10. Share-Based Payments

Stock Option Plan 2007

On September 12, 2007 the Company's management and supervisory boards resolved to implement a stock option plan ("SOP 2007") for all employees (including members of the management board) with open-ended contracts of employment with the Company and for selected members of the supervisory board of the Company and further participants. The stock option plan became effective on September 28, 2007. In connection with the Redomiciliation Transaction, the SOP 2007 was amended to take account of certain requirements under Irish law and assumed by Nabriva Ireland, with each option to acquire one Nabriva Austria common share becoming an option to acquire ten ordinary shares of Nabriva Ireland on the same terms and conditions. As of September 27, 2017, all outstanding options under the SOP 2007 automatically terminated and were forfeited.

Movements in the number of share options outstanding and their related weighted average exercise prices concerning the SOP 2007 are as follows:

	2015					2016					2017
Stock Option Plan 2007	Weighted average exercise price in $ per share		Options			Weighted average exercise price in $ per share		Options			Weighted average exercise price in $ per share		Options			Aggregate intrinsic value
Outstanding as of January 1		0.73		241,330			0.73		234,760			0.73		109,960
Granted		—		—			—		—			—		—
Exercised		0.73		(6,570	)		0.73		(124,540	)		0.73		(108,440	)
Forfeited		—		—			0.73		(260	)		0.73		(1,520	)

Outstanding as of December 31		0.73		234,760			0.73		109,960			—		—		$	—


Vested and exercisable as of December 31		0.73		229,270			0.73		107,900			—		—		$	—

As a result of the Redomiciliation Transaction, the 2015 and 2016 movements in the number of share options outstanding and their related weighted average exercise prices have been adjusted on a one-for-ten basis from the Nabriva Austria common shares, to the Nabriva Ireland ordinary shares.

The total intrinsic value of options exercised during the years ended December 31, 2015, 2016 and 2017 was $119, $860 and $899, respectively.

Stock-based compensation expense under the SOP 2007 for the years ended December 31, 2015, 2016 and 2017 was $78, $95 and $40, respectively.

Stock Option Plan 2015

On April 2, 2015, the Company's shareholders, management board and supervisory board adopted the Stock Option Plan 2015 (the "SOP 2015") and the shareholders approved an amended and restated version of the SOP 2015 on June 30, 2015. An amendment to the amended and restated SOP 2015 was approved by the shareholders on July 22, 2015. SOP 2015 became effective on July 3, 2015 upon the registration with the commercial register in Austria of the conditional capital increase approved by the shareholders on June 30, 2015. The SOP 2015 initially provided for the grant of options for up to 95,000 Nabriva Austria common shares to the Company's employees, including members of the management board, and to members of the supervisory board. Following the closing of the initial public offering of the Company, the overall number of options increased to 177,499 Nabriva Austria common shares. Following approval by the Company's shareholders at its 2016 annual general meeting, the number of shares available for issuance under the SOP 2015 was increased to 346,235 Nabriva Austria common shares. In connection with the Redomiciliation Transaction, the SOP 2015 was amended to take account of certain requirements under Irish law and assumed by Nabriva Ireland, with each option to acquire one Nabriva Austria common share becoming an option to acquire ten ordinary shares of Nabriva Ireland on the same terms and conditions.

Each vested option grants the beneficiary the right to acquire one share in the Company. The vesting period for the options is four years following the grant date. On the last day of the last calendar month of the first year of the vesting period, 25% of the options attributable to each beneficiary are automatically vested. During the second, third and fourth years of the vesting period, the remaining 75% of the options vest on a monthly pro rata basis (i.e. 2.083% per month). Options granted under the SOP 2015 have a term of no more than ten years from the beneficiary's date of participation. Since the closing of the initial public offering of the Company on September 23, 2015 the beneficiaries are entitled to exercise their vested options until the 10th anniversary of the date of their participation. The beneficiaries are not entitled to transfer vested options except to individuals by way of inheritance or bequest. Options do not entitle beneficiaries to exercise any shareholder rights. Beneficiaries may only exercise shareholder rights if and to the extent he holds shares.

Movements in the number of share options outstanding and their related weighted average exercise prices concerning the SOP 2015 are as follows:

	2015					2016					2017
Stock Option Plan 2015	Weighted average exercise price in $ per share		Options			Weighted average exercise price in $ per share		Options			Weighted average exercise price in $ per share		Options			Aggregate intrinsic value
Outstanding as of January 1		—		—			7.61		1,092,300			7.83		1,794,360
Granted		7.61		1,093,550			8.02		922,130			9.02		1,458,300
Exercised		—		—			7.21		(23,360	)		—		—
Forfeited		7.21		(1,250	)		7.64		(196,710	)		8.60		(207,761	)

Outstanding as of December 31		7.61		1,092,300			7.83		1,794,360			8.35		3,044,899		$	9


Vested and exercisable as of December 31		7.21		86,620			7.52		425,210			7.68		989,656		$	3

The total intrinsic value of options exercised during the years ended December 31, 2015, 2016 and 2017 was $0, $181 and $0, respectively.

The Company has 3,044,899 option grants outstanding at December 31, 2017 with exercise prices ranging from $4.06 per share to $11.00 per share and a weighted average remaining contractual life of 8.4 years.

Stock-based compensation expense under the SOP 2015 was $1,274, $2,450 and $5,610 for the years ended December 31, 2015, 2016 and 2017, respectively. The weighted average fair value of the options granted during the years ended December 31, 2015, 2016 and 2017 was $7.07 per share, $4.76 per share and $5.05 per share, respectively.

The grant date fair value of each option grant was estimated throughout the year using the Black-Scholes option-pricing model using the following assumptions:

Input parameters	2015	2016	2017
Expected volatility	55.0% - 70.0%	59.8% - 67.2%	55.6% - 62.0%
Expected term of options	2.0 years	6.0 years	6.1 years
Risk-free interest rate	(0.40)% - (0.21)%	1.15% - 2.09%	1.89% - 2.10%
Expected dividend yield	—	—	—

The expected price volatility is based on historical trading volatility for the publicly traded peer companies under consideration of the remaining life of the options. The risk free interest rate for the year 2015, is based on the 6 year euro area market yield for AAA-rated European central government bonds and for the years 2016 and 2017, is based on the average of 5 and 7 year market yield on U.S. treasury securities in effect at the time of grant.

As of December 31, 2017, there was $10.1 million of unrecognized compensation expense, related to unvested options granted under the SOP 2015 Plan, which will be recognized over the weighted average remaining vesting period of 1.3 years.

2017 Share Incentive Plan

On July 26, 2017, the Company's board of directors adopted the 2017 Share Incentive Plan (the "2017 Plan") and the shareholders approved the 2017 Plan at the Company's Extraordinary General Meeting of Shareholders on September 15, 2017. Following shareholder approval of the 2017 Plan, the Company ceased making awards under the SOP 2015, and future awards will be made under the 2017 Plan. However, all outstanding awards under SOP 2015 will remain in effect and continue to be governed by the terms of the SOP 2015. The 2017 Plan permits the award of share options (both incentive and nonstatutory options), share appreciation rights ("SARs"), restricted shares, restricted share units ("RSUs"), and other share-based awards to the Company's employees, officers, directors, consultants and advisers. The 2017 Plan is administered by the Company's board of directors.

Under the 2017 Plan, the number of ordinary shares that will be reserved for issuance will be the sum of (1) 3,000,000 ordinary shares; plus (2) a number of ordinary shares (up to 3,438,990 ordinary shares) which is equal to the sum of the number of the Company's ordinary shares then available for issuance under the SOP 2015 and the number of ordinary shares subject to outstanding awards under the SOP 2015 that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right; plus (3) an annual increase, to be added on the first day of each fiscal year beginning in the fiscal year ending December 31, 2018 and continuing until, and including, the fiscal year ending December 31, 2027, equal to the least of (i) 2,000,000 ordinary shares, (ii) 4% of the number of outstanding ordinary shares on such date and (iii) an amount determined by the board of directors.

At December 31, 2017, 3,394,091 ordinary shares were available for issuance under the 2017 Plan.

Options and SARs granted will be exercisable at such times and subject to such terms and conditions as the board may specify in the applicable option agreement; provided, however, that no option or SAR will be granted with a term in excess of ten years. The board will also determine the terms and conditions of restricted shares and RSUs, including the conditions for vesting and repurchase (or forfeiture) and the issue price, if any.

The following table summarizes information regarding our stock option awards under the 2017 Plan at December 31, 2017:

	2017
2017 Plan	Weighted average exercise price in $ per share		Options		Aggregate intrinsic value
Outstanding as of January 1, 2017		—		—
Granted		6.92		294,100
Exercised		—		—
Forfeited		—		—

Outstanding as of December 31, 2017		6.92		294,100	$	—


Vested and exercisable as of December 31, 2017		—		—	$	—

There were no options exercised during the year ended December 31, 2017.

The Company has 294,100 option grants outstanding at December 31, 2017 with exercise prices ranging from $5.98 per share to $8.35 per share and a weighted average remaining contractual life of 9.8 years.

Stock-based compensation expense under the 2017 Plan was $82 for the year ended December 31, 2017. The weighted average fair value of the options granted during year ended December 31, 2017 was $3.98 per share based on a Black Scholes option pricing model using

The significant inputs into the model were as follows:

Input parameters
Range of expected volatility		59.5% - 63.0%
Expected term of options (in years)		6.0
Range of risk-free interest rate		1.93% - 2.27%
Dividend yield		—

As of December, 2017, there was $1.1 million of total unrecognized compensation expense, related to unvested options granted under the 2017 Plan, which will be recognized over the weighted-average remaining vesting period of 1.7 years

Our share-based compensation expense has been allocated to research and development and general and administrative expenses in the Consolidated Statement of Operations and Comprehensive Loss as follows:

	December 31,
(in thousands)	2015		2016		2017
Research and development	$	418	$	894	$	2,128
General and administrative		933		1,651		3,604

Total	$	1,351	$	2,545	$	5,732