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Shareholders' Equity | 6 Months Ended
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Jun. 30, 2023
Shareholders' Equity |
Shareholders' Equity | 7. Shareholders’ Equity As of June 30, 2023, the Company’s Memorandum and Articles of Association, as amended, authorizes the Company to issue 500,000,000 ordinary shares and 100,000,000 undesignated shares, of which 7,410,518 shares have been designated as non-voting ordinary shares and 92,589,482 remain undesignated shares, all with a par value of $0.0001 per share. The undesignated shares may be designated by the Company’s board of directors in accordance with the Company’s Articles of Association. In May 2023, the Company’s board of directors designated 7,410,518 non-voting ordinary shares in accordance with the Articles of Association. The non-voting ordinary shares rank on parity with the ordinary shares as to distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary. The non-voting ordinary shares are entitled on an equal basis to any dividends declared on the ordinary shares on an as-converted to ordinary share basis. Each non-voting ordinary shareholder has the right to convert each non-voting ordinary share into one ordinary share, subject to appropriate adjustment in the event of any dividend, split, reverse split, combination or other similar recapitalization with respect to the ordinary shares, at such holder’s election by providing written notice to the Company, provided that such non-voting ordinary shares may only be converted into ordinary shares during such time or times as immediately prior to or as a result of such conversion would not result in the holder thereof beneficially owning, when aggregated with affiliates with whom such holder is required to aggregate beneficial ownership for purposes of Section 13(d) of the Exchange Act, in excess of the 9.99% of the ordinary shares (The “Beneficial Ownership Limitation”). Any non-voting ordinary shareholder may increase the Beneficial Ownership Limitation with respect to such holder, not to exceed 19.99% of the ordinary shares, upon 61 days’ prior written notice to the Company and may decrease the Beneficial Ownership Limitation at any time upon providing written notice of such election to the Company; provided, however, that no holder may make such an election to change the percentage with respect to such holder unless all holders managed by the same investment advisor as such electing holder make the same election. In May 2023, the Company entered into an Exchange Agreement with Biotechnology Value Fund, L.P., Biotechnology Value Fund II, L.P., and Biotechnology Value Trading Fund OS, L.P. (each an “Investor” and together, the “Investors”), who in the aggregate hold more than 5% of the Company’s issued share capital, pursuant to which the Investors delivered to the Company, a total of 7,410,518 ordinary shares of the Company, in exchange for the Company’s delivery of 7,410,518 newly designated non-voting ordinary shares, par value $0.0001 per share. The exchange did not result in any change in the aggregate number of outstanding shares of the Company as the exchange was implemented on a one-for-one basis. Ordinary shareholders, including non-voting ordinary shareholders, are entitled to dividends if and when declared by the Company’s board of directors subject to the prior rights of any preferred shareholders. As of June 30, 2023 and December 31, 2022, no dividends on ordinary shares had been declared by the board of directors. Options A summary of share option activity is set forth below (in thousands except per share amounts and years):
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​ | ​ | ​ | ​ | OUTSTANDING AWARDS
​ | ​ | NUMBER | ​ | ​ | ​ | ​ | ​ | ​ | WEIGHTED- | ​ | ​ | ​
​ | ​ | OF | ​ | NUMBER OF | ​ | ​ | ​ | ​ | AVERAGE | ​ | ​ | ​
​ | ​ | SHARES | ​ | SHARES | ​ | WEIGHTED- | ​ | REMAINING | ​ | ​ | ​
​ | ​ | AVAILABLE | ​ | UNDERLYING | ​ | AVERAGE | ​ | CONTRACTUAL | ​ | AGGREGATE
​ | ​ | FOR | ​ | OUTSTANDING | ​ | EXERCISE | ​ | TERM | ​ | INTRINSIC
​ |  | GRANT |  | OPTIONS |  | PRICE |  | (IN YEARS) |  | VALUE
As of December 31, 2022 |  | 977 |  | 7,612 | ​ | $ | 1.62 |  | 8.57 | ​ | $ | 13,283
Additional shares authorized | ​ | 12,000 | ​ | — | ​ | ​ | — | ​ | ​ | ​ | ​ | ​
Granted |  | (4,760) |  | 4,760 | ​ | ​ | 5.79 |  |  | ​ |  |
Exercised |  | — |  | (94) | ​ | ​ | 2.22 |  |  | ​ |  |
Forfeited |  | 236 |  | (236) | ​ | ​ | 2.83 |  |  | ​ |  |
As of June 30, 2023 |  | 8,453 |  | 12,042 | ​ | ​ | 3.24 |  | 8.67 | ​ |  | 127,869
Exercisable at June 30, 2023 | ​ | ​ |  | 3,248 | ​ | ​ | 1.23 |  | 7.71 | ​ |  | 41,028
Vested and expected to vest at June 30, 2023 | ​ | ​ |  | 12,042 | ​ | ​ | 3.24 |  | 8.67 | ​ |  | 127,869
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​ The total fair value of options that vested during the three months ended June 30, 2023 and 2022 was $0.5 million and $0.6 million, respectively. The total fair value of options that vested during the six months ended June 30, 2023 and 2022 was $1.7 million and $0.7 million, respectively. Restricted Shares Activity with respect to restricted shares was as follows (in thousands, except per share amounts): ​
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​ |  | ​ |  | ​ | ​
​ | ​ | NUMBER OF SHARES | ​ | ​ | ​
​ | ​ | UNDERLYING | ​ | WEIGHTED-
​ | ​ | OUTSTANDING | ​ | AVERAGE
​ | ​ | RESTRICTED | ​ | GRANT DATE FAIR
​ |  | SHARES |  | VALUE
Unvested, December 31, 2022 | ​ | 327 | ​ | $ | 0.33
Vested | ​ | (327) | ​ | ​ | 0.33
Unvested, June 30, 2023 |  | — | ​ |  | —
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​ The fair value of restricted shares vested during the three months ended June 30, 2023 and 2022 was less than $0.1 million and $0.1 million, respectively. The fair value of restricted shares vested during the six months ended June 30, 2023 and 2022 was $0.1 million and $0.2 million, respectively. Share-Based Compensation Associated with Awards to Employees and Non-Employees The Company recognized share-based compensation as follows (in thousands):
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​ | ​ | THREE MONTHS ENDED | ​ | SIX MONTHS ENDED | ​
​ | ​ | JUNE 30, | ​ | JUNE 30, | ​
​ |  | 2023 |  | 2022 |  | 2023 |  | 2022 |
Research and development | ​ | $ | 584 | ​ | $ | 232 | ​ | $ | 2,176 | ​ | $ | 491 | ​
General and administrative | ​ |  | 1,118 | ​ |  | 411 | ​ |  | 2,059 | ​ |  | 772 | ​
Total share-based compensation | ​ | $ | 1,702 | ​ | $ | 643 | ​ | $ | 4,235 | ​ | $ | 1,263 | ​
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​ As of June 30, 2023, the total unrecognized share-based compensation expense related to unvested share options was $28.1 million, which is expected to be recognized over the remaining weighted-average vesting period of 3.4 years. China Employees’ Options The Company has granted share options to employees based in China. The exercise of share options granted to such employees was conditioned on a liquidity event, such as an IPO or change in control, which was not considered probable until consummated. The liquidity event condition was satisfied upon the closing of the IPO, and the Company recognized cumulative share-based compensation expense for share options granted to employees based in China. For the three and six months ended June 30, 2023, the Company recognized $0.2 million and $1.7 million in share-based compensation expense related to share options granted to employees based in China, respectively. Performance Options In February 2023, the Company's board of directors approved the grant of performance share options for 1,200,000 ordinary shares, which were granted under the 2023 Equity Incentive Plan. Each share option will vest over four years, subject to the achievement of certain clinical milestones as determined by the Company’s compensation committee in the first year following the grant, and subject to the employees' continuous service through each vesting date. The achievement of performance milestones was not probable as of June 30, 2023. As such, no share-based compensation expense has been recognized for performance share options during the six months ended June 30, 2023. Ordinary Share Warrants In connection with entering into a Loan and Security Agreement (the “SVB Agreement”) with Silicon Valley Bank (“SVB”), the Company issued SVB a warrant to purchase shares of its ordinary shares at an exercise price of $0.48 per share (“SVB Warrant”). The SVB Warrant was immediately exercisable for 112,279 ordinary shares of the Company and could have been exercisable for an additional number of ordinary shares equal to 44,567 ordinary shares upon draw of Tranche A under the SVB Agreement and 22,283 ordinary shares upon draw of Tranche B under the SVB Agreement. The warrant for Tranche A shares and Tranche B shares expired on July 31, 2021 and July 31, 2022, respectively, as the Company elected to allow the Tranche A and Tranche B financings to expire unused on July 31, 2021 and July 31, 2022, respectively. In February 2023, SVB fully exercised the SVB Warrant for 106,060 ordinary shares through a cashless exercise.

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