Share Capital

6 Months Ended

Jun. 30, 2022

Stockholders Equity Note [Abstract]

Share Capital

7. Share capital:

(a) Financing:

In August 2020, the Company entered into an “at-the-market” equity offering sales agreement, amended as of March 2022, with Jefferies LLC (“Jefferies”) and Stifel, Nicolaus & Company, Incorporated (“Stifel”) pursuant to which the Company may sell common shares from time to time. In January 2021, the Company sold an aggregate of 733,000 common shares for proceeds of $10,693, net of commissions and transaction expenses pursuant to a prospectus supplement filed in August 2020 (“August 2020 ATM"). The Company may sell common shares having gross proceeds of up to $250,000, from time to time, pursuant to a new prospectus supplement filed in March 2022 (“March 2022 ATM"), replacing the August 2020 ATM. As of June 30, 2022, no common shares have been sold under the March 2022 ATM.

In March 2021, the Company entered into an underwriting agreement with Jefferies and Stifel, relating to an underwritten public offering of 5,135,135 common shares, including 810,810 common shares sold upon the full exercise of the underwriters’ over-allotment option, at a public offering price of $18.50 per common share and pre-funded warrants to purchase 1,081,081 common shares at $18.4999 per pre-funded warrant (note 7c), with each pre-funded warrant having an exercise price of $0.0001. The public offering was completed in March 2021, and the Company received proceeds of $107,922, net of underwriting discounts, commissions and offering expenses.

In January 2022, in connection with the License and Collaboration Agreement entered in December 2019 and amended in January 2021 (the "Neurocrine Collaboration Agreement"), the Company executed a Share Purchase Agreement ("SPA") pursuant to which the Company issued 258,986 common shares for an aggregate purchase price of $8,250, or $31.855 per common share, which represents a premium of $374 when compared to the fair value of common shares on the date of issuance. The SPA contains certain other customary terms and conditions, including mutual representations, warranties and covenants. For additional information regarding the Neurocrine Collaboration Agreement, refer to note 8a.

In June 2022, the Company entered into an underwriting agreement with Jefferies, J.P. Morgan Securities LLC, Stifel and SVB Securities LLC, relating to an underwritten public offering of 9,098,362 common shares, including 1,229,508 shares sold upon the full exercise of the underwriters’ over-allotment option, at a public offering price of $30.50 per common share and pre-funded warrants to purchase 327,868 common shares at $30.4999 per pre-funded warrant (note 7c), with each pre-funded warrant having an exercise price of $0.0001. The public offering was completed in June 2022, and the Company received proceeds of $269,890, net of underwriting discounts, commissions and offering expenses.

(b) Exchange agreement with certain funds affiliated with BVF Partners L.P. (collectively, “BVF”):

In March 2018, the Company and BVF entered into an exchange agreement pursuant to which the Company issued to BVF 2,868,000 Series 1 Preferred Shares in exchange for 2,868,000 common shares which were subsequently cancelled by the Company. The Series 1 Preferred Shares were convertible into common shares on a one-for-one basis, subject to certain restrictions.

The Series 1 Preferred Shares ranked equally to the common shares in the event of liquidation, dissolution or winding up or other distribution of the assets of the Company among its shareholders and the holders of the Series 1 Preferred Shares were entitled to vote together with the common shares on an as-converted basis and as a single class, subject to certain restrictions.

The Series 1 Preferred Shares were recorded wholly as equity under ASC 480, with no bifurcation of conversion feature from the host contract, given that the Series 1 Preferred Shares cannot be cash settled and had no redemption features.

During the year ended December 31, 2018, BVF converted 1,852,000 Series 1 Preferred Shares in exchange for an equal number of common shares. In March 2022, the remaining outstanding 1,016,000 Series 1 Preferred Shares were exchanged for an equal number of common shares.

(c) Pre-funded warrants:

The following table summarizes the pre-funded warrants outstanding at June 30, 2022:

Date of Issuance	Pre-Funded Warrants to Purchase Common Shares		Price per Pre-Funded Warrant		Exercise Price
March 2021		1,081,081	$	18.4999	$	0.0001
October 2021		1,694,915	$	29.4999	$	0.0001
June 2022		327,868	$	30.4999	$	0.0001
Total		3,103,864

The pre-funded warrants are exercisable at the holder’s discretion from the date of issuance until the date the pre-funded warrant is exercised in full.  The Company may not affect the exercise of any pre-funded warrant, and a holder will not be entitled to exercise any portion of any pre-funded warrant that, upon giving effect to such exercise, would cause: (i) the aggregate number of common shares beneficially owned by such holder, together with its affiliates, to exceed 4.99% of the total number of common shares outstanding immediately after giving effect to the exercise; or (ii) the combined voting power of the Company’s securities beneficially owned by such holder, together with its affiliates, to exceed 4.99% of the combined voting power of all of the Company’s securities immediately outstanding after giving effect to the exercise, which percentage may be changed at the holder’s election to a higher or lower percentage not in excess of 19.99% upon at least 61 days’ notice to the Company.

Since the pre-funded warrants meet the condition for equity classification, net proceeds from issuances of the pre-funded warrants are recorded in additional paid-in capital. Upon exercise of the pre-funded warrants, the historical costs recorded in additional paid-in capital along with the exercise price collected from holder will be recorded in common shares. As of June 30, 2022, no pre-funded warrants have been exercised. Pre-funded warrants to purchase 3,103,864 (June 30, 2021 – 1,081,081) common shares are not included in the number of issued and outstanding common shares as of June 30, 2022.   

(d) Stock-based compensation:  

The following table presents stock option activity for the period:

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Outstanding, beginning of period		7,075,073			5,742,608			5,638,232			4,758,997
Granted		318,000			382,500			1,977,845			1,494,450
Exercised(1)		(130,031	)		(222,331	)		(349,138	)		(344,734	)
Forfeited, cancelled or expired		(28,582	)		(131,726	)		(32,479	)		(137,662	)
Outstanding, end of period		7,234,460			5,771,051			7,234,460			5,771,051
Exercisable, end of period		3,464,081			2,842,948			3,464,081			2,842,948

⁽¹⁾ During the six months ended June 30, 2022, no stock options were exercised for cash (six months ended June 30, 2021 – 58,179)  . In the same period, the Company issued 234,783 (six months ended June 30, 2021 – 179,129) common shares for the cashless exercise of 349,138  (six months ended June 30, 2021 – 286,555) stock options.

The fair value of each stock option granted is estimated using the Black-Scholes option-pricing model with the following weighted-average assumptions:

	Three Months Ended June 30,						Six Months Ended June 30,
	2022			2021			2022			2021
Average risk-free interest rate		3.17	%		1.27	%		2.14	%		1.18	%
Expected volatility		70	%		69	%		70	%		68	%
Average expected term (in years)		5.87			7.09			6.21			6.67
Expected dividend yield		0	%		0	%		0	%		0	%
Weighted average fair value of stock options granted	$	19.60		$	12.14		$	19.29		$	12.67