13. Share-Based Compensation

On November 18, 2015, the Company’s Board of Directors adopted and approved the 2015 Equity Incentive Plan (the 2015 Plan), which authorized the Company to grant up to 223,424 ordinary shares in the form of incentive share options, nonstatutory share options, share appreciation rights, restricted share awards, restricted share units and other share awards. The types of share-based awards, including the rights, amount, terms, and exercisability provisions of grants are determined by the Company’s Board of Directors. The purpose of the 2015 Plan was to provide the Company with the flexibility to issue share-based awards as part of an overall compensation package to attract and retain qualified personnel. On May 18, 2017, the Company amended the 2015 Plan to increase the number of ordinary shares available for issuance under the 2015 Plan by 219,605 shares to 443,029 shares.

On March 14, 2018, the Company’s Board of Directors adopted and approved the 2018 Equity Incentive Plan (the 2018 Plan), which became effective upon the execution and delivery of the underwriting agreement related to the Company’s IPO in May 2018. Since adopting the 2018 Plan, no further grants will be made under the 2015 Plan. The ordinary shares underlying any options that are forfeited, cancelled, repurchased or are otherwise terminated by the Company under the 2015 Plan will not be added back to the ordinary shares available for issuance.

The 2018 Plan originally authorized the Company to grant up to 1,018,459 ordinary shares in the form of incentive share options, nonstatutory share options, share appreciation rights, restricted share awards, restricted share units, performance share awards, performance cash awards and other share awards. The types of share-based awards, including the amount, terms, and exercisability provisions of grants are determined by the Company’s Board of Directors. The ordinary shares underlying any options that are forfeited, cancelled, repurchased or are otherwise terminated by the Company under the 2018 Plan are added back to the ordinary shares available for issuance under the 2018 Plan.

On December 5, 2018, pursuant to powers delegated to it by the Board of Directors of the Company, the Compensation Committee approved an increase in the number of ordinary shares available to be granted pursuant to the 2018 Plan by 4% of the total number of shares of the Company’s issued share capital on December 31, 2018, being 574,081 ordinary shares.

On February 14, 2020, pursuant to powers delegated to it by the Board of Directors of the Company, the Compensation Committee approved, by written resolution, an increase of 594,758 ordinary shares to the number of ordinary shares available to be granted pursuant to the 2018 Plan, being just under 4% of the total number of the Company’s ordinary shares outstanding on December 31, 2019, in accordance with the terms of the 2018 Plan.

On June 10, 2020, at the Company’s annual general meeting of shareholders, the shareholders approved and adopted an amended and restated 2018 Plan which, among other things included an increase of 2,250,000 ordinary shares to the number of ordinary shares reserved for issuance under the 2018 Plan.

On June 23, 2021, at the Company’s annual general meeting of shareholders, the shareholders approved an amendment to the amended and restated 2018 Plan to increase the number of ordinary shares reserved for issuance under the amended and restated 2018 Plan by 15,000,000 ordinary shares to 19,437,298 ordinary shares.

On November 24, 2021, the Company’s Board of Directors adopted and approved the 2021 Inducement Equity Incentive Plan (the 2021 Inducement Plan) reserving 5,000,000 of its ordinary shares to be used exclusively for grants of awards to individuals that were not previously employees or directors of the Company (or following such individuals’ bona fide period of non-employment with the company), as a material inducement to such individuals’ entry into employment with the company within the meaning of Rule 5635(c)(4) of the Nasdaq Listing Rules. The terms and conditions of the 2021 Inducement Plan are substantially similar to the 2018 Plan.

Share Options

Unless specified otherwise in an individual option agreement, share options granted under the 2015 Plan, the 2018 Plan and the 2021 Inducement Plan generally have a ten year term and a four year vesting period. The vesting requirement is conditioned upon a grantee’s continued service with the Company during the vesting period. Once vested, all awards are exercisable from the date of grant until they expire. The option grants are non-transferable. Vested options generally remain exercisable for 90 days subsequent to the termination of the option holder’s service with the Company. In the event of an option holder’s disability or death while employed by or providing service to the Company, the exercisable period extends to twelve months or eighteen months, respectively.

The fair value of options granted are estimated using the Black-Scholes option-pricing model. The inputs for the Black-Scholes model require management’s significant assumptions. The risk-free interest rate was based on a normalized estimate of the 7-year U.S. treasury yield. The Company has estimated the expected term utilizing the “simplified” method for awards that qualify as “plain vanilla”. The Company does not have sufficient company-specific historical and implied volatility information and it therefore estimates its expected share volatility based on historical volatility information of reasonably comparable guideline public companies and itself. The Company expects to continue to do so until such time as it has adequate historical data regarding the volatility of its own traded share price. Expected dividend yield is based on the fact that the Company has never paid cash dividends and the Company’s future ability to pay cash dividends on its shares may be limited by the terms of any future debt or preferred securities. The Company has elected to account for forfeitures as they occur.

The Company granted 2,201,889 and 13,374,412 share options to employees and directors during the six months ended June 30, 2022 and 2021, respectively, under the 2018 Plan and 85,000 share options to employees during the six months ended June 30, 2022 under the 2021 Inducement Plan. No share options were granted to employees or directors under the 2021 Inducement Plan during the six months ended June 30, 2021. There were 14,305,867 and 13,516,250 unvested employee and director share options outstanding as of June 30, 2022 and June 30, 2021, respectively. Total expense recognized related to employee share options was $1,682 and $3,363 for the three and six months ended June 30, 2022 and $277 and $441 for the three and six months ended June 30, 2021. Total unamortized compensation expense related to employee share options was $18,589 and $23,927 as of June 30, 2022 and June 30, 2021, respectively, which is expected to be recognized over a remaining weighted average vesting period of 2.74 years and 3.92 years as of June 30, 2022 and June 30, 2021, respectively.

Restricted Share Units (RSUs)

The Company granted 792,877 and 1,345,328 RSUs to employees and directors during the six months ended June 30, 2022 and 2021, respectively, under the 2018 Plan.

The fair value of the RSUs is determined on the date of grant based on the market price of the Company’s ordinary shares on that date. The fair value of RSUs is expensed ratably over the vesting period, which is generally one year for directors and two years for our employees under our 2018 Plan and four years for our employees under our 2021 Inducement Plan. Total expense recognized related to the RSUs was $302 and $516 for the three and six months ended June 30, 2022 and $282 and $364 for the three and six months ended June 30, 2021. Total unamortized compensation expense related to the RSUs was $989 and $1,771 as of June 30, 2022 and June 30, 2021, respectively, which is expected to be recognized over a remaining average vesting period of 1.54 and 1.57 years as of June 30, 2022 and June 30, 2021, respectively.

No RSUs that are subject to certain performance-based vesting conditions (Performance RSUs) were awarded to employees or directors during the three and six months ended June 30, 2022 and 2021, respectively.

The fair value of Performance RSUs is expensed evenly over the vesting period. No expense related to Performance RSUs was recognized during the three months ended June 30, 2021, and total expense recognized related to Performance RSUs was $35 for the six months ended June 30, 2021. All Performance RSUs were fully expensed as of June 30, 2021.

There was a total of $19,578 and $25,698 unamortized share-based compensation expense for options and RSUs as of June 30, 2022 and June 30, 2021, respectively, which is expected to be recognized over a remaining average vesting period of 2.61 years and 3.62 years as of June 30, 2022 and June 30, 2021, respectively.