Share-based compensation

3 Months Ended

Mar. 31, 2020

Share-based compensation

Share-based compensation

8Share-based compensation

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 (together the “2014 Plans”). 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 3,000,000 to a total of 8,601,471.

a) 2014 Plans

Share-based compensation expense recognized by classification included in the Consolidated statements of operations and comprehensive loss in relation to the 2014 Plans was as follows:

	Three months ended March 31,
	2020		2019
	(in thousands)
Research and development	$	2,382	$	1,980
Selling, general and administrative		1,958		2,298
Total	$	4,340	$	4,278

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

	Three months ended March 31,
	2020		2019
	(in thousands)
Award type
Share options	$	2,208	$	2,076
Restricted share units (“RSUs”)		1,444		930
Performance share units (“PSUs”)		688		1,272
Total	$	4,340	$	4,278

As of March 31, 2020, the unrecognized share-based compensation expense related to unvested awards under the 2014 Plans were:

	Unrecognized		Weighted average
	share-based		remaining
	compensation		period for
	expense		recognition
	(in thousands)		(in years)
Award type
Share options	$	28,880	3.10
Restricted share units		16,746	2.40
Performance share units		4,278	1.58
Total	$	49,904	2.73

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

Share options

The following table summarizes option activity for the three months ended March 31, 2020:

	Options
	Number of	Weighted average
	ordinary shares	exercise price
Outstanding at December 31, 2019	2,683,104	$	21.29
Granted	393,302	$	51.81
Forfeited	(8,214)	$	40.82
Exercised	(64,762)	$	14.38
Outstanding at March 31, 2020	3,003,430	$	25.38
Thereof, fully vested and exercisable at March 31, 2020	1,528,351	$	15.75
Thereof, outstanding and expected to vest at March 31, 2020	1,475,079	$	35.36

Total weighted average grant date fair value of options issued during the period (in $ millions)	$	11.5
Proceeds from option sales during the period (in $ millions)	$	0.9

Share options are priced 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 grant date and the remainder vests in equal quarterly installments, over years two, three and four. Any options that vest must be exercised by the tenth anniversary of the grant date.

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

	Three months ended March 31,
Assumptions	2020	2019
Expected volatility	70%	75%
Expected terms	10 years	10 years
Risk free interest rate	1.44%	2.80% - 2.87%
Expected dividend yield	0%	0%

Restricted share units (“RSUs”)

The following table summarizes the RSUs activity for the three months ended March 31, 2020:

	RSU
		Weighted average
	Number of	grant-date fair
	ordinary shares	value
Non-vested at December 31, 2019	370,830	$	28.62
Granted	216,749	$	51.81
Vested	(166,974)	$	18.90
Forfeited	(1,535)	$	48.07
Non-vested at March 31, 2020	419,070	$	44.41
Total weighted average grant date fair value of RSUs granted during the period (in $ millions)		$	11.2

RSUs vest over one to three years. RSUs granted to non-executive directors will vest one year from the date of grant.

Performance share units (“PSUs”)

The following table summarizes the PSUs activity for the three months ended March 31, 2020:

	PSU
		Weighted average
	Number of	grant-date fair
	ordinary shares	value
Non-vested at December 31, 2019	479,422	$	21.17
Granted	91,003	$	57.56
Vested	(354,105)	$	17.44
Non-vested at March 31, 2020	216,320	$	42.58
Total weighted average grant date fair value of PSUs granted during the period (in $ millions)		$	5.2

In January 2019, the Company awarded PSUs to its executives and other members of senior management. These PSUs were earned as of January 2020 based on the Board’s assessment of the level of achievement of agreed upon performance targets through December 31, 2019. PSUs vest after three years.

b) 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 ordinary 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. During the three months ended March 31, 2020, 1,801 ordinary shares were issued under the ESPP compared to 3,126 during the same period in 2019. As of March 31, 2020, a total of 136,406 ordinary shares remains available for issuance under the ESPP plan compared to a total of 144,283 as of March 31, 2019.