UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the
Securities Exchange Act of 1934
Filed by the Registrant x
Filed by a Party other than the Registrant ¨
Check the appropriate box:
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x |
Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
CASI Pharmaceuticals, 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):
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¨ |
Fee paid previously with preliminary materials. |
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¨ |
Fee computed on table in exhibit required by Item 25(b) per Exchange
Act Rules 14a6(i)(1) and 0-11. |
PRELIMINARY PROXY STATEMENT
SUBJECT TO COMPLETION
CASI PHARMACEUTICALS, INC.
Notice of Annual Meeting of Stockholders
Date: |
Wednesday, May 25, 2022 |
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Time: |
9:00 a.m., local time |
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Place: |
Hilton Garden Inn
14975 Shady Grove Road
Rockville, MD 20850 |
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Purposes: |
1. |
To elect two directors;
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2. |
To ratify the appointment of KPMG Huazhen LLP
as our independent registered public accounting firm for the fiscal year ending December 31, 2022;
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3. |
To approve the proposal to authorize our Board of Directors, in its discretion but no later than the one-year anniversary of the 2022 annual meeting of stockholders (the “Annual Meeting”), to amend our Amended and Restated Certificate of Incorporation to effect a reverse stock split of our outstanding common stock and treasury shares, at a ratio in the range of 1-for-2 to 1-for-20, such ratio to be determined by the board of directors and included in a public announcement (the “Reverse Stock Split Proposal”); and
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4. |
To consider and take action upon such other matters
as may properly come before the Annual Meeting or any postponement or adjournment thereof.
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Who Can Vote: |
Stockholders at the close of business on April 4, 2022. |
Our Board of Directors has
fixed April 4, 2022 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Annual Meeting.
Only stockholders of record at the close of business on that date will be entitled to notice of, and to vote at, the Annual Meeting.
We intend to hold our Annual
Meeting in person at the location specified above. We will continue to monitor the coronavirus (“COVID-19”) situation and
will follow all national and local government protocols. If you are planning to attend the Annual Meeting, please check our website (www.casipharmaceuticals.com)
one week prior to the meeting date. As always, we encourage you to vote your shares prior to the Annual Meeting.
Details regarding the matters
to be acted upon at the Annual Meeting appear in the accompanying Proxy Statement. Please give this material your careful attention.
YOUR VOTE AND PARTICIPATION IN THE COMPANY’S
AFFAIRS ARE IMPORTANT
You are cordially invited
to attend the Annual Meeting. Whether or not you expect to attend, you are respectfully requested by the Board of Directors to sign, date
and return the enclosed proxy promptly. Stockholders who execute proxies retain the right to revoke them at any time prior to the voting
thereof. A return envelope, which requires no postage if mailed in the United States, is enclosed for your convenience.
In particular, our Board of
Directors has approved the Reverse Stock Split Proposal to help ensure that the share price of our common stock meets the continued listing
requirements of The Nasdaq Capital Market. The delisting of our common stock from Nasdaq would likely have serious consequences for
the Company and our stockholders.
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By Order of the Board of Directors, |
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Dr. Wei-Wu He |
April , 2022 |
Chairman and CEO |
IMPORTANT NOTICE REGARDING THE AVAILABILITY
OF PROXY MATERIALS FOR
THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 25, 2022
This Proxy Statement relating
to the 2022 Annual Meeting of Stockholders and the Annual Report to Stockholders on Form 10-K for the year ended December 31, 2021 are
also available for viewing, printing and downloading at www.casipharmaceuticals.com. |
PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
To be held on May 25, 2022
This proxy statement (the
“Proxy Statement”) is furnished in connection with the solicitation of proxies by the Board of Directors of CASI Pharmaceuticals,
Inc., a Delaware corporation (the “Company”, “we”, “us”, “our” and like expressions),
the principal executive offices of which are located at 9620 Medical Center Drive, Suite 300, Rockville, Maryland 20850, for the Annual
Meeting of Stockholders (the “Annual Meeting”).
The Annual Meeting will be
held at the Hilton Garden Inn, 14975 Shady Grove Road, Rockville, MD 20850 on May 25, 2022, at 9:00 a.m. (local time) and for any postponement,
or adjournments thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Stockholders.
Any stockholder giving a proxy
has the power to revoke it at any time before it is voted. Written notice of such revocation should be forwarded directly to the Secretary
of the Company at the Company’s executive offices. Attendance at the Annual Meeting will not have the effect of revoking the proxy
unless written notice is given or the stockholder votes by ballot at the Annual Meeting.
We intend to hold our Annual
Meeting in person at the location specified above. We will continue to monitor the coronavirus (“COVID-19”) situation and
will follow all national and local government protocols. If it is not possible or advisable to hold the Annual Meeting at the location
specified above in person, we will announce on our website (www.casipharmaceuticals.com) and other sites, as required, appropriate
alternative arrangements for the meeting as promptly as practicable, which may include holding the meeting at an alternative location
or by means of remote communication.
If the enclosed proxy is properly
executed and returned, the shares represented thereby will be voted in accordance with the specified directions and otherwise in accordance
with the judgment of the persons designated as proxies. Any proxy returned on which no direction is specified will be voted in favor of
the actions described in this Proxy Statement, including:
| · | the election of the director nominees set forth under the caption “Election of Directors;” |
| · | the ratification of the appointment of KPMG Huazhen LLP as the independent registered public accounting
firm of the Company for the fiscal year ending December 31, 2022; and |
| · | the approval of the proposal to authorize our Board of Directors, in its discretion but no later
than the one-year anniversary of the Annual Meeting, to amend our Amended and Restated Certificate of Incorporation to effect a
reverse stock split of our outstanding common stock and treasury shares, at a ratio in the range of 1-for-2 to 1-for-20, such ratio
to be determined by the board of directors and included in a public announcement (the “Reverse Stock Split
Proposal”). |
The approximate date on which
this Proxy Statement and the accompanying form of proxy will first be mailed or given to the Company’s stockholders is April , 2022.
Pursuant to rules promulgated by the U.S. Securities and Exchange Commission (the “SEC”), we have elected to provide access
to our proxy materials both by sending you this full set of proxy materials, including a proxy card, and by posting our proxy materials
on the Internet. This Proxy Statement and our 2021 Annual Report to Stockholders on Form 10-K are available at www.casipharmaceuticals.com.
All references in this Proxy
Statement to “the Company,” “we,” “our,” and “us” mean CASI Pharmaceuticals, Inc. Please
note that the Company qualifies as a “smaller reporting company” for the fiscal year ended December 31, 2021 under the applicable
rules of the SEC. Accordingly, this Proxy Statement reflects the scaled disclosure requirements available to smaller reporting companies.
Your
vote is important.
Whether or not you plan to attend the Annual
Meeting, please sign and return the accompanying proxy card so that we can be assured of having a quorum present at the meeting and so
that your shares may be voted in accordance with your wishes.
Frequently Asked Questions
Q: |
Why am I receiving this Proxy Statement and proxy card? |
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A: |
You are receiving a Proxy Statement and proxy
card from us because you own shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), as
of the record date. This Proxy Statement describes issues on which we would like you, as a stockholder, to vote. It also gives you information
on these issues so that you can make an informed decision.
Rui Zhang
and Alexander Zukiwski were named by the Board of Directors as proxy holders. Ms. Zhang and Dr. Zukiwski will vote all proxies, or record
an abstention or withheld vote, in accordance with the directions on the proxy. This way, your shares will be voted whether or not you
attend the Annual Meeting. Even if you plan to attend the meeting, please complete, sign and return your proxy card in advance of the
meeting just in case you are unable to attend. You can always decide to vote in person. If no contrary direction is given, the shares
will be voted as recommended by the Board of Directors. |
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Q: |
What is the record date? |
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A: |
The record date is April 4, 2022. Only holders of record of Common Stock as of the close of business on this date will be entitled to vote at the Annual Meeting. |
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Q: |
How many shares are outstanding? |
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A: |
As of the record date, the Company had 136,062,495
shares of Common Stock outstanding. |
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Q: |
What am I voting on? |
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A: |
You are being asked to vote on the election of two directors to the terms described in the Proxy Statement, the ratification of KPMG Huazhen LLP as the independent registered public accounting firm of the Company, the Reverse Stock Split Proposal, and such other business as may properly come before the Annual Meeting or any postponement or adjournment thereof. |
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Q: |
How does the Board of Directors recommend I vote? |
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A: |
Please see the information included
in the proxy statement relating to the proposals to be voted on. Our Board of Directors unanimously recommends that you vote:
1. “FOR”
the nominees to the Board of Directors;
2. “FOR”
ratification of KPMG Huazhen LLP as our independent registered public accounting firm; and
3. “FOR”
the Reverse Stock Split Proposal. |
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Q: |
What happens if additional matters are presented at the Annual Meeting? |
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A: |
Other than the items of business described in this Proxy Statement, we are not aware of any other business to be acted upon at the Annual Meeting. If you grant a proxy, the persons named as proxy holders will have the discretion to vote your shares on any additional matters properly presented for a vote at the Annual Meeting in accordance with Delaware law and our Bylaws. |
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Q: |
How do I vote? |
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A: |
You may either vote by mail or in person at the Annual Meeting. To vote by mail, please sign your proxy card and mail it in the enclosed, prepaid and addressed envelope. If you mark your voting instructions on the proxy card, your shares will be voted in accordance with your instructions. If you return a signed card but do not provide voting instructions, your shares will be voted based on the recommendations of the Board of Directors. We will pass out written ballots to anyone who wants to vote at the Annual Meeting. If you hold your shares through a brokerage account and do not have a physical share certificate, you must request a legal proxy from your stockbroker in order to vote at the Annual Meeting. |
Q: |
What does it mean if I receive more than one proxy card? |
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A: |
It means that you have multiple accounts at the transfer agent and/or with stockbrokers. Please sign and return all proxy cards to ensure that all your shares are voted. |
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Q: |
How many votes do you need to hold the Annual Meeting? |
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A: |
A majority of the Company’s outstanding shares of Common Stock as of the record date must be present at the Annual Meeting, in person or in proxy, in order to hold the Annual Meeting and conduct business. This is called a quorum. Proxies received but marked as abstentions and broker non-votes, if any, will be included in the calculation of the number of shares considered to be present at the meeting for quorum purposes. |
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Q: |
What is the voting requirement to approve the proposals? |
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A: |
In order for a director to be
elected, he must receive the affirmative vote of a plurality of the shares voted. In other words, the two nominees receiving the greatest
number of affirmative votes cast will be elected. Abstentions and broker non-votes will not have an effect on the outcome of the election
of directors.
Ratification of the appointment
of KPMG Huazhen LLP as our independent registered public accounting firm also requires the affirmative vote of the majority of shares
present or represented and entitled to vote. Abstentions are counted as votes present and entitled to vote and have the same effect as
votes “against” the proposal.
The approval of the amendment to our Amended and Restated Certificate
of Incorporation to effect a reverse stock split as set forth in the Reverse Stock Split Proposal requires the affirmative vote of the
holders of a majority of the outstanding shares of our Common Stock as of the Record Date. Abstentions and broker non-votes are counted
as votes present and entitled to vote and have the same effect as votes “against” the Reverse Stock Split Proposal. |
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Q: |
What are broker non-votes? If my shares are held in street name by my broker, will my broker vote my shares for me? |
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A: |
In the United States, the majority
of public company stockholders hold their shares through a bank, broker, trustee or other nominee, rather than directly in their own name.
When shares are so held, the stockholder is considered the “beneficial owner” of shares held in “street name”
and the broker will request voting instructions from the beneficial owner. Generally, broker non-votes occur when shares held by a broker,
bank, or other nominee in “street name” for a beneficial owner are not voted with respect to a particular proposal because
the broker, bank, or other nominee (1) has not received voting instructions from the beneficial owner and (2) lacks discretionary voting
power to vote those shares with respect to that particular proposal.
·
Non-Discretionary Items. The election of directors (Proposal 1) is a non-discretionary item and may not be voted by banks, brokers
or other nominees that have not received specific voting instructions from beneficial owners. If you have not specifically instructed
your bank, broker or other nominee how to vote your shares on any of these proposals, your shares will not be voted on that matter.
·
Discretionary Items. The ratification of the appointment of KPMG Huazhen LLP as our independent registered public
accounting firm (Proposal 2) and the Reverse Stock Split Proposal (Proposal 3) are each a discretionary item. Generally, banks, brokers
or other nominees that do not receive specific voting instructions from beneficial owners may vote on this proposal at their discretion. |
Q: |
Can I change my vote after I have delivered my proxy? |
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A: |
Yes. You may revoke your proxy at any time before its exercise. You may also revoke your proxy by voting in person at the Annual Meeting. If your shares are held in street name, you must contact your brokerage firm or bank to change your vote or obtain a proxy to vote your shares if you wish to cast your vote in person at the Annual Meeting. |
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Q: |
How are votes counted? |
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A: |
Voting results will be tabulated and certified by our transfer agent, American Stock Transfer & Trust Company. |
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Q: |
Where can I find the voting results of the Annual Meeting? |
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A: |
Preliminary voting results will
be announced at the Annual Meeting. We will report final voting results in a Current Report on Form 8-K, which we expect to file with
the SEC within four business days after the Annual Meeting. If final voting results are not available to us in time to file a Form 8-K
within four business days after the meeting, we intend to file a Form 8-K to publish preliminary results and, within four business days
after the final results are known to us, file an additional Form 8-K to publish the final results.
You can obtain a copy, at no charge,
of such Current Report on Form 8-K or any of our SEC reports:
•
by contacting our corporate offices via phone at (240) 864-2643 or by email at ir@casipharmaceuticals.com; or
•
through the SEC via their website: www.sec.gov. |
VOTING SECURITIES
Holders of record of shares
of the Company’s Common Stock as of the close of business on April 4, 2022 (the “Record Date”) are entitled to notice
of and to vote at the Annual Meeting on all matters. On the Record Date, the Company had outstanding 136,062,495
shares of Common Stock. Each outstanding share is entitled to one vote upon all matters to be acted upon at the Annual Meeting. A majority
of the outstanding shares of Common Stock entitled to vote on any matter and represented at the Annual Meeting, in person or by proxy,
shall constitute a quorum.
Abstentions and broker non-votes
are counted for purposes of determining the presence or absence of a quorum for the transaction of business at the Annual Meeting.
For the election of directors,
you have the option to vote “For” or “Withhold” authority to vote for any of the director nominees. Assuming a
quorum is present, the affirmative vote of a plurality of the shares of Common Stock cast in person or represented by proxy at the Annual
Meeting and entitled to vote is required to elect director nominees. That means that the two director nominees with the most votes will
be elected. If you “Withhold” authority to vote on any or all nominees, your vote will have no effect on the outcome of the
election. If you hold your shares in “street name” and do not provide instructions to your broker, your broker will not have
discretionary authority with respect to the proposal to elect directors and will therefore provide a “broker non-vote.” Because
broker non-votes are not deemed votes cast, they will not affect the outcome of the election of director nominees.
For the ratification of
the appointment of KPMG Huazhen LLP as the independent registered public accounting firm of the Company for the fiscal year ending
December 31, 2022, you have the option to vote “For,” “Against” or “Abstain” from voting.
Assuming a quorum is present, the affirmative vote of a majority of the shares of Common Stock cast in person or represented by
proxy at the Annual Meeting and entitled to vote is necessary to approve this proposal. If you “Abstain” from voting on
this proposal, your shares will be counted as present and entitled to vote and your vote will have the same legal effect as a vote
“against” the proposal. If you hold your shares in “street name” and do not provide instructions to your
broker, your broker will have discretionary authority to vote your shares with respect to this proposal.
For the approval of the amendment
to our Amended and Restated Certificate of Incorporation to effect a reverse stock split as set forth in the Reverse Stock Split Proposal,
you have the option to vote “For,” “Against” or “Abstain” from voting. Assuming a quorum is present,
the affirmative vote of a majority of the shares of Common Stock cast in person or represented by proxy at the Annual Meeting and entitled
to vote is necessary to approve this proposal. If you “Abstain” from voting on this proposal, your shares will be counted
as present and entitled to vote and your vote will have the same legal effect as a vote “against” the proposal. If you hold
your shares in “street name” and do not provide instructions to your broker, your broker will have discretionary authority
to vote your shares with respect to this proposal.
However, we understand
that certain brokerage firms have elected not to vote even on “routine” matters without your voting instructions. If your
broker or other nominee has made this decision and you do not provide voting instructions, your vote will not be cast and will have the
effect of votes against the ratification and appointment of KPMG Huazhen LLP as our independent registered public accounting firm and
the Reverse Stock Split Proposal. Accordingly, we urge you to direct your broker or other nominee how to vote by returning your voting
materials as instructed or by obtaining a proxy from your broker or other nominee in order to vote your shares in person at the special
meeting.
YOUR VOTE AND PARTICIPATION
IN THE COMPANY’S AFFAIRS ARE IMPORTANT. In particular, our Board of Directors approved the Reverse Stock Split Proposal in order
to help ensure that the share price of our Common Stock meets the continued listing requirements of The Nasdaq Capital Market. The delisting
of our Common Stock from Nasdaq would likely have very serious consequences for the Company and our stockholders.
The Company is not currently
aware of any matters that will be brought before the Annual Meeting (other than procedural matters) that are not referred to in the enclosed
Notice of Annual Meeting.
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN
BENEFICIAL HOLDERS
The following table sets
forth the beneficial ownership of the Common Stock as of April 1, 2022
for (i) each director (including nominees), (ii) each named executive officer named in the Summary Compensation Table, (iii)
all directors (including nominees) and executive officers of the Company as a group, and (iv) each person or group known by us to beneficially
own more than 5% of our outstanding stock.
Name of Beneficial Owner | |
Amount and Nature of Beneficial Ownership(1) | | |
Percentage of Common Stock Outstanding | |
Directors: | |
| | | |
| | |
Quan Zhou, Ph.D. | |
| 10,128,723 | (2)(3) | |
| 7.36 | % |
James Huang | |
| 689,593 | (2) | |
| * | |
Y. Alexander Wu, Ph.D. | |
| 424,529 | (2) | |
| * | |
Rajesh C. Shrotriya, MD | |
| 376,557 | (2) | |
| * | |
Franklin C. Salisbury, Jr. | |
| 399,529 | (2) | |
| * | |
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Named Executive Officers: | |
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Wei-Wu He, Ph.D., Chairman and CEO | |
| 26,731,994 | (2)(4) | |
| 18.34 | % |
Wei (Larry) Zhang, President | |
| 870,153 | (2) | |
| * | |
Alexander A. Zukiwski, MD, EVP & Chief Medical Officer | |
| 400,000 | (2) | |
| * | |
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All executive officers and directors as a group (8 persons)(2) | |
| 40,021,078 | (2) | |
| 26.59 | % |
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More than 5% Beneficial Owners: | |
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IDG-Accel China and affiliated entities(5) Unit 1509, The Center 99 Queen’s Road, Central, Hong Kong | |
| 9,773,370 | | |
| 7.12 | % |
| |
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Sparkle Byte Limited(6) 6/F, Tower A, COFCO Plaza 8 Jianguomennei Avenue Beijing, 100005, China | |
| 10,198,518 | | |
| 7.50 | % |
| |
| | | |
| | |
Wealth Strategy Holdings Limited(7) Level 12, International Commerce Centre 1 Austin Road West, Kowloon, Hong Kong | |
| 9,458,258 | | |
| 6.93 | % |
| |
| | | |
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Emerging Technology Partners LLC(8) 4919 Rebel Ridge Drive Sugar Land, TX 77478 | |
| 12,207,986 | | |
| 8.89 | % |
| |
| | | |
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Federated Hermes, Inc.(9) 1001 Liberty Avenue Pittsburgh, PA 15222 | |
| 10,150,000 | | |
| 7.46 | % |
(1) |
Beneficial ownership is defined in accordance with the rules of the SEC and the information does not necessarily indicate beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares over which the person or entity has sole or shared voting power or investment power and also any shares that the person or entity can acquire within 60 days of April 1, 2022 through the exercise of any stock option or other right. For purpose of computing the percentage of outstanding shares of Common Stock held by each person or entity, any shares that the person or entity has the right to acquire within 60 days after April 1, 2022, are deemed to be outstanding with respect to such person or entity but are not deemed to be outstanding for the purpose of computing the percentage of ownership of any other person or entity. Unless otherwise noted, each individual has sole voting and investment power with respect to the shares shown in the table above. The address for each person set forth above, unless otherwise noted, is c/o CASI Pharmaceuticals, Inc., 9620 Medical Center Drive, Suite 300, Rockville, Maryland 20850. |
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(2) |
Includes shares issuable upon exercise of options and warrants which are exercisable within 60 days of April 1, 2022, in the following amounts: Wei-Wu He, 9,694,581 (including 1,234,567 shares underlying warrants through ETP Global Fund L.P.); James Huang, 689,402; Y. Alexander Wu, 424,529; Franklin C. Salisbury, 399,529; Rajesh Shrotriya, 376,557; Quan Zhou, 1,589,920 (including 1,234,567 shares underlying warrants through IDG-Accel China and affiliated entities); Wei (Larry) Zhang, 850,000; Alexander Zukiwski, 400,000; and all executive officers and directors as a group, 14,424,518. |
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(3) |
Includes 9,773,370 shares beneficially held by IDG-Accel China and affiliated entities as to which Dr. Zhou disclaims beneficial ownership. |
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(4) |
Includes 441,072 shares beneficially held by Emerging Technology Partners, LLC, 8,766,914 shares beneficially held by ETP Global Fund. L.P., 3,000,000 shares beneficially held by ETP BioHealth III Fund, L.P., and 500,000 shares beneficially owned by Huiying Memorial Foundation. |
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(5) |
Number of shares and percentage of Common Stock outstanding are based on the books and records of the Company. According to information provided by IDG in a Schedule 13D Amendment filed on March 20, 2018, the following persons have sole voting and dispositive power and shared voting and dispositive power over the shares indicated in the table below: (i) IDG-Accel Growth, (ii) IDG-Accel Investors, (iii) IDG-Accel China Growth Fund III Associates L.P., an exempted Cayman Islands limited partnership and the sole general partner of IDG-Accel Growth (“IDG-Accel Associates”), (iv) IDG-Accel China Growth Fund GP III Associates, Ltd., an exempted Cayman Islands limited company (“IDG-Accel GP,” and collectively with IDG-Accel Growth, IDG-Accel Investors and IDG-Accel Associates, “IDG-Accel”), and the sole general partner of each of IDG-Accel Investors and IDG-Accel Associates, (v) Chi Sing Ho, an individual, and director and shareholder of IDG- Accel GP, and (vi) Quan Zhou, an individual, director and shareholder of IDG-Accel GP: |
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Sole Power to | | |
Shared Power to | | |
Sole Power to | | |
Shared Power to | |
| |
Vote/Direct Vote | | |
Vote/Direct Vote | | |
Dispose/Direct Disposition | | |
Dispose/Direct Disposition | |
IDG-Accel Growth | |
| 9,126,375 | | |
| 646,995 | | |
| 9,126,375 | | |
| 646,995 | |
IDG-Accel Investors | |
| 646,995 | | |
| 9,126,375 | | |
| 646,995 | | |
| 9,126,375 | |
IDG-Accel Associates | |
| 9,126,375 | | |
| 646,995 | | |
| 9,126,375 | | |
| 646,995 | |
IDG-Accel GP | |
| 9,773,370 | | |
| 0 | | |
| 9,773,370 | | |
| 0 | |
Chi Sing Ho | |
| 0 | | |
| 9,773,370 | | |
| 0 | | |
| 9,773,370 | |
Quan Zhou | |
| 75,000 | | |
| 9,773,370 | | |
| 75,000 | | |
| 9,773,370 | |
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(6) |
According to a Schedule 13D Amendment filed with the SEC on November 14, 2018, the record owner of these shares is Sparkle Byte Limited. By virtue of holding 100% of the equity interest of Sparkle Byte Limited, Snow Moon Limited may be deemed to have sole voting and dispositive power with respect to these shares. By virtue of holding 100% of the equity interest of Snow Moon Limited, Tianjin Jingran Management Center (Limited Partnership) may be deemed to have sole voting and dispositive power with respect to these shares. By virtue of being the general partner of Tianjin Jingran Management Center (Limited Partnership), He Xie Ai Qi Investment Management (Beijing) Co., Ltd. may be deemed to have sole voting and dispositive power with respect to these shares. By virtue of being the shareholders and/or directors of He Xie Ai Qi Investment Management (Beijing) Co., Ltd., Jianguang Li, Dongliang Lin, Fei Yang and Hugo Shong may be deemed to have shared voting and dispositive power with respect to these shares. |
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(7) |
Beneficial ownership is based on the books and records of the Company. According to a Schedule 13G filed on October 11, 2018 and amendments to the Schedule 13G filed on February 19, 2020 by Wealth Strategy Holding Limited (“WSH”), WSH has sole voting power and dispositive power over the shares. |
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|
(8) |
Beneficial ownership is based on the books and records of the Company and based in part on a Schedule 13D filed on January 12, 2018, a Schedule 13D/A filed on April 4, 2018, a second amendment to Schedule 13D/A filed on March 24, 2020, a third amendment to Schedule 13D/A filed on July 29, 2020, a fourth amendment to Schedule 13D/A filed on February 3, 2021, and a fifth amendment to Schedule 13D/A filed on November 23, 2021. Emerging Technology Partners, LLC (“ETP”), a Delaware limited liability company, is the general partner of ETP Global Fund L.P. (“ETP Global”), a Delaware limited partnership. ETP also is the general partner of ETP BioHealth III Fund, L.P. (“ETP BioHealth”), a Delaware limited partnership. ETP Global has shared voting and dispositive power with respect to 8,766,914 shares of Common Stock. ETP BioHealth has shared voting and dispositive power with respect to 3,000,000 shares of Common Stock. ETP has shared voting and dispositive power with respect to 12,207,986 shares of Common Stock, including 441,072 shares of which ETP is the direct beneficial owner. Dr. He, as founder and managing partner of each of ETP and ETP Global, may be deemed the indirect beneficial owner of the 12,207,986 shares of Common Stock owned by ETP, ETP Global and ETP BioHealth. |
|
|
(9) |
Based solely on a Schedule 13G filed on February 14, 2022 jointly by Federated Hermes, Inc. and Voting Shares Irrevocable Trust, each of which has sole voting and dispositive power with respect to 10,150,000 shares, and Thomas R. Donahue, Rhodora J. Donahue and J. Christopher Donahue, each of whom has shared voting and dispositive power with respect to 10,150,000 shares. |
|
|
|
* |
Represents less than 1% of the Common Stock outstanding. |
PROPOSAL 1
ELECTION OF DIRECTORS
Our Board of Directors currently
consists of six members and is divided into three classes with terms currently expiring at the Annual Meeting and the annual meetings
of stockholders to be held in 2023 and 2024. At the Annual Meeting, two directors will be elected by the stockholders to serve the terms
described herein.
Upon the recommendation of
the independent members of the Board of Directors, the Board of Directors recommends that Dr. Zhou and Mr. Huang be elected as directors
of the Company, and it is intended that the accompanying proxy will be voted FOR the election of Dr. Zhou and Mr. Huang as directors,
unless the proxy contains contrary instructions. The Company has no reason to believe that any of the nominees will not be a candidate
or will be unable to serve. However, in the event that any nominee should become unable or unwilling to serve as a director, the persons
named in the proxy have advised that they will vote (unless authority has been withdrawn) for the election of such person as shall be
designated by the independent members of the Board of Directors.
Dr. Zhou and Mr. Huang currently
serve as directors of the Company and have consented to being named in this Proxy Statement and to serve if elected.
The following table sets forth
each nominee to be elected at the Annual Meeting, our continuing directors, the year each such nominee or director was first elected a
director, the positions with the Company currently held by the nominee or director and the year the nominee’s or director’s
current term will expire:
Nominee’s or Director’s Name and
Year First Became a Director |
|
Position(s) with the Company |
|
If Elected,
Year Term will Expire |
James Huang – 2013 |
|
Director |
|
2025 |
Quan Zhou, Ph.D. – 2016 |
|
Director |
|
2025
|
Continuing Directors: |
|
Position(s) with the Company |
|
Year Term will Expire |
Franklin Salisbury, Jr. – 2014 |
|
Director |
|
2023 |
Y. Alexander Wu, Ph.D. – 2013 |
|
Director |
|
2023 |
Wei-Wu He. – 2012 |
|
Chairman and CEO |
|
2024 |
Rajesh C. Shrotriya, MD – 2014 |
|
Director |
|
2024 |
Vote Required
Election of a director requires
the affirmative vote of a plurality of the shares of Common Stock present or represented and entitled to vote at the meeting. This means
that each nominee will be elected if he receives more affirmative votes than votes withheld for such nominee. Broker non-votes will not
affect the outcome of the election.
Board of Directors Recommendation
THE BOARD OF DIRECTORS
RECOMMENDS A VOTE “FOR” THE ELECTION OF THE NOMINATED DIRECTORS AND SIGNED PROXIES THAT ARE RETURNED WILL BE
SO VOTED UNLESS OTHERWISE INSTRUCTED ON THE PROXY CARD.
MANAGEMENT
Directors and Executive Officers
The following table sets forth
the director nominees to be elected at the Annual Meeting, the continuing directors and the executive officers of the Company, their ages,
and the positions currently held by each such person with the Company as of April 1, 2022.
Name |
Age |
Positions |
Director Nominees for Election: |
James Huang(3) |
56 |
Director |
Quan Zhou, Ph.D.(4) |
64 |
Director |
|
|
|
Continuing Directors: |
Wei-Wu He, Ph.D. |
56 |
Chairman and CEO |
Rajesh C. Shrotriya, MD |
78 |
Director |
Franklin C. Salisbury, Jr.(1)(2) |
66 |
Director |
Y. Alexander Wu, Ph.D.(1)(2) |
58 |
Director |
|
|
|
Executive Officers: |
Wei-Wu He, Ph.D. |
56 |
Chairman & CEO |
Wei (Larry) Zhang |
63 |
President |
Alexander A. Zukiwski, MD |
64 |
EVP & Chief Medical Officer |
|
(1) |
Member of Compensation Committee |
|
(2) |
Member of Audit Committee |
|
(3) |
Chairman of Audit Committee |
|
(4) |
Chairman of Compensation Committee. |
Set forth below is a brief
description of the principal occupation and business experience of each nominee and continuing director, as well as the summary of our
views as to the qualifications of each nominee and continuing director to serve on the Board of Directors and each board committee of
which he is a member. Our views are informed not only by the current and prior employment and educational background of our directors,
but also by the Board of Directors’ experience in working with their fellow directors. Each director has had the opportunity to
assess the contributions that the directors have made to our Board of Directors as well as their industry knowledge, judgment and leadership
capabilities.
Nominees for Election
James Huang.
Mr. Huang has been a director of the Company since April 2013. Mr. Huang joined Kleiner Perkins China, a venture capital company, as a
managing partner in 2011 and focuses on the firm’s life sciences practice. Mr. Huang is also managing partner of Panacea Venture,
a global healthcare venture capital company he founded in 2017. His main investment interests are innovative and transformative early
and growth stage healthcare companies. Mr. Huang has made more than 31 global investments since 2007. Before Kleiner Perkins and Panacea
Venture, James was a managing partner at Vivo Ventures, a venture capital firm specializing in life sciences investments. While at Vivo,
James led numerous investments in China. Before joining Vivo in 2007, James was president of Anesiva, a biopharmaceutical company focused
on pain-management treatments. During his 20-year career in the pharmaceutical and biotech industry, he also held senior roles in business
development, sales, marketing and R&D with Tularik Inc. (acquired by Amgen), GlaxoSmithKline LLC, Bristol-Meyers Squibb and ALZA Corp.
(acquired by Johnson & Johnson). Mr. Huang is Chairman of the Board at Ziopharm Oncology, Windtree Therapeutics, Eden Biologics, TriArm
Therapeutics, Tactiva Therapeutics, Chime Biologics and XW Pharma and Director at Orion Biotech, Kindstar Global and Asian Pacific Medical.
James received an M.B.A. from the Stanford Graduate School of Business and a B.S. degree in chemical engineering from the University of
California, Berkeley. Mr. Huang’s deep experience and numerous contacts with a large number of life science companies, extensive
industry knowledge in both U.S. and China, business development expertise, coupled with his financial background, provides significant
abilities to guide the Company as a member of the Board of Directors as well as serving as Chair of the Audit Committee.
Quan
Zhou, Ph.D. Dr. Zhou served from the mid-1990’s as president of IDG Technology Venture Investment, Inc.
until 2012, and he has been acting for over 20 years as a managing member of the general partner of IDG Technology Venture Investments,
LP and its successor funds. Since 2005, Dr. Zhou has served as a director of the general partner of each of IDG-Accel China Growth Fund
1, IDG-Accel China Capital Fund I and their respective successor funds. Dr. Zhou is also currently acting as a director of the general
partner of IDG China Venture Capital IV LP and IDG China Capital Fund III LP and has been serving as the president and director of IDG
VC Management Ltd since 2012. Dr. Zhou is a member of the board of directors of a number of private and listed companies including CosmoChina
Limited, COFCO Womai Limited and Circle Internet Financial Limited, Yirendai Ltd (NYSE: YRD). Dr. Zhou received a bachelor’s degree
in chemistry from China Science and Technology University, a master’s degree in chemical physics from the Chinese Academy of Sciences
and a Ph.D. degree in fiber optics from Rutgers University. Dr. Zhou’s qualifications to serve on the Board of Directors, as well
as serving as the Chair of the Compensation Committee, include his substantial and successful financing, business and operation experience.
Continuing Directors
Wei-Wu He, Ph.D.
Dr. He has served as Chairman and CEO since April 2, 2019. Dr. He served as Executive Chairman of the Company from February 23, 2018
to April 2, 2019, as Chairman of the Company from May 2013 to February 23, 2018, and as Executive Chairman from February 2012 to May
2013. Dr. He has been serving as Executive Chairman of Human Longevity Inc. (a privately-held biotechnology firm specializing in combining
DNA sequencing with machine learning) since July 2019. He also is the founder and General Partner of Emerging Technology Partners, LLC,
a life sciences focused venture fund established in 2000. Dr. He has been involved in founding or funding over 20 biotech companies throughout
his career, some of which went on to be acquired by significantly larger firms. In the earlier part of his career, Dr. He was one of
the first few scientists at Human Genome Sciences, and prior to that, was a research fellow at Massachusetts General Hospital and Mayo
Clinic. Dr. He is an author to more than 25 research publications and inventor of over 30 issued patents. Dr. He received his Ph.D. from
Baylor College of Medicine and MBA from The Wharton School of University of Pennsylvania. We believe that as a seasoned leader in the
biotechnology industry and demonstrated financing and business acumen in both the United States and China, Dr. He adds valuable insight
and expertise to the Board of Directors. Dr. He’s knowledge of the drug development process provides valuable insight to the Company.
His leadership skills, strategic analysis, industry knowledge and substantial experience in the biotech sector give him the qualifications
and skills to serve as a director and the Chairman of the Company.
Rajesh C. Shrotriya,
MD. Dr. Shrotriya has been a director of the Company since September 2014. From 2000 until 2017, he was President and Chief Operating
Officer and Chief Executive Officer of Spectrum Pharmaceuticals, a biopharmaceutical company. He is also a Trustee of the UNLV Foundation.
Prior to joining Spectrum, from September 2000 to August 2002, Dr. Shrotriya was President and COO of Neotherapeutics, Inc., and prior
to that he was Executive Vice President and Chief Scientific Officer for SuperGen, Inc. and Vice President, Medical Affairs and Vice President,
Chief Medical Officer at MGI Pharma, Inc. For 18 years he held various positions at Bristol-Myers Squibb Company, the most recent being
Executive Director Worldwide CNS Clinical Research. Dr. Shrotriya’s significant leadership experience in the biopharmaceutical sector,
along with his experience as a physician and his expertise in drug development, make him well-qualified to serve on our Board of Directors.
Franklin C. Salisbury,
Jr. Mr. Salisbury has been a director of the Company since June 2014. Mr. Salisbury is a co-founder and director of AIM-HI Translational
Research, a nonprofit accelerator fund which is an extension of the National Foundation for Cancer Research (NFCR). Prior to AIM-HI, Mr.
Salisbury was Chief Executive Officer of the National Foundation for Cancer Research (NFCR) from 1997 to 2018. NFCR is an organization
that supports basic science research at universities and research hospitals in order to accelerate new approaches to preventing, diagnosing
and treating cancer. Under his leadership, NFCR has forged greater collaboration among scientists at universities, research hospitals,
and pharmaceutical companies in the U.S. and China in an effort to bring new and innovative care to cancer patients. Mr. Salisbury also
led NFCR to launch several research consortia that have enabled cancer researchers to pool their resources and reduce duplicate efforts,
thereby accelerating discoveries being made and reducing the cost of achieving them. Mr. Salisbury also holds a B.A. in economics from
Yale, a Juris Doctor, J.D., from the University of Georgia School of Law, a Masters of the Arts degree from the University of Chicago,
and an M.Div. from Yale Divinity School. Mr. Salisbury’s leadership experience and significant background in supporting cancer research
give him the qualifications and skills necessary to guide the Company’s Board of Directors, including as a member of the Compensation
Committee and Audit Committee.
Y. Alexander Wu,
Ph.D. Dr. Wu has been a director of the Company since April 2013. From 2006 to 2017, Dr. Wu was co- founder and Chief
Executive Officer of Crown Bioscience, Inc., a drug discovery and preclinical research organization in the oncology sector with over
600 employees. The company was acquired by JSR for over $400 million in 2017. Before co-founding Crown Bioscience, Dr. Wu was Chief
Business Officer of Starvax International Inc., a biopharmaceutical R&D company focusing on the development of novel therapeutic
drugs for the treatment of infectious disease and cancer. Prior to Starvax, he was the Head of Asian Operations with Burrill &
Company, a life science venture capital and merchant bank. Dr. Wu also co-founded and was Chief Operating Officer of Unimicro
Technologies, a life science instrumentation company. He started his career with Hoffmann-La Roche, where he was Manager of Business
Development and Strategic Planning. Dr. Wu obtained his B.S. in biochemistry from Fudan University, China, a M.S. in Biochemistry
from the University of Illinois, and a Ph.D. in molecular cell biology and MBA from the University of California, Berkeley. Dr.
Wu’s experience in the biopharmaceutical industry and research in the oncology and small molecule areas, practical experience
as a senior executive operating in U.S. and China, and entrepreneurial vision makes him uniquely qualified to serve as a Director,
as well as a member of the Compensation Committee and Audit Committee.
Executive Officers
The names and biographies of our executive officers,
as of April 1, 2022, are set forth below:
Wei-Wu He, Ph.D.
See “Management — Continuing Directors” above.
Wei (Larry) Zhang.
Mr. Zhang joined the Company in September 2018 as President of CASI (Beijing) Pharmaceuticals Co., Ltd., now known as CASI Pharmaceuticals
(China) Co., Ltd. (“CASI China”), which is a subsidiary of the Company, and his role expanded to President of the Company
in September 2019 and has more than 20 years management experience in the healthcare and biopharmaceutical industries in the U.S., Asia
Pacific, and China. Prior to joining the Company’s Beijing office, Mr. Zhang was Vice President, Head of Public Affairs and Corporate
Responsibility at Novartis Group (China) focusing on the public affairs/public relations strategy including initiating Novartis’
China policy focusing on National Medical Product Administration (NMPA) new drug approval reform, IP protection, generic quality consistency
evaluation and new regulations on biosimilars. From 2021-2016, he was Chief Executive Officer of Sandoz Pharmaceutical (China), a Novartis
Company. Mr. Zhang has also held executive leadership roles with Bayer Healthcare and Baxter International Corporation in the U.S. and
Asia Pacific. He holds a bachelor and master degree in nuclear physics from University of Science & Technology of China, an MBA in
marketing/finance from the University of California at Los Angeles (UCLA), and received Ph.D. training in political science from University
of Utah.
Alexander A. Zukiwski,
MD. Dr. Zukiwski joined the Company in April of 2017 as Chief Medical Officer, and he currently serves as Executive Vice
President and Chief Medical Officer. Prior to joining the Company, Dr. Zukiwski was Chief Executive Officer and Chief Medical Officer
of Arno Therapeutics and has been a Director of Arno Therapeutics (“Arno”) since 2014. At Arno, his responsibilities included
leading the clinical development and regulatory affairs teams to support the company’s pipeline. Prior to Arno in 2007, Dr. Zukiwski
served as Chief Medical Officer and Executive Vice President of Clinical Research at MedImmune LLC (“MedImmune”). Prior to
MedImmune, Dr. Zukiwski held several roles of increasing responsibility at Johnson & Johnson’s (“J&J”) medical
affairs and clinical development functions at Johnson & Johnson Pharmaceutical Research & Development LLC (“J&JPRD”);
Centocor R&D and Ortho Biotech. Before joining J&J, he served in clinical oncology positions at pharmaceutical companies such
as Hoffmann-LaRoche, Glaxo Wellcome and Rhone-Poulenc Rorer. Dr. Zukiwski has more than 21 years of experience in global drug development
and supported the clinical evaluation and registration of many successful oncology therapeutic agents, including Taxotere®, Xeloda®,
Procrit®/Eprex®, Velcade®, Yondelis®, and Doxil®. He previously served as a Member of Medical Advisory Board at Gem
Pharmaceuticals, LLC and served as a Director of Ambit Biosciences Corporation. Dr. Zukiwski holds a bachelor’s degree in pharmacy
from the University of Alberta and a Doctor of Medicine degree from the University of Calgary. He conducted his post-graduate training
at St. Thomas Hospital Medical Center in Akron, Ohio and the University of Texas MD Anderson Cancer Center.
All executive officers of
the Company are elected by the Board of Directors on an annual basis and serve until their successors have been duly elected and qualified.
CORPORATE GOVERNANCE
Director Independence
Our Board of Directors currently
consists of six members and is divided into three classes.
The Board of Directors affirmatively
determined that each of the directors and nominees, with the exception of Dr. Wei-Wu He, our Chairman and CEO, qualify as “independent”
as defined by applicable Nasdaq and SEC rules. In making this determination, the Board of Directors concluded that none of these members
has a relationship which, in the opinion of the Board of Directors, would interfere with the exercise of independent judgment in carrying
out the responsibilities of a director. Dr. He does not serve on any independent committees.
Board of Directors Meetings and Attendance
The Board of Directors of
the Company held four regular meetings and three special board meetings during the fiscal year ended December 31, 2021 (“fiscal
2021”). Each director attended 75% or more of the meetings of the Board of Directors and committees of which they were members during
fiscal 2021. The Company generally encourages, but does not require, directors to attend the Company’s annual meeting of stockholders.
The Company considers the international travel associated with directors attending the annual meeting and the Company’s objective
of preserving its cash resources. No directors attended the last annual meeting of stockholders.
Board Committees
The Board of Directors has
two standing committees: the Audit Committee and the Compensation Committee. For greater efficiency, the Nominating and Corporate Governance
Committee was disbanded in 2013 and the committee’s function was delegated to the independent members of the Board of Directors.
Each member of these committees is independent as defined under applicable Nasdaq and SEC rules. Each of the Audit and Compensation Committees
has a written charter approved by the Board of Directors. The current members of each of the committees are identified below:
Director |
|
Audit |
|
Compensation |
Wei-Wu He, Chairman and CEO |
|
|
|
|
James Huang |
|
X
(chairman and financial expert) |
|
|
Quan Zhou |
|
|
|
X
(chairman) |
Franklin C. Salisbury, Jr. |
|
X |
|
X |
Rajesh C. Shrotriya |
|
|
|
|
Y. Alexander Wu |
|
X |
|
X |
Audit Committee
The primary purpose of the
Audit Committee is to oversee: (a) management’s preparation of the financial statements and management’s conduct of the Company’s
accounting and financial reporting process, (b) management’s maintenance of the Company’s internal control over financial
reporting, (c) the Company’s compliance with legal and regulatory requirements, and (d) the qualifications, independence and performance
of the Company’s independent registered public accounting firm. The Audit Committee held four meetings during fiscal 2021.
The Company’s independent
registered public accounting firm is ultimately accountable to the Audit Committee in its capacity as a committee of the Board of Directors.
The Audit Committee has sole authority and responsibility to appoint, compensate, oversee, evaluate, and, where appropriate, replace the
Company’s independent registered public accounting firm. In addition, the Audit Committee must approve any audit and permitted non-audit
services to be provided by the Company’s independent registered public accounting firm.
The Board of Directors
has adopted a written charter for the Audit Committee, a copy of which is available on our website at www.casipharmaceuticals.com.
All members of the Audit Committee meet the independence and financial literacy requirements as defined by applicable Nasdaq and SEC
rules. The Board of Directors has determined that James Huang, chairman of the Audit Committee, is an “audit committee
financial expert” as defined by the rules and regulations of the SEC.
Compensation Committee
The Compensation Committee
develops and recommends to the Board of Directors the compensation and benefits of the CEO and other executive officers of the Company,
reviews general policy matters relating to compensation and benefits of employees of the Company and administers the Company’s stock
option plans. The Compensation Committee also reviews, and if appropriate, approves employment agreements, severance agreements, change
in control agreements and provisions, and any special or supplemental benefits for each of our executive officers. The Compensation Committee
held three meetings during fiscal 2021. Committee related matters were also discussed at meetings of either the entire Board of Directors
or independent executive sessions of the Board of Directors.
The Board of Directors has
adopted a written charter for the Compensation Committee, a copy of which is available on our website at www.casipharmaceuticals.com.
All members of the Compensation Committee are “independent” as defined by applicable Nasdaq rules.
Board of Directors Leadership Structure and Role in Risk Oversight
The Board does not believe
that mandating a particular structure, such as designating an independent lead director or having a separate Chairman and CEO is necessary
to achieve effective oversight. As a result, our board of directors has not designated an independent lead director nor has it designated
a separate Chairman and CEO. The Board of Directors believes that Dr. He is the best situated to identify strategic opportunities for
our Company and to focus the activities of the Board of Directors due to his commitment to the business and his long tenure with CASI.
The Board of Directors also believes that Dr. He’s dual roles as Chairman of the Board and CEO promotes effective execution of our
business strategy and facilitates information flow between management and the Board of Directors.
The Board of Directors has
ultimate authority and responsibility for overseeing our risk management. The Board of Directors does not have a standing risk committee,
but primarily administers its oversight role during meetings of our Board of Directors and its committees. During regular meetings of
the Board of Directors, members discuss the operating results for the current fiscal quarter and the status of our product candidates
with senior management. These discussions allow the members of the Board of Directors to analyze any significant financial, operational,
competitive, economic, regulatory and legal risks of our business model, as well as how effectively we implement our strategic and budgetary
goals. The Board of Directors is also routinely informed of developments that affect our risk profile and those that are material to other
aspects of our business. Further, significant transactions and decisions require approval by the Board of Directors, or the appropriate
board committee.
The Compensation Committee
is responsible for overseeing risks related to our cash and equity-based compensation programs and practices as well as for evaluating
whether our compensation plans encourage participants to take excessive risks that are reasonably likely to have a material adverse effect
on the Company. We believe that our executive and employee compensation plans are appropriately structured so as not to incent excessive
risk taking and are not reasonably likely to have a material adverse effect on our business.
Director Candidates
The independent members of
the Board of Directors identify potential nominees from various sources, including personal contacts and the recommendations of current
directors and executive officers. In the past, the Company has used third party consultants to assist in identifying and evaluating potential
nominees and the Board of Directors may do so in the future.
The Board of Directors
will consider nominees for director recommended by a stockholder. Stockholders who wish to recommend a director nominee for
consideration by the independent members of the Board of Directors should submit a nomination in accordance with the procedures
outlined in the Company’s Bylaws or other procedures adopted by the Board of Directors, if any. Currently, our Bylaws require
stockholders to provide written notice of a proposed nominee to: CASI Pharmaceuticals, Inc., Attn: Secretary, 9620 Medical Center
Drive, Suite 300, Rockville, Maryland 20850, not less than 60, nor more than 90, calendar days before the date on which the previous
year’s proxy was mailed. Such notice must include all information specified in our Bylaws relating to the proposed
nominee.
The Board of Directors does
not have specific, minimum qualifications for nominees and has not established specific qualities or skills that it regards as necessary
for one or more of the Company’s directors to possess. In evaluating potential director candidates, the independent members of the
Board of Directors may take into account all factors and criteria it considers appropriate, which shall include, among others:
|
• |
whether the director/potential director possesses personal and professional integrity, sound judgment and forthrightness; |
|
• |
the director/potential director’s educational, business or scientific experience and other directorship experience; |
|
• |
whether the director/potential director assists in achieving a mix of directors that represents a diversity of background and experience; |
|
• |
whether the director/potential director, by virtue of particular business, professional or technical expertise, experience or specialized skill relevant to the Company’s current or future business, will add specific value as a member of the Board of Directors; |
|
• |
whether the director/potential director meets the independence requirements of Nasdaq listing standards; and |
|
• |
whether the director/potential director is free from conflicts of interest with the Company. |
There are no differences in
the manner in which the Board of Directors evaluates potential director nominees based on whether the potential nominee was recommended
by a stockholder or through any other source.
Board Diversity
The Board of Directors does
not have a formal policy with respect to diversity. To carry out its obligations with respect to the proper composition and functioning
of the Board of Directors, the independent directors review the qualifications of all directors, evaluating skills and talents to assure
a complementary balance of disciplines and perspectives. The independent directors also seek to further enhance the Board of Directors
through diversity of experience, as well as gender and ethnic diversity. Through these and other activities, the independent directors
seek to assemble a Board of Directors that can responsibly, critically and collegially work through major decisions based on each director’s
experience, talent, skills and knowledge.
The below Board Diversity
Matrix reports self-identified diversity statistics for the Board of Directors in the format required by Nasdaq rules.
Board Diversity Matrix (as of April 1, 2022) |
Total Number of Directors |
6 |
|
Female |
Male |
Non-Binary |
Did Not Disclose Gender |
Part I: Gender Identity |
|
|
|
|
Directors |
0 |
6 |
0 |
0 |
Part II: Demographic Background |
|
|
|
|
African American or Black |
|
|
|
|
Alaskan Native or Native American |
|
|
|
|
Asian |
|
5 |
|
|
Hispanic or Latinx |
|
|
|
|
Native Hawaiian or Pacific Islander |
|
|
|
|
White |
|
1 |
|
|
Two or More Races or Ethnicities |
|
|
|
|
LGBTQ+ |
|
Did Not Disclose Demographic Background |
|
Executive Sessions of Independent Directors
The independent members of
the Board of Directors typically meet in executive sessions following regularly scheduled meetings of the Board of Directors. The Board
of Directors continues to meet in closed sessions (without the presence of management) following each regularly scheduled meeting. The
Board of Directors holds executive sessions of the independent directors without the presence of our Chairman and Chief Executive Officer,
and James Huang, chairman of our Audit Committee, is responsible for leading these executive sessions.
Code of Ethics
The Company has adopted a
Code of Ethics, as defined in applicable SEC and Nasdaq rules, which applies to the Company’s directors, officers and employees,
including the Company’s principal executive officer and principal financial and accounting officer. The Code of Ethics is available
on the Company’s website at www.casipharmaceuticals.com. The Company intends to disclose any amendment to or waiver of a provision
of the Code of Ethics that applies to its principal executive officer, principal accounting officer or controller, or persons performing
such information on its website.
Communications with the Board of Directors
Any stockholder who wishes
to send any communications to the Board of Directors or to individual directors should deliver such communications to the Company’s
executive offices, 9620 Medical Center Drive, Suite 300, Rockville, Maryland 20850, Attn: Investor Relations. Any such communication should
indicate whether the communication is intended to be directed to the entire Board of Directors or to a particular director(s), and must
indicate the number of shares of Company stock beneficially owned by the stockholder. Our investor relations department will forward appropriate
communications to the Board of Directors and/or the appropriate director(s). Inappropriate communications include correspondence that
does not relate to the business or affairs of the Company or the functioning of the Board of Directors or its committees, advertisements
or other commercial solicitations or communications, and communications that are frivolous, threatening, illegal or otherwise not appropriate
for delivery to directors.
DIRECTOR COMPENSATION
In setting director compensation,
the Company considers the significant amount of time that directors expended in fulfilling their duties to the Company as well as the
skill-level required by the Company of members of the Board of Directors. We compensate our non-employee members of the Board of Directors
through a mixture of (i) cash and (ii) equity-based compensation.
For 2021, our non-employee
members of the Board of Directors were paid through a mixture of (i) cash and (ii) equity-based compensation. Directors are paid $134,000
annually. Committee chairmen are paid an additional annual fee, ranging from $13,500 to $20,000. Other non-chairman committee members
are paid an additional annual fee ranging from $6,500 to $10,000, depending on the committee(s) on which they serve. In order to help
the Company conserve cash, it was determined that each director would receive approximately 20 percent of his compensation in cash and
the remaining portion would be converted into stock options based on the Black-Scholes-Merton option-pricing method.
2021 Director Compensation
The table below summarizes
the compensation paid by the Company to non-employee directors during the fiscal year ended December 31, 2021.
| |
Fees Earned or Paid in Cash | | |
Stock Awards(1) | | |
Option Awards(2)(3) | | |
Non- Equity Incentive Plan Compensation | | |
All Other Compensation | | |
Total | |
Name | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | | |
($) | |
James Huang | |
$ | 30,800 | | |
| — | | |
$ | 123,200 | | |
| — | | |
| — | | |
$ | 154,000 | |
Y. Alexander Wu, Ph.D. | |
$ | 30,100 | | |
| — | | |
$ | 120,400 | | |
| — | | |
| — | | |
$ | 150,500 | |
Franklin C. Salisbury, Jr. | |
$ | 30,100 | | |
| — | | |
$ | 120,400 | | |
| — | | |
| — | | |
$ | 150,500 | |
Rajesh C. Shrotriya, MD | |
$ | 26,800 | | |
| — | | |
$ | 107,200 | | |
| — | | |
| — | | |
$ | 134,000 | |
Quan Zhou, Ph.D. | |
$ | 29,500 | | |
| — | | |
$ | 118,000 | | |
| — | | |
| — | | |
$ | 147,500 | |
(1) |
The amounts in this column represent the grant date fair value calculated in accordance with ASC 718. There were no stock awards in 2021. |
(2) |
The amounts in this column represent the grant date fair value of options awarded, as calculated in accordance with ASC 718. Using the Black-Scholes-Merton option-pricing method, fair value was calculated as $1.09 per share, for all Board members. Assumptions used in the calculation of these amounts are included in Note 17 to the Company’s audited financial statements for the year ended December 31, 2021, set forth in the Company’s Annual Report on Form 10-K filed with the SEC on March 28, 2022. |
(3) |
As of December 31, 2021, each of the non-employee directors had the following aggregate number of options exercisable for shares of Common Stock: James Huang: 661,145; Y. Alexander Wu: 396,915; Franklin C. Salisbury, Jr.: 371,915; Rajesh C. Shrotriya: 351,970 and Quan Zhou: 328,289. |
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following summary compensation
table includes information concerning compensation for each of our named executive officers during fiscal years ended December 31, 2021
and 2020.
Name
and Principal Position | |
Year | | |
Salary ($) | | |
Bonus ($) | | |
Stock Awards ($)
(1) | | |
Option Awards ($)
(1) | | |
Non-Equity Incentive
Plan Compensation ($) | | |
All
Other Compensation ($) | | |
Total ($) | |
Wei-Wu He, Ph.D. | |
| 2021 | | |
$ | 322,368 | | |
$ | — | | |
| — | | |
$ | 9,100,000 | (2) | |
| — | | |
$ | 242,991 | (3) | |
$ | 9,665,359 | |
Chief Executive Officer | |
| 2020 | | |
$ | 577,656 | | |
$ | — | | |
| — | | |
$ | — | | |
| — | | |
$ | 241,831 | | |
$ | 819,487 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Wei (Larry) Zhang | |
| 2021 | | |
$ | 554,442 | | |
$ | 232,439 | | |
| — | | |
$ | 1,424,000 | (2) | |
| — | | |
$ | 344,363 | (4) | |
$ | 2,555,244 | |
President | |
| 2020 | | |
$ | 437,094 | | |
$ | — | | |
| — | | |
$ | — | | |
| — | | |
$ | 278,675 | | |
$ | 715,769 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Alexander Zukiwski, MD | |
| 2021 | | |
$ | 451,449 | | |
$ | 25,000 | | |
| — | | |
$ | 666,600 | (2) | |
| — | | |
$ | 38,346 | (5) | |
$ | 1,181,395 | |
EVP & Chief Medical Officer | |
| 2020 | | |
$ | 414,529 | | |
$ | — | | |
| — | | |
$ | — | | |
| — | | |
$ | 28,250 | | |
$ | 442,779 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
(1) |
The amounts in this column represent the aggregate grant date fair value of these awards as calculated in accordance with ASC 718. Assumptions used in the calculation of these amounts are included in Note 17 to the Company’s audited financial statements for the year ended December 31, 2021, set forth in the Company’s Annual Report on Form 10-K filed with the SEC on March 28, 2022. |
(2) |
Includes the value of certain option awards issued in 2021 that will
only vest if certain performance-based conditions are achieved (and which performance-based conditions have not yet been achieved or satisfied),
with a grant date fair value totaling $4,580,000 for Dr. He; $712,000 for Mr. Zhang; and $361,600 for Dr. Zukiwski. |
(3) |
Includes 401(k) matching contributions ($14,250), housing allowance for an apartment in Beijing ($120,610), allowance for tuition for pre-college age children ($85,209), and Company paid health insurance ($22,922). |
(4) |
Includes reimbursement for total annual expenditures, including housing rental, meals, laundry services, and costs for children’s education and language training ($306,841). Also includes Company paid health insurance ($34,189) and 401(k) matching contributions ($3,333). |
(5) |
Represents 401(k) matching and profit sharing contributions by the Company ($28,500), car allowance ($6,000) and wellness benefit ($3,846). |
OUTSTANDING EQUITY AWARDS
The following table includes
certain information with respect to the value of all unexercised options previously awarded to the executive officers named above at the
fiscal year ended December 31, 2021.
Name and Principal Position | |
Number of Securities Underlying Unexercised Options Exercisable | | |
Number of Securities Underlying Unexercised Options Unexercisable | | |
Option Exercise Price ($) | | |
Option Expiration Date (1) |
Wei-Wu He, Ph.D. | |
| 4,000,000 | (2) | |
| — | | |
$ | 2.85 | | |
04/02/2029 |
Chairman and Chief Executive Officer | |
| — | | |
| 4,000,000 | (3) | |
$ | 1.73 | | |
04/27/2031 |
| |
| — | | |
| 4,000,000 | (5) | |
$ | 1.73 | | |
04/27/2031 |
Wei (Larry) Zhang | |
| 750,000 | (3) | |
| 250,000 | (3) | |
$ | 6.95 | | |
09/01/2028 |
President | |
| 100,000 | (3) | |
| 100,000 | (3) | |
$ | 3.35 | | |
06/22/2029 |
| |
| — | | |
| 800,000 | (3) | |
$ | 1.28 | | |
07/24/2031 |
| |
| — | | |
| 800,000 | (4) | |
$ | 1.28 | | |
07/24/2031 |
Alexander Zukiwski, MD | |
| 300,000 | (4) | |
| — | | |
$ | 1.34 | | |
04/03/2027 |
EVP and Chief Medical Officer | |
| 100,000 | (3) | |
| 100,000 | (3) | |
$ | 3.16 | | |
12/15/2029 |
| |
| — | | |
| 30,000 | (6) | |
$ | 1.52 | | |
06/15/2031 |
| |
| — | | |
| 30,000 | (6) | |
$ | 1.52 | | |
06/15/2031 |
| |
| — | | |
| 500,000 | (3) | |
$ | 0.8741 | | |
12/02/2031 |
| |
| — | | |
| 500,000 | (6) | |
$ | 0.8741 | | |
12/02/2031 |
(1) |
The term of each option is ten years. |
(2) |
Options vested on the second anniversary of the date of grant. |
(3) |
Options vest as follows: 25% on each of the first, second, third and fourth anniversary of the date of grant. |
(4) |
The performance-based option will only vest if, within the time period commencing on July 24, 2021 and ending on June 30, 2025, specific product sale milestones are achieved as prescribed by the Compensation Committee. |
(5)
|
The performance-based option will only vest if, within the time period commencing on June 16, 2021 and ending on June 30, 2025, specific product sales milestones are achieved as prescribed by the Compensation Committee. |
(6) |
These performance-based options will only vest upon meeting certain clinical development milestones. |
Equity Compensation Plan Information
As of December 31, 2021, the
number of stock options and restricted Common Stock outstanding under our equity compensation plans, the weighted average exercise price
of outstanding stock options and restricted Common Stock and the number of securities remaining available for issuance were as follows:
Plan category | |
Number of securities to be issued upon exercise of outstanding options, restricted common stock, warrants and rights (a) | | |
Weighted average exercise price of outstanding options, restricted common stock, warrants and rights (b) | | |
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |
Equity compensation plans approved by security holders | |
| 33,243,790 | | |
$ | 2.04 | | |
| 10,515,448 | |
Equity compensation plans not approved by security holders | |
| 0 | | |
$ | 0.00 | | |
| 0 | |
Total | |
| 33,243,790 | | |
$ | 2.04 | | |
| 10,515,448 | |
Employment Arrangements
The Company is currently a
party to employment agreements with Wei-Wu He, Wei (Larry) Zhang, and Alexander Zukiwski. The terms of such agreements and the respective
payments payable upon termination are set forth below.
Wei-Wu He, Ph.D., Chairman and CEO
Dr. He started as CEO on April
2, 2019 pursuant to the terms of an offer letter (the “Offer Letter”) from the Company, dated March 22, 2019. Under the terms
of the Offer Letter, Dr. He was entitled to
|
• |
an annual base salary of $568,000; and |
|
• |
an expatriate allowance consisting of tuition for pre-college age children (up to $120,000 per year) and a housing allowance for an apartment in Beijing. |
Dr. He was also awarded
a grant of options to purchase four million shares of the Common Stock at an exercise price of $2.85, the closing price on April 2,
2019, the grant date, vesting at the earlier of (i) the completion of a transformative event by the Company as determined in the
discretion of the Compensation Committee or (ii) the second anniversary of the date of grant, April 2, 2021.
On April 27, 2021, the Compensation
Committee revised the annual compensation and benefits of Dr. He. Under the revised terms, effective the day after the Annual Meeting,
Dr. He is entitled to:
|
• |
an annual base salary of $100,000; and |
|
• |
continuation of a housing allowance for an apartment in Beijing, an allowance for tuition for pre-college age children, and Company paid health insurance. |
Wei (Larry) Zhang, President
Effective September 1, 2018,
CASI (Beijing) Pharmaceuticals, Inc., now known as CASI Pharmaceuticals (China) Co., Ltd., entered into a labor contract with Wei (Larry)
Zhang, governed by the laws of the People’s Republic of China. The term of the agreement was set for three years, until August 31,
2021. The contract automatically terminated and was not renewed.
In July, 2021, the Compensation
Committee approved changes to Mr. Zhang’s compensation, and which are not subject to a written labor contract with Mr. Zhang. The
new terms provide for an increase in annual base salary of US$200,000, to a total annual base salary equivalent to US$437,094. Mr. Zhang
was also entitled to an incentive bonus in the amount of RMB 1,500,000 contingent upon product sales reaching a specified level between
January 1, 2021 and December 31, 2021. This incentive bonus amount was fully-earned by Mr. Zhang, and the U.S. dollar-equivalent amount
of such bonus paid to Mr. Zhang was $232,439.
On July 24, 2021, Mr. Zhang
was also awarded time-based stock options exercisable for 800,000 shares of Common Stock that vest
and become exercisable over a four year period, with 25% vesting on the first anniversary of the date of grant and 25% vesting over each
of the remaining three subsequent anniversaries of the grant date. In addition, the Board of Directors approved the grant of performance-based
options covering 800,000 shares of Common Stock. The performance-based options will only vest if, within the time period commencing on
July 24, 2021 and ending on June 30, 2025, specific product sale milestones are achieved as prescribed by the Compensation Committee.
These options have an exercise price of $1.28 per share.
Under the current terms
of his employment, Mr. Zhang is also entitled to a personal cash allowance up to 1,330,000 RMB per year and an allowance for
children’s tuition and Company paid health insurance.
Alexander A. Zukiwski, MD, Executive Vice
President and Chief Medical Officer
On April 3, 2017, the Company
entered into an employment agreement with Alexander A. Zukiwski, MD. The term of the employment agreement is subject to automatic one-year
extensions unless either party gives at least sixty days prior written notice not to extend. Subsequently, effective as of December 9,
2021, the Company and Dr. Zukiwski entered into a First Amendment to Employment Agreement in connection with his promotion to Executive
Vice President.
Dr. Zukiwski’s employment
agreement, as amended, provides for an annualized minimum base salary of $522,000, and his annual base salary was increased to $504,000
retroactive to August 16, 2021. Dr. Zukiwski was also allowed a $1,500 per month car allowance retroactive
to August 16, 2021. Dr. Zukiwski shall be eligible to earn incentive compensation up to an
aggregate of $500,000, subject to the Phase II study of CID-103 demonstrating a Proof of Principle that would support a decision to initiate
a Phase III clinical trial.
If the Company
terminates Dr. Zukiwski “without cause,” Dr. Zukiwski will receive a severance benefit equal to 12 months of salary,
payable in accordance with the Company’s customary pay practices, a pro-rata portion of any incentive compensation he would
have been entitled to for that year, and continued insurance coverage for up to 12 months. Dr. Zukiwski also may resign at any time
for “good reason,” (which generally means any material diminution or change in salary, responsibilities or title;
relocation to an office more than 50 miles from Company headquarters; failure to continue health benefits; a failure to pay
deferred compensation due under any plan; or the failure to honor any material aspect of the employment agreement), by providing at
least thirty days’ prior written notice. Resignation for “good reason” or non-extension of the term of his
agreement will be deemed a termination without cause. In addition, if Dr. Zukiwski’s employment is terminated upon disability
or death, Dr. Zukiwski or his estate will be entitled to receive a payment equal to six months’ salary plus a pro-rated amount
of any incentive compensation he would have been entitled to for that year.
The employment agreement imposes
confidentiality obligations and a 6-month non-compete (12 months in the event of a resignation for other than good reason) on Dr.
Zukiwski following termination of employment.
On April 3, 2017, the Company
entered into a change-in-control agreement with Dr. Zukiwski. See “Change-in-Control Severance Agreements” for information
on change-in-control termination payments. These change-in-control severance payments will be made in lieu of the severance payments under
the executive’s employment agreement.
Change-In-Control Severance Agreements
The Company currently is a
party to a Change in Control Agreement with Alexander A. Zukiwski. The Company entered into a First Amendment to the Change in Control
Agreement with Dr. Zukiwski effective December 9, 2021.
Dr. Zukiwski’s Change
in Control Agreement, as amended, provides for certain benefits either upon an involuntary termination of employment, other than for cause,
or resignation for “good reason,” upon a “Triggering Event.”
A Triggering Event includes
a merger of the Company with and into an unaffiliated corporation if the Company is not the surviving corporation or the sale of all or
substantially all of the Company’s assets. “Good reason” generally means any material diminution or change in salary,
responsibilities or title; relocation to an office more than 50 miles from Company headquarters or office; a failure to continue health
benefits; a failure to pay deferred compensation due under any plan; or the failure to honor any material aspect of the employment agreement.
The benefits to be received
by Dr. Zukiwski, in the event his employment is terminated after a Triggering Event occurs, include: (i) receipt of a lump sum severance
payment equal to Dr. Zukiwski’s then current annual salary and the average of the two prior year’s bonuses; (ii) pro rata
current year bonus; (iii) continuation of life, health and disability benefits for twelve months after the termination of employment and
(iv) in accordance with the terms of Dr. Zukiwski’s option agreement, all outstanding options would accelerate and become immediately
exercisable.
DELINQUENT SECTION 16(A) REPORTS
Section 16(a) of the 1934
Securities and Exchange Act, as amended, requires the Company’s executive officers, directors and persons who beneficially own more
than 10% of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports
of changes in ownership of Common Stock and other equity securities of the Company. Such executive officers, directors, and greater than
10% beneficial owners are required by SEC regulation to furnish the Company with copies of all Section 16(a) reports filed by such reporting
persons.
Based solely on our review
of such forms furnished to the Company and written representations from certain reporting persons, we believe that all filing requirements
applicable to our executive officers, directors and greater than 10% beneficial owners were timely made during fiscal 2021.
CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS
Any member of the Board
of Directors who is a related person with respect to a transaction under review may not participate in the deliberations or vote
respecting approval or ratification of the transaction, provided, however, that such director may be counted in determining the
presence of a quorum at a meeting of the committee that considers the transaction.
Juventas. As
previously disclosed, on July 1, 2019, the Company entered into a one-year equipment lease with Juventas in the amount of RMB 80,000 ($15,000)
a month, which is classified as an operating lease. Transactions with Juventas are considered to be related party transactions as the
Company’s CEO and Chairman is the chairman and one of the founding shareholders of Juventas. The lease was renewed in July 2020 and June 2021
with the same monthly lease income. During the year ended December 31, 2021, the Company recognized lease income of $148,000.
BioCheck.
In June 2019, the Company entered into a one-year agreement primarily for the sublease of certain office and lab space
with BioCheck Inc. (“BioCheck”) in the amount of $60,000 ($5,000 a month), which is classified as an operating lease. Transactions
with BioCheck are considered to be related party transactions as Dr. Wei-Wu He, the Company’s Chairman and CEO, is also the Chairman
of BioCheck. Transactions with Emerging Technology Partners, LLC (“ETP”), the parent of BioCheck and a more than 5% shareholder
of the Company, are also considered to be related party transactions as Dr. Wei-Wu He, the Company’s CEO and Chairman, is also the
founder and managing partner of ETP.
Because the Company required
additional office space, in January 2020, the agreement was amended for annualized rents in the amount of $144,000 ($12,000 a month) with
a stipulation that the new rent was retroactive to October 1, 2019. The lease expired on June 9, 2021 and was not renewed. During the
year ended December 31, 2021 and 2020, the Company recognized rent expense of $60,000 and $144,000, respectively.
March 2021 Underwritten
Public Offering Transactions. On March 24, 2021, the Company closed an underwritten public offering of 15,853,658 shares of the
Company’s common stock (the “Offering”) at a price to the public of $2.05 per share. The gross proceeds to CASI from
the Offering were $32.5 million before deducting the underwriting discounts and commissions and offering expenses payable by CASI.
ETP BioHealth III Fund L.P. (“ETP BioHealth”), in which
CASI’s Chairman and CEO is the founder and managing partner of ETP BioHealth’s general partner (ETP), purchased shares of
common stock in the Offering at the public offering price and on the same terms as the other purchasers in the Offering. ETP BioHealth
purchased 3,000,000 shares at the public offering price of $2.05 per share for a total of $6.15 million.
PROPOSAL 2
RATIFICATION OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The Board of Directors recommends
a vote FOR the ratification of the appointment of KPMG Huazhen LLP (“KPMG”), as the Company’s independent registered
public accounting firm for the fiscal year ending December 31, 2022 (“fiscal 2022”). KPMG was appointed the Company’s
independent registered public accounting firm on January 24, 2019, and has been engaged for fiscal 2022. KPMG has no direct or indirect
financial interest in the Company.
On January 24, 2019, our Audit
Committee engaged KPMG as the independent registered public accounting firm to audit the Company’s consolidated financial statements
for the fiscal year ended December 31, 2018. The Company did not, nor did anyone on its behalf, consult KPMG during the Company’s
two most recent fiscal years and any subsequent interim period prior to the Company’s engagement of KPMG regarding any of the matters
or events set forth in Item 304(a)(2) of Regulation S-K.
Representatives of KPMG are
not expected to be present at the Annual Meeting and thus will not be available to respond to questions from stockholders.
Although the Company is
not required to submit the ratification of the selection of its independent registered public accounting firm to a vote of
stockholders, the Audit Committee believes that it is good corporate governance and sound policy to do so. If the stockholders fail
to ratify the appointment of KPMG, the Audit Committee will reconsider whether or not to retain the firm. If the selection of
independent registered public accounting firm is ratified, the Audit Committee, in its discretion, may nevertheless select a
different independent registered public accounting firm at any time during the year if it determines that such a change would be in
the best interest of the Company and its stockholders.
Vote Required
The affirmative vote of a
majority of the total votes cast by the stockholders present at the meeting, in person or by proxy, and entitled to vote on this proposal
is necessary for approval of the ratification of the appointment of KPMG as the Company’s independent registered public accounting
firm for the current year. If you submit a proxy without direction as to a vote on this matter, the proxy will be voted “FOR”
this proposal. Abstentions will have the effect of a vote against this proposal.
Board of Directors Recommendation
THE BOARD OF DIRECTORS RECOMMENDS
THAT YOU VOTE “FOR” THE RATIFICATION OF KPMG HUAZHEN LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
FOR FISCAL 2022.
MATTERS CONCERNING OUR INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM
The following table presents
aggregate fees for professional services rendered by KPMG for the years ended December 31, 2021 and 2020.
KPMG
| |
2021 | | |
2020 | |
Audit fees | |
$ | 774,795 | | |
$ | 747,579 | |
Audit-related fees | |
$ | — | | |
$ | — | |
Tax fees | |
$ | — | | |
$ | — | |
All Other Fees | |
$ | — | | |
$ | — | |
Total | |
$ | 774,795 | | |
$ | 747,579 | |
Services rendered by KPMG
(for fiscal years 2021 and 2020) in connection with fees presented above were as follows:
Audit Fees
The Company incurred from
KPMG audit fees of $774,795 in fiscal year 2021, covering professional services rendered for (1) the audit of the Company’s
annual financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2021 and (2) the reviews of the financial statements included in the Company’s quarterly reports on Form 10-Q for the
first three quarters of 2021.
The Company incurred from
KPMG audit fees of $747,579 in fiscal year 2020, covering professional services rendered for (1) the audit of the Company’s
annual financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31,
2020 and (2) the reviews of the financial statements included in the Company’s quarterly reports on Form 10-Q for the
first three quarters of 2020.
Audit-Related Fees
The Company did not incur
audit-related fees in fiscal years 2021 or 2020.
Tax Fees
The Company did not incur
any tax fees in fiscal year 2021 or 2020 from KPMG.
All Other Fees
The Company did not incur
any other fees in fiscal years 2021 or 2020 from KPMG.
The Audit Committee pre-approves
all audit services provided by our independent registered public accounting firm in accordance with the Audit Committee’s pre-approval
policy for audit services.
REPORT OF THE AUDIT COMMITTEE
The Board of Directors of
the Company has appointed an Audit Committee composed of three directors, Mr. Huang (chairman), Mr. Salisbury and Dr. Wu, each of
whom is independent under Nasdaq listing standards, as applicable and as may be modified or supplemented.
The Board of Directors has
adopted a written charter for the Audit Committee. A copy of that Charter is available on our website at www.casipharmaceuticals.com.
The Audit Committee’s job is one of oversight as set forth in its Charter. It is not the duty of the Audit Committee to prepare
the Company’s financial statements, to plan or conduct audits, or to determine that the Company’s financial statements are
complete and accurate and are in accordance with generally accepted accounting principles. The Company’s management is responsible
for preparing the Company’s financial statements and for maintaining internal control. The independent registered public accounting
firm is responsible for performing independent audits of the Company’s financial statements.
The Audit Committee has reviewed
and discussed the Company’s audited consolidated financial statements with management and with KPMG Huazhen LLP, the Company’s
independent registered public accounting firm for 2021.
The Audit Committee meets
with the independent registered public accounting firm, with and without management present, as needed, to discuss the results of their
audits and reviews, their consideration of the Company’s internal controls, including internal control over financial reporting,
and the overall quality of the Company’s financial reporting.
The Audit Committee has reviewed
and discussed with KPMG Huazhen LLP the matters required to be discussed by the applicable
requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the Securities and Exchange Commission.
The Audit Committee also has
received and reviewed the written disclosures and the letter from KPMG Huazhen LLP required by applicable requirements of the PCAOB regarding
KPMG Huazhen LLP’s communications with the Audit Committee concerning independence and has discussed with KPMG Huazhen LLP its independence.
Based on the review and discussions
referred to above, the Audit Committee has recommended to the Board of Directors that the audited consolidated financial statements be
included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for filing with the
SEC.
|
By the Audit Committee: |
|
|
|
James Huang, Chairman |
|
Franklin C. Salisbury, Jr. |
|
Y. Alexander Wu, Ph.D |
PROPOSAL 3
APPROVAL OF THE REVERSE
STOCK SPLIT PROPOSAL
On March 10, 2022 and April
1, 2022, our Board of Directors unanimously adopted resolutions approving, declaring advisable and recommending to our stockholders for
their approval an amendment to our Amended and Restated Certificate of Incorporation (the “Amendment”) to effect a reverse
stock split of our outstanding Common Stock and treasury shares, with a ratio in the range of 1-for-2 and 1-for-20, such ratio to be determined
by our Board of Directors in its discretion but in no event later than one-year anniversary of the Annual Meeting, with respect to the
issued and outstanding Common Stock (the “Reverse Stock Split”). The Reverse Stock Split will also affect outstanding options
and the number of shares of Common Stock reserved for issuance under our equity plans, as described in “—Effect on Equity
Compensation Plans and Outstanding Options” below, and will also affect outstanding warrants, as described in “—Effect
on Outstanding Warrants”.
Approval of this Proposal
3 will grant our Board of Directors the authority, without further action by the stockholders, to carry out the Reverse Stock Split any
time on or before the one-year anniversary of the Annual Meeting, with the exact exchange ratio and timing to be determined at the discretion
of our Board of Directors and set forth in a public announcement. Even if our stockholders approve this proposal, our Board of Directors
may determine in its discretion not to effect the Reverse Stock Split and to abandon the Amendment to implement the Reverse Stock Split
prior to the time the Amendment is filed and becomes effective. In addition, our Board of Directors may determine to effect the Reverse
Stock Split even if the trading price of our Common Stock is at or above $1.00 per share.
If approved, this proposal
would approve the Amendment set forth in Appendix A. The text of the proposed Amendment to effect the Reverse Stock Split is subject
to revision to include such changes as may be required by the Secretary of State of the State of Delaware and as our Board of Directors
deems necessary and advisable to effect the proposed Amendment. Stockholders are urged to carefully read Appendix A.
Background
Our Common Stock is currently
listed on The Nasdaq Capital Market under the symbol “CASI.” The continued listing requirements of The Nasdaq Capital Market
provide, among other things, that our Common Stock must maintain a closing bid price in excess of $1.00 per share. On December 30, 2021,
we received written notice from Nasdaq indicating that we were not in compliance with the $1.00 minimum bid price requirement for continued
listing on The Nasdaq Capital Market, as set forth in Listing Rule 5550(a)(2). In accordance with Listing Rule 5810(c)(3)(A), we were
provided a period of 180 calendar days, or until June 28, 2022, to regain compliance with the minimum bid price requirement. To regain
compliance, the closing bid price of our Common Stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days
during this 180-day period. If we fail to achieve compliance, our Common Stock may be delisted.
Our Board of Directors determined
that the continued listing of our Common Stock on The Nasdaq Capital Market is beneficial for our stockholders. The delisting of our
Common Stock from The Nasdaq Capital Market would likely have very serious consequences for the Company and our stockholders. If our
Common Stock is delisted from The Nasdaq Capital Market, our Board of Directors believes that the trading market for our Common Stock
could become significantly less liquid, which could reduce the trading price of our Common Stock and increase the transaction costs of
trading in shares of our Common Stock.
The purpose of the Reverse
Stock Split is to decrease the total number of shares of Common Stock outstanding and proportionately increase the market price of the
Common Stock in order to meet the continuing listing requirements of The Nasdaq Capital Market. Our Board of Directors intends to effect
the Reverse Stock Split only if it believes that a decrease in the number of shares outstanding is in the best interests of the Company
and our stockholders and is likely to improve the trading price of our Common Stock and improve the likelihood that we will be allowed
to maintain our continued listing on The Nasdaq Capital Market. Accordingly, our Board of Directors approved the Reverse Stock Split Proposal
in order to help ensure that the share price of our Common Stock meets the continued listing requirements of The Nasdaq Capital Market.
The Reverse Stock Split will
affect outstanding options, as described below in “—Effect on Equity Compensation Plans and Outstanding Options”, and
also will affect outstanding warrants, as described below in “—Effect on Outstanding Warrants”.
Approval of this Proposal
3 will grant our Board of Directors the authority, without further action by the stockholders, to carry out the Reverse Stock Split any
time on or before the one-year anniversary of the Annual Meeting, with the exact exchange ratio and timing to be determined at the discretion
of our Board of Directors.
Even if our stockholders approve
this proposal, our Board of Directors may determine in its discretion not to effect the Reverse Stock Split and to abandon the Amendment
to effect the Reverse Stock Split prior to the time the Amendment is filed and becomes effective.
Effective Time
If the Reverse Stock Split
Proposal is approved and our Board of Directors determines to effect the Reverse Stock Split, we will file the proposed Amendment with
the Secretary of State of the State of Delaware. The Reverse Stock Split will become effective at the time the Amendment is filed with
the Secretary of State of Delaware and becomes effective, with the exact timing to be determined at the discretion of our board of directors.
If the Reverse Stock Split
Proposal is approved, no further action on the part of stockholders would be required to either effect or abandon the Reverse Stock Split.
If our Board of Directors does not implement the Reverse Stock Split on or before the one-year anniversary of the Annual Meeting, the
authority granted in this Proposal 3 to implement the Reverse Stock Split will terminate and the Amendment to effect the Reverse Stock
Split will be abandoned. Our Board of Directors reserves its right to elect not to proceed and abandon the Reverse Stock Split if it determines,
in its sole discretion, that this proposal is no longer in the best interests of our stockholders.
Reasons for the Reverse Stock Split
The principal purpose of the
Reverse Stock Split is to decrease the total number of shares of Common Stock outstanding and proportionately increase the market price
of the Common Stock in order to meet the continuing listing requirements of The Nasdaq Capital Market. Accordingly, our Board of Directors
approved the Reverse Stock Split Proposal in order to help ensure that the share price of our Common Stock meets the continued listing
requirements of The Nasdaq Capital Market. Our Board of Directors intends to effect the Reverse Stock Split only if it believes that a
decrease in the number of shares outstanding is in the best interests of the Company and our stockholders and is likely to improve the
trading price of our Common Stock and improve the likelihood that we will be allowed to maintain our continued listing on The Nasdaq Capital
Market. Our Board of Directors may determine to effect the Reverse Stock Split even if the trading price of our Common Stock is at or
above $1.00 per share.
Board Discretion to Implement the Reverse Stock
Split
Our Board of Directors believes
that stockholder approval of a range of Reverse Stock Split ratios (rather than a single exchange ratio) is in the best interests of our
stockholders because it provides the Board of Directors with the flexibility to achieve the desired results of the Reverse Stock Split
and because it is not possible to predict market conditions at the time the Reverse Stock Split would be implemented. If stockholders
approve this proposal, our Board of Directors would carry out a reverse stock split only upon the Board of Directors’ determination
that a reverse stock split would be in the best interests of our stockholders at that time. Our Board of Directors would then set the
ratio for the Reverse Stock Split within the range approved by stockholders and in an amount it determines is advisable and in the best
interests of the stockholders considering relevant market conditions at the time the Reverse Stock Split is to be implemented. In determining
the Reverse Stock Split ratio, following receipt of stockholder approval, our Board of Directors may consider numerous factors including:
| · | the historical and projected performance of our Common Stock; |
| · | general economic and other related conditions prevailing in our industry
and in the marketplace; |
| · | the projected impact of the Reverse Stock Split ratio on trading liquidity
in our Common Stock and our ability to maintain continued listing on The Nasdaq Capital Market; |
| · | our capitalization (including the number of shares of Common Stock issued
and outstanding); |
| · | the then-prevailing trading price for our Common Stock and the volume level
thereof; and |
| · | the potential devaluation of our market capitalization as a result of the
Reverse Stock Split. |
Our Board of Directors intends to select a reverse
stock split ratio that it believes would be most likely to achieve the anticipated benefits of the Reverse Stock Split.
Certain Risks Associated with the Reverse Stock Split
Before voting on this proposal,
stockholders should consider the following risks associated with effecting the Reverse Stock Split:
| · | As noted above, the principal purpose of the Reverse Stock Split is to increase
the market price of our Common Stock in order to improve the likelihood that we will be allowed to maintain our continued listing on The
Nasdaq Capital Market. However, the Reverse Stock Split, if effected, may not increase the market price of our Common Stock in proportion
to the reduction in the number of shares of our Common Stock outstanding, or at all. If the proposed Reverse Stock Split does result in
an increase in the market price of our Common Stock, the increase may not be long-term or permanent. The market price of our Common Stock
is dependent on many factors, including our business and financial performance, general market conditions, prospects for future growth
and other factors detailed from time to time in the reports we file with the SEC. We cannot predict the effect that the Reverse Stock
Split may have upon the market price of our Common Stock with any certainty, and the history of similar reverse stock splits for companies
in similar circumstances to ours is varied. The total market capitalization of our Common Stock after the proposed Reverse Stock Split
may be lower than the total market capitalization before the proposed Reverse Stock Split and, in the future, the market price of our
Common Stock following the Reverse Stock Split may not exceed or remain higher than the market price prior to the proposed Reverse Stock
Split. |
| · | Even if our stockholders approve the Reverse Stock Split and the Reverse
Stock Split is effected, there can be no assurance that we will continue to meet the continued listing requirements of The Nasdaq Capital
Market. |
| · | The Reverse Stock Split may result in some stockholders owning “odd
lots” of less than 100 shares of Common Stock on a post-split basis. These odd lots may be more difficult to sell, or require greater
transaction costs per share to sell, than shares in “round lots” of even multiples of 100 shares. |
| · | Although our Board of Directors believes that the decrease in the number
of shares of Common Stock outstanding as a consequence of the Reverse Stock Split and the anticipated increase in the market price of
Common Stock could encourage interest in our Common Stock and possibly promote greater liquidity for stockholders, such liquidity could
also be adversely affected by the reduced number of shares outstanding after the Reverse Stock Split |
Principal Effects of the Reverse Stock Split
If the Reverse Stock Split
is approved and effected with respect to the issued and outstanding Common Stock, each holder of Common Stock outstanding immediately
prior to the effectiveness of the Reverse Stock Split will own a reduced number of shares of Common Stock upon effectiveness of the Reverse
Stock Split. The Reverse Stock Split would be effected simultaneously for all outstanding shares of Common Stock at the same exchange
ratio. Except for adjustments that may result from the treatment of fractional shares (as described below), the Reverse Stock Split would
affect all stockholders uniformly and would not change any stockholder’s percentage ownership interest in the Company. The relative
voting rights and other rights and preferences that accompany the shares of Common Stock will not be affected by the Reverse Stock Split.
Shares of Common Stock issued pursuant to the Reverse Stock Split will remain fully paid and nonassessable.
The Reverse Stock Split
will not affect the number of authorized shares of Common Stock, which will remain at 250,000,000 shares. Although the Reverse Stock
Split will not, by itself, have any immediate dilutive effect on stockholders, the proportion of shares owned by stockholders
relative to the number of shares authorized for issuance will decrease because the number of authorized shares of Common Stock would
remain unchanged. As a result, additional authorized shares of Common Stock would become available for issuance at such times and
for such purposes as the Board of Directors may deem advisable without further action by stockholders, except as required by
applicable law or stock exchange rules. To the extent that additional authorized shares of Common Stock are issued in the future,
such shares could be dilutive to existing stockholders of the Company by decreasing such stockholders’ percentage of equity
ownership in the Company. See “—Potential Anti-Takeover Effect” below for more information on potential
anti-takeover effects of the Reverse Stock Split.
The Reverse Stock Split will
have no effect on the number of our authorized shares of preferred stock or the par value of the Company’s authorized preferred
stock.
Effect on Equity Compensation Plans and Outstanding Options
If the Reverse Stock Split
is approved and effected, the total number of shares of Common Stock reserved for issuance under our 2011 Long-Term Incentive Plan and
our 2021 Long-Term Incentive Plan (collectively, the “Plans”) would be reduced in proportion to the ratio selected by our
Board of Directors. As of April 1, 2022, there were a total of 32,523,790 shares of Common Stock reserved for issuance upon the exercise
of stock options outstanding under the Plans, and 10,575,448 shares of Common Stock remained available for future awards under our 2021
Long-Term Incentive Plan. Following the Reverse Stock Split, if any, such reserve would be reduced to between approximately 16,261,895
and approximately 1,626,189 shares reserved for issuance upon the exercise of stock options under the Plans, and between approximately
5,287,724 and approximately 528,772 shares would be available for future awards under our 2021 Long-Term Incentive Plan.
Under the terms of our outstanding
equity awards and options, the Reverse Stock Split would adjust and proportionately reduce the number of shares of Common Stock issuable
upon exercise or vesting of such awards and options in the same ratio of the Reverse Stock Split and, correspondingly, would proportionately
increase the exercise or purchase price, if any, of all such awards and options. The number of shares of Common Stock issuable upon exercise
or vesting of outstanding equity awards and options and the exercise or purchase price related thereto, if any, would be equitably adjusted
in accordance with the terms of the Plans, which may include rounding the number of shares of Common Stock issuable down to the nearest
whole share.
Effect on Outstanding Warrants
The Reverse Stock Split would
effect a reduction in the number of shares of Common Stock issuable upon the exercise of our outstanding warrants in proportion to the
applicable split ratio. The exercise price of outstanding warrants would also be subject to a corresponding increase in proportion to
the applicable split ratio.
Impact of the Reverse Stock Split
The following table contains
approximate information relating to our Common Stock immediately following the Reverse Stock Split under certain possible exchange ratios,
based on share information as of April 1, 2022, without giving effect to the treatment of fractional shares.
| |
| | |
| | |
| | |
| |
| |
April 1, 2022 | | |
1-for-2 | | |
1-for-10 | | |
1-for-20 | |
Number of authorized shares of Common Stock | |
| 250,000,000 | | |
| 250,000,000 | | |
| 250,000,000 | | |
| 250,000,000 | |
Number of outstanding shares of Common Stock | |
| 136,062,495 | | |
| 68,031,247 | | |
| 13,606,249 | | |
| 6,803,124 | |
Number of shares of Common Stock reserved for issuance upon exercise of outstanding stock options | |
| 32,523,790 | | |
| 16,261,895 | | |
| 3,252,379 | | |
| 1,626,189 | |
Number of other shares of Common Stock reserved primarily for issuance in connection with future awards under our equity incentive plans | |
| 10,575,448 | | |
| 5,287,724 | | |
| 1,057,544 | | |
| 528,772 | |
Number of shares of Common Stock reserved for issuance pursuant to outstanding warrants | |
| 6,172,832 | | |
| 3,086,416 | | |
| 617,283 | | |
| 308,641 | |
Number of shares of Common Stock held as treasury shares | |
| 1,273,292 | | |
| 636,646 | | |
| 127,329 | | |
| 63,664 | |
Number of authorized and unreserved shares of Common Stock not outstanding (and excluding treasury shares) | |
| 63,392,143 | | |
| 156,696,072 | | |
| 231,339,216 | | |
| 240,669,610 | |
Potential Anti-Takeover Effect
An additional effect of the
Reverse Stock Split would be to increase the relative amount of authorized but unissued shares of Common Stock, which may, under certain
circumstances, be construed as having an anti-takeover effect. Although not designed or intended for such purposes, the effect of the
increased available shares might be to make more difficult or to discourage an attempt to take over or otherwise acquire control of the
Company (for example, by permitting issuances that would dilute the stock ownership of a person or entity seeking to effect a change in
the composition of the Board of Directors or contemplating a tender offer or other change in control transaction). In addition, our Amended
and Restated Certificate of Incorporation and our Bylaws include provisions that may have an anti-takeover effect. These provisions, among
things, permit our Board of Directors to issue preferred stock with rights senior to those of the Common Stock without any further vote
or action by the stockholders, provide that special meetings of stockholders may only be called by our Board of Directors and some of
our officers, and do not provide for cumulative voting rights, which could make it more difficult for stockholders to effect certain corporate
actions and may delay or discourage a change in control.
Our Board of Directors is
not presently aware of any attempt, or contemplated attempt, to acquire control of the Company, and the Reverse Stock Split Proposal is
not part of any plan by our Board of Directors to recommend or implement a series of anti-takeover measures.
Accounting Matters
The Reverse Stock Split will
not affect the par value per share of Common Stock, which will remain unchanged at $0.01 per share. As a result of the Reverse Stock Split,
at the effective time, the stated capital on our balance sheet attributable to the Common Stock, which consists of the par value per share
of the Common Stock multiplied by the aggregate number of shares of the Common Stock issued and outstanding, will be reduced in proportion
to the ratio of the Reverse Stock Split. Correspondingly, the additional paid-in capital account, which consists of the difference between
the stated capital and the aggregate amount paid upon issuance of all currently outstanding shares of Common Stock, will be credited with
the amount by which the stated capital is reduced. The stockholders’ equity, in the aggregate, will remain unchanged. In addition,
the per share net income or loss of Common Stock, for all periods, will be restated because there will be fewer outstanding shares of
Common Stock.
Mechanics of the Reverse Stock Split
Effect on Registered “Book-Entry”
Holders of Common Stock
Holders of Common Stock may
hold some or all of their Common Stock electronically in book-entry form (“street name”) under the direct registration system
for securities. These stockholders will not have stock certificates evidencing their ownership. They are, however, provided with a statement
reflecting the number of shares of Common Stock registered in their accounts. If you hold registered Common Stock in book-entry form,
you do not need to take any action to receive your post-split shares, if applicable.
Fractional Shares
We would not issue fractional
shares in connection with the Reverse Stock Split. Instead, any fractional share resulting from the Reverse Stock Split because the stockholder
owns a number of shares not evenly divisible by the ratio would instead receive cash. The cash amount to be paid to each stockholder would
be equal to the resulting fractional interest in one share of our Common Stock to which the stockholder would otherwise be entitled, multiplied
by the closing trading price of our Common Stock on the trading day immediately preceding the effective date of the Reverse Stock Split.
We do not anticipate that the aggregate cash amount paid by the Company for fractional interests will be material to the Company.
No Dissenters’ or Appraisal Rights
Under the Delaware General
Corporation Law, our stockholders are not entitled to any dissenters’ or appraisal rights with respect to the Reverse Stock Split,
and we will not independently provide stockholders with any such right.
U.S. Federal Income Tax Considerations
The following is a summary
of certain U.S. federal income tax consequences of the Reverse Stock Split to stockholders that hold their shares of Common Stock as capital
assets for U.S. federal income tax purposes. This summary is based upon the provisions of the U.S. Internal Revenue Code of 1986, as amended
(the “Code”), Treasury regulations promulgated thereunder (the “Regulations”), administrative rulings and judicial
decisions, all as in effect as of the date hereof, and all of which are subject to change and differing interpretations, possibly with
retroactive effect. Changes in these authorities or their interpretation may result in the U.S. federal income tax consequences of the
Reverse Stock Split differing substantially from the consequences summarized below.
This summary is for general
information purposes only and does not address all aspects of U.S. federal income taxation that may be relevant to stockholders in light
of their particular circumstances or to stockholders that may be subject to special tax rules, including, without limitation: (i) persons
subject to the alternative minimum tax; (ii) banks, insurance companies, or other financial institutions; (iii) tax-exempt organizations;
(iv) dealers in securities or commodities; (v) regulated investment companies or real estate investment trusts; (vi) partnerships (including
entities or arrangements treated as partnerships for U.S. federal income tax purposes and their partners or members); (vii) traders in
securities that elect to use the mark-to-market method of accounting; (viii) persons whose “functional currency” is not the
U.S. dollar; (ix) persons holding our Common Stock in a hedging transaction, “straddle,” “conversion transaction”
or other risk reduction transaction; (x) persons who acquired our Common Stock in connection with employment or the performance of services;
(xii) retirement plans; (xiii) persons who are not U.S. stockholders (as defined below); or (xiv) certain former citizens or long-term
residents of the United States.
In addition, this summary
of certain U.S. federal income tax consequences does not address the tax consequences arising under the laws of any U.S., state or local,
or non-U.S. jurisdiction or any U.S. federal tax consequences other than U.S. federal income taxation (such as U.S. federal estate and
gift tax consequences). If a partnership (including any entity or arrangement treated as a partnership for U.S. federal income tax purposes)
holds shares of our Common Stock, the tax treatment of a partner in the partnership generally will depend upon the status of the partner,
the activities of the partnership, and certain determinations made at the partner level. Partnerships holding our Common Stock and the
partners in such partnerships should consult their tax advisors regarding the tax consequences to them of the Reverse Stock Split.
We have not sought, and will
not seek, an opinion of counsel or a ruling from the Internal Revenue Service (the “IRS”), regarding the U.S. federal income
tax consequences of the Reverse Stock Split, and there can be no assurance that the IRS will not challenge the statements and conclusions
set forth below or that a court would not sustain any such challenge.
EACH STOCKHOLDER SHOULD CONSULT ITS TAX ADVISORS
WITH RESPECT TO THE PARTICULAR TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT TO SUCH STOCKHOLDER.
This summary addresses only
stockholders that are U.S. stockholders. For purposes of this discussion, a “U.S. stockholder” is any beneficial owner of
our Common Stock that, for U.S. federal income tax purposes, is or is treated as any of the following:
| · | an individual who is a citizen or resident of the United States; |
| · | a corporation created or organized under the laws of the United States, any state thereof or the District of Columbia; |
| · | an estate, the income of which is subject to U.S. federal income tax regardless
of its source; or |
| · | a trust that (i) is subject to the primary supervision of a U.S. court and
all substantial decisions of which are subject to the control of one or more “United States persons” (within the meaning of
Section 7701(a)(30) of the Code), or (ii) has a valid election in effect to be treated as a United States person for U.S. federal income
tax purposes. |
U.S. Federal Income Tax Consequences of the Reverse Stock Split
to U.S. Stockholders
The Reverse Stock Split is
intended to qualify as a “recapitalization” and a “reorganization” for U.S. federal income tax purposes. Assuming
the Reverse Stock Split qualifies as a reorganization, and except as described below with respect to a U.S. stockholder who receives cash
in lieu of fractional shares, a U.S. stockholder generally should not recognize gain or loss as a result of the Reverse Stock Split. A
U.S. stockholder’s aggregate tax basis in the shares of the Common Stock received pursuant to the Reverse Stock Split should equal
the U.S. stockholder’s aggregate tax basis in the shares of the Common Stock surrendered (excluding any portion of such basis that
is allocated to any fractional share of our Common Stock), and such U.S. stockholder’s holding period in the shares of the Common
Stock received should include the holding period of the shares of the Common Stock surrendered. The Regulations provide detailed rules
for allocating the tax basis and holding period of shares of Common Stock surrendered pursuant to the Reverse Stock Split to shares of
Common Stock received pursuant to the Reverse Stock Split. U.S. stockholders holding shares of Common Stock that were acquired on different
dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.
Cash in Lieu of Fractional Shares
A U.S. stockholder who receives
cash in lieu of a fractional share of Common Stock should be treated as first receiving such fractional share and then receiving cash
in redemption of such fractional share. A U.S. stockholder who receives cash in lieu of a fractional share in the Reverse Stock Split
should recognize capital gain or loss equal to the difference between the amount of the cash received in lieu of the fractional share
and the portion of the U.S. stockholder’s adjusted tax basis allocable to the fractional share. The capital gain or loss generally
should be a long term capital gain or loss if the U.S. stockholder’s holding period for such Common Stock being exchanged exceeds
one year at the effective time of the Reverse Stock Split. The deductibility of the net capital losses is subject to limitations. U.S.
stockholders should consult their tax advisors regarding the tax effects to them of receiving cash in lieu of fractional shares based
on their particular circumstances.
Information Reporting and Backup Withholding
A U.S. stockholder generally
will be subject to information reporting with respect to any cash received in exchange for a fractional share of Common Stock. U.S. stockholders
who are subject to information reporting and who do not provide a correct taxpayer identification number and other required information
(such as by timely submitting a properly completed IRS Form W-9) may also be subject to backup withholding (at the current applicable
rate of 24%). Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be refunded or
credited against the U.S. stockholder’s U.S. federal income tax liability, provided that the required information is properly furnished
in a timely manner to the IRS.
Vote Required
This Proposal Three must receive
a “For” vote from the holders of a majority of the Company’s outstanding shares of Common Stock. Abstentions will have
the same effect as a vote “Against” this Proposal 3.
Board of Directors Recommendation
THE BOARD OF DIRECTORS
RECOMMENDS THAT YOU VOTE “FOR” THE REVERSE STOCK SPLIT.
GENERAL
Management of the Company
does not know of any matters other than those stated in this Proxy Statement that are to be presented for action at the Annual Meeting.
If any other matters should properly come before the Annual Meeting, it is intended that proxies in the accompanying form will be voted
on any such other matters in accordance with the judgment of the persons voting such proxies. Discretionary authority to vote on such
matters is conferred by such proxies upon the persons voting them.
The Company will bear the
cost of preparing, printing, assembling, and mailing the proxy, this Proxy Statement and other material that may be sent to stockholders
in connection with this solicitation. It is contemplated that brokerage houses will forward the proxy materials to beneficial owners at
the request of the Company. In addition to the solicitation of proxies by use of the mails, officers and regular employees of the Company
may solicit proxies by telephone without additional compensation. The Company has retained Georgeson, Inc. to assist in the solicitation
of proxies, and we will pay Georgeson approximately $10,000 plus out-of-pocket expenses.
The Company’s Annual
Report on Form 10-K for the year ended December 31, 2021 (without exhibits), is being forwarded to each shareholder with this proxy statement.
This Proxy Statement and our Annual Report are also available for reviewing, printing and downloading at www.casipharmaceuticals.com.
The exhibits to the 10-K, which are listed on the Exhibit Index in Part IV of the Annual Report on Form 10-K, are available upon written
request to the Company and upon payment of the nominal fees associated with copying and mailing such exhibits. All such requests should
be directed to Investor Relations, CASI Pharmaceuticals, Inc., 9620 Medical Center Drive, Suite 300, Rockville, Maryland 20850.
STOCKHOLDER PROPOSALS
The Annual Meeting of stockholders
for the fiscal year ending December 31, 2022 is expected to be held in June 2023 (the “Next Annual Meeting”). Pursuant to
the proxy rules, all proposals intended to be presented at the Next Annual Meeting must be received at the Company’s executive offices,
which are located at 9620 Medical Center Drive, Suite 300, Rockville, Maryland 20850, Attention: Corporate Secretary, no later than December
, 2022 to receive consideration for inclusion in the Proxy Statement and form of proxy related to that meeting.
Stockholders who do not wish
to follow the SEC rules in proposing a matter for action at the Next Annual Meeting must notify the Company in writing of the information
required by our Bylaws dealing with stockholder proposals. The notice must be delivered to the Company’s Secretary not later than
the close of business on February , 2023, nor earlier than January , 2023. As to all such matters which the Company does not have notice
on or prior to that date, discretionary authority to vote on such proposal shall be granted to the persons designated in the Company’s
proxy related to the Next Annual Meeting.
* * *
|
By Order of the Board of Directors, |
|
|
|
Dr. Wei-Wu He |
|
Chairman and CEO |
APPENDIX A
Form of Certificate of Amendment
CERTIFICATE OF AMENDMENT
OF
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
OF
CASI PHARMACEUTICALS, INC.
CASI
Pharmaceuticals, Inc. (the “Corporation”), a corporation organized and existing under the General Corporation
Law of the State of Delaware, does hereby certify:
FIRST:
That the Board of Directors of the Corporation has duly adopted resolutions (i) authorizing the Corporation to execute and file with
the Secretary of State of the State of Delaware this Certificate of Amendment of Amended and Restated Certificate of Incorporation (this
“Certificate of Amendment”) to combine each [TWO (2) UP THROUGH TWENTY (20)] outstanding shares of the Corporation’s
Common Stock, par value $0.01 per share, into one share of Common Stock, par value $0.01 per share; and (ii) declaring this Certificate
of Amendment to be advisable and recommended for approval by the stockholders of the Corporation.
SECOND:
That this Certificate of Amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law
of the State of Delaware by the Board of Directors and stockholders of the Corporation.
THIRD:
That the capital of the Corporation shall not be reduced under or by reason of this Certificate of Amendment.
FOURTH:
That upon the effectiveness of this Certificate of Amendment, the first paragraph of Article FOURTH of the Amended and Restated Certificate
of Incorporation is hereby amended and restated in its entirety such that, as amended, said paragraph shall read in its entirety as follows:
“The total number of shares of capital stock which the
Corporation is authorized to issue is 255,000,000 shares divided into two classes as follows:
(A) Common Stock. 250,000,000 shares
of common stock, $.01 par value per share (“Common Stock”), the holder of which shall be entitled to one vote for each share
on all matters required or permitted to be voted on by stockholders of the Corporation, and
(B) Preferred Stock. 5,000,000
shares of preferred stock, $1.00 par value per share (“Preferred Stock”).
Immediately upon the filing of this
Certificate of Amendment, each [TWO (2) UP THROUGH TWENTY (20)] shares of Common Stock issued and outstanding at such time shall be
combined into one share of Common Stock (the “Reverse Stock Split”). No fractional share shall be issued upon the
Reverse Stock Split. All shares of Common Stock (including fractions thereof) issuable upon the Reverse Stock Split to a given
holder shall be aggregated for purposes of determining whether the Reverse Stock Split would result in the issuance of any
fractional share. If, after the aforementioned aggregation, the Reverse Stock Split would result in the issuance of a fraction of a
share of Common Stock, the Corporation shall, in lieu of issuing any such fractional share, pay the holder otherwise entitled to
such fraction a sum in cash equal to the fraction multiplied by the fair market value per share of the Common Stock as determined in
a reasonable manner by the Board of Directors. Upon surrender by a holder of a certificate or certificates for Common Stock
(including, for this purpose, a holder of shares of Common Stock issuable upon conversion of Preferred Stock), duly endorsed, at the
office of the Corporation (or, if lost, an acceptable affidavit of loss is delivered to the Corporation), the Corporation shall, as
soon as practicable thereafter, issue and deliver to such holder, or to the nominee or assignee of such holder, a new certificate or
certificates for the number of shares of Common Stock that such holder shall be entitled to following the Reverse Stock
Split.”
IN
WITNESS WHEREOF, the Corporation has caused this Certificate of Amendment of Amended and Restated Certificate of Incorporation to
be executed by Wei-Wu He, its Chief Executive Officer, this day
of ,
2022.
|
CASI PHARMACEUTICALS, INC. |
|
By: |
|
|
Name: |
Wei-Wu He |
|
Title: |
Chief Executive Officer |
ANNUAL MEETING OF STOCKHOLDERS OF CASI PHARMACEUTICALS, INC. May 25, 2022 GO GREEN e - Consent makes it easy to go paperless . With e - Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste . Enroll today via www . astfinancial . com to enjoy online access . IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 25, 2022. You may obtain a copy of the related proxy statement, the accompanying Notice of Annual Meeting of Stockholders, and the form of proxy card without charge by visiting www.casipharmaceuticals.com Please sign, date and mail your proxy card in the envelope provided as soon as possible. Signature of Stockholder Date: Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. To change the address on your account, please check the box at right and indicate your new address in the address space above . Please note that changes to the registered name(s) on the account may not be submitted via this method . Signature of Stockholder Date : 2 . Ratification of the appointment of KPMG Huazhen LLP as our independent registered public accounting firm for the fiscal year ending December 31 , 2022 . 3 . Approval of the proposal to authorize the Board of Directors, in its discretion but no later than the one - year anniversary of the 2022 Annual Meeting of Stockholders, to amend our Amended and Restated Certificate of Incorporation to effect a reverse stock split of our outstanding common stock and treasury shares, at a ratio in the range of 1 - for - 2 to 1 - for - 20 , such ratio to be determined by the Board of Directors and included in a public announcement . The shares of Common Stock represented by this proxy will be voted as directed . If no contrary instruction is given, the shares of Common Stock will be voted for the election of each director nominee, for the ratification of the appointment of KPMG Huazhen LLP as the independent registered public accounting firm of the Company for fiscal year 2022 , and to amend our Amended and Restated Certificate of Incorporation to effect a reverse stock split of our outstanding common stock and treasury shares, at a ratio in the range of 1 - for - 2 to 1 - for - 20 , such ratio to be determined by the Board of Directors and included in a public announcement . In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any adjournments or postponements thereof . Attendance of the undersigned at the meeting or at any adjournment or postponement thereof will not be deemed to revoke this proxy unless the undersigned shall revoke this proxy in writing or shall deliver a subsequently dated proxy to the Corporate Secretary of CASI Pharmaceuticals, Inc . or shall vote in person at the meeting . THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF CASI PHARMACEUTICALS, INC. (THE "COMPANY"). THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" PROPOSALS 1, 2, AND 3. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x P . lease d . etach and ma . il i . n t . he enve . lop . e . provid . ed . . . 052522 FOR AGAINST ABSTAIN INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: 1. Election of Directors: FOR ALL EXCEPT (See instructions below) NOMINEES: FOR ALL NOMINEES O Quan Zhou Ph.D. – Term Expiring 2025 O James Huang – Term Expiring 2025 WITHHOLD AUTHORITY FOR ALL NOMINEES 20230300000000000000 4
0 14475 CASI PHARMACEUTICALS, INC. ANNUAL MEETING OF STOCKHOLDERS THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Rui Zhang and Alexander Zukiwski, MD and each of them as proxy (each of whom shall have full power of substitution) to represent the undersigned at the Annual Meeting of Stockholders to be held at the Hilton Garden Inn, 14975 Shady Grove Rd . , Rockville, MD 20850 on Wednesday, May 25 , 2022 at 9 : 00 a . m . and at any adjournment or postponement thereof, and to vote the shares of common stock the undersigned would be entitled to vote if personally present, as indicated on the reverse . (Continued and to be signed on the reverse side) 1 . 1
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