Share-Based Compensation

Stock Options:

In March 2015, the Company adopted its 2015 Equity Incentive Plan, which was amended and restated in June 2017 by its Board of Directors and became effective upon shareholder approval in August 2017 (the "2015 Plan"). A 1-for-8 reverse share split of the Company's outstanding common stock was effected on May 8, 2019 as approved by the Company's Board of Directors and a majority of its shareholders. The reverse share split reduced the number of shares authorized for issuance, the number of shares available for issuance, and the number of options outstanding under the 2015 Plan from approximately 24.8 million to 3.1 million, from approximately 8.4 million to 1.0 million, and from approximately 15.4 million to 1.9 million, respectively, as of March 31, 2019. As such, all references to share and per share amounts in the financial statements and accompanying notes to the financial statements have been retroactively restated to reflect the 1-for-8 reverse share split, except for the authorized number of shares of the Company's common stock and the par value per share, which were not affected. At March 31, 2020, totals of 4.0 million common shares were authorized for issuance and 1.5 million common shares were available for future issuance under the 2015 Plan.

Stock options granted under the 2015 Plan provide option holders, if approved by the Board of Directors, the right to exercise their options prior to vesting. In the event that an option holder exercises the unvested portion of any option, such unvested portion will be subject to a repurchase option held by the Company at the lower of (1) the fair market value of its common shares on the date of repurchase and (2) the exercise price of the options. Any common shares underlying such unvested portion will continue to vest in accordance with the original vesting schedule of the option.

The Company estimated the fair value of each time-based stock option on the date of grant using the Black-Scholes closed-form option-pricing model applying the weighted average assumptions in the following table:



	Years Ended March 31,
	2020		2019
Expected share price volatility	78.9	%	85.5	%
Expected risk free interest rate	2.30	%	2.82	%
Expected term, in years	6.13		6.03
Expected dividend yield	—	%	—	%

The Company estimated the grant date fair value of each market-based performance stock option granted during the year ended March 31, 2020 using a Monte Carlo Simulation method under the income approach by applying the following assumptions:



Expected share price volatility	73.6 - 74.3%
Contractual term, in years	10

The following table presents a summary of option activity and data under the Company's stock incentive plans through March 31, 2020:



	Number of Options		Weighted Average Exercise Price		Weighted Average Grant Date Fair Value		Weighted Average Remaining Contractual Life	Aggregate Intrinsic Value
Options outstanding at March 31, 2018	1,760,602		$	44.11	$	52.68	8.73	$	1,347,255
Granted	606,599		16.41		11.42
Exercised	(39,130	)	8.57		100.42			242,574
Forfeited	(408,913	)	53.04		53.64
Cancelled	—		—		—
Options outstanding at March 31, 2019	1,919,158		$	34.09	$	49.35	6.86	$	1,569,809
Granted	1,541,672		8.12		4.96
Exercised	(11,778	)	7.20		114.40			2,972
Forfeited	(1,440,317	)	33.99		50.32
Cancelled	—		—		—
Options outstanding at March 31, 2020	2,008,735		$	14.39	$	13.87	8.33	$	—
Options vested and expected to vest at March 31, 2020	2,008,735		$	14.39	$	13.87	8.33	$	—
Options exercisable at March 31, 2020	1,714,955		$	15.16	$	14.60	8.29	$	—

At March 31, 2020, there were vested options to purchase 0.5 million common shares outstanding.

The following table presents a summary of restricted stock unit activity and data under the Company's stock incentive plans through March 31, 2020:



	Number of RSUs		Weighted Average Grant Date Fair Value
RSUs outstanding at March 31, 2019	—		$	—
Granted	369,577		7.50
Vested and settled	(103,294	)	7.77
Forfeited	(18,420	)	7.77
RSUs outstanding at March 31, 2020	247,863		$	7.37

(A) Equity Awards:

During the years ended March 31, 2020 and 2019, the Company granted options to purchase a total of 1.5 million and 0.6 million of its common shares, respectively, with weighted average exercise prices of $8.12 and $16.41, respectively, and estimated grant date fair values of $7.6 million and $6.3 million, respectively, under the 2015 Plan. Share-based compensation expense is included in research and development and general and administrative expenses in the accompanying consolidated statements of operations. Time-based stock options granted to the Company's employees vest over a period of four years with 25% of the common shares underlying the option vesting on the first anniversary of the vesting commencement date and the remainder vesting in 12 quarterly installments thereafter, subject to continuing service. Initial stock options granted to the Company's non-employee directors vest in equal installments on the first, second and third anniversaries of the vesting commencement date, and stock options subsequently granted annually to the Company's non-employee directors vest fully on the first anniversary of the vesting commencement date, each subject to continuous service. The stock options granted to employees during the years ended March 31, 2020 and 2019 include options with market-based performance conditions to purchase 0.4 million and 0.1 million common shares, respectively, with weighted average exercise prices of $8.07 and $20.49 per share, respectively, and corresponding estimated grant date fair values of $1.2 million and $1.5 million, respectively, which were estimated using Monte Carlo Simulation methods under the income approach. At March 31, 2020, options with market-based performance conditions to purchase 0.4 million common shares at a weighted average exercise price of $10.66 per share were outstanding. The market-based performance options vest based on the trading price for the Company's common shares exceeding certain closing price thresholds. At March 31, 2020, options with market-based performance conditions to purchase 19 thousand common shares at a weighted average exercise price of $11.68 per share were outstanding and vested, all of which vested during the year ended March 31, 2019.

During the year ended March 31, 2020, the Company granted RSUs underlying a total of 0.4 million common shares with an aggregate grant date fair value of $2.8 million to its employees under the 2015 Plan. One-half of the RSUs granted in September 2019 vested on January 31, 2020 with the remainder scheduled to vest on July 31, 2020, subject to continuing service. All other RSUs granted are scheduled to vest in three equal annual installments commencing on the first anniversary of the vesting commencement date, subject to continuing service.

The Company recorded total share-based compensation expense of $7.0 million and $17.7 million for the years ended March 31, 2020 and 2019, respectively, related to options and RSUs granted to its employees, directors and consultants. The share-based compensation expense was recorded as research and development and general and administrative expenses in the accompanying consolidated statements of operations. At March 31, 2020, total unrecognized compensation expense related to non-vested outstanding equity awards related to options and RSUs granted to its employees, directors and consultants was $8.9 million, which is expected to be recognized over the remaining weighted-average service period of 2.36 years.

(B) Share-Based Compensation for Related Parties:

(1) Share-Based Compensation Allocated to the Company by RSL:

The Company has incurred share-based compensation expense for RSL common share awards and RSL options issued by RSL to RSL, RSG and RSI employees. Share-based compensation expense has been allocated to the Company by RSL based upon the relative percentage of time utilized by RSL, RSG and RSI employees on Company matters.

The Company recorded share-based compensation expense (benefit) of $45 thousand and $(2.6) million, respectively, for the years ended March 31, 2020 and 2019, in relation to the RSL common share awards and options issued by RSL to RSL, RSG and RSI employees.

(2) RSL Common Share Awards and Options:

Certain employees of the Company have been granted RSL common share awards and options. The Company recorded share-based compensation expense of $0.9 million and $1.3 million for the years ended March 31, 2020 and 2019, respectively, related to these awards.