Share-Based Compensation

9 Months Ended

Dec. 31, 2020

Share-based Payment Arrangement [Abstract]

The Company has two share-based compensation plans, the Myovant Sciences Ltd. 2020 Inducement Plan and the Myovant Sciences Ltd. 2016 Equity Incentive Plan (collectively, the “Equity Plans”).

(A) 2020 Inducement Plan

In November 2020, the compensation committee of the Company’s board of directors adopted the Myovant Sciences Ltd. 2020 Inducement Plan (the “2020 Inducement Plan”), which, subject to the adjustment provisions thereof, reserved 1.0 million shares of the Company’s common shares for issuance. The 2020 Inducement Plan was adopted without shareholder approval pursuant to the Listed Company Manual Rule 303A.08 (“Rule 303A.08”) of the New York Stock Exchange (the “NYSE”). The 2020 Inducement Plan provides for the grant of restricted stock units and non-qualified stock options, and contains terms and conditions intended to comply with the inducement award exception under the NYSE rules. In accordance with Rule 303A.08, awards under the 2020 Inducement Plan may only be made to individuals not previously employees of the Company, or being rehired following a bona fide period of interruption of employment, as an inducement material to such individuals’ entering into employment with the Company. An award is a right to receive the Company’s common shares pursuant to the 2020 Inducement Plan pursuant to a restricted stock unit award or a non-qualified stock option award. As of December 31, 2020, a total of 0.7 million common shares were available for future issuance under the 2020 Inducement Plan.

(B) 2016 Equity Incentive Plan

In June 2016, the Company adopted its 2016 Equity Incentive Plan, 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 the Company’s 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, 2020, the number of common shares authorized for issuance under the 2016 Plan increased automatically by 3.6 million shares in accordance with the evergreen provision. As of December 31, 2020, a total of 1.0 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.

A summary of stock option activity under the Company’s Equity Plans are as follows:


			Number of Options
Options outstanding at March 31, 2020			7,723,302
Granted			1,679,338
Exercised			(729,024)
Forfeited			(452,419)

Options outstanding at December 31, 2020			8,221,197
Options vested and expected to vest at December 31, 2020			8,221,197

Options exercisable at December 31, 2020			4,456,746

(D) Restricted Stock Awards and Restricted Stock Units

A summary of restricted stock award and restricted stock unit activity under the Company’s Equity Plans are as follows:


			Number of Shares
Unvested balance at March 31, 2020			1,280,312
Granted			2,947,939
Vested			(246,305)
Forfeited			(326,357)
Unvested balance at December 31, 2020			3,655,589

(E) Performance Stock Units

A summary of performance stock unit activity under the Company’s Equity Plans are as follows:


			Number of Shares
Unvested balance at March 31, 2020			299,870
Granted			568,976
Vested			(131,227)
Forfeited			(37,415)
Unvested balance at December 31, 2020			700,204

The vesting of performance stock units requires that certain performance conditions are achieved during the performance period and is subject to the employee’s continued service requirements.

(F) Share-Based Compensation Expense

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


	Three Months Ended December 31,				Nine Months Ended December 31,
	2020		2019		2020		2019
Share-based compensation expense recognized as:
R&D expenses	$	3,311	$	5,399	$	11,060	$	11,565
SG&A expenses	3,699		14,396		10,686		22,613
Total	$	7,010	$	19,795	$	21,746	$	34,178

Share-based compensation expense is included in R&D and SG&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 $66.6 million as of December 31, 2020 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 SG&A expense for the three and nine months ended December 31, 2019 includes $1.8 million and $10.2 million, respectively, related to the accelerated vesting of certain share-based payment awards as a result of the change in control of the Company described in Note 5(A).

On January 3, 2021, Dr. Lynn Seely and Myovant Sciences, Inc. entered into a Separation Agreement and General Release pursuant to which, among other things, all of Dr. Seely’s equity incentive awards granted under the 2016 Plan that are then outstanding and unvested on the Separation Date shall become fully vested and, if applicable, exercisable. The vesting of these awards is expected to result in the recognition of approximately $12.0 million of previously unrecognized share-based compensation expense as well as incremental share-based compensation as a result of the modification of these awards (see Note 12(B)).