Share-Based Payments

6 Months Ended

Jun. 30, 2021

Share-Based Payments

Share-Based Payments

8.           Share-Based Payments

Stock Option Plan 2015

On April 2, 2015, the Company’s shareholders, management board and supervisory board adopted the Stock Option Plan 2015, or the SOP 2015, as amended. With the approval of the 2017 Share Incentive Plan, there were no further options are available for grant under the SOP 2015. However, all outstanding awards under SOP 2015 will remain in effect and continue to be governed by the terms of the SOP 2015.

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.

The following table summarizes information regarding the Company’s stock option awards under the SOP 2015 for the six months ended June 30, 2021:

		Weighted
		average
		exercise	Aggregate
		price in	intrinsic
SOP 2015	Options	$ per share	value
Outstanding as of January 1, 2021	202,374	82.71
Granted	—	—
Exercised	—	—
Forfeited	(32,824)	88.93
Outstanding as of June 30, 2021	169,550	81.51	$	—
Vested and exercisable as of June 30, 2021	169,141	81.48	$	—

Stock-based compensation expense under the SOP 2015 was $0.3 million and $0.6 million for the three and six months ended June 30, 2020 and $38 thousand and $169 thousand for the three and six months ended June 30, 2021, respectively.

The weighted average remaining contractual life of the options as of June 30, 2021 was 4.9 years.

As of June 30, 2021, there was $3 thousand of total unrecognized compensation expense, related to unvested options granted under the SOP 2015, which will be recognized over the weighted-average remaining vesting period of 0.1 years.

2017 Share Incentive Plan

On July 26, 2017, the Company’s board of directors adopted the 2017 Share Incentive Plan, or 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. The 2017 Plan permitted the award of share options (both incentive and nonstatutory options), share appreciation rights, or SARs, restricted shares, restricted share units, or 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. With the approval of the 2020 Share Incentive Plan, there were no further options are available for grant under the 2017 Plan.

The following table summarizes information regarding the Company’s stock option awards under the 2017 Plan for the six months ended June 30, 2021:

		Weighted
		average
		exercise		Aggregate
		price in $		intrinsic
2017 Plan	Options	per share		value
Outstanding as of January 1, 2021	442,844	30.89
Granted	—	—
Exercised	—	—
Forfeited	(101,204)	32.82
Outstanding as of June 30, 2021	341,640	30.31	$	—
Vested and exercisable as of June 30, 2021	231,403	34.75	$	—

Stock-based compensation expense for stock option awards under the 2017 Plan was $0.5 million and $1.1 million for the three and six months ended June 30, 2020 and $0.3 million and $0.6 million for the three and six months ended June 30, 2021, respectively.

The weighted average remaining contractual life of the options as of June 30, 2021 is 7.5 years.

As of June 30, 2021, there was $1.4 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 1.2 years.

Restricted Share Units (“RSUs”)

Under the 2017 Plan, the Company granted RSUs which vest over a period of four years with 25% vesting upon the first anniversary of the grant date and on a monthly pro rata basis thereafter over the remaining three years. The Company also granted RSUs to certain employees that vest over a period of four years with 25% vesting upon the first anniversary of the grant date and on a monthly pro rata basis thereafter over the remaining three years.

During 2018, the Company granted RSUs to certain employees where vesting of the RSUs was subject to FDA approval of an NDA for XENLETA. Fifty percent (50%) of each RSU award vested upon FDA approval, and the remaining fifty percent (50%) vested on the one- year anniversary of such approval. In connection with the FDA approval that was received in August 2019, the Company started recognizing compensation expense, as there was no compensation expense recognized on these awards prior to the FDA approval as it was determined that approval was not probable since it was outside of the Company’s control. Also during 2018, the Company granted RSUs to certain employees that have vested in three six-month increments beginning in May 2019 and ending in May 2020. Lastly, the Company granted RSUs in 2018 to certain employees where vesting of the RSUs is subject to FDA approval of an NDA for CONTEPO. Fifty percent (50%) of each RSU award will vest upon FDA approval, and the remaining fifty percent (50%) will vest on the one-year anniversary of such approval.

The following table summarizes information regarding the Company´s RSU awards under the 2017 Plan for the six months ended June 30, 2021:

		Weighted
		average fair
2017 Plan	RSUs	value in $ per share
Outstanding as of January 1, 2021	151,269	14.56
Granted	—	—
Vested and issued	(42,752)	13.98
Forfeited	(30,640)	13.62
Outstanding as of June 30, 2021	77,877	14.19

Stock-based compensation expense for RSUs granted under the 2017 Plan was $0.4 million and $1.0 million for the three and six months ended June 30, 2020 and $0.1 million and $0.3 million for the three and six months ended June 30, 2021, respectively.

The Company has total unrecognized compensation costs of $0.4 million associated with RSUs which are expected to be recognized over the awards average remaining vesting period of 2.6 years. The fair value of RSU’s that vested during the six months ended June 30, 2021 was $0.2 million.

2019 Inducement Share Incentive Plan

On March 12, 2019, the Company’s board of directors adopted the 2019 Inducement Share Incentive Plan, or the 2019 Inducement Plan and, subject to the adjustment provisions of the 2019 Inducement Plan, reserved 200,000 ordinary shares for issuance pursuant to equity awards granted under the 2019 Inducement Plan. In accordance with Nasdaq Listing Rule 5635(c)(4), awards under the 2019 Inducement Plan may only be made to individuals who were not previously employees or non-employee directors of the Company (or following such individuals’ bona fide period of non-employment with the Company), as an inducement material to the individuals’ entry into employment with the Company. On April 28, 2020, the board of directors resolved not to make any further awards under the 2019 Inducement Plan.

The following table summarizes information regarding the Company’s stock option awards under the 2019 Inducement Plan for the six months ended June 30, 2021:

		Weighted
		average
		exercise	Aggregate
		price in $	intrinsic
2019 Inducement Plan	Options	per share	value
Outstanding as of January 1, 2021	25,815	19.04
Granted	—	—
Exercised	—	—
Forfeited	(13,053)	18.20
Outstanding as of June 30, 2021	12,762	19.90	$	—
Vested and exercisable as of June 30, 2021	8,510	19.16	$	—

Stock-based compensation expense under the 2019 Inducement Plan was less than $0.1 million for the three and six months ended June 30, 2020 and $7 thousand and $23 thousand for the three and six months ended June 30, 2021, respectively.

The weighted average remaining contractual life of the options as of June 30, 2021 was 8.2 years.

As of June 30, 2021, there was $53 thousand of total unrecognized compensation expense, related to unvested options granted under the 2019 Inducement Plan, which will be recognized over the weighted-average remaining vesting period of 2.0 years.

Inducement Awards Outside of the 2019 Inducement Plan

In July 2018, the Company granted a non-statutory option to purchase 85,000 of its ordinary shares and 15,000 performance-based RSUs to the Company’s newly appointed Chief Executive Officer, or the CEO. These equity awards were granted outside of the 2017 Plan and the 2019 Inducement Plan, were approved by the Company’s compensation committee and board of directors and were made as an inducement material to the CEO entering into employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4). The exercise price per share for the share option is $35.30 per share, and the option award has a ten-year term and will vest over a four-year period, with 25% of the shares underlying the award vesting on the first anniversary of the grant date and the remaining 75% of the shares underlying the option award to vest monthly over the subsequent 36-month period. The performance-based RSUs are subject to

vesting as follows: 50% will vest upon certification by the board of directors of the receipt of approval by the FDA of an NDA for each of lefamulin and CONTEPO for any indication, and 50% will vest on the first anniversary of such certification by the board of directors, provided, in each case, the CEO is performing services to the Company on the applicable vesting dates. If the FDA does not approve an NDA for both lefamulin and CONTEPO by January 31, 2020, the performance-based RSUs will terminate in full. Since CONTEPO was not approved by this date the award was forfeited. The Company also issues non-statutory options to new employees upon the commencement of their employment.

Stock-based compensation expense for the inducement awards granted outside of the 2019 Inducement Plan was $0.1 million and $0.2 million for the three and six months ended June 30, 2020, and $0.1 million and $0.2 million for the three and six months ended June 30, 2021. The performance-based RSUs had a grant date fair value of $3.53 per share and the options had a grant date fair value of $2.05 per share based on a Black Scholes option pricing model. No expense has been recognized to date on the performance based RSUs as it was determined that approval of CONTEPO is not probable since it is outside of the Company’s control.

The weighted average remaining contractual life of the options as of June 30, 2021 was 7.1 years.

As of June 30, 2021, there was $0.5 million of total unrecognized compensation expense, related to unvested inducement award options granted, which will be recognized over the weighted-average remaining vesting period of 1.1 years.

2020 Share Incentive Plan

On March 4, 2020, the Company´s board of directors adopted the 2020 Share Incentive Plan, or the 2020 Plan, which was approved by the Company´s shareholders at the 2020 Annual General Meeting of Shareholders in July 2020, or 2020 AGM. As of the date of the 2020 AGM, the total number of ordinary shares reserved for issuance under the 2020 Plan was for the sum of 930,000 ordinary shares, plus the number of the Company´s ordinary shares that remained available for grant under the 2017 Plan as of immediately prior to the AGM and the number of ordinary shares subject to awards granted under the 2017 Plan and the Company´s Amended and Restated Stock Option Plan 2015, that expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by us at their original issuance price pursuant to a contractual repurchase right. Following shareholder approval of the 2020 Plan, no further awards will be made under the 2017 Plan.

The 2020 Plan provides for the grant of incentive share options, non-statutory share options, share appreciation rights, restricted share awards, restricted share units, other share-based and cash-based awards and performance awards.

At June 30, 2021, 657,575 ordinary shares were available for future issuance under the 2020 Plan.

The following table summarizes information regarding the Company’s stock option awards under the 2020 Plan for the six months ended June 30, 2021:

		Weighted
		average
		exercise	Aggregate
		price in $	intrinsic
2020 Plan	Options	per share	value
Outstanding as of January 1, 2021	296,805	10.18
Granted	21,000	1.39
Exercised	—	—
Forfeited	(107,325)	5.70
Outstanding as of June 30, 2021	210,480	9.87	$	—
Vested and exercisable as of June 30, 2021	—	—	$	—

Stock-based compensation expense for stock option awards under the 2020 Plan was $51 thousand and $65 thousand for the three and six months ended June 30, 2020 and $0.1 million and $0.2 million for the three and six months ended June 30, 2021, respectively. The options granted in the six months ended June 30, 2021 had a weighted average grant date fair value of $0.90 per share based on a Black Scholes option pricing model using the following assumptions. The significant inputs into the model were as follows:

Input parameters
Expected volatility	77.3	%
Expected term of options (in years)	5.5
Range of risk-free interest rate	1.0	%
Dividend yield	—

The weighted average remaining contractual life of the options as of June 30, 2021 was 7.9 years.

As of June 30, 2021, there was $0.6 million of total unrecognized compensation expense related to unvested options granted under the 2020 Plan, which will be recognized over the weighted-average remaining vesting period of 1.5 years.

Restricted Share Units (“RSUs”)

During 2020, the Company granted 45,977 RSUs to certain employees that vest in three six-month increments beginning in January 2021 and ending in January 2022, with a grant date fair value of $7.88 per share. Also during 2020, the Company granted 43,125 RSUs to certain employees with a grant date fair value of $5.30 per share, where vesting of the RSUs was subject to individual performance goals. During the six months ended June 30, 2021, the Company granted 341,935 RSUs to certain employees that vest in annual increments beginning January 2022 and ending in January 2025. Additionally, the Company granted 7,000 RSUs to each our former CMO and former CFO, which vest as to 50% of the shares underlying the RSUs each year over the term of their respective consulting agreements. For the three and six months ended June 30, 2021, stock-based compensation expense of $0.2 million and $0.3 million was recognized for these RSUs, respectively. As of June 30, 2021, there was $1.3 million of unrecognized compensation expense related to unvested RSUs, which will be recognized over the weighted-average remaining vesting period of 2.0 years.

2021 Inducement Share Incentive Plan

On December 9, 2020, the Company´s board of directors adopted without stockholder approval the 2021 Inducement Share Incentive Plan (the “2021 Inducement Plan”) and, subject to the adjustment provisions of the 2021 Inducement Plan, reserved 200,000 ordinary shares for issuance pursuant to equity awards granted under the 2021 Inducement Plan. In accordance with Nasdaq Listing Rule 5635(c)(4), awards under the 2021 Inducement Plan may only be made to individuals who were not previously employees or non-employee directors of the Company (or following such individuals’ bona fide period of non-employment with the company), as an inducement material to the individuals’ entry into employment with the Company.

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 the Company’s stock option awards under the 2021 Inducement Plan for the six months ended June 30, 2021:

		Weighted
		average
		exercise	Aggregate
		price in $	intrinsic
2021 Inducement Plan	Options	per share	value
Outstanding as of January 1, 2021	—	—
Granted	129,250	1.66
Exercised	—	—
Forfeited	—	—
Outstanding as of June 30, 2021	129,250	1.66	$	—
Vested and exercisable as of June 30, 2021	—	—	$	—

Stock-based compensation expense recognized for the 2021 Inducement Plan was $8 thousand for the three and six months ended June 30, 2021. The options granted in the six months ended June 30, 2021 had a weighted average grant date fair value of $1.09 per share based on a Black Scholes option pricing model using the following assumptions. The significant inputs into the model were as follows:

Input parameters
Expected volatility	75.3% - 76.3%
Expected term of options (in years)	6.1
Risk-free interest rate	1.02% - 1.16%
Dividend yield	—

At June 30, 2021, 70,750 ordinary shares were available for future issuance under the 2021 Inducement Plan.

The weighted average remaining contractual life of the options as of June 30, 2021 was 9.1 years.

As of June 30, 2021, there was $142 thousand of total unrecognized compensation expense related to unvested options granted under the 2021 Inducement Plan, which will be recognized over the weighted-average remaining vesting period of 4.0 years.

Employee Stock Purchase Plan

The Company’s board of directors adopted, and in August 2018 Company’s stockholders approved, the 2018 employee stock purchase plan, or the 2018 ESPP. The maximum aggregate number of shares of ordinary shares that may be purchased under the 2018 ESPP is 50,000 shares, or the ESPP Share Pool, subject to adjustment as provided for in the 2018 ESPP. The ESPP Share Pool available as of December 31, 2020, represented less than 0.1% of the total number of shares of ordinary shares outstanding as of December 31, 2020. The 2018 ESPP allows eligible employees to purchase shares at a 15% discount to the lower of the closing share price at the beginning and end of the six-month offering periods commencing November 1 and ending April 30 and commencing May 1 and ending October 31 of each year. As of the date of this Quarterly Report on Form 10-Q, the Company has suspended the 2018 ESPP until further notice.