Share-Based Compensation

12 Months Ended

Mar. 31, 2022

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. On March 22, 2022, the compensation committee of the Company’s board of directors adopted the first amendment to the 2020 Inducement Plan, which, subject to the adjustment provisions thereof, increased the authorized shares of the Company’s common shares for issuance from 1.0 million to 2.0 million under the 2020 Inducement Plan. All of the other terms of the 2020 Inducement Plan remained the same. As of March 31, 2022, there were 1.0 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, 2021, 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, 2022, a total of 2.6 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 retained their original vesting schedules and expiration dates. As a result of the repricing, 5,095,013 vested and unvested stock options outstanding on the repricing date 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. One fourth 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 twelve equal quarterly installments thereafter. 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. The vesting of stock options is subject to 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, 2022 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, 2021	8,293,331	$	9.90	6.48	$	90,699
Granted	1,178,625	$	18.93
Exercised	(2,513,887)	$	9.80
Forfeited	(827,389)	$	17.07
Options outstanding at March 31, 2022	6,130,680	$	10.71	6.98	$	26,467
Options vested and expected to vest at March 31, 2022	6,130,680	$	10.71	6.98	$	26,467
Options exercisable at March 31, 2022	3,754,020	$	8.41	6.08	$	20,978

The aggregate intrinsic value of stock options is calculated as the pre-tax difference between the weighted-average exercise price of the stock options and the closing price per share of the Company’s common shares of $13.32 and $20.58 on March 31, 2022 and 2021, respectively. The calculation excludes any stock options with an exercise price higher than the closing price of the Company’s common shares.

As of March 31, 2022, 2021, and 2020, there were 3,754,020, 5,219,403, and 3,009,080 vested stock options outstanding, respectively.

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,
	2022		2021		2020
Expected common share price volatility	71.9	%	75.7	%	69.5	%
Expected risk free interest rate	1.03	%	0.47	%	2.05	%
Expected term, in years	6.2		6.21		6.17
Expected dividend yield	—	%	—	%	—	%

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


	Year Ended March 31,
	2022		2021		2020
Intrinsic value of options exercised	$	23,305	$	12,154	$	1,036
Grant date fair value of options vested	$	37,326	$	19,923	$	2,112
Weighted-average grant date fair value per share of options granted	$	12.12	$	7.22	$	11.54

(E) Restricted Stock Awards and Restricted Stock Units

Restricted stock units (“RSU”) and Restricted Stock Awards (“RSA”) 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 RSUs for the year ended March 31, 2022 is included in the following table:


	Number of Shares	Weighted-Average Grant Date Fair Value
Unvested balance at March 31, 2021	3,194,562	$	12.68
Granted	3,376,403	$	18.21
Vested	(1,220,572)	$	11.92
Forfeited	(964,426)	$	15.17
Unvested balance at March 31, 2022	4,385,967	$	16.60

The total fair value of RSUs vested during the years ended March 31, 2022, 2021, and 2020 was $14.5 million, $3.3 million and $0.2 million, respectively. The total fair value of RSAs vested during the years ended March 31, 2021 and 2020 was $8.4 million and $1.4 million, respectively. No RSAs vested during the year ended March 31, 2022.

(F) Performance Share Units

Activity for performance share units (“PSU”) for the year ended March 31, 2022 is included in the following table:


	Number of Shares	Weighted-Average Grant Date Fair Value
Unvested balance at March 31, 2021	376,673	$	7.99
Granted	—	$	—
Vested	(123,118)	$	7.87
Forfeited	(106,903)	$	8.08
Unvested balance at March 31, 2022	146,652	$	8.04

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, 2022, 2021, and 2020 was $1.0 million, $3.6 million, and $0.8 million, respectively.

(G) Share-Based Compensation

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


	Year Ended March 31,
		2022		2021		2020
Share-based compensation recognized as:
SG&A expense		$	22,918	$	39,627	$	25,727
R&D expense		16,010		14,049		14,524
Total		$	38,928	$	53,676	$	40,251

Share-based compensation capitalized to inventories was not material during the year ended March 31, 2022. There was no share-based compensation capitalized to inventories for the years ended March 31, 2021 and 2020.

Total unrecognized share-based compensation was approximately $83.0 million as of March 31, 2022 and is expected to be recognized over a weighted-average period of approximately 2.8 years.

Share based compensation included in SG&A for the year ended March 31, 2022 includes $1.7 million related to the settlement and remeasurement of the Company’s former Principal Executive Officer’s equity awards (see Note 10(H)) and $1.3 million of expense related to the accelerated vesting and modification of the post-termination exercise period of the Company’s former Principal Financial Accounting Officer’s equity awards (see Note 10(I)).

Share-based compensation 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 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 could exercise her outstanding stock options was extended to 12 months. The former Principal Executive Officer 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.

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 were remeasured at fair value each reporting period end, with the change in fair value recorded as share-based compensation within SG&A expense until the stock options were exercised and the common shares sold to Sumitovant, to the market, or otherwise settled, or the former Principal Executive Officer held the common shares for a period of at least six months. As of March 31, 2021, $21.6 million is included in share-based compensation liabilities on the consolidated balance sheet. The former Principal Executive Officer’s outstanding stock options were exercisable through January 11, 2022. On January 11, 2022, 331,265 stock options were canceled and the remaining share-based compensation liability was reclassified to additional paid-in capital.

(I) Separation Agreement with Former Principal Financial and Accounting Officer

In August 2021, the Company entered into a Separation Agreement and General Release with its former Principal Financial and Accounting Officer. Pursuant to the terms of this agreement, 25% of the former Principal Financial and Accounting Officer’s then outstanding and unvested equity awards became fully vested. In addition, the post-termination period during which he could exercise his outstanding stock options was extended to six months.