5, 2020
purposes, as more fully described in the accompanying proxy statement:
3.2020.
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| ☐ | Preliminary Proxy Statement | |||||
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule14a-6(e)(2)) | |||||
| ☒ | Definitive Proxy Statement | |||||
| ☐ | Definitive Additional Materials | |||||
| ☐ | Soliciting Material Pursuant to §240.14a-12 | |||||
| ☒ | No fee required. | |||||||||||
| ☐ | Fee computed on table below per Exchange Act Rules14a-6(i)(1) and0-11. | |||||||||||
| 1. | Title of each class of securities to which transaction applies: | |||||||||||
| 2. | Aggregate number of securities to which transaction applies: | |||||||||||
| 3. | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |||||||||||
| 4. | Proposed maximum aggregate value of transaction: | |||||||||||
| 5. | Total fee paid: | |||||||||||
| ☐ | Fee paid previously with preliminary materials. | |||||||||||
| ☐ | Check box if any part of the fee is offset as provided by Exchange Act Rule0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||||||||||
| 6. | Amount previously paid: | |||||||||||
| 7. | Form, Schedule or Registration Statement No.: | |||||||||||
| 8. | Filing party: | |||||||||||
| 9. | Date Filed: | |||||||||||
5, 2020
purposes, as more fully described in the accompanying proxy statement:
3.2020.
| ||
5, 2020
Annual Meeting.
How4, 2020.
The meetingAnnual Meeting?
check-in procedures.
Annual Meeting?
A list of our stockholders of record will be open for examination by any stockholder beginning ten days prior to the Annual Meeting at our headquarters located at 210 East Grand Avenue, South San Francisco, California 94080. If you would like to view the list, please contact our Corporate Secretary to schedule an appointment by calling (650) 457-2700 or writing to him at the address above. In addition, the list will be available for inspection by stockholders on the virtual meeting website during the Annual Meeting.
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Notice is being forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the annual meeting.Annual Meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account. You are also invited to attend the annual meeting.Annual Meeting. However, since you are not the stockholder of record, you may not vote your shares in personlive at the meeting unless you request and obtain a valid proxy from your broker or other agent.
• Proposal 1: Election of the Board’s three nominees for director named herein to hold office until the 20222023 Annual Meeting of Stockholders; and
•Proposal 2: To indicate, on an advisory basis, the preferred frequency of stockholder advisory votes on the compensation of our named executive officers; and
• To vote live at the Annual Meeting, attend the Annual Meeting by visiting www.virtualshareholdermeeting.com/ALLO2020, where stockholders may vote and submit questions during the meeting (have your Notice or proxy card in person, come to the annual meeting and we will give you a ballothand when you arrive.
• To vote using the proxy card, simply complete, sign and date the proxy card that may be delivered to you and return it promptly in the envelope provided. If you return your signed proxy card to us before the annual meeting,Annual Meeting, we will vote your shares as you direct.
• To vote over the telephone, dial toll-free1-800-690-6903 and follow the recorded instructions. You will be asked to provide the company number and control number from the Notice. Your telephone vote must be received by 11:59 p.m., Eastern Time, on June 5, 20194, 2020 to be counted.
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Beneficial Owner: Shares Registered in the Name of Broker or Bank
Internet proxy voting | ||
21, 2020.
3
• You may submit another properly completed proxy card with a later date.
• You may grant a subsequent proxy by telephone or through the internet.
• You may send a timely written notice that you are revoking your proxy to the Company’s Secretary at 210 East Grand Avenue, South San Francisco, California 94080.
• You may attend the annual meeting and vote in person. Simply attendingonline at the meetingAnnual Meeting (although attendance at the Annual Meeting will not, by itself, revoke your proxy.
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Annual Meeting?
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Chief Executive Officer of Kite Pharma, Inc. (“Kite”) and as a director from June 2009 until October 2017. Dr. Belldegrun currently serves as Chairman of Urogen Pharma, Ltd., a position he has held since December 2012, as Chairman and Partner of Two River Consulting, LLC, a position he has held since June 2009, and as Chairman of the Board of Directors of Kronos Bio, Inc., a position that he has held since June 2017.2017, as a director of Breakthrough Properties LLC and Breakthrough Services LLC, a position he has held since April 2019, and as a director of ByHeart, Inc., a position he has held since October 2019. Dr. Belldegrun has also served as Senior Managing Director of Vida Ventures, LLC since November 2017. Dr. Belldegrun previously served as a director of Teva Pharmaceutical Industries Ltd. from March 2013 until January 2017, Chairman of Arno Therapeutics, Inc. from March 2008 until January 2017, a director of Capricor Therapeutics, Inc. from September 2009 until November 2013, and a director of SonaCare Medical, LLC from October 2009 until October 2014. In 1996, he founded Agensys, Inc., a biotechnology company, where he served as its founding Chairman from 1996 to 2001, and continued to serve on the board until 2007 when it was acquired by Astellas Pharma Inc. Dr. Belldegrun was also the Founding Vice-Chairman of the board of directors and Chairman of the scientific advisory board of Cougar Biotechnology, Inc., a biotechnology company, from 2003 to 2009, when it was acquired by Johnson & Johnson. He is certified by the American Board of Urology and is a Fellow of the American College of Surgeons and the American Association of Genitourinary Surgeons. Dr. Belldegrun is Professor of Urology, holds the Roy and Carol Doumani Chair in Urologic Oncology, and Director of the Institute of Urologic Oncology at the David Geffen School of Medicine at the University of California, Los Angeles (“UCLA”). Prior to joining UCLA in October of 1988, he was a research fellow at NCI/NIH in surgical oncology and immunotherapy from July 1985 to August 1988 under Dr. Steven Rosenberg. Dr. Belldegrun received his M.D. from the Hebrew University Hadassah Medical School in Jerusalem before completing his post graduate studies in Immunology at the Weizmann Institute of Science and his residency in Urologic Surgery at Harvard Medical School.
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Corporation (from January 2008 to October 2017); Energy Future Holdings Corp. (from October 2007 to March 2018) and TPG Pace Energy Holdings Corp. (from April 2017 to July 2018). Prior to forming TPG in 1992, Mr. Bonderman was Chief Operating Officer of the Robert M. Bass Group, Inc. (RMBG), now doing business as Keystone Group, L.P., in Fort Worth, Texas. Prior to joining RMBG in 1983, Mr. Bonderman was a partner in the law firm of Arnold & Porter in Washington, D.C., where he specialized in corporate, securities, bankruptcy and antitrust litigation. From 1969 to 1970, Mr. Bonderman was a Fellow in Foreign and Comparative Law in conjunction with Harvard University, and from 1968 to 1969, he was Special Assistant to the U.S. Attorney General in the Civil Rights division. From 1967 to 1968, Mr. Bonderman was Assistant Professor at Tulane University School of Law in New Orleans, Louisiana. Mr. Bonderman holds a bachelor’sbachelor's degree from the University of Washington and a J.D. from Harvard Law School. Mr. Bonderman graduated magna cum laude from Harvard Law School where he was a member of the Harvard Law Review and Sheldon Fellow.
The Board of Directors Recommends
A Vote “For” Each Named Nominee.
Directors Continuing in Office Until the 2020 Annual Meeting
Owen Witte, M.D., 69, has served as a member of our Board since April 2018. Dr. Witte previously served as a member of the board of directors of Kite from March 2017 until October 2017. Dr. Witte joined the UCLA faculty in 1980, where he is presently a University Professor of microbiology, immunology and molecular genetics, the UCLA David Saxon Presidential Chair in Developmental Immunology and the director of the Eli and Edythe Broad Center of Regenerative Medicine and Stem Cell Research. Dr. Witte was appointed a University Professor by the University of California Board of Regents, an honor reserved for scholars of the highest international distinction. Dr. Witte is a member of the National Academy of Sciences, the American Academy of Arts and Sciences, and the National Academy of Medicine. Dr. Witte currently serves on several editorial and advisory boards. He previously served on the board of directors for the American Association for Cancer Research. He was appointed by President Obama to the President’s Cancer Panel. Dr. Witte holds a bachelor’s degree from Cornell University and an M.D. from Stanford University. He completed postdoctoral research at the Massachusetts Institute of Technology.
Our Nominating and Corporate Governance Committee and Board of Directors believes Dr. Witte’s expertise and experience in cancer research, his experience in academia and his educational background provide him with the qualifications and skills to serve on our Board of Directors.
Deborah Messemer, 61, has served as a member of our Board since September 2018. Ms. Messemer currently serves as director of PayPal Holdings, Inc. (since January 2019) and of Carbon, Inc. (since November 2018). Ms. Messemer is a certified public accountant and joined KPMG LLP (KPMG), the U.S. member firm of KPMG International, in 1982 and was admitted into the partnership in 1995. Most recently, she served as the Managing Partner of KPMG’s Bay Area and Northwest region until her retirement in September 2018. Ms. Messemer spent the majority of her career in KPMG’s audit practice as an audit engagement partner serving public and private clients in a variety of industry sectors. In addition to her operational and audit signing responsibilities, she has significant experience in SEC filings, due diligence, initial public offerings, mergers and acquisitions, and internal controls over financial reporting. Ms. Messemer is a member of the National Association of Corporate Directors and co-founder of the San Francisco Chapter of Women Corporate Directors. She has served on a number ofnon-profit and advisory boards including the Bay Area Council, the San Francisco Committee on Jobs, the California Chamber of Commerce, the San Francisco Chamber of Commerce, the UC Berkeley Fisher Center Policy Advisory Board, San Francisco Ballet, and Posse. Ms. Messemer received a bachelor’s degree in accounting from the University of Texas at Arlington.
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Our Nominating and Corporate Governance Committee and Board of Directors believes Ms. Messemer’s expertise in the accounting and finance industry, her experience advising public companies and her education provide her with the qualifications and skills to serve on our Board or Directors.
Todd Sisitsky, 47, has served as a member of our Board since April 2018. Mr. Sisitsky is Managing Partner of TPG Capital, where heco-leads the firm’s investment activities in healthcare services and pharmaceutical/medical device sectors. He has played leadership roles in connection with TPG’s investments in companies such as Aptalis Pharma, aGI-focused specialty pharmaceutical company, Biomet, a broad-based orthopedic product manufacturer, Exactech, an orthopedic implant manufacturer with a focus on extremities, hips and knees, Fenwal Transfusion Therapies, a blood product technologies business, IASIS Healthcare, a Tennessee-based acute care hospital company, Surgical Care Affiliates, an ambulatory surgery center business, HealthScope, a hospital and pathology company based in Australia, IMS Health, a leading global data services and consulting business to several segments of the healthcare industry, Immucor, a leading automated blood screening and testing business, and Par Pharmaceutical Companies, Inc. Mr. Sisitsky currently serves as director of Endo International plc, a position he has held since April 2016, and director of IQVIA Holdings, Inc., a position he has held since April 2018. Mr. Sisitsky previously served as a director of Par Pharmaceutical Companies, Inc. from September 2012 to September 2015, director of IMS Health Holdings, Inc. from February 2010 until October 2016 and Surgical Care Affiliates, Inc. from October 2013 until March 2017. Mr. Sisitsky also serves on the board of directors of the globalnot-for-profit organization, the Campaign for Tobacco Free Kids, as well as on the Dartmouth Medical School Board of Advisors, where he serves as chairman. Prior to joining TPG in 2003, Mr. Sisitsky worked at Forstmann Little & Company and Oak Hill Capital Partners. He received an MBA from the Stanford Graduate School of Business and earned his bachelor’s degree from Dartmouth College.
Our Nominating and Corporate Governance Committee and Board of Directors believes Mr. Sisitsky’s expertise and experience in life science investing and the finance industry provide him with the qualifications and skills to serve on our Board of Directors.
Directors Continuing in Office Until the 2021 Annual Meeting
Franz Humer, Ph.D., 72, has served as a member of our Board since April 2018. Dr. Humer is Chairman of the board of directors of the International Centre for Missing and Exploited Children and Chairman of the Humer Foundation. Dr. Humer previously served as a member of the board of directors of Kite from September 2015 until October 2017. He has also served as an independent director of Citigroup Inc. since 2012, and Chugai Pharmaceuticals Ltd. (Japan) since 2002. Dr. Humer also serves as a director of Bial Pharmaceuticals (Portugal), WISeKey (Cyber Security Company, Switzerland) and as a member of the International Advisory Board of Allianz SE. He served as Chairman of Diageo plc from 2005 to 2017. In addition, Dr. Humer served as Head of Pharmaceuticals and then as Chief Operating Officer of F.Hoffmann-La Roche Ltd. from 1996 to 1998, prior to serving as Chief Executive Officer of Roche Group from 1998 to 2001 and later as chairman and Chief Executive Officer from 2001 to 2008. His tenure as Chairman of Roche Holding Ltd. extended from 2008 to 2014. Before joining Roche Group, he served on the board of Glaxo Holdings plc and was responsible for research, business development, manufacturing, commercial strategy, and allnon-US operations for 13 years. In 1973, Dr. Humer joined Schering Plough Corporation where he held various General Management positions in Latin America and Europe. Dr. Humer attended the University of Innsbruck, where he obtained a Ph.D. in Law, and INSEAD in Fontainebleau, where he obtained an MBA.
Our Nominating and Corporate Governance Committee and Board of Directors believes that Dr. Humer’s expertise and experience in life sciences, his experience as a director of other companies and his educational background provide him with the qualifications and skills to serve on our Board of Directors.
Joshua Kazam, 42, has served as a member of our Board since November 2017. Mr. Kazam served as our President from November 2017 until June 2018. He was a founder of Kite and served as a member of Kite’s board of directors from Kite’s inception in June 2009 until October 2017. Mr. Kazam also served as Kite’s
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President until September 2010. In June 2009, Mr. Kazamco-founded Two River Consulting, LLC, a life-science consulting and investment firm. Since October 2005, he has also served as an officer and director and is theco-owner of Riverbank Capital Securities, Inc., a FINRA member broker dealer. From 2002 to 2004, Mr. Kazam served as the Director of Investment Management for the Orion Biomedical Fund, a private equity fund focused on biotechnology investments. Mr. Kazam has served on the board of directors of Capricor Therapeutics, Inc., a publicly reporting biotechnology company, since May 2005, and Vision Path, Inc. (d/b/a Hubble Contacts) since May 2016, Kronos Bio, Inc. since June 2017 and Platinum Eagle Acquisition Corp., a blank check company formed for the purpose of effecting a business combination with one or more businesses, since January 2018. Mr. Kazam served on the board of directors of Velcera, Inc. from 2003 until it was acquired by Perrigo Company plc in 2013. He is also theco-founder and has served on the board of directors of Veterinary Prime, Inc. since its inception in February 2015 and has served as the President of Desert Flower Foundation since June 2016. Mr. Kazam received his bachelor’s degree in Entrepreneurial Management from the Wharton School of the University of Pennsylvania and is a Member of the Wharton School’s Undergraduate Executive Board.
Our Nominating and Corporate Governance Committee and Board of Directors believes Mr. Kazam’s expertise and experience in the life sciences and venture capital industries and his educational background provide him with the qualifications and skills to serve on our Board of Directors.
John DeYoung, 56, has served as a member of our Board since April 2018. Mr. DeYoung is Vice President of Worldwide Business Development for Pfizer’s Oncology Business Unit. He is a member of Pfizer’s Oncology Leadership Team and its Worldwide Business Development Leadership Team. Mr. DeYoung joined Pfizer in 1991 and has held leadership positions in Finance, Marketing, Commercial Development and Business Development. Mr. DeYoung received his bachelor’s degree in business from Michigan State University in 1985 and his MBA from the University of Chicago in 1990.
Our Nominating and Corporate Governance Committee and Board of Directors believes Mr. DeYoung’s expertise and experience in the life sciences and his financial background provide him with the qualifications and skills to serve on our Board of Directors.
Executive Officers
Technology, where he serves on the Visiting Committee for the Department of Biology.
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member, provided that one Board member attended 75% of the aggregate number of meetings of the Board and of the committees on which he served.
Name | Audit | Compensation | Nominating and Corporate Governance | |||||||||
Robert Abraham, Ph.D. (1) | X | |||||||||||
Arie Belldegrun, M.D., FACS | ||||||||||||
David Bonderman | X | * | ||||||||||
David Chang, M.D., Ph.D. | ||||||||||||
John DeYoung | X | |||||||||||
Franz Humer, Ph.D. | X | * | X | |||||||||
Joshua Kazam (2) | X | |||||||||||
Deborah Messemer | X | X | ||||||||||
Todd Sisitsky | X | X | ||||||||||
Owen Witte, M.D. | X | * | ||||||||||
Total meetings in 2018 | 5 | 3 | 1 | |||||||||
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Name | Audit | Compensation | Nominating and Corporate Governance | International and Business Development Oversight Committee (1) | ||||||||||||||||||||||
| Arie Belldegrun, M.D., FACS | ||||||||||||||||||||||||||
| David Bonderman | X* | |||||||||||||||||||||||||
| David Chang, M.D., Ph.D. | ||||||||||||||||||||||||||
| John DeYoung | X | X | ||||||||||||||||||||||||
| Franz Humer, Ph.D. | X* | X | X* | |||||||||||||||||||||||
| Joshua Kazam | X | |||||||||||||||||||||||||
| Deborah Messemer | X | X | ||||||||||||||||||||||||
| Todd Sisitsky | X | X | ||||||||||||||||||||||||
| Owen Witte, M.D. | X* | |||||||||||||||||||||||||
| Total meetings in 2019 | 6 | 4 | 3 | 1 | ||||||||||||||||||||||
• evaluating the performance, independence and qualifications of our independent registered public accounting firm and determining whether to retain our existing independent registered public accounting firm or engage a new independent registered public accounting firm;
• reviewing and approving the engagement of the independent registered public accounting firm to perform audit services and any permissiblenon-audit services;
• monitoring the rotation of partners of the independent registered public accounting firm on our engagement team as required by law;
• prior to engagement of any independent registered public accounting firm, and at least annually thereafter, reviewing relationships that may reasonably be thought to bear on their independence, and assessing and otherwise taking the appropriate action to oversee the independence of our independent registered public accounting firm;
• reviewing our annual and quarterly financial statements and reports, including the disclosures contained under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and discussing the statements and reports with our independent registered public accounting firm and management;
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• reviewing, with our independent registered public accounting firm and management, significant issues that arise regarding accounting principles and financial statement presentation and matters concerning the scope, adequacy and effectiveness of our financial controls;
• reviewing with management and our independent registered public accounting firm any earnings announcements and other public announcements regarding material developments;
• preparing the report that the SEC requires in our annual proxy statement;
• reviewing and providing oversight of any related-person transactions in accordance with our related person transaction policy and reviewing and monitoring compliance with legal and regulatory responsibilities, including our code of business conduct and ethics;
• reviewing our major financial risk exposures, including the guidelines and policies to govern the process by which risk assessment and risk management are implemented;
• reviewing on a periodic basis our investment policy; and
• reviewing and evaluating on an annual basis the performance of the Audit Committee and the Audit Committee charter.
2019.
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* The material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of the Company under the Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”), whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
• reviewing, modifying and approving (or if it deems appropriate, making recommendations to the full Board regarding) our overall compensation strategy and policies;
• reviewing and making recommendations to the full Board regarding the compensation and other terms of employment of our executive officers;
• reviewing and approving (or if it deems it appropriate, making recommendations to the full Board regarding) the equity incentive plans, compensation plans and similar programs advisable for us, as well as modifying, amending or terminating existing plans and programs;
• evaluating risks associated with our compensation policies and practices and assessing whether risks arising from our compensation policies and practices for our employees are reasonably likely to have a material adverse effect on us;
• reviewing and making recommendations to the full Board regarding the type and amount of compensation to be paid or awarded to ournon-employee board members;
• establishing policies with respect to votes by our stockholders to approve named executive officer compensation as required by Section 14A of the Exchange Act and determining our recommendations regarding the frequency of advisory votes on named executive officer compensation, to the extent required by law;
• reviewing and assessing the independence of compensation consultants, legal counsel and other advisors as required by Section 10C of the Exchange Act;
• administering our equity incentive plans;
• establishing policies with respect to equity compensation arrangements;
• reviewing the competitiveness of our executive compensation program and evaluating the effectiveness of our compensation policy and strategy in achieving expected benefits to us;
• reviewing and making recommendations to the full Board regarding the terms of any employment agreements, severance arrangements, change in control protections and any other compensatory arrangements for our executive officers;
• reviewing with management and approving our disclosures under the caption “Compensation Discussion and Analysis” in our periodic reports or proxy statements to be filed with the SEC, to the extent such caption is included in any such report or proxy statement;
• preparing the report from the Compensation Committee that the SEC requires in our annual proxy statement; and
• reviewing and assessing on an annual basis the performance of the Compensation Committee and the Compensation Committee charter.
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Compensation Committee Processes and Procedures
• identifying, reviewing and evaluating candidates to serve on our Board of Directors consistent with criteria approved by our Board;
• determining the minimum qualifications for service on our Board of Directors;
• evaluating director performance on the board and applicable committees of the board and determining whether continued service on our board is appropriate;
• evaluating, nominating and recommending individuals for membership on our Board of Directors;
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• evaluating nominations by stockholders of candidates for election to our Board of Directors;
• considering and assessing the independence of members of our Board of Directors;
• developing a set of corporate governance policies and principles, periodically reviewing and assessing these policies and principles and their application and recommending to our Board of Directors any changes to such policies and principles;
• considering questions of possible conflicts of interest of directors as such questions arise; and
• reviewing and evaluating on an annual basis the performance of the Nominating and Corporate Governance Committee and the Nominating and Corporate Governance Committee charter.
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Governance Committee at the following address: 210 East Grand Avenue, South San Francisco, California 94080, Attn: Secretary, no later than the 90th day and no earlier than the 120th day prior to the one year anniversary of the preceding year’s Annual Meeting. Submissions must include, among other things, (1) the name and address of the stockholder on whose behalf the submission is made; (2) number of our shares that are owned beneficially by such stockholder as of the date of the submission; (3) the full name of the proposed candidate; (4) description of the proposed candidate’s business experience for at least the previous five years; (5) complete biographical information for the proposed candidate; (6) a description of the proposed candidate’s qualifications as a director and (7) any other information required by our Amended and Restated Bylaws. We may require any proposed nominee to furnish such other information as we may reasonably require to determine the eligibility of such proposed nominee to serve as our independent director or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such proposed nominee.
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| Fiscal Year Ended 2018 | Period from November 30, 2017 (Inception) to December 31, 2017 | |||||||
| (in thousands) | ||||||||
Fee Category | ||||||||
Audit fees(1) | $ | 1,518 | $ | 26 | ||||
Audit-related fees(2) | 75 | — | ||||||
Tax fees | — | — | ||||||
All other fees(3) | 2 | — | ||||||
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Total fees | $ | 1,595 | $ | 26 | ||||
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| 2019 | 2018 | ||||||||||||||||
| (in thousands) | |||||||||||||||||
| Fee Category | |||||||||||||||||
| Audit fees(1) | $ | 1,228 | $ | 1,518 | |||||||||||||
| Audit-related fees(2) | — | 75 | |||||||||||||||
| Tax fees | — | — | |||||||||||||||
| All other fees(3) | 4 | 2 | |||||||||||||||
| Total fees | $ | 1,232 | $ | 1,595 | |||||||||||||
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Name of Beneficial Owner | Number of shares Beneficially Owned | Percentage Beneficially Owned | ||||||
Greater than 5% Stockholders | ||||||||
Pfizer Inc. (1) | 22,032,040 | 18.1 | % | |||||
Entities affiliated with TPG Group Holdings (SBS) Advisors, Inc.(2) | 23,135,061 | 19.0 | % | |||||
Gilead Sciences, Inc. (3) | 7,486,689 | 6.2 | % | |||||
Seaview Trust (4) | 8,514,287 | 7.0 | % | |||||
Directors and Named Executive Officers | ||||||||
David Chang, M.D., Ph.D. (5) | 5,047,881 | 4.1 | % | |||||
Eric Schmidt, Ph.D. (6) | 1,549,730 | 1.3 | % | |||||
Alison Moore, Ph.D.(7) | 976,507 | * | % | |||||
Joshua Kazam (8) | 1,390,651 | 1.1 | % | |||||
Arie Belldegrun, M.D., FACS (9) | 12,109,522 | 9.9 | % | |||||
Franz Humer, Ph.D. (10) | 258,620 | * | % | |||||
Owen Witte, M.D. (11) | 221,182 | * | % | |||||
David Bonderman (12) | 23,135,061 | 19.0 | % | |||||
Deborah Messemer(13) | 216,535 | * | % | |||||
Todd Sisitsky | — | — | % | |||||
John DeYoung | — | — | % | |||||
All current executive officers and directors as a group (11 persons) (14) | 45,051,057 | 36.5 | % | |||||
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| Name of Beneficial Owner | Number of shares Beneficially Owned | Percentage Beneficially Owned | ||||||||||||
| Greater than 5% Stockholders | ||||||||||||||
| Pfizer Inc.(1) | 22,032,040 | 17.6% | ||||||||||||
| Entities affiliated with TPG Group Holdings (SBS) Advisors, Inc.(2) | 21,216,306 | 16.9% | ||||||||||||
| Seaview Trust(3) | 8,592,608 | 6.9% | ||||||||||||
| Gilead Sciences, Inc.(4) | 7,486,689 | 6.0% | ||||||||||||
| Capital Research Global Investors(5) | 6,542,678 | 5.2% | ||||||||||||
| Directors and Named Executive Officers | ||||||||||||||
| David Bonderman(6) | 21,216,306 | 16.9% | ||||||||||||
| Arie Belldegrun, M.D., FACS(7) | 7,393,303 | 5.9% | ||||||||||||
| David Chang, M.D., Ph.D.(8) | 5,383,363 | 4.3% | ||||||||||||
| Joshua Kazam(9) | 990,703 | * | ||||||||||||
| Franz Humer, Ph.D.(10) | 258,620 | * | ||||||||||||
| Deborah Messemer(11) | 242,560 | * | ||||||||||||
| Owen Witte, M.D.(12) | 247,207 | * | ||||||||||||
| Todd Sisitsky | — | — | ||||||||||||
| John DeYoung | — | — | ||||||||||||
| Eric Schmidt, Ph.D.(13) | 1,431,321 | 1.1% | ||||||||||||
| Alison Moore, Ph.D.(14) | 946,535 | * | ||||||||||||
| Rafael Amado, M.D.(15) | 271,093 | * | ||||||||||||
| All current executive officers and directors as a group (13 persons)(16) | 39,156,916 | 31.3% | ||||||||||||
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16(a) Reports
Onand Dr. Chang.
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our named executive officers (our “Named Executive Compensation
Summary Compensation Table
The following table showsOfficers”) for the period from November 30, 2017 (inception) through December 31, 2017 and the fiscal year ended December 31, 2018, as applicable, compensation awarded to or paid to, or earned by, the Company’s named executive officers,2019, which consist of the individuals who served as the Company’sour principal executive officer, for any portion of 2018principal financial officer and the Company’sour remaining two other most highly compensated executive officers as of December 31, 2018, as follows:
Joshua Kazam, our former President;
•Eric Schmidt, Ph.D., our Chief Financial Officer;
•Alison Moore, Ph.D., our Chief Technical Officer.
2018
| Name and principal position | Year | Salary ($) (1) | Stock awards ($)(2) | Option awards ($)(3) | Non-equity incentive plan compensation ($)(4) | All other compensation ($)(5) | Total ($) | |||||||||||||||||||||
David Chang, M.D., Ph.D. | 2018 | 362,413 | 8,948,152 | 3,070,331 | 217,641 | 250,000 | 12,848,537 | |||||||||||||||||||||
President and Chief Executive Officer | ||||||||||||||||||||||||||||
Joshua Kazam (6) | 2018 | — | 3,592,474 | — | — | — | 3,592,474 | |||||||||||||||||||||
Former President | 2017 | — | — | — | — | — | — | |||||||||||||||||||||
Eric Schmidt, Ph.D. | 2018 | 201,232 | — | 2,299,658 | 88,099 | — | 2,588,989 | |||||||||||||||||||||
Chief Financial Officer | ||||||||||||||||||||||||||||
Alison Moore, Ph.D. | 2018 | 233,265 | — | 1,401,225 | 102,124 | 100,000 | 1,836,614 | |||||||||||||||||||||
Chief Technical Officer | ||||||||||||||||||||||||||||
•Compensation Committee of Independent Directors. Our Compensation Committee is composed of all independent directors and includes our lead independent director. •Annual Compensation Review. Our Compensation Committee undertakes a comprehensive review of compensation of our executives, including our Named Executive Officers, on an annual basis. •Independent Compensation Consultant. Our Compensation Committee engages its own compensation consultant, and reviews its independence from management. •Risk Analysis. We review the structure of our executive compensation program to minimize the risk of inappropriate risk-taking by our executive officers. •No Guaranteed Compensation. Although we have signed employment agreements with each of our Named Executive Officers, these agreements provide for “at will” employment, and none of these agreements provides any guarantees relating to |
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Annual Base Salary
The base salary increases or the amounts of any annual incentive awards or long-term equity awards.
| Acceleron Pharma | Atara Biotherapeutics | Audentes Therapeutics | ||||||
| BeiGene | bluebird bio | Blueprint Medicines | ||||||
| CRISPR Therapeutics | Editas Medicine | Endocyte | ||||||
| G1 Therapeutics | Global Blood Therapeutics | Immunomedics | ||||||
| Loxo Oncology | Moderna | Nektar Therapeutics | ||||||
| REGENXBIO | Rubius Therapeutics | Sangamo Therapeutics | ||||||
| Solid Biosciences | Spark Therapeutics | Ultragenyx Pharmaceutical | ||||||
| Xencor | ||||||||
| Audentes Therapeutics | BeiGene | bluebird bio | ||||||
| Blueprint Medicines | CRISPR Therapeutics | Editas Medicine | ||||||
| Fate Therapeutics | Global Blood Therapeutics | Immunomedics | ||||||
| Iovance Biotherapeutics | Mirati Therapeutics | Moderna | ||||||
| Nektar Therapeutics | Sage Therapeutics | Sangamo Therapeutics | ||||||
| Sarepta Therapeutics | Spark Therapeutics | Ultragenyx Pharmaceutical | ||||||
| Xencor | ||||||||
| Name | 2019 Base Salary ($) | |||||||
| David Chang, M.D., Ph.D. | 600,000 | |||||||
| Eric Schmidt, Ph.D. | 425,000 | |||||||
| Rafael Amado, M.D.(1) | 500,000 | |||||||
| Alison Moore, Ph.D. | 425,000 | |||||||
Dr. Chang’s annual base salary.
In addition to base salaries, our named executive officers
Our Generally, the Board of Directors and Compensation Committee, as applicable, will generally considerassess each named executive officer’sNamed Executive Officer’s individual contributions towards reaching our annual corporate goals but does not typically establish specific individual goals for our named executive officers. There is no minimumNamed Executive Officers.
2020.
Company StandupPhase 1 clinical trial of ALLO-501 in patients with NHL by the end of the second quarter of 2019 (weighted at 40%30%)
Onboard employees conveyed as parto Initiate enrollment of the acquisitionPhase 1 clinical trial of allogeneic chimeric antigen receptor (“CAR”) T cell assets from Pfizer, Inc.ALLO-715 in April 2018;
Implement key human resourceso Nominate two clinical candidates by the end of the fourth quarter of 2019 (weighted at 10%);
Execute a lease for securing Company headquarters.
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Submit Anti-CD52 Monoclonal Antibody Drug Master File withinitiate the U.S. Food and Drug Administration (“FDA”)build-out of our commercial manufacturing facility by the end of the fourth quarter of 2019 (weighted at 20%)
Achieve; and
Complete the majority of IND modules;
CompleteGMP-based manufacturing runs; and
Initiate clinical sitestart-up activities.
AchieveALLO-715 IND Readiness for a 2019 IND Submission to the FDA (weighted at 20%)
Initiate IND modules;
Complete pilot production; and
Convene a multiple myeloma clinical scientific advisory board.
The Board also established an additional, or stretch, corporate goal to complete a second roundgoals as follows:
No specific individual
| Name | 2019 Annual Cash Bonus ($) | |||||||
| David Chang, M.D., Ph.D. | 363,000 | |||||||
| Eric Schmidt, Ph.D. | 187,000 | |||||||
| Rafael Amado, M.D. | 71,726 | |||||||
| Alison Moore, Ph.D. | 187,000 | |||||||
our executive officers to further our long-term strategic plan to create long-term stockholder value. We also believe equity awards create an ownership culture. In December 2018,addition, the vesting requirements of our equity awards contributes to executive retention by providing an incentive to our executive officers to remain employed by us during the vesting period.
Asas a result,retention measure, the Compensation Committee determined to provide Dr. Chang, Dr. Schmidt and Dr. Moore a special restricted stock unit award in December 2018,addition to their annual equity award. The Compensation Committee approved a special restricted stock unit award to Dr. Schmidt of approximately 30% of the expected value of his total annual equity award and to Dr. Moore of approximately 15% of the expected value of her total annual equity award. The Compensation Committee also recommended and our Board of Directors awarded the following bonusapproved a special restricted stock unit award to Dr. Chang of approximately 30% of the expected value of his total annual equity award.
| Name | Options to Purchase Shares of Our Common Stock (#) | RSU Awards for Shares of Our Common Stock (#) | Equity Awards (Aggregate Grant Date Fair Value) | |||||||||||||||||
| David Chang, M.D., Ph.D. | 292,700 | 173,000 | $9,979,110 | |||||||||||||||||
| Eric Schmidt, Ph.D. | 83,500 | 49,400 | $2,848,066 | |||||||||||||||||
| Rafael Amado, M.D.(1) | 160,630 | 162,523 | $7,009,600 | |||||||||||||||||
| Alison Moore, Ph.D. | 83,500 | 37,050 | $2,515,975 | |||||||||||||||||
Executive Officer | Title | 2018 Bonus Amount(1) | ||||
David Chang, M.D., Ph.D. | President and Chief Executive Officer | $ | 217,641 | |||
Eric Schmidt, Ph.D. | Chief Financial Officer | $ | 88,099 | |||
Alison Moore, Ph.D. | Chief Technical Officer | $ | 102,124 | |||
Perquisites We generally do not provide perquisites or personal benefits to our Named Executive Officers. We do, however, pay a portion of the premiums for medical, dental, group term life, disability and accidental death and dismemberment insurance for all of our full-time 30 employees. Our Board may elect to adopt qualified or nonqualified benefit plans in the future if it determines that doing so is in our best interests. Post-Employment Compensation Our Named Executive Officers are |
Mr. Kazam was not entitled to any targetcertain severance and change of control payments and benefits pursuant to our change in control and severance benefit plan (the “Plan”), as described in more detail below in the section entitled “—Potential Payments Upon Termination or minimum bonusChange of Control.” The Plan provides for a combination of a lump-sum cash severance payment, continued health benefits and no specific performance goalsacceleration of vesting on outstanding equity awards in specified circumstances. Acceleration of vesting is subject to a “double trigger” arrangement, meaning that vesting acceleration occurs only in the event of a change of control of the Company in connection with or bonus program were established duringfollowed by a termination of employment without cause by us, or with good reason by the time he served asNamed Executive Officer.
Equity-Based Incentive Awards
distraction and loss of executive officers that may occur in connection with rumored or actual fundamental corporate changes and thereby protect stockholder interests while a transaction is under consideration or pending.
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additional retention measure. Our executive officers generally were awarded an initial stock option grant upon commencement of employment. Additional equity awards may be granted periodically to specifically incentivize our executive officers with the interests of our stockholders.
| Compensation Committee | ||||||||
David Bonderman, Chairman | ||||||||
| Franz B. Humer | ||||||||
| John DeYoung | ||||||||
| * | The material in this report is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. | ||||
| Name and principal position | Year | Salary ($)(1) | Stock awards ($)(2) | Option awards ($)(3) | Non-equity incentive plan compensation ($)(4) | All other compensation ($)(5) | Total ($) | |||||||||||||||||||||||||||||||||||||
| David Chang, M.D., Ph.D. | 2019 | 600,000 | 4,651,970 | 5,327,140 | 363,000 | 250,000 | 11,192,110 | |||||||||||||||||||||||||||||||||||||
| President and Chief Executive Officer | 2018 | 362,413 | 8,948,152 | 3,070,331 | 217,641 | 250,000 | 12,848,537 | |||||||||||||||||||||||||||||||||||||
| Eric Schmidt, Ph.D. | 2019 | 425,000 | 1,328,366 | 1,519,700 | 187,000 | — | 3,460,066 | |||||||||||||||||||||||||||||||||||||
| Chief Financial Officer | 2018 | 201,232 | — | 2,299,658 | 88,099 | — | 2,588,989 | |||||||||||||||||||||||||||||||||||||
| Rafael Amado, M.D. | 2019 | 145,833 | 4,249,976 | 2,759,623 | 71,726 | 225,000 | 7,452,158 | |||||||||||||||||||||||||||||||||||||
| Chief Medical Officer and Executive Vice President of Research and Development | ||||||||||||||||||||||||||||||||||||||||||||
| Alison Moore, Ph.D. | 2019 | 425,000 | 996,275 | 1,519,700 | 187,000 | — | 3,127,975 | |||||||||||||||||||||||||||||||||||||
| Chief Technical Officer | 2018 | 233,265 | — | 1,401,225 | 102,124 | 100,000 | 1,836,614 | |||||||||||||||||||||||||||||||||||||
Prior to our initial public offering, we granted all equity awards pursuant to our prior amended and restated 2018 equity incentive plan (the “Prior Plan”). All equity awards granted since our initial public offering have been granted pursuant to our amended and restated 2018 Equity Incentive Plan (the “2018 Plan”), the terms of which are described below under “-Equity Benefit Plans.” All stock options are granted with a per share exercise price equal to no less than thedate fair market value of a sharerestricted stock units granted during 2019 based on the closing market price of ourthe Company's common stock on the date of grant.
Generally, our stock option awards vest overgranted in 2018 and 2019. These amounts have been computed in accordance with FASB ASC Topic 718, using the Black-Scholes option pricing model. For a onediscussion of valuation assumptions, see Note 13 “Stock-based Compensation” to four-year period subject toour financial statements included in our Annual Report on Form 10-K for the holder’s continuous service to us and mayyear ended December 31, 2019. These amounts do not reflect the actual economic value that will be granted with an earlyrealized by the Named Executive Officer upon the vesting of the stock options, the exercise feature. Such early exercise feature allowsof the holder to exercise and receive unvested shares of our common stock, so that the holder may have a greater opportunity for gains on the shares to be taxed at long-term capital gains rates rather than ordinary income rates. From time to time as our Board of Directors or Compensation Committee considers appropriate, we may grant stock options, or RSU awards that vest upon achievementthe sale of performance goals.
the common stock underlying such stock options.
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to an annual base salary of $400,000, which was increased to $425,000 for 2019.2019 and $440,000 for 2020. Dr. Moore was eligible to receive an annual target performance bonus of up to 35% and 40% of her base salary for 2018 and 2019, respectively, and is eligible to receive an annual target performance bonus of up to 40% of her annual base salary for 2019.2020. In addition, Dr. Moore was paid a $100,000 relocation bonus in 2018 in connection with her relocation to the San Francisco Bay Area. Dr. Moore was granted an initial stock option to purchase 892,500 shares of our common stock.
Joshua Kazam. We entered into a vesting restriction agreement with Mr. Kazam in April 2018, pursuant to which the 1,718,435 shares of common stock beneficially owned by Mr. Kazam and issued in December 2017 became subject to vesting over a52-month period commencing in December 2017, subject to his continuous service through each vesting date.
Potential Payments and Benefits upon Termination or Change
Regardless of the mannerplan-based incentive awards to our Named Executive Officers in which an executive officer’s service terminates, each executive officer is entitled to receive amounts earned during his or her term of service, including unpaid salary and unused paid-time off, as applicable. In addition, our Board has approved a Change in Control Plan described below.
Each of our named executive officers holds2019.
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Grant Date | Threshold ($) | Target ($) | Maximum ($) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| David Chang, M.D., Ph.D. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock unit award | 3/13/2019 | — | — | — | 173,000 | — | — | 4,651,970 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock option award | 3/13/2019 | — | — | — | — | 292,700 | 26.89 | 5,327,140 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annual bonus | — | — | 405,000 | 607,500 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Eric Schmidt, Ph.D. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock unit award | 3/13/2019 | — | — | — | 49,400 | — | — | 1,328,366 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock option award | 3/13/2019 | — | — | — | — | 83,500 | 26.89 | 1,519,700 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annual bonus | — | — | 176,000 | 264,000 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rafael Amado, M.D. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock unit award | 9/3/2019 | — | — | — | 162,523 | — | — | 4,249,976 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock option award | 9/3/2019 | — | — | — | — | 160,630 | 26.15 | 2,759,623 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annual bonus | — | — | 204,000 | 306,000 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Alison Moore, Ph.D. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Restricted stock unit award | 3/13/2019 | — | — | — | 37,050 | — | — | 996,275 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stock option award | 3/13/2019 | — | — | — | — | 83,500 | 26.89 | 1,519,700 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Annual bonus | — | — | 176,000 | 264,000 | — | — | — | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares of Stock that have not Vested (#) | Market Value of Shares of Stock that have not Vested ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| David Chang, M.D., Ph.D.(1)(2) | 4/6/2018 | — | — | — | — | 2,222,446 | 57,739,147 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 6/25/2018 | — | — | 2.27 | 6/25/2028 | 1,140,782 | 29,637,516 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/13/2019 | 292,700 | — | 26.89 | 3/13/2029 | 173,000 | 4,494,540 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Eric Schmidt, Ph.D.(3) | 6/25/2018 | — | — | 2.27 | 6/25/2028 | 915,469 | 23,783,885 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/13/2019 | 83,500 | — | 26.89 | 3/13/2029 | 49,400 | 1,283,412 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Rafael Amado, M.D.(4) | 9/3/2019 | 160,630 | — | 26.15 | 9/3/2029 | 162,523 | 4,222,348 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Alison Moore, Ph.D. | 6/25/2018 | 718,202 | — | 2.27 | 6/25/2028 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 3/13/2019 | 83,500 | — | 26.89 | 3/13/2029 | 37,050 | 962,559 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||||||||||
| Name | Number of Shares Acquired on Exercise | Value Realized on Exercise ($)(1) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | ||||||||||||||||||||||||||||||||||
| David Chang, M.D., Ph.D.(2) | — | — | 1,802,597 | 49,012,433 | ||||||||||||||||||||||||||||||||||
| Eric Schmidt, Ph.D. | — | — | 549,281 | 15,505,595 | ||||||||||||||||||||||||||||||||||
| Rafael Amado, M.D. | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Alison Moore, Ph.D. | 174,298 | 4,665,199 | — | — | ||||||||||||||||||||||||||||||||||
| (1) | The value realized on exercise is based on the difference between the closing market price of our common stock on the date of exercise and the exercise price of the applicable options, and does not represent actual amounts received by the Named Executive Officers as a result of the option exercises. | ||||
| (2) | In connection with the issuance of the Company’s Series A and Series A-1 convertible preferred stock in April 2018, the Company’s founders, including Dr. Chang, agreed to modify their fully vested founders’ shares of common stock outstanding to include a forfeiture restriction that lapses based on their continued service to the Company. The shares are subject to vesting over a 52-month period commencing in December 2017, subject to continuous service through each vesting date. The shares vested in this table include a portion of the founders' shares that vested during 2019. | ||||
Name | Fees earned ($) | Stock awards ($)(1) | Option awards ($)(2) | All other Compensation ($)(3) | Total ($) | |||||||||||||||||||||||||||
| Arie Belldegrun, M.D. FACS | — | 3,101,304 | 3,551,421 | 664,000 | 7,316,725 | |||||||||||||||||||||||||||
| David Bonderman | — | — | — | — | — | |||||||||||||||||||||||||||
| John DeYoung | — | — | — | — | — | |||||||||||||||||||||||||||
| Franz Humer, Ph.D. | 101,325 | 424,983 | — | — | 526,308 | |||||||||||||||||||||||||||
| Joshua Kazam | 43,500 | 424,983 | — | 560,400 | 1,028,883 | |||||||||||||||||||||||||||
| Deborah Messemer | 57,500 | — | 424,988 | — | 482,488 | |||||||||||||||||||||||||||
| Todd Sisitsky | — | — | — | — | — | |||||||||||||||||||||||||||
| Owen Witte, M.D | 50,000 | — | 424,988 | — | 474,988 | |||||||||||||||||||||||||||
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | Weighted-average exercise price of outstanding options, warrants and rights (b) | Number of securities remaining available for issuance under equity compensation plans (excluding securities reflected in column (a)) (c) | |||||||||||||||||
| Equity compensation plans approved by security holders | — | — | — | |||||||||||||||||
| Amended and Restated 2018 Equity Incentive Plan(1) | 11,131,677 | 14.51 | 9,642,503 | |||||||||||||||||
| 2018 Employee Stock Purchase Plan(2) | — | — | 2,266,844 | |||||||||||||||||
| Equity compensation plans not approved by security holders | — | — | — | |||||||||||||||||
| Total | 11,131,677 | 14.51 | 11,909,347 | |||||||||||||||||
Change in Control and Severance Benefit Plan
Our current executive officers, including our Named Executive Officers, are entitled to certain severance and change of control payments and benefits pursuant to our change in control and severance benefit plan (the “Change in Control Plan”). The Change in Control Plan provides for, in the event of an involuntary termination of employment without “cause” or a resignation with “good reason,” and subject to our receipt of an effective waiver and release of claims from the executive, a combination of (1) cash severance for the severance period and (2) the payment or reimbursement of premiums or continued coverage under group health plans for the severance period. The severance period is 24 months in the case of our Chief Executive Officer, and 12 months in the case of our Chief Financial Officer and Chief Technical Officer.
other Named Executive Officers.
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any person or company of more than 50% of the combined voting power of our then outstanding stock, (2) a merger, consolidation or similar transaction in which our stockholders immediately before the transaction do not own, directly or indirectly, more than 50% of the combined voting power of the surviving entity (or the parent of the surviving entity) in substantially the same proportions as their ownership
2018 Outstanding Equity Awards at FiscalYear-End Table
| Option Awards | Stock Awards | |||||||||||||||||||||||||||||
| Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | |||||||||||||||||||||||
David Chang, M.D., Ph.D. | (1) | — | — | — | — | — | 2,075,952 | 55,905,387 | ||||||||||||||||||||||
| (2) | — | — | — | — | — | 1,955,625 | 52,664,981 | |||||||||||||||||||||||
Joshua Kazam | (1) | — | — | — | — | — | 1,028,951 | 27,709,650 | ||||||||||||||||||||||
Eric Schmidt, Ph.D. | (3) | — | — | — | — | — | 1,464,750 | 39,445,718 | ||||||||||||||||||||||
Alison Moore, Ph.D. | (4) | 6/25/2018 | 892,500 | — | 2.26 | 6/25/2028 | — | — | ||||||||||||||||||||||
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Policy Against Hedging and Speculative Trading and Pledging our Common Stock
Our insider trading policy prohibits our employees from engaging in “hedging” or other inherently speculative transactions with respect to our common stock or borrowing against our common stock.
Stock Ownership Guidelines Policy
In March 2019, our Compensation Committee recommended and our Board adopted a Stock Ownership Guidelines Policy. The purposeprovides an estimate of the Guidelines is to encourage ownership of our common stock, promote the alignment of the long-term interests of our Chief Executive Officer, Chief Financial Officer, Chief Technical Officerpotential payments and directors with the long-term interests of the Company’s stockholders, and further promote our commitment to sound corporate governance. Under the Guidelines, the target common stock ownership level for our President and Chief Executive Officer is three times (3x) his base annual salary, the target stock ownership level for ournon-executive directors is three times (3x) their base annual cash retainer and the target stock ownership level for our other executive officers is one times (1x) their base annual salary. Under these Guidelines, the compliance deadline for all of our current executive officers and directors is December 2023, although we expect that the target stock ownership levels likely will be achieved much sooner than that.
Health, Welfare and Retirement Benefits; Perquisites
Our executive officers, during their employment with us, are eligible to participate in our employee benefit plans, including our medical, dental, group term life, disability and accidental death and dismemberment insurance plans, in each case on the same basis as all of our other employees. In addition, we provide a Section 401(k) plan to our employees, including our executive officers, as discussed in the section below entitled “— 401(k) Plan.”
We generally do not provide perquisites or personal benefits to our executive officers. We do, however, pay the premiums for medical, dental, group term life, disability and accidental death and dismemberment insurance for all of our employees. Our Board may elect to adopt qualified or nonqualified benefit plans in the future if it determines that doing so is in our best interests.
401(k) Plan
We maintain a defined contribution employee retirement plan (the “401(k) Plan”), for our employees. Our executive officers are eligible to participate in the 401(k) Plan on the same basis as our other employees. The 401(k) Plan is intended to qualify as atax-qualified plan under Section 401(a) of the Code. The 401(k) Plan provides that each participant may contribute up to the lesser of 100% of his or her compensation or the statutory limit, which was $18,500 for calendar year 2018. Participants that are 50 years or older can also make“catch-up” contributions, which in calendar year 2018 may have been up to an additional $6,000 above the statutory limit. We currently make matching contributions into the 401(k) Plan on behalf of participants. We match 100% of eligible contributions up to the first 3%, with an additional match of 50% on the next 3% (maximum of 4.5%). Participant contributions are held and invested, pursuant to the participant’s instructions, byChange in Control Plan, which could occur upon termination of the plan’s trustee. Our named executive officers did not contribute to the 401(k) Plan during 2018 and therefore did not receive any matching contributions during 2018.
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Equity Benefit Plans
Amended and Restated 2018 Equity Incentive Plan
Our Board adoptedemployment of our 2018 Plan in September 2018 and our stockholders approved our 2018 Plan in October 2018. Our 2018 Plan became effective on October 2, 2018Named Executive Officers, including in connection with our initial public offering. Our 2018 Plan is a successor to and continuation of our Prior Plan. No further grants will be made under the Prior Plan. As of December 31, 2018, there were 8,176,125 shares remaining available for the future grant of stock awards under our 2018 Plan. As of December 31, 2018, there were outstanding stock options covering a total of 7,235,545 shares of our common stock that were granted under our 2018 Plan.
Stock Awards.Our 2018 Plan provides for the grant of incentive stock options (“ISOs”) within the meaning of Section 422 of the Code, to employees, including employees of any parent or subsidiary, and for the grant of nonstatutory stock options (“NSOs”) stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, performance cash awards and other forms of stock awards to employees, directors and consultants, including employees and consultants of our affiliates. We have granted stock options and RSU awards under the 2018 Plan.
Authorized Shares.The maximum number of shares of our common stock that may be issued under our 2018 Plan is 20,432,250 shares, which is the sum of (1) 8,223,097 new shares, plus (2) the number of shares (not to exceed 12,209,153 shares) (i) that remained available for the issuance of awards under our Prior Plan at the time our 2018 Plan became effective, and (ii) any shares subject to outstanding stock options or other stock awards that were granted under our Prior Plan that terminate or expire prior to exercise or settlement; are forfeited because of the failure to vest; or are reacquired or withheld (or not issued) to satisfy a tax withholding obligation or the purchase or exercise price. In addition, the number of shares of our common stock reserved for issuance under our 2018 Plan will automatically increase on January 1 of each calendar year, starting on January 1, 2019 through January 1, 2028, in an amount equal to 5% of the total number of shares of our capital stock outstanding on the last day of the calendar month before the date of each automatic increase, or a lesser number of shares determined by our Board. The maximum number of shares of our common stock that may be issued on the exercise of ISOs under our 2018 Plan is 40,864,500.
Shares subject to stock awards granted under our 2018 Plan that expire or terminate without being exercised in full or that are paid out in cash rather than in shares do not reduce the number of shares available for issuance under our 2018 Plan. If any shares of common stock issued pursuant to a stock award are forfeited back to or repurchased or reacquired by us for any reason, the shares that are forfeited or repurchased or reacquired will revert to and again become available for issuance under the 2018 Plan. Any shares reacquired in satisfaction of tax withholding obligations or as consideration for the exercise or purchase price of a stock award will again become available for issuance under the 2018 Plan.
Plan Administration.Our Board, or a duly authorized committee of our Board, has the authority to administer our 2018 Plan and is referred to as the “plan administrator” herein. Our Board may also delegate to one or more of our officers the authority to (1) designate employees (other than officers) to receive specified stock awards and (2) determine the number of shares subject to such stock awards. Under our 2018 Plan, our Board has the authority to determine award recipients, grant dates, the numbers and types of stock awards to be granted, the applicable fair market value, and the provisions of each stock award, including the period of exercisability and the vesting schedule applicable to a stock award.
Under the 2018 Plan, the Board also generally has the authority to effect, with the consent of any adversely affected participant, (A) the reduction of the exercise, purchase, or strike price of any outstanding award; (B) the cancellation of any outstanding award and the grant in substitution therefore of other awards, cash, or other consideration; or (C) any other action that is treated as a repricing under generally accepted accounting principles.
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Stock Options.ISOs and NSOs are granted under stock option agreements adopted by the plan administrator. The plan administrator determines the exercise price for stock options, within the terms and conditions of the 2018 Plan, provided that the exercise price of a stock option generally cannot be less than 100% of the fair market value of our common stock on the date of grant. Options granted under the 2018 Plan vest at the rate specified in the stock option agreement as determined by the plan administrator.
The plan administrator determines the term of stock options granted under the 2018 Plan, up to a maximum of 10 years. Unless the terms of an optionholder’s stock option agreement provide otherwise, if an optionholder’s service relationship with us or any of our affiliates ceases for any reason other than disability, death, or cause, the optionholder may generally exercise any vested options for a period of three months following the cessation of service. This period may be extended in the event that exercise of the option is prohibited by applicable securities laws or our insider trading policy. If an optionholder’s service relationship with us or any of our affiliates ceases due to death, or an optionholder dies within a certain period following cessation of service, the optionholder or a beneficiary may generally exercise any vested options for a period of 18 months following the date of death. If an optionholder’s service relationship with us or any of our affiliates ceases due to disability, the optionholder may generally exercise any vested options for a period of 12 months following the cessation of service. In the event of a termination for cause, options generally terminate upon the termination date. In no event may an option be exercised beyond the expiration of its term.
Acceptable consideration for the purchase of common stock issued upon the exercise of a stock option will be determined by the plan administrator and may include (1) cash, check, bank draft or money order, (2) a broker- assisted cashless exercise, (3) the tender of shares of our common stock previously owned by the optionholder, (4) a net exercise of the option if it is an NSO, or (5) other legal consideration approved by the plan administrator.
Unless the plan administrator provides otherwise, options generally are not transferable except by will or the laws of descent and distribution. Subject to approval of the plan administrator or a duly authorized officer in each case, (i) an option may be transferred pursuant to a domestic relations order, official marital settlement agreement, or other divorce or separation instrument and (ii) an optionholder may designate a beneficiary who may exercise the option following the optionholder’s death.
Tax Limitations on ISOs.The aggregate fair market value, determined at the time of grant, of our common stock with respect to ISOs that are exercisable for the first time by an award holder during any calendar year under all of our stock plans may not exceed $100,000. Options or portions thereof that exceed such limit will generally be treated as NSOs. No ISO may be granted to any person who, at the time of the grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power or that of any of our affiliates unless (1) the option exercise price is at least 110% of the fair market value of the stock subject to the option on the date of grant, and (2) the term of the ISO does not exceed five years from the date of grant.
Restricted Stock Unit Awards.Restricted stock unit awards are granted under restricted stock unit award agreements adopted by the plan administrator. Restricted stock unit awards may be granted in consideration for any form of legal consideration that may be acceptable to our Board and permissible under applicable law. A restricted stock unit award may be settled by cash, delivery of stock, a combination of cash and stock as deemed appropriate by the plan administrator, or in any other form of consideration set forth in the restricted stock unit award agreement. Additionally, dividend equivalents may be credited in respect of shares covered by a restricted stock unit award. Except as otherwise provided in the applicable award agreement, restricted stock unit awards that have not vested will be forfeited once the participant’s continuous service ends for any reason.
Restricted Stock Awards.Restricted stock awards are granted under restricted stock award agreements adopted by the plan administrator. A restricted stock award may be awarded in consideration for cash, check, bank draft or money order, past or future services to us, or any other form of legal consideration that may be acceptable to our Board and permissible under applicable law. The plan administrator determines the terms and conditions of
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restricted stock awards, including vesting and forfeiture terms. If a participant’s service relationship with us ends for any reason, we may receive any or all of the shares of common stock held by the participant that have not vested as of the date the participant terminates service with us through a forfeiture condition or a repurchase right.
Stock Appreciation Rights.Stock appreciation rights are granted under stock appreciation right agreements adopted by the plan administrator. The plan administrator determines the purchase price or strike price for a stock appreciation right, which generally cannot be less than 100% of the fair market value of our common stock on the date of grant. A stock appreciation right granted under the 2018 Plan vests at the rate specified in the stock appreciation right agreement as determined by the plan administrator.
The plan administrator determines the term of stock appreciation rights granted under the 2018 Plan, up to a maximum of 10 years. If a participant’s service relationship with us or any of our affiliates ceases for any reason other than cause, disability, or death, the participant may generally exercise any vested stock appreciation right for a period of three months following the cessation of service. This period may be further extended in the event that exercise of the stock appreciation right following such a termination of service is prohibited by applicable securities laws or our insider trading policy. If a participant’s service relationship with us, or any of our affiliates, ceases due to disability or death, or a participant dies within a certain period following cessation of service, the participant or a beneficiary may generally exercise any vested stock appreciation right for a period of 12 months in the event of disability and 18 months in the event of death. In the event of a termination for cause, stock appreciation rights generally terminate immediately upon the occurrence of the event giving rise to the termination of the individual for cause. In no event may a stock appreciation right be exercised beyond the expiration of its term.
Performance Awards.The 2018 Plan permits the grant of performance-based stock and cash awards. Our compensation committee may structure awards so that the stock or cash will be issued or paid only following the achievement of certainpre-established performance goals during a designated performance period.
The performance goals that may be selected include one or more of the following: (i) sales; (ii) revenues; (iii) assets; (iv) expenses; (v) market penetration or expansion; (vi) earnings from operations; (vii) earnings before or after deduction for all or any portion of interest, taxes, depreciation, amortization, incentives, service fees or extraordinary or special items, whether or not on a continuing operations or an aggregate or per share basis; (viii) net income or net income per common share (basic or diluted); (ix) return on equity, investment, capital or assets; (x) one or more operating ratios; (xi) borrowing levels, leverage ratios or credit rating; (xii) market share; (xiii) capital expenditures; (xiv) cash flow, free cash flow, cash flow return on investment, or net cash provided by operations; (xv) stock price, dividends or total stockholder return; (xvi) development of new technologies or products; (xvii) sales of particular products or services; (xviii) economic value created or added; (xix) operating margin or profit margin; (xx) customer acquisition or retention; (xxi) raising or refinancing of capital; (xxii) successful hiring of key individuals; (xxiii) resolution of significant litigation; (xxiv) acquisitions and divestitures (in whole or in part); (xxv) joint ventures and strategic alliances; (xxvi) spin-offs,split-ups and the like; (xxvii) reorganizations; (xxviii) recapitalizations, restructurings, financings (issuance of debt or equity) or refinancings; (xxix) or strategic business criteria, consisting of one or more objectives based on the following goals: achievement of timely development, design management or enrollment, meeting specified market penetration or value added, payor acceptance, patient adherence, peer reviewed publications, issuance of new patents, establishment of or securing of licenses to intellectual property, product development or introduction (including, without limitation, any clinical trial accomplishments, regulatory or other filings, approvals or milestones, discovery of novel products, maintenance of multiple products in pipeline, product launch or other product development milestones), geographic business expansion, cost targets, cost reductions or savings, customer satisfaction, operating efficiency, acquisition or retention, employee satisfaction, information technology, corporate development (including, without limitation, licenses, innovation, research or establishment of third-party collaborations), manufacturing or process development, legal compliance or risk reduction, patent application or issuance goals, or goals relating to acquisitions, divestitures or other business combinations (in
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whole or in part), joint ventures or strategic alliances; and (xxx) other measures of performance selected by the Board.
The performance goals may be based on company-wide performance or performance of one or more business units, divisions, affiliates, or business segments, and may be either absolute or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. Our Board is authorized at any time in its sole discretion, to adjust or modify the calculation of a performance goal for such performance period in order to prevent the dilution or enlargement of the rights of participants, (a) in the event of, or in anticipation of, any unusual or extraordinary corporate item, transaction, event or development; (b) in recognition of, or in anticipation of, any other unusual or nonrecurring events affecting us, or our financial statements in response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or business conditions; or (c) in view of the board of director’s assessment of our business strategy, performance of comparable organizations, economic and business conditions, and any other circumstances deemed relevant. Specifically, the Board is authorized to make adjustment in the method of calculating attainment of performance goals and objectives for a performance period as follows: (i) to exclude the dilutive effects of acquisitions or joint ventures; (ii) to assume that any business divested by us achieved performance objectives at targeted levels during the balance of a performance period following such divestiture; and (iii) to exclude the effect of any change in the outstanding shares of our common stock by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation,spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends. In addition, the Board is authorized to make adjustment in the method of calculating attainment of performance goals and objectives for a performance period as follows: (i) to exclude restructuring and/or other nonrecurring charges; (ii) to exclude exchange rate effects, as applicable, fornon-U.S. dollar denominated net sales and operating earnings; to exclude the effects of changes to generally accepted accounting standards required by the Financial Accounting Standards Board; (iv) to exclude the effects of any items that are “unusual” in nature or occur “infrequently” as determined under generally accepted accounting principles; (v) to exclude the effects to any statutory adjustments to corporate tax rates; and (vi) to make other appropriate adjustments selected by the Board.
Other Stock Awards. The plan administrator may grant other awards based in whole or in part by reference to our common stock. The plan administrator will set the number of shares under the stock award and all other terms and conditions of such awards.
Changes to Capital Structure. In the event there is a specified type of change in our capital structure, such as a stock split, reverse stock split, or recapitalization, appropriate adjustments will be made to (1) the class and maximum number of shares reserved for issuance under the 2018 Plan, (2) the class and maximum number of shares by which the share reserve may increase automatically each year, (3) the class and maximum number of shares that may be issued on the exercise of ISOs and (4) the class and number of shares and exercise price, strike price, or purchase price, if applicable, of all outstanding stock awards.
Corporate Transactions. Our 2018 Plan provides that in the event of certain specified significant corporate transactions (or a change in control, as defined below), unless otherwise provided in an award agreement or other written agreement between us and the award holder, the plan administrator may take one or more of the following actions with respect to such stock awards:
arrange for the assumption, continuation, or substitution of a stock award by a successor corporation;
arrange for the assignment of any reacquisition or repurchase rights held by us to a successor corporation;
accelerate the vesting, in whole or in part, of the stock award and provide for its termination if not exercised (if applicable) at or before the effective time of the transaction;
arrange for the lapse, in whole or in part, of any reacquisition or repurchase rights held by us;
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cancel or arrange for the cancellation of the stock award, to the extent not vested or not exercised before the effective time of the transaction, in exchange for a cash payment, if any; or
make a payment equal to the excess, if any, of (A) the value of the property the participant would have received on exercise of the award immediately before the effective time of the transaction, over (B) any exercise price payable by the participant in connection with the exercise.
The plan administrator is not obligated to treat all stock awards or portions of stock awards in the same manner and is not obligated to take the same actions with respect to all participants.
Under the 2018 Plan, a corporate transaction is generally the consummation of: (1) a sale of all or substantially all of our assets, (2) the sale or disposition of more than 50% of our outstanding securities, (3) a merger or consolidation where we do not survive the transaction, or (4) a merger or consolidation where we do survive the transaction but the shares of our common stock outstanding immediately before such transaction are converted or exchanged into other property by virtue of the transaction.
Change in Control.In the event of a change in control, the plan administrator may take any of the above-mentioned actions. Awards granted under the 2018 Plan may be subject to additional acceleration of vesting and exercisability upon or after a change in control as may be provided in the applicable stock award agreement or in any other written agreement between us or any affiliate and the participant, but in the absence of such provision, no such acceleration will automatically occur. Under the 2018 Plan, a change in control is generally (1) the acquisition by any person or company of more than 50% of the combined voting power of our then outstanding stock, (2) a merger, consolidation or similar transaction in which our stockholders immediately before the transaction do not own, directly or indirectly, more than 50% of the combined voting power of the surviving entity (or the parent of the surviving entity) in substantially the same proportions as their ownership immediately prior to such transaction, (3) a sale, lease, exclusive license or other disposition of all or substantially all of our assets other than to an entity more than 50% of the combined voting power of which is owned by our stockholders in substantially the same proportions as their ownership of our outstanding voting securities immediately prior to such transaction, (4) a complete dissolution or liquidation of the company or (5) when a majority of our Board becomes comprised of individuals who were not serving on our Board on the date of the underwriting agreement related to our initial public offering, or the incumbent board, or whose nomination, appointment, or election was not approved by a majority of the incumbent board still in office.
Plan Amendment or Termination. Our Board has the authority to amend, suspend, or terminate our 2018 Plan, provided that such action does not materially impair the existing rights of any participant without such participant’s written consent. Certain material amendments also require the approval of our stockholders. No ISOs may be granted after the tenth anniversary of the date our Board adopts our 2018 Plan. No stock awards may be granted under our 2018 Plan while it is suspended or after it is terminated.
Prior Amended and Restated 2018 Equity Incentive Plan
Our Board adopted our prior Amended and Restated 2018 Equity Incentive Plan (the “Prior Plan”), in June 2018 and our stockholders approved the Prior Plan in July 2018. All references in this proxy statement to the Prior Plan shall be deemed to refer to our Amended and Restated 2018 Equity Incentive Plan, as amended, unless the context otherwise requires. As of December 31, 2018, there were outstanding stock options covering a total of 6,075,825 shares of our common stock that were granted under our Prior Plan and there were no additional shares available for grant under the Prior Plan.
No additional awards will be granted under the Prior Plan, and all outstanding awards granted under the Prior Plan that are repurchased, forfeited, expire or are canceled will become available for grant under the 2018 Plan in accordance with its terms.
Stock Awards.Our Prior Plan provides for the grant of ISOs within the meaning of Section 422 of the Code to employees, including employees of any parent or subsidiary, and for the grant of NSOs, stock appreciation rights,
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restricted stock awards, restricted stock unit awards and other stock awards to employees, directors and consultants, including employees and consultants of our affiliates. We have granted stock options under the Prior Plan.
Plan Administration.Our Board, or a duly authorized committee of our Board, has the authority to administer our Prior Plan and is referred to as the “plan administrator” herein. The plan administrator may also delegate to one or more of our officers the authority to (1) designate employees (other than officers) to receive specified stock awards and (2) determine the number of shares subject to such stock awards. Under our Prior Plan, the plan administrator has the authority to determine award recipients, dates of grant, the numbers and types of stock awards to be granted, the applicable fair market value and the provisions of each stock award, including the period of their exercisability and the vesting schedule applicable to a stock award.
Under the Prior Plan, the plan administrator also generally has the authority to effect, with the consent of any adversely affected participant, (A) the reduction of the exercise, purchase, or strike price of any outstanding award or (B) any other action that is treated as a repricing under generally accepted accounting principles.
Stock Options.ISOs and NSOs were granted under stock option agreements adopted by the plan administrator. The plan administrator determined the exercise price for stock options, within the terms and conditions of the Prior Plan, provided that the exercise price of a stock option generally cannot be less than 100% of the fair market value of our common stock on the date of grant. Options granted under the Prior Plan vest at the rate specified in the stock option agreement as determined by the plan administrator.
The plan administrator determined the term of stock options granted under the Prior Plan, up to a maximum of 10 years. If an optionholder’s service relationship with us or any of our affiliates ceases for any reason other than disability, death or cause, the optionholder may generally exercise any vested options for a period of three months following the cessation of service. This period may be extended in the event that exercise of the option is prohibited by applicable securities laws or our insider trading policy. If an optionholder’s service relationship with us or any of our affiliates ceases due to death, or an optionholder dies within a certain period following cessation of service, the optionholder or a beneficiary may generally exercise any vested options for a period of 18 months following the date of death. If an optionholder’s service relationship with us or any of our affiliates ceases due to disability, the optionholder may generally exercise any vested options for a period of 12 months following the cessation of service.
In the event of a termination for cause, options generally terminate upon the termination date. In no event may an option be exercised beyond the expiration of its term.
Acceptable consideration for the purchase of common stock issued upon the exercise of a stock option was determined by the plan administrator and may include (1) cash, check, bank draft or money order, (2) a broker-assisted cashless exercise, (3) the tender of shares of our common stock previously owned by the optionholder, (4) a net exercise of the option if it is an NSO, (5) a deferred payment arrangement or (6) other legal consideration approved by the plan administrator.
Unless the plan administrator provides otherwise, options generally are not transferable except by will or the laws of descent and distribution.
Tax Limitations on ISOs.The aggregate fair market value, determined at the time of grant, of our common stock with respect to ISOs that are exercisable for the first time by an optionholder during any calendar year under all of our stock plans may not exceed $100,000. Options or portions thereof that exceed such limit will generally be treated as NSOs. No ISO may be granted to any person who, at the time of the grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power or that of any of our affiliates unless (1) the option exercise price is at least 110% of the fair market value of the stock subject to the option on the date of grant and (2) the term of the ISO does not exceed five years from the date of grant.
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Changes to Capital Structure. In the event there is a specified type of change in our capital structure, such as a stock split, reverse stock split, or recapitalization, appropriate adjustments will be made to (1) the class and maximum number of shares reserved for issuance under the Prior Plan, (2) the class and maximum number of shares that may be issued on the exercise of ISOs and (3) the class and number of shares and exercise price, strike price, or purchase price, if applicable, of all outstanding stock awards.
Corporate Transactions. Our Prior Plan provides that in the event of certain specified significant corporate transactions, unless otherwise provided in an award agreement or other written agreement between us and the award holder, the plan administrator may take one or more of the following actions with respect to such stock awards:
arrange for the assumption, continuation, or substitution of a stock award by a surviving or acquiring corporation;
arrange for the assignment of any reacquisition or repurchase rights held by us to the surviving or acquiring corporation;
accelerate the vesting, in whole or in part, of the stock award and provide for its termination if not exercised (if applicable) at or before the effective time of the transaction;
arrange for the lapse, in whole or in part, of any reacquisition or repurchase rights held by us;
cancel or arrange for the cancellation of the stock award, to the extent not vested before the effective time of the transaction, in exchange for no consideration or for a cash payment, if any as the plan administrator deems appropriate; and
cancel or arrange for the cancellation of the stock award in exchange for a payment equal to the excess, if any, of (A) the value of the property the participant would have received on exercise of the award immediately before the effective time of the transaction, over (B) any exercise price payable by the participant in connection with the exercise.
The plan administrator is not obligated to treat all stock awards or portions of stock awards in the same manner and is not obligated to treat all participants in the same manner.
Under the Prior Plan, a corporate transaction is generally the consummation of: (1) a sale of all or substantially all of our assets, (2) the sale or disposition of at least 50% of our outstanding securities, (3) a merger or consolidation where we do not survive the transaction, or (4) a merger or consolidation where we do survive the transaction but the shares of our common stock outstanding immediately before such transaction are converted or exchanged into other property by virtue of the transaction.
Change in Control.A stock award under the Prior Plan may be subject to additional acceleration of vesting and exercisability upon or after a change in control as may be provided in the award agreement or other written agreement between us and the participant, but in the absence of such provision, no such acceleration will occur, except as described above.Under the Prior Plan, a change in control is a transaction that qualifies as a “deemed liquidation event” as defined in our amended and restated certificate of incorporation, but excluding (1) a capitalization adjustment, (2) a public offering of our securities, (3) a capital raising transaction, (4) a transaction exclusively for the purpose of changing our domicile or corporate form, or (5) a merger, consolidation or similar transaction in which our stockholders immediately before the transaction continue to hold, directly or indirectly, at the least a majority of our combined voting power or the combined voting power of the surviving entity (as applicable) immediately following such transaction.
Plan Amendment or Termination. Our Board has the authority to amend, suspend, or terminate the Prior Plan, provided that such action does not impair the existing rights of any participant without such participant’s written consent. Certain material amendments also require the approval of our stockholders. Unless terminated sooner, the Prior Plan will automatically terminate on June 24, 2028. No stock awards may be granted under our Prior Plan while it is suspended or after it is terminated.
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2018 Employee Stock Purchase Plan
Our Board adopted, and our stockholders approved, the 2018 Employee Stock Purchase Plan (“ESPP”) in October 2018. The ESPP became effective on October 2, 2018, in connection with our initial public offering. The purpose of the ESPP is to secure the services of new employees, to retain the services of existing employees, and to provide incentives for such individuals to exert maximum efforts toward our success and that of our affiliates. The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Code for U.S. employees.
Share Reserve. The ESPP authorizes the issuance of shares of our common stock under purchase rights granted to our employees or to employees of any of our designated affiliates. As of December 31, 2018, 1,160,000 shares of our common stock were authorized under the ESPP for issuance pursuant to purchase rights granted to our employees or to employees of any of our designated affiliates. The number of shares of our common stock reserved for issuance will automatically increase on January 1 of each calendar year, beginning on January 1, 2019 through January 1, 2028, by the lesser of (1) 1% of the total number of shares of our common stock outstanding on the last day of the calendar month before the date of the automatic increase and (2) 2,320,000 shares; provided that before the date of any such increase, our Board may determine that such increase will be less than the amount set forth in clauses (1) and (2). As of the date hereof, no shares of our common stock have been purchased under the ESPP.
Administration. Our Board administers the ESPP and may delegate its authority to administer the ESPP to our Compensation Committee. The ESPP is implemented through a series of offerings under which eligible employees are granted purchase rights to purchase shares of our common stock on specified dates during such offerings. Under the ESPP, we may specify offerings with durations of not more than 27 months, and may specify shorter purchase periods within each offering. Each offering will have one or more purchase dates on which shares of our common stock will be purchased for employees participating in the offering. An offering under the ESPP may be terminated under certain circumstances.
Payroll Deductions. Generally, all regular employees, including executive officers, employed by us or by any of our designated affiliates, may participate in the ESPP and may contribute, normally through payroll deductions, up to 15% of their earnings (as defined in the ESPP) for the purchase of our common stock under the ESPP. Unless otherwise determined by our Board, common stock will be purchased for the accounts of employees participating in the ESPP at a price per share that is at least the lesser of (1) 85% of the fair market value of a share of our common stock on the first date of an offering or (2) 85% of the fair market value of a share of our common stock on the date of purchase.
Limitations. Employees may have to satisfy one or more of the following service requirements before participating in the ESPP, as determined by our Board, including: (1) being customarily employed for more than 20 hours per week, (2) being customarily employed for more than five months per calendar year or (3) continuous employment with us or one of our affiliates for a period of time (not to exceed two years). No employee may purchase shares under the ESPP at a rate in excess of $25,000 worth of our common stock based on the fair market value per share of our common stock at the beginning of an offering for each calendar year such a purchase right is outstanding. Finally, no employee will be eligible for the grant of any purchase rights under the ESPP if immediately after such rights are granted, such employee has voting power over 5% or more of our outstanding capital stock measured by vote or value under Section 424(d) of the Code.
Changes to Capital Structure. In the event that there occurs a change in our capital structure through such actions as a stock split, merger, consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in property other than cash, large nonrecurring cash dividend, liquidating dividend, combination of shares, exchange of shares, change in corporate structure, or similar transaction, the Board will make appropriate adjustments to: (1) the class(es) and maximum number of shares reserved under the ESPP, (2) the class(es) and maximum number of shares by which the share reserve may increase automatically each year, (3) the class(es)
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and number of shares subject to and purchase price applicable to outstanding offerings and purchase rights and (4) the class(es) and number of shares that are subject to purchase limits under ongoing offerings.
Corporate Transactions. In the event of certain significant corporate transactions, any then-outstanding rights to purchase our stock under the ESPP may be assumed, continued, or substituted for by any surviving or acquiring entity (or its parent company). If the surviving or acquiring entity (or its parent company) elects not to assume, continue, or substitute for such purchase rights, then the participants’ accumulated payroll contributions will be used to purchase shares of our common stock within 10 business days before such corporate transaction, and such purchase rights will terminate immediately.
Under the ESPP, a corporate transaction is generally the consummation of: (1) a sale of all or substantially all of our assets, (2) the sale or disposition of more than 50% of our outstanding securities, (3) a merger or consolidation where we do not survive the transaction and (4) a merger or consolidation where we do survive the transaction but the shares of our common stock outstanding immediately before such transaction are converted or exchanged into other property by virtue of the transaction.
ESPP Amendment or Termination. Our Board has the authority to amend or terminate our ESPP, provided that except in certain circumstances such amendment or termination may not materially impair any outstanding purchase rights without the holder’s consent. We will obtain stockholder approval of any amendment to our ESPP as required by applicable law or listing requirements.
Director Compensation
The table below shows for the fiscal year ended December 31, 2018 certain information with respect to the compensation of allnon-employee directors of the Company, including our Executive Chairman. In addition to serving on our Board of Directors, our Executive Chairman provides additional and ongoing oversight of us, and ongoing advice and analysis with respect to our business, business strategy and potential opportunities in the field of allogeneic CAR T cell therapy.
2018 Director Compensation Table
Name | Fees earned ($) | Stock awards ($)(1) | Option awards ($)(2) | All other Compensation ($)(3) | Total ($) | |||||||||||||||
Arie Belldegrun, M.D., FACS | — | 8,226,852 | 1,533,105 | 286,226 | 10,046,183 | |||||||||||||||
David Bonderman | — | — | — | — | — | |||||||||||||||
John DeYoung | — | — | — | — | — | |||||||||||||||
Franz Humer, Ph.D. | 32,500 | — | 288,488 | — | 320,988 | |||||||||||||||
Joshua Kazam | — | 3,592,474 | — | — | 3,592,474 | |||||||||||||||
Deborah Messemer | 10,000 | — | 2,118,900 | — | 2,128,900 | |||||||||||||||
Todd Sisitsky | — | — | — | — | — | |||||||||||||||
Owen Witte, M.D. | 20,000 | — | 288,488 | — | 308,488 | |||||||||||||||
Robert Abraham, Ph.D. (4) | — | — | — | — | — | |||||||||||||||
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We have reimbursed and will continue to reimburse all of ournon-employee directors for their travel, lodging and other reasonable expenses incurred in attending meetings of our Board of Directors and committees of our Board of Directors, and will pay for the travel, lodging and other reasonable expenses incurred by our employee directors to attend meetings of our Board of Directors and, as applicable, committees of our Board of Directors.
Non-Employee Director Compensation Policy
Our Board of Directors approved the followingnon-employee director compensation policy in September 2018:
an annual cash retainer of $40,000;
an additional annual cash retainer of $12,500, $7,500 and $5,000 for service as a member of the Audit Committee, Compensation Committee and the Nominating and Corporate Governance Committee, respectively;
an additional annual cash retainer of $25,000, $15,000 and $10,000 for service as chairman of the Audit Committee, Compensation Committee and the Nominating and Corporate Governance Committee, respectively (in lieu of the committee member retainer above);
an initial option grant to purchase 54,075 shares of our common stock, vesting in 36 equal monthly installments, and an initial restricted stock unit award that may be settled for 16,275 shares of our common stock, vesting annually over a three-year period from the date of grant; and
an annual option grant to purchase 27,300 shares of our common stock, vesting in 12 equal monthly installments, and an annual restricted stock unit award that may be settled for 7,875 shares of our common stock, vesting on theone-year anniversary of the date of grant. The annual grants will be made on the date of each of our annual meetings of stockholders.
As a result of periodic review of the policy, in March 2019, our Board of Directors and Compensation Committee determined that Messrs. Bonderman and DeYoung will have sole authority to review and update the policy for 2019. Neither Mr. Bonderman nor Mr. DeYoung accept any compensation for serving on our Board of Directors. In consultation with Compensia and in light of the increase in the value of the Company’s equity, Mr. Bonderman and Mr. DeYoung approved a reduction in the amount of equity compensation to ournon-employee directors for 2019. The revised policy is set forth below:
an annual cash retainer of $40,000;
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an additional annual cash retainer of $12,500, $7,500 and $5,000 for service as a member of the Audit Committee, Compensation Committee and the Nominating and Corporate Governance Committee, respectively;
an additional annual cash retainer of $25,000, $15,000 and $10,000 for service as chairman of the Audit Committee, Compensation Committee and the Nominating and Corporate Governance Committee, respectively (in lieu of the committee member retainer above);
an initial option grant, vesting in 36 equal monthly installments, and/or an initial restricted stock unit award, vesting annually over a three-year period from the date of grant, having an aggregate grant date value of $850,000, with the director designating the proportionate share between the initial option grant and initial restricted stock unit award prior to or on the date of grant; and
an annual option grant, vesting in 12 equal monthly installments, and/or an annual restricted stock unit award, vesting on theone-year anniversary of the date of grant, having an aggregate grant date value of $425,000, with the director designating the proportionate share between the annual option grant and annual restricted stock unit award prior to or on the date of grant. The annual grants will be made on the date of each of our annual meetings of stockholders.
Each of the equity awards described above will vest and become exercisable subject to thenon-employee director’s continuous service with us through each applicable vesting date, provided that each option and RSU award will vest in full upon a change of control of the Company, as defined underassuming a triggering event occurred on December 31, 2019:
| Name | Benefit | Termination without Cause or Resignation for Good Reason Not in Connection with a Change in Control ($) | Termination without Cause or Resignation for Good Reason in Connection with a Change in Control ($) | |||||||||||||||||
| David Chang, M.D., Ph.D. | Lump Sum Cash Severance Payment | 1,200,000 | 1,200,000 | |||||||||||||||||
| Lump Sum Target Bonus Payment | — | 660,000 | ||||||||||||||||||
| Health Insurance Premiums | 22,336 | 44,671 | ||||||||||||||||||
| Vesting Acceleration(1) | — | 50,862,409 | ||||||||||||||||||
| Benefit Total | 1,222,336 | 52,767,080 | ||||||||||||||||||
| Eric Schmidt, Ph.D. | Lump Sum Cash Severance Payment | 425,000 | 637,500 | |||||||||||||||||
| Lump Sum Target Bonus Payment | — | 255,000 | ||||||||||||||||||
| Health Insurance Premiums | 25,212 | 37,818 | ||||||||||||||||||
| Vesting Acceleration(1) | — | 36,012,635 | ||||||||||||||||||
| Benefit Total | 450,212 | 36,942,953 | ||||||||||||||||||
| Rafael Amado, M.D. | Lump Sum Cash Severance Payment | 500,000 | 750,000 | |||||||||||||||||
| Lump Sum Target Bonus Payment | — | 300,000 | ||||||||||||||||||
| Health Insurance Premiums | 15,437 | 23,156 | ||||||||||||||||||
| Vesting Acceleration(1) | 4,222,348 | |||||||||||||||||||
| Benefit Total | 515,437 | 5,295,504 | ||||||||||||||||||
| Alison Moore, Ph.D. | Lump Sum Cash Severance Payment | 425,000 | 637,500 | |||||||||||||||||
| Lump Sum Target Bonus Payment | — | 255,000 | ||||||||||||||||||
| Health Insurance Premiums | 22,336 | 33,504 | ||||||||||||||||||
| Vesting Acceleration(1) | — | 17,991,128 | ||||||||||||||||||
| Benefit Total | 447,336 | 18,917,132 | ||||||||||||||||||
Transactions With Related Persons
the stock options, the exercise price of the unvested stock option shares subject to acceleration.
• the risks, costs and benefits to us;
• the impact on a director’s independence in the event the related person is a director, immediate family member of a director or an entity with which a director is affiliated;
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• the terms of the transaction;
• the availability of other sources for comparable services or products; and
• the terms available to or from, as the case may be, unrelated third parties.
Series A andA-1 Convertible Preferred Stock Financing
In April 2018, we entered into a Series A andA-1 preferred stock purchase agreement with various investors, pursuant to which we issued and sold to participating investors an aggregate of 7,557,900 shares of our Series A convertible preferred stock and 998,225 shares of our SeriesA-1 convertible preferred stock at a purchase price of $35.06 per share, and received aggregate gross proceeds of approximately $300 million. Half of this funding was received in April 2018 and the remainder was received in July and August 2018.
The participants in the Series A andA-1 convertible preferred stock financing included the following executive officers and members of our Board and holders of more than 5% of our capital stock or entities affiliated with them. The following table sets forth the aggregate number of shares of convertible preferred stock issued to these related parties in the Series A andA-1 convertible preferred stock financing:
Participants | Shares of Series A Convertible Preferred Stock | Shares of SeriesA-1 Convertible Preferred Stock | Consideration | |||||||||
Executive Officers and Directors | ||||||||||||
David Chang, M.D., Ph.D. (1) | 5,704 | — | $ | 199,995 | ||||||||
Joshua Kazam | 3,565 | — | $ | 124,997 | ||||||||
Arie Belldegrun, M.D., FACS (2) | 27,095 | — | $ | 950,011 | ||||||||
Owen Witte, M.D. | 7,130 | — | $ | 249,994 | ||||||||
Franz Humer, Ph.D. | 14,261 | — | $ | 500,023 | ||||||||
Greater than 5% stockholders | ||||||||||||
Pfizer Inc. | — | 998,225 | $ | 34,999,998 | ||||||||
Entities affiliated with TPG Carthage Holdings, L.P. (3) | 4,278,107 | — | $ | 149,999,984 | ||||||||
Gilead Sciences, Inc. | 1,426,036 | — | $ | 50,000,007 | ||||||||
Entities affiliated with VVAG Special Fund LLC (4) | 1,426,036 | — | $ | 50,000,007 | ||||||||
Seaview Trust | 57,042 | — | $ | 2,000,020 | ||||||||
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Pfizer Asset Purchase Transaction
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The TSA provides that Pfizer will indemnify us for damages that result from Pfizer’s gross negligence, willful misconduct or material breach of the TSA and that we will indemnify Pfizer for damages that arise from the provision of the services, unless such damages result from Pfizer’s gross negligence, willful misconduct or material breach. We are also required
The term of the agreement began in April 2018 and ends on the earlier to occur of the last date that Pfizer is required to provide the services or the termination of the TSA in accordance with the agreement. Either party may terminate the agreement upon 60 days’ prior written notice in the event of the other party’s uncured material breach. Pfizer may terminate the TSA upon 10 days’ prior written notice in the event of ournon-payment, if left uncured. We may terminate our use of the facilities with 60 days’ written notice.
Investor Agreements
In connection with our Series A andA-1 convertible preferred stock financing, we entered into an investors’ rights agreement, dated April 6, 2018, as amended, voting agreementbetween us and rightcertain of first refusalour stockholders,
Consulting Arrangements
In April 2018, we entered into an Independent Contractor Agreementcompany, as well as Pfizer, entities affiliated with David Chang, M.D., Ph.D., our President and Chief Executive Officer and member of our Board, for services consistent with the role and duties of Chief Executive Officer. In exchange for the services agreed upon under the consulting agreement, we paid
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Dr. Chang at a rate of $8,250 per week. The agreement was terminated in June 2018. We paid Dr. Chang an aggregate of $90,750 in consulting fees in 2018.
In June 2018, we entered into a letter agreement with TPG Capital – FO LLC (“TPG FO”), an affiliate of TPG Carthage Holdings, L.P. and The Riseentities affiliated with VVAG Special Fund Carthage, L.P., beneficial owners of more than 5% of our capital stock, for consulting services. PursuantLLC, are entitled to the letter agreement, TPG FO is to provide strategic, operationscertain demand registration rights, piggyback registration rights and transition consulting services for a consulting fee not to exceed $150,000 per quarter, paid in arrears beginning in April 2018, unless a higher rate is approved by our Board or our audit committee. We paid TPG FO an aggregate of $0.3 million in consulting fees in 2018.
Form S-3 registration rights.
We amended our agreement with Two River in January 2020 to provide payment of no more than $84,000 per quarter.
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ByHeart and Mr. Kazam serves on the board of directors of ByHeart. The sublease terminates in June 2025, subject to certain early termination rights. Commencing in December 2018, ByHeart pays a monthly base rent of approximately $16,000, which will total approximately $1.3 million for the full term of the sublease. The monthly base rent and related occupancy costs are pass-through costs to the master landlord or other third parties and no portion is retained by us.
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ALLOGENE THERAPEUTICS, INC. 210 EAST GRAND AVENUE SOUTH SAN FRANCISCO, CA 94080 VOTE BY INTERNET www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. Eastern Time on June 5, 2019. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. Eastern Time on June 5, 2019. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: E71441-P25456 KEEP THIS PORTION FOR YOUR RECORDS THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. DETACH AND RETURN THIS PORTION ONLY ALLOGENE THERAPEUTICS, INC. The Board of Directors recommends you vote FOR the following: 1. To elect the following Class I Director Nominees Nominees: For Against Abstain 1a. Arie Belldegrun, M.D., FACS1b. David Bonderman c. David Chang, M.D., Ph.D.The Board of Directors recommends you vote FOR the following proposalAbstainForAgainst 2.To ratify the appointment of Ernst & Young LLP as Allogene Therapeutics, Inc.’s independent registered public accounting firm for the fiscal year ending December 31, 2019NOTE: Such other business as may properly come before the meeting or any adjournment thereof.For address changes and/or comments, please check this box and write them on the back where indicated.Please indicate if you plan to attend this meeting.YesNoPlease sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice and Proxy Statement and Annual Report are available at www.proxyvote.com. ALLOGENE THERAPEUTICS, INC.Annual Meeting of ShareholdersJune 6, 2019 10:00 AM ETThis proxy is solicited by the Board of Directors The shareholder(s) hereby appoint(s) David Chang, M.D., Ph.D. and Eric Schmidt, Ph.D., or either of them, as proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of ALLOGENE THERAPEUTICS, INC. that the shareholder(s) is/are entitled to vote at theAnnual Meeting of Shareholder(s) to be held at 10:00 AM ET, on June 6, 2019, at the Company’s offices located at 689 Fifth Avenue, 14th Floor, New York, New York 10022, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors’ recommendations. Address Changes/Comments: (If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side
