Share-Based Payments

9 Months Ended

Sep. 30, 2022

Share-Based Payments

Share-Based Payments

8.           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. 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.

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 8,000 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 3,400 of its ordinary shares 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 $882.50 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 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 the 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 37,200 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 2020 AGM and the number of ordinary shares subject to awards granted under the 2017 Plan and the 2015 SOP, 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. The Company granted RSUs to certain employees which vest as to 25% of the shares underlying the RSUs in four annual increments. Additionally, the Company granted 280 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. During the nine months ended September 30, 2022, option awards to purchase 23,680 ordinary shares with an exercise price of $11.25 per share and 11,836 RSUs

were granted under the 2020 Plan, which as of the 2022 Annual General Meeting of Shareholders, in the case of the options, have automatically converted to cash-settled share appreciation rights and, in the case of the RSUs, represent the right to receive the economic equivalent of one ordinary share of the Company in cash on the applicable vesting date. As a result, such grants awarded under the 2020 Plan are liability classified. Stock-based compensation expense for liability classified option awards and RSUs under the 2020 Plan was $66 thousand for the nine months ended September 30, 2022.

At September 30, 2022, 9,885 ordinary shares excluding the liability classified awards 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 8,000 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 8,000 shares to 20,000 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 for the nine months ended September 30, 2022:

				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, 2022	53,885	$	510.34	8.0		—
Granted	24,160		11.25			—
Exercised	—		—			—
Cancelled and forfeited	(500)		816.81			—
Outstanding as of September 30, 2022	77,545	$	349.79	7.9	$	—
Vested and exercisable as of September 30, 2022	36,829	$	685.59	6.7	$	—

The Company has 77,545 option grants outstanding at September 30, 2022 with exercise prices ranging from $11.25 per share to $2,750.00 per share. As of September 30, 2022, there was $1.0 million of total unrecognized compensation expense related to unvested stock options, which will be recognized over the weighted-average remaining vesting period of 1.3 years.

The stock options granted in the nine months ended September 30, 2022 had a weighted average grant date fair value of $11.05 per share based on a Black Scholes option pricing model. The significant inputs into the model were as follows

Expected volatility	76.4% - 76.9%
Expected term of options (in years)	6.1
Range of risk-free interest rate	1.68% - 1.76%
Dividend yield	—

The expected price volatility is based on historical trading volatility of our ordinary shares 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 Share Units (“RSUs”)

The following table summarizes information regarding the Company’s restricted share unit awards for the nine months ended September 30, 2022:

			Weighted
			average fair
	RSUs		value in $ per share
Outstanding as of January 1, 2022	31,538	$	74.10
Granted	19,566		11.04
Vested and issued	(9,222)		76.37
Forfeited	(1,042)		46.69
Outstanding as of September 30, 2022	40,840	$	44.07

The Company has total unrecognized compensation costs of $0.6 million associated with RSUs which are expected to be recognized over the awards average remaining vesting period of 1.5 years. The intrinsic value of RSU’s that vested during the nine months ended September 30, 2022 was $67 thousand.

Stock-based Compensation

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

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(in thousands)	2022		2021		2022		2021
Research and development expense	$	63	$	96	$	224	$	435
Selling, general and administrative expense		435		683		1,608		2,082
Total stock-based compensation expense	$	498	$	779	$	1,832	$	2,517

Employee Stock Purchase Plan

The Company’s board of directors adopted, and in August 2018 the 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 2,000 shares, or the ESPP Share Pool, subject to adjustment as provided for in the 2018 ESPP. 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. The Company suspended the 2018 ESPP in April 2020.