UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant þ
Filed by a Party other than the Registrant ¨
Check the appropriate box:
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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 |
IOVANCE BIOTHERAPEUTICS,
INC.
(Name of Registrant as Specified in Its Charter)
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Fee computed on table below per Exchange Act Rules 14a(i)(1)
and 0-11. |
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Amount Previously Paid: |
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Form, Schedule or Registration Statement No.: |

999 Skyway Road, Suite 150
San Carlos, California 94070
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held at 9:00 a.m. Eastern Daylight Savings Time on Monday,
June 10, 2019
Dear
Stockholders of Iovance Biotherapeutics, Inc.:
The 2019 Annual Meeting of Stockholders (the “Annual Meeting”) of
Iovance Biotherapeutics, Inc., a Delaware corporation, will be held
on Monday, June 10, 2019 at 9:00 a.m. Eastern Time at the offices
of DLA Piper LLP (US), 1251 6th Avenue, New York, New York 10020,
for the following purposes, as more fully described in the
accompanying proxy statement:
1. To
elect six directors named in the proxy statement accompanying this
notice to serve until the 2020 Annual Meeting of Stockholders;
2. To
approve, by non-binding advisory vote, the compensation of our
named executive officers;
3.
To approve an amendment to
our Certificate of Incorporation, as amended, to increase the
number of authorized shares of our common stock from 150,000,000
shares to 300,000,000 shares ; and
4. To
ratify the appointment of Marcum LLP as our independent registered
public accounting firm for our fiscal year ending December 31,
2019.
We will also consider and act upon other business as may properly
come before the Annual Meeting or any adjournments or postponements
thereof.
Our Board of Directors has fixed the close of business on April 18,
2019 as the record date for the Annual Meeting. Only stockholders
of record on April 18, 2019 are entitled to notice of and to vote
at the Annual Meeting. Further information regarding voting rights
and the matters to be voted upon is presented in the accompanying
proxy statement.
This proxy statement and our 2018 Annual Report can be accessed
directly at the following internet address:
http://www.cstproxy.com/iovance/2019.
YOUR VOTE IS IMPORTANT. Whether or not you plan to attend the
Annual Meeting, we urge you to submit your vote via the internet,
telephone or mail.
We appreciate your continued support of Iovance Biotherapeutics,
Inc. and look forward to either greeting you personally at the
Annual Meeting or receiving your proxy.
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By order of
the Board of Directors |
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Maria Fardis,
Ph.D. |
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President and Chief Executive
Officer |
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April 30, 2019 |
TABLE OF CONTENTS

PROXY STATEMENT
FOR 2019 ANNUAL MEETING OF STOCKHOLDERS
To Be Held at 9:00 a.m. Eastern Daylight Savings Time on Monday,
June 10, 2019
This proxy statement and the enclosed form of proxy are furnished
by Iovance Biotherapeutics, Inc., a Delaware corporation (“we,”
“our,” “us,” or the “Company”), in connection with the solicitation
of proxies by our Board of Directors for use at our 2019 Annual
Meeting of Stockholders, and any postponements, adjournments or
continuations thereof (the “Annual Meeting”). The Annual Meeting
will be held on Monday, June 10, 2019 at 9:00 a.m. Eastern Daylight
Savings Time, at the offices of DLA Piper LLP (US), 1251 6th
Avenue, New York, New York 10020. The Notice of Internet
Availability of Proxy Materials (the “Notice”) containing
instructions on how to access this proxy statement and our 2018
Annual Report is first being mailed on or about May 1, 2019 to all
stockholders entitled to vote at the Annual Meeting.
IMPORTANT NOTICE REGARDING THE INTERNET AVAILABILITY OF PROXY
MATERIALS FOR THE ANNUAL MEETING: This proxy statement, the
accompanying proxy card or voting instruction card and our 2018
Annual Report are also available at
http://www.cstproxy.com/iovance/2019 .
The information provided in the “question and answer” format below
is for your convenience only and is merely a summary of the
information contained in this proxy statement. You should read this
entire proxy statement carefully. Information contained on, or that
can be accessed through, our website is not intended to be
incorporated by reference into this proxy statement and references
to our website address in this proxy statement are inactive textual
references only.
QUESTIONS AND ANSWERS ABOUT THE
PROXY MATERIALS AND OUR ANNUAL MEETING
What
matters am I voting on at the Annual Meeting?
You will be voting:
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To elect six directors to serve until the 2020 Annual Meeting
of Stockholders; |
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To approve, by non-binding advisory vote, the compensation of
our named executive officers; |
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To approve an amendment
to our Certificate of Incorporation, as amended (the “Charter”), to
increase the number of authorized shares of our common stock from
150,000,000 shares to 300,000,000 shares ; |
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To ratify the appointment of Marcum LLP as our independent
registered public accounting firm for our fiscal year ending
December 31, 2019; and |
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Upon any other business as may properly come before the Annual
Meeting. |
How does
the Board of Directors recommend I vote on these proposals?
Our Board of Directors recommends a vote:
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Proposal No. 1 - “FOR” election of the nominees for directors
named in this proxy statement; |
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Proposal No. 2 - “FOR” the approval of the compensation of our
named executive officers as disclosed in this proxy statement; |
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Proposal No. 3 - “FOR” the approval of an amendment to our
Charter to increase the number of authorized shares of our common
stock from 150,000,000 shares to 300,000,000 shares; and |
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Proposal No. 4 - “FOR” the ratification of the appointment of
Marcum LLP as our independent registered public accounting firm for
our fiscal year ending December 31, 2019. |
Who is
entitled to vote?
Holders of our common stock as of the close of business on April
18, 2019 (the “Record Date”) may vote at the Annual Meeting. As of
the Record Date, there were 123,514,231 shares of our common stock
outstanding. At the Annual Meeting, the stockholders will be
entitled to one vote for each share of our common stock held by
them on the Record Date. We do not have cumulative voting rights
for the election of directors. On the Record Date, 194 shares of
our Series A Convertible Preferred Stock (the “Series A Preferred”)
were outstanding, which shares of Series A Preferred were
convertible into 97,000 shares of common stock, and 5,854,845
shares of our Series B Convertible Preferred Stock (the “Series B
Preferred”) were outstanding, which shares of Series B Preferred
were convertible into 5,854,845 shares of common stock. However,
except as otherwise required by law, the holders of shares of
Series A Preferred and Series B Preferred do not have the right to
vote on matters that come before the stockholders. Accordingly, the
holders of the Series A Preferred and Series B Preferred do not
have the right to vote at the Annual Meeting in their capacities as
holders of preferred stock.
Registered Stockholders . If shares of our common stock are
registered directly in your name with our transfer agent, you are
considered the stockholder of record with respect to those shares,
and the Notice was provided to you directly by us. As the
stockholder of record, you have the right to grant your voting
proxy directly to the individuals listed on the proxy card or to
vote in person at the Annual Meeting.
Street Name Stockholders . If shares of our common stock are
held on your behalf in a stock brokerage account or by a bank or
other nominee, you are considered the beneficial owner of those
shares held in “street name,” and the Notice was forwarded to you
by your broker or nominee, who is considered the stockholder of
record with respect to those shares. As the beneficial owner, you
have the right to direct your broker or nominee how to vote your
shares. Beneficial owners are also invited to attend the Annual
Meeting. However, since a beneficial owner is not the stockholder
of record, you may not vote your shares of our common stock in
person at the Annual Meeting unless you follow your broker’s
procedures for obtaining a legal proxy. If you request a printed
copy of our proxy materials by mail, your broker or nominee will
provide a voting instruction card for you to use. Throughout this
proxy, we refer to stockholders who hold their shares through a
broker, bank or other nominee as “street name stockholders.”
How many
votes are needed for approval of each proposal?
The representation, in person or by proxy, of at least a majority
of the outstanding shares of common stock entitled to vote at the
Annual Meeting is necessary to constitute a quorum for the
transaction of business. Shares represented by proxies pursuant to
which votes have been withheld from any nominee for director, or
which contain one or more abstentions or broker “non-votes,” are
counted as present or represented for purposes of determining the
presence or absence of a quorum for the Annual Meeting. A
“non-vote” occurs when a broker or other nominee holding shares for
a beneficial owner votes on one proposal but does not vote on
another proposal because the broker does not have discretionary
voting power and has not received instructions from the beneficial
owner.
Election of Directors (Proposal No. 1). Directors are
elected by a plurality of the votes cast, in person or by proxy, at
the Annual Meeting. The six nominees who receive the highest number
of affirmative votes of the shares present or represented and
voting on the election of directors at the Annual Meeting will be
elected to our Board of Directors. Shares present or represented
and not so marked as to withhold authority to vote for a particular
nominee will be voted in favor of a particular nominee and will be
counted toward such nominee’s achievement of a plurality. Shares
present at the meeting or represented by proxy where the
stockholder properly withholds authority to vote for such nominee
in accordance with the proxy instructions and broker “non-votes”
will not be counted toward such nominee’s achievement of
plurality.
Advisory Vote on the Compensation of our Named Executive
Officers (Proposal No. 2). For the advisory vote on the
compensation of our named executive officers, the affirmative vote
of the majority of shares present, in person or represented by
proxy, and voting on that matter is required for approval. Shares
voted to abstain are included in the number of shares present or
represented and voting on each matter. Shares subject to broker
“non-votes” are considered to be not entitled to vote for the
particular matter and have the practical effect of reducing the
number of affirmative votes required to achieve a majority for such
matter by reducing the total number of shares from which the
majority is calculated.
Approval of an Amendment to our Certificate of Incorporation, as
Amended, to Increase the Number of Authorized Shares of our Common
Stock (Proposal No. 3). For the approval of an amendment to our Charter to
increase the number of authorized shares of our common stock from
150,000,000 shares to 300,000,000 shares, the affirmative vote of
the majority of shares outstanding is required for approval.
Brokers are authorized to
vote without instructions on this proposal. Abstentions are
included in the shares present at the Meeting for purposes of
determining whether a quorum is present and are counted as a vote
against for purposes of determining whether the foregoing proposal
is approved.
Ratification of Independent Accountants (Proposal No. 4).
For the ratification of the appointment of Marcum LLP as our
independent registered public accounting firm for the fiscal year
ending December 31, 2018, an affirmative vote of a majority of the
shares present, in person or represented by proxy, and voting on
such matter is required for approval. Shares voted to abstain are
included in the number of shares present or represented and voting.
Shares subject to broker “non-votes” are considered to be not
entitled to vote for the particular matter and have the practical
effect of reducing the number of affirmative votes required to
achieve a majority by reducing the total number of shares from
which the majority is calculated.
Other Matters . The Board of Directors knows of no other
matters to be presented at the Annual Meeting. If any other matter
should be presented at the Annual Meeting upon which a vote
properly may be taken, the persons named on the enclosed proxy will
have discretionary authority to vote the shares represented by such
proxies in accordance with their best judgment.
How do I
vote?
If you are a stockholder of record, there are four ways to
vote:
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By Internet — You may submit your proxy from any
location in the world by following the internet voting instructions
on the proxy card or voting instruction card sent to you. |
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By Telephone — You may submit your proxy by following
the telephone voting instructions on the proxy card or voting
instruction card sent to you. |
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By Mail — You may do this by marking, dating and signing
your proxy card or, for shares held in street name, the voting
instruction card provided to you by your broker or nominee, and
mailing it in the enclosed, self-addressed, postage prepaid
envelope. No postage is required if mailed in the United States.
Please note that you will be mailed a printed proxy card or
printed voting instruction card only if you request that such
printed materials be sent to you by following the instructions in
the Notice of Internet Availability for requesting paper copies of
the proxy materials . |
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· |
In Person — You may vote by written ballot at the Annual
Meeting, if you are a stockholder of record. |
If you are a street name stockholder, you will receive voting
instructions from your broker, bank or other nominee. You must
follow the voting instructions provided by your broker, bank or
other nominee in order to instruct your broker, bank or other
nominee on how to vote your shares. Street name stockholders should
generally be able to vote by returning an instruction card, or by
telephone or on the internet. However, the availability of
telephone and internet voting will depend on the voting process of
your broker, bank or other nominee. As discussed above, if you are
a street name stockholder, you may not vote your shares in person
at the Annual Meeting unless you obtain a legal proxy from your
broker, bank or other nominee.
Can I
change my vote?
Yes. If you are a stockholder of record, you can change your vote
or revoke your proxy any time before the Annual Meeting by:
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entering a new vote by internet; |
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returning a later-dated proxy card; |
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notifying the Corporate Secretary, in writing, at Iovance
Biotherapeutics, Inc., 999 Skyway Road, Suite 150, San Carlos,
California 94070; or |
|
· |
completing a written ballot at the Annual Meeting. |
If you are a street name stockholder, your broker, bank or other
nominee can provide you with instructions on how to change your
vote.
What is
the effect of giving a proxy?
Proxies are solicited by and on behalf of our Board of Directors.
Maria Fardis, Ph.D., and Timothy E. Morris have been designated as
proxies by our Board of Directors. When proxies are properly dated,
executed and returned, the shares represented by such proxies will
be voted at the Annual Meeting in accordance with the instructions
of the stockholder. If no specific instructions are given, however,
the shares will be voted in accordance with the recommendations of
our Board of Directors as described above. If any matters not
described in this proxy statement are properly presented at the
Annual Meeting, the proxy holders will use their own judgment to
determine how to vote the shares. If the Annual Meeting is
adjourned, the proxy holders can vote the shares on the new Annual
Meeting date as well, unless you have properly revoked your proxy
instructions, as described above.
Why did
I receive a Notice of Internet Availability of Proxy Materials
instead of a full set of proxy materials?
In accordance with the rules of the Securities and Exchange
Commission (“SEC”), we have elected to furnish our proxy materials,
including this proxy statement and our annual report, primarily via
the internet. The Notice containing instructions on how to access
our proxy materials is first being mailed on or about May 1, 2019
to all stockholders entitled to vote at the Annual Meeting.
Stockholders may request to receive all future proxy materials in
printed form by mail or electronically by e-mail by following the
instructions contained in the Notice. We encourage stockholders to
take advantage of the availability of our proxy materials on the
internet to help reduce the environmental impact of our annual
meetings of stockholders.
How are
proxies solicited for the Annual Meeting?
Our Board of Directors is soliciting proxies for use at the Annual
Meeting. All expenses associated with this solicitation will be
borne by us. We will reimburse brokers or other nominees for
reasonable expenses that they incur in sending our proxy materials
to you if a broker or other nominee holds shares of our common
stock on your behalf.
How may
my brokerage firm or other intermediary vote my shares if I fail to
provide timely directions?
Brokerage firms and other intermediaries holding shares of our
common stock in street name for customers are generally required to
vote such shares in the manner directed by their customers. In the
absence of timely directions, your broker will have discretion to
vote your shares on our two “routine” matters: the proposal to
approve an amendment to our to increase the number of authorized
shares of our common stock from 150,000,000 shares to 300,000,000
shares, and the proposal to ratify the appointment of Marcum LLP as
our independent registered public accounting firm for our fiscal
year ending December 31, 2019. Your broker will not have discretion
to vote on the election of directors or any of the other proposals,
which are “non-routine” matters, absent direction from you.
Who will
bear the cost of soliciting votes for the Annual Meeting?
We will bear all expenses of this
solicitation, including the cost of preparing and mailing these
proxy materials. We may reimburse brokerage firms, custodians,
nominees, fiduciaries and other persons representing beneficial
owners of common stock for their reasonable expenses in forwarding
solicitation material to such beneficial owners. Directors,
officers and employees of our Company may also solicit proxies in
person or by other means of communication. Such directors, officers
and employees will not be additionally compensated but may be
reimbursed for reasonable out-of-pocket expenses in connection with
such solicitation. We may engage the services of a professional
proxy solicitation firm to aid in the solicitation of proxies from
certain brokers, bank nominees and other institutional owners. Our
costs for such services, if retained, will not be significant. You
are responsible for any internet access charges you may incur in
connection with viewing our proxy materials or voting over the
internet.
Is my
vote confidential?
Proxy instructions, ballots, and
voting tabulations that identify individual stockholders are
handled in a manner that protects your voting privacy. Your vote
will not be disclosed either within our Company or to third
parties, except as necessary to meet applicable legal requirements,
to allow for the tabulation of votes and certification of the vote,
or to facilitate a successful proxy solicitation.
Where
can I find the voting results of the Annual Meeting?
We will announce preliminary voting results at the Annual Meeting.
We will also disclose voting results on a Current Report on Form
8-K that we will 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 Current Report on Form 8-K within four business
days after the Annual Meeting, we will file a Current Report on
Form 8-K to publish preliminary results and will provide the final
results in an amendment to this Current Report on Form 8-K as soon
as they become available.
I share
an address with another stockholder, and we received only one paper
copy of the proxy materials. How may I obtain an additional copy of
the proxy materials?
We have adopted a procedure called “householding,” which the SEC
has approved. Under this procedure, we deliver a single copy of the
Notice and, if applicable, our proxy materials to multiple
stockholders who share the same address unless we have received
contrary instructions from one or more of the stockholders. This
procedure reduces our printing costs, mailing costs, and fees, and
is also environmentally friendly. Stockholders who participate in
householding will continue to be able to access and receive
separate proxy cards. Upon written or oral request, we will deliver
promptly a separate copy of the Notice and, if applicable, our
proxy materials to any stockholder at a shared address to which we
delivered a single copy of any of these materials. To receive a
separate copy, or, if a stockholder is receiving multiple copies,
to request that we only send a single copy of the Notice and, if
applicable, our proxy materials, such stockholder may contact us at
the following address:
Iovance Biotherapeutics, Inc.
Attention: Corporate Secretary
999 Skyway Road, Suite 150
San Carlos, California 94070
Stockholders who beneficially own shares of our common stock held
in street name may contact their brokerage firm, bank,
broker-dealer or other similar organization to request information
about householding.
What is
the deadline to propose actions for consideration at next year’s
Annual Meeting of Stockholders or to nominate individuals to serve
as directors?
Stockholders may present proper proposals for inclusion in our
proxy statement and for consideration at the next Annual Meeting of
Stockholders by submitting their proposals in writing to our
Secretary in a timely manner. For a stockholder proposal to be
considered for inclusion in our proxy statement for our 2020 Annual
Meeting of Stockholders, our Corporate Secretary must receive the
written proposal at our principal executive offices not later than
December 26, 2019, which is 120 days prior to the first anniversary
of the mailing date of this proxy. In addition, stockholder
proposals must comply with the requirements of Rule 14a-8 regarding
the inclusion of stockholder proposals in company-sponsored proxy
materials. Stockholder proposals should be addressed to:
Iovance Biotherapeutics, Inc.
Attention: Corporate Secretary
999 Skyway Road, Suite 150
San Carlos, California 94070
In addition, our bylaws establish an advance notice procedure for
stockholders who wish to present certain matters before an Annual
Meeting of Stockholders. In general, nominations for the election
of directors may be made by our board of directors or any committee
thereof or any stockholder, who is a stockholder of record on the
date of the giving of such notice and on the record date for the
determination of stockholders entitled to vote at such meeting, who
is entitled to vote at such meeting and who has delivered Timely
Notice (as defined below) to our Corporate Secretary, which notice
must contain specified information concerning the nominees and
concerning the stockholder proposing such nominations, as specified
in our bylaws.
Our bylaws also provide that the only business that may be
conducted at an annual meeting is business that is (1) specified in
the notice of meeting (or any supplement thereto) given by or at
the direction of our Board of Directors, (2) otherwise properly
brought before the meeting by or at the direction of our Board of
Directors (or any committee thereto) or (3) properly brought before
the meeting by a stockholder who has delivered Timely Notice (as
defined below) to our Corporate Secretary.
“Timely Notice” is defined in our amended and restated bylaws as
that date which is not less than 90 days nor more than 120 days
prior to the one-year anniversary of the previous year’s Annual
Meeting of Stockholders. As a result, in order for a stockholder to
bring an item of business before the 2020 Annual Meeting of
Stockholders, that item must be provided to our Corporate Secretary
between February 11, 2020 and March 12, 2020 in accordance with the
applicable provisions of our bylaws.
You may recommend candidates to our Board of Directors for
consideration by our nominating and governance committee by
following the procedures set forth below in “Board of Directors and
Corporate Governance — Director Nominations Process —
Nomination of Directors by Stockholders .
”
If a stockholder who has notified us of his, her or its intention
to present a proposal at an annual meeting does not appear to
present his, her or its proposal at such annual meeting, we are not
required to present the proposal for a vote at such annual
meeting.
How may
I obtain a copy of the bylaw provisions regarding stockholder
proposals and director nominations?
A copy of the full text of the bylaw provisions discussed above may
be obtained by writing to our Corporate Secretary. In
addition, this and other information about our Company may be
obtained at the web site maintained by the SEC that contains
reports, proxy and information statements and other information
regarding registrants that file electronically with the SEC. The
address of the SEC’s website is www.sec.gov. All notices of
proposals by stockholders, whether or not included in our proxy
materials, should be sent to our principal executive offices,
Attention: Corporate Secretary.
PROPOSAL NO. 1 - ELECTION OF
DIRECTORS
The following is information concerning the nominees for election
as directors. We believe that each nominee will be able to serve as
a director. In the event that a nominee is unable to serve, the
proxy holder will vote the proxies for such other nominee as he or
she may determine. Each nominee, currently serves as a director of
the Company. The term of office of each director will expire at
next year’s Annual Meeting of Stockholders.
Nominees
Our Nominating and Corporate Governance Committee has recommended,
and our Board of Directors has approved, as nominees the following
individuals for election as directors at the Annual Meeting.
Iain Dukes, D. Phil.
Maria Fardis, Ph.D.
Ryan Maynard
Merrill A. McPeak
Wayne P. Rothbaum
Michael Weiser, M.D., Ph.D.
For information concerning the nominees, please see the section
titled “Board of Directors and Corporate Governance” below.
If you are a stockholder of record and you sign your proxy card or
vote by telephone or over the internet but do not give instructions
with respect to the voting of directors, your shares will be voted
“FOR” the re-election of the above-mentioned nominees.
We expect that all of the foregoing nominees will accept such
nomination; however, in the event that a director nominee is unable
or declines to serve as a director at the time of the Annual
Meeting, the proxies will be voted for any nominee who shall be
designated by our Board of Directors to fill such vacancy. If you
are a street name stockholder and you do not give voting
instructions to your broker or nominee, your broker will leave your
shares unvoted on this matter.
BOARD OF DIRECTORS AND CORPORATE
GOVERNANCE
Our business affairs are managed under the direction of our Board
of Directors, which is currently composed of six members. The
following table sets forth the names, ages as of the Record Date,
and certain other information for the six directors whose terms are
expiring at the annual meeting and who are also nominees for
election as a director at the Annual Meeting.
Directors with Terms
expiring at the Annual
Meeting/Nominees
|
|
Age |
|
Position |
|
Director
Since
|
Iain Dukes, D.Phil. |
|
60 |
|
Chairman of the Board |
|
2016 |
Maria Fardis, Ph.D. |
|
51 |
|
President, Chief Executive Officer and
Director |
|
2016 |
Ryan Maynard |
|
49 |
|
Director |
|
2015 |
Merrill A. McPeak |
|
83 |
|
Director |
|
2011 |
Wayne Rothbaum |
|
51 |
|
Director |
|
2016 |
Michael Weiser, M.D.,
Ph.D. |
|
56 |
|
Director |
|
2018 |
Nominees
for Director
Iain Dukes, D. Phil . Dr. Dukes joined our Board of
Directors on August 4, 2016 and was appointed Chairman of the Board
on August 16, 2016. Dr. Dukes currently is a Venture Partner at
OrbiMed Advisors LLC. He previously served as Senior Vice President
and Head of Business Development and Licensing for Merck Research
Laboratories through May 2016. He joined Merck in August 2013.
Prior to joining Merck, Dr. Dukes was Vice President of External
Research & Development at Amgen, from August 2010 to August
2013. From 2007 to 2010, Dr. Dukes was the President and Chief
Executive Officer, and a member of the board of directors, of
Essentialis Therapeutics, a clinical stage biotechnology company
focused on the development of breakthrough medicines for the
treatment of rare metabolic diseases. From 2000 to 2007, Dr. Dukes
was Vice President of Scientific and Technology Licensing at
GlaxoSmithKline, and prior to that, from 1990 to 1999, he held
various positions at Glaxo Wellcome, including Head of Exploratory
Development for Metabolic and Urogenital Diseases and Head of Ion
Channel Drug Discovery Group. Dr. Dukes holds Master of
Jurisprudence and Doctorate of Philosophy degrees from the
University of Oxford, a Master of Science degree in Cardiovascular
Studies from the University of Leeds and a Bachelor of Science
degree in Pharmacology from the University of Bath.
Our Board of Directors believes that Dr. Dukes is highly qualified
to serve as a member of the Board of Directors because of his
extensive experience in the pharmaceutical industry, including in
senior management roles.
Maria Fardis, Ph.D. Dr. Fardis joined the Company as
President and Chief Executive Officer on June 1, 2016 and was
appointed to our Board of Directors on June 7, 2016. Dr. Fardis
served as the Chief Operating Officer of Acerta Pharma, LLC, a
clinical-stage biopharmaceutical company, from January 2015 to
March 2016. From 2011 to 2014, she worked at Pharmacyclics, Inc.,
which she joined as Senior Director of Global Project Management,
and was promoted to Vice President, Alliance and Global Project
Management in December 2011, was appointed Executive Vice
President, Alliances and Operations in September 2012 and was
appointed Chief of Oncology Operations and Alliances in March 2013.
Prior to joining Pharmacyclics, from August 2001 to April 2011, Dr.
Fardis held increasingly senior positions in Medicinal Chemistry
and the project and portfolio management department at Gilead
Sciences, Inc., most recently serving as Associate Director,
Project and Portfolio Management. Dr. Fardis received her Ph.D. in
Organic Chemistry from the University of California, Berkeley and
her B.S. summa cum laude, in chemistry from the University of
Illinois, Urbana-Champaign. Dr. Fardis holds an M.B.A., with
highest honors, from Golden Gate University.
Our Board of Directors believes that Dr. Fardis is highly qualified
to serve as a member of the Board of Directors because of her
experience both as an executive of biopharmaceutical companies and
as a scientist.
Ryan Maynard . Mr. Maynard joined our Board of
Directors in February 2015. Mr. Maynard was appointed as the Chief
Financial Officer of Blade Therapeutics, Inc., a privately held
biotechnology company in February of 2018. Until December 2017, he
was the Executive Vice President and Chief Financial Officer of
Rigel Pharmaceuticals, Inc., a public commercial-stage drug
development company. He joined Rigel in September 2001 as Corporate
Controller and was appointed as an Assistant Secretary in October
2001. In June 2006 he became Rigel’s Vice President of Finance and
Acting Chief Financial Officer and became its Vice President and
Chief Financial Officer in January 2007. Prior to joining Rigel,
Mr. Maynard was Corporate Controller and Director of Finance and
Accounting for Personify, Inc., an e-commerce software company,
from November 1999 to April 2001. From July 1998 to October 1999 he
served as Controller of General Magic, Inc. and from July 1994 to
June 1998 he held various positions at Siliconix, Inc., most
recently as Senior Finance Manager. He previously worked at Ernst
& Young LLP. Mr. Maynard holds a B.S. in Commerce - Accounting
from Santa Clara University.
Our Board of Directors believes that Mr. Maynard is highly
qualified to serve as a member of the Board of Directors because of
his extensive experience as the Chief Financial Officer of a
publicly traded pharmaceutical company, as well as his expertise in
auditing and financial and other related matters pertaining to the
operation of publicly traded pharmaceutical companies.
Merrill A. McPeak. General (Ret.) McPeak joined our Board of
Directors in July 2011. From February 2015 until the appointment of
Dr. Dukes as our new Chairman, General McPeak was the lead director
on our Board of Directors. General McPeak also served as our
unpaid, interim Chief Executive Officer from January 14, 2013
until July 24, 2013. General McPeak currently is the President of
McPeak and Associates, a consulting firm that he founded in 1995.
He has previously served as a director of several public companies,
including Tektronix, Inc., Trans World Airlines, Inc., and ECC
International Corp., where he was for many years the chairman of
the board. General McPeak has served as a director of Research
Solutions, Inc., a company engaged in developing systems to reuse
published content, since November 2010, and of Aerojet Rocketdyne,
an aerospace and defense contractor, since March 2013. He also
served on the board of directors of Lilis Energy, an independent
oil and gas producer, from January 2015 to April 2018. He was
Chairman of the Board of Coast Plating, Inc., a privately held
turnkey provider of metal processing and metal finishing services,
from January 2009 until the company was acquired by Trive Capital
and renamed Valence Surface Technologies, now the country’s largest
independently owned aerospace and defense metal processing company.
He continues to be a director of that company. He helped found, and
from December 2003 to February 2012 was Chairman of the Board of
EthicsPoint, Inc., a provider of risk management and compliance
software-as-a-service that was acquired in 2012 and restyled Navex
Global. General McPeak remained a member of the board of directors
of Navex Global until that company was sold in 2014.
From 1990 until his retirement from active military service in late
1994, General McPeak was Chief of Staff of the United States Air
Force. As a member of the Joint Chiefs of Staff, General McPeak was
a military advisor to the Secretary of Defense and the President of
the United States. General McPeak received a Bachelor of Arts
degree in economics from San Diego State College and a Master of
Science degree in international relations from the George
Washington University, and is a member of the Council on Foreign
Relations. From July 2010 to December 2017, General McPeak was
Chairman of the American Battlefield Monuments Commission.
Our Board of Directors believes that General McPeak is highly
qualified to serve as a member of the Board of Directors because of
his extensive leadership experience, including his experience in
the military and as a director on numerous public and private
company boards of directors.
Wayne P. Rothbaum. Mr. Rothbaum joined our Board of
Directors on June 7, 2016. Mr. Rothbaum is currently the President
of Quogue Capital LLC, a life sciences investment fund he founded
in 2001. Beginning in 2012, Mr. Rothbaum served as the co-founder
and largest investor of Acerta Pharma, B.V., a Dutch biotech
focused on developing selective, covalent small molecules to treat
cancer and inflammation. Acerta Pharma was sold to AstraZeneca in
February 2016. From February 2013 until its sale in February 2016,
Mr. Rothbaum served as the executive chairman of Acerta Pharma.
From 1993 until 2001, Mr. Rothbaum led the biotechnology practice
at the strategic consulting firm The Carson Group. Mr. Rothbaum
graduated Phi Beta Kappa from Binghamton University in 1990 with a
dual major in political science and psychology and received his
master’s degree in international economics from the George
Washington University.
Our Board of Directors believes that Mr. Rothbaum is highly
qualified to serve as a member of the Board of Directors on the
basis of his business background and education, his investment
experience as the manager of an investment fund focused on the life
sciences industry, and his experience serving in a leadership
capacity with other biotechnology companies.
Michael Weiser, M.D., Ph.D. Dr. Weiser joined our Board of
Directors in March 2018. He is the founder and has been a principal
of Actin Biomed LLC since 2006. Actin Biomed is a healthcare
investment firm focused on the discovery and development of novel
treatments for unmet medical needs. Prior to joining Actin Biomed,
Dr. Weiser was the Director of Research at Paramount BioCapital,
Inc., a pharmaceutical development and healthcare investment firm.
Dr. Weiser currently serves on the board of directors of Emisphere
Technologies, Inc., a pharmaceutical and drug delivery company. Dr.
Weiser previously served as the chairman of the board of directors
of Chelsea Therapeutics International, Ltd., a development stage
pharmaceutical company that was acquired by H. Lundbeck A/S in
2014, and served on the board of directors of Ziopharm Oncology,
Inc., a publicly traded biopharmaceutical company focused on
immunotherapies in oncology. Dr. Weiser holds a B.A. in Psychology
from the University of Vermont, received his M.D. from New York
University School of Medicine and completed his Ph.D. in Molecular
Neurobiology at Cornell University Medical College.
Our Board of Directors believes that Dr. Weiser is highly qualified
to serve as a member of the Board of Directors because of his
medical and business background and education, and his investment
experience as the manager of an investment fund focused on
biotechnology companies.
Corporate Governance Highlights at a Glance
What we do
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Annually Elected Directors |
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Robust Independent Director Role |
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Majority of Independent Directors |
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Non-Executive Chairperson |
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Regular Non-Executive Director Executive Sessions |
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Proactive Stockholder Engagement |
What we do not do
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No Supermajority Voting Provisions |
Director Nominations Process
The Nominating and Corporate Governance Committee administers our
director nominations process and establishes criteria for Board of
Directors member candidates and the process by which candidates for
inclusion in our recommended slate of director nominees are
selected. The Committee’s charter is available under the
“Investors” section of our website at www.iovance.com ,
under “Corporate Governance – Governance Highlights.”
Minimum Criteria for Board of Directors Members. Under the
director nominations process, each Board of Directors candidate
must possess at least the following specific minimum
qualifications:
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He or she shall be prepared to represent the best interests of
all of our stockholders and not just one particular
constituency. |
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He or she shall be an individual who has demonstrated integrity
and ethics in his or her personal and professional life and
established a record of professional accomplishment in his or her
chosen field. |
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Neither the candidate nor any family member (as defined in the
Nasdaq Stock Market Rules) or affiliate or associate (each as
defined in SEC rules) shall have any material personal, financial
or professional interest in any of our current or potential
competitors. |
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He or she shall be prepared to participate fully in Board of
Directors activities, including, if eligible, active membership on
at least one committee and attendance at, and active participation
in, meetings of the Board of Directors and any committee of which
he or she is a member, and not have other personal or professional
commitments that would, in the Nominating and Corporate Governance
Committee’s sole judgment, interfere with or limit his or her
ability to do so. |
Desirable Qualities and Skills. The Nominating and Corporate
Governance Committee also considers it desirable that each
candidate should:
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Contribute to the Board of Directors’ overall diversity —
diversity being broadly construed to mean a variety of opinions,
perspectives, personal and professional experiences and
backgrounds, as well as other differentiating characteristics. |
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Contribute positively to the collaborative culture among Board
of Directors members. |
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Possess professional and personal experiences and expertise
relevant to our goal of being a leading biopharmaceutical company.
At this stage of our development, relevant experiences might
include, among other things, large biotechnology or pharmaceutical
company chief executive officer or senior management experience,
senior-level management experience in medical research or clinical
development activities in the fields of oncology, immunology or
molecular biology within a public company or large university
setting, and relevant senior-level expertise in one or more of
finance, accounting, sales and marketing, organizational
development and public relations. |
Internal Process for Identifying Candidates. The Nominating
and Corporate Governance Committee has two primary methods for
identifying Board of Directors candidates. On a periodic basis, the
Nominating and Corporate Governance Committee may solicit
suggestions for possible candidates from a number of sources, which
may include members of the Board of Directors, our senior
executives, individuals personally known to members of the Board of
Directors, and independent research by either members of the Board
of Directors or our senior executives. The Nominating and Corporate
Governance Committee may also use its authority under its Charter
to retain at the Company’s expense one or more search firms to
identify candidates. If a search firm is used, it may be asked to
identify possible candidates who meet minimum and desired
qualifications; interview and screen candidates, and conduct
appropriate background and reference checks; act as a liaison among
the Board of Directors, the Nominating and Corporate Governance
Committee, and the candidate during the screening and evaluation
process; and be available for consultation as needed by the
Nominating and Corporate Governance Committee. The Nominating and
Corporate Governance Committee has the authority under its Charter
to approve such firms’ fees and other retention terms.
Nomination of Directors by Stockholders. The Nominating and
Corporate Governance Committee will also consider properly
submitted stockholder nominations for candidates for membership on
the Board of Directors. Any of our stockholders may recommend one
or more eligible persons for election as a director at an Annual
Meeting of Stockholders if the stockholder provides the
recommendation to our Corporate Secretary at our principal
executive offices not less than 120 days prior to the anniversary
of the date of the proxy statement released to stockholders in
connection with the previous year’s annual meeting. In the event
that we set an annual meeting date that is not within 30 days
before or after the date of the immediately preceding annual
stockholders meeting, the stockholder’s recommendation must be
received no later than the close of business on the tenth day
following the day on which notice of the date of the annual meeting
was mailed or public disclosure of that date was made, whichever
occurs first. To be eligible for consideration, a candidate
proposed by a stockholder must be independent of the stockholder
providing the nomination in all respects, as determined by the
Nominating and Corporate Governance Committee or by applicable law,
qualify as an “independent director” under the Nasdaq Stock Market
Rules and meet the Minimum Criteria for Board of Directors
Members set forth above.
Evaluation of Candidates. The Nominating and Corporate
Governance Committee will consider all candidates identified
through the processes described above, and will evaluate each of
them, including incumbents, based on the same criteria. If, based
on the Nominating and Corporate Governance Committee’s or other
director’s initial evaluation, a candidate continues to be of
interest, the Nominating and Corporate Governance Committee Chair
or one or more other directors will interview the candidate and
communicate the interviewer(s)’ evaluation to the other Nominating
and Corporate Governance Committee member(s), the Chairman of the
Board of Directors, the Chief Executive Officer, and the
independent members of the Board of Directors. Later reviews will
be conducted by other members of the Nominating and Corporate
Governance Committee, the Board of Directors and senior management.
Ultimately, background and reference checks will be conducted, and
the Nominating and Corporate Governance Committee will meet to
finalize its list of recommended candidates for the Board of
Directors’ consideration.
Timing of the Identification and Evaluation Process. Our
fiscal year is the calendar year. The Nominating and Corporate
Governance Committee expects generally to meet one or more times to
consider, among other things, candidates to be recommended to the
Board of Directors for inclusion in our recommended slate of
director nominees for the next annual meeting and our Proxy
Statement. The Board of Directors usually meets each March or early
April and at that meeting approves, among other things, the slate
of director nominees to be submitted to and recommended for
election by stockholders at the annual meeting, which is typically
held in May or June. All candidates, whether identified internally
or by a nomination received from a stockholder, who after
evaluation are recommended by the Nominating and Corporate
Governance Committee and the independent members of the Board of
Directors, and approved by the Board of Directors, will be included
in our recommended slate of director nominees in our Proxy
Statement.
Meetings
of the Board of Directors
The property, affairs and business of our Company are conducted
under the supervision and management of our Board of Directors, as
called for under the laws of Delaware and our bylaws. Pursuant to
our bylaws, our Board of Directors may establish committees of one
or more directors from time-to-time, as it deems appropriate.
Our common stock currently is listed on the Nasdaq Global Market. A
majority of our directors currently are “independent directors” as
defined under the Nasdaq Stock Market Rules, which define an
“independent director” as “a person other than an executive officer
or employee of the Company or any other individual having a
relationship which, in the opinion of the Company’s board of
directors, would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director.” The
definition further provides that, among others, employment of a
director by us (or any parent or subsidiary of ours) at any time
during the past three years is considered a bar to independence
regardless of the determination of our Board of Directors.
Our Board of Directors has determined that, with the exception of
Dr. Fardis and Dr. Dukes, for the purposes of serving on our Board
of Directors, all of our other directors are “independent” under
the Nasdaq Stock Market Rules.
Our Board of Directors held five meetings during the fiscal year
ending December 31, 2018. Each director attended at least 75% of
the aggregate of the total meetings of the Board of Directors that
were held during the portion of the 2018 fiscal year in which
he/she served as a director.
Executive Sessions
During the fiscal year ended December 31, 2018, the non-executive
directors met in executive session of the Board of Directors on
three occasions, the members of the Audit Committee met in
executive session on four occasions, the members of the Nominating
and Corporate Governance Committee met in executive session on one
occasion, and the members of the Compensation Committee met in
executive session on two occasions.
Committees of The Board of Directors
Our Board of Directors has a standing Audit Committee, Nominating
and Corporate Governance Committee, and Compensation Committee.
Current committee memberships are as follows:
Audit
Committee
The Audit Committee currently consists of:
Ryan
Maynard (Chair)
Merrill A. McPeak
Michael Weiser, M.D., Ph.D.
The Audit Committee operates pursuant to a written charter. Among
other things, the Audit Committee is responsible for:
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appointing, approving the compensation of, and assessing the
independence of our independent registered public accounting
firm; |
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overseeing the work of our independent registered public
accounting firm; |
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reviewing and discussing with management and the independent
registered public accounting firm our annual and quarterly
financial statements and related disclosures; |
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monitoring our internal control over financial reporting,
disclosure controls and procedures and Code of Business Conduct and
Ethics; |
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overseeing our internal audit function; |
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meeting independently with our internal auditing staff or
consultants, independent registered public accounting firm and
management; |
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reviewing and approving or ratifying any related person
transactions; |
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periodically reviewing and assessing the adequacy of our
insurance programs, including directors’ and officers’ insurance
programs, and recommending any changes to such programs to our
Board of Directors; and |
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preparing the Audit Committee Report required by SEC rules
(which is included on page 16 of this proxy statement). |
As of the date of this proxy statement, Mr. Maynard, Dr. Weiser,
and General McPeak constitute all of the members of the Audit
Committee. All of the members of the Audit Committee are
non-employee directors and independent as defined under the Nasdaq
Stock Market Rules. Mr. Maynard is a former chief financial officer
of a public company, Rigel Pharmaceuticals, Inc., where he served
in that role for more than 10 years. Because of his knowledge of
financial, audit and accounting matters, our Board of Directors has
designated him as the “audit committee financial expert” of the
Audit Committee.
The Audit Committee operates pursuant to a written charter, which
is available on our website, www.iovance.com, under “Corporate
Governance – Governance Highlights”.
Compensation
Committee
The Compensation Committee currently consists of:
Michael Weiser, M.D., Ph.D. (Chair)
Merrill A. McPeak
Wayne
P. Rothbaum
The Compensation Committee is responsible for the compensation of
our executives and directors. As part of its responsibilities, the
Compensation Committee has the following duties and
responsibilities:
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Establish annual base salary and annual incentive compensation
amounts for executive officers and, based upon discussions with the
Chief Executive Officer, annual incentive levels and the
operational and any other goals to be met to earn annual and
long-term incentive awards. |
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Review and evaluate the performance and leadership of the Chief
Executive Officer and determine the amounts of annual and any
long-term incentive awards and any adjustment to the annual salary
and annual incentive compensation amounts based upon such
performance and other factors as the Compensation Committee deems
appropriate. |
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Review with the Chief Executive Officer his/her evaluation of
the performance of the other executive officers and determine with
the Chief Executive Officer, and either approve or recommend Board
of Directors approval of, the amounts of annual and any long-term
incentive awards and any adjustments to the annual salary and
annual incentive compensation amounts based upon such performance
and other factors as the Compensation Committee deems
appropriate. |
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Review the compensation of non-employee directors and recommend
to the Board of Directors, for its approval, the components and
amounts of compensation for non-employee directors. |
As part of its other responsibilities, the Compensation Committee
reviews and approves any reports required by the SEC for inclusion
in the annual report and proxy statement, provides general
oversight of our compensation structure, and, if deemed necessary,
retains and approves the terms of the retention of compensation
consultants and other compensation experts. Other specific duties
and responsibilities of the Compensation Committee include
reviewing the performance of executive officers and overseeing
succession planning; reviewing and approving objectives relevant to
executive officer compensation; administering our equity-based and
incentive compensation plans; and establishing compensation
policies and practices for service on our Board of Directors and
its committees and for the Chairman of our Board of Directors.
In the Compensation Committee’s sole discretion, the Committee has
the authority to retain or obtain the advice of a compensation
consultant, legal counsel or other advisor after taking into
consideration the independence of such compensation consultant,
legal counsel or other advisor. Our Compensation Committee requires
any compensation consultant, legal counsel or other advisor
retained by the Compensation Committee, or who otherwise provides
advice to the Compensation Committee, to be independent.
The Compensation Committee is directly responsible for the
appointment, compensation, oversight and termination of the work of
any compensation consultant, legal counsel or other advisor
retained by the Committee. Our Company is responsible for the
payment of all reasonable compensation, as determined and approved
by the Compensation Committee, that is owed to any compensation
consultant, legal counsel or other advisor retained by the
Compensation Committee.
Unless prohibited by applicable law, Nasdaq’s rules and regulations
or our bylaws, the Compensation Committee may delegate to one or
more of its members or to our executive officers its authority with
respect to compensation determinations for our non-executive
officers and employees consistent with applicable law.
Our Board of Directors has granted our Chief Executive Officer the
authority to grant options to (i) newly hired non-executive
employees, and (ii) non-executive employees as part of our annual
performance review. The Compensation Committee has established
certain parameters within which non-executive options could be
granted by our Chief Executive Officer.
The executive officers of our Company are responsible for
maintaining the employee compensation policies for our Company,
including ensuring that the policies are sufficiently attractive to
retain our Company’s existing employees and to incentivize
prospective employees. For a description of the processes and
procedures used by the Compensation Committee for the consideration
and determination of executive and director compensation, see
“Executive Compensation-Compensation Discussion and Analysis.”
Our Board of
Directors has determined that each of the current members of the
Compensation Committee is “independent” under the current
independence standards of the Nasdaq Stock Market Rules.
Nominating
and Corporate Governance Committee
The Nominating and Corporate Governance Committee currently
consists of:
Merrill A. McPeak (Chair)
Michael Weiser, M.D., Ph.D.
The Nominating and Corporate Governance Committee recommends
candidates to be nominated for election as directors at our annual
meeting, consistent with criteria approved by our Board of
Directors; develops and regularly reviews corporate governance
principles and related policies for approval by our Board of
Directors; oversees the organization of our Board of Directors to
discharge its duties and responsibilities properly and efficiently;
and sees that proper attention is given and effective responses are
made to stockholder concerns regarding corporate governance. The
Nominating and Corporate Governance Committee also oversees an
annual assessment by the Board of Directors of its performance.
Usually, nominees for election to our Board of Directors are
proposed by our existing directors. In identifying and evaluating
individuals qualified to become Board of Directors members, our
current directors will consider such factors as they deem
appropriate to assist in developing a Board of Directors and
committees thereof that are diverse in nature and comprised of
experienced and seasoned advisors. Our Board of Directors has not
adopted a formal policy with regard to the consideration of
diversity, other than as may be prescribed by law, when evaluating
candidates for election to our Board of Directors. However, our
Board of Directors believes that membership should reflect
diversity in its broadest sense, but should not be chosen nor
excluded based on race, color, gender, national origin or sexual
orientation. In this context, our Board of Directors does consider
a candidate’s experience, education, industry knowledge, history
with the Company, independence, and differences of viewpoint when
evaluating his or her qualifications for election to our Board of
Directors. In evaluating such candidates, our Board of Directors
seeks to achieve a balance of knowledge, experience and capability
in its composition. In connection with this evaluation, our Board
of Directors determines whether to interview the prospective
nominee, and if warranted, one or more directors interview
prospective nominees in person or by telephone.
Report
of the Audit Committee of the Board of Directors
The Audit Committee provides assistance to our Board of Directors
in fulfilling its oversight responsibility to the Company’s
stockholders, potential stockholders, the investment community, and
others relating to our financial statements and the financial
reporting process, the systems of internal accounting and financial
controls, the internal audit function, the annual independent audit
of our financial statements and the ethics programs when
established by our management and our Board of Directors. The Audit
Committee has the sole authority (subject, if applicable, to
stockholder ratification) to appoint or replace the outside
auditors and is directly responsible for determining the
compensation of the independent auditors. In discharging its
oversight role, the Audit Committee is empowered to investigate any
matter brought to its attention, with full access to all of our
books, records, facilities and personnel, and to retain its own
legal counsel and other advisers as it deems necessary or
appropriate.
As part of its oversight of our financial statements, the Audit
Committee reviewed and discussed with both management and our
outside auditors our interim financial statements and annual
audited financial statements that are included in our Quarterly
Reports on Form 10-Q and Annual Report on Form 10-K, respectively.
The Audit Committee held four meetings during the fiscal year ended
December 31, 2018, including regular meetings in conjunction with
the close of each fiscal quarter, during which the Audit Committee
reviewed and discussed the Company’s financial statements with
management and Marcum LLP. These Audit Committee meetings routinely
include executive sessions of the committee, as well as private
sessions with Marcum LLP. Our management advised the Audit
Committee in each case that all such financial statements were
prepared in accordance with accounting principles generally
accepted in the United States of America and reviewed significant
accounting issues with the Audit Committee. These reviews included
discussion with the outside auditors of matters required to be
discussed by Auditing
Standard 1301, “Communications with Audit Committees,” issued by
the Public Company Accounting Oversight Board.
During the fiscal year ended December 31, 2018, Marcum LLP served
as our independent registered public accounting firm and audited
our financial statements for the year ended December 31, 2018.
Marcum LLP did not have any financial interest, direct or indirect,
in our Company, and did not have any connection with our Company
except in its professional capacity as our independent auditors. As
discussed in Proposal No. 4 below, the Audit Committee has engaged
Marcum LLP as our independent registered public accountants for the
fiscal year ending December 31, 2019.
The Audit Committee discussed with Marcum LLP, the auditors of our
2018 annual financial statements, matters relating to its
independence, including a review of audit and non-audit fees and
the letter and written disclosures made by Marcum LLP to the Audit
Committee pursuant to Public Company Accounting Oversight Board
(United States) Rule 3526.
Audit and non-audit services to be provided by Marcum LLP are
subject to the prior approval of the Audit Committee. In general,
the Audit Committee’s policy is to grant such approval where it
determines that the non-audit services are not incompatible with
maintaining the independent registered public accounting firm’s
independence and there are cost or other efficiencies in obtaining
such services from the independent registered public accounting
firm as compared to other possible providers.
Taking all of these reviews and discussions into account, the Audit
Committee recommended to our Board of Directors that our Board of
Directors approve the inclusion of our audited financial statements
in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2018, which was deemed filed with the SEC on February
28, 2019.
AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
Ryan Maynard (Chair)
Merrill McPeak
Michael Weiser, M.D., Ph.D.
Board
Leadership Structure and Role in Risk Oversight
Our Board of Directors believes it is important to select the
Company’s Chairman and Chief Executive Officer in the manner it
considers in the best interests of the Company at any given time.
Our Board of Directors believes that the Chairman and Chief
Executive Officer positions may be filled by one individual or by
two different individuals, as determined by our Board of Directors
based on circumstances then in existence.
Our Board of Directors is currently comprised of a majority of
individuals who are independent from the management of the Company
and, assuming that the nominees are elected at the Annual Meeting,
four of the six members of our Board of Directors will continue to
be independent directors. Our Board of Directors and its committees
meet regularly throughout the year to assure that the independent
directors are well briefed and informed with regard to the
Company’s affairs. Each of the independent directors has access to
the executive officers of the Company. In this fashion, we seek to
maintain well informed, independent directors who are prepared to
make informed decisions regarding our business affairs.
Management is responsible for the day-to-day management of risks
the Company faces, while our Board of Directors as a whole plays an
important role in overseeing the identification, assessment and
mitigation of such risks. Our Board of Directors reviews
information regarding the Company’s finances and operations, as
well as the risks associated with each. For example, the oversight
of financial risk management lies primarily with the Audit
Committee, which is empowered to appoint and oversee our
independent auditors, monitor the integrity of our financial
reporting processes and systems of internal controls and provide an
avenue of communication among our independent auditors, management
and our Board of Directors. The Compensation Committee is
responsible for overseeing the management of risks relating to the
Company’s compensation plans and arrangements. In fulfilling its
risk oversight responsibility, our Board of Directors, as a whole
and acting through any established committees, consults with
management to evaluate and, when appropriate, modify our risk
management strategies.
Stockholder Communication with Members of the Board of
Directors
Stockholders who wish to communicate with members of our Board of
Directors may contact us at our principal executive office at 999
Skyway Road, Suite 150, San Carlos, California 94070. Written
communications specifically marked as a communication for our Board
of Directors, or a particular director, except those that are
clearly marketing or soliciting materials, will be forwarded
unopened to Dr. Dukes, currently the Chairman of our Board of
Directors, or to the particular director to whom they are
addressed, or presented to the full Board of Directors or the
particular director at the next regularly scheduled Board of
Directors meeting.
Board of
Directors Members’ Attendance at Annual Meetings
It is the Company’s policy to have each director and director
nominee attend the Annual Meeting of Stockholders. Three of our
current directors attended our 2018 Annual Meeting of Stockholders
and all of our then-current directors attended our 2017 Annual
Meeting of Stockholders.
Code of
Ethics
Our Board of Directors has adopted a code of business conduct and
ethics that applies to our officers, directors and employees (“Code
of Ethics”). A copy of our Code of Ethics will be furnished without
charge to any person upon written request. Requests should be sent
to: Secretary, Iovance Biotherapeutics, Inc., 999 Skyway Road,
Suite 150, San Carlos, California 94070. Our Code of Ethics is also
available under the “Investors” section of our website at
www.iovance.com, under “Corporate Governance – Governance
Highlights”.
Director
Compensation
We believe that a combination of cash and equity compensation is
appropriate to attract and retain the individuals we desire to
serve on our board of directors and that this approach is
comparable to the policies of our peer companies. Our cash
compensation policies are designed to encourage frequent and active
interaction between directors and our executives both during and
between formal meetings as well as compensate our directors for
their time and effort. Further, we believe it is important to align
the long-term interests of our non-employee directors with those of
the Company and its stockholders, and that awarding equity
compensation to, and thereby increasing ownership of our common
stock by, our non-employee directors is an appropriate means to
achieve this alignment.
In 2018, our non-employee directors received an annual cash
retainer for Board of Directors and committee service in addition
to equity compensation, as set forth in further detail in the table
below. We expect non-employee director compensation to remain the
same in 2019, except that the Chair of the Compensation Committee
is expected to receive an additional 15,000 options for his
additional service to the Board of Directors.
|
|
|
|
Annual Cash
Retainer (1)
|
|
|
Annual Equity
Compensation (2)
|
|
Board of
Directors membership |
|
|
|
$ |
35,000 |
|
|
|
35,000 |
|
Chairman of the Board
of Directors (Extra Retainer) |
|
|
|
$ |
25,000 |
|
|
|
35,000 |
|
Audit Committee |
|
Chair |
|
$ |
15,000 |
|
|
|
|
|
|
|
Member |
|
$ |
7,500 |
|
|
|
|
|
Compensation
Committee |
|
Chair |
|
$ |
15,000 |
|
|
|
|
|
|
|
Member |
|
$ |
7,500 |
|
|
|
|
|
Nominating and
Corporate Governance Committee |
|
Chair |
|
$ |
15,000 |
|
|
|
|
|
|
|
Member |
|
$ |
7,500 |
|
|
|
|
|
|
(1) |
The annual cash retainers are payable in quarterly
installments. |
|
(2) |
Represents number of shares underlying options granted annually
to the directors. These options are exercisable in four equal
quarterly installments following the date of grant. If the
individual’s service with the Board of Directors is terminated
before the option expiration date, the options will be exercisable
for two years following termination of service (or until the
expiration of the option) unless the director is terminated for
cause, in which case the options are terminated. |
The table below shows the compensation received by each of our
non-employee directors during 2018 for serving on the Board of
Directors and on its committees. Our non-employee directors do not
receive fringe or other benefits.
Director Compensation Table
Name |
|
Fees Earned or Paid in
Cash |
|
|
Options Awards
($) (1)
|
|
|
Total ($) |
|
Iain
Dukes, D.Phil. |
|
$ |
60,000 |
|
|
$ |
992,866 |
|
|
$ |
1,052,866 |
|
Wayne
Rothbaum (2) |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
Ryan Maynard |
|
$ |
50,000 |
|
|
$ |
496,433 |
|
|
$ |
546,433 |
|
Merrill A.
McPeak |
|
$ |
65,000 |
|
|
$ |
496,433 |
|
|
$ |
561,433 |
|
Michael Weiser, M.D.,
Ph.D. |
|
$ |
51,819 |
|
|
$ |
1,273,483 |
|
|
$ |
1,325,302 |
|
|
(1) |
Represents the grant date value computed in accordance with
FASB ASC Topic 718. These amounts do not reflect the actual
economic value that will be realized by the directors upon the
vesting of the stock options, the exercise of the stock options, or
the sale of the common stock underlying such stock options. |
|
(2) |
To date, Mr. Rothbaum has declined to receive any compensation,
whether cash or options. |
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES
NAMED ABOVE.
PROPOSAL NO. 2 - ADVISORY VOTE ON
THE COMPENSATION OF
THE COMPANY’S NAMED EXECUTIVE OFFICERS
Section 951 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act of 2010 (the “Dodd-Frank Act”), as set forth in
Section 14A(a) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”), provides the Company’s stockholders with the
opportunity to vote to approve, on an advisory, non-binding basis,
the compensation of our named executive officers as disclosed in
this proxy statement in accordance with SEC rules. At the 2014
Annual Meeting of Stockholders, our stockholders approved an
advisory measure that the stockholders’ advisory votes on executive
compensation be held on an annual basis. Our Board of Directors
determined to follow our stockholders’ recommendations and to
include an annual stockholders advisory vote on the compensation of
the Company’s named executive officers. Please refer to the
discussion under “Executive Compensation-Compensation Discussion
and Analysis” for a description of the compensation of our named
executive officers.
We are asking for stockholder approval of the compensation of our
named executive officers as disclosed in this proxy statement in
accordance with SEC rules, which include the disclosures under
“Executive Compensation - Compensation Discussion and Analysis,”
the compensation tables and the narrative discussion following the
compensation tables. This vote is not intended to address any
specific item of compensation, but rather the overall compensation
of our named executive officers and the compensation policies and
practices described in this proxy statement. Accordingly, we are
asking you to approve the following resolution:
RESOLVED, that the compensation paid to the named executive
officers of Iovance Biotherapeutics, Inc., as disclosed in the 2019
Proxy Statement of Iovance Biotherapeutics, Inc. pursuant to Item
402 of SEC Regulation S-K, including the compensation tables and
narrative discussion, hereby is approved.
This proposal, commonly known as a “Say-on-Pay” proposal, gives our
stockholders the opportunity to express their views on our named
executive officers’ compensation as a whole. This vote is advisory
in nature and therefore is not binding on us, our Compensation
Committee or our Board of Directors. Our Board of Directors and our
Compensation Committee, however, value the opinions of our
stockholders. To the extent there is any significant vote against
the named executive officer compensation as disclosed in this proxy
statement, we will consider the stockholders’ concerns, and our
Compensation Committee will evaluate whether any actions are
necessary to address those concerns.
Vote
Required
The affirmative vote of a majority of the shares of our common
stock present in person or represented by proxy and entitled to
vote on this proposal at the Annual Meeting is required for
advisory approval of the proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL, ON
AN ADVISORY BASIS, OF THE COMPENSATION OF OUR NAMED EXECUTIVE
OFFICERS.
MANAGEMENT NAMED EXECUTIVE
OFFICERS
Named
Executive Officers
The following table sets forth information regarding our named
executive officers as of the Record Date.
Name |
|
Age |
|
Position |
Maria Fardis, Ph.D. |
|
51 |
|
President and Chief Executive
Officer |
Timothy E. Morris |
|
57 |
|
Chief Financial Officer and
Corporate Secretary |
Frederick G. Vogt, Ph.D.,
Esq. |
|
45 |
|
General Counsel |
Maria Fardis, Ph.D. Dr. Fardis has served as our President
and Chief Executive Officer since her appointment effective June 1,
2016. See, “Proposal No. 1: Election of Directors — Nominees for
Director,” above.
Timothy E. Morris. Mr. Morris joined the Company as our
Chief Financial Officer on August 14, 2017. Mr. Morris thereafter
became our principal accounting officer on November 8, 2017. Prior
to joining us, Mr. Morris was the Chief Financial Officer and Head
of Business Development for AcelRx Pharmaceuticals, Inc., a
publicly traded biopharmaceutical company focusing on the
development and commercialization of sublingual therapies for the
treatment of acute pain, from March 2014 until June 2017. From
November 2004 to December 2013, Mr. Morris served as the Chief
Financial Officer and Global Head of Corporate Development for
VIVUS, Inc., a publicly traded biopharmaceutical company focused on
the development and commercialization of therapies to treat obesity
and restore sexual health. Prior to joining VIVUS, he served as
Chief Financial Officer and Senior Vice President of Finance,
Manufacturing and Administration at Questcor Pharmaceuticals, Inc.
from September 2001 to November 2004. Prior thereto, Mr. Morris
also served as Chief Financial Officer of Interpro Business
Solutions, Inc., Utility.com, and RiboGene, Inc. Mr. Morris
currently serves as a non-executive director of Humanigen, Inc. Mr.
Morris is a Certified Public Accountant (inactive) and received a
bachelor’s degree in business with emphasis in accounting from
California State University, Chico.
Frederick G. Vogt, Ph.D., Esq. Dr. Vogt joined the Company
on September 30, 2016 as our Vice President, Intellectual Property.
Dr. Vogt was promoted to General Counsel on July 1, 2017. From May
2013 until he joined the Company, Dr. Vogt practiced law at the
international law firm of Morgan, Lewis & Bockius LLP, focusing
on intellectual property and business law in the life sciences and
representing clients in patent strategy, transactional, and
litigation matters. Prior to joining Morgan, Lewis & Bockius
LLP, he served in numerous scientific, management, and legal roles
of increasing responsibility over a period of 13 years at
GlaxoSmithKline plc., where he focused primarily on oncology and
cardiovascular drug development. Dr. Vogt holds a B.S. in Chemistry
from Ursinus College, a Ph.D. in Chemistry from the Pennsylvania
State University, and a J.D. from Temple University. He is admitted
to practice in Pennsylvania and before the U.S. Patent and
Trademark Office and the U.S. District Court for the Eastern
District of Pennsylvania.
EXECUTIVE COMPENSATION —
COMPENSATION DISCUSSION AND ANALYSIS
Overview
of Executive Compensation Program
The Compensation Committee recommends to the Board of Directors for
its determination and approval the compensation of our Chief
Executive Officer and, based on discussions with our Chief
Executive Officer, establishes the compensation of our other named
executive officers.
At our 2018 Annual Meeting of Stockholders, on an advisory basis, a
majority of the stockholders who voted on this matter approved the
compensation of our named executive officers as disclosed in our
2018 proxy statement. Based on our continued engagement with our
shareholders as well as the results of the 2018 stockholder
advisory vote, the Compensation Committee has determined to follow
the stockholders’ recommendation and to continue to follow our
historical compensation policies and procedures, subject to
recommendations received from our independent compensation
consulting firm.
This section explains the objectives of our name executive officer
compensation program, the compensation decisions we made with
respect to compensation for our fiscal year ended December 31,
2018, and the factors we considered in making those decisions, and
focuses on the compensation of officers who are listed as our
“named executive officers” in this proxy statement. The named
executive officers include the following three officers who are
currently employed with us:
Maria Fardis, Ph.D., our President and Chief Executive Officer,
Timothy E. Morris, our Chief Financial Officer, and
Frederick G. Vogt, Ph.D., Esq., our General Counsel.
Compensation Policies and Practices at a Glance
What we do
|
· |
Practice pay-for-performance, under which a significant
percentage of our named executive officer compensation is at-risk
and may not be realized if corporate and individual performance
goals are not achieved |
|
· |
Set challenging short- and long-term incentive award goals |
|
· |
Maintain an industry-specific peer group for benchmarking
compensation |
|
· |
Target named executive officer compensation based on market
norms |
|
· |
Offer market-competitive benefits for named executive officers
that are consistent with the rest of our employees |
|
· |
Do not guarantee annual bonus or guarantee salary
increases |
|
· |
Have a pre-established grant date practice for approving
executive officers’ equity awards |
|
· |
Maintain an independent Compensation Committee |
|
· |
Consult with an independent compensation advisor on
compensation levels and practices |
What we do not do
|
· |
Executives are prohibited from hedging or pledging our
stock |
|
· |
Compensation Committee’s independent consultant performs no
other work for the Company |
|
· |
No single trigger severance benefits upon change in control
except for our President and Chief Executive Officer |
|
· |
No excise tax gross-ups for any change-of-control payments |
|
· |
Provide excessive personal perquisites, such as automobile
leases, country club memberships or personal use of aircraft |
|
· |
Provide supplemental executive retirement plans |
Policies and Procedures for the Review and Approval of
Transactions with Related Persons
The Audit Committee’s charter requires the Audit Committee to
review and approve any related-person transactions. In considering
related-person transactions, the Audit Committee considers the
relevant available facts and circumstances, including, but not
limited to, (i) the risks, costs and benefits to us,
(ii) the impact on a director’s independence in the event the
related party is a director, immediate family member of a director
or an entity with which a director is affiliated, (iii) the
terms of the transaction, (iv) the availability of other
sources for comparable services or products, and (v) the terms
available to or from, as the case may be, unrelated third parties
or to or from employees generally. In the event a director has an
interest in the proposed transaction, the director must recuse
himself or herself from the deliberations and approval. In
determining whether to approve, ratify or reject a related-person
transaction, the Audit Committee evaluates whether, in light of
known circumstances, the transaction is in, or is not inconsistent
with, our best interests and those of our stockholders.
Insider Trading Policy
Our insider trading policy expressly prohibits short sales and
derivative transactions of our stock by our named executive
officers, directors and specified other employees, including short
sales of our securities, including short sales “against the box”;
purchases or sales of puts, calls or other derivative securities of
the Company or any derivative securities that provide the economic
equivalent of ownership of any of our securities or an opportunity,
direct or indirect, to profit from any change in the value of our
securities; or other hedging or monetization transactions
accomplished through the use of prepaid variable forwards, equity
swaps, collars and exchange funds. In addition, our insider trading
policy expressly prohibits our named executive officers, directors
and specified other employees from purchasing our securities on
margin, borrowing against Company securities held in a margin
account, or pledging our securities as collateral for a loan.
Compensation Objectives and Philosophy
Our named executive officer compensation program is designed
principally to:
|
· |
attract, motivate and retain talented and dedicated named
executive officers; |
|
· |
correlate discretionary annual cash bonuses to the achievement
of operational and financial objectives; and |
|
· |
provide our named executive officers with appropriate long-term
incentives that directly correlate to the enhancement of
stockholder value, as well as facilitate executive retention. |
To achieve these objectives, we establish (i) annual base salaries
at levels that we believe are competitive with base salaries of
executive officers in other comparable publicly-held
biopharmaceutical companies, and (ii) discretionary year-end annual
cash bonuses based in part on the achievement of key operational
and financial goals. We also grant stock options as a retention
tool and as a means to align the named executive officer’s
long-term interests with those of our stockholders, with the
ultimate objective of affording our named executive officers an
appropriate incentive to help us to improve stockholder value. Our
Compensation Committee does not have any formal policies for
allocating compensation among the foregoing three components.
Rather, our Compensation Committee uses its judgment to determine
the appropriate level and mix of compensation on an annual basis
with the goal to balance current cash compensation with equity
awards to reward both short-term and long-term performance. Our
Compensation Committee evaluates both employee performance and
compensation to maintain our ability to attract and retain
highly-qualified executives in key positions and to assure that
compensation provided to our named executive officers remains
competitive when compared to the compensation paid to similarly
situated executives of companies that we consider comparable to our
Company.
Compensation Determination Process and the Role of Named Executive
Officers in Compensation Decisions
We conduct an annual review of named executive officer
compensation, generally in December, January, or February, with a
presentation by our Chief Executive Officer to our Board of
Directors and Compensation Committee regarding each element of our
executive compensation arrangements. Our Compensation Committee met
on February 26, 2019 to establish year-end compensation for the
fiscal year ended December 31, 2018. At the Compensation
Committee’s direction, our Chief Executive Officer typically
prepares an executive compensation review for each named executive
officer which includes recommendations for:
|
· |
a proposed year-end cash bonus, if any, (i) payable under the
terms of each named executive officer’s employment agreement or
(ii) under our discretionary cash bonus program, in each case based
on the achievement of individual and/or corporate objectives and
the applicable terms of the employment agreements; |
|
· |
a proposed increase, if any, in base salary and cash bonus
potential for the upcoming year; and |
|
· |
an award, if any, of stock options or stock awards for the year
under review. |
As part of the compensation review, our Compensation Committee also
considers changes to an executive officer’s compensation.
In accordance with Nasdaq requirements, the Compensation Committee
also meets in an executive session without the Chief Executive
Officer to consider and make recommendations to our Board of
Directors regarding the Chief Executive Officer’s compensation,
including base salary and cash bonus. The Compensation Committee
recommends to our Board of Directors year-end annual stock option
grants to our Chief Executive Officer. The Compensation Committee
also grants year-end stock options to other named executive
officers based on, among other factors, recommendations by our
Chief Executive Officer. With the exception of these executive
sessions of the Compensation Committee, our Chief Executive Officer
generally participates in all deliberations of the Compensation
Committee and of our Board of Directors relating to executive
compensation.
In conjunction with the year-end annual compensation review, or as
soon as practicable after the fiscal year-end (but no later than
March 15 of each year), our Chief Executive Officer recommends (by
the end of the prior fiscal year) to the Compensation Committee the
corporate objectives and other criteria to be utilized for purposes
of determining cash bonuses (i) for each named executive officer
for the upcoming year (typically in accordance with that named
executive officer’s employment agreement), and (ii) for all other
employees as a group. The Compensation Committee in its discretion
may revise our Chief Executive Officer’s recommendations or make
its own recommendations to our Board of Directors, which may in
turn suggest further revisions. At the end of the year, the
Compensation Committee, in consultation with our Chief Executive
Officer, reviews each performance goal and determines the extent to
which we achieved such goals. For a description of some of the
goals established for 2018, see “2018 Named Executive Officer
Compensation - Annual and Special Cash Bonuses,” below.
Setting
Compensation for Named Executive Officers - Compensation Committee,
Board of Directors and Chief Executive Officer
The Compensation Committee of our Board of Directors has the
primary responsibility for determining compensation of our
executive officers. Our Board of Directors has determined that each
member of our Compensation Committee is “independent” as that term
is defined by applicable Nasdaq rules, is an “outside director” as
defined in Section 162(m) of the Internal Revenue Code (the
“Code”), and is a “non-employee” director as defined under Section
16 of the Exchange Act. Pursuant to the Tax Cuts and Jobs Act,
Section 162(m) is no longer applicable for compensation received
after December 31, 2017. However, we have retained references to
Section 162(m) in this proxy statement as it applies to
compensation prior to 2018. Our Compensation Committee recommends
the compensation of our Chief Executive Officer and determines all
compensation matters for our named executive officers, including
base salary, bonuses, and equity compensation. Our Board of
Directors, after considering the recommendations of the
Compensation Committee, makes the final determination with respect
to the compensation of our Chief Executive Officer. Utilizing input
from our Chief Executive Officer, the Compensation Committee makes
an independent decision on compensation for each other named
executive officers, although our Compensation Committee has, on
occasion, submitted its compensation determinations for named
executive officers to our full Board of Directors for its approval.
The Compensation Committee engaged Radford, a business unit of Aon
plc (“Radford”), as a compensation consultant for part of the 2018
review and assessed Radford’s independence pursuant to SEC rules
and concluded that no conflict of interest exists that would have
prevented Radford from independently advising the Compensation
Committee. The Compensation Committee has engaged Haigh &
Company (“Haigh”) as a compensation consultant for part of the 2018
review and for the 2019 review and has assessed Haigh’s
independence pursuant to SEC rules and concluded that no conflict
of interest exists that would prevent Haigh from independently
advising the Compensation Committee.
Peer and
Industry Data
For purposes of compensation for 2019, our Compensation Committee,
with the advice of Haigh, examined our 2018 peer group in light of
our continued growth throughout 2018, which is anticipated to
continue in 2019, the stage of development of our clinical
programs, and changes in our market capitalization. With reference
to these and other key business metrics, companies whose market
capitalization and/or whose number of employees that were at the
low end, below, or significantly above our targeted range were
removed and new companies were added to the peer group for 2019.
Based on its discussions with Haigh, the Compensation Committee
identified the following 20 peer companies for 2019 that were
selected from among publicly-held U.S. pharmaceutical and
biotechnology companies with comparable operations in the U.S.
based on the following criteria: number, stage and indication of
development programs, number of employees, and market
capitalization:
Acceleron Pharma, Inc.
Aduro Biotech, Inc.
Aimmune Therapeutics, Inc.
AnaptysBio, Inc.
Atara Biotherapeutics, Inc.
Blueprint Medicines Corp.
Calithera Biosciences, Inc.
ChemoCentryx, Inc.
Cytokinetics, Inc.
CytomX Therapeutics, Inc.
|
Editas Medicine, Inc.
Epizyme, Inc.
Fate Therapeutics, Inc.
Five Prime Therapeutics, Inc.
ImmunoGen, Inc.
Kura Oncology, Inc.
Mirati Therapeutics, Inc.
Portola Pharmaceuticals, Inc.
Sangamo Therapeutics, Inc.
Zogenix, Inc.
|
Benchmarking in the Context
of Our Other Executive Compensation Principles
Our Compensation Committee and our Board of Directors use market
data as one means of evaluating and establishing executive pay. In
instances where an executive officer is believed to be especially
suited to our Company or important to our success, the Compensation
Committee may establish or recommend compensation that deviates
from industry averages or other specific benchmarks. Upward or
downward variations in total cash compensation and long-term
incentives may also occur as a result of the individual’s
experience level, the nature and level of the individual’s specific
job responsibilities, the balance of the individual’s different
elements of compensation, market factors and other strategic
considerations.
Our Compensation Committee
believes that, given the competitiveness of our industry and our
corporate culture, our base compensation, annual cash bonuses and
equity programs are flexible enough to reward the achievement of
clearly defined corporate goals and are sufficient to retain our
existing executive officers and to hire new executive officers with
the appropriate qualifications and experience.
Elements
of Named Executive Compensation
The objectives of our compensation program are to pay competitive
compensation to our employees in light of the tight labor market
for biotech employees in Silicon Valley. For 2018, the cash
compensation for each of our named executive officers ranged from
the third quartile to the fourth quartile, while the equity
compensation ranged from the first quartile to the fourth quartile,
based on data from a combination of our peer group companies and
using a Black-Scholes valuation method. Based on a comparison of
the actual amount of equity grants awarded to our named executive
officers, which we believe may be a more accurate comparison, due
to fluctuations in our stock price that impacted the Black-Scholes
analysis, equity compensation ranged from the first quartile to the
third quartile, with Dr. Fardis at the 55th percentile.
We have designed and implemented compensation policies that have
historically allowed us to recruit both in the geographic areas
where we operate and where our named executive officers serve, as
the case may be. For 2018, the principal components of compensation
for our named executive officers consisted of:
|
· |
an annual cash incentive bonus; and |
|
· |
an annual stock option award. |
Base
Salary
We provide our named executive officers with base salary to
compensate them for services rendered during the year. Generally,
the base salaries reflect the experience, skills, knowledge and
responsibilities required of each executive officer, and reflect
our executive officers’ overall performance and contributions to
our business.
During its review of base salaries for executives, the Compensation
Committee primarily considers:
|
· |
the negotiated terms of each named executive officer’s
employment agreement, if any; |
|
· |
an internal review of the named executive officer’s
compensation, both individually and relative to other named
executive officers; and |
|
· |
base salaries paid by comparable companies in the
biopharmaceutical industry that have a similar business and
financial profile. |
Salary levels are considered annually as part of our Company’s
performance review process. Merit-based increases to salaries are
based on management’s assessment of the individual’s performance,
the recommendations made by the Chief Executive Officer to the
Compensation Committee, and the comparative compensation at peer
companies.
Other than Mr. Morris, each of our named executive officers
received an increase in his or her base salary in 2018 over his or
her 2017 base salary. Mr. Morris and Dr. Vogt each received an
increase in their base salary in 2019, as described below. Dr.
Fardis did not receive an increase in her base salary in 2019.
Annual
Cash Incentive Bonuses
We provide an opportunity for each of our named executive officers
to receive an annual cash incentive bonus based on the satisfaction
of individual and corporate objectives established by our Board of
Directors. For any given year, these objectives may include
individualized goals or corporate goals that relate to operational,
strategic or financial factors such as progress in developing our
product candidates, achieving certain manufacturing, intellectual
property, clinical and regulatory objectives, and raising certain
levels of capital.
Historically, at its annual year-end meeting to consider named
executive officer compensation, the Compensation Committee, in
consultation with management, has established corporate goals for
the upcoming fiscal year for purposes of, among other things,
making its recommendations regarding its discretionary annual bonus
awards (and stock option grants) for the upcoming year to our named
executive officers and all employees.
The employment agreements of our named executive officers and
certain of our other executives entitle the named executive
officers and those other individuals to an annual target
end-of-year cash bonus, at the discretion of the Chief Executive
Officer and/or the Compensation Committee, upon the achievement of
certain goals or milestones.
While the Board of Directors or the Compensation Committee adopts
corporate objectives, it is typically the Compensation Committee
that evaluates and approves the achievement level of corporate
objectives, and subsequently reviews and approves the annual cash
bonuses for named executive officers as part of its final
compensation deliberations. The Compensation Committee also
considers the bonuses paid by comparable companies. The
Compensation Committee, or where appropriate, our Board of
Directors may approve bonuses based on the foregoing determinations
or, after considering market conditions, our financial position or
other factors, may, in its sole discretion, determine not to award
any bonuses or to award larger or smaller bonuses.
On February 7, 2018, the Compensation Committee adopted corporate
goals for the determination of cash bonuses to be paid for the 2018
fiscal year. Under the plan adopted by our Board of Directors, cash
bonuses, if any, will be paid to qualified participating officers
and employees upon (i) the achievement of corporate goals and (ii)
a review of personal performance. The corporate goals, and the
weight assigned to each of the goals, will apply to all officers
and employees, including our named executive officers. The target
bonus payable to participating employees and officers currently
ranges from 10% to 40% of such recipient’s 2018 base salary, and in
the case of Dr. Fardis, ranges up to 100%. The target cash bonus
percentage for most senior executive officers is currently based on
the percentage set forth in each executive officer’s employment
agreement. The Company’s goal is to pay any earned bonus by March
15 of the year following the year in which the bonus is earned. The
cash bonuses that officers and employees can receive will be based
upon the following corporate goals and on an evaluation of an
individual’s performance. The corporate goals and objectives for
the 2018 calendar year were based on meeting certain goals with
respect to the Company’s operational performance as follows: (i)
completing enrollment of certain number of patients in Phase 3
registrational quality manufacturing suites appropriate for
registration of lifileucel, or LN-144, in the Company’s C-144-01
metastatic melanoma trial; (ii) assuring that cervical (C-145-04)
and head and neck cancer studies (C-145-03) are each half enrolled;
(iii) starting enrollment of a new combination study for melanoma
and head and neck cancers, and enrolling a specified number of
patients by the end of the year; (iv) enrolling a specified number
of patients in the non-small cell lung cancer trial by the end of
the year; (v) completing process optimization and securing supplies
for the Company’s new Generation 2 process; (vi) achieving certain
FDA goals regarding the regulatory path to registration for LN-144
in the U.S.; and (vii) achieving specified goals in the M.D.
Anderson Cancer Center collaboration. Other lesser weighted goals
included completing specified actions to protect the Company’s
intellectual property related to its Generation 2 manufacturing
process and obtaining funding.
At its February 26, 2019 meeting, the Compensation Committee
determined that the Company met 85% of its operational goals.
At its December 7, 2018 meeting, our Board of Directors set
corporate goals and objectives for the Company in 2019, and such
goals will be disclosed in next year’s proxy statement.
See the discussion below in “2018 Named Executive Officer
Compensation - Annual and Special Bonuses” for information
regarding the annual incentive bonuses paid to our named executive
officers for 2018.
Equity
Incentive Compensation
We believe that successful long-term corporate performance is more
likely to be achieved with a corporate culture that encourages a
long-term focus by our named executive officers and other employees
through the use of equity awards, the value of which depends on our
stock performance. We established our 2014 Equity Incentive Plan
and 2018 Equity Incentive
Plan to provide all of our employees, including our named
executive officers, with incentives to help align our employees’
interests with the interests of our stockholders and to enable them
to participate in the long-term appreciation of our stockholder
value. Additionally, equity awards provide an important retention
tool for all employees, as the awards generally are subject to
vesting over an extended period of time based on continued service
with us.
Typically, we grant equity awards upon an employee’s hire. In
addition, equity awards may also be granted for performance
annually at, or soon after, the end of each year, depending on
position, performance and tenure at the Company.
The determination of whether to grant stock options, as well as the
size of such grants, to our named executive officers involves
subjective assessments by the Compensation Committee and our Board
of Directors and, with respect to named executive officers other
than herself, our Chief Executive Officer. Generally, annual equity
awards are driven by our desire to retain and motivate our named
executive officers, and we consider individual performance and
contributions during the preceding year to the extent the
Compensation Committee and our Board of Directors believe such
factors are relevant. As with base salary and cash bonuses, in
evaluating and determining stock option grants to our named
executive officers, the Compensation Committee and our Board of
Directors also considers publicly available data prepared by Haigh
at the request of the Compensation Committee from other similar
clinical stage companies identified by the Compensation
Committee.
We normally grant stock options or stock awards to new employees
when they join our Company based upon their position with us and
their relevant prior experience. The range of options that can be
granted to employees is prescribed in a schedule based on
employee’s title and position. The awards granted by the
Compensation Committee generally vest over the first three years of
the ten-year option term (although some previously granted awards
vest over four years), or upon the achievement of certain
milestones. Unless otherwise agreed to by us with respect to a
termination without “cause” or for “good reason,” vesting and
exercise rights generally cease upon termination of employment,
except in the case of death (subject to a one-year limitation),
disability or retirement. Prior to the exercise of an option, the
holder has no rights as a stockholder with respect to the shares
subject to such option, including voting rights or the right to
receive dividends or dividend equivalents. In addition to the
initial option grants, our Compensation Committee may grant
additional options to retain our employees and reward, or provide
incentive for, the achievement of corporate goals and strong
individual performance.
Our Board of Directors has granted our Chief Executive Officer the
discretion to grant options to non-executive employees upon joining
our Company, and to make grants during each annual non-executive
employee review cycle. Our Board of Directors has fixed both the
total number of shares that our Chief Executive Officer can grant
under such options, and the range of shares subject to such grants
based on each employee’s position with the Company. Options are
granted based on a combination of individual contributions to our
Company and on general corporate achievements, which may include
the attainment of product development milestones (such as
commencement and completion of clinical trials) and attaining other
annual corporate goals and objectives.
On an annual basis, the Compensation Committee assesses the
appropriate corporate goals for our named executive officers and
may provide additional option grants based upon the achievement by
the named executive officers of corporate goals or other
significant accomplishments for the Company. We expect that we will
continue to provide new employees with initial option grants in the
future to provide long-term compensation incentives and will
continue to rely on performance-based and retention grants to
provide additional incentives for current employees. Additionally,
in the future, the Compensation Committee may consider awarding
additional or alternative forms of equity incentives, such as
grants of bonus stock, restricted stock and restricted stock units,
although the Compensation Committee does not currently plan to do
so in the near future.
It is our policy to award stock options at an exercise price equal
to the closing price on the Nasdaq Global Market of our common
stock on the date of the grant. For purposes of determining the
exercise price of stock options for newly hired employees, other
than executive officers, the grant date is deemed to be the first
day of employment and the authority to make such a grant is
delegated to our Chief Executive Officer. For other employee stock
option grants, the grant date is such date as is determined by the
Compensation Committee when it approves the stock option grant.
We have no program, practice or plan to grant stock options, in
coordination with the release of material nonpublic information. We
also have not timed the release of material nonpublic information
for the purpose of affecting the value of stock options or other
compensation, and we have no plan to do so. We have no policy
regarding the adjustment or recovery of stock option awards in
connection with the restatement of our financial statements, as our
stock option awards have not been tied to the achievement of
specific financial statement goals.
We do not take into consideration any amounts realized by our named
executive officers from prior stock option or stock awards in
determining whether to grant new stock options, restricted stock
units or restricted stock awards.
Other
Aspects of Our Compensation Philosophy
Retirement Plans, Perquisites
and Other Personal Benefits
Our named executive officers are eligible to participate in the
employee benefit plans on the same terms and conditions as they are
available to our other regular employees. These benefits include
medical, dental, vision, disability and life insurance, flexible
spending accounts, and a 401(k) plan.
Under the tax-qualified employee savings and retirement plan, our
401(k) plan, all eligible U.S. employees, including our named
executive officers, may elect to defer a percentage of their
eligible compensation in our 401(k) plan, subject to the annual IRS
limit. In 2018, we matched 100% of the employee contributions up to
4% of annual eligible compensation. The 2018 matching contributions
made under the Safe Harbor Matching Contribution are fully
vested.
We do not provide perquisites or other personal benefits to our
named executive officers other than those that we provide to our
employees. We do not provide any tax reimbursement payments
(including “gross-ups”) on any personal benefits, except in the
case of certain relocation benefits.
Cash Bonuses
From time to time, we may pay cash bonuses to employees upon the
successful completion of certain projects and we may also pay
sign-on bonuses to aid in recruiting certain key employees.
Severance
Agreements
We have entered into employment agreements with our named executive
officers which provide for payment of between six months’ and one
year’s base salary as severance upon the involuntary termination of
employment, provided such termination is not for cause, as defined
in the agreements.
Stock Ownership
Guidelines
Although stock option grants encourage equity ownership, we
currently do not require our directors or executive officers to own
a particular number of shares of our common stock. We believe that
stock and option holdings among our directors and named executive
officers are adequate at this time to appropriately align their
interests with those of our stockholders.
2018
Named Executive Officer Compensation
Base Salaries
The Compensation Committee considers salary increases for our named
executive officers generally on an annual basis, setting salaries
based on corporate objectives and the recommendations of our Chief
Executive Officer after assessing each executive’s performance. A
similar process is used by the Board of Directors in setting our
Chief Executive Officer’s salary. However, the Chief Executive
Officer does not provide recommendations on her own salary.
The base salary of all three of our named executive officers
currently exceeds the Compensation Committee’s goal of positioning
the compensation of our named executive officers at approximately
the 50% percentile of our peer group. At its February 26, 2019
meeting, our Compensation Committee did not increase the salary of
Dr. Fardis. Previously, in February 2018, in recognition of her
performance, our Compensation Committee recommended, and the Board
of Directors approved, an increase in Dr. Fardis’ annual base
salary in 2018 from $500,000 to $600,000. At its February 26, 2019
meeting, our Compensation Committee, in recognition of their
performance, increased the salaries of Mr. Morris from $450,000 to
$460,000 and Dr. Vogt from $375,000 to $400,000. At the
Compensation Committee’s meetings in December 2017, the
Compensation Committee increased Dr. Vogt’s 2018 annual base salary
from $350,000 to $375,000 in recognition of his promotion to
General Counsel and his performance in 2017. The 2018 base salary
of Mr. Morris was not increased because Mr. Morris was hired in
August 2017.
As a result, the 2019 and 2018 salaries of our three currently
employed named executive officers are as follows:
Name and Position
(1) |
|
2018
Salary
|
|
|
2019
Salary
|
|
|
% Increase
from Final 2018
Base Salary
|
|
|
|
|
|
|
|
|
|
|
|
Maria
Fardis, Ph.D., President and Chief Executive Officer |
|
$ |
600,000 |
|
|
$ |
600,000 |
|
|
|
0 |
% |
Timothy E. Morris,
Chief Financial Officer and Corporate Secretary |
|
$ |
450,000 |
|
|
$ |
460,000 |
|
|
|
2.22 |
% |
Frederick G. Vogt,
Ph.D., Esq., General Counsel |
|
$ |
375,000 |
|
|
$ |
400,000 |
|
|
|
6.67 |
% |
Annual Incentive
Bonuses
We provide an opportunity for each of our named executive officers
as well as other key employees, to receive a discretionary annual
incentive bonus based on both (i) performance related to corporate
objectives established by our Compensation Committee and Board of
Directors and (ii) a subjective evaluation of the employee’s
individual performance. For 2018, these objectives include
individualized goals or corporate goals that relate to operational,
strategic or financial factors such as progress in developing our
product candidates, achieving certain manufacturing, intellectual
property, clinical and regulatory objectives, and raising certain
levels of capital.
Historically, at its annual year-end meeting to consider named
executive officer compensation, our Compensation Committee, in
consultation with the Chief Executive Officer and our compensation
consultants, has considered corporate goals for the upcoming fiscal
year for purposes of, among other things, making its
recommendations regarding its discretionary annual bonus awards
(and stock option grants) for the upcoming year to our named
executive officers. The attainment of substantially all of our
corporate goals for 2018, as described above, as well as the
significant events and developments affecting the condition of the
Company and need to retain certain key employees to manage and
operate the Company was considered by our Compensation Committee at
its meetings held in 2018 and 2019.
At its February 26, 2019 meeting, in recognition of their
performance in 2018, our Compensation Committee granted Dr. Fardis,
Mr. Morris, and Dr. Vogt year-end bonuses of $510,000, $153,000,
and $127,500, respectively. Previously, at its December 29, 2017
meeting, the Compensation Committee granted Mr. Morris a year-end
bonus of $65,130, which amount was based on his pro-rated time of
service during 2017 and on the achievement level of his performance
milestones. In February 2018 the Compensation Committee
recommended, and the Board of Directors approved, a $350,000
year-end cash bonus to Dr. Fardis. This bonus exceeded her 50%
target bonus opportunity set forth in her employment agreement
because the Compensation Committee determined that Dr. Fardis’
performance in 2017 significantly exceeded the Compensation
Committee’s expectations. On February 9, 2018, in recognition of
her substantial achievements in 2017, the Board of Directors
increased Dr. Fardis’ bonus opportunity to 100%. The cash year-end
bonuses paid to the three currently serving named executive
officers for 2018 is as follows:
Name and Position |
|
Hire Date |
|
Annual
Incentive
Target %
(1)
|
|
|
2018 Target
Bonus
Opportunity
|
|
|
2018 Actual
Bonus Payment
(2)
|
|
|
2018 Actual
Bonus
Payment (%
of Target
Award
Opportunity)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maria
Fardis, Ph.D., President and Chief Executive Officer |
|
6/1/2016 |
|
|
100 |
% |
|
$ |
600,000 |
|
|
$ |
510,000 |
|
|
|
85 |
% |
Timothy E. Morris,
Chief Financial Officer and Corporate Secretary |
|
8/14/2017 |
|
|
40 |
% |
|
$ |
180,000 |
|
|
$ |
153,000 |
|
|
|
85 |
% |
Frederick G. Vogt,
Ph.D., Esq., General Counsel |
|
9/30/2016 |
|
|
40 |
% |
|
$ |
150,000 |
|
|
$ |
127,500 |
|
|
|
85 |
% |
|
(1) |
The annual cash bonus target is a
percentage of base salary. |
|
(2) |
Bonus amounts were paid on March 15, 2019. |
|
(3) |
The annual cash bonus target will remain the same for
2019. |
The Compensation Committee retains the right to make discretionary
cash bonus payments in excess of the target cash bonus levels to
the named executive officers if in its opinion a named executive
officer’s performance justifies such excess payment. No excess
payments were made for 2018.
Annual Stock Option Awards for
Named Executive Officers
Our Board of Directors and Compensation Committee generally make
year-end options grants to our named executive officers in
recognition of their performance. None of our named executive
officers is currently party to an employment agreement that
provides for an automatic grant of stock options.
At its February 26, 2019 meeting, our Compensation Committee
granted Dr. Fardis a non-qualified stock option award of 400,000
shares of our common stock at an exercise price of $11.26, which
price is equal to the closing price of our common stock on March 4,
2019, in recognition of her achievements in 2018. Dr. Fardis’
option award has a term of ten years and, provided that she is
employed with us on the following dates, will vest in installments
as follows: (i) options for the purchase of one-third of the
400,000 shares shall vest on the one-year anniversary of March 4,
2019; and (ii) the remaining options shall vest in eight equal
quarterly installments over the next two years, commencing with the
first quarter following the first anniversary of March 4, 2019. The
grant exceeded the Compensation Committee’s goal of keeping equity
awards at approximately the 50th percentile to the executive
officers holding comparable positions at the companies in our
compensation peer group. However, in determining the amount of Dr.
Fardis’ option award, our Compensation Committee considered her
existing equity holdings, her level of responsibility and
criticality, the amount of her existing equity holdings, and its
subjective assessment of her individual performance and our overall
Company performance. Previously, at the recommendation of the
Compensation Committee, in recognition of her substantial
achievements in 2017, on February 9, 2018, the Board of Directors
granted Dr. Fardis a year-end option award of 500,000 shares of our
common stock at an exercise price of $16.80 (which price is equal
to the closing price of our common stock on February 9, 2018).
At its February 26, 2019 meeting, our Compensation Committee
granted Mr. Morris a non-qualified stock option award of 100,000
shares of our common stock at an exercise price of $11.26, which
price is equal to the closing price of our common stock on March 4,
2019, in recognition of his achievements in 2018. Mr. Morris’
option award has a term of ten years and, provided that he is
employed with us on the following dates, will vest in installments
as follows: (i) options for the purchase of one-third of the
100,000 shares shall vest on the one-year anniversary of March 4,
2019; and (ii) the remaining options shall vest in eight equal
quarterly installments over the next two years, commencing with the
first quarter following the first anniversary of March 4, 2019. As
part of its year-end equity awards review, our Compensation
Committee considered granting Mr. Morris an additional stock option
award in 2018. However, because Mr. Morris joined the Company less
than five months before and was granted options at that time, the
Compensation Committee did not grant Mr. Morris a year-end stock
option award.
At its February 26, 2019 meeting, our Compensation Committee
granted Dr. Vogt a non-qualified stock option award of 200,000
shares of our common stock at an exercise price of $11.26, which
price is equal to the closing price of our common stock on March 4,
2019, in recognition of his achievements in 2018. Dr. Vogt’s option
award has a term of ten years and, provided that he is employed
with us on the following dates, will vest in installments as
follows: (i) options for the purchase of one-third of the 100,000
shares shall vest on the one-year anniversary of March 4, 2019; and
(ii) the remaining options shall vest in eight equal quarterly
installments over the next two years, commencing with the first
quarter following the first anniversary of March 4, 2019. In
December 2017, as part of its year-end review, the Compensation
Committee granted Dr. Vogt incentive stock options to purchase
37,400 shares, which options will have a term of ten years and will
vest in installments over three years as follows: (i) one-third of
the shares underlying the option shall vest on December 29, 2018;
and (ii) the remaining shares underlying the option shall vest in
eight equal quarterly installments over the two years following
December 29, 2018. Based on an equity compensation report provided
by Radford, the 2017 stock option grant to Dr. Vogt was positioned
at the 25th percentile of the survey of grants by similar
companies.
Other
Policies and Considerations
Relationship Between Compensation Elements
Each element of named executive officer compensation in 2017
considered the same element paid to named executive officers
holding similar positions at comparable companies within our peer
group. Our Compensation Committee retained Haigh & Company
(“Haigh”) to assess our current compensation programs and provide
recommendations for continued improved alignment of the programs
with our compensation philosophy and goals. Haigh conducted and
reported to the Compensation Committee an assessment of our named
executive officer’s base salaries, target total cash, short- and
long-term incentives, target total direct compensation and
retention value of prior equity awards against the competitive
market. To determine the competitive market compensation, survey
data was blended with proxy data of the peer companies identified
below in this Compensation Discussion and Analysis. The foregoing
information was considered when determining the relative proportion
of salary, cash incentive or equity awards relative to each other
and to total compensation.
Employment Agreements and Termination Benefits.
We have entered into written employment agreements with each of our
current and former named executive officers. The main purpose of
these agreements is to protect our Company from business risks such
as competition for each named executive officer’s service, loss of
confidential information or trade secrets, solicitation of our
other employees, and to define our respective rights to terminate
the employment relationship. Each of these employment agreements
can be terminated by either party at any time. Each employment
agreement was individually negotiated, so there are some variations
in the terms among named executive officers. Generally speaking,
however, the employment agreements provide for termination and
severance benefits that the Compensation Committee believes are
consistent with industry practices for similarly situated
executives. The Compensation Committee believes that the
termination and severance benefits help the Company retain the
named executive officers by providing them with a competitive
employment arrangement and compensation for termination of their
employment by us without “cause.”
In the event of termination of a named executive officer’s
employment by us without “cause,” the named executive officers will
be, entitled to a lump-sum payment, which payment is equal to
twelve months of base salary in the case of Dr. Fardis, and six
months of base salary in the case of Mr. Morris and Dr. Vogt. If a
named executive officer’s employment is terminated by us without
“cause” in connection with a change of control of our Company, the
named executive officers will be entitled to a lump-sum payment
equal to twelve months of base salary in the case of Dr. Fardis and
Mr. Morris, and six months of base salary in the case of Dr. Vogt,
plus in each instance the pro-rated amount of their respective
minimum bonuses for those periods. In addition, if the employment
agreements of Dr. Fardis or Dr. Vogt are terminated by us without
“cause” or by them for “good reason,” their unvested stock options
vest immediately.
The specific terms of the termination and change of control
arrangements, as well as an estimate of the compensation that would
have been payable had such provisions been triggered as of the end
of 2018, are described in detail in the section below entitled
“Executive Compensation – Potential Payments Upon
Termination/Change of Control.”
2019
Stockholder Advisory Vote
Each year, we hold a non-binding advisory stockholder vote on the
compensation program for our named executive officers. At our
annual stockholder meetings held in 2017 and 2018, our stockholders
approved, on an advisory basis, the compensation of our named
executive officers. In evaluating our compensation arrangements in
early 2018 (and most recently for 2018 year-end bonuses), we
considered the support of our stockholders of our compensation
arrangements and objectives. As a result, our Compensation
Committee retains our general approach to executive compensation
and continues to apply the same general principles and philosophy
as in the prior fiscal years in determining executive compensation.
Our Compensation Committee values the opinions of our stockholders
and will take our stockholders’ opinions into account when making
compensation decisions for the members of our executive team,
including the named executive officers.
Tax and
Accounting Implications
Deductibility of Executive
Compensation
The Compensation Committee takes into consideration the tax
consequences of compensation to the named executive officers, but
tax considerations are not a significant part of our Company’s
compensation policy.
Accounting for Share-Based
Compensation
We account for share-based compensation in accordance with the
requirements of FASB ASC Topic 718. This accounting treatment has
not significantly affected our executive compensation
decisions.
Clawbacks
We have not established any policy regarding recoupment, or
“clawback,” of any performance-based compensation in the event our
Company’s historical financial results are subsequently revised or
restated in a way that would have produced a lower compensation
amount.
The foregoing policies remained in place through 2018, and, unless
otherwise noted above, we expect to continue to follow them for the
foreseeable future.
Compensation Committee Interlocks and Insider Participation
During 2018, no member of the Compensation Committee served as one
of our officers, former officers, or employees. During 2018, none
of our named executive officers served as a member of the
compensation committee of any other entity, one of whose executive
officers served as a member of our Board of Directors or
Compensation Committee, and none of our named executive officers
served as a member of the Board of Directors of any other entity,
one of whose executive officers served as a member of our
Compensation Committee.
Report
of the Compensation Committee on Executive Compensation
The Compensation Committee of our Board of Directors has reviewed
and discussed with management the foregoing “Compensation
Discussion and Analysis” required by Item 402(b) of Regulation S-K
and, based on such review and discussions, the Compensation
Committee recommended to our Board of Directors that this
“Compensation Discussion and Analysis” be included in this Proxy
Statement.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Michael Weiser, M.D., Ph.D. (Chair)
Merrill A. McPeak
Wayne Rothbaum
Summary
Compensation of Named Executive Officers
The following table sets forth all compensation awards to, paid or
earned by the following type of named executive officers for each
of the Company’s last three years ended December 31, 2018, 2017,
and 2016: (i) individuals who served as, or acted in the capacity
of, the Company’s principal executive officer or principal
financial officer for the year ended December 31, 2018; (ii) the
Company’s most highly compensated executive officers, other than
the principal executive officer or principal financial officer, who
were serving as executive officers at the end of the year ended
December 31, 2018; and (iii) up to two additional individuals for
whom the disclosure would have been provided but for the fact that
the individual was not serving as an executive officer of the
Company at the end of the year ended December 31, 2018. We refer to
these individuals collectively as our named executive officers.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock |
|
|
Stock |
|
|
Incentive Plan |
|
|
All Other |
|
|
|
|
Name and Principal |
|
|
|
Salary
(1) |
|
|
Bonus |
|
|
Awards
(2) |
|
|
Options
(3) |
|
|
Compensation
(4) |
|
|
Compensation |
|
|
Total |
|
Position |
|
Year |
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Officers: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maria Fardis, Ph.D.
(6) |
|
2018 |
|
$ |
600,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
8,284,600 |
(5) |
|
$ |
510,000 |
|
|
$ |
- |
|
|
$ |
9,394,600 |
|
President and Chief |
|
2017 |
|
$ |
500,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
350,000 |
|
|
$ |
- |
|
|
$ |
850,000 |
|
Executive Officer |
|
2016 |
|
$ |
291,667 |
|
|
$ |
- |
|
|
$ |
3,228,500 |
|
|
$ |
2,935,000 |
|
|
$ |
116,720 |
(7) |
|
$ |
150,000 |
(8) |
|
$ |
6,721,887 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy E. Morris (9) |
|
2018 |
|
$ |
450,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
153,000 |
|
|
$ |
- |
|
|
$ |
603,000 |
|
Chief Financial Officer and Corporate
Secretary |
|
2017 |
|
$ |
172,212 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1,262,500 |
|
|
$ |
65,130 |
(10) |
|
$ |
- |
|
|
$ |
1,499,842 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frederick G. Vogt, |
|
2018 |
|
$ |
375,000 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
127,500 |
|
|
$ |
- |
|
|
$ |
502,500 |
|
Ph.D., Esq. (11) |
|
2017 |
|
$ |
326,355 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
393,070 |
|
|
$ |
131,390 |
|
|
$ |
- |
|
|
$ |
850,815 |
|
General
Counsel |
|
2016 |
|
$ |
75,616 |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1,510,000 |
|
|
$ |
13,620 |
(7) |
|
$ |
50,000 |
(8) |
|
$ |
1,649,236 |
|
|
(1) |
Includes amounts earned but deferred at the election of the
named executive officer, such as salary deferrals under the
Company’s 401(k) plan. |
|
(2) |
The amounts in this column represent the aggregate grant date
fair value of the restricted stock awards and restricted stock
units, determined in accordance with Financial Accounting Standards
Board (FASB) Accounting Standards Codification (ASC) Topic 718. The
Company determines the grant date fair value of the awards by
multiplying the number of units granted by the closing market price
of one share of Iovance common stock on the award grant date. These
amounts do not reflect the actual economic value that will be
realized by the named executive officer upon the vesting or the
sale of the common stock awards. |
|
(3) |
The Company’s share-based compensation program includes
incentive and non-statutory stock options. The amounts set forth
under this column represent the aggregate grant date fair value of
stock options granted in each fiscal year for financial reporting
purposes under Statement of Financial Accounting Standards ASC
Topic 718, “Stock Compensation,” disregarding the estimate of
forfeitures. The Company’s methodology, including its underlying
estimates and assumptions used in calculating these values, is set
forth in Note 6 to its audited financial statements included in its
Form 10-K filed with the SEC for the year ended December 31, 2018.
These amounts do not reflect the actual economic value that will be
realized by the named executive officer upon the vesting of the
stock options, the exercise of the stock options, or the sale of
the common stock underlying such stock options. |
|
(4) |
Amounts reported
represent the annual cash performance-based bonuses earned pursuant
to the achievement of certain corporate and individual performance
objectives during 2018. Please see the descriptions of the annual
performance bonuses in the prior sections entitled “ Annual Cash
Incentive Bonuses. ” |
|
(5) |
The grant date fair value of stock options calculated using
Black-Scholes calculations in accordance with Statement of
Financial Accounting Standards ASC Topic 718, “Stock Compensation,”
included the following inputs: volatility, 192%; expected term, 6
years; risk free interest rate, 2.58%; and dividend rate, 0%. The
volatility was calculated using historical Company share prices
which included the impact of a 100-to-1 reverse split which
occurred subject to a restructuring effective May 22, 2013.
Starting on January 1, 2019, the volatility calculation will no
longer include the impact of the unusual volatility observed in
2013 due in part to the 100-to-1 reverse split. As of the end of
the first quarter in 2019, the volatility used in the Black-Scholes
calculations was 71%. All of these stock options are out of the
money as of the Record Date. |
|
(6) |
Dr. Fardis became our Chief Executive Officer on June 1,
2016. |
|
(7) |
Amount represents a discretionary pro-rata annual bonus paid
for the 2016 fiscal year. |
|
(8) |
Amount represents a sign-on bonus. |
|
(9) |
Mr. Morris became our Chief Financial Officer on August 14,
2017. |
|
(10) |
Amount represents a discretionary pro-rata annual bonus paid
for the 2017 fiscal year. |
|
(11) |
Dr. Vogt was promoted to General Counsel on July 1, 2017 and
became a named executive officer on October 20, 2017. Amounts paid
to Dr. Vogt prior thereto represent compensation he received after
joining the Company on September 30, 2016 as Vice President,
Intellectual Property. |
Chief Executive Officer Pay Ratio
As a result of the recently adopted rules under the Dodd-Frank Act,
SEC rules now require companies to disclose the ratio of the total
annual compensation of the principal executive officer to the
median employee’s total annual compensation. We identified the
median employee by examining the 2018 total annual compensation for
all individuals, excluding our Chief Executive Officer, who were
employed by us on December 31, 2018. We included all employees. For
all employees, we examined total compensation, which included base
salary, incentive compensation plan payments, equity awards
consisting of stock options, and other compensation such as 401(k)
matching contributions. We annualized the compensation of all
permanent employees who were not employed by us for all of
2018.
After identifying the median employee based on total cash
compensation, we calculated annual total compensation for that
employee using the same methodology we use for our named executive
officers as set forth in the 2017 Summary Compensation Table above.
We then updated the median employee’s compensation as it stood in
2018, and similarly updated our Chief Executive Officer’s
compensation. The total annual compensation of the median employee
for 2018 was $312,125. The total annual compensation including
bonuses for our Chief Executive Officer for 2018 was $9,394,600
(which includes $8,284,600 for stock options based on a
Black-Scholes calculation using historical volatility that results
in a significant increase in total annual compensation, as
described in footnote (5) of the foregoing table, although all of
such options are out of the money). The total cash compensation for
our Chief Executive Officer including salary and bonus was
$1,080,000. The ratio of Chief Executive Officer total annual
compensation to the median employee total annual compensation for
2018 was approximately 30 to 1. The ratio of Chief Executive
Officer salary compensation to the median employee salary
compensation for 2018 was approximately 7 to 1.
2018
Grants of Plan-Based Awards
In 2018, we granted the following stock options to our named
executive officers under our 2014 Equity Incentive Plan, as amended
(as so amended, the “2014 Plan”):
Name |
|
Grant Date |
|
Number of
Securities
Underlying
Options (1)
|
|
|
Exercise
Price of
Option
Awards
($/Share)
|
|
|
Grant Date
Fair Value of
Stock and
Option Awards
($) (2)
|
|
Maria
Fardis, Ph.D. |
|
2/9/2018 |
|
|
500,000 |
(3) |
|
$ |
16.80 |
|
|
$ |
8,284,600 |
(4) |
|
(1) |
Represents shares of our common stock underlying options
awarded, each of which vest over time. |
|
(2) |
Represents the fair value of each equity award on the date of
grant, as computed in accordance with FASB ASC 718. |
|
(3) |
The option awards vest as to 33% of the shares underlying the
options on the first anniversary, with remaining option awards
vesting in equal quarterly installments over the two-year period
following such first anniversary. |
|
(4) |
The grant date fair value of stock options calculated using
Black-Scholes calculations in accordance with Statement of
Financial Accounting Standards ASC Topic 718, “Stock Compensation,”
included the following inputs: volatility, 192%; expected term, 6
years; risk free interest rate, 2.58%; and dividend rate, 0%. The
volatility was calculated using historical Company share prices
which included the impact of a 100-to-1 reverse split which
occurred subject to a restructuring effective May 22, 2013.
Starting on January 1, 2019, the volatility calculation will no
longer include the impact of the unusual volatility observed in
2013 due in part to the 100-to-1 reverse split. As of the end of
the first quarter in 2019, the volatility used in the Black-Scholes
calculations was 71%. All of these stock options are out of the
money as of the Record Date. |
Outstanding Equity Awards
The following table sets forth
outstanding stock options held by our named executive officers as
of December 31, 2018. All options were granted under the 2014 Plan.
In addition, the following table sets forth the restricted stock
units held by Dr. Fardis under a restricted stock unit agreement as
of December 31, 2018.
Outstanding Equity Awards at Year Ended December 31, 2018
|
|
Option Awards |
|
Stock Awards |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number |
|
|
Market |
|
|
|
|
|
Number of |
|
|
Number of |
|
|
|
|
|
|
|
|
of Shares |
|
|
Value of |
|
|
|
|
|
Securities |
|
|
Securities |
|
|
|
|
|
|
|
|
or Units |
|
|
Shares or |
|
|
|
|
|
Underlying |
|
|
Underlying |
|
|
|
|
|
|
|
|
of Stock |
|
|
Units of |
|
|
|
|
|
Unexercised |
|
|
Unexercised |
|
|
|
|
|
|
|
|
That |
|
|
Stock That |
|
|
|
|
|
Options |
|
|
Options |
|
|
Option |
|
|
Option |
|
|
Have Not |
|
|
Have Not |
|
|
|
|
|
(#) |
|
|
(#) |
|
|
Exercise |
|
|
Expiration |
|
|
Vested |
|
|
Vested |
|
|
|
Grant Date |
|
Exercisable |
|
|
Unexercisable |
|
|
Price ($) |
|
|
Date |
|
|
(#) |
|
|
($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maria Fardis, Ph.D. |
|
2/9/2018 |
|
|
- |
|
|
|
500,000 |
|
|
$ |
16.80 |
|
|
|
2/9/2028 |
|
|
|
- |
|
|
|
- |
|
|
|
6/1/2016 |
|
|
312,494 |
|
|
|
187,506 |
|
|
$ |
5.87 |
|
|
|
6/1/2026 |
|
|
|
- |
|
|
|
- |
|
|
|
6/1/2016 |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
68,749 |
|
|
$ |
608,429 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Timothy E. Morris |
|
8/14/2017 |
|
|
104,166 |
|
|
|
145,834 |
|
|
$ |
5.05 |
|
|
|
8/14/2027 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frederick G. Vogt, Ph.D., Esq. |
|
12/29/2017 |
|
|
12,466 |
|
|
|
24,934 |
|
|
$ |
8.00 |
|
|
|
12/29/2027 |
|
|
|
- |
|
|
|
- |
|
|
|
3/16/2017 |
|
|
7,350 |
|
|
|
5,250 |
|
|
$ |
7.45 |
|
|
|
3/16/2027 |
|
|
|
- |
|
|
|
- |
|
|
|
11/14/2016 |
|
|
150,000 |
|
|
|
50,000 |
|
|
$ |
7.55 |
|
|
|
11/14/2026 |
|
|
|
- |
|
|
|
- |
|
Option
Exercises and Restricted Stock Units Vested
The following table contains information for our named executive
officers concerning the option awards that were exercised and
restricted stock units that vested during the year ended December
31, 2018:
|
|
Option Awards |
|
|
Stock Awards |
|
Name |
|
Number of
Shares
Acquired on
Exercise
|
|
|
Value
Realized on
Exercise ($)
|
|
|
Number of
Shares Acquired
on Vesting
|
|
|
Value Realized
on
Vesting ($) (1)
|
|
Maria
Fardis, Ph.D. |
|
|
- |
|
|
$ |
- |
|
|
|
45,833 |
|
|
$ |
405,622 |
|
|
(1) |
Represents the closing price
of our common stock on the vesting date multiplied by the number of
RSUs that vested on that date. |
Potential Payments Upon Termination/Change of Control
Our named executive officer employment agreements have no specified
term, and the employment relationship may be terminated by the
named executive officers or by us at any time. The following table
sets forth information regarding payments that would have been made
to our named executive officers if they suffered an involuntary
termination without cause, including a termination in connection
with a change of control, and such termination payments were
triggered on December 31, 2018. The closing price per share of our
common stock on the Nasdaq Global Market on December 31, 2018 was
$8.85.
|
|
Change in Control/Acceleration
and Termination
|
|
|
Termination Without Cause |
|
|
|
Salary
and |
|
|
Equity |
|
|
Salary
and |
|
|
Equity |
|
|
|
Bonus |
|
|
Acceleration |
|
|
Bonus |
|
|
Acceleration |
|
Name |
|
($) |
|
|
($) |
|
|
($) |
|
|
($) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Maria
Fardis, Ph.D. |
|
$ |
1,200,000 |
(1) |
|
$ |
558,768 |
(2) |
|
$ |
1,200,000 |
(1) |
|
$ |
389,063 |
(3) |
Timothy E.
Morris |
|
$ |
630,000 |
(4) |
|
$ |
554,169 |
(5) |
|
$ |
225,000 |
(6) |
|
$ |
- |
|
Frederick G. Vogt,
Ph.D., Esq. |
|
$ |
187,500 |
(6) |
|
$ |
93,544 |
(5) |
|
$ |
337,500 |
(7) |
|
$ |
93,544 |
(5) |
|
(1) |
Dr. Fardis would have received one year of her annual base
salary, and the target bonus for that year. In addition, Dr. Fardis
may be entitled to additional severance payments under certain
circumstances pursuant to her Executive Employment Agreement. |
|
(2) |
Upon a change of control, all of Dr. Fardis’ unvested
time-based stock options and all unvested restricted stock units
would vest immediately, and Dr. Fardis would have twelve months
from the date of termination within which to exercise her vested
options. |
|
(3) |
Upon termination, the vesting of Dr. Fardis’ stock options
would accelerate by one year, Dr. Fardis would have twelve months
from the date of termination within which to exercise her vested
options, and the vesting of her time-based restricted stock units
would have been accelerated by one year. |
|
(4) |
Mr. Morris would have received one year of his annual base
salary, and his pro-rated target bonus for that year. |
|
(5) |
Upon termination, all equity awards would have vested and the
named executive officer would have been given three months in which
to exercise the equity awards. |
|
(6) |
The named executive officer would have received six months of
his current annual base salary. |
|
(7) |
The named executive officer would have received six months of
his annual base salary, and his pro-rated target bonus for that
year assuming the bonus was earned in 2018. |
Employment Agreements
The following is a summary of the employment agreements we entered
into with our three named executive officers, Dr. Fardis, Mr.
Morris and Dr. Vogt, who continue to serve as executive officers as
of the Record Date.
Maria Fardis, Ph.D . On June 1, 2016, we entered into an
Executive Employment Agreement with Maria Fardis, Ph.D., under
which Dr. Fardis agreed to serve as our President and Chief
Executive Officer. In her employment agreement, we have agreed to
pay Dr. Fardis an annual base salary of $500,000 and a signing
bonus of $150,000. In addition, on June 1, 2016, we granted to Dr.
Fardis under our 2014 Plan stock options to purchase an aggregate
of 500,000 shares of our common stock and entered into a restricted
stock unit agreement pursuant to which we granted her 550,000
non-transferrable restricted stock units, outside the 2014 Plan, as
an inducement of employment pursuant to the exception to the Nasdaq
Stock Market rules that generally require stockholder approval of
equity incentive plans. Dr. Fardis’ stock options have an exercise
price per share of $5.87, vested 25% (125,000 shares) on June 1,
2017, with remaining options vesting in equal monthly installments
over the 36-month period following June 1, 2017. The restricted
stock units vest in installments as follows: (i) 137,500 restricted
stock units vested upon the first anniversary of the effective date
of her employment agreement; (ii) 275,000 restricted stock units
vested upon the satisfaction of certain clinical trial milestones;
and (iii) 137,500 restricted stock units vest in equal monthly
installments over the 36-month period following the first
anniversary of the effective date of her employment, in each case,
provided that Dr. Fardis has been continuously employed with us as
of such vesting dates. Dr. Fardis will also be eligible to
participate in our annual incentive compensation program as
approved by our Board of Directors, with target potential annual
incentive compensation of 50% of her base annual salary. On
February 9, 2018, the Board of Directors increased Dr. Fardis’
annual base salary from $500,000 to $600,000 and increased her
annual cash bonus target as a percentage of her annual base salary
from 50% to 100% of her base salary.
If we terminate Dr. Fardis’ employment agreement without “cause”
(as defined in her employment agreement), or she terminates her
employment for “good reason,” Dr. Fardis will be entitled to
receive her base salary through the date of termination, any
incentive compensation that was earned to the date of termination,
and a severance payment equal to twelve months’ base annual salary
and a full year’s Incentive Compensation. In addition, Dr. Fardis
may be entitled to additional severance payments under certain
circumstances. Further, there will be a twelve-month acceleration
of her unvested stock options and unvested time-based restricted
stock units, and she will have twelve months from the date of
termination within which to exercise her vested options.
In the event of a “change of control” (as defined in her employment
agreement) of the Company, all of Dr. Fardis’ unvested time-based
stock options and all unvested restricted stock units will vest
immediately, whether or not her employment is terminated. If,
either before or after a change in control, Dr. Fardis’ employment
is terminated by us for any reason other than “cause” or she were
to terminate her employment for “good reason,” Dr. Fardis will be
entitled to receive all of the cash payments she would be entitled
to receive in the event we were to terminate her employment without
“cause.”
Timothy E. Morris . On August 4, 2017, entered into an
Executive Employment Agreement with Mr. Morris pursuant to which
agreed to serve as our Chief Financial Officer, effective August
14, 2017. Under his employment agreement, we agreed to pay Mr.
Morris an annual base salary of $450,000. In connection with his
employment, we granted Mr. Morris a ten-year incentive stock option
to purchase up to an aggregate of 250,000 shares of common stock at
an exercise price of $5.05, which was equal to the closing trading
price of our common stock on the date of his employment. Provided
that Mr. Morris is still employed with us on the following dates,
the Option will vest in installments as follows: (i) options for
the purchase of one-third of the 250,000 shares shall vest on
August 14, 2018; and (ii) the remaining options shall vest as to
one-twelfth of 250,000 shares at the end of each quarter over the
next two years after August 14, 2018. Mr. Morris will be eligible
to participate in our annual cash bonus program applicable to
executive employees, as approved annually by the Board of
Directors. The maximum potential amount payable to Mr. Morris under
the bonus plan, if earned, is 40% of his base salary earned during
the applicable calendar year. Compensation under the bonus plan
will be conditioned on the satisfaction of individual and corporate
objectives, as established in writing by our Compensation
Committee, and on the condition that Mr. Morris is still employed
by us on the payment date of the bonus compensation. Mr. Morris’s
annual salary was increased to $460,000, effective February 15,
2019.
Mr. Morris’s employment is “at-will” and not be for any
pre-determined period of time. If the Company terminates Mr. Morris
without cause, Mr. Morris will receive (i) his base salary through
the date of termination; (ii) a severance payment equal to six
months of his then base salary, provided he satisfies the severance
conditions set forth in his employment agreement; and (iii) any
benefits required to be paid in accordance with applicable benefit
plans through the date of termination. If Mr. Morris’ employment is
terminated without cause in connection with a “change of control”
(as defined in the employment agreement) of the Company, in
addition to the foregoing termination payments, Mr. Morris will
receive a change of control severance payment equal to six months
of his then base salary, his prorated Incentive Compensation, and
any of his time-based unvested stock options will become fully
vested.
Frederick G. Vogt, Ph.D., Esq. On August 7, 2016, we entered
into an Executive Employment Agreement with Frederick G. Vogt,
Ph.D., Esq., under which Dr. Vogt agreed to serve as our Vice
President of Intellectual Property, effective September 30, 2016.
In his employment agreement, we agreed to pay Dr. Vogt an annual
base salary of $300,000 and a signing bonus of $50,000. In
addition, effective as of September 30, 2016, we granted him stock
options to purchase an aggregate of 200,000 shares of our common
stock. The stock options have an exercise price of $8.23, equal to
the fair market value of the common stock at the close of trading
on the Nasdaq Global Market as of the date of grant. The employment
agreement provided that the foregoing stock options would vest in
three installments as follows: (i) options for the purchase of
66,672 shares vested on the one-year anniversary of the effective
date of his employment; and (ii) the remaining stock options vest
as to 16,672 shares at the end of each quarter over the next two
years. Dr. Vogt is eligible to participate in our annual incentive
compensation program as approved by our Board of Directors, with
target potential annual incentive compensation of 30% of his base
annual salary earned during the applicable calendar year, which was
increased to 40% when he was promoted to General Counsel on July 1,
2017. Dr. Vogt’s annual salary was increased to $375,000, effective
February 1, 2018, and to $400,000, effective February 15, 2019.
Dr. Vogt’s employment is “at-will”, and either party can terminate
the employment agreement and Dr. Vogt’s employment without cause at
any time. If we terminate Dr. Vogt’s employment without cause (as
defined in his agreement), whether or not in connection with a
“change of control” (as defined in the agreement), Dr. Vogt will
receive a severance payment equivalent to six months of his
then-current base salary and all of Dr. Vogt’s unvested stock
options will become fully vested, and he shall have six months from
the date of termination within which to exercise his vested
options.
2010
Equity Compensation Plan
On March 29, 2010, our Board of Directors adopted the 2010 Equity
Compensation Plan (the “2010 Plan”) pursuant to which the Board of
Directors reserved an aggregate of 35,000 shares of common stock
for future issuance. The 2010 Plan provided for awards of incentive
stock options, non-qualified stock options, rights to acquire
restricted stock, rights to acquire unrestricted stock, and stock
appreciation rights, or SARs, but since we did not obtain
stockholder approval of the 2010 Plan within twelve months after
the date our Board of Directors adopted the 2010 Plan, incentive
stock options could not be granted thereunder. As of October 2011,
options for the issuance of all 35,000 shares had been granted. As
of December 31, 2017, as a result of certain forfeitures by former
employees, 13,250 shares were available for future grant under the
2010 Plan. However, we have decided not to grant any awards under
the 2010 Plan in the future.
2011
Equity Incentive Plan
As of October 14, 2011, we adopted our 2011 Equity Incentive Plan
(the “2011 Plan”). Employees, directors, consultants and advisors
of the Company are eligible to participate in the 2011 Plan. The
2011 Plan initially had 180,000 shares of common stock reserved for
issuance in the form of incentive stock options, non-qualified
options, common stock, and grant appreciation rights. The 2011 Plan
was not approved by our stockholders within the required one-year
period following its adoption and, accordingly, no incentive stock
options can be granted under the 2011 Plan. In August 2013 our
Board of Directors and a majority of our stockholders approved an
amendment to increase the number of shares available under the 2011
Plan from 180,000 shares to 1,900,000 shares, and an amendment to
increase the number options or other awards that can be granted to
any one person during a twelve-month period from 50,000 shares to
300,000 shares. The foregoing amendment to the 2011 Plan became
effective in September 2013. As of December 31, 2017, as a result
of certain forfeitures by former employees, 592,490 shares were
available for future grant under the 2011 Plan.
2014
Equity Incentive Plan
On September 19, 2014, our Board of Directors adopted the Iovance
Biotherapeutics, Inc. 2014 Equity Incentive Plan (the “2014 Plan”).
The 2014 Plan was approved by our stockholders at the Annual
Meeting of Stockholders held in November 2014. On June 10, 2016,
our Board of Directors amended the 2014 Plan to increase the total
number of shares that can be issued under the 2014 Plan to
9,000,000 shares. The foregoing increase in the number of shares
available under the 2014 Plan was approved by our stockholders at
the Annual Meeting of Stockholders held on August 16, 2016.
The 2014 Plan contains provisions that are designed to protect our
stockholders’ interests and to reflect strong corporate governance
practices, including:
|
· |
Continued broad-based eligibility for equity awards . We
have granted stock options to our full-time employees. By doing so,
we link employee interests with stockholder interests throughout
the organization and motivate our employees to act as owners of the
business. |
|
· |
Stockholder approval is required for additional shares .
The 2014 Plan does not contain an annual “evergreen” provision. The
2014 Plan authorizes a fixed number of shares available under the
plan, so that stockholder approval is required to issue any
additional shares beyond those already approved under the 2014
Plan. |
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No discount stock options or stock appreciation rights .
All stock options and stock appreciation rights are intended to
have an exercise price equal to or greater than the fair market
value of our common stock on the date the stock option or stock
appreciation right is granted. |
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The Board is prohibited from taking action related to the
2014 Plan that would be treated as a repricing under generally
accepted accounting principles without the approval of our
stockholders . The 2014 Plan requires that the Board of
Directors obtain the approval of our stockholders before taking
actions that would be deemed to be a repricing under generally
accepted accounting principles, including reducing the exercise
price of any outstanding stock option and/or cancelling and
re-granting any outstanding stock option to reduce the exercise
price of the option. |
General . The 2014 Plan provides for awards of incentive
stock options, non-statutory stock options, rights to acquire
restricted stock, and stock appreciation rights, or SARs. Incentive
stock options (“ISOs”) granted under the 2014 Plan are intended to
qualify as “incentive stock options” within the meaning of Section
422 of the Code. Non-qualified stock options (NQSOs) granted under
the 2014 Plan are not intended to qualify as incentive stock
options under the Code. See “Certain Federal Income Tax
Consequences” below for a discussion of the principal federal
income tax consequences of awards under the 2014 Plan.
Purpose . Our Board of Directors adopted the 2014 Plan to
provide a means by which our employees, directors and consultants
may be given an opportunity to benefit from increases in the value
of our common stock, to assist in attracting and retaining the
services of such persons, to bind the interests of eligible
recipients more closely to our Company’s interests by offering them
opportunities to acquire shares of our common stock and to afford
such persons stock-based compensation opportunities that are
competitive with those afforded by similar businesses.
Administration . Our Board of Directors has authorized our
Compensation Committee to administer the 2014 Plan, although the
Board of Directors also, from time to time, participates in the
administration of the 2014 Plan and the grant of options. Subject
to the provisions of the 2014 Plan, our Compensation Committee has
the power to determine in its discretion: (a) to grant options and
SARs and grant or sell restricted stock; (b) to determine the fair
market value of the shares of common stock subject to options or
other awards; (c) to determine the exercise price of options
granted, which shall be no less than the fair market value of any
common stock on the date of grant, the economic terms of SARs
granted, which shall provide for a benefit of the appreciation on
common stock over not less than the value of our common stock on
the date of grant, or the offering price of restricted stock; (d)
to determine the persons to whom, and the time or times at which,
options or SARs shall be granted or restricted stock granted or
sold, and the number of shares subject to each option or SAR or the
number of shares of restricted stock granted or sold; (e) to
construe and interpret the terms and provisions of the 2014 Plan,
of any applicable agreement and all options and SARs granted under
the 2014 Plan, and of any restricted stock award under the 2014
Plan; (f) to prescribe, amend, and rescind rules and regulations
relating to the 2014 Plan; (g) to determine the terms and
provisions of each option and SAR granted and award of restricted
stock (which need not be identical), including but not limited to,
the time or times at which options and SARs shall be exercisable or
the time at which the restrictions on restricted stock shall lapse;
(h) with the consent of the grantee, to rescind any award or
exercise of an option or SAR; (i) to modify or amend the terms of
any option, SAR or restricted stock (with the consent of the
grantee or holder of the restricted stock if the modification or
amendment is adverse to the grantee or holder); (j) to accelerate
or defer (with the consent of the grantee) the exercise date of any
option or SAR or the date on which the restrictions on restricted
stock lapse; (k) to issue shares of restricted stock to an optionee
in connection with the accelerated exercise of an option by such
optionee; (l) to authorize any person to execute on behalf of our
Company any instrument evidencing the grant of an option, SAR or
award of restricted stock; (m) to determine the duration and
purposes of leaves of absence which may be granted to participants
without constituting a termination of their employment for the
purpose of the 2014 Plan; and (n) to make all other determinations
deemed necessary or advisable for the administration of the 2014
Plan, any applicable agreement, option, SAR or award of restricted
stock.
The Compensation Committee granted our Chief Executive Officer the
authority to grant options to (i) newly hired non-executive
employees, and (ii) non-executive employees as part of year-end
bonus compensation. The Compensation Committee established a limit
on the number of shares that may be granted and certain other
parameters within which non-executive options could be granted by
our Chief Executive Officer.
Eligibility . Incentive stock options may be granted under
the 2014 Plan only to employees of our Company and its affiliates.
Employees, directors and consultants of our Company and its
affiliates are eligible to receive all other types of awards under
the 2014 Plan.
Terms of Options and SARs . The exercise price of incentive
stock options may not be less than the fair market value of our
common stock subject to the option on the date of the grant and, in
some cases, may not be less than 110% of such fair market value.
The exercise price of nonstatutory options also may not be less
than the fair market value of our common stock on the date of
grant.
Options granted under the 2014 Plan may be exercisable in
increments, or “vest,” as determined by our Board of Directors. Our
Board of Directors has the power to accelerate the time as of which
an option may vest or be exercised, with the consent of the
optionee. The maximum term of options and SARs under the 2014 Plan
is ten years, except that in certain cases the maximum term is five
years. Options and SARs awarded under the 2014 Plan generally will
terminate 90 days after termination of the participant’s service,
subject to certain exceptions.
A recipient may not transfer an incentive stock option otherwise
than by will or by the laws of descent and distribution. During the
lifetime of the recipient, only the recipient may exercise an
option or SAR. Our Board of Directors may grant nonstatutory stock
options and SARs that are transferable to the extent provided in
the applicable written agreement.
Terms of Restricted Stock Awards . Our Board of Directors or
the Compensation Committee may issue shares of restricted stock
under the 2014 Plan as a grant or for such consideration, including
services, and, subject to the Sarbanes-Oxley Act of 2002,
promissory notes, as determined in its sole discretion.
Shares of restricted stock acquired under a restricted stock
purchase or grant agreement may, but need not, be subject to
forfeiture to us or other restrictions that will lapse in
accordance with a vesting schedule to be determined by our Board of
Directors or the Compensation Committee. In the event a recipient’s
employment or service with our Company terminates, any or all of
the shares of common stock held by such recipient that have not
vested as of the date of termination under the terms of the
restricted stock agreement may be forfeited to our Company in
accordance with such restricted stock agreement.
Rights to acquire shares of our common stock under the restricted
stock purchase or grant agreement shall be transferable by the
recipient only upon such terms and conditions as are set forth in
the restricted stock agreement, as our Board of Directors shall
determine in its discretion, so long as shares of common stock
awarded under the restricted stock agreement remain subject to the
terms of such agreement
Adjustment Provisions . If our common stock is changed by
reason of a stock split, reverse stock split, stock dividend,
recapitalization, combination or reclassification, then the number
and class of shares of stock subject to each option and SAR
outstanding under the 2014 Plan, and the exercise price of each
outstanding option and the base value of SAR, will be automatically
and proportionately adjusted, except that our company will not be
required to issue fractional shares as a result of any such
adjustments. Such adjustment in any outstanding option or SAR will
be made without change in the total price applicable to the
unexercised portion of the option or SAR, but with a corresponding
adjustment in the price for each share covered by the unexercised
portion of the option or SAR.
Effect of Certain Corporate Events . Except as otherwise
provided in an applicable employment agreement, in the event of (i)
a liquidation or dissolution of our Company, (ii) a merger or
consolidation of our Company with or into another corporation or
entity (other than a merger with a wholly-owned subsidiary), or
(iii) a sale of all or substantially all of the assets of our
Company in a single transaction or a series of related
transactions, all options and SARs will terminate upon consummation
of the transaction unless our Board of Directors determines that
they will survive. If our Board of Directors determines that
outstanding options and SARs will survive, and if our Company will
not be the surviving entity in the transaction, our Board of
Directors may provide that the outstanding options and SARs will be
assumed or an equivalent option or SAR substituted by an applicable
successor entity or any affiliate of the successor entity. If
outstanding options and SARs are to terminate upon consummation of
the corporate transaction, any options or SARs outstanding
immediately prior to the consummation of the corporate transaction
will be deemed fully vested and exercisable immediately prior to
the consummation of the corporate transaction (provided that the
option or SAR has not expired by its terms and that the grantee
takes all steps necessary to exercise the option or SAR prior to
the corporate transaction as required by the agreement evidencing
the option or SAR).
Duration, Amendment and Termination . Our Board of Directors
may suspend or terminate the 2014 Plan without stockholder approval
or ratification, subject to certain restrictions, at any time or
from time to time. Unless sooner terminated, the 2014 Plan will
terminate ten years from the date of its adoption by our Board of
Directors, or on September 19, 2024.
Our Board of Directors may also amend the 2014 Plan at any time,
and from time to time. However, except as relates to adjustments
upon changes in common stock, no amendment will be effective unless
approved by our stockholders to the extent stockholder approval is
necessary to preserve incentive stock option treatment for federal
income tax purposes. Our Board of Directors may submit any other
amendment to the 2014 Plan for stockholder approval in its
discretion.
Certain Federal Income Tax
Consequences of the 2014 Plan
Section 162(m) . For the purposes of complying with the
requirements under Section 162(m) of the Code relating to the
deductibility for federal income tax purposes of employee expense
associated with awards under the 2014 Plan of more than $1 million
to “covered employees” within the meaning of Section 162(m), the
2014 Plan as originally approved by our Board of Directors and our
stockholders provided that no eligible person shall be granted
options or other awards during any twelve-month period covering
more than 500,000 shares. This so-called Section 162(m) limitation
was increased to 550,000 by the amendment to the 2014 Plan adopted
by our board of directors on June 1, 2016. The amended limitation
will not satisfy the requirements to Section 162(m) unless and
until the limitation is approved by our stockholders. We are not
seeking stockholder approval of this recent amendment at the Annual
Meeting, but our Board of Directors may determine to present the
amended Section 162(m) limitation for stockholder approval in the
future.
Non-qualified Stock Options . There will be no federal
income tax consequences to either the Company or the participant
upon the grant of a non-discounted NQSO. However, the participant
will realize ordinary income on the exercise of the NQSO in an
amount equal to the excess of the fair market value of the common
stock acquired upon the exercise of such option over the exercise
price, and the Company will receive a corresponding deduction. The
gain, if any, realized upon the subsequent disposition by the
participant of the common stock will constitute short-term or
long-term capital gain, depending on the participant’s holding
period.
Incentive Stock Options . There will be no regular federal
income tax consequences to either the Company or the participant
upon the grant or exercise of an ISO. If the participant does not
dispose of the shares of common stock for two years after the date
the option was granted and one year after the acquisition of such
shares of common stock, the difference between the aggregate option
price and the amount realized upon disposition of the shares of
common stock will constitute long-term capital gain or loss, and
the Company will not be entitled to a federal income tax deduction.
If the shares of common stock are disposed of in a sale, exchange
or other “disqualifying disposition” during those periods, the
participant will realize taxable ordinary income in an amount equal
to the excess of the fair market value of the common stock
purchased at the time of exercise over the aggregate option price
(adjusted for any loss of value at the time of disposition), and
the Company will be entitled to a federal income tax deduction
equal to such amount, subject to the limitations under Section
162(m) of the Code.
While the exercise of an incentive stock option does not result in
current taxable income, the excess of (1) the fair market value of
the option shares at the time of exercise over (2) the exercise
price, will be an item of adjustment for purposes of determining
the participant’s alternative minimum tax income.
SARs . A participant receiving an SAR will not recognize
income, and the Company will not be allowed a tax deduction, at the
time the award is granted. When a participant exercises the SAR,
the amount of cash and the fair market value of any shares of
common stock received will be ordinary income to the participant
and will be allowed as a deduction for federal income tax purposes
to the Company, subject to limitations under Section 162(m) of the
Code. In addition, the Board of Directors or the Compensation
Committee, may at any time, in its discretion, declare any or all
awards to be fully or partially exercisable and may discriminate
among participants or among awards in exercising such
discretion.
Restricted Stock . Unless a participant makes an election to
accelerate recognition of the income to the date of grant, a
participant receiving a restricted stock award will not recognize
income, and the Company will not be allowed a tax deduction, at the
time the award is granted. When the restrictions lapse, the
participant will recognize ordinary income equal to the fair market
value of the common stock, and the Company will be entitled to a
corresponding tax deduction at that time, subject to the
limitations under Section 162(m) of the Code.
2018
Equity Incentive Plan
On March 9, 2018, our Board of Directors adopted the Iovance
Biotherapeutics, Inc. 2018 Equity Incentive Plan (the “2018 Plan”).
The 2018 Plan was approved by our stockholders at the Annual
Meeting of Stockholders held on June 6, 2018. Except with respect
to awards then outstanding, unless sooner terminated, the 2018 Plan
will expire on the tenth anniversary of the date it was approved by
stockholders and no further awards may be granted after such
date.
The 2018 Plan contains provisions that are designed to protect our
stockholders’ interests and to reflect strong corporate governance
practices, including:
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Stockholder approval is required for additional shares .
The 2018 Plan does not contain an annual “evergreen” provision that
provides for automatic increases of shares on an ongoing basis. The
2018 Plan authorizes a fixed number for our share reserve, so that
stockholder approval is required to issue any additional shares
from the 2018 Plan once we have used all shares available for
issuance. The 2018 Plan is not an inducement plan, and therefore
requires stockholder approval under the Nasdaq Stock Market
Rules. |
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No discounted stock options or stock appreciation rights
. All stock options and stock appreciation rights will have an
exercise price equal to or greater than the fair market value of
our common stock on the date the stock option or stock appreciation
right is granted. |
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Repricing is not allowed without stockholder approval .
The 2018 Plan prohibits the repricing or exchange of underwater
stock options and stock appreciation rights without prior
stockholder approval. |
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Reasonable share counting provisions. In general, when
awards granted under the 2018 Plan lapse or are canceled, the
shares reserved for those awards will be returned to the share
reserve and be available for future awards. However, the 2018 Plan
prohibits shares tendered or withheld to pay the exercise price of
an award or for payment of taxes to be returned to our share
reserve. |
Administration . Our Board of Directors has authorized our
Compensation Committee to administer the 2018 Plan, although the
Board of Directors also, from time to time, participates in the
administration of the 2018 Plan and the grant of options. The
Compensation Committee has the authority to determine the terms and
conditions of any agreements evidencing any awards granted under
the 2018 Plan and to adopt, alter and repeal rules, guidelines and
practices relating to the 2018 Plan. The Compensation Committee has
full discretion to administer and interpret the 2018 Plan and to
adopt such rules, regulations and procedures as it deems necessary
or advisable and to determine, among other things, the time or
times at which the awards may be exercised and whether and under
what circumstances an award may be exercised.
Eligibility . Any current or prospective employees,
directors, officers, consultants or advisors of the Company or its
affiliates who are selected by the Compensation Committee are
eligible for awards under the 2018 Plan. The Compensation Committee
will have the sole and complete authority to determine who will be
granted an award under the 2018 Plan.
Number of Shares Authorized . Pursuant to the 2018 Plan, we
have reserved an aggregate of 6,000,000 shares of our common stock
for issuance of awards to be granted thereunder. All of the shares
of our common stock reserved under the plan may be issued as
incentive stock options under the 2018 Plan. The maximum number of
equity awards that may be awarded to the non-employee members of
the Board of Directors for serving on the Board of Directors, shall
be an amount equal to the product of 50,000 times the number of
non-employee members on the Board of Directors; provided, that the
foregoing limitation shall not apply in respect of any awards
issued to a non-employee director in respect of (i) any one-time
equity grant upon a non-employee director’s initial appointment or
election to the Board of Directors, or (ii) equity grants for
services provided to the Company other than services as a member of
the Board of Directors. The total amount of awards granted annually
to the non-employee members of the Board of Directors may allocated
amongst the non-employee members of the Board of Directors in a
manner determined by the Board of Directors. If any award granted
under the 2018 Plan expires, terminates, or is canceled or
forfeited without being settled, vested or exercised, shares of our
common stock subject to such award will again be made available for
future grants. Any shares that are surrendered or tendered to pay
the exercise price of an award or to satisfy withholding taxes
owed, or any shares reserved for issuance, but not issued, with
respect to settlement of a stock appreciation right, will not again
be available for grants under the 2018 Plan.
Change in Capitalization . If there is a change in our
capitalization in the event of a stock or extraordinary cash
dividend, recapitalization, stock split, reverse stock split,
reorganization, merger, consolidation, split-up, split-off,
spin-off, combination, repurchase or exchange of shares of our
common stock or other relevant change in capitalization or
applicable law or circumstances, such that the Compensation
Committee determines that an adjustment to the terms of the 2018
Plan (or awards thereunder) is necessary or appropriate, then the
Compensation Committee shall make adjustments in a manner that it
deems equitable. Such adjustments may be to the number of shares
reserved for issuance under the 2018 Plan, the number of shares
covered by awards then outstanding under the 2018 Plan, the
limitations on awards under the 2018 Plan, or the exercise price of
outstanding options, or such other equitable substitution or
adjustments as the Compensation Committee may determine
appropriate.
Awards Available for Grant . The Compensation Committee may
grant awards of non-qualified stock options, incentive (qualified)
stock options, stock appreciation rights (“SARs”), restricted stock
awards, restricted stock units, other stock-based awards, other
cash-based awards or any combination of the foregoing. Awards may
be granted under the 2018 Plan in assumption of, or in substitution
for, outstanding awards previously granted by an entity acquired by
the Company or with which the Company combines, which are referred
to herein as “Substitute Awards.”
Stock Options . The Compensation Committee will be
authorized to grant options to purchase shares of our common stock
that are either “qualified,” meaning they are intended to satisfy
the requirements of Section 422 of the Code for incentive stock
options, or “non-qualified,” meaning they are not intended to
satisfy the requirements of Section 422 of the Code. All options
granted under the 2018 Plan shall be non-qualified unless the
applicable award agreement expressly states that the option is
intended to be an incentive stock option. Options granted under the
2018 Plan will be subject to the terms and conditions established
by the Compensation Committee. Under the terms of the 2018 Plan,
the exercise price of the options will not be less than the fair
market value (or 110% of the fair market value in the case of an
incentive stock option granted to a 10% stockholder) of our common
stock on the date of grant (except with respect to Substitute
Awards). Options granted under the 2018 Plan will be subject to
such terms, including the exercise price and the conditions and
timing of exercise, as may be determined by the Compensation
Committee and specified in the applicable award agreement. The
maximum term of an option granted under the 2018 Plan will be ten
years from the date of grant (or five years in the case of an
incentive stock option granted to a 10% stockholder), provided that
if the term of a non-qualified option would expire at a time when
trading in the shares of our common stock is prohibited by the
Company’s insider trading policy, the option’s term shall be
extended automatically until the 30th day following the expiration
of such prohibition (as long as such extension shall not violate
Section 409A of the Code). Payment in respect of the exercise of an
option may be made in cash, by check, by cash equivalent or by such
other method as the Compensation Committee may permit in its sole
discretion, including, to the extent permitted by the Compensation
Committee, (i) by delivery of shares of our common stock valued at
the fair market value on the date the option is exercised, provided
that such shares are not subject to any pledge or other security
interest, (ii) by delivery of other property having a fair market
value equal to the exercise price and all applicable required
withholding taxes, (iii) if there is a public market for the shares
of our common stock at such time, by means of a broker-assisted
cashless exercise mechanism or (iv) by means of a “net exercise”
procedure effected by withholding the minimum number of shares
otherwise deliverable in respect of an option that are needed to
pay the exercise price and up to the maximum withholding taxes, or
any combination of the foregoing. In all events of cashless or net
exercise, any fractional shares of common stock will be settled in
cash.
Stock Appreciation Rights . The Compensation Committee will
be authorized to award SARs under the 2018 Plan. SARs will be
subject to the terms and conditions established by the Compensation
Committee. A SAR is a contractual right that allows a participant
to receive, in the form of either cash, shares or any combination
of cash and shares, the appreciation, if any, in the value of a
share over a certain period of time. An option granted under the
2018 Plan may include SARs, and SARs may also be awarded to a
participant independent of the grant of an option. SARs granted in
connection with an option shall be subject to terms similar to the
option corresponding to such SARs, including with respect to
vesting and expiration. Except as otherwise provided by the
Compensation Committee (in the case of Substitute Awards or SARs
granted in tandem with previously granted options), the strike
price per share of our common stock underlying each SAR shall not
be less than 100% of the fair market value of such share,
determined as of the date of grant and the maximum term of a SAR
granted under the 2018 Plan will be ten years from the date of
grant.
Restricted Stock . The Compensation Committee will be
authorized to grant restricted stock under the 2018 Plan, which
will be subject to the terms and conditions established by the
Compensation Committee. Restricted stock is common stock that is
generally non-transferable and is subject to other restrictions
determined by the Compensation Committee for a specified period.
Any accumulated dividends will be payable at the same time that the
underlying restricted stock vests.
Restricted Stock Unit Awards . The Compensation Committee
will be authorized to grant restricted stock unit awards, which
will be subject to the terms and conditions established by the
Compensation Committee. A restricted stock unit award, once vested,
may be settled in a number of shares of our common stock equal to
the number of units earned, in cash equal to the fair market value
of the number of shares of our common stock earned in respect of
such restricted stock unit award or in a combination of the
foregoing, at the election of the Compensation Committee.
Restricted stock units may be settled at the expiration of the
period over which the units are to be earned or the Compensation
Committee may establish a program for deferred delivery, in
compliance with Section 409A of the Code. To the extent provided in
an award agreement, the holder of outstanding restricted stock
units shall be entitled to be credited with dividend equivalent
payments upon the payment by us of dividends on shares of our
common stock, either in cash or, at the sole discretion of the
Compensation Committee, in shares of our common stock having a fair
market value equal to the amount of such dividends (or a
combination of cash and shares), and interest may, at the sole
discretion of the Compensation Committee, be credited on the amount
of cash dividend equivalents at a rate and subject to such terms as
determined by the Compensation Committee, which accumulated
dividend equivalents (and interest thereon, if applicable) shall be
payable at the same time that the underlying restricted stock units
are settled.
Other Stock-Based Awards . The Compensation Committee will
be authorized to grant awards of unrestricted shares of our common
stock, rights to receive grants of awards at a future date, other
awards denominated in shares of our common stock, or awards that
provide for cash payments based in whole or in part on the value of
our common stock under such terms and conditions as the
Compensation Committee may determine and as set forth in the
applicable award agreement.
Effect of a Change in Control . Unless otherwise provided in
an award agreement, or any applicable employment, consulting,
change in control, severance or other agreement between us and a
participant, in the event of a change in control (as defined in the
2018 Plan), if a participant’s employment or service is terminated
by us other than for cause (and other than due to death or
disability) within the 12-month period following a change in
control, then (i) all then-outstanding options and SARs held by
such participant will become immediately exercisable as of such
participant’s date of termination with respect to all of the shares
subject to such option or SAR; and/or (ii) the restricted period
(and any other conditions) shall expire as of such participant’s
date of termination with respect to all of the then-outstanding
shares of restricted stock or restricted stock units held by such
participant (including without limitation a waiver of any
applicable performance goals); provided that with respect to any
award whose vesting or exercisability is otherwise subject to the
achievement of performance conditions, the portion of such award
that shall become fully vested and immediately exercisable shall be
based on the assumed achievement of actual or target performance as
determined by the Compensation Committee and, unless otherwise
determined by the Compensation Committee, prorated for the number
of days elapsed from the grant date of such award through the date
of termination. In addition, the Compensation Committee may in its
discretion and upon at least ten days’ notice to the affected
persons, cancel any outstanding award and pay the holders, in cash,
securities or other property (including of the acquiring or
successor company), or any combination thereof, the value of such
awards based upon the price per share of the Company’s common stock
received or to be received by other shareholders of the Company in
connection with the transaction (it being understood that any
option or SAR having a per-share exercise price or strike price
equal to, or in excess of, the fair market value (as of the date
specified by the Compensation Committee) of a share of the
Company’s common stock subject thereto may be canceled and
terminated without payment or consideration therefor).
Notwithstanding the above, the Compensation Committee shall
exercise such discretion over the timing of settlement of any award
subject to Section 409A of the Code at the time such award is
granted.
Nontransferability . Each award may be exercised during the
participant’s lifetime by the participant or, if permissible under
applicable law, by the participant’s guardian or legal
representative. No award may be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by a
participant other than by will or by the laws of descent and
distribution unless the Compensation Committee permits the award to
be transferred to a permitted transferee (as defined in the 2018
Plan).
Amendment . Our Board of Directors may amend, suspend or
terminate the 2018 Plan at any time, subject to stockholder
approval if necessary to comply with any tax, stock exchange rules,
or other applicable regulatory requirement. No amendment,
suspension or termination will materially and adversely affect the
rights of any participant or recipient of any award without the
consent of the participant or recipient.
The Compensation Committee may,
to the extent consistent with the terms of any applicable award
agreement, waive any conditions or rights under, amend any terms
of, or alter, suspend, discontinue, cancel or terminate, any award
theretofore granted or the associated award agreement,
prospectively or retroactively; provided, that any such waiver,
amendment, alteration, suspension, discontinuance, cancellation or
termination that would materially and adversely affect the rights
of any participant with respect to any award theretofore granted
will not to that extent be effective without the consent of the
affected participant; and provided further that, without
stockholder approval, (i) no amendment or modification may reduce
the exercise price of any option or the strike price of any SAR,
(ii) the Compensation Committee may not cancel any outstanding
option and replace it with a new option (with a lower exercise
price) or cancel any SAR and replace it with a new SAR (with a
lower strike price) or, in each case, with another award or cash in
a manner that would be treated as a repricing (for compensation
disclosure or accounting purposes), (iii) the Compensation
Committee may not take any other action considered a repricing for
purposes of the stockholder approval rules of the applicable
securities exchange on which our common shares are listed and (iv)
the Compensation Committee may not cancel any outstanding option or
SAR that has a per-share exercise price or strike price (as
applicable) at or above the fair market value of a share of our
common stock on the date of cancellation and pay any consideration
to the holder thereof. However, stockholder approval is not
required with respect to clauses (i), (ii), (iii) and (iv) above
with respect to certain adjustments on changes in
capitalization.
Certain Federal Income Tax
Consequences of the 2018 Plan
Stock Options . Holders of incentive stock options will
generally incur no federal income tax liability at the time of
grant or upon vesting or exercise of those options. However, the
spread at exercise will be an “item of tax preference,” which may
give rise to “alternative minimum tax” liability for the taxable
year in which the exercise occurs. If the holder does not dispose
of the shares before the later of two years following the date of
grant and one year following the date of exercise, the difference
between the exercise price and the amount realized upon disposition
of the shares will constitute long-term capital gain or loss, as
the case may be. Assuming the holding period is satisfied, no
deduction will be allowed to us for U.S. federal income tax
purposes in connection with the grant or exercise of the incentive
stock option. If, within two years following the date of grant or
within one year following the date of exercise, the holder of
shares acquired through the exercise of an incentive stock option
disposes of those shares (a “disqualifying disposition”), the
participant will generally realize taxable compensation at the time
of such disposition equal to the difference between the exercise
price and the lesser of the fair market value of the share on the
date of exercise or the amount realized on the subsequent
disposition of the shares, and that amount will generally be
deductible by us for U.S. federal income tax purposes, subject to
the possible limitations on deductibility under Sections 280G and
162(m) of the Code. Any additional gain and any loss would be a
capital gain or loss. The applicable capital gain tax rate will
depend on the length of the Participant’s share holding period
measured from the exercise date. Finally, if an incentive stock
option becomes first exercisable in any one year for shares having
an aggregate value in excess of $100,000 (based on the grant date
value), the portion of the incentive stock option in respect of
those excess shares will be treated as a non-qualified stock option
for federal income tax purposes.
No income will be realized by a participant upon grant or vesting
of an option that does not qualify as an incentive stock option (“a
non-qualified stock option”). Upon the exercise of a non-qualified
stock option, the participant will recognize ordinary compensation
income in an amount equal to the excess, if any, of the fair market
value of the purchased shares on the date of exercise over the
option exercise price, and the participant’s tax basis will equal
the sum of the compensation income recognized and the exercise
price paid. We will be able to deduct this same excess amount for
U.S. federal income tax purposes, subject to the possible
limitations on deductibility under Sections 280G and 162(m) of the
Code. In the event of a sale of shares received upon the exercise
of a non-qualified stock option, any appreciation or depreciation
after the exercise date generally will be taxed as capital gain or
loss and will be long-term gain or loss if the holding period for
such shares is more than one year.
SARs . No income will be realized by a participant upon
grant or vesting of a SAR. Upon the exercise of a SAR, the
participant will recognize ordinary compensation income in an
amount equal to the fair market value of the payment received in
respect of the SAR. We will be able to deduct this same amount for
U.S. federal income tax purposes, subject to the possible
limitations on deductibility under Sections 280G and 162(m) of the
Code.
Restricted Stock . A participant will not be subject to tax
upon the grant of an award of restricted stock unless the
participant elects to be taxed on the date of grant pursuant to
Section 83(b) of the Code. On the date an award of restricted stock
is no longer subject to a substantial risk of forfeiture (i.e., the
vesting date), the participant will have taxable compensation equal
to the difference between the fair market value of the shares on
that date over the amount the participant paid for such shares, if
any, unless the participant made an election under Section 83(b) of
the Code to be taxed on the date of grant. If the participant made
an election under Section 83(b), the participant will have taxable
compensation on the date of grant equal to the difference between
the fair market value of the shares on the date of grant over the
amount the participant paid for such shares, if any. If the
election is made, the participant will not be allowed a deduction
for, or recoupment of, taxes paid on account of shares that fail to
vest or on account of any subsequent decrease in the value of the
shares. (Special rules apply to the receipt and disposition of
restricted shares received by officers and directors who are
subject to Section 16(b) of the Exchange Act). We will be able to
deduct, in the same year as it is recognized by the participant,
the amount of taxable compensation to the participant for U.S.
federal income tax purposes, subject to the possible limitations on
deductibility under Sections 280G and 162(m) of the Code.
Restricted
Stock Units . A participant will not be subject to tax upon the
grant or vesting of a restricted stock unit award. Rather, upon the
delivery of shares or cash pursuant to a restricted stock unit
award, the participant will have taxable compensation equal to the
fair market value of the number of shares (or the amount of cash)
the participant actually receives with respect to the award. We
will be able to deduct the amount of taxable compensation to the
participant for U.S. federal income tax purposes, subject to the
possible limitations on deductibility under Sections 280G and
162(m) of the Code.
Section
409A
Code Section 409A imposes complex rules on nonqualified deferred
compensation arrangements, including requirements with respect to
elections to defer compensation and the timing of payment of
deferred amounts. Depending on how they are structured, certain
equity-based awards may be subject to Code Section 409A, while
others are exempt. If an award is subject to Code Section 409A and
a violation occurs, the compensation is includible in income when
no longer subject to a substantial risk of forfeiture and the
participant may be subject to a 20% penalty tax and, in some cases,
interest penalties. The 2018 Plan and awards granted under the 2018
Plan are intended to be exempt from or conform to the requirements
of Code Section 409A.
Section
162(m) and the Company’s Deduction.
Generally, whenever a participant recognizes ordinary income under
the 2018 Plan, a corresponding deduction is available to the
Company, provided that the Company complies with certain reporting
requirements. However, under Code Section 162(m), the Company will
be denied a deduction for compensation paid to certain senior
executives that exceeds $1,000,000, unless the compensation is
“performance-based compensation” within the meaning of the
Code.
Beginning January 1, 2018, with the passage and signing of the Tax
Cuts and Jobs Act (“TCJA”), this limitation will apply to the
Company's Chief Executive Officer, Chief Financial Officer, the
Company's three next highest-paid executive officers, and anyone
who was such a covered person starting with 2017. Prior to January
1, 2018, certain performance-based compensation was excluded from
the $1,000,000 deduction limit. Under the TCJA, beginning January
1, 2018 (with an exception for certain grandfathered arrangements),
the Company will be denied a deduction for any compensation
exceeding $1,000,000.
Equity
Compensation Plan Information
The following table summarizes, as of December 31, 2018, (i) the
number of shares of our common stock that are issuable under our
equity compensation plans upon the exercise of outstanding options,
and other rights, (ii) the weighted-average exercise price of such
options and rights, and (iii) the number of securities remaining
available for future issuance under our equity compensation
plans.
Plan Category |
|
Number of
securities
to be issued
upon
exercise of
outstanding
options,
warrants and
rights
(a)
|
|
|
Weighted-
average
exercise
price of
outstanding options,
warrants
and rights
(b)
|
|
|
Number of securities
remaining available
for
future issuance under
equity compensation
plans (excluding
securities reflected
in column (a))
(c)
|
|
2018
Equity Incentive Plan |
|
|
- |
|
|
|
- |
|
|
|
6,000,000 |
|
2014 Equity Incentive
Plan |
|
|
6,262,570 |
|
|
$ |
10.21 |
|
|
|
579,809 |
|
Equity
compensation plans not approved by our stockholders:
(1) |
|
|
|
|
|
|
|
|
|
|
|
|
2010 Equity
Compensation Plan |
|
|
2,000 |
|
|
$ |
117.00 |
|
|
|
33,000 |
|
2011 Equity Incentive
Plan |
|
|
624,717 |
|
|
$ |
10.32 |
|
|
|
376,240 |
|
Total |
|
|
6,889,287 |
|
|
$ |
10.25 |
|
|
|
6,989,049 |
|
|
(1) |
Our Board of Directors adopted our 2010 Equity Compensation
Plan and our 2011 Equity Incentive Plan. However, we did not submit
either of those plans to our stockholders for their approval.
Accordingly, while we have adopted these equity compensation plans,
these plans are not stockholder-approved plans. |
CERTAIN RELATIONSHIPS AND RELATED
PARTY TRANSACTIONS
Certain
Relationships and Related Transactions
Other than employment agreements with our named executive officers
and other payments made to our named executive officers, all as
described above under the section entitled “Executive Compensation
—Compensation of Executive Officers,” and compensation paid to
directors as described above in the section titled “Executive
Compensation - Director Compensation,” the following is a
description of all transactions since January 1, 2017 to which we
have been a party, and in which (i) the amounts involved exceeded
or will exceed $120,000, and (ii) our directors and named executive
officers or holders of more than 5% of our common stock, or any
member of the immediate family of the foregoing persons or entities
affiliated with them, had or will have a direct or indirect
material interest.
On September 8, 2017 we entered into a three-year consulting
agreement (the “Consulting Agreement”) with Iain Dukes, D. Phil,
the Chairman of our Board of Directors. Under the Consulting
Agreement, Dr. Dukes agreed to consult with us regarding business
development opportunities, licensing transactions and technology
acquisitions, and any such strategic initiatives appropriate for
the Company that Dr. Dukes may identify. In consideration for his
services, we granted Dr. Dukes a ten-year, non-qualified stock
option to purchase up to 150,000 shares of our common stock at an
exercise price of $7.30 per share (the closing trading price of the
common stock on the Nasdaq Global Market on September 8, 2017). The
stock option vests in 12 quarterly installments (with 1/12th of the
option shares having vested on the date of grant). The vesting of
the stock option will accelerate, and the entire stock option will
become fully vested upon the closing of a significant licensing
transaction, a material product acquisition, a material strategic
transaction, or upon a Change of Control transaction. A “Change of
Control” is defined to mean: (1) a merger or consolidation or the
sale or exchange by our of capital stock, where our stockholders do
not obtain or retain, directly or indirectly, at least a majority
of the beneficial interest in the voting stock or other voting
equity of the surviving or acquiring corporation or other surviving
or acquiring entity, in substantially the same proportion as before
such transaction; (2) any transaction or series of related
transactions to which this Company is a party in which in excess of
fifty percent (50%) of our voting power is transferred; or (3) the
sale or exchange of all or substantially all of our assets, where
our stockholders do not obtain or retain, directly or indirectly,
at least a majority of the beneficial interest in the voting stock
or other voting equity of the corporation or other entity acquiring
our assets, in substantially the same proportion as before such
transaction.
Jay Venkatesan, M.D., was a member of our Board of Directors from
September 3, 2013 until March 1, 2018. In July 2017, we filed a
post-effective amendment to a registration statement on Form S-3 to
register the public sale of certain securities we sold in a private
placement in 2013. Also included in that Form S-3 registration
statement also were 2,823,333 shares of this Company’s common stock
owned by Ayer Capital Partners Master Fund, L.P. and Ayer Capital
Partners Kestrel Fund, LP (collectively, “Ayer”). Dr. Venkatesan is
the manager of the Ayer funds.
In July 2017, we filed a post-effective amendment to a registration
statement on Form S-3 to register the public sale of certain
securities, including 446,433 shares owned by General McPeak, a
member of our Board of Directors.
Sanford J. Hillsberg, a former member of our Board of Directors,
was an attorney at TroyGould PC. TroyGould PC rendered legal
services to our company in 2018 and has continued to render legal
services in 2019. We paid TroyGould PC $0.5 million in fees in
2018. Mr. Hillsberg did not provide any legal services to our
Company during 2018.
Director
Independence
Our Board of Directors has determined that General McPeak, Mr.
Rothbaum, Mr. Maynard and Dr. Weiser qualify as “independent
directors” as defined under the applicable Nasdaq Stock Market
Rules and the rules of the SEC, satisfy the independence criteria
set forth in Rule 10A-3 under the Exchange Act, and have no
material relationships with us (either directly or as a partner,
stockholder or officer of any entity) that are inconsistent with a
finding of their independence as members of our Board of Directors.
Our Board of Directors has determined that Mr. Maynard, General
McPeak and Dr. Weiser, the current members of our Audit Committee,
also are “independent” for purposes of service as the members of
our Audit Committee.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of our common stock as of the Record Date by
(i) each person who is known by us to own more than 5% of the
outstanding common stock; (ii) each of our directors and director
nominees; (iii) each of our named executive officers listed in the
“Compensation of Executive Officers” table; and (iv) all of our
current named executive officers and directors as a group. This
table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G and amendments
thereto filed with the SEC. Unless otherwise indicated below, to
our knowledge, the persons and entities named in the table have
sole voting and sole investment power with respect to all shares
that they beneficially owned, subject to community property laws
where applicable. As of the Record Date, a total of 123,514,231
shares of common stock were outstanding, a total of 194 shares of
Series A Preferred were outstanding, and a total of 5,854,845
shares of Series B Preferred were outstanding. Our shares of Series
A Preferred and Series B Preferred do not have voting rights.
|
|
Common Stock |
Name and Address of
Beneficial Owner
|
|
Number of
Shares
|
|
|
Percent of
Class (1)
|
5%
and Greater Stockholders |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Perceptive Advisors LLC
Joseph
Edelman
Perceptive Life Sciences Master Fund Ltd
51 Astor Place, 10 th Floor
New York, NY 10003 (2)
|
|
|
12,339,072 |
(2) |
|
|
9.9% |
venBio
Select Advisor LLC
120
West 45th Street, Suite 2802
New
York, NY 10036 (3) |
|
|
11,738,961 |
(3) |
|
|
9.5% |
Quogue
Capital LLC
1171
S. Ocean Blvd.
Delray
Beach, FL 33483 (4) |
|
|
9,000,000 |
(4) |
|
|
7.3% |
BlackRock
Inc.
55
East 52nd Street
New
York, NY 10055 (5) |
|
|
8,780,191 |
(5) |
|
|
7.1% |
Franklin
Resources, Inc.
One
Franklin Parkway
San
Mateo, CA 94403 (6) |
|
|
8,283,464 |
(6) |
|
|
6.7% |
|
|
|
|
|
|
|
|
Named
Executive Officers and Directors |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Merrill
A. McPeak |
|
|
682,833 |
(7) |
|
|
* |
Michael
Weiser, M.D., Ph.D. |
|
|
178,882 |
(8) |
|
|
* |
Ryan
D. Maynard |
|
|
181,250 |
(9) |
|
|
* |
Maria
Fardis, Ph.D. |
|
|
858,350 |
(10) |
|
|
* |
Timothy
E. Morris |
|
|
145,833 |
(9) |
|
|
* |
Frederick
G. Vogt, Ph.D., Esq. |
|
|
191,699 |
(9) |
|
|
* |
Wayne
Rothbaum |
|
|
9,000,000 |
(11) |
|
|
7.3% |
Iain
Dukes, D. Phil. |
|
|
304,500 |
(12) |
|
|
* |
All
directors, director nominees and current executive officers as a
group (8 persons) |
|
|
11,543,347 |
(13) |
|
|
9.3% |
|
(1) |
Beneficial ownership is determined in accordance with the rules
of the SEC and generally includes voting or investment power with
respect to securities. Shares of common stock subject to options,
warrants and convertible securities currently exercisable or
convertible, or exercisable or convertible within 60 days, are
deemed outstanding, including for purposes of computing the
percentage ownership of the person holding such option, or
convertible security, but not for purposes of computing the
percentage of any other holder. |
|
(2) |
Based on information disclosed in a Schedule 13G filed with the
SEC on February 14, 2019 by Perceptive Advisors LLC, according to
which Perceptive Advisors LLC and Joseph Edelman beneficially own
12,241,305 shares, all of which are held by Perceptive Life
Sciences Master Fund Ltd., a private investment fund to which
Perceptive Advisors LLC serves as the investment manager. Mr.
Edelman is the managing member of Perceptive Advisors LLC. Excludes
908,724 shares of our common stock issuable upon the conversion of
Series B Preferred shares. Under the terms of the Series A
Preferred and Series B Preferred shares, the holder does not have
the right to convert the preferred stock to the extent that after
giving effect to such exercise, the holder (together with its
affiliates) would beneficially own in excess of 4.99% (which limit
was increased to 9.99% upon notice by Perceptive Advisors LLC).
Additionally, the beneficial ownership limitation for the Series B
Preferred shares will not apply to the extent that the holder’s
ownership was, immediately prior to such conversion, required to
report, or exempt from reporting, his, her or its holdings and
transactions relating to our securities pursuant to Section 16 of
the Exchange Act. |
|
(3) |
Based on information disclosed in a Schedule 13G/A filed with
the SEC on February 13, 2019 by (i) venBio Select Advisor LLC, a
Delaware limited liability company, which provides investment
advisory and management services and has acquired the foregoing
securities solely for investment purposes on behalf of venBio
Select Fund LLC, a Delaware limited liability company, and certain
managed accounts and (ii) Behzad Aghazadeh, who serves as the
portfolio manager and controlling person of venBio Select Advisor
LLC. The number of shares beneficially owned consists of 11,000,000
shares of our common stock and 738,961 shares of our common stock
issuable upon conversion of Series B Preferred shares. Under the
terms of the Series B Preferred, the holder does not have the right
to convert the preferred stock to the extent that after giving
effect to such exercise, the holder (together with its affiliates)
would beneficially own in excess of 4.99% (which limit was
increased to 9.99% upon notice by venBio Select Advisor LLC).
Additionally, the beneficial ownership limitation for the Series B
Preferred shares will not apply to the extent that the holder’s
ownership was, immediately prior to such conversion, required to
report, or exempt from reporting, his, her or its holdings and
transactions relating to our securities pursuant to Section 16 of
the Exchange Act. |
|
(4) |
Based on information disclosed in a Schedule 13D/A filed with
the SEC on December 7, 2018 by Quogue Capital LLC, the number of
shares beneficially owned consists of 7,067,333 shares of our
common stock and 1,932,667 shares of our common stock issuable upon
conversion of Series B Preferred shares owned by Quogue Capital
LLC. Mr. Rothbaum is the sole managing member of Quogue Capital LLC
and may be deemed to beneficially own the shares owned by Quogue
Capital LLC. Under the terms of the Series B Preferred shares, the
holder does not have the right to convert the preferred stock or
exercise the warrant to the extent that after giving effect to such
exercise, the holder (together with its affiliates) would
beneficially own in excess of 4.99% (which limit was increased to
9.99% upon notice by Mr. Rothbaum); provided, however, that the
beneficial ownership limitation for the Series B Preferred shares
will not apply to the extent that the holder’s ownership was,
immediately prior to such conversion, required to report, or exempt
from reporting, his, her or its holdings and transactions relating
to our securities pursuant to Section 16 of the Exchange Act.
Therefore, the 9.99% limitation does not apply to Mr. Rothbaum or
Quogue Capital LLC. |
|
(5) |
Based on information disclosed in a Schedule 13G filed with the
SEC on February 13, 2019 by Blackrock, Inc., according to which
Blackrock, Inc. beneficially owns 8,780,191 shares, with sole
voting power over 8,559,912 shares and sole dispositive power over
8,780,191 shares. The registered holders of the referenced shares
are funds and accounts under management by investment adviser
subsidiaries of BlackRock, Inc. BlackRock, Inc. is the ultimate
parent holding company of such investment adviser entities. |
|
(6) |
Based on information disclosed in a Schedule 13G/A filed on
January 28, 2019 by Franklin Resources, Inc. (“FRI”), Charles B.
Johnson, Rupert H. Johnson, Jr. and Franklin Advisers, Inc.,
regarding their beneficial ownership as of December 31, 2018.
According to this Schedule 13G/A, these securities are beneficially
owned by one or more open- or closed-end investment companies or
other managed accounts that are investment management clients of
investment managers that are direct and indirect subsidiaries of
FRI. Charles B. Johnson and Rupert H. Johnson, Jr. each own in
excess of 10% of the outstanding common stock of FRI and are the
principal stockholders of FRI. Franklin Advisers, Inc., one of the
subsidiaries of FRI, has sole voting power and sole dispositive
power with respect to 8,224,464 shares and Fiduciary Trust Company
International, one of the subsidiaries of FRI, has sole voting and
dispositive power with respect to 59,000 shares. |
|
(7) |
Represents 456,583 shares of common stock and options to
purchase 226,250 shares of common stock that are exercisable
currently or within 60 days of the Record Date. |
|
(8) |
Represents 102,632 shares owned by Dr. Weiser and 76,250
options that are exercisable currently or within 60 days of the
Record Date. Does not include 28,484 shares owned by Actin Capital
Partners, LLC. Dr. Weiser holds a position in Actin Capital
Partners, LLC but does not have voting or dispositive control over
the 28,484 shares held by Actin Capital Partners, LLC, and thus
disclaims beneficial ownership of these shares, except to the
extent of his pecuniary interest therein. |
|
(9) |
Represents options to purchase shares of common stock that are
exercisable currently or within 60 days of the Record Date. |
|
(10) |
Represents 267,382 shares owned and 7,639 shares of common
stock that are issuable upon vesting of restricted stock units, and
583,329 options to purchase shares of common stock that are
exercisable currently or within 60 days of the Record Date. |
|
(11) |
Represents the shares of common stock owned by Quogue Capital
LLC described in footnote (4) above. Mr. Rothbaum is the sole
managing member of Quogue Capital LLC and may be deemed to
beneficially own the shares owned by Quogue Capital LLC. |
|
(12) |
Represents 12,000 shares of common stock and 292,500 options to
purchase shares of common stock that are exercisable currently or
within 60 days of the Record Date. |
|
(13) |
Includes 7,639 shares of common stock that are issuable upon
vesting of restricted stock units and options to purchase 1,697,111
shares of common stock that are exercisable currently or within 60
days of the Record Date. |
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE COMPENSATION OF
THE COMPANY’S NAMED EXECUTIVE OFFICERS.
PROPOSAL NO. 3 - APPROVAL OF AN
AMENDMENT TO OUR CERTIFICATE OF INCORPORATION, AS AMENDED, TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF OUR COMMON
STOCK
Our Charter currently authorizes us to issue a total of 150,000,000
shares of common stock, with a par value of $0.000041666 per share,
and 50,000,000 shares of preferred stock, with a par value of
$0.001 per share, for a total of 200,000,000 shares of all classes.
In December 2018, our Board of Directors approved an amendment to
our Charter (the “Authorized Shares Amendment”) to increase the
number of shares of authorized common stock from 150,000,000 shares
to 300,000,000 shares, subject to stockholder approval, and
consequently the total number of shares of all classes increased to
350,000,000.
Approval of the Authorized Shares Amendment requires the
affirmative vote of the holders of a majority of the shares
outstanding. Brokers are
authorized to vote without instructions on this proposal.
Abstentions are included in the shares present at the Meeting for
purposes of determining whether a quorum is present, and are
counted as a vote against for purposes of determining whether the
foregoing proposal is approved.
Our Board of Directors has unanimously determined that the
Authorized Shares Amendment is advisable and in the best interests
of the Company and our stockholders and recommends that our
stockholders approve the Authorized Shares Amendment. In accordance
with the General Corporation Law of the State of Delaware (the
“DGCL”), we are hereby seeking approval of the Authorized Shares
Amendment by our stockholders. No other changes to our Charter are
being proposed, including with respect to the number of authorized
shares of our preferred stock. The Authorized Shares Amendment is
not intended to modify the rights of existing stockholders in any
material respect. The additional shares of common stock to be
authorized pursuant to the proposed Authorized Shares Amendment
will be identical to the shares of common stock currently
authorized and outstanding under our Charter, none of which have
preemptive or similar rights to acquire the newly authorized
shares. Under the DGCL, our stockholders are not entitled to
appraisal rights with respect to the proposed Authorized Shares
Amendment to increase the number of authorized shares of common
stock, and we will not independently provide stockholders with any
such rights.
Reasons for the Authorized Shares Amendment
Our Board of Directors is proposing the Authorized Shares Amendment
to increase the number of authorized shares of our common stock
from 150,000,000 shares to 300,000,000 shares, and consequently
increase the total number of shares of all classes from 200,000,000
to 350,000,000. Of the 150,000,000 shares of common stock that are
currently authorized to be issued under the Charter, as of the
Record Date, 123,514,231 shares are issued and outstanding,
including shares reserved for issuance under our equity plans.
Therefore, we currently have only a limited number of authorized
shares of common stock available for future issuance.
In determining the magnitude of the Authorized Shares Amendment,
the Board considered a number of factors, including our historical
issuances of shares and potential future needs, our need to issue
additional shares in connection with one or more future equity
transactions, acquisitions or other strategic transactions and
future issuances under equity compensation plans.
The additional authorized shares will be available for issuance
from time to time to enable us to respond to future business
opportunities requiring the issuance of shares, including the
consummation of equity-based financings involving common stock or
securities convertible into or exercisable for common stock
(“equity-linked securities”), acquisition or strategic joint
venture transactions involving the issuance of common stock or
equity-linked securities, grants of common stock and equity-linked
securities to our current and future employees and directors, or
for other general corporate purposes that our Board of Directors
may deem advisable from time to time.
Our Board of Directors believes that the proposed increase in the
number of authorized shares of common stock will also benefit us by
improving our ability to raise funding through the issuance of
shares of common stock. As of the date of this proxy statement, we
have no current plans, arrangements or understandings regarding the
issuance of any additional shares of common stock that would be
authorized pursuant to this proposal, and there are no negotiations
pending with respect to the issuance thereof for any purpose. Our
Board of Directors does not intend to issue any common stock except
on terms which our Board of Directors deems to be in the best
interests of our Company and its then existing stockholders.
Potential Effects of Not Approving the Authorized Shares
Amendment
Without an increase in the number of authorized shares of common
stock, we may be constrained in our ability to raise capital in a
timely fashion or at all and may be unable to complete our clinical
programs, commercialize our products, or conduct important business
activities, which could adversely affect our financial performance
and growth. For example, if the stockholders do not approve this
proposal, then we may not have needed additional shares available
or may be required to seek stockholder approval in connection with
a transaction, which may delay or otherwise have a material adverse
effect on us. If our Company’s stockholders do not approve the
increase in authorized shares of common stock, then our Company
will not be able to increase the total number of authorized shares
of common stock from 150,000,000 to 300,000,000, and therefore, the
Company could be limited in its ability to use shares of common
stock for financing, issuing stock options or other general
corporate purposes.
Potential Effects of Approving the Authorized Shares
Amendment
The proposed increase in the number of authorized shares of common
stock will not have any immediate effect on the rights of our
existing stockholders. However, the Board will have the authority
to issue the additional shares of common stock without requiring
future stockholder approval of such issuances, except as may be
required by applicable law or rules of any stock exchange on which
our securities may be listed, including The Nasdaq Global Market.
The issuance of additional shares of common stock may decrease the
relative percentage of equity ownership of our existing
stockholders, thereby diluting the voting power of their common
stock.
While the issuance of additional shares of common stock may be
deemed to have potential anti-takeover effects, including by
delaying or preventing a change in control of our Company through
subsequent issuances of these shares and the other reasons set
forth above, which, among other things, could include issuances in
one or more transactions that would make a change in control of our
Company more difficult, and therefore, less likely, this proposal
to increase the authorized common stock is not prompted by any
specific effort of which we are aware to accumulate shares of our
common stock or obtain control of our Company. A takeover may be
beneficial to independent stockholders because, among other
reasons, a potential suitor may offer such stockholders a premium
for their shares of common stock as compared to the then-existing
market price. Although the issuance of additional shares of common
stock could, under certain circumstances, have an anti-takeover
effect, this proposal to adopt the amendment is not in response to
any effort to which our Company is aware to accumulate common stock
or obtain control of our Company.
The additional authorized shares of common stock, if and when
issued, would be part of the existing class of common stock and
would have the same rights and privileges as the shares of common
stock currently outstanding. Stockholders do not have preemptive
rights with respect to our common stock. Therefore, should the
Board determine to issue additional shares of common stock,
existing stockholders would not have any preferential rights to
purchase such shares in order to maintain their proportionate
ownership thereof.
We can provide no assurance that we will be successful in amending
our Charter to increase the number of shares of common stock that
are available for issuance, or that the Authorized Shares Amendment
will not have an adverse effect on our stock price.
Our directors and executive officers have no substantial interests,
directly or indirectly, in the matters set forth in this proposed
amendment, except to the extent of their ownership in shares of our
common stock and securities convertible or exercisable for common
stock.
Effectiveness of the Authorized Shares Amendment
The form of the Authorized Shares Amendment is attached as Appendix
A to this proxy statement. If the Authorized Shares Amendment is
approved by our stockholders, it will become effective upon the
acceptance by the Secretary of State of the State of Delaware of
the filing of the Authorized Shares Amendment. Such filing is
expected to occur promptly after stockholder approval of this
proposal. If this proposal is not approved, our Charter would
remain unchanged and the number of authorized shares of common
stock would remain 150,000,000. Other than as described herein,
this proposed Authorized Shares Amendment effects no other changes
to our Charter.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF APPROVAL OF AN
AMENDMENT TO OUR CERTIFICATE OF INCORPORATION, AS AMENDED, TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF OUR COMMON STOCK.
PROPOSAL NO. 4 - RATIFICATION OF
APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit Committee appointed Marcum LLP as our independent
registered public accounting firm for 2019. Marcum LLP served as
our independent registered public accounting firm and audited our
consolidated financial statements for our fiscal years ended
December 31, 2018, 2017, and 2016. Representatives of Marcum LLP
are expected to be present at the Annual Meeting, will have an
opportunity to make a statement if they so desire, and will be
available to respond to appropriate questions.
At the Annual Meeting, our stockholders are being asked to ratify
the appointment of Marcum LLP as our independent registered public
accounting firm for our fiscal year ending December 31, 2018. Our
Audit Committee is submitting the appointment of Marcum LLP to our
stockholders because we value our stockholders’ views on our
independent registered public accounting firm and as a matter of
good corporate governance. Notwithstanding this appointment of
Marcum LLP as our independent registered public accounting firm,
and even if our stockholders ratify that appointment, our Audit
Committee, in its discretion, may appoint another independent
registered public accounting firm at any time during our 2018
fiscal year if our Audit Committee believes that such a change
would be in the best interests of our Company and our
stockholders.
If our stockholders do not ratify the appointment of Marcum LLP,
our Audit Committee may reconsider the appointment.
Fees
Paid to the Independent Registered Public Accounting Firm
The following table presents fees for professional audit services
and other services rendered to our Company by Marcum LLP for our
fiscal years ended December 31, 2018 and 2017, respectively.
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
Audit
fees: |
|
$ |
375,965 |
|
|
$ |
329,148 |
|
Audit related
fees: |
|
$ |
- |
|
|
$ |
- |
|
Tax fees: |
|
$ |
- |
|
|
$ |
- |
|
All other fees: |
|
$ |
- |
|
|
$ |
- |
|
Total |
|
$ |
375,965 |
|
|
$ |
329,148 |
|
In the above table, “audit fees” are fees for professional services
for the audit of the Company’s financial statements included in its
Annual Report on Form 10-K for the fiscal year ended December 31,
2018 and the fiscal year ended December 31, 2017, including
internal control attestations, and review of financial statements
included in its quarterly reports on Form 10-Q and for services
that are normally provided in connection with regulatory filings
and public offerings. “Audit-related fees” represent fees for
professional services for assurance and related services that are
reasonably related to the performance of the audit or review of
financial statements and that are not reported under the “audit
fees” category. “Tax fees” are fees for tax compliance, tax advice
and tax planning.
Our Audit Committee of our Board of Directors considered whether
the provision of the services described above for the fiscal years
ended December 31, 2018 and 2017, is compatible with maintaining
the auditor’s independence. All audit and non-audit services that
may be provided by our principal accountant to us require
pre-approval by the Audit Committee of our Board of Directors.
Further, our auditor shall not provide those services to us
specifically prohibited by the SEC, including bookkeeping or other
services related to the accounting records or financial statements
of the audit client; financial information systems design and
implementation; appraisal or valuation services, fairness opinion,
or contribution-in-kind reports; actuarial services; internal audit
outsourcing services; management functions; human resources;
broker-dealer, investment adviser, or investment banking services;
legal services and expert services unrelated to the audit; and any
other service that the Public Company Accounting Oversight Board
determines, by regulation, is impermissible.
Auditor
Independence
In our fiscal year ended December 31, 2018, there were no other
professional services provided by Marcum LLP that would have
required our audit committee to consider their compatibility with
maintaining the independence of Marcum LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF
THE APPOINTMENT OF MARCUM LLP
OTHER MATTERS
Section
16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our Company’s executive
officers and directors, and persons who own more than 10% of a
registered class of our Company’s equity securities, to file
reports of ownership and changes in ownership with the SEC.
Executive officers, directors and greater than 10% stockholders are
required by SEC regulations to furnish our Company with copies of
all Section 16(a) forms they file.
SEC regulations require us to
identify in this proxy statement anyone who filed a required report
late during the most recent fiscal year. Based solely on our review
of forms we received, or written representations from reporting
persons stating that they were not required to file these forms, we
believe that during the fiscal year ended December 31, 2017, all
filings required under Section 16(a) of the Exchange Act, were
filed in a timely manner.
Fiscal
Year 2018 Annual Report and SEC Filings
Our financial statements for our fiscal year ended December 31,
2018 are included in our 2018 Annual Report, which we will make
available to stockholders at the same time as this proxy statement.
This proxy statement and our annual report are posted on our
website at www.iovance.com and are also available from the SEC at
its website at www.sec.gov. You may also obtain a copy of our
annual report without charge by sending a written request to the
Corporate Secretary, at Iovance Biotherapeutics, Inc., 999 Skyway
Road, Suite 150, San Carlos, California 94070.
* * *
Our Board of Directors does not know of any other matters to be
presented at the Annual Meeting. If any additional matters are
properly presented at the Annual Meeting, the persons named in the
enclosed proxy card will have discretion to vote the shares of our
common stock they represent in accordance with their own judgment
on such matters.
It is important that your shares of our common stock be represented
at the Annual Meeting, regardless of the number of shares that you
hold. You are, therefore, urged to vote by telephone or by using
the internet as instructed on the enclosed proxy card or execute
and return, at your earliest convenience, the enclosed proxy card
in the envelope that has also been provided.
|
THE BOARD OF DIRECTORS
San
Carlos, California
April 30, 2019
|
APPENDIX A
CERTIFICATE OF AMENDMENT TO THE
CERTIFICATE OF INCORPORATION, AS AMENDED, OF
IOVANCE BIOTHERAPEUTICS, INC.
Iovance Biotherapeutics, Inc., a corporation duly organized and
validly existing under and by virtue of the General Corporation Law
of the State of Delaware (the “ Company ”), does hereby
certify as follows:
FIRST : The Certificate of Incorporation of the Company is
hereby amended by deleting the first sentence of Article IV thereof
in its entirety and inserting the following in lieu thereof:
“The
total number of shares of all classes of stock which the
Corporation shall have authority to issue is Three Hundred Fifty
Million (350,000,000), consisting of (a) Three Hundred Million
(300,000,000) shares of Common Stock, $0.000041666 par value per
share (“ Common Stock ”), and (b) Fifty Million (50,000,000)
shares of Preferred Stock, $0.001 par value per share (“
Preferred Stock ”).”
SECOND: Except as explicitly amended by the foregoing
amendment, the language of Article IV of the Certificate of
Incorporation shall remain unchanged.
THIRD : All other provisions of the Certificate of
Incorporation shall remain in full force and effect.
FOURTH : The foregoing amendment was duly adopted in
accordance with the provisions of Section 242(b) of the General
Corporation Law of the State of Delaware.
FIFTH: That this Certificate of Amendment to the Certificate
of Incorporation shall be effective upon filing.
IN WITNESS WHEREOF , the undersigned has duly executed this
Certificate of Amendment on this __ day of June, 2019.
|
IOVANCE
BIOTHERAPEUTICS, INC. |
|
Name:
Maria Fardis |
|
Title:
Chief Executive Officer |

12289-lovance Proxy Card REV1- Front
YOUR VOTE IS IMPORTANT. PLEASE VOTE TODAY. Vote by Internet - QUICK
★★★ EASY
IMMEDIATE - 24 Hours a Day, 7 Days a Week or by Mail IOVANCE
BIOTHERAPEUTICS, INC. Your Internet vote authorizes the named
proxies to vote your shares in the same manner as if you marked,
signed and returned your proxy card. Votes submitted electronically
over the Internet must be received by 11:59 p.m., Eastern Time, on
June 9, 2019. INTERNET/MOBILE — www.cstproxyvote.com Use the
Internet to vote your proxy. Have your proxy card available when
you access the above website. Follow the prompts to vote your
shares. MAIL - Mark, sign and date your proxy card and return it in
the postage-paid envelope provided. PLEASE DO NOT RETURN THE PROXY
CARD IF YOU ARE VOTING ELECTRONICALLY. FOLD HERE • DO NOT SEPARATE
INSERT IN ENVELOPE PROVIDED PROXY Please mark your votes like this
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO SUCH
DIRECTION IS MADE, THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE
BOARD OF DIRECTORS’ RECOMMENDATIONS. The Board of Directors
recommends a vote “FOR” the following: 1. Election of Directors FOR
ALL WITHHOLD ALL FOR ALL EXCEPT (1) lain Dukes, D. Phil (2) Maria
Fardis, Ph.D. (3) Ryan Maynard (4) Merrill A. McPeak (5) Wayne P.
Rothbaum (6) Michael Weiser, M.D., Ph.D. (Instruction: To withhold
authority to vote for any individual nominee, mark “For All Except"
and write the nominee’s name on the line below) The Board of
Directors recommends that you vote FOR the proposals 2, 3, and 4.
FOR AGAINST ABSTAIN 2. To approve, by non-binding advisory vote,
the compensation of our named executive officers. FOR AGAINST
ABSTAIN 3. To approve an amendment to our Certificate of
Incorporation to increase authorized shares of common stock from
150,000,000 to 300,000,000. FOR AGAINST ABSTAIN 4. To ratify the
appointment of Marcum LLP as our independent registered public
accounting firm for our fiscal year ending December 31, 2019.
CONTROL NUMBER Signature Signature, if held jointly Date , 2019
Note: Please sign exactly as name appears hereon. When shares are
held by joint owners, both should sign. When signing as attorney,
executor, administrator, trustee, guardian, or corporate officer,
please give title as such.

12289-lovance Proxy Card REV1-Back
Important Notice Regarding the Availability of Proxy Materials for
the Annual Meeting: The Annual Report, Notice and Proxy Statement
are available at http://www.cstproxy.com/iovance/2019 FOLD HERE DO
NOT SEPARATE INSERT IN ENVELOPE PROVIDED PROXY THIS PROXY IS
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS IOVANCE
BIOTHERAPEUTICS, INC. Annual Meeting of Stockholders June 10, 2019
at 9:00 a.m. ET The undersigned stockholder(s) of lovance
Biotherapeutics, Inc. hereby appoint(s) Maria Fardis and Timothy E.
Morris, or either of them, as proxies, each with the power to
appoint his/her substitute, and hereby authorizes them to represent
and to vote, as designated on the reverse side, all of the shares
of common stock of IOVANCE BIOTHERAPEUTICS, INC. that the
stockholder(s) is/are entitled to vote at the Annual Meeting of
Stockholders to be held on Monday, June 10, 2019 at 9:00 a.m. at
the offices of DLA Piper LLP, 1251 6th Avenue, New York, New York
10020 and any adjournment or postponement of the annual meeting.
Such proxies are authorized to vote in their discretion (i) for the
election of any person to the Board of Directors if the nominees
named herein becomes unable to serve or for good cause will not
serve; and (ii) on such other business, if any, as may properly be
brought before the meeting or any adjournment or postponement of
the meeting. (Continued, and to be marked, dated and signed, on the
other side)
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