DEF 14A of Achieve Life Sciences, Inc.
Filed Apr 28, 2025 · FY20240000950170-25-059297
BOARD OF DIRECTORS
BOARD OF DIRECTORS
General
General Directors are elected at each annual stockholders meeting to hold office until the next annual meeting or until their successors are elected and have qualified. Currently, there are eight members of the Board of Directors and we are nominating seven members for re-election. The following table sets forth information with respect to the directors nominated for election at the annual stockholders meeting. The ages of such persons are shown as of April 15, 2025.
General
| Name | Age | Position | Director Since | | Stuart Duty | 60 | Director, Chairperson of the Audit Committee and Member of the Nominating and Governance Committee | 2023 | | Thomas B. King | 70 | Director, Interim Executive Chairman | 2023 | | Bridget Martell | 59 | Director, Chairperson of the Nominating and Governance Committee and Member of the Compensation Committee | 2021 | | Nancy R. Phelan | 56 | Director, and Member of the Audit Committee and the Compensation Committee | 2025 | | Thomas Sellig | 58 | Director, Chairperson of the Compensation Committee and Member of the Audit Committee | 2023 | | Kristen Slaoui | 54 | Director and Member of the Compensation Committee and Nominating and Governance Committee | 2025 | | Richard Stewart | 66 | Director, Chief Executive Officer | 2017 |
General
The Board of Directors held a total of eleven meetings during fiscal year 2024. During fiscal year 2024, each of our directors attended at least 75% of the aggregate of: (i) the total number of meetings of the Board of Directors held during the period he or she was a director; and (ii) the total number of meetings held by all committees on which the director served during the period he or she was a member. Although we do not have a formal policy regarding attendance by directors at annual meetings of stockholders, we encourage directors to attend and, historically, most have done so. All of our directors then in office were in attendance at the 2024 annual meeting. Pursuant to our Corporate Governance Guidelines, the Board of Directors is required to hold at least four regularly scheduled meetings each year. At least one of these meetings must include budgeting and long-term strategic planning. Each director is expected to attend no fewer than 75% of the total of all meetings of the Board of Directors and meetings of the committees on which he or she serves. Set forth below are the names of, and information concerning, our current directors. Stuart Duty was a Senior Managing Director at Guggenheim Securities, LLC, a global investment and advisory financial services firm, from June 2012 to March 2023. Previously, he served as Managing Director, Co-Head, Healthcare Investment Banking at Piper Jaffray Companies, a global investment firm, from 2007 to 2012, as the Chief Operating Officer of Oracle Partners, L.P., a private healthcare focused investment fund, from 2002 to 2007, as Managing Director, Co-Head, Healthcare Investment Banking at Piper Jaffray, Inc., an global investment bank, from 1992 to 2002, as Managing Director, Healthcare Investment Banking at Montgomery Securities, an investment bank, from 1993 to 1999 and as the Director of Business Development at Curative Technologies, Inc., a biotherapeutics company, from 1992 to 1993. Mr. Duty has served on the board of directors of Eyepoint Pharmaceuticals, Inc., a publicly traded pharmaceutical company, since October 2023 and on the board of Milestone Pharmaceuticals, Inc. since July 2024. Mr. Duty holds a B.A. in Biochemistry from Occidental College and an M.B.A from Harvard Business School. The determination was made that Mr. Duty should serve on our Board of Directors due to his extensive experience in the banking and finance industry. Thomas B. King has served as our Interim Executive Chairman since August 2024, and a member of the Board of Directors since March 2023. Effective upon the Annual Meeting, Mr. King will cease to serve as Interim Executive Chairman and will assume the position of an independent Chairman of the Board. Mr. King has over 30 years of executive leadership and board experience in the life sciences industry. Mr. King currently also serves on the board of directors of Kinaset Therapeutics, Inc. and Concentric Analgesics, Inc., both privately held biotechnology companies. Mr. King served on the board of directors of Satsuma Pharmaceuticals, Inc., a publicly traded biopharmaceutical company, from September 2017 to June 2023, when it was acquired by Shin Nippon Biomedical Laboratories, Ltd. Mr. King served as a member of the board of directors of VIVUS, Inc., a publicly traded pharmaceutical company, from May 2017 to December 2020, and served as interim Chief Executive Officer from December 2017 to April 2018 and interim President from April 2018 to May 2018. Previously, Mr. King served as President, Chief Executive Officer and a member of the board of directors of Alexza Pharmaceuticals, Inc., a publicly traded pharmaceutical company, from June 2003 until it was acquired by Grupo Ferrer in August 2016. From October 2015 to August 2016, Mr. King also served as Chief Financial Officer and Chief Accounting Officer of Alexza Pharmaceuticals, Inc. From September 2002 to April 2003 Mr. King served as President, Chief Executive Officer and a member of the board of directors of Cognetix, Inc., a biopharmaceutical development-stage company. From January 1994 to February 2001, Mr. King held various senior executive positions at Anesta Corporation, a publicly traded specialty pharmaceutical company, including President and Chief Operating Officer from January 1995 to January 1997 and President and Chief Executive Officer from January 1997 to October 2000. Mr. King received a B.A. in chemistry from McPherson College and an M.B.A. from the University of Kansas Graduate School of Business. The determination was made that Mr. King should serve on our Board of Directors due to his extensive leadership experience in the pharmaceutical and biopharmaceutical industry, including experience with small and large development stage pharmaceutical companies, and his experience on the boards of directors of both public and private companies. Bridget Martell, M.A., M.D., has been an Operating Partner at Two Bear Capital since 2024 and the Founder and Managing Partner of her consultancy practice, BAM Consultants, which she started in 2013. She previously served as President and Chief Executive Officer of the privately held biotechnology company Artizan Biosciences, Inc. from July 2021 until August of 2023. Prior to that, Dr. Martell was at Kura Oncology, Inc., a public, clinical-stage biopharmaceutical company, where she served in varied roles first as VP, Clinical Development, Acting Chief Medical Officer, and Senior Scientific Advisor from October 2017 until December 2021. She has served as the Acting Chief Medical Officer of a number of privately held early-stage biotechnology companies, including Nobias Therapeutics, Inc. from August 2020 to August 2021 and August 2023 to present, for Verseau Therapeutics, Inc. from October 2020 to September 2021, and most recently at Glycyx Therapeutics, Inc. starting in August 2023. Additionally, Dr. Martell served as Chief Medical Officer of RRD International, Inc., a privately held boutique Contract Research Organization from April 2018 to January 2020. From 2015 to 2017, Dr. Martell served as Senior Vice President, New Product Development and Chief Medical Officer at Juniper Pharmaceuticals, a publicly traded specialty pharmaceuticals company. Prior to that, Dr. Martell held leadership roles of increasing responsibility at Pfizer, Inc., a publicly traded biopharmaceutical company from 2005 to 2011. Dr. Martell currently serves as an independent director of Aligos Therapeutics, Inc. and Delcath Systems, Inc. each a publicly traded biotechnology company, and previously served as a director of POINT Biopharma Global, Inc, a cancer treatment biotechnology company, from June 2023 until its acquisition by Eili Lilly and Company, a pharmaceutical company, in December 2023 and Ayala Pharmaceuticals, Inc., acquired by Immunome, Inc. in February 2024. Dr. Martell holds a B.S. in microbiology from Cornell University, an M.A. in molecular immunology from Boston University and an M.D. from the Chicago Medical School. She completed her internship and residency in internal medicine and was an internal medicine chief resident and RWJ Faculty Clinical Scholar at Yale University. Dr. Martell is board certified in both internal and addiction medicine. Dr. Martell was a Teaching Attending and Clinical Associate Professor at Yale from 2005 to 2020 and has continued her engagement at Yale as an Entrepreneur in Residence at Yale Ventures since 2017. The determination was made that Dr. Martell should serve on the Board of Directors due to her diverse background of scientific, clinical and leadership experience in the clinical development, success of numerous marketed products across multiple therapeutic categories, leadership in her operational roles, and engagement with key industry and business stakeholders in the biopharmaceutical space.
General
Nancy R. Phelan has served as Senior Vice President & Head of Customer Engagement at Trinity Life Sciences, a life sciences consultancy. She has served as a member of the board of directors of Medexus Pharmaceuticals, a specialty pharmaceutical company, since September 2023, and a board member of FemmePharma Consumer Healthcare, a pharmaceutical company, since 2018. From May 2022 to May 2024, Ms. Phelan served as Senior Vice President of Indegene, a technology-led healthcare solutions provider. Prior to that, she held roles of increasing responsibility with Novartis AG, a multinational pharmaceutical company, including as Vice President, Business Transformation, Patient Engagement and Integrated Marketing Team Lead from April 2021 to May 2022 and Vice President, Patient and Specialty Services, Neuroscience from June 2002 to April 2021. She served as Chief Executive Officer and Secretary of Adhera Therapeutics, Inc., a clinical stage biopharmaceutical company, from April, 2019 to June 2020 and as a director from October 2018 to June 2020. Ms. Phelan received a B.A. with Honors from Franklin & Marshall College and completed coursework towards an M.B.A. from Villanova University. She also received certificates from Wharton Executive Education and the Harvard School of Public Health. The determination was made that Ms. Phelan should serve on our Board of Directors due to her executive leadership in biopharma and expertise in data-driven insights, digital innovation and digital-first marketing. Thomas Sellig has served as the Chief Executive Officer of Adare Pharmaceuticals, Inc., a global technology-driven Contract Development and Manufacturing Organization since January 2022. From July 2019 to October 2021, Mr. Sellig served as Chief Executive Officer of LabConnect, Inc., a clinical trial laboratory services organization. Prior to LabConnect, Inc., Mr. Sellig was Chief Commercial Officer at PSKW, LLC (doing business as ConnectiveRx), a biopharmaceutical services company, from September 2018 to July 2019. From November 2014 to August 2017, Mr. Sellig was Senior Vice President of Global Sales at Patheon N.V., and continued to serve as Senior Vice President of Global Sales at Themo Fisher Scientific Inc. a life, scient and clinical research company, following its acquisition of Patheon N.V. in August 2017. Previously, he served as the Global Vice President of Sales and Client Services from 2011 to 2014, and as the Vice President of Strategic Partnering/ Alliance Management from 2007 to 2011 at Covance, the drug development business of Laboratory Corporation of America Holdings, a contract research organization. Early in his career, Mr. Sellig had a variety of sales and marketing leadership roles at Procter & Gamble Company, a multinational consumer goods company, Wyeth, LLC (formerly American Home Products), a pharmaceutical company, and Ascent Pediatrics, Inc., a drug development company. Mr. Sellig received his B.A. in Economics from Vanderbilt University and an M.B.A. from New York University. The determination was made that Mr. Sellig should serve on our Board of Directors due to his global extensive experience in the life sciences and pharmaceutical services industries. Kristen Slaoui, Ph.D., has served as the Chief Corporate Development Officer at Galderma S.A., a global pharmaceutical company specializing in dermatological treatments and skin care products, since September 2020. From March 2019 to November 2022, she also served as a member of the board of directors of Villaris Therapeutics, Inc., a biopharmaceutical company focusing on developing novel antibody therapeutics for the treatment of vitiligo. Prior to this role, Dr. Slaoui spent 20 years at GlaxoSmithKline plc, a multinational pharmaceutical and biotechnology company where she held roles of increasing responsibility, including as Vice President & Head, Business Development – North America from March 2015 to March 2019, and Vice President & Head, of Business Development, Pharmaceuticals Commercial Portfolio from March 2019 to August 2020. Dr. Slaoui earned a B.S. in Biology and a B.A. in Classical Studies from Gettysburg College. She earned her Ph.D. in Physiology from The Johns Hopkins University Bloomberg School of Public Health and completed a post-doctoral fellowship in pharmacology at the University of Washington School of Medicine. The determination was made that Dr. Slaoui should serve on our Board of Directors due to her broad experience in corporate strategy and development. Richard Stewart has served as our Chief Executive officer since August 2024, and served as our Executive Chairman from September 2020 to August 2024. Previously, Mr. Stewart served as Chief Executive Officer from the consummation of the merger between OncoGenex Pharmaceuticals, Inc. and Achieve in August 2017 to September 2020. Previously, Mr. Stewart was Chairman and a director of Achieve, from its founding in May 2015 to August 2017. Mr. Stewart is also a founder and has served as a director of Ricanto Limited, a pharmaceutical asset optimization company, since 2009. Mr. Stewart has been Chairman and Chief Executive Officer of Renown Pharma Limited, a central nervous system company focused on Parkinson’s disease, since 2016. Prior to Achieve, Mr. Stewart was Chairman and Chief Executive Officer of Huxley Pharmaceuticals, Inc., a single purpose central nervous system company, during 2009, prior to Huxley Pharmaceuticals, Inc.’s acquisition by BioMarin Pharmaceutical Inc., a biotechnology company. Mr. Stewart was Chief Executive Officer of Brabant Pharma Limited, a single purpose central nervous system company, from 2013 to 2014 prior to its acquisition by Zogenix Inc., a biopharmaceutical company. He was a co-founder and Chief Executive Officer of Amarin Corporation plc, a central nervous system company focused on Parkinson’s disease and Huntington’s disease, from 2000 to 2007. Mr. Stewart was a co-founder and Chief Financial Officer, and later Chief Business Officer, of SkyePharma plc, a drug delivery company specializing in controlled release formulations, and held such position from 1995 until 1998. Mr. Stewart holds a B.S. in Business Administration from the University of Bath. The determination was made that Mr. Stewart should serve on our Board of Directors due to his prior service on boards of directors, and extensive experience and innovations in the field of biotechnology. In addition, Mr. Stewart’s accomplishments provide our Board of Directors with in-depth product and field knowledge. Each of the standing committees of our Board of Directors has diverse representation. In addition, on our Board of Directors there are two directors who hold medical doctorates, two directors who holds a doctorate in scientific fields and three directors who hold a master’s degree in business administration.
Director Independence
Director Independence Our Board of Directors has determined that Mr. Duty, Dr. Martell, Ms. Phelan, Mr. Sellig and Dr. Slaoui, are “independent” under the applicable Securities and Exchange Commission, or the SEC, rules and the criteria established by Nasdaq. Our Board of Directors also determined that Mr. King will once again become “independent” under the applicable SEC rules and criteria established by Nasdaq following the cessation of his service as Interim Executive Chairman effective upon the Annual Meeting. In addition, our Board of Directors previously determined that Dr. Vaughn Himes, who served as a director until January 2025, was “independent” under the applicable SEC rules and the criteria established by Nasdaq while serving on our Board of Directors.
Relationships Among Directors, Executive Officers and Director Nominees
Relationships Among Directors, Executive Officers and Director Nominees There are no family relationships among any of our directors, executive officers or director nominees.
Timing of equity grants
Timing of equity grants We do not time equity grants to take advantage of a depressed stock price or an anticipated increase in stock price and generally grant awards in January and ensure that awards cannot be timed to take advantage of material non-public information. New hire stock awards to employees, including executive officers, are generally granted at the next Board of Directors’ meeting following their start date, and initial awards to non-employee directors are granted on the date of the non-employee director’s initial appointment or election to our board of directors.
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS
Director Compensation Overview
Director Compensation Overview The charter of the Compensation Committee provides that the Compensation Committee is to recommend to the Board of Directors matters related to director compensation. The director compensation package for non-employee directors consists of annual cash compensation and stock options exercisable to purchase shares of our common stock. None of our employees who also serve as directors are entitled to receive compensation for service as a director. Therefore, Richard Stewart, Thomas King and Cindy Jacobs receive no compensation for their service as a director. Our director compensation policy for fiscal year 2024 is set forth below under the heading “Director Compensation Policy – 2024 Director Compensation.”
Director Compensation Policy
Director Compensation Policy
2024 Director Compensation
2024 Director Compensation As part of its evaluation of compensation levels for the 2024 fiscal year, the Compensation Committee recommended and the Board of Directors approved, the retention of Aon to review compensation levels of our independent directors and committee members. Aon was instructed to benchmark and make recommendations regarding the annual retainer amounts for directors and chairpersons of the Board of Directors and the various committees, as well as the amounts and terms of initial and annual long-term equity incentive awards for directors. On recommendation by Aon in 2024, the equity compensation and cash compensation for non-employee directors in connection with their service on the Board of Directors in 2024 is as follows: An annual retainer of $60,000 to be paid to the Lead Independent Director and $40,000 was paid to all other non-employee directors. These retainers were paid in quarterly installments, with the Lead Independent Director retainer ending August 2024 at the time Mr. King became an employee as Interim Executive Chairman. Each quarterly payment was conditioned on the director remaining a director on the date of actual payment, which was typically within 10 days following the completion of the respective calendar quarter. Retainers are pro-rated for the portion of the year during which a director was on the Board of Directors. These annual retainers have remained the same since 2017. Additional annual cash compensation for the chairpersons and members of each committee as set forth in the following table, are the same as the previous year, and are paid on the same schedule and terms as the non-employee director compensation described above:
2024 Director Compensation
| | Chairperson | Other Members | | Audit Committee | $15,000 | $7,500 | | Compensation Committee | $10,000 | $5,000 | | Nominating and Governance Committee | $7,500 | $3,500 |
2024 Director Compensation
• Any new director would have received a one-time initial grant of stock options to acquire 47,250 shares of our common stock upon becoming a director, which would vest monthly over three years from the date of grant, subject to continued service as a director. • In January 2024, each director then seated received a grant of stock options to acquire 31,500 shares of common stock, with 100% vesting on the earlier of the eighteen-month anniversary of the grant date or the date immediately prior to our 2025 annual meeting of stockholders, subject to the grantee’s continued service as a director. Director Compensation Paid for 2024 The following table summarizes all compensation earned or awarded to non-employee directors who served during 2024 as compensation for board service during the 2024 fiscal year. Mr. King became an employee in August 2024 upon his appointment as Interim Executive Chairman, and Dr. Himes resigned as a Director in January 2025.
2024 Director Compensation
| | Fees Earned or Paid in Cash | Option Awards | Total | | Name | ($) | ($)(1)(2) | ($) | | Stuart Duty | 58,500 | 104,378 | 162,878 | | Vaughn Himes | 58,886 | 104,378 | 163,264 | | Thomas B. King(3) | 50,126 | 104,378 | 154,504 | | Bridget Martell | 60,000 | 104,378 | 164,378 | | Thomas Sellig | 59,472 | 104,378 | 163,850 |
2024 Director Compensation
(1) The dollar amounts reflect the aggregate grant date fair value of equity awards granted within the fiscal year in accordance with the Financial Accounting Standards Board, or FASB, Accounting Standards Codification Topic 718 for stock-based compensation. These amounts do not correspond to the actual cash value that will be recognized by the directors when received. Assumptions used in the calculation of the amounts in this column are included in note 11 to our audited consolidated financial statements included in our 2024 Annual Report on Form 10-K. As of December 31, 2024, the following directors had the following numbers of options outstanding: • Stuart Duty: 78,750 options, of which 27,563 were vested as of December 31, 2024. • Vaughn Himes: 69,600 options, of which 37,550 were vested as of December 31, 2024. • Thomas B. King: 78,750 options, of which 27,563 were vested as of December 31, 2024. • Bridget Martell: 73,050 options, of which 41,550 were vested as of December 31, 2024. • Thomas Sellig: 78,750 options, of which 27,563 were vested as of December 31, 2024. (2) These options were granted on January 22, 2024 to each of Messrs. Duty, King, and Sellig and Drs. Martell and Himes with an aggregate of 157,500 options under our 2023 Non-Employee Director Equity Incentive Plan. These options will vest 100% on June 3, 2025. (3) Mr. King received compensation as a director until he became an employee in August 2024 upon his appointment as Interim Executive Chairman, at which point he stopped receiving compensation for his services as a director. The Board of Directors unanimously recommends that stockholders vote “FOR all” nominees FOR THE BOARD OF DIRECTORS.
2023 NON-EMPLOYEE DIRECTOR EQUITY INCENTIVE PLAN
2023 NON-EMPLOYEE DIRECTOR EQUITY INCENTIVE PLAN We are asking our stockholders to approve an amendment to our 2023 Non-Employee Director Equity Incentive Plan, or the Plan, to increase the authorized number of shares of our common stock reserved for issuance under the Plan by 650,000 shares for a total of 950,000 shares, or the Plan Amendment which we expect to be sufficient for two years. If the stockholders approve the Plan Amendment, we will grant the customary annual equity compensation paid to our non-employee directors on the date of each annual meeting of stockholders and any future one-time initial grants of equity awards. We believe the proposed Plan Amendment would enable us to continue to attract and retain qualified directors and to respond to relevant market changes in equity compensation practices. The Plan has a remaining pool of 9,750 shares and if our stockholders do not approve the Plan Amendment, we will not be able to issue new awards to our non-employee directors under the Plan and our ability to issue awards to directors will be severely restricted as there are insufficient shares available under our 2018 Equity Incentive Plan. Approval of the Plan Amendment is intended to enable us to continue granting equity awards to non-employee directors, which is a critical element of our non-employee director compensation program. Offering a equity compensation program is vital to attracting and retaining highly skilled board members in our highly competitive industry. We use equity awards to provide incentives to our eligible non-employee directors who provide significant services to the company. Accordingly, approving the Plan Amendment is in the best interest of our stockholders because equity awards help us to: • attract, motivate and retain experienced non-employee directors to our board; and • align director interests with those of our stockholders. We strongly believe that the approval of the Plan Amendment will enable us to achieve our goals in attracting and retaining qualified and experienced non-employee directors which we believe is critical to the execution of our strategy and continued success. Without equity incentives, we would be forced to consider cash replacement alternatives to provide a market-competitive total compensation package necessary to attract and retain key non-employee director talent who bring knowledge, experience and perspectives which are critical to our future successes. These cash replacement alternatives would, among other things, reduce the cash available for investment in the company’s growth and development. Equity-based awards also directly align a portion of the compensation of our non-employee directors with the economic interests of our stockholders. If the Plan Amendment is not approved by our stockholders, we believe our ability to continue to attract and retain qualified and experienced non-employee directors to advise, guide and oversee the operations of the Company would be significantly impacted negatively, and this could affect our ability to implement our business strategy and our long-term success.
Key Terms of the Plan
| Share Recycling: | In addition, shares subject to awards, and shares issued under the Plan under any award, will again be available for grant and issuance under the Plan to the extent such shares: (i) are subject to issuance upon exercise of a stock option award granted under the Plan but which cease to be subject to the stock option award for any reason other than exercise of the options; (ii) are subject to awards granted under the Plan that are forfeited or are repurchased by us at the original issue price; (iii) are subject to awards granted under the Plan that otherwise terminate without such shares being issued; (iv) are surrendered pursuant to an exchange program; or (v) are withheld to pay the exercise or purchase price of an award or to satisfy any tax withholding obligations in connection with an award. |
Key Terms of the Plan
| Award Types:(1) | Non-qualified stock options |
Key Terms of the Plan
| (2) Restricted stock units |
Key Terms of the Plan
| (3) Restricted stock awards |
Key Terms of the Plan
| (4) Stock bonus awards |
Key Terms of the Plan
| Award Terms: | Options and restricted stock units have a term no longer than ten years from the date the award was granted. |
Terms Applicable to Stock Options
Terms Applicable to Stock Options The exercise price of grants made under the Plan may not be less than the fair market value (the closing price of our common stock on the date of grant) of our common stock. The term of these awards may not be longer than ten years. The Board of Directors determines at the time of grant the other terms and conditions applicable to such award, including vesting and exercisability. The closing price of our common stock as reported on The Nasdaq Capital Market on April 22, 2025 was $2.48 per share.
Terms Applicable to Restricted Stock Units, Restricted Stock Awards, Stock Bonus Awards, and Performance Awards
Terms Applicable to Restricted Stock Units, Restricted Stock Awards, Stock Bonus Awards, and Performance Awards The Board of Directors determines the terms and conditions applicable to the granting of restricted stock units, restricted stock awards, stock bonus awards, and performance awards. The Board of Directors may make the grant, issuance, offer, retention and/or vesting of restricted stock units, stock bonus awards, restricted stock awards and performance awards contingent upon continued service with Achieve, the passage of time, or performance criteria and the level of achievement against such criteria as it deems appropriate, subject to the minimum vesting requirement described above.
Change of Control Transactions
Change of Control Transactions In the event of a Corporate Transaction (as defined below), unless otherwise determined by the Board of Directors, all outstanding awards will be subject to the agreement governing such Corporate Transaction. Such agreement need not treat all such awards in an identical manner, and it will provide for one or more of the following with respect to each award: the continuation of the award, the assumption of the award, the substitution of the award, the settlement of the award in cash, equivalents or securities of the successor entity (or its parent, if any). In the event the successor corporation refuses to either assume, convert, replace or substitute stock options, then the Board of Directors will notify the participant in writing or electronically that such award will be exercisable for a period of time determined by the Board of Directors (in its sole discretion) and that the stock option will terminate upon expiration of such period. In addition, in the event of a Corporate Transaction, the vesting of all awards granted to our non-employee directors will accelerate and any stock options shall become exercisable in full prior to the consummation of such Corporate Transaction. “Corporate Transaction” generally means the occurrence of any of the following events: (a) any “Person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of securities of the company representing more than fifty percent (50%) of the total voting power represented by the company’s then-outstanding voting securities, provided, however, that for purposes of this subclause (a) the acquisition of additional securities by any one Person who is considered to own more than fifty percent (50%) of the total voting power of the securities of the company will not be considered a Corporate Transaction; (b) the consummation of the sale or disposition by the company of all or substantially all of the company’s assets; (c) the consummation of a merger or consolidation of the company with any other corporation, other than a merger or consolidation which would result in the voting securities of the company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or its parent) at least fifty percent (50%) of the total voting power represented by the voting securities of the company or such surviving entity or its parent outstanding immediately after such merger or consolidation; (d) any other transaction which qualifies as a “corporate transaction” under Section 424(a) of the Internal Revenue Code of 1986, or the Code, wherein the stockholders of the company give up all of their equity interest in the company (except for the acquisition, sale or transfer of all or substantially all of the outstanding shares of capital stock of the company), or (e) a change in the effective control of the company that occurs on the date that a majority of members of the Board of Directors is replaced during any twelve (12) month period by members of the Board of Directors whose appointment or election is not endorsed by a majority of the members of the Board of Directors prior to the date of the appointment or election.
Non-Qualified Stock Options
Non-Qualified Stock Options A participant will realize no taxable income at the time a non-qualified stock option is granted under the Plan, but generally at the time such non-qualified stock option is exercised, the participant will realize ordinary income in an amount equal to the excess of the fair market value of the shares on the date of exercise over the stock option exercise price. Upon a disposition of such shares by the optionee, any difference between the sale price and the optionee’s exercise price, to the extent not recognized as taxable income as provided above, is treated as long-term or short-term capital gain or loss, depending on the holding period. We will generally be entitled to a deduction for federal income tax purposes at the same time and in the same amount as the participant is considered to have realized ordinary income in connection with the exercise of the non-qualified stock option.
Restricted Stock
Restricted Stock A participant receiving restricted stock may be taxed in one of two ways: the participant (i) pays tax when the restrictions lapse (i.e., with respect to the shares as they become vested) or (ii) makes an election under Section 83(b) of the Code to pay tax in the year the grant is made with respect to all of the shares subject to the grant. At either time the value of the award for tax purposes is the excess of the fair market value of the shares at that time over the amount (if any) paid for the shares. This value is taxed as ordinary income and, if granted to an employee, is subject to income tax withholding. We receive a tax deduction at the same time and for the same amount taxable to the participant. If a participant makes an election under Section 83(b) of the Code to be taxed at grant, then, when the restrictions lapse, there will be no further tax consequences attributable to the awarded stock until the recipient disposes of the stock, at which point any gain or loss will be short-term or long-term capital gain or loss, depending on the holding period of the stock prior to such disposition.
Restricted Stock Units
Restricted Stock Units In general, no taxable income is realized upon the grant of a restricted stock unit award. The participant will generally include in ordinary income the fair market value of the award of stock at the time shares of stock are delivered to the participant or at the time the restricted stock unit vests. We generally will be entitled to a tax deduction at the time and in the amount that the participant recognizes ordinary income. Upon the sale of any shares received under a restricted stock unit award, any gain or loss, based on the difference between the sale price and the fair market value will be taxed as capital gain or loss, depending on the holding period.
Interest of Certain Persons in Matters to Be Acted Upon; Awards under the Plan
Interest of Certain Persons in Matters to Be Acted Upon; Awards under the Plan Members of our Board of Directors and our director nominees have an interest in this Proposal 3 to approve the Plan Amendment, as each would be eligible to receive future awards under the Plan. Future awards under the Plan would be made at the discretion of the Board of Directors. Therefore, the total benefits and amounts that will be received or allocated under the Plan in the future are not determinable at this time. Currently, our non-employee directors are entitled to receive cash and equity compensation for their service as directors. Pursuant to our director compensation policy, any new non-employee director would receive a one-time initial grant of stock options to acquire 47,250 shares of our common stock upon becoming a director, which would vest monthly over three years from the date of grant. Each director that is re-elected by our stockholders at an annual meeting receives a grant of stock options to acquire 31,500 shares of common stock. Each annual stock option vests in full on the earlier of the first anniversary of the date of grant or the date immediately prior to our next annual meeting of stockholders. These awards are not required under the terms of our Plan.
Vote Required and Board of Directors Recommendation
| THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE AMENDMENT TO OUR 2023 NON-EMPLOYEE DIRECTOR EQUITY INCENTIVE PLAN. |
Summary Compensation Table
Summary Compensation Table The following table sets forth information regarding the compensation of our NEOs for each of the fiscal years ended December 31, 2024 and 2023. The components of the compensation reported in the Summary Compensation Table are described below.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($) | Total ($) | | Richard Stewart, | 2024 | 509,879(4) | 637,000 | 206,420 | 382,253 | — | 1,735,552 | | Chief Executive Officer | 2023 | 450,000(5) | 367,500 | 319,655 | 213,750 | — | 1,350,905 | | Cindy Jacobs, | 2024 | 484,666 | 382,200 | 123,852 | 290,800 | — | 1,281,518 | | President and Chief Medical Officer | 2023 | 473,000 | 294,000 | 255,724 | 179,740 | — | 1,202,464 | | Mark Oki, Chief Financial Officer | 2024 | 30,864(5) | 759,360 | 225,164 | — | — | 1,015,388 | | John Bencich, | 2024 | 473,102(6) | 796,250 | 258,025 | — | 991,600 | 2,518,977 | | Former Chief Executive Officer | 2023 | 530,000 | 490,000 | 426,207 | 251,750 | — | 1,697,957 |
Summary Compensation Table
(1) The dollar amounts in this column reflect the aggregate grant date fair value of performance-based restricted stock units granted during the fiscal year in accordance with FASB Accounting Standards Codification Topic 718 for stock-based compensation, based upon the probable outcome of the performance conditions as of the grant date. These amounts do not correspond to the actual cash value that will be recognized by each of the NEOs when received. (2) The dollar amounts in this column reflect the aggregate grant date fair value of stock option agreements granted during the fiscal year in accordance with FASB Accounting Standards Codification Topic 718 for stock-based compensation. These amounts do not correspond to the actual cash value that will be recognized by each of the NEOs when received. For a discussion of the assumptions and methodologies used to value the awards reported in this column, see note 11 to our audited consolidated financial statements, which are included in our 2024 Annual Report on Form 10-K. (3) The dollar amounts in this column reflect the aggregate non-equity incentive plan compensation earned by each NEO in 2024 and paid in early 2025. For more information, see “—2024 Bonuses” below. (4) Mr. Stewart’s salary was increased to $450,000 as of July 1, 2023 and increased to $615,000 as of August 21, 2024 in connection with his appointment as Chief Executive Officer. (5) Mr. Oki became an employee effective December 5, 2024 with an annual salary of $450,000. (6) On August 20, 2024, the Board determined that John Bencich will no longer serve as the Company's Chief Executive Officer, effective as of August 21, 2024. In connection with Mr. Bencich’s separation, we entered into a Separation Agreement with Mr. Bencich, pursuant to which he received, in exchange for releasing us from all claims, (i) a lump-sum cash severance payment equivalent to 18 months of his base salary of approximately $855,000, (ii) premium payments for continued healthcare coverage for 18 months, grossed up for applicable taxes, (iii) in lieu of notice of termination, a cash payment equal to 30 days of his base salary of approximately $47,500, (iv) accelerated vesting of the unvested portion of each time-based option grant awarded to Mr. Bencich that is equal to the number of shares that would have vested over 18 months from August 21, 2024 and (v) ability to retain his outstanding performance-based restricted stock units until the earlier of their expiration by their existing terms or the achievement of the milestones. Mr. Bencich continued to serve as an advisor to the Company until December 31, 2024, during which time his existing equity awards continued to vest and he received compensation for his services of $114,750.
Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End The following table provides information regarding the outstanding equity awards held by the NEOs as of December 31, 2024.
Outstanding Equity Awards at Fiscal Year-End
| | OPTION AWARDS | | | | STOCK AWARDS | | | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) | Market Value of Unearned Shares, Units, or Other Rights that Have Not Vested ($) | Number of Shares or Units or Other Rights that Have Not Vested(#) | Market Value of Shares or Units or Other Rights that Have Not Vested ($) | | Richard Stewart, | 2,600 | — | 67.40 | 07/26/28(1) | — | — | — | — | | Chief Executive | 5,050 | — | 51.20 | 09/20/28(2) | — | — | — | — | | Officer | 3,750 | — | 28.40 | 01/29/29(3) | — | — | — | — | | | 1,250 | — | 28.40 | 01/29/29(4) | — | — | — | — | | | 22,500 | — | 11.20 | 01/28/30(5) | — | — | — | — | | | 15,000 | — | 10.36 | 11/16/30(6) | — | — | — | — | | | 48,958 | 1,042 | 13.09 | 01/26/31(7) | — | — | — | — | | | 43,750 | 1,250 | 8.26 | 01/03/32(8) | — | — | — | — | | | 47,917 | 27,083 | 4.90 | 01/25/33(9) | — | — | — | — | | | — | 60,000 | 4.55 | 01/22/34(10) | — | — | — | — | | | — | — | — | — | 75,000(11) | 264,000 | — | — | | | — | — | — | — | 140,000(12) | 492,800 | — | — | | Cindy Jacobs, | 17 | — | 4,092.00 | 05/19/25(13) | — | — | — | — | | President and | 1,370 | — | 578.00 | 08/01/27(14) | — | — | — | — | | Chief Medical | 1,000 | — | 67.40 | 07/26/28(1) | — | — | — | — | | Officer | 1,850 | — | 51.20 | 09/20/28(2) | — | — | — | — | | | 1,500 | — | 28.40 | 01/29/29(3) | — | — | — | — | | | 500 | — | 28.40 | 01/29/29(4) | — | — | — | — | | | 10,000 | — | 11.20 | 01/28/30(5) | — | — | — | — | | | 12,000 | — | 10.36 | 11/16/30(6) | — | — | — | — | | | 29,375 | 625 | 13.09 | 01/26/31(7) | — | — | — | — | | | 31,597 | 903 | 8.26 | 01/03/32(8) | — | — | — | — | | | 38,333 | 21,667 | 4.90 | 01/25/33(9) | — | — | — | — | | | — | 36,000 | 4.55 | 01/22/34(10) | — | — | — | — | | | — | — | — | — | 60,000(11) | 211,200 | — | — | | | — | — | — | — | 84,000(12) | 295,680 | — | — | | Mark Oki | — | 72,000 | 4.52 | 12/06/34(15) | — | — | — | — | | Chief Financial | — | — | — | — | 168,000(16) | 591,360 | — | — | | Officer | | | | | | | | | | John Bencich, | 11 | — | 4,092.00 | 03/31/25(13) | — | — | — | — | | Former Chief | 1,370 | — | 578.00 | 03/31/25(14) | — | — | — | — | | Executive Officer | 1,250 | — | 67.40 | 03/31/25(1) | — | — | — | — | | | 2,500 | — | 51.20 | 03/31/25(2) | — | — | — | — | | | 1,500 | — | 28.40 | 03/31/25(3) | — | — | — | — | | | 500 | — | 28.40 | 03/31/25(4) | — | — | — | — | | | 10,000 | — | 11.20 | 03/31/25(5) | — | — | — | — | | | 20,000 | — | 10.36 | 03/31/25(6) | — | — | — | — | | | 60,000 | — | 13.09 | 03/31/25(7) | — | — | — | — | | | 50,000 | — | 8.26 | 03/31/25(8) | — | — | — | — | | | 100,000 | — | 4.90 | 03/31/25(9) | — | — | — | — | | | 50,000 | 25,000 | 4.55 | 03/31/25(17) | — | — | — | — | | | — | — | — | — | 100,000(11)(18) | 352,000 | — | — | | | — | — | — | — | 175,000(12)(18) | 616,000 | — | — |
Outstanding Equity Awards at Fiscal Year-End
(1) These stock options were granted under the 2017 Equity Incentive Plan and were fully vested on July 26, 2022. (2) These stock options were granted under the 2018 Equity Incentive Plan and were fully vested on September 20, 2022. (3) These stock options were granted under the 2018 Equity Incentive Plan and were fully vested on January 29, 2023. (4) These stock options were granted under the 2018 Equity Incentive Plan and vested on June 12, 2021. (5) These stock options were granted under the 2018 Equity Incentive Plan and were fully vested on January 28, 2024. (6) These stock options were granted under the 2018 Equity Incentive Plan and were fully vested on June 30, 2023. These stock options were granted under the 2018 Equity Incentive Plan and vested as to 25% on January 26, 2022 and then vest monthly over a 36-month period. These stock options were granted under the 2018 Equity Incentive Plan and vested as to one-third on January 3, 2023 and then vest monthly over a 24-month period. These stock options were granted under the 2018 Equity Incentive Plan and vested as to one-third on January 25, 2024 and then vest monthly over a 24-month period. (10) These stock options were granted under the 2018 Equity Incentive Plan and vested as to one-third on January 22, 2025 and then vest monthly over a 24-month period. (11) These PSUs were granted under the 2018 Equity Incentive Plan and vest as to 50% upon the filing of a NDA for cytisinicline with the FDA, by a certain time, and 50% upon FDA acceptance of the NDA within 60 days of submission; or 100% upon either marketing approval of cytisinicline by the FDA or an acquisition of us occurring by a certain time. (12) These PSUs were granted under the 2018 Equity Incentive Plan and vest as to 100% upon the acceptance of a NDA for cytisinicline by the FDA in a Day-74 Letter; or 100% upon either marketing approval of cytisinicline by FDA or acquisition of us occurring by a certain time. (13) These stock options were granted under the 2010 Performance Incentive Plan and were fully vested on January 1, 2019. (14) These stock options were granted under the 2017 Equity Incentive Plan and were fully vested on August 15, 2021. (15) These stock options were granted under the 2024 Equity Inducement Plan and vest as to one-third on December 5, 2025 and then vest monthly over a 24-month period. (16) These PSUs were granted under the 2024 Equity Inducement Plan and vest as to 100% upon the acceptance of a NDA for cytisinicline by the FDA in a Day-74 Letter; or 100% upon either marketing approval of cytisinicline by FDA or acquisition of us occurring by a certain time. (17) These stock options were granted under the 2018 Equity Incentive Plan, and pursuant to the Separation Agreement, the vesting of unvested shares was accelerated such that the number of shares that would have vested if Mr. Bencich had continued employment for the 18 months following August 21, 2024. Additionally, during his continued service as an advisor, the shares subject to his existing stock options continued to vest until December 31, 2024. (18) Pursuant to the Separation Agreement with Mr. Bencich he retains these outstanding performance-based restricted stock units until the earlier of their expiration by their existing terms or the achievement of the milestones.
Pay versus Performance
Pay versus Performance As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(v) of Regulation S-K, we are providing the following disclosure regarding executive compensation for our principal executive officers, or PEOs and our other NEOs, or Non-PEO NEOs and Company performance for the fiscal years listed below. The Compensation Committee did not consider the pay versus performance disclosure below in making its pay decisions for any of the years shown. The Compensation Committee undertakes to maintain an overall compensation structure designed to attract, retain and motivate management and employees by providing appropriate incentives based on individual contribution and performance and avoiding undue emphasis on short-term market value. The amounts shown for “Compensation Actually Paid” have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually earned, realized, or received by the Company’s NEOs; these amounts reflect the Summary Compensation Table total with certain adjustments as described in the following table and footnotes.
Pay versus Performance
| Year | Summary Compensation Table Total for PEO(1) $ | Summary Compensation Table Total for PEO(2) $ | Compensation Actually Paid to PEO (1)(4) $ | Compensation Actually Paid to PEO (2)(4) $ | Average Summary Compensation Table Total for Non-PEO NEOs(3) $ | Average Compensation Actually Paid to Non-PEO NEOs $ | Value of Initial Fixed $100 Investment Based on Total Shareholder Return(5) $` | Net Income/(Loss) $ | | 2024 | 1,735,552 | 2,518,977 | 1,486,755 | 2,199,924 | 1,148,588 | 1,618,927 | 43.46 | (39,827,000) | | 2023 | — | 1,697,957 | — | 1,635,000 | 1,276,685 | 1,236,370 | 50.86 | (29,815,000) | | 2022 | — | 1,504,795 | — | 1,069,416 | 1,192,669 | 861,361 | 30.25 | (42,350,000) |
Pay versus Performance
(1) Richard Stewart is our Chief Executive Officer and has been our PEO since August 2024; he was a non-PEO NEO in 2022, 2023 and 2024 (until August). (2) John Bencich was our PEO in 2022, 2023 and 2024 (until August); he was our Chief Executive Officer from September 2020 to August 2024. (3) Cindy Jacobs was a non-PEO NEO in 2022, 2023 and 2024. Mark Oki has been a non-PEO NEO since December 2024. Compensation Actually Paid reflects the exclusions and inclusions of certain amounts for the PEO and the Non-PEO NEOs as set forth below. Equity values are calculated in accordance with FASB ASC Topic 718. Amounts in the Exclusion of Stock Awards and Option Awards columns are the totals from the Stock Awards and Option Awards columns set forth in the Summary Compensation Table. Represents the cumulative total return on $100 invested in the Company’s common stock as of the last day of public trading of the Company’s common stock in fiscal year 2021 through the last day of public trading of the Company’s common stock in the applicable fiscal year for which the cumulative total return is reported.
Pay versus Performance
| Year | Summary Compensation Table Total for PEO ($)(1) | Summary Compensation Table Total for PEO ($)(2) | Exclusion of Stock Awards and Option Awards for PEO ($)(1) | Exclusion of Stock Awards and Option Awards for PEO ($)(2) | Inclusion of Equity Values for PEO ($)(1) | Inclusion of Equity Values for PEO ($)(2) | Compensation Actually Paid to PEO ($)(1) | Compensation Actually Paid to PEO ($)(2) | | 2024 | 1,735,552 | 2,518,977 | (843,420) | (1,054,275) | 594,623 | 735,222 | 1,486,755 | 2,199,924 | | 2023 | — | 1,697,957 | — | (916,207) | — | 853,250 | — | 1,635,000 | | 2022 | — | 1,504,795 | — | (771,670) | — | 336,291 | — | 1,069,416 |
Pay versus Performance
(1) Richard Stewart is our Chief Executive Officer and has been our PEO since August 2024; he was a non-PEO NEO in 2022, 2023 and 2024 (until August). (2) John Bencich was our PEO in 2022, 2023 and 2024 (until August); he was our Chief Executive Officer from September 2020 to August 2024.
Pay versus Performance
| Year | Average Summary Compensation Table Total for Non-PEO NEOs ($) | Average Exclusion of Stock Awards and Option Awards for Non-PEO NEOs ($) | Average Inclusion of Equity Values for Non-PEO NEOs ($) | Average Compensation Actually Paid to Non-PEO NEOs ($) | | 2024 | 1,148,588 | (745,288) | 1,215,627 | 1,618,927 | | 2023 | 1,276,685 | (618,440) | 578125 | 1,236,370 | | 2022 | 1,192,669 | (598,044) | 266,736 | 861,361 |
Pay versus Performance
The amounts in the Inclusion of Equity Values in the tables above are derived from the amounts set forth in the following tables for each of Richard Stewart and John Bencich, respectively:
Pay versus Performance
| Year | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for PEO ($) | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for PEO ($) | Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for PEO ($) | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for PEO ($) | Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for PEO ($) | Total - Inclusion of Equity Values for PEO ($) | | 2024 | 675,387 | (66,747) | — | (14,017) | — | 594,623 |
Pay versus Performance
| Year | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for PEO ($) | Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for PEO ($) | Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year for PEO ($) | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for PEO ($) | Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for PEO ($) | Total - Inclusion of Equity Values for PEO ($) | | 2024 | 616,000 | — | 152,156 | (32,934) | — | 735,222 | | 2023 | 740,911 | (8,318) | — | 120,657 | — | 853,250 | | 2022 | 413,664 | (89,088) | — | 11,716 | — | 336,291 |
Pay versus Performance
| Year | Average Year- End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year for Non- PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Last Day of Year of Unvested Equity Awards for Non-PEO NEOs ($) | Average Vesting- Date Fair Value of Equity Awards Granted During Year that Vested During Year for Non-PEO NEOs ($) | Average Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year for Non-PEO NEOs ($) | Average Fair Value at Last Day of Prior Year of Equity Awards Forfeited During Year for Non- PEO NEOs ($) | Total - Average Inclusion of Equity Values for Non-PEO NEOs ($) | | 2024 | 1,278,736 | (53,100) | — | (10,009) | — | 1,215,627 | | 2023 | 500,115 | (3,409) | — | 81,419 | — | 578,125 | | 2022 | 320,590 | (57,034) | — | 3,180 | — | 266,736 |
Pay Versus Performance Table
Pay Versus Performance Table The illustrations below provide a graphical description of compensation actually paid (as calculated in accordance with the SEC rules) and the following measures: (i) our cumulative total shareholder return, or TSR; and (ii) our net income/(loss). Compensation Actually Paid (Cap) and TSR As shown in the following graph, the compensation actually paid or CAP, to each of Mr. Stewart and Mr. Bencich and the average amount of compensation actually paid to our Non – PEO NEOs during the periods presented are negatively correlated. We do utilize several performance measures to align executive compensation with our performance, but those tend not to be financial performance measures, such as TSR. For example, part of the compensation our named executive officers are eligible to receive consists of annual performance-based cash bonuses which are designed to provide appropriate incentives to our executives to achieve defined annual corporate goals and to reward our executives for individual achievement towards these goals. Additionally, we view stock options, which are an integral part of our executive compensation program, as related to company performance although not directly tied to TSR, because they provide value only if the market price of our common stock increases, and if the executive officer continues in our employment over the vesting period. These stock option awards strongly align our executive officers’ interests with those of our stockholders by providing a continuing financial incentive to maximize long-term value for our stockholders and by encouraging our executive officers to continue in our employment for the long-term. Compensation Actually Paid and Net Income/(Loss) Because we are not a commercial-stage company, we did not have any revenue during the periods presented and our company has not historically looked to net income (loss) as a performance measure for our executive compensation program.
Potential Payments Upon Termination/Change of Control
Potential Payments Upon Termination/Change of Control