UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION(Rule 14a-101)
PROXY STATEMENT PURSUANT TO SECTIONProxy Statement Pursuant to Section 14(a) OFTHE SECURITIES EXCHANGE ACT OFof
the Securities Exchange Act of 1934 (Amendment No. )
| Filed by the Registrant x | ||
| Filed by a Party other than the Registrant ¨ | ||
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| ¨ | Preliminary Proxy Statement | |
| ¨ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| x | Definitive Proxy Statement | |
| ¨ | Definitive Additional Materials | |
| ¨ | Soliciting Material under §240.14a-12 | |
| Hepion Pharmaceuticals, Inc. | ||
| (Name of Registrant as Specified In Its Charter) | ||
| (Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||
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Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material under §240.14a-12
ContraVirHepion Pharmaceuticals, Inc.
(Name of Registrant as Specified in Its Charter)
(Name of Person(s) Filing Proxy Statement, if other Than the Registrant)
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(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
399 Thornall Street, First Floor
Edison, New JerseyNJ 08837
NOTICE OF 2017 ANNUAL MEETING OF
STOCKHOLDERS AND PROXY STATEMENT
To Be Held on July 30, 2020
Dear Stockholder:
On behalf of our Board of Directors (the “Board”), I cordiallyWe are pleased to invite you to attend the annual meeting of stockholders (the “Annual Meeting”) of ContraVirHepion Pharmaceuticals, Inc. (the “Company”(“Hepion” or the “Company”) to, which will be held on July 30, 2020 at the Company’s9:00 a.m. local time at our offices, located at 399 Thornall Street, First Floor, Edison, New JerseyNJ 08837, on December 13, 2017 at 9:00 a.m. local time, for the following purposes:
1. To elect seven (7) directors for a one-year termsix (6) members to expire atour Board of Directors to hold office until the 2018 annual meeting of stockholders;2021 Annual Meeting;
2. To ratify the appointment of BDO USA, LLP as our independent registered public accounting firm for theour fiscal year ending June 30, 2018;December 31, 2020;
3. To consider and act upon a proposal to approve an amendment to the Company’s 2013 Equity Incentive Plan (the “2013 Plan”“2013 Plan”) to increase the reservationnumber of common stock for issuanceshares issuable thereunder to 10,700,0002,500,000 shares from 7,700,00040,536 shares; and
4. To transact anysuch other business thatmatters as may properly come before our annual meeting orthe Annual Meeting and any adjournment or postponement of the meeting.thereof.
Our Boardboard of directors has fixed October 27, 2017the close of business on June 12, 2020 as the record date for thea determination of stockholders entitled to notice of, and to vote at, the annual meeting and atAnnual Meeting or any adjournment or postponement of the meeting.thereof.
All stockholders are cordially invited to attend the annual meeting. Whether or not you expect to attend the annual meeting, please complete, sign and date the enclosed proxy and return it promptly. If you plan to attend the annual meeting and wish to vote your shares personally, you may do so at any time before the proxy is voted.
If You Plan to Attend
Please note that space limitations make it necessary to limit attendance of the Annual Meeting to our stockholders. Registration and seating will begin at 8:3000 a.m. Shares of common stock can be voted at the Annual Meeting only if the holder thereof is present in person or by valid proxy.
For admission to the Annual Meeting, each stockholder may be asked to present valid picture identification, such as a driver’s license or passport, and proof of stock ownership as of the record date, such as the enclosed proxy card or a brokerage statement reflecting stock ownership. Cameras, recording devices and other electronic devices will not be permitted at the meeting.Annual Meeting. If you do not plan on attending the meeting,Annual Meeting, please vote, date and sign the enclosed proxy and return it in the business envelope provided. Even if you do plan to attend the Annual Meeting, we recommend that you vote your shares at your earliest convenience in order to ensure your representation at the Annual Meeting. Your vote is very important.
By OrderImportant Notice Regarding the Availability of Proxy Materials for the Board of Directors,Annual Meeting to Be Held on July 30, 2020 at 9:00 a.m. local time at 399 Thornall Street, First Floor, Edison, NJ 08837.
The proxy statement and annual report to stockholders are available at
http://www.pstvote.com/hepion2020.
By the Order of the Board of Directors | ||
| /s/ GARY S. JACOB | ||
| Gary S. Jacob | ||
| Chairman of the Board of Directors |
Edison, New Jersey
October 27, 2017Dated: June 12, 2020
Whether or not you expect to attend the Annual Meeting in person, we urge you to vote your shares at your earliest convenience. This will ensure the presence of a quorum at the Annual Meeting. Promptly voting your shares will save the Company the expenses and extra work of additional solicitation. An addressed envelope for which no postage is required if mailed in the United States is enclosed if you wish to vote by mail. Submitting your proxy now will not prevent you from voting your shares at the Annual Meeting if you desire to do so, as your proxy is revocable at your option. Your vote is important. Please vote your shares whether or not you plan to attend the meeting.important, so please act today!
Table of ContentsHepion Pharmaceuticals, Inc.
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399 Thornall Street, First Floor
Edison, New JerseyNJ 08837
PROXY STATEMENT FOR THE 2017
2020 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON DECEMBER 13, 2017JULY 30, 2020
This proxy statement is furnished to holdersThe Board of common stockDirectors (the “Board”) of ContraVirHepion Pharmaceuticals, Inc., a Delaware corporation (“we,” “us,” “our,” “ContraVirHepion” or the “Company”), in connection with is soliciting your proxy to vote at the solicitation of proxies by our board of directors (our “Board”) for use at our 2017 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on December 13, 2017 at 9:00 a.m., local time, at the Company’sour offices, located at 399 Thornall Street, First Floor, Edison, New Jersey 08837. This proxy statement is being distributedNJ 08837, on July 30, 2020, at 9:00 a.m. local time, including at any adjournments or made available, aspostponements of the case may be, to stockholders on or about October 27, 2017.
Annual Meeting. You are invited to attend the Annual Meeting to vote on the proposals described in this proxy statement. However, you do not need to attend the meetingAnnual Meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card if you received paper copies of the proxy materials, or follow the instructions below to submit your proxy over the Internet.
Our Board is asking you to vote your shares by completing, signing and returning the accompanying proxy card. If you attend the Annual Meeting in person, you may vote at the Annual Meeting even if you have previously returned a proxy card. Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to vote at the Annual Meeting, you must obtain a proxy issued in your name from that record holder as described in more detail below.QUESTIONS AND ANSWERS ABOUT THIS PROXY MATERIAL AND VOTING
IMPORTANT NOTICE REGARDING THE INTERNET AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL STOCKHOLDERS MEETING TO BE HELD ON DECEMBER 13, 2017: This proxy statement, the accompanying proxy card or voting instruction card and our 2017 Annual Report on Form 10-K are also available at www.pstvote.com/contravir2017.
GENERAL INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
What is a proxy?
A proxy is the legal designation of another person to vote the stock you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document is also called a proxy or a proxy card. By completing, signing and returning the accompanying proxy card, you are designating James SapirsteinRobert Foster, Ph.D. and John Cavan, our Chief Executive Officer and Chief Financial Officer, respectively, as your proxies for the Annual Meeting and you are authorizing Messrs. SapirsteinDr. Foster and Mr. Cavan to vote your shares at the Annual Meeting as you have instructed them on the proxy card. This way, your shares will be voted whether or not you attend the Annual Meeting. Even if you plan to attend the Annual Meeting, we urge you to vote in one of the ways described below so that your vote will be counted even if you are unable or decide not to attend the Annual Meeting.
What is a proxy statement?
A proxy statement is a document that we are required by regulations of the Securities and Exchange Commission, or “SEC,,” to give you when we ask you to sign a proxy card designating Messrs. SapirsteinDr. Foster and Mr. Cavan as proxies to vote on your behalf.
Why did you send me this proxy statement?How do I attend the Annual Meeting?
We sentThe Annual Meeting will be held on July 30, 2020, at 9:00 a.m. local time at our offices, located at 399 Thornall Street, First Floor, Edison, NJ 08837. Directions to the Annual Meeting may be found at the back of this Proxy Statement. Information on how to vote in person at the Annual Meeting is discussed below.
Who May Attend the Annual Meeting?
Only record holders and beneficial owners of our common stock, or their duly authorized proxies, may attend the Annual Meeting. If your shares of common stock are held in street name, you this proxywill need to bring a copy of a brokerage statement andor other documentation reflecting your stock ownership as of the enclosed proxy card because ourRecord Date.
Who is Entitled to Vote?
The Board is soliciting your proxyhas fixed the close of business on June 12, 2020 as the record date (the “Record Date”) for the determination of stockholders entitled to notice of, and to vote at, the 2017 Annual Meeting of stockholders. This proxy statement summarizes information related to your vote at the Annual Meeting. All stockholders who find it convenient to do so are cordially invited to attend the Annual Meeting in person. However, you do not need to attend the meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card.
We intend to begin making this proxy statement, the attached notice of Annual Meeting and the enclosed proxy card available on or about October 27, 2017 to all stockholders of record entitled to vote at the Annual Meeting.any adjournment or postponement thereof. Only stockholdersstockholder who owned our common stock on October 27, 2017June 12, 2020 are entitled to vote at the Annual Meeting.Meeting. In addition, on October 27, 2017June 12, 2020 there were 104,01385,581 shares of Series A Preferred Stock issued and outstanding. Each share of Series A Preferred Stock is entitled to vote on any matter with the holders of Common Stockcommon stock on an as converted basis. On the record date,Record Date, there were 80,445,8409,028,245 shares of our common stock outstanding (including 2,166,9343,184 shares of common stock issuable upon conversion of the Series A Preferred Stock).
What is the Difference Between Holding Shares as a Record Holder and as a Beneficial Owner (Holding Shares in Street Name)?
Why did I ReceiveIf your shares are registered in your name with our transfer agent, Philadelphia Stock Transfer, Inc., you are the Mail a Notice“record holder” of Internet Availability of Proxy Materials this Year instead of a Full Set of Proxy Materials?
We are pleased to take advantage of the SEC rule that allows companies to furnish their proxy materials over the Internet. Accordingly, we have sent to our stockholders of record a Notice of Internet Availability of Proxy Materials. Instructions on how to access the proxy materials over the Internet or to request a paper copy may be found in the Notice. Our stockholders may request to receive proxy materials in printed form by mail or electronically on an ongoing basis. A stockholder’s election to receive proxy materials by mail or electronically by email will remain in effect until the stockholder terminates its election.
Why did I Receive a Full Set of Proxy Materials in the Mail instead of a Notice of Internet Availability of Proxy Materials?
We are providing paper copies of the proxy materials instead of a Notice to our beneficial owners or stockholders of record who have previously requested to receive paper copies of our proxy materials.those shares. If you are a beneficial ownerrecord holder, these proxy materials have been provided directly to you by the Company.
If your shares are held in a stock brokerage account, a bank or other holder of record, you are considered the “beneficial owner” of those shares held in “street name.” If your shares are held in street name, these proxy materials have been forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record who received a paper copyfor purposes of voting at the proxy materials, andAnnual Meeting. As the beneficial owner, you would likehave the right to reduce the environmental impact and the costs incurred by us in mailing proxy materials, you may electinstruct this organization on how to receive all future proxy materials electronically via email or the Internet. You can choose to receive future proxy materials electronically by visiting http://www.pstvote.com/contravir2017. Your choice to receive proxy materials electronically will remain in effect until you instruct us otherwise by following the instructions contained invote your Notice and visiting http://www.pstvote.com/contravir2017, sending an electronic mail message to info@philadelphiastocktransfer.com, or calling 1-866-223-0448.shares.
What am I voting on?
There are four proposalsthree (3) matters scheduled for a vote:
Proposal 1: Election1. To elect six (6) members to our Board of seven (7) Directors:Directors to hold office until the 2021 Annual Meeting;
·Gary S. Jacob, Ph.D.
·James Sapirstein R.Ph.
·John P. Brancaccio
·Thomas Adams, Ph.D.
·Dr. Timothy Block
·Arnold Lippa, Ph.D
·Tamar Howson
Proposal 2:Ratification of2. To ratify the appointment of BDO USA, LLP as the Company’sour independent registered public accountantaccounting firm for theour fiscal year ending June 30, 2018.December 31, 2020; and
Proposal 3: To3. To consider an act upon a proposal to approve an amendment to the Company’s 2013 Equity Incentive Plan (the “2013 Plan”) to increase the reservationnumber of shares issuable thereunder to 2,500,000 shares from 40,536 shares.
What if another matter is properly brought before the Annual Meeting?
The Board knows of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the Annual Meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment.
How Do I Vote?
Stockholders of Record
For your convenience, record holders of our common stock have three methods of voting:
1. Vote by Internet. The website address for issuance thereunderInternet voting is on your proxy card.
2. Vote by mail. Mark, date, sign and promptly mail the enclosed proxy card (a postage-paid envelope is provided for mailing in the United States).
3. Vote in person. Attend and vote at the Annual Meeting.
Beneficial Owners of Shares Held in Street Name
For your convenience, beneficial owners of our common stock have three methods of voting:
1. Vote by Internet. The website address for Internet voting is on your vote instruction form.
2. Vote by mail. Mark, date, sign and promptly mail your vote instruction form (a postage-paid envelope is provided for mailing in the United States).
3. Vote in person. Obtain a valid legal proxy from the organization that holds your shares and attend and vote at the Annual Meeting.
If you vote by Internet, please DO NOT mail your proxy card.
All shares entitled to 10,700,000vote and represented by a properly completed and executed proxy received before the Annual Meeting and not revoked will be voted at the Annual Meeting as instructed in a proxy delivered before the Annual Meeting. If you do not indicate how your shares should be voted on a matter, the shares represented by your properly completed and executed proxy will be voted as the Board recommends on each of the enumerated proposals, with regard to any other matters that may be properly presented at the Annual Meeting and on all matters incident to the conduct of the Annual Meeting. If you are a registered stockholder and attend the Annual Meeting, you may deliver your completed proxy card in person. If you are a street name stockholder and wish to vote at the Annual Meeting, you will need to obtain a proxy form from 7,700,000the institution that holds your shares. All votes will be tabulated by the inspector of elections appointed for the Annual Meeting, who will separately tabulate affirmative and negative votes, abstentions and broker non-votes.
We provide Internet proxy voting to allow you to vote your shares. online, with procedures designed to ensure the authenticity and correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your Internet access, such as usage charges from Internet access providers and telephone companies.
How many votesMany Votes do I have?Have?
Each share of our common stock (including shares of common stock issuable upon conversion of Series A Preferred Stock) that you own as of October 27, 2017June 12, 2020 entitles you to one vote.
How do I vote by proxy?Is My Vote Confidential?
With respect to the election of directors, you may either vote “For” all the nominees to the Board or you may “Withhold”Yes, your vote is confidential. Only the inspector of elections, individuals who help with processing and counting your votes and persons who need access for any nominee you specify. For the ratification of the appointment of BDO USA, LLPlegal reasons will have access to your vote. This information will not be disclosed, except as the Company’s independent registered public accountant for the fiscal year ending June 30, 2018 you may vote “For, “Against” or “Abstain” from voting. With respect to the amendment to the Company’s 2013 Equity Incentive Plan, you may vote “For”, “Against” or “Abstain” from voting.required by law.
Stockholders of Record: Shares Registered in Your NameWhat Constitutes a Quorum?
If you are a stockholder of record, you may vote in personTo carry on business at the Annual Meeting, or vote by proxy usingwe must have a quorum. A quorum is present when a majority of the enclosed proxy card. Whether or not you plan to attend the meeting, we urge youshares entitled to vote by proxy to ensure that your vote is counted. You may still attend the meeting and vote in person even if you have already voted by proxy. To vote in person, come to the Annual Meeting and we will give you a ballot at the Annual Meeting. To vote using the proxy card, simply complete, sign and date the enclosed proxy card and return it promptly in the envelope provided. If you properly complete your proxy card and send it to us in time to vote, your proxy (oneas of the individuals named on your proxy card) will vote your shares as you have directed. If you sign the proxy card but do not make specific choices, your shares will be, as permitted, voted as recommended by our Board. If any other matter is presented at the Annual Meeting, your proxy (one of the individuals named on your proxy card) will vote in accordance with his or her best judgment. As of the date of this proxy statement, we knew of no matters that needed to be acted on at the meeting, other than those discussed in this proxy statement.
Beneficial Owners: Shares Registered in the Name of a Broker or Bank
If youRecord Date, are a beneficial owner of shares registered in the name of your broker, bank or other agent, you should have received a proxy card and voting instructions with these proxy materials from that organization rather than directly from us. Simply complete and mail the proxy card to ensure that your vote is counted. To vote in person at the Annual Meeting, you must obtain a valid proxy from your broker, bank or other agent. Follow the instructions from your broker or bank included with these proxy materials, or contact your broker or bank to request a proxy form.
May I revoke my proxy?
If you give us your proxy, you may revoke it at any time before it is exercised. You may revoke your proxy in any one of the three following ways:
· you may send in another signed proxy with a later date;
· you may notify us in writing before the Annual Meeting that you have revoked your proxy; or
· you may notify us in writing before the Annual Meeting and vote in person at the meeting.
Can I vote via the Internet?
If your shares are registered in the name of a bank or brokerage firm, you may be eligible to vote your shares electronically over the Internet. A large number of banks and brokerage firms offer Internet voting. If your bank or brokerage firm does not offer Internet voting information, please complete and return your proxy card in the self-addressed, postage-paid envelope provided.
What constitutes a quorum?
The presence at the Annual Meeting,represented in person or by proxy of holders representing a majority of our outstanding common stock (including(including shares of common stock issuable upon conversion of the Series A Convertible Preferred Stock) as of October 27, 2017,. Thus, 4,514,123 shares must be represented in person or approximately 40,222,621 shares, constitutesby proxy to have a quorum at the meeting, permitting us to conduct our business.
What vote is required to approve each proposal?
Proposal 1: Election of Directors. For Proposal 1, the seven nominees who receive the most “For” votes (among votes properly cast in person or by proxy)Annual Meeting. Your shares will be elected. Only votes “For” or “Withheld” will affectcounted towards the outcome.
Proposal 2: Ratification of Independent Registered Public Accounting Firm. To be approved, Proposal 2 must receive “For” votes from the holders of a majority of the shares of Common Stock present or represented by proxy and entitled to vote at the Annual Meeting.
Proposal 3: Amendment to Increase Reserve under 2013 Plan. To be approved, Proposal 3 must receive “For” votes from the holders of a majority of the shares of Common Stock present or represented by proxy and entitled to vote at the annual meeting.
Voting results will be tabulated and certified by our mailing and tabulating agent, Philadelphia Stock Transfer, Inc.
What are the Board’s recommendations?
The recommendations of our Board are set forth together with the description of each proposal in this proxy statement. In summary, our Board recommends a vote:
·“FOR” election of the directors named in this proxy statement as described in Proposal 1;
·“FOR” approval of BDO USA, LLP as the independent registered public accounting firm of the Company for the fiscal year ending June 30, 2018 as described in Proposal 2; and
·“FOR” an amendment to the Company’s 2013 Plan to increase the reservation of common stock for issuance thereunder to 10,700,000 shares from 7,700,000 shares as described in Proposal 3.
How can I attend the Annual Meeting?
You may attend the Annual Meetingquorum only if you are listed assubmit a stockholder of record as of October 27, 2017 and bring proof ofvalid proxy (or one is submitted on your identity. If you holdbehalf by your shares in street name through a broker, bank or other nominee, you will need to provide proof that you are the beneficial owner of the shares by bringing either a copy of a brokerage statement showing your share ownership as of October 27, 2017,nominee) or a legal proxy if you wish to vote your shares in person at the Annual Meeting. In additionAbstentions and broker non-votes will be counted towards the quorum requirement. Shares owned by us are not considered outstanding or considered to the items mentioned above, you should bring proof of your identity.
How can I vote my shares in person at the Annual Meeting?
Shares held directly in your name as the stockholder of record may be voted in personpresent at the Annual Meeting. If you choose to do so, please bring proof of your identity to the Annual Meeting. Shares held in street name beneficially owned may be voted by you if you receive and presentthere is not a quorum at the Annual Meeting, a proxy from your broker or nominee, together with proofeither the chairperson of your identity. Even if you plan to attend the Annual Meeting we urge youor our stockholders entitled to vote in one of the ways described below so that your vote will be counted if you are unable or decide not to attend the Annual Meeting. Attendance at the Annual Meeting will not cause your previously granted proxy to be revoked unless you change your proxy instructions as described below.
How can I vote my shares without attendingmay adjourn the Annual Meeting?Meeting.
WhetherHow Will my Shares be Voted if I Give No Specific Instruction?
We must vote your shares as you hold shares directly as thehave instructed. If there is a matter on which a stockholder of record or beneficially in street name, you may direct yourhas given no specific instruction but has authorized us generally to vote without attending the Annual Meeting. You may vote by granting a proxy or, for shares, held in street name, by submitting voting instructions to your broker or nominee. In most instances, youthey will be able to do this over the Internet or by mail. Please refer to the summary instructions below, and if you request printed proxy materials, the instructions included on your proxy card or, for shares held in street name, the voting instruction card provided by your broker or nominee.voted as follows:
·By Internet—If you have Internet access, you may submit your proxy from any location in1. “FOR” the world by followingelection of each of the Internet voting instructions onsix (6) members to our Board of Directors to hold office until the proxy card or voting instruction card sent to you.2021 Annual Meeting;
·By Mail—You may do this by marking, dating and signing your proxy card or, for shares held in street name,2. “FOR” the voting instruction card provided to you by your broker or nominee, and mailing it in the enclosed, self-addressed, postage prepaid envelope. No postage is required if mailed in the United States
What is a broker non-vote?
A broker non-vote occurs if you hold shares in “street name” and do not provide voting instructions to your broker on a proposal and your broker does not have the discretionary authority to vote on such proposal. Matters subject to stockholder vote are classified as “routine” or “non-routine.” In the case of non-routine matters, brokers may not vote shares held in “street name” for which they have not received voting instructions from the beneficial owner (“Broker Non-Votes”), whereas they may vote those shares in their discretion in the case of any routine matter. Broker Non-Votes will be counted for purposes of calculating whether a quorum is present at the stockholder meetings, but will not be counted for purposes of determining the numbers of votes present in person or represented by proxy and entitled to vote with respect to a particular proposal. A broker is entitled to vote shares held for a beneficial holder on routine matters, such as Proposal 2 (the ratification of the appointment of BDO USA, LLP as our independent registered public accountantsaccounting firm for 2018), withoutour fiscal year ending December 31, 2020; and
3. “FOR” the amendment to the 2013 Plan to increase the number of shares issuable thereunder to 2,500,000 shares from 40,536 shares.
This authorization would exist, for example, if a stockholder of record merely signs, dates and returns the proxy card but does not indicate how its shares are to be voted on one or more proposals. If other matters properly come before the Annual Meeting and you do not provide specific voting instructions, fromyour shares will be voted at the beneficial holderdiscretion of those shares. On the other hand, absent instructions from the beneficial holders of such shares, a broker will not be entitled to vote shares held for a beneficial holder on certain non-routine items, such as Proposal 1 (election of directors) and Proposal 3 (increase in reservation of common stock under 2013 Plan). Broker Non-Votes for Proposal 1 and Proposal 3 will have the same effect as an “AGAINST” vote. It is therefore important that you provide instructions to your broker ifproxies.
If your shares are held byin street name, see “What is a broker so that yourBroker Non-Vote?” below regarding the ability of banks, brokers and other such holders of record to vote may be recorded.the uninstructed shares of their customers or other beneficial owners in their discretion.
How are Votes cast by proxy or in person at the stockholder meetingsCounted?
Votes will be tabulatedcounted by the inspectorsinspector of election appointed for the stockholder meetings,Annual Meeting, who also will determine whether a quorum is present.
What isseparately count, for the effectelection of directors, “FOR,” “WITHHOLD” and broker non-votes; and, with respect to the other proposals, votes “FOR” and “AGAINST,” abstentions and broker non-votes?non-votes.
Shares of common stockWhat is a Broker Non-Vote?
If your shares are held in street name, you must instruct the organization who holds your shares how to vote your shares. If you sign your proxy card but do not provide instructions on how your broker should vote on “routine” proposals, your broker will vote your shares as recommended by persons attendingthe Board. If you do not provide voting instructions, your shares will not be voted on any “non-routine” proposals. This vote is called a “broker non-vote.” Because broker non-votes are not considered under Delaware law to be entitled to vote at the Annual Meeting, butbroker non-votes will not be included in the tabulation of the voting results of any of the proposals and, therefore, will have no effect on these proposals.
Brokers cannot use discretionary authority to vote shares represented by proxies that reflecton the election of directors if they have not received instructions from their clients. Please submit your vote instruction form so your vote is counted.
What is an Abstention?
An abstention is a stockholder’s affirmative choice to decline to vote on a proposal. Under Delaware law, abstentions as to a particular proposal, will beare counted as present for purposes of determining the presence of a quorum. Abstentions are treated as shares present in person or by proxy and entitled to vote so abstaining hasat the same effect as a negative vote for purposesAnnual Meeting. However, our By-Laws provide that an action of determining whether our stockholders have(other than the election of directors) is only approved eachif a majority of the proposals.number of shares of stock present and entitled to vote thereat vote in favor of such action.
Shares representedHow Many Votes are Needed for Each Proposal to Pass?
| Proposal | Vote Required | |
| Election of each of the six (6) members to our Board of Directors | Plurality of the votes cast (the six directors receiving the most “FOR” votes) | |
| Ratification of the Appointment of BDO USA, LLP as our Independent Registered Public Accounting Firm for our Fiscal Year Ending December 31, 2020 | A majority of the votes entitled to vote thereon and present at the Annual Meeting | |
| Approval of an amendment to the Company’s 2013 Equity Incentive Plan (the “2013 Plan”) to increase the number of shares issuable thereunder to 2,500,000 shares from 40,536 shares | A majority of the votes entitled to vote thereon and present at the Annual Meeting |
What Are the Voting Procedures?
In voting by proxies that reflect a “broker non-vote” will be counted for purposes of determining whether a quorum exists. A “broker non-vote” occurs when a nominee holding shares for a beneficial owner has not received instructions from the beneficial owner and does not have discretionary authorityproxy with regard to vote the shares for certain non-routine matters. Because the election of directors, you may vote in favor of all nominees, withhold your votes as to all nominees, or withhold your votes as to specific nominees. With regard to other proposals, you may vote in favor of or against the proposal, or you may abstain from voting on the proposal. You should specify your respective choices on the accompanying proxy card or your vote instruction form.
Is My Proxy Revocable?
You may revoke your proxy and reclaim your right to vote at any time before your proxy is determinedvoted by giving written notice to the Secretary of Hepion, by delivering a pluralityproperly completed, later-dated proxy card or vote instruction form or by voting in person at the Annual Meeting. All written notices of votes castrevocation and other communications with respect to revocations of proxies should be addressed to: 399 Thornall Street, First Floor, Edison, NJ 08837, Attention: Secretary, or by a majorityfacsimile at 732-902-4100. Your most current proxy card or Internet proxy is the one that will be counted.
Who is Paying for the Expenses Involved in Preparing and Mailing this Proxy Statement?
All of the outstanding shares entitled to vote, abstentions will not be countedexpenses involved in determining the outcomes of such proposal.
What does it mean if I receive more than one set of proxy materials?
If you receive more than one set ofpreparing, assembling and mailing these proxy materials your shares may be registered in more than one name or in different accounts. Please complete, sign and return each proxy card to ensure that all of your shares are voted.
I share the same address with another shareholder of the Company. Why has our household only received one set of proxy materials?
The SEC’s rules permit us to deliver a single set of proxy materials to one address shared by two or more of our shareholders. This practice, known as “householding,” is intended to reduce our printing and postage costs. We have delivered only one set of proxy materials to shareholders who hold their shares through a bank, broker or other holder of record and share a single address, unless we received contrary instructions from any shareholder at that address. However, any such street name holder residing at the same address who wishes to receive a separate copy of the proxy materials may make such a request by contacting the bank, broker or other holder of record.
Who is paying the costs of soliciting these proxies?
Weproxies will pay for the entire cost of soliciting proxies.be paid by us. In addition to these mailed proxy materials,the solicitation by mail, proxies may be solicited by our directorsofficers and other employees may also solicit proxies in person, by telephone or by other means of communication. Directors and employeesin person. Such persons will not be paid any additionalreceive no compensation for soliciting proxies buttheir services other than their regular salaries. Arrangements will also be made with brokerage houses and other custodians, nominees and fiduciaries to forward solicitation materials to the beneficial owners of the shares held of record by such persons, and we may be reimbursedreimburse such persons for out-of-pocketreasonable out of pocket expenses incurred in connection with the solicitation. We will also reimburse brokerage firms, banks and other agents for their reasonable out-of-pocket expenses incurredby them in forwarding proxy materials to beneficial owners.solicitation materials.
Do I Have Dissenters’ Rights of Appraisal?
Our stockholders do not have appraisal rights under Delaware law or under our governing documents with respect to the matters to be voted upon at the Annual Meeting.
How can I findFind out the resultsResults of the votingVoting at the Annual Meeting?
Preliminary voting results will be announced at the Annual Meeting. FinalIn addition, final voting results will be publisheddisclosed in our current reporta Current Report on Form 8-K that we expect to be filedfile with the SEC within four business days after the Annual Meeting. If final voting results are not available to us in time to file a Form 8-K with the SEC within four business days after the meeting,Annual Meeting, we intend to file a Form 8-K to publish preliminary results and, within four business days after the final results are known to us, file an additional Form 8-K to publish the final results.
When are Stockholder Proposals Due for the 20182021 Annual Meeting?
Any appropriate proposal submitted by a stockholder and intended to be presented at the 20182021 Annual Meeting of Stockholders (the “2018“2021 Annual Meeting”Meeting”) must be submitted in writing to the Company’s Secretary at 399 Thornall Street, First Floor, Edison, NJ 08873,08837 and received no later than June 30, 2018,February 12, 2021, to be includable in the Company’s proxy statement and related proxy for the 20182021 Annual Meeting. However, if the date of the 20182021 Annual Meeting is convened more than 30 days before, or delayed by more than 30 days after, December 13, 2018,July 30, 2021, to be considered for inclusion in proxy materials for our 20182021 Annual Meeting, a stockholder proposal must be submitted in writing to the Company’s Secretary at 399 Thornall Street, First Floor, Edison, NJ 08873,08837, a reasonable time before we begin to print and send our proxy materials for the 20182021 Annual Meeting. A stockholder proposal will need to comply with the SEC regulations under Rule 14a-8 of the Securities Exchange Act of 1934, as amended
(the (the “Exchange Act”), regarding the inclusion of stockholder proposals in company-sponsored proxy materials. Although the Board will consider stockholder proposals, we reserve the right to omit from our proxy statement, or to vote against, stockholder proposals that we are not required to include under the Exchange Act, including Rule 14a-8.
If Pursuant to our Bylaws, if you wish to submit a proposal that is not to be included in the proxy materials for the 20182021 Annual Meeting, your proposal must be submitted in writing to the Company’sour Secretary at 399 Thornall Street, First Floor, Edison, NJ 08873 by08837 no earlier than April 1, 2021 and no later than September 14, 2018 and not prior to August 15, 2018.May 1, 2021, However, if the date of the 20182021 Annual Meeting is convened more than 25 days before, or delayed by more than 25 days after, December 13, 2018,July 30, 2021, to be brought before our 20182021 Annual Meeting, a stockholder proposal must be submitted in writing to the Company’sour Secretary at 399 Thornall Street, First Floor, Edison, NJ 08873, no later than08837, a reasonable time before we begin to print and send our proxy materials for the close of business on2021 Annual Meeting.
Do the 10th day following the date on which such noticeCompany’s Officers and Directors have an Interest in Any of the dateMatters to Be Acted Upon at the Annual Meeting?
Members of the annual meeting was mailed orBoard have an interest in Proposal 1, the public disclosure of the date of the annual meeting was made, whichever first occurs.
ELECTION OF DIRECTORS
The Company’s By-laws currently specify that the number of directors shall consist of one or more members, the exact number of which shall initially be fixed from timeelection to time by the Board of Directors (the “Board”). The Company’s Board currently consists of seven (7) persons, all of whom have been nominated by ContraVir to stand for re-election. Eachthe six (6) director is elected or nominated to the Board until the following annual meeting of stockholders and until his successor has been elected and qualified or until the director’s earlier resignation or removal.
The Board based on the recommendation of the Nominating and Corporate Governance Committee has nominated Gary S. Jacob, James Sapirstein, John P. Brancaccio, Thomas Adams, Timothy Block, Arnold Lippa and Tamar Howson for electionnominees set forth herein, as directors of ContraVir. Allfour of the nominees are existingcurrently members of the Board and three are director nominees. Members of the Board and executive officers of Hepion do not have any interest in Proposal 2, the ratification of the appointment of our independent registered public accounting firm. Members of the Board and the executive officers of Hepion are eligible to receive awards under the terms of the 2013 Plan, and they therefore have a substantial interest in Proposal 3.
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PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, the stockholders will elect six (6) directors to hold office until the 2021 Annual Meeting. Directors are elected by a plurality of ContraVir and eachvotes cast by stockholders. In the event the nominees are unable or unwilling to serve as directors at the time of the Annual Meeting, the proxies will be voted for any substitute nominees designated by the present Board or the proxy holders to fill such vacancy, or for the balance of the nominees named without nomination of a substitute, or the size of the Board will be reduced in accordance with the Bylaws of the Company. The Board has consentedno reason to beingbelieve that the persons named as a nominee for director of ContraVir and has agreedbelow will be unable or unwilling to serve as nominees or as directors if elected.
Set forth below areAssuming a quorum is present, the six (6) nominees receiving the highest number of affirmative votes of shares entitled to be elected to serve until the 2018 annual meeting of stockholders or until their respective successors have been duly elected and qualified.
Tovoted for such persons will be elected as a director, each nominee must receive a pluralitydirectors of the votes cast by the holders of our common stock.
Should any nominee become unable or unwillingCompany to accept election, the proxy holders may vote theserve for a one-year term. Unless marked otherwise, proxies forreceived will be voted “FOR” the election in his or her stead, of any other person our Board may nominate or designate.the nominees named below. In the event that additional persons are nominated for election as directors, the proxy holders intend to vote all proxies received by them in such a manner as will ensure the election of the nominees listed below, and, in such event, the specific nominees to be voted for will be determined by the proxy holders.
Information with Respect to Director Nominees
Listed below are the current directors who are nominated to hold office until their successors are elected and qualified.qualified, and their ages as of June 12, 2020.
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Gary S. Jacob, Ph.D. |
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John P. Brancaccio |
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Gary S. Jacob, Ph.D. has served as our Chairman of the Board of Directors since March 19, 2014, and earlier served as our Chief Executive Officer from May 15, 2013 until March 19, 2014. From November 2018 until March 2020, Dr. Jacob is currentlyserved as Chief Executive Officer of Immuron Limited, an Australian microbiome biopharmaceutical company. Previously, Dr. Jacob was the Chairman of the Board, President and Chief Executive Officer of Synergy Pharmaceuticals Inc., a biopharmaceutical company, where he has held various positions sincefrom July 2008.2008 to October 2018. On December 12, 2018, Synergy Pharmaceuticals Inc. filed a petition for relief under Chapter 11 of the U.S. Bankruptcy Code. Dr. Jacob served as Chief Executive Officer of Callisto Pharmaceuticals, Inc. from May 2003 until January 2013 and a director from October 2004 until January 2013. Dr. Jacob currently serves as a director of Trovagene,Cardiff Oncology, Inc., a precision medicineclinical-stage oncology therapeutics company. Dr. Jacob also serves as a director of Virpax Pharmaceuticals, Inc. Dr. Jacob has over twenty-five years of experience in the pharmaceutical and biotechnology industries across multiple disciplines including research & development, operations and business development. Prior to 1999, Dr. Jacob served as a Monsanto Science Fellow, specializing in the field of glycobiology, and from 1997 to 1998 was Director of Functional Genomics, Corporate Science & Technology, at Monsanto Company. Dr. Jacob also served from 1990 to 1997 as Director of Glycobiology at G.D. Searle Pharmaceuticals Inc. During the period of 1986 to 1990, he was Manager of the G.D.Searle Glycobiology Group at Oxford University, England. Dr. Jacob’s experience as a biotechnology company chief executive officer provides him with valuable management and leadership abilities which the Board believes qualifies him to be a director of our Company.
James SapirsteinDr. Robert T. Foster has served as Chief Executive Officer since October 3, 2018 and as our Chief Scientific Officer since June 10, 2016. Prior to Hepion, he was Chief Executive Officer and a Director since March 19, 2014. Mr. SapirsteinFounder of Ciclofilin Pharmaceuticals Inc. from January 2014 until it merged with us on June 10, 2016. Prior to Ciclofilin Pharmaceuticals, he founded Isotechnika Pharma Inc. in 1993, where he was the chief executive officerChairman and Chief Executive Officer for 21 years. Dr. Foster was founding Chief Executive Officer and later, Chief Scientific Officer of Alliqua Therapeutics at AlliquaAurinia Pharmaceuticals, Inc., where he helped lead the transformationafter Isotechnika acquired Aurinia. Dr. Foster is currently a Board member of transdermal wound care and drug delivery technology into a wound care organization from October 2012 to February 2014. Mr. Sapirstein was the chiefTranscriptome Sciences Inc. Dr. Foster’s experience as an executive officer of Tobira Therapeutics, a New Jersey based biopharmaceutical company focused on the development of novel HIV and infectious disease compounds, from October 2006 to April 2011. From June 2002 until May 2005, Mr. Sapirstein was Executive Vice President for Serono Laboratories. Mr. Sapirstein is a director of Panther Biotechnology, Inc.,at a biotechnology company and RespireRx Pharmaceuticals, Inc., a biotechnology company. Mr. Sapirstein’s experiencehis background as a biotechnology executivescientist provides him with the leadership and management abilities which the Board believes qualifies him to serve asbe a director of our Company.
John P. Brancaccio, a retired CPA, has served as a director of our Company since May 15, 2013 and as a director of Synergy Pharmaceuticals, Inc. since July 2008. Mr. Brancaccio was the Chief Financial Officer of Accelerated Technologies, Inc., an incubator for medical device companies from April 2004 until May 2017. From May 2002 until March 2004, Mr. Brancaccio was the Chief Financial Officer of Memory Pharmaceuticals Corp., a biotechnology company. From 2000 to 2002, Mr. Brancaccio was the Chief Financial Officer/Chief Operating Officer of Eline Group, an entertainment and media company. Mr. Brancaccio is currently a director of Tamir Biotechnology, Inc. (formerly Alfacell Corporation) as well as a director of Trovagene,Cardiff Oncology, Inc. and Rasna Therapeutics, Inc., a biotechnology company. Mr. Brancaccio’s chief financial officer experience provides him with valuable financial and accounting expertise which the Board believes qualifies him to serve as a director of our Company.
Thomas Adams, Ph.D. has served as a director of our Company since September 2016. Dr. Adams has been Chief Executive Officer of Cardiff Oncology, Inc., a clinical-stage oncology therapeutics company, since June 2018 and Chairman of the Board since April 2009. Dr. Adams has served as the Chairman of Clearbridge BioPhotonics, Inc., an imaging solutions company, since April 2013. From June 2005 through 2011, Dr. Adams served as a director of IRIS International, Inc., a diagnostics company, and has served as Chief Technology Officer of IRIS since April 2006. Dr. Adams was the Head of Iris Molecular Diagnostics from 2006 until November 2012 and has served as the President of Iris Personalized Medicine since 2011. In November 2012, IRIS was acquired by Danaher Corporation. Dr. Adams served as Chairman and Chief Executive Officer of Leucadia Technologies, a privately held medical-device company, from 1998 to April 2006, when Leucadia was acquired by IRIS. In 1989, Dr. Adams founded Genta, Inc., a publicly held biotechnology company in the field of antisense technology, and served as its Chief Executive Officer until 1997. Dr. Adams founded Gen-Probe, Inc. in 1984 and served as its Chief Executive Officer and Chairman until its acquisition by Chugai Biopharmaceuticals, Inc. in 1989. Dr. Adams has served as a director of Synergy Pharmaceuticals Inc., a biotechnology company, since July 2009. Dr. Adams holds a Ph.D. in Biochemistry from the University of California, at Riverside. The Board believes that Dr. Adams’ executive leadership, particularly in the diagnostic field, and the extensive healthcare expertise he has developed qualifies Dr. Adams to serve as a director of our Company.
Dr. Timothy Block has served as a director of our Company since November 26, 2013. Dr. Block is Professor of Microbiology and Immunology, Drexel University College of Medicine and Director of its Drexel Institute for Biotechnology and Virology Research, and is also the Co-founder and President of the Hepatitis B Foundation (HBF) and its Baruch S. Blumberg Institute (formerly called the Institute for Hepatitis and Virus Research). Dr. Block is also President and CEO of the Pennsylvania Biotechnology Center. Dr. Block has been a member of medical school faculties as a professional researcher for more than 28 years, publishing more than 180 papers, 12 U.S. patents, and since 2006, has led or “co-led” more than $50 million in research funding. Honors include an honorary Medical Doctorate (Bulgarian Academy of Medicine); the Lifetime Achievement Award from the Centrals Bucks Chamber of Commerce; named one of the regions 100 Most Outstanding People of the Century by the Daily Intelligencer; Distinguished Service Recognition from the National Cancer Institute’s Early Detection Research Network; and a Special Citation from the U.S. House of Representatives in recognition of “outstanding achievements.” Dr. Block has given frequent testimony to the U.S. Congress and State legislatures; has served on U.S. FDA and numerous NIH panels as well as commercial boards including the Bristol Myers Squibb Entecavir Advisory Board. In 2009, Dr. Block was named an elected Fellow of the American Association for the Advancement of Science (AAAS). Dr. Block’s experience and expertise in the medical field with respect to Hepatitis B qualifies him to serve as a director of our Company.
Arnold Lippa, Ph.D. has served as a director of our company since December 3, 2015. Dr. Lippa has been Executive Chairman of the Board of RespireRx Pharmaceuticals Inc., since March 2013, and was appointed Chief Scientific Officer in August 2015. Previously, he served as Chief Executive Officer and President. He is also Chairman of the Board of Xintria Pharmaceutical Corporation, which he co-founded in 2006. Dr. Lippa is a Managing Member and founder of T Morgen Capital LLC, which is an investment and management company specializing in the creation and management of biomedical companies. Since 2005, T Morgen Capital has been a significant equity owner and a managing member of Aurora Capital LLC, a life science focused FINRA member firm, where Dr. Lippa represents T Morgen Capital as a Manager. In 2004, Dr. Lippa co-founded and currently is representing T Morgen Capital, a Managing Member, as a Manager of Atypical BioCapital Management LLC and Atypical BioVentures Fund LLC, a life science fund management company and fund, respectively, both of which are affiliates of Aurora Capital. Dr. Lippa was a founder of DOV Pharmaceutical, Inc., and served as Chairman of the Board and Chief Executive Officer from its inception in April 1995 until 2005. Prior to DOV, Dr. Lippa co-founded and co-managed a number of life sciences companies, including Praxis Pharmaceuticals, Inc., which he co-founded and took public in 1985, serving as President and Chief Operating Officer from 1984 until 1987. Dr. Lippa’s experience as a biotechnology company executive and a financier qualifies him to be a director of our Company.
Table of ContentsFamily Relationships and Other Arrangements
Thomas Adams, Ph.D. has servedThere are no family relationships among our directors and executive officers. There are no arrangements or understandings between or among our executive officers and directors pursuant to which any director or executive officer was or is to be selected as a director of our Company since September 2016. Dr. Adams has been Chairman of the Board of Trovagene, Inc., a precision medicine company, since April 2009. Dr. Adams has served as the Chairman of Clearbridge BioPhotonics, Inc., an imaging solutions company, since April 2013. From June 2005 through 2011, Dr. Adams served as a director of IRIS International, Inc., a diagnostics company, and has served as Chief Technology Officer of IRIS since April 2006. Dr. Adams was the Head of Iris Molecular Diagnostics from 2006 until November 2012 and has served as the President of Iris Personalized Medicine since 2011. In November 2012, IRIS was acquired by Danaher Corporation. Dr. Adams served as Chairman and Chief Executive Officer of Leucadia Technologies, a privately held medical-device company, from 1998 to April 2006, when Leucadia was acquired by IRIS. In 1989, Dr. Adams founded Genta, Inc., a publicly held biotechnology company in the field of antisense technology, and served as its Chief Executive Officer until 1997. Dr. Adams founded Gen-Probe, Inc. in 1984 and served as its Chief Executive Officer and Chairman until its acquisition by Chugai Biopharmaceuticals, Inc. in 1989. Dr. Adams has served as a director of Synergy Pharmaceuticals Inc., a biotechnology company, since July 2009. Dr. Adams holds a Ph.D. in Biochemistry from the University of California, at Riverside. The Board believes that Dr. Adams’or executive leadership, particularly in the diagnostic field, and the extensive healthcare expertise he has developed qualifies Dr. Adams to serve as a director of our Company.officer.
Tamar Howson has served as a director of the Company since December 2016. Since September 2011, Ms. Howson has served as Principal of Howson Associates and from January 2009 until December 2011 she served as Senior Advisor of JSB-Partners. From April 2007 until October 2008, Ms. Howson served as Senior Vice President of Corporate Development at Lexicon Pharmaceuticals and from December 2001 until February 2007 she served as Senior Vice President of Corporate and Business Development at Bristol-Myers Squibb Company. From April 1991 until June 2000, Ms. Howson served as Senior Vice President of Corporate and Business Development at SmithKline Beecham. Ms. Howson earned a B.Sc. in Chemical Engineering from Technion in Haifa, Israel, an M.S. in Chemical Engineering from City College of New York, and an MBA in Finance, International Business and Marketing from Columbia University. The Company believes that Ms. Howson’s experience in corporate and business development qualifies her to serve as a director of our Company.
Board Leadership Structure and Board’s Role in Risk Oversight
We have a separate Chairman of the Board, Dr. Jacob, and Chief Executive Officer, Mr. Sapirstein. We believe that having an independent director serve as our Chairman allows our CEO to focus on our business, while allowing the Chairman to fulfill his fundamental Board leadership role, which includes providing advice to and independent oversight of our Board. As Chairman, Dr. Jacob serves as the primary liaison between the CEO and the independent directors and provides strategic input and counseling to the CEO. With input from other members of the board of directors, committee chairs and management, he presides over meetings of the board of directors. Dr. Jacob has developed an extensive knowledge of our company, its challenges and opportunities and has a productive working relationship with our senior management team.
The board of directors, as a unified body and through committee participation, organizes the execution of its monitoring and oversight roles and does not expect its Chairman to organize those functions. The board of directors has three standing committees – Audit, Compensation and Corporate Governance/Nominating. The membership of each of the board committees is comprised of independent directors, with each of the committees having a separate chairman, each of whom is an independent director. Our non-management members of the board of directors meet in executive session at each board meeting.
Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. Management is responsible for the day-to-day management of the risks the company faces,we face, while the board of directors,Board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the board of directors has the responsibility to satisfyBoard is responsible for satisfying itself that the risk management processes designed and implemented by management are adequate and functioning as designed.
The board of directors recognizes that different leadership models may, depending upon individual circumstances, work for other companies and may be appropriate for us under different circumstances. The board ofdirectorsBoard believes that we will be greatly benefited from having a single person settingestablishing the toneright “tone at the top” and directionthat full and open communication between executive management and the Board are essential for our companyeffective risk management and having primary responsibility for managing its operations, while allowing the board of directors to carry out its oversight responsibilities with the full involvement of each independent director.oversight. Our CEO communicates frequently with members of the boardBoard to discuss strategy and challenges facing theour company. Senior management usually attends our regular quarterly boardBoard meetings and is available to address any questions or concerns raised by the board of directorsBoard on risk management-related and any other matters. Each quarter, the board of directorsBoard receives presentations from senior management on matters involving our key areas of operations.
Information RegardingDirector Independence
Our Board has determined that a majority of the Board consists of Directorsmembers who are currently “independent” as that term is defined under Nasdaq Listing Rule 5605(a)(2). The Board considers Drs. Jacob, Adams, Block, Lippa and Corporate GovernanceMr. Brancaccio to be “independent.” Dr. Foster, our Chief Executive Officer, is not considered to be “independent” as defined by Nasdaq Listing Rule 5605(a)(2).
Directorships
Except as otherwise reported above, none of our directors held directorships in other reporting companies and registered investment companies at any time during the past five years.
Family Relationships
There are no family relationships among our directors and executive officers. There is no arrangement or understanding between or among our executive officers and directors pursuant to which any director or officer was or is to be selected as a director or officer.
Involvement in Certain Legal Proceedings
To our knowledge, during the past ten years, none of our directors, executive officers, promoters, control persons, or nominees has been:
· the subject of any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
·convicted in a criminal proceeding or is subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
·subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or any Federal or State authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities;
·found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law;
·the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of (a) any Federal or State securities or commodities law or regulation; (b) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (c) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
·the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity
Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
There are no material proceedings to which any director of the Company is a party adverse to the Company or has a material interest adverse to the Company.
Board Responsibilities and Structure
The Board oversees, counsels, and directs management in our long-term interest and our shareholders. The Board’s responsibilities include establishing broad corporate policies and reviewing our overall performance. The Board is not, however, involved in the operating details on a day-to-day basis.
Board of Directors Meetings
During the fiscal year ended June 30, 2017,December 31, 2019, our Board met 6 times, including telephonic meetings, the Audit Committee met 54 times, the Compensation Committee met 5 times1 time and the Corporate Governance/Nominating Committee did not meet.met 1 time. All directors attended 100% of the aggregate number of meetings of the Board, all of the Audit Committee members attended 100% of the Audit Committee meetings, and all of the Compensation Committee members attended 100% of the Compensation Committee meetings.meeting, and all of the Corporate Governance/Nominating Committee members attended 100% of the Corporate Governance/Nominating Committee meeting.
Information Regarding Board Committees
Our Board has established standing Audit, Compensation and Corporate Governance/Nominating Committees to devote attention to specific subjects and to assist it in the discharge of its responsibilities. All committees operate under a written charter adopted by our Board, each of which is available on our Internet website at www.contravir.com under “Corporate Governance.”www.hepionpharma.com/investors/governance.
Audit Committee
The Audit Committee’s responsibilities include: (i) reviewing the independence, qualifications, services, fees, and performance of the independent registered public accountants, (ii) appointing, replacing and discharging the independent registered public accounting firm, (iii) pre-approving the professional services provided by the independent registered public accounting firm, (iv) reviewing the scope of the annual audit and reports and recommendations submitted by the independent registered public accounting firm, and (v) reviewing our financial reporting and accounting policies, including any significant changes, with management and the independent registered public accounting firm. The Audit Committee also prepares the Audit Committee report that is required pursuant to the rules of the SEC.
The Audit Committee currently consists of JohnMr. Brancaccio, chairman, of the Audit Committee, ArnoldDr. Lippa and ThomasDr. Adams. We believe that each of Mr. Brancaccio, Dr. Lippa and Dr. Adams is “independent” as that term is defined under applicable SEC and NASDAQNasdaq rules. Mr. Brancaccio is our audit committee financial expert. The board of directors has adopted a written charter setting forth the authority and responsibilities of the Audit Committee. The charter is available on our website at www.contravir.com.www.hepionpharma.com.
Compensation Committee
The Compensation Committee has responsibility for assisting the board of directors in, among other things, (i) evaluating and making recommendations regarding the compensation of the executive officers and directors of our company, (ii) assuring that the executive officers are compensated effectively in a manner consistent with our stated compensation strategy, (iii) producing an annual report on executive compensation in accordance with the rules and regulations promulgated by the SEC, (iv) periodically evaluating the terms and administration of our incentive plans and benefit programs and (v) monitoring of compliance with the legal prohibition on loans to our directors and executive officers.
The Compensation Committee currently consists of ArnoldDr. Lippa, chairman, of the Compensation Committee, JohnMr. Brancaccio, Tamar Howson,and ThomasDr. Adams. We believe that all of the members are “independent” under the current listing standards of NASDAQ.Nasdaq. The board of directors has adopted a written charter setting forth the authority and responsibilities of the Compensation Committee which is available on our website at www.contravir.com.www.hepionpharma.com.
Compensation Committee Interlocks and Insider Participation
None of the members of our compensation committee was, during the year ended June 30, 2017,December 31, 2019, an officer or employee of ours, was formerly an officer of ours or had any relationship requiring disclosure by us under Item 404 of Regulation S-K. No interlocking relationship as described in Item 407(e)(4) of Regulation S-K exists between any of our executive officers or Compensation Committee members, on the one hand, and the executive officers or compensation committee members of any other entity, on the other hand, nor has any such interlocking relationship existed in the past.
Corporate Governance/Nominating Committee
The Corporate Governance/Nominating Committee has responsibility for assisting the board of directors in, among other things, (i) effecting board organization, membership and function including identifying qualified board nominees, (ii) effecting the organization, membership and function of board committees including composition and recommendation of qualified candidates, (iii) establishment of and subsequent periodic evaluation of successor planning for the chief executive officer and other executive officers, (iv) development and evaluation of criteria for board membership such as overall qualifications, term limits, age limits and independence and (v) oversight of compliance with the Corporate Governance Guidelines. The Corporate Governance/Nominating Committee shall identify and evaluate the qualifications of all candidates for nomination for election as directors. Potential nominees are identified by the board of directors based on the criteria, skills and qualifications that have been recognized by the Corporate Governance/Nominating Committee. While our nomination and corporate governance policy does not prescribe specific diversity standards, the Corporate Governance/Nominating Committee and its independent members seek to identify nominees that have a variety of perspectives, professional experience, education, differences in viewpoints and skills, and personal qualities that will result in a well-rounded board of directors.
The Corporate Governance/Nominating Committee currently consists of TimothyDr. Block, chairman, of the Corporate Governance/Nominating Committee, ArnoldDr. Lippa, Tamar Howson,and JohnMr. Brancaccio. We believe that all of the members are “independent” under the current listing standards of NASDAQ.Nasdaq. The board of directors has adopted a written charter setting forth the authority and responsibilities of the Corporate Governance/Nominating Committee which is available on our website at www.contravir.com.www.hepionpharma.com.
Communications with our Board of Directors
Stockholders seeking to communicate with our Board should submit their written comments to our Chief Executive Officer, James Sapirstein,Dr. Robert Foster, at ContraVirHepion Pharmaceuticals, Inc., 399 Thornall Street, First Floor, Edison, NJ 08837. Mr. Sapirstein08837. Dr. Foster will forward such communications to each member of our Board; provided that, if in the opinion of Mr. SapirsteinDr. Foster it would be inappropriate to send a particular stockholder communication to a specific director, such communication will only be sent to the remaining directors (subject to the remaining directors concurring with such opinion).
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our officers and directors, and persons who own more than ten percent of a registered class of our equity securities, to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.
Based on a review of the copies of such forms received, we believe that during the year ended June 30, 2017, all filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied with.
Code of Business Conduct and Ethics
We have adopted a Code of Business Conduct and Ethics to ensure that our business is conducted in a consistently legal and ethical manner. All of our employees, including our executive officers and directors, are required to comply with our Code of Business Conduct and Ethics.
The full text of the Code of Business Conduct and Ethics is posted on our website at http://www.contravir.com.www.hepionpharma.com/investors/governance. Any waiver of the Code of Business Conduct and Ethics for directors or executive officers must be approved by our Audit Committee. We will disclose future amendments to our Code of Business Conduct and Ethics, or waivers from our Code of Business Conduct and Ethics for our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on our website within four business days following the date of the amendment or waiver. In addition, we will disclose any waiver from our Code of Business Conduct and Ethics for our other executive officers and our directors on our website. A copy of our Code of Business Conduct and Ethics will also be provided free of charge upon request to: Secretary, ContraVirHepion Pharmaceuticals, Inc. 399 Thornall Street, First Floor, Edison, NJ 08837.
Director Compensation
On March 12, 2014, the Board of Directors determined that compensation for our non-employee directors will be comprised of an annual cash retainer and an annual equity award in the form of stock options. In addition, we grant to new directors a one-time equity award in the form of stock options in connection with their election to the board.
Cash Compensation
Below is a summary of cash compensation payable to non-employee directors for the fiscal year ended June 30, 2017:
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In addition to the above cash compensation, each board member receives a $2,000 fee for each in-person attendance of quarterly board meetings.
Equity Awards
The Compensation Committee grants equity awards to non-employee directors as follows:
· upon initial election or appointment to our Board of Directors, a non-employee director will be granted an award of a nonqualified stock option to purchase a number of shares of common stock to be determined at the time of such director’s appointment to the board; and
· as a continuing member of the board of directors, each non-employee director will be granted an annual award of a nonqualified stock option to purchase a number of shares of common stock,
provided that, in either case, the Compensation Committee has discretion to decrease the size of any such grant if it determines such modification to be in the best interests of the Company after considering the factors the Compensation Committee deems appropriate.Recommendation
Director Compensation Table
During the year ended June 30, 2017, our non-employee directors received the following compensation for their services on the board and its committees:
Name |
| Cash Fees |
| Option |
| Total |
| |||
Gary S. Jacob(2) |
| $ | 37,000 |
| $ | 44,211 |
| $ | 81,211 |
|
John P. Brancaccio(3) |
| 59,000 |
| 44,211 |
| 103,211 |
| |||
Arnold Lippa(4) |
| 55,125 |
| 22,530 |
| 77,655 |
| |||
Timothy Block(5) |
| 51,900 |
| 44,211 |
| 96,111 |
| |||
Tamar Howson(6) |
| 11,500 |
| 97,971 |
| 109,471 |
| |||
Thomas Adams(7) |
| 27,250 |
| 34,717 |
| 61,967 |
| |||
As of June 30, 2017, we have recorded a liability of approximately $74,013 related to director fees, which was paid in July 2017.
(1) Represents the fair value of incentive stock options granted during the year ended June 30, 2017 using the Black-Scholes model for computing stock-based compensation expense as of the date of grant. The fair value of the option grants was calculates in accordance with FASB ASC 718, and the assumptions used are described in Note 10 to the Company’s audited consolidated financial statements for the year ended June 30, 2017.
(2) As of June 30, 2017, Dr. Jacob held 1,015,000 option awards of which 767,500 are exercisable.
(3) As of June 30, 2017, Mr. Brancaccio held 200,656 option awards of which 155,235 are exercisable.
(4) As of June 30, 2017, Dr. Lippa held 77,500 option awards of which 15,000 grants are exercisable.
(5) As of June 30, 2017, Dr. Block held 169,688 option awards of which 127,217 are exercisable.
(6) As of June 30, 2017, Ms. Howson held 80,000 option awards of which no grants are exercisable.
(7) As of June 30, 2017, Dr. Adams held 45,000 option awards of which no grants are exercisable.
Vote Required; Recommendation of the Board of Directors
If a quorum is present and voting at the Annual Meeting, each nominee must receive a plurality of the votes cast by the holders of our common stock to be elected to our Board. Votes withheld from any nominee, abstentions and broker non-votes will be counted only for purposes of determining a quorum. Broker non-votes will have no effect on this proposal as brokers or other nominees are not entitled to vote on such proposal in the absence of voting instructions from the beneficial owner.
THE BOARD RECOMMENDS THAT YOU VOTE “FOR”“FOR” EACH OF THE NOMINEES TO THE BOARD SET FORTH IN THIS PROPOSAL 1.
Table of ContentsPROPOSAL 2
RATIFICATION OF SELECTIONTHE APPOINTMENT OF OUR INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTSACCOUNTING FIRM FOR FISCAL YEAR ENDING
DECEMBER 31, 2020
The Audit Committee has selected BDO USA, LLP, as the Company’s independent registered public accountants for the fiscal year ending June 30, 2018December 31, 2020 and has further directed that management submit the selection of independent registered public accountants for ratification by the stockholders at the Annual Meeting. A representativesrepresentative of BDO USA, LLP is expected to be present at the Annual Meeting
Stockholder ratification of the selection of BDO USA, LLP as our independent registered public accountants is not required by Delaware law, the Company’s certificate of incorporation, or the Company’s bylaws. However, the Audit Committee is submitting the selection of BDO USA, LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee will reconsider whether to retain that firm. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of different independent registered public accountants at any time during the year if the Audit Committee determines that such a change would be in the best interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present in person or represented by proxyPrincipal Accountant Fees and entitled to vote at the Annual Meeting will be required to ratify the selection of BDO USA, LLP. Abstentions will be counted toward the tabulation of votes cast on Proposal 2 and will have the same effect as negative votes. Broker non-votes will be counted towards a quorum, but will not be counted for any purpose in determining whether Proposal 2 has been approved.
Independent Registered Public Accountants’ Fees
Audit FeesServices
The aggregate fees billed and unbilledto the Company by BDO, the Company’s independent registered public accounting firm, for the indicated services for each of the last two fiscal years ended June 30, 2017 and 2016 for professional services rendered by our principal accountants for the audits of our annual financial statements on Form 10-K, the review of our financial statements included in our quarterly reports on Form 10-Q, services associated with other SEC filings, and consents were approximately $273,000 and $270,000, respectively.as follows:
| 2019 | 2018 | |||||||
| Audit fees(1) | $ | 415,660 | $ | 318,000 | ||||
| Tax fees(2) | 0 | 40,000 | ||||||
| Total fees | $ | 415,660 | $ | 358,000 | ||||
Audit Related Fees
| (1) | Audit fees consist of fees for professional services performed by BDO for the audit and review of our financial statements, preparation and filing of our registration statements, including issuance of comfort letters. |
| (2) | Tax fees consist of fees for professional services performed by BDO with respect to tax compliance. |
There were $25,800Policy on Audit Committee Pre-Approval of audit related fees incurred in the fiscal year ended June 30, 2017 related to remaining fees attributable to the acquisitionAudit and Permissible Non-Audit Services of the net assets of Ciclofilin Pharmaceuticals Inc. and our proxy statement and $64,000 of audit related fees incurred in the fiscal year ended June 30, 2016 related to the acquisition of the net assets of Ciclofilin Pharmaceuticals Inc. that closed on June 10, 2016
Tax and Other Fees
There was approximately $21,400 billed for the fiscal year ended June 30, 2017 and $12,000 billed for the fiscal year ended June 30, 2016 for professional services rendered by our principal accountants for tax compliance. There were no other fees billed for the years ended June 30, 2017 or 2016.
Audit Committee’s Pre-Approval Policies and ProceduresIndependent Auditors
Consistent with SEC policies and guidelines regarding audit independence, the Audit Committee is responsible for the pre-approval of all audit and permissible non-audit services provided by our principal accountantsindependent registered public accounting firm on a case-by-case basis. Our Audit Committee has established a policy regarding approval of all audit and permissible non-audit services provided by our principal accountants. Our Audit Committee pre-approves these services by category and service. Our Audit Committee has pre-approved all of the services provided by our principal accountants.independent registered public accounting firm.
Vote Required; RecommendationRequired
The selection of our independent registered public accounting firm is not required to be submitted to a vote of our stockholders for ratification. However, we are submitting this matter to the stockholders as a matter of good corporate governance. Even if the appointment is ratified, the Board may, in its discretion, appoint a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of Directorsus and our stockholders. If the appointment is not ratified, the Board will reconsider whether or not to retain BDO.
The affirmative vote of a majority of the shares of common stock(by voting power) present in person at the Annual Meeting or represented by proxy and entitled to vote at the meeting will beAnnual Meeting is required to ratifyapprove the selectionratification of the appointment of BDO USA, LLP.LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2020.
Table of ContentsBoard Recommendation
OURTHE BOARD RECOMMENDS A VOTE “FOR” RATIFICATION OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE TO RATIFY THE SELECTIONAPPOINTMENT OF BDO USA, LLP AS OURTHE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING JUNE 30, 2018.DECEMBER 31, 2020.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORSREPORT
The following Audit Committee Report shall not be deemed to be “soliciting material,” deemed “filed” with the SEC or subject to the liabilities of Section 18 of the Exchange Act. Notwithstanding anything to the contrary set forth in any of the Company’s previous filings under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act that might incorporate by reference future filings, including this Proxy Statement, in whole or in part, the following Audit Committee Report shall not be incorporated by reference into any such filings.
The Audit Committee is comprised of three independent directors (as defined under NASDAQ Listing Rule 5605(a)(2) of the NASDAQ Stock Market)). The Audit Committee operates under a written charter, which is available in print to any stockholder upon request to the Corporate Secretary.on our website at https://hepionpharma.com/investors/governance/.
We have reviewed and discussed with management and the Company’s auditors, the Company’s audited consolidated financial statements as of and for the fiscal year ended June 30, 2017.December 31, 2019.
Management is responsible for the Company’s internal accounting and financial controls, the financial reporting process, and compliance with the Company’s policies and legal requirements. The Company’s independent registered public accounting firm is responsible for performing an independent audit of the Company’s consolidated financial statements in accordance with standards of the Public Company Accounting Oversight Board (United States) or “PCAOB”, and for issuance of a report thereon; they also perform limited reviews of the Company’s unaudited quarterly financial statements.We have discussed with BDO USA, LLP, the overall scope and plans for their auditCompany’s independent registered public accounting firm, the matters as well as the results of their examinations, and the overall quality of the Company’s financial reporting.
We have discussed with management and BDO USA, LLP, , those matters required to be discussed pursuant toby the Public Company Accounting Oversight Board (the “PCAOB”) Auditing StandardsStandard No. 1301 “Communications(Communications with Audit Committees,” issued by the PCAOB and other auditing standards generally accepted in the United States, the corporate governance standards of the NASDAQ Stock Market and the Audit Committee’s Charter.Committees).
We have received and reviewed the written disclosures and the letter from BDO USA, LLP required by applicable requirements of the PCAOB regarding BDO USA, LLP’s communications with the Audit Committee concerning independence, and have discussed with BDO USA, LLP, their independence from management and the Company.
Based on the reviewsreview and discussions referred to above, we recommended to the Board of Directors that the financial statements referred to above be included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2017December 31, 2019 for filing with the SEC.Securities and Exchange Commission.
Submitted by the Audit Committee | |
| John | |
| Dr. Arnold Lippa | |
| Dr. Thomas Adams |
Table of ContentsPROPOSAL 3
APPROVAL OF AN AMENDMENT TO THE COMPANY’S 2013 PLAN TO INCREASE THE RESERVATION OF COMMON STOCK FOR ISSUANCE THEREUNDER TO 10,700,0002,500,000 SHARES FROM 7,700,00040,536 SHARES
Our Board adopted the 2013 Plan in June 2013. The Board initially authorized the issuance of up to 1,500,0002,679 shares of common stock under the 2013 Plan. On December 2, 2014, our stockholders approved an increase in the authorized number of shares under the 2013 Plan to 6,500,000 shares and on11,607 shares. On December 14, 2016, our stockholders approved an increase in the authorized number of shares under the 2013 Plan to 7,700,00013,750 shares. On February 21, 2018, our stockholders approved an increase in the authorized number of shares under the 2013 Plan to 19,107 shares. On May 2, 2019, our stockholders approved an increase in the authorized number of shares under the 2013 Plan to 40,536 shares.
We are seeking stockholder approval in order to amend the 2013 Plan to increase the total number of shares of our common stock available for issuance thereunder to 10,700,0002,500,000 shares.
Reasons for the Proposed Amendment
As described above, we are seeking stockholder approval of the amendment to increase the number of shares issuable pursuant to the 2013 Plan to 10,700,0002,500,000 shares from 7,700,00040,536 shares. As of October 27, 2017,June 12, 2020 there were 1,218,814zero shares remaining available for issuance under the 2013 Plan. In determining the amount of the increase contemplated by the proposed amendment to the 2013 Plan, the Board has taken into consideration the fact that, as of October 26, 2017,June 12, 2020, there were approximately 78 million9,025,061 shares of our Common Stockcommon stock outstanding. If this amendment to the 2013 Plan is approved, the number of shares available for issuance under the 2013 Plan would increase by 3,000,0002,459,464 shares to 10,700,0002,500,000 shares. The requested increase represents approximately 3.8%28% of the outstanding shares of Common Stockcommon stock and the total number of shares available for issuance under the 2013 Plan would represent approximately 5.3%28% of our Common Stockcommon stock as calculated.
For the year ended June 30, 2017,December 31, 2019, the average burn rate at which shares of our Common Stockcommon stock were granted under the 2013 Plan as a percentage of average basic shares outstanding in that period was approximately 1.7%1%.
Total potential dilution (as a percentage of shares of our Common Stockcommon stock outstanding) associated with the 3,000,0002,459,464 additional shares of our Common Stockcommon stock to be authorized under the 2013 Plan plus the 6,481,1861,347,771 shares subject to outstanding awards under the 2013 Plan (as of October, 27, 2017)June 12, 2020) is 12.1%43%.
The historical burn rate and the potential dilution described above may not be indicative of what the actual amounts are in the future. The 2013 Plan does not contemplate the amount or timing of specific equity awards. The potential dilution is a forward-looking statement. Forward-looking statements are not facts. Actual results may differ materially because of factors such as those identified in reports we have filed with the Securities and Exchange Commission.
The purpose of this increase is to continue to be able to attract, retain and motivate executive officers and other employees and certain consultants. Upon stockholder approval, additional shares of Common Stockcommon stock will be reserved for issuance under the 2013 Plan, which will enable us to continue to grant equity awards to our officers, employees and consultants at levels determined by the Board to be necessary to attract, retain and motivate the individuals who will be critical to our success in achieving its business objectives and thereby creating greater value for all our stockholders. We have no current plans to make awards under the 2013 Plan.
Furthermore, we believe that equity compensation aligns the interests of our management and other employees with the interests of our other stockholders. Equity awards are a key component of our incentive compensation program. We believe that option grants have been critical in attracting and retaining talented employees and officers, aligning their interests with those of stockholders, and focusing key employees on our long-
term growth. We anticipate that option grants and other forms of equity awards such as restricted stock awards may become an increasing component in similarly motivating our consultants.
Approval of the amendment to the 2013 Plan will permit the Company to continue to use stock-based compensation to align stockholder and employee interests and to motivate employees and others providing services to us or any of our subsidiaries.
The terms of the 2013 Plan are summarized below and the full text of 2013 Plan is set forth as Exhibit 10.1 to our Registration Statement on Form S-8 filed with the SEC on May 4, 2015. The full text of the proposed amendment to the 2013 Plan is set forth as Appendix A to this proxy statement. It is intended that the 2013 Plan qualify as an incentive stock option plan meeting the requirements of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).
Summary of the 2013 Equity Incentive Plan
Employees, officers and directors of, and consultants and advisors to us, and any subsidiary, are eligible to receive awards under the 2013 Plan at the discretion of the Board or its designated committee. The Board, or a committee designated by the Board (for the purposes of this Proposal 3,2, “Board” shall also refer to such a committee, if any), has authority to, among other things:
·Determine the persons to whom, and the time or times at which, options shall be granted and the number of shares of Common Stock to be subject to each option;
| · | Determine the persons to whom, and the time or times at which, options shall be granted and the number of shares of common stock to be subject to each option; |
·Designate options as incentive stock options or nonstatutory stock options;
| · | Designate options as incentive stock options or nonstatutory stock options; |
·Determine the fair market value of shares of stock or other property;
| · | Determine the fair market value of shares of stock or other property; |
·Determine the terms, conditions and restrictions applicable to each option (which need not be identical) and any shares acquired upon the exercise thereof, including, without limitation, (i) the exercise price of the option, (ii) the method of payment for shares purchased upon the exercise of the option; (iii) the method for satisfaction of any tax withholding obligation arising in connection with the option or such shares, including by the withholding or delivery of shares of stock, (iv) the timing, terms and conditions of the exercisability of the option or the vesting of any shares acquired upon the exercise thereof, including the grants of options on an immediately exercisable basis subject to repurchase restrictions in favor of us, (v) the time of the expiration of the option, (vi) the effect of the optionee’s termination of service with us on any of the foregoing, and (vii) all other terms, conditions and restrictions applicable to the option or such shares not inconsistent with the terms of the 2013 Plan;
| · | Determine the terms, conditions and restrictions applicable to each option (which need not be identical) and any shares acquired upon the exercise thereof, including, without limitation, (i) the exercise price of the option, (ii) the method of payment for shares purchased upon the exercise of the option; (iii) the method for satisfaction of any tax withholding obligation arising in connection with the option or such shares, including by the withholding or delivery of shares of stock, (iv) the timing, terms and conditions of the exercisability of the option or the vesting of any shares acquired upon the exercise thereof, including the grants of options on an immediately exercisable basis subject to repurchase restrictions in favor of us, (v) the time of the expiration of the option, (vi) the effect of the optionee’s termination of service with us on any of the foregoing, and (vii) all other terms, conditions and restrictions applicable to the option or such shares not inconsistent with the terms of the 2013 Plan; |
·Approve one or more forms of Option Agreement—Incentive Stock Option and Option Agreement—Nonstatutory Stock Option;
| · | Approve one or more forms of Option Agreement—Incentive Stock Option and Option Agreement—Nonstatutory Stock Option; |
·Amend, modify, extend, cancel, renew, reprice or otherwise adjust the exercise price of, or grant a new option in substitution for, any option or to waive any restrictions or conditions applicable to any option or any shares acquired upon the exercise thereof;
| · | Amend, modify, extend, cancel, renew, reprice or otherwise adjust the exercise price of, or grant a new option in substitution for, any option or to waive any restrictions or conditions applicable to any option or any shares acquired upon the exercise thereof; |
·Accelerate, continue, extend or defer the exercisability of any option or the vesting of any shares acquired upon the exercise thereof, including with respect to the period following an optionee’s termination of service with us;
| · | Accelerate, continue, extend or defer the exercisability of any option or the vesting of any shares acquired upon the exercise thereof, including with respect to the period following an optionee’s termination of service with us; |
·Prescribe, amend or rescind rules, guidelines and policies relating to the 2013 Plan, or to adopt supplements to, or alternative versions of, the 2013 Plan, including, without limitation, as the Board deems necessary or
| · | Prescribe, amend or rescind rules, guidelines and policies relating to the 2013 Plan, or to adopt supplements to, or alternative versions of, the 2013 Plan, including, without limitation, as the Board deems necessary or desirable to comply with the laws of, or to accommodate the tax policy or custom of, foreign jurisdictions whose citizens may be granted options; and |
desirable to comply with the laws of, or to accommodate the tax policy or custom of, foreign jurisdictions whose citizens may be granted options; and
·Correct any defect, supply any omission or reconcile any inconsistency in the 2013 Plan or any option agreement and to make all other determinations and take such other actions with respect to the 2013 Plan or any option as the Board may deem advisable to the extent consistent with the 2013 Plan and applicable law.
| · | Correct any defect, supply any omission or reconcile any inconsistency in the 2013 Plan or any option agreement and to make all other determinations and take such other actions with respect to the 2013 Plan or any option as the Board may deem advisable to the extent consistent with the 2013 Plan and applicable law. |
Our employees and directors, and consultants, and any parent corporation, or subsidiary are eligible to receive nonstatutory stock options and other stock-based awards under the 2013 Plan. Only our employees, and any parent corporation or subsidiary, are eligible to receive incentive stock options under the 2013 Plan.
Incentive stock options may not be priced at less than 100% of the fair market value of our Common Stockcommon stock on the date of grant (110% of fair market value in the case of individuals holding 10% or more of our Common Stock)common stock). Except as otherwise determined by the Board, in the case of nostatutorynonstatutory options, the exercise price may not be less than 100% of the fair market value on the date of grant in accordance with applicable law. The fair market value of our Common Stockcommon stock on October 27, 2017,June 12, 2020, was $0.62,$[__], based on the closing sale price of our Common Stockcommon stock as reported by The Nasdaq Capital Market on that date. The 2013 Plan provides that stock options and similar awards may be issued with exercise periods of up to 10 years (except that no Incentive Stock Option granted to 10% owners of the our common stock shall be exercisable after the expiration of five years after the effective date of grant of such option).
Payment of the exercise price of options under the 2013 Plan may be made in the form of: (1) cash, check or cash equivalent; (2) by tender to us, or attestation to ownership, of shares of Common Stockcommon stock owned by the optionee having a fair market value not less than the exercise price; (3) such other consideration as may be approved by the Board to the extent applicable by law; (4) or any combination thereof, as determined by the Board.
In the event of termination of employment or consulting relationship for any reason other than disability or death, the award recipient may exercise his or her vested options within 90 days of the date of such termination. In the event of termination as a result of disability, the award recipient may exercise his or her vested options within one year following the date of such termination but in any event no later than the date of expiration of the option’s term. In the event of death, the award recipient’s estate may exercise his or her vested options within one year following the date of death. Upon the occurrence of a “Change in Control” (as defined in the 2013 Plan), the Board may, at its sole discretion, accelerate the vesting and exercisability of outstanding options.
The Board has discretion to grant other stock-based awards; provided, however, that no such awards may be made unless the terms of the 2013 Plan and the awards are in compliance with Section 409A of the Code.
Transfers of awards may not be made other than by will or by the laws of descent and distribution. During the lifetime of a participant, an award may be exercised only by the participant to whom the award is granted.
New Plan Benefits
The following table sets forth grants of stock options approved by our Board on April 3, 2020, that are contingent upon shareholder approval of this Proposal 3.
| Name and Position | Dollar Value | Number of Units (1) |
| Robert Foster, Chief Executive Officer and Director | (2) | 380,000 |
| John Cavan, Chief Financial Officer | (2) | 215,000 |
| Gary Jacob, Director | (2) | 60,000 |
| John Brancaccio, Director | (2) | 60,000 |
| Arnold Lippa, Director | (2) | 60,000 |
| Timothy Block, Director | (2) | 60,000 |
| Thomas Adams, Director | (2) | 60,000 |
| All current executive officers as a group | (2) | 595,000 |
| All current directors who are not executive officers as a group | (2) | 300,000 |
| (1) | Awards granted under the Plan to our executive officers are discretionary and are not subject to set benefits or amounts under the terms of the 2013 Plan. Accordingly, except as noted below, the benefits or amounts that will be received by or allocated to our executive officers under the 2013 Plan in the future are not determinable. On April 3, 2020, the Compensation Committee of our Board of Directors approved the grant of stock options under the 2013 Plan to certain of our current executive officers and directors, contingent upon shareholder approval of this Proposal 3. The number of units in the table above is the number of shares of our common stock subject to each option that is contingent upon shareholder approval of this Proposal 3. |
| (2) | Each option was granted with an exercise price per share of $1.63. The actual value realized upon exercise of an option will depend on the excess, if any, of the stock price over the exercise price on the date of exercise. |
Federal Income Tax Consequences
The following is a summary of the principal U.S. federal income tax consequences generally applicable to awards under the 2013 Plan. This summary does not purport to consider all of the possible U.S. federal tax consequences of the awards and is not intended to reflect the particular tax position of any award recipient. This summary is based upon the U.S. federal tax laws and regulations now in effect and as currently interpreted and does not take into account possible changes in such tax laws or such interpretations, any of which may be applied retroactively. Award recipients are strongly advised to consult their own tax advisors for additional information.
Grant of an Option The grant of an option is not expected to result in any taxable income for the recipient as of the date of the grant, except that in the event non-statutory options are granted with an exercise price lower than the then-current fair market value of the Common Stock,common stock, the difference between the exercise price and the then-
currentthen-current fair market value may be treated as deferred compensation income recognized as of the date the non-statutory options are granted.
Exercise of Incentive Stock Option The holder of an incentive stock option generally will have no taxable income upon exercising the option (except that a tax liability may arise pursuant to the alternative minimum tax), and the Company will not be entitled to a tax deduction.
Exercise of Nonqualified Stock Option Generally, subject to Code Section 409A, upon exercising a nonqualified stock option, the award recipient must recognize ordinary income equal to the excess of the fair market value of the shares of Common Stockv acquired on the date of exercise over the exercise price. The income will be treated as compensation income subject to payroll and withholding tax obligations. The Company would be entitled to a compensation deduction in the amount of income recognized by the award recipient.
Disposition of Shares Acquired Through an Option The tax consequence to a holder of an option upon a disposition of shares acquired through the exercise of an option will depend on how long the shares have been held and upon whether such shares were acquired by exercising an incentive stock option or by exercising a nonqualified stock option.
Generally, the disposition of shares which were acquired by exercise of an incentive stock option will be taxable as long-term capital gain or loss if the award recipient disposes of the shares more than two years after the option was granted and at least one year after exercising the option. If the award recipient fails to satisfy the holding period requirements for treatment as an incentive stock option, a disposition will result in any gain being treated as compensation income subject to ordinary tax rates. If the award recipient is still an employee of the Company at the time of the disposition, the amount of gain treated as compensation will also be subject to payroll and withholding taxes.
If an award recipient disposes of shares acquired through the exercise of a nonqualified option, any gain or loss will be treated as a capital gain or loss. To the extent such shares have been held for at least one year after exercise of the nonqualified option, the gain or loss will be treated as long-term capital gain or loss.
Generally, there will be no tax consequence to us in connection with the disposition of shares acquired under an option, except that we may be entitled to a tax deduction in the case of the disposition of shares acquired under an incentive stock option before the applicable incentive stock option holding periods set forth in the Code have been satisfied.
The grant by the Board of other stock-based awards may have varying tax consequences to award recipients. Grants made pursuant to the 2013 Plan may be subject to Code Section 409A and plan administration may have to conform to Code Section 409A. Failure to comply with Code Section 409A, if applicable, will result in acceleration of income and imposition of penalties and interest to award recipients.
Application of Section 16 of the Securities Exchange Act of 1934 Special rules may apply in the case of individuals subject to Section 16 of the Securities Exchange Act of 1934, as amended. In particular, unless a special election is made pursuant to the Code, shares received pursuant to the exercise of a stock option may be treated as restricted as to transferability and subject to a substantial risk of forfeiture for a period of up to six months after the date of exercise. Accordingly, the amount of any ordinary income recognized, and the amount of our tax deduction, are determined as of the end of such period.
Delivery of Shares to Satisfy Tax Obligation Under the 2013 Plan, participants may deliver shares of Common Stockcommon stock (either shares received upon the receipt or exercise of the award or shares previously owned by the holder of the option) to us to satisfy federal and state tax obligations unless the Board provides to the contrary in the award agreement.
Vote Required
The affirmative vote of a majority of the shares of Common Stockvoting capital present or represented by proxy and entitled to vote at the annual meetingAnnual Meeting will be required to amend our 2013 Plan. Abstentions will be counted toward the tabulation of votes cast on this proposal and will have the same effect as negative votes. Broker non-votesNon-Votes will have no effect on this proposal as brokers or other nominees are not entitled to vote on such proposal in the absence of voting instructions from the beneficial owner.
Board Recommendation
OUR BOARD UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE TO AMEND THE 2013 PLAN TO INCREASE THE RESERVATION OF COMMON STOCK FOR ISSUANCE THEREUNDER TO 10,700,0002,500,000 SHARES FROM 7,700,00040,536 SHARES.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table contains compensation information for our Chief Executive Officer and certain other executives who were the most highly compensated executive officers for the years ended December 31, 2019 and 2018.
| Name & Principal Position | Year | Salary | Bonus(1) | Stock In Lieu of Cash Bonus | Options granted(2) | Non-equity incentive plan compensation(1)(3) | Other | Total | ||||||||||||||||||||||||
| Dr. Robert Foster. | December 2019 | $ | 400,000 | $ | — | $ | — | $ | 21,102 | $ | 200,000 | $ | — | $ | 621,102 | |||||||||||||||||
| Chief Executive Officer | December 2018 | $ | 312,345 | $ | — | $ | 62,244 | $ | — | $ | — | $ | — | $ | 374,589 | |||||||||||||||||
| John Cavan. | December 2019 | $ | 291,136 | $ | — | $ | — | $ | 12,635 | $ | 72,917 | $ | — | $ | 376,688 | |||||||||||||||||
| Chief Financial Officer | December 2018 | $ | 274,827 | $ | — | $ | 64,007 | $ | — | $ | — | $ | — | $ | 338,834 | |||||||||||||||||
| (1) | Bonus and non-equity incentive compensation amounts are for performance during the years ended December 31, 2019 and 2018, whether or not paid in the year the compensation was earned. |
| (2) | Our named executive officers will only realize compensation to the extent the fair market value of our common stock is greater than the exercise price of such stock options. The grant date fair value of option awards granted in 2019 is in accordance with ASC Topic 718, or ASC 718. For information regarding assumptions underlying the valuation of equity awards, see Note 10 contained in the Annual Report on Form 10-K for the year ended December 31, 2019. |
| (3) | Represents cash incentive payments earned based upon the achievement of corporate objectives established by our Board of Directors for performance during the years ended December 31, 2019 and 2018. |
Employment Agreements
On December 12, 2018, we entered into an Executive Agreement (the “Foster Agreement”) with Dr. Robert Foster, our Chief Executive Officer. The term of the Foster Agreement commenced on October 1, 2018 and will continue until October 1, 2021, following which time the Foster Agreement will be automatically renewed for successive one year periods at the end of each term, unless either party delivers written notice to the other party of their intent to not renew the Foster Agreement. Pursuant to the Foster Agreement, Dr. Foster’s current base compensation is $400,000 per year. Dr. Foster is eligible to receive a cash bonus of up to 50% of his base salary per year based on meeting certain performance objectives and bonus criteria.
If Dr. Foster’s employment is terminated by us for cause or as a result of Dr. Foster’s death or permanent disability, or if Dr. Foster terminates his the Foster Agreement voluntarily without Good Reason (as defined in the Foster Agreement), Dr. Foster will be entitled to receive a lump sum equal to (i) any portion of unpaid base compensation then due for periods prior to termination, (ii) any bonus earned but not yet paid, and (iii) all business expenses reasonably and necessarily incurred by Dr. Foster prior to the date of termination. If Dr. Foster’s employment is terminated by us without cause or by Dr. Foster for Good Reason, Dr. Foster will be entitled to receive the amounts due upon termination of his employment by us for cause or as a result of his death or permanent disability, or upon termination by Dr. Foster of his employment voluntarily without Good Reason, in addition to (provided that Dr. Foster executes a written release with respect to certain matters) a severance payment equal to his base compensation for 12 months from the date of termination and reimburse Dr. Foster’s payment of COBRA premiums for 12 months from the date of termination. In addition, if Dr. Foster’s employment is terminated: (a) by us without cause within 6 months prior to a change of control (as defined in the Foster Agreement) that was pending during such 6 month period, (b) by Mr. Foster for Good Reason within 12 months after a change of control, or (c) by us without cause at any time upon or within 12 months after a change of control, Dr. Foster would be entitled to receive the amounts due upon termination of his employment by us for cause or as a result of his death or permanent disability, or upon termination by Dr. Foster voluntarily without Good Reason, provided, if Dr. Foster executes a written release with respect to certain matters, he will be entitled to a severance payment equal to his base compensation for 12 months from the date of termination and reimbursement of his payment of COBRA premiums for 12 months from the date of termination. In addition, all of Dr. Foster’s unvested stock options and other equity awards would immediately vest and become fully exercisable (x) in the event a change of control transaction is pending, for a period of six months following the date of termination, and (y) in the event a change of control transaction is not then pending, for the period of time set forth in the applicable agreement evidencing the award.
Outstanding Equity Awards as of December 31, 2019
| Number of Securities | ||||||||||||||||
| Underlying Unexercised | Option | Option | ||||||||||||||
| Options (#) | Exercise | Expiration | ||||||||||||||
| Name | Exercisable | Unexercisable | Price ($) | Date(1), (2) | ||||||||||||
| Dr. Robert Foster | 134 | 45 | 515.20 | 6/10/2026 | ||||||||||||
| Chief Executive Officer | 9,700 | — | 3.24 | 7/29/2029 | ||||||||||||
| John Cavan | 134 | 45 | 677.60 | 4/1/2026 | ||||||||||||
| Chief Financial Officer | 34 | — | 616.00 | 8/26/2026 | ||||||||||||
| 18 | 9 | 324.80 | 7/20/2027 | |||||||||||||
| 5,820 | — | 3.24 | 7/24/2029 | |||||||||||||
Director Compensation
During year ended December 31, 2019, our non-employee directors received the following compensation for their services on the Board and its committees:
| Name | Cash Fees | Option Awards(1) | Total | |||||||
| Gary S. Jacob(2) | $ | 38,000 | $ | — | $ | 38,000 | ||||
| John P. Brancaccio(3) | 59,000 | — | 59,000 | |||||||
| Arnold Lippa(4) | 55,500 | — | 41,625 | |||||||
| Timothy Block(5) | 44,400 | — | 55,500 | |||||||
| Thomas Adams(6) | 50,500 | — | 50,500 | |||||||
As of December 31, 2019, we have recorded a liability of $116,600 related to director fees, of which $116,600 was paid in January 2020.
| (1) | 4,850 option awards were issued during the year ended December 31, 2019. |
| (2) | As of December 31, 2019, Dr. Jacob held 2,782 option awards of which 2,782 are exercisable. |
| (3) | As of December 31, 2019, Mr. Brancaccio held 1,328 option awards of which 1,328 are exercisable. |
| (4) | As of December 31, 2019, Dr. Lippa held 1,273 option awards of which 1,273 grants are exercisable. |
| (5) | As of December 31, 2019, Dr. Block held 1,108 option awards of which 1,108 are exercisable. |
| (6) | As of December 31, 2019, Dr. Adams held 1,050 option awards of which 1,050 are exercisable. |
BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information regarding the beneficial ownership of shares of our common stock as of October 27, 2017 by:
·June 12, 2020 by (i) each person known to beneficially own more than 5% of our outstanding common stock, (ii) each of our directors, (iii) each of our named executive officers;
· each of our directors;
·officers, and (iv) all of our current directors and executive officers as a group;group. Except as otherwise indicated, the persons named in the table below have sole voting and
· each stockholder known by us investment power with respect to ownall shares beneficially more than five percent of our common stock.owned, subject to community property laws, where applicable.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and includes voting or investment power with respect to the securities. Shares of common stock that may be acquired by an individual or group within 60 days of October 27, 2017,June 12, 2020, pursuant to the exercise of options or warrants, are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the table. Percentage of ownership is based on 78,278,3069,025,061 shares of common stock outstanding on October 27, 2017.June 12, 2020.
Except as indicated in footnotes to this table, we believe that the stockholders named in this table have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them, based on information provided to us by such stockholders. Unless otherwise indicated, the address for each director and executive officer listed is: c/o ContraVirHepion Pharmaceuticals, Inc., 399 Thornall Street, First Floor, Edison, New Jersey 08837.
Beneficial Owner |
| Number of Shares |
| Shares of |
| Percentage of |
|
Directors and Executive Officers |
|
|
|
|
|
|
|
James Sapirstein |
| 170,727 |
| 1,500,002 |
| 2.1 |
|
Theresa Matkovits |
| — |
| 45,000 |
| * |
|
John Sullivan-Bolyai |
| 79,680 |
| 141,930 |
| * |
|
John Cavan |
| 66,726 |
| 31,229 |
| * |
|
Robert Foster |
| 40,482 |
| 25,000 |
| * |
|
Gary S. Jacob |
| 32,935 |
| 907,500 |
| 1.2 |
|
John Brancaccio |
| 2,015 |
| 168,155 |
| * |
|
Timothy Block |
| — |
| 137,188 |
| * |
|
Arnold Lippa |
| — |
| 62,500 |
| * |
|
Thomas Adams |
| — |
| 15,000 |
| * |
|
Tamar Howson |
| — |
| 15,000 |
| * |
|
All current executive officers and directors as a group (9 persons) |
| 392,565 |
| 3,048,504 |
| 4.2 |
|
5% or Greater Stockholders |
|
|
|
|
|
|
|
Gabriele M. Cerrone(1) |
| 4,436,104 |
| 240,000 |
| 6.0 |
|
(1)08837.
Consists of 78,146 shares of common stock held by Mr. Cerrone and 4,357,958 shares of common stock held by Panetta Partners, Ltd. Mr. Cerrone is a member of the board of directors of Panetta Partners, Ltd. and in such capacity holds voting and dispositive control over securities held by Panetta.
| Beneficial Owner | Number of Shares Beneficially Owned | Shares of common stock issuable upon exercise of stock options | Shares of common stock issuable upon exercise of warrants | Percentage of Common Stock Beneficially Owned | |||||
| Directors and Executive Officers | |||||||||
| John Cavan | 300 | 231 | 123 | * | |||||
| Dr. Robert Foster | 259 | 179 | — | * | |||||
| Gary S. Jacob | 59 | 2,782 | 123 | * | |||||
| John Brancaccio | 4 | 1,328 | 25 | * | |||||
| Timothy Block | — | 1,108 | — | * | |||||
| Arnold Lippa | — | 1,273 | 123 | * | |||||
| Thomas Adams | — | 1,050 | — | * | |||||
| All current executive officers and directors as a group (7 persons) | 622 | 7,951 | 394 | * |
* less than one percent.
*Represents beneficial ownership of less than 1%.
EXECUTIVE COMPENSATIONCERTAIN RELATIONSHIPS AND OTHER INFORMATION
Information about Executive OfficersRELATED TRANSACTIONS
The following table sets forth certain information aboutis a description of transactions or series of transactions since January 1, 2019 or any currently proposed transaction, to which we were or are to be a participant and in which the amount involved in the transaction or series of transactions exceeds $120,000, and in which any of our directors, executive officers asor persons who we know hold more than five percent of October 27, 2017
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Mr. Sapirstein’s biography is listed under Proposal 1—Electionany class of Directors.our capital stock, including their immediate family members, had or will have a direct or indirect material interest, other than compensation arrangements with our directors and executive officers.
John Cavan has served as our Chief Financial Officer since April 1, 2016. From January 2016 to April 2016, Mr. Cavan served in the capacity of Interim CFO. Prior to joining ContraVir, Mr. Cavan was a consultant with The Pine Hill Group from February 2012 to March 2016 where he was instrumental in completing multiple strategic and financial transactions, including initial public offerings, business combinations and strategic transactions. Prior to his role with the Pine Hill Group, from June 2006 until February 2012, he served as Chief Accounting Officer at Stemline Therapeutics, Inc. and as Vice President and Chief Accounting Officer at Aegerion Pharmaceuticals, Inc. where he was instrumental in the company’s initial public offering, through which Aegerion achieved a $2 billion market capitalization. He has also held financial positions within the healthcare industry at AlgoRx Pharmaceuticals, Inc. and Alpharma. Mr. Cavan served in a variety of financial and operational positions early in his career during tenures with large multinational public companies, including Sony, American Express, International Specialty Products (an Ashland Company) and Nestlé U.S.A. Mr. Cavan currently serves on the Board of Directors of Vantage Health Systems.None
Dr. John Sullivan-Boyai has served as our Chief Medical Officer since January 19, 2015. From August 2014 until January 2015, Dr. Sullivan-Bolyai was the Executive Director of Infectious Disease clinical research at Merck & Co. Inc. where he oversaw multiple HCV protocols in all three phases of clinical development. From June 2007 until August 2014, he was the Vice-President of Clinical Research at Idenix Pharmaceuticals Inc. where he managed all medical aspectsDELINQUENT SECTION 16(A) REPORTS
Section 16(a) of the HIV and HCV programs. Additionally, he was responsible for the transition of Idenix’s clinical team to Merck, which acquired Idenix. Prior to joining Idenix, Dr. Sullivan-Bolyai worked at Anadys Pharmaceuticals on hepatitis C and at Valeant Pharmaceuticals International on Valeant’s nucleotide prodrug for the treatment of chronic hepatitis B infection. Previously, he held various medical and operations positions at Biomeasure and Serono Laboratories in Massachusetts, working on coagulation, immunomodulatory, endocrine, and gastrointestinal compounds. He began his career with Hoffmann-La Roche where he worked on a variety of compounds for the treatment of bacterial infections, HCV and HIV. Dr. Sullivan-Bolyai received an MD, MPH from the University of Washington in Seattle. He completed his infectious diseases fellowship training at the
Children’s Orthopedic Hospital and Medical Center, Seattle, WA, followed by academic positions at UCLA and the University of Illinois.
Dr. Robert T. Foster has served asExchange Act requires our Chief Scientific Officer since June 10, 2016. Prior to ContraVir, he was Chief Executive Officer and Founder of Ciclofilin Pharmaceuticals Inc. from January 2014 until it merged with ContraVir on June 10, 2016. Prior to Ciclofilin Pharmaceuticals, he founded Isotechnika Pharma Inc. in 1993, where he was Chairman and Chief Executive Officer for 21 years. Dr. Foster was founding Chief Executive Officer and later, Chief Scientific Officer of Aurinia Pharmaceuticals, Inc., after Isotechnika acquired Aurinia. Dr. Foster is currently a Board member of Transcriptome Sciences Inc.
Dr. Theresa Matkovits joined us in May 2015 and currently serves as our Executive Vice President – Drug Development. Dr. Matkovits brings over 20+ years global drug development, commercialization, and leadership experience to ContraVir. A seasoned and established leader in the Pharmaceutical and Biotech Sectors, Dr. Matkovits has led Global Drug Development Teams bringing to market a number of approved medicines to several global markets. Dr. Matkovits earned her Ph.D. in Biochemistry and Molecular Biology from the University of Medicine and Dentistry of NJ.. She currently serves on the board of BioSurplus, Inc.
Executive Compensation
The following table contains compensation information for our Chief Executive Officer and certain other executives who were the most highly compensateddirectors, executive officers for the fiscal years ended June 30, 2017 and 2016.
Name & Principal Position |
| Year |
| Salary |
| Bonus(1)(2) |
| Options |
| Non-equity |
| Total |
| |||||
James Sapirstein, |
| 2017 |
| $ | 410,000 |
| $ | — |
| $ | 610,995 |
| $ | 228,940 |
| $ | 1,249,935 |
|
Chief Executive Officer |
| 2016 |
| $ | 370,595 |
| $ | 51,042 |
| $ | — |
| $ | 175,000 |
| $ | 596,637 |
|
John Sullivan- |
| 2017 |
| $ | 332,800 |
| $ | — |
| $ | 102,904 |
| $ | — |
| $ | 453,704 |
|
Chief Medical Officer |
| 2016 |
| $ | 320,000 |
| $ | — |
| $ | 13,963 |
| $ | — |
| $ | 333,963 |
|
Theresa Matkovits, |
| 2017 |
| $ | 275,000 |
| $ | — |
| $ | — |
| $ | 64,870 |
| $ | 339,870 |
|
Executive Vice President |
| 2016 |
| $ | 250,000 |
| $ | — |
| $ | 23,754 |
| $ | — |
| $ | 273,754 |
|
(1)Bonus and non-equity incentive compensation amounts are for performance during the fiscal year ended June 30, 2017, as applicable, whether or not paid in the year the compensation was earned.
(2)Represents cash incentive payments in excessholders of such named executive officer’s target bonus, paid at the discretion of our Board of Directors in 2017 for performance in 2017.
(3)Our named executive officers will only realize compensation to the extent the fair market valuemore than 10% of our common stock is greater thanto file with the exercise priceSEC initial reports of such stock options. The grant date fair valueownership and reports of option awards granted in 2017 is in accordance with ASC Topic 718, or ASC 718. For information regarding assumptions underlying the valuation of equity awards, see Note 10 of the Financial Statements in our Annual Report on Form 10-K for the fiscal year ended June 30, 2017.
(4)Represents cash incentive payments earned based upon the achievement of corporate objectives established by our Board of Directors for performance in 2017.
Employment Agreements
On May 25, 2017, we entered into an Amended and Restated Executive Agreement (the “Sapirstein Agreement”) with James Sapirstein, our Chief Executive Officer. The term of the Sapirstein Agreement commenced on May 25, 2017 and will continue until May 25, 2020, following which time the Sapirstein Agreement will beautomatically renewed for successive one year periods at the end of each term, unless either party delivers written notice to the other party of their intent to not renew the Sapirstein Agreement. Pursuant to the Sapirstein Agreement, Mr. Sapirstein’s current base compensation is $480,000 per year. Mr. Sapirstein is eligible to receive a cash bonus of up to 50% of his base salary per year based on meeting certain performance objectives and bonus criteria. Mr. Sapirstein is also eligible to receive a realization bonus (the “Realization Bonus”) equal to $2,000,000 in either cash or registered common stock or a combination thereof as mutually agreed by Mr. Sapirstein and the Company,changes in the event that during the termownership of the Sapirstein Agreement, for a period of 90 consecutive trading days, the market price of the Company’sour common stock is $4.00 or more and the value of the common stock daily trading volume is $900,000 or more.
If Mr. Sapirstein’s employment is terminated by us for cause or as a result of Mr. Sapirstein’s death or permanent disability, or if Mr. Sapirstein terminates his the Sapirstein Agreement voluntarily without Good Reason (as defined in the Sapirstein Agreement), Mr. Sapirstein will be entitled to receive a lump sum equal to (i) any portion of unpaid base compensation then due for periods prior to termination, (ii) any bonus earned but not yet paid, (iii) any Realization Bonus earned and payable, but not yet paid, and (iv) all business expenses reasonably and necessarily incurred by Mr. Sapirstein prior to the date of termination. If Mr. Sapirstein’s employment is terminated by us without cause or by Mr. Sapirstein for Good Reason, Mr. Sapirstein will be entitled to receive the amounts due upon termination of his employment by us for cause or as a result of his death or permanent disability, or upon termination by Mr. Sapirstein of his employment voluntarily without Good Reason, in addition to (provided that Mr. Sapirstein executes a written release with respect to certain matters) a severance payment equal to his base compensation for 18 months from the date of termination and reimburse Mr. Sapirstein’s payment of COBRA premiums for 18 months from the date of termination. In addition, if Mr. Sapirstein’s employment is terminated: (a) by us without cause within 6 months prior to a change of control (as defined in the Sapirstein Agreement) that was pending during such 6 month period, (b) by Mr. Sapirstein for Good Reason within 12 months after a change of control, or (c) by us without cause at any time upon or within 12 months after a change of control, Mr. Sapirstein would be entitled to receive the amounts due upon termination of his employment by us for cause or as a result of his death or permanent disability, or upon termination by Mr. Sapirstein voluntarily without Good Reason, provided, if Mr. Sapirstein executes a written release with respect to certain matters, he will be entitled to a severance payment equal to his base compensation for 18 months from the date of termination and reimbursement of his payment of COBRA premiums for 18 months from the date of termination. In addition, all of Mr. Sapirstein’s unvested stock options and other equity awards would immediately vestsecurities. Such persons are required to furnish us copies of all Section 16(a) filings. Based solely upon a review of the copies of the forms furnished to us, we believe that our officers, directors and become fully exercisable (x) in the event a changeholders of control transaction is pending, for a periodmore than 10% of six months following the date of termination, and (y) in the event a change of control transaction is not then pending, for the period of time set forth in theour common stock complied with all applicable agreement evidencing the award.filing requirements.
On January 13, 2015, we entered into an executive agreement with John Sullivan-Bolyai, M.D., MPH, effective January 19, 2015, under which he serves as Chief Medical Officer of the Company. Pursuant to the terms of his employment agreement, Dr. Sullivan-Bolyai receives an annual salary of $320,000. He also received 135,000 options with an exercise price of $2.56 which vest over three years. He is eligible to receive a cash bonus of up to 25% of his base salary upon achievement of performance milestones. If Dr. Sullivan-Bolyai’s employment is terminated without cause or for good reason (as defined in his employment agreement), he will be entitled to receive a severance payment equal to base salary for nine months from date of termination in addition to any earned but unpaid salary and bonus.
On June 1, 2015, we entered into an executive agreement with Theresa Matkovits Ph.D. effective June 1, 2015, under which Dr. Matkovits serves as Executive Vice President – Drug Development of the Company. Pursuant to the terms of her employment agreement, Dr. Matkovits receives an annual salary of $275,000. She is eligible to receive a cash bonus of up to 28% of her base salary upon achievement of performance milestones. If Dr. Matkovits employment is terminated without cause or for good reason (as defined in his employment agreement), she will be entitled to receive a severance payment equal to base salary for six months from date of termination in addition to any earned but unpaid salary and bonus.
Outstanding Equity Awards as of June 30, 2017
|
| Number of Securities |
|
|
|
|
| ||
|
| Underlying Unexercised |
| Option |
| Option |
| ||
|
| Options (#) |
| Exercise |
| Expiration |
| ||
Name |
| Exercisable |
| Unexercisable |
| Price ($) |
| Date |
|
James Sapirstein, |
| 750,000 |
| 250,000 |
| 2.31 |
| 3/19/2024 |
|
Chief Executive Officer |
| 333,333 |
| 166,667 |
| 1.50 |
| 12/3/2024 |
|
|
| 100,000 |
| 50,000 |
| 3.60 |
| 6/4/2025 |
|
|
| 166,667 |
| 333,333 |
| 0.99 |
| 6/13/2026 |
|
|
| — |
| 313,898 |
| 1.43 |
| 3/3/2027 |
|
|
| — |
| 313,898 |
| 1.48 |
| 3/6/2027 |
|
|
|
|
|
|
|
|
|
|
|
John Sullivan-Bolyai, |
| 90,000 |
| 45,000 |
| 2.56 |
| 1/19/2025 |
|
Chief Medical Officer |
| 6,667 |
| 13,333 |
| 0.99 |
| 6/13/2026 |
|
|
| — |
| 135,790 |
| 1.10 |
| 8/26/2026 |
|
|
|
|
|
|
|
|
|
|
|
Theresa Matkovits, |
| 33,333 |
| 16,667 |
| 3.83 |
| 5/26/2025 |
|
Executive Vice President |
| 3,333 |
| 6,667 |
| 0.95 |
| 2/1/2026 |
|
|
| 8,333 |
| 16,667 |
| 0.99 |
| 6/13/2026 |
|
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Master Services Agreement
We are a party to a Master Services Agreement dated June 19, 2014 with Clinical Supplies Management, Inc., or CSM, pursuant to which CSM provides us with pharmaceutical and clinical supply management services in support of our clinical research programs. James Sapirstein, the CEO of ContraVir, was a director of CSM, which is a private company, until October 15, 2016. For the fiscal years ended June 30, 2017 and 2016, we paid CSM approximately $481,000 and $550,000, respectively.
Consulting Agreement
On June 1, 2016, we entered into a consulting agreement with Gabriele Cerrone, a principal stockholder of the Company, pursuant to which we pay Mr. Cerrone $120,000 per year. The term of the consulting agreement is from June 1, 2016 to June 1, 2019. In addition, Mr. Cerrone was granted options to purchase 360,000 shares of common stock with an exercise price equal to $0.94 which options vest at the rate of 10,000 per month over 3 years. For the fiscal years ended June 30, 2017 and June 30, 2016 we paid Mr. Cerrone $120,000 and $10,000, respectively.
Sponsored Research Agreement
On May 29, 2015, we entered into a Sponsored Research Agreement with Baruch S. Blumberg Institute, or Blumberg Institute, pursuant to which we are sponsoring research by investigators affiliated with the Blumberg Institute with respect to CMX157. Dr. Timothy Block, a director of our Company, is President of the Blumberg Institute. For the fiscal years ended June 30, 2017 and 2016, we paid the Blumberg Institute approximately $75,000 and $127,500, respectively.
We have no knowledge of any other matters that may come before the Annual Meeting and doesdo not intend to present any other matters. However, if any other matters shall properly come before the meetingAnnual Meeting or any adjournment or postponement thereof, the persons soliciting proxies will have the discretion to vote as they see fit unless directed otherwise.
We will bear the cost of soliciting proxies in the accompanying form. In addition to the use of the mails,mailings, proxies may also be solicited by our directors, officers or other employees, personally or by telephone, facsimile or email, none of whom will be compensated separately for these solicitation activities.
If you do not plan to attend the Annual Meeting, in order that your shares may be represented and in order to assure the required quorum, please sign, date and return your proxy promptly. In the event you are able to attend the Annual Meeting, at your request, we will cancel your previously submitted proxy.
DELIVERY OF PROXY MATERIALSADDITIONAL INFORMATION
We mayHouseholding
The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy SEC rules regardingthe delivery of proxyrequirements for Proxy Availability Notice or other Annual Meeting materials includingwith respect to two or more stockholders sharing the proxy statement, annual report and notice,same address by delivering a single notice and, if applicable, a single set of proxyNotice or other Annual Meeting materials addressed to an address shared by two or more of ourthose stockholders. This delivery method can result in meaningfulprocess, which is commonly referred to as householding, potentially provides extra convenience for stockholders and cost savings for us. In ordercompanies. Stockholders who participate in householding will continue to take advantagebe able to access and receive separate proxy cards.
This year, a number of this opportunity, we may deliver onlybrokers with account holders who are our stockholders will be “householding” our proxy materials. A Notice or proxy materials will be delivered in one notice and, if applicable, a single set of proxy materialsenvelope to multiple stockholders who sharesharing an address unless contrary instructions arehave been received prior tofrom one or more of the mailing date. Similarly, ifaffected stockholders. Once you share an address with another stockholder and have received notice from your broker that they will be householding communications to your address, householding will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in householding and would prefer to receive a separate Notice or proxy materials, please notify your broker or call our Secretary at (732) 902-4000, or submit a request in writing to our Secretary, c/o Hepion Pharmaceuticals, Inc., 399 Thornall Street, First Floor, Edison, NJ 08837. Stockholders who currently receive multiple copies of our notice and/the Notice or other proxy materials you may write or call us at thetheir address and phone number belowwould like to request deliveryhouseholding of a single copy of the notice and, if applicable, other proxy materials in the future. We undertake totheir communications should contact their broker. In addition, we will promptly deliver, promptly upon written or oral request to the address or telephone number above, a separate copy of the notice and, if applicable, otherNotice or proxy materials as requested, to a stockholder at a shared address to which a single copy of the notice and/or other proxy materialsdocuments was delivered. If you hold stock as a record stockholder
Annual Reports and prefer to receive separateForm 10-K
Additional copies of a notice and, if applicable, other proxy materials either now or inour Annual Report on Form 10-K for the future, please contact our Investor Relations department atfiscal year ended December 31, 2019 may be obtained without charge by writing to the Secretary, Hepion Pharmaceuticals, Inc., 399 Thornall Street, First Floor, Edison, New Jersey 08837 or by telephone at (732) 902-4000. If your stock is held through a brokerage firm or bank and you prefer to receive separate copies of a Notice and, if applicable, other proxy materials either now or in the future, please contact your brokerage firm or bank.
EACH STOCKHOLDER IS URGED TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY.NJ 08837.
By Order of the Board of Directors | |
/s/ GARY S. JACOB, PH.D. | |
Gary S. Jacob, Ph.D. | |
Chairman of the Board of Directors |
Edison, New JerseyJune 12, 2020
October 27, 2017
APPENDIX A
Table of ContentsHEPION PHARMACEUTICALS, INC.
Appendix A
CONTRAVIR PHARMACEUTICALS, INC.
AMENDMENT TO 2013 EQUITY INCENTIVE STOCK OPTION PLAN
4. Stock Reserved for the Plan.
Subject to adjustment as provided in Section 8 hereof, a total of 10,700,0002,500,000 shares of the Company’s common stock, par value $0.0001 per share (the “(“Stock”), shall be subject to the Plan. The shares of Stock subject to the Plan shall consist of unissued shares, treasury shares or previously issued shares held by any Subsidiary of the Company, and such number of shares of Stock shall be and is hereby reserved for such purpose. Any of such shares of Stock that may remain unissued and that are not subject to outstanding Options at the termination of the Plan shall cease to be reserved for the purposes of the Plan, but until termination of the Plan the Company shall at all times reserve a sufficient number of shares of Stock to meet the requirements of the Plan. Should any Option or award of Restricted Stock expire or be canceled prior to its exercise or vesting in full or should the number of shares of Stock to be delivered upon the exercise or vesting in full of an Option or award of Restricted Stock be reduced for any reason, the shares of Stock theretofore subject to such Option or Restricted Stock may be subject to future Options or Restricted Stock under the Plan, except where such reissuance is inconsistent with the provisions of Section 162(m) of the Code where qualification as performance-based compensation under Section 162(m) of the Code is intended.
PROXY CARD
CONTRAVIR PHARMACEUTICALS, INC. PROXY FOR ANNUAL MEETING TO BE HELD ON DECEMBER 13, 2017 JULY 30, 2020
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints, James SapirsteinRobert Foster, Ph.D. and John Cavan, and each of them, as proxies, each with full power of substuon,substitution, to represent and to vote all the shares of common stock of ContraVir Pharmaceucals,Hepion Pharmaceuticals, Inc. (the “Company”“Company”), which the undersigned would be entledentitled to vote, at the Company’s Annual MeengMeeting of Stockholders to be held on December 13, 2017July 30, 2020 and at any adjournments thereof, subject to the direconsdirections indicated on this Proxy Card.
In their discreon,discretion, the proxy is authorized to vote upon any other maermatter that may properly come before the meengmeeting or any adjournments or postponements thereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE SPECIFICATIONS MADE, BUT IF NO CHOICES ARE INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL NOMINEES AND FOR THE PROPOSALS LISTED BELOW. ON THE REVERSE SIDE.
This proxy is governed by the laws of the State of Delaware.
IMPORTANT—This Proxy must be signed and dated below. on the reverse side.
Important NoceNotice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to Be Held on December 13, 2017July 30, 2020 at 9:00 a.m.am local metime at the Company’s okcesoffices located at 399 Thornall Street, First Floor, Edison, New JerseyNJ 08837. The proxy statement and 2017 annual report to stockholdersthe 2019 Annual Report on Form 10K10-K are available at www.pstvote.com/contravir2017. hepion2020.
THIS IS YOUR PROXY
YOUR VOTE IS IMPORTANT!
Dear Stockholder:
We cordially invite you to aendattend the Annual Meeting of Stockholders of ContraVir Pharmaceucals,Hepion Pharmaceuticals, Inc. to be held at ContraVir’s okcesthe Company’s offices located at 399 Thornall Street, First Floor, Edison, New Jersey,NJ 08837, on December 13, 2017,July 30, 2020, beginning at 9:00 a.m. local me. time.
Please read the proxy statement which describes the proposals and presents other important informaon,information, and complete, sign and return your proxy promptly in the enclosed envelope.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE FOLLOWING“FOR” PROPOSALS 1. Elecon of seven directors 01. Gary S. Jacob 05. Arnold Lippa 02. James Sapirstein 06. Thomas Adams 03. John P. Brancaccio 07. Tamar Howson 04. Timothy Block FOR ALL NOMINIEES WITHHOLD AUTHORITY FOR ALL NOMINEES FOR ALL EXCEPT INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and, in the list above, strike a line through the name of the nominee for whom you wish to withhold your vote. 2. To rafy BDO USA, LLP as the Company’s independent registered public accounting firm for the fiscal year ending June 30, 2018. FOR AGAINST ABSTAIN 3. To approve an amendment to the Company’s 2013 Equity Incenve Plan (the “Plan”) to increase the number of shares of common stock authorized to be issued pursuant to the Plan from 7,700,000 to 10,700,000. FOR AGAINST ABSTAIN Date: Signature of Stockholder Date: Signature of Stockholder 1-3
| 1. Election of Directors Nominees | FOR | WITHHOLD | ||
| 01- Gary S. Jacob, Ph.D. | ¨ | ¨ | ||
| 02- Robert Foster, Ph.D. | ¨ | ¨ | ||
| 03- John P. Brancaccio | ¨ | ¨ | ||
| 04- Thomas Adams, Ph.D. | ¨ | ¨ | ||
| 05- Timothy Block, Ph.D. | ¨ | ¨ | ||
| 06- Arnold Lippa, Ph.D. | ¨ | ¨ | ||
| 2. Proposal to ratify BDO USA, LLP as the Company’s independent registered public accountants for fiscal year ending December 31, 2020. | FOR ¨ | AGAINST ¨ | ABSTAIN ¨ | |
| 3. Proposal to approve an amendment to the Company’s 2013 Equity Incentive Plan to increase the number of shares issuable thereunder to 2,500,000 shares from 40,536 shares. | FOR ¨ | AGAINST ¨ | ABSTAIN ¨ |
Important: Please sign exactly as name appears on this proxy. When signing as aorney,attorney, executor, trustee, guardian, corporate okcer,officer, etc., please indicate full tletitle.
| Dated: | , 2020 | |
| Signature | ||
| Name (printed) | ||
| Title | ||
VOTING INSTRUCTIONS
You may vote your proxy in the following ways:
| 1. | VIA INTERNET: |
Login to www.pstvote.com/hepion2020
Enter your control number (12 digit number located below)
| 2. | VIA MAIL: |
Philadelphia Stock Transfer, Inc.
2320 Haverford Rd., Suite 230
Ardmore, PA 19003
CONTROL NUMBER:
You may vote by Internet 24 hours a day, 7 days a week. Internet voting is available through 11:59 p.m.,
prevailing time, on July 29, 2020.