Share-based compensation

12 Months Ended

Dec. 31, 2023

10. Share-based compensation

At the time of the Company’s corporate reorganization and subsequent IPO in February 2021, previously awarded options were re-designated to reflect the equivalent number of options and exercise prices on the basis of the Company’s new shares. References in this note to options granted prior to the Company’s reorganization are made on this redesignated basis. Details of modifications in the year ended December 31, 2021 impacting the fair value of previously awarded options are provided further below under “Pre-IPO Grants”.

The following table shows the total share-based compensation expense recorded in the Consolidated Statements of Operations and Comprehensive Loss (in thousands):

	2023		2022		2021
R&D	$	6,467	$	5,311	$	5,365
Selling, general and administrative	$	26,002	$	27,577	$	43,529

Equity Incentive Plan (“EIP”)

Under the Company’s EIP, the Company may grant market value options, share appreciation rights or restricted shares, restricted share units, performance share units and other share-based awards to the Company’s employees. The Company’s board members and consultants are eligible to receive awards under the Company’s non-employee sub-plan to the EIP. Awards may be granted at such times as the Company may determine, but will generally be granted annually following the end of the financial year. Awards vest at such times and as specified in the award agreement, typically being over a four-year period although the Company retains the discretion to provide for other vesting schedules. If the participant violates the non-competition, non-solicitation, confidentiality or other similar restrictive covenant provisions of any employment contract, the right of the participant to receive these shares on vesting shall terminate immediately. The Company maintains discretion over the type and terms of equity awards granted. All awards lapse on the tenth anniversary from the date of grant, and they are not subject to performance conditions or entitled to dividends.

During the year ended December 31, 2023 and 2022, options over a total of 853,863 shares and 1,507,581 shares respectively were awarded under the Company’s EIP. Of the above awards in the year ended December 31, 2023, there were 43,380 options awarded to our non-executive directors, which vest on the first anniversary from the date of grant. In fiscal 2022, there were 66,972 non-executive options awarded, 56,704 of which vested one year from the date of grant and 10,268 of which vest monthly over a three-year period.

Pre-IPO Grants

Prior to its IPO, the Company granted a limited number of options to employees and directors. These grants had varying terms, typically vesting over a four-year period with 25% vesting at the end of the first year and the options lapsing on the tenth anniversary from the date of grant. Following the Company’s corporate reorganization in February 2021, previous options were re-designated to reflect an equivalent number of share options and exercise price on the basis of the Company’s new shares.

There was no impact to the fair value of pre-IPO grants on redesignation, with the exception of 96,300 Growth shares awarded in previous periods and 2,911,260 options originally awarded in 2019. The 2019 awards were modified at the time of the Company’s reorganization through the removal of accelerated vesting conditions under certain circumstances. The incremental fair value granted was valued on a consistent basis to other awards made within the Company and was valued at $5.19 per share and was applied to those unvested awards as of the date of modification. Fair value inputs for the purposes of calculating the incremental fair value of the modification in January 2021 included an exercise price of $17.46, a share price of $26.00, an expected life of 3 years, expected volatility of 90%, and a risk-free rate of -0.13%.

As of December 31, 2023, there was $31.0 million of total unrecognized compensation cost related to stock options granted but not vested under the Company’s plans. That cost will be recognized over an expected remaining weighted-average period of 1.0 years.

The number and weighted average exercise prices of share options are as follows:

Number of shares issuable	Number of share options (#)			Weighted average exercise price ($)		Average Remaining Contractual Term	Aggregate Intrinsic Value (in thousands)
Outstanding at January 1, 2021		4,551,359		$	17.16
Awards granted		4,702,027			26.56
Awards exercised		(76,762	)		17.01
Awards forfeited		(290,664	)		31.24
Awards replaced with options		312,500			38.72
Outstanding at December 31, 2021		9,198,460			22.31	8.5 years	$	109,749
Awards granted		1,507,581			27.50
Awards exercised		(492,163	)		19.72
Awards forfeited		(320,634	)		26.41
Outstanding at December 31, 2022		9,893,244			23.10	7.9 years	$	336,120
Awards granted		853,863			62.57
Awards exercised		(1,637,303	)		20.93
Awards forfeited		(141,922	)		34.78
Outstanding at December 31, 2023		8,967,882			27.06	7.1 years	$	369,976
Exercisable at December 31, 2023		5,761,718		$	22.26	6.7 years	$	265,412

The weighted average fair value of options granted in 2023 was $38.57 (2022: $16.93; 2021: $16.48). The weighted average share price at the date of exercise of the options during the year was $56.73 (2022: $46.17; 2021: $33.97). As of December 31, 2023 we have $0.5 million included in prepaid expenses and other current assets for exercises of options during the year.

In the years ended December 31, 2023, 2022 and 2021 the total intrinsic value of stock options exercised was $58.4 million, $12.9 million and $1.3 million, respectively. The tax benefit arising on the exercise of stock options was $3.1 million, $2.6 million and $0.2 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Awards granted in the year ended December 31, 2023, 2022 and 2021, have been valued using the Black-Scholes option pricing model. The assumptions used in the models for share options granted during year ended December 31, 2023 2022 and 2021, are as follows:

	2023		2022		2021
Share price at grant date	$	46.48 - $64.53	$	24.66 - $46.86	$	26.00 - $41.74
Exercise price	$	46.48 - $64.53	$	24.66 - $46.86	$	26.00 - $41.74
Expected volatility		66.7% - 72.05%		73.02% - 87.81%		83.88% - 88.76%
Expected life (years)	5 years		4 years - 5 years		4 years
Risk free rate		3.52% - 4.75%		1.12% - 4.12%		-0.05% - 0.52%
Fair value	$	27.77 - $39.02	$	15.10 - $29.41	$	16.16 - $26.18

Share options are not entitled to dividends.