UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No.__)
| | |
Filed by the Registrant ☒þ |
| Filed by a Party other than the Registrant ☐ |
Check the appropriate box:
| | | | | |
| þ | Preliminary Proxy Statement |
| ☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ☐ | Definitive Proxy Statement |
| ☐ | Definitive Additional Materials |
| ☐ | Soliciting Material Pursuant Rule §240.14a-11(c) or §240.14a-2 |
9 Meters Biopharma, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check all boxes that apply):
þ No fee required
☐ Fee paid previously with preliminary materials
☐ Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11
9 METERS BIOPHARMA, INC.
8480 Honeycutt Road, Suite 120
Raleigh, NC 27615
(919) 275-1933
Notice of AnnualSpecial Meeting of Stockholders
To Be Held on June 22,September 23, 2022
Dear Stockholder:
The stockholders of 9 Meters Biopharma, Inc. (the “Company”) will hold an annuala special meeting of stockholders (the “Annual“Special Meeting”) on June 22,September 23, 2022, at [•]8 a.m. Eastern Time at [•].the Renaissance Raleigh North Hills Hotel, 4100 Main at North Hills Street, Raleigh, NC 27609. Due to the ongoing uncertainty regarding the spread of the coronavirus, or COVID-19, in the United States, it may become necessary to change the date, time, location, and/or format of the AnnualSpecial Meeting in order to comply with advisories or mandates of federal, state, and local governments, and related agencies or, in our sole determination, to ensure the safety of those who attend. We will announce any such change in advance by issuing a press release and filing the announcement with the Securities and Exchange Commission (the “SEC”).
The AnnualSpecial Meeting is called to approve the potential issuance of shares of our common stock underlying senior secured convertible notes in an amount that may be equal to or exceed 20% of our common stock outstanding on June 30, 2022, for purposes of complying with Nasdaq Listing Rule 5635(d) (the “Nasdaq Proposal”). We will also transact any other business that may properly come before the following purposes:Special Meeting or at any adjournments or postponements of the Special Meeting.
1.To elect two Class I directors to serve three-year terms expiring at the 2025 Annual Meeting of Stockholders and until such director’s successorThe Nasdaq Proposal is elected and qualified, or until his earlier death, resignation or removal;
2.To approve an amendment to the amended and restated certificate of incorporation to effect a reverse stock split of the Company’s common stock, the decision whether to implement such split, being subject to the discretion of the Board of Directors (the “Reverse Stock Split Proposal”);
3.To hold an advisory (nonbinding) vote on named executive officer compensation;
4.To hold an advisory (nonbinding) vote on the frequency of future stockholder advisory votes on named executive officer compensation; and
5.To ratify the appointment of Mayer Hoffman McCann P.C. as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022.
These items of business are more fully described in the Proxy Statement accompanying this Notice. Please refer to the Proxy Statement for further information with respect to the business to be transacted at the Special Meeting. The Board of Directors unanimously recommends that you vote “FOR” the election of the director nominees listed in the accompanying Proxy Statement, “FOR” the Reverse Stock Split Proposal, “FOR” for the named executive officer compensation as described in this Proxy Statement, “FOR” one year frequency of future advisory votes on named executive officer compensation, and “FOR” ratification of the appointment of Mayer Hoffman McCann P.C. as the Company’s independent registered public accounting firm.Nasdaq Proposal.
The record date for the AnnualSpecial Meeting is May 4,July 25, 2022. Only stockholders of record at the close of business on that date may vote at the meeting or any adjournment thereof. Whether or not you expect to attend the AnnualSpecial Meeting, it is important that your shares be represented and voted. Please vote over the telephone or over the Internet as instructed in these materials, or request a proxy card and vote by mail, as promptly as possible in order to ensure your representation at the meeting. Even if you have voted by proxy, you may still vote in person if you attend the meeting. Please note, however, that, if your shares are held of record by a broker, bank or other nominee and you wish to vote at the meeting, you must obtain a proxy issued in your name from that record holder. Instructions on how to vote are found in the section entitled “How may I vote shares at the AnnualSpecial Meeting” starting on page 54 of the Proxy Statement.
9 METERS BIOPHARMA, INC.
8480 Honeycutt Road, Suite 120
Raleigh, NC 27615
(919) 275-1933
| | |
|
| If you have any questions, or require any assistance |
| with voting your shares, please contact: |
|
| D.F. King & Co., Inc. |
|
| 48 Wall Street, 22nd Floor |
| New York, New York 10005 |
|
| Telephone for Banks and Brokers: (212) 269-5550 |
| Stockholders may call toll-free: (866) 829-1035 |
| Email: 9meters@dfking.com |
| | |
| By Order of the Board of Directors |
|
| /s/ John Temperato |
| John Temperato |
| President and Chief Executive Officer |
|
|
| Raleigh, North Carolina |
9 METERS BIOPHARMA, INC.
8480 Honeycutt Road, Suite 120
Raleigh, NC 27615
919-275-1933
Proxy Statement for AnnualSpecial Meeting of Stockholders
To Be Held on June 22,September 23, 2022
TABLE OF CONTENTS
9 METERS BIOPHARMA, INC.
8480 Honeycutt Road, Suite 120
Raleigh, NC 27615
919-275-1933
Proxy Statement for AnnualSpecial Meeting of Stockholders
To Be Held on June 22,September 23, 2022
IMPORTANT NOTICE REGARDING THE AVAILABILITYSPECIAL MEETING OF PROXY MATERIALS FOR THE ANNUAL MEETINGSTOCKHOLDERS TO BE HELD ON JUNE 22,SEPTEMBER 23, 2022
Our Proxy Statement and our 2021 Annual Report to Stockholders are available at www.proxyvote.com.
This Proxy Statement is furnished to the holders of our common stock in connection with the solicitation of proxies on behalf of our Board of Directors for use at the AnnualSpecial Meeting to be held on June 22,September 23, 2022 at [•]8 a.m. Eastern Time at [•],the Renaissance Raleigh North Hills Hotel, 4100 Main at North Hills Street, Raleigh, NC 27609, or for use at any adjournment or postponement thereof,thereof. The purpose of the Special Meeting is to approve the potential issuance of shares of our common stock underlying senior secured convertible notes in an amount that may be equal to or exceed 20% of our common stock outstanding on June 30, 2022, for the purposes set forth herein and in the accompanying Notice of Annual Meeting of Stockholders.complying with Nasdaq Listing Rule 5635(d) (the "Nasdaq Proposal"). Only stockholders of record at the close of business on May 4,July 25, 2022 (the "Record Date") are entitled to notice of and to vote at the meeting.
In accordance with the rules of the SEC, and to save printing costs and benefit the environment, instead of mailing a printed copy ofSpecial Meeting. We mailed our proxy materials to each stockholder of record, we are furnishing proxy materials, including the Notice, this Proxy Statement, our 2021 Annual Report to Stockholders, including financial statements, and a proxy card for the meeting, by providing access to them on the Internet. These materials were first available on the Internet on May 11, 2022. We mailed a Notice of Internet Availability of Proxy Materials on or about May 11,August 2, 2022 to our stockholders of record and beneficial owners as of the close of business on May 4, 2022, the record date for the Annual Meeting. The Proxy Statement and the Notice of Internet Availability of Proxy Materials contain instructions for accessing and reviewing our proxy materials on the Internet and for voting by proxy over the Internet. You will need to obtain your own Internet access if you choose to access the proxy materials and/or vote over the Internet. If you prefer to receive printed copies of our proxy materials, the Notice of Internet Availability of Proxy Materials contains instructions on how to request the materials by mail. You will not receive printed copies of the proxy materials unless you request them. If you elect to receive the materials by mail, you may also vote by proxy on the proxy card or voter instruction card that you will receive in response to your request.Record Date.
Each holder of our common stock is entitled to one vote for each share held as of the record dateRecord Date with respect to all matters that may be considered at the AnnualSpecial Meeting. Stockholder votes will be tabulated by persons appointed by our Board of Directors to act as inspectors of election for the AnnualSpecial Meeting.
We bearhave engaged D.F. King & Co., Inc. ("DF King"), a proxy solicitation firm, at an approximate costs of $12,500, to solicit proxies on behalf of the expenseCompany. DF King may solicit the return of soliciting proxies.proxies, either by mail, telephone, email or through personal contact. The cost of solicitation will be borne by us, including the fees of DF King as well as the reimbursement of their expenses. Our directors officers, and employees may also solicit proxies personally orin person, by telephone, facsimile,fax, electronic transmission or other means of communication. We dowill not intend to pay these directors and employees any additional compensation for doing so. In addition, we might reimbursethese services. We will ask banks, brokerage firms, and other custodians,institutions, nominees, and fiduciaries representing beneficial owners of our common stockto forward these proxy materials to their principal, and to obtain authority to execute proxies, and will reimburse them for their expenses in forwarding soliciting materialsexpenses.
Please refer to those beneficial owners.the Proxy Statement for further information with respect to the business to be transacted at the Special Meeting. Our Proxy Statement is also available at www.proxyvote.com.
All references in this Proxy Statement to “9 Meters”, “the Company”, “we”, “our”, and “us” mean 9 Meters Biopharma, Inc.
QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING
Will the AnnualSpecial Meeting be impacted by the coronavirus (COVID-19) pandemic?
We continue to actively monitor developments in relation to the COVID-19 pandemic, including the spread of variant strains of the virus, and we regularly review and consider the related requirements, recommendations, and protocols that are issued and that may be issued by public health authorities and governments, including in relation to masking, testing, and vaccinations. Due to the rapidly evolving circumstances and the uncertainties surrounding the COVID-19 pandemic, it may become necessary to change the location, date, and/or time of the AnnualSpecial Meeting to comply with these advisories and mandates or, in our sole determination, to ensure the safety of those who attend. If circumstances dictate, it may become necessary for us to conduct the AnnualSpecial Meeting “virtually” through the internet or through other electronic or telephonic means in lieu of an in-person meeting.
If it becomes necessary to change the date, time, location, and/or format of the AnnualSpecial Meeting, in lieu of mailing additional soliciting materials or amending this Proxy Statement, we will announce the decision in advance by issuing a press release, filing the announcement with the SEC and taking other reasonable steps to notify other parties involved in the proxy process of the change(s). Any such press release and filing with the SEC will also be available on our website at www.9meters.com.
We recommend that you monitor our press releases or filings with the SEC in the event that circumstances require us to change the date, time, location or format of the AnnualSpecial Meeting, particularly if you plan to attend the AnnualSpecial Meeting in person. We encourage all stockholders to vote their shares prior to the AnnualSpecial Meeting. Even if you plan to attend the AnnualSpecial Meeting, we recommend that you vote your shares in advance using one of the methods described below under “How may I vote my shares at the AnnualSpecial Meeting?” to ensure that your vote will be counted, including in the event that you later decide not to attend the AnnualSpecial Meeting.
Who may vote at the AnnualSpecial Meeting?
Our Board of Directors set May 4,July 25, 2022 as the Record Date for the AnnualSpecial Meeting. If you owned shares of our common stock at the close of business on May 4,July 25, 2022, you may attend and vote at the AnnualSpecial Meeting. Each stockholder is entitled to one vote for each share of common stock held on all matters to be voted on. Cumulative voting is not permitted in the election of directors or on any other matter.
As of the close of business on May 4,July 25, 2022, there were [•[●] shares of our common stock outstanding that will be entitled to vote at the AnnualSpecial Meeting.
A list of the stockholders entitled to vote at the AnnualSpecial Meeting may be examined at our principal executive office in Raleigh, North Carolina during ordinary business hours for the ten-day period preceding the meetingSpecial Meeting for any purposes related to the meeting. The stockholder list will also be available to stockholders during the meeting.Special Meeting.
What is the difference between holding shares as a stockholder of record and as a beneficial owner?
Many of our stockholders hold their shares through a broker, bank or other nominee rather than directly in their own name as the stockholder of record. As summarized below, there are some distinctions between shares held of record and those owned beneficially.
Stockholder of Record. If your shares are registered directly in your name with our transfer agent, EQ Shareowner Services, formerly known as Corporate Stock Transfer (“EQ”), you are considered, with respect to those shares, the stockholder of record, and these proxy materials are being sent directly to you by EQ on our behalf. As the stockholder of record, you have the right to grant your voting proxy directly to us or to vote in person at the AnnualSpecial Meeting. You will need to present a form of personal photo identification in order to be admitted to the AnnualSpecial Meeting.
Beneficial Owner. If you hold your shares in an account with a broker, bank or other nominee, rather than of record directly in your own name, then the broker, bank or other nominee is considered the record holder of that stock. You are considered the beneficial owner of that stock, and your stock is held in “street name.”name”. This Proxy Statement has been forwarded to you by your broker, bank or other nominee. As the beneficial owner, you have the right to direct your broker, bank or other nominee regarding how to vote your shares, and you are also invited to attend the AnnualSpecial Meeting.
Your broker, bank or other nominee has enclosed a voting instruction form for you to use in directing your broker, bank or other nominee as to how to vote your shares. In most cases, you will be able to do this by mail, via the Internet or by telephone. Alternatively, you may obtain a “legal proxy”legal proxy from your broker, bank or other nominee and follow the instructions described below. Because a beneficial owner is not the stockholder of record, you may not vote these shares in person at the AnnualSpecial Meeting unless you obtain a “legal proxy”legal proxy from the broker, nominee, or trustee that holds your shares, giving you the right to vote the shares at the AnnualSpecial Meeting. We urge you to instruct your broker, bank or other nominee by following the instructions on the enclosed voting instruction form, to vote your shares in line with our Board of Directors’ recommendations on the voting instruction form.
What is the quorum requirement for the AnnualSpecial Meeting?
A majority of our outstanding shares of common stock entitled to vote as of the Record Date must be present at the AnnualSpecial Meeting in order for us to hold the meetingSpecial Meeting and conduct business. This is called a quorum. Your shares will be counted as present at the AnnualSpecial Meeting if you:
•Are present and entitled to vote in person at the AnnualSpecial Meeting; or
•Properly submitted a proxy card or voting instruction form; or
•Do not provide your broker with instructions on how to vote, but the broker submits your proxy nonetheless (a broker non-vote).form.
Abstentions withheld votes and broker non-votes (if any) will be counted for purposes of determining whether a quorum is present at the AnnualSpecial Meeting. Broker non-votes occur when a person holding shares in street name, such as through a brokerage firm, does not provide instructions as to how to vote those shares, but the broker submits that person’s proxy nonetheless. If you are present in person or by proxy at the AnnualSpecial Meeting but withhold your vote or abstain from voting on any or all proposals,the proposal, your shares are still counted as present and entitled to vote.
What proposalsproposal will be voted on at the AnnualSpecial Meeting?
The five proposalsproposal to be voted on at the AnnualSpecial Meeting are as follows:is the Nasdaq Proposal to approve the potential issuance of shares of our common stock underlying senior secured convertible notes in an amount that may be equal to or exceed 20% of our common stock outstanding on June 30, 2022, for purposes of complying with Nasdaq Listing Rule 5635(d).
1.To elect two Class I directors to serve three-year terms expiring at the 2025 Annual Meeting of Stockholders and until such director’s successor is elected and qualified, or until his earlier death, resignation or removal;
2.To approve an amendment to our amended and restated certificate of incorporation, to effect a reverse stock split of the Company’s common stock, the decision whether to implement such split, being subject to the discretion of the Board of Directors (the “Reverse Stock Split Proposal”);
3.To hold an advisory (nonbinding) vote on named executive officer compensation;
4.To hold an advisory (nonbinding) vote on the frequency of future stockholder advisory votes on named executive officer compensation; and
5.To ratify the appointment of Mayer Hoffman McCann P.C. as our independent registered public accounting firm for the fiscal year ending December 31, 2022.
We will also consider any other business that properly comes before the AnnualSpecial Meeting. As of the Record Date, we are not aware of any other matters to be submitted for consideration at the AnnualSpecial Meeting. If any other
matters are properly brought before the AnnualSpecial Meeting, the proxy named in the proxy card or voter instruction card will vote the shares it represents using itstheir best judgment.
What is a broker non-vote, and will there be any broker non-votes at the AnnualSpecial Meeting?
Broker non-votes occur when brokers do not have discretionary voting authority to vote certain shares held in “street name” on particular non-routine"non-routine" proposals and the beneficial owner of those shares has not instructed the broker to vote on those proposals. Broker non-votes arewill not be counted in the tabulationstabulation of the votes present at the Annual Meetingcast and entitled to vote on any of the non-routineNasdaq Proposal. As there are no "routine" proposals to bebeing voted on, at the Annual Meeting, and thereforethere will be no broker non-votes. The failure to issue voting instructions to your broker will have no effect on the outcome of the Nasdaq Proposal, 1, Proposal 3, or Proposal 4.
Proposal 2,except to the Reverse Stock Split Proposal, and Proposal 5,extent such failure prevents the ratification ofCompany from obtaining a quorum at the appointment of a registered public accounting firm, are each considered a routine proposal, and brokers have discretion to vote on such matters even if no instructions are received from the “street name” holder. As such, we do not expect any broker non-votes for Proposal 2 or Proposal 5.Special Meeting.
What vote is required to approve each proposal?the Nasdaq Proposal?
Votes will be counted by the inspector of elections appointed for the AnnualSpecial Meeting, who will separately count votes “For”, “Against,” and “Against,” abstentions or withheld votes, and, if applicable,abstentions. As there are no "routine" matters being voted on, there will be no broker non-votes. The following table describes the voting requirementsrequirement for each proposal,the Nasdaq Proposal, including the required vote to approve each proposal and the effect that abstentions or broker non-votes will have on the outcome of the proposal:Nasdaq Proposal:
| | | | | | | | | | | | | | |
| Proposal Number | Proposal Description | Required Vote for Approval | Effect of Abstentions | Effect of Broker Non-Votes |
| 1 | Election of directors | Nominee receiving the most “For” votes (plurality voting) | Withheld votes will have no effect | None |
2 | Approval of the Reverse Stock SplitNasdaq Proposal | “For” votes from the holders of a majority of the shares outstanding and entitled to vote at the meeting | Abstentions will have no effect | No broker non-votes are expected |
3 | Advisory (nonbinding) vote on named executive officer compensation | “For” votes from the holders of a majority of the votes cast and entitled to vote thereon | Abstentions will have no effect | None |
4 | Advisory (nonbinding) vote on the frequency of future stockholder advisory votes on named executive officer compensation | “For” votes from the holders of a majority of the votes cast and entitled to vote thereon | AbstentionsBroker non-votes will have no effect | None |
5 | Ratification of the appointment of Mayer Hoffman McCann P.C. as our independent registered public accounting firm for the fiscal year ending December 31, 2022 | “For” votes from the holders of a majority of the votes cast and entitled to vote thereon | Abstentions will have no effect | No broker non-votes are expected |
Can I access these proxy materials on the Internet?
Yes. The Notice of AnnualSpecial Meeting and Proxy Statement and 2021 Annual Report to Stockholders (including the 2021 Annual Report on Form 10-K) are available for viewing, printing, and downloading at www.proxyvote.com. Our Annual Report on Form 10-K for the year ended December 31, 2021 is also available under the Investors - Stock
& Finance section of our website at www.9meters.com and through the SEC website at http://www.sec.gov. All materials will remain posted on www.proxyvote.com at least until the conclusion of the AnnualSpecial Meeting.
How may I vote my shares at the AnnualSpecial Meeting?
If your common stock is held by a broker, bank, nominee, or trustee, they should send you instructions that you must follow in order to have your shares voted.
If you hold shares in your own name, you may vote by proxy in any one of the following ways:
•Proxy Vote by Internet. You may use the Internet to transmit your voting instructions by going to the website www.proxyvote.com and following the voting instructions on that website;
•Proxy Vote by Phone. You may use any touch-tone telephone to transmit your voting instructions by calling the toll-free number 1-800-690-6903 and following the recorded instructions;
•By Mail. By requesting that printed copies of the proxy materials be mailed to you pursuant to the instructions provided in the Notice of Internet Availability and completing, dating, signing, and returning the proxy card that you receive in response to your request;proxy materials; or
•In Person at the AnnualSpecial Meeting. All stockholders of record may vote in person at the AnnualSpecial Meeting. You may also be represented by another person at the AnnualSpecial Meeting by executing a proper proxy
designating that person. You are encouraged to vote via the Internet, by telephone or by mail, regardless of whether you plan to attend the AnnualSpecial Meeting in person.
The Internet and telephone voting procedures are designed to authenticate stockholders’ identities by use of a control number to allow stockholders to vote their shares and to confirm that stockholders’ instructions have been properly recorded. Voting via the Internet or telephone must be completed by 11:59 PM EDT on June 21,September 22, 2022. If you submit or return a proxy card without giving specific voting instructions, your shares will be voted as recommended by our Board of Directors, as permitted by law.
If you have any questions or need assistance voting, please contact DF King, our proxy solicitor assisting us in connection with the Special Meeting. Stockholders may call toll free at (866) 829-1035 or email at 9meters@dfking.com. Brokers and banks may call (212) 269-5550.
What is a proxy?
A proxy is your legal designation of another person to vote the stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document is also called a proxy or a proxy card. Our Board of Directors has designated our Chief Executive Officer, John Temperato, and our Board Chairman, Mark Sirgo, as the Company’s proxies for the AnnualSpecial Meeting.
How can I change my vote after submitting it?
If you are a stockholder of record, you can revoke your proxy before your shares are voted at the AnnualSpecial Meeting by:
•Filing a written notice of revocation bearing a later date than the proxy with our Corporate Secretary at 8480 Honeycutt Road, Suite 120, Raleigh, NC 27615 at or before the taking of the vote at the AnnualSpecial Meeting;
•Duly executing a later-dated proxy relating to the same shares and delivering it to our Corporate Secretary at 8480 Honeycutt Road, Suite 120, Raleigh, NC 27615 at or before the taking of the vote at the AnnualSpecial Meeting;
•Attending the AnnualSpecial Meeting and voting at the meeting (although attendance at the meetingSpecial Meeting will not in and of itself constitute a revocation of a proxy); or
•If you voted by telephone or via the Internet, voting again by the same means prior to 11:59 PM EDT on June 21,September 22, 2022.
If you are a beneficial owner of shares, you may submit new voting instructions by contacting your broker, bank, or other holder of record. You may also vote at the AnnualSpecial Meeting by following the instructions provided by your bank, broker or other holder of record to participate in the Annual MeetingSpecial Meeting.
What does it mean if I receive more than one proxy card or voting instruction form?
It means that you have multiple accounts at the transfer agent or with banks, brokers or other nominees. Please complete and return all proxy cards or voting instruction forms to ensure that all of your shares are voted.voted. For joint accounts, each owner should sign the proxy card. When signing as an executor, administrator, attorney, trustee, guardian or other representative, please print your full name and title on the proxy card.
Who can help answer my questions about the AnnualSpecial Meeting or how to submit or revoke my proxy?
If you are the stockholder of record, please contact:
9 Meters Biopharma, Inc.
Attn: Investor Relations
8480 Honeycutt Road, Suite 120,
Raleigh, NC 27615
Telephone: (919) 275-1933
investor-relations@9meters.com
If your shares are held in street name, please call the telephone number provided on your voting instruction form or contact your bank, broker or other nominee directly.
Who will pay the costs of soliciting these proxies, and how are they being solicited?
We have engaged DF King, a proxy solicitation firm, at an approximate costs of $12,500, to solicit proxies on behalf of the Company. DF King may solicit the return of proxies, either by mail, telephone, email or through personal contact. The cost of solicitation will be borne by us, including the fees of DF King as well as the reimbursement of their expenses. Our directors and employees may also solicit proxies in person, by telephone, fax, electronic transmission or other means of communication. We will not pay these directors and employees any additional compensation for these services. We will ask banks, brokerage firms, and other institutions, nominees, and fiduciaries to forward these proxy materials to their principal, and to obtain authority to execute proxies, and will reimburse them for their expenses.
If you choose to access the proxy materials and/or submit a proxy to vote on the Internet or telephonically, you are responsible for access charges you may incur.
Where can I find the voting results of the AnnualSpecial Meeting?
We plan to announce the preliminary voting results at the AnnualSpecial Meeting. We will publish the results in a Form 8-K filed with the SEC within four business days after the AnnualSpecial Meeting.
Whom do I contact if I have questions about the Special Meeting?
| | |
|
| If you have any questions, or require any assistance |
| with voting your shares, please contact: |
|
| D.F. King & Co., Inc. |
|
| 48 Wall Street, 22nd Floor |
| New York, New York 10005 |
|
| Telephone for Banks and Brokers: (212) 269-5550 |
| Stockholders may call toll-free: (866) 829-1035 |
| Email: 9meters@dfking.com |
PROPOSAL 1 – NASDAQ PROPOSAL
ELECTIONTO APPROVE THE ISSUANCE OF DIRECTORSSHARES OF COMMON STOCK UPON CONVERSION OF THE
CONVERTIBLE NOTES ISSUED BY US ON JULY 15, 2022
Our Board of Directors is divided into three classes. Each class consists, as nearly as possible, of one-thirdDescription of the total number of directors and each class has a three-year term. At the recommendation of our nominating and corporate governance committee, our Board proposes that the nominees below be elected as Class I directors for a three-year term expiring at the 2025 Annual Meeting of Stockholders and until such director’s successor is elected and qualified, or until his earlier death, resignation or removal.Convertible Notes
Information about our directors, includingOn June 30, 2022, we entered into the nominees, their ages asPurchase Agreement for the purchase of May 4, 2022, occupations and length of service onsenior secured convertible notes with an institutional investor (the “Holder”). The principal amount for the Board of Directors are provided in the tables below. Additional biographical descriptions are set forth in the text below the tables and include the primary individual experience, qualifications, attributes and skills of each director that ledinitial note was $21 million (the “Initial Note”), with an option to issue additional convertible notes to the conclusionHolder with principal amounts of up to an aggregate of $70 million (together with the Initial Note, the “Convertible Notes”), subject to certain limitations, including that such director should serve as a memberthe price of our Boardcommon stock is not less than 130% of Directors at this time.the Fixed Conversion Price (as defined below). The closing date of the Initial Note was July15, 2022 (the “Initial Closing Date”) and additional Convertible Notes may be issued and sold in one or more subsequent closings (each, a “Subsequent Closing Date”, and together with the Initial Closing Date, the “Closing Dates”). Any future issuances of Convertible Notes under the Purchase Agreement will be on substantially the same terms as the Initial Note, as described below. The Company will use the net proceeds from the sale of the Convertible Notes to develop and commercialize vurolenatide for short bowel syndrome and for other corporate purposes.
Nominees for Election toGeneral Terms of the Board of Directors at the Annual MeetingConvertible Notes
The nominees for election36-month Convertible Notes bear interest equal to the Boardthree-month benchmark rate plus 5% (with a floor of Directors,6%) (18% upon an event of default). The Convertible Notes rank senior to all of the outstanding and his respective Classfuture indebtedness of the Company and termour subsidiaries, and are secured by a first priority perfected security interest in all of service, is set forth below.our existing and future assets; however, we may use our intellectual property collateral in certain strategic transactions with companies in the pharmaceutical or biotechnology industry, subject to certain collateral requirements being met.
| | | | | | | | | | | | | | | | | | | | |
| Name of Director/Nominee | | Age | | Class | | Director Since |
| Michael Constantino | | 59 | | Class I | | 2020 |
| Lorin K. Johnson, Ph.D. | | 69 | | Class I | | 2018 |
Michael Constantino
Mr. Constantino joined our BoardThe Convertible Notes are optionally convertible by us or the Holder, subject to certain limitations as described below. We can elect to make principal or interest payments (or accelerated payments) in June 2020. Mr. Constantino iscommon stock instead of cash, by providing a retired Ernst & Young LLP assurance partner who servednotice to the Holder specifying the dollar amount of such election for any given month’s scheduled amortization and, in the Research Triangle Park Regioncase of North Carolina for over 30 years. From 2009 to 2012, he served asany earlier accelerated payment(s), a conversion period of not less than 10 trading days, but no more than 40 trading days, during which the Office Managing Partner for the combined Raleigh/Greensboro office with over 200 employees. He was responsible for leading a growing practice that included assurance, advisory and tax services focused on public and privately held entrepreneurial companies representing many industries. During his career with the firm, he worked with several companies including life sciences companies (biotechnology, medical device and pharmaceuticals), contract research organizations, technology, manufacturing and transportation companies, and large SEC registrants. Mike assisted clients with over 20 initial public offerings, debt offerings, mergers and acquisition transactions, and private equity offerings. He worked closely with companies across the development continuum from start-up to mature public entities and assisted management teams and boards of directors with SEC compliance matters, Sarbanes-Oxley internal controls, global operations and strategic planning. Currently, he is the ChairHolder converts such portion of the Audit CommitteeConvertible Notes into common stock. Pursuant to such optional conversion, the conversion price equals 92.0% of Humacyte (Nasdaq:HUMA), a biotechnology company that is pioneering the development and manufacture of off-the-shelf, universally implantable, bioengineered human tissues. Mike holds a B.A. in both Accounting and Business Management from NC State University and is a North Carolina CPA.
We believe that Mr. Constantino’s extensive experience as a CPA and with SEC compliance matters and Sarbanes-Oxley internal controls qualifies him to serve on our Board.
Lorin K. Johnson, Ph.D.
Dr. Johnson joined our Board in January 2018. He islowest daily VWAP during the founder and Chief Scientist of Glycyx PharmaVentures Ltd., a biopharma investment and development company. In 1989, he co-founded Salix Pharmaceuticals, Inc. (Nasdaq: SLXP), a specialty pharmaceutical company specializing in gastrointestinal products, and held senior leadership positionsthree-trading day period immediately prior to its $15.8 billion acquisitionthe payment date determined by Valeant Pharmaceuticals International, Inc. (NYSEA: VRX)the Holder during the conversion period, provided however, that we can elect to set a conversion floor price. If the Holder elects to convert the Convertible Notes, the conversion price per share will be $0.3531, subject to customary adjustments and anti-dilution protection described below (the “Fixed Conversion Price”). The conversion of the Convertible Notes is subject to certain conditions, including that the shares are registered under the Securities Act of 1933, as amended, the Holder is not in April 2015. Prior to Salix, Dr. Johnson served as Directorpossession of Scientific Operations and Chief Scientist at Scios, Inc. (formerly California Biotechnology, Inc). Since June 2019, hematerial non-public information provided by or on behalf of the Company, no fundamental change of the Company has been a board member of Edesa Biotech, Inc. (Nasdaq: EDSA), a biopharmaceutical company inannounced or is pending, the fields of inflammation, infectious disease and gastroenterology. He is also a board member of Glycyx MOR, Inc. (Delaware) and Kinisi Therapeutics, Ltd. (Isle of Man), as well as Intact Inc. (California). All are GI specialty drug development companies. In addition to his career in industry, Dr. Johnson has served as an Assistant Professor of Pathology at Stanford University Medical Center and held academic positions at Stanford University School of Medicine andHolder remains within the University of California, San Francisco. He is the co-author of 75 journal articles and book chapters and is the co-inventor on 22 issued patents. Dr. Johnson holds a Ph.D. from the University of Southern California and was a Postdoctoral Fellow at the University of California, San Francisco.
We believe that Dr. Johnson’s extensive experience in the pharmaceutical and life science industries, both as an executive and investor, qualifies him to serve on our Board.
Continuing Directors
| | | | | | | | | | | |
Director | Age | Class | Term |
Michael Rice | 57 | Class II | 2023 Annual Meeting of Stockholders |
John Temperato | 57 | Class II | 2023 Annual Meeting of Stockholders |
Mark Sirgo, Pharm.D. | 68 | Class III | 2024 Annual Meeting of Stockholders |
Samantha Ventimiglia | 49 | Class III | 2024 Annual Meeting of Stockholders |
Michael Rice
Mr. Rice joined our Board in February 2021. Mr. Rice is president and co-founder of LifeSci Advisors, LLC, a life sciences investor relations consultancy, and co-founder of LifeSci Capital, a research-driven investment bank, positions he has held since March 2010. Mr. Rice is also a founding member of LifeSci Communications, LLC, a corporate communications and public relations firm. From June 2019 to December 2020, Mr. Rice also served as Chief Operating Officer and a member of the board of LifeSci Acquisition Corp. until its merger with Vincerx Pharma, Inc. (f/k/a Vincera Pharma, Inc.). Prior to co-founding LifeSci Advisors and LifeSci Capital, Mr. Rice was the co-head of health care investment banking at Canaccord Adams from April 2007 to November 2008, where he was involved in debt and equity financing. Mr. Rice was also was a Managing Director at ThinkEquity Partners from April 2005 to April 2007, where he was responsible for managing Healthcare Capital Markets. Prior to that, from August 2003 to March 2005, Mr. Rice served as a Managing Director at Bank of America, serving large hedge funds and private equity healthcare funds. Previously, he was a Managing Director at JPMorgan/Hambrecht & Quist. Mr. Rice has been a director of Navidea Biopharmaceuticals, Inc. (NYSEA: NAVB) since May 2016 and served as a director of RDD from January 2016 until the Company’s merger with RDD in May 2020. Michael received his B.A. from the University of Maryland. Michael holds Series 7, 24, 63, and 79 licenses.
We believe Mr. Rice’s long-running healthcare investment and advisory experience qualifies him to serve on our Board.
John TemperatoBeneficial Ownership Limitation (as defined below), and no event of default has occurred and is continuing (the “Equity Conditions”).
As long as we remain in compliance with the Convertible Notes, and subject to certain limitations described in the Convertible Note, we have two optional redemption rights to repay the Convertible Notes in cash. First, after 180 days following the applicable closing date, so long as the market price of our common stock has been no less than 140% of the Fixed Conversion Price for the immediately preceding 20 trading days, we can elect to redeem the Convertible Note for an amount equal to 105% of the principal amount elected to be redeemed, plus accrued and unpaid interest. Second, at any time following the applicable Closing Date, we can elect to repay the Convertible Note at the greater of (i) the Fixed Conversion Value (the daily VWAP of the common stock on the date of the redemption notice multiplied by the number of shares that would result from the conversion of the principal amount being redeemed at the Fixed Conversion Price), plus accrued and unpaid interest or (ii) 125% of par before the first anniversary of the applicable Closing Date, 115% of par before the second anniversary of the applicable Closing Date, and 105% of par before the third anniversary of the applicable Closing Date, each plus accrued and unpaid interest.
The conversion price with respect to the Convertible Notes is subject to a weighted average anti-dilution adjustment in the event we issue, or are deemed to have issued, shares of common stock, other than certain excepted issuances, at a price below the conversion price then in effect. Additionally, for 90 days following the Initial Closing Date, if we grant, issue or sell any shares of common stock, then immediately after such dilutive issuance, the conversion rate of the Initial Note will be decreased to an amount equal to the average of the daily VWAPs of the common stock for each of the five trading days immediately following the date of public disclosure of such issuance.
Mr. Temperato
joined
The Convertible Notes provide for standard and customary events of default, such as our Board in April 2020 leadingfailing to make timely payments under the Convertible Notes and failing to timely comply with the reporting requirements of the Securities Exchange Act of 1934, as amended. The Purchase Agreement and Convertible Notes also contain customary affirmative and negative covenants, including limitations on incurring additional indebtedness, the creation of 9 Meters throughadditional liens on our assets, and entering into investments, as well as a mergerrequirement to raise at least $25 million by March 31, 2023 (the “Subsequent Financing”) and a minimum liquidity requirement (110% of three companies: Innovate Biopharmaceuticals, Inc., RDD Pharma Ltd., and Naia Rare Diseases, Inc. in May of 2020. Priorthe outstanding principal amount prior to the merger, Mr. Temperato served asSubsequent Financing and thereafter the Chief Executive Officergreater of RDD from March 2019 until April 2020. Prior to joining RDD, Mr. Temperato held various leadership roles, including most notably U.S. President & Chief Operating Officer with Atlantic Healthcare, President & Chief Operating Officer/Chief Commercial Officer with Melinta Therapeutics, Inc.,(i) the outstanding principal amount, less 7.5% of our total market capitalization and Senior Vice President(ii) 50% of Sales and Managed Markets with Salix Pharmaceuticals, Inc., a specialty pharmaceutical company specializing in gastrointestinal products. Notably, at Salix Pharmaceuticals, Mr. Temperato played a critical role in the successful commercialization and growth of their broad GI portfolio and executed over ten launches during his tenure at the company driving growth of company revenues from $119 million in 2004 to $2 billion in 2015. Across his career, Mr. Temperato has been instrumental in defining and executing capital efficient go-to-market strategies, business development strategy and overseeing the commercialization and life-cycle management for small molecules, devices, and biologics. Additionally, he has developed strategies for reimbursement and external healthcare policy. He holds a Bachelor of Science degree from the University of Bridgeport in Bridgeport, Connecticut.outstanding principal amount).
We believe that Mr. Temperato’s extensive executive experienceThe Convertible Note may not be converted into shares of common stock if such conversion would result in the pharmaceuticalHolder and healthcare industries qualifies himits affiliates owning an aggregate of in excess of 4.99% of the then-outstanding shares of our common stock, provided that upon 61 days’ notice, such ownership limitation may be adjusted by the Holder, but in any case, to serve on our Board.no greater than 9.99% (the “Beneficial Ownership Limitation”).
Mark Sirgo, Pharm.D.
Dr. Sirgo joined our BoardAdditionally, as discussed further below, the Convertible Notes are not convertible to the extent the conversion would result in April 2020 upon completionthe Company issuing in the aggregate pursuant to the Convertible Notes more shares of common stock than permitted under the rules of the RDD Merger and was appointedNasdaq Listing Rules until such time as Board chairman. In January 2019, Dr. Sirgo was appointed Chief Executive Officer of Aruna Bio, Inc.we shall have obtained stockholder approval (the “Exchange Cap”), a private development-stage company focused on central nervous system and neurodegenerative disorders, a position he held until April ofwhich we are seeking pursuant to this year. He was President and Chief Executive Officer of BioDelivery Sciences International, Inc. (Nasdaq: BDSI) (“BDSI”) from January 2005 to January 2018. He joined BDSI in August 2004 as Senior Vice President of Commercialization and Corporate Development upon its acquisition of Arius Pharmaceuticals, Inc., of which he was a co-founder and Chief Executive Officer. Dr. Sirgo served as a director of BDSI from August 2005 until the sale of the Company in March of this year. Dr. Sirgo has over 30 years of experience in the pharmaceutical industry, including senior and/or executive positions in research and development, business development, sales, marketing and business operations. Dr. Sirgo spent 16 years in a variety of positions of increasing responsibility in both clinical development and marketing at Glaxo, Glaxo Wellcome, and GlaxoSmithKline, including Vice President of International OTC Development and Vice President of New Product Marketing. From 1996 to 1999, Dr. Sirgo was Senior Vice President of Global Sales and Marketing at Pharmaceutical Product Development, Inc. (Nasdaq: PPDI), a leading contract service provider to the pharmaceutical industry. Dr. Sirgo served on the Board of Directors and as Chairman of the Compensation Committee of Salix Pharmaceuticals, Inc. (Nasdaq: SLXP), a specialty pharmaceutical company specializing in gastrointestinal products, from 2008 until its sale in 2015. Dr. Sirgo has also served on the Board of Directors of Biomerica, Inc. (Nasdaq: BMRA), a gastrointestinal diagnostics and therapeutic company, since 2016. Dr. Sirgo received his BS in Pharmacy from The Ohio State University and his Doctorate from Philadelphia College of Pharmacy and Science.
We believe that Dr. Sirgo’s extensive executive level experience in the pharmaceutical industry, including leading both public and private companies and served on multiple boards of directors, qualifies him to serve on our Board.Nasdaq Proposal.
Samantha VentimigliaWhy does the Company need Stockholder Approval?
Ms. Ventimiglia joined our BoardOur common stock is listed on The Nasdaq Capital Market and, as such, we are subject to the Nasdaq Stock Market Rules. Nasdaq Listing Rule 5635(d) requires stockholder approval for the issuance, other than in October 2021. Since December 2011, Ms. Ventimiglia has served in various leadership roles at Vertex Pharmaceuticals, Inc., a global biotechnology company, and is currently Senior Vice President, U.S. Public Affairs, responsiblepublic offering, of common stock equal to 20% or more of the common stock outstanding on June 30, 2022, the date we entered into the Purchase Agreement, for developing and overseeinga price less than the company’s policy, government affairs and patient advocacy strategy, including building relationships with state and federal government officials, industry organizations, patient groups and other stakeholders. From February 2008 until December 2010, Ms. Ventimiglia was government affairs director at Astellas Pharma US, a multinational pharmaceutical company, and from April 2004 until February 2008, she was a principal consultant at Jeffrey J. Kimbell & Associates, a federal government affairs firm representing clients“Minimum Price” as defined in the healthcare community whoNasdaq Listing Rules (the “Nasdaq 20% Rule”). There were 259,107,380 shares of our common stock outstanding on June 30, 2022. Even though we do not necessarily anticipate issuing that many shares at this time, and notwithstanding the Beneficial Ownership Limitation, it is possible under the structure of the Convertible Notes that in the aggregate over the life of this arrangement we might issue enough shares to violate the Nasdaq 20% Rule. Therefore, in order to ensure there is not a violation and the resulting delisting, which would be detrimental to the price and liquidity of our stock, we are seeking legislative and regulatory solutions to problems related to productstockholder approval coverage and reimbursement and marketing practices. Prior to that, Ms. Ventimiglia was a policy director atfor elimination of the Pharmaceutical Research & Manufacturers of America (PhRMA) and the National Governors Association (NGA) where she played a pivotal role in developing the associations’ policy and legislative agenda on Medicare, Medicaid, private sector healthcare and Food & Drug Administration issues. She also held legislative positions in the offices of U.S. Senator Olympia J. Snowe and U.S. Congressman Elton Gallegly. Ms. Ventimiglia received a B.A. from Catholic University of America and a Master of Public Policy from Georgetown University.Exchange Cap.
We believe that Ms. Ventimiglia’s yearshave entered into voting agreements with each of experience seeking legislativeour officers and regulatory solutionsdirectors pursuant to which they have agreed to vote their shares in favor of the healthcare industry qualifies Ms. VentimigliaNasdaq Proposal. Parties to serve onthese voting agreements held an aggregate of [●] shares of our Board.common stock, or approximately [●] of the total outstanding shares, as of the Record Date.
What is the effect on current stockholders if the Nasdaq Proposal is approved?
If our stockholders approve the Nasdaq Proposal, we will be able to eliminate the Exchange Cap in the Convertible Notes and therefore potentially issue shares of common stock equal to 20% or more of our outstanding common stock on the date we entered into the Purchase Agreement. This will avoid a potential delisting of our common stock from Nasdaq, which delisting would be detrimental to the price and liquidity of our stock.
If stockholders approve the Nasdaq Proposal, current stockholders may experience significant dilution of their current equity ownership in the Company upon conversion of some or all of the Convertible Notes. There are two principal ways in which the Convertible Notes may be converted into shares of common stock: (i) conversion at the election of the Holder of the Convertible Notes and (ii) conversion at our election, provided we meet the requirements, in order to pay the principal or interest payments (or accelerated payments) in common stock.
For conversions at the election of the Holder, at the current conversion rate of $0.3531 for such conversions, the principal amount of $21 million on the Initial Note would be convertible into 59,473,237 shares of common stock, representing approximately [l]% dilution to current stockholders based on [l] shares of common stock issued and outstanding on July 25, 2022.
For conversions in relation to the principal or interest payments (or accelerated payments) on the Initial Note, the conversion price is determined as a discount to the then current market price, as described above. For example, if all principal and interest payments were to be paid in shares of common stock, which aggregate payments total an estimated $[l] million, and the payments were made at the conversion price of $[l] per share (the conversion price on July 25, 2022), then we would issue approximately [l] shares of common stock. This would represent [l]% dilution to current stockholders based on [l] shares of common stock issued and outstanding on July 25, 2022. If the calculated discount to the current market price of our common stock on the actual date of such principal or interest payments (or accelerated payments) is above $[l], we will issue fewer shares for settlement of such payments on the Initial Note. However, if we issue subsequent Convertible Notes under the Purchase Agreement in the future, or if the conversion price is less than $[l], then could issue more shares for settlement of such payments.
What is the effect on current stockholders if the Nasdaq Proposal is not approved?
Repayment of the Convertible Notes in Cash
If the Nasdaq Proposal is not approved, we will be unable to convert the Convertible Notes into shares of common stock to the extent that conversion of the Convertible Notes would result in the issuance of 20% or more of the issued and outstanding shares of common stock on the date we entered into the Purchase Agreement, and we would be forced to pay cash to meet our obligations under the terms of the Convertible Notes. Under the restrictions of the Nasdaq 20% Rule and the Exchange Cap, we can only issue 51,821,475 shares in settlement of installment conversions. Failure of the stockholders to approve the Nasdaq Proposal will drastically limit our ability to elect to make future payments in shares of common stock, which would result in our using available cash to make installment payments under the Convertible Notes. Repayment of the Convertible Notes in cash would divert resources away from funding our business operations, including our pipeline development, which could negatively impact our prospects, financial condition and results of operations.
Potential Future Dilution
If we cannot issue shares of common stock to make payments as they become due under the Convertible Notes because of the Exchange Cap, and we do not otherwise have sufficient available cash to meet our obligations, we might seek to raise additional capital through the issuance of shares of common stock or preferred stock. Such issuances might be at prices more dilutive to stockholders than the terms permitting conversion of installment payments into shares of common stock under the Convertible Notes. To the extent that we engage in such transactions to raise additional capital, our current stockholders could be substantially diluted.
Potential Event of Default
If this Nasdaq Proposal is not approved, and if we do not have sufficient funds to make cash payments for payments due under the Convertible Notes and cannot raise such funds prior to a payment date, then we might default under the Convertible Notes. Occurrence of an event of default by the Company could have significant negative consequences for us and our stockholders. An event of default could harm our financial condition, force us to reduce or cease operations or to sell or out-license some or all of our intellectual property or could result in our declaring bankruptcy and the Holder of the Convertible Notes seizing some or all of the assets of the Company and our subsidiaries which currently secure the Convertible Notes.
Obligation to Continue to Seek Approval
If our stockholders do not approve this Nasdaq Proposal, we will be required to seek stockholder approval of this proposal every 90 days until we receive stockholder approval of this proposal. We are not seeking the approval of our stockholders to authorize our issuance of the Convertible Notes, as we have already entered into the Purchase Agreement and issued the Initial Note, which are binding obligations on us. The failure of our stockholders to approve the Nasdaq Proposal will not negate the existing terms of the documents governing the Convertible Notes. The Initial Note will remain outstanding and the terms of the Purchase Agreement will remain binding obligations of the Company.
Seeking stockholder approval multiple times would require us to devote cash and management resources to those stockholder meetings, and would leave less resources for the development of our pipeline product candidates.
Where can I find more information regarding the Convertible Notes?
The above descriptions set forth some but not all of the material terms of the Convertible Notes and the Purchase Agreement. The full text of the Purchase Agreement and the Form of Convertible Note are attached as exhibits to the Company’s Current Report on Form 8-K, as filed with the SEC on June 30, 2022.
Required Vote
Provided there isApproval of the Nasdaq Proposal requires the affirmative vote of a quorum formajority of the Annual Meeting, the director nominees receiving the highest number of affirmative votes of our common stock present or representedcast and entitled to be voted for them will be elected as directors. Votes withheld will have no legal effect on the election of a director. Under applicable exchange rules, brokers are not permitted to vote shares held for a customer on “non-routine” matters without specific instructions from the customer. As such, broker non-votesthereon. Abstentions will have no effect on the outcome of this Proposal 1.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE “FOR” THE DIRECTOR NOMINEES LISTED ABOVE.
PROPOSAL 2
APPROVAL OF REVERSE STOCK SPLIT
The Board of Directors deems it advisable and in the best interest of the Company that the Board be granted the discretionary authority to amend the Company’s amended and restated certificate of incorporation (the “Charter”) to effect a reverse stock split of the Company’s issued and outstanding common stock as described below (the “Reverse Stock Split Amendment”). The form of Reverse Stock Split Amendment to be filed with the Delaware Secretary of State is set forth in Annex A.
The Company intends to drive organic growth of the per share price of our common stock by continuing to pursue our goal of becoming a leading biopharmaceutical company focused on rare or debilitating digestive diseases that have the potential to transform current treatment paradigms for patients and address unmet medical needs. However, we also intend to consider other options in order to regain or maintain compliance with the continued listing requirements of Nasdaq Listing Rules and optimize trading in our stock. One of these options is to undertake a reverse stock split of our common stock, which requires the approval of our stockholders.
Approval of the proposal would permit (but not require) our Board of Directors to effect a reverse stock split of our issued and outstanding common stock by a ratio of not less than one-for-two and not more than one-for-twenty (a “Reverse Stock Split”), with the exact ratio to be set at a number within this range as determined by our Board in its sole discretion, provided that the Company effects a Reverse Stock Split no later than one year following the approval of this proposal by stockholders. We believe that enabling our Board to set the ratio within the stated range will provide us with the flexibility to implement a Reverse Stock Split in a manner designed to maximize the anticipated benefits for our stockholders. If our Board implements a Reverse Stock Split, it may consider a variety of factors in determining the exact ratio within the approved range.
Our Board of Directors reserves the right to elect to abandon a Reverse Stock Split, including the proposed reverse stock split ratio, if it determines, in its sole discretion, that a Reverse Stock Split is not in the best interests of the Company and its stockholders.
If our Board implements a Reverse Stock Split, depending on the ratio for a Reverse Stock Split, no less than two (2) and no more than twenty (20) shares of outstanding common stock, as determined by our Board, will be combined into one share of common stock. Holders of fractional shares will be entitled to receive, in lieu of any fractional share, the number of shares rounded up to the next whole number.
Reasons for a Reverse Stock Split; Potential Consequences of a Reverse Stock Split
The Company’s primary reasons for approving and recommending a Reverse Stock Split are to increase the per share price and bid price of our common stock to help the Company regain compliance with the continued listing requirements of Nasdaq Listing Rules.
On February 8, 2022, we received a letter from the Nasdaq Stock Market LLC (“Nasdaq”) notifying the Company that, for the last 30 consecutive business days the bid price for the Company’s common stock had closed below the minimum $1.00 per share requirement for continued inclusion on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Bid Price Rule”). The Nasdaq letter had no immediate effect on the listing of the Company’s common stock on the Nasdaq Capital Market.
In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company has a compliance period of 180 calendar days, or until August 8, 2022, to regain compliance with the Bid Price Rule. If at any time before August 8, 2022, the bid price of the Company's common stock closes at $1.00 per share or more for a minimum of ten consecutive business days, Nasdaq will provide the Company with a written confirmation of compliance with the Bid Price Rule.
If the Company does not regain compliance with the Bid Price Rule by August 8, 2022, the Company may be eligible for an additional 180-day compliance period, until February 5, 2023. To qualify, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing
standards for the Nasdaq Capital Market, with the exception of the Bid Price Rule, and would need to provide written notice of its intention to cure the bid price deficiency during the second compliance period, by effecting a Reverse Stock Split, if necessary.
Reducing the number of outstanding shares of common stock should, absent other factors, generally increase the per share market price of our common stock. Although the intent of a Reverse Stock Split is to increase the price of our common stock, there can be no assurance, however, that even if a Reverse Stock Split is effected, that the bid price of the Company’s common stock will be sufficient for the Company to regain compliance with the Bid Price Rule.
In addition, the Company believes a Reverse Stock Split will make its common stock more attractive to a broader range of investors, as it believes that the current market price of its common stock may prevent or deter certain institutional investors, professional investors and other members of the investing public from purchasing stock. The Company believes that a Reverse Stock Split will make its common stock a more attractive and cost-effective investment for many investors, which in turn would enhance the liquidity of the holders of common stock.
There can be no assurance that a Reverse Stock Split, if completed, will result in the intended benefits described above, that the market price of our common stock will increase following a Reverse Stock Split, that as a result of a Reverse Stock Split we will be able to meet or maintain a bid price over the minimum bid price requirement of Nasdaq or that the market price of our common stock will not decrease in the future.
Procedure for Implementing a Reverse Stock Split
If we implement a Reverse Stock Split, it will become effective upon the filing or such later time as specified in the filing (the “Split Effective Time”) of a Reverse Stock Split Amendment with the Delaware Secretary of State. The form of the Reverse Stock Split Amendment is attached hereto as Annex A. The exact timing of the filing of a Reverse Stock Split Amendment and the ratio of a Reverse Stock Split (within the approved range), if any, will be determined by our Board of Directors based on its evaluation as to when such action and at what ratio will be the most advantageous to the Company and our stockholders. In addition, our Board reserves the right, notwithstanding stockholder approval and without further action by the stockholders, to elect not to proceed with a Reverse Stock Split if, at any time prior to filing a Reverse Stock Split Amendment, our Board, in its sole discretion, determines that it is not in our best interest and the best interests of our stockholders to proceed with a Reverse Stock Split. If a Reverse Stock Split Amendment has not been filed with the Delaware Secretary of State by the date that is one year following the approval of this Proposal 2 by our stockholders, our Board will abandon a Reverse Stock Split.
Principal Effects of a Reverse Stock Split
If implemented, a Reverse Stock Split will be effected simultaneously for all outstanding shares of Company common stock. A Reverse Stock Split will affect all of the Company’s stockholders uniformly and will not affect any stockholder’s percentage ownership interests in the Company, except to the extent that a Reverse Stock Split results in any stockholders owning a fractional share. Holders of fractional shares will be entitled receive, in lieu of any fractional share, the number of shares rounded up to the next whole number. Common stock issued pursuant to a Reverse Stock Split will remain fully paid and nonassessable. A Reverse Stock Split will not affect the Company’s continuing to be subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
As of the Split Effective Time, the Company will adjust and proportionately decrease the number of shares of common stock reserved for issuance upon exercise of, and adjust and proportionately increase the exercise price of, all options and warrants and other rights to acquire shares of common stock. In addition, as of the Split Effective Time, the Company will adjust and proportionately decrease the total number of shares of common stock that may be the subject of the future grants under stock option plans.
As an example, the following table illustrates the effects of a 1-for-20 and a 1-for-2 reverse stock split (without giving effect to the treatment of fractional shares) as of March 31, 2022:
| | | | | | | | | | | | | | | | | |
| Prior to Reverse Stock Split | | After 1-for-20 Reverse Stock Split | | After 1-for-2 Reverse Stock Split |
| Common stock outstanding | 258,235,418 | | | 12,911,771 | | | 129,117,709 | |
| Common stock issuable pursuant to outstanding equity awards | 30,205,484 | | | 1,510,274 | | | 15,102,742 | |
| Common stock issuable pursuant to outstanding warrants | 23,044,062 | | | 1,152,203 | | | 11,522,031 | |
Authorized Shares of Common Stock
A Reverse Stock Split will not change the number of authorized shares or the par value of the Company’s common stock under the Charter. Because the number of issued and outstanding shares of common stock will decrease, the number of shares of common stock remaining available for issuance will increase. Currently, under our Charter, our authorized capital stock consists of 550,000,000 shares of common stock.
Subject to limitations imposed by Nasdaq Listing Rules, the additional shares available for issuance may be issued without stockholder approval at any time, in the sole discretion of our Board of Directors. The authorized and unissued shares may be issued for cash, for acquisitions or for any other purpose that is deemed in the best interests of the Company.
Registered “Book-Entry” Holders of Common Stock (i.e. stockholders that are registered on the transfer agent’s books and records but do not hold stock certificates)
Certain of our registered holders of common stock may hold some or all of their shares electronically in book-entry form with the transfer agent. These stockholders do not have stock certificates evidencing their ownership of the common stock. They are, however, provided with a statement reflecting the number of shares registered in their accounts.
Stockholders who hold shares electronically in book-entry form with the transfer agent will not need to take action (the exchange will be automatic) to receive whole shares of post-Reverse Stock Split common stock, subject to adjustment for treatment of fractional shares.
Holders of Certificated Shares of Common Stock
Stockholders holding shares of our common stock in certificated form will be sent a transmittal letter by our transfer agent after the Split Effective Time. The letter of transmittal will contain instructions on how a stockholder should surrender his, her or its certificate(s) representing shares of our common stock (the “Old Certificates”) to the transfer agent in exchange for certificates representing the appropriate number of whole shares of post-Reverse Stock Split common stock (the “New Certificates”). No New Certificates will be issued to a stockholder until such stockholder has surrendered all Old Certificates, together with a properly completed and executed letter of transmittal, to the transfer agent. No stockholder will be required to pay a transfer or other fee to exchange his, her or its Old Certificates. Stockholders will then receive a New Certificate(s) representing the number of whole shares of common stock that they are entitled to as a result of a Reverse Stock Split, subject to the treatment of fractional shares. Until surrendered, we will deem outstanding Old Certificates held by stockholders to represent the number of whole shares of post-Reverse Stock Split common stock to which these stockholders are entitled, subject to the treatment of fractional shares. Any Old Certificates submitted for exchange, whether because of a sale, transfer or other disposition of stock, will automatically be exchanged for New Certificates. If an Old Certificate has a restrictive legend on the back of the Old Certificate, the New Certificate will be issued with the same restrictive legends that are on the back of the Old Certificate.
The Company expects that our transfer agent will act as exchange agent for purposes of implementing the exchange of stock certificates. No service charges will be payable by holders of shares of common stock in connection with the exchange of certificates. All of such expenses will be borne by the Company.
Beneficial Holders of Common Stock (i.e. stockholders who hold in street name)
Upon the implementation of a Reverse Stock Split, we will treat shares held by stockholders through a bank, broker, custodian or other nominee in the same manner as registered stockholders whose shares are registered in their names. Banks, brokers, custodians or other nominees will be instructed to effect a Reverse Stock Split for their beneficial holders holding our common stock in street name. However, these banks, brokers, custodians or other nominees may have different procedures than registered stockholders for processing a Reverse Stock Split. Stockholders who hold shares of our common stock with a bank, broker, custodian or other nominee and who have any questions in this regard are encouraged to contact their banks, brokers, custodians or other nominees.
STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATES(S) AND SHOULD NOT SUBMIT ANY STOCK CERTIFICATES(S) UNTIL REQUESTED TO DO SO.
Appraisal Rights
Under the Delaware General Corporation Law, our stockholders are not entitled to appraisal or dissenter’s rights with respect to a Reverse Stock Split, and we do not intend to voluntarily provide our stockholders with such rights.
Potential Anti-Takeover Effect
Even though a Reverse Stock Split would result in an increased proportion of unissued authorized shares to be issued, which could, under certain circumstances, have an anti-takeover effect (for example, by permitting issuances that would dilute the stock ownership of a person seeking to effect a change in the composition of the Board of Directors or contemplating a tender offer or other transaction for the combination of our Company with another company), the Reverse Stock Split Proposal is not being proposed in response to any effort of which we are aware to accumulate shares of our common stock or obtain control of us, nor is it part of a plan by management to recommend a series of similar amendments to our Board and stockholders.
Fractional Shares
Holders of fractional shares will be entitled to receive, in lieu of any fractional share, the number of shares rounded up to the next whole number. The ownership of a fractional share interest following a Reverse Stock Split will not give the holder any voting, dividend or other rights, except to receive the number of shares rounded up to the next whole number.
Effect of a Reverse Stock Split on Equity Incentive Plans, Options, Warrants, and Convertible or Exchangeable Securities
Based upon the Reverse Stock Split ratio determined by the Board of Directors, proportionate adjustments are generally required to be made to the per share exercise price and the number of shares issuable upon the exercise or conversion of all outstanding options, warrants and convertible or exchangeable securities entitling the holders to purchase, exchange for, or convert into, shares of common stock. This would result in approximately the same aggregate price being required to be paid under such options, warrants and convertible or exchangeable securities upon exercise, and approximately the same value of shares of common stock being delivered upon such exercise, exchange or conversion, immediately following a Reverse Stock Split as was the case immediately preceding a Reverse Stock Split. The number of shares deliverable upon settlement or vesting of restricted stock awards will be similarly adjusted, subject to our treatment of fractional shares. The number of shares reserved for issuance pursuant to these securities will be proportionately based upon the Reverse Stock Split ratio determined by the Board, subject to our treatment of fractional shares.
Accounting Matters
A Reverse Stock Split Amendment will not affect the par value of our common stock per share, which will remain $0.0001 par value per share. As a result, as of the Split Effective Time, the stated capital attributable to common stock and the additional paid-in capital account on our balance sheet, in the aggregate, will not change due to a Reverse Stock Split. Reported per share net income or loss will be higher because there will be fewer shares of common stock outstanding.
Certain Federal Income Tax Consequences of a Reverse Stock Split
The following summary describes certain material U.S. federal income tax consequences of a Reverse Stock Split to holders of our common stock. Unless otherwise specifically indicated herein, this summary addresses the tax consequences only to a “U.S. holder”, which means a beneficial owner of our common stock that is (i) a citizen or individual resident of the United States, (ii) an entity taxable as a corporation for U.S. tax purposes and organized in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate whose income is subject to U.S. federal income taxation regardless of its source, or (iv) a trust if (1) a U.S. court is able to exercise primary supervision over administration of such trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) it has a valid election in place to be treated as a U.S. person.
This summary does not address all of the tax consequences that may be relevant to any particular investor, including tax considerations that arise from rules of general application to all taxpayers or to certain classes of taxpayers or that are generally assumed to be known by investors. This summary also does not address the tax consequences to stockholders that (i) may be subject to special treatment under U.S. federal income tax law, such as banks, insurance companies, thrift institutions, regulated investment companies, real estate investment trusts, tax-exempt organizations, U.S. expatriates, persons subject to the alternative minimum tax, traders in securities that elect to mark to market, and dealers in securities or currencies, (ii) hold our common stock as part of a position in a “straddle” or as part of a “hedging,” “conversion” or other integrated investment transaction for federal income tax purposes, or (iii) do not hold our common stock as a “capital asset” (generally, property held for investment). In addition, this summary does not consider the effects of any federal, state, local, foreign, or other tax laws other than the U.S. federal income tax laws.
If a partnership (or other entity classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our common stock, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. Entities or arrangements treated as a partnership for U.S. federal income tax purposes should consult their own tax advisors regarding the U.S. federal income tax consequences to them and their owners of a Reverse Stock Split.
This summary is based on the provisions of the Internal Revenue Code of 1986, as amended (the “Code”), U.S. Treasury regulations, administrative rulings, and judicial authority, all as in effect as of the date of this information statement. Subsequent developments in U.S. federal income tax law, including changes in law or differing interpretations, which may be applied retroactively, could have a material effect on the U.S. federal income tax consequences of a Reverse Stock Split. We have not sought and will not seek any ruling from the Internal Revenue Service (the “IRS”), or an opinion from counsel with respect to the U.S. federal income tax consequences discussed below. There can be no assurance that the tax consequences discussed below would be accepted by the IRS or a court. The tax treatment of a Reverse Stock Split to any U.S. holder may vary depending upon such holder’s particular facts and circumstances.
PLEASE CONSULT YOUR OWN TAX ADVISOR REGARDING THE U.S. FEDERAL, STATE, LOCAL, AND FOREIGN INCOME AND OTHER TAX CONSEQUENCES OF A REVERSE STOCK SPLIT IN YOUR PARTICULAR CIRCUMSTANCES UNDER THE CODE AND THE LAWS OF ANY OTHER TAXING JURISDICTION.
A Reverse Stock Split should be treated as a recapitalization for U.S. federal income tax purposes. Thus, a stockholder generally will not recognize gain or loss on an exchange of common shares for common shares in a
Reverse Stock Split, except for adjustments that may result from the treatment of fractional shares of common stock as described below. The aggregate tax basis of the shares received in the Reverse Stock Split will equal the aggregate tax basis of the pre-Reverse Stock Split shares exchanged therefore (increased by any income or gain recognized on receipt of a whole share in lieu of a fractional share). Except in the case of any portion of a share of common stock treated as a distribution or as to which a U.S. holder recognizes capital gain as a result of the treatment of fractional shares, discussed below, the U.S. holder’s holding period for the post-Reverse Stock Split shares of common stock should include the holding period of pre-Reverse Stock Split shares of common stock surrendered. U.S. holders of shares of common stock should consult their tax advisors regarding the applicable rules for allocating the tax basis and holding period of the surrendered pre-Reverse Stock Split shares of common stock to the post-Reverse Stock Split shares of common stock received in the Reverse Stock Split. U.S. holders of shares of common stock acquired on different dates and at different prices should consult their tax advisors regarding the allocation of the tax basis and holding period of such shares.
No gain or loss will be recognized by the Company as a result of a Reverse Stock Split.
The treatment of fractional shares of common stock being rounded up to the next whole share is uncertain. A U.S. holder that receives a whole share of common stock in the Reverse Stock Split in lieu of a fractional share of common stock might recognize income, which may be characterized either as capital gain or as a dividend to the extent of the portion of our accumulated earnings and profits (if we have any) attributable to the rounded share. Any such taxable income would be in an amount not to exceed the excess of the fair market value of such whole share over the fair market value of the fractional share to which the U.S. holder was otherwise entitled. U.S. holders should consult their tax advisors regarding the U.S. federal income tax and other tax consequences of fractional shares being rounded to the next whole share (including the holding period of a post-Reverse Stock Split share of common stock received in exchange for a fractional pre-Reverse Stock Split share of common stock).
Required Vote
Provided there is a quorum for the Annual Meeting, approval of the Reverse Stock Split Amendment requires the affirmative vote of a majority of the shares outstanding and entitled to vote on Proposal 2 as of the Record Date. Because the affirmative vote of at least a majority of the shares outstanding is required to approve this Proposal 2, abstentions will have the same effect as a vote against Proposal 2. Under applicable stock exchange rules, brokers are permitted to vote shares held for a customer on “routine” matters, such as this Proposal 2, without specific instructions from the customer. Therefore, we do not expect any broker non-votes on this Proposal 2.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” THE REVERSE STOCK SPLIT PROPOSAL.
PROPOSAL 3
ADVISORY (NONBINDING) VOTE ON
NAMED EXECUTIVE OFFICER COMPENSATION
As discussed under the “Executive Compensation” section, our compensation strategy focuses on providing a total compensation package that is designed to attract and retain high-caliber executives by incentivizing them to achieve Company performance goals and closely aligning these goals with stockholder interests. Our philosophy reflects our emphasis on pay for performance and on long-term value creation for our stockholders.
As required by Section 14A of the Exchange Act, we are providing stockholders with an advisory (nonbinding) vote on the compensation of our named executive officers, as described in this Proxy Statement. This Proposal 3, known as a “Say-on-Pay” proposal, is designed to give our stockholders the opportunity to endorse or not endorse our Company’s executive compensation program through the following resolution:
“Resolved, that the stockholders approve, on an advisory (nonbinding) basis, the compensation of our named executive officers, as disclosed in this Proxy Statement pursuant to the compensation disclosure rules of the SEC (which disclosure includes the Executive Compensation section, the Summary Compensation Table for fiscal year 2021, and other related tables and disclosures)”.
When you cast your vote, we urge you to consider the description of our executive compensation program contained in the Executive Compensation section in this Proxy Statement and the accompanying tables and narrative disclosures.
Required Vote
The affirmative vote of a majority of the shares cast and entitled to be cast at the Annual Meeting is required for approval of Proposal 3. Abstentions and broker non-votes will have no effect on the outcome of this Proposal 3.
Because your vote is advisory, it will not be binding upon our Board of Directors, overrule any decision by our Board, or create or imply any additional fiduciary duties on our Board or any member of our Board. However, our Board and our compensation committee will take into account the outcome of the vote when considering future executive compensation arrangements.
Proposal.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” THE NASDAQ PROPOSAL 3 ON OUR NAMED EXECUTIVE OFFICER COMPENSATION AS DESCRIBED IN THIS PROXY STATEMENT.
PROPOSAL 4
ADVISORY (NONBINDING) VOTE ON THE FREQUENCY OF
FUTURE ADVISORY VOTES ON NAMED EXECUTIVE OFFICER COMPENSATION
Under Section 14A of the Exchange Act, we are required to seek a nonbinding advisory stockholder vote regarding the frequency of submission to stockholders of a Say-on-Pay advisory vote such as Proposal 3. The law specifies that at least once every six years we give our stockholders the opportunity to vote on the preferred frequency of future votes on our named executive officer compensation either annually, every two years or every three years, referred to as a “Say-on-Frequency” proposal. Although this vote is advisory and nonbinding, our Board of Directors will review voting results and give serious consideration to the outcome of such voting. We plan to present this proposal to our stockholders at least once every six years.
You may cast your advisory vote on whether the advisory vote on named executive officer compensation will occur every one, two or three years, or you may abstain from voting on the matter.
Our Board of Directors recommends that stockholders vote in favor of holding an advisory vote on named executive officer compensation every year. In making this recommendation, our Board considered the relevant merits of each of the three frequency alternatives. Our Board believes that holding the advisory vote every year will allow stockholders to provide timely, direct input on our executive compensation philosophy, policies and practices as disclosed in the Proxy Statement each year and is therefore consistent with our efforts to engage in an ongoing dialogue with stockholders on executive compensation and corporate governance matters.
Required Vote
The option of one year, two years, or three years that receives the affirmative vote of a majority of the votes cast and entitled to be cast will be the frequency for the advisory vote on named executive officer compensation that has been selected by stockholders. Abstentions and broker non-votes will have no effect on the outcome of this Proposal 4.
Because your vote is advisory, it will not be binding upon our Board of Directors, overrule any decision by our Board, or create or imply any additional fiduciary duties on our Board or any member of our Board. However, our Board will take into account the outcome of the vote when making its decision regarding the frequency of future stockholder advisory votes on named executive officer compensation.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” “ONE YEAR” (AS OPPOSED TO TWO YEARS OR THREE YEARS) FOR PROPOSAL 4, THE FREQUENCY OF FUTURE ADVISORY VOTES ON NAMED EXECUTIVE OFFICER COMPENSATION.
PROPOSAL 5
RATIFICATION OF SELECTION OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our audit committee has selected Mayer Hoffman McCann P.C. (“MHM”) as our independent registered public accounting firm for the fiscal year ending December 31, 2022, and has further directed that we submit our audit committee’s selection of MHM as our independent registered public accounting firm for ratification by our stockholders at the Annual Meeting. MHM has served as the Company’s auditor since 2015. Representatives ofMHM are expected to be present at the Annual Meeting, either in person or by telephone, depending on the COVID-19 situation. 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 MHM as the Company’s independent registered public accounting firm. However, we are submitting the selection of MHM to our stockholders for ratification as a matter of good corporate practice. If our stockholders fail to ratify the selection, our audit committee will reconsider the retention of MHM. Even if the selection is ratified, our audit committee in its discretion may direct the appointment of different independent auditors at any time during the year if it determines that such a change would be in the best interests of 9 Meters and its stockholders.
Principal Accountant Fees and Services
Substantially all of MHM personnel, who work under the control of MHM shareholders, are employees of wholly-owned subsidiaries of CBIZ, Inc., which provides personnel and various services to MHM in an alternative practice structure. The following table represents aggregate fees billed to the Company by MHM, the Company’s independent registered public accounting firm for the fiscal years ended December 31, 2021 and 2020.
| | | | | | | | | | | | | | | | | | | | |
| | Fiscal Year Ended |
| | 2021 | | 2020 |
| | (in thousands) |
Audit Fees (1) | | $ | 253 | | $ | 349 |
| Audit-related Fees | | | — | | | — |
| Tax Fees | | | — | | | — |
| All Other Fees | | | — | | | — |
| Total Fees | | $ | 253 | | $ | 349 |
(1) Audit fees consist of fees billed for the professional services rendered to the Company for the audit of the Company’s annual consolidated financial statements for the years ended December 31, 2021 and 2020, reviews of the quarterly financial statements during those periods, the issuance of consent and comfort letters in connection with registration statement filings, and all other services that are normally provided by the accounting firm in connection with statutory and regulatory filings and engagements.
All fees described above were approved by our audit committee.
Pre-Approval Policies and Procedures
Our audit committee has adopted policy and procedures for the pre-approval of audit and non-audit services rendered by the Company’s independent registered public accounting firm. The policy generally pre-approves specified services in the defined categories of audit services, audit-related services and tax services up to specified amounts. Pre-approval may also be given as part of our audit committee’s approval of the scope of the engagement of the independent auditor or on an individual, explicit, case-by-case basis before the independent auditor is engaged to provide each service. The pre-approval of services may be delegated to one or more of our audit committee’s members, but the decision must be reported to the full audit committee at its next scheduled meeting.
Our audit committee has determined that the rendering of services other than audit services by MHM to date are compatible with maintaining the principal accountant’s independence.
Required Vote
Ratification of the appointment of MHM as the Company’s independent registered public accounting firm requires the affirmative vote of the holders of a majority of the votes cast and entitled to be cast. Abstentions will have no effect on the outcome of this Proposal 5. Under applicable stock exchange rules, brokers are permitted to vote shares held for a customer on “routine” matters, such as this Proposal 5, without specific instructions from the customer. Therefore, we do not expect any broker non-votes on this Proposal 5.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE “FOR” PROPOSAL 5.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD
The principal purpose of the audit committee is to assist the Board of Directors in its oversight of the Company’s accounting and financial reporting processes and audits of 9 Meters’ consolidated financial statements. The Company’s audit committee is responsible for appointing, evaluating, retaining and, when necessary, terminating the Company’s independent registered public accounting firm and approving the audit and non-audit services to be provided by the independent registered public accounting firm.
Management is responsible for the Company’s internal controls and the financial reporting process. The independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB) to obtain reasonable assurance that the Company’s consolidated financial statements are free from material misstatement and expressing an opinion on the conformity of such financial statements with accounting principles generally accepted in the United States.
In this context, the audit committee has reviewed and discussed the audited consolidated financial statements for the fiscal year ended December 31, 2021, with management and MHM. The audit committee has discussed with MHM the matters required to be discussed by the applicable requirements of the PCAOB and the SEC. The audit committee has also received the written disclosures and the letter from MHM required by applicable requirements of the PCAOB regarding the independent accountants’ communications with the audit committee concerning independence, and has discussed with the independent registered public accounting firm the accounting firm’s independence.
Based on its discussions with management and the independent registered public accounting firm, the audit committee in place in March 2022 recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, which was filed on March 23, 2022.
Submitted by the Audit Committee
Michael Constantino, Chairman
Lorin Johnson, Ph.D.
Mark Sirgo, Pharm.D.
The information contained in the following report of 9 Meters’ audit committee is not considered to be “soliciting material,” “filed” or incorporated by reference in any past or future filing by 9 Meters under the Exchange Act or the Securities Act of 1933 unless and only to the extent that 9 Meters specifically incorporates it by reference.
CORPORATE GOVERNANCE MATTERS
Board Leadership Structure
Our Board of Directors does not have a written policy regarding the separation of the roles of chief executive officer and chairman of the Board. Our Board believes that it is in the best interests of our company to make that determination from time to time based on the position and the direction of our company and the membership of our Board. Currently, these roles are held separately. Mr. Temperato serves as Chief Executive Officer and Dr. Sirgo serves as the Board Chair. While the Board believes that separation of these positions serves our company well, and intends to maintain this separation where appropriate and practicable, the Board does not believe that it is appropriate to prohibit one person from serving as both Board Chairman and Chief Executive Officer.
Role of the Board in Risk Oversight
The audit committee of our Board of Directors is primarily responsible for overseeing our risk management on behalf of our Board. The audit committee receives reports from management on a regular basis regarding our assessment of risks. In addition, the audit committee reports regularly to our Board, which also considers our risk profile. The audit committee and our Board focus on the most significant risks we face and our general risk-management strategies, including cybersecurity risks. While our Board, through our audit committee, oversees our risk management, management is responsible for day-to-day risk-management processes.
Each committee of our Board of Directors meets in executive session with key management personnel and representatives of outside advisors to oversee risks associated with their respective principal areas of focus. Our audit committee oversees management of financial risks. Our compensation committee oversees the management of risks related to our executive compensation plans and arrangements. Our nominating and corporate governance committee manages risks associated with the independence of our Board and potential conflicts of interest. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through committee reports about such risks.
Independence of Directors
Our common stock is listed on The Nasdaq Capital Market. Under Nasdaq rules, independent directors must comprise a majority of the Board of Directors, and each member of our audit committee, compensation committee and nominating and corporate governance committee must be independent. Under Nasdaq rules, a director will only qualify as an “independent director” if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with such person’s exercise of independent judgment in carrying out the responsibilities of a director.
Our Board of Directors has undertaken a review of its composition, the composition of its committees and the independence of each director. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, the Board has determined that none of Messrs. Constantino and Rice, Drs. Johnson and Sirgo and Ms. Ventimiglia had a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these directors is “independent” as that term is defined under applicable Nasdaq rules. In making these determinations, the Board considered the current and prior relationships that each non-employee director has with us and all other facts and circumstances the Board deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director.
Board Meetings and Attendance
Our Board of Directors meets throughout the year on a set schedule and also holds special meetings and acts by written consent from time to time. During 2021, the Board held seven meetings and each director attended at least 75% of the aggregate total number of meetings held by the Board and each committee on which he or she served
during the period each director was appointed during 2021. Additionally, Drs. Sirgo and Johnson and Messrs. Constantino, Rice and Temperato attended the Annual Meeting of Stockholders held on June 22, 2021. We do not have a stated policy regarding director attendance at annual stockholder meetings, but strongly encourage our directors to attend each such meeting.
Board Committees
As described above, our Board of Directors has established an audit committee, a compensation committee and a nominating and corporate governance committee. Our Board may establish other committees to facilitate the management of our business. The composition and functions of each of our audit, compensation and nominating and corporate governance committees are described below. Members serve on these committees until their resignation or until otherwise determined by our Board. Each of these committees is governed by a formal written charter approved by our Board, and a copy of each such charter is available on the Investors – Resources - Corporate Governance section of our website at www.9meters.com. However, the reference to our website does not constitute incorporation by reference of the information contained on or available through our website, and you should not consider it to be a part of this Proxy Statement.
The following table provides membership information of our non-employee directors on each committee of our Board of Directors as of May 4, 2022.
| | | | | | | | | | | | | | | | | |
| Audit Committee | | Compensation Committee | | Nominating and Corporate Governance Committee |
Michael Constantino | µ | | | | þ |
Lorin K. Johnson, Ph.D. | þ | | µ | | þ |
Michael Rice | | | þ | | µ |
Mark Sirgo, Pharm.D. | þ | | þ | | þ |
Samantha Ventimiglia | | | | | þ |
µ = Committee Chair
þ = Member
Audit Committee
Our audit committee consists of Mr. Constantino (Chair) and Drs. Johnson and Sirgo. Each of Mr. Constantino and Drs. Johnson and Sirgo satisfy the independence requirements of Rules 5605(a)(2) and 5605(c)(2) of the Nasdaq Stock Market listing rules and Section 10A(m)(3) of the Exchange Act. The audit committee met five times during 2021. Our Board of Directors has determined that Mr. Constantino is an “audit committee financial expert,” as that term is defined by the SEC rules implementing Section 407 of the Sarbanes-Oxley Act, and possesses financial sophistication, as defined under applicable Nasdaq rules. Our Board has also determined that each member of our audit committee can read and understand fundamental financial statements in accordance with applicable SEC and Nasdaq rules. To arrive at these determinations, our Board has examined each audit committee member’s scope of experience and the nature of his experience in the corporate finance sector.
The responsibilities of our audit committee include:
•selecting and retaining, compensating, overseeing and, if necessary, terminating the Company’s independent registered public accounting firm with respect to its performance of audit services and any permissible non-audit services;
•selecting and retaining, compensating, overseeing and, if necessary, terminating any other registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company;
•pre-approving all audit and permitted non-audit and tax services provided by any independent registered public accounting firm;
•reviewing and discussing with the independent registered public accounting firm critical accounting policies and practices, alternative treatments of financial information and other material written communications;
•evaluating the qualifications, performance and independence of the Company’s independent registered public accounting firm;
•reviewing and discussing with the independent registered public accounting firm and management our annual financial statements and, following completion of the audit, reviewing separately with the independent registered public accounting firm and management any problems or difficulties encountered during the audit;
•recommending that the audited financial statements be included in our Forms 10-K and producing the Audit Committee Report required to be included in our proxy statements;
•reviewing any other relevant reports or other financial information prepared by management and directing the independent registered public accounting firm to use its best efforts to perform a review of interim financial information prior to our disclosure of such financial information;
•discussing policies and procedures concerning press releases and reviewing the information to be included in earnings press releases, as well as financial information and earnings guidance provided to analysts;
•coordinating our Board of Directors’ oversight of our internal control over financial reporting and disclosure controls and procedures;
•discussing our policies with respect to risk assessment and risk management, including risk for fraud, and discussing the guidelines and policies that govern the process by which our exposure to risk is handled;
•establishing procedures for the receipt, retention and treatment of complaints received by us regarding (i) accounting, internal accounting controls or auditing matters and (ii) the confidential, anonymous submission by our employees of concerns regarding questionable accounting or auditing matters;
•reviewing and approving, or making recommendations to our Board of Directors regarding, our policies and procedures for reviewing and approving or ratifying related person transactions, and reviewing, approving and overseeing any related person transactions;
•monitoring compliance with our Code of Ethics and Business Conduct (the “Code”), investigating any alleged breach or violation of the Code, enforcing the provisions of the Code, and reviewing the Code periodically and recommending any changes to the Board;
•periodically reviewing our Investment Policy and recommending any changes to the Board;
•performing an annual review and evaluation of the performance of the audit committee and an annual review of its charter; and
•performing any other activities consistent with the Company’s governing documents or that the audit committee or Board of Directors deems necessary or appropriate.
Compensation Committee
Our compensation committee consists of Dr. Johnson (Chair), Mr. Rice and Dr. Sirgo. Mr. Constantino was a member of the compensation committee from July 2020, when Mr. Constantino joined the Board of Directors, until February 2021, when Mr. Rice joined the Board and the compensation committee. Each of Dr. Johnson, Mr. Rice and Dr. Sirgo, and Mr. Constantino during his period of service on the compensation committee, satisfy the independence requirements of Rules 5605(a)(2) and 5605(d)(2) of the Nasdaq Stock Market listing rules. The compensation committee met three times during 2021.
The responsibilities of our compensation committee include:
•reviewing and approving, or recommending that our Board of Directors approve, the compensation of our chief executive officer and all other executive officers, and evaluating the compensation in light of the most recent stockholder advisory vote on executive compensation;
•periodically reviewing and making recommendations to our Board of Directors with respect to director compensation;
•reviewing and approving, or recommending that our Board of Directors approve, incentive compensation plans and equity-based plans;
•reviewing and approving, or making recommendations to our Board of Directors regarding, any employment agreements and any severance arrangements or plans, including any benefits to be provided in connection with a change in control, for our chief executive officer and other executive officers;
•reviewing and recommending to the Board of Directors the frequency with which the Company will conduct Say-on-Pay votes and reviewing and approving the Say-on-Pay and Say-on-Frequency proposals for inclusion in the Company’s proxy statements;
•overseeing the management of risks relating to our executive compensation plans and arrangements;
•performing an annual review and evaluation of the performance of the compensation committee and an annual review of its charter; and
•performing any other activities consistent with the Company’s governing documents or that the compensation committee or Board of Directors deems necessary or appropriate.
Our compensation committee reviews and approves, or recommends for approval by the Board of Directors, the compensation of our chief executive officer and our other executive officers. Our compensation committee meets without the presence of executive officers when approving or deliberating on the compensation of our chief executive officer but may, in its discretion, invite our chief executive officer to be present during the approval of, or deliberations with respect to, compensation for our other executive officers. Our compensation committee also periodically reviews and makes recommendations to our Board of Directors regarding the compensation of our directors. Our compensation committee may form and delegate authority to one or more subcommittees as it deems appropriate from time to time.
Our compensation committee has the authority, in its sole discretion, to retain or obtain the advice of such compensation consultants, legal counsel or other advisors as it deems necessary or appropriate. During 2021 Aon Rewards Solutions - Radford (“Radford”) assisted the compensation committee by providing consulting services with regard to the compensation of our executive officers, non-executive staff and directors. Other than its engagement by the compensation committee, Radford provides no other services to the Company. The compensation
committee has assessed the independence of Radford and concluded that its engagement of Radford does not raise any conflict of interest with us or any of our directors or executive officers.
Nominating and Corporate Governance Committee
Our nominating and corporate governance committee consists of Messrs. Rice (Chair) and Constantino and Drs. Johnson and Sirgo and Ms. Ventimiglia. Dr. Nissim Darvish was a member of the nominating and corporate governance committee until his resignation from the Board of Directors in February 2021, thereafter Mr. Rice was appointed to the committee and was also appointed as Chair. Mr. Constantino joined the committee in February 2021. Each of Messrs. Rice and Constantino, Drs. Johnson and Sirgo and Ms. Ventimiglia, and Dr. Darvish during his period of service on the nominating and corporate governance committee, satisfy the independence requirements of Rule 5605(a)(2) of the Nasdaq Stock Market listing rules. The nominating and corporate governance did not meet in person during 2021, but took action by written consent once during 2021.
The responsibilities of our nominating and corporate governance committee include:
•identifying and screening individuals qualified to become members of our Board of Directors;
•recommending the number of members that shall serve on our Board of Directors;
•evaluating and reviewing the qualifications and independence of existing and prospective directors;
•selecting and approving the director nominees to be submitted to a stockholder vote at our Annual Meeting of stockholders;
•developing and recommending corporate governance guidelines to our Board of Directors;
•periodically reviewing our Board of Directors’ leadership structure;
•overseeing the review by our Board of Directors, from time to time, of succession planning for senior executives;
•overseeing the evaluation of our Board of Directors and its committees; and
•performing an annual review and evaluation of the performance of our nominating and corporate governance committee and an annual review of its charter.
Our nominating and corporate governance committee identifies persons as candidates to serve on the Board of Directors and selects, or recommends that our Board select, the nominees for directorships to be filled by our Board or by our stockholders at an annual or special meeting. In evaluating the suitability of individual candidates, our nominating and corporate governance committee may take into account many factors, including, among others, personal and professional integrity, ethics and values, experience in corporate management, strong finance experience, practical and mature business judgment, experience relevant to our industry, experience as a board member or executive officer of another publicly held company, relevant academic expertise or other proficiency in an area of our operations, diversity of expertise and experience in substantive matters pertaining to our business relative to other board members and diversity of background and perspective, including, but not limited to, with respect to age, gender, ethnicity, place of residence and specialized experience. The committee charter requires the nominating and corporate governance committee to strive to include candidates with a diversity of ethnicity and gender in each pool of candidates from which Board nominees are chosen and seek diverse candidates by including in the candidate pool (among others) individuals with diverse backgrounds in terms of knowledge, experience, skills, and other characteristics. Our nominating and corporate governance committee evaluates each person in the context of our Board as a whole, with the objective of assembling a group that can best effect and perpetuate the success of our company and represent stockholder interests through the exercise of sound judgment, using its diversity of experience in these various areas.
Our nominating and corporate governance committee will consider stockholder recommendations of candidates on the same basis as it considers all other candidates. Stockholder recommendations should be submitted to us under the procedures discussed in “Stockholder Communications with the Board of Directors,” and should 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 and a description of the proposed nominee’s qualifications as a director. 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.
Environmental, Social and Governance
The management team and board of directors of 9 Meters are keenly aware of the importance of environmental, social and governance issues, and the Company’s need to conduct business with high standards. Our mission as an organization is to be patient-centric and develop innovative treatments to liberate patients from rare and underserved diseases through our deep understanding of GI biology.
We collectively believe that pursuing an environmental, social and governance (“ESG”) agenda serves the interests of all of our stakeholders, which includes our shareholders. Our employees, partners, and investors expect us to honor our values and take action to promote a more equitable and sustainable world for future generations.
As we further build our organization behind our pipeline of innovative products to treat rare and unmet needs in digestive diseases, we intend to strive to understand the perspectives of the diverse clients and communities we will serve, and as such, we are intensifying our efforts to drive diversity and inclusion and a culture of belonging throughout our organization. We will strive to comply with all applicable environmental laws, regulations and policies concerning environmental protection in all our business activities and in the selection of partners we choose to work with. We are committed to strengthening our local community by contributing through volunteerism and will continue, as we have been doing, to provide donations to parties we believe will support our goal in improving patient health and well-being. We are also committed to good corporate governance. All of our employees, officers and directors must conduct themselves according to the language and spirit of our Code of Conduct, and our board of directors is dedicated to providing effective corporate oversight including through oversight committees such as the nominating and governance committee and the audit committee.
Diversity, Equity and Inclusion
At 9 Meters, we are committed to diversity, equity and inclusion across all aspects of our organization, including hiring, promotion and development practices. We seek to build a diverse and inclusive workplace and have no tolerance for prejudice or racism. As of March 18, 2022, 38% of our employees were ethnically diverse individuals and 57% of our employees were female.
We are committed to ensuring our employees receive equal pay for equal work. We establish components and ranges of compensation based on market and benchmark data. Within this context, we strive to pay all employees equitably within a reasonable range, taking into consideration factors such as role, relevant experience, internal equity, job location, and individual, business unit and company performance. In addition, we are committed to providing benefits designed to allow our diverse workforce to have reward opportunities that meet their varied needs so that they are inspired to perform their best on behalf of patients and stockholders each day. We regularly review our compensation practices and analyze the equity of compensation decisions, for individual employees and our workforce as a whole. If we identify employees with pay gaps, we receive and take action to attain fidelity between our stated philosophy and actions.
Board Diversity
We are committed to fostering an environment of diversity and inclusion, including among the members of our board of directors. Therefore, while the board has not adopted a formal diversity policy, in considering director nominees, the nominating and governance committee considers candidates who represent a mix of backgrounds and
a diversity of gender, race, ethnicity, age, background, professional experience and perspectives that enhance the quality of the deliberations and decisions of our board, in the context of both the perceived needs of the structure of our board and the Company’s business and structure at that point in time.
| | | | | | | | | | | | | | |
| Board Diversity Matrix |
| Total Number of Directors | 6 | | | |
| Female | Male | Non-Binary | Did Not Disclose Gender |
| Part I: Gender Identity | | | | |
| Directors | 1 | | 5 | | — | | — | |
| Part II: Demographic Background | | | | |
| African American or Black | — | | — | | — | | — | |
| Alaskan Native or Native American | — | | — | | — | | — | |
| Asian | — | | — | | — | | — | |
| Hispanic or Latinx | — | | — | | — | | — | |
| Native Hawaiian or Pacific Islander | — | | — | | — | | — | |
| White | 1 | | 5 | | — | | — | |
| Two or More Races or Ethnicities | — | | — | | — | | — | |
| LGBTQ+ | — | | — | | — | | — | |
| Did Not Disclose Demographic Background | — | | — | | — | | — | |
Stockholder Communications with the Board of Directors
Stockholders who wish to communicate with our Board of Directors may do so by sending written communications to our Corporate Secretary addressed as follows: 9 Meters Biopharma, Inc., Attn: Corporate Secretary, 8480 Honeycutt Road, Suite 120, Raleigh, NC 27615. The communications will be reviewed by the Corporate Secretary. Our Corporate Secretary will forward such communication to the Board or to any individual director to whom the communication is addressed unless the communication is frivolous, hostile, threatening or similarly inappropriate, in which case our Corporate Secretary shall discard the communication.
Code of Ethics and Business Conduct
We have adopted a Code of Ethics and Business Conduct that applies to our directors, officers (including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions) and other employees. Our Code of Ethics and Business Conduct is available on our website under Investors — Resources, which may be accessed by navigating to www.9meters.com/resources. We intend to post on our website and (if required) file on Form 8-K all disclosures that are required by applicable law, the rules of the SEC or the Nasdaq listing standard, concerning any amendment to, or waiver from, our Code of Ethics and Business Conduct. However, the reference to our website does not constitute incorporation by reference of the information contained on or available through our website, and you should not consider it to be a part of this Proxy Statement.
Anti-Hedging and Anti-Pledging Policies
The Company’s Insider Trading Policy prohibits our directors, officers and employees from engaging in any hedging activity in our securities or pledging any of our securities as collateral for loans or margin accounts.
EXECUTIVE OFFICERS OF THE COMPANY
For information regarding Mr. Temperato, our Chief Executive Officer, please see his biography above under "Directors."
Bethany Sensenig
Ms. Sensenig joined our Company as Chief Financial Officer in January 2022. Prior to joining the Company from March 2019 to January 2022, Ms. Sensenig was Chief Financial Officer and Head of U.S. Operations of Minovia Therapeutics, Ltd., a clinical-stage biotech company, where she played a leadership role building the company’s business and financing strategy. From April 2006 to March 2019, Ms. Sensenig held various roles at Biogen, Inc. a multinational biotechnology company, where she most recently held the position of Vice President of Finance and Commercial Operations. Earlier in her career, Ms. Sensenig held financial management and analyst roles at Merck & Co. Inc. and Nexus Technologies, Inc. Ms. Sensenig holds a Bachelor of Science in Accounting and Business Management from Montreat College, a Master of Business Administration from Western Carolina University and is a Certified Management Accountant.
EXECUTIVE COMPENSATION
This Executive Compensation section describes the material elements of our compensation program for our “named executive officers” during 2021. Our named executive officers consisted of two individuals, our principal executive officer and our principal financial officer during 2021; there were no other executive officers of the Company during 2021. Our named executive officers for 2021 were:
•Mr. Temperato, who has served as our President and Chief Executive Officer (our “CEO”) since April 2020; and
•Edward J. Sitar, who served as our Chief Financial Officer (our “Former CFO”) from June 2019 through January 2022.
Summary Compensation Table
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and
Principal
Position | Year | | Salary
($) | | Bonus ($) | | Stock Awards(1) ($) | | Option Awards(2) ($) | | Non-equity Incentive Plan Compensation(3) ($) | | All Other Compensation
($) | | Total
($) |
| John Temperato | 2021 | | $ | 537,100 | | | $ | — | | | $ | — | | | $ | 1,435,854 | | | $ | 214,840 | | | $ | — | | | $ | 2,187,794 | |
President and Chief Executive Officer (4) | 2020 | | $ | 328,708 | | | $ | — | | | $ | 326,577 | | | $ | 1,253,588 | | | $ | 159,375 | | | $ | — | | | $ | 2,068,248 | |
| | | | | | | | | | | | | | | |
| Edward J. Sitar | 2021 | | $ | 371,500 | | | $ | — | | | $ | — | | | $ | 523,489 | | | $ | 118,880 | | | $ | — | | | $ | 1,013,869 | |
Chief Financial Officer(5) | 2020 | | $ | 311,000 | | | $ | — | | | $ | — | | | $ | 381,810 | | | $ | 86,400 | | | $ | — | | | $ | 779,210 | |
(1)The amount in the “Stock Awards” column reflects the grant date fair value of restricted stock units granted during the calendar year computed in accordance with the provisions of Accounting Standards Codification (“ASC”) 718, Compensation-Stock Compensation. The grant date fair value, which is based on the value of the underlying common stock on the date of grant, does not reflect the actual economic value that will be realized by the named executive officer upon the vesting of the restricted stock units or the sale of the common stock underlying the award.
(2)The amounts in the “Option Awards” column reflect the aggregate Black-Scholes grant date fair value of stock options granted during the calendar year computed in accordance with the provisions of ASC 718, Compensation-Stock Compensation. The assumptions that were used to calculate the value of these awards are discussed in Notes 1 and 9 to the consolidated financial statements included in our Annual Report on
Form 10-K. These amounts do not reflect the actual economic value that will be realized by the named executive officer upon the vesting of the stock options, the exercise of the stock options or the sale of the common stock underlying such stock options.
(3)During February 2021 and 2022, the compensation committee awarded non-equity incentive plan compensation to certain executives and senior employees for the prior year’s performance. See section entitled “Employment Agreements with Our Named Executive Officers” below for further details of non-equity incentive plan compensation that may be awarded under those agreements.
(4)Mr. Temperato was appointed as Chief Executive Officer effective April 30, 2020, upon closing of the RDD Merger.
(5)Mr. Sitar served as Chief Financial Officer until his separation from the Company, effective January 14, 2022.
Narrative Disclosure to Summary Compensation Table
The primary elements of compensation for our named executive officers consisted of base salary, equity-based compensation awards and other compensation such as discretionary bonuses and annual non-equity incentive bonuses. Our named executive officers are also able to participate in employee benefit plans and programs that we offer to our other full-time employees on the same basis. Each of our named executive officers is (or was) compensated by us pursuant to an executive employment agreement, the terms of which are described below under “Employment Agreements with Our Named Executive Officers.”
Base Salary
The base salary payable to our named executive officers was intended to provide a fixed component of compensation that reflected the executive’s skill set, experience, role and responsibilities.
Bonus
Pursuant to their respective employment agreements, each named executive officer is eligible for an annual non-equity incentive award, based on goals established by the Board. In 2021 and 2020, the Board set goals related to various operational and financial objectives. For the year ended December 31, 2021, the Board determined that Mr. Temperato and Mr. Sitar will receive a bonus of $214,840 and $118,880, respectively, after determining that certain operational and financial objectives were met.
Equity Awards
The Company has two stock option plans in existence: the 2012 Omnibus Incentive Plan, as amended (the “Omnibus Plan”), and the Innovate 2015 Stock Incentive Plan (the “Private Innovate Plan”). We will no longer award options under the Private Innovate Plan. In addition, pursuant to the RDD Merger Agreement, we assumed previously issued option grant agreements awarded to RDD employees upon consummation of the RDD Merger on April 30, 2020. For information about stock option awards granted to our named executive officers, see the “Outstanding Equity Awards at Year-end” table below. We believe that equity grants provide our executives with a strong link to our long-term performance, create an ownership culture and help to align the interests of our executives and stockholders. In addition, we believe that equity grants with a time-based vesting feature promote executive retention by incentivizing executives to continue employment during the vesting period.
Health, Welfare and Additional Benefits
Each of our named executive officers was eligible to participate in our employee benefit plans and programs, including medical, dental and vision benefits, to the same extent as our other full-time employees, subject to the terms and eligibility requirements of those plans.
2021 Outstanding Equity Awards at Fiscal Year-End
The following table presents the outstanding equity awards held by our named executive officers as of December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Option Awards | | |
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | | | |
| John Temperato | 246,743 | (1) | — | | $ | 0.74 | | | 4/30/2025 | | | | | | |
| 562,500 | | (2) | 437,500 | | | $ | 0.70 | | | 4/30/2030 | | | | | | |
| 109,913 | (3) | 200,432 | | $ | 0.62 | | | 7/6/2030 | | | | | | |
| 226,544 | (3) | 413,111 | | $ | 1.07 | | | 11/27/2030 | | | | | | |
| — | (4) | 650,000 | | $ | 1.07 | | | 11/27/2030 | | | | | | |
| — | (5) | 1,309,626 | | $ | 1.81 | | | 2/4/2031 | | | | | | |
| | | | | | | | |
Edward J. Sitar (8) | 350,000 | (6) | — | | | $ | 1.17 | | | 7/1/2029 | | | | | | |
| 176,156 | (7) | — | | | $ | 0.60 | | | 4/24/2030 | | | | | | |
| 70,313 | (2) | 54,688 | | $ | 0.70 | | | 4/30/2030 | | | | | | |
| 194,792 | (3) | 355,208 | | $ | 0.62 | | | 7/6/2030 | | | | | | |
| — | (4) | 225,000 | | $ | 0.62 | | | 7/6/2030 | | | | | | |
| — | (5) | 477,468 | | $ | 1.81 | | | 2/4/2031 | | | | | | |
(1) This option was granted by RDD Pharma, Ltd. and was assumed by the Company pursuant to the RDD Merger Agreement upon consummation of the RDD Merger on April 30, 2020.
(2) This option was granted under the Omnibus Plan, and 25% of these options vested on April 30, 2020, with the remainder vesting monthly over the next 48 months.
(3) This option was granted under the Omnibus Plan, and 25% of these options will vest on July 6, 2021, with the remainder vesting monthly over the next 36 months.
(4) This option was granted under the Omnibus Plan, and began vesting upon satisfaction of certain performance criteria previously set by the Board. The Compensation Committee determined that the performance criteria was met and vesting began on January 1, 2021, with 25% vesting on January 1, 2022 and the remainder vesting over the next 36 months.
(5) This option was granted under the Omnibus Plan, and 25% of these options vest on February 4, 2022, with the remainder vesting monthly over the next 36 months.
(6) This option was granted under the Omnibus Plan, and 7.5% vested on December 31, 2019. The remainder of the options vesting was accelerated upon completion of the RDD Merger on April 30, 2020.
(7) This option was granted under the Omnibus Plan, and was fully vested on the date of grant, April 24, 2020.
(8) Mr. Sitar was serving as an independent consultant for the three months following the January 14, 2022 separation date. The material terms of Mr. Sitar’s previously granted equity awards subject to time-based vesting remained unchanged and continued to vest during the consulting period. Following the end of the consulting period, the remaining unvested equity awards previously granted to Mr. Sitar subject to time-based vesting were accelerated and became fully vested with the exercise period being extended to ten years from the issuance date.
Employment Agreements with Our Named Executive Officers
John Temperato
We entered into an executive employment agreement with Mr. Temperato, effective April 30, 2020, as amended on July 12 2021,which included provisions with respect to, among other things, base salary. Pursuant to the executive employment agreement with Mr. Temperato, he receives an initial base salary of $450,000 per year, subject to review and adjustment by the Board from time to time. Effective January 1, 2021, Mr. Temperato’s salary was increased to $537,100. Upon execution of the employment agreement, the Board approved an option grant to Mr. Temperato to purchase 1,000,000 shares of Common Stock, which vested 25% upon grant, with the remainder vesting in 48 equal month installments, provided that Mr. Temperato remains an employee of the Company as of each such vesting date. Mr. Temperato is eligible to receive an annual non-equity incentive cash award with a target amount of 40% of his base salary, as determined by the Board in its sole discretion (and pro-rated for 2020). Mr. Temperato is also eligible to participate in the Company’s other employee benefit plans in effect from time to time on the same bases as are generally made available to other senior executive employees of the Company.
If the employment of Mr. Temperato is terminated by the Company without “Cause” or by Mr. Temperato for “Good Reason” (each as defined in the employment agreement, as amended), Mr. Temperato will be eligible to receive 12 months of his then-current salary, the prorated amount of his target year-end annual non-equity incentive award, and accelerated vesting of his unvested options and restricted stock unit awards that were scheduled to vest in the 12 months following termination. However, if such termination of employment occurs within 12 months of a “Change in Control” (as defined in the employment agreement, as amended), then Mr. Temperato will be eligible to receive 18 months of his then-current salary, the amount of his target year-end annual non-equity incentive award, and accelerated vesting of all of his unvested options and restricted stock unit awards. All separation benefits are subject to Mr. Temperato entering into and not revoking a separation agreement.
Effective November 27, 2020, the Board cancelled certain stock option awards to Mr. Temperato that were intended to be granted to Mr. Temperato on July 6, 2020 (collectively, the “Original Stock Options”) under the 2012 Plan. The purpose of the cancellation was to correct an inadvertent error that occurred when the Company included a number of shares in the Original Stock Options that exceeded the previous annual individual award limit under the 2012 Plan of 1.5 million shares of common stock. The individual award limit was increased by the Board in November 2020 to 4 million shares of Company common stock. Following the increase of the individual award limit, and in lieu of the Original Stock Options that were granted in excess of the prior individual award limit, the Board granted Mr. Temperato the following new stock awards: 639,655 shares of common stock, subject to time-based vesting, and 650,000 shares of common stock, subject to performance-based vesting, each at an exercise price of $1.07. Additionally, the Board granted Mr. Temperato 203,667 shares of restricted stock, vesting on November 25, 2021, contingent upon his continued relationship with the Company, in order to compensate him for the lost value of the Original Stock Options due to the increased exercise price of the new options. The portion of the Original Stock Options relating to 310,345 shares of common stock that were not in excess of the prior individual award limit remain in effect. Prior option grants made to Mr. Temperato in April 2020 and June 2020 also remain in effect.
Edward J. Sitar
We entered into an executive employment agreement with Mr. Sitar effective July 1, 2019. Pursuant to the executive employment agreement with Mr. Sitar, Mr. Sitar received an annual base salary of $285,000, subject to periodic increase as the Company may determine. Effective January 1, 2021, Mr. Sitar’s salary was increased to $371,500. Mr. Sitar’s employment agreement provided that Mr. Sitar would receive an initial grant of options to purchase up to 350,000 shares of the Company’s common stock, which award vest with respect to 7.5% of the shares on the six-month anniversary of July 1, 2019, 7.5% of the shares on the one-year anniversary of July 1, 2019, and the remainder of the shares in 36 equal monthly installments on the last day of each successive month thereafter. In addition to Mr. Sitar’s initial equity award, Mr. Sitar was eligible to participate in (i) any equity compensation plan or similar program established by the Company and (ii) any bonus or similar incentive plans established by the
Company that may be applicable to executives of the Company at Mr. Sitar’s level, with participation in such bonus or similar incentive plans based on a target of 30% - 50% of Mr. Sitar’s base salary. Mr. Sitar was also generally eligible to participate in employee benefit programs established by us from time to time that were applicable to our executives.
As of January 14, 2022, the Company entered into a separation and consulting agreement with Mr. Sitar, effective January 14, 2022 (the “Separation Date”). Pursuant to the separation and consulting agreement, Mr. Sitar served as an independent consultant for three months following the Separation Date (the “Consulting Period”). In connection with his separation, and following his non-revocation of a general release of claims, as provided in his employment agreement, Mr. Sitar will receive: (i) separation pay in an amount equal to 12 months of his regular base salary, minus applicable withholdings, paid in accordance with the Company’s normal payroll practices; (ii) payment of his 2021 annual bonus, as determined by the Company’s board of directors; and (iii) payment of his 2022 annual bonus prorated for his period of service prior to the Separation Date and during the Consulting Period. The material terms of Mr. Sitar’s previously granted equity awards subject to time-based vesting remained unchanged and continued to vest during the Consulting Period. Following the end of the Consulting Period, the remaining unvested equity awards previously granted to Mr. Sitar subject to time-based vesting were accelerated and became fully vested with an extension of the exercise period to ten years from the issuance date.
DIRECTOR COMPENSATION
The following table provides compensation information regarding our non-employee directors for the year ended December 31, 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Name | | Fees Earned or Paid in Cash (1) ($) | | Option Awards (2) ($) | | Total
($) |
| Mark Sirgo, Pharm.D. | | $ | 93,750 | | | | $ | 75,640 | | | | $ | 169,390 | | |
| Michael Constantino | | $ | 57,500 | | | | $ | 75,640 | | | | $ | 133,140 | | |
| Lorin K. Johnson, Ph.D. | | $ | 58,750 | | | | $ | 75,640 | | | | $ | 134,390 | | |
Michael Rice (3) | | $ | 35,000 | | | | $ | 153,354 | | | | $ | 188,354 | | |
Samantha Ventimiglia (4) | | $ | 3,438 | | | | $ | 117,601 | | | | $ | 121,039 | | |
Nissim Darvish, M.D., Ph.D. (5) | | $ | 13,125 | | | | $ | — | | | | $ | 13,125 | | |
Sandeep Laumas, M.D. (6) | | $ | 24,151 | | | | $ | — | | | | $ | 24,151 | | |
(1)Fees earned or paid in cash reflect the non-employee director compensation earned or paid in cash during the year ended December 31, 2021.
(2)The amounts in the “Option Awards” column reflect the aggregate Black-Scholes grant date fair value of stock options granted during the calendar year computed in accordance with the provisions of ASC 718, Compensation-Stock Compensation. The assumptions that were used to calculate the value of these awards are discussed in Notes 1 and 9 to the consolidated financial statements included in our Annual Report on Form 10-K. These amounts do not reflect the actual economic value that will be realized by the directors upon the vesting of the stock options, the exercise of the stock options or the sale of the common stock underlying such stock options.
(3)Mr. Rice was appointed to the Board of Directors on February 12, 2021.
(4)Ms. Ventimiglia was appointed to the Board of Directors on October 1, 2021.
(5)Dr. Darvish resigned effective as of February 12, 2021.
(6)Dr. Laumas served as a director until the 2021 Annual Meeting of Stockholders on June 22, 2021.
The table below shows the aggregate number of option awards (vested and unvested) held as of December 31, 2021 by each of our non-employee directors who was serving as of that date.
| | | | | |
Name | Aggregate Options Outstanding as of
December 31, 2021 |
Mark Sirgo, Pharm.D. | 486,743 | |
Michael Constantino | 240,000 | |
Lorin K. Johnson, Ph.D. | 616,492 | |
Michael Rice | 150,000 | |
Samantha Ventimiglia | 150,000 | |
Non-Employee Director Compensation Policy
As of May 1, 2020, our non-employee directors receive the following annual retainers, to be paid quarterly:
| | | | | |
Position | Retainer |
Board member | $ | 37,500 | |
Chairman of the Board | 35,000 | |
Audit Committee Chair | 15,000 | |
Audit Committee member | 7,500 | |
Compensation Committee Chair | 10,000 | |
Compensation Committee member | 7,500 | |
Nominating and Corporate Governance Chair | 7,500 | |
Nominating and Corporate Governance member | 3,750 | |
Under the policy, each non-employee director who is initially elected or appointed to the Board on any date other than the date of the Annual Meeting will automatically be granted options to purchase 150,000 shares of our common stock. The initial equity awards will vest monthly over a period of three years, subject to continued service on our Board. In addition, each non-employee director who serves on the Board as of the date of any Annual Meeting will automatically be granted an option on the date of such Annual Meeting, with the number of options and vesting period to be determined by the Compensation Committee.
Directors may be reimbursed for travel, food, lodging and other expenses directly related to their service as directors. Directors are also entitled to the protection provided by their indemnification agreements and the indemnification provisions in our certificate of incorporation and bylaws.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and the related notes present information on the beneficial ownership of shares of our common stock as of May 4,July 25, 2022 (except where otherwise indicated) by:
•each person, or group of affiliated persons, who are known by us to beneficially own more than 5% of the outstanding shares of our capital stock;
•each of our directors;
•each of our named executive officers; and
•all of our current directors and executive officers as a group.
Beneficial ownership is determined in accordance with SEC rules and includes voting or investment power with respect to the securities. Shares of common stock that may be acquired by an individual or group within 60 days of May 4,July 25, 2022, pursuant to the exercise of options or warrants, are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table.
Except as indicated in the footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them, based on information provided to us by such stockholders. Unless otherwise indicated, the address for each stockholder listed is: c/o 9 Meters Biopharma, Inc., 8480 Honeycutt Road, Suite 120, Raleigh, NC 27615.
| | | | | | | | | | | | | | | | | | | | |
| Name and Address of Beneficial Owner | | Shares Beneficially Owned | | Percent of Outstanding(1) |
| Principal Stockholders: | | | | |
OrbiMed Advisors, LLC (2) | | 15,384,418 | | | | 5.9 | | % |
Adage Capital Management, L.P. (3) | | 15,000,000 | | | | 5.8 | | % |
BlackRock, Inc. (4) | | 14,164,801 | | | | 5.5 | | % |
| Directors and Named Executive Officers: | | | | |
John Temperato (5) | | 3,326,214 | | | | 1.3 | | % |
Edward J. Sitar (6) | | 2,165,762 | | | | * | |
| Bethany Sensenig | | — | | | | * | |
Mark Sirgo, Pharm.D. (7) | | 1,884,667 | | | | * | |
Lorin K. Johnson, Ph.D. (8) | | 662,759 | | | | * | |
Michael Constantino (9) | | 168,775 | | | | * | |
Michael Rice (10) | | 58,333 | | | | * | |
Samantha Ventimiglia (11) | | 29,167 | | | | * | |
All directors and executive officers as a group (7 persons) (12) | | 6,408,330 | | | | 2.5 | | % |
| | | | | | | | | | | | | | | | | |
| Name and Address of Beneficial Owner | | Shares Beneficially Owned | | Percent of Outstanding(1) |
| Principal Stockholders: | | | | |
| Adage Capital Management, L.P. | | [●] | | [●] | % |
| | | | | |
| Directors and Named Executive Officers: | | | | |
| John Temperato | | [●] | | [●] | % |
| Bethany Sensenig | | [●] | | [●] | |
| Mark Sirgo, Pharm.D. | | [●] | | [●] | |
| Lorin K. Johnson, Ph.D. | | [●] | | [●] | |
| Michael Constantino | | [●] | | [●] | |
| Michael Rice | | [●] | | [●] | |
| Samantha Ventimiglia | | [●] | | [●] | |
| All directors and executive officers as a group (7 persons) | | [●] | | [●] | % |
* Represents beneficial ownership of less than 1% of the shares of common stock outstanding
| | | | | | | | | | | |
| (1) | The percentage of beneficial ownership is based on 258,235,418[●] shares of common stock outstanding as of May 4,July 25, 2022. | |
| | |
(2) | Based solely on Company records and a Schedule 13D/A filed with the SEC on June 28, 2021 by OrbiMed Israel BioFund GP Limited Partnership and OrbiMed Israel GP Ltd. Consists of (i) 10,697,918 shares of common stock and (ii) warrants to purchase up to 4,686,500 shares of common stock. The managing member of Orbimed Advisors, LLC is a former director of the Company, Nissim Darvish. The address for Orbimed Advisors, LLC is 89 Medinat Ha Yehudim St. Israel 4676672 P.O. Box. | |
| | |
(3) | Based solely on a Schedule 13G/A filed with the SEC on February 10, 2022 by Adage Capital Partners, L.P. Consists of 15,000,000 shares of common stock held directly by Adage Capital Partners, L.P. The address for Adage Capital Partners, L.P. is 200 Clarendon Street, 52nd Floor, Boston, Massachusetts 02116. | |
| | |
(4) | Based solely on a Schedule 13G filed with the SEC on February 4, 2022 by BlackRock, Inc. BlackRock, Inc. reported in its Schedule 13G/A that it has sole voting power over 14,087,913 shares, sole dispositive power over 14,164,801 shares and no shared voting power or shared dispositive power over any shares. The address for BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. | |
| | | |
(5) | Consists of (i) 1,252,522 shares of common stock held by Mr. Temperato, (ii) options to purchase 2,006,302 shares of common stock held by Mr. Temperato that are exercisable within 60 days of May 4, 2022, and (iii) warrants to purchase up to 271,400 shares of common stock. | |
| | |
(6) | Consists of (i) 194,338 shares of common stock held by Mr. Sitar, (ii) options to purchase 1,903,624 shares of common stock held by Mr. Sitar that are exercisable within 60 days of May 4, 2022, and (iii) warrants to purchase up to 67,800 shares of common stock. | |
| | |
(7) | Consists of (i) 1,279,044.55 shares of common stock held by Dr. Sirgo, (ii) 21,485 shares of common stock held by Dr. Sirgo’s spouse; (iii) options to purchase 376,743 shares of common stock exercisable within 60 days of May 4, 2022, and (iv) warrants to purchase up to 254,400 shares of common stock. | |
| | |
(8) | Consists of (i) 84,800 shares of common stock held by Dr. Johnson, (ii) options to purchase 502,325 shares of common stock that are exercisable within 60 days of May 4, 2022, and (iii) warrants to purchase up to 84,800 shares of common stock. | |
| | |
(9) | Consists of (i) 44,508.74 shares of common stock held by Mr. Constantino and (ii) options to purchase 125,833 shares of common stock that are exercisable within 60 days of May 4, 2022. | |
| | |
(10) | Consists of options to purchase 66,667 shares of common stock that are exercisable within 60 days of May 4, 2022. | |
| | |
(11) | Consists of options to purchase 37,500 shares of common stock that are exercisable within 60 days of May 4, 2022. | |
| | |
(12) | Consists of (i) 2,682,360.29 shares of common stock, (ii) options to purchase 3,115,370 held by the Company’s current directors and executive officers that are exercisable within 60 days of May 4, 2022, and (iii) warrants to purchase up to 610,600 shares of common stock. | |
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Related Person Transaction Policy and Procedures
The Board has adopted a written related person transaction policy setting forth the policies and procedures for the review and approval or ratification of related person transactions. This policy covers, with certain exceptions set forth in Item 404 of Regulation S-K, any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, in which the amount involved exceeds $120,000 in any fiscal year and a related person had, has or will have a direct or indirect material interest, including without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person. In reviewing and approving any such transactions, our audit committee is tasked to consider all relevant facts and circumstances, including, but not limited to, whether the transaction is on terms comparable to those that could be obtained in an arm’s length transaction and the extent of the related person’s interest in the transaction. Notwithstanding anything therein to the contrary, the policy is to be interpreted only in such a manner as to comply with Item 404 of Regulation S-K.
Certain Related Person Transactions
Described below is each transaction occurring since January 1, 2020, and any currently proposed transaction to which we were or are to be a participant, respectively, and in which:
•The amounts involved exceeded or will exceed the lesser of (a) $120,000 or (b) 1% of the average of our total assets at year-end for the last two completed fiscal years; and
•Any person (i) who since January 1, 2020 served as a director or executive officer of the Company or any member of such person’s immediate family that had or will have a direct or indirect material interest, other than compensation, termination and change of control arrangements that are described under the section titled “Executive Compensation” or (ii) who, at the time when a transaction in which such person had a direct or indirect material interest occurred or existed, was a beneficial owner of more than 5% of our outstanding common stock or any member of such person’s immediate family.
Each of these transactions was approved pursuant to our related transaction policy.
Equity Financing:
On May 4, 2020, we closed the RDD Merger Financing and sold an aggregate of (i) 382,779 shares of Series A Preferred Stock, par value $0.0001 per share, which converted into 38,277,900 shares of common stock on June 30, 2020, upon receipt of approval by our stockholders, and (ii) Preferred Warrants to purchase up to 382,779 shares of Series A Preferred Stock, which following the Automatic Conversion became exercisable for 38,277,900 shares of common stock. Our Chief Executive Officer, Chief Financial Officer and members of our Board (collectively referred to as the “9 Meters Purchasers”), purchased an aggregate of 7,507,300 shares of common stock in the offering at the public offering price and on the same terms as the other purchasers in the offering. The underwriters received the same underwriting discount on the shares purchased by the 9 Meters Purchasers. The aggregate purchase price of the common stock units issued to the 9 Meters Purchasers was approximately $4.4 million.
Pursuant to the underwriting agreement in connection with the December 2020 Offering, we issued an aggregate of 53,076,924 shares of common stock at a price of $0.65 per share. Of the shares issued in the December 2020 Offering, our Chief Executive Officer, Chief Financial Officer and Chairman of the Board of Directors purchased an aggregate of 446,153 shares of common stock in this offering at the public offering price and on the same terms as the other purchasers in the offering. The underwriters received the same underwriting discount on the shares purchased by our Chief Executive Officer, Chief Financial Officer and Chairman of the Board of Directors. The aggregate purchase price of the common stock shares issued to our Chief Executive Officer, Chief Financial Officer and Chairman of the Board of Directors was $290,000.
Pursuant to the underwriting agreement in connection with the April 2021 Offering, the Company issued an aggregate of 34,500,000 shares of common stock at a price of $1.00 per share. Of the shares issued in the April 2021 Offering, the Company’s Chief Executive Officer, Chief Financial Officer and Chairman of the Board of Directors purchased an aggregate of 450,000 shares at the public offering price and on the same terms as the other purchasers in the April 2021 Offering. The underwriters received the same underwriting discount on the shares purchased by the Company’s Chief Executive Officer, Chief Financial Officer and Chairman of the Board of Directors as the other shares sold in the offering. The aggregate purchase price of the common stock shares issued to the Company’s Chief Executive Officer, Chief Financial Officer and Chairman of the Board was $450,000.
Agreement with LifeSci Advisors
Michael Rice, a member of our Board since March 2021, is a Founding Partner of LifeSci Advisors, LLC and LifeSci Communications, LLC. Prior to his becoming a director, on April 1, 2020 we entered into a master services agreement with both LifeSci Advisors, LLC and LifeSci Communications, LLC, to provide investor relations and public relations services, respectively. During the year ended December 31, 2021, we incurred expenses of approximately $0.3 million with LifeSci Advisors, LLC and $0.3 million with LifeSci Communications, LLC. During the year ended December 31, 2020, we incurred expenses of approximately $0.1 million with LifeSci Advisors, LLC and approximately $0.1 million in expenses with LifeSci Communications, LLC.
STOCKHOLDER PROPOSALS
Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present proper proposals for inclusion in the proxy statement for consideration at our next Annual Meetingannual meeting of stockholders. To be eligible for inclusion in the 2023 proxy statement for the 2023 annual meeting of stockholders, your proposal must be received by us no later than January 13, 2023 and must otherwise comply with Rule 14a-8. While our Board of Directors will consider stockholder proposals, we reserve the right to omit from the proxy statement stockholder proposals that we are not required to include under the Exchange Act, including Rule 14a-8.
Management’s proxy holders for the 2023 Annual Meetingannual meeting of stockholders will have discretion to vote proxies given to them on any stockholder proposal of which we do not have notice prior to March 29, 2023.
Under our Bylaws, in order to nominate a director or bring any other business before the stockholders at the 2023 Annual Meetingannual meeting of Stockholdersstockholders that will not be included in our proxy statement, you must notify us in writing, and such notice must be received by us no earlier than 90 days and no later than 120 days before the date of the 2023 Annual Meeting.annual meeting. Assuming the 2023 Annual Meetingannual meeting were held on June 22, 2023, (which was the same date as our 2022 annual meeting) such notice would have to be received by us no earlier than February 22, 2023 and no later than March 24, 2023. If the date of the 2023 Annual Meetingannual meeting is more than 30 days before or more than 60 days after June 22, 2023, then the notice must be delivered not earlier than 120 days before such date for the 2023 Annual Meetingannual meeting and not later than the later of (i) 90 days before such date for the 2023 Annual Meetingannual meeting or (ii) 10 days after the day on which we provided public disclosure of the date of the 2023 Annual Meeting.annual meeting.
For proposals not made in accordance with Rule 14a-8, you must comply with specific procedures set forth in our Bylaws and the nomination or proposal must contain the specific information required by our Bylaws. You may write to our Corporate Secretary at 9 Meters Biopharma, Inc., Attn: Corporate Secretary, 8480 Honeycutt Road, Suite 120, Raleigh, NC 27615, to deliver the notices discussed above and to request a copy of the relevant Bylaw provisions regarding the requirements for making stockholder proposals and nominating director candidates pursuant to the Bylaws.
HOUSEHOLDING OF PROXY MATERIALS
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy materials with respect to two or more stockholders sharing the same address by delivering a single set of proxy 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.
A number of brokers with account holders who are 9 Meters stockholders will be householding the Company’s proxy materials. A single set 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 set of proxy materials, please notify us or your broker. We will deliver promptly upon written or oral request a separate copy of the proxy materials. Direct your written request to our Corporate Secretary at 9 Meters Biopharma. Inc. Attn: Corporate Secretary, 8480 Honeycutt Road, Suite 120, Raleigh, NC 27615, or at (919) 275-1933. Stockholders who currently receive multiple copies of the proxy materials at their addresses and would like to request householding of their communications should contact their brokers.
ANNUAL REPORT ON FORM 10-K
Our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 as filed with the SEC is accessible free of charge under the Investors - Stock & Finance section of our website at www.9meters.com. The Annual Report on Form 10-K contains audited consolidated balance sheets of the Company as of December 31, 2021 and 2020, and the related consolidated statements of operations and comprehensive loss, changes in
stockholders’ equity (deficit) and cash flows for each of the two years in the period ended December 31, 2021. You can request a copy of our Annual Report on Form 10-K free of charge by e-mail at investor-relations@9meters.com, by mail addressed to 9 Meters Biopharma, Inc., Attn: Investor Relations, 8480 Honeycutt Road, Suite 120, Raleigh, NC 27615, or by telephone at (919) 275-1933. Please include your contact information with the request.
REQUESTS FOR DIRECTIONS TO THE ANNUALSPECIAL MEETING OF STOCKHOLDERS
The AnnualSpecial Meeting will be held on June 22,September 23, 2022, at [•]8 a.m. Eastern Time at [•].the Renaissance Raleigh North Hills Hotel, 4100 Main at North Hills Street, Raleigh, NC 27609. Requests for directions to the meetingSpecial Meeting location may be directed to 9 Meters Biopharma. Inc., Attn: Corporate Secretary, 8480 Honeycutt Road, Suite 120, Raleigh, NC 27615.
OTHER MATTERS
We do not know of any additional matters to be submitted at the AnnualSpecial Meeting. If any other matters properly come before the AnnualSpecial Meeting, it is the intention of the persons named in the enclosed form of proxy to vote the shares they represent as our Board of Directors recommends.
THE BOARD OF DIRECTORS
Dated: May 11,August 2, 2022
ANNEX A
CERTIFICATE OF AMENDMENT TO THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION, AS AMENDED
OF9 METERS BIOPHARMA, INC.
(Pursuant to Section 242 of the
General Corporation Law of the State of Delaware)
9 Meters Biopharma, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Corporation”), does hereby certify as follows:
The Board of Directors of the Corporation duly adopted a resolution in accordance with Section 242 of the General Corporation Law of the State of Delaware, setting forth an amendment to the Amended and Restated Certificate of Incorporation of the Corporation, as amended (the “Amendment”) and declaring said Amendment to be advisable. The stockholders of the Corporation duly approved said proposed Amendment at the Annual Meeting of Stockholders of the Corporation held on [•] in accordance with Section 242 of the General Corporation Law of the State of Delaware. The resolution setting forth the Amendment is as follows:
In order to effect the Amendment, the FIFTH ARTICLE of the Amended and Restated Certificate of Incorporation of the Corporation, as amended, is hereby amended to add the following paragraphs after the fourth paragraph of the FIFTH ARTICLE:
“The issued and outstanding Common Stock of the corporation, $0.0001 par value, shall, at 5:00 p.m., Eastern Standard Time, on [•], 202[•] (the “202•] Effective Time”), be deemed to be “reverse stock split,” and in furtherance thereof, there shall, after the 202[•]Effective Time, be deemed to be issued and outstanding one (1) share of the Common Stock of the Corporation for and instead of each [•] ([•]) shares of the Common Stock of the Corporation issued and outstanding immediately prior to the 202[•] Effective Time. Shares of Common Stock that were outstanding prior to the 202[•] Effective Time and that are not outstanding after the 202[•] Effective Time shall resume the status of authorized but unissued shares of Common Stock. To the extent that any stockholder shall be deemed after the 202[•]Effective Time as a result of this Amendment to own a fractional share of Common Stock, such fractional share shall be deemed to be one whole share.
The reverse stock split shall occur without any further action on the part of the Corporation or the holders of shares of common stock and whether or not certificates representing such holders’ shares prior to the Reverse Split are surrendered for cancellation. Each stock certificate that, immediately prior to the 202[•] Effective Time, represented shares of Common Stock shall, after the 202[•] Effective Time, represent that number of whole shares of Common Stock into which the shares of Common Stock represented by such certificate shall have been reclassified (as well as the right to receive a whole share in lieu of any fractional shares of Common Stock as set forth above); provided, however, that each holder of record of a certificate that represented shares of Common Stock prior to the 202[•] Effective Time shall receive, upon surrender of such certificate, a new certificate representing the number of whole shares of Common Stock into which the shares of Common Stock represented by such certificate shall have been reclassified, as well as any whole share in lieu of fractional shares of Common Stock to which such holder may be entitled pursuant to the immediately preceding paragraph.”
SECOND:Except as expressly amended herein, all provisions of the Amended and Restated Certificate of Incorporation of the Corporation filed with the Office of the Secretary of State of the State
of Delaware on December 5, 2018, and amended on May 1, 2020 and June 22, 2021, shall remain in full force and effect.
THIRD:That said amendment was duly adopted in accordance with the provisions of Section 242 of the General Corporation Law of the State of Delaware.
FOURTH: That the Corporation’s number of shares of authorized capital stock of all classes, and the par value thereof, shall not be changed or affected under or by reason of said amendment.
FIFTH: That said amendment shall be effective at 5:00 p.m., Eastern Standard Time, on [•], 202[•].
IN WITNESS WHEREOF, the undersigned, being a duly authorized officer of the Corporation, does hereby execute this Certificate of Amendment to the Amended and Restated Certificate of Incorporation, as amended, this [•] day of [•], 202[•].
| | | | | |
| 9 METERS BIOPHARMA, INC. |
| |
| By: _________________________________________ |
| Name: |
| Title: |
