| Item 5.02 | Departure of Directors
or Principal Officers; Election of Directors; Appointment of Principal Officers. |
Departure of President and Chief Executive Officer
and Director
On June 22, 2022, the Company announced that Russell H. Ellison, M.D., M.Sc., will be stepping down from his role as the President and Chief
Executive Officer of the Company, effective as of June 30, 2022 (the “separation date”). Effective as of the separation
date, Dr. Ellison will also resign from the board of directors of the Company (the “Board”).
Pursuant to his employment agreement, subject to
Dr. Ellison’s execution and non-revocation of a release agreement in favor of the Company and continued compliance with certain
restrictive covenants, including covenants relating to confidentiality, non-interference, non-competition and non-solicitation, Dr. Ellison
will receive the following payments and benefits: (i) an amount equal to the sum of (A) $500,000, representing Dr. Ellison’s
annualized base salary; and (B) $350,000, representing 100% of Dr. Ellison’s annual target bonus, payable in equal installments
and in accordance with the Company’s regular payroll schedule for a period of 12 months following the separation date, (ii) reimbursement
of Dr. Ellison’s costs for medical coverage for up to one year (or, if sooner, until he receives substantially similar coverage
from another employer), and (iii) the time-based stock options granted to Dr. Ellison in connection with his commencement of
employment will continue to vest for a period of one year and all stock options held by Dr. Ellison that are exercisable as of the
separation date and all stock options that become exercisable over the one-year period following the separation date will remain exercisable
until the one-year anniversary of the separation date.
Appointment of President and Chief Executive
Officer
On June 21, 2022, the Board appointed Mark
Strobeck, Ph.D. as the Company’s President and Chief Executive Officer and as a Class III Director to serve until the Company’s
2024 Annual Meeting of Stockholders and until his successor is duly elected and qualified, effective July 1, 2022.
Dr. Strobeck, age 51, has held leadership
positions in both emerging biotechnology and pharmaceutical companies for more than twenty years. Most recently, he served as Managing
Director of Aquilo Partners, LP, a life sciences investment bank, from May 2021 to June 2022. He previously served as Executive
Vice President and Chief Operating Officer of Assertio Holdings, Inc., a pharmaceutical company, from May 2020 to December 2020.
Prior to that, Dr. Strobeck was Executive Vice President and Chief Operating Officer of Zyla Life Sciences, a pharmaceutical company,
from September 2015 through its merger with Assertio Holdings, Inc. in May 2020, and previously served as Zyla’s
Chief Business Officer from January 2014 to September 2015. Before his employment at Zyla, he served as Zyla’s advisor
from June 2012 to December 2013. From January 2012 to December 2013, he served as President and Chief Executive Officer
and a director of Corridor Pharmaceuticals, Inc., a pharmaceuticals company, which was acquired by AstraZeneca plc in 2014. From
December 2010 to October 2011, Dr. Strobeck served as Chief Business Officer of Topaz Pharmaceuticals Inc., a specialty
pharmaceutical company acquired by Sanofi Pasteur in the fourth quarter of 2011. From June 2010 to November 2010 and October 2011
to January 2012, Dr. Strobeck worked as a consultant. From January 2008 to May 2010, Dr. Strobeck served as Chief
Business Officer of Trevena, Inc., a pharmaceutical company. Prior to joining Trevena, Dr. Strobeck held management roles at
GlaxoSmithKline plc, a pharmaceuticals company, and venture capital firms SR One Limited and EuclidSR Partners, L.P. Dr. Strobeck
currently serves on the board of directors of Horse Power For Life, a nonprofit organization dedicated to improving the quality of life
for individuals diagnosed with cancer, a position he has held since 2012. Dr. Strobeck received his B.S. in Biology from St. Lawrence
University and his Ph.D. in Pharmacology and Biophysics from the University of Cincinnati, and completed his post-doctoral fellowship
at the University of Pennsylvania. There is no information that is required to be disclosed with respect to Dr. Strobeck pursuant
to Item 404(a) of Regulation S-K.
On June 21, 2022, in connection with Dr. Strobeck’s
commencement of employment, the Company entered into an employment agreement with Dr. Strobeck pursuant to which he will serve as
the Company’s President and Chief Executive Officer (the “Employment Agreement”). The Employment Agreement provides
that Dr. Strobeck will serve as an at-will employee. Dr. Strobeck will receive an annualized base salary of $550,000 (“Base
Salary”). He will be eligible to earn year-end performance bonuses with a target bonus opportunity of 60% of his Base Salary (“Target
Bonus”) and is eligible to participate in the employee benefit plans and programs generally available to the Company’s similarly
situated senior executives. Dr. Strobeck is also eligible to receive annual long-term incentive grants consistent with similar practices
for the Company’s senior executives, awarded at the discretion of the Compensation Committee of the Board. In connection with his
commencement of employment, he received an initial equity grant comprised of a time-based option to purchase up to 400,000 shares of the
Company’s common stock (the “Initial Time-Based Options”).
Under the Employment Agreement, upon a termination
of Dr. Strobeck’s employment due to death or Disability, any equity awards held by Dr. Strobeck subject to time-based
vesting conditions will accelerate and become fully vested. All stock options held by Dr. Strobeck that are exercisable as of the
date of such termination, including any stock options that accelerate in connection with such termination, will remain exercisable until
the earlier of one year following such termination and the expiration date of the stock options.
Under the Employment Agreement, upon a termination
of Dr. Strobeck’s employment by the Company without Cause or by Dr. Strobeck for Good Reason, Dr. Strobeck will be
entitled to receive, subject to his execution and non-revocation of a separation agreement and release of claims in favor of the Company
and compliance with certain restrictive covenants, (i) an amount equal to his Base Salary then in effect, payable in equal installments
for a one-year period, (ii) a pro-rated bonus for the year of termination, based on achievement of actual performance for the full
performance period and pro-rated based on the portion of the performance period Dr. Strobeck was employed prior to termination, payable
in a lump sum after the completion of the full performance, (iii) reimbursement of COBRA coverage for up to one year (or, if sooner,
until he receives substantially similar coverage from another employer), and (iv) Dr. Strobeck’s Initial Time-Based Options
will continue to vest for a period of one year and all stock options held by Dr. Strobeck that are exercisable as of the date of
such termination and all stock options that become exercisable over the one-year period following such termination, will remain exercisable
until the earlier of one year following such termination and the expiration date of the stock options.
Under the Employment Agreement, in the event of
a Change of Control, upon a termination of Dr. Strobeck’s employment by the Company without Cause or by Executive for Good
Reason during the Effective Period, subject to his compliance with certain restrictive covenants, Dr. Strobeck will be entitled to
receive (i) an amount equal to the sum of (A) 1.5 times his Base Salary then in effect plus (B) 100% of his annual Target
Bonus, (ii) reimbursement of COBRA coverage for up to two years (or, if sooner, until he receives substantially similar coverage
from another employer or is no longer eligible for COBRA coverage) and (iii) any equity awards held by Dr. Strobeck subject
to time-based vesting conditions will accelerate and become fully vested and all stock options held by Dr. Strobeck that are exercisable
as of the date of such termination, including any stock options that accelerate in connection with such termination, will remain exercisable
until the expiration date of the stock options.
In connection with the Employment Agreement, Dr. Strobeck
also entered into the Company’s form of Employee Confidentiality, Assignment of Inventions, Non-Interference and Non-Competition
Agreement.
Capitalized terms used in herein, but not defined,
shall have the meanings given to them in the Employment Agreement. The foregoing summary of the Employment Agreement does not purport
to be a complete description of the Employment Agreement and is qualified in its entirety by reference to the full text of the Employment
Agreement, which the Company intends to file with its quarterly report on Form 10-Q for the quarter ended June 30, 2022.