Item 10. Directors, Executive Officers and Corporate Governance
Identification of Directors
The following is a description
of the business experience, qualifications, skills and educational background of each of our directors, including each director’s
relevant business experience:
Mr. Renè Sindlev.
Mr. Sindlev, age 59, has served as the Chairman of the Board of Directors since June 2017. Mr. Sindlev has been successfully self-employed
since 1985 from the age of 23. He has been an investor and entrepreneur since 1997 through his holding companies including RS Group
ApS, RS Arving ApS, RS Family ApS, RS Newton ApS and RS Bio ApS. In January of 2014, Mr. Sindlev established Dr. Smood ApS in Denmark,
and Dr. Smood Group, Inc. in the United States, a chain of all USDA Certified Organic health restaurants, and since 2014 he has
served as its chairman. Mr. Sindlev has previously founded, owned and sold more than 28 companies in the jewelry, aviation, charter
and real estate businesses, such as World of Watches A/S, Pandora A/S, RS Aviation ApS and Gråbrødrestræde ApS,
among others. In 2002, Mr. Sindlev co-founded Pandora A/S and served as President & Board Member, and as an advisor to the
board before and after its IPO on Nasdaq Copenhagen in 2010. Mr. Sindlev co-founded Enochian BioSciences Inc. in February 2018
from being an early Biotech investor in DanDrit Biotech, Inc. We believe Mr. Sindlev’s experience as an entrepreneur in successfully
building start-up companies from the ground up qualifies him to serve as a director and Chairman of the Board.
Dr. Mark Dybul.
Dr. Dybul, age 58, was appointed our Chief Executive Officer (CEO) and principal executive officer, effective July 1, 2021. Previous
to the appointment, he served as Executive Vice Chair of the Board since January of 2019 and as a director since February of 2018.
Dr. Dybul has served as a Professor in the Department of Medicine at Georgetown University Medical Center as of July 2017, and
was the Faculty Co-Director of the Center for Global Health and Quality until he became Enochian BioSciences’ CEO. Dr. Dybul has
worked on HIV and public health for nearly 30 years as a clinician, scientist, teacher, and administrator, most recently as the
Executive Director of the Global Fund to Fight AIDS, Tuberculosis and Malaria from 2013 through May of 2017. Prior to joining
the Global Fund, he was a principal architect and ultimately the head of the U.S. President’s Emergency Plan for AIDS Relief (PEPFAR),
the largest international health initiative in history dedicated to a single disease, which achieved historic prevention, care,
and treatment goals on time and on budget. During his tenure, the program’s funding grew from approximately $500 million to $6.5
billion annually. After serving as Chief Medical officer, Assistant, Deputy and Acting Director, he was appointed as its leader
in 2006, becoming U.S. Global AIDS Coordinator, with the rank of Ambassador at the level of an Assistant Secretary of State. He
served until early 2009. Earlier in his career, after graduating from Georgetown Medical School in Washington D.C., Dr. Dybul
joined the National Institute of Allergy and Infectious Diseases, as a research fellow under director Dr. Anthony Fauci, where
he conducted basic and clinical studies on HIV virology, immunology and treatment optimization, including the first randomized,
controlled trial with combination antiretroviral therapy in Africa. Dr. Dybul has written extensively in scientific and policy
literature, and has received several Honorary Degrees and awards, including a Doctor of Science, Honoris Causa, from Georgetown
University. Dr. Dybul is a member of the National Academy of Medicine. We believe Dr. Dybul’s extensive clinical experience in
HIV and public health, as well as an educator and administrator qualifies him to serve as director and Chief Executive Officer.
Carol L. Brosgart, MD.
Dr. Brosgart, age 70, has served as a Director since December of 2019. Dr. Brosgart serves on the boards of privately held
biotech companies and public, not-for-profit, domestic and global health organizations. She is a member of the Board of Directors
of Galmed Pharmaceuticals, Ltd. (headquartered in Tel Aviv, Israel); Abivax, (headquartered in Paris, France), Intrivo Diagnostics,
(headquartered in California) and Mirum Pharmaceuticals (headquartered in California). She also serves as a Board member for the
non-profit organization, Berkeley Community Scholars (headquartered in California). She also is the Chair of Enochian’s Scientific
Advisory Board on HBV Cure and Intrivo Diagnostic’s Scientific Advisory Board on COVID-19 diagnostic tests. Previously, she served
as a member of Tobira Therapeutics’ Board of Directors from September 2009 until Allergan acquired it in November 2016; and, she
was formerly on the Board of Juvaris, a vaccine company until Bayer Company acquired its assets. She is a consultant to Allergan,
Dynavax, Hepion, Moderna, Pardes Biosciences, and a number of biotechnology companies in the areas of liver disease and infectious
diseases. Dr. Brosgart is the Chair of the Scientific Advisory Committee for Hepion (formerly “ContraVir”), a biotechnology
company working in the area of HBV Cure, NASH and Hepatocellular Carcinoma. She also serves on the Board of the American Liver
Foundation (ALF) and on the ALF Medical and Scientific Advisory Board, Northern California Chapter, the Executive Committee of
the Forum for Collaborative Research at UC Berkeley, and the Steering Committee of the HBV Cure Group at the Forum. She is a member
of the Board of the Hepatitis B Foundation (HBF); serves on the Medical and Scientific Advisory Committee of the Hepatitis B Foundation;
and, is the Research Integrity Officer for the Hepatitis B Foundation and the Baruch S. Blumberg Institute. Dr. Brosgart also serves
on the Board of the AP Giannini Foundation and on the National Advisory Committee of Hepatitis B United. She served for many years
on the Boards of the SF AIDS Foundation and the Pangaea Global AIDS Foundation. She is active in the public policy arena for the
following professional organizations: AASLD and IDSA/HIVMA. Dr. Brosgart served as Senior Advisor on Science and Policy to the
Division of Viral Hepatitis at the CDC and the Viral Hepatitis Action Coalition at the CDC Foundation from 2011 to 2014. Dr. Brosgart
has also served as a member on the faculty of the School of Medicine at the University of California, San Francisco for the past
four decades, where she is a Clinical Professor of Medicine, Biostatistics and Epidemiology in the Division of Global Health and
Infectious Diseases. Previous positions include, serving as Chief Medical Officer at biotechnology company Alios BioPharma, Inc.
Prior to Alios, Dr. Brosgart served as Senior Vice President and Chief Medical Officer of Children’s Hospital & Research Center
in Oakland, California, from 2009 until February 2011. Previously, she served for eleven years, from 1998 until 2009, at the biopharmaceutical
company Gilead Sciences, Inc., where she held a number of senior management roles, most recently as Vice President, Public Health
and Policy and earlier as Vice President, Clinical Research and Vice President, Medical Affairs and Global Medical Director, Hepatitis.
She led the clinical development and FDA approval of a number of agents at Gilead, including Viread™ and Hepsera™.
Prior to Gilead, Dr. Brosgart worked for more than 20 years in clinical care, research, and teaching at several Bay Area medical
centers. She was the founder and Medical Director of the East Bay AIDS Center at Alta Bates Medical Center in Berkeley, California,
from 1987 until 1998 and served as the Medical Director of Central Health Center, Oakland, California, of the Alameda County Health
Care Services Agency from 1978 until 1987. Dr. Brosgart received a B.S. in Community Medicine from the University of California,
Berkeley and received an M.D. from the University of California, San Francisco. Her residency training was in pediatrics, public
health, and preventive medicine at UCSF and UC Berkeley School of Public Health. She has published extensively in the areas of
HIV, HBV, CMV, and liver disease. We believe Dr. Brosgart’s extensive clinical experience in HIV and HBV, her significant clinical
research and regulatory experience, and her service in senior management and on numerous public and private boards in the biotechnology
industry qualifies her to serve as a director.
Mr. Gregg Alton. Mr. Alton, age 55, has served as a director
since December 2019. Mr. Alton joined the Board after serving for 20 years at the biopharmaceutical company Gilead Sciences, Inc. At Gilead,
Mr. Alton served as interim Chief Executive Officer, responsible for the company’s strategy, growth and operations. As Chief Patient
Officer, he led Gilead’s patient outreach and engagement initiatives and the company’s efforts to facilitate access to its
medicines around the world. He oversaw the corporate and medical affairs functions and developing world access programs, as well as its
digital patient solutions and patient-centered outcomes groups and commercial operations in certain countries. Mr. Alton joined Gilead
in 1999 and held a number of positions at the company with experience in legal, medical affairs, policy and commercial. He previously
served as general counsel. Prior to joining Gilead, he was an attorney at the law firm of Cooley Godward, LLP, where he specialized in
mergers and acquisitions, corporate partnerships and corporate finance transactions for healthcare and information technology companies.
Mr. Alton is a member of the Board of Directors of Corcept Therapeutics, Brii Biosciences, Novavax, Inc., the Hepatitis Fund and the Boys
and Girls Clubs of Oakland. Mr. Alton serves as a board observer for GARDP. He also serves on the U.S. government’s President's
Advisory Council on HIV/AIDS, and the advisory board for the UC Berkeley College of Letters & Science. Mr. Alton received a bachelor’s
degree in legal studies from the University of California at Berkeley and a law degree from Stanford University. We believe Mr. Alton’s
decades of experience in senior management at a large pharmaceutical company, along with his legal and governance experience qualifies
him to serve as a director.
Mr. James Sapirstein. Mr. Sapirstein,
age 60, has served as a director since March of 2018. Mr. Sapirstein joined the Board after having served over thirty-seven years
in the pharmaceutical industry. He is currently the Chairman, President and CEO of First Wave BioPharma (formerly “AzurRx
BioPharma”) and has served as the CEO of ContraVir Pharmaceuticals, Inc. (now Hepion), which is a company specializing in
the Hepatitis B space. After beginning his career in 1984 with Eli Lilly, he accepted a position at Hoffmann-LaRoche in 1987, where
he served for almost a decade as part of its commercial teams in the US and abroad. He held a number of positions at Hoffmann-LaRoche,
before moving to Bristol Myers Squibb (BMS) in 1996 as the Director of International Marketing in the Infectious Disease group.
While at BMS, he worked on several important HIV/AIDS projects including Secure the Future. Later, Mr. Sapirstein started his career
in smaller biotech companies when he joined Gilead Sciences, Inc. (GILD) in order to lead the Global Marketing team in its launch
of Viread (tenofovir). In 2002, he accepted the position of Executive Vice President Metabolic and Endocrinology for Serono Laboratories
before becoming the founding CEO of Tobira Therapeutics in 2006. In 2012, after several years in the infectious diseases space,
Mr. Sapirstein became the CEO of Alliqua Therapeutics at Alliqua, Inc. He is also a Director for Biotechnology Innovation Organization
(BIO) and the Chairman Emeritus of BIO’s New Jersey Chapter (BioNJ), where he sits on the Emerging Companies Section Governing
Board. Mr. Sapirstein received his MBA from Fairleigh Dickinson University and B.Pharm. from Rutgers University. We believe Mr.
Sapirstein’s extensive experience as a biotechnology executive and as a board member in biopharma industry and industry associations
qualifies him to serve as a director.
Mr. Carl Sandler. Mr.
Sandler, age 49, has served as a director since February of 2018. Mr. Sandler is an entrepreneur and investor who has built
numerous consumer-facing technology and healthcare companies. He was the co-founder and CEO of Enochian BioPharma, Inc. prior to
its acquisition by the Registrant and has been the Manager of Weird Science, LLC since March of 2017. He is the CEO of Frida
Therapeutics, a gene therapy start-up in rare monogenic diseases, the Manager of DH Services, LLC, an application developer
and the CEO of True Sons Grooming, a subscription service. We believe Mr. Sandler’s significant experience building businesses
qualifies him to serve as a director.
Mr. Henrik Grønfeldt-Sørensen.
Mr. Grønfeldt-Sørensen, age 49, has served as a director since October of 2017. has been the Chief Executive Officer
of RS Group ApS, RS Arving ApS, RS Family ApS and RS Newton ApS since October of 2012, and he has served as a director of Dr. Smood
Group, Inc. since January of 2014. Mr. Grønfeldt-Sørensen has over 10 years’ experience in different CEO & management
positions at Danske Bank in Denmark, and the Danish Bank Nykredit in France. RS Group of Companies is a family office in Denmark
with global investments within the real estate, charter business, food & beverage, private hospitals and biosciences industries.
Mr. Grønfeldt-Sørensen holds an eMBA from University of Monaco (2011). We believe Mr. Grønfeldt-Sørensen’s
significant experience in corporate management and in investor relations qualifies him to serve as a director.
Ms. Jayne McNicol. Ms. McNicol, age 55,
has served as a director and chair of our audit committee since May of 2021. Since May 2017, Ms. McNicol
has been the Chief Financial Officer of the California Life Sciences Association, a nonprofit, membership-based trade association
that empowers the life sciences community to deliver innovative solutions for healthier lives. Previously, from July 2001 to April
2017, Ms. McNicol was a Partner of Assurance Services at Ernst & Young LLP serving public and private life sciences companies
primarily in the San Francisco Bay Area. Prior to this, Ms. McNicol served in positions of increasing responsibility at Ernst &
Young and its predecessor, Arthur Young, initially in Bristol, England and later in the San Francisco Bay Area. Ms. McNicol is
a Certified Public Accountant with the California Board of Accountancy and a Chartered Accountant with the Institute of Chartered
Accountants in England and Wales. She holds a Bachelor of Arts degree in English from the University of Leeds, England. We believe
Ms. McNicol’s significant experience in financial management within the life sciences industry qualifies her to serve as a director
and chair of our audit committee.
There are no family relationships,
as defined in subparagraph (d) of Item 401 of Regulation S-K, among any of our executive officers and directors. To the best of
our knowledge, none of our directors or executive officers has, during the past ten years, been involved in any legal proceedings
described in subparagraph (f) of Item 401 of Regulation S-K.
The Board and Board Committees
The Board.
The Board met 8 times for meetings during fiscal 2021, and also acts by written consent. Four of such meetings were regularly scheduled
meetings and the other special Board meetings and telephonic calls were held as needed. During fiscal year 2021, each incumbent
director attended 75% or more of the Board meetings for the periods during which each such director served. Directors are not required
to attend annual meetings of our stockholders.
Audit Committee and
Audit Committee Financial Experts
The Audit Committee has
been structured to comply with the requirements of Rule 10A-3(b)(1) promulgated under the Securities Exchange Act of 1934,
as amended (the “Exchange Act”), and the listing standards of NASDAQ, and each member and former member of the
Audit Committee complied with such requirements and standards. The members of the Audit Committee are currently Jayne McNicol (Chair),
James Sapirstein and Gregg Alton.
The Audit Committee oversees
and reports to our Board on various auditing and accounting-related matters, including, among other things, the maintenance of
the integrity of our financial statements, reporting process and internal controls; the selection, evaluation, compensation and
retention of our independent registered public accounting firm; legal and regulatory compliance, including our disclosure controls
and procedures; and oversight over our risk management policies and procedures. The Audit Committee appoints and sets the compensation
for the independent registered public accounting firm annually and reviews and evaluates such auditor. This external auditor reports
directly to the Audit Committee. The Audit Committee establishes our hiring policies regarding current and former partners and
employees of the external auditor. In addition, the Audit Committee pre-approves all audit and non-audit services undertaken by
the external auditor and any outside consultants engaged in work related to the Company’s financial reporting. The Audit Committee
has direct responsibility for overseeing the work of the external auditor engaged for the purpose of preparing or issuing an auditor’s
report or performing other audits, review or attest services, including the resolution of disagreements between the external auditor
and management. The Audit Committee meets at least once per fiscal quarter to fulfill its responsibilities under its charter and
in connection with the review of the Company’s quarterly and annual financial statements.
The Board has determined
that each member of the Audit Committee has the appropriate level of financial understanding and industry specific knowledge to
be able to perform the duties of the position; and they are financially literate and have the requisite financial sophistication
as required by the applicable listing standards of NASDAQ. The Board has determined that both Ms. McNicol and Mr. Alton are “audit
committee financial experts” as defined by applicable SEC and Nasdaq rules.
The Audit Committee met
6 times during fiscal 2021, which were all attended by each member during his or her period of service, and also acts by written
consent. The Audit Committee operates under a charter that was adopted by our Board and is posted on our website at www.enochianbio.com.
The Audit Committee reviewed
and discussed the audited financial statements for the 2021 fiscal year with management, and with Sadler, Gibb & Associates,
LLC (“Sadler”), the Company’s independent registered public accounting firm. Further, the Audit Committee also discussed
with Sadler the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board
(the “PCAOB”) and the SEC. The Audit Committee reviewed permitted services under rules of the SEC as currently in effect
and discussed with Sadler its independence from management and the Company, including the matters in the written disclosures and
the letter from Sadler required by the applicable requirements of the PCAOB regarding the independent accountant’s communications
with the Audit Committee concerning independence.
Based on its review of
the financial statements and the aforementioned discussions, the Audit Committee recommended to the Board of Directors that the
audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2021 for
filing with the SEC.
THE AUDIT COMMITTEE
Jayne McNicol (Chair)
James Sapirstein
Gregg Alton
Nominating and Corporate Governance Committee
The members of our Nominating
and Corporate Governance Committee are currently Carol L. Brosgart, M.D. and Gregg Alton (Chair).
The Nominating and Corporate
Governance Committee, as permitted by, and in accordance with, its charter, is responsible for matters related to the selection
of directors for the appointment and/or election to the Board. This includes establishing criteria for, identifying and recommending
potential candidates for nomination to serve on the Board, and establishing criteria to consider recommendations from the stockholders
of the Company. The Nominating and Corporate Governance Committee considers and makes recommendations with respect to the independence
of all directors.
The Nominating and Corporate
Governance Committee is also responsible for maintaining compliance with applicable corporate governance requirements under the
Exchange Act and the listing standards of NASDAQ. The Nominating and Corporate Governance Committee oversees the evaluation of
the Board, including with respect to corporate governance, and develops and recommends to the Board corporate governance guidelines.
The Nominating and Corporate
Governance Committee met 3 times during fiscal 2021. The Nominating and Corporate Governance Committee operates under a charter
that was adopted by our Board and is posted on our website at www.enochianbio.com.
Compensation Committee
The members of our Compensation
Committee are currently James Sapirstein (Chair) and Carol L. Brosgart, M.D.
The Compensation Committee,
as permitted by, and in accordance with, its charter, is responsible for assisting the Board in fulfilling its responsibilities
relating to matters of human resources and compensation, including equity compensation, and to establish a plan of continuity and
development for our senior management. The Compensation Committee periodically assesses compensation of our executive officers
in relation to companies of comparable size, industry and complexity, taking the performance of the Company and such other companies
into consideration. All decisions with respect to the compensation of our principal executive officer are determined and approved
solely by the Compensation Committee. All decisions with respect to other executive compensation, including incentive-compensation
and equity-based plans are first approved by the Compensation Committee and then submitted, together with the Compensation Committee’s
recommendation, to the members of the Board for final approval. In addition, the Compensation Committee will, as appropriate, review
and approve public or regulatory disclosure relating to compensation, including the Compensation Disclosure and Analysis, and any
metrics for performance measurements. The Compensation Committee has the authority to retain and compensate any outside adviser
as it determines necessary to permit it to carry out its duties and engaged such a consultant in connection with the Company’s
compensation for the 2021 fiscal year.
The Board has determined
that each member of the Compensation Committee is a “nonemployee director” as that term is defined under Rule 16b-3 of
the Exchange Act and an “outside director” as that term is defined in Treasury Regulation Section 1.162-27(e)(3). The
Compensation Committee meets periodically and at least annually in connection with determining the compensation of management for
each fiscal year.
The Compensation Committee
met 4 times during fiscal year 2021. The Compensation Committee operates under a charter that was adopted by our Board and is posted
on our website at www.enochianbio.com.
The Compensation Committee
has considered the potential risks arising from the Company’s compensation for all employees and does not believe the risks from
those compensation practices are reasonably likely to have a material adverse effect on the Company.
Executive Officers Who Are Not Directors
Luisa Puche. Ms.
Puche, age 58, is our Chief Financial Officer and principal financial officer.
Prior to becoming our Chief Financial Officer in January of 2019, Ms. Puche served as a senior accounting and financial advisor and president
of Puche Group, LLC, since 2015 where she served in a variety of advisory capacities for both public and private organizations, such as
technical accounting consultations, complex technical implementations, M&A transactions, IT Risk assessments and SOX 404 implementations.
Previously, Ms. Puche served in various senior executive roles at Brightstar Corp., a global distributor and service provider in the wireless
industry, with public reporting requirements, including as Vice President and Global Controller and Interim Chief Accounting Officer.
During her tenure at Brightstar, she was responsible for financial reporting from 55 countries, and was instrumental in various key transactions
including the $1.6 billion sale of Brightstar to SoftBank. Ms. Puche also worked at Ernst & Young for 10 years. Ms. Puche holds a
Bachelor’s of Accounting from Florida International University.
Delinquent Section 16(a) Reports
Section
16(a) of the Securities Exchange Act of 1934 requires executive officers, directors and persons who own more than 10% of a registered
class of our equity securities to file reports of ownership with the Securities and Exchange Commission. Based
solely on our review of the copies of such forms received by us, we believe that during the fiscal year ended June 30, 2021, all
filing requirements were timely satisfied, except (i) a late Form 4 was filed for James Sapirstein on March 11, 2021 to report
a grant of options on March 6, 2021, (ii) a late Form 4 was filed for Evelyn D’An on March 11, 2021 to report a grant of options
on March 6, 2021 and (iii) a late Form 3 was filed for Jayne McNicol on June 14, 2021 to report her appointment to the Board on
May 26, 2021.
Code of Ethics
Our Board has adopted a Code of Ethics and
Conduct (our “Code of Ethics”). Our Code of Ethics sets forth standards of conduct applicable to our employees,
officers and directors to promote honest and ethical conduct, proper disclosure in our periodic filings, and compliance with applicable
laws, rules and regulations. Our Code of Ethics is available to view at our website, www.enochianbio.com by clicking on Investors/Media-Corporate
Governance. We intend to provide disclosure of any amendments or waivers of our Code of Ethics on our website within four business
days following the date of the amendment or waiver.
Item 11. Executive Compensation
|
Name and Principal Position
|
|
Year
|
|
Salary ($)
|
|
Bonus
|
|
Stock
Awards ($)
|
|
Option Awards
($)(1)
|
|
Non-equity
incentive
plan
compensation ($)
|
|
Other
Compensation
($)
|
|
Total
($)
|
|
Mark Dybul, M.D.
|
|
|
2021
|
|
|
$
|
430,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
430,000
|
|
|
Executive Vice Chair(2)
|
|
|
2020
|
|
|
$
|
430,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
832,500
|
(3)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,262,500
|
|
|
Luisa Puche
|
|
|
2021
|
|
|
$
|
275,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
275,000
|
|
|
Chief Financial Officer
|
|
|
2020
|
|
|
$
|
200,000
|
|
|
$
|
80,000
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
280,000
|
|
|
(1)
|
Amounts shown do not reflect compensation actually received by the executive officer. Instead, the amounts shown are the total grant date valuations of stock option grants awarded during the year as determined pursuant to ASC Topic 718. The valuations are expensed for financial reporting purposes over the vesting period of the grant.
|
|
(2)
|
Effective July 1, 2021, Dr. Dybul was appointed our Chief Executive Officer.
|
|
(3)
|
Represents the fair value of options to purchase 450,000 shares of common stock, which were granted on June 11, 2020 at the fair value at the grant date of $1.85 per share.
|
Arrangements with Named Executive Officers
During the fiscal year
ended June 30, 2021, we had agreements in place with Dr. Dybul and Ms. Puche. A description of each agreement is set forth below.
Mark R. Dybul, M.D.
Since January 7, 2019, when Dr. Dybul became our principal executive officer by virtue of his appointment as Executive Vice-Chair
of the Board, Dr. Dybul received compensation as Executive Vice Chair of the Board under his Amended and Restated Director’s Agreement,
as amended on May 1, 2019 (the “Director Agreement”), which called for cash compensation of $430,000 per annum,
and the grant of options to purchase 300,000 shares of common stock, which was granted on November 21, 2018. The Director Agreement
did not provide for any payments or other benefits upon a change in control. Dr. Dybul was given a one-time grant of options to
purchase 450,000 shares of common stock at a strike price of $8.00 per share on June 11, 2020.
On October 30, 2019, the
Compensation Committee approved and presented to the Board an employment agreement whereby Dr. Dybul would serve as the Company’s
Chief Executive Officer (the “Executive Employment Agreement”) which was recommended by the Board for approval
by our stockholders. On October 31, 2019, our stockholders approved the Employment Agreement via written consent. Effective July
1, 2021, Dr. Dybul and the Company entered into the Executive Employment Agreement in connection with his appointment to Chief
Executive Officer. The following is a summary of the Employment Terms and other material terms of the Employment Agreement.
Term. Dr. Dybul will
serve as Chief Executive Officer for a term of three (3) years with automatic yearly renewal terms thereafter unless terminated at least
90 days before the expiry of a term.
Duties. Dr. Dybul
will perform duties consistent with the position of Chief Executive Officer, as directed by and reporting to the Board, where he shall
remain a director but without further compensation for Board service. Dr. Dybul will devote a substantial majority of his business time
and attention to the performance of his duties with the Company, but he will be able to hold positions with charitable organizations approved
by the Board, and serve on boards of up to five non-competitive entities, with prior approval by the Board required for publicly traded
companies.
Place of Employment and Expenses. Dr.
Dybul shall work out of the Company’s headquarters in Los Angeles, commuting as needed. Dr. Dybul shall be reimbursed for reasonable
expenses for accommodations in Los Angeles and a company car.
Cash Compensation.
Dr. Dybul shall be entitled to a base salary of Eight Hundred Fifty Thousand Dollars ($850,000) per year. Dr. Dybul shall be eligible
for a bonus of up to 60% of his base salary per year in the sole discretion of the Compensation Committee and in accordance with any short-term
incentive plan adopted by the Company.
Benefits. Dr. Dybul
shall receive benefits provided to similarly situated employees of the Company and five (5) weeks vacation per year.
Termination. The Employment
Agreement may be terminated by the Company for “Cause” or by Dr. Dybul without “Good Reason” (each as defined
therein), in which case Dr. Dybul will only receive accrued compensation and benefits. In the event the Company terminates the Employment
Agreement without Cause or Dr. Dybul terminates the Agreement with Good Reason, Dr. Dybul will receive his base salary for one (1) year
and vesting of one (1) year’s worth of unvested options.
Change in Control.
Upon a change in control, the option grant described below shall immediately vest, and Dr. Dybul shall have the right to terminate the
Employment Agreement for Good Reason.
Restrictive Covenants.
Dr. Dybul shall be subject to restrictive covenants set forth in that certain Confidential and Proprietary Information Agreement attached
to the Employment Agreement, which are independent of the obligations set forth in the Employment Agreement. The restrictive covenants
include a non-compete, non-solicitation and non-disparagement obligations for one (1) year, provided that the Company shall continue to
pay his base salary for such one (1) year period.
Description of the Option
Grant. Upon appointment to Chief Executive Officer, Dr. Dybul was awarded an option to purchase 3,000,000 shares of the Company’s
common stock at an exercise price equivalent to the closing price per share quoted on the NASDAQ Stock Market on the trading day prior
to the grant date. The option has a ten-year term, subject to continued employment, and 2,000,000 of the shares will vest ratably on July
1, 2022, July 1, 2023 and July 1, 2024. One-third of the remaining 1,000,000 shares are subject to vesting at the end of each of the three
years beginning with the year ending June 30, 2022, based upon the achievement by the Company of certain benchmarks.
Luisa Puche. Pursuant
to her offer letter from the Company, dated December 28, 2018 (the “Offer Letter”), Ms. Puche received an annual base
salary of $200,000, and is eligible for a discretionary cash bonus, with a target of 40% of her base salary. Ms. Puche also received
a grant of options to purchase 60,000 shares of Common Stock and 15,000 restricted stock units, each vesting in equal increments
over three years. The Offer Letter provides for at will employment; provided however, that upon termination of Ms. Puche’s employment
by the Company without cause, or for a termination of employment by Ms. Puche for good reason, she will receive six months salary
and COBRA eligibility. Additionally, if the termination without cause or for good reason occurs within 12 months of a change in
control, Ms. Puche will also be entitled to a pro-rata bonus and immediate vesting of any unvested options or restricted stock
units. Ms. Puche had a base salary of $275,000 for the fiscal year 2021. Effective October 1, 2021, Ms. Puche received an increase
in base salary to $300,000 following the completion of the 2021 fiscal year, a discretionary bonus of $110,000 (equal to 40% target
of her base salary), and 60,000 options, each vesting in equal increments over three years.
Outstanding Equity Awards as of June 30, 2021
The following table provides
information concerning outstanding equity awards held by our named executive officers as of June 30, 2021.
|
Option Awards
|
|
Stock Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
Option
Exercise
Price
($)
|
|
Option
Expiration
Date
|
|
Number of
Shares
or Shares of
Stock That
Have
Not
Vested
(#)
|
|
Market
Value of
Shares or
Shares of
Stock
That
Have
Not
Vested
($)(1)
|
Mark R. Dybul, M.D.
Executive Vice Chair
|
|
|
7,563
|
|
|
|
—
|
|
|
$
|
8.00
|
|
|
|
02/27/2028
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
5,226
|
|
|
|
—
|
|
|
$
|
5.74
|
|
|
|
09/18/2028
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
300,000
|
|
|
|
—
|
|
|
$
|
6.50
|
|
|
|
11/21/2028
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
450,000
|
|
|
|
—
|
|
|
$
|
8.00
|
|
|
|
06/11/2030
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Luisa Puche
Chief Financial Officer
|
|
|
40,000
|
|
|
|
20,000
|
|
|
$
|
6.15
|
|
|
|
01/7/2029
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
5,000
|
|
|
$
|
24,850
|
|
|
(1)
|
The unvested equity awards market value is computed using the closing share price of $4.97 on June 30, 2021.
|
Board Compensation
The table below sets forth
the compensation earned by directors, all of whom are non-employees for services during the fiscal year ended June 30, 2021:
|
Name
|
|
Fees Earned
or Paid in Cash ($)
|
|
Stock Awards ($)
|
|
Option Awards
($) (1)
|
|
All Other Compensation
($)
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
René Sindlev
|
|
$
|
45,000
|
|
|
$
|
—
|
|
|
$
|
29,462
|
|
|
$
|
—
|
|
|
$
|
74,462
|
|
|
Evelyn D’An (2)
|
|
|
63,516
|
|
|
|
—
|
|
|
|
50,730
|
|
|
|
—
|
|
|
|
114,246
|
|
|
James Sapirstein
|
|
|
77,500
|
|
|
|
—
|
|
|
|
50,730
|
|
|
|
—
|
|
|
|
128,230
|
|
|
Carl Sandler
|
|
|
45,000
|
|
|
|
—
|
|
|
|
30,433
|
|
|
|
—
|
|
|
|
75,433
|
|
|
Carol Brosgart
|
|
|
69,000
|
|
|
|
—
|
|
|
|
49,856
|
|
|
|
—
|
|
|
|
118,856
|
|
|
Gregg Alton
|
|
|
77,500
|
|
|
|
—
|
|
|
|
49,856
|
|
|
|
—
|
|
|
|
127,356
|
|
|
Henrik Grønfeldt-Sørensen
|
|
|
45,000
|
|
|
|
—
|
|
|
|
29,114
|
|
|
|
—
|
|
|
|
74,114
|
|
|
Jayne McNicol (3)
|
|
|
7,418
|
|
|
|
—
|
|
|
|
105,542
|
|
|
|
—
|
|
|
|
112,960
|
|
|
Total
|
|
$
|
429,934
|
|
|
$
|
—
|
|
|
$
|
395,723
|
|
|
$
|
—
|
|
|
$
|
825,657
|
|
|
(1)
|
Amounts shown are not intended to reflect value actually received by the directors. Instead, the amounts shown are the total fair value of option awards granted in fiscal 2021 for financial statement reporting purposes, as determined pursuant to Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC Topic 718. These values are amortized as equity compensation expense over the vesting period of the grants.
|
|
(2)
|
Ms. Evelyn D’An resigned from the board of directors effective April 15, 2021. Compensation reflects 3 quarters of payments, and a prorated amount related to the 4th quarter through her resignation date related to the annual base per her director agreement, and her additional compensation for committee membership. Equity grants issued to Ms. D’An during the fiscal year remain available to exercise through their expiration date.
|
|
(3)
|
Ms. Jayne McNicol joined the board on May 25, 2021, and received pro-rated cash compensation of $7,418 and her full annual stock option award pursuant to her director agreement during the 2021 fiscal year. She will be paid cash compensation in future periods based on the annual base salary per her director agreement, and additional compensation for committee membership.
|
Narrative to Director’s Compensation Table
In September of 2018, we revised
our director compensation program to reflect competitive practices and our transition to a NASDAQ listed company. The resulting compensation
package for our independent directors (who qualify as independent under the rules of The NASDAQ Capital Market and serve on committees
of the Board) and for committee service as of the date hereof is set forth in the table below. In addition, our independent directors
are awarded annual options to purchase common stock valued at $75,000. Directors who are not independent, or do not serve on committees
are paid an annual cash fee of $45,000 and awarded options to purchase common stock valued at $45,000 per annum.
|
Compensation Element
|
|
Value
|
|
Retainer
|
|
$
|
60,000
|
|
|
Audit Committee Chair Fee
|
|
$
|
15,000
|
|
|
Compensation Committee Chair Fee
|
|
$
|
10,000
|
|
|
Nominating Committee Chair Fee
|
|
$
|
10,000
|
|
|
Audit Committee Member Fee
|
|
$
|
7,500
|
|
|
Compensation Committee Member Fee
|
|
$
|
5,000
|
|
|
Nominating Committee Member Fee
|
|
$
|
4,000
|
|
Item 13. Certain
Relationships and Related Transactions and Director Independence
Transactions with Related
Persons
Described below are transactions
or series of transactions that occurred from July 1, 2019 through the date of this Amendment (the “Reporting Period”)
between us and our executive officers, directors or the beneficial owners of 5% or more of our Common Stock, and certain persons
affiliated with or related to these persons, including family members, in which they had or will have a direct or indirect material
interest in an amount that exceeds the lesser of $120,000 or 1% of the average of our total assets as of year-end for the last
two completed fiscal years, other than compensation arrangements that are otherwise required to be described under “Executive
Compensation.”
On July 9, 2018, the Company
entered into a consulting agreement with G-Tech Bio, LLC, a California limited liability company (“G-Tech”) to assist
the Company with the development of the gene therapy and cell therapy modalities for the prevention, treatment, amelioration of
HIV in humans, and with the development of a genetically enhanced Dendritic Cell for use as a wide spectrum platform for various
diseases (including but not limited to cancers and infectious diseases) (the “G-Tech Agreement”). G-Tech was entitled
to consulting fees for 20 months, with a monthly consulting fee of not greater than $130,000 per month. Upon the completion of
the 20 months, the monthly consulting fee of $25,000 continued for scientific consulting and knowledge transfer on existing HIV
experiments, and will continue until the services are no longer rendered or the agreement is terminated. G-Tech is controlled by
Dr. Serhat Gümrükcü and Anderson Wittekind, shareholders of the Company. For the year ended June 30, 2021, we paid
$275,000 to G-Tech pursuant to the G-Tech Agreement.
On January 31, 2020, the
Company entered into a Statement of Work & License Agreement (the “HBV License Agreement”) by and among the Company,
G Tech, and G Health Research Foundation, a not for profit entity organized under the laws of California doing business as Seraph
Research Institute (“SRI”), whereby the Company acquired a perpetual, sublicensable, exclusive license (the “HBV
License”) for a treatment under development (the “Treatment”) aimed to treat Hepatitis B Virus (HBV) infections
in accordance with its agreement in principle with G-Tech and SRI announced by the Company on November 25, 2019.
The HBV License Agreement
states that in consideration for the HBV License, the Company shall provide cash funding for research costs and equipment and certain
other in-kind funding related to the Treatment over a 24 month period, and provides for an up-front payment of $1.2 million within
7 days of January 31, 2020, along with additional payments upon the occurrence of certain benchmarks in the development of the
technology set forth in the HBV License Agreement, in each case subject to the terms of the HBV License Agreement. Additionally,
the HBV License Agreement provides for cooperation related to the development of intellectual property related to the Treatment
and for a 2% royalty to G Tech on any net sales that may occur under the HBV License. On February 6, 2020, the Company paid the
$1.2 million aforementioned.
The cash funding for research
costs pursuant to the HBV License Agreement consist of monthly payments amounting to $144,500 that cover scientific staffing resources
to complete the project as well as periodic payments for materials and equipment needed to complete the project. During the year
ended June 30, 2021, the Company paid $2,409,000 for scientific staffing resources, research and development and IND enabling studies.
The HBV License Agreement
contains customary representations, warranties and covenants of the parties with respect to the development of the Treatment and
the HBV License. G Tech is controlled by Dr. Serhat Gümrükcü and Anderson Wittekind, shareholders of the Company,
and SRI is controlled by Dr. Serhat Gümrükcü.
On April 18, 2021, the
Company entered into a Statement of Work and License Agreement (the “License Agreement”), by and among the Company, G
Tech and SRI, whereby the Company acquired a perpetual sublicensable, exclusive license (the “Development License”) to
research, develop, and commercialize certain formulations which are aimed at preventing and treating pan-coronavirus or the potential
combination of the pan-coronavirus and pan-influenza, including the SARS-coronavirus that causes COVID-19 and pan-influenza (the
“Prevention and Treatment”).
The License Agreement was
entered into pursuant to the existing Framework Agreement between the parties dated November 15, 2019. The License Agreement states
that in consideration for the Development License, the Company shall provide cash funding for research costs and equipment and
certain other in-kind funding related to the Prevention and Treatment over a 24-month period. The License Agreement provided for
an up-front payment of $10 million and a $760,000 payment for expenditures to date related to research towards the Prevention and
Treatment, both of which were to be paid within 60 days of April 18, 2021. The License Agreement provides for additional payments
upon the occurrence of certain benchmarks in the development of the technology set forth in the License Agreement, in each case
subject to the terms of the License Agreement. During the year ended June 30, 2021, the Company paid $10,760,000 pursuant to the
License Agreement.
Compensation of Named Executive Officers
and Directors
For information regarding compensation of named
executive officers and directors, please see “Item 11. Executive Compensation.”
Except as otherwise indicated
herein, there have been no other related party transactions, or any other transactions or relationships required to be disclosed
pursuant to Item 404 and Item 407(a) of Regulation S-K.
Director Independence
The NASDAQ listing standards
provide that an independent director is one who the Board affirmatively determines is free of any relationship that would interfere
with that individual’s exercise of independent judgment. The Board has determined that Mr. Sapirstein, Mr. Sandler, Mr. Alton,
Dr. Brosgart and Ms. McNicol are each independent as defined in the listing standards of NASDAQ. In making such determinations,
the Board has concluded that none of these directors has an employment, business, family or other relationship, which, in the opinion
of our Board, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director.