5 Shareholders’ equity

Authorized share capital

An unlimited number of common shares, voting and participating, without par value.

On January 1, 2021 the number of the Company’s common shares reserved for issuance under the Employee Stock Purchase Plans (ESPP) increased by 298,279 [2020 – 245,057]. As of March 31, 2021, there were 822,100 common shares available for issuance under the ESPP and no common shares have been issued.

During the three-month period ended March 31, 2021, the Company issued a total of 18,003 common shares [2020 –53,722] for a total cash consideration of $19 [2020 - $77] pursuant to the exercise of 18,003 stock options [2020 – 53,722] at an average exercise price of US$1.08 per option [2020 – US$1.44]. As a result, an amount of $15 [2020 - $56] previously included in additional paid-in capital related to the exercised options has been credited to share capital and deducted from additional paid-in capital.

Additional paid-in capital


	Three months ended March 31,
	2021		2020
Opening balance	$	8,530	$	3,805
Share-based compensation expense		1,368		981
Exercise of stock options		(15)		(56)
Closing balance	$	9,883	$	4,730

Share-based compensation

Under the Company’s 2019 Equity Incentive Plan (the 2019 Plan) and the Company’s Stock Option Plan (the 2011 Plan), unless otherwise decided by the Board of Directors, options vest and are exercisable as follows: 25% vest and are exercisable on the one year anniversary of the grant date and one thirty-sixth (1/36th) of the remaining options vest and are exercisable each month thereafter, such that options are vested in full on four-year anniversary of the grant date.

On January 1, 2021, the number of the Company’s common shares reserved for issuance under the 2019 Plan increased by 1,193,119 [2020 - 980,229] common shares. In addition, 72,186 options have been forfeited under the 2011 Plan after adoption of the 2019 Plan and became available for issuance under the 2019 Plan. As of March 31, 2021, there were 4,562,467 [2020 - 3,316,239] shares available for issuance under the 2019 Plan, of which 992,327 shares were available for future grants.

The total outstanding and exercisable options from the 2011 Plan and 2019 Plan as at March 31 were as follows:


	2021							2020
						Weighted								Weighted
		Number				average			Number					average
		of shares				exercise			of shares					exercise
		2019 Plan		2011 Plan	Total	price			2019 Plan			2011 Plan	Total	price
Outstanding at beginning of year - 2011 Plan		—		2,080,087	2,080,087	$	2.15		—			2,364,526	2,364,526	$	2.15
Outstanding at beginning of year - 2019 Plan		1,706,190		—	1,706,190		13.55		220,140			—	220,140		20.78
Granted - 2019 Plan		1,863,950		—	1,863,950		6.31		765,160			—	765,160		21.49
Exercised - 2011 Plan		—		(16,753)	(16,753)		0.88		—			(53,722)	(53,722)		1.44
Exercised - 2019 Plan		(1,250)		—	(1,250)		3.74		—			—	—		—
Forfeited - 2011 Plan		—		—	—		—		—			(4,978)	(4,978)		2.12
Forfeited - 2019 Plan		—		—	—		—		(2,750)			—	(2,750)		21.48
Outstanding at end of period		3,568,890		2,063,334	5,632,224	$	6.99		982,550			2,305,826	3,288,376	$	7.89
Outstanding at end of period - Weighted average exercise price	$	9.77	$	2.16				$	21.33		$	2.17
Exercisable at end of period		591,885		1,613,229	2,205,114	$	4.86		5,660			1,327,637	1,333,297	$	1.92
Exercisable at end of period - Weighted average exercise price	$	12.55	$	2.05				$	18.43	$		1.85

As of March 31, 2021, the weighted average remaining contractual life was 8.4 for outstanding options [2020 – 8.2 years]. The weighted average remaining contractual life was 7.1 years for vested options [2020 – 7.0 years]. There were no options forfeited or cancelled for the three-month period ended March 31, 2021. There were 7,728 options forfeited and nil cancelled for the three-month period ended March 31, 2020.

Options granted are valued using the Black-Scholes option pricing model. Amortization of the fair value of the options over vesting years has been expensed and credited to additional paid-in capital in shareholders’ equity. The weighted average fair values of options granted in the three-month period ended March 31, 2021 was $4.79 per share [2020 - $15.19]. Share-based compensation expense recognized for the three-month period ended March 31, 2021 was $1,368 [2020 - $981].

As of March 31, 2021, there was $20,573 [2020 - $17,442] of total unrecognized compensation cost, related to non‑vested share options, which is expected to be recognized over a remaining weighted average vesting period of 3.1 years [2020 - 2.9 years].

The non-vested options as at March 31 were as follows:


	2021							2020
		Number				Weighted			Number				Weighted
		of options				average			of options				average
		2019 Plan		2011 Plan	Total	fair value			2019 Plan		2011 Plan	Total	fair value
Non-vested share options at beginning of year - 2011 Plan		—		543,192	543,192	$	1.81		—		1,152,300	1,152,300	$	1.88
Non-vested share options at beginning of year - 2019 Plan		1,438,026		—	1,438,026	$	10.28		218,975		—	218,975	$	14
Granted - 2019 Plan		1,863,950		—	1,863,950		4.79		765,160		—	765,160		15.19
Vested, outstanding 2011 Plan		—		(93,087)	(93,087)		1.61		—		(169,133)	(169,133)		5.81
Vested, outstanding 2019 Plan		(324,971)		—	(324,971)		11.38		(4,495)		—	(4,495)		12.85
Forfeited - 2011 Plan		—		—	—		—		—		(4,978)	(4,978)		1.52
Forfeited - 2019 Plan		—		—	—		—		(2,750)		—	(2,750)		15.25
Non-vested share options at end of period		2,977,005		450,105	3,427,110	$	6.08		976,890		978,189	1,955,079	$	8.12
Non-vested share options at end of period - Weighted average fair value	$	6.72	$	1.85				$	11.80	$	1.21

The fair value of share-based payment transaction is measured using Black-Scholes valuation model. This model also requires assumptions, including expected option life, volatility, risk-free interest rate and dividend yield, which greatly affect the calculated values.

The fair value of options granted was estimated using the Black-Scholes option pricing model, resulting in the following weighted average assumptions for the options granted for the three months ended March 31:



	2021			2020
Exercise price	$	6.31		$	21.41
Share price	$	6.31		$	21.41
Volatility		94	%		82	%
Risk-free interest rate		1.06	%		1.60	%
Expected life		6.10 years			6.24 years
Dividend		0	%		0	%

Expected volatility is determined using comparable companies for which the information is publicly available. The risk-free interest rate is determined based on the U.S. sovereign rates benchmark in effect at the time of grant with a remaining term equal to the expected life of the option. Expected option life is determined based on the simplified method as the Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. The simplified method is an average of the contractual term of the options and its ordinary vesting period. Dividend yield is based on the share option’s exercise price and expected annual dividend rate at the time of grant.

The Company recognized share-based compensation expense as follows for the three months ended March 31:



	2021		2020
Administration	$	573	$	399
Research and development		580		386
Commercial activities		215		196
	$	1,368	$	981