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Item 5.02
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Departure of Directors or Certain Officers; Election
of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
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Directors
In accordance with the Exchange Agreement, on
June 7, 2019, effective immediately prior to the Closing, each of
Deborah F. Aghib, Ph.D
.,
Tessie M. Che, Ph.D.
, Paul Chun,
David L. Hill,
Ph.D., Charles V. Olson, D.Sc. and Mayank D. Sampat
resigned from the Company’s board of directors and committees
of the board of directors on which they respectively served, which resignations were not the result of any disagreements with the
Company relating to the Company’s operations, policies or practices.
At the Closing, in accordance with the Exchange
Agreement, the size of the Company’s board of directors was fixed at seven members and the board of directors was reconstituted
to consist of four members designated by Edesa, Dr. Pardeep Nijhawan, Sean MacDonald, Paul William Pay and Peter van der Velden,
one designated by Stellar, Frank R. Oakes, who retained his position as a director of the Company from prior to the Closing, and
two “independent” directors, Lorin Johnson and Carlo Sistilli. Each of Sean MacDonald, Paul William Pay, Peter van
der Velden, Lorin Johnson and Carlo Sistilli qualify as “independent” as defined under Nasdaq corporate governance
rules. The directors shall serve until their respective successors are duly elected or appointed and qualified or their earlier
death, resignation or removal.
In addition, upon the completion of the Exchange,
Sean McDonald, Paul William Pay and Carlo Sistilli were appointed to the Company’s Audit Committee (with Mr. Sistilli
appointed to serve as chair of the committee); Sean McDonald, Peter van der Velden and Carlo Sistilli were appointed to the Company’s
Nominating and Corporate Governance Committee; and Sean McDonald, Paul William Pay and Lorin K. Johnson were appointed to the Compensation
Committee. Sean MacDonald was also appointed to serve as Chairman of the board of directors of the combined company.
As compensation for their services on the board of directors, each
non-executive board member will receive annual base remuneration of $30,000 and the Chairman of the Board will receive annual remuneration
of $50,000, inclusive of compensation for his services on committees of the board of directors. Each member of the Company’s
Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee will receive annual remuneration of $5,000
for each committee on which they serve, and the Chair of the Audit Committee will receive $10,000 annually for his services and
the Chairs of each of the Compensation Committee and Nominating and Corporate Governance Committee shall respectively receive $7,500
annually for their services.
Biographies of New Directors
Dr. Pardeep Nijhawan, 48, MD, FRCPC, AGAF
is the Chief Executive Officer, Secretary and a director of Edesa, positions he has held since forming the company in 2015. Dr.
Nijhawan is a seasoned pharmaceutical entrepreneur with nineteen years of experience in cross-functional roles including finance,
marketing and business development. At Edesa, Dr. Nijhawan leads the Executive Team in setting the company’s corporate strategy
and business development initiatives. Prior to Edesa, Dr. Nijhawan was the founder and CEO of Medical Futures Inc which was sold
to Tribute Pharmaceuticals. Dr. Nijhawan founded and led Digestive Health Clinic into becoming Canada’s largest provider
of private endoscopy services. He is also the founder of Exzell Pharma, a specialty Canadian based pharmaceutical organization
that markets and commercializes approved products. Dr. Nijhawan was Inducted into the CHLA BD Hall of fame in 2018 and Awarded
Business Development Deal of the Year 2017. Dr. Nijhawan received his MD (University of Ottawa), Internship (Yale), Residency IM
(Mayo), Fellowship GI (Mayo). Dr. Nijhawan’s qualifications to serve on the combined company’s board of directors include
his extensive executive leadership and experience in the life sciences industry and his knowledge of Edesa’s business as
its Chief Executive Officer.
Sean MacDonald, 42, is the CEO of Corbin Therapeutics
Inc., a Montreal based biotech start up focused on treating neuroinflammation and has been a director of Edesa since September
2017. Mr. MacDonald became CEO of Corbin Therapeutics in October of 2018, and in such capacity oversees all of the company’s
activities including R&D, financing, and operations. Prior to Corbin Therapeutics, Mr. MacDonald was with Pharmascience Inc.,
one of Canada’s largest pharmaceutical companies. During his six years with Pharmascience which began in 2012, Mr. MacDonald
held roles of increasing responsibility finishing with Vice President of Business Development and Corporate Development and a member
of the executive team. Mr. MacDonald’s responsibilities included R&D and pipeline development, business development and
licensing and corporate development. Over his career, Mr. MacDonald has closed deals valued at greater than $2.5 billion in the
aggregate, lived and worked in Canada, Denmark and Belgium, and helped build both large and small biotech companies. Mr. MacDonald
received a B.Sc. in molecular biology from the University of Ottawa and an M.B.A. also from the University of Ottawa. Mr. MacDonald’s
qualifications to serve on the combined company’s board of directors include his extensive operational experience and background
in the pharmaceutical/biotechnology industry.
Paul William Pay, 64, is an executive with forty
years’ experience in the pharmaceutical / biotechnology industry and has been a member of the board of directors of Edesa
since the company’s inception in 2015. During his career, Mr. Pay has held Senior management positions in big pharma, specialty
pharmaceutical and early stage companies, including being a co-founder of a university spin-out company. In his current role as
Chief Business Development Officer at Norgine, a role he has held since 2007, Mr. Pay has global responsibility for business development,
licensing, acquisitions, integration, alliance management and regional partnerships. This includes profit responsibility for business
with annual revenue of €50 million. At Norgine, Mr. Pay also serves as a member of the Executive Committee and as Chair or
a member of a number of key internal committees. Past commercial roles held during his career have covered sales, marketing, market
research, licensing, business development, public relations, intellectual property and product development projects. In addition
to the Company, Mr. Pay is currently a Director of each of Exzell Pharma, a specialty pharmaceutical company, Arc Medical Design,
a medical device development company and a portfolio company of Norgine and Norgine Ltd., an affiliate of Norgine. Mr. Pay is also
the President and CEO of Merus Labs Inc., a Norgine wholly owned affiliate company. Mr. Pay received a B.SC. (hons) from the University
of Leeds. Mr. Pay’s qualifications to serve on the combined company’s board of directors include his extensive experience
in the pharmaceutical / biotechnology industry and his knowledge of Edesa’s business.
Peter van der Velden, 57, is an experienced
investor and operator who for the past twenty-eight years has been building innovative, technology centric companies from start-up
through to expansion. Since 2007, Mr. van der Velden has been the Managing General Partner of Lumira Ventures, one of Canada’s
largest and most active dedicated life sciences venture capital investors. Mr. van der Velden led Lumira’s investment in
Edesa in the fall of 2017 and he has been on the board of directors of the company since that time. Mr. van der Velden’s
current and past corporate board roles include: Exact Imaging, Edesa, Medexus Pharmaceuticals, Milcom Ventures, Spinal Kinetics,
Alveolus Inc., CML Healthcare, First Aid Shot Therapy, Life Sciences Ontario, Skinstore.com, Vendorlink.ca and the Canadian Venture
Capital and Private Equity Association. Mr. van der Velden is an active volunteer and is a frequent lecturer at universities and
conferences around the world on themes related to venture capital, innovation and healthcare. Mr. van der Velden is a past President
and Chairman of the Canadian Venture and Private Equity Association and in addition to a number of investee company board roles
he is currently a board member for the World Health Innovation Network, a member of the SickKids Commercialization Advisory Board,
an advisor to the head of Office of the Chief Health Innovation Strategist - MOHLTC, and a member of the selection committee for
the Ontario Scale-up Vouchers Program. Mr. van der Velden works closely with both Federal and Provincial governments in Canada
advising on policy matters related to healthcare innovation and innovation financing. Mr. van der Velden holds degrees from the
Schulich School of Business (MBA finance and policy) and Queen’s University (MSc (pathology), B.Sc. (honours life sciences)).
Mr. van der Velden’s qualifications to serve on the combined company’s board of directors include his extensive operational
experience building growth companies and his knowledge acquired from serving on the boards of other companies.
Lorin Johnson, 66, is the founder and Chief
Scientist of Glycyx PharmaVentures Ltd., a biopharma investment and development company formed in early 2017. In 1989, he co-founded
Salix Pharmaceuticals, Inc. (Nasdaq: SLXP), a specialty pharmaceutical company, and held senior leadership positions prior to its
$15.8 billion acquisition by Valeant Pharmaceuticals International, Inc. (NYSE: VRX) in April 2015. Prior to Salix, Dr. Johnson
served as director of scientific operations and chief scientist at Scios, Inc. (formerly California Biotechnology, Inc). He is
a board member of Innovate Biopharmaceuticals, Inc. (Nasdaq: INNT), a position he has held since March 2018, Glycyx MOR, LTD and
Kinisi Therapeutics, Ltd., both GI specialty pharma companies based on the Isle of Man, Intact Therapeutics, Inc., a gastro-enterology
specialty drug delivery company based in Belmont, Canada, and Tumour Trace Ltd, a cancer diagnostic company based in Nottingham,
UK. Dr. Johnson previously served as a director of Edesa from 2015-2017. In addition to his career in industry, Dr. Johnson held
academic positions at Stanford University School of Medicine where he served as an Assistant Professor of Pathology and at the
University of California, San Francisco. He is the co-author of 76 journal articles and book chapters and is the co-inventor on
23 issued patents. Dr. Johnson holds a Ph.D. from the University of Southern California and was a Postdoctoral Fellow at the University
of California, San Francisco. Dr. Johnson’s qualifications to serve on the combined company’s board of directors include
his knowledge of Edesa’s business and his significant experience in the pharmaceutical industry.
Carlo Sistilli, 62, has held a variety of senior
positions in accounting and finance during his professional career. Mr. Sistilli joined Arista Homes, as CFO, 15 years ago. As
a member of the senior management team of Arista, Mr. Sistilli’s responsibilities include overseeing the finance, accounting
and IT areas, as well as due diligence and analysis of land purchases and various other investments. Prior to Arista, Mr. Sistilli
spent five years as CFO and as a board member of an Internet start-up, which provided innovative finance solutions using the internet
in the automotive retail sector. As a founder and member of the senior management team, Mr. Sistilli played a key role in taking
the company public on the Alberta Ventures Exchange. Prior to his time with the internet startup, Mr. Sistilli spent nine years
as Controller and part of the senior management team of a $ 1 billion regional trust company. Mr. Sistilli was part of the team
to facilitate the successful sale of the trust company to Manulife Financial. Mr. Sistilli is an officer and a member of the Board
of Directors of Mother of Mercy Centre. Mr. Sistilli holds a Bachelor of Arts from York University (1978), an Economics Major Certified
Management Accountant Designation (1986) and a Chartered Professional Accountant Designation (2013). Mr. Sistilli’s qualifications
to serve on the combined company’s board of directors include his knowledge of Edesa’s business and his background
in accounting and finance.
Executive Officers
At the Closing, Frank R. Oakes resigned as
the Company’s Chief Executive Officer and Dr. Pardeep Nijhawan, Edesa’s Chief Executive Officer, was appointed the
combined Company’s Chief Executive Officer and Michael Brooks, Edesa’s Vice President Corporate Development and Strategy,
was appointed the combined Company’s President. Kathi Niffenegger, Stellar’s Chief Financial Officer, remains the Chief
Financial Officer of the combined company.
Dr. Michael Brooks, PhD, MBA, 41, initially
joined Edesa in September 2015 as Vice President, Corporate Development and Strategy. Prior to joining Edesa, Dr. Brooks held positions
of increasing responsibility at Cipher Pharmaceuticals Inc (TSX:CPH) from 2010 to 2015 and served most recently as Director of
Business Development. Prior to joining Cipher, Dr. Brooks was a Post-Doctoral fellow at the University of Toronto. Dr. Brooks holds
a Hons B.Sc. degree in Microbiology and a PhD in Molecular Genetics from the University of Toronto. Dr. Brooks also holds a Master
of Business Administration degree from the Rotman School of Management where he was a Canadian Institute for Health Research (CIHR)
Science to Business Scholar.
Family Relationships and Legal Proceedings
There are no family relationships among any
of the combined company directors and officers. None of the combined company directors or executive officers have been involved,
in the past ten years and in a manner material to an evaluation of such director’s or officer’s ability or integrity
to serve as a director or executive officer, in any of those “Certain Legal Proceedings” more fully detailed in Item
401(f) of Regulation S-K, which include but are not limited to, bankruptcies, criminal convictions and an adjudication finding
that an individual violated federal or state securities laws.
Related Party Transactions
During the year ended December 31, 2017, Dr.
Nijhawan and his affiliates had outstanding loan balances of CDN $1,386,888 which funds were advanced to Edesa for start-up and
ongoing operations, and the entire amount advanced was settled with 999,900 Edesa common shares on August 28, 2017 in conjunction
with the closing of Edesa’s Class A preferred share financing.
Edesa leases approximately 2,800 square feet
of premises from 1968160 Ontario Inc., a shareholder of Edesa that is also an affiliate of Dr. Nijhawan, pursuant to a lease agreement
dated on January 1, 2017, at current rent rate of CDN $99,840 per annum plus applicable taxes, increasing by CDN $1/square foot
every two years.
Employment Agreements with Executive Officers
Kathi Niffenegger
At the Closing, the Company entered into an
employment agreement with Ms. Niffenegger. Pursuant to the employment agreement, Ms. Niffenegger will serve as the Company’s
Chief Financial Officer. Both Ms. Niffenegger and the Company have the right to terminate the employment relationship at any time,
with or without cause. As compensation for her services to the Company, Ms. Niffenegger will receive a base salary of $215,000
per year, a discretionary bonus in an amount up to 25% of her base salary based on her performance and the performance of the Company,
a one-time hiring and retention bonus of $53,750 which is subject to partial claw back if Ms. Niffenegger voluntary terminates
her employment prior to March 1, 2020 and such other employee benefits as are generally provided to similarly situated employees
of the Company. Ms. Niffenegger may be eligible for future share and/or option grants in accordance with the Company’s executive
compensation policy as in effect from time to time as determined by the Company’s Compensation Committee subject to availability
of shares and/or options for grant under the Company’s Incentive Compensation Plan.
If Ms. Niffenegger’s employment with the
Company is terminated for “Cause” (as such term is defined in the employment agreement) or if Ms. Niffenegger resigns
from her employment at any time, the Company’s only obligation shall be to provide Ms. Niffenegger with: (i) her accrued
salary through and including her last day of employment (the “Separation Date”); (ii) reimbursement of any reimbursable
expenses properly incurred through and including the Separation Date; and (iii) any benefit required under applicable law. If the
Company terminates Ms. Niffenegger’s employment without “Cause” or if Ms. Niffenegger’s employment with
the Company is “constructively terminated” (as such term is defined in the employment agreement) the Company’s
only obligations shall be: (a) to provide Ms. Niffenegger with the same payments and benefits as would be provided if the Company
had terminated her employment for Cause; and (b) subject to Ms. Niffenegger’s execution of a release in favor of the Company,
Ms. Niffenegger will also be paid, as severance, an amount equal to twelve months of her base salary at her then-current rate.
In the event that Ms. Niffenegger’s employment is terminated or constructively terminated by the Company without Cause upon
or within a twelve month period following a Change of Control (as defined in the employment agreement), Ms. Niffenegger shall be
entitled to the payments and benefits as though she was terminated without “Cause”, plus an additional change of control
payment equal to twelve months of her base salary.
During the term of Ms. Niffenegger’s employment
with the Company, Ms. Niffenegger is prohibited from competing with the Company’s business. In addition, while Ms. Niffenegger
is employed by the Company and for a period of one year thereafter, Ms. Niffenegger is prohibited from soliciting for employment
certain employees of the Company.
The foregoing description of Ms. Niffenegger’s
employment agreement contained herein does not purport to be complete and is qualified in its entirety by reference to the employment
agreement, which is attached hereto as Exhibit 10.1 and incorporated herein by reference.
The Company is currently finalizing employment
agreements with each of Dr. Pardeep Nijhawan and Michael Brooks and will file an amendment to this Current Report on Form 8-K to
disclose such agreements once finalized.