SHARE-BASED COMPENSATION | NOTE 8:- SHARE-BASED COMPENSATION a. Option plans: On November 23, 2014, the Company’s Board of Directors approved, subject to the approval of the shareholders, creation of the Company’s ordinary C share class, with nominal value NIS 0.01 per share and classification of 1,500,000 ordinary shares for such class of shares, whereby 1,152,044 of such shares were allocated to the Company’s employees under the amended 2014 Israel Share Option Plan (the “2014 Plan”). The exercise price of the options granted under the 2014 Plan may not be less than the nominal value of the shares into which the options are exercised. The options vest primarily over three years. There are no cash settlement alternatives. On December 29, 2014, the Company’s shareholders ratified and approved the aforesaid actions. On January 23, 2017, the Company’s Board of Directors approved the Company’s 2017 Share Incentive Plan (the “2017 Plan” and together with the 2014 Plan, the “Option Plans”), and the subsequent grant of options to the Company’s employees, officers and directors. Pursuant to the 2017 Plan, the Company initially reserved for issuance 312,867 ordinary shares, nominal value NIS 0.01 each. On February 28, 2017, the Company’s shareholders approved the 2017 Plan. The 2017 Plan provides for the grant of awards, including options, restricted shares and restricted share units to the Company’s directors, employees, officers, consultants and advisors. On June 26, 2017 and on December 28, 2017, the Company’s Board of Directors approved the reservation of 463,384 and 559,764 additional ordinary shares, respectively, for issuance under the 2017 Plan (totaling, including previous plans, an aggregate of 1,338,015 ordinary Shares). On February 25, 2021 and November 17, 2021, the board of directors and shareholders, respectively, approved an amendment and restatement of the 2017 Plan. The 2017 Plan, as amended, also contains an “evergreen” provision, which provides for an automatic allotment of ordinary shares to be added every year to the pool of ordinary shares available for grant under the 2017 Plan. Under the evergreen provision, on January 1 of each year (beginning January 1, 2022), the number of ordinary shares available under the 2017 Plan automatically increases by the lesser of the following: (i) 4% of our outstanding ordinary shares on the last day of the immediately preceding year; and (ii) an amount determined in advance of January 1 by the board of directors. The Company estimates the fair value of stock options granted using the binominal option-pricing model. The option-pricing model requires a number of assumptions, of which the most significant are the expected stock price volatility and the expected option term. Expected volatility was calculated based upon the Company’s historical share price and historical volatilities of similar entities in the related sector index. The expected term of the options granted is derived from output of the option valuation model and represents the period of time that options granted are expected to be outstanding. The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term. The Company has historically not paid dividends and has no foreseeable plans to pay dividends. The following table lists the inputs to the binomial option-pricing model used for the fair value measurement of equity-settled share options for the nine months ended September 30, 2022 and 2021: Nine months ended 2022 2021 (unaudited) Dividend yield 0% 0% Expected volatility of the share prices 66%-67% 66% Risk-free interest rate 1.8% - 3.5% 1.3% - 1.6% Expected term (in years) 8 8 Based on the above inputs, the fair value of the options was determined to be $0.99 - $1.85 per option at the grant date. b. The following table summarizes the number of options granted to employees under the Option Plans as of September 30, 2022 and related information: Number of Weighted (unaudited) (unaudited) Balance as of December 31, 2021 4,411,424 $ 6.01 Granted 2,233,150 2.60 Exercised (47,426 ) 1.60 Forfeited (378,379 ) 6.52 Expired (144,717 ) 5.22 Balance as of September 30, 2022 6,074,052 4.78 Exercisable as of September 30, 2022 2,696,432 $ 5.93 As of September 30, 2022, there are $10,964 of total unrecognized costs related to share-based compensation that are expected to be recognized over a period of up to four years. c. A summary of restricted shares and restricted shares unit activity as of September 30, 2022 is as follows: Number of Weighted (unaudited) (unaudited) Unvested as of December 31, 2021 531,477 $ 5.48 Granted 1,203,650 2.77 Vested (121,768 ) 6.04 Forfeited (124,670 ) 5.21 Unvested as of September 30, 2022 1,488,689 $ 3.27 d. The total share-based compensation expense related to all of the Company’s equity-based awards, recognized for the three and nine months ended September 30, 2022 and 2021 is comprised as follows: Three months ended September 30, Nine months ended 2022 2021 2022 2021 (unaudited) Research and development expenses, net $ 533 $ 368 $ 1,551 $ 1,051 Commercial expenses 328 253 976 653 General and administrative expenses 438 476 1,302 1,418 Total share-based compensation $ 1,299 $ 1,097 $ 3,829 $ 3,122 |