DEF 14A of Eton Pharmaceuticals, Inc., Apr 25, 2025

DEF 14A of Eton Pharmaceuticals, Inc.

Filed Apr 25, 2025 · FY20240001437749-25-013137

Open on EDGAR

  1. PROPOSAL ONE - ELECTION OF DIRECTORS

    PROPOSAL ONE - ELECTION OF DIRECTORS

  2. Director Nominees

    Director Nominees Based on the recommendation of the nominating and corporate governance committee, our board of directors has nominated Paul V. Maier for reelection as director to serve for a three-year term ending at the 2028 annual meeting or until their successors are elected and qualified or until their earlier death, resignation or removal. The biographies of each of the nominees and continuing directors below contain information regarding each such person’s service as a director, business experience, public director positions held currently or at any time during the last five years and the experiences, qualifications, attributes or skills that caused the nominating and corporate governance committee to determine that the person should serve as a director of the Company. In addition to the information presented below regarding each such person’s specific experience, qualifications, attributes and skills that led the board of directors and its nominating and corporate governance committee to the conclusion that he or she should serve as a director, we also believe that each of our directors has a reputation for integrity, honesty and adherence to high ethical standards. Each of our directors has demonstrated business acumen and an ability to exercise sound judgment, as well as a commitment of service to our Company and our board of directors. Finally, we value our directors’ experience in relevant areas of business management and on other boards of directors and board committees. Our corporate governance guidelines also dictate that a majority of the board of directors be comprised of independent directors whom the board of directors has determined have no material relationship with the Company and who are otherwise “independent” directors under the published listing requirements of The NASDAQ Stock Market LLC (“NASDAQ”). The Company has determined that, with the exception of Sean E. Brynjelsen, our president and chief executive officer, all of our other directors qualify as “independent” directors.

  3. Nominee for Election as Class I Director for a Three-Year Term

    Nominee for Election as Class I Director for a Three-Year Term Paul V. Maier has served as a member of our board of directors since September 2017. Mr. Maier has over 25 years of experience as a senior executive in biotechnology and pharmaceutical companies and more than 15 years of experience as a director of multiple life science public and private company boards. In addition to his board positions, Mr. Maier also currently serves as an advisor to the life science industry. In June 2014, Mr. Maier retired after serving since November 2009 as chief financial officer of Sequenom, Inc., a publicly held company serving the discovery, clinical research, and molecular diagnostics market. From February 2007 until November 2009, Mr. Maier served as an independent financial consultant. Previously, Mr. Maier was senior vice president and chief financial officer of Ligand Pharmaceuticals, Inc., a commercial stage biopharmaceutical company, a position he held from 1992 to 2007. From 1990 to 1992, Mr. Maier served as vice president, finance of DFW West, a division of DFS Group, LP a private multinational retailer. From 1984 to 1990, Mr. Maier was employed by ICN Pharmaceuticals, a pharmaceutical and biotechnology research products company, where he held various executive positions in finance and general management in ICN as well as SPI Pharmaceuticals, a publicly held subsidiary. Mr. Maier currently serves on the board of directors of International Stem Cell Corporation. In the past, he served on the board of Biological Dynamics, Small Pharma Inc., Ambrx Biopharma Inc., and was chairman of the board of Lackey Clinic, a non-profit providing healthcare to those without insurance. Mr. Maier received an MBA from Harvard Business School and a BS from Pennsylvania State University. Mr. Maier is currently an Executive Partner at The College of William and Mary’s Mason School of Business. We believe that Mr. Maier’s years of public company executive experience, including vast knowledge of various pharmaceuticals and life sciences companies, make him a valued member of our board of directors. RECOMMENDATION: THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF THE NOMINEE NAMED ABOVE.

  4. Class II Directors Continuing in Office (terms expire 2026)

    Class II Directors Continuing in Office (terms expire 2026) Jenn Adams has served as a member of our board of directors since 2021. She is chief executive officer of August Bioservices LLC which provides research, pharmaceutical development and manufacturing services in the pharmaceutical and biotechnology space, a position she has held since 2020. Prior to joining August Bioservices, she served as SVP & president of AmerisourceBergen’s Clinical Product Solutions Business Unit. Amerisource Bergen is a United States-based pharmaceutical wholesale distributor. Ms. Adams spent her early career at Baxter Healthcare, serving in leadership roles in the Medication Delivery and Fenwal businesses. Ms. Adams also serves as executive in residence/senior advisor to Oak HC/FT, a venture growth-equity fund investing in healthcare information and services. Ms. Adams serves on the nonprofit Board of LifeScience Tennessee and holds an MBA from Northwestern University’s J.L. Kellogg Graduate School of Management. We believe that Ms. Adams’ significant experience as an executive in several life science companies brings relevant expertise to the board of directors. Charles J. Casamento has served as a member of our board of directors since 2017. Mr. Casamento is currently executive director and principal of The Sage Group, a healthcare advisory group specializing in mergers, acquisitions, and partnerships between biotechnology companies and pharmaceutical companies, since 2007. He was the president and CEO of Osteologix, Inc., a public biopharmaceutical company developing products for treating osteoporosis, from 2004 through 2007. Mr. Casamento was founder of, and from 1999 through 2004, served as chairman of the board, president and CEO, of Questcor Pharmaceuticals, Inc. which was subsequently acquired by Mallinckrodt. Mr. Casamento formerly served as RiboGene, Inc.’s president, CEO and chairman of the board from 1993 through 1999 until it merged with Cypros to form Questcor. He was co-founder, president and CEO of Interneuron Pharmaceuticals, Inc. (Indevus), a biopharmaceutical company, from 1989 until 1993. Indevus was eventually acquired by Endo. Mr. Casamento has also held senior management positions at Genzyme Corporation, where he was senior vice president, pharmaceuticals and biochemicals; American Hospital Supply, where he was vice president of business development and strategic planning for the Critical Care Division; Johnson & Johnson, Hoffmann-LaRoche, Inc. and Sandoz Inc. (now Novartis). Mr. Casamento also serves on the board of directors of PaxMedica, Relmada Therapeutics and GT Biopharma. He is chairman of the board at Relmada. During his career he has served on the boards of fourteen Biotech/Pharma companies and has also been a director and vice chairman of The Catholic Medical Missions Board, a large not-for-profit organization providing health care services to third world countries. He has served as a guest lecturer at Fordham University and is on the Science Council of Fordham University. He holds a bachelor’s degree in Pharmacy from Fordham University and an MBA from Iona University and was originally licensed to practice pharmacy in the states of New York and New Jersey. We believe that Mr. Casamento’s significant experience as chief executive officer in various life sciences companies and his service on several other boards bring valuable knowledge and insights to the board of directors.

  5. Class III Directors Continuing in Office (terms expire 2027)

    Class III Directors Continuing in Office (terms expire 2027) Norbert G. Riedel, Ph.D. has served as a member of our board of directors since 2017 and as chairman of the board since 2018. Dr. Riedel served as executive chairman of Aptinyx, Inc., a biopharmaceutical company discovering and developing innovative therapies for challenging disorders of the brain and nervous system, from January 2022 to June 2023. Dr. Riedel was a director and served as president and chief executive officer of Aptinyx Inc. from August 2015 to December 2021. From January 2014 to August 2015, Dr. Riedel served as the president and chief executive officer of Naurex Inc., the predecessor company acquired by Allergan and from which Aptinyx and its technology were spun out. Prior to that time, he was corporate vice president and chief science and innovation officer of Baxter International Inc., a diversified healthcare company from March 2001 until January 2013. From 1998 to 2001, Dr. Riedel served as president and general manager of the recombinant therapeutic proteins business unit and vice president of Research and Development at Baxter’s bioscience business. Prior to joining Baxter, from 1996 to 1998, he was head of worldwide biotechnology and worldwide core research functions at Hoechst-Marion Roussel, now Sanofi, a global pharmaceutical company. Previously, he held a series of scientific management positions at Hoechst-Marion Roussel and Hoechst AG. Dr. Riedel is a member of the board of directors of Jazz Pharmaceuticals and the Illinois Biotechnology Innovation Organization. From 1999 to 2010, Dr. Riedel was a member of the board of directors of Oscient Pharmaceuticals Corporation, a biopharmaceutical company, and its predecessor company, Genome Therapeutics Corporation, a genomics company. Dr. Riedel was a member of the Supervisory Board of MediGene AG, a biotechnology company from 2003 to 2013. Dr. Riedel was a postdoctoral fellow at Harvard University from 1984 to 1987 and an Assistant Professor and Associate Professor of medicine and biochemistry at Boston University School of Medicine from 1987 to 1991. Dr. Riedel was also a visiting professor at Massachusetts Institute of Technology in 1992, and in 2009, Dr. Riedel was elected as member of the Austrian Academy of Sciences. Dr. Riedel serves on the board of directors of Atsena Therapeutics, Inc., a clinical-stage gene therapy company developing treatments for the reversal or prevention of blindness from inherited retinal diseases. Dr. Riedel is currently an adjunct professor at Boston University School of Medicine, and an adjunct professor of Medicine at Northwestern University’s Feinberg School of Medicine. We believe that Dr. Riedel’s extensive academic experience in the pharmaceutical and biotechnology fields provides valuable experience to our board of directors. Sean E. Brynjelsen has served as our president, chief executive officer and a member of our board of directors since 2017. Prior to joining Eton, Mr. Brynjelsen served as a corporate officer and executive vice president at Sagent Pharmaceuticals, Inc., where he made a number of successful M&A transactions. Prior to his tenure at Sagent, he was senior vice president of Global Business Development for Akorn Pharmaceuticals, Inc. where he led the company’s business development group. Earlier in his career, Mr. Brynjelsen spent a number of years as a product development scientist with a focus on sterile pharmaceuticals at both Baxter and Pfizer (formerly Hospira). Mr. Brynjelsen earned an MBA degree from the University of Notre Dame and holds a Master of Science in Chemistry and a Bachelor of Science in Biochemistry from the University of Illinois. We believe that Mr. Brynjelsen’s valuable perspective and experience as our president and chief executive officer, considerable experience in the pharmaceuticals industry and extensive leadership skills qualify him to serve on our board of directors.

  6. Stockholder Communications

    Stockholder Communications Our board of directors has established a process by which every stockholder can communicate with the board of directors, as a whole and with individual directors on the board of directors. Stockholders may send communications directed to the board of directors to the attention of the Chair of the Board of Directors via U.S. Mail or Expedited Delivery Service to: Eton Pharmaceuticals, Inc., 21925 W. Field Parkway, Suite 235, Deer Park, Illinois 60010 Attn: Chair of the Board of Directors.

  7. CORPORATE GOVERNANCE

    CORPORATE GOVERNANCE

  8. Our Board of Directors

    Our Board of Directors Our certificate of incorporation and bylaws provide that the number of our directors shall be fixed from time to time by a resolution of the majority of our board of directors. Our board of directors consists of five members and is divided into three staggered classes of directors as nearly equal in number as possible. One class is elected each year at the annual meeting of stockholders for a term of three years. The term of the Class I director expires at the 2025 Annual Meeting. The term of the Class II directors expires at the 2026 Annual Meeting and the term of the Class III directors expires at the 2027 Annual Meeting. The following presents our current directors, their respective terms on the board of directors, ages and positions as of April 11, 2025:

  9. Our Board of Directors

    | Name | Age | Position | | Class I director nominee whose term will expire at the 2025 Annual Meeting | | | | Paul V. Maier (1)(2)(3) | 77 | Director | | Class II directors whose terms will expire at the 2026 Annual Meeting | | | | Jenn Adams (1)(2)(3) | 56 | Director | | Charles J. Casamento (1)(2)(3) | 79 | Director | | Class III directors whose terms will expire at the 2027 Annual Meeting | | | | Norbert G. Riedel, Ph.D. (1)(2)(3) | 67 | Director, Chairman of the Board | | Sean E. Brynjelsen | 53 | Director, President & CEO |

  10. Our Board of Directors

    | (1) Member of the audit committee | | (2) Member of the compensation committee | | (3) Member of the nominating and corporate governance committee |

  11. Director Compensation

    Director Compensation The following table provides information for the year ended December 31, 2024, regarding all compensation awarded to, earned by or paid to each person who served as a non-employee member of our board of directors during any portion of that year. Other than as set forth in the table and described more fully below, we did not pay any compensation, make any equity awards or non-equity awards to, or pay any other compensation to any of the non-employee members of our board of directors in 2024.

  12. Director Compensation

    | Name | Fees Earned or Paid in Cash ($) | Option Awards ($) | Total ($) | | Jennifer Adams | 67,600 | 83,130 | 150,730 | | Charles J. Casamento | 75,712 | 83,130 | 158,842 | | Paul V. Maier | 78,416 | 83,130 | 161,546 | | Norbert G. Riedel, Ph.D. | 105,456 | 83,130 | 188,586 |

  13. Annual performance bonuses

    Annual performance bonuses We also believe that a significant portion of our executives’ cash compensation should be based on the attainment of business goals established by our board of directors or the compensation committee. The Company set target performance bonus amounts for 2024 for our executive officers pursuant to which officers would be paid a specified percentage of those targets based on operational results. Specific achievements and performance metrics considered in 2024 included:

  14. Annual performance bonuses

    | ● | Company stock performance relative to its peer group of companies; | | ● | Financial revenue and profitability for the year; | | ● | U.S. Food and Drug Administration (“FDA”) product approvals received; and | | ● | Product candidate licensing/acquisitions activity |

  15. Annual performance bonuses

    Based on the achievement of the above factors, the Company awarded each of our executive officers 131.1% of the target bonuses as listed in the Compensation Table.

  16. Equity-based compensation

    Equity-based compensation Equity-based compensation is an integral part of our overall compensation program. Providing named executive officers with the opportunity to create significant wealth through stock ownership is a powerful tool to attract and retain highly qualified executives, achieve strong long-term stock price performance, align our executives’ interests with those of our stockholders and provide a means to build real ownership in the Company. We account for stock-based compensation under the provisions of the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (“ASC”) – 18 Compensation – Stock Compensation. The guidance under ASC 718 requires companies to estimate the fair value of the stock-based compensation awards on the date of grant for employees and directors and record expense over the related service periods, which are generally the vesting period of the equity awards. We estimate the fair value of stock-based option awards to our employees and directors using the Black-Scholes Model (the “BSM”). The BSM requires the input of subjective assumptions, including the expected stock price volatility, the calculation of expected term, forfeitures and the fair value of the underlying common stock on the date of grant, among other inputs. The risk-free interest rate was determined from the implied yields for zero-coupon U.S. government issues with a remaining term approximating the expected life of the options. Dividends on common stock are assumed to be zero for the BSM valuation of the stock options. The expected term of stock options granted is based on vesting periods and the contractual life of the options. Expected volatilities are based on comparable companies’ historical volatility along with limited weighting for the Company’s own volatility, which management believes represents the most accurate basis for estimating expected future volatility under the current conditions. We account for forfeitures as they occur.

  17. Summary Compensation Table

    Summary Compensation Table The following table provides information regarding the total compensation for services rendered in all capacities that was earned during the fiscal years ended December 31, 2024 and December 31, 2023 by our named executive officers.

  18. Summary Compensation Table

    | | | Salary | Non-Equity Incentive Compensation | Stock Awards | Option Awards | All Other Compensation | Total | | Name and Principal Position (1) | Year | ($) | ($) (2) | ($) (3) | ($) (3) | ($) (4) | ($) | | Sean E. Brynjelsen | 2024 | 615,536 | 487,304 | — | 1,295,283 | 13,800 | 2,411,923 | | President and Chief Executive Officer | 2023 | 591,862 | 334,355 | — | 807,628 | 13,200 | 1,747,045 | | James R. Gruber | 2024 | 397,833 | 236,216 | — | 427,231 | 13,800 | 1,075,080 | | Chief Financial Officer | 2023 | 379,167 | 162,075 | — | 230,698 | 13,200 | 785,140 | | David C. Krempa | 2024 | 397,833 | 236,216 | 250,003 | 427,231 | 13,800 | 1,325,083 | | Chief Business Officer | 2023 | 372,583 | 162,075 | — | 171,222 | 12,200 | 719,080 | | Ipek Erdogan-Trinkaus (5) | 2024 | 33,560 | 19,799 | 100,004 | 622,125 | — | 775,488 | | Chief Commercial Officer | 2023 | — | — | — | — | — | — |

  19. Summary Compensation Table

    | (1) We do not have any other executive officers that are required to be included in the Summary Compensation Table. | | (2) The amounts reflected in 2024 and 2023 reflect the discretionary performance bonus awards for each year that were paid in 2025 and 2024, respectively. | | (3) Amounts shown in this column do not reflect dollar amounts actually received by our named executive officers. Instead, these amounts reflect the aggregate grant date fair value of each award computed in accordance with the provisions of FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in Note 9 and Note 8 of our financial statements for the periods ending December 31, 2024, and December 31, 2023, respectively. | | (4) These amounts reflect contributions by us to each officer’s 401(k) account. | | (5) Ms. Erdogan-Trinkaus was appointed as our chief commercial officer on December 2, 2024. |

  20. Potential Payments Upon Termination and Change in Control

    Potential Payments Upon Termination and Change in Control The definitions of “cause” and “change in control” referenced herein are defined in the individual employment agreements between us and each of the named executive officers.

  21. Outstanding Equity Awards at Fiscal Year-End 2024

    Outstanding Equity Awards at Fiscal Year-End 2024 The following table provides information with respect to outstanding stock options held by each of our named executive officers as of December 31, 2024.

  22. Outstanding Equity Awards at Fiscal Year-End 2024

    | | | Option Awards | | | | Stock Awards | | | Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | | Sean E. Brynjelsen | 7/12/2022 | | | | | 55,000 | 732,600 | | | 2/13/2024 | 91,381 | 347,252 | 4.42 | 2/12/2034 | | | | | 2/20/2023 | 160,591 | 189,790 | 3.47 | 2/19/2033 | | | | | 2/7/2022 | 416,500 | — | 3.78 | 2/6/2032 | | | | | 5/3/2021 | 245,000 | — | 8.61 | 5/2/2031 | | | | | 3/12/2020 | 490,000 | — | 3.58 | 3/11/2030 | | | | | 2/20/2019 | 250,000 | — | 7.31 | 2/19/2029 | | | | | 11/10/2017 | 200,000 | — | 1.37 | 11/9/2027 | | | | James R. Gruber | 7/12/2022 | | | | | 20,000 | 266,400 | | | 2/13/2024 | 30,141 | 114,536 | 4.42 | 2/12/2034 | | | | | 2/20/2023 | 45,872 | 54,214 | 3.47 | 2/19/2033 | | | | | 4/11/2022 | 50,000 | 50,000 | 3.81 | 4/10/2032 | | | | David C. Krempa | 10/2/2024 | | | | | 42,088 | 560,612 | | | 7/12/2022 | | | | | 20,000 | 266,400 | | | 2/13/2024 | 30,141 | 114,536 | 4.42 | 2/12/2034 | | | | | 2/20/2023 | 34,046 | 40,237 | 3.47 | 2/19/2033 | | | | | 2/7/2022 | 112,107 | 46,163 | 3.78 | 2/6/2032 | | | | | 10/29/2021 | 20,000 | — | 5.76 | 10/28/2031 | | | | | 5/3/2021 | 76,145 | 8,855 | 8.61 | 5/2/2031 | | | | | 3/12/2020 | 156,200 | — | 3.58 | 3/11/2030 | | | | | 2/20/2019 | 95,000 | — | 7.31 | 2/19/2029 | | | | | 11/10/2017 | 25,000 | — | 1.37 | 11/9/2027 | | | | | 8/7/2017 | 25,000 | — | 1.38 | 8/6/2027 | | | | Ipek Erdogan-Trinkaus | 12/2/2024 | | | | | 8,026 | 106,906 | | | 12/2/2024 | — | 75,000 | 12.46 | 12/1/2034 | | |

  23. PAY VERSUS PERFORMANCE

    PAY VERSUS PERFORMANCE The following table shows the past three fiscal years’ total compensation for our named executive officers as set forth in the Summary Compensation Table, the “compensation actually paid” to our named executive officers (as determined under SEC rules), and our net income. SEC rules require certain adjustments be made to the Summary Compensation Table totals to determine Compensation Actually Paid as reported in the Pay Versus Performance Table. Compensation Actually Paid does not necessarily represent cash and/or equity value transferred to the applicable named executive officer without restriction, but rather is a valuation calculated under applicable SEC rules. In general, Compensation Actually Paid is calculated as summary compensation table total compensation adjusted to (a) include the value of any pension benefit (or loss) attributed to the past fiscal year, including on account of any amendments adopted during such year; and (b) include the fair market value of equity awards as of December 31, 2024 or, if earlier, the vesting date (rather than the grant date) and factor in dividends and interest accrued with respect to such awards, if applicable. For purposes of the disclosure below, no pension valuation adjustments were required.

  24. PAY VERSUS PERFORMANCE

    | Year | Summary Compensation Table Total for Principal Executive Officer (“PEO”)(1) | Compensation Actually Paid to PEO(2) | Average Summary Compensation Table Total for Non-PEO Named Executive Officers (“NEOs”)(3) | Average Compensation Actually Paid to Non-PEO NEOs(3) | Net Income (Loss) (thousands)(4) | | 2024 | $2,411,923 | $7,906,428 | $1,058,550 | $3,169,516 | $(3,823) | | 2023 | $1,747,045 | $2,258,856 | $752,110 | $1,037,017 | $(936) | | 2022 | $2,119,541 | $1,700,769 | $814,825 | $584,117 | $(9,021) |

  25. PAY VERSUS PERFORMANCE

    (1) Sean E. Brynjelsen was the Registrant’s PEO for each of the 2024, 2023 and 2022 fiscal years. (2) The amounts disclosed reflect the adjustments listed in the tables below to the amounts reported in the Summary Compensation Table for PEO:

  26. PAY VERSUS PERFORMANCE

    | Year | Less: Grant Date Value of Equity Awards | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year | Change in Fair Value From Last Day of Prior Year to Last Day of Year of Unvested Equity Awards | Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year | Dividends on Unvested Awards | Total Adjustments | | 2024 | $(1,295,283) | $3,782,258 | $2,048,927 | $378,596 | $580,007 | — | $5,494,505 | | 2023 | $(807,628) | $807,468 | $166,636 | $187,804 | $157,531 | — | $511,811 | | 2022 | $(1,251,415) | $673,908 | $(48,439) | $297,486 | $(90,312) | — | $(418,772) |

  27. PAY VERSUS PERFORMANCE

    (3) For the 2024 fiscal year, our Non-PEO NEOs were: James R. Gruber, David C. Krempa and Ipek Erdogan-Trinkaus. For the 2023 and 2022 fiscal years, our Non-PEO NEOs were: James R. Gruber and David C. Krempa. The amounts disclosed reflect the adjustments listed in the table below to the amounts reported in the Summary Compensation Table for Non-PEO NEOs:

  28. PAY VERSUS PERFORMANCE

    | Year | Less: Grant Date Value of Equity Awards | Year-End Fair Value of Equity Awards Granted During Year That Remained Unvested as of Last Day of Year | Change in Fair Value From Last Day of Prior Year to Last Day of Year of Unvested Equity Awards | Vesting-Date Fair Value of Equity Awards Granted During Year that Vested During Year | Change in Fair Value from Last Day of Prior Year to Vesting Date of Unvested Equity Awards that Vested During Year | Dividends on Unvested Awards | Total Adjustments | | 2024 | $(609,340) | $1,279,687 | $998,549 | $124,817 | $317,253 | — | $2,110,966 | | 2023 | $(200,960) | $200,920 | $181,180 | $46,731 | $57,036 | — | $284,907 | | 2022 | $(420,678) | $307,435 | $(108,460) | $29,641 | $(38,647) | — | $(230,709) |

  29. PAY VERSUS PERFORMANCE

    (4) The dollar amounts reported represent the amount of net loss reflected in our consolidated audited financial statements for the applicable year.