Share Option Plan and ESPP

3 Months Ended

Mar. 31, 2020

Share-based Compensation, Allocation and Classification in Financial Statements [Abstract]

Share Option Plan and ESPP

SHARE OPTION PLAN AND ESPPIn September 2015, the Company adopted the 2015 Omnibus Incentive Plan (the “2015 Plan”). Under the 2015 Plan, the Company can issue various types of equity compensation awards such as share options, restricted shares, performance shares, restricted share units (“RSUs”), performance-based share units (“PSUs”), long-term cash awards and other share-based awards.

Options granted under the 2015 Plan generally have a four-year vesting period and expire ten years after the date of grant. Options granted under the 2015 Plan that are canceled or forfeited before expiration become available for future grants. RSUs granted under the 2015 Plan generally vest over a three year period. PSUs granted under the 2015 Plan generally vest between a three and six year period as performance targets are attained. RSUs and PSUs granted under the 2015 Plan that are canceled before expiration become available for future grants. As of March 31, 2020, 11,430,386 ordinary shares were available for grant under the 2015 Plan.

A summary of the status of the Company’s option plans as of March 31, 2020 and changes during the period then ended is presented below: 

	Three months ended March 31, 2020
	Unaudited
	Number of options	Weighted average exercise price
Outstanding at beginning of year	10,350,810	$	20.40
Granted	671,530	69.37
Exercised	(291,088)	15.52
Forfeited and canceled	(6,025)	41.39
Outstanding as of March 31, 2020	10,725,227	$	23.58
Exercisable options	4,572,967	$	16.17

For the three months, ended March 31, 2020, options to purchase 291,088 ordinary shares were exercised, resulting in the issuance of 291,088 ordinary shares.

A summary of the status of the Company’s RSUs and PSUs as of March 31, 2020 and changes during the period then ended is presented below.

	Three months ended March 31, 2020
	Unaudited
	Number of RSU/PSUs	Weighted average grant date fair value
Unvested at beginning of year	1,474,395	$	30.26
Granted (1)	3,747,545	54.07
Vested	(543,450)	22.10
Forfeited and cancelled	(3,194)	52.84
Unvested as of March 31, 2020	4,675,296	50.28

(1) Represents RSUs and PSUs granted on March 3, 2020 as follows: (a) 527,041 RSUs that are expensed based on their grant date fair value of $69.37 per RSU over the service period of three years; (b) 408,539 PSUs that have a mix of service and clinical milestone vesting conditions, cliff-vest in pre-determined increments, and that have been deemed probable to vest and are therefore expensed beginning in the first quarter of 2020 based on their grant date fair value of $69.37 per PSU; (c) 108,113 PSUs that have a mix of service and clinical milestone vesting conditions, cliff-vest in pre-determined increments, and that will begin to be expensed at $69.37 per PSU when it becomes probable that the milestones will be achieved, and (d) 2,703,852 PSUs that have a mix of service, market and other milestone performance vesting conditions (including but not limited to new FDA approved indications), cliff-vest in pre-determined increments, and that will begin to be expensed at $48.16 per PSU when it becomes probable that the milestones will be achieved. The PSUs vest no earlier than three years from the date of grant and no later than six years from the date of grant. The grant date fair value of PSUs with market vesting conditions were obtained by using Monte Carlo simulations. All RSUs and PSUs are expensed in accordance with ASC 718.

In September 2015, the Company adopted an employee share purchase plan (“ESPP”) to encourage and enable eligible employees to acquire ownership of the Company’s ordinary shares purchased through accumulated payroll

deductions on an after-tax basis. In the United States, the ESPP is intended to be an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code and the provisions of the ESPP are construed in a manner consistent with the requirements of such section. As of March 31, 2020, 4,050,089 ordinary shares were available to be purchased by eligible employees under the ESPP and 414,559 shares had been issued under the ESPP.

The fair value of share-based awards was estimated using the Black-Scholes model for all equity grants. For market condition awards, the Company also applied the Monte-Carlo simulation model. We assessed fair value using the following underlying assumptions: 

	Three months ended March 31,				Year ended December 31, 2019
	2020		2019
	Unaudited				Audited
Stock Option Plans
Expected term (years)	6.25		6.23		5.50-6.5
Expected volatility	54%		55%		55%-61%
Risk-free interest rate	0.86%		2.40%		1.73%-2.40%
Dividend yield	0.00	%	0.00	%	0.00	%
ESPP
Expected term (years)	0.50		0.50		0.50
Expected volatility	47%		62%		44%-62%
Risk-free interest rate	1.57%		2.51%		2.10%-2.51%
Dividend yield	0.00	%	0.00	%	0.00	%

The total non-cash share-based compensation expense related to all of the Company’s equity-based awards recognized for the three months ended March 31, 2020 and 2019 and the year ended December 31, 2019 was:

	Three months ended March 31,				Year ended December 31, 2019
	2020		2019
	Unaudited				Audited
Cost of revenues	$	590	$	426	$	2,231
Research, development and clinical trials	3,394		1,188		7,570
Sales and marketing	3,616		1,962		11,897
General and administrative	8,957		6,073		30,718
Total share-based compensation expense	$	16,557	$	9,649	$	52,416