DEF 14A of Crescent Biopharma, Inc.
Filed Apr 1, 2024 · FY20230001558370-24-004448
ELECTION OF DIRECTORS
ELECTION OF DIRECTORS Under the Restated Certificate and under our bylaws, the Board is divided into three classes, with only one class of directors being elected in each year and each class serving a three-year term. There are currently eight members of the Board. Two of our current directors have a term that expires at this Annual Meeting; three of our current directors have a term that expires at the Company’s 2025 annual meeting of stockholders; and three of our current directors have a term that expires at the Company’s 2026 annual meeting of stockholders, or in each case until their respective successors are duly elected and qualified, or until their earlier death, resignation, or removal. Upon the recommendation of the Nominating and Corporate Governance Committee, the Board has considered and nominated the two incumbent directors listed below, each of whom has previously been elected by our stockholders, for election to the Board at the Annual Meeting. We have no reason to believe that any of the nominees will be unavailable or, if elected, will decline to serve. In the event that any of these nominees should become unavailable for election due to any presently unforeseen reason, proxies will be voted for a substitute as designated by the Board, or alternatively, the Board may leave a vacancy on the Board or reduce the size of the Board. The biographies of each of our nominees for election to the Board and all other directors are set forth below, including the offices held, other business directorships and the class and term of each director nominee and director. Each of the biographies highlights specific experience, qualifications, attributes, and skills that led us to conclude that such person should serve as a director. We believe that, as a whole, our Board possesses the requisite skills and characteristics, leadership traits, work ethic, and independence to provide effective oversight. No director or executive officer is related by blood, marriage, or adoption to any other director or executive officer. No arrangements or understandings exist between any director and any other person pursuant to which such person was selected as a director or nominee.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS FOR A THREE-YEAR TERM EXPIRING AT THE 2027 ANNUAL MEETING
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS FOR A THREE-YEAR TERM EXPIRING AT THE 2027 ANNUAL MEETING
Daniel Junius, age 71
Daniel Junius, age 71 Mr. Junius has served as a member of our Board since 2016. Mr. Junius served as the president and chief executive officer of ImmunoGen, Inc., formerly a publicly held biotechnology company recently acquired by AbbVie, from 2009 until his retirement in 2016. He also served as ImmunoGen’s president and chief operating officer and acting chief financial officer from July 2008 to December 2008, as an executive vice president and the chief financial officer from 2006 to July 2008, and as a senior vice president and the chief financial officer from 2005 to 2006. Mr. Junius also served as a director of ImmunoGen from 2008 until June 2018. Before joining ImmunoGen, Mr. Junius was an executive vice president and the chief financial officer of New England Business Service, Inc., or NEBS, a business-to-business direct marketing company, from 2002 until its acquisition by Deluxe Corporation in 2004 and a senior vice president and the chief financial officer of NEBS from 1998 to 2002. Prior to NEBS, he was a vice president and the chief financial officer of Nashua Corporation, a manufacturer and marketer of specialty imaging paper and label products and services. He joined Nashua Corporation in 1984 and held financial management positions of increasing responsibility before becoming chief financial officer in 1996. Mr. Junius has served on the board of directors and as chair of the audit committee of IDEXX Laboratories, Inc., a publicly held pet healthcare company, since 2014. Mr. Junius holds a Bachelor of Arts in Political Science from Boston College and a master’s degree in Management from Northwestern University’s Kellogg School of Management. The Board believes that Mr. Junius’s extensive experience, including service as chief executive officer and chief financial officer of public companies, in addition to his financial expertise and depth of knowledge of the biopharmaceutical industry, allows him to make valuable contributions to the Board and to bolster the Board’s overall skills and experience.
Rachel King, age 64
Rachel King, age 64 Ms. King co-founded our company and has served as a member of our Board since our inception in 2003. Ms. King served as our president and chief executive officer from our inception in 2003 until August 2021. Ms. King has served as the interim president and chief executive officer of the Biotechnology Innovation Organization (BIO) from October 2022 to March 2024 and has served on its board of directors since 2005, including as chair of the board of BIO from 2013 to 2015. Previously, Ms. King was an Executive in Residence at New Enterprise Associates (NEA), an investment firm, from 2001 to 2003. From 1999 to 2001, Ms. King served as a senior vice president of Novartis Corporation, a pharmaceutical company. Before joining Novartis, Ms. King spent 10 years with Genetic Therapy, Inc., a biotechnology company, where she served in a number of roles as part of the executive team, which included the company’s initial public offering and later acquisition by Novartis. After the acquisition by Novartis, she served as the chief executive officer of Genetic Therapy, which was then a wholly owned subsidiary of Novartis. Ms. King previously worked at Alza Corporation, a pharmaceutical and medical systems company that was later acquired by Johnson & Johnson, as well as at Bain and Company, a management consulting firm. Ms. King currently serves on the board of directors of Novavax, Inc., a publicly traded biotechnology company. Ms. King was appointed by Maryland’s governor as chair of the Maryland Life Sciences Advisory Board and served in that capacity from 2013 to 2015. She also currently serves on the board of the University of Maryland BioPark. She received a B.A. from Dartmouth College and an M.B.A. from Harvard Business School. The Board believes that Ms. King’s detailed knowledge of our company as one of our co-founders and her experience with biotechnology companies prior to founding our company, in addition to her leadership skills, allow her to make valuable contributions to the Board.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2025 ANNUAL MEETING
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2025 ANNUAL MEETING
Scott Jackson, age 59
Scott Jackson, age 59 Mr. Jackson has served as a member of our Board since November 2018. Mr. Jackson served as the chief executive officer and as a member of the board of directors of Celator Pharmaceuticals, Inc. from 2008 until 2016, when the company was acquired by Jazz Pharmaceuticals plc. Mr. Jackson has more than 30 years of experience in the pharmaceutical and biotechnology industries and has held positions of increasing responsibility in sales, marketing and commercial development at Eli Lilly & Co., SmithKline Beecham, ImClone Systems Inc., Centocor Inc. (a division of Johnson & Johnson), Eximias Pharmaceutical and YM BioSciences. Mr. Jackson currently serves on the board of directors of MacroGenics, Inc., and Spero Therapeutics, Inc., and as chairperson of the board of directors of Mural Oncology, plc., all of which are publicly traded pharmaceutical companies. Mr. Jackson also serves on the board of directors of Philabundance, a non-profit organization addressing food insecurity in the Philadelphia region. He holds a B.S. in pharmacy from the Philadelphia College of Pharmacy and Science and an M.B.A. from the University of Notre Dame. We believe Mr. Jackson’s extensive experience in the pharmaceutical and biotechnology industries, including service as an executive officer and board member, as well as his management expertise and significant background in business and commercial development, sales and marketing and clinical development, make him highly qualified to serve as a member of our Board.
Scott Koenig, M.D., Ph.D., age 71
Scott Koenig, M.D., Ph.D., age 71 Dr. Koenig has served as a member of our Board since 2017. Dr. Koenig is the co-founder of and has been the president and chief executive officer and a director of MacroGenics, Inc., a publicly held pharmaceutical company, since 2001. Previously, Dr. Koenig served as a senior vice president at MedImmune, Inc., where he participated in the selection and maturation of their product pipeline. From 1984 to 1990, he worked in the Laboratory of Immunoregulation at the National Institute of Allergy and Infectious Diseases at the National Institutes of Health, where he investigated the immune response to retroviruses and studied the pathogenesis of AIDS. Dr. Koenig served as chairman of the board of directors of Applied Genetic Technologies Corporation, or AGTC, a publicly held pharmaceutical company, until its acquisition in November 2022. He is also a member of the board of directors of the Biotechnology Innovation Organization (BIO) and the International Biomedical Research Alliance. Dr. Koenig received his A.B. and Ph.D. from Cornell University and his M.D. from the University of Texas Health Science Center in Houston. We believe that Dr. Koenig’s deep experience in the biopharmaceutical industry, specifically in the BioHealth Capital Region of Maryland, Virginia, and Washington, DC, his service on committees and boards of local institutions and organizations, and his strategic and operational expertise and leadership skills make him highly qualified to serve as a member of our Board.
Harout Semerjian, age 53
Harout Semerjian, age 53 Mr. Semerjian has served as our President and Chief Executive Officer and as a member of our Board since August 2021. Prior to joining our company, he was an independent advisor to private equity firms focused on investments in healthcare companies. He previously served as president and chief executive officer of Immunomedics, Inc., a pharmaceutical company, during April and May of 2020. From March 2018 to April 2020, he served as an executive vice president and chief commercial officer at Ipsen Pharma, where he was accountable for that company’s worldwide commercialization and portfolio strategy across oncology, neurosciences and rare diseases. From February 2017 to February 2018, he served as president and head of Ipsen’s Specialty Care International Region & Global Franchises. Mr. Semerjian previously spent 16 years at Novartis Oncology, where he held various worldwide strategic and operational positions, culminating in his last role as a senior vice president and global head for Ribociclib, accountable for worldwide launch preparations. During his tenure at Novartis, Mr. Semerjian worked on numerous launches and commercial activities for various therapies, including Gleevec, Tasigna, Exjade/Jadenu, Promacta, Zometa, and Femara. He has also served as a member of the board of directors of the Biotechnology Innovation Organization (BIO) since October 2023. Mr. Semerjian holds an M.B.A. from Cornell University, an M.B.A. from Queen’s University, Canada, and a B.S. in Biology from the Lebanese American University in Lebanon. The Board believes that Mr. Semerjian’s long-time experience as an executive officer in the pharmaceutical industry and his significant background in commercialization activities provide a valuable contribution to our Board, in addition to his role as our Chief Executive Officer.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2026 ANNUAL MEETING
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2026 ANNUAL MEETING
Patricia Andrews, age 66
Patricia Andrews, age 66 Ms. Andrews has served as a member of our Board since 2017. Ms. Andrews has served as the chief executive officer of Sumitomo Pharma Oncology, Inc. (and its predecessor, Boston Biomedical, Inc.), an oncology drug research and development company, and as an executive officer of its parent company, Sumitomo Pharma Co. Ltd. from 2017 until her retirement in July 2023. Ms. Andrews joined Boston Biomedical in 2013. From 2008 to 2012, she served as the chief commercial officer of Incyte Corporation, a publicly held biopharmaceutical company. From 1991 to 2008, Ms. Andrews served in various roles of increasing responsibility at Pfizer Inc., culminating in her role as a vice president and the general manager of Pfizer’s U.S. Oncology business unit. Ms. Andrews serves on the board of Oncolytics Biotech, Inc. Ms. Andrews received her B.A. degree from Brown University and her M.B.A. degree from the University of Michigan. We believe Ms. Andrews’ qualifications to serve on our Board include her strong leadership and demonstrated management experience within the pharmaceutical industry, including serving as a chief executive officer and a chief commercial officer, as well as her in-depth knowledge of operations and commercial strategy.
Mark Goldberg, M.D., age 69
Mark Goldberg, M.D., age 69 Dr. Goldberg has served as a member of our Board since 2014. Dr. Goldberg served in a number of capacities of increasing responsibility at Synageva BioPharma Corp., a biopharmaceutical company, between 2011 and 2015, including as Executive Vice President, Medical and Regulatory Strategy. Prior to joining Synageva he served in various management capacities of increasing responsibility at Genzyme Corporation, a biopharmaceutical company, from 1996 to 2011, most recently as Senior Vice President, Clinical Development and Global Therapeutic Head, Oncology and Personalized Genetic Health, and as Chairman of Genzyme’s Early Product Development Board. Prior to working at Genzyme, he was a full-time staff physician at Brigham and Women’s Hospital and the Dana-Farber Cancer Institute. He still holds an appointment at Brigham and Women’s Hospital. Dr. Goldberg has also been on the faculty of Harvard Medical School since 1987 and serves as a Lecturer in Medicine (part-time). He is a board-certified medical oncologist and hematologist. Dr. Goldberg serves on the boards of directors of the public biopharmaceutical companies Blueprint Medicines Corporation and Avacta Group plc. Within the last five years, he also served on the boards of directors of the public biopharmaceutical companies Audentes Therapeutics, Inc., ImmunoGen, Inc. and Idera Pharmaceuticals (now known as Aceragen, Inc.). He has also served as a member of the board of directors of the American Cancer Society since January 2019. Dr. Goldberg received his A.B. from Harvard College and his M.D. from Harvard Medical School. The Board believes that Dr. Goldberg’s prestigious medical background and significant clinical experience allow him to make particularly valuable contributions to our research and development efforts, while his public company board experience provides us with valuable strategic and operational expertise and leadership skills.
Timothy Pearson, age 56
Timothy Pearson, age 56 Mr. Pearson has served as a member of our Board since 2014 and as our Chairperson since 2019. Mr. Pearson has served as the chief executive officer of Carrick Therapeutics, a privately held oncology company, since July 2019. He previously served as executive vice president and the chief financial officer of TESARO, Inc., an oncology-focused biopharmaceutical company, from 2014 until its acquisition by GlaxoSmithKline in February 2019. Mr. Pearson was also executive vice president and chief financial officer of Catalyst Health Solutions, a publicly held pharmacy benefit management company, from 2011 until its acquisition by SXC Health Solutions in 2012. Prior to joining Catalyst, Mr. Pearson served as the chief financial officer and executive vice president of MedImmune, Inc. Mr. Pearson also currently serves on the board of Korro Bio, a public company. He previously served on the board of directors of Ra Pharmaceuticals, Inc., until it was acquired by UCB in 2020. Mr. Pearson is a Certified Public Accountant and holds dual B.S. degrees in Business Administration from the University of Delaware and in Accounting from the University of Maryland, University College, as well as an M.S. in Finance from Loyola College. As a result of Mr. Pearson’s educational background and professional experiences, the Board believes Mr. Pearson possesses particularly impactful knowledge and experience in accounting and finance; corporate strategy, leadership of complex organizations and human capital management, all of which strengthen the Board’s collective qualifications, skills and experience.
APPROVAL OF AMENDMENT OF CERTIFICATE OF INCORPORATION TO INCREASE AUTHORIZED SHARES
APPROVAL OF AMENDMENT OF CERTIFICATE OF INCORPORATION TO INCREASE AUTHORIZED SHARES The Board is requesting stockholder approval of an amendment to the Restated Certificate to increase the authorized number of shares of common stock from 100,000,000 shares to 150,000,000 shares. The current Restated Certificate was adopted in January 2014, and the authorized number of shares of common stock has not been increased since that time. The text of the proposed amendment is set forth on Appendix A to this Proxy Statement. The additional common stock to be authorized by adoption of the amendment would have rights identical to the currently outstanding common stock of the Company. Adoption of the proposed amendment and issuance of the common stock would not affect the rights of the holders of currently outstanding common stock of the Company, except for effects incidental to increasing the number of shares of the Company’s common stock outstanding, such as dilution of the earnings per share and voting rights of current holders of common stock. If the amendment is adopted, it will become effective upon filing of a Certificate of Amendment to the Restated Certificate with the Secretary of State of the State of Delaware. In addition to the 64,450,385 shares of common stock outstanding on the record date, the Board has reserved 20,002,206 shares of common stock for issuance upon exercise of options and settlement of restricted stock units and other equity awards granted under the Company’s equity incentive plans, including our inducement plan. Although, at present, the Board has no plans to issue the additional shares of common stock, it desires to have the shares available to provide additional flexibility to use its capital stock for business and financial purposes in the future. The additional shares may be used for various purposes without further stockholder approval. These purposes may include raising capital, providing equity incentives to employees, officers or directors, and establishing strategic relationships with other companies. Since the commencement of our operations, we have devoted substantially all of our resources to performing research and development activities in support of our product development efforts, hiring personnel, raising capital to support and expand such activities and providing general and administrative support for these operations. We do not have any products approved for sale and have not generated any revenue from product sales. We have funded our operations since the initial public offering of our common stock in 2014 primarily from additional public offerings of common stock. We anticipate incurring significant losses for the foreseeable future and that a substantial portion of our capital resources and efforts will be focused on obtaining regulatory approval and preparing for commercialization of our lead product candidate uproleselan, as well as completing the necessary clinical development of the other product candidates in our pipeline and discovering new potential therapeutics. In light of our capital needs, we regularly consider fundraising opportunities and may decide, from time to time, to raise capital based on various factors, including market conditions and our plans of operation. In this regard, if the Board determines that raising additional capital through the issuance of additional shares of common stock (or securities convertible into common stock) is desirable, we want to be able to act quickly if market conditions are favorable. However, unless our stockholders approve this proposal, we will not have sufficient unissued and unreserved authorized shares to engage in such transactions. Further, our success also depends in part on our continued ability to attract, retain, and motivate highly qualified management and key personnel. If this proposal is not approved by our stockholders, the lack of unissued and unreserved authorized shares of common stock to provide future equity incentive opportunities could adversely impact our ability to achieve these goals. The additional shares of common stock that would become available for issuance if the proposal were adopted could also be used to delay or prevent changes in control or management of the Company. For example, without further stockholder approval, the Board could strategically sell shares of common stock in a private transaction to purchasers who would oppose a takeover or favor the current Board. Although this proposal to increase the authorized common stock has been prompted by business and financial considerations and not by the threat of any hostile takeover attempt (nor is the Board currently aware of any such attempts directed at the Company), nevertheless, stockholders should be aware that approval of this proposal could facilitate future efforts by the Company to deter or prevent changes in control of the Company, including transactions in which the stockholders might otherwise receive a premium for their shares over then current market prices. If the proposed amendment is approved, no further action by stockholders would be necessary prior to the issuance of additional shares of common stock unless required by applicable law or Nasdaq listing rules.
2023 SUMMARY COMPENSATION TABLE
2023 SUMMARY COMPENSATION TABLE The following table shows, for the years ended December 31, 2023 and 2022, the compensation awarded to or paid to, or earned by, our Chief Executive Officer and our two other most highly compensated executive officers at December 31, 2023. We refer to these officers in this Proxy Statement as our named executive officers.
2023 SUMMARY COMPENSATION TABLE
| | | | | | NON-EQUITY | | | | | | | | | INCENTIVE | | | | | | | | OPTION | PLAN | ALL OTHER | | | | | SALARY | BONUS | AWARDS | COMPENSATION | COMPENSATION | TOTAL | | NAME AND PRINCIPAL POSITION | YEAR | ($) | ($)(1) | ($)(2) | ($)(3) | ($)(4) | ($) | | Harout Semerjian | 2023 | 638,405 | 100,000 | 1,263,328 | 376,910 | 10,775 | 2,389,418 | | -President and Chief Executive Officer | 2022 | 614,090 | 100,000 | 338,800 | 372,574 | 9,458 | 1,434,922 | | Brian Hahn | 2023 | 461,009 | 154,679 | 477,822 | 196,004 | 10,425 | 1,299,939 | | -Chief Financial Officer and Senior Vice President | 2022 | 443,450 | 103,120 | 169,920 | 193,001 | 8,700 | 918,191 | | Edwin Rock, M.D.(5) | 2023 | 466,620 | — | 474,912 | 198,779 | 12,000 | 1,152,311 | | -Chief Medical Officer and Senior Vice President | | | | | | | |
2023 SUMMARY COMPENSATION TABLE
| (1) For Mr. Semerjian, the amount for 2022 represents the second half of a signing bonus award to him upon joining our company in 2021, and the amount for 2023 represents a discretionary bonus awarded, in part, to assist with commuter expenses. For Mr. Hahn, amounts in this column represent a retention bonus initially awarded in January 2022, of which 40% was paid in August 2022 and the remaining 60% was paid in August 2023. |
2023 SUMMARY COMPENSATION TABLE
| (2) The amounts reflect the full grant date fair value for stock option awards granted during the indicated year. The grant date fair value was computed in accordance with ASC Topic 718, Compensation—Stock Compensation. This calculation does not give effect to any estimate of forfeitures related to service-based vesting but assumes that the executive will perform the requisite service for the award to vest in full. The assumptions we used in valuing stock options are described in Note 9 to our audited financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. These amounts do not reflect the actual economic value that will be realized by the named executive officer upon vesting or exercise of the stock options, or the sale of the common stock underlying the stock options. |
2023 SUMMARY COMPENSATION TABLE
| (3) The amounts reflect the portion of each officer’s target bonus paid based on the achievement of pre-specified corporate and/or individual performance goals, which for 2023 are discussed further below under “Annual Bonus.” |
2023 SUMMARY COMPENSATION TABLE
| (4) Amounts in this column reflect matching contributions under the Company’s 401(k) plan and supplemental compensation for cell phone expenses. For Mr. Semerjian only, the amount reported for 2022 also includes $758 for tax return preparation fees. |
2023 SUMMARY COMPENSATION TABLE
| (5) Dr. Rock was not a named executive officer for 2022, and as a result his compensation for that year has been omitted pursuant to applicable SEC rules and regulations. |
Outstanding Equity Awards at End of 2023
Outstanding Equity Awards at End of 2023 The following table provides information about outstanding stock options and restricted stock units held by each of our named executive officers at December 31, 2023.
Outstanding Equity Awards at End of 2023
| | OPTION AWARDS | | | | | STOCK AWARDS | | | | | | EQUITY INCENTIVE | | | | | | | | | PLAN AWARS: | | | | | | | | | NUMBER OF | | | NUMBER OF | MARKET VALUE | | | NUMBER OF | NUMBER OF | SECURITIES | | | SHARES | OF SHARES | | | SECURITIES | SECURITIES | UNDERLYING | | | OR UNITS | OR UNITS OF | | | UNDERLYING | UNDERLYING | UNEXERCISED | OPTION | | OF STOCK | STOCK THAT | | | UNEXERCISED | UNEXERCISED | UNEARNED | EXERCISE | OPTION | THAT HAVE | HAVE NOT | | | OPTIONS (#) | OPTIONS (#) | OPTIONS (#) | PRICE | EXPIRATION | NOT VESTED | VESTED (2) | | NAME | EXERCISABLE | UNEXERCISABLE | UNEXERCISABLE | ($) | DATE (1) | (#) | ($) | | Harout Semerjian | 640,734 | 457,666(3) | | 2.03 | 08/02/2031 | | | | | — | — | 549,200(4) | 2.03 | 08/02/2031 | | | | | 202,928 | 220,572(5) | | 1.11 | 01/20/2032 | | | | | — | 651,200(6) | | 2.55 | 01/18/2033 | | | | Brian Hahn | 37,564 | — | | 8.00 | 01/09/2024 | | | | | 61,000 | — | | 7.15 | 01/07/2025 | | | | | 65,000 | — | | 5.22 | 01/06/2026 | | | | | 65,000 | — | | 6.33 | 01/03/2027 | | | | | 65,000 | — | | 20.03 | 01/09/2028 | | | | | 90,000 | — | | 10.59 | 01/16/2029 | | | | | 117,500 | 2,500(7) | | 4.72 | 01/21/2030 | | | | | 50,313 | 18,687(8) | | 3.81 | 01/19/2031 | | | | | 78,919 | 85,781(5) | | 1.11 | 01/20/2032 | | | | | — | 246,300(6) | | 2.55 | 01/18/2033 | | | | | — | — | 47,700(4) | 1.11 | 01/20/2032 | | | | | | | | | | 17,250 | 40,710(9) | | Edwin Rock, M.D. | 62,500 | 137,500(10) | | 0.74 | 09/01/2032 | | | | | — | 244,800(6) | | 2.55 | 01/18/2033 | | |
Outstanding Equity Awards at End of 2023
| (1) In each case the option expiration date is ten years after the date of grant. |
Outstanding Equity Awards at End of 2023
| (2) Market value of restricted stock units that have not vested was determined by multiplying the number of shares by $2.36, the closing price of our common stock on December 29, 2023. |
Outstanding Equity Awards at End of 2023
| (3) These shares will vest monthly through August 3, 2025, in each case subject to the officer’s continued service through the applicable vesting date. |
Outstanding Equity Awards at End of 2023
| (4) This option will vest upon achievement of specified development and commercialization milestones, as described above. |
Outstanding Equity Awards at End of 2023
| (5) These shares will vest monthly through January 21, 2026, subject to the officer’s continued service through each applicable vesting date. |
Outstanding Equity Awards at End of 2023
| (6) 25% of the total shares underlying this option vested on January 19, 2024. The remaining shares will vest monthly through January 19, 2027, subject to the officer’s continued service through each applicable vesting date. |
Outstanding Equity Awards at End of 2023
| (7) These shares vested on January 22, 2024. |
Outstanding Equity Awards at End of 2023
| (8) These shares will vest monthly through January 20, 2025, subject to the officer’s continued service through each applicable vesting date. |
Outstanding Equity Awards at End of 2023
| (9) One-half of these shares vested on January 20, 2024, and the remainder will vest on January 20, 2025, subject to the officer’s continuous service as of that date. |
Outstanding Equity Awards at End of 2023
| (10) These shares will vest monthly through September 2, 2026, in each case subject to the officer’s continued service through the applicable vesting date. |
Pension Benefits and Nonqualified Deferred Compensation
Pension Benefits and Nonqualified Deferred Compensation Our named executive officers did not participate in, or otherwise receive any benefits under, any pension plan or nonqualified deferred compensation plan sponsored by us during 2023.
Employment Agreements and Potential Payments upon Termination of Employment or upon Change in Control
Employment Agreements and Potential Payments upon Termination of Employment or upon Change in Control Pursuant to their employment agreements with us, each named executive officer is eligible for severance benefits in specified circumstances. Under the terms of the agreements, upon execution and effectiveness of a severance agreement and release of claims, each such named executive officer will be entitled to severance payments if we terminate such executive’s employment without cause, or such executive terminates employment with us for good reason. The following definitions have been adopted in the current employment agreements with our named executive officers:
Employment Agreements and Potential Payments upon Termination of Employment or upon Change in Control
| ● | “cause” means that we have determined in our sole discretion that any of the following occurred: (a) the executive officer’s breach of fiduciary duty or substantial misconduct with respect to our business and affairs, (b) the executive officer’s neglect of duties or failure to act which can reasonably be expected to materially adversely affect our business or affairs, (c) the executive officer’s material breach of the employment agreement, or of any provision of the proprietary information, assignment of inventions, noncompetition and nonsolicitation agreement to which the executive is a party which, to the extent curable, is not cured within 15 days after written notice thereof is given to the executive officer, (d) the commission by the executive officer of an act involving moral turpitude or fraud, (e) the executive officer’s conviction of any felony, or of any misdemeanor involving fraud, theft, embezzlement, forgery or moral turpitude, (f) other conduct by the executive officer that is materially harmful to our business or reputation, including but not limited to conduct found to be in violation of our policies prohibiting harassment or discrimination, or (g) the expiration of the employment agreement; |
Employment Agreements and Potential Payments upon Termination of Employment or upon Change in Control
| ● | “good reason” means any of the following without the executive officer’s prior written consent: (a) any material diminution of the executive officer’s duties or responsibilities under the employment agreement (except in each case in connection with a termination for cause or as a result of the executive officer’s death or disability), or the assignment to the executive officer of duties or responsibilities that are materially inconsistent with the executive officer’s then-current position, with the exception of certain situations involving the acquisition of the Company; (b) a reduction of at least 10% of the executive’s base salary unless pursuant to a salary reduction program applicable generally to similarly-situated employees; (c) any material breach of the employment agreement by us which we have not cured within 15 business days after written notice thereof is given to us; or (d) a relocation of the executive officer from our principal office to a location more than 35 miles from the location of our principal office, other than on required travel by the executive officer on business or on a temporary basis not to exceed a period equal to two calendar months; and |
Employment Agreements and Potential Payments upon Termination of Employment or upon Change in Control
| ● | “change in control” means any of the following: (a) a sale, lease, exchange or other transfer in one transaction or a series of related transactions of all or substantially all of our assets, other than the transfer of our assets to a majority-owned subsidiary corporation; (b) a merger or consolidation in which we are not the surviving corporation, unless the holders of our outstanding voting stock immediately prior to such transaction own, immediately after such transaction, securities representing at least 50% of the voting power of the corporation or other entity surviving such transaction; (c) a reverse merger in which we are the surviving corporation but the shares of our common stock outstanding immediately preceding the merger are converted by virtue of the merger into other property, whether in the form of securities, cash or otherwise, unless the holders of our outstanding voting stock immediately prior to such transaction own, immediately after such transaction, securities representing at least 50% of our voting power; or (d) any transaction or series of related transactions in which in excess of 50% of our voting power is transferred; provided that, where required to avoid additional taxation under Section 409A of the Internal Revenue Code, the event that occurs must also be a “change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation” as defined under applicable regulations. |
Employment Agreements and Potential Payments upon Termination of Employment or upon Change in Control
The following table summarizes the schedule of severance payments each of our named executive officers would receive in the event of a qualifying termination.
Employment Agreements and Potential Payments upon Termination of Employment or upon Change in Control
| | | | CONTINUATION OF | | | | | | EMPLOYER PORTION | | | | | | OF MEDICAL, | ACCELERATION OF | | | SALARY | | DENTAL AND VISION | UNVESTED | | TERMINATION SCENARIO | CONTINUATION(1) | BONUS | BENEFIT PREMIUMS | EQUITY AWARDS | | Prior to or More than 12 Months Following a Change in Control | | | | | | Harout Semerjian | 18 months | None | 18 months | None | | Brian Hahn | 12 months | None | 12 months | None | | Edwin Rock, M.D. | 12 months | None | 12 months | None | | Within 12 Months Following a Change in Control | | | | | | Harout Semerjian | 18 months | Target Bonus(2) | 18 months | Full Acceleration(3) | | Brian Hahn | 12 months | Target Bonus(2) | 12 months | Full Acceleration(3) | | Edwin Rock, M.D. | 12 months | Target Bonus(2) | 12 months | Full Acceleration(3) |
Employment Agreements and Potential Payments upon Termination of Employment or upon Change in Control
| (1) If the termination is prior to, or more than 12 months following a change, in control, the executive officer’s salary continuation will be paid on our regular payroll dates, less applicable withholdings and deductions. If the termination is within 12 months following a change in control, the executive officer’s salary continuation will be paid in a lump-sum cash payment, less applicable withholdings and deductions, within 60 days following the change in control termination. |
Employment Agreements and Potential Payments upon Termination of Employment or upon Change in Control
| (2) The executive officer will receive payment of the executive officer’s target bonus award for the 18 months, in the case of Mr. Semerjian, or 12 months, in the case of Mr. Hahn and Dr. Rock, immediately prior to the executive officer’s change in control termination, payable in a lump-sum cash payment, less applicable withholdings and deductions, within 60 days following the change in control termination. |
Employment Agreements and Potential Payments upon Termination of Employment or upon Change in Control
| (3) The executive officer will receive accelerated vesting of all then unvested equity awards that he may have, if any. |
PAY VERSUS PERFORMANCE
PAY VERSUS PERFORMANCE We are providing the following information about the relationship between executive compensation actually paid and certain financial performance of our company 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. This does not necessarily reflect value actually received or realized by the executives or how our Compensation Committee evaluates compensation decisions in light of company or individual performance.
Pay versus Performance Table
Pay versus Performance Table
Pay versus Performance Table
| | | | | | Average | | Value of | | | | | | | | Summary | | Initial Fixed | | | | | | | | Compensation | | $100 | | | | Summary | | | | Table Total | | Investment | | | | Compensation | | | | For Non-PEO | Average | Based On | | | | Table Total for | Summary | | | Named | Compensation | Total | | | | Principal | Compensation | Compensation | Compensation | Executive | Actually Paid | Shareholder | Net Income | | | Executive | Table Total for | Actually Paid to | Actually Paid to | Officers | To Non-PEO | Return | (Loss)(7) | | | Officer ("PEO")1(2) | PEO 2 (2) | PEO 1 (3) | PEO 2 (3) | (NEOs)(4) | NEOs (5) | ("TSR")(6) | (thousands) | | Year (1) | ($)(b) | ($)(b) | ($)(c) | ($)(c) | ($)(d) | ($)(e) | ($)(f) | ($)(g) | | 2023 | 2,389,418 | — | 1,726,797 | — | 1,226,125 | 1,040,066 | 63 | (36,899) | | 2022 | 1,434,922 | — | 4,067,807 | — | 836,222 | 1,046,698 | 81 | (46,689) | | 2021 | 2,876,118 | 1,420,848 | 2,062,334 | (1,283,348) | 1,122,561 | (332,812) | 38 | (63,427) |
Pay versus Performance Table
| (1) We are a smaller reporting company pursuant to Rule 405 of the Securities Act of 1933, and as such, we are only required to include information for the past three fiscal years in this table. |
Pay versus Performance Table
| (2) The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Semerjian (our current Chief Executive Officer since August 6, 2021) (“PEO 1”) and Ms. King (our former Chief Executive Officer who retired from that position on August 6, 2021) (“PEO 2”), respectively, for each corresponding year in the “Total” column of the Summary Compensation Table. |
Pay versus Performance Table
| (3) The dollar amounts reported in column (c) represent the amount of “compensation actually paid” to Mr. Semerjian and Ms. King, respectively, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to Mr. Semerjian and Ms. King during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the adjustments made to Mr. Semerjian’s and Ms. King’s total compensation for each year to determine the compensation actually paid are shown in the “Adjustments to Compensation Actually Paid” table below. |
Pay versus Performance Table
| (4) The dollar amounts reported in column (d) represent the average of the amounts reported for our company’s named executive officers (NEOs) as a group (excluding, in the case of 2022, Mr. Semerjian, and, in the case of 2021, Mr. Semerjian and Ms. King) in the “Total” column of the Summary Compensation Table in each applicable year. The names of each of the NEOs (excluding, in the case of 2022, Mr. Semerjian, and, in the case of 2021, Mr. Semerjian and Ms. King) included for purposes of calculating the average amounts in each applicable year are as follows: (i) for 2023, Brian Hahn and Edwin Rock; (ii) for 2022, Brian Hahn and Armand Girard; and (iii) for 2021, Brian Hahn and John Magnani, Ph.D. |
Pay versus Performance Table
| (5) The dollar amounts reported in column (e) represent the average amount of “compensation actually paid” to the NEOs as a group (excluding, in the case of 2022, Mr. Semerjian, and, in the case of 2021, Mr. Semerjian and Ms. King), as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual average amount of compensation earned by or paid to the NEOs as a group (excluding, in the case of 2022, Mr. Semerjian, and, in the case of 2021, Mr. Semerjian and Ms. King) during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the adjustments made to the average total compensation for the NEOs as a group (excluding, in the case of 2022, Mr. Semerjian, and, in the case of 2021, Mr. Semerjian and Ms. King) for each year to determine the average compensation actually paid are shown in the “Adjustments to Compensation Actually Paid” table below. |
Pay versus Performance Table
| (6) Cumulative total shareholder return (“TSR”) is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between our company’s share price at the end and the beginning of the measurement period by our company’s share price at the beginning of the measurement period. No dividends were paid on stock or option awards in 2022 or 2023. |
Pay versus Performance Table
| (7) The dollar amounts reported represent the amount of net income (loss) reflected in our audited financial statements for the applicable year. |
Adjustments to Compensation Actually Paid
Adjustments to Compensation Actually Paid As noted above in footnotes 3 and 5 to the Pay versus Performance Table, in accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to (i) Mr. Semerjian’s total compensation for each year, as applicable, to determine the compensation actually paid to him, and (ii) to the average total compensation for the NEOs as a group (excluding Mr. Semerjian) for each year to determine the average compensation actually paid to them. The methodology used to determine compensation actually paid is further described in footnotes (a), (b) and (c) below.
Adjustments to Compensation Actually Paid
| | FY2023 | | FY2022 | | FY2021 | | | | | PEO | Other NEOs | PEO | Other NEOs | PEO | PEO | Other NEOs | | Adjustments: | Semerjian | Average (c) | Semerjian | Average (c) | Semerjian | King | Average (c) | | Total from Summary Compensation Table | $2,389,418 | $1,226,125 | $1,434,922 | $836,222 | $2,876,118 | $1,420,848 | $1,122,561 | | Adjustments for stock and options awards | | | | | | | | | Deduct: SCT Amounts (a) | (1,263,328) | (476,367) | (338,800) | (161,920) | (2,394,160) | (887,668) | (482,698) | | Add: Fair value of equity granted during fiscal year, outstanding and unvested as of end of fiscal year (b) | 1,176,784 | 443,734 | 1,107,645 | 529,368 | 1,580,376 | 289,701 | 87,799 | | Add (Deduct): Change in fair value of equity granted in prior year that is outstanding at beginning and end of fiscal year (b) | (264,514) | (65,979) | 2,045,495 | 115,696 | - | (445,799) | (155,176) | | Add (Deduct): Change in fair value for awards granted in prior fiscal years that vested in fiscal year (b) | (311,563) | (87,447) | (181,454) | (272,667) | - | (1,660,429) | (905,297) | | Total adjustments for stock and option awards | 600,707 | 290,308 | 2,632,885 | 210,476 | (813,784) | (2,704,196) | (1,455,373) | | Compensation Actually Paid (as calculated) | $1,726,797 | $1,040,066 | $4,067,807 | $1,046,698 | $2,062,334 | $(1,283,348) | $(332,812) |
Adjustments to Compensation Actually Paid
(a) The grant date fair value of equity awards represents the sum of the totals of the amounts reported in the “Option Awards” column in the Summary Compensation Table for the applicable year. (b) The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of the following, to the extent applicable: (i) the year-end fair value of any equity awards granted in the applicable year that are outstanding and unvested as of the end of the year; (ii) the amount of change as of the end of the applicable year (from the end of the prior fiscal year) in fair value of any awards granted in prior years that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in same applicable year, the fair value as of the vesting date; (iv) for awards granted in prior years that vest in the applicable year, the amount equal to the change as of the vesting date (from the end of the prior fiscal year) in fair value; (v) for awards granted in prior years that are determined to fail to meet the applicable vesting conditions during the applicable year, a deduction for the amount equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of any dividends or other earnings paid on stock or option awards in the applicable year prior to the vesting date that are not otherwise reflected in the fair value of such award or included in any other component of total compensation for the applicable year. (c) For the NEOs as a group in each applicable year (excluding, in the case of 2022, Mr. Semerjian, and, in the case of 2021, Mr. Semerjian and Ms. King), all amounts shown represent averages.
Description of Relationship between Compensation Actually Paid and Cumulative TSR
Description of Relationship between Compensation Actually Paid and Cumulative TSR The following graph sets forth the relationship between “compensation actually paid” to our PEO, the average of “compensation actually paid” to our other NEOs, and our cumulative TSR during the applicable year over the three fiscal-year period from 2021 through 2023:
Description of Relationship Between Compensation Actually Paid and Net Income (Loss)
Description of Relationship Between Compensation Actually Paid and Net Income (Loss) The following graph sets forth the relationship between “compensation actually paid” to our PEO, the average of “compensation actually paid” to our other NEOs, and our net income (loss) during the applicable year over the three fiscal-year period from 2021 through 2023: All information provided above under the “Pay Versus Performance” heading will not be deemed to be incorporated by reference into any filing of the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, except to the extent the Company specifically incorporates such information by reference.
NON-EMPLOYEE DIRECTOR COMPENSATION
NON-EMPLOYEE DIRECTOR COMPENSATION As compensation for serving on our Board of Directors, each director who is not an employee of our company receives a cash retainer for service on the Board and for service on each committee on which the director is a member. The compensation of our directors is based on market practice information provided by our independent compensation consultant. This compensation is periodically reviewed with respect to cash retainers and equity incentives. The retainers paid to non-employee directors for service on the Board and for service on each committee of the Board on which the director is a member are as follows:
NON-EMPLOYEE DIRECTOR COMPENSATION
| | | CHAIR ADDITIONAL | | | MEMBER ANNUAL SERVICE | ANNUAL SERVICE | | | RETAINER | RETAINER | | Board of Directors | $40,000 | $30,000 | | Audit Committee | 9,000 | 9,000 | | Compensation Committee | 6,000 | 6,000 | | Nominating and Corporate Governance Committee | 4,500 | 4,500 |
NON-EMPLOYEE DIRECTOR COMPENSATION
These retainers are payable in arrears in four equal quarterly installments on the last day of each quarter, provided that the amount of such payment is prorated for any portion of such quarter that the director is not serving on our Board. We also reimburse our non-employee directors for reasonable travel and out-of-pocket expenses incurred in connection with attending our Board and committee meetings. In March 2023, we amended our non-employee director compensation policy to allow for each director to make an election to receive all or a portion of the annual cash compensation payable above in the form of fully vested shares of common stock. Elections must be delivered before the start of the fiscal year to which the election relates. Elections cannot be altered with respect to a fiscal year once the fiscal year begins and, once made, such election remains in effect for all subsequent fiscal years unless and until revised or revoked. In addition, any new non-employee director receives an option grant to purchase 80,000 shares of common stock upon becoming a director. This grant will vest in three equal installments on the first, second and third anniversaries of the grant date. Further, on the date of the 2024 annual meeting of stockholders, each non-employee director that continues to serve as a non-employee member on our Board will receive an option to purchase 40,000 shares of common stock. For the 2023 annual meeting of stockholders, the annual grant was an option to purchase 35,000 shares of common stock. The annual grant to the non-employee director vests on the first full anniversary of the date of grant. The exercise price of options granted to directors is equal to the closing price of our common stock on the Nasdaq Global Market the date of grant.
2023 Director Compensation
2023 Director Compensation The following table shows the compensation earned by each of our non-employee directors for the year ended December 31, 2023:
2023 Director Compensation
| | FEES EARNED OR | OPTION AWARDS | | | Name | PAID IN CASH ($) | ($)(1) | TOTAL ($) | | Patricia Andrews (2) | 49,000 | 56,000 | 105,000 | | Mark Goldberg, M.D. (2) | 55,000 | 56,000 | 111,000 | | Scott Jackson | 55,000 | 56,000 | 111,000 | | Daniel Junius | 62,500 | 56,000 | 118,500 | | Rachel King (2) | 40,000 | 56,000 | 96,000 | | Scott Koenig, M.D., Ph.D. | 44,500 | 56,000 | 100,500 | | Timothy Pearson | 82,000 | 56,000 | 138,000 |
2023 Director Compensation
| (1) Reflects the aggregate grant date fair value of options and restricted stock units granted during the fiscal year ended December 31, 2023 calculated in accordance with FASB ASC Topic 718. For a discussion of valuation assumptions, see Note 9 to our audited consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. These amounts do not reflect the actual economic value that will be realized by the director upon vesting or exercise of the stock options or the sale of the common stock underlying the stock options. |
2023 Director Compensation
| (2) This director elected to receive quarterly retainers for the third and fourth quarters of 2023, equal to one-half of the amounts reported in the “Fees Earned or Paid in Cash” column, in the form of unrestricted shares of common stock. |
2023 Director Compensation
As of December 31, 2023, our non-employee directors held the following restricted stock units and stock options:
2023 Director Compensation
| Name | Shares Subject to Unvested RSUs (#) | Shares Subject to Outstanding Options (#) | | Patricia Andrews | - | 141,500 | | Mark Goldberg, M.D. | - | 167,901 | | Scott Jackson | - | 130,500 | | Daniel Junius | - | 163,500 | | Rachel King | 48,125 | 1,870,139 | | Scott Koenig, M.D., Ph.D. | - | 121,000 | | Timothy Pearson | - | 167,901 |