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Share-based compensation | 9 Months Ended
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Sep. 30, 2017
Share-based compensation |
Share-based compensation | 10 Share-based compensation Share-based compensation expense recognized by classification included in the consolidated statements of operations and comprehensive loss was as follows:
|  | Three months ended September 30, |  | Nine months ended September 30,
|  | 2017 |  | 2016 |  | 2017 |  | 2016
|  | in thousands
Research and development - employees |  | $ | 1,131 |  | $ | 893 |  | $ | 2,612 |  | $ | 2,670
Selling, general and administrative - employees |  |  | 1,316 |  |  | 30 |  |  | 3,366 |  |  | 1,680
Research and development - non-employees |  |  | — |  |  | — |  |  | — |  |  | 670
Total |  | $ | 2,447 |  | $ | 923 |  | $ | 5,978 |  | $ | 5,020
Share-based compensation expense recognized by award type was as follows:
|  | Three months ended September 30, |  | Nine months ended September 30,
|  | 2017 |  | 2016 |  | 2017 |  | 2016
Award type |  | in thousands
Share options |  | $ | 638 |  | $ | 718 |  | $ | 2,347 |  | $ | 4,408
Restricted share units (“RSUs”) |  |  | 728 |  |  | 88 |  |  | 1,960 |  |  | 323
Performance share units (“PSUs”) |  |  | 1,081 |  |  | 117 |  |  | 1,671 |  |  | 289
Total |  | $ | 2,447 |  | $ | 923 |  | $ | 5,978 |  | $ | 5,020
As of September 30, 2017, the unrecognized compensation costs related to unvested awards under the various share-based compensation plans were:
|  |  |  |  | Weighted-average
|  | Unrecognized |  | remaining
|  | compensation |  | period for
|  | costs |  | recognition
Award type |  | in thousands |  | in years
Share options |  | $ | 7,041 |  | 2.52
Restricted share units |  |  | 4,003 |  | 1.64
Performance share units |  |  | 3,747 |  | 1.84
Total |  | $ | 14,791 |  | 2.11
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 Select 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 ordinary 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”). 2014 Plan Share options The following table summarizes option activity under the Company’s 2014 Plan for the nine months ended September 30, 2017:
|  | 2014 plan
|  |  |  | Weighted average
|  | Options |  | exercise price
Outstanding at December 31, 2016 |  | 1,812,766 |  | $ | 12.47
Granted |  | 949,350 |  | $ | 6.17
Forfeited |  | (348,697) |  | $ | 7.95
Expired |  | (164,106) |  | $ | 14.46
Exercised |  | (8,125) |  | $ | 7.49
Outstanding at September 30, 2017 |  | 2,241,188 |  | $ | 10.38
Fully vested and exercisable |  | 820,522 |  | $ | 12.58
Outstanding and expected to vest |  | 1,420,666 |  | $ | 9.10
Total weighted average grant date fair value of options issued during the period (in $ million) |  |  |  | $ | 3.5
Grants during the period to directors and officers |  | 641,250 |  | $ | 6.43
Proceeds from option sales (in $ million) |  |  |  |  | —
Options to purchase ordinary shares granted to the Company’s non-executive directors, other than those granted upon appointment will vest 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 September 30, |  | Nine months ended September 30,
Assumptions |  | 2017 |  | 2016 |  | 2017 |  | 2016
Expected volatility |  | 80% |  | 75% |  | 75% - 80% |  | 75%
Expected terms (in years) |  | 10 years |  | 10 years |  | 10 years |  | 10 years
Risk free interest rate |  | 2.40% - 2.48% |  | 1.52% - 1.89% |  | 2.40% - 2.81% |  | 0.16% - 1.96%
Expected dividends |  | 0% |  | 0% |  | 0% |  | 0%
Restricted Share Units (RSUs) The following table summarizes the RSUs activity for the nine months ended September 30, 2017:
|  |  | RSU
|  |  |  |  | Weighted average
|  |  |  |  | grant-date fair
|  | Number of shares |  | value
Non-vested at December 31, 2016 |  |  | 307,063 |  | $ | 9.11
Granted |  |  | 428,350 |  | $ | 6.00
Vested |  |  | (25,000) |  | $ | 18.21
Forfeited |  |  | (38,550) |  | $ | 7.15
Non-vested at September 30, 2017 |  |  | 671,863 |  | $ | 6.90
Total weighted average grant date fair value of RSUs issued during the period (in $ million) |  |  |  |  | $ | 2.6
Grants during the period to directors and officers |  |  | 255,000 |  | $ | 5.95
RSUs vest over one to three years. RSUs granted in March 2017 to the Company’s Chief Executive Officer will vest equally over two years from the date of grant and RSUs granted to non-executive directors will vest one year from the date of grant. RSUs granted during the period include 255,000 RSUs granted to directors and officers Performance Share Units (PSUs) The following table summarizes the PSUs activity for the nine months ended September 30, 2017:
|  |  | PSU
|  |  |  |  | Weighted average
|  |  |  |  | grant-date fair
|  | Number of shares |  | value
Non-vested at December 31, 2016 |  |  | 111,564 |  | $ | 5.76
Granted |  |  | 13,000 |  | $ | 4.99
Retired |  |  | (12,000) |  | $ | 5.76
Vested |  |  | (58,500) |  | $ | 5.76
Non-vested at September 30, 2017 |  |  | 54,064 |  | $ | 5.57
PSUs awarded but not yet earned |  |  | 437,060 |  |  |
Total non-vested and discretionary PSUs |  |  | 491,124 |  |  |
Total weighted average grant date fair value of PSUs awarded during the period (in $ million) |  |  |  |  | $ | 2.0
In January 2017, the Company awarded PSUs to its executives and other members of senior management. These PSUs are earned based on the Board’s assessment of the level of achievement of agreed performance targets through December 31, 2017. In September 2016, the Company awarded PSUs to its Chief Executive Officer, subject to the successful implementation of the strategic plan. The earning of these PSUs is based on the Board’s assessment of the Chief Executive Officer’s performance through December 31, 2017. Other Plans Under Rule 5653(c)(4) of the NASDAQ Global Select Market, the Company grants share options and RSUs to officers as a material inducement to enter into employment with the Company. In 2017, the Company granted 175,000 inducement RSUs with a grant date fair value of $1.0 million. The following table summarizes option activity under Other Plans for the nine months ended September 30, 2017:
|  | Other plans
|  |  |  |  | Weighted average
|  | Options |  | exercise price
Outstanding at December 31, 2016 |  |  | 187,500 |  | $ | 17.93
Granted |  |  | 300,000 |  | $ | 6.90
Expired |  |  | (62,500) |  | $ | 27.82
Outstanding at September 30, 2017 |  |  | 425,000 |  | $ | 8.69
Fully vested and exercisable |  |  | 39,062 |  | $ | 12.98
Outstanding and expected to vest |  |  | 385,938 |  | $ | 8.25
Total weighted average grant date fair value of options issued during the period (in $ million) |  |  |  |  | $ | 1.2
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. 2012 Plan The following table summarizes option activity under the Company’s 2012 Plan for the nine months ended September 30, 2017:
|  | 2012 plan
|  |  |  | Weighted average
|  | Options |  | exercise price
Outstanding at December 31, 2016 |  | 483,006 |  | € | 5.13
Exercised |  | (286,804) |  | € | 3.07
Forfeited |  | (5,000) |  | € | 3.07
Expired |  | (9,000) |  | € | 3.07
Outstanding, fully vested and exercisable at September 30, 2017 |  | 182,202 |  | € | 8.52
Options exercised under the 2012 plan during the nine months ended September 30, 2017, resulted in total proceeds to the Company of $1.0 million.

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- Definition The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 40 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=65895303&loc=d3e17540-113929 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 50 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=68057994&loc=d3e25284-112666 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SAB Topic 14) -URI http://asc.fasb.org/extlink&oid=27013229&loc=d3e301413-122809 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 2 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5070-113901 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5047-113901 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 718 -SubTopic 10 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=6415400&loc=d3e5444-113901 + Details
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