Share-based compensation

6 Months Ended

Jun. 30, 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 for the periods indicated below was as follows:

	Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
	(in thousands)				(in thousands)
Research and development	$	2,889	$	2,119	$	5,271	$	4,099
Selling, general and administrative		2,825		2,457		4,783		4,755
Total	$	5,714	$	4,576	$	10,054	$	8,854

Share-based compensation expense recognized by award type for the periods indicated below was as follows:

	Three months ended June 30,				Six months ended June 30,
	2020		2019		2020		2019
	(in thousands)				(in thousands)
Award type
Share options	$	2,746	$	2,004	$	4,954	$	4,080
Restricted share units (“RSUs”)		2,209		995		3,653		1,925
Performance share units (“PSUs”)		759		1,577		1,447		2,849
Total	$	5,714	$	4,576	$	10,054	$	8,854

As of June 30, 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	$	27,450	3.00
Restricted share units		15,705	2.28
Performance share units		3,519	1.37
Total	$	46,674	2.63

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 six months ended June 30, 2020:

	Options
	Number of	Weighted average
	ordinary shares	exercise price
Outstanding at December 31, 2019	2,683,104	$	21.29
Granted	470,327	$	53.26
Forfeited	(69,758)	$	36.13
Exercised	(203,940)	$	16.68
Outstanding at June 30, 2020	2,879,733	$	26.47
Thereof, fully vested and exercisable at June 30, 2020	1,530,724	$	16.06
Thereof, outstanding and expected to vest after June 30, 2020	1,349,009	$	38.30

Total weighted average grant date fair value of options issued during the period (in $ millions)	$	14.2
Proceeds from option sales during the period (in $ millions)	$	3.4

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 June 30,		Six months ended June 30,
Assumptions	2020	2019	2020	2019
Expected volatility	70%	75%	70%	75%
Expected terms	10 years	10 years	10 years	10 years
Risk free interest rate	0.76% - 0.83%	2.17% - 2.63%	0.76% - 1.44%	2.17% - 2.87%
Expected dividend yield	0%	0%	0%	0%

Restricted share units (“RSUs”)

The following table summarizes the RSUs activity for the six months ended June 30, 2020:

	RSU
		Weighted average
	Number of	grant-date fair
	ordinary shares	value
Non-vested at December 31, 2019	370,830	$	28.62
Granted	244,449	$	52.81
Vested	(171,401)	$	19.36
Forfeited	(14,562)	$	45.12
Non-vested at June 30, 2020	429,316	$	45.53
Total weighted average grant date fair value of RSUs granted during the period (in $ millions)		$	12.9

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

Performance share units (“PSUs”)

The following table summarizes the PSUs activity for the six months ended June 30, 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 June 30, 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 certain other members of senior management. These PSUs were earned as of January 2020 based on an assessment by the Company’s board of directors 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 and the closing market price on the purchase date of each three-month offering period. During the six months ended June 30, 2020, 3,005 ordinary shares were issued under the ESPP compared to 4,870 during the same period in 2019. As of June 30, 2020, a total of 135,202 ordinary shares remains available for issuance under the ESPP plan compared to a total of 142,539 as of June 30, 2019.