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Share-based compensation

6 Months Ended

Jun. 30, 2022

7Share-based compensation

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 terms similar to the 2014 Plan (together the “2014 Plans”). At the annual general meeting of shareholders in June 2021, the Company’s shareholders approved an increase in the number of ordinary shares authorized for issuance under the 2014 Plan from 8,601,471 to 12,601,471.

In June 2018, the Company’s shareholders adopted and approved an employee share purchase plan (“ESPP”) allowing the Company to issue up to 150,000 ordinary shares. The ESPP is intended to qualify under Section 423 of the Internal Revenue Code of 1986. Under the ESPP, employees are eligible to purchase ordinary shares through payroll deductions, subject to any plan limitations. The purchase price of the ordinary shares on each purchase date is equal to 85% of the lower of the closing market price on the offering date and the closing market price on the purchase date of each three-month offering period.

2014 Plans and ESPP

Share-based compensation expense recognized by classification included in the Consolidated statements of operations and comprehensive loss in relation to the 2014 Plans and the ESPP for the periods indicated below was as follows:


	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021

	(in thousands)				(in thousands)
Research and development	$	4,306	$	3,294	$	8,360	$	5,974
Selling, general and administrative		3,359		3,737		6,174		6,818
Cost of contract manufacturing		148		—		148		—
Total	$	7,813	$	7,030	$	14,682	$	12,792

Share-based compensation expense recognized by award type of the 2014 Plans as well as the ESPP was as follows:


	Three months ended June 30,				Six months ended June 30,
	2022		2021		2022		2021

	(in thousands)				(in thousands)
Award type/ESPP
Share options	$	3,438	$	3,350	$	6,693	$	6,190
Restricted share units		4,127		3,222		7,397		5,782
Performance share units		242		449		580		803
ESPP		6		9		12		17
Total	$	7,813	$	7,030	$	14,682	$	12,792

As of June 30, 2022, the unrecognized share-based compensation expense related to unvested awards under the 2014 Plans were:


	Unrecognized		Weighted average
	share-based		remaining
	compensation		period for
	expense		recognition
	(in thousands)		(in years)
Award type
Share options	$	32,429	2.76
Restricted share units		33,228	2.20
Performance share units		202	0.21
Total	$	65,859	2.47

The Company satisfies the exercise of share options and vesting of Restricted Share Units (“RSUs”) and Performance Share Units (“PSUs”) through newly issued ordinary shares.

Share options

Share options are priced on the date of grant and, except for certain grants made to non-executive directors, vest over a period of four years. The first 25% vests after one year from the initial grant date and the remainder vests in equal quarterly installments over years two, three and four. Certain grants to non-executive directors vest in full after one year. Any options that vest must be exercised by the tenth anniversary of the initial grant date.

The following tables summarize option activity under the Company’s 2014 Plans for the six months ended June 30, 2022:


	Options
	Number of	Weighted average
	ordinary shares	exercise price

Outstanding at December 31, 2021	3,308,325	$	31.02
Granted	1,343,496	$	15.66
Forfeited	(106,166)	$	37.70
Expired	(66,587)	$	39.53
Exercised	(68,594)	$	6.39
Outstanding at June 30, 2022	4,410,474	$	26.44
Thereof, fully vested and exercisable on June 30, 2022	2,045,905	$	27.21
Thereof, outstanding and expected to vest after June 30, 2022	2,364,569	$	25.77


Total weighted average grant date fair value of options issued during the period (in $ millions)	$	11.9
Proceeds from option sales during the period (in $ millions)	$	0.5

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


	Three months ended June 30,		Six months ended June 30,
Assumptions	2022	2021	2022	2021
Expected volatility	70%	75%	70%	75%
Expected terms	10 years	10 years	10 years	10 years
Risk free interest rate	3.03% - 3.44%	1.72 - 1.85%	2.12% - 3.44%	1.21 - 1.85%
Expected dividend yield	0%	0%	0%	0%

Restricted share units (“RSUs”)

The following table summarizes the RSUs activity for the six months ended June 30, 2022:


	RSU
		Weighted average
	Number of	grant-date fair
	ordinary shares	value
Non-vested at December 31, 2021	710,617	$	38.89
Granted	1,496,443	$	15.81
Vested	(230,794)	$	39.64
Forfeited	(94,596)	$	25.20
Non-vested at June 30, 2022	1,881,670	$	21.13

Total weighted average grant date fair value of RSUs granted during the period (in $ millions)		$	23.7

RSUs vest over one to three years. RSUs granted to non-executive directors vest one year from the date of grant.

Performance share units (“PSUs”)

The following table summarizes the PSUs activity for the six months ended June 30, 2022:


	PSU
		Weighted average
	Number of	grant-date fair
	ordinary shares	value
Non-vested at December 31, 2021	632,930	$	33.54
Granted	34,700	$	15.11
Vested	(77,330)	$	57.56
Forfeited	(24,400)	$	29.35
Non-vested at June 30, 2022	565,900	$	29.31

PSUs granted in 2019 vested on the third anniversary of the grant, subject to the grantee’s continued employment.

The Company granted shares to certain employees in September and December 2021 and at various dates during the six months ended June 30, 2022 that will be earned upon achievement of defined milestones. Earned shares will vest upon the later of a minimum service period of one year or three years, or the achievement of defined milestones, subject to the grantee’s continued employment. In addition, portions of the December 2021 shares granted to executives and other members of senior management are subject to achieving a minimum total shareholder return relative to the Nasdaq biotechnology index. The Company recognizes the compensation cost related to these grants to the extent it considers achievement of the milestones to be probable.

ESPP

During the six months ended June 30, 2022, 5,890 ordinary shares were issued under the ESPP compared to 1,174 during the same period in 2021. As of June 30, 2022, a total of 121,414 ordinary shares remain available for issuance under the ESPP plan compared to a total of 130,852 as of June 30, 2021.