independent under directors of the definition promulgatedCompany (consistent with criteria approved by the Nasdaq Stock Market. The nominating committee’s responsibilities are set forth inBoard), reviewing and evaluating incumbent directors, recommending to the nominating committee’s written charter and include:
evaluating andBoardcandidates for election to the Board, making recommendations to the full board asBoard regarding the membership of the committees of the Board (including with respect to making changes or rotation of members, the composition, organizationcreation of additional Board committees, or changes in Committee charters), overseeing an annual self-assessment of the Board, overseeing succession planning for senior executives of the Company, and governance of our board of directors and its committees;
evaluating and making recommendations as to director candidates;
evaluating current board members’ performance;
overseeing the process for CEO and other executive officer succession planning; and
developing and recommending to the Board a set of corporate governance guidelinesprinciples for the Company.
Generally, our nominating committee considers
The Nominating and Corporate Governance Committee believes that candidates for
inclusion on the board,director should have certain minimum qualifications, including
those recommended by stockholder, in accordance with our Criteriaa reputation for
Nomination as a Director appendedintegrity, honesty and adherence to
our Corporate Governance Guidelines. Threshold criteria include: personal integrity and high ethical
standards,standards; demonstrated business acumen, experience and
the ability to exercise sound
judgment, independence, knowledgejudgements in matters that relate to the current and long-term objectives of
ourthe Company and a willingness and ability to contribute positively to the decision-making process of the Company; a commitment to understand the Company and its industry
possible conflictsand to regularly attend and participate in meetings of the Board and its committees; the interest and ability to understand the sometimes conflicting interests of the various constituencies of the Company, which include stockholders, employees, customers, governmental units, creditors and the general public, and to act in the interests of all stockholders; and the ability to serve for at least three years before reaching the age of 75. The Nominating and Corporate Governance Committee also believes that candidates for director should not have, nor appear to have, a conflict of interest
diversity,that would impair the
extentcandidate’s ability to
whichrepresent the
candidate would fillinterests of all the Company’s stockholders and to fulfill the responsibilities of a
present need on our boarddirector. However, the Nominating and Corporate Governance Committee retains the right to modify these qualifications from time to time. Candidates for director nominees are reviewed in the context of
directors,the current composition of the Board, the operating requirements of the Company and
concern for the long-term interests of
our stockholders. The nominating committee seeksstockholders, and
evaluates candidates such that the
backgroundsNominating and
qualificationsCorporate Governance Committee has direct input from the Chairman of the
directors considered as a group provide a significant breadth of experience, knowledgeBoard and
abilities that shall assist our board of directors in fulfilling its responsibilities.the Chief Executive Officer.
Our
nominating committeeNominating and Corporate Governance Committee has not adopted a formal diversity policy in connection with the consideration of director nominations or the selection of nominees but believes that our
board,Board, taken as a whole, should embody a diverse set of skills, experiences and backgrounds. In this regard, the
nominating committeeNominating and Corporate Governance Committee will consider issues of diversity among its members in identifying and considering nominees for director, and strive where appropriate to achieve a diverse balance of backgrounds, perspectives, experience, age, gender, ethnicity and country of citizenship on our board of directors and its committees. The
nominating committeeNominating and Corporate Governance Committee does not make any particular weighting of diversity or any other characteristic in evaluating nominees and directors.
If
The Nominating and Corporate Governance Committee appreciates the value of thoughtful Board refreshment, and regularly identifies and considers qualities, skills and other director attributes that would enhance the composition of the Board. In the case of incumbent directors whose terms of office are set to expire, the Committee reviews these directors’ overall service to the Company during their terms, including the number of meetings attended, level of participation, quality of performance and any other relationships and transactions that might impair the directors’ independence. The Nominating and Corporate Governance Committee also takes into account the results of the Board’s self-evaluation, conducted annually on a stockholder wishesgroup and individual basis. In the case of new director candidates, the Nominating and Corporate Governance Committee also determines whether the nominee is independent for Nasdaq purposes, which determination is based upon applicable Nasdaq listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary. The Nominating and Corporate Governance Committee then uses its network of contacts to proposecompile a candidate for consideration aslist of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The Nominating and Corporate Governance Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board. The Nominating and Corporate Governance Committee meets to discuss and consider the candidates’ qualifications and then selects a nominee for recommendation to the Board by majority vote.
The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders. The Nominating and Corporate Governance Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether or not the candidate was recommended by a stockholder.
Stockholders who wish to recommend individuals for consideration by the Nominating and Corporate Governance Committee to become nominees for election to our board of directors, it must follow the procedures described in our amended and restatedby-laws and in “Stockholder Proposals and Nominations for Director” at the end of this proxy statement. In general, persons recommendedBoard may do so by stockholders will be considered in accordance with our Criteria for Nomination asdelivering a Director appended to our Corporate Governance Guidelines. Any suchwritten recommendation should be made in writing to the Nominating and Corporate Governance Committee careat the following address: c/o X4 Pharmaceuticals, Inc., 61 North Beacon Street, 4th Floor, Boston, Massachusetts 02134 at least 120 days prior to the anniversary date of the mailing of our proxy statement for the last Annual Meeting of Stockholders. Submissions must include the full name of the proposed nominee, a description of the proposed nominee’s business experience for at least the previous five years, complete biographical information, a description of the proposed nominee’s qualifications as a director and a representation that the nominating stockholder is a beneficial or record holder of our common stock and has been a holder for at least one year. Any such submission must be accompanied by the written consent of the proposed nominee to be named as a nominee and to serve as a director if elected.
STOCKHOLDER COMMUNICATIONSWITHTHE BOARDOF DIRECTORS
These communications will be reviewed by one or more employees of the Company designated by the Board, who will determine whether the communication should be presented to the Board. Stockholders who wish to communicate with our Board of Directors, or any individual director, may do so by sending written communications addressed to our Corporate Secretary at our principal office and should be accompanied by the following information concerning each recommending stockholder and the beneficial owner, if any, on whose behalf the nomination is made:all information relating to such person that would be required to be disclosed in a proxy statement;
certain biographical and share ownership information about the stockholder and any other proponent, including a description of any derivative transactions in the Company’s securities;
a description of certain agreements, arrangements and understandings between or among the proposing stockholder and any beneficial owner and any other person in connection with such stockholder nomination and the director nominee; and
a statement whether such stockholder or beneficial owner intends to appear in person or by proxy at the meeting to nominate the person(s) named in its notice; and
a statement whether or not either such stockholder or beneficial owner intends to deliver a proxy statement and form of proxy to holders of voting shares sufficient to carry the proposal.
The recommendation must also be accompanied by the following information concerning the proposed nominee:
certain biographical information and share ownership information concerning the proposed nominee;
all information concerning the proposed nominee required to be disclosed in solicitations of proxies for election of directors;
all information concerning compensation or other material monetary agreements, arrangements or understandings during the past three years and any other material relationship between or among the stockholder, beneficial owner and their respective affiliates and each proposed nominee, and his or her affiliates; and
a description of all relationships between the proposed nominee and the recommending stockholder or any beneficial owner, including any agreements or understandings regarding the nomination.
A copy of the nominating committee’s written charter is publicly available on our website at www.x4pharma.com.
Board Leadership Structure and Role in Risk Oversight
The positions of our chairman of the board and chief executive officer are separate. Separating these positions allows our chief executive officer to focus on ourday-to-day61 North Beacon Street, business, while allowing the chairman of the board to lead the board of directors in its fundamental roles of setting a company’s overall strategy and providing advice to and independent oversight of management. Our board of directors recognizes the time, effort and energy that the chief executive officer must devote to her position in the current business environment, as well as the commitment required to serve as our chairman, particularly as the board of directors’ oversight responsibilities continue to grow. Our board of directors also believes that this structure ensures a greater role for the independent directors in the oversight of the company and active participation of the independent directors in setting agendas and establishing priorities and procedures for the work of our board of directors. Our board of directors believes its administration of its risk oversight function has not affected its leadership structure.
Although our bylaws do not require the chairman and chief executive officer positions to be separate, our board of directors believes that having separate positions is the appropriate leadership structure for the Company at this time and demonstrates our commitment to good corporate governance.
Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. Our board of directors is actively involved in oversight of risks that could affect the Company. This oversight is conducted primarily by our full board of directors, which has responsibility for general oversight of risks. For example, in determining whether and under what circumstances we will engage in financing transactions or enter into licensing, collaboration or similar arrangements, the board of directors is involved in our management of risks related to our financial condition or of the risks inherent in drug development and commercialization.
As part of its oversight, our board of directors receives reports by each committee chair regarding the committee’s considerations and actions. In particular, the audit committee is responsible for discussing the adequacy of our risk management activities with management and our independent registered public accounting firm. The audit committee’s primary emphasis is financial risk, including our internal control over financial reporting. In addition, the compensation committee is responsible for considering whether our compensation programs and practices are reasonably likely to have a material adverse effect on us.
At each of its meetings, the board of directors receives business updates from various members of management. These updates may identify matters that have emerged within that member of management’s scope of responsibility that involve operational, financial, legal or regulatory risks and, in these cases, the board of directors provides guidance to management. Our board of directors believes that full and open communication between management and the board of directors is essential for effective risk management and oversight.
Stockholder Communications to our Board of Directors
Generally, stockholders who have questions or concerns should contact our Investor Relations department at (857)529-8300. However, any stockholders who wish to address questions regarding our business directly with our board of directors, or any individual director, should direct his or her questions in writing to the chairman of our board of directors at 955 Massachusetts Avenue,4th Floor, Cambridge,Boston, Massachusetts 02139.
02134.Communications will be distributed to our boardBoard of directors,Directors, or to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communications. Items that are unrelated to the duties and responsibilities of our boardBoard of directorsDirectors may be excluded, such as:
junk mail and mass mailings;
resumes and other forms of job inquiries;
solicitations or advertisements.
In addition, any material that is unduly hostile, threatening, or illegal in nature may be excluded, in which case it will be made available to any outside director upon request.
Executive Officers
CODEOF ETHICS
We have adopted aCode of Business Conduct and Ethics that applies to all of our officers, directors and employees. The Code of Business Conduct and Ethics is available on our website at http://investors.x4pharma.com.If the Company makes any substantive amendments to the Code of Business Conduct and Ethics or grants any waiver from a provision of the Code of Business Conduct and Ethics to any executive officer or director, the Company will promptly disclose the nature of the amendment or waiver on its website.
PROPOSAL 2
RATIFICATIONOF SELECTIONOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee of the Board has selected PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021 and has further directed that management submit the selection of its independent registered public accounting firm for ratification by the stockholders at the Annual Meeting. PricewaterhouseCoopers LLP has audited our financial statements since 2016 and also served as our auditor when we were a private company since 2016. Representatives ofPricewaterhouseCoopers LLP are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
Neither our Bylaws nor other governing documents or law require stockholder ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm. However, the Audit Committee of the Board is submitting the selection of PricewaterhouseCoopers LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee of the Board will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee of the Board in its discretion may direct the appointment of different independent auditors at any time during the year if they determine that such a change would be in our best interests and our stockholders.
PRINCIPAL ACCOUNTANT FEESAND SERVICES
The following table represents aggregate fees billed to us for the fiscal years ended December 31, 2020 and December 31, 2019 by PricewaterhouseCoopers LLP, our principal accountant.
| | | | | | | | | | | | | | |
| | | | |
| | | For the year ended |
| | | 2020 | | 2019 |
Audit Fees(1) | | $ | 1,102,700 | | | $ | 1,422,363 | |
Audit-related Fees(2) | | — | | | — | |
Tax Fees(3) | | — | | | 10,000 | |
All Other Fees (4) | | 2,756 | | | 2,400 | |
| Total Fees | | $ | 1,105,456 | | | $ | 1,434,763 | |
| | | | | |
| (1) | Consists of fees billed for professional services provided to us in connection with the annual audit of our consolidated financial statements, the review of our quarterly condensed consolidated financial statements, as well as audit services that are normally provided by an independent registered public accounting firm in connection with statutory and regulatory filings or engagements for those fiscal years, such as statutory audits. Included in 2020 Audit Fees are fees of $385,000 in connection with the filing of registration statements and issuance of comfort letters. Included in 2019 Audit Fees are fees of $762,363 in connection with filing of registration statements. |
| | | | | |
| (2) | Consist of fees billed by an independent registered public accounting firm for assurance and related services that are reasonably related to the performance of the audit or review of financial statements and which are not reported under “Audit Fees.” There were no such fees incurred in 2020 or 2019. |
| | | | | |
| (3) | Consists of fees billed for tax compliance, tax advice and tax planning services, including the review and preparation of federal and state income tax returns. |
| | | | | |
| (4) | Consists of subscription fees paid for access to online accounting research software applications and data. |
All fees described above were pre-approved by the Audit Committee. There were no services that were approved by the Audit Committee pursuant to Rule 2-01(c)(7)(i)(C) (relating to the approval of a de minimis amount of non-audit services after the fact but before completion of the audit).
The Audit Committee has adopted a policy and procedures for the pre-approval of audit and non-audit services rendered by our independent registered public accounting firm, PricewaterhouseCoopers LLP. Prior to engagement of an independent registered public accounting firm for the next year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of four categories of services (audit services, audit-related services, tax services and other fees) to the Audit Committee for approval. Prior to engagement, the Audit Committee pre-approves these services by
category of service. The fees are budgeted, and the Audit Committee requires our independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage our independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires specific pre-approval before engaging our independent registered public accounting firm. The pre-approval of services may be delegated to one or more of the Audit Committee’s members, but the decision must be reported to the full Audit Committee at its next scheduled meeting.
The Audit Committee has determined that the rendering of services other than audit services by PricewaterhouseCoopers LLP is compatible with maintaining the principal accountant’s independence.
Vote Required
The affirmative vote of a majority of the votes cast by the holders of shares present in person or by proxy and entitled to vote at the Annual Meeting will be required to ratify the selection of PricewaterhouseCoopers LLP.
THE BOARDOF DIRECTORS RECOMMENDS
A VOTEIN FAVOROF PROPOSAL 2.
EXECUTIVE OFFICERS
The following table sets forth
certain information
as of April 30, 2019 regarding each ofwith respect to our executive officers
whoand their ages as of the date of this Proxy Statement. There are
not also directors. We have employment agreements with allno family relationships between any of our executive officers, and
all of ourthere is no arrangement or understanding between any executive
officers areat-will employees.officer and any other person pursuant to which the executive officer was selected. | | | | | | | | | | | | | | |
| | | | |
| Name | | Age | | | Position |
Paula Ragan, Ph.D. | | 51 | | President, Chief Executive Officer, Corporate Secretary and Director |
| Adam S. Mostafa | | | 39 | 41 | | Chief Financial Officer and Treasurer |
E. Lynne Kelley
Diego Cadavid, M.D. | | 55 | 56 | | | Chief Medical Officer |
| Arthur Taveras, Ph.D. | | 57 | | Chief Scientific Officer |
| Derek Meisner, J.D. | | 50 | | General Counsel |
Paula Ragan, Ph.D. Biographical information for Dr. Ragan is presented above under the caption “Nominees for Election as a Class I Director for a Three-Year Term Expiring at the 2024 Annual Meeting of Stockholders”
Adam S. Mostafa. Mr. Mostafa has served as our Chief Financial Officer and Treasurer since the closing of the Merger in March 2019. Prior to the Merger, Mr. Mostafa served as Private X4’s Chief Financial Officer since September 2018. Prior to joining Private X4, Mr. Mostafa served as chief financial officer of Abpro Corporation, a biotechnology company focused on antibody therapeutics, from June 2016 to August 2018. Prior to that, Mr. Mostafa was a managing director in the healthcare investment banking group at Cantor Fitzgerald from January 2015 to May 2016, and from June 2011 to January 2015, Mr. Mostafa was a senior banker in the healthcare investment banking group at Needham & Company. Prior to that, Mr. Mostafa was a vice president in the investment banking group at CRT Capital Group from March 2007 to May 2011, and from September 2003 to March 2007, Mr. Mostafa was a portfolio management associate in the global stock selection group at AQR Capital. Mr. Mostafa began his career as an analyst in the healthcare investment banking group at Salomon Smith Barney. Mr. Mostafa earned an A.B. in Economics from Brown University.E. Lynne Kelley,
Diego Cadavid, M.D.Dr. KelleyCadavid has served as our Chief Medical Officer since April 2019. She brings more thanDecember 2020. Previously, from September 2016 to November 2020, Dr. Cadavid was Vice President of Clinical Development and then Senior Vice President and Head of Clinical Development at Fulcrum Therapeutics, a decadepublic biopharmaceutical company. Dr. Cadavid served in various roles of experience directing clinical developmentincreasing responsibility at Biogen from 2008 until September 2016, ultimately departing as Senior Medical Director, Multiple Sclerosis Clinical Development Group. From 2008 until 2015, Dr. Cadavid was also a consultant at the Center for Immunology and global expansion of novel pharmaceutical productsInflammatory Diseases at both emerging and established life sciences companies. Dr. KelleyMassachusetts General Hospital. He is a Board Certified Generallicensed physician and Vascular Surgeon. Before joininga board-certified neurologist. Additionally, Dr. Cadavid has served as an Affiliate Instructor in Neurology at the University of Massachusetts Medical School since May 2018, and he previously taught at the Rutgers-New Jersey Medical School for 9 years. Dr. Cadavid received undergraduate and graduate medical education at Pontificia Universidad Javeriana in Colombia, and conducted his post-doctoral fellowship training and residency training at the University of Texas Health Science Center, the Armed Forces Institute of Pathology, and Georgetown University Medical Center and Affiliated Hospitals.
Arthur Taveras, Ph.D. Dr. Taveras has served as our company, Dr. Kelley was chief medical officer (CMO) of Massachusetts-based biopharmaceutical company Histogenics CorporationChief Scientific Officer since November 2020. Previously, from JulyAugust 2018 to January 2019, where she led the development of restorative cell therapies to replace damaged cartilage and oversaw the completion of a Phase 3 clinical trial and regulatory submission for the company’s lead program. Previously, from January 2016 to May 2018,July 2020, Dr. KelleyTaveras served as CMOChief Scientific Officer of Senseonics Holdings,Comet Therapeutics, Inc., a private biotechnology company. From May 2015 to the present, Dr. Taveras has served in various capacities as Chief Scientific Officer, Head of Drug Discovery and/or Owner of Transform Therapeutics, a private company he founded that developsis focused on developing novel therapeutics for cancer, neurodegenerative diseases and sells systemsimmunologic disorders. Dr. Taveras also served as President & Chief Scientific Officer of Shanghai ChemPartner Co., Ltd., a research organization serving the pharmaceutical and biotechnology industry, from October 2013 to help people with diabetes monitor their glucose levels. She alsoDecember 2014. Earlier in his career, he held leadership positions in clinical development roles at global companies such as Becton, Dickinson and Company, a global medical technology company (from January 2011 to December 2015), Kimberly-Clark Corporation, a company focused on creating essential household products (from January 2008 to December 2011)Biogen, Atlantos Pharmaceuticals (later acquired by Amgen), and Boston Scientific Corporation, a medical device company (from November 2005 to December 2008)Schering-Plough Research Institute (later acquired by Merck). Dr. KelleyTaveras received her medical degreehis Ph.D., M.S and B.S. degrees from Dartmouth Medical SchoolRensselaer Polytechnical Institute.
Derek Meisner, J.D. Mr. Meisner has served as our General Counsel since November 2019. From September 2018 until October 2019, Mr. Meisner held the role of General Counsel at Genocea Biosciences, a publicly traded, clinical-stage
biopharmaceutical company. Prior to Genocea, he served as General Counsel of multiple Boston-based financial services firms, including Quantopian, Inc., a venture-backed start-up, from April 2016 until September 2018, and her bachelor’s degreelife science investor RA Capital Management from January 2015 to April 2016. Mr. Meisner was also previously a partner at the international law firm K&L Gates and Branch Chief in biology from Boston University. She trained at Dartmouth Hitchcock Hospital and Massachusetts General Hospital, and was a practicing surgeon at Yale University. Dr. Kelley was named Fellowthe Division of Enforcement of the AmericanU.S. Securities and Exchange Commission.
Mr. Meisner holds a B.A. from the University of Michigan and a J.D. from the Washington College of Surgeons, was awarded an NIH research grantLaw at Harvard UniversityAmerican University.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership of the Company’s common stock as of April 5, 2021 by: (i) each director and nominee for director; (ii) each of the executive officers named in the Summary Compensation Table; (iii) all current executive officers and directors of the Company as a group; and (iv) all those known by the Company to be beneficial owners of more than five percent of its common stock. Applicable percentages are based on 23,655,660 shares outstanding on April 5, 2021, adjusted as required by rules promulgated by the SEC. Unless otherwise noted below, the address of each stockholder below is c/o X4 Pharmaceuticals, Inc., 61 North Beacon Street, 4th Floor, Boston, Massachusetts 02134.
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
| | | Beneficial Ownership (1) | |
| Beneficial Owner | | Number of Shares | | | Percent of Total | |
| 5% Stockholders | | | | | | | | |
Entities affiliated with Ikarian Capital, LLC (1) | | | 2,624,988 | | | | 11.10 | % | |
Entities affiliated with Biotechnology Value Fund L.P. (2) | | | 2,625,726 | | | | 9.99 | % | |
Entities affiliated with RA Capital Management, L.P. (3) | | | 2,565,962 | | | | 9.99 | % | |
Entities affiliated with Bain Capital Life Sciences Fund, L.P (4) | | | 2,390,240 | | | | 9.99 | % | |
Entities affiliated with OrbiMed Advisors LLC (5) | | | 1,835,993 | | | | 7.61 | % | |
| Named Executive Officers, Directors and Director Nominees | | | | | | | | |
Paula Ragan, Ph.D. (6) | | | 288,812 | | | | 1.91 | % | |
Adam S. Mostafa (7) | | | 50,653 | | | | * | |
Derek Meisner (7) | | | 21,771 | | | | * | |
William E. Aliski (7) | | | 7,235 | | | | * | |
Gary J. Bridger, Ph.D (7) | | | 23,740 | | | | * | |
| Alison Lawton | | | — | | | | | — | | |
David McGirr, M.B.A (7) | | | 12,686 | | | | * | |
René Russo, Pharm.D. (7) | | | 87,515 | | | | * | |
Murray W. Stewart, M.D. (7) | | | 8,377 | | | | * | |
Michael S. Wyzga (7) | | | 73,032 | | | | * | |
All directors and current executive officers as a group (12 people) (8) | | | 742,628 | | | | 3.06 | % | |
(1) Based on a Schedule 13G filed on April 8, 2021. Consists of shares held by by Ikarian Capital, LLC (“Ikarian Capital”), Ikarian Healthcare Master Fund, L.P, (the “Ikarian Fund”), Ikarian Healthcare Fund GP, L.P., (“Ikarian GP”), Chart Westcott and Neil Shahrestani (such individuals, together with Ikarian Capital, Ikarian Fund and Ikarian GP, the “Ikarian Parties”). The Ikarian Fund and the Marco Polo Fellowship studying at Hospital Henri MondorIkarian Managed Accounts are the record and direct beneficial owners of the University Paris Hospital System,shares of common stock. Ikarian Capital is the investment manager of, and may be deemed to indirectly beneficially own securities owned by, the Ikarian Fund. Ikarian GP is the general partner of, and may be deemed to indirectly beneficially own securities owned by, the Fund. Ikarian Capital is also the general partner of, and may be deemed to indirectly beneficially own, securities beneficially owned by Ikarian GP. Ikarian Capital is a sub-advisor for certain separate managed accounts (collectively, the “Ikarian Managed Accounts”) and may be deemed to indirectly beneficially own securities owned by the Ikarian Managed Accounts. Ikarian Capital is ultimately owned and controlled by Chart Westcott Living Trust, of which Mr. Westcott serves as the sole trustee (the “Westcott Trust”), and indirectly by Mr. Shahrestani. Accordingly, each of Mr. Westcott, as sole trustee of the Westcott Trust, and Mr. Shahrestani may be deemed to indirectly beneficially own securities beneficially owned by Ikarian Capital. The Ikarian Fund disclaims beneficial ownership of the shares held by the Ikarian Managed Accounts. The address of the Ikarian Parties is c/o Ikarian Capital, LLC, 100 Crescent Court, Suite 1620, Dallas, Texas 75201.
(2) Based in part on information provided in a Schedule 13G/A filed by entities affiliated with Biotechnology Value Fund, L.P. (“BVF”) on February 16, 2021. Consists of (i) 448,467 shares of common stock held by BVF, 293,248 shares of common stock held by Biotechnology Value Fund II, L.P. (“BVF II”), and 48.836 shares of common stock held by Biotechnology Value Trading Fund OS LP (“Trading Fund OS”), (ii) 530,425 shares of common stock issuable upon the exercise of pre-funded warrants issued in April 2019 (“April Pre-Funded Warrants”) held by BVF, 428,704 shares of common stock issuable upon the exercise of April Pre-Funded Warrants held by BVF 2, 76,534 shares of common stock issuable upon the exercise of April Pre-Funded Warrants held by Trading Fund OS, and 37,377 shares of common stock issuable upon the exercise of April Pre-Funded Warrants held by a certain BVF Partners L.P. (“Partners”) managed account (the “Partners Managed Account”), (iii) 69,814 shares of common stock issuable upon the exercise of Class A warrants to purchase common stock (“Class A Warrants”) held by BVF, 64,996 shares of common stock issuable
upon the exercise of Class A Warrants held by Trading Fund OS, and 31,630 shares of common stock issuable upon the exercise of Class A Warrants held by the Partners Managed Account, (iv) 259,739 shares of common stock issuable upon the exercise of pre-funded warrants issued in November 2019 (the “November Pre-Funded Warrants”) held by BVF, 204,465 shares of common stock issuable upon the exercise of November Pre-Funded Warrants held by BVF 2, and 35,796 shares of common stock issuable upon the exercise of November Pre-Funded Warrants held by Trading Fund OS, and (v) 66,236 shares of common stock issuable upon the exercise of Class B warrants to purchase common stock (“Class B Warrants”) held by Trading Fund OS and 29,459 shares of common stock issuable upon the exercise of Class B Warrants held by the Partners Managed Account. Each of the April Pre-Funded Warrants, the Class A Warrants, the November Pre-Funded Warrants, and the Class B Warrants contain provisions that restrict the exercise of such securities to the extent that such exercises would, (i) in the case of the Class A warrants, Class B warrants, the April Pre-Funded Warrants and the November Pre-Funded warrants, cause the number of shares then beneficially owned by the holder, together with its affiliates and other attribution parties, to exceed 9.99% of the total number of shares of common stock then outstanding, or (ii) in the case of the April Pre-Funded Warrants and the November Pre-Funded Warrants, cause the combined voting power of our securities beneficially owned by the holder, together with its affiliates, to exceed 9.99% of the combined voting power of all of our securities then outstanding immediately after giving effect to the exercise (together, the “Ownership Caps”). As a result of the Ownership Caps, the following have been excluded from the amounts reported above as beneficially owned: (a) 380,500 shares of common stock issuable upon the exercise of Class A Warrants held by BVF and 363,810 shares of common stock issuable upon the exercise of Class A Warrants held by BVF 2 and (b) 518,856 shares of common stock issuable upon the exercise of Class B Warrants held by BVF and 385,449 shares of common stock issuable upon the exercise of Class B Warrants held by BVF 2. BVF Partners OS Ltd. (“Partners OS”), as the general partner of Trading Fund OS, may be deemed to beneficially own the securities beneficially owned by Trading Fund OS. Partners, as the general partner of BVF, BVF II, the investment manager of Trading Fund OS, and the sole member of Partners OS, may be deemed to beneficially own the securities beneficially owned by BVF, BVF II, Trading Fund OS, and the Partners Managed Account. BVF Inc., as the general partner of Partners, may be deemed to beneficially own the securities beneficially owned by Partners. Mark N. Lampert, as a director and officer of BVF Inc., may be deemed to beneficially own the securities beneficially owned by BVF Inc. Partners OS disclaims beneficial ownership of the securities beneficially owned by Trading Fund OS. Each of Partners, BVF Inc. and Mr. Lampert disclaims beneficial ownership of the securities beneficially owned by BVF, BVF II, Trading Fund OS, and the Partners Managed Account. The address of BVF, BVF II, Partners, BVF, Inc. and Mr. Lampert is 44 Montgomery St., 40th Floor, San Francisco, California 94104 and the address of Trading Fund OS and Partners OS is P.O. Box 309 Ugland House, Grand Cayman, KY1-1104, Cayman Islands.
(3) Based in part on a Schedule 13G/A filed by RA Capital Management, L.P. (“RA Capital”), Peter Kolchinsky, and Rajeev Shah on February 16, 2021. Consists of (i) 536,962 shares of common stock held by RA Capital Healthcare Fund, L.P. (the “RA Fund”), (iii) 898,873 shares of common stock issuable upon the exercise of April Pre-Funded Warrants held by the Fund, (iii) 158,127 shares of common stock issuable upon the exercise of April Pre-Funded Warrants held by the Account, (iv) 966,054 shares of common stock issuable upon the exercise of Class A Warrants held by the Fund and (v) 5,946 shares of common stock issuable upon the exercise of Class A Warrants held by the account. As a result of the Ownership Caps, 164,000 shares of common stock issuable upon the exercise of Class A Warrants held by the RA Fund have been excluded from amounts reported above as beneficially owned. RA Capital Healthcare Fund GP, LLC is the general partner of the RA Fund. The general partner of RA Capital is RA Capital Management GP, LLC, of which Dr. Kolchinsky and Mr. Shah are the controlling persons. RA Capital serves as investment adviser for the RA Fund and the Account and may be deemed a beneficial owner of any securities held by the Fund and the Account. The RA Fund has authored numerous articlesdelegated to RA Capital the sole power to vote and the sole power to dispose of all securities held in the Fund’s portfolio, including the shares of our common stock. Because the RA Fund has divested voting and investment power over the shares of our securities it holds and may not revoke that delegation on less than 61 days’ notice, the RA Fund disclaims beneficial ownership of our securities it holds. As managers of RA Capital, Dr. Kolchinsky and Mr. Shah may be deemed beneficial owners of our securities beneficially owned by RA Capital. RA Capital, Dr. Kolchinsky, and Mr. Shah disclaim beneficial ownership of our securities. The address of the RA Fund, RA Capital and Dr. Kolchinsky is c/o RA Capital Management, LLC, 200 Berkley Street, 18th Floor, Boston, MA 02116.
(4) Based in part of a Schedule 13G filed by Bain Capital Life Sciences Fund, L.P. (“BCLS”), Bain Capital Life Sciences Fund II, L.P. (“BCLS II”), and BCIP Life Sciences Associates, LP, (“BCIP LS” and, together with BCLS and BCLS II, the “Bain Capital Holders”) on December 9, 2019. Consists of (i) 566,966 shares of common stock and 270,700 shares of common stock issuable upon exercise of November Pre-Funded Warrants held by BCLS, (ii) 1,332,276 shares of common stock held by BCLS II, and (iii) 220,298 shares of common stock held by BCIP LS. As a result of the Ownership Caps and similar ownership limitations included in certain prefunded warrants to purchase common stock issued in March 2021 (the “March Pre-Funded Warrants), the following have been excluded from the amounts reported above as beneficially owned: (a) 296,266 shares of common stock issuable upon exercise of November Pre-Funded Warrants and 1,133,932 shares of common stock issuable upon exercise of Class B Warrants held by BCLS, (b) 557,143 shares of common stock issuable upon exercise of November Pre-Funded Warrants, 1,114,285 shares of common stock issuable upon exercise of Class B Warrants, and 44,571 shares of common stock issuable upon exercise of March Pre-Funded Warrants held by BCLS II, and (c) 125,891 shares of common stock issuable upon exercise of November Pre-Funded Warrants, 251,782 shares of common stock issuable upon exercise of Class B Warrants, and 5,429 shares of common stock issuable upon exercise of March Pre-Funded Warrants held by BCIP LS. Bain Capital Life Sciences Investors, LLC, (“BCLSI”), whose managers are Jeffrey Schwartz and Adam Koppel, is (i) the general partner of Bain Capital Life Sciences Partners, LP, a Cayman exempted limited partnership (“BCLSP”), which is the general partner of BCLS and (ii) the manager of Bain Capital Life Sciences Investors II, LLC, (“BCLSI II”), which is the general partner of BCLS II. Boylston Coinvestors, LLC, a Delaware limited liability company (“Boylston”), is the general partner of BCIP LS. BCLSI governs the investment strategy and decision-making process with respect to investments held by BCIP LS. As a result, each of BCLSI, Mr. Schwartz and Dr. Koppel may be deemed to share voting and dispositive power with respect to the securities held by the Bain Capital Holders. The address of each of the Bain Capital Holders, BCLSI, BCLSP, BCLSI II, Boylston, Mr. Schwartz and Dr. Koppel is 200 Clarendon Street, Boston, MA 02116.
(5) Based on a Schedule 13G/A filed by OrbiMed Advisors LLC (“Advisors”) on March 25, 2021. Consists of 1,373,493 shares of common stock held by OrbiMed Private Investments IV, LP (“OPI IV”), and 462,500 shares of common stock issuable upon the exercise of Class A and Class B warrants to purchase common stock held by OPI IV. Advisors is an investment advisor and is the Managing Member of OrbiMed Capital GP IV LLC (“GP IV”). GP IV is the sole general partner of OPI IV. As a result, Advisors and GP IV share the power to direct the vote and the disposition of the securities held by OPI IV. Advisors exercises this investment and voting power through a management committee comprised of Carl L. Gordon, Sven H. Borho and Jonathan T. Silverstein. On the basis of these relationships, GP IV and Advisors may be deemed to share beneficial ownership of the securities held by OPI IV. The address of Advisors, OPI IV, GP IV, Carl L. Gordon, Sven H. Borho and Jonathan T. Silverstein is 601 Lexington Avenue, 54th Floor, New York, NY 10022.
(6) Consists of 168,809 shares of common stock, 274,828 shares of common stock underlying options that were exercisable as of April 5, 2021 or will become exercisable within 60 days after such date, and 13,982 shares of common stock underlying restricted stock units that were vested as of April 15, 2021 or will become exercisable within 60 days after such date.
(7) Consists of shares of common stock underlying options that were exercisable as of April 5, 2020 or will become exercisable within 60 days after such date.
(8) Consists of 168,809 shares of common stock, 559,837 shares of common stock underlying options that were exercisable as of April 15, 2020 or will become exercisable within 60 days after such date, and 13,982 shares of common stock underlying restricted stock units that were vested as of April 5, 2020 or will become exercisable within 60 days after such date.
EXECUTIVE COMPENSATION
Our Compensation Committee is primarily responsible for peer-reviewed publications.establishing and reviewing our general compensation strategy, see the section captioned “Compensation Committee Processes and Procedure.”
EXECUTIVE OFFICER AND DIRECTOR COMPENSATION
Summary Compensation Table
SUMMARY COMPENSATION TABLE
The following table shows the total compensation paid or accrued during the fiscal years ended December 31, 20182020 and December 31, 20172019 to (1) the individualsindividual who served as our Chief Executive Officer during the fiscal year ended December 31, 2018,2020 and (2) our two next most highly compensated executive officers who earned more than $100,000 during the fiscal year ended December 31, 20182020 and were serving as executive officers as of such date, and (3) any individualdate. We refer to these individuals in this Proxy Statement as our Named Executive Officers.
Our Named Executive Officers for 2020 who would otherwise be includedappear in (2) above but for the fact that such individual was not serving as an executive officer of ours as of December 31, 2018. The Summary Compensation Table includes Michael Gray, M.B.A., C.P.A., David Mantus, Ph.D., and Christopher Stevens, M.D., each of whom resigned from their respective positions in connection with the Merger, and René Russo, Pharm.D., BCPS, who resigned from her positions as of November 26, 2018. In addition, we have also included are:
Paula Ragan, Ph.D., our current President, Chief Executive Officer, Corporate Secretary and Secretary following the Merger, and Director;
Adam S. Mostafa, our
current Chief Financial Officer and
Treasurer following the Merger, in the table below, notwithstanding that such persons did not serve as executive officers of the Company during the fiscal year ended December 31, 2018. These executive officers are referred to as our “named executive officers” in this proxy statement. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position (1) | | Year | | Salary
($) | | Bonus
($) (2) | | Stock
Awards
($) (3) | | Option
Awards
($) (3) | | Non-equity
Incentive Plan
Compensation
($) (4) | | All Other
Compensation
($) (5) | | Total ($) |
Paula Ragan, Ph.D. | | | | 2018 | | | | | 380,000 | | | | | — | | | | | — | | | | | 407,577 | | | | | 133,000 | | | | | 450 | | | | | 921,027 | |
President, Chief Executive Officer and Secretary | | | | 2017 | | | | | 364,000 | | | | | — | | | | | — | | | | | 303,422 | | | | | 89,180 | | | | | 576 | | | | | 757,178 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Adam S. Mostafa (6) | | | | 2018 | | | | | 109,285 | | | | | — | | | | | — | | | | | 480,789 | | | | | 38,250 | | | | | 90 | | | | | 628,414 | |
Chief Financial Officer and Treasurer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Michael Gray, M.B.A., C.P.A. | | | | 2018 | | | | | 405,193 | | | | | 181,136 | | | | | 1,030,000 | | | | | 1,310,947 | | | | | — | | | | | — | | | | | 2,927,276 | |
Former President, Chief Executive Officer and Chief Financial Officer | | | | 2017 | | | | | 363,077 | | | | | 231,525 | | | | | — | | | | | 262,090 | | | | | — | | | | | — | | | | | 856,692 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
David Mantus, Ph.D. | | | | 2018 | | | | | 358,750 | | | | | — | | | | | — | | | | | 595,885 | | | | | — | | | | | 120,250 | | | | | 1,074,885 | |
Former Chief Development Officer | | | | 2017 | | | | | 313,750 | | | | | — | | | | | — | | | | | 117,926 | | | | | — | | | | | — | | | | | 431,676 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
René Russo, Pharm.D., BCPS | | | | 2018 | | | | | 405,866 | | | | | — | | | | | — | | | | | 1,906,833 | | | | | — | | | | | 1,046,250 | | | | | 3,358,949 | |
Former President and Chief Executive Officer | | | | 2017 | | | | | 388,750 | | | | | 254,100 | | | | | — | | | | | 524,182 | | | | | — | | | | | — | | | | | 1,167,032 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | |
Christopher Stevens, M.D. | | | | 2018 | | | | | 380,000 | | | | | — | | | | | — | | | | | 595,885 | | | | | — | | | | | 329,333 | | | | | 1,305,218 | |
Former Chief Medical Officer | | | | 2017 | | | | | 380,000 | | | | | 159,600 | | | | | — | | | | | 117,937 | | | | | — | | | | | — | | | | | 657,537 | |
Derek Meisner, J.D., General Counsel
SUMMARY COMPENSATION TABLE
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
| Name and Principal Position | | Year | | Salary ($) | | Bonus (1) ($) | | Stock Awards ($) (2) (3) | | Option Awards ($) (2) | | Non-Equity Incentive Plan Compensation ($) (4) | | All Other
Compensation
($) | | Total ($) | |
Paula Ragan, Ph.D. President, Chief Executive Officer, Corporate Secretary and Director | | 2020 | | 543,400 | | | — | | | 1,690,827 | | | — | | | 271,700 | | | 8,169 | | (6) | 2,514,096 | | |
| | 2019 | | 492,276 | | | — | | | 824,938 | | | 893,460 | | | 286,000 | | | 1,177 | | | 2,497,851 | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | |
Adam S. Mostafa Chief Financial Officer and Treasurer | | 2020 | | 400,000 | | | — | | | 612,950 | | | — | | | 163,600 | | | 564 | | (6) | 1,177,114 | | |
| | 2019 | | 372,275 | | | — | | | 155,819 | | | 168,771 | | | 168,341 | | | 1,025 | | | 866,231 | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | |
Derek Meisner General Counsel | | 2020 | | 400,000 | | (5) | 67,500 | | | 471,500 | | | — | | | 162,400 | | | 11,964 | | (6) | 1,113,364 | | |
| | | | | |
| (1) | The amounts reported in this table (i) for Dr. Ragan and Mr. Mostafa, represent amounts earned for service as an executive officer of X4, and (ii) for Mr. Gray, Dr. Mantus, Dr. Russo and Dr. Stevens, represent amounts earned for service as an executive officer of Arsanis. |
(2) | Except where noted otherwise, the amounts reported in the “Bonus” column reflect discretionary annual cash bonuses paida “Start Bonus” payable to Arsanis’s executive officers for their performance.
Mr. Meisner pursuant to his employment agreement totaling $135,000, half of which was payable in 2019 and half of which was payable in 2020. |
(3)(2) | The amounts reported in the “Stock Awards” column and “Option Awards” column reflect the aggregate fair value of stock-based compensation awarded during the year computed in accordance with the provisions of Financial Accounting Standards Board, Accounting Standards Codification Topic 718, or ASC 718. For Dr. Ragan and Mr. Mostafa, see Note 11 to the X4 consolidated financial statements in our Amendment No. 1 to Current Report on Form8-K/A filed with the SEC on April 3, 2019, and for Mr. Gray, Dr. Mantus, Dr. Russo and |
| Dr. Stevens, seeSee Note 12 to the Arsanis consolidated financial statements in Arsanis’sX4 Pharmaceuticals Inc. Annual Report on Form10-K for the year ended December 31, 20182020 filed with the SEC on March 11, 2019,19, 2021, regarding assumptions underlying the valuation of equity awards. |
| (3) | The amounts reported in the “Stock Awards” column reflect the grant date fair value for performance-based restricted stock units (“PRSUs”) granted to Dr. Ragan, Mr. Mostafa, and Mr. Meisner in fiscal 2020, which are reported based upon the probable outcome of the performance conditions on the grant date. The value of the PRSUs granted in fiscal 2020, assuming achievement of the maximum performance level, would have been: Dr. Ragan: $1,690,827, Mr. Mostafa: $612,950, and Mr. Meisner: $471,500. |
| (4) | For 2018,2020, represents amounts earned for the12-month period from January 1, 20182020 to December 31, 20182020 and paid in 2019,2021, and excludes payments made in 20182020 that were earned in 2017.2019. For 2017,2019, represents amounts earned for the12-month period from January 1, 20172019 to December 31, 20172019 and paid in 2018,2020, and excludes payments made in 20172020 that were earned in 2016. 2019. |
| (5) | The amounts reported inMr. Meisner’s employment with X4 began on November 4, 2019. Accordingly, his salary for 2019 reflects the “All Other Compensation” column reflect for 2018, $450 for Dr. Ragan and $90 for Mr. Mostafa, and for 2017, $576 for Dr. Ragan,amount he earned from November 4, 2019 through the end of the calendar year.
|
| (6) | Reflects $564 in life insurance premiums X4the Company paid for a term life insurance policy to benefit these executive officerseach of Dr. Ragan, Mr. Mostafa, and Mr. Meisner, respectively, with a face value of $300,000 and 401(k) matching contributions of $7,605 and $11,400 for 2018, severance paid to René Russo in connection with her separation as Arsanis’s PresidentDr. Ragan and CEO and retention bonus amounts accrued as of December 31, 2018 for David Mantus, Ph.D. and Christopher Stevens, M.D.Mr. Meisner, respectively. |
(6) | Mr. Mostafa’s employment with X4 began on September 5, 2018.
|
Outstanding Equity Awards at Fiscal Year End 2018
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
The following table sets forthshows for the fiscal year ended December 31, 2020, certain information regarding outstanding equity awards which consist of X4 stock options and X4 restricted stock, held by Dr. Ragan and Mr. Mostafa as of Decemberat fiscal year end for the Named Executive Officers.
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2018. The share and per share amounts included in this table have not been adjusted to reflect the conversion of the shares in the Merger based on the exchange ratio of 0.5702 and do not reflect the Reverse Stock Split. | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards (1) | | |
Name | | Number of
Shares of X4
Common
Stock
Underlying
Unexercised
Options (#)
Exercisable | | Number of
Shares of X4
Common
Stock
Underlying
Unexercised
Options (#)
Unexercisable | | Option
Exercise
Price
($) | | Option
Expiration
Date |
Paula Ragan, Ph.D. | | | | 1,059,935 | (2) | | | | — | (2) | | | | 0.65 | | | | | 1/18/2026 | |
| | | | 329,906 | (3) | | | | 358,594 | (3) | | | | 0.65 | | | | | 1/23/2027 | |
| | | | — | (4) | | | | 843,496 | (4) | | | | 0.67 | | | | | 1/30/2028 | |
Adam S. Mostafa | | | | — | (5) | | | | 659,067 | (5) | | | | 0.99 | | | | | 10/3/2028 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | Option Awards | | Stock Awards |
| Name | | Grant Date | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Option Exercise Price ($) | | Option
Expiration
Date | | Equity
incentive
plan awards:
number of
unearned
shares, units
or other
rights that
have not
vested
(#) | | Equity
incentive
plan awards:
market or
payout value
of unearned
shares, units
or other
rights that
have not
vested
($) | | Performance-based restricted stock awards:
number of shares or units
of stock that
have not
vested
(#) | | Performance-based restricted stock awards:
market or payout value of shares or units
of stock that
have not
vested
($) |
| Paula Ragan, Ph.D. | | 1/19/2016 | (1) | 100,729 | | 0 | | 6.84 | | 1/18/2026 | | | | | | | | |
| | 1/24/2017 | (1) | 64,067 | (2) | 1,363 | (2) | 6.84 | | 1/23/2027 | | | | | | | | |
| | 1/31/2018 | (1) | 60,120 | (3) | 20,040 | (3) | 7.08 | | 1/30/2028 | | | | | | | | |
| | 6/17/2019 | (4) | 31,460 | (5) | 52,433 | (5) | 14.75 | | 6/16/2029 | | | | | | | | |
| | 6/17/2019 | (4) | | | | | | | | | 41,946 | (6) | 269,713 | | | | |
| | 4/13/2020 | (4) | | | | | | | | | 59,768 | (11) | 384,308 | | 89,652 | (12) | 576,462 |
| | | | |
| Adam S. Mostafa | | 10/4/2018 | (1) | 36,536 | (8) | 26,097 | (8) | 10.44 | | 10/3/2028 | | | | | | | | |
| | 6/17/2019 | (4) | 5,943 | (5) | 9,904 | (5) | 14.75 | | 6/16/2029 | | | | | | | | |
| | 6/17/2019 | (4) | | | | | | | | | 7,923 | (7) | 50,945 | | | | |
| | 4/13/2020 | (4) | | | | | | | | | 21,666 | (11) | 139,312 | | 32,500 | (12) | 208,975 |
| | | | |
| Derek Meisner | | 11/26/2019 | (9) | 16,042 | (9) | 38,958 | (10) | 11.03 | | 11/25/2029 | | | | | | | | |
| | 4/13/2020 | (4) | | | | | | | | | 16,666 | (11) | 107,162 | | 25,000 | (12) | 160,750 |
| | | | | |
| (1) | Each of the outstanding equity awards in this tableThis award was granted pursuant to the X4 2015 Employee, Director and Consultant Equity Incentive Plan, as amended.
Plan. |
| | | | | |
| (2) | Represents an option to purchase shares of X4 common stock granted on January 19, 2016. As of the date of grant, 33.33% of the shares underlying the option had vested and 2.0833% of the shares underlying the option vested, subject to continued service, on the 15th of each month thereafter until September 15, 2018.
|
(3) | Represents an option to purchase shares of X4 common stock granted on January 24, 2017. The shares underlying this option vest, subject to continued service, as follows: 25% of the shares vested on January 24, 2018 with the remainder vesting over the next three years in equal monthly installments on the grant day of each succeeding calendar month thereafter.
|
(4) | Represents an option to purchase shares of X4 common stock granted on January 1, 2018.
| | | | |
| (3) | The shares underlying this option vest, subject to continued service, as follows: 25% of the shares vested on January 1, 2019 with the remainder vesting over the next three years in equal monthly installments on the grant24th day of each succeeding calendar month thereafter. |
| | | | | |
| (4) | This award was granted pursuant to the 2017 Plan, as amended. |
| | | | | |
| (5) | 25% of the shares subject to the option shall vest on June 17, 2020, with the remainder vesting in equal installments of 2.0833% of the shares subject to the option on the last day of each month thereafter for a period of 36 months, subject to continued service through each such date. |
| | | | | |
| (6) | Represents an optionrestricted stock units, with each restricted stock unit representing the contingent right to purchase sharesreceive one share of X4 common stock granted on September 5, 2018. the applicable vesting date. No amount was paid upon grant of the restricted stock units. The restricted stock units vest, subject to continued service, in four equal annual installments on May 31, 2020, 2021, 2022 and 2023. |
| | | | | |
| (7) | Represents restricted stock units, with each restricted stock unit representing the contingent right to receive one share of common stock on the applicable vesting date. No amount was paid upon grant of the restricted stock units. The restricted stock units vest, subject to continued service, in four equal annual installments on June 30, 2020, 2021, 2022 and 2023. |
| | | | | |
| (8) | The shares underlying this option vest, subject to continued service, as follows: 25% of the shares vest on September 5, 2019, with the remainder vesting over the next three years in equal monthly installments on the grant5th day of each succeeding calendar month thereafter. |
The following table sets forth information regarding outstanding equity awards, which consist of Arsanis stock options and Arsanis restricted stock, held by Mr. Gray, Dr. Mantus, Dr. Russo and Dr. Stevens as of December 31, 2018. The share and per share amounts included in this table do not reflect the Reverse Stock Split.
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Option Awards | | Restricted
Stock Awards |
| Name | | Number of
Shares of
Arsanis
Common
Stock
Underlying
Unexercised
Options (#)
Exercisable | | Number of
Shares of
Arsanis
Common
Stock
Underlying
Unexercised
Options (#)
Unexercisable | | Option
Exercise
Price ($) | | Option
Expiration
Date | | Number of Shares of
Restricted Arsanis
Common Stock |
Michael P. Gray, M.B.A., C.P.A. | | | | — | | | | | — | | | | | — | | | | | — | | | | | 250,000 | (13)(14) |
| | | | 35,258 | | | | | 16,016 | (1)(14) | | | $ | 9.39 | | | | | 7/20/2026 | | | | | — | |
| | | | 36,628 | | | | | 61,037 | (2)(14) | | | $ | 4.00 | | | | | 6/18/2027 | | | | | — | |
| | | | — | | | | | 110,000 | (3)(14) | | | $ | 17.34 | | | | | 3/7/2028 | | | | | — | |
David Mantus, Ph.D. | | | | 11,599 | | | | | 3,050 | (4) | | | $ | 8.33 | | | | | 2/3/2026 | | | | | — | |
| | | | 7,327 | | | | | 4,392 | (5) | | | $ | 9.39 | | | | | 7/20/2026 | | | | | — | |
| | | | 16,481 | | | | | 27,468 | (6) | | | $ | 4.00 | | | | | 6/18/2027 | | | | | — | |
| | | | — | | | | | 50,000 | (7) | | | $ | 17.34 | | | | | 3/7/2028 | | | | | — | |
René Russo, Pharm.D., BCPS | | | | 80,889 | | | | | — | (8) | | | $ | 8.20 | | | | | 7/21/2025 | | | | | — | |
| | | | 47,757 | | | | | — | (8) | | | $ | 9.39 | | | | | 7/20/2026 | | | | | — | |
| | | | 195,331 | | | | | — | (8) | | | $ | 4.00 | | | | | 6/18/2027 | | | | | — | |
| | | | 160,000 | | | | | — | (8) | | | $ | 17.34 | | | | | 3/7/2028 | | | | | — | |
Christopher Stevens, M.D. | | | | 16,487 | | | | | 9,882 | (9)(10) | | | $ | 9.39 | | | | | 7/20/2026 | | | | | — | |
| | | | 16,482 | | | | | 27,466 | (11)(10) | | | $ | 4.00 | | | | | 6/18/2027 | | | | | — | |
| | | | — | | | | | 50,000 | (12)(10) | | | $ | 17.34 | | | | | 3/7/2028 | | | | | — | |
(1) | | | | | |
| (9) | This award was granted under the 2019 Plan. |
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| (10) | The shares underlying this option award vests over four years, withvest, subject to continued service, as follows: 25% of the shares underlyingsubject to the option vestedwere to vest on March 1, 2017 and 2.0833%November 4, 2020, with the remainder vesting in equal installments of 2.083% of the shares vesting monthlysubject to the option on the last day of each month thereafter for a period of 36 months. |
| | | | | |
| (11) | Represents performance-based restricted stock units for which the performance criteria has been achieved, as certified by the Compensation Committee of the Board on August 14, 2020 and August 17, 2020, and which vest in four equal installments, subject to continued service. |
(2) | This option award vests over four years, with 25% of the shares underlying the option vestedservice, on June 19, 2018August 14, 2021, August 17, 2021, August 14, 2022 and 2.0833% of the shares vesting monthly thereafter, subject to continued service.
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(3) | This option award vests over four years, with 25% of the shares underlying the option vested on March 7, 2019 and 2.0833% of the shares vesting monthly thereafter, subject to continued service.
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(4) | This option award vests over four years, with 25% of the shares underlying the option vested on October 12, 2016 and 2.0833% of the shares vesting monthly thereafter, subject to continued service.
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(5) | This option award vests over four years, with 25% of the shares underlying the option vested on June 1, 2017 and 2.0833% of the shares vesting monthly thereafter, subject to continued service.
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(6) | This option award vests over four years, with 25% of the shares underlying the option vested on June 19, 2018 and 2.0833% of the shares vesting monthly thereafter, subject to continued service.
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(7) | This option award vests over four years, with 25% of the shares underlying the option vested on March 7, 2019 and 2.0833% of the shares vesting monthly thereafter, subject to continued service.
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(8) | In connection with Dr. Russo’s stepping down from her position as President and Chief Executive Officer of Arsanis, all unvested stock options held by Dr. Russo vested in full upon her letter agreement with the company, dated as of November 26, 2018, becoming effective and irrevocable as of December 3, 2018. See “Narrative Disclosure to Summary Compensation Table—Arsanis Compensation—Employment and Change in Control Arrangements—Letter Agreement for Dr. René Russo” below for more information.
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(9) | This option award vests over four years, with 25% of the shares underlying the option vested on July 20, 2017 and 2.0833% of the shares vesting monthly thereafter, subject to continued service.
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(10) | In connection with Dr. Stevens’s stepping down from his position as Chief Medical Officer of Arsanis, all unvested stock options held by Dr. Stevens vested in full upon his letter agreement with the company, dated
August 17, 2022. |
| as of January 15, 2019, and becoming effective and irrevocable as of January 22, 2019. See “Narrative Disclosure to Summary Compensation Table—Arsanis Compensation—Employment and Change in Control Arrangements—Letter Agreement for Dr. Christopher Stevens” below for more information. | | | | |
(11) | This option award vests over four years, with 25% of the shares underlying the option vested on June 19, 2018 and 2.0833% of the shares vesting monthly thereafter, subject to continued service.
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| (12) | This option award vests over four years, with 25% of the shares underlying the option vested on March 7, 2019 and 2.0833% of the shares vesting monthly thereafter, subject to continued service.
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(13) | ThisRepresents performance-based restricted stock award vests over four years, with 25% ofunits for which the shares underlying the option vesting on November 27, 2019 and 2.0833% of the shares vesting monthly thereafter, subject to continued service.
performance criteria has not been achieved. |
(14) | In connection with Mr. Gray stepping down from his position as President and Chief Executive Officer of Arsanis, all unvested stock options and restricted stock held by Mr. Gray vested in full in connection with the closing of the Merger. See “Narrative Disclosure to Summary Compensation Table—Arsanis Compensation—Employment and Change in Control Arrangements—2018 Amended and Restated Employment Agreement for Michael P. Gray” below for more information.
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Narrative Disclosure to Summary Compensation Table
X4 Compensation
NARRATIVETO SUMMARY COMPENSATION TABLE
The material terms of the elements of
X4’sour executive compensation program
for 2018 are described below.
Each
named executive officer’sNamed Executive Officer’s base salary is a fixed component of annual compensation for performing specific duties and functions, and has been established by our
board of directorsBoard taking into account each individual’s role, responsibilities, skills, and experience.
In February 2020, the Compensation Committee increased Dr. Ragan’s base salary for 2020 to $543,400 and increased Mr. Mostafa’s base salary for 2020 to $400,000.
Bonus
Pursuant to his employment agreement, Mr. Meisner was eligible to receive a “Start Bonus” in connection with the commencement of his employment equal to $135,000, $67,500 of which was payable in 2019 and $67,500 of which was payable in March 2020. The payment of the bonus is subject to recoupment if Mr. Meisner’s service is terminated before the one-year anniversary of the payment date.
Non-Equity Incentive Plan Compensation
Our annual bonus program is intended to reward our
named executive officersNamed Executive Officers for meeting objective or subjective individual and/or company-wide performance goals for a fiscal year. For
20182020 and
2017, X4’s named executive officers2019, our Named Executive Officers received incentive compensation based upon the
X4 board of directors’Board or
X4’s compensation committee’sCompensation Committee’s determination of their respective achievement of and performance with respect to corporate objectives.
Dr. Ragan’s, Mr. Mostafa’s, and Mr. Meisner’s bonus targets were 50%, 40% and 40%, respectively, of their respective base salaries.
The impact of the COVID-19 pandemic continues to be difficult to assess or predict and depends on numerous evolving factors that we may not be able to accurately predict or effectively respond to, including, without limitation: the duration and scope of the outbreak; actions taken by governments, businesses, and individuals in response to the outbreak; the effect on economic activity and actions taken in response. While COVID-19 did not have a significant impact on our results of operations for the 2020 fiscal year, the impact of the global pandemic on our business and financial outlook are currently unknown. Continued uncertainty associated with the pandemic could impact our future results. Despite the uncertainties associated with the pandemic, we did not change our performance metrics under our incentive programs in light of COVID-19.
In February 2021, the Compensation Committee completed an evaluation of our overall performance for 2020 and the Named Executive Officers’ respective contributions in achieving this performance. The Compensation Committee’s review was based on company performance against corporate objectives, including advancing research and clinical development of mavorixafor, expanding the pipeline of other assets, advancing CXCR4 molecules and other assets to further expand our pipeline, maintaining business sustainability, building organizational strength, and preparing the commercialization of medicines for commercial use. Following such review, the Compensation Committee determined that the corporate performance objective were achieved at 100%, and Dr. Ragan had earned 100% of her target bonus for 2020, equal to a bonus of $271,700; Mr. Mostafa had earned 102% of his target bonus for 2020, equal to a bonus of $163,600; and Mr. Meisner had earned 102% of his target bonus for 2020, equal to a bonus of $162,400.
Long-Term Equity Incentives
Our equity grant program is intended to align the interests of our
named executive officersNamed Executive Officers with those of our stockholders and to motivate them to make important contributions to our performance.
In April 2020, the Compensation Committee granted PRSUs to our Named Executive Officers, see the section captioned “Outstanding Equity Awards at Fiscal Year-End.” The PRSUs are divided into four equal tranches, with each tranche having
its own separate corporate-based performance goal and service-based vesting conditions. The initial service-based vesting condition for each tranche requires continued service through the date the applicable corporate-based performance goal is certified as achieved by our Compensation Committee, and the remaining service-based vesting conditions require continued services through the first and second anniversaries of the date the applicable corporate-based performance goal is achieved. As of December 31, 2020, two of the four corporate-based performance goals have been achieved. In addition, 100% of the unvested portion of the PRSUs will vest upon the termination of the NEO’s employment by the Company without “cause” (as defined in the 2017 Plan) upon or at any time within 12 months following a “change of control” (as defined in the 2017 Plan), subject to the terms of each individual’s respective employment agreement.
Employment and Change in Control Arrangements
Paula Ragan, Ph.D.
On June 23, 2015, X4 entered into an executive employment agreement with Paula Ragan, Ph.D. Pursuant to the executive employment agreement, Dr. Ragan’s compensation consisted of base salary, annual bonus as determined by the X4 board of directors, equity grants as determined by the X4 board of directors, fringe benefits, vacation and reimbursement of ordinary and reasonableout-of-pocket expenses. In March 2017, Dr. Ragan’s base salary was increased from $350,000 to $364,000, and in March 2018, Dr. Ragan’s base salary was increased to $380,000. Dr. Ragan had an annual target bonus for 2017 and 2018 set at 35% of base salary.
On March 13, 2019, in connection with the closing of the Merger, we entered into an amended and restated executive employment agreement with PaulaDr. Ragan, Ph.D., pursuant to which Dr. Ragan agreed to continue
serving as our Chief Executive Officer. Pursuant to the agreement, Dr. Ragan’s compensation consists of base salary at an annual rate approved by the board of directorsour Board or an appropriate committee thereof, an annuala bonus as determined by our Board (provided that the board of directors, buttarget for such bonus shall be not less than 25% of Dr. Ragan’s annual base salary,salary), fringe benefits, vacation, reimbursement of ordinary and reasonableout-of-pocket expenses and coverage under our Directors’ and Officers’, or D&O, insurance policies, subject to the terms and conditions of such policies. Dr. Ragan’s 2020 base salary is currently equal to $520,000,was $543,000, with an annual target bonus set at 50% of her annual base salary, subject to review and adjustment each year by the board of directors.
Ifdirectors and in February 2021, Dr. Ragan’s 2021 base salary was set at $562,420.
Pursuant to her amended and restated executive employment agreement, as amended in February 2020, if Dr. Ragan’s employment is terminated for any reason, Dr. Ragan will be entitled to receive her accrued but unpaid salary, accrued but unused vacation days, the amount of any properly incurred expenses prior to termination not yet reimbursed and other benefits. In addition to the foregoing, if Dr. Ragan’s employment is terminated by us without cause or if Dr. Ragan resigns for good reason, each term as defined in the agreement, Dr. Ragan will be entitled to the following: (a) a continuation of base salary for 12 months, (b) apro-rata pro-rated portion of Dr. Ragan’sher at-target annual bonus for the calendar year in which the termination occurs, based on the period worked by Dr. Ragan during such calendar year prior to termination, (c) so long as Dr. Ragan is eligible for coverage under our health insurance plan, elects coverage, was covered prior to termination, and elects to exercise her rights under COBRA to continue participation in such plan, we will pay the normal share of costs we pay for current employees under such plan until the earlier of 12 months from the date of Dr. Ragan’s termination, or the date Dr. Ragan is eligible to receive health benefits through another employer, and (d) Dr. Ragan will become vested in the additional number of outstanding time-based equity awards granted to Dr. Ragan by us that would have otherwise vested had Dr. Ragan remained employed for an additional 12 months after her termination date. In addition, if Dr. Ragan’s employment is terminated without cause or if Dr. Ragan resigns for good reason within theone-year period following a change of control, as that term is defined in the agreement, Dr. Ragan will be entitled to the following: (a) a continuation of base salary for 18 months, (b) her full annual bonus for the calendar year in which the termination occurs, (c) so long as Dr. Ragan is eligible for coverage under our health insurance plan, elects coverage, was covered prior to termination, and elects to exercise her rights under COBRA to continue participation in such plan, we will pay the normal share of costs we pay for current employees under such plan until the earlier of 12 months from the date of Dr. Ragan’s termination, or the date Dr. Ragan is eligible to receive health benefits through another employer, and (d) automatic vesting in all outstanding time-based equity awards granted to Dr. Ragan by us, subject to the terms and conditions of the agreement. As a condition to receiving the foregoing severance benefits, Dr. Ragan must execute and not revoke a separation agreement in a form acceptable to us and which will include a complete release of claims and terms related to non-disparagement, non-competition, confidentiality and cooperation.
In connection with the execution of her amended and restated employment agreement, Dr. Ragan also agreed to continue to abide by the terms of her
non-competition,non-solicitation,non-disclosure and intellectual property agreement.
Adam S. Mostafa
On July 23, 2018, X4 entered into an executive employment agreement with Adam S. Mostafa, pursuant to which Mr. Mostafa agreed to serve as X4’s Chief Financial Officer effective as of September 5, 2018. Pursuant to the executive employment agreement, Mr. Mostafa’s compensation consisted of base salary, potential annual bonus as determined by the X4 board of directors, a potential equity grant subject to approval by the X4 board of directors, fringe benefits, vacation and reimbursement of ordinary and reasonableout-of-pocket expenses. Mr. Mostafa’s initial base salary, which is subject to review and adjustment, was $340,000. The agreement provided for X4 to pay annual bonuses at X4’s sole discretion, as determined by the X4 board of directors, with an annual target bonus set at 35% of base salary. X4 also agreed to grant Mr. Mostafa an option to purchase 659,067 shares of X4 common stock (which share amount has not been adjusted to reflect the conversion of the shares in the Merger based on the exchange ratio of 0.5702 and does not reflect the Reverse Stock Split), subject to approval by the X4 board of directors and subject to certain vesting conditions, which option was granted on October 19, 2018.
On March 13, 2019, in connection with the closing of the Merger, we entered into an amended and restated executive employment agreement with Adam S.Mr. Mostafa, pursuant to which Mr. Mostafa agreed to continue serving as our Chief Financial Officer. Pursuant to the agreement, Mr. Mostafa’s compensation consists of base salary at an annual rate approved by the board of directorsour Board or an appropriate committee thereof, an annual bonus as determined by our Board (provided that the board of directors buttarget for such bonus shall not be less than 25% of Mr. Mostafa’s annual base salary,salary), fringe benefits, vacation, reimbursement of ordinary and reasonableout-of-pocket expenses and coverage under our D&O insurance policies, subject to the terms and conditions of such policies. Mr. Mostafa’s base salary is currently equal to $380,000,in 2020 was $400,000, with an annual target bonus set at 40% of his annual base salary, subject to review and adjustment each year by the board of directors.Board and in February 2021, Mr. Mostafa’s 2021 base salary was set at $420,000.
Pursuant to his amended and restated executive employment agreement, as amended in February 2020, if Mr. Mostafa’s employment is terminated for any reason, Mr. Mostafa is entitled to receive his accrued but unpaid salary, accrued but unused vacation days, the amount of any properly incurred expenses prior to termination not yet reimbursed and other benefits. In addition to the foregoing, if Mr. Mostafa’s employment is terminated by us without cause or if Mr. Mostafa resigns for good reason, each term as defined in the agreement, Mr. Mostafa will be entitled to the following: (a) a continuation of base salary for six months, (b) apro-rata pro-rated portion of Mr. Mostafa’sat-target annual bonus for the calendar year in which the termination occurs based on the period worked by Mr. Mostafa during such calendar year prior to termination, (c) so long as Mr. Mostafa is eligible for coverage under our health insurance plan, elects coverage, was covered prior to termination, and elects to exercise his rights under COBRA to continue participation in such plan, we will pay the normal share of costs we pay for current employees under such plan until the earlier of six months from the date of Mr. Mostafa’s termination or the date Mr. Mostafa is eligible to receive health benefits through another employer, and (d) Mr. Mostafa will become vested in the additional number of outstanding time-based equity awards granted to Mr. Mostafa by us that would have otherwise vested had Mr. Mostafa remained employed for an additional six months after his termination date. In addition, if Mr. Mostafa’s employment is terminated without cause or if Mr. Mostafa resigns for good reason within theone-year period following a change of control, as that term is defined in the agreement, Mr. Mostafa will be entitled to the following: (a) a continuation of base salary for 12 months, (b) Mr. Mostafa’s full annual bonus for the calendar year in which the termination occurs, (c) so long as Mr. Mostafa is eligible for coverage under our health insurance plan, elects coverage, was covered prior to termination, and elects to exercise his rights under COBRA to continue participation in such plan, we will pay the normal share of costs we pay for current employees under such plan until the earlier of six months from the date of Mr. Mostafa’s termination or the date Mr. Mostafa is eligible to receive health benefits through another employer, and (d) automatic vesting in all outstanding time-based equity awards granted to Mr. Mostafa by us, subject to the terms and conditions of the agreement. As a condition to receiving the foregoing severance benefits, Mr. Mostafa must execute and not revoke a separation agreement in a form acceptable to us and which will include a complete release of claims and terms related to non-disparagement, non-competition, confidentiality and cooperation.
In connection with the execution of his amended and restated employment agreement, Mr. Mostafa agreed to continue to abide by the terms of his
non-competition,non-solicitation,non-disclosure and intellectual property agreement.
E. Lynne Kelley, M.D.
On April 22, 2019, we entered into an
Derek Meisner
Pursuant to his amended and restated executive employment agreement,
with E. Lynne Kelley, M.D., pursuant to which Dr. Kelley agreed to serve as
our Chief Medical Officer commencing on April 24, 2019. Pursuant to the executive employment agreement, Dr. Kelley’s compensation consists ofamended in February 2020, Mr. Meisner’s annual base salary
potentialfor 2020 was $400,000, and he is eligible for an annual
bonus as determined by the board of directors, a potential equity grant subject to approval by the board of directors, fringe benefits, vacation and reimbursement of ordinary and reasonableout-of-pocket expenses. Dr. Kelley’s initial base salary, which is subject to review and adjustment, is $410,000. The agreement provides for theincentive payment
of annual bonuses of upequal to 40% of
his base salary. In February 2021, Mr. Meisner’s 2021 base salary
as determinedwas set at
our sole discretion. We also agreed to grant Dr. Kelley an option to purchase 37,170 shares of common stock, subject to approval by the board of directors and subject to certain vesting conditions, which option was granted on April 24, 2019.$418,000.
If Dr. Kelley’sMr. Meisner’s employment is terminated for any reason, Dr. KelleyMr. Meisner is entitled to receive herhis accrued but unpaid salary, accrued but unused vacation days, the amount of any properly incurred expenses prior to termination not yet reimbursed and other benefits. In addition to the foregoing, if Dr. Kelley’sMr. Meisner’s employment is terminated by us without cause or if Dr. KelleyMr. Meisner resigns for good reason, each term as defined in the agreement, Dr. KelleyMr. Meisner will be entitled to the following: (a) a continuation of base salary for six months, (b) apro-rata pro-rated portion of Dr. Kelley’sMr. Meisner’s at-target annual bonus for the calendar year in which the termination occurs based on the period worked by Dr. KelleyMr. Meisner during such calendar year prior to termination, (c) so long as Dr. KelleyMr. Meisner is eligible for coverage under our health insurance plan, elects coverage, was covered prior to termination, and elects to exercise herhis rights under COBRA to continue participation in such plan, we will pay the normal share of costs we pay for current employees under such plan until the earlier of six months from the date of Dr. Kelley’sMr. Meisner’s termination or the date Dr. KelleyMr. Meisner is eligible to receive health benefits through another employer, and (d) Dr. KelleyMr. Meisner will become vested in the additional number of outstanding time-based equity awards granted to Dr. KelleyMr. Meisner by us that would have otherwise vested had Dr. KelleyMr. Meisner remained employed for an additional six months after herhis termination date. In addition, if Dr. Kelley’sMr. Meisner’s employment is terminated without cause or if Dr. KelleyMr. Meisner resigns for good reason within theone-year period following a change of control, as that term is defined in the agreement, Dr. KelleyMr. Meisner will be entitled to the following: (a) a continuation of base salary for 12 months, (b) Mr. Meisner’s full annual bonus for the calendar year in which the termination occurs, (c) so long as Mr. Meisner is eligible for coverage under our health insurance plan, elects coverage, was covered prior to termination, and elects to exercise his rights under COBRA to continue participation in such plan, we will pay the normal share of costs we pay for current employees under such plan until the earlier of six months from the date of Mr. Meisner’s termination or the date Mr. Meisner is eligible to receive health benefits through another employer, and (d) automatic vesting in all outstanding time-based equity awards granted to Dr. KelleyMr. Meisner by us, subject to the terms and conditions of the agreement. Dr. Kelley also entered intoAs anon-competition,non-solicitation,non-disclosure condition to receiving the foregoing severance benefits, Mr. Meisner must execute and intellectual propertynot revoke a separation agreement with us.in a form acceptable to us and which will include a complete release of claims and terms related to non-disparagement, non-competition, confidentiality and cooperation.
See the section captioned “Long-Term Equity Incentives” for vesting acceleration applicable to PRSUs held by our Named Executive Officers.
We maintain a defined contribution retirement plan that provides eligible U.S. employees with an opportunity to save for retirement on a
tax-advantaged basis. Eligible employees may defer eligible compensation on a
pre-tax basis, up to the statutorily prescribed annual limits on contributions under
the Internal Revenue Code of 1986, as amended, or the Code. Contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participants’ directions. Employees are immediately and fully vested in their contributions. The 401(k) plan is intended to be qualified under Section 401(a) of the Code with the 401(k) plan’s related trust intended to be tax exempt under Section 501(a) of the Code. As a
tax-qualified retirement plan, contributions to the 401(k) plan and earnings on those contributions are not taxable to the employees until distributed from the 401(k) plan.
Health and Welfare Benefits
All of our full-time employees and certain of our part-time employees are eligible to participate in our
employeehealth and welfare benefit plans, including our medical, dental, life and long-term disability insurance
plans, in each case on the same basis as all of our other employees.Arsanis Compensation
The material terms of the elements of Arsanis’s executive compensation program for 2018 are described below. The shareplans. Our health and per share amounts included in this sectionwelfare benefit plans do not reflect the Reverse Stock Split.
Arsanis’s compensation committee set base salaries and bonuses and grants equity incentive awards to its executive officers. In setting base salaries and bonuses and granting equity incentive awards, Arsanis’s compensation committee considered compensation for comparable positionsdiscriminate in the market, the historical compensation levels of its executives, individual and corporate performance as compared to its expectations and objectives, its desire to motivate its employees to achieve short- and long-term results that are in the best interests of its stockholders, and a long-term commitment to the company. As part of this process, Mr. Gray, as Arsanis’s president and chief executive officer, prepared performance evaluations for the other executive officers and recommended annual salary increases, annual stock option awards and cash bonuses to the compensation committee. The compensation committee conducted a performance evaluation of Mr. Gray. The compensation committee consulted with the board of directors as to the achievement of corporate objectives that drive contingent compensation awards.
The compensation committee has the authority to retain compensation consultants and other outside advisors to assist in the evaluation of executive officer compensation.
Base Salary
For 2017, the annualized base salary of each of Arsanis’s named executive officers was initially $350,000 for Mr. Gray, $310,000 for Dr. Mantus, $380,000 for Dr. Russo and $380,000 for Dr. Stevens. In September and October 2017, the board of directors and the compensation committee of the board of directors approved increases in the annualized base salaries of Dr. Russo, Mr. Gray and Mr. Mantus to $450,000, $400,000 and $340,000, respectively, in each case subject to and effective upon the closing of Arsanis’s initial public offering and, in the case of Mr. Gray’s increase, to be retroactive to September 27, 2017, which was the effective date of Mr. Gray’s promotion to the role of Chief Operating Officer and Chief Financial Officer. Mr. Gray previously served as Arsanis’s Chief Financial Officer and Chief Business Officer. In June 2018, Arsanis’s compensation committee approved an increase to the annualized base salary of Dr. Mantus to $370,000. In November 2018, Arsanis’s compensation committee approved an increase in the annualized base salary of Mr. Gray to $450,000 effective as of November 27, 2018, which was the effective date of Mr. Gray’s promotion to the role of President and Chief Executive Officer.
Arsanis used base salaries to recognize the experience, skills, knowledge and responsibilities required of all its employees, including its named executive officers. None of the Arsanis named executive officers is currently party to an employment agreementscope, terms or other agreement or arrangement that provides for automatic or scheduled increases in base salary.
Annual Bonus
The board of directors, in its discretion, awarded bonuses to the named executive officers from time to time. Arsanis typically established annual bonus targets based around a set of specified corporate goals for its named executive officers and conducted an annual performance review to determine the attainment of such goals. Arsanis’s management would propose bonus awards to the board of directors primarily based on such review process. Arsanis’s board of directors would make the final determination of the eligibility requirements for and the amount of such bonus awards.
Equity Incentives
Although Arsanis did not have a formal policy with respect to the grant of equity incentive awards to its executive officers, or any formal equity ownership guidelines applicable to them, Arsanis believed that equity grants provided its executives with a strong link to its long-term performance, create an ownership culture and helped to align the interests of its executives and its stockholders. In addition, Arsanis believed that equity grants with a time-based vesting feature promoted executive retention because this feature would incent its executive officers to remain in its employment during the vesting period. Accordingly, Arsanis’s board of directors would periodically review the equity incentive compensation of its named executive officers and from time to time would grant equity incentive awards to them in the form of stock options. In 2017, based upon Arsanis’s overall performance, Arsanis granted to Mr. Gray an option to purchase 97,665 shares of its common stock, to Dr. Mantus an option to purchase 43,949 shares of its common stock, to Dr. Russo an option to purchase 195,331 shares of its common stock, and to Dr. Stevens an option to purchase 43,948 shares of its common stock. In 2018, based upon its overall performance, Arsanis granted to Mr. Gray an option to purchase 110,000 shares of its common stock, to Dr. Mantus an option to purchase 50,000 shares of its common stock, to Dr. Russo an option to purchase 160,000 shares of its common stock, and to Dr. Stevens an option to purchase 50,000 shares of its common stock. These share amounts do not reflect the Reverse Stock Split.
Arsanis would use stock options to compensate its executive officers in the form of initial grants in connection with the commencement of employment and also at various times, often but not necessarily annually, if Arsanis performed as expected or better than expected. Prior to Arsanis’s initial public offering, the award of stock options to its executive officers was made by its board of directors or compensation committee. None of Arsanis’s executive officers is currently party to an employment agreement that provides for automatic award of stock options. Arsanis granted stock options to its executive officers with time-based vesting. The options that Arsanis granted to its executive officers typically become exercisable as to 25% of the shares underlying the option on the first anniversary of the grant date, and as to an additional 1/48th of the original number of shares underlying the option monthly thereafter. Vesting rights cease upon termination of employment and exercise rights cease shortly after termination, except that vesting is fully accelerated upon certain terminations in connection with a change of control (including the Merger) and exercisability is extended in the case of death or disability. Prior to the exercise of an option, the holder has no rights as a stockholder with respect to the shares subject to such option, including no voting rights and no right to receive dividends or dividend equivalents.
Prior to Arsanis’s initial public offering, Arsanis historically granted stock options with exercise prices that are equal to the fair market value of its common stock on the date of grant as determined by its board of directors or compensation committee, based on a number of objective and subjective factors. The exercise price of all stock options granted after the closing of Arsanis’s initial public offering is equal to the fair market value of shares of its common stock on the date of grant, which is determined by reference to the closing market price of its common stock on the date of grant.
In addition, in connection with his promotion to the role of President and Chief Executive Officer in November 2018, Arsanis granted to Mr. Gray a restricted stock award with respect to 250,000 shares of its common stock, which share number does not reflect the Reverse Stock Split. The restricted stock award would vest as to 25% of the shares subject to the award on theone-year anniversary of the date of grant, with the remainder vesting in equal monthly installments until the fourth anniversary of the date of grant, subject to Mr. Gray’s continued service with the company. The restricted stock award vested in full upon the closing of the Merger.
Employment and Change in Control Arrangements
Arsanis entered into written offer letters with each of its named executive officers. These agreements set forth the terms of the named executive officer’s compensation, including his or her initial base salary, severance and annual cash bonus opportunity. In addition, the agreements provide that the named executive officers are eligible to participate in company-sponsored benefit programs that are available generally to all of our employees.
Arsanis also entered into written bonus retention agreements and/or letter agreements with certain of its named executive officers which replaced such named executive officers’ prior severance benefits as set forth in their written offer letters, as described below.
2018 Amended and Restated Employment Agreement for Michael P. Gray
In connection with the appointment of Michael P. Gray as President and Chief Executive Officer of Arsanis, on November 26, 2018, Arsanis entered into an amended and restated employment agreement with Mr. Gray, which agreement became effective as of November 27, 2018 and replaced his October 10, 2017 amended and restated letter agreement. We refer to such amended and restated employment agreement as the Gray 2018 agreement. Under the Gray 2018 agreement, Mr. Gray’s base salary was $450,000 per annum and he was entitled to participate in Arsanis’s medical and other benefits programs, and was entitled to receive an annual bonus based on his individual performance and the company’s performance during the applicable year, all as determined by Arsanis’s board of directors in its sole discretion, at a target bonus rate of 55% of his annualized base salary.
The Gray 2018 agreement provides that the vesting of all equity awards granted to Mr. Gray before the closing of Arsanis’s initial public offering on November 20, 2017 would accelerate in full upon a “change of control” of the company (as defined in the Gray 2018 agreement and including the Merger). Specifically, on July 20, 2016, Mr. Gray received a grant of options to purchase 51,274 shares of common stock with an exercise price of $9.39 per share, which vested in full upon the closing of the Merger. On June 19, 2017, Mr. Gray received a grant of options to purchase 97,665 shares of common stock with an exercise price of $4.00 per share, which vested in full upon the closing of the Merger. The Gray 2018 agreement also provides that, subject to approval of Arsanis’s board of directors, Arsanis would grant Mr. Gray a restricted stock award with respect to 250,000 shares of common stock, which grant Arsanis’s board of directors did approve, became effective on November 27, 2018 and vested in full upon the closing of the Merger. Pursuant to the terms of the Gray 2018 agreement, Mr. Gray’s employment with the company could be terminated at any time, with or without “cause” (as defined in the Gray 2018 agreement and set forth below) by either Mr. Gray or Arsanis. If Arsanis terminated Mr. Gray’s employment without cause or Mr. Gray terminated his employment for “good reason” (as defined in the Gray 2018 agreement and set forth below) he would be entitled to (i) 12 months’ pay at his then-current base salary, (ii) a portion of the same year’s target bonus,pro-rated to reflect the portion of the year elapsed, and (iii) COBRA premium benefits for up to 12 months. If Arsanis terminated Mr. Gray’s employment without cause or Mr. Gray terminated his employment for good reason within 18 months following a change of control of the company, Mr. Gray would be entitled to (i) an amount equal to the sum of (x) 1.5 times his then-current base salary and (y) 1.5 times his target bonus for the year of termination, and (ii) COBRA premium benefits for up to 12 months. In addition, on March 7, 2018, Mr. Gray received a grant of options to purchase 110,000 shares of
common stock with an exercise price of $17.34 per share. If Arsanis terminated Mr. Gray’s employment without cause or Mr. Gray terminated his employment for good reason, each within 18 months following a change of control (including the Merger), this option would vest in full, and the period during which Mr. Gray would be entitled to exercise certain stock options granted to him in June 2017 would be extended for up to two years following his separation date. As a result of his resignation in connection with the Merger, we paid Mr. Gray severance benefits in March 2019 and his outstanding options and restricted stock vested in full. The Gray 2018 agreement also provides for a limitation on payments under the Gray 2018 agreement if limiting the payments would leave Mr. Gray in a better net position than bearing the tax penalties under Section 280G of the Code.
Pursuant to the Gray 2018 agreement:
The following, as determined by Arsanis’s board of directors in its reasonable judgment, constitutes “cause” for termination: (i) the commission of, or indictment or conviction for, any felony, or any other crime involving dishonesty; (ii) participation in any fraud, deliberate and substantial misconduct, breach of duty of loyalty or breach of fiduciary duty against the company; (iii) intentional and substantial damage to any property of the company; (iv) failure of performance of Mr. Gray’s duties under the Gray 2018 agreement (not attributable to sickness, disability or death) after reasonable written notice no later than 30 days following the occurrence of the failure and a30-day opportunity to cure, provided, however, that such opportunity to cure shall only apply to any failure that the board of directors, in its reasonable discretion, deems susceptible to cure; or (v) Mr. Gray’s breach of any material provision of the Gray 2018 agreement, his Invention,Non-Competition,Non-Solicitation andNon-Disclosure Agreement, or any other agreement to which he and the company are both parties, after reasonable written notice no later than 30 days following the occurrence of the breach and a30-day opportunity to cure, provided, however, that such opportunity to cure shall only apply to any breach that the board of directors, in its reasonable discretion, deems susceptible to cure, and that any breach by Mr. Gray of his obligations of confidentiality ornon-competition under hisnon-disclosure agreement shall be deemed not susceptible to cure.
The following, if occurring without Mr. Gray’s consent, constitutes “good reason” for termination: (i) a material and adverse diminution of Mr. Gray’s duties and responsibilities with the company, provided that such change is not in connection with a termination of his employment relationship with the company; (ii) a material diminution of Mr. Gray’s then base salary, provided that such change is not in connection with a termination of his employment relationship with the company; (iii) relocation of Mr. Gray’s principal place of employment outside a 30 mile radius from Boston, Massachusetts, if such relocation increases his daily commuting distance; or (iv) a material breach by the company of the Gray 2018 agreement.
“Change of control” means the first to occur of any of the following: (i) a merger or consolidation, business combination, acquisition or similar transaction (a “Transaction”) in which (A) the company is a constituent party, or (B) a subsidiary of the company is a constituent party and the company issues shares of its capital stock pursuant to such Transaction, except in the case of either clause (A) or (B) any such Transaction involving the company or a subsidiary of the company in which the beneficial owners of the shares of our capital stock outstanding immediately prior to such Transaction continue beneficially to own, immediately following such Transaction, at least a majority by voting power of our capital stock of (x) the surviving or resulting corporation or (y) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such Transaction, the parent corporation of such surviving or resulting corporation; (ii) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the company or a subsidiary of the company of all or substantially all the assets of the company and the company’s subsidiaries taken as a whole (except in connection with a Transaction not constituting a change of control under clause (i) or where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the company); or (iii) the sale or transfer, in a single transaction or series of related transactions, by our stockholders of more than 50% by voting power of our then-outstanding capital stock to any person or entity or group of affiliated persons or entities.
Amended and Restated Letter Agreement and Retention Bonus Agreement for Dr. David Mantus
On November 26, 2018, Arsanis entered into a retention bonus agreement with Dr. David Mantus, Arsanis’s Chief Development Officer, which replaced Dr. Mantus’s existing severance benefits as set forth in the amended and restated letter agreement, dated October 10, 2017, between Dr. Mantus and us. Dr. Mantus was eligible to receive payment from the company for benefits continuation and any equity acceleration provided by his amended and restated letter agreement. Under his retention bonus agreement, Dr. Mantus was eligible for a retention bonus payment of $481,000 upon the earliest to occur of the following, subject to Dr. Mantus’s continued service with the company on such date: (i) March 31, 2019, (ii) the closing of a “change of control” of the company (as defined in the retention bonus agreement and including the Merger), (iii) the termination of Dr. Mantus’s employment by the company without “cause” (as defined in the retention bonus agreement and set forth below), or (iv) Dr. Mantus’s death. Dr. Mantus’s receipt of the retention bonus payment was conditioned upon his entering into a release of claims agreementoperation in favor of the company. Dr. Mantus’s retention bonus was paid in March 2019.
Except as expressly modified by the retention bonus agreement, Dr. Mantus’s amended and restated letter agreement remains in full force and effect. Dr. Mantus’s amended and restated letter agreement provides that the vesting of all equity awards granted to Dr. Mantus before the closing of Arsanis’s initial public offering on November 20, 2017 would accelerate in full upon a “change of control” of the company (as defined in the amended and restated employment agreement), which equity awards vested in full as a result of the Merger. The amended and restated letter agreement also provides Dr. Mantus’s employment with us may be terminated at any time, with or without “cause” (as defined in the amended and restated letter agreement and set forth below) by either Dr. Mantus or us. If we terminate Dr. Mantus’s employment without cause or Dr. Mantus terminates his employment for “good reason” (as defined in the amended and restated letter agreement and set forth below), he will be entitled to COBRA premium benefits for up to 12 months. If we terminate Dr. Mantus’s employment without cause or Dr. Mantus terminates his employment for good reason within 12 months following a change of control of the company, Dr. Mantus will be entitled to (i) COBRA premium benefits for up to 12 months; and (ii) vesting in full of all unvested stock options and other equity awards then held by him. The amended and restated letter agreement also provides for a limitation on payments under the agreement if limiting the payments would leave Dr. Mantus in a better net position than bearing the tax penalties under Section 280G of the Code.
On February 26, 2016, Dr. Mantus received a grant of options to purchase 14,649 shares of our common stock with an exercise price of $8.33 per share. On July 20, 2016, Dr. Mantus received a grant of options to purchase 11,719 shares of our common stock with an exercise price of $9.39 per share. On June 19, 2017, Dr. Mantus received a grant of options to purchase 43,949 shares of our common stock with an exercise price of $4.00 per share. Each of these option grants vested in full upon the closing of the Merger.
On March 7, 2018, Dr. Mantus received a grant of options to purchase 50,000 shares of our common stock with an exercise price of $17.34 per share. If we terminate Dr. Mantus’s employment without cause or Dr. Mantus terminates his employment for good reason, each within 12 months following a change of control, these options will vest in full.
Pursuant to Dr. Mantus’s amended and restated letter agreement and retention bonus agreement:
The following, as determined by the board of directors in its reasonable judgment, constitutes “cause” for termination: (i) the commission of, or indictment or conviction for, any felony, or any other crime involving dishonesty; (ii) participation in any fraud, deliberate and substantial misconduct, breach of duty of loyalty or breach of fiduciary duty against the company; (iii) intentional and substantial damage to any property of the company; (iv) failure of performance of Dr. Mantus’s duties (not attributable to sickness, disability or death) after reasonable written notice no later than 30 days following the occurrence of the failure and a30-day opportunity to cure, provided, however, that such opportunity to cure shall only apply to any failure that the our board of directors, in its reasonable discretion, deems susceptible to cure; or (v) Dr. Mantus’s breach of any material provision of his amended and restated letter agreement, his Invention,Non-Competition,
Non-Solicitation andNon-Disclosure Agreement, or any other agreement to which he and the company are both parties, after reasonable written notice no later than 30 days following the occurrence of the breach and a30-day opportunity to cure, provided, however, that such opportunity to cure shall only apply to any breach that the board of directors, in its reasonable discretion, deems susceptible to cure, and that any breach by Dr. Mantus of his obligations of confidentiality ornon-competition under hisnon-disclosure agreement shall be deemed not susceptible to cure.
“Change of control” means the first to occur of any of the following: (i) a merger or consolidation, business combination, acquisition or similar transaction (a “Transaction”) in which (A) the company is a constituent party, or (B) a subsidiary of the company is a constituent party and the company issues shares of capital stock pursuant to such Transaction, except in the case of either clause (A) or (B) any such Transaction involving the company or a subsidiary of the company in which the beneficial owners of the shares of the company’s capital stock outstanding immediately prior to such Transaction continue beneficially to own, immediately following such Transaction, at least a majority by voting power of the capital stock of (x) the surviving or resulting corporation or (y) if the surviving or resulting corporation is a wholly owned subsidiary of another corporation immediately following such Transaction, the parent corporation of such surviving or resulting corporation; (ii) the sale, lease, transfer, exclusive license or other disposition, in a single transaction or series of related transactions, by the company or a subsidiary of the company of all or substantially all the assets of the company and the company’s subsidiaries taken as a whole (except in connection with a Transaction not constituting a change of control under clause (i) or where such sale, lease, transfer, exclusive license or other disposition is to a wholly owned subsidiary of the company); or (iii) the sale or transfer, in a single transaction or series of related transactions, by the company’s stockholders of more than 50% by voting power of our then-outstanding capital stock to any person or entity or group of affiliated persons or entities.
Pursuant to Dr. Mantus’s amended and restated letter agreement:
The following, if occurring without Dr. Mantus’s consent, constitutes “good reason” for termination: (i) a material and adverse diminution of Dr. Mantus’s duties and responsibilities with the company, provided that such change is not in connection with a termination of his employment relationship with the company; (ii) a material diminution of Dr. Mantus’s then base salary, provided that such change is not in connection with a termination of his employment relationship with the company; (iii) relocation of Dr. Mantus’s principal place of employment outside a 30 mile radius from Boston, Massachusetts, if such relocation increases his daily commuting distance; or (iv) a material breach by the company of Dr. Mantus’s amended and restated letter agreement.
Letter Agreement for Dr. René Russo
In connection with Dr. Russo stepping down from her position as President and Chief Executive Officer of Arsanis, on November 26, 2018, Dr. Russo signed a letter agreement, which upon expiration of a release revocation period replaces Dr. Russo’s existing severance benefits as set forth in the amended and restated letter agreement, dated October 10, 2017, between Dr. Russo and Arsanis. Under the November 2018 letter agreement, in exchange for, among other things, her general release of claims in favor of the company, Dr. Russo is entitled to severance benefits comprised of (i) alump-sum payment of $1,046,250; (ii) COBRA premium benefits for up to 18 months; and (iii) the vesting in full of all unvested stock options then held by Dr. Russo. In addition, Arsanis agreed to extend the period during which Dr. Russo may exercise the stock options granted to her in June 2017 for up to two years following her separation date, and also agreed to waive Dr. Russo’s post-employmentnon-competition obligations.
On July 22, 2015, Dr. Russo received a grant of options to purchase 80,889 shares of common stock with an exercise price of $8.20 per share. On July 20, 2016, Dr. Russo received a grant of options to purchase 47,757 shares of common stock with an exercise price of $9.39 per share. On June 19, 2017, Dr. Russo received a grant of options to purchase 195,331 shares of common stock with an exercise price of $4.00 per share. As described above, Dr. Russo will have the right to exercise this June 2017 option for a period of up totwo-years following
her separation date. On March 7, 2018, Dr. Russo received a grant of options to purchase 160,000 shares of common stock with an exercise price of $17.34 per share. All unvested stock options held by Dr. Russo vested in full upon her letter agreement becoming effective and irrevocable.
Notwithstanding her stepping down as President and Chief Executive Officer of the company, Dr. Russo’s equity awards will remain outstanding in accordance with their terms (subject to the provisions of her letter agreement described above) for so long as she continues to serve as a director of the Company following the Merger.
Letter Agreement for Dr. Christopher Stevens
Effective January 15, 2019, Dr. Stevens stepped down from his position as Chief Medical Officer of Arsanis. In connection with the termination of his employment, Dr. Stevens signed a letter agreement, dated January 15, 2019, which upon expiration of a revocation period replaces Dr. Stevens’s existing severance benefits as set forth in the retention bonus agreement, dated November 26, 2018, between Dr. Stevens and Arsanis and the amended and restated letter agreement, dated October 10, 2017, between Dr. Stevens and Arsanis. Under the January 2019 letter agreement, in exchange for, among other things, his general release of claims in favor of the company, Dr. Stevens is entitled to severance benefits comprised of (i) alump-sum payment of $494,000; (ii) COBRA premium benefits for up to 12 months; and (iii) the vesting in full of all unvested stock options then held by Dr. Stevens, which will remain exercisable for the period of time set forth in the applicable grant agreement. In addition, we agreed to waive Dr. Stevens’s post-employmentnon-competition obligations.
On July 20, 2016, Dr. Stevens received a grant of options to purchase 26,369 shares of our common stock with an exercise price of $9.39 per share. On June 19, 2017, Dr. Stevens received a grant of options to purchase 43,948 shares of common stock with an exercise price of $4.00 per share. On March 7, 2018, Dr. Stevens received a grant of options to purchase 50,000 shares of common stock with an exercise price of $17.34 per share. All unvested stock options held by Dr. Stevens vested in full upon his letter agreement becoming effective and irrevocable as of January 22, 2019.
Other Agreements
Each of the Arsanis named executive officers entered into a standard form agreement with respect tonon-competition,non-solicitation, confidential information and assignment of inventions. Under this agreement, each Arsanis named executive officer agreed not to compete with us during his or her employment and for a period of one year after the termination of his or her employment, not to solicit our employees, consultants, clients or customers during his or her employment and for a period of one year after the termination of his or her employment, and to protect our confidential and proprietary information indefinitely. In addition, under this agreement, each named executive officer has agreed that we own all inventions that are developed by such executive officer during his or her employment with us that are within the field of monoclonal antibody-based therapeutic treatments for infectious diseases. Each named executive officer also agreed to provide us with anon-exclusive, royalty-free, perpetual license to use any prior inventions that such executive officer incorporates into inventions assigned to us under this agreement.
401(k) Retirement Plan
We maintain a defined contribution employee retirement plan for Arsanis’s employees, including the named executive officers. The plan is intended to qualify as a
tax-qualifiedDIRECTOR COMPENSATION 401(k) plan so that contributions to the 401(k) plan, and income earned on such contributions, are not taxable to participants until withdrawn or distributed from the 401(k) plan (except in the case of contributions under the 401(k) plan designated as Roth contributions). Under the 401(k) plan, each employee is fully vested in his or her deferred salary contributions. Employee contributions are held and invested by the plan’s trustee as directed by participants. The 401(k) planFOR FISCAL 2020
provides us with the discretion to match employee contributions, but to date we have not provided any employer matching contributions.
Tax Considerations
The compensation committee of our board of directors considers the potential future effects of Section 162(m) of the Code on compensation paid to our named executive officers. Section 162(m) of the Code generally disallows a tax deduction to public companies for compensation in excess of $1 million paid to each of the company’s chief executive officer and the three most highly compensated executive officers (other than the chief executive officer and chief financial officer). Pursuant to tax legislation signed into law on December 22, 2017 (the “Tax Act”), for taxable years beginning after December 31, 2017, the Section 162(m) deduction limitation is expanded so that it also applies to compensation in excess of $1 million paid to a public company’s chief financial officer. Historically, compensation that qualified under Section 162(m) as performance-based compensation was exempt from the deduction limitation. However, subject to certain transition rules, the Tax Act eliminated the qualified performance-based compensation exception. As a result, for taxable years beginning after December 31, 2017, all compensation in excess of $1 million paid to each of the executives described above (other than certain grandfathered compensation or compensation paid pursuant to certain equity awards granted before or during a transition period following Arsanis’s initial public offering) will not be deductible by us.
Director Compensation
Arsanis Director Compensation
Under Arsanis’s director compensation program, Arsanis paid its
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | |
Name (1) | Fees Earned
or Paid in
Cash
($) | | Option Awards ($)(2)(3) | | Total
($) |
| William E. Aliski, MPA | $ | 41,912 | | | $ | 21,728 | | | $ | 63,640 | |
| Gary J. Bridger, Ph.D. | $ | 44,838 | | | $ | 21,728 | | | $ | 66,566 | |
Alison Lawton (4) | $ | 11,353 | | | $ | 37,516 | | | $ | 48,869 | |
| David McGirr, M.B.A. | $ | 54,000 | | | $ | 21,728 | | | $ | 75,728 | |
| René Russo., Pharm.D. | $ | 35,000 | | | $ | 21,728 | | | $ | 56,728 | |
| Murray W. Stewart, M.D. | $ | 50,700 | | | $ | 21,728 | | | $ | 72,428 | |
| Michael S. Wyzga | $ | 86,500 | | | $ | 21,728 | | | $ | 108,228 | |
| | | | | |
non-employee
directors a cash retainer for service on the board of directors and for service on each committee on which the director is a member. The chairman of the board, the lead independent director and the chair of each committee received higher retainers for such service. These fees were payable in arrears in four equal quarterly installments on the last day of each quarter, provided that the amount of such payment would be prorated for any portion of such quarter that the director was not serving on the board of directors, on such committee or in such position. The fees paid tonon-employee directors for service on the board of directors, for service as a lead independent director and for service on each committee of the board of directors on which the director is a member were as follows. The share and per share amounts included in this section “Arsanis Director Compensation” do not reflect the Reverse Stock Split. | | | | | | | | | | | | | | | |
| | | Member
Annual Fee | | Chairman
Annual Fee | | Lead
Independent
Director
Annual Fee |
Board of Directors | | | $ | 35,000 | | | | $ | 75,000 | | | | $ | 50,000 | |
Audit Committee | | | $ | 7,500 | | | | $ | 15,000 | | | | | — | |
Compensation Committee | | | $ | 5,000 | | | | $ | 10,000 | | | | | — | |
Nominating and Corporate Governance Committee | | | $ | 4,000 | | | | $ | 8,000 | | | | | — | |
Arsanis also reimbursed itsnon-employee directors for reasonable travel and other expenses incurred in connection with attending meetings of the board of directors and any committee of the board of directors on which they served.
In addition, under Arsanis’s director compensation program, Arsanis granted the directors who were in office at the time of the closing of Arsanis’s initial public offering, and would grant to newnon-employee directors upon their initial election to the board of directors, an option to purchase 25,000 shares of common stock. Each of these options would vest as to 33.3333% of the shares of common stock underlying such option on the first anniversary of the date of grant, with the remainder vesting in equal monthly installments until the third anniversary of the date of grant, subject to thenon-employee director’s continued service as a director. Further,
on the dates of each of Arsanis’s annual meetings of stockholders, eachnon-employee director that has served on the board of directors for at least six months will automatically receive, under our 2017 Equity Incentive Plan, or the 2017 Plan, an option to purchase 10,000 shares of common stock. Each of these options would vest in equal monthly installments until the first anniversary of the date of grant (or, if earlier, the date of our next annual meeting of stockholders following the date of grant) unless otherwise provided at the time of grant, subject to thenon-employee director’s continued service as a director, with full acceleration of vesting upon a change in control of the company. All options issued tonon-employee directors under the director compensation program were issued at exercise prices equal to the closing price of the common stock on the date of grant.
Mr. Gray, an Arsanis director who also served as President and Chief Executive Officer and Chief Financial Officer until the closing of the Merger, did not receive any additional compensation for his service as a director. Dr. Russo also served as President and Chief Executive Officer during 2018, until she stepped down from such positions on November 26, 2018. Dr. Russo did not receive any additional compensation for her service as a director. Mr. Gray and Dr. Russo are two of our named executive officers and, accordingly, the compensation that we pay to Mr. Gray and Dr. Russo is discussed under “—Summary Compensation Table” and “—Narrative Disclosure to Summary Compensation Table.”
The following table sets forth information regarding compensation earned by Arsanis’snon-employee directors during fiscal 2018.
| | | | | | | | | | | | | | | |
| Name | | Fees Earned
or Paid
in Cash
($) | | Option Awards
($)(1) | | Total
($) |
Tillman U. Gerngross, Ph.D. | | | | 94,615 | | | | | 111,785 | | | | | 206,400 | |
William Clark, M.B.A. | | | | 47,871 | | | | | 111,785 | | | | | 159,656 | |
Carl Gordon, Ph.D., C.F.A. | | | | 47,871 | | | | | 111,785 | | | | | 159,656 | |
David McGirr, M.B.A. | | | | 56,319 | | | | | 111,785 | | | | | 168,104 | |
Terrance McGuire | | | | 48,434 | | | | | 111,785 | | | | | 160,219 | |
Claudio Nessi, Ph.D., M.B.A. | | | | 39,423 | | | | | 111,785 | | | | | 151,208 | |
Michael Ross, Ph.D. | | | | 45,055 | | | | | 111,785 | | | | | 156,840 | |
Amy Schulman, J.D. | | | | 72,088 | | | | | 111,785 | | | | | 183,873 | |
| | | | | |
| (1) | Dr. Ragan, one of our directors who also serves as our Chief Executive Officer, President and Secretary, did not receive any additional compensation for her service director. Dr. Ragan is a Named Executive Officer and, accordingly, the compensation that we pay to Dr. Ragan is described under “—Summary Compensation Table” and “—Narrative Disclosure to Summary Compensation Table.” |
| | | | | |
| (2) | The amounts reported in the “Option Awards” column reflect the aggregate fair value of stock-based compensation awarded during the year computed in accordance with the provisions of ASC 718. See Note 12 to Arsanis’sour consolidated financial statements appearing in Arsanis’sour Annual Report on Form10-K for the year ended December 31, 20182020 filed with the SEC on March 11, 2019,19, 2021, regarding assumptions underlying the valuation of equity awards. |
As of December 31, 2018, Arsanis’snon-employee directors held the following stock options, all of which were granted under our 2010 Special Stock Incentive Plan, as amended, or the 2010 Plan, our 2011 Stock Incentive Plan, or 2011 Plan, and our 2017 Plan:
| | | | | |
Name(3) | The aggregate number of shares subject to outstanding stock options held by each director listed in the table above as of December 31, 2020 was as follows: 10,281 shares for Mr. Aliski; 31,851 shares for Dr. Bridger; 6,854 for Ms. Lawton; 12,686 shares for Mr. McGirr; 33,520 shares for Dr. Russo; 10,281 shares for Dr. Stewart; and 80,605 shares for Mr. Wyzga. |
| Option Awards |
Tillman U. Gerngross, Ph.D.
| | | | 100,484 | |
William Clark, M.B.A.
(4) | | | | 35,000 | |
Carl Gordon, Ph.D., C.F.A.
| | | | 35,000 | |
David McGirr, M.B.A.
| | | | 35,000 | |
Terrance McGuire
| | | | 35,000 | |
Claudio Nessi, Ph.D., M.B.A.
| | | | 35,000 | |
Michael Ross, Ph.D.
| | | | 35,000 | |
Amy Schulman, J.D.
| | | | 41,482 | |
René Russo
| | | | 483,977 | Ms. Lawton joined our Board in October 2020. |
NARRATIVE TO DIRECTOR COMPENSATION TABLE
Non-Employee Director Compensation Policy
Following the MergerOn March 13, 2019, we adopted a director compensation policy based on Arsanis’s existing director compensation program. Pursuant to the policy, the annualretainer for non-employee directors is $35,000 and the annual retainer for the chair of the board of directors is $75,000. Annual retainers for committee membership are as follows:
| | | | | |
Audit committee chairperson | | | $ | 15,000 | |
Audit committee member | | | $ | 7,500 | |
Compensation committee chairperson | | | $ | 10,000 | |
Compensation committee member | | | $ | 5,000 | |
Nominating and corporate governance committee chairperson | | | $ | 8,000 | |
Nominating and corporate governance committee member | | | $ | 4,000 | |
These fees are payable in arrears in four equal quarterly installments on the last day of each quarter, provided that the amount of such payment will be prorated for any portion of such quarter that a director is not serving on the our board of directors, on such committee or in such position.Non-employee directors are also reimbursedfor reasonable out-of-pocket business expenses incurred in connection with attending meetings of the board of directors and any committee of the board of directors on which they serve and in connection with other business related to the board of directors. Directors may also be reimbursed for reasonable out-of-pocket business expenses authorized by the board of directors or a committee that are incurred in connection with attending conferences or meetings with management in accordance with a travel policy, as may be in effect from time to time.
In addition to the above fees, the board of directors may determine that additional committee fees are appropriate and should be payable for any newly created committee of the board of directors.
In addition, we grant
We have historically granted to new non-employee directors, upon their initial election to the board of directors, an option to purchase 6,854 shares of our common stock at an exercise price equal to the closing price of our common stock on the date of grant.
In February 2021, our Board, upon the recommendation of the Compensation Committee, approved an increase in this initial option grant to 12,250 shares of common stock. Each of these options has a term of 10 years from the date of the award and vests as to 33.3333% of the shares of common stock underlying such option on the first anniversary of the date of grant, with the remainder vesting in equal monthly installments of 2.7777% of the shares of common stock underlying such option
until the 36-month anniversary of the date of grant, subject to the non-employee director’s continued service as a director. This vesting accelerates as to 100% of the shares upon a change in control of the Company.
Further, on the dates of each of our annual meetingsof stockholders, we have historically granted to each non-employee director that has served on our board of directors for at least six months automatically receives an option to purchase 3,427 shares of our common stock at an exercise price equal to the closing price of our common stock on the date of the grant. In February 2021, our Board, upon the recommendation of the Compensation Committee, approved an increase in this annual option grant. Starting with the Annual Meeting, on the dates of each of our annual meetings of stockholders, each non-employee director that that has served on our board of directors for at least six months will automatically receive an option to purchase 6,000 shares of our common stock at an exercise price equal to the closing price of our common stock on the date of the grant. Each of these options has a term of 10 years from the date of the award and vests in equal monthly installments of 8.333% of the shares of our common stock underlying such optionuntil the 12-month anniversary of the date of grant (or, if earlier, the date of our next annual meeting of stockholders following the date of grant) unless otherwise provided at the time of grant,subject to the non-employee director’s continued service as a director, with 100% acceleration of vesting upon a change in control of the Company.
We pay our non-employee directors a cash retainer for service on the Board of Directors and for service on each committee on which the director was a member. The Chairman of the Board, the Lead Independent Director and the Chair of each committee received higher retainers for such service. These fees are payable in arrears in four equal quarterly installments on the last day of each quarter, provided that the amount of such payment would be prorated for any portion of such quarter that the director was not serving on the Board of Directors, on such committee or in such position. The fees paid to non-employee directors for service on the Board of Directors, for service as a Lead Independent Director and for service on each committee of the Board of Directors on which the director was a member were as follows.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | Member
Annual Fee | | | Chairman
Annual Fee | | | Lead
Independent
Director
Annual Fee | |
| Board of Directors | | $ | 35,000 | | | $ | 75,000 | | | $ | 50,000 | |
| Audit Committee | | $ | 7,500 | | | $ | 15,000 | | | | — | |
| Compensation Committee | | $ | 5,000 | | | $ | 10,000 | | | | — | |
| Nominating and Corporate Governance Committee | | $ | 4,000 | | | $ | 8,000 | | | | — | |
We also reimburse our non-employee directors for reasonable travel and other expenses incurred in connection with attending meetings of the Board of Directors and any committee of the Board of Directors on which they served.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION
PLAN INFORMATION | | | | | | | | | | | | | | | |
Plan Category | | Number of
securities
to be
issued upon
exercise of
outstanding
options,
warrants
and rights | | Weighted
average
exercise
price of
outstanding
options,
warrants
and rights | | Number of
securities
remaining
available for
future
issuance
under equity
compensation
plans (excluding
securities
reflected in
column (a)) |
| | | (a) | | (b) | | (c) |
Equity compensation plans approved by security holders | | | | 1,953,804 | (1) | | | $ | 10.16 | (2) | | | | 308,288 | (3) |
Equity compensation plans not approved by security holders | | | | — | | | | | — | | | | | — | |
Total | | | | 1,953,804 | | | | $ | 10.16 | | | | | 308,288 | (4) |
EQUITY COMPENSATION PLAN INFORMATION
The following table provides certain information with respect to all of our equity compensation plans in effect as of December 31, 2020:
| | | | | | | | | | | | | | | | | | | | | | | |
| 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 | | 488,043 | | (1) | $ | 23.85 | | (2) | 254,796 | | (3) |
| Equity compensation plans not approved by security holders | | 1,386,471 | | (4) | $ | 9.15 | | (5) | 162,156 | | (6) |
| Total | | 1,874,514 | | | $ | 12.94 | | | 416,952 | | (7) |
| | | | | |
| (1) | Consists of (i) 103,10086,573 shares to be issued upon exercise of outstanding options under our 2010 Special Stock Incentive Plan, as amended, or the 20102011 Plan, as of December 31, 2018,2020, and (ii) 967,404401,470 shares to be issued upon exercise of outstanding options under our 2011 Stock Incentive Plan, or 2011 Plan, as of December 31, 2018 and (iii) 883,300 shares to be issued upon exercise of outstanding options under ourthe 2017 Plan, as of December 31, 2018. 2020. |
| (2) | Consists of the weighted averageweighted-average exercise price of the 1,953,804488,043 stock options outstanding on December 31, 2018. 2020. |
| (3) | Consists of (i) 308,28825,732 shares that remained available for future issuance under ourthe 2017 Plan as of December 31, 2018,2020 and (ii) 219,111229,064 shares that remained available for future issuance under our 2017 Employee Stock Purchase Plan or 2017 ESPP,(the “2017 ESPP”), as of December 31, 2018.2020. No shares remained available for future issuance under the 2010 Plan or the 2011 Plan, as of December 31, 2018. 2020. |
| (4) | OurConsists of (i) 743,421 shares to be issued upon exercise of outstanding options under the 2015 Plan, as of December 31, 2020 and (ii) 643,050 shares to be issued upon exercise of outstanding options under our 2019 Inducement Equity Incentive Plan, as of December 31, 2020 (the “Inducement Plan”). Descriptions of the 2015 Plan and the Inducement Plan are contained in Note 12 of the notes to our consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC on March 19, 2021.
|
| (5) | Consists of the weighted-average exercise price of the 1,386,471 stock options outstanding on December 31, 2020. |
| (6) | Consists of (i) 5,206 shares that remained available for future issuance under the 2015 Plan, as of December 31, 2020, (ii) 156,950 shares that remained available for future issuance under the Inducement Plan, as of December 31, 2020. |
| (7) | The 2017 Plan has an evergreen provision, as amended, that allows for an annual increase in the number of shares available for issuance under the 2017 Plan to be added on the first day of each fiscal year, beginning with the fiscal year ended December 31, 2018 and continuing for each fiscal year until, and including, the fiscal year ending December 31, 2027,2027. The evergreen provides for an automatic increase in the number of shares available for issuance equal to the least of 1,025,490 shares of our common stock,(i) 4% of the number of shares of our common stock outstanding on the first day of the applicable fiscal yearsuch date and (ii) an amount determined by our board of directors. On January 1, 2019, 582,889 additional shares were reserved for issuance under the 2017 Plan pursuant to this provision. OurBoard. The 2017 ESPP has an evergreen provision that allows for an annual increase in the number of shares available for issuance under the 2017 ESPP to be added on the first day of each fiscal year, beginning on January 1, 2019 and ending on December 31, 2029, in an amount equal to the least of 512,745(i) 85,457 shares of our common stock, (ii) 2% of the total number of outstanding shares as of our common stock outstanding on the first day of the applicable fiscal yearsuch date and (iii) an amount determined by our board of directors. On January 1, 2019, 291,444 additional shares were reserved for issuance under the 2017 ESPP pursuant to this provision. In addition, upon the closing of the Merger on March 13, 2019, we assumed the X4 Plan. As of March 13, 2019, there were options to purchase an aggregate of 751,929 shares of common stock outstanding under the X4 Plan and 217,411 shares of our common stock reserved for future issuance under the X4 Plan.Board. |
REPORT OF AUDIT COMMITTEE
The audit committee
TRANSACTIONS WITH RELATED PERSONS AND INDEMNIFICATION
RELATED-PERSON TRANSACTIONS POLICY AND PROCEDURES
Our Board of
our board of directors, which consists entirely of directors who meet the independence and experience requirements of the Nasdaq Stock Market, has furnished the following report:The audit committee assists our board of directors in overseeing and monitoring the integrity of our financial reporting process, compliance with legal and regulatory requirements and the quality of internal and external audit processes. This committee’s role and responsibilities are set forth in our charter adopted by our board of directors, which is available on our website at www.x4pharma.com. This committee reviews and reassesses our charter annually and recommends any changes to our board of directors for approval. The audit committee is responsible for overseeing our overall financial reporting process, and for the appointment, compensation, retention, and oversight of the work of PricewaterhouseCoopers LLP. In fulfilling its responsibilities for the Arsanis, Inc., or Arsanis, financial statements for the fiscal year ended December 31, 2018, the audit committee of Arsanis took the following actions:
Reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2018 with management and PricewaterhouseCoopers LLP, our independent registered public accounting firm;
| • | | Discussed with PricewaterhouseCoopers LLP the matters required to be discussed in accordance with Auditing Standard No. 1301—Communications with Audit committees; and
|
Received written disclosures and the letter from PricewaterhouseCoopers LLP regarding its independence as required by applicable requirements of the Public Company Accounting Oversight Board regarding PricewaterhouseCoopers LLP’s communications with the audit committee and the audit committee further discussed with PricewaterhouseCoopers LLP its independence. The audit committee of Arsanis also considered the status of pending litigation, taxation matters and other areas of oversight relating to the financial reporting and audit process that the committee determined appropriate.
Based on the Arsanis audit committee’s review of the audited financial statements and discussions with management and PricewaterhouseCoopers LLP, the Arsanis audit committee recommended to the Arsanis board of directors that the audited financial statements be included in the Arsanis Annual Report on Form10-K for the fiscal year ended December 31, 2018 for filing with the SEC.
Members of the X4 Pharmaceuticals, Inc. Audit Committee
David McGirr
Isaac Blech
Michael S. Wyzga
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 of 1933, as amended, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, requires our directors and executive officers, and persons who own more than ten percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. Officers, directors and greater than ten percent stockholders are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations regarding the filing of required reports, we believe that all Section 16(a) filing requirements applicable to our directors, executive officers andgreater-than-ten-percent beneficial owners with respect to fiscal 2018 were met.
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Policies and Procedures for Related Person Transactions
Our board of directorsDirectors has adopted a written related person transaction policy to set forth policies and procedures for the review of any transaction, arrangement or relationship in which our company is a participant, the amount involved exceeds $120,000, and one of our executive officers, directors, director nominees or 5% stockholders, or their immediate family members, each of whom we refer to as a “related person,” has a direct or indirect material interest.
If a related person proposes to enter into such a transaction, arrangement or relationship, which we refer to as a “related party transaction,” the related person must report the proposed related person transaction to our
chief financialChief Financial officer. The policy calls for the proposed related person transaction to be reviewed and approved by our
audit committee.Audit Committee. Whenever practicable, the reporting, review and approval will occur prior to entry into the transaction. If advance review and approval is not practicable,
the committeeAudit Committee will review and, in its discretion, may ratify the related person transaction. The policy also permits the
chairChair of the
audit committeeAudit Committee to review and, if deemed appropriate, approve proposed related person transactions that arise between
committeeAudit Committee meetings, subject to ratification by the
committeeAudit Committee at its next meeting. Any related person transactions that are ongoing in nature will be reviewed annually.
A related person transaction reviewed under this policy will be considered approved or ratified if it is authorized by the
audit committeeAudit Committee in accordance with the standards set forth in the policy after full disclosure of the related person’s interests in the transaction. As appropriate for the circumstances, the policy provides that the
audit committeeAudit Committee will review and consider:
the related person’s interest in the related person transaction;
the approximate dollar value of the amount involved in the related person transaction;
the approximate dollar value of the amount of the related person’s interest in the transaction without regard to the amount of any profit or loss;
whether the transaction was undertaken in the ordinary course of our business;
whether the terms of the transaction are no less favorable to us than the terms that could have been reached with an unrelated third party;
the purpose of, and the potential benefits to us of, the transaction; and
any other information regarding the related person transaction or the related person in the context of the proposed transaction that would be material to investors in light of the circumstances of the particular transaction.
The
audit committeeAudit Committee may approve or ratify the related person transaction only if the
audit committeeAudit Committee determines that, under all of the circumstances, the transaction is in our best interests. The
audit committeeAudit Committee may impose any conditions on the related person transaction as it deems appropriate. The policy also provides that transactions involving compensation of executive officers will be reviewed and approved by our
compensation committeeCompensation Committee in the manner specified in its charter.
Related Person
For purposes of the policy, we refer to certain related-party transactions below in which (a) we were a participant, (b) the amount involved exceeded or will exceed $120,000 or, during such time as we qualify as a “smaller reporting company,” the lesser of (1) $120,000 or (2) 1% of the average of our total assets for the last two completed fiscal years, and (c) one or more related persons had a direct or indirect material interest. Transactions
In addition involving compensation for services provided to the compensation arrangements with directors and executive officers described elsewhereus by an employee, director, consultant or individual performing in a similar capacity by a related person are not covered by this proxy statement, sincepolicy.
CERTAIN RELATED-PERSON TRANSACTIONS
Since January 1, 2017,2019, we have engaged in, or currently propose to engage in, the following transactions in which the amount involved exceeds $120,000 and any of our executive officers, directors, director nominees or 5% stockholders, or their immediate family members, or any person who was in any of those categories at the time of such transaction, had or has a direct or indirect material interest.related-party transactions. We believe that all of these transactions were on terms comparable to terms that could have been obtained from unrelated third parties.
Arsanis Related Person Transactions
Services and Facilities Agreement with EveliQure Biotechnologies GmbH
Our subsidiary, Arsanis Biosciences GmbH, leases approximately 1,500 square meters of office and lab space from Marxbox Bauprojekt GmbH & Co. OG. In February 2015, Arsanis Biosciences GmbH entered into a services and facilities agreement with EveliQure Biotechnologies GmbH, or EveliQure, under which Arsanis provided certain laboratory services and sublet approximately 150 square meters of office and lab space. Tamás Henics, the husband of Eszter Nagy, Arsanis’s former Chief Scientific Officer and director, serves as Chief Scientific Officer at EveliQure.
On June 28, 2018 and in accordance with the terms of this agreement with EveliQure, Arsanis provided EveliQure with written notice that the services and facilities agreement will terminate and EveliQure will vacate the sublet space no later than December
31
2018. As of December 31, 2018, Arsanis had vacated the office and lab space and its services and facilities agreement with EveliQure was terminated.During the years ended December 31, 2018 and 2017, Arsanis received payments from EveliQure under the agreement of $0.2 million and less than $0.1 million, respectively. As of December 31, 2018 and 2017, amounts due from EveliQure totaled less than $0.1 million. These amounts included rental charges as well as amounts attributable to facilities and laboratory services.
Agreements with
Adimab, LLCArsanis entered into two agreements with Adimab, LLC, or Adimab, the Adimab Collaboration Agreement and the Adimab Option Agreement, under which Arsanis was granted exclusive options to obtain ownership or exclusive worldwide licenses under specified patents relating to the development and commercialization of monoclonal antibodies. Tillman U. Gerngross, Ph.D., the former chairman of Arsanis’s board of directors, is aco-founder of Adimab and currently serves as its chief executive officer. The following descriptions of the agreements with Adimab are summaries and are qualified by reference to the underlying agreements.
Adimab Collaboration Agreement
In May 2011, Arsanis entered into a collaboration agreement with Adimab, which, as amended, and together with certain applicable option exercise letters Arsanis sent to Adimab, we refer to as the Adimab Collaboration Agreement. Under the Adimab Collaboration Agreement, Adimab and Arsanis were required to use reasonable efforts to conduct certain research, which Arsanis funded, to discover and optimize antibodies directed against targets selected by Arsanis. Prior to Arsanis’s exercise of an option, (1) Arsanis and Adimab each grant the other anon-exclusive license to the relevant intellectual property Arsanis owns to allow each party to carry out its rights and obligations in connection with the research, and (2) except for Adimab’s retained right to continue using and licensing its own libraries, each party agrees not to practice or license the patents arising out of the research that it owns for any purpose other than to carry out its rights and obligations in connection with the research.
With respect to each target that was the subject of the research, Arsanis had an exclusive option to obtain, with respect to a specified number of antibodies directed against such target and discovered or optimized by Adimab, (1) ownership of certain patent rights relating to such antibodies and (2) exclusive andnon-exclusive licenses, with the right to grant sublicenses, in all human therapeutic, prophylactic and diagnostic areas, which we refer to as the licensed field, under certain patent rights andknow-how, to research, develop, make, have made, use, sell, offer to sell, import and export such antibodies and products based on such antibodies (but not for antibody discovery purposes). In addition, upon exercise of each option, certain contractual restrictions on Arsanis’s ability to prosecute, practice and license certain patents owned by Arsanis that arose out of the research were eliminated. All of Arsanis’s options under the Adimab Collaboration Agreement have expired, or, with respect to multiple targets and hundreds of antibodies, have already been exercised.
DirectorsUnder the Adimab Collaboration Agreement, for each target for which Arsanis has exercised an option, we are required to use commercially reasonable efforts to develop and commercialize at least one product in major markets. If we do not fulfill these diligence obligations, Adimab may consider it a material breach, allowing Adimab to terminate the agreement with respect to such target and all associated products. We are obligated to pay Adimab royalties at amid-single-digit percentage of net sales, made by us or our affiliates, of products based on antibodies for which Arsanis exercised its option, or products that use or are based on any antibody discovered or optimized under the agreement, any derivative or modified version of any such antibody, or any sequence information as to any such antibody.
If we (or one of our affiliates with rights under the agreement) undergoes a change in control and, at the time of such change in control, we have not sold or licensed to third parties all of our rights in antibodies for which we are obligated to pay Adimab royalties under the agreement (which rights we refer to as undesignated rights), then we are obligated to either pay Adimab a percentage, in the mid double digits of the payments we receive from that change in control that are reasonably attributable to those undesignated rights and certain patents arising from the collaboration, or require our acquirer and all of its future third party collaborators to pay to Adimab the royalties described above with respect to net sales of all products based on those undesignated rights. As a result of the Merger, this royalty election was made by Arsanis. If we grant rights to a third party under certain patents that are not directed to the antibodies for which we are obligated to pay Adimab royalties, we are also obligated to pay Adimab, in place of royalties or a percentage of payments received from the third party, a lump sum in the high six digits.
If we sell or license to any third party, or otherwise grant rights to any third party to, any of the products for which we are obligated to pay Adimab royalties, either alone or as part of a package including specified patents not directed to these antibodies, we are obligated to pay Adimab either the same royalties on net sales of such products by such third party, or a percentage, ranging from the low double digits to a maximum of less than 30%, of the payments we receive from such third parties that are attributable to such grant of rights. In April 2017, Arsanis entered into a letter agreement with the Gates Foundation (described below), pursuant to which Arsanis licensed to the Gates Foundation certain rights under its ASN100 program.
Notwithstanding the payment obligations described above, we have no payment obligations under the Adimab Collaboration Agreement with respect to sales of certain antibody products if they are sold at cost in developing countries under Arsanis’s April 2017 letter agreement with the Bill & Melinda Gates Foundation. However, if such products are sold in developing countries for an amount that exceeds cost, then the amount of such excess over cost will be subject to the royalty payment obligations.
The Adimab Collaboration Agreement will expire on acountry-by-country basis twelve years after the first commercial sale in such country of the last product for which we are obligated to pay Adimab royalties in such country under the agreement. We have the right to terminate the agreement for any reason by providing Adimab with a specified amount of prior written notice. Adimab has the right to terminate the agreement if we materially breach the agreement. If Adimab terminates the agreement for our breach, or if we terminate the agreement for our convenience, then we must transfer or license to Adimab certain rights and assets relating to targets and antibodies for which Arsanis exercised its option. Adimab is then obligated to make payments to us with respect to these targets and antibodies that are similar to the payments we were required to make to Adimab during the term of the agreement. Certain of our payment obligations relating to specified products and patents arising from the agreement survive expiration or termination of the agreement. Under the Adimab Collaboration Agreement, as of December 31, 2018, Arsanis had paid Adimab approximately $4.3 million in the aggregate, consisting of upfront payments and reimbursement for research conducted by Adimab.
Adimab Option and License Agreement
In February 2017, Arsanis entered into an option and license agreement with Adimab, which we refer to as the Adimab Option Agreement. Under the Adimab Option Agreement, Adimab has provided to us certain
proprietary antibodies against respiratory syncytial virus, or RSV, which we refer to as the initial RSV antibodies, for our evaluation during a specified option period and has granted us an exclusive, non-sublicensable license under certain Adimab patent rights andknow-how during the option period to create, research, optimize, make, have made and use the initial RSV antibodies and modified or derivative forms of the initial RSV antibodies.
Under the Adimab Option Agreement, we have an exclusive option, exercisable during the option period upon payment of an option fee to Adimab, to require Adimab to assign to us all rights in up to a specified number of RSV antibodies selected by us, which we refer to as the selected RSV antibodies, and certain patent rights owned by Adimab that cover these antibodies, and to obtain from Adimab anon-exclusive license, with the right to grant sublicenses, under certain other patent rights andknow-how owned by Adimab, to research, develop, have developed, make, have made, use, sell, offer to sell, import and export products based on the selected RSV antibodies and modified or derivative forms of the selected RSV antibodies, for all indications and uses except for certain diagnostic uses. If we exercise our option under the agreement, we would be required to use commercially reasonable efforts to develop and commercialize at least one product based on a licensed RSV antibody in major markets.
If we wish to exercise our option under the Adimab Option Agreement, we will be obligated to pay Adimab an option fee of $0.3 million and make clinical and regulatory milestone payments of up to $24.4 million. We are obligated to pay Adimab royalties at amid-single-digit percentage of net sales of products based on the initial RSV antibodies (including modified or derivative forms of those antibodies created by or for us) by us or any of our affiliates, licensees or sublicensees, regardless of whether these products practice any of the assigned or licensed patents orknow-how, subject to certainoff-set rights and adjustments to the royalty payments described in the agreement, and subject to further carve-outs with respect to sales of products based on licensed RSV antibodies to the extent they are sold at cost in developing countries under the February 2017 Bill & Melinda Gates Foundation, or Gates Foundation, grant agreement, as amended and restated in August 2018, and the August 2018 Gates Foundation grant agreement (described below). However, if such products are sold in developing countries for an amount that exceeds cost, then the amount of such excess will be subject to the royalty payment obligations described in the preceding paragraph.
If we do not exercise our option, the Adimab Option Agreement will expire on our achievement of specified preclinical milestones under our grant agreement with the Gates Foundation, but in any event no later thanmid-2019. We have the right to terminate the Adimab Option Agreement for any reason by providing Adimab with a specified amount of prior written notice. Adimab has the right to terminate the agreement if we materially breach the agreement. If Adimab terminates the agreement for our breach, if we terminate the agreement for our convenience or if the agreement expires before we exercises our option, then we must return or destroycertain know-how, including all initial RSV antibodies, and all modified or derivative forms of those antibodies, in our possession other than those for which we have made all payments required under the agreement, assign certain patents covering certain RSV antibodies to Adimab, grant Adimaba non-exclusive, royalty-free license under certain other patents, and grant Adimab a time-limited right of first negotiation to obtain an exclusive license to certain patentsand know-how and the transfer and assignment of certain regulatory filings and approvals and other related assets related to products based on licensed RSV antibodies. Certain of our payment obligations relating to specified products arising from the agreement survive expiration or termination of the agreement. During the years ended December 31, 2018 and 2017, Arsanis made payments to Adimab of $0.1 million and $0.1 million, respectively, under the Adimab Option Agreement.
Agreements with Bill & Melinda Gates Foundation
February 2017 Grant Agreement and August 2018 Amended and Restated Gates Foundation Grant Agreement
In February 2017, Arsanis entered into a grant agreement with the Gates Foundation pursuant to which the Gates Foundation granted Arsanis up to $9.3 million to conduct preclinical development of monoclonal
antibodies for the prevention of RSV infection in newborns, which we refer to as the RSV project. In return, Arsanis agreed to conduct the RSV project in a manner that ensures that the knowledge and information gained from the project will be promptly and broadly disseminated, and that the products, technologies, materials, processes and other intellectual property resulting from the RSV project (which Arsanis collectively refers to as the funded developments) will be made available and accessible at an affordable price to people most in need within developing countries. These obligations survive any expiration or termination of the grant agreement.
To this end, Arsanis granted the Gates Foundationa non-exclusive, perpetual, royalty-free, fully paid up, sublicensable license to make, use, sell, offer to sell, import, distribute, copy, modify, create derivative works, publicly perform and display the funded developments and, to the extent incorporated into a funded development or required to use a funded development, any other technology created outside of the RSV project that was used as part of the RSV project, for the benefit of people in developing countries. Arsanis also agreed to seek prompt publication of data and results developed under the RSV project under “open access” terms and conditions. This license and these publication obligations survive any expiration or termination of the grant agreement.
The grant agreement expires on October 31, 2019. The Gates Foundation can modify, suspend or discontinue any payment under the grant agreement, or terminate the grant agreement, if it is not reasonably satisfied with Arsanis’s progress on the RSV project; if there are significant changes to Arsanis’s leadership or other factors that the Gates Foundation reasonably believes may threaten the RSV project’s success; if Arsanis undergoes a change in control; if there is a change in its tax status; if the RSV project is no longer aligned with the Gates Foundation’s programmatic strategy; or if Arsanis fails to comply with the grant agreement. Any grant funds that have not been used for, or committed to, the RSV project upon the expiration or termination of the agreement must be returned to the Gates Foundation or otherwise used as directed by the Gates Foundation. In August 2018, Arsanis amended and restated the February 2017 grant agreement. The amended and restated grant agreement includes amendments to conform to current Gates Foundation audit, reporting, and other administrative requirements, as well as to make the perpetual Gates Foundation license grant described above irrevocable.
During the years ended December 31, 2018 and 2017, Arsanis recognized grant income of $0 and $1.6 million, respectively, under the grant agreement with the Gates Foundation upon incurring qualifying expenses. As of December 31, 2018 and 2017, there were no amounts recorded as unearned income under the grant agreement with the Gates Foundation.
August 2018 Gates Foundation Grant Agreement
In August 2018, Arsanis entered into an additional grant agreement with the Gates Foundation pursuant to which the Gates Foundation granted to Arsanis up to $1.1 million to conduct preclinical development activities for the RSV project that were not included in the February 2017 grant agreement, as amended and restated in August 2018. In return, Arsanis agreed to conduct the RSV project in a manner that ensures that the knowledge and information gained from the project will be promptly and broadly disseminated, and that the products, technologies, materials, processes and other intellectual property resulting from the RSV project (collectively referred to as the funded developments) will be made available and accessible at an affordable price to people most in need within developing countries. These obligations survive any expiration or termination of the grant agreement.
To this end, Arsanis granted to the Gates Foundationa non-exclusive, perpetual, irrevocable, royalty-free, fully paid up, sublicensable license to make, use, sell, offer to sell, import, distribute, copy, modify, create derivative works, publicly perform and display the funded developments and, to the extent incorporated into a funded development or required to use a funded development, any other technology created outside of the RSV project that was used as part of the RSV project, for the benefit of people in developing countries. Arsanis also agreed to seek prompt publication of data and results developed under the RSV project under “open access” terms and conditions. This license and these publication obligations survive any expiration or termination of the grant agreements.
During the year ended December 31, 2018, Arsanis recognized grant income of $1.1 million under the August 2018 grant agreement with the Gates Foundation upon incurring qualifying expenses. Accordingly, unearned income under the August 2018 grant agreement with the Gates Foundation was $0 as of December 31, 2018. The August 2018 grant agreement expired during the year ended December 31, 2018.
Gates Foundation Letter Agreement and Investment
In April 2017, Arsanis entered into a letter agreement with the Gates Foundation. In connection with the letter agreement, the Gates Foundation purchased 2,464,799 shares of Arsanis’s Series D redeemable convertible preferred stock (the “Series D preferred stock”), which converted into 120,363 shares of Arsanis’s common stock in connection with Arsanis’s initial public offering after giving effect to aone-for-3.4130 reverse stock split and the Reverse Stock Split. Arsanis committed to use the proceeds of $8.0 million from the investment by the Gates Foundation solely to advance the development of a specified monoclonal antibody program that involved the monoclonal antibodiesASN-1,ASN-2 andASN-3 and Arsanis’s product candidate, ASN100. Under the letter agreement, in addition to the initial project funded by the Gates Foundation with its initial investment, Arsanis also agreed to conduct up to four additional projects to be proposed and to be funded by the Gates Foundation.
The letter agreement contains certain global access obligations as well as requirements relating to Arsanis’s use of the funds received from the Gates Foundation investment. In the event that we fail to comply with these obligations or requirements or any related U.S. legal obligations set forth in the letter agreement, the Gates Foundation will have the right, after expiration of a specified cure period, to require us to redeem all of the shares owned by the Gates Foundation or to locate a third party that will purchase such shares. For any redemption or purchase resulting from such default, the shares of our stock held by the Gates Foundation will be redeemed at an amount equal to the greater of the original purchase price (plus specified interest) or the fair market value of such stock on the date of such redemption. The term of the letter agreement continues in perpetuity.
In connection with this letter agreement, Arsanis granted to the Gates Foundation and/or Gates Foundation-supported entities certain licenses, including anon-exclusive,non-terminable, royalty-free (except as required under the Adimab Collaboration Agreement), sublicensable license to products, technologies, materials, processes and other intellectual property developed using funds provided by the Gates Foundation or a Gates Foundation-supported entity, or developed in connection with Arsanis’s conduct of any funded project or additional funded project, as well as all of Arsanis’s background intellectual property, to utilize and exploit products and services directed at pathogens or other targets subject to any funded project or additional funded project.
The proceeds received from the Gates Foundation in connection with Arsanis’s sale and issuance of Series D preferred stock were incurred on qualifying expenses under the letter agreement during the year ended December 31, 2017. During the years ended December 31, 2018 and 2017, Arsanis incurred qualifying expenses of $0 and $8.0 million, respectively, under the letter agreement with the Gates Foundation.
Arsanis 2017 Convertible Note Financing
In January 2017, Arsanis issued and sold an aggregate of $4,934,981 in convertible promissory notes, or the 2017 Notes. The 2017 Notes accrued interest at a rate of 0.96% per annum, with a maturity date of October 12, 2017, unless earlier converted under the terms of the 2017 Notes. All principal and interest accrued under the 2017 Notes was converted into shares of Arsanis Series D convertible preferred stock in connection with the closing of Arsanis’s Series D convertible preferred stock financing in April 2017. Upon completion of Arsanis’s initial public offering in November 2017, all the outstanding shares of Arsanis Series D convertible preferred stock automatically converted into shares of Arsanis common stock. The following table sets forth the aggregate principal amount of notes issued and sold to Arsanis’s 5% stockholders and their affiliates in this transaction and the cash purchase price for such notes:
| | | | | | | | | | |
Name | | Aggregate Principal
Amount of 2017
Notes | | Cash
Purchase
Price |
Entities affiliated with Polaris Venture Partners (1) | | | $ | 1,294,943 | | | | $ | 1,294,943 | |
Entities affiliated with SV Health Investors, LLC (2) | | | $ | 1,294,943 | | | | $ | 1,294,943 | |
OrbiMed Private Investments IV, LP (3) | | | $ | 1,294,943 | | | | $ | 1,294,943 | |
NeoMed Innovation V, L.P. (4) | | | $ | 565,147 | | | | $ | 565,147 | |
Tillman U. Gerngross, Ph.D. (5) | | | $ | 250,000 | | | | $ | 250,000 | |
(1) | Terrance McGuire and Amy Schulman were members of Arsanis’s board of directors and each is an affiliate of Polaris Venture Partners.
|
(2) | Michael Ross was a member of Arsanis’s board of directors who is an affiliate of SV Health Investors, LLC.
|
(3) | Carl Gordon was a member of Arsanis’s board of directors who is an affiliate of OrbiMed Private Investments IV, LP.
|
(4) | Claudio Nessi was a member of Arsanis’s board of directors who is an affiliate of NeoMed Innovation V, L.P.
|
(5) | Tillman U. Gerngross is the former chairman of Arsanis’s board of directors.
|
Arsanis Series D Preferred Stock Financing
In April 2017, Arsanis issued and sold an aggregate of 14,220,284 shares of its Series D convertible preferred stock, consisting of (i) 12,323,987 shares sold for an aggregate of $35,053,178 in cash and conversion of $4,946,793 in outstanding principal and interest under the 2017 Notes at a price per share of approximately $3.2457 and (ii) 1,896,297 shares issued upon conversion of $5,539,344 in outstanding principal and interest under convertible promissory notes issued in April 2016, or the 2016 Notes, at a price per share of approximately $2.92. Upon completion of Arsanis’s initial public offering in November 2017, all the outstanding shares of Series D convertible preferred stock automatically converted into shares of Arsanis common stock. The following table sets forth the aggregate numbers of shares of Arsanis’s Series D convertible preferred stock that Arsanis sold to its 5% stockholders and their affiliates in these transactions and the aggregate amount of consideration for such shares:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name | | Shares of Series D
Preferred Stock
Issued for Cash
and upon
Conversion of
2017 Notes | | Cash
Purchase
Price | | Principal
Cancelled
under
2017
Notes | | Interest
Cancelled
under
2017 Notes | | Shares of Series D
Preferred
Stock
Issued upon
Conversion
of 2016 Notes | | Principal
Cancelled
under
2016
Notes | | Interest
Cancelled
Under
2016 Notes |
Bill & Melinda Gates Foundation | | | | 2,464,799 | | | | $ | 7,999,998 | | | | | — | | | | | — | | | | | — | | | | | — | | | | | — | |
Entities affiliated with Polaris Venture Partners (2) | | | | 1,924,752 | | | | $ | 4,949,125 | | | | $ | 1,294,943 | | | | $ | 3,099 | | | | | 307,259 | | | | $ | 891,178 | | | | $ | 6,375 | |
Entities affiliated with SV Health Investors, LLC (3) | | | | 1,924,750 | | | | $ | 4,949,125 | | | | $ | 1,294,943 | | | | $ | 3,099 | | | | | 307,262 | | | | $ | 891,178 | | | | $ | 6,375 | |
OrbiMed Private Investments IV,
LP (4) | | | | 1,924,752 | | | | $ | 4,949,125 | | | | $ | 1,294,943 | | | | $ | 3,099 | | | | | 307,262 | | | | $ | 891,178 | | | | $ | 6,375 | |
NeoMed Innovation V, L.P. (5) | | | | 839,938 | | | | $ | 2,159,687 | | | | $ | 565,147 | | | | $ | 1,353 | | | | | 112,559 | | | | $ | 326,467 | | | | $ | 2,335 | |
Tillman U. Gerngross, Ph.D. (6) | | | | 308,099 | | | | $ | 749,399 | | | | $ | 250,000 | | | | $ | 598 | | | | | — | | | | | — | | | | | — | |
(1) | Terrance McGuire and Amy Schulman were members of Arsanis’s board of directors and each is an affiliate of Polaris Venture Partners.
|
(2) | Michael Ross was a member of Arsanis’s board of directors who is an affiliate of SV Health Investors, LLC.
|
(3) | Carl Gordon was a member of Arsanis’s board of directors who is an affiliate of OrbiMed Private Investments IV, LP.
|
(4) | Claudio Nessi was a member of Arsanis’s board of directors who is an affiliate of NeoMed Innovation V, L.P.
|
(5) | Tillman U. Gerngross was the chairman of Arsanis’s board of directors.
|
Arsanis’s Initial Public Offering
In November 2017, Arsanis completed its initial public offering under which Arsanis issued and sold an aggregate of 4,600,000 shares of its common stock at a price per share of $10.00, for an aggregate purchase price of $46.0 million. The following table sets forth the number of shares of our common stock purchased by our directors, executive officers and 5% stockholders and their affiliates in the initial public offering and the aggregate purchase price paid for such shares. The share and per share amounts described in this section “Arsanis’s Initial Public Offering” do not reflect the Reverse Stock Split.
| | | | | | | | | | |
Name | | Shares of Common
Stock Purchased | | Aggregate
Purchase Price |
Entities affiliated with Polaris Venture Partners (1) | | | | 500,000 | | | | $ | 5,000,000 | |
Entities affiliated with SV Health Investors, LLC (2) | | | | 500,000 | | | | $ | 5,000,000 | |
OrbiMed Private Investments IV, LP (3) | | | | 500,000 | | | | $ | 5,000,000 | |
NeoMed Innovation V, L.P. (4) | | | | 300,000 | | | | $ | 3,000,000 | |
Tillman U. Gerngross, Ph.D. (5) | | | | 200,000 | | | | $ | 2,000,000 | |
| | | | | | | | | | |
Total | | | | 2,000,000 | | | | $ | 20,000,000 | |
| | | | | | | | | | |
(1) | Terrance McGuire and Amy Schulman were members of Arsanis’s board of directors and each is an affiliate of Polaris Venture Partners.
|
(2) | Michael Ross was a member of Arsanis’s board of directors who is an affiliate of SV Health Investors, LLC.
|
(3) | Carl Gordon was a member of Arsanis’s board of directors who is an affiliate of OrbiMed Private Investments IV, LP.
|
(4) | Claudio Nessi was a member of Arsanis’s board of directors who is an affiliate of NeoMed Innovation V, L.P.
|
(5) | Tillman U. Gerngross was the chairman of Arsanis’s board of directors.
|
X4 Related Person Transactions
X4 Series B Preferred Stock Financing
Since November 2017, X4 issued an aggregate of 18,616,569 shares of X4 Series B preferred stock at $1.88 per share and warrants to purchase an aggregate of 3,504,906 shares of X4 Series B preferred stock for an aggregate purchase price of approximately $35.0 million, which is referred to as the Series B preferred stock financing. Each share of X4 Series B preferred stock converted automatically into the right to receive shares of our common stock based on the exchange ratio immediately prior to the Merger.
The following table summarizes the Series B preferred stock and warrants to purchase Series B preferred stock purchased by X4’s directors, executive officers and principal stockholders at the time of the Series B preferred stock financing.
| | | | | | | | | | | | | | | | | | | | |
Name of Purchaser | | Number of
Shares of
Series B
Preferred
Stock
Purchased | | | Warrants
to Purchase
the
Number of
Shares of
Series B
Preferred
Stock
Listed
Below | | | Exercise
Price of
Warrants | | | Aggregate
Purchase
Price | | | Date of
Purchase | | Expiration
Date of
Warrants |
Entities affiliated with Cormorant (1) | | | 1,329,788 | | | | 132,979 | | | $ | 1.88 | | | $ | 2,500,000 | | | November 1,
2017 | | November 1,
2020 |
Healthcare Industry (Cayman) A Co., Limited | | | 2,659,574 | | | | 265,957 | | | $ | 1.88 | | | $ | 5,000,000 | | | September 12,
2018 | | September 12,
2021 |
(1) | Consists of 1,094,149 shares of X4 Series B preferred stock and warrants to purchase 109,415 shares of X4 Series B preferred stock issued to Cormorant Private Healthcare Fund I, L.P., 191,490 shares of X4 Series B preferred stock and warrants to purchase 19,149 shares of X4 Series B preferred stock issued to Cormorant Global Healthcare Master Fund, L.P., and 44,149 shares of X4 Series B preferred stock and warrants to purchase 4,415 shares of X4 Series B preferred stock issued to CRMA SPV, L.P.
|
X4 also paid Maxim Partners LLC, or Maxim, fees and reimbursement of expenses of approximately $2.8 million as placement agent for the Series B preferred stock financing, pursuant to a letter agreement between X4 and Maxim, dated as of July 6, 2017, as amended on February 13, 2018. As additional compensation, X4 issued warrants to purchase shares of X4 Series B preferred stock to Maxim. The first warrant was issued on December 28, 2017, was exercisable for 1,219,815 shares of X4 Series B preferred stock, had an exercise price of $1.88 per share, and expires on December 28, 2027. The second warrant was issued on September 12, 2018, was exercisable for 212,765 shares of X4 Series B preferred stock, had an exercise price of $1.88 per share, and expires on September 12, 2028. The letter agreement was terminated, effective as of May 16, 2018. In connection with the termination of the letter agreement, X4 agreed to pay Maxim a fee of $25,000 for expenses incurred after December 31, 2017. In addition, X4 and Maxim agreed that if, within 12 months of termination of the letter agreement, we complete a private financing or capital raising activity with certain other qualified investors, X4 would be required to pay Maxim certain agreed upon fee amounts. In connection with the Merger, the warrants exercisable for X4 Series B preferred stock became warrants to exercisable for our common stock at an agreed upon exchange ratio. The exercise price was also adjusted according to the exchange ratio.
X4 Series Seed Preferred Stock Repurchase
In October 2017, X4 entered into a stock repurchase agreement with the Estate of Henri Termeer (the “Termeer Estate”), a founder of X4, pursuant to which X4 agreed to repurchase 598,975 shares of X4 Series Seed preferred stock from the Termeer Estate at an aggregate repurchase price of $1,126,073. Alan E. Walts, Ph.D., a former director of X4 elected by the holders of X4 Series Seed preferred stock, serves as a business advisor to the Termeer Estate and receives a monthly consulting fee for such services. Dr. Walts does not have any voting or investment control over the securities held by the Termeer Estate and recused himself from the discussions with respect to this repurchase. The repurchase was settled in January 2018.
X4 Investors’ Rights, Votingand Co-sale Agreements
In connection with X4’s preferred stock financings, X4 entered into investors’ rights, voting and right of first refusaland co-sale agreements containing registration rights, information rights, voting rights and rights of first refusal, among other things, with certain holders of X4 preferred stock and certain holders of X4 common stock. In accordance with and pursuant to the terms of the Merger Agreement, these stockholder agreements terminated upon the closing of the Merger.
X4 Agreements with X4 Directors
Gary J. Bridger, Ph.D.
On
November 14, 2017, X4September 17, 2020, we entered into an independent contractor agreement with Gary J. Bridger, Ph.D.
, pursuant to which Dr. Bridger
agreedwas entitled to
provide X4 with strategic advice in supportreceive $30,000 per month and a non-qualified stock option to purchase 30,000 shares of our
research and development programscommon stock in
oncology and WHIM syndrome. The agreement provided for an initial termconsideration of
six months, which was renewed in accordance with its terms for an additional six months and expired in November 2018. The independent contractor agreement included standard assignmenthis performance of
invention, confidentiality and indemnification provisions. In consideration for the provision ofcertain consulting services
pursuant to
us during the
agreement, Dr. Bridger was paid approximately $105,000.On October 4, 2018, X4 entered into a letter agreement with Dr. Bridger, pursuantperiod from September 17, 2020 to which Dr. Bridger agreed to serve as a member of the board of directors of X4. This letter agreement superseded the independent contractor agreement described above. Pursuant to the letter agreement, X4December 17, 2020. We granted Dr. Bridger an option to purchase 226,98330,000 shares of X4our common stock to vestat a strike price of $7.33 on October 5, 2020.
Murray Stewart, M.D.
On September 17, 2020, we entered into an independent contractor agreement with Murray Stewart M.D., pursuant to
the terms of the X4 Plan and a separatenon-qualified stock option agreement. The letter agreement also specified thatwhich Dr.
Bridger would beStewart was entitled to receive
an annual grant$450 per hour and a non-qualified stock option to purchase 10,000 shares of
our common stock in consideration of his performance of certain consulting services to us during the period from September 17, 2020 to September 17, 2021. We granted Dr. Stewart an option to purchase
shares of X4 common stock at the level set for independent directors by the board of directors, if any. X4 also agreed to reimburse Dr. Bridger for expenses for which he received prior approval. Either X4 or Dr. Bridger may terminate the letter agreement at any time, for any reason, by giving the other 30 days’ prior written notice. In connection with the Merger, the option to purchase shares of X4 common stock became an option to purchase10,000 shares of our common
stock.Alan E. Walts, Ph.D.
On November 27, 2016, X4 entered into a letter agreement with its former director Alan E. Walts, Ph.D. to outline the applicable terms of his role as a member of the X4 board of directors. Pursuant to the letter agreement, X4 and Dr. Walts acknowledged that X4 had previously granted Dr. Walts an option to purchase 70,000 shares of X4 common stock at an exercisea strike price of $0.65 per share, to vest pursuant to the terms of the X4 Plan and a separatenon-qualified stock option agreement previously entered into by and between X4 and Dr. Walts. The letter agreement also specified that Dr. Walts would be entitled to receive an annual grant of an option to purchase shares of X4 common stock at the level set for independent directors by the X4 board of directors, if any. X4 also agreed to reimburse Dr. Walts for expenses for which he received prior approval from X4. The letter agreement included standard assignment of invention and confidentiality provisions. Either X4 or Dr. Walts was entitled to terminate the letter agreement at any time, for any reason, by giving the other 30 days’ prior written notice. Dr. Walts resigned as a director of X4 upon the completion of the Merger.
Michael Gilman, Ph.D.
On November 27, 2016, X4 entered into a letter agreement with its former director Michael Gilman to outline the applicable terms of his role as a member of the X4 board of directors. Pursuant to the letter agreement, X4 and Dr. Gilman acknowledged that X4 had previously granted Dr. Gilman options to purchase 70,000 and 8,000 shares of X4 common stock, at an exercise price of $0.65 per share, to vest pursuant to the terms of the X4 Plan and a separatenon-qualified stock option agreement previously entered into by and between X4 and Dr. Gilman. The letter agreement also specified that Dr. Gilman would be entitled to receive an annual
grant of an option to purchase shares of X4 common stock at the level set for independent directors by the X4 board of directors, if any. X4 also agreed to reimburse Dr. Gilman for expenses for which he receives prior approval from X4. The letter agreement included standard assignment of invention, confidentiality and indemnification provisions. Either X4 or Dr. Gilman was entitled to terminate the letter agreement at any time, for any reason, by giving the other 30 days’ prior written notice. Dr. Gilman resigned as a director of X4 upon the completion of the Merger.
Nancy Lurker
On September$7.27 on October 20, 2016, X4 entered into a letter agreement with its former director Nancy Lurker pursuant to which Ms. Lurker agreed to serve as Chairwoman of the X4 board of directors. Pursuant to the letter agreement, X4 granted Ms. Lurker an option to purchase 175,000 shares of X4 common stock to vest pursuant to the terms of the X4 Plan and a separate2020.
non-qualified
stock option agreement previously entered into by and between X4 and Ms. Lurker. The letter agreement also specified that Ms. Lurker would be entitled to receive an annual grant of an option to purchase shares of X4 common stock at the level set for independent directors by the X4 board of directors, if any. X4 also agreed to reimburse Ms. Lurker for expenses for which she received prior approval from X4. The letter agreement included standard assignment of invention, confidentiality and indemnification provisions. Either X4 or Ms. Lurker was entitled to terminate the letter agreement at any time, for any reason, by giving the other 30 days’ prior written notice. Ms. Lurker resigned from the X4 board of directors as of January 21, 2018.
Shares of Our Common Stock Issued in the Merger
On March 13, 2019, we completed the Merger and effected the Reverse Stock Split. In connection with the Merger, Paula Ragan, Ph.D., our President and Chief Executive Officer, received 181,366 shares of common stock in exchange for 1,870,000 shares of
Private X4 common stock and 38,451 shares of
Private X4 Series Seed preferred stock, as adjusted for the Reverse Stock Split. In addition, the following table sets forth the options to purchase
Private X4 common stock held by our directors and executive officers that became exercisable for our common stock in connection with the Merger:
| | | | | | | | | | | | | | | | | | | | |
Name | | Number of
Shares of X4
Common
Stock
Underlying
X4 Options (#) | | X4 Option
Exercise
Price ($) | | Number of
Shares of
Post-Merger
Common
Stock
Underlying
Post-Merger
Options (#) | | Post-
Merger
Option
Exercise
Price ($) |
Paula Ragan, Ph.D. | | | | 1,059,935 | | | | | 0.65 | | | | | 100,729 | | | | | 6.84 | |
| | | | 688,500 | | | | | 0.65 | | | | | 65,430 | | | | | 6.84 | |
| | | | 843,496 | | | | | 0.67 | | | | | 80,160 | | | | | 7.08 | |
Adam S. Mostafa | | | | 659,067 | | | | | 0.99 | | | | | 62,633 | | | | | 10.44 | |
Michael S. Wyzga | | | | 740,000 | | | | | 0.99 | | | | | 70,324 | | | | | 10.44 | |
Isaac Blech | | | | 744,967 | | | | | 0.65 | | | | | 70,796 | | | | | 6.84 | |
Gary J. Bridger, Ph.D. | | | | 226,983 | | | | | 0.99 | | | | | 21,570 | | | | | 10.44 | |
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
On May 13, 2019,
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| Name | | Number of
Shares of X4
Common Stock
Underlying
Private
X4 Options (#) | | | Private
X4 Option
Exercise
Price ($) | | | Number of
Shares of
Post-Merger
Common Stock
Underlying
Post-Merger
Options (#) | | | Post-
Merger
Option
Exercise
Price ($) | |
| Paula Ragan, Ph.D. | | | 1,059,935 | | | | 0.65 | | | | 100,729 | | | | 6.84 | |
| | | 688,500 | | | | 0.65 | | | | 65,430 | | | | 6.84 | |
| | | 843,496 | | | | 0.67 | | | | 80,160 | | | | 7.08 | |
| Adam S. Mostafa | | | 659,067 | | | | 0.99 | | | | 62,633 | | | | 10.44 | |
| Michael S. Wyzga | | | 740,000 | | | | 0.99 | | | | 70,324 | | | | 10.44 | |
| Isaac Blech | | | 744,967 | | | | 0.65 | | | | 70,796 | | | | 6.84 | |
| Gary J. Bridger, Ph.D. | | | 226,983 | | | | 0.99 | | | | 21,570 | | | | 10.44 | |
INDEMNIFICATION
We provide indemnification for our boarddirectors and executive officers so that they will be free from undue concern about personal liability in connection with their service to us. Under our Bylaws, we are required to indemnify our directors and executive officers to the extent not prohibited under Delaware or other applicable law. We has also entered into indemnity agreements with certain officers and directors. These agreements provide, among other things, that we will indemnify the officer or director, under the circumstances and to the extent provided for in the agreement, for expenses, damages, judgments, fines and settlements he or she may be required to pay in actions or proceedings which he or she is or may be made a party by reason of directors nominated René Russo for election at the annual meeting. Our board of directors currently consists of seven (7) members, classified into three classes as follows: René Russo and Isaac Blech constitute Class II, with a term ending at the 2019 annual meeting of stockholders; Gary J. Bridger, Ph.D. and Murray Stewart, M.D. constitute Class III, with a term ending at the 2020 annual meeting of stockholders; and Paula Ragan, Ph.D., Michael S. Wyzga and David McGirr constitute Class I, with a term ending at the 2021 annual meeting of stockholders. Mr. Blech will continue to servehis or her position as a director, officer or other agent of the Company, and otherwise to the fullest extent permitted under Delaware law and our Bylaws.
HOUSEHOLDING OF PROXY MATERIALS
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for Notices of Internet Availability of Proxy Materials or other Annual Meeting materials with respect to two or more stockholders sharing the same address by delivering a single Notice of Internet Availability of Proxy Materials or other Annual Meeting materials addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
This year, a number of brokers with account holders who are X4 stockholders will be “householding” the Company’s proxy materials. A single Notice of Internet Availability of Proxy Materials will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate Notice of Internet Availability of Proxy Materials, please notify your broker or X4. Direct your written request to X4 Pharmaceuticals, Inc., Attn: Corporate Secretary, 61 North Beacon Street, 4th Floor, Boston, MA 02134 or contact the endCorporate Secretary at (857) 529-8300. Stockholders who currently receive multiple copies of his term, which concludesthe Notices of Internet Availability of Proxy Materials at their addresses and would like to request “householding” of their communications should contact their brokers.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for consideration at the
annual meeting, upon whichAnnual Meeting. If any other matters are properly brought before the
sizeAnnual Meeting, it is the intention of
our board will be reduced to consist of six (6) members.At each annual meeting of stockholders, directors are elected for a full term of three years to succeed those directors whose terms are expiring.
Our board of directors has voted to nominate René Russo for election at the annual meeting for a term of three years to serve untilpersons named in the 2022 annual meeting of stockholders, and until her successor is elected and qualified. The Class III directors (Gary J. Bridger, Ph.D. and Murray Stewart, M.D.) and the Class I directors (Paula Ragan, Ph.D., Michael S. Wyzga and David McGirr) will serve until the annual meetings of stockholders to be held in 2020 and 2021, respectively, and each director will hold office until his or her successor has been elected and qualified or until his or her earlier death, resignation or removal.
Unless authorityaccompanying proxy to vote for the nominee is withheld, the shares represented by the enclosed proxy will be votedFOR the election of René Russo as a director. In the event that Ms. Russo becomes unable or unwilling to serve, the shares represented by the enclosed proxy will be voted for the election ofon such other person as our board of directors may recommendmatters in the nominee’s place. We have no reason to believe that the nominee will be unable or unwilling to serve as a director.
accordance with their best judgment.
| | |
|
| By Order of the Board of Directors, |
|
|
| Paula Ragan |
| President, Chief Executive Officer, Corporate Secretary and Director |
April 20, 2021
A
pluralitycopy of the
shares votedFORCompany’s Annual Report to the
nominee at the annual meeting is required to elect the nominee as a director.THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION OF RENÉ RUSSO AS A DIRECTOR, AND PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR THEREOF UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
PROPOSAL NO. 2:
RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The audit committee has appointed PricewaterhouseCoopers LLP, as our independent registered public accounting firm, to audit our financial statementsSecurities and Exchange Commission on Form 10-K for the fiscal year ending December 31, 2019. The board of directors proposes that the stockholders ratify this appointment. PricewaterhouseCoopers LLP audited our financial statements for the fiscal years ended December 31, 2018 and 2017 and audited the financial statements of X4 for the fiscal years ended December 31, 2018 and 2017. We expect that representatives of PricewaterhouseCoopers LLP will be present at the annual meeting, will be able to make a statement if they so desire, and will be2020 is available to respond to appropriate questions.
In deciding to appoint PricewaterhouseCoopers LLP, the audit committee reviewed auditor independence issues with PricewaterhouseCoopers LLP and concluded that PricewaterhouseCoopers LLP has no commercial relationship with the Company that would impair its independence for the fiscal year ending December 31, 2019.
Arsanis Audit Fees and Services
The following table presents fees for professional audit services rendered by PricewaterhouseCoopers LLP for the audit of Arsanis’s annual financial statements for the years ended December 31, 2018 and December 31, 2017 as well as fees billed for other services rendered by PricewaterhouseCoopers LLP during those periods.
| | | | | | | | | | |
| Fee Category | | 2018 | | 2017 |
Audit Fees (1) | | | $ | 731,372 | | | | $ | 1,437,218 | |
Audit-Related Fees (2) | | | | — | | | | | — | |
Tax Fees (3) | | | | — | | | | | — | |
All Other Fees (4) | | | | 1,800 | | | | | — | |
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Total Fees | | | $ | 733,172 | | | | $ | 1,437,218 | |
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(1) | “Audit Fees” consist of fees billed for professional services performed by PricewaterhouseCoopers LLP for the audit of Arsanis’s annual financial statements, the review of interim financial statements, and related services that are normally provided in connection with registration statements. Included in 2017 Audit Fees are fees of $926,309 billed in connection with Arsanis’s initial public offering, which closed in November 2017, and fees billed in connection with the filing of registration statements. Included in 2018 Audit Fees are fees of $188,372 billed in connection with the filing of registration statements.
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(2) | “Audit-Related Fees” consist of fees billed by an independent registered public accounting firm for assurance and related services that are reasonably related to the performance of the audit or review of Arsanis’s financial statements and which are not reported under “Audit Fees.” There were no such fees incurred in 2018 or 2017.
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(3) | “Tax Fees” consist of fees primarily related to tax compliance and consulting. There were no such fees incurred in 2018 or 2017.
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(4) | “All Other Fees” relate to fees for access to the PricewaterhouseCoopers LLP online accounting research and financial disclosure tools.
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There were no services that were approved by the audit committee pursuant to Rule2-01(c)(7)(i)(C) (relating to the approval of ade minimis amount ofnon-audit services after the fact but before completion of the audit).
X4 Audit Fees and Services
The following table presents fees for professional audit services rendered by PricewaterhouseCoopers LLP for the audit of X4’s annual financial statements for the years ended December 31, 2018 and December 31, 2017 as well as fees billed for other services rendered by PricewaterhouseCoopers LLP during those periods.
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| Fee Category | | 2018 | | 2017 |
Audit Fees (1) | | | $ | 1,112,232 | | | | $ | 185,000 | |
Audit-Related Fees (2) | | | | — | | | | | — | |
Tax Fees (3) | | | | 8,150 | | | | | 7,250 | |
All Other Fees (4) | | | | 900 | | | | | — | |
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Total Fees | | | $ | 1,121,282 | | | | $ | 192,250 | |
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(1) | “Audit Fees” consist of fees billed for professional services performed by PricewaterhouseCoopers LLP for the audit of X4’s annual financial statements, the review of interim financial statements, and related services that are normally provided in connection with registration statements. Included in 2018 Audit Fees are fees of $542,232 incurred through December 31, 2018 in connection with SEC and other regulatory filings related to the Merger.
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(2) | “Audit-Related Fees” consist of fees billed by an independent registered public accounting firm for assurance and related services that are reasonably related to the performance of the audit or review of X4’s financial statements and which are not reported under “Audit Fees.” There were no such fees incurred in 2018 or 2017.
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(3) | “Tax Fees” consist of fees primarily related to tax compliance and consulting.
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(4) | “All Other Fees” relate to fees for access to the PricewaterhouseCoopers LLP online accounting research and financial disclosure tools.
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Policy on Audit CommitteePre-Approval of Audit and PermissibleNon-Audit Services of Independent Public Accountant
Consistent with SEC policies regarding auditor independence, the audit committee has responsibility for appointing, setting compensation for and overseeing the work of our independent registered public accounting firm. In recognition of this responsibility, the audit committee has established a policy topre-approve all audit and permissiblenon-audit services provided by our independent registered public accounting firm.
Prior to engagement of an independent registered public accounting firm for the next year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of four categories of services to the audit committee for approval.
1. Auditservices include audit work performed in the preparation of financial statements, as well as work that generally only an independent registered public accounting firm can reasonably be expected to provide, including comfort letters, statutory audits, consents in connection with registration statements, and attest services and consultation regarding financial accounting and/or reporting standards.
2. Audit-Related services are for assurance and related services that are traditionally performed by an independent registered public accounting firm, including due diligence related to mergers and acquisitions, employee benefit plan audits, and special procedures required to meet certain regulatory requirements.
3. Tax services include all services performed by an independent registered public accounting firm’s tax personnel, except those services specifically related to the audit of the financial statements, and include fees in the areas of tax compliance, tax planning and tax advice.
4. Other Fees are those associated with services not captured in the other categories. We generally do notwithout charge upon written request such services from our independent registered public accounting firm.
Prior to engagement, the audit committeepre-approves these services by category of service. The fees are budgeted and the audit committee requires our independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage our independent registered public accounting firm for additional services not contemplated in the originalpre-approval. In those instances, the audit committee requires specificpre-approval before engaging our independent registered public accounting firm.
The audit committee may delegatepre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, anypre-approval decisions to the audit committee at its next scheduled meeting.
In the event the stockholders do not ratify the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm, the audit committee will reconsider its appointment.
The affirmative vote of the holders of shares of our common stock having a majority in voting power of the votes cast by the holders of all of the shares of our common stock present or represented at the annual meeting and voting affirmatively or negatively on the matter is required to ratify the appointment of our independent registered public accounting firm.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE TO RATIFY THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND PROXIES SOLICITED BY OUR BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF SUCH RATIFICATION UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY.
CODE OF BUSINESS CONDUCT AND ETHICS
We have adopted a code of business conduct and ethics that applies to all of our employees, including our chief executive officer and chief financial and accounting officer. We have posted a copy of the code of business conduct and ethics on our website at www.x4pharma.com. Disclosure regarding any amendments to, or waivers from, provisions of the code of business conduct and ethics that apply to our directors, principal executive officer or principal financial officer will be included in a Current Report on Form8-K within four business days following the date of the amendment or waiver, unless website posting or the issuance of a press release of such amendments or waivers is then permitted by the rules of the Nasdaq Stock Market.
OTHER MATTERS
Our board of directors knows of no other business which will be presented to the annual meeting. If any other business is properly brought before the annual meeting, proxies will be voted in accordance with the judgment of the persons named therein.
STOCKHOLDER PROPOSALS AND NOMINATIONS FOR DIRECTOR
To be considered for inclusion in the proxy statement relating to our 2020 annual meeting of stockholders, we must receive stockholder proposals (other than for director nominations) no later than January 24, 2020. To be considered for presentation at the2020 annual meeting of stockholders, although not included in the proxy statement, proposals (including director nominations that are not requested to be included in our proxy statement) must be received no earlier than February 18, 2020 and no later than March 19, 2020. Proposals that are not received in a timely manner will not be voted on at the 2020 annual meeting of stockholders. If a proposal is received on time, the proxies that management solicits for the meeting may still exercise discretionary voting authority on the proposal under circumstances consistent with the proxy rules of the SEC. All stockholder proposals should be marked for the attention ofto: Corporate Secretary, X4 Pharmaceuticals, Inc., 955 Massachusetts Avenue,61 North Beacon Street, 4th Floor, Cambridge, Massachusetts 02139.
Cambridge, Massachusetts
May 22, 2019
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Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas.
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Your vote matters – here’s how to vote!
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You may vote online or by phone instead of mailing this card. |
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| | Votes submitted electronically must be received by 11:59 p.m. EDT on Sunday, June 16, 2019. |
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 | | Online
Go towww.investorvote.com/XFOR or scan the QR code – login details are located in the shaded bar below.
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| | Phone
Call toll free 1-800-652-VOTE (8683) within the USA, US territories and Canada
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| | Save paper, time and money!
Sign up for electronic delivery at www.investorvote.com/XFOR
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q IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.q
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A Proposals – The Board of Directors recommend a voteFOR the nominee listed andFOR Proposal 2.
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1. Election of Directors:
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| | For | | Withhold | | | | | | | | | | | | | | |
01 - René Russo
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| | For
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| | Abstain
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2. Ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2019.
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B Authorized Signatures – This section must be completed for your vote to count. Please date and sign below.
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Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
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Date (mm/dd/yyyy) – Please print date below.
| | | | Signature 1 – Please keep signature within the box. | | | | Signature 2 – Please keep signature within the box. |
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032C6B
2019 Annual Meeting Admission Ticket
2019 Annual Meeting of X4 Pharmaceuticals, Inc. Shareholders
Monday June 17, 2019, 10:00 a.m. EDT
Offices of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.,
One Financial Center, Boston, MA 02111
Upon arrival, please present this admission ticket and photo identification at the registration desk.
Important notice regarding the Internet availability of proxy materials for the Annual Meeting of Shareholders.
The material is available at: www.investorvote.com/XFOR
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| | | | Small steps make an impact.
Help the environment by consenting to receive electronic
delivery, sign up at www.investorvote.com/XFOR
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02134.
q
IF VOTING BY MAIL, SIGN, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
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Notice of 2019 Annual Meeting of Stockholders
Proxy Solicited by Board of Directors for Annual Meeting – June 17, 2019
Paula Ragan. Ph.D. and Adam S. Mostafa, or any of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Stockholders of X4 Pharmaceuticals, Inc. to be held on June 17, 2019 or at any postponement or adjournment thereof.
Shares represented by this proxy will be voted by the stockholder. If no such directions are indicated, the Proxies will have authority to vote FOR the election of the Board of Directors and FOR item 2.
In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
(Items to be voted appear on reverse side)
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C Non-Voting Items
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Change of Address – Please print new address below.
| | | | Comments – Please print your comments below.
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