9Share-based compensation

The Company recognized share-based compensation expense totaling $1.6 million and $2.6 million during the three months ended March 31, 2017, and 2016, respectively.

Share-based compensation expense recognized by classification included in the consolidated statements of operations and comprehensive loss was as follows:

	Three months ended March 31,
	2017		2016
	in thousands
Research and development - employees	$	687	$	859
Selling, general and administrative - employees	918		1,119
Research and development - non-employees	—		670

Total	$	1,605	$	2,648

Share-based compensation expense recognized by award type was as follows:

	Three months ended March 31,
	2017		2016
	in thousands
Award type
Share options	$	826	$	2,384
Restricted share units (“RSUs”)	516		152
Performance share units (“PSUs”)	263		112

Total	$	1,605	$	2,648

As of March 31, 2017, the unrecognized compensation costs related to unvested awards under the various share-based compensation plans were:

	Unrecognized compensation costs		Weighted-average remaining period for recognition (in years)
	in thousands
Award type
Stock options	$	8,324	2.85
Restricted stock units	3,369		2.22
Performance stock units	2,703		2.60

Total	$	14,396	2.66

The Company satisfies the exercise of share options and vesting of RSUs and PSUs through newly issued shares.

The Company’s share-based compensation plans include the 2014 Amended and Restated Share Option Plan (the “2014 Plan”) and inducement grants under Rule 5653(c)(4) of the NASDAQ Global Market with characteristics similar to the 2014 Plan (classified as “Other Plans”). The Company previously had a 2012 Equity Incentive Plan (the “2012 Plan”) and issued options to purchase common shares to the shareholders of 4D in connection with a collaboration and license agreement between the Company and 4D dated as of January 2014 (classified as Other Plans).

2012 Plan

The following table summarizes option activity under the Company’s 2012 Plan for the three months ended March 31, 2017:

	2012 Plan
	Options		Weighted average exercise price

Outstanding at December 31, 2016	483,006		€	5.13
Exercised	(134,974	)	€	3.07

Outstanding, fully vested and exercisable at March 31, 2017	348,032		€	5.92

Options exercised during the three months ended March 31, 2017, resulted in total proceeds to the Company of $0.4 million.

2014 Plan

Share options

The following table summarizes option activity under the Company’s 2014 Plan for the three months ended March 31, 2017:

	2014 plan
	Options		Weighted average exercise price

Outstanding at December 31, 2016	1,812,766		$	12.47
Granted	508,500		$	5.63
Forfeited	(40,371	)	$	12.76
Expired	(12,952	)	$	18.30

Outstanding at March 31, 2017	2,267,943		$	10.90
Fully vested and exercisable	746,557		$	13.01

Outstanding and expected to vest	1,521,386		$	9.86

During the three months ended March 31, 2017, the Company granted options to purchase an aggregate of 508,500 common shares with an aggregate weighted average grant date fair value of $1.6 million. This included an option to purchase 175,000 options common shares the Company granted to its Chief Executive Officer and options to purchase an aggregate 69,000 common shares that the Company granted to its non-executive directors, each such option vesting after one year from the date of grant.

The fair value of each option issued was estimated at the date of grant using the Hull & White option pricing model with the following weighted-average assumptions:

	Three months ended March 31,
	2017	2016
Assumptions
Expected volatility	75%	75%
Expected terms (in years)	10 years	10 years
Risk free interest rate	2.53% - 2.70%	0.16% - 0.54%
Expected dividends	0%	0%

Restricted Share Units (RSUs)

The following table summarizes the RSUs activity for the three months ended March 31, 2017:

	Number of shares		Weighted average grant-date fair value
Undistributed at December 31, 2016	307,063		$	9.11
Granted	285,500		$	5.95
Distributed	(25,000	)	$	18.21
Forfeited	(375	)	$	13.03

Undistributed at March 31, 2017	567,188		$	7.12

During the three months ended March 31, 2017, the Company granted an aggregate of 285,500 RSUs with an aggregate weighted average grant date fair value of $1.7 million. The grants include 69,000 RSUs granted to non-executive directors, each such grant to vest after one year, and 175,000 RSUs granted to the Company’s Chief Executive Officer, which vest in equal tranches on February 21, 2018, and February 21, 2019.

During the three months ended March 31, 2017, the Company distributed 25,000 common shares in connection with the settlement of vested RSUs.

Performance Share Units (PSUs)

The following table summarizes the PSUs activity for the three months ended March 31, 2017:

	Number of shares		Weighted average grant-date fair value
Undistributed at December 31, 2016	111,564		$	5.76
Distributed	(58,500	)	$	5.76

Undistributed at March 31, 2017	53,064		$	5.76

In January 2017, the Company awarded an aggregate of 423,500 PSUs to members of its senior management, including 162,500 PSUs to its Chief Executive Officer. As awarding these PSUs is discretionary based on the Board’s assessment of 2017 performance, these PSUs are not recorded in the above table.

In September 2016, the Company awarded 61,560 PSUs to its Chief Executive Officer, subject to the successful implementation of the strategic plan. As awarding thee PSUs is discretionary based on the Board’s assessment of the Chief Executive Officer’s 2017 performance, these PSUs are also not recorded in the above table.

Other Plans

The following table summarizes option activity under the Company’s Other Plans for the three months March 31, 2017:

	Other plans
	Options	Weighted average exercise price

Outstanding at December 31, 2016	187,500	$	17.93
Granted	150,000	$	5.31

Outstanding at March 31, 2017	337,500	$	12.32
Fully vested and exercisable	62,500	$	27.82

Outstanding and expected to vest	275,000	$	8.80

Under Rule 5653(c)(4) of the NASDAQ Global Market, the Company grants share options to certain employees as a material inducement to enter into employment with the Company. During the three months ended March 31, 2017, the Company granted 150,000 options with an aggregate weighted average grant date fair value of $0.5 million. No options were exercised during the three months ended March 31, 2017.

The fair value of the inducement grant options was estimated at the date of grant using the Hull & White option pricing model with the same assumptions as used in determining the fair value of options issued under the 2014 Plan.