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Share-Based Compensation

12 Months Ended

Mar. 31, 2021

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 March 31, 2021, there were less than 0.1 million common shares 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 March 31, 2021, a total of 1.3 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.

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 were 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 have vested and 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 is being recognized over the remaining term of the repriced stock options.

(D) Stock Options

Each non-qualified stock option has an exercise price equal to the fair market value of the Company’s common shares on the date of grant. Stock options granted to employees generally vest over a four-year period. Initial stock options granted to non-

executive members of the Company’s board of directors vest over a three-year period. One third of the shares subject to such stock options vest on the first anniversary of the grant date, with the balance of the shares vesting in eight equal quarterly installments thereafter, subject to subject in each case to continued service through each of the vesting dates.

Annual stock options granted to non-executive members of the Company’s board of directors vest in full on the earlier to occur of (i) the first (1st) anniversary of the date of grant and (ii) the day immediately prior to the date of the annual general meeting of shareholders for the year following the year in which the grant is made, subject in each case to continued service through the vesting date.

Each non-qualified stock option award has a maximum term of 10 years from the date of grant, subject to the earlier cancellation prior to vesting upon cessation of service to the Company. Options that are forfeited or expire are available for future grants.

Activity for stock options for the year ended March 31, 2021 is included in the following table:


	Number of Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value (in thousands)








Options outstanding at March 31, 2020	7,723,302	$	9.25	8.08	$	4,146
Granted	1,985,765	$	10.88
Exercised	(905,776)	$	7.41
Forfeited	(509,960)	$	8.32
Options outstanding at March 31, 2021	8,293,331	$	9.90	6.48	$	90,699
Options vested and expected to vest at March 31, 2021	8,293,331	$	9.90	6.48	$	90,699
Options exercisable at March 31, 2021	5,219,403	$	9.77	5.26	$	58,419

As of March 31, 2021, 2020 and 2019, there were 5,219,403, 3,009,080 and 1,581,810 vested stock options outstanding, respectively. Pursuant to the Separation and General Release Agreement with the Company’s former Principal Executive Officer, the vesting of a total of 631,850 stock options was accelerated on January 11, 2021 (see Note 10(H)). As a result of the change in control of the Company described in Note 6(A), the vesting of 849,212 stock options was accelerated on December 27, 2019.

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


	Year Ended March 31,
	2021		2020		2019
Expected common share price volatility	75.7	%	69.5	%	71.6	%
Expected risk free interest rate	0.47	%	2.05	%	2.78	%
Expected term, in years	6.21		6.17		6.23
Expected dividend yield	—	%	—	%	—	%

Additional information regarding stock options is set forth below (in thousands, except per share data).


	Year Ended March 31,
	2021		2020		2019
Intrinsic value of options exercised	$	12,154	$	1,036	$	2,167
Grant date fair value of options vested	$	19,923	$	2,112	$	11,409
Weighted-average grant date fair value per share of options granted	$	7.22	$	11.54	$	14.10

(E) Restricted Stock Awards and Restricted Stock Units

Restricted stock units (“RSU”) are share awards that, upon vesting, will deliver to the holder shares of the Company’s common shares. RSUs generally vest over a four-year period. Activity for restricted stock awards (“RSA”) and RSUs for the year ended March 31, 2021 is included in the following table:


	Number of Shares	Weighted-Average Grant Date Fair Value








Unvested balance at March 31, 2020	1,280,312	$	10.71
Granted	3,356,865	$	12.52
Vested	(1,041,684)	$	11.17
Forfeited	(400,931)	$	9.03
Unvested balance at March 31, 2021	3,194,562	$	12.68

The total fair value of RSAs vested during the years ended March 31, 2021, 2020, and 2019 was $8.4 million, $1.4 million and $1.4 million, respectively. The total fair value of RSUs vested during the years ended March 31, 2021, 2020, and 2019 was $3.3 million, $0.2 million and $0.1 million, respectively. Pursuant to the Separation and General Release Agreement with the Company’s former Principal Executive Officer, the vesting of RSUs and RSAs covering a total of 761,770 common shares was accelerated on January 11, 2021 (see Note 10(H)).

(F) Performance Share Units

Activity for performance share units (“PSU”) for the year ended March 31, 2021 is included in the following table:


	Number of Shares	Weighted-Average Grant Date Fair Value




Unvested balance at March 31, 2020	299,870	$	7.78
Granted	568,976	$	8.08
Vested	(454,758)	$	7.98
Forfeited	(37,415)	$	7.78
Unvested balance at March 31, 2021	376,673	$	7.99

The vesting of PSUs requires that certain performance conditions are achieved during the performance period and is subject to the employee’s continued service requirements. The total fair value of PSUs vested during the years ended March 31, 2021 and 2020 was $3.6 million and $0.8 million, respectively. No PSUs vested in the year ended March 31, 2019. Pursuant to the Separation and General Release Agreement with the Company’s former Principal Executive Officer, the vesting of PSUs covering a total of 301,659 common shares was accelerated on January 11, 2021 (see Note 10(H)). As a result of the change in control of the Company described in Note 6(A), the vesting of certain PSUs covering a total of 108,640 common shares was accelerated on December 27, 2019.

(G) Share-Based Compensation Expense

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


	Year Ended March 31,
		2021		2020		2019
Share-based compensation expense recognized as:
R&D expense		$	14,049	$	14,524	$	7,161
SG&A expense		39,627		25,727		11,535
Total		$	53,676	$	40,251	$	18,696

Total unrecognized share-based compensation expense was approximately $62.4 million as of March 31, 2021 and is expected to be recognized over a weighted-average period of approximately 2.9 years.

Share-based compensation expense included in SG&A expense for the year ended March 31, 2021 includes $25.7 million of incremental expense as a result of the separation of the Company’s former Principal Executive Officer (see Note 10(H)). Share-based compensation expense included in SG&A and R&D expense for the year ended March 31, 2020 includes $10.2 million

and $1.8 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 6(A).

(H) Separation Agreement with Former Principal Executive Officer

In January 2021, the Company entered into a Separation and General Release Agreement with its former Principal Executive Officer. Pursuant to the terms of this agreement, all of the former Principal Executive Officer’s then outstanding and unvested equity awards became fully vested. In addition, the post-termination period during which the former Principal Executive Officer may exercise her outstanding stock options was extended to 12 months. The former Principal Executive Officer has granted Sumitovant or any Sumitovant affiliate a right of first refusal to purchase her common shares of the Company under certain circumstances and provide the Company and its affiliates a general release of claims. Share-based compensation expense included in SG&A expense for the year ended March 31, 2021 includes $25.7 million related to the acceleration, modification, and remeasurement of these awards.

As a result of the repurchase feature described above, the outstanding awards were reclassified from additional paid-in capital to current liabilities. The share-based compensation liabilities have been and will continue to be remeasured at fair value each reporting period end, with the change in fair value recorded as share-based compensation expense within SG&A until the stock options are exercised and the common shares are sold to Sumitovant, to the market, or otherwise settled, or the former Principal Executive Officer has held the common shares for a period of at least six months (see Note 3). As of March 31, 2021, a total of 1,281,803 outstanding stock options and a total of 462,705 common shares remain subject to the right of first refusal. The former Principal Executive Officer’s outstanding stock options remain exercisable through January 11, 2022.