Share-Based Payments

12 Months Ended

Dec. 31, 2021

Share-Based Payments

Share-Based Payments

10.  Share Based Payments

Stock Plan Activity

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. 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. With the approval of the 2017 Share Incentive Plan, there were no further shares available for issuance 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.

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. 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. 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. 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. With the approval of the 2020 Share Incentive Plan, there were no further shares available for issuance under the 2017 Plan. However, all outstanding awards under 2017 Plan will remain in effect and continue to be governed by the terms of the 2017 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.

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.

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. 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. Under the 2020 Plan the Company granted RSUs to certain employees that vest in three six-month increments beginning in January 2021 and ending in January 2022. The Company also granted RSUs to certain employees, where vesting of the RSUs was subject to individual performance goals. During the year ended December 31, 2021, the Company granted 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 its former Chief Medical Officer

and to its former Chief Financial Officer, which vest as to 50% of the shares underlying the RSUs each year over the term of their respective consulting agreements.

At December 31, 2021, 271,080 ordinary shares were available for future issuance under the 2020 Plan.

On December 9, 2020, the Company´s board of directors adopted without stockholder approval the 2021 Inducement Share Incentive Plan, or 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. In September 2021, the Company’s board of directors adopted an amendment to the 2021 Inducement Plan that increased the amount of shares reserved for issuance under the plan from 200,000 shares to 500,000 shares. 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.

Stock Options

The following table summarizes information regarding the Company´s stock option awards:

			Weighted
		Weighted	Average
		average	Remaining	Aggregate
		exercise	Contractual	intrinsic
		price in	Term	value
	Options	$ per share	(in years)	(in thousands)
Outstanding as of January 1, 2019	609,133	65.17	—		—
Granted	316,645	20.11	—		—
Exercised	—	—	—		—
Cancelled and forfeited	(108,887)	64.33	—		—
Outstanding as of December 31, 2019	816,891	47.82	—		—
Granted	465,055	11.27	—		—
Exercised	—	—	—		—
Cancelled and forfeited	(229,108)	31.92	—		—
Outstanding as of December 31, 2020	1,052,838	35.08	—		—
Granted	637,880	1.23	—		—
Exercised	—	—	—		—
Cancelled and forfeited	(342,241)	16.90	—		—
Outstanding as of December 31, 2021	1,348,477	20.46	8.0	$	—
Vested and exercisable as of December 31, 2021	533,564	45.05	6.7	$	—

The Company has 1,348,477 option grants outstanding at December 31, 2021 with exercise prices ranging from $1.06 per share to $110.00 per share. As of December 31, 2021, there was $1.8 million of total unrecognized compensation expense related to unvested stock options, which will be recognized over the weighted-average remaining vesting period of 0.9 years.

The weighted average fair value of the stock options granted during years ended December 31, 2021, 2020 and 2019 was $0.82, $5.99 and $11.95 per share, respectively, based on a Black Scholes option pricing model using the following assumptions:

Input parameters	2021	2020	2019
Range of expected volatility	75.3% ‑ 77.3%	63.7% ‑ 74.4%	59.8% - 63.1%
Expected term of options (in years)	5.5 - 6.1	5.5 - 6.1	6.0 - 6.1
Range of risk-free interest rate	0.8% ‑ 1.3%	0.8% ‑ 1.5%	1.9% - 3.0%
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 is based on the average of five and seven-year market yield on U.S. treasury securities in effect at the time of grant.

Restricted Stock Units (“RSUs”)

The following table summarizes information regarding the Company’s restricted share unit awards:

		Weighted average
		grant date fair
	RSUs	value in $ per share
Outstanding as of January 1, 2019	137,210	33.34
Granted	47,900	19.00
Vested and issued	(65,758)	31.80
Forfeited	(14,183)	27.87
Outstanding as of December 31, 2019	105,169	28.50
Granted	244,832	10.99
Vested and issued	(52,640)	31.15
Forfeited	(57,977)	21.74
Outstanding as of December 31, 2020	239,384	11.60
Granted	769,132	2.02
Vested and issued	(90,330)	12.04
Forfeited	(128,448)	6.93
Outstanding as of December 31, 2021	789,738	2.92

As of December 31, 2021, there was unrecognized compensation costs of $1.1 million associated with RSUs which are expected to be recognized over the awards average remaining vesting period of 1.7 years. The intrinsic value of RSU’s that vested during the years ended December 31, 2021, 2020 and 2019 was $0.2 million, $0.4 million and $1.5 million, respectively.

Stock-based Compensation

The following table presents stock-based compensation expense included in the Company’s consolidated statements of operations:

	Year Ended
	December 31,
(in thousands)	2021		2020		2019
Research and development expense	$	565	$	1,280	$	2,138
Selling, general and administrative expense		2,726		3,939		7,610
Total stock-based compensation expense	$	3,291	$	5,219	$	9,748

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 2018 ESPP allowed 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. The Company suspended the 2018 ESPP in April 2020.