Indicate by check mark if the registrant is a well-known seasoned
issuer, as defined in Rule 405 of the Securities Act
Indicate by check mark if the registrant is not required to
file reports pursuant to Section 13 or Section 15(d) of the Act
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
As of June 30, 2019, the last day of the registrant's most recently
completed second fiscal quarter, the aggregate market value of the common stock held by non-affiliates of the registrant was approximately
$18.1 million, based upon the closing price of the registrant's common stock on June 30, 2019.
As of April 27, 2020, there were 74,549,048 outstanding
shares of the registrant’s common stock, $0.01 par value per share.
This Amendment No. 1 on Form 10-K/A contains forward-looking
statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts contained
in this report regarding our strategy, future operations, future financial position, future revenues, projected costs, prospects,
plans and objectives of management are forward-looking statements. These statements are based on assumptions and expectations that
may not be realized and involve known and unknown risks, uncertainties and other important factors, many of which cannot be predicted
with accuracy and some of which might not even be anticipated, that may cause our actual results, performance or achievements to
be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
Factors that could cause or contribute to such differences include, but are not limited to, those identified in Item 1A entitled
“Risk Factors” beginning on page 34 of the Original Filing, as well as those discussed in our other filings with the
Securities and Exchange Commission, or SEC, including our Quarterly Reports on Form 10-Q. As a result, you are cautioned not to
unduly rely on these forward-looking statements. We do not assume any obligation to update any forward-looking statements.
PART III
Item 10.
|
Directors, Executive Officers, and Corporate Governance.
|
Background of Directors
and Executive Officers
Directors
We have three classes of directors serving staggered three-year
terms. Our Board of Directors (our “Board”) is presently composed of eight directors. Class I and Class III currently
consist of three directors and Class II consists of two directors. The terms of our Class III directors will expire at our 2020
annual stockholders meeting.
Set forth below is biographical information as of April 27,
2020, for our current directors. There are no family relationships among our executive officers or directors.
Name
|
|
Age
|
|
Position(s) Held with Ocugen
|
|
Director Since
|
Class I Directors:
|
|
|
|
|
|
|
Shankar Musunuri, Ph.D., MBA
|
|
56
|
|
Chairman and Chief Executive Officer
|
|
2019
|
Ramesh Kumar, Ph.D.
|
|
64
|
|
Director
|
|
2019
|
Junge Zhang, Ph.D.
|
|
53
|
|
Director
|
|
2019
|
Class II Directors:
|
|
|
|
|
|
|
Uday B. Kompella, Ph.D.
|
|
52
|
|
Director
|
|
2019
|
Manish Potti
|
|
33
|
|
Director
|
|
2019
|
Class III Directors:
|
|
|
|
|
|
|
Kirsten Castillo
|
|
47
|
|
Director
|
|
2020
|
Prabhavathi Fernandes, Ph.D.
|
|
71
|
|
Director
|
|
2020
|
Suha Taspolatoglu, M.D.
|
|
58
|
|
Director
|
|
2019
|
Shankar Musunuri, Ph.D., MBA, has served as Chairman
of the Board and as our Chief Executive Officer since September 2019. Dr. Musunuri has served as the Co-Founder, Chief Executive
Officer and Executive Chairman of the Board of OpCo, our wholly owned subsidiary, since September 2013 and has served as OpCo’s
Chief Executive Officer since May 2015. Dr. Musunuri was a Founder, President, Chief Executive Officer, and a board member of Nuron
Biotech, Inc. from April 2010 to May 2013. Previously, Dr. Musunuri spent nearly fifteen years at Pfizer Inc. where he had held
various positions of increasing leadership and responsibility. Prior to Pfizer, Dr. Musunuri worked for Amylin Pharmaceuticals
from 1993 to 1996. Dr. Musunuri obtained his Ph.D. in Pharmaceutical Sciences from the University of Connecticut and a Master's of Business Administration from
Duke University’s Fuqua School of Business. He serves on the Advisory Board of Fuqua’s Center for Entrepreneurship
and Innovation. Our Board believes Dr. Musunuri’s perspective and history as our Co-Founder and Chief Executive Officer,
as well as his executive, operational and commercial expertise, qualify him to serve on our Board.
Ramesh Kumar, Ph.D., has served as a member of
our Board since September 2019. Dr. Kumar has served as a director of OpCo, our wholly owned subsidiary, since June 2019. He co-founded
Onconova Therapeutics, Inc. in 1998 and served as its Chief Executive Officer and a member of its board from 1998 to February 2019
and as its President from 1998 to June 2018. Dr. Kumar transitioned to an Advisory role with Onconova in January 2019. He has held
positions in R&D and management at Princeton University, Bristol-Myers Squibb, DNX (later Nextran, a subsidiary of Baxter)
and Kimeragen (later Valigen), where he served as President of the Genomics and Transgenics Division. Dr. Kumar obtained an undergraduate
and Master’s degree in Microbiology from Panjab University and received his Ph.D. in Molecular Biology from the University
of Illinois, Chicago and trained at the National Cancer Institute. Our Board believes Dr. Kumar’s extensive senior executive
and public company experience, and familiarity with the pharmaceutical industry qualify him to serve on our Board.
Junge (John) Zhang, Ph.D., has served as a
member of our Board since September 2019. Dr. Zhang has served as a member of the board of directors of OpCo, our wholly
owned subsidiary, since May 2015. Dr. Zhang has served as the Founder, President, and CEO of Biopeptek Pharmaceuticals LLC, a
custom peptide manufacturing company, since its founding in October 2010. Prior to founding Biopeptek, Dr. Zhang was with the
Janssen Pharmaceutical division of Johnson & Johnson from October 2002 to April 2011. Before joining Johnson &
Johnson, Dr. Zhang was a Senior Chemist at Eisai USA from December 1997 to October 2002. Dr. Zhang earned a Ph.D. in
analytical chemistry from Drexel University, an M.S. in chemistry from University of Louisiana, and a B.S. in material
science from Wuhan University of Technology in China. Our Board believes Dr. Zhang’s extensive senior management
experience in the pharmaceutical industry provides him with the qualifications and skills to serve on our Board.
Uday B. Kompella, Ph.D., has served as a member
of our Board since September 2019. Dr. Kompella has served as Co-Founder and as a member of the board of directors of OpCo since
September 2013, when he and Dr. Musunuri co-founded OpCo. Dr. Kompella has served as a Professor of Pharmaceutical Sciences, Ophthalmology,
and Bioengineering at University of Colorado-Anschutz Medical Campus since March 2008. He is a Fellow of the American Association
of Pharmaceutical Scientists (AAPS) and the Association for Research in Vision and Ophthalmology (ARVO) and serves as the Editor-in-Chief
for the journal Expert Opinion on Drug Delivery. Also, he is an editor for the journals, Pharmaceutical Research and the Journal
of Ocular Pharmacology and Therapeutics. Dr. Kompella obtained his undergraduate degree from the Birla Institute of Technology
and Science, a Master’s Degree in Pharmaceutical Engineering from Jadavpur University and a Ph.D. in Pharmaceutical Sciences
from the University of Southern California. Our Board believes Dr. Kompella’s deep experience with our business as a co-founder
of OpCo and his academic experience in pharmaceutical sciences and ophthalmology provides him with the qualifications and skills
to serve on our Board.
Manish Potti has served as a member of our Board
since September 2019. Mr. Potti has served as a member of the board of directors of OpCo, our wholly owned subsidiary, since November
2016 and has served as Co-Founder and President of Innogenix Pharma, a generic and specialty pharmaceutical company, since June
2016. He was previously Director of Business Development at Epic Pharma, a generic pharmaceutical company and contract manufacturing
organization, from December 2014 to May 2016. Prior to his employment with Epic Pharma, Mr. Potti worked as an analyst at One William
Street Capital from August 2010 to February 2014 and served as a consultant in the financial industry relating to fixed income
portfolios from March 2014 to December 2014. Prior to his experience in pharmaceuticals, Mr. Potti spent several years in finance
as an analyst and trader, working in investment banking and hedge funds. Mr. Potti holds a Bachelor’s of Science in Cellular
and Molecular Biology from Johns Hopkins University, and a Master’s Degree in Financial Engineering from New York University.
Our Board believes Mr. Potti’s financial knowledge and significant investing experience, along with his previous experience
in the pharmaceutical industry, provides him with the qualifications and skills to serve on our Board.
Kirsten Castillo has over 20 years of supply chain
and logistics experience, having held multiple supply chain leadership roles at a spin-off company of 3M, where she led multiple
major acquisitions and integrations for the company. During her tenure at Logistics Planning Services, a privately held transportation
and logistics services company, where she served as CEO, the company achieved aggressive growth plans which ultimately resulted
in the sale of the business to GlobalTranz. She stayed on through the transition as Chief Operating Officer and was responsible
for all company operations including regional branches in North America and Mexico, delivering $1.6 billion in revenue before stepping
down to pursue new opportunities. Ms. Castillo is committed to the advancement of women and has been named the Vice President of
Engagement for AWESOME (Advancing Women’s Excellence in Supply Chain, Operations, Management and Education). She received
her Bachelor's of Science from the University of Minnesota and her Global Executive Master's of Business Administration from Duke Fuqua School of Business. Our Board believes Ms.
Castillo’s expertise in business operations and logistics and her leadership experience provides her with the qualifications
and skills to serve on our Board.
Prabhavathi Fernandes, Ph.D., has more than 35
years of pharmaceutical discovery, development and management experience in large and small pharmaceutical companies. Dr. Fernandes
has held executive leadership positions at Bristol-Myers Squibb Pharmaceutical Research Institute, Abbott Laboratories and The
Squibb Institute for Medical Research. After leaving BMS, she founded and led four biotechnology and CRO companies as President,
Chief Executive Officer and Director of each of these companies. Prior to her retirement in December 2016, she led Cempra, Inc.
for 12 years as its founder, CEO and chief scientist. Dr. Fernandes currently serves as the Chairperson of both the National Biodefense
Science Board (NBSB) and the Scientific Advisory Committee of the Global Antibiotic Research and Development Partnership, a Drugs
for Neglected Diseases initiative/World Health Organization (DNDi /WHO) initiative. She received her Ph.D. in Microbiology from
Thomas Jefferson University. Our Board believes Dr. Fernandes’ extensive experience in the pharmaceutical and biotechnology
space provides her with the qualifications and skills to serve on our Board.
Suha Taspolatoglu, M.D. has served as a
member of our Board since September 2019. Dr. Taspolatoglu has served as a member of the board of directors of OpCo, our
wholly owned subsidiary, since June 2017. Since 2013, Dr. Taspolatoglu has been working as the Chief Executive Officer of
Abdi Ibrahim Ilac Sanayi ve Ticaret A.S., a pharmaceutical company. Dr. Taspolatoglu joined Abdi Ibrahim as the head of sales
and marketing division in 2001 and became managing director of sales and marketing division in 2007. From 2009 to 2013, Dr.
Taspolatoglu worked as the General Manager of Roche Turkey. Dr. Taspolatoglu is a graduate of Ankara University Faculty of
Medicine and served from 1986 to 1989 as a physician in the Ministry of Health. Our Board believes Dr. Taspolatoglu’s
background in marketing and sales in the pharmaceutical sector provides him with the qualifications and skills to serve on
our Board.
Executive Officers
The following table sets forth the name, position and age of
each of our executive officers as of the date of this report:
Name
|
|
Position
|
|
Age
|
Shankar Musunuri, Ph.D., MBA
|
|
Chief Executive Officer
|
|
56
|
Sanjay Subramanian
|
|
Chief Financial Officer, Chief Accounting Officer and Treasurer
|
|
44
|
Daniel Jorgensen, M.D., M.P.H., MBA
|
|
Chief Medical Officer
|
|
60
|
Rasappa Arumugham, Ph.D.
|
|
Chief Scientific Officer
|
|
68
|
Vijay Tammara, Ph.D.
|
|
Senior Vice President, Regulatory & Quality
|
|
60
|
Kelly Beck, MBA, SPHR, SHRM-SCP, PMP
|
|
Vice President, Investor Relations & Administration and Corporate Secretary
|
|
43
|
Shankar Musunuri, Ph.D., MBA – For biographical
information for Dr. Musunuri, see “—Directors” above.
Sanjay Subramanian, MBA, has served as our Chief
Financial Officer, Chief Accounting Officer and Treasurer since October 2019. Prior to joining us, Mr. Subramanian worked at Aralez
Pharmaceuticals Inc., a specialty pharmaceutical company, where he served as Chief Financial Officer from January 2019 through
September 2019, and prior to that as Vice President and Treasurer from October 2015. Aralez (renamed Old API Wind-Down Ltd. in
February 2019) voluntarily commenced restructuring proceedings in Canadian Court and its U.S.-based subsidiaries filed voluntary
petitions for relief under Chapter 11 of the U.S. Bankruptcy Code in August 2018, which became effective in May 2019. He was the
Director of Treasury at Bausch Health Companies, Inc., a specialty pharmaceutical company, from 2013 to October 2015. Mr. Subramanian
started his finance career in 2008 at General Motors Company where he held various positions before ending as the Treasurer of
GM Korea in 2012. He obtained his Master's of Business Administration from MIT Sloan School of Management, a Master of Science from both MIT and The Ohio State
University and a Bachelor of Technology from Indian Institute of Technology.
Daniel Jorgensen, M.D., M.P.H., MBA, has served
as our Chief Medical Officer since September 2019. Dr. Jorgensen has served as the Chief Medical Officer of OpCo, our wholly owned
subsidiary, since April 2017. Prior to joining OpCo, Dr. Jorgensen worked as Chief Medical Officer at Crestovo, LLC, a clinical
stage biopharmaceutical company, from April 2016 to April 2017, at Cellceutix Corporation (now Innovation Pharmaceuticals, Inc.),
a clinical stage biopharmaceutical company, from January 2015 to March 2016 and at SANUWAVE Health, Inc. from May 2013 to September
2014. Dr. Jorgensen also worked at Pfizer Inc. from January 2000 to January 2010, where he served in various senior leadership
positions, and at Pasteur Merieux Connaught from 1998 to 2000. Prior to joining the private sector, Dr. Jorgensen was an Epidemic
Intelligence Service Officer at the Centers for Disease Control and Prevention. Dr. Jorgensen received his undergraduate degree
from Yale University, his MD from the University of Wisconsin, his MPH from the University of Washington, and his Master's of Business Administration from Yale
University.
Rasappa Arumugham, Ph.D., has served as our Chief
Scientific Officer since September 2019. Dr. Arumugham has served as Vice President, Research and Development of OpCo, our wholly
owned subsidiary, since March 2017 and had served as the Chief Scientific Officer of OpCo since March 2018. Prior to joining OpCo,
Dr. Arumugham worked at Soligenix, Inc., a late stage biopharmaceutical company, as Vice President, Biopharmaceutical Development
from August 2014 to March 2017 and also served as the Principal Investigator. Previously, he served as the Head of Microbial Analytics
at the Manufacturing Division at Merck & Co., Inc. from December 2011 to September 2013. Prior to joining Merck, Dr. Arumugham
spent 25 years in various biologics/vaccines research and development positions of increasing responsibilities at Pfizer Inc. and
Wyeth. Dr. Arumugham earned his Ph.D. and MSc in Biochemistry and BSC in Chemistry from the University of Madras, India.
Vijay Tammara, Ph.D., has served as our
Senior Vice President, Regulatory & Quality since December 2019 and previously served as our Vice President, Regulatory
& Quality from September 2019 to December 2019. Dr. Tammara has served as Vice President, Regulatory & Quality of
OpCo, our wholly owned subsidiary, since August 2017. Prior to joining OpCo, Dr. Tammara worked at VRT Pharma Consulting LLC,
a business consulting company, as CEO and President from July 2014 to August 2017. Dr. Tammara previously served as VP
Regulatory Affairs at Nuron Biotech Inc. from September 2010 to August 2013, Director of Regulatory Affairs at Merck &
Co., Inc. from March 2004 to September 2010, Senior Associate Director at Wyeth Pharmaceuticals from September 2002 to March
2004, and Assistant Director at Sanofi-Synthelabo in Worldwide Regulatory Affairs from March 2000 to September 2000. Dr.
Tammara received his Bachelor of Pharmacy from Kakatiya University, Master’s in Pharmacy from Nagpur University, and
Ph.D. in Pharmaceutics from the University of Louisiana, Monroe, LA.
Kelly Beck, MBA, SPHR, SHRM- SCP, PMP, has served
as our Vice President, Investor Relations and Administration and Corporate Secretary since September 2019. Ms. Beck has served
as Vice President, Investor Relations and Administration of OpCo, our wholly owned subsidiary, since July 2017. Prior to joining
OpCo, Ms. Beck worked at hrQ, an HR executive recruiting, consulting and interim staffing company, as Vice President and Managing
Director from August 2016 June to 2017. Ms. Beck has served in senior human resources and administrative leadership roles with
PRA Health Sciences from February 2015 to August 2016, DrugDev (formerly CFS Clinical) from January 2011 to January 2015, Pennsylvania
Bio, from August 2009 to May 2010, Tengion, Inc. from April 2005 to August 2009 and General Fiber Communications from April 2003
to April 2005. Ms. Beck obtained her Master's of Business Administration from Penn State University with a concentration in biotechnology and health industry management,
Master's of Science in Human Resource Development from Villanova University and her Bachelor's of Science in Business Administration with a concentration in Accounting
from Millersville University. She also holds SPHR, SHRM-SCP and PMP certifications.
Corporate Governance
and Risk Management
We are committed to good corporate governance and integrity
in our business dealings. Our governance practices are documented in our Sixth Amended and Restated Certificate of Incorporation
(the “Charter”), our Amended and Restated Bylaws (“Bylaws”), our Code of Business Conduct and Ethics (the
“Code of Conduct”), our Corporate Governance Guidelines and the charters of the committees of the Board (the “Committees”).
Aspects of our governance documents are summarized below. You can find the charter for each Committee of the Board and our Code
of Conduct on our website www.Ocugen.com under “Investors.”
We have a written set of Corporate Governance Guidelines that
are designed to help ensure effective corporate governance of our Company. Our Corporate Governance Guidelines cover topics including,
but not limited to, director responsibilities, director qualification standards, director access to management and independent
advisors, director compensation, director orientation and continuing education, the periodic evaluations of our Board and its Committees
and succession planning. Succession planning for the Board is critical to our success. Our goal is to achieve a Board that provides
effective oversight of the Company through the appropriate balance of diversity of perspectives, experience, expertise and skills.
Our Corporate Governance Guidelines are reviewed periodically by the Nominating and Corporate Governance Committee to assess the
adequacy of the corporate governance guidelines and recommend any proposed changes to the Board. The Corporate Governance Guidelines
are amended by our Board when appropriate. The full text of our Corporate Governance Guidelines is available on our website at
www.ocugen.com.
The Board’s role in risk oversight is consistent with
our leadership structure, with management having day-to-day responsibility for assessing and managing our risk exposure and the
Board actively overseeing management of our risks, both at the Board and Committee level. The risk oversight process includes receiving
regular reports from Committees and our executive officers to enable our Board to understand our risk identification, risk management
and risk mitigation strategies with respect to areas of potential material risk, including operations (including cyber-security),
finance, legal, regulatory, strategic and reputational risk.
The Board focuses on the overall risks affecting us. Each Committee
has been delegated the responsibility for the oversight of specific risks that fall within its areas of responsibility. For example:
|
·
|
The Audit Committee oversees management of financial reporting, compliance and litigation risks, including risks related to
our insurance, information technology, cybersecurity, human resources and regulatory matters, as well as the steps management has
taken to monitor and control such exposures.
|
|
·
|
The Compensation Committee is responsible for overseeing the management of risks relating to our executive compensation policies,
plans and arrangements and the extent to which those policies, plans and arrangements increase or decrease risk for the Company.
|
|
·
|
The Nominating and Corporate Governance Committee manages risks associated with the independence of the Board, potential conflicts
of interest and the effectiveness of the Board.
|
While each Committee is responsible for evaluating certain risks
and overseeing the management of such risks, the entire Board is regularly informed through Committee reports about such risks.
Matters of significant strategic risk are considered by our entire Board.
Board Leadership Structure
The Board should remain free to configure the leadership of
the Board and the Company in the way that best serves the Company’s interests at the time and, accordingly, has no fixed
policy with respect to combining or separating the offices of the Chairman of the Board and the Chief Executive Officer. Dr. Shankar
Musunuri, our Chief Executive Officer, currently serves as the Chairman of the Board. Combining the roles of chief executive officer
and chairman of the Board fosters accountability, effective decision-making and alignment between interests of the Board and management.
In the event that the Chairman is not independent, the Board
may, but is not required to, appoint a Lead Independent Director, who shall be selected by a majority of the independent directors
and who shall preside over executive sessions of the Board. As of the date of this report, the Board has not appointed a Lead Independent
Director. The Nominating and Corporate Governance Committee shall periodically assess the Board’s leadership structure and
whether the Board’s leadership structure is appropriate given the specific characteristics or circumstances of the Company.
Board Committees and
Membership
Our Board has established various Committees to assist in discharging
its duties: the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee. Each member
of our Committees is an independent director as that term is defined by the SEC and Nasdaq. Each of the Committees has the authority,
as its members deem appropriate, to engage legal counsel or other experts or consultants in order to assist the Committee in carrying
out its responsibilities. The Nominating and Corporate Governance Committee is responsible for overseeing periodic self-evaluations
of the Board to determine whether it and its Committees are functioning effectively. Each Committee also conducts periodic self-evaluations
of their own performance and reports their conclusions to the Board.
The Committee memberships and the primary responsibilities of
each of the Committees are as follows:
Director
|
|
Board
|
|
Audit
Committee
|
|
Compensation
Committee
|
|
Nominating &
Corporate
Governance
Committee
|
Shankar Musunuri, Ph.D., MBA
|
|
C
|
|
|
|
|
|
|
Ramesh Kumar, Ph.D.
|
|
M
|
|
C
|
|
|
|
M
|
Junge Zhang, Ph.D.
|
|
M
|
|
|
|
M
|
|
C
|
Uday B. Kompella, Ph.D.
|
|
M
|
|
|
|
|
|
M
|
Manish Potti
|
|
M
|
|
M
|
|
|
|
|
Kirsten Castillo
|
|
M
|
|
|
|
C
|
|
|
Prabhavathi Fernandes, Ph.D.
|
|
M
|
|
|
|
M
|
|
|
Suha Taspolatoglu, M.D.
|
|
M
|
|
M
|
|
|
|
|
M = Member / C = Chair
Audit Committee
The Audit Committee assists the Board by providing oversight
of our financial management, independent auditor and accounting and financial reporting processes, as well as such other matters
as directed by the Board or the Audit Committee Charter.
Among other things, the Audit Committee’s responsibilities
include:
|
·
|
having sole discretion and direct responsibility for appointing, evaluating, retaining, compensating, overseeing, evaluating,
and, when necessary, terminating our engagement with our independent registered public accounting firm;
|
|
·
|
discussing with management and the independent registered public accounting firm our annual and quarterly financial statements
and related disclosures and preapproving all audit services;
|
|
·
|
establishing and overseeing compliance with our procedures governing treatment of complaints concerning our accounting, internal
accounting controls, or auditing matters, and submissions of confidential, anonymous, employee concerns regarding accounting or
auditing matters;
|
|
·
|
reviewing our Code of Conduct and our compliance with applicable legal requirements, as well as any litigation or material
government investigations, and making corresponding reports to the Board;
|
|
·
|
overseeing our risk assessment and risk management processes and the guidelines and procedures to implement such processes;
|
|
·
|
reviewing and ratifying all related person transactions, based on the standards set forth in our Related Person Transaction
Policy; and
|
|
·
|
preparing the Audit Committee report required to be included in our annual proxy statement.
|
The members of our Audit Committee are Dr. Kumar (Chair), Mr.
Potti and Dr. Taspolatoglu. All members of our Audit Committee are deemed “independent” and financially literate under
the applicable rules and regulations of the SEC and Nasdaq. Each of Mr. Potti and Drs. Kumar and Taspolatoglu also qualifies as
an “audit committee financial expert” within the meaning of SEC regulations.
Compensation Committee
The Compensation Committee reviews the performance and development
of our management in achieving corporate goals and objectives and assures that our executive officers (including our CEO) are compensated
effectively in a manner consistent with our strategy, competitive practice and stockholder interests, as well as such other matters
as directed by the Board or the Compensation Committee Charter. Among other things, the Compensation Committee’s responsibilities
include:
|
·
|
reviewing and recommending to the Board the terms of any binding offer letters, employment agreements, termination agreements
or arrangements, change-in-control agreements, indemnification agreements and other material agreements that we execute with the
CEO, as well as reviewing and approving the terms of any such letters, arrangements, or agreements that we execute with any executive
officer;
|
|
·
|
overseeing the evaluation of our executive officers and preparing assessments of their performance, to be discussed periodically
with the Board; annually reviewing and making recommendations to the Board for approval of our CEO’s and other executive
officers’ compensation level (including salary, bonus, incentive compensation, severance arrangements, change-in-control
benefits and other forms of executive officer compensation);
|
|
·
|
reviewing and making recommendations to the Board regarding director compensation, including all forms of paid cash compensation
and all forms of equity compensation granted to members of the Board;
|
|
·
|
reviewing and making recommendations to the Board regarding incentive compensation and equity-based plans, as well as approving
employee benefit plans pursuant to which options or stock may be acquired by officers, directors, employees or consultants;
|
|
·
|
administering, or where appropriate, overseeing the administration of, executive and equity compensation plans and such other
compensation and benefit plans that are adopted by us from time to time; and
|
|
·
|
determining stock ownership guidelines for our CEO and other executive officers and monitoring compliance with such guidelines,
if deemed advisable by our Board or the Compensation Committee.
|
Our Compensation Committee may, in its sole discretion,
retain or obtain the advice of compensation consultants, legal counsel or other advisors, after taking into consideration
applicable factors affecting independence that are specified under Nasdaq and SEC regulations. Our Compensation Committee is
directly responsible for the appointment, compensation and oversight of the work of any retained compensation consultant,
legal counsel and other advisor, and is empowered, without further action by the Board, to both determine and cause us to pay
such compensation to any retained compensation consultant, legal counsel and other advisor retained by the Compensation
Committee. Our CEO annually reviews the performance of each of the other executive officers, including the other named
executive officers. He then recommends annual merit salary adjustments and any changes in annual or long-term incentive
opportunities for other executives. The Compensation Committee considers our CEO’s recommendations in addition to data
and recommendations presented by our executive compensation consultant.
The Compensation Committee has retained Radford, an independent
compensation consulting firm, since June 2018. In February 2018, Radford presented a summary executive compensation report to the
Compensation Committee. Radford previously provided the Compensation Committee with data about the compensation paid by our peer
group of companies and other employers who compete with the Company for executives, updated the Compensation Committee on new developments
in areas that fall within the Compensation Committee’s jurisdiction and was available to advise the Compensation Committee
regarding all of its responsibilities. The consultant serves at the pleasure of the Compensation Committee rather than the Company,
and the consultant’s fees are approved by the Compensation Committee.
The members of our Compensation Committee are Dr. Zhang, Ms.
Castillo (Chair) and Dr. Fernandes. The Board has determined that all Compensation Committee members are independent under the
listing standards of Nasdaq, and that they are “non-employee directors” for purposes of Rule 16b-3 under the Exchange
Act and “outside directors” for purposes of Section 162(m) of the Internal Revenue Code (the “Code”).
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee identifies
qualified individuals for membership on the Board, recommends to the Board the director nominees to fill vacancies on the Board
and to stand for election at the next annual meeting of stockholders, develops and recommends to the Board a set of corporate governance
guidelines for the Board and provides oversight of the corporate governance affairs of the Board, as well as such other matters
as directed by the Board or the Nominating and Corporate Governance Charter. Among other things, our Nominating and Corporate Governance
Committee’s responsibilities include:
|
·
|
periodically reviewing and adopting procedures regarding director candidates proposed by stockholders;
|
|
·
|
retaining and terminating any search firm used to identify director nominees, approving the search firm’s fees and other
retention terms, and authorizing our payment of compensation to any such search firm without further action by the Board;
|
|
·
|
identifying, recommending and evaluating candidates, including candidates submitted by stockholders, for election to the Board
and recommending to the Board (i) nominees to fill vacancies or new positions on the Board and (ii) the slate of nominees to stand
for election by our stockholders at each annual meeting of stockholders;
|
|
·
|
developing and recommending to the Board corporate governance guidelines, and periodically reviewing and recommending any necessary
or appropriate changes to such guidelines;
|
|
·
|
recommending to the Board (i) directors to be appointed to or to fill vacancies on each of our Committees; and (ii) director
independence determinations for the Board as a whole and each of our Committees;
|
|
·
|
periodically assessing the appropriate size, composition and leadership structure of the Board as a whole, the needs of the
Board and the respective committees of the Board, and the qualification of director candidates in light of these needs;
|
|
·
|
overseeing periodic self-evaluations of the Board to determine whether it and its committees are functioning effectively, as
well as determining the nature of the evaluation, supervising the conduct of the evaluation; and preparing an assessment of the
Board’s performance to be discussed with the Board;
|
|
·
|
reviewing the adequacy of the Charter and Bylaws and recommending to the Board, as conditions dictate, amendments for consideration
by the stockholders; and
|
|
·
|
reviewing plans for the development, retention and succession of our executive officers.
|
The Nominating and Corporate Governance Committee is
responsible for identifying individuals that the Committee believes are qualified to become Board members, as described below
in the section entitled “Board Structure and Composition.” Although the Nominating and Corporate Governance
Committee has not established a formal policy regarding the consideration of diversity in identifying director nominees, the
criteria for individuals qualified to become Board members as set forth in our Corporate Governance Guidelines includes
diversity as a factor for consideration. The Nominating and Corporate Governance Committee considers candidates proposed by
our stockholders and reviews and evaluates information available to it regarding candidates proposed by stockholders and
applies the same criteria, and follows substantially the same process in considering them, as it does in considering other
candidates.
The members of our Nominating and Corporate Governance Committee
are Dr. Kumar, Dr. Zhang (Chair) and Dr. Kompella. The Board has determined that all Nominating and Corporate Governance Committee
members are independent under the listing standards of Nasdaq.
Compensation Committee
Interlocks and Insider Participation
During 2019 and as of the date of this report, none of the members
of the Compensation Committee was or is one of our officers or employees, and none of our executive officers has served or serves
on the compensation committee or board of any company that employed or employs any member of our Compensation Committee or Board.
Board Structure and
Composition
The Nominating and Corporate Governance Committee of our Board
is responsible for recommending the composition and structure of our Board and for developing criteria for Board membership. This
Committee regularly reviews director competencies, qualities and experiences, with the goal of ensuring that our Board is comprised
of an effective team of directors who function collegially and who are able to apply their experience toward meaningful contributions
to our business strategy and oversight of our performance, risk management, organizational development and succession planning.
Our Bylaws provide that the number of members of our Board shall
be fixed by the Board from time to time. Our Board was previously fixed at four members, until September 27, 2019, when we increased
the size of the Board to seven members. On April 5, 2020, we increased the size of the Board to eight members. Our Board is divided
into three classes with staggered three-year terms. The Nominating and Corporate Governance Committee is responsible for identifying
individuals that the Committee believes are qualified to become Board members.
Criteria for Board
Membership
The Nominating and Corporate Governance Committee has identified
certain criteria that it will consider in identifying director nominees. Important general criteria and considerations for Board
membership include:
|
·
|
Nominees should have a reputation for integrity, honesty and adherence to high ethical standards.
|
|
·
|
Nominees should have demonstrated business acumen, experience and ability to exercise sound judgments in matters that relate
to the current and long-term objectives of the Company and should be willing and able to contribute positively to the decision-making
process of the Company.
|
|
·
|
Nominees should have a commitment to understand the Company and its industry and to regularly attend and participate in meetings
of the Board and its committees.
|
|
·
|
Nominees should have the interest and ability to understand the sometimes conflicting interests of the various constituencies
of the Company, which include stockholders, employees, customers, governmental units, creditors and the general public, and to
act in the interest of all stockholders.
|
|
·
|
Nominees should not have, nor appear to have, a conflict of interest that would impair the nominee’s ability to represent
the interests of the Company and its stockholders and to fulfill the responsibilities of a director.
|
|
·
|
Nominees shall not be discriminated against on the basis of race, religion, national origin, sex, sexual orientation, disability
or any other basis proscribed by law. The value of diversity on the Board should be considered.
|
|
·
|
Nominees should have the potential to serve on the Board for at least five years.
|
In each of the director biographies above, we highlight the
specific experience, qualifications, attributes and skills that led the Board to conclude that the director is qualified to serve
on our Board.
Board and Stockholder
Meeting Attendance
During 2019, the Board of Ocugen met six times; its Audit Committee
met twice its Compensation Committee met twice and its Nominating and Corporate Governance Committee met once. The
Board of Histogenics met 20 times and its audit committee met three times.
Each board member of Ocugen attended 75% or more of the
aggregate number of meetings of the Board and of the committees on which he or she served, held during the portion of the
last fiscal year for which he or she was a director or committee member, except for Suha Taspolatoglu who attended 33% of
such meetings. Each of our current directors was appointed to the Board in September 2019 or later and therefore did not
attend any meetings prior to September 2019.
Directors are encouraged, but not required, to attend our annual
stockholder meetings. All of the directors attended the 2019 Annual Meeting except for Suha Taspolatoglu.
Code of Conduct
We have a written Code of Conduct that applies to our directors,
officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or
controller, or persons performing similar functions. The Code of Conduct covers fundamental ethical and compliance-related principles
and practices such as accurate accounting records and financial reporting, avoiding conflicts of interest, the protection and use
of our property, compliance with legal and regulatory requirements and internal reporting procedures for violations of the code.
The Code of Conduct is available on our website at www.ocugen.com and any amendments to the Code of Conduct, or any waivers of
its requirements, will be disclosed on our website or in a Current Report on Form 8-K which we will file with the SEC.
Only the Board may waive any specific provision of this Code
of Conduct for directors and executive officers. The compliance officer may waive any specific provision of this Code of Conduct
for employees other than director and executive officers. In the event of an approved waiver involving the conduct of a director
or executive officer, appropriate and prompt disclosure, including disclosure of the reasons for the waiver, must be made to our
stockholders as required by applicable law and stock exchange rules. The Board shall be responsible for monitoring compliance with
the Code of Conduct and shall assess the adequacy of the Code of Conduct periodically and approve any changes to the Code of Conduct.
Delinquent Section
16(a) Beneficial Ownership Reports
Section 16(a) of the Exchange Act requires our officers and
directors, and persons who own more than ten percent of a registered class of our equity securities, to file reports of securities
ownership and changes in such ownership with the SEC. Officers, directors and greater than ten percent stockholders are also required
by SEC rules to furnish us with copies of all Section 16(a) forms they file.
Based solely on a review of the Company’s records and
written representations by the persons required to file such reports, all filing requirements of Section 16(a) were satisfied with
respect to the 2019 fiscal year except for (i) the Form 3’s for Shankar Musunuri, Daniel Jorgensen, Rasappa Arumugham, Vijay
Tammara, Kelly Beck, Frank Leo, Ramesh Kumar, Uday Kompella, Suha Taspolatoglu and Manish Potti, which were inadvertently filed
late following their respective appointments as executive officers or directors of the Company on September 27, 2019, and (ii)
a Form 4 filed on October 4, 2019 for Junge Zhang, which was filed late due to an administrative error.
Item 11.
|
Executive Compensation.
|
Introductory Note
Regarding Presentation of Information
On September 27, 2019, Histogenics completed the Merger of Merger
Sub with OpCo. At the effective time of the Merger, the management of Histogenics was replaced with the management of OpCo. Accordingly,
we have included compensation information with respect to Histogenics’ “named executive officers” under SEC rules
for 2018 and 2019 and with respect to the executive officers of OpCo that would have been “named executive officers”
of OpCo for 2019 (such executive officers are referred to as OpCo’s named executive officers).
Ocugen Executive Compensation
Summary Compensation Table
In connection with the Merger and since the closing date, we
have been led by our senior management team from OpCo, who became the management of Ocugen. The following table shows for the years
ended December 31, 2019, and 2018, compensation awarded to or paid to, or earned by, our Chief Executive Officer and our two other
most highly compensated executive officers at December 31, 2019 (collectively, the “Named Executive Officers”).
Name and Principal
Position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($) (1)
|
|
|
Option
Awards
($) (2)
|
|
|
All
Other
Compensation
($) (3)
|
|
|
Total
Compensation
($)
|
|
Shankar Musunuri (4)
|
|
2019
|
|
|
420,000
|
|
|
|
141,120
|
|
|
|
—
|
|
|
|
11,200
|
|
|
|
572,320
|
|
Chief Executive Officer
|
|
2018
|
|
|
420,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
11,000
|
|
|
|
431,000
|
|
Daniel Jorgensen (4)
|
|
2019
|
|
|
341,250
|
|
|
|
79,853
|
|
|
|
—
|
|
|
|
11,200
|
|
|
|
432,303
|
|
Chief Medical Officer
|
|
2018
|
|
|
341,250
|
|
|
|
—
|
|
|
|
122,295
|
|
|
|
11,000
|
|
|
|
474,545
|
|
Rasappa Arumugham (4)
|
|
2019
|
|
|
287,000
|
|
|
|
67,158
|
|
|
|
—
|
|
|
|
11,200
|
|
|
|
365,358
|
|
Chief Scientific Officer
|
|
2018
|
|
|
285,500
|
|
|
|
—
|
|
|
|
122,295
|
|
|
|
11,000
|
|
|
|
418,795
|
|
|
(1)
|
The amounts represent annual performance cash bonuses
earned in 2019 and paid in the following year.
|
|
(2)
|
Amounts represent the grant date fair value of option
awards, computed in accordance with Accounting Standards Codification Accounting Topic 718: Compensation-Stock Compensation (“ASC Topic 718”).
|
|
(3)
|
Amounts in this column include matching contributions
under the Company’s 401(k) retirement plan paid during the fiscal year.
|
|
(4)
|
Shankar Musunuri, Daniel Jorgensen and Rasappa Arumugham each commenced service with the Company
on September 27, 2019 upon the closing of the Merger. Amounts disclosed for such officers include amounts paid for service
with OpCo during the fiscal year ended December 31, 2019.
|
Narrative Explanation of Certain Aspects of the Summary
Compensation Table
Base Salaries
We use base salaries to recognize the experience, skills,
knowledge and responsibilities required of all employees, including the Named Executive Officers. Base salaries are reviewed
annually, typically in connection with the annual performance review process, and adjusted from time to time to take into
account market levels, individual responsibilities, performance and experience. In December 2019, the Ocugen Board and
Compensation Committee authorized adjustments to the executive management salaries to bring base salaries closer to the
50th percentile of market data for publicly traded companies. As of January 1, 2020, Dr. Musunuri’s, Dr.
Jorgensen’s and Dr. Arumugham’s base salaries were increased to $500,000, $414,500 and $353,800,
respectively.
Annual Cash Bonuses
We do not maintain a formal performance-based cash bonus plan,
but our employment agreements with the Named Executive Officers provide that the executive may be eligible to earn an annual performance
bonus of up to a targeted percentage of the executive’s base salary, further described under the heading “—Ocugen
Employment Agreements” below. From time to time, our Board may approve annual bonuses for the Named Executive Officers based
on individual performance, company performance or as otherwise determined to be appropriate.
Equity Compensation
For 2019, we did not have a formal policy with respect to the
grant of equity incentive awards to the Named Executive Officers, or any formal equity ownership guidelines applicable to them.
However, we believe that equity grants provide the Named Executive Officers with a strong link to long-term performance and retention
incentives, creates an ownership culture and helps to align the interests of executive officers and stockholders. Accordingly,
our Board periodically reviews the equity incentive compensation of the Named Executive Officers and from time to time may grant
equity incentive awards to them.
Our practice has been to grant stock option awards to each executive
officer at the start of employment and on an annual basis for performance and retention purposes. Stock options may also be granted
for accomplishments of specific company milestones. Stock options are awarded on the date our board of directors approve the grant.
The option exercise price and grant date fair value are set based on the per-share value on the date of grant.
Outstanding Equity Awards at Fiscal Year-End for 2019
The following table summarizes the number of shares of our common
stock underlying outstanding equity incentive plan awards for each of the Named Executive Officers as of December 31, 2019 and
reflect the conversion and reverse stock split that occurred in connection with the Merger.
Name
|
|
Vesting
Commencement
Date
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable (1)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable (1)
|
|
Option
Exercise
Price ($)
|
|
|
Option
Expiration
Date
|
Shankar Musunuri
|
|
08/26/2015
|
|
|
86,292
|
|
|
—
|
|
|
1.88
|
|
|
08/25/2025
|
Daniel Jorgensen
|
|
04/17/2017
|
|
|
17,259
|
|
|
8,629
|
|
|
6.30
|
|
|
04/16/2027
|
|
|
12/15/2017
|
|
|
4,475
|
|
|
2,237
|
|
|
7.56
|
|
|
12/14/2027
|
|
|
08/13/2018
|
|
|
799
|
|
|
1,598
|
|
|
12.18
|
|
|
08/12/2028
|
|
|
12/07/2018
|
|
|
3,196
|
|
|
6,392
|
|
|
13.52
|
|
|
12/06/2028
|
Rasappa Arumugham
|
|
03/22/2017
|
|
|
15,341
|
|
|
7,670
|
|
|
6.30
|
|
|
03/21/2027
|
|
|
12/15/2017
|
|
|
6,392
|
|
|
3,196
|
|
|
7.56
|
|
|
12/14/2027
|
|
|
08/13/2018
|
|
|
799
|
|
|
1,598
|
|
|
12.18
|
|
|
08/12/2028
|
|
|
12/07/2018
|
|
|
3,195
|
|
|
6,393
|
|
|
13.52
|
|
|
12/06/2028
|
|
(1)
|
Each option award was granted pursuant to OpCo’s
2014 Stock Option Plan. The shares subject to each option vest in three equal installments on the corresponding day of each anniversary
of the vesting commencement date.
|
Ocugen Employment Agreements
OpCo had entered into employment agreements with each Drs. Musunuri,
Jorgensen and Arumugham. Effective January 1, 2020, the Board of the Company amended and restated each of those employment agreements
as described below.
Shankar Musunuri
Dr. Musunuri serves as our Chief Executive Officer and Chairman
of our Board pursuant to an employment agreement with Ocugen dated as of January 1, 2020, which amended and restated previous employment
agreements. In January 2020, Dr. Musunuri’s base salary was increased from $420,000 to $500,000 per annum, which is subject
to annual review and adjustment by our compensation committee. In addition, Dr. Musunuri is eligible to receive a discretionary
bonus in a target amount of 50% of his annual base salary, as determined by our compensation committee in its sole discretion.
Subject to his execution and nonrevocation of a release of claims
in Ocugen’s favor, in the event of the termination of Dr. Musunuri’s employment by Ocugen without cause or by him for
good reason, each as defined in his employment agreement, Dr. Musunuri will be entitled to (i) continued payment of his then-current
annual base salary for twenty-four months and (ii) payment of his COBRA premiums for continued health benefit coverage for up to
twenty-four months.
Further, pursuant to his amended and restated employment agreement,
in the event of a termination of his employment three months prior to or 12 months following a Change of Control (as defined in
the amended and restated employment agreement) by us without cause or by Dr. Musunuri for good reason (each as defined in the amended
and restated employment agreement), Dr. Musunuri is also entitled to (i) a lump sum payment equal to 200% of his target bonus;
and (ii) full vesting acceleration of unvested equity awards.
Daniel Jorgensen
Dr. Jorgensen serves as our Chief Medical Officer pursuant to
an employment agreement with Ocugen dated as of January 1, 2020, which amended and restated a prior employment agreement. In January
2020, Dr. Jorgensen’s base salary was increased from $341,250 per annum to $414,500 per annum, which is subject to annual
review and adjustment by our compensation committee. In addition, Dr. Jorgensen is eligible to receive a discretionary bonus in
a target amount of 40% of his annual base salary, as determined by our compensation committee in its sole discretion.
Subject to his execution and nonrevocation of a release of claims
in Ocugen’s favor, in the event of the termination of Dr. Jorgensen’s employment by Ocugen without cause or by him
for good reason, each as defined in his employment agreement, Dr. Jorgensen will be entitled to (i) continued payment of his then-current
annual base salary for twelve months and (ii) payment of his COBRA premiums for continued health benefit for up to twelve months.
Further, pursuant to his amended and restated employment agreement,
in the event of a termination of his employment three months prior to or 12 months following a Change of Control (as defined in
the amended and restated employment agreement) by us without cause or by Dr. Jorgensen for good reason (each as defined in the
amended and restated employment agreement), Dr. Jorgensen is also entitled to (i) a lump sum payment equal to 100% of his target
bonus; and (ii) full vesting acceleration of unvested equity awards.
Rasappa Arumugham
Dr. Arumugham serves as our Chief Scientific Officer pursuant
to an employment agreement with Ocugen dated as of January 1, 2020, which amended and restated previous employment agreements.
In January 2020, Dr. Arumugham’s base salary was increased from $287,000 to $353,800 per annum, which is subject to annual
review and adjustment by our compensation committee. In addition, Dr. Arumugham is eligible to receive a discretionary bonus in
a target amount of 35% of his annual base salary, as determined by our compensation committee in its sole discretion.
Subject to his execution and nonrevocation of a release of claims
in Ocugen’s favor, in the event of the termination of Dr. Arumugham’s employment by Ocugen without cause or by him
for good reason, each as defined in his employment agreement, Dr. Arumugham will be entitled to (i) continued payment of his then-current
annual base salary for twelve months and (ii) payment of his COBRA premiums for continued health benefit coverage for up to twelve
months.
Further, pursuant to his amended and restated employment
agreement, in the event of a termination of his employment three months prior to or 12 months following a Change of Control
(as defined in the amended and restated employment agreement) by us without cause or by Dr. Arumugham for good reason (each
as defined in the amended and restated employment agreement), Dr. Arumugham is also entitled to (i) a lump sum payment equal
to 100% of his target bonus; and (ii) full vesting acceleration of unvested equity awards.
Histogenics Executive
Compensation
Summary Compensation Table
The following table sets forth information for the years ended
December 31, 2019 and 2018, concerning the compensation awarded to or paid to, or earned by, Histogenics’ principal executive
officer and each of Histogenics’ two other most highly compensated executive officers who were serving Histogenics prior
to the Merger.
Name and Principal Position
|
|
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Option
Awards
($) (1)
|
|
|
All Other
Compensation
($)
|
|
|
Total
Compensation
($)
|
|
Adam Gridley (2)
|
|
2019
|
|
$
|
99,672
|
|
|
|
191,200
|
(4)
|
|
|
—
|
|
|
|
478,065
|
(5)
|
|
$
|
768,937
|
|
Former President
|
|
2018
|
|
|
478,065
|
|
|
|
—
|
|
|
|
186,056
|
|
|
|
—
|
|
|
|
664,121
|
|
Stephen Kennedy (2)
|
|
2019
|
|
$
|
81,971
|
|
|
|
156,750
|
(6)
|
|
|
—
|
|
|
|
294,114
|
(7)
|
|
$
|
532,835
|
|
Former Executive Vice President and Chief Operating Officer
|
|
2018
|
|
|
391,875
|
|
|
|
—
|
|
|
|
74,156
|
|
|
|
—
|
|
|
|
466,031
|
|
Donald Haut, Ph.D. (3)
|
|
2019
|
|
$
|
33,553
|
|
|
|
94,354
|
(8)
|
|
|
—
|
|
|
|
283,061
|
(9)
|
|
$
|
410,968
|
|
Former Chief Business Officer
|
|
2018
|
|
|
377,415
|
|
|
|
—
|
|
|
|
40,436
|
|
|
|
—
|
|
|
|
417,851
|
|
|
(1)
|
Represents the aggregate grant date fair value of
option awards, computed in accordance with ASC
Topic 718. See Note 11 to Histogenics’s consolidated financial statements included in our Annual Report on Form
10-K for the year ended December 31, 2018 for a discussion of the assumptions made by Histogenics in determining the fair value
of equity awards.
|
|
(2)
|
Messrs. Gridley’s and Kennedy’s employment
with Histogenics terminated on March 22, 2019 as part of Histogenics’ continuing strategic alternative review process. Messrs.
Gridley and Kennedy retained their statutory titles and continued service in consulting capacities until the closing of the Merger.
Mr. Gridley also continued service with Histogenics as a director until the closing of the Merger.
|
|
(3)
|
Dr. Haut’s employment with Histogenics terminated
on January 23, 2019.
|
|
(4)
|
The amount in this column for Mr. Gridley represents
the payment of a retention bonus under the Amended and Restated Executive Officer Retention Bonus Plan implemented in January
2019, pursuant to a separation agreement by and between us and Mr. Gridley.
|
|
(5)
|
The amount in this column for Mr. Gridley represents
the payment of a one-time lump sum payment of $478,065, less all applicable withholdings, pursuant to a separation agreement by
and between us and Mr. Gridley.
|
|
(6)
|
The amount in this column for Mr. Kennedy represents
the payment of a retention bonus under the Amended and Restated Executive Officer Retention Bonus Plan implemented in January
2019, pursuant to a separation agreement by and between us and Mr. Kennedy.
|
|
(7)
|
The amount in this column for Mr. Kennedy represents
the payment of (a) a one-time lump sum payment of $293,906, less all applicable withholdings, pursuant to a separation agreement
by and between us and Mr. Kennedy; and (b) $208.06, representing the employer portion of the monthly premium under COBRA for March
and April 2019.
|
|
(8)
|
The amount in this column for Dr. Haut represents
the payment of a retention bonus under the Amended and Restated Executive Officer Retention Bonus Plan implemented in January
2019, pursuant to a separation agreement by and between us and Dr. Haut.
|
|
(9)
|
The amount in this column for Dr. Haut represents
the payment of a one-time lump sum payment of $283,061, less all applicable withholdings, pursuant to a separation agreement by
and between us and Dr. Haut.
|
Narrative Explanation of Certain Aspects of the Summary
Compensation Table
The compensation paid to Histogenics’ named executive
officers during the year ended December 31, 2019 consisted of the following components (in addition to severance benefits described
below under “Histogenics Employment Agreements and Severance Benefits”):
|
·
|
Performance-based cash bonuses; and
|
|
·
|
Long-term incentive compensation in the form of stock options.
|
Base Salaries
For the year ended December 31, 2019, the annual base salaries
for Histogenics’ named executive officers were as follows: Mr. Gridley – $478,065; Mr. Kennedy – $391,875; and
Dr. Haut – $377,415. Messrs. Gridley’s and Kennedy’s employment with Histogenics terminated on March 22, 2019
and Dr. Haut’s employment with Histogenics terminated on January 23, 2019. In addition to actions taken with respect to hiring
new, or promoting existing, executive officers, Histogenics’ Compensation Committee approved the annual base salaries for
Histogenics’ named executive officers for the fiscal year ended December 31, 2019.
Performance-Based Bonuses
Pursuant to employment agreements with Messrs. Gridley and Kennedy
and Dr. Haut, each named executive officer was eligible to earn an annual bonus equal to a specified percentage of his base salary
(60% with respect to Mr. Gridley, 40% with respect to Mr. Kennedy and 35% with respect to Dr. Haut). The actual amount of bonus
earned was determined by Histogenics’ Board based on performance and the officer’s achievement of objectives and goals
determined by Histogenics’ Chief Executive Officer (or, with respect to Mr. Gridley, the Histogenics Board). No performance-based
bonuses were awarded to Histogenics’ named executive officers for the year ended December 31, 2019.
Long-Term Incentive Compensation
Histogenics historically offered stock options to its employees,
including its named executive officers, as the long-term incentive component of Histogenics’ compensation program. Histogenics
stock options allowed its employees to purchase shares of Histogenics common stock at a price equal to the fair market value of
Histogenics common stock on the date of grant. Histogenics stock options generally vested as to 25% of the total number of option
shares on the first anniversary of the award and in equal monthly installments over the following 36 months.
Histogenics Outstanding Equity Awards at Fiscal Year-End
for 2019
Prior to the closing of the Merger, each unexpired and unexercised
option to purchase Histogenics common stock, whether vested or unvested, was cancelled effective as of immediately prior to the
effective time of the Merger. Accordingly, there are no outstanding equity incentive plan awards for Histogenics named executive
officers as of December 31, 2019.
Histogenics Employment Agreements and Severance Benefits
Adam Gridley
In April 2014, Histogenics entered into a letter agreement with
Adam Gridley, under which Mr. Gridley agreed to become Histogenics’ president and chief executive officer, effective as of
May 12, 2014. Under this agreement, Mr. Gridley’s base salary for 2019 was $478,065 per year. Mr. Gridley was eligible to
receive an annual cash bonus with a target equal to 60% of his base salary, subject to satisfaction of objective or subjective
criteria established by the Histogenics Board.
Pursuant to a reduction in force approved by the
Histogenics Board in March 2019, Mr. Gridley’s employment with Histogenics terminated effective March 22, 2019. Mr.
Gridley retained his statutory titles of president, treasurer and secretary of Histogenics while he provided consulting
services to Histogenics, and remained a director of Histogenics until September 27, 2019. In connection with the execution of
the separation agreement entered into between the Histogenics and Mr. Gridley in connection with his termination, Mr. Gridley
received (i) $478,065 and (ii) payment of monthly COBRA premiums until the earlier of 12 months, the expiration of COBRA
continuation coverage and the date when Mr. Gridley is offered substantially equivalent health insurance in connection with
new employment or self-employment. Mr. Gridley also received $191,200 pursuant to the Histogenics’ Amended and Restated
Executive Officer Retention Bonus Plan then in effect. Histogenics and Mr. Gridley also entered into a consulting agreement
pursuant to which Mr. Gridley provided consulting services to Histogenics through June 30, 2019 for an hourly fee of
$250.
In connection with the closing of the Merger, all of Mr. Gridley’s
options to purchase Histogenics shares were cancelled.
Stephen Kennedy
In October 2017, Stephen Kennedy was promoted to Chief Operating
Officer of Histogenics. In connection with this promotion, Histogenics entered into an amended and restated employment agreement
with Mr. Kennedy. Under this amended agreement, Mr. Kennedy’s base salary for 2019 was $391,875. Mr. Kennedy was eligible
to receive an annual cash bonus equal to 40% of his base salary, subject to satisfaction of objective or subjective criteria established
by the Histogenics Board.
Pursuant to a reduction in force approved by the Histogenics
Board in March 2019, Mr. Kennedy’s employment with Histogenics terminated effective March 22, 2019. In connection with the
execution of the separation agreement entered into between Histogenics and Mr. Kennedy, Mr. Kennedy received (i) $293,906 and payment
of monthly COBRA premiums until the earlier of 12 months, the expiration of COBRA continuation coverage and the date when Mr. Kennedy
is offered substantially equivalent health insurance in connection with new employment or self-employment. Mr. Kennedy also received
$156,750 pursuant to the Histogenics’ Amended and Restated Executive Officer Retention Bonus Plan then in effect. Histogenics
and Mr. Kennedy also entered into a consulting agreement pursuant to which Mr. Kennedy provided consulting services to Histogenics
through June 30, 2019 for an hourly fee of $220.
In connection with the closing of the Merger, on September 27,
2019 all of Mr. Kennedy’s outstanding and unexercised options to purchase Histogenics shares were cancelled.
Donald Haut, Ph.D.
In June 2017, Histogenics entered into an employment agreement
with Donald Haut, Ph.D. in connection with his appointment as Histogenics’ Chief Business Officer. Under this agreement,
Dr. Haut’s base salary for 2019 was $377,415. Dr. Haut was eligible to receive an annual cash bonus with a target amount
equal to 35% of his base salary, subject to satisfaction of objective or subjective criteria established by the Histogenics Board.
Dr. Haut was terminated in connection with a reduction in force
implemented in January 2019. On January 23, 2019, Histogenics and Dr. Haut entered into a Separation Agreement pursuant to which
Dr. Haut received (i) $283,061 and (ii) payment of monthly COBRA premiums until the earliest of 9 months, the expiration of COBRA
continuation coverage or the date Dr. Haut is offered substantially equivalent health insurance coverage in connection with new
employment or self-employment. Dr. Haut also received $94,354 pursuant to the Histogenics’ Amended and Restated Executive
Officer Retention Bonus Plan then in effect and an additional nine months of vesting for all outstanding options at the time of
separation.
In connection with the closing of the Merger, on September 27,
2019, all of Dr. Haut’s outstanding and unexercised options to purchase Histogenics shares were cancelled.
Histogenics Change in Control Benefits
Pursuant to the employment agreements in effect prior to the
Merger, which, as described above, were each terminated in 2019, in the event that Histogenics experienced a change in control
and within twelve months after such change in control, a named executive officer was terminated by Histogenics without cause or
such individual resigned for good reason, then such individual’s options would become fully vested and exercisable. For purposes
of the stock option agreements, change in control meant an acquisition by any individual, entity or group of 50% or more of Histogenics’
voting stock, certain changes in the composition of the Histogenics Board, Histogenics’ merger, consolidation, liquidation,
dissolution or sale of all or substantially all of Histogenics’ assets.
Director Compensation
Introductory Note
On September 27, 2019, Histogenics completed the Merger of Merger
Sub with OpCo. At the effective time of the Merger, each Histogenics director resigned and each of the OpCo directors was appointed
to our Board. Accordingly, we have provided compensation disclosure with respect to all directors of Histogenics that served during
2019 and for those directors of OpCo that were appointed to our Board in connection with the Merger.
Director Compensation Program
Immediately following the closing of the Merger and up to December
31, 2019, we did not have a formal director compensation policy in place. In connection with the Merger, the Histogenics’
director compensation program was suspended. On January 1, 2020, the Board approved a new cash and equity compensation arrangement
for the Company’s non-employee directors. The arrangement has the following features:
|
·
|
Initial Equity Grant. Each non-employee director who joins the Board will receive options to purchase 54,000 shares
of common stock, which will vest monthly over three years, subject to continued service.
|
|
·
|
Annual Equity Grant. Each non-employee director will, subject to continued service, be granted an annual grant of options
to purchase 27,000 shares of common stock. Such options will be granted to each current non-employee director beginning in 2021
on the date of our annual meeting of stockholders, and will vest at the sooner of the one-year anniversary of the grant date or
the next annual meeting. The strike price for such options will be the closing price of our common stock on the date of the grant.
|
|
·
|
Cash Retainers. The compensation arrangement provides for annual cash retainers for service on the Board and committees
of the Board, or for service as chair of such committees, as follows:
|
Compensation Category
|
|
Amount
|
|
Annual Base Cash Retainer
|
|
$
|
40,000
|
|
Additional Committee Chair Compensation:
|
|
|
|
|
Audit Committee:
|
|
$
|
17,000
|
|
Compensation Committee:
|
|
$
|
12,500
|
|
Nominating and Corporate Governance
Committee:
|
|
$
|
8,000
|
|
Additional Committee Membership Compensation:
|
|
|
|
|
Audit Committee:
|
|
$
|
8,500
|
|
Compensation Committee:
|
|
$
|
6,250
|
|
Nominating and Corporate Governance
Committee:
|
|
$
|
4,000
|
|
Summary Ocugen 2019 Director Compensation
Our non-employee directors who were appointed in connection
with the Merger did not receive compensation for their service on the board of directors for the period immediately following the
closing of the Merger on September 27, 2019 and up to December 31, 2019. Dr. Musunuri served as an employee of Ocugen during 2019,
as well as a member of our board of directors, and he did not receive any additional compensation as a member of our board of directors.
Dr. Musunuri’s compensation as an employee is described under “—Executive Compensation” above.
The following table sets forth information regarding outstanding
option awards held by each of our non-employee directors as of December 31, 2019.
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Option
Exercise
Price ($)
|
|
|
Option Expiration
Date
|
Uday Kompella, Ph.D
|
|
|
7,191
|
|
|
|
—
|
|
|
|
1.88
|
|
|
August 25, 2025 (3)
|
Ramesh Kumar, Ph.D.
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
Frank Leo (1)
|
|
|
14,382
|
|
|
|
—
|
|
|
|
2.94
|
|
|
June 15, 2026 (3)
|
Manish Potti
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
Suha Taspolatoglu, M.D.
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
Junge Zhang, Ph.D.
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
Kirsten Castillo (2)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
Prabhavathi Fernandes, Ph.D. (2)
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
(1)
|
Mr. Leo resigned from the Board as of April 3, 2020.
|
|
(2)
|
Ms. Castillo and Dr. Fernandes were appointed to the
Board on April 5, 2020.
|
|
(3)
|
Options vested immediately upon date of grant.
|
Summary Histogenics 2019 Director Compensation
The following table provides summary information regarding 2019
compensation to Histogenics’ non-employee directors. Each of the directors listed below resigned from our Board in connection
with the Merger, except for Dr. Kong, Mr. Johnson and Messrs. Lewis and Rakin, who resigned from the Histogenics board of directors
on February 22, 2019, February 27, 2019 and June 20, 2019, respectively.
Name (1)
|
|
Fees Earned
or Paid
in Cash
($)
|
|
|
Option
Awards
($)
|
|
|
Stock
Awards
($)
|
|
|
Total
($)
|
|
Garheng Kong, M.D., Ph.D.
|
|
|
15,118
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,118
|
|
Joshua Baltzell
|
|
|
64,554
|
|
|
|
—
|
|
|
|
—
|
|
|
|
64,554
|
|
David Gill
|
|
|
32,500
|
|
|
|
—
|
|
|
|
—
|
|
|
|
32,500
|
|
John Johnson
|
|
|
13,209
|
|
|
|
—
|
|
|
|
—
|
|
|
|
13,209
|
|
Michael Lewis
|
|
|
21,875
|
|
|
|
—
|
|
|
|
—
|
|
|
|
21,875
|
|
Kevin Rakin
|
|
|
24,375
|
|
|
|
—
|
|
|
|
—
|
|
|
|
24,375
|
|
Susan Washer
|
|
|
37,662
|
|
|
|
—
|
|
|
|
—
|
|
|
|
37,662
|
|
David C. Hood (2)
|
|
|
15,000
|
|
|
|
—
|
|
|
|
—
|
|
|
|
15,000
|
|
|
(1)
|
Mr. Gridley was not eligible in 2019 to receive any
compensation from Histogenics for his service as a director pursuant to Histogenics’ Amended and Restated Compensation Program
for Non-Employee Directors because Mr. Gridley was an employee of Histogenics.
|
|
(2)
|
Mr. Hood was appointed to the Histogenics board of
directors on July 19, 2019 and resigned on September 27, 2019.
|
Prior to the closing of the Merger, each unexpired and unexercised
option to purchase Histogenics common stock, whether vested or unvested, was cancelled effective as of immediately prior to the
effective time of the Merger. Accordingly, there are no outstanding equity incentive plan awards for Histogenics non-employee directors
as of December 31, 2019.
Item 12.
|
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|
Security Ownership
of Certain Beneficial Owners and Management
The following table sets forth certain information regarding
the beneficial ownership of common stock as of April 15, 2020 by (a) each named executive officer identified in the Summary Compensation
Table above, (b) each director and (c) all executive officers and directors as a group. As of April 15, 2020, there were no persons
known by us to be the beneficial owner of more than 5% of the outstanding shares of our common stock.
The percentage of common stock outstanding is based on 52,625,228
shares of our common stock outstanding as of April 15, 2020. For purposes of the table below, and in accordance with
the rules of the SEC, we deem shares of common stock subject to options that are currently exercisable or exercisable within sixty
days of April 15, 2020 to be outstanding and to be beneficially owned by the person holding the options for the purpose of
computing the percentage ownership of that person, but we do not treat them as outstanding for the purpose of computing the percentage
ownership of any other person. Except as otherwise noted, each of the persons or entities in this table has sole voting and investing
power with respect to all of the shares of common stock beneficially owned by them, subject to community property laws, where applicable.
Except as otherwise indicated, the street address of each beneficial owner is c/o Ocugen, Inc., 5 Great Valley Parkway, Suite 160,
Malvern, PA 19355.
|
|
Shares Beneficially Owned
|
|
Name of Beneficial Owner
|
|
Number of
Shares
|
|
|
Percentage
|
|
Named Executive Officers and Directors
|
|
|
|
|
|
|
|
|
Shankar Musunuri, Ph.D., MBA (1)
|
|
|
1,875,187
|
|
|
|
3.6
|
%
|
Daniel Jorgensen, M.D., M.P.H., MBA (2)
|
|
|
34,358
|
|
|
|
*
|
|
Rasappa Arumugham, Ph.D. (3)
|
|
|
33,397
|
|
|
|
*
|
|
Adam Gridley
|
|
|
7,000
|
|
|
|
*
|
|
Stephen Kennedy
|
|
|
—
|
|
|
|
—
|
|
Donald Haut, Ph.D.
|
|
|
—
|
|
|
|
—
|
|
Ramesh Kumar, Ph.D. (4)
|
|
|
7,500
|
|
|
|
*
|
|
Junge Zhang, Ph.D. (5)
|
|
|
1,184,404
|
|
|
|
2.2
|
%
|
Uday Kompella, Ph.D. (6)
|
|
|
1,445,135
|
|
|
|
2.7
|
%
|
Manish Potti (7)
|
|
|
228,793
|
|
|
|
*
|
|
Kirsten Castillo (8)
|
|
|
3,000
|
|
|
|
*
|
|
Prabhavathi Fernandes, Ph.D. (9)
|
|
|
3,000
|
|
|
|
*
|
|
Suha Taspolatoglu, M.D. (10)
|
|
|
770,248
|
|
|
|
1.5
|
%
|
All executive officers and directors as a group (13 persons)
|
|
|
5,654,787
|
|
|
|
10.7
|
%
|
* Represents beneficial ownership of less than one percent
(1%) of the outstanding common stock.
|
(1)
|
Consists of (i) 406,000 shares of common stock; 7,191 shares of common stock issuable upon exercise of warrants exercisable
within 60 days of April 15, 2020; and 86,292 shares of common stock issuable upon exercise of stock options exercisable within
60 days of April 15, 2020; and (ii) 1,375,299 shares of common stock and 405 shares of common stock issuable upon exercise of warrants
exercisable within 60 days of April 15, 2020, in each case held by KVM Holdings LLC. Dr. Musunuri is a member and officer of KVM
Holdings, LLC and has voting and investment power over the shares held by KVM Holdings, LLC.
|
|
(2)
|
Consists of 34,358 shares issuable pursuant to stock options exercisable within 60 days of April 15, 2020.
|
|
(3)
|
Consists of 33,397 shares issuable pursuant to stock options exercisable within 60 days of April, 15 2020.
|
|
(4)
|
Consists of 7,500 shares issuable pursuant to stock options exercisable within 60 days of April, 15 2020.
|
|
(5)
|
Consists of (i) 818,578 shares of common stock and 7,500 shares of common stock issuable upon exercise of stock options exercisable
within 60 days of April 15, 2020; and (ii) 212,853 shares of common stock and 145,473 shares of common stock issuable upon exercise
of warrants exercisable within 60 days of April 15, 2020, in each case held by Gupiao Trust. Mr. Zhang is the beneficiary of Gupiao
Trust has voting and investment power over securities held by Gupiao Trust.
|
|
(6)
|
Consists of (i) 950,674 shares of common stock, 354 shares of common stock issuable upon exercise of warrants exercisable within
60 days of April 15, 2020, and 14,691 shares of common stock issuable upon exercise of stock options exercisable within 60 days
of April 15, 2020; and (ii) 479,416 shares of common stock held by Kompella LLC. Mr. Kompella has voting and investment power over
the shares of common stock held by Kompella LLC.
|
|
(7)
|
Consists of (i) 7,500 shares of common stock issuable upon exercise of stock options exercisable within 60 days of April 15,
2020 and (ii) 123,429 shares of common stock and 97,864 shares of common stock issuable upon exercise of warrants exercisable within
60 days of April 15, 2020, in each case held by Scotland Parkway LLC. Mr. Potti is a managing member of Scotland Parkway LLC and
has voting and investment power over securities held by Scotland Parkway LLC.
|
|
(8)
|
Consists of 3,000 shares issuable pursuant to stock options exercisable within 60 days of April 15, 2020.
|
|
(9)
|
Consists of 3,000 shares issuable pursuant to stock options exercisable within 60 days of April 15, 2020.
|
|
(10)
|
Consists of (i) 7,500 shares of common stock issuable upon exercise of stock options
exercisable within 60 days of April 15, 2020 and (ii) 742,905 shares of common stock and 19,843 shares of common stock
issuable upon exercise of warrants exercisable within 60 days of April 15, 2020, in each case held by Abdi Ibrahim
Uluslararası İlaç Yatırımları Sanayi ve Ticaret A.Ş (“Abdi”). Dr.
Taspolatogula is the Chief Executive Officer of Abdi and has voting and investment power over securities held by Abdi.
|
Equity Compensation
Plan Information
The following table provides certain information as of December
31, 2019, with respect to our equity compensation plan in effect on that date.
Plan Category
|
|
Number of
securities to be
issued upon
exercise of
outstanding
options,
warrants and
rights
|
|
|
Weighted-
average
exercise price of
outstanding
options,
warrants
and rights
|
|
|
Number of
securities
remaining
available for
future issuance
under equity
compensation
plans
(excluding
securities
reflected in
column (a)) (3)
|
|
Equity compensation plans approved by security holders (1)
|
|
|
164,500
|
|
|
$
|
0.39
|
|
|
|
1,897,125
|
|
Equity compensation plans not approved by security holders
(2)
|
|
|
566,689
|
|
|
$
|
5.81
|
|
|
|
215,692
|
|
Total
|
|
|
731,189
|
|
|
$
|
4.59
|
|
|
|
2,112,817
|
|
|
(1)
|
Includes securities issuable under the Ocugen, Inc. 2019 Equity Incentive Plan (the “2019 Plan”).
|
|
(2)
|
Includes securities issuable under the Ocugen, Inc. 2014 Stock Option Plan (the “2014 Plan”). Persons eligible to participate in the 2014 Plan are those employees,
officers and directors of, and consultants and advisors to us, as selected from time to time by the Compensation Committee, as
administrator. The 2014 Plan permits the grants of (1) options to purchase common stock, including options intended to qualify
as incentive stock options under Section 422 of the Code, and (2) shares of common stock directly. The per share option exercise
price and term of each option will be determined by the Compensation Committee, but the exercise price may not be less than fair
market value of the common stock on the date of grant. The 2014 Plan provides that in connection with a “change in
control,” as defined in the 2014 Plan, the Compensation Committee may take whatever action with respect to outstanding options
it deems necessary or desirable, including, without limitation, accelerating the vesting, expiration or termination date of such
options. No options may be granted under the 2014 Plan after February 10, 2024.
|
|
(3)
|
Consists of (a) 2,061,625 shares initially available for issuance under the 2019 Plan, minus 164,500 shares to be issued upon
the exercise of outstanding options, warrants and rights and (b) 782,381 shares initially
available for issuance under the 2014 Plan, minus 566,689 shares to be issued upon the exercise of outstanding options. Pursuant
to the terms of the 2019 Plan’s “evergreen” provision, an additional 2,105,009
shares of common stock were added to the 2019 Plan, effective January 1, 2020. Pursuant to the “evergreen” provision,
as of the first business day of each fiscal year, the aggregate number of shares of Common Stock that may be issued under the 2019
Plan shall automatically increase by a number equal to the lesser of (x) 4.0% of the total number of shares of Common Stock outstanding
on December 31 of the prior year, or (y) a number of shares of Common Stock determined by the Company’s board of directors
|
Item 13.
|
Certain Relationships and Related Transactions, and Director Independence.
|
Related-Party Transactions
Policies and Procedures
Our Board has adopted a written related party transaction policy
setting forth the policies and procedures for the review and approval or ratification of related-person transactions. This policy
covers any financial 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 the lesser of (i) $120,000 in any twelve-month period
or (ii) 1% of the average of our assets at the end of the last two fiscal years and in which any related person had, has or will
have a direct or indirect material interest. Our management is responsible for determining whether a transaction is a related party
transaction subject to our policy, and upon subject determination, is responsible for disclosing the material facts concerning
the transaction and the related party’s interest in our transaction to our Audit Committee. In reviewing and approving any
such transactions, our Audit Committee is tasked to consider all available relevant facts and circumstances with respect to the
transaction and shall evaluate all available options, including ratification, revision or termination of the transaction. All of
the transactions described as Ocugen transactions under “—Certain Relationships and Related Party Transactions”
in this report were either approved or ratified in compliance with the Ocugen related party transaction policy.
Histogenics had adopted a related-party transaction policy under
which its directors, executive officers and any person who was known to be the beneficial owner of more than 5% of any class of
Histogenics voting securities, including their immediate family members and affiliates, were not permitted to enter into a related-party
transaction with Histogenics without the prior consent of Histogenics’ Audit Committee or another independent committee of
the Histogenics Board where it was inappropriate for its Audit Committee to review such transaction due to a conflict of interest.
Any request for Histogenics to enter into a transaction with an executive officer, director or any of such persons’ immediate
family members or affiliates, in which the amount involved exceeded $120,000 must have first been presented to Histogenics’
Audit Committee for review, consideration and approval. All of Histogenics’ directors and executive officers were required
to report to its Audit Committee any such related party transaction. In approving or rejecting the proposed agreement, Histogenics’
Audit Committee was to consider the relevant facts and circumstances available and deemed relevant to the Audit Committee, including
costs and benefits to Histogenics, the terms of the transaction, the availability of other sources for comparable services or products
and, if applicable, the impact on a director’s independence. Histogenics’ Audit Committee was to approve only those
agreements that, in light of known circumstances, were not inconsistent with Histogenics’ best interests, as Histogenics’
Audit Committee determined in the good faith exercise of its discretion. All of the transactions described as Histogenics transactions
under “—Certain Relationships and Related Party Transactions” in this report were either approved or ratified
in compliance with the Histogenics related-party transaction policy.
Certain Relationships and Related Party Transactions
Described below are any transactions occurring since January
1, 2018 and any currently proposed transactions to which either we were a party and in which:
|
·
|
the lesser of $120,000 or 1% of the average of the total assets at year-end for the last two completed fiscal years; and
|
|
·
|
a director, executive officer, holder of more than 5% of our outstanding capital stock or any member of such person’s
immediate family had or will have a direct or indirect material interest, other than the compensation, termination and change of
control arrangements that are described under “—Ocugen Executive Compensation” under Item 11 of this report.
|
The historical share and per share amounts set forth below do
not reflect the reverse stock split that occurred in connection with the Merger.
2018 and 2019 Convertible Promissory Note Financing
From January 2018 through February 2019, OpCo issued an
aggregate principal amount of $8.75 million of convertible promissory notes that accrued interest at a rate of 5% per annum
(the “2018 Notes”). In connection with the April 2019 common stock issuance described below, all of the 2018
Notes, including all principal and accrued interest were converted into 2,195,157 shares of OpCo common stock at a conversion
price of $4.165 per share. The table below sets forth the principal amount of the 2018 Notes purchased by related parties as
well as the number of shares of OpCo common stock acquired by each such related party upon conversion of the 2018 Notes:
Participants
|
|
Principal
Amount of
Notes
Purchased
|
|
|
OpCo Shares of
Common Stock
Issued Upon
Conversion
|
|
JSC “Lancaster Group Kazakhstan”
|
|
$
|
2,500,000
|
|
|
|
637,755
|
|
Abdi Ibrahim Uluslararasi Ilac Yaturmlari Sanayi ve Ticaret A.S. (1)
|
|
$
|
2,500,000
|
|
|
|
637,755
|
|
Bharath R. Potti (2)
|
|
$
|
200,000
|
|
|
|
49,874
|
|
Manish Potti
|
|
$
|
700,000
|
|
|
|
174,675
|
|
Martin Coyne (3)
|
|
$
|
150,000
|
|
|
|
36,615
|
|
Vinayak Potti (4)
|
|
$
|
100,000
|
|
|
|
24,510
|
|
Sreekanth Madathil (5)
|
|
$
|
50,400
|
|
|
|
12,353
|
|
|
(1)
|
Suha Taspolatoglu, M.D., one of our directors, is
the chief executive officer of Abdi Ibrahim Ilac Sanayi ve Ticaret A.S.
|
|
(2)
|
Bharath Potti is the brother of Manish Potti, one
of our directors.
|
|
(3)
|
Martin Coyne served as a director of OpCo until June
2019.
|
|
(4)
|
Vinayak Potti is the cousin of Manish Potti, one of our directors.
|
|
(5)
|
Sreekanth Madathil is the cousin of Manish Potti, one of our directors.
|
April 2019 Common Stock Financing
In April 2019, each of JSC “Lancaster Group Kazakhstan”
and Abdi Ibrahim Uluslararasi Ilac Yaturmlari Sanayi ve Ticaret A.S. purchased 84,034 shares of OpCo common stock at a per share
price of $5.95 for an aggregate purchase price of $1.0 million.
February 2019 Repricing and Exercise of Warrants
In September 2016, Histogenics entered into a securities purchase
agreement with certain institutional and accredited investors (the “Securities Purchase Agreement”) for the sale and
issuance of 2,596,059 shares of Histogenics common stock (the “Common Shares”) and 24,158.8693 shares of Histogenics
Series A Convertible Preferred Stock (the “Preferred Stock,” and such shares, the “Preferred Shares”),
which Preferred Shares were convertible into an aggregate of 10,737,275 shares of Histogenics common stock, for total consideration
of approximately $30,000,000 (the “Private Placement”).
As part of the Private Placement, Histogenics provided each
purchaser 100% warrant coverage based on an as-converted number of shares of Histogenics common stock issued and issuable upon
conversion of the Preferred Shares plus the Common Shares and accordingly issued the investors warrants (the “2016 Warrants”).
The exercise price of the 2016 Warrants was $2.25 per share. Also as described below, as part of the October 2018 Offering, Histogenics
sold and issued the 2018 Warrants. The exercise price of the 2018 Warrants was $0.70 per share, subject to Histogenics’ right
pursuant to Section 2(e) of the 2018 Warrants to reduce the exercise price to any amount and for any period of time deemed appropriate
by Histogenics Board (the “Voluntary Adjustment Right”).
On February 8, 2019, Histogenics and certain holders of the
2016 Warrants (the “Participating 2016 Holders”) entered into a Warrant Amendment and Exercise Agreement (the “2016
Exercise Agreement”) pursuant to which Histogenics agreed to reduce the exercise price of the 2016 Warrants held by such
Participating 2016 Holders from $2.25 to $0.01 per share (the “2016 Reduced Exercise Price”) in consideration for the
exercise of the 2016 Warrants held by such Participating 2016 Holders in full at the 2016 Reduced Exercise Price for cash and provided
a general release of claims of such Participating 2016 Holders against Histogenics with respect to the 2016 Warrants. Histogenics
also agreed to modify the reference to “three (3) Trading Days” in the first sentence of Section 2(d)(i) of the 2016
Warrants held by the Participating 2016 Holders to “two (2) Trading Days.” The Participating 2016 Holders owned, in
the aggregate, 2016 Warrants to purchase a total of 12,957,953 shares of Histogenics common stock. After the full exercise of the
2016 Warrants held by the Participating 2016 Holders, 2016 Warrants to purchase approximately 508,714 shares of Histogenics common
stock remained outstanding.
On February 8, 2019, pursuant to the Voluntary Adjustment
Right, Histogenics determined to reduce the exercise price of the 2018 Warrants from $0.70 to $0.01 per share (the
“2018 Reduced Exercise Price”) through the close of business on February 8, 2019. Additionally, on February 8,
2019, Histogenics and all of the holders of the 2018 Warrants (the “Participating 2018 Holders” and, together
with the Participating 2016 Holders, the “Holders”) entered into a Warrant Exercise Agreement (the “2018
Exercise Agreement”) pursuant to which in consideration for the 2018 Reduced Exercise Price, the Participating 2018
Holders agreed to exercise the 2018 Warrants held by such Participating 2018 Holders in full at the 2018 Reduced Exercise
Price for cash and provided a general release of claims of such Participating 2018 Holders against Histogenics with respect
to the 2018 Warrants. The Participating 2018 Holders owned, in the aggregate, 2018 Warrants to purchase a total of 19,616,250
shares of Histogenics’ common stock. After the full exercise of the 2018 Warrants held by the Participating 2018
Holders, no 2018 Warrants remain outstanding.
Wilmslow Estate Limited (“Wilmslow”), which was
a greater than 5% holder of Histogenics common stock and an affiliate of Michael Lewis, a former member of the Histogenics Board,
exercised their outstanding 2016 Warrants and 2018 Warrants pursuant to a 2016 Exercise Agreement and 2018 Exercise Agreement,
respectively. Kevin Rakin, a former member of the Histogenics Board, and certain of his affiliated trusts, exercised their outstanding
2016 Warrants and 2018 Warrants pursuant to a 2016 Exercise Agreement and 2018 Exercise Agreement, respectively.
October 2018 Public Offering
In October 2018, Histogenics closed an underwritten public offering
(the “October 2018 Offering”) of 26,155,000 shares of Histogenics common stock and warrants to purchase up to 19,616,250
shares of common stock, at a combined purchase price of $0.65 per share of common stock and accompanying warrant (the “Securities”).
The gross proceeds from this offering were $17.0 million, before deducting underwriting discounts and commissions, and offering
expenses payable by Histogenics. The warrants (the “2018 Warrants”) were exercisable immediately upon issuance at a
price of $0.70 per share of common stock and have a term of five years commencing on the date of issuance.
Wilmslow, which was a greater than 5% holder of Histogenics
common stock and an affiliate of Michael Lewis, a former member of the Histogenics Board, purchased securities in the October 2018
Offering. Kevin Rakin, a former member of the Histogenics Board, purchased Securities in the October 2018 Offering.
Collaboration with Advaite, Inc.
In April 2020, the Company entered into an agreement with
Advaite, Inc., (“Advaite”) to provide certain support services for Advaite's development of a diagnostic test kit
that is designed to detect antibodies to COVID-19. Advaite was co-founded and is being managed by Mr. Karthik Musunuri, the
son of the Company's Chief Executive Officer, Chairman of the Board and co-founder, Dr. Shankar Musunuri. Pursuant to the
agreement, the Company will be paid on an hourly basis at a rate between $200-$375 for those hours actually worked on Advaite
related projects by specific employees, and will receive tiered royalty payments based on cumulative net sales of the test
kit. No amount was paid or invoiced for the year ended December 31, 2019.
Employment Agreements
For information on employment arrangements and compensation
for service as an Ocugen officer or on the Ocugen Board, see “—Ocugen Executive Compensation” under Item 11 of
this report.
Indemnification Agreements
Ocugen’s Certificate of Incorporation and Bylaws require
Ocugen to indemnify its directors and officers to the fullest extent permitted by Delaware law. Ocugen has also entered into indemnity
agreements with certain officers and directors. These agreements provide, among other things, that Ocugen will indemnify the officer
or director, under the circumstances and to the extent provided for in the agreement, for expenses, damages, judgments, fines and
settlements he or she may be required to pay in actions or proceedings which he or she is or may be made a party by reason of his
or her position as a director, officer or other agent of the Company, and otherwise to the fullest extent permitted under Delaware
law and our Bylaws and Amended and Certificate of Incorporation.
Histogenics had entered into indemnification agreements with
its former directors, executive officers and certain key employees. Under these agreements, Histogenics agreed to indemnify its
directors, executive officers and certain key employees against any and all expenses incurred by them in connection with proceedings
because of their status as one of Histogenics’ directors, executive officers or key employees to the fullest extent permitted
by Delaware law, subject to certain limitations. In addition, these indemnification agreements provided that, to the fullest extent
permitted by Delaware law, Histogenics would pay for all expenses incurred by its directors, executive officers and certain key
employees in connection with a legal proceeding arising out of their service to Histogenics.
In addition, as permitted by Section 145 of the Delaware General
Corporation Law, Histogenics’ amended and restated bylaws provided that Histogenics was authorized to enter into indemnification
agreements with its directors and executive officers and Histogenics was authorized to purchase directors’ and officers’
liability insurance, which Histogenics maintained to cover its directors and executive officers.
Independence of the
Board of Directors
Under the Nasdaq Stock Market (“Nasdaq”)
listing standards, a majority of the members of a listed company’s board of directors must qualify as
“independent,” as affirmatively determined by the board of directors. Our Board consults with our counsel to
ensure that the Board’s determinations are consistent with all relevant securities and other laws and regulations
regarding the definition of “independent,” including those set forth in pertinent listing standards of Nasdaq, as
in effect from time to time.
Our Board has determined all of our directors, except for Dr.
Musunuri, are “independent” directors, as defined under the rules of Nasdaq. In making such determination, the Board
considered the relationships that each such non-employee director has with the Company and all other facts and circumstances that
the Board deemed relevant in determining their independence, including the beneficial ownership of our common stock by each non-employee
director. Our independent directors generally meet in executive session at each regularly scheduled Board meeting.
The Histogenics Board of Directors determined, prior to the
completion of the Merger, that in the fiscal year ended December 31, 2019, the following directors were “independent”
directors, as defined under the rules of Nasdaq: David Gill; John H. Johnson; Garheng Kong, M.D., Ph.D.; Kevin Rakin; Susan Washer;
Michael Lewis and Josh Baltzell. Adam Gridley, Histogenics’ former Chief Executive Officer, served on the Histogenics Board
of Directors and was deemed not “independent” by virtue of being an employee of Histogenics.
Item 14.
|
Principal Accountant Fees and Services.
|
General
The Audit Committee of the Board has appointed and engaged Ernst
& Young LLP to serve as our independent registered public accounting firm to audit the consolidated financial statements of
the Company and its subsidiaries for the 2020 fiscal year, and to perform audit-related services. Ernst & Young LLP had audited
OpCo’s financial statements since 2018. Grant Thornton LLP had served as the Company’s independent registered public
accounting firm since 2012.
Change in Certifying
Accountant
On September 27, 2019, the Audit Committee approved the termination
the Company’s engagement with Grant Thornton LLP. The Company notified Grant Thornton LLP on October 9, 2019 that it would
be dismissed as the Company’s independent registered public accounting firm effective immediately.
Grant Thornton LLP’s reports on the Company’s financial
statements for the years ended 2017 and 2018 did not contain an adverse opinion or disclaimer of opinion and were not qualified
or modified as to uncertainty, audit scope or accounting principles. During the Company’s fiscal years ended 2017 and 2018,
and the subsequent interim period through October 9, 2019, there were no “reportable events” within the meaning of
Item 304(a)(1)(v) of Regulation S-K and the related instructions thereto.
On September 27, 2019, the Audit Committee approved the appointment
of Ernst & Young LLP as the Company’s new independent registered public accounting firm, effective upon the dismissal
of Grant Thornton LLP.
Independent Registered
Public Accounting Firm Fees
Current Independent Registered Public Accounting Firm Fees
The Audit Committee works with our management in order to negotiate
appropriate fees with its independent registered public accounting firm and is ultimately responsible for approving those fees.
The following is a summary and description of fees for services provided by the independent registered public accounting firm,
Ernst & Young LLP, in fiscal years 2019 and 2018 (including the financial statements of OpCo). Other than as set forth below,
no professional services were rendered or fees billed by Ernst & Young LLP during fiscal years 2018 and 2019.
Service
|
|
2019
|
|
|
2018
|
|
Audit Fees
|
|
$
|
827,859
|
|
|
$
|
345,171
|
|
Audit-Related Fees
|
|
|
—
|
|
|
|
—
|
|
Tax Fees
|
|
|
—
|
|
|
$
|
37,595
|
|
All Other Fees
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
$
|
827,859
|
|
|
$
|
382,766
|
|
“Audit Fees” means the fees billed
or incurred by Ernst & Young LLP for professional services rendered in connection with the annual audit and quarterly reviews
of our consolidated financial statements for the years ended December 31, 2019 and 2018, and the fees billed in connection with
the filing of registration statements with the SEC.
“Audit-Related Fees” consisted of
amounts paid to Ernst & Young LLP for assurance and related services reasonably related to the performance of the audit or
review of the financial statements and that are not reported under the Audit Fees category. There were no such fees incurred during
the years ended December 31, 2019 or 2018.
“Tax Fees” consisted of amounts paid
to Ernst & Young LLP for tax compliance and consulting. There were no such fees incurred during the year ended December 31,
2019.
Other Auditors
The following table presents the fees for professional services
earned by Grant Thornton LLP, Histogenics’ independent registered public accounting firm, for services rendered for the years
ended December 31, 2019 and 2018, respectively.
Service
|
|
2019
|
|
|
2018
|
|
Audit Fees
|
|
$
|
110,725
|
|
|
$
|
420,548
|
|
Audit-Related Fees
|
|
|
—
|
|
|
|
—
|
|
Tax Fees
|
|
|
—
|
|
|
|
—
|
|
All Other Fees
|
|
|
—
|
|
|
|
—
|
|
Total
|
|
$
|
110,725
|
|
|
$
|
420,548
|
|
“Audit Fees” means the fees billed
or incurred by Grant Thornton LLP for professional services rendered in connection with (i) the quarterly reviews of Histogenics’
consolidated financial statements during 2019, (ii) the annual audit and quarterly reviews of Histogenics’ consolidated financial
statements for the year ended December 31, 2018, (iii) consents issued for registration statements filed with the SEC, and (iv)
the use of Grant Thornton LLP’s online research tool for 2018.
All fees described above were pre-approved by the Histogenics
Audit Committee in accordance with applicable SEC requirements.
Audit Committee Pre-Approval
Policies and Procedures
The Audit Committee is responsible for appointing, setting compensation
for, and overseeing the work of the independent registered public accounting firm. The Audit Committee’s charter establishes
a policy that all audit and permissible non-audit services provided by the independent registered public accounting firm will be
pre-approved by the Audit Committee.
The Audit Committee has adopted a policy to pre-approve all
audit and permissible non-audit services rendered by Ernst & Young LLP, our independent registered public accounting firm.
The Audit Committee can pre-approve specified services in defined categories of audit services and audit-related services up to
specified amounts as part of the Audit Committee’s approval of the scope of the engagement of Ernst & Young LLP or on
an individual case-by-case basis before Ernst & Young LLP is engaged to provide a service. Ernst & Young LLP is not currently
engaged to perform any non-audit services or tax services.