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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

 

 

Filed by the Registrant  ☒                            Filed by a party other than the Registrant  ☐

Check the appropriate box:

 

☐   Preliminary Proxy Statement
☐   Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒   Definitive Proxy Statement
☐   Definitive Additional Materials
☐   Soliciting Material under §240.14a-12

Coherus BioSciences, Inc.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if Other Than The Registrant)

Payment of Filing Fee (Check the appropriate box):

☒   No fee required.
☐   Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which transaction applies:

 

     

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Aggregate number of securities to which transaction applies:

 

     

  (3)  

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

     

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Proposed maximum aggregate value of transaction:

 

     

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Total fee paid:

 

     

☐   Fee paid previously with preliminary materials.
☐   Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Date Filed:

 

     

 

 

 

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LOGO  

COHERUS BIOSCIENCES, INC.

333 Twin Dolphin Drive, Suite 600

Redwood City, California 94065

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON MAY 23, 2018

To the Stockholders of Coherus BioSciences, Inc.:

The 2018 Annual Meeting of Stockholders, or the 2018 Annual Meeting, of Coherus BioSciences, Inc., a Delaware corporation, or the Company, will be held on May 23, 2018 at 2:00 p.m. local time at the offices of Latham & Watkins LLP, 140 Scott Drive, Menlo Park, CA 94025 for the following purposes:

 

  1. To elect two Class I directors to hold office until the 2021 Annual Meeting of Stockholders or until their successors are elected;

 

  2. To ratify the selection, by the Audit Committee of our Board of Directors, of Ernst & Young LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2018; and

 

  3. To transact such other business as may properly come before the 2018 Annual Meeting or any adjournment or postponement thereof.

The foregoing items of business are more fully described in the proxy statement accompanying this Notice. Only stockholders who owned the Company’s common stock at the close of business on April 2, 2018 may vote at the 2018 Annual Meeting or any adjournments or postponements that take place.

We have elected to provide our proxy materials to our stockholders over the internet as permitted by the rules of the U.S. Securities and Exchange Commission. As a result, we are mailing most of our stockholders a paper copy of the Notice of Internet Availability of Proxy Materials, or the Notice, but not a paper copy of our proxy statement and our 2017 Annual Report to Stockholders. This process allows us to provide our proxy materials to our stockholders in a timelier and more readily accessible manner, while reducing the environmental impact and lowering the costs of printing and distributing our proxy materials. The Notice contains instructions on how to access those documents over the internet. The Notice also contains instructions on how to request a paper copy of our proxy materials, including this proxy statement, our 2017 Annual Report to Stockholders and a form of proxy card or voting instruction card. All stockholders who have previously requested a paper copy of our proxy materials will continue to receive a paper copy of the proxy materials by mail.

You are cordially invited to attend the 2018 Annual Meeting in person. Whether or not you plan to attend the 2018 Annual Meeting, please vote as soon as possible. You may vote over the internet or by a toll-free telephone number. If, however, you requested to receive paper proxy materials, then you may vote by mailing a complete, signed and dated proxy card or voting instruction card in the envelope provided. Please note that any stockholder attending the 2018 Annual Meeting may vote in person, even if the stockholder has already returned a proxy card or voting instruction card.

Our Board of Directors recommends that you vote “ FOR ” the election of its director nominees and “ FOR ” the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm.

 

By Order of the Board of Directors:

/s/ Jean-Frédéric Viret

Jean-Frédéric Viret, Ph.D.

Chief Financial Officer

Redwood City, California

April 13, 2018

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QUESTIONS AND ANSWERS REGARDING THE PROXY MATERIALS AND THE VOTING PROCESS

     1  

PROPOSAL NO. 1 ELECTION OF DIRECTORS

     6  

PROPOSAL NO.  2 RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     10  

REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

     12  

CORPORATE GOVERNANCE

     13  

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

     20  

NON-EMPLOYEE DIRECTOR COMPENSATION

     22  

EXECUTIVE OFFICERS

     24  

COMPENSATION DISCUSSION AND ANALYSIS

     26  

REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

     33  

EXECUTIVE COMPENSATION TABLES

     34  

EQUITY COMPENSATION PLAN INFORMATION

     40  

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     41  

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

     45  

ADDITIONAL INFORMATION

     45  

 

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COHERUS BIOSCIENCES, INC.

333 Twin Dolphin Drive, Suite 600

Redwood City, California 94065

PROXY STATEMENT

FOR THE ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON MAY 23, 2018

IMPORTANT NOTICE REGARDING THE INTERNET AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 23, 2018

This proxy statement and our 2017 Annual Report to Stockholders, which includes our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, are available at our website at www.coherus.com and at www.proxyvote.com.

QUESTIONS AND ANSWERS REGARDING THE PROXY MATERIALS AND THE VOTING PROCESS

Why am I receiving these proxy materials?

We have made these proxy materials available to you on the internet or, upon your request, have delivered paper proxy materials to you, because the Board of Directors of Coherus BioSciences, Inc., or the Company, is soliciting your proxy to vote at the 2018 Annual Meeting of Stockholders, or the 2018 Annual Meeting, or any adjournments or postponements that take place. The 2018 Annual Meeting will be held on May 23, 2018 at 2:00 p.m. local time at the offices of Latham & Watkins LLP, 140 Scott Drive, Menlo Park, CA 94025. As a stockholder, you are invited to attend the 2018 Annual Meeting and are requested to vote on the proposals described in this proxy statement. However, you do not need to attend the 2018 Annual Meeting to vote.

What is included in the proxy materials?

The proxy materials include:

 

  •   This proxy statement, which includes information regarding the proposals to be voted on at the 2018 Annual Meeting, the voting process, corporate governance, the compensation of our directors and certain executive officers, and other required information;

 

  •   Our 2017 Annual Report to Stockholders, which includes our Annual Report on Form 10-K for the fiscal year ended December 31, 2017; and

 

  •   The proxy card or a voting instruction card for the 2018 Annual Meeting.

The proxy materials are being mailed or made available to stockholders on or about April 13, 2018.

Why did I receive a Notice of Internet Availability of Proxy Materials, or the Notice, in the mail instead of a complete set of paper proxy materials?

We have elected to provide our proxy materials to our stockholders over the internet as permitted by the rules of the U.S. Securities and Exchange Commission, or SEC. As a result, we are mailing most of our stockholders a paper copy of the Notice, but not a paper copy of the proxy materials. This process allows us to provide our proxy materials to our stockholders in a timelier and more readily accessible manner, while reducing the environmental impact and lowering the costs of printing and distributing our proxy materials. The Notice contains instructions on how to access the proxy materials over the Internet, and how to request a paper copy of the proxy materials. All stockholders who have previously elected to receive a paper copy of our proxy materials will continue to receive a paper copy of the proxy materials by mail until the stockholder terminates such election.

 

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Why did I receive a complete set of paper proxy materials in the mail instead of a Notice of Internet Availability of Proxy Materials?

We are providing stockholders who have previously requested to receive paper copies of the proxy materials with paper copies of the proxy materials instead of the Notice. If you would like to reduce the environmental impact and the costs incurred by us in printing and distributing the proxy materials, you may elect to receive all future proxy materials electronically via email or the internet. To sign up for electronic delivery, please follow the instructions provided with your proxy materials and on your proxy card or voting instruction card.

Who can vote at the 2018 Annual Meeting?

Only stockholders of record at the close of business on April 2, 2018 will be entitled to vote at the 2018 Annual Meeting. On this record date, there were 60,154,225 shares of common stock outstanding and entitled to vote.

Stockholder of Record: Shares Registered in Your Name

If, at the close of business on April 2, 2018, your shares were registered directly in your name with our transfer agent, Equiniti Trust Company Shareowner Services, then you are a stockholder of record. As a stockholder of record, you may vote in person at the 2018 Annual Meeting or vote by proxy. Whether or not you plan to attend the 2018 Annual Meeting, please vote as soon as possible by completing and returning the enclosed proxy card or vote by proxy over the telephone or on the internet as instructed below to ensure your vote is counted.

Beneficial Owner: Shares Registered in the Name of a Broker or Bank

If, at the close of business on April 2, 2018, your shares were not held in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the 2018 Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent how to vote the shares in your account. You are also invited to attend the 2018 Annual Meeting. However, because you are not the stockholder of record, you may not vote your shares in person at the 2018 Annual Meeting unless you request and obtain a valid proxy from your broker or other agent.

What proposals are scheduled for a vote?

There are two proposals scheduled for a vote at the 2018 Annual Meeting:

 

  •   Proposal No. 1–To elect two Class I directors to hold office until the 2021 Annual Meeting of Stockholders or until their successors are elected; and

 

  •   Proposal No. 2–To ratify the selection, by the Audit Committee of our Board of Directors, of Ernst & Young LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2018.

How do I vote?

For Proposal No. 1, you may either vote “ FOR ” all nominees to our Board of Directors or you may “ WITHHOLD ” your vote for any nominee you specify. For Proposal No. 2, you may either vote “ FOR ” or “ AGAINST ” or you may abstain from voting.

 

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The procedures for voting are as follows:

Stockholder of Record: Shares Registered in Your Name

If you are a stockholder of record, you may vote in person at the 2018 Annual Meeting or vote by proxy by telephone or internet or by mail. Whether or not you plan to attend the 2018 Annual Meeting, please vote as soon as possible to ensure your vote is counted. You may still attend the 2018 Annual Meeting and vote in person even if you have already voted by proxy.

 

  •   To vote in person . You may attend the 2018 Annual Meeting and we will give you a ballot when you arrive.

 

  •   To vote by proxy by telephone or internet . If you have telephone or internet access, you may submit your proxy by following the instructions provided in the Notice, or if you received paper proxy materials by mail, by following the instructions provided with your proxy materials and on your proxy card or voting instruction card.

 

  •   To vote by proxy by mail . If you received paper proxy materials, you may submit your proxy by mail by completing and signing your proxy card and mailing it in the enclosed envelope. Your shares will be voted as you have instructed.

Beneficial Owner: Shares Registered in the Name of Broker or Bank

If you are a beneficial owner of shares registered in the name of your broker, bank, dealer or other similar organization, you should have received a proxy card and voting instructions with these proxy materials from that organization rather than from us. Simply complete and mail the proxy card to ensure that your vote is counted. Alternatively, you may vote by telephone or over the internet as instructed by your broker or other agent. To vote in person at the 2018 Annual Meeting, you must obtain a valid proxy from your broker or other agent. Follow the instructions from your broker or other agent included with these proxy materials, or contact your broker or bank to request a proxy form.

Can I vote my shares by completing and returning the Notice?

No. The Notice will, however, provide instructions on how to vote by telephone, by internet, by requesting and returning a paper proxy card or voting instruction card, or by submitting a ballot in person at the 2018 Annual Meeting.

How many votes do I have?

On each matter to be voted upon, you have one vote for each share of the Company’s common stock you own as of April 2, 2018.

What if I return a proxy card but do not make specific choices?

If you return a signed and dated proxy card without marking any voting selections, your shares will be voted “ FOR ” the election of each nominee for director (Proposal No. 1) and “ FOR ” the ratification of the selection of Ernst & Young LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2018 (Proposal No. 2). If any other matter is properly presented at the 2018 Annual Meeting, your proxyholder (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.

Who is paying for this proxy solicitation?

We will pay for the entire cost of soliciting proxies. In addition to these mailed proxy materials, our directors, officers and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors, officers and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.

 

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What does it mean if I receive more than one proxy card?

If you receive more than one proxy card, your shares are registered in more than one name or are registered in different accounts. Please complete, sign and return each proxy card to ensure that all of your shares are voted.

Can I change my vote after submitting my proxy?

Yes. You can revoke your proxy at any time before the final vote at the 2018 Annual Meeting. If you are the stockholder of record of your shares, you may revoke your proxy in any one of three ways:

 

  •   You may submit another properly completed proxy with a later date.

 

  •   You may send a timely written notice that you are revoking your proxy to the Company’s Corporate Secretary at Coherus BioSciences, Inc., 333 Twin Dolphin Drive, Suite 600, Redwood City, California 94065.

 

  •   You may attend the 2018 Annual Meeting and vote in person. Simply attending the 2018 Annual Meeting will not, by itself, revoke your proxy.

If your shares are held by your broker or other agent, you should follow the instructions provided by your broker or agent.

What is the quorum requirement?

A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if stockholders holding at least a majority of the outstanding shares entitled to vote are present at the 2018 Annual Meeting. On the record date, there were 60,154,225 shares outstanding and entitled to vote. Accordingly, the holders of 30,077,113 shares must be present at the 2018 Annual Meeting to have a quorum. Your shares will be counted toward the quorum at the 2018 Annual Meeting only if you vote in person at the meeting, or you submit a valid proxy vote.

Abstentions and broker non-votes (as described below) will be counted towards the quorum requirement. If there is no quorum, the chairperson of the meeting or the holders of a majority of shares present and entitled to vote at the meeting in person or represented by proxy may adjourn the 2018 Annual Meeting to another date.

How are votes counted?

Votes will be counted by the Inspector of Elections appointed for the 2018 Annual Meeting. The Inspector of Elections will separately count:

 

  •   “ FOR ,” “ WITHHOLD ” and broker non-votes for Proposal No. 1 (the election of directors); and

 

  •   “ FOR ” and “ AGAINST ” votes, abstentions and, if any, broker non-votes for Proposal No. 2 (the ratification of the selection of Ernst & Young LLP as the independent registered accounting firm of the Company for the fiscal year ending December 31, 2018).

If your shares are held by your broker or other agent as your nominee (that is, held beneficially in “street name”), you will need to obtain a proxy form from the institution that holds your shares and follow the instructions included on that form regarding how to instruct your broker or other agent to vote your shares. If you do not give voting instructions to your broker or other agent, your broker or other agent can only vote your shares with respect to “routine” matters (as described below).

What are “broker non-votes”?

If you hold shares beneficially in street name and do not provide your broker with voting instructions, your shares may constitute “broker non-votes.” Broker non-votes occur on a matter when a broker is not permitted to

 

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vote on that matter without instructions from the beneficial owner and instructions are not given. These matters are referred to as “non-routine” matters. Proposal No. 1 to elect directors is a non-routine matter, but Proposal No. 2 to ratify the selection of Ernst & Young LLP as the independent registered public accounting firm for the Company for the fiscal year ending December 31, 2018 is a “routine” matter. A broker or other nominee may generally vote on routine matters, and therefore no broker non-votes are expected to exist in connection with Proposal No. 2. A broker or other nominee cannot vote without instructions on non-routine matters, and therefore there may be broker non-votes on Proposal No. 1. Broker non-votes will not be counted toward the vote total for any proposal at the 2018 Annual Meeting.

How many votes are needed to approve each proposal?

 

  •   Proposal No. 1–To elect two Class I directors to hold office until the 2021 Annual Meeting of Stockholders or until their successors are elected. The two nominees receiving the most “ FOR ” votes (from the votes of shares present in person or represented by proxy and entitled to vote on the election of directors) will be elected. Broker non-votes will not be counted towards the vote total for this proposal.

 

  •   Proposal No. 2–To ratify the selection of Ernst & Young LLP as the independent registered public accounting firm of the Company for the fiscal year ending December 31, 2018. “ FOR ” votes from the holders of a majority of the shares cast (excluding abstentions and broker non-votes) are required to approve this proposal. Because Proposal No. 2 is considered a “routine” matter, no broker non-votes are expected in connection with this proposal.

How can I find out the results of the voting at the 2018 Annual Meeting?

We will disclose final voting results in a Current Report on Form 8-K filed with the SEC within four business days after the 2018 Annual Meeting. If final voting results are unavailable at that time, then we intend to file a Current Report on Form 8-K to disclose preliminary voting results and file an amended Current Report on Form 8-K within four business days after the date the final voting results are available.

When are stockholder proposals due for next year’s annual meeting?

To be considered for inclusion in the proxy materials for the 2019 Annual Meeting of Stockholders, your proposal must be submitted in writing by December 14, 2018, to the Company’s Corporate Secretary at Coherus BioSciences, Inc., 333 Twin Dolphin Drive, Suite 600, Redwood City, California 94065. However, if the meeting is not held between April 23, 2019 and June 21, 2019, then the deadline will be a reasonable time before we begin to print and mail our proxy materials for that meeting.

If you wish to submit a proposal before the stockholders or nominate a director at the 2019 Annual Meeting of Stockholders, but you are not requesting that your proposal or nomination be included in the proxy materials for that meeting, then you must follow the procedures set forth in our bylaws and, among other things, notify the Company’s Corporate Secretary in writing between January 23, 2019 and February 22, 2019. However, if the date of the 2019 Annual Meeting of Stockholders is more than 30 days before or more than 60 days after May 23, 2019, then you must give notice not later than the 90th day prior to that meeting or, if later, the 10th day following the day on which public disclosure of that annual meeting date is first made. You are also advised to review our bylaws, which contain additional requirements regarding advance notice of stockholder proposals and director nominations.

 

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PROPOSAL NO. 1

ELECTION OF DIRECTORS

Our Board of Directors 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. Except as otherwise provided by law, vacancies on the Board of Directors may be filled only by individuals elected by a majority of the remaining directors. A director elected by the Board of Directors to fill a vacancy in a particular class, including a vacancy created by an increase in the number of directors, shall serve for the remainder of the full term of that class and until such director’s successor is elected and qualified, or until such director’s earlier death, resignation or removal.

Our Board of Directors currently consists of seven directors divided into the three following classes:

 

  •   The Class I directors are Christos Richards and V. Bryan Lawlis, Ph.D., and their terms will expire at the 2018 Annual Meeting;

 

  •   The Class II directors are Mary T. Szela and Ali J. Satvat, and their terms will expire at the 2019 Annual Meeting of Stockholders; and

 

  •   The Class III directors are Dennis M. Lanfear, Mats Wahlström and James I. Healy, M.D., Ph.D., and their terms will expire at the 2020 Annual Meeting of Stockholders.

Our current Class I directors, Christos Richards and V. Bryan Lawlis, Ph.D., have been nominated to serve as Class I directors and have agreed to stand for election. If the nominees for Class I are elected at the 2018 Annual Meeting, then each nominee will serve for a three-year term expiring at the 2021 Annual Meeting of Stockholders, or until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal.

Our directors are elected by a plurality of the votes cast. If a choice is specified on the proxy card by a stockholder, the shares will be voted as specified. If a choice is not specified on the proxy card, and authority to do so is not withheld, the shares will be voted “FOR” the election of the two nominees for Class I above. If any of the nominees becomes unavailable for election as a result of an unexpected occurrence, shares that would have been voted for the nominee will instead be voted for the election of a substitute nominee proposed by the Company’s management or the Board of Directors. Each person nominated for election has agreed to serve if elected. Our management has no reason to believe that any nominee will be unable to serve.

The following is a brief biography and discussion of the specific attributes, qualifications, experience and skills of each nominee for director and each director whose term will continue after the 2018 Annual Meeting. Our Board of Directors and management encourage each nominee for director and each continuing director to attend the 2018 Annual Meeting.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE TWO CLASS I NOMINEES FOR DIRECTOR.

CLASS I NOMINEES FOR DIRECTORS – To be elected for a three-year term expiring at the 2021 Annual Meeting of Stockholders

Christos Richards , age 60, has served as a member of our Board of Directors since March 2011. Mr. Richards has been partner at Catalyst Advisors, LLC, an executive search firm, since January 2014 and currently serves as an advisor to the UCSF Office of Innovation, Technology & Alliances. Prior to that, from October 1998 to January 2014, Mr. Richards held positions of increasing responsibility at Levin & Company, Inc. an executive search and consulting firm. From January 2009 to January 2014, Mr. Richards served as Chief Executive Officer of Levin & Company, Inc. Mr. Richards served as a Principal of Stanton Chase International from July 1996 to October 1998. From 1987 to July 1996, Mr. Richards founded and served as Chief Executive Officer of Career

 

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Connection/Nexium Inc. Mr. Richards was educated in Switzerland and is fluent in German and Swiss German. Mr. Richards brings to the board experience in the recruitment of numerous executive level professionals, including a diverse range of C-level and VP-level executives. We believe Mr. Richards is qualified to serve on our Board of Directors based on his extensive senior management experience and expertise.

V.  Bryan Lawlis, Ph.D. , age 66, has served on our Board of Directors since May 2014 and has also served as the Chairman of our Scientific Advisory Board from November 2012 through June 2016. He currently serves as the Science Director for our Board of Directors. He served as the President and Chief Executive Officer of Itero Biopharmaceuticals, LLC, a privately held limited liability holding company which has held the assets of Itero Biopharmaceuticals, Inc., or Itero Biopharmaceuticals, from August 2011 until its dissolution in 2017. Dr. Lawlis co-founded and served as President and Chief Executive Officer of Itero Biopharmaceuticals, from 2006 until it discontinued operations in August 2011. Prior to that, he served as President and Chief Executive Officer of Aradigm Corporation, a pharmaceutical company, from August 2004, and served on its board of directors from February 2005, continuing in both capacities until August 2006. Dr. Lawlis served as Aradigm Corporation’s President from June 2003 to August 2004 and as its Chief Operating Officer from November 2001 to June 2003. Previously, Dr. Lawlis co-founded Covance Biotechnology Services, Inc., a contract biopharmaceutical manufacturing company, served as its President and Chief Executive Officer from 1996 to 1999, and served as Chairman from 1999 to 2001 when it was sold to Diosyth RTP, Inc., a division of Akzo Nobel, NV. From 1981 to 1996, Dr. Lawlis was employed at Genencor, Inc., a biotechnology company, and Genentech. His last position at Genentech was Vice President of Process Sciences. Dr. Lawlis has served on the boards of directors of four privately held companies, Sutro Biopharmaceuticals, Inc. since 2003, Reform Biologics, LLC since February 2014, AbSci LLC since April 2016 and TSpan LLC since 2017. He has also served on the boards of directors at BioMarin Pharmaceutical Inc., a public biopharmaceutical company since June 2007 and Geron Corporation, a public biopharmaceutical company, since March 2012. Dr. Lawlis has served as an adviser to Phoenix Venture Partners, a venture capital firm focused on manufacturing technologies, since September 2015. Dr. Lawlis holds a B.A. in Microbiology from the University of Texas at Austin and a Ph.D. in Biochemistry from Washington State University. We believe Dr. Lawlis is qualified to serve on our Board of Directors due to his longtime involvement in the biotechnology industry and extensive service as a director or officer of other life sciences companies.

CLASS II DIRECTORS – To continue in office until the 2019 Annual Meeting of Stockholders

Mary  T. Szela , age 54, has served as a member of our Board of Directors since July 2014. In January 2018, Ms. Szela was named Chief Executive Officer and President of Surefire Medical, Inc. and currently serves on its board of directors. Mats L. Wahlström, a member of our Board of Directors, currently serves as Chairman of Surefire Medical, Inc. From January 2016 to November 2016, Ms. Szela served as Chief Executive Officer of Aegerion Pharmaceuticals, Inc. and served on its board of directors. In November 2016, Aegerion Pharmaceuticals, Inc. merged with QLT Inc. to form Novelion Therapeutics Inc., where, until November 2017, Ms. Szela served as Chief Executive Officer and as a member of its board of directors. Ms. Szela served as the Chief Executive Officer of Melinta Therapeutics, Inc., an antibiotic development company, from April 2013 to August 2015. She has also served on the board of directors of Melinta from January 2013 to August 2015, Receptos, Inc. from June 2014 to July 2015, Novo Nordisk from March 2014 to March 2017 and Suneva Medical, Inc. from July 2012 to 2017. Previously, Ms. Szela joined Abbott Laboratories in 1987 and held several leadership positions, including Senior Vice President of Global Strategic Marketing from January 2010 to May 2012 and Senior Vice President of U.S. Pharmaceuticals from September 2008 to December 2009. Prior to Abbott, Ms. Szela worked for the University of Illinois Hospital. Ms. Szela earned a B.S. in Nursing and an M.B.A. from the University of Illinois. We believe Ms. Szela is qualified to serve on our Board of Directors because of her extensive management experience and expertise in pharmaceutical company operations.

Ali J. Satvat , age 40, has served as a member of our Board of Directors since May 2014. Mr. Satvat joined KKR in January 2012 and is a Member of KKR on the Health Care industry team within KKR’s Americas Private Equity platform. Mr. Satvat leads KKR’s Health Care Strategic Growth investing efforts and sits on the Health

 

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Care Strategic Growth Investment Committee and the Health Care Strategic Growth Portfolio Management Committee. Mr. Satvat has also served as a member of the boards of directors of publicly held PRA Health Sciences since September 2013 and several privately held organizations, including AcuFocus, Arbor Pharmaceuticals, Blue Sprig Pediatrics, BridgeBio Pharma, Cohera Medical, Slayback Pharma and Trilogy MedWaste. Prior to joining KKR, Mr. Satvat was a Principal with Apax Partners, where he invested in health care from 2006 to 2012 and was actively involved with many of the firm’s successful private equity and growth equity investments. Previously, Mr. Satvat held various positions with Johnson & Johnson Development Corporation, Audax Group and The Blackstone Group. Mr. Satvat holds an A.B. in History and Science from Harvard College and an M.B.A. in Health Care Management and Entrepreneurial Management from the Wharton School of the University of Pennsylvania. Mr. Satvat also serves on the board of directors of the Healthcare Private Equity Association. We believe Mr. Satvat is qualified to serve on our Board of Directors based on his extensive investment experience in the health care industry.

CLASS III DIRECTORS – To continue in office until the 2020 Annual Meeting of Stockholders

Dennis  M. Lanfear , age 62, is our co-founder and has served as our President and Chief Executive Officer and as a member of our Board of Directors since our inception in September 2010. Mr. Lanfear previously was President of InteKrin Therapeutics Inc., a biopharmaceutical company, from 2005 to May 2010. Prior to that, Mr. Lanfear served in various senior leadership roles at Amgen Inc., a biopharmaceutical company from 1986 to 1999. While at Amgen, Mr. Lanfear had key leadership positions in the Process Development department, which under his management became an area of key strategic advantage for Amgen. Mr. Lanfear has also held senior leadership roles in several product development programs including those for growth factors, somatotrophins and neurotrophins and directed efforts from preclinical studies to Phase 3 clinical trials at Amgen. Mr. Lanfear holds B.S. degrees in Chemical Engineering and Biochemistry from Michigan State University and an M.B.A. from the Anderson School of Management at the University of California, Los Angeles. We believe Mr. Lanfear is qualified to serve on our Board of Directors because of his background and various leadership roles in the biopharmaceutical field.

Mats Wahlström , age 63, has served as a member of our Board of Directors since January 2012. He currently serves as the Executive Chairman of KMG Capital Partners, LLC, where he has been a senior leader since April 2012, Chairman of Triomed AB since October 2016, Chairman of Surefire Medical, Inc. since January 2017 and Chairman of Caduceus Medical Holdings, Inc. since August 2010. He has served on the boards of directors of Alteco Medical AB since October 2012, Empirican Group, Inc. since July 2016 and PCI | HealthDev since August 2010. He served as a director of Health Grades, Inc., a Nasdaq-listed healthcare ratings company, from March 2009 through its sale to a private equity firm in October 2010, and as a director of Zynex Inc., an over-the-counter medical device manufacturer, from October 2010 through January 2014. From January 2004 to December 2009, Mr. Wahlström served as co-CEO of Fresenius Medical Care North America and a member of the management board at Fresenius Medical Care AG & Co. KGAA. From November 2002 to December 2009, he served as President and CEO of Fresenius Medical Services, which operated more than 1,700 dialysis clinics in the U.S. Prior to joining Fresenius Medical Care in 2002, he held various positions at Gambro AB in Sweden, including President of Gambro North America and Chief Executive Officer of Gambro Healthcare Inc. as well as Chief Financial Officer of the Gambro Group. Mr. Wahlström has a B.S. degree in Economics and Business Administration from University of Lund, Sweden. We believe Mr. Wahlström is qualified to serve on our Board of Directors because of his extensive management and director experience in the life sciences and healthcare sectors.

James  I. Healy, M.D., Ph.D. , age 53, has been a member of our Board of Directors since February 2014. Dr. Healy has been a General Partner of Sofinnova Ventures, Inc., a venture capital firm, since June 2000. Prior to this, Dr. Healy held various positions at Sanderling Ventures, Bayer Healthcare Pharmaceuticals (as successor to Miles Laboratories) and ISTA Pharmaceuticals, Inc. Dr. Healy is currently on the board of directors of Ascendis Pharma A/S, Edge Therapeutics, Inc., Natera, Inc., NuCana plc, Obseva SA and several private companies. Previously, he served as a board member of Amarin Corporation plc, Anthera Pharmaceuticals, Inc.,

 

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Auris Medical Holding AG, Durata Therapeutics, Inc., InterMune, Inc., Hyperion Therapeutics, Inc., KaloBios Pharmaceuticals, Inc., Movetis NV and a number of private companies. Dr. Healy holds an M.D. and a Ph.D. in Immunology from the Stanford University School of Medicine and holds a B.A. in Molecular Biology and a B.A. in Scandinavian Studies from the University of California, Berkeley. We believe Dr. Healy is qualified to serve on our Board of Directors due to his extensive experience investing and working in the pharmaceuticals industry and extensive service on the boards of directors of other life sciences companies.

 

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PROPOSAL NO. 2

RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee of our Board of Directors has selected Ernst & Young LLP, or EY, as our independent registered public accounting firm for the fiscal year ending December 31, 2018, and is seeking ratification of such selection by our stockholders at the 2018 Annual Meeting. EY has audited our financial statements for the fiscal years ended December 31, 2017 and 2016. Representatives of EY are expected to be present at the 2018 Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.

Neither our bylaws nor other governing documents or law require stockholder ratification of the selection of EY as our independent registered public accounting firm. However, the Audit Committee is submitting the selection of EY to our stockholders for ratification as a matter of good corporate practice. If our stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain EY. Even if the selection is ratified, the Audit Committee in its discretion may select a different independent registered public accounting firm at any time during the year if they determine that such a change would be in the best interests of the Company and our stockholders.

The affirmative vote of a majority of the shares cast at the 2018 Annual Meeting will be required to ratify the selection of EY.

THE BOARD OF DIRECTORS RECOMMENDS

A VOTE “FOR” PROPOSAL NO. 2.

The following information sets out the fees for professional services rendered by EY, during the fiscal years 2017 and 2016:

 

     Year Ended December 31,  
     2017      2016  

Audit Fees (1)

   $ 1,547,143      $ 1,807,255  

Audit-Related Fees (2)

     —          —    

Tax Fees (3)

     —          —    

All Other Fees (4)

     1,950        1,980  
  

 

 

    

 

 

 

Total All Fees

   $ 1,549,093      $ 1,809,235  
  

 

 

    

 

 

 

 

(1) This category consists of fees for professional services for the audit of the Company’s 2017 and 2016 annual financial statements, the review of quarterly financial statements, and for services that are normally provided by the independent registered public accounting firm in connection with other statutory and regulatory filings or engagements in the years ended December 31, 2017 or 2016.
(2) This category consists of fees for assurance and related services reasonably related to the performance of the audit or review of financial statements and that are not reported under the Audit Fees category. We did not incur any fees in this category in the years ended December 31, 2017 or 2016.
(3) This category consists of fees for professional services rendered for tax compliance, tax advice and tax planning. We did not incur any fees in this category in the years ended December 31, 2017 or 2016.
(4) This category consists of fees for any other products and professional services provided by the independent registered public accounting firm and includes subscription fees for access to on-line library of accounting research literature.

 

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Pre-Approval Policies and Procedures

The Audit Committee has adopted a policy for the pre-approval of all audit and non-audit services to be performed for the Company by the independent registered public accounting firm. This policy is set forth in the charter of the Audit Committee and available at http://investors.coherus.com. The Audit Committee has considered the role of EY in providing audit and audit-related services to the Company and has concluded that such services are compatible with EY’s role as the Company’s independent registered public accounting firm.

 

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REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

The material in this report is not “soliciting material,” is not deemed “filed” with the SEC, and is not 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.

The primary purpose of the Audit Committee is to oversee our financial reporting processes on behalf of our Board of Directors. The Audit Committee’s functions are more fully described in its charter, which is available on our website at http://investors.coherus.com.

In fulfilling its oversight responsibilities, the Audit Committee reviewed and discussed with management the Company’s audited financial statements for the fiscal year ended December 31, 2017. The Audit Committee has discussed with EY, the Company’s independent registered public accounting firm, the matters required to be discussed by Auditing Standards No. 61, “Communications with Audit Committees,” issued by the Public Company Accounting Oversight Board, or PCAOB. In addition, the Audit Committee has discussed with EY their independence, and received from EY the written disclosures and the letter required by Ethics and Independence Rule 3526 of the PCAOB. Finally, the Audit Committee discussed with EY, with and without management present, the scope and results of EY’s audit of the financial statements for the fiscal year ended December 31, 2017.

Based on these reviews and discussions, the Audit Committee has recommended to our Board of Directors that such audited financial statements be included in our Annual Report on Form 10-K for the year ended December 31, 2017 for filing with the SEC.

Audit Committee

Mats Wahlström

James I. Healy, M.D., Ph.D.

Ali J. Satvat

 

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CORPORATE GOVERNANCE

Board Composition

Director Independence

Our Board of Directors currently consists of seven members. Our Board of Directors has determined that all of our directors, as well as each individual nominated by our Board of Directors for election to our Board of Directors at the 2018 Annual Meeting, other than Messrs. Lanfear and Richards, qualify as “independent” directors in accordance with the Nasdaq listing requirements. Mr. Lanfear is not considered independent because he is an employee of our company. Mr. Richards is not considered independent because he has served as an executive officer of Catalyst Advisors, LP and Levin & Company which provided executive search services to us. Dr. Troendle is no longer a member of our Board of Directors; however, he served on our Board of Directors during the 2017 fiscal year until he voluntarily resigned in March 2018. Dr. Troendle was not considered independent because he is a founder and chief executive officer of Medpace, Inc., a company that has provided clinical research services to us.

The Nasdaq independence definition includes a series of objective tests, such as that the director is not, and has not been for at least three years, one of our employees and that neither the director nor any of his family members has engaged in various types of business dealings with us. In addition, as required by Nasdaq rules, our Board of Directors has made a subjective determination as to each independent director that no relationships exist, which, in the opinion of our Board of Directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In making these determinations, our Board of Directors reviewed and discussed information provided by the directors and us with regard to each director’s business and personal activities and relationships as they may relate to us and our management. There are no family relationships among any of our directors or executive officers.

As described more fully below, the Board of Directors has also determined that each current member of the Compensation Committee, and each current member of the Audit Committee and the Nominating and Corporate Governance Committee, as well as each director and director nominee that we expect to serve on such committees after the 2018 Annual Meeting, meets the independence standards applicable to those committees prescribed by Nasdaq, the SEC, and the Internal Revenue Service.

Classified Board of Directors

In accordance with our amended and restated certificate of incorporation, our Board of Directors is divided into three classes with staggered, three-year terms. At each annual meeting of stockholders, the successors to directors whose terms then expire will be elected to serve from the time of election and qualification until the third annual meeting following election.

Leadership Structure of the Board of Directors

Our amended and restated bylaws and corporate governance guidelines provide our Board of Directors with flexibility to combine or separate the positions of Chairman of the Board of Directors and Chief Executive Officer and/or the implementation of a lead director in accordance with its determination that utilizing one or the other structure would be in the best interests of our company. Mr. Lanfear currently serves as the Chairman of the Board of Directors and Mr. Wahlström currently serves as the lead independent director of the Board of Directors. All of our directors are encouraged to make suggestions for Board of Director’s agenda items of pre-meeting materials. In addition, in his role as lead independent director, Mr. Wahlström presides over the executive sessions of the Board of Directors in which Mr. Lanfear, as the Chief Executive Officer, does not participate and serves as a liaison to management on behalf of the independent members of the Board of Directors.

 

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Our Board of Directors has concluded that our current leadership structure is appropriate at this time. However, our Board of Directors will continue to periodically review our leadership structure and may make such changes in the future as it deems appropriate.

Role of the Board of Directors in Risk Oversight Process

Risk assessment and oversight are an integral part of our governance and management processes. Our Board of Directors encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings and conducts specific strategic planning and review sessions during the year that include a focused discussion and analysis of the risks facing us. Throughout the year, senior management reviews these risks with the Board of Directors at regular board meetings as part of management presentations that focus on particular business functions, operations or strategies and presents the steps taken by management to mitigate or eliminate such risks.

Our Board of Directors does not have a standing risk management committee, but rather administers this oversight function directly through our Board of Directors as a whole, as well as through various standing committees of our Board of Directors that address risks inherent in their respective areas of oversight. In particular, our Board of Directors is responsible for monitoring and assessing strategic risk exposure. Our Audit Committee is responsible for overseeing our major financial risk exposures and the steps our management has taken to monitor and control these exposures and considers and approves or disapproves any related-persons transactions. The Audit Committee also monitors compliance with legal and regulatory requirements. Our Nominating and Corporate Governance Committee monitors the effectiveness of our corporate governance guidelines. Our Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.

Meetings of the Board of Directors and Committees

During 2017, the Board of Directors met five times, the Audit Committee met ten times, the Compensation Committee met four times and the Nominating and Corporate Governance Committee met one time. In that year, each director attended at least 75% of the meetings of the Board of Directors and the committees on which he or she served which occurred while such director was a member of the Board of Directors and such committees, with the exception of Ms. Szela, who attended 70% of the meetings of the Board of Directors and the committees on which she served. As required under Nasdaq rules and regulations, our independent directors meet in regularly scheduled executive sessions at which only independent directors are present.

Board Committees

Audit Committee

Our Audit Committee oversees our corporate accounting and financial reporting process. Among other matters, the Audit Committee:

 

  •   appoints our independent registered public accounting firm;

 

  •   evaluates the independent registered public accounting firm’s qualifications, independence and performance;

 

  •   determines the engagement of the independent registered public accounting firm;

 

  •   reviews and approves the scope of the annual audit and the audit fee;

 

  •   discusses with management and the independent registered public accounting firm the results of the annual audit and the review of our quarterly financial statements;

 

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  •   approves the retention of the independent registered public accounting firm to perform any proposed permissible audit and non-audit services;

 

  •   monitors the rotation of partners of the independent registered public accounting firm on our engagement team as required by law;

 

  •   is responsible for reviewing our consolidated financial statements and our management’s discussion and analysis of financial condition and results of operations to be included in our annual and quarterly reports to be filed with the SEC;

 

  •   reviews our critical accounting policies and estimates; and

 

  •   reviews the Audit Committee charter and the Audit Committee’s performance.

The current members of our Audit Committee are Mats Wahlström, James I. Healy, M.D., Ph.D. and Ali J. Satvat. Mr. Wahlström serves as the Chairman of the Audit Committee. After the 2018 Annual Meeting, we expect that our Audit Committee will be composed of Mr. Wahlström, as Chairman, Dr. Healy and Mr. Satvat.

Each of the current members of our Audit Committee, as well as the expected members of our Audit Committee after the 2018 Annual Meeting, meets or will meet the requirements for financial literacy under the applicable rules and regulations of the SEC and Nasdaq. Our Board of Directors has determined that Mr. Wahlström is an audit committee financial expert as defined under the applicable rules of the SEC and has the requisite financial sophistication as defined under the applicable rules and regulations of Nasdaq. Under the rules of the SEC, members of the Audit Committee must also meet heightened independence standards. Our Board of Directors has determined that each of Messrs. Wahlström and Satvat and Dr. Healy are independent under the heightened independence standards under the applicable rules of Nasdaq. Our Audit Committee has been established in accordance with the rules and regulations of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The Audit Committee operates under a written charter that satisfies the applicable standards of the SEC and Nasdaq. A copy of the Audit Committee charter is available to security holders on the Company’s website at http://investors.coherus.com.

Compensation Committee

Our Compensation Committee reviews and recommends policies relating to compensation and benefits of our officers and employees. The Compensation Committee reviews and recommends corporate goals and objectives relevant to compensation of our President and Chief Executive Officer and other executive officers, evaluates the performance of these officers in light of those goals and objectives and recommends to our Board of Directors the compensation of these officers based on such evaluations. The Compensation Committee also recommends to our Board of Directors the issuance of stock options and other awards under our stock plans. The Compensation Committee will review and evaluate, at least annually, the performance of the Compensation Committee and its members, including compliance by the Compensation Committee with its charter. The current members of our Compensation Committee are James I. Healy, M.D., Ph.D., V. Bryan Lawlis, Ph.D. and Mary T. Szela. Dr. Healy serves as the chairperson of the Compensation Committee. After the 2018 Annual Meeting, and subject to election by our stockholders in the case of Dr. Lawlis, we expect that our Compensation Committee will be composed of Dr. Healy, as Chairman, Dr. Lawlis and Ms. Szela.

Each of the current members of our Compensation Committee, as well as the expected members of our Compensation Committee after the 2018 Annual Meeting, is or will be an independent under the applicable rules and regulations of The Nasdaq Global Market, and is or will be a “non-employee director” as defined in Rule 16b-3 promulgated under the Exchange Act. The Compensation Committee operates under a written charter that satisfies the applicable standards of the SEC and Nasdaq. A copy of the Compensation Committee charter is available to security holders on the Company’s website at http://investors.coherus.com.

Our Compensation Committee has retained Radford, Inc., or Radford, a nationally recognized compensation consulting firm, to serve as its independent compensation consultant and to conduct market research and analysis

 

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on our various executive positions, to assist the Compensation Committee in developing appropriate incentive plans for our executives on an annual basis, to provide the Compensation Committee with advice and ongoing recommendations regarding material executive compensation decisions, and to review compensation proposals of management. Radford reports directly to the Compensation Committee and does not provide any non-compensation-related services to us. In compliance with the disclosure requirements of the SEC regarding the independence of compensation consultants, Radford addressed each of the six independence factors established by the SEC with our Compensation Committee. Its responses affirmed the independence of Radford on executive compensation matters. Based on this assessment, our Compensation Committee determined that the engagement of Radford does not raise any conflicts of interest or similar concerns. In addition, our Compensation Committee evaluated the independence of its other outside advisors to the Compensation Committee, including outside legal counsel, considering the same independence factors and concluded their work for our Compensation Committee does not raise any conflicts of interest.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee is responsible for making recommendations to our Board of Directors regarding candidates for directorships and the size and composition of our Board of Directors. In addition, the Nominating and Corporate Governance Committee is responsible for overseeing our corporate governance policies and reporting and making recommendations to our Board of Directors concerning governance matters. The current members of our Nominating and Corporate Governance Committee are Mats Wahlström, V. Bryan Lawlis and Mary T. Szela. Mr. Wahlström served as the chairperson of the Nominating and Corporate Governance Committee until June 2016, when Mr. Wahlström voluntarily resigned as chairperson. Dr. Lawlis was appointed in his place and currently serves as the chairperson of the Nominating and Corporate Governance Committee. After the 2018 Annual Meeting, and subject to election by our stockholders in the case of Dr. Lawlis, we expect that our Nominating and Corporate Governance Committee will be composed of Dr. Lawlis, as Chairman, Mr. Wahlström and Ms. Szela.

Each of the current members of our Nominating and Corporate Governance Committee, as well as the expected members of our Nominating and Corporate Governance Committee after the 2018 Annual Meeting, is or will be an “independent director” under the applicable rules and regulations of Nasdaq relating to nominating and corporate governance committee independence. Following the 2018 Annual Meeting, we will continue to comply with Nasdaq’s rules regarding independent director oversight of director nominations under either Nasdaq Rule 5605(e)(1)(A) or 5605(e)(1)(B). The Nominating and Corporate Governance Committee operates under a written charter that satisfies the applicable standards of the SEC and Nasdaq. A copy of the Nominating and Corporate Governance Committee charter is available to security holders on the Company’s website at http://investors.coherus.com.

The Nominating and Corporate Governance Committee will consider individuals who are properly proposed by stockholders to serve on the Board of Directors in accordance with laws and regulations established by the SEC and the Nasdaq listing requirements, our bylaws and applicable corporate law, and make recommendations to the Board of Directors regarding such individuals based on the established criteria for members of our Board of Directors. The Nominating and Corporate Governance Committee may consider in the future whether we should adopt a more formal policy regarding stockholder nominations.

For a stockholder to make any nomination for election to the Board of Directors at an annual meeting, the stockholder must provide notice to the Company, which notice must be delivered to, or mailed and received at, the Company’s principal executive offices not less than 90 days and not more than 120 days prior to the one-year anniversary of the preceding year’s annual meeting; provided, that if the date of the annual meeting is more than 30 days before or more than 60 days after such anniversary date, the stockholder’s notice must be delivered, or mailed and received, not later than 90 days prior to the date of the annual meeting or, if later, the 10th day following the date on which public disclosure of the date of such annual meeting is made. Further updates and supplements to such notice may be required at the times, and in the forms, required under our bylaws. As set

 

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forth in our bylaws, submissions must include the name and address of the proposed nominee, information regarding the proposed nominee that is required to be disclosed in a proxy statement or other filings in a contested election pursuant to Section 14(a) under the Exchange Act, information regarding the proposed nominee’s indirect and direct interests in shares of the Company’s common stock, and a completed and signed questionnaire, representation and agreement of the proposed nominee. Our bylaws also specify further requirements as to the form and content of a stockholder’s notice. We recommend that any stockholder wishing to make a nomination for director review a copy of our bylaws, as amended and restated to date, which is available, without charge, from our Corporate Secretary, at Coherus BioSciences, Inc., 333 Twin Dolphin Drive, Suite 600, Redwood City, California 94065.

Board Diversity

Our Nominating and Corporate Governance Committee is responsible for reviewing with the Board of Directors, on an annual basis, the appropriate characteristics, skills and experience required for the Board of Directors as a whole and its individual members. In evaluating the suitability of individual candidates (both new candidates and current members), the Nominating and Corporate Governance Committee, in recommending candidates for election, and the Board of Directors, in approving (and, in the case of vacancies, appointing) such candidates, will take into account many factors, including the following:

 

  •   personal and professional integrity;

 

  •   ethics and values;

 

  •   experience in corporate management, such as serving as an officer or former officer of a publicly held company;

 

  •   experience in the industries in which we compete;

 

  •   experience as a board member or executive officer of another publicly held company;

 

  •   diversity of expertise and experience in substantive matters pertaining to our business relative to other board members;

 

  •   conflicts of interest; and

 

  •   practical and mature business judgment.

Currently, our Board of Directors evaluates each individual in the context of the Board of Directors as a whole, with the objective of assembling a group that can best maximize the success of the business and represent stockholder interests through the exercise of sound judgment using its diversity of experience in these various areas.

Code of Business Conduct and Ethics

We have adopted a code of business conduct and ethics that applies to all of our employees, officers and directors, including those officers responsible for financial reporting. The code of business conduct and ethics is available on our website at http://investors.coherus.com. We will disclose any substantive amendments to the code of business conduct and ethics, or any waiver of its provisions, on our website. The reference to our website does not constitute incorporation by reference of the information contained at or available through our website.

Limitation on Liability and Indemnification Matters

Our amended and restated certificate of incorporation contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by Delaware law. Consequently, our directors will not be

 

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personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for:

 

  •   any breach of the director’s duty of loyalty to us or our stockholders;

 

  •   any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

 

  •   unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law; or

 

  •   any transaction from which the director derived an improper personal benefit.

Our amended and restated certificate of incorporation and amended and restated bylaws provide that we are required to indemnify our directors and officers, in each case to the fullest extent permitted by Delaware law. Our amended and restated bylaws also provide that we are obligated to advance expenses incurred by a director or officer in advance of the final disposition of any action or proceeding, and permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in that capacity regardless of whether we would otherwise be permitted to indemnify him or her under Delaware law.

We have entered and expect to continue to enter into agreements to indemnify our directors, executive officers and other employees as determined by our Board of Directors. With specified exceptions, these agreements provide for indemnification for related expenses including, among other things, attorneys’ fees, judgments, fines and settlement amounts incurred by any of these individuals in any action or proceeding. We believe that these bylaw provisions and indemnification agreements are necessary to attract and retain qualified directors and officers. We also maintain directors’ and officers’ liability insurance.

The limitation of liability and indemnification provisions in our amended and restated certificate of incorporation and amended and restated bylaws may discourage stockholders from bringing a lawsuit against our directors and officers for breach of their fiduciary duty. They may also reduce the likelihood of derivative litigation against our directors and officers, even though an action, if successful, might benefit us and our stockholders. Further, a stockholder’s investment may be adversely affected to the extent that we pay the costs of settlement and damage. To the extent the indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. At present, there is no pending litigation or proceeding involving any of our directors, officers or employees for which indemnification is sought, and we are not aware of any threatened litigation that may result in claims for indemnification.

Director Attendance at Annual Meetings

Our Board of Directors has a policy of encouraging director attendance at our annual meetings of stockholders, but attendance is not mandatory. Our Board of Directors and management team encourage all of our directors to attend the 2018 Annual Meeting. Our Chief Executive Officer and Chairman of the Board of Directors, Dennis M. Lanfear, and all of our directors attended our 2017 Annual Meeting.

Stockholder Communications with the Board of Directors

A stockholder may communicate with the Board of Directors, or an individual director, by sending written correspondence to the Company’s Corporate Secretary at Coherus BioSciences, Inc., 333 Twin Dolphin Drive, Suite 600, Redwood City, California 94065. The Corporate Secretary will review such correspondence and forward it to the Board of Directors, or an individual director, as appropriate.

 

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Compensation Committee Interlocks and Insider Participation

During 2017, our Compensation Committee consisted of James I. Healy, M.D., Ph.D., V. Bryan Lawlis, Ph.D. and Mary T. Szela. Dr. Healy served as the chairperson of the Compensation Committee. None of the members of our Compensation Committee have at any time been one of our officers or employees. None of our executive officers currently serves, or has in the past fiscal year served, as a member of the Board of Directors or Compensation Committee of any entity that has one or more executive officers on our Board of Directors or Compensation Committee.

 

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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

The following is a description of transactions since January 1, 2017 to which we have been a party, in which the amount involved exceeds $120,000 and in which any of our directors, executive officers or holders of more than 5% of our capital stock, or an affiliate or immediate family member thereof, had or will have a direct or indirect material interest.

Private Placement Transaction

In August 2017, we issued and sold an aggregate of 6,556,116 shares of common stock to V-Sciences Investments Pte Ltd, a private limited Singapore company (“Temasek”), in a private placement transaction at an offering price of $11.4397 per share for gross proceeds of $75.0 million. Pursuant to the stock purchase agreement, Temasek may purchase additional shares of common stock equal to gross proceeds of $75.0 million, subject to certain conditions. On September 22, 2017, we filed a registration statement with the SEC registering the resale of the common stock sold and issued in the private placement transaction as of August 2017, and it was declared effective with the SEC on October 16, 2017.

Temasek became a holder of more than 5% of our capital stock as a result of the private placement.

Convertible Notes Offering

In February 2016, we issued and sold in a private placement $100.0 million aggregate principal amount of our 8.2% Convertible Senior Notes due 2022 (the “Convertible Notes”). Healthcare Royalty Partners III, L.P., purchased $75.0 million in aggregate principal amount of the Convertible Notes, and the remaining $25 million in aggregate principal amount was purchased by three related party investors, KKR Biosimilar L.P., MX II Associates LLC, and KMG Capital Partners, LLC. Ali J. Satvat, who is a member of our Board of Directors, is an executive of Kohlberg Kravis Roberts & Co. L.P. (“KKR”) and KKR Biosimilar L.P. is an entity affiliated with KKR. August J. Troendle, M.D., who was a member of our Board of Directors until March 2018, when he voluntarily resigned from the Board of Directors, is the Managing Member of MX II Associates, LLC. Mats Wahlström, who is a member of our Board of Directors, is the Chief Executive Officer and Chairman of KMG Capital Partners, LLC.

The Convertible Notes bear interest at a fixed coupon rate of 8.2% per annum payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year, which commenced on March 31, 2016, and mature on March 31, 2022, unless earlier converted, redeemed or repurchased. If we fail to satisfy certain registration or reporting requirements, then additional interest will accrue on the Convertible Notes at a rate of up to 0.50% per annum in the aggregate. The Convertible Notes also bear a premium of 9.0% of their principal amount, which is payable when the Convertible Notes mature or are repurchased or redeemed by us.

During fiscal year 2017, the largest balance of the aggregate principal amounts outstanding of the Convertible Notes were $20.0 million, $4.0 million, and $1.0 million for KKR Biosimilar L.P., MX II Associates LLC, and KMG Capital Partners, LLC, respectively. As of April 2, 2018, the aggregate principal amounts outstanding of the Convertible Notes were $20.0 million, $4.0 million, and $1.0 million for KKR Biosimilar L.P., MX II Associates LLC, and KMG Capital Partners, LLC, respectively. During fiscal year 2017, we paid interest expense on the Convertible Notes to KKR Biosimilar L.P., MX II Associates LLC, and KMG Capital Partners, LLC in the amounts of $1.6 million, $0.3 million and $0.1 million, respectively. Since March 31, 2016, we paid interest expense on the Convertible Notes to KKR Biosimilar L.P., MX II Associates LLC, and KMG Capital Partners, LLC in the amounts of $3.0 million, $0.6 million and $0.2 million, respectively.

Medpace, Inc. Master Services Agreement

In January 2012, we entered into a Master Services Agreement with Medpace, Inc., or Medpace, a contract research organization, or CRO, under which we engage Medpace to perform certain CRO services related to the

 

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design and execution of clinical development programs. August J. Troendle, M.D., who was a member of our Board of Directors until March 2018, when he voluntarily resigned from the Board of Directors, is Chief Executive Officer, President and Chairman of Medpace, Inc. and is the Managing Member of MX II Associates, LLC.

Prior to the consummation of our initial public offering, MX II Associates, LLC was a beneficial owner of more than 5% of our common stock. In August 2014, we executed a task order with Medpace to cover the in-life management of the Phase 3 rheumatoid arthritis study (a Phase 3, double-blind, randomized, parallel-group, active-control study to compare the efficacy and safety of CHS-0214 versus Enbrel ® in subjects with rheumatoid arthritis and inadequate response to treatment with methotrexate). In September 2014, we executed a task order with Medpace to cover the in-life management of the Phase 3 chronic plaque psoriasis study (a Phase 3, double-blind, randomized, parallel-group, active-control study to compare the efficacy and safety of CHS-0214 versus Enbrel ® in subjects with chronic plaque psoriasis). In June 2015, we executed a task order with Medpace to cover a Phase 3, open-label, safety extension study of CHS-0214. During the year ended December 31, 2017, we recorded approximately $8.2 million in our consolidated statement of operations for services rendered by Medpace and we paid Medpace approximately $8.9 million.

Transactions with InteKrin Russia

InteKrin Therapeutics, Inc., our wholly owned subsidiary, paid cash to its majority owned subsidiary, InteKrin Russia, as funding for the general working capital of InteKrin Russia. Dennis M. Lanfear, our President, Chief Executive Officer and a member of our Board of Directors, owns 10% of the outstanding securities of InteKrin Russia. During the year ended December 31, 2017, we recorded approximately $0.2 million in our consolidated statement of operations as investments in InteKrin Russia.

Policies and Procedures for Related Party Transactions

Our Board of Directors has adopted a written related person transaction policy setting forth the policies and procedures for the review and approval or ratification of related person transactions. This policy covers, with certain exceptions set forth in Item 404 of Regulation S-K under the Securities Act, any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, where the amount involved exceeds $120,000 and a related person had or will have a direct or indirect material interest, including, without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person. As provided by our Audit Committee charter, our Audit Committee will be responsible for reviewing and approving any related person transaction and in doing so will consider all relevant facts and circumstances, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in an arm’s length transaction and the extent of the related person’s interest in the transaction. Since the adoption of this policy, we have followed all policies and procedures in reviewing, approving and ratifying related person transactions.

 

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NON-EMPLOYEE DIRECTOR COMPENSATION

The following table sets forth information for the year ended December 31, 2017 regarding the compensation awarded to, earned by or paid to our non-employee directors:

 

Name

   Fees Earned
or Paid in
Cash ($) 		     Option
Awards
($) (1) 		     Total ($)  

James I. Healy, M.D., Ph.D.

     68,750        317,532        386,282  

V. Bryan Lawlis, Ph.D.

     81,250        317,532        398,782  

Christos Richards

     43,750        317,532        361,282  

Ali J. Satvat

     53,750        317,532        371,282  

Mary T. Szela

     56,250        317,532        373,782  

August J. Troendle, M.D.

     43,750        317,532        361,282  

Mats Wahlström

     97,500        317,532        415,032  

 

(1) Amount represents the grant date fair value of options granted during the year ended December 31, 2017 as calculated in accordance with ASC Topic 718. The assumptions used in calculating the grant date fair value of the stock options reported in the Option Awards column are set forth in Note 9 to the audited consolidated financial statements included in the Annual Report on Form 10-K. As of December 31, 2017, our non-employee directors held options to purchase the aggregate number of shares of our common stock set forth in the table below.

 

Name

   Shares Subject to Outstanding Options  

James I. Healy, M.D., Ph.D.

     104,994  

V. Bryan Lawlis, Ph.D.

     141,241  

Christos Richards

     94,991  

Ali J. Satvat

     79,997  

Mary T. Szela

     64,997  

August J. Troendle, M.D.

     50,000  

Mats Wahlström

     214,982  

Our director compensation policy (the “Director Compensation Policy”) provides for both cash retainer fees and new automatic, non-discretionary equity grants. Pursuant to the Director Compensation Policy as in effect on January 1, 2017, our non-employee directors receive the following cash compensation:

 

•   Each non-employee director receives an annual cash retainer in the amount of $40,000 per year.

 

•   The lead independent director receives an additional cash retainer in the amount of $25,000 per year.

 

•   The chairperson of the Audit Committee receives additional cash compensation in the amount of $20,000 per year for such chairperson’s service on the Audit Committee. Each non-chairperson member of the Audit Committee receives additional cash compensation in the amount of $10,000 per year for such member’s service on the Audit Committee.

 

•   The chairperson of the Compensation Committee receives additional cash compensation in the amount of $15,000 per year for such chairperson’s service on the Compensation Committee. Each non-chairperson member of the Compensation Committee receives additional cash compensation in the amount of $7,500 per year for such member’s service on the Compensation Committee.

 

•   The chairperson of the Nominating and Corporate Governance Committee receives additional cash compensation in the amount of $10,000 per year for such chairperson’s service on the Nominating and Corporate Governance Committee. Each non-chairperson member of the Nominating and Corporate Governance Committee receives additional cash compensation in the amount of $5,000 per year for such member’s service on the Nominating and Corporate Governance Committee.

 

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•   The Science Director, currently Dr. Lawlis, receives additional cash compensation in the amount of $20,000 per year for such director’s service.

Under the Director Compensation Policy, each non-employee director receives an option to purchase 20,000 shares of our common stock upon the director’s initial appointment or election to our Board of Directors, and an annual option to purchase 10,000 shares of our common stock on the date of each annual meeting of our stockholders thereafter. The initial grant will vest and become exercisable in substantially equal monthly installments over three years, subject to continued service on our Board of Directors. The annual grant will vest and become exercisable in substantially equal monthly installments over one year, subject to continued service on the Board of Directors.

In May 2017, following a competitive assessment performed by Radford, our independent compensation consultant, the Board of Directors approved certain adjustments to our Director Compensation Policy in order align our non-employee director compensation with the 75 th percentile of our peer group. Under the new Director Compensation Policy effective May 2017, the annual cash retainer for all non-employee directors was increased from $40,000 to $45,000, the annual retainer for our lead independent director was increased from $25,000 to $30,000, the initial stock option grant was increased from 20,000 shares to 40,000 shares, and the annual stock option grant was increased from 10,000 shares to 20,000 shares.

 

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EXECUTIVE OFFICERS

The following table sets forth information regarding our executive officers as of April 2, 2018:

 

Name

   Age     

Position(s)

Executive Officers

     

Dennis M. Lanfear

     62      President, Chief Executive Officer and Chairman of the Board of Directors

Jean-Frédéric Viret, Ph.D.

     52      Chief Financial Officer

Barbara K. Finck, M.D.

     71      Chief Medical Officer

Alan C. Herman, Ph.D.

     70      Chief Scientific Officer

Peter K. Watler, Ph.D.

     56      Chief Technical Officer

Vincent Anicetti

     63    Chief Quality and Compliance Officer

Mr. Lanfear’s biographical information is set forth in “ Proposal No. 1–Election of Directors ” in this proxy statement.

Jean-Frédéric Viret, Ph.D. has served as the Company’s Chief Financial Officer since September 2014. Previously, Dr. Viret was Chief Financial Officer at diaDexus, Inc., a cardiovascular diagnostics company, from February 2012 to September 2014. diaDexus, Inc. filed a voluntary petition for bankruptcy in June 2016. Prior to that, Dr. Viret was Chief Financial Officer at XDx, Inc. (now CareDx, Inc.), a privately held molecular diagnostics company, from December 2009 to January 2012. From March 2009 to December 2009, Dr. Viret served as the President of JV Consulting, a private consulting firm that provided accounting, public company compliance and other financial consulting services to technology companies. Prior to that time, Dr. Viret served in various capacities at Anesiva, Inc. (previously known as Corgentech Inc.), a public biopharmaceutical company, most recently as a finance consultant from February 2009 to May 2009. Dr. Viret served as Anesiva’s Vice President and Chief Financial Officer from March 2008 to February 2009 and as its Vice President, Finance from August 2006 to February 2008. Dr. Viret held various positions in finance in Anesiva from December 2002 to August 2006 and at Tularik Inc. from March 2000 to November 2002. He held various positions in the business assurance services of PricewaterhouseCoopers LLP from September 1997 to March 2000. Dr. Viret served on the board of trustees of the International School of the Peninsula in Palo Alto, California from September 2011 to June 2017, where he was a member of the finance and investment committees, and was a member of the audit committee through June 2015. Dr. Viret received a B.S. in Engineering from the Institut National Polytechnique de Lorraine, an M.B.A. from Cornell University and a Ph.D. in Plant Molecular Biology from Université Louis Pasteur (Strasbourg I). He was a visiting fellow at Harvard University and a postdoctoral fellow at the Massachusetts Institute of Technology. As described above, Dr. Viret held various positions with Anesiva, Inc. (previously known as Corgentech Inc.), including as a finance consultant from February 2009 to May 2009, Vice President and Chief Financial Officer from March 2008 to February 2009, Vice President, Finance from August 2006 to February 2008, and various other positions from December 2002 to August 2006. Anesiva, Inc. filed a voluntary petition for bankruptcy in December 2009. Except as described in the preceding sentence, no other event has occurred during the past 10 years requiring disclosure pursuant to Item 401(f) of Regulation S-K of the Securities Act of 1933, as amended, or the Securities Act.

Barbara  K. Finck, M.D. has served as our Chief Medical Officer since July 2013 and served as Senior Vice President from July 2012 to July 2013. Dr. Finck previously served as Senior Vice President and Chief Medical Officer of NKT Therapeutics Inc., a biopharmaceutical company, from September 2010 to July 2012. Prior to that, from June 2007 to June 2010, Dr. Finck served as Senior Vice President of Research and Development and Chief Medical Officer at Osprey Pharmaceuticals U.S.A., Inc., a biopharmaceutical company. Prior to that, Dr. Finck served as an executive for various biopharmaceutical companies. Dr. Finck has a B.S. in Physiological Psychology from the University of California, Santa Barbara and received her M.D. and post-doctorate training in internal medicine and rheumatology from the University of California, San Francisco School of Medicine. She is board certified in internal medicine.

 

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Alan  C. Herman, Ph.D. has served as our Chief Scientific Officer since April 2011. Dr. Herman previously founded and served as Chief Executive Officer of WindRose Analytica, Inc., a contract analytical laboratory. In May 2009, WindRose Analytica was acquired by Althea Technologies, Inc., a biologic manufacturing company. Dr. Herman served as Chief Scientific Officer and Vice President of Product Development at Althea Technologies from May 2009 to April 2011. Prior to that, Dr. Herman served as Senior Director of Quality Control for Tercica, Inc., a biopharmaceutical company. In 1989, Dr. Herman joined Amgen where he started and served in the Analytical Research and Development Department until May 2009. In 1984, he joined Genentech where he worked first in process development and later in pharmaceutics. During his time at Genentech, Dr. Herman worked on a number of products, including human growth hormone, tissue plasminogen activator and interferon. Dr. Herman started his career at Merck, where he worked on a recombinant hepatitis B vaccine. Dr. Herman received his B.S. and M.S. degrees in Biology at Indiana University of Pennsylvania. He received a Ph.D. in Microbiology from Duke University and did his post-doctoral work in oncogenic virus structure at Duke University Medical Center under Dr. Dani Bolognesi.

Peter K.  Watler, Ph.D. has served as our Chief Technical Officer since June 2014. Dr. Watler also has served as our Senior Vice President of Process Sciences since March 2012. Dr. Watler was previously the Principal Consultant and Chief Technology Officer of Hyde Engineering Consulting, a global process system design and consulting organization, from January 2007 to May 2012. Previously, Dr. Watler also held various process engineering roles at VaxGen, a biopharmaceutical company, serving as its Vice President of Manufacturing Operations from January 2006 to January 2007 and Senior Director of Manufacturing from August 2002 to December 2005. Prior to that, Dr. Watler worked at Amgen as an Associate Director of Pilot Plant Engineering from June 2000 to August 2002 and an Engineer and Manager from June 1990 to June 2000. Dr. Watler received his B.S. and M.S. degrees in Chemical Engineering from the University of Toronto and a Ph.D. in Chemical Engineering from Yamaguchi University.

Vincent Anicetti has served as our Chief Quality and Compliance Officer since March 2018 and served as our Executive Vice President of Quality and Compliance from June 2014 to March 2018. Mr. Anicetti previously served as Executive Director of Quality of Boehringer Ingelheim, a pharmaceutical company, from February 2013 to May 2014. Prior to that, from June 2006 to September 2011, Mr. Anicetti served as Vice President of Biologics Quality at Genentech, a biotechnology corporation. Prior to that, Mr. Anicetti served as Vice President of Portfolio Management and Senior Director of Regulatory Affairs at Genentech. Since August 2011, Mr. Anicetti is also an Industry Professor at the Keck Graduate Institute, a private graduate school. Mr. Anicetti has a M.S. in Biological Sciences from San Francisco State University and currently serves on the board of directors of the San Francisco State University Foundation in San Francisco, California.

 

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COMPENSATION DISCUSSION AND ANALYSIS

General

The following Compensation Discussion and Analysis (“CD&A”) provides information on the compensation arrangements for our named executive officers, or NEOs, and is intended to provide context for the decisions underlying the compensation paid to our NEOs in 2017. This CD&A should be read together with the compensation tables and related disclosures set forth below. Our NEOs for 2017 were as follows:

 

  •   Dennis M. Lanfear, President and Chief Executive Officer;

 

  •   Jean-Frédéric Viret, Ph.D., Chief Financial Officer;

 

  •   Barbara K. Finck, M.D., Chief Medical Officer; and

 

  •   Peter K. Watler, Ph.D., Chief Technical Officer.

Executive Summary

Pay for Performance. Our executive compensation programs are designed to deliver pay in accordance with corporate and individual performance, rewarding superior performance and providing consequences for underperformance. We believe that compensation of our NEOs for fiscal year 2017 was aligned with the Company’s performance during 2017, in which we successfully executed against our product development timeline, funding and partnering goals and manufacturing, quality, intellectual property, commercial and analytical pharmaceutical science goals.

In order to align pay with performance, a significant portion of our NEOs’ compensation is delivered in the form of equity awards and annual cash incentives, the value of each of which depends on our actual performance. For fiscal year 2017, approximately 70% of our NEOs’ total target compensation was in the form of stock options and annual performance-based incentives, in order to focus the management team on long-term performance achievements.

2017 Compensation Highlights. Consistent with our compensation philosophy, key compensation decisions for 2017 included the following:

 

  •   Base Salaries and Target Annual Cash Incentive Opportunities . Our Compensation Committee determined that our NEOs’ base salaries would be increased from 5% to 7% for 2017 following consideration of our NEO’s performance in 2016 and their positioning relative to market. Our Compensation Committee further determined that no increases would be made to our NEOs’ target bonuses for 2017.

 

  •   Annual Performance-Based Incentives . For 2017, our Board of Directors selected corporate performance goals for our performance-based annual bonus program that were intended promote our business plan and short-term goals across ten clinical and operational areas. In late 2017, the Board of Directors determined our overall corporate achievement percentage to be 51.6%, and approved payouts under the program at 50% of target for each of our NEOs based on such achievement. For 2017, our payouts under our annual bonus program were made in shares of fully vested common stock rather than cash in order to preserve our cash resources and to further align the interests of our named executive officers with the interests of our stockholders.

 

  •   Equity-Based Long Term Incentives . In 2017, we granted approximately 50% of our NEOs’ total target compensation as equity-based compensation in the form of stock options. We believe that stock options effectively align the interests of our executives with those of our stockholders, providing significant potential upside compensation if our growth objectives are achieved while also placing a significant portion of compensation at risk if our objectives are not achieved. In the event that our executives fail to increase stockholder value over the term of their stock options, or if stockholder value remains stagnant, then our NEOs will realize no value from their stock options.

 

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Compensation Governance and Best Practices. We are committed to having strong governance standards with respect to our compensation programs, procedures and practices. Our key compensation practices include the following:

 

  •   Pay for performance. A significant portion of executive compensation is “at risk” based on corporate performance or equity-based in order to align the interests of our executive officers with stockholders.

 

  •   Strong link between performance measures and strategic objectives. Performance measures for incentive compensation are linked to operating priorities designed to create long-term stockholder value.

 

  •   Independent compensation consultant . The Compensation Committee retains an independent compensation consultant to review our executive compensation program and practices.

 

  •   No guaranteed annual salary increases or bonuses. Our NEOs’ salary increases are based on individual evaluations and their annual cash incentives are tied to corporate performance, as well as individual performance as applicable.

 

  •   Limited perquisites. We provide only limited perquisites or personal benefits to our NEOs, and do not consider these to be a significant component of our executive compensation program.

 

  •   No excise tax gross-ups. We do not provide any gross-ups for excise taxes to our NEOs.

 

  •   No hedging or pledging . We prohibit our employees and directors from hedging or pledging any Company securities.

Executive Compensation Objectives and Philosophy

The key objective in our executive compensation program is to attract, motivate and reward leaders with the skills and experience necessary to successfully execute on our strategic plan to maximize stockholder value. Our executive compensation program is designed to:

 

  •   Attract and retain talented and experienced executives in a competitive and dynamic market;

 

  •   Motivate our NEOs to help the Company achieve the best possible financial and operational results;

 

  •   Provide reward opportunities consistent with our performance on both a short-term and long-term basis; and

 

  •   Align the long-term interests of our NEOs with those of our stockholders.

We strive to set our overall total compensation at a competitive level. Executives may be compensated above or below the targeted market position based on factors such as experience, performance, scope of position and the competitive demand for proven executive talent, as described further below under “ Determination of Executive Compensation .”

Determination of Executive Compensation

Our Compensation Committee is responsible for establishing and overseeing our executive compensation programs and annually reviews and determines the compensation to be provided to our NEOs, other than with respect to our CEO, whose compensation is determined by the Board of Directors.

In setting executive compensation, the Compensation Committee considers a number of factors, including the recommendations of our CEO (other than with respect to himself), current and past total compensation, competitive market data and analysis provided by the Compensation Committee’s independent compensation consultant, Company performance and each executive’s impact on performance, each executive’s relative scope of responsibility and potential, each executive’s individual performance and demonstrated leadership and internal

 

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equity pay considerations. Our CEO’s recommendations are based on his evaluation of each other NEO’s individual performance and contributions, of which he has direct knowledge. Our Board of Directors makes decisions regarding our CEO’s compensation, following recommendation from the Compensation Committee.

Competitive Market Data and Independent Compensation Consultant

In order to design a competitive executive compensation program that will continue to attract top executive talent, our Compensation Committee retained Radford as an independent compensation consultant to provide a competitive review of executive compensation, including developing a peer group of public companies, reviewing our executive compensation program covering cash and equity, and analyzing peer practices. In April 2016, in consultation with Radford, our Compensation Committee selected our peer group as follows:

 

•   Acceleron Pharma

  

•   bluebird bio

  

•   Five Prime Therapeutics

  

•   Portola Pharmaceuticals

•   Adamas Pharmaceuticals

  

•   Cempra

  

•   Geron

  

•   Prothena

•   Agios Pharmaceuticals

  

•   Depomed

  

•   Karyopharm Therapeutics

  

•   Radius Health

•   Amicus Therapeutics

  

•   Dermira

  

•   Kite Pharma

  

•   Relypsa

•   Anacor Pharmaceuticals

  

•   Dynavax Technologies

  

•   Momenta Pharmaceuticals

  

•   Sage Therapeutics

•   Atara Biotherapeutics

  

•   Epizyme

  

•   New Link Genetics

  

•   Ultragenyx Pharmaceutical

Our peer group was selected using the following criteria: (i) later stage pre-commercial companies and select commercial companies; (ii) companies located in geographic biotechnology hubs; (iii) companies that are publicly traded since 2010; (iv) companies with market capitalizations between $300 million to $3 billion; and (iv) companies with between 50 and 300 full time equivalent employees. As of April 2016, as compared to such peer group, we were at the 71 st percentile for 12-month trailing revenues, the 39 th percentile for 30-day average market capitalization and the 47 th percentile for headcount.

In March 2017, the Compensation Committee approved a new peer group based on the following adjusted criteria: (i) later stage pre-commercial companies and early stage commercial companies; (ii) companies located in geographic biotechnology hubs; (iii) newly public companies or other newly commercial organizations; (iv) companies with market capitalizations between $300 million to $3 billion with a median value roughly equivalent to the Company’s current valuation; and (iv) companies with between 50 and 500 full time equivalent employees. Based on these criteria, the following changes were made from our 2016 peer group: Anacor Pharmaceuticals, Dynavax Technologies and Relypsa were removed, and Clovis Oncology, Flexion Therapeutics and Sarepta Theraputics were added.

For 2017, the Compensation Committee used Radford’s analysis of our 2016 peer group to help structure a competitive executive compensation program, with particular consideration of the 75 th percentile of the peer group, which it deemed necessary and appropriate to attract and retain executive talent in the market with which we compete. While the Compensation Committee does not establish compensation levels solely based on a review of competitive data, it believes such data is a useful tool in its deliberations as our compensation policies and practices must be competitive in the marketplace for us to be able to attract, motivate and retain qualified executive officers.

Components of Compensation

The primary elements of our NEOs’ compensation and the main objectives of each are:

 

  •   Base Salary . Base salary attracts and retains talented executives, recognizes individual roles and responsibilities and provides stable income;

 

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  •   Annual Performance-Based Incentive Compensation . Annual performance bonuses promote short-term performance objectives and reward executives for their contributions toward achieving those objectives; and

 

  •   Equity Based Long-Term Incentive Compensation . Equity compensation, provided in the form of stock options, aligns executives’ interests with our stockholders’ interests, emphasizes long-term financial and operational performance, and helps retain executive talent.

In addition, our NEOs are eligible to participate in our health and welfare programs and our 401(k) plan on the same basis as our other employees. We also maintain severance and change in control arrangements, which aid in attracting and retaining executive talent and help executives to remain focused and dedicated during potential transition periods due to a change in control. Each of these elements of compensation for 2017 is described further below.

Base Salary

Base salaries provide our NEOs with a reasonable degree of financial certainty and stability. Our Compensation Committee annually reviews and determines the base salaries of our executives and evaluates the base salaries of new hires at the time of hire. In February 2017, our Compensation Committee (or our Board of Directors, with respect to our CEO) approved certain increases to our NEOs’ bases salaries, effective January 1, 2017. These increases were approved following evaluation of each NEO’s 2016 performance, with consideration of the 75 th percentile of market (including our 2016 peer group, the Radford Northern CA Life Sciences data from the fourth quarter of 2016 and the Radford US Survey data from the fourth quarter of 2016). The Compensation Committee also took into consideration the fact that the last merit increases to our NEOs’ base salaries were made in 2015. The Compensation Committee was not apprised of the constituent companies in the broader survey data.

The table below shows our NEOs’ 2016 annual base salaries and 2017 annual salaries following such determinations.

 

Name

   2016 Annual Base Salary      2017 Annual Base Salary  

Dennis M. Lanfear

   $ 561,700      $ 595,000  

Jean-Frédéric Viret

   $ 373,000      $ 395,000  

Barbara Finck

   $ 407,500      $ 427,875  

Peter Watler (1)

   $ 341,700      $ 365,000  

 

(1) Effective November 1, 2017, Dr. Watler became a part-time employee, reducing his commitment to 20 hours per week. In connection with the transition, his base salary was reduced accordingly to $182,500 per year.

Annual Performance-Based Incentive Compensation

Our annual performance-based bonus program is designed to motivate our executives to meet or exceed company-wide short-term performance objectives. Our annual bonus program provides for the payment of cash bonuses based on each NEO’s target annual bonus and our overall achievement of corporate performance objectives. For 2017, the individual performance component of our annual bonus program was eliminated, and each of our NEOs received payouts based solely on achievement of our corporate performance objectives.

For 2017, our Compensation Committee determined to maintain our NEOs’ target bonuses at their respective levels in 2016, with our CEO’s target bonus at 100% of base salary and our other NEOs’ target bonuses at 50% of base salary. The Company maintains a team-based approach to target bonuses, in which employees at the same level are eligible to receive the same target bonus as a percentage of base salary.

Under our annual bonus program, corporate goals and performance targets are reviewed and approved by the Compensation Committee, which gives its recommendations to the Board of Directors. For fiscal year 2017,

 

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following recommendation from our Compensation Committee, our Board of Directors approved ten performance goals in the areas set forth below. Given that certain of our corporate goals are related to our business strategy or are goals shared with partners, and thus are highly confidential, we do not publicly disclose them. We believe their disclosure would provide our competitors, customers and other third parties with significant insights regarding our confidential business strategies that could cause us substantial competitive harm. These goals were set by our Board of Directors at a level our Board of Directors and Compensation Committee determined would require substantial effort to be achieved, such that the goals would not be expected to be achieved with average or below average performance.

In November 2017, the Compensation Committee reviewed our 2017 performance under our corporate goals and the Board of Directors determined, after reviewing the recommendations from the Compensation Committee, overall corporate achievement under our annual bonus program of 51.6%. The areas of our corporate goals, their corresponding weights, and our actual achievement for 2017 are set forth in the table below.

 

Corporate Goal

   Weighting     Actual
Achievement 		    Weighted
Achievement 		 

Clinical/Regulatory

      

CHS-1701: Completion of immunogenicity study, completion of BLA-enabling pharmacokinetic; and pharmacodynamics study, biologics license application (BLA) submission and acceptance, and market authorization application

     22.5 %      0 %      0 % 

CHS-1420: Completion of Phase 3 trial and completion of bioequivalence study in 2017

     15.0 %      0 %      0 % 

CHS-0214: Completion of two pharmacokinetic bioequivalence studies of CHS-0214

     5.0 %      40 %      2.00 % 

CHS-131: Completion of Phase 2 trial

     2.5 %      75 %      1.88 % 

Pipeline

     5.0 %      100 %      5.00 % 

CHS-1701 Commercial Production Supply

     7.5 %      80 %      6.00 % 

Finance, including, in part, raising $125 million before the filing of the 10-K and positioning the Company with at least 15 months of cash

     10.0 %      100 %      10.00 % 

Corporate Development

     10.0 %      65 %      6.50 % 

Legal

     12.5 %      90 %      11.25 % 

Commercial

     10.0 %      90 %      9.00 % 
  

 

 

   

 

 

   

 

 

 

Total

     100.0 %        51.60 % 

Based on our overall corporate achievement, the Compensation Committee determined to award each NEO with a bonus of 50% of his or her target level. For 2017, bonuses were paid on December 15, 2017 in fully vested shares of the Company’s common stock valued based on the closing price of our common stock on December 15, 2017.

Dr. Watler’s 2017 bonus was determined based on his base salary of $182,500 that was in effect as of the payout date. The dollar value of our NEOs’ 2017 annual bonuses are set forth in the column entitled “Non-Equity Incentive Plan Compensation” in the “2017 Summary Compensation Table” below.

Equity-Based Long-Term Incentive Awards

Our Compensation Committee believes it is essential to provide equity-based compensation to our executive officers in order to link the interests and risks of our executive officers with those of our stockholders, reinforcing our commitment to ensuring a strong linkage between company performance and pay. In 2017, we granted all equity-based compensation to our NEOs in the form of stock options pursuant to our 2014 Equity Incentive Award Plan, which we believe effectively align the interests of our executives with those of our stockholders because our NEOs will realize no value in their stock options in the event they fail to increase stockholder value over the term of their options.

 

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In determining the size of the annual stock option grants made to our NEOs in August 2017, our Compensation Committee considered the performance of our NEOs in 2016.

In August 2017, our Board of Directors made the following grants of stock options to our NEOs:

 

Name

   Number of Shares Underlying
Stock Options (#) 		     Grant Date Fair Value
($) 		 

Dennis M. Lanfear

     200,000        1,707,760  

Jean-Frédéric Viret

     67,000        572,100  

Barbara Finck

     67,000        572,100  

Peter Watler

     67,000        572,100  

These stock option awards vest as to 50% of the total number of shares subject to the option on August 1, 2018, 25% of the total number of shares subject to the option on February 1, 2019, and 25% of the total number of shares subject to the option on August 1, 2019, subject to continued service through each applicable vesting date.

Retirement Savings, Health and Welfare Benefits

Our NEOs participate in our company-sponsored benefit programs on generally the same basis as other salaried employees, including a standard complement of health and welfare benefit plans and a 401(k) plan, which is intended to qualify under Section 401(k) of the Code. Under the 401(k) plan, employees may elect to contribute up to a maximum of 90% of his or her salary, not to exceed the contribution amount allowed by the IRS. We do not provide any matching contributions under the 401(k) plan.

Perquisites and Other Personal Benefits

We provide only limited perquisites and personal benefits to our NEOs, including health club membership dues, and for our CEO, concierge physician services. Such benefits are intended to attract and retain qualified talent, reward long standing service to us and to promote the physical health of our executives. We do not view perquisites or other personal benefits as a significant component of our executive compensation program. In the future, we may provide perquisites or other personal benefits in limited circumstances, such as where we believe it is appropriate to assist an individual executive officer in the performance of his or her duties, to make our executive officers more efficient and effective or for recruitment, motivation, recognition or retention purposes. All future practices with respect to perquisites or other personal benefits will be approved by the Compensation Committee.

Severance and Change in Control Arrangements

As of January 1, 2017, each of our NEOs was party to a severance and change in control agreement with us, which provided for severance benefits and payments upon certain involuntary terminations, including in connection with a change in control. In April 2017, we adopted an Executive Change in Control and Severance Plan that updated the level of severance benefits provided to our executives in line with market practices and superseded the individual severance and change in control agreements. Our Compensation Committee believes that these types of arrangements are necessary to attract and retain executive talent and are a customary component of executive compensation. In particular, such arrangements can serve to mitigate a potential disincentive for them when they are evaluating a potential acquisition of the Company and can encourage retention through the conclusion of the transaction. The severance benefits provided are designed to provide our NEOs with treatment that is competitive with market practices. A description of these arrangements, as well as information on the estimated payments and benefits that our NEOs would have been eligible to receive as of December 31, 2017 are set forth in “ Potential Payments Upon Termination or Change in Control ” below.

 

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Other Policies and Considerations

Derivatives Trading, Hedging, and Pledging Policies. Our Insider Trading Policy provides that no officer, director, employee or consultant, or any immediate family member or any member of the household of any such person, shall purchase or sell any type of security while in possession of material, non-public information relating to the security, whether the issuer of such security is the Company or any other company. This prohibition includes any interest or position relating to put options, call options or short sales, or engaging in hedging transactions. In addition, our Insider Trading Policy provides that no employee, officer or director may pledge Company securities as collateral to secure loans. This prohibition means, among other things, that these individuals may not hold Company securities in a “margin” account, which would allow the individual to borrow against their holdings to buy securities.

Deductibility of Compensation. Section 162(m) of the Code disallows the deductibility of compensation expenses in excess of $1,000,000 to any “covered employee” within a taxable year. Prior to the Tax Cuts and Jobs Act of 2017, covered employees generally consisted of our Chief Executive Officer and each of the next three highest compensated officers serving at the end of the taxable year other than our Chief Financial Officer, and compensation that qualified as “performance-based” under Section 162(m) was exempt from this $1 million deduction limitation. As part of the Tax Cuts and Jobs Act of 2017, the ability to rely on this exemption was, with certain limited exceptions, eliminated; in addition, the definition of covered employees was expanded to generally include all named executive officers. While our Board of Directors and Compensation Committee may take the deductibility of compensation into account when making compensation decisions, we believe that maintaining the discretion to provide compensation to our executive officers that is non-deductible allows us to provide compensation tailored to the needs of our Company, which is an important part of our responsibilities and benefits our stockholders.

Nonqualified Deferred Compensation . The Compensation Committee takes into account whether components of the compensation for our executive officers will be adversely impacted by the penalty tax imposed by Section 409A of the Code, and aims to structure these components to be compliant with or exempt from Section 409A to avoid such potential adverse tax consequences.

“Golden Parachute” Payments. Sections 280G and 4999 of the Code provide that certain executive officers and other service providers who are highly compensated or hold significant equity interests may be subject to an excise tax if they receive payments or benefits in connection with a change in control of the company that exceeds certain prescribed limits, and that we, or a successor, may forfeit a deduction on the amounts subject to this additional tax. We do not provide any executive officer, including any NEO, with a “gross-up” or other reimbursement payment for any tax liability that he or she might owe as a result of the application of Sections 280G or 4999.

Accounting for Share-Based Compensation . We follow Financial Accounting Standard Board Accounting Standards Codification Topic 718, (“ASC Topic 718”), for our share-based compensation awards. ASC Topic 718 requires companies to measure the compensation expense for all share-based payment awards made to employees and directors, including stock options and restricted stock units, based on the grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the compensation tables below, even though our executive officers may never realize any value from their awards. ASC Topic 718 also requires companies to recognize the compensation cost of their share-based compensation awards in their income statements over the period that an executive officer is required to render service in exchange for the option or other award.

 

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REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS

The material in this report is not “soliciting material,” is not deemed “filed” with the SEC, and is not 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.

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management. Based on its review and discussions with management, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this proxy statement for the 2018 Annual Meeting and incorporated by reference in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

Compensation Committee

James I. Healy, M.D., Ph.D.

V. Bryan Lawlis, Ph.D.

Mary T. Szela

 

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EXECUTIVE COMPENSATION TABLES

2017 Summary Compensation Table

The following table sets forth total compensation earned by our NEOs for the fiscal years ending on December 31, 2017, 2016, and 2015.

 

Name and Principal Positions

  Year     Salary($)     Option
Awards($) (1) 		    Non-Equity
Incentive Plan
Compensation($) (2) 		    All Other
Compensation($) 		    Total($)  

Dennis M. Lanfear

    2017       656,030       1,707,760       297,502       —         2,661,292  

President, Chief Executive Office and Chairman of the Board of Directors

   
2016
2015 		 
  		   
652,609
546,181 		 
  		   
3,645,144
8,159,039 		 
  		   
469,020
449,360 		 
  		   
—  
3,837 		 
  		   
4,770,073
9,158,417 		 
 

Jean-Frédéric Viret, Ph.D.

    2017       410,601       572,100       98,757       —         1,081,457  

Chief Financial Officer

   
2016
2015 		 
  		   
389,166
363,320 		 
  		   
883,147
1,826,410 		 
  		   
158,758
126,820 		 
  		   
—  
1,875 		 
  		   
1,431,223
2,318,425 		 
 

Barbara Finck

    2017       469,844       572,100       106,970       —         1,148,913  

Chief Medical Officer

   
2016
2015 		 
  		   
429,364
410,359 		 
  		   
883,147
1,826,410 		 
  		   
174,680
128,363 		 
  		   
—  
182 		 
  		   
1,487,192
2,365,314 		 
 

Peter Watler

    2017       315,772       572,100       83,650       —         971,522  

Chief Technical Officer

   
2016
2015 		 
  		   
365,378
356,825 		 
  		   
883,147
1,826,410 		 
  		   
147,035
112,761 		 
  		   
—  
1,935 		 
  		   
1,396,910
2,297,931 		 
 

 

(1) These amounts represent the grant date fair value of the options granted to our NEOs during 2017 as computed in accordance with ASC 718. The assumptions used in calculating the grant date fair value are set forth in Note 9 to the audited consolidated financial statements included in the Annual Report on Form 10-K. The amounts reported in this column exclude the impact of estimated forfeitures related to service-based vesting conditions. Note that the amounts reported in this column reflect the accounting cost for these stock options, and do not correspond to the actual economic value that may be received by the employees from the options.
(2) Amounts for 2017 represent annual bonuses awarded in recognition of 2017 performance, paid in the form of fully vested shares of Company common stock. Amount is based on our closing price of $8.85 on December 15, 2017.

 

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2017 Grants of Plan-Based Awards

The following table summarizes information about the incentive awards and equity-based awards granted to our NEOs in 2017:

 

Name

  Grant
Date 		    Estimated Future Payouts Under
Non-Equity Incentive Plan
Awards (1) 		    All Other
Option
Awards: (#)
of Securities
Underlying
Options (2) 		    Exercise or
Base Price of
Option
Awards
($/Share) 		    Grant Date
Fair Value
of Option
Awards (3) 		 
    Threshold
($) 		    Target
($) 		    Maximum
($) 		       

Dennis Lanfear

    8/6/2017             200,000       12.70       1,707,760  
      —         595,000       595,000        

Jean-Frédéric Viret

    8/6/2017             67,000       12.70       572,100  
      —         197,500       197,500        

Barbara Finck

    8/6/2017             67,000       12.70       572,100  
      —         213,938       213,938        

Peter Watler

    8/6/2017             67,000       12.70       572,100  
      —         91,250 (4)       91,250 (4)        

 

(1) The amounts shown represent the value of bonus awards under our 2017 annual bonus program, which were paid in fully vested shares of the Company’s common stock based on the Company’s closing stock price on December 15, 2017. No threshold amounts were applicable under the program. The target and maximum amounts represent each NEO’s target annual bonus multiplied by his or her base salary. For additional detail on our annual bonus program, please see “ Compensation Discussion and Analysis – Annual Performance-Based Incentive Compensation ” above.
(2) Vests as to 50% of the total number of shares subject to the option on August 1, 2018, 25% of the total number of shares subject to the option on February 1, 2019, and 25% of the total number of shares subject to the option on August 1, 2019, subject to continued service through each applicable vesting date.
(3) These amounts represent the grant date fair value of the options granted to our NEOs during 2017 as computed in accordance with ASC 718. The assumptions used in calculating the grant date fair value are set forth in Note 9 to the audited consolidated financial statements included in the Annual Report on Form 10-K. The amounts reported in this column exclude the impact of estimated forfeitures related to service-based vesting conditions.
(4) The target and maximum bonus awards shown for Dr. Watler are calculated based on his base salary as in effect as of fiscal year end.

 

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Outstanding Equity Awards at 2017 Fiscal Year End

The following table lists all outstanding equity awards held by our NEOs as of December 31, 2017.

 

           Option Awards  

Executive Officers

   Vesting
Commencement
Date (1) 		    Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable 		     Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable 		     Option
Exercise
Price
($) 		     Option
Expiration
Date 		 

Dennis Lanfear

     10/12/2010       29,994        —          0.0083        10/11/2020  
     4/19/2011 (2)       331,054        —          0.4168        7/17/2021  
     7/20/2013       299,940        —          1.4170        11/21/2023  
     3/11/2014       843,165        56,212        1.6670        3/10/2024  
     4/1/2015       166,667        83,333        29.0000        4/1/2025  
     4/1/2015 (3)       60,000        90,000        29.0000        4/1/2025  
     4/1/2015       23,333        11,667        25.2600        5/21/2025  
     5/6/2016       128,206        195,683        17.1700        5/11/2026  
     8/1/2017 (4)       —          200,000        12.7000        8/6/2027  

Jean-Frédéric Viret

     9/22/2014 (2)       87,173        25,308        13.5000        11/5/2024  
     4/1/2015       66,666        33,334        29.0000        3/31/2025  
     5/6/2016       31,061        47,411        17.1700        5/11/2026  
     8/1/2017 (4)       —          67,000        12.7000        8/6/2027  

Barbara Finck

     7/2/2012 (2)       121,175        —          2.0838        2/27/2023  
     7/30/2013       89,981        —          1.4170        11/21/2023  
     4/1/2015       66,666        33,334        29.0000        3/31/2025  
     5/6/2016       31,061        47,411        17.1700        5/11/2026  
     8/1/2017 (4)       —          67,000        12.7000        8/6/2027  

Peter Watler

     3/19/2012 (2)       48,503        —          2.0838        12/13/2022  
     7/30/2013       44,990        —          1.4170        11/21/2023  
     6/30/2014       26,243        3,750        2.5005        6/29/2024  
     4/1/2015       66,666        33,334        29.0000        3/31/2025  
     5/6/2016       31,061        47,411        17.1700        5/11/2026  
     8/1/2017 (4)       —          67,000        12.7000        8/6/2027  

 

(1) Unless otherwise noted, each option vests and becomes exercisable as to 1/48th of the total numbers of shares subject to the option in monthly installments over four years measured from the vesting commencement date, subject to continued service through the applicable vesting date.
(2) This option vests as to 25% of the total number of shares subject to the option on the first anniversary of the vesting commencement date and 1/48th of the total number of shares subject to the option in monthly installments over the three year period thereafter, subject to continued service through each applicable vesting date.
(3) This option vests and becomes exercisable as to 1/5th of the total number of shares subject to the option in yearly installments over five years measured from the vesting commencement date, subject to continued service through the applicable vesting date.
(4) This option vests as to 50% of the total number of shares subject to the option on August 1, 2018, 25% of the total number of shares subject to the option on February 1, 2019, and 25% of the total number of shares subject to the option on August 1, 2019, subject to continued service through each applicable vesting date.

 

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Option Exercises and Stock Vested

The following table summarizes the stock options exercised during the year ended December 31, 2017, and the value realized upon exercise by our NEOs. Our NEOs did not hold any stock awards that vested during the year ended December 31, 2017.

 

     Option Awards  

Name

   Number of Shares
Acquired on Exercise
(#) 		     Value Realized Upon
Exercise ($) (1) 		 

Dennis M. Lanfear

     —          —    

Jean-Frédéric Viret

     3,900        52,650  

Barbara Finck

     —          —    

Peter Watler

     —          —    

 

(1) The value realized equals the excess of the sale price or our closing stock price on the date of exercise over the option exercise price, multiplied by the number of shares for which the option was exercised.

Potential Payments Upon Termination or Change in Control

As of January 1, 2017, each NEO was party to a change in control severance agreement with us. Each change in control severance agreement provided that, in the event the NEO’s employment is terminated by the Company other than for “cause” (as defined in the agreement) or the executive experiences a “constructive termination” (as defined in the agreement, and together with a termination by the Company without cause, a “qualifying termination”), the NEO will receive as severance continued payment of base salary for six months plus one month for each completed full year of service with the Company, provided that the maximum amount calculated shall be 12 months (“the Severance Period”) (or 24 months in the case of Mr. Lanfear), continued healthcare coverage premium reimbursement for the Severance Period (or 24 months in the case of Mr. Lanfear) and the vesting of each equity award, including each stock option, will be accelerated in respect of that number of shares that would have vested during the Severance Period (or 24 months in the case of Mr. Lanfear) following the NEO’s termination date.

In the event the termination occurs during the 12 months following a change in control, then the severance payment will be made in a single cash lump sum, vesting acceleration is increased to 100% of the shares subject to each equity award and the base salary payment and healthcare continuation coverage premium reimbursement for each of the executives, other than Mr. Lanfear, is increased to 12 months. All such severance payments and benefits are subject to the execution of a general release of claims against the Company that becomes effective and irrevocable within 60 days of the NEO’s termination.

The change in control severance agreements also provide for a parachute payment “best pay” provision, under which payments and benefits will either be made to the NEO in full or as to such lesser amount as which would result in no portion of the payments and benefits being subject to an excise tax under Section 280G of the Code, whichever of the foregoing amounts is greater on an after-tax basis.

In April 2017, our Compensation Committee adopted an Executive Change in Control and Severance Plan that superseded the change in control and severance agreements. The Executive Change in Control and Severance Plan provides the same benefits and definitions as the change in control and severance agreements except that the Severance Period is fixed at 2 years for Mr. Lanfear and 1 year for the other NEOs.

 

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The following table shows the payments and benefits that would be made to our NEOs under the Executive Change in Control and Severance Plan, assuming a qualifying termination or a qualifying termination following a change in control occurred on December 31, 2017.

 

Name

  Cash Severance
($) 		    COBRA
Premiums
($) 		    Equity Acceleration
($) (1) 		    Total Potential
Payment ($) (2) 		 

Dennis M. Lanfear

       

Qualifying Termination

    1,190,000       66,665       400,960       1,657,625  

Qualifying Termination in Connection with a CIC

    1,190,000       66,665       400,960       1,657,625  

Jean-Frédéric Viret

       

Qualifying Termination

    395,000       33,332       —         428,333  

Qualifying Termination in Connection with a CIC

    395,000       33,332       —         428,333  

Barbara Finck

       

Qualifying Termination

    427,875       10,733       —         438,608  

Qualifying Termination in Connection with a CIC

    427,875       10,733       —         438,608  

Peter Watler

       

Qualifying Termination

    182,500       23,367       23,623       229,490  

Qualifying Termination in Connection with a CIC

    182,500       23,367       23,623       229,490  

 

(1) Amounts shown assume that all stock options for which vesting is accelerated would be exercised immediately upon termination of employment. Stock option values represent the excess of $8.80, the closing stock price of our common stock on December 29, 2017 over the applicable exercise price, multiplied by the number of option shares accelerated.
(2) Amounts shown are the maximum potential payment the NEO would have received as of December 31, 2017. Amounts of any reduction pursuant to the parachute payment best pay provision, if any, would be calculated upon actual termination of employment.

CEO Pay Ratio

As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing information about the relationship of the annual total compensation of our employees and the annual total compensation of our CEO. For 2017, our last completed fiscal year, the total compensation in 2017 of our CEO was approximately 9.7 times the median total compensation in 2017 of all of our other employees. The median of the annual total compensation of all employees of our Company (other than our CEO) was $274,049 and the annual total compensation of our CEO was $2,661,292, as included in the “Summary Compensation Table” above.

The Company chose December 31, 2017 as the date for establishing the employee population used in identifying the median employee and used 2017 as the measurement period. We identified the median employee using a consistently applied compensation measure equal to the sum of (i) the annual base salary in effect as of December 31, 2017 for all permanent employees and all base salary earned during 2017 for all temporary employees and (ii) the target bonus as of December 31, 2017 for all employees. We captured all U.S. employees as of December 31, 2017, consisting of approximately 122 individuals. We excluded the Company’s one non-U.S. employee, who is an employee of our subsidiary in Russia.

Our median employee initially identified with this methodology was an employee hired during 2017, who therefore had anomalous compensation (base salary for a partial year, a prorated annual cash bonus and a new-hire equity award that was larger than would have been awarded on an annual basis). We therefore substituted this employee with a comparable employee who was employed for the entire year with substantially similar annual target compensation and whose rank was one greater than the original median employee on the basis of our consistently applied compensation measure.

The annual total compensation of the median employee and the annual total compensation of the CEO were calculated in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K.

 

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Compensation Risk Assessment

Consistent with the SEC’s disclosure requirements, we have assessed our compensation programs for all employees. We have concluded that our compensation policies and practices do not create risks that are reasonably likely to have a material adverse effect on us. Management has evaluated our executive and employee compensation and benefits programs to determine if these programs’ provisions and operations create undesired or unintentional risk of a material nature. The risk assessment process includes a review of program policies and practices; analysis to identify risks and risk controls related to our compensation programs; and determinations as to the sufficiency of risk identification, the balance of potential risk to potential reward, the effectiveness of our risk controls and the impacts of our compensation programs and their risks to our strategy. Although we periodically review all compensation programs, we focus on the programs with variability of payout, with the ability of a participant to directly affect payout and the controls on participant action and payout. In relation to this, we believe that our incentive compensation arrangements provide incentives that do not encourage risk taking beyond our ability to effectively identify and manage significant risks and are compatible with effective internal controls and our risk management practices.

The Compensation Committee monitors our compensation programs on an annual basis and expects to make modifications as necessary to address any changes in our business or risk profile.

 

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EQUITY COMPENSATION PLAN INFORMATION

The following table provides certain information as of December 31, 2017, regarding existing compensation plans, under which equity securities of the Company are authorized for issuance.

 

Plan Category

   Number of Securities to
be Issued Upon Exercise
of Outstanding Option
Awards and Restricted
Stock Units (a) 		    Weighted-
Average Exercise
Price of
Outstanding
Option Awards 		    Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a)) 		 

Equity compensation plans approved by stockholders (1) (2)

     10,878,096 (4)     $ 14.60 (5)       1,672,387 (6) (7)  

Equity compensation plans not approved by stockholders (3)

     648,500 (4)     $ 27.37 (5)       345,500  

Total

     11,526,596     $ 15.32       2,017,887  

 

(1) Consists of the Coherus Biosciences, Inc. 2014 Equity Incentive Award Plan (the “2014 Plan”), 2014 Employee Stock Purchase Plan (the “ESPP”) and 2010 Equity Incentive Plan, as amended.
(2) The 2014 Plan contains an “evergreen” provision, pursuant to which the number of shares of common stock reserved for issuance pursuant to awards under such plan shall be increased on the first day of each year beginning in 2015 and ending in 2024, in each case subject to the approval of the plan administrator on or prior to the applicable date, equal to the lesser of (A) four percent (4%) of the shares of stock outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year and (B) such smaller number of shares of stock as determined by our Board of Directors; provided, however, that no more than 18,846,815 shares of stock may be issued upon the exercise of incentive stock options. The ESPP contains an “evergreen” provision, pursuant to which the number of shares of common stock reserved for issuance under such plan shall be increased on the first day of each year beginning in 2015 and ending in 2024, in each case subject to the approval of the plan administrator on or prior to the applicable date, equal to the lesser of (A) one percent (1%) of the shares of stock outstanding (on an as converted basis) on the last day of the immediately preceding fiscal year and (B) such smaller number of shares of stock as determined by our Board of Directors; provided, however, no more than 3,520,000 shares of stock may be issued under the 2014 ESPP.
(3) Consists of the Coherus Biosciences, Inc. 2016 Employment Commencement Incentive Plan (the “2016 Plan”). The 2016 Plan provides for the grant of non-qualified stock options, restricted stock units, restricted stock awards, performance awards, dividend equivalents, deferred stock awards, deferred stock units, stock payment and stock appreciation rights to a person not previously an employee or director of the Company, or following a bona fide period of non-employment, as an inducement material to the individual’s entering into employment with the Company. The 2016 Plan does not provide for any annual increases in the number of shares available. See also Note 9 to the audited consolidated financial statements included in the Annual Report on Form 10-K for the fiscal year ended December 31, 2017 for a description of the material features of the 2016 Plan.
(4) Consists of shares of common stock underlying outstanding options.
(5) Represents the weighted average exercise price of outstanding options. The weighted average exercise price does not take into account outstanding RSUs.
(6) Includes 1,500,715 shares that were available for future issuance as of December 31, 2017 under the ESPP, which allows eligible employees to purchase shares of common stock with accumulated payroll deductions.
(7) Includes 171,672 shares that were available for future issuance as of December 31, 2017 under the 2014 Plan, which allows management to grant equity-based awards to employees, directors or consultants.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The percentage of shares beneficially owned is computed on the basis of 60,154,225 shares of our common stock outstanding as of April 2, 2018. Shares of our common stock that a person has the right to acquire within 60 days of April 2, 2018 are deemed outstanding for purposes of computing the percentage ownership of the person holding such rights, but are not deemed outstanding for purposes of computing the percentage ownership of any other person, except with respect to the percentage ownership of all directors, director nominees and executive officers as a group. Unless otherwise indicated below, the address for each beneficial owner listed is c/o Coherus BioSciences, Inc., at 333 Twin Dolphin Drive, Suite 600, Redwood City, California 94065.

 

Name of Beneficial Owner

   Number of
Outstanding
Shares
Beneficially
Owned 		     Number of
Shares
Convertible
/Exercisable
Within
60 Days 		     Number of
Shares
Beneficially
Owned 		     Percentage
of
Beneficial
Ownership 		 

5% and Greater Stockholders

           

Entities associated with Wellington Management Group LLP (1)

     7,259,398        —          7,259,398        12.07 % 

Entities associated with FMR LLC (2)

     6,684,258        —          6,684,258        11.11 % 

Entities associated with Temasek Holdings (Private) Limited (3)

     6,556,116        —          6,556,116        10.90 % 

KKR Biosimilar L.P. (4)

     3,055,055        894,774        3,949,829        6.47 % 

BlackRock, Inc. (5)

     3,198,726        —          3,198,726        5.32 % 

HealthCare Royalty Partners III, L.P. (6)

     —          3,355,403        3,355,403        5.28 % 

Named Executive Officers and Directors

           

Barbara K. Finck, M.D. (7)

     34,336        340,389        374,725        *  

James I. Healy, M.D., Ph.D. (8)

     2,893,313        102,284        2,995,597        4.97 % 

Dennis M. Lanfear (9)

     1,517,150        2,071,266        3,588,416        5.77 % 

V. Bryan Lawlis, Ph.D. (10)

     —          136,915        136,915        *  

Christos Richards (11)

     63,836        97,490        161,326        *  

Ali J. Satvat (12)

     3,055,055        976,957        4,032,012        6.60 % 

Mary T. Szela (13)

     —          67,183        67,183        *  

Mats Wahlström (14)

     398,442        246,595        645,037        1.07 % 

Jean-Frédéric Viret, Ph.D. (15)

     9,958        230,467        240,425        *  

Peter K. Watler, Ph.D. (16)

     5,900        313,547        319,447        *  

All directors and executive officers as a group (11 persons) (17)

     7,983,140        4,708,218        12,691,358        19.57 % 

 

 * Indicates beneficial ownership of less than 1% of the total outstanding common stock.
(1) Based on information contained in a Schedule 13G/A filed by Wellington Management Group LLP and its affiliates with the SEC on February 8, 2018. Consists of 7,259,398 shares of our common stock beneficially owned by Wellington Group Holdings LLP, Wellington Investment Advisors LLP, Wellington Management Global Holdings, Ltd. and one or more of the following investment advisers (the “Wellington Investment Advisers”): Wellington Management Company LLP, Wellington Management Canada LLC, Wellington Management Singapore Pte Ltd, Wellington Management Hong Kong Ltd, Wellington Management International Ltd, Wellington Management Japan Pte Ltd and Wellington Management Australia Pty Ltd. Wellington Management Group LLP is the parent holding company of certain holding companies and the Wellington Investment Advisers. These securities are owned of record by clients of the Wellington Investment Advisers. Wellington Investment Advisors Holdings LLP controls directly, or indirectly through Wellington Management Global Holdings, Ltd., the Wellington Investment Advisers. Wellington Investment Advisors Holdings LLP is owned by Wellington Group Holdings LLP. Wellington Group Holdings LLP is owned by Wellington Management Group LLP. The address for Wellington Management Group LLP and its affiliated entities is 280 Congress Street, Boston, MA 02210.

 

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(2) As reported on Schedule 13G/A filed by FMR LLC (“FMR”) and Abigail P. Johnson on February 13, 2018, consists of an aggregate of 6,684,258 shares beneficially owned by FMR. Abigail P. Johnson is a Director, the Vice Chairman, the Chief Executive Officer and the President of FMR LLC. Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. Neither FMR LLC nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act (“Fidelity Funds”) advised by Fidelity Management & Research Company (“FMR Co”), a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds’ Boards of Trustees. FMR Co carries out the voting of the shares under written guidelines established by the Fidelity Funds’ Boards of Trustees. FMR has its principal business office at 245 Summer Street, Boston MA 02210.
(3) Based on information contained in a Schedule 13G filed by Temasek Holdings (Private) Limited and its affiliates with the SEC on August 31, 2017. Consists of 6,556,116 shares directly owned V-Sciences Investments Pte Ltd (“V-Sciences”), a wholly-owned subsidiary of Temasek Life Sciences Private Limited (“Temasek Life Sciences”). Temasek Life Sciences is in turn a wholly-owned subsidiary of Fullerton Management Pte Ltd (“FMPL”), which is in turn wholly-owned by Temasek Holdings (Private) Limited (“Temasek”). Accordingly, each of Temasek Life Sciences, FMPL and Temasek may be deemed to have beneficially owned the 6,556,116 shares owned directly by V-Sciences. The address for V-Sciences, Temasek Life Sciences, FMPL and Temasek is 60B Orchard Road, #06-18, Tower 2, The Atrium@Orchard, Singapore 238891.
(4) Consists of (i) 3,055,055 outstanding shares and (ii) 894,744 shares issuable upon conversion of $20,000,000 aggregate principal amount of Coherus’s 8.2% Convertible Senior Notes due 2022 (the “Notes”) owned directly by KKR Biosimilar L.P. Holders of the Notes may convert their Notes at their option at any time prior to the close of business on the business day immediately preceding March 31, 2022. KKR Biosimilar GP LLC is the sole general partner of KKR Biosimilar L.P. KKR Fund Holdings L.P. is the sole member of KKR Biosimilar GP LLC. The general partners of KKR Fund Holdings L.P. are KKR Fund Holdings GP Limited and KKR Group Holdings L.P. The sole shareholder of KKR Fund Holdings GP Limited is KKR Group Holdings L.P. The sole general partner of KKR Group Holdings L.P. is KKR Group Limited. The sole shareholder of KKR Group Limited is KKR & Co. L.P. The sole general partner of KKR & Co. L.P. is KKR Management LLC. The designated members of KKR Management LLC are Messrs. Kravis and Roberts. Each of KKR Biosimilar GP LLC, KKR Fund Holdings L.P., KKR Fund Holdings GP Limited, KKR Group Holdings L.P., KKR Group Limited, KKR & Co. L.P., KKR Management LLC, and Messrs. Kravis and Roberts disclaim beneficial ownership over all shares held by KKR Biosimilar L.P. except to the extent of their indirect pecuniary interests therein. Ali J. Satvat, who is a member of our Board of Directors, is an executive of Kohlberg Kravis Roberts & Co. L.P. and/or one or more of its affiliates. Mr. Satvat disclaims beneficial ownership of all shares held by KKR Biosimilar L.P. except to the extent of his indirect pecuniary interests therein. The address of the entities affiliated with Kohlberg Kravis Roberts & Co. L.P. and Mr. Kravis is c/o Kohlberg Kravis Roberts & Co. L.P., 9 West 57th Street, New York, NY 10019. The address of Messrs. Roberts and Satvat is c/o Kohlberg Kravis Roberts & Co. L.P., 2800 Sand Hill Road, Suite 200, Menlo Park, CA 94025.
(5) Based on information contained in a Schedule 13G filed by BlackRock, Inc. with the SEC on January 29, 2018. BlackRock, Inc., and its affiliates and subsidiaries have beneficial ownership of an aggregate of 3,198,726 shares of the Company’s common stock, BlackRock, Inc. has sole power to vote 3,135,458 shares of the Company’s common stock and sole power to dispose of 3,198,726 shares of the Company’s common stock. The address for BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055.
(6)

Consists of 3,355,403 shares issuable upon the conversion of $75,000,000 aggregate principal amount of Notes held by HealthCare Royalty Partners III, L.P. (“HCRP III”); HCRP Overflow Fund, L.P (“HCRP

 

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  Overflow” and together with HCRP III the “HCRP Holders”); and MOLAG Healthcare Royalty, LLC (“MOLAG Healthcare”). HealthCare Royalty GP III, LLC is the general partner of HCRP III and therefore may be deemed to beneficially own the shares held by HCRP III. HCRP Overflow GP, LLC is the general partner of HCRP Overflow and therefore may be deemed to beneficially own the shares held by HCRP Overflow. HealthCare Royalty Management, LLC is the investment manager of each of HealthCare Royalty GP III, LLC, and HCRP Overflow GP, LLC and therefore may be deemed to beneficially own the shares beneficially owned by the HCRP Holders. Clarke B. Futch, Paul J. Hadden, Matthew Q. Reber, Christopher A. White and Michael G. Carter comprise the investment committee that, through HealthCare Royalty Management, LLC, is responsible for the voting and investment decisions relating to the shares beneficially owned by the HCRP Holders. HCRP MGS Account Management, LLC is the investment manager of MOLAG Healthcare and therefore may be deemed to beneficially own the shares held by MOLAG Healthcare. Vanderbilt Account Management GP, LLC is managing member of HCRP MGS Account Management, LLC and therefore may be deemed to beneficially own the shares beneficially owned by MOLAG Healthcare. Clarke B. Futch comprises the operating committee that, through Vanderbilt Account Management GP, LLC, is responsible for the voting and investment committee decisions relating to the shares beneficially owned by MOLAG Healthcare. The HCRP Holders and MOLAG Healthcare may be deemed to be a group as defined in Rule 13d-5(b) under the Securities Exchange Act of 1934, as amended, and each member of such group may be deemed to beneficially own the ordinary shares beneficially owned by other members constituting such group. Each of Messrs. Futch, Hadden, Reber, White and Carter disclaims beneficial ownership of such shares.
(7) Consists of (i) 34,336 shares of common stock, and (ii) 340,389 shares that may be acquired pursuant to the exercise of stock options within 60 days of April 2, 2018 by Dr. Finck.
(8) Consists of 2,893,221 shares of common stock held by Sofinnova Venture Partners VII, L.P. Dr. Healy is a managing member of Sofinnova Management VII, L.L.C., the general partner of Sofinnova Venture Partners VII, L.P., and disclaims beneficial ownership of the shares held by Sofinnova Venture Partners VII, L.P., except to the extent of his pecuniary interest therein. Also includes (i) 92 shares of common stock and (ii) 102,284 shares that may be acquired pursuant to the exercise of stock options within 60 days of April 2, 2018.
(9) Consists of (i) 1,337,566 shares of common stock held by Dennis M. Lanfear, as Trustee of the Lanfear Revocable Trust, dated January 27, 2004, as restated, (ii) 86,965 shares of common stock held by offering by Lanfear Capital Advisors, LLC, (iii) 92,619 shares of common stock held by Dennis M. Lanfear and (iv) 2,071,266 shares that may be acquired pursuant to the exercise of stock options within 60 days of April 2, 2018 by Mr. Lanfear.
(10) Consists of 136,915 shares that may be acquired pursuant to the exercise of stock options within 60 days of April 2, 2018 by Dr. Lawlis.
(11) Consists of (i) 63,836 shares of common stock and (ii) 97,490 shares that may be acquired pursuant to the exercise of stock options within 60 days of April 2, 2018 by Mr. Richards.
(12) Consists of the shares held by KKR Biosimilar L.P. Mr. Satvat disclaims beneficial ownership of the shares held by KKR Biosimilar L.P., except to the extent of his pecuniary interest therein. Also includes 82,183 shares that may be acquired pursuant to the exercise of stock options within 60 days of April 2, 2018.
(13) Consists of 67,183 shares that may be acquired pursuant to the exercise of stock options within 60 days of April 2, 2018 by Ms. Szela.
(14) Consists of (i) 178,528 shares held by KMG Capital Partners, LLC, (ii) 219,914 shares held by Leonard Capital, LLC, (iii) 44,739 shares issuable upon the conversion of $1,000,000 aggregate principal amount of Notes held by KMG Capital Partners, LLC and (iv) 201,856 shares that may be acquired pursuant to the exercise of stock options within 60 days of April 2, 2018 by Mr. Wahlström. Mr. Wahlström is Chief Executive Officer and Chairman of KMG Capital Partners, LLC and of Leonard Capital, LLC. Mr. Wahlström disclaims beneficial ownership of the shares held by KMG Capital Partners, LLC and Leonard Capital, LLC, except to the extent of his pecuniary interest therein.
(15) Consists of (i) 9,958 shares of common stock and (ii) 230,467 shares that may be acquired pursuant to the exercise of stock options within 60 days of April 2, 2018 by Dr. Viret.

 

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(16) Consists of (i) 5,900 shares of common stock and (ii) 313,547 shares that may be acquired pursuant to the exercise of stock options within 60 days of April 2, 2018 by Dr. Watler.
(17) Includes (i) 7,771,249 shares held by entities affiliated with certain of our directors and (ii) 7,983,140 shares beneficially owned by our executive officers and directors, which includes the 7,771,249 shares held by such entities, 211,891 shares held by certain of our executive officers and directors, 939,513 shares issuable upon the conversion of Notes held by such entities and 3,768,705 shares that may be acquired pursuant to the exercise of stock options within 60 days of April 2, 2018.

 

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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, requires the Company’s directors and executive officers, and persons who own more than 10% of a registered class of the Company’s equity securities, to file with the U.S. Securities and Exchange Commission, or SEC, initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than 10% stockholders are required by SEC regulations to furnish the Company with copies of all Section 16(a) forms they file.

To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the year ended December 31, 2017, all Section 16(a) filing requirements applicable to our officers, directors and greater than 10% beneficial owners were complied with, except with respect to the two late Form 4 reports filed for Mr. Wahlström in connection with KMG Capital Partners, LLC’s distributions to Leonard Capital, LLC on (i) February 22, 2017 and (ii) May 9, 2017.

ADDITIONAL INFORMATION

Householding of Proxy Materials

The SEC has adopted rules known as “householding” that permit companies and intermediaries (such as brokers) to deliver one set of proxy materials to multiple stockholders residing at the same address. This process enables us to reduce our printing and distribution costs, and reduce our environmental impact. Householding is available to both registered stockholders and beneficial owners of shares held in street name.

Registered Stockholders

If you are a registered stockholder and have consented to householding, then we will deliver or mail one set of our proxy materials, as applicable, for all registered stockholders residing at the same address. Your consent will continue unless you revoke it, which you may do at any time by providing notice to the Company’s Corporate Secretary by telephone at (650) 463-4693 or by mail at 333 Twin Dolphin Drive, Suite 600, Redwood City, California 94065. In addition, the Company will promptly deliver, upon written or oral request to the address or telephone number above, a separate copy of our proxy materials to a stockholder at a shared address to which a single copy of the documents was delivered.

If you are a registered stockholder who has not consented to householding, then we will continue to deliver or mail copies of our proxy materials, as applicable, to each registered stockholder residing at the same address. You may elect to participate in householding and receive only one set of proxy materials for all registered stockholders residing at the same address by providing notice to the Company as described above.

Street Name Holders

Stockholders who hold their shares through a brokerage may elect to participate in householding, or revoke their consent to participate in householding, by contacting their respective brokers.

Annual Reports

This proxy statement is accompanied by our 2017 Annual Report to Stockholders, which includes our Annual Report on Form 10-K for the fiscal year ended December 31, 2017, or the Form 10-K. The Form 10-K includes our audited financial statements. We have filed the Form 10-K with the SEC, and it is available free of charge at the SEC’s website at www.sec.gov and on our website at www.coherus.com. In

 

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addition, upon written request to the Company’s Corporate Secretary at 333 Twin Dolphin Drive, Suite 600, Redwood City, California 94065, we will mail a paper copy of our Form 10-K, including the financial statements and the financial statement schedules, to you free of charge.

Other Matters

As of the date of this proxy statement, our Board of Directors knows of no other matters that will be presented for consideration at the 2018 Annual Meeting other than the matters described in this proxy statement. If other matters are properly brought before the 2018 Annual Meeting, then proxies will be voted in accordance with the recommendation of the Board of Directors or, in the absence of such a recommendation, in accordance with the best judgment of the proxy holder.

 

By Order of the Board of Directors:

/s/ Jean-Frédéric Viret

Jean-Frédéric Viret
Chief Financial Officer

Redwood City, California

April 13, 2018

 

 

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LOGO

COHERUS BIOSCIENCES, INC. 333 TWIN DOLPHIN DRIVE SUITE 600 REDWOOD CITY, CA 94065 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 1 1 1 of 2 VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. NAME THE COMPANY NAME INC. - COMMON THE COMPANY NAME INC. - CLASS A THE COMPANY NAME INC. - CLASS B THE COMPANY NAME INC. - CLASS C THE COMPANY NAME INC. - CLASS D THE COMPANY NAME INC. - CLASS E THE COMPANY NAME INC. - CLASS F THE COMPANY NAME INC. - 401 K CONTROL # SHARES 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 PAGE 1 OF 2 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. For All Withhold All For All Except The Board of Directors recommends you vote FOR the following: 0 1. Election of Directors Nominees 01 Christos Richards 02 V. Bryan Lawlis, Ph.D. The Board of Directors recommends you vote FOR proposal 2. 2. To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018. NOTE: Such other business as may properly come before the meeting or any adjournment thereof. To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. For Against Abstain 0000000000 0 2 For address change/comments, mark here. (see reverse for instructions) Yes No Please indicate if you plan to attend this meeting Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 0000375269_1 R1.0.1.17 Signature [PLEASE SIGN WITHIN BOX] Date JOB # Signature (Joint Owners) Date SHARES CUSIP # SEQUENCE #

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LOGO

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com COHERUS BIOSCIENCES, INC. Annual Meeting of Stockholders May 23, 2018 2:00 p.m. PDT This proxy is solicited by the Board of Directors The stockholder(s) hereby appoint(s) Dennis M. Lanfear and Jean-Frédéric Viret, Ph.D., or either of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock of Coherus BioSciences, Inc. that the stockholder(s) is/are entitled to vote at the Annual Meeting of stockholder(s) to be held at 2:00 p.m. PDT on May 23, 2018, at Latham & Watkins LLP, 140 Scott Drive, Menlo Park, CA 94025, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations. Address change/comments: (If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side 0000375269_2 R1.0.1.17

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