Quarterly report pursuant to Section 13 or 15(d)

Share-based Compensation

Share-based Compensation
3 Months Ended
Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]  
Share-based Compensation Share-based Compensation
The Company's Amended and Restated Equity Incentive Plan (the Plan), which was adopted and approved by the Company's shareholders in June 2021, allows for an issuance of up to an aggregate of 23.8 million shares and provides for grants of stock options, performance awards (PAs), and restricted stock units (RSUs) that may be settled in cash and common shares. Also in June 2021, the Company's shareholders adopted and approved the Company's 2021 ESPP, which allows for the issuance of up to 2.5 million shares. The 2021 ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code (the Code) but also permits the Company to include the employees, including non-United States employees, in offerings not intended to qualify under Section 423. The purpose of the 2021 ESPP is to provide eligible employees with opportunities to purchase the Company’s common shares at a discounted price.
During 2022, the Company modified the 2021 ESPP for the current and future offerings. The new ESPP terms shortened the plan from four purchases over a 24 month Offering Period to two purchases over a 12 month offering period. Additionally, the ESPP now contains a rollover mechanism; that is, if the stock price on the purchase date is less than the offering price (as that is determined under the 2021 ESPP), that offering is then canceled and any participants are rolled into the new 12 month offering period at the lower price.
In addition to stock options, PAs and RSUs granted under the Plan, the Company has granted certain stock options and RSUs as inducements material to new employees entering employment in accordance with Nasdaq Listing Rule 5635(c)(4). The inducements were granted outside of the Plan.
Stock Options

The Plan requires the exercise price of each option not to be less than the closing market price of the Company’s common shares on the business day immediately prior to the date of grant. The board of directors approves the vesting criteria and periods at its discretion. The options issued under the plan are accounted for as equity-settled share-based payments.
The Company used the Black-Scholes option pricing model to estimate the fair value of the options granted. The assumptions used for the annual volatility and expected life of the options are reviewed and updated annually. The Company considers
historical volatility of its common shares in estimating its future stock price volatility. The risk-free interest rate for the expected life of the options was based on the yield available on government benchmark bonds with an approximate equivalent remaining term at the time of the grant. The expected life is based upon the contractual term, taking into account expected employee exercise and expected post-vesting employment termination behavior.
The following weighted average assumptions were used to estimate the fair value of the options granted during the three months ended March 31, 2023 and March 31, 2022:
2023 2022
Annualized volatility 71  % 70  %
Risk-free interest rate 4.08  % 1.73  %
Expected life of options in years 5.0 years 5.0 years
Estimated forfeiture rate 12.7  % 11.6  %
Dividend rate 0.0  % 0.0%
Fair value per common share option $ 5.44  $ 7.02 
The increase of the risk-free interest rate during the three months ended March 31, 2023 was due to the increase of higher yields on government benchmark bonds.

The following table summarizes the option award activity for the three months ended March 31, 2023:

March 31, 2023
Number of shares (in thousands) Weighted average exercise price $
Outstanding - December 31, 2022 13,295  $ 12.09 
Granted 232  8.84 
Exercised (319) 5.09 
Forfeited (530) 14.43 
Outstanding - March 31, 2023 12,678  $ 12.11 
Restricted Stock Units and Performance Awards
The Company has granted RSUs and PAs under the Plan, as well as inducements for certain new hires as discussed above. The RSUs and PAs are fair valued based on the previous business days' market price of our common shares on the date of the grant.
The following table summarizes the RSU and PA activity for the three months ended March 31, 2023:
March 31, 2023
Number of shares (in thousands) Weighted average fair value price $
Outstanding - December 31, 2022 1,980  $ 10.84 
Granted 6,468  8.99 
Vested (442) 12.01 
Forfeited (102) 9.73 
Outstanding - March 31, 2023 7,904  $ 9.27 
Compensation Expense
The Company recognized share-based compensation expense for the three month periods ended March 31, 2023 and March 31, 2022 as follows:
Three months ended
March 31,
(in thousands) 2023 2022
Research and development $ 1,590  $ 976 
Selling, general and administrative 7,589  5,972 
Capitalized under inventories 288  75 
Share-based compensation expense $ 9,467  $ 7,023 
As of March 31, 2023, there was $50.9 million of unrecognized share-based compensation expense related to unvested awards granted which is expected to be recognized over a weighted-average period of approximately 1.6 years.