3. SHARE-BASED COMPENSATION

The Wave Life Sciences Ltd. 2014 Equity Incentive Plan (the “2014 Plan”) authorizes the board of directors or a committee of the board to grant incentive share options, non-qualified share options, share appreciation rights and restricted share awards to eligible employees, outside directors and consultants of the Company. Options generally vest over periods of one to four years, and options that expire or are forfeited are available to be granted again. The contractual life of all options is generally five or ten years from the grant date.

As of September 30, 2017, 1,730,546 ordinary shares remained available for future grant under the 2014 Plan.

The Company measures and records the value of options granted to non-employees over the period of time that services are provided and, as such, unvested portions are subject to re-measurement at subsequent reporting periods.

Share Options

Share option activity under the 2014 Plan for the nine months ended September 30, 2017 is summarized as follows:

	Number of Shares			Weighted- Average Exercise Price
Options outstanding as of January 1, 2017		3,577,766		$	10.58
Granted		414,000			25.55
Exercised		(76,319	)		4.24
Canceled or forfeited		(109,652	)		16.79
Outstanding as of September 30, 2017		3,805,795			12.26
Options exercisable as of September 30, 2017		2,042,259			6.62
Options unvested as of September 30, 2017		1,763,536			18.79

The Company recorded share-based compensation expense related to options granted to non-employees in the amount of $0.6 million and $0.9 million for the three months ended September 30, 2017 and 2016, respectively. During the nine months ended September 30, 2017 and 2016, the Company recorded share-based compensation expense related to options granted to non-employees in the amount of $1.9 million and $1.9 million, respectively. Share-based compensation expense related to non-employees is recorded in research and development expenses.

Restricted Share Units

Restricted share unit (“RSU”) activity for the nine months ended September 30, 2017 is summarized as follows:

	RSUs			Average Grant Date Fair Value (in dollars per share)
RSUs Outstanding as of January 1, 2017		22,750		$	21.69
Granted		170,859			29.05
Vested		(22,750	)		21.69
Canceled or forfeited		(8,579	)		29.05
RSUs Outstanding at September 30, 2017		162,280			29.05

The RSUs granted in 2016 fully vested during the three months ended September 30, 2017 upon the first anniversary of the grant date. The RSUs granted in 2017 vest over a four-year period. Any RSUs that are forfeited or canceled are available to be granted again.

Share-based compensation expense for the three and nine months ended September 30, 2017 and 2016 was classified in the consolidated statements of operations as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2017		2016		2017		2016
	(in thousands)
Research and development expenses	$	1,759	$	1,695	$	5,527	$	3,207
General and administrative expenses		1,241		486		3,439		1,112
Total share-based compensation	$	3,000	$	2,181	$	8,966	$	4,319