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6-K
CIPHER PHARMACEUTICALS INC filed this Form 6-K on 11/15/2016
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The following information relates to stock options that were outstanding as at September 30, 2016:

 

Range of exercise prices  Number of options (in thousands)  Weighted average remaining contractual life (years)  Weighted average exercise price
CDN$        CDN$
1.03-4.60  423  3.6  2.98
4.61-6.20  328  9.6  5.16
6.21-13.88  1,044  8.4  9.27
   1,795  7.5  7.03

 

During Q3 2016, the Company granted 144,283 stock options under the stock option plan. The options vest over a four year period based on the grant date, at 25% per year and have a ten year life. Expected volatility is based on the Company's historical volatility, while estimated forfeitures are not considered significant. There is no expected dividend. The exercise price and Black Scholes assumptions are as follows:

 

         Black Scholes  Risk-free  Expected  Expected 
Grant Date  Number Granted  Exercise Price  Value  Interest Rate  Life  Volatility 
                    
August 12, 2016  11,675  US$4.84  US$2.77  0.86%  6.5 years   62.6%
August 12, 2016  9,084  CDN$6.28  CDN$3.61  0.86%  6.5 years   62.6%
August 15, 2016  60,000  CDN$6.19  CDN$3.40  0.86%  6.5 years   61.7%
August 29, 2016  18,682  US$3.89  US$2.37  0.86%  6.5 years   66.1%
September 7, 2016  7,161  CDN$5.39  CDN$3.29  0.82%  6.5 years   66.2%
September 12, 2016  37,681  CDN$5.18  CDN$3.07  0.82%  6.5 years   65.9%

 

Total compensation cost for these stock options is $365 which will be recognized over the four year vesting period. The total expense for stock options for the three month period ended September 30, 2016 is $554 ($253 in Q3 2015). The total expense for stock options for the nine month period ended September 30, 2016 is $1,609 ($1,498 in Q3 2015).

 

Restricted Share Unit (RSU) and Performance Share Unit (PSU) Plan

 

The PSUs have both performance conditions and market conditions as defined under IFRS 2, Share-Based Payments. At September 30, 2016, the performance conditions component of the PSUs have a fair value of $nil. The fair value of the market condition component of the PSUs was calculated using a Monte-Carlo simulation model which provides a valuation based on a number of future probabilities and scenarios based on the Company's share price performance against certain comparable indices.

 

A summary of the RSUs and PSUs granted and outstanding as at September 30, 2016 is as follows:

 

   RSUs   PSUs 
   Number of Units (in 000's)   Number of Units (in 000's) 
         
Balance - January 1, 2016   59    25 
Granted during the period   292    118 
Vested during the period   (36)   - 
Forfeited during the period   (52)   (19)
Balance - September 30, 2016   263    124 

 

The total expense for RSUs and PSUs for the three month period ended September 30, 2016 was $271 ($137 in Q3 2015). The total expense for the nine month period ended September 30, 2016 was $717 ($146 in 2015).