10 Share-based compensation

Share-based compensation expense recognized by classification included in the consolidated statements of operations and comprehensive loss was as follows:


	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
	in thousands
Research and development	$	895	$	1,131	$	2,694	$	2,612
Selling, general and administrative		1,724		1,316		4,657		3,366
Total	$	2,619	$	2,447	$	7,351	$	5,978

Share-based compensation expense recognized by award type was as follows:


	Three months ended September 30,				Nine months ended September 30,
	2018		2017		2018		2017
	in thousands
Award type
Share options	$	1,160	$	638	$	3,315	$	2,347
Restricted share units (“RSUs”)		667		728		1,953		1,960
Performance share units (“PSUs”)		792		1,081		2,083		1,671
Total	$	2,619	$	2,447	$	7,351	$	5,978

As of September 30, 2018, the unrecognized compensation costs related to unvested awards under the various share-based compensation plans were:



			Weighted-average
	Unrecognized		remaining
	compensation		period for
	costs		recognition
Award type	in thousands		in years
Share options	$	15,651	3.29
Restricted share units		4,994	1.15
Performance share units		5,472	1.84
Total	$	26,117	2.58

The Company satisfies the exercise of share options and vesting of RSUs and PSUs through newly issued shares.

The Company’s share-based compensation plans include the 2014 Amended and Restated Share Option Plan (the “2014 Plan”) and inducement grants under Rule 5653(c)(4) of the NASDAQ Global Select Market with terms similar to the 2014 Plan. At the annual general meeting of shareholders in June 2018, the Company’s shareholders approved amendments of the 2014 Plan, increasing the shares authorized for issuance by 3,000,0000 to a total of 8,601,471. The Company previously had a 2012 Equity Incentive Plan (“2012 Plan”). As of September 30, 2018, 32,567 fully vested share options are outstanding (December 31, 2017: 72,818) under the 2012 Plan.

Share options

The following table summarizes option activity for the nine months ended September 30, 2018:



		Weighted average
	Options	exercise price

Outstanding at December 31, 2017	2,456,433	$	10.06
Granted	906,582	$	26.05
Forfeited	(266,222)	$	13.18
Expired	(9,915)	$	13.49
Exercised	(379,340)	$	11.42
Outstanding at September 30, 2018	2,707,538	$	14.91

Fully vested and exercisable at September 30, 2018	977,409	$	11.03
Outstanding and expected to vest at September 30, 2018	1,730,129	$	17.10

Total weighted average grant date fair value of options issued during the period (in $ millions)		$	15.8
Granted to directors and officers during the period (options, $ in millions)	315,156	$	4.7
Proceeds from option sales (in $ millions)		$	4.6

Share options are granted on the date of grant and, except for certain grants made to non-executive directors, vest over a period of four years, the first 25% vests after one year from the initial grant date and the remainder vests in equal quarterly installments, straight-line over years two, three and four. Any options that vest must be exercised by the tenth anniversary of the initial grant date.

The fair value of each option issued was estimated at the date of grant using the Hull & White option pricing model with the following weighted-average assumptions:


	Three months ended September 30,		Nine months ended September 30,
Assumptions	2018	2017	2018	2017
Expected volatility	80%	80%	80%	75%-80%
Expected terms (in years)	10 years	10 years	10 years	10 years
Risk-free interest rate	3.10%	2.40% - 2.48%	2.67% - 3.10%	2.40% - 2.81%
Expected dividends	0%	0%	0%	0%

Restricted Share Units

The following table summarizes the RSUs activity for the nine months ended September 30, 2018:


		RSU
			Weighted average
			grant-date fair
	Number of shares		value
Non-vested at December 31, 2017		683,663	$	6.38
Granted		262,599	$	23.61
Vested		(276,833)	$	5.99
Forfeited		(189,708)	$	8.00
Non-vested at September 30, 2018		479,721	$	15.40

Total weighted average grant date fair value of RSUs granted during the period (in millions)			$	6.2
Granted to directors and officers during the period (shares, $ in millions)		133,808	$	3.3

RSUs vest over one to three years. RSUs granted in March 2017 to the Company’s Chief Executive Officer will vest equally over two years from the date of grant and RSUs granted to non-executive directors will vest one year from the date of grant.

Performance Share Units

The following table summarizes the PSUs activity for the nine months ended September 30, 2018:


		PSU
			Weighted average
			grant-date fair
	Number of shares		value
Non-vested at December 31, 2017		511,074	$	16.73
Granted		—	$	—
Vested		(68,115)	$	15.79
Forfeited		(73,068)	$	18.85
Non-vested at September 30, 2018		369,891	$	16.74
PSUs awarded but not yet earned		117,197	$	36.39
Total non-vested and discretionary PSUs		487,088	$	21.47

Total weighted average grant date fair value of PSUs awarded during the period (in millions)			$	4.3

In January 2018, the Company awarded PSUs to its executives and other members of senior management. These PSUs are earned based on the Board’s assessment of the level of achievement of agreed upon performance targets through December 31, 2018.

Employee Share Purchase Plan (“ESPP”)

In June 2018 the Company’s shareholders adopted and approved an ESPP allowing the Company to issue up to 150,000 ordinary shares. The ESPP is intended to qualify under Section 423 of the Internal Revenue Code of 1986. Under the ESPP, employees are eligible to purchase ordinary shares through payroll deductions, subject to any plan limitations. The purchase price of the shares on each purchase date is equal to 85% of the lower of the closing market price on the offering date or the closing market price on the purchase date of each three-month offering period. As of September 30, 2018, no shares have been issued.