DEF 14A of Aclaris Therapeutics, Inc., Apr 25, 2024

DEF 14A of Aclaris Therapeutics, Inc.

Filed Apr 25, 2024 · FY20230001558370-24-005677

Open on EDGAR

  1. ELECTION OF DIRECTORS

    ELECTION OF DIRECTORS Our Board is divided into three classes. Each class consists, as nearly as possible, of one-third of the total number of directors, and each class has a three-year term. Vacancies on the Board may be filled only by persons elected by a majority of the remaining directors. A director elected by the Board to fill a vacancy in a class, including vacancies created by an increase in the number of directors, shall serve for the remainder of the full term of that class and until the director’s successor is duly elected and qualified. The Board presently has nine members. There are three directors in the class whose term of office expires in 2024: Christopher Molineaux, Bryan Reasons and Vincent Milano. One of these directors, Bryan Reasons, notified us that he decided to not stand for re-election at the Annual Meeting and his term will expire at the Annual Meeting. In addition, Andrew Powell notified us that he was resigning effective as of the Annual Meeting. The Board has approved a decrease in the authorized size of the Board to seven members effective immediately following the Annual Meeting. Each of the nominees listed below is currently a director of the Company who was previously elected by the stockholders. If elected at the Annual Meeting, each of these nominees would serve until the 2027 Annual Meeting of Stockholders and until his successor has been duly elected and qualified, or, if sooner, until the director’s death, resignation or removal. It is our policy to invite and encourage directors and nominees for director to attend the Annual Meeting. Six of the ten then serving directors attended the 2023 Annual Meeting of Stockholders. Directors are elected by a plurality of the votes of the holders of shares present or represented by proxy and entitled to vote on the election of directors at the Annual Meeting. Accordingly, the two nominees receiving the highest number of affirmative votes will be elected. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the nominees named below. If any nominee becomes unavailable for election as a result of an unexpected occurrence, shares that would have been voted for that nominee may instead be voted for the election of a substitute nominee proposed by our Board. Each person nominated for election has agreed to serve if elected, and we have no reason to believe that any nominee will be unable to serve. The Nominating and Corporate Governance Committee of our Board seeks to assemble a board that, as a whole, possesses the appropriate balance of professional and industry knowledge, financial expertise and high-level management experience necessary to oversee and direct our business. To that end, the Nominating and Corporate Governance Committee has identified and evaluated the nominees in the broader context of the Board’s overall composition, with the goal of recruiting members who complement and strengthen the skills of other members and who also exhibit integrity, collegiality, sound business judgment and other qualities that the Nominating and Corporate Governance Committee views as critical to effective functioning of the Board. The biographies below include information, as of the date of this proxy statement, regarding the specific and particular experience, qualifications, attributes or skills of each nominee that led the Nominating and Corporate Governance Committee to recommend that person as a nominee for director. However, each member of the committee may have a variety of reasons why he or she believes a particular person would be an appropriate nominee for the Board, and these views may differ from the views of other members.

  2. NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2027 ANNUAL MEETING

    NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2027 ANNUAL MEETING

  3. Christopher Molineaux, age 58

    Christopher Molineaux, age 58 Christopher Molineaux has served as Lead Independent Director of our Board since January 2023, having previously served as Chair since June 2019. He has served as a member of our Board since 2014. Since 2010, Mr. Molineaux has served as President and Chief Executive Officer of Life Sciences Pennsylvania, formerly Pennsylvania Bio, a pharmaceutical and biotech industry advocacy organization, and previously served as its Senior Vice President, Membership Services. Mr. Molineaux previously served as worldwide Vice President of Pharmaceutical Communications and Public Affairs for Johnson & Johnson, a global healthcare company. Mr. Molineaux also served as Vice President for Public Affairs at the Pharmaceutical Research and Manufacturers of America (PhRMA). He received a B.A. degree from the College of the Holy Cross. Our Board believes that Mr. Molineaux’s substantial pharmaceutical and biotechnology industry experience qualifies him to serve as a director of our company.

  4. Vincent Milano, age 60

    Vincent Milano, age 60 Vincent Milano has served as a member of our Board since January 2020. Mr. Milano most recently served as Chair of the Board of Aceragen, Inc. (formerly known as Idera Pharmaceuticals, Inc.), a publicly held biopharmaceutical company, from 2022 to August 2023, having previously served as Idera’s President and Chief Executive Officer and a member of Idera’s board of directors since 2014. From 1996 to 2014, Mr. Milano served in increasingly senior roles at ViroPharma Inc., a pharmaceutical company acquired by Shire plc in 2014, most recently as Chairman, President and Chief Executive Officer from 2008 to 2014. From 1985 to 1996, Mr. Milano served in increasingly senior roles, most recently as a senior manager, at KPMG LLP, an independent registered public accounting firm. Mr. Milano currently serves on the boards of directors of BioCryst Pharmaceuticals, Inc., a publicly held company, and Life Sciences Cares Philadelphia, a non-profit organization. Within the past five years, Mr. Milano also served on the boards of directors of the publicly held companies Spark Therapeutics, Inc. and Vanda Pharmaceuticals Inc., and VenatoRx Pharmaceuticals, Inc., a privately held company. Mr. Milano received a B.S. degree in Accounting from Rider College. Our Board believes that Mr. Milano’s extensive leadership experience with pharmaceutical and biotechnology companies qualifies him to serve as a director of our company.

  5. THE BOARD OF DIRECTORS RECOMMENDS

    THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH NAMED NOMINEE.

  6. DIRECTORS CONTINUING IN OFFICE UNTIL THE 2025 ANNUAL MEETING

    DIRECTORS CONTINUING IN OFFICE UNTIL THE 2025 ANNUAL MEETING

  7. Neal Walker, age 54

    Neal Walker, age 54 Neal Walker co-founded our company and has served as our Interim Chief Executive Officer and President since January 2024. He previously served as our Chief Executive Officer from our inception in 2012 until December 2022. Dr. Walker has also served as a member of our Board since our inception and currently serves as its Chair. Dr. Walker co-founded NeXeption, LLC, a biopharmaceutical assets management company, in 2012. Dr. Walker co-founded and served as President and Chief Executive Officer and a member of the board of directors of Vicept Therapeutics, Inc., a dermatology-focused specialty pharmaceutical company, from 2009 until its acquisition by Allergan, Inc. in 2011. Previously, Dr. Walker co-founded and led a number of life science companies, including Octagon Research Solutions, Inc., a software and services provider to biopharmaceutical companies ( acquired by Accenture plc), Trigenesis Therapeutics, Inc., a specialty dermatology company, where he served as Chief Medical Officer (acquired by Dr. Reddy’s Laboratories Inc.), and Cutix Inc., a commercial dermatology company. He began his pharmaceutical industry career at Johnson and Johnson, Inc. Dr. Walker is a director of Aldeyra Therapeutics, Inc., a publicly held biotechnology company, as well as several private companies. Dr. Walker received an M.B.A. degree from The Wharton School of the University of Pennsylvania, a Doctor of Osteopathic Medicine degree from the Philadelphia College of Osteopathic Medicine and a B.A. degree in Biology from Lehigh University. Dr. Walker’s experience as a board-certified dermatologist and the founder of our company and other pharmaceutical companies, his background in clinical and drug development in dermatology and other fields, and his knowledge of the pharmaceutical industry contributed to the conclusion of our Board that he should serve as a director of our company.

  8. William Humphries, age 57

    William Humphries, age 57 William Humphries has served as a member of our Board since 2016. Mr. Humphries joined Alcami Corporation, a contract development and manufacturing organization, in June 2023 and serves as its Chief Executive Officer and member of its board of directors. From May 2021 to May 2023, Mr. Humphries served as the Chief Executive Officer of lsosceles Pharmaceuticals Inc, a biotechnology company. From 2018 to December 2020, Mr. Humphries served as President of Ortho Dermatologics, the dermatology division of Bausch Health Companies, Inc., and previously served as its Executive Vice President, Company Group Chairman for Dermatology and OraPharma from 2017 to 2018. From 2012 to 2016, he served as President and Chief Executive Officer of the North American business of Merz, Inc., an affiliate of Merz Pharma Group, a specialty healthcare company. From 2006 to 2012, Mr. Humphries served in a number of leadership positions with Stiefel Laboratories, Inc., a dermatology pharmaceutical company, including as its Chief Commercial Officer and then as President beginning in 2008. Stiefel was acquired by GSK in 2009, after which Mr. Humphries served as the President of Dermatology for Stiefel from 2009 until 2012. Mr. Humphries previously held multiple senior executive roles in sales and marketing, business development and international marketing for Allergan, Inc., concluding as Vice President of its U.S. skincare business. Mr. Humphries currently serves as a director of the publicly held companies Clearside Biomedical, Inc. and PhaseBio Pharmaceuticals, Inc., and as a director of the privately held life sciences company Bryn Pharmaceuticals. Within the past five years, he served as a member of the board of directors of STRATA Skin Sciences, Inc, a publicly held company, and SKNV. He received a B.A. degree from Bucknell University and an M.B.A. degree from Pepperdine University. Our Board believes that Mr. Humphries’ experience as a pharmaceutical company executive provides him with the qualifications and skills to serve as a director of our company.

  9. Andrew Schiff, M.D., age 58

    Andrew Schiff, M.D., age 58 Andrew Schiff has served as a member of our Board since 2017. Dr. Schiff joined Aisling Capital, an investment firm, in 1999 and currently serves as one of its managing partners. Prior to joining Aisling Capital, Dr. Schiff practiced internal medicine for six years at The New York Presbyterian Hospital, where he maintains his position as a Clinical Assistant Professor of Medicine. Dr. Schiff currently serves on the board of directors of the publicly held company Monte Rosa Therapeutics, Inc. Dr. Schiff also currently serves on the board of directors of the privately held company Dren Bio. He is a board member of the Visiting Nurse Service of New York, as well as other charitable organizations. Dr. Schiff received an M.D. degree from Cornell University Medical College, an M.B.A. degree from Columbia University, and a B.S. degree with honors in Neuroscience from Brown University. Our Board believes that Dr. Schiff’s medical background and venture capital experience qualify him to serve as a director of our company.

  10. DIRECTORS CONTINUING IN OFFICE UNTIL THE 2026 ANNUAL MEETING

    DIRECTORS CONTINUING IN OFFICE UNTIL THE 2026 ANNUAL MEETING

  11. Anand Mehra, M.D., age 48

    Anand Mehra, M.D., age 48 Anand Mehra, M.D. has served as a member of our Board since 2014. Dr. Mehra has served as a founding partner of Forge Life Science Partners, a biotech investment firm, since its inception in May 2023. Dr. Mehra joined Sofinnova Investments, Inc. (fka Sofinnova Ventures, Inc.), a biotech investment firm, in 2007 and served as a managing general partner until January 2020. Prior to joining Sofinnova, Dr. Mehra worked in J.P. Morgan’s private equity and venture capital group, and before that, Dr. Mehra was a consultant in McKinsey & Company’s pharmaceutical practice. Dr. Mehra currently serves as the chair of the board of directors of the publicly held company Merus N.V. Within the past five years, he also served on the board of directors of the pharmaceutical company Spark Therapeutics, Inc. Dr. Mehra received a B.A. degree in political philosophy from the University of Virginia and an M.D. degree from Columbia University’s College of Physicians and Surgeons. Our Board believes that Dr. Mehra’s extensive experience in the life sciences industry, his service on the boards of directors of other public life sciences companies and his extensive leadership experience qualify him to serve as a director of our company.

  12. Maxine Gowen, Ph.D., age 66

    Maxine Gowen, Ph.D., age 66 Maxine Gowen has served as a member of our Board since July 2019. Dr. Gowen joined TamuroBio Inc., a biotechnology company, in August 2019, and served as its part-time Chief Executive Officer until December 2021. Dr. Gowen founded Trevena, Inc., a publicly held biopharmaceutical company, and served as its President and Chief Executive Officer from 2007 until 2018. Prior to this, Dr. Gowen held a variety of leadership roles at GlaxoSmithKline (GSK) over a period of fifteen years. Dr. Gowen was previously President and Managing Partner at SR One, the venture capital subsidiary of GSK, where she led its investments in, and served on the board of directors of, numerous companies. Until 2002, Dr. Gowen was Vice President, Drug Discovery, Musculoskeletal Diseases at GSK, responsible for drug discovery and early development for osteoporosis, arthritis and metastatic bone disease. Dr. Gowen held a tenured academic position in the School of Pharmacology, University of Bath, UK from 1989 to 1992. Dr. Gowen currently serves on the boards of directors of the publicly held companies Merus N.V. and as chair of Passage Bio, Inc. Within the past five years, Dr. Gowen served as a director of the publicly held companies Trevena, Inc., Aceragen, Inc. (formerly known as Idera Pharmaceuticals, Inc.) and Akebia Therapeutics, Inc. Dr. Gowen received a B.Sc. in biochemistry from the University of Bristol, UK, then received a Ph.D. in cell biology from the University of Sheffield, UK, and received an M.B.A from The Wharton School of the University of Pennsylvania. Dr. Gowen also received a D.Sc. from the University of Bath, UK. Our Board believes that Dr. Gowen’s extensive leadership experience with pharmaceutical and biotechnology companies qualifies her to serve as a director of our company.

  13. BOARD DIVERSITY MATRIX

    BOARD DIVERSITY MATRIX

  14. BOARD DIVERSITY MATRIX

    | Board Diversity Matrix (As of April 1, 2024) | | | | Total Number of Directors | 9 | | | | Female | Male | | Part I: Gender Identity | | | | Directors | 1 | 8 | | Part II: Demographic Background | | | | Asian | — | 1 | | White | 1 | 7 |

  15. BOARD DIVERSITY MATRIX

    | Board Diversity Matrix (As of April 1, 2023) | | | | Total Number of Directors | 10 | | | | Female | Male | | Part I: Gender Identity | | | | Directors | 1 | 9 | | Part II: Demographic Background | | | | Asian | — | 1 | | White | 1 | 8 |

  16. INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

    INFORMATION REGARDING THE BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

  17. Key Compensation Decisions and Actions

    | Compensation Area | Highlights | | Cash Compensation | ● Set base salary and target bonus levels for Dr. Manion and Mr. Balthaser as part of their appointments as Chief Executive Officer and Chief Financial Officer, respectively ● Approved merit-based base salary increases for Dr. Cawkwell and Mr. Loerop, as well as a market adjustment to base salary for Dr. Monahan ● Approved target bonus levels for Dr. Monahan, Dr. Cawkwell and Mr. Loerop ● Approved the 2023 corporate incentive goals and weightings and associated NEO target bonuses ● Paid bonuses to our NEOs at a level that reflected performance against our 2023 goals, other significant accomplishments, and individual contributions where applicable | | Equity Compensation | ● Granted our NEOs annual long-term incentive grants with 4-year vesting to promote retention and shareholder alignment ● All equity grants were comprised 70% in stock options and 30% in restricted stock units (“RSUs”) | | Employment Agreements | ● Entered into a new employment agreement with Dr. Manion and Mr. Balthaser as part of their appointment as Chief Executive Officer and Chief Financial Officer, respectively ● Entered into an amended employment agreement with Dr. Monahan as part of his transition from full-time to part-time status | | Process / Governance | ● Updated our peer group of comparable companies ● Re-engaged Pearl Meyer as the Compensation Committee’s independent consultant |

  18. Key Compensation Governance Attributes

    | What We Do | What We Don’t Do | | ✓ Utilize “double-trigger” vesting on equity awards ✓ Have a maximum individual payout on our bonus plan ✓ Have an independent Compensation Committee ✓ Consult an independent compensation consultant ✓ Provide a majority of compensation through long-term incentives that have multi-year vesting schedules ✓ Provide a competitive mix of fixed (e.g., base salary) and variable (e.g., bonus) short-term compensation ✓ Evaluate the risk profile of our pay program ✓ Use a consistent approach to granting and pricing equity awards ✓ Have a clawback policy for incentive-based compensation | ✘ No guaranteed salary increases ✘ No executive-only perquisites ✘ No pension plans ✘ No post-employment benefit plans ✘ No hedging or pledging of Company stock ✘ No history of repricing stock options |

  19. Compensation Philosophy

    | ✓ | providing competitive compensation opportunities; |

  20. Compensation Philosophy

    | ✓ | establishing appropriate incentives to further our long-term strategic plan. |

  21. Compensation Philosophy

    We accomplish these goals through a total view of compensation that covers multiple compensation elements including but not limited to base salary, cash- and equity-based incentives, and health and welfare benefits. In setting NEO compensation, we consider compensation for comparable positions in the market, the historical compensation levels of our executives, individual performance as compared to our expectations and objectives, our desire to motivate our employees to achieve short- and long-term results that are in the best interests of our stockholders and a long-term commitment to our company. We do not target a specific competitive position or a specific mix of compensation among base salary, bonus or long-term incentives; however, we do deliver a majority of compensation through long-term incentives.

  22. Process and Roles

    Process and Roles We review compensation annually for our NEOs, and in some cases more frequently as deemed appropriate. The various roles that contribute to our decisions and actions each year are as follows: The Compensation Committee. The Compensation Committee is responsible for establishing and overseeing our executive compensation program. Specific responsibilities of the Compensation Committee are described in this proxy statement under “Information Regarding Committees of the Board of Directors—Compensation Committee.” Our Compensation Committee typically reviews and discusses management’s proposed compensation with the Chief Executive Officer for all executives other than the Chief Executive Officer. Based on those discussions and its discretion, the Compensation Committee then recommends the compensation for each NEO. Our Compensation Committee, without members of management present, discusses and ultimately approves the compensation of our executive officers. Role of our Chief Executive Officer and other Management Members. Our Chief Executive Officer evaluates and reviews with the Compensation Committee the individual performance and contributions of each of the other NEOs and makes recommendations to the Compensation Committee regarding base salary, and short- and long-term incentive awards. The Compensation Committee reviews and considers such recommendations, but ultimately retains full discretion and authority over the final compensation decisions for the NEOs. Our Chief Executive Officer also recommends the Company performance objectives that are used to determine bonus amounts and consults with select members of management in the development of the goals. The Compensation Committee may request that certain executives attend portions of Compensation Committee meetings based on the topics being covered and their respective areas of expertise. NEO compensation decisions are made in executive session without the respective NEOs present. Role of our Independent Compensation Consultant. In 2023, the Compensation Committee retained Pearl Meyer, a compensation consulting firm, to evaluate and make recommendations with respect to our executive compensation program. Pearl Meyer’s role included assisting the Compensation Committee with the selection of a peer group of companies for comparison purposes, an analysis of our existing executive compensation, the design of our long-term incentive program, an analysis of our director compensation policy, sharing new developments in areas that fall within the Compensation Committee’s jurisdiction, and advising the Compensation Committee as appropriate. The consultant serves at the pleasure of the Compensation Committee, and the consultant’s fees are approved by the Compensation Committee.

  23. Use of Market Data

    Use of Market Data The Compensation Committee makes use of market data in making its decisions. One of these references is compensation market data derived from other comparable public companies. In September 2022, Pearl Meyer developed a peer group for use in evaluating the competitiveness of NEO compensation arrangements. The group consisted of 24 companies that were comparable to ours at that time. The key criteria used to arrive at the selected companies was as follows:

  24. Use of Market Data

    | ● | U.S. publicly traded biotechnology or pharmaceutical companies; |

  25. Use of Market Data

    | ● | development-stage; and |

  26. Use of Market Data

    | ● | comparable size, as defined by market capitalization, operating expenses, and number of full-time employees. |

  27. Use of Market Data

    In September 2022, the Compensation Committee approved the following peer group, which such group was used by the Compensation Committee in connection with making compensation decisions for 2023:

  28. Use of Market Data

    | Aldeyra Therapeutics, Inc. | Design Therapeutics, Inc. | Replimune Group, Inc. | | AlloVir, Inc. | Evelo Biosciences, Inc. | Scholar Rock Holding Corporation | | AnaptysBio, Inc. | Inhibrx, Inc. | Selecta Biosciences, Inc. | | BioXcel Therapeutics, Inc. | iTeos Therapeutics, Inc. | Seres Therapeutics, Inc. | | C4 Therapeutics, Inc. | IVERIC bio, Inc. | Stoke Therapeutics, Inc. | | Celldex Therapeutics, Inc. | Kymera Therapeutics, Inc. | Syndax Pharmaceuticals, Inc. | | Chinook Therapeutics, Inc. | Nurix Therapeutics, Inc. | Vaxcyte, Inc. | | Day One Biopharmaceuticals, Inc. | RAPT Therapeutics, Inc. | Ventyx Biosciences, Inc. |

  29. Use of Market Data

    In December 2023, Pearl Meyer again reviewed the peer group of companies for continued appropriateness. The criteria used to develop this peer group was similar to the previous year, adjusted for our change in market capitalization and anticipated operating changes. It also included new criteria based on therapeutic focus and cash balance. This criterion resulted in the following peer group of 20 companies used to make compensation decisions for 2024:

  30. Use of Market Data

    | Abeona Therapeutics, Inc. | CytomX Therapeutics, Inc. | Passage Bio, Inc. | | Adverum Biotechnologies, Inc. | HOOKIPA Pharma Inc. | Precision BioSciences, Inc. | | Athira Pharma, Inc. | Immunic, Inc. | Rezolute, Inc. | | aTyr Pharma, Inc. | Invivyd, Inc. | Shattuck Labs, Inc. | | Barinthus Biotherapeutics plc | Kronos Bio, Inc. | Syros Pharmaceuticals, Inc. | | Black Diamond Therapeutics, Inc. | Lyra Therapeutics, Inc. | Vaxart, Inc. | | Bolt Biotherapeutics, Inc. | NextCure, Inc. | |

  31. Use of Market Data

    From time to time, the Compensation Committee also will make use of industry and size specific survey data to benchmark compensation levels or program practices. Typically, this survey data is used when the peer group disclosures do not contain the type of information being researched or have inadequate sample sizes for benchmarking purposes.

  32. Overview

    | Element | Summary Purpose | | Base Salary | Provide a fixed source of income commensurate with the NEOs’ positions at the Company | | Annual Cash Incentive Bonus | Motivate NEOs to achieve our annual corporate objectives that we believe will translate to long-term stockholder value creation and achievement of our mission | | Long-term Equity Incentives | Aid in attraction and retention of NEOs and create stockholder alignment | | Benefits | Provide our NEOs with health and welfare benefits, as well as certain protections if we experience a change of control or an NEO separates |

  33. Annual Base Salary

    | (3) Dr. Monahan’s increase in base salary was intended to align Dr. Monahan with the base salaries of chief scientific officers among the peer group of companies. Effective July 2023, Dr. Monahan shifted to 60% part-time status, and his base salary was reduced pro rata to $280,800 for the period from July 1, 2023 to December 31, 2023. |

  34. Annual Bonus (Non-Equity Incentive Plan Compensation)

    Annual Bonus (Non-Equity Incentive Plan Compensation) We seek to motivate and reward our executives for achievements relative to our corporate goals and expectations, and with respect to our NEOs other than the Chief Executive Officer, their respective individual goals, for each fiscal year. The actual annual bonus paid, if any, is calculated by multiplying the NEO’s annual base salary, target bonus percentage, the percentage attainment of the corporate goals established by the Board for such year, and for our NEOs other than the Chief Executive Officer, the percentage attainment of the individual goals established by our Chief Executive Officer. The Compensation Committee is not required to determine bonuses based on this exact formula and reserves the right to consider other factors and adjust bonus amounts accordingly. For 2023, the bonus funding factor was weighted 75% for corporate goals and 25% for individual goals for all NEOs other than our Chief Executive Officer, whose bonus funding was 100% dependent on the achievement of corporate goals. The Compensation Committee reviews our performance against our goals and approves the extent to which we achieved each of our corporate goals and, with the input of our Chief Executive Officer, individual performance, as applicable, and, for each NEO, the amount of the bonus awarded. The following chart depicts the structure of our annual bonus program for 2023:

  35. Annual Bonus (Non-Equity Incentive Plan Compensation)

    | Base SalaryX | Target Bonus PercentageX | Bonus Funding Factor (allocated as follows) | | = | Annual Cash Incentive Bonus Earned | | | | Corporate Funding Factor | Individual Funding Factor (if any) | | |

  36. Annual Bonus (Non-Equity Incentive Plan Compensation)

    Our Compensation Committee established the following target bonus opportunities for each NEO for 2023 that reflected the individual’s role and also took into consideration target bonuses among executives at peer companies:

  37. Annual Bonus (Non-Equity Incentive Plan Compensation)

    | | | | 2023 Target | | | | 2023 Target Bonus | Bonus | | | 2023 Annual Base Salary | Opportunity (% of Base | Opportunity | | Name | ($) | Salary) | ($) | | Douglas Manion | 600,000 | 55% | 330,000 | | Kevin Balthaser | 444,000 | 40% | 177,600 | | Joseph Monahan(1) | 374,400 | 40% | 149,760 | | Gail Cawkwell | 490,000 | 40% | 196,000 | | James Loerop | 435,000 | 40% | 174,000 |

  38. Annual Bonus (Non-Equity Incentive Plan Compensation)

    | (1) Target bonus for Dr. Monahan is a percentage of his earned base salary for 2023, taking into account the different base salaries earned during the parts of the year in which he was a full-time and part-time employee. |

  39. Annual Bonus (Non-Equity Incentive Plan Compensation)

    In early 2023, our Compensation Committee approved our 2023 corporate performance goals (which comprise the corporate funding factor used to calculate the bonus funding factor). These goals were divided into two primary categories that the Compensation Committee believed were critical to achieving the Company’s mission: (a) research and development goals, which together comprised 85% of the overall corporate performance target score, and (b) other corporate goals, which comprised 15% of the overall corporate performance target score. These two categories of objectives included specific deliverables, described below, with differing weightings. The Compensation Committee also approved stretch performance goals in both the research and development and other corporate categories that, if earned, could increase the overall funding of the bonus plan up to a maximum of 140% of the corporate performance target score. The plan goals were generally intended to be measured over one year but could be accomplished at various times during the year. For each corporate goal described below, partial credit could be given by the Compensation Committee based on the actual level of achievement. We established goals designed to drive corporate performance that we believed were challenging but also achievable. In late 2023, the Compensation Committee evaluated the level of achievement for the 2023 corporate performance goals. The following chart provides a summary of the corporate goals for 2023 and resulting assessment of achievement:

  40. Annual Bonus (Non-Equity Incentive Plan Compensation)

    | | | Credit Given | | | | for | | | Weighting | Achievement | | | (%) | (%) | | Research and Development | 85 | 45 | | • Clinical development | | | | • Preclinical development | | | | • Discovery and contract research | | | | Other Corporate | 15 | 10 | | • Business development, financing, investor relations, operational and compliance | | | | Total Score | 100 | 55 | | Stretch Goals | 40 | 5 | | • Research and development | 15 | | | • Other corporate | 25 | | | Total Score (with Stretch Goals) | 140 | 60 |

  41. Annual Bonus (Non-Equity Incentive Plan Compensation)

    Our research and development goals included various clinical development milestones, including advancing zunsemetinib through a Phase 2b clinical trial in subjects with rheumatoid arthritis (“RA”), a Phase 2a clinical trial in subjects with psoriatic arthritis, and a Phase 2a clinical trial in subjects with hidradenitis suppurativa (“HS”), advancing ATI-1777 through a Phase 2b clinical trial in subjects with atopic dermatitis, advancing ATI-2138 through a Phase 1 MAD study and initiating Phase 2 development activities, and advancing ATI-2231 through IND submission and initiating a Phase 1 clinical trial; various preclinical development goals; and various discovery, contract research organization (“CRO”) and other research and development targets, including advancing discovery activities with respect to our pipeline and increasing our CRO business revenue. The clinical development objectives comprised the largest weighting within this category. The research and development stretch objectives related to more advanced development or additional development of our clinical, preclinical and discovery programs and additional goals related to our CRO business. In assessing our overall level of achievement, the Compensation Committee considered, among other things, the completion of our Phase 2 trials of zunsemetinib for HS and RA, the completion of the Phase 1 MAD trial of ATI-2138, the submission of the IND for ATI-2231 and initiation of Phase 1 activities, and the progression of our preclinical programs and discovery pipeline. The Compensation Committee concluded that partial credit for our research and development goals was warranted given that we had not achieved certain clinical development objectives and our zunsemetinib trials in HS and RA did not meet their primary endpoints, and we had not achieved the revenue goal for our CRO business that could have resulted in full credit. With respect to the stretch goals, the Compensation Committee considered the progress of additional development activities with respect to ATI-2231 and our drug discovery improvements. The Compensation Committee determined that partial credit for the stretch goals was warranted, but full credit was not awarded as we had not achieved some of the clinical, preclinical and discovery goals and had not achieved the revenue goal for our CRO business. Our other corporate goals were focused in the areas of business development, financing and investor relations, as well as certain operational and compliance goals. The other corporate stretch goals related to additional business development and financing goals. In assessing our level of achievement of these goals, the Compensation Committee considered, among other things, our net proceeds of $27.5 million from sales of our common stock, the execution of an out-licensing agreement, and the broad achievement across our investor relations, operational and compliance goals. The Compensation Committee determined that no credit for the stretch goals was warranted. In addition to the corporate performance goals described above, Dr. Manion, who was serving as our Chief Executive Officer in 2023, evaluated the individual performance of each of Mr. Balthaser, Dr. Cawkwell, Mr. Loerop and Dr. Monahan, and recommended a level of achievement to the Compensation Committee. The individual goals focused on contributions toward our corporate objectives as well as the personal qualities necessary to effectively manage a team, solve problems and drive our business forward. Dr. Manion recommended full credit for these individual objectives, which the Compensation Committee approved. Applying the corporate and individual funding factor weightings, the Compensation Committee approved the following bonus payouts for 2023:

  42. Annual Bonus (Non-Equity Incentive Plan Compensation)

    | | | | | | Actual | | | | Corporate | Individual | | Bonus as a | | | Target Bonus | Funding Factor | Funding Factor | | Percent of | | | Opportunity | Credit | Credit | Earned Bonus | Target | | Name | ($) | (%) | (%) | ($) | (%) | | Douglas Manion | 330,000 | 60 | — | 198,000 | 0.60 | | Kevin Balthaser | 177,600 | 45* | 25 | 124,320 | 0.70 | | Joseph Monahan | 149,760 | 45* | 25 | 104,832 | 0.70 | | Gail Cawkwell | 196,000 | 45* | 25 | 137,200 | 0.70 | | James Loerop | 174,000 | 45* | 25 | 121,800 | 0.70 |

  43. Annual Bonus (Non-Equity Incentive Plan Compensation)

    * Represents 60% multiplied by 75%, the corporate funding factor for the officer.

  44. Long-term Incentives

    Long-term Incentives Long-term incentives represent a key element of our overall compensation program. This compensation element is primarily used to aid in attracting and retaining the talent we need to achieve our mission, strategies, and underlying corporate goals. Additionally, long-term incentives align the interests of our NEOs with our stockholders. The Compensation Committee typically approves long-term incentive grants for NEOs at the start of their employment, and annually thereafter in connection with the annual performance review. Additionally, the Compensation Committee may periodically grant additional equity awards based on changes in job responsibility, performance and contribution, or other special circumstances. For the 2023 plan year, the Compensation Committee approved both stock options and RSUs for NEOs as part of their annual long-term incentive awards. The vesting schedules for grants made in 2023 are as follows:

  45. Long-term Incentives

    | ● | Stock option grants vest in equal installments on the anniversary of the grant date over a 4-year period for Dr. Monahan, Dr. Cawkwell and Mr. Loerop, and vest in equal installments on the anniversary of January 1, 2023 over a 4-year period for Dr. Manion and Mr. Balthaser, which is the effective date of their respective appointments. |

  46. Long-term Incentives

    | ● | RSU grants vest in equal installments on the anniversary of the grant date over a 4-year period for Dr. Monahan, Dr. Cawkwell and Mr. Loerop, and vest in equal installments on the anniversary of January 1, 2023 over a 4-year period for Dr. Manion and Mr. Balthaser, which is the effective date of their respective appointments. |

  47. Long-term Incentives

    In determining annual long-term incentive grants for NEOs, the Compensation Committee reviews market data for annual long-term incentive grant levels and groups the NEOs accordingly. The market data that the Compensation Committee reviewed for the purpose of sizing equity grants included long-term incentive awards expressed as a percentage of shares of common stock outstanding, as well as grant date fair values. In February 2023, the Compensation Committee approved the grant of stock options and RSUs to each of our NEOs who were employed with us at that time. For all NEOs, the grants were apportioned 70% to stock options and 30% to RSUs, with the number of shares underlying the RSUs being further divided by 1.5 to reflect the full value nature of the RSUs. The following table sets forth the number of shares of common stock issuable upon exercise of the stock options, and the number of shares of common stock underlying the RSUs, granted to our NEOs in 2023:

  48. Long-term Incentives

    | | Number of | | | | | Stock Options | | Number of RSUs | | | Granted | Exercise Price | Granted | | Name | (#) | ($) | (#) | | Douglas Manion | 378,000 | 16.97 | 108,000 | | Kevin Balthaser | 105,000 | 16.97 | 30,000 | | Joseph Monahan | 105,000 | 16.97 | 30,000 | | Gail Cawkwell | 105,000 | 16.97 | 30,000 | | James Loerop | 105,000 | 16.97 | 30,000 |

  49. Long-term Incentives

    As of December 31, 2023, our stock price was $1.05. As a result, the stock options granted that are detailed above have an intrinsic value of $0, and the RSUs granted are worth 6% of their original grant date fair value. This reduction in value supports the notion of executive pay for performance. For further analysis of our pay and performance measures, see “Pay versus Performance”.

  50. Severance and Change of Control Benefits

    Severance and Change of Control Benefits Our NEOs are entitled to certain benefits if the executive’s employment terminates in certain circumstances or if a change of control occurs. The terms of these arrangements and the amounts payable under them are described below for each NEO under “Compensation Tables—Potential Payments Upon Termination or Change of Control.” We provide these benefits because we believe that severance protection is necessary to attract executives to join our company, as well as to help our executives focus on the best interests of the Company when performing their duties and when making strategic decisions about a potential corporate transaction or change of control. In January 2024, we terminated the employment of Dr. Cawkwell without cause. In connection with her departure, Dr. Cawkwell became eligible to receive the severance benefits as outlined in her employment agreement as described under “Compensation Tables—Potential Payments Upon Termination or Change of Control.” In February 2024, in connection with Dr. Manion’s departure from the Company, we entered into a separation agreement, waiver and release with Dr. Manion pursuant to which we agreed to provide him the same severance benefits as if he were terminated without cause under his employment agreement as described under “Compensation Tables—Potential Payments Upon Termination or Change of Control.”

  51. 2024 Compensation Actions

    | ● | In connection with Dr. Manion’s separation as Chief Executive Officer and President in January 2024, in February 2024 we entered into a separation agreement, waiver and release with him pursuant to which we agreed to provide him the same severance benefits as if he were terminated without cause under his employment agreement. |

  52. 2024 Compensation Actions

    | ● | In January 2024, in connection with the departure of Dr. Manion, Dr. Neal Walker was appointed Interim Chief Executive Officer and President. In connection therewith, we entered into a letter agreement with Dr. Walker pursuant to which Dr. Walker receives an annual base salary of $500,000 and is eligible to earn a cash bonus equal to 60% of his annual base salary (prorated based on time of service), subject to the achievement of performance goals established by our Board. Dr. Walker was also granted a nonqualified stock option to purchase 497,000 shares and a restricted stock unit award for 142,000 shares. Each of the awards vest in equal monthly installments over 15 months, subject to Dr. Walker’s continuous service with us as the Interim CEO as of each such vesting date, provided that in the event he ceases to be Interim CEO but continues to provide continuous service to us in any capacity, such awards will continue to vest in the event that our Board determines in its sole discretion that he achieved his performance goals prior to the cessation of his employment as Interim CEO. Vesting of the equity awards will accelerate in full and be immediately exercisable upon a change in control. |

  53. 2024 Compensation Actions

    | ● | In January 2024, we terminated the employment of Dr. Cawkwell without cause. In connection with her departure, Dr. Cawkwell became eligible to receive the severance benefits as outlined in her employment agreement. |

  54. 2024 Compensation Actions

    | ● | In January 2024, we entered into a second amended and restated employment agreement with Dr. Monahan pursuant to which he returned to full-time status, effective February 2024. Pursuant to such agreement, Dr. Monahan receives an annual base salary of $430,000 and is eligible to earn an incentive bonus with a target bonus of up to 40% of his annual base salary. Dr. Monahan is eligible for the same benefits and payments that he was eligible to receive under his prior employment agreement in the event of certain qualifying terminations or non-renewal of his employment, as described in further detail below under “Compensation Tables—Potential Payments Upon Termination or Change of Control.” |

  55. 2024 Compensation Actions

    | ● | In January 2024, the Compensation Committee also approved 2024 target bonuses. Dr. Monahan, Mr. Balthaser and Mr. Loerop’s target bonuses remained at 40% of their base salaries. |

  56. 2024 Compensation Actions

    | ● | In February 2024, Mr. Balthaser, Mr. Loerop and Dr. Monahan each received annual equity grants consisting of 59,000 RSUs, and stock options to purchase 206,500 shares. All of the awards vest in four equal annual installments, subject to the officer’s continuous service with us as of the applicable vesting date. In addition, as part of the Company’s employee retention initiative following the Company’s reduction in force, Mr. Balthaser, Mr. Loerop and Dr. Monahan each received additional retention equity grants consisting of 147,500 RSUs, which vest in two equal installments on December 31, 2024 and December 31, 2025, subject to the officer’s continuous service with us as of the applicable vesting date. |

  57. Compensation Risk Assessment

    | ● | our short-term incentive plan is based on a variety of corporate goals; |

  58. Compensation Risk Assessment

    | ● | the Compensation Committee has discretion to reduce or eliminate a payout under our annual cash incentive plan; |

  59. Compensation Risk Assessment

    | ● | our long-term incentive grants vest over time, generally over four years of continuous service; |

  60. Compensation Risk Assessment

    | ● | the Compensation Committee engages with an independent compensation consultant. |

  61. Summary Compensation Table

    Summary Compensation Table The following table presents the compensation awarded to or earned by each of our NEOs for the years ended December 31, 2023, 2022 and 2021.

  62. Summary Compensation Table

    | Name and Principal Position | Year | Salary ($) | Bonus | Stock Awards ($)(1) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($) | Total ($) | | Douglas Manion(4) | 2023 | 600,000 | - | 1,832,760 | 4,513,721 | 198,000 | 13,200(3) | 7,157,681 | | Former President and Chief Executive Officer | 2022 | 204,167 | - | 848,526 | 2,067,346 | 82,159 | - | 3,202,198 | | Kevin Balthaser(5) | 2023 | 444,000 | - | 509,100 | 1,253,812 | 124,320 | 13,200(3) | 2,344,432 | | Chief Financial Officer | | | | | | | | | | Joseph Monahan | 2023 | 374,400 | - | 509,100 | 1,253,812 | 104,832 | 13,200(3) | 2,255,344 | | Chief Scientific Officer | 2022 | 420,000 | - | 652,878 | 1,570,083 | 168,000 | 12,021(3) | 2,822,982 | | | 2021 | 350,000 | - | 4,812,000 | - | 154,700 | 10,605(3) | 5,327,305 | | Gail Cawkwell(6) | 2023 | 490,000 | - | 509,100 | 1,253,812 | 137,200 | 13,200(3) | 2,403,312 | | Former Chief Medical Officer | 2022 | 247,273 | 25,000(7) | 896,400 | 2,030,642 | 98,893 | 800(3) | 3,299,008 | | James Loerop(8) | 2023 | 435,000 | - | 509,100 | 1,253,812 | 121,800 | 13,200(3) | 2,332,912 | | Chief Business Officer | | | | | | | | |

  63. Summary Compensation Table

    | (1) The amounts reflect the full grant date fair value for RSU and stock option awards granted during the indicated year. The grant date fair value was computed in accordance with ASC Topic 718, Compensation—Stock Compensation. The assumptions we used in valuing stock options and restricted stock unit awards 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. |

  64. Summary Compensation Table

    | (2) The amounts reflect the portion of each officer’s target annual bonus paid based on the achievement of our corporate and individual goals, as applicable, which for 2023 are discussed further above under “Compensation Program and Decisions—Annual Bonus (Non-Equity Incentive Plan Compensation).” |

  65. Summary Compensation Table

    | (3) The amount consists of company matching contributions to the executive's 401(k) plan account. |

  66. Summary Compensation Table

    | (4) Dr. Manion’s employment with us began in August 2022 and ended in January 2024. |

  67. Summary Compensation Table

    | (5) Mr. Balthaser was not one of our executive officers during the years ended December 31, 2022 and 2021 and, accordingly, only his compensation for the year ended December 31, 2023 is included in the Summary Compensation Table in accordance with SEC rules. |

  68. Summary Compensation Table

    | (6) Dr. Cawkwell’s employment with us began in June 2022 and ended in January 2024. |

  69. Summary Compensation Table

    | (7) The amount reflects Dr. Cawkwell’s signing bonus. |

  70. Summary Compensation Table

    | (8) Mr. Loerop began his employment with us in January 2022 and was not an NEO for the year ended December 31, 2022. Accordingly, only his compensation for the year ended December 31, 2023 is included in the Summary Compensation Table in accordance with SEC rules. |

  71. Grants of Plan-Based Awards

    Grants of Plan-Based Awards The following table shows certain information regarding grants of plan-based awards to our NEOs during the year ended December 31, 2023:

  72. Grants of Plan-Based Awards

    | | | | | All Other | All Other | | | | | | | | Stock | Option | | | | | | | | Awards: | Awards: | | Grant Date | | | | | | Number of | Number of | Exercise or | Fair Value of | | | | Estimated Future Payouts | | Shares of | Securities | Base Price | Stock and | | | | Under Non-Equity Incentive | | Stock or | Underlying | of Option | Option | | | | Plan Awards(1) | | Units | Options | Awards | Awards | | Name | Grant Date or Modification Date | Target ($) | Maximum ($) | (#)(2) | (#)(3) | ($/Sh) | ($)(4) | | Douglas Manion | | 330,000 | 462,000 | | | | | | | 2/1/2023 | | | | 378,000 | 16.97 | 4,513,721 | | | 2/1/2023 | | | 108,000 | | | 1,832,760 | | Kevin Balthaser | | 177,600 | 230,880 | | | | | | | 2/1/2023 | | | | 105,000 | 16.97 | 1,253,812 | | | 2/1/2023 | | | 30,000 | | | 509,100 | | Joseph Monahan | | 149,760 | 194,688 | | | | | | | 2/1/2023 | | | | 105,000 | 16.97 | 1,253,812 | | | 2/1/2023 | | | 30,000 | | | 509,100 | | Gail Cawkwell | | 196,000 | 254,800 | | | | | | | 2/1/2023 | | | | 105,000 | 16.97 | 1,253,812 | | | 2/1/2023 | | | 30,000 | | | 509,100 | | James Loerop | | 174,000 | 226,200 | | | | | | | 2/1/2023 | | | | 105,000 | 16.97 | 1,253,812 | | | 2/1/2023 | | | 30,000 | | | 509,100 |

  73. Grants of Plan-Based Awards

    | (1) Amounts represent cash bonus opportunities provided to NEOs in 2023 under our annual bonus program. There are no threshold payouts, as partially met goals can receive a score based on the partial achievement. Target payment amounts assume goal attainment of 100% of the corporate and individual (as applicable) performance goals. Maximum payment amounts assume goal attainment of 140% of corporate performance goals and 100% of individual goals (as applicable). The criteria used to determine the amount of the annual bonus payable to each NEO for 2023 is described above under “Compensation Programs and Decisions—Annual Bonus (Non-Equity Incentive Plan Compensation).” The actual amounts earned for 2023 are disclosed in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. |

  74. Grants of Plan-Based Awards

    | (2) These RSUs vest over four years in four equal installments beginning on the first anniversary of the grant date for Dr. Monahan, Dr. Cawkwell and Mr. Loerop, and vest over four years in four equal installments beginning on the first anniversary of January 1, 2023 for Dr. Manion and Mr. Balthaser, which is the effective date of their respective appointments as Chief Executive Officer and Chief Financial Officer, respectively. |

  75. Grants of Plan-Based Awards

    | (3) These stock options vest over four years in four equal installments beginning on the first anniversary of the grant date for Dr. Monahan, Dr. Cawkwell and Mr. Loerop, and vest over four years in four equal installments beginning on the first anniversary of January 1, 2023 for Dr. Manion and Mr. Balthaser, which is the effective date of their respective appointments as Chief Executive Officer and Chief Financial Officer, respectively. |

  76. Grants of Plan-Based Awards

    | (4) The grant date fair value was computed in accordance with ASC Topic 718, Compensation—Stock Compensation. The assumptions we used in valuing stock options and restricted stock unit awards 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. |

  77. Outstanding Equity Awards as of December 31, 2023

    Outstanding Equity Awards as of December 31, 2023 The following table provides information about outstanding equity awards held by each of our NEOs as of December 31, 2023:

  78. Outstanding Equity Awards as of December 31, 2023

    | | Option Awards | | | | | Stock Awards | | | | | | | | | | Market | | | | | | | | Number | Value | | | | | | | | of Shares | of Shares | | | | | | | | of Stock | of Stock | | | | Number of Securities Underlying | | Option | | That | That | | | Type | Unexercised Options | | Exercise | Option | Have Not | Have Not | | | of | (#) | | Price | Expiration | Vested | Vested | | Name | Award | Exercisable | Unexercisable | ($) | Date | (#) | ($)(17) | | Douglas Manion | Option | 54,450 | 163,350(1) | 13.62 | 7/31/2032 | | | | | Option | — | 378,000(1) | 16.97 | 1/31/2033 | | | | | RSU | | | | | 46,725(2) | 49,061 | | | RSU | | | | | 108,000(2) | 113,400 | | Kevin Balthaser | Option | 11,200 | — | 27.54 | 7/4/2027 | | | | | Option | 2,100 | — | 22.09 | 1/31/2028 | | | | | Option | 7,750 | 7,750(3) | 24.06 | 2/28/2031 | | | | | Option | 8,350 | 25,050(4) | 14.94 | 2/29/2032 | | | | | Option | — | 105,000(5) | 16.97 | 1/31/2033 | | | | | RSU | | | | | 1,500(6) | 1,575 | | | RSU | | | | | 1,000(7) | 1,050 | | | RSU | | | | | 2,200(8) | 2,310 | | | RSU | | | | | 7,125(9) | 7,481 | | | RSU | | | | | 30,000(10) | 31,500 | | Joseph Monahan | Option | 56,000 | — | 25.80 | 8/31/2027 | | | | | Option | 14,700 | — | 22.09 | 1/31/2028 | | | | | Option | 38,275 | 114,825(4) | 14.94 | 2/29/2032 | | | | | Option | — | 153,100(16) | 16.97 | 1/31/2033 | | | | | RSU | | | | | 12,500(6) | 13,125 | | | RSU | | | | | 100,000(8) | 105,000 | | | RSU | | | | | 32,775(9) | 34,414 | | | RSU | | | | | 30,000(15) | 31,500 | | Gail Cawkwell | Option | 52,500 | 157,500(11) | 13.83 | 6/30/2032 | | | | | Option | — | 105,000(11) | 16.97 | 1/31/2033 | | | | | RSU | | | | | 45,000(12) | 47,250 | | | RSU | | | | | 30,000(12) | 31,500 | | James Loerop | Option | 38,750 | 116,250(13) | 11.58 | 1/31/2032 | | | | | Option | — | 105,000(16) | 16.97 | 1/31/2033 | | | | | RSU | | | | | 33,750(14) | 35,438 | | | RSU | | | | | 30,000(15) | 31,500 |

  79. Outstanding Equity Awards as of December 31, 2023

    | (1) These unvested stock options will not vest as a result of Dr. Manion's departure in January 2024. |

  80. Outstanding Equity Awards as of December 31, 2023

    | (2) These unvested RSUs will not vest as a result of Dr. Manion's departure in January 2024. |

  81. Outstanding Equity Awards as of December 31, 2023

    | (3) Of the unvested stock options, one-half vested on March 1, 2024 and the remainder will vest on March 1, 2025, subject to the officer’s continued service through the vesting date. |

  82. Outstanding Equity Awards as of December 31, 2023

    | (4) Of the unvested stock options, one-third vested on March 1, 2024 and the remainder will vest in two equal installments on March 1, 2025 and March 1, 2026, subject to the officer’s continued service through each applicable vesting date. |

  83. Outstanding Equity Awards as of December 31, 2023

    | (5) Of the unvested stock options, one-fourth vested on January 1, 2024 and the remainder will vest in three equal installments on January 1, 2025, January 1, 2026 and January 1, 2027, subject to the officer’s continued service through each applicable vesting date. |

  84. Outstanding Equity Awards as of December 31, 2023

    | (6) These unvested RSUs vested on March 2, 2024. |

  85. Outstanding Equity Awards as of December 31, 2023

    | (7) These unvested RSUs will vest on September 1, 2024, subject to the officer’s continued service through the vesting date. |

  86. Outstanding Equity Awards as of December 31, 2023

    | (8) Of the unvested RSUs, one-half vested on March 1, 2024 and the remainder will vest on March 1, 2025, subject to the officer’s continued service through the vesting date. |

  87. Outstanding Equity Awards as of December 31, 2023

    | (9) Of the unvested RSUs, one-third vested on March 1, 2024 and the remainder will vest in two equal installments on March 1, 2025 and March 1, 2026, subject to the officer’s continued service through each applicable vesting date. |

  88. Outstanding Equity Awards as of December 31, 2023

    | (10) Of the unvested RSUs, one-fourth vested on January 1, 2024 and the remainder will vest in three equal installments on January 1, 2025, January 1, 2026 and January 1, 2027, subject to the officer’s continued service through each applicable vesting date. |

  89. Outstanding Equity Awards as of December 31, 2023

    | (11) These unvested stock options will not vest as a result of Dr. Cawkwell's termination in January 2024. |

  90. Outstanding Equity Awards as of December 31, 2023

    | (12) These unvested RSUs will not vest as a result of Dr. Cawkwell's termination in January 2024. |

  91. Outstanding Equity Awards as of December 31, 2023

    | (13) Of the unvested stock options, one-third vested on February 1, 2024 and the remainder will vest in two equal installments on February 1, 2025 and February 1, 2026, subject to the officer’s continued service through each applicable vesting date. |

  92. Outstanding Equity Awards as of December 31, 2023

    | (14) Of the unvested RSUs, one-third vested on February 1, 2024 and the remainder will vest in two equal installments on February 1, 2025 and February 1, 2026, subject to the officer’s continued service through each applicable vesting date. |

  93. Outstanding Equity Awards as of December 31, 2023

    | (15) Of the unvested stock options, one-fourth vested on February 1, 2024 and the remainder will vest in three equal installments on February 1, 2025, February 1, 2026 and February 1, 2027, subject to the officer’s continued service through each applicable vesting date. |

  94. Outstanding Equity Awards as of December 31, 2023

    | (16) Of the unvested RSUs, one-fourth vested on January 1, 2024 and the remainder will vest in three equal installments on February 1, 2025, February 1, 2026 and February 1, 2027, subject to the officer’s continued service through each applicable vesting date. |

  95. Outstanding Equity Awards as of December 31, 2023

    | (17) Based on the closing price of our common stock of $1.05 per share on December 29, 2023. |

  96. Option Exercises and Stock Vested

    Option Exercises and Stock Vested The following table shows certain information regarding RSUs that vested during the year ended December 31, 2023 for our NEOs. There were no option exercises by our NEOs during 2023.

  97. Option Exercises and Stock Vested

    | | Stock Awards | | | | Number of | | | | Shares | | | | Acquired on | Value Realized on | | | Vesting | Vesting | | Name | (#) | ($)(1) | | Douglas Manion | 15,575 | 152,791 | | Kevin Balthaser | 7,450 | 87,418 | | Joseph Monahan | 87,175 | 1,071,772 | | Gail Cawkwell | 15,000 | 155,550 | | James Loerop | 11,250 | 190,913 |

  98. Option Exercises and Stock Vested

    | (1) Computed by multiplying the closing market price of our common stock on the vesting date by the number of RSUs subject to such award vesting on the applicable vesting date. |

  99. Potential Payments Upon Termination or Change of Control

    Potential Payments Upon Termination or Change of Control

  100. Potential Payments Upon Termination or Change-in-Control Table

    Potential Payments Upon Termination or Change-in-Control Table The following table shows potential estimated payments that would be made to our NEOs if their employment had terminated in certain instances on December 31, 2023, under contracts or arrangements that were in effect as of December 31, 2023. With respect to equity awards, the calculations assume the closing price of our common stock of $1.05 on December 29, 2023. In addition to the amounts shown in the table below, each executive would receive payments for amounts of base salary and vacation time accrued through the date of termination.

  101. Potential Payments Upon Termination or Change-in-Control Table

    | | Termination by | | | | Company Without | Termination by | | | Cause, Termination | Company Without | | | by Executive for | Cause, Termination | | | Good Reason, | by Executive for | | | Upon Disability or | Good Reason, or | | | Death Unrelated to a | Upon Disability or | | | Change of Control, | Death Related to a | | | or Upon Nonrenewal by Company | Change of Control | | Name | ($)(1) | ($)(1) | | Douglas Manion | | | | Cash Severance | 930,000 | 1,395,000 | | Acceleration Value of RSUs | — | 162,461 | | Acceleration Value of Stock Options | — | — | | Continued Health Coverage | 21,624 | 32,436 | | Total | 951,624 | 1,634,897 | | Kevin Balthaser | | | | Cash Severance | 621,600 | 799,200 | | Acceleration Value of RSUs | — | 43,916 | | Acceleration Value of Stock Options | — | — | | Continued Health Coverage | 9,894 | 9,894 | | Total | 631,494 | 853,010 | | Joseph Monahan | | | | Cash Severance | 524,160 | 673,920 | | Acceleration Value of RSUs | — | 184,039 | | Acceleration Value of Stock Options | — | — | | Continued Health Coverage | 16,490 | 16,490 | | Total | 540,650 | 874,449 | | Gail Cawkwell | | | | Cash Severance | 686,000 | 882,000 | | Acceleration Value of RSUs | — | 78,750 | | Acceleration Value of Stock Options | — | — | | Continued Health Coverage | 16,490 | 16,490 | | Total | 702,490 | 977,240 | | James Loerop | | | | Cash Severance | 609,000 | 783,000 | | Acceleration Value of RSUs | — | 66,938 | | Acceleration Value of Stock Options | — | — | | Continued Health Coverage | 21,624 | 21,624 | | Total | 630,624 | 871,562 |

  102. Potential Payments Upon Termination or Change-in-Control Table

    | (1) For purposes of calculating the cash severance amounts in this column, we have assumed that 100% of the target amount of each NEO’s annual bonus was earned but unpaid at the time of termination. |

  103. PAY RATIO DISCLOSURE

    PAY RATIO DISCLOSURE In accordance with SEC rules, we are providing the ratio of the annual total compensation of Dr. Manion, our Chief Executive Officer during the year ended December 31, 2023, to the median of the annual total compensation of all our employees excluding our Chief Executive Officer (the “Ratio”). For the year ended December 31, 2023, the annual total compensation of our Chief Executive Officer in the Summary Compensation Table is $7,157,681 and the median of the annual total compensation of all of our employees (excluding our Chief Executive Officer) is $208,679. The Ratio is 34 to 1. In determining the annual total compensation of the median employee, we calculated such employee’s compensation in accordance with SEC executive compensation disclosure rules. This calculation is the same calculation used to determine the total compensation for purposes of the Summary Compensation Table with respect to each of our NEOs. To identify the median employee, we used the following methodology:

  104. PAY RATIO DISCLOSURE

    | ● | We collected compensation data from our human resources system of record for all employees, whether employed on a full-time, part-time, temporary or seasonal basis, as of December 31, 2023 which was the last day of our last completed fiscal year. |

  105. PAY RATIO DISCLOSURE

    | ● | We annualized the compensation of all permanent full-time and part-time employees who we hired during 2023. |

  106. PAY RATIO DISCLOSURE

    | ● | We used total compensation as of December 31, 2023 as our consistently applied compensation measure. In this context, total compensation meant (1) total base salary (2) all merit and spot bonuses, and (3) the value of all equity awards vested during the year ended December 31, 2023. |

  107. PAY RATIO DISCLOSURE

    The ratio presented above is a reasonable estimate calculated in a manner consistent with SEC rules based on our human resources system of record. Because the SEC rules for identifying the median employee and calculating the pay ratio allow companies to use different methodologies, exemptions, estimates and assumptions, this pay ratio disclosure may not be comparable to the pay ratio reported by other companies.

  108. PAY VERSUS PERFORMANCE

    PAY VERSUS PERFORMANCE As required by Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and Item 402(v) of Regulation S-K, we are providing the following information about the relationship between executive compensation actually paid and certain financial performance of our Company. The disclosure included in this section is prescribed by Securities and Exchange Commission (“SEC”) rules and 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.

  109. Pay Versus Performance Table

    Pay Versus Performance Table The table below presents information on the compensation of our principal executive officer (“PEO”) and our other NEOs (“non-PEO NEOs”) in comparison to certain performance metrics for the years ended December 31, 2023, 2022, 2021 and 2020. The metrics are not those that the Compensation Committee uses when setting executive compensation. The use of the term “Compensation Actually Paid” (“CAP”) is required by SEC rules. Neither CAP nor the total amount reported in the Summary Compensation Table (“SCT”) reflect the amount of compensation actually earned or received by or paid to the executives during the applicable year.

  110. Pay Versus Performance Table

    | | | | | | Value of Initial Fixed | | | | | | | Average | | $100 Investment Based On: | | | | | Summary | | Summary | Average | | Peer Group | | | | Compensation | Compensation | Compensation | Compensation | Total | Total | | | | Table Total | Actually | Total for | Actually Paid to | Shareholder | Shareholder | | | Year | for PEO(1)(2) | Paid to PEO(1) (3) | Non-PEO NEOs(1)(2) | Non-PEO NEOs(1) (3) | Return(4) | Return(5) | Net Loss(6) | | 2023 | $7,157,681 | $(1,539,940) | $2,334,000 | $(1,641,762) | $55.55 | $118.87 | $(88,481,000) | | 2022 | $5,836,727 | $6,651,810 | $3,124,517 | $3,356,375 | $833.81 | $113.66 | $(86,908,000) | | 2021 | $6,854,936 | $12,148,391 | $4,049,572 | $5,693,754 | $769.71 | $126.45 | $(90,865,000) | | 2020 | $1,610,678 | $4,886,201 | $789,592 | $1,974,638 | $342.56 | $126.43 | $(51,015,000) |

  111. Pay Versus Performance Table

    | (1) For 2023, the PEO was Dr. Manion. For 2022, 2021 and 2020, the PEO was Dr. Walker. For 2023, the non-PEO NEOs were Mr. Balthaser, Dr. Monahan, Dr. Cawkwell and Mr. Loerop. For 2022, the non-PEO NEOs were Dr. Cawkwell, Dr. Manion, Dr. Monahan and a former executive officer, Frank Ruffo. For 2021, the non-PEO NEOs were Mr. Ruffo, Dr. Monahan and two former executive officers, Kamil Ali-Jackson and David Gordon. For 2020, the non-PEO NEOs were Ms. Ali-Jackson and Mr. Ruffo. |

  112. Pay Versus Performance Table

    | (2) The amounts shown in this column are the amounts of total compensation reported for the PEO, or the average total compensation reported for the non-PEO NEOs, as applicable, for each corresponding year in the “Total” column of the SCT. Please refer to “Executive Compensation—Compensation Tables—Summary Compensation Table.” |

  113. Pay Versus Performance Table

    | (3) The amounts shown have been calculated in accordance with Item 402(v) of Regulation S-K and do not reflect compensation actually realized or received by the Company’s PEO and non-PEO NEOs. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to the PEO’s total |

  114. Pay Versus Performance Table

    compensation, or the average total compensation of the non-PEO NEOs, as applicable, as reported in the “Total” column in the SCT for the applicable year:

  115. Pay Versus Performance Table

    | | 2020 | 2021 | 2022 | 2023 | | PEO SCT Reported Total Compensation | $1,610,678 | $6,854,936 | $5,836,727 | $7,157,681 | | Aggregate SCT Reported Equity Compensation(a) (-) | $767,614 | $5,889,350 | $4,881,039 | $6,346,481 | | Year-End Fair Value of Awards Granted During the FY & Outstanding (b)(i)(+) | $2,337,835 | $3,121,459 | $5,005,765 | $338,899 | | Year-Over-Year Change in Fair Value of Awards Granted During Prior FY & Outstanding(b)(ii) (+) | $1,420,029 | $3,592,769 | $566,524 | $(2,335,318) | | Vesting Date Fair Value of Awards Granted & Vested During the Covered FY(b)(iii) (+) | $356,213 | $- | $- | $- | | Year-Over-Year Change in Fair Value of Awards Granted During Prior FY & Vesting During Covered FY(b)(iv) (+) | $(70,941) | $4,468,577 | $123,834 | $(354,721) | | PEO Compensation Actually Paid Determination | $4,886,201 | $12,148,391 | $6,651,810 | $(1,539,940) | | | 2020 | 2021 | 2022 | 2023 | | Non-PEO NEOs Average SCT Reported Total Compensation | $789,592 | $4,049,572 | $3,124,517 | $2,334,000 | | Average Aggregate SCT Reported Equity Compensation(a) (-) | $216,092 | $3,015,976 | $2,660,870 | $1,762,912 | | Average Year-End Fair Value of Awards Granted During the FY & Outstanding (b)(i)(+) | $977,857 | $1,687,901 | $2,761,495 | $94,139 | | Average Year-Over-Year Change in Fair Value of Awards Granted During Prior FY & Outstanding(b)(ii) (+) | $385,408 | $1,094,491 | $115,987 | $(2,058,062) | | Average Vesting Date Fair Value of Awards Granted & Vested During the Covered FY(b)(iii) (+) | $43,808 | $- | $- | $- | | Average Year-Over-Year Change in Fair Value of Awards Granted During Prior FY & Vesting During Covered FY(b)(iv) (+) | $(5,936) | $1,877,766 | $15,246 | $(248,926) | | Non-PEO NEOs Average Compensation Actually Paid Determination | $1,974,638 | $5,693,754 | $3,356,375 | $(1,641,762) |

  116. Pay Versus Performance Table

    | (a) The reported grant date fair value of equity awards represents the total of the amounts reported for the PEO, or the average of the total amounts reported in the case of the non-PEO NEOs, as applicable, in the “Option Awards” and “Stock Awards” columns in the SCT for the applicable year. |

  117. Pay Versus Performance Table

    | (b) The equity award adjustments for each applicable year include the addition (or subtraction, as applicable) of, the following for the PEO, or the average of the following in the case of the non-PEO NEOs, 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 any prior year that are outstanding and unvested as of the end of the applicable year; (iii) for awards that are granted and vest in the same applicable year, the fair value as of the vesting date; (iv) for awards granted in any prior year that vested 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 any prior year that failed 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. |

  118. Pay Versus Performance Table

    | (4) 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 the share price of our |

  119. Pay Versus Performance Table

    common stock at the end and the beginning of the measurement period by the share price of our common stock at the beginning of the measurement period. We have never declared or paid any dividends on our common stock.

  120. Pay Versus Performance Table

    | (5) Represents the weighted peer group TSR, weighted according to the respective companies’ stock market capitalization at the beginning of each period for which a return is indicated. The peer group used for this purpose is the Nasdaq Biotechnology Index. |

  121. Pay Versus Performance Table

    | (6) The dollar amounts reported represent the amount of net loss reflected in our audited financial statements for the applicable year. |

  122. Analysis of Information Presented in the Pay Versus Performance Table

    Analysis of Information Presented in the Pay Versus Performance Table As described in more detail above in “Executive Compensation–Compensation Discussion and Analysis,” the Company’s executive compensation program reflects a performance-driven compensation philosophy. While the Company utilizes several performance measures to align executive compensation with Company performance, those Company measures are not financial performance measures and are therefore not presented in the Pay Versus Performance table. Moreover, the Company generally seeks to incentivize long-term performance, and therefore does not specifically align the Company’s performance measures with “compensation actually paid” (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay Versus Performance table above. Compensation Actually Paid, Cumulative TSR of the Company and Cumulative Peer Group TSR The following graph illustrates the relationship of the CAP for our PEO and non-PEO NEOs, as calculated pursuant to SEC rules, to our cumulative TSR and the TSR of the Nasdaq Biotechnology Index (“NBI”) over the four years presented in the Pay Versus Performance table. Compensation Actually Paid and Net Loss The following graph illustrates the relationship of the CAP for our PEO and non-PEO NEOs, as calculated pursuant to SEC rules, to our net loss over the four years presented in the Pay Versus Performance table. 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.

  123. NON-EMPLOYEE DIRECTOR COMPENSATION

    NON-EMPLOYEE DIRECTOR COMPENSATION Under our non-employee director compensation policy, we pay each of our non-employee directors a cash retainer for service on the Board and for service on each committee of which the director is a member. The policy applies to each of our directors who is not an employee of our company. During 2023, Dr. Manion was our Chief Executive Officer and did not receive any additional compensation for service as a director. Pursuant to the policy in effect for 2023, each non-employee director receives an annual cash retainer of $40,000 for serving on our Board. The Chair of the Board receives an additional annual cash retainer of $30,000 and the Lead Independent Director receives an additional annual cash retainer of $25,000. The members of each of the Audit, Compensation, Nominating and Corporate Governance and Research and Development Committees receive additional retainers for such service, as does the Chair of each such committee (in addition to the member retainers), as follows:

  124. NON-EMPLOYEE DIRECTOR COMPENSATION

    | | | Additional | | | Member | Chair | | | Annual Service | Annual Service | | | Retainer | Retainer | | Committee | ($) | ($) | | Audit Committee | 7,500 | 12,500 | | Compensation Committee | 7,500(1) | 12,500 | | Nominating and Corporate Governance Committee | 4,500 | 4,500 | | Research and Development Committee | 6,000 | 8,000 |

  125. NON-EMPLOYEE DIRECTOR COMPENSATION

    | (1) Effective February 22, 2023, the Board amended the non-employee director compensation policy to increase the annual service retainer for members of the Compensation Committee to $7,500. |

  126. NON-EMPLOYEE DIRECTOR COMPENSATION

    All annual cash compensation amounts are payable in equal quarterly installments in arrears, on the last day of each fiscal quarter for which the service occurred, prorated based on the days served in the applicable fiscal quarter. 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. Each new non-employee director who joins our Board will be granted awards under our 2015 Plan with an aggregate grant date fair value (as calculated for financial reporting purposes) equal to the lesser of (a) $320,000 or (b) the fair value of 22,500 stock options measured as of the date the director joins the Board. Once the aggregate fair value of the new director award has been determined, the new director will be granted a stock option having a grant date fair value equal to 70% of such amount and restricted stock units having a grant date fair value equal to 30% of such amount. On the date of each annual meeting of our stockholders, each non-employee director who continues to serve as a director of our company following the meeting will be granted awards under our 2015 Plan with an aggregate grant date fair value (as calculated for financial reporting purposes) equal to the lesser of (a) $320,000 or (b) the fair value of 22,500 stock options measured as of the annual meeting date. Once the aggregate fair value of the continuing director award has been determined, the continuing director will be granted a stock option having a grant date fair value equal to 70% of such amount and restricted stock units having a grant date fair value equal to 30% of such amount. In no event, however, shall the fair value of the annual award, together with the fair value of any initial award granted to a new director who joined the Board in the same fiscal year, exceed $320,000 in the aggregate. The shares subject to each stock option granted will vest in equal monthly installments over 12 months and the restricted stock units will vest in one installment on the first anniversary of the grant date, subject to continued service through the applicable vesting date. The exercise price per share of each stock option will be equal to the closing price of our common stock on the date of the option grant. Each such stock option will have a term of ten years from the date of grant, subject to earlier termination in connection with a termination of the non-employee director’s continuous service with us. On June 1, 2023, the date of our 2023 annual meeting of stockholders, each non-employee director (other than Dr. Walker) who continued to serve as a director of our company following the meeting was granted a stock option to purchase 15,750 shares of common stock and 4,660 restricted stock units under our 2015 Plan. These awards are reflected in the table below.

  127. Director Compensation Table

    Director Compensation Table The following table shows the compensation earned by each of our non-employee directors for 2023. Dr. Manion, our Chief Executive Officer in 2023, was also a director but did not receive any additional compensation for his service as a director in 2023. Dr. Manion’s compensation as an executive officer is set forth above under “Executive Compensation—Compensation Tables—Summary Compensation Table.”

  128. Director Compensation Table

    | | Fees Earned or Paid | | | | | | in Cash | Stock Awards | Option Awards | Total | | Name | ($) | ($)(1)(2)(3) | ($)(1)(2)(4) | ($) | | Neal Walker | 73,500 | — | — | 73,500 | | William Humphries | 44,500 | 92,339 | 40,542 | 177,381 | | Anand Mehra, M.D. | 61,500 | 92,339 | 40,542 | 194,381 | | Christopher Molineaux | 74,000 | 92,339 | 40,542 | 206,881 | | Andrew Powell | 52,000 | 92,339 | 40,542 | 184,881 | | Bryan Reasons | 60,000 | 92,339 | 40,542 | 192,881 | | Andrew Schiff, M.D. | 53,500 | 92,339 | 40,542 | 186,381 | | Maxine Gowen, Ph.D. | 73,500 | 92,339 | 40,542 | 206,381 | | Vincent Milano | 47,500 | 92,339 | 40,542 | 180,381 |

  129. Director Compensation Table

    | (1) Reflects the aggregate grant date fair value for awards granted for 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. Our directors will not realize the estimated value of these awards until the awards are vested, exercised and/or sold, as applicable. |

  130. Director Compensation Table

    | (2) As of December 31, 2023, our non-employee directors held the following number of stock options and RSUs: Dr. Walker, 1,422,994 stock options; Mr. Humphries, 86,250 stock options and 4,660 RSUs; Dr. Mehra, 68,250 stock options and 4,660 RSUs; Mr. Molineaux, 76,526 stock options and 4,660 RSUs; Mr. Powell, 92,250 stock options and 4,660 RSUs; Mr. Reasons, 76,250 stock options and 4,660 RSUs; Dr. Schiff, 84,250 stock options and 4,660 RSUs; Dr. Gowen, 76,250 stock options and 4,660 RSUs; and Mr. Milano, 82,250 stock options and 4,660 RSUs. |

  131. Director Compensation Table

    | (3) Consists of 4,660 RSUs granted on June 1, 2023. The RSUs will vest on June 1, 2024, subject to continuous service with us through that date. |

  132. Director Compensation Table

    | (4) Consists of an option granted on June 1, 2023 to purchase 15,750 shares at an exercise price of $8.70 per share. This option vests in 12 equal monthly installments through June 1, 2024, subject to continuous service with us through each vesting date. |