Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes ☐ No ☒
Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days) Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation
S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post
such files). Yes ☒ No ☐
Indicate by check mark if disclosure of
delinquent filers pursuant to Item 405 of Regulation
S-K
(§ 229.405) is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form
10-K
or any amendment to this Form
10-K. ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, smaller reporting company, or an emerging growth company. See the definitions of large accelerated filer, accelerated filer, smaller reporting company, and emerging growth company in Rule
12b-2
of the Exchange Act. (Check one):
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period
for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒
Indicate
by check mark whether the registrant is a shell company (as defined in Exchange Act Rule
12b-2) Yes ☐ No ☒
Based on the closing price of the registrants Common Stock on the last business day of the registrants most recently completed second fiscal
quarter, which was June 30, 2016, the aggregate market value of its shares (based on a closing price of $3.00 per share) held by
non-affiliates
was approximately $39.3 million. Shares of the
registrants Common Stock held by each executive officer and director and by each entity or person that owned five percent or more of the registrants outstanding Common Stock were excluded in that such persons may be deemed to be
affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.
As of March 31, 2017, there
were 20,794,193 shares of common stock outstanding.
PART III
Item 10.
|
Directors, Executive Officers and Corporate Governance
|
Board of Directors
Our board of directors currently consists of nine directors. Set forth below is certain information regarding our current directors as
of the date hereof.
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Name
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Position
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Age
|
|
Douglas M. Fambrough, III, Ph.D.
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|
President, Chief Executive Officer and Director
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|
|
48
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Martin Freed, M.D.
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Director
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|
56
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|
Brian K. Halak, Ph.D.
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Director
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45
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Stephen J. Hoffman, M.D., Ph.D.
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|
Director
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|
|
63
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|
Peter Kolchinsky, Ph.D.
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Director
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40
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Adam M. Koppel, M.D., Ph.D.
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Director
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47
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Dennis H. Langer, M.D., J.D.
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|
Director
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65
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David M. Madden
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Chairman
|
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54
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Bruce Peacock
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Director
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65
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Douglas M. Fambrough, III, Ph.D.
Douglas M. Fambrough, III, Ph.D.
has served as a member
of our board of directors since April 2007 and as our president and chief executive officer since May 2010. From 2000 to May 2010, Dr. Fambrough held various positions at Oxford Bioscience Partners, a life science venture capital firm, most
recently as a general partner. During his years at Oxford Bioscience Partners, he specialized in financing innovative life science technology companies, including the Company, Sirna Therapeutics, Inc. (acquired by Merck & Co., Inc.),
Solexa, Inc. (acquired by Illumina, Inc.), and Xencor, Inc. (NASDAQ: XNCR), and served as a director of each of these companies. Dr. Fambrough has also served as a Trustee of Boston Biomedical Research Institute, a
not-for-profit
organization. Before joining Oxford Bioscience Partners, he was a genomic scientist at the Whitehead/MIT Center for Genome Research (now known as the Broad
Institute). Dr. Fambrough graduated from Cornell University and obtained his Ph.D. in genetics at the University of California, Berkeley.
Martin Freed, M.D.
Martin Freed, M.D. has served as a member of our board of directors since June 2016. Dr. Freed has
served as an independent consultant to several private pharmaceutical, biotechnology, and healthcare companies, specializing in clinical and general pharmaceutical development and clinical and regulatory strategy since February 2015. He
co-founded
and served as chief medical officer of Civitas Therapeutics, Inc., from December 2010 to October 2014 (acquired by Acorda Therapeutics, Inc. (Acorda)), and as senior vice president, clinical development
of Acorda from October 2014 through January 2015. In addition, Dr. Freed has served as chief medical officer and has provided strategic and operational planning and execution, as well as medical leadership for clinical pharmacology and
development strategy and preclinical development for multiple pharmaceutical companies throughout his career. These companies include Avila Therapeutics, Inc., Taligen Therapeutics, Adnexus Therapeutics, Inc. (acquired by Bristol-Myers Squibb), and
Vitae Pharmaceuticals, Inc. Dr. Freed spent nearly 14 years at GlaxoSmithKline and its predecessor, SmithKline Beecham Pharmaceuticals or SmithKline Beecham, where he served numerous roles including vice president, clinical development and
medical affairs in the metabolism therapeutic area. He has authored over 100 publications or presentations. Dr. Freed has been Board Certified in Internal Medicine, Nephrology and Clinical Pharmacology. He performed his internal medicine
residency at Temple University Hospital and nephrology fellowship at
Yale-New
Haven Hospital. A Fellow of the American College of Physicians, Dr. Freed received his B.S. with Distinction in Biology from
the University of Delaware and M.D. from Pennsylvania State Universitys College of Medicine.
Brian K. Halak, Ph.D.
Brian K. Halak, Ph.D. has served as a member of our board of directors since August 2010. Dr. Halak is currently a partner of Domain Associates, LLC, which he joined in 2001. Prior to joining Domain Associates, LLC, Dr. Halak was
an associate with Advanced Technology Ventures. Prior to that, Dr. Halak was a consultant at the Wilkerson Group. Dr. Halak currently serves as a member of the boards of directors of Alimera Sciences, Inc. (NASDAQ: ALIM), BioNano Genomics,
Inc., Kona Medical, Inc., Zyga Technology, Inc. and WindMIL Therapeutics, Inc. where he is also president and chief executive officer. Dr. Halak also serves as a member of the Advisory Board for the Department of Bioengineering of the
University of Pennsylvania, an advisor to Elm Street Ventures, and a director on the board of Life Sciences Pennsylvania. Dr. Halak previously served on the boards of directors of Eddingpharm, Inc., Esprit Pharma, Inc. (until acquired by
Allergan, Inc.), GI Dynamics, Inc. (ASX: GID), Tobira Therapeutics, Inc. (NASDAQ: TBRA), and Vanda Pharmaceuticals, Inc. (NASDAQ: VNDA). Dr. Halak received his BSE in bioengineering from the University of Pennsylvania and his Ph.D. in
immunology from the Thomas Jefferson University.
2
Stephen J. Hoffman, M.D., Ph.D.
Stephen J. Hoffman, M.D., Ph.D.
has served
as a member of our board of directors since November 2007. Dr. Hoffman has been a senior advisor to PDL BioPharma, Inc. since February 2014. Prior to that, he served as a managing director at Skyline Ventures, a venture capital firm, from May
2007 until February 2014. From January 2003 to March 2007, Dr. Hoffman was a general partner at TVM Capital, a venture capital firm. From 1994 to 2002, he served as president, chief executive officer and a member of the board of directors of
Allos Therapeutics, Inc., a biopharmaceutical company, where he remained as chairman of the board until it was acquired by Spectrum Pharmaceuticals, Inc. in September 2012. From 1990 to 1994, Dr. Hoffman completed a fellowship in clinical
oncology and a residency/fellowship in dermatology, both at the University of Colorado. Dr. Hoffman was the scientific founder of Somatogen Inc., a biotechnology company that was acquired by Baxter International, Inc. in 1998, where he held the
position of vice president of science and technology from 1987 until 1990. Dr. Hoffman currently serves on the board of directors of AcelRx Pharmaceuticals, Inc. (NASDAQ: ACRX). Previously, Dr. Hoffman also served on the boards of
directors of Genocea Biosciences, Inc. (NASDAQ: GNCA), which he resigned from effective April 11, 2017, and Sirtris Pharmaceuticals, Inc., a pharmaceutical company that was acquired by GlaxoSmithKline (NYSE: GSK) in 2008. Dr. Hoffman holds
a Ph.D. in
bio-organic
chemistry from Northwestern University and an M.D. from the University of Colorado School of Medicine.
Peter Kolchinsky, Ph.D.
Peter Kolchinsky, Ph.D. has served as a member of our board of directors since July 2013.
Dr. Kolchinsky is a founding partner and portfolio manager at RA Capital, where he has been since September 2004. He is active in both public and private investments across the pharmaceutical, medical devices, diagnostics and life-science tools
industries. Dr. Kolchinsky authored the
e-book
The Entrepreneurs Guide to a Biotech Startup. Dr. Kolchinsky currently also serves as a member of the boards of directors of Lantos
Technologies, Inc., Wave Life Sciences, G1 Therapeutics, Antera Therapeutics, Inc., Sojournix, Inc., and Ivantis, Inc. In the past, Dr. Kolchinsky served on the Board of Global Science and Technology for the National Academies of Sciences. He
received a Ph.D. in virology from Harvard University and a bachelors degree from Cornell University.
Adam M. Koppel, M.D.,
Ph.D.
Adam M. Koppel, M.D., Ph.D. joined our board of directors in April 2017. Dr. Koppel rejoined Bain Capital in 2016 as a managing director of Bain Capital Life Sciences. He had initially joined Bain Capital Public Equity in
2003 where he was a leader within the healthcare sector until
mid-2014.
During the period
mid-2014
to
mid-2016,
Dr. Koppel
worked at Biogen, Inc. (NASDAQ: BIIB) where he served as executive vice president of corporate development and chief strategy officer. Prior to joining Bain Capital Public Equity in 2003, Dr. Koppel was an associate principal at
McKinsey & Co in New Jersey where he served a variety of healthcare companies. Dr. Koppel received an M.D. and Ph.D. in neuroscience from the University of Pennsylvania School of Medicine. He also received an M.B.A. from The Wharton
School at the University of Pennsylvania, where he was a Palmer Scholar. He graduated magna cum laude from Harvard University with an AB and AM in History and Science. Dr. Koppel currently serves on the board of directors of Trevena, Inc.
(NASDAQ: TRVN), PTC Therapeutics, Inc. (NASDAQ: PTCT), and Solid Biosciences, LLC.
Dennis H. Langer, M.D., J.D.
Dennis H.
Langer, M.D., J.D. has served as a member of our board of directors since November 2007. Dr. Langer previously served as the chairman of the board of directors and chief executive officer of AdvanDx, Inc., from January 2013 to August 2014.
Dr. Langer has been a clinical professor in the department of psychiatry at Georgetown University School of Medicine since September 2003. From August 2005 to May 2010, Dr. Langer served as managing partner of Phoenix IP Ventures, LLC.
From January 2004 to July 2005, he served as president, North America of Dr. Reddys Laboratories, Inc. (NYSE: RDY). From September 1994 until January 2004, Dr. Langer held several positions at GlaxoSmithKline plc (NYSE: GSK) and its
predecessor, SmithKline Beecham, culminating with senior vice president of research and development. Dr. Langer currently serves on the board of directors of Myriad Genetics, Inc. (NASDAQ: MYGN) and Pernix Therapeutics Holdings, Inc.
(NASDAQ:PTX). Dr. Langer previously served on the boards of directors of Auxilium Pharmaceuticals, Inc. (NASDAQ: AUXL), Cytogen Corporation (NASDAQ:CYTO) (acquired by EUSA Pharma, Inc.), Delcath Systems, Inc. (NASDAQ: DCTH), Myrexis, Inc.
(NASDAQ:MYRX), Pharmacopeia, Inc. (NASDAQ:PCOP) (acquired by Ligand Pharmaceuticals Inc.) and Sirna Therapeutics, Inc. (NASDAQ:RNAI) (acquired by Merck & Co., Inc.). Dr. Langer received a J.D. (cum laude) from Harvard Law School, an
M.D. from Georgetown University School of Medicine and a B.A. in biology from Columbia University.
David M. Madden
. David
M. Madden has served as a member and the chairman of our board of directors since June 2009. Mr. Madden is a founder and principal of Narrow River Management, LP, an investment management company with a focus on equity investments in the
emerging pharmaceutical industry, where he has been since 2004. Mr. Madden has served as chief executive officer and a member of the board of directors of River Vision Development Corporation since 2011. Mr. Madden previously served as
interim president and chief executive officer of Adolor Corporation (NASDAQ: ADLR) from August 2005 to December 2006 and the chairman of its board of directors until it was acquired by Cubist Pharmaceuticals, Inc. (NASDAQ: CBST) in December 2011.
Mr. Madden was
co-chief
executive officer of Royalty Pharma AG, a private
3
investment management firm specializing in the acquisition of royalty interests in pharmaceutical products, from October 2000 to 2003, and a member of its board of directors until March 2004.
From 1997 to October 2000, he served as a managing member of Pharmaceutical Partners, LLC. From 1992 to 1995, Mr. Madden was president and chief executive officer and a member of the board of directors of Selectide Corporation. Mr. Madden
has a B.S. in Electrical Engineering from Union College and an M.B.A. from Columbia University.
Bruce A. Peacock
. Bruce A.
Peacock has served as a member of our board of directors since September 2014. Mr. Peacock served as the chief financial and business officer of Ophthotech Corporation from August 2013 to September 2014 and served as its chief business officer
from September 2010 to August 2013. From April 2008 to February 2011, Mr. Peacock served as president, chief executive officer and
co-chairman
of the board of directors of Alba Therapeutics where he
continues to serve as
co-chairman
of the board of directors. Additionally, Mr. Peacock has served as a venture partner of SV Life Sciences Advisors, LLC since 2006 and as executive chairman of CARMA
Therapeutics LLC since October 2016. Previously, Mr. Peacock served as the chief executive officer and director of The Little Clinic; president, chief executive officer and director of Adolor Corporation (NASDAQ: ADLR) (acquired by Cubist
Pharmaceuticals, Inc. (NASDAQ: CBST)); president, chief executive officer and director of Orthovita Inc. (acquired by Stryker Corporation); executive vice president, chief operating officer and director of Cephalon Inc. (acquired by Teva
Pharmaceutical Industries Ltd.); and as chief financial officer of Centocor Inc. (acquired by Johnson & Johnson (NYSE: JNJ)). Mr. Peacock currently serves as the
co-chairman
of the board of
directors of Alba Therapeutics Corporation and is a member of the board of directors of Windtree Therapeutics, Inc. (NASDAQ:WINT) (formerly known as Discovery Laboratories, Inc. (NASDAQ: DSCO)), Invisible Sentinel Inc., Ocular Therapeutix (NASDAQ:
OCUL), and PanOptica, Inc. Mr. Peacock holds a B.A. from Villanova University and is a certified public accountant.
Executive Officers
The following sets forth information about our executive officers as of the date hereof.
|
|
|
|
|
|
|
Name
|
|
Position
|
|
Age
|
|
Douglas M. Fambrough, III, Ph.D.
|
|
President, Chief Executive Officer and Director
|
|
|
48
|
|
Bob D. Brown, Ph.D.
|
|
Chief Scientific Officer, Senior Vice President
|
|
|
52
|
|
John B. Green
|
|
Chief Financial Officer
|
|
|
63
|
|
James B. Weissman
|
|
Chief Business Officer
|
|
|
55
|
|
The following is biographical information as of the date hereof for our executive officers other than Douglas
M. Fambrough, III, Ph.D., whose biographical information is included in Board of Directors above.
Bob D. Brown, Ph.D.
Bob D. Brown, Ph.D. initially served as our senior vice president of research beginning in May 2008 and has served as our chief scientific officer since January 2012. From March 2003 to March 2008, Dr. Brown held various positions at
Genta Incorporated, most recently as its vice president of research and technology. Previously, he was a
co-founder
and vice president of research and development of Oasis Biosciences Inc., which was acquired
by
Gen-Probe
Incorporated. Dr. Brown is an inventor or
co-inventor
on 16 issued patents and dozens of patent applications covering oligonucleotide and conventional
small molecule therapeutic agents, diagnostic tool and oligonucleotide and small molecule drug delivery technologies. Dr. Brown holds a Ph.D. in molecular biology from the University of California, Berkeley, and a B.S. in chemistry and biology
from the University of Washington, Seattle.
John B. Green
. John B. (Jack) Green initially joined us as interim
chief financial officer in January 2016 and became our full time chief financial officer in April 2016. Mr. Green was the chief financial officer of Verastem, Inc. from May 2013 until April 2016. Prior to joining Verastem, Inc., from March 2011
until December 2012, Mr. Green was Vice President, Finance of
On-Q-ity
Inc. and from May 2002 until June 2010, Mr. Green was the Senior Vice President and
Chief Financial Officer of GTC Biotherapeutics, Inc. (formerly Genzyme Transgenics Corporation). Mr. Green is a Certified Public Accountant. He holds a masters degree in business administration from Boston University Graduate School of
Management and a bachelors degree from College of the Holy Cross.
James B. Weissman
. James B. Weissman has served as
our chief business officer since January 2012. From January 2006 to January 2012, Mr. Weissman was senior director and then vice president, business development of MannKind Corporation (NASDAQ: MNKD), where he was responsible for leading the
companys activities related to licensing, new products and strategic planning. Prior to MannKind, Mr. Weissman held leadership positions in both business development and marketing at Pfizer Pharmaceuticals, Inc. in Tokyo, most recently as
senior director of marketing, responsible for the sales, profit and strategic targets for the companys specialty products, in a variety of therapeutic areas. Mr. Weissman also served as
4
a board member and vice president of the North Jersey Masters Track and Field Club from October 2008 to January 2012 and served as a board member of the Town of Bedford, Massachusetts Trails
Committee from July 2012 to December 2015. Mr. Weissman holds a B.S. from Bates College in Maine.
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Exchange Act requires insiders, including our executive officers, directors and beneficial
owners of more than 10% of our common stock, to file reports of ownership and changes in ownership of our common stock with the SEC and The NASDAQ Stock Market LLC (NASDAQ), and to furnish us with copies of all Section 16(a) forms they file. Based
solely on our review of the copies of such forms received by us, or written representations from reporting persons, we believe that our insiders complied with all applicable Section 16(a) filing requirements during 2016.
Code of Ethics
We have adopted a code of
business conduct and ethics applicable to all employees, including the principal executive officer, principal financial officer and principal accounting officer or controller, or persons performing similar functions. The code of business conduct and
ethics is available on our website at
www.dicerna.com
. Amendments to, and waivers from, the code of business conduct and ethics that apply to any director, executive officer or persons performing similar functions, and that relate to any
element of the code of ethics definition enumerated in Item 406(b) of Regulation
S-K
will be disclosed at the website address provided above and, to the extent required by applicable regulations, on a Current
Report on Form
8-K
filed with the SEC.
Stockholder Recommendations and Nominees
The nominating and corporate governance committee will consider for nomination any qualified director candidates recommended by our
stockholders. Any stockholder who wishes to recommend a director candidate is directed to submit in writing the candidates name, biographical information, relevant qualifications and other information required by our bylaws to our Secretary at
our principal executive offices before the deadline set forth in our bylaws. All written submissions received from our stockholders will be reviewed by the nominating and corporate governance committee at the next appropriate meeting. The nominating
and corporate governance committee will evaluate any suggested director candidates received from our stockholders in the same manner as recommendations received from management, committee members or members of our board.
Audit Committee
The board of directors
has established an audit committee that oversees managements conduct of our corporate accounting and financial reporting process. The members of the audit committee are Mr. Peacock, Dr. Hoffman and Mr. Madden. Mr. Peacock
serves as the chairman of the committee. Our board of directors has determined that each member of the audit committee is independent for audit committee purposes as that term is defined in the applicable rules of the SEC and NASDAQ. Our
board of directors has designated each of Mr. Peacock and Dr. Hoffman as an audit committee financial expert as defined under the applicable rules of the SEC.
Item 11.
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Executive Compensation
|
Executive Compensation
Overview
Our executive
compensation program is based on a
pay-for-performance
philosophy. We designed our executive compensation program to achieve the following primary objectives:
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provide compensation and benefit levels that will attract, retain, motivate and reward a highly talented executive team;
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create an environment that fosters high performance and strong sense of urgency to bring our novel therapeutic approach to patients;
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5
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establish a direct link between the Company, individual and team performance and results and our executives compensation; and
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align the interests and objectives of our executives with those of our stockholders by linking executive equity awards to long-term stockholder value creation.
|
Compensation for our named executive officers is comprised primarily of the following three main components:
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Base Salary
. Base salaries are determined on a
case-by-case
basis for each executive, including consideration of each officers
experience, expertise and performance, as well as market compensation levels for similar positions.
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|
Annual Cash Incentive Bonuses
. Annual cash incentive bonuses are contingent upon our achievement of certain operational and financial objectives, which for 2016 primarily related to
pre-clinical
and clinical development, technology platform, business development and financial position goals, and also depends upon the performance of the individual. Each executives target bonus amount
is expressed as a percentage of the executives base salary and intended to be commensurate with the executives position and responsibilities. Target bonuses for our named executive officers ranged from 40 to 60 percent of base
salary for the year ended December 31, 2016.
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Long-term Equity Incentives
. We believe equity awards in the form of options to purchase shares of our common stock provide an incentive for our executives to focus on driving growth in our stock price and
long-term value creation and help us to attract and retain key talent. In addition, the granting of options helps ensure that the interests of our executive officers are aligned with those of our stockholders as the options only have value if the
value of the Companys stock increases after the date the option is granted. In 2016, we granted options to our named executive officers that would vest based on the executives continued service to the Company to provide an additional
retention incentive.
|
Our named executive officers are entitled to certain benefits if the executives employment
terminates in certain circumstances or if a change of control occurs. We also may provide our named executive officers with relocation, housing or other benefits in certain circumstances. However, we do not provide any of our named executive
officers with a tax
gross-up
payment on any severance or change of control benefits although we may provide tax reimbursement payments on relocation and other benefits.
Our compensation committee reviews our named executive officers overall compensation packages on an annual basis or more frequently as
it deems appropriate. From time to time, we may retain independent compensation consultants as we consider appropriate to help identify appropriate peer group companies and to obtain and evaluate current executive compensation data. The compensation
committee retained an independent compensation consultant in designing our executive compensation program for 2016. The compensation committee has assessed the independence of its independent compensation consultant pursuant to the NASDAQ rules, and
the Company concluded that the compensation consultants work for the compensation committee did not raise any conflict of interest.
2016
Summary Compensation Table
The following table provides a summary of compensation paid to our principal executive officer and each
of our two other most highly compensated executive officers who were serving the Company as of December 31, 2016 (collectively, the named executive officers).
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Name and principal
position
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Fiscal
year
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Base
salary
($)
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Bonus
($)
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Stock
awards
($)
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Option
awards
($)
(1)
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Non-equity
incentive
plan
compensation
($)
(2)
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All other
compensation
($)
(3)
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Total
($)
|
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Douglas M. Fambrough, III, Ph.D.
|
|
|
2016
|
|
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490,000
|
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1,317,888
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179,084
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18,142
|
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2,005,115
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|
President and Chief Executive Officer
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2015
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|
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490,000
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2,618,710
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229,320
|
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16,636
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3,354,666
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John B. Green
(4)
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2016
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307,636
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965,152
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105,000
|
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15,716
|
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1,393,504
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|
Chief Financial Officer
|
|
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2015
|
|
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Bob D. Brown, Ph.D.
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2016
|
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380,000
|
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732,160
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124,568
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12,090
|
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1,248,818
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|
Chief Scientific Officer, Senior Vice President
|
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2015
|
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380,000
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872,903
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148,200
|
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23,858
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1,424,961
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6
(1)
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Pursuant to applicable SEC rules, the amounts reported in the Option Awards column reflect the grant date fair value of the option awards granted to our named executive officers during the year, and do not
reflect the actual amounts earned. These values have been determined under the principles used to calculate the value of equity awards for purposes of our consolidated financial statements. For a discussion of the assumptions and methodologies used
to calculate the amounts referred to above, please see the discussion of option awards contained in Note 8, Common Stock and Stock Option Plan, to our consolidated financial statements for the fiscal year ended December 31, 2016 included in our
Original Filing.
|
(2)
|
These amounts include payments under our annual incentive bonus plan, which is based on our performance against certain operational and financial goals established by our compensation committee, as well as the
performance of the individual. Based on what the compensation committee determined was progress with respect to our
pre-clinical
and clinical development, technology platform, business development and
financial position goals, and based upon individual performance, our named executive officers were awarded bonuses of 54% to 82% of target bonus levels for 2016.
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(3)
|
The amounts reported in this column include matching contributions we made to each executives account under our 401(k) plan.
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(4)
|
Mr. Green was not a named executive officer prior to 2016.
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Employment Agreements
Douglas M. Fambrough, III, Ph.D.
In July
2016, we entered into an amended and restated employment agreement with Dr. Fambrough (Fambrough Agreement). Under the Fambrough Agreement, Dr. Fambrough will receive an annual base salary of $490,000 and will be eligible to
participate in the Companys annual bonus program, with a target opportunity equal to 60% of base salary. Per the Fambrough Agreement, Dr. Fambroughs employment with us is
at-will,
and his employment is not for a specified term. The Fambrough Agreement also provides for Dr. Fambrough to participate in our benefit programs made available to our senior executives generally.
Under the Fambrough Agreement, if Dr. Fambrough is terminated by us for cause (as such term is defined in the Fambrough
Agreement), or by him other than for good reason (as such term is defined in the Fambrough Agreement), Dr. Fambrough will receive the following severance benefits: (i) 18 months of continued base salary payments; (ii) a
pro rata portion of his annual bonus for the year in which the termination occurs, based on actual performance during the entire performance period; (iii) 18 months of Company-reimbursed Consolidated Omnibus Budget Reconciliation Act (COBRA)
premiums; and (iv) outstanding and unvested stock options that were scheduled to vest in the
12-month
period following his termination of employment will accelerate in full.
In addition, if we terminate Dr. Fambrough other than for cause or if Dr. Fambrough terminates his employment for good reason during
the
one-year
period following a change in control (as defined in the Fambrough Agreement), then Dr. Fambrough will receive the following severance benefits: (i) a lump sum severance payment equal to
1.5, multiplied by the sum of Dr. Fambroughs annual base salary and target annual bonus; (ii) a pro rata portion of Dr. Fambroughs target bonus for the year in which the termination occurs; (iii) 18 months of
Company-reimbursed COBRA premiums; and (iv) outstanding and unvested stock options will accelerate in full. Under the terms of the Fambrough Agreement, if any payment or other benefit provided to Dr. Fambrough pursuant to the Fambrough
Agreement constitutes an excess parachute payment within the meaning of Section 280G of the Internal Revenue Code of 1986, as amended (Code), and would be subject to an excise tax imposed by Section 4999 of the Code, then the
amounts actually paid to Dr. Fambrough will be reduced to the extent that such a reduction would result in Dr. Fambrough receiving a greater amount than he would have received if the payment had been made in full.
Dr. Fambroughs right to receive these severance benefits is subject to his providing a release of claims in favor of us.
Dr. Fambrough has also entered into an agreement that includes noncompetition and nonsolicitation covenants in favor of us that apply during Dr. Fambroughs employment with us and for two years thereafter.
Bob D. Brown, Ph.D. and John B. Green
In
July 2016, we entered into an amended and restated employment agreement with Dr. Brown and, in November 2016, we entered into an amended and restated employment agreement with Mr. Green (collectively, Employment Agreements) to reflect that
their employment with us is
at-will,
and that their employment was not for a specified term. Under the Employment Agreements, Dr. Brown and Mr. Green will receive an annual base
salary of $380,000 and $350,000,
7
respectively, and each will be eligible to participate in the Companys annual bonus program, with a target opportunity equal to 40% of base salary. The Employment Agreements also provide
for each executive to participate in our benefit programs made available to our senior executives generally.
Pursuant to the respective
Employment Agreements, if we terminate the executive other than for cause (as defined in the respective Employment Agreement) or if the executive officer terminates his employment for good reason (as defined in the respective
Employment Agreement), then the executive will receive the following severance benefits: (i) 12 months of continued base salary payments; (ii) a pro rata portion of his annual bonus for the year in which the termination occurs, based on
actual performance during the entire performance period; and (iii) 12 months of Company-reimbursed COBRA premiums.
In addition, if
we terminate the executive other than for cause or if the executive terminates his employment for good reason during the
one-year
period following a change in control (as defined in the Employment Agreements),
then the executive officer will receive the following severance benefits: (i) a lump sum severance payment equal to the sum of the executives annual base salary and target annual bonus; (ii) a pro rata portion of the executives
target bonus for the year in which the termination occurs; and (iii) 12 months of Company-reimbursed COBRA premiums. Except as otherwise provided for in an award agreement, any outstanding equity awards will vest in full upon a change in
control of the Company. Under the terms of the Employment Agreements, if any payment or other benefit provided to the executive pursuant to his employment agreement constitutes an excess parachute payment within the meaning of
Section 280G of the Code, and would be subject to an excise tax imposed by Section 4999 of the Code, then the amounts actually paid to the executive officer will be reduced to the extent that such a reduction would result in the executive
officer receiving a greater amount than he would have received if the payment had been made in full.
Each executives right to
receive the aforementioned severance benefits is subject to him providing a release of claims in favor of us. Each of Dr. Brown and Mr. Green also have entered into an agreement that includes noncompetition and nonsolicitation covenants in
favor of us that apply during each of these employees employment with us and for two years thereafter.
Defined Contribution Plan
As part of our overall compensation program, we provide all full-time employees, including our named executive officers, with the opportunity
to participate in a defined contribution 401(k) plan. Employees may elect to defer up to 96 percent of their eligible compensation (not to exceed the statutorily prescribed annual limit) in the form of elective deferral contributions to our
401(k) plan. Our 401(k) plan also has a
catch-up
contribution feature for employees aged 50 or older (including those who qualify as highly compensated employees) who can defer amounts
over the statutory limit that applies to all other employees. We currently provide matching contributions under the plan of up to six percent of an employees eligible compensation.
Outstanding Equity Awards at December 31, 2016
The following table presents information regarding the outstanding stock options held by each of the named executive officers as of
December 31, 2016, including the vesting dates for the portions of these awards that had not vested as of that date. None of the named executive officers held any outstanding restricted stock or other equity awards as of that date.
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Name
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Grant
date
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Number of
securities
underlying
unexercised
options
exercisable
(#)
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Number of
securities
underlying
unexercised
options
unexercisable
(#)
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Equity
incentive
plan
awards:
number of
securities
underlying
unexercised
unearned
options
(#)
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Option
exercise
price
($)
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Option
expiration
date
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Douglas M. Fambrough, III, Ph.D.
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9/24/2013
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246,093
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35,157
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(1)
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3.42
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9/23/2023
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9/24/2013
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225,000
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56,250
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(6)
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3.42
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9/23/2023
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4/16/2014
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353,924
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117,976
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(2)
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16.30
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4/15/2024
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1/9/2015
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112,499
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112,501
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(3)
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18.50
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1/8/2025
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1/8/2016
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56,249
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168,751
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(4)
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9.09
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1/8/2026
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8
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John B. Green
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4/14/2016
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265,000
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(5)
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5.45
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4/14/2026
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Bob D. Brown, Ph.D.
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10/14/2010
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267
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3.42
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10/13/2020
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9/24/2013
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98,437
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16,407
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(1)
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3.42
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9/23/2023
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9/24/2013
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87,500
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3.42
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9/23/2023
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4/16/2014
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123,787
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41,263
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(2)
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16.30
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4/15/2024
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1/9/2015
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37,499
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37,501
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(3)
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18.50
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1/8/2025
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1/8/2016
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31,249
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93,751
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(4)
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9.09
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1/8/2026
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(1)
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These options vest in monthly installments, with the first such installment vesting on July 30, 2013 and an additional installment vesting on the last day of each of the 47 months thereafter.
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(2)
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These options vest in monthly installments, with the first such installment vesting on January 30, 2014 and an additional installment vesting on the last day of each of the 47 months thereafter.
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(3)
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These options vest in monthly installments, with the first such installment vesting on January 30, 2015 and an additional installment vesting on the last day of each of the 47 months thereafter.
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(4)
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These options vest in monthly installments, with the first such installment vesting on January 30, 2016 and an additional installment vesting on the last day of each of the 47 months thereafter.
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(5)
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These options vest as follows: 25% on April 14, 2017, and the remaining 75% in 36 equal monthly installments thereafter.
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(6)
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These options vest based on the achievement of certain business development goals.
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Director Compensation
Overview
Under our
non-employee
director compensation program, we compensate our
non-employee
directors with a combination of cash and equity. Each
non-employee
director is eligible to receive an annual retainer of $35,000 for serving on the board of directors, and the chairperson of our board of directors is eligible to receive an additional annual
retainer of $25,000. The program also provides that we compensate the members of the board of directors for service on our committees as follows:
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The chairperson of our audit committee will receive an annual cash retainer of $15,000 for such service, and each of the other members of the audit committee will receive an annual cash retainer of $5,200;
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The chairperson of our compensation committee will receive an annual cash retainer of $10,000 for such service, and each of the other members of the compensation committee will receive an annual cash retainer of $5,200;
and
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The chairperson of our nominating and corporate governance committee will receive an annual cash retainer of $7,000 for such service, and each of the other members of the nominating and corporate governance committee
will receive an annual cash retainer of $5,200.
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Under our
non-employee
director
compensation program, each new
non-employee
director will be granted an option to purchase 25,000 shares of our common stock (or 30,000 shares in the case of a new chairperson of the board of directors) upon
his or her appointment to the board of directors, and each
non-employee
director continuing in office immediately after our annual meeting each year will be granted an option to purchase 15,000 shares of our
common stock (or 20,000 shares in the case of the chairperson of the board of directors). Each option granted under our director compensation program has an exercise price equal to the closing price of our common stock on the grant date. The initial
grants made to new
non-employee
directors will vest as to
one-third
of the grant after one year and as to the remaining
two-thirds
of the grant in quarterly installments over the
two-year
period thereafter, subject to the directors continued service through the applicable vesting
date. Grants made to continuing
non-employee
directors following our annual meeting each year vest one year after the grant date, subject to the directors continued service through the applicable vesting
date
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Director Compensation Table Year Ended December 31, 2016
The following table presents information regarding the compensation paid for 2016 to members of our board of directors who are not also
employed by us or any of our subsidiaries (our
non-employee
directors). The compensation paid to Douglas M. Fambrough, III, Ph.D., who is also our chief executive officer, is set forth above in the section
titled Executive Compensation and the related explanatory tables. Dr. Fambrough was not entitled to receive additional compensation for his service as a director. Dr. Koppel joined our board of directors in April 2017,
after the end of the fiscal year.
9
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Name
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Fees
earned or
paid in
cash
($)
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Option
awards
(1)
($)
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All other
compensation
($)
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Total
($)
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Martin Freed, M.D.
(2)
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20,692
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51,655
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72,347
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Brian K. Halak, Ph.D.
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45,000
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30,993
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75,993
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Stephen J. Hoffman, M.D., Ph.D.
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45,400
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30,993
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76,393
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Peter Kolchinsky, Ph.D.
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42,000
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30,993
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72,993
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Dennis H. Langer, M.D., J.D.
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40,200
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30,993
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71,193
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David M. Madden
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70,400
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41,324
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111,724
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Bruce Peacock
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50,000
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30,993
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80,993
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(1)
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Pursuant to applicable SEC rules, the amounts reported in the Option Awards column of the table above reflect the grant date fair value of the option
awards granted to our
non-employee
directors during 2016. These values have been determined under the principles used to calculate the value of equity awards for purposes of our financial statements. For a
discussion of the assumptions and methodologies used to calculate the amounts referred to above, please see the discussion of option awards contained in Note 8, Common Stock and Stock Option Plan, to our consolidated financial statements for the
fiscal year ended December 31, 2016 included in our Original Filing. As of December 31, 2016, our
non-employee
directors had outstanding option awards to acquire shares of our common stock as
follows: Dr. Freed, 25,000; Dr. Halak, 70,000; Dr. Hoffman, 70,000; Dr. Kolchinsky, 70,000; Dr. Langer, 77,305; Mr. Madden, 90,000; and Mr. Peacock, 55,000.
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(2)
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Dr. Freed commenced service on the board of directors on June 14, 2016.
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
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Securities Authorized for Issuance under Equity Compensation Plans
The following table provides information about the securities authorized for issuance under our equity compensation plans as of
December 31, 2016, which as of that date consisted of our 2007 Employee, Director and Consultant Stock Plan, as amended, 2010 Employee, Director and Consultant Equity Incentive Plan, as amended, Amended and Restated 2014 Performance Incentive
Plan, 2014 Employee Stock Purchase Plan and our 2016 Inducement Plan:
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Plan category
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Number of
shares to be
issued upon
exercise of
outstanding
options,
warrants
and
rights
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Weighted-
average
exercise
price
of
outstanding
options,
warrants
and
rights
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Number of
shares
remaining
available for
future
issuance
under
equity
compensation
plans
(excluding
securities
reflected
in
column (a))
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Total of
shares
reflected
in columns
(a) and (c)
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(a)
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(b)
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(c)
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(d)
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Equity compensation plans approved by stockholders
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5,099,449
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$
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10.08
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1,572,501
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(1)
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6,671,950
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Equity compensation plans not approved by stockholders
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250,000
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(2)
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250,000
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Total
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5,099,449
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$
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10.08
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1,822,501
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6,921,950
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(1)
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Includes 284,620 and 1,287,881 shares of common stock available for issuance under the Amended and Restated 2014 Performance Incentive Plan and the 2014 Employee Stock Purchase Plan, respectively, as of
December 31, 2016.
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(2)
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Shares of common stock issuable as of December 31, 2016 under the 2016 Inducement Plan, which was adopted by our Board of Directors in March 2016 pursuant to NASDAQ Listing Rule 5635(c)(4).
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10
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information regarding the ownership of our common stock as of March 31, 2017, by: (i) each
nominee for director; (ii) each of our named executive officers; (iii) all of our executive officers and directors as a group; and (iv) all those known by us to be beneficial owners of more than five percent of our common stock.
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Beneficial Ownership**
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Beneficial Owner
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Number of
Shares
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Percent
of
Total
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Fidelity Management & Research
Company
(1)
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2,762,611
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13.29
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%
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RA Capital Management, LLC
(2)
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2,428,571
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11.68
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%
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Domain Associates, L.L.C.
(3)
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1,786,908
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8.58
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%
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Skyline Ventures Partners V, L.P.
(4)
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1,742,123
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8.37
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%
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RTW Investments, LP
(5)
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2,043,216
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9.83
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%
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Douglas M. Fambrough, III, Ph.D.
(6)
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1,175,418
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5.37
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%
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Brian K. Halak, Ph.D.
(7)
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1,841,908
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8.83
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%
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Stephen J. Hoffman, M.D., Ph.D.
(8)
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55,000
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*
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Peter Kolchinsky, Ph.D.
(9)
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2,483,571
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11.91
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%
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Dennis H. Langer, M.D., J.D.
(10)
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177,328
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*
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David M. Madden
(11)
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190,011
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*
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Bruce Peacock
(12)
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33,746
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*
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Bob D. Brown, Ph.D.
(13)
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445,686
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2.10
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%
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John B. Green
(14)
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78,019
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*
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James Weissman
(15)
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293,796
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1.39
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%
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All executive officers and directors as a group (12 persons)
(16)
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6,774,483
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29.41
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%
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*
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Denotes ownership percentage less than one percent.
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**
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This table is based upon information supplied by officers, directors and principal stockholders and Forms 3, Forms 4 and Schedules 13D and 13G filed with the SEC. Unless otherwise indicated in the footnotes to this
table, we believe that each of the stockholders named in the table has sole voting and dispositive power with respect to the shares indicated as beneficially owned. Applicable percentages are based on 20,794,193 shares outstanding on March 31,
2017, adjusted as required by rules promulgated by the SEC. Unless otherwise set forth below, the address of each beneficial owner is 87 Cambridgepark Drive, Cambridge, MA 02140.
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(1)
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Based solely on the Schedule 13G/A No. 3 filed with the SEC on February 13, 2017 by FMR LLC, a Delaware limited liability company, Abigail P. Johnson, and Fidelity Growth Company Fund (Fidelity). FMR LLC, 245
Summer Street, Boston, Massachusetts 02210, is the beneficial owner of 2,762,611 shares of our common stock. FMR LLC has the sole power to direct the voting of 362,222 shares owned by it, and FMR LLC and Abigail P. Johnson, through its or her
control of Fidelity, each has sole power to dispose of the 2,762,611 shares of our common stock owned by FMR LLC. Members of the Johnson family, including Abigail P. Johnson, the Vice Chairman, the Chief Executive Officer and the President of FMR
LLC, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a
shareholders voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of
the shareholders voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. Neither FMR LLC nor Abigail P. Johnson has the sole power to vote or
direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act (Fidelity Funds) advised by Fidelity Management & Research Company (FMR Co), which power resides with the
Fidelity Funds Boards of Trustees. FMR Co carries out the voting of the shares under written guidelines established by the Fidelity Funds Boards of Trustees. FMR Co is the beneficial owner of 2,762,611 shares of our common stock held by
FMR LLC.
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(2)
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Based solely on the Schedule 13D filed with the SEC on February 5, 2014 by RA Capital Healthcare Fund, L.P.
(RA Fund), RA Capital Management, LLC (RA Capital) and Peter Kolchinsky, Ph.D. Consists of 2,428,571 shares of our common stock. RA Fund has the shared voting power and shared dispositive power with respect to 2,256,071 shares of our common stock.
RA Capital has the shared voting power and shared dispositive power with respect to 2,428,571 shares of
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11
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our common stock, including (a) 2,256,071 shares of our common stock held by RA Fund, for which RA Capital serves as the sole general partner, and (b) 172,500 shares of our common stock held in a
separately managed account, for which RA Capital serves as investment adviser. Dr. Kolchinsky and the managing member of RA Capital have the shared voting power and shared dispositive power with respect to 2,428,571 shares of our common stock,
reported for RA Capital, for which Dr. Kolchinsky serves as the manager. Each of RA Fund, RA Capital and Dr. Kolchinsky disclaims beneficial ownership for the shares, except to the extent of its or his pecuniary interest therein. The
address of the principal place of business of RA Fund, RA Capital and Peter Kolchinsky, Ph.D. is 20 Park Plaza, Suite 1200, Boston, MA 02116.
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(3)
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Based solely on the Schedule 13G filed with the SEC on February 5, 2015 by Domain Partners VIII, L.P. Consists of (a) 1,752,707 shares of our common stock held by Domain Partners VIII, L.P. (Domain Partners), (b)
21,041 shares of our common stock issuable upon exercise of a common stock warrant held by Domain Partners, (c) 13,004 shares of our common stock held by DP VIII Associates, L.P. (DP Associates), and (d) 156 shares of our common stock issuable upon
exercise of a common stock warrant held by DP Associates. James C. Blair, Brian H. Dovey, Jesse I. Treu, Brian K. Halak, a member of our board of directors, and Nicole Vitullo, the managing members of One Palmer Square Associates VIII, L.L.C., the
general partner of Domain Partners and DP Associates, share the power to vote or dispose of the shares held by Domain Partners and DP Associates and therefore each of the foregoing managing members may be deemed to have voting and dispositive power
with respect to such shares. Each of the foregoing managing members disclaims beneficial ownership of such shares except to the extent of his or her pecuniary interest therein, if any. The address of the principal place of business of Domain
Partners and DP Associates is One Palmer Square, Suite 515, Princeton, NJ 08542.
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(4)
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Based solely on the Schedule 13D filed with the SEC on February 14, 2014 and the Form 4 filed with the SEC on February 24, 2015 by Skyline Venture Partners V, L.P., a Delaware limited partnership (SVP),
Skyline Venture Management V, LLC, a California limited liability company (SVM), John G. Freund, M.D. and Yasunori Kaneko, M.D. SVP holds 1,719,671 shares of our common stock and common stock warrants to purchase 22,452 shares of our common stock.
Mr. Hoffman is a former member of SVM that has transitioned to an independent consultant of SVM, SVP or its affiliates with no financial interest, voting or dispositive power over the shares. John G. Freund, M.D. and Yasunori Kaneko, M.D. are
Managing Directors of SVM, the general partner of SVP, and may be deemed to share voting and dispositive power over the shares held by SVP. Each of Drs. Freund and Kaneko disclaims beneficial ownership of such shares, except to the extent of his
pecuniary interest therein. The address of the principal place of business of SVP, SVM and Drs. Freund, Kaneko and Hoffman is 525 University Avenue, Suite 520, Palo Alto, CA 94301.
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(5)
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Based solely on the Schedule 13G/A No. 2 filed with the SEC on February 15, 2017 by RTW Investments, LP, a Delaware limited partnership (RTWI), RTW Master Fund, Ltd., a company organized under the laws of the
Cayman Islands (RTW Fund), and Roderick Wong. RTWI, RTW Fund and Roderick Wong have shared voting power and share dispositive power with respect to 2,043,216 shares of our common stock. Each may be deemed to beneficially own such shares. The address
of the principal place of business of RTWI and Roderick Wong is c/o RTW Investments, LLC, 250 West 55
th
Street, 16
th
Floor, Suite A, New York,
New York 10019. The address and principal place of RTW Fund is c/o Intertrust Corporate Services (Cayman) Limited, 190 Elgin Avenue, George Town, Grand Cayman
KY1-9001,
Cayman Islands.
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(6)
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Consists of (a) 62,641 shares of our common stock and (b) 1,112,777 shares of our common stock issuable upon exercise of stock options exercisable within 60 days of March 31, 2017.
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(7)
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Consists of shares of our common stock held and issuable upon exercise of warrants held by Domain Partners and DP Associates as described in footnote (3) above, and 55,000 shares of common stock issuable upon
exercise of stock options within 60 days of March 31, 2017. Dr. Halak is a managing member of One Palmer Square Associates VIII, L.L.C., the general partner of Domain Partners and DP Associates, and may be deemed to share voting and
dispositive power over the shares held by Domain Partners and DP Associates. Dr. Halak disclaims beneficial ownership of such shares held by Domain Partners and DP Associates, except to the extent of his pecuniary interest therein.
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(8)
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Consists of 55,000 shares of common stock issuable upon exercise of stock options within 60 days of March 31, 2017. Mr. Hoffman is a former member of SVM that has transitioned to an independent consultant of
SVM, SVP or its affiliates with no financial interest, voting or dispositive power over the shares.
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(9)
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Consists of 2,428,571 shares of our common stock beneficially owned by RA Capital as described in footnote (2) above, and 55,000 shares of our common stock issuable upon exercise of options within 60 days of
March 31, 2017. Dr. Kolchinsky serves as the managing director of RA Capital, the sole general partner of RA Fund, and may be deemed to beneficially own the shares beneficially owned by RA Capital. Dr. Kolchinsky disclaims beneficial
ownership for the shares beneficially owned by RA Capital, except to the extent of his pecuniary interest therein.
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(10)
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Consists of (a) 71,428 shares of common stock held by Langer Family Holdings, LLLP, (b) 360 shares of common stock issuable upon exercise of stock options exercisable within 60 days of March 31, 2017 held by Langer
Family Holdings, LLLP, (c) 43,595 shares of common stock held by Dennis H. Langer, M.D., J.D., and (d) 61,945 shares of common stock issuable upon stock options exercisable within 60 days of March 31, 2017 held by Dennis H. Langer, M.D., J.D.
Dennis H. Langer, M.D., J.D. is a manager of Langer Family Investments, LLC, which is the general partner of Langer Family Holdings, LLLP. Dr. Langer disclaims beneficial ownership of the shares and options owned by Langer Family Holdings,
LLLP.
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12
(11)
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Consists of 120,011 shares of common stock and 70,000 shares of common stock issuable upon exercise of stock options within 60 days of March 31, 2017.
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(12)
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Consists of 33,746 shares of common stock issuable upon exercise of options exercisable within 60 days of March 31, 2017.
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(13)
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Consists of 19,339 shares of common stock and 426,347 shares of common stock issuable upon exercise of options exercisable within 60 days of March 31, 2017.
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(14)
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Consists of 78,019 shares of common stock issuable upon exercise of options exercisable within 60 days of March 31, 2017.
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(15)
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Consists of 19,800 shares of common stock and 273,996 shares of common stock issuable upon exercise of options exercisable within 60 days of March 31, 2017.
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(16)
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Consists of (a) 336,814 shares of common stock held by our directors and four executive officers, (b) 2,222,190 shares of common stock issuable upon exercise of stock options that are exercisable within 60 days of
March 31, 2017 held by our directors and four executive officers, and (c) 4,215,479 shares of common stock and shares of common stock issuable upon exercise of warrants that are exercisable within 60 days of March 31, 2017 held by entities
affiliated with certain of our directors.
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On April 11, 2017, we completed a private placement with seven institutional
investors, led by funds advised by Bain Capital Life Sciences L.P., pursuant to which we agreed to issue and sell 700,000 shares of our newly designated Redeemable Convertible Preferred Stock, par value $0.0001 per share (Redeemable Convertible
Preferred), at a purchase price of $100.00 per share, for total gross proceeds of $70.0 million (Private Placement). Other participants in the financing include Cormorant Asset Management, Domain Associates, EcoR1 Capital, RA Capital and
Skyline Ventures, among others. Based on an initial conversion price of $3.19 per share of Redeemable Convertible Preferred, the 700,000 shares of Redeemable Convertible Preferred Stock were convertible into approximately 21,943,573 shares of common
stock as of the date of the closing of the Private Placement.
Item 13.
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Certain Relationships and Related Transactions and Director Independence
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Policies and Procedures for Related Party Transactions
We have adopted a written related party transactions policy which sets forth the policies and procedures for the review and approval or
ratification of related party transactions. The policy covers, with certain exceptions set forth in Item 404 of Regulation
S-K
promulgated under the Exchange Act, any transaction, arrangement or relationship,
or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, where the amount involved exceeds $120,000 and a related party had, has or will have a direct or indirect material interest, including
indebtedness, guarantees of indebtedness and employment by us of a related party.
A related party transaction reviewed under the policy
will be considered approved or ratified if it is authorized by the audit committee of our board of directors or the chairperson of the audit committee in accordance with the standards set forth in the policy after full disclosure of the related
partys interests in the transaction. As appropriate for the circumstances, the audit committee or the chairperson of the audit committee, as applicable, shall review and consider:
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the related partys interest in the transaction;
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the approximate dollar value of the amount involved in the related party transaction;
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the approximate dollar value of the amount of the related partys interest in the transaction without regard to the amount of any profit or loss;
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whether the transaction was undertaken in our ordinary course of business;
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whether the transaction with the related party is proposed to be, or was, entered into on terms no less favorable to us than terms that could have been reached with an unrelated third party;
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the purpose and the potential benefits of the related party transaction to us;
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required public disclosure, if any; and
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any other information regarding the related party transaction in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction.
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13
Fiscal 2016 Related Party Transactions
During the year ended December 31, 2016, there were no transactions or series of similar transactions to which we were a party or will be
a party, in which (i) the amounts involved exceeded or will exceed $120,000 and (ii) any of our directors, executive officers, holders of more than five percent of our capital stock or any member of their immediate family had or will have
a direct or indirect material interest, other than compensation arrangements with directors and executive officers, which are described where required in the sections titled Director Compensation and Executive Compensation in
Item 11Executive Compensation.
On April 11, 2017, we completed a private placement with seven institutional
investors, led by funds advised by Bain Capital Life Sciences L.P. (Bain Capital), pursuant to which we agreed to issue and sell 700,000 shares of our newly designated Redeemable Convertible Preferred, at a purchase price of $100.00 per share, for
total gross proceeds of $70.0 million. Other participants in the financing include Domain Associates, RA Capital, Skyline Ventures and RTW Investments, which are holders or more than five percent of our capital stock. Bain Capital, Domain
Associates, RA Capital and Skyline Ventures are also entities affiliated with or formerly affiliated with four members of our board of directors as of the date hereof.
Indemnification of Directors and Officers
We have entered into indemnification agreements with each of our directors and executive officers. These agreements, among other things,
require us or will require us to indemnify each director (and in certain cases their affiliated venture capital funds) and executive officer to the fullest extent permitted by Delaware law, including indemnification of expenses such as
attorneys fees, judgments, fines and settlement amounts incurred by the director or executive officer in any action or proceeding, including any action or proceeding by or in right of us, arising out of the persons services as a director
or executive officer.
Independence of the Board of Directors
Under the rules of NASDAQ, independent directors must comprise a majority of a listed companys board of directors within twelve months
from the date of listing. In addition, NASDAQ rules require that, subject to specified exceptions, each member of a listed companys audit, compensation and nominating and corporate governance committees be independent. Audit committee members
must also satisfy additional independence criteria set forth in Rule
10A-3
under the Exchange Act, and in NASDAQ rule 5605(c)(2)(A). Under NASDAQ rules, a director will only qualify as an independent
director if, in the opinion of that companys board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. To be considered
independent for purposes of Rule
10A-3,
a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors or any other
board committee, accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of its subsidiaries or be an affiliated person of the listed company or any of its subsidiaries.
Our board of directors has undertaken a review of its composition, the composition of its committees and the independence of each director.
Based upon information requested from and provided by each director concerning his background, employment and affiliations, including family relationships, our board of directors has determined that none of Martin Freed, M.D., Brian K. Halak, Ph.D.,
Stephen J. Hoffman, M.D., Ph.D., Peter Kolchinsky, Ph.D., Adam M. Koppel, M.D., Ph.D., Dennis H. Langer, M.D., J.D., David M. Madden or Bruce Peacock, representing eight of our nine directors, have a relationship that would interfere with the
exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is independent as that term is defined under NASDAQ rules. Our board of directors has also determined that
Mr. Peacock, Dr. Hoffman and Mr. Madden, members of our audit committee, Dr. Halak, Dr. Hoffman and Dr. Langer, members of our compensation committee, and Dr. Freed, Dr. Kolchinsky and Mr. Madden, members
of our nominating and corporate governance committee, satisfy the independence standards for those committees established by applicable SEC and NASDAQ rules. In making these determinations, our board of directors considered the relationships that
each
non-employee
director has with us and all other facts and circumstances our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by
each
non-employee
director.
14
Item 14.
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Principal Accountant Fees and Services
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The following table
represents aggregate fees billed to us for fiscal years ended December 31, 2016 and 2015 by Deloitte & Touche LLP, our independent registered public accounting firm.
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Fiscal Year Ended
December 31,
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2016
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2015
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Audit Fees
(1)
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$
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362,200
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$
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338,275
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Audit-Related Fees
(2)
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24,400
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Tax Fees
(3)
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1,040
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All Other Fees
(4)
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2,000
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$
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364,200
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$
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363,715
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(1)
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Audit fees for the fiscal year ended December 31, 2016 consist of fees for professional services rendered in connection with the audit of our annual financial statements, review of our quarterly financial
statements, assistance with registration statements filed with the SEC and services that are normally provided by our independent registered public accounting firm in connection with statutory and regulatory filings or engagements. Audit fees for
the fiscal year ended December 31, 2015 consist of fees for professional services rendered in connection with the audit of our annual financial statements, review of our quarterly financial statements and services that are normally provided by
our independent registered public accounting firm in connection with statutory and regulatory filings or engagements.
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(2)
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Audit-related fees for the fiscal year ended December 31, 2016 consist principally of fees for professional services rendered that are reasonably related to the performance of the audit or review of our financial
statements. Audit-related fees for the fiscal year ended December 31, 2015 consist principally of fees for professional services rendered that are reasonably related to the performance of the audit or review of our financial statements and fees
related to assistance with registration statements filed with the SEC.
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(3)
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Tax fees for the fiscal years ended December 31, 2016 and 2015 consist of fees for tax consultation services provided.
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(4)
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All other fees for the fiscal years ended December 31, 2016 and 2015 consist of fees for all other services that are not reported above.
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All fees described above were approved by our board of directors or the audit committee of the board of directors.
Pre-Approval
Policies and Procedures
The audit committee has adopted policies and procedures for the
pre-approval
of audit and
non-audit
services provided by our independent registered public accounting firm, Deloitte & Touche LLP. The policy generally requires
pre-approval
for specified
services in the defined categories of audit services, audit-related services and tax services up to specified amounts.
Pre-approval
may also be given as part of the audit committees approval of the scope
of the engagement of the independent registered public accounting firm or on an individual explicit
case-by-case
basis before the independent registered public
accounting firm is engaged to provide each service. The
pre-approval
of services may be delegated to one or more of the audit committees members, but the decision must be reported to the full audit
committee at its next scheduled meeting.
The audit committee will review both audit and
non-audit
services performed by Deloitte & Touche LLP and the fees charged for such services on at least an annual basis. Among other things, the audit committee will review
non-audit
services proposed to be
provided by Deloitte & Touche LLP and
pre-approve
such services only if they are compatible with maintaining Deloitte & Touche LLPs status as an independent registered public accounting
firm. All services provided by Deloitte & Touche LLP in 2016 and 2015 were
pre-approved
by our board of directors or the audit committee after review of each of the services proposed for approval.
15