Share-Based Compensation

9 Months Ended

Dec. 31, 2019

Share-based Payment Arrangement [Abstract]

(A) Myovant 2016 Equity Incentive Plan

In June 2016, the Company adopted its 2016 Equity Incentive Plan, or as amended, the 2016 Plan, under which 4.5 million common shares were originally reserved for issuance. Pursuant to the “evergreen” provision contained in the 2016 Plan, the number of common shares reserved for issuance under the 2016 Plan automatically increases on April 1 of each year, commencing on (and including) April 1, 2017 and ending on (and including) April 1, 2026, in an amount equal to 4% of the total number of shares of capital stock outstanding on March 31 of the preceding fiscal year, or a lesser number of shares as determined by the Company’s board of directors. On April 1, 2019, the number of common shares authorized for issuance increased automatically by 2.9 million shares in accordance with the evergreen provision of the 2016 Plan. As of December 31, 2019, a total of 1.5 million common shares were available for future issuance under the 2016 Plan.

The Company’s employees, directors, officers and consultants are eligible to receive non-qualified and incentive stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, and other share awards under the 2016 Plan.

(B) Stock Option Repricing

On August 26, 2019 (the “repricing date”), the Company’s Board of Directors approved a stock option repricing program (the “repricing”) whereby certain previously granted and still outstanding vested and unvested stock options held by current employees and certain executives were repriced on a one-for-one basis to $7.78 per share, which represented the closing market price of the Company’s common shares on the repricing date. To be eligible to participate in the stock option repricing program, 735,428 vested stock options to certain executives as of the repricing date are subject to a one-year exercise restriction period beginning from the repricing date. No other terms of the repriced stock options were modified, and the repriced stock options will continue to vest according to their original vesting schedules and will retain their original expiration dates. As a result of the repricing, 5,095,013 vested and unvested stock options outstanding with original exercise prices ranging from $8.82 to $24.44, and a median exercise price of $17.28 per share, were repriced under this program. The repricing resulted in one-time incremental stock-based compensation expense of $9.2 million, which will be recognized over the remaining term of the repriced stock options.

A summary of stock option activity under the Company’s 2016 Plan is as follows:



	Number of Options
Options outstanding at March 31, 2019	5,396,465
Granted	2,768,700
Exercised	(80,548	)
Forfeited	(340,360	)
Options outstanding at December 31, 2019	7,744,257
Options vested and expected to vest at December 31, 2019	7,744,257
Vested options subject to one-year exercise restriction period beginning on August 26, 2019	735,428
Options exercisable at December 31, 2019	2,857,183

As a result of the change in control of the Company described in Note 7, the vesting of 849,212 stock options was accelerated on December 27, 2019, resulting in the recognition of $11.2 million of share-based compensation expense upon the change in control.

(D) Restricted Stock Awards and Restricted Stock Units

A summary of restricted stock award and restricted stock unit activity under the Company’s 2016 Plan is as follows:



	Number of Shares
Unvested balance at March 31, 2019	956,066
Granted	724,554
Vested	(221,781	)
Forfeited	(69,973	)
Unvested balance at December 31, 2019	1,388,866

(E) Performance Stock Units

On August 26, 2019, the Company’s Board of Directors granted performance stock units covering a total of 408,510 common shares, of which two-thirds of the shares (272,338 shares) subject to each performance stock unit vests based upon the passage of time, and the remaining one-third of the shares (136,172 shares) subject to each performance stock unit vests if the Company achieves certain clinical trial and regulatory milestones. Total share-based compensation expense associated with the performance stock units is based on the fair value of the Company’s common shares on the grant date, which equals the closing market price of the Company’s common shares on the grant date. The Company recognizes the share-based compensation expense related to the performance stock unit awards subject to time-based vesting on a straight-line basis over the requisite service period, which is generally the vesting period of the respective awards. The Company will recognize the share-based compensation expense related to the performance stock unit awards subject to vesting based upon the achievement of certain clinical trial and regulatory milestones only if such milestones are achieved. As of December 31, 2019, the performance conditions had not been met and were deemed not probable of being met. As a result of the change in control of the Company described in Note 7, the vesting of certain performance stock units covering a total of 108,640 common shares was accelerated on December 27, 2019, resulting in the recognition of $0.8 million of share-based compensation expense upon the change in control. As of December 31, 2019, performance stock units covering a total of 299,870 common shares are unvested.

(F) Share-Based Compensation Expense

Share-based compensation expense was as follows (in thousands):



	Three Months Ended December 31,
	2019		2018
Share-based compensation expense recognized as:
R&D expenses	$	5,399	$	1,840
G&A expenses	14,396		2,954
Total	$	19,795	$	4,794



	Nine Months Ended December 31,
	2019		2018
Share-based compensation expense recognized as:
R&D expenses	$	11,565	$	5,247
G&A expenses	22,613		8,516
Total	$	34,178	$	13,763

Share-based compensation expense is included in R&D and G&A expenses in the accompanying unaudited condensed consolidated statements of operations consistent with the grantee’s salary. Total unrecognized share-based compensation expense was approximately $58.8 million as of December 31, 2019 and is expected to be recognized over a weighted-average period of approximately 2.8 years. Share-based compensation expense included in R&D and G&A expenses for the three and nine months ended December 31, 2019 include $1.8 million and $10.2 million, respectively, related to the acceleration of vesting of certain share-based payment awards as a result of the change in control of the Company described previously.

(G) RSL RSUs

The Company’s Principal Executive Officer was granted 66,845 RSL RSUs during the fiscal year ended March 31, 2017. These RSUs will vest to the extent certain RSL performance criteria are achieved and certain RSL liquidity conditions are satisfied within specified years of the grant date, provided that the Company’s Principal Executive Officer has provided continued service to RSL, the Company, or any of their respective subsidiaries through such date. As of December 31, 2019, the performance conditions had not been met and were deemed not probable of being met. For the three and nine months ended December 31, 2019 and 2018, the Company recorded no share-based compensation expense related to these RSL RSUs.