| Shareholders' Equity | Shareholders’ Equity a. Equity Offerings 2020 Public Offering On January 27, 2020, the Company closed a public offering pursuant to which the Company sold 5,824,729 common shares, including the sale of 900,000 common shares to the underwriters upon their full exercise of their over-allotment option, at $46.50 per common share and 1,075,271 Pre-Funded Warrants (note 8d) in lieu of common shares at $46.4999 per Pre-Funded Warrant. Net proceeds were $300,910, after underwriting discounts, commissions and offering expenses of $19,940. b. Authorized The Company has an unlimited authorized number of voting Common Shares and Preferred Shares without par value. c. Preferred Shares As of June 30, 2021 and December 31, 2020, no preferred shares were issued or outstanding, respectively. d. Pre-Funded Common Share Warrants In connection with a public offering completed on June 24, 2019, the Company issued 4,166,690 Pre-Funded Warrants at a price of $17.9999 per Pre-Funded Warrant which granted holders of warrants the right to purchase up to 4,166,690 common shares of the Company, at an exercise price of $0.0001 per share. In connection with a public offering completed on January 27, 2020 (note 8a), the Company issued 1,075,271 Pre-Funded Warrants at a price of $46.4999 per Pre-Funded Warrant which granted holders of warrants the right to purchase up to 1,075,271 common shares of the Company, at an exercise price of $0.0001 per share. The Pre-Funded Warrants are exercisable by the holders at any time on or after the original issue date. The Pre-Funded Warrants do not expire unless they are exercised or settled in accordance with the Pre-Funded Warrant agreement. As the Pre-Funded Warrants meet the condition for equity classification, proceeds from issuance of the Pre-Funded Warrants, net of any transaction costs, are recorded in additional paid-in capital. Upon exercise of the Pre-Funded Warrants, the historical costs recorded in additional paid-in capital along with exercise price collected from holders will be recorded in common shares. No Pre-Funded Warrants have been exercised to date. e. Stock-Based Compensation Original Stock Option Plan On July 14, 2006, the shareholders of the Company approved an employee stock option plan (the “Original Plan”). The Original Plan provides for the granting of options to directors, officers, employees and consultants. Options to purchase common shares may be granted at an exercise price of each option equal to the last private issuance of common shares immediately preceding the date of the grant. The total number of options outstanding is not to exceed 20% of the issued common shares of the Company. Options granted under the Original Plan are exercisable at various dates over their 10-year life. Common shares are issued from treasury when options are exercised. Options issued to employees under the Original Plan vest over 4 years, with 25% of the options subject to vesting one year after grant and the remainder of the options vesting monthly over the following three years in equal installments. Options issued to directors under the Original Plan vest over 3 years in equal monthly installments, and options issued to consultants and members of the Scientific Advisory Board under the Original Plan vest immediately upon issuance. The exercise prices of the Company’s stock options under the Original Plan are denominated in Canadian dollars. The Canadian dollar amounts have been translated to U.S. dollars using the period end rate or the average foreign exchange rate for the period, as applicable, and have been provided for information purposes. Upon the effectiveness of the Company’s New Stock Option Plan described below, no further options were issuable under the Original Plan. However, all outstanding options granted under the Original Plan remain outstanding, subject to the terms of the Original Plan and the applicable grant documents, until such outstanding options are exercised or they terminate or expire by their terms. New Stock Option and Equity Compensation Plan On April 10, 2017, the Company’s shareholders approved a new stock option plan, which became effective immediately prior to the consummation of the Company's IPO. This plan allows for the grant of options to directors, officers, employees and consultants in U.S. or Canadian dollars, and also permits the Company to grant incentive stock options (“ISOs”), within the meaning of Section 422 of the Internal Revenue Code, to its employees. On June 7, 2018, the Company’s shareholders approved an amendment and restatement of this plan (this plan, as amended and restated, the “New Plan”), which was further amended on March 4, 2020, that includes an article that allows the Company to grant restricted shares, restricted share units (“RSUs”) and other share-based awards, in addition to stock options. The terms and vesting provisions of options to be granted under the New Stock Option Plan remained same as the Original Stock Option Plan. The maximum number of common shares reserved for issuance under the New Plan is 10,698,103, which includes 7,671,197 shares issuable upon exercise of options outstanding as of June 30, 2021. Beginning in 2021 and ending in 2028, this maximum number may be increased on the first day of each calendar year by up to 4.0% of the number of outstanding shares on the last day of the immediately preceding calendar year. ISOs may be granted with respect to a maximum fixed amount equal to 20% of the shares reserved for issuance under the New Plan as of June 7, 2018. Restricted Stock Units ( “ RSUs ” ) During the six months ended June 30, 2021, the Company granted 122,860 RSUs to certain employees that vest over a period of three years, in the amount of one-third each year on the anniversary of the grant date. RSUs are equity-settled on each vesting date, subject to the grantee’s continued employment with the Company on the vesting date. The fair value of RSUs granted was calculated by using the closing stock price on the grant date. As of June 30, 2021, there was $4,191 of unamortized RSU expense that will be recognized over a weighted average period of 1.68 years. Number of RSUs Weighted- Outstanding, December 31, 2020 82,704 35.19 Granted 122,860 36.68 Vested and settled (26,222) 35.41 Forfeited (13,125) 34.96 Outstanding, June 30, 2021 166,217 36.28 Stock Options All options granted under the New Plan will have an exercise price determined and approved by the Board of Directors on the date of the grant, which shall not be less than the market price of the common shares at such time. For the purposes of the New Plan, the market price of a common share shall be the closing sale price of a share on the grant date reported by the stock exchange with the greatest trading volume or, if such day is not a trading day, the closing sale price reported for the immediately preceding trading day. The Company may convert a market price denominated in Canadian dollars into United States dollars and vice versa and such converted amount shall be the market price. An option shall be exercisable during a period established by the Board of Directors which shall commence on the date of the grant and shall terminate not later than ten years after the date of the granting of the option. The New Plan provides that the exercise period shall automatically be extended if the date on which it is scheduled to terminate shall fall during a black-out period. In such cases, the extended exercise period shall terminate on the tenth business day after the last day of the black-out period, provided that the exercise period shall in no case be extended beyond the tenth anniversary of the date the option was granted. All options shall vest in accordance with the terms of their grant agreements. The following table summarizes the Company’s stock options granted in Canadian dollars under the Original Plan and the New Plan: Number Weighted- Weighted- Weighted- Aggregate Aggregate Outstanding, December 31, 2020 2,285,569 22.00 17.27 6.46 87,545 68,664 Granted 434,617 43.27 34.46 Exercised (51,932) 17.86 14.13 Forfeited (17,836) 45.14 36.54 Outstanding, June 30, 2021 2,650,418 25.41 20.49 6.56 49,658 39,980 The following table summarizes the Company’s stock options granted in U.S. dollars under the New Plan: Number Weighted- Weighted- Aggregate Outstanding, December 31, 2020 3,790,326 22.85 8.20 92,705 Granted 1,383,015 35.45 Exercised (94,387) 14.36 Forfeited (58,175) 33.20 Outstanding, June 30, 2021 5,020,779 26.36 8.27 47,471 During the six months ended June 30, 2021, the Company received cash proceeds of $2,084 from stock options exercised. The stock options outstanding at June 30, 2021 expire at various dates from July 1, 2021 to June 9, 2031. The estimated fair values of options granted to officers, directors, employees and consultants are amortized over the relevant vesting periods. Stock-based compensation expense for equity classified instruments, as well as the financial statement impact of the amortization and periodic revaluation of liability classified instruments (note 12), are recorded in research and development expenses, general and administration expenses and finance expense (income) as follows: Three Months Ended June 30, Six Months Ended June 30, 2021 2020 2021 2020 Research and development expense: Stock-based compensation for equity classified instruments $ 5,790 $ 3,346 $ 10,126 $ 5,496 Change in fair value of liability classified instruments 245 (107) (2,268) (1,900) $ 6,035 $ 3,239 $ 7,858 $ 3,596 General and administrative expense: Stock-based compensation for equity classified instruments $ 5,296 $ 4,046 $ 9,488 $ 6,497 Change in fair value of liability classified instruments 1,545 (310) (11,406) (5,799) $ 6,841 $ 3,736 $ (1,918) $ 698 Finance expense (income): Change in fair value of liability classified instruments (66) (2) (58) (36) $ (66) $ (2) $ (58) $ (36) Amounts for equity classified instruments above include stock-based compensation expense relating to RSUs of $718 and $1,324 for the three and six months ended June 30, 2021, respectively (three and six months ended June 30, 2020: $411 and $503, respectively). The estimated fair value of stock options granted in Canadian dollars under the Original Plan and the New Plan was determined using the Black-Scholes option pricing model with the following weighted-average assumptions: Six Months Ended June 30, 2021 2020 Dividend yield 0 % 0 % Expected volatility 81.0 % 75.5 % Risk-free interest rate 1.02 % 0.64 % Expected average life of options 6.07 years 6.07 years The estimated fair value of stock options granted in U.S. dollars under the New Plan was determined using the Black-Scholes option pricing model with the following weighted-average assumptions: Six Months Ended June 30, 2021 2020 Dividend yield 0 % 0 % Expected volatility 80.9 % 76.3 % Risk-free interest rate 0.97 % 0.73 % Expected average life of options 6.04 years 6.02 years Expected Volatility — Volatility is a measure of the amount by which a financial variable such as a share price has fluctuated (historical volatility) or is expected to fluctuate (expected volatility) during a period. As the Company does not yet have sufficient history of its own volatility, the Company has identified several public entities of similar complexity and stage of development and calculates historical volatility using the volatility of these companies. Risk-Free Interest Rate — This rate is from the Government of Canada and U.S. Federal Reserve marketable bonds for the month prior to each option grant during the year, having a term that most closely resembles the expected life of the option. Expected Term — This is the period of time that the options granted are expected to remain unexercised. Options granted have a maximum term of ten years. The Company uses the simplified method to calculate the average expected term, which represents the average of the vesting period and the contractual term. Share Fair Value — Options granted after the Company’s IPO, are issued with exercise price equal to the fair market value of the Company’s stock on the date the grant is approved by the Board of Directors. Before the IPO, the Company granted stock options at exercise prices not less than the fair value of its common shares as determined by the Board of Directors, with input from management. Management estimated the fair value of its common shares based on a number of objective and subjective factors, including the most recently available valuation of common shares prepared by independent valuation specialists, external market considerations affecting the biotechnology industry and the historic prices at which the Company sold common shares. The weighted-average Black-Scholes option pricing assumptions for liability classified stock options outstanding at June 30, 2021 and 2020 are as follows: June 30, June 30, Dividend yield 0 % 0 % Expected volatility 75.9 % 85.7 % Risk-free interest rate 0.59 % 0.31 % Expected average option term 2.53 years 3.06 years Number of liability classified stock options outstanding 1,011,965 1,244,204 At June 30, 2021, the unamortized compensation expense related to unvested options was $49,929 (C$62,016). The remaining unamortized compensation expense as of June 30, 2021 will be recognized over a weighted-average period of 1.87 years. f. Employee Stock Purchase Plan: On April 10, 2017, the Company’s shareholders approved an employee stock purchase plan (“ESPP”) which became effective immediately prior to the consummation of the Company’s IPO. On June 7, 2018, certain amendments to the ESPP were approved by shareholders. Prior to these amendments, the ESPP allowed eligible employees to acquire common shares at a discounted purchase price of 85% of the market value of the Company's common shares on the purchase date. The ESPP, as amended, allows eligible employees to acquire common shares at a discounted purchase price of the lesser of (i) 85% of the market price of a common share on the first day of the applicable purchase period and (ii) 85% of the market price of a common share on the purchase date. The ESPP qualifies as an “employee stock purchase plan” within the meaning of Section 423 of the Code for employees who are United States taxpayers. The Company currently holds offerings consisting of a single six-month purchase period commencing on January 1 and July 1 of each calendar year, with a single purchase date at the end of the purchase period on June 30 and December 31 of each calendar year. Eligible employees are able to contribute up to 15% of their gross base earnings for purchases under the ESPP through regular payroll deductions. Purchases of shares under the ESPP are limited for each employee at $25 thousand worth of the Company’s common shares (determined using the lesser of (i) the market price of a common share on the first day of the applicable purchase period and (ii) the market price of a common share on the purchase date) for each year such purchase right is outstanding. As this plan is considered compensatory, the Company recognizes compensation expense on these awards based on their estimated grant date fair value using the Black-Scholes option pricing model. The Company recognizes compensation expense in the consolidated statements of loss and comprehensive loss on a straight-line basis over the requisite service period. For the six months ended June 30, 2021, the Company recorded compensation expense of and $518 (six months ended June 30, 2020: $311) in research and development expense and general and administrative expense accounts. As of June 30, 2021, the total amount contributed by ESPP participants and not yet settled is $1,296 (December 31, 2020: $926). |
