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Item 5.02
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Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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Officers
After the effective time of
the Mergers, on May 4, 2017, the Company’s Board appointed William Enright as President and Chief
Executive Officer, Elizabeth A. Czerepak as Executive Vice President of Corporate Development and Chief Financial Officer, M.
Scot Roberts, Ph.D. as Chief Scientific Officer and Sybil Tasker, M.D., M.P.H. as Senior Vice President of Clinical Research
and Development.
William Enright — Chief Executive
Officer and President
Mr. Enright currently serves as President
and CEO of the Company and is a member of its Board of Directors. He joined Altimmune as President and a member of the Board of
Directors in June 2008 and was named CEO shortly thereafter. Mr. Enright brings more than 25 years of experience in a variety of
positions within the life science and biotech industries. Prior to joining Altimmune, Mr. Enright spent six years with GenVec,
Inc. (NASDAQ: GNVC) with increasing responsibilities culminating in the Head of Business Development. Mr. Enright was responsible
for helping to build GenVec’s vaccine business including generating approximately $140 million of funding for vaccine-related
initiatives and moving four vaccines into clinical development. Prior to GenVec, Mr. Enright was a self-employed consultant providing
business development and strategic marketing services to academic institutions and a number of small to mid-size life science companies.
Prior to becoming a consultant, and after spending several years as a bench scientist at SUNY at Buffalo, Mr. Enright spent 12
years with Life Technologies, Inc., working in various licensing, business management, manufacturing and research roles. Mr. Enright
received a Master of Arts in Biology from SUNY at Buffalo and a Master of Science in Business Management from Johns Hopkins University.
Elizabeth A. Czerepak — Chief
Financial Officer and Executive Vice President of Corporate Development
Ms. Czerepak currently serves as
CFO and Executive Vice President of Corporate Development of the Company. Ms. Czerepak joined Altimmune in April 2015 as its
Chief Financial Officer and received the additional title of Executive Vice President of Corporate Development in January
2017. An experienced finance executive, Ms. Czerepak has led a broad range of initiatives at public and privately held
pharmaceutical and biotechnology companies. As a venture capital investor and board member of several portfolio companies at
Bear Stearns Health Innoventures (BSHI), she played a key role in raising hundreds of millions of dollars in private
financings and IPOs, and the successful sale of two portfolio companies. From April 2014 until April 2015, Ms. Czerepak
served as CFO and Chief Business Officer at Isarna Therapeutics BV and, earlier, from January 2011 until March 2014, as CFO
and Principal Accounting Officer at Cancer Genetics, Inc. (NASDAQ: CGIX). Prior to CGIX, from April 2000 until June 2009, she
was a founding general partner at BSHI, and from April 2000 until December 2008, she was a managing director and an NASD
Registered Representative at JP Morgan Inc. and Bear Stearns & Co. Earlier in her career, Ms. Czerepak was Vice President
of Business Development and a member of the U.S. executive board at BASF Pharma, and held senior-level finance, licensing and
corporate development positions at Hoffmann-La Roche and Merck & Co. Ms. Czerepak has an MBA from Rutgers University and
a BA magna cum laude from Marshall University.
M. Scot Roberts, Ph.D. — Chief
Scientific Officer
Dr. Roberts currently serves as Chief Scientific
Officer of the Company. Dr. Roberts joined Altimmune in December 2012 and has nearly 20 years of senior technical leadership experience,
most recently at ImQuest BioSciences, Inc., where as Chief Scientific Officer from November 2010 until November 2012, he was responsible
for managing scientific operations as well as business development opportunities in cancer and antivirals. Dr. Roberts held key
positions at Wellstat Biologics Corporation from August 1996 until October 2010, including Director of Research and Development
where he was responsible for a portfolio of biologic candidates in oncology including a clinical stage asset. He also led bioassay
development efforts for the company and assumed leadership roles in upstream process development and animal pharmacology while
at Wellstat. Dr. Roberts has significant experience in both small molecule and biologics drug development with a focus on viral
vectors and antiviral therapies. Dr. Roberts completed a post-doctoral fellowship at the National Cancer Institute, Laboratory
of Molecular Virology and has numerous patents and publications in peer-reviewed journals, and has been an invited speaker and
Chair at numerous international conferences. Dr. Roberts received his Ph.D. from the Johns Hopkins School of Medicine, Department
of Pharmacology and Molecular Sciences.
Sybil Tasker, M.D.,M.P.H., FACP, FIDSA
— Senior Vice President of Clinical Research and Development
Dr. Tasker serves as Senior Vice President of Clinical Research and Development of the Company. Dr. Tasker joined Altimmune as
Senior Vice President of Clinical Research and Development in April 2016, and is an experienced infectious disease clinician
and fellow of the American College of Physicians and the Infectious Diseases Society of America. Prior to
joining Altimmune, she led development of a therapeutic herpes simplex vaccine at Genocea Biosciences and had positions
of increasing responsibility in infectious disease product development strategy at two global CROs. A prior career
military officer, she was the senior U.S. Navy infectious disease physician and technical advisor to Department of Defense
leaders about a wide variety of infectious disease policy issues, including HIV, tropical disease, vaccination,
infection control, bioterrorism and pandemic preparedness. She has extensive antimicrobial, vaccine and infectious
disease-related device and diagnostic development experience across all phases of the clinical development process. She holds
a California medical license and is board certified in both internal medicine and infectious diseases. Dr. Tasker earned
an A.B. degree in Biochemistry from Princeton University, an M.D. degree from Columbia University and an M.P.H. degree
from Johns Hopkins University School of Public Health.
Employment Agreement with William Enright
Altimmune entered into an amended and
restated employment agreement with William Enright, the President and Chief Executive Officer of the Company, that became
effective on May 4, 2017, the date of the closing of the Mergers. The amended agreement has an initial term that will expire
on December 31, 2018. Unless either the Company or Mr. Enright elect not to renew the agreement, Mr. Enright’s
agreement will automatically renew for successive one-year terms effective January 1, 2019 and each January 1 thereafter.
Under the agreement, Mr. Enright will
receive a base salary of $375,000 and will be eligible to receive an annual discretionary incentive bonus of up to 50% of his
base salary based on achievement of performance goals established by the compensation committee of the Company’s Board
(the “Compensation Committee”). Mr. Enright will be eligible to participate in the Company’s employee benefit plans made
available to its similarly situated senior executives. In addition, the Company will pay the premium costs for a term life
insurance policy for Mr. Enright with a benefit equal to Mr. Enright’s base salary and for short- and long-term
disability plans that provide for an annual benefit of at least 60% of Mr. Enright’s base salary for as long as the
disability continues. During the term of Mr. Enright’s employment, and subject to applicable securities laws or listing
standards, the Company will use its best efforts to cause Mr. Enright to be nominated for election as a member of the
Company’s board of directors at each annual meeting of stockholders at which Mr. Enright is up for election.
On May 4, 2017, the effective date of
the agreement, the Compensation Committee granted Mr. Enright an option to purchase 99,927 shares of common stock of the Company
at an exercise price of $6.50 per share (which is equal to the closing price of the Company’s common stock on the NYSE MKT
on May 4, 2017, as adjusted for the Reverse Stock Split). Twenty five percent of the shares underlying the option are vested
on the date of grant and the remaining 75% of the shares vest and become exercisable in substantially equal monthly installments
over the 36 months following the date of grant; provided, that if, in the sole discretion of the Compensation Committee, the Company
successfully completes a public offering then an additional 25% of the shares underlying the option shall immediately vest and
the remaining 50% of the shares will vest and become exercisable in substantially equal monthly installments over the 24 months
following the date of grant. The option was granted under the terms of the Altimmune, Inc. 2017 Omnibus Incentive Plan (formerly
called the PharmAthene, Inc. 2017 Omnibus Incentive Plan) and is subject to the terms and conditions thereof.
In the event of an employment termination,
the Company will pay Mr. Enright his earned but unpaid base salary through the date of termination, accrued but unused vacation
pay, unreimbursed business expenses and such employee benefits as may be due to Mr. Enright under the terms of the applicable benefit
plans (the “Accrued Benefits”).
If the Company terminates Mr.
Enright’s employment without cause or Mr. Enright resigns his employment for good reason, in addition to the Accrued
Benefits, Mr. Enright will be entitled to receive 12 months of base salary continuation payments, 12 months of continued
coverage under the health insurance plans in which Mr. Enright participates at the time of the termination and payment of any
unpaid prior year’s annual bonus. If such employment termination or resignation occurs within one year following a
change of control, Mr. Enright is entitled to receive an amount equal to the sum of 18 months of his base salary plus his
target annual discretionary incentive bonus for the year of termination, 12 months of continued coverage under the health
insurance plans in which Mr. Enright participates at the time of the termination, payment of any unpaid prior year’s
annual bonus and, in addition, all of Mr. Enright’s outstanding unvested equity awards will become vested. If any
payments, whether under Mr. Enright’s employment agreement or otherwise, would be subject to the golden parachute
excise tax under Section 4999 of the Internal Revenue Code (the “Code”), such payments will be reduced to the extent
necessary to avoid the excise tax if doing so would result in a greater net after tax payment to Mr. Enright. Mr. Enright is
required to execute and not revoke a release of claims in order to be eligible to receive severance payments or benefits,
other than the Accrued Benefits.
Under the agreement, “cause”
generally means Mr. Enright’s (i) material breach of his fiduciary duties, (ii) material breach of his employment agreement,
(iii) willful failure or refusal to follow written policies, (iv) conviction of, or plea of guilty or nolo contendere to, a felony,
or (v) continuing and willful refusal to act as directed by the Company’s board of directors. Under the agreement, “good
reason” generally means (i) a reduction in Mr. Enright’s base salary or target annual bonus opportunity, (ii) a material
diminution in Mr. Enright’s authorities, duties or responsibilities, or (iii) a relocation of Mr. Enright’s principal
place of employment more than 50 miles from Gaithersburg, Maryland.
Mr. Enright will be subject to restrictive
covenants during the term of his employment and for a period of one year following the termination of his employment. In particular,
Mr. Enright will be prohibited from soliciting the Company’s customers, clients and employees and from engaging in sales,
marketing or related activities on behalf of himself or another entity that directly competes with the Company and does business
in the same geographical areas in which the Company does business, except that the post-employment restriction on competition does
not apply if Mr. Enright’s employment is terminated for cause.
Employment Agreements with Elizabeth
A. Czerepak, M. Scot Roberts and Sybil Tasker
Altimmune entered into an
employment agreement with each of Elizabeth A. Czerepak, the Chief Financial Officer and Executive Vice President,
Corporate Development, and M. Scot Roberts, Ph.D., the Chief Scientific Officer, that became effective on December 7, 2015.
In addition, Altimmune entered into an employment agreement with Sybil Tasker, M.D., the Senior Vice President of
Clinical Research and Development. Upon the closing of the Mergers, each of these agreements have become
agreements of the Company. Each of these agreements provides for an initial term that will expire on December 31, 2017.
Unless either party elects not to renew the agreement, the agreement will automatically renew for successive one-year terms
effective January 1, 2018 and each January 1 thereafter.
The agreements provide each of Ms.
Czerepak and Dr. Tasker with an initial base salary of $290,000 and Dr. Roberts with an initial base salary of $200,000. Upon
the closing of the Mergers, the base salary amounts for Ms. Czerepak and Dr. Roberts were increased to $325,000 and $220,000,
respectively. In addition, Ms. Czerepak and Drs. Roberts and Tasker are each eligible to receive an annual discretionary
incentive bonus of up to 30% of their respective base salaries based on achievement of performance goals previously
established by the compensation committee of Private Altimmune’s board of directors. Ms. Czerepak and Drs. Roberts and Tasker will be eligible to participate
in the Company’s employee benefit plans made available to its similarly situated senior executives.
If, prior to a change in control, the Company
terminates the employment of Ms. Czerepak or Drs. Roberts or Tasker without cause or if such executive resigns for good reason,
in addition to the executive’s Accrued Benefits (to which the executive is entitled on any termination of employment), the
executive will be entitled to receive severance equal to six months of base salary continuation payments, six months of continued
coverage under the health insurance plans in which the executive participated at the time of the termination and payment of any
unpaid prior year’s annual bonus. If such employment termination or resignation occurs within the one-year period following
a change in control, the executive would be entitled to receive a severance amount equal to the sum of 12 months of the executive’s
base salary plus the executive’s target annual discretionary incentive bonus for the year of termination, six months of continued
coverage under the health insurance plans in which the executive participates at the time of termination, payment of any unpaid
prior year’s annual bonus and, in addition, all of the executive’s outstanding unvested equity awards will become vested.
The agreements also provide that if any payments, whether under the agreements or otherwise, payable to the executive would be
subject to the golden parachute excise tax under Section 4999 of the Code, such payments will be reduced to the extent necessary
to avoid the excise tax if doing so would result in a greater net after tax payment to the executive. The executive is required
to execute and not revoke a release of claims in Altimmune’s favor in order to be eligible to receive the severance payments
and benefits.
Under the agreements with Ms. Czerepak
and Drs. Roberts and Tasker, “cause” generally means the executive’s (i) material breach of her or his fiduciary
duties to us, (ii) material breach of her or his agreement, (iii) willful failure or refusal to follow Altimmune’s written
policies, (iv) conviction of, or plea of guilty or nolo contendere to, a felony or (v) continuing and willful failure to act as
directed by Altimmune’s board of directors or its chief executive officer. Under the agreements, “good reason”
generally means (i) a reduction in the executive’s base salary or target annual bonus opportunity, (ii) a material diminution
in authority, duties or responsibilities or (iii) a relocation of the executive’s principal place of employment more than
50 miles from Gaithersburg, Maryland.
Under the agreements, Ms. Czerepak and
Drs. Roberts and Tasker will be subject to restrictive covenants during the term of their employment and for a period of six months
following termination of employment. In particular, the executives will be prohibited from soliciting the Company’s customers,
clients and employees and from engaging in sales, marketing or related activities on the executive’s behalf or another entity
that directly competes with the Company.
Directors
In accordance with the Merger Agreement,
on May 4, 2017, effective immediately prior to the effective time of the Mergers, each of Eric I. Richman, Steven St. Peter, M.D.,
and Jeffrey W. Runge, M.D. resigned from the Company’s Board and any respective committees of the Board
on which they served, which resignations were not the result of any disagreements with the Company relating to the Company’s
operations, policies or practices.
In accordance with the Merger Agreement,
at the effective time of the Mergers, on May 4, 2017, the Board and its committees were reconstituted, with William
Enright, David J. Drutz, Philip Hodges and Klaus Schafer appointed as directors of the Company.
David J. Drutz, M.D. — Chairman
of the Board
Dr. Drutz, was first elected
to Altimmune’s board of directors in January 2010 and has served as Chairman of the board since October 2011. Dr. Drutz
is the President of Pacific Biopharma Associates, a biopharmaceutical consulting company that he founded in January 1999.
Between 2008 and 2015, he served as Director (March 2008 – December 2015), Chief Executive Officer (December 2011
– June 2014), Executive Chairman (June 2014 – December 2015) and Chief Medical Officer (January 2012 –
December 2015) of DARA BioSciences (NASDAQ:DARA), an oncology supportive care company located in Raleigh, NC, which was
acquired by Midatech Pharma in December 2015. Dr. Drutz served previously as Chairman of Tranzyme, Inc. (NASDAQ:TZYM) from
2000 to 2010, which was acquired by Ocera Therapeutics (NASDAQ:OCRX); Director of MethylGene, Inc. (TSX:MYG) from 2000 to
2010, which was acquired by Mirati Therapeutics (NASDAQ:MRTX); and Director of Gentris Corporation from 2007 to 2014, which
was acquired by Cancer Genetics (NASDAQ:CGIX). From 1999 to 2008 he was a general partner with Pacific Rim Ventures, a
Tokyo-based international venture capital firm. He is a former member of the Science and Industry Advisory Committee (SIAC)
of Genome Canada, which advises Genome Canada’s board of directors regarding genomics investments throughout Canada.
Dr. Drutz’s management experience includes tenures as VP Biological Sciences and VP Clinical Research at Smith Kline
& French Laboratories, VP Clinical Development at Daiichi Pharmaceutical Corporation, and CEO of Inspire Pharmaceuticals
(1995 – 1998) and Sennes Drug Innovations (1994 – 1995). Earlier in his career, Dr. Drutz was Professor of
Medicine and Chief of the Division of Infectious Diseases at the University of Texas Health Science Center, San Antonio, and
prior to that appointment was Assistant Professor of Medicine and Chief of the Division of Infectious Diseases at the
University of California, San Francisco/San Francisco General Hospital. Dr. Drutz received his M.D. from the University of
Louisville School of Medicine and postgraduate training in internal medicine and infectious diseases at Vanderbilt University
School of Medicine, serving subsequently as a research medical officer (infectious diseases) in the U.S. Navy with the rank
of Lieutenant Commander. He is certified by the American Board of Internal Medicine, a fellow of the American College
of Physicians and the Infectious Diseases Society of America, a member of the American Society of Clinical Oncology and
the American Society for Clinical Investigation, and the author of more than 200 peer-reviewed articles, book chapters
and abstracts for presentation. Dr. Drutz brings significant experience in biotechnology investment and as a physician
to Altimmune’s board of directors.
Philip L. Hodges
Mr. Hodges was first elected to Altimmune’s
board of directors in September 2003. He is Managing Partner of Redmont
Capital, a private equity firm located in Birmingham, Alabama, which he joined at its inception in 1997. Redmont Capital is a co-founder
of Altimmune. Mr. Hodges’ investment strategy is focused on high-growth small businesses within the health care, life science
and technology sectors. He currently serves as a director for several of the firm’s portfolio companies. Mr. Hodges holds
a Bachelor of Science in Business Administration from the Brock School of Business at Samford University. Mr. Hodges brings significant
experience as a life science investor and co-founder to the Company’s board of directors.
Brigadier General (ret.) Klaus O. Schafer,
M.D., MPH
Brigadier General (ret.), Klaus
Schafer, M.D., MPH, has over 30 years of leadership experience, having held senior positions in government and industry. He
was first elected to Altimmune’s board of directors in July 2012. As the Deputy Assistant to the Secretary of Defense
for chemical and biological defense, a position he held from April 2004 through June 2005, he oversaw the management of the
Department of Defense’s $1.0 billion program for vaccine, therapeutics, medical device and sensor development. He
retired from the Air Force as the Assistant Surgeon General with extensive experience managing all aspects of large
integrated health care delivery systems. Prior private sector experience includes VP of business development for Compressus
Inc., a telemedicine start-up, former CEO and cofounder of TessArae LLC, a start-up biotech genetic testing company. He is
currently Chief Medical Officer and VP, business development, Health for CACI International, a publicly traded Fortune 1000
company. Dr. Schafer brings significant experience as a physician and biotechnology investor, in government and as a board
member and advisor in the health care biodefense industry to the Company’s board of directors.
In connection with the expansion of the
Board, the Board has effected certain changes to the composition of various Board committees. Effective May 4, 2017,
the composition of each of the Board’s standing committees is as follows:
Audit Committee
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Compensation Committee
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Nominating & Corporate Governance Committee
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Mitchel B. Sayare (Chairman)
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David J. Drutz (Chairman)
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Philip L. Hodges (Chairman)
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Klaus O. Schafer
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Derace D. Schaffer
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David J. Drutz
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Philip L. Hodges
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Philip L. Hodges
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Mitchel B. Sayare
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Adoption of Altimmune, Inc. 2017
Omnibus Incentive Plan
On May 4, 2017, the Company adopted the
Altimmune, Inc. 2017 Omnibus Incentive Plan (the “Plan”) which became effective upon the receipt of stockholder
approval. A complete copy of the Plan is filed herewith as Exhibit 10.1 and incorporated into this Item 5.02
by reference.
Approval of New Forms of Stock Option
Agreements
On
May 4, 2017, the Compensation Committee, pursuant
to the Plan, approved two forms of stock option agreements for use under the Plan.
The first form of stock option agreement, a copy of which is attached hereto as Exhibit 10.2 and incorporated by reference herein,
is for use in connection with grants of incentive stock options to eligible participants under the Plan. The second
form of stock option agreement, a copy of which is attached hereto as Exhibit 10.3 and incorporated by reference herein, is for
use in connection with grants of non-qualified stock options to eligible participants under the Plan.