Share-based Compensation

6 Months Ended

Dec. 31, 2020

Note 10. Share-based Compensation

We use equity-based compensation programs to provide long-term performance incentives for our employees. These incentives consist primarily of stock options and RSUs. In December 2008, we adopted the MEI Pharma, Inc. 2008 Stock Omnibus Equity Compensation Plan (“2008 Plan”), as amended and restated in 2011, 2013, 2014, 2015, 2016, 2018 and 2020, under which 29,014,794 shares of common stock are authorized for issuance. The 2008 Plan provides for the grant of options and/or other stock-based or stock-denominated awards to our

non-employee

directors, officers, employees and advisors. As of December 31, 2020, there were 11,112,365 shares available for future grant under the 2008 Plan.

Total share-based compensation expense for all stock awards consists of the following, (in thousands):


	Three Months Ended December 31,				Six Months Ended December 31,
	2020		2019		2020		2019
Research and development	$	1,160	$	743	$	2,289	$	1,524
General and administrative		1,449		1,028		3,262		2,360

Total share-based compensation	$	2,609	$	1,771	$	5,551	$	3,884

Stock Options

Stock option activity for the six months ended December 31, 2020 was as follows:


	Number of Options			Weighted- Average Exercise Price		Weighted-Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value
Outstanding at June 30, 2020		11,252,976		$	2.81
Granted		4,890,300			3.38
Exercised		(56,088	)		2.47
Forfeited / Cancelled		(178,828	)		3.53

Outstanding at December 31, 2020		15,908,360			2.98		8.0	$	3,430,245

Vested and exercisable at December 31, 2020		7,252,642			2.71		6.9	$	2,944,999

The fair value of each stock option granted during the six months ended December 31, 2020 is estimated on the grant date under the fair value method using a Black-Scholes valuation model. Stock options granted to employees during the six months ended December 31, 2020 vest 25% one year from the date of grant and ratably each month thereafter for a period of 36 months and expire ten years from the date of grant. Stock options granted to directors during the six months ended December 31, 2020 vest ratably each month for a period of 12 months from the date of grant and expire ten years from the date of grant. The estimated fair values of the stock options, including the effect of estimated forfeitures, are expensed over the service period.

The following weighted-average assumptions were used to determine the fair value of options granted during the period:


	Six Months Ended December 31,
	2020			2019
Risk-free interest rate		0.4	%		1.8	%
Expected life (years)		6.0			6.0
Expected volatility		80.8	%		73.5	%
Dividend yield		0.0	%		0.0	%
Weighted-average grant date fair value	$	2.30		$	1.60

As of December 31, 2020, there was $10.5 million of unrecognized compensation expense related to the unvested portion of stock options. Such compensation expense is expected to be recognized over a weighted-average period of 1.7 years.

Restricted Stock Units

In July 2020, we granted 442,650 RSUs to employees. Each RSU represented the contingent right to receive one share of our common stock. The RSUs will vest in periods of either one year or two years from the date of grant. The fair value of the RSUs was measured at $3.49 per unit. Under the terms of the 2008 Plan, each of the RSUs is calculated as 1.25 shares of common stock for purposes of determining the number of shares available for future grant. There were forfeitures of 12,000 RSUs during the six months ended December 31, 2020, and 430,650 unvested RSUs were outstanding as of December 31, 2020. As of December 31, 2020, unrecognized compensation expense related to the unvested portion of our RSUs was approximately $1.0 million and is expected to be recognized over approximately 1.3 years.