DEF 14A of Journey Medical Corp, Apr 29, 2024

DEF 14A of Journey Medical Corp

Filed Apr 29, 2024 · FY20230001104659-24-054010

Open on EDGAR

  1. Our Board of Directors

    Our Board of Directors Our Bylaws provide that our Board shall consist of between one to nine directors, and such number of directors within this range may be determined from time to time by resolution of our Board or our stockholders. Since the resignation of one of the members of our Board in December 2023, we have had five directors and one vacancy. On April 26, 2024, the Board approved a decrease in the number of directors from six to five. The following individuals are being nominated to serve on our Board (See “Proposal 1 — Election of Directors; Nominees”):

  2. Our Board of Directors

    | Name | Age | Position | Director Since | | Lindsay A. Rosenwald, M.D. | 69 | Executive Chairman of the Board of Directors | 2014 | | Claude Maraoui | 58 | President, Chief Executive Officer & Director | 2016 | | Neil Herskowitz | 67 | Director | 2021 | | Justin Smith | 50 | Director | 2021 | | Miranda Toledano | 47 | Director | 2021 |

  3. Our Board of Directors

    The Board does not have a formal policy regarding the separation of the roles of Chief Executive Officer and Chairman, as the Board believes that it is in the best interests of the Company to make that determination based on the direction of the Company and the current membership of the Board. The Board has determined that at present having Dr. Rosenwald serve as Executive Chairman and Mr. Maraoui as our Chief Executive Officer is in the best interest of the Company’s stockholders. Journey does not have a standing risk management committee, but instead administers this oversight function directly through our Board as a whole, as well as through various standing committees of our Board that address risks inherent in their respective areas of oversight. In particular, our Board is responsible for monitoring and assessing strategic risk exposure. Our Audit Committee coordinates the Board’s oversight of our internal control over financial reporting, disclosure controls and procedures, related-party transactions and code of conduct and corporate governance guidelines. Our Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking as well as succession planning as it relates to our Chief Executive Officer. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, our entire Board is regularly informed through committee reports about such risks. The table above and the following biographies set forth the names of our directors and director nominees, their ages, the year in which they first became directors, their positions with us, their principal occupations and employers for at least the past five years, any other directorships held by them during the past five years in companies that are subject to the reporting requirements of the Securities Exchange Act of 1934 (the “Exchange Act”), or any company registered as an investment company under the Investment Company Act of 1940, as well as additional information, all of which we believe sets forth each director nominee’s qualifications to serve on the Board. There is no family relationship between or among any of our executive officers or directors. Except as described herein, there are no arrangements or understandings between any of our executive officers or directors and any other person pursuant to which any of them are elected as an officer or director.

  4. Director Independence and Controlled Company Exemption

    Director Independence and Controlled Company Exemption Journey adheres to the corporate governance standards adopted by The Nasdaq Stock Market (“Nasdaq”). Nasdaq rules require our Board to make an affirmative determination as to the independence of each director. Consistent with these rules, our Board undertook its annual review of director independence in April 2024. During the review, our Board considered relationships and transactions during 2023 and 2022 between each director or any member of his or her immediate family, on the one hand, and the Company and our subsidiaries and affiliates, on the other hand. The purpose of this review was to determine whether any such relationships or transactions were inconsistent with a determination that the director is independent. Based on this review, our Board determined that Neil Herskowitz, Justin Smith, and Miranda Toledano are independent under the criteria established by Nasdaq and our Board. Fortress Biotech, Inc. (“Fortress”) beneficially owns common stock representing more than 50% of the voting power of our common stock eligible to vote in the election of directors. As a result, we qualify as a “controlled company” and avail ourselves of certain “controlled company” exemptions under the Nasdaq corporate governance rules. As a controlled company, we are not required to have a majority of “independent directors” on our Board as defined under the Nasdaq rules, or have a compensation, nominating or governance committee composed entirely of independent directors. Lindsay A. Rosenwald, M.D. — Executive Chairman of the Board of Directors Dr. Rosenwald has served as a member of our Board since inception and the Executive Chairman of our Board since October 2014. Dr. Rosenwald has been a member of the board of directors of our parent company Fortress Biotech, Inc. (Nasdaq: FBIO) since October 2009 and has served as Fortress’s Chairman, President and Chief Executive Officer since December 2013. Dr. Rosenwald also currently serves as a member of the board of directors of Avenue Therapeutics, Inc. (Nasdaq: ATXI), Checkpoint Therapeutics, Inc. (Nasdaq: CKPT) and Mustang Bio, Inc. (Nasdaq: MBIO). From 1991 to 2008, Dr. Rosenwald served as the Chairman of Paramount BioCapital, Inc. Over the last 30 years, Dr. Rosenwald has acted as a biotechnology entrepreneur and has been involved in the founding and recapitalization of numerous public and private biotechnology and life sciences companies. These companies include: • Cougar Biotechnology, Inc., a start-up founded by Dr. Rosenwald in 2006 that focused on the development of cancer therapeutics, including abiraterone acetate, an orally available targeted inhibitor of the steroidal enzyme known as 17-alpha hydroxylase/C17, 20 lyases for the treatment of prostate cancer. Johnson and Johnson acquired the company in 2009 for nearly $1 billion in cash (or $43 per share). The company was sold after a single phase 2 study. Abiraterone acetate has since been approved as Zytiga® and achieved billions of dollars in global sales; • Keryx Biopharmaceuticals, Inc. (Nasdaq: KERX), founded in 1994 by Dr. Rosenwald. Keryx is focused on the development of treatments for renal disease, including Ferric Citrate, an oral, ferric iron-based compound with capacity to bind to phosphate in the gastrointestinal tract and form non-absorbable complexes. In September 2014, the FDA approved Ferric Citrate (to be marketed as “Zerenex”). Keryx successfully merged into Akebia Therapeutics (Nasdaq: AKBA) in December 2018; and • TG Therapeutics, Inc. (Nasdaq: TGTX), co-founded by Dr. Rosenwald and Michael Weiss in 2012 and focused on the development of cancer therapeutics, and in particular treatments for hematological malignancies. Its therapies include Ublituximab, a chimeric glycoengineered monoclonal antibody that targets a unique epitope on the CD20 antigen found on the surface of B-lymphocytes developed to aid in the depletion of circulating B-cells; and Umbralisib, an orally available phosphoinositide-3-kinase delta inhibitor with nanomolar potency. As of January 2021, the company had a market cap in excess of $7.2 billion. Dr. Rosenwald received his B.S. in finance from Pennsylvania State University and his M.D. from Temple University School of Medicine. Dr. Rosenwald has been selected to serve on the Company’s board due to his extensive biotechnology, pharmaceutical and finance expertise, as well as his medical background and in-depth understanding of the Company’s business. Claude Maraoui — President & Chief Executive Officer, Director Claude Maraoui is our founder, President and Chief Executive Officer and is also a member of the Board of Directors. Mr. Maraoui has over 30 years of experience in launching and commercializing successful dermatology products. Prior to founding Journey, Mr. Maraoui spent 21 years at Medicis Pharmaceutical Corporation (NYSE: MRX) in a variety of sales and marketing leadership roles in both the aesthetics and therapeutic dermatology divisions, ultimately serving as Vice President of Dermatology Sales, where he was responsible for over $1.2 billion in revenue. While at Medicis, he was part of the leadership team that successfully commercialized leading therapeutic products such as Solodyn, Dynacin, Loprox and Ziana. He was also a divisional head of marketing and sales for aesthetics products such as Dysport, Restylane, and Perlane. In 2012, Mr. Maraoui played a key role during the $2.6 billion acquisition of Medicis by Valeant Pharmaceuticals International Inc. (now Bausch Health), and served on the transition team that led to the post-merger formation of the largest dermatology company in the U.S. As our founder, President and Chief Executive Officer, Mr. Maraoui has guided the organization to a leading position in dermatology with a proven track record of commercial excellence in a highly competitive niche market. We believe that a significant amount of our success can be attributed to Mr. Maraoui’s disciplined business development approach, identifying differentiated portfolio assets and continuously working on transformative pipeline, merger, and acquisition opportunities while focusing on the aggressive organic growth strategy of our existing product portfolio. Mr. Maraoui has been selected to serve on our Board based on his pharmaceutical and dermatology industry experience, as well as his extensive management experience. Mr. Maraoui received his B.S. in Marketing from Rutgers University and is a member of the American Academy of Dermatology. Neil Herskowitz — Director Since 1998, Mr. Herskowitz has served as the managing member of the ReGen Group of companies, located in New York, which includes ReGen Capital Investments LLC and Riverside Claims Investments LLC. Mr. Herskowitz has also served as President of Riverside Claims Investment’s affiliate, Riverside Claims LLC, since June 2004. He also serves as Director and Chair of the Audit Committee of Checkpoint Therapeutics, Inc., and is a Director of Avenue Therapeutics, Inc. and Mustang Bio, Inc. In addition, Mr. Herskowitz serves as Chairman of the Board of Directors of Starting Point Services for Children, a not-for-profit corporation. Mr. Herskowitz received a B.B.A. in Finance from Bernard M. Baruch College in 1978. Mr. Herskowitz has been selected to serve on our Board based on his financial industry experience and his in-depth understanding of our business. Justin Smith — Director

  5. Director Independence and Controlled Company Exemption

    Justin Smith has served as a member of our Board since July 2021. Mr. Smith is the Co-Founder and General Manager of Skinbetter Science, a fast growing physician-dispensed skincare brand in the United States. Mr. Smith previously served as President of Skinbetter Science where he led all commercial activities through its acquisition by L’Oréal in 2022. Prior to Co-Founding Skinbetter Science in 2013, Mr. Smith held the position of Senior Vice President, General Manager of the US Rx Dermatology Division of Bausch Health Companies (NYSE: BHC), where he led the sales and marketing efforts for the largest division of the company through July 2013. Mr. Smith joined BHC through the acquisition of Medicis Pharmaceutical Corp. (NYSE: MRX) in 2012. While at Medicis, from 1998 to 2012, he held numerous progressive positions in sales and marketing leadership, serving as Senior Vice President, Marketing, and a member of the Chairman’s Committee at the time of the acquisition of the company. Mr. Smith earned his B.B.A. in marketing from James Madison University. Mr. Smith has been selected to serve on our Board based on his dermatology industry experience, his in-depth understanding of our business, and his extensive management experience. Miranda Toledano — Director Miranda Toledano has served as a member of our Board since June 2021. Ms. Toledano has over 20 years of biotech-related principal investment, Wall Street/capital market, and strategic experience. Since July 2022, Ms. Toledano has served as Chief Executive Officer of Entera Bio Ltd. (Nasdaq: ENTX). From August 2021 to March 2024, she served as a director of Nexgel, Inc. (Nasdaq: NXGL). From 2021 to 2023, Ms. Toledano served as a Director for Compass Therapeutics (Nasdaq: CMPX), which acquired TRIGR Therapeutics, an oncology focused, clinical stage bispecific antibody company, in May 2021. Before the acquisition, Ms. Toledano served as Chief Operating Officer, Chief Financial Officer and Director of TRIGR Therapeutics from its inception in 2018. Previously, Ms. Toledano served on the executive management team of Sorrento Therapeutics (Nasdaq: SRNE) as EVP Corporate Development, where she helped drive the Company’s hematology/oncology (IO mAbs, ADC), cellular therapy (CD-38 CAR-T, oncolytic virus), and pain franchises. From 2012 to 2016, Ms. Toledano served as Head of Healthcare Investment Banking at MLV & Co. (acquired by B. Riley FBR & Co.), where she completed biotech equity financings, including IPOs and follow-on offerings, totaling over $4 billion in aggregate value. Prior to joining MLV, from 2004 until 2010, Ms. Toledano served as a VP in the investment group of Royalty Pharma (Nasdaq: RPRX), where she focused on oncology/hematology and auto-immune monoclonal antibody investments. Ms. Toledano has also served as Director, Chair of the Audit Committee, and Member of the Compensation Committee of Entera Bio Ltd. Since 2018 and as Director and Member of the Executive Committee of the Board of Directors of Lipomedix Pharmaceuticals Ltd. From 1998 to 2003, Ms. Toledano led the Life Sciences Corporate Finance group at Ernst & Young (Israel). Ms. Toledano holds a BA in Economics from Tufts University and an MBA in Finance and Entrepreneurship from the NYU Stern School of Business. Ms. Toledano has been selected to serve on our Board based on her financial and healthcare industry experience, as well as her in-depth understanding of our business. During 2023, our Board held six meetings and took action by unanimous written consent seven times. Each regularly scheduled meeting of the Board includes an executive session at which the independent directors, Dr. Rosenwald, the Chief Executive Officer and the Chief Financial Officer discuss certain matters. Each incumbent director who served his or her full term and is standing for election attended at least 75% of the meetings of the Board of Directors and the meetings of those committees on which such incumbent director served during the fiscal year ended December 31, 2023. The permanent committees established by our Board are the Audit Committee and the Compensation Committee, descriptions of which are set forth in more detail below. Our directors are expected to attend each Annual Meeting of Stockholders, and it is our expectation that all of the directors standing for election will attend this year’s Annual Meeting. Each of our directors attended the annual meeting of stockholders in 2023 by teleconference.

  6. Summary Compensation Table

    Summary Compensation Table The following table sets forth information concerning compensation paid by us to our named executive officers (“NEOs”), which includes all of our executive officers, for their services rendered to us in all capacities during the years ended December 31, 2023 and 2022:

  7. Summary Compensation Table

    | Name and principal position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Nonequity Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | | Claude Maraoui Chief Executive Officer | 2023 | $550,000 | $— | $— | $371,250 | $13,200 | $934,450 | | | 2022 | $473,900 | $— | $1,053,000 | $334,200 | $12,200 | $1,873,300 | | Joseph Benesch Chief Financial Officer | 2023 | $300,000 | $— | $— | $103,200 | $5,835 | $409,035 | | Ernie De Paolantonio Former Chief Financial Officer | 2023 | $31,693(1) | $— | $— | $— | $1,269 | $32,962 | | | 2022 | $306,800 | $— | $1,139,700 | $— | $12,200 | $1,458,700 |

  8. Summary Compensation Table

    (1) Mr. De Paolantonio resigned effective January 27, 2023. The value of his annual salary reflects his base salary for the period of 2023 prior to his resignation. (2) Represents non-equity incentive plan compensation earned upon the achievement of specified financial, operational, and commercial goals. (3) All Other compensation reflects the employer 401(k) contribution during the year for each NEO.

  9. Outstanding Equity Awards as of December 31, 2023

    Outstanding Equity Awards as of December 31, 2023 The following table sets forth certain information about outstanding equity awards granted to our named executive officers that remain outstanding as of December 31, 2023.

  10. Outstanding Equity Awards as of December 31, 2023

    | | | Options Awards | | | | Stock or RSU Awards | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($)(1) | | Claude Maraoui | 10/19/2015 | 1,250,000 | — | $0.065 | 10/19/2025 | — | $— | | | 9/24/2020 | — | — | — | — | 59,300(2) | $341,568 | | | 12/10/2021 | — | — | — | — | 88,506(3) | $509,795 | | | 7/21/2022 | — | — | — | — | 225,000(4) | $1,296,000 | | Joseph Benesch | 7/1/2022 | — | — | — | — | 6,667(5) | $38,402 | | | 7/21/2022 | | | | | 37,500(4) | $216,000 |

  11. Outstanding Equity Awards as of December 31, 2023

    The market value of stock awards is based on the closing price of our common stock on December 29, 2023 (the last business day of our completed fiscal year) which was $5.76 per share. (2) These restricted stock units vest on November 15, 2024. (3) These restricted stock units vest on November 12, 2024. (4) One-third of these restricted stock units vest on each of July 21, 2024, July 21, 2025 and July 21, 2026. (5) One-half of these restricted stock units vest on each of July 1, 2024 and July 1, 2025.

  12. DIRECTOR COMPENSATION

    DIRECTOR COMPENSATION

  13. Director Compensation Program

    Director Compensation Program In July 2021, we adopted a Non-Employee Directors Compensation Plan for our non-employee directors. Pursuant to that Plan, our non-employee directors receive the following compensation for service on the Board: Cash Compensation: • $50,000 annual retainer, paid quarterly in advance; and • $10,000 additional annual retainer for the Audit Committee Chair, paid quarterly in advance. Equity Compensation: • Initial Equity Award: Upon election or appointment to the Board, 30,000 of any of the following equity securities (as selected in advance of the grant date at the discretion of the non-employee director): (i) restricted stock; (ii) restricted stock units; or (iii) stock options, which equity securities shall vest and become non-forfeitable in equal annual installments on the first three anniversaries of the grant date, subject to the non-employee director’s continued service on the Board on each such date; and • Annual Equity Award: On the day following each annual meeting of stockholders, restricted stock, restricted stock units or stock options (as selected in advance of the grant date at the discretion of the non-employee director) with a grant date value of $50,000, which award shall vest and become non-forfeitable in full on the first anniversary of the grant date, subject to the non-employee director’s continued service on the Board on such date. In addition, each non-employee director receives reimbursement for reasonable travel expenses incurred in attending meetings of our Board and meetings of committees of our Board.

  14. Director Compensation Table

    Director Compensation Table The following table sets forth the cash and other compensation we paid to the non-employee members of our Board for all services in all capacities during 2023.

  15. Director Compensation Table

    | Name | Fees Earned in Cash ($)(1) | Stock Awards ($)(2) | Total ($) | | Lindsay A. Rosenwald, M.D.(3) | $50,000 | $— | $50,000 | | Neil Herskowitz(3) | $60,000 | $50,000 | $110,000 | | Jeffrey Paley, M.D(4) | $50,000 | $50,000 | $100,000 | | Justin Smith(3) | $50,000 | $50,000 | $100,000 | | Miranda Toledano(3) | $50,000 | $50,000 | $100,000 |

  16. Director Compensation Table

    (1) Represents cash retainer for serving on our Board and committees of the Board, as applicable. (2) The amounts reflected in the “Stock Awards” column represent the grant date fair value of the awards as computed in accordance with the FASB ASC “Compensation - Stock Compensation” (Topic 718), and described in Note 16 of the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023. For 2023, each non-employee director elected to receive his or her annual equity award in the form of restricted stock units. (3) As of December 31, 2023, these directors had the following number of unvested restricted stock units outstanding: Mr. Herskowitz: 37,472; Mr. Smith: 37,472 and Ms. Toledano: 37,472. On December 7, 2023, Dr. Jeffrey Paley submitted his resignation from his position as a member of the Board of Directors of Journey Medical Corporation, effective immediately. Dr. Paley forfeited 37,472 unvested restricted stock units as a result of his resignation.

  17. PROPOSAL NO. 1 ELECTION OF DIRECTORS; NOMINEES

    PROPOSAL NO. 1 ELECTION OF DIRECTORS; NOMINEES Our Bylaws provide that the Board shall consist of not more than nine nor less than one member, as determined from time to time by resolution of the Board. Since the resignation of one of the members of our Board in December 2023, our Board has had five members and one vacancy. On April 26, 2024 the Board approved a decrease in the number of directors from six to five. The nominated directors are: Lindsay A. Rosenwald, M.D., Claude Maraoui, Neil Herskowitz, Justin Smith, and Miranda Toledano. For information about each of the nominees and our Board generally, please see “Corporate Governance — Our Board of Directors” beginning on page 6. If elected, the nominees will hold office until the next annual meeting of stockholders and until a respective successor is elected and has been qualified, or until such director resigns or is removed from office. Each nominee listed above has consented to being named in this proxy statement and has agreed to serve if elected. Management expects that each of the nominees will be available for election, but if any of them is unable to serve at the time the election occurs, your proxy will vote your shares for the election of another nominee to be designated by a majority of the independent directors serving on our Board. If a choice is specified on the proxy card, in an Internet vote or in a mobile device vote by the stockholder, the shares will be voted as specified. If no specification is made, the shares will be voted “FOR” all of the nominees. The affirmative vote of the holders of a plurality of the shares of our common stock and our Class A common stock, voting together as a single class, present in person or represented by proxy and entitled to vote on the election of directors at the annual meeting at which a quorum is present is required for the election of the nominees. The Board unanimously recommends a vote “FOR” the election of all of the nominees for director. The affirmative vote of a plurality of the shares present and entitled to vote, virtually or represented by proxy, is required for approval.