DEF 14A of Phathom Pharmaceuticals, Inc., Apr 12, 2024

DEF 14A of Phathom Pharmaceuticals, Inc.

Filed Apr 12, 2024 · FY20230000950170-24-044015

Open on EDGAR

  1. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS Our board of directors is divided into three classes, with one class of our directors standing for election each year, generally for a three-year term. Directors for each class are elected at the annual meeting of stockholders held in the year in which the term for their class expires and hold office until the third annual meeting following election and until such director’s successor is elected and qualified, or until such director’s earlier death, resignation or removal. The composition of our board of directors is as follows: Class I consists of Terrie Curran and Mark Stenhouse; Class II consists of Michael F. Cola, Frank Karbe and Asit Parikh, M.D., Ph.D.; and Class III consists of Heidi Kunz, David Socks and James Topper, M.D., Ph.D. At this meeting, three nominees for director are to be elected as Class II directors for a three-year term expiring at our 2027 annual meeting of stockholders and until their successors are duly elected and qualified. The nominees, who were recommended for nomination by the nominating and corporate governance committee of our board of directors, are Michael F. Cola, Frank Karbe and Asit Parikh, M.D., Ph.D. The Class III directors have one year remaining on their terms of office and the Class I directors have two years remaining on their terms of office. If no contrary indication is made, proxies in the accompanying form are to be voted for Mr. Cola, Mr. Karbe and Dr. Parikh, or if any of Mr. Cola, Mr. Karbe or Dr. Parikh is not a candidate or is unable to serve as a director at the time of the election (which is not currently expected), for any nominee who is designated by our board of directors to fill the vacancy. Each of Mr. Cola, Mr. Karbe and Dr. Parikh is currently a member of our board of directors. All of our directors bring to the board of directors significant leadership experience derived from their professional experience and service as executives or board members of other corporations and/or private equity and venture capital firms. The process undertaken by the nominating and corporate governance committee in recommending qualified director candidates is described below under “Director Nomination Process.” Certain individual qualifications and skills of our directors that contribute to the board of directors’ effectiveness as a whole are described in the following paragraphs.

  2. Information Regarding Directors

    Information Regarding Directors The information set forth below as to the directors and nominees for director has been furnished to us by the directors and nominees for director:

  3. Nominees for Election to the Board of Directors

    Nominees for Election to the Board of Directors

  4. 2027 Annual Meeting of Stockholders (Class II)

    Michael F. Cola has served as a member of our board of directors since September 2019, and as Chairman of our Board since February 2022. Mr. Cola served as Chief Executive Officer of Avalo Therapeutics (formerly, Cerecor Inc.) from its acquisition of Aevi Genomic Medicine, Inc. in February 2020 until February 2022. Prior to the acquisition, Mr. Cola had served as Chief Executive Officer and President of Aevi Genomic Medicine, Inc. since September 2013. Mr. Cola served as President of Shire plc’s Specialty Pharmaceuticals business from 2007 until April 2012. Mr. Cola joined Shire in July 2005 as Executive Vice President for Global Therapeutic Business Units and Portfolio Management prior to being named President of the Specialty Pharmaceuticals business. Prior to joining Shire, Mr. Cola spent more than five years at Safeguard Scientifics, where he served as President of the Life Sciences Group. As part of his role with Safeguard Scientifics, Mr. Cola served as Chairman and CEO of Clarient, a cancer diagnostics company, and chairman of Laureate Pharma, a full-service contract manufacturing organization serving research-based biologics companies. Prior to joining Safeguard Scientifics, Mr. Cola held senior positions of increasing responsibility in product development and commercialization at AstraMerck, and later with AstraZeneca. Mr. Cola currently serves on the board of directors of Sage Therapeutics, Inc. Mr. Cola received his Bachelor of Arts degree in biology and physics from Ursinus College and his Master of Science degree in biomedical science from Drexel University. Mr. Cola’s executive experience in the biopharmaceutical industry, knowledge of our business and service as a director of other biopharmaceutical companies contributed to our board of directors’ conclusion that he should serve as a director of our company. Frank Karbe joined our board of directors in April 2022. Mr. Karbe was appointed Chief Executive Officer and a director of Better Therapeutics, Inc. from June 2022 to March 2024. Previously, Mr. Karbe served as the Principal Financial and Accounting Officer of Myovant Sciences, Inc. from September 2016 to August 2021. Mr. Karbe was appointed as Myovant’s Chief Financial Officer in April 2017 and was subsequently appointed as President and Chief Financial Officer in February 2020. From September 2014 to July 2016, Mr. Karbe served as President of The Color Run, a global mass participation events platform. From January 2004 to June 2014, Mr. Karbe was the Executive Vice President and Chief Financial Officer of Exelixis, Inc., a biotechnology company. Prior to joining Exelixis in 2004, Mr. Karbe worked as an investment banker for Goldman Sachs & Co., where he served most recently as Vice President in the healthcare group advising clients on corporate finance and mergers and acquisitions. Prior to joining Goldman Sachs in 1997, Mr. Karbe held various positions in the finance department of The Royal Dutch/Shell Group in Europe. Mr. Karbe served as a director of Aduro Biotech, Inc. from April 2019 to October 2020 when Aduro Biotech was merged with Chinook Therapeutics, Inc. Mr. Karbe also served as a director of Arbutus Biopharma Corporation from 2010 to 2018. Mr. Karbe received his Diplom Kaufmann from the WHU-Otto Beisheim Graduate School of Management, Koblenz, Germany. Mr. Karbe’s extensive experience as a chief financial and accounting officer and service as a director of other biopharmaceutical companies contributed to our board of directors’ conclusion that he should serve as a director of our company. Asit Parikh, M.D., Ph.D. joined our board of directors in December 2019. Dr. Parikh has served as the Chief Executive Officer of MOMA Therapeutics since April 2021. From October 2014 through March 2021, Dr. Parikh served as the Senior Vice President and head of the Gastrointestinal Therapeutic Area Unit at Takeda Pharmaceuticals. Prior to that, Dr. Parikh served in various positions at Takeda since 2006. Dr. Parikh received a bachelor’s degree in Biochemistry and Molecular Biology from Northwestern University and an M.D. and Ph.D. in Biochemistry and Molecular Biology from Vanderbilt University School of Medicine. He completed his internal medicine residency at the University of Pennsylvania and completed specialty training in gastroenterology at the Massachusetts General Hospital. He also completed postdoctoral work in cancer biology at Massachusetts Institute of Technology. Dr. Parikh’s extensive knowledge of our business and prior oversight of the Takeda team bringing vonoprazan to the Japanese market in seven indications contributed to our board of directors’ conclusion that he should serve as a director of our company.

  5. Members of the Board of Directors Continuing in Office

    Members of the Board of Directors Continuing in Office

  6. 2025 Annual Meeting of Stockholders (Class III)

    Heidi Kunz has served as a member of our board of directors since September 2019. Ms. Kunz served as Executive Vice President and Chief Financial Officer of Blue Shield of California from September 2003 until her retirement in December 2012. Prior to joining Blue Shield of California, she served as Executive Vice President and Chief Financial Officer of Gap, Inc. from 1999 to January 2003. From 1995 to 1999, Ms. Kunz served as the Chief Financial Officer of ITT Industries, Inc. She has also held senior financial management positions at General Motors Corporation, including Vice President and Treasurer during her 16-year tenure from 1979 to 1995. Ms. Kunz currently serves as a director of Agilent Technologies Inc., a global scientific instrument manufacturing and clinical diagnostics company, and previously served as a director of Icosavax, Inc., a public biotechnology company, until its acquisition by AstraZeneca in February 2024, and as a director of Avanos Medical, Inc., a public medical device company and Financial Engines, Inc., an investment advisement company. Ms. Kunz received an MBA in Finance and Accounting from Columbia Business School and a bachelor’s degree in Russian Language from Georgetown University. Ms. Kunz’s extensive experience as a chief financial officer and service as a director of other public companies contributed to our board of directors’ conclusion that she should serve as a director of our company. David Socks is our co-founder and served as an executive from January 2018 to July 2020, as a strategic advisor since July 2020, and as a member of our board of directors since January 2018. Mr. Socks previously served as our Chief Executive Officer from January 2018 until December 2019 and as our interim Chief Financial Officer from December 2019 until his appointment as a strategic advisor in July 2020. From February 2021 to January 2024, he served as Chief Business Officer of HilleVax, Inc., where he also served as Chief Financial Officer from February 2021 until January 2023. Mr. Socks also served as a director of Eleusis, Ltd. from July 2021 to October 2022. From August 2014 to September 2021, Mr. Socks was a Venture Partner at Frazier. In this capacity, he co-founded Arcutis, Inc., Nexcida Therapeutics, Inc., Outpost Medicine, LLC, Passage Bio, Inc., Recida Therapeutics, Inc., and Scout Bio, Inc. Mr. Socks served as Chief Executive Officer of Nexcida Therapeutics, Outpost Medicine, and Scout Bio. Prior to joining Frazier, Mr. Socks co-founded Incline Therapeutics, Inc. in 2010 and served as its President and Chief Operating Officer from 2010 until its sale to The Medicines Company in 2013. He also cofounded Cadence Pharmaceuticals, Inc. in 2004 and served as its Vice President of Business Development and then as its Senior Vice President, Corporate Development and Strategy from 2004 until 2010. From 2000 to 2004, Mr. Socks was a Venture Partner at Windamere Venture Partners, a venture capital firm founding and investing in early-stage life science companies Previously, he worked at Neurocrine Biosciences, EFO Holdings, L.P., an investment firm, and Kaiser Associates, Inc., a strategic management consulting firm. Mr. Socks holds a B.S. from Georgetown University and an MBA from Stanford University. Mr. Socks’ knowledge of our business and significant experience as a biopharmaceutical executive and board member, contributed to our board of directors’ conclusion that he should serve as a director of our company. James Topper, M.D., Ph.D. has served as a member of our board of directors since September 2022 and he previously served as a member of our board of directors from January 2018 to May 2021. Since 2005, Dr. Topper has also served as the Managing General Partner at Frazier Life Sciences, or Frazier, a venture capital firm, with whom he served as a Partner from 2003 to 2005. Prior to that, from 2002 to 2003, Dr. Topper served as head of the Cardiovascular Research and Development Division at Millennium Pharmaceuticals, Inc., a biopharmaceutical company. Dr. Topper currently serves as a member of the board of directors of the following publicly traded companies: Alpine lmmune Sciences, Inc., a biotechnology company, since June 2016, and NewAmsterdam Pharma B.V., a biotechnology company, since 2022. Dr. Topper received a B.S. in Biology from the University of Michigan and an M.D. and a Ph.D. in Biophysics from the Stanford University School of Medicine. He did his postgraduate training in internal medicine and cardiovascular disease at the Brigham and Women’s Hospital in Boston and was board certified in both disciplines. Dr. Topper’s extensive service as a director of other biopharmaceutical companies contributed to our board of directors’ conclusion that he should serve as a director of our company.

  7. Members of the Board of Directors Continuing in Office

    Members of the Board of Directors Continuing in Office

  8. Director Compensation

    Director Compensation Our non-employee director compensation program provides for annual retainer fees and/or long-term equity awards for our non-employee directors. Each non-employee director receives an annual retainer of $50,000. Non-employee directors serving as the chairs of the audit, compensation and nominating and corporate governance committees receive additional annual retainers of $20,000, $15,000 and $10,000, respectively. Non-employee directors serving as members of the audit, compensation and nominating and corporate governance committees receive additional annual retainers of $10,000, $7,500 and $5,000, respectively. Additionally, the non-executive chairman of the board receives an additional annual retainer of $40,000. Non-employee directors also receive initial grants of 18,000 restricted stock units, or RSUs, and options to purchase 30,000 shares of our common stock upon election to the board of directors. One-third of the RSUs and options subject to the initial grants will vest on the first anniversary of the grant date and the remainder of which will vest in quarterly installments over the following 24 months thereafter. The non-employee directors will also receive annual grants of 9,000 RSUs and options to purchase 15,000 shares of our common stock, vesting on the first to occur of (1) the first anniversary of the grant date or (2) the next occurring annual meeting of our stockholders, in each case, subject to the non-employee director continuing in service on our board of directors through such vesting date. Compensation under our non-employee director compensation program is subject to the annual limits on non-employee director compensation set forth in our 2019 Incentive Award Plan, or 2019 Plan. Our board of directors or its authorized committee may modify the non-employee director compensation program from time to time in the exercise of its business judgment, taking into account such factors, circumstances and considerations as it shall deem relevant from time to time, subject to the annual limit on non-employee director compensation set forth in the 2019 Plan. As provided in the 2019 Plan, our board of directors or its authorized committee may make exceptions to this limit for individual non-employee directors in extraordinary circumstances, as the board of directors or its authorized committee may determine in its discretion, provided that the non-employee director receiving such additional compensation may not participate in the decision to award such compensation or in other compensation decisions involving non-employee directors. We have reimbursed and will continue to reimburse all of our non-employee directors for their travel, lodging and other reasonable expenses incurred in attending meetings of our board of directors and committees of our board of directors. The following table summarizes cash and stock compensation received by our non-employee directors during the year ended December 31, 2023. Ms. Curran is not included in the following table as her compensation is included in the Summary Compensation Table in the “Executive Compensation and Other Information” section below.

  9. Director Compensation

    | Name | Fees Earned or Paid in Cash ($) | Option Awards ($)(1) | Stock Awards ($)(2) | All Other Compensation ($) | Total ($) | | Michael F. Cola | 119,167 | 106,782 | 105,390 | — | 331,339 | | Frank Karbe | 71,667 | 106,782 | 105,390 | — | 283,839 | | Heidi Kunz | 75,000 | 106,782 | 105,390 | — | 287,172 | | Asit Parikh, M.D., Ph.D. | 67,500 | 106,782 | 105,390 | — | 279,672 | | David Socks | 54,167 | 106,782 | 105,390 | — | 266,339 | | Mark Stenhouse | 71,667 | 106,782 | 105,390 | — | 283,839 | | James Topper, M.D., Ph.D.(3) | 54,969 | 106,782 | 105,390 | — | 267,141 |

  10. Director Compensation

    (1) The amounts are valued based on the aggregate grant date fair value of the stock options granted in 2023 calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC 718. See Note 8 to our financial statements in our Annual Report on Form 10‑K for the year ended December 31, 2023, filed with the SEC on March 7, 2024, or the 2023 Form 10-K, for a discussion of the relevant assumptions used in determining the grant date fair value pursuant to ASC 718. These amounts do not reflect whether the recipient has actually realized or will realize a financial benefit from the awards (such as by exercising stock options). Whether, and to what extent, a non-employee director realizes a financial benefit from the awards will depend on our actual operating performance, stock price fluctuations and the non-employee director’s continued service on our board. (2) The amounts shown in this column represent the grant-date fair value of RSUs granted in 2023 calculated in accordance with ASC 718. See Note 8 to our financial statements included in our 2023 Form 10-K for a discussion of the relevant assumptions used in determining the grant date fair value pursuant to ASC 718. These amounts do not reflect whether the recipient has actually realized or will realize a financial benefit from the awards (such as by exercising stock options). Whether, and to what extent, a non-employee director realizes a financial benefit from the awards will depend on our actual operating performance, stock price fluctuations and the non-employee director's continued service on our board. Each non-employee director received an annual grant of 9,000 RSUs on May 25, 2023, with a grant date fair value of $11.71 per share, which was the closing price of our stock on the date of grant. Dr. Topper is one of the partners at Frazier Healthcare Ventures. The cash retainers payable to Dr. Topper were paid to Frazier Healthcare Ventures. The aggregate number of shares underlying stock options and restricted stock units at December 31, 2023 for the individuals who served as non-employee directors during 2023 was as follows:

  11. Director Compensation

    | Name | Number of Securities Underlying Options Outstanding at December 31, 2023 | Number of Securities Underlying Restricted Stock Units Outstanding at December 31, 2023 | | Michael F. Cola | 95,860 | 9,000 | | Frank Karbe | 45,000 | 9,000 | | Heidi Kunz | 95,860 | 9,000 | | Asit Parikh, M.D., Ph.D. | 35,000 | 9,000 | | David Socks | 42,500 | 9,000 | | Mark Stenhouse | 62,500 | 9,000 | | James Topper, M.D., Ph.D. | 45,000 | 9,000 |

  12. Summary Compensation Table

    Summary Compensation Table The following table presents summary information regarding the total compensation that was awarded to, earned by, or paid to our named executive officers for services rendered during the years ended December 31, 2023 and December 31, 2022.

  13. Summary Compensation Table

    | Name and Principal Position (as of December 31, 2023) | Year | Salary ($) | Bonus ($) | Stock Awards ($)(1) | Option Awards ($)(1) | Non-equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | | Terrie Curran | 2023 | 687,500 | — | 1,357,957 | 830,538 | 518,152 | 16,875 | 3,411,022 | | President and Chief Executive Officer | 2022 | 650,000 | — | — | 3,932,145 | 442,358 | 15,375 | 5,039,878 | | Azmi Nabulsi, M.D., M.P.H. | 2023 | 552,000 | — | 763,691 | 383,325 | 320,022 | 16,875 | 2,035,913 | | Chief Operating Officer | 2022 | 525,000 | — | — | 1,947,240 | 274,838 | 15,375 | 2,762,453 | | Molly Henderson(4) | 2023 | 500,000 | — | 814,925 | 281,105 | 260,888 | 16,875 | 1,873,793 | | Chief Financial and Business Officer | 2022 | 356,615 | 75,000(5) | — | 1,977,270 | 226,152 | 13,500 | 2,648,537 |

  14. Summary Compensation Table

    (1) The amounts are valued based on the aggregate grant date fair value of the stock and option awards granted in the applicable year in accordance with ASC 718. See Note 8 to our financial statements in our 2023 Form 10‑K for a discussion of the relevant assumptions used in determining the grant date fair value pursuant to ASC 718. With respect to the RSUs and the performance-based stock units, or PSUs, granted to our named executive officers in 2023 and 2022, the grant date fair value was determined by multiplying the closing price per share of our common stock on the date of grant by the number of RSUs or PSUs awarded. Amounts for 2023 include the incremental fair value of replacement RSUs granted to Ms. Curran and Dr. Nabulsi in 2023 in connection with the Option Exchange (as defined below) compared to the surrender date fair value of surrendered options in the amount of $355,957 and $200,066, respectively. For additional information on the RSUs granted in connection with the Option Exchange, see “Narrative Disclosure to Summary Compensation Table—Option Exchange” below. These amounts do not reflect whether the recipient has actually realized or will realize a financial benefit from the awards (such as by exercising stock options). Whether, and to what extent, a named executive officer realizes a financial benefit from the awards will depend on our actual operating performance, stock price fluctuations and the named executive officer's continued employment or service. (2) This column reflects the annual bonuses paid to our named executive officers for 2023 and 2022. (3) Includes the value of matching contributions to the 401(k) Plan, which were made in the form of fully vested shares of our common stock. (4) Salary column for Ms. Henderson reflects a prorated portion of her 2022 annual salary of $480,000 based on her start date of April 5, 2022. (5) Represents a sign-on bonus paid to Ms. Henderson in connection with her commencement of employment.

  15. Outstanding Equity Awards at Fiscal Year-End

    Outstanding Equity Awards at Fiscal Year-End The following table sets forth certain information regarding equity awards granted to our named executive officers that remained outstanding as of December 31, 2023.

  16. Outstanding Equity Awards at Fiscal Year-End

    | | | Option Awards (1) | | | | Stock Awards (2) | | | | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | | Terrie Curran | 8/28/2019 | 855,687 | — | 6.95 | 8/27/2029 | — | — | | | 1/19/2022 | 98,827 | 107,423 | 15.21 | 1/18/2032 | 27,500 | 251,075 | | | 1/19/2023 | — | 162,500 | 8.35 | 1/18/2033 | 97,500 | 890,175 | | | 7/14/2023 | — | — | — | — | 200,000(4) | 1,826,000 | | Azmi Nabulsi, M.D., M.P.H. | 1/19/2022 | 46,718 | 50,782 | 15.21 | 1/18/2032 | 13,000 | 118,690 | | | 1/19/2023 | — | 75,000 | 8.35 | 1/18/2033 | 45,000 | 410,850 | | | 7/14/2023 | — | — | — | — | 110,000(4) | 1,004,300 | | Molly Henderson | 4/5/2022 | 41,666 | 58,334 | 15.08 | 4/4/2032 | 13,334 | 121,739 | | | 1/19/2023 | — | 55,000 | 8.35 | 1/18/2033 | 33,000 | 301,290 | | | 7/14/2023 | — | — | — | — | 25,000 | 228,250 |

  17. Outstanding Equity Awards at Fiscal Year-End

    (1) The stock options vest over a period of four years from the date of grant, with 25% vesting on the first anniversary of the grant date and the remainder vesting in 36 equal monthly installments thereafter, subject to the executive's continuous service through each vesting date. The stock options have a term of ten years from the date of grant. The stock options will be subject to accelerated vesting pursuant to the employment letters with our named executive officers and the equity plans pursuant to which such stock options were granted, as described elsewhere in this “Executive Compensation and Other Information” and “Other Elements of Compensation--Termination and Change in Control Benefits” sections. (2) Represents RSUs that vest in three equal installments on each of the first three anniversaries of the grant date, subject to executive’s continued employment or service on the applicable vesting date. Each RSU represents a contingent right to receive one share of our common stock upon vesting of the underlying RSU. The RSUs will be subject to accelerated vesting pursuant to the employment letters with our named executive officers and the equity plans pursuant to which such RSUs were granted, as described elsewhere in this “Executive Compensation and Other Information” and “Other Elements of Compensation--Termination and Change in Control Benefits” sections. (3) The market value was computed using $9.13 per share, which is the closing price per share of our common stock on December 29, 2023, the last trading day of 2023. (4) Represents RSUs granted upon completion of our Option Exchange on July 14, 2023. For additional information on the RSUs granted in connection with the Option Exchange, see “Narrative Disclosure to Summary Compensation Table—Option Exchange” above.

  18. Option Exercises and Stock Vested in 2023

    Option Exercises and Stock Vested in 2023 The following table sets forth the number of shares acquired upon the vesting of RSUs, PSUs and restricted stock awards for each of our named executive officers during the year ended December 31, 2023. None of our named executive officers exercised any stock options during the year ended December 31, 2023.

  19. Option Exercises and Stock Vested in 2023

    | | Stock Awards | | | | Number of shares acquired on vesting | Value realized on vesting ($)(1) | | Terrie Curran | 66,750 | 635,548 | | Azmi Nabulsi, M.D., M.P.H. | 108,700 | 526,960 | | Molly Henderson | 44,666 | 425,113 |

  20. Option Exercises and Stock Vested in 2023

    Stock awards value realized is determined by multiplying (i) the closing market price of our common stock on the vesting date by (ii) the number of shares of common stock that vested on that date.