share appreciation rights and performance shares. The 2014 Plan replaced the Amended and Restated Stock Option Plan. No further options will be granted under the Company’s Amended and Restated Stock Option Plan.

The Amended and Restated Stock Option Plan provided for the grant of options for the purchase of common shares to directors, officers, employees and consultants prior to the Company’s IPO. The options granted under the Amended and Restated Stock Option Plan vest on a graduated basis over a four-year period or less and each option’s maximum term is ten years. The Amended and Restated Stock Option Plan will continue to govern the options granted thereunder.

Under the 2014 Plan, options granted generally vest on a graduated basis over a four-year period or less. The exercise price of the options is determined by the Board but must at least be equal to the fair market value of the common shares on the date of grant. Options may be exercised over a maximum term of ten years. As of December 31, 2015, a total of 4,742 stock options remain to be granted under the 2014 Plan. The number of common shares available for issuance under the 2014 Plan was increased by 375,000 in January 2016 as approved by the Board in accordance with the terms of the 2014 Plan.

Summary of stock option activity is as follows:

	Number of			Weighted Average Exercise Price				Aggregate
	Options			CAD $		U.S. $		Intrinsic Value
Outstanding, January 1, 2013		1,128,437			4.13		4.17
Granted		292,418			3.74		3.64
Exercised		(8,329	)		6.07		5.88		37
Forfeited, cancelled or expired		(79,427	)		4.90		4.76
Outstanding, December 31, 2013		1,333,099			3.98		3.88		8,300
Granted		205,170			10.84		9.35
Exercised		(2,417	)		6.07		5.23		23
Forfeited, cancelled or expired		(51,634	)		5.96		5.14
Outstanding, December 31, 2014		1,484,218			4.88		4.20		15,551
Granted		529,288			18.73		14.67
Exercised⁽¹⁾		(270,254	)		4.66		3.65		2,426
Forfeited, cancelled or expired		(21,780	)		11.21		8.78
Outstanding, December 31, 2015		1,721,472			9.62		6.95		1,880
Exercisable, December 31, 2015		1,034,576			4.42		3.20		5,010

(1)	During the year ended December 31, 2015, 70,438 stock options were exercised for the same number of common shares in exchange for cash. In the same period, the Company issued 133,565 common shares for the cashless exercise of 199,816 stock options.

The following table summarizes the stock options outstanding and exercisable at December 31, 2015:

	Options Outstanding								Options Exercisable
Range of Exercise Prices	Number of Options Outstanding		Weighted Average Remaining Contractual Life		Weighted Average Exercise Price				Number of Options Exercisable		Weighted Average Exercise Price
			(years)		CAD $		U.S. $				CAD $		U.S. $
$1.93 - $2.31		236,759		5.70		2.67		1.93		181,768		2.67		1.93
$2.32 - $4.86		728,895		3.51		3.74		2.70		728,416		3.74		2.70
$4.87 - $7.72		179,842		9.41		10.43		7.54		25,732		9.76		7.05
$7.73 - $7.91		150,173		7.17		10.78		7.79		81,949		10.78		7.79
$7.92 - $17.70		86,533		8.77		15.69		11.34		16,598		13.87		10.02
$17.71 - $18.23		338,200		8.60		24.58		17.76		—		24.58		17.76
$18.24 - $21.82		1,070		9.11		27.58		19.92		113		30.20		21.82
		1,721,472		6.01		9.62		6.95		1,034,576		4.42		3.20

At December 31, 2015, there were 1,034,576 options exercisable with a weighted average remaining contractual life as at December 31, 2015 of 4.32 years.

A summary of the Company’s non-vested stock option activity and related information for the year ended December 31, 2015 is as follows:

	Number of Options			Weighted Average Grant Date Fair Value
				CAD $		USD $
Non-vested, January 1, 2015		367,654			5.64		4.86
Granted		529,288			12.55		9.83
Vested		(190,477	)		6.72		5.27
Forfeited and cancelled		(19,569	)		7.90		6.19
Non-vested, December 31, 2015		686,896			10.60		8.54

The aggregate fair value of options vested during the year ended December 31, 2015 was $999 (2014 - $722, 2013 - $374).

The fair value of stock options at the date of grant is estimated using the Black-Scholes option-pricing model which requires multiple subjective inputs. The risk-free interest rate of the options is based on the U.S. Treasury yield curve in effect at the date of grant for a term similar to the expected term of the option. Prior to the IPO, the Company’s stock did not have a readily available market; therefore, the Company lacks company-specific historical and implied volatility information. Consequently, the expected volatility of stock options was estimated based on a historical volatility analysis of peers that were similar to the Company with respect to industry, stage of life cycle, size, and financial leverage. The expected term of the Company’s stock options has been determined utilizing the “simplified” method. Under this method, the expected term represents the average of the vesting period and the contractual term. The dividend yield is based on the fact that the Company has never paid cash dividends and has no present intention to pay cash dividends. Forfeitures have been estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ materially from these estimates.

The weighted-average option pricing assumptions are as follows:

	Years ended December 31
	2015			2014			2013
Average risk-free interest rate		1.75	%		1.94	%		1.03	%
Expected volatility		75	%		73	%		70	%
Average expected term (in years)		6.23			6.13			6.20
Expected dividend yield		0.00	%		0.00	%		0.00	%
Weighted average fair value of options granted	$	9.83		$	6.10		$	4.13

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

	Years ended December 31,
	2015		2014		2013
Research and development	$	624	$	194	$	147
General and administrative		3,105		566		428
	$	3,729	$	760	$	575

As of December 31, 2015, the unrecognized stock-based compensation cost related to the non-vested stock options was $4,650, which is expected to be recognized over a weighted-average period of 3.0 years.