We know of no other matters that will be presented for consideration at the Annual Meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the accompanying proxy to vote on those matters in accordance with their best judgment.
With respect to Proposal No. 1 (Election of Directors), you may either vote “For” all the nominees to our Board or you may “Withhold” your vote for any nominee you specify. For each of the other matters to be voted on, you may vote “For” or “Against” or abstain from voting.
If you are a stockholder of record, you may vote at the Annual Meeting, vote by proxy over the telephone, vote by proxy through the internet, or vote by proxy using the encloseda proxy card.card that you may request or that we may elect to deliver at a later time. Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure that your vote is counted. You may still attend the meeting and vote even if you have already voted by proxy.
Beneficial Owner: Shares Registered in the Name of Broker or Bank
If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should have received a voting instruction form accompanying the proxy materialsNotice containing voting instructions from that organization rather than from us. Simply follow the voting instructions in the Notice to ensure that your vote is counted. To vote in person at the Annual Meeting via live webcast, 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.
Internet proxy voting may be provided 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 votes do I have?
On each matter to be voted upon, you have one vote for each share of common stock you own as of June 12, 2020.March 22, 2021. Common stock is the only class of voting securities currently outstanding and entitled to vote.
What happens if I do not vote?
Stockholder of Record: Shares Registered in Your Name
If you are a stockholder of record and do not vote (1) by completing and returning your proxy card, (2) by telephone, (3) through the internet or (4) in person at the Annual Meeting via live webcast, your shares will not be voted.
Beneficial Owner: Shares Registered in the Name of Broker or Bank
If you are a beneficial owner and do not instruct your broker, bank, or other agent how to vote your shares, the question of whether your broker or nominee will still be able to vote your shares depends on whether the New York Stock Exchange (NYSE) deems the particular proposal to be a “routine” matter. Brokers and nominees can use their discretion to vote “uninstructed” shares with respect to matters that are considered to be “routine,” but not with respect to “non-routine” matters. Under the rules and interpretations of the New York Stock Exchange, “non-routine” matters are matters that may substantially affect the rights or privileges of shareholders, such as mergers, shareholder proposals, elections of directors (even if not contested), executive compensation (including any advisory shareholder votes on executive compensation and on the frequency of shareholder votes on executive compensation), and certain corporate governance proposals, even if management-supported. These rules apply to brokers holding our shares even though our common stock is traded on the NASDAQ Global Market. Accordingly, your broker or nominee may not vote your shares on Proposal Nos. 1 (Election of Directors), or 2 (Advisory Vote on Compensation of Our Named Executive Officers), but may vote your shares on Proposal No. 3 (Ratification of Selection of KPMG LLP as Our Independent Registered Public Accounting Firm) even in the absence of your instruction.
What if I return a proxy card or otherwise vote but do not make specific choices?
If you return a signed and dated proxy card or otherwise vote without marking voting selections, your shares will be voted, as applicable, “For” the election of the nominees for director, “For” the advisory approval of executive compensation, and “For” ratification of the selection, by the Audit Committee of our Board, of KPMG LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2020.2021. If any other matter is properly presented at the meeting, your proxyholder (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.
Who is paying for this proxy solicitation?
We will pay for the entire cost of soliciting proxies. In addition to these proxy materials, our directors and employees may also solicit proxies in person, by telephone or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
What does it mean if I receive more than one set of Proxy Materials?Notice?
If you receive more than one set of Proxy Materials,Notice, your shares may be registered in more than one name or in different accounts. For example, you may own some shares directly as a stockholder of record and other shares through a broker, or you may own shares through more than one broker. In these situations, you will receive multiple sets of proxy materials. You must complete, sign, date and returnPlease follow the voting instructions on each Notice to ensure that all of the proxy cards or follow the instructions for any alternative voting procedures on each of the proxy cards you receive in order to vote all of theyour shares you own. Each proxy card you receive will come with its own postage-paid return envelope; if you vote by mail, make sure you return each proxy card in the return envelope that accompanied that proxy card.are voted.
Can I change my vote after submitting my proxy?
Stockholder of Record: Shares Registered in Your Name
Yes. You can revoke your proxy at any time before the final vote at the Annual Meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following ways:
•You may submit another properly completed proxy card with a later date;
•You may grant a subsequent proxy by telephone or through the internet;
•You may send a timely written notice that you are revoking your proxy to the Company’s Secretary at 2503 South Loop Drive, Suite 5100, Ames, IA 50010;4200 Marathon Boulevard #200, Austin, TX 78756; or
•You may attend the Annual Meeting and vote in person via live webcast (simply attending the meeting will not, by itself, revoke your proxy).
Your most current proxy card or telephone or internet proxy is the one that is counted.
Beneficial Owner: Shares Registered in the Name of Broker or Bank
If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.
When are stockholder proposals due for next year’s annual meeting?
To be considered for inclusion in next year’s proxy materials, your proposal must be submitted in writing and received by February 23,December 6, 2021 to Corporate Secretary, Lumos Pharma, Inc., 2503 South Loop Drive, Suite 5100, Ames, IA 500104200 Marathon Boulevard #200, Austin, TX 78756.If you wish to submit a director nomination or a proposal at next year’s annual meeting that is not to be included in next year’s proxy materials, you must do so by no later than the close of business on April 29, 2021,February 18, 2022, nor earlier than the close of business on March 30, 2021,January 19, 2022, and you must comply with the requirements of Section 5(b) in the our Bylaws, including submitting written notice to our Corporate Secretary as set forth above. However, if the date of next year’s annual meeting is more than 30 days before or more than 30 days after July 28, 2021,May 19, 2022, then we must receive your notice no earlier than the close of business on the one hundred twentieth (120th) day prior to such meeting and no later than the close of business on the later of the ninetieth (90th) day prior to such meeting or the tenth (10th) day following the day on which public announcement of the date of such meeting is first made. You are also advised to review our bylaws, which contain additional requirements regarding advance notice of stockholder proposals and director nominations.
What happens if I do not provide instructions on how to vote or if other matters are presented for determination at the Annual Meeting?
If you are a stockholder of record and return your proxy card without instructions, the persons named as proxy holders on the proxy card will vote in accordance with the recommendations of the Board of Directors.
If you are a beneficial owner as noted above you generally cannot vote your shares directly and must instead instruct your broker, trustee, bank or nominee how to vote your shares using the voting instructions form provided by that intermediary. If you do not provide voting instructions, whether your shares can be voted by your broker, bank or nominee depends on the type of item being considered.
•Non-Discretionary Items. If you do not provide voting instructions for any of the non-discretionary items at the Annual Meeting, your broker, bank or nominee cannot vote your shares, resulting in a “broker non-vote.” All items of business other than Proposal No. 3 (Ratification of Selection of KPMG LLP as Our Independent Registered Public Accounting Firm) are non-discretionary items. Shares constituting broker non-votes will be counted as present for the purpose of
determining a quorum at the Annual Meeting, but generally are not counted or deemed to be present in person or by proxy for the purpose of voting on any of the non-discretionary items.
•Discretionary Items. Even if you do not provide voting instructions, your broker, bank or nominee may vote in its discretion on Proposal No. 3 (Ratification of Selection of KPMG LLP as Our Independent Registered Public Accounting Firm) because it is a discretionary item.
What items are being voted upon, how does the Board recommend that you vote, and what are the standards for determining whether an item has been approved?
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Proposal Number | Proposal Description | Board Recommendation | Vote Required for Approval | Effect of Abstentions | Effect of Broker Non-Vote |
1 | Election of Directors | FOR each director nominee | Nominees receiving the most “For” votes | No effect | None |
2 | Advisory Vote on Compensation of Our Named Executive Officers | FOR | “For” votes from a majority of the votes cast | Against | None |
3 | Ratification of Selection of KPMG LLP as Our Independent Registered Public Accounting Firm | FOR | “For” votes from a majority of the votes cast | Against | Not applicable |
What is the quorum requirement?
A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if stockholders holding a majority of the outstanding shares entitled to vote are present in person via live webcast or represented by proxy. On the Record Date, there were 8,292,8038,332,193 shares outstanding and entitled to vote.Thus, the holders of 4,146,4024,166,097 shares must be present at the meeting or represented by proxy at the meeting to have a quorum.
Your shares will be counted toward the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person via live webcast at the meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, the holders of a majority of shares present at the meeting in person or represented by proxy may adjourn the meeting to another date.
How can I find out the results of the voting at the annual meeting?
Preliminary voting results will be announced at the Annual Meeting. In addition, final voting results will be published in a current report on Form 8-K that we expect to file 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 within four business days after the 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.
Note Regarding Our Recent Merger
On March 18, 2020, the Company, formerly known as NewLink Genetics Corporation, merged Cyclone Merger Sub, Inc., its wholly-owned subsidiary, with what was then known as Lumos Pharma, Inc. and has since been renamed “Lumos Pharma Sub, Inc.” (“Private Lumos”), and changed our name from “NewLink Genetics Corporation” to “Lumos Pharma, Inc.” (the “Merger”). Unless otherwise indicated, references to the “Company,” “Lumos,” “we,” “us” or “our” refer to Lumos Pharma, Inc., formerly known as NewLink Genetics Corporation. References to “NewLink” refer to NewLink Genetics Corporation prior to the Merger.
Also on March 18, 2020, and prior to the effective time of the Merger (the “Effective Time”), the Company effected a 1-for-9 reverse stock split of its common stock (the “Reverse Stock Split”). Unless otherwise noted herein, all references to share amounts give effect to the Reverse Stock Split. Following the completion of the Merger, the business being conducted by the Company became primarily the business conducted by Private Lumos, which is a biopharmaceutical company focused on the identification, acquisition, in-license, development, and commercialization of novel products for the treatment of rare diseases. Our current pipeline is focused on the development of an orally administered small molecule, the growth hormone secretagogue ibutamoren, for rare endocrine disorders.
Immediately following the Reverse Stock Split and the completion of the Merger, there were 8,292,803 shares of the Company’s common stock outstanding. Under the terms of the Merger, Private Lumos stockholders received an aggregate of 4,146,398 shares of our common stock, at an exchange rate of (i) 0.1308319305 shares of common stock in exchange for each share of Private Lumos common stock outstanding immediately prior to the Merger, (ii) 0.0873621142 shares of our common stock in exchange for each share of Private Lumos Series A Preferred Stock outstanding immediately prior to the Merger, and (iii) 0.1996348626 shares of our common stock in exchange for each share of Private Lumos Series B Preferred Stock outstanding immediately prior to the Merger. Immediately following the Merger, the former Private Lumos stockholders beneficially owned approximately 50% of the shares of the Company and the former NewLink stockholders beneficially owned approximately 50% of the shares of the Company. For accounting purposes, Private Lumos is considered to have acquired NewLink in the Merger. Accordingly, for accounting purposes the reported historical operating results of the combined company prior to the Merger will be those of Private Lumos and not of NewLink after retroactively giving effect to the common stock exchange ratio, reverse stock split and change in par value for all periods presented; and for periods prior to the transaction, shareholders’ authorized capital of the combined company is presented based on the historical authorized capital of NewLink. Compensation information included herein for periods prior to the Merger is based on information from the accounting records of NewLink, except where noted with respect to information that reflects compensation paid by Private Lumos prior to the Merger.
As part of the Merger, we also assumed 26,248 stock options issued and outstanding under the Lumos 2012 Equity Incentive Plan (as amended, the “Lumos 2012 EIP”), with a weighted-average exercise price of $1.39 per share and 163,864 stock options issued and outstanding under the Lumos 2016 Stock Plan (the “Lumos 2016 Plan,” and together with the Lumos 2012 EIP, the “Lumos Plans”), with a weighted-average exercise price of $3.66 per share. From and after the Effective Time, such options may be exercised for shares of our common stock.
PROPOSAL 1
ELECTION OF DIRECTORS
Our Board is divided into three classes. Each class consists, as nearly as possible, of one-third of the total number of directors, and each class has a three-year term. Vacancies on our Board may be filled only by persons elected by a majority of the remaining directors. A director elected by our Board to fill a vacancy in a class, including vacancies created by an increase in the number of directors, shall serve for the remainder of the full term of that class and until the director’s successor is duly elected and qualified.
Our Board presently has seven members. There are two directors in the class whose term of office expires in 2020,2021, each of whom has been nominated for re-election. Richard J. Hawkins currently serves on our Board and was previously appointed in March 2020 in connection with the Merger. ThomasChad A. RaffinJohnson currently serves on our Board and was previously elected by the stockholders in 2017.2018. Lota S. Zoth currently serves on our Board and was previously elected by the stockholders in 2018. If elected at the Annual Meeting, each nominee would serve until the 20232024 Annual Meeting of Stockholders and until his or her successor has been duly elected and qualified, or, if sooner, until the director’s death, resignation or removal.
Directors are elected by a plurality of the votes of the holders of shares present in person at the Annual Meeting or represented by proxy and entitled to vote on the election of directors. If a choice is specified on the proxy card by a stockholder, their shares will be voted as specified. If a choice is not specified on the proxy card, and authority to do so is not withheld, the shares will be voted “FOR” the election of nominees named below. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the nominees named below. If any nominee becomes unavailable for election as a result of an unexpected occurrence, shares that would have been voted for that nominee will instead be voted for the election of a substitute nominee proposed by us. Each person nominated for election has agreed to serve if elected. Our management has no reason to believe that any nominee will be unable to serve.
Class IIIII Director Nominees
Below is a brief biography of each nominee and each director whose term will continue after the Annual Meeting, including the ages of each nominee and director as of June 12, 2020.April 1, 2021. Each individual listed below is nominated for election for a three-year term expiring at the 20232024 Annual Meeting.
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Name of Nominee | Age | Position Held with Company | Committees | Director Since |
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Chad A. Johnson | 42 | Director | Nominating and Corporate Governance Committee, Audit Committee | 2018 |
Lota S. Zoth | 61 | Director | Audit Committee, Compensation Committee | 2012 |
Chad A. Johnson, J.D.,age 42, has served as a member of the Board since March 2018. Mr. Johnson is currently General Counsel at Stine Seed Company. From May 2015 to April 2017, Mr. Johnson was the Assistant Corporate Secretary and Senior Corporate Counsel for Renewable Energy Group, Inc., a supplier of advanced biofuels in North America. In addition to his role as a corporate officer, Mr. Johnson was a senior in-house attorney for the company. From 2007 to April 2015, he spent eight years in roles of increasing responsibility at DuPont Pioneer, a subsidiary of DuPont and a global leading seed and agriculture biotechnology company. Mr. Johnson is admitted to practice law in the State of Iowa and before the United States Patent and Trademark Office. Mr. Johnson graduated from Iowa State University with a Master of Science in Crop Production and Physiology and received his J.D. from Drake University Law School.
Our Board believes that Mr. Johnson’s career at major biotechnology companies, service as a public company officer and experience overseeing various legal matters provide him with the background necessary for him to serve as a member of our Board, our Compensation Committee and our Nominating and Corporate Governance Committee.
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Name of Nominee | Age | Position Held with Company | Committees | Director Since |
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Richard J. Hawkins(1) | 71 | President, Chief Executive Officer and Chairman of the Board | None | 2011 |
Thomas A. Raffin, M.D. | 73 | Director, Lead Independent Director | Compensation Committee; Nominating and Corporate Governance Committee | 1999 |
(1) Appointed to our board of directors in March 2020 in connection with the Merger. Service on our board of directors prior to such appointment noted in the table above and in the narrative below includes service with Private Lumos. |
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Lota S. Zoth, CPA, age 61, has served as a member of the Board and Chair of the Audit Committee since November 2012. Ms. Zoth currently serves on the Board of Directors of Spark Therapeutics, Inc. (Nasdaq: ONCE), 89Bio, Inc., Zymeworks, Inc. and Inovio Pharmaceuticals, Inc. She also previously served on the Board of Directors for nonprofit Aeras from 2011 to 2018, Circassia Pharmaceuticals, PLC from 2015 to 2019, Hyperion Therapeutics, Inc. from 2008 to May 2015, Ikaria, Inc. from 2008 to 2014 and Orexigen Therapeutics, Inc. from 2012 to 2019. Prior to her board service, Ms. Zoth served as Chief Financial Officer of MedImmune, Inc. from 2004 through 2007, and as its Corporate Controller from 2002 to 2004. Prior to that, Ms. Zoth was a financial executive at several companies, including Sodexho Marriott Services, Inc., PSINet Inc., Marriott International, Inc. and PepsiCo, Inc. Ms. Zoth began her career as an auditor at Ernst & Young, LLP. Ms. Zoth received a BBA in accounting, summa cum laude, from Texas Tech University.
Our Board believes that Ms. Zoth’s experience with our Company, as a director since 2012 and as the current chair of our Audit Committee of our Board and a member of our Compensation Committee of our Board, brings continuity to our Board. In addition, our Nominating and Corporate Governance Committee believes that Ms. Zoth’s extensive financial background and experience provides important experience in corporate finance, corporate management, and investor relations and provides the background necessary for her to serve as a member of our Audit Committee and our Compensation Committee.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH DIRECTOR NOMINEE.
Class I Directors Continuing in Office Until the 2022 Annual Meeting of Stockholders
An van Es-Johansson, M.D. age 61, has served as a member of our Board since February 2021. Dr. van Es-Johansson currently serves as a senior advisor for AlzeCure Pharma, a Swedish pharmaceutical company with a primary focus on Alzheimer's disease. Dr. van Es-Johansson was previously the Chief Medical Officer and Head of Development for AlzeCare Pharma from 2018 to 2021. From 2005 to 2018, Dr. van Es-Johansson served in a range of executive roles of increasing responsibility at Sobi, an international rare disease company headquartered in Stockholm, Sweden. Dr. van Es-Johansson also served as a member of the Scientific Advisory board for Uppsala Bio from 2004 to 2016 and currently serves on the Board of Directors at Medivir AB, Savara Inc., PLUS Therapeutics and Agendia BV. Dr. van Es-Johansson received an M.D. from Erasmus University, Rotterdam, The Netherlands.
Our Board believes that Dr. van Es-Johansson's vast experience in the pharmaceutical industry with a focus on growth hormone disorders and other rare diseases provides immense value to our Board.
Kevin Lalande, age 48, has served as a member of the Private Lumos Board since 2014. Mr. Lalande is also a Co-Founder and Managing Director of Santé Ventures, a healthcare and life science venture capital firm founded in 2006 which currently manages $380 million across three funds with 30 portfolio company investments. Mr. Lalande is also the Founder and Chief Investment Officer of Santé Capital, a systematic machine learning hedge fund that began trading capital in 2015 after three years of research and development. Mr. Lalande conceived the investment strategy, designed the original MindRank algorithms, and assembled a seasoned team to help drive this related line of business. Before Santé Ventures and Santé Capital, Mr. Lalande spent seven years as an investment professional with Austin Ventures, a prominent venture capital firm with $4.0 billion under management. Prior to Austin Ventures, he was a management consultant with McKinsey & Company. Before McKinsey, he founded, built and sold three internet-based companies in the 1990s. Mr. Lalande received a B.S. in electrical and computer engineering with honors in 1996 from Brigham Young University and an MBA with highest distinction from the Harvard Business School in 2001, where he was both a Baker Scholar and a Siebel Scholar.
Our Board believes that Mr. Lalande’s extensive experience as an investor and board member in pharmaceutical and life sciences companies and his knowledge gained from service on such boards qualify him to be a member of our Board.
Joseph S. McCracken, age 67, has served as a member of our Board since March 2020. Dr. McCracken currently advises biopharmaceutical companies on the design and implementation of corporate strategy and business development initiatives. Dr. McCracken also serves on the board of Kindred Biosciences, Inc. (NASDAQ: KIN), Savara Inc. (NASDAQ: SVRA) and Modalis Therapeutics, Inc. (TSE: 4883.T), as well as the boards of privately held Regimmune Inc., and Neuropore Therapies, Inc. From July 2011 to September 2013, Dr. McCracken was Vice President and Global Head of Business Development & Licensing for Roche Pharma, a research-focused healthcare company, where he was responsible for Roche Pharma’s global in-licensing and out-licensing activities. From October 2009 until July 2011, he was General Manager, Roche Pharma Japan & Asia Regional Head, Roche Partnering. Prior to joining Roche Pharma, Dr. McCracken held the position of Vice President, Business Development at Genentech for more than 9 years, and previously held similar positions at Aventis Pharma and Rhone-Poulenc Rorer. Dr. McCracken holds a B.S. in microbiology, a Master of Science in pharmacology and a Doctorate of Veterinary Medicine from The Ohio State University.
Our Board believes that Dr. McCracken’s extensive experience in the biotechnology and pharmaceutical industries qualifies him to serve on our Board.
Class II Directors Continuing in Office Until the 2023 Annual Meeting of Stockholders
Richard J. Hawkins, age 71,72, has served as President and Chief Executive Officer and as a member of the board of directors of Private Lumos (the “Private Lumos Board”) since January 2011. In addition, Mr. Hawkins currently serves on the board of directors of several life sciences companies, including Cytori Therapeutics, Inc. (Nasdaq: CYTX) and Savara Inc. (Nasdaq: SVRA), and previously served on the board of directors of SciClone Pharmaceuticals, Inc. until its acquisition in October 2017. From 2000 to 2010, Mr. Hawkins, founded and advised numerous pharmaceutical companies including Sensus, where he served as co-founder and Chairman until it was sold to Pfizer. From 1981 to 2000, Mr. Hawkins was founder, President and CEO of Pharmaco. The company later merged with PPD of Wilmington, NC to form PPD Pharmaco, one of the largest clinical contract research organizations in the world. Mr. Hawkins received his B.S. degree in biology from Ohio University.
Our Board believes that Mr. Hawkins’s experience in the pharmaceutical and life sciences industries as well as his broad management experience qualify him to serve on our Board.
Thomas A. Raffin, M.D., age 73,74, has served as a member of the Board since 1999 and has been the Board’s Lead Independent Director since October 2010. Dr. Raffin has spent 30 years on the faculty at Stanford University School of Medicine, where he is the Colleen and Robert Haas Professor Emeritus of Medicine and Biomedical Ethics. Over the past two decades, Dr. Raffin has worked extensively in the healthcare and medical device business sectors and was an advisor to Cell Therapeutics Inc. from 1993 to 1997, Broncus Technologies from 1997 to 2004, iMedica from 1998 to 2002, and Inhale Technologies from 1998 to 2001. He co-founded Rigel Pharmaceuticals, a publicly traded company (Nasdaq: RIGL), in 1996. In 2001, he co-founded Telegraph Hill Partners, a San Francisco life sciences private equity firm as a General Partner. Dr. Raffin has been a director of the following Telegraph Hill Partners private portfolio companies: AngioScore, Inc., Confirma, Inc., Freedom Innovations, LDR Holding Corporation, PneumRx, Inc., Akoya BioSciences, Inc. and InvisALERT Solutions. Dr. Raffin received a B.A. from Stanford University and an M.D. from Stanford University School of Medicine and did his medical residency at the Peter Bent Brigham Hospital (now Brigham and Women’s Hospital) in Boston, MA.
Our Board believes that Dr. Raffin’s extensive medical and business background and experience provides important experience in business operations and medical technology and provides the background necessary for him to serve as a member of our Board and our Nominating and Corporate Governance Committee, and as the Chair of our Compensation Committee.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF EACH DIRECTOR NOMINEE.
Class III Directors Continuing in Office Until the 2021 Annual Meeting of Stockholders
Chad A. Johnson, J.D.,age 41, has served as a member of the Board since March 2018. Mr. Johnson is currently General Counsel at Stine Seed Company. From May 2015 to April 2017, Mr. Johnson was the Assistant Corporate Secretary and Senior Corporate Counsel for Renewable Energy Group, Inc., a supplier of advanced biofuels in North America. In addition to his role as a corporate officer, Mr. Johnson was a senior in-house attorney for the company. From 2007 to April 2015, he spent eight years in roles of increasing responsibility at DuPont Pioneer, a subsidiary of DuPont and a global leading seed and agriculture biotechnology company. Mr. Johnson is admitted to practice law in the State of Iowa and before the United States Patent and Trademark Office. Mr. Johnson graduated from Iowa State University with a Master of Science in Crop Production and Physiology and received his J.D. from Drake University Law School.
Our Board believes that Mr. Johnson’s career at major biotechnology companies, service as a public company officer and experience overseeing various legal matters provide him with the background necessary for him to serve as a member of our Board, our Compensation Committee and our Nominating and Corporate Governance Committee.
Lota S. Zoth, CPA, age 60, has served as a member of the Board and Chair of the Audit Committee since November 2012. Ms. Zoth currently serves on the Board of Directors of Spark Therapeutics, Inc. (Nasdaq: ONCE), Zymeworks, Inc. and Inovio Pharmaceuticals, Inc. She also previously served on the Board of Directors for nonprofit Aeras from 2011 to 2018, Circassia Pharmaceuticals, PLC from 2015 to 2019, Hyperion Therapeutics, Inc. from 2008 to May 2015, Ikaria, Inc. from 2008 to 2014 and Orexigen Therapeutics, Inc. from 2012 to 2019. Prior to her board service, Ms. Zoth served as Chief Financial Officer of MedImmune, Inc. from 2004 through 2007, and as its Corporate Controller from 2002 to 2004. Prior to that, Ms. Zoth was a financial executive at several companies, including Sodexho Marriott Services, Inc., PSINet Inc., Marriott International, Inc. and PepsiCo, Inc. Ms. Zoth began her career as an auditor at Ernst & Young, LLP. Ms. Zoth received a BBA in accounting, summa cum laude, from Texas Tech University.
Our Board believes that Ms. Zoth’s experience with our Company, as a director since 2012 and as the current chair of our Audit Committee of our Board and a member of our Compensation Committee of our Board, brings continuity to our Board. In addition, our Nominating and Corporate Governance Committee believes that Ms. Zoth’s extensive financial background and experience provides important experience in corporate finance, corporate management, and investor relations and provides the background necessary for her to serve as a member of our Audit Committee and our Compensation Committee.
Class I Directors Continuing in Office Until the 2022 Annual Meeting of Stockholders
Emmett T. Cunningham, Jr., M.D., Ph.D.,age 58, has served as a board observer of the Private Lumos Board since 2016 and as a member of the Private Lumos Board since 2019. In addition, Dr. Cunningham is a Senior Managing Director in the Blackstone Life Sciences group, having joined Blackstone as part of its acquisition of Clarus in December of 2018. Dr. Cunningham joined Clarus in 2006 as a principal. Dr. Cunningham has led investments in the medical technology, and biotechnology space including partnerships with pharmaceutical companies. Prior to joining Clarus, Dr. Cunningham was the Senior Vice President, Medical Strategy at Eyetech Pharmaceuticals, Inc. where he led the team that developed Macugen, a first-in-class product for the treatment of age-related macular degeneration. Prior to Eyetech, Dr. Cunningham was at Pfizer, Inc. (NYSE: PFE) (“Pfizer”). Dr. Cunningham is an internationally recognized specialist in infectious and inflammatory eye disease with over 350 publications. In addition, Dr. Cunningham is a member of the boards of directors of Annexon Biosciences, Galera Therapeutics, Graybug Vision, and SFJ Pharmaceuticals Group, and serves on the Scientific Advisory Board of Aerie Pharmaceuticals (Nasdaq: AERI). Dr. Cunningham is the founder and chairman of the Ophthalmology Innovation Summit symposium held in conjunction with the annual meetings of the American Academy of Ophthalmology and the American Society of Cataract and Refractive Surgery. Dr. Cunningham received an M.D. and MPH in epidemiology and statistics from Johns Hopkins University and a Ph.D. in neuroscience from the University of California at San Diego for work done at The Salk Institute.
Our Board believes that Dr. Cunningham’s experience in the pharmaceutical and life sciences industries, as well as his training as a physician, qualify him to serve on our Board.
Kevin Lalande, age 47, has served as a member of the Private Lumos Board since 2014. Mr. Lalande is also a Co-Founder and Managing Director of Santé Ventures, a healthcare and life science venture capital firm founded in 2006 which currently manages $380 million across three funds with 30 portfolio company investments. Mr. Lalande is also the Founder and Chief Investment Officer of Santé Capital, a systematic machine learning hedge fund that began trading capital in 2015 after three years of research and development. Mr. Lalande conceived the investment strategy, designed the original MindRank algorithms, and assembled a seasoned team to help drive this related line of business. Before Santé Ventures and Santé Capital, Mr. Lalande spent seven years as an investment professional with Austin Ventures, a prominent venture capital firm with $4.0 billion under management. Prior to Austin Ventures, he was a management consultant with McKinsey & Company. Before McKinsey, he founded, built and sold three internet-based companies in the 1990s. Mr. Lalande received a B.S. in electrical and computer engineering with honors in 1996 from Brigham Young University and an MBA with highest distinction from the Harvard Business School in 2001, where he was both a Baker Scholar and a Siebel Scholar.
Our Board believes that Mr. Lalande’s extensive experience as an investor and board member in pharmaceutical and life sciences companies and his knowledge gained from service on such boards qualify him to be a member of our Board.
Joseph S. McCracken, age 66, has served as a member of our Board since March 2020. Dr. McCracken currently advises biopharmaceutical companies on the design and implementation of corporate strategy and business development initiatives. Dr. McCracken also serves on the board of Kindred Biosciences, Inc. (NASDAQ: KIN) and Savara Inc. (NASDAQ: SVRA), as well as the boards of privately held Alkahest, Inc., Modalis Therapeutics, Inc., Regimmune Inc., and Neuropore Therapies, Inc. From July 2011 to September 2013, Dr. McCracken was Vice President and Global Head of Business Development & Licensing for Roche Pharma, a research-focused healthcare company, where he was responsible for Roche Pharma’s global in-licensing and out-licensing activities. From October 2009 until July 2011, he was General Manager, Roche Pharma Japan & Asia Regional Head, Roche Partnering. Prior to joining Roche Pharma, Dr. McCracken held the position of Vice President, Business Development at Genentech for more than 9 years, and previously held similar positions at Aventis Pharma and Rhone-Poulenc Rorer. Dr. McCracken holds a B.S. in microbiology, a Master of Science in pharmacology and a Doctorate of Veterinary Medicine from The Ohio State University.
Our Board believes that Dr. McCracken’s extensive experience in the biotechnology and pharmaceutical industries qualifies him to serve on our Board.
INFORMATION REGARDING OUR BOARD OF DIRECTORS AND CORPORATE GOVERNANCE
Independence of our Board of Directors
In determining independence, our Board considers the definition of “independent” set forth in the listing standards of the NASDAQ Stock Market, or NASDAQ, as well as other factors that contribute to effective oversight and decision-making by our Board. Our independence standards are set forth in our Corporate Governance Guidelines on our website at www.lumos-pharma.com in the “Investors & Media - Corporate Governance” section. As required under the NASDAQ listing standards, a majority of the members of a listed company’s board of directors must qualify as “independent,” as affirmatively determined by our Board. Our Board consults with our counsel to ensure that our Board’s determinations are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent listing standards of NASDAQ, as in effect from time to time.
Consistent with these considerations, after review of all relevant identified transactions or relationships between each director, or any of his or her family members and our Company, its senior management and its independent auditors, our Board has affirmatively determined that the following directors are independent directors within the meaning of the applicable NASDAQ listing standards: Dr. Cunningham,van Es-Johansson, Mr. Johnson, Mr. Lalande, Dr. McCracken, Dr. Raffin and Ms. Zoth. In making its independence assessments, our Board found that none of these directors or nominees for director had a material or other disqualifying relationship with our Company.
Mr. Hawkins is not an independent director by virtue of his employment with our Company.
There are no family relationships among any of our directors, director nominees and executive officers.
Board Leadership
Our Board is currently chaired by the President and Chief Executive Officer of our Company, Mr. Hawkins. Our Board has appointed Dr. Raffin as Lead Independent Director.
Our Company believes that combining the positions of Chief Executive Officer and Chairman of our Board, which we refer to as the Chairman, helps to ensure that our Board and management act with a common purpose. We believe combining the positions of Chief Executive Officer and Chairman is appropriate for a biopharmaceutical company focused on drug development in that it enhances our Board’s focus on our progress on scientific research, clinical trials and commercialization as inputs to developing and implementing strategy. Our Company believes that combining the positions of Chief Executive Officer and Chairman provides a single, clear chain of command to execute our strategic initiatives and business plans related to drug development and commercialization. In addition, our Company believes that a combined Chief Executive Officer and Chairman is well-positioned to act as a bridge between management and our Board, facilitating the regular flow of information. Our Company also believes that it is advantageous to have a Chairman with an extensive history with and knowledge of our Company (as is the case with our Chief Executive Officer) as compared to a relatively less informed independent Chairman at this stage in our development.
Our Board appointed Dr. Raffin as the Lead Independent Director to help reinforce the independence of our Board as a whole. The position of Lead Independent Director has been structured to serve as an effective balance to a combined Chief Executive Officer and Chairman. The Lead Independent Director is empowered, among other duties and responsibilities, to develop, together with the Chief Executive Officer, the agenda for meetings of our Board, to develop, together with committee chairs, the agendas for meetings of committees, to preside over Board meetings in the absence of the officers and to oversee our Board’s annual evaluation of the Chief Executive Officer’s performance.
Role of Our Board of Directors on Risk Oversight
One of our Board’s key functions is informed oversight of our risk management process. Our Board does not have a standing risk management committee, but rather administers this oversight function directly through our Board as a whole, as well as through various Board standing committees that address risks inherent in their respective areas of oversight. In particular, while our Board is responsible for monitoring and assessing strategic risk exposure, our Audit Committee has the responsibility to consider and discuss the major financial risk exposures and the steps management has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. Our Audit Committee also monitors compliance with legal and regulatory requirements with respect to SEC regulations, NASDAQ listing standards, pharmaceutical industry regulations and corporate risk management, in addition to oversight of the performance of our accounting and financial reporting processes. Our Nominating and Corporate Governance Committee monitors the effectiveness of the corporate governance guidelines, including whether they are successful in preventing illegal or improper liability-creating conduct. Our Compensation Committee assesses and monitors whether any compensation policies and programs have the potential to encourage excessive risk-taking. The entire Board and its committees address risk management issues from time-to-time and meet at least annually with the employees responsible for risk management in the committees’ respective areas of oversight. Both our Board as a whole and the various standing committees receive periodic reports from the employees responsible for risk management, as well as incidental reports as matters may arise. It is the responsibility of the committee chairs to report findings regarding material risk exposures to our Board as quickly as possible.
Meeting Attendance
Our Board met twentynine times during the fiscal year ended December 31, 2019.2020. Our Audit Committee met five times during the 20192020 fiscal year, our Compensation Committee met six times during the 20192020 fiscal year, and our Nominating and Corporate Governance Committee met fivethree times during the 20192020 fiscal year. None of our incumbent directors attended fewer than 75% of the meetings of the Board and committee meetings of which he or she was a member.
It is our policy to encourage directors and nominees for director to attend the Annual Meeting. Four of our directors attended the 2019virtual 2020 Annual Meeting of Stockholders.
Committees of our Board of Directors
The following table sets forth the current membership of each of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee:
|
| | | | | | | | | | |
Name | Audit | Compensation | Nominating and Corporate Governance |
Emmett T. Cunningham, Jr.,An van Es-Johansson, M.D. | | | X |
Chad A. Johnson | X | | Chair |
Kevin Lalande | | X | |
Joseph McCracken | X | | |
Thomas A. Raffin, M.D. | | Chair | X |
Lota S. Zoth | Chair | X | |
Each of the committees has authority to engage legal counsel or other experts or consultants, as it deems appropriate to carry out its responsibilities. Our Board has determined that, except as specifically described below, each current member of each committee meets the applicable NASDAQ rules and regulations regarding “independence” and that each member is free of any relationship that would impair his or her individual exercise of independent judgment with regard to the Company.
Below is a description of each committee of our Board.
Audit Committee
Our Audit Committee was established by our Board in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, to oversee our corporate accounting and financial reporting processes and audits of its financial statements. For this purpose, our Audit Committee performs several functions. Our Audit Committee evaluates the performance of and assesses the qualifications of the independent auditors; determines and approves the engagement of the independent auditors; determines whether to retain or terminate the existing independent auditors or to appoint and engage new independent auditors; reviews and approves the retention of the independent auditors to perform any proposed permissible non-audit services; monitors the rotation of partners of the independent auditors on our audit engagement team as required by law; confers with management and the independent auditors regarding the effectiveness of internal controls over financial reporting; establishes procedures, as required under applicable law, for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters, oversees corporate risk management of the company as a whole; and meets to review our annual audited financial statements and quarterly financial statements with management and the independent auditor, including a review of our disclosures in our Annual Report on Form 10-K under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Our Audit Committee is currently comprised of three directors: Ms. Zoth, Mr. Johnson and Dr. McCracken. Our Board has adopted a written Audit Committee charter that is available to stockholders on our website at www.lumos-pharma.com in the “Investors & Media - Corporate Governance” section.
Our Board reviews the NASDAQ listing standards definition of independence for Audit Committee members on an annual basis and has determined that each current member of our Audit Committee meets the independence requirement (as independence is currently defined in Rule 5605(c)(2)(A)(i) and (ii) of the NASDAQ listing standards).
Our Board has also determined that Ms. Zoth qualifies as an “audit committee financial expert,” as defined in applicable SEC rules. Our Board made a qualitative assessment of Ms. Zoth’s level of knowledge and experience based on a number of factors, including her formal education and her years of experience.
Compensation Committee
The Compensation Committee of our Board is currently comprised of three directors: Dr. Raffin, Mr. Lalande, and Ms. Zoth. All current members of our Compensation Committee are independent (as independence is currently defined in Rule 5605(d)(2) of the NASDAQ listing standards). Additionally, all current members of our Compensation Committee are “outside directors” for 162(m) purposes and non-employee directors under Rule 16b-3 of the Exchange Act. Our Board has adopted a written Compensation Committee charter that is available to stockholders on our website at www.lumos-pharma.com in the “Investors & Media - Corporate Governance” section.
The purpose of our Compensation Committee is to discharge the responsibilities of our Board to oversee our compensation policies, plans and programs and to review and determine the compensation to be paid to our directors, executive officers and other senior management. The scope of authority and specific responsibilities of our Compensation Committee include:
•determining the compensation and other terms of employment of our executive officers and reviewing and approving corporate performance goals and objectives relevant to such compensation;
•evaluating and recommending to our Board the compensation plans and programs advisable for the Company, and evaluating and recommending the modification or termination of existing plans and programs;
•reviewing and approving the terms of any employment agreements, severance arrangements, change in control protections and any other compensatory arrangements for our executive officers;
•selecting, retaining and terminating compensation consultants to assist in its evaluation of executive and director compensation, including the sole authority to approve the consultant’s reasonable fees and other retention terms; and
•reviewing and recommending to our Board the type and amount of compensation to be paid or awarded to members of our Board.
For fiscal year 2019,2020, our Compensation Committee retained Radford, an Aon company,Setren & Associates, Inc. ("Setren & Associates"), as its independent compensation consultant to advise on various aspects of executive compensation and our overall equity practices. RadfordSetren & Associates was retained by and reported directly to our Compensation Committee. RadfordSetren & Associates did not provide any other consulting services to our Company.
Annually, our Compensation Committee has considered the following six factors, as set forth by the SEC and NASDAQ, when engaging RadfordSetren & Associates and evaluating its independence: (i) the provision of other services to our Company by Radford;Setren & Associates; (ii) the
amount of fees from our Company paid to RadfordSetren & Associates as a percentage of the firm’sSetren & Associates' total revenue; (iii) Radford’sSetren & Associates' policies and procedures that are designed to prevent conflicts of interest; (iv) any business or personal relationship of Radford or the individual compensation advisors employed by the firmSetren & Associates with an executive officer of our Company; (v) any business or personal relationship of the individual compensation advisorsadvisor with any member of our Compensation Committee; and (vi) any stock of our Company owned by the individual compensation advisors employed by the firm.Setren & Associates. Based on its review, our Compensation Committee has determined that the work of RadfordSetren & Associates has not raised any conflict of interest that would adversely affect Radford’sSetren & Associates' independence.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee of our Board is responsible for overseeing our corporate governance functions on behalf of our Board, making recommendations to our Board regarding corporate governance issues, identifying, reviewing and evaluating candidates to serve as directors of the Company consistent with criteria approved by our Board, reviewing and evaluating incumbent directors, recommending to our Board for selection candidates for election to our Board and making other recommendations to our Board regarding affairs relating to the directors of the Company, including director compensation.
Our Nominating and Corporate Governance Committee is currently comprised of three directors: Mr. Johnson, Dr. Cunninghamvan Es-Johansson and Dr. Raffin. Prior to his resignation in February of 2021, Dr. Cunningham was a member of our Nominating and Corporate Governance Committee. All current members of our Nominating and Corporate Governance Committee are independent (as independence is currently defined in Rule 5605(a)(2) of the NASDAQ listing standards). Our Board has adopted a written Nominating and Corporate Governance Committee charter that is available to stockholders on our website at www.lumos-pharma.com in the “Investors & Media - Corporate Governance” section.
Our Nominating and Corporate Governance Committee believes that candidates for director should have certain minimum qualifications, including the ability to read and understand basic financial statements, being over 21 years of age and having the highest personal integrity and ethics. Our Nominating and Corporate Governance Committee also considers whether the candidate possesses the following factors among others: relevant expertise upon which to base advice and guidance to management, sufficient time to devote to the affairs of the Company, demonstrated excellence in his or her field, the ability to exercise sound business judgment and the commitment to rigorously represent the long-term interests of our stockholders. Candidates for director nominees are reviewed in the context of the current composition of our Board, the operating requirements of the Company and the long-term interests of stockholders. In conducting this assessment, our Nominating and Corporate Governance Committee typically considers diversity, age, skills and such other factors as it deems appropriate given the current needs of our Board and the Company to maintain a balance of knowledge, experience and capability. Our Nominating and Corporate Governance Committee does not have a policy regarding how it considers diversity in selecting candidates.
In the case of incumbent directors whose terms of office are set to expire, our Nominating and Corporate Governance Committee reviews these directors’ overall service to the Company during their terms, including the number of meetings attended, level of participation, quality of performance and any relationships and transactions that might impair the directors’ independence. Our Nominating and Corporate Governance Committee also takes into account the results of our Board’s self-evaluation, conducted annually on a group and individual basis. In the case of new director candidates, our Nominating and Corporate Governance Committee also determines whether the nominee is independent for NASDAQ purposes, which determination is based upon applicable NASDAQ listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary. Our Nominating and Corporate Governance Committee then uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. Our Nominating and Corporate Governance Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of our Board. Our Nominating and Corporate Governance Committee meets to discuss and consider the candidates’ qualifications and then selects a nominee for recommendation to our Board by majority vote.
In identifying potential candidates for Board membership, our Nominating and Corporate Governance Committee relies on suggestions and recommendations from our Board, stockholders, management and others. Our Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders. Our Nominating and Corporate Governance Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above based on whether or not the candidate was recommended by a stockholder.
Code of Business Conduct and Ethics
The Company has adopted its Code of Business Conduct and Ethics that applies to all officers, directors and employees. The Code of Business Conduct and Ethics is available on our website at www.lumos-pharma.com in the “Investors & Media - Corporate Governance” section. Any future amendments or waivers to our code of ethics will be promptly disclosed on its website and as required by applicable laws, rules and regulations of the SEC and NASDAQ.
Corporate Governance Guidelines
Our Board adopted Corporate Governance Guidelines to assure that our Board will have the necessary authority and practices in place to review and evaluate our business operations as needed and to make decisions that are independent of our management. The guidelines are also intended to align the interests of directors and management with those of our stockholders. The Corporate Governance Guidelines set forth the practices our Board intends to follow with respect to board composition and selection, board meetings and involvement of senior management, Chief Executive Officer performance evaluation and succession planning and board committees and compensation. The Corporate Governance Guidelines, as well as the charters for each committee of our Board, may be viewed at www.lumos-pharma.com in the “Investors & Media - Corporate Governance” section.
PROPOSAL 2
ADVISORY VOTE ON COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS
At the 2018 Annual Meeting of Stockholders, our stockholders indicated their preference that the Company solicit a non-binding advisory vote on the compensation of the named executive officers, commonly referred to as a “say-on-pay vote,” every year. Our Board has adopted a policy that is consistent with that preference.
This vote is being provided pursuant to section 14A of the Exchange Act. It is not intended to address any specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this proxy statement. The compensation of our named executive officers subject to the vote is disclosed in the compensation tables and the related narrative disclosure contained in this proxy statement. As discussed in those disclosures, the Company believes that its compensation policies and decisions are consistent with our strategic compensation and retention needs. Further, our compensation policies and decisions are designed to align our executive officers’ compensation with our business objectives and the interests of its stockholders, to incentivize and reward our executive officers for our success and to promote teamwork within our executive management team. Compensation of our named executive officers is designed to enable the Company to attract and retain talented and experienced executives to lead the Company successfully in a competitive environment.
Accordingly, our Board is asking the stockholders to indicate their support for the compensation of our named executive officers as described in this proxy statement by casting a non-binding advisory vote “FOR” the following resolution:
“RESOLVED, that the compensation paid to our named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the compensation tables and narrative discussion, is hereby APPROVED.”
Because the vote is advisory, it is not binding on our Board or our Company. Nevertheless, the views expressed by the stockholders, whether through this vote or otherwise, are important to management and our Board and, accordingly, our Board and our Compensation Committee intend to consider the results of this vote in making determinations in the future regarding executive compensation arrangements.
Advisory approval of this proposal requires the vote of the holders of a majority of the shares present in person at the Annual Meeting or represented by proxy and entitled to vote on the matter at the Annual Meeting. Abstentions will be counted toward the tabulation of votes on proposals presented to the stockholders and will have the same effect as negative votes. Broker non-votes are counted toward a quorum, but are not counted for any purpose in determining whether this matter has been approved.
Unless our Board decides to modify its policy regarding the frequency of soliciting advisory votes on the compensation of our named executive officers, the next scheduled say-on-pay vote will be at the 20212024 Annual Meeting of Stockholders.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 2.
PROPOSAL 3
RATIFICATION OF SELECTION OF KPMG LLP AS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit Committee has selected KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 20202021 and has further directed that management submit the selection of independent registered public accounting firm for ratification by the stockholders at the Annual Meeting. KPMG LLP has audited our financial statements since 1999. Prior to the Merger, KPMG LLP audited Private Lumos' financial statements since 2015. Representatives of KPMG LLP are expected to be available at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.
Neither our Bylaws nor other governing documents or law require stockholder ratification of the selection of KPMG LLP as our independent registered public accounting firm. However, our Audit Committee is submitting the selection of KPMG LLP to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, our Audit Committee will reconsider whether or not to retain that firm. Even if the selection is ratified, our Audit Committee in its discretion may direct the appointment of different independent auditors at any time during the year if they determine that such a change would be in the best interests of our Company and our stockholders.
The affirmative vote of the holders of a majority of the shares present at the Annual Meeting or represented by proxy and entitled to vote on the matter at the Annual Meeting will be required to ratify the selection of KPMG LLP. Abstentions will be counted toward the tabulation of votes on proposals presented to the stockholders and will have the same effect as negative votes. Broker non-votes are counted towards a quorum, but are not counted for any purpose in determining whether this matter has been approved.
Principal Accountant Services and Fees
The following table representspresents the aggregate fees billed to the Company for the fiscal years ended December 31, 20192020 and December 31, 2018,2019, by KPMG LLP, our principal accountant. All tax fees described below were pre-approved by our Audit Committee.
| | | Year Ended | | Year Ended |
| 2019 | 2018 | | 2020 | 2019 |
Audit Fees (1) | $475,090 | $524,000 | Audit Fees (1) | $638,500 | $475,090 |
Audit-related Fees | 0 | Audit-related Fees | 0 |
Tax Fees (2) | $194,529 | $114,660 | Tax Fees (2) | $261,517 | $194,529 |
All Other Fees | 0 | All Other Fees | 0 |
Total Fees | $669,619 | $638,660 | Total Fees | $900,017 | $669,619 |
(1)Represents fees for the audit of our annual financial statements, and of our internal control over financial reporting, review of our quarterly financial statements included in our Forms 10-Q, accounting consultations and the issuance of consents and comfort letters.
(2)Consists of fees for tax services provided to the Company, including tax planning and compliance services and the review of certain tax returns.returns.
Prior to the completion of the Merger, KPMG LLP served as the independent registered accounting firm, of Private Lumos for the year ended December 31, 2019 and for the 2020 period up to the completion of the Merger on March 18, 2020. The following table presents the aggregate fees billed by KPMG LLP to Private Lumos during those periods:
| | | | | | | | | | | | | | |
| Year Ended |
| 2020 | 2019 |
Audit Fees (1) | $120,000 | $140,282 |
Audit-related Fees | 0 | 0 |
Tax Fees | 0 | 0 |
All Other Fees | 0 | 0 |
Total Fees | $120,000 | $140,282 |
(1)Represents fees for the audit of our annual financial statements, review of our quarterly financial statements included in our Forms 10-Q, accounting consultations and the issuance of consents and comfort letters.
Pre-Approval Policies and Procedures
Our Audit Committee has adopted a policy and procedures for the pre-approval of audit services, audit-related services and tax services rendered by our independent registered public accounting firm. The policy generally pre-approves specified services in the defined categories of audit services, audit-related services, and tax services up to specified amounts. Pre-approval may also be given as part of our Audit Committee’s approval of the scope of the engagement of the independent registered public accounting firm or on an individual explicit case-by-case basis before the independent registered public accounting firm is engaged to provide each service. The pre-approval of services has been delegated to the Chairperson of our Audit Committee, but the decision must be reported to the full Audit Committee at its next scheduled meeting.
In connection with the audit of the 20192020 financial statements, our Audit Committee entered into an engagement agreement with KPMG LLP which sets forth the terms by which KPMG LLP was to perform audit services for the Company.
Report of Our Audit Committee (1)
Our Audit Committee reviewed and discussed the audited financial statements for the fiscal year ended December 31, 20192020 with management of the Company. Our Audit Committee discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard 1301, Communications with Audit Committee, as adopted by the Public Company Accounting Oversight Board, or PCAOB. Our Audit Committee also received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent accountants’ communications with our Audit Committee concerning independence, and discussed with the independent registered public accounting firm the accounting firm’s independence.
Based on the foregoing, our Audit Committee recommended to our Board of Directors that the audited financial statements be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019,2020, filed March 3, 2020.
9, 2021.
AUDIT COMMITTEE
(2)
Ms. Lota Zoth (Chair)
Dr. Thomas Chad A. RaffinJohnson
Joe McCracken
(1)The material in this Audit Committee report is not “soliciting material,” is not deemed “filed” with the Commission and is not to be incorporated by reference in any filing of the Company under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.
(2) Dr. Raffin is a current member of our board but is no longer a member of the audit committee. Dr. Raffin has been listed because he was a member of the audit committee for the relevant review and discussions of the audit committee matters described in the foregoing report. Mr. Talarico was also a member of the audit committee for the relevant review and discussions of the audit committee but is no longer a member of our board. Mr. McCracken and Mr. Johnson are currently members of the audit committee and became members upon the closing of the Merger, but the relevant review and discussions of the audit committee described above took place before Mr. McCracken and Mr. Johnson were appointed to the committee. Accordingly, and in accordance with SEC guidance, the names of Mssrs. Talarico, McCracken and Johnson do not appear with the audit committee in this report.
OUR BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 3.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership of our common stock as of June 12, 2020,March 2, 2021, except as set forth below, by: (i) each current director and nominee for director; (ii) each of the named executive officers specified in the Summary Compensation Table; (iii) all executive officers and directors of the Company as a group; and (iv) all those known by the Company to be beneficial owners of more than 5% of its common stock. The percentage of shares beneficially owned is computed on the basis of 8,292,8038,325,631 shares of our common stock outstanding as of June 12, 2020.March 2, 2021. Shares of our common stock that a person has the right to acquire within 60 days of June 12, 2020March 2, 2021 are deemed outstanding for purposes of computing the percentage ownership of the person holding such rights, but are not deemed outstanding for purposes of computing the percentage ownership of any other person.
| | | | | | | | | | | | | | |
Name and Address of Beneficial Owner(1) | Shares (#) | Percent (%) |
5% and Greater Stockholders | | |
| Stine Seed Farm, Inc.(2) | 873,081 | 10.5% |
| Deerfield Private Design Fund III, L.P.(3) | 784,568 | 9.4% |
| Richard J. Hawkins(4) | 773,400 | 9.2% |
| Entities affiliated with New Enterprise Associates, Inc.(5) | 526,663 | 6.3% |
| Clarus Lifesciences III, L.P.(6) | 468,145 | 5.6% |
Named Executive Officers and Directors | | |
| Richard J. Hawkins(4) | 773,400 | 9.2% |
| Chad A. Johnson(7) | 6,038 | * |
| Kevin Lalande(8) | 409,627 | 4.9% |
| Joseph McCracken(9) | 1,894 | * |
| Thomas A. Raffin, M.D.(10) | 17,067 | * |
| Lota S. Zoth(11) | 8,442 | * |
| Eugene P. Kennedy, M.D.(12) | 117,752 | 1.4% |
| Carl W. Langren(13) | 38,549 | * |
| Lori D. Lawley(14) | 14,301 | * |
| John McKew, Ph.D.(15) | 116,138 | 1.4% |
| Bradley J. Powers(16) | 19,052 | * |
| An van Es-Johansson, M.D. | — | * |
| All current executive officers and directors as a group (12 persons)(17) | 1,524,154 | 17.5% |
* | Indicates beneficial ownership of less than 1% of the outstanding shares of the Company’s common stock. |
(1) | | Unless otherwise indicated, the address of such individual is Lumos Pharma, Inc., 4200 Marathon Boulevard, Suite 200, Austin, Texas 78756. |
(2) | | | Address: 22555 Laredo Trail, Adel, Iowa 50003, Based solely upon a Schedule 13D filed with the SEC on October 6, 2017. Harry H. Stine, the CEO of Stine Seed Farm, Inc., may be deemed to beneficially own such shares. |
(3) | | | Consists of shares held by Deerfield Private Design Fund III, L.P. Deerfield Mgmt III, L.P. is the general partner of, and Deerfield Management Company, L.P. is the investment advisor to, Deerfield Private Design Fund III, L.P. Mr. James E. Flynn is the sole member of the general partner of each of Deerfield Mgmt III, L.P. and Deerfield Management Company, L.P. The address for each of these entities and Mr. Flynn is 780 Third Avenue, 37th Floor, New York, NY 10017. |
(4) | | Includes 53,825 shares Mr. Hawkins has the right to acquire through the exercise of stock options within 60 days of March 2, 2021. |
(5) | | Consists of (i) 2,633 shares held by NEA Ventures 2013, L.P. (“Ven 2013”) and (ii) 524,030 shares held by New Enterprise Associates 14, L.P. (“NEA 14”) (collectively, the “NEA Shares”). The shares held by Ven 2013 are held indirectly by Karen P. Welsh, the general partner of Ven 2013. The shares held by NEA 14 are held indirectly by NEA Partners 14, L.P. (“NEA Partners 14”), the general partner of NEA 14, NEA 14 GP LTD (“NEA 14 LTD”), the general partner of NEA Partners 14, and the individual directors (the “Directors”) of NEA 14 LTD. The Directors of NEA 14 LTD are Peter J. Barris, Forest Baskett, Anthony A. Florence, Patrick J. Kerins, David M. Mott, Scott D. Sandell, and Peter W. Sonsini. All indirect holders of the above referenced shares disclaim beneficial ownership of all applicable shares except to the extent of their pecuniary interest therein. The address for each of these entities is c/o New Enterprise Associates, Inc., 1954 Greenspring Drive, Suite 600, Timonium, Maryland 21093. |
|
| | | | |
Name and Address of Beneficial Owner(1) | Shares (#) | Percent (%) |
5% and Greater Stockholders | | |
| Deerfield Private Design Fund III, L.P.(2) | 936,291 | 11.3% |
| Stine Seed Farm, Inc.(3) | 873,081 | 10.5% |
| Richard J. Hawkins(4) | 749,045 | 9.0% |
| Entities affiliated with New Enterprise Associates, Inc.(5) | 526,663 | 6.4% |
| Clarus Lifesciences III, L.P.(6) | 468,145 | 5.6% |
Named Executive Officers and Directors | | |
| Richard J. Hawkins(4) | 749,045 | 9.0% |
| Emmett T. Cunningham, Jr., M.D.(7) | — | * |
| Chad A. Johnson(8) | 4,144 | * |
| Kevin Lalande(9) | 409,627 | 4.9% |
| Joseph McCracken | — | * |
| Thomas A. Raffin, M.D.(10) | 15,173 | * |
| Lota S. Zoth(11) | 6,548 | * |
| Eugene P. Kennedy, M.D.(12) | 19,778 | * |
| Carl W. Langren(13) | 24,881 | * |
| Lori D. Lawley(14) | 6,463 | * |
| John McKew, Ph.D.(15) | 103,230 | 1.2% |
| Bradley J. Powers(16) | 9,216 | * |
| Charles J. Link, Jr., M.D.**(17) | 76,723 | * |
| Nicholas N. Vahanian, M.D.**(18) | 41,916 | * |
| All current executive officers and directors as a group (12 persons)(19) | 1,348,105 | 15.9% |
* | Indicates beneficial ownership of less than 1% of the outstanding shares of the Company’s common stock. |
** | Our former Chief Executive Officer and Chief Scientific Officer, Dr. Link, retired from his position as an executive and a Board member on August 3, 2019, and our former President, Dr. Vahanian retired from his position as President and as a Board member on September 27, 2019. |
(1) | | Unless otherwise indicated, the address of such individual is Lumos Pharma, Inc., 4200 Marathon Boulevard, Suite 200, Austin, Texas 78756. |
(2) | | Consists of shares held by Deerfield Private Design Fund III, L.P. Deerfield Mgmt III, L.P. is the general partner of, and Deerfield Management Company, L.P. is the investment advisor to, Deerfield Private Design Fund III, L.P. Mr. James E. Flynn is the sole member of the general partner of each of Deerfield Mgmt III, L.P. and Deerfield Management Company, L.P. The address for each of these entities and Mr. Flynn is 780 Third Avenue, 37th Floor, New York, NY 10017. |
(3) | | Address: 22555 Laredo Trail, Adel, Iowa 50003, Based solely upon a Schedule 13D filed with the SEC on October 6, 2017. Harry H. Stine, the CEO of Stine Seed Farm, Inc., may be deemed to beneficially own such shares. |
(4) | | Includes 29,470 shares Mr. Hawkins has the right to acquire through the exercise of stock options within 60 days of June 12, 2020. |
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(5) | | Consists of (i) 2,633 shares held by NEA Ventures 2013, L.P. (“Ven 2013”) and (ii) 524,030 shares held by New Enterprise Associates 14, L.P. (“NEA 14”) (collectively, the “NEA Shares”). The shares held by Ven 2013 are held indirectly by Karen P. Welsh, the general partner of Ven 2013. The shares held by NEA 14 are held indirectly by NEA Partners 14, L.P. (“NEA Partners 14”), the general partner of NEA 14, NEA 14 GP LTD (“NEA 14 LTD”), the general partner of NEA Partners 14, and the individual directors (the “Directors”) of NEA 14 LTD. The Directors of NEA 14 LTD are Peter J. Barris, Forest Baskett, Anthony A. Florence, Patrick J. Kerins, David M. Mott, Scott D. Sandell, and Peter W. Sonsini. All indirect holders of the above referenced shares disclaim beneficial ownership of all applicable shares except to the extent of their pecuniary interest therein. The address for each of these entities is c/o New Enterprise Associates, Inc., 1954 Greenspring Drive, Suite 600, Timonium, Maryland 21093. |
(6) | | Consists of shares held by Clarus Lifesciences III, L.P. (“Clarus”). Clarus Ventures III GP, L.P. is the sole general partner of Clarus. Blackstone Clarus III L.L.C. is the sole general partner of Clarus Ventures III GP, L.P. The sole member of Blackstone Clarus III L.L.C. is Blackstone Holdings II L.P. The sole general partner of Blackstone Holdings II L.P. is Blackstone Holdings I/II GP Inc. The controlling shareholder of Blackstone Holdings I/II GP Inc. is The Blackstone Group L.P. The sole general partner of The Blackstone Group L.P. is Blackstone Group Management L.L.C. Blackstone Group Management L.L.C. is wholly-owned by The Blackstone Group L.P. ‘s senior managing directors and controlled by its founder, Stephen A. Schwarzman. Each of Clarus Ventures III GP, L.P., Blackstone Clarus III L.L.C., Blackstone Holdings II L.P., Blackstone Holdings I/II GP Inc., The Blackstone Group L.P., Blackstone Group Management L.L.C. and Stephen A. Schwarzman may be deemed to beneficially own the common stock beneficially owned by Clarus and each disclaim beneficial ownership of all shares held by Clarus. The address for the entities is 101 Main Street, Suite 1210, Cambridge, MA 02142. |
(7) | | Dr. Cunningham is a Senior Managing Director of an entity affiliated with Clarus Lifesciences III, L.P. Dr. Cunningham is not deemed to have any beneficial ownership in the shares held by Clarus Lifesciences III, L.P. described in footnote (16) below. |
(8) | | Consists of 4,1446,038 shares Mr. Johnson has the right to acquire through the exercise of stock options within 60 days of June 12, 2020.March 2, 2021. |
(9)(8) | | | Consists of the shares held by Sante Health Ventures II, L.P. Mr. Lalande may be deemed to beneficially own such shares. Mr. Lalande, Joe Cunningham, M.D. and Douglas D. French, are managing directors (the “SHV Directors”) of SHV Management Services, LLC (“SHV Management”). SHV Management is the general partner of SHV Management Services, LP, which is the general partner of Santé Health Ventures II, L.P. Each of the SHV Directors, SHV Management, and SHV Management Services, LP disclaims beneficial ownership of these securities except to the extent of its or his pecuniary interest therein. The address for this entity is 201 W 5th Street, Suite 1500, Austin, TX 78701. |
(9) | | | Consists of 1,894 shares Dr. McCracken has the right to acquire through the exercise of stock options within 60 days of March 2, 2021. |
(10) | | Includes 7,9939,887 shares Dr. Raffin has the right to acquire through the exercise of stock options within 60 days of June 12, 2020.March 2, 2021. |
(11) | | Includes 5,4377,331 shares Ms. Zoth has the right to acquire through the exercise of stock options within 60 days of June 12, 2020.March 2, 2021. |
(12) | | Includes 18,294116,268 shares Dr. Kennedy has the right to acquire through the exercise of stock options within 60 days of June 12, 2020.March 2, 2021. |
(13) | | Consists of 17,12230,790 shares Mr. Langren has the right to acquire through the exercise of stock options within 60 days of June 12, 2020,March 2, 2021, 2,238 shares of common stock held by Mr. Langren and 5,521 shares of common stock held by the Susan A. Langren 2014 DGT Trust, of which Mr. Langren’s spouse is the grantor. |
(14) | | Includes 6,12113,959 shares Ms. Lawley has the right to acquire through the exercise of stock options within 60 days of June 12, 2020.March 2, 2021. |
(15) | | Consists of 103,230115,954 shares Dr. McKew has the right to acquire through the exercise of stock options within 60 days of June 12, 2020.March 2, 2021. |
(16) | | Consists of 9,13418,970 shares Mr. Powers has the right to acquire through the exercise of stock options within 60 days of June 12, 2020,March 2, 2021, 55 shares of common stock held by Mr. Powers and 27 shares of common stock held by Mr. Power’s spouse. |
(17) | | | Includes 46,065 shares Dr. Link has the right to acquire through the exercise of stock options within 60 days of June 12, 2020. |
(18) | | Includes 36,771 shares Dr. Vahanian has the right to acquire through the exercise of stock options within 60 days of June 12, 2020. |
(19) | | Includes 200,945376,810 shares issuable pursuant to stock options that the executive officers and directors of the Company have the right to acquire within 60 days of June 12, 2020.March 2, 2021. |
Securities Authorized For Issuance Under Equity Compensation Plans
We maintain our 2019 Equity Incentive Plan, 2010 Non-Employee Directors’ Stock Award Plan and 2010 Employee Stock Purchase Plan, each of which was approved by the Company’s security holders, pursuant to which we may grant equity awards to eligible persons. We also maintain the Lumos Plans that were assumed at the closing of the Merger approved by the Company's security holders.
The following table gives information about equity awards under the applicable foregoing plans as of December 31, 2019, after giving effect to the subsequent Reverse Stock Split:2020:
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Plan Category | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column(a)) | |
Equity compensation plans approved by security holders | 1,032,699 | | | $ | 9.47 | | 522,749 | | | (1)(2) |
Equity compensation plans not approved by security holders | — | | | $ | — | | | — | | | |
Total | 1,032,699 | | | | 522,749 | | | |
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Plan Category | Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column(a)) | |
Equity compensation plans approved by security holders | 390,045 |
| | $ | 45.54 |
| | 866,346 |
| | (1)(2) |
Equity compensation plans not approved by security holders | — |
| | $ | — |
| | — |
| | |
Total | 390,045 |
| | (3) | 866,346 |
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(1) The 2009 Equity Incentive Plan incorporated an evergreen formula pursuant to which, on each January 1st, the aggregate number of shares reserved for issuance under the plan will increase by a number equal to 4% of the outstanding shares on December 31st of the preceding calendar year, or such lesser amount (or no shares) as determined by our Board. On May 9, 2019, the Company’s stockholders approved a proposal to amend and extend the 2009 Plan (the "2019 Plan") which, among other modifications, included decreasing the automatic annual “evergreen provision” from 4% to 3%, in accordance with which, on January 1 of each year, from 2020 to (and including) 2029, a number of shares of common stock in an amount equal to 3% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year, or such lesser amount of shares (or no shares) approved by the Company’s Board of Directors, was added or will be added to the shares reserved under the 2019 Plan.
(2) Of these shares, as of December 31, 2019, 833,8402020, 519,888 shares remained available under the 2019 Equity Incentive Plan, 29,8782,166 shares remained available under the 2010 Non-Employee Directors’ Stock Award Plan and 2,628695 shares remained available under the 2010 Employee Stock Purchase Plan.
(3)The total does not include shares of our common stock issuable in connection with options outstanding under the Lumos Plans assumed at the closing of the Merger. As of the Merger closing, options to purchase 190,112 shares of our common stock with a weighted-average exercise price of $3.34 per share under the Lumos Plans were outstanding.
DIRECTOR COMPENSATION
The following table shows certain information with respect to the compensation of all of our non-employee directors for the fiscal year ended December 31, 2019.2020.
| | Name | | Cash Compensation (1) | | | Option Awards ($) (2)(3)(4) | | Total ($) | Name | | Cash Compensation (1) | | Option Awards ($) (2)(3)(4) | | Stock Awards (5) | | Total ($) |
Chad A. Johnson | | $64,000 | | | $30,379 | | $94,379 | Chad A. Johnson | | $57,702 | | | $31,215 | | $5,516 | | $94,433 |
Thomas A. Raffin, M.D. | | $106,000 | | $30,379 | | $136,379 | Thomas A. Raffin, M.D. | | $85,000 | | $31,215 | | $5,516 | | $121,731 |
Matthew L. Sherman, M.D.* | | $69,500 | | $30,379 | | $99,879 | |
Ernest J. Talarico, III* | | $67,000 | | $30,379 | | $97,379 | |
Ernest Talarico* | | Ernest Talarico* | | $16,750 | | $0 | | $0 | | $16,750 |
Matthew Sherman* | | Matthew Sherman* | | $17,375 | | $0 | | $0 | | $17,375 |
Lota S. Zoth | | $73,000 | | $30,379 | | $103,379 | Lota S. Zoth | | $58,879 | | $31,215 | | $5,516 | | $95,610 |
Emmett Cunningham, M.D. ** | | Emmett Cunningham, M.D. ** | | $35,173 | | $31,215 | | $5,516 | | $71,904 |
Kevin Lalande | | Kevin Lalande | | $36,235 | | $31,215 | | $5,516 | | $72,966 |
Joe McCracken | | Joe McCracken | | $36,874 | | $31,215 | | $5,516 | | $73,605 |
* Resigned as a member of our board of directors in March 2020 in connection with the closing of the Merger.Merger
**Resigned as a member of our board of directors in February 2021 |
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(1(1) | ) | | Cash compensation paid quarterly based on the annual amount of $45,000$40,000 for all non-employee directors with additional annual cash compensation of $27,000$22,000 for Lead Independent Director, $18,000, $18,000, $15,500$15,000, $12,000 and $9,000$8,000 for the Chairs of the Audit, Science, Compensation and Nominating and Corporate Governance Committees, respectively; and $12,000, $10,000, $10,000$7,500, $5,500 and $6,500$4,000 for members of the Audit, Compensation Science and Nominating and Corporate Governance Committees, respectively. |
(2(2) | ) | | The assumptions we used in valuing options are described under the caption “Share-Based Compensation” in note 2 to our financial statements included in our Annual Report on Form 10-K filed on March 3, 2020.9, 2021. This column reflects compensation expense that would be recorded under FASB ASC topic 718 as stock-based compensation in our financial statements for the indicated year in connection with options we granted in the indicated year, disregarding the effects of any estimate of forfeitures related to service-based vesting. |
(3(3) | ) | | The aggregate number of shares subject to stock option awards outstanding for each non-employee director as of December 31, 20192020 are as follows after giving effect to the Reverse Stock Split:follows: |
| | | Option Awards |
| Chad A. Johnson | | 7,00412,688 |
| Thomas A. Raffin, M.D. | | 13,21618,900 |
| Ernest J. Talarico, IIIEmmett Cunningham, M.D. | | 11,1425,684 |
| Matthew L. Sherman,Kevin Lalande | | 5,684 |
| | Joe McCracken, M.D. | | 7,8445,684 |
| Lota Zoth | | 8,10113,785 |
(4(4) | ) | | Grant date fair value of 25,0005,684 options granted in 20192020 at an exercise price of $1.69,$7.78, which was the per share closing price of our common stock on the NASDAQ Global Market on the date of grant. |
(5) | | | Grant date fair value of 709 RSUs granted in 2020 at a per share price of $7.78, which was the per share closing price of our common stock on the NASDAQ Global Market on the date of grant. |
Non-Employee Director Compensation
The following compensation components are paid to our non-employee directors:
•Annual cash retainer fees;
•An equity grant upon initial election or appointment to our Board; and
•An annual equity grant.
Our non-employee director compensation program as in effect for the fiscal year ended December 31, 20192020 is as described below. For a description of our compensation program in effect for prior years, please refer to the proxy statement for our 20192020 Annual Meeting of stockholders. Under our program, each non-employee director was entitled to receive annual cash retainer fees in the amounts set forth below and were paid in cash quarterly on the first day of each quarter during their annual term commencing upon their election or re-election at each Annual Meeting of Stockholders. Such amounts were pro-rated for appointments made to our Board between our annual meetings.
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Director Compensation | | | | 2019 |
Annual retainer fee payable to all non-employee directors | | | $ | 45,000 |
Additional annual retainer fee payable to the Lead Independent Director of our Board | | | $ | 27,000 |
Additional annual retainer fee payable to our Audit Committee Chair | | | $ | 18,000 |
Additional annual retainer fee payable to other Audit Committee members | | | $ | 12,000 |
Additional annual retainer fee payable to our Scientific Committee Chair | | | $ | 18,000 |
Additional annual retainer fee payable to our Compensation Committee Chair | | | $ | 15,500 |
Additional annual retainer fee payable to other Compensation Committee members | | | $ | 10,000 |
Additional annual retainer fee payable to our Nominating and Corporate Governance Committee Chair | | | $ | 9,000 |
Additional annual retainer fee payable to other Nominating and Corporate Governance Committee members | | | $ | 6,500 |
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Director Compensation | | | | 2020 |
Annual retainer fee payable to all non-employee directors | | | $ | 40,000 | |
Additional annual retainer fee payable to the Lead Independent Director of our Board | | | $ | 22,000 | |
Additional annual retainer fee payable to our Audit Committee Chair | | | $ | 15,000 | |
Additional annual retainer fee payable to other Audit Committee members | | | $ | 7,500 | |
Additional annual retainer fee payable to our Compensation Committee Chair | | | $ | 12,000 | |
Additional annual retainer fee payable to other Compensation Committee members | | | $ | 5,500 | |
Additional annual retainer fee payable to our Nominating and Corporate Governance Committee Chair | | | $ | 8,000 | |
Additional annual retainer fee payable to other Nominating and Corporate Governance Committee members | | | $ | 4,000 | |
During 2019,2020, upon election to our Board, each new non-employee director would have been eligible to receive an initial grant of stock options and restricted stock units ("RSUs") for a number of shares equal to $250,000 divided by0.081 percent of the per share grant date fair value that will be used for reporting compensation under applicable accounting guidance.number of shares outstanding at the time of appointment. Additionally, during the term of his or her service on our Board, each non-employee director receives an annual grant comprised of stock options for a number of shares equal to $150,000 divided by the per share grant date fair value that will be used for reporting compensation under applicable accounting guidance. During 2019, we made such annual grants pursuant to our 2019 Plan since our 2010 Non-Employee Directors’ Stock Award Plan did not have sufficient shares to cover such grants and the Board elected to reduce0.041 percent of the number of shares underlyingoutstanding at the 2019 stock option grantsdate of grant. During 2020, in connection with the Merger, we made an initial grant in place of the annual grant to 25,000 total option awards for each non-employee director.director due to the circumstance surrounding the Merger and the appointment of multiple new board members.
We also reimburse our directors, including our employee directors, for their reasonable expenses incurred in attending meetings of our Board and the committees of our Board. Other than reimbursement of any such reasonable expenses, our employee directors do not receive compensation for their service on our Board.
Director Stock Ownership GuidelinesOur stock ownership guidelines for non-employee directors anticipated that each director would, by December 31, 2019, hold shares of our common stock representing at least $150,000 worth of common stock or 10,000 shares, whichever is less. At December 31, 2019, all of our then serving directors met the stock ownership guidelines or were making acceptable progress toward their required level. Following the closure of the Merger, these stock ownership guidelines were suspended by our Board after consideration of the practices of comparable companies in our industry.
EXECUTIVE OFFICERS
Our executive officers are appointed by and serve at the direction of our Board. The following table lists the names and positions of our current executive officers:
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Name | Age | | Position(s) |
Richard J. Hawkins(1)Hawkins(1) | 7172 | | President, Chief Executive Officer and Chairman |
Carl W. Langren | 6465 | | Chief Financial Officer |
Eugene P. Kennedy, M.D.(2) | 5152 | | Chief Medical Officer |
John McKew, Ph.D.(1) | 5556 | | Chief Operating Officer and Chief Scientific Officer |
Bradley J. Powers | 4142 | | General Counsel |
Lori D. Lawley | 3637 | | Sr. VP, Finance and Controller |
(1) Appointed as an executive officer in March 2020 in connection with the Merger. Service as an executive officer prior to such appointment noted in such officer’s biography includes service with Private Lumos. For a brief biography of Mr. Hawkins, please see “Board of Directors” above.
(2) Resigned from the Company in March 2021.
Richard J. Hawkins, see Mr. Hawkin's biography in "Proposal Number 1-Election of Directors."
Carl W. Langren has served as our Chief Financial Officer since July 2018. Previously, he was our Vice President of Finance since November 2011 and has also been Chief Financial Officer of our subsidiary BioProtection Systems Corporation since February 2005. Prior to NewLink,joining the Company, Mr. Langren previously served as Chief Financial Officer for each of Housby Mixer Group from 1998 to 2002 and Equity Dynamics, Inc. from 1988 to 1989. He also served as a Principal in Capital Management Solutions, President of Iowa Machinery and Supply, Treasurer of DFM Corporation, and Tax Manager with McGladrey Pullen and Company. Mr. Langren received his B.A. degree from the University of Iowa.
Eugene P. Kennedy, M.D., FACS, has served as our Chief Medical Officer sincefrom November 2017 until his resignation on March 5, 2021, where he leadslead clinical development across all immuno-oncology product candidates as well as investigator initiated trials. From January 2014 to November 2017, Dr. Kennedy served as our Vice President for Clinical and Medical Affairs. Prior to joining NewLink,the Company, he was on faculty and clinical staff at Thomas Jefferson University in Philadelphia, Pennsylvania where he served as Associate Professor of Surgery and held leadership positions as Chief of the Section of Pancreaticobiliary Surgery and co-director of the Jefferson Pancreas, Biliary, and Related Cancers Center from January 2006 to December 2013. Previously, Dr. Kennedy held faculty positions at Johns Hopkins Hospital and the Louisiana State University School of Medicine. Dr. Kennedy obtained his undergraduate education at the University of Virginia and received his medical degree from the Medical College of Virginia. He completed a residency and fellowship in Surgery and Surgical Oncology as well as a research fellowship in tumor immunology at the Johns Hopkins Hospital.
John McKew, Ph.D., has served as the Chief Scientific Officer of Private Lumos since 2016 and as our Chief Scientific Officer and Chief Operating Officer since March 2020. From 2014 until 2016, Dr. McKew was V.P. of research for aTyr Pharma where he led research aimed at understanding and harnessing the therapeutic potential of tRNA synthetases. From 2010 until 2014, Dr. McKew worked for the NIH, during which time he served as a branch chief at the National Human Genome Research Institute Home (the “NHGRI”) from 2010 until 2013, and as the acting Scientific Director of the Division of Preclinical Innovation at the National Center for Advancing Translational Sciences (“NCATS”) from 2013 until 2014. His responsibilities included developing both the Therapeutics for Rare and Neglected Disease (“TRND”) and the Bridging Interventional Development Gaps (“BrIDGs”) programs. The department he led also included NCATS’s high throughput screening center and its Tox21 in vitro toxicology initiative. Before joining the NIH, Dr. McKew held a director level position at Wyeth Research in Cambridge, Massachusetts. Dr. McKew is also currently an Adjunct Associate Professor at the Boston University School of Medicine. Dr. McKew received a B.S. degree in chemistry and biochemistry from State University of New York at Stony Brook, a Ph.D. in organic chemistry from the University of California, Davis, and held post-doctoral research positions at the University of Geneva and Firmenich, SA.
Bradley J. Powers has served as our General Counsel since August 2015. Prior to joining NewLink,the Company, Mr. Powers served as the General Counsel of Kinze Manufacturing, an agricultural equipment manufacturer in North America, since March 2013. Mr. Powers received a B.S. degree in biology and a M.S. degree in bioinformatics and computational biology from Iowa State University and a J.D. from Drake University Law School.
Lori D. Lawley has served as our Senior Vice President - Finance and Controller and the principal accounting officer since March 2020. Previously, Ms. Lawley served as NewLink’s Managerthe Company in various roles of SEC Reporting and Accounting Policyincreasing responsibilities from April 2015 until January 2017, Director of SEC and Financial Reporting from January 2017 to November 2017, Corporate Controller from November 2017 until July 2018 and Vice President - Finance and Controller from July 2018 until March 2020. Prior to
joining NewLink,the Company, Ms. Lawley worked as an auditor at Ernst and Young LLP for over 8 years where she served in increasing capacities from 2007 through April 2015, including as Manager from October 2011 to September 2014, andwas a Senior Manager from October 2014 until April 2015.Manager. Ms. Lawley is a licensed certified public accountant. Ms. Lawley received her Bachelor of Business Administration and Master’s in Professional Accounting from the University of Texas.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth information regarding compensation earned during the years ended December 31, 20192020 and December 31, 2018,2019, by the executive officers identified below, who are referred to in this proxy statement as our “named executive officers.”
| | Name and Principal Position | Year | Salary($) | Option Awards ($)(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | | Total ($) | Name and Principal Position | Year | Salary($) | Stock Awards ($)(1) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(3) | All Other Compensation ($)(4) | Total ($) |
Charles J. Link, Jr., M.D.* | 2019 | 365,483 | 1,064,009 | 220,521 | 70,234 | (4) | 1,720,247 | |
Former Chief Executive & Scientific Officer | 2018 | 593,910 | 1,745,244 | 374,200 | 76,135 | (5) | 2,789,489 | |
Nicholas N. Vahanian, M.D.* | 2019 | 406,778 | 239,648 | 133,877 | 439,000 | (6) | 1,219,303 | |
Former President | 2018 | 495,002 | 712,173 | 180,915 | 24,126 | (7) | 1,412,216 | |
Eugene P. Kennedy, M.D. | 2019 | 435,298 | 234,835 | 192,610 | 57,299 | | 920,042 | |
Richard J. Hawkins* | | Richard J. Hawkins* | 2020 | 516,380 | 196,750 | 759,063 | 686,336 | 63,500 | 2,222,029 |
Chief Executive Officer | | Chief Executive Officer | 2019 | 425,000 | — | 136,720 | 178,500 | — | 740,220 |
John C. McKew* | | John C. McKew* | 2020 | 436,300 | 102,310 | 365,475 | 276,044 | 35,641 | 1,215,770 |
Chief Scientific and Chief Operating Officer | | Chief Scientific and Chief Operating Officer | 2019 | 412,000 | — | 144,200 | — | 556,200 |
Eugene P. Kennedy, M.D.** | | Eugene P. Kennedy, M.D.** | 2020 | 459,638 | 70,830 | 253,021 | 300,770 | 62,040 | 1,146,299 |
Chief Medical Officer | 2018 | 425,000 | 589,073 | 170,000 | 24,640 | | 1,208,713 | Chief Medical Officer | 2019 | 437,750 | — | 234,835 | 192,610 | 57,299 | 922,494 |
Carl W. Langren | 2019 | 368,192 | 234,835 | 163,020 | 54,467 | | 820,514 | Carl W. Langren | 2020 | 389,025 | 70,830 | 253,021 | 269,926 | 59,040 | 1,041,842 |
Chief Financial Officer | 2018 | N/A | | N/A | Chief Financial Officer | 2019 | 370,500 | — | 234,835 | 163,020 | 54,467 | 822,822 |
Bradley J. Powers | 2019 | 336,346 | 100,613 | 151,800 | 45,365 | | 634,124 | Bradley J. Powers | 2020 | 380,000 | 35,415 | 140,567 | 245,236 | 51,842 | 853,060 |
General Counsel and Former Principal Executive Officer | 2018 | N/A | | N/A | General Counsel and Former Principal Executive Officer | 2019 | 345,000 | — | 100,613 | 151,800 | 45,365 | 642,778 |
Our executive compensation program consists of three primary components: base salary, short-term incentives, and long-term equity incentives.
Base salary is the primary fixed element of our executive compensation program. We use base salary to compensate our executive officers for services rendered during the fiscal year, and to ensure that we remain competitive in attracting and retaining executive talent.
Historically, we have not applied, nor do we intend to apply, specific formulas to determine base salary increases. Instead, we annually review corporate and individual performance. Our Compensation Committee examines numerous factors, including the executive’s expertise, seniority, position, functional role, level of responsibility and individual performance during the previous year. Further, our Compensation Committee reviews peer and market data as provided by Radford.Setren & Associates.
Our performance-based cash incentives are designed to provide executive officers with the opportunity to earn annual cash awards based upon the achievement of pre-specified corporate and individual performance objectives which align with and support our business strategy.
Shortly before the end of each fiscal year, our Board determines the annual target bonus percentages for our executive officers for the upcoming fiscal year based on the recommendations of our Compensation Committee. Generally, each executive officer is eligible for a discretionary annual cash incentive payment up to a specified percentage of the executive officer’s salary. Our Board sets these annual target bonus percentages at levels that, upon achievement of the target percentage, are likely to result in cash bonus payments that our Board believes to be approximately the level paid to high-performing executives of comparable companies in the biopharmaceutical industry.
The performance goals for each fiscal year are determined by the Board in the first quarter of each fiscal year, and typically include corporate and individual performance objectives which are tailored to each executive’s role and responsibilities.
At the end of the fiscal year, our Compensation Committee assesses the accomplishments of each executive versus each of the aforementioned goals and recommends earned bonus amounts to the Board for approval. The Compensation Committee retains the ability to apply negative discretion to adjust bonus amounts lower based on other corporate performance factors.