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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-K
(Mark One)
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2024
OR
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-37809
METAVIA INC.
(Exact name of Registrant as specified in its charter)
Delaware
47-2389984
(State or other jurisdiction of incorporation or organization)
(IRS Employer Identification No.)
545 Concord Avenue, Suite 210
Cambridge, Massachusetts
02138
(Address of principal executive offices)
(Zip Code)
(857) 702-9600
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Trading Symbol(s)
Name of Exchange on Which Registered
Common stock, $0.001 par value
MTVA
The Nasdaq Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth
company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐
Accelerated filer
☐
Non-accelerated filer
☒
Smaller reporting company
☒
Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any
new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared
or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the
filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12(b)-2 of the Act). Yes ☐ No ☒
As of June 30, 2024, the aggregate market value of the registrant’s common stock held by non-affiliates of the registrant was approximately $13.8
million, based on the closing price on the Nasdaq Capital Market on the last business day of the registrant’s most recently completed second fiscal quarter.
As of March 17, 2025, the registrant had 8,654,869 shares of common stock, $0.001 par value per share, outstanding.
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1
METAVIA INC.
Table of Contents
Special Note Regarding Forward-Looking Statements
2
Summary Risk Factors
3
Part I
Item 1.
Business
5
Item 1A.
Risk Factors
31
Item 1B.
Unresolved Staff Comments
63
Item 1C.
Cybersecurity
63
Item 2.
Properties
64
Item 3.
Legal Proceedings
64
Item 4.
Mine Safety Disclosures
64
Part II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
64
Item 6.
[Reserved]
64
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
64
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
72
Item 8.
Financial Statements and Supplementary Data
72
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
72
Item 9A.
Controls and Procedures
72
Item 9B.
Other Information
74
Item 9C.
Disclosure Regarding Foreign Jurisdictions that Prevents Inspections
74
Part III
Item 10.
Directors, Executive Officers and Corporate Governance
74
Item 11.
Executive Compensation
78
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
82
Item 13.
Certain Relationships and Related Transactions, and Director Independence
84
Item 14.
Principal Accountant Fees and Services
86
Part IV
Item 15.
Exhibits and Financial Statement Schedules
86
Item 16.
Form 10-K Summary
89
Signatures
90
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2
Unless the context requires otherwise, references in this Annual Report on Form 10-K for the fiscal year ended December 31,
2024 (this “Annual Report” or “Report”) to “we,” “us,” “the Company,” “MetaVia” and “our” refer to MetaVia Inc. (the
“Company”) and its subsidiaries.
Special Note Regarding Forward-Looking Statements
This Annual Report contains “forward-looking statements” within the meaning of the safe harbor provisions of Section 27A of
the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”). All statements that address future operating performance, events or developments that we
expect or anticipate will occur in the future are forward-looking statements, including without limitation, our expectations
regarding our ability to execute our commercial strategy; our expectations regarding the sufficiency of our existing cash on hand
to fund our operations; the timeline for regulatory submissions, regulatory steps and potential regulatory approval of our current
and future product candidates; the ability to realize the benefits of the license agreement with Dong-A ST Co., Ltd., a related
party (“Dong-A”), including the impact on our future financial and operating results; the ability to integrate the product
candidates into our business in a timely and cost-efficient manner; the cooperation of our contract manufacturers, clinical study
partners and others involved in the development of our current and future product candidates; our ability to initiate clinical trials
on a timely basis; our planned clinical trials and our ability to recruit subjects for our clinical trials; the costs related to the
license agreement, known and unknown, including costs of any litigation or regulatory actions relating to the license agreement;
the changes in applicable laws or regulations; and the effects of changes to our stock price on the terms of the license agreement
and any future fundraising and other risks and uncertainties described in our filings with the Securities and Exchange
Commission (“SEC”).
Forward-looking statements are based on management’s current expectations and assumptions about future events, which are
inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. These statements may be
identified by words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,”
“plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of these terms or other comparable
terminology, although not all forward-looking statements contain these words. In addition, statements that “we believe,” “we
expect,” “we anticipate” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are
based upon information available to us as of the date of this Annual Report and management believes that these forward-
looking statements are reasonable as and when made. However, you should not place undue reliance on forward-looking
statements because they speak only as of the date when made. We undertake no obligation to update or revise forward-looking
statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results or
expectations, except as required by law.
We operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible
for us to predict all risk factors and uncertainties. We may not achieve the plans, projections or expectations disclosed in
forward-looking statements, and actual results, developments or events could differ materially from those disclosed in the
forward-looking statements. Forward-looking statements are subject to a number of risks and uncertainties, including without
limitation, the possibility that regulatory authorities do not accept our applications or approve the marketing of our products, the
possibility we may be unable to raise the funds necessary for the development and commercialization of our products, and those
described in our filings with the SEC.
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3
Summary Risk Factors
Our business is subject to a number of risks, as fully described in Part I, Item 1A. Risk Factors in this Annual Report. The
principal factors and uncertainties include, among others:
●
We have incurred net losses since inception, and we anticipate that we will continue to incur net losses for the
foreseeable future. We require additional capital to accomplish our business plan and the failure to obtain necessary
capital when needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our operations.
●
As we do not generate any revenue, we are dependent on working capital to fund our business plan, and raising
additional capital may cause dilution to existing stockholders, restrict our operations or require us to relinquish rights
to our technologies.
●
Future sales, or the perception of future sales, by us or our securityholders could cause the market price of our
common stock to decline.
●
Adverse global economic conditions could have a material adverse effect on our business, results of operations and
financial condition and liquidity.
●
We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on
product candidates or indications that may be more profitable or for which there is a greater likelihood of success.
●
Public opinion and scrutiny of treatments for obesity and overweight patients may impact public perception of our
Company and DA-1726, or may adversely affect our ability to conduct our business and our business plans.
●
We may be required to make significant payments under the 2022 License Agreement.
●
Even if we obtain favorable clinical results, we may not be able to obtain regulatory approval for, or successfully
commercialize DA-1241 and DA-1726.
●
Preliminary, interim and topline data from our clinical trials that we announce or publish from time to time may
change as more patient data become available and are subject to audit and verification procedures that could result in
material changes in the final data.
●
Results of earlier clinical trials may not be predictive of the results of later-stage clinical trials.
●
Product candidates may cause undesirable side effects that could delay or prevent their marketing approval, limit the
commercial profile of an approved label, or result in significant negative consequences following marketing approval,
if any, including marketing withdrawal.
●
Our efforts to discover drug candidates beyond our current drug candidates may not succeed, and any drug candidates
we recommend for clinical development may not actually begin clinical trials.
●
Delays in our clinical trials may lead to a delay in the submission of marketing approval applications and jeopardize
our ability to potentially receive approvals and generate revenues from the sale of our products.
●
We may develop DA-1241 and DA-1726, and potentially future product candidates, in combination with other
therapies, which exposes us to additional risks.
●
Any collaboration arrangement that we may enter into in the future may not be successful, which could adversely
affect our ability to develop and commercialize our current and potential future drug candidates.
●
Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be made
more difficult or rendered impossible by multiple factors outside our control, including difficulties in identifying
patients with MASH and significant competition for recruiting such patients in clinical trials.
●
We face substantial competition, which may result in others discovering, developing or commercializing products
before or more successfully than we do.
●
Our commercial success depends upon attaining significant market acceptance of our product candidates, if approved,
among hospitals, physicians, patients and healthcare payors.
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4
●
We may engage in strategic transactions that could impact on our liquidity, increase our expenses and present
significant distractions to our management.
●
Product liability lawsuits against us could cause us to incur substantial liabilities and could limit commercialization of
any product candidate that we may develop.
●
If we or our third-party manufacturers fail to comply with environmental, health and safety laws and regulations, we
could become subject to fines or penalties or incur costs that could have an adverse effect on the success of our
business.
●
We rely and will continue to rely on collaborative partners regarding the development of our research programs and
product candidates.
●
We are subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws, and
anti-money laundering laws and regulations. Compliance with these legal standards could impair our ability to
compete in domestic and international markets. We can face criminal liability and other serious consequences for
violations which can harm our business.
●
We have relied and will rely on third-party clinical research organizations (CROs) to conduct our preclinical studies
and clinical trials. If these CROs do not successfully carry out their contractual duties or meet expected deadlines, we
may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be
substantially harmed.
●
We rely on third parties to manufacture our product candidates and preclinical and clinical drug supplies.
●
We may engage in future acquisitions, mergers or in-licenses and out-licenses of technology that could disrupt our
business, cause dilution to the organization’s stockholders and harm our financial condition and operating results.
●
We may form or seek strategic alliances or enter into additional licensing arrangements in the future, and we may not
realize the benefits of such alliances or licensing arrangements.
●
If we are unable to obtain and maintain sufficient intellectual property rights, our competitive position could be
harmed.
●
We may not be able to protect or practice our intellectual property rights throughout the world.
●
We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time-
consuming and unsuccessful.
●
Our trade secrets are difficult to protect and if we are unable to protect the confidentiality of our trade secrets, our
business and competitive position would be harmed.
●
We currently have a small number of employees and consultants, and our future success depends on our ability to
retain our executive officers and to attract, retain and motivate qualified personnel.
●
The price of our common stock may be volatile and fluctuate substantially, which could result in substantial losses for
holders of our common stock.
●
Our largest stockholder may use its significant interest to take actions not supported by our other stockholders.
●
We may fail to comply with the continued listing requirements of Nasdaq, such that our common stock may be
delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted.
●
We have identified material weaknesses in our internal control over financial reporting that could, if not remediated,
result in material misstatements in our financial statements or impair our ability to produce accurate and timely
consolidated financial statements.
●
Our business and operations may suffer in the event of system failures or other unplanned events.
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5
Part I
Item 1.
Business
Overview
We are a clinical-stage biotechnology company focused primarily on developing novel pharmaceuticals to treat
cardiometabolic diseases. MetaVia has two programs focused primarily on the treatment of metabolic dysfunction-
associated steatohepatitis (“MASH”) and obesity.
●
DA-1241 is a novel G-Protein-Coupled Receptor 119 (“GPR119”) agonist with development optionality as a
standalone and/or combination therapy for both MASH and Type 2 Diabetes Mellitus (“T2DM”). Agonism of
GPR119 in the gut promotes the release of key gut peptides, glucagon-like peptide-1 (“GLP-1”), glucose-
dependent insulinotropic polypeptide (“GIP”), and peptide YY (“PYY”). These peptides play a further role in
glucose metabolism, lipid metabolism and weight loss. DA-1241 has demonstrated beneficial effects on glucose,
lipid profile and liver inflammation, as demonstrated during in-vivo preclinical studies. The therapeutic potential
of DA-1241 has been demonstrated in multiple preclinical animal models of MASH and T2DM where DA-1241
reduced hepatic steatosis, inflammation, fibrosis, and improved glucose control.
o
In Phase 1a and 1b human trials, DA-1241 was well tolerated in both healthy volunteers and those with
T2DM.
o
We initiated a Phase 2a clinical trial in 2023 with the goal of establishing the mechanism of action and
efficacy of DA-1241 in the treatment of MASH and to evaluate trends for T2DM. This is the first-in-
human MASH trial for DA-1241. In November 2024, we completed the last patient last visit for the
Phase 2a clinical trial.
o
In December 2024, we announced positive top-line 16-week results from the two-part Phase 2a clinical trial
in patients with presumed MASH.
o
We are expecting to finalize the Clinical Study Report (“CSR”) of the Phase 2a clinical trial in the first half
of 2025.
●
DA-1726 is a novel oxyntomodulin (“OXM”) analogue functioning as a GLP-1 receptor (“GLP1R”) and
glucagon receptor (“GCGR”) dual agonist for the treatment of obesity that is designed to be administered once
weekly subcutaneously. With the activation of the dual agonist, weight loss may be achieved by GLP1R reducing
appetite while GCGR increases energy expenditure. DA-1726 has a well understood mechanism and, in
preclinical mice models, resulted in improved weight loss compared to semaglutide and tirzepatide.
o
We initiated a Phase 1 trial in 2024 with the goal of establishing the safety and tolerability of DA-1726
while exploring the mechanism of action and efficacy of DA-1726 in the treatment of obesity. This is the
first-in-human trial for DA-1726.
o
In September 2024, we announced positive top-line data from the planned single ascending dose (“SAD”)
Part 1 of our Phase 1 trial evaluating DA-1726 while an additional SAD study and multiple-ascending dose
(“MAD”) study were ongoing.
o
We are expecting top-line results from the MAD Part 2 study of our Phase 1 trial in April 2025.
While we focus our financial resources and management’s attention on the development of DA-1241 and DA-1726, we
also have four legacy therapeutic programs designed to impact a range of indications in viral, neurodegenerative and
cardiometabolic diseases which we are not planning to advance development on and continue to consider for out-licensing
and divestiture opportunities:
●
ANA001, a proprietary oral niclosamide formulation for the treatment of patients with moderate COVID-19.
●
NB-01 for the treatment for painful diabetic neuropathy (“PDN”). In July 2024, we entered into an exclusive out-
license agreement with MThera Pharma Co., LTD. (“MThera”) to provide MThera with the rights to NB-01 for
the treatment of painful diabetic neuropathy.
●
NB-02 for the treatment of cognitive impairment.
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6
●
Gemcabene for the treatment of dyslipidemia.
Our operations have consisted principally of performing research and development (“R&D”) activities, preclinical
developments, clinical trials, and raising capital. Our activities are subject to significant risks and uncertainties, including failing
to secure additional funding before sustainable revenues and profit from operations are achieved and other risks listed in Part I,
Item 1A. Risk Factors in this Annual Report.
Our Strategy
Our goal is to discover and develop novel therapeutics designed to impact a range of indications primarily in cardiometabolic
diseases. The key elements of our business strategy to achieve this goal include:
●
Advance DA-1241 through the FDA regulatory process to obtain approval for the treatment of MASH.
Successful completion of the Phase 2a trial is designed to establish the mechanism of action and an early signal
of efficacy in MASH and T2DM, which will allow us to seek initiation of a Phase 2b trial as monotherapy or in
combination with GLP1R or other therapeutic candidates.
●
Pursuit for DA-1241 combination therapy. The Phase 2a Part 2 trial showed DA-1241’s strong potential for
monotherapy as well as the potential for combination therapy with its strong safety signals. With the successful
proof of concept demonstrated in the Phase 2a trial, we plan to explore other combination therapies that can
benefit from the mechanism of action of DA-1241 and to expand the target efficacy of DA-1241 for the
treatment of MASH.
●
Advance DA-1726 through the FDA regulatory process to obtain approval for the treatment of obesity.
Explore various avenues to advance DA-1726 through the FDA approval process, including seeking ways to
expedite clinical trials and conducting non-clinical studies.
●
Pursue additional pipelines and/or other business opportunities. With both DA-1241 and DA-1726 in clinical
trials, we plan to explore adding (i) clinical stage product candidates to diversify and enrich our pipeline and/or
(ii) other technologies.
Our Pipeline
Our focus is on two cardiometabolic assets. Our lead asset DA-1241, is a GPR119 agonist, in Phase 2a trial for treatment
of MASH. Our second asset is DA-1726, a GLP-1 receptor and glucagon receptor dual agonist, in Phase 1 for treatment of
obesity. The following illustrates the current status of our assets as of filing date of this Annual Report.
DA-1241 Treatment of MASH
DA-1241 is a potential first-in-class GPR119 agonist with therapeutic potential for MASH and T2DM that is designed to
be orally administered once a day. Two Phase 1 clinical trials for the treatment of T2DM have been completed and a
Phase 2a trial for the treatment of MASH is ongoing in the U.S. In November 2024, we completed the last patient last visit
for Phase 2a trial. In December 2024, we announced positive top-line 16-week results from the two-part Phase 2a clinical trial
in patients with presumed MASH. We are expecting to finalize the CSR of the Phase 2a trial in the first half of 2025.
DA-1241 is a novel chemical drug candidate selectively activating GPR119 which has shown consistent target-related
mechanisms and glucose-lowering effects from nonclinical studies in Phase 1b exploratory clinical trials in patients with
T2DM in the U.S. GPR119 is known to be a regulator of both blood glucose and lipid levels. Non-clinical studies suggest
DA-1241 selectively activates GPR119, stimulates the secretion of insulin and incretin hormones such as GLP-1, and
thereby reduces plasma glucose levels without hypoglycemia risk and lowers plasma lipids levels of both triglycerides
and cholesterol. Moreover, impaired insulin action and lipid metabolism which are frequently observed in T2DM patients
are highly associated with the pathogenesis of steatosis and inflammation in MASH. Extensive non-clinical studies have
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shown DA-1241 has therapeutic potential for the reduction in hepatic steatosis, inflammation, fibrosis, and improved
glucose control regardless of body weight reduction.
MASH Overview
MASH is a severe form of metabolic dysfunction-associated steatotic liver disease (“MASLD”) characterized by
inflammation and fibrosis in the liver that can progress to cirrhosis, liver failure, hepatocellular carcinoma and death.
MASLD was formerly known as nonalcoholic fatty liver disease (“NAFLD”) and was changed by the AASLD and its
European and Latin American counterparts. Patients with MASH are at increased risk of liver damage and other
complications. Fibrosis is generally reversible in its early-to-mid stages. However, late-stage fibrosis can be irreversible
in the absence of therapy and prevents the liver from performing its natural functions.
The prevalence of MASLD, which affects approximately 30% of the global population, and MASH, which develops in
approximately 12% to 14% of MASLD patients, is growing and is driven primarily by the worldwide obesity epidemic.
Over the past three decades, the global prevalence of MASLD has grown substantially from 17.6% (1990) to 23.4%
(2019), with an average increase of about 1.0% annually. The critical pathophysiologic mechanisms underlying the
development and progression of MASH include reduced ability to handle lipids, increased insulin resistance, injury to
hepatocytes and liver fibrosis in response to hepatocyte injury. Patients with MASH frequently have other significant
metabolic co-morbidities such as obesity, hyperglycemia, dyslipidemia and systemic hypertension (a constellation of
which is commonly referred to as metabolic syndrome) and these further contribute to the risk of cardiovascular disease.
DA-1241 Preclinical Development
Extensive preclinical pharmacology, Absorption, Distribution, Metabolism and Excretion (“ADME”), safety and
toxicology studies have been completed for DA-1241. The pharmacokinetic characteristics of DA-1241 were identified
through the full set of preclinical ADME studies. The safety and toxicology studies completed were: (i) central nervous
system, cardiovascular, and respiratory safety in rats and dogs; (ii) a single-dose, 4-week, 13-week and 26-week oral
toxicity studies in rats; (iii) 4-week, 13-week and 39-week oral toxicity studies in dogs; (iv) pre-natal development studies
in rats and rabbits; and (v) genotoxicity tests of in vitro bacterial reverse mutation, chromosome aberration, and in-vivo
micronucleus.
Comprehensive non-clinical studies demonstrated DA-1241 distinctively activates GPR119 across species, stimulates the
secretion of insulin and GLP-1, a gut peptide hormone with various metabolic benefits, from the pancreas and intestine,
respectively, and thereby reduces postprandial glucose and lipid levels after single administration to mice. The
postprandial hypoglycemic response by DA-1241 observed in wild type mice disappeared in GPR119-deficient mice,
demonstrating target engagement. Notably, DA-1241 treatment did not cause hypoglycemia < 50 mg/dl in overnight
fasted mice.
In diabetic mice with hypertriglyceridemia, chronic treatment with DA-1241 lowered fasting and non-fasting blood
glucose levels, in which DA-1241 prevented pancreatic beta cell loss and preserved pancreatic function. Moreover, DA-
1241 treatment decreased hepatic lipid accumulation in addition to plasma triglycerides levels at the same dose levels.
When a DPP4 inhibitor was cotreated with DA-1241 to prolong the biological half-life of plasma GLP-1, plasma
concentrations of active GLP-1 increased more than those due to degradation blockade with DPP4 inhibitors, and thereby
potentiation of GLP-1 action further improved glucose and lipid metabolism compared to each treatment alone.
In a non-diabetic mouse model with pre-established dyslipidemia, DA-1241 completely reduced plasma and hepatic
triglycerides to normal control levels and also decreased plasma LDL-cholesterol, independent of glycemic control.
Comprehensive mechanism studies have shown that the lipid-lowering effects of DA-1241 are due in part to inhibiting
lipid synthesis in the liver and interfering with dietary lipid transport in the intestine.
With regard to the MASH indication, DA-1241 has been shown to improve fatty liver in various types of mouse models
with metabolic diseases. Thereafter, therapeutic potential for treating MASH has been evaluated in several MASH mice
models with different pathophysiology. Among them, the STAM-MASH mouse model exhibits mild fatty liver and
moderate liver inflammation/fibrosis and is rapidly chemically induced. DA-1241 improved hepatic inflammation and
fibrosis, showing a decrease in MASLD activity score and relative fibrotic area of the liver compared to the vehicle-
treated control. Diet-induced obesity (“DIO”)-MASH mice are chronically induced through a Western diet and are
characterized by marked fatty liver and mild to moderate hepatic inflammation/fibrosis. In DIO-MASH mice, DA-1241
improved hepatic steatosis, inflammation, and fibrosis assessed by histological and biochemical methods regardless of
body weight reduction. Of note, DA-1241 improved systemic inflammatory status with reduced plasma inflammatory
cytokines (TNFα, IL6) and chemokines (CCL2, CXCL1, CXCL2, CXCL10) contributing to tissue damage. Therefore,
DA-1241 treatment reduced the levels of plasma liver enzymes (ALT, AST), which were increased due to liver tissue
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damage in DIO-MASH mice. In mice with metabolic diseases, the effects of DA-1241 on the MASH phenotypes
(steatosis, inflammation, and fibrosis in the liver) are enhanced by the co-treatment with a DPP4 inhibitor compared to
each treatment alone due to potentiated GLP-1 actions.
Result of Phase 1 U.S. Clinical Trial for DA-1241
Completed Phase 1a and 1b trials in the U.S. healthy subjects. The first-in-humans Phase 1a study was a double-blind, placebo
controlled, SAD, single-center study in 60 healthy male volunteers to evaluate the safety, tolerability, pharmacokinetics
(“PK”), pharmacodynamics (“PD”), and interaction effect with metformin. Each cohort was given a single oral dose of
12.5 mg, 25 mg, 50 mg, 100 mg, 200 mg, and 400 mg DA-1241 or placebo tablets. The dose level of DA-1241 for the
interaction effect (“IE”) assessment of metformin on the PK of DA-1241 was 100 mg. Therefore, the IE cohort had 2
separate treatment periods. Subjects in the IE cohort received DA-1241 100 mg or placebo alone in Treatment Period 1,
and DA-1241 100 mg or placebo with 500 mg metformin (IR formulation) in Treatment Period 2. DA-1241 was well
tolerated over a dose range of 12.5 mg to 400 mg. There was no effect of concomitant administration of metformin on
DA-1241 PK parameters.
Phase 1b, Part 1 was a double-blind placebo-controlled, MAD, single-center study of DA-1241 in healthy subjects.
Overall, 24 male subjects were blinded and randomized to receive DA-1241: 50 mg, 100 mg or 200 mg or placebo, as
single daily oral doses for 28 days. Safety data reviews and dose escalation decisions between cohorts took place after all
subjects of an ongoing cohort had completed procedures through day 14. All doses tested were well tolerated. There were
no Serious Adverse Events (“SAEs”) and no discontinuations due to Adverse Events (“AEs”).
Completed Phase 1b trial in the U.S. T2DM patients. The Phase 1b study was designed as a placebo and active comparator
(sitagliptin 100 mg)-controlled, double-blind, randomized, multi-center study with an objective of evaluating whether
DA-1241 delivers improved glucose-lowering efficacy in 83 diabetic patients. Patients were treated with placebo,
sitagliptin 100 mg or DA-1241 25 mg, 50 mg and 100 mg once daily for 8 weeks, in combination with stable doses of
metformin (13~19 patients/group). In the mixed meal tolerance test to evaluate the ability to reduce postprandial glucose
through GPR119 activation, the incremental AUE0-4h of plasma glucose (“iAUE”) upon nutrient ingestion was measured
and compared. Eight-week treatment of DA-1241 25 mg, 50 mg and 100 mg showed the changes of
+6.3%, -2.0% and -13.8% in iAUE levels from the baseline and DA-1241 100 mg showed similar blood glucose
improvement with that of sitagliptin 100 mg (-9.0%), and it outperformed placebo (+10.5%).
Exploratory P1b Study in the U.S.: Glucose-Lowering Effects
Mean Change in Postprandial Glucose Excursion at Week 8
In the parameters of glycemic variability measured with a Continuous Glucose Monitoring system and fasting plasma
glucose, the glucose-lowering efficacy by DA-1241 was similar to that of sitagliptin. Moreover, the time-in-range,
the percentage of how long blood glucose value is within 70~180 mg/dL, was increased by mitigating the hypoglycemia
risk and duration of hyperglycemia whereas such time-in-range was reduced in the placebo group.
Single administration or 8-week repeated administration of DA-1241 increased secretion of gut peptide hormones such as
GLP-1, GIP and PYY in gastrointestinal tracts after taking meals. The amount of secretion of such hormones increased in
proportion to the extent of exposure to DA-1241.
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9
Exploratory P1b Study in the U.S.: Target-related Biomarker Change
* & ** P<0.05 & P<0.01 versus corresponding baseline values; DA, DA-1241; Sita, Sitagliptin
Total GLP-1 Secretion during Mixed Meal Tolerance Test
In terms of safety, no clinically significant adverse events were observed following the 8-week treatment, confirming the
tolerability of DA-1241, and the bodyweight showed a tendency to decrease.
DA-1241 Phase 2a Trial
We are currently finalizing the CSR on a Phase 2a trial in the U.S. MASH Phase 2a is a 16-week, multicenter, randomized,
double-blind, placebo-controlled, parallel arm clinical trial to establish safety and an early signal of efficacy in MASH as a
next-generation competitive oral agent while we follow the trend for T2DM. The trial completed the last patient last visit in
November 2024 and topline results were disclosed in December 2024. A total of 109 patients were randomized, while 95
patients completed the dosing. These patients were randomized into four treatment groups and dosed with: DA-1241 50 mg,
DA-1241 100 mg, DA-1241 100 mg/Sitagliptin 100 mg, or Placebo in a 1:2:2:2 ratio. The primary efficacy endpoint for the
study is the change from baseline in the alanine transaminase (“ALT”) levels at week 16. The secondary efficacy endpoints
evaluate changes in the following at week 16 including: proportion of subjects with normalization of ALT level of < 30 IU/L;
relative percent change liver fat fraction from baseline; absolute change in liver fat from baseline; proportion of subjects with a
30% or more reduction in liver fat from baseline; change in aspartate transaminase (“AST”), gamma glutamyl transpeptidase,
and alkaline phosphatase from baseline; change in hemoglobin A1c (“HbA1c”) (%); change in NAFLD Fibrosis Score from
baseline; liver stiffness measurement assessed by FibroScan® from baseline; and change in FAST (FibroScan - AST) from
baseline. Safety will be evaluated by monitoring AEs including determination of SAEs and AEs leading to discontinuation and
laboratory abnormalities as characterized by type, frequency, timing, severity (mild, moderate, severe), seriousness and
relationship to DA-1241, vital signs measurements, clinical laboratory tests and electrocardiogram assessments.
Topline results from the Phase 2a Study. We have reported positive top-line 16-week results from the two-part Phase 2a
clinical trial in patients with presumed MASH in December 2024. Part 1 of this Phase 2a trial is exploring DA-1241, a novel
GPR119 agonist compared to placebo, while Part 2 is investigating the efficacy of DA-1241 in combination with sitagliptin, a
DPP-4 inhibitor. An overview of the top-line 16-week results from the two-part Phase 2a clinical trial is included below:
Overview of the Topline Results
●
Achieved primary efficacy endpoint. DA-1241 100 mg showed statistically significant reductions in ALT levels at weeks
4 and 8 (p = 0.0159 and p = 0.0342, respectively) and a near statistically significant reduction (p = 0.0506) at week 16
compared to placebo.
●
Normalized ALT levels in 16 weeks. DA-1241 50 mg showed a statistically significant improvement in the normalization
of ALT levels compared to placebo, with an odds ratio of 10.500 (p = 0.0487).
●
Direct hepatic effect shown by significant improvements in CAP score and FAST score. DA-1241 100 mg and DA-1241
100 mg + Sitagliptin 100 mg showed significant improvements in the CAP score compared to placebo (p=0.0308 and
p=0.0452, respectively). DA-1241 100 mg in combination with Sitagliptin 100 mg showed a statistically significant
reduction in the FAST score compared to placebo (p = 0.0416).
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10
●
Additional glycemic control with significant reduction of HbA1c in 16 weeks. DA-1241 100 mg and DA-1241 100 mg in
combination with Sitagliptin 100 mg showed significant reductions in HbA1c from baseline at Week 16 compared to the
placebo group (p = 0.0179 and p = 0.0050, respectively).
●
Strong safety signal compared to competition. DA-1241 was shown to be very well tolerated with mostly mild AEs and
no drug related SAEs in the treatment groups with no treatment emergent adverse events (“TEAEs”) leading to study drug
discontinuation.
Primary Efficacy Endpoint
LS Mean ALT Changes from Baseline (U/L)
Placebo
(N=23)
DA-1241 100 mg +
Sitagliptin 100 mg
(N=34)
P value
vs. PBO
DA-1241
50 mg
(N=12)
P value
vs.
PBO
DA-1241
100 mg
(N=22)
P value
vs. PBO
Baseline
Mean
68.4
63.2
65.8
57.2
Week 4 LS
Mean
(95% CI)
-1.51
(-8.23, 5.21)
-8.38
(-13.89, -2.87)*
0.1195
-9.63
(-18.90, -0.35)*
0.1622
-13.44
(-20.32, -6.57)*
0.0159†
Week 8 LS
Mean
(95% CI)
0.13
(-7.83, 8.09)
-10.27
(-16.80, -3.73)*
0.0479†
-11.05
(-22.04, -0.05)*
0.1050
-12.25
(-20.40, -4.10)*
0.0342†
Week 16 LS
Mean
(95% CI)
-4.70
(-14.05, 4.65)
-8.24
(-15.91, -0.57)*
0.5624
-16.81
(-29.72, -3.89)*
0.1345
-18.09
(-27.67, -8.52)*
0.0506
* Confidence interval excludes 0, suggesting a statistically meaningful difference.
† p < 0.05 vs. placeboLS Mean ALT Changes from Baseline (U/L)
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11
Notable Secondary Endpoints
Proportion of Subjects with Normalized ALT <30 IU/L at Week 16
Number of Subjects, n
Placebo
(N=23)
DA-1241 100 mg +
Sitagliptin 100 mg
(N=34)
DA-1241
50 mg
(N=12)
DA-1241
100 mg
(N=22)
< 30, n (%)
1 (4.3%)
3 (8.8%)
4 (33.3%)
4 (18.2%)
Odds Ratio
(p value)
2.423
(0.4576)
10.500†
(0.0487)†
5.600
(0.1402)
† p < 0.05 vs. placebo
LS Mean CAP, VCTE, FAST score Changes from Baseline at Week 16
Placebo
(N=23)
DA-1241 100 mg +
Sitagliptin 100 mg
(N=34)
P value
vs. PBO
DA-1241
50 mg
(N=12)
P value
vs.
PBO
DA-1241
100 mg
(N=22)
P value
vs. PBO
Baseline Mean
(dB/m)
347.4
344.1
347.3
336.0
Week 16 LS Mean
CAP Score (dB/m)
(95% CI)
-2.32
(-16.17, 11.52)
-20.62
(-31.99, -9.26)*
0.0452†
-8.94
(-28.08, 10.20)
0.5787
-24.32
(-38.54, -10.10)*
0.0308†
Baseline Mean
(kPa)
10.00
9.89
10.71
10.32
Week 16 LS Mean
VCTE Score (kPa)
(95% CI)
0.29
(-1.31, 1.89)
-1.45
(-2.77, -0.13)*
0.0997
-1.40
(-3.62, 0.83)
0.2257
0.00
(-1.64, 1.64)
0.8051
Baseline Mean
0.555
0.564
0.604
0.538
Week 16 LS Mean
FAST score
(95% CI)
-0.09
(-0.17, -0.01)*
-0.19
(-0.26, -0.13)*
0.0416†
-0.17
(-0.28, -0.06)*
0.2429
-0.19
(-0.27, -0.11)*
0.0704
* Confidence interval excludes 0, suggesting a statistically meaningful difference.
† p < 0.05 vs. placebo
LS Mean HbA1c Changes from Baseline at Week 16 (%)
Placebo
(N=23)
DA-1241 100 mg
+ Sitagliptin 100
mg
(N=34)
P value
vs. PBO
DA-1241
50 mg
(N=12)
P value
vs. PBO
DA-1241
100 mg
(N=22)
P value
vs. PBO
Baseline Mean
6.78
6.51
6.58
7.01
Week 16 LS
Mean
(95% CI)
-0.10
(-0.23, 0.44)
-0.52
(-0.80, -0.25)*
0.0050†
-0.24
(-0.70, 0.22)
0.2357
-0.48
(-0.82, -0.13) *
0.0179†
* Confidence interval excludes 0, suggesting a statistically meaningful difference.
† p < 0.05 vs. placebo
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12
LS Mean CAP, FAST, HbA1c score Changes from Baseline at Week 16
Overall TEAE Summary
N (%)
Placebo
(N=32)
DA-1241 100
mg +
Sitagliptin
100 mg
(N=36)
DA-1241
50 mg
(N=14)
DA-1241
100 mg
(N=26)
Subjects with any Treatment Related AE
Mild
Moderate
Severe
9 ( 28.1%)
8 ( 25.0%)
1 ( 3.1%)
0
10 ( 27.8%)
9 ( 25.0%)
1 ( 2.8%)
0
4 ( 28.6%)
4 ( 28.6%)
0
0
9 ( 34.6%)
8 ( 30.8%)
1 ( 3.8%)
0
Subjects with any Treatment related SAE
0
0
0
0
Subjects with any TEAE leading to
study discontinuation
0
1 ( 3.1%)
0
0
Subjects with any TEAE leading to
study drug discontinuation
1 ( 3.1%)
0
0
0
DA-1726 Treatment of Obesity
DA-1726 is a novel OXM analogue functioning as a GLP1R and GCGR dual agonist. It is a long-acting, novel peptide
drug candidate, with a Phase 1 investigational new drug (“IND”) approved by the FDA with therapeutic potential for
obesity. Activation of GLP1R contributes to central anorexic effect (appetite suppression) and activation of GCGR
peripherally enhances basal metabolic rate. Accordingly, non-clinical studies have shown that DA-1726 not only reduces
food intake but also increases energy expenditure even at the basal resting state, leading to persistent weight loss in diet-
induced obese mice and rats. DA-1726 directly lowers blood glucose and lipid levels in addition to the accompanying
metabolic improvement by weight loss. Weight reduction is closely related to the alleviation of fatty liver. Having
*
*
*
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13
stabilized the fragile peptide through several unique modifications, DA-1726 is predicted to be available as a once-weekly
regimen to humans.
Physiological effects of oxyntomodulin
Background
Obesity is a disease caused by abnormal or excessive fat accumulation due to an imbalance in energy intake and
consumption over a long period of time. According to the World Health Organization (“WHO”), in 2022, there were 2.5
billion adults (18 years and older), and approximately 43% of all adults were overweight and 890 million, or
approximately 16%, were living with obesity. In 2024, the NCD Risk Factor Collaboration published findings that
estimate that more than one billion people in the world are now living with obesity and nearly 3 billion people are living
with either overweight or obesity. The comorbidities of obesity include T2DM, cardiovascular disease, hypertension and
MASH, and the risk of these diseases is higher in obese people than in non-obese people.
The treatment of obesity can be divided into three mechanisms: (i) appetite control, (ii) absorption inhibition, and
(iii) increase of energy expenditure. Currently, there are a total of eight approved anti-obesity medications on the market,
of which the most notable are Novo Nordisk semaglutide (WEGOVY®) and Eli Lilly tirzepatid (Zepbound®). However,
there is still an unmet need in the market as there are no agents with a mechanism to reduce body weight by increasing
energy expenditure in peripheral tissue.
Oxyntomodulin is a gut hormone released from intestinal L-cells after meal ingestion and represents dual agonism of the
GLP-1 receptor and glucagon receptor. It increases energy expenditure through glucagon receptors and increases appetite
suppression and insulin secretion through GLP-1 receptor activation, ultimately inducing weight loss and glycemic
control. The furthest stage of development of any oxyntomodulin analogue are survudutide and mazdutide in Phase 3
trials in the U.S., mazdutide which is approved in China, and in Phase 2 trial in the U.S. for the treatment of obesity and
MASH.
DA-1726 Preclinical Development
Animal toxicity studies of DA-1726 for the Phase 1 clinical trial have been completed. The toxicity studies included
safety pharmacology studies and general toxicity studies.
The mode of action and pharmacological effects of DA-1726 were evaluated in various disease models. In high-fat diet-
induced obese (“HF-DIO”) mice, DA-1726 showed more body weight loss and increasing energy expenditure than a pair-
fed group.
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14
Mean energy expenditure:
DA-1726*# 16.6 kcal/kg/hr
Pair-Fed 12.4 kcal/kg/hr
HF Control 12.6 kcal/kg/hr
Mechanism of action
In comparison with GLP-1 analogue, DA-1726 represented superior body weight loss compared to semaglutide in HF-
DIO obese mice. At the end of the study, DA-1726 significantly increased the expression of thermogenic genes (Ucp-
1 and Ppargc1a) in epididymal fat and increased white adipose tissue browning was histologically confirmed. In addition,
DA-1726 inhibited adipocyte differentiation in vitro. Taken together, it suggests the GCGR action of DA-1726 contributes
to reduced adiposity by enhancing fat burning and inhibiting adipogenesis. DA-1726 effectively reduced postprandial
glucose excursion in acute oral glucose tolerance test in normal mice. Notably, DA-1726 showed similar glycemic control
and excellent weight loss to semaglutide in obese mice with hyperglycemia. Simultaneously, DA-1726 enhanced insulin
sensitivity by significantly reducing fasting plasma insulin and glucose levels. Meanwhile, DA-1726 showed no
hypoglycemia risk in overnight fasted normal mice, unlike semaglutide.
In comparison with GLP-1 receptor and GIP dual agonist tirzepatide in HF-DIO obese MASH mice, DA-1726 showed
similar body weight while consuming significantly more food. In addition, DA-1726 reduced plasma clinical chemistry
parameters (ALT, AST, ALP, T-BIL, glucose, and cholesterol) and hepatic fat accumulation.
Notes: HF-DIO (High Fat-Diet Induced Obesity); BWL (Body Weight Loss)
1.
Dong-A Study Report 105497. All treatments given as twice weekly injections.
2.
Jung I-H et al. 83rd Meeting of the American Diabetes Association. 2023; Abstract 1668-P.
Weight loss and plasma biochemistry analysis
DA-1726 Phase 1 Trial
We are currently conducting a Phase 1 trial in the U.S. The Phase 1 trial, a first-in-human trial, is a randomized, placebo-
controlled, double-blind, two-part study to investigate the safety, tolerability, PK, and PD of single and multiple ascending doses
of DA-1726 in obese, otherwise healthy subjects. In September 2024, we announced positive top-line data from the
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15
planned SAD Part 1 of our Phase 1 trial evaluating DA-1726. Thereafter, we completed enrollment in the SAD Part 1 additional
cohort. In the SAD Part 1 study, the patients were enrolled into one of six cohorts and each cohort was randomized in a 6:3 ratio
of DA-1726 or placebo. Part 2 is a MAD study, with the first patient dosed in June 2024 and is expected to enroll approximately
36 participants, who will be enrolled into four cohorts, each to receive 4 weekly administrations of DA-1726 or placebo. We are
expecting top-line results from the MAD Part 2 study of our Phase 1 trial in April 2025.
The primary endpoint for SAD Part 1 and MAD Part 2 of our Phase 1 trial is to assess the safety and tolerability of DA-1726 by
monitoring AEs, SAEs, TEAEs and AEs leading to treatment discontinuation. Secondary endpoints include the PK of DA-1726,
assessed via serum concentrations over time and metabolite profiling at the highest doses of DA-1726. Exploratory endpoints
will include the effect of DA-1726 on metabolic parameters, cardiac parameters, fasting lipid levels, body weight, waist
circumference and body mass index, among others.
Other Product Candidates
We are focusing our financial resources and management’s attention on the development of DA-1241 for MASH and DA-1726
for obesity. We also have four legacy therapeutic programs, ANA001, NB-01, NB-02 and Gemcabene, that we are not planning
to advance development on. We continue to consider out-licensing and divestiture opportunities with respect to the following
legacy programs.
ANA001 Treatment of COVID-19 Symptoms
ANA001 is a proprietary oral niclosamide formulation that was developed as a treatment for patients with moderate
COVID-19 (patients not requiring ventilators). Niclosamide is a potential oral antiviral and anti-inflammatory agent
with a long history of use and documented safety in humans. Niclosamide has demonstrated both antiviral and
immunomodulatory activity with possible downstream effects on coagulation abnormalities observed in COVID-19. In
preclinical research by an independent academic group published in Antimicrobial Agents and Chemotherapy,
niclosamide inhibited viral replication in vitro and was more potent than remdesivir and chloroquine in the same assay.
We believe ANA001 has the potential to reduce the viral load and inflammation associated with cytokine
dysregulation, acute respiratory distress syndrome, and coagulation abnormalities and thus improve time to clinical
improvement as defined as hospital discharge recorded using the WHO Ordinal Scale for Clinical Improvement.
NB-01
NB-01 addresses a range of mechanisms that contribute to neuropathic pain and nerve degeneration in diabetic and
other peripheral neuropathies. These include a decrease in key inflammatory markers, restoration of nerve growth
factor (“NGF”) to normal levels, and reduction of advanced glycation end products (“AGEs”). Inflammation is a
central factor in pain generation and other peripheral neurodegenerative diseases. NB-01 reduces levels of TNF-a and
IL-6, both of which are markers of inflammation. NB-01 also reduces AGEs, which are implicated in diabetes-related
complications. AGE inhibitors have been clinically tested as potential treatments for these complications. NB-01 also
restores the neurotrophin NGF, which is involved in nerve growth, maintenance and repair. NB-01 has been shown in
animal models to alleviate symptoms of PDN.
In July 2024, we entered into an exclusive out-license agreement with MThera to provide MThera with the rights
to NB-01 for the treatment of painful diabetic neuropathy.
NB-02
NB-02 was being developed for the symptomatic and disease modifying treatment of neurodegenerative diseases,
including Alzheimer's disease and tauopathies. In preclinical studies, we have observed the mechanisms of action
of NB-02 to include inhibition of tau phosphorylation, acetylcholinesterase (“AChE”) inhibition, inhibition of Ab
toxicity and amyloid plaque formation, and anti-inflammatory effects. Specifically, in both in-vitro and in-vivo
models, NB-02 has demonstrated inhibition of AChE, as is the case with three of the current products on the market to
treat the symptoms of Alzheimer's disease. It has also demonstrated inhibition of tau phosphorylation and of amyloid
plaque formation, both mechanisms believed to contribute to the progression of neurodegenerative diseases.
Gemcabene
Gemcabene is a novel, once-daily, oral therapy designed to target known lipid metabolic pathways to lower levels of
LDL-C, hsCRP and triglycerides. Gemcabene shares many of the attributes of statin therapy, including broad
therapeutic applications, convenient route of administration and cost-effective manufacturing process, but does not
appear to increase the reporting of myalgia when added to statin therapy. Gemcabene has also shown additive LDL-
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16
C lowering in combination with stable low, moderate or high-intensity statin therapy. As described below, we licensed
global rights to Gemcabene from Pfizer in April 2011. Under the terms of the amended and restated license agreement
with Pfizer, Pfizer may terminate the license if we have not made a commercial sale by April 2024.
License Agreements
License Agreement with Dong-A for DA-1241 and DA-1726
In September 2022, we entered into an exclusive license agreement (the “2022 License Agreement”) and a Securities Purchase
Agreement with Dong-A (the “Securities Purchase Agreement”). Pursuant to the 2022 License Agreement and subject to the
conditions set forth therein, we received an exclusive global license (excluding the Republic of Korea) to two proprietary
compounds for specified indications. The 2022 License Agreement covers the rights to a compound referred to as DA-1241 for
treatment of MASH and T2DM and a compound referred to as DA-1726 for treatment of obesity and MASH. The 2022 License
Agreement became effective in November 2022.
Under the terms of the 2022 License Agreement, Dong-A (i) received an upfront payment which was settled in 2,200 shares of
preferred stock of MetaVia designated as “Series A Convertible Preferred Stock”, par value $0.001 per share (which was
subsequently converted into shares of our common stock), under the terms of the Securities Purchase Agreement; (ii) is eligible
to receive single digit royalties on net sales received by us from the commercial sale of products covering DA-1241 or DA-
1726; (iii) is eligible to receive commercial-based milestone payments, dependent upon the achievement of specific commercial
developments; and (iv) is eligible to receive regulatory milestone payments of up to $178.0 million for DA-1726 and $138.0
million for DA-1241, dependent upon the achievement of specific regulatory developments.
Our obligation to pay royalties to Dong-A under the 2022 License Agreement continues on a product-by-product and
country-by-country basis until the later of (i) the fifth anniversary of the first commercial sale of such product in such
country, (ii) the expiration or termination of the last valid patent claim that covers a product in such country and (iii) the
loss of regulatory exclusivity for such product in such jurisdiction. Either we or Dong-A may terminate the 2022 License
Agreement (i) if the other party is in material breach of the agreement and has not cured or started to cure the breach
within 60 days of notice of such breach; provided that if the breach cannot be cured within the 60-day period and the
breaching party started to remedy the breach, if such breach is not cured within 90 days of receipt of written notice or
(ii) if the other party is subject to a bankruptcy or insolvency event (subject to a 30-day cure period in the case of a
petition for bankruptcy).
License Agreement with Dong-A for NB-01
In January 2018, we entered into an exclusive license agreement with Dong-A (the “2018 License Agreement”), which
agreement was amended in April 2018 and July 2019. Under the terms of the 2018 License Agreement, we obtained an
exclusive, royalty-bearing, worldwide (except for the Republic of Korea) license to make, use, offer to sell, sell and import
products covered by certain Dong-A intellectual property rights in its proprietary compound designated as DA-9801 (NB-01).
Our license rights cover any and all applications and markets for the therapeutic, health, nutrition or well-being of humans. We
may grant sublicenses to any affiliate or third party. We are responsible for all future patent prosecution costs.
We are obligated to use commercially reasonable efforts to develop products for use in each of the U.S., the European Union,
Japan and the People's Republic of China. If we terminate, discontinue or suspend, for longer than 12 months, the development
of any product listed as a product under development in any development plan provided to Dong-A (other than for reasons of
force majeure or requirements of applicable law), then we are deemed in breach of this development obligation, and Dong-A
may terminate the 2018 License Agreement for cause after a 60-day cure period.
The term of the 2018 License Agreement continues on a country-by country and product-by-product basis until the later of the
12th anniversary of the first commercial sale of such product in such country or expiration or termination of the last valid claim
within the patent rights covering the product. Either Dong-A or we may terminate the 2018 License Agreement if the other
party is in material breach of the 2018 License Agreement and has not cured or started to cure the breach within 60 days of
notice of such breach, or is subject to a bankruptcy or insolvency event. We may terminate the 2018 License Agreement at any
time upon 90 days’ written notice.
Pfizer License Agreement
In August 2018, an Amended and Restated License Agreement with Pfizer (the “Pfizer Agreement”) for the research,
development, manufacture and commercialization of Gemcabene went into effect. The Pfizer Agreement amended and restated
the prior license agreement with Pfizer dated April 16, 2011. The Pfizer Agreement includes milestone payments to Pfizer and
tiered royalties on a country-by-country basis based upon the annual amount of net sales as specified in the Pfizer Agreement.
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The Pfizer Agreement will expire upon expiration of the last royalty term. Either party may terminate the Pfizer Agreement for
the other party's material breach following a cure period or immediately upon certain insolvency events relating to the other
party. Pfizer may immediately terminate the Pfizer Agreement in the event that (i) we or any of our affiliates or sublicenses
contests or challenges, or supports or assists any third party to contest or challenge, Pfizer's ownership of or rights in, or the
validity, enforceability or scope of any of the patents licensed under the Pfizer Agreement or (ii) we or any of our affiliates or
sublicensees fails to achieve the first commercial sale in at least one country by April 16, 2024.
License Agreement with Beijing SL
Pursuant to the terms and conditions of a License and Collaboration Agreement dated July 23, 2019 (the “Beijing SL License
Agreement”), Beijing SL has an exclusive royalty-bearing license to research, develop, manufacture and commercialize
pharmaceutical products comprising, as an active ingredient, Gemcabene in the territory comprised of mainland China, Hong
Kong, Macau and Taiwan. We retain all rights to Gemcabene outside of the territory. The parties have agreed to collaborate with
respect to development and commercialization activities under the Beijing SL License Agreement through a joint steering
committee composed of an equal number of representatives of Beijing SL and us.
Pursuant to the Beijing SL License Agreement, Beijing SL made an upfront gross payment of $2.5 million. Additionally,
with respect to each licensed product, Beijing SL will make payments for specified developmental and regulatory
milestones and payments for specified global net sales milestones. Beijing SL will also be obligated to pay tiered royalties
ranging from the mid-teens to twenty percent on the net sales of all licensed products in the territory until the latest of (a)
the date on which any applicable regulatory exclusivity with respect to such Licensed Product expires in such region, (b)
the expiration or abandonment of the last valid patent claim or joint patent claim covering such Licensed Product in each
region and (c) the fifth anniversary of the first commercial sale of such Licensed Product in such region.
Either party may terminate the Beijing SL License Agreement (x) with written notice for the other party's material breach
following a cure period or (y) if the other party becomes subject to certain insolvency proceedings. In addition, we may
terminate the Beijing SL License Agreement in its entirety if Beijing SL or its affiliates or sublicensees commence a proceeding
challenging the validity, enforceability or scope of any of our patents.
Manufacturing
Dong-A manufactures clinical quantities of DA-1241 and DA-1726 in accordance with the 2022 License Agreement and
the Shared Services Agreement. As MetaVia advances the product candidates through clinical development our current
plans are to continue to use third parties including Dong-A to manufacture drug products for our trials.
Among the conditions for FDA approval of a pharmaceutical product is the requirement that the manufacturer’s quality
control and manufacturing procedures conform to cGMP. The FDA typically inspects manufacturing facilities every
two years. In complying with cGMP regulations, pharmaceutical manufacturers must expend resources and time to ensure
compliance with product specifications as well as production, record keeping, quality control, reporting and other
requirements.
Competition
The pharmaceutical and biotechnology industries are characterized by rapidly advancing technologies, intense competition and
a strong emphasis on proprietary products. We face potential competition from many different sources, including major
pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions, governmental agencies and
public and private research institutions. Any product candidates that we successfully develop and commercialize will compete
with existing therapies and new therapies that may become available in the future.
Some of our competitors may have significantly greater financial resources and expertise in R&D, manufacturing, preclinical
testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Other firms may
also compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial
sites and patient enrollment for clinical trials, as well as in acquiring technologies complementary to, or necessary for our
programs. Mergers and acquisitions in the pharmaceutical, biotechnology and diagnostic industries may result in even more
resources being concentrated among a smaller number of our competitors. Smaller or early-stage companies may also prove to
be significant competitors with us, particularly through collaborative arrangements with large established companies.
Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize therapeutics that are
safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any products that we
may develop. Our competitors also may obtain marketing approvals for their products more rapidly than we may obtain
approval for our products, which could result in our competitors establishing a strong market position before we are able to
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enter the market. In addition, our ability to compete may be affected because in some cases insurers or other third-party payors,
including government programs, seek to encourage the use of generic products. This may have the effect of making branded
products less attractive from a cost perspective to buyers.
DA-1241 MASH
There is only one approved treatment of MASH, Madrigal Pharmaceuticals’ thyroid hormone receptor beta agonist.
However, various therapeutics are used off-label for the treatment of MASH, including vitamin E (an antioxidant), insulin
sensitizers (e.g., metformin, pioglitazone), antihyperlipidemic agents (e.g., gemfibrozil), pentoxifylline and
ursodeoxycholic acid (UDCA). There are several product candidates in Phase 3 or earlier clinical or preclinical
development for the treatment of MASH, including Novo Nordisk’s GLP1R agonist semaglutide, Eli Lilly’s GLP1R and
GIP dual agonist tirzepatide, Akero Therapeutics’s FGF21 analog efruxifermin, 89 Bio’s FGF21 analog pegaozafermin,
Inventiva’s pan-peroxisome proliferator-activated receptor agonist, Boston Pharmaceuticals and Roche’s fibroblast growth
factor 21 analogs, and farnesoid X receptor agonists from Intercept Pharmaceuticals Inc., among others. Additional
pharmaceutical and biotechnology companies with product candidates in development for the treatment of MASH include
AstraZeneca plc, Altimmune Inc., Boehringer Ingelheim GmbH, Bristol-Myers Squibb Company, Durect Corporation,
Galectin Therapeutics Inc., Galmed Pharmaceuticals Ltd., Immuron Ltd., Ionis Pharmaceuticals, Inc., Islet Sciences, Inc.,
MediciNova, Inc., NGM Biopharmaceuticals, Inc., NuSirt Sciences Inc., Pfizer Inc., Viking Therapeutics, Inc. and Zydus
Pharmaceuticals (USA) Inc. MASH is a complex disease and we believe that it is unlikely that any one therapeutic option
will be optimal for every MASH patient.
DA-1726-Obesity
Due to the growing overweight and obesity epidemic and consumer demand, there are many competitors in the field of
obesity treatment. Obesity treatments range from behavioral modification to drugs, medical devices and surgery, generally
as a last resort. If DA-1726 were approved for obesity, our primary competition in the obesity treatment market would
currently be from approved and marketed products, including semaglutide (WEGOVY®) and tirzepatide (Zepbound®).
Further competition could arise from products currently in development, including among others, with GLP1R/GCGR
dual agonists, Boehringer Ingelheim, Merck/Hanmi Pharmaceutical, AstraZeneca, Altimmune, Innovent Biologics/Eli
Lilly, Carmot and D&D Pharma; with GLP1R/GCGR/GIP triple agonists, Hanmi Pharmaceutical and Eli Lilly; Amgen
with its GLP-1R agonist/GIP antagonist antibody; and Novo Nordisk with Amylin and Amylin-GLP-1 combination. To
the extent our product candidate is approved for obesity, the commercial success of our product will also depend on our
ability to demonstrate benefits over the then-prevailing standard of care. Finally, morbidly obese patients sometimes
undergo a gastric bypass procedure, with salutary effects on the many co-morbid conditions of obesity.
DA-1241 T2DM
There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are
pursuing the development of products for T2DM. Some of these competitive products and therapies are based on
scientific approaches that are the same as or similar to our approach and others are based on entirely different approaches.
Potential competitors also include academic institutions, government agencies and other public and private research
organizations that conduct research, seek patent protection and establish collaborative arrangements for research,
development, manufacturing and commercialization.
Intellectual Property
The term of individual patents depends upon the legal term of the patents in the countries in which they are obtained. In most
countries, including the U.S., the patent term is 20 years from the earliest filing date of a non-provisional patent application or a
Patent Cooperation Treaty (“PCT”) application to which a U.S. application claims priority. In the U.S., a patent's term may be
lengthened by patent term adjustment, which compensates a patentee for administrative delays by the U.S. Patent and
Trademark Office (“USPTO”) in examining and granting a patent, or may be shortened if a patent is terminally disclaimed over
an earlier filed patent. The term of a U.S. patent that covers a drug or biological product may also be eligible for patent term
extension when approval from the FDA is granted, provided statutory and regulatory requirements are met. In the future, if our
product candidates receive approval from the FDA or foreign regulatory authorities, we expect to apply for patent term
extensions on issued patents covering those products, depending upon the length of the clinical trials for each drug and/or other
factors. There can be no assurance that any of our pending patent applications will be issued or that we will benefit from any
patent term extension or other favorable adjustment to the term of any patents.
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As with other biotechnology and pharmaceutical companies, our ability to maintain and solidify our proprietary and intellectual
property position for our product candidates, preclinical compounds, and core technologies will depend on our success in
obtaining effective patent claims and enforcing those claims if granted. However, patent applications that we may file or license
from third parties may not result in the issuance of patents. We also cannot predict the breadth of claims that may be allowed or
enforced in our patents. Any issued patents that we may receive in the future may be challenged, invalidated or circumvented.
For example, prior to March 16, 2013, in the U.S., patent applications were subject to a “first to invent” rule of law.
Applications effectively filed on or after March 16, 2013, are subject to a “first to file” rule of law.
Discoveries reported in the scientific literature often lag the actual discoveries, and patent applications in the U.S. and other
jurisdictions are typically not published until 18 months after filing, or in some cases not at all. We cannot be certain that any
existing application will be subject to the “first to file” or “first to invent” rule of law, that we or our licensor were the first to
make the inventions claimed in our existing patent portfolio subject to the prior laws, or that we or our licensor were the first to
file for patent protection of such inventions subject to the new laws. If third parties prepare and file patent applications in the
U.S. that also claim technology we have claimed in our patents or patent applications, we may have to participate in interference
or derivation proceedings and/or invalidation proceedings in the USPTO, which could result in substantial costs to us, even if
the eventual outcome is favorable. In addition, because of the extensive time required for clinical development and regulatory
review of a product candidate we may develop, it is possible that, before any of our product candidates can be commercialized,
any related patent may expire or remain in force for only a short period following commercialization, thereby reducing any
advantage of any such patent.
In addition to patents, we rely upon unpatented trade secrets, know-how, and continuing technological innovation to develop
and maintain our competitive position. We seek to protect our proprietary information, in part, by using confidentiality
agreements with our collaborators, scientific advisors, employees and consultants, and invention assignment agreements with
our employees. We also have agreements requiring assignment of inventions with selected consultants, scientific advisors and
collaborators. Confidentiality agreements are designed to protect our proprietary information and, in the case of agreements or
clauses requiring invention assignment, to grant us ownership of technologies that are developed under those agreements.
Our ability to commercialize product candidates depends in large part on our ability to obtain and maintain intellectual property
protection for our product candidates. Our policy is to seek to protect our intellectual property position by, among other
methods, filing U.S. and foreign patent applications related to the technology, inventions and improvements that are important
to the development and implementation of our business strategy. We also rely on trade secrets, know-how and continuing
technological innovation to develop and maintain our proprietary position.
DA-1241
As of December 31, 2024, our exclusively licensed intellectual property portfolio for DA-1241 includes one U.S. patent
directed to both composition of matter and a process of making the composition, one U.S. non-provisional patent directed
to both composition of matter and use of the composition and two U.S. non-provisional patent applications directed to
both composition of matter and use of the composition. The two issued U.S. patents are expected to expire in July 2035,
excluding any additional term for patent term adjustments or patent term extensions. MetaVia’s intellectual property
portfolio for DA-1241 also includes 28 non-U.S. patents and 33 non-U.S. patent applications directed to composition of
matter and/or use of the composition. The issued non-U.S. patents are expected to expire between 2035 and 2041,
excluding any additional term for patent term adjustments or patent term extensions. The jurisdictions for the non-U.S.
patents and applications include: Australia, Brazil, Canada, China, the European Patent Convention, Hong Kong, India,
Israel, Japan, Mexico, New Zealand, Philippines, Republic of Korea, Russia, Saudi Arabia, and Singapore.
DA-1726
As of December 31, 2024, our exclusively licensed intellectual property portfolio for DA-1726 includes two U.S. patents
directed to both composition of matter and use of the composition and one U.S. non-provisional patent application
directed to both composition of matter and use of the composition. The issued U.S. patent is expected to expire in 2041,
excluding any additional term for patent term adjustments or patent term extensions. Our intellectual property portfolio
for DA-1726 also includes 19 non-U.S. patents and 16 non-U.S. patent applications directed to composition of matter
and/or use of the composition. The issued non-U.S. patents is expected to expire between 2038 and 2041, excluding any
additional term for patent term adjustments or patent term extensions. The jurisdictions for the non-U.S. patents and
applications include: Australia, Brazil, Canada, China, the European Patent Convention, Hong Kong, India,
Israel, Japan, Mexico, New Zealand, Philippines, Republic of Korea, Russia, Saudi Arabia and Singapore.
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NB-01 and NB-02
As of December 31, 2024, our intellectual property portfolio for NB-01 included four issued U.S. patents, comprised of one
patent directed to composition of matter and three patents directed to use, and 66 granted foreign patents, all related to our NB-
01 programs in peripheral neuropathy and neurological conditions. The issued patents have expiration dates ranging between
October 2026 and July 2038. The jurisdictions for the foreign patents and application include: Brazil, China, the European
Patent Convention (including Austria, Belgium, Finland, France, Germany, Greece, Hungary, Italy, Netherlands, Poland,
Portugal, Romania, Spain, Switzerland, Turkey, and the United Kingdom), India, Japan, the Republic of Korea, and Russia.
As of December 31, 2024, our intellectual property portfolio for NB-02 included three issued U.S. patents, 74 foreign granted
patents, and 1 foreign patent application. The issued patents have an expiration date between December 2035 and March 2040.
The jurisdictions for the foreign patents and applications include: Brazil, Canada, China, the European Patent Convention
(including Austria, Belgium, Finland, France, Germany, Greece, Hungary, Italy, Netherlands, Poland, Portugal, Romania, Spain,
Switzerland, Turkey, and the United Kingdom), India, Japan, Mexico, the Republic of Korea, and Russia. All of the above
patents and patent applications for NB-02 were assigned to us.
Gemcabene
As of December 31, 2024, our intellectual property portfolio relating to Gemcabene included six issued U.S. patents, two
pending U.S. patent applications, and two foreign-granted patents directed to formulations, compositions, methods of use and
methods of manufacturing. The Gemcabene intellectual property are MTVA owned for the issued and pending patents in the
U.S. and foreign jurisdictions. The issued patents in the U.S. and foreign countries have expiration dates between December
2031 and November 2040.
Government Regulation
Government authorities at the federal, state and local level in the U.S. and in other countries extensively regulate, among other
things, the research, development, testing, manufacture (including any manufacturing changes), packaging, storage,
recordkeeping, labeling, advertising, promotion, distribution, marketing, post-approval monitoring and reporting, import and
export of pharmaceutical products, such as those we are developing.
U.S. FDA Regulation
In the U.S., pharmaceutical products are subject to regulation by the FDA. The Federal Food, Drug, and Cosmetic Act
(“FDCA”) and other federal and state statutes and regulations, govern, among other things, the research, development, testing,
manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and
reporting, sampling, and import and export of pharmaceutical products. Failure to comply with applicable U.S. requirements
may subject a company to a variety of administrative or judicial sanctions, such as imposition of clinical holds, refusal by the
FDA to approve pending new drug applications (“NDAs”), warning letters, product recalls, product seizures, total or partial
suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement, civil
penalties and criminal prosecution.
Pharmaceutical product development in the U.S. typically involves preclinical or other nonclinical laboratory and animal tests
and the submission to the FDA of an IND application, which must become effective before clinical testing may commence. For
commercial approval, the sponsor must submit adequate tests by all methods reasonably applicable to show that the drug is safe
for use under the conditions prescribed, recommended or suggested in the proposed labeling. The sponsor must also submit
substantial evidence, generally consisting of adequate, well-controlled clinical trials to establish that the drug will have the
effect it purports or is represented to have under the conditions of use prescribed, recommended or suggested in the proposed
labeling. Satisfaction of the FDA pre-market approval requirements typically takes many years and the actual time required may
vary substantially based upon the type, complexity and novelty of the product or disease.
Nonclinical tests include laboratory evaluation of product chemistry, formulation and toxicity, as well as animal studies to
assess the characteristics and potential safety and efficacy of the product. The conduct of the nonclinical tests must comply with
federal requirements, including the FDA's good laboratory practice regulations and the regulations of the U.S. Department of
Agriculture implementing the Animal Welfare Act. The results of nonclinical testing are submitted to the FDA as part of an
IND along with other information, including information about product chemistry, manufacturing and controls, and a proposed
clinical trial protocol. Long-term nonclinical tests, such as animal studies of reproductive toxicity and carcinogenicity, may
continue after the IND is submitted.
A 30-day waiting period after the submission of each IND is required prior to the commencement of clinical testing in humans.
If the FDA has not imposed a clinical hold on the IND or otherwise commented or questioned the IND within this 30-day
period, the clinical trial proposed in the IND may begin.
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Clinical trials involve the administration of the investigational new drug to healthy volunteers or patients under the supervision
of a qualified investigator. Clinical trials must be conducted: (i) in compliance with federal regulations, (ii) in compliance with
good clinical practice (“GCP”), an international standard meant to protect the rights and health of patients and to define the
roles of clinical trial sponsors, administrators and monitors (some of which have been codified into U.S. federal regulations),
and (iii) under protocols detailing the objectives of the trial, the parameters to be used in monitoring safety and the effectiveness
criteria to be evaluated. Each protocol involving testing on U.S. patients and subsequent protocol amendments must be
submitted to the FDA as part of the IND.
The FDA may order the temporary, or permanent, discontinuation of a clinical trial at any time or impose other sanctions if it
believes that the clinical trial either is not being conducted in accordance with the FDA requirements or presents an
unacceptable risk to the clinical trial patients. The trial protocol and informed consent information for patients in clinical trials
must also be submitted to an institutional review board (“IRB”) at each site where a trial will be conducted for approval. An
IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the
IRB's requirements or may impose other conditions. Clinical trials to support NDAs for marketing approval are typically
conducted in three sequential phases, but the phases may overlap. In general, in Phase 1, the initial introduction of the drug into
healthy human volunteers or, in some cases, patients, the drug is tested to assess metabolism, pharmacokinetics,
pharmacological actions, side effects associated with increasing doses and, if possible, early evidence of effectiveness. Phase 2
usually involves trials in a limited patient population to determine the effectiveness of the drug for a particular indication,
dosage tolerance and optimum dosage, and to identify common adverse effects and safety risks. If a compound demonstrates
evidence of effectiveness and an acceptable safety profile in Phase 2 evaluations, Phase 3 trials are undertaken to obtain
additional information about clinical efficacy and safety in a larger number of patients, typically at geographically dispersed
clinical trial sites, to permit the FDA to evaluate the overall benefit-risk relationship of the drug and to provide adequate
information for the labeling of the drug. In most cases, the FDA requires two adequate and well-controlled Phase 3 clinical
trials to demonstrate the efficacy of the drug. The FDA may, however, determine that a drug is effective based on one clinical
trial plus confirmatory evidence. Only a small percentage of investigational drugs complete all three phases and obtain
marketing approval. In some cases, the FDA may require post-market studies, known as Phase 4 studies, to be conducted as a
condition of approval to gather additional information on the drug's effect in various populations and any side effects associated
with long-term use. Depending on the risks posed by the drugs, other post-market requirements may be imposed.
After completion of the required clinical testing, an NDA is prepared and submitted to the FDA. FDA approval of the NDA is
required before marketing of the product may begin in the U.S. The NDA must include the results of all preclinical, clinical, and
other testing and a compilation of data relating to the product's pharmacology, chemistry, manufacture, and controls. The cost of
preparing and submitting an NDA is substantial. Under federal law, the submission of most NDAs is additionally subject to a
substantial application user fee.
The FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the
agency's threshold determination that it is sufficiently complete to permit substantive review. Once the submission is accepted
for filing, the FDA begins an in-depth review. Under the statute and implementing regulations, the FDA has 180 days (the initial
review cycle) from the date of filing to issue either an approval letter or a complete response letter, unless the review period is
adjusted by mutual agreement between the FDA and the applicant or as a result of the applicant submitting a major amendment.
In practice, the performance goals established pursuant to the Prescription Drug User Fee Act have effectively extended the
initial review cycle beyond 180 days. The FDA's current performance goals call for the FDA to complete review of 90% of
standard (non-priority) NDAs within 10 months of receipt and within six months for priority NDAs, but two additional months
are added to standard and priority NDAs for a new molecular entity (“NME”) such that the 10-month and 6-month action goals
for NME applications begin to run from the 60-day filing date rather than from receipt of the original NDA submission.
The FDA may also refer applications for novel drug products, or drug products that present difficult questions of safety or
efficacy, to an advisory committee, which is typically a panel that includes clinicians and other experts, for review, evaluation
and a recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an
advisory committee, but it generally follows such recommendations. Before approving an NDA, the FDA will typically inspect
one or more clinical sites to assure compliance with GCP. Additionally, the FDA will inspect the facility or the facilities at
which the drug is manufactured. The FDA will not approve the product unless compliance with current good manufacturing
practice (GMP) regulations is satisfactory, and the NDA contains data that provides substantial evidence that the drug is safe
and effective in the indication studied.
After the FDA evaluates the NDA and the manufacturing facilities, it issues either an approval letter or a complete response
letter. A complete response letter (CRL) generally outlines the deficiencies in the submission and may require substantial
additional testing or information, in order for the FDA to reconsider the application. If, or when, those deficiencies have been
addressed to the FDA's satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has
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committed to reviewing 90% of NDA resubmissions within two to six months depending on the type of information included in
response to the deficiencies identified in the CRL.
An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications.
As a condition of NDA approval, the FDA may require a risk evaluation and mitigation strategy (“REMS”) to help ensure that
the benefits of the drug outweigh the potential risks. REMS can include medication guides, communication plans for health care
professionals, and/or elements to assure safe use (“ETASU”). ETASU can include, but is not limited to, special training or
certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of
patient registries. The requirement for a REMS can materially affect the potential market and profitability of the drug.
Moreover, product approval may require substantial post-approval testing and surveillance to monitor the drug's safety or
efficacy. Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained, or
problems are identified following initial marketing.
Fast Track Designation and Accelerated Approval
The FDA is authorized to facilitate the development, and expedite the review, of drugs that are intended for the treatment of a
serious or life-threatening disease or condition for which there is no effective treatment, and which demonstrate the potential to
address unmet medical needs for the condition. These programs include Fast Track designation, breakthrough therapy
designation, priority review designation and other accelerated approvals.
Under the Fast Track Program, the sponsor of a new drug candidate that is intended to treat a serious condition may request that
the FDA designate the drug candidate for a specific indication as a Fast Track drug concurrent with, or after, the filing of the
IND for the drug candidate. The FDA must determine if the drug candidate qualifies for Fast Track designation within 60 days
of receipt of the sponsor's request. In addition to other benefits such as the ability to engage in more frequent interactions with
the FDA, the FDA may initiate review of sections of a Fast Track drug's NDA before the application is complete. This rolling
review is available if the applicant provides, and the FDA approves, a schedule for the submission of the remaining information
and the applicant pays applicable user fees. However, the FDA's time period goal for reviewing an application does not begin
until the last section of the NDA is submitted. Additionally, the Fast Track designation may be withdrawn by the FDA if the
FDA believes that the designation is no longer supported by data emerging in the clinical trial process.
In 2012, Congress enacted the Food and Drug Administration Safety and Innovation Act. This law established a new regulatory
program for products designated as “breakthrough therapies.” A product may be designated as a breakthrough therapy if it is
intended, either alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition
and preliminary clinical evidence indicates that the product may demonstrate substantial improvement over existing therapies
on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. The
FDA may take certain actions with respect to designated breakthrough therapies, including: holding meetings with the sponsor
throughout the development process; providing timely advice to the product sponsor regarding development and approval;
involving more senior staff in the review process; assigning a cross-disciplinary project lead for the review team; and taking
other steps to design the clinical trials in an efficient manner.
The FDA may also designate a product for priority review if it is a drug that treats a serious condition and, if approved, would
provide a significant improvement in safety or effectiveness. The FDA determines at the time that the marketing application is
submitted, on a case- by-case basis, whether the proposed drug represents a significant improvement when compared with other
available therapies. Significant improvement may be illustrated by evidence of increased effectiveness in the treatment of a
condition, elimination or substantial reduction of a treatment-limiting drug reaction, documented enhancement of patient
compliance that may lead to improvement in serious outcomes, or evidence of safety and effectiveness in a new subpopulation.
A priority review designation is intended to direct overall attention and resources to the evaluation of such applications, and to
shorten the FDA's goal for taking action on a marketing application from ten months to six months.
Under the FDA’s accelerated approval regulations, the FDA may approve a drug for a serious or life-threatening illness that
provides meaningful therapeutic benefit to patients over existing treatments based upon a surrogate endpoint that is reasonably
likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality,
that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account
the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments. The accelerated approval
regulations are codified within Title 21 of the Code of Federal Regulations, as Subpart H under Part 314, the part of the FDA
regulations covering applications for FDA approval to market a new drug, and as such the accelerated approval pathway is
sometimes referred to as approval under “Subpart H.”
In clinical trials, a surrogate endpoint is a measurement of laboratory or clinical signs of a disease or condition that substitutes
for a direct measurement of how a patient feels, functions or survives. Surrogate endpoints can often be measured more easily
or more rapidly than clinical endpoints. A drug candidate approved under Subpart H is subject to rigorous post-marketing
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compliance requirements, including the completion of Phase 4 or post-approval clinical trials to confirm the effect on the
clinical endpoint. Failure to conduct required post-approval studies, or confirm a clinical benefit during post-marketing studies,
will allow the FDA to withdraw the drug from the market on an expedited basis. Unless otherwise informed by the FDA, for an
accelerated approval product an applicant must submit to the FDA for consideration during the pre-approval review period
copies of all promotional materials, including promotional labeling as well as advertisements, intended for dissemination or
publication within 120 days following marketing approval. After 120 days following marketing approval, unless otherwise
informed by the FDA, the applicant must submit promotional materials at least 30 days prior to the intended time of initial
dissemination of the labeling or initial publication of the advertisement. The accelerated approval pathway is most often used in
settings in which the course of a disease is long, and an extended period of time is required to measure the intended clinical
benefit of a drug, even if the effect on the surrogate or intermediate clinical endpoint occurs rapidly. For example, accelerated
approval has been used extensively in the development and approval of drugs for treatment of a variety of cancers in which the
goal of therapy is generally to improve survival or decrease morbidity and the duration of the typical disease course requires
lengthy and sometimes large clinical trials to demonstrate a clinical or survival benefit.
Orphan Drugs
Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs intended to treat a rare disease or condition
generally a disease or condition that affects fewer than 200,000 individuals. The U.S. Orphan Drug Designation must be
requested before submitting an NDA. After the FDA grants orphan drug designation, the generic identity and trade name, if any,
of the drug and its designated use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage
in, or shorten the duration of, the regulatory review and approval process. The first NDA applicant to receive FDA approval for
a particular active ingredient to treat a particular disease with FDA orphan drug designation is entitled to a seven-year exclusive
marketing period in the U.S. for that product, for that indication. During the seven-year exclusivity period, the FDA may not
approve any other applications to market the same drug for the same disease, except in limited circumstances, such as a
showing of clinical superiority to the product with orphan drug exclusivity. Orphan drug exclusivity does not prevent the FDA
from approving a different drug for the same disease or condition, or the same drug for a different disease or condition. Among
the other benefits of orphan drug designation are tax credits for certain research and a waiver of the NDA application user fee.
Pediatric Information
Under the Pediatric Research Equity Act (“PREA”), NDAs or supplements to NDAs must contain data to assess the safety and
effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and
administration for each pediatric subpopulation for which the drug is safe and effective. The FDA may grant full or partial
waivers for submission of data, as well as deferrals for several reasons, including a finding that the drug is ready for approval
for use in adults before pediatric studies are complete or that additional safety or effectiveness data needs to be collected before
the pediatric studies begin. Unless otherwise required by regulation, PREA does not apply to any drug for an indication for
which orphan designation has been granted.
The Best Pharmaceuticals for Children Act (“BPCA”) provides NDA holders a six-month extension of any exclusivity-patent or
non-patent-for a drug if certain conditions are met. Conditions for exclusivity include the FDA's determination that information
relating to the use of a new drug in the pediatric population may produce health benefits in that population, the FDA making a
written request for pediatric studies, and the applicant agreeing to perform, and reporting on, the requested studies within the
statutory timeframe. Applications under the BPCA are treated as priority applications, with all of the benefits that designation
confers.
Special Protocol Assessment
A company may reach an agreement with the FDA under the Special Protocol Assessment (“SPA”) process as to the required
design and size of clinical trials intended to form the primary basis of an efficacy claim for a new drug product. According to its
performance goals, the FDA seeks to evaluate the protocol within 45 days of the request to assess whether the proposed trial is
adequate, and that evaluation may result in discussions and a request for additional information. An SPA request must be made
before the proposed trial begins, and all open issues must be resolved before the trial begins. If a written agreement is reached, it
will be documented and made part of the administrative record. Under the FDCA and FDA guidance implementing the statutory
requirement, an SPA is generally binding on the FDA except in limited circumstances, such as if the FDA identifies a
substantial scientific issue essential to determining safety or efficacy after the study begins, public health concerns emerge that
were unrecognized at the time of the protocol assessment, the sponsor and the FDA agree to the change in writing, or if the
study sponsor fails to follow the protocol that was agreed upon with the FDA.
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Disclosure of Clinical Trial Information
Sponsors of clinical trials of certain FDA-regulated products, including prescription drugs, are required to register and disclose
certain clinical trial information on a public website maintained by the U.S. National Institutes of Health (“NIH”). Information
related to the product, patient population, phase of investigation, study sites and investigator, and other aspects of the clinical
trial is made public as part of the registration. Sponsors are also obligated to disclose the results of these trials after completion.
Disclosure of the results of these trials can be delayed for up to two years if the sponsor certifies that it is seeking approval of an
unapproved product or that it will file an application for approval of a new indication for an approved product within one year.
Competitors may use this publicly available information to gain knowledge regarding the design and progress of the
development programs. Failure to timely register a covered clinical study or to submit study results as provided for in the law
can give rise to civil monetary penalties and also prevent the non-compliant party from receiving future grant funds from the
federal government. Since the NIH's Final Rule on ClinicalTrials.gov registration and reporting requirements became effective
in 2017, both NIH and FDA have signaled the government's willingness to begin enforcing those requirements against clinical
trial sponsors who fail to meet those legal obligations, with FDA releasing a guidance document in August 2020 for certain
procedural steps it intends to take when determining whether and how to assess civil monetary penalties against a non-
compliant party.
Post-Approval Requirements
Drugs manufactured, marketed or distributed pursuant to FDA approval decisions are subject to pervasive and continuing
regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product
sampling and distribution, advertising and promotion, and reporting of adverse experiences with the product. After approval,
most changes to the approved product, such as adding new indications or other labeling claims, are subject to FDA review and
approval before they can be implemented. There also are continuing, annual user fee requirements for any marketed products
and related manufacturing facilities, as well as new application fees for supplemental applications.
In addition, drug manufacturers and other entities involved in the manufacture of approved drugs are required to register their
facilities with the FDA and state agencies, and are subject to periodic unannounced inspections by the FDA for compliance with
GMP requirements. Prescription drug distribution facilities are also subject to state licensure, including inspections, by the
relevant local regulatory authority. Changes to the manufacturing process, specifications or container closure system for an
approved drug are strictly regulated and often require prior FDA approval before being implemented. FDA regulations also
require investigation and correction of any deviations from GMP and impose reporting and documentation requirements upon
the sponsor and others involved in the drug manufacturing process. Accordingly, manufacturers must continue to expend time,
money and effort in the area of production and quality control to maintain GMP compliance and ensure ongoing compliance
with other statutory requirements the FDCA, such as the requirements for making manufacturing changes to an approved NDA.
Thus, even after new drug approval is granted, Regulatory authorities may withdraw that approval or request product recalls if
compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the
market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or
frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in revisions to the
approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks;
or imposition of distribution or other restrictions under a REMS program. Other potential consequences of regulatory non-
compliance include, among other things:
●
restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or
product recalls;
●
fines, warning letters or holds on post-approval clinical trials;
●
refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of
product license approvals;
●
product seizure or detention, or refusal to permit the import or export of products; or
●
injunctions or the imposition of civil or criminal penalties.
As described below, the FDA strictly regulates marketing, labeling, advertising and promotion of prescription drug products that
are placed on the market. Drugs may be promoted only for the approved indications and in accordance with the provisions of
the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label
uses, and a company that is found to have improperly promoted off-label uses may be subject to significant penalties.
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The Hatch-Waxman Amendments
Orange Book Listing
In 1984, with passage of the Hatch-Waxman Amendments to the FDCA, Congress authorized the FDA to approve generic drugs
that are the same as drugs previously approved by the FDA under the NDA provisions of the statute. As part of the marketing
application process when seeking approval for a new drug through an NDA, applicants are required to list with the FDA every
patent of which claims cover the applicant's product or an approved method of using the product. Upon approval of a drug,
approval information about the drug along with each of the applicant's listed patents is then published in the FDA's Approved
Drug Products with Therapeutic Equivalence Evaluations, commonly known as the "Orange Book." Pursuant to the Hatch-
Waxman Amendments, drugs listed in the Orange Book can, in turn, be cited by potential generic competitors in support of
approval of an abbreviated new drug application (“ANDA”). An ANDA provides for marketing of a drug product that has the
same active ingredients in the same strengths and dosage form as the reference license drug (“RLD”) and has been shown
through bioequivalence testing to be bioequivalent to the RLD. The FDA is responsible for determining that the generic drug is
"bioequivalent" to the innovator drug, although under the statute, a generic drug is bioequivalent to a RLD if "the rate and
extent of absorption of the drug do not show a significant difference from the rate and extent of absorption of the listed drug."
Other than the requirement for bioequivalence testing, ANDA applicants are not required to conduct, or submit results of,
preclinical or clinical tests to prove the safety or effectiveness of their drug product. Drugs approved in this way are most often
considered to be therapeutically equivalent to the RLD, are commonly referred to as "generic equivalents" to the RLD, and can
often be substituted by pharmacists under prescriptions written for the original RLD in accordance with state law. Specifically,
upon approval of an ANDA, the FDA indicates whether the generic product is "therapeutically equivalent" to the RLD in the
Orange Book. By operation of certain state laws and numerous health insurance programs, the FDA's designation of therapeutic
equivalence in the Orange Book often results in substitution of the generic drug without the knowledge or consent of either the
prescribing physician or the patient.
The Hatch-Waxman Amendments also amended the FDCA to enact Section 505(b)(2) of the FDCA, which permits the filing of
an NDA where at least some of the information required for approval comes from studies not conducted by or for the applicant
and for which the applicant has not obtained a right of reference. A Section 505(b)(2) applicant may eliminate the need to
conduct certain preclinical or clinical studies, if it can establish that reliance on studies conducted for a previously approved
product is scientifically appropriate. The FDA may also require companies to perform additional trials or measurements to
support the change from the approved product. The FDA may then approve the new product for all or some of the label
indications for which the referenced product has been approved, as well as for any new indication sought by the Section 505(b)
(2) applicant. With respect to listed patents, patent certification requirements, and the blocking of follow-on marketing
applications for the drug product previously approved under an NDA and listed in the Orange Book-known as the RLD-505(b)
(2) NDA applications and ANDAs are required under the statute and FDA's implementing regulations to follow similar
procedures and are subject to similar conditions. However, only in some cases is a 505(b)(2) NDA-approved drug product
determined by FDA to be therapeutically equivalent to the original innovator RLD.
As part of our own marketing application process, the ANDA/505(b)(2) applicant is required to certify to the FDA concerning
any patents listed for the relevant RLD in the FDA's Orange Book. Specifically, the applicant must certify either that: (i) the
required patent information has not been filed; (ii) the listed patent has expired; (iii) the listed patent has not expired but will
expire on a particular date and approval is sought after patent expiration; or (iv) the listed patent is invalid or will not be
infringed by the generic product. The ANDA applicant may also elect to submit a Section VIII statement, certifying that our
proposed ANDA or 505(b)(2) labeling does not contain (or carves out) any language regarding the patented method-of-use,
rather than certify to a listed method-of-use patent.
If the ANDA/505(b)(2) applicant does not challenge the innovator's listed patents or indicates that it is not seeking approval of a
patented method of use, the ANDA/505(b)(2) application will not be approved by the FDA until all the listed patents claiming
the referenced product have expired.
A certification that the new product will not infringe the already approved product's listed patents, or that such patents are
invalid, is called a Paragraph IV certification. If the ANDA/505(b)(2) applicant has provided a Paragraph IV certification to the
FDA, the applicant must also send notice of that Paragraph IV certification to the NDA sponsor and patent holders once FDA
accepts the ANDA/505(b)(2) application for filing. The NDA and patent holders may then initiate a patent infringement lawsuit
in response to the notice of the Paragraph IV certification, as provided for in the statute. The filing of a patent infringement
lawsuit within 45 days of receipt of a Paragraph IV certification automatically prevents the FDA from approving the
ANDA/505(b)(2) NDA until the earlier of 30 months, expiration of the patent, settlement of the lawsuit, or a decision in the
infringement case that is favorable to the ANDA/505(b)(2) applicant.
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Non-Patent Exclusivity
Under the Hatch-Waxman Amendments, the FDA also may not approve an ANDA or 505(b)(2) NDA until any applicable
period of non-patent exclusivity for the RLD has expired. The FDCA provides a period of five years of non-patent exclusivity
for a new drug containing a new chemical entity (“NCE”) which is a drug that contains no active moiety that has been approved
by the FDA in any other NDA. During these five years of marketing exclusivity, the FDA cannot receive any ANDA or 505(b)
(2) application seeking approval of a drug that references a version of the NCE drug.
The FDCA also provides for a period of three years of exclusivity if the NDA includes reports of one or more new clinical
investigations, other than bioavailability or bioequivalence studies, that were conducted by or for the applicant and are essential
to the approval of the application. This three-year exclusivity period often protects changes to a previously approved drug
product, such as a new dosage form, route of administration, combination or the addition of a new indication. During this three-
year period of exclusivity, the FDA cannot approve an ANDA or 505(b)(2) application that includes the change.
An ANDA or 505(b)(2) application may be submitted one year before NCE exclusivity expires if a Paragraph IV certification is
filed. If there is no listed patent in the Orange Book, there may not be a Paragraph IV certification requirement, and in such
situations, no ANDA or 505(b)(2) application may be filed before the expiration of the exclusivity period.
Patent Term Extension
After NDA approval, owners of relevant drug patents may apply for up to a five-year patent extension. The allowable patent
term extension is calculated as half of the drug's testing phase—the time between IND submission and NDA submission—and
all of the review phase—the time between NDA submission and approval up to a maximum of five years. The time can be
shortened if the FDA determines that the applicant did not pursue approval with due diligence. The total patent term after the
extension may not exceed 14 years from market approval.
For patents that might expire during the application phase, the patent owner may request an interim patent extension. An interim
patent extension increases the patent term by one year and may be renewed up to four times. For each interim patent extension
granted, the post-approval patent extension is reduced by one year. The director of the U.S. Patent and Trademark Office must
determine that approval of the drug covered by the patent for which a patent extension is being sought is likely. Interim patent
extensions are not available for a drug for which an NDA has not been submitted.
Prescription Drug Marketing Act
As part of the sales and marketing process, pharmaceutical companies frequently provide samples of approved drugs to
physicians. The Prescription Drug Marketing Act (“PDMA”) imposes requirements and limitations upon the provision of drug
samples to physicians, as well as prohibits states from licensing distributors of prescription drugs unless the state licensing
program meets certain federal guidelines that include minimum standards for storage, handling and record keeping. In addition,
the PDMA sets forth civil and criminal penalties for violations.
New Legislation and Regulations
From time to time, legislation is drafted, introduced and passed in Congress that could significantly change the statutory
provisions governing the testing, approval, manufacturing and marketing of products regulated by the FDA and relevant
regulatory authorities outside the U.S. In addition to new legislation, regulations and policies are often revised or interpreted by
regulatory authorities in ways that may significantly affect our business and our product candidates. It is impossible to predict
whether further legislative changes will be enacted or whether regulations, guidance, policies or interpretations will be changed
or what the effect of such changes, if any, may be.
Other U.S. Healthcare Laws and Compliance Requirements
If we obtain regulatory approval of our product candidates and launch them commercially in the U.S., we may be subject to
various federal and state laws targeting fraud and abuse in the healthcare industry. These laws may impact, among other things,
our proposed sales, marketing and education programs. In addition, we may be subject to patient privacy regulation by both the
federal government and the states in which we conduct our business. Some of the laws that may affect our future ability to
operate include:
●
the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully
soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or
recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and
Medicaid programs;
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●
federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things,
individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare,
Medicaid, or other third-party payers that are false or fraudulent;
●
the federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created new federal
criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program and making false
statements relating to healthcare matters;
●
HIPAA, as amended by the Health Information Technology and Clinical Health Act and its implementing regulations,
which imposes certain requirements relating to the privacy, security and transmission of individually identifiable
health information;
●
the federal transparency requirements under the Physician Payments Sunshine Act require manufacturers of FDA-
approved drugs, devices, biologics and medical supplies covered by Medicare or Medicaid to report, on an annual
basis, to the Department of Health and Human Services information related to payments and other transfers of value to
physicians, teaching hospitals, and certain advanced non-physician health care practitioners and physician ownership
and investment interests; and
●
state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, which may apply
to items or services reimbursed by any third-party payer, including commercial insurers, and state laws governing the
privacy and security of health information in certain circumstances, many of which differ from each other in
significant ways and may not have the same effect, thus complicating compliance efforts. Moreover, some state laws
require pharmaceutical companies to comply with the pharmaceutical industry's voluntary compliance guidelines, or
the relevant compliance guidance promulgated by the federal government, in addition to requiring drug manufacturers
to report information related to payments to physicians and other health care providers or marketing expenditures to
the extent that those laws impose requirements that are more stringent than the Physician Payments Sunshine Act.
Europe/Rest of World Government Regulation
In addition to regulations in the U.S., we are and will be subject, either directly or through our potential partners, to a variety of
regulations in other jurisdictions governing, among other things, clinical trials and any commercial sales and distribution of our
products, if approved.
Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in
non-U.S. countries prior to the commencement of clinical trials or marketing of the product in those countries.
The approval process varies from country to country and can involve additional product testing and additional administrative
review periods. The time required to obtain approval in other countries might differ from and be longer than that required to
obtain FDA approval. Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay
in obtaining regulatory approval in one country may negatively impact the regulatory process in others.
In the European Union, medicinal products are subject to extensive pre- and post-marketing regulation by regulatory authorities
at both the European Union and national levels. Additional rules also apply at the national level to the manufacture, import,
export, storage, distribution and sale of controlled substances. In many European Union. member states the regulatory authority
responsible for medicinal products is also responsible for controlled substances. Responsibility is, however, split in some
member states. Generally, any company manufacturing or distributing a medicinal product containing a controlled substance in
the European Union will need to hold a controlled substances license from the competent national authority and will be subject
to specific record-keeping and security obligations. Separate import or export certificates are required for each shipment into or
out of the member state.
Clinical Trials and Marketing Approval
Certain countries outside of the U.S. have a process that requires the submission of a clinical trial application much like an IND
prior to the commencement of human clinical trials. In Europe, for example, a clinical trial application (“CTA”) must be
submitted to the competent national health authority and to independent ethics committees in each country in which a company
intends to conduct clinical trials. Once the CTA is approved in accordance with a country's requirements and a company has
received favorable ethics committee approval, clinical trial development may proceed in that country.
The requirements and process governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from
country to country, even though there is some degree of legal harmonization in the European Union member states resulting
from the national implementation of the underlying European Union. legislation. In all cases, the clinical trials must be
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conducted in accordance with the International Conference on Harmonization guidelines on GCP and other applicable
regulatory requirements.
To obtain regulatory approval to place a drug on the market in the European Union, we must submit a marketing authorization
application. This application is similar to the NDA in the U.S., with the exception of, among other things, country-specific
document requirements. All application procedures require an application in the common technical document format, which
includes the submission of detailed information about the manufacturing and quality of the product, and non-clinical and
clinical trial information. Drugs can be authorized in the European Union by using (i) the centralized authorization procedure,
(ii) the mutual recognition procedure, (iii) the decentralized procedure or (iv) national authorization procedures.
The European Commission created the centralized procedure for the approval of human drugs to facilitate marketing
authorizations that are valid throughout the European Union and, by extension (after national implementing decisions) in
Iceland, Liechtenstein and Norway, which, together with European Union member states, comprise the European Economic
Area. Applicants file marketing authorization applications with the EMA, where a relevant scientific committee reviews them,
in most cases the Committee for Medicinal Products for Human Use (“CHMP”). The EMA forwards CHMP opinions to the
European Commission, which uses them as the basis for deciding whether to grant a marketing authorization. This procedure
results in a single marketing authorization granted by the European Commission that is valid across the European Union, as
well as in Iceland, Liechtenstein and Norway. The centralized procedure is compulsory for human drugs that: (i) are derived
from biotechnology processes, such as genetic engineering, (ii) contain a new active substance indicated for the treatment of
certain diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative diseases, autoimmune and other immune dysfunctions
and viral diseases, (iii) are officially designated "orphan drugs" (drugs used for rare human diseases) and (iv) are advanced-
therapy medicines, such as gene-therapy, somatic cell-therapy or tissue-engineered medicines. The centralized procedure may,
at the voluntary request of the applicant, also be used for human drugs which do not fall within the above-mentioned categories
if the CHMP agrees that (a) the human drug contains a new active substance not yet approved as of November 20, 2005; (b) it
constitutes a significant therapeutic, scientific or technical innovation or (c) authorization under the centralized procedure is in
the interests of patients at the European Union level.
Under the centralized procedure in the European Union, the maximum timeframe for the evaluation of a marketing
authorization application by the EMA is 210 days (excluding clock stops, when additional written or oral information is to be
provided by the applicant in response to questions asked by the CHMP), with adoption of the actual marketing authorization by
the European Commission thereafter. Accelerated evaluation might be granted by the CHMP in exceptional cases, when a
medicinal product is expected to be of major public health interest from the point of view of therapeutic innovation, defined by
three cumulative criteria: the seriousness of the disease to be treated, the absence of an appropriate alternative therapeutic
approach, and anticipation of exceptional high therapeutic benefit. In this circumstance, the EMA ensures that the evaluation for
the opinion of the CHMP is completed within 150 days and the opinion is issued thereafter.
For those medicinal products for which the centralized procedure is not available, the applicant must submit marketing
authorization applications to the national medicines regulators through one of three procedures: (i) the mutual recognition
procedure (which must be used if the product has already been authorized in at least one other European Union member state,
and in which the European Union member states are required to grant an authorization recognizing the existing authorization in
the other European Union member state, unless they identify a serious risk to public health), (ii) the decentralized procedure (in
which applications are submitted simultaneously in two or more European Union member states) or (iii) national authorization
procedures (which results in a marketing authorization in a single European Union member state).
Mutual Recognition Procedure
The mutual recognition procedure (“MRP”) for the approval of human drugs is an alternative approach to facilitate individual
national marketing authorizations within the European Union. Basically, the MRP may be applied for all human drugs for which
the centralized procedure is not obligatory. The MRP is applicable to the majority of conventional medicinal products and must
be used if the product has already been authorized in one or more member states.
The characteristic of the MRP is that the procedure builds on a pre-existing marketing authorization in a member state of the
European Union that is used as a reference in order to obtain marketing authorizations in other European Union member states.
In the MRP, a marketing authorization for a drug already exists in one or more member states of the European Union and
subsequently marketing authorization applications are made in other European Union member states by referring to the initial
marketing authorization. The member state in which the marketing authorization was first granted will then act as the reference
member state. The member states where the marketing authorization is subsequently applied for act as concerned member
states. The concerned member states are required to grant an authorization recognizing the existing authorization in the
reference member state unless they identify a serious risk to public health.
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The MRP is based on the principle of mutual recognition by the European Union member states of their respective national
marketing authorizations. Based on a marketing authorization in the reference member state, the applicant may apply for
marketing authorizations in other member states. In such cases, the reference member state shall update its existing assessment
report about the drug in 90 days. After the assessment is completed, copies of the report are sent to all member states, together
with the approved summary of product characteristics, labeling and package leaflet. The concerned member states then have 90
days to recognize the decision of the reference member state and the summary of product characteristics, labeling and package
leaflet. National marketing authorizations shall be granted within 30 days of acknowledgement of the agreement.
If any European Union member state refuses to recognize the marketing authorization by the reference member state, on the
grounds of potential serious risk to public health, the issue will be referred to a coordination group. Within a timeframe of 60
days, member states shall, within the coordination group, make all efforts to reach a consensus. If this fails, the procedure is
submitted to an EMA scientific committee for arbitration. The opinion of this EMA Committee is then forwarded to the
European Commission for the start of the decision-making process. As in the centralized procedure, this process entails
consulting various European Commission Directorates General and the Standing Committee on Human Medicinal Products.
Data and Market Exclusivity in the European Union
In the European Union, NCEs qualify for eight years of data exclusivity upon marketing authorization and an additional two
years of market exclusivity. This data exclusivity, if granted, prevents regulatory authorities in the European Union from
referencing the innovator's data to assess a generic (abbreviated) application for eight years, after which generic marketing
authorization can be submitted, and the innovator's data may be referenced, but not approved for two years. The overall ten-year
period will be extended to a maximum of eleven years if, during the first eight years of those ten years, the marketing
authorization holder obtains an authorization for one or more new therapeutic indications which, during the scientific evaluation
prior to their authorization, are held to bring a significant clinical benefit in comparison with existing therapies. Even if a
compound is considered to be a NCE and the sponsor is able to gain the prescribed period of data exclusivity, another company
nevertheless could also market another version of the drug if such company can complete a full marketing authorization
application (“MAA”) with a complete database of pharmaceutical test, preclinical studies and clinical trials and obtain
marketing approval of its product.
Pharmaceutical Coverage, Pricing and Reimbursement
Sales of pharmaceutical products approved for marketing in the U.S. by the FDA will depend, in part, on the extent to which the
costs of the products will be covered by third-party payers, such as government health programs, and commercial insurance and
managed health care organizations. These third-party payers are increasingly challenging the prices charged for medical
products and services. Additionally, the containment of health care costs has become a priority of federal and state governments,
and the prices of drugs have been a focus in this effort. The U.S. government, state legislatures and foreign governments have
shown significant interest in implementing cost-containment programs, including price controls, utilization management and
requirements for substitution of generic products. Adoption of price controls and cost-containment measures, and adoption of
more restrictive policies in jurisdictions with existing controls and measures, could further limit our operating results. If these
third-party payers do not consider our products to be cost-effective compared to other available therapies, they may not cover
our products after approval as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to
sell our products on a profitable basis.
The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (“MMA”) imposed requirements for the
distribution and pricing of prescription drugs for Medicare beneficiaries and included a major expansion of the prescription drug
benefit under Medicare Part D. Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private
entities that provide coverage of outpatient prescription drugs. Part D is available through both stand-alone prescription drug
benefit plans and prescription drug coverage as a supplement to Medicare Advantage plans. Unlike Medicare Parts A and B,
Part D coverage is not standardized. Part D prescription drug plan sponsors are not required to pay for all covered Part D drugs,
and each drug plan can develop its own drug formulary that identifies which drugs it will cover and at what tier or level.
However, Part D prescription drug formularies must include drugs within each therapeutic category and class of covered Part D
drugs, though not necessarily all the drugs in each category or class. Any formulary used by a Part D prescription drug plan
must be developed and reviewed by a pharmacy and therapeutic committee.
Government payment for some of the costs of prescription drugs may increase demand for products for which we receive
marketing approval in the U.S. However, any negotiated prices for our products covered by a Part D prescription drug plan will
likely be lower than the prices we might otherwise obtain. Moreover, while the MMA applies only to drug benefits for Medicare
beneficiaries, private payers often follow Medicare coverage policy and payment limitations in setting their own payment rates.
Any reduction in payment that results from the MMA may result in a similar reduction in payments from non-governmental
payers.
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The Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act
of 2010 (collectively, the “ACA”), was enacted with the goal of expanding coverage for the uninsured while at the same time
containing overall health care costs. With regard to pharmaceutical products, among other things, the ACA expanded and
increased industry rebates for drugs covered under Medicaid programs and made changes to the coverage requirements under
the Medicare Part D program.
Individual states in the U.S. have also become increasingly active in implementing regulations designed to control
pharmaceutical product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product
access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from
other countries and bulk purchasing. In addition, regional healthcare authorities and individual hospitals are increasingly using
bidding procedures to determine which drugs and suppliers will be included in their healthcare programs. Furthermore, there
has been increased interest by third party payors and governmental authorities in reference pricing systems and publication of
discounts and list prices.
In the U.S., Medicare covers certain drug purchases by the elderly and eligible disabled people and introduced a reimbursement
methodology based on average sales prices for physician-administered drugs. In addition, Medicare may limit the number of
drugs that will be covered in any therapeutic class. Ongoing cost reduction initiatives and future laws could decrease the
coverage and price that we will receive for any approved products. While Medicare beneficiaries are limited to most elderly and
certain disabled individuals, private payors often follow Medicare coverage policy and payment limitations in setting their own
payment rates.
Among the provisions of the ACA of importance or potential importance to our product candidates are the following:
●
an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and
biologic products;
●
an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program;
●
expansion of healthcare fraud and abuse laws, including the False Claims Act and the Anti-Kickback Statute, new
government investigative powers, and enhanced penalties for noncompliance;
●
a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale
discounts off negotiated prices;
●
extension of manufacturers' Medicaid rebate liability;
●
expansion of eligibility criteria for Medicaid programs;
●
expansion of the entities eligible for discounts under the Public Health Service Act's pharmaceutical pricing program;
●
new requirements to report financial arrangements with physicians and teaching hospitals (i.e., the Federal Physician
Payment Sunshine Act, which has since been expanded to cover additional specified healthcare providers);
●
a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and
●
a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative
clinical effectiveness research, along with funding for such research.
We expect that the ACA, as well as other healthcare reform measures that may be adopted in the future, may result in more
rigorous coverage criteria and in additional downward pressure on the price that we will receive for any approved product. Any
reduction in payments from Medicare or other government programs may result in a similar reduction in payments from private
payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to
generate revenue, attain profitability, or commercialize our products.
There remain judicial and political challenges to certain aspects of the ACA. In June 2021, the U.S. Supreme Court dismissed
the most recent judicial challenge to the ACA without specifically ruling on the constitutionality of the ACA. Prior to the
Supreme Court’s decision, President Biden issued an executive order to initiate a special enrollment period from February 2021
to August 2021 for purposes of obtaining health insurance coverage through the ACA marketplace. The executive order also
instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to health
care, including among others, reexamining Medicaid demonstration projects and waiver programs that include work
requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or
the ACA.
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In addition, other legislative changes have been proposed and adopted since the ACA was enacted. These changes included
aggregate reductions to Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013 and, due to
subsequent legislative amendments to the statute, including the Bipartisan Budget Act of 2018, will remain in effect through
2030, with the exception of a temporary suspension from May 2020 through March 2022, unless additional Congressional
action is taken. In addition, in January 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among
other things, reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations
period for the government to recover overpayments to providers from three to five years.
Moreover, there has recently been heightened governmental scrutiny over the manner in which manufacturers set prices for their
marketed products, which has resulted in several Congressional inquiries and proposed and enacted federal and state legislation
designed to, among other things, bring more transparency to product pricing, review the relationship between pricing and
manufacturer patient programs, and reform government program reimbursement methodologies for pharmaceutical products.
The likelihood of success of these and other measures is uncertain.
In addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed.
The requirements governing drug pricing vary widely from country to country. For example, some European Union
jurisdictions operate positive and negative list systems under which products may only be marketed once a reimbursement price
has been agreed. To obtain reimbursement or pricing approval, some of these countries may require the completion of clinical
trials that compare the cost-effectiveness of a particular product candidate to currently available therapies. Other member states
allow companies to fix their own prices for medicines but monitor and control company profits. Such differences in national
pricing regimes may create price differentials between European Union member states. There can be no assurance that any
country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement
and pricing arrangements for any of our products. Historically, products launched in the European Union do not follow price
structures of the U.S. In the European Union, the downward pressure on healthcare costs in general, particularly prescription
medicines, has become intense. As a result, barriers to entry of new products are becoming increasingly high and patients are
unlikely to use a drug product that is not reimbursed by their government.
Human Capital
As of March 17, 2025, we had nine full-time (and total) employees, of which five were engaged in R&D functions, three were
engaged in general and administrative (“G&A”) functions, and one was engaged in both R&D and G&A functions. We have no
collective bargaining agreements with our employees and have not experienced any work stoppages. We consider our
relationships with our employees to be good.
Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating
our existing and new full-time employees. The principal purposes of our equity and cash incentive plans are to attract, retain
and reward personnel through the granting of stock-based and cash-based compensation awards, in order to increase stockholder
value and the success of our Company by motivating such individuals to perform to the best of their abilities and achieve our
objectives.
Corporate Information
MetaVia was incorporated under the laws of the State of Delaware in October 2014. Our principal executive offices are located
at 545 Concord Avenue, Suite 210, Cambridge, Massachusetts, 02138. Our website address is www.metaviatx.com. The
information contained on or that can be accessed through our website is not a part of this report.
Additional Information
On our website, we make available, free of charge, our annual, quarterly and current reports, including amendments to such
reports, as soon as reasonably practicable after the Company electronically files such material with, or furnishes such material
to, the SEC. The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements and other
information regarding us and other companies that file materials with the SEC electronically.
Also available on our website is information relating to our corporate governance and our board of directors, including our
corporate governance guidelines; our code of business conduct; and our board committee charters. We will provide any of the
foregoing information without charge upon written request to our Secretary, MetaVia Inc., 545 Concord Avenue, Suite 210,
Cambridge, Massachusetts 02138.
Item 1A. Risk Factors
Investing in our common stock involves a high degree of risk. Before making your decision to invest in shares of our common
stock, you should carefully consider the risks described below, together with the other information contained in this Annual
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Report, including in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” and in our consolidated financial statements and the related notes included elsewhere in this Annual Report. We
cannot assure you that any of the events discussed below will not occur. These events could have a material and adverse impact
on our business, financial condition, results of operations and prospects. If that were to happen, the trading price of our
common stock could decline, and you could lose all or part of your investment.
Risks related to our financial position and need for capital
We have incurred net losses since inception, and we anticipate that we will continue to incur net losses for the foreseeable
future. We require additional capital to accomplish our business plan and the failure to obtain necessary capital when
needed on acceptable terms, or at all, could force us to delay, limit, reduce or terminate our operations.
We have experienced net losses and negative cash flows from operating activities since our inception, and we have a net loss of
$27.6 million and an accumulated deficit of $135.9 million as of December 31, 2024. We have concluded that there is
substantial doubt about the Company’s ability to continue as a going concern within twelve months from the date the
consolidated financial statements were issued. Our independent registered public accounting firm has issued an opinion on our
consolidated financial statements included in this Annual Report that also states that there is substantial doubt about the
Company’s ability to continue as a going concern. Our consolidated financial statements have been prepared using accounting
principles generally accepted in the U.S. applicable for a going concern, which assume that we will realize our assets and satisfy
our liabilities in the normal course of business. Our consolidated financial statements do not include any adjustments to the
amounts and classification of assets and liabilities that may be necessary should we be unable to continue as a going concern.
We expect to incur increasing levels of losses from operating activities for the foreseeable future, particularly as we advance our
product candidates through clinical development. Our prior losses, combined with expected future losses, have had and will
continue to have an adverse effect on our stockholders’ equity and working capital. We expect our R&D expenses to increase in
connection with our additional planned clinical trials for our product candidates and the development of other future product
candidates we may choose to pursue. In addition, if we obtain marketing approval for any of our product candidates, we will
incur significant sales, marketing and outsourced manufacturing expenses in connection with the commercialization of our
product candidates. As a result, we expect to continue to incur significant and increasing losses from operating activities for the
foreseeable future. To-date, we have not generated any revenue and we do not know when, or if, we will generate any revenue.
Even if we do become profitable, we may not be able to sustain or increase our profitability on a quarterly or annual basis. We
do not expect to generate significant revenue unless and until we obtain marketing approval for, and begin to sell, one or more
of our product candidates. It is possible we will never generate revenue or profit.
Although we are exploring financing opportunities and carefully monitoring the capital markets, we do not yet have any
commitments for additional financing and may not be successful in our efforts to raise additional funds. There can be no
assurances that additional financing will be available to us on satisfactory terms, or at all. If we are unable to raise sufficient
additional capital (which is not assured at this time), our business plan may not be accomplished, and we may be forced to
delay, limit, reduce or terminate our operations. For more information about our liquidity and capital resources, see “Liquidity
and Capital Resources” in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations.
As we do no generate any revenue, we are dependent on working capital to fund our business plan, and raising additional
capital may cause dilution to existing stockholders, restrict our operations or require us to relinquish rights to our
technologies.
We believe that our existing cash will be sufficient to fund our operations into the third quarter of 2025. Until such time, if ever,
as we can generate revenue, we expect to finance our cash needs through a combination of equity offerings, debt financing,
collaborations, strategic alliances, and marketing, distribution or licensing arrangements with third parties. In addition, we may
seek additional capital due to favorable market conditions or strategic considerations, even if we believe we have sufficient
funds from our current or future expected business plans. To the extent that we raise additional capital through the sale of equity
or convertible debt securities, the ownership interest of current stockholders may be materially diluted, and the terms of such
securities could include liquidation preferences or other preferences that adversely affect the rights of our current stockholders.
The terms of debt and/or equity financings, if available, may provide rights senior to those of our common stock and could
contain covenants or protective rights that would restrict our operations and potentially impair our competitiveness, such as
limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights
and other operating restrictions that could adversely impact our ability to conduct our business. If we raise funds through
collaborations, strategic alliances or marketing, distribution or licensing arrangements with third parties, we may have to
relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or grant licenses
on terms that may not be favorable to us. If we are unable to raise additional funds through equity or debt financing or other
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arrangements when needed, we may be required to delay, scale back or discontinue the development and commercialization of
one or more of our product candidates or delay our pursuit of potential in-licenses, out-licenses or acquisitions. If we need to
secure additional financing, such additional fundraising efforts may divert our management and research efforts from our day-
to-day activities, which may adversely affect our ability to develop and commercialize our product candidates.
Future sales, or the perception of future sales, by us or our securityholders could cause the market price of our common
stock to decline.
The sale of shares of our common stock in the public market, or the perception that such sales could occur, could harm the
prevailing market price of shares of our common stock. These sales, or the possibility that these sales may occur, also might
make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.
For example, on January 23, 2024, we filed a registration statement on Form S-3 relating to the reoffer and resale from time to
time of up to 22,629,907 shares of our common stock by the selling stockholders named therein, and such registration statement
was declared effective on January 31, 2024. Additionally, on July 18, 2024, we filed a registration statement on Form S-1
relating to the reoffer and resale from time to time of up to 17,175,579 shares of our common stock by the selling
securityholders named therein, and such registration statement was declared effective on July 24, 2024. By exercising their
registration rights and selling a large number of shares of our common stock in reliance on these and other existing registration
statements, these securityholders could cause the prevailing market price of our common stock to decline.
As of December 31, 2024, we had outstanding warrants to purchase an aggregate of 14,483,792 shares of our common stock.
Each warrant entitles the holder thereof to purchase one share of our common stock. To the extent such warrants are exercised,
additional shares of our common stock will be issued, which will result in dilution to the then existing holders of shares our
common stock and increase the number of shares eligible for resale in the public market.
In addition, the shares of our common stock reserved for future issuance under our equity incentive plans will become eligible
for sale in the public market once those shares are issued, subject to provisions relating to various vesting agreements and, in
some cases, limitations on volume and manner of sale applicable to affiliates under Rule 144, as applicable. We have filed
registration statements on Form S-8 to register shares of our common stock or securities convertible into or exchangeable for
shares of our common stock issued pursuant to our equity incentive plans. We expect to file additional registration statements on
Form S-8 in the future to register additional shares reserved for future issuance under our equity incentive plans, and Form S-8
registration statements automatically become effective upon filing. Accordingly, shares registered under such registration
statements will be available for sale in the open market.
In the future, we may also issue our securities in connection with investments or acquisitions. The number of shares of our
common stock issued in connection with an investment or acquisition could constitute a material portion of our then-
outstanding shares of common stock. Any issuance of additional securities in connection with investments or acquisitions may
result in additional dilution to our stockholders.
Adverse global economic conditions could have a material adverse effect on our business, results of operations and financial
condition and liquidity.
Our business, financial condition, results of operations and prospects could be adversely affected by general conditions in the
global economy and in the global financial markets. A severe or prolonged economic downturn could result in a variety of risks
to our business, including our ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining
economy could also strain our suppliers, service providers or other partners and there is a risk that one or more would not
survive or be able to meet their commitments to us under such circumstances. As widely reported, global credit and financial
markets have experienced volatility and disruptions in the past several years due to the impacts of the COVID-19 pandemic,
and, more recently, the ongoing conflicts in Ukraine and Israel, including severely diminished liquidity and credit availability,
declines in consumer confidence, declines in economic growth, inflation, rising interest rates, increases in unemployment rates
and uncertainty about tariffs and economic stability. There can be no assurances that further deterioration in credit and financial
markets and confidence in economic conditions will not occur. Any of the foregoing could harm our business and we cannot
anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our
business.
Conditions in the banking system and financial markets, including the failure of banks and financial institutions, could
have an adverse effect on our operations and financial results.
Actual events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial
institutions, transactional counterparties or other companies in the financial services industry or the financial services industry
generally, or concerns or rumors about any events of these kinds or other similar risks, have in the past and may in the future
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lead to market-wide liquidity problems. For example, in 2023, the Federal Deposit Insurance Corporation took control and was
appointed receiver of Silicon Valley Bank, Signature Bank and Silvergate Capital Corp, respectively, after each bank was unable
to continue their operations. Since then, additional financial institutions have experienced similar failures and have been placed
into receivership. It is possible that other banks will face similar difficulties in the future.
Although we do not maintain any deposit accounts, credit agreements or letters of credit with any financial institution currently
in receivership, we are unable to predict the extent or nature of the impacts of these evolving circumstances at this time. If, for
example, other banks and financial institutions enter receivership or become insolvent in the future in response to financial
conditions affecting the banking system and financial markets, our ability to access our existing cash, cash equivalents and
investments may be threatened. While it is not possible at this time to predict the extent of the impact that the failure of these
financial institutions or the high market volatility and instability of the banking sector could have on economic activity and our
business in particular, the failure of other banks and financial institutions and the measures taken by governments, businesses
and other organizations in response to these events could adversely impact our business, financial condition and results of
operations.
Risks related to our operations and to the development, marketing, commercialization and regulation of our product
candidates
We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product
candidates or indications that may be more profitable or for which there is a greater likelihood of success.
Because we have limited financial and managerial resources, we focus on research programs and product candidates that we
identify for specific indications. As a result, we may forego or delay pursuit of opportunities with other product candidates or
for other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail
to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and
development programs and product candidates for specific indications may not yield any commercially viable products. If we
do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish
valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in cases in which it
would have been more advantageous for us to retain sole development and commercialization rights to such product candidate.
Additionally, our R&D efforts are focused, in part, on developing DA-1241 for the treatment of MASH, an indication for which
there is only one approved product. The regulatory approval process for novel product candidates, such as DA-1241 for MASH,
can be more expensive and take longer than for other, better known or extensively studied product candidates. In addition to
Madrigal Pharmaceuticals’ approved product, other companies are in later stages of clinical trials for their potential MASH
therapies, and we expect that the path for regulatory approval for MASH therapies may continue to evolve in the near term as
these other companies refine their regulatory approval strategies and interact with regulatory authorities. Such evolution may
impact our future clinical trial designs, including trial size and endpoints, in ways that we cannot predict today. Our anticipated
development costs would likely increase if development of DA-1241 or any future product candidate is delayed because the
FDA requires us to perform studies or trials in addition to, or different from, those that we currently anticipate. Because of the
numerous risks and uncertainties associated with pharmaceutical product development, we are unable to predict the timing or
amount of any increase in our anticipated development costs.
Public opinion and scrutiny of treatments for obesity and overweight patients may impact public perception of our Company
and DA-1726, or may adversely affect our ability to conduct our business and our business plans.
Public perception may be influenced by claims, such as claims that DA-1726 is unsafe, unethical or immoral and, consequently,
our approach may not gain the acceptance of the public or the medical community. Negative public reaction to treatments for
obesity and overweight patients in general could result in greater government regulation and stricter labeling requirements of
products to treat these chronic conditions, including DA-1726, if approved, and could cause a decrease in the demand for DA-
1726 or any product candidates we may develop. For example, severe adverse events observed with GLP-1 receptor agonists
include, but are not limited to, acute pancreatitis, acute gallbladder disease, acute kidney injury and worsening of diabetic
retinopathy. Such side effects associated with GLP-1 receptor or GLP-1/GIP receptor targeting treatments may negatively
impact public perception of us, DA-1726 or any product candidates we develop. Adverse public attitudes may also adversely
impact our ability to enroll clinical trials. Moreover, our success will depend upon physicians and their patients being willing to
receive treatments that involve the use of DA-1726 or any product candidates we develop, in lieu of or in addition to, existing
treatments that such physicians and their patients are already familiar with and for which greater clinical data may be available.
Adverse events in our clinical trials, even if not ultimately attributable to our DA-1726 or any product candidates we develop,
and the resulting publicity could result in withdrawal of clinical trial participants, increased governmental regulation,
unfavorable public perception, potential regulatory delays in the testing or approval of DA-1726 or any product candidates we
develop, stricter labeling requirements for those product candidates that are approved and a decrease in demand for any such
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product candidates. More restrictive government regulations or negative public opinion could have a material and adverse
impact on our business, financial condition, results of operations and prospects, and may delay or impair the development,
commercialization (if approved) or demand for DA-1726 or any product candidates we develop.
We may be required to make significant payments under the 2022 License Agreement.
We have exclusive rights (other than in the Republic of Korea) to DA-1241 and DA-1726 for the specific indications provided
in the 2022 License Agreement. Under the 2022 License Agreement, in consideration for the license, we made an upfront
payment of 2,200 shares of our Series A Convertible Preferred Stock. As additional consideration for the license, we are
required to pay Dong-A milestone payments upon the achievement of specified regulatory milestones and milestone payments
upon the achievement of specified commercial milestones. Commencing on the first commercial sale of licensed products, we
are obligated to pay royalties of single-digit percentages on annual net sales of the products covered by the license. If the
milestone is reached or the other non-royalty obligations become due, we may not have sufficient funds available to meet our
obligations, which may materially adversely affect our business operations and financial condition.
Even if we obtain favorable clinical results, we may not be able to obtain regulatory approval for, or successfully
commercialize DA-1241 and DA-1726.
Of the large number of drugs in development in the U.S., only a small percentage receive FDA regulatory approval and are
commercialized in the U.S. We are not permitted to market DA-1241 or DA-1726 in the U.S. until we receive approval of a
New Drug Application (“NDA”) from the FDA, or in any foreign countries until we receive the requisite approval from such
countries or jurisdictions, such as the MAA in the European Union from the European Medicines Agency (“EMA”).
As a condition to submitting an NDA to the FDA for DA-1241 or DA-1726, we must successfully complete several clinical
trials demonstrating efficacy and safety. For example, we must successfully meet a number of critical developmental
milestones, including: (i) developing dosages that will be well-tolerated, safe and effective; (ii) completing the development and
scale-up to permit manufacture of our product candidates in commercial quantities and at acceptable costs; (iii) demonstrating
through pivotal clinical trials that the product candidate is safe and effective in patients for the intended indication; (iv)
establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers; and (v) obtaining
and maintaining exclusive rights, including patent and trade secret protection and non-patent exclusivity for our product
candidates. The time necessary to achieve these developmental milestones for any individual product candidate is long and
uncertain, and we may not successfully complete these milestones for any product candidates that we may develop. We are
continuing to test and develop our product candidates and may explore possible design or formulation changes to address safety,
dosage, efficacy, manufacturing efficiency and performance issues to the extent any arise. The design of a clinical trial may be
able to determine whether its results will support approval of a product, and flaws in the design of a clinical trial may not
become apparent until the clinical trial is well advanced or completed. There is no assurance that we will be able to design and
complete a clinical trial to support marketing approval. Moreover, nonclinical and clinical data are often susceptible to multiple
interpretations and analyses. A number of companies in the pharmaceutical and biotechnology industries have experienced
significant setbacks in advanced clinical trials, even after achieving promising results in earlier trials.
Successfully completing clinical trials and obtaining approval of an NDA is a complex, lengthy, expensive and uncertain
process, and the FDA, or a comparable foreign regulatory authority, may delay, limit or deny approval of an NDA for many
reasons, including, among others: (i) disagreement with the design or implementation of our clinical trials; (ii) disagreement
with the sufficiency of our clinical trials; (iii) failure to demonstrate the safety and efficacy of the product candidate for the
proposed indications; (iv) failure to demonstrate that any clinical and other benefits of the product candidate outweigh their
safety risks; (v) a negative interpretation of the data from our nonclinical studies or clinical trials; (vi) insufficient data collected
from clinical trials or changes in the approval requirements that render our nonclinical and clinical data insufficient to support
the filing of an NDA or to obtain regulatory approval; or (vii) changes in clinical practice in our approved products available for
the treatment of the target patient population that could have an impact on the indications that we are pursuing for our product
candidates. Any of these factors, many of which are beyond our control, could jeopardize our ability to obtain regulatory
approval for and successfully market DA-1241 and DA-1726.
DA-1241 and DA-1726 may not be successful in clinical trials or receive regulatory approval. Further, DA-1241 and DA-1726
may not receive regulatory approval even if they are successful in clinical trials, or these product candidates may be approved
for fewer or more limited indications than we request, such approval may be contingent on the performance of costly post-
marketing clinical trials or we may not be allowed to include the labeling claims necessary or desirable for the successful
commercialization of such product candidate. In addition, the policies or regulations, or the type and amount of clinical data
necessary to gain approval, may change during a product candidate’s clinical development and may vary among jurisdictions.
Our development activities could be harmed or delayed by a partial shutdown of the U.S. government, including the FDA. We
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have not obtained regulatory approval for any product candidate, and it is possible that DA-1241 and DA-1726 will never
obtain regulatory approval.
Alternatively, even if we obtain regulatory approval, that approval may be for indications or patient populations that are not as
broad as we intend or desire or may require labeling that includes significant use or distribution restrictions or safety warnings.
We may also be required to perform additional, unanticipated clinical trials to obtain approval or be subject to additional post
marketing testing requirements to maintain regulatory approval. In addition, regulatory authorities may withdraw their approval
of a product, or the FDA may require a REMS for a product, which could impose restrictions on our distribution. Any of the
foregoing scenarios could materially harm the commercial prospects for our product candidates.
Preliminary, interim and topline data from our clinical trials that we announce or publish from time to time may change as
more patient data become available and are subject to audit and verification procedures that could result in material
changes in the final data.
From time to time, we may publicly disclose preliminary, interim or topline data from our clinical trials. These updates are
based on a preliminary analysis of then-available data, and the results and related findings and conclusions are subject to change
following a more comprehensive review of the data related to the particular study or trial. Additionally, interim data from
clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as
patient enrollment continues and more patient data become available. Therefore, positive interim results in any ongoing clinical
trial may not be predictive of similarly positive results in the completed study or trial. We also make assumptions, estimations,
calculations and conclusions as part of our analyses of data, and we may not have received or had the opportunity to fully and
carefully evaluate all data. As a result, the topline results that we report may differ from future results of the same studies, or
different conclusions or considerations may qualify such results once additional data have been received and fully evaluated.
Topline data also remain subject to audit and verification procedures that may result in the final data being materially different
from the preliminary data we previously published. As a result, topline data should be viewed with caution until the final data
are available. In addition, we may report interim analyses of only certain endpoints rather than all endpoints. Adverse changes
between preliminary or interim data and final data could significantly harm our business and prospects. Further, additional
disclosure of interim data by us or by our competitors in the future could result in volatility in the price of our shares of
common stock.
Further, others, including regulatory agencies, may not accept or agree with our assumptions, estimates, calculations,
conclusions or analyses or may interpret or weigh the importance of data differently, which could impact the value of the
particular program, the approvability or commercialization of the particular product candidate or product and our Company in
general. In addition, the information we choose to publicly disclose regarding a particular study or clinical trial is typically
selected from a more extensive amount of available information. You or others may not agree with what we determine is the
material, or otherwise appropriate, information to include in our disclosure, and any information we determine not to disclose
may ultimately be deemed significant with respect to future decisions, conclusions, views, activities or otherwise regarding a
particular product, product candidate or our business. If the preliminary or topline data that we report differ from late, final or
actual results, or if others, including regulatory authorities, disagree with the conclusions reached, our ability to obtain approval
for, and commercialize any product candidates may be harmed, which could harm our business, financial condition, results of
operations and prospects.
Results of earlier clinical trials may not be predictive of the results of later-stage clinical trials.
The results of preclinical studies and early clinical trials of product candidates may not be predictive of the results of later-stage
clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy results despite
having progressed through preclinical studies and initial clinical trials. Many companies in the biopharmaceutical industry have
suffered significant setbacks in advanced clinical trials due to adverse safety profiles or lack of efficacy, notwithstanding
promising results in earlier studies. Similarly, our future clinical trial results may not be successful for these or other reasons.
This drug candidate development risk is heightened by any changes in the planned clinical trials compared to the completed
clinical trials. As product candidates are developed through preclinical to early to late-stage clinical trials towards approval and
commercialization, it is customary that various aspects of the development program, such as manufacturing and methods of
administration, are altered along the way to optimize processes and results. While these types of changes are common and are
intended to optimize the product candidates for late-stage clinical trials, approval and commercialization, such changes carry the
risk that they will not achieve these intended objectives.
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Any of these changes could make the results of our planned clinical trials or other future clinical trials we may initiate less
predictable and could cause our product candidates to perform differently, including causing toxicities, which could delay the
completion of our clinical trials, delay the approval of our product candidates and/or jeopardize our ability to commence
product sales and generate revenues.
Product candidates may cause undesirable side effects that could delay or prevent their marketing approval, limit the
commercial profile of an approved label, or result in significant negative consequences following marketing approval, if any,
including marketing withdrawal.
Undesirable side effects caused by any of our product candidates that we may develop or acquire could cause us or the FDA or
other regulatory authorities to interrupt, delay or halt our clinical trials and could result in more restrictive labels or the delay or
denial of marketing approval by the FDA or other regulatory authorities of such product candidates. Results of our clinical trials
could reveal high and unacceptable severity and prevalence of these or other side effects. In such an event, our trials could be
suspended or terminated, and the FDA or comparable foreign regulatory authorities could order us to cease further development
of or deny approval of our product candidates for any or all targeted indications. In addition, any drug-related side effects could
affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims.
Any of these occurrences may harm our business, financial condition and prospects significantly.
Further, clinical trials by their nature utilize a sample of the potential patient population. With a limited number of patients, rare
and severe side effects of our product candidates may only be uncovered with a significantly larger number of patients exposed
to the product candidate. If our product candidates receive marketing approval and we or others identify undesirable side effects
caused by such product candidates (or any other similar drugs) after such approval, a number of potentially significant negative
consequences could result, including:
●
regulatory authorities may withdraw or limit their approval of such product candidates;
●
regulatory authorities may require the addition of labeling statements, such as a “boxed” warning or a
contraindication;
●
we may be required to recall the product, change the way such product candidates are distributed or administered,
conduct additional clinical trials or change the labeling of the product candidates;
●
regulatory authorities may require a REMS plan to mitigate risks, which could include medication guides to be
distributed to patients, physician communication plans, or elements to assure safe use, such as restricted distribution
methods, patient registries and other risk minimization tools;
●
we may be subject to regulatory investigations and government enforcement actions;
●
we may be subject to fines, injunctions or the imposition of civil or criminal penalties;
●
we may decide to remove such product candidates from the marketplace after they are approved;
●
the product may be rendered less competitive, and sales may decrease;
●
we could be sued and held liable for injury caused to individuals exposed to or taking our product candidates; and
●
our reputation may suffer.
We believe that any of these events could prevent us from achieving or maintaining market acceptance of the affected product
candidates and could substantially increase the costs of commercializing our product candidates, if approved, and significantly
impact our ability to successfully commercialize our product candidates and generate revenues.
Our efforts to discover drug candidates beyond our current drug candidates may not succeed, and any drug candidates we
recommend for clinical development may not actually begin clinical trials.
We intend to continue to use our technology, including our licensed technology, knowledge and expertise to develop novel
drugs to address some of the world’s most widespread and costly chronic diseases. We intend to expand our existing pipeline of
core assets by advancing drug compounds from current ongoing discovery programs into clinical development. However, the
process of researching and discovering drug compounds is expensive, time-consuming and unpredictable. Data from our current
preclinical programs may not support the clinical development of our lead compounds or other compounds from these
programs, and we may not identify any additional drug compounds suitable for recommendation for clinical development.
Moreover, any drug compounds we recommend for clinical development may not demonstrate, through preclinical studies,
indications of safety and potential efficacy that would support advancement into clinical trials. Such findings would potentially
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impede our ability to maintain or expand our clinical development pipeline. Our ability to identify new drug compounds and
advance them into clinical development also depends upon our ability to fund our research and development operations, and we
cannot be certain that additional funding will be available on acceptable terms, or at all.
Delays in our clinical trials may lead to a delay in the submission of marketing approval applications and jeopardize our
ability to potentially receive approvals and generate revenues from the sale of our products.
We may experience delays in ongoing and planned clinical trials. We do not know whether planned clinical trials will begin or
enroll subjects on time, need to be redesigned or be completed on schedule, if at all. Clinical trials may be delayed, suspended
or terminated for a variety of reasons, such as:
●
delay or failure in reaching an agreement with the FDA or a comparable foreign regulatory authority on a trial design
that we are able to execute;
●
delay or failure in obtaining authorization to commence a trial or inability to comply with conditions imposed by a
regulatory authority regarding the scope or design of a clinical trial;
●
inability, delay or failure in identifying and maintaining a sufficient number of trial sites, many of which may already
be engaged in competing clinical trial programs;
●
issues with the manufacture of drug substance for use in clinical trials;
●
delay or failure in recruiting and enrolling suitable subjects to participate in a trial;
●
delay or failure in having subjects complete a trial or return for post-treatment follow-up;
●
clinical sites and investigators deviating from trial protocol, failing to conduct the trial in accordance with regulatory
requirements, or dropping out of a trial;
●
delay or failure in reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of
which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
●
delay or failure in obtaining IRB approval to conduct a clinical trial at each site;
●
delays resulting from negative or equivocal findings of the Data Safety Monitoring Board (“DSMB”), if any;
●
ambiguous or negative results;
●
decision by the FDA, a comparable foreign regulatory authority, or recommendation by a DSMB to suspend or
terminate clinical trials at any time for safety issues or for any other reason;
●
conflicts affecting clinical trial sites and regions where clinical trials are being completed;
●
lack of adequate funding to continue the product development program; or
●
changes in governmental regulations or requirements.
Any delays in completing our clinical trials will increase our costs, slow down our product candidate development and approval
process and jeopardize our ability to commence product sales and generate revenues. Any of these occurrences may
significantly harm our business, financial condition and prospects. In addition, many of the factors that cause, or lead to, a delay
in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory approval of our
product candidates.
We may develop DA-1241 and DA-1726, and potentially future product candidates, in combination with other therapies,
which exposes us to additional risks.
We may develop DA-1241 and DA-1726 and future product candidates in combination with one or more currently approved
therapies. Even if any product candidate we develop were to receive marketing approval or be commercialized for use in
combination with other existing therapies, we would continue to be subject to the risks that the FDA or similar regulatory
authorities outside of the U.S. could revoke approval of the therapy used in combination with our product candidate or that
safety, dosage, efficacy, manufacturing or supply issues could arise with these existing therapies. This could result in our own
products being removed from the market or being less successful commercially.
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We may also evaluate DA-1241 and DA-1726 or any other future product candidates in combination with one or more other
therapies that have not yet been approved for marketing by the FDA or similar regulatory authorities outside of the U.S. We will
not be able to market and sell DA-1241 and DA-1726 or any product candidate we develop in combination with any such
unapproved therapies that do not ultimately obtain marketing approval. If the FDA or similar regulatory authorities outside of
the U.S. do not approve these other drugs or revoke their approval of, or if safety, efficacy, manufacturing, or supply issues arise
with, the drugs we choose to evaluate in combination with DA-1241 and DA-1726 or any other product candidate we develop,
we may be unable to obtain approval of or market DA-1241 and DA-1726 or any other product candidate we develop.
Any collaboration arrangement that we may enter into in the future may not be successful, which could adversely affect our
ability to develop and commercialize our current and potential future drug candidates.
We may seek collaboration arrangements with biopharmaceutical companies for the development or commercialization of our
current and potential future drug candidates. To the extent that we decide to enter into collaboration agreements, we will face
significant competition in seeking appropriate collaborators. Moreover, collaboration arrangements are complex and time-
consuming to negotiate, execute and implement. We may not be successful in our efforts to establish and implement
collaborations, or other alternative arrangements should we choose to enter into such arrangements, and the terms of the
arrangements may not be favorable to us. If, and when we collaborate with a third party for development and commercialization
of a drug candidate, we can expect to relinquish some or all of the control over the future success of that drug candidate to the
third party. The success of our collaboration arrangements will depend heavily on the efforts and activities of our collaborators.
Collaborators generally have significant discretion in determining the efforts and resources that they will apply to these
collaborations.
Disagreements between parties to a collaboration arrangement can lead to delays in developing or commercializing the
applicable drug candidate and can be difficult to resolve in a mutually beneficial manner. In some cases, collaborations with
biopharmaceutical companies and other third parties are terminated or allowed to expire by the other party. Any such
termination or expiration would adversely affect our business, financial condition and results of operations.
Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be made more
difficult or rendered impossible by multiple factors outside our control, including difficulties in identifying patients with
MASH and significant competition for recruiting such patients in clinical trials.
Identifying and qualifying patients to participate in our clinical trials is critical to our success. We may encounter delays in
enrolling, or be unable to enroll, a sufficient number of patients to complete any of our clinical trials, and even once enrolled we
may be unable to retain a sufficient number of patients to complete any of our trials. In particular, as a result of the inherent
difficulties in diagnosing MASH and the significant competition for recruiting patients with MASH in clinical trials, there may
be delays in enrolling the patients we need to complete clinical trials on a timely basis, or at all. This risk may be more
significant for us than other companies conducting clinical trials for the treatment of patients with MASH because we are
enrolling only patients with a biopsy-confirmed diagnosis of MASH in our clinical trials.
Factors that may generally affect patient enrollment include:
●
the size and nature of the patient population;
●
the number and location of clinical sites we enroll;
●
competition with other companies for clinical sites or patients;
●
the eligibility and exclusion criteria for the trial;
●
the design of the clinical trial;
●
inability to obtain and maintain patient consents;
●
risk that enrolled participants will drop out before completion; and
●
competing clinical trials and clinicians’ and patients’ perceptions as to the potential advantages of the drug being
studied in relation to other available therapies, including any new drugs that may be approved for the indications we
are investigating.
In addition, if any significant adverse events or other side effects are observed in any of our future clinical trials, it may make it
more difficult for us to recruit patients to our clinical trials and patients may drop out of our trials, or we may be required to
abandon the trials or our development efforts of one or more product candidates altogether. Our inability to enroll a sufficient
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number of patients for our clinical trials would result in significant delays, which would increase our costs and have an adverse
effect on our Company.
We face substantial competition, which may result in others discovering, developing or commercializing products before or
more successfully than we do.
The development and commercialization of new products is highly competitive. Our future success depends on our ability to
demonstrate and maintain a competitive advantage with respect to the development and commercialization of our product
candidates. Our objective is to develop and commercialize new products with superior efficacy, convenience, tolerability and
safety. In many cases, the products that we commercialize will compete with existing, market-leading products.
Many of our potential competitors have significantly greater financial, manufacturing, marketing, drug development, technical
and human resources than we do. Large pharmaceutical companies, in particular, have extensive experience in clinical testing,
obtaining regulatory approvals, recruiting patients and manufacturing pharmaceutical products. In particular, these companies
have greater experience and expertise in securing government contracts and grants to support their R&D efforts, conducting
testing and clinical trials, obtaining regulatory approvals to market products, manufacturing such products on a broad scale and
marketing approved products. These companies also have significantly greater research and marketing capabilities than we do
and may also have products that have been approved or are in late stages of development and have collaborative arrangements
in our target markets with leading companies and research institutions. Established pharmaceutical companies may also invest
heavily to accelerate discovery and development of novel compounds or to in-license novel compounds that could make the
product that we develop obsolete. As a result of all of these factors, our competitors may succeed in obtaining patent protection
and/or FDA approval or discovering, developing and commercializing products before, or more effectively than, we do. In
addition, any new product that competes with an approved product must demonstrate compelling advantages in efficacy,
convenience, tolerability and safety in order to overcome price competition and to be commercially successful. If we are not
able to compete effectively against potential competitors, our business will not grow, and our financial condition and operations
will suffer.
MASH
There is only one approved treatment of MASH, Madrigal Pharmaceuticals’ thyroid hormone receptor beta agonist.
However, various therapeutics are used off-label for the treatment of MASH, including vitamin E (an antioxidant), insulin
sensitizers (e.g., metformin, pioglitazone), antihyperlipidemic agents (e.g., gemfibrozil), pentoxifylline and
ursodeoxycholic acid (UDCA). There are several product candidates in Phase 3 or earlier clinical or preclinical
development for the treatment of MASH, including Novo Nordisk’s GLP1 agonist semaglutide, Eli Lilly’s GLP1R and
GIP dual agonist tirzepatide, Akero Therapeutics’s FGF21 analog efruxifermin, 89 Bio’s FGF21 analog pegaozafermin,
Inventiva’s pan-peroxisome proliferator-activated receptor agonist, Boston Pharmaceuticals and Roche’s fibroblast growth
factor 21 analogs, and farnesoid X receptor agonists from Intercept Pharmaceuticals Inc., among others. Additional
pharmaceutical and biotechnology companies with product candidates in development for the treatment of MASH include
AstraZeneca plc, Altimmune Inc., Boehringer Ingelheim GmbH, Bristol-Myers Squibb Company, Durect Corporation,
Galectin Therapeutics Inc., Galmed Pharmaceuticals Ltd., Immuron Ltd., Ionis Pharmaceuticals, Inc., Islet Sciences, Inc.,
MediciNova, Inc., NGM Biopharmaceuticals, Inc., NuSirt Sciences Inc., Pfizer Inc., Viking Therapeutics, Inc. and Zydus
Pharmaceuticals (USA) Inc. MASH is a complex disease and we believe that it is unlikely that any one therapeutic option
will be optimal for every MASH patient.
Obesity
Due to the growing overweight and obesity epidemic and consumer demand, there are many competitors in the field of
obesity treatment. Obesity treatments range from behavioral modification to drugs and medical devices, and surgery,
generally as a last resort. If DA-1726 were approved for obesity, our primary competition in the obesity treatment market
would currently be from approved and marketed products, including semaglutide (WEGOVY®) and tirzepatide
(Zepbound®). Further competition could arise from products currently in development, including among others, with
GLP1R/GCGR dual agonists, Boehringer Ingelheim, Merck/Hanmi Pharmaceutical, AstraZeneca, Altimmune, Innovent
Biologics/Eli Lilly, Carmot and D&D Pharma; with GLP1R/GCGR/GIP triple agonists, Hanmi Pharmaceutical and Eli
Lilly; Amgen with its GLP-1R agonist/GIP antagonist antibody; and Novo Nordisk with Amylin and Amylin-GLP-1
combination. To the extent any of our product candidates are approved for obesity, the commercial success of our product
will also depend on our ability to demonstrate benefits over the then-prevailing standard of care. Finally, morbidly obese
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patients sometimes undergo a gastric bypass procedure, with salutary effects on the many co-morbid conditions of
obesity.
T2DM
There are a number of large pharmaceutical and biotechnology companies that currently market and sell products or are
pursuing the development of products for T2DM. Some of these competitive products and therapies are based on
scientific approaches that are the same as or similar to our approach and others are based on entirely different approaches.
Potential competitors also include academic institutions, government agencies and other public and private research
organizations that conduct research, seek patent protection and establish collaborative arrangements for research,
development, manufacturing and commercialization.
Our commercial success depends upon attaining significant market acceptance of our product candidates, if approved,
among hospitals, physicians, patients and healthcare payors.
Even if we obtain regulatory approval for any of our product candidates that we may develop or acquire in the future, the
product may not gain market acceptance among hospitals, physicians, health care payors, patients, and the medical community.
Market acceptance of any of our product candidates for which we receive regulatory approval depends on a number of factors,
including:
●
the clinical indications for which the product candidate is approved;
●
acceptance by major operators of hospitals, physicians and patients of the product candidate as a safe and effective
treatment, particularly the ability of our product candidates to establish themselves as a new standard of care in the
treatment paradigm for the indications that we are pursuing;
●
the potential and perceived advantages of our product candidates over alternative treatments as compared to the
relative costs of the product candidates and alternative treatments;
●
the willingness of physicians to prescribe, and patients to take, a product candidate that is based on a botanical source;
●
the prevalence and severity of any side effects with respect to our product candidates, and any elements that may be
imposed by the FDA under a REMS program that could discourage market uptake of the products;
●
the availability of adequate reimbursement and pricing for any approved products by third party payors and
government authorities;
●
inability of certain types of patients to take our product;
●
demonstrated ability to treat patients and, if required by any applicable regulatory authority in connection with the
approval for target indications, to provide patients with incremental cardiovascular disease benefits, as compared with
other available therapies;
●
the relative convenience and ease of administration of our product candidates, including as compared with other
treatments available for approved indications;
●
limitations or warnings contained in the labeling approved by the FDA;
●
availability of alternative treatments already approved or expected to be commercially launched in the near future;
●
the effectiveness of our sales and marketing strategies;
●
guidelines and recommendations of organizations involved in research, treatment and prevention of various diseases
that may advocate for alternative therapies;
●
the willingness of patients to pay out-of-pocket in the absence of third-party coverage;
●
physicians or patients may be reluctant to switch from existing therapies even if potentially more effective, safe or
convenient;
●
efficacy, safety, and potential advantages compared to alternative treatments;
●
the ability to offer our product for sale at competitive prices;
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●
the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;
●
any restrictions on the use of our product together with other medications;
●
interactions of our product with other medicines patients are taking; and
●
the timing of market introduction of our products as well as competitive products.
There may be delays in getting our product candidates, if approved, on hospital or insurance formularies or limitations on
coverages that may be available in the early stages of commercialization for newly approved drugs. If any of our product
candidates are approved but fail to achieve market acceptance among hospitals, physicians, patients or health care payors, we
will not be able to generate significant revenues, which would have a material adverse effect on our business, prospects,
financial condition and results of operations.
Even if we are able to commercialize a future pharmaceutical drug candidate, the profitability of such product candidate will
likely depend in significant part on third-party reimbursement practices, which, if unfavorable, would harm our business.
Our ability to commercialize a drug successfully will depend in part on the extent to which coverage and adequate
reimbursement will be available from government health administration authorities, private health insurers and other
organizations. Government authorities and third-party payors, such as private health insurers and health maintenance
organizations, decide which medications they will pay for and establish reimbursement levels. Government authorities and
third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular
medications. Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts
from list prices and are challenging the prices charged for medical products. We cannot be sure that coverage will be available
for any product candidate that we commercialize and, if coverage is available, whether the level of reimbursement will be
adequate. Assuming we obtain coverage for our product candidates, if approved, by a third-party payor, the resulting
reimbursement payment rates may not be adequate or may require co-payments that patients find unacceptably high. Patients
who are prescribed medications for the treatment of their conditions, and their prescribing physicians, generally rely on third-
party payors to reimburse all or part of the costs associated with their prescription drugs. Patients are unlikely to use a product
candidate, if approved, unless coverage is provided, and reimbursement is adequate to cover all or a significant portion of the
cost of our products. Therefore, coverage and adequate reimbursement are critical to new product acceptance. If reimbursement
is not available or is available only to limited levels, we may not be able to successfully commercialize any product candidate
for which we obtain marketing approval.
There may be significant delays in obtaining reimbursement for newly approved drugs, and coverage may be more limited than
the purposes for which a product candidate is approved by the FDA or similar regulatory authorities outside the U.S. Moreover,
eligibility for reimbursement does not imply that any product will be paid for in all cases or at a rate that covers our costs,
including research, development, manufacture, sale and distribution. Interim reimbursement levels for a new product, if
applicable, may also not be sufficient to cover our costs and may not be made permanent. Reimbursement rates may vary
according to the use of the product and the clinical setting in which it is used, may be based on reimbursement levels already set
for lower cost medicines and may be incorporated into existing payments for other services. Net prices for products may be
reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future
relaxation of laws that presently restrict imports of medicines from countries where they may be sold at lower prices than in the
U.S. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement
policies. However, no uniform policy requirement for coverage and reimbursement for drug products exists among third-party
payors in the U.S. Therefore, coverage and reimbursement for drug products can differ significantly from payor to payor. As a
result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific
and clinical support for the use of our products to each payor separately with no assurance that coverage and adequate
reimbursement will be applied consistently or obtained in the first instance.
Our inability to promptly obtain coverage and profitable payment rates from both government-funded and private payors for
any approved products that we develop could have an adverse effect on our operating results, our ability to raise capital needed
to commercialize products and our overall financial condition.
We may engage in strategic transactions that could impact on our liquidity, increase our expenses and present significant
distractions to our management.
From time to time, we may consider strategic transactions, such as acquisitions of companies, asset purchases and out-licensing
or in-licensing of products, drug candidates or technologies. Additional potential transactions that we may consider include a
variety of different business arrangements, including spin-offs, strategic partnerships, joint ventures, restructurings,
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divestitures, business combinations and investments. Any such transaction may require us to incur non-recurring or other
charges, may increase our near- and long-term expenditures and may pose significant integration challenges or disrupt our
management or business, which could adversely affect our business, financial condition and results of operations. For example,
these transactions may entail numerous operational and financial risks, including:
●
exposure to unknown liabilities;
●
disruption of our business and diversion of our management’s time and attention in order to develop acquired
products, drug candidates, technologies or businesses;
●
incurrence of substantial debt or dilutive issuances of equity securities to pay for any of these transactions;
●
higher-than-expected transaction and integration costs;
●
write-downs of assets or goodwill or impairment charges;
●
increased amortization expenses;
●
difficulty and cost in combining the operations and personnel of any acquired businesses or product lines with our
operations and personnel; and
●
inability to retain key employees of any acquired business.
Accordingly, although there can be no assurance that we will undertake or successfully complete any transactions of the nature
described above, any transactions that we complete may be subject to the foregoing risk or other risks and could have a material
adverse effect on our business, financial condition and results of operations.
Product liability lawsuits against us could cause us to incur substantial liabilities and could limit commercialization of any
product candidate that we may develop.
We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical trials and
will face an even greater risk if we commercially sell any product that we may develop. Product liability claims might be
brought against us by patients, healthcare providers or others selling or otherwise coming into contact with any of our products
or future product candidates during product testing, manufacturing, marketing or sale. For example, we may be sued on
allegations that a product candidate caused injury or that the product is otherwise unsuitable. Any such product liability claims
may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product,
including as a result of interactions with alcohol or other drugs, negligence, strict liability, and a breach of warranties. Claims
could also be asserted under state consumer protection acts.
If we cannot successfully defend ourselves against claims that our product caused injuries, we could incur substantial liabilities.
Regardless of merit or eventual outcome, liability claims may result in:
●
decreased demand for any product candidate that we are developing;
●
injury to our reputation and significant negative media attention;
●
withdrawal of clinical trial participants;
●
increased FDA warnings on product labels;
●
significant costs to defend the related litigation;
●
substantial monetary awards to trial participants or patients;
●
distraction of management’s attention from our primary business;
●
loss of revenue;
●
the inability to commercialize any product candidate that we may develop;
●
the removal of a product from the market; and
●
increased insurance costs.
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If we or our third-party manufacturers fail to comply with environmental, health and safety laws and regulations, we could
become subject to fines or penalties or incur costs that could have an adverse effect on the success of our business.
Our R&D activities involve the controlled use of potentially hazardous substances, including chemical and biological materials,
by us and our third-party manufacturers. Our manufacturers are subject to federal, state and local laws and regulations in the
U.S. and abroad governing laboratory procedures and the use, manufacture, storage, handling and disposal of medical and
hazardous materials. Although we believe that our manufacturers’ procedures for using, handling, storing and disposing of these
materials comply with legally prescribed standards, we cannot completely eliminate the risk of contamination or injury resulting
from medical or hazardous materials. As a result of any such contamination or injury, we may incur liability or local, city, state
or federal authorities may curtail the use of these materials and interrupt our business operations. In the event of an accident, we
could be held liable for damages or penalized with fines, and the liability could exceed our resources. We do not have any
insurance for liabilities arising from medical or hazardous materials. Although we maintain workers’ compensation insurance to
cover us for costs and expenses, we may incur due to injuries to our employees resulting from the use of hazardous materials,
this insurance may not provide adequate coverage against potential liabilities. Compliance with applicable environmental,
health and safety laws and regulations are expensive, and current or future environmental regulations may impair our research,
development and production efforts, which could harm our business, prospects, financial condition or results of operations.
We rely and will continue to rely on collaborative partners regarding the development of our research programs and product
candidates.
We are and expect to continue to be dependent on collaborations with partners relating to the development and
commercialization of our existing and future research programs and product candidates. In particular, we rely on Dong-A to
provide services with respect to our development of DA-1241 and DA-1726. In addition, we have had, have and will continue
to have discussions on potential partnering opportunities with various pharmaceutical companies. If we fail to enter into or
maintain collaborative agreements on reasonable terms or at all, our ability to develop our existing or future research programs
and product candidates could be delayed, the commercial potential of our products could change, and our costs of development
and commercialization could increase.
Our dependence on collaborative partners subjects us to a number of risks, including, but not limited to, the following:
●
We may not be able to control the amount or timing of resources that collaborative partners devote to our research
programs and product candidates;
●
We may be required to relinquish significant rights, including intellectual property, marketing and distribution rights;
●
We rely on the information and data received from third parties regarding our research programs and product
candidates and will not have control of the process conducted by the third party in gathering and composing such data
and information. We may not have formal or appropriate guarantees from our contract parties with respect to the
quality and the completeness of such data;
●
A collaborative partner may develop a competing product either by itself or in collaboration with others, including one
or more of our competitors;
●
Our collaborative partners’ willingness or ability to complete their obligations under our collaboration arrangements
may be adversely affected by business combinations or significant changes in a collaborative partner’s business
strategy; and/or
●
We may experience delays in, or increases in the costs of, the development of our research programs and product
candidates due to the termination or expiration of collaborative R&D arrangements.
If, in the future, we are unable to establish sales and marketing capabilities or to selectively enter into agreements with third
parties to sell and market our product candidates, we may not be successful in commercializing our product candidates if
and when they are approved.
We do not have sales or marketing infrastructure and have no experience in the sale, marketing or distribution of pharmaceutical
products. To achieve commercial success for any approved product for which we retain sales and marketing responsibilities, we
must either develop a sales and marketing organization or outsource these functions to other third parties. In the future, we may
choose to build a focused sales and marketing infrastructure to sell some of our product candidates if and when they are
approved.
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There are risks involved both with establishing our own sales and marketing capabilities and with entering into arrangements
with third parties to perform these services. For example, recruiting and training a sales force is expensive and time-consuming
and could delay any product launch. If the commercial launch of a product candidate for which we recruit a sales force and
establish marketing capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily
incurred these commercialization expenses. This may be costly, and our investment would be lost if we cannot retain or
reposition our sales and marketing personnel.
Factors that may inhibit our efforts to commercialize our product candidates on our own include:
●
our inability to recruit and retain adequate numbers of effective sales and marketing personnel;
●
the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe
any future pharmaceutical products; and
●
unforeseen costs and expenses associated with creating an independent sales and marketing organization.
If we enter into arrangements with third parties to perform sales, marketing and distribution services, our product revenue or the
profitability of these product revenues may be lower than if we were to market and sell any products that we develop ourselves.
In addition, we may not be successful in entering into arrangements with third parties to sell and market our product candidates
or may be unable to do so on terms that are favorable to us. We may have little control over such third parties, and any of them
may fail to devote the necessary resources and attention to sell and market our products effectively. If we do not establish sales
and marketing capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in
commercializing our product candidates.
Any product candidate for which we obtain marketing approval could be subject to marketing restrictions or withdrawal
from the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience
unanticipated problems with our products.
Any pharmaceutical product candidate for which we obtain marketing approval will be subject to continual requirements of and
review by the FDA and other regulatory authorities. These requirements include submissions of safety and other post-marketing
information and reports, registration and listing requirements, cGMP requirements, quality assurance and corresponding
maintenance of records and documents and requirements regarding the distribution of samples to physicians and recordkeeping.
Even if the marketing approval of a product candidate is granted, the approval may be subject to limitations on the indicated
uses for which the product may be marketed or to the conditions of approval, or contain requirements for costly post-marketing
testing and surveillance to monitor the safety or efficacy of the medicine. The FDA closely regulates the post-approval
marketing and promotion of drugs to ensure that they are marketed only for the approved indications and in accordance with the
provisions of the approved labeling. The FDA imposes stringent restrictions on manufacturers’ communications regarding off-
label use and if we do not market our products for their approved indications, we may be subject to enforcement action for off-
label marketing and/or promotion.
In addition, later discovery of previously unknown problems with our products, manufacturers or manufacturing processes, or
failure to comply with regulatory requirements, may result in, among other things:
●
restrictions on such products, manufacturers or manufacturing processes;
●
restrictions on the labeling, marketing, distribution or use of a product;
●
requirements to conduct post-approval clinical trials;
●
warning or untitled letters;
●
withdrawal of the products from the market;
●
refusal to approve pending applications or supplements to approved applications that we submit;
●
recall of products;
●
fines, restitution or disgorgement of profits or revenue;
●
suspension or withdrawal of marketing approvals for the drug products;
●
refusal to permit the import or export of our products;
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●
product seizure; and
●
injunctions or the imposition of civil or criminal penalties.
We or any potential collaborator may never receive regulatory approval to market our product candidates outside of the U.S.
The activities associated with the development and commercialization of pharmaceutical drugs are subject to comprehensive
regulation by the FDA, other regulatory agencies in the U.S. and by comparable authorities in other countries. Failure to obtain
regulatory approval for our product candidates will prevent us or any potential collaborator from commercializing our product
candidates as pharmaceutical drugs. We have not received regulatory approval to market any of our product candidates in any
jurisdiction, and we do not expect to obtain FDA or any other regulatory approvals to market any of our product candidates for
the foreseeable future, if at all. The process of obtaining regulatory approvals is expensive, often takes many years, if approval
is obtained at all, and can vary substantially based upon the type, complexity and novelty of the product candidates involved.
We may seek to avail ourselves of mechanisms to expedite and/or reduce the cost for development or approval of any of our
product candidates or product candidates we may pursue in the future, such as Fast Track designation or orphan drug
designation, but such mechanisms may not actually lead to a faster or less expensive development or regulatory review or
approval process.
We may seek Fast Track designation, priority review, orphan drug designation, or accelerated approval for any product
candidate we may pursue in the future. For example, if a drug is intended for the treatment of a serious or life-threatening
condition and the drug demonstrates the potential to address unmet medical needs for this condition, the drug sponsor may
apply for FDA Fast Track designation. However, the FDA has broad discretion with regard to these mechanisms, and even if we
believe a particular product candidate is eligible for any such mechanism, we cannot assure you that the FDA would decide to
grant it. Even if we obtain Fast Track or priority review designation or pursue an accelerated approval pathway, we may not
experience a faster and/or less costly development process, review or approval compared to conventional FDA procedures. The
FDA may withdraw a particular designation if it believes that the designation is no longer supported by data from our clinical
development program.
Current and future legislation may increase the difficulty and cost of obtaining marketing approval and commercialization
of our product candidates and affect the prices we may obtain.
In the U.S. and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed
changes regarding the healthcare system that could prevent or delay marketing approval of our product candidates, restrict post-
approval activities and affect our ability to profitably sell any product candidates for which we obtain marketing approval. See
the section titled “Government Regulation” in above Item 1. Business.
Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional
activities for pharmaceutical products. We cannot be sure whether additional legislative changes will be enacted, or whether
FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing approvals, if
any, of our product candidates may be. In addition, increased scrutiny by the U.S. Congress of the FDA's approval process may
significantly delay or prevent marketing approval, as well as subject us to more stringent product labeling and post-marketing
conditions and other requirements.
Governments outside the U.S. tend to impose strict price controls, which may adversely affect our revenues, if any.
In some countries, particularly the countries of the European Union, the pricing of prescription pharmaceuticals is subject to
governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after the
receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we may be
required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to other available therapies. If
reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our
business could be materially harmed.
Our relationships with healthcare providers and third-party payors will be subject to applicable anti-kickback, fraud and
abuse and other healthcare laws and regulations, which could expose us to criminal sanctions, civil penalties, contractual
damages, reputational harm and diminished profits and future earnings, among other penalties and consequences.
Healthcare providers and third-party payors will play a primary role in the recommendation and prescription of any product
candidate for which we obtain marketing approval. Our arrangements with third-party payors and customers may expose us to
broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or financial
arrangements and relationships through which we market, sell and distribute any product candidate for which we obtain
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marketing approval. Restrictions and obligations under applicable federal and state healthcare laws and regulations are noted in
“Government Regulation” in above Item 1. Business.
Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations
will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not
comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and
regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may
apply to it, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment,
exclusion of products from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or
restructuring of our operations. If any of the physicians or other healthcare providers or entities with whom we expect to do
business is found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative
sanctions, including exclusions from government funded healthcare programs.
We are subject to U.S. and certain foreign export and import controls, sanctions, embargoes, anti-corruption laws, and anti-
money laundering laws and regulations. Compliance with these legal standards could impair our ability to compete in
domestic and international markets. We can face criminal liability and other serious consequences for violations which can
harm our business.
We are subject to export control and import laws and regulations, including the U.S. Export Administration Regulations, U.S.
Customs regulations, various economic and trade sanctions regulations administered by the U.S. Treasury Department’s Office
of Foreign Assets Controls, the U.S. Foreign Corrupt Practices Act of 1977, as amended, the U.S. domestic bribery statute
contained in 18 U.S.C. § 201, the U.S. Travel Act, the USA PATRIOT Act, and other state and national anti-bribery and anti-
money laundering laws in the countries in which we conduct activities. Anti-corruption laws are interpreted broadly and
prohibit companies and their employees, agents, contractors, and other partners from authorizing, promising, offering, or
providing, directly or indirectly, improper payments or anything else of value to recipients in the public or private sector. We
may engage third parties for clinical trials outside of the U.S. to sell our products abroad and/or to obtain necessary permits,
licenses, patent registrations, and other regulatory approvals. We have direct or indirect interactions with officials and
employees of government agencies or government-affiliated hospitals, universities, and other organizations. We can be held
liable for the corrupt or other illegal activities of our employees, agents, contractors, and other partners, even if it does not
explicitly authorize or have actual knowledge of such activities. Our violations of the laws and regulations described above may
result in substantial civil and criminal fines and penalties, imprisonment, the loss of export or import privileges, debarment, tax
reassessments, breach of contract and fraud litigation, reputational harm, and other consequences.
Our ability to use our NOLs to offset future taxable income may be subject to certain limitations.
In general, under Section 382 of Internal Revenue Code of 1986, as amended (the “Code”), a corporation that undergoes an
“ownership change” is subject to limitations on its ability to utilize carryforwards to offset future taxable income. Our existing
net operating loss (“NOL”) carryforwards were subject to limitation arising from an ownership change related to the Dong-A
Financing and the underwritten public offering we closed on in November 2022. Future changes in our stock ownership, some
of which are outside of our control, could result in further ownership changes under Section 382 of the Code. There is also a
risk that due to regulatory changes, such as suspensions on the use of NOL carryforwards, or other unforeseen reasons, our
existing and any future NOL carryforwards could expire or otherwise be unavailable to offset future income tax liabilities.
Tax matters, including the changes in corporate tax rates, disagreements with taxing authorities and imposition of new taxes
could impact the results of our operations and financial condition.
We are subject to income and other taxes in the U.S. and our operations, plans and results are affected by tax and other
initiatives. In 2017, comprehensive changes to the Code were signed into law, informally titled the Tax Cuts and Jobs Act (the
“Tax Act”). The Tax Act included significant changes that could materially impact the taxation of corporations, like us,
including among other things, changes to the corporate income tax rate, limitation of the tax deduction for interest expense to
business interest income plus 30% of adjusted taxable income (except for certain small businesses), immediate deductions for
certain new investments instead of deductions for depreciation expense over time, and modifying or repealing many business
deductions and credits (including changes to the orphan drug tax credit and changes to the deductibility of research and
experimental expenditures that will be effective in the future). The Tax Act also included a limitation of the deduction for net
operating losses (“NOLs”) generated in tax years beginning after 2017 to 80% of current year taxable income and the general
elimination of carrybacks of NOLs generated in taxable years ending after 2017. However, the Coronavirus Aid, Relief, and
Economic Security Act signed into law in 2020, provided that NOLs generated in a taxable year beginning in 2018, 2019 or
2020, may now be carried back five years. In addition, the 80% taxable income limitation is temporarily removed, allowing
NOLs to fully offset net taxable income. Notwithstanding the reduction in the corporate income tax rate, the overall impact of
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the Tax Act and any future tax reform is uncertain and our business and financial condition could be adversely affected. The
impact of the Tax Act and any future tax reform on holders of our common stock is likewise uncertain and could be adverse.
We are also subject to regular reviews, examinations, and audits by the IRS and other taxing authorities with respect to our
taxes. Although we believe our tax estimates are reasonable, if a taxing authority disagrees with the positions we have taken, we
could face additional tax liability, including interest and penalties. There can be no assurance that payment of such additional
amounts upon final adjudication of any disputes will not have a material impact on our results of operations and financial
position.
We also need to comply with new, evolving or revised tax laws and regulations. The enactment of or increases in tariffs, or other
changes in the application or interpretation of the Tax Act, or on specific products that we may ultimately sell or with which our
products compete, may have an adverse effect on our business or on our results of operations.
Inadequate funding of the FDA and other government agencies could hinder their ability to hire and retain key leadership
and other personnel, prevent new products and services from being developed or commercialized in a timely manner or
otherwise prevent those agencies from performing normal business functions on which the operation of our business may
rely, which could negatively impact our business.
The ability of the FDA to review and approve new products can be affected by a variety of factors, including government
budget and funding levels, the ability to hire and retain key personnel and accept the payment of user fees, and statutory,
regulatory and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition,
government funding of other government agencies on which the combined organization’s operations may rely, including those
that fund R&D activities is subject to the political process, which is inherently fluid and unpredictable.
Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be reviewed and/or approved by
necessary government agencies, which would adversely affect our business. For example, over the last several years the U.S.
government has shut down several times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA
and other government employees and stop critical activities. If a prolonged government shutdown occurs, it could significantly
impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse
effect on our business. Further, in our operations as a public company, future government shutdowns could impact our ability to
access the public markets and obtain necessary capital in order to properly capitalize and continue our operations.
Federal legislation and actions by state and local governments may permit reimportation of drugs from foreign countries
into the U.S., including foreign countries where the drugs are sold at lower prices than in the U.S., which could adversely
affect our operating results.
We may face competition for our product candidates, if approved, from cheaper alternatives sourced from foreign countries that
have placed price controls on pharmaceutical products. For example, in October 2020, the FDA published a final rule that
would allow for the importation of certain prescription drugs from Canada, where there are government price controls. In
January 2024, the FDA approved Florida’s request to import certain lower-priced medications from Canada. While the full
implications of the final rule are currently unknown, legislation or regulations allowing the reimportation of drugs could
decrease the price we receive for any products we may develop and adversely affect our future revenues and potential
profitability.
Risks related to dependence on third parties
We have relied and will rely on third-party clinical research organizations (CROs) to conduct our preclinical studies and
clinical trials. If these CROs do not successfully carry out their contractual duties or meet expected deadlines, we may not be
able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially
harmed.
We have relied upon and plan to continue to rely upon CROs and clinical data management organizations to monitor and
manage data for our ongoing preclinical and clinical programs. Although we control only certain aspects of their activities, we
are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol and legal,
regulatory and scientific standards, and our reliance on the CROs does not relieve us of our regulatory responsibilities. We also
rely on third parties to conduct our preclinical studies in accordance with Good Laboratory Practice (“GLP”) requirements and
the Laboratory Animal Welfare Act of 1966 requirements. We, our CROs and our clinical trial sites are required to comply with
regulations and current GCP, and comparable foreign requirements to ensure that the health, safety and rights of patients are
protected in clinical trials, and that data integrity is assured. Regulatory authorities ensure compliance with GCP requirements
through periodic inspections of trial sponsors and trial sites. If we, any of our CROs or our clinical trial sites fail to comply with
applicable GCP requirements, the clinical data generated in our clinical trials, or a specific site may be deemed
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unreliable, and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before
approving our marketing applications.
Our CROs are not our employees, and except for remedies available to us under our agreements with such CROs, we cannot
control whether or not they devote sufficient time and resources to our ongoing clinical programs. If CROs do not successfully
carry out their contractual obligations or meet expected timelines or if the quality or accuracy of the clinical data they obtain is
compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical
trials may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully
commercialize our product candidates. As a result, our results of operations and the commercial prospects for our product
candidates would be harmed, our costs could increase and our ability to generate revenues could be delayed.
We rely on third parties to manufacture our product candidates and preclinical and clinical drug supplies.
We have no experience manufacturing our product candidates on a large clinical or commercial scale and have no
manufacturing facility. We currently have no plans to build our own clinical or commercial scale manufacturing capabilities. We
currently work exclusively with Dong-A as the sole manufacturer for the production of DA-1241 and DA-1726. To meet our
projected needs for clinical supplies to support our activities for DA-1241 and DA-1726 through regulatory approval and
commercial manufacturing, Dong-A will need to provide sufficient scale of production for these projected needs. If any issues
arise in the manufacturing and we are unable to arrange for alternative third-party manufacturing sources, we are unable to find
an alternative third party capable of reproducing the existing manufacturing method or we are unable to do so on commercially
reasonable terms or in a timely manner, we may not be able to complete the development of our product candidates, or market
or distribute them.
Reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured our product candidates
and preclinical and clinical drug supplies, including:
●
reliance on the third party for regulatory compliance and quality assurance;
●
the possibility of breach of the manufacturing agreement by the third party because of factors beyond our control
(including a failure to synthesize and manufacture our product candidates or any products that we may eventually
commercialize in accordance with our specifications);
●
the possibility of termination or nonrenewal of the agreement by the third party, based on our own business priorities,
at a time that is costly or damaging to us;
●
delay in, or failure to obtain, regulatory approval of any of our product candidates because of the failure by our third-
party manufacturer to comply with cGMP or failure to scale up manufacturing processes; and
●
current manufacturer and any future manufacturers may not be able to manufacture our product candidates at a cost or
in quantities or in a timely manner necessary to make commercially successful products.
If third-party manufacturers do not successfully carry out their contractual obligations or meet expected timelines or if the
quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols,
regulatory requirements or for other reasons, our clinical trials may be extended, delayed or terminated and we may not be able
to obtain regulatory approval for or successfully commercialize our product candidates.
We may engage in future acquisitions, mergers or in-licenses and out-licenses of technology that could disrupt our business,
cause dilution to the organization’s stockholders and harm our financial condition and operating results.
We may, in the future, make acquisitions or licenses of, or investments in, companies, products or technologies that we believe
are a strategic or commercial fit with our current product candidates and business or otherwise offer opportunities for us. In
connection with these acquisitions, mergers or investments, the organization may:
●
issue stock that would dilute our stockholders’ percentage of ownership;
●
expend cash;
●
incur debt and assume liabilities; and
●
incur amortization expenses related to intangible assets or incur large and immediate write-offs.
We also may be unable to find suitable acquisition, merger or license candidates and we may not be able to complete
acquisitions, mergers or licenses on favorable terms, if at all. If we do complete an acquisition, merger or license, we cannot
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assure you that it will ultimately strengthen our competitive position or that it will not be viewed negatively by customers,
financial markets or investors. Further, future acquisitions, mergers or licenses could also pose numerous additional risks to our
operations, including:
●
problems integrating the purchased or licensed business, products or technologies;
●
increases to our expenses;
●
the failure to have discovered undisclosed liabilities of the acquired or licensed asset or company;
●
diversion of management’s attention from their day-to-day responsibilities;
●
harm to our operating results or financial condition;
●
entrance into markets in which we have limited or no prior experience; and
●
potential loss of key employees, particularly those of the acquired entity.
We may not be able to complete one or more acquisitions or mergers or effectively integrate the operations, products or
personnel gained through any such acquisition without a material adverse effect on our business, financial condition and results
of operations.
We may form or seek strategic alliances or enter into additional licensing arrangements in the future, and we may not realize
the benefits of such alliances or licensing arrangements.
We may form or seek strategic alliances, create joint ventures or collaborations or enter into additional licensing arrangements
with third parties that we believe will complement or augment our development and commercialization efforts with respect to
our products and any future product candidates that we may develop. Any strategic alliance or collaboration may require us to
incur non-recurring and other charges, increase our near and long-term expenditures, issue securities that dilute our existing
stockholders or disrupt our management and business. Our likely collaborators include large and mid-size pharmaceutical
companies, regional and national pharmaceutical companies and biotechnology companies. If we enter into any such
arrangements with any third parties, we will likely have limited control over the amount and timing of resources that our
collaborators dedicate to the development or commercialization of our products or any future product candidate. Our ability to
generate revenues from these arrangements will depend on our collaborators’ abilities to successfully perform the functions
assigned to them in these arrangements. We cannot be certain that, following a strategic transaction or license, we will achieve
the revenue or specific net income that justifies such transaction.
Collaborations involving our product candidates, or any future product candidate pose the following risks to us:
●
collaborators have significant discretion in determining the efforts and resources that they will apply to these
collaborations;
●
collaborators may not perform their obligations as expected;
●
collaborators may not pursue development and commercialization or may elect not to continue or renew development
or commercialization programs based on clinical trial results, changes in the collaborator’s strategic focus or available
funding or external factors such as an acquisition that diverts resources or creates competing priorities;
●
collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical trial or
abandon a product candidate, repeat or conduct new clinical trials or require a new formulation of a product candidate
for clinical testing;
●
collaborators could independently develop, or develop with third parties, products that compete directly or indirectly
with our product candidates if the collaborators believe that competitive products are more likely to be successfully
developed or can be commercialized under terms that are more economically attractive;
●
a collaborator with marketing and distribution rights to one or more product candidates may not commit sufficient
resources to the marketing and distribution of any such product candidate;
●
collaborators may not properly maintain or defend our intellectual property rights or may use our proprietary
information in such a way as to invite litigation that could jeopardize or invalidate our proprietary information or
expose us to potential litigation;
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●
collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and
potential liability;
●
disputes may arise between the collaborators and us that result in the delay or termination of the research, development
or commercialization of our product candidate or that result in costly litigation or arbitration that diverts
management’s attention and resources;
●
we may lose certain valuable rights under circumstances identified in our collaborations, including if we undergo a
change of control;
●
collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue further
development or commercialization of the applicable product candidates;
●
collaborators may learn about our discoveries and use this knowledge to compete with us in the future;
●
the results of collaborators’ preclinical or clinical studies could harm or impair other development programs;
●
there may be conflicts between different collaborators that could negatively affect those collaborations and potentially
others;
●
the number and type of our collaborations could adversely affect our attractiveness to future collaborators or acquirers;
●
collaboration agreements may not lead to the development or commercialization of our product candidate in the most
efficient manner or at all. If our present or future collaborator were to be involved in a business combination, the
continued pursuit and emphasis on our product development or commercialization program under such collaboration
could be delayed, diminished or terminated; and
●
collaborators may be unable to obtain the necessary marketing approvals.
If future collaboration partners fail to develop or effectively commercialize our product candidates or any future product
candidate for any of these reasons, such candidate may not be approved for sale and our sales of such product candidate, if
approved, may be limited, which would have an adverse effect on our operating results and financial condition.
Our employees, principal investigators, CROs and consultants may engage in misconduct or other improper activities,
including noncompliance with regulatory standards and requirements, which could have a material adverse effect on our
business.
We are exposed to the risk that our employees, principal investigators, CROs and consultants may engage in fraudulent conduct
or other illegal activity. Misconduct by these parties could include failures to comply with FDA regulations or similar
regulations of comparable foreign regulatory authorities, to provide accurate information to the FDA or comparable foreign
regulatory authorities, to comply with manufacturing standards we have established, to comply with federal and state healthcare
fraud and abuse laws and regulations and similar laws and regulations established and enforced by comparable foreign
regulatory authorities, to report financial information or data accurately or to disclose unauthorized activities to us. In particular,
sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to
prevent fraud, kickbacks, self-dealing and other abusive practices. These laws and regulations may restrict or prohibit a wide
range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business
arrangements. Employee or third-party misconduct could also involve the improper use of information obtained in the course of
clinical trials, which could result in regulatory sanctions and serious harm to our reputation. It is not always possible to identify
and deter employee misconduct, and the precautions we take to detect and prevent this activity, such as employee training, may
not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or
other actions or lawsuits stemming from failure to be in compliance with such laws or regulations. If any such actions are
instituted against us, and we are not successful in defending such action or asserting our rights, those actions could have a
significant impact on our business and results of operations, including the imposition of significant fines or other sanctions.
Risks related to intellectual property
If we are unable to obtain and maintain sufficient intellectual property rights, our competitive position could be harmed.
We depend on our ability to protect our proprietary technology. We rely on trade secrets, patents, copyright and trademark laws,
and confidentiality, licensing and other agreements with employees and third parties, all of which offer only limited protection.
Our success depends in large part on our ability to obtain and maintain patent protection in the U.S. and other
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countries with respect to our proprietary technology and products. Where we have the right to do so under our license
agreements, we seek to protect our proprietary position by filing patent applications in the U.S. and abroad related to our novel
technologies and products that are important to our business.
The patent positions of pharmaceutical and biotechnology companies generally are highly uncertain, involve complex legal and
factual questions and have in recent years been the subject of much litigation. As a result, the issuance, scope, validity,
enforceability and commercial value of our patents, including those patent rights licensed to us by third parties, are highly
uncertain.
The steps we have taken to police and protect our proprietary rights may not be adequate to preclude misappropriation of our
proprietary information or infringement of our intellectual property rights, both inside and outside the U.S. The rights already
granted under any of our currently issued patents and those that may be granted under future issued patents may not provide us
with the proprietary protection or competitive advantages that we are seeking. If we are unable to obtain and maintain patent
protection for our technology and products, or if the scope of the patent protection obtained is not sufficient, our competitors
could develop and commercialize technology and products similar or superior to ours, and our ability to successfully
commercialize our technology and products may be adversely affected.
With respect to patent rights, we do not know whether any of our pending patent applications for any of our product candidates
will result in the issuance of patents that protect our technology or products, or which will effectively prevent others from
commercializing competitive technologies and products. Our pending applications cannot be enforced against third parties
practicing the technology claimed in such applications unless and until a patent is issued from such applications. Further, the
examination process may require us or our licensors to narrow the claims, which may limit the scope of patent protection that
may be obtained. Although our license agreement with Dong-A includes a number of issued patents that are exclusively
licensed to us, the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, issued patents
that we own or have licensed from third parties may be challenged in the courts or patent offices in the U.S. and abroad. Such
challenges may result in the loss of patent protection, the narrowing of claims in such patents, or the invalidity or
unenforceability of such patents, which could limit our ability to stop others from using or commercializing similar or identical
technology and products or limit the duration of the patent protection for our technology and products. Protecting against the
unauthorized use of our patented technology, trademarks and other intellectual property rights is expensive, difficult and may, in
some cases, not be possible. In some cases, it may be difficult or impossible to detect third party infringement or
misappropriation of our intellectual property rights, even in relation to issued patent claims, and proving any such infringement
may be even more difficult.
We may not be able to protect or practice our intellectual property rights throughout the world.
In jurisdictions where we have not obtained patent protection, competitors may use our intellectual property to develop their
own products and further, may export otherwise infringing products to territories where we have patent protection, but where it
is more difficult to enforce a patent as compared to the U.S. competitor products may compete with our product candidates, if
approved, or any future product candidate in jurisdictions where we do not have issued or granted patents or where we issued or
granted patent claims or other intellectual property rights are not sufficient to prevent competitor activities in these jurisdictions.
The legal systems of certain countries, particularly certain developing countries, make it difficult to enforce patents and such
countries may not recognize other types of intellectual property protection, particularly that relating to pharmaceuticals. This
could make it difficult for us to prevent the infringement of our patents or marketing of competing products in violation of our
proprietary rights generally in certain jurisdictions. Proceedings to enforce our patent rights in foreign jurisdictions could result
in substantial cost and divert our efforts and attention from other aspects of our business.
The laws of some jurisdictions do not protect intellectual property rights to the same extent as the laws in the U.S., and many
companies have encountered significant difficulties in protecting and defending such rights in such jurisdictions. If we, or our
licensors, encounter difficulties in protecting, or are otherwise precluded from effectively protecting, the intellectual property
rights important for our business in such jurisdictions, the value of these rights may be diminished, and we may face additional
competition from others in those jurisdictions. Many countries have compulsory licensing laws under which a patent owner may
be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government
agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially
diminish the value of such patent. If we, or any of our licensors, are forced to grant a license to third parties with respect to any
patents relevant to our business, our competitive position in the relevant jurisdiction may be impaired and our business and
results of operations may be adversely affected.
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We may become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time-
consuming and unsuccessful.
In addition to the possibility of litigation relating to infringement claims asserted against us, we may become a party to other
patent litigation and other proceedings, including inter partes review proceedings, post-grant review proceedings, derivation
proceedings declared by the USPTO and similar proceedings in foreign countries, regarding intellectual property rights with
respect to our current or future technologies or product candidates or products. The cost to us of any patent litigation or other
proceeding, even if resolved in our favor, could be substantial. Some of our competitors may be able to sustain the costs of such
litigation or proceedings more effectively than we can because of their substantially greater financial resources. Patent litigation
and other proceedings may also absorb significant management time. Uncertainties resulting from the initiation and
continuation of patent litigation or other proceedings could impair our ability to compete in the marketplace.
Competitors may infringe or otherwise violate our intellectual property, including patents that may be issued to or be licensed
by us. As a result, we may be required to file claims in an effort to stop third-party infringement or unauthorized use. Any such
claims could provoke these parties to assert counterclaims against us, including claims alleging that we infringe their patents or
other intellectual property rights. This can be prohibitively expensive, particularly for a company of our size, and time-
consuming, and even if we are successful, any award of monetary damages or other remedy we may receive may not be
commercially valuable. In addition, in an infringement proceeding, a court may decide that our asserted intellectual property is
not valid or is unenforceable or may refuse to stop the other party from using the technology at issue on the grounds that our
intellectual property does not cover our technology. An adverse determination in any litigation or defense proceedings could put
our intellectual property at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not
being issued.
If the breadth or strength of our patent or other intellectual property rights is compromised or threatened, it could allow third
parties to commercialize our technology or products or result in our inability to commercialize our technology and products
without infringing third-party intellectual property rights. Further, third parties may be dissuaded from collaborating with us.
Interference or derivation proceedings brought by the USPTO or its foreign counterparts may be necessary to determine the
priority of inventions with respect to our patent applications, and we may also become involved in other proceedings, such as
re-examination proceedings, before the USPTO or its foreign counterparts. Due to the substantial competition in the
pharmaceutical space, the number of such proceedings may increase. This could delay the prosecution of our pending patent
applications or impact the validity and enforceability of any future patents that we may obtain. In addition, any such litigation,
submission or proceeding may be resolved adversely to us and, even if successful, may result in substantial costs and distraction
to our management.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is
a risk that some of our confidential information could be compromised by disclosure during this type of litigation. Moreover,
intellectual property law relating to the fields in which we operate is still evolving and, consequently, patent and other
intellectual property positions in our industry are subject to change and are often uncertain. We may not prevail in any of these
suits or other efforts to protect our technology, and the damages or other remedies awarded, if any, may not be commercially
valuable. During the course of this type of litigation, there could be public announcements of the results of hearings, motions or
other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, the market
price for the combined organization’s common stock could be significantly harmed.
Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of
which would be uncertain and could have a material adverse effect on the success of our business.
Our commercial success depends upon our ability to develop, manufacture, market and sell our product candidates, and to use
our proprietary technologies without infringing the proprietary rights of third parties. We may become party to, or threatened
with, future adversarial proceedings or litigation regarding intellectual property rights with respect to our products and
technology, including interference and various post grant proceedings before the USPTO or non-U.S. opposition proceedings.
Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future.
As a result of any such infringement claims, or to avoid potential claims, we may choose or be compelled to seek intellectual
property licenses from third parties. These licenses may not be available on acceptable terms, or at all. Even if we are able to
obtain a license, the license would likely obligate us to pay license fees or royalties or both, and the rights granted to us likely
would be nonexclusive, which would mean that our competitors also could obtain licenses to the same intellectual property.
Ultimately, we could be prevented from commercializing a product candidate or technology or be forced to cease some aspects
of our business operations if, as a result of actual or threatened infringement claims, we are unable to enter into licenses of the
relevant intellectual property on acceptable terms. Further, if we attempt to modify a product candidate or technology or to
develop alternative methods or products in response to infringement claims or to avoid potential claims, we could incur
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substantial costs, encounter delays in product introductions or interruptions in sales. Ultimately, such efforts could be
unsuccessful.
Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal
responsibilities.
Litigation or other legal proceedings relating to intellectual property claims, with or without merit, is unpredictable and
generally expensive and time consuming and is likely to divert significant resources from our core business, including
distracting our technical and management personnel from their normal responsibilities. Furthermore, because of the substantial
amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential
information could be compromised by disclosure during this type of litigation. In addition, there could be public announcements
of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive
these results to be negative, it could have a substantial adverse effect on the price of our common stock and negatively impact
our ability to raise additional funds. Such litigation or proceedings could substantially increase our operating losses and reduce
the resources available for development activities or any future sales, marketing or distribution activities.
We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our
competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their
greater financial resources and more mature and developed intellectual property portfolios. Accordingly, despite our efforts, we
may not be able to prevent third parties from infringing upon, misappropriating or successfully challenging our intellectual
property rights. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have a
material adverse effect on our ability to compete in the marketplace.
We may be subject to damages resulting from claims that our employees or we have wrongfully used or disclosed alleged
trade secrets of their former employers.
Our employees and consultants have been previously employed at other biotechnology or pharmaceutical companies, including
our competitors or potential competitors. Although we are not aware of any claims currently pending against us, we may be
subject to claims that these employees, or we have, inadvertently or otherwise used or disclosed trade secrets or other
proprietary information or intellectual property of the former employers of our employees. Litigation may be necessary to
defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial
costs and be a distraction to management. If we fail in defending such claims, in addition to paying money claims, we may lose
valuable intellectual property rights or personnel. A loss of key personnel or their work product could hamper or prevent our
ability to commercialize product candidates, which would adversely affect our commercial development efforts.
Our trade secrets are difficult to protect and if we are unable to protect the confidentiality of our trade secrets, our business
and competitive position would be harmed.
In addition to seeking patents for some of our technologies and product candidates, we also rely on trade secrets, including
unpatented know-how, technology and other proprietary information, to maintain our competitive position. We seek to protect
these trade secrets, in part, by entering into non-disclosure and confidentiality agreements with parties who have access to them,
such as our employees, corporate collaborators, outside scientific collaborators, contract manufacturers, consultants, advisors
and other third parties. We also enter into confidentiality, non-competition, non-solicitation, and invention assignment
agreements with our employees and consultants that obligate them to assign to us any inventions developed in the course of
their work for us. However, we cannot guarantee that we have executed these agreements with each party that may have or have
had access to our trade secrets or that the agreements we have executed will provide adequate protection. Despite these efforts,
any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we
may not be able to seek patent protection on technology relating to our product candidates or obtain adequate remedies for such
breaches. As a result, we may be forced to bring claims against third parties, or defend claims that they bring against us, to
determine ownership of what we regard as our intellectual property. Monitoring unauthorized disclosures is difficult and we do
not know whether the procedures that we have followed to prevent such disclosure are or will be adequate. Enforcing a claim
that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is
unpredictable. In addition, some courts inside and outside the U.S. may be less willing or unwilling to protect trade secrets.
Furthermore, if any of the technology or information that we protect as trade secrets were to be lawfully obtained or
independently developed by a competitor, we would have no right to prevent them from using that technology or information to
compete with us. If any of our trade secrets were to be disclosed to, or independently developed by, a competitor, our
competitive position would be harmed.
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Our ability to obtain and maintain our patent protection depends on compliance with various procedural, documentary, fee
payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or
eliminated for non-compliance with these requirements.
Periodic maintenance fees on any issued patent are due to be paid to the USPTO, and foreign patent agencies in several stages
over the lifetime of the patent. The USPTO and various foreign governmental patent agencies require compliance with a
number of procedural, documentary, fee payment and other requirements during the patent application process. While an
inadvertent lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules,
there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in
partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or
lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time
limits, non-payment of fees and failure to properly legalize and submit formal documents. If we or our licensors fail to maintain
the patents and patent applications covering our product candidates, our competitors might be able to enter the market, which
would have a material adverse effect on our business.
Intellectual property rights do not necessarily address all potential threats to our competitive advantage.
The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have
limitations, and may not adequately protect our business or permit us to maintain our competitive advantage. For example:
●
others may be able to make product candidates that are similar to our product candidates but that are not covered by
the claims of the patents that we own or have exclusively licensed;
●
we or our future licensors or collaborators might not have been the first to make the inventions covered by the issued
patent or pending patent application that we own or have exclusively licensed;
●
we or our future licensors or collaborators might not have been the first to file patent applications covering certain of
our inventions;
●
others may independently develop similar or alternative technologies or duplicate any of our technologies without
infringing our intellectual property rights;
●
it is possible that our pending patent applications will not lead to issued patents;
●
issued patents that we own or have exclusively licensed may be held invalid or unenforceable, as a result of legal
challenges by our competitors;
●
our competitors might conduct R&D activities in countries where we do not have patent rights and then use the
information learned from such activities to develop competitive products for sale in our major commercial markets;
●
we may not develop additional proprietary technologies that are patentable; and
●
the patents of others may have an adverse effect on our business.
Should any of these events occur, they could significantly harm our business, results of operations and prospects.
Risks related to operations, employee matters and managing growth
We currently have a small number of employees and consultants, and our future success depends on our ability to retain our
executive officers and to attract, retain and motivate qualified personnel.
Because of the specialized scientific nature of our business, we rely heavily on our ability to attract and retain qualified
scientific, technical and managerial personnel. We are highly dependent upon current members of our management and
scientific team. We intend to increase our technical and management staff as needs arise and supporting resources become
available, but the loss of one or more of our senior executive officers could be detrimental to us if we cannot recruit suitable
replacements in a timely manner. The competition for qualified personnel in the pharmaceutical field is intense and as a result,
we may be unable to continue to attract and retain qualified personnel necessary for the development of our business or to
recruit suitable replacement personnel.
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We may need to increase the size of our organization, and we may experience difficulties in managing this growth.
We are a clinical-stage biopharmaceutical company with a small number of employees, and our management systems currently
in place are not likely to be adequate to support our future growth plans. Our ability to grow and to manage our growth
effectively will require us to hire, train, retain, manage and motivate additional employees and to implement and improve our
operational, financial and management systems. These demands also may require the hiring of additional senior management
personnel or the development of additional expertise by our senior management personnel. Hiring a significant number of
additional employees, particularly those at the management level, would increase our expenses significantly. Moreover, if we
fail to expand and enhance our operational, financial and management systems in conjunction with our potential future growth,
it could have a material adverse effect on our business, financial condition and results of operations.
As of December 31, 2024, we had nine full-time employees. As our development and commercialization plans and strategies
develop, or as a result of any future acquisitions, we may need additional managerial, operational, development, sales,
marketing, financial and other resources. Our management, personnel and systems currently in place may not be adequate to
support our future growth. Future growth would impose significant added responsibilities on our employees, including:
●
managing our clinical trials effectively;
●
identifying, recruiting, maintaining, motivating and integrating additional employees;
●
managing our internal development efforts effectively while complying with our contractual obligations to licensors,
contractors and other third parties; and
●
improving our managerial, development, operational and finance systems.
As our operations expand, we will need to manage additional relationships with various CROs, strategic partners, and other
third parties. Our future financial performance and our ability to commercialize our product candidates and to compete
effectively will depend, in part, on our ability to manage any future growth effectively. To that end, we must be able to manage
our development efforts and clinical trials effectively and hire, train and integrate additional management, administrative, R&D,
and sales and marketing personnel. We may not be able to accomplish these tasks, and our failure to accomplish any of them
could prevent us from successfully growing MetaVia.
We intend to market our product candidates outside of the U.S., and if we do, we will be subject to the risks of doing business
outside of the U.S.
Because we intend to market our product candidates, if approved, outside of the U.S., our business is subject to risks associated
with doing business outside of the U.S. Accordingly, our business and financial results in the future could be adversely affected
due to a variety of factors, including:
●
failure to develop an international sales, marketing and distribution system for our products;
●
changes in a specific country’s or region’s political and cultural climate or economic condition;
●
unexpected changes in foreign laws and regulatory requirements;
●
difficulty of effective enforcement of contractual provisions in local jurisdictions;
●
inadequate intellectual property protection in foreign countries;
●
inadequate data protection against unfair commercial use;
●
trade-protection measures, import or export licensing requirements such as Export Administration Regulations
promulgated by the U.S. Department of Commerce and fines, penalties or suspension or revocation of export
privileges;
●
the effects of applicable foreign tax structures and potentially adverse tax consequences; and
●
significant adverse changes in foreign currency exchange rates.
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The pharmaceutical industry is highly competitive and is subject to rapid and significant technological change, which could
render our technologies and products obsolete or uncompetitive.
The pharmaceutical industry is highly competitive and is subject to rapid and significant technological change, which could
render certain of our products obsolete or uncompetitive. This is particularly true in the development of therapeutics for
indications where new products and combinations of products are rapidly being developed that change the treatment paradigm
for patients. There is no assurance that our product candidates will be the most effective, have the best safety profile, be the first
to market, or be the most economical to make or use. The introduction of competitive therapies as alternatives to our product
candidates could dramatically reduce the value of those development projects or chances of successfully commercializing those
product candidates, which could have a material adverse effect on our long-term financial success.
We will compete with companies in the U.S. and internationally, including major pharmaceutical and chemical companies,
specialized CROs, R&D firms, universities and other research institutions. Many of our competitors have greater financial
resources and selling and marketing capabilities, greater experience in clinical testing and human clinical trials of
pharmaceutical products and greater experience in obtaining FDA and other regulatory approvals than we do. In addition, some
of our competitors may have lower development and manufacturing costs.
Risks related to our common stock
The price of our common stock may be volatile and fluctuate substantially, which could result in substantial losses for
holders of our common stock.
The trading price of our common stock has been and is likely to continue to be highly volatile and could be subject to wide
fluctuations in response to various factors, some of which are beyond our control, including limited trading volume. In addition
to the factors discussed in this “Risk Factors” section, these factors include:
●
adverse results or delays in preclinical studies, clinical trials, regulatory decisions or the development status of our
product candidates or any product candidates we may pursue in the future;
●
our ability to raise sufficient additional funds on satisfactory terms, or at all, necessary for the continued development
of our product candidates whether through potential collaborative, partnering or other strategic arrangements or
otherwise;
●
the terms and timing of any future collaborative, licensing or other strategic arrangements that we may establish;
●
our inability to comply with the minimum listing requirements of Nasdaq;
●
the timing of achievement of, or failure to achieve, our, or any potential collaborator’s clinical, regulatory and other
milestones, such as the commencement of clinical development, the completion of a clinical trial or the receipt of
regulatory approval;
●
decisions to initiate a clinical trial, not initiate a clinical trial, or terminate an existing clinical trial;
●
adverse regulatory decisions, including failure to receive regulatory approval for our product candidates or regulatory
actions requiring or leading to a delay or stoppage of any clinical trials;
●
the commercial success of any product approved by the FDA or its foreign counterparts;
●
changes in applicable laws, rules or regulations;
●
adverse developments concerning our manufacturers, suppliers, collaborators and other third parties;
●
occurrence of health epidemics or contagious diseases, and potential effects on our business, clinical trial sites, supply
chain and manufacturing facilities;
●
our failure to commercialize our product candidates;
●
the success of competitive drugs;
●
if our patents covering our product candidates expire or are invalidated or are found to be unenforceable, or if some or
all of our patent applications do not result in issued patents or result in patents with narrow, overbroad, or
unenforceable claims;
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●
additions or departures of key scientific or management personnel;
●
unanticipated safety concerns related to the use of any product candidates;
●
our announcements or our competitor’s announcements regarding new products, enhancements, significant contracts,
acquisitions or strategic partnerships and investments;
●
the size and growth of our target markets;
●
our, or companies perceived to be similar to us, failure to meet external expectations, or management guidance;
●
fluctuations in our quarterly financial results or the quarterly financial results of companies perceived to be similar to
us;
●
publication of research reports about us or our industry, recommendations, earning results or estimates or withdrawal
of research coverage by securities analysts;
●
changes in the market valuations of similar companies;
●
changes in general economic, industry, political and market conditions due to military conflicts or war, inflation,
increases in interest rates, health epidemics, the imposition of tariffs by the U.S. or other countries or trade wars;
●
changes in our capital structure or dividend policy, future issuances of securities, sales of common stock by officers,
directors and significant stockholders or our incurrence of debt;
●
trading volume of our common stock;
●
changes in accounting practices and ineffectiveness of our internal controls;
●
disputes, litigation or developments relating to proprietary rights;
●
timing of milestones and royalty payments; and
●
other events or factors, many of which are beyond our control.
In addition, the stock market in general, Nasdaq, and the stock of biopharmaceutical companies in particular, have experienced
extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these
companies. Broad market and industry factors may negatively affect the market price of our common stock, regardless of our
actual operating performance. In the past, securities class action litigation has often been instituted against companies following
periods of volatility in the market price of a company’s securities. This type of litigation, if instituted, could result in substantial
costs and a diversion of management's attention and resources, which would harm our business, operating results or financial
condition.
Our largest stockholder may use its significant interest to take actions not supported by our other stockholders.
As of December 31, 2024, our largest stockholder, Dong-A beneficially owned approximately 62% of our voting rights. As a
result, Dong-A is able to exert a significant influence on the outcome of corporate actions requiring stockholder approval,
including mergers, share capital increases and other extraordinary items.
In addition, pursuant to the Investor Rights Agreement between us and Dong-A, Dong-A has the right to appoint a number of
our directors commensurate with its percentage holding of our common stock, which may result in Dong-A controlling both the
determinations of the board of directors (“Board”) and the vote of all matters submitted to a vote of our stockholders, which
enables them to control all corporate decisions. This concentration of ownership may delay, deter or prevent acts that would be
favored by our other stockholders. The interests of Dong-A may not always coincide with our interests or the interests of our
other stockholders. For as long as Dong-A owns shares of our common stock and the Investor Rights Agreement is effective,
Dong-A will have significant influence on our management, business plans and policies, including the appointment and removal
of members of our Board, decisions on whether to raise future capital and amending our certificate of incorporation and bylaws,
which govern the rights attached to our common stock. In particular, with a significant ownership percentage of our stock,
Dong-A will be able to cause or prevent a change of control of us or a change in the composition of our Board and could
preclude any unsolicited acquisition of us. The concentration of ownership could deprive you of an opportunity to receive a
premium for your shares of common stock as part of a sale of MetaVia and ultimately might affect the market price of our
common stock. In addition, this concentration of ownership may adversely affect the trading price of our common stock because
investors may perceive disadvantages in owning shares in a company with significant stockholders.
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Dong-A and its affiliates engage in a broad spectrum of activities, including investments in the healthcare industry generally. In
the ordinary course of its business activities, Dong-A and its affiliates may engage in activities where their interests conflict
with our interests or those of our other stockholders, such as investing in or advising businesses that directly or indirectly
compete with certain portions of our business or are suppliers or customers of ours. Nothing in our certificate of incorporation
provides that neither Dong-A or any of their affiliates or any director who is not employed by us (including any non-employee
director who serves as one of our officers in both her or his director and officer capacities) or its affiliates have any duty to
refrain from engaging, directly or indirectly, in the same business activities or similar business activities or lines of business in
which we operate. Dong-A also may pursue acquisition opportunities that may be complementary to our business, and, as a
result, those acquisition opportunities may not be available to us. In addition, Dong-A may have an interest in pursuing
acquisitions, divestitures and other transactions that, in their judgment, could enhance its investment, even though such
transactions might involve risks to our stockholders.
We are a controlled company within the meaning of Nasdaq listing requirements and as a result, may rely on exemptions
from certain corporate governance requirements. To the extent we rely on such exemptions, you will not have the same
protections afforded to stockholders of companies that are subject to such corporate governance requirements.
Because of the voting power over our Company held by Dong-A and the Investor Rights Agreement between such parties, we
are considered a controlled company for the purposes of Nasdaq listing requirements. As such, we are exempt from the
corporate governance requirements that our Board, compensation committee, and nominating and corporate governance
committee meet the standard of independence established by those corporate governance requirements. The independence
standards are intended to ensure that directors who meet the independence standards are free of any conflicting interest that
could influence their actions as directors.
We do not currently utilize the exemptions afforded to a controlled company, though we are entitled to do so. To the extent we
utilize these exemptions, you will not have the same protections afforded to stockholders of companies that are subject to all of
the corporate governance requirements of Nasdaq.
Provisions in our corporate charter documents and under Delaware law may make an acquisition of MetaVia, which may be
beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current
management.
Provisions in our certificate of incorporation and the bylaws may discourage, delay or prevent a merger, acquisition or other
change in control of us that stockholders may consider favorable, including transactions in which our stockholders might
otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay
in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because
our Board is responsible for appointing the members of our management team, these provisions may frustrate or prevent any
attempts by stockholders to replace or remove their current management by making it more difficult for stockholders to replace
members of our Board. Among other things, these provisions:
●
establish a classified Board such that not all members of the Board are elected at one time;
●
allow the authorized number of our directors to be changed only by resolution of our Board;
●
limit the manner in which our stockholders can remove directors from the Board;
●
establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and
nominations to our Board;
●
require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our
stockholders by written consent;
●
prohibit our stockholders from calling special meetings;
●
authorize our Board to issue preferred stock without stockholder approval, which preferred stock may include rights
superior to the rights of the holders of common stock, and which could be used to institute a shareholder rights plan, or
so-called “poison pill,” that would work to dilute the stock ownership of a potential hostile acquirer, effectively
preventing acquisitions that have not been approved by our Board; and
●
require the approval of the holders of at least two-thirds of the votes that all our stockholders would be entitled to cast
to amend or repeal certain provisions of our charter or bylaws.
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Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General
Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or
combining with it for a period of three years after the date of the transaction in which the person acquired in excess of 15% of
our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
We may fail to comply with the continued listing requirements of Nasdaq, such that our common stock may be delisted and
the price of our common stock and our ability to access the capital markets could be negatively impacted.
Our common stock is listed for trading on Nasdaq. We must satisfy Nasdaq’s continued listing requirements, including, among
other things, a minimum closing bid price requirement of $1.00 per share for thirty consecutive business days (the “Minimum
Bid Price Requirement”). We have in the past been notified by Nasdaq that we were not in compliance with the Minimum Bid
Price Requirement, and while we have regained compliance, there can be no assurance that we will remain compliant with the
Minimum Bid Price Requirement, or any other Nasdaq continued listing requirements.
The delisting of our common stock from Nasdaq could materially reduce the liquidity of our common stock and result in a
corresponding material reduction in the price of our common stock. In addition, delisting could harm our ability to raise capital
through alternative financing sources on terms acceptable to us, or at all, and may result in the potential loss of confidence by
investors, employees and fewer business development opportunities.
We are a “smaller reporting company” and we cannot be certain if the reduced reporting requirements applicable to such
companies could make our common stock less attractive to investors.
We are a “smaller reporting company”, as defined in the Exchange Act. For as long as we continue to be an smaller reporting
company, we may take advantage of exemptions from various reporting requirements, including exemption from compliance
with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”), only being
required to provide two years of audited financial statements in our annual reports and reduced disclosure obligations regarding
executive compensation in our periodic reports and proxy statements.
We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some
investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and
our stock price may be more volatile.
We have identified material weaknesses in our internal control over financial reporting that could, if not remediated, result
in material misstatements in our financial statements or impair our ability to produce accurate and timely consolidated
financial statements.
We concluded that there was a material weakness relating to our internal control over financial reporting relating to a lack of
management review over clinical trial accruals. For more information about these material weaknesses, see Part II, Item 9A.
Controls and Procedures of this report. A material weakness is a deficiency, or a combination of deficiencies, in internal control
over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim
consolidated financial statements will not be prevented or detected on a timely basis.
Although we have begun to take measures to remediate this material weakness, the measures we have taken, and expect to take,
to improve our internal controls may not be sufficient to address the issues identified, to ensure that our internal controls are
effective or to ensure that the identified material weakness will not result in a material misstatement of our annual or interim
consolidated financial statements. If we are unable to correct material weaknesses or deficiencies in internal controls in a timely
manner, our ability to record, process, summarize and report financial information accurately and within the time periods
specified in the rules and forms of the SEC will be adversely affected. This failure could negatively affect the market price and
trading liquidity of our common stock, cause investors to lose confidence in our reported financial information, subject us to
civil and criminal investigations and penalties, and materially and adversely impact our business and financial condition.
General risk factors
Our business and operations may suffer in the event of system failures or other unplanned events.
Despite the implementation of security measures, our internal computer systems and those of our current and future contractors
and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and
telecommunication and electrical failures. While we are not aware of any such material system failure, accident or security
breach to-date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of
our development programs and our business operations. For example, the loss of clinical trial data from completed or future
clinical trials could result in delays in regulatory approval efforts and significantly increase our costs to recover or reproduce the
data. To the extent that any disruption or security breach was to result in a loss of, or damage to, our data or applications,
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or inappropriate disclosure of confidential or proprietary information, we could incur liability, and the further development and
commercialization of our product candidates could be delayed.
Furthermore, any unplanned event, such as flood, fire, explosion, tornadoes, earthquake, extreme weather condition, medical
epidemics, power shortage, telecommunication failure or other natural or manmade accidents or incidents that result in us being
unable to fully utilize the facilities, may have an adverse effect on our ability to operate the business, particularly on a daily
basis, and have significant negative consequences on our financial and operating conditions. Loss of access to these facilities
may result in increased costs, delays in the development of our product candidates or interruption of our business operations.
We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that
technology or loss of data, including any cyber security incidents, may compromise sensitive information related to our
business, prevent us from accessing critical information or expose us to liability which could harm our ability to operate our
business effectively and adversely affect our business and reputation.
In the ordinary course of our business, our contract research organizations and other third parties on which we rely collect and
store sensitive data, including legally protected patient health information, personally identifiable information about our
employees, intellectual property, and proprietary business information. We manage and maintain our applications and data
utilizing on-site systems. These applications and data encompass a wide variety of business-critical information, including R&D
information and business and financial information.
The secure processing, storage, maintenance and transmission of this critical information is vital to our operations and business
strategy. Despite the implementation of security measures, our internal computer systems and those of third parties with which
we contract are vulnerable to damage from cyber-attacks, computer viruses, breaches, unauthorized access, interruptions due to
employee error or malfeasance or other disruptions, or damage from natural disasters, terrorism, war and telecommunication
and electrical failures. Any such event could compromise our networks, and the information stored there could be accessed by
unauthorized parties, publicly disclosed, lost or stolen. We have measures in place that are designed to detect and respond to
such security incidents and breaches of privacy and security mandates. Any such access, disclosure or other loss of information
could result in legal claims or proceedings, liability under laws that protect the privacy of personal information, government
enforcement actions and regulatory penalties. Unauthorized access, loss or dissemination could also disrupt our operations,
including our ability to conduct research, development and commercialization activities, process and prepare company financial
information, manage various G&A aspects of our business and damage our reputation, in addition to possibly requiring
substantial expenditures of resources to remedy, any of which could adversely affect our business. The loss of clinical trial data
could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. In
addition, there can be no assurance that we will promptly detect any such disruption or security breach, if at all. To the extent
that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate
disclosure of confidential or proprietary information, we could incur liability, and our research, development and
commercialization efforts could be delayed.
An active trading market for our common stock may not be maintained.
Our common stock is currently traded on Nasdaq, but we can provide no assurance that we will be able to maintain an active
trading market for our shares on Nasdaq or any other exchange in the future. If there is no active market for our common stock,
it may be difficult for our stockholders to sell shares without depressing the market price for the shares or at all.
If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our
business, the price of our stock could decline.
If one or more analysts cover our business and downgrade their evaluations of our stock or publish inaccurate or unfavorable
research about our business, the price of our stock could decline. If one or more of these analysts cease to cover our stock, we
could lose visibility in the market for our stock, which in turn could cause our stock price and trading volume to decline.
We incur increased costs as a result of operating as a public company and our management is required to devote substantial
time to compliance initiatives.
The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the
stock exchange upon which our common stock is listed, and other applicable securities rules and regulations impose various
requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and
corporate governance practices. Our management and other personnel devote a substantial amount of time to these compliance
initiatives. Moreover, these rules and regulations increase our legal and financial compliance costs and make some activities
more time-consuming and costly. However, these rules and regulations are often subject to varying interpretations, in many
cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is
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provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and
higher costs necessitated by ongoing revisions to disclosure and governance practices. Stockholder activism, the current
political environment and the current high level of government intervention and regulatory reform may lead to substantial new
regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which we
operate our business in ways we cannot currently anticipate.
For as long as we continue to be an smaller reporting company, we may take advantage of exemptions from various reporting
requirements that are applicable to other public companies, including exemption from compliance with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act, only being required to provide two years of audited financial
statements in our annual reports and reduced disclosure obligations regarding executive compensation in our periodic reports
and proxy statements. If we no longer qualify as a “smaller reporting company,” we will need to comply with additional
reporting requirements that are applicable to other public companies that may be costly and require management to devote
substantial time to compliance with such requirements, such as providing an opinion from our independent registered public
accounting firm on the effectiveness of our internal control over financial reporting.
To achieve compliance with Section 404, we are required to engage in a process to document and evaluate our internal control
over financial reporting, which is both costly and challenging. In this regard, we must dedicate internal resources, hire
additional finance and accounting personnel, potentially engage outside consultants and adopt a detailed work plan to assess and
document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate,
validate through testing that controls are functioning as documented and implement a continuous reporting and improvement
process for internal control over financial reporting.
During the course of our review and testing, we may identify deficiencies or material weaknesses and be unable to remediate
them before we must provide the required reports. We or our independent registered public accounting firm may not be able to
conclude on an ongoing basis that we have effective internal control over financial reporting, which could harm our operating
results, cause investors to lose confidence in our reported financial information and cause the trading price of our stock to fall.
In addition, as a public company we are required to timely file accurate quarterly and annual reports with the SEC under the
Exchange Act. In order to report the results of our operations and financial position on an accurate and timely basis, we will
depend on CROs to provide timely and accurate notice of their costs to us. Any failure to report our financial results on an
accurate and timely basis could result in sanctions, lawsuits, delisting of our shares from Nasdaq or other adverse consequences
that would materially harm our business.
We do not anticipate declaring or paying, in the foreseeable future, any cash dividends and, consequently, the ability of our
stockholders to achieve a return on their investment will depend on appreciation in the price of our common stock.
We have never declared or paid any cash dividend on our capital stock and do not currently intend to do so in the foreseeable
future. We currently anticipate that we will retain future earnings for the development, operation and expansion of our business.
Therefore, the success of an investment in shares of our common stock will depend upon any future appreciation in their value.
There is no guarantee that shares of our common stock will appreciate in value or even maintain the price at which you
purchased them.
Our bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of
actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a
favorable judicial forum for disputes with us or our directors, officers or employees.
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the
State of Delaware will generally be the sole and exclusive forum for any derivative action or proceeding brought on our behalf,
any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our
stockholders, any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law, as
amended, the certificate of incorporation or the bylaws or any other action asserting a claim governed by the internal affairs
doctrine. This provision does not apply to claims arising under the Securities Act and the Exchange Act or any claim for which
the federal courts have exclusive jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of
our capital stock shall be deemed to have notice of and to have consented to the provisions of the bylaws described above. This
choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for
disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors,
officers and employees. Alternatively, if a court were to find this provision inapplicable to, or unenforceable in respect of, one
or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in
other jurisdictions, which could adversely affect our business and financial condition.
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Item 1B.
Unresolved Staff Comments
None.
Item 1C. Cybersecurity
Risk management
We recognize the importance of assessing, identifying, and managing risks associated with cybersecurity threats. These risks
include, among other things, operational risks; intellectual property theft; fraud; extortion; harm to employees, violation of
privacy or security laws and other litigation and legal risk; and reputational risks. We are committed to maintaining robust
governance and oversight of these risks and to implementing mechanisms, controls, technologies, and processes designed to
help us assess, identify, and manage these risks. While we have not, as of the date of this Annual Report, experienced a
cybersecurity threat or incident that resulted in a material adverse impact to our business or operations, there can be no
guarantee that we will not experience such an incident in the future.
We aim to incorporate industry best practices throughout our cybersecurity program. Our cybersecurity strategy focuses on
implementing effective and efficient controls, technologies, and other processes to assess, identify, and manage material
cybersecurity risks. Our cybersecurity program is designed to be aligned with applicable industry standards. We work with a
third-party provider to monitor threats and potential cybersecurity breaches.
We have processes in place to assess, identify, manage, and address material cybersecurity threats and incidents. These include,
among other things: ongoing security awareness training for employees; mechanisms to detect and monitor unusual network
activity; and containment and incident response tools. We monitor issues that are internally discovered or reported by our third-
party monitoring service that may affect our information services and have processes to assess those issues for potential
cybersecurity impact or risk. We impose security requirements upon our suppliers and CROs, including maintaining an effective
security management program; abiding by information handling and asset management requirements; and notifying us in the
event of any known or suspected cyber incident.
Governance
Our Board has ultimate oversight of cybersecurity risk, which it manages as part of our enterprise risk management program.
That program is utilized in making decisions with respect to Company priorities, resource allocations, and oversight structures.
The Board is assisted by the audit committee, which reviews our cybersecurity program with management and reports to the
Board.
The audit committee is central to the Board’s oversight of cybersecurity risks and bears the primary responsibility for this
domain. The audit committee is composed of board members with diverse expertise including risk management, technology,
and finance, equipping them to oversee cybersecurity risks effectively.
Our Chief Executive Officer, Chief Financial Officer and corporate controller have operational experience in assessing and
managing cybersecurity risk. Our Chief Executive Officer plays a pivotal role in informing the audit committee on
cybersecurity risks. They provide comprehensive briefings to the audit committee on a regular basis, with a minimum frequency
of once per year. These briefings encompass a broad range of topics, including:
●
Current cybersecurity landscape and emerging threats;
●
Status of ongoing cybersecurity initiatives and strategies;
●
Incident reports and learnings from any cybersecurity events; and
●
Compliance with regulatory requirements and industry standards.
In addition to our scheduled meetings, the audit committee and Chief Executive Officer maintain an ongoing dialogue regarding
emerging or potential cybersecurity risks. Together, they receive updates on any significant developments in the cybersecurity
domain, ensuring the board’s oversight is proactive and responsive. The audit committee actively participates in strategic
decisions related to cybersecurity, offering guidance and approval for major initiatives. This involvement ensures that
cybersecurity considerations are integrated into the broader strategic objectives of MetaVia.
Our Chief Financial Officer is informed by our third-party monitoring service of any cybersecurity incidents, who will then
escalate the incident to our Chief Executive Officer, if necessary. Furthermore, significant cybersecurity matters, and strategic
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risk management decisions are escalated to the Board, ensuring that they have comprehensive oversight and can provide
guidance on critical cybersecurity issues.
Item 2.
Properties
We currently lease 2,441 square feet of office space in Cambridge, Massachusetts, as our corporate headquarters. The initial
lease term is for three years with an option to renew for an additional two-year term. The lease commenced in September 2023
and expires in August 2026.
We believe that our leased properties are adequate for our purposes and to pursue our strategy.
Item 3.
Legal Proceedings
From time to time, we may be involved in various claims and legal proceedings arising out of our ordinary course of business.
We are not currently a party to any claims or legal proceedings that, in the opinion of our management, are likely to have a
material adverse effect on our business and consolidated financial statements. Regardless of outcome, litigation can have an
adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Item 4.
Mine Safety Disclosures
Not applicable.
Part II
Item 5.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market information
Our common stock is listed on Nasdaq under the symbol “MTVA.”
Stockholders
On March 17, 2025, we had 8,654,869 shares of common stock outstanding and 52 holders of record of our common stock. The
transfer agent and registrar for our common stock is Equiniti Trust Company, LLC.
Dividend policy
We have never declared or paid any dividends on our common stock, and we do not currently intend to pay any dividends on
our common stock for the foreseeable future. Any future determination to pay dividends on our common stock will be, subject
to applicable law, at the discretion of our Board and will depend upon, among other factors, our results of operations, financial
condition, capital requirements, and contractual restrictions in loan or other agreements.
Recent sales of unregistered securities; use of proceeds from registered offerings
During the year ended December 31, 2024, we did not issue or sell any unregistered securities not previously disclosed in a
Quarterly Report on Form 10-Q or in a Current Report on Form 8-K.
Purchases of equity securities by the issuer and affiliated purchasers
None.
Item 6.
[Reserved]
Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the
information set forth under our consolidated financial statements and the notes to those financial statements included elsewhere
in this Annual Report. This discussion contains forward-looking statements based upon current expectations that involve risks
and uncertainties. See “Special Note Regarding Forward-Looking Statements.” Our actual results may differ materially from
those contained in or implied by any forward-looking statements as a result of various factors, including, but not limited to, the
risks and uncertainties described under “Risk Factors” elsewhere in this Annual Report.
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Certain amounts in the following discussion and analysis may not add due to rounding, and all percentages have been calculated
using unrounded amounts.
Overview
We are a clinical-stage biotechnology company focused primarily on developing novel pharmaceuticals to treat
cardiometabolic diseases. MetaVia has two programs focused primarily on the treatment of MASH and obesity.
●
DA-1241 is a novel GPR119 agonist with development optionality as a standalone and/or combination therapy
for both MASH and T2DM. Agonism of GPR119 in the gut promotes the release of key gut peptides, GLP-1,
GIP and PYY. These peptides play a further role in glucose metabolism, lipid metabolism and weight loss. DA-
1241 has demonstrated beneficial effects on glucose, lipid profile and liver inflammation, as demonstrated during
in-vivo preclinical studies.
●
DA-1726 is a novel oxyntomodulin analogue functioning as a GLP1R and GCGR dual agonist for the treatment of
obesity that is designed to be administered once weekly subcutaneously. With the activation of the dual agonist, weight
loss may be achieved by GLP1R reducing appetite while GCGR increases energy expenditure.
While we primarily focus our financial resources and management’s attention on the development of DA-1241 and DA-
1726, we also have four legacy therapeutic programs designed to impact a range of indications in viral, neurodegenerative
and cardiometabolic diseases, which we are not planning to advance development on and have, or continue to consider
for, out-licensing and divestiture opportunities. In July 2024, we entered into an exclusive out-license agreement with
MThera to provide MThera with the rights to NB-01 for the treatment of painful diabetic neuropathy.
Our operations have consisted principally of performing R&D activities, which include preclinical developments and clinical
trials, and raising capital. Our activities are subject to significant risks and uncertainties, such as failing to secure additional
funding before sustainable revenues and profit from operations are achieved. For more information on our business and product
candidates, see Part I, Item 1. Business of this Annual Report.
Recent developments
●
December 2024: Announced positive top-line 16-week results from the two-part Phase 2a clinical trial in patients with
presumed MASH.
●
November 2024: Announced a strategic realignment, ahead of important clinical milestones, with a corporate name
change to MetaVia Inc.
●
November 2024: Announced completion of last patient last visit for Phase 2a clinical trial evaluating DA-1241 for the
treatment of MASH.
●
September 2024: Announced positive top-line data from the SAD Part 1 of our Phase 1 clinical trial evaluating DA-
1726 for the treatment of obesity.
Key operating information
Research and development expenses
R&D expenses consist primarily of costs incurred in connection with the development of our product candidates. These
expenses include:
●
employee-related expenses, including salaries, related benefits and stock-based compensation, for employees engaged
in research and development functions;
●
expenses incurred in connection with the clinical development of our product candidates, including under agreements
with third parties, such as consultants and CROs;
●
the cost of manufacturing and storing drug products for use in our preclinical studies and clinical trials, including
under agreements with third parties, such as consultants and Clinical Manufacturing Organizations (“CMOs”);
●
facilities, depreciation and other expenses, which include direct or allocated expenses for rent and maintenance of
facilities and insurance;
●
costs related to compliance with regulatory requirements; and
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●
payments made under third-party licensing agreements.
We recognize external development costs based on an evaluation of the progress toward completion of specific tasks using
information provided to us by our service providers. This process involves reviewing open contracts and purchase orders,
communicating with our personnel to identify services that have been performed on our behalf, and estimating the level of
service provided and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of
actual costs. Nonrefundable advance payments for goods or services to be received in the future for use in research and
development activities are recorded as prepaid expenses. Such amounts are recognized as an expense when the goods have been
delivered or the services have been performed, or when it is no longer expected that the goods will be delivered, or the services
rendered.
Our direct research and development expenses consist primarily of external costs, such as fees paid to outside consultants,
CROs, CMOs and research laboratories in connection with our clinical development, quality assurance and quality control
processes, manufacturing, and clinical development activities. Our direct research and development expenses also include fees
incurred under third-party license agreements. We use our employee and infrastructure resources across multiple research and
development projects. We do not allocate employee costs and costs associated with our facilities, including depreciation or other
indirect costs, to specific product candidates because these costs are deployed across multiple programs and, as such, are not
separately classified. We use internal resources to manage CMO and CRO activities. These employees work across multiple
programs. We do not track our costs by product candidate.
Clinical development activities are central to our business model. We do not believe that our historical costs are indicative of the
future costs associated with these programs, nor do they represent the costs of other future programs we may initiate. Product
candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical
development, primarily due to the increased size and duration of later-stage clinical trials. We have some control over the timing
of these expenses, but costs may be difficult to control once clinical trials have commenced.
The successful development and commercialization of our product candidates are highly uncertain. At this time, we cannot
reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the preclinical and
clinical development of any of our product candidates. Additionally, because of the risks inherent in novel treatment discovery
and development, we cannot reasonably estimate or know:
●
the timing and progress of preclinical and clinical development activities;
●
the number and scope of clinical programs that we decide to pursue;
●
our ability to maintain our current development programs and to establish new ones;
●
establishing an appropriate safety profile with IND-enabling studies;
●
successful patient enrollment in, and the initiation and completion of, clinical trials;
●
the successful completion of clinical trials with safety, tolerability and efficacy profiles that are satisfactory to the FDA
or any comparable foreign regulatory authority;
●
the receipt of regulatory approvals from applicable regulatory authorities;
●
the timing, receipt and terms of any marketing approvals from applicable regulatory authorities;
●
our ability to establish new licensing or collaboration arrangements;
●
establishing agreements with third-party manufacturers for clinical supply for our clinical trials and commercial
manufacturing, if any of our product candidates is approved;
●
development and timely delivery of clinical-grade and commercial-grade drug formulations that can be used in our
clinical trials and for commercial launch;
●
obtaining, maintaining, defending and enforcing patent claims and other intellectual property rights;
●
launching commercial sales of our product candidates, if approved, whether alone or in collaboration with others;
●
maintaining a continued acceptable safety profile of the product candidates following commercialization; or
●
the effect of competing technological and market developments.
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A change in the outcome of any of these variables with respect to the development of our product candidates could significantly
change the costs and timing associated with the development of that product candidate.
Acquired in-process research and development expenses
We include costs to acquire or in-license product candidates in-process research and development (“IPR&D”). When we acquire
the right to develop and commercialize a new product candidate, any up-front payments, or any future milestone payments that
relate to the acquisition or licensing of such a right are immediately expensed as acquired in-process research and development
in the period in which they are incurred. These costs are immediately expensed provided that the payments do not also represent
processes or activities that would constitute a “business,” or provided that the product candidate has not achieved regulatory
approval for marketing and, absent obtaining such approval, has no alternative future use. Royalties owed on future sales of any
licensed product will be expensed in the period the related revenues are recognized.
General and administrative expenses
G&A expenses consist primarily of salaries and related costs, including stock-based compensation, for personnel in executive,
finance and administrative functions. G&A expenses also include direct and allocated facility-related costs as well as
professional fees for legal, patent, consulting, investor and public relations, accounting, and audit services.
We anticipate that our G&A expenses will increase in the future as a result of accounting, audit, legal, regulatory, compliance,
and director and officer insurance costs as we pursue the development of our product pipeline, as well as investor and public
relations expenses associated with being a public company.
Income taxes
We have had significant pre-tax losses since our inception, and we have not yet generated revenues and face significant
challenges to becoming profitable. Accordingly, we recorded a valuation allowance on the deferred tax assets attributable to the
NOL we have incurred in each year or for our earned R&D credits. We will continue to monitor all positive and negative
evidence until we believe it is more likely than not that the valuation allowance is no longer necessary, resulting in an income
tax benefit in the period such determination is made.
We have U.S. federal NOL carryforwards and U.S. federal R&D credit carryforwards, and these carryforwards will not expire.
We also have state NOL carryforwards and state R&D credit carryforwards. Our state NOL and R&D credit carryforwards will
begin to expire in 2042, if not utilized.
Net loss
We have incurred significant operating losses since our inception. Our ability to generate product revenue sufficient to achieve
profitability will depend on the successful development and eventual commercialization of one or more of our current or future
product candidates. To date, we have not generated any revenue from product sales, collaborations with other companies,
government grants or any other source, and do not expect to generate any revenue in the foreseeable future.
Accumulated deficit
We have an accumulated deficit, and we expect to continue to incur significant expenses and increasing operating losses for at
least the next several years. We expect that our expenses and capital requirements will increase substantially in connection with
our ongoing activities, particularly if and as we:
●
pursue clinical development for our current product candidates;
●
initiate preclinical studies and clinical trials with respect to our current product candidates and indications and any
future product candidates or indications that we may pursue;
●
acquire or in-license other product candidates and/or technologies;
●
develop, maintain, expand and protect our intellectual property portfolio;
●
hire additional clinical, scientific and commercial personnel;
●
establish a commercial manufacturing source and secure supply chain capacity sufficient to provide commercial
quantities of any product candidates for which we may obtain regulatory approval;
●
seek regulatory approvals for any product candidates that successfully complete clinical trials;
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●
establish a sales, marketing and distribution infrastructure and/or enter into partnership arrangements to commercialize
any products for which we may obtain regulatory approval; or
●
add administrative, operational, financial and management information systems and personnel, including personnel to
support our product development and planned future commercialization efforts, and to support being a public reporting
company.
Results of Operations
2024 compared to 2023
The following table summarizes our results of operations for 2024 and 2023 (in thousands, other than share and per share
amounts):
Year Ended December 31,
2024
2023
Operating expenses:
Research and development
$
21,553
$
9,158
General and administrative
7,256
6,728
Total operating expenses
28,809
15,886
Loss from operations
(28,809)
(15,886)
Other income:
Change in fair value of warrant liabilities
297
2,955
Interest income
920
461
Total other income
1,217
3,416
Loss before income taxes
(27,592)
(12,470)
Provision for income taxes
—
—
Net loss
$
(27,592)
$
(12,470)
Loss per share of common stock, basic and diluted
$
(3.56)
$
(2.46)
Weighted average shares of common stock, basic and diluted
7,757,128
5,071,101
Operating expenses and loss from operations
Our total operating expenses and loss from operations for 2024 were $28.8 million, an increase of $12.9 million, or 81.3%,
compared to 2023. This increase was attributable to higher R&D and G&A expenses.
Our R&D expenses were $21.6 million for 2024, an increase of $12.4 million, or 135.3%, compared to 2023. This increase was
primarily related to increased R&D activities related to Phase 2a clinical trial for DA-1241 and Phase 1 trial for DA-1726 for
2024 as compared to 2023 when R&D activities began to ramp up following the acquisition of DA-1241 and DA-1726 in the
fourth quarter of 2022. Specifically, the increase in R&D expenses was primarily attributable to (i) $9.3 million in higher
clinical trial expenditures, (ii) $2.5 million in higher expenditures for investigational drug manufacturing, non-clinical and
preclinical costs related to expenses incurred under the Shared Services Agreement with Dong-A, and (iii) $1.2 million in
higher employee compensation and benefits. These increases were partially offset by (i) $0.2 million in lower consulting
expenditures and (ii) $0.4 million in lower other R&D costs.
Our G&A expenses were $7.3 million for 2024, an increase of $0.5 million, or 7.8%, compared to 2023. This increase was
primarily attributable to $1.0 million in higher employee compensation and benefits, partially offset by (i) $0.4 million in lower
consulting expenditures, and (ii) $0.1 million in lower legal and professional fees.
Other income
Our other income for 2024 was $1.2 million, a decrease of $2.2 million, or 64.4%, compared to 2023. This decrease was
attributable to $2.7 million in lower gain related to the change in fair value of warrant liabilities due to warrant exercises in
2023 and the impact of our common stock’s declining stock price during the last few years, partially offset by $0.5 million in
higher interest income due primarily to higher average invested amount in 2024.
Provision for income taxes
Our effective tax rate for 2024 and 2023 was zero percent as we have recorded a full valuation allowance for the income tax
benefits attributable to our pre-tax losses.
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Net loss
For 2024, we had a net loss of $27.6 million, or $3.56 per share of basic and diluted common stock, compared to a net loss of
$12.5 million, or $2.46 per share of basic and diluted common stock for 2023.
Going concern
As reflected in the consolidated financial statements, we had $16.0 million in cash as of December 31, 2024. We have
experienced net losses and negative cash flows from operating activities since our inception and had an accumulated deficit
of $135.9 million as of December 31, 2024. We have incurred a net loss of $27.6 million and net cash used in operating
activities of $24.7 million for the year ended December 31, 2024. Due in large part to the ongoing Phase 2a clinical trial for
DA-1241 and Phase 1 clinical trial for DA-1726, we expect to continue to incur net losses and negative cash flows from
operating activities for the foreseeable future. These conditions raise substantial doubt about our ability to continue as a going
concern within one year from the issuance of our consolidated financial statements in Part II, Item 8. Financial Statements and
Supplementary Data.
We believe that our existing cash will be sufficient to fund our operations into the third quarter of 2025. We plan to continue to
fund our operations from equity offerings, debt financing, or other sources, potentially including collaborations, out-licensing
and other similar arrangements. However, there can be no assurance that we will be able to obtain any sources of financing on
acceptable terms, or at all, or that the Series A Warrants will be exercised. To the extent that we can raise additional funds by
issuing equity securities or in the event our existing warrants are exercised, our stockholders may experience significant
dilution. Any debt financing, if available, may involve restrictive covenants that impact our ability to conduct our business. If
we are unable to raise additional capital, we may slow down or stop our ongoing and planned clinical trials until such time as
additional capital is raised and this may have a material adverse effect on us.
The determination as to whether we can continue as a going concern contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. Our consolidated financial statements have been prepared assuming that we will
continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty. This
basis of accounting contemplates the recovery of our assets and the satisfaction of our liabilities in the normal course of
business.
Liquidity and capital resources
Our primary use of cash is to fund our R&D activities. We have funded our operations primarily through public offerings of our
common stock and private placements of equity and convertible securities. As of December 31, 2024, we had cash totaling
$16.0 million. We maintain cash at financial institutions that at times may exceed the Federal Deposit Insurance Corporation
(“FDIC”) insured limits of $0.25 million per bank. Our cash balance includes liquid insured deposits, which are obligations of
the banks in which the deposits are held and qualify for FDIC insurance protection per depositor in each recognized legal
category of account ownership in accordance with the rules of the FDIC. To date, we have not experienced any losses related to
these funds.
Registered direct offering and private placement
In June 2024, we closed on a registered direct offering of 763,359 shares of common stock at a purchase price of $3.93 per
share for gross proceeds of $3.0 million (the “Registered Direct Offering”) with an institutional investor. The offering of the
shares was made pursuant to our effective shelf registration statement on Form S-3 (Registration No. 333-278646), initially
filed with and declared effective by the SEC in April 2024, and a prospectus supplement filed with the SEC in June 2024.
In June 2024, we closed on a private placement offering (the “Private Placement,” and together with the Registered Direct
Offering, the “Offering”) with an institutional investor and Dong-A, and received aggregate gross proceeds of $17.0 million, of
which $10.0 million was received from Dong-A. The Private Placement was comprised of (i) 2,544,530 shares of common
stock, (ii) pre-funded warrants to purchase up to 1,781,171 shares of common stock (the “Pre-Funded Warrants”), (iii) Series A
warrants to purchase 5,089,060 shares of common stock (the “Series A Warrants”), and (iv) Series B warrants to purchase up to
7,633,591 shares of common stock (the “Series B Warrants”). For additional information, see “Note 7. Stockholders’ equity” to
the consolidated financial statements included elsewhere in this Report.
Cash Flows
The principal use of cash in operating activities is to fund our current expenditures in support of our R&D activities and clinical
development activities. Financing activities currently represent the principal source of our cash flow.
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The following table reflects the major categories of cash flows for each of the periods presented (in thousands).
Year Ended December 31,
2024
2023
Net cash used in operating activities
$
(24,710)
$
(10,799)
Net cash used in investing activities
(8)
(50)
Net cash provided by (used in) financing activities
18,300
(80)
Net decrease in cash
$
(6,418)
$
(10,929)
Net cash used in operating activities was $24.7 million for 2024 and consisted of net loss of $27.6 million, partially offset by net
cash provided by change in operating assets and liabilities of $2.6 million and non-cash charges totaling $0.3 million, which
was primarily related to stock-based compensation and change in fair value of warrant liabilities. Net cash used in operating
activities was $10.8 million for 2023 and consisted of net loss of $12.5 million and non-cash credits totaling $2.8 million, which
was primarily related to change in fair value of warrant liabilities, partially offset by net cash provided by changes in operating
assets and liabilities of $4.4 million.
Net cash used in investing activities, related to the purchases of property equipment, was less than $0.1 million for 2024 and
2023.
Net cash provided by financing activities was $18.3 million for 2024 compared to net cash used in financing activities of less
than $0.1 million for 2023. Net cash provided by financing activities for 2024 primarily consisted of gross proceeds from the
Offering of $20.0 million, net of payment of issuance cost of $1.7 million. Net cash used in financing activities of less than $0.1
million for 2023 was attributable to payment of financing costs related to a prior financing transaction in 2022.
For additional details, see the consolidated statements of cash flows in the consolidated financial statements included elsewhere
in this Annual Report.
Contractual obligations, purchase commitments and employment agreements
Contractual obligations
We entered into a non-cancelable operating lease for our corporate headquarters in Cambridge, Massachusetts. For additional
information, see "Note 6. Commitments and contingencies" to the consolidated financial statements included in this Annual
Report.
In the ordinary course of business, we enter into agreements with third parties that include indemnification provisions, which, in
our judgment, are normal and customary for companies in our industry sector. These agreements are typically with business
partners, clinical sites, and suppliers. Pursuant to these agreements, we generally agree to indemnify, hold harmless, and
reimburse indemnified parties for losses suffered or incurred by the indemnified parties with respect to our products or product
candidates, use of such products or product candidates, or other actions taken or omitted by us. The maximum potential amount
of future payments we could be required to make under these indemnification provisions is sometimes unlimited. We have not
incurred material costs to defend lawsuits or settle claims related to these indemnification provisions. As a result, the estimated
fair value of liabilities relating to these provisions is minimal. Accordingly, we have no liabilities recorded for these provisions
as of December 31, 2024 and 2023.
In the normal course of business, we may be confronted with issues or events that may result in contingent liability. These
generally relate to lawsuits, claims, environmental actions, or the actions of various regulatory agencies. We consult with
counsel and other appropriate experts to assess the claim. If, in our opinion, we have incurred a probable loss, an estimate is
made of the loss and the appropriate accounting entries are reflected in our financial statements.
We are party to license agreements with respect to certain of our product candidates that would obligate us to pay royalties with
respect to revenue from such product candidates and milestone payments upon achievement of certain development milestones.
As of the date hereof, we do not expect to achieve such milestones in the near term, but we would have to obtain additional
capital to pay such milestone payments.
Additional information regarding contingent payments and license agreements is in “Note 5. Related party” and "Note 6.
Commitments and contingencies" to the consolidated financial statements included in this Annual Report.
Purchase commitments
Information regarding purchase commitments is in "Note 6. Commitments and contingencies" to the consolidated financial
statements included in this Annual Report.
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Employment agreements
Information regarding employment agreements is in "Note 6. Commitments and contingencies" to the consolidated financial
statements included in this Annual Report.
Critical Accounting Estimates
Our consolidated financial statements included in this Annual Report have been prepared in accordance with accounting
principles generally accepted in the United States of America (“GAAP”).
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, expenses, and related disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of expenses during the reporting period. The most significant
estimates in our consolidated financial statements relate to clinical trial costs and accruals, classification of warrants as
derivative liability or equity, and the fair value of stock-based compensation and warrants. We base our estimates on historical
experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making
judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates. Changes in
estimates are reflected in reported results in the period in which they become known.
Our critical accounting estimates and judgements relate to the following items: (i) cash forecast for conclusion about MetaVia’s
ability to continue as a going concern, (ii) conclusion on the classification of warrants based on the underlying warrant and
transaction agreements, and (iii) clinical trial costs and accruals. Our cash forecast for the 12-month period from the filing date
of this Annual Report utilizes current cash balance less estimated payments for future clinical trials and G&A costs plus
forecasted cash inflows. Our estimates and judgements used in clinical trial costs and accruals are described below.
Accrual for research and development costs related to clinical trial activities
As part of the process of preparing our consolidated financial statements, we are required to record an accrual for R&D costs
related to clinical trial activities. This process involves reviewing open contracts and purchase orders, communicating with
applicable personnel to identify services that have been performed on our behalf and estimating the level of service provided
and the associated cost incurred for the service when we have not yet been invoiced or otherwise notified of actual costs.
Certain of our service providers invoice us in arrears for services performed, on a pre-determined schedule or when contractual
milestones are met; however, some service providers require advance payments. We make estimates of our accrued and prepaid
expenses as of each balance sheet date in the consolidated financial statements based on facts and circumstances known to us at
that time. We periodically confirm the accuracy of these estimates with the service providers and make adjustments, if
necessary. Examples of estimated accrued R&D expenses include fees paid to:
●
vendors in connection with preclinical development activities;
●
CROs and investigative sites in connection with preclinical studies and clinical trials; and
●
CMOs in connection with the production of preclinical and clinical trial materials.
We base the expense recorded related to external R&D on our estimates of the services received and efforts expended pursuant
to quotes and contracts with multiple CMOs and CROs that supply, conduct and manage preclinical studies and clinical trials on
our behalf. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in
uneven payment flows. There may be instances in which payments made to our vendors will exceed the level of services
provided and result in a prepayment of the expense. Payments under some of these contracts depend on factors such as the
successful enrollment of patients and the completion of clinical trial milestones. In accruing service fees, we estimate the time
period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the
performance of services or the level of effort varies from the estimate, we adjust the accrual or the amount of prepaid expenses
accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our
understanding of the status and timing of services performed relative to the actual status and timing of services performed may
vary and may result in reporting amounts that are too high or too low in any particular period.
Recent accounting pronouncements
Information regarding (i) adoption of new accounting standards during 2024 and (ii) accounting standards issued but not yet
adopted is included in “Note 1. Business, basis of presentation, new accounting standards and summary of significant
accounting policies” to the consolidated financial statements included in this Annual Report.
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Item 7A. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risks in the ordinary course of business. Some potential market risks are discussed below:
Market risk
Strategic and operational risks arise if we fail to carry out business operations and/or raise sufficient equity and/or debt
financing. These strategic opportunities or risks arise from a range of factors that might include changing economic and political
circumstances and regulatory approvals and competitor actions. The risk is mitigated by consideration of other potential
development opportunities and challenges which management may undertake.
Currency risk
Our operating results and financial position are reported in U.S. dollars. Some of our financial transactions are denominated in
currencies other than the U.S. dollar. Accordingly, our results of operations are subject to currency transaction risks.
We have no hedging agreements in place with respect to foreign exchange rates. We have not entered into any agreements or
purchased any instruments to hedge possible currency risks at this time.
Interest rate risk
Interest rate risk is the risk that the fair value or the future cash flows of a financial instrument will fluctuate as a result of
changes in market interest rates. Cash bears interest at market rates.
Inflation risk
If our costs become subject to significant inflationary pressures, it could harm our business, financial condition, and operating
results.
Item 8.
Financial Statements and Supplementary Data
Reference is made to the financial statements, the notes thereto, and the report thereon, commencing on page F-1 of this Annual
Report, which financial statements, notes and report are incorporated herein by reference.
Item 9.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of disclosure controls and procedures
As required by Rules 13a-15(b) and 15d-15(b) under the Exchange Act, our management, with the participation of our principal
executive officer (“PEO”) and principal financial officer (“PFO”), evaluated the effectiveness of our disclosure controls and
procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this
Annual Report. Based upon that evaluation, our PEO and PFO concluded that our disclosure controls and procedures were not
effective as of the end of the period covered by this Annual Report, as a result of the material weaknesses in our internal control
over financial reporting, which is discussed further below.
Management’s annual report on internal control over financial reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide
reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external
purposes in accordance with U.S. generally accepted accounting principles. Internal control over financial reporting includes
those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with U.S. generally accepted accounting principles, and
that our receipts and expenditures are being made only in accordance with authorizations of our management and Board; and
(iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of
our assets that could have a material effect on the financial statements.
Management has assessed the effectiveness of our internal control over financial reporting as of the end of the period covered
by this Annual Report. The scope of management’s assessment regarding the Company’s internal control over financial
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reporting includes the criteria set forth by the Internal Control Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. Based upon that assessment, management has concluded that our
internal control over financial reporting was not effective as of December 31, 2024.
In connection with the preparation of the audited financial statements included elsewhere in this Annual Report, management
has identified the following material weaknesses as of December 31, 2024: (i) logical access over the accounting software and
(ii) lack of review over reconciliation of accrued clinical trial liabilities. A material weakness is a deficiency, or a combination
of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material
misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. See
“Remediation efforts to address the material weaknesses” below for steps we are taking to correct these material weaknesses.
This Annual Report does not include an attestation report of our registered public accounting firm regarding internal control
over financial reporting. The management’s report was not subject to attestation by our registered public accounting firm
pursuant to the rules of the SEC that permit us to provide only the management’s report in this Annual Report.
Remediation efforts to address the material weaknesses
We are in the process of remediating, but have not yet remediated, the material weaknesses, as described above, related to
logical access over the accounting software and lack of review over reconciliation of accrued clinical trial liabilities. Under the
oversight of the audit committee, management has developed a detailed plan and timetable for the implementation of
appropriate remedial measures to address the material weaknesses. As of the date of this report, the following actions have
been taken:
●
we have implemented enhanced controls relating to logical access over the accounting software, which includes (i)
validation of certain financial reports for accuracy and completeness and (ii) supervision and review over financial
reporting; and
●
we have implemented enhanced controls relating to lack of review over reconciliation of accrued clinical trial
liabilities, which include enhanced documentation of the reviews.
Management is working to fully remediate these material weaknesses in 2025.
Inherent limitations of disclosure controls and procedures and internal control over financial reporting
Our management, including our PEO and PFO, does not expect that our disclosure controls and procedures or our internal
control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the
inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and
instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that
judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally,
controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management
override of the control. The design of any system of controls is also based in part upon certain assumptions about the likelihood
of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential
future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance
with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system,
misstatements due to error or fraud may occur and not be detected.
Changes in internal control over financial reporting
Other than the remediation activities for previously identified material weaknesses in internal control over financial reporting
discussed below, there have been no other changes in our internal control over financial reporting during the quarter ended
December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
Remediation activities for previously identified material weaknesses
In connection with the preparation of the financial statements included in our Annual Report for the year ended December 31,
2023, management identified the following material weaknesses: (i) lack of segregation of duties over cash disbursements and
financial reporting, (ii) logical access over computer applications, and (iii) lack of supervision and review over financial
reporting. Specifically, there was a lack of segregation of duties involved in the execution of wire transfers, preparing journal
entries and review over clinical trial accruals, and certain individuals in the accounting department have administrative access to
certain financial reporting systems.
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Under the oversight of the audit committee, management has developed a detailed plan and timetable for the implementation of
appropriate remedial measures to address the previously identified material weaknesses. As of the date of our Quarterly Report
on Form 10-Q for the quarterly period ended September 30, 2024, management concluded that certain previously identified
material weaknesses related to (i) lack of segregation of duties over cash disbursements and (ii) logical access over certain of
the computer applications, including removing certain individuals in the accounting department with administrative access,
have been remediated. The remaining previously identified weaknesses as of September 30, 2024 were: (i) lack of segregation
of duties over financial reporting, (ii) logical access over the accounting software, and (iii) lack of supervision and review over
financial reporting. We have taken the following actions to address the remaining previously identified material weaknesses:
●
we have added additional personnel to the accounting department to allow for the effective segregation of duties over
financial reporting, including preparing journal entries and review over clinical trial accruals;
●
we have implemented effective controls relating to lack of supervision over financial reporting;
●
we have implemented enhanced controls relating to logical access over the accounting software, which includes (i)
validation of certain financial reports for accuracy and completeness and (ii) supervision and review over financial
reporting; and
●
we have implemented effective controls related to lack of review over financial reporting, except for the reconciliation
of accrued clinical trial liabilities.
As of the date of this Annual Report, management has concluded that the actions described above were satisfactorily
implemented and have been in place for a sufficient period of time to demonstrate that previously identified material
weaknesses related to (i) lack of segregation of duties over financial reporting, (ii) lack of supervision over financial reporting,
and (iii) lack of review over financial reporting, except for the reconciliation of accrued clinical trial liabilities, have been
remediated. We are in the process of remediating, but have not yet remediated, the material weaknesses related to (i) logical
access over the accounting software and (ii) lack of review over reconciliation of accrued clinical trial liabilities.
Item 9B.
Other Information
Trading Plans
During the three months ended December 31, 2024, none of our directors or Section 16 officers adopted or terminated any
contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative
defense conditions of Rule 10b5-1(c) of the Exchange Act or any “non-Rule 10b5-1 trading arrangement.”
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevents Inspections
None.
Part III
Item 10.
Directors, Executive Officers and Corporate Governance
Directors and executive officers
The Board is divided into three classes. Members of each class serve staggered three-year term. The terms of directors in Class
I, Class II and Class III expire at the annual meetings of stockholders to be held in 2026, 2027 and 2025, respectively.
The following table provides information as to each person who is, as of the filing hereof, a director and/or executive officer of
MetaVia.
Name
Position(s)
Age
Mark A. Glickman
Class III Director
59
Jason L. Groves
Class II Director
54
Hyung Heon Kim
Chief Executive Officer, President and Class II Director
49
Andrew I. Koven
Class II Director and Chair of the Board
67
Michael Salsbury
Class III Director
75
D. Gordon Strickland
Class I Director
78
James P. Tursi
Class I Director
60
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Marshall H. Woodworth
Chief Financial Officer
67
Business experience and background of directors and executive officers
Mr. Mark A. Glickman has served as a member of the Board since May 2023. Mr. Glickman has also served as a member of the
board of Otsuka Precision Health since March 2024. Since December 2023, Mr. Glickman has served as President and Chief
Executive Officer of BioFlorida Inc., an association representing life sciences and research organizations based in Florida.
Previously, Mr. Glickman served as the Co-Chief Executive Officer for TherapeuticsMD, Inc. (“TXMD”) (Nasdaq: TXMD), a
women’s healthcare product company, from September 2022 through the sale of the assets of TXMD, Inc. to Mayne
Therapeutics (now Mayne Pharma Group Ltd) in January 2023. Mr. Glickman also served as Chief Business Officer,
Commercial of TXMD, since June 2021 through the sale of assets of TXMD. Previously, Mr. Glickman served as the Chief
Commercial Officer for Esperion Therapeutics, Inc. (Nasdaq: ESPR) from 2018 until December 2020, where he developed and
led the commercial division in the launch of the company’s first cardiovascular prescription therapy. From June 2015 to March
2018, Mr. Glickman served as the Chief Commercial Officer for Aralez Pharmaceuticals, Inc. (“Aralez”), a public specialty
pharmaceutical company, where he built out and led the first commercial effort for a previously clinical organization. Prior to
June 2015, Mr. Glickman was Executive Vice President of Sales and Marketing for Auxilium Pharmaceuticals Inc., which was
acquired by Endo International plc (“Endo”) in January 2015, where he led all commercial efforts for a portfolio of thirteen
pharmaceutical products. Mr. Glickman's previous positions include Senior Vice President of Sales and Marketing and Vice
President of Medical Devices for Otsuka America Pharmaceuticals Inc. and Marketing Head, Regional Sales Director and Vice
President of Sales and Operations at Kos Pharmaceuticals (Abbott Laboratories, now AbbVie Inc. (NYSE: ABBV)), where he
expanded his skills in the commercial products area. Mr. Glickman received a Bachelor of Arts degree in Political Science from
S.U.N.Y Oswego, and a Master of Business Administration in Finance and International Management from the N.Y.U. Stern
School of Business. The Board believes that Mr. Glickman’s 30 years of experience in the pharmaceutical and medical device
industry qualifies him to serve as a director.
Mr. Jason L. Groves, Esq. has served as a member of the Board since December 2019. Since July 2022, Mr. Groves has served
as the Chief Legal Officer and Corporate Secretary of Medifast, Inc. (“Medifast”) (NYSE: MED), a publicly-held leading
manufacturer and distributor of clinically-proven, healthy-living products and programs. After joining Medifast in 2009, Mr.
Groves has held several executive management positions, most recently serving as Executive Vice President and General
Counsel of Medifast, Inc. from 2011 to July 2022. Mr. Groves was a Medifast director from 2009 to 2015, serving on the audit
committee from 2009 to 2011. Prior to joining Medifast, Mr. Groves was Assistant Vice President of Government Affairs for
Verizon Maryland, a telecommunications company, where he was responsible for the company’s legislative policy and
government affairs. A U.S. Army veteran, Mr. Groves was a direct-commissioned Judge Advocate in the U.S. Army Judge
Advocate General’s (JAG) Corps. As a JAG officer, he practiced law and had the distinction of prosecuting criminal cases in the
District Court of Maryland as a Special Assistant U.S. Attorney. Over the course of three years, he received two Army
Achievement Medals and one Army Commendation Medal. Mr. Groves completed nine years with the Anne Arundel Medical
Center Board of Trustees, chairing their international captive insurance company board for eight years. Mr. Groves received his
Bachelor of Science degree, cum laude, in Hospitality Management from Bethune-Cookman University, and obtained his Juris
Doctor from North Carolina Central University School of Law. The Board believes that Mr. Grove’s experience serving as an
independent director, audit committee member, and chief legal officer of a large public corporation while assisting with the
initial international introduction of such corporation’s products qualifies him to serve as a director.
Mr. Hyung Heon Kim has served as a member of the Board since July 2021 and was appointed as our President and Chief
Executive Officer in August 2023. Previously, Mr. Kim was the General Counsel and a Vice President of Dong-A ST and Dong-
A Socio Group, a Korean-based group of companies mainly engaged in the research, development, production and sale of
pharmaceuticals, medical devices and APis. Mr. Kim served as General Counsel of Dong-A ST from January 2018 until August
2023 and as a Vice President of Dong-A ST from December 2020 until August 2023. Mr. Kim previously served as Executive
Director of Dong-A ST from January 2018 through December 2020. Prior to his roles with Dong-A ST, Mr. Kim was Head of
International Legal Affairs for Dong-A Socio Holdings Co., Ltd., a Korean-based holdings company for the Dong-A Socio
group of companies from 2012 to 2018. Since April 2021, Mr. Kim has served as a director of AnaPath Services GmbH, a
private Swiss-based provider of scientific research and development services, and STP America Research Corp, a private New
Jersey-based research and development company. Prior to joining Dong-A Socio Group, Mr. Kim served as legal counsel to SK
Energy Co., Ltd. and SK Innovation Co., Ltd. from 2008 to 2011. Mr. Kim received his Bachelor of Law degree from Soongshil
University in Korea, and obtained his Juris Doctor from Washington University School of Law. The Board believes that Mr.
Kim’s experiences gained as General Counsel and Head of International Legal Affairs to an established pharmaceutical group of
companies qualify him to serve as a director. In addition, his day-to-day leadership of MetaVia gives him critical insights into
our operations, strategy and competition, and he facilitates the Board’s ability to perform its oversight function.
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Mr. Andrew I. Koven has served as a member of the Board since July 2021, and Chair of the Board since January 2022. Mr.
Koven is the Lead Independent Director of Kala Bio, Inc. (“Kala”) (Nasdaq: KALA), a public biopharmaceutical company
focused on the discovery, development and commercialization of innovative therapies for diseases of the eye. He has served as
the Lead Independent Director of Kala since December 2018 and as a member of the Kala board of directors since September
2017. Mr. Koven serves as Chair of Kala’s compensation committee and is a member of the audit committee. Mr. Koven was,
until his retirement in January 2019, the President and Chief Business Officer of Aralez and served in that role with the
company’s predecessor, Pozen Inc. (“Pozen”), commencing in June 2015. Prior to joining Pozen, Mr. Koven served as
Executive Vice President, Chief Administrative Officer and General Counsel of Auxilium Pharmaceuticals Inc., a public
specialty biopharmaceutical company, from February 2012 until January 2015, when it was acquired by Endo. Mr. Koven
served as President and Chief Administrative Officer and a member of the board of directors of Neurologix, Inc.
(“Neurologix”), a company focused on the development of multiple innovative gene therapy development programs, from
September 2011 to November 2011. Before Neurologix, Mr. Koven served as Executive Vice President and Chief
Administrative and Legal Officer of Inspire Pharmaceuticals, Inc., a public specialty pharmaceutical company, from July 2010
until May 2011 when it was acquired by Merck & Co., Inc. (NYSE: MRK). Previously, Mr. Koven served as Executive Vice
President, General Counsel and Corporate Secretary of Sepracor Inc. (now Sunovion), a public specialty pharmaceutical
company, from March 2007 until February 2010 when it was acquired by Dainippon Sumitomo Pharma Co., Ltd. Prior to
joining Sepracor, Mr. Koven served as Executive Vice President, General Counsel and Corporate Secretary of Kos
Pharmaceuticals, Inc., a public specialty pharmaceutical company, from August 2003 until its acquisition by Abbott
Laboratories (now AbbVie) in December 2006. Mr. Koven began his career in the pharmaceutical industry first as an Assistant
General Counsel and then as Associate General Counsel at Warner-Lambert Company from 1993 to 2000, followed by his role
as Senior Vice President and General Counsel at Lavipharm Corporation from 2000 to 2003. From 1986 to 1992, he was a
corporate associate at Cahill, Gordon & Reindel in New York. From 1992 to 1993, he served as Counsel, Corporate and
Investment Division, at The Equitable Life Assurance Society of the U.S. Mr. Koven holds a Master of Laws (LL.M.) Degree
from Columbia University School of Law and a Bachelor of Laws (LL.B.) Degree and B.A. Degree in Political Science from
Dalhousie University. The Board believes that Mr. Koven’s extensive experience in the pharmaceutical industry qualifies him to
serve as a director.
Mr. Michael Salsbury has served as a member of the Board since December 2019. From May 2021 to August 2024, Mr.
Salsbury served as Counsel to Current Health Inc., a provider of remote care management services and products. Current Health
was acquired by Best Buy Co., Inc. (NYSE: BBY) in November 2021. From September 2017 to May 2022, Mr. Salsbury served
as Counsel to Verisma Systems, Inc., a provider of cloud-based automated disclosure management systems; and from February
2013 to July 2017, he served as Secretary and General Counsel to Best Doctors, Inc., a provider of expert medical opinions.
Best Doctors was acquired by Teladoc Health, Inc. (NYSE: TDOC) in July 2017. Mr. Salsbury has more than 25 years’
experience as a senior executive with public and private companies and at a private law practice. Mr. Salsbury received a J.D.
and M.B.A. from the University of Virginia and a B.A. from Dartmouth College. The Board believes that Mr. Salsbury’s legal
expertise and his experience serving as general counsel and secretary of a Fortune 100 corporation qualifies him to serve as a
director.
Mr. D. Gordon Strickland has served as a member of the Board since January 2022. He served as Chair of Ampex Corporation
(“Ampex”), a technology company that was previously listed on Nasdaq, from March 2012 until June 2019. He also served
as Ampex’s Chief Executive Officer from February 2007 to March 2012. Prior to Ampex, he served as President and Chief
Executive Officer of Cardiff Holdings, a privately held producer of credit, debit, loyalty and other cards by Brookside Equity
Partners from March 2012 to August 2013. Prior to Cardiff Holdings, Mr. Strickland was the Chair of Medical Resources, a
public operator of diagnostic imaging centers. Mr. Strickland was also president and CEO of MCSi, Inc., a technical integrator
of audio-visual products, from March 2003 until March 2004. Prior to MCSi, Mr. Strickland was the president and CEO of
Capitol Wire, Inc, an internet-based news and information service provider from September 1999 until August 2002 and had
leadership roles with Kerr Group, a manufacturer of glass containers and plastic packaging, from June 1986 until August 1997,
including serving as the president and CEO, and as Senior Vice President, Finance and Chief Financial Officer. Mr. Strickland
has over 35 years of experience as a senior executive and board member with public and private companies. Mr. Strickland
received an M.B.A. from the Wharton School of the University of Pennsylvania and a B.A from Yale University. The Board
believes that Mr. Strickland’s experience serving as Chair and Chief Executive Officer of a publicly-traded company, Ampex,
qualifies him to serve as a director.
Dr. James P. Tursi was appointed to the Board in November 2023. Dr. Tursi has served as Executive Vice President – Global
R&D for Endo since January 2022. From April 2020 until January 2022, Dr. Tursi served as Chief Scientific Officer U.S. for
Ferring Pharmaceuticals. From August 2018 until April 2020, Dr. Tursi served as Executive Vice President, R&D for Antares
Pharma Inc. (Nasdaq: ATRS). Prior to August 2018, Dr. Tursi served as Chief Medical Officer at Aralez, Chief Medical Officer
and Vice President of Clinical R&D for Auxilium Pharmaceuticals, Inc., and held positions of increasing responsibility at
GlaxoSmithKline (NYSE: GSK) and Procter & Gamble Pharmaceuticals. Dr. Tursi practiced medicine and surgery for over 10
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years and created a medical education company, I Will Pass®, which assisted physicians in the process of board certification.
He holds a Bachelor of Science degree in Chemistry and Biology from Ursinus College; a Doctor of Medicine from Medical
College of Pennsylvania and performed his residency in Gynecology and Obstetrics at the Johns Hopkins Hospital. The Board
believes Dr. Tursi’s pharmaceutical industry and senior leadership experience qualifies him to serve as a director.
Mr. Marshall Woodworth served as our Acting Chief Financial Officer from October 25, 2023 until his appointment as our
Chief Financial Officer on March 1, 2024. Previously, Mr. Woodworth served as the Chief Financial Officer of Nevakar Inc. and
its respective subsidiaries (Nevakar Injectables Inc. and Vyluma Inc.) from May 2017 through May 2023, where Mr.
Woodworth was responsible for the accounting, financing, legal and human resources functions. From October 2015 through
October 2016, Mr. Woodworth served as the Chief Financial Officer of Braeburn Pharmaceuticals Inc., where Mr. Woodworth
led and coordinated the accounting, finance and treasury functions. From May 2014 to July 2015, Mr. Woodworth served as the
Chief Financial Officer of Aerocrine AB, where Mr. Woodworth had responsibility for directing and coordinating the
accounting and finance, FRS (Swedish SEC) reporting, investor relations, human resources and legal aspects of the company.
From January 2010 through February 2014, Mr. Woodworth served as Chief Financial Officer of Furiex Pharmaceuticals, Inc.
(Nasdaq: FURX), where Mr. Woodworth led a multi-disciplinary team and managed accounting, finance, SEC reporting,
financial planning, analysis and reporting, and treasury functions. Mr. Woodworth received a Bachelor of Science degree from
the University of Maryland and a Master of Business Administration degree in Finance from Indiana University.
Family relationships
None of our directors or executive officers has a family relationship as defined in Item 401 of Regulation S-K.
Involvement in certain previous legal proceedings
Mr. Glickman served as Chief Commercial Officer at Aralez from June 2016 to March 2018, Mr. Koven served as President and
Chief Business Officer of Aralez’s predecessor, Pozen, and then at Aralez from June 2015 to January 2019, and Dr. Tursi served
as Chief Medical Officer of Pozen and then Aralez from 2015 until August 2018, and has served as Executive Vice President –
Global R&D for Endo since January 2022. Each of Aralez and Endo and certain of their respective affiliates filed a voluntary
petition for relief under Chapter 11 of the U.S. Bankruptcy Code on August 10, 2018 and August 16, 2022, respectively.
Code of business conduct and ethics
Our Board has adopted a code of business conduct and ethics that applies to all of our employees, officers and directors,
including our Chief Executive Officer, Chief Financial Officer and other executive officers, as applicable. We intend to disclose
future amendments to certain provisions of our code of business conduct and ethics, or waivers of these provisions, on our
website. The full text of our code of conduct is posted on the investor relations section of our website at http://metaviatx.com
under “Investors & News-Corporate Governance-Highlights”.
Insider Trading Policy
Our Board has adopted an Insider Trading Compliance Policy (“Insider Trading Policy”) governing the purchase, sale, and/or
other dispositions of our securities by directors, officers, employees and other specified persons. Our Insider Trading Policy is
designed to promote compliance with insider trading laws by informing, educating and creating reasonable processes to prevent
the Company and its directors, officers, employees and other specified persons from insider trading violations and the
appearance of any related improper conduct. The policy prohibits the trading of our securities on the basis on material
nonpublic information, establishes regular blackout periods when directors, executive officers and other specified persons are
prohibited from trading in our securities, and requires legal compliance for any insider trading plans intended to rely on the
affirmative defense against insider trading liability in accordance with Rule 10b5-1 under the Exchange Act. Additionally, the
policy specifically prohibits all directors, officers, employees and other specified persons from speculative trading and hedging
transactions involving our common stock, including short sales, transactions in put or call options, and other speculative
transactions.
Audit committee
Our Board has established an audit committee, which is comprised of Mr. Strickland, Mr. Koven and Mr. Glickman, with Mr.
Strickland serving as chair of the committee. Each member of our audit committee meets the requirements for independence
under the current Nasdaq and SEC rules and regulations and is financially literate. In addition, our Board has determined that
Messrs. Glickman and Strickland each qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of
Regulation S-K promulgated under the Securities Act based on his serving as chief executive officer of multiple companies as
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described above. This designation does not impose on either of them any duties, obligations or liabilities that are greater than
are generally imposed on members of our audit committee and our Board.
Item 11.
Executive Compensation
Executive officer compensation
Summary compensation table for 2024 and 2023
The following table presents summary information regarding the total compensation for services rendered in all capacities that
were earned by our named executive officers for 2024 and 2023.
Salary
Bonus
Stock
Awards (1)
All Other
Compensation
Total
Name and Principal Position
Year
($)
($)
($)
($)
($)
Hyung Heon Kim, President and
2024
460,125 220,163
—
36,116 (2)
716,404
Chief Executive Officer
2023
174,009
55,000
386,915
48,131 (2)
664,055
Marshall H. Woodworth, Chief
2024
316,667 120,663
209,015
128,354 (3)
774,699
Financial Officer (3)
2023
—
—
—
154,500 (3)
154,500
(1) Amounts reflect the aggregate grant date fair value of restricted stock units (“RSUs”) in accordance with FASB ASC
Topic 718. The grant date fair value was determined based on the closing sales price of our common stock as
reported on Nasdaq on the date of grant multiplied by the number of shares of common stock subject to the RSU
award. The amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions.
(2) Other compensation for 2024 was related to health and welfare benefits paid by MetaVia.
(3) Mr. Woodworth was appointed as our Acting Chief Financial Officer in October 2023 and was appointed as Chief
Financial Officer in March 2024. While serving as our Acting Chief Financial Officer, Mr. Woodworth was
employed by WhiteCap Search Holdings, LLC (“WhiteCap”) and was contracted to us from October 2023 until
March 2024. Other compensation for 2024 included $118,422 of consulting fees paid to WhiteCap for Mr.
Woodworth’s services in 2024 and health and welfare benefits paid by MetaVia.
Narrative disclosure to summary compensation table
Agreements with our named executive officers
We entered into an employment agreement with Mr. Kim in connection with his appointment as our President and Chief
Executive Officer in August 2023. In October 2023, Mr. Woodworth was appointed as the Acting Chief Financial Officer of
MetaVia, pursuant to an engagement agreement with WhiteCap. In March 2024, we entered into an employment agreement
with Mr. Woodworth in connection with his appointment as Chief Financial Officer of MetaVia (the “Woodworth Employment
Agreement”).
Hyung Heon Kim
We entered into an employment agreement with Mr. Kim in connection with his appointment as our Chief Executive Officer
and President in August 2023 (the “Kim Employment Agreement”). Under the terms of Kim Employment Agreement, we
agreed to provide Mr. Kim: (i) an annual base salary of $450,000, reviewed annually; (ii) an annual discretionary bonus targeted
at 50% of his base salary, as determined in the sole discretion of the Board or committee thereof; (iii) the right to participate in
the benefit programs and arrangements that we make available to our employees, including paid vacation and sick leave,
contributory and non-contributory welfare and benefit plans, disability plans, and medical, death benefit and life insurance plans
for which Mr. Kim is eligible under the terms of those plans; and (iv) a RSU award for 625,064 shares of our common stock
pursuant to the terms of a RSU grant notice and form award agreement (the “Kim RSU Award”) under our Amended and
Restated 2022 Equity Incentive Plan (the “2022 Plan”). The Kim RSU Award vested as to 50% of the shares underlying the
Kim RSU Award on the first anniversary of Mr. Kim’s employment with MetaVia and, the remaining shares subject to the Kim
RSU Award, shall vest and become exercisable in equal monthly installments on the last day of each full month over the twelve
(12) months following the first anniversary of Mr. Kim’s employment with us.
In the event of Mr. Kim’s death during the employment period or a termination due to disability, Mr. Kim or his beneficiaries or
legal representatives shall be entitled to receive (i) any annual base salary earned, but unpaid, for services rendered to MetaVia
on or prior to the date on which the employment period ends, (ii) unreimbursed expenses and (iii) certain other benefits
provided for in the employment agreement (the “Kim Unconditional Entitlements”). In the event of termination for cause by
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MetaVia or the termination of employment as a result of resignation without good reason, Mr. Kim shall be provided the Kim
Unconditional Entitlements.
In the event of a resignation by Mr. Kim for good reason or the exercise by MetaVia of its right to terminate Mr. Kim other than
for cause, death or disability, Mr. Kim will receive the Kim Unconditional Entitlements and, subject to Mr. Kim signing and
delivering to us and not revoking a general release of claims in favor of MetaVia and certain related parties, we shall pay a
severance amount to Mr. Kim equal to fifty percent (50%) of Mr. Kim’s then-current base salary (the “Severance Amount”) and
pay for Mr. Kim’s continued health insurance coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended (known as COBRA) for a period of six (6) months following Mr. Kim’s termination (the “Kim Conditional Benefits”).
In the event of a resignation by Mr. Kim for good reason, the exercise by MetaVia of its right to terminate Mr. Kim other than
for cause, death or disability, in each case, within twelve (12) months following or three (3) months prior to the effective date of
a change in control, Mr. Kim will receive the following: (i) the Kim Unconditional Entitlements and the Kim Conditional
Benefits less the Severance Amount; (ii) an amount equal to the product of 1.0 times the sum of Mr. Kim’s annual base salary
and target annual cash bonus, less the Non-Compete Amount (as defined in the Kim Employment Agreement, if applicable);
and (iii) accelerated vesting of all equity awards that were assumed, continued or substituted by the surviving or acquiring
corporation in the change in control and remain subject to time-based vesting conditions, if any.
In addition, Mr. Kim entered into an Employee Proprietary Information and Invention Assignment Agreement that applies
during the term of Mr. Kim’s employment and thereafter.
Marshall H. Woodworth
In October 2023, Mr. Woodworth was appointed as the Acting Chief Financial Officer of MetaVia, pursuant to an engagement
agreement with WhiteCap, dated February 3, 2023. Mr. Woodworth received his compensation and benefits from WhiteCap. In
connection with the appointment of Mr. Woodworth as our Acting Chief Financial Officer, we paid WhiteCap approximately
$375.00 per hour under the engagement agreement for services rendered to MetaVia by Mr. Woodworth.
In March 2024, we entered into the Woodworth Employment Agreement with Mr. Woodworth in connection with his
appointment as Chief Financial Officer of MetaVia. The Woodworth Employment Agreement has an initial term of two (2)
years beginning on March 1, 2024 (“Initial Term”) and automatically renews for an additional one-year period at the end of the
Initial Term and each anniversary thereafter (“Renewal Term”) provided that at least 60 days prior to the expiration of the Initial
Term or any Renewal Term the Board does not notify Mr. Woodworth of its intention not to renew.
Under the terms of Woodworth Employment Agreement, we agreed to provide Mr. Woodworth: (i) an annual base salary of
$380,000, reviewed annually; (ii) an annual discretionary bonus targeted at 40% of his base salary, as determined in the sole
discretion of the Board or committee thereof; (iii) the right to participate in the benefit programs and arrangements that we
make available to our employees, including paid vacation and sick leave, contributory and non-contributory welfare and benefit
plans, disability plans, and medical, death benefit and life insurance plans for which Mr. Woodworth is eligible under the terms
of those plans; and (iv) a RSU award for 33,496 shares of our common stock pursuant to the terms of a RSU grant notice and
form award agreement (the “Woodworth RSU Award”) under our 2022 Plan. The Woodworth RSU Award vests as follows: (i)
30% of the shares underlying the Woodworth RSU Award on the first anniversary of the grant; (ii) 30% of the shares underlying
the Woodworth RSU Award on the second anniversary of the grant date; and (iii) the remaining shares subject to the
Woodworth RSU Award, shall vest and become exercisable in equal monthly installments on the last day of each full month
over the twelve (12) months following the first anniversary of grant date.
If during the period Mr. Woodworth is employed by MetaVia, we consummate a change in control (as defined in the
Woodworth Employment Agreement) and the Woodworth RSU Award is not assumed, continued or substituted by the surviving
corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) in such change in control in
the manner contemplated by the 2022 Plan, then 100% of the unvested portion of the Woodworth RSU Award shall fully vest
immediately prior to the effectiveness of such change in control.
In the event of Mr. Woodworth’s death during the employment period or a termination due to disability, Mr. Woodworth or his
beneficiaries or legal representatives shall be entitled to receive any annual base salary earned, but unpaid, for services rendered
to MetaVia on or prior to the date on which the employment period ends, unreimbursed expenses and certain other benefits
provided for in the Woodworth Employment Agreement (the “Unconditional Entitlements”). In the event of termination for
cause by MetaVia or the termination of employment as a result of resignation without good reason, Mr. Woodworth shall be
provided the Unconditional Entitlements.
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In the event of a resignation by Mr. Woodworth for good reason or the exercise by MetaVia of its right to terminate Mr.
Woodworth other than for cause, death or disability, Mr. Woodworth will receive the Unconditional Entitlements and, subject to
Mr. Woodworth signing and delivering to MetaVia and not revoking a general release of claims in favor of the MetaVia and
certain related parties, we shall pay a severance amount to Mr. Woodworth equal to twenty-five percent (25%) of Mr.
Woodworth’s then-current annual base salary and pay for Mr. Woodworth’s continued health insurance coverage under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (known as COBRA) for a period of three (3) months
(the “Conditional Benefits”).
In the event of a resignation by Mr. Woodworth for good reason or the exercise by MetaVia of its right to terminate Mr.
Woodworth other than for cause, death or disability, in each case, within twelve (12) months following or three (3) months prior
to the effective date of a change in Control, Mr. Woodworth will receive the following: (i) the Unconditional Entitlements and
the Conditional Benefits less the Severance Amount; (ii) an amount equal to the product of 0.50 times the sum of Mr.
Woodworth’s annual base salary and target annual cash bonus, less the Non-Compete Amount (as defined in the Woodworth
Employment Agreement, if applicable); and (iii) accelerated vesting of all equity awards that were assumed, continued or
substituted by the surviving or acquiring corporation in the Change in Control and remain subject to time-based vesting
conditions, if any.
Outstanding Equity Awards at Fiscal Year-End 2024
The following table sets forth information regarding outstanding stock option and RSU awards held by our named executive
officers as of December 31, 2024:
Option Awards
Stock Awards
Number of
Market
Securities
Number of
Value of
Underlying
Share of
Share of
Unexercised
Option
Stock That
Stock That
Options
Exercise
Option
Have
Have
(Exercisable)
Price
Expiration
Not Vested
Not Vested (1)
Name
Grant Date
(#)
($)
Date
(#)
($)
Hyung Heon Kim
June 9, 2022
83
14.18
June 9, 2032
—
—
Hyung Heon Kim
August 11, 2023
—
—
—
29,298 (1)
59,475
Marshall Woodworth
March 1, 2024
—
—
—
33,496 (2)
67,997
(1) This column shows the market value of the unvested RSUs held by our named executive officers based on $2.03 per
share, the closing price of our Common Stock on December 31, 2024, the last trading day of 2024.
(2) The RSUs will vest in equal monthly installments on the last day of each full month following August 11, 2024, subject to
continuing service.
(3) 30% of the RSUs will vest on March 1, 2025, 30% will vest on March 1, 2026 and 40% vest in twelve equal installments
on the last day of each full month following March 1, 2026, subject to continuing service.
Policy on Timing of Option Grants
During 2024, we did not grant stock options to our executive officers, directors or employees. Our compensation committee has
not established policies and practices regarding the timing of stock option grants in relation to the release of material nonpublic
information and does not take material non-public information into account when determining the timing and terms of stock
option awards to executive officers. We do not time the disclosure of material non-public information for the purpose of
affecting the value of executive compensation.
Non-employee director compensation
Our non-employee directors receive a mix of cash and share-based compensation intended to encourage non-employee directors
to continue to serve on the Board, further align the interests of the directors and stockholders, and attract new non-employee
directors with outstanding qualifications. Directors who are employees or officers of MetaVia do not receive any additional
compensation for Board service.
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81
The following table provides compensation information for 2024 for each non-employee member of the Board.
Fees Earned
or Paid
Stock
in Cash (1)
Awards (2)
Total
Name
($)
($)
($)
Mark A. Glickman
55,000
19,850
74,850
Jason Groves
45,000
19,850
64,850
Andrew I. Koven
94,000
19,850
113,850
Michael Salsbury
52,000
19,850
71,850
D. Gordon Strickland
64,000
19,850
83,850
James P. Tursi
45,000
19,850
64,850
(1) The amounts in this column represent the value of annual cash earned from retainers by directors serving on
the Board and committees of the Board in 2024.
(2) Amounts reported reflect the aggregate grant date fair value of 5,051 RSUs granted to each of our directors
for service in 2024, whose grant date fair value was determined based on the closing sales price of our
common stock as reported on Nasdaq on the date of grant. The amounts shown exclude the impact of
estimated forfeitures related to service-based vesting conditions.
Non-employee director compensation policy
In May 2024, the compensation committee recommended, and the Board approved our Amended and Restated Non-Employee
Director Compensation Policy (as further amended in November 2024, the “Amended Non-Employee Director Compensation
Policy”). Under the Amended Non-Employee Director Compensation Policy, all of our non-employee directors receive an
annual cash retainer of $40,000 for Board service except for the Non-Executive Chair of the Board who receives an annual cash
retainer of $75,000. Additionally, directors receive an additional cash retainer for serving as a committee chair or member as
follows:
Nominating
and Corporate
Audit
Compensation
Governance
Committee
Committee
Committee
($)
($)
($)
Committee chair
18,000
12,000
10,000
Committee member (other than the chair)
9,000
6,000
5,000
Initial grant: For each non-employee director who is first elected or appointed to the Board on or following the effective date of
the Amended Non-Employee Director Compensation Policy, at the close of business on the date of such non-employee
director’s initial election or appointment to the Board, such non-employee director will be automatically, and without further
action by the Board or the compensation committee, granted an RSU award covering a number of RSUs equal to (a) $40,000
divided by (b) the average fair market value of a share of our common stock for the 30 consecutive market trading days ending
on and including the last market trading day prior to the grant date of such RSU award, rounded down to the nearest whole unit
(each, an “Initial Grant”). 50% of each Initial Grant will vest as of the date of grant and the remainder will vest in two equal
installments on each subsequent anniversary of the date of grant, subject to the non-employee director’s continuous service on
each vesting date
Annual grant and prorated annual grant: At the close of business after the first annual meeting of the Company’s stockholders
following the effective date of the Amended Non-Employee Director Compensation Policy and on the date of each subsequent
annual meeting of the Company’s stockholders held following the initial annual meeting of stockholders (each, an “Annual
Meeting”), each person who is then a non-employee director will be automatically, and without further action by the Board or
the compensation committee, granted an RSU award covering a number of RSUs equal to (i) $20,000 divided by (ii) the
average fair market value of a share of common stock for the 30 consecutive market trading days ending on and including the
last market trading day prior to the grant date of such RSU award, rounded down to the nearest whole unit (each, an “Annual
Grant”).
In addition, for each non-employee director who is first elected or appointed to the Board after the first Annual Meeting of the
Company’s stockholders following the effective date on a date other than the date of an Annual Meeting of the Company’s
stockholders, at the close of business on the thirtieth (30th) day following such non-employee director’s initial election or
appointment to the Board, such non-employee director will be automatically, and without further action by the Board or the
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compensation committee, granted an RSU award covering a number of RSUs equal to (i) $20,000 divided by (ii) the average
fair market value of a share of common stock for the 30 consecutive market trading days ending on and including the last
market trading day prior to the grant date of such RSU award, multiplied by a fraction, the numerator of which equals 365
minus the total number of days, as of the grant date of such RSU award, that have occurred since the last Annual Meeting and
the denominator of which equals 365, rounded down to the nearest whole unit (each, a “Prorated Annual Grant”).
Each Annual Grant and Prorated Annual Grant will vest in full on the earlier of the (i) one-year anniversary of the grant date of
the Annual Grant or Prorated Annual Grant, as applicable, and (ii) date immediately prior to the date of the Annual Meeting
following the grant date of such Annual Grant or Prorated Annual Grant, as applicable, subject to the non-employee director’s
continuous service on the vesting date.
Retainer grant: Each non-employee director may elect to forego receiving payment of all (but not less than all) of the annual
cash retainers described above that he is otherwise eligible to receive for the period during the Company’s fiscal year that the
election applies commencing on the first day of such fiscal year (or if the non-employee director makes the election in the
Company’s fiscal year that the election applies, on the first day of the Company’s fiscal quarter next following the Company’s
fiscal quarter in which the election is made) and ending on the last day of such fiscal year and instead receive an RSU award
(the “Retainer Grant”), provided such election is timely made and complies with certain other requirements specified in the
Amended Non-Employee Director Compensation Policy. If a non-employee director timely makes the election described above
in accordance with the Amended Non-Employee Director Compensation Policy, on the first day of the Company’s fiscal year
that the election applies (or if the non-employee director makes the election in the Company’s fiscal year that the election
applies, on the first day of the Company’s fiscal quarter following the Company’s fiscal quarter in which the election is made),
the non-employee director will be automatically granted a Retainer Grant covering a number of RSUs equal to the (i) aggregate
amount of the annual cash retainers that the non-employee director is eligible to receive under the Amended Non-Employee
Director Compensation Policy for the applicable period to which the election applies divided by (ii) average fair market value of
a share of the Company’s common stock for the 30 consecutive market trading days ending on and including the last market
trading day prior to the grant date of such Retainer Grant, rounded down to the nearest whole unit. Each Retainer Grant will
vest in equal quarterly installments over the period commencing on the grant date of the Retainer Grant and ending on the last
day of the fiscal year in which the Retainer Grant is granted, subject to the non-employee director’s continued service on each
vesting date.
Deferral of settlement of RSU awards: Each non-employee director may elect to defer the delivery of shares in settlement of
any RSU award granted under the Amended Non-Employee Director Compensation Policy that would otherwise be delivered to
such non-employee director on or following the date such award vests pursuant to the terms of a deferral election such non-
employee director makes in accordance with the Amended Non-Employee Director Compensation Policy.
Change of Control; Death; Disability: Each RSU award held by a non-employee director that is granted under the Amended
Non-Employee Director Compensation Policy, including the awards described above, will fully vest upon such non-employee
director’s death or disability (as defined in the Company’s 2022 Plan), or immediately prior to the consummation of a change in
control (as defined in the Company’s 2022 Plan), in each case to extent such award is outstanding immediately prior to the
occurrence of such event.
Non-employee director compensation limit: The aggregate value of all compensation granted or paid, to any non-employee
director with respect to any fiscal year of the Company, including awards granted and cash fees paid by the Company to such
non-employee director, will not exceed the limits set forth in the Company’s 2022 Plan, currently, (1) $750,000 in total value or
(2) if such non-employee director first joins the Board during such fiscal year, $1,000,000 in total value.
All RSU awards shall be issued pursuant to the terms of the Company’s 2022 Plan.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth certain information regarding beneficial ownership of our common stock, as of March 17, 2025
by:
●
each person, or group of affiliated persons, known by us to beneficially own more than 5% of our common stock;
●
each of our named executive officers;
●
each of our directors; and
●
all of our current executive officers and directors as a group.
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The table lists the applicable percentage of ownership based on an aggregate of 8,654,869 shares of common stock outstanding
as of March 17, 2024. In addition, the rules provide for the inclusion of shares of our common stock issuable pursuant to the
vesting and settlement of RSUs and the exercise of stock options and warrants that are either immediately exercisable or
exercisable within 60 days of March 17, 2025. These shares of common stock are deemed to be outstanding and beneficially
owned by the person holding those RSUs, options or warrants for the purpose of computing the percentage ownership of that
person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person.
We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute beneficial
ownership of securities to persons who possess sole or shared voting power or investment power with respect to those
securities. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with
respect to all shares shown as beneficially owned by them, subject to applicable community property laws.
Except as otherwise noted below, the address for each person or entity listed in the table is c/o MetaVia Inc., 545 Concord
Avenue, Suite 210, Cambridge, Massachusetts, 02138.
Shares
Beneficially
Owned (1)
Percent (2)
Name of Beneficial Owner
(#)
(%)
Greater than 5% stockholders
Dong-A ST Co., Ltd. (3)
5,347,792
62%
Armistice Capital, LLC (4)
848,000
10%
Directors and Named Executive Officers
Mark A. Glickman
3,907
*
Jason Groves (5)
10,100
*
Andrew I. Koven (6)
10,100
*
Hyung Heon Kim (7)
48,067
*
Michael Salsbury (5)
10,100
*
D. Gordon Strickland (8)
10,016
*
James P. Tursi, Director
4,021
*
Marshall H. Woodworth
6,632
*
All current executive officers and directors as a group (8 persons)
102,943
*
* Represents beneficial ownership of less than one percent.
(1) Includes shares underlying (i) options that are exercisable and (ii) RSUs that are vested or will become vested, in each case,
within 60 days of March 25, 2024.
(2) Applicable percentage of ownership is based on 8,654,869 shares of common stock outstanding as of March 17, 2025, as
adjusted for each stockholder.
(3) Represents shares of common stock owned by Dong-A, a South Korean corporation, with an address of Dong-A ST Co.,
Ltd. is 64, Cheonho-daero, Dongdaemun-gu, Seoul, Republic of Korea.
(4) Based on information disclosed, as of February 14, 2025, in a Schedule 13G, as filed with the SEC, Armistice Capital, LLC
(“Armistice Capital”), 510 Madison Avenue, 7th Floor, New York, New York 10022. Armistice Capital is the investment
manager of Armistice Capital Master Fund Ltd. (the "Master Fund"), the direct holder of the Shares, and pursuant to an
Investment Management Agreement, Armistice Capital exercises voting and investment power over the securities of the
Issuer held by the Master Fund and thus may be deemed to beneficially own the securities of the Issuer held by the Master
Fund. Mr. Boyd, as the managing member of Armistice Capital, may be deemed to beneficially own the securities of the
Issuer held by the Master Fund. The Master Fund specifically disclaims beneficial ownership of the securities of the Issuer
directly held by it by virtue of its inability to vote or dispose of such securities as a result of its Investment Management
Agreement with Armistice Capital.
(5) Includes 333 shares of common stock issuable upon exercise of outstanding options within 60 days of March 17, 2025.
(6) Includes (i) 333 shares of common stock issuable upon exercise of outstanding options within 60 days of March 17, 2025
and (ii) 9,767 of vested RSUs whose common stock issuance was deferred under the terms of the RSU award.
(7) Includes (i) 83 shares of common stock issuable upon exercise of outstanding options within 60 days of March 17, 2025
and (ii) 6,510 of RSUs that will vest within 60 days of March 17, 2025.
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(8) Includes 250 shares of common stock issuable upon exercise of outstanding options within 60 days of March 17, 2025.
Securities authorized for issuance under equity compensation plans
The following table presents information as of December 31, 2024 with respect to compensation plans under which shares of
our common stock may be issued.
(a)
(b)
(c)
Number of
securities
to be issued
upon
exercise of
outstanding
options,
warrants
and rights
Weighted
average
exercise
price of
outstanding
options,
warrants
and rights
Number of
securities
remaining
available for
future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column (a))
Plan Category
(#)
($)
(#)
Equity compensation plans approved by security holders
179,786
398.30
356,992 (1)(2)
Equity compensation plans not approved by security holders
—
—
4,166 (3)
Total
179,786
398.30
361,158
(1)
The number of shares of common stock remaining available for future issuance represents shares available for issuance under
the 2022 Plan.
(2)
The 2022 Plan provides that the number of shares that may be issued under the 2022 Plan shall be increased on the first day of
each fiscal year by an amount equal to the lesser of (i) 5% of the number of outstanding shares of common stock on such date
and (ii) an amount determined by the plan administrator.
(3)
Our only equity compensation plan not approved by our security holders is our 2021 Inducement Plan. A total of 4,166 shares
of our common stock have been reserved for issuance under the Inducement Plan, subject to adjustment for stock dividends,
stock splits, or other changes in our common stock or capital structure. The Inducement Plan was approved by the
compensation committee without stockholder approval pursuant to Nasdaq Stock Market Listing Rule 5635(c)(4), and is to be
utilized exclusively for the grant of stock awards to individuals who were not previously an employee or non-employee
director of MetaVia (or following a bona fide period of non-employment with MetaVia) as an inducement material to such
individual’s entry into employment with MetaVia, within the meaning of Nasdaq Listing Rule 5635(c)(4). The 2021
Inducement Plan is administered by the Board. Stock awards under the Inducement Plan may only be granted by: (i) the
compensation committee or (ii) another committee of the Board composed solely of at least two members of the Board who
meet the requirements for independence under the Nasdaq Stock Market Listing Rules (the foregoing subsections (i) and (ii)
are collectively referred to as the “Committee”). Under the 2021 Inducement Plan, the Committee may choose to grant (i) non-
statutory stock options, (ii) stock appreciation rights, (iii) restricted stock awards, (iv) restricted stock unit awards, (v)
performance stock awards, (vi) performance cash awards, and (vii) other stock awards to eligible recipients, with each grant to
be evidenced by an award agreement setting forth the terms and conditions of the grant as determined by the compensation
committee in accordance with the terms of the Inducement Plan.
Item 13.
Certain Relationships and Related Transactions, and Director Independence
The following includes a summary of transactions since January 1, 2023 to which we have been a party, in which the amount
involved in the transaction exceeded the lesser of $120,000 or 1% of the average of our total assets at year-end for the last two
completed fiscal years, and in which any of our directors, nominees for director, executive officers or, to our knowledge,
beneficial owners of more than 5% of our capital stock or any member of the immediate family of any of the foregoing persons
had or will have a direct or indirect material interest.
Private placement
On June 23, 2024, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with Dong-A and
another institutional investor (the “2024 Private Placement”). Pursuant to the Securities Purchase Agreement, we issued to
Dong-A 2,544,530 shares of our Common Stock, Series A Warrants to purchase up to 2,544,530 shares of our Common Stock,
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and Series B Warrants to purchase up to 3,816,795 shares of our Common Stock in a private placement pursuant to Section 4(a)
(2) and Regulation D promulgated under the Securities Act. The Series A Warrants and the Series B Warrants have an exercise
price of $3.93 per share and became exercisable as of September 18, 2024, which is the effective date of stockholder approval
received at the Company’s special meeting of stockholders for the issuance of the shares upon exercise of the Series A Warrants
and the Series B Warrants (the “Stockholder Approval Date”). In connection with the Securities Purchase Agreement, Dong-A
entered into a voting agreement, whereby it agreed to vote all shares of Common Stock that it or its affiliate beneficially owned
with respect to any proposals presented to stockholders for approval on the Stockholder Approval Date. The Series A Warrants
will expire on the earlier of the twelve month anniversary of the Stockholder Approval Date and within 60 days following the
public announcement of MetaVia receiving positive Phase 1 MAD data readout for DA-1726, and the Series B Warrants will
expire on the earlier of the five years anniversary of the Stockholder Approval Date and within six months following the public
announcement of MetaVia receiving positive Phase 1 Part 3 data readout for DA-1726.
In connection with the 2024 Private Placement, on June 23, 2024, we entered into the Registration Rights Agreement with
Dong-A and another institutional investor, pursuant to which, among other things, we were required to prepare and file with the
SEC one or more registration statements to register for resale the shares of common stock sold in the 2024 Private Placement to
Dong-A, as well as the shares issued to the other institutional investor in the 2024 Private Placement and in the registered direct
offering (including the shares of common stock issuable upon exercise of the warrants issued in such offerings). On July 18,
2024, we filed a registration statement on Form S-1 to register such securities (the “Resale Registration Statement”). The Resale
Registration Statement was declared effective by the SEC on July 24, 2024.
Director independence
Our common stock is listed on Nasdaq. Because Dong-A ST Co., Ltd. holds a majority of the voting power of our outstanding
common stock, we are a “controlled company” under the listing rules of Nasdaq. As a controlled company, we are exempt from
certain Nasdaq governance requirements that would otherwise apply to the composition and function of our Board. For
example, we are not required to comply with certain rules that would otherwise require, among other things, (i) our Board to
have a majority of independent directors, (ii) the compensation of our executive officers to be determined by a majority of the
independent directors or a committee of independent directors, and (iii) director nominees to be selected or recommended either
by a majority of the independent directors or a committee of independent directors. Notwithstanding our status as a controlled
company, we remain subject to the requirements that our independent directors hold regular executive sessions and that our
audit committee consist entirely of independent directors. Under the rules of Nasdaq, 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 the exercise of independent judgment in carrying out the responsibilities of a director.
Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act. In order
to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other
than in his or her capacity as a member of the audit committee, the board of directors or any other board of directors committee:
(i) accept, directly or indirectly, any consulting, advisory or other compensatory fee from the listed company or any of its
subsidiaries; or (ii) be an affiliated person of the listed company or any of its subsidiaries.
Notwithstanding our status as a controlled company, the Board has undertaken a review of the independence of each director
and considered whether each director has a material relationship with us that could compromise his ability to exercise
independent judgment in carrying out his responsibilities. As a result of this review, the Board affirmatively determined that
Mark A. Glickman, Jason Groves, Andrew I. Koven, Michael Salsbury, D. Gordon Strickland, and James P. Tursi, M.D., are
“independent directors” as defined under the applicable rules and regulations of the SEC and the listing requirements and rules
of Nasdaq. The Board determined that Hyung Heon Kim, our Chief Executive Officer and President, who serves as a director, is
not an “independent director” as defined under the applicable regulations of the SEC and the listing requirements and rules of
Nasdaq. In making this determination, the Board considered the current and prior relationships that each non-employee director
has with us and all other facts and circumstances that the Board deemed relevant in determining each non-employee director’s
independence, including the participation by our non-employee directors, or their affiliates, in certain financing transactions by
us and the beneficial ownership of the common stock by each non-employee director. See “Certain Relationships and Related-
Party Transactions” and “Security Ownership of Certain Beneficial Owners and Management.”
Additionally, all of our committees are comprised solely of independent directors under the current Nasdaq and SEC rules and
regulations, with Messrs. Glickman, Koven and Strickland serving on our audit committee, Messrs. Glickman, Salsbury and
Strickland serving on our compensation committee, and Messrs. Groves, Koven and Tursi serving on our nominating and
corporate governance committee.
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Item 14.
Principal Accountant Fees and Services
Service fees paid to the independent registered public accounting firms
The audit committee has considered the scope and fee arrangements for all services provided by BDO USA, P.C. (“BDO”),
taking into account whether the provision of non-audit-related services is compatible with maintaining BDO independence.
The following table presents fees for professional audit services rendered by BDO for the audit of the annual financial
statements for 2024 and 2023 (in thousands):
Year Ended December 31,
2024
2023
Audit fees
$
508
$
451
Audit-related fees
—
—
Tax fees
—
42
All other fees
—
—
Net decrease in cash
$
508
$
493
Audit fees consist of fees billed for services relating to the audit of our annual financial statement and review of our quarterly
financial statements, and services that are normally provided in connection with statutory and regulatory filings or engagements,
comfort letters, reports on an issuer's internal controls, and review of documents to be filed with the SEC (e.g. periodic filings,
registration statements, and company responses to SEC comment letters).
Tax fees relate to permissible services for technical tax advice related to federal and state income tax matters.
Policy on audit committee pre-approval of audit and permissible non-audit services of independent registered public
accounting firm
Our audit committee generally pre-approves all audit and permitted non-audit and tax services provided by the independent
registered public accounting firm. Pre-approval is detailed as to the particular service or category of services and is generally
subject to a specific budget. The independent registered public accounting firm and management are required to periodically
report to the audit committee regarding the extent of services provided by the independent registered public accounting firm in
accordance with this pre-approval, and the fees for the services performed to date. Our audit committee may also pre-approve
particular services on a case-by-case basis. All of the services relating to the fees described in the table above were approved by
our audit committee.
Part IV
Item 15.
Exhibits and Financial Statement Schedules
(a) Financial statements and financial statements schedules
(1) Financial Statements are listed in the Index to Financial Statements on page F-1 of this Annual Report.
(2) No financial statement schedules are included because such schedules are not applicable, are not required, or because
required information is included in the consolidated financial statements or notes thereto.
(b) Exhibits
Exhibit
Number
Description of Document
2.1+++
Agreement and Plan of Merger, dated as of December 31, 2020, by and among the Registrant, Shelby
Merger Sub 1, Inc., Shelby Merger Sub 2, LLC, ANA Therapeutics, Inc. and Akash Bakshi (incorporated
by reference to Exhibit 2.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on January
6, 2021).
3.1
Third Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to
Exhibit 3.1 to the Registrant's Current Report on Form 8-K, filed with the SEC on August 10, 2016).
3.2
Certificate of Amendment (Reverse Stock Split) to the Third Amended and Restated Certificate of
Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report
on Form 8-K, filed with the SEC on December 31, 2019).
Table of Contents
87
3.3
Certificate of Amendment (Name Change) to the Third Amended and Restated Certificate of Incorporation
of the Registrant (incorporated by reference to Exhibit 3.2 to the Registrant's Current Report on Form 8-K,
filed with the SEC on December 31, 2019).
3.4
Certificate of Amendment (Reverse Stock Split) to the Third Amended and Restated Certificate of
Incorporation of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant's Current Report
on Form 8-K, filed with the SEC on September 12, 2022).
3.5
Certificate of Amendment to the Third Amended and Restated Certificate of Incorporation of the
Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed
with the SEC on December 19, 2023).
3.6
Certificate of Amendment (Name Change) to the Third Amended and Restated Certificate of Incorporation
of the Registrant (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K,
filed with the SEC on November 18, 2024).
3.7
Fourth Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.2 to the
Registrant’s Current Report on Form 8-K, filed with the SEC on November 18, 2024).
3.8
Certificate of Designation of Preferences, Rights and Limitations, filed with the Delaware Secretary of
State on November 4, 2022, with respect to the Series A Convertible Preferred Stock (incorporated by
reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K, filed with the SEC on November
8, 2022).
3.9
Certificate of Designation of Preferences, Rights and Limitations, filed with the Delaware Secretary of
State on November 4, 2022, with respect to the Series B Convertible Preferred Stock (incorporated by
reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K, filed with the SEC on November
8, 2022).
4.1
Form of Common Stock Certificate of the Registrant (incorporated by reference to Exhibit 4.1 to the
Registrant's Amendment No. 1 to Registration Statement on Form S-1, filed with the SEC on June 13,
2016).
4.2
Warrant to Purchase Stock, dated July 31, 2018, by and between the Registrant and Silicon Valley Bank
(incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8- K, filed with the
SEC on August 6, 2018).
4.3
Form of Placement Agent’s Warrant to Purchase Common Stock (incorporated by reference to Exhibit 4.1
to the Registrant’s Current Report on Form 8-K, filed with the SEC on April 15, 2020).
4.4
Form of Warrant to Purchase Common Stock (incorporated by reference to Exhibit 4.1 to the Registrant’s
Current Report on Form 8-K, filed with the SEC on January 21, 2021).
4.5
Form of Warrant to Purchase shares of Common Stock (incorporated by reference to Exhibit 4.1 to the
Registrant’s Current Report on Form 8-K, filed with the SEC on October 4, 2021).
4.6
Form of Series B Warrant to purchase shares of common stock (incorporated by reference to Exhibit 4.2 to
the Registrant’s Current Report on Form 8-K, filed with the SEC on November 8, 2022).
4.7
Warrant Agency Agreement, dated as of November 8, 2022, by and between the Registrant and American
Stock Transfer and Trust Company LLC (incorporated by reference to Exhibit 4.3 to the Registrant’s
Current Report on Form 8-K, filed with the SEC on November 8, 2022).
4.8
Form of Pre-Funded Warrant (incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report
on Form 8-K, filed with the SEC on June 25, 2024).
4.9
Form of Series A Warrant (incorporated by reference to Exhibit 4.2 to the Registrant’s Current Report on
Form 8-K, filed with the SEC on June 25, 2024).
4.10
Form of Series B Warrant (incorporated by reference to Exhibit 4.3 to the Registrant’s Current Report on
Form 8-K, filed with the SEC on June 25, 2024).
4.11
Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.4 to the Registrant’s Current
Report on Form 8-K, filed with the SEC on June 25, 2024).
4.12*
Description of Securities.
10.1#*
Form of Indemnification Agreement.
10.2
Lease Agreement, dated as of August 23, 2023, by and between Alewife Properties LLC and the Registrant
(incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q, filed with
the SEC on November 13, 2023).
10.3#
Employment Agreement entered into on August 11, 2023 by and between the Registrant and Hyung Heon
Kim (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K, filed with
the SEC on August 14, 2023).
10.4#
Employment Agreement entered into on March 1, 2024 by and between the Registrant and Marshall H.
Woodworth (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K,
filed with the SEC on March 4, 2024).
Table of Contents
10.5#*
2019 Equity Incentive Plan of the Registrant and forms of
award agreements.
10.6#*
Amended and Restated 2021 Inducement Plan of the
Registrant and form of award agreements.
10.7#*
Amended and Restated 2022 Equity Incentive Plan of the
Registrant, as amended November 29, 2024, and forms of
award agreements.
10.8#
Amended
and
Restated
Non-Employee
Director
Compensation Policy, dated June 27, 2023 (incorporated
by reference to Exhibit 10.1 to the Registrant’s Current
Report on Form 8-K, filed on June 29, 2023).
10.9#*
Amended
and
Restated
Non-Employee
Director
Compensation Policy, dated May 7, 2024, as amended
November 29, 2024.
10.10
License Agreement, dated September 14, 2022, by and
between Dong-A ST Co., Ltd. and the Registrant
(incorporated by reference to Exhibit 10.1 to the
Registrant’s Current Report on Form 8-K, filed with the
SEC on September 14, 2022).
10.11
Shared Services Agreement, dated September 14, 2022,
by and between Dong-A ST Co., Ltd. and the Registrant
(incorporated by reference to Exhibit 10.2 to the
Registrant’s Current Report on Form 8-K, filed with the
SEC on September 14, 2022).
10.12
Registration Rights Agreement, dated September 14,
2022, by and among Dong-A ST Co., Ltd., The
E&Healthcare Investment Fund II, The E&Healthcare
Investment Fund No. 6, The E&Healthcare Investment
Fund No. 7 and the Registrant (incorporated by reference
to Exhibit 10.4 to the Registrant’s Current Report on
Form 8-K, filed with the SEC on September 14, 2022).
10.13
Investor Rights Agreement, dated September 14, 2022,
by and between Dong-A ST Co., Ltd. and the Registrant
(incorporated by reference to Exhibit 10.5 to the
Registrant’s Current Report on Form 8-K, filed with the
SEC on September 14, 2022).
10.14
Manufacturing and Supply Agreement (NB-02 formerly
DA-9803), dated as of June 7, 2020, by and between
Dong-A ST Co., Ltd. and the Registrant (incorporated by
reference to Exhibit 10.2 to the Registrant’s Quarterly
Report on Form 10-Q, filed with the SEC on August 11,
2020).
10.15+
Amended and Restated License Agreement, effective as
of August 2, 2018, by and between the Registrant and
Pfizer Inc. (incorporated by reference to Exhibit 10.1 to
the Registrant’s Current Report on Form 8-K, filed with
the SEC on August 6, 2018).
10.16+++
License and Collaboration Agreement, dated as of
July 23, 2019, by and between the Registrant and Beijing
SL Pharmaceutical Co., Ltd. (incorporated by reference to
Exhibit 10.6 to the Registrant’s Current Report on
Form 8-K, filed with the SEC on July 25, 2019).
10.17++
Contingent Value Rights Agreement, dated as of
December 30, 2019, by and among the Registrant, Grand
Rapids Holders Representative, LLC, Computershare Inc.
and Computershare Trust Company, N.A. (incorporated
by reference to Exhibit 10.1 to the Registrant’s Current
Report on Form 8-K, filed with the SEC on December 31,
2019).
10.18
First Amendment to Contingent Value Rights Agreement,
dated as of December 30, 2019, by and among the
Registrant, Grand Rapids Holders Representative, LLC,
Computershare Inc. and Computershare Trust Company,
N.A., dated as of March 23, 2021 (incorporated by
reference to Exhibit 10.1 to the Registrant’s Current
Report on Form 8-K, filed with the SEC on March 24,
2021).
10.19
Form of Registration Rights Agreement, dated as of June
23, 2024, by and among the Registrant and the Purchasers
identified on the signature pages thereto (incorporated by
88
reference to Exhibit 10.3 to the Registrant’s Current
Report on Form 8-K, filed with the SEC on June 25,
2024).
19.1*
Insider Trading Compliance Policy.
21.1*
Subsidiaries of the Registrant.
23.1*
Consent of Independent Registered Public Accounting
Firm (BDO USA, P.C.).
24.1*
Power of Attorney (reference is made to the signature
page hereto).
31.1*
Certification of Chief Executive Officer pursuant to Rule
13a-14(a) or 15d-14(a).
31.2*
Certification of Chief Financial Officer pursuant to Rule
13a-14(a) or 15d-14(a).
32.1**
Certification of Chief Executive Officer under Section
906 of the Sarbanes-Oxley Act of 2002.
32.2**
Certification of Chief Financial Officer under Section 906
of the Sarbanes-Oxley Act of 2002.
97.1*
Policy for the Recovery of Erroneously Awarded
Compensation, dated November 3, 2023, as amended on
November 29, 2024.
101.INS* Inline XBRL Instance Document.
101.SCH*
Inline XBRL Taxonomy Extension Schema Document.
101.CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase
Document.
101.DEF*
Inline XBRL Taxonomy Extension Definition Linkbase
Document.
101.LAB*
Inline XBRL Taxonomy Extension Label Linkbase
Document.
101.PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase
Document.
104*
Cover Page Interactive Data File (formatted as Inline
XBRL and contained in Exhibit 101).
Table of Contents
89
#
Indicates management contract or compensatory plan.
*
Filed herewith.
**
Furnished herewith.
+
Registrant has omitted and filed separately with the SEC portions of the exhibit pursuant to a confidential
treatment request under Rule 406 promulgated under the Securities Act.
++
Certain schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of
any omitted schedule and/or exhibit will be furnished to the SEC upon request.
+++
Certain schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of
any omitted schedule and/or exhibit will be furnished to the SEC upon request. Certain portions of the
exhibits that are not material and would be competitively harmful if publicly disclosed have been redacted
pursuant to Item 601(b)(10)(iv) of Regulation S-K. Copies of the unredacted exhibits will be furnished to
the SEC upon request.
Item 16.
Form 10-K Summary
None.
Table of Contents
90
Signatures
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 20, 2025.
MetaVia Inc.
/s/ Hyung Heon Kim
Hyung Heon Kim
President and Chief Executive Officer
/s/ Marshall H. Woodworth
Marshall H. Woodworth
Chief Financial Officer
Power of Attorney
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints
Hyung Heon Kim and Marshall H. Woodworth, and each of them, as his true and lawful attorneys-in-fact, proxies and agents,
each with full power of substitution and resubstitution, for him and in his name, place and stead, in any and all capacities, to
sign any and all amendments to this report and to file the same, with any exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto such attorneys-in-fact, proxies and agents full power
and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as
fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorneys-in-
fact, proxies and agents, or their or his substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual Report has been signed below by the
following persons in the capacities indicated on March 20, 2025.
Signature
Title
/s/ Hyung Heon Kim
President, Chief Executive Officer and Director
Hyung Heon Kim
(Principal Executive Officer)
/s/ Marshall H. Woodworth
Chief Financial Officer (Principal Financial Officer
Marshall H. Woodworth
and Principal Accounting Officer)
/s/ Mark A. Glickman
Director
Mark A. Glickman
/s/ Jason L. Groves
Director
Jason L. Groves
/s/ Andrew I. Koven
Chair of the Board
Andrew I. Koven
/s/ Michael Salsbury
Director
Michael Salsbury
/s/ D. Gordon Strickland
Director
D. Gordon Strickland
/s/ James P. Tursi
Director
James P. Tursi
Table of Contents
F-1
Index to Financial Statements
Report of Independent Registered Public Accounting Firm (BDO USA, P.C. Boston Massachusetts, PCAOB ID#243)
F-2
Consolidated Balance Sheets
F-4
Consolidated Statements of Operations
F-5
Consolidated Statements of Stockholders' Equity
F-6
Consolidated Statements of Cash Flows
F-7
Notes to Consolidated Financial Statements
F-8
Table of Contents
F-2
Report of Independent Registered Public Accounting Firm
Shareholders and Board of Directors
MetaVia Inc
Cambridge, Massachusetts
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of MetaVia, Inc (the “Company”) as of December 31, 2024 and
2023, the related consolidated statements of operations, stockholders’ equity, and cash flows for each of the years then ended,
and the related notes. In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the
years then ended, in conformity with accounting principles generally accepted in the United States of America.
Going Concern Uncertainty
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going
concern. As discussed in Note 1 to the consolidated financial statements, the Company has suffered recurring losses and
negative cash flows from operations and has an accumulated deficit that raise substantial doubt about its ability to continue as a
going concern. Management’s plans in regard to these matters are also described in Note 1. The consolidated financial
statements do not include any adjustments that might result from the outcome of this uncertainty.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an
opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered
with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the
Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over
financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over
financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included
evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall
presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial
statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate
opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Estimation of Clinical Trial Accrued Liabilities
As described in Note 1 to the consolidated financial statements, the Company records clinical trial accrued liabilities for
expenses associated with particular activities performed by contract research organizations, investigative sites in connection
with clinical trials and contract manufacturing organizations. Expenses incurred for certain research and development activities
Table of Contents
F-3
are recognized based on an evaluation of the progress or completion of specific tasks using either time-based measures or data
such as information provided to the Company by its vendors on actual activities completed or costs incurred. As of December
31, 2024, the Company recorded $1.7 million of clinical trial accrued liabilities, which was included on the consolidated
balance sheet.
We identified the estimation of the clinical trial accrued liabilities as a critical audit matter. When estimating clinical trial
accrued liabilities, the Company applies judgement in estimating the services received and the progress of activities performed
by external vendors. Auditing these elements involved especially challenging auditor judgment due to the nature and extent of
audit effort required to address this matter.
The primary procedures we performed to address the critical audit matter included:
●
For certain contract research organizations, inspecting, on a sample basis, invoices received from, and payments
made to such organizations in the development of the clinical trial accrued liabilities.
●
For certain clinical trial studies, assessing the Company's estimates of the activities completed to date through (i)
inspection of original contract terms, change orders and the expected timeline for the related study, (ii) discussion of
the current status of the clinical trials with certain members of management and project teams (iii) confirmation of
patient enrollment information (iv) confirmation of amounts due to certain closed clinical sites and (iv) evaluation
of the payments made and the invoices received after December 31, 2024 for proper application in the determination
of the accruals.
●
Testing the completeness of the Company’s clinical trial accruals by reviewing i) the Company’s press releases and
public databases that track clinical trials and ii) board of directors’ materials regarding the status of clinical trials.
Accounting for the Offering
As discussed in Note 7, the Company entered into a financing transaction in June 2024 that included the issuance common stock
and warrants (the “Offering”).
We identified the accounting for the Offering, including the evaluation for the classification of the warrants as a critical audit
matter. The application of the accounting guidance to the Offering is complex, and therefore, applying such guidance to the
contract terms requires significant management judgment. Auditing these elements involved especially complex auditor
judgment due to the nature of the terms of the financing transaction and the effort required to address these matters, including
the use of firm personnel with expertise in technical accounting.
The primary procedures we performed to address this critical audit matter included:
●
Reviewing the agreements associated with the financing transaction and evaluating the completeness and accuracy of
the Company’s technical accounting analysis and application of the relevant accounting literature.
●
Utilizing firm personnel with expertise in the relevant technical accounting to assist in evaluating i) the
appropriateness of the Company’s application of the relevant technical accounting guidance and conclusions reached
and ii) the classification of the related warrants in the financial statements.
/s/ BDO USA, P.C.
We have served as the Company's auditor since 2019.
Boston, Massachusetts
March 20, 2025
Table of Contents
F-4
MetaVia Inc.
Consolidated Balance Sheets
(In thousands, except per share amounts)
As of December 31,
2024
2023
Assets
Current assets
Cash
$
16,017
$
22,435
Prepaid expenses and other current assets
55
77
Total current assets
16,072
22,512
Property and equipment, net
34
46
Right-of-use asset
133
202
Other assets
21
21
Total assets
$
16,260
$
22,781
Liabilities and stockholders’ equity
Current liabilities
Accounts payable
$
3,879
$
821
Clinical trial accrued liabilities
1,696
3,033
Accrued expenses and other current liabilities
785
592
Warrant liabilities
361
658
Related party payable
1,472
789
Lease liability, short-term
78
67
Total current liabilities
8,271
5,960
Lease liability, long-term
58
136
Total liabilities
8,329
6,096
Commitments and contingencies (Note 6)
Stockholders’ equity
Preferred stock, $0.001 par value per share; 10,000 shares authorized and no
shares issued or outstanding as of December 31, 2024 and 2023
—
—
Common stock, $0.001 par value per share, 100,000 shares authorized as of
December 31, 2024 and 2023; 8,637 and 4,906 shares issued and outstanding as of
December 31, 2024 and 2023, respectively
9
5
Additional paid–in capital
143,779
124,945
Accumulated deficit
(135,857)
(108,265)
Total stockholders’ equity
7,931
16,685
Total liabilities and stockholders’ equity
$
16,260
$
22,781
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
F-5
MetaVia Inc.
Consolidated Statements of Operations
(In thousands, except share and per share amounts)
Year Ended December 31,
2024
2023
Operating expenses
Research and development
$
21,553
$
9,158
General and administrative
7,256
6,728
Total operating expenses
28,809
15,886
Loss from operations
(28,809)
(15,886)
Other income
Change in fair value of warrant liabilities
297
2,955
Interest income
920
461
Total other income
1,217
3,416
Loss before income taxes
(27,592)
(12,470)
Provision for income taxes
—
—
Net loss and comprehensive net loss
(27,592)
(12,470)
Loss per share of common stock, basic and diluted
$
(3.56)
$
(2.46)
Weighted average shares of common stock, basic and diluted
7,757,128
5,071,101
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
F-6
MetaVia Inc.
Consolidated Statements of Stockholders’ Equity
(In thousands)
Additional
Common Stock
Paid-In
Accumulated
Total
Shares Amount
Capital
Deficit
Equity
As of January 1, 2023
3,179
$
3
$
117,542
$
(95,795)
$
21,750
Issuance of stock from exercise of warrants
1,702
2
7,181
—
7,183
Issuance of stock for vested restricted stock units
25
—
—
—
—
Stock-based compensation
—
—
222
—
222
Net loss
—
—
—
(12,470)
(12,470)
As of December 31, 2023
4,906
5
124,945
(108,265)
16,685
Issuance of common stock and warrants under the
securities purchase agreements, net of issuance costs
of $1,960
3,308
3
18,035
—
18,038
Issuance of placement agent warrants
—
—
309
—
309
Issuance of stock from exercise of warrants
351
1
—
—
1
Issuance of stock for vested restricted stock units,
net of shares withheld for withholding taxes
72
—
(48)
—
(48)
Stock-based compensation
—
—
538
—
538
Net loss
—
—
—
(27,592)
(27,592)
As of December 31, 2024
8,637
$
9
$
143,779
$
(135,857)
$
7,931
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
F-7
MetaVia Inc.
Consolidated Statements of Cash Flows
(In thousands)
Year Ended December 31,
2024
2023
Operating activities
Net loss
$
(27,592)
$
(12,470)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation
538
222
Non-cash lease expense
4
1
Depreciation
20
6
Change in fair value of warrant liabilities
(297)
(2,955)
Change in operating assets and liabilities:
Prepaid expenses and other assets
20
70
Accounts payable
3,058
113
Accrued and other liabilities
(461)
4,214
Net cash used in operating activities
(24,710)
(10,799)
Investing activities
Purchases of property and equipment
(8)
(50)
Net cash used in investing activities
(8)
(50)
Financing activities
Proceeds from the issuance of common stock and warrants under the securities purchase
agreements
19,998
—
Proceeds from exercise of warrants
1
—
Payments of issuance costs in connection with the securities purchase agreements
(1,651)
(80)
Payment of employee withholding taxes related to shares withheld from issuance for
vested restricted stock units
(48)
Net cash provided by (used in) financing activities
18,300
(80)
Net decrease in cash
(6,418)
(10,929)
Cash at beginning of period
22,435
33,364
Cash at end of period
$
16,017
$
22,435
Supplemental non-cash investing and financing transactions:
Fair value of warrants issued to placement agent
$
309
$
—
Right-of-use assets obtained in exchange for operating lease liabilities
$
—
$
223
Reclassification of warrant liabilities upon exercise of warrants
$
—
$
7,183
The accompanying notes are an integral part of these consolidated financial statements.
Table of Contents
MetaVia Inc.
Notes to Consolidated Financial Statements
F-8
1.
Business, basis of presentation, new accounting standards and summary of significant accounting policies
General
MetaVia Inc. (the “Company”), a Delaware corporation, and its subsidiaries are referred to collectively in these notes to the
financial statements of the Company as “MetaVia,” “we,” “our” and “us.” Prior to the Company’s legal name change in
November 2024, the Company was formerly known as NeuroBo Pharmaceuticals, Inc. We are a clinical-stage biotechnology
company focused primarily on developing novel pharmaceuticals to treat cardiometabolic diseases. MetaVia has two
programs focused primarily on the treatment of metabolic dysfunction-associated steatohepatitis (“MASH”) and obesity,
DA-1241 and DA-1726.
While we primarily focus our financial resources and management’s attention on the development of DA-1241 and DA-
1726, we also have four legacy therapeutic programs designed to impact a range of indications in viral, neurodegenerative
and cardiometabolic diseases which we are not planning to advance development on and have, or continue to consider
for, out-licensing and divestiture opportunities. In July 2024, we entered into an exclusive out-license agreement with
MThera Pharma Co., LTD. (“MThera”) to provide MThera with the rights to NB-01 for the treatment of painful diabetic
neuropathy.
Our operations have consisted principally of performing research and development (“R&D”) activities, which include
preclinical developments and clinical trials, and raising capital. Our activities are subject to significant risks and uncertainties,
including failing to secure additional funding before sustainable revenues and profit from operations are achieved.
Going concern
As reflected in the consolidated financial statements, we had $16.0 million in cash as of December 31, 2024. We have
experienced net losses and negative cash flows from operating activities since our inception and had an accumulated deficit
of $135.9 million as of December 31, 2024. We have incurred a net loss of $27.6 million and net cash used in operating
activities of $24.7 million for the year ended December 31, 2024. Due in large part to the ongoing Phase 2a clinical trial for
DA-1241 and Phase 1 clinical trial for DA-1726, we expect to continue to incur net losses and negative cash flows from
operating activities for the foreseeable future. These conditions raise substantial doubt about our ability to continue as a going
concern within one year from the issuance of these consolidated financial statements.
We plan to continue to fund our operations from equity offerings, debt financing, or other sources, potentially including
collaborations, out-licensing and other similar arrangements. However, there can be no assurance that we will be able to obtain
any sources of financing on acceptable terms, or at all, or that the Series A Warrants will be exercised. To the extent that we can
raise additional funds by issuing equity securities or in the event our existing warrants are exercised, our stockholders may
experience significant dilution. Any debt financing, if available, may involve restrictive covenants that impact our ability to
conduct our business. If we are unable to raise additional capital, we may slow down or stop our ongoing and planned clinical
trials until such time as additional capital is raised and this may have a material adverse effect on us.
The determination as to whether we can continue as a going concern contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. Our consolidated financial statements have been prepared assuming that we will
continue as a going concern and do not include any adjustments that might result from the outcome of this uncertainty. This
basis of accounting contemplates the recovery of our assets and the satisfaction of our liabilities in the normal course of
business.
A.
Basis of presentation
Our consolidated financial statements include a South Korean wholly owned subsidiary, which was dissolved and liquidated in
June 2023. The accompanying financial statements were prepared in conformity with accounting principles generally accepted
in the United States of America (“GAAP”). Our fiscal year-end is as of and for the year ended December 31st for each year
presented. All significant intercompany accounts and transactions have been eliminated in the preparation of the financial
statements.
B.
New accounting standards
Adoption of new accounting standards
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-
07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures to improve disclosure requirements
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MetaVia Inc.
Notes to Consolidated Financial Statements – Continued
F-9
about reportable segments and address requests from investors for additional, more detailed information about a reportable
segment’s expenses. This ASU requires that a public entity that has a single reportable segment provide all the disclosures
required by the amendments in this ASU and all existing segment disclosures in Topic 280. Additionally, this ASU requires
disclosures of significant segment expenses provided to the Chief Operating Decision Maker ("CODM") and included in
reported measures of segment profit and loss. Disclosure of the title and position of the CODM is required. This ASU requires
interim and annual disclosures about a reportable segment's profit or loss and assets. Furthermore, this ASU requires disclosure
of other segment items by reportable segment including a description of its composition. This ASU is effective for fiscal years
beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, on a
retrospective basis. We adopted ASU 2023-07 in 2024. See below I. Segment reporting and Note 8. Significant segment
expenses for additional information.
Other new accounting standards or accounting standards updates were assessed and determined to be either not applicable or
did not have a material impact on our consolidated financial statements or processes.
Accounting standards issued but not yet adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures to
improve the transparency of income tax disclosures by amending the required rate reconciliation disclosures as well as requiring
disclosure of income taxes paid disaggregated by jurisdiction. As amended, the rate reconciliation disclosure will be required to
be presented in both percentages and reporting currency amounts, with consistent categories and greater disaggregation of
information. This ASU also includes amendments intended to improve the effectiveness of income tax disclosures and eliminate
certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. This ASU is
effective for fiscal years beginning after December 15, 2024 and should be applied prospectively. Early adoption is permitted.
We are currently evaluating the impact of adopting this ASU to our notes to the consolidated financial statements and processes.
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense
Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses to improve financial reporting by
requiring that public business entities disclose additional information about specific expense categories in the notes to financial
statements at interim and annual reporting periods. The amendments in this ASU do not change or remove current expense
disclosure requirements; however, the amendments affect where such information appears in the notes to financial statements
because entities are required to include certain current disclosures in the same tabular format disclosure as the other
disaggregation requirements in the amendments. In January 2025, the FASB issued ASU 225-01, Income Statement-Reporting
Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. This ASU is
effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within annual reporting
period beginning after December 15, 2027. Early adoption is permitted. We are currently evaluating the impact of adopting this
ASU to our notes to the consolidated financial statements and processes.
Other recently issued accounting standards not yet adopted by us are not expected, upon adoption, to have a material impact on
our consolidated financial statements.
C.
Estimates and assumptions
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, expenses, and related disclosure of contingent assets and liabilities at the date of
the consolidated financial statements and the reported amounts of expenses during the reporting period. The most significant
estimates in our consolidated financial statements relate to clinical trial costs and accruals, classification of warrants as
derivative liability or equity, and the fair value of stock-based compensation and warrants. We base our estimates on historical
experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making
judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates. Changes in
estimates are reflected in reported results in the period in which they become known.
D.
Cash
We maintain cash at financial institutions that at times may exceed the Federal Deposit Insurance Corporation (“FDIC”) insured
limits of $0.25 million per bank. Our cash balance includes liquid insured deposits, which are obligations of the banks in which
the deposits are held and qualify for FDIC insurance protection per depositor in each recognized legal category of account
ownership in accordance with the rules of the FDIC. To date, we have not experienced any losses related to these funds.
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MetaVia Inc.
Notes to Consolidated Financial Statements – Continued
F-10
E.
Property and equipment, net
Property and equipment are recorded at cost and reduced by accumulated depreciation. Depreciation expense is recognized over
the estimated useful lives of the assets using the straight-line method. The estimated useful life for property and equipment
ranges from three to five years. Tangible assets acquired for R&D activities and that have an alternative use are capitalized over
the useful life of the acquired asset. Estimated useful lives are periodically reviewed, and when appropriate, changes are made
prospectively. When certain events or changes in operating conditions occur, asset lives may be adjusted and an impairment
assessment may be performed on the recoverability of the carrying amounts. Maintenance and repairs are charged directly to
expense as incurred.
F.
Leases
We assess our contracts at inception to determine whether the contract contains a lease, including evaluation of whether the
contract conveys the right to control an explicitly or implicitly identified asset for a period of time. We have recognized right-
of-use assets and lease liabilities that represent the net present value of future operating lease payments utilizing a discount rate
corresponding to our incremental borrowing rate and amortized over the remaining terms of the leases. For operating leases of a
short-term nature, i.e., those with a term of less than twelve months, we recognize lease payments as an expense on a straight-
line basis over the remaining lease term.
G. Warrant liabilities
Warrants are accounted for as liabilities at their fair value if equity accounting treatment is precluded due to provisions existing
within the warrant agreements. The change in fair value of the warrant liabilities is recognized as a fair value change in warrant
liabilities in the consolidated statements of operations and as an operating item in the statement of cash flows. Additionally,
issuance costs associated with warrants initially classified as liabilities are expensed as incurred and reflected as financing costs
in the accompanying consolidated statements of operations.
H. Fair value of financial instruments
Our financial instruments principally include cash, prepaid expenses, right of use assets, accounts payable, accrued liabilities,
lease liabilities and warrant liabilities. The carrying amounts of cash, prepaid expenses and other current assets, accounts
payable, and accrued liabilities are reasonable estimates of their fair value because of the short maturity of these items.
I.
Segment reporting
We manage and operate as one reportable segment, which is principally the business of development of pharmaceutical
products, with one geographic location. We do not operate separate lines of business with respect each pharmaceutical product
being studied in a clinical environment, and we do not prepare discrete financial information with respect to our pharmaceutical
products. Our CODM is our chief executive officer. The measure of performance used by the CODM to assess segment
performance is reported on the consolidated statements of operations as loss from operations and net loss. Since the Company
only have one reportable segment, our CODM does not need to decide on how to allocate resources between segments. The
measure of segment assets is reported on the consolidated balance sheets as total assets.
J.
Research and development costs
R&D expenditures for clinical development, including upfront licensing fees and milestone payments associated with products
that have not yet been approved by the United States Food and Drug Administration, are charged to R&D expense as incurred.
These expenses consist of costs incurred in performing development activities, including salaries and benefits, equity-based
compensation expense, preclinical expenses, clinical trial and related clinical manufacturing expenses, contract services and
other outside expenses.
Expenses incurred for certain R&D activities, including expenses associated with particular activities performed by contract
research organizations, investigative sites in connection with clinical trials and contract manufacturing organizations, are
recognized based on an evaluation of the progress or completion of specific tasks using either time-based measures or data such
as information provided to us by our vendors on actual activities completed or costs incurred. Payments for these activities are
based on the terms of the individual arrangements, which may differ from the pattern of expense recognition. Expenses for
R&D activities incurred that have yet to be invoiced by the vendors that perform the related activities are reflected as clinical
trial accrued liabilities in the accompanying consolidated financial statements. Advance payments, if any, for goods or services
to be received in the future for R&D activities are deferred and capitalized as prepaid expenses and other current assets in the
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MetaVia Inc.
Notes to Consolidated Financial Statements – Continued
F-11
accompanying consolidated balance sheets. The capitalized amounts are expensed as the related goods are delivered or the
services are performed.
K. Acquired in-process research and development
We include costs to acquire or in-license product candidates in acquired in-process R&D (“IPR&D”). When we acquire the
right to develop and commercialize a new product candidate, any up-front payments, or any future milestone payments that
relate to the acquisition or licensing of such a right are immediately expensed as acquired IPR&D in the period in which they
are incurred. These costs are immediately expensed provided that the payments do not also represent processes or activities that
would constitute a “business” as defined under GAAP, or provided that the product candidate has not achieved regulatory
approval for marketing and absent obtaining such approval, has no alternative future use. Royalties owed on future sales of any
licensed product will be expensed in the period the related revenues are recognized.
L.
General and administrative expenses
General and administrative expenses consist primarily of personnel-related costs, including salaries and stock-based
compensation costs, for personnel in functions not directly associated with R&D activities. Other significant costs include legal
fees related to intellectual property and corporate matters and professional fees for accounting and other services.
M. Patent costs
Costs related to filing and pursuing patent applications are expensed as incurred, as recoverability of such expenditures is
uncertain. These costs are included in general and administrative expenses.
N.
Stock-based compensation
Compensation costs related to equity instruments granted are recognized at the grant-date fair value, which is amortized as
compensation expense on a straight-line basis over the requisite service period (generally, the vesting period) for both graded
and cliff vesting awards. We have elected to account for forfeitures as they occur.
O. Income taxes
Income taxes are accounted for under the asset and liability method. Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases, and operating loss and income tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change
in income tax rates is recorded as a component of the income tax provision in the period that includes the enactment date.
Regular assessments are made on the likelihood that our deferred tax assets will be recovered from our future taxable income.
Our evaluation is based on estimates, assumptions, and includes an analysis of available positive and negative evidence, giving
weight based on the evidence’s relative objectivity. Sources of positive evidence include estimates of future taxable income,
future reversal of existing taxable temporary differences, taxable income in carryback years, and available tax planning
strategies. Sources of negative evidence include current and cumulative losses in recent years, losses expected in early future
years, any history of operating losses or tax credit carryforwards expiring unused, and unsettled circumstances that, if
unfavorably resolved, would adversely affect future profit levels.
The remaining carrying value of our deferred tax assets, after recording the valuation allowance on our deferred tax assets, is
based on our present belief that it is more likely than not that we will be able to generate sufficient future taxable income to
utilize such deferred tax assets. The amount of the remaining deferred tax assets considered recoverable could be adjusted if our
estimates of future taxable income during the carryforward period change favorably or unfavorably. To the extent we believe
that it is more likely than not that some or all the remaining deferred tax assets will not be realized, we must establish a
valuation allowance against those deferred tax assets, resulting in additional income tax expense in the period such
determination is made. To the extent a valuation allowance currently exists, we will continue to monitor all positive and
negative evidence until we believe it is more likely than not that it is no longer necessary, resulting in an income tax benefit in
the period such determination is made.
Our policy is to recognize both interest and penalties related to uncertain tax positions as part of the income tax provision. A
significant judgment is required in evaluating our tax positions, and in determining our provisions for income taxes, our
deferred tax assets and liabilities and any valuation allowance recorded against our net deferred tax assets. We establish reserves
when,
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MetaVia Inc.
Notes to Consolidated Financial Statements – Continued
F-12
despite our belief that the income tax return positions are fully supportable, certain positions are likely to be challenged and we
may ultimately not prevail in defending those positions.
P.
Foreign currency translation
Our foreign subsidiary, dissolved and liquidated in June 2023, used the South Korean Won (KRW) as its functional currency.
We translated the assets and liabilities of our foreign operation into United States (“U.S.”) dollars based on the rates of
exchange in effect as of the transaction date. The resulting adjustments from the translation process are included in accumulated
other comprehensive (loss) income in the accompanying consolidated balance sheets.
Certain transactions are settled in foreign currency and are thus translated to U.S. dollars at the rate of exchange in effect at the
end of each month. Gains and losses resulting from the translation are included in other income or expense in the accompanying
consolidated statements of operations.
Q. Comprehensive loss
Comprehensive loss is comprised of net loss and other comprehensive income or loss. Comprehensive loss includes net loss as
well as other changes in stockholders' equity that result from transactions and economic events other than those with
stockholders. Comprehensive loss currently consists of net loss and changes in foreign currency translation adjustments.
R.
Loss per share of common stock
Basic earnings or loss per share of common stock is computed by dividing net income or loss available to stockholders of
common stock by the weighted average number of shares of common stock. Diluted earnings per share of common stock is
computed by dividing net income or loss available to stockholders of common stock by the sum of the weighted average
number of shares of common stock and the number of additional shares of common stock that would have been outstanding if
our outstanding potentially dilutive securities had been issued. Potentially dilutive securities include convertible preferred stock,
outstanding stock options, non-vested restricted stock units (“RSUs”) and outstanding warrants. The dilutive effect of
potentially dilutive securities is reflected in diluted earnings per share of common stock by application of the treasury stock
method, except if its impact is anti-dilutive. Under the treasury stock method, an increase in the fair market value of our
common stock can result in a greater dilutive effect from potentially dilutive securities. For additional information, see Note 10.
Loss per share of common stock.
S.
Concentrations
Credit Risk
Financial instruments that potentially subject us to concentration of credit risk consist of cash. As of December 31, 2024, our
cash is held by one financial institution in the U.S., and we believe that the financial institution is financially sound.
Accordingly, minimal credit risk exists with the financial institution.
Supplier Risk
In 2022, we entered into an exclusive license agreement (the “2022 License Agreement”) with Dong-A ST Co., Ltd. (“Dong-
A”), a related party, which requires Dong-A to be the sole manufacturer for the production of DA-1241 and DA-1726. If any
issues arise in the manufacturing and we are unable to arrange for alternative third-party manufacturing sources, or unable to
find an alternative third party capable of reproducing the existing manufacturing method or unable to do so on commercially
reasonable terms or in a timely manner, we may not be able to complete the development of DA-1241 or DA-1726.
T.
Loss contingencies
In determining whether an accrual for a loss contingency is required, we first assess the likelihood of occurrence of the future
event or events that will confirm the loss. When a loss is probable (the future event or events are likely to occur) and the amount
of the loss can be reasonably estimated, the estimated loss is accrued. If the reasonable estimate of the loss is a range and an
amount within the range appears to be a better estimate than any other amount within the range, that amount should be accrued.
However, if no amount within the range is a better estimate, the minimum amount in the range should be accrued.
When a loss is reasonably possible (the chance of the future event or events occurring is more than remote but less than likely),
no accrual is recognized.
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MetaVia Inc.
Notes to Consolidated Financial Statements – Continued
F-13
U.
Reclassification of prior year presentation
Certain prior year amounts have been reclassified for consistency with the current year presentation. Adjustments have been
made to the consolidated balance sheets to reclassify the presentation of certain current liabilities related to clinical trial accrued
liabilities of $3.0 million and related party payable of $0.8 million from accrued expenses and other current liabilities. These
reclassifications had no effect on the reported total current liabilities in the consolidated balance sheets.
2.
Prepaid expenses and other current assets
Prepaid expenses and other current assets consist of the following (in thousands):
As of December 31,
2024
2023
Insurance
$
5
$
—
Deposits
16
39
Other prepaid expenses
34
38
Total
$
55
$
77
3.
Property and equipment, net
Property and equipment, net consist of the following (in thousands):
As of December 31,
2024
2023
Office equipment
$
88
$
80
Less accumulated depreciation
(54)
(34)
Property and equipment, net
$
34
$
46
We recorded depreciation expense of $20 thousand and $6 thousand for 2024 and 2023, respectively, which was included in
general and administrative operating expenses in the accompanying consolidated statements of operations.
4.
Current liabilities
Accrued expenses and other current liabilities
Accrued expenses and other current liabilities consist of the following (in thousands):
As of December 31,
2024
2023
Employee related costs
$
713
$
118
Professional service fees
17
308
Other
55
166
Total
$
785
$
592
Warrant liabilities
Changes to our warrant liabilities are summarized as follows (in thousands):
Total
As of January 1, 2023
$
10,796
Reclassification of warrant liabilities upon exercise of warrants
(7,183)
Change in fair value of warrant liabilities
(2,955)
As of December 31, 2023
658
Change in fair value of warrant liabilities
(297)
As of December 31, 2024
$
361
Our warrant liabilities relate to the 2022 Series A warrants and 2022 Series B warrants, both of which were issued in November
2022. These warrants are considered to be derivative instruments; accordingly, we recorded their estimated fair value as warrant
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MetaVia Inc.
Notes to Consolidated Financial Statements – Continued
F-14
liabilities. We estimated the fair value of these warrants using the trading market price of our common stock due to a cashless
exercise provision of these warrants whereby eight warrants can be exercised for one share of common stock for no additional
consideration, which results in the warrant exercise price to be zero.
5.
Related party
License agreement with Dong-A for DA-1241 and DA-1726
In September 2022, we entered into the 2022 License Agreement with Dong-A pursuant to which we received an exclusive
global license (except for the territory of the Republic of Korea) for two proprietary compounds for specified indications upon
meeting certain financing milestones. The 2022 License Agreement covers the rights to DA-1241 for treatment of MASH and
DA-1726 for treatment of obesity and MASH. The 2022 License Agreement also provides that we may develop DA-1241 for
the treatment of T2DM.
In connection with the 2022 License Agreement, we entered into a shared services agreement with Dong-A (the “Shared
Services Agreement”), relating to DA-1241 and DA-1726, pursuant to which Dong-A may provide technical support,
preclinical development, and clinical trial support services on terms and conditions acceptable to both parties. In addition, the
Shared Services Agreement provides that Dong-A will manufacture all of our clinical requirements of DA-1241 and DA-1726
under the terms provided in the Shared Services Agreement.
Under the terms of the 2022 License Agreement, we had previously expensed $8.2 million of IPR&D in 2022 as the 2022
License Agreement did not include any processes or activities constituting a “business” acquired since none of the rights
underlying the Dong-A License Agreement had alternative future uses or had reached a stage of technological feasibility. Also,
Dong-A will be eligible to receive (i) regulatory milestone payments of up to $178 million for DA-1726 and $138 million for
DA-1241, dependent upon the achievement of specific regulatory developments; (ii) commercial-based milestone payments,
dependent upon the achievement of specific commercial developments; and (iii) single digit royalties on net sales received by
us from the commercial sale of products covering DA-1241 or DA-1726. The term of the 2022 License Agreement continues on
a product-by-product and country-by country basis until the later of (i) the fifth anniversary of the first commercial sale of such
product in such country, (ii) the expiration or termination of the last valid patent claim that covers a product in such country and
(iii) the loss of regulatory exclusivity for such product in such jurisdiction. Either Dong-A or MetaVia may terminate the 2022
License Agreement (i) if the other party is in material breach of the agreement and has not cured or started to cure the breach
within 60 days of notice of such breach; provided that if the breach cannot be cured within the 60-day period and the breaching
party started to remedy the breach, if such breach is not cured within 90 days of receipt of written notice, or (ii) if the other
party is subject to a bankruptcy or insolvency event (subject to a 30-day cure period in the case of a petition for bankruptcy).
As of December 31, 2024, there were no potential milestones under the 2022 License Agreement that were yet considered
probable; therefore, no liabilities were recorded.
As of December 31, 2024, Dong-A owns approximately 62% of our outstanding common stock.
Shared services agreement with Dong-A
In September 2022, in conjunction with the 2022 License Agreement, we entered into the Shared Services Agreement with
Dong-A, relating to DA-1241 and DA-1726. The Shared Services Agreement provides that Dong-A may provide technical
support, preclinical development, and clinical trial support services on terms and conditions acceptable to both parties. In
addition, the Shared Services Agreement provides that Dong-A will manufacture all of our clinical requirements of DA-1241
and DA-1726 under the terms provided in the Shared Services Agreement.
Either party may terminate the Shared Services Agreement for the other party’s material breach that is not cured within 30
days of notice. Dong-A may also terminate the Shared Services Agreement in part on a service-by-service or product-by-
product basis upon a breach by us which is not cured within 30 days.
We incurred R&D expenses of $4.9 million and $2.4 million for 2024 and 2023, respectively, under the Shared Services
Agreement, which are included in operating expenses in the accompanying consolidated statement of operations. As of
December 31, 2024 and 2023, we have amounts payable to Dong-A of $1.5 million and $0.8 million, respectively, under the
Shared Services Agreement, which is included in related party payable in the accompanying consolidated balance sheets. We
did not incur any expenses or liabilities under the Shared Services Agreement in 2022.
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MetaVia Inc.
Notes to Consolidated Financial Statements – Continued
F-15
License agreement with Dong-A for NB-01 (a legacy therapeutic program)
In January 2018, we entered into an exclusive license agreement with Dong-A, (the “2018 License Agreement”) which
agreement was amended in April 2018 and July 2019. Under the terms of the 2018 License Agreement, we obtained an
exclusive, royalty-bearing, worldwide (except for the Republic of Korea) license to make, use, offer to sell, sell and import
products covered by certain Dong-A intellectual property rights in its proprietary compound designated as DA-9801 (NB-01).
Our license rights cover any and all applications and markets for the therapeutic, health, nutrition or well-being of humans. We
may grant sublicenses to any affiliate or third party. We are responsible for all future patent prosecution costs.
6.
Commitments and contingencies
Operating lease
In August 2023, we entered into a non-cancelable operating lease for our corporate headquarters in Cambridge, Massachusetts.
The initial lease term is for three years with an option to renew for an additional two-year term. The lease commenced in
September 2023 and expires in August 2026. We recorded lease rental expenses of $0.1 million and $29 thousand for 2024 and
2023, respectively, and made lease cash payments of $0.1 million and $28 thousand for 2024 and 2023, respectively.
The following table reconciles the undiscounted lease liabilities to the total lease liabilities recognized on the consolidated
balance sheet as of December 31, 2024 (in thousands):
Operating
Lease
2025
$
89
2026
60
Total lease payments
149
Less effect of discounting
(13)
Total
136
Short-term portion
78
Long-term portion
$
58
As of December 31, 2024 and 2023, our lease liability, which represents the net present value of future lease payments, was
calculated utilizing a discount rate of 11%, which corresponds to our estimated incremental borrowing rate.
Additionally, in January 2024, we terminated a short-term operating lease for our former corporate headquarters located in
Boston, Massachusetts. There were no lease rental expense or lease cash payment for 2024 for our former corporate
headquarters and we recorded a lease rental expense and made lease cash payments of $22 thousand for 2023.
Contingent payments and license agreements
We have certain contractual contingent payments under various merger or license agreements executed between 2019 and
2020 for our legacy therapeutic programs. Since we have discontinued the clinical development of our legacy therapeutic
programs, we believe any contractual payments to be paid by us or to be received by us under these agreements are remote.
Therefore, as of December 31, 2024, no liabilities or assets were recorded in the accompanying consolidated financial
statements for our legacy therapeutic programs.
Legal proceedings
From time to time, we may be involved in various claims and legal proceedings arising out of our ordinary course of business.
We are not currently a party to any claims or legal proceedings that, in the opinion of our management, are likely to have a
material adverse effect on our business and consolidated financial statements. Regardless of the outcome, litigation can have an
adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.
Purchase commitments
We enter into contracts in the normal course of business with various third parties for clinical trials, preclinical research studies,
and testing, manufacturing, and other services and products for operating purposes. These contracts provide for termination
upon notice. Payments due upon cancellation generally consist only of payments for services provided or expenses incurred,
including non-cancellable obligations of our service providers, up to the date of cancellation. There are no minimum purchase
requirements under these contracts.
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MetaVia Inc.
Notes to Consolidated Financial Statements – Continued
F-16
Employment agreements
We have entered into employment agreements with certain of our executives that provide for compensation and certain other
benefits. Under certain circumstances, including a change in control, some of these agreements provide for severance or other
payments, if those circumstances occur during the term of the employment agreement.
Employee benefit plan
We adopted a 401(k) defined contribution plan in November 2018, which became effective in January 2019, for all employees
over age 21. Employees can defer up to 90% of their compensation through payroll withholdings into the plan subject to federal
law limits. Discretionary employer matches vest over a six-year period beginning on the second anniversary of an employee’s
date of hire. Employee contributions and any employer matching contributions made to satisfy certain non-discrimination tests
required by the Internal Revenue Code are 100% vested upon contribution. No matching contributions were made for 2024 and
2023.
7.
Stockholders’ equity
Common stock
The voting, dividend, and liquidation rights of the holders of the common stock are subject to and qualified by the rights,
powers, and preferences of the holders of the preferred stock when outstanding. The holders of the common stock are entitled to
one vote for each share of common stock held at all meetings of stockholders. Common stockholders are entitled to receive
dividends at the sole discretion of our Board. There have been no dividends declared on common stock to date as of December
31, 2024. In the event of any liquidation, dissolution, or winding-up of MetaVia, the holders of common stock shall be entitled
to share in the remaining assets of MetaVia available for distribution post preferential distributions made to any holders of our
preferred stock.
The Offering
Securities purchase agreements
In June 2024, we entered into and closed on two securities purchase agreements (the “Offering”) with an institutional investor
and Dong-A, and received aggregate gross proceeds of $20.0 million, of which $10.0 million was received from Dong-A. The
Offering was comprised of (i) 3,307,889 shares of common stock at a purchase price of $3.93 per share, (ii) pre-funded warrants
to purchase up to 1,781,171 shares of common (the “Pre-Funded Warrants”) at a purchase price of $3.929 per warrant, (iii)
Series A warrants to purchase 5,089,060 shares of common stock (the “Series A Warrants”), and (iv) Series B warrants to
purchase up to 7,633,591 shares of common stock (the “Series B Warrants”). Collectively, the Series A Warrants and the Series
B Warrants are referred to as “PIPE Common Warrants.” Of the total shares of common stock issued in the
Offering, 763,359 shares were sold to an institutional investor.
The Pre-Funded Warrants have an exercise price of $0.001 per share and are immediately exercisable and will expire when
exercised in full and the PIPE Common Warrants have an exercise price of $3.93 per share and are exercisable as of September
18, 2024, which is the effective date of the stockholder approval received at the Special Meeting of Stockholders for the
issuance of the shares upon exercise of the warrants (the “Stockholder Approval Date”).
The Series A Warrants will expire on the earlier of the twelve month anniversary of the Stockholder Approval Date and
within 60 days following the public announcement of the Company receiving positive Phase 1 multiple ascending dose
(“MAD”) data readout for DA-1726, and the Series B Warrants will expire on the earlier of the five-year anniversary of the
Stockholder Approval Date and within six months following the public announcement of the Company receiving positive Phase
1 Part 3 data readout for DA-1726. Based on the terms of the PIPE Common Warrants, we have concluded that the accounting
classification of the PIPE Common Warrants is to be stockholders’ equity.
Under the terms of the Pre-Funded Warrants and the PIPE Common Warrants issued to the institutional investor, we may not
affect the exercise of any such Pre-Funded Warrants or PIPE Common Warrants, and the holder will not be entitled to exercise
any portion of any Pre-Funded Warrants or PIPE Common Warrants, if, upon giving effect to such exercise, the aggregate
number of shares of common stock beneficially owned by the holder (together with its affiliates, other persons acting or who
could be deemed to be acting as a group together with the holder or any of the holder’s affiliates, and any other persons whose
beneficial ownership of common stock would or could be aggregated with the holder’s or any of the holder’s affiliates) would
exceed 9.99% (in the case of the Pre-Funded Warrants) or 4.99% (in the case of the PIPE Common Warrants) of the number of
shares of the Company’s outstanding common stock immediately after giving effect to the exercise (the “Beneficial
Table of Contents
MetaVia Inc.
Notes to Consolidated Financial Statements – Continued
F-17
Ownership Limitation”), as such percentage ownership is calculated in accordance with Section 13(d) of the Exchange Act and
the applicable regulations of the SEC. A holder of the Pre-Funded Warrants or PIPE Common Warrants that were issued to the
institutional investor may increase or decrease the Beneficial Ownership Limitation to a higher or lower percentage (not to
exceed 9.99%), effective 61 days after written notice to us. Any such increase or decrease will apply only to that holder and not
to any other holder of the Pre-Funded Warrants or PIPE Common Warrants.
Placement agent
We paid the placement agent a cash fee equal to 7.0% of the gross proceeds of the Offering received from a certain institutional
investor and $0.1 million for non-accountable expenses and clearing costs. In addition, we issued warrants to the placement
agent’s designees (“Placement Agent Warrants”) to purchase up to 127,227 shares of common stock (which represents 5% of
the sum of the shares of common stock and Pre-Funded Warrants sold to the institutional investor in the Offering) at an exercise
price of $4.9125 per share (which represents a premium of 125% of the offering price per share of common stock in the
Offering). The Placement Agent Warrants will be exercisable beginning on the effective date of the Stockholder Approval Date
and will expire on the earlier of (i) two years after the date that the shares of common stock underlying the Placement Agent
Warrants are registered pursuant to an effective registration statement filed pursuant to the Securities Act of 1933, as amended,
which occurred on July 24, 2024, and (ii) June 23, 2029. The grant date fair value of the Placement Agent Warrants
was $0.3 million, which represents a non-cash issuance cost. The weighted average grant date fair value per share of these
Placement Agent Warrants was $2.73, which was determined using the Black-Scholes option pricing model. Based on the terms
of the Placement Agreement Warrants, we have concluded that the accounting classification of the Placement Agent Warrants is
stockholders’ equity in the accompanying consolidated balance sheets.
Upon the exercise for cash of any PIPE Common Warrants issued to a certain institutional investor, we shall pay the placement
agent (i) a cash fee of 7.0% of the aggregate gross exercise price paid in cash with respect thereto and (ii) a non-cash fee in the
form of additional warrants to purchase the number of shares of common stock equal to 5.0% of the aggregate number of such
shares of common stock underlying such warrants. The cash fee payable to the placement agent for any PIPE Common
Warrants exercised by the institutional investor is accounted for as a contingent commitment and will be recorded as an offset to
any gross proceeds received from any future exercises of PIPE Common Warrants by the institutional investor. The non-cash
fee payable to the placement agent for any PIPE Common Warrants exercised by the institutional investor is accounted for as
contingent warrants (“Placement Agent Contingent Warrants”) to purchase up to 318,067 shares of common stock, which is
subject to performance criteria of the institutional investor regarding any exercise for cash of any PIPE Common Warrants with
an assumed grant date of the Offering closing date, and an exercise price of $4.9125 per share. The weighted average grant date
fair value per share of these Placement Agent Contingent Warrants was $3.43, which was determined using the Black-Scholes
option pricing model. Based on the terms of the placement agent engagement letter, we have concluded that the accounting
classification of the Placement Agent Contingent Warrants is to be stockholders’ equity. On each balance sheet reporting date,
we will need to assess whether it is probable for us to issue warrants to the placement agent based on whether it is probable for
any PIPE Common Warrants to be exercised by the institutional investor. As of December 31, 2024, we determined that the
issuance of additional warrants to the placement agent is not yet probable; accordingly, the Placement Agent Contingent
Warrants had no impact on the consolidated balance sheets.
Warrants
The following warrants were outstanding as of December 31, 2024 and 2023:
Shares of Common Stock Issuable
for Outstanding Warrants
As of December 31,
Exercise
Expiration
Warrant Issuance
2024
2023
Price
Date
July 2018 (1)
6
6
$ 44,820.00
July 2028
April 2020 (1)
159
159
$
3,000.00
April 2025
January 2021 (1)
10,421
10,421
$
1,447.20
July 2026
October 2021 (1)
15,390
15,390
$
900.00
April 2025
November 2022 Series B (2)
177,938
177,938
$
0.00
December 2027
June 2024 Placement Agent (3)
127,227
—
$
4.91
July 2026
June 2024 Pre-Funded (4)
1,430,000
—
$
0.00
no expiration date
June 2024 Series A (5)
5,089,060
—
$
3.93
September 2025 (latest date)
June 2024 Series B (6)
7,633,591
—
$
3.93
September 2029 (latest date)
Total
14,483,792
203,914
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MetaVia Inc.
Notes to Consolidated Financial Statements – Continued
F-18
(1)
The number of outstanding and exercisable warrants is equal to the number of shares of common stock issuable for
outstanding warrants.
(2)
The number of outstanding and exercisable warrants of 1,423,504 represent eight times the number of shares of
common stock issuable for these warrants. These warrants have a cashless exercise provision whereby eight warrants
can be exercised for one share of common stock for no additional consideration, which renders the $3.00 per warrant
exercise price to be zero. In 2023, 6,843,666 Series B warrants issued in November 2022 were exercised for 855,458
shares of our common stock.
(3)
These warrants are exercisable at any time from the Stockholder Approval Date and expire two years after a resale
registration statement covering the shares of common stock issuable upon the exercise of the warrants hereunder
becomes effective with the SEC. In July 2024, a resale registration statement was filed with the SEC and became
effective.
(4)
These warrants are exercisable immediately upon their issuance in June 2024 and are considered to be perpetual
warrants without any expiration date. Additionally, in the third quarter of 2024, 351,171 Pre-Funded Warrants were
exercised for an equivalent number of shares of our common stock.
(5)
These warrants are exercisable at any time from the Stockholder Approval Date and expire earlier of (i) the twelve
months anniversary of the Stockholder Approval Date, and (ii) the 60th day following the date on which the Company
publicly announces the receiving of positive Phase 1 MAD data readout for DA-1726.
(6)
These warrants are exercisable at any time from the Stockholder Approval Date and expire on the earlier of (i) the
five-year anniversary of the Stockholder Approval Date and (ii) the six months anniversary following the date on
which the Company publicly announce the receiving of positive Phase 1, Part 3 data readout for DA-1726.
Additionally, on a cashless basis, 6,768,837 Series A warrants issued in November 2022 were exercised in 2023 for 846,105
shares of our common stock. As of December 31, 2023, all Series A warrants were fully exercised for shares of our common
stock.
Stock-based compensation
Stock-based compensation expense was included in general and administrative and research and development as follows (in
thousands):
Year Ended December 31,
2024
2023
General and administrative
$
366
$
178
Research and development
172
44
Total stock-based compensation
$
538
$
222
Stock-based award plans
In December 2019, in connection with a merger, we adopted the 2019 Equity Incentive Plan (the “2019 Plan”). Additionally, we
adopted the 2021 Inducement Plan in November 2021 and the Amended and Restated 2022 Equity Incentive Plan (the “2022
Plan”) in December 2022. The 2019 Plan, 2021 Inducement Plan and 2022 Plan provide for the grant of stock options, restricted
stock, RSUs and other equity awards of our common stock to employees, officers, consultants, and directors. Stock options
granted under any of these plans expire within a period of not more than ten years from the date of grant.
With the adoption of the 2022 Plan, no additional shares may be added to or granted from the 2019 Plan, and any shares related
to forfeited awards are carryover to the 2022 Plan. In June 2024, in connection with the 2024 Annual Meeting of Stockholders,
our stockholders approved an amendment (the “Amendment”) to our 2022 Plan. Pursuant to the terms and conditions of the
Amendment, the 2022 Plan was amended to:
●
automatically increase on January 1st of each year for a period of eight years commencing on January 1, 2025 and
ending on (and including) January 1, 2032, the aggregate number of shares of common stock that may be issued
pursuant to Awards (as defined in the 2022 Plan) to an amount equal to 10% of the Fully Diluted Shares (as defined in
the 2022 Plan) as of the last day of the preceding calendar year, provided, however that the Board may act prior to the
effective date of any such annual increase to provide that the increase for such year will be a lesser number of shares
of common stock; and
●
increase the aggregate maximum number of shares of common stock that may be issued pursuant to the exercise of
Table of Contents
MetaVia Inc.
Notes to Consolidated Financial Statements – Continued
F-19
Incentive Stock Options (as defined in the 2022 Plan) to 1 million shares of the common stock plus the amount of any
increase in the number of shares that may be available for issuance pursuant to the annual increase described above,
but in no event more than 15 million shares of the common stock issued as incentive stock options.
The following table summarizes the outstanding awards issued pursuant to our stock-based award plans and inducement grants
as of December 31, 2024 and the remaining shares of common stock available for future issuance:
Remaining shares of
Stock
common stock available
Plan Name
Options
RSUs
for future issuance
2019 Plan
1,575
—
—
2022 Plan
3,125
175,086
356,992
2021 Inducement Plan
—
—
4,166
Total
4,700
175,086
361,158
For stock options and RSUs granted under the 2019 Plan and 2022 Plan as of December 31, 2024, unrecognized stock-based
compensation costs totaled $0.6 million. The unrecognized stock-based costs are expected to be recognized as an expense over
a weighted average period of 1.7 years.
RSUs
The following table summarizes the status of our RSUs and related transactions for the period presented (in thousands, except
share and per share amounts):
Outstanding
Vested and Deferred Release
Shares of
Average
Shares of
Average
Common Stock Grant Date
Aggregate Common Stock Grant Date
Aggregate
Issuable
Fair Value
Fair
Issuable
Fair Value
Intrinsic
for RSUs
Price
Value
for RSUs
Price
Value
As of January 1, 2023
— $
— $
—
— $
— $
—
Granted
173,395
4.45
Forfeited/cancelled
(7,032)
4.04
Vested and released
(25,002)
3.99
100
Vested and deferred release
5,469
4.02
As of December 31, 2023
141,361
4.55
523
5,469
4.02
20
Granted
120,129
4.56
Vested and released
(86,404)
4.31
284
Vested and deferred release
7,554
4.44
As of December 31, 2024
175,086 $
4.68 $
355
13,023 $
4.26 $
26
Stock options
The following table summarizes the status of our outstanding and exercisable options and related transactions for the period
presented (in thousands, except share and per share amounts):
Outstanding
Exercisable
Shares of
Weighted
Shares of
Weighted
Common
Weighted
Average
Common
Weighted
Average
Stock
Average
Remaining
Stock
Average
Remaining
Issuable
Exercise
Contractual
Issuable
Exercise
Contractual
for Options
Price
Term (years) for Options
Price
Term (years)
As of January 1, 2023
4,560 $
796.96
8.5
2,238 $
1,173.60
8.1
Granted
3,125
5.36
Forfeited and cancelled
(2,985)
596.32
As of December 31, 2023
4,700
398.30
8.6
4,577
391.04
8.6
As of December 31, 2024
4,700 $
398.30
7.5
4,695 $
398.46
7.5
The aggregate intrinsic value of our outstanding and exercisable options was zero as of January 1, 2023 and December 31,
Table of Contents
MetaVia Inc.
Notes to Consolidated Financial Statements – Continued
F-20
2023 and 2024.
Grant date fair value of RSUs, stock options and warrants
We estimated the grant date fair value of RSUs granted to employees, consultants, and directors based on the closing sales price
of our common stock as reported on Nasdaq on the date of grant. We estimated the grant date fair value of stock options and
warrants granted to employees, consultants, and directors using the Black-Scholes option pricing model.
The following table sets forth the fair value per share of Placement Agent Warrants granted in 2024 and the weighted average
fair value per share of stock options granted in 2023 and the assumptions used in the Black-Scholes option-pricing model:
Placement Agent
Contingent
Stock
Warrants
Warrants
Options
Granted in
Granted in
Granted in
June 2024
June 2024
March 2023
Weighted average fair value
$
2.73
$
3.43
$
3.63
Expected stock price volatility
140.0 %
127.0 %
82.9 %
Expected term (years)
2.1
5.7
5.0
Expected dividend yield
— %
— %
— %
Risk-free interest rate
4.63 %
4.31 %
3.54 %
8.
Significant segment expenses
The following table sets forth the significant segment expenses that are regularly provided to our CODM:
Year Ended December 31,
2024
2023
Operating expenses
Research and development
Clinical trial
$
14,441
$
5,100
Costs under the Shared Services Agreement with
Dong-A (related party)
4,930
2,438
Employee compensation and benefits
1,606
461
Consulting
288
483
Other (1)
288
676
Total research and development
21,553
9,158
General and administrative
Legal and professional fees
2,864
3,007
Consulting
1,533
1,961
Employee compensation and benefits
1,659
620
Other (2)
1,200
1,140
Total general and administrative
7,256
6,728
Total operating expenses
$
28,809
$
15,886
(1)
Other R&D expenses include non-clinical and preclinical services and other R&D expenditures.
(2) Other G&A expenses include insurance, software license fees, non-income state taxes, lease rental expenses and
other G&A expenditures.
9.
Income taxes
Our loss before income taxes is as follows (in thousands):
Year Ended December 31,
2024
2023
United States
$
(27,592)
$
(12,468)
Foreign
—
(2)
Loss before income taxes
$
(27,592)
$
(12,470)
Table of Contents
MetaVia Inc.
Notes to Consolidated Financial Statements – Continued
F-21
The components of our income tax provision are as follows (in thousands):
Year Ended December 31,
2024
2023
Income tax (benefit) expense:
Current
United States
$
—
$
—
Foreign
—
—
Total current income tax (benefit) expense
—
—
Deferred
United States
(8,401)
(3,424)
Foreign
—
176
Total deferred income tax (benefit) expense
(8,401)
(3,248)
Change in valuation allowance - United States
8,401
3,424
Change in valuation allowance - Foreign
—
(176)
Provision for income taxes
$
—
$
—
Our effective tax rate for 2024 and 2023 was zero percent. A reconciliation between income tax computed at the statutory U.S.
federal statutory rate and the consolidated effective tax rate is as follows:
Year Ended December 31,
2024
2023
Income taxes at federal statutory rate
21.0 %
21.0 %
State income tax, net of federal benefit
6.0
3.0
Change in state tax rate
2.5
(1.4)
Change in fair value of warrant liabilities
0.3
5.7
Other
0.6
(0.8)
Valuation allowance
(30.4)
(27.5)
Effective tax rate
— %
— %
The significant components of our deferred tax assets and liabilities are as follows (in thousands):
As of December 31,
2024
2023
Gross deferred income tax assets:
Federal and state operating loss carryforwards
$
4,959
$
2,107
Acquired intangibles
3,000
2,803
Stock-based compensation
458
392
Lease liability
37
49
Capitalized R&D expenses
7,516
2,315
Other
118
34
R&D credit carryforwards
26
26
Total gross deferred income tax assets
16,114
7,726
Valuation allowance - U.S. federal
(16,077)
(7,676)
Gross deferred tax assets, net of valuation allowance
37
50
Gross deferred tax liabilities:
ROU asset
(36)
(49)
Other
(1)
(1)
Gross deferred income tax liabilities
(37)
(50)
Deferred income tax assets, net
$
—
$
—
The realization of our deferred income tax assets is primarily dependent upon future taxable income, if any, and such income is
uncertain in both amount and timing. We have had significant pre-tax losses since our inception, and we have not yet generated
revenues and face significant challenges to becoming profitable. Accordingly, we have recorded a valuation allowance of $16.1
million and $7.7 million as of December 31, 2024 and 2023, respectively. U.S. federal deferred income tax assets will continue
to require a valuation allowance until we can demonstrate their realizability through sustained profitability or another source of
income.
Table of Contents
MetaVia Inc.
Notes to Consolidated Financial Statements – Continued
F-22
As of December 31, 2024 and 2023, our U.S. federal net operating loss (“NOL”) carryforwards were $18.5 million and $8.8
million, respectively. We had $24 thousand of U.S. federal R&D credit carryforwards as of December 31, 2024 and 2023. As of
December 31, 2024 and 2023, we had state NOL carryforwards of $17.4 million and $4.4 million. We had $2 thousand of state
R&D credit carryforwards as of December 31, 2024 and 2023. Since our U.S. federal net operating losses were incurred after
December 31, 2017, our U.S NOL will not expire. Our state NOL and U.S federal and R&D credit carryforwards will begin to
expire in 2042, if not utilized. Lastly, since the foreign subsidiary that generated the foreign losses was dissolved and liquidated
in June 2023, the recorded value of foreign NOL and related deferred tax asset have been reduced to zero as of December 31,
2023.
Our ability to utilize our NOL and R&D credit carryforwards have been and may be substantially limited due to the ownership
changes that have occurred or that could occur in the future, as provided by Section 382 of the Internal Revenue Code of 1986,
as amended (the “Code”), and similar state provisions. These ownership changes may limit the amount of NOL and R&D credit
carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an “ownership
change,” as defined by Section 382 of the Code, results from a transaction or series of transactions over a three-year period
resulting in an ownership change of more than 50 percent of the outstanding stock of a company by certain stockholders or
public groups.
We recognize interest and/or penalties related to uncertain tax positions in income tax expense. There were no uncertain tax
positions as of December 31, 2024 and 2023, and as such, no interest or penalties were recorded to income tax expense.
Our U.S. corporate tax returns are subject to examination beginning with the 2019 tax year for U.S. federal and state
jurisdictions, and beginning with the 2019 tax year for one foreign jurisdiction.
10. Loss per share of common stock
The following table sets forth the computation of basic and diluted loss per share of common stock (in thousands, except share
and per share amounts):
Year Ended December 31,
2024
2023
Numerator:
Net loss
$
(27,592)
$
(12,470)
Denominator:
Weighted average shares of common stock, basic
7,757,128
5,071,101
Effect of dilutive securities
—
—
Weighted average shares of common stock, diluted
7,757,128
5,071,101
Loss per share of common stock, basic and diluted
$
(3.56)
$
(2.46)
For each of the periods presented in the above table, our basic weighted average shares of common stock include any
outstanding (i) November 2022 Series A warrants, (ii) November 2022 Series B warrants, (ii) June 2024 Pre-Funded Warrants
and (iii) vested RSUs in which their release was deferred in accordance with the respective award agreement during the
respective period.
Since we reported a net loss for 2024 and 2023, our potentially dilutive securities are deemed to be anti-dilutive, accordingly,
there was no effect of dilutive securities. Therefore, our basic and diluted loss per share of common stock and our basic and
diluted weighted average shares of common stock are the same for 2024 and 2023.
The following table sets forth the outstanding securities as of the periods presented which were not included in the calculation
of diluted earnings per share of common stock for 2024 and 2023:
As of December 31,
2024
2023
Stock options
4,700
4,700
RSUs
162,063
141,361
Warrants
12,875,854
25,976
Table of Contents
MetaVia Inc.
Notes to Consolidated Financial Statements – Continued
F-23
11. Fair value measurements
Fair value is a market-based measurement, not an entity specific measurement and is defined as “the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement
date.” Fair value measurements are defined on a three-level hierarchy:
Level 1: Unadjusted quoted prices for identical assets or liabilities in active markets;
Level 2: Quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active,
or inputs which are observable, whether directly or indirectly, for substantially the full term of the asset or
liability; and
Level 3: Unobservable inputs that reflect our own assumptions about the assumptions market participants would use in
pricing the asset or liability in which there is little, if any, market activity for the asset or liability at the
measurement date.
The following table sets forth our financial assets and liabilities, subject to fair value measurements on a recurring basis, by
level within the fair value hierarchy (in thousands):
As of December 31, 2024
As of December 31, 2023
Description
Total Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3
Liabilities:
Warrant liabilities
$ 361
$
—
$ 361
$
—
$ 658
$
—
$ 658
$
—
Total
$ 361
$
—
$ 361
$
—
$ 658
$
—
$ 658
$
—
We estimated the fair value of our warrant liabilities using the trading market price of our common stock due to a cashless
exercise provision of these warrants whereby eight warrants can be exercised for one share of common stock for no additional
consideration, which results in the warrant exercise price to be zero. Accordingly, our warrant liabilities were considered to be
Level 2 of the fair value hierarchy.
Exhibit 4.12
DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
General
The following summary describes the securities of MetaVia, Inc. (the “Company”) registered under Section 12 of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), certain provisions of the Company’s Third Amended and Restated Certificate of
Incorporation, as amended (the “Certificate of Incorporation”), Fourth Amended and Restated Bylaws (the “Bylaws”), and certain
provisions of Delaware law. This summary does not purport to be complete and is qualified in its entirety by reference to the full text of our
Certificate of Incorporation and our Bylaws, copies of which have been filed with the Securities and Exchange Commission, and the
applicable provisions of Delaware law.
The Company has one class of securities registered under Section 12 of the Exchange Act, the Company’s common stock, par value
$0.001 per share (“Common Stock”).
The Company’s authorized capital stock consists of 100,000,000 shares of Common Stock, $0.001 par value per share, and
10,000,000 shares of preferred stock, $0.001 par value per share (“Preferred Stock”).
Description of Common Stock
Voting Rights
Each holder of our Common Stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders,
including the election of directors. Our stockholders do not have cumulative voting rights in the election of directors. Accordingly, holders of
a majority of the voting shares are able to elect all of the directors. In addition, the affirmative vote of holders of 66-2/3% of the voting
power of all of the then outstanding voting stock will be required to take certain actions, including amending certain provisions of our
Certificate of Incorporation, such as the provisions relating to amending our Bylaws, procedures for our stockholder meetings, the classified
board, director liability, and amendments requirements of our Certificate of Incorporation.
Dividend Rights
Subject to preferences that may be applicable to any then-outstanding Preferred Stock, the holders of Common Stock are entitled to
receive ratably dividends, if any, as may be declared by the Board of Directors (“Board”) out of legally available funds.
Liquidation, Dissolution or Winding Up
In the event of our liquidation, dissolution, or winding up, the holders of Common Stock will be entitled to share ratably in the
assets legally available for distribution to stockholders after the payment of or provision for all of our debts and other liabilities, subject to
the prior rights of any Preferred Stock then-outstanding.
Other Rights and Preferences
Holders of Common Stock have no preemptive or conversion rights or other subscription rights and there are no redemption or
sinking fund provisions applicable to the Common Stock. The rights, preferences, and privileges of holders of Common Stock are subject to
and may be adversely affected by the rights of the holders of shares of any series of Preferred Stock that we may designate and issue in the
future.
Investor Rights Agreement
On September 14, 2022, we entered into the Investor Rights Agreement with Dong-A pursuant to which, Dong-A ST Co. Ltd.
(“Dong-A”) has the right, subject to the terms thereof, to designate for appointment to the Board that number of directors commensurate
with Dong-A’s and its affiliates’ beneficial ownership of our common stock, with the number of directors that Dong-A is entitled to
designate rounded up to the nearest whole number (“DA Designees”). To the extent necessary to permit the designation of the DA
Designees, the size of the Board shall be increased to that number of directors that would permit Dong-A to designate a number of directors
to fill the
vacancies created thereby that is commensurate with Dong-A’s and its affiliates’ collective beneficial ownership of the common stock
outstanding at such time (taking into account any DA Designees already serving on the Board at such time). For so long as Dong-A has the
right to designate any DA Designee to the Board, Dong-A will vote their shares of our common stock in favor of any Company Director (as
defined in the Investor Rights Agreement) or any nominee designated by the Nominating and Corporate Governance Committee of the
Board and against the removal of any Company Director, in each case, at any meeting of the stockholders of the Company.
Registration Rights — 2022 Registration Rights Agreement
On September 14, 2022, we entered into the 2022 Registration Rights Agreement with Dong-A and the other parties thereto. The
2022 Registration Rights Agreement provides Dong-A with demand and piggyback registration rights, including the right to two long-form
registration statements. In addition, we agreed to file a registration statement to register the shares of common stock issuable upon any
common stock held by the parties to the 2022 Registration Rights Agreement and to use commercially reasonable efforts to cause each
registration statement to be declared effective under the Securities Act of 1933, as amended (the “Securities Act”) as promptly as possible
after the filing thereof. We also agreed to use our commercially reasonable efforts to keep such registration statement continuously effective
under the Securities Act until the date that all securities covered by such registration statement have been sold or are otherwise able to be
sold pursuant to Rule 144.
Registration Rights — 2024 Registration Rights Agreement
On June 23, 2024, we entered into the 2024 Registration Rights Agreement with Dong-A and Armistice Capital Master Fund Ltd.
The 2024 Registration Rights Agreement provides Dong-A and Armistice Capital Master Fund Ltd., among other things, with registration
rights for the shares of common stock, as well as the shares of Common Stock underlying warrants, in each case issued in June 2024. We
also agreed to use our commercially reasonable efforts to keep such registration statement continuously effective under the Securities Act
until the date that all securities covered by such registration statement have been sold or are otherwise able to be sold pursuant to Rule 144.
Preferred Stock
Our Board may, without further action by our stockholders, fix the rights, preferences, privileges and restrictions of up to an
aggregate of 10,000,000 shares of Preferred Stock in one or more series and authorize their issuance. These rights, preferences and privileges
could include dividend rights, conversion rights, voting rights, terms of redemption, liquidation preferences, sinking fund terms and the
number of shares constituting any series or the designation of any series, any or all of which may be greater than the rights of our Common
Stock. The issuance of our Preferred Stock could adversely affect the voting power of holders of our Common Stock and the likelihood that
such holders will receive dividend payments and payments upon liquidation. In addition, the issuance of Preferred Stock could have the
effect of decreasing the market price of our Common Stock and could also have the effect of delaying, deferring or preventing a change of
control or other corporate action.
Warrants
In July 2018, we entered into a First Amendment to the Loan and Security Agreement (the “Loan and Security Agreement”), as
borrower, with Silicon Valley Bank (“SVB”), as lender. In connection with the Loan and Security Agreement, we issued to SVB in a private
placement pursuant to Section 4(a)(2) of the Securities Act, a warrant to purchase 36,000 shares of Common Stock (the “SVB Warrant”), at
an exercise price of $7.47 per share. As of December 31, 2024, the SVB Warrant was exercisable for 6 shares of our Common Stock at an
exercise price of $44,820 per share.
In April 2020, in connection with a securities purchase agreement, we issued to H.C. Wainwright & Co., LLC and certain of its
designees in a private placement pursuant to Section 4(a)(2) of the Securities Act, a warrant to purchase up to 37,500 shares of our Common
Stock, at an exercise price of $12.50 per share (the “April 2020 Warrant”). As of December 31, 2024, the April 2020 Warrant was
exercisable for 159 shares of our Common Stock at an exercise price of $3,000 per share.
In January 2021, in connection with a securities purchase agreement, we issued to certain institutional investors in a private
placement pursuant to Section 4(a)(2) of the Securities Act, a warrant to purchase up to 2,500,000 shares of our Common Stock, at an
exercise price of $4.00 per share (the “January 2021 Warrant”). As of December 31, 2024, the January 2021 Warrant was exercisable for
10,421 shares of our Common Stock at an exercise price of $1,447.20 per share.
In October 2021, in connection with a securities purchase agreement, we issued to certain institutional investors in a private
placement pursuant to Section 4(a)(2) of the Securities Act, a warrant to purchase up to 4,307,693 shares of our Common Stock, at an
exercise price of $3.75 per share (the “October 2021 Warrant”). As of December 31, 2024, the October 2021 Warrant was exercisable for
17,955 shares of our Common Stock at an exercise price of $900 per share.
In June 2024, we issued to Armistice Capital Master Fund Ltd and Dong-A in a private placement pursuant to Section 4(a)(2) of the
Securities Act, (i) the pre-funded warrants to purchase up to 1,781,171 shares of Common Stock at an exercise price of $0.001 per share (the
“Pre-Funded Warrants”), (ii) the Series A warrants to purchase 5,089,060 shares of Common Stock at an exercise price of $3.93 per share
(the “Series A Warrants”), and (iii) the Series B warrants to purchase up to 7,633,591 shares of Common Stock at an exercise price of $3.93
per share (the “Series B Warrants”). As of December 31, 2024, the Pre-Funded Warrants were exercisable for up to 1,430,000 shares of our
Common Stock at an exercise price of $0.0001 per share, the Series A Warrants were exercisable for up to 5,089,060 shares of our Common
Stock at an exercise price of $3.93 per share, and our Series B Warrants were exercisable for 7,633,591 shares of our Common Stock at an
exercise price of $3.93 per share.
In June 2024, we issued to H.C. Wainwright & Co., LLC and certain of its designees in a private placement pursuant to Section 4(a)
(2) of the Securities Act, a warrant to purchase up to 127,227 shares of Common Stock at an exercise price of $4.9125 per share (the
“Placement Agent Warrants”). As of December 31, 2024, the Placement Agent Warrants were exercisable for 127,227 shares of our
Common Stock at an exercise price of $4.9125 per share.
Anti-Takeover Effects of Delaware Law and Our Certificate of Incorporation and Bylaws
Our Certificate of Incorporation and Bylaws contain provisions that could make it more difficult to complete an acquisition of us by
means of a tender offer, a proxy contest or otherwise or the removal and replacement of our incumbent officers and directors.
Removal of Directors; Board Vacancies; Board Size
Our Certificate of Incorporation provides for the removal of any of our directors only for cause and requires a stockholder vote of at
least 66 2/3% of the voting power of the then outstanding voting stock. In addition, our Certificate of Incorporation provides that any
vacancy occurring on our Board may be filled by a majority of directors then in office, even if less than a quorum, unless the Board
determines that such vacancy shall be filled by the stockholders. Finally, the authorized number of directors may be changed only by a
resolution of the Board. This system of removing directors, filling vacancies and fixing the size of the Board makes it more difficult for
stockholders to replace a majority of the directors.
Classes
Our Certificate of Incorporation and Bylaws provide that the Board be divided into three classes of directors, as nearly equal in
number as possible, with each class serving a staggered three-year term. The classification system of electing directors may tend to
discourage a third-party from making a tender offer or otherwise attempting to obtain control of us since the classification of the Board
generally increases the difficulty of replacing a majority of directors.
Special Stockholder Meetings
Our Certificate of Incorporation and Bylaws provide that a special meeting of stockholders may be called only by a resolution
adopted by a majority of our Board or by the chair of the Board.
Stockholder Advance Notice Procedure
Our Bylaws establish an advance notice procedure for stockholders to make nominations of candidates for election as directors or to
bring other business before an annual meeting of our stockholders. The Bylaws provide that any stockholder wishing to nominate persons for
election as directors at, or bring other business before, an annual meeting must deliver to our secretary a written notice of the stockholder’s
intention to do so. To be timely, the stockholder’s notice must be delivered to or mailed and received by us not more than 120 days, and not
less than 90 days before the anniversary date of the preceding annual meeting, except that if the annual meeting is set for a date that is not
within 30 days before or 30 days after such anniversary date, we must receive the notice not earlier than the close of business on the 120th
day prior to the annual meeting and not later than the close of business on the later of (i) the 90th day prior to the annual meeting or (ii) the
10th day following the day on which we first made public announcement of the date of meeting. The notice must include the following
information:
●
as to director nominations all information relating to each director nominee that is required by the rules of the SEC to be
disclosed in solicitations of proxies, or is otherwise required by Section 14 of the Exchange Act, including Regulation 14A
and Rule 14a-19, and a description of all Derivative Transactions (as defined in the Bylaws) by each nominee during the
previous twelve-month period;
●
as to any other business that the stockholder proposes to bring before the meeting, a reasonably brief description of the
business to be proposed, the text of the proposal, the reasons for conducting such business at the meeting and, if any, and
the stockholder’s material interest in the proposed business; and
●
as to the stockholder who intends to make the nomination (the “Notifying Stockholder”), (i) the name and address of the
Notifying Stockholder, (ii) the class, series and number of our securities that Notifying Stockholder beneficially owns of
record and (iii) a description of any participants, associates, family members living in the same household and any person
or entity who is a member of a group with the Notifying Stockholder.
Undesignated Preferred Stock
The ability to authorize undesignated Preferred Stock makes it possible for our Board to issue Preferred Stock with voting or other
rights or preferences that could have the effect of delaying, deferring, preventing or otherwise impeding any attempt to change control of us.
Delaware Anti-Takeover Statute
The Company is subject to Section 203 (“Section 203”) of the Delaware General Corporation Law. Section 203 generally prohibits
a public Delaware corporation such as us from engaging in a “business combination” with an “interested stockholder” for a period of three
years following the time that the stockholder became an interested stockholder, unless:
●
prior to the time the stockholder became an interested stockholder, the board of directors of the corporation approved
either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder;
●
upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the number of shares outstanding (i) shares owned by persons who are directors and
also officers and (ii) employee stock plans in which employee participants do not have the right to determine
confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or
●
at or subsequent to the time the stockholder became an interested stockholder, the business combination is approved by the
board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote
of at least 66 2/3% of the outstanding voting stock which is not owned by the interested stockholder.
Section 203 defines a business combination to include:
●
any merger or consolidation involving the corporation and the interested stockholder;
●
any sale, lease, exchange, mortgage, pledge, transfer or other disposition (in one transaction or a series of transactions)
involving the interested stockholder of 10% or more of the assets of the corporation (or its majority-owned subsidiary);
●
subject to exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the
corporation to the interested stockholder;
●
subject to exceptions, any transaction involving the corporation that has the effect, directly or indirectly, of increasing the
proportionate share of the stock or any class or series of the corporation beneficially owned by the interested stockholder;
and
●
the receipt by the interested stockholder of the benefit, directly or indirectly (except proportionately as a stockholder of
such corporation), of any loans, advances, guarantees, pledges or other financial benefits, other than certain benefits set
forth in Section 203, provided by or through the corporation.
In general, Section 203 defines an interested stockholder as any entity or person beneficially owning 15% or more of the
outstanding voting stock of the corporation and any entity or person that is an affiliate or associate of such entity or person.
Transfer Agent and Registrar
The transfer agent and registrar for our Common Stock is Equiniti Trust Company, LLC.
Listing on the Nasdaq Capital Market
Our Common Stock is listed on the Nasdaq Capital Market under the symbol “MTVA.”
Exhibit 10.1
1
INDEMNIFICATION AGREEMENT
Effective Date: [ ], 20[ ]
This Indemnification Agreement (this “Agreement”), is made as of the Effective Date set
forth above, between MetaVia Inc., a Delaware corporation (the “Company”), whose address is
545 Concord Avenue, Suite 210, Cambridge, Massachusetts 02138, and [ ] (“Indemnitee”).
Recitals
A.
The Company desires to attract and retain the services of highly qualified
individuals as directors, officers, employees and agents.
B.
The Company’s Amended and Restated Bylaws (the “Bylaws”) require that the
Company indemnify its directors and executive officers and empowers the Company to indemnify
its other officers, employees and agents, as authorized by the General Corporation Law of the State
of Delaware, as amended (the “DGCL”), under which the Company is organized, and such Bylaws
expressly provide that the indemnification provided therein is not exclusive and contemplates that
the Company may enter into separate agreements with its directors, officers and other persons to
set forth specific indemnification provisions.
C.
Indemnitee does not regard the protection currently provided by applicable law, the
Company’s governing documents and available insurance as adequate under the present
circumstances, and the Company has determined that Indemnitee and other directors, officers,
employees and agents of the Company may not be willing to serve or continue to serve in such
capacities without additional protection.
D.
The Company desires and has requested Indemnitee to serve or continue to serve as
a director, officer, employee or agent of the Company, as the case may be, and has proffered this
Agreement to Indemnitee as an additional inducement to serve in such capacity.
E.
Indemnitee is willing to serve, or to continue to serve, as a director, officer,
employee or agent of the Company, as the case may be, if Indemnitee is furnished the indemnity
provided for herein by the Company.
Agreement
Now Therefore, in consideration of the mutual covenants and agreements set forth herein,
the parties hereto, intending to be legally bound, hereby agree as follows:
1.
Definitions.
(a)
Agent. For purposes of this Agreement, the term “agent” of the Company
means any person who: (i) is or was a director, officer, employee or other fiduciary of the
Company or a subsidiary of the Company; or (ii) is or was serving at the request or for the
convenience of, or representing the interests of, the Company or a subsidiary of the Company, as a
director, officer,
2
employee or other fiduciary of a foreign or domestic corporation, partnership, joint venture, trust
or other enterprise.
(b)
Expenses. For purposes of this Agreement, the term “expenses” shall be
broadly construed and shall include, without limitation, (i) all direct and indirect costs of any type
or nature whatsoever (including, without limitation, all attorneys’, witness, or other professional
fees and related disbursements, other out-of-pocket costs of whatever nature), actually and
reasonably incurred by Indemnitee in connection with the investigation, defense, participation in
(including as a witness) or appeal of a proceeding or establishing or enforcing a right to
indemnification under this Agreement, the DGCL or otherwise, and amounts paid in settlement by
or on behalf of Indemnitee, (ii) damages, judgments, fines and amounts paid in settlement and any
other amounts that Indemnitee becomes legally obligated to pay (including any federal, state or
local taxes imposed on Indemnitee as a result of receipt of reimbursements or advances of
expenses under this Agreement) and (iii) the premium, security for, and other costs relating to any
costs bond, supersedes bond, or other appeal bond or its equivalent, whether civil, criminal,
arbitrational, administrative or investigative with respect to any proceeding, provided that expenses
shall not include any judgments, fines or penalties actually levied against Indemnitee for such
individual’s violations of law to the extent Section 10 prohibits the Company from indemnifying
the Indemnitee for such amounts. The term “expenses” shall also include reasonable compensation
for time spent by Indemnitee for which he is not compensated by the Company or any subsidiary
or third party (x) for any period during which Indemnitee is not an agent, in the employment of, or
providing services for compensation to, the Company or any subsidiary; and (y) if the rate of
compensation and estimated time involved is approved by the directors of the Company who are
not parties to any action with respect to which expenses are incurred, for Indemnitee while an
agent of, employed by, or providing services for compensation to, the Company or any subsidiary.
(c)
Proceedings. For purposes of this Agreement, the term “proceeding” shall
be broadly construed and shall include, without limitation, any threatened, pending, or completed
action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry,
administrative hearing or any other actual, threatened or completed proceeding, whether brought in
the right of the Company or otherwise and whether of a civil, criminal, administrative or
investigative nature, and whether formal or informal in any case, in which Indemnitee was, is or
will be involved as a party or participant (including as a witness) or otherwise by reason of: (i) the
fact that Indemnitee is or was a director, officer or agent of the Company; (ii) any action taken by
Indemnitee or any action on Indemnitee’s part while acting as director, officer, employee or agent
of the Company; or (iii) the fact that Indemnitee is or was serving at the request of the Company as
a director, officer, employee or agent of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise, and in any such case described above, whether or not
serving in any such capacity at the time any liability or expense is incurred for which
indemnification, reimbursement, or advancement of expenses may be provided under this
Agreement.
(d)
Subsidiary. For purposes of this Agreement, the term “subsidiary” means
any corporation or limited liability company of which more than 50% of the outstanding voting
securities or equity interests are owned, directly or indirectly, by the Company and one or more of
its subsidiaries, and any other corporation, limited liability company, partnership, joint venture,
3
trust, employee benefit plan or other enterprise of which Indemnitee is or was serving at the
request of the Company as a director, officer, employee, agent or fiduciary.
(e)
Independent Counsel. For purposes of this Agreement, the term
“independent counsel” means a law firm, or a partner (or, if applicable, member) of such a law
firm, that is experienced in matters of corporation law and neither presently is, nor in the past five
(5) years has been, retained to represent: (i) the Company or Indemnitee in any matter material to
either such party, or (ii) any other party to the proceeding giving rise to a claim for indemnification
hereunder. Notwithstanding the foregoing, the term “independent counsel” shall not include any
person who, under the applicable standards of professional conduct then prevailing, would have a
conflict of interest in representing either the Company or Indemnitee in an action to determine
Indemnitee’s rights under this Agreement.
(f)
Indemnification to the Fullest Extent. For purposes of this Agreement,
the meaning of the phrase “to the fullest extent authorized or permitted by law” shall include, but
not be limited to: (i) to the fullest extent authorized or permitted by the provision of the DGCL that
authorizes or contemplates additional indemnification by agreement, or the corresponding
provision of any amendment to or replacement of the DGCL or such provision thereof; and (ii) to
the fullest extent authorized or permitted by any amendments to or replacements of the DGCL
adopted after the date of this Agreement that increase the extent to which a corporation may
indemnify its directors and officers.
2.
Agreement to Serve.
(a)
Indemnitee will serve, or continue to serve, as a director, officer, employee
or agent of the Company or any subsidiary, as the case may be, faithfully and to the best of his or
her ability, at the will of such corporation (or under separate agreement, if such agreement exists),
in the capacity Indemnitee currently serves as an agent of such corporation, so long as Indemnitee
is duly appointed or elected and qualified in accordance with the applicable provisions of the
Bylaws or other applicable charter documents of such corporation, or until such time as Indemnitee
tenders his or her resignation in writing; provided, however, that nothing contained in this
Agreement is intended as an employment agreement between Indemnitee and the Company or any
of its subsidiaries or to create any right to continued employment of Indemnitee with the Company
or any of its subsidiaries in any capacity.
(b)
The Company acknowledges that it has entered into this Agreement and
assumes the obligations imposed on it hereby, in addition to and separate from its obligations to
Indemnitee under the Bylaws, to induce Indemnitee to serve, or continue to serve, as a director,
officer, employee or agent of the Company, and the Company acknowledges that Indemnitee is
relying upon this Agreement in serving as a director, officer, employee or agent of the Company.
3.
Indemnification and Contribution.
(a)
Indemnification in Third Party Proceedings. Subject to Section 10
below, the Company shall indemnify Indemnitee to the fullest extent authorized or permitted by
law, including the DGCL, as the same may be amended from time to time (but, only to the extent
that such amendment permits Indemnitee to broader indemnification rights than the DGCL
4
permitted prior to adoption of such amendment), if Indemnitee is a party to or threatened to be
made a party to or otherwise involved in (including as a witness) any proceeding, for any and all
expenses, actually and reasonably incurred by or on behalf of Indemnitee in connection with the
investigation, defense, settlement or appeal of such proceeding.
(b)
Indemnification in Derivative Actions and Direct Actions by the
Company. Subject to Section 10 below, the Company shall indemnify Indemnitee to the fullest
extent authorized or permitted by law, including the DGCL, as the same may be amended from
time to time (but, only to the extent that such amendment permits Indemnitee to broader
indemnification rights than the DGCL permitted prior to adoption of such amendment), if
Indemnitee is a party to or threatened to be made a party to or otherwise involved in (including as a
witness) any proceeding by or in the right of the Company to procure a judgment in its favor,
against any and all expenses actually and reasonably incurred by or on behalf of Indemnitee in
connection with the investigation, defense, settlement, or appeal of such proceedings.
(c)
Indemnification of Related Parties. If (i) Indemnitee is or was affiliated
with one or more venture capital funds that has invested in the Company (an “Appointing
Stockholder”), (ii) the Appointing Stockholder is, or is threatened to be made, a party to or a
participant in any proceeding, and (iii) the Appointing Stockholder’s involvement in the
proceeding is related to Indemnitee’s service to the Company as a director of the Company or any
direct or indirect subsidiaries of the Company, then, to the extent resulting from any claim based
on the Indemnitee’s service to the Company as a director or other fiduciary of the Company, the
Appointing Stockholder will be entitled to indemnification hereunder for reasonable expenses to
the same extent as Indemnitee.
(d)
Fund Indemnitors. The Company hereby acknowledges that the
Indemnitee has or may have in the future certain rights to indemnification, advancement of
expenses and/or insurance provided by entities and/or organizations other than the Company
(collectively, the “Fund Indemnitors”). In the event that the Indemnitee is, or is threatened to be
made, a party to or a participant in any proceeding to the extent resulting from any claim based on
the Indemnitee’s service to the Company as a director or other fiduciary of the Company, then the
Company shall (i) be an indemnitor of first resort (i.e., its obligations to Indemnitee are primary
and any obligation of the Fund Indemnitors to advance expenses or to provide indemnification for
the same expenses or liabilities incurred by Indemnitee are secondary), (ii) be required to advance
reasonable expenses incurred by Indemnitee, and (iii) be liable for the full amount of all expenses,
judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as
required by the terms of this Agreement and any provision of the Bylaws or the Company’s
Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) (or any
other agreement between the Company and Indemnitee), without regard to any rights Indemnitee
may have against the Fund Indemnitors. The Company irrevocably waives, relinquishes and
releases the Fund Indemnitors from any and all claims against the Fund Indemnitors for
contribution, subrogation or any other recovery of any kind in respect thereof. No advancement or
payment by the Fund Indemnitors on behalf of Indemnitee with respect to any claim for which
Indemnitee has sought indemnification from the Company shall affect the foregoing and the Fund
Indemnitors shall have a right of contribution or be subrogated to the extent of such advancement
or payment to all of the rights of recovery of Indemnitee against the Company. The Fund
Indemnitors are third party beneficiaries of the terms of this Section.
5
(e)
Contribution. Whether or not the indemnification provided in this Section
3 is available, in respect of any proceeding in which the Company is jointly liable with Indemnitee
(or would be if joined in such proceeding), the Company shall pay, in the first instance, the entire
amount of any judgment or settlement of such proceeding without requiring Indemnitee to
contribute to such payment and the Company hereby waives and relinquishes any right of
contribution it may have against Indemnitee. The Company shall not enter into any settlement of
any proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in
such proceeding) unless such settlement provides for a full and final release of all claims asserted
against Indemnitee. Without diminishing or impairing the obligations of the Company set forth in
this Section 3, if, for any reason, Indemnitee shall elect or be required to pay all or any portion of
any judgment or settlement in any threatened, pending or completed proceeding in which the
Company is jointly liable with Indemnitee (or would be if joined in such proceeding), the
Company shall contribute to the amount of expenses, judgments, fines and amounts paid in
settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the
relative benefits received by the Company and all officers, directors or employees of the Company,
other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such
proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction from which
such proceeding arose; provided, however, that the proportion determined on the basis of relative
benefit may, to the extent necessary to conform to law, be further adjusted by reference to the
relative fault of the Company and all officers, directors or employees of the Company other than
Indemnitee who are jointly liable with Indemnitee (or would be if joined in such proceeding), on
the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such
expenses, judgments, fines or settlement amounts, as well as any other equitable considerations
which the law may require to be considered. The relative fault of the Company and all officers,
directors or employees of the Company, other than Indemnitee, who are jointly liable with
Indemnitee (or would be if joined in such proceeding), on the one hand, and Indemnitee, on the
other hand, shall be determined by reference to, among other things, the degree to which their
actions were motivated by intent to gain personal profit or advantage, the degree to which their
liability is primary or secondary and the degree to which their conduct is active or passive.
4.
Indemnification of Expenses of Successful Party. Notwithstanding any other
provision of this Agreement, to the extent that Indemnitee has been successful on the merits or
otherwise in defense of any proceeding or in defense of any claim, issue or matter therein,
including the dismissal of any action without prejudice, the Company shall indemnify Indemnitee
against all expenses actually and reasonably incurred in connection with the investigation, defense
or appeal of such proceeding.
5.
Partial Indemnification. If Indemnitee is entitled under any provision of this
Agreement to indemnification by the Company for some or a portion of any expenses actually and
reasonably incurred by Indemnitee in the investigation, defense, settlement or appeal of a
proceeding, but is precluded by applicable law or the specific terms of this Agreement to
indemnification for the total amount thereof, the Company shall nevertheless indemnify
Indemnitee for the portion thereof to which Indemnitee is entitled.
6.
Advancement of Expenses. To the extent not prohibited by law, the Company shall
advance the expenses incurred by Indemnitee in connection with any proceeding, and such
advancement shall be made promptly following request therefor, but in any event no later than
6
twenty (20) days after the receipt by the Company of a statement or statements requesting such
advances (which shall include invoices received by Indemnitee in connection with such expenses
but, in the case of invoices in connection with legal services, any references to legal work
performed or to expenditures made that would cause Indemnitee to waive any privilege accorded
by applicable law shall not be included with the invoice) and upon request of the Company, an
undertaking to repay the advancement of expenses if and to the extent that it is ultimately
determined by a court of competent jurisdiction in a final non-appealable judgment of a court of
competent jurisdiction that Indemnitee is not entitled to be indemnified by the Company.
Advances shall be unsecured, interest free and without regard to Indemnitee’s ability to repay the
expenses. Advances shall include any and all expenses actually and reasonably incurred by
Indemnitee pursuing an action to enforce Indemnitee’s right to indemnification under this
Agreement, or otherwise, and this right of advancement, including expenses incurred preparing
and forwarding statements to the Company to support the advances claimed. Indemnitee
acknowledges that the execution and delivery of this Agreement shall constitute an undertaking
providing that Indemnitee shall, to the fullest extent required by law, repay the advance if and to
the extent that it is ultimately determined by a court of competent jurisdiction in a final non-
appealable judgment of a court of competent jurisdiction that Indemnitee is not entitled to be
indemnified by the Company, and that no other undertaking with respect to the foregoing shall be
required. The right to advances under this Section shall continue until final disposition of any
proceeding, including any appeal therein. This Section 6 shall not apply to any claim made by
Indemnitee for which indemnity is excluded pursuant to Section 10(b).
7.
Notice and Other Indemnification Procedures.
(a)
Notification of Proceeding. Indemnitee will notify the Company in writing
promptly upon being served with any summons, citation, subpoena, complaint, indictment,
information or other document relating to any proceeding or matter which may be subject to
indemnification or advancement of expenses covered hereunder. The failure of Indemnitee to so
notify the Company shall not relieve the Company of any obligation which it may have to
Indemnitee under this Agreement or otherwise and any delay in so notifying the Company shall
not constitute a waiver by Indemnitee of any rights under this Agreement.
(b)
Request for Indemnification and Indemnification Payments. Indemnitee
shall notify the Company promptly in writing upon receiving notice of any demand, judgment or
other requirement for payment that Indemnitee reasonably believes to be subject to indemnification
under the terms of this Agreement, and shall request payment thereof by the Company.
Indemnification payments requested by Indemnitee under Section 3 hereof shall be made by the
Company no later than sixty (60) days after receipt of the written request of Indemnitee. Claims
for advancement of expenses shall be made under the provisions of Section 6 herein.
(c)
Application for Enforcement. In the event the Company fails to make
timely payments as set forth in Sections 6 or 7(b) above, Indemnitee shall have the right to apply to
any court of competent jurisdiction for the purpose of enforcing Indemnitee’s right to
indemnification or advancement of expenses pursuant to this Agreement. In such an enforcement
hearing or proceeding, the burden of proof shall be on the Company to prove that indemnification
or advancement of expenses to Indemnitee is not required under this Agreement or permitted by
7
applicable law. Any determination by the Company (including its Board of Directors, stockholders
or independent counsel) that Indemnitee is not entitled to indemnification hereunder, shall not be a
defense by the Company to the action nor create any presumption that Indemnitee is not entitled to
indemnification or advancement of expenses hereunder.
(d)
Indemnification of Certain Expenses. The Company shall indemnify
Indemnitee against all expenses incurred in connection with any hearing or proceeding under this
Section 7 unless the Company prevails in such hearing or proceeding on the merits in all material
respects.
8.
Assumption of Defense. In the event the Company shall be requested by
Indemnitee to pay the expenses of any proceeding, the Company, if appropriate, shall be entitled to
assume the defense of such proceeding, or to participate to the extent permissible in such
proceeding, with counsel reasonably acceptable to Indemnitee. Upon assumption of the defense by
the Company and the retention of such counsel by the Company, the Company shall not be liable
to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee
with respect to the same proceeding, provided that Indemnitee shall have the right to employ
separate counsel in such proceeding at Indemnitee’s sole cost and expense. Notwithstanding the
foregoing, if Indemnitee’s counsel delivers a written notice to the Company stating that such
counsel has reasonably concluded that there may be a conflict of interest between the Company
and Indemnitee in the conduct of any such defense or the Company shall not, in fact, have
employed counsel or otherwise actively pursued the defense of such proceeding within a
reasonable time, then in any such event the fees and expenses of Indemnitee’s counsel to defend
such proceeding shall be subject to the indemnification and advancement of expenses provisions of
this Agreement. The Company shall not be entitled to assume the defense of any action, suit or
proceeding brought by or on behalf of the Company or as to which Indemnitee shall have initiated
in accordance with Section 10(b).
9.
Insurance.
(a)
To the extent that the Company maintains an insurance policy or policies
providing liability insurance for directors, officers, employees, or agents of the Company or of any
subsidiary (“D&O Insurance”), Indemnitee shall be covered by such policy or policies in
accordance with its or their terms to the maximum extent of the coverage available for any such
director, officer, employee or agent under such policy or policies. If, at the time of the receipt of a
notice of a claim pursuant to the terms hereof, the Company has D&O Insurance in effect, the
Company shall give prompt notice of the commencement of such proceeding to the insurers in
accordance with the procedures set forth in the respective policies. The Company shall thereafter
take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all
amounts payable as a result of such proceeding in accordance with the terms of such policies.
(b)
In the event of a change of control of the Company or the Company
dissolving or liquidating (including being placed into receivership or entering the federal
bankruptcy process and the like), the Company shall maintain in force any and all insurance
policies then maintained by the Company in providing insurance in respect of Indemnitee
(directors’ and officers’ liability, fiduciary, employment practices or otherwise) for a period of at
least six years thereafter (a “Tail Policy”). Such coverage shall be placed by the Company’s
8
incumbent broker. If such coverage is not placed with the incumbent insurance carriers using the
policies that were in place at the time of the change of control or insolvency event, the Tail Policy
shall be substantially comparable in scope and amount as the expiring policies, and the insurance
carriers for the Tail Policy shall have an AM Best rating that is the same or better than the AM
Best ratings of the expiring policies.
10.
Exceptions.
(a)
Certain Matters. Any provision herein to the contrary notwithstanding, the
Company shall not be obligated pursuant to the terms of this Agreement to indemnify Indemnitee
on account of any proceeding with respect to (i) remuneration paid to Indemnitee if it is
determined by final non-appealable judgment of a court of competent jurisdiction that such
remuneration was in violation of law; (ii) a final non-appealable judgment of a court of competent
jurisdiction rendered against Indemnitee for disgorgement or repayment of profits made from the
purchase or sale by Indemnitee of securities of the Company against Indemnitee or in connection
with a settlement by or on behalf of Indemnitee to the extent it is acknowledged by Indemnitee and
the Company that such amount paid in settlement resulted from Indemnitee’s conduct from which
Indemnitee received monetary personal profit, pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934, as amended, or other provisions of any federal, state or local
statute or rules and regulations thereunder; (iii) a final non-appealable judgment of a court of
competent jurisdiction that Indemnitee’s conduct was in bad faith, knowingly fraudulent or
deliberately dishonest or constituted willful misconduct (but only to the extent of such specific
determination); or (iv) on account of conduct that is established by a final non-appealable
judgment of a court of competent jurisdiction as constituting a breach of Indemnitee’s duty of
loyalty to the Company. For purposes of the foregoing sentence, a final non-appealable judgment
of a court of competent jurisdiction may be reached in either the underlying proceeding or action in
connection with which indemnification is sought or a separate proceeding or action to establish
rights and liabilities under this Agreement. The termination of any proceeding or of any claim,
issue or matter therein, by judgment, order, settlement or conviction, or upon a plea of nolo
contendere or its equivalent, shall not (except as otherwise expressly provided in this Agreement)
of itself adversely affect the right of Indemnitee to indemnification or create a presumption that
Indemnitee did not act in good faith and in a manner which he or she reasonably believed to be in
or not opposed to the best interests of the Company or, with respect to any criminal proceeding,
that Indemnitee had reasonable cause to believe that such Indemnitee’s conduct was unlawful. For
purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good
faith to the extent Indemnitee relied in good faith on (i) the records or books of account of the
company, including financial statements, (ii) information supplied to Indemnitee by agents of the
Company in the course of their duties, (iii) the advice of legal counsel for the Company or its
board of directors or counsel selected by any committee of the board of directors or (iv)
information or records given or reports made to the Company by an independent certified public
accountant, an appraiser, investment banker or other expert selected with reasonable care by the
Company or its board of directors or any committee of the board of directors.
(b)
Claims Initiated by Indemnitee. Any provision herein to the contrary
notwithstanding, the Company shall not be obligated to indemnify or advance expenses to
Indemnitee with respect to proceedings or claims initiated or brought by Indemnitee against the
Company or its directors, officers, employees or other agents and not by way of defense, except
9
(i) with respect to proceedings brought to establish or enforce a right to indemnification under this
Agreement or under any other agreement, provision in the Bylaws or Certificate of Incorporation
or applicable law, or (ii) with respect to any other proceeding initiated by Indemnitee that is either
approved by the Board of Directors or Indemnitee’s participation is required by applicable law.
However, indemnification or advancement of expenses may be provided by the Company in
specific cases if the Board of Directors determines it to be appropriate.
(c)
Unauthorized Settlements. Any provision herein to the contrary
notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement to
indemnify Indemnitee under this Agreement for any amounts paid in settlement of a proceeding
effected without the Company’s written consent. Neither the Company nor Indemnitee shall
unreasonably withhold consent to any proposed settlement; provided, however, that the Company
may in any event decline to consent to (or to otherwise admit or agree to any liability for
indemnification hereunder in respect of) any proposed settlement if the Company is also a party in
such proceeding and determines in good faith that such settlement is not in the best interests of the
Company and its stockholders.
(d)
Securities Act Liabilities. Indemnitee acknowledges that paragraph (h) of
Item 512 of Regulation S-K promulgated under the Securities Act of 1933, as amended (the
“Act”), currently generally requires the Company to undertake in connection with any registration
statement filed under the Act to submit the issue of the enforceability of Indemnitee’s rights under
this Agreement in connection with any liability under the Act on public policy grounds to a court
of appropriate jurisdiction and to be governed by any final adjudication of such issue.
11.
Non-exclusivity and Survival of Rights.
(a)
The provisions for indemnification and advancement of expenses set forth in
this Agreement shall not be deemed exclusive of any other rights which Indemnitee may at any
time be entitled under any provision of applicable law, the Certificate of Incorporation, Bylaws or
other agreements, both as to action in Indemnitee’s official capacity and Indemnitee’s action as an
agent of the Company, in any court in which a proceeding is brought, and Indemnitee’s rights
hereunder shall continue after Indemnitee has ceased acting as an agent of the Company and shall
inure to the benefit of the heirs, executors, administrators and assigns of Indemnitee. The
obligations and duties of the Company to Indemnitee under this Agreement shall be binding on the
Company and its successors and assigns until terminated in accordance with its terms. The
Company shall require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or assets of the Company,
expressly to assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform if no such succession had taken place.
(b)
No amendment, alteration or repeal of this Agreement or of any provision
hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action
taken or omitted by such Indemnitee in his or her corporate status prior to such amendment,
alteration or repeal. To the extent that a change in the DGCL, whether by statute or judicial
decision, permits greater indemnification or advancement of expenses than would be afforded
currently under the Certificate of Incorporation, Bylaws and this Agreement, it is the intent of the
parties hereto that Indemnitee shall enjoy by this Agreement the greater benefits so afforded by
10
such change. No right or remedy herein conferred is intended to be exclusive of any other right or
remedy, and every other right and remedy shall be cumulative and in addition to every other right
and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, by Indemnitee shall not
prevent the concurrent assertion or employment of any other right or remedy by Indemnitee.
(c)
The Company and Indemnitee agree herein that a monetary remedy for
breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of
proof, and further agree that such breach may cause Indemnitee and the Company irreparable
harm. Accordingly, the parties hereto agree that each of the Company and the Indemnitee may
enforce this Agreement by seeking injunctive relief and/or specific performance hereof, without
any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief
and/or specific performance, they shall not be precluded from seeking or obtaining any other relief
to which they may be entitled. The Company and Indemnitee further agree that they shall be
entitled to such specific performance and injunctive relief, including temporary restraining orders,
preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other
undertaking in connection therewith. The Company and Indemnitee acknowledge that in the
absence of a waiver, a bond or undertaking may be required by the Delaware Court of Chancery,
and they hereby waive any such requirement of such a bond or undertaking.
12.
Term.
(a)
This Agreement shall continue until and terminate upon the later of: (i) five
(5) years after the date that Indemnitee shall have ceased to serve as a director and/or officer,
employee or agent of the Company; or (ii) one (1) year after the final termination of any
proceeding, including any appeal then pending, in respect to which Indemnitee was granted rights
of indemnification or advancement of expenses hereunder.
(b)
No legal action shall be brought and no cause of action shall be asserted by
or in the right of the Company against an Indemnitee or an Indemnitee’s estate, spouse, heirs,
executors or personal or legal representatives after the expiration of five (5) years from the date of
accrual of such cause of action, and any claim or cause of action of the Company shall be
extinguished and deemed released unless asserted by the timely filing of a legal action within such
five-year period; provided, however, that if any shorter period of limitations is otherwise
applicable to such cause of action, such shorter period shall govern.
13.
Subrogation. In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who, at the
request and expense of the Company, shall execute all papers required and shall do everything that
may be reasonably necessary to secure such rights, including the execution of such documents
necessary to enable the Company effectively to bring suit to enforce such rights.
14.
Information Sharing. If the Indemnitee is the subject of or is implicated in any
way during an investigation, whether formal or informal, the Company shall notify the Indemnitee
of such investigation and shall share with Indemnitee any information it has turned over to any
third parties concerning the investigation (“Shared Information”). By executing this agreement,
Indemnitee agrees that such Shared Information is material non-public information that
11
Indemnitee is obligated to hold in confidence and may not disclose publicly; provided, however,
that Indemnitee is permitted to use the Shared Information and to disclose such Shared Information
to Indemnitee’s legal counsel and third parties solely in connection with defending Indemnitee
from legal liability.
15.
Interpretation of Agreement. It is understood that the parties hereto intend this
Agreement to be interpreted and enforced so as to provide indemnification to Indemnitee to the
fullest extent now or hereafter permitted by law.
16.
Severability. If any provision of this Agreement shall be held to be invalid, illegal
or unenforceable for any reason whatsoever, (a) the validity, legality and enforceability of the
remaining provisions of the Agreement (including without limitation, all portions of any
paragraphs of this Agreement containing any such provision held to be invalid, illegal or
unenforceable, that are not themselves invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this
Agreement (including, without limitation, all portions of any paragraph of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that are not themselves
invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by
the provision held invalid, illegal or unenforceable and to give effect to Section 15 hereof.
17.
Amendment
and Waiver. No supplement, modification, amendment, or
cancellation of this Agreement shall be binding unless executed in writing by the parties hereto.
No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver
of any other provision hereof (whether or not similar) nor shall such waiver constitute a continuing
waiver.
18.
Notice. Except as otherwise provided herein, any notice or demand which, by the
provisions hereof, is required or which may be given to or served upon the parties hereto shall be
in writing and, if by telegram, telecopy or telex, shall be deemed to have been validly served, given
or delivered when sent, if by overnight delivery, courier or personal delivery, shall be deemed to
have been validly served, given or delivered upon actual delivery and, if mailed, shall be deemed
to have been validly served, given or delivered three (3) business days after deposit in the United
States mail, as registered or certified mail, with proper postage prepaid and addressed to the party
or parties to be notified at the addresses set forth on the signature page of this Agreement (or such
other address(es) as a party may designate for itself by like notice). If to the Company, notices and
demands shall be delivered to the attention of the Secretary of the Company.
19.
Governing Law. This Agreement shall be governed exclusively by and construed
according to the laws of the State of Delaware, as applied to contracts between Delaware residents
entered into and to be performed entirely within Delaware.
20.
Counterparts. This Agreement may be executed in one or more counterparts, each
of which shall for all purposes be deemed to be an original but all of which together shall
constitute but one and the same Agreement. Only one such counterpart need be produced to
evidence the existence of this Agreement.
12
21.
Headings. The headings of the sections of this Agreement are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or to affect the
construction hereof.
22.
Entire Agreement. This Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all prior agreements,
understandings and negotiations, written and oral, between the parties with respect to the subject
matter of this Agreement, including but not limited to any Indemnity Agreement previously
entered into between the Company and the Indemnitee; provided, however, that this Agreement is
a supplement to and in furtherance of the Certificate of Incorporation, Bylaws, the DGCL and any
other applicable law, and shall not be deemed a substitute therefor, and does not diminish or
abrogate any rights of Indemnitee thereunder.
Signatures on the Following Page
Signature Page to
Indemnification Agreement
The parties hereto have executed this Indemnification Agreement as of the date first
above written.
Indemnitee:
The Company:
MetaVia Inc.
_____________________________
[ ]
By: _____________________________
Name: [ ]
Title: [ ]
Exhibit 10.5
GEMPHIRE THERAPEUTICS INC.
2019 EQUITY INCENTIVE PLAN
1.
DEFINITIONS.
Unless otherwise specified or unless the context otherwise requires, the following terms, as used in
this Gemphire Therapeutics Inc. 2019 Equity Incentive Plan, have the following meanings:
Administrator means the Board of Directors, unless it has delegated power to act on its
behalf to the Committee, in which case the term Administrator means the Committee.
Affiliate means a corporation or other entity, which, for purposes of Section 424 of the
Code, is a parent or subsidiary of the Company, direct or indirect.
Agreement means a written or electronic document setting forth the terms of a Stock Right
delivered pursuant to the Plan in such form as the Administrator shall approve.
Board of Directors means the Board of Directors of the Company.
Cause means, with respect to a Participant (a) dishonesty with respect to the Company or
any Affiliate, (b) insubordination, substantial malfeasance or non-feasance of duty, (c)
unauthorized disclosure of confidential information, (d) breach by a Participant of any
provision of any employment, consulting, advisory, nondisclosure, non-competition or
similar agreement between the Participant and the Company or any Affiliate, and (e)
conduct substantially prejudicial to the business of the Company or any Affiliate; provided,
however, that any provision in an agreement between a Participant and the Company or an
Affiliate, which contains a conflicting definition of Cause for termination and which is in
effect at the time of such termination, shall supersede this definition with respect to that
Participant. The determination of the Administrator as to the existence of Cause will be
conclusive on the Participant and the Company.
Code means the United States Internal Revenue Code of 1986, as amended including any
successor statute, regulation and guidance thereto.
Committee means the committee of the Board of Directors to which the Board of Directors
has delegated power to act under or pursuant to the provisions of the Plan.
Common Stock means shares of the Company’s common stock, $0.001 par value per share.
Company means Gemphire Therapeutics Inc., a Delaware corporation.
Consultant means any natural person who is an advisor or consultant who provides bona
fide services to the Company or its Affiliates, provided that such services are not in
connection with the offer or sale of securities in a capital raising transaction, and do not
directly or indirectly promote or maintain a market for the Company’s or its Affiliates’
securities.
2
Corporate Transaction means a merger, consolidation, or sale of all or substantially all of
the Company’s assets or the acquisition of all of the outstanding voting stock of the
Company in a single transaction or a series of related transactions by a single entity other
than a transaction to merely change the state of incorporation.
Disability or Disabled means permanent and total disability as defined in Section 22(e)(3)
of the Code.
Employee means any employee of the Company or of an Affiliate (including, without
limitation, an employee who is also serving as an officer or director of the Company or of
an Affiliate), designated by the Administrator to be eligible to be granted one or more
Stock Rights under the Plan.
Exchange Act means the United States Securities Exchange Act of 1934, as amended.
Fair Market Value of a Share of Common Stock means:
If the Common Stock is listed on a national securities exchange or traded in the
over-the-counter market and sales prices are regularly reported for the Common
Stock, the closing or, if not applicable, the last price of the Common Stock on the
composite tape or other comparable reporting system for the trading day on the
applicable date and if such applicable date is not a trading day, the last market
trading day prior to such date;
If the Common Stock is not traded on a national securities exchange but is traded on
the over-the-counter market, if sales prices are not regularly reported for the
Common Stock for the trading day referred to in clause (1), and if bid and asked
prices for the Common Stock are regularly reported, the mean between the bid and
the asked price for the Common Stock at the close of trading in the over-the-counter
market for most recent the trading day on which Common Stock was traded on the
applicable date and if such applicable date is not a trading day, the last market
trading day prior to such date; and
If the Common Stock is neither listed on a national securities exchange nor traded
in the over-the-counter market, such value as the Administrator, in good faith, shall
determine in compliance with applicable laws.
Fully Diluted Shares as of a date means an amount equal to the number of shares of
Common Stock (i) outstanding and (ii) issuable upon exercise, conversion or settlement of
outstanding Stock Rights under the Plan and any other outstanding options, warrants or
other securities of the Company that are (directly or indirectly) convertible or exchangeable
into or exercisable for shares of Common Stock, in each case as of the close of business of
the Company on such date. For purposes of calculating the number of Fully Diluted Shares:
(x) if the number of shares subject to an outstanding Stock Right is variable on the
applicable date, then the number of shares of Common Stock issuable upon exercise or
settlement of the Stock Right shall be the maximum number of shares that could be
received under such Stock Right and (y) if two or more types of Stock Rights are granted to
a Participant in tandem with each other such that the exercise of one type of Stock Right
3
with respect to a number of shares cancels at least an equal number of shares of the other,
then the number of shares of Common Stock issuable upon exercise or settlement of the
Stock Right shall be the largest number of shares that would be counted under either of the
Stock Rights.
ISO means a stock option intended to qualify as an incentive stock option under Section
422 of the Code.
Non-Qualified Option means a stock option which is not intended to qualify as an ISO.
Option means an ISO or Non-Qualified Option granted under the Plan.
Participant means an Employee, director or Consultant of the Company or an Affiliate to
whom one or more Stock Rights are granted under the Plan. As used herein, “Participant”
shall include “Participant’s Survivors” where the context requires.
Performance-Based Award means a Stock Grant or Stock-Based Award which vests based
on the attainment of written Performance Goals as set forth in Paragraph 9 hereof.
Performance Goals means performance goals determined by the Committee in its sole
discretion and set forth in an Agreement. The satisfaction of Performance Goals shall be
subject to certification by the Committee. The Committee has the authority to take
appropriate action with respect to the Performance Goals (including, without limitation,
making adjustments to the Performance Goals or determining the satisfaction of the
Performance Goals in connection with a Corporate Transaction) provided that any such
action does not otherwise violate the terms of the Plan.
Plan means this Gemphire Therapeutics Inc. 2019 Equity Incentive Plan.
Securities Act means the United States Securities Act of 1933, as amended.
Shares means shares of the Common Stock as to which Stock Rights have been or may be
granted under the Plan or any shares of capital stock into which the Shares are changed or
for which they are exchanged within the provisions of Paragraph 3 of the Plan. The Shares
issued under the Plan may be authorized and unissued shares or shares held by the
Company in its treasury, or both.
Stock-Based Award means a grant by the Company under the Plan of an equity award or an
equity based award, which is not an Option or a Stock Grant.
Stock Grant means a grant by the Company of Shares under the Plan.
Stock Right means a right to Shares or the value of Shares of the Company granted pursuant
to the Plan—an ISO, a Non-Qualified Option, a Stock Grant or a Stock-Based Award.
Survivor means a deceased Participant’s legal representatives and/or any person or persons
who acquired the Participant’s rights to a Stock Right by will or by the laws of descent and
distribution.
4
2.
PURPOSES OF THE PLAN.
The Plan is intended to encourage ownership of Shares by Employees and directors of and
certain Consultants to the Company and its Affiliates in order to attract and retain such people, to
induce them to work for the benefit of the Company or of an Affiliate and to provide additional
incentive for them to promote the success of the Company or of an Affiliate. The Plan provides for
the granting of ISOs, Non-Qualified Options, Stock Grants and Stock-Based Awards.
3.
SHARES SUBJECT TO THE PLAN.
(a)
Plan Shares:
(i)(a)The number of Shares which may be issued from time to time pursuant to this
Plan shall be the sum of: (i) 75,000,000 shares of Common Stock and (ii) any shares
of Common Stock that are represented by awards granted under the NeuroBo
Pharmaceuticals, Inc. 2018 Stock Plan that are forfeited, expire or are cancelled
without delivery of shares of Common Stock or which result in the forfeiture of
shares of Common Stock back to the Company on or after December 6, 2019, or the
equivalent of such number of Shares after the Administrator, in its sole discretion,
has interpreted the effect of any stock split, stock dividend, combination,
recapitalization or similar transaction in accordance with Paragraph 25 of this Plan;
provided, however, that no more than 839,000 Shares shall be added to the Plan
pursuant to subsection (ii).
(ii)Notwithstanding Subparagraph (a) above, on the first day of each fiscal year of
the Company during the period beginning in fiscal year 2020, and ending on the
second day of fiscal year 2029, the number of Shares that may be issued from time
to time pursuant to the Plan, shall be increased by an amount equal to the lesser of
(i) 4% of the number of outstanding shares of Common Stock on such date and (ii)
an amount determined by the Administrator. (iii)Notwithstanding any other
provision of this Section 3, the aggregate maximum number of shares of Common
Stock that may be issued pursuant to the exercise of Incentive Stock Options under
this Plan will be 167,000,000 shares of Common Stock.
(b)
If an Option ceases to be “outstanding”, in whole or in part (other than by exercise),
or if the Company shall reacquire (at not more than its original issuance price) any
Shares issued pursuant to a Stock Grant or Stock-Based Award, or if any Stock
Right expires or is forfeited, cancelled, or otherwise terminated or results in any
Shares not being issued, the unissued or reacquired Shares which were subject to
such Stock Right shall again be available for issuance from time to time pursuant to
this Plan. Notwithstanding the foregoing, if a Stock Right is exercised, in whole or
in part, by tender or withholding of Shares or if the Company or an Affiliate’s tax
withholding obligation is satisfied by the tender or withholding of Shares, the
number of Shares deemed to have been issued under the Plan for purposes of the
limitation set forth in Paragraph 3(a) above shall be the number of Shares that were
subject to the Stock Right or portion thereof, and not the net number of Shares
actually issued. In addition, Shares repurchased by the Company with the proceeds
5
of the option exercise price may not be reissued under the Plan. However, in the
case of ISOs, the foregoing provisions shall be subject to any limitations under the
Code.
4.
ADMINISTRATION OF THE PLAN.
The Administrator of the Plan will be the Board of Directors, except to the extent the Board
of Directors delegates its authority to the Committee, in which case the Committee shall be the
Administrator. Subject to the provisions of the Plan, the Administrator is authorized to:
(a)
Interpret the provisions of the Plan and all Stock Rights and to make all rules and
determinations which it deems necessary or advisable for the administration of the
Plan;
(b)
Determine which Employees, directors and Consultants shall be granted Stock
Rights;
(c)
Determine the number of Shares for which a Stock Right or Stock Rights shall be
granted, provided however that in no event shall the aggregate grant date fair value
of Stock Rights to be granted to any non-employee director under the Plan in any
calendar year exceed $500,000, except that the aggregate grant date fair value of
Stock Rights to be granted to any non-employee director in the calendar year in
which such director commences his or her service with the Company shall not
exceed $1,000,000;
(d)
Specify the terms and conditions upon which a Stock Right or Stock Rights may be
granted;
(e)
Amend any term or condition of any outstanding Stock Right, other than reducing
the exercise price or purchase price or extending the expiration date of an Option,
provided that (i) such term or condition as amended is not prohibited by the Plan;
(ii) any such amendment shall not impair the rights of a Participant under any Stock
Right previously granted without such Participant’s consent or in the event of death
of the Participant the Participant’s Survivors; and (iii) any such amendment shall be
made only after the Administrator determines whether such amendment would
cause any adverse tax consequences to the Participant, including, but not limited to,
the annual vesting limitation contained in Section 422(d) of the Code and described
in Paragraph 6(b)(iv) below with respect to ISOs and pursuant to Section 409A of
the Code;
(f)
Determine and make any adjustments in the Performance Goals included in any
Performance-Based Awards in compliance with (d) above; and
(g)
Adopt any sub-plans applicable to residents of any specified jurisdiction as it deems
necessary or appropriate in order to comply with or take advantage of any tax or
other laws applicable to the Company, any Affiliate or to Participants or to
otherwise facilitate the administration of the Plan, which sub-plans may include
6
additional restrictions or conditions applicable to Stock Rights or Shares issuable
pursuant to a Stock Right;
provided, however, that all such interpretations, rules, determinations, terms and conditions shall
be made and prescribed in the context of potential tax consequences under Section 409A of the
Code and preserving the tax status under Section 422 of the Code of those Options which are
designated as ISOs. Subject to the foregoing, the interpretation and construction by the
Administrator of any provisions of the Plan or of any Stock Right granted under it shall be final,
unless otherwise determined by the Board of Directors, if the Administrator is the Committee. In
addition, if the Administrator is the Committee, the Board of Directors may take any action under
the Plan that would otherwise be the responsibility of the Committee.
To the extent permitted under applicable law, the Board of Directors or the Committee may
allocate all or any portion of its responsibilities and powers to any one or more of its members and
may delegate all or any portion of its responsibilities and powers to any other person selected by it.
The Board of Directors or the Committee may revoke any such allocation or delegation at any
time. Notwithstanding the foregoing, only the Board of Directors or the Committee shall be
authorized to grant a Stock Right to any director of the Company or to any “officer” of the
Company as defined by Rule 16a-1 under the Exchange Act.
5.
ELIGIBILITY FOR PARTICIPATION.
The Administrator will, in its sole discretion, name the Participants in the Plan; provided,
however, that each Participant must be an Employee, director or Consultant of the Company or of
an Affiliate at the time a Stock Right is granted. Notwithstanding the foregoing, the Administrator
may authorize the grant of a Stock Right to a person not then an Employee, director or Consultant
of the Company or of an Affiliate; provided, however, that the actual grant of such Stock Right
shall be conditioned upon such person becoming eligible to become a Participant at or prior to the
time of the execution of the Agreement evidencing such Stock Right. ISOs may be granted only to
Employees who are deemed to be residents of the United States for tax purposes. Non-Qualified
Options, Stock Grants and Stock-Based Awards may be granted to any Employee, director or
Consultant of the Company or an Affiliate. The granting of any Stock Right to any individual shall
neither entitle that individual to, nor disqualify him or her from, participation in any other grant of
Stock Rights or any grant under any other benefit plan established by the Company or any Affiliate
for Employees, directors or Consultants.
6.
TERMS AND CONDITIONS OF OPTIONS.
Each Option shall be set forth in an Option Agreement, duly executed by the Company and,
to the extent required by law or requested by the Company, by the Participant. The Administrator
may provide that Options be granted subject to such terms and conditions, consistent with the
terms and conditions specifically required under this Plan, as the Administrator may deem
appropriate including, without limitation, subsequent approval by the shareholders of the Company
of this Plan or any amendments thereto. The Option Agreements shall be subject to at least the
following terms and conditions:
7
(a)
Non-Qualified Options: Each Option intended to be a Non-Qualified Option shall
be subject to the terms and conditions which the Administrator determines to be
appropriate and in the best interest of the Company, subject to the following
minimum standards for any such Non-Qualified Option:
(i)
Exercise Price: Each Option Agreement shall state the exercise price (per
share) of the Shares covered by each Option, which exercise price shall be
determined by the Administrator and shall be at least equal to the Fair
Market Value per share of the Common Stock on the date of grant of the
Option.
(ii)
Number of Shares: Each Option Agreement shall state the number of Shares
to which it pertains.
(iii)
Vesting: Each Option Agreement shall state the date or dates on which it first
is exercisable and the date after which it may no longer be exercised, and
may provide that the Option rights accrue or become exercisable in
installments over a period of months or years, or upon the occurrence of
certain performance conditions or the attainment of stated goals or events.
(iv)
Additional Conditions: Exercise of any Option may be conditioned upon the
Participant’s execution of a shareholders agreement in a form satisfactory to
the Administrator providing for certain protections for the Company and its
other shareholders, including requirements that:
A.
The Participant’s or the Participant’s Survivors’ right to sell or
transfer the Shares may be restricted; and
B.
The Participant or the Participant’s Survivors may be required to
execute letters of investment intent and must also acknowledge that
the Shares will bear legends noting any applicable restrictions.
(v)
Term of Option: Each Option shall terminate not more than ten years from
the date of the grant or at such earlier time as the Option Agreement may
provide.
(b)
ISOs: Each Option intended to be an ISO shall be issued only to an Employee who is
deemed to be a resident of the United States for tax purposes, and shall be subject to the
following terms and conditions, with such additional restrictions or changes as the
Administrator determines are appropriate but not in conflict with Section 422 of the Code
and relevant regulations and rulings of the Internal Revenue Service:
(vi)
Minimum Standards: The ISO shall meet the minimum standards required of
Non-Qualified Options, as described in Paragraph 6(a) above, except clause
(i) and (v) thereunder.
8
(vii)
Exercise Price: Immediately before the ISO is granted, if the Participant
owns, directly or by reason of the applicable attribution rules in Section
424(d) of the Code:
A.
10% or less of the total combined voting power of all classes of
stock of the Company or an Affiliate, the exercise price per share of
the Shares covered by each ISO shall not be less than 100% of the
Fair Market Value per share of the Common Stock on the date of
grant of the Option; or
B.
More than 10% of the total combined voting power of all classes of
stock of the Company or an Affiliate, the exercise price per share of
the Shares covered by each ISO shall not be less than 110% of the
Fair Market Value per share of the Common Stock on the date of
grant of the Option.
(viii)
Term of Option: For Participants who own:
(ix)
Limitation on Yearly Exercise: The Option Agreements shall restrict the
amount of ISOs which may become exercisable in any calendar year (under
this or any other ISO plan of the Company or an Affiliate) so that the
aggregate Fair Market Value (determined on the date each ISO is granted) of
the stock with respect to which ISOs are exercisable for the first time by the
Participant in any calendar year does not exceed $100,000.
A.
10% or less of the total combined voting power of all classes of
stock of the Company or an Affiliate, each ISO shall terminate not
more than ten years from the date of the grant or at such earlier time
as the Option Agreement may provide; or
B.
More than 10% of the total combined voting power of all classes of
stock of the Company or an Affiliate, each ISO shall terminate not
more than five years from the date of the grant or at such earlier time
as the Option Agreement may provide.
7.
TERMS AND CONDITIONS OF STOCK GRANTS.
Each Stock Grant to a Participant shall state the principal terms in an Agreement duly
executed by the Company and, to the extent required by law or requested by the Company, by the
Participant. The Agreement shall be in a form approved by the Administrator and shall contain
terms and conditions which the Administrator determines to be appropriate and in the best interest
of the Company, subject to the following minimum standards:
(a)
Each Agreement shall state the purchase price per share, if any, of the Shares
covered by each Stock Grant, which purchase price shall be determined by the
Administrator but shall not be less than the minimum consideration required by the
Delaware General Corporation Law, if any, on the date of the grant of the Stock
Grant;
9
(b)
Each Agreement shall state the number of Shares to which the Stock Grant pertains;
and
(c)
Each Agreement shall include the terms of any right of the Company to restrict or
reacquire the Shares subject to the Stock Grant, including the time period or
attainment of Performance Goals or such other performance criteria upon which
such rights shall accrue and the purchase price therefor, if any.
8.
TERMS AND CONDITIONS OF OTHER STOCK-BASED AWARDS.
The Administrator shall have the right to grant other Stock-Based Awards based upon the
Common Stock having such terms and conditions as the Administrator may determine, including,
without limitation, the grant of Shares based upon certain conditions, the grant of securities
convertible into Shares and the grant of stock appreciation rights, phantom stock awards or stock
units. The principal terms of each Stock-Based Award shall be set forth in an Agreement, duly
executed by the Company and, to the extent required by law or requested by the Company, by the
Participant. The Agreement shall be in a form approved by the Administrator and shall contain
terms and conditions which the Administrator determines to be appropriate and in the best interest
of the Company. Each Agreement shall include the terms of any right of the Company including
the right to terminate the Stock-Based Award without the issuance of Shares, the terms of any
vesting conditions, Performance Goals or events upon which Shares shall be issued. Under no
circumstances may the Agreement covering stock appreciation rights (a) have an exercise or base
price (per share) that is less than the Fair Market Value per share of Common Stock on the date of
grant or (b) expire more than ten years following the date of grant.
The Company intends that the Plan and any Stock-Based Awards granted hereunder be
exempt from the application of Section 409A of the Code or meet the requirements of paragraphs
(2), (3) and (4) of subsection (a) of Section 409A of the Code, to the extent applicable, and be
operated in accordance with Section 409A so that any compensation deferred under any Stock-
Based Award (and applicable investment earnings) shall not be included in income under Section
409A of the Code. Any ambiguities in the Plan shall be construed to effect the intent as described
in this Paragraph 8.
9.
PERFORMANCE-BASED AWARDS.
The Committee shall determine whether, with respect to a performance period, the
applicable Performance Goals have been met with respect to a given Participant and, if they have,
to so certify and ascertain the amount of the applicable Performance-Based AWARD. No
Performance-Based Awards will be issued for such performance period until such certification is
made by the Committee. The number of Shares issued in respect of a Performance-Based Award
determined by the Committee for a performance period shall be paid to the Participant at such time
as determined by the Committee in its sole discretion after the end of such performance period.
10.
EXERCISE OF OPTIONS AND ISSUE OF SHARES.
An Option (or any part or installment thereof) shall be exercised by giving written notice to
the Company or its designee (in a form acceptable to the Administrator, which may include
electronic notice), together with provision for payment of the aggregate exercise price in
10
accordance with this Paragraph for the Shares as to which the Option is being exercised, and upon
compliance with any other condition(s) set forth in the Option Agreement. Such notice shall be
signed by the person exercising the Option (which signature may be provided electronically in a
form acceptable to the Administrator), shall state the number of Shares with respect to which the
Option is being exercised and shall contain any representation required by the Plan or the Option
Agreement. Payment of the exercise price for the Shares as to which such Option is being
exercised shall be made (a) in United States dollars in cash or by check; or (b) at the discretion of
the Administrator, through delivery of shares of Common Stock held for at least six months (if
required to avoid negative accounting treatment) having a Fair Market Value equal as of the date of
the exercise to the aggregate cash exercise price for the number of Shares as to which the Option is
being exercised; or (c) at the discretion of the Administrator, by having the Company retain from
the Shares otherwise issuable upon exercise of the Option, a number of Shares having a Fair
Market Value equal as of the date of exercise to the aggregate exercise price for the number of
Shares as to which the Option is being exercised; or (d) at the discretion of the Administrator, in
accordance with a cashless exercise program established with a securities brokerage firm, and
approved by the Administrator; or (e) at the discretion of the Administrator, by any combination of
(a), (b), (c) and (d) above or (f) at the discretion of the Administrator, by payment of such other
lawful consideration as the Administrator may determine. Notwithstanding the foregoing, the
Administrator shall accept only such payment on exercise of an ISO as is permitted by Section 422
of the Code.
The Company shall then reasonably promptly deliver the Shares as to which such Option
was exercised to the Participant (or to the Participant’s Survivors, as the case may be). In
determining what constitutes “reasonably promptly,” it is expressly understood that the issuance
and delivery of the Shares may be delayed by the Company in order to comply with any law or
regulation (including, without limitation, state securities or “blue sky” laws) which requires the
Company to take any action with respect to the Shares prior to their issuance. The Shares shall,
upon delivery, be fully paid, non-assessable Shares.
11.
PAYMENT IN CONNECTION WITH THE ISSUANCE OF STOCK GRANTS AND
STOCK-BASED AWARDS AND ISSUE OF SHARES.
Any Stock Grant or Stock-Based Award requiring payment of a purchase price for the
Shares as to which such Stock Grant or Stock-Based Award is being granted shall be made (a) in
United States dollars in cash or by check; or (b) at the discretion of the Administrator, through
delivery of shares of Common Stock held for at least six months (if required to avoid negative
accounting treatment) and having a Fair Market Value equal as of the date of payment to the
purchase price of the Stock Grant or Stock-Based Award; or (c) at the discretion of the
Administrator, by any combination of (a) and (b) above; or (d) at the discretion of the
Administrator, by payment of such other lawful consideration as the Administrator may determine.
The Company shall when required by the applicable Agreement, reasonably promptly
deliver the Shares as to which such Stock Grant or Stock-Based Award was made to the Participant
(or to the Participant’s Survivors, as the case may be), subject to any escrow provision set forth in
the applicable Agreement. In determining what constitutes “reasonably promptly,” it is expressly
understood that the issuance and delivery of the Shares may be delayed by the Company in order
to comply with any law or regulation (including, without limitation, state securities or “blue sky”
11
laws) which requires the Company to take any action with respect to the Shares prior to their
issuance.
12.
RIGHTS AS A SHAREHOLDER.
No Participant to whom a Stock Right has been granted shall have rights as a shareholder
with respect to any Shares covered by such Stock Right except after due exercise of an Option or
issuance of Shares as set forth in any Agreement, tender of the aggregate exercise or purchase
price, if any, for the Shares being purchased and registration of the Shares in the Company’s share
register in the name of the Participant.
13.
ASSIGNABILITY AND TRANSFERABILITY OF STOCK RIGHTS.
By its terms, a Stock Right granted to a Participant shall not be transferable by the
Participant other than (i) by will or by the laws of descent and distribution, or (ii) as approved by
the Administrator in its discretion and set forth in the applicable Agreement provided that no Stock
Right may be transferred by a Participant for value. Notwithstanding the foregoing, an ISO
transferred except in compliance with clause (i) above shall no longer qualify as an ISO. The
designation of a beneficiary of a Stock Right by a Participant, with the prior approval of the
Administrator and in such form as the Administrator shall prescribe, shall not be deemed a transfer
prohibited by this Paragraph. Except as provided above during the Participant’s lifetime a Stock
Right shall only be exercisable by or issued to such Participant (or his or her legal representative)
and shall not be assigned, pledged or hypothecated in any way (whether by operation of law or
otherwise) and shall not be subject to execution, attachment or similar process. Any attempted
transfer, assignment, pledge, hypothecation or other disposition of any Stock Right or of any rights
granted thereunder contrary to the provisions of this Plan, or the levy of any attachment or similar
process upon a Stock Right, shall be null and void.
14.
EFFECT ON OPTIONS OF TERMINATION OF SERVICE OTHER THAN FOR
CAUSE OR DEATH OR DISABILITY.
Except as otherwise provided in a Participant’s Option Agreement, in the event of a
termination of service (whether as an Employee, director or Consultant) with the Company or an
Affiliate before the Participant has exercised an Option, the following rules apply:
(a)
A Participant who ceases to be an Employee, director or Consultant of the
Company or of an Affiliate (for any reason other than termination for Cause,
Disability, or death for which events there are special rules in Paragraphs 15, 16,
and 17, respectively), may exercise any Option granted to him or her to the extent
that the Option is exercisable on the date of such termination of service, but only
within such term as the Administrator has designated in a Participant’s Option
Agreement.
(b)
Except as provided in Subparagraph (c) below, or Paragraph 16 or 17, in no event
may an Option intended to be an ISO, be exercised later than three months after the
Participant’s termination of employment.
(c)
The provisions of this Paragraph, and not the provisions of Paragraph 16 or 17,
shall apply to a Participant who subsequently becomes Disabled or dies after the
12
termination of employment, director status or consultancy; provided, however, in
the case of a Participant’s Disability or death within three months after the
termination of employment, director status or consultancy, the Participant or the
Participant’s Survivors may exercise the Option within one year after the date of the
Participant’s termination of service, but in no event after the date of expiration of
the term of the Option.
(d)
Notwithstanding anything herein to the contrary, if subsequent to a Participant’s
termination of employment, termination of director status or termination of
consultancy, but prior to the exercise of an Option, the Administrator determines
that, either prior or subsequent to the Participant’s termination, the Participant
engaged in conduct which would constitute Cause, then such Participant shall
forthwith cease to have any right to exercise any Option.
(e)
A Participant to whom an Option has been granted under the Plan who is absent
from the Company or an Affiliate because of temporary disability (any disability
other than a Disability as defined in Paragraph 1 hereof), or who is on leave of
absence for any purpose, shall not, during the period of any such absence, be
deemed, by virtue of such absence alone, to have terminated such Participant’s
employment, director status or consultancy with the Company or with an Affiliate,
except as the Administrator may otherwise expressly provide; provided, however,
that, for ISOs, any leave of absence granted by the Administrator of greater than
three months, unless pursuant to a contract or statute that guarantees the right to
reemployment, shall cause such ISO to become a Non-Qualified Option on the date
that is six months following the commencement of such leave of absence.
(f)
Except as required by law or as set forth in a Participant’s Option Agreement,
Options granted under the Plan shall not be affected by any change of a
Participant’s status within or among the Company and any Affiliates, so long as the
Participant continues to be an Employee, director or Consultant of the Company or
any Affiliate.
15.
EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR CAUSE.
Except as otherwise provided in a Participant’s Option Agreement, the following rules
apply if the Participant’s service (whether as an Employee, director or Consultant) with the
Company or an Affiliate is terminated for Cause prior to the time that all his or her outstanding
Options have been exercised:
(a)
All outstanding and unexercised Options as of the time the Participant is notified his
or her service is terminated for Cause will immediately be forfeited.
(b)
Cause is not limited to events which have occurred prior to a Participant’s
termination of service, nor is it necessary that the Administrator’s finding of Cause
occur prior to termination. If the Administrator determines, subsequent to a
Participant’s termination of service but prior to the exercise of an Option, that either
prior or subsequent to the Participant’s termination the Participant engaged in
13
conduct which would constitute Cause, then the right to exercise any Option is
forfeited.
16.
EFFECT ON OPTIONS OF TERMINATION OF SERVICE FOR DISABILITY.
Except as otherwise provided in a Participant’s Option Agreement:
(a)
A Participant who ceases to be an Employee, director or Consultant of the
Company or of an Affiliate by reason of Disability may exercise any Option granted
to such Participant to the extent that the Option has become exercisable but has not
been exercised on the date of the Participant’s termination of service due to
Disability; and in the event rights to exercise the Option accrue periodically, to the
extent of a pro rata portion through the date of the Participant’s termination of
service due to Disability of any additional vesting rights that would have accrued on
the next vesting date had the Participant not become Disabled. The proration shall
be based upon the number of days accrued in the current vesting period prior to the
date of the Participant’s termination of service due to Disability.
(b)
A Disabled Participant may exercise the Option only within the period ending one
year after the date of the Participant’s termination of service due to Disability,
notwithstanding that the Participant might have been able to exercise the Option as
to some or all of the Shares on a later date if the Participant had not been terminated
due to Disability and had continued to be an Employee, director or Consultant or, if
earlier, within the originally prescribed term of the Option.
(c)
The Administrator shall make the determination both of whether Disability has
occurred and the date of its occurrence (unless a procedure for such determination is
set forth in another agreement between the Company and such Participant, in which
case such procedure shall be used for such determination). If requested, the
Participant shall be examined by a physician selected or approved by the
Administrator, the cost of which examination shall be paid for by the Company.
17.
EFFECT ON OPTIONS OF DEATH WHILE AN EMPLOYEE, DIRECTOR OR
CONSULTANT.
Except as otherwise provided in a Participant’s Option Agreement:
(a)
In the event of the death of a Participant while the Participant is an Employee,
director or Consultant of the Company or of an Affiliate, such Option may be
exercised by the Participant’s Survivors to the extent that the Option has become
exercisable but has not been exercised on the date of death; and in the event rights
to exercise the Option accrue periodically, to the extent of a pro rata portion through
the date of death of any additional vesting rights that would have accrued on the
next vesting date had the Participant not died. The proration shall be based upon the
number of days accrued in the current vesting period prior to the Participant’s date
of death.
14
(b)
If the Participant’s Survivors wish to exercise the Option, they must take all
necessary steps to exercise the Option within one year after the date of death of
such Participant, notwithstanding that the decedent might have been able to exercise
the Option as to some or all of the Shares on a later date if he or she had not died
and had continued to be an Employee, director or Consultant or, if earlier, within
the originally prescribed term of the Option.
18.
EFFECT OF TERMINATION OF SERVICE ON UNACCEPTED STOCK GRANTS
AND STOCK-BASED AWARDS.
In the event of a termination of service (whether as an Employee, director or Consultant)
with the Company or an Affiliate for any reason before the Participant has accepted a Stock Grant
or a Stock-Based Award and paid the purchase price, if required, such grant shall terminate.
For purposes of this Paragraph 18 and Paragraph 19 below, a Participant to whom a Stock
Grant or a Stock-Based Award has been issued under the Plan who is absent from work with the
Company or with an Affiliate because of temporary disability (any disability other than a
Disability as defined in Paragraph 1 hereof), or who is on leave of absence for any purpose, shall
not, during the period of any such absence, be deemed, by virtue of such absence alone, to have
terminated such Participant’s employment, director status or consultancy with the Company or
with an Affiliate, except as the Administrator may otherwise expressly provide.
In addition, for purposes of this Paragraph 18 and Paragraph 19 below, any change of
employment or other service within or among the Company and any Affiliates shall not be treated
as a termination of employment, director status or consultancy so long as the Participant continues
to be an Employee, director or Consultant of the Company or any Affiliate.
19.
EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF TERMINATION
OF SERVICE OTHER THAN FOR CAUSE, DEATH or DISABILITY.
Except as otherwise provided in a Participant’s Agreement, in the event of a termination of
service for any reason (whether as an Employee, director or Consultant), other than termination for
Cause, death or Disability for which there are special rules in Paragraphs 20, 21, and 22 below,
before all forfeiture provisions or Company rights of repurchase shall have lapsed, then the
Company shall have the right to cancel or repurchase that number of Shares subject to a Stock
Grant or Stock-Based Award as to which the Company’s forfeiture or repurchase rights have not
lapsed.
20.
EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF TERMINATION
OF SERVICE FOR CAUSE.
Except as otherwise provided in a Participant’s Agreement, the following rules apply if the
Participant’s service (whether as an Employee, director or Consultant) with the Company or an
Affiliate is terminated for Cause:
(a)
All Shares subject to any Stock Grant or Stock-Based Award that remain subject to
forfeiture provisions or as to which the Company shall have a repurchase right shall
15
be immediately forfeited to the Company as of the time the Participant is notified
his or her service is terminated for Cause.
(b)
Cause is not limited to events which have occurred prior to a Participant’s
termination of service, nor is it necessary that the Administrator’s finding of Cause
occur prior to termination. If the Administrator determines, subsequent to a
Participant’s termination of service, that either prior or subsequent to the
Participant’s termination the Participant engaged in conduct which would constitute
Cause, then all Shares subject to any Stock Grant or Stock-Based Award that
remained subject to forfeiture provisions or as to which the Company had a
repurchase right on the date of termination shall be immediately forfeited to the
Company.
21.
EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF TERMINATION
OF SERVICE FOR DISABILITY.
Except as otherwise provided in a Participant’s Agreement, the following rules apply if a
Participant ceases to be an Employee, director or Consultant of the Company or of an Affiliate by
reason of Disability: to the extent the forfeiture provisions or the Company’s rights of repurchase
have not lapsed on the date of Disability, they shall be exercisable; provided, however, that in the
event such forfeiture provisions or rights of repurchase lapse periodically, such provisions or rights
shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant or Stock-
Based Award through the date of Disability as would have lapsed had the Participant not become
Disabled. The proration shall be based upon the number of days accrued prior to the date of
Disability.
The Administrator shall make the determination both as to whether Disability has occurred
and the date of its occurrence (unless a procedure for such determination is set forth in another
agreement between the Company and such Participant, in which case such procedure shall be used
for such determination). If requested, the Participant shall be examined by a physician selected or
approved by the Administrator, the cost of which examination shall be paid for by the Company.
22.
EFFECT ON STOCK GRANTS AND STOCK-BASED AWARDS OF DEATH WHILE
AN EMPLOYEE, DIRECTOR OR CONSULTANT.
Except as otherwise provided in a Participant’s Agreement, the following rules apply in the
event of the death of a Participant while the Participant is an Employee, director or Consultant of
the Company or of an Affiliate: to the extent the forfeiture provisions or the Company’s rights of
repurchase have not lapsed on the date of death, they shall be exercisable; provided, however, that
in the event such forfeiture provisions or rights of repurchase lapse periodically, such provisions or
rights shall lapse to the extent of a pro rata portion of the Shares subject to such Stock Grant or
Stock-Based Award through the date of death as would have lapsed had the Participant not died.
The proration shall be based upon the number of days accrued prior to the Participant’s date of
death.
23.
PURCHASE FOR INVESTMENT.
16
Unless the offering and sale of the Shares shall have been effectively registered under the
Securities Act, the Company shall be under no obligation to issue Shares under the Plan unless and
until the following conditions have been fulfilled:
(a)
The person who receives a Stock Right shall warrant to the Company, prior to the
receipt of Shares, that such person is acquiring such Shares for his or her own
account, for investment, and not with a view to, or for sale in connection with, the
distribution of any such Shares, in which event the person acquiring such Shares
shall be bound by the provisions of the following legend (or a legend in
substantially similar form) which shall be endorsed upon the certificate evidencing
the Shares issued pursuant to such exercise or such grant of a Stock Right:
“The shares represented by this certificate have been taken for investment and they
may not be sold or otherwise transferred by any person, including a pledgee, unless
(1) either (a) a Registration Statement with respect to such shares shall be effective
under the Securities Act of 1933, as amended, or (b) the Company shall have
received an opinion of counsel satisfactory to it that an exemption from registration
under such Act is then available, and (2) there shall have been compliance with all
applicable state securities laws.”
(b)
At the discretion of the Administrator, the Company shall have received an opinion
of its counsel that the Shares may be issued in compliance with the Securities Act
without registration thereunder.
24.
DISSOLUTION OR LIQUIDATION OF THE COMPANY.
Upon the dissolution or liquidation of the Company, all Options granted under this Plan
which as of such date shall not have been exercised and all Stock Grants and Stock-Based Awards
which have not been accepted, to the extent required under the applicable Agreement, will
terminate and become null and void; provided, however, that if the rights of a Participant or a
Participant’s Survivors have not otherwise terminated and expired, the Participant or the
Participant’s Survivors will have the right immediately prior to such dissolution or liquidation to
exercise or accept any Stock Right to the extent that the Stock Right is exercisable or subject to
acceptance as of the date immediately prior to such dissolution or liquidation. Upon the dissolution
or liquidation of the Company, any outstanding Stock-Based Awards shall immediately terminate
unless otherwise determined by the Administrator or specifically provided in the applicable
Agreement.
25.
ADJUSTMENTS.
Upon the occurrence of any of the following events, a Participant’s rights with respect to
any Stock Right granted to him or her hereunder shall be adjusted as hereinafter provided, unless
otherwise specifically provided in a Participant’s Agreement.
(a)
Stock Dividends and Stock Splits. If (i) the shares of Common Stock shall be
subdivided or combined into a greater or smaller number of shares or if the
Company shall issue any shares of Common Stock as a stock dividend on its
outstanding Common Stock, or (ii) additional shares or new or different shares or
17
other securities of the Company or other non-cash assets are distributed with respect
to such shares of Common Stock, each Stock Right and the number of shares of
Common Stock deliverable thereunder shall be appropriately increased or decreased
proportionately, and appropriate adjustments shall be made including, in the
exercise, base or purchase price per share and in the Performance Goals applicable
to outstanding Performance-Based Awards to reflect such events. The number of
Shares subject to the limitations in Paragraph 3(a) and 4(c) shall also be
proportionately adjusted upon the occurrence of such events.
(b)
Corporate Transactions. If the Company is to be consolidated with or acquired by
another entity in a Corporate Transaction, the Administrator or the board of
directors of any entity assuming the obligations of the Company hereunder (the
“Successor Board”), shall, as to outstanding Options, either: (i) make appropriate
provision for the continuation of such Options by substituting on an equitable basis
for the Shares then subject to such Options either the consideration payable with
respect to the outstanding shares of Common Stock in connection with the
Corporate Transaction or securities of any successor or acquiring entity; or (ii) upon
written notice to the Participants, provide that such Options must be exercised
(either (A) to the extent then exercisable or (B) at the discretion of the
Administrator, any such Options being made partially or fully exercisable for
purposes of this Subparagraph), within a specified number of days of the date of
such notice, at the end of which period such Options which have not been exercised
shall terminate; or (iii) terminate such Options in exchange for payment of an
amount equal to the consideration payable upon consummation of such Corporate
Transaction to a holder of the number of shares of Common Stock into which such
Option would have been exercisable (either (A) to the extent then exercisable or,
(B) at the discretion of the Administrator, any such Options being made partially or
fully exercisable for purposes of this Subparagraph) less the aggregate exercise
price thereof. For purposes of determining the payments to be made pursuant to
Subclause (iii) above, in the case of a Corporate Transaction the consideration for
which, in whole or in part, is other than cash, the consideration other than cash shall
be valued at the fair value thereof as determined in good faith by the Board of
Directors.
With respect to outstanding Stock Grants, the Administrator or the Successor Board, shall
make appropriate provision for the continuation of such Stock Grants on the same terms and
conditions by substituting on an equitable basis for the Shares then subject to such Stock Grants
either the consideration payable with respect to the outstanding Shares of Common Stock in
connection with the Corporate Transaction or securities of any successor or acquiring entity. In lieu
of the foregoing, in connection with any Corporate Transaction, the Administrator may provide
that, upon consummation of the Corporate Transaction, each outstanding Stock Grant shall be
terminated in exchange for payment of an amount equal to the consideration payable upon
consummation of such Corporate Transaction to a holder of the number of shares of Common
Stock comprising such Stock Grant (to the extent such Stock Grant is no longer subject to any
forfeiture or repurchase rights then in effect or, at the discretion of the Administrator, all forfeiture
and repurchase rights being waived upon such Corporate Transaction).
18
In taking any of the actions permitted under this Paragraph 25(b), the Administrator shall
not be obligated by the Plan to treat all Stock Rights, all Stock Rights held by a Participant, or all
Stock Rights of the same type, identically.
A Stock Right may be subject to additional acceleration of vesting and exercisability upon
or after a change of control as may be provided in the Agreement for such Stock Right, in any
other written agreement between the Company or any Affiliate and the Participant or in any
director compensation policy of the Company.
(c)
Recapitalization or Reorganization. In the event of a recapitalization or
reorganization of the Company other than a Corporate Transaction pursuant to
which securities of the Company or of another corporation are issued with respect
to the outstanding shares of Common Stock, a Participant upon exercising an
Option or accepting a Stock Grant after the recapitalization or reorganization shall
be entitled to receive for the price paid upon such exercise or acceptance if any, the
number of replacement securities which would have been received if such Option
had been exercised or Stock Grant accepted prior to such recapitalization or
reorganization.
(d)
Adjustments to Stock-Based Awards. Upon the happening of any of the events
described in Subparagraphs (a), (b) or (c) above, any outstanding Stock-Based
Award shall be appropriately adjusted to reflect the events described in such
Subparagraphs. The Administrator or the Successor Board shall determine the
specific adjustments to be made under this Paragraph 25, including, but not limited
to the effect of any, Corporate Transaction and, subject to Paragraph 4, its
determination shall be conclusive.
(e)
Modification of Options. Notwithstanding the foregoing, any adjustments made
pursuant to Subparagraph (a), (b) or (c) above with respect to Options shall be made
only after the Administrator determines whether such adjustments would (i)
constitute a “modification” of any ISOs (as that term is defined in Section 424(h) of
the Code) or (ii) cause any adverse tax consequences for the holders of Options,
including, but not limited to, pursuant to Section 409A of the Code. If the
Administrator determines that such adjustments made with respect to Options
would constitute a modification or other adverse tax consequence, it may in its
discretion refrain from making such adjustments, unless the holder of an Option
specifically agrees in writing that such adjustment be made and such writing
indicates that the holder has full knowledge of the consequences of such
“modification” on his or her income tax treatment with respect to the Option. This
paragraph shall not apply to the acceleration of the vesting of any ISO that would
cause any portion of the ISO to violate the annual vesting limitation contained in
Section 422(d) of the Code, as described in Paragraph 6(b)(iv).
26.
ISSUANCES OF SECURITIES.
Except as expressly provided herein, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by
19
reason thereof shall be made with respect to, the number or price of shares subject to Stock Rights.
Except as expressly provided herein, no adjustments shall be made for dividends paid in cash or in
property (including without limitation, securities) of the Company prior to any issuance of Shares
pursuant to a Stock Right.
27.
FRACTIONAL SHARES.
No fractional shares shall be issued under the Plan and the person exercising a Stock Right
shall receive from the Company cash in lieu of such fractional shares equal to the Fair Market
Value thereof.
28.
WITHHOLDING.
In the event that any federal, state, or local income taxes, employment taxes, Federal
Insurance Contributions Act withholdings or other amounts are required by applicable law or
governmental regulation to be withheld from the Participant’s salary, wages or other remuneration
in connection with the issuance of a Stock Right or Shares under the Plan or for any other reason
required by law, the Company may withhold from the Participant’s compensation, if any, or may
require that the Participant advance in cash to the Company, or to any Affiliate of the Company
which employs or employed the Participant, the statutory minimum amount of such withholdings
unless a different withholding arrangement, including the use of shares of the Company’s Common
Stock or a promissory note, is authorized by the Administrator (and permitted by law). For
purposes hereof, the fair market value of the shares withheld for purposes of payroll withholding
shall be determined in the manner set forth under the definition of Fair Market Value provided in
Paragraph 1 above, as of the most recent practicable date prior to the date of exercise. If the Fair
Market Value of the shares withheld is less than the amount of payroll withholdings required, the
Participant may be required to advance the difference in cash to the Company or the Affiliate
employer.
29.
NOTICE TO COMPANY OF DISQUALIFYING DISPOSITION.
Each Employee who receives an ISO must agree to notify the Company in writing
immediately after the Employee makes a Disqualifying Disposition of any Shares acquired
pursuant to the exercise of an ISO. A Disqualifying Disposition is defined in Section 424(c) of the
Code and includes any disposition (including any sale or gift) of such Shares before the later of (a)
two years after the date the Employee was granted the ISO, or (b) one year after the date the
Employee acquired Shares by exercising the ISO, except as otherwise provided in Section 424(c)
of the Code. If the Employee has died before such Shares are sold, these holding period
requirements do not apply and no Disqualifying Disposition can occur thereafter.
30.
TERMINATION OF THE PLAN.
The Plan will terminate on August 29, 2029, the date which is ten years from the earlier of
the date of its adoption by the Board of Directors and the date of its approval by the shareholders
of the Company. The Plan may be terminated at an earlier date by vote of the shareholders or the
Board of Directors of the Company; provided, however, that any such earlier termination shall not
affect any Agreements executed prior to the effective date of such termination. Termination of the
Plan shall not affect any Stock Rights theretofore granted.
20
31.
AMENDMENT OF THE PLAN AND AGREEMENTS.
The Plan may be amended by the shareholders of the Company. The Plan may also be
amended by the Administrator; provided that any amendment approved by the Administrator
which the Administrator determines is of a scope that requires shareholder approval shall be
subject to obtaining such shareholder approval including, without limitation, to the extent
necessary to qualify any or all outstanding Stock Rights granted under the Plan or Stock Rights to
be granted under the Plan for favorable federal income tax treatment as may be afforded ISOs
under Section 422 of the Code and to the extent necessary to qualify the Shares issuable under the
Plan for listing on any national securities exchange or quotation in any national automated
quotation system of securities dealers. Other than as set forth in Paragraph 25 of the Plan, at any
time when the exercise price of such Option is above the fair market value of a share, the
Administrator may not without shareholder approval reduce the exercise price of an Option or
cancel any outstanding Option of Common Stock in exchange for (i) a replacement option having a
lower exercise price, (ii) a Stock Grant, (iii) any other Stock-Based Award or (iv) for cash. In
addition the Administrator shall not take any other action that is considered a direct or indirect
“repricing” for purposes of the shareholder approval rules of the applicable securities exchange or
inter-dealer quotation system on which the Shares are listed, including any other action that is
treated as a repricing under generally accepted accounting principles. Any modification or
amendment of the Plan shall not, without the consent of a Participant, adversely affect his or her
rights under a Stock Right previously granted to him or her, unless such amendment is required by
applicable law or necessary to preserve the economic value of such Stock Right. With the consent
of the Participant affected, the Administrator may amend outstanding Agreements in a manner
which may be adverse to the Participant but which is not inconsistent with the Plan. In the
discretion of the Administrator, outstanding Agreements may be amended by the Administrator in
a manner which is not adverse to the Participant. Nothing in this Paragraph 31 shall limit the
Administrator’s authority to take any action permitted pursuant to Paragraph 25.
32.
EMPLOYMENT OR OTHER RELATIONSHIP.
Nothing in this Plan or any Agreement shall be deemed to prevent the Company or an
Affiliate from terminating the employment, consultancy or director status of a Participant, nor to
prevent a Participant from terminating his or her own employment, consultancy or director status
or to give any Participant a right to be retained in employment or other service by the Company or
any Affiliate for any period of time.
33.
SECTION 409A.
If a Participant is a “specified employee” as defined in Section 409A of the Code (and as
applied according to procedures of the Company and its Affiliates) as of his separation from
service, to the extent any payment under this Plan or pursuant to the grant of a Stock-Based Award
constitutes deferred compensation (after taking into account any applicable exemptions from
Section 409A of the Code), and to the extent required by Section 409A of the Code, no payments
due under this Plan or pursuant to a Stock-Based Award may be made until the earlier of: (i) the
first day of the seventh month following the Participant’s separation from service, or (ii) the
Participant’s date of death; provided, however, that any payments delayed during this six-month
21
period shall be paid in the aggregate in a lump sum, without interest, on the first day of the seventh
month following the Participant’s separation from service.
The Administrator shall administer the Plan with a view toward ensuring that Stock Rights
under the Plan that are subject to Section 409A of the Code comply with the requirements thereof
and that Options under the Plan be exempt from the requirements of Section 409A of the Code, but
neither the Administrator nor any member of the Board of Directors, nor the Company nor any of
its Affiliates, nor any other person acting hereunder on behalf of the Company, the Administrator
or the Board of Directors shall be liable to a Participant or any Survivor by reason of the
acceleration of any income, or the imposition of any additional tax or penalty, with respect to a
Stock Right, whether by reason of a failure to satisfy the requirements of Section 409A of the Code
or otherwise.
34.
INDEMNITY.
Neither the Board of Directors nor the Administrator, nor any members of either, nor any
employees of the Company or any parent, subsidiary, or other Affiliate, shall be liable for any act,
omission, interpretation, construction or determination made in good faith in connection with their
responsibilities with respect to this Plan, and the Company hereby agrees to indemnify the
members of the Board or Directors, the members of the Committee, and the employees of the
Company and its parent or subsidiaries in respect of any claim, loss, damage, or expense (including
reasonable counsel fees) arising from any such act, omission, interpretation, construction or
determination to the full extent permitted by law.
35.
CLAWBACK.
Notwithstanding anything to the contrary contained in this Plan, the Company may recover
from a Participant any compensation received from any Stock Right (whether or not settled) or
cause a Participant to forfeit any Stock Right (whether or not vested) in the event that the
Company’s Clawback Policy as then in effect is triggered.
36.
GOVERNING LAW.
This Plan shall be construed and enforced in accordance with the law of the State of
Delaware.
Incentive Stock Option Agreement
This Incentive Stock Option Agreement (this “Agreement”) is made and entered into as of
the below Grant Date by and between NeuroBo Pharmaceuticals, Inc., a Delaware corporation (the
“Company”), and ________ (the “Participant”). Capitalized terms used but not defined herein
shall have the meanings ascribed to them in the Company’s 2019 Equity Incentive Plan (the
“Plan”).
Grant Date:
Exercise Price per
Share:
Number of Option
Shares:
Expiration Date:
1.
Grant of Option.
1.1
Grant; Type of Option. The Company hereby grants to the Participant an incentive
stock option (the “Option”) to purchase up to the total number of Option Shares set forth above, at
the Exercise Price per Share set forth above. The Option is being granted pursuant to the terms of
the Plan. The Option is intended to be an Incentive Stock Option within the meaning of Section
422 of the Code to the maximum extent permitted by applicable law. If Participant ceases to be an
Employee of the Company or an Affiliate, but continues to provide Service, this Option will be
treated as a Non-Qualified Stock Option on the day after the date that is three (3) months after
Participant ceases to be an Employee (i) even if Participant continues to provide Service after
his/her employment has terminated or (ii) if termination of employment was for any reason other
than due to Participant’s death or Disability. In addition, to the extent that all or part of this Option
exceeds the $100,000 limitation rule of section 422(d) of the Code, this Option or the lesser excess
part will be treated as a Non-Qualified Stock Option.
1.2
Consideration; Subject to Plan. The grant of the Option is made in consideration of
the Services to be rendered by the Participant to the Company and is subject to the terms and
conditions of the Plan.
2.
Exercise Period; Vesting.
2.3
Vesting Schedule. Subject to the Participant’s continuous Service, the Option shall
become vested and exercisable with respect to one-twelfth (1/12) of the Option Shares on the last
day of each calendar quarter commencing with the calendar quarter following the calendar quarter
of the Grant Date (provided however that the last such quarterly vesting installment shall instead
occur on the third anniversary of the Grant Date). The unvested portion of the Option shall never
be exercisable including for avoidance of doubt on or after the Participant’s termination of Service.
2.4
Expiration. The Option shall expire on the Expiration Date set forth above, or
earlier as provided in this Agreement or the Plan.
23
3.
Termination of Service. For purposes of this Agreement, “Service” means Participant’s
service as an Employee, Consultant, or non-employee director of the Company or Company
Affiliate. Service will be deemed terminated as soon as the entity to which Service is being
provided is no longer either (i) the Company or (ii) an Affiliate. The Administrator determines
when Service commences and when Service terminates. The Administrator may determine whether
any Company transaction, such as a sale or spin-off of a division or subsidiary that employs a
Participant, shall be deemed to result in termination of Service for purposes of this Agreement and
the Administrator’s decision shall be final, conclusive and binding.
3.5
Termination for Reasons Other Than Cause, Death, Disability. If the Participant’s
Service is terminated for any reason other than Cause, death, or Disability, the Participant may
exercise the vested portion of the Option, but only within such period of time ending on the earlier
of (a) the date three (3) months following the termination of the Participant’s Service or (b) the
Expiration Date or (c) the date that this Option is not assumed or continued after a Corporate
Transaction.
3.6
Termination for Cause. If Participant’s Service is terminated for Cause, the Option
(both vested and unvested portions) shall immediately terminate without consideration and cease to
be exercisable. The provisions of Plan Paragraph 15 will apply to this Agreement.
3.7
Termination due to Disability. If Participant’s Service terminates as a result of
Participant’s Disability, then the provisions of Plan Paragraph 16 will apply to this Agreement and
the Participant may exercise the vested portion of the Option, but only within such period of time
ending on the earlier of (a) the date twelve (12) months following the Participant’s termination of
Service or (b) the Expiration Date or (c) the date that this Option is not assumed or continued after
a Corporate Transaction.
3.8
Termination due to Death. If Participant’s Service terminates as a result of
Participant’s death, then the provisions of Plan Paragraph 17 will apply to this Agreement and the
vested portion of the Option may be exercised by the Participant’s estate, by a person who acquired
the right to exercise the Option by bequest or inheritance, or by the person designated to exercise
the Option upon the Participant’s death, but only within the time period ending on the earlier of (a)
the date twelve (12) months following the Participant’s termination of Service or (b) the Expiration
Date or (c) the date that this Option is not assumed or continued after a Corporate Transaction.
3.9
Extension of Termination Date. If, following the Participant’s termination of
Service for any reason (other than for Cause) the exercise of the vested portion of this Option is
prohibited because the exercise of the Option would violate the registration requirements under the
Securities Act or any other state or federal securities law or the rules of any securities exchange or
interdealer quotation system, then the expiration of the Option shall be tolled until the date that is
thirty (30) days after the end of the period during which the exercise of the Option would be in
violation of such registration or other securities requirements but in no event tolled later than the
earlier of the Expiration Date or the date that this Option is not assumed or continued after a
Corporate Transaction.
24
4.
Leaves of Absence. For purposes of the Option, the Participant’s Service does not terminate
when he or she goes on a bona fide leave of absence that was approved by the Company in writing,
if the terms of the leave of absence provide for Service crediting, or when Service crediting is
required by applicable law. The Participant’s Service terminates in any event when the approved
leave of absence ends unless the Participant immediately returns to active work. The Administrator
determines which leaves of absence count for this purpose (along with determining the effect of a
leave of absence on vesting of the Option), and when the Participant’s Service terminates for all
purposes under the Plan. For income tax purposes, if the period of leave exceeds three (3) months
and Participant’s right to reemployment is not provided either by statute or by contract, then this
Option will be treated as a Non-Qualified Stock Option if the exercise of this Option occurs after
the expiration of six (6) months from the commencement of such leave of absence.
5.
Manner of Exercise.
5.10
Election to Exercise. To exercise the Option, the Participant (or in the case of
exercise after the Participant’s death or incapacity, the Participant’s executor, administrator, heir, or
legatee, as the case may be) must deliver to the Company a notice of intent to exercise in the
manner designated by the Administrator.
If someone other than the Participant exercises the Option, then such person must submit
documentation reasonably acceptable to the Company verifying that such person has the legal right
to exercise the Option.
5.11
Payment of Exercise Price. The entire Exercise Price of the Option Shares being
acquired shall be payable in full at the time of exercise to the extent permitted by applicable
statutes and regulations, either:
(a)
in cash or by certified or bank check at the time the Option is exercised; or
(b)
in the discretion of the Administrator, upon such terms as the Administrator
shall approve including the below:
(i)
by delivery to the Company of other Shares, duly endorsed for
transfer to the Company, with an aggregate Fair Market Value on the date of
delivery equal to the aggregate Exercise Price (or portion thereof) due for the
number of Shares being acquired, or by means of attestation, whereby the
Participant identifies for delivery specific Shares that have a Fair Market Value on
the date of attestation equal to the aggregate Exercise Price (or portion thereof) and
receives a number of Shares equal to the difference between the number of Shares
thereby purchased and the number of identified attestation Shares;
(ii)
through a “cashless exercise program” established with a broker;
(iii)
by reduction in the number of Shares otherwise deliverable upon
exercise of this Option with a Fair Market Value equal to the aggregate Exercise
Price at the time of exercise;
(iv)
by any combination of the foregoing methods; or
25
(v)
in any other form of legal consideration that may be acceptable to the
Administrator.
5.12
Withholding. Prior to the issuance of Shares upon the exercise of the Option, the
Participant must make arrangements satisfactory to the Company to pay or provide for any
applicable federal, state, and local withholding obligations of the Company. The Participant may
satisfy any federal, state, or local tax withholding obligation relating to the exercise of the Option
by any of the following means:
(a)
tendering a cash payment;
(b)
in the discretion of the Administrator, authorizing the Company to withhold
Shares from the Shares otherwise issuable to the Participant as a result of the exercise of the
Option; provided, however, that no Shares are withheld with a value exceeding the statutory
maximum amount of tax required to be withheld by law; or
(c)
in the discretion of the Administrator, delivering to the Company previously
owned and unencumbered Shares.
The Company also has the right to withhold from any compensation paid to a Participant.
5.13
Issuance of Shares. Provided that the completed and signed exercise notice and
payment are in form and substance satisfactory to the Company, the Company shall issue the
Shares registered in the name of the Participant, the Participant’s authorized assignee, or the
Participant’s legal representative, and shall deliver certificates representing the Shares with the
appropriate legends affixed thereto.
6.
Stockholder Rights. The Participant, or his or her estate, shall have no rights as a
stockholder of the Company with regard to the Option until the Participant has been issued the
applicable Option Shares by the Company and has satisfied all other conditions specified in the
Plan. No adjustment shall be made for cash or stock dividends or other rights for which the record
date is prior to the date when such applicable Option Shares are issued, except as may be provided
in the Plan.
7.
Transfer of Option. Prior to the Participant’s death, only the Participant may exercise the
Option. The Participant cannot gift, transfer, assign, alienate, pledge, hypothecate, attach, sell, or
encumber the Option. If the Participant attempts to do any of these things, the Option will
immediately become invalid. The Participant may, however, dispose of the Option by will or it
may be transferred by the laws of descent and distribution. Regardless of any marital property
settlement agreement, the Company is not obligated to honor a notice of exercise from the
Participant’s spouse, nor is the Company obligated to recognize any spousal interest in the Option
in any other way.
8.
Restrictions on Exercise and Resale. By signing this Agreement, the Participant agrees not
to (i) exercise this Option (“Exercise Prohibition”), or (ii) sell, transfer, dispose of, pledge,
hypothecate, make any short sale of, or otherwise effect a similar transaction of any Shares
acquired under this Option (each a “Sale Prohibition”) at a time when applicable laws, regulations
or Company or underwriter trading policies prohibit the exercise or disposition of Shares. The
26
Company will not permit the Participant to exercise this Option if the issuance of Shares at that
time would violate any law or regulation. The Company shall have the right to designate one or
more periods of time, each of which generally will not exceed one hundred eighty (180) days in
length (provided however, that such period may be extended in connection with the Company’s
release (or announcement of release) of earnings results or other material news or events), and to
impose an Exercise Prohibition and/or Sale Prohibition, if the Company determines (in its sole
discretion) that such limitation(s) is needed in connection with a public offering of Shares or to
comply with an underwriter’s request or trading policy, or could in any way facilitate a lessening of
any restriction on transfer pursuant to the Securities Act or any state securities laws with respect to
any issuance of securities by the Company, facilitate the registration or qualification of any
securities by the Company under the Securities Act or any state securities laws, or facilitate the
perfection of any exemption from the registration or qualification requirements of the Securities
Act or any applicable state securities laws for the issuance or transfer of any securities. The
Company may issue stop/transfer instructions and/or appropriately legend any stock certificates
issued pursuant to the Option in order to ensure compliance with the foregoing. Any such Exercise
Prohibition shall not alter the Vesting Schedule set forth in this Agreement other than to limit the
periods during which the Option shall be exercisable.
If the sale of Option Shares acquired under this Agreement is not registered under the
Securities Act, but an exemption is available which requires an investment representation or other
representation and warranty, the Participant shall represent and agree that the Shares being
acquired are being acquired for investment, and not with a view to the sale or distribution thereof,
and shall make such other representations and warranties as are deemed necessary or appropriate
by the Company and its counsel.
The Participant may also be required, as a condition of exercise of the Option, to enter into
any Company stockholder agreement or other agreements that are applicable to stockholders.
If Participant sells or otherwise disposes of any of the Option Shares acquired pursuant to
the exercise of this Option on or before the later of (i) the date that is two years after the Grant
Date or (ii) the date that is one year after the applicable exercise of this Option, then Participant
shall within ten days of any and all such sales or dispositions provide the Company with written
notice of such transactions including without limitation the date of each disposition, the number of
Option Shares that Participant disposed of in each transaction and their original Grant Date, and
the amount of proceeds Participant received from each disposition.
9.
Clawback Policy. The Participant expressly acknowledges and agrees to be bound by
Paragraph 35 of the Plan, which contains provisions addressing the Company’s policy on
recoupment of equity or other compensation.
10.
No Retention Rights. The Participant’s Option or this Agreement does not give the
Participant the right to be retained by the Company (or any Affiliate) in any capacity. The
Company (and its Affiliates) reserves the right to terminate the Participant’s Service at any time
and for any reason.
11.
Adjustments. In the event of a Corporate Transaction, the provisions of Plan Paragraph
25(b) shall apply as is to this Option. In addition, the provisions of Plan Paragraphs 25(a) and 25(c)
27
shall also apply as is to this Option. The Option shall be subject to the terms of the agreement of
merger, liquidation or reorganization in the event the Company is subject to such corporate
activity.
12.
Legends. All certificates or book entries representing the Shares issued under this Option
may, where applicable, have endorsed thereon any notation or legend the Company determines
appropriate.
13.
Taxes and Withholding. The Participant will be solely responsible for payment of any and
all applicable taxes, including without limitation any penalties or interest based upon such tax
obligations, associated with this Option. The Participant will not be allowed to exercise this Option
unless acceptable arrangements are made to pay any withholding or other taxes that may be due as
a result of the Option exercise or sale of Shares acquired under this Option.
14.
Code Section 409A. This Option will be administered and interpreted to be exempt from
(or comply with) Code Section 409A.
15.
Legal Compliance with Law. The Company (and any Affiliate) is not responsible for the
Participant’s legal compliance requirements relating to this Option, including, but not limited to,
tax reporting.
16.
Regulatory Compliance. The issuance of Common Stock pursuant to this Agreement shall
be subject to full compliance with all applicable requirements of law and the requirements of any
stock exchange or interdealer quotation system upon which the Common Stock may be listed or
traded.
17.
Data Privacy. The Participant hereby explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of his or her personal data as described in
this document by the Company for the exclusive purpose of implementing, administering and
managing his or her participation in the Plan. The Participant understands that the Company holds
certain personal information about him or her, including, but not limited to, name, home address
and telephone number, date of birth, gender, social security or insurance number or other
identification number, salary, nationality, job title, any shares of stock or directorships held in the
Company, details of all awards or any other entitlement to Shares awarded, cancelled, purchased,
exercised, vested, unvested or outstanding in the Participant’s favor for the purpose of
implementing, managing and administering the Plan (“Data”). The Participant understands that the
Data may be transferred to any third parties assisting in the implementation, administration and
management of the Plan, that these recipients may be located in his or her country or elsewhere
and that the recipient country may have different data privacy laws and protections than his or her
country. The Participant authorizes the recipients to receive, possess, use, retain and transfer the
Data, in electronic or other form, for the purposes of implementing, administering and managing
his or her participation in the Plan, including any requisite transfer of such Data, as may be
required to a broker or other third party with whom the Participant may elect to deposit any Shares
acquired under the Plan.
18.
Notice. Any notice to be given or delivered to the Company relating to this Agreement
shall be in writing and addressed to the Company at its principal corporate offices. All notices
28
shall be deemed effective upon personal delivery or upon deposit in the postal mail, postage
prepaid and properly addressed to the Company. Any notice to be given or delivered to the
Participant relating to this Agreement may be delivered by electronic form including without
limitation by email (including prospectuses required by the Securities and Exchange Commission)
as well as all other documents that the Company is required to deliver to its security holders
(including annual reports and proxy statements). The Company may also deliver these documents
by posting them on a web site maintained by the Company or by a third party under contract with
the Company.
19.
Other Information. The Participant agrees to receive stockholder information, including
copies of any annual report, proxy statement and periodic report, from the Company’s website, if
the Company wishes to provide such information through its website. The Participant
acknowledges that copies of the Plan, Plan prospectus, Plan information and stockholder
information are also available upon written or telephonic request to the Administrator.
20.
Further Assistance. The Participant agrees to provide assistance (either before or after
termination of Service) reasonably requested by the Company in connection with actions taken by
the Participant while providing Services to the Company, including but not limited to assistance in
connection with any lawsuits or other claims against the Company arising from events during the
period in which the Participant rendered Service.
21.
Additional Conditions. If the Company shall determine, in its sole discretion, that the
consent or approval of any governmental authority is necessary or desirable as a condition to the
payment of benefits to the Participant pursuant to the Plan, such payment shall not occur until such
registration, qualification, consent or approval shall have been effected or obtained free of any
conditions not acceptable to the Company.
22.
Enforcement. The Company will be entitled to enforce its rights under this Agreement
specifically, to recover damages by reason of any breach of any provision of this Agreement and to
exercise all other rights to which it may be entitled. The Participant agrees and acknowledges that
money damages may not be an adequate remedy for breach of the provisions of this Agreement
and that the Company may in its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
23.
Nondisclosure of Confidential Information. The Participant acknowledges that the
businesses of the Company are highly competitive and that the Company’s strategies, methods,
books, records, and documents, technical information concerning their products, equipment,
services, and processes, procurement procedures and pricing techniques, the names of and other
information (such as credit and financial data) concerning former, present or prospective customers
and business affiliates, all comprise confidential business information and trade secrets which are
valuable, special, and unique assets which the Company uses in their business to obtain a
competitive advantage over competitors. The Participant further acknowledges that protection of
such confidential business information and trade secrets against unauthorized disclosure and use is
of critical importance to the Company in maintaining its competitive position. The Participant
acknowledges that by reason of the Participant’s duties to and association with the Company, the
Participant has had and will have access to and have and will become informed of confidential
29
business information which is a competitive asset of the Company. The Participant hereby agrees
that he or she will not, at any time during or after employment, make any unauthorized disclosure
of any confidential business information or trade secrets of the Company, or make any use thereof,
except in the carrying out of services responsibilities. The Participant shall take all necessary and
appropriate steps to safeguard confidential business information and protect it against disclosure,
misappropriation, misuse, loss and theft. Confidential business information shall not include
information in the public domain (but only if the same becomes part of the public domain through
a means other than a disclosure prohibited hereunder). The above notwithstanding, a disclosure
shall not be unauthorized if (i) it is required by law or by a court of competent jurisdiction or (ii) it
is in connection with any judicial, arbitration, dispute resolution or other legal proceeding in which
the Participant’s legal rights and obligations as a Service provider or under this Agreement are at
issue; provided, however, that the Participant shall, to the extent practicable and lawful in any such
events, give prior notice to the Company of his or her intent to disclose any such confidential
business information in such context so as to allow the Company an opportunity (which the
Participant will not oppose) to obtain such protective orders or similar relief with respect thereto as
may be deemed appropriate. In the event of any conflict in terms between this Section 23 and the
terms of any Company confidentiality or proprietary information agreement the Participant has
executed, the terms of such other confidentiality or proprietary information agreement shall prevail
and govern.
24.
Applicable Law. This Agreement will be interpreted and enforced under the laws of the
State of Delaware without reference to the conflicts of law provisions thereof.
25.
Interpretation. Any dispute regarding the interpretation of this Agreement shall be
submitted by the Participant or the Company to the Administrator for review. The resolution of
such dispute by the Administrator shall be final and binding on the Participant and the Company.
26.
Option is Subject to Plan. This Option and this Agreement is subject to the Plan. The terms
and provisions of the Plan as it may be amended from time to time are hereby incorporated herein
by reference. In the event of a conflict between any term or provision contained herein and a term
or provision of the Plan, the applicable terms and provisions of the Plan shall govern and prevail.
27.
Binding Effect; No Third Party Beneficiaries. This Agreement shall be binding upon and
inure to the benefit of the Company and the Participant and any respective heirs, representatives,
successors and permitted assigns. This Agreement shall not confer any rights or remedies upon any
person other than the Company and the Participant and any respective heirs, representatives,
successors and permitted assigns. The parties agree that this Agreement shall survive the
settlement or termination of the Option. The Company may assign any of its rights under this
Agreement.
28.
Severability. The invalidity or unenforceability of any provision of the Plan or this
Agreement shall not affect the validity or enforceability of any other provision of the Plan or this
Agreement, and each provision of the Plan and this Agreement shall be severable and enforceable
to the extent permitted by law.
29.
Voluntary Participant. The Participant acknowledges that he or she is voluntarily
participating in the Plan.
30
30.
No Rights to Future Awards. The Participant’s rights, if any, in respect of or in connection
with the Option or any other awards are derived solely from the discretionary decision of the
Company to permit the Participant to participate in the Plan and to benefit from a discretionary
future award. By accepting this Option, the Participant expressly acknowledges that there is no
obligation on the part of the Company to continue the Plan and/or grant any additional awards to
the Participant or benefits in lieu of Options or any other awards even if awards have been granted
repeatedly in the past. All decisions with respect to future awards, if any, will be at the sole
discretion of the Administrator. Any amendment, modification, or termination of the Plan shall not
constitute a change or impairment of the terms and conditions of the Participant’s Service.
31.
No Right to Damages. The Participant will have no right to bring a claim or to receive
damages if any portion of the Option is cancelled or expires unexercised. The loss of existing or
potential profit in the Option will not constitute an element of damages in the event of the
termination of the Participant’s Service for any reason, even if the termination is in violation of an
obligation of the Company or Affiliate to the Participant.
32.
Future Value. The future value of the underlying Shares is unknown and cannot be
predicted with certainty. If the underlying Shares do not increase in value after the Date of Option
Grant, the Option will have little or no value. If the Participant exercises the Option and obtains
Shares, the value of the Shares acquired upon exercise may decrease in value, even below the
Exercise Price.
33.
Amendment. The Administrator has the right to amend, alter, suspend, discontinue, or
cancel the Option, prospectively or retroactively; provided, that, no such amendment or other
action shall adversely affect the Participant’s material rights under this Agreement without the
Participant’s consent.
34.
Extraordinary Compensation. The Option and the Shares subject to the Option are not
intended to constitute or replace any pension rights or compensation and are not to be considered
compensation of a continuing or recurring nature, or part of the Participant’s normal or expected
compensation, and in no way represent any portion of the Participant’s salary, compensation or
other remuneration for any purpose, including but not limited to, calculating any severance,
resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service
awards, pension or retirement benefits or similar payments.
35.
Counterparts. This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same instrument.
Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic
mail in portable document format (.pdf), or by any other electronic means intended to preserve the
original graphic and pictorial appearance of a document, shall have the same effect as physical
delivery of the paper document.
36.
No Advice Regarding Award. The Company has not provided any tax, legal or financial
advice, nor has the Company made any recommendations regarding the Participant’s participation
in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is
hereby advised to consult with his or her own personal tax, legal and financial advisors regarding
his or her participation in the Plan before taking any action related to the Plan.
31
37.
Acceptance. The Participant hereby acknowledges receipt of a copy of the Plan, the Plan
prospectus and this Agreement. The Participant has read and understands the terms and provisions
thereof, and accepts the Option subject to all of the terms and conditions of the Plan and this
Agreement. The Participant acknowledges that there may be adverse tax consequences upon the
grant, vesting or exercise of the Option or disposition of the underlying Shares and that the
Participant should consult a tax advisor prior to such exercise or disposition.
[signature page follows]
32
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Grant
Date.
NEUROBO PHARMACEUTICALS, INC.
By:
Name:
Title:
PARTICIPANT
By:
Name:
NEUROBO PHARMACEUTICALS, INC.
2019 EQUITY INCENTIVE PLAN
STOCK GRANT AGREEMENT
The Company hereby awards a Stock Grant (the “Restricted Stock”) to the Participant named
below. The terms and conditions of the Stock Grant are set forth in this cover sheet and the
attached Stock Grant Agreement and in the Plan. This cover sheet is incorporated into and a part of
the attached Stock Grant Agreement (together, the “Agreement”).
Date of Award:
Name of Participant:
Number of Shares of Restricted Stock Awarded (“Shares”):
Amount Paid by Participant for the Shares of Restricted Stock Awarded: $
Fair Market Value of a Share on Date of Award: $
Vesting Calculation Date:___________________, [YEAR]
Vesting Schedule:
As long as you render continuous Service to the Company (or its Parent, Subsidiary or Affiliate),
you will become incrementally vested as to one-third of the total number of Shares of Restricted
Stock awarded (rounded down to the nearest whole number), as shown above on the cover sheet,
on each of the first three anniversaries of the Vesting Calculation Date. In the event that your
Service ceases prior to the third anniversary of the Vesting Calculation Date, you will forfeit to the
Company without consideration (except for any amount paid by you to the Company for the
unvested Shares) all of the unvested Shares subject to this Award.
By signing this cover sheet, you agree to all terms and conditions described in the
attached Stock Grant Agreement and in the Plan. You specifically acknowledge that you
have carefully read the section entitled "Code Section 83(b) Election" and you further
acknowledge that you are solely responsible for filing any Code Section 83(b) election,
and that such election must be filed within thirty (30) days after the Date of Award in
order to be effective. You are also acknowledging receipt of this Agreement and a copy of
the Plan and Plan prospectus.
Company:
Participant:
By:
Its:
Attachments
NEUROBO PHARMACEUTICALS, INC.
2019 EQUITY INCENTIVE PLAN
STOCK GRANT AGREEMENT
The Plan and Other
Agreements
The text of the Plan is incorporated in this Agreement by this
reference. You and the Company agree to execute such further
instruments and to take such further action as may reasonably be
necessary to carry out the intent of this Agreement. Unless
otherwise defined in this Agreement, certain capitalized terms
used in this Agreement are defined in the Plan.
This Agreement, the attached Exhibits and the Plan constitute the
entire understanding between you and the Company regarding
this Award of Restricted Stock. Any prior agreements,
commitments or negotiations are superseded.
For purposes of this Agreement, “Service” means Participant’s
service as an Employee, Consultant, or non-employee director of
the Company or Company Affiliate. Service will be deemed
terminated as soon as the entity to which Service is being
provided is no longer either (i) the Company or (ii) an Affiliate.
The Administrator determines when Service commences and
when Service terminates. The Administrator may determine
whether any Company transaction, such as a sale or spin-off of a
division or subsidiary that employs a Participant, shall be deemed
to result in termination of Service for purposes of this Agreement
and the Administrator’s decision shall be final, conclusive and
binding.
Award of Restricted Stock
The Company awards you the number of shares of Restricted
Stock shown on the cover sheet of this Agreement. The Award is
subject to the terms and conditions of this Agreement and the
Plan. This Award is not intended to constitute a nonqualified
deferred compensation plan within the meaning of section 409A
of the Code and will be interpreted accordingly. You will also be
required, as a condition of this Award, to enter into any
Stockholders Agreement or other agreements that are applicable
to stockholders. In the event of any conflict in terms between the
Stockholders Agreement and this Agreement, the terms of the
Stockholders Agreement shall prevail and govern.
Vesting
This Award will vest according to the Vesting Schedule on the
attached cover sheet.
Escrow
The Company shall issue the Shares of Restricted Stock either (i)
in certificate form or (ii) in book entry form, registered in the
name of Participant, with legends, or notations, as applicable,
35
referring to the terms, conditions and restrictions applicable to the
Award. Any certificate(s) for the Restricted Stock shall be
deposited in escrow with the Secretary of the Company (or
his/her designee) to be held in accordance with the provisions of
this paragraph. Each deposited certificate shall be accompanied
by a duly executed Assignment Separate from Certificate in the
form attached hereto as Exhibit A. Any deposited certificates
shall remain in escrow until such time as the certificates are to be
released or otherwise surrendered for cancellation as discussed
below.
All dividends whether in cash or in stock, if any, on the
Restricted Stock shall also be held in escrow and subject to the
same vesting terms and conditions as the Restricted Stock and
such dividends shall only be paid to Participant upon vesting of
the underlying Shares of Restricted Stock.
If and when your interest in the Restricted Stock vests, the
Company shall, as applicable, either remove the notations on any
such Shares of Restricted Stock issued in book entry form or
deliver to Participant a stock certificate representing a number of
Shares, equal to the number of Shares of Restricted Stock with
respect to which have become vested; provided, however, that the
minimum number of Shares released to you in any individual
release of Shares must be for at least twenty-five (25) Shares
(unless the release represents your final release of Shares from
escrow).
Upon termination of your Service for any reason prior to vesting
and in which no vesting is provided upon such termination, any
unvested Restricted Stock subject to this Agreement shall be
immediately surrendered to the Company.
Code Section 83(b)
Election
You represent and warrant that you understand the Federal, state
and local income tax consequences of the granting of this
Restricted Stock. Under Section 83 of the Code, the Fair Market
Value of the Restricted Stock on the date any forfeiture
restrictions applicable to such Restricted Stock lapse will be
reportable as ordinary income at that time. For this purpose,
“forfeiture restrictions” include surrender to the Company of
unvested Restricted Stock as described above. You may
voluntarily elect to be taxed at the time the Restricted Stock is
acquired to the extent that the Fair Market Value of the Restricted
Stock exceeds the amount of consideration paid by you (if any)
for such Restricted Stock at that time rather than when such
Restricted Stock ceases to be subject to such forfeiture
36
restrictions, by filing an election under Section 83(b) of the Code
with the Internal Revenue Service within thirty (30) days after the
Date of Award. A form for making this election is attached as
Exhibit B hereto. Failure to make this filing within the thirty (30)
day period will result in the recognition of ordinary income by
you as the forfeiture restrictions lapse. YOU ACKNOWLEDGE
THAT IT IS YOUR SOLE RESPONSIBILITY, AND NOT
THE COMPANY’S, TO FILE A TIMELY ELECTION
UNDER CODE SECTION 83(b), EVEN IF YOU REQUEST
THE COMPANY OR ITS REPRESENTATIVES TO MAKE
THIS FILING ON YOUR BEHALF. MOREOVER, YOU
ARE RELYING SOLELY ON YOUR OWN ADVISORS
WITH RESPECT TO THE DECISION AS TO WHETHER
OR NOT TO FILE A CODE SECTION 83(b) ELECTION.
Voting and Other Rights
Subject to the terms of this Agreement, you shall have all the
rights and privileges of a stockholder of the Company while the
Restricted Stock is held in escrow, including the right to vote and
to receive dividends (if any).
Leave of Absence
For purposes of this Agreement, while you are a common-law
employee, your Service does not terminate when you go on a
bona fide leave of absence that was approved by the Company (or
Affiliate) in writing, if the terms of the leave provide for
continued Service crediting, or when continued Service crediting
is required by applicable law. Your Service terminates in any
event when the approved leave ends, unless you immediately
return to active work.
The Company determines which leaves count for this purpose
(along with determining the effect of a leave of absence on
vesting of the Award), and when your Service terminates for all
purposes under the Plan.
No Assignment
The Shares subject to this Award shall not be sold, anticipated,
assigned, attached, garnished, optioned, transferred or made
subject
to
any
creditor’s
process,
whether
voluntarily,
involuntarily or by operation of law. However, this shall not
preclude a transfer of vested Shares by will or by the laws of
descent and distribution. In addition, pursuant to Company
procedures, you may designate a beneficiary who will receive
any outstanding vested Shares in the event of your death.
Regardless of any marital property settlement agreement, the
Company is not obligated to recognize your spouse’s interest in
your Award in any way.
37
Restrictions on Issuance
and Resale
The Company will not issue any Shares if the issuance of such
Shares at that time would violate any law or regulation.
By signing this Agreement, you agree not to sell, transfer, dispose
of, pledge, hypothecate, make any short sale of, or otherwise
effect a similar transaction of any Shares acquired under this
Award (each a “Sale Prohibition”) at a time when applicable
laws, regulations or Company or underwriter trading policies
prohibit the exercise or disposition of Shares. The Company shall
have the right to designate one or more periods of time, each of
which generally will not exceed one hundred eighty (180) days in
length (provided however, that such period may be extended in
connection with the Company’s release (or announcement of
release) of earnings results or other material news or events), and
to impose a Sale Prohibition, if the Company determines (in its
sole discretion) that such limitation(s) is needed in connection
with a public offering of Shares or to comply with an
underwriter’s request or trading policy, or could in any way
facilitate a lessening of any restriction on transfer pursuant to the
Securities Act or any state securities laws with respect to any
issuance of securities by the Company, facilitate the registration
or qualification of any securities by the Company under the
Securities Act or any state securities laws, or facilitate the
perfection of any exemption from the registration or qualification
requirements of the Securities Act or any applicable state
securities laws for the issuance or transfer of any securities. The
Company
may
issue
stop/transfer
instructions
and/or
appropriately legend any stock certificates issued pursuant to this
Award in order to ensure compliance with the foregoing.
If the sale of Shares acquired under this Award is not registered
under the Securities Act, but an exemption is available which
requires an investment representation or other representation and
warranty, you shall represent and agree that the Shares being
acquired are being acquired for investment, and not with a view
to the sale or distribution thereof, and shall make such other
representations and warranties as are deemed necessary or
appropriate by the Company and its counsel.
If the sale of Shares acquired under this Agreement is not
registered under the Securities Act, but an exemption is available
which
requires
an
investment
representation
or
other
representation and warranty, the Participant shall represent and
agree that the Shares being acquired are being acquired for
investment, and not with a view to the sale or distribution thereof,
and shall make such other representations and warranties as are
38
deemed necessary or appropriate by the Company and its
counsel.
The Participant may also be required, as a condition of the
Award, to enter into any Company stockholder agreement or
other agreements that are applicable to stockholders.
Clawback Policy
The Participant expressly acknowledges and agrees to be bound
by Paragraph 35 of the Plan, which contains provisions
addressing the Company’s policy on recoupment of equity or
other compensation.
No Retention Rights
The Participant’s Award or this Agreement does not give the
Participant the right to be retained by the Company (or any
Affiliate) in any capacity. The Company (and its Affiliates)
reserves the right to terminate the Participant’s Service at any
time and for any reason.
Adjustments
In the event of a Corporate Transaction, the provisions of Plan
Paragraph 25(b) shall apply as is to this Award. In addition, the
provisions of Plan Paragraphs 25(a) and 25(c) shall also apply as
is to this Award. The Award shall be subject to the terms of the
agreement of merger, liquidation or reorganization in the event
the Company is subject to such corporate activity.
Legends
All certificates or book entries representing the Shares issued
under this Award may, where applicable, have endorsed thereon
any notation or legend the Company determines appropriate.
Taxes and Withholding
The Participant will be solely responsible for payment of any and
all applicable taxes, including without limitation any penalties or
interest based upon such tax obligations, associated with this
Award. The Participant will not be allowed to receive benefits
from this Award unless acceptable arrangements are made to pay
any withholding or other taxes that may be due as a result of the
Award or sale of Shares acquired under this Award.
Code Section 409A
This Award will be administered and interpreted to be exempt
from (or comply with) Code Section 409A.
Legal Compliance with
Law
The Company (and any Affiliate) is not responsible for the
Participant’s legal compliance requirements relating to this
Award, including, but not limited to, tax reporting.
Regulatory Compliance
The issuance of Common Stock pursuant to this Agreement shall
be subject to full compliance with all applicable requirements of
39
law and the requirements of any stock exchange or interdealer
quotation system upon which the Common Stock may be listed or
traded.
Data Privacy
The Participant hereby explicitly and unambiguously consents to
the collection, use and transfer, in electronic or other form, of his
or her personal data as described in this document by the
Company
for
the
exclusive
purpose
of
implementing,
administering and managing his or her participation in the Plan.
The Participant understands that the Company holds certain
personal information about him or her, including, but not limited
to, name, home address and telephone number, date of birth,
gender, social security or insurance number or other identification
number, salary, nationality, job title, any shares of stock or
directorships held in the Company, details of all awards or any
other entitlement to Shares awarded, cancelled, purchased,
exercised, vested, unvested or outstanding in the Participant’s
favor for the purpose of implementing, managing and
administering the Plan (“Data”). The Participant understands that
the Data may be transferred to any third parties assisting in the
implementation, administration and management of the Plan, that
these recipients may be located in his or her country or elsewhere
and that the recipient country may have different data privacy
laws and protections than his or her country. The Participant
authorizes the recipients to receive, possess, use, retain and
transfer the Data, in electronic or other form, for the purposes of
implementing,
administering
and
managing
his
or
her
participation in the Plan, including any requisite transfer of such
Data, as may be required to a broker or other third party with
whom the Participant may elect to deposit any Shares acquired
under the Plan.
Notice
Any notice to be given or delivered to the Company relating to
this Agreement shall be in writing and addressed to the Company
at its principal corporate offices. All notices shall be deemed
effective upon personal delivery or upon deposit in the postal
mail, postage prepaid and properly addressed to the Company.
Any notice to be given or delivered to the Participant relating to
this Agreement may be delivered by electronic form including
without limitation by email (including prospectuses required by
the Securities and Exchange Commission) as well as all other
documents that the Company is required to deliver to its security
holders (including annual reports and proxy statements). The
Company may also deliver these documents by posting them on a
web site maintained by the Company or by a third party under
contract with the Company.
40
Other Information
The Participant agrees to receive stockholder information,
including copies of any annual report, proxy statement and
periodic report, from the Company’s website, if the Company
wishes to provide such information through its website. The
Participant acknowledges that copies of the Plan, Plan
prospectus, Plan information and stockholder information are
also available upon written or telephonic request to the
Administrator.
Further Assistance
The Participant agrees to provide assistance (either before or after
termination of Service) reasonably requested by the Company in
connection with actions taken by the Participant while providing
Services to the Company, including but not limited to assistance
in connection with any lawsuits or other claims against the
Company arising from events during the period in which the
Participant rendered Service.
Additional Conditions
If the Company shall determine, in its sole discretion, that the
consent or approval of any governmental authority is necessary or
desirable as a condition to the payment of benefits to the
Participant pursuant to the Plan, such payment shall not occur
until such registration, qualification, consent or approval shall
have been effected or obtained free of any conditions not
acceptable to the Company.
Enforcement
The Company will be entitled to enforce its rights under this
Agreement specifically, to recover damages by reason of any
breach of any provision of this Agreement and to exercise all
other rights to which it may be entitled. The Participant agrees
and acknowledges that money damages may not be an adequate
remedy for breach of the provisions of this Agreement and that
the Company may in its sole discretion apply to any court of law
or equity of competent jurisdiction for specific performance
and/or injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
Nondisclosure of
Confidential Information
The Participant acknowledges that the businesses of the
Company are highly competitive and that the Company’s
strategies, methods, books, records, and documents, technical
information concerning their products, equipment, services, and
processes, procurement procedures and pricing techniques, the
names of and other information (such as credit and financial data)
concerning former, present or prospective customers and business
affiliates, all comprise confidential business information and
trade secrets which are valuable, special, and unique assets
41
which the Company uses in their business to obtain a competitive
advantage
over
competitors.
The
Participant
further
acknowledges that protection of such confidential business
information and trade secrets against unauthorized disclosure and
use is of critical importance to the Company in maintaining its
competitive position. The Participant acknowledges that by
reason of the Participant’s duties to and association with the
Company, the Participant has had and will have access to and
have and will become informed of confidential business
information which is a competitive asset of the Company. The
Participant hereby agrees that he or she will not, at any time
during or after employment, make any unauthorized disclosure of
any confidential business information or trade secrets of the
Company, or make any use thereof, except in the carrying out of
services responsibilities. The Participant shall take all necessary
and appropriate steps to safeguard confidential business
information and protect it against disclosure, misappropriation,
misuse, loss and theft. Confidential business information shall not
include information in the public domain (but only if the same
becomes part of the public domain through a means other than a
disclosure prohibited hereunder). The above notwithstanding, a
disclosure shall not be unauthorized if (i) it is required by law or
by a court of competent jurisdiction or (ii) it is in connection with
any judicial, arbitration, dispute resolution or other legal
proceeding in which the Participant’s legal rights and obligations
as a Service provider or under this Agreement are at issue;
provided, however, that the Participant shall, to the extent
practicable and lawful in any such events, give prior notice to the
Company of his or her intent to disclose any such confidential
business information in such context so as to allow the Company
an opportunity (which the Participant will not oppose) to obtain
such protective orders or similar relief with respect thereto as
may be deemed appropriate. In the event of any conflict in terms
between this Section and the terms of any Company
confidentiality or proprietary information agreement the
Participant has executed, the terms of such other confidentiality
or proprietary information agreement shall prevail and govern.
Applicable Law
This Agreement will be interpreted and enforced under the laws
of the State of Delaware without reference to the conflicts of law
provisions thereof.
Interpretation
Any dispute regarding the interpretation of this Agreement shall
be submitted by the Participant or the Company to the
Administrator for review. The resolution of such dispute by the
42
Administrator shall be final and binding on the Participant and
the Company.
Award is subject to Plan
This Award and this Agreement is subject to the Plan. The terms
and provisions of the Plan as it may be amended from time to
time are hereby incorporated herein by reference. In the event of
a conflict between any term or provision contained herein and a
term or provision of the Plan, the applicable terms and provisions
of the Plan shall govern and prevail.
Binding Effect; No Third
Party Beneficiaries
This Agreement shall be binding upon and inure to the benefit of
the Company and the Participant and any respective heirs,
representatives,
successors
and
permitted
assigns.
This
Agreement shall not confer any rights or remedies upon any
person other than the Company and the Participant and any
respective heirs, representatives, successors and permitted
assigns. The parties agree that this Agreement shall survive the
settlement or termination of the Award. The Company may assign
any of its rights under this Agreement.
Severability
The invalidity or unenforceability of any provision of the Plan or
this Agreement shall not affect the validity or enforceability of
any other provision of the Plan or this Agreement, and each
provision of the Plan and this Agreement shall be severable and
enforceable to the extent permitted by law.
Voluntary Participant
No Rights to Future
Awards
You acknowledge that you are voluntarily participating in the
Plan.
Your rights, if any, in respect of or in connection with this Award
or any other awards are derived solely from the discretionary
decision of the Company to permit you to participate in the Plan
and to benefit from a discretionary future award. By accepting
this Award, you expressly acknowledge that there is no obligation
on the part of the Company to continue the Plan and/or grant any
additional awards to you or benefits in lieu of other awards even
if awards have been granted repeatedly in the past. All decisions
with respect to future awards, if any, will be at the sole discretion
of the Administrator.
No Right to Damages
You will have no right to bring a claim or to receive damages if
any portion of the Award is cancelled or expires. The loss of
existing or potential profit in the Award will not constitute an
element of damages in the event of the termination of your
Service for any reason, even if the termination is in violation of
an obligation of the Company or an Affiliate to you.
43
Future Value
The future value of the underlying Shares is unknown and cannot
be predicted with certainty. If the underlying Shares do not
increase in value after the Date of Award, the Award could have
little or no value.
Amendment
The Administrator has the right to amend, alter, suspend,
discontinue, or cancel the Award, prospectively or retroactively;
provided, that, no such amendment or other action shall adversely
affect the Participant’s material rights under this Agreement
without the Participant’s consent.
Extraordinary
Compensation
The Award and the Shares subject to the Award are not intended
to constitute or replace any pension rights or compensation and
are not to be considered compensation of a continuing or
recurring nature, or part of the Participant’s normal or expected
compensation, and in no way represent any portion of the
Participant’s salary, compensation or other remuneration for any
purpose, including but not limited to, calculating any severance,
resignation, termination, redundancy, dismissal, end of service
payments, bonuses, long-service awards, pension or retirement
benefits or similar payments.
Counterparts
This Agreement may be executed in counterparts, each of which
shall be deemed an original but all of which together shall
constitute one and the same instrument. Counterpart signature
pages to this Agreement transmitted by facsimile transmission, by
electronic mail in portable document format (.pdf), or by any
other electronic means intended to preserve the original graphic
and pictorial appearance of a document, shall have the same
effect as physical delivery of the paper document.
No Advice Regarding
Award
The Company has not provided any tax, legal or financial advice,
nor has the Company made any recommendations regarding the
Participant’s participation in the Plan, or the Participant’s
acquisition or sale of the underlying Shares. The Participant is
hereby advised to consult with his or her own personal tax, legal
and financial advisors regarding his or her participation in the
Plan before taking any action related to the Plan.
Acceptance
The Participant hereby acknowledges receipt of a copy of the
Plan, the Plan prospectus and this Agreement. The Participant has
read and understands the terms and provisions thereof, and
accepts the Stock Grant subject to all of the terms and conditions
of the Plan and this Agreement. The Participant acknowledges
that there may be adverse tax consequences upon the grant or
44
vesting of the Stock Grant or disposition of the underlying Shares
and that the Participant should consult a tax advisor prior to such
disposition.
By signing the cover sheet of this Agreement, you agree to all of the terms and conditions
described above and in the Plan. Any inconsistency between this Agreement and the Plan shall
be resolved by reference to the Plan.
45
EXHIBIT A
ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED and pursuant to that certain Stock Grant Agreement dated as of [
], the undersigned hereby sells, assigns and transfers unto [ ] shares of the Common Stock of
NeuroBo Pharmaceuticals, Inc., a Delaware corporation, standing in the undersigned’s name on the
books of said corporation represented by certificate No. ____________, herewith, and does hereby
irrevocably constitute and appoint _____________ attorney-in-fact to transfer the said stock on the
books of the said corporation with full power of substitution in the premises.
Dated: [Month] [Day], 20__
46
EXHIBIT B
ELECTION UNDER SECTION 83(b) OF
THE INTERNAL REVENUE CODE
The undersigned taxpayer hereby elects, pursuant to § 83(b) of the Internal Revenue Code of 1986,
as amended, to include in gross income as compensation for services the excess (if any) of the fair
market value of the shares described below over the amount paid for those shares.
1.
The name, taxpayer identification number, address of the undersigned, and the taxable year
for which this election is being made are:
TAXPAYER’S NAME: _____________________________________________
TAXPAYER’S SOCIAL SECURITY NUMBER: __________________________
ADDRESS: ______________________________________________________
TAXABLE YEAR: Calendar Year 20__
2.
The property which is the subject of this election is __________ shares of common stock of
NeuroBo Pharmaceuticals, Inc.
3.
The property was transferred to the undersigned on [DATE].
4.
The property is subject to the following restrictions: [Describe restrictions.]
5.
The fair market value of the property at the time of transfer (determined without regard to
any restriction other than a nonlapse restriction as defined in § 1.83-3(h) of the Income Tax
Regulations) is: $_______ per share x ________ shares = $___________.
6.
For the property transferred, the undersigned paid $______ per share x _________ shares =
$______________.
7.
The amount to include in gross income is $______________. [The result of the amount
reported in Item 5 minus the amount reported in Item 6.]
The undersigned taxpayer will file this election with the Internal Revenue Service office with
which taxpayer files his or her annual income tax return not later than 30 days after the date of
transfer of the property. A copy of the election also will be furnished to the person for whom the
services were performed. The undersigned is the person performing the services in connection with
which the property was transferred.
Dated:
Taxpayer
Non-Qualified Stock Option Agreement
This Non-Qualified Stock Option Agreement (this “Agreement”) is made and entered into
as of the below Grant Date by and between NeuroBo Pharmaceuticals, Inc., a Delaware
corporation (the “Company”), and ________ (the “Participant”). Capitalized terms used but not
defined herein shall have the meanings ascribed to them in the Company’s 2019 Equity Incentive
Plan (the “Plan”).
Grant Date:
Exercise Price per
Share:
Number of Option
Shares:
Expiration Date:
1.
Grant of Option.
1.14
Grant; Type of Option. The Company hereby grants to the Participant a non-
qualified stock option (the “Option”) to purchase up to the total number of Option Shares set forth
above, at the Exercise Price per Share set forth above. The Option is being granted pursuant to the
terms of the Plan. The Option is intended to be a Non-Qualified Stock Option and not an Incentive
Stock Option within the meaning of Section 422 of the Code.
1.15
Consideration; Subject to Plan. The grant of the Option is made in consideration of
the Services to be rendered by the Participant to the Company and is subject to the terms and
conditions of the Plan.
2.
Exercise Period; Vesting.
2.16
Vesting Schedule. Subject to the Participant’s continuous Service, the Option shall
become vested and exercisable with respect to one-twelfth (1/12) of the Option Shares on the last
day of each calendar quarter commencing with the calendar quarter following the calendar quarter
of the Grant Date (provided however that the last such quarterly vesting installment shall instead
occur on the third anniversary of the Grant Date). The unvested portion of the Option shall never
be exercisable including for avoidance of doubt on or after the Participant’s termination of Service.
2.17
Expiration. The Option shall expire on the Expiration Date set forth above, or
earlier as provided in this Agreement or the Plan.
3.
Termination of Service. For purposes of this Agreement, “Service” means Participant’s
service as an Employee, Consultant, or non-employee director of the Company or Company
Affiliate. Service will be deemed terminated as soon as the entity to which Service is being
provided is no longer either (i) the Company or (ii) an Affiliate. The Administrator determines
when Service commences and when Service terminates. The Administrator may determine whether
any Company transaction, such as a sale or spin-off of a division or subsidiary that
48
employs a Participant, shall be deemed to result in termination of Service for purposes of this
Agreement and the Administrator’s decision shall be final, conclusive and binding.
3.18
Termination for Reasons Other Than Cause, Death, Disability. If the Participant’s
Service is terminated for any reason other than Cause, death, or Disability, the Participant may
exercise the vested portion of the Option, but only within such period of time ending on the earlier
of (a) the date three (3) months following the termination of the Participant’s Service or (b) the
Expiration Date or (c) the date that this Option is not assumed or continued after a Corporate
Transaction.
3.19
Termination for Cause. If Participant’s Service is terminated for Cause, the Option
(both vested and unvested portions) shall immediately terminate without consideration and cease to
be exercisable. The provisions of Plan Paragraph 15 will apply to this Agreement.
3.20
Termination due to Disability. If Participant’s Service terminates as a result of
Participant’s Disability, then the provisions of Plan Paragraph 16 will apply to this Agreement and
the Participant may exercise the vested portion of the Option, but only within such period of time
ending on the earlier of (a) the date twelve (12) months following the Participant’s termination of
Service or (b) the Expiration Date or (c) the date that this Option is not assumed or continued after
a Corporate Transaction.
3.21
Termination due to Death. If Participant’s Service terminates as a result of
Participant’s death, then the provisions of Plan Paragraph 17 will apply to this Agreement and the
vested portion of the Option may be exercised by the Participant’s estate, by a person who acquired
the right to exercise the Option by bequest or inheritance, or by the person designated to exercise
the Option upon the Participant’s death, but only within the time period ending on the earlier of (a)
the date twelve (12) months following the Participant’s termination of Service or (b) the Expiration
Date or (c) the date that this Option is not assumed or continued after a Corporate Transaction.
3.22
Extension of Termination Date. If, following the Participant’s termination of
Service for any reason (other than for Cause) the exercise of the vested portion of this Option is
prohibited because the exercise of the Option would violate the registration requirements under the
Securities Act or any other state or federal securities law or the rules of any securities exchange or
interdealer quotation system, then the expiration of the Option shall be tolled until the date that is
thirty (30) days after the end of the period during which the exercise of the Option would be in
violation of such registration or other securities requirements but in no event tolled later than the
earlier of the Expiration Date or the date that this Option is not assumed or continued after a
Corporate Transaction.
4.
Leaves of Absence. For purposes of the Option, the Participant’s Service does not terminate
when he or she goes on a bona fide leave of absence that was approved by the Company in writing,
if the terms of the leave of absence provide for Service crediting, or when Service crediting is
required by applicable law. The Participant’s Service terminates in any event when the approved
leave of absence ends unless the Participant immediately returns to active work. The Administrator
determines which leaves of absence count for this purpose (along with determining the effect of a
49
leave of absence on vesting of the Option), and when the Participant’s Service terminates for all
purposes under the Plan.
5.
Manner of Exercise.
5.23
Election to Exercise. To exercise the Option, the Participant (or in the case of
exercise after the Participant’s death or incapacity, the Participant’s executor, administrator, heir, or
legatee, as the case may be) must deliver to the Company a notice of intent to exercise in the
manner designated by the Administrator.
If someone other than the Participant exercises the Option, then such person must submit
documentation reasonably acceptable to the Company verifying that such person has the legal right
to exercise the Option.
5.24
Payment of Exercise Price. The entire Exercise Price of the Option Shares being
acquired shall be payable in full at the time of exercise to the extent permitted by applicable
statutes and regulations, either:
(a)
in cash or by certified or bank check at the time the Option is exercised; or
(b)
in the discretion of the Administrator, upon such terms as the Administrator
shall approve including the below:
(i)
by delivery to the Company of other Shares, duly endorsed for
transfer to the Company, with an aggregate Fair Market Value on the date of
delivery equal to the aggregate Exercise Price (or portion thereof) due for the
number of Shares being acquired, or by means of attestation, whereby the
Participant identifies for delivery specific Shares that have a Fair Market Value on
the date of attestation equal to the aggregate Exercise Price (or portion thereof) and
receives a number of Shares equal to the difference between the number of Shares
thereby purchased and the number of identified attestation Shares;
(ii)
through a “cashless exercise program” established with a broker;
(iii)
by reduction in the number of Shares otherwise deliverable upon
exercise of this Option with a Fair Market Value equal to the aggregate Exercise
Price at the time of exercise;
(iv)
by any combination of the foregoing methods; or
(v)
in any other form of legal consideration that may be acceptable to the
Administrator.
5.25
Withholding. Prior to the issuance of Shares upon the exercise of the Option, the
Participant must make arrangements satisfactory to the Company to pay or provide for any
applicable federal, state, and local withholding obligations of the Company. The Participant may
satisfy any federal, state, or local tax withholding obligation relating to the exercise of the Option
by any of the following means:
50
(a)
tendering a cash payment;
(b)
in the discretion of the Administrator, authorizing the Company to withhold
Shares from the Shares otherwise issuable to the Participant as a result of the exercise of the
Option; provided, however, that no Shares are withheld with a value exceeding the statutory
maximum amount of tax required to be withheld by law; or
(c)
in the discretion of the Administrator, delivering to the Company previously
owned and unencumbered Shares.
The Company also has the right to withhold from any compensation paid to a Participant.
5.26
Issuance of Shares. Provided that the completed and signed exercise notice and
payment are in form and substance satisfactory to the Company, the Company shall issue the
Shares registered in the name of the Participant, the Participant’s authorized assignee, or the
Participant’s legal representative, and shall deliver certificates representing the Shares with the
appropriate legends affixed thereto.
6.
Stockholder Rights. The Participant, or his or her estate, shall have no rights as a
stockholder of the Company with regard to the Option until the Participant has been issued the
applicable Option Shares by the Company and has satisfied all other conditions specified in the
Plan. No adjustment shall be made for cash or stock dividends or other rights for which the record
date is prior to the date when such applicable Option Shares are issued, except as may be provided
in the Plan.
7.
Transfer of Option. Prior to the Participant’s death, only the Participant may exercise the
Option. The Participant cannot gift, transfer, assign, alienate, pledge, hypothecate, attach, sell, or
encumber the Option. If the Participant attempts to do any of these things, the Option will
immediately become invalid. The Participant may, however, dispose of the Option by will or it
may be transferred by the laws of descent and distribution. Regardless of any marital property
settlement agreement, the Company is not obligated to honor a notice of exercise from the
Participant’s spouse, nor is the Company obligated to recognize any spousal interest in the Option
in any other way.
8.
Restrictions on Exercise and Resale. By signing this Agreement, the Participant agrees not
to (i) exercise this Option (“Exercise Prohibition”), or (ii) sell, transfer, dispose of, pledge,
hypothecate, make any short sale of, or otherwise effect a similar transaction of any Shares
acquired under this Option (each a “Sale Prohibition”) at a time when applicable laws, regulations
or Company or underwriter trading policies prohibit the exercise or disposition of Shares. The
Company will not permit the Participant to exercise this Option if the issuance of Shares at that
time would violate any law or regulation. The Company shall have the right to designate one or
more periods of time, each of which generally will not exceed one hundred eighty (180) days in
length (provided however, that such period may be extended in connection with the Company’s
release (or announcement of release) of earnings results or other material news or events), and to
impose an Exercise Prohibition and/or Sale Prohibition, if the Company determines (in its sole
discretion) that such limitation(s) is needed in connection with a public offering of Shares or to
comply with an underwriter’s request or trading policy, or could in any way facilitate a lessening
51
of any restriction on transfer pursuant to the Securities Act or any state securities laws with respect
to any issuance of securities by the Company, facilitate the registration or qualification of any
securities by the Company under the Securities Act or any state securities laws, or facilitate the
perfection of any exemption from the registration or qualification requirements of the Securities
Act or any applicable state securities laws for the issuance or transfer of any securities. The
Company may issue stop/transfer instructions and/or appropriately legend any stock certificates
issued pursuant to the Option in order to ensure compliance with the foregoing. Any such Exercise
Prohibition shall not alter the Vesting Schedule set forth in this Agreement other than to limit the
periods during which the Option shall be exercisable.
If the sale of Option Shares acquired under this Agreement is not registered under the
Securities Act, but an exemption is available which requires an investment representation or other
representation and warranty, the Participant shall represent and agree that the Shares being
acquired are being acquired for investment, and not with a view to the sale or distribution thereof,
and shall make such other representations and warranties as are deemed necessary or appropriate
by the Company and its counsel.
The Participant may also be required, as a condition of exercise of the Option, to enter into
any Company stockholder agreement or other agreements that are applicable to stockholders.
9.
Clawback Policy. The Participant expressly acknowledges and agrees to be bound by
Paragraph 35 of the Plan, which contains provisions addressing the Company’s policy on
recoupment of equity or other compensation.1
10.
No Retention Rights. The Participant’s Option or this Agreement does not give the
Participant the right to be retained by the Company (or any Affiliate) in any capacity. The
Company (and its Affiliates) reserves the right to terminate the Participant’s Service at any time
and for any reason.
11.
Adjustments. In the event of a Corporate Transaction, the provisions of Plan Paragraph
25(b) shall apply as is to this Option. In addition, the provisions of Plan Paragraphs 25(a) and 25(c)
shall also apply as is to this Option. The Option shall be subject to the terms of the agreement of
merger, liquidation or reorganization in the event the Company is subject to such corporate
activity.
12.
Legends. All certificates or book entries representing the Shares issued under this Option
may, where applicable, have endorsed thereon any notation or legend the Company determines
appropriate.
13.
Taxes and Withholding. The Participant will be solely responsible for payment of any and
all applicable taxes, including without limitation any penalties or interest based upon such tax
obligations, associated with this Option. The Participant will not be allowed to exercise this Option
unless acceptable arrangements are made to pay any withholding or other taxes that may be due as
a result of the Option exercise or sale of Shares acquired under this Option.
14.
Code Section 409A. This Option will be administered and interpreted to be exempt from
(or comply with) Code Section 409A.
52
15.
Legal Compliance with Law. The Company (and any Affiliate) is not responsible for the
Participant’s legal compliance requirements relating to this Option, including, but not limited to,
tax reporting.
16.
Regulatory Compliance. The issuance of Common Stock pursuant to this Agreement shall
be subject to full compliance with all applicable requirements of law and the requirements of any
stock exchange or interdealer quotation system upon which the Common Stock may be listed or
traded.
17.
Data Privacy. The Participant hereby explicitly and unambiguously consents to the
collection, use and transfer, in electronic or other form, of his or her personal data as described in
this document by the Company for the exclusive purpose of implementing, administering and
managing his or her participation in the Plan. The Participant understands that the Company holds
certain personal information about him or her, including, but not limited to, name, home address
and telephone number, date of birth, gender, social security or insurance number or other
identification number, salary, nationality, job title, any shares of stock or directorships held in the
Company, details of all awards or any other entitlement to Shares awarded, cancelled, purchased,
exercised, vested, unvested or outstanding in the Participant’s favor for the purpose of
implementing, managing and administering the Plan (“Data”). The Participant understands that the
Data may be transferred to any third parties assisting in the implementation, administration and
management of the Plan, that these recipients may be located in his or her country or elsewhere
and that the recipient country may have different data privacy laws and protections than his or her
country. The Participant authorizes the recipients to receive, possess, use, retain and transfer the
Data, in electronic or other form, for the purposes of implementing, administering and managing
his or her participation in the Plan, including any requisite transfer of such Data, as may be
required to a broker or other third party with whom the Participant may elect to deposit any Shares
acquired under the Plan.
18.
Notice. Any notice to be given or delivered to the Company relating to this Agreement
shall be in writing and addressed to the Company at its principal corporate offices. All notices shall
be deemed effective upon personal delivery or upon deposit in the postal mail, postage prepaid and
properly addressed to the Company. Any notice to be given or delivered to the Participant relating
to this Agreement may be delivered by electronic form including without limitation by email
(including prospectuses required by the Securities and Exchange Commission) as well as all other
documents that the Company is required to deliver to its security holders (including annual reports
and proxy statements). The Company may also deliver these documents by posting them on a web
site maintained by the Company or by a third party under contract with the Company.
19.
Other Information. The Participant agrees to receive stockholder information, including
copies of any annual report, proxy statement and periodic report, from the Company’s website, if
the Company wishes to provide such information through its website. The Participant
acknowledges that copies of the Plan, Plan prospectus, Plan information and stockholder
information are also available upon written or telephonic request to the Administrator.
20.
Further Assistance. The Participant agrees to provide assistance (either before or after
termination of Service) reasonably requested by the Company in connection with actions taken by
53
the Participant while providing Services to the Company, including but not limited to assistance in
connection with any lawsuits or other claims against the Company arising from events during the
period in which the Participant rendered Service.
21.
Additional Conditions. If the Company shall determine, in its sole discretion, that the
consent or approval of any governmental authority is necessary or desirable as a condition to the
payment of benefits to the Participant pursuant to the Plan, such payment shall not occur until such
registration, qualification, consent or approval shall have been effected or obtained free of any
conditions not acceptable to the Company.
22.
Enforcement. The Company will be entitled to enforce its rights under this Agreement
specifically, to recover damages by reason of any breach of any provision of this Agreement and to
exercise all other rights to which it may be entitled. The Participant agrees and acknowledges that
money damages may not be an adequate remedy for breach of the provisions of this Agreement
and that the Company may in its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief in order to enforce or prevent any
violations of the provisions of this Agreement.
23.
Nondisclosure of Confidential Information. The Participant acknowledges that the
businesses of the Company are highly competitive and that the Company’s strategies, methods,
books, records, and documents, technical information concerning their products, equipment,
services, and processes, procurement procedures and pricing techniques, the names of and other
information (such as credit and financial data) concerning former, present or prospective customers
and business affiliates, all comprise confidential business information and trade secrets which are
valuable, special, and unique assets which the Company uses in their business to obtain a
competitive advantage over competitors. The Participant further acknowledges that protection of
such confidential business information and trade secrets against unauthorized disclosure and use is
of critical importance to the Company in maintaining its competitive position. The Participant
acknowledges that by reason of the Participant’s duties to and association with the Company, the
Participant has had and will have access to and have and will become informed of confidential
business information which is a competitive asset of the Company. The Participant hereby agrees
that he or she will not, at any time during or after employment, make any unauthorized disclosure
of any confidential business information or trade secrets of the Company, or make any use thereof,
except in the carrying out of services responsibilities. The Participant shall take all necessary and
appropriate steps to safeguard confidential business information and protect it against disclosure,
misappropriation, misuse, loss and theft. Confidential business information shall not include
information in the public domain (but only if the same becomes part of the public domain through
a means other than a disclosure prohibited hereunder). The above notwithstanding, a disclosure
shall not be unauthorized if (i) it is required by law or by a court of competent jurisdiction or (ii) it
is in connection with any judicial, arbitration, dispute resolution or other legal proceeding in which
the Participant’s legal rights and obligations as a Service provider or under this Agreement are at
issue; provided, however, that the Participant shall, to the extent practicable and lawful in any such
events, give prior notice to the Company of his or her intent to disclose any such confidential
business information in such context so as to allow the Company an opportunity (which the
Participant will not oppose) to obtain such protective orders or similar relief with respect thereto as
may be deemed appropriate. In the event of any conflict in terms between this Section 23 and the
terms of any Company confidentiality or proprietary information agreement the
54
Participant has executed, the terms of such other confidentiality or proprietary information
agreement shall prevail and govern.
24.
Applicable Law. This Agreement will be interpreted and enforced under the laws of the
State of Delaware without reference to the conflicts of law provisions thereof.
25.
Interpretation. Any dispute regarding the interpretation of this Agreement shall be
submitted by the Participant or the Company to the Administrator for review. The resolution of
such dispute by the Administrator shall be final and binding on the Participant and the Company.
26.
Option is Subject to Plan. This Option and this Agreement is subject to the Plan. The terms
and provisions of the Plan as it may be amended from time to time are hereby incorporated herein
by reference. In the event of a conflict between any term or provision contained herein and a term
or provision of the Plan, the applicable terms and provisions of the Plan shall govern and prevail.
27.
Binding Effect; No Third Party Beneficiaries. This Agreement shall be binding upon and
inure to the benefit of the Company and the Participant and any respective heirs, representatives,
successors and permitted assigns. This Agreement shall not confer any rights or remedies upon any
person other than the Company and the Participant and any respective heirs, representatives,
successors and permitted assigns. The parties agree that this Agreement shall survive the
settlement or termination of the Option. The Company may assign any of its rights under this
Agreement.
28.
Severability. The invalidity or unenforceability of any provision of the Plan or this
Agreement shall not affect the validity or enforceability of any other provision of the Plan or this
Agreement, and each provision of the Plan and this Agreement shall be severable and enforceable
to the extent permitted by law.
29.
Voluntary Participant. The Participant acknowledges that he or she is voluntarily
participating in the Plan.
30.
No Rights to Future Awards. The Participant’s rights, if any, in respect of or in connection
with the Option or any other awards are derived solely from the discretionary decision of the
Company to permit the Participant to participate in the Plan and to benefit from a discretionary
future award. By accepting this Option, the Participant expressly acknowledges that there is no
obligation on the part of the Company to continue the Plan and/or grant any additional awards to
the Participant or benefits in lieu of Options or any other awards even if awards have been granted
repeatedly in the past. All decisions with respect to future awards, if any, will be at the sole
discretion of the Administrator. Any amendment, modification, or termination of the Plan shall not
constitute a change or impairment of the terms and conditions of the Participant’s Service.
31.
No Right to Damages. The Participant will have no right to bring a claim or to receive
damages if any portion of the Option is cancelled or expires unexercised. The loss of existing or
potential profit in the Option will not constitute an element of damages in the event of the
termination of the Participant’s Service for any reason, even if the termination is in violation of an
obligation of the Company or Affiliate to the Participant.
55
32.
Future Value. The future value of the underlying Shares is unknown and cannot be
predicted with certainty. If the underlying Shares do not increase in value after the Date of Option
Grant, the Option will have little or no value. If the Participant exercises the Option and obtains
Shares, the value of the Shares acquired upon exercise may decrease in value, even below the
Exercise Price.
33.
Amendment. The Administrator has the right to amend, alter, suspend, discontinue, or
cancel the Option, prospectively or retroactively; provided, that, no such amendment or other
action shall adversely affect the Participant’s material rights under this Agreement without the
Participant’s consent.
34.
Extraordinary Compensation. The Option and the Shares subject to the Option are not
intended to constitute or replace any pension rights or compensation and are not to be considered
compensation of a continuing or recurring nature, or part of the Participant’s normal or expected
compensation, and in no way represent any portion of the Participant’s salary, compensation or
other remuneration for any purpose, including but not limited to, calculating any severance,
resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service
awards, pension or retirement benefits or similar payments.
35.
Counterparts. This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same instrument.
Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic
mail in portable document format (.pdf), or by any other electronic means intended to preserve the
original graphic and pictorial appearance of a document, shall have the same effect as physical
delivery of the paper document.
36.
No Advice Regarding Award. The Company has not provided any tax, legal or financial
advice, nor has the Company made any recommendations regarding the Participant’s participation
in the Plan, or the Participant’s acquisition or sale of the underlying Shares. The Participant is
hereby advised to consult with his or her own personal tax, legal and financial advisors regarding
his or her participation in the Plan before taking any action related to the Plan.
37.
Acceptance. The Participant hereby acknowledges receipt of a copy of the Plan, the Plan
prospectus and this Agreement. The Participant has read and understands the terms and provisions
thereof, and accepts the Option subject to all of the terms and conditions of the Plan and this
Agreement. The Participant acknowledges that there may be adverse tax consequences upon the
grant, vesting or exercise of the Option or disposition of the underlying Shares and that the
Participant should consult a tax advisor prior to such exercise or disposition.
[signature page follows]
56
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the Grant
Date.
NEUROBO PHARMACEUTICALS, INC.
By:
Name:
Title:
PARTICIPANT
By:
Name:
Exhibit 10.6
1
MetaVia Inc.
Amended and Restated 2021 Inducement Plan
Adopted by the Board of Directors: November 3, 2021
Amended by the Board of Directors: November 29, 2024
1.
General.
(a)
Eligible Award Recipients. The only persons eligible to receive grants of
Awards under this Plan are individuals who satisfy the standards for inducement grants under
Nasdaq Marketplace Rule 5635(c)(4) or 5635(c)(3), if applicable, and the related guidance under
Nasdaq IM 5635-1 (together with any analogous rules or guidance effective after the date hereof,
the “Inducement Award Rules”). A person who previously served as an Employee or Director will
not be eligible to receive Awards under this Plan, other than following a bona fide period of non-
employment. Persons eligible to receive grants of Awards under this Plan are referred to in this
Plan as “Eligible Employees.” These Awards must be approved by either a majority of the
Company’s “Independent Directors” (as such term is defined in Nasdaq Marketplace Rule
5605(a)(2)) or the Company’s compensation committee, provided such committee comprises
solely Independent Directors (the “Independent Compensation Committee”) in order to comply
with the exemption from the stockholder approval requirement for “inducement grants” provided
under the Inducement Award Rules.
(b)
Available Awards. This Plan provides for the grant of the following
Awards: (i) Options, (ii) Stock Appreciation Rights, (iii) Restricted Stock Awards, (iv) Restricted
Stock Unit Awards, (v) Performance Stock Awards, (vi) Performance Cash Awards and (vii) Other
Stock Awards. All Options shall be Nonstatutory Stock Options.
(c)
Purpose. This Plan, through the grant of Awards, is intended to provide (i)
an inducement material for certain individuals to enter into employment with the Company within
the meaning of Rule 5635(c)(4) of the Nasdaq Marketplace Rules, (ii) incentives for such persons
to exert maximum efforts for the success of the Company and any Affiliate and (iii) a means by
which Eligible Employees may be given an opportunity to benefit from increases in value of the
Common Stock.
2.
Administration.
(a)
Administration by Board. The Board will administer this Plan; provided,
however, that Awards may only be granted by either (i) a majority of the Company’s Independent
Directors or (ii) the Independent Compensation Committee. Subject to those constraints and the
other constraints of the Inducement Award Rules, the Board may delegate some of its powers of
administration of this Plan to a Committee or Committees, as provided in Section 2(c).
(b)
Powers of Board. The Board will have the power, subject to, and within
the limitations of, the express provisions of this Plan and the Inducement Award Rules:
2
(i)
To determine: (A) who will be granted Awards; (B) when and how
each Award will be granted; (C) what type of Award will be granted; (D) the provisions of each
Award (which need not be identical), including when a person will be permitted to exercise or
otherwise receive cash or Common Stock under the Award; (E) the number of shares of Common
Stock subject to, or the cash value of, an Award; and (F) the Fair Market Value applicable to an
Award; provided, however, that Awards may only be granted by either (i) a majority of the
Company’s Independent Directors or (ii) the Independent Compensation Committee.
(ii)
To construe and interpret this Plan and Awards granted under it, and
to establish, amend and revoke rules and regulations for administration of this Plan and Awards.
The Board, in the exercise of these powers, may correct any defect, omission or inconsistency in
this Plan or in any Award Agreement, in a manner and to the extent it will deem necessary or
expedient to make this Plan or Award fully effective.
(iii)
To settle all controversies regarding this Plan and Awards granted
under it.
(iv)
To accelerate, in whole or in part, the time at which an Award may
be exercised or vest (or the time at which cash or shares of Common Stock may be issued in
settlement thereof).
(v)
To suspend or terminate this Plan at any time. Except as otherwise
provided in this Plan or an Award Agreement, suspension or termination of this Plan will not
materially impair a Participant’s rights under the Participant’s then-outstanding Award without the
Participant’s written consent, except as provided in subsection (viii) below.
(vi)
To amend this Plan in any respect the Board deems necessary or
advisable, including, without limitation, by adopting amendments relating to certain nonqualified
deferred compensation under Section 409A of the Code and/or to ensure this Plan or Awards
granted under this Plan are exempt from, or compliant with, the requirements for nonqualified
deferred compensation under Section 409A of the Code, subject to the limitations, if any, of
applicable law. Except as provided in Section 9(a) relating to Capitalization Adjustments, if
required by applicable law or listing requirements, the Company shall seek stockholder approval
for any amendment of this Plan. Except as otherwise provided in this Plan or an Award
Agreement, no amendment of this Plan will materially impair a Participant’s rights under an
outstanding Award without the Participant’s written consent.
(vii)
To submit any amendment to this Plan for stockholder approval,
including, but not limited to, amendments to this Plan intended to satisfy the requirements of Rule
16b-3 or to comply with other applicable laws or listing requirements.
(viii)
To approve forms of Award Agreements for use under this Plan and
to amend the terms of any one or more Awards, including, but not limited to, amendments to
provide terms more favorable to the Participant than previously provided in the Award Agreement,
subject to any specified limits in this Plan that are not subject to Board discretion; provided,
however, that a Participant’s rights under any Award will not be impaired by any such
3
amendment unless (A) the Company requests the consent of the affected Participant, and (B) such
Participant consents in writing. Notwithstanding the foregoing, (1) a Participant’s rights will not be
deemed to have been impaired by any such amendment if the Board, in its sole discretion,
determines that the amendment, taken as a whole, does not materially impair the Participant’s
rights, and (2) subject to the limitations of applicable law, if any, the Board may amend the terms
of any one or more Awards without the affected Participant’s consent (A) to clarify the manner of
exemption from, or to bring the Award into compliance with, Section 409A of the Code and the
Department of Treasury regulations and other interpretive guidance issued thereunder (including,
without limitation, such guidance as may be issued after the Effective Date); or (B) to comply with
other applicable laws or listing requirements.
(ix)
Generally, to exercise such powers and to perform such acts as the
Board deems necessary or expedient to promote the best interests of the Company and that are not
in conflict with the provisions of this Plan or Awards.
(x)
To adopt such procedures and sub-plans as are necessary or
appropriate to permit participation in this Plan by Eligible Employees who are foreign nationals or
employed outside the United States (provided that Board approval will not be necessary for
immaterial modifications to this Plan or any Award Agreement that are required for compliance
with the laws of the relevant foreign jurisdiction).
(c)
Delegation to Committee.
(i)
General. Subject to the terms of Section 4(b), the Board may
delegate some or all of the administration of this Plan to a Committee or Committees. If
administration of this Plan is delegated to a Committee, the Committee will have, in connection
with the administration of this Plan, the powers theretofore possessed by the Board that have been
delegated to the Committee, including the power to delegate to a subcommittee of the Committee
any of the administrative powers the Committee is authorized to exercise (and references in this
Plan to the Board will thereafter be construed as being to the Committee or subcommittee, as
applicable). Any delegation of administrative powers will be reflected in resolutions, not
inconsistent with the provisions of this Plan, adopted from time to time by the Board or Committee
(as applicable). The Committee may, at any time, abolish the subcommittee and/or revest in the
Committee any powers delegated to the subcommittee. The Board may retain the authority to
concurrently administer this Plan with the Committee and may, at any time, revest in the Board
some or all of the powers previously delegated.
(ii)
Rule 16b-3 Compliance. The Committee may consist solely of two
or more Non-Employee Directors in accordance with Rule 16b-3.
(d)
Effect of Board’s Decision. All determinations, interpretations and
constructions made by the Board in good faith will not be subject to review by any person and will
be final, binding and conclusive on all persons.
(e)
Repricing; Cancellation and Re-Grant of Awards. Neither the Board nor
any Committee will have the authority to reduce the exercise, purchase or strike price of any
4
outstanding Option or SAR, unless the stockholders of the Company have approved such an action
within twelve (12) months prior to such an event.
3.
Shares Subject to this Plan.
(a)
Share Reserve. Subject to Section 9(a) relating to Capitalization
Adjustments, the aggregate number of shares of Common Stock that may be issued pursuant to
Awards will not exceed 1,000,000 shares (the “Share Reserve”). No Participant in the Plan may
be granted an Award during the term of the Plan in excess of the Share Reserve. For clarity, the
Share Reserve is a limitation in the number of shares of Common Stock that may be issued
pursuant to the Plan and does not limit the granting of Awards except as provided in Section 7(a).
Shares may be issued in connection with a merger or acquisition as permitted by Nasdaq
Marketplace Rule 5635(c) or, if applicable NYSE Listed Company Manual Section 303A.08,
AMEX Company Guide Section 711 or other applicable rule, and such issuance will not reduce the
number of shares available for issuance under this Plan.
(b)
Reversion of Shares to the Share Reserve. If an Award or any portion
thereof (i) expires or otherwise terminates without all of the shares covered by such Award having
been issued or (ii) is settled in cash (i.e., the Participant receives cash rather than stock), such
expiration, termination or settlement will not reduce (or otherwise offset) the number of shares of
Common Stock that may be available for issuance under this Plan. If any shares of Common Stock
issued pursuant to an Award are forfeited back to or repurchased or reacquired by the Company for
any reason, including because of the failure to meet a contingency or condition required to vest
such shares in the Participant, then the shares that are forfeited or repurchased or reacquired will
revert to and again become available for issuance under this Plan. Any shares reacquired by the
Company in satisfaction of tax withholding obligations on an Award or as consideration for the
exercise or purchase price of an Award will again become available for issuance under this Plan.
(c)
Source of Shares. The stock issuable under this Plan will be shares of
authorized but unissued or reacquired Common Stock, including shares repurchased by the
Company on the open market or otherwise.
4.
Eligibility.
(a)
Eligibility for Specific Awards. Awards may only be granted to persons
who are Eligible Employees described in Section 1(a) of this Plan, where the Award is an
inducement material to the individual’s entering into employment with the Company or an
Affiliate within the meaning of Rule 5635(c)(4) of the Nasdaq Marketplace Rules or is otherwise
permitted pursuant to Rule 5635(c) of the Nasdaq Marketplace Rules, provided, however, that
Awards may not be granted to Eligible Employees who are providing Continuous Service only to
any “parent” of the Company, as such term is defined in Rule 405 of the Securities Act, unless (i)
the stock underlying such Awards is treated as “service recipient stock” under Section 409A of the
Code (for example, because the Awards are granted pursuant to a corporate transaction such as a
spin off transaction), (ii) the Company, in consultation with its legal counsel, has determined that
such Awards are otherwise exempt from Section 409A of the Code, or (iii) the Company, in
5
consultation with its legal counsel, has determined that such Awards comply with the distribution
requirements of Section 409A of the Code.
(b)
Approval Requirements. All Awards must be granted either by a majority
of the Company’s independent directors or the Independent Compensation Committee.
5.
Provisions relating to Options and Stock Appreciation Rights. Each Option or
SAR will be in such form and will contain such terms and conditions as the Board deems
appropriate. All Options will be Nonstatutory Stock Options at the time of grant. The provisions of
separate Options or SARs need not be identical; provided, however, that each Award Agreement
will conform to (through incorporation of provisions hereof by reference in the applicable Award
Agreement or otherwise) the substance of each of the following provisions:
(a)
Term. No Option or SAR will be exercisable after the expiration of 10
years from the date of its grant or such shorter period specified in the Award Agreement.
(b)
Exercise Price. The exercise or strike price of each Option or SAR will be
not less than 100% of the Fair Market Value of the Common Stock subject to the Option or SAR
on the date the Award is granted. Notwithstanding the foregoing, an Option or SAR may be
granted with an exercise or strike price lower than 100% of the Fair Market Value of the Common
Stock subject to the Award if such Award is granted pursuant to an assumption of or substitution
for another option or stock appreciation right pursuant to a Corporate Transaction and in a manner
consistent with the provisions of Section 409A of the Code. Each SAR will be denominated in
shares of Common Stock equivalents.
(c)
Purchase Price for Options. The purchase price of Common Stock
acquired pursuant to the exercise of an Option may be paid, to the extent permitted by applicable
law and as determined by the Board in its sole discretion, by any combination of the methods of
payment set forth below. The Board will have the authority to grant Options that do not permit all
of the following methods of payment (or otherwise restrict the ability to use certain methods) and
to grant Options that require the consent of the Company to use a particular method of payment.
The permitted methods of payment are as follows:
(i)
by cash, check, bank draft or money order payable to the Company;
(ii)
pursuant to a program developed under Regulation T as promulgated
by the Federal Reserve Board that, prior to the issuance of the stock subject to the Option, results
in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to
pay the aggregate exercise price to the Company from the sales proceeds;
(iii)
by delivery to the Company (either by actual delivery or attestation)
of shares of Common Stock;
(iv)
by a “net exercise” arrangement pursuant to which the Company will
reduce the number of shares of Common Stock issuable upon exercise by the largest whole number
of shares with a Fair Market Value that does not exceed the aggregate exercise price;
6
provided, however, that the Company will accept a cash or other payment from the Participant to
the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction
in the number of whole shares to be issued. Shares of Common Stock will no longer be subject to
an Option and will not be exercisable thereafter to the extent that (A) shares issuable upon exercise
are used to pay the exercise price pursuant to the “net exercise,” (B) shares are delivered to the
Participant as a result of such exercise, and (C) shares are withheld to satisfy tax withholding
obligations; or
(v)
in any other form of legal consideration that may be acceptable to the
Board and specified in the applicable Award Agreement.
(d)
Exercise and Payment of a SAR. To exercise any outstanding SAR, the
Participant must provide written notice of exercise to the Company in compliance with the
provisions of the Stock Appreciation Right Agreement evidencing such SAR. The appreciation
distribution payable on the exercise of a SAR will be not greater than an amount equal to the
excess of (A) the aggregate Fair Market Value (on the date of the exercise of the SAR) of a number
of shares of Common Stock equal to the number of Common Stock equivalents in which the
Participant is vested under such SAR, and with respect to which the Participant is exercising the
SAR on such date, over (B) the aggregate strike price of the number of Common Stock equivalents
with respect to which the Participant is exercising the SAR on such date. The appreciation
distribution may be paid in Common Stock, in cash, in any combination of the two or in any other
form of consideration, as determined by the Board and contained in the Award Agreement
evidencing such SAR.
(e)
Transferability of Options and SARs. The Board may, in its sole
discretion, impose such limitations on the transferability of Options and SARs as the Board will
determine. In the absence of such a determination by the Board to the contrary, the following
restrictions on the transferability of Options and SARs will apply:
(i)
Restrictions on Transfer. An Option or SAR will not be
transferable except by will or by the laws of descent and distribution (or pursuant to subsections
(ii) and (iii) below), and will be exercisable during the lifetime of the Participant only by the
Participant. The Board may permit transfer of the Option or SAR in a manner that is not
prohibited by applicable tax and securities laws. Except as explicitly provided in this Plan, neither
an Option nor a SAR may be transferred for consideration.
(ii)
Domestic Relations Orders. Subject to the approval of the Board
or a duly authorized Officer, an Option or SAR may be transferred pursuant to the terms of a
domestic relations order, official marital settlement agreement or other divorce or separation
instrument.
(iii)
Beneficiary Designation. Subject to the approval of the Board or a
duly authorized Officer, a Participant may, by delivering written notice to the Company, in a form
approved by the Company (or the designated broker), designate a third party who, on the death of
the Participant, will thereafter be entitled to exercise the Option or SAR and receive the Common
Stock or other consideration resulting from such exercise. In the absence of such a designation,
upon the death of the Participant the executor or administrator of the Participant’s
7
estate will be entitled to exercise the Option or SAR and receive the Common Stock or other
consideration resulting from such exercise. However, the Company may prohibit designation of a
beneficiary at any time, including due to any conclusion by the Company that such designation
would be inconsistent with the provisions of applicable laws.
(f)
Vesting Generally. The total number of shares of Common Stock subject to
an Option or SAR may vest and become exercisable in periodic installments that may or may not
be equal. The Option or SAR may be subject to such other terms and conditions on the time or
times when it may or may not be exercised (which may be based on the satisfaction of
Performance Goals or other criteria) as the Board may deem appropriate. The vesting provisions
of individual Options or SARs may vary. The provisions of this Section 5(f) are subject to any
Option or SAR provisions governing the minimum number of shares of Common Stock as to
which an Option or SAR may be exercised.
(g)
Termination of Continuous Service. Except as otherwise provided in the
applicable Award Agreement or other agreement between the Participant and the Company, if a
Participant’s Continuous Service terminates (other than for Cause and other than upon the
Participant’s death or Disability), the Participant may exercise his or her Option or SAR (to the
extent that the Participant was entitled to exercise such Award as of the date of termination of
Continuous Service) within the period of time ending on the earlier of (i) the date that is three (3)
months following the termination of the Participant’s Continuous Service (or such longer or shorter
period specified in the applicable Award Agreement, which period will not be less than thirty (30)
days if necessary to comply with applicable laws unless such termination is for Cause) and (ii) the
expiration of the term of the Option or SAR as set forth in the Award Agreement. If, after
termination of Continuous Service, the Participant does not exercise his or her Option or SAR (as
applicable) within the applicable time frame, the Option or SAR will terminate.
(h)
Extension of Termination Date. Except as otherwise provided in the
applicable Award Agreement or other written agreement between the Participant and the Company,
if the exercise of an Option or SAR following the termination of the Participant’s Continuous
Service (other than for Cause and other than upon the Participant’s death or Disability) would be
prohibited at any time solely because the issuance of shares of Common Stock would violate the
registration requirements under the Securities Act, then the Option or SAR will terminate on the
earlier of (i) the expiration of a total period of time (that need not be consecutive) equal to the
applicable post-termination exercise period after the termination of the Participant’s Continuous
Service during which the exercise of the Option or SAR would not be in violation of such
registration requirements, and (ii) the expiration of the term of the Option or SAR as set forth in
the applicable Award Agreement. In addition, unless otherwise provided in a Participant’s Award
Agreement, if the sale of any Common Stock received on exercise of an Option or SAR following
the termination of the Participant’s Continuous Service (other than for Cause) would violate the
Company’s insider trading policy, then the Option or SAR will terminate on the earlier of (i) the
expiration of a period of months (that need not be consecutive) equal to the applicable post-
termination exercise period after the termination of the Participant’s Continuous Service during
which the sale of the Common Stock received upon exercise of the Option or SAR would not be in
violation of the Company’s insider trading policy, or (ii) the expiration of the term of the Option or
SAR as set forth in the applicable Award Agreement.
8
(i)
Disability of Participant. Except as otherwise provided in the applicable
Award Agreement or other agreement between the Participant and the Company, if a Participant’s
Continuous Service terminates as a result of the Participant’s Disability, the Participant may
exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such
Option or SAR as of the date of termination of Continuous Service), but only within such period of
time ending on the earlier of (i) the date twelve (12) months following such termination of
Continuous Service (or such longer or shorter period specified in the Award Agreement, which
period will not be less than six (6) months if necessary to comply with applicable laws) and (ii) the
expiration of the term of the Option or SAR as set forth in the Award Agreement. If, after
termination of Continuous Service, the Participant does not exercise his or her Option or SAR
within the applicable time frame, the Option or SAR (as applicable) will terminate.
(j)
Death of Participant. Except as otherwise provided in the applicable
Award Agreement or other agreement between the Participant and the Company, if (i) a
Participant’s Continuous Service terminates as a result of the Participant’s death, or (ii) the
Participant dies within the period (if any) specified in the Award Agreement for exercisability after
the termination of the Participant’s Continuous Service for a reason other than death, then the
Option or SAR may be exercised (to the extent the Participant was entitled to exercise such Option
or SAR as of the date of death) by the Participant’s estate, by a person who acquired the right to
exercise the Option or SAR by bequest or inheritance or by a person designated to exercise the
Option or SAR upon the Participant’s death, but only within the period ending on the earlier of (i)
the date eighteen (18) months following the date of death (or such longer or shorter period
specified in the Award Agreement, which period will not be less than six (6) months if necessary to
comply with the applicable laws) and (ii) the expiration of the term of such Option or SAR as set
forth in the Award Agreement. If, after the Participant’s death, the Option or SAR is not exercised
within the applicable time frame, the Option or SAR (as applicable) will terminate.
(k)
Termination for Cause. Except as explicitly provided otherwise in a
Participant’s Award Agreement or other individual written agreement between the Company or any
Affiliate and the Participant, if a Participant’s Continuous Service is terminated for Cause, the
Option or SAR will terminate immediately upon such Participant’s termination of Continuous
Service, and the Participant will be prohibited from exercising his or her Option or SAR from and
after the time of such termination of Continuous Service.
(l)
Non-Exempt Employees. If an Option or SAR is granted to an Employee
who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended,
the Option or SAR will not be first exercisable for any shares of Common Stock until at least six
(6) months following the date of grant of the Option or SAR (although the Award may vest prior to
such date). Consistent with the provisions of the Worker Economic Opportunity Act, (i) if such
non-exempt Employee dies or suffers a Disability, (ii) upon a Corporate Transaction in which such
Option or SAR is not assumed, continued, or substituted, (iii) upon a Change in Control, or (iv)
upon the Participant’s retirement (as such term may be defined in the Participant’s Award
Agreement, in another agreement between the Participant and the Company, or, if no such
definition, in accordance with the Company’s then current employment policies and guidelines),
the vested portion of any Options and SARs may be
9
exercised earlier than six (6) months following the date of grant. The foregoing provision is
intended to operate so that any income derived by a non-exempt employee in connection with the
exercise or vesting of an Option or SAR will be exempt from his or her regular rate of pay. To the
extent permitted and/or required for compliance with the Worker Economic Opportunity Act to
ensure that any income derived by a non-exempt employee in connection with the exercise, vesting
or issuance of any shares under any other Award will be exempt from the employee’s regular rate
of pay, the provisions of this Section 5(l) will apply to all Awards and are hereby incorporated by
reference into such Award Agreements.
6.
Provisions of Awards Other than Options and SARs.
(a)
Restricted Stock Awards. Each Restricted Stock Award Agreement will be
in such form and will contain such terms and conditions as the Board deems appropriate. To the
extent consistent with the Company’s bylaws, at the Board’s election, shares of Common Stock
may be (i) held in book entry form subject to the Company’s instructions until any restrictions
relating to the Restricted Stock Award lapse; or (ii) evidenced by a certificate, which certificate
will be held in such form and manner as determined by the Board. The terms and conditions of
Restricted Stock Award Agreements may change from time to time, and the terms and conditions
of separate Restricted Stock Award Agreements need not be identical. Each Restricted Stock
Award Agreement will conform to (through incorporation of the provisions hereof by reference in
the agreement or otherwise) the substance of each of the following provisions:
(i)
Consideration. A Restricted Stock Award may be awarded in
consideration for (A) cash, check, bank draft or money order payable to the Company, (B) past or
future services to the Company or an Affiliate, or (C) any other form of legal consideration that
may be acceptable to the Board, in its sole discretion, and permissible under applicable law.
(ii)
Vesting. Shares of Common Stock awarded under the Restricted
Stock Award Agreement may be subject to forfeiture to the Company in accordance with a vesting
schedule to be determined by the Board.
(iii)
Termination of Participant’s Continuous Service. If a
Participant’s Continuous Service terminates, the Company may receive through a forfeiture
condition or a repurchase right any or all of the shares of Common Stock held by the Participant as
of the date of termination of Continuous Service under the terms of the Restricted Stock Award
Agreement.
(iv)
Transferability. Rights to acquire shares of Common Stock under
the Restricted Stock Award Agreement will be transferable by the Participant only upon such terms
and conditions as are set forth in the Restricted Stock Award Agreement, as the Board will
determine in its sole discretion, so long as Common Stock awarded under the Restricted Stock
Award Agreement remains subject to the terms of the Restricted Stock Award Agreement.
(v)
Dividends. A Restricted Stock Award Agreement may provide that
any dividends paid on Restricted Stock will be subject to the same vesting and forfeiture
restrictions as apply to the shares subject to the Restricted Stock Award to which they relate.
10
(b)
Restricted Stock Unit Awards. Each Restricted Stock Unit Award
Agreement will be in such form and will contain such terms and conditions as the Board deems
appropriate. The terms and conditions of Restricted Stock Unit Award Agreements may change
from time to time, and the terms and conditions of separate Restricted Stock Unit Award
Agreements need not be identical. Each Restricted Stock Unit Award Agreement will conform to
(through incorporation of the provisions hereof by reference in the Agreement or otherwise) the
substance of each of the following provisions:
(i)
Consideration. At the time of grant of a Restricted Stock Unit
Award, the Board will determine the consideration, if any, to be paid by the Participant upon
delivery of each share of Common Stock subject to the Restricted Stock Unit Award. The
consideration to be paid (if any) by the Participant for each share of Common Stock subject to a
Restricted Stock Unit Award may be paid in any form of legal consideration that may be
acceptable to the Board, in its sole discretion, and permissible under applicable law.
(ii)
Vesting. At the time of the grant of a Restricted Stock Unit Award,
the Board may impose such restrictions on or conditions to the vesting of the Restricted Stock Unit
Award as it, in its sole discretion, deems appropriate.
(iii)
Payment. A Restricted Stock Unit Award may be settled by the
delivery of shares of Common Stock, their cash equivalent, any combination thereof or in any
other form of consideration, as determined by the Board and contained in the Restricted Stock Unit
Award Agreement.
(iv)
Additional Restrictions. At the time of the grant of a Restricted
Stock Unit Award, the Board, as it deems appropriate, may impose such restrictions or conditions
that delay the delivery of the shares of Common Stock (or their cash equivalent) subject to a
Restricted Stock Unit Award to a time after the vesting of such Restricted Stock Unit Award.
(v)
Dividend Equivalents. Dividend equivalents may be credited in
respect of shares of Common Stock covered by a Restricted Stock Unit Award, as determined by
the Board and contained in the Restricted Stock Unit Award Agreement. At the sole discretion of
the Board, such dividend equivalents may be converted into additional shares of Common Stock
covered by the Restricted Stock Unit Award in such manner as determined by the Board. Any
additional shares covered by the Restricted Stock Unit Award credited by reason of such dividend
equivalents will be subject to all of the same terms and conditions of the underlying Restricted
Stock Unit Award Agreement to which they relate.
(vi)
Termination of Participant’s Continuous Service. Except as
otherwise provided in the applicable Restricted Stock Unit Award Agreement or other written
agreement between a Participant and the Company or an Affiliate, such portion of the Restricted
Stock Unit Award that has not vested will be forfeited upon the Participant’s termination of
Continuous Service.
(c)
Performance Awards.
11
(i)
Performance Stock Awards. A Performance Stock Award is an
Award that is payable (including that may be granted, may vest or may be exercised) contingent
upon the attainment during a Performance Period of certain Performance Goals. A Performance
Stock Award may, but need not, require the Participant’s completion of a specified period of
Continuous Service. The length of any Performance Period, the Performance Goals to be achieved
during the Performance Period, and the measure of whether and to what degree such Performance
Goals have been attained will be conclusively determined by the Board or Committee, in its sole
discretion. In addition, to the extent permitted by applicable law and the applicable Award
Agreement, the Board or the Committee may determine that cash may be used in payment of
Performance Stock Awards.
(ii)
Performance Cash Awards. A Performance Cash Award is a cash
award that is payable contingent upon the attainment during a Performance Period of certain
Performance Goals. A Performance Cash Award may also require the completion of a specified
period of Continuous Service. At the time of grant of a Performance Cash Award, the length of
any Performance Period, the Performance Goals to be achieved during the Performance Period,
and the measure of whether and to what degree such Performance Goals have been attained will be
conclusively determined by the Board or Committee, in its sole discretion. The Board or
Committee may specify the form of payment of Performance Cash Awards, which may be cash or
other property, or may provide for a Participant to have the option for his or her Performance Cash
Award, or such portion thereof as the Board may specify, to be paid in whole or in part in cash or
other property.
(iii)
Discretion. A majority of the Company’s Independent Directors or
the Independent Compensation Committee retains the discretion to adjust or eliminate the
compensation or economic benefit due upon attainment of Performance Goals and to define the
manner of calculating the Performance Criteria it selects to use for a Performance Period. Partial
achievement of the specified criteria may result in the payment or vesting corresponding to the
degree of achievement as specified in the Award Agreement or the written terms of a Performance
Cash Award.
(d)
Other Stock Awards. Other forms of Stock Awards valued in whole or in
part by reference to, or otherwise based on, Common Stock, including the appreciation in value
thereof (e.g., options or stock rights with an exercise price or strike price less than 100% of the
Fair Market Value of the Common Stock at the time of grant) may be granted either alone or in
addition to Awards provided for under Section 5 and the preceding provisions of this Section 6.
Subject to the provisions of this Plan, a majority of the Company’s Independent Directors or the
Independent Compensation Committee will have sole and complete authority to determine the
persons to whom and the time or times at which such Other Stock Awards will be granted, the
number of shares of Common Stock (or the cash equivalent thereof) to be granted pursuant to such
Other Stock Awards and all other terms and conditions of such Other Stock Awards.
7.
Covenants of the Company.
(a)
Availability of Shares. The Company will keep available at all times the
number of shares of Common Stock reasonably required to satisfy then-outstanding Awards.
12
(b)
Securities Law Compliance. The Company will seek to obtain from each
regulatory commission or agency having jurisdiction over this Plan, as necessary, such authority as
may be required to grant Awards and to issue and sell shares of Common Stock upon exercise or
vesting of the Awards; provided, however, that this undertaking will not require the Company to
register under the Securities Act, or other securities or applicable laws, this Plan, any Award or any
Common Stock issued or issuable pursuant to any such Award. If, after reasonable efforts and at a
reasonable cost, the Company is unable to obtain from any such regulatory commission or agency
the authority that counsel for the Company deems necessary or advisable for the lawful issuance
and sale of Common Stock under this Plan, the Company will be relieved from any liability for
failure to issue and sell Common Stock upon exercise or vesting of such Awards unless and until
such authority is obtained. A Participant will not be eligible for the grant of an Award or the
subsequent issuance of cash or Common Stock pursuant to the Award if such grant or issuance
would be in violation of any applicable securities law.
(c)
No Obligation to Notify or Minimize Taxes. The Company will have no
duty or obligation to any Participant to advise such holder as to the tax treatment or time or manner
of exercising such Award. Furthermore, the Company will have no duty or obligation to warn or
otherwise advise such holder of a pending termination or expiration of an Award or a possible
period in which the Award may not be exercised. The Company has no duty or obligation to
minimize the tax consequences of an Award to the holder of such Award.
8.
Miscellaneous.
(a)
Use of Proceeds from Sales of Common Stock. Proceeds from the sale of
shares of Common Stock pursuant to Awards will constitute general funds of the Company.
(b)
Corporate Action Constituting Grant of Awards. Corporate action
constituting a grant by the Company of an Award to any Participant will be deemed completed as
of the date of such corporate action, unless otherwise determined by the Board, regardless of when
the instrument, certificate, or letter evidencing the Award is communicated to, or actually received
or accepted by, the Participant. In the event that the corporate records (e.g., Board consents,
resolutions or minutes) documenting the corporate action approving the grant contain terms (e.g.,
exercise price, vesting schedule or number of shares) that are inconsistent with those in the Award
Agreement or related grant documents as a result of a clerical error in the papering of the Award
Agreement or related grant documents, the corporate records will control and the Participant will
have no legally binding right to the incorrect term in the Award Agreement or related grant
documents.
(c)
Stockholder Rights. No Participant will be deemed to be the holder of, or
to have any of the rights of a holder with respect to, any shares of Common Stock subject to an
Award unless and until (i) such Participant has satisfied all requirements for exercise of, or the
issuance of shares of Common Stock under, the Award pursuant to its terms, and (ii) the issuance
of the Common Stock subject to such Award has been entered into the books and records of the
Company.
(d)
No Employment or Other Service Rights. Nothing in this Plan, any Award
Agreement or any other instrument executed thereunder or in connection with any Award
13
granted pursuant thereto will confer upon any Participant any right to continue to serve the
Company or an Affiliate in the capacity in effect at the time the Award was granted or will affect
the right of the Company or an Affiliate to terminate (i) the employment of an Employee with or
without notice and with or without cause, (ii) the service of a Consultant pursuant to the terms of
such Consultant’s agreement with the Company or an Affiliate, or (iii) the service of a Director
pursuant to the bylaws of the Company or an Affiliate, and any applicable provisions of the
corporate law of the state or foreign jurisdiction in which the Company or the Affiliate is
domiciled or incorporated, as the case may be.
(e)
Change in Time Commitment. In the event a Participant’s regular level of
time commitment in the performance of his or her services for the Company and any Affiliates is
reduced (for example, and without limitation, if the Participant is an Employee of the Company
and the Employee has a change in status from a full-time Employee to a part-time Employee or
takes an extended leave of absence) after the date of grant of any Award to the Participant, the
Board has the right in its sole discretion to (x) make a corresponding reduction in the number of
shares or cash amount subject to any portion of such Award that is scheduled to vest or become
payable after the date of such change in time commitment, and (y) in lieu of or in combination
with such a reduction, extend the vesting or payment schedule applicable to such Award. In the
event of any such reduction, the Participant will have no right with respect to any portion of the
Award that is so reduced or extended.
(f)
Investment Assurances. The Company may require a Participant, as a
condition of exercising or acquiring Common Stock under any Award, (i) to give written
assurances satisfactory to the Company as to the Participant’s knowledge and experience in
financial and business matters and/or to employ a purchaser representative reasonably satisfactory
to the Company who is knowledgeable and experienced in financial and business matters and that
such Participant is capable of evaluating, alone or together with the purchaser representative, the
merits and risks of exercising the Award; and (ii) to give written assurances satisfactory to the
Company stating that the Participant is acquiring Common Stock subject to the Award for the
Participant’s own account and not with any present intention of selling or otherwise distributing the
Common Stock. The foregoing requirements, and any assurances given pursuant to such
requirements, will be inoperative if (A) the issuance of the shares upon the exercise or acquisition
of Common Stock under the Award has been registered under a then currently effective registration
statement under the Securities Act, or (B) as to any particular requirement, a determination is made
by counsel for the Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the Company, place
legends on stock certificates issued under this Plan as such counsel deems necessary or appropriate
in order to comply with applicable securities laws, including, but not limited to, legends restricting
the transfer of the Common Stock.
(g)
Withholding Obligations. Unless prohibited by the terms of an Award
Agreement, the Company may, in its sole discretion, satisfy any federal, state or local tax
withholding obligation relating to an Award by any of the following means or by a combination of
such means: (i) causing the Participant to tender a cash payment; (ii) withholding shares of
Common Stock from the shares of Common Stock issued or otherwise issuable to the Participant
in connection with the Award; provided, however, that no shares of Common Stock are withheld
14
with a value exceeding the maximum amount of tax required to be withheld by law (or such lesser
amount as may be necessary to avoid classification of the Award as a liability for financial
accounting purposes); (iii) withholding cash from an Award settled in cash; (iv) withholding
payment from any amounts otherwise payable to the Participant; or (v) by such other method as
may be set forth in the Award Agreement.
(h)
Electronic Delivery. Any reference herein to a “written” agreement or
document will include any agreement or document delivered electronically, filed publicly at
www.sec.gov (or any successor website thereto) or posted on the Company’s intranet (or other
shared electronic medium controlled by the Company to which the Participant has access).
(i)
Deferrals. To the extent permitted by applicable law, the Board, in its sole
discretion, may determine that the delivery of Common Stock or the payment of cash, upon the
exercise, vesting or settlement of all or a portion of any Award may be deferred and may establish
programs and procedures for deferral elections to be made by Participants. Deferrals by
Participants will be made in accordance with Section 409A of the Code. Consistent with Section
409A of the Code, the Board may provide for distributions while a Participant is still an employee
or otherwise providing services to the Company. The Board is authorized to make deferrals of
Awards and determine when, and in what annual percentages, Participants may receive payments,
including lump sum payments, following the Participant’s termination of Continuous Service, and
implement such other terms and conditions consistent with the provisions of this Plan and in
accordance with applicable law.
(j)
Compliance with Section 409A of the Code. Unless otherwise expressly
provided for in an Award Agreement, this Plan and Award Agreements will be interpreted to the
greatest extent possible in a manner that makes this Plan and the Awards granted hereunder exempt
from Section 409A of the Code, and, to the extent not so exempt, in compliance with Section 409A
of the Code. If the Board determines that any Award granted hereunder is not exempt from and is
therefore subject to Section 409A of the Code, the Award Agreement evidencing such Award will
incorporate the terms and conditions necessary to avoid the consequences specified in Section
409A(a)(1) of the Code, and to the extent an Award Agreement is silent on terms necessary for
compliance, such terms are hereby incorporated by reference into the Award Agreement.
Notwithstanding anything to the contrary in this Plan (and unless the Award Agreement
specifically provides otherwise), if the shares of Common Stock are publicly traded, and if a
Participant holding an Award that constitutes “deferred compensation” under Section 409A of the
Code is a “specified employee” for purposes of Section 409A of the Code, no distribution or
payment of any amount that is due because of a “separation from service” (as defined in Section
409A of the Code without regard to alternative definitions thereunder) will be issued or paid before
the date that is six months following the date of such Participant’s “separation from service” (as
defined in Section 409A of the Code without regard to alternative definitions thereunder) or, if
earlier, the date of the Participant’s death, unless such distribution or payment can be made in a
manner that complies with Section 409A of the Code, and any amounts so deferred will be paid in
a lump sum on the day after such six month period elapses, with the balance paid thereafter on the
original schedule. Notwithstanding any provision of this Plan, in no event will the Company be
liable for any additional tax, interest or penalty imposed upon or other detriment suffered by a
Participant under Section 409A of the
15
Code or for any damages suffered by such Participant for any failure of this Plan or any Award to
comply with or be exempt from Section 409A of the Code.
(k)
Clawback/Recovery. All Awards granted under this Plan will be subject to
recoupment in accordance with any clawback policy that the Company is required to adopt
pursuant to the listing standards of any national securities exchange or association on which the
Company’s securities are listed or as is otherwise required by the Dodd-Frank Wall Street Reform
and Consumer Protection Act or other applicable law. In addition, the Board may impose such
other clawback, recovery or recoupment provisions in an Award Agreement as the Board
determines necessary or appropriate, including but not limited to a reacquisition right in respect of
previously acquired shares of Common Stock or other cash or property upon the occurrence of an
event constituting Cause. No recovery of compensation under such a clawback policy will be an
event giving rise to a right to voluntary terminate employment upon “resignation” for “good
reason” or for a “constructive termination” or any similar term under any plan of or agreement
with the Company.
(l)
Not Benefit Plan Compensation. Payments and other benefits received by
a Participant under an Award made pursuant to this Plan will not be deemed a part of Participant’s
compensation for purposes of determining the Participant’s benefits under any other benefit plans
or arrangements provided by the Company or an Affiliate, except where the Board expressly
provides otherwise in writing.
9.
Adjustments upon Changes in Common Stock; Other Corporate Events.
(a)
Capitalization Adjustments. In the event of a Capitalization Adjustment,
the Board will appropriately and proportionately adjust: (i) the class(es) and maximum number of
securities subject to this Plan pursuant to Section 3(a); and (ii) the class(es) and number of
securities and price per share of stock subject to outstanding Awards. The Board will make such
adjustments, and its determination will be final, binding and conclusive.
(b)
Dissolution. Except as otherwise provided in the Award Agreement, in the
event of a Dissolution of the Company, all outstanding Awards (other than Awards consisting of
vested and outstanding shares of Common Stock not subject to a forfeiture condition or the
Company’s right of repurchase) will terminate immediately prior to the completion of such
Dissolution, and the shares of Common Stock subject to the Company’s repurchase rights or
subject to a forfeiture condition may be repurchased or reacquired by the Company
notwithstanding the fact that the holder of such Award is providing Continuous Service; provided,
however, that the Board may, in its sole discretion, cause some or all Awards to become fully
vested, exercisable and/or no longer subject to repurchase or forfeiture (to the extent such Awards
have not previously expired or terminated) before the Dissolution is completed but contingent on
its completion.
(c)
Transaction. The following provisions will apply to Awards in the event of
a Transaction unless otherwise provided in the instrument evidencing the Award or any other
written agreement between the Company or any Affiliate and the Participant or unless otherwise
expressly provided by the Board at the time of grant of an Award. In the event of a Transaction,
16
then, notwithstanding any other provision of this Plan, the Board may take one or more of the
following actions with respect to Awards, contingent upon the closing or completion of the
Transaction:
(i)
arrange for the surviving corporation or acquiring corporation (or the
surviving or acquiring corporation’s parent company) to assume or continue the Award or to
substitute a similar stock award for the Award (including, but not limited to, an award to acquire
the same consideration paid to the stockholders of the Company pursuant to the Transaction);
(ii)
arrange for the assignment of any reacquisition or repurchase rights
held by the Company in respect of Common Stock issued pursuant to the Award to the surviving
corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company);
(iii)
accelerate the vesting, in whole or in part, of the Award (and, if
applicable, the time at which the Award may be exercised) to a date prior to the effective time of
such Transaction as the Board determines (or, if the Board does not determine such a date, to the
date that is five days prior to the effective date of the Transaction), with such Award terminating if
not exercised (if applicable) at or prior to the effective time of the Transaction; provided, however,
that the Board may require Participants to complete and deliver to the Company a notice of
exercise before the effective date of a Transaction, which exercise is contingent upon the
effectiveness of such Transaction;
(iv)
arrange for the lapse, in whole or in part, of any reacquisition or
repurchase rights held by the Company with respect to the Award;
(v)
cancel or arrange for the cancellation of the Award, to the extent not
vested or not exercised prior to the effective time of the Transaction, in exchange for such cash
consideration, if any, as the Board, in its sole discretion, may consider appropriate; and
(vi)
make a payment, in such form as may be determined by the Board
equal to the excess, if any, of (A) the value of the property the Participant would have received
upon the exercise of the Award immediately prior to the effective time of the Transaction, over (B)
any exercise price payable by such holder in connection with such exercise. For clarity, this
payment may be $0 if the value of the property is equal to or less than the exercise price.
Payments under this provision may be delayed to the same extent that payment of consideration to
the holders of the Company’s Common Stock in connection with the Transaction is delayed as a
result of escrows, earn outs, holdbacks or other contingencies.
The Board need not take the same action or actions with respect to all Awards or portions thereof
or with respect to all Participants. The Board may take different actions with respect to the vested
and unvested portions of an Award.
(d)
Change in Control. An Award may be subject to additional acceleration of
vesting and exercisability upon or after a Change in Control as may be provided in the Award
Agreement for such Award or as may be provided in any other written agreement between the
Company or any Affiliate and the Participant, but in the absence of such provision, no such
acceleration will automatically occur.
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10.
Termination or Suspension of this Plan. The Board may suspend or terminate this
Plan at any time. No Awards may be granted under this Plan while this Plan is suspended or after it
is terminated.
11.
Effective Date of this Plan. This Plan will come into existence on the Effective
Date.
12.
Choice of Law. The laws of the State of Delaware will govern all questions
concerning the construction, validity and interpretation of this Plan, without regard to that state’s
conflict of laws rules.
13.
Definitions. As used in this Plan, the following definitions will apply to the
capitalized terms indicated below:
(a)
“Affiliate” means, at the time of determination, any “parent” or “subsidiary”
of the Company as such terms are defined in Rule 405 of the Securities Act. The Board will have
the authority to determine the time or times at which “parent” or “subsidiary” status is determined
within the foregoing definition.
(b)
“Award” means an Option, a Stock Appreciation Right, a Restricted Stock
Award, a Restricted Stock Unit Award, a Performance Stock Award, a Performance Cash Award or
an Other Stock Award.
(c)
“Award Agreement” means a written agreement between the Company and
a Participant evidencing the terms and conditions of an Award.
(d)
“Board” means the Board of Directors of the Company.
(e)
“Capitalization Adjustment” means any change that is made in, or other
events that occur with respect to, the Common Stock subject to this Plan or subject to any Award
after the Effective Date without the receipt of consideration by the Company through merger,
consolidation, reorganization, recapitalization, reincorporation, stock dividend, dividend in
property other than cash, large nonrecurring cash dividend, stock split, reverse stock split
liquidating dividend, combination of shares, exchange of shares, change in corporate structure or
any similar equity restructuring transaction, as that term is used in Statement of Financial
Accounting Standards Board Accounting Standards Codification Topic 718 (or any successor
thereto). Notwithstanding the foregoing, the conversion of any convertible securities of the
Company will not be treated as a Capitalization Adjustment.
(f)
“Cause” shall have the meaning ascribed to such term in any written
agreement between the Participant and the Company defining such term and, in the absence of
such agreement, such term means, with respect to a Participant, the occurrence of any of the
following events: (i) such Participant’s commission of any felony or any crime involving fraud,
dishonesty or moral turpitude under the laws of the United States or any state thereof; (ii) such
Participant’s attempted commission of, or participation in, a fraud or act of dishonesty against the
Company; (iii) such Participant’s intentional, material violation of any contract or agreement
between the Participant and the Company or of any statutory duty owed to the Company; (iv) such
Participant’s unauthorized use or disclosure of the Company’s confidential information or
18
trade secrets; or (v) such Participant’s gross misconduct. The determination that a termination of
the Participant’s Continuous Service is either for Cause or without Cause shall be made by the
Company, in its sole discretion. Any determination by the Company that the Continuous Service
of a Participant was terminated with or without Cause for the purposes of outstanding Awards held
by such Participant shall have no effect upon any determination of the rights or obligations of the
Company or such Participant for any other purpose.
(g)
“Change in Control” means the occurrence, in a single transaction or in a
series of related transactions, of any one or more of the following events:
(i)
any Exchange Act Person becomes the Owner, directly or indirectly,
of securities of the Company representing more than 50% of the combined voting power of the
Company’s then outstanding securities other than by virtue of a merger, consolidation or similar
transaction. Notwithstanding the foregoing, a Change in Control will not be deemed to occur (A)
on account of the acquisition of securities of the Company directly from the Company; (B) on
account of the acquisition of securities of the Company by an investor, any affiliate thereof or any
other Exchange Act Person that acquires the Company’s securities in a transaction or series of
related transactions the primary purpose of which is to obtain financing for the Company through
the issuance of equity securities; or (C) solely because the level of Ownership held by any
Exchange Act Person (the “Subject Person”) exceeds the designated percentage threshold of the
outstanding voting securities as a result of a repurchase or other acquisition of voting securities by
the Company reducing the number of shares outstanding, provided that if a Change in Control
would occur (but for the operation of this sentence) as a result of the acquisition of voting
securities by the Company, and after such share acquisition, the Subject Person becomes the
Owner of any additional voting securities that, assuming the repurchase or other acquisition had
not occurred, increases the percentage of the then outstanding voting securities Owned by the
Subject Person over the designated percentage threshold, then a Change in Control will be deemed
to occur;
(ii)
there is consummated a merger, consolidation or similar transaction
involving (directly or indirectly) the Company and, immediately after the consummation of such
merger, consolidation or similar transaction, the stockholders of the Company immediately prior
thereto do not Own, directly or indirectly, either (A) outstanding voting securities representing
more than 50% of the combined outstanding voting power of the surviving Entity in such merger,
consolidation or similar transaction or (B) more than 50% of the combined outstanding voting
power of the parent of the surviving Entity in such merger, consolidation or similar transaction, in
each case in substantially the same proportions as their Ownership of the outstanding voting
securities of the Company immediately prior to such transaction;
(iii)
there is consummated a sale, lease, exclusive license or other
disposition of all or substantially all of the consolidated assets of the Company and its Subsidiaries,
other than a sale, lease, license or other disposition of all or substantially all of the consolidated
assets of the Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the
combined voting power of the voting securities of which are Owned by stockholders of the
Company in substantially the same proportions as their Ownership of the
19
outstanding voting securities of the Company immediately prior to such sale, lease, license or other
disposition; or
(iv)
individuals who, on the date this Plan is adopted by the Board, are
members of the Board (the “Incumbent Board”) cease for any reason to constitute at least a
majority of the members of the Board; provided, however, that if the appointment or election (or
nomination for election) of any new Board member was approved or recommended by a majority
vote of the members of the Incumbent Board then still in office, such new member will, for
purposes of this Plan, be considered as a member of the Incumbent Board.
For purposes of determining voting power under the term Change in Control, voting power
shall be calculated by assuming the conversion of all equity securities convertible (immediately or
at some future time) into shares entitled to vote, but not assuming the exercise of any warrant or
right to subscribe to or purchase those shares. In addition, (A) the term Change in Control will not
include a sale of assets, merger or other transaction effected exclusively for the purpose of
changing the domicile of the Company, (B) the term Change in Control will not include a change
in the voting power of any one or more stockholders as a result of the conversion of any class of
the Company’s securities into another class of the Company’s securities having a different number
of votes per share pursuant to the conversion provisions set forth in the Company’s Amended and
Restated Certificate of Incorporation, as amended, and (C) the definition of Change in Control (or
any analogous term) in an individual written agreement between the Company or any Affiliate and
the Participant will supersede the foregoing definition with respect to Awards subject to such
agreement; provided, however, that if no definition of Change in Control or any analogous term is
set forth in such an individual written agreement, the foregoing definition will apply. If required
for compliance with Section 409A of the Code, in no event will a Change in Control be deemed to
have occurred if such transaction is not also a “change in the ownership or effective control of” the
Company or “a change in the ownership of a substantial portion of the assets of” the Company as
determined under Treasury Regulation Section 1.409A-3(i)(5) (without regard to any alternative
definition thereunder). The Board may, in its sole discretion and without a Participant’s consent,
amend the definition of “Change in Control” to conform to the definition of “Change in Control”
under Section 409A of the Code, and the regulations thereunder.
(h)
“Code” means the Internal Revenue Code of 1986, as amended, including
any applicable regulations and guidance thereunder.
(i)
“Committee” means a committee of one or more Independent Directors to
whom authority has been delegated by the Board in accordance with Section 2(c).
(j)
“Common Stock” means the common stock of the Company having one
vote per share.
(k)
“Company” means MetaVia Inc., a Delaware corporation.
(l)
“Consultant” means any person, including an advisor, who is (i) engaged by
the Company or an Affiliate to render consulting or advisory services and is compensated for such
services, or (ii) serving as a member of the board of directors of an Affiliate and is
20
compensated for such services. However, service solely as a Director, or payment of a fee for such
service, will not cause a Director to be considered a “Consultant” for purposes of this
Plan. Notwithstanding the foregoing, a person is treated as a Consultant under this Plan only if a
Form S-8 Registration Statement under the Securities Act is available to register either the offer or
the sale of the Company’s securities to such person.
(m)
“Continuous Service” means that the Participant’s service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not interrupted or
terminated. A change in the capacity in which the Participant renders service to the Company or
an Affiliate as an Employee, Consultant or Director or a change in the entity for which the
Participant renders such service, provided that there is no interruption or termination of the
Participant’s service with the Company or an Affiliate, will not terminate a Participant’s
Continuous Service; provided, however, that if the Entity for which a Participant is rendering
services ceases to qualify as an Affiliate, as determined by the Board, in its sole discretion, such
Participant’s Continuous Service will be considered to have terminated on the date such Entity
ceases to qualify as an Affiliate. To the extent permitted by law, the Board or the chief executive
officer of the Company, in that party’s sole discretion, may determine whether Continuous Service
will be considered interrupted in the case of (i) any leave of absence approved by the Board or
chief executive officer, including sick leave, military leave or any other personal leave, or (ii)
transfers between the Company, an Affiliate, or their successors. Notwithstanding the foregoing, a
leave of absence will be treated as Continuous Service for purposes of vesting in an Award only to
such extent as may be provided in the Company’s leave of absence policy, in the written terms of
any leave of absence agreement or policy applicable to the Participant, or as otherwise required by
law.
(n)
“Corporate Transaction” means the consummation, in a single transaction
or in a series of related transactions, of any one or more of the following events:
(i)
a sale or other disposition of all or substantially all, as determined by
the Board, in its sole discretion, of the consolidated assets of the Company and its Subsidiaries;
(ii)
a sale or other disposition of more than 50% of the outstanding
securities of the Company;
(iii)
a merger, consolidation or similar transaction following which the
Company is not the surviving corporation; or
(iv)
a merger, consolidation or similar transaction following which the
Company is the surviving corporation but the shares of Common Stock outstanding immediately
preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of
the merger, consolidation or similar transaction into other property, whether in the form of
securities, cash or otherwise.
(o)
“Director” means a member of the Board. Directors are not eligible to
receive Awards under this Plan with respect to their service in such capacity.
21
(p)
“Disability” means, with respect to a Participant, the inability of such
Participant to engage in any substantial gainful activity by reason of any medically determinable
physical or mental impairment that can be expected to result in death or that has lasted or can be
expected to last for a continuous period of not less than 12 months, as provided in Sections 22(e)
(3) and 409A(a)(2)(c)(i) of the Code, and will be determined by the Board on the basis of such
medical evidence as the Board deems warranted under the circumstances.
(q)
“Dissolution” means when the Company, after having executed a certificate
of dissolution with the State of Delaware (or other applicable state), has completely wound up its
affairs. Conversion of the Company into a Limited Liability Company (or any other pass-through
entity) will not be considered a “Dissolution” for purposes of this Plan.
(r)
“Effective Date” means November 1, 2021.
(s)
“Employee” means any person employed by the Company or an Affiliate.
However, service solely as a Director, or payment of a fee for such services, will not cause a
Director to be considered an “Employee” for purposes of this Plan.
(t)
“Entity” means a corporation, partnership, limited liability company or
other entity.
(u)
“Exchange Act” means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
(v)
“Exchange Act Person” means any natural person, Entity or “group”
(within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act
Person” will not include (i) the Company or any Subsidiary of the Company, (ii) any employee
benefit plan of the Company or any Subsidiary of the Company or any trustee or other fiduciary
holding securities under an employee benefit plan of the Company or any Subsidiary of the
Company, (iii) an underwriter temporarily holding securities pursuant to a registered public
offering of such securities, (iv) an Entity Owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their Ownership of stock of the Company; or (v)
any natural person, Entity or “group” (within the meaning of Section 13(d) or 14(d) of the
Exchange Act) that, as of the Effective Date, is the Owner, directly or indirectly, of securities of
the Company representing more than 50% of the combined voting power of the Company’s then
outstanding securities.
(w)
“Fair Market Value” means, as of any date, the value of the Common Stock
determined as follows:
(i)
If the Common Stock is listed on any established stock exchange or
traded on any established market, the Fair Market Value of a share of Common Stock will be,
unless otherwise determined by the Board, the closing sales price for such stock as quoted on such
exchange or market (or the exchange or market with the greatest volume of trading in the Common
Stock) on the date of determination, as reported in a source the Board deems reliable.
22
(ii)
Unless otherwise provided by the Board, if there is no closing sales
price for the Common Stock on the date of determination, then the Fair Market Value will be the
closing selling price on the last preceding date for which such quotation exists.
(iii)
In the absence of such markets for the Common Stock, the Fair
Market Value will be determined by the Board in good faith and in a manner that complies with
Section 409A of the Code.
(x)
“Non-Employee Director” means a Director who either (i) is not a current
employee or officer of the Company or an Affiliate, does not receive compensation, either directly
or indirectly, from the Company or an Affiliate for services rendered as a consultant or in any
capacity other than as a Director (except for an amount as to which disclosure would not be
required under Item 404(a) of Regulation S-K promulgated pursuant to the Securities Act
(“Regulation S-K”)), does not possess an interest in any other transaction for which disclosure
would be required under Item 404(a) of Regulation S-K, and is not engaged in a business
relationship for which disclosure would be required pursuant to Item 404(b) of Regulation S-K; or
(ii) is otherwise considered a “non-employee director” for purposes of Rule 16b-3.
(y)
“Nonstatutory Stock Option” means any option granted pursuant to Section
5 of this Plan that does not qualify as an “incentive stock option” within the meaning of Section
422 of the Code.
(z)
“Officer” means a person who is an officer of the Company within the
meaning of Section 16 of the Exchange Act.
(aa)
“Option” means a Nonstatutory Stock Option to purchase shares of
Common Stock granted pursuant to this Plan.
(bb)
“Option Agreement” means a written agreement between the Company and
an Optionholder evidencing the terms and conditions of an Option grant. Each Option Agreement
will be subject to the terms and conditions of this Plan.
(cc)
“Optionholder” means a person to whom an Option is granted pursuant to
this Plan or, if applicable, such other person who holds an outstanding Option.
(dd)
“Other Stock Award” means an award based in whole or in part by
reference to the Common Stock which is granted pursuant to the terms and conditions of Section
6(d).
(ee)
“Other Stock Award Agreement” means a written agreement between the
Company and a holder of an Other Stock Award evidencing the terms and conditions of an Other
Stock Award grant. Each Other Stock Award Agreement will be subject to the terms and
conditions of this Plan.
(ff)
“Own,” “Owned,” “Owner,” “Ownership” means a person or Entity will be
deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of
securities if such person or Entity, directly or indirectly, through any contract, arrangement,
23
understanding, relationship or otherwise, has or shares voting power, which includes the power to
vote or to direct the voting, with respect to such securities.
(gg)
“Participant” means a person to whom an Award is granted pursuant to this
Plan or, if applicable, such other person who holds an outstanding Award.
(hh)
“Performance Cash Award” means an award of cash granted pursuant to
the terms and conditions of Section 6(c)(ii).
(ii)
“Performance Criteria” means the one or more criteria that a majority of
the Company’s Independent Directors or the Independent Compensation Committee will select for
purposes of establishing the Performance Goals for a Performance Period. The Performance
Criteria that will be used to establish such Performance Goals may be based on any one of, or
combination of, the following as determined by a majority of the Company’s Independent
Directors or the Independent Compensation Committee: (i) sales; (ii) revenues; (iii) assets; (iv)
expenses; (v) market penetration or expansion; (vi) earnings from operations; (vii) earnings before
or after deduction for all or any portion of interest, taxes, depreciation, amortization, incentives,
service fees or extraordinary or special items, whether or not on a continuing operations or an
aggregate or per share basis; (viii) net income or net income per common share (basic or diluted);
(ix) return on equity, investment, capital or assets; (x) one or more operating ratios; (xi) borrowing
levels, leverage ratios or credit rating; (xii) market share; (xiii) capital expenditures; (xiv) cash
flow, free cash flow, cash flow return on investment, or net cash provided by operations; (xv) stock
price, dividends or total stockholder return; (xvi) development of new technologies or products;
(xvii) sales of particular products or services; (xviii) economic value created or added; (xix)
operating margin or profit margin; (xx) customer acquisition or retention; (xxi) raising or
refinancing of capital; (xxii) successful hiring of key individuals; (xxiii) resolution of significant
litigation; (xxiv) acquisitions and divestitures (in whole or in part); (xxv) joint ventures and
strategic alliances; (xxvi) spin-offs, split-ups and the like; (xxvii) reorganizations; (xxviii)
recapitalizations, restructurings, financings (issuance of debt or equity) or refinancings; (xxix) or
strategic business criteria, consisting of one or more objectives based on the following goals:
achievement of timely development, design management or enrollment; pre-clinical development
related compound goals; regulatory milestones, including approval of a product candidate;
progress of internal research or clinical programs; progress of partnered programs; partner
satisfaction; budget management; clinical achievements; completing phases of a clinical study
(including the treatment phase); announcing or presenting preliminary or final data from clinical
studies; in each case, whether on particular timelines or generally; timely completion of clinical
trials; submission of INDs and NDAs and other regulatory achievements; partner or collaborator
achievements; manufacturing achievements (including obtaining particular yields from
manufacturing runs and other measurable objectives related to process development activities);
strategic partnerships or transactions (including in-licensing and out-licensing of intellectual
property; establishing relationships with commercial entities with respect to the marketing,
distribution and sale of the Company’s products (including with group purchasing organizations,
distributors and other vendors); supply chain achievements (including establishing relationships
with manufacturers or suppliers of active pharmaceutical ingredients and other component
materials and manufacturers of the Company’s products); co-development, co-marketing, profit
sharing, joint venture or other similar arrangements; meeting specified market penetration or value
added, payor acceptance; patient adherence; peer reviewed
24
publications; issuance of new patents; establishment of or securing of licenses to intellectual
property; product development or introduction (including, without limitation, discovery of novel
products, maintenance of multiple products in pipeline, product launch or other product
development milestones); geographic business expansion; cost targets, cost reductions or savings;
customer satisfaction; operating efficiency; acquisition or retention, employee satisfaction,
information technology, corporate development (including, without limitation, licenses,
innovation, research or establishment of third party collaborations); manufacturing or process
development; legal compliance or risk reduction; patent application or issuance goals; or goals
relating to acquisitions, divestitures or other business combinations (in whole or in part), joint
ventures or strategic alliances; and (xxx) other measures of performance selected by the
Company’s Independent Directors or the Independent Compensation Committee.
(jj)
“Performance Goals” means, for a Performance Period, the one or more
goals established by a majority of the Company’s Independent Directors or the Independent
Compensation Committee for the Performance Period based upon the Performance Criteria.
Performance Goals may be based on a Company-wide basis, with respect to one or more business
units, divisions, Affiliates, or business segments, and in either absolute terms or relative to the
performance of one or more comparable companies or the performance of one or more relevant
indices. The Company’s Independent Directors or the Independent Compensation Committee are
authorized at any time in its sole discretion, to adjust or modify the calculation of a Performance
Goal for such Performance Period in order to prevent the dilution or enlargement of the rights of
Participants, (a) in the event of, or in anticipation of, any unusual or extraordinary corporate item,
transaction, event or development; (b) in recognition of, or in anticipation of, any other unusual or
nonrecurring events affecting the Company, or the financial statements of the Company in
response to, or in anticipation of, changes in applicable laws, regulations, accounting principles, or
business conditions; or (c) in view of the Company’s Independent Directors or the Independent
Compensation Committee’s assessment of the business strategy of the Company, performance of
comparable organizations, economic and business conditions, and any other circumstances deemed
relevant. Specifically, the Company’s Independent Directors or the Independent Compensation
Committee are authorized to make adjustment in the method of calculating attainment of
Performance Goals and objectives for a Performance Period as follows: (i) to exclude the dilutive
effects of acquisitions or joint ventures; (ii) to assume that any business divested by the Company
achieved performance objectives at targeted levels during the balance of a Performance Period
following such divestiture; and (iii) to exclude the effect of any change in the outstanding shares of
common stock of the Company by reason of any stock dividend or split, stock repurchase,
reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares
or other similar corporate change, or any distributions to common stockholders other than regular
cash dividends. In addition, the Company’s Independent Directors or the Independent
Compensation Committee are authorized to make adjustment in the method of calculating
attainment of Performance Goals and objectives for a Performance Period as follows: (i) to exclude
restructuring and/or other nonrecurring charges; (ii) to exclude exchange rate effects, as applicable,
for non-U.S. dollar denominated net sales and operating earnings; (iii) to exclude the effects of
changes to generally accepted accounting standards required by the Financial Accounting
Standards Board; (iv) to exclude the effects of any items that are “unusual” in nature or occur
“infrequently” as determined under generally accepted accounting principles; (v) to exclude the
effects to any statutory adjustments to corporate tax
25
rates; and (vi) to make other appropriate adjustments selected by the Company’s Independent
Directors or the Independent Compensation Committee.
(kk)
“Performance Period” means the period of time selected by a majority of
the Company’s Independent Directors or the Independent Compensation Committee over which
the attainment of one or more Performance Goals will be measured for the purpose of determining
a Participant’s right to and the payment of an Award. Performance Periods may be of varying and
overlapping duration, at the sole discretion of a majority of the Company’s Independent Directors
or the Independent Compensation Committee.
(ll)
“Performance Stock Award” means an Award granted under the terms and
conditions of Section 6(c)(i).
(mm) “Plan” means this MetaVia Inc. Amended and Restated 2021 Inducement
Plan, as it may be amended.
(nn)
“Restricted Stock Award” means an award of shares of Common Stock
which is granted pursuant to the terms and conditions of Section 6(a).
(oo)
“Restricted Stock Award Agreement” means a written agreement between
the Company and a holder of a Restricted Stock Award evidencing the terms and conditions of a
Restricted Stock Award grant. Each Restricted Stock Award Agreement will be subject to the
terms and conditions of this Plan.
(pp)
“Restricted Stock Unit Award” means a right to receive shares of Common
Stock which is granted pursuant to the terms and conditions of Section 6(b).
(qq)
“Restricted Stock Unit Award Agreement” means a written agreement
between the Company and a holder of a Restricted Stock Unit Award evidencing the terms and
conditions of a Restricted Stock Unit Award grant. Each Restricted Stock Unit Award Agreement
will be subject to the terms and conditions of this Plan.
(rr)
“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or
any successor to Rule 16b-3, as in effect from time to time.
(ss)
“Securities Act” means the Securities Act of 1933, as amended.
(tt)
“Stock Appreciation Right” or “SAR” means a right to receive the
appreciation on Common Stock that is granted pursuant to the terms and conditions of Section 5.
(uu)
“Stock Appreciation Right Agreement” means a written agreement between
the Company and a holder of a Stock Appreciation Right evidencing the terms and conditions of a
Stock Appreciation Right grant. Each Stock Appreciation Right Agreement will be subject to the
terms and conditions of this Plan.
(vv)
“Subsidiary” means, with respect to the Company, (i) any corporation of
which more than 50% of the outstanding capital stock having ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of whether, at the time, stock
26
of any other class or classes of such corporation will have or might have voting power by reason of
the happening of any contingency) is at the time, directly or indirectly, Owned by the Company,
and (ii) any partnership, limited liability company or other entity in which the Company has a
direct or indirect interest (whether in the form of voting or participation in profits or capital
contribution) of more than 50%.
(ww)
“Transaction” means a Corporate Transaction or a Change in Control.
1
MetaVia Inc.
Stock Option Grant Notice
(Amended and Restated 2021 Inducement Plan)
MetaVia Inc., a Delaware corporation (the “Company”), pursuant to its Amended and
Restated 2021 Inducement Plan (the “Plan”), hereby grants to Optionholder an option to purchase
the number of shares of the Company’s Common Stock set forth below. This option is subject to
all of the terms and conditions as set forth in this Stock Option Grant Notice, in the Option
Agreement, the Plan and the Notice of Exercise, all of which are attached hereto and incorporated
herein in their entirety. Capitalized terms not explicitly defined herein but defined in the Plan or
the Option Agreement will have the same definitions as in the Plan or the Option Agreement. If
there is any conflict between the terms in this Stock Option Grant Notice and the Plan, the terms of
the Plan will control.
Optionholder:
Date of Grant:
Vesting Commencement Date:
Number of Shares Subject to
Option:
Exercise Price (Per Share):
Total Exercise Price:
Expiration Date:
Type of Grant: Nonstatutory Stock Option
Exercise
Schedule:
Same as Vesting Schedule
Vesting
Schedule:
______________, subject to Optionholder’s Continuous Service as of each such
date
Payment:
By one or a combination of the following items (described in the Option
Agreement):
⌧ By cash, check, bank draft or money order payable to the Company
⌧ Pursuant to a Regulation T Program if the shares are publicly traded
⌧ By delivery of already-owned shares if the shares are publicly traded
⌧ Subject to the Company’s consent at the time of exercise, by a “net
exercise” arrangement
Additional Terms/Acknowledgements: Optionholder acknowledges receipt of, and understands
and agrees to, this Stock Option Grant Notice, the Option Agreement and the Plan. Optionholder
acknowledges and agrees that this Stock Option Grant Notice and the Option Agreement may not
be modified, amended or revised except as provided in the Plan. Optionholder further
acknowledges that as of the Date of Grant, this Stock Option Grant Notice,
2
the Option Agreement, and the Plan set forth the entire understanding between Optionholder and
the Company regarding this option award and supersede all prior oral and written agreements,
promises and/or representations on that subject with the exception of, if applicable, (i) equity
awards previously granted and delivered to Optionholder, (ii) any compensation recovery policy
that is adopted by the Company or is otherwise required by applicable law and (iii) any written
employment or severance arrangement or other written agreement entered into between the
Company and Optionholder specifying the terms that should govern this option upon the terms and
conditions set forth therein.
By accepting this option, Optionholder acknowledges having received and read the Stock Option
Grant Notice, the Option Agreement and the Plan and agrees to all of the terms and conditions set
forth in these documents, Optionholder consents to receive Plan and related documents by
electronic delivery and to participate in the Plan through an on-line or electronic system
established and maintained by the Company or another third party designated by the Company.
MetaVia Inc.
Optionholder:
By:
Signature
Signature
Title:
Date:
Date:
Attachments: Option Agreement, Amended and Restated 2021 Inducement Plan and Notice of
Exercise (Attachment I); MetaVia Inc. Amended and Restated 2021 Inducement Plan
(Attachment II); and Notice of Exercise (Attachment III).
3
Attachment I
MetaVia Inc.
Option Agreement
(Amended and Restated 2021 Inducement Plan)
(Nonstatutory Stock Option)
Pursuant to your Stock Option Grant Notice (the “Grant Notice”) and this Option
Agreement (this “Agreement”), MetaVia Inc., a Delaware corporation (the “Company”) has
granted you an option under the MetaVia Inc. Amended and Restated 2021 Inducement Plan (the
“Plan”) to purchase the number of shares of the Company’s Common Stock indicated in your
Grant Notice at the exercise price indicated in your Grant Notice. The option is granted to you
effective as of the date of grant set forth in the Grant Notice (the “Date of Grant”). The option is
granted in compliance with Nasdaq Listing Rule 5635(c)(4) as a material inducement to you
entering into employment with the Company. If there is any conflict between the terms in this
Agreement and the Plan, the terms of the Plan will control. Capitalized terms not explicitly defined
in this Option Agreement or in the Grant Notice but defined in the Plan will have the same
definitions as in the Plan.
The details of your option, in addition to those set forth in the Grant Notice and the Plan,
are as follows:
14.
Vesting. Subject to the provisions contained herein, your option will vest as
provided in your Grant Notice. Vesting will cease upon the termination of your Continuous
Service.
15.
Number of Shares and Exercise Price. The number of shares of Common Stock
subject to your option and your exercise price per share in your Grant Notice will be adjusted for
Capitalization Adjustments.
16.
Exercise Restriction for Non-Exempt Employees. If you are an Employee
eligible for overtime compensation under the Fair Labor Standards Act of 1938, as amended (that
is, a “Non-Exempt Employee”), and except as otherwise provided in the Plan, you may not
exercise your option until you have completed at least six (6) months of Continuous Service
measured from the Date of Grant, even if you have already been an employee for more than six (6)
months. Consistent with the provisions of the Worker Economic Opportunity Act, you may
exercise your option as to any vested portion prior to such six (6) month anniversary in the case of
(i) your death or disability, (ii) a Corporate Transaction in which your option is not assumed,
continued or substituted, (iii) a Change in Control or (iv) your termination of Continuous Service
on your “retirement” (as defined in the Company’s benefit plans).
17.
Method of Payment. You must pay the full amount of the exercise price for the
shares you wish to exercise. You may pay the exercise price in cash or by check, bank draft or
money order payable to the Company or in any other manner permitted by the Grant Notice, which
may include one or more of the following:
4
(a)
Provided that at the time of exercise the Common Stock is publicly traded,
pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board
that, prior to the issuance of Common Stock, results in either the receipt of cash (or check) by the
Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the
Company from the sales proceeds. This manner of payment is also known as a “broker-assisted
exercise”, “same day sale”, or “sell to cover”.
(b)
Provided that at the time of exercise the Common Stock is publicly traded,
by delivery to the Company (either by actual delivery or attestation) of already-owned shares of
Common Stock that are owned free and clear of any liens, claims, encumbrances or security
interests, and that are valued at Fair Market Value on the date of exercise. “Delivery” for these
purposes, in the sole discretion of the Company at the time you exercise your option, will include
delivery to the Company of your attestation of ownership of such shares of Common Stock in a
form approved by the Company. You may not exercise your option by delivery to the Company of
Common Stock if doing so would violate the provisions of any law, regulation or agreement
restricting the redemption of the Company’s stock.
(c)
Subject to the consent of the Company at the time of exercise, by a “net
exercise” arrangement pursuant to which the Company will reduce the number of shares of
Common Stock issued upon exercise of your option by the largest whole number of shares with a
Fair Market Value that does not exceed the aggregate exercise price. You must pay any remaining
balance of the aggregate exercise price not satisfied by the “net exercise” in cash or other permitted
form of payment. Shares of Common Stock will no longer be outstanding under your option and
will not be exercisable thereafter if those shares (i) are used to pay the exercise price pursuant to
the “net exercise,” (ii) are delivered to you as a result of such exercise, and (iii) are withheld to
satisfy your tax withholding obligations.
18.
Whole Shares. You may exercise your option only for whole shares of Common
Stock.
19.
Securities Law Compliance. In no event may you exercise your option unless the
shares of Common Stock issuable upon exercise are then registered under the Securities Act or, if
not registered, the Company has determined that your exercise and the issuance of the shares
would be exempt from the registration requirements of the Securities Act. The exercise of your
option also must comply with all other applicable laws and regulations governing your option, and
you may not exercise your option if the Company determines that such exercise would not be in
material compliance with such laws and regulations (including any restrictions on exercise
required for compliance with Treas. Reg. 1.401(k)-1(d)(3), if applicable).
20.
Term. You may not exercise your option before the Date of Grant or after the
expiration of the option’s term. The term of your option expires, subject to the provisions of
Section 5(h) of the Plan, upon the earliest of the following:
(a)
immediately upon the termination of your Continuous Service for Cause;
(b)
three (3) months after the termination of your Continuous Service for any
reason other than Cause, your Disability or your death (except as otherwise provided in Section
5
7(d) below); provided, however, that if during any part of such three (3) month period your option
is not exercisable solely because of the condition set forth in the section above regarding
“Securities Law Compliance,” your option will not expire until the earlier of the Expiration Date or
until it has been exercisable for an aggregate period of three (3) months after the termination of
your Continuous Service; provided further, if during any part of such three (3) month period, the
sale of any Common Stock received upon exercise of your option would violate the Company’s
insider trading policy, then your option will not expire until the earlier of the Expiration Date or
until it has been exercisable for an aggregate period of three (3) months after the termination of
your Continuous Service during which the sale of the Common Stock received upon exercise of
your option would not be in violation of the Company’s insider trading policy. Notwithstanding
the foregoing, if (i) you are a Non-Exempt Employee, (ii) your Continuous Service terminates
within six (6) months after the Date of Grant, and (iii) you have vested in a portion of your option
at the time of your termination of Continuous Service, your option will not expire until the earlier
of (x) the later of (A) the date that is seven (7) months after the Date of Grant, and (B) the date that
is three (3) months after the termination of your Continuous Service, and (y) the Expiration Date;
(c)
twelve (12) months after the termination of your Continuous Service due to
your Disability (except as otherwise provided in Section 7(d)) below;
(d)
eighteen (18) months after your death if you die either during your
Continuous Service or within three (3) months after your Continuous Service terminates for any
reason other than Cause;
(e)
the Expiration Date indicated in the Grant Notice; or
(f)
the day before the tenth (10th) anniversary of the Date of Grant.
21.
Exercise.
(a)
You may exercise the vested portion of your option (and the unvested
portion of your option if your Grant Notice so permits) during its term by (i) delivering a Notice of
Exercise (in a form designated by the Company) or completing such other documents and/or
procedures designated by the Company for exercise and (ii) paying the exercise price and any
applicable withholding taxes to the Company’s Secretary, stock plan administrator, or such other
person as the Company may designate, together with such additional documents as the Company
may then require.
(b)
By exercising the Grant Notice you agree that, as a condition to any exercise
of your option, the Company may require you to enter into an arrangement providing for the
payment by you to the Company of any tax withholding obligation of the Company arising by
reason of (i) the exercise of your option, (ii) the lapse of any substantial risk of forfeiture to which
the shares of Common Stock are subject at the time of exercise, or (iii) the disposition of shares of
Common Stock acquired upon such exercise.
22.
Transferability. Except as otherwise provided in this Section 9, your option is not
transferable, except by will or by the laws of descent and distribution, and is exercisable during
your life only by you.
6
(a)
Certain Trusts. Upon receiving written permission from the Board or its
duly authorized designee, you may transfer your option to a trust if you are considered to be the
sole beneficial owner (determined under Section 671 of the Code and applicable state law) while
the option is held in the trust. You and the trustee must enter into transfer and other agreements
required by the Company.
(b)
Domestic Relations Orders. Upon receiving written permission from the
Board or its duly authorized designee, and provided that you and the designated transferee enter
into transfer and other agreements required by the Company, you may transfer your option
pursuant to the terms of a domestic relations order, official marital settlement agreement or other
divorce or separation instrument as permitted by Treasury Regulation 1.421-1(b)(2) that contains
the information required by the Company to effectuate the transfer. You are encouraged to discuss
the proposed terms of any division of this option with the Company prior to finalizing the domestic
relations order or marital settlement agreement to help ensure the required information is contained
within the domestic relations order or marital settlement agreement.
(c)
Beneficiary Designation. Upon receiving written permission from the
Board or its duly authorized designee, you may, by delivering written notice to the Company, in a
form approved by the Company and any broker designated by the Company to handle option
exercises, designate a third party who, on your death, will thereafter be entitled to exercise this
option and receive the Common Stock or other consideration resulting from such exercise. In the
absence of such a designation, your executor or administrator of your estate will be entitled to
exercise this option and receive, on behalf of your estate, the Common Stock or other
consideration resulting from such exercise.
23.
Option not a Service Contract. Your option is not an employment or service
contract, and nothing in your option will be deemed to create in any way whatsoever any
obligation on your part to continue in the employ of the Company or an Affiliate, or of the
Company or an Affiliate to continue your employment. In addition, nothing in your option will
obligate the Company or an Affiliate, their respective stockholders, boards of directors, officers or
employees to continue any relationship that you might have as a Director or Consultant for the
Company or an Affiliate.
24.
Withholding Obligations.
(a)
At the time you exercise your option, in whole or in part, and at any time
thereafter as requested by the Company, you hereby authorize withholding from payroll and any
other amounts payable to you, and otherwise agree to make adequate provision for (including by
means of a “same day sale” pursuant to a program developed under Regulation T as promulgated
by the Federal Reserve Board to the extent permitted by the Company), any sums required to
satisfy the federal, state, local and foreign tax withholding obligations of the Company or an
Affiliate, if any, which arise in connection with the exercise of your option.
(b)
Upon your request and subject to approval by the Company, and compliance
with any applicable legal conditions or restrictions, the Company may withhold from fully vested
shares of Common Stock otherwise issuable to you upon the exercise of your option a number of
whole shares of Common Stock having a Fair Market Value, determined by the
7
Company as of the date of exercise, not in excess of the maximum amount of tax permitted to be
withheld by law (or such lower amount as may be necessary to avoid classification of your option
as a liability for financial accounting purposes).
(c)
You may not exercise your option unless the tax withholding obligations of
the Company and/or any Affiliate are satisfied. Accordingly, you may not be able to exercise your
option when desired even though your option is vested, and the Company will have no obligation
to issue a certificate for such shares of Common Stock or release such shares of Common Stock
from any escrow provided for herein, if applicable, unless such obligations are satisfied.
25.
Tax Consequences. You hereby agree that the Company does not have a duty to
design or administer the Plan or its other compensation programs in a manner that minimizes your
tax liabilities. You will not make any claim against the Company, or any of its Officers, Directors,
Employees or Affiliates related to tax liabilities arising from your option or your other
compensation. In particular, you acknowledge that this option is exempt from Section 409A of the
Code only if the exercise price per share specified in the Grant Notice is at least equal to the “fair
market value” per share of the Common Stock on the Date of Grant and there is no other
impermissible deferral of compensation associated with the option.
26.
Notices. Any notices provided for in your option or the Plan will be given in
writing (including electronically) and will be deemed effectively given upon receipt or, in the case
of notices delivered by mail by the Company to you, five (5) days after deposit in the United States
mail, postage prepaid, addressed to you at the last address you provided to the Company. The
Company may, in its sole discretion, decide to deliver any documents related to participation in the
Plan and this option by electronic means or to request your consent to participate in the Plan by
electronic means. By accepting this option, you consent to receive such documents by electronic
delivery and to participate in the Plan through an on-line or electronic system established and
maintained by the Company or another third party designated by the Company.
27.
Governing Plan Document. Your option is subject to all the provisions of the
Plan, the provisions of which are hereby made a part of your option, and is further subject to all
interpretations, amendments, rules and regulations, which may from time to time be promulgated
and adopted pursuant to the Plan. If there is any conflict between the provisions of your option
and those of the Plan, the provisions of the Plan will control. In addition, your option (and any
compensation paid or shares issued under your option) is subject to recoupment in accordance with
The Dodd–Frank Wall Street Reform and Consumer Protection Act and any implementing
regulations thereunder, any clawback policy adopted by the Company and any compensation
recovery policy otherwise required by applicable law.
28.
Other Documents. You hereby acknowledge receipt of and the right to receive a
document providing the information required by Rule 428(b)(1) promulgated under the Securities
Act, which includes the Plan prospectus. In addition, you acknowledge receipt of the Company’s
policy permitting certain individuals to sell shares only during certain “window” periods and the
Company’s insider trading policy, in effect from time to time.
8
29.
Effect on Other Employee Benefit Plans. The value of this option will not be
included as compensation, earnings, salaries, or other similar terms used when calculating your
benefits under any employee benefit plan sponsored by the Company or any Affiliate, except as
such plan otherwise expressly provides. The Company expressly reserves its rights to amend,
modify, or terminate any of the Company’s or any Affiliate’s employee benefit plans.
30.
Voting Rights. You will not have voting or any other rights as a stockholder of the
Company with respect to the shares to be issued pursuant to this option until such shares are issued
to you. Upon such issuance, you will obtain full voting and other rights as a stockholder of the
Company. Nothing contained in this option, and no action taken pursuant to its provisions, will
create or be construed to create a trust of any kind or a fiduciary relationship between you and the
Company or any other person.
31.
Severability. If all or any part of this Option Agreement or the Plan is declared by
any court or governmental authority to be unlawful or invalid, such unlawfulness or invalidity will
not invalidate any portion of this Option Agreement or the Plan not declared to be unlawful or
invalid. Any Section of this Option Agreement (or part of such a Section) so declared to be
unlawful or invalid shall, if possible, be construed in a manner which will give effect to the terms
of such Section or part of a Section to the fullest extent possible while remaining lawful and valid.
32.
Miscellaneous.
(a)
The rights and obligations of the Company under your option will be
transferable to any one or more persons or entities, and all covenants and agreements hereunder
will inure to the benefit of, and be enforceable by the Company’s successors and assigns.
(b)
You agree upon request to execute any further documents or instruments
necessary or desirable in the sole determination of the Company to carry out the purposes or intent
of your option.
(c)
You acknowledge and agree that you have reviewed your option in its
entirety, have had an opportunity to obtain the advice of counsel prior to executing and accepting
your option, and fully understand all provisions of your option.
(d)
This Option Agreement will be subject to all applicable laws, rules, and
regulations, and to such approvals by any governmental agencies or national securities exchanges
as may be required.
(e)
All obligations of the Company under the Plan and this Option Agreement
will be binding on any successor to the Company, whether the existence of such successor is the
result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all
of the business and/or assets of the Company.
* * *
This Option Agreement will be deemed to be signed by you upon the signing by you of the Stock
Option Grant Notice to which it is attached.
9
Attachment II
Amended and Restated 2021 Inducement Plan
10
Attachment III
Notice of Exercise
MetaVia Inc.
545 Concord Avenue, Suite 210
Cambridge, Massachusetts 02138
Attention: Chief Executive Officer
Date of Exercise:
This constitutes notice to MetaVia Inc., a Delaware corporation (the “Company”) under my
stock option that I elect to purchase the below number of shares of Common Stock of the
Company (the “Shares”) for the price set forth below.
Type of option:
Nonstatutory
Stock option dated:
Number of Shares as
to which option is
exercised:
Certificates to be
issued in name of:
Total exercise price:
$
Cash payment delivered
herewith:
$
Value of ________ Shares
delivered herewith1:
$
Value of ________ Shares
pursuant to net exercise2:
$
Regulation T Program
(cashless
exercise3):
$
1 Shares must meet the public trading requirements set forth in the option. Shares must be valued in
accordance with the terms of the option being exercised, and must be owned free and clear of any liens, claims,
encumbrances or security interests. Certificates must be endorsed or accompanied by an executed assignment separate
from certificate.
2 The Company must have established net exercise procedures at the time of exercise, in order to utilize this
payment method.
3 Shares must meet the public trading requirements set forth in the option.
11
By this exercise, I agree (i) to provide such additional documents as you may require
pursuant to the terms of the MetaVia Inc. Amended and Restated 2021 Inducement Plan, and (ii) to
provide for the payment by me to you (in the manner designated by you) of your withholding
obligation, if any, relating to the exercise of this option.
Very truly yours,
Exhibit 10.7
METAVIA INC.
AMENDED AND RESTATED 2022 EQUITY INCENTIVE PLAN
ADOPTED BY THE BOARD OF DIRECTORS: November 8, 2022
APPROVED BY THE STOCKHOLDERS: December 22, 2022
AMENDED BY THE BOARD OF DIRECTORS: November 29, 2024
1.
GENERAL.
(a)
Successor to and Continuation of Prior Plan. The Plan is the successor to and
continuation of the Prior Plan. As of the Effective Date, (i) no additional awards may be granted under the
Prior Plan; (ii) the Prior Plan’s Available Reserve plus any Returning Shares will become available for
issuance pursuant to Awards granted under this Plan; and (iii) all outstanding awards granted under the Prior
Plan will remain subject to the terms of the Prior Plan (except to the extent such outstanding awards result
in Returning Shares that become available for issuance pursuant to Awards granted under this Plan). All
Awards granted under this Plan will be subject to the terms of this Plan.
(b)
Plan Purpose. The Company, by means of the Plan, seeks to secure and retain the
services of Employees, Directors and Consultants, to provide incentives for such persons to exert maximum
efforts for the success of the Company and any Affiliate and to provide a means by which such persons may
be given an opportunity to benefit from increases in value of the Common Stock through the granting of
Awards.
(c)
Available Awards. The Plan provides for the grant of the following Awards:
(i) Incentive Stock Options; (ii) Nonstatutory Stock Options; (iii) SARs; (iv) Restricted Stock Awards;
(v) RSU Awards; (vi) Performance Awards; and (vii) Other Awards.
(d)
Adoption Date; Effective Date. The Plan will come into existence on the
Adoption Date, but no Award may be granted prior to the Effective Date.
2.
SHARES SUBJECT TO THE PLAN.
(a)
Share Reserve. Subject to adjustment in accordance with Section 2(c) and any
adjustments as necessary to implement any Capitalization Adjustments, the aggregate number of shares of
Common Stock that may be issued pursuant to Awards will not exceed the sum of (i) 4,910,073 shares, plus
(ii) the Prior Plan’s Available Reserve, plus (iii) the number of Returning Shares, if any, as such shares
become available from time to time. In addition, subject to any adjustments as necessary to implement any
Capitalization Adjustments, such aggregate number of shares of Common Stock will automatically increase
on January 1st of each year for a period of eight years commencing on January 1, 2025 and ending on (and
including) January 1, 2032, to an amount equal to 10% of the Fully Diluted Shares as of the last day of the
preceding calendar year; provided, however that the Board may act prior to the effective date of any such
annual increase to provide that the increase for such year will be a lesser number of shares of Common
Stock.
(b)
Aggregate Incentive Stock Option Limit. Notwithstanding anything to the
contrary in Section 2(a) and subject to any adjustments as necessary to implement any Capitalization
Adjustments, the aggregate maximum number of shares of Common Stock that may be issued pursuant to
the exercise of Incentive Stock Options is 1,000,000 shares of the Company Stock plus the amount of any
increase in the number of shares that may be available for issuance pursuant to Awards pursuant to Section
2(a), but in no event shall more than 15,000,000 shares of the Company Stock be issued as Incentive Stock
Options.
(c)
Share Reserve Operation.
(i)
Limit Applies to Common Stock Issued Pursuant to Awards. For
clarity, the Share Reserve is a limit on the number of shares of Common Stock that may be issued pursuant
to Awards and does not limit the granting of Awards, except that the Company will keep available at all
times the number of shares of Common Stock reasonably required to satisfy its obligations to issue shares
pursuant to such Awards. Shares may be issued in connection with a merger or acquisition as permitted by,
as applicable, Nasdaq Listing Rule 5635(c), NYSE Listed Company Manual Section 303A.08, NYSE
American Company Guide Section 711 or other applicable rule, and such issuance will not reduce the
number of shares available for issuance under the Plan.
(ii)
Actions that Do Not Constitute Issuance of Common Stock and Do Not
Reduce Share Reserve. The following actions do not result in an issuance of shares under the Plan and
accordingly do not reduce the number of shares subject to the Share Reserve and available for issuance
under the Plan: (1) the expiration or termination of any portion of an Award without the shares covered by
such portion of the Award having been issued; (2) the settlement of any portion of an Award in cash (i.e.,
the Participant receives cash rather than Common Stock); (3) the withholding of shares that would
otherwise be issued by the Company to satisfy the exercise, strike or purchase price of an Award; or (4) the
withholding of shares that would otherwise be issued by the Company to satisfy a tax withholding
obligation in connection with an Award.
(iii)
Reversion of Previously Issued Shares of Common Stock to Share
Reserve. The following shares of Common Stock previously issued pursuant to an Award and accordingly
initially deducted from the Share Reserve will be added back to the Share Reserve and again become
available for issuance under the Plan: (1) any shares that are forfeited back to or repurchased by the
Company because of a failure to meet a contingency or condition required for the vesting of such shares;
(2) any shares that are reacquired by the Company to satisfy the exercise, strike or purchase price of an
Award; and (3) any shares that are reacquired by the Company to satisfy a tax withholding obligation in
connection with an Award.
3.
ELIGIBILITY AND LIMITATIONS.
(a)
Eligible Award Recipients. Subject to the terms of the Plan, Employees, Directors
and Consultants are eligible to receive Awards.
(b)
Specific Award Limitations.
(i)
Limitations on Incentive Stock Option Recipients. Incentive Stock
Options may be granted only to Employees of the Company or a “parent corporation” or “subsidiary
corporation” thereof (as such terms are defined in Sections 424(e) and (f) of the Code).
(ii)
Incentive Stock Option $100,000 Limitation. To the extent that the
aggregate Fair Market Value (determined at the time of grant) of Common Stock with respect to which
Incentive Stock Options are exercisable for the first time by any Optionholder during any calendar year
(under all plans of the Company and any Affiliates) exceeds $100,000 (or such other limit established in the
Code) or otherwise does not comply with the rules governing Incentive Stock Options, the Options or
portions thereof that exceed such limit (according to the order in which they were granted) or otherwise do
not comply with such rules will be treated as Nonstatutory Stock Options, notwithstanding any contrary
provision of the applicable Option Agreement(s).
(iii)
Limitations on Incentive Stock Options Granted to Ten Percent
Stockholders. A Ten Percent Stockholder may not be granted an Incentive Stock Option unless (i) the
exercise price of such Option is at least 110% of the Fair Market Value on the date of grant of such Option
and (ii) the Option is not exercisable after the expiration of five years from the date of grant of such Option.
(iv)
Limitations on Nonstatutory Stock Options and SARs. Nonstatutory
Stock Options and SARs may not be granted to Employees, Directors and Consultants who are providing
Continuous Service only to any “parent” of the Company (as such term is defined in Rule 405) unless the
stock underlying such Awards is treated as “service recipient stock” under Section 409A because the
Awards are granted pursuant to a corporate transaction (such as a spin off transaction) or unless such
Awards otherwise comply with the distribution requirements of Section 409A.
(c)
Aggregate Incentive Stock Option Limit. The aggregate maximum number of
shares of the Common Stock that may be issued pursuant to the exercise of Incentive Stock Options is the
number of shares specified in Section 2(b).
(d)
Non-Employee Director Compensation Limit. The aggregate value of all
compensation granted or paid, as applicable, to any individual for service as a Non-Employee Director with
respect to any calendar year, including Awards granted and cash fees paid by the Company to such Non-
Employee Director, will not exceed (i) $750,000 in total value or (ii) in the event such Non-Employee
Director is first appointed or elected to the Board during such calendar year, $1,000,000 in total value, in
each case calculating the value of any equity awards based on the grant date fair value of such equity
awards for financial reporting purposes. The limitations in this Section 3(d) shall apply beginning with the
first calendar year that commences following the Effective Date.
4.
OPTIONS AND STOCK APPRECIATION RIGHTS.
Each Option and SAR will have such terms and conditions as determined by the Board. Each
Option will be designated in writing as an Incentive Stock Option or Nonstatutory Stock Option at the time
of grant; provided, however, that if an Option is not so designated, then such Option will be a Nonstatutory
Stock Option. The shares purchased upon exercise of each type of Option will be accounted for separately.
Each SAR will be denominated in shares of the Common Stock equivalents. The terms and conditions of
separate Options and SARs need not be identical; provided, however, that each Option Agreement and SAR
Agreement will conform (through incorporation of provisions hereof by reference in the Award Agreement
or otherwise) to the substance of each of the following provisions:
(a)
Term. Subject to Section 3(b) regarding Incentive Stock Options granted to Ten
Percent Stockholders, no Option or SAR will be exercisable after the expiration of ten years from the date
of grant of such Award or such shorter period specified in the Award Agreement.
(b)
Exercise or Strike Price. Subject to Section 3(b) regarding Ten Percent
Stockholders, the exercise or strike price of each Option or SAR will not be less than 100% of the Fair
Market Value on the date of grant of such Award. Notwithstanding the foregoing, an Option or SAR may be
granted with an exercise or strike price lower than 100% of the Fair Market Value on the date of grant of
such Award if such Award is granted pursuant to an assumption of or substitution for another option or stock
appreciation right pursuant to a Corporate Transaction and in a manner consistent with the provisions of
Sections 409A and, if applicable, 424(a) of the Code.
(c)
Exercise Procedure and Payment of Exercise Price for Options. In order to
exercise an Option, the Participant must provide notice of exercise to the Plan Administrator in
accordance with the procedures specified in the Option Agreement or otherwise provided by the Company.
The Board has the authority to grant Options that do not permit all of the following methods of payment (or
otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the
Company to utilize a particular method of payment. The exercise price of an Option may be paid, to the
extent permitted by Applicable Law and as determined by the Board, by one or more of the following
methods of payment to the extent set forth in the Option Agreement:
(i)
by cash or check, wire, bank draft or money order (or an electronic
equivalent thereof) payable to the Company;
(ii)
pursuant to a “cashless exercise” program developed under Regulation T as
promulgated by the Federal Reserve Board that, prior to the issuance of the Common Stock subject to the
Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable
instructions to pay the exercise price to the Company from the sales proceeds;
(iii)
by delivery to the Company (either by actual delivery or attestation) of
shares of Common Stock that are already owned by the Participant free and clear of any liens, claims,
encumbrances or security interests, with a Fair Market Value on the date of exercise that does not exceed the
exercise price, provided that (1) at the time of exercise the Common Stock is publicly traded, (2) any
remaining balance of the exercise price not satisfied by such delivery is paid by the Participant in cash or
other permitted form of payment, (3) such delivery would not violate any Applicable Law or agreement
restricting the redemption of the Common Stock, (4) any certificated shares are endorsed or accompanied
by an executed assignment separate from certificate, and (5) such shares have been held by the Participant
for any minimum period necessary to avoid adverse accounting treatment as a result of such delivery;
(iv)
by a “net exercise” arrangement pursuant to which the Company will
reduce the number of shares of Common Stock issuable upon exercise by the largest whole number of
shares with a Fair Market Value on the date of exercise that does not exceed the exercise price, provided
that (1) such shares used to pay the exercise price will not be exercisable thereafter and (2) any remaining
balance of the exercise price not satisfied by such net exercise is paid by the Participant in cash or other
permitted form of payment; or
(v)
in any other form of consideration that may be acceptable to the Board and
permissible under Applicable Law.
(d)
Exercise Procedure and Payment of Appreciation Distribution for SARs. In
order to exercise any SAR, the Participant must provide notice of exercise to the Plan Administrator in
accordance with the SAR Agreement. The appreciation distribution payable to a Participant upon the
exercise of a SAR will not be greater than an amount equal to the excess of (i) the aggregate Fair Market
Value on the date of exercise of a number of shares of the Common Stock equal to the number of the
Common Stock equivalents that are vested and being exercised under such SAR, over (ii) the strike price of
such SAR. Such appreciation distribution may be paid to the Participant in the form of the Common Stock
or cash (or any combination of the Common Stock and cash) or in any other form of payment, as
determined by the Board and specified in the SAR Agreement.
(e)
Transferability. Options and SARs may not be transferred to third party financial
institutions for value. The Board may impose such additional limitations on the transferability of an Option
or SAR as it determines. In the absence of any such determination by the Board, the following restrictions
on the transferability of Options and SARs will apply, provided that except as explicitly provided herein,
neither an Option nor a SAR may be transferred for consideration and provided, further,
that if an Option is an Incentive Stock Option, such Option may be deemed to be a Nonstatutory Stock
Option as a result of such transfer:
(i)
Restrictions on Transfer. An Option or SAR will not be transferable,
except by will or by the laws of descent and distribution, and will be exercisable during the lifetime of the
Participant only by the Participant; provided, however, that the Board may permit transfer of an Option or
SAR in a manner that is not prohibited by applicable tax and securities laws upon the Participant’s request,
including to a trust if the Participant is considered to be the sole beneficial owner of such trust (as
determined under Section 671 of the Code and applicable state law) while such Option or SAR is held in
such trust, provided that the Participant and the trustee enter into a transfer and other agreements required
by the Company.
(ii)
Domestic Relations Orders. Notwithstanding the foregoing, subject to the
execution of transfer documentation in a format acceptable to the Company and subject to the approval of
the Board or a duly authorized Officer, an Option or SAR may be transferred pursuant to a domestic
relations order.
(f)
Vesting. The Board may impose such restrictions on or conditions to the vesting
and/or exercisability of an Option or SAR as determined by the Board. Except as otherwise provided in the
Award Agreement or other written agreement between a Participant and the Company or an Affiliate,
vesting of Options and SARs will cease upon termination of the Participant’s Continuous Service.
(g)
Termination of Continuous Service for Cause. Except as explicitly otherwise
provided in the Award Agreement or other written agreement between a Participant and the Company or an
Affiliate, if a Participant’s Continuous Service is terminated for Cause, the Participant’s Options and SARs
will terminate and be forfeited immediately upon such termination of Continuous Service, and the
Participant will be prohibited from exercising any portion (including any vested portion) of such Awards on
and after the date of such termination of Continuous Service and the Participant will have no further right,
title or interest in such forfeited Award, the shares of Common Stock subject to the forfeited Award, or any
consideration in respect of the forfeited Award.
(h)
Post-Termination Exercise Period Following Termination of Continuous
Service for Reasons Other than Cause. Subject to Section 4(i), if a Participant’s Continuous Service
terminates for any reason other than for Cause, the Participant may exercise their Option or SAR to the
extent vested, but only within the following period of time or, if applicable, such other period of time
provided in the Award Agreement or other written agreement between a Participant and the Company or an
Affiliate; provided, however, that in no event may such Award be exercised after the expiration of its
maximum term (as set forth in Section 4(a)):
(i)
three months following the date of such termination if such termination is a
termination without Cause (other than any termination due to the Participant’s Disability or death);
(ii)
12 months following the date of such termination if such termination is due
to the Participant’s Disability;
(iii)
18 months following the date of such termination if such termination is due
to the Participant’s death; or
(iv)
18 months following the date of the Participant’s death if such death occurs
following the date of such termination but during the period such Award is otherwise exercisable (as
provided in (i) or (ii) above).
Following the date of such termination, to the extent the Participant does not exercise such Award
within the applicable Post-Termination Exercise Period (or, if earlier, prior to the expiration of the
maximum term of such Award), such unexercised portion of the Award will terminate, and the Participant
will have no further right, title or interest in the terminated Award, the shares of Common Stock subject to
the terminated Award, or any consideration in respect of the terminated Award.
(i)
Restrictions on Exercise; Extension of Exercisability. A Participant may not
exercise an Option or SAR at any time that the issuance of shares of Common Stock upon such exercise
would violate Applicable Law. Except as otherwise provided in the Award Agreement or other written
agreement between a Participant and the Company or an Affiliate, if a Participant’s Continuous Service
terminates for any reason other than for Cause and, at any time during the last thirty days of the applicable
Post-Termination Exercise Period: (i) the exercise of the Participant’s Option or SAR would be prohibited
solely because the issuance of shares of Common Stock upon such exercise would violate Applicable Law,
or (ii) the immediate sale of any shares of Common Stock issued upon such exercise would violate the
Company’s Trading Policy, then the applicable Post-Termination Exercise Period will be extended to the
last day of the calendar month that commences following the date the Award would otherwise expire, with
an additional extension of the exercise period to the last day of the next calendar month to apply if any of
the foregoing restrictions apply at any time during such extended exercise period, generally without
limitation as to the maximum permitted number of extensions; provided, however, that in no event may
such Award be exercised after the expiration of its maximum term (as set forth in Section 4(a)).
(j)
Non-Exempt Employees. No Option or SAR, whether or not vested, granted to an
Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as
amended, will be first exercisable for any shares of Common Stock until at least six months following the
date of grant of such Award. Notwithstanding the foregoing, in accordance with the provisions of the
Worker Economic Opportunity Act, any vested portion of such Award may be exercised earlier than six
months following the date of grant of such Award in the event of (i) such Participant’s death or Disability,
(ii) a Corporate Transaction in which such Award is not assumed, continued or substituted, (iii) a Change in
Control, or (iv) such Participant’s retirement (as such term may be defined in the Award Agreement or
another applicable agreement or, in the absence of any such definition, in accordance with the Company’s
then current employment policies and guidelines). This Section 4(j) is intended to operate so that any
income derived by a non-exempt employee in connection with the exercise or vesting of an Option or SAR
will be exempt from their regular rate of pay.
(k)
Whole Shares. Options and SARs may be exercised only with respect to whole
shares of the Common Stock or their equivalents.
5.
AWARDS OTHER THAN OPTIONS AND STOCK APPRECIATION RIGHTS.
(a)
Restricted Stock Awards and RSU Awards. Each Restricted Stock Award and
RSU Award will have such terms and conditions as determined by the Board; provided, however, that each
Restricted Stock Award Agreement and RSU Award Agreement will conform (through incorporation of the
provisions hereof by reference in the Award Agreement or otherwise) to the substance of each of the
following provisions:
(i)
Form of Award.
(1)
RSAs. To the extent consistent with the Company’s Bylaws, at the
Board’s election, shares of the Common Stock subject to a Restricted Stock Award may be (A) held in book
entry form subject to the Company’s instructions until such shares become vested or any other
restrictions lapse, or (B) evidenced by a certificate, which certificate will be held in such form and manner
as determined by the Board. Unless otherwise determined by the Board, a Participant will have voting and
other rights as a stockholder of the Company with respect to any shares subject to a Restricted Stock Award.
(2)
RSUs. An RSU Award represents a Participant’s right to be issued
on a future date the number of shares of the Common Stock that is equal to the number of restricted stock
units subject to the RSU Award. As a holder of an RSU Award, a Participant is an unsecured creditor of the
Company with respect to the Company’s unfunded obligation, if any, to issue shares of the Common Stock
in settlement of such Award and nothing contained in the Plan or any RSU Agreement, and no action taken
pursuant to its provisions, will create or be construed to create a trust of any kind or a fiduciary relationship
between a Participant and the Company or an Affiliate or any other person. A Participant will not have
voting or any other rights as a stockholder of the Company with respect to any RSU Award (unless and until
shares are actually issued in settlement of a vested RSU Award).
(ii)
Consideration.
(1)
RSA. A Restricted Stock Award may be granted in consideration
for (A) cash or check, wire, bank draft or money order payable to the Company, (B) past services to the
Company or an Affiliate, or (C) any other form of consideration (including future services)as the Board may
determine and permissible under Applicable Law.
(2)
RSU. Unless otherwise determined by the Board at the time of
grant, an RSU Award will be granted in consideration for the Participant’s services to the Company or an
Affiliate, such that the Participant will not be required to make any payment to the Company (other than
such services) with respect to the grant or vesting of the RSU Award, or the issuance of any shares of the
Common Stock pursuant to the RSU Award. If, at the time of grant, the Board determines that any
consideration must be paid by the Participant (in a form other than the Participant’s services to the Company
or an Affiliate) upon the issuance of any shares of the Common Stock in settlement of the RSU Award, such
consideration may be paid in any form of consideration as the Board may determine and permissible under
Applicable Law.
(iii)
Vesting. The Board may impose such restrictions on or conditions to the
vesting of a Restricted Stock Award or RSU Award as determined by the Board. Except as otherwise
provided in the Award Agreement or other written agreement between a Participant and the Company or an
Affiliate, vesting of Restricted Stock Awards and RSU Awards will cease upon termination of the
Participant’s Continuous Service.
(iv)
Termination of Continuous Service. Except as otherwise provided in the
Award Agreement or other written agreement between a Participant and the Company or an Affiliate, if a
Participant’s Continuous Service terminates for any reason, (1) the Company may receive through a
forfeiture condition or a repurchase right any or all of the shares of the Common Stock held by the
Participant under their Restricted Stock Award that have not vested as of the date of such termination as set
forth in the Restricted Stock Award Agreement and (2) any portion of their RSU Award that has not vested
will be forfeited upon such termination and the Participant will have no further right, title or interest in the
RSU Award, the shares of the Common Stock issuable pursuant to the RSU Award, or any consideration in
respect of the RSU Award.
(v)
Dividends and Dividend Equivalents. Dividends or dividend equivalents
may be paid or credited, as applicable, with respect to any shares of the Common Stock
subject to a Restricted Stock Award or RSU Award, as determined by the Board and specified in the Award
Agreement).
(vi)
Settlement of RSU Awards. An RSU Award may be settled by the
issuance of shares of the Common Stock or cash (or any combination thereof) or in any other form of
payment, as determined by the Board and specified in the RSU Award Agreement. At the time of grant, the
Board may determine to impose such restrictions or conditions that delay such delivery to a date following
the vesting of the RSU Award.
(b)
Performance Awards. With respect to any Performance Award, the length of any
Performance Period, the Performance Goals to be achieved during the Performance Period, the other terms
and conditions of such Award, and the measure of whether and to what degree such Performance Goals
have been attained will be determined by the Board.
(c)
Other Awards. Other forms of Awards valued in whole or in part by reference to,
or otherwise based on, the Common Stock, including the appreciation in value thereof (e.g., options or stock
rights with an exercise price or strike price less than 100% of the Fair Market Value at the time of grant)
may be granted either alone or in addition to Awards provided for under Section 4 and the preceding
provisions of this Section 5. Subject to the provisions of the Plan, the Board will have sole and complete
discretion to determine the persons to whom and the time or times at which such Other Awards will be
granted, the number of shares of the Common Stock (or the cash equivalent thereof) to be granted pursuant
to such Other Awards and all other terms and conditions of such Other Awards.
6.
ADJUSTMENTS UPON CHANGES IN COMMON STOCK; OTHER CORPORATE
EVENTS.
(a)
Capitalization Adjustments. In the event of a Capitalization Adjustment, the
Board shall appropriately and proportionately adjust: (i) the class(es) and maximum number of shares of the
Common Stock subject to the Plan and the maximum number of shares by which the Share Reserve may
annually increase pursuant to Section 2(a); (ii) the class(es) and maximum number of shares that may be
issued pursuant to the exercise of Incentive Stock Options pursuant to Section 2(b); and (iii) the class(es)
and number of securities and exercise price, strike price or purchase price of the Common Stock subject to
outstanding Awards. The Board shall make such adjustments, and its determination shall be final, binding
and conclusive. Notwithstanding the foregoing, no fractional shares or rights for fractional shares of the
Common Stock shall be created in order to implement any Capitalization Adjustment. The Board shall
determine an appropriate equivalent benefit, if any, for any fractional shares or rights to fractional shares
that might be created by the adjustments referred to in the preceding provisions of this Section 6.
(b)
Dissolution or Liquidation. Except as otherwise provided in the Award
Agreement, in the event of a dissolution or liquidation of the Company, all outstanding Awards (other than
Awards consisting of vested and outstanding shares of the Common Stock not subject to a forfeiture
condition or the Company’s right of repurchase) will terminate immediately prior to the completion of such
dissolution or liquidation, and the shares of the Common Stock subject to the Company’s repurchase rights
or subject to a forfeiture condition may be repurchased or reacquired by the Company notwithstanding the
fact that the holder of such Award is providing Continuous Service; provided, however, that the Board may
determine to cause some or all Awards to become fully vested, exercisable and/or no longer subject to
repurchase or forfeiture (to the extent such Awards have not previously expired or terminated) before the
dissolution or liquidation is completed but contingent on its completion.
(c)
Corporate Transaction. The following provisions will apply to Awards in the
event of a Corporate Transaction, except as set forth in Section 11, unless otherwise provided in the
instrument evidencing the Award or any other written agreement between the Company or any Affiliate and
the Participant or unless otherwise expressly provided by the Board at the time of grant of an Award.
(i)
Awards May Be Assumed. In the event of a Corporate Transaction, any
surviving or acquiring corporation (or the surviving or acquiring corporation’s parent company) may
assume or continue any or all Awards outstanding under the Plan or may substitute similar awards for
Awards outstanding under the Plan (including but not limited to awards to acquire the same consideration
paid to the stockholders of the Company pursuant to the Corporate Transaction), and any reacquisition or
repurchase rights held by the Company in respect of the Common Stock issued pursuant to Awards may be
assigned by the Company to the successor of the Company (or the successor’s parent company, if any), in
connection with such Corporate Transaction. A surviving or acquiring corporation (or its applicable parent)
may choose to assume or continue only a portion of an Award or substitute a similar award for only a
portion of an Award, or may choose to assume or continue the Awards held by some, but not all
Participants. The terms of any assumption, continuation or substitution will be set by the Board.
(ii)
Awards Held by Current Participants. In the event of a Corporate
Transaction in which the surviving or acquiring corporation (or its parent company) does not assume or
continue outstanding Awards or substitute similar awards for such outstanding Awards, then with respect to
Awards that have not been assumed, continued or substituted and that are held by Participants whose
Continuous Service has not terminated prior to the effective time of the Corporate Transaction (referred to
as the “Current Participants”), the vesting of such Awards (and, with respect to Options and Stock
Appreciation Rights, the time when such Awards may be exercised) will be accelerated in full to a date prior
to the effective time of such Corporate Transaction (contingent upon the effectiveness of the Corporate
Transaction) that the Board determines (or, if the Board does not determine such a date, to the date that is
five (5) days prior to the effective time of the Corporate Transaction). Awards so accelerated will terminate
if not exercised (if applicable) at or prior to the effective time of the Corporate Transaction, and any
reacquisition or repurchase rights held by the Company with respect to such Awards will lapse (contingent
upon the effectiveness of the Corporate Transaction). With respect to the vesting of Performance Awards
that (a) will accelerate upon the occurrence of a Corporate Transaction pursuant to this subsection (ii) and
(b) have multiple vesting levels depending on the level of performance, unless otherwise provided in the
Award Agreement or unless otherwise provided by the Board, the vesting of such Performance Awards will
accelerate at 100% of the target level upon the occurrence of a Corporate Transaction in which the Awards
are not assumed, continued or substituted for in accordance with Section 6(c)(i). With respect to the vesting
of cash-settled Awards that will accelerate upon the occurrence of a Corporate Transaction pursuant to this
subsection (ii), such cash payment will be made no later than 30 days following the occurrence of the
Corporate Transaction or such later date as required by Section 409A of the Code.
(iii)
Awards Held by Persons other than Current Participants. In the event
of a Corporate Transaction in which the surviving or acquiring corporation (or its parent company) does not
assume or continue such outstanding Awards or substitute similar awards for such outstanding Awards, then
with respect to Awards that have not been assumed, continued or substituted and that are held by persons
other than Current Participants, such Awards will terminate if not exercised (if applicable) prior to the
occurrence of the Corporate Transaction; provided, however, that any reacquisition or repurchase rights held
by the Company with respect to such Awards will not terminate and may continue to be exercised
notwithstanding the Corporate Transaction.
(iv)
Payment for Awards in Lieu of Exercise. Notwithstanding the foregoing,
in the event an Award will terminate if not exercised prior to the effective time of a Corporate
Transaction, the Board may provide, in its sole discretion, that the holder of such Award may not exercise
such Award but will receive a payment, in such form as may be determined by the Board, equal in value, at
the effective time, to the excess, if any, of (1) the value of the property the Participant would have received
upon the exercise of the Award (including, at the discretion of the Board, any unvested portion of such
Award), over (2) any exercise price payable by such holder in connection with such exercise.
(d)
Appointment of Stockholder Representative. As a condition to the receipt of an
Award under this Plan, a Participant will be deemed to have agreed that the Award will be subject to the
terms of any agreement governing a Corporate Transaction involving the Company, including, without
limitation, a provision for the appointment of a stockholder representative that is authorized to act on the
Participant’s behalf with respect to any escrow, indemnities and any contingent consideration.
(e)
No Restriction on Right to Undertake Transactions. The grant of any Award
under the Plan and the issuance of shares pursuant to any Award does not affect or restrict in any way the
right or power of the Company or the stockholders of the Company to make or authorize any adjustment,
recapitalization, reorganization or other change in the Company’s capital structure or its business, any
merger or consolidation of the Company, any issue of stock or of options, rights or options to purchase stock
or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the
Common Stock or the rights thereof or which are convertible into or exchangeable for the Common Stock,
or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or
business, or any other corporate act or proceeding, whether of a similar character or otherwise.
7.
ADMINISTRATION.
(a)
Administration by Board. The Board will administer the Plan unless and until the
Board delegates administration of the Plan to a Committee or Committees, as provided in subsection
(c) below.
(b)
Powers of Board. The Board will have the power, subject to, and within the
limitations of, the express provisions of the Plan:
(i)
To determine from time to time (1) which of the persons eligible under the
Plan will be granted Awards; (2) when and how each Award will be granted; (3) what type or combination
of types of Award will be granted; (4) the provisions of each Award granted (which need not be identical),
including the time or times when a person will be permitted to receive an issuance of the Common Stock or
other payment pursuant to an Award; (5) the number of shares of the Common Stock or cash equivalent
with respect to which an Award will be granted to each such person; (6) the Fair Market Value applicable to
an Award; and (7) the terms of any Performance Award that is not valued in whole or in part by reference to,
or otherwise based on, the Common Stock, including the amount of cash payment or other property that
may be earned and the timing of payment.
(ii)
To construe and interpret the Plan and Awards granted under it, and to
establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this
power, may correct any defect, omission or inconsistency in the Plan or in any Award Agreement, in a
manner and to the extent it deems necessary or expedient to make the Plan or Award fully effective.
(iii)
To settle all controversies regarding the Plan and Awards granted under it.
(iv)
To accelerate the time at which an Award may first be exercised or the time
during which an Award or any part thereof will vest, notwithstanding the provisions in the Award
Agreement stating the time at which it may first be exercised or the time during which it will vest.
(v)
To prohibit the exercise of any Option, SAR or other exercisable Award
during a period of up to 30 days prior to the consummation of any pending stock dividend, stock split,
combination or exchange of shares, merger, consolidation or other distribution (other than normal cash
dividends) of Company assets to stockholders, or any other change affecting the shares of the Common
Stock or the share price of the Common Stock including any Corporate Transaction, for reasons of
administrative convenience.
(vi)
To suspend or terminate the Plan at any time. Suspension or termination of
the Plan will not Materially Impair rights and obligations under any Award granted while the Plan is in
effect except with the written consent of the affected Participant.
(vii)
To amend the Plan in any respect the Board deems necessary or advisable;
provided, however, that stockholder approval will be required for any amendment to the extent required by
Applicable Law. Except as provided above, rights under any Award granted before amendment of the Plan
will not be Materially Impaired by any amendment of the Plan unless (1) the Company requests the consent
of the affected Participant, and (2) such Participant consents in writing.
(viii)
To submit any amendment to the Plan for stockholder approval.
(ix)
To approve forms of Award Agreements for use under the Plan and to
amend the terms of any one or more Awards, including, but not limited to, amendments to provide terms
more favorable to the Participant than previously provided in the Award Agreement, subject to any specified
limits in the Plan that are not subject to Board discretion; provided however, that, a Participant’s rights
under any Award will not be Materially Impaired by any such amendment unless (1) the Company requests
the consent of the affected Participant, and (2) such Participant consents in writing.
(x)
Generally, to exercise such powers and to perform such acts as the Board
deems necessary or expedient to promote the best interests of the Company and that are not in conflict with
the provisions of the Plan or Awards.
(xi)
To adopt such procedures and sub-plans as are necessary or appropriate to
permit and facilitate participation in the Plan by, or take advantage of specific tax treatment for Awards
granted to, Employees, Directors or Consultants who are foreign nationals or employed outside the United
States (provided that Board approval will not be necessary for immaterial modifications to the Plan or any
Award Agreement to ensure or facilitate compliance with the laws of the relevant foreign jurisdiction).
(xii)
To effect, at any time and from time to time, subject to the consent of any
Participant whose Award is Materially Impaired by such action, (1) the reduction of the exercise price (or
strike price) of any outstanding Option or SAR; (2) the cancellation of any outstanding Option or SAR and
the grant in substitution therefor of (A) a new Option, SAR, Restricted Stock Award, RSU Award or Other
Award, under the Plan or another equity plan of the Company, covering the same or a different number of
shares of the Common Stock, (B) cash and/or (C) other valuable consideration (as determined by the
Board); or (3) any other action that is treated as a repricing under generally accepted accounting principles.
(c)
Delegation to Committee.
(i)
General. The Board may delegate some or all of the administration of the
Plan to a Committee or Committees. If administration of the Plan is delegated to a Committee, the
Committee will have, in connection with the administration of the Plan, the powers theretofore possessed by
the Board that have been delegated to the Committee, including the power to delegate to another Committee
or a subcommittee of the Committee any of the administrative powers the Committee is authorized to
exercise (and references in this Plan to the Board will thereafter be to the Committee or subcommittee),
subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted
from time to time by the Board. Each Committee may retain the authority to concurrently administer the
Plan with Committee or subcommittee to which it has delegated its authority hereunder and may, at any
time, revest in such Committee some or all of the powers previously delegated. The Board may retain the
authority to concurrently administer the Plan with any Committee and may, at any time, revest in the Board
some or all of the powers previously delegated.
(ii)
Rule 16b-3 Compliance. To the extent an Award is intended to qualify for
the exemption from Section 16(b) of the Exchange Act that is available under Rule 16b-3 under the
Exchange Act, the Award will be granted by the Board or a Committee that consists solely of two or more
Non-Employee Directors, as determined under Rule 16b-3(b)(3) under the Exchange Act and thereafter any
action establishing or modifying the terms of the Award will be approved by the Board or a Committee
meeting such requirements to the extent necessary for such exemption to remain available.
(d)
Effect of Board’s Decision. All determinations, interpretations and constructions
made by the Board or any Committee in good faith will not be subject to review by any person and will be
final, binding and conclusive on all persons.
(e)
Delegation to an Officer. The Board or any Committee may delegate to one or
more Officers the authority to do one or both of the following (i) designate Employees who are not Officers
to be recipients of Options and SARs (and, to the extent permitted by Applicable Law, other types of
Awards) and, to the extent permitted by Applicable Law, the terms thereof, and (ii) determine the number of
shares of the Common Stock to be subject to such Awards granted to such Employees; provided, however,
that the resolutions or charter adopted by the Board or any Committee evidencing such delegation will
specify the total number of shares of the Common Stock that may be subject to the Awards granted by such
Officer and that such Officer may not grant an Award to himself or herself. Any such Awards will be
granted on the applicable form of Award Agreement most recently approved for use by the Board or the
Committee, unless otherwise provided in the resolutions approving the delegation authority.
Notwithstanding anything to the contrary herein, neither the Board nor any Committee may delegate to an
Officer who is acting solely in the capacity of an Officer (and not also as a Director) the authority to
determine the Fair Market Value.
8.
TAX WITHHOLDING.
(a)
Withholding Authorization. As a condition to acceptance of any Award under the
Plan, a Participant authorizes withholding from payroll and any other amounts payable to such Participant,
and otherwise agrees to make adequate provision for (including), any sums required to satisfy any U.S.
federal, state, local and/or foreign tax or social insurance contribution withholding obligations of the
Company or an Affiliate, if any, which arise in connection with the exercise, vesting or settlement of such
Award, as applicable. Accordingly, a Participant may not be able to exercise an Award even though the
Award is vested, and the Company shall have no obligation to issue shares of the Common Stock subject to
an Award, unless and until such obligations are satisfied.
(b)
Satisfaction of Withholding Obligation. To the extent permitted by the terms of
an Award Agreement, the Company may, in its sole discretion, satisfy any U.S. federal, state, local and/or
foreign tax or social insurance withholding obligation relating to an Award by any of the following means
or by a combination of such means: (i) causing the Participant to tender a cash payment; (ii) withholding
shares of the Common Stock from the shares of the Common Stock issued or otherwise issuable to the
Participant in connection with the Award; (iii) withholding cash from an Award settled in cash;
(iv) withholding payment from any amounts otherwise payable to the Participant; (v) by allowing a
Participant to effectuate a “cashless exercise” pursuant to a program developed under Regulation T as
promulgated by the Federal Reserve Board; or (vi) by such other method as may be set forth in the Award
Agreement.
(c)
No Obligation to Notify or Minimize Taxes; No Liability to Claims. Except as
required by Applicable Law the Company has no duty or obligation to any Participant to advise such holder
as to the time or manner of exercising such Award. Furthermore, the Company has no duty or obligation to
warn or otherwise advise such holder of a pending termination or expiration of an Award or a possible
period in which the Award may not be exercised. The Company has no duty or obligation to minimize the
tax consequences of an Award to the holder of such Award and will not be liable to any holder of an Award
for any adverse tax consequences to such holder in connection with an Award. As a condition to accepting
an Award under the Plan, each Participant (i) agrees to not make any claim against the Company, or any of
its Officers, Directors, Employees or Affiliates related to tax liabilities arising from such Award or other
Company compensation and (ii) acknowledges that such Participant was advised to consult with their own
personal tax, financial and other legal advisors regarding the tax consequences of the Award and has either
done so or knowingly and voluntarily declined to do so. Additionally, each Participant acknowledges any
Option or SAR granted under the Plan is exempt from Section 409A only if the exercise or strike price is at
least equal to the “fair market value” of the Common Stock on the date of grant as determined by the
Internal Revenue Service and there is no other impermissible deferral of compensation associated with the
Award. Additionally, as a condition to accepting an Option or SAR granted under the Plan, each Participant
agrees not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates in
the event that the Internal Revenue Service asserts that such exercise price or strike price is less than the
“fair market value” of the Common Stock on the date of grant as subsequently determined by the Internal
Revenue Service.
(d)
Withholding Indemnification. As a condition to accepting an Award under the
Plan, in the event that the amount of the Company’s and/or its Affiliate’s withholding obligation in
connection with such Award was greater than the amount actually withheld by the Company and/or its
Affiliates, each Participant agrees to indemnify and hold the Company and/or its Affiliates harmless from
any failure by the Company and/or its Affiliates to withhold the proper amount.
9.
MISCELLANEOUS.
(a)
Source of Shares. The stock issuable under the Plan will be shares of authorized
but unissued or reacquired shares of the Common Stock, including shares repurchased by the Company on
the open market or otherwise.
(b)
Use of Proceeds from Sales of the Common Stock. Proceeds from the sale of
shares of the Common Stock pursuant to Awards will constitute general funds of the Company.
(c)
Corporate Action Constituting Grant of Awards. Corporate action constituting a
grant by the Company of an Award to any Participant will be deemed completed as of the date of such
corporate action, unless otherwise determined by the Board, regardless of when the instrument, certificate,
or letter evidencing the Award is communicated to, or actually received or accepted by, the Participant. In
the event that the corporate records (e.g., Board consents, resolutions or minutes) documenting the
corporate action approving the grant contain terms (e.g., exercise price, vesting
schedule or number of shares) that are inconsistent with those in the Award Agreement or related grant
documents as a result of a clerical error in the Award Agreement or related grant documents, the corporate
records will control and the Participant will have no legally binding right to the incorrect term in the Award
Agreement or related grant documents.
(d)
Stockholder Rights. No Participant will be deemed to be the holder of, or to have
any of the rights of a holder with respect to, any shares of the Common Stock subject to such Award unless
and until (i) such Participant has satisfied all requirements for exercise of the Award pursuant to its terms, if
applicable, and (ii) the issuance of the Common Stock subject to such Award is reflected in the records of
the Company.
(e)
No Employment or Other Service Rights. Nothing in the Plan, any Award
Agreement or any other instrument executed thereunder or in connection with any Award granted pursuant
thereto will confer upon any Participant any right to continue to serve the Company or an Affiliate in the
capacity in effect at the time the Award was granted or affect the right of the Company or an Affiliate to
terminate at will and without regard to any future vesting opportunity that a Participant may have with
respect to any Award (i) the employment of an Employee with or without notice and with or without cause,
(ii) the service of a Consultant pursuant to the terms of such Consultant’s agreement with the Company or
an Affiliate, or (iii) the service of a Director pursuant to the Bylaws of the Company or an Affiliate, and any
applicable provisions of the corporate law of the state or foreign jurisdiction in which the Company or the
Affiliate is incorporated, as the case may be. Further, nothing in the Plan, any Award Agreement or any
other instrument executed thereunder or in connection with any Award will constitute any promise or
commitment by the Company or an Affiliate regarding the fact or nature of future positions, future work
assignments, future compensation or any other term or condition of employment or service or confer any
right or benefit under the Award or the Plan unless such right or benefit has specifically accrued under the
terms of the Award Agreement and/or Plan.
(f)
Change in Time Commitment. In the event a Participant’s regular level of time
commitment in the performance of their services for the Company and any Affiliates is reduced (for
example, and without limitation, if the Participant is an Employee of the Company and the Employee has a
change in status from a full-time Employee to a part-time Employee or takes an extended leave of absence)
after the date of grant of any Award to the Participant, the Board may determine, to the extent permitted by
Applicable Law, to (i) make a corresponding reduction in the number of shares or cash amount subject to
any portion of such Award that is scheduled to vest or become payable after the date of such change in time
commitment, and (ii) in lieu of or in combination with such a reduction, extend the vesting or payment
schedule applicable to such Award. In the event of any such reduction, the Participant will have no right
with respect to any portion of the Award that is so reduced or extended.
(g)
Execution of Additional Documents. As a condition to accepting an Award under
the Plan, the Participant agrees to execute any additional documents or instruments necessary or desirable,
as determined in the Plan Administrator’s sole discretion, to carry out the purposes or intent of the Award,
or facilitate compliance with securities and/or other regulatory requirements, in each case at the Plan
Administrator’s request.
(h)
Electronic Delivery and Participation. Any reference herein or in an Award
Agreement to a “written” agreement or document will include any agreement or document delivered
electronically, filed publicly at www.sec.gov (or any successor website thereto) or posted on the Company’s
intranet (or other shared electronic medium controlled by the Company to which the Participant has access).
By accepting any Award the Participant consents to receive documents by electronic delivery and to
participate in the Plan through any on-line electronic system established and maintained by the Plan
Administrator or another third party selected by the Plan Administrator. The form
of delivery of any the Common Stock (e.g., a stock certificate or electronic entry evidencing such shares)
shall be determined by the Company.
(i)
Clawback/Recovery. All Awards granted under the Plan will be subject to
recoupment in accordance with any clawback policy that the Company is required to adopt pursuant to the
listing standards of any national securities exchange or association on which the Company’s securities are
listed or as is otherwise required by the Dodd-Frank Wall Street Reform and Consumer Protection Act or
other Applicable Law and any clawback policy that the Company otherwise adopts, to the extent applicable
and permissible under Applicable Law. In addition, the Board may impose such other clawback, recovery or
recoupment provisions in an Award Agreement as the Board determines necessary or appropriate, including
but not limited to a reacquisition right in respect of previously acquired shares of the Common Stock or
other cash or property upon the occurrence of Cause. No recovery of compensation under such a clawback
policy will be an event giving rise to a Participant’s right to voluntarily terminate employment upon a
“resignation for good reason,” or for a “constructive termination” or any similar term under any plan of or
agreement with the Company.
(j)
Securities Law Compliance. A Participant will not be issued any shares in respect
of an Award unless either (i) the shares are registered under the Securities Act; or (ii) the Company has
determined that such issuance would be exempt from the registration requirements of the Securities Act.
Each Award also must comply with other Applicable Law governing the Award, and a Participant will not
receive such shares if the Company determines that such receipt would not be in material compliance with
Applicable Law.
(k)
Transfer or Assignment of Awards; Issued Shares. Except as expressly provided
in the Plan or the form of Award Agreement, Awards granted under the Plan may not be transferred or
assigned by the Participant. After the vested shares subject to an Award have been issued, or in the case of
Restricted Stock and similar awards, after the issued shares have vested, the holder of such shares is free to
assign, hypothecate, donate, encumber or otherwise dispose of any interest in such shares provided that any
such actions are in compliance with the provisions herein, the terms of the Trading Policy and Applicable
Law.
(l)
Effect on Other Employee Benefit Plans. The value of any Award granted under
the Plan, as determined upon grant, vesting or settlement, shall not be included as compensation, earnings,
salaries, or other similar terms used when calculating any Participant’s benefits under any employee benefit
plan sponsored by the Company or any Affiliate, except as such plan otherwise expressly provides. The
Company expressly reserves its rights to amend, modify, or terminate any of the Company’s or any
Affiliate’s employee benefit plans.
(m)
Deferrals. To the extent permitted by Applicable Law, the Board, in its sole
discretion, may determine that the delivery of the Common Stock or the payment of cash, upon the exercise,
vesting or settlement of all or a portion of any Award may be deferred and may also establish programs and
procedures for deferral elections to be made by Participants. Deferrals will be made in accordance with the
requirements of Section 409A.
(n)
Section 409A. Unless otherwise expressly provided for in an Award Agreement,
the Plan and Award Agreements will be interpreted to the greatest extent possible in a manner that makes
the Plan and the Awards granted hereunder exempt from Section 409A, and, to the extent not so exempt, in
compliance with the requirements of Section 409A. If the Board determines that any Award granted
hereunder is not exempt from and is therefore subject to Section 409A, the Award Agreement evidencing
such Award will incorporate the terms and conditions necessary to avoid the consequences specified in
Section 409A(a)(1) of the Code, and to the extent an Award Agreement is silent on terms necessary for
compliance, such terms are hereby incorporated by reference into the Award Agreement. Notwithstanding
anything to the contrary in this Plan (and unless the Award Agreement specifically provides otherwise), if
the shares of the Common Stock are publicly traded, and if a Participant holding an Award that constitutes
“deferred compensation” under Section 409A is a “specified employee” for purposes of Section 409A, no
distribution or payment of any amount that is due because of a “separation from service” (as defined in
Section 409A without regard to alternative definitions thereunder) will be issued or paid before the date that
is six months and one day following the date of such Participant’s “separation from service” or, if earlier,
the date of the Participant’s death, unless such distribution or payment can be made in a manner that
complies with Section 409A, and any amounts so deferred will be paid in a lump sum on the day after such
six month period elapses, with the balance paid thereafter on the original schedule.
(o)
Choice of Law. This Plan and any controversy arising out of or relating to this Plan
shall be governed by, and construed in accordance with, the internal laws of the State of Delaware, without
regard to conflict of law principles that would result in any application of any law other than the law of the
State of Delaware.
10.
COVENANTS OF THE COMPANY.
The Company will seek to obtain from each regulatory commission or agency, as may be deemed to
be necessary, having jurisdiction over the Plan such authority as may be required to grant Awards and to
issue and sell shares of the Common Stock upon exercise or vesting of the Awards; provided, however, that
this undertaking will not require the Company to register under the Securities Act the Plan, any Award or
any Common Stock issued or issuable pursuant to any such Award. If, after reasonable efforts and at a
reasonable cost, the Company is unable to obtain from any such regulatory commission or agency the
authority that counsel for the Company deems necessary or advisable for the lawful issuance and sale of the
Common Stock under the Plan, the Company will be relieved from any liability for failure to issue and sell
the Common Stock upon exercise or vesting of such Awards unless and until such authority is obtained. A
Participant is not eligible for the grant of an Award or the subsequent issuance of the Common Stock
pursuant to the Award if such grant or issuance would be in violation of any Applicable Law.
11.
ADDITIONAL RULES FOR AWARDS SUBJECT TO SECTION 409A.
(a)
Application. Unless the provisions of this Section 11 of the Plan are expressly
superseded by the provisions in the form of Award Agreement, the provisions of this Section 11 shall apply
and shall supersede anything to the contrary set forth in the Award Agreement for a Non-Exempt Award.
(b)
Non-Exempt Awards Subject to Non-Exempt Severance Arrangements. To the
extent a Non-Exempt Award is subject to Section 409A due to application of a Non-Exempt Severance
Arrangement, the following provisions of this subsection (b) apply.
(i)
If the Non-Exempt Award vests in the ordinary course during the
Participant’s Continuous Service in accordance with the vesting schedule set forth in the Award Agreement,
and does not accelerate vesting under the terms of a Non-Exempt Severance Arrangement, in no event will
the shares be issued in respect of such Non-Exempt Award any later than the later of: (i) December 31st of
the calendar year that includes the applicable vesting date, or (ii) the 60th day that follows the applicable
vesting date.
(ii)
If vesting of the Non-Exempt Award accelerates under the terms of a Non-
Exempt Severance Arrangement in connection with the Participant’s Separation from Service, and such
vesting acceleration provisions were in effect as of the date of grant of the Non-Exempt Award and,
therefore, are part of the terms of such Non-Exempt Award as of the date of grant, then the shares will be
earlier issued in settlement of such Non-Exempt Award upon the Participant’s Separation from Service in
accordance with the terms of the Non-Exempt Severance Arrangement, but in no event later than the 60th
day that follows the date of the Participant’s Separation from Service. However, if at the time the shares
would otherwise be issued the Participant is subject to the distribution limitations contained in Section 409A
applicable to “specified employees,” as defined in Section 409A(a)(2)(B)(i) of the Code, such shares shall
not be issued before the date that is six months following the date of such Participant’s Separation from
Service, or, if earlier, the date of the Participant’s death that occurs within such six month period.
(iii)
If vesting of a Non-Exempt Award accelerates under the terms of a Non-
Exempt Severance Arrangement in connection with a Participant’s Separation from Service, and such
vesting acceleration provisions were not in effect as of the date of grant of the Non-Exempt Award and,
therefore, are not a part of the terms of such Non-Exempt Award on the date of grant, then such acceleration
of vesting of the Non-Exempt Award shall not accelerate the issuance date of the shares, but the shares shall
instead be issued on the same schedule as set forth in the Grant Notice as if they had vested in the ordinary
course during the Participant’s Continuous Service, notwithstanding the vesting acceleration of the Non-
Exempt Award. Such issuance schedule is intended to satisfy the requirements of payment on a specified
date or pursuant to a fixed schedule, as provided under Treasury Regulations Section 1.409A-3(a)(4).
(c)
Treatment of Non-Exempt Awards Upon a Corporate Transaction for
Employees and Consultants. The provisions of this subsection (c) shall apply and shall supersede anything
to the contrary set forth in the Plan with respect to the permitted treatment of any Non-Exempt Award in
connection with a Corporate Transaction if the Participant was either an Employee or Consultant upon the
applicable date of grant of the Non-Exempt Award.
(i)
Vested Non-Exempt Awards. The following provisions shall apply to any
Vested Non-Exempt Award in connection with a Corporate Transaction:
(1)
If the Corporate Transaction is also a Section 409A Change in
Control then the Acquiring Entity may not assume, continue or substitute the Vested Non-Exempt Award.
Upon the Section 409A Change in Control the settlement of the Vested Non-Exempt Award will
automatically be accelerated and the shares will be immediately issued in respect of the Vested Non-Exempt
Award. Alternatively, the Company may instead provide that the Participant will receive a cash settlement
equal to the Fair Market Value of the shares that would otherwise be issued to the Participant upon the
Section 409A Change in Control.
(2)
If the Corporate Transaction is not also a Section 409A Change in
Control, then the Acquiring Entity must either assume, continue or substitute each Vested Non-Exempt
Award. The shares to be issued in respect of the Vested Non-Exempt Award shall be issued to the
Participant by the Acquiring Entity on the same schedule that the shares would have been issued to the
Participant if the Corporate Transaction had not occurred. In the Acquiring Entity’s discretion, in lieu of an
issuance of shares, the Acquiring Entity may instead substitute a cash payment on each applicable issuance
date, equal to the Fair Market Value of the shares that would otherwise be issued to the Participant on such
issuance dates, with the determination of the Fair Market Value of the shares made on the date of the
Corporate Transaction.
(ii)
Unvested Non-Exempt Awards. The following provisions shall apply to
any Unvested Non-Exempt Award unless otherwise determined by the Board pursuant to Section 11(e).
(1)
In the event of a Corporate Transaction, the Acquiring Entity shall
assume, continue or substitute any Unvested Non-Exempt Award. Unless otherwise determined by the
Board, any Unvested Non-Exempt Award will remain subject to the same vesting and forfeiture restrictions
that were applicable to the Award prior to the Corporate Transaction. The shares to be issued in respect of
any Unvested Non-Exempt Award shall be issued to the Participant by the Acquiring Entity on the same
schedule that the shares would have been issued to the Participant if the Corporate Transaction had not
occurred. In the Acquiring Entity’s discretion, in lieu of an issuance of shares, the Acquiring Entity may
instead substitute a cash payment on each applicable issuance date, equal to the Fair Market Value of the
shares that would otherwise be issued to the Participant on such issuance dates, with the determination of
Fair Market Value of the shares made on the date of the Corporate Transaction.
(2)
If the Acquiring Entity will not assume, substitute or continue any
Unvested Non-Exempt Award in connection with a Corporate Transaction, then such Award shall
automatically terminate and be forfeited upon the Corporate Transaction with no consideration payable to
any Participant in respect of such forfeited Unvested Non-Exempt Award. Notwithstanding the foregoing, to
the extent permitted and in compliance with the requirements of Section 409A, the Board may in its
discretion determine to elect to accelerate the vesting and settlement of the Unvested Non-Exempt Award
upon the Corporate Transaction, or instead substitute a cash payment equal to the Fair Market Value of such
shares that would otherwise be issued to the Participant, as further provided in subsection (e)(ii) below. In
the absence of such discretionary election by the Board, any Unvested Non-Exempt Award shall be forfeited
without payment of any consideration to the affected Participants if the Acquiring Entity will not assume,
substitute or continue the Unvested Non-Exempt Awards in connection with the Corporate Transaction.
(3)
The foregoing treatment shall apply with respect to all Unvested
Non-Exempt Awards upon any Corporate Transaction, and regardless of whether or not such Corporate
Transaction is also a Section 409A Change in Control.
(d)
Treatment of Non-Exempt Awards Upon a Corporate Transaction for Non-
Employee Directors. The following provisions of this subsection (d) shall apply and shall supersede
anything to the contrary that may be set forth in the Plan with respect to the permitted treatment of a Non-
Exempt Director Award in connection with a Corporate Transaction.
(i)
If the Corporate Transaction is also a Section 409A Change in Control then
the Acquiring Entity may not assume, continue or substitute the Non-Exempt Director Award. Upon the
Section 409A Change in Control the vesting and settlement of any Non-Exempt Director Award will
automatically be accelerated and the shares will be immediately issued to the Participant in respect of the
Non-Exempt Director Award. Alternatively, the Company may provide that the Participant will instead
receive a cash settlement equal to the Fair Market Value of the shares that would otherwise be issued to the
Participant upon the Section 409A Change in Control pursuant to the preceding provision.
(ii)
If the Corporate Transaction is not also a Section 409A Change in Control,
then the Acquiring Entity must either assume, continue or substitute the Non-Exempt Director Award.
Unless otherwise determined by the Board, the Non-Exempt Director Award will remain subject to the same
vesting and forfeiture restrictions that were applicable to the Award prior to the Corporate Transaction. The
shares to be issued in respect of the Non-Exempt Director Award shall be issued to the Participant by the
Acquiring Entity on the same schedule that the shares would have been issued to the Participant if the
Corporate Transaction had not occurred. In the Acquiring Entity’s discretion, in lieu of
an issuance of shares, the Acquiring Entity may instead substitute a cash payment on each applicable
issuance date, equal to the Fair Market Value of the shares that would otherwise be issued to the Participant
on such issuance dates, with the determination of Fair Market Value made on the date of the Corporate
Transaction.
(e)
If the RSU Award is a Non-Exempt Award, then the provisions in this Section 11(e)
shall apply and supersede anything to the contrary that may be set forth in the Plan or the Award Agreement
with respect to the permitted treatment of such Non-Exempt Award:
(i)
Any exercise by the Board of discretion to accelerate the vesting of a Non-
Exempt Award shall not result in any acceleration of the scheduled issuance dates for the shares in respect
of the Non-Exempt Award unless earlier issuance of the shares upon the applicable vesting dates would be
in compliance with the requirements of Section 409A.
(ii)
The Company explicitly reserves the right to earlier settle any Non-Exempt
Award to the extent permitted and in compliance with the requirements of Section 409A, including pursuant
to any of the exemptions available in Treasury Regulations Section 1.409A-3(j)(4)(ix).
(iii)
To the extent the terms of any Non-Exempt Award provide that it will be
settled upon a Change in Control or Corporate Transaction, to the extent it is required for compliance with
the requirements of Section 409A, the Change in Control or Corporate Transaction event triggering
settlement must also constitute a Section 409A Change in Control. To the extent the terms of a Non-Exempt
Award provides that it will be settled upon a termination of employment or termination of Continuous
Service, to the extent it is required for compliance with the requirements of Section 409A, the termination
event triggering settlement must also constitute a Separation From Service. However, if at the time the
shares would otherwise be issued to a Participant in connection with a “separation from service” such
Participant is subject to the distribution limitations contained in Section 409A applicable to “specified
employees,” as defined in Section 409A(a)(2)(B)(i) of the Code, such shares shall not be issued before the
date that is six months following the date of the Participant’s Separation From Service, or, if earlier, the date
of the Participant’s death that occurs within such six month period.
(iv)
The provisions in this subsection (e) for delivery of the shares in respect of
the settlement of an RSU Award that is a Non-Exempt Award are intended to comply with the requirements
of Section 409A so that the delivery of the shares to the Participant in respect of such Non-Exempt Award
will not trigger the additional tax imposed under Section 409A, and any ambiguities herein will be so
interpreted.
12.
SEVERABILITY.
If all or any part of the Plan or any Award Agreement is declared by any court or governmental
authority to be unlawful or invalid, such unlawfulness or invalidity shall not invalidate any portion of the
Plan or such Award Agreement not declared to be unlawful or invalid. Any Section of the Plan or any
Award Agreement (or part of such a Section) so declared to be unlawful or invalid shall, if possible, be
construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest
extent possible while remaining lawful and valid.
13.
TERMINATION OF THE PLAN.
The Board may suspend or terminate the Plan at any time. No Incentive Stock Options may be
granted after the tenth anniversary of the earlier of: (i) the Adoption Date, or (ii) the date the Plan is
approved by the Company’s stockholders. No Awards may be granted under the Plan while the Plan is
suspended or after it is terminated.
14.
DEFINITIONS.
As used in the Plan, the following definitions apply to the capitalized terms indicated below:
(a)
“Acquiring Entity” means the surviving or acquiring corporation (or its parent
company) in connection with a Corporate Transaction.
(b)
“Adoption Date” means the date the Plan is first approved by the Board or
Compensation Committee.
(c)
“Affiliate” means, at the time of determination, any “parent” or “subsidiary” of the
Company as such terms are defined in Rule 405 promulgated under the Securities Act. The Board may
determine the time or times at which “parent” or “subsidiary” status is determined within the foregoing
definition.
(d)
“Applicable Law” means any applicable securities, federal, state, foreign, material
local or municipal or other law, statute, constitution, principle of common law, resolution, ordinance, code,
edict, decree, rule, listing rule, regulation, judicial decision, ruling or requirement issued, enacted, adopted,
promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Body
(including under the authority of any applicable self-regulating organization such as the Nasdaq Stock
Market, New York Stock Exchange, or the Financial Industry Regulatory Authority).
(e)
“Award” means any right to receive the Common Stock, cash or other property
granted under the Plan (including an Incentive Stock Option, a Nonstatutory Stock Option, a Restricted
Stock Award, an RSU Award, a SAR, a Performance Award or any Other Award).
(f)
“Award Agreement” means a written or electronic agreement between the
Company and a Participant evidencing the terms and conditions of an Award. The Award Agreement
generally consists of the Grant Notice and the agreement containing the written summary of the general
terms and conditions applicable to the Award and which is provided, including through electronic means, to
a Participant along with the Grant Notice.
(g)
“Board” means the Board of Directors of the Company (or its designee). Any
decision or determination made by the Board shall be a decision or determination that is made in the sole
discretion of the Board (or its designee), and such decision or determination shall be final and binding on all
Participants.
(h)
“Capitalization Adjustment” means any change that is made in, or other events
that occur with respect to, the Common Stock subject to the Plan or subject to any Award after the Effective
Date without the receipt of consideration by the Company through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other than cash, large nonrecurring
cash dividend, stock split, reverse stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or any similar equity restructuring transaction, as that term is used in
Statement of Financial Accounting Standards Board Accounting Standards Codification Topic 718 (or any
successor thereto). Notwithstanding the foregoing, the conversion of any convertible securities of the
Company will not be treated as a Capitalization Adjustment.
(i)
“Cause” has the meaning ascribed to such term in any written agreement between a
Participant and the Company defining such term and, in the absence of such agreement, such term means,
with respect to a Participant, the occurrence of any of the following events: (i) the Participant’s dishonest
statements or acts with respect to the Company or any Affiliate of the Company, or any current or
prospective customers, suppliers, vendors or other third parties with which such entity does business; (ii) the
Participant’s commission of (A) a felony or (B) any misdemeanor involving moral turpitude, deceit,
dishonesty or fraud; (iii) the Participant’s failure to perform the Participant’s assigned duties and
responsibilities to the reasonable satisfaction of the Company which failure continues, in the reasonable
judgment of the Company, after written notice given to the Participant by the Company; (iv) the
Participant’s gross negligence, willful misconduct or insubordination with respect to the Company or any
Affiliate of the Company; or (v) the Participant’s material violation of any provision of any agreement(s)
between the Participant and the Company relating to noncompetition, nonsolicitation, nondisclosure and/or
assignment of inventions. The determination that a termination of the Participant’s Continuous Service is
either for Cause or without Cause will be made by the Board with respect to Participants who are executive
officers of the Company and by the Company’s Chief Executive Officer with respect to Participants who are
not executive officers of the Company. Any determination by the Company that the Continuous Service of a
Participant was terminated with or without Cause for the purposes of outstanding Awards held by such
Participant will have no effect upon any determination of the rights or obligations of the Company or such
Participant for any other purpose.
(j)
“Change in Control” or “Change of Control” means the occurrence, in a single
transaction or in a series of related transactions, of any one or more of the following events; provided,
however, to the extent necessary to avoid adverse personal income tax consequences to the Participant in
connection with an Award, also constitutes a Section 409A Change in Control:
(i)
any Exchange Act Person becomes the Owner, directly or indirectly, of
securities of the Company representing more than 50% of the combined voting power of the Company’s
then outstanding securities other than by virtue of a merger, consolidation or similar transaction.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur (A) on account of the
acquisition of securities of the Company directly from the Company, (B) on account of the acquisition of
securities of the Company by an investor, any affiliate thereof or any other Exchange Act Person that
acquires the Company’s securities in a transaction or series of related transactions the primary purpose of
which is to obtain financing for the Company through the issuance of equity securities, or (C) solely
because the level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds the
designated percentage threshold of the outstanding voting securities as a result of a repurchase or other
acquisition of voting securities by the Company reducing the number of shares outstanding, provided that if
a Change in Control would occur (but for the operation of this sentence) as a result of the acquisition of
voting securities by the Company, and after such share acquisition, the Subject Person becomes the Owner
of any additional voting securities that, assuming the repurchase or other acquisition had not occurred,
increases the percentage of the then outstanding voting securities Owned by the Subject Person over the
designated percentage threshold, then a Change in Control shall be deemed to occur;
(ii)
there is consummated a merger, consolidation or similar transaction
involving (directly or indirectly) the Company and, immediately after the consummation of such merger,
consolidation or similar transaction, the stockholders of the Company immediately prior thereto do not
Own, directly or indirectly, either (A) outstanding voting securities representing more than 50% of the
combined outstanding voting power of the surviving Entity in such merger, consolidation or similar
transaction or (B) more than 50% of the combined outstanding voting power of the parent of the surviving
Entity in such merger, consolidation or similar transaction, in each case in substantially the same
proportions as their Ownership of the outstanding voting securities of the Company immediately prior to
such transaction;
(iii)
there is consummated a sale, lease, exclusive license or other disposition of
all or substantially all of the consolidated assets of the Company and its Subsidiaries, other than a sale,
lease, license or other disposition of all or substantially all of the consolidated assets of the Company and its
Subsidiaries to an Entity, more than 50% of the combined voting power of the voting securities of which are
Owned by stockholders of the Company in substantially the same proportions as their Ownership of the
outstanding voting securities of the Company immediately prior to such sale, lease, license or other
disposition; or
(iv)
individuals who, on the date the Plan is adopted by the Board, are members
of the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the members
of the Board; provided, however, that if the appointment or election (or nomination for election) of any new
Board member was approved or recommended by a majority vote of the members of the Incumbent Board
then still in office, such new member shall, for purposes of this Plan, be considered as a member of the
Incumbent Board.
Notwithstanding the foregoing or any other provision of this Plan, (A) the term Change in Control
shall not include a sale of assets, merger or other transaction effected exclusively for the purpose of
changing the domicile of the Company, and (B) the definition of Change in Control (or any analogous term)
in an individual written agreement between the Company or any Affiliate and the Participant shall
supersede the foregoing definition with respect to Awards subject to such agreement; provided, however,
that if no definition of Change in Control or any analogous term is set forth in such an individual written
agreement, the foregoing definition shall apply.
(k)
“Code” means the Internal Revenue Code of 1986, as amended, including any
applicable regulations and guidance thereunder.
(l)
“Committee” means the Compensation Committee and any other committee of one
or more Directors to whom authority has been delegated by the Board or Compensation Committee in
accordance with the Plan.
(m)
“Common Stock” means the Class A Common Stock of the Company.
(n)
“Company” means MetaVia Inc., a Delaware corporation.
(o)
“Compensation Committee” means the Compensation Committee of the Board.
(p)
“Consultant” means any person, including an advisor, who is (i) engaged by the
Company or an Affiliate to render consulting or advisory services and is compensated for such services, or
(ii) serving as a member of the board of directors of an Affiliate and is compensated for such services.
However, service solely as a Director, or payment of a fee for such service, will not cause a Director to be
considered a “Consultant” for purposes of the Plan. Notwithstanding the foregoing, a person is treated as a
Consultant under this Plan only if a Form S-8 Registration Statement under the Securities Act is available to
register either the offer or the sale of the Company’s securities to such person.
(q)
“Continuous Service” means that the Participant’s service with the Company or an
Affiliate, whether as an Employee, Director or Consultant, is not interrupted or terminated. A change in the
capacity in which the Participant renders service to the Company or an Affiliate as an Employee, Director or
Consultant or a change in the Entity for which the Participant renders such service, provided that there is no
interruption or termination of the Participant’s service with the Company or an Affiliate, will not terminate a
Participant’s Continuous Service; provided, however, that if the Entity for which a Participant is rendering
services ceases to qualify as an Affiliate, as determined by the Board, such
Participant’s Continuous Service will be considered to have terminated on the date such Entity ceases to
qualify as an Affiliate. For example, a change in status from an Employee of the Company to a Consultant
of an Affiliate or to a Director will not constitute an interruption of Continuous Service. To the extent
permitted by law, the Board or the Chief Executive Officer of the Company, in that party’s sole discretion,
may determine whether Continuous Service will be considered interrupted in the case of (i) any leave of
absence approved by the Board or chief executive officer, including sick leave, military leave or any other
personal leave, or (ii) transfers between the Company, an Affiliate, or their successors. Notwithstanding the
foregoing, a leave of absence will be treated as Continuous Service for purposes of vesting in an Award
only to such extent as may be provided in the Company’s leave of absence policy, in the written terms of
any leave of absence agreement or policy applicable to the Participant, or as otherwise required by law. In
addition, to the extent required for exemption from or compliance with Section 409A, the determination of
whether there has been a termination of Continuous Service will be made, and such term will be construed,
in a manner that is consistent with the definition of “separation from service” as defined under Treasury
Regulation Section 1.409A-1(h) (without regard to any alternative definition thereunder).
(r)
“Corporate Transaction” means the consummation, in a single transaction or in a
series of related transactions, of any one or more of the following events:
(i)
a sale or other disposition of all or substantially all, as determined by the
Board, of the consolidated assets of the Company and its Subsidiaries;
(ii)
a sale or other disposition of at least 50% of the outstanding securities of
the Company;
(iii)
a merger, consolidation or similar transaction following which the
Company is not the surviving corporation; or
(iv)
a merger, consolidation or similar transaction following which the
Company is the surviving corporation but the shares of the Common Stock outstanding immediately
preceding the merger, consolidation or similar transaction are converted or exchanged by virtue of the
merger, consolidation or similar transaction into other property, whether in the form of securities, cash or
otherwise.
Notwithstanding the foregoing or any other provision of this Plan, (A) the term Corporate
Transaction shall not include a sale of assets, merger or other transaction effected exclusively for the
purpose of changing the domicile of the Company, (B) the definition of Corporate Transaction (or any
analogous term) in an individual written agreement between the Company or any Affiliate and the
Participant shall supersede the foregoing definition with respect to Awards subject to such agreement;
provided, however, that if no definition of Corporate Transaction or any analogous term is set forth in such
an individual written agreement, the foregoing definition shall apply, and (C) with respect to any
nonqualified deferred compensation that becomes payable on account of the Corporate Transaction, the
transaction or event described in clause (i), (ii), (iii), or (iv) also constitutes a Section 409A Change in
Control if required in order for the payment not to violate Section 409A of the Code.
(s)
“Director” means a member of the Board.
(t)
“determine” or “determined” means as determined by the Board or the Committee
(or its designee) in its sole discretion.
(u)
“Disability” means, with respect to a Participant, such Participant is unable to
engage in any substantial gainful activity by reason of any medically determinable physical or mental
impairment which can be expected to result in death or which has lasted or can be expected to last for a
continuous period of not less than 12 months, as provided in Section 22(e)(3) of the Code, and will be
determined by the Board on the basis of such medical evidence as the Board deems warranted under the
circumstances.
(v)
“Effective Date” means the effective date of this Plan, which is the date this Plan
(as amended from time to time) is approved by the Company’s stockholders.
(w)
“Employee” means any person employed by the Company or an Affiliate.
However, service solely as a Director, or payment of a fee for such services, will not cause a Director to be
considered an “Employee” for purposes of the Plan.
(x)
“Employer” means the Company or the Affiliate of the Company that employs the
Participant.
(y)
“Entity” means a corporation, partnership, limited liability company or other entity.
(z)
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
(aa)
“Exchange Act Person” means any natural person, Entity or “group” (within the
meaning of Section 13(d) or 14(d) of the Exchange Act), except that “Exchange Act Person” will not
include (i) the Company or any Subsidiary of the Company, (ii) any employee benefit plan of the Company
or any Subsidiary of the Company or any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any Subsidiary of the Company, (iii) an underwriter temporarily holding
securities pursuant to a registered public offering of such securities, (iv) an Entity Owned, directly or
indirectly, by the stockholders of the Company in substantially the same proportions as their Ownership of
stock of the Company; or (v) any natural person, Entity or “group” (within the meaning of Section 13(d) or
14(d) of the Exchange Act) that, as of the Effective Date, is the Owner, directly or indirectly, of securities of
the Company representing more than 50% of the combined voting power of the Company’s then
outstanding securities.
(bb)
“Fair Market Value” means, as of any date, unless otherwise determined by the
Board, the value of the Common Stock (as determined on a per share or aggregate basis, as applicable)
determined as follows:
(i)
If the Common Stock is listed on any established stock exchange or traded
on any established market, the Fair Market Value will be the closing sales price for such stock as quoted on
such exchange or market (or the exchange or market with the greatest volume of trading in the Common
Stock) on the date of determination, as reported in a source the Board deems reliable.
(ii)
If there is no closing sales price for the Common Stock on the date of
determination, then the Fair Market Value will be the closing selling price on the last preceding date for
which such quotation exists.
(iii)
In the absence of such markets for the Common Stock, or if otherwise
determined by the Board, the Fair Market Value will be determined by the Board in good faith and in a
manner that complies with Sections 409A and 422 of the Code.
(cc)
“Fully Diluted Shares” as of a date means an amount equal to the number of
shares of Common Stock (i) outstanding and (ii) issuable upon exercise, conversion or settlement of
outstanding Awards under the Plan and any other outstanding options, warrants or other securities of the
Company that are (directly or indirectly) convertible or exchangeable into or exercisable for shares of
Common Stock, in each case as of the close of business of the Company on such date and without regard to
any vesting conditions or other limitations on the immediate ability to convert, exchange or exercise such
rights. For purposes of calculating the number of Fully Diluted Shares, if the number of shares subject to an
outstanding right to acquire shares is variable, then the number of shares of Common Stock issuable upon
exercise, conversion, exchange or settlement of the right shall be the maximum number of shares that could
be received under such right.
(dd)
“Governmental Body” means any: (i) nation, state, commonwealth, province,
territory, county, municipality, district or other jurisdiction of any nature; (ii) federal, state, local, municipal,
foreign or other government; (iii) governmental or regulatory body, or quasi-governmental body of any
nature (including any governmental division, department, administrative agency or bureau, commission,
authority, instrumentality, official, ministry, fund, foundation, center, organization, unit, body or Entity and
any court or other tribunal, and for the avoidance of doubt, any Tax authority) or other body exercising
similar powers or authority; or (iv) self-regulatory organization (including the Nasdaq Stock Market, New
York Stock Exchange, and the Financial Industry Regulatory Authority).
(ee)
“Grant Notice” means the notice provided to a Participant that he or she has been
granted an Award under the Plan and which includes the name of the Participant, the type of Award, the date
of grant of the Award, number of shares of the Common Stock subject to the Award or potential cash
payment right, (if any), the vesting schedule for the Award (if any) and other key terms applicable to the
Award.
(ff)
“Incentive Stock Option” means an option granted pursuant to Section 4 of the
Plan that is intended to be, and qualifies as, an “incentive stock option” within the meaning of Section 422
of the Code.
(gg)
“Materially Impair” means any amendment to the terms of the Award that
materially adversely affects the Participant’s rights under the Award. A Participant’s rights under an Award
will not be deemed to have been Materially Impaired by any such amendment if the Board, in its sole
discretion, determines that the amendment, taken as a whole, does not Materially Impair the Participant’s
rights. For example, the following types of amendments to the terms of an Award do not Materially Impair
the Participant’s rights under the Award: (i) imposition of reasonable restrictions on the minimum number
of shares subject to an Option or SAR that may be exercised; (ii) to maintain the qualified status of the
Award as an Incentive Stock Option under Section 422 of the Code; (iii) to change the terms of an Incentive
Stock Option in a manner that disqualifies, impairs or otherwise affects the qualified status of the Award as
an Incentive Stock Option under Section 422 of the Code; (iv) to clarify the manner of exemption from, or
to bring the Award into compliance with or qualify it for an exemption from, Section 409A; or (v) to
comply with other Applicable Laws.
(hh)
“Non-Employee Director” means a Director who either (i) is not a current
employee or officer of the Company or an Affiliate, does not receive compensation, either directly or
indirectly, from the Company or an Affiliate for services rendered as a consultant or in any capacity other
than as a Director (except for an amount as to which disclosure would not be required under Item 404(a) of
Regulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”)), does not possess an
interest in any other transaction for which disclosure would be required under Item 404(a) of Regulation S-
K, and is not engaged in a business relationship for which disclosure would be required pursuant to
Item 404(b) of Regulation S-K; or (ii) is otherwise considered a “non-employee director” for purposes of
Rule 16b-3.
(ii)
“Non-Exempt Award” means any Award that is subject to, and not exempt from,
Section 409A, including as the result of (i) a deferral of the issuance of the shares subject to the Award
which is elected by the Participant or imposed by the Company, or (ii) the terms of any Non-Exempt
Severance Agreement.
(jj)
“Non-Exempt Director Award” means a Non-Exempt Award granted to a
Participant who was a Director but not an Employee on the applicable grant date.
(kk)
“Non-Exempt Severance Arrangement” means a severance arrangement or other
agreement between the Participant and the Company that provides for acceleration of vesting of an Award
and issuance of the shares in respect of such Award upon the Participant’s termination of employment or
separation from service (as such term is defined in Section 409A(a)(2)(A)(i) of the Code (and without
regard to any alternative definition thereunder) (“Separation from Service”) and such severance benefit
does not satisfy the requirements for an exemption from application of Section 409A provided under
Treasury Regulations Section 1.409A-1(b)(4), 1.409A-1(b)(9) or otherwise.
(ll)
“Nonstatutory Stock Option” means any option granted pursuant to Section 4 of
the Plan that does not qualify as an Incentive Stock Option.
(mm)
“Officer” means a person who is an officer of the Company within the meaning of
Section 16 of the Exchange Act.
(nn)
“Option” means an Incentive Stock Option or a Nonstatutory Stock Option to
purchase shares of the Common Stock granted pursuant to the Plan.
(oo)
“Option Agreement” means a written or electronic agreement between the
Company and the Optionholder evidencing the terms and conditions of the Option grant. The Option
Agreement includes the Grant Notice for the Option and the agreement containing the written summary of
the general terms and conditions applicable to the Option and which is provided, including through
electronic means, to a Participant along with the Grant Notice. Each Option Agreement will be subject to
the terms and conditions of the Plan.
(pp)
“Optionholder” means a person to whom an Option is granted pursuant to the Plan
or, if applicable, such other person who holds an outstanding Option.
(qq)
“Other Award” means an award valued in whole or in part by reference to, or
otherwise based on, Common Stock, including the appreciation in value thereof (e.g., options or stock rights
with an exercise price or strike price less than 100% of the Fair Market Value at the time of grant) that is not
an Incentive Stock Option, Nonstatutory Stock Option, SAR, Restricted Stock Award, RSU Award or
Performance Award.
(rr)
“Other Award Agreement” means a written agreement between the Company and
a holder of an Other Award evidencing the terms and conditions of an Other Award grant. Each Other
Award Agreement will be subject to the terms and conditions of the Plan.
(ss)
“Own”, “Owned”, “Owner” or “Ownership” means that a person or Entity will be
deemed to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if
such person or Entity, directly or indirectly, through any contract, arrangement,
understanding, relationship or otherwise, has or shares voting power, which includes the power to vote or to
direct the voting, with respect to such securities.
(tt)
“Participant” means an Employee, Director or Consultant to whom an Award is
granted pursuant to the Plan or, if applicable, such other person who holds an outstanding Award.
(uu)
“Performance Award” means an Award that may vest or may be exercised or a
cash award that may vest or become earned and paid contingent upon the attainment during a Performance
Period of certain Performance Goals and which is granted under the terms and conditions of Section 5(b)
pursuant to such terms as are approved by the Board. In addition, to the extent permitted by Applicable Law
and set forth in the applicable Award Agreement, the Board may determine that cash or other property may
be used in payment of Performance Awards. Performance Awards that are settled in cash or other property
are not required to be valued in whole or in part by reference to, or otherwise based on, the Common Stock.
(vv)
“Performance Criteria” means one or more criteria that the Board will select for
purposes of establishing the Performance Goals for a Performance Period. The Performance Criteria that
will be used to establish such Performance Goals may be based on any one of, or combination of, the
following as determined by the Board: earnings (including earnings per share and net earnings); earnings
before interest, taxes and depreciation; earnings before interest, taxes, depreciation and amortization; total
stockholder return; return on equity or average stockholder’s equity; return on assets, investment, or capital
employed; stock price; margin (including gross margin); income (before or after taxes); operating income;
operating income after taxes; pre-tax profit; operating cash flow; sales or revenue targets; increases in
revenue or product revenue; expenses and cost reduction goals; improvement in or attainment of working
capital levels; economic value added (or an equivalent metric); market share; cash flow; cash flow per
share; share price performance; debt reduction; customer satisfaction; stockholders’ equity; capital
expenditures; debt levels; operating profit or net operating profit; workforce diversity; growth of net income
or operating income; billings; product development goals; financing; regulatory milestones, including
approval of a product; stockholder liquidity; corporate governance and compliance; product
commercialization; intellectual property; personnel matters; progress of internal research; progress of
partnered programs; partner satisfaction; budget management; data from clinical studies, partner or
collaborator achievements; internal controls, including those related to the Sarbanes-Oxley Act of 2002;
investor relations, analysts and communication; manufacturing achievements (including obtaining particular
yields from manufacturing runs and other measurable objectives relates to process development activities);
employee retention; strategic partnerships or transactions (including in-licensing and out-licensing of
intellectual property); establishing relationships with commercial entities with respect to the marketing,
distribution and sale of the Company’s products; supply chain achievements; co-development, co-
marketing, profit sharing, joint venture or other similar arrangements; individual performance goals;
corporate development and planning goals; and other measures of performance selected by the Board or
Committee whether or not listed herein.
(ww)
“Performance Goals” means, for a Performance Period, one or more goals
established by the Board for the Performance Period based upon the Performance Criteria. Performance
Goals may be based on a Company-wide basis, with respect to one or more business units, divisions,
Affiliates, or business segments, and in either absolute terms or relative to the performance of one or more
comparable companies or the performance of one or more relevant indices. Unless specified otherwise by
the Board (i) in the Award Agreement at the time the Award is granted or (ii) in such other document setting
forth the Performance Goals at the time the Performance Goals are established, the Board will appropriately
make adjustments in the method of calculating the attainment of Performance Goals for a Performance
Period as follows: (1) to exclude restructuring and/or other nonrecurring charges; (2) to exclude exchange
rate effects; (3) to exclude the effects of changes to generally accepted
accounting principles; (4) to exclude the effects of any statutory adjustments to corporate tax rates; (5) to
exclude the effects of items that are “unusual” in nature or occur “infrequently” as determined under
generally accepted accounting principles; (6) to exclude the dilutive effects of acquisitions or joint ventures;
(7) to assume that any business divested by the Company achieved performance objectives at targeted levels
during the balance of a Performance Period following such divestiture; (8) to exclude the effect of any
change in the outstanding shares of common stock of the Company by reason of any stock dividend or split,
stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange
of shares or other similar corporate change, or any distributions to common stockholders other than regular
cash dividends; (9) to exclude the effects of stock based compensation and the award of bonuses under the
Company’s bonus plans; (10) to exclude costs incurred in connection with potential acquisitions or
divestitures that are required to be expensed under generally accepted accounting principles; and (11) to
exclude the goodwill and intangible asset impairment charges that are required to be recorded under
generally accepted accounting principles. In addition, the Board may establish or provide for other
adjustment items in the Award Agreement at the time the Award is granted or in such other document
setting for the Performance Goals at the time the Performance Goals are established. In addition, the Board
retains the discretion to reduce or eliminate the compensation or economic benefit due upon attainment of
Performance Goals and to define the manner of calculating the Performance Criteria it selects to use for
such Performance Period. Partial achievement of the specified criteria may result in the payment or vesting
corresponding to the degree of achievement as specified in the Award Agreement or the written terms of a
Performance Cash Award.
(xx)
“Performance Period” means the period of time selected by the Board over which
the attainment of one or more Performance Goals will be measured for the purpose of determining a
Participant’s right to vesting or exercise of an Award. Performance Periods may be of varying and
overlapping duration, at the sole discretion of the Board.
(yy)
“Plan” means this MetaVia Inc. Amended and Restated 2022 Equity Incentive
Plan, as amended from time to time.
(zz)
“Plan Administrator” means the person, persons, and/or third-party administrator
designated by the Company to administer the day to day operations of the Plan.
(aaa)
“Post-Termination Exercise Period” means the period following termination of a
Participant’s Continuous Service within which an Option or SAR is exercisable, as specified in Section 4(h).
(bbb)
“Prior Plan’s Available Reserve” means the number of shares available for the
grant of new awards under the Prior Plan as of the Effective Date.
(ccc)
“Prior Plan” means the Gemphire Therapeutics, Inc. 2019 Equity Incentive Plan.
(ddd)
“Prospectus” means the document containing the Plan information specified in
Section 10(a) of the Securities Act.
(eee)
“Restricted Stock Award” or “RSA” means an Award of shares of the Common
Stock which is granted pursuant to the terms and conditions of Section 5(a).
(fff)
“Restricted Stock Award Agreement” means a written or electronic agreement
between the Company and a holder of a Restricted Stock Award evidencing the terms and conditions of a
Restricted Stock Award grant. The Restricted Stock Award Agreement includes the Grant Notice for the
Restricted Stock Award and the agreement containing the written summary of the general terms and
conditions applicable to the Restricted Stock Award and which is provided, including by electronic means,
to a Participant along with the Grant Notice. Each Restricted Stock Award Agreement will be subject to the
terms and conditions of the Plan.
(ggg)
“Returning Shares” means shares subject to outstanding stock awards granted
under the Prior Plan and that following the Effective Date: (A) are not issued because such stock award or
any portion thereof expires or otherwise terminates without all of the shares covered by such stock award
having been issued; (B) are not issued because such stock award or any portion thereof is settled in
cash; (C) are forfeited back to or repurchased by the Company because of the failure to meet a contingency
or condition required for the vesting of such shares; (D) are withheld or reacquired to satisfy the exercise,
strike or purchase price; or (E) are withheld or reacquired to satisfy a tax withholding obligation.
(hhh)
“RSU Award” or “RSU” means an Award of restricted stock units representing the
right to receive an issuance of shares of the Common Stock which is granted pursuant to the terms and
conditions of Section 5(a).
(iii)
“RSU Award Agreement” means a written or electronic agreement between the
Company and a holder of an RSU Award evidencing the terms and conditions of an RSU Award grant. The
RSU Award Agreement includes the Grant Notice for the RSU Award and the agreement containing the
written summary of the general terms and conditions applicable to the RSU Award and which is provided,
including by electronic means, to a Participant along with the Grant Notice. Each RSU Award Agreement
will be subject to the terms and conditions of the Plan.
(jjj)
“Rule 16b-3” means Rule 16b-3 promulgated under the Exchange Act or any
successor to Rule 16b-3, as in effect from time to time.
(kkk)
“Rule 405” means Rule 405 promulgated under the Securities Act.
(lll)
“Section 409A” means Section 409A of the Code and the regulations and other
guidance thereunder.
(mmm)“Section 409A Change in Control” means a change in the ownership or effective
control of the Company, or in the ownership of a substantial portion of the Company’s assets, as provided in
Section 409A(a)(2)(A)(v) of the Code and Treasury Regulations Section 1.409A-3(i)(5) (without regard to
any alternative definition thereunder).
(nnn)
“Securities Act” means the Securities Act of 1933, as amended.
(ooo)
“Share Reserve” means the number of shares available for issuance under the Plan
as set forth in Section 2(a).
(ppp)
“Stock Appreciation Right” or “SAR” means a right to receive the appreciation on
the Common Stock that is granted pursuant to the terms and conditions of Section 4.
(qqq)
“SAR Agreement” means a written or electronic agreement between the Company
and a holder of a SAR evidencing the terms and conditions of a SAR grant. The SAR Agreement includes
the Grant Notice for the SAR and the agreement containing the written summary of the general terms and
conditions applicable to the SAR and which is provided, including by electronic
means, to a Participant along with the Grant Notice. Each SAR Agreement will be subject to the terms and
conditions of the Plan.
(rrr)
“Subsidiary” means, with respect to the Company, (i) any corporation of which
more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the
board of directors of such corporation (irrespective of whether, at the time, stock of any other class or
classes of such corporation will have or might have voting power by reason of the happening of any
contingency) is at the time, directly or indirectly, Owned by the Company, and (ii) any partnership, limited
liability company or other entity in which the Company has a direct or indirect interest (whether in the form
of voting or participation in profits or capital contribution) of more than 50%.
(sss)
“Ten Percent Stockholder” means a person who Owns (or is deemed to Own
pursuant to Section 424(d) of the Code) stock possessing more than 10% of the total combined voting
power of all classes of stock of the Company or any Affiliate.
(ttt)
“Trading Policy” means the Company’s policy permitting certain individuals to
sell Company shares only during certain “window” periods and/or otherwise restricts the ability of certain
individuals to transfer or encumber Company shares, as in effect from time to time.
(uuu)
“Unvested Non-Exempt Award” means the portion of any Non-Exempt Award that
had not vested in accordance with its terms upon or prior to the date of any Corporate Transaction.
(vvv)
“Vested Non-Exempt Award” means the portion of any Non-Exempt Award that
had vested in accordance with its terms upon or prior to the date of a Corporate Transaction.
* * * *
Standard RSU Package
METAVIA INC.
RSU AWARD GRANT NOTICE
(AMENDED AND RESTATED 2022 EQUITY INCENTIVE PLAN)
MetaVia Inc., a Delaware corporation (the “Company”), has awarded to you (the “Participant”)
the number of restricted stock units specified and on the terms set forth below in consideration of your
services (the “RSU Award”). Your RSU Award is subject to all of the terms and conditions as set forth
herein and in the Company’s Amended and Restated 2022 Equity Incentive Plan (the “Plan”) and the
Award Agreement (the “Agreement”), which are attached hereto and incorporated herein in their entirety.
Capitalized terms not explicitly defined herein but defined in the Plan or the Agreement shall have the
meanings set forth in the Plan or the Agreement.
Participant:
Date of Grant:
Vesting Commencement Date:
Number of Restricted Stock Units:
Vesting
Schedule:
[
]
Notwithstanding the foregoing, vesting shall terminate upon the Participant’s termination of
Continuous Service.
Issuance
Schedule:
One share of Common Stock will be issued for each restricted stock unit which vests at the
time set forth in Section 5 of the Agreement.
Participant Acknowledgements: By your signature below or by electronic acceptance or authentication in
a form authorized by the Company, you understand and agree that:
•
The RSU Award is governed by this RSU Award Grant Notice (the “Grant Notice”), and
the provisions of the Plan and the Agreement, all of which are made a part of this
document. Unless otherwise provided in the Plan, this Grant Notice and the Agreement
(together, the “RSU Award Agreement”) may not be modified, amended or revised except
in a writing signed by you and a duly authorized officer of the Company.
•
You have read and are familiar with the provisions of the Plan, the RSU Award Agreement
and the Prospectus. In the event of any conflict between the provisions in the RSU Award
Agreement, or the Prospectus and the terms of the Plan, the terms of the Plan shall control.
•
To the fullest extent permitted under the Plan and applicable law, any withholding taxes
applicable to the RSU Award will be satisfied through the sale of a number of the shares
issuable in settlement of the RSU Award as determined in accordance with Section 4 of the
Agreement and the remittance of the cash proceeds to the Company. Under the Agreement,
the Company or, if different, your employer shall make payment from the cash proceeds of
this sale directly to the appropriate tax or social security authorities in an amount equal to
the taxes required to be remitted. The mandatory sale of shares to cover withholding taxes
is imposed by the Company on you in connection with your receipt of this RSU Award.
•
The RSU Award Agreement sets forth the entire understanding between you and the
Company regarding the acquisition of Common Stock and supersedes all prior oral and
written agreements, promises and/or representations on that subject with the exception of:
(i) other equity awards previously granted to you, (ii) any written employment agreement,
offer letter, severance agreement, written severance plan or policy, or other written
agreement between the Company and you in each case that specifies the terms that should
govern this RSU Award, and (iii) any clawback policy that the Company is required to
adopt pursuant to the listing standards of any national securities exchange or association on
which the Company’s securities are listed or as is otherwise required by the Dodd-Frank
Wall Street Reform and Consumer Protection Act or other Applicable Law.
THE COMPANY:
MetaVia Inc.
PARTICIPANT:
By:
Name:
[Insert Name]
Title:
Date:
Date:
ATTACHMENTS: RSU Award Agreement, Amended and Restated 2022 Equity Incentive Plan
METAVIA INC.
AMENDED AND RESTATED 2022 EQUITY INCENTIVE PLAN
AWARD AGREEMENT (RSU AWARD)
As reflected by your Restricted Stock Unit Grant Notice (the “Grant Notice”), MetaVia Inc., a
Delaware corporation (the “Company”) has granted you a RSU Award under the Company’s Amended and
Restated 2022 Equity Incentive Plan (the “Plan”) for the number of restricted stock units as indicated in
your Grant Notice (the “RSU Award”). The terms of your RSU Award as specified in this Award
Agreement for your RSU Award (the “Agreement”) and the Grant Notice constitute your “RSU Award
Agreement”. Defined terms not explicitly defined in this Agreement but defined in the Grant Notice or the
Plan shall have the same definitions as in the Grant Notice or Plan, as applicable.
The general terms applicable to your RSU Award are as follows:
1. Governing Plan Document. Your RSU Award is subject to all the provisions of the Plan,
including but not limited to the provisions in:
(a) Section 6 of the Plan regarding the impact of a Capitalization Adjustment,
dissolution, liquidation, or Corporate Transaction on your RSU Award;
(b) Section 9(e) of the Plan regarding the Company’s retained rights to terminate your
Continuous Service notwithstanding the grant of the RSU Award; and
(c) Section 8 of the Plan regarding the tax consequences of your RSU Award.
Your RSU Award is further subject to all interpretations, amendments, rules and regulations, which
may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict
between the RSU Award Agreement and the provisions of the Plan, the provisions of the Plan shall control.
2. Grant of the RSU Award. This RSU Award represents your right to be issued on a future
date the number of shares of the Company’s Common Stock that is equal to the number of restricted stock
units indicated in the Grant Notice as modified to reflect any Capitalization Adjustment and subject to your
satisfaction of the vesting conditions set forth therein (the “Restricted Stock Units”). Any additional
Restricted Stock Units that become subject to the RSU Award pursuant to Capitalization Adjustments as set
forth in the Plan and the provisions of Section 3 below, if any, shall be subject, in a manner determined by
the Board, to the same forfeiture restrictions, restrictions on transferability, and time and manner of delivery
as applicable to the other Restricted Stock Units covered by your RSU Award.
3. Dividends. You shall receive no benefit or adjustment to your RSU Award with respect to any
cash dividend, stock dividend or other distribution that does not result from a Capitalization Adjustment as
provided in the Plan; provided, however, that this sentence shall not apply with respect to any shares of
Common Stock that are delivered to you in connection with your RSU Award after such shares have been
delivered to you.
4. Withholding Obligations.
(a) You acknowledge that, regardless of any action taken by the Company, or if
different, the Affiliate employing or engaging you (the “Employer”), the ultimate liability for all income tax
(including U.S. federal, state, and local taxes and/or non-U.S. taxes), social insurance, payroll tax,
fringe benefits tax, payment on account or other tax-related items related to your participation in the Plan
and legally applicable to you (the “Tax-Related Items”) is and remains your responsibility and may exceed
the amount, if any, actually withheld by the Company or the Employer. You further acknowledge that the
Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any
Tax-Related Items in connection with any aspect of the RSU Award, including, but not limited to, the grant
of the RSU Award, the vesting of the RSU Award, the issuance of shares in settlement of vesting of the RSU
Award, the subsequent sale of any shares of Common Stock acquired pursuant to the RSU Award and the
receipt of any dividends or dividend equivalent; and (ii) do not commit to and are under no obligation to
reduce or eliminate your liability for Tax-Related Items. Further, if you become subject to taxation in more
than one country, you acknowledge that the Company and/or the Employer (or former employer, as
applicable) may be required to withhold or account for Tax-Related Items in more than one country.
(b) On each vesting date, and on or before the time you receive a distribution of the
shares underlying your Restricted Stock Units, and at any other time as reasonably requested by the
Company in accordance with Applicable Law, you agree to make adequate provision for any sums required
to satisfy the withholding obligations of the Company, the Employer or any Affiliate in connection with any
Tax-Related Items that arise in connection with your RSU Award (the “Withholding Taxes”). The Company
shall arrange a mandatory sale (on your behalf pursuant to your authorization under this section and without
further consent) of the shares of Common Stock issued in settlement upon the vesting of your Restricted
Stock Units in an amount necessary to satisfy the Withholding Taxes and shall satisfy the Withholding
Taxes by withholding from the proceeds of such sale (the “Mandatory Sell to Cover”). You hereby
acknowledge and agree that the Company shall have the authority to administer the Mandatory Sell to
Cover arrangement in its sole discretion with a registered broker-dealer that is a member of the Financial
Industry Regulatory Authority (a “FINRA Dealer”) as the Company may select as the agent (the “Agent”)
who will sell on the open market at the then prevailing market price(s), as soon as practicable on or after
each date on which your Restricted Stock Units vest, the number (rounded up to the next whole number) of
the shares of Common Stock to be delivered to you in connection with the vesting of the Restricted Stock
Units sufficient to generate proceeds to cover (A) the Withholding Taxes that you are required to pay
pursuant to the Plan and this Agreement as a result of the vesting of the Restricted Stock Units (or shares
being issued thereunder, as applicable) and (B) all applicable fees and commissions due to, or required to be
collected by, the Agent with respect thereto any remaining funds shall be remitted to you.
(c) If, for any reason, such Mandatory Sell to Cover does not result in sufficient
proceeds to satisfy the Withholding Taxes, the Company or an Affiliate may, in its sole discretion, satisfy all
or any portion of the Withholding Taxes relating to your RSU Award by any of the following means or by a
combination of such means: (i) withholding from any compensation otherwise payable to you by the
Company or the Employer; (ii) causing you to tender a cash payment (which may be in the form of a check,
electronic wire transfer or other method permitted by the Company); or (iii) withholding shares of Common
Stock from the shares of Common Stock issued or otherwise issuable to you in connection with your
Restricted Stock Units with a fair market value (measured as of the date shares of Common Stock are issued
to you) equal to the amount of such Withholding Taxes; provided, however, that the number of such shares
of Common Stock so withheld will not exceed the amount necessary to satisfy the Company’s required tax
withholding obligations using the maximum statutory withholding rates for federal, state, local and foreign
tax purposes, including payroll taxes, that are applicable to supplemental taxable income; and to the extent
necessary to qualify for an exemption from application of Section 16(b) of the Exchange Act, if applicable,
such share withholding procedure will be subject to the express prior approval of the Company’s Board or
Compensation Committee.
(d) Unless the tax withholding obligations of the Company and/or any Affiliate with
respect to the Tax-Related Items are satisfied, the Company shall have no obligation to deliver to you any
Common Stock.
(e) In the event the Company’s obligation to withhold arises prior to the delivery to you
of Common Stock or it is determined after the delivery of Common Stock to you that the amount of the
Tax-Related Items withholding obligation was greater than the amount withheld by the Company or your
Employer, you agree to indemnify and hold the Company and your Employer harmless from any failure by
the Company or your Employer to withhold the proper amount.
(f) You acknowledge that the Mandatory Sell to Cover is imposed by the Company on
you pursuant to the terms of the RSU Award.
(g) The Company may withhold or account for Tax-Related Items by considering
applicable minimum statutory withholding amounts, or other applicable withholding rates, including
maximum applicable rates in your jurisdiction(s). If the maximum rate is used, any over-withheld amount
may be refunded to you in cash by the Company or Employer (with no entitlement to the equivalent in
shares of Common Stock), or if not refunded, you may seek a refund from the local tax authorities. You
must pay to the Company and/or the Employer any amount of Tax-Related Items that the Company and/or
the Employer may be required to withhold or account for as a result of your participation in the Plan that
cannot be satisfied by the means previously described.
5. Date of Issuance.
(a) The issuance of shares in respect of the Restricted Stock Units is intended to comply
with Treasury Regulations Section 1.409A-1(b)(4) and will be construed and administered in such a manner.
Subject to the satisfaction of the Withholding Obligation, if any, in the event one or more Restricted Stock
Units vests, the Company shall issue to you one (1) share of Common Stock for each Restricted Stock Unit
that vests on the applicable vesting date(s) (subject to any adjustment under Section 4 above, and subject to
any different provisions in the Grant Notice). Each issuance date determined by this paragraph is referred to
as an “Original Issuance Date.”
(b) Notwithstanding the foregoing, if (i) selling shares of the Company’s Common Stock
in the public market on the Original Issuance Date to satisfy your tax withholding obligation in accordance
with Section 4 of this Agreement is prohibited for any reason, and (ii) the Company elects not to instead
satisfy its tax withholding obligations by withholding shares from your distribution, then such shares shall
not be delivered on such Original Issuance Date and shall instead be delivered to you on the earliest of:
(1) the first date that you are not prohibited from selling shares of the Company’s Common Stock in the
open market, or (2) such earlier date that the Company elects to satisfy its tax withholding obligation by
withholding shares from your distribution; provided, however, that notwithstanding the foregoing, in no
event will the shares be delivered to you any later than: (A) December 31 of the calendar year in which the
Original Issuance Date occurs (that is, the last day of the taxable year in which the Original Issuance Date
occurs), or (B) if and only if permitted in a manner that complies with Treasury Regulations Section 1.409A-
1(b)(4), no later than the date that is the 15th day of the third calendar month of the applicable year
following the year in which the shares of Common Stock are no longer subject to a “substantial risk of
forfeiture” within the meaning of Treasury Regulations Section 1.409A-1(d). Delivery of the shares is
intended to comply with the requirements for the short-term deferral exemption available under Treasury
Regulations Section 1.409A-1(b)(4) and shall be construed and administered in such manner.
(c) In addition and notwithstanding the foregoing, no shares of Common Stock issuable
to you under this Section 5 as a result of the vesting of one or more Restricted Stock Units will be delivered
to you until any filings that may be required pursuant to the Hart-Scott-Rodino (“HSR”) Act in connection
with the issuance of such shares have been filed and any required waiting period under the HSR Act has
expired or been terminated (any such filings and/or waiting period required pursuant to HSR, the “HSR
Requirements”). If the HSR Requirements apply to the issuance of any shares of Common Stock issuable to
you under this Section 5 upon vesting of one or more Restricted Stock Units, such shares of Common Stock
will not be issued on the Original Issuance Date and will instead be issued on the first business day on or
following the date when all such HSR Requirements are satisfied and when you are permitted to sell shares
of Common Stock on an established stock exchange or stock market, as determined by the Company in
accordance with the Company’s then-effective policy on trading in Company securities. Notwithstanding
the foregoing, the issuance date for any shares of Common Stock delayed under this Section 5(c) shall in no
event be later than December 31 of the calendar year in which the Original Issuance Date occurs (that is, the
last day of your taxable year in which the Original Issuance Date occurs), unless a later issuance date is
permitted without incurring adverse tax consequences under Section 409A of the Code or other Applicable
Law.
(d) To the extent the RSU Award is a Non-Exempt RSU Award, the provisions of
Section 11 of the Plan shall apply.
6. Transferability. Except as otherwise provided in the Plan, your RSU Award is not
transferable, except by will or by the applicable laws of descent and distribution
7. Corporate Transaction. Your RSU Award is subject to the terms of any agreement
governing a Corporate Transaction involving the Company, including, without limitation, a provision for the
appointment of a stockholder representative that is authorized to act on your behalf with respect to any
escrow, indemnities and any contingent consideration.
8. No Liability for Taxes. As a condition to accepting the RSU Award, you hereby (a) agree to
not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates related
to tax liabilities arising from the RSU Award or other Company compensation and (b) acknowledge that you
were advised to consult with your own personal tax, financial and other legal advisors regarding the tax
consequences of the RSU Award and have either done so or knowingly and voluntarily declined to do so.
9. Severability. If any part of this Agreement or the Plan is declared by any court or
governmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any
portion of this Agreement or the Plan not declared to be unlawful or invalid. Any Section of this Agreement
(or part of such a Section) so declared to be unlawful or invalid will, if possible, be construed in a manner
which will give effect to the terms of such Section or part of a Section to the fullest extent possible while
remaining lawful and valid.
10. Other Documents. You hereby acknowledge receipt of or the right to receive a document
providing the information required by Rule 428(b)(1) promulgated under the Securities Act, which includes
the Prospectus. In addition, you acknowledge receipt of the Company’s Trading Policy.
11. Questions. If you have questions regarding these or any other terms and conditions
applicable to your RSU Award, including a summary of the applicable federal income tax consequences
please see the Prospectus.
* * * *
Non-Employee Director RSU Package
METAVIA INC.
RSU AWARD GRANT NOTICE
(AMENDED AND RESTATED 2022 EQUITY INCENTIVE PLAN)
MetaVia Inc., a Delaware corporation (the “Company”) has awarded to you (the “Participant”) the
number of restricted stock units specified and on the terms set forth below in consideration of your services
(the “RSU Award”). Your RSU Award is subject to all of the terms and conditions as set forth herein and in
the Company’s Amended and Restated 2022 Equity Incentive Plan (the “Plan”) and the Award Agreement
(the “Agreement”), which are attached hereto and incorporated herein in their entirety. Capitalized terms
not explicitly defined herein but defined in the Plan or the Agreement shall have the meanings set forth in
the Plan or the Agreement.
Participant:
Date of Grant:
Vesting Commencement Date:
Number of Restricted Stock Units:
Vesting
Schedule:
[
].
Notwithstanding the foregoing, vesting shall terminate upon the Participant’s termination of
Continuous Service.
Issuance
Schedule:
One share of Common Stock will be issued for each restricted stock unit which vests at the
time set forth in Section 5 of the Agreement.
Participant Acknowledgements: By your signature below or by electronic acceptance or authentication in
a form authorized by the Company, you understand and agree that:
•
The RSU Award is governed by this RSU Award Grant Notice (the “Grant Notice”), and
the provisions of the Plan and the Agreement, all of which are made a part of this
document. Unless otherwise provided in the Plan, this Grant Notice and the Agreement
(together, the “RSU Award Agreement”) may not be modified, amended or revised except
in a writing signed by you and a duly authorized officer of the Company.
•
You have read and are familiar with the provisions of the Plan, the RSU Award Agreement
and the Prospectus. In the event of any conflict between the provisions in the RSU Award
Agreement, or the Prospectus and the terms of the Plan, the terms of the Plan shall control.
•
The RSU Award Agreement sets forth the entire understanding between you and the
Company regarding the acquisition of Common Stock and supersedes all prior oral and
written agreements, promises and/or representations on that subject with the exception of:
(i) other equity awards previously granted to you, and (ii) any written employment
agreement, offer letter, severance agreement, written severance plan or policy, or other
written agreement between the Company and you in each case that specifies the terms that
should govern this RSU Award.
THE COMPANY:
MetaVia Inc.
PARTICIPANT:
By:
Name:
[Insert Name]
Title:
Date:
Date:
ATTACHMENTS: RSU Award Agreement, Amended and Restated 2022 Equity Incentive Plan
METAVIA INC.
AMENDED AND RESTATED 2022 EQUITY INCENTIVE PLAN
AWARD AGREEMENT (RSU AWARD)
As reflected by your Restricted Stock Unit Grant Notice (the “Grant Notice”), MetaVia Inc., a
Delaware corporation (the “Company”) has granted you a RSU Award under the Company’s Amended and
Restated 2022 Equity Incentive Plan (the “Plan”) for the number of restricted stock units as indicated in
your Grant Notice (the “RSU Award”). The terms of your RSU Award as specified in this Award
Agreement for your RSU Award (the “Agreement”) and the Grant Notice constitute your “RSU Award
Agreement”. Defined terms not explicitly defined in this Agreement but defined in the Grant Notice or the
Plan shall have the same definitions as in the Grant Notice or Plan, as applicable.
The general terms applicable to your RSU Award are as follows:
1. Governing Plan Document. Your RSU Award is subject to all the provisions of the Plan,
including but not limited to the provisions in:
(a) Section 6 of the Plan regarding the impact of a Capitalization Adjustment,
dissolution, liquidation, or Corporate Transaction on your RSU Award;
(b) Section 9(e) of the Plan regarding the Company’s retained rights to terminate your
Continuous Service notwithstanding the grant of the RSU Award; and
(c) Section 8 of the Plan regarding the tax consequences of your RSU Award.
Your RSU Award is further subject to all interpretations, amendments, rules and regulations, which
may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict
between the RSU Award Agreement and the provisions of the Plan, the provisions of the Plan shall control.
2. Grant of the RSU Award. This RSU Award represents your right to be issued on a future
date the number of shares of the Company’s Common Stock that is equal to the number of restricted stock
units indicated in the Grant Notice as modified to reflect any Capitalization Adjustment and subject to your
satisfaction of the vesting conditions set forth therein (the “Restricted Stock Units”). Any additional
Restricted Stock Units that become subject to the RSU Award pursuant to Capitalization Adjustments as set
forth in the Plan and the provisions of Section 3 below, if any, shall be subject, in a manner determined by
the Board, to the same forfeiture restrictions, restrictions on transferability, and time and manner of delivery
as applicable to the other Restricted Stock Units covered by your RSU Award.
3. Dividends. You shall receive no benefit or adjustment to your RSU Award with respect to any
cash dividend, stock dividend or other distribution that does not result from a Capitalization Adjustment as
provided in the Plan; provided, however, that this sentence shall not apply with respect to any shares of
Common Stock that are delivered to you in connection with your RSU Award after such shares have been
delivered to you.
4. Withholding Obligations. As further provided in Section 8 of the Plan, you hereby authorize
withholding from payroll and any other amounts payable to you, and otherwise agree to make adequate
provision for, any sums required to satisfy the federal, state, local and foreign tax withholding obligations, if
any, which arise in connection with your RSU Award (the “Withholding Obligation”) in accordance with
the withholding procedures established by the Company. Unless the Withholding
Obligation is satisfied, the Company shall have no obligation to deliver to you any Common Stock in
respect of the RSU Award. In the event the Withholding Obligation of the Company arises prior to the
delivery to you of Common Stock or it is determined after the delivery of Common Stock to you that the
amount of the Withholding Obligation was greater than the amount withheld by the Company, you agree to
indemnify and hold the Company harmless from any failure by the Company to withhold the proper
amount.
5. Date Of Issuance.
(a) The issuance of shares in respect of the Restricted Stock Units is intended to comply
with Treasury Regulations Section 1.409A-1(b)(4) and will be construed and administered in such a manner.
Subject to the satisfaction of the Withholding Obligation, if any, in the event one or more Restricted Stock
Units vests, the Company shall issue to you one (1) share of Common Stock for each Restricted Stock Unit
that vests on the applicable vesting date(s) (subject to any adjustment under Section 3 above, and subject to
any different provisions in the Grant Notice). Each issuance date determined by this paragraph is referred to
as an “Original Issuance Date.”
(b) If the Original Issuance Date falls on a date that is not a business day, delivery shall
instead occur on the next following business day. In addition, if:
(i) the Original Issuance Date does not occur (1) during an “open window
period” applicable to you, as determined by the Company in accordance with the Company’s then-effective
policy on trading in Company securities, or (2) on a date when you are otherwise permitted to sell shares of
Common Stock on an established stock exchange or stock market (including but not limited to under a
previously established written trading plan that meets the requirements of Rule 10b5-1 under the Exchange
Act and was entered into in compliance with the Company’s policies (a “10b5-1 Arrangement”)), and
(ii) either (1) a Withholding Obligation does not apply, or (2) the Company
decides, prior to the Original Issuance Date, (A) not to satisfy the Withholding Obligation by withholding
shares of Common Stock from the shares otherwise due, on the Original Issuance Date, to you under this
Award, and (B) not to permit you to enter into a “same day sale” commitment with a broker-dealer
(including but not limited to a commitment under a 10b5-1 Arrangement) and (C) not to permit you to pay
your Withholding Obligation in cash, then the shares that would otherwise be issued to you on the Original
Issuance Date will not be delivered on such Original Issuance Date and will instead be delivered on the first
business day when you are not prohibited from selling shares of the Company’s Common Stock in the open
public market, but in no event later than December 31 of the calendar year in which the Original Issuance
Date occurs (that is, the last day of your taxable year in which the Original Issuance Date occurs), or, if and
only if permitted in a manner that complies with Treasury Regulations Section 1.409A-1(b)(4), no later than
the date that is the 15th day of the third calendar month of the applicable year following the year in which
the shares of Common Stock under this Award are no longer subject to a “substantial risk of forfeiture”
within the meaning of Treasury Regulations Section 1.409A-1(d).
(c) To the extent the RSU Award is a Non-Exempt RSU Award, the provisions of
Section 11 of the Plan shall apply.
6. Transferability. Except as otherwise provided in the Plan, your RSU Award is not
transferable, except by will or by the applicable laws of descent and distribution
7. Corporate Transaction. Your RSU Award is subject to the terms of any agreement
governing a Corporate Transaction involving the Company, including, without limitation, a provision for the
appointment of a stockholder representative that is authorized to act on your behalf with respect to any
escrow, indemnities and any contingent consideration.
8. No Liability for Taxes. As a condition to accepting the RSU Award, you hereby (a) agree to
not make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates related
to tax liabilities arising from the RSU Award or other Company compensation and (b) acknowledge that you
were advised to consult with your own personal tax, financial and other legal advisors regarding the tax
consequences of the RSU Award and have either done so or knowingly and voluntarily declined to do so.
9. Severability. If any part of this Agreement or the Plan is declared by any court or
governmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any
portion of this Agreement or the Plan not declared to be unlawful or invalid. Any Section of this Agreement
(or part of such a Section) so declared to be unlawful or invalid will, if possible, be construed in a manner
which will give effect to the terms of such Section or part of a Section to the fullest extent possible while
remaining lawful and valid.
10. Other Documents. You hereby acknowledge receipt of or the right to receive a document
providing the information required by Rule 428(b)(1) promulgated under the Securities Act, which includes
the Prospectus. In addition, you acknowledge receipt of the Company’s Trading Policy.
11. Questions. If you have questions regarding these or any other terms and conditions
applicable to your RSU Award, including a summary of the applicable federal income tax consequences
please see the Prospectus.
* * * *
Standard Stock Option Grant Package
METAVIA INC.
STOCK OPTION GRANT NOTICE
(AMENDED AND RESTATED 2022 EQUITY INCENTIVE PLAN)
MetaVia Inc., a Delaware corporation (the “Company”), pursuant to its Amended and Restated
2022 Equity Incentive Plan (the “Plan”), has granted to you (“Optionholder”) an option to purchase the
number of shares of the Common Stock set forth below (the “Option”). Your Option is subject to all of the
terms and conditions as set forth in this Stock Option Grant Notice (the “Grant Notice”) and in the Plan, the
Stock Option Agreement and the Notice of Exercise, all of which are attached hereto and incorporated
herein in their entirety. Capitalized terms not explicitly defined herein but defined in the Plan or the Stock
Option Agreement shall have the meanings set forth in the Plan or the Stock Option Agreement, as
applicable.
Optionholder:
Date of Grant:
Vesting Commencement Date:
Number of Shares of the Common Stock
Subject to Option:
Exercise Price (Per Share):
Total Exercise Price:
Expiration Date:
Type of Grant:
[Incentive Stock Option] OR [Nonstatutory Stock Option]
Exercise and Vesting
Schedule:
Subject to the Optionholder’s Continuous Service through each applicable vesting
date, the Option will vest as follows:1
Optionholder Acknowledgements: By your signature below or by electronic acceptance or
authentication in a form authorized by the Company, you understand and agree that:
•
The Option is governed by the Grant Notice, and the provisions of the Plan, the Stock
Option Agreement and the Notice of Exercise, all of which are made a part of this
document. Unless otherwise provided in the Plan, this Grant Notice and the Stock Option
Agreement (together, the “Option Agreement”) may not be modified, amended or revised
except in a writing signed by you and a duly authorized officer of the Company.
•
If the Option is designated an Incentive Stock Option, it (plus other outstanding Incentive
Stock Options granted to you) cannot be first exercisable for more than $100,000 in value
(measured by exercise price) in any calendar year. Any excess over $100,000 is a
Nonstatutory Stock Option.
1 Note to Draft: To insert applicable vesting schedule
•
You consent to receive this Grant Notice, the Stock Option Agreement, the Plan and any
other Plan-related documents (including the Prospectus) by electronic delivery and to
participate in the Plan through an on-line or electronic system established and maintained
by the Company or another third party designated by the Company.
•
You have read and are familiar with the provisions of the Plan, the Grant Notice, the Stock
Option Agreement, the Notice of Exercise and the Prospectus. In the event of any conflict
between the provisions in this Grant Notice, the Option Agreement, the Notice of Exercise,
or the Prospectus and the terms of the Plan, the terms of the Plan shall control.
•
The Option Agreement sets forth the entire understanding between you and the Company
regarding the acquisition of the Common Stock and supersedes all prior oral and written
agreements, promises and/or representations on that subject with the exception of other
equity awards previously granted to you and any written employment agreement, offer
letter, severance agreement, written severance plan or policy, or other written agreement
between the Company and you in each case that specifies the terms that should govern this
Option.
•
Counterparts may be delivered via facsimile, electronic mail (including pdf or any
electronic signature complying with the U.S. federal ESIGN Act of 2000, Uniform
Electronic Transactions Act or other applicable law) or other transmission method and any
counterpart so delivered will be deemed to have been duly and validly delivered and be
valid and effective for all purposes.
THE COMPANY:
MetaVia Inc.
OPTIONHOLDER:
By:
Name:
[Insert Name]
Title:
Date:
Date:
ATTACHMENTS: Stock Option Agreement, Amended and Restated 2022 Equity Incentive Plan, Notice of
Exercise
ATTACHMENT I
STOCK OPTION AGREEMENT
METAVIA INC.
AMENDED AND RESTATED 2022 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
As reflected by your Stock Option Grant Notice (the “Grant Notice”), MetaVia Inc., a Delaware
corporation (the “Company”) has granted you an option under its Amended and Restated 2022 Equity
Incentive Plan (the “Plan”) to purchase a number of shares of the Common Stock at the exercise price
indicated in your Grant Notice (the “Option”). Capitalized terms not explicitly defined in this Agreement
but defined in the Grant Notice or the Plan shall have the meanings set forth in the Grant Notice or Plan, as
applicable. The terms of your Option as specified in the Grant Notice and this Stock Option Agreement
constitute your Option Agreement.
The general terms and conditions applicable to your Option are as follows:
1. Governing Plan Document. Your Option is subject to all the provisions of the Plan,
including but not limited to the provisions in:
(a) Section 6 regarding the impact of a Capitalization Adjustment, dissolution,
liquidation, or Corporate Transaction on your Option;
(b) Section 9(e) regarding the Company’s retained rights to terminate your Continuous
Service notwithstanding the grant of the Option; and
(c) Section 8 regarding the tax consequences of your Option.
Your Option is further subject to all interpretations, amendments, rules and regulations, which may
from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the
Option Agreement and the provisions of the Plan, the provisions of the Plan shall control.
2. Vesting.
(a) The provisions of this Section 2 shall not apply to your Option if you have entered
into a written agreement with the Company that contains terms related to a 280G Payment (as defined
below).
(b) Your Option will vest as provided in your Grant Notice, subject to the provisions
contained herein and the terms of the Plan. Vesting will cease upon the termination of your Continuous
Service. Notwithstanding the foregoing, if a Change in Control occurs and your Continuous Service has not
terminated as of immediately prior to such Change in Control, then the vesting and exercisability of your
Option will be accelerated in full upon such Change in Control.
(c) If any payment or benefit you would receive from the Company or otherwise in
connection with a Change in Control or other similar transaction (a “280G Payment”) would (i) constitute a
“parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be
subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then any such 280G
Payment (a “Payment”) shall be equal to the Reduced Amount. The “Reduced Amount” shall be either
(x) the largest portion of the Payment that would result in no portion of the Payment (after reduction) being
subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment,
whichever amount (i.e., the amount determined by clause (x) or by clause (y)), after taking into account all
applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the
highest applicable marginal rate), results in your receipt, on an after-tax basis, of the greater economic
benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax. If a
reduction in a Payment is required pursuant to the preceding sentence and the Reduced Amount is
determined pursuant to clause (x) of the preceding sentence, the reduction shall occur in the manner (the
“Reduction Method”) that results in the greatest economic benefit for you. If more than one method of
reduction will result in the same economic benefit, the items so reduced will be reduced pro rata (the “Pro
Rata Reduction Method”).
Notwithstanding the foregoing, if the Reduction Method or the Pro Rata Reduction Method would
result in any portion of the Payment being subject to taxes pursuant to Section 409A of the Code that would
not otherwise be subject to taxes pursuant to Section 409A of the Code, then the Reduction Method and/or
the Pro Rata Reduction Method, as the case may be, shall be modified so as to avoid the imposition of taxes
pursuant to Section 409A of the Code as follows: (A) as a first priority, the modification shall preserve to the
greatest extent possible, the greatest economic benefit for you as determined on an after-tax basis; (B) as a
second priority, Payments that are contingent on future events (e.g., being terminated without cause), shall
be reduced (or eliminated) before Payments that are not contingent on future events; and (C) as a third
priority, Payments that are “deferred compensation” within the meaning of Section 409A of the Code shall
be reduced (or eliminated) before Payments that are not deferred compensation within the meaning of
Section 409A of the Code.
Unless you and the Company agree on an alternative accounting firm, the accounting firm engaged
by the Company for general tax compliance purposes as of the day prior to the effective date of the change
of control transaction triggering the Payment shall perform the foregoing calculations. If the accounting
firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group
effecting the change of control transaction, the Company shall appoint a nationally recognized accounting
firm to make the determinations required hereunder. The Company shall bear all expenses with respect to
the determinations by such accounting firm required to be made hereunder. The Company shall use
commercially reasonable efforts to cause the accounting firm engaged to make the determinations hereunder
to provide its calculations, together with detailed supporting documentation, to you and the Company within
fifteen (15) calendar days after the date on which your right to a 280G Payment becomes reasonably likely
to occur (if requested at that time by you or the Company) or such other time as requested by you or the
Company.
If you receive a Payment for which the Reduced Amount was determined pursuant to clause (x) of
the first paragraph of this Section 2(b) and the Internal Revenue Service determines thereafter that some
portion of the Payment is subject to the Excise Tax, you shall promptly return to the Company a sufficient
amount of the Payment (after reduction pursuant to clause (x) of the first paragraph of this Section 2(b)) so
that no portion of the remaining Payment is subject to the Excise Tax. For the avoidance of doubt, if the
Reduced Amount was determined pursuant to clause (y) in the first paragraph of this Section 2(b), you
3. Exercise.
(a) You may generally exercise the vested portion of your Option for whole shares of the
Common Stock at any time during its term by delivery of payment of the exercise price and applicable
withholding taxes and other required documentation to the Plan Administrator in accordance with the
exercise procedures established by the Plan Administrator, which may include an electronic submission.
Please review Sections 4(i), 4(j) and 7(b)(v) of the Plan, which may restrict or prohibit your ability to
exercise your Option during certain periods.
(b) To the extent permitted by Applicable Law, you may pay your Option exercise price
as follows:
(i) cash, check, bank draft or money order;
(ii) subject to Company and/or Committee consent at the time of exercise,
pursuant to a “cashless exercise” program as further described in Section 4(c)(ii) of the Plan if at the time of
exercise the Common Stock is publicly traded;
(iii) subject to Company and/or Committee consent at the time of exercise, by
delivery of previously owned shares of the Common Stock as further described in Section 4(c)(iii) of the
Plan; or
(iv) subject to Company and/or Committee consent at the time of exercise, if the
Option is a Nonstatutory Stock Option, by a “net exercise” arrangement as further described in Section 4(c)
(iv) of the Plan.
(c) By accepting your Option, you agree that you will not sell, dispose of, transfer, make
any short sale of, grant any option for the purchase of, or enter into any hedging or similar transaction with
the same economic effect as a sale with respect to any shares of the Common Stock or other securities of the
Company held by you, for a period of one hundred eighty (180) days following the effective date of a
registration statement of the Company filed under the Securities Act or such longer period as the
underwriters or the Company will request to facilitate compliance with FINRA Rule 2241 or any successor
or similar rules or regulation (the “Lock-Up Period”); provided, however, that nothing contained in this
section will prevent the exercise of a repurchase option, if any, in favor of the Company during the Lock-Up
Period. You further agree to execute and deliver such other agreements as may be reasonably requested by
the Company or the underwriters that are consistent with the foregoing or that are necessary to give further
effect thereto. In order to enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to your shares of the Common Stock until the end of such period. You also agree
that any transferee of any shares of the Common Stock (or other securities) of the Company held by you
will be bound by this Section 3(c). The underwriters of the Company’s stock are intended third party
beneficiaries of this Section 3(c) and will have the right, power and authority to enforce the provisions
hereof as though they were a party hereto.
4. Term. You may not exercise your Option before the commencement of its term or after its
term expires. The term of your Option commences on the Date of Grant and expires upon the earliest of the
following:
(a) immediately upon the termination of your Continuous Service for Cause;
(b) three months after the termination of your Continuous Service for any reason other
than Cause, Disability or death;
(c) 12 months after the termination of your Continuous Service due to your Disability;
(d) 18 months after your death if you die during your Continuous Service;
(e) immediately upon a Corporate Transaction if the Board has determined that the
Option will terminate in connection with a Corporate Transaction;
(f) the Expiration Date indicated in your Grant Notice; or
(g) the day before the 10th anniversary of the Date of Grant.
Notwithstanding the foregoing, if you die during the period provided in Section 3(b) or 3(c) above,
the term of your Option shall not expire until the earlier of (i) 18 months after your death, (ii) upon any
termination of the Option in connection with a Corporate Transaction, (iii) the Expiration Date indicated in
your Grant Notice, or (iv) the day before the tenth anniversary of the Date of Grant. Additionally, the Post-
Termination Exercise Period of your Option may be extended as provided in Section 4(i) of the Plan.
To obtain the federal income tax advantages associated with an Incentive Stock Option, the Code
requires that at all times beginning on the date of grant of your Option and ending on the day three months
before the date of your Option’s exercise, you must be an employee of the Company or an Affiliate, except
in the event of your death or Disability. If the Company provides for the extended exercisability of your
Option under certain circumstances for your benefit, your Option will not necessarily be treated as an
Incentive Stock Option if you exercise your Option more than three months after the date your employment
terminates.
5. Withholding Obligations. As further provided in Section 8 of the Plan: (a) you may not
exercise your Option unless the applicable tax withholding obligations are satisfied, and (b) at the time you
exercise your Option, in whole or in part, or at any time thereafter as requested by the Company, you hereby
authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make
adequate provision for (including by means of a “cashless exercise” pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board to the extent permitted by the Company), any
sums required to satisfy the federal, state, local and foreign tax withholding obligations, if any, which arise
in connection with the exercise of your Option in accordance with the withholding procedures established
by the Company. Accordingly, you may not be able to exercise your Option even though the Option is
vested, and the Company shall have no obligation to issue shares of the Common Stock subject to your
Option, unless and until such obligations are satisfied. In the event that the amount of the Company’s
withholding obligation in connection with your Option was greater than the amount actually withheld by the
Company, you agree to indemnify and hold the Company harmless from any failure by the Company to
withhold the proper amount.
6. Incentive Stock Option Disposition Requirement. If your Option is an Incentive Stock
Option, you must notify the Company in writing within 15 days after the date of any disposition of any of
the shares of the Common Stock issued upon exercise of your Option that occurs within two years after the
date of your Option grant or within one year after such shares of the Common Stock are transferred upon
exercise of your Option.
7. Transferability. Except as otherwise provided in Section 4(e) of the Plan, your Option is not
transferable, except by will or by the applicable laws of descent and distribution, and is exercisable during
your life only by you.
8. Corporate Transaction. Your Option is subject to the terms of any agreement governing a
Corporate Transaction involving the Company, including, without limitation, a provision for the
appointment of a stockholder representative that is authorized to act on your behalf with respect to any
escrow, indemnities and any contingent consideration.
9. No Liability for Taxes. As a condition to accepting the Option, you hereby (a) agree to not
make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates related to
tax liabilities arising from the Option or other Company compensation and (b) acknowledge that you were
advised to consult with your own personal tax, financial and other legal advisors regarding the tax
consequences of the Option and have either done so or knowingly and voluntarily declined to do so.
Additionally, you acknowledge that the Option is exempt from Section 409A only if the exercise price is at
least equal to the “fair market value” of the Common Stock on the date of grant as determined by the
Internal Revenue Service and there is no other impermissible deferral of compensation associated with the
Option. Additionally, as a condition to accepting the Option, you agree not make any claim against the
Company, or any of its Officers, Directors, Employees or Affiliates in the event that the Internal Revenue
Service asserts that such exercise is less than the “fair market value” of the Common Stock on the date of
grant as subsequently determined by the Internal Revenue Service.
10. Severability. If any part of this Option Agreement or the Plan is declared by any court or
governmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any
portion of this Option Agreement or the Plan not declared to be unlawful or invalid. Any Section of this
Option Agreement (or part of such a Section) so declared to be unlawful or invalid will, if possible, be
construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest
extent possible while remaining lawful and valid
11. Other Documents. You hereby acknowledge receipt of or the right to receive a document
providing the information required by Rule 428(b)(1) promulgated under the Securities Act, which includes
the Prospectus. In addition, you acknowledge and agree to be subject to the Company’s Trading Policy,
which such Trading Policy has been or will be made available to you.
12. Questions. If you have questions regarding these or any other terms and conditions
applicable to your Option, including a summary of the applicable federal income tax consequences please
see the Prospectus.
* * * *
ATTACHMENT II
AMENDED AND RESTATED 2022 EQUITY INCENTVE PLAN
ATTACHMENT III
NOTICE OF EXERCISE
METAVIA INC.
(AMENDED AND RESTATED 2022 EQUITY INCENTIVE PLAN)
NOTICE OF EXERCISE
MetaVia Inc.
545 Concord Avenue, Suite 210
Cambridge, Massachusetts 02138
Attention: Chief Executive Officer
Date of Exercise: _____________
This constitutes notice to MetaVia Inc., a Delaware corporation (the “Company”) that I elect to
purchase the below number of shares of the Common Stock of the Company (the “Shares”) by exercising
my Option for the price set forth below. Capitalized terms not explicitly defined in this Notice of Exercise
but defined in the Grant Notice, Option Agreement or Amended and Restated 2022 Equity Incentive Plan
(the “Plan”) shall have the meanings set forth therein, as applicable. Use of certain payment methods is
subject to Company and/or Committee consent and certain additional requirements set forth in the Option
Agreement and the Plan.
Type of option (check one):
Incentive ☐Nonstatutory ☐
Date of Grant:
Number of Shares as to which Option is exercised:
Certificates to be issued in name of:
Total exercise price:
$
Cash, check, bank draft or money order delivered
herewith:
$
Value of Shares delivered herewith:
$
Regulation T Program (cashless exercise)
$
Value of Shares pursuant to net exercise:
$
By this exercise, I agree (i) to provide such additional documents as the Company may require
pursuant to the terms of the Plan, (ii) to satisfy the tax withholding obligations, if any, relating to the
exercise of this Option as set forth in the Option Agreement, and (iii) if this exercise relates to an incentive
stock option, to notify the Company in writing within 15 days after the date of any disposition of any of the
Shares issued upon exercise of this Option that occurs within two years after the Date of Grant or within one
year after such Shares are issued upon exercise of this Option.
I further agree that, if required by the Company (or a representative of the underwriters) in
connection with the first underwritten registration of the offering of any securities of the Company under the
Securities Act, I will not sell, dispose of, transfer, make any short sale of, grant any option for the purchase
of, or enter into any hedging or similar transaction with the same economic effect as a sale with respect to
any shares of the Common Stock or other securities of the Company for a period of one hundred eighty
(180) days following the effective date of a registration statement of the Company filed under the Securities
Act (or such longer period as the underwriters or the Company shall request to facilitate compliance with
FINRA Rule 2241 or any successor or similar rule or regulation) (the “Lock-Up Period”). I further agree to
execute and deliver such other agreements as may be reasonably requested by the Company or the
underwriters that are consistent with the foregoing or that are necessary to give further effect thereto. In
order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to
securities subject to the foregoing restrictions until the end of such period.
Very truly yours,
Non-Employee Director
METAVIA INC.
STOCK OPTION GRANT NOTICE
(AMENDED AND RESTATED 2022 EQUITY INCENTIVE PLAN)
MetaVia Inc., a Delaware corporation (the “Company”), pursuant to its Amended and Restated
2022 Equity Incentive Plan (the “Plan”), has granted to you (“Optionholder”) an option to purchase the
number of shares of the Common Stock set forth below (the “Option”). Your Option is subject to all of the
terms and conditions as set forth in this Stock Option Grant Notice (the “Grant Notice”) and in the Plan, the
Stock Option Agreement and the Notice of Exercise, all of which are attached hereto and incorporated
herein in their entirety. Capitalized terms not explicitly defined herein but defined in the Plan or the Stock
Option Agreement shall have the meanings set forth in the Plan or the Stock Option Agreement, as
applicable.
Optionholder:
Date of Grant:
Number of Shares of the Common
Stock Subject to Option:
Exercise Price (Per Share):
Total Exercise Price:
Expiration Date:
Type of Grant:
Nonstatutory Stock Option
Exercise and Vesting
Schedule:
Subject to the Optionholder’s Continuous Service through each applicable vesting
date, the Option will vest as follows, subject to the potential vesting acceleration
described in Section 2 of the Stock Option Agreement:
[Initial Grant]The shares subject to the Option shall vest and become exercisable in
a series of thirty-six (36) successive equal monthly installments measured from the
Date of Grant.
[Annual Grant][The shares subject to the Option shall vest and become exercisable
on the earlier of (i) the one-year anniversary of the Date of Grant and (ii) the day
immediately prior to the date of the Company’s next annual stockholder meeting
following the Date of Grant.]
Optionholder Acknowledgements: By your signature below or by electronic acceptance or
authentication in a form authorized by the Company, you understand and agree that:
•
The Option is governed by this Grant Notice, and the provisions of the Plan, the Stock
Option Agreement and the Notice of Exercise, all of which are made a part of this
document. Unless otherwise provided in the Plan, this Grant Notice and the Stock Option
Agreement (together, the “Option Agreement”) may not be modified, amended or revised
except in a writing signed by you and a duly authorized officer of the Company.
•
You consent to receive this Grant Notice, the Stock Option Agreement, the Plan and any
other Plan-related documents (including the Prospectus) by electronic delivery and to
participate in the Plan through an on-line or electronic system established and maintained
by the Company or another third party designated by the Company.
•
You have read and are familiar with the provisions of the Plan, the Grant Notice, the Stock
Option Agreement, the Notice of Exercise and the Prospectus. In the event of any conflict
between the provisions in this Grant Notice, the Option Agreement, the Notice of Exercise,
or the Prospectus and the terms of the Plan, the terms of the Plan shall control.
•
The Option Agreement sets forth the entire understanding between you and the Company
regarding the acquisition of the Common Stock and supersedes all prior oral and written
agreements, promises and/or representations on that subject with the exception of other
equity awards previously granted to you and any written employment agreement, offer
letter, severance agreement, written severance plan or policy, or other written agreement
between the Company and you in each case that specifies the terms that should govern this
Option.
•
Counterparts may be delivered via facsimile, electronic mail (including pdf or any
electronic signature complying with the U.S. federal ESIGN Act of 2000, Uniform
Electronic Transactions Act or other applicable law) or other transmission method and any
counterpart so delivered will be deemed to have been duly and validly delivered and be
valid and effective for all purposes.
THE COMPANY:
MetaVia Inc.
OPTIONHOLDER:
By:
Name:
[Insert Name]
Title:
Date:
Date:
ATTACHMENTS: Stock Option Agreement, Amended and Restated 2022 Equity Incentive Plan, Notice of
Exercise
ATTACHMENT I
STOCK OPTION AGREEMENT
METAVIA INC.
AMENDED AND RESTATED 2022 EQUITY INCENTIVE PLAN
STOCK OPTION AGREEMENT
As reflected by your Stock Option Grant Notice (the “Grant Notice”), MetaVia Inc., a Delaware
corporation (the “Company”) has granted you an option under its Amended and Restated 2022 Equity
Incentive Plan (the “Plan”) to purchase a number of shares of the Common Stock at the exercise price
indicated in your Grant Notice (the “Option”). Capitalized terms not explicitly defined in this Agreement
but defined in the Grant Notice or the Plan shall have the meanings set forth in the Grant Notice or Plan, as
applicable. The terms of your Option as specified in the Grant Notice and this Stock Option Agreement
constitute your Option Agreement.
The general terms and conditions applicable to your Option are as follows:
1. Governing Plan Document. Your Option is subject to all the provisions of the Plan,
including but not limited to the provisions in:
(a) Section 6 regarding the impact of a Capitalization Adjustment, dissolution,
liquidation, or Corporate Transaction on your Option;
(b) Section 9(e) regarding the Company’s retained rights to terminate your Continuous
Service notwithstanding the grant of the Option; and
(c) Section 8 regarding the tax consequences of your Option.
Your Option is further subject to all interpretations, amendments, rules and regulations, which may
from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the
Option Agreement and the provisions of the Plan, the provisions of the Plan shall control.
2. Vesting.
(a) Your Option will vest as provided in your Grant Notice, subject to the provisions
contained herein and the terms of the Plan. Vesting will cease upon the termination of your Continuous
Service. Notwithstanding the foregoing, if a Change in Control occurs and your Continuous Service has not
terminated as of immediately prior to such Change in Control, then the vesting and exercisability of your
Option will be accelerated in full upon such Change in Control.
(b) If any payment or benefit you would receive from the Company or otherwise in
connection with a Change in Control or other similar transaction (a “280G Payment”) would (i) constitute a
“parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be
subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then any such 280G
Payment (a “Payment”) shall be equal to the Reduced Amount. The “Reduced Amount” shall be either
(x) the largest portion of the Payment that would result in no portion of the Payment (after reduction) being
subject to the Excise Tax or (y) the largest portion, up to and including the total, of the Payment, whichever
amount (i.e., the amount determined by clause (x) or by clause (y)), after taking into account all applicable
federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest
applicable marginal rate), results in your receipt, on an after-tax basis, of the greater
economic benefit notwithstanding that all or some portion of the Payment may be subject to the Excise Tax.
If a reduction in a Payment is required pursuant to the preceding sentence and the Reduced Amount is
determined pursuant to clause (x) of the preceding sentence, the reduction shall occur in the manner (the
“Reduction Method”) that results in the greatest economic benefit for you. If more than one method of
reduction will result in the same economic benefit, the items so reduced will be reduced pro rata (the “Pro
Rata Reduction Method”).
Notwithstanding the foregoing, if the Reduction Method or the Pro Rata Reduction Method would
result in any portion of the Payment being subject to taxes pursuant to Section 409A of the Code that would
not otherwise be subject to taxes pursuant to Section 409A of the Code, then the Reduction Method and/or
the Pro Rata Reduction Method, as the case may be, shall be modified so as to avoid the imposition of taxes
pursuant to Section 409A of the Code as follows: (A) as a first priority, the modification shall preserve to the
greatest extent possible, the greatest economic benefit for you as determined on an after-tax basis; (B) as a
second priority, Payments that are contingent on future events (e.g., being terminated without cause), shall
be reduced (or eliminated) before Payments that are not contingent on future events; and (C) as a third
priority, Payments that are “deferred compensation” within the meaning of Section 409A of the Code shall
be reduced (or eliminated) before Payments that are not deferred compensation within the meaning of
Section 409A of the Code.
Unless you and the Company agree on an alternative accounting firm, the accounting firm engaged
by the Company for general tax compliance purposes as of the day prior to the effective date of the change
of control transaction triggering the Payment shall perform the foregoing calculations. If the accounting
firm so engaged by the Company is serving as accountant or auditor for the individual, entity or group
effecting the change of control transaction, the Company shall appoint a nationally recognized accounting
firm to make the determinations required hereunder. The Company shall bear all expenses with respect to
the determinations by such accounting firm required to be made hereunder. The Company shall use
commercially reasonable efforts to cause the accounting firm engaged to make the determinations hereunder
to provide its calculations, together with detailed supporting documentation, to you and the Company within
fifteen (15) calendar days after the date on which your right to a 280G Payment becomes reasonably likely
to occur (if requested at that time by you or the Company) or such other time as requested by you or the
Company.
If you receive a Payment for which the Reduced Amount was determined pursuant to clause (x) of
the first paragraph of this Section 2(b) and the Internal Revenue Service determines thereafter that some
portion of the Payment is subject to the Excise Tax, you shall promptly return to the Company a sufficient
amount of the Payment (after reduction pursuant to clause (x) of the first paragraph of this Section 2(b)) so
that no portion of the remaining Payment is subject to the Excise Tax. For the avoidance of doubt, if the
Reduced Amount was determined pursuant to clause (y) in the first paragraph of this Section 2(b), you shall
have no obligation to return any portion of the Payment pursuant to the preceding sentence.
3. Exercise.
(a) You may generally exercise the vested portion of your Option for whole shares of the
Common Stock at any time during its term by delivery of payment of the exercise price and applicable
withholding taxes and other required documentation to the Plan Administrator in accordance with the
exercise procedures established by the Plan Administrator, which may include an electronic submission.
Please review Sections 4(i), 4(j) and 7(b)(v) of the Plan, which may restrict or prohibit your ability to
exercise your Option during certain periods.
(b) To the extent permitted by Applicable Law, you may pay your Option exercise price
as follows:
(i) cash, check, bank draft or money order;
(ii) subject to Company and/or Committee consent at the time of exercise,
pursuant to a “cashless exercise” program as further described in Section 4(c)(ii) of the Plan if at the time of
exercise the Common Stock is publicly traded;
(iii) subject to Company and/or Committee consent at the time of exercise, by
delivery of previously owned shares of the Common Stock as further described in Section 4(c)(iii) of the
Plan; or
(iv) subject to Company and/or Committee consent at the time of exercise by a
“net exercise” arrangement as further described in Section 4(c)(iv) of the Plan.
4. Term. You may not exercise your Option before the commencement of its term or after its
term expires. The term of your Option commences on the Date of Grant and expires upon the earliest of the
following:
(a) immediately upon the termination of your Continuous Service for Cause;
(b) 12 months after the termination of your Continuous Service for any reason other than
Cause or death;
(c) 18 months after your death if you die during your Continuous Service;
(d) immediately upon a Corporate Transaction if the Board has determined that the
Option will terminate in connection with a Corporate Transaction;
(e) the Expiration Date indicated in your Grant Notice; or
(f) the day before the 10th anniversary of the Date of Grant.
Notwithstanding the foregoing, if you die during the period provided in Section 4(b) above, the term
of your Option shall not expire until the earlier of (i) 18 months after your death, (ii) upon any termination of
the Option in connection with a Corporate Transaction, (iii) the Expiration Date indicated in your Grant
Notice, or (iv) the day before the tenth anniversary of the Date of Grant. Additionally, the Post-Termination
Exercise Period of your Option may be extended as provided in Section 4(i) of the Plan.
5. Withholding Obligations. As further provided in Section 8 of the Plan: (a) you may not
exercise your Option unless the applicable tax withholding obligations are satisfied, and (b) at the time you
exercise your Option, in whole or in part, or at any time thereafter as requested by the Company, you hereby
authorize withholding from payroll and any other amounts payable to you, and otherwise agree to make
adequate provision for (including by means of a “cashless exercise” pursuant to a program developed under
Regulation T as promulgated by the Federal Reserve Board to the extent permitted by the Company), any
sums required to satisfy the federal, state, local and foreign tax withholding obligations, if any, which arise
in connection with the exercise of your Option in accordance with the withholding procedures established
by the Company. Accordingly, you may not be able to exercise your Option even though the Option is
vested, and the Company shall have no obligation to issue shares of the Common Stock subject to your
Option, unless and until such obligations are satisfied. In the event that the
amount of the Company’s withholding obligation in connection with your Option was greater than the
amount actually withheld by the Company, you agree to indemnify and hold the Company harmless from
any failure by the Company to withhold the proper amount.
6. Transferability. Except as otherwise provided in Section 4(e) of the Plan, your Option is not
transferable, except by will or by the applicable laws of descent and distribution, and is exercisable during
your life only by you.
7. Corporate Transaction. Your Option is subject to the terms of any agreement governing a
Corporate Transaction involving the Company, including, without limitation, a provision for the
appointment of a stockholder representative that is authorized to act on your behalf with respect to any
escrow, indemnities and any contingent consideration.
8. No Liability for Taxes. As a condition to accepting the Option, you hereby (a) agree to not
make any claim against the Company, or any of its Officers, Directors, Employees or Affiliates related to
tax liabilities arising from the Option or other Company compensation and (b) acknowledge that you were
advised to consult with your own personal tax, financial and other legal advisors regarding the tax
consequences of the Option and have either done so or knowingly and voluntarily declined to do so.
Additionally, you acknowledge that the Option is exempt from Section 409A only if the exercise price is at
least equal to the “fair market value” of the Common Stock on the date of grant as determined by the
Internal Revenue Service and there is no other impermissible deferral of compensation associated with the
Option. Additionally, as a condition to accepting the Option, you agree not make any claim against the
Company, or any of its Officers, Directors, Employees or Affiliates in the event that the Internal Revenue
Service asserts that such exercise is less than the “fair market value” of the Common Stock on the date of
grant as subsequently determined by the Internal Revenue Service.
9. Severability. If any part of this Option Agreement or the Plan is declared by any court or
governmental authority to be unlawful or invalid, such unlawfulness or invalidity will not invalidate any
portion of this Option Agreement or the Plan not declared to be unlawful or invalid. Any Section of this
Option Agreement (or part of such a Section) so declared to be unlawful or invalid will, if possible, be
construed in a manner which will give effect to the terms of such Section or part of a Section to the fullest
extent possible while remaining lawful and valid
10. Other Documents. You hereby acknowledge receipt of or the right to receive a document
providing the information required by Rule 428(b)(1) promulgated under the Securities Act, which includes
the Prospectus. In addition, you acknowledge and agree to be subject to the Company’s Trading Policy,
which such Trading Policy has been or will be made available to you.
11. Questions. If you have questions regarding these or any other terms and conditions
applicable to your Option, including a summary of the applicable federal income tax consequences please
see the Prospectus.
* * * *
ATTACHMENT II
AMENDED AND RESTATED 2022 EQUITY INCENTIVE PLAN
ATTACHMENT III
NOTICE OF EXERCISE
METAVIA INC.
(AMENDED AND RESTATED 2022 EQUITY INCENTIVE PLAN)
NOTICE OF EXERCISE
MetaVia Inc.
545 Concord Avenue, Suite 210
Cambridge, Massachusetts 02138
Attention: Chief Executive Officer
Date of Exercise: ________________
This constitutes notice to MetaVia Inc., a Delaware corporation (the “Company”) that I elect to
purchase the below number of shares of the Common Stock of the Company (the “Shares”) by exercising
my Option for the price set forth below. Capitalized terms not explicitly defined in this Notice of Exercise
but defined in the Grant Notice, Option Agreement or Amended and Restated 2022 Equity Incentive Plan
(the “Plan”) shall have the meanings set forth therein, as applicable. Use of certain payment methods is
subject to Company and/or Committee consent and certain additional requirements set forth in the Option
Agreement and the Plan.
Type of option:
Nonstatutory
Date of Grant:
Number of Shares as to which Option is exercised:
Certificates to be issued in name of:
Total exercise price:
$
Cash, check, bank draft or money order delivered herewith:
$
Value of Shares delivered herewith:
$
Regulation T Program (cashless exercise):
$
Value of Shares pursuant to net exercise:
$
By this exercise, I agree (i) to provide such additional documents as the Company may require
pursuant to the terms of the Plan and (ii) to satisfy the tax withholding obligations, if any, relating to the
exercise of this Option as set forth in the Option Agreement.
Very truly yours,
Exhibit 10.9
1
MetaVia Inc.
Amended and Restated
Non-Employee Director Compensation Policy
Effective Date: May 7, 2024; as amended November 29, 2024
Each member of the Board of Directors (the “Board”) of MetaVia Inc., a Delaware
corporation (the “Company”) who is not also serving as an employee of the Company or any of its
subsidiaries (each such member, an “Non-Employee Director”) will receive the compensation
described in this Amended and Restated Non-Employee Director Compensation Policy (this
“Policy”). A Non-Employee Director may decline all or any portion of his or her compensation by
giving notice to the Company prior to the date cash is to be paid or equity awards are to be granted,
as the case may be. This Policy will be effective as of May 7, 2024 (the “Effective Date”). This
Policy may be amended at any time in the sole discretion of the Board, or by the Compensation
Committee of the Board (the “Compensation Committee”) at the recommendation of the Board.
Unless otherwise defined herein, capitalized terms used in this Policy will have the meaning given
to such terms in the Company’s 2022 Equity Incentive Plan, as amended, or if such plan is no
longer in use, the meaning given to such terms or any similar terms in the primary successor to
such plan (in either case, the “Plan”).
I.
ANNUAL CASH COMPENSATION. Commencing on the Effective Date, each
Non-Employee Director will receive the cash compensation set forth below for service on the
Board. The annual cash compensation amounts will be payable in equal quarterly installments, in
arrears no later than 30 days following the end of each quarter in which the service occurred (each,
a “Quarterly Date”). Each annual retainer set forth below will be pro-rated based on days served
in the applicable fiscal year of the Company, with the pro-rated amount paid for the first fiscal
quarter of the Company in which the Non-Employee Director provides the service, and regular full
quarterly payments to be paid thereafter. All annual cash fees are vested upon payment. The
schedule of annual retainers (the “Annual Retainers”) for the Non-Employee Directors is as
follows:
Position
Amount
Base Board Retainer
$
40,000
Non-Executive Chair of the Board (in addition to above Base
Retainer)
$
35,000
Chair of Audit Committee
$
18,000
Chair of Compensation Committee
$
12,000
Chair of Nominating and Corporate Governance Committee
$
10,000
Member of Audit Committee (non-Chair)
$
9,000
Member of Compensation Committee (non-Chair)
$
6,000
Member of Nominating and Corporate Governance Committee
(non-Chair)
$
5,000
For the avoidance of doubt, the Annual Retainers in the table above are additive and a Non-
Employee Director shall be eligible to earn an Annual Retainer for each position in which he or
she serves. In addition, the Annual Retainers will be prorated for the first calendar quarter
2
in which the Effective Date occurs, which proration will be based on the number of days of the
calendar quarter remaining in such quarter after the Effective Date. The Board may adopt a
program that allows Non-Employee Directors to defer Annual Retainers.
II.
EQUITY COMPENSATION. The equity compensation set forth below will be
granted under the Plan and the applicable RSU Award Agreement.
1.
Automatic Initial Grant. For each Non-Employee Director who is first elected or
appointed to the Board on or following the Effective Date, at the close of business on the date of such Non-
Employee Director’s initial election or appointment to the Board, such Non-Employee Director will be
automatically, and without further action by the Board or the Compensation Committee, granted a restricted
stock unit award (an “RSU Award”) covering a number of restricted stock units equal to (a) $40,000
divided by (b) the average Fair Market Value of a share of the Company’s common stock (the “Common
Stock”) for the 30 consecutive market trading days ending on and including the last market trading day
prior to the grant date of such RSU Award, rounded down to the nearest whole unit (each, an “Initial
Grant”). 50% of each Initial Grant will be vested as of the date of grant and the remainder will vest in two
equal installments on each subsequent anniversary of the date of grant, subject to the Non-Employee
Director’s Continuous Service on each vesting date.
2.
Automatic Annual Grant and Prorated Annual Grant.
(a)
At the close of business after the first Annual Meeting following the
Effective Date and on the date of each subsequent annual meeting of the Company’s stockholders
held following the initial Annual Meeting (each, an “Annual Meeting”), each person who is then a
Non-Employee Director will be automatically, and without further action by the Board or the
Compensation Committee, granted an RSU Award covering a number of restricted stock units
equal to (i) $20,000 divided by (ii) the average Fair Market Value of a share of Common Stock for
the 30 consecutive market trading days ending on and including the last market trading day prior to
the grant date of such RSU Award, rounded down to the nearest whole unit (each, an “Annual
Grant”).
(b)
In addition, for each Non-Employee Director who is first elected or
appointed to the Board after the first Annual Meeting of the Company’s stockholders following the
Effective Date on a date other than the date of an Annual Meeting of the Company’s stockholders,
at the close of business on the thirtieth (30th) day following such Non-Employee Director’s initial
election or appointment to the Board, such Non-Employee Director will be automatically, and
without further action by the Board or the Compensation Committee, granted an RSU Award
covering a number of restricted stock units equal to (i) $20,000 divided by (ii) the average Fair
Market Value of a share of Common Stock for the 30 consecutive market trading days ending on
and including the last market trading day prior to the grant date of such RSU Award, multiplied by
a fraction, the numerator of which equals 365 minus the total number of days, as of the grant date
of such RSU Award, that have occurred since the last Annual Meeting and the denominator of
which equals 365, rounded down to the nearest whole unit (each, a “Prorated Annual Grant”).
(c)
Each Annual Grant and Prorated Annual Grant will vest in full on
the earlier of (i) the one-year anniversary of the grant date of the Annual Grant or Prorated Annual
Grant, as applicable, and (ii) the date immediately prior to the date of the Annual
3
Meeting following the grant date of such Annual Grant or Prorated Annual Grant, as applicable,
subject to the Non-Employee Director’s Continuous Service on the vesting date.
3.
Elections to Receive an RSU Award in Lieu of Annual Cash Retainers.
(a)
Retainer Grant. For the fiscal year of the Company in which the
Effective Date occurs and each fiscal year of the Company thereafter, each Non-Employee
Director may elect (such election, a “Retainer Grant Election”) to forego receiving payment of all
(but not less than all) of the compensation such Non-Employee Director is otherwise eligible to
receive in cash under Article I of this Policy for the period during the fiscal year of the Company
to which the Retainer Grant Election applies commencing on the Retainer Grant Measurement
Date and ending on the last day of the fiscal year of the Company to which the Retainer Grant
Election applies (each such period, a “Retainer Grant Measurement Period”) and receive an RSU
Award instead (each, a “Retainer Grant”) but only if the Retainer Grant Election is timely made in
accordance with the requirements of this Section 4. If a Non-Employee Director timely makes a
Retainer Grant Election pursuant to Section 4(b) below, on the Retainer Grant Measurement Date
(as defined below), such Non-Employee Director will be automatically, and without any further
action by the Board or the Compensation Committee, granted a Retainer Grant covering a number
of restricted stock units equal to (i) the aggregate amount of cash compensation under Article I of
this Policy that such Non-Employee Director is eligible to receive for the applicable Retainer Grant
Measurement Period divided by (ii) the average Fair Market Value of a share of Common Stock for
the 30 consecutive market trading days ending on and including the last trading day prior to the
grant date of such Retainer Grant, rounded down to the nearest whole unit. For purposes of this
Policy, “Retainer Grant Measurement Date” means the first day of the fiscal year of the
Company to which the Retainer Grant Election applies, provided that if the Retainer Grant
Election is made in the same fiscal year of the Company to which it applies, then the Retainer
Grant Measurement Date means the first day of the fiscal quarter of the Company following the
fiscal quarter of the Company in which the Retainer Grant Election is made. Each Retainer Grant
will vest as to the Retainer Grant Vesting Percentage on each Quarterly Date following the grant
date of the Retainer Grant, subject to such Non-Employee Director’s Continuous Service through
each vesting date. The “Retainer Grant Vesting Percentage” equals (y) 100% multiplied by (z) a
fraction, the numerator of which equals one and the denominator of which equals the number of
Quarterly Dates occurring during the period commencing on the grant date of the applicable
Retainer Grant and ending on the last day of the fiscal year of the Company in which such Retainer
Grant was granted.
(b)
Election Mechanics. For any Retainer Grant Election to be effective,
it must be submitted to the Chief Financial Officer of the Company with a copy to the Company’s
counsel (or such other individual(s) as the Company designates) (i) on or prior to the last day of the
calendar year immediately preceding the first calendar year in which the Retention Grant Election
will be effective, or (ii) within 30 days after the Non-Employee Director first becomes eligible to
participate in this Policy. A Non-Employee Director may only make a Retainer Grant Election
during a period in which the Company is not in a quarterly or special blackout period and the Non-
Employee Director is not aware of any material non-public information. In addition, a Non-
Employee Director may not make a Retainer Grant Election that
4
applies to the fiscal year in which he or she first becomes eligible to participate in this Policy after
the third Quarterly Date in such fiscal year. Any Retainer Grant Election will be irrevocable, and
will be subject to such rules, conditions and procedures as shall be determined by the Board or the
Compensation Committee, in its sole discretion, which rules, conditions and procedures shall at all
times comply with the requirements of Code Section 409A. Retainer Grant Elections shall be made
pursuant to a form of election in substantially the form attached hereto as Exhibit A or such other
form as approved by the Board or the Compensation Committee. A Non-Employee Director who
fails to make a timely Retainer Grant Election will not receive a Retainer Grant and instead will
receive the cash compensation under Article I of this Policy.
III.
NON-EMPLOYEE DIRECTOR COMPENSATION LIMIT. Notwithstanding
anything herein to the contrary, the cash compensation and equity compensation that each Non-
Employee Director is entitled to receive under this Policy shall be subject to the limits set forth in
Section 3(d) of the Plan.
IV.
CHANGE IN CONTROL; DEATH; DISABILITY. Each RSU Award held by a
Non-Employee Director that is granted under this Policy will vest in full upon such Non-Employee
Director’s death or Disability, or immediately prior to the consummation of a Change in Control, in
each case, to extent such RSU Award is outstanding as of immediately prior to the occurrence of
such event.
V.
DEFERRAL OF RSU AWARDS. Each Non-Employee Director may elect to
defer the delivery of shares in settlement of any RSU Award granted pursuant to this Policy that
would otherwise be delivered to such Non-Employee Director on or following the date such RSU
Award vests pursuant to the terms of this Policy (the “Deferral Election”). For any such Deferral
Election to be effective, it must be submitted to the Chief Financial Officer of the Company with a
copy to the Company’s counsel (or such other individual(s) as the Company designates) (1) for
2024, within 30 days following the Effective Date, (2) on or prior to the last day of the calendar
year immediately prior to the calendar year in which the RSU Award to which the Deferral
Election relates is granted or (3) within 30 days of such Non-Employee Director’s initial election
or appointment to the Board. Any Deferral Election will be irrevocable, and will be subject to such
rules, conditions and procedures as shall be determined by the Board or the Compensation
Committee, in its sole discretion, which rules, conditions and procedures shall at all times comply
with the requirements of Section 409A, unless otherwise specifically determined by the Board or
the Compensation Committee. Deferral Elections shall be made pursuant to a form of deferral
election in substantially the form attached hereto as Exhibit A or such other form as approved by
the Board or the Compensation Committee.
VI.
EXPENSES. The Company will reimburse Non-Employee Directors for ordinary,
necessary and reasonable out-of-pocket travel expenses to cover in-person attendance at and
participation in Board and committee meetings; provided, that the Non-Employee Director timely
submits to the Company appropriate documentation substantiating such expenses in accordance
with the Company’s travel and expense policy, as in effect from time to time.
Approved by the Board of Directors: May 7, 2024; November 29, 2024
Exhibit A-1
Exhibit A
METAVIA INC.
AMENDED AND RESTATED
NON-EMPLOYEE DIRECTOR COMPENSATION POLICY
Restricted Stock Unit Deferral and Retainer Grant Election Form
For Non-Employee Directors
Please complete and return this Restricted Stock Unit Deferral and Retainer Grant Election
Form (the “Election Form”), as described below, [for existing non-employee directors making
elections for 2024: within 30 days after the Effective Date of the Policy][for existing non-
employee directors making elections for 2025 or any year thereafter: on or before
December 31 of each year] [for new non-employee directors: within 30 days following the date
you join the Board] (the “Submission Deadline”), to the Chief Financial Officer of the Company,
with a copy to the Company’s counsel, MetaVia Inc., 545 Concord Avenue, Suite 210, Cambridge,
Massachusetts 02138.
Neither the provision of this Election Form nor your completion of this Election Form
represents a commitment by the Company to grant an Award to you. The grant of an Award
remains subject to the terms of the Company’s Amended and Restated Non-Employee Director
Compensation Policy as may be hereinafter amended (the “Policy”). Terms not otherwise defined
herein shall have the meaning set forth in the Policy or the Plan, as applicable.
I understand that my Election Form will become irrevocable effective as of the
Submission Deadline.
1.
Personal Information:
(Please print)
Participant Name: (the “Participant”)
2.
Retainer Grant Election: By signing below, I elect to forego receiving payment
of all (but not less than all) of the compensation I am otherwise eligible to receive in cash under
Article I of the Policy for the period during the fiscal year of the Company ended [
] commencing on [
]1 and ending on [
],2 and to
receive a Retainer Grant in lieu thereof. If I do not timely submit a properly completed Election
Form, I will not receive the applicable Retainer Grant and will instead receive the applicable cash
compensation under Article I of the Policy.
1 Applicate Retainer Grant Measurement Date
2 Last day of the fiscal year of the Company to which the Retainer Gant Election applies
Exhibit A-2
3.
RSU Award and Deferral Election:
(a)
By signing below, I elect to defer in accordance with this Section 3 100% of
my [
]3 that may be granted to me, if any, under the Plan and pursuant to the
Policy in the calendar year following the calendar year in which I tender this election (or if I first
became eligible to participate in the Policy in the calendar year in which I tender this election, in
the calendar year in which I tender this election). If I do not timely submit a properly completed
Election Form, then my [
]4 will vest and settle in accordance with the terms of the
Policy, the Plan, and the applicable RSU Award Agreement.
(b)
All Awards that are deferred pursuant to this Section 3 are referred to as
“Deferred Awards” in this Election Form.
(c)
By signing below, I elect to have my Deferred Awards settled as follows:
(i)
Subject to the following paragraph, my Deferred Awards will be
settled in a single lump sum installment in whole shares on the earlier of (y) immediately prior to a
Change in Control, provided that, for the avoidance of doubt, a transaction will not be deemed a
Change in Control unless the transaction qualifies as a “change in control event” within the
meaning of Treasury Regulation Section 1.409A-3(i)(5); or (z) within 60 days following my
Separation Date or my death, whichever is earlier.
For the purposes of the foregoing, “Separation Date” means the date of my retirement or
other separation from service with the Company and all of its Affiliates (as determined in
accordance with Section 409A(2)(A)(i) of the Code and Treasury Regulation Section 1.409A-
1(h)).
(ii)
If a distribution hereunder is triggered because of my Separation
Date and I am a “specified employee” within the meaning of Section 409A at the time of my
Separation Date, then the distribution that I would otherwise be entitled to receive upon the
Separation Date will not be settled until the date that is 6 months and 1 day following the
Separation Date, unless I die following my Separation Date, in which case, my distribution will
commence as soon as practicable following my death.
4.
Participant Acknowledgements and Signatures:
(a)
I agree to all of the terms and conditions of this Election Form.
(b)
I acknowledge that I have received and read a copy of the Plan’s prospectus
and that I am familiar with the terms and provisions of the Plan.
(c)
I agree to the right of the Board or the Compensation Committee to amend
or terminate my election under Section 3 at any time and for any reason, with or without notice;
3 Awards with respect to which the Non-Employee Director is making a deferral election to be included.
4 Awards with respect to which the Non-Employee Director is making a deferral election to be included.
Exhibit A-3
provided that such termination or amendment is performed in compliance with Section 409A (as
determined by Company legal counsel in its sole and absolute discretion).
(d)
I understand that the obligation of the Company to settle any Deferred
Awards is unfunded and that no assets of any kind have been segregated in a trust or otherwise set
aside to satisfy any obligation under this Election Form. I also understand that any election to
defer the settlement of any Awards pursuant to this Election Form will make me only a general,
unsecured creditor of the Company.
(e)
I understand that any amounts deferred will be taxable as ordinary income in
the year settled. Notwithstanding, I agree and understand that the Company does not guarantee in
any way whatsoever the tax treatment of any deferrals or payments made under the Policy or this
Election Form. I understand that I will be responsible for all taxes and any other costs owed with
respect to any deferrals or payments made with respect to my Awards.
(f)
I understand that the Company will be under no obligation to settle any
Deferred Awards until any applicable tax withholding obligations are satisfied and that if I fail to
satisfy any such tax withholding obligations I will forfeit my right to receive the shares subject to
my Deferred Award. I understand that the Company has the right (but not the obligation) to
withhold taxes from my Deferred Awards (including pursuant to net share withholding) in any
amount and through such procedure as the Company deems necessary or desirable to satisfy any
income or other tax obligations incurred with respect to my Awards.
(g)
I understand that, upon receipt of any Deferred Awards, in addition to
federal taxes, I may owe taxes to the state where I resided at the time of vesting in the Deferred
Awards and/or to the state where I reside when the Deferred Awards are settled, if different.
(h)
I understand, acknowledge and agree that the Board or the Compensation
Committee has the discretion to make all determinations and decisions regarding any elections set
forth on this Election Form.
(i)
I understand that this Election Form and the elections made hereunder are
intended to comply with the requirements of Section 409A so that none of [the Deferred Awards or
the Retainer Grant] issuable will be subject to the tax acceleration and additional penalty taxes
imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. If
applicable, I understand that I am solely responsible for any accelerated income taxes and
additional taxes and tax penalties imposed by Section 409A.
(j)
I also understand that this Election Form and the elections made hereunder
will in all respects be subject to the terms and conditions of the Policy, the applicable Award
Agreement and the Plan, as applicable. Should any inconsistency exist between this Election
Form, the Policy, the Plan, the Award Agreement under which an Award was granted, and/or any
applicable law, then the provisions of either the applicable law (including, but not limited to,
Section 409A) or the Plan will control, with the Plan subordinated to the applicable law and the
Award Agreement and the Policy subordinated to this Election Form.
Exhibit A-4
By signing this Election Form, I authorize the implementation of the above elections. I
understand that my [deferral election and retainer grant election] are irrevocable effective as of the
Submission Deadline and may not be changed in the future, except in accordance with the
requirements of Section 409A and the procedures specified by the Board or the Compensation
Committee.
Signed:
Participant Name:
Date:
Agreed to and accepted:
MetaVia Inc.
By:
Name:
Title:
Date:
IMPORTANT DEADLINE: Please remember that if you wish to make any election set forth on
this Election Form, then the properly completed Election Form must be signed by you and
returned ON OR BEFORE THE SUBMISSION DEADLINE to the Chief Financial Officer of
the Company, with a copy to the Company’s counsel (or such other individual as the Company
designates).
Exhibit 19.1
METAVIA Inc.
MetaVia Inc.
Insider Trading Compliance Policy
Effective November 29, 2024
This Insider Trading Compliance Policy (this “Policy”) consists of four sections:
Section I provides an overview; Section II sets forth the policies of MetaVia Inc., a Delaware
corporation (the “Company”) prohibiting insider trading; Section III explains insider trading; and Section
IV consists of various procedures which have been put in place by the Company to prevent insider trading.
I.
SUMMARY.
Preventing insider trading is necessary to comply with securities laws and to preserve the reputation
and integrity of the Company as well as that of all persons affiliated with it. “Insider trading” occurs when
any person purchases or sells a security while in possession of inside information relating to the security.
As explained in Section III below, “inside information” is information which is considered to be both
“material” and “non-public.” Insider trading is a crime and the penalties for violating the law include
imprisonment, disgorgement of profits, civil fines of up to three (3) times the profit gained or loss avoided,
and criminal fines of up to $5,000,000 for individuals and $25,000,000 for entities. Insider trading is also
prohibited by this Policy and could result in serious sanctions, including dismissal.
This Policy applies to all officers, directors and employees of the Company and extends to all
activities within and outside an individual’s duties at the Company. This Policy also applies to any
consultant or contractor to the Company that receives or has access to material, non-public information
regarding the Company (each such consultant or contractor, including such consultant’s or contractor’s
representatives and agents, a “Subject Contractor”). Every officer, director, employee and Subject
Contractor must review and adhere to this Policy. The Company has appointed the person serving as the
Company’s Chief Financial Officer or Acting Chief Financial Officer as the Company’s Insider Trading
Compliance Officer (the “Compliance Officer”). The Audit Committee (the “Audit Committee”) of the
Board of Directors of the Company is responsible for oversight of this Policy. The Compliance Officer is
responsible for monitoring and updating this Policy and presenting any material updates to the Policy to the
Audit Committee for approval. Questions regarding the Policy should be directed to the Compliance
Officer.
II.
STATEMENT OF POLICIES PROHIBITING INSIDER TRADING.
A.
No officer, director, employee or Subject Contractor shall purchase or sell any type of
security while in possession of material, non-public information relating to the security, whether the issuer
of such security is the Company or any other company.
B.
Additionally, except as set forth in Section II.D. below and except for transactions effected
under an approved Rule 10b5-1 Trading Plan as described in Section V below, no officer, director,
employee or Subject Contractor shall purchase or sell any security of the Company during the period
beginning on the last “trading day” of the fiscal quarter and ending two (2) full “trading days” after
Insider Trading Compliance Policy
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METAVIA Inc.
the public release of the Company’s quarterly/annual report whether or not the Company or any of
its officers, directors, employees or Subject Contractors is in possession of material, non-public
information (the “Black-Out Period”). For the purposes of this Policy, a “trading day” shall mean a day
on which national stock exchanges are open for trading. The Company also encourages officers, directors,
employees and Subject Contractors to consider conducting transactions in the Company’s securities only
during the first 20 calendar days following the end of the Black-Out Period.
C.
No officer, director, employee or Subject Contractor shall directly or indirectly tip material,
non-public information to anyone while in possession of such information. In addition, material, non-public
information should not be communicated to anyone outside the Company under any circumstances (absent
prior approval by the Compliance Officer and execution of an appropriate confidentiality agreement), or to
anyone within the Company other than on a need-to- know basis.
D.
This Policy does not apply in the case of the following transactions under Company plans,
except as set forth under Section IV.D. (Pre-Clearance) and except as otherwise specifically noted:
1.
This Policy does not apply to the exercise of stock options or the vesting of
restricted stock units or restricted stock, in each case granted under Company’s
equity compensation plans. This Policy does apply, however, to any sale of
Company Stock (as defined below) as part of a broker-assisted cashless option
exercise, or any other market sale of the Company Stock received upon exercise or
vesting of any equity award, whether or not for the purpose of generating the cash
needed to pay the exercise price of a stock option or to pay taxes.
2.
This Policy does not apply to the surrender of shares directly to the Company to
satisfy tax withholding obligations as a result of the issuance of shares upon vesting
or exercise of restricted stock units, stock options or other equity awards granted
under the Company’s equity compensation plans. Of course, any market sale of the
Company Stock received upon exercise or vesting of any such equity awards
remains subject to all provisions of this Policy, whether or not for the purpose of
generating the cash needed to pay the exercise price or pay taxes.
3.
This Policy does not apply to purchases of Company Stock under any employee
stock purchase plan adopted by the Company (“ESPP”) on periodic designated
dates in accordance with the ESPP. This Policy does apply, however, to an
employee’s sale of Company Stock purchased pursuant to the ESPP.
4.
This Policy does not apply to acquisition of Company Stock on periodic designated
dates in accordance with the Company’s Non-Employee Directors’ Compensation
Policy (the “Directors’ Compensation Policy”). This Policy does apply, however,
to a director’s election to receive Company Stock in lieu of cash compensation
under the Directors’ Compensation Policy. Accordingly, such elections may not be
effected during a Black-Out Period or when a director is otherwise in possession of
material, non- public information relating to the Company or any of its securities.
III.
EXPLANATION OF INSIDER TRADING.
As noted above, “insider trading” refers to the purchase or sale of a security while in possession of
“material,” “non-public” information relating to the security. “Securities” include not only stocks, bonds,
notes and debentures, but also stock options, warrants and similar instruments. “Purchase” and “sale” are
defined broadly under the federal securities laws. “Purchase” includes not only the actual purchase of a
Insider Trading Compliance Policy
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METAVIA Inc.
security, but any contract to purchase or otherwise acquire a security. “Sale” includes not only the actual
sale of a security, but any contract to sell or otherwise dispose of a security. These definitions extend to a
broad range of transactions including conventional cash-for-stock transactions, conversions, the grant and
exercise of stock options and acquisitions and exercises of warrants or puts, calls or other options related to
a security. It is generally understood that insider trading includes the following:
●
Trading by insiders while in possession of material, non-public information;
●
Trading by persons other than insiders while in possession of material, non-public
information where the information either was given in breach of an insider’s fiduciary duty
to keep it confidential or was misappropriated; or
●
Communicating or tipping material, non-public information to others, including
recommending the purchase or sale of a security while in possession of such information.
A.
What Facts are Material?
The materiality of a fact depends upon the circumstances. A fact is considered “material” if there is
a substantial likelihood that a reasonable investor would consider it important in making a decision to buy,
sell or hold a security or where the fact is likely to have a significant effect on the market price of the
security. Material information can be positive or negative and can relate to virtually any aspect of a
company’s business or to any type of security, debt or equity.
Examples of material information include (but are not limited to) facts concerning: dividends;
corporate earnings or earnings forecasts; possible mergers or acquisitions; significant developments in
borrowings or financings; information concerning product developments or clinical results; important
business developments and major litigation developments. Moreover, material information does not have to
be related to a company’s business. For example, the contents of a forthcoming newspaper column that is
expected to affect the market price of a security can be material.
A good general rule of thumb: when in doubt, do not trade.
B.
What is Non-Public?
Information is “non-public” if it is not available to the general public. In order for information to be
considered public, it must be widely disseminated in a manner making it generally available to investors
through such media as Dow Jones, Reuters, The Wall Street Journal, Business Wire, Globe Newswire,
Associated Press, PR Newswire or United Press International or filed with the United States Securities and
Exchange Commission (the “SEC”). The circulation of rumors, even if accurate and reported in the media,
does not constitute effective public dissemination.
In addition, even after a public announcement, a reasonable period of time must lapse in order for
the market to react to the information. Generally, one should allow approximately twenty-four (24) hours
following publication as a reasonable waiting period before such information is deemed to be public.
C.
Who is an Insider?
“Insiders” include officers, directors and employees of a company and anyone else who has
material inside information about a company, including Subject Contractors. Insiders have independent
fiduciary duties to their company and its stockholders not to trade on material, non- public information
relating to the company’s securities. All officers, directors, employees and Subject Contractors of the
Insider Trading Compliance Policy
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METAVIA Inc.
Company should consider themselves insiders with respect to material, non-public information about the
Company’s business, activities and securities. Officers, directors, employees and Subject Contractors may
not trade the Company’s securities while in possession of material, non-public information relating to the
Company nor tip (or communicate within the Company except on a need-to-know basis) such information
to others.
It should be noted that trading by members of an insider’s household can be the responsibility of
such insider under certain circumstances and could give rise to legal and Company-imposed sanctions.
D.
Trading by Persons Other than Insiders.
Insiders may be liable for communicating or tipping material, non-public information to a third
party (a “tippee”), and insider trading violations are not limited to trading or tipping by insiders. Persons
other than insiders also can be liable for insider trading, including tippees who trade on material, non-public
information tipped to them or individuals who trade on material, non- public information which has been
misappropriated.
Tippees inherit an insider’s duties and are liable for trading on material, non-public information
illegally tipped to them by an insider. Similarly, just as insiders are liable for the insider trading of their
tippees, so are tippees who pass the information along to others who trade. In other words, a tippee’s
liability for insider trading is no different from that of an insider. Tippees can obtain material, non-public
information by receiving overt tips from others or through, among other things, conversations at social,
business or other gatherings.
E.
Penalties for Engaging in Insider Trading.
Penalties for trading on or tipping material, non-public information can extend significantly beyond
any profits made or losses avoided, both for individuals engaging in such unlawful conduct and their
employers. The SEC and the Department of Justice have made the civil and criminal prosecution of insider
trading violations a top priority. Enforcement remedies available to the government or private plaintiffs
under the federal securities laws include:
●
SEC administrative sanctions;
●
Securities industry self-regulatory organization sanctions;
●
Civil injunctions;
●
Damage awards to private plaintiffs;
●
Disgorgement of all profits;
●
Civil fines for the violator of up to three (3) times the amount of profit gained or loss
avoided;
●
Civil fines for the employer or other controlling person of a violator (i.e., where the violator
is an employee or other controlled person) of up to the greater of $1,000,000 or three (3)
times the amount of profit gained or loss avoided by the violator;
●
Criminal fines for individual violators of up to $5,000,000 ($25,000,000 for an entity); and
Insider Trading Compliance Policy
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METAVIA Inc.
●
Jail sentences of up to twenty (20) years.
In addition, insider trading could result in serious sanctions by the Company, including dismissal.
Insider trading violations are not limited to violations of the federal securities laws. Other federal and state
civil or criminal laws, such as the laws prohibiting mail and wire fraud and the Racketeer Influenced and
Corrupt Organizations Act, also may be violated upon the occurrence of insider trading.
F.
Examples of Insider Trading.
Examples of insider trading cases include actions brought against: corporate officers, directors and
employees who traded a company’s securities after learning of significant confidential corporate
developments; friends, business associates, family members and other tippees of such officers, directors and
employees who traded the securities after receiving such information; government employees who learned
of such information in the course of their employment; and other persons who misappropriated, and took
advantage of, confidential information from their employers.
The following are illustrations of insider trading violations. These illustrations are hypothetical and
are not comprehensive, and, consequently, are not intended to reflect the actual activities or business of the
Company or any other entity.
Trading by Insider
An officer of X Corporation learns that earnings to be reported by X Corporation will increase
dramatically. Prior to the public announcement of such earnings, the officer purchases X
Corporation’s stock. The officer, an insider, is liable for all profits as well as penalties of up to three
(3) times the amount of all profits. The officer also is subject to, among other things, criminal
prosecution, including up to $5,000,000 in additional fines and twenty (20) years in jail. Depending
upon the circumstances, X Corporation and the individual to whom the officer reports also could be
liable as controlling persons.
Trading by Tippee
An officer of X Corporation tells a friend that X Corporation is about to publicly announce that it
has concluded an agreement for a major acquisition. This tip causes the friend to purchase X
Corporation’s stock in advance of the announcement. The officer is jointly liable with his friend for
all of the friend’s profits and each is liable for all penalties of up to three (3) times the amount of the
friend’s profits. In addition, the officer and his friend are subject to, among other things, criminal
prosecution, as described above.
G.
Insider Reporting Requirements, Short-Swing Profits and Short Sales.
1.
Reporting Obligations Under Section 16(a)--SEC Forms 3, 4 and 5.
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “1934 Act”),
generally requires all officers, directors and 10% stockholders, within ten (10) days after
the insider becomes an officer, director or 10% stockholder (such person a “Section 16
reporting person”), to file with the SEC an “Initial Statement of Beneficial Ownership of
Securities” on SEC Form 3 (“Form 3”) listing the amount of the Company’s Common
Stock (the “Stock”), stock options and warrants which the insider beneficially owns.
Following the initial filing on Form 3, every change in the beneficial ownership of the
Company’s Stock, stock options and warrants must be reported on SEC Form 4 (“Form
Insider Trading Compliance Policy
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METAVIA Inc.
4”) within two (2) business days after the date on which such change occurs or in certain
cases on SEC Form 5 (“Form 5”) within forty-five (45) days after fiscal year end. Form 4
must be filed even if, as a result of balancing transactions, there has been no net change in
holdings. In deciding the filing deadline for purposes of filing Form 4, the trade date rather
than the settlement date is ordinarily determinative.
Special rules apply in certain situations. If any officer or director purchases or sells any of
the Company’s Stock within six (6) months after the event which required him or her to file
Form 3, the Form 4 filed with respect to that purchase or sale must also report any other
purchases or sales he or she made within the preceding six (6) months which were not
previously reported. Similarly, if an officer or director purchases or sells any of the
Company’s Stock within six (6) months after his or her termination from such position, the
transaction must be reported on Form 4 if he or she made any purchase or sale within the
preceding six (6) months and prior to termination.
2.
Recovery of Profits Under Section 16(b).
For the purpose of preventing the unfair use of information which may have been obtained
by an insider, any profits realized by any Section 16 reporting person from any “purchase”
and “sale” of the Company’s Stock during a six (6) month period, so called “short-swing
profits,” may be recovered by the Company. When such a purchase and sale occurs, good
faith is no defense. The Section 16 reporting person is liable even if compelled to sell for
personal reasons, and even if the sale takes place after full disclosure and without the use of
any inside information.
The liability of a Section 16 reporting person under Section 16(b) of the 1934 Act is only to
the Company itself. The Company, however, cannot waive its right to short-swing profits,
and any Company stockholder can bring suit in the name of the Company. In this
connection it must be remembered that reports of ownership filed with the SEC on Form 3,
Form 4 or Form 5 pursuant to Section 16(a) (discussed above) are readily available to the
public, and certain attorneys carefully monitor these reports for potential Section 16(b)
violations. In addition, liabilities under Section 16(b) may require separate disclosure in the
Company’s annual report to the SEC on Form 10-K or its proxy statement for its annual
meeting of stockholders. No suit may be brought more than two (2) years after the date the
profit was realized. However, if the Section 16 reporting person fails to file a report of the
transaction under Section 16(a), as required, the two (2) year limitation period does not
begin to run until after the transactions giving rise to the profit have been disclosed. Failure
to report transactions and late filing of reports require separate disclosure in the Company’s
proxy statements.
Officers and directors should consult the attached “Short-Swing Profit Rule Section 16(b)
Checklist” attached hereto as Attachment A in addition to consulting with the Compliance
Officer prior to engaging in any transactions involving the Company’s securities (see
Section IV(A) below), including without limitation, the Company’s Stock, stock options or
warrants.
3.
Short Sales Prohibited Under Section 16(c).
Section 16(c) of the 1934 Act absolutely prohibits insiders from making short sales of the
Company’s Stock, i.e., sales of shares which the insider does not own at the time of sale or
sales of the Company’s Stock against which the insider does not deliver the shares within
Insider Trading Compliance Policy
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METAVIA Inc.
twenty (20) days after the sale. Under certain circumstances, the purchase or sale of put or
call options, or the writing of such options, can result in a violation of Section 16(c).
Insiders violating Section 16(c) face criminal liability.
The Compliance Officer should be consulted if you have any questions regarding reporting
obligations, short-swing profits or short sales under Section 16.
H.
Prohibition of Records Falsifications and False Statements.
Section 13(b)(2) of the 1934 Act requires companies subject to the 1934 Act to maintain proper
internal books and records and to devise and maintain an adequate system of internal accounting controls.
The SEC has supplemented the statutory requirements by adopting rules that prohibit (1) any person from
falsifying records or accounts subject to the above requirements and (2) officers or directors from making
any materially false, misleading or incomplete statement to any accountant in connection with any audit or
filing with the SEC. These provisions reflect the SEC’s intent to discourage officers, directors and other
persons with access to the Company’s books and records from taking action that might result in the
communication of materially misleading financial information to the investing public.
IV.
STATEMENT OF PROCEDURES PREVENTING INSIDER TRADING.
The following procedures have been established, and will be maintained and enforced, by the
Company to prevent insider trading. Every officer, director, employee and Subject Contractor is required to
follow these procedures.
A.
Identifying Material, Non-Public Information.
Prior to directly or indirectly trading any security of the Company, every officer, director, employee
and Subject Contractor is required to contact the Compliance Officer (as part of the pre-clearance procedure
discussed below in Section IV.D) and make an initial determination whether the Company and/or such
officer, director, employee and/or Subject Contractor is in possession of material, non-public information
relating to such security. In making such assessment, the explanations of “material” and “non-public”
information set forth above should be of assistance. If after consulting with the Compliance Officer it is
determined that the Company and/or such officer, director, employee or Subject Contractor is in possession
of material, non-public information, there can be no trading of such security.
B.
Information Relating to the Company.
1.
Access to Information.
Access to material, non-public information about the Company, including the Company’s
business, clinical data or analyses, interactions with regulatory authorities, pending
publication of scientific/clinical data or results, earnings or prospects, should be limited to
officers, directors, employees and Subject Contractors of the Company on a need-to-know
basis. In addition, such information should not be communicated to anyone outside the
Company under any circumstances (absent prior approval by the Compliance Officer and
execution of an appropriate confidentiality agreement) or to anyone within the Company
other than on a need-to-know basis.
In communicating material, non-public information to employees of the Company, all
officers, directors, employees and Subject Contractors must take care to emphasize the
Insider Trading Compliance Policy
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METAVIA Inc.
need for confidential treatment of such information and adherence to the Company’s
policies with regard to confidential information.
2.
Inquiries from Third Parties.
Inquiries from third parties, such as industry analysts or members of the media, about the
Company should be directed to the Compliance Officer or his/her designee.
C.
Limitations on Access to the Company Information.
The following procedures are designed to maintain confidentiality with respect to the Company’s
information, business operations and activities.
1.
All officers, directors, employees and Subject Contractors should take all steps and
precautions necessary to restrict access to, and secure, material, non-public
information by, among other things:
●
Maintaining the confidentiality of Company related information;
●
Conducting their business and social activities so as not to risk inadvertent
disclosure of confidential information. Review of confidential documents
in public places should be conducted so as to prevent access by
unauthorized persons;
●
Restricting access to documents and files (including computer files)
containing material, non-public information to individuals on a need-to-
know basis (including maintaining control over the distribution of
documents and drafts of documents);
●
Promptly removing and cleaning up all confidential documents and other
materials from conference rooms following the conclusion of any
meetings;
●
Disposing of all confidential documents and other papers, after there is no
longer any business or other legally required need, through shredders when
appropriate;
●
Restricting access to areas likely to contain confidential documents or
material, nonpublic information; and
●
Avoiding the discussion of material, non-public information in places
where the information could be overheard by others, such as in elevators,
restrooms, hallways, restaurants, airplanes or taxicabs.
2.
Personnel involved with material, non-public information, to the extent feasible,
should conduct their business and activities in areas separate from other Company
activities.
D.
Pre-Clearance
of Trades
by Officers, Directors, Employees
and Subject
Contractors.
Insider Trading Compliance Policy
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METAVIA Inc.
To provide assistance in preventing inadvertent violations of applicable securities laws and to avoid
the appearance of impropriety in connection with the purchase and sale of the Company securities, except as
set forth in the paragraph below, all transactions in Company securities (including without limitation,
acquisitions and dispositions of the Company’s Stock, the exercise of stock options, the sale of the
Company’s Stock issued upon the exercise of stock options or the vesting of restricted stock units or
restricted stock and the sale of the Company’s Stock purchased under the ESPP) by officers, directors,
employees and Subject Contractors must be pre-cleared by the Compliance Officer. A request for pre-
clearance should be submitted to the Compliance Officer at least two (2) business days in advance of
the proposed transaction.
Additionally, except as set forth in Section II.D. above, neither the Company nor any of its officers,
directors, employees or Subject Contractors may trade in any securities of the Company during the Black-
Out Period, unless authorized by the Compliance Officer. Also, please consult the “Insider Trading
Reminders” attached hereto as Attachment B.
The requirement for pre-clearance as set forth in the above paragraph does not apply to the
following transactions:
●
the vesting of restricted stock units or restricted stock;
●
purchases of the Company’s Stock under the ESPP on periodic designated dates in
accordance with the ESPP;
●
purchases of Company Stock under on periodic designated dates in accordance with the
Directors’ Compensation Policy; and
●
transactions effected under an approved Rule 10b5-1 Trading Plan as set forth in Section V
below.
All other transactions in Company securities, including the exercise of stock options, are subject to pre-
clearance as set forth in the above paragraph. A request for pre-clearance must be made in writing,
preferably by submission of a completed Request for Pre-Clearance in the form of Attachment C to this
Policy. Pre-cleared transactions should be effected promptly. Requestors are required to refresh the request
for pre-clearance if a pre-cleared transaction is not effected within five business days after pre-clearance is
received.
Furthermore, requestors must immediately notify the Chief Compliance Officer following the
execution of any transaction.
E.
Avoidance of Certain Aggressive or Speculative Trading.
Officers, directors, employees and Subject Contractors, and their respective family members
(including spouses, minor children or any other family members living in the same household), as
applicable, may not directly or indirectly participate in transactions involving trading activities which by
their aggressive or speculative nature cause or even give the appearance of an impropriety, such as, for
example, those listed in Nos. 1 and 2 below. If you are uncertain whether your proposed transaction may
implicate these prohibitions, please contact the Compliance Officer for pre-approval.
1.
PROHIBITION OF SPECULATIVE TRADING/HEDGING. All directors,
officers, employees and Subject Contractors are prohibited from engaging in short
sales; transactions in put or call options, hedging or monetization transactions; or
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METAVIA Inc.
other inherently speculative transactions with respect to the securities of the
Company at any time.
2.
PROHIBITION ON PLEDGING. All directors, officers, employees and Subject
Contractors are prohibited from holding any securities of the Company in a margin
account or otherwise pledging any securities of the Company as collateral for any
loan.
V.
RULE 10B5-1 TRADING PLANS.
A.
Overview.
SEC Rule 10b5-1 under the 1934 Act (“Rule 10b5-1”) protects directors, officers and employees
from insider trading liability under Rule 10b5-1 for transactions under a previously established contract,
plan or instruction to trade the Company’s Stock (a “Trading Plan”) entered into in good faith (and acted
on in good faith for the duration of the Trading Plan) and in accordance with the terms of Rule 10b5-1 and
all applicable state laws and shall be exempt from the trading restrictions set forth in the Policy. The
initiation of, and any modification to, any such Trading Plan will be deemed to be a transaction in the
Company’s securities and such initiation or modification is subject to all limitations and prohibitions of
transactions involving the Company’s securities. Each such Trading Plan, and any modification thereof,
shall be submitted to and pre-approved by the Compliance Officer, or such other person as the Company’s
Board of Directors may designate from time to time (the “Authorizing Officer”), who may impose such
conditions on the implementation and operation of the Trading Plan as the Authorizing Officer deems
necessary or advisable. Without limiting the generality of the foregoing, the Authorizing Officer may
prescribe certain forms of Trading Plans to which each Trading Plan must conform. The Authorizing
Officer may also require that Trading Plans be arranged with a specified broker. However, compliance of
the Trading Plan to the terms of Rule 10b5-1 and the execution of transactions pursuant to the Trading Plan
are the sole responsibility of the person initiating the Trading Plan, not the Company or the Authorizing
Officer.
Rule 10b5-1 presents an opportunity for insiders to establish arrangements to sell (or purchase) the
Company’s Stock without the restrictions of windows and blackout periods even when there is undisclosed
material information (subject to the insider not having material, non-public information at the time of
adoption and the cooling-off period described below). A Trading Plan might also help reduce negative
publicity that may result when key executives sell the Company’s Stock. Rule 10b5-1 only provides an
“affirmative defense” in the event there is an insider-trading lawsuit. It does not prevent someone from
bringing a lawsuit.
A director, officer and employee may enter into a Trading Plan that outlines a pre-set plan for
trading of the Company’s Stock only when he or she is not in possession of material, non-public
information, and only during an open trading window period outside of the Black-Out Period and cooling-
off period described below. Although transactions effected under a Trading Plan will not require further
pre-clearance at the time of the trade, any transaction (including the quantity and price) made pursuant to a
Trading Plan of a Section 16 reporting person must be reported to the Company promptly on the day of each
trade to permit the Company’s Section 16 filing coordinator to assist in the preparation and filing of a
required Form 4. Form 4 and Form 5 filers must also indicate by checkbox if a reported transaction was
made under a plan that is intended to satisfy the “affirmative defense” conditions of Rule 10b5-1(c) and the
date of the adoption of such plan.
From time to time, for legal or other reasons, the Authorizing Officer may direct that purchases and
sales pursuant to any Trading Plan be suspended or discontinued. Failure to discontinue purchases and
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METAVIA Inc.
sales as directed shall constitute a violation of the terms of this Section V and result in a loss of the
exemption set forth herein.
Prohibition Against Multiple, Overlapping Plans
A director, officer or employee may only enter into one Trading Plan at a time.
Director and Officer Representations
Directors and officers must include a representation in their Trading Plan certifying, at the time of
the adoption of a new or modified Trading Plan, that: (1) they are not aware of material, non-public
information about the Company or its securities; and (2) they are adopting the plan in good faith and not as
part of a plan or scheme to evade the prohibitions of Rule 10b-5.
Cooling-Off Period
Trades pursuant to a Trading Plan made by an executive officer or director may occur at any time,
subject to the following waiting period, whichever is longer, (i) a 90 day waiting period after the adoption or
material modification of the Trading Plan during which time no transactions under the Trading Plan can be
made; or (ii) two business days following the Company’s disclosure of financial results in in a Form 10-Q,
Form 10-K, or Form 8-K for the fiscal quarter during which the plan was adopted or materially modified (in
any event, subject to a maximum waiting period of 120 days following a plan adoption or modification)
before any trading can commence under the adopted or modified Trading Plan.
Trades pursuant to a Trading Plan made by employees that are non-executive officers may occur at
any time, subject to a 30 day waiting period after the adoption or material modification of the Trading Plan,
during which time no transactions under the Trading Plan can be made.
Trading Plan modifications that do not change the sales or purchase prices or price ranges, the
amount of securities to be sold or purchased, or the timing of transactions under a Trading Plan (such as an
adjustment for stock splits or a change in account information) will not trigger a new waiting period.
Please review the following description of how a Trading Plan works.
Pursuant to Rule 10b5-1, an individual’s purchase or sale of securities will not be “on the basis of”
material non-public information if:
●
First, before becoming aware of the information, the individual enters into a binding
contract to purchase or sell the securities, provides instructions to another person to sell the
securities or adopts a written plan for trading the securities in good faith (i.e., the Trading
Plan).
●
Second, the Trading Plan must either:
°
specify the amount of securities to be purchased or sold, the price at which the
securities are to be purchased or sold and the date on which the securities are to be
purchased or sold;
°
include a written formula or computer program for determining the amount, price
and date of the transactions; or
Insider Trading Compliance Policy
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METAVIA Inc.
°
prohibit the individual from exercising any subsequent influence over the purchase
or sale of the Company’s Stock under the Trading Plan in question.
●
Third, the purchase or sale must occur pursuant to the Trading Plan and the individual must
not enter into a corresponding hedging transaction or alter or deviate from the Trading Plan.
B.
Revocation/Amendments to Trading Plans.
Revocation of Trading Plans (which includes terminations of Trading Plans) should occur only in
unusual circumstances, and the effectiveness of any revocation of a Trading Plan will be subject to the prior
review and approval of the Authorizing Officer. If an individual revokes a Trading Plan, then the individual
may not enter into a new Trading Plan until thirty (30) days after termination of the Trading Plan or such
longer period as the Authorizing Officer may determine in his or her discretion. Such new Trading Plan can
be executed only when the individual is not in possession of material non-public information, and during a
trading window period outside of a Black-Out Period. In addition, transactions pursuant to such new
Trading Plan will be subject to the respective waiting period.
Each Trading Plan must contain provisions allowing the Company to revoke or suspend a Trading
Plan. Circumstances under which Trading Plans may be revoked or suspended include the announcement of
a merger or the occurrence of an event that would cause the transaction either to violate applicable law or to
have an adverse effect on the Company. The Authorizing Officer or administrator of the Company’s stock
plans is authorized to notify the applicable broker in such circumstances.
Amendments to Trading Plans, which for these purposes would include any modifications to or
voluntary suspensions of Trading Plans, should be made in only very limited circumstances and should be
avoided if possible. Any amendment to a Trading Plan will be subject to the prior review and approval of
the Authorizing Officer. Any amendment to a Trading Plan can be effected only when the individual is not
in possession of material non-public information, and during a trading window period outside of a Black-
Out Period. In addition, transactions pursuant to such amended Trading Plan will be subject to the
respective waiting period (or such longer period as the Authorizing Officer may determine in his or her
discretion) during which time no transactions under the amended Trading Plan can be made.
C.
Discretionary Plans.
Discretionary Trading Plans, where the discretion or control over trading is transferred to a broker,
are permitted if (i) pre-approved by the Authorizing Officer, (ii) the officer, director, or employee may not
exercise influence over the broker’s trading decisions and (iii) the broker may not be in possession of any
Company material non-public information.
The Authorizing Officer of the Company must pre-approve any Trading Plan, arrangement or
trading instructions, etc., involving potential sales or purchases of the Company’s Stock or stock option
exercises, including but not limited to, blind trusts, or limit orders. The actual transactions effected pursuant
to a pre-approved Trading Plan will not be subject to further pre-clearance for transactions in the
Company’s Stock once the Trading Plan or other arrangement has been pre-approved.
D.
Reporting (if required).
SEC Form 144 (“Form 144”) will be filled out and filed by the individual/brokerage firm in
accordance with the existing rules regarding Form 144 filings. A footnote at the bottom of the Form 144
should indicate that the trades “are in accordance with a Trading Plan that complies with Rule 10b5-1 and
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METAVIA Inc.
expires ______.” For Section 16 reporting persons, Form 4s should be filed before the end of the second
(2nd) business day following the date that the broker, dealer or plan administrator informs the individual that
a transaction was executed, provided that the date of such notification is not later than the third (3rd)
business day following the trade date. A similar footnote should be placed at the bottom of the Form 4 as
outlined above.
E.
Stock Options.
Cash exercise of stock options currently can be executed at any time. Same day sales exercises of
stock options are subject to trading windows. However, the Company will permit same day sales under
Trading Plans. Once a broker determines that the time is right to exercise the stock option and dispose of
the shares in accordance with the Trading Plan, the broker will notify the Company in writing and the
administrator of the Company’s stock plans will process the transaction. The insider should not be involved
with this type of same day sale exercise.
F.
Trades Outside of a Trading Plan.
During an open window, trades which differ from Trading Plan instructions that are already in place
are allowed as long as the Trading Plan continues to be followed.
The Trading Plans do not exempt the Section 16 reporting person from the Section 16 six (6)
month short-swing profit rules or liability.
G.
Disclosures.
The Company will make quarterly disclosures regarding the adoption, material modification and
termination of Trading Plans and certain other written trading arrangements by the Company’s directors and
officers for the trading of its securities, including the material terms (other than the pricing terms) of such
arrangements. The Company will also make an annual disclosure in its annual reports or in the annual
meeting proxy statement whether it has adopted insider trading policies and procedures and include such
policies in its Form 10-K. The Company will also provide certain tabular and narrative disclosures
regarding awards of options close in time to the release of material nonpublic information and related
policies and procedures. The Company may also make public announcements or respond to inquiries from
the media as transactions are made under a Trading Plan.
H.
Pledging the Company’s Stock to Secure Margin of Other Loans.
The Company does not permit officers or directors to pledge the Company’s Stock or securities as
collateral to secure loans. Such pledges also cannot be carried out through a Trading Plan. The Trading
Plan must be consistent with Section IV E above.
I.
Put and Call Options and other Hedging Transactions.
Put and call options and other hedging transactions will not be permitted under a Trading Plan. In
fact, such transactions outside of a Trading Plan may destroy the protection afforded by a Trading Plan. The
Trading Plan must be consistent with Section IV E above.
J.
Policy Takes Precedence.
In the event of any conflict between this Policy and any Trading Plan, this Policy shall control, to
the extent the Trading Plan would permit activities otherwise prohibited by this Policy.
Insider Trading Compliance Policy
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METAVIA Inc.
VI.
EXECUTION AND RETURN OF CERTIFICATION OF COMPLIANCE.
After reading this policy statement all officers, directors, employees and Subject Contractors should
execute and return to a Compliance Officer the applicable Certification of Compliance form attached hereto
as Attachment D, Attachment E or Attachment F.
Adopted: November 29, 2024
Insider Trading Compliance Policy
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METAVIA Inc.
Attachment A
SHORT-SWING PROFIT RULE SECTION 16(b) CHECKLIST
Note: ANY combination of PURCHASE AND SALE or SALE AND PURCHASE within six (6)
months of each other results in a violation of Section 16(b), and the “profit” must be recovered by the
Company. It makes no difference how long the shares being sold have been held or that you are an insider
for only one of the two matching transactions. The highest priced sale will be matched with the lowest
priced purchase within the six (6) month period.
SALES
If a sale is to be made by an officer, director or 10% stockholder (or any family member living in
the same household):
1.
Have there been any purchases by the insider (or family members living in the same
household) within the past six (6) months?
2.
Have there been any stock option exercises within the past six (6) months?
3.
Are any purchases (or stock option exercises) anticipated or required within the next six (6)
months?
4.
Has a Form 4 been prepared?
Note: If a sale is to be made by an affiliate of the Company and unregistered stock is to be sold, has
a Form 144 been prepared and has the broker been reminded to sell pursuant to Rule 144?
PURCHASES AND STOCK OPTION EXERCISES
If a purchase or stock option exercise for stock is to be made:
1.
Have there been any sales by the insider (or family members living in the same household)
within the past six (6) months?
2.
Are any sales anticipated or required within the next six (6) months (such as tax- related or
year-end transactions)?
3.
Has a Form 4 been prepared?
BEFORE PROCEEDING WITH A PURCHASE OR SALE, CONSIDER WHETHER YOU ARE
AWARE OF MATERIAL, NON-PUBLIC INFORMATION WHICH COULD AFFECT THE PRICE
OF THE STOCK.
Insider Trading Compliance Policy
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METAVIA Inc.
Attachment B
INSIDER TRADING REMINDERS
Before engaging in any transaction in the Company’s securities, please read the following:
Both the federal securities laws and the Company’s policy prohibit transactions in the Company’s
securities at a time when you may be in possession of material information about the Company which has
not been publicly disclosed. This also applies to members of your household as well as all others whose
transactions may be attributable to you.
Material information, in short, is any information which could affect the price of the securities.
Either positive or negative information may be material. Once a public announcement has been made, you
should wait until the information has been made available to the public for at least twenty-four (24) hours
before engaging in any transaction.
Except as set forth in Section II.D. of our Insider Trading Compliance Policy and except for
transactions effected under an approved Rule 10b5-1 Trading Plan as described in Section V of our Insider
Trading Compliance Policy, neither the Company nor any of its officers, directors, employees or
Subject Contractors may trade in any securities of the Company during the period beginning on the
last trading day of the fiscal quarter and ending two (2) full trading days after the public release of
earnings data or quarterly/annual report whether or not the Company or any of its officers, directors,
employees or Subject Contractors is in possession of material, non-public information, unless
authorized by the Compliance Officer.
Important: All transactions by officers, directors, employees and Subject Contractors must be
pre-cleared with the Compliance Officer, except as specifically noted in Section IV.D. of our Insider
Trading Compliance Policy.
For further information and guidance, please refer to our Insider Trading Compliance Policy and do
not hesitate to contact the Compliance Officer.
ALL TRANSACTIONS IN METAVIA INC. SECURITIES BY OFFICERS, DIRECTORS,
EMPLOYEES AND SUBJECT CONTRACTORS MUST BE PRE- CLEARED BY THE
COMPLIANCE OFFICER.
Insider Trading Compliance Policy
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METAVIA Inc.
Attachment C
Request for Pre-Clearance*
For pre-clearance to transact in Company Securities.
Upon executing a transaction, directors, officers and employees must immediately notify the
Company.
Transaction Vehicle (check one)
Transaction Initiated By (check one)
☐ Open Market Transaction
☐ Employee or immediate family member directly
☐ Equity Compensation Plan
☐ Court or government decree (e.g., divorce decree)
☐ Other (specify):
☐ Broker (provide name, firm, telephone and e-mail):
Type of Transaction (check one)
☐ Purchase or acquire common stock
☐ Sell or dispose of common stock
☐ Move Company Securities from one account to another (e.g., in or out of a trust)
☐ Dispose of fractional shares
☐ Pledge Company Securities for margin account, or otherwise
☐ Exercise options without subsequent sale
☐ Exercise options with subsequent sale (e.g., a “cashless exercise”)
☐ Other (describe):
Transaction Detail (provide the following information)
Number of securities:
Estimated share price:
Contemplated execution date:
Date of your last “opposite way” transaction**:
Certification
I certify that I have fully disclosed the information requested in this form, I have read the MetaVia Inc.
Insider Trading Policy, I am not in possession of material nonpublic information, and to the best of my
knowledge and belief the proposed transaction will not violate the NeuroBo Pharmaceuticals, Inc. Insider
Trading Compliance Policy.
Signature:
Print Name:
Date:
* Capitalized terms used but not defined herein have the meanings ascribed to them in the MetaVia Inc.
Insider Trading Compliance Policy.
** If a Section 16 insider buys and sells (or sells and buys) Company Securities within a six-month time
frame and such transactions are not exempt under SEC rules, the two transactions can be “matched” for
purposes of Section 16. The insider may be sued and will be strictly liable for any profits made, regardless
of whether the insider was in possession of material nonpublic information.
Insider Trading Compliance Policy
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METAVIA Inc.
Attachment D
Outside Directors
CERTIFICATION OF COMPLIANCE
TO:
Compliance Officer
FROM:
RE:
INSIDER TRADING COMPLIANCE POLICY OF METAVIA INC.
I have received, reviewed and understand the above-referenced Insider Trading Compliance Policy
and hereby undertake, as a condition to my present and continued affiliation with MetaVia Inc., to comply
fully with the policies and procedures contained therein.
I hereby certify that to the best of my knowledge I have complied, and I will henceforth comply
fully with all policies and procedures set forth in the above-referenced Insider Trading Compliance Policy.
SIGNATURE
DATE
TITLE
Insider Trading Compliance Policy
Page 18
METAVIA Inc.
Attachment E
Officers, Management Directors & Employees
CERTIFICATION OF COMPLIANCE
TO:
Compliance Officer
FROM:
RE:
INSIDER TRADING COMPLIANCE POLICY OF METAVIA INC.
I have received, reviewed and understand the above-referenced Insider Trading Compliance Policy
and hereby undertake, as a condition to my present and continued employment at MetaVia Inc., to comply
fully with the policies and procedures contained therein.
I hereby certify that to the best of my knowledge I have complied, and I will henceforth comply
fully with all policies and procedures set forth in the above-referenced Insider Trading Compliance Policy.
SIGNATURE
DATE
TITLE
Insider Trading Compliance Policy
Page 19
METAVIA Inc.
Attachment F
Consultants, Contractors
CERTIFICATION OF COMPLIANCE
TO:
Compliance Officer
FROM:
RE:
INSIDER TRADING COMPLIANCE POLICY OF METAVIA INC.
The above named consultant or contractor to MetaVia Inc. has received, reviewed and understands
the above-referenced Insider Trading Compliance Policy and hereby undertakes, as a condition to his, her or
its present and continued consulting or other contractual relationship with MetaVia Inc., to comply fully
with the policies and procedures contained therein.
The above named consultant or contractor hereby certifies that to the best of his, her or its
knowledge such consultant or contractor has complied and will henceforth comply fully with all policies
and procedures set forth in the above-referenced Insider Trading Compliance Policy.
SIGNATURE
DATE
NAME
TITLE
Insider Trading Compliance Policy
Page 20
Exhibit 21.1
Subsidiaries of MetaVia Inc.
Name
Jurisdiction of Organization
ANA Therapeutics, LLC
Delaware
NeuroBo Therapeutics, Inc.
Delaware
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No. 333-269365, 333-
255418, 333-252412 and 333-278646), Form S-1 (No. 333-280865) and Form S-8 (No. 333-271292, 333-237535 and 333-
260765) of MetaVia Inc. (the Company) of our report dated March 20, 2025, relating to the consolidated financial
statements which appears in this Annual Report on Form 10-K. Our report contains an explanatory paragraph regarding the
Company’s ability to continue as a going concern.
/s/ BDO USA, P.C.
Boston, Massachusetts
March 20, 2025
Exhibit 31.1
Certification of Chief Executive Officer
pursuant to Rule 13a-14(a) or Rule 15d-14(a)
I, Hyung Heon Kim, certify that:
(1) I have reviewed this annual report on Form 10-K of MetaVia Inc.;
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
(4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under my supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is
being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
(5) The registrant’s other certifying officer and I have disclosed, based on my most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: March 20, 2025
/s/ Hyung Heon Kim
President and Chief Executive Officer
(Principal Executive Officer)
Exhibit 31.2
Certification of Chief Financial Officer
pursuant to Rule 13a-14(a) or Rule 15d-14(a)
I, Marshall H. Woodworth, certify that:
(1) I have reviewed this annual report on Form 10-K of MetaVia Inc.;
(2) Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances under which such statements were made, not
misleading with respect to the period covered by this report;
(3) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods
presented in this report;
(4) The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed
under my supervision, to ensure that material information relating to the registrant, including its consolidated
subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is
being prepared;
(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under my supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report my
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by
this report based on such evaluation; and
(d) disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has
materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;
and
(5) The registrant’s other certifying officer and I have disclosed, based on my most recent evaluation of internal control over
financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons
performing the equivalent functions):
(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the
registrant’s internal control over financial reporting.
Date: March 20, 2025
/s/ Marshall H. Woodworth
Chief Financial Officer
(Principal Financial Officer)
Exhibit 32.1
Certification of Chief Executive Officer
under Section 906 of the Sarbanes-Oxley Act of 2002
(18 U.S.C. § 1350)
In connection with the Annual Report of MetaVia Inc. (the “Company”) on Form 10-K for the year ended December 31,
2024 as filed with the Securities and Exchange Commission (the “Report”), I, Hyung Heon Kim, President and Chief
Executive Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002,
that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company.
Date: March 20, 2025
/s/ Hyung Heon Kim
President and Chief Executive Officer
(Principal Executive Officer)
Exhibit 32.2
Certification of Chief Financial Officer
under Section 906 of the Sarbanes-Oxley Act of 2002
(18 U.S.C. § 1350)
In connection with the Annual Report of MetaVia Inc. (the “Company”) on Form 10-K for the year ended December 31,
2023 as filed with the Securities and Exchange Commission (the “Report”), I, Marshall H. Woodworth, Chief Financial
Officer, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;
and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results
of operations of the Company.
Date: March 20, 2025
/s/ Marshall H. Woodworth
Chief Financial Officer
(Principal Financial Officer)
Exhibit 97.1
MetaVia Inc.
Policy for the Recovery of Erroneously Awarded Compensation
Adopted and approved on November 2, 2023; and Amended as of November 29, 2024
1.
Purpose. The Board of Directors (the “Board”) of MetaVia Inc., a Delaware
corporation (the “Company”) believes that it is in the best interests of the Company and its
stockholders to adopt this Policy for the Recovery of Erroneously Awarded Compensation, as may
be amended from time to time (this “Policy”). This Policy requires the recovery of Erroneously
Awarded Compensation by the Company from Covered Executive Officers in accordance with the
terms herein. Promptly, but in no event later than 30 days, following the later of the Effective Date
or becoming a Covered Executive Officer, each Covered Executive Officer shall sign and return to
the Company the Acknowledgement Form attached hereto as Exhibit A pursuant to which such
Covered Executive Officer shall agree to be bound by the terms of and comply with this Policy.
All capitalized terms used and not otherwise defined herein shall have the meanings set forth in
Section 3 hereof.
2.
Administration. This Policy shall be administered by the Compensation Committee
of the Board (the “Compensation Committee”) or, if so designated by the Board, the Board or
another committee thereof (the “Administrator”). The Administrator is authorized to interpret and
enforce this Policy and to make all determinations necessary, appropriate or advisable for the
administration of this Policy. Any determinations made by the Administrator shall be final and
binding on all affected persons and need not be uniform with respect to each person covered by
this Policy. This Policy is designed to comply with, and shall be interpreted by the Administrator in
a manner consistent with, Section 10D (“Section 10D”) of the Securities Exchange Act of 1934
(the “Exchange Act”), Rule 10D-1 promulgated under the Exchange Act (“Rule 10D-1”) and
Nasdaq Listing Rule 5608 (the “Listing Standards”), each as may be amended from time to time.
In the administration of this Policy, the Administrator is authorized to consult with the full Board
or other committees of the Board, as well as retain any counsel, advisors and consultants.
3.
Definitions. For purposes of this Policy, the following capitalized terms shall have
the meanings set forth below.
(a)
“Accounting Restatement” means an accounting restatement of the
Company’s financial statements due to the material noncompliance of the Company with any
financial reporting requirement under the securities laws, including any required accounting
restatement to correct an error in previously issued financial statements (i) that is material to the
previously issued financial statements, or (ii) that is not material to the previously issued financial
statements but that would have resulted in a material misstatement if the error were corrected in the
current period or left uncorrected in the current period.
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(b)
“Clawback Eligible Incentive Compensation” means all Incentive-Based
Compensation Received by a Covered Executive Officer (i) on or after October 2, 2023, (ii) if that
person served as an executive officer of the Company at any time during the performance period
for such Incentive-Based Compensation (whether or not such executive officer is serving as an
executive officer or employee of the Company at the time the Erroneously Awarded Compensation
is required to be recovered by the Company), and (iii) while the Company had a class of securities
listed on a national securities exchange or a national securities association.
(c)
“Clawback Period” means with respect to any Accounting Restatement, (i)
the three completed fiscal years of the Company immediately preceding the Restatement Date and
(ii) any transition period that results from a change in the Company’s fiscal year of less than nine
months within or immediately following such three completed fiscal years, provided that a
transition period that comprises a period of at least nine months shall count as a completed fiscal
year.
(d)
“Code” means the Internal Revenue Code of 1986, as amended, and the
regulations and guidance issued thereunder.
(e)
“Covered Executive Officer” means the Company’s current and former
executive officers, as determined by the Board or an applicable committee in accordance with the
definition of “executive officer” set forth in Rule 10D-1 and the Listing Standards. Unless
determined otherwise by the Board or the Administrator, Covered Executive Officers for this
Policy shall be any person designated by the Board as an “officer” under Rule 16a-1(f) under the
Exchange Act.
(f)
“Effective Date” means November 2, 2023.
(g)
“Erroneously Awarded Compensation” means with respect to each Covered
Executive Officer and in connection with an Accounting Restatement, the amount of Clawback
Eligible Incentive Compensation Received by the Covered Executive Officer during the Clawback
Period that exceeds the amount of Clawback Eligible Incentive-Based Compensation that
otherwise would have been Received by the Covered Executive Officer during the Clawback
Period had it been determined based on the restated amounts, computed without regard to any
taxes paid or payable by the Covered Executive Officer.
(h)
“Financial Reporting Measures” means measures that are determined and
presented in accordance with the accounting principles used in preparing the Company’s financial
statements, and any other measures that are derived wholly or in part from such measures. Financial
Reporting Measures include GAAP and non-GAAP financial measures and include but are not
limited to the following (and any measures derived wholly or in part therefrom): Company stock
price; total shareholder return; revenues; net or operating income; profitability of one or more
reportable segments; financial ratios; net assets or net asset value per share; EBITDA; funds from
operations; liquidity measures; return measures; earnings measures; sales per square foot or same
store sales; revenue per user, or average revenue per user; and any adjusted measure of any of the
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foregoing measures. For the avoidance of doubt, a Financial Reporting Measure need not be
presented in the Company’s financial statements or included in a Company filing with the SEC.
(i)
“Group Companies” means any of the Company’s direct and indirect
Subsidiaries and affiliates.
(j)
“Incentive-Based Compensation” means any compensation that is granted,
earned or vested based wholly or in part upon the attainment of a Financial Reporting Measure.
(k)
“Nasdaq” means The Nasdaq Stock Market or any other national securities
exchange or association on which the Company’s securities are listed as of the applicable date.
(l)
“Received” means with respect to any Incentive-Based Compensation,
actual or deemed receipt. Incentive-Based Compensation shall be deemed to be Received in the
Company’s fiscal period during which the Financial Reporting Measure specified in the Incentive-
Based Compensation award is attained, even if payment or grant of the earned Incentive-Based
Compensation occurs after the end of the performance period. For the avoidance of doubt,
Incentive-Based Compensation that is subject to both a Financial Reporting Measure vesting
condition and a service-based vesting condition shall be considered Received when the relevant
Financial Reporting Measure is attained, even if the Incentive-Based Compensation continues to
be subject to the service-based vesting condition.
(m)
“Restatement Date” means the earlier to occur of (i) the date that the Board,
a committee thereof or any of the Company’s officers authorized to take such action if Board
action is not required concluded, or reasonably should have concluded, that the Company is
required to prepare an Accounting Restatement; or (ii) the date that a court, regulator or other
legally authorized body directs the Company to prepare an Accounting Restatement, in each case
regardless of when the restated financial statements are filed.
(n)
“SEC” means the U.S. Securities and Exchange Commission.
(o)
“Section 409A” means Section 409A of the Code.
4.
Recovery of Erroneously Awarded Compensation.
(a)
In the event of an Accounting Restatement, the Administrator shall
reasonably promptly recover any Erroneously Awarded Compensation and in a manner set forth in
this Section 4. In connection therewith, the Administrator shall reasonably promptly (A) determine
the amount of any Erroneously Awarded Compensation for each Covered Executive Officer in
connection with such Accounting Restatement and (B) thereafter provide each Covered Executive
Officer with a written notice containing the amount of Erroneously Awarded Compensation, the
applicable methodology and calculation of such amount, and the method of recovery, as applicable.
Prior to sending any such formal demand for recovery as determined pursuant to this Policy, the
Administrator may, in its sole discretion depending on the specific facts and circumstances,
provide a Covered Executive Officer with an initial written notice containing
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the foregoing information, and may provide the Covered Executive Officer with the opportunity to
be heard at a meeting or otherwise respond in writing to such information.
(i)
Recovery under this Policy with respect to a Covered Executive
Officer shall not require the finding of any misconduct by such Covered Executive Officer or such
Covered Executive Officer being found responsible for the accounting error leading to an
Accounting Restatement.
(ii)
For Incentive-Based Compensation based on (or derived from) stock
price or total shareholder return (or a similar Financial Reporting Measure) where the amount of
Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the
information in the applicable Accounting Restatement, the amount shall be determined by the
Administrator based on a reasonable estimate of the effect of the Accounting Restatement on the
stock price or total shareholder return (or such similar Financial Reporting Measure) upon which
the Incentive-Based Compensation was Received; provided that the Company shall maintain
documentation of the determination of such reasonable estimate and provide such documentation
to Nasdaq.
(iii)
Where Incentive-Based Compensation is based only in part on the
achievement of a Financial Reporting Measure, the Administrator shall first determine the portion
of the original Incentive-Based Compensation that was based on the Financial Reporting Measure
that was restated in the Accounting Restatement. The Administrator shall then recalculate the
affected portion based on the Financial Reporting Measure as restated, and recover the Erroneously
Awarded Compensation.
(iv)
To determine Erroneously Awarded Compensation for cash incentive
awards determined for a pool of participants, the size of the aggregate pool from which individual
awards were paid shall be reduced by applying the Financial Reporting Measure that was restated
in the Accounting Restatement, and the individual awards shall be reduced on a pro rata basis
(with recovery required from the Covered Executive Officers only).
(v)
With respect to any compensation plans or programs that take into
account Incentive-Based Compensation, the amount of Erroneously Awarded Compensation
subject to recovery hereunder includes, but is not limited to, the amount contributed to any
notional account based on Erroneously Awarded Compensation and any earnings accrued to date
on that notional amount.
(b)
The Administrator shall have broad discretion to determine the appropriate
timing and means of recovery of Erroneously Awarded Compensation based on the particular facts
and circumstances, subject to applicable law, including but not limited to (i) requiring
reimbursement of all or part of any paid cash award, (ii) seeking recovery or forfeiture of any gain
realized on the vesting, exercise, settlement, sale, transfer or other disposition of any equity-based
awards, (iii) cancelling or reducing any outstanding cash or equity-based awards, whether vested
or unvested, (iv) cancelling or offsetting against any planned future cash or equity-based awards,
(v) forfeiture of deferred compensation, (vi) offsetting any compensation amount otherwise
payable by the Company (or the Group Companies) to the Covered Executive Officer in the future,
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and (vii) any other method authorized by applicable law or contract as determined by the
Administrator. Any method elected by the Administrator shall comply with Section 409A or as
required by applicable law. For the avoidance of doubt, except as set forth in Section 4(d) hereof,
in no event may the Company accept an amount that is less than the amount of Erroneously
Awarded Compensation in satisfaction of a Covered Executive Officer’s obligations hereunder.
(c)
To the extent that a Covered Executive Officer fails to repay all Erroneously
Awarded Compensation to the Company when due (as determined in accordance with Section 4(b)
hereof), the Company shall take all reasonable and appropriate actions to recover such Erroneously
Awarded Compensation from the applicable Covered Executive Officer. The applicable Covered
Executive Officer shall be required to reimburse the Company for any and all expenses reasonably
incurred (including legal fees) by the Company in recovering such Erroneously Awarded
Compensation in accordance with the immediately preceding sentence.
(d)
Notwithstanding anything herein to the contrary, the Company shall not be
required to recover Erroneously Awarded Compensation, including taking the actions
contemplated by this Section 4, if the Compensation Committee (or, if the Compensation
Committee is not composed solely of independent directors under the Listing Standards, a majority
of independent directors serving on the Board) determines that recovery would be impracticable
solely for one of the following limited reasons and subject to the procedural and disclosure
requirements below and in the applicable rules:
(i)
The direct expenses paid to a third party to assist in enforcing this
Policy against a Covered Executive Officer would exceed the amount of Erroneously Awarded
Compensation, after the Company has made a reasonable attempt to recover the applicable
Erroneously Awarded Compensation, documented such attempt and provided such documentation
to Nasdaq; or
(ii)
Recovery would likely cause a tax-qualified retirement plan, under
which benefits are broadly available to employees of the Company (or the Group Companies),to
fail to meet the requirements of Section 401(a)(13) or Section 411(a) of the Code.
5.
Reporting and Disclosure. The Company shall file all disclosures with respect to
this Policy in accordance with federal securities laws, including the disclosure required in any
applicable SEC filings.
6.
Indemnification
and Insurance Prohibition. The Company (or the Group
Companies) shall not insure (or reimburse for the purchase of insurance) or indemnify any Covered
Executive Officer against (i) the loss of any Erroneously Awarded Compensation that is repaid,
returned, recovered, cancelled or forfeited pursuant to the terms of this Policy, or (ii) any claims
relating to the Company’s enforcement of its rights under this Policy. Further, the Company (or the
Group Companies) shall not enter into any agreement that exempts any Incentive-Based
Compensation from the application of this Policy or that waives the Company’s right to recovery of
any Erroneously Awarded Compensation, and this Policy shall supersede any such agreement
(whether entered into before, on or after the Effective Date).
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7.
Effective Date. This Policy shall be effective as of the Effective Date. Subject to
applicable law, the Administrator may affect recovery under this Policy from any amount of
compensation approved, awarded, granted, payable or paid to the Covered Executive prior to, on or
after the Effective Date.
8.
Amendment; Termination. The Board or Administrator may amend this Policy
from time to time in its discretion and shall amend this Policy as it deems necessary, including as
and when it determines that it is legally required by any federal securities laws or Nasdaq rules or
to comply with (or maintain an exemption from the application of) Section 409A. The Board or
Administrator may terminate this Policy at any time. Notwithstanding anything in this Section 8 to
the contrary, no amendment or termination of this Policy shall be effective if such amendment or
termination would (after taking into account any actions taken by the Company
contemporaneously with such amendment or termination) cause the Company to violate any
federal securities laws, SEC rule or Nasdaq rule.
9.
Other Recoupment Rights; No Additional Payments. Any employment
agreement, cash or equity-based award agreement, compensatory plan or any other agreement or
arrangement with a Covered Executive Officer shall be deemed to include, as a condition to the
grant of any benefit thereunder, an agreement by the Covered Executive Officer to abide by the
terms of this Policy. Any right of recoupment under this Policy is in addition to, and not in lieu of,
any other remedies or rights of recoupment that may be available to the Company (or the Group
Companies), including under applicable law, regulation or rule or pursuant to the terms of any
employment or severance agreement, cash or equity-based award agreement, plan or policy, or
similar agreement, plan or policy with the Company (or the Group Companies). To the extent that
the Covered Executive Officer has already reimbursed the Company (or the Group Companies) for
any Erroneously Awarded Compensation Received under any duplicative recovery obligations
established by the Company (or the Group Companies) and subject to applicable law, such
reimbursed amount shall be credited to the amount of Erroneously Awarded Compensation that is
subject to recovery under this Policy.
10.
Severability. The provisions in this Policy are intended to be applied to the fullest
extent of the law. To the extent that any provision of this Policy is found to be unenforceable or
invalid under any applicable law, such provision shall be applied to the maximum extent permitted,
and shall automatically be deemed amended in a manner consistent with its objectives to the extent
necessary to conform to any limitations required under applicable law.
11.
Successors. This Policy shall be binding and enforceable against all Covered
Executive Officers and their beneficiaries, heirs, executors, administrators or other legal
representatives.
*
*
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Exhibit A
MetaVia Inc.
Policy for the Recovery of Erroneously Award Compensation
Covered Executive Officer Acknowledgement Form
By signing below, the undersigned acknowledges and confirms that the undersigned has
received and reviewed a copy of the MetaVia Inc. Policy for the Recovery of Erroneously Awarded
Compensation (as may be amended, restated, supplemented or otherwise modified from time to
time, the “Policy”). Capitalized terms used but not otherwise defined in this Acknowledgement
Form (the “Acknowledgement Form”) shall have the meanings ascribed to such terms in the
Policy.
By signing this Acknowledgement Form, the undersigned acknowledges and agrees that the
undersigned is and will continue to be subject to the Policy and that the Policy will apply both
during and after the undersigned’s employment with the Company (or the Group Companies). In
the event of any inconsistency between the Policy and the terms of any employment or separation
agreement to which I am a party, or the terms of any compensation or severance plan, program or
agreement under which any compensation has been granted, awarded, earned or paid, the terms of
the Policy shall govern. In the event it is determined by the Administrator that the Erroneously
Awarded Compensation must be returned, forfeited or reimbursed to the Company, I will promptly
take any action necessary to effectuate such recovery in any manner permitted by the Policy and
determined by the Administrator.
_____________________________
[Name/Title]
_____________________________
[Date]