SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
☒ Filed by the Registrant ☐ Filed by a Party other than the Registrant
☒ | Filed by the Registrant ☐ Filed by a Party other than the Registrant |
| Check the appropriate box: | |
| Preliminary Proxy Statement | |
☐ | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
| Definitive Proxy Statement | |
☐ | Definitive Additional Materials | |
☐ | Soliciting Material under | |
Baudax bio,BAUDAX BIO, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check | ||
☒ | No fee required. | |
☐ | Fee paid previously with preliminary | |
☐ | Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and | |
0-11. | ||
PRELIMINARY COPY SUBJECT TO COMPLETION DATED OCTOBER 3, 2022
In accordance with Rule 14a-6(d) under Regulation 14A, please be advised that Baudax Bio, Inc. intends to release definitive copies of this Proxy Statement to security holders on or about October 13, 2022.
Malvern, PA 19355
2022 ANNUALSPECIAL MEETING OF SHAREHOLDERS
To be Held on May 4,November 3, 2022
March 31,October 13, 2022
Dear Shareholder:
We are pleased to invite you to attend Baudax Bio, Inc.’s, or Baudax Bio’s, or the Company’s, 2022 Annuala Special Meeting of Shareholders (the “Special Meeting”), of Baudax Bio, Inc. (“Baudax Bio” or Annual Meeting,the “Company”), which will be held at 9:00 a.m., Eastern Time, on Wednesday, May 4, 2022. We have decided to holdNovember 3, 2022 for the Annual Meeting virtually this year. We believe that hosting the Annual Meeting virtually enables greater shareholder attendance and participation and improves our ability to communicate effectively with our shareholders. following purposes:
| 1. | to approve an amendment to our Amended and Restated Articles of Incorporation, as amended (the “Charter”), to effect a reverse stock split of our outstanding shares of common stock by a ratio of any whole number between 1-for-5 and 1-for-40, the implementation and timing of which shall be subject to the discretion of our Board of Directors (the “Board”); and |
| 2. | to approve adjournment of the Special Meeting to the extent there are insufficient votes at the Special Meeting to approve the preceding proposal. |
The AnnualSpecial Meeting can be accessed via the Internet at: www.virtualshareholdermeeting.com/BXRX2022.BXRX2022SM.
Details regarding admission to the AnnualSpecial Meeting and the business to be conducted are more fully described in the accompanying Notice of 2022 AnnualSpecial Meeting of Shareholders, or Notice,(the “Notice”), and 2022 AnnualSpecial Meeting Proxy Statement (the “Proxy Statement”). You are entitled to vote at our Special Meeting and any adjournments thereof only if you were a stockholder as of October 3, 2022. As a result of the dividend of the shares of Series B Preferred Stock, par value $0.01 per share (“Series B Preferred Stock”) distributed on October 3, 2022, each holder of shares of our common stock also holds a number of one one-thousandths of a share of our Series B Preferred Stock equal to the whole number of shares of common stock held by such holder. Because any one one-thousandths of a share of Series B Preferred Stock that are not present in person or Proxy Statement. Other thanby proxy at the proposals describedSpecial Meeting as of immediately prior to the opening of the polls at the Special Meeting will be automatically redeemed, if you fail to submit a proxy to vote your shares or attend the Special Meeting in order to do so, your shares of Series B Preferred Stock will be redeemed immediately prior to the Proxy Statement,opening of the Board ispolls at the Special Meeting and will not aware of any other mattersbe entitled to be presented for a vote at the AnnualSpecial Meeting.
Your vote is important. Whether or not you plan to virtually attend the AnnualSpecial Meeting, we hope you will vote as soon as possible. Information about voting methods is set forth in the accompanying Notice and Proxy Statement.
If you have any questions with respect toregarding the attached proxy statement or need assistance in voting your shares of common stock or preferred stock, please callcontact our President and Chief Executive Officer, Gerri Henwood,Corporate Controller, Jillian Dilmore, at (484) 395-2470.395-2440, or our proxy solicitor, Kingsdale Advisors, by telephone at 1-855-476-6002 (or collect outside of North America at 1-646-960-6306), or by email at contactus@kingsdaleadvisors.com.
Sincerely,
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/s/ Wayne Weisman |
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| Gerri Henwood | |
Chairman of the Board | Director, President and Chief Executive Officer | |
THIS PROXY STATEMENT AND ENCLOSED PROXY CARD ARE
FIRST BEING MADE AVAILABLEMAILED TO SHAREHOLDERS ON OR ABOUT MARCH 31,OCTOBER 13, 2022.
NOTICE OF ANNUALSPECIAL MEETING OF SHAREHOLDERS
Dear Shareholders:
You are invited to attend Baudax Bio’s AnnualSpecial Meeting. At the AnnualSpecial Meeting, shareholders will vote:
toelectthetwodirectornomineesthataresetforthintheattachedProxyStatementtoserveasClassIII directors,whosetermwillexpirein2025; and
| 1. | to approve an amendment to the Charter to effect a reverse stock split of our outstanding shares of common stock by a ratio of any whole number between 1-for-5 and 1-for-40, the implementation and timing of which shall be subject to the discretion of the Board (the “Reverse Stock Split Proposal”); and |
toratifytheselectionofKPMGLLP,orKPMG,asourindependentregisteredpublicaccountingfirmforthe 2022fiscalyear.
| 2. | to approve adjournment of the Special Meeting to the extent there are insufficient votes at the Special Meeting to approve the preceding proposal (the “Adjournment Proposal”). |
Shareholders also will transact any other business that may properly come before the AnnualSpecial Meeting or any adjournment or postponement of the AnnualSpecial Meeting.
MEETING INFORMATION
Date: |
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Time: | 9:00 a.m. Eastern Time | |
Location: | Via the Internet www.virtualshareholdermeeting.com/ | |
Record Date: | You can vote if you were a shareholder of record on |
The Board has fixed the close of business on October 3, 2022 as the Record Date for the Special Meeting. Only stockholders of record on the Record Date are entitled to receive notice of the Special Meeting and to vote at the Special Meeting or at any adjournment(s) of the Special Meeting. Notwithstanding the foregoing, holders of our outstanding shares of Series B Preferred Stock will only be entitled to vote such shares on the Reverse Stock Split Proposal and the Adjournment Proposal to the extent that such shares have not been automatically redeemed in the Initial Redemption as described in the accompanying Proxy Statement.
Your vote matters. Whether or not you plan to virtually attend the AnnualSpecial Meeting, please ensure that your shares are represented by voting, signing, dating and returning your proxy in the enclosed envelope, which requires no postage if mailed in the United States.
By Order of the Board of Directors | ||
/s/ Jillian Dilmore | ||
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Jillian Dilmore
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IMPORTANT NOTICE REGARDING AVAILABILITY OF PROXY MATERIALS. This Proxy Statement and the proxy card are being mailed to our shareholders on or about March 31,October 13, 2022. This Proxy Statement and our 2021 Annual Report areis available to holders of our common stockshareholders at www.proxyvote.com. If you would like to receive, without charge, a paper copy of our 2021 Annual Report, including the financial statements, please send your request to President and Chief Executive Officer, Baudax Bio, Inc., 490 Lapp Road, Malvern, PA 19355.
| Notice of Special Meeting of Shareholdersand Proxy Statement | ii |
SUMMARY INFORMATION |
To assist you in reviewing this year’smeeting’s proposals, we call your attention to the following proxy summary. This is only a summary; please review this 2022 Special Meeting Proxy Statement and our 2021 Annual Report(the “Proxy Statement”) in full.
Summary of Shareholder Voting Matters
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Our Director Nominees
You are being asked to vote on the election of Arnold Baskies, M.D. and Winston Churchill as Class III directors, each to serve for a three-year term expiring at our 2025 Annual Meeting of Shareholders. The number of members of our Board is currently set at seven members and is divided into three classes, each of which has a three-year term. Class I consists of two directors, Class II consists of three directors, and Class III consists of two directors. Alfred Altomari, the Chairman of our Board and a Class I director, has informed us that he will be resigning from our Board, effectiveimmediatelyfollowingtheAnnualMeeting.As a result, we intend to reduce the size of our Board from seven to six, effective immediately following the Annual Meeting. Our Board intends to appoint a new Chairman of the Board prior to the effectiveness of Mr. Altomari’s resignation.
The term of office of our Class III directors expires at the Annual Meeting. We are nominating Arnold Baskies, M.D. and Winston Churchill for re-election at the Annual Meeting to serve until the 2025 Annual Meeting of Shareholders and until their successors, if any, are elected or appointed, or their earlier death, resignation, retirement, disqualification or removal. Directors are elected by a plurality of the votes cast by our shareholders at the Annual Meeting. The two nominees receiving the most FOR votes (among votes properly cast in person or by proxy) will be elected. If no contrary indication is made, shares represented by executed proxies will be voted FOR the election of Dr. Baskies and Mr. Churchill. Each nominee has agreed to serve as a director if elected, and we have no reason to believe that any nominee will be unable to serve.
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| Committee Memberships | ||||
Name | Age | Director Since | Occupation | Independent | AC | CC | NCGC | Other Current Public Company Boards |
Arnold Baskies, M.D. | 72 | 2020 | Retired | Yes |
| M | M | Anixa Biosciences, Inc. |
Winston Churchill | 81 | 2019 | Retired | Yes | M | M | M | Amkor Technology, Inc.; Societal CDMO, Inc.; Innovative Solutions and Support, Inc. |
| PROPOSAL | FOR MORE INFORMATION | BOARDOF DIRECTORS RECOMMENDATION | |||
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Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | i
SUMMARY INFORMATION
CORPORATE GOVERNANCE SUMMARY FACTS
The following table summarizes our current Board structure and key elements of our corporate governance framework:
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Recent Corporate Highlights
In November 2021, we announced completion of a dose-escalation study of BX1000, one of our neuromuscular blocking agents, or NMBs, in healthy volunteers, which was generally well-tolerated and achieved rapid muscle paralysis.
In December 2021, we completed an offering of common stock, convertible preferred stock and warrants for approximately $4.8 million in gross proceeds.
In February 2022, we completed a public offering of common stock, pre-funded warrants and warrants for approximately $10.0 million in gross proceeds.
In March 2022, we announced that we received written notice from the Nasdaq Stock Market LLC, or Nasdaq, that the Company regained compliance with Listing Rule 5550(a)(2), which requires listed companies to maintain a minimum bid price of $1.00.
Reverse Stock Split
On February 15, 2022, we filed Articles of Amendment to our Articles of Incorporation, as amended, with the Secretary of State of the Commonwealth of Pennsylvania, to effect a reverse stock split of our common stock at a rate of 1-for-35, which became effective as of February 16, 2022. The reverse stock split did not have any impact on the number of authorized shares of common stock. Unless otherwise noted, the information in this Proxy Statement reflects the reverse stock split of our outstanding common stock at a 1-for-35 ratio, effective as of February 16, 2022.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | ii
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Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | iii
TABLE OF CONTENTS
This Proxy Statement, with the enclosed proxy card, is being mailed to shareholders of Baudax Bio, Inc. (“Baudax Bio” or the “Company”) in connection with the solicitation by our Board of Directors (the “Board”) of proxies to be voted at our AnnualSpecial Meeting of Shareholders (the “Special Meeting”) and at any postponements or adjournments thereof. The AnnualSpecial Meeting will be held on Wednesday, May 4,November 3, 2022, at 9:00 a.m., Eastern Time, via the Internet at www.virtualshareholdermeeting.com/BXRX2022.
BXRX2022SM.
This Proxy Statement and the enclosed proxy card are first being mailed to our shareholders on or about March 31,October 13, 2022.
| Notice of Special Meeting of Shareholdersand Proxy Statement | iv |
Notice of Annual Meeting of Shareholders
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PROXY SOLICITATION
Our BoardThe Company is soliciting your vote on matters that will be presented at the AnnualSpecial Meeting and at any adjournment or postponement thereof. This Proxy Statement contains information on these matters to assist you in voting your shares.
This Proxy Statement and the proxy card are being mailed to our shareholders on or about March 31,October 13, 2022. This Proxy Statement and our 2021 Annual Report areis available to shareholders at www.proxyvote.com.
SHAREHOLDERS ENTITLED TO VOTE
Shareholders of record, including holders of our common stock at www.proxyvote.com. If you would like to receive, without charge, a paper copyand holders of our 2021 Annual Report, including the financial statements, please send your request to President and Chief Executive Officer, Baudax Bio, Inc.Series B Preferred Stock (“Series B Preferred Stock”), 490 Lapp Road, Malvern, PA 19355.
SHAREHOLDERS ENTITLED TO VOTE
All shareholders of record of our common stock at the close of business on March 29,October 3, 2022 or(the “Record Date”) may vote at the Special Meeting. Notwithstanding the foregoing, holders of outstanding shares of Series B Preferred Stock will only be entitled to vote such shares to the extent that such shares have not been automatically redeemed in the Initial Redemption (defined below). There were 20,003,745 shares of common stock and 20,003.745 shares of Series B Preferred Stock outstanding on the Record Date, are entitledDate.
Pursuant to receive the Notice and to vote their shares at the Annual Meeting. Asrights of that date, 6,412,979 sharesour shareholders contained in our charter documents, each share of our common stock were outstanding. Each share is entitled to one vote on all matters listed in this proxy statement. As previously announced on September 19, 2022, the Board declared a dividend of one one-thousandth (1/1,000th) of a share of Series B Preferred Stock for each matter properly broughtoutstanding share of common stock to shareholders of record of common stock as of 5:00 p.m. Eastern Time on September 29, 2022. The holders of Series B Preferred Stock have 1,000,000 votes per whole share of Series B Preferred Stock (i.e., 1,000 votes per one one-thousandth of a share of Series B Preferred Stock) and are entitled to vote with the common stock, together as a single class, on the Reverse Stock Split Proposal and Adjournment Proposal, but are not otherwise entitled to vote on the other proposals, if any, to be presented at the Special Meeting. Notwithstanding the foregoing, each share of Series B Preferred Stock redeemed pursuant to the meeting.Initial Redemption will have no voting power with respect to the Reverse Stock Split Proposal, the Adjournment Proposal or any other matter. Unless otherwise provided on any applicable proxy or ballot with respect to the voting on the Reverse Stock Split Proposal or the Adjournment Proposal, when a holder of common stock submits a vote on the Reverse Stock Split Proposal and the Adjournment Proposal, the corresponding number of shares of Series B Preferred Stock (or fraction thereof) held by such holder will be automatically cast in the same manner as the vote of the share of common stock (or fraction thereof) in respect of which such share of Series B Preferred Stock (or fraction thereof) was issued as a dividend is cast on the Reverse Stock Split Proposal, the Adjournment Proposal or such other matter, as applicable, and the proxy or ballot with respect to shares of common stock held by any holder on whose behalf such proxy or ballot is submitted will be deemed to include all shares of Series B Preferred Stock (or fraction thereof) held by such holder. Holders of Series B Preferred Stock will not receive a separate ballot or proxy to cast votes with respect to the Series B Preferred Stock on the Reverse Stock Split Proposal, the Adjournment Proposal or any other matter brought before the Special Meeting. For example, if a shareholder holds 10 shares of common stock (entitled to one vote per share) and votes in favor of the Reverse Stock Split Proposal, then 10,010 votes will be recorded in favor of the Reverse Stock Split Proposal, because the shareholder’s shares of Series B Preferred Stock will automatically be voted in favor of the Reverse Stock Split Proposal alongside such shareholder’s shares of common stock.
All shares of Series B Preferred Stock that are not present in person or by proxy at the Special Meeting as of immediately prior to the opening of the polls at the Special Meeting will be automatically redeemed (the “Initial Redemption”). Any outstanding shares of Series B Preferred Stock that have not been redeemed pursuant to the Initial Redemption will be redeemed in whole, but not in part, (i) if and when ordered by our Board or (ii) automatically upon the approval by the Company’s shareholders of the Reverse Stock Split Proposal at any meeting of the shareholders held for the purpose of voting on such proposal.
| Notice of Special Meeting of Shareholdersand Proxy Statement | 2 |
VOTING METHODS
You may vote at the AnnualSpecial Meeting by delivering a proxy card in person or you may cast your vote in any of the following ways:
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| INTERNET | PHONE | ONLINE AT THE MEETING | ||||||||||||||||
Mailing your signed | Using the Internet at www.proxyvote.com. | Calling toll-free from the United States, U.S. territories and Canada to 6903. | You can vote at the meeting at www.virtualshareholder meeting.com/ |
HOW YOUR SHARES WILL BE VOTED
In each case, your shares will be voted as you instruct. Unless otherwise provided on any applicable proxy or ballot with respect to the voting on the Reverse Stock Split Proposal or the Adjournment Proposal, when a holder of common stock submits a vote on the Reverse Stock Split Proposal and the Adjournment Proposal, the corresponding number of shares of Series B Preferred Stock (or fraction thereof) held by such holder will be automatically cast in the same manner as the vote of the share of common stock (or fraction thereof) in respect of which such share of Series B Preferred Stock (or fraction thereof) was issued as a dividend is cast on the Reverse Stock Split Proposal, the Adjournment Proposal or such other matter, as applicable, and the proxy or ballot with respect to shares of common stock held by any holder on whose behalf such proxy or ballot is submitted will be deemed to include all shares of Series B Preferred Stock (or fraction thereof) held by such holder. If you return a signed card, but do not provide voting instructions, your shares will be voted FOR each of the proposals. If you are the record holder of your shares, you may revoke or change your vote any time before the proxy is exercised. To do so, you must do one of the following:
Vote over the Internet or by telephone as instructed above. Only your latest Internet or telephone vote is counted. You may not revoke or change your vote over the Internet or by telephone after 11:59 p.m., Eastern Time, on May 3,November 2, 2022.
Sign a new proxy card and submit it by mail, which must be received no later than May 3,November 2, 2022. Only your latest dated proxy card will be counted.
Virtually attend the AnnualSpecial Meeting at www.virtualshareholdermeeting.com/BXRX2022. BXRX2022SM. Virtually attending the AnnualSpecial Meeting will not by itself revoke a previously granted proxy.
Give our Corporate Secretary written notice before or at the meeting that you want to revoke your proxy.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 1
GENERAL INFORMATION ABOUT THE MEETING
If your shares are held by your broker, bank or other holder of record as a nominee or agent (i.e., the shares are held in “street name”“street name”), you should follow the instructions provided by your broker, bank or other holder of record.
Deadline for Voting. The deadline for voting by telephone or Internet, other than by virtually attending the AnnualSpecial Meeting, is 11:59 p.m. Eastern Time on May 3,November 2, 2022. If you are a registered shareholder and virtually attend the AnnualSpecial Meeting, you may vote online during the AnnualSpecial Meeting.
| Notice of Special Meeting of Shareholdersand Proxy Statement | 3 |
GENERAL INFORMATION ABOUT THE MEETING |
BROKER VOTING AND VOTES REQUIRED FOR EACH PROPOSAL
If your shares are held in a stock brokerage account or by a bank or other holder of record, you are considered the “beneficial owner”“beneficial owner” of shares held in street name. The Notice of 2022 Special Meeting of Shareholders, (the “Notice”), has been forwarded to you by your broker, bank or other holder of record who is considered the shareholder of record of those shares. As the beneficial owner, you may direct your broker, bank or other holder of record on how to vote your shares by using the proxy card included in the materials made available or by following their instructions for voting on the Internet.
A broker non-vote occurs when a broker or other nominee that holds shares for another does not vote on a particular item because the nominee does not have discretionary voting authority for that item and has not received instructions from the beneficial owner of the shares. The following table summarizes how broker non-votes and abstentions are treated with respect to our proposals:
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PROPOSAL | VOTES REQUIRED | TREATMENTOF ABSTENTIONS | BROKER DISCRETIONARY VOTING | ||||
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| Abstentions will be treated as a vote “against” such proposal | Yes | |
Proposal | Majority of the votes cast | Abstentions taken into account in determining the outcome of the proposal | Yes |
Proposal One: Approval of an amendment to the Charter to effect a reverse stock split of our outstanding shares of common stock by a ratio of any whole number between 1-for-5 and 1-for-40, the implementation and timing of which shall be subject to the discretion of the Board. The approval of the amendment to the Amended and Restated Articles of Incorporation, as amended (the “Charter”) to effect a reverse stock split requires the affirmative votes of a majority of the combined voting power of the outstanding shares of common stock and Series B Preferred Stock, voting together as a single class, present in person or represented by proxy and entitled to vote on the proposal. The holders of common stock have the right to cast one (1) vote per share of common stock on this proposal. The holders of Series B Preferred Stock have the right to cast 1,000,000 votes per share of Series B Preferred Stock on this proposal.
ProposalTwo: Adjournment. The approval of the adjournment requires the affirmative vote of a majority of the votes cast by all shareholders present in person or represented by proxy at the Special Meeting and entitled to vote on the proposal.
| Notice of Special Meeting of Shareholdersand Proxy Statement | 4 |
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QUORUM
We must have a quorum to conduct business at the AnnualSpecial Meeting. A quorum consists of the presence at the AnnualSpecial Meeting either attending the meeting virtually or represented by proxy of the holders of a majority of the votes shareholders are entitled to cast at the AnnualSpecial Meeting. Shares of Series B Preferred Stock that are automatically redeemed in the Initial Redemption will not be counted towards the presence of a quorum or as part of the issued and outstanding shares of capital stock of the Company entitled to vote at our Special Meeting for purposes of determining the presence of a quorum. Both abstentions and broker non-votes, if any, are counted as present for determining the presence of a quorum. For the purpose of establishing a quorum, abstentions, including brokers holding customers’ shares of record who cause abstentions to be recorded at the meeting, and broker non-votes are considered shareholders who are present and entitled to vote, and count toward the quorum. If there is no quorum, the holders of a majority of shares virtually attending the AnnualSpecial Meeting or represented by proxy or the chairman of the meeting may adjourn the AnnualSpecial Meeting to another date.
PROXY SOLICITATION COSTS
We pay the cost of soliciting proxies. Proxies will be solicited on behalf of the BoardCompany by mail, telephone and other electronic means or in person. Directors and employees will not be paid any additional compensation for soliciting proxies. We have engaged Kingsdale Advisors to assist with the solicitation of proxies for an estimated fee of up to $12,000, plus any additional expenses. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 2
Our Board has nominated Arnold Baskies, M.D. and Winston Churchill for re-election as Class III directors at our Annual Meeting to hold office until our 2025 Annual Meeting of Shareholders.
Our Board is the Company’s ultimate decision-making body, except with respect to those matters reserved to the shareholders. Our Board selects the members of our senior management team, who in turn are responsible for the day-to-day operations of the Company. Our Board acts as an advisor and counselor to senior management and oversees its performance.
Our Board consists of directors divided into three classes, with each class holding office for a three-year term. Arnold Baskies, M.D. and Winston Churchill have been nominated by our Board for election at the Annual Meeting for three-year terms that will expire at the 2025 Annual Meeting of Shareholders and until their successors, if any, are elected or appointed, or their earlier death, resignation, retirement, disqualification or removal. Each of the nominees has agreed to be named and to serve, and we expect each nominee to be able to serve if elected. If any nominee is unable to serve, the Nominating and Corporate Governance Committee, or the Governance Committee, of our Board will recommend to our Board a replacement nominee. The Board may then designate the other nominee to stand for election. If you voted for the unavailable nominee, your vote will be cast for his or her replacement.
BOARD STRUCTURE AND COMPOSITION
The Governance Committee of our Board is responsible for recommending the composition and structure of our Board and for developing criteria for Board membership. This committee regularly reviews director competencies, qualities and experiences, with the goal of ensuring that our Board is comprised of an effective team of directors who function collegially and who are able to apply their experience toward meaningful contributions to our business strategy and oversight of our performance, risk management, organizational development and succession planning.
Our Amended and Restated Bylaws, or Bylaws, provide that the number of members of our Board shall be fixed by the Board from time to time. Our Board is currently fixed at seven members. Our Board is divided into three classes with staggered three-year terms. Alfred Altomari has informed us that he will be resigning from our Board, effective immediately following the Annual Meeting. As a result, we intend to reduce the size of our Board from seven to six, effective immediately following the Annual Meeting. The Governance Committee is responsible for identifying individuals that it believes are qualified to become Board members.
Board diversity and inclusion is critical our success. While we do not have a formal policy on Board diversity, the Board is committed to maintaining a Board that consists of the optimal mix of skills, expertise, and diversity capable of effectively overseeing the execution of our business and meeting the Company’s evolving needs, with diversity reflecting gender, age, race, ethnicity, background, professional experience and perspectives. The Governance Committee considers the value of diversity on the Board in evaluating director nominees. Accordingly, the Governance Committee’s evaluation of director nominees includes consideration of their ability to contribute to the diversity of personal and professional experiences, opinions, perspectives and backgrounds on the Board.
As presently constituted, the Board represents a deliberate mix of members who have a deep understanding of our business as well as members who have different skill sets and points of view. The recently adopted listing requirements of the Nasdaq Stock Market LLC, or Nasdaq, require each listed company to have, or explain why it does not have, two diverse directors on the board, including at least one diverse director who self-identifies as female and at least one diverse director who self-identifies as an underrepresented minority or LGBTQ+, or for smaller reporting companies, two female directors. Companies listed on Nasdaq must have at least one diverse director by 2023 and two diverse directors by 2026. As of March 31, 2022, our Board has one diverse director, and we intend to be fully compliant with Nasdaq’s diversity requirement by 2026. The matrix below provides certain highlights of the composition of our Board members based on self-identification. Each of the categories listed in the matrix below has the meaning as it is used in Nasdaq Listing Rule 5605(f).
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 3
BOARD OF DIRECTORS
Board Diversity Matrix (as of March 31, 2022)
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Total Number of Directors | 7 | |||
| Female | Male | Non-Binary | Did Not Disclose Gender |
Part I: Gender Identity | ||||
Directors | 1 | 6 |
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Part II: Demographic Background |
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White | 1 | 6 |
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Did Not Disclose Demographic Background |
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The Governance Committee has identified certain criteria that it will consider in identifying director nominees. Important general criteria and considerations for Board membership include:
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Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 4
BOARD OF DIRECTORS
The Governance Committee also considers, on an ongoing basis, the background, experience and skills of the incumbent directors that are important to our current and future business needs, including, among others, the combined mix of experience in the following areas:
| Notice of Special Meeting of Shareholdersand | ||||
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Director Skill Set Considerations; Use of Matrix
In recruiting and selecting Board candidates, the Governance Committee takes into account the size of the Board and considers a skills matrix. This skills matrix helps the Governance Committee determine whether a particular Board member or candidate possesses one or more of the skill sets, as well as whether those skills and/or other attributes qualify him or her for service on a particular committee. The Governance Committee also considers a wide range of additional factors, including each director’s and candidate’s projected retirement date, to assist in Board succession planning; other positions the director or candidate holds, including other boards of directors on which he or she serves; and the independence of each director and candidate, to ensure that a substantial majority of the Board is independent. While the Company does not have a formal policy on Board diversity, the Governance Committee considers the value of diversity on the Board in evaluating director nominees. Accordingly, the Governance Committee’s evaluation of director nominees includes consideration of their ability to contribute to the diversity of personal and professional experiences, opinions, perspectives and backgrounds on the Board.
Potential Director Candidates
On an ongoing basis, the Governance Committee considers potential director candidates identified on its own initiative, as well as candidates referred or recommended to it by other directors, members of management, search firms, shareholders and others (including individuals seeking to join the Board). Shareholders who wish to recommend candidates may contact the Governance Committee in the manner described in “Shareholder Communications to the Board.” Shareholder nominations must be made according to the procedures required under our Bylaws and described in this Proxy Statement under the heading “Requirements for Submission of Shareholder Proposals for Next Year’s Annual Meeting.” Shareholder-recommended candidates and shareholder nominees whose nominations comply with these procedures and who meet the criteria referred to above will be evaluated by the Governance Committee in the same manner as the Governance Committee’s nominees.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 5
BOARD OF DIRECTORS
In each of the director nominee and continuing director biographies that follow, we highlight the specific experience, qualifications, attributes and skills that led the Board to conclude that the director nominee or continuing director should serve on our Board at this time.
CLASS III DIRECTORS— PRESENT TERMS EXPIRING AT THE ANNUAL MEETING AND PROPOSED TERMS TO EXPIRE IN 2025
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BOARD OF DIRECTORS
CLASS I DIRECTOR —TERM EXPIRING AT THE 2023 ANNUAL MEETING OF SHAREHOLDERS
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BOARD OF DIRECTORS
CLASS II DIRECTORS —TERMS EXPIRING AT THE 2024 ANNUAL MEETING OF SHAREHOLDERS
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BOARD OF DIRECTORS
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BOARD OF DIRECTORS
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Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 11
CORPORATE GOVERNANCE AND RISK MANAGEMENT
We are committed to good corporate governance and integrity in our business dealings. We believe that strong corporate governance practices that provide meaningful rights to our shareholders and ensure Board and management accountability are key to our relationship with our shareholders. We strive to have regular, constructive conversations with our shareholders to better understand our shareholders’ priorities and perspectives.
Our governance practices are documented in our Amended and Restated Articles of Incorporation, as amended, or Articles, our Bylaws, our Code of Business Conduct and Ethics, or the Code of Conduct, our Corporate Governance Guidelines and the charters of the committees of the Board, or the Committees. Aspects of our governance documents are summarized below. You can find our charters for each Committee and our Code of Conduct on our website at www.baudaxbio.com under “News & Investors—Governance—Governance Documents.”
Our Board has determined all of our directors, except for Ms. Henwood, are “independent” directors, as defined under the rules of Nasdaq. In making such determination, the Board considered the relationships that each such non-employee director has with the Company and all other facts and circumstances that the Board deemed relevant in determining their independence, including the beneficial ownership of our common stock by each non-employee director. Our independent directors generally meet in executive session at each regularly scheduled Board meeting.
The Board does not have a formal policy with respect to the separation of the offices of Chief Executive Officer, or CEO, and Chairman of the Board. It is the Board’s view that rather than having a rigid policy, the Board, with the advice and assistance of the Governance Committee, and upon consideration of all relevant factors and circumstances, will determine, as and when appropriate, whether the two offices should be separate. Currently, our leadership structure separates the offices of CEO and Chairman of the Board with Ms. Henwood serving as our CEO and Mr. Altomari serving as Chairman of the Board. Mr. Altomari has informed us of his intention to resign form our Board, effective immediately following the Annual Meeting. Our Board intends to appoint a new Chairman of the Board prior to the effectiveness of Mr. Altomari’s resignation. Our Board believes that the separation of the positions of CEO and Chairman of the Board reinforces the independence of the Board from management, creates an environment that encourages objective oversight of management’s performance and enhances the effectiveness of our Board as a whole.
Our Board has established various Committees to assist in discharging its duties: the Audit Committee, the Compensation Committee and the Governance Committee. Each member of our Committees is an independent director as that term is defined by the Securities and Exchange Commission, or SEC, and Nasdaq. The primary responsibilities of each of the Committees and the Committee memberships are provided below under the section entitled “Board Attendance, Committee Meetings and Committee Membership.”
Each of the Committees has the authority, as its members deem appropriate, to engage legal counsel or other experts or consultants in order to assist the Committee in carrying out its responsibilities.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 12
CORPORATE GOVERNANCE AND RISK MANAGEMENT
Our Board oversees an enterprise-wide approach to risk management designed to support the achievement of organizational objectives, including strategic objectives, to improve long-term organizational performance and enhance shareholder value. A fundamental part of risk management is not only understanding the risks we face and what steps management is taking to manage those risks, but also understanding what level of risk is appropriate for us. The involvement of the full Board in setting our business strategy is a key part of its assessment of management’s appetite for risk and the determination of what constitutes an appropriate level of risk for the Company. The risk oversight process includes receiving regular reports from Committees and our executive officers to enable our Board to understand our risk identification, risk management and risk mitigation strategies with respect to areas of potential material risk, including operations (including cyber-security), finance, legal, regulatory, strategic and reputational risk.
While the Board has the ultimate oversight responsibility for the risk management process, each Committee also has responsibility for risk management. Each Committee has been delegated the responsibility for the oversight of specific risks that fall within its areas of responsibility. For example:
The Audit Committee oversees management of financial reporting, compliance and litigation risks, including risks related to our insurance, information technology, cybersecurity, human resources and regulatory matters, as well as the steps management has taken to monitor and control such exposures.
The Compensation Committee is responsible for overseeing the management of risks relating to our executive compensation policies, plans and arrangements and the extent to which those policies or practices increase or decrease risk for the Company.
The Governance Committee manages risks associated with the independence of the Board, potential conflicts of interest and the effectiveness of the Board.
While each Committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through Committee reports about such risks. Matters of significant strategic risk are considered by our entire Board.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 13
CORPORATE GOVERNANCE AND RISK MANAGEMENT
EVALUATING BOARD EFFECTIVENESS
The Board is committed to continuous improvement and annual self-evaluations are an important tool for evaluating effectiveness. The Board and each committee conduct a rigorous annual self-evaluation of their performance and effectiveness.
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We have a written Code of Conduct that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. The Code of Conduct covers fundamental ethical and compliance-related principles and practices such as accurate accounting records and financial reporting, avoiding conflicts of interest, the protection and use of our property and information and compliance with legal and regulatory requirements. The Code of Conduct and any amendments thereto, or any waivers of its requirements, will be disclosed on our website at www.baudaxbio.com.
DIRECTOR ORIENTATION AND CONTINUING EDUCATION
Our director orientation programs familiarize new directors with the Company’s businesses, strategies, and policies, and assist new directors in developing the skills and knowledge required for their service on the Board. All other directors are also invited to attend the orientation programs. From time to time, management advises, or invites outside experts to attend Board meetings to advise the Board on its responsibilities, management’s responsibilities, developments relevant to corporate governance and best corporate practices. Additionally, Board members may attend, and are encouraged to attend, accredited director education programs at the Company’s expense.
ANTI-HEDGING AND ANTI-PLEDGING POLICY
Pursuant to our Insider Trading Policy, which applies to all officers, all directors and all employees of the Company and any of the Company’s subsidiaries, or the Covered Individuals, the Covered Individuals are prohibited from all
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 14
CORPORATE GOVERNANCE AND RISK MANAGEMENT
forms of hedging or monetization transactions, such as zero-cost collars and forward sale contracts. Covered Individuals are also prohibited from holding any of the Company’s or its subsidiary’s securities in a margin account or selling “short” any of the Company’s or its subsidiary’s securities. These prohibitions also apply to family members living in the same household as Covered Individuals, as well as entities influenced or controlled by the Covered Individuals.
Pursuant to the Insider Trading Policy, the Covered Individuals are also prohibited from pledging any of the Company’s or its subsidiary’s securities to secure margin or other loans.
CORPORATE GOVERNANCE GUIDELINES
We have a written set of corporate governance guidelines that are designed to help ensure effective corporate governance of our Company. Our corporate governance guidelines cover topics including, but not limited to, director qualification criteria, director responsibilities, director compensation, director orientation and continuing education, the annual evaluations of our Board and its Committees and succession planning. Succession planning for the Board is critical to our success. Our goal is to achieve a Board that provides effective oversight of the Company through the appropriate balance of diversity of perspectives, experience, expertise and skills. Our corporate governance guidelines are reviewed at least annually by the Governance Committee and amended by our Board when appropriate.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 15
CORPORATE GOVERNANCE AND RISK MANAGEMENT
BOARD ATTENDANCE, COMMITTEE MEETINGS AND COMMITTEE MEMBERSHIP
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During 2021, our Board held thirteen meetings, our Compensation Committee held eight meetings, our Audit Committee held six meetings and our Governance Committee held four meetings. During 2021, each director attended at least 75% of the meetings of the Board and meetings of each Committee on which he or she served. Although we do not have a formal policy regarding attendance by members of our Board at our Annual Meeting, we encourage all of our directors to attend. All of our directors attended our 2021 Annual Meeting of Shareholders.
Audit Committee
The Audit Committee assists the Board by providing oversight of our financial management, independent auditor and financial reporting procedures, as well as such other matters as directed by the Board or the Audit Committee Charter.
Among other things, the Audit Committee’s responsibilities include:
appointing, retaining, compensating, overseeing, evaluating, and, when appropriate, terminating our independent registered public accounting firm;
discussing with management and the independent registered public accounting firm our annual and quarterly financial statements and related disclosures;
periodically reviewing policies and procedures with respect to data privacy and security we employ in conducting our business;
reviewing with management its assessment of our internal control over financial reporting, disclosure controls and procedures;
reviewing our Code of Conduct and recommending any changes to the Board;
overseeing our risk assessment and risk management processes;
reviewing the effects of regulatory initiatives in the areas of securities, accounting or tax, as well as off-balance sheet transactions and structures on our financial statements;
reviewing, approving, ratifying, prohibiting and/or monitoring all related party transactions, based on the standards set forth in our Related Party Transactions Policy and in accordance with applicable law and SEC and Nasdaq rules and regulations; and
preparing and approving the Audit Committee report required to be included in our annual proxy statement.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 16
CORPORATE GOVERNANCE AND RISK MANAGEMENT
The members of our Audit Committee are Messrs. Altomari, Ashton, Churchill, Drechsler (chair) and Weisman. All members of our Audit Committee are deemed “independent” and financially literate under the applicable rules and regulations of the SEC and Nasdaq. Mr. Altomari and Mr. Drechsler also qualify as an “audit committee financial experts” within the meaning of SEC regulations. Effective immediately following the Annual Meeting, upon Mr. Altomari’s resignation, the Audit Committee will be comprised of Messrs. Ashton, Churchill, Drechsler (chair) and Weisman.
Nominating and Corporate Governance Committee
The Governance Committee identifies qualified individuals for membership on the Board, recommends to the Board the director nominees to fill vacancies on the Board and to stand for election at the next annual meeting of shareholders, develops and recommends to the Board a set of corporate governance guidelines for the Board and provides oversight of the corporate governance affairs of the Board, as well as such other matters as directed by the Board or the Nominating and Corporate Governance Charter. Among other things, our Governance Committee’s responsibilities include:
developing and submitting to the Board for its adoption a list of selection criteria for new directors to serve on the Board;
identifying, reviewing and evaluating candidates, including candidates submitted by shareholders, for election to the Board and recommending to the Board (i) nominees to fill vacancies or new positions on the Board and (ii) the slate of nominees to stand for election by the Company’s shareholders at each annual meeting of shareholders;
developing, recommending, and overseeing the implementation of and monitor compliance with, our corporate governance guidelines, and periodically reviewing and recommending any necessary or appropriate changes to our corporate governance guidelines;
annually recommending to the Board (i) the assignment of directors to serve on each Committee; (ii) the chairperson of each Committee and (iii) the chairperson of the Board or lead independent director, as appropriate;
periodically assessing the appropriate size and composition of the Board as a whole, the needs of the Board and the respective committees of the Board, and the qualification of director candidates in light of these needs;
reviewing the adequacy of our Articles and Bylaws and recommending to the Board, as conditions dictate, amendments for consideration by the shareholders;
reviewing any proposals submitted by shareholders for action at the annual meeting of shareholders and make recommendations to the Board regarding action to be taken in response to each proposal;
evaluating the re-nomination and continuing service of incumbent directors, as impacted by factors including retirement, changes in principal employment or primary occupation, conflicts of interest and attendance; and
implementing policies with respect to governance risk oversight, assessment and management of risk associated with the independence of our Board and director nominees, potential conflicts of interest of members of our Board and our executive officers and the effectiveness of the Board and the Committees thereof.
The Governance Committee is responsible for identifying individuals that the Governance Committee believes are qualified to become Board members, as described above in the section entitled “Board Structure and Composition.”
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 17
CORPORATE GOVERNANCE AND RISK MANAGEMENT
The members of our Governance Committee are Mr. Altomari, Mr. Ashton, Dr. Baskies, Mr. Churchill and Mr. Weisman (chair). The Board has determined that all Governance Committee members are independent under the listing standards of Nasdaq. Effective immediately following, the Annual Meeting, upon Mr. Altomari’s resignation, the Governance Committee will be comprised of Mr. Ashton, Dr. Baskies, Mr. Churchill and Mr. Weisman (chair).
Compensation Committee
The Compensation Committee reviews the performance and development of our management in achieving corporate goals and objectives and assures that our executive officers (including our CEO) are compensated effectively in a manner consistent with our strategy, competitive practice and shareholder interests, as well as such other matters as directed by the Board or the Compensation Committee Charter. Among other things, the Compensation Committee’s responsibilities include:
annually reviewing and recommending to the Board for approval the corporate goals and objectives applicable to the compensation of our CEO and other executive officers and evaluating at least annually our CEO’s and other executive officers’ performance in light of those goals and objectives;
reviewing the relationship between risk management policies and practices, corporate strategy and our compensation arrangements;
annually reviewing and approving our peer group for compensation benchmarking;
determining and approving our non-CEO executive officers’ compensation level (including salary, cash and equity-based incentive awards and any personal benefits);
recommending our CEO’s compensation level to the Board (including salary, cash and equity-based incentive awards and any personal benefits);
administering, or where appropriate, overseeing the administration of, executive and equity compensation plans and such other compensation and benefit plans that will be adopted by us from time to time;
determining stock ownership guidelines for our CEO and other executive officers and monitoring compliance with such guidelines, if deemed advisable by our Board or the Compensation Committee; and
overseeing risks and exposures associated with executive compensation plans and arrangements.
Our Compensation Committee has the authority to form and delegate authority to one or more subcommittees as it deems appropriate from time to time under the circumstances. Our Compensation Committee also has the authority to delegate to one or more of our executive officers the authority to make grants and awards to non-executive officers of the Company under our equity plans.
Our CEO annually reviews the performance of each of the other executive officers, including the other named executive officers. The CEO then recommends annual merit salary adjustments and any changes in annual or long-term incentive opportunities for other executives. The Compensation Committee considers our CEO’s recommendations in addition to data and recommendations presented by our executive compensation consultant.
The members of our Compensation Committee are Mr. Altomari, Mr. Ashton (chair), Dr. Baskies, Mr. Churchill and Mr. Weisman. The Board has determined that all Compensation Committee members are independent under the listing standards of Nasdaq, and that they are “non-employee directors” for purposes of Rule 16b-3 under the Exchange Act. Effective immediately following, the Annual Meeting, upon Mr. Altomari’s resignation, the Compensation Committee will be comprised of Mr. Ashton (chair), Dr. Baskies, Mr. Churchill and Mr. Weisman.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 18
CORPORATE GOVERNANCE AND RISK MANAGEMENT
Oversight of Compensation Consultant
In 2021, our Compensation Committee retained Pay Governance, LLC, or Pay Governance, as its independent compensation consultant to assist the Compensation Committee with the design of our executive compensation programs, as well as to provide objective advice on compensation practices and the competitive landscape for the compensation of the Baudax Bio executive officers. Pay Governance provides various executive compensation services to the Compensation Committee, including advising the Compensation Committee on the principal aspects of our executive compensation program and evolving industry practices and providing market information and analysis regarding the competitiveness of our program design and our award values in relation to performance. Pay Governance reports directly to the Compensation Committee, has direct access to Compensation Committee members, interacts with Baudax Bio management when necessary and appropriate and attends Compensation Committee meetings either in person or by telephone.
Pay Governance does not provide services to us other than its advice to the Compensation Committee on executive and director compensation matters. The Compensation Committee determined Pay Governance to be independent under the Nasdaq and SEC regulations.
There are no family relationships among any of our directors or executive officers.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the fiscal year ended December 31, 2021 and as of the date of this Proxy Statement, none of the members of the Compensation Committee was or is one of our officers or employees, and none of our executive officers has served or serves on the compensation committee or board of any company that employed or employs any member of our Compensation Committee or Board.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 19
CORPORATE GOVERNANCE AND RISK MANAGEMENT
Connect
Engaging with investors is fundamental to our commitment to good corporate governance and essential to maintaining strong corporate governance practices. We regularly seek opportunities to connect with our investors to gain and share valuable insights into current and emerging global governance trends.
Collaborate
We strive for a collaborative approach to shareholder engagement and value the variety of investors’ perspectives received, which helps deepen our understanding of their interests and motivations.
Communicate
Our goal is to communicate with our shareholders through various platforms, including via our website at www.baudaxbio.com, in print and in person at investor presentations or shareholder meetings. We view communication between our shareholders and the Board as a dialogue.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 20
We have designed and implemented our compensation program for our non-employee directors to attract, motivate and retain individuals who are committed to our values and goals and who have the expertise and experience that we need to achieve those goals.
The table below depicts our compensation program for our non-employee directors:
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The cash fees described above are paid on a quarterly basis. Our non-employee directors are also reimbursed for their business-related expenses incurred in connection with attendance at Board and Committee meetings and related activities. Our only employee director, Ms. Henwood, receives no separate compensation for her service in such capacity.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 21
DIRECTOR COMPENSATION
The following table provides summary information regarding 2021 compensation to our non-employee directors.
Name | Fees Earned or Paid in | Option Awards ($)(1) | Stock Awards ($)(1) | Total ($)
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Alfred Altomari | 92,500 | 65,058 | 70,000 | 227,558 |
William L. Ashton | 70,000 | 65,058 | 70,000 | 205,058 |
Arnold Baskies, M.D. | 52,500 | 65,058 | 70,000 | 187,558 |
Winston Churchill | 62,500 | 65,058 | 70,000 | 197,558 |
Andrew Drechsler | 60,000 | 65,058 | 70,000 | 195,058 |
Wayne B. Weisman | 66,500 | 65,058 | 70,000 | 201,558 |
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Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 22
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES
The Audit Committee works with our management in order to negotiate appropriate fees with KPMG and is ultimately responsible for approving those fees. The following is a summary of audit fees paid or payable to KPMG for each of our years ended December 31, 2021 and 2020, and the fees billed by KPMG for other services in each of those years, were as follows:
Service | 2021 | 2020 |
Audit Fees | $466,712 | $628,613 |
Audit-Related Fees | - | - |
Tax Fees | $15,418 | $12,264 |
Total | $482,130 | $640,877 |
“Audit fees” represented the aggregate fees for professional services rendered for the audit of our consolidated and combined financial statements and the review of our quarterly financial statements on Form 10-K and Form 10-Q, respectively, that are customary under the standards of the Public Company Accounting Oversight Board (United States), and in connection with regulatory requirements. The amount also includes other services that are normally provided by KPMG in connection with statutory and regulatory filings or engagements.
“Tax fees” consisted of fees related to tax compliance, tax planning and tax advice.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
The Audit Committee is responsible for appointing, setting compensation for, and overseeing the work of the independent registered public accounting firm. The Audit Committee’s charter establishes a policy that all audit and permissible non-audit services provided by the independent registered public accounting firm will be pre-approved by the Audit Committee.
All such audit and permissible non-audit services were pre-approved in accordance with this policy during the fiscal year ended December 31, 2021. These services may include audit services, audit-related services, tax services and other services. The Audit Committee considers whether the provision of each non-audit service is compatible with maintaining the independence of our independent registered public accounting firm. The responsibility to pre-approve audit and non-audit services may be delegated by the Audit Committee to one or more members of the Audit Committee; provided that any decisions made by such member or members must be presented to the full Audit Committee at its next scheduled meeting.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 23
The primary purpose of the Audit Committee is to assist the Board in its general oversight of the Company’s financial reporting process.
Management is primarily responsible for the preparation, presentation, and integrity of the Company’s consolidated financial statements, accounting and financial reporting principles, internal controls and procedures designed to ensure compliance with accounting standards, applicable laws and regulations. The Company’s independent registered public accounting firm for the fiscal year 2021, KPMG LLP, is responsible for performing an independent audit of the consolidated financial statements and expressing an opinion on the conformity of those consolidated financial statements with generally accepted accounting principles.
The Audit Committee and the chairman of the Audit Committee have met with management during fiscal year 2021 to consider the adequacy of the Company’s internal controls, and discussed these matters and the overall scope and plans for the audit of the Company with KPMG LLP. The Audit Committee also discussed with management and KPMG LLP the Company’s disclosure controls and procedures.
The Audit Committee has reviewed and discussed management’s assessment of the effectiveness of the Company’s internal controls and the audited consolidated financial statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 with management. The Audit Committee has discussed with KPMG LLP the matters required to be discussed by Public Company Accounting Oversight Board Auditing Standard No. 1301, “Communication with Audit Committees.” In addition, KPMG LLP has provided the Audit Committee with the written disclosures and the letter required by the applicable requirements of the Public Company Accounting Oversight Board regarding KPMG LLP’s communications with the audit committee concerning independence, and the Audit Committee has discussed with KPMG LLP its independence.
The Audit Committee also considered whether the independent registered public accounting firm’s provision of non-audit services to the Company is compatible with the auditor’s independence. The Audit Committee has concluded that the independent registered public accounting firm is independent from the Company and its management. Based on the considerations and discussions referred to above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
Audit Committee
Alfred Altomari
William Ashton
Winston Churchill
Andrew Drechsler (Chairman)
Wayne Weisman
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 24
The following table sets forth the name, age and position of each of our executive officers as of the date of this Proxy Statement:
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Gerri Henwood – For biographical information for Gerri Henwood, see “Board of Directors – Continuing Directors.”
Richard S. Casten has served as our Chief Financial Officer since March 2021.
Previously, Mr. Casten served as Vice President, Controller and Treasurer of Lupin Pharmaceuticals, Inc., or Lupin, a transnational pharmaceutical company, where he managed Lupin’s U.S. accounting operations, financial reporting and enforcing accounting policies and procedures, from September 2016 until March 2021. From 2011 until 2016, Mr. Casten served in roles of increasing responsibility at Endo International plc, or Endo, a specialty pharmaceutical company, including Senior Director, Financial Planning and Analysis and Senior Director, Finance and Accounting. Prior to Endo, Mr. Casten served in various financial roles at Campbell Soup Company. Mr. Casten spent the initial ten years of his career in public accounting, primarily at Ernst & Young LLP, rising to a Senior Manager, Assurance and Advisory Business Services. He holds a B.S. in Business and Economics, with a major in Accounting, from Lehigh University and an M.B.A. from the Johnson School at Cornell University. Mr. Casten is a Certified Public Accountant in both Pennsylvania and California and is a member of the American Institute of Certified Public Accountants and the Pennsylvania Institute of Certified Public Accountants.
Mr. Casten will no longer be employed with the Company, effective on April 16, 2022. During the remaining period of his service, Mr. Casten will continue to serve as our Chief Financial Officer and will assist in the orderly transition of his duties to other Company personnel.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 25
In 2021, our named executive officers were Gerri Henwood, our President and CEO and Richard Casten, our Chief Financial Officer, beginning in March 2021.
In connection with our separation from Societal CDMO, formerly Recro Pharma, Inc., in November 2019, or the Separation, we also entered into a Transition Services Agreement with Societal CDMO, whereby we agreed that the named executive officers would continue to provide services to Societal CDMO for a twelve-month period following the Separation. In 2020, Societal CDMO reimbursed us for a portion of the compensation in respect to Ms. Henwood’s services (approximately 50% of each named executive officer’s 2020 cash compensation). For more information about the compensation paid by Societal CDMO to our named executive officers in respect of the services rendered to Societal CDMO before and after the Separation, see Societal CDMO’s proxy statement for its 2021 annual meeting of shareholders.
This section discusses the material components of the executive compensation program for our named executive officers.
The following table sets forth information concerning the compensation of our named executive officers during the fiscal years ended December 31, 2021 and December 31, 2020:
Name and | Year | Salary ($) | Bonus | Stock | Option | Non-Equity Incentive Plan Compensation ($) | All Other | Total ($) |
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Gerri Henwood President and Chief Executive Officer | 2021 | 618,000 | - | 923,099(2) | 89,836 | - | 43,535 | 1,674,470 |
2020 | 308,654 | - | 162,286(3) | - | 111,240 | 21,166 | 603,346 | |
Richard S. Casten(6) Chief Financial Officer | 2021 | 307,500 | 75,000 | 121,000(4) | 210,594 | 65,813 | 42,020 | 821,927 |
2020 | - | - | - | - | - | - | - |
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Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 26
EXECUTIVE COMPENSATION
Non-Equity Incentive Plan Compensation
Each of our named executive officers are eligible to receive an annual performance bonus based on the achievement of pre-established corporate and/or individual objectives as determined by our Board and our Compensation Committee, in consultation with Pay Governance and upon review of the recommendations of our CEO for our other named executive officers. The Compensation Committee and the Board retained the discretion to make adjustments to the calculated bonus amount based on unexpected or unplanned events, the overall financial condition of the Company, extraordinary performance or underperformance or other factors deemed appropriate by the Compensation Committee and the Board. Each officer is assigned a target bonus expressed as a percentage of his or her base salary. Actual bonus payments may be higher or lower than the target bonus amount, as determined by our Board or Compensation Committee, based on the achievement of corporate and individual objectives. The target bonus amounts in 2021 for Ms. Henwood and Mr. Casten were 60% and 37.5% of their respective base salaries, or $370,800 for Ms. Henwood and $146,250 for Mr. Casten.
In determining the amount of performance bonus awards, our Compensation Committee determines the level of achievement of the corporate goals and individual goals in respect of our non-CEO executive officers and our Board determines the amount of performance bonus awards for our CEO. In determining the level of achievement for our other named executive officers, our Compensation Committee reviews and considers the recommendations of our CEO. These achievement levels are used to determine each named executive officer’s bonus.
For 2021, the Compensation Committee and the Board determined that each named executive officer’s performance bonus should be based principally on contribution towards the achievement of corporate goals. These goals primarily included achievement of revenue and sales targets for ANJESO, achievement of certain formulary milestones for ANJESO, increasing ANJESO awareness, raising capital to fund continued operations and managing cash to budget, out-licensing ANJESO or other pipeline candidates and completing pipeline development goals. The Compensation Committee and the Board determined that the percentage attainment of our corporate goals for 2021 was 75%. Our Compensation Committee approved, and, in the case of Ms. Henwood, our Compensation Committee recommended and our Board approved, 2021 annual bonus payments to each of Ms. Henwood and Mr. Casten in an amount equal to 0% and 45%, respectively, of their respective target bonus amounts.
QUALIFIED AND NON-QUALIFIED PLANS
We maintain a tax-qualified savings plan under Section 401(k) of the Internal Revenue Code. Employees who participate in the plan may make elective deferrals to the plan, subject to the limitations imposed by the Internal Revenue Code. In addition, we match 100% of employee deferrals under the plan, up to a limit of 5% of the employee’s eligible compensation (the eligibility compensation limit is established by the IRS annually and was $290,000 for 2021).
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 27
EXECUTIVE COMPENSATION
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END FOR 2021
The following table summarizes the number of shares of common stock underlying outstanding equity incentive plan awards for each named executive officer as of December 31, 2021:
| Option Awards | Stock Awards | ||||||
Name | Number of Securities | Number of Securities | Option Exercise | Option Expiration | Number of time-based vesting shares or units of stock that have not vested (#) | Market value of time-based vesting shares or units of stock that have not vested ($)(1) | Number of Performance-Based Vesting Shares or Units of Stock that Have Not Vested (#) | Market value of performance-based vesting shares or units of stock that have not vested ($) |
Gerri Henwood |
|
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|
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|
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2,623 | 2,624 (2) | $221.55 | 12/4/2029 |
|
|
|
| |
| 5,368 | 18,093 (3) | $59.50 | 12/21/2031 |
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|
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| 1,837 (4) | $14,090 |
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|
| 15,126 (7) | $116,016 |
Richard S. Casten |
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|
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|
428 | - | $42.35 | 3/7/2031 |
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| |
1,365 | 5,920 (5) | $42.35 | 3/7/2031 |
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| |
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|
| 2,428 (6) | $18,623 |
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| |
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We entered into employment agreements with Ms. Henwood on February 12, 2020 and with Mr. Casten on March 8, 2021.
Compensation
Under these employment agreements, the annual base salary rate in effect for Ms. Henwood is $600,000 and for Mr. Casten is $390,000. In addition, the employment agreements provide that the named executive officers who remain employed with us are eligible to participate in our annual cash bonus program, with target bonus opportunities at 60% and 37.5% of Ms. Henwood and Mr. Casten’s base salaries, respectively.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 28
EXECUTIVE COMPENSATION
Under the employment agreements, the named executive officers are bound by a non-solicitation of employees and customers and a non-compete during their employment and the one-year period thereafter.
Termination and Severance
Pursuant to each of the employment agreements, if we terminate one of our named executive officer’s employment without cause (as defined below) or such named executive officer resigns for certain reasons described below within 12 months of a change of control (as defined below), such named executive officer will generally be entitled to receive:
(i) any accrued but unused vacation and paid time off and any earned but unpaid bonus in respect of the prior year, or the Accrued Benefits;
(ii) continuation of such named executive officer’s base salary and health insurance benefits (including for eligible dependents), at active employee rates, for a period of 12 months following the date of termination, with respect to Mr. Casten, and for a period of 18 months following the date of termination, with respect to Ms. Henwood;
(iii) a pro-rata annual bonus in respect of the fiscal year in which the effective date of termination occurs, to the extent such bonus is earned based on the applicable criteria, paid at the same time it would have otherwise been paid absent the named executive officer’s termination of employment; and
(iv) outplacement services for a period of 12 months following the date of termination, which shall not exceed $25,000.
If Ms. Henwood’s employment is terminated as a result of her disability or death, she or her estate will be entitled to receive:
(i) the Accrued Benefits;
(ii) continuation of Ms. Henwood’s base salary and health insurance benefits (including for eligible dependents) at active employee rates for a period of 12 months following the date of termination;
(iii) a pro-rata target bonus in respect of the fiscal year in which the effective date of termination occurs, paid within 30 days of termination.
If Mr. Casten’s employment is terminated as a result of his death, his estate will be entitled to receive:
(i) the Accrued Benefits;
(ii) continuation of Mr. Casten’s base salary and health insurance benefits (including for eligible dependents) at active employee rates for a period of 6 months following the date of termination;
(iii) a pro-rata target bonus in respect of the fiscal year in which the effective date of termination occurs, to be paid promptly.
The severance benefits described above are generally subject to the named executive officer’s execution of a release of claims in favor of the Company and its affiliates. If the severance and other benefits provided in a named executive officer’s employment agreement or otherwise payable to a named executive officer would be subject to excise tax under Section 280(G) of the Code, then the named executive officer’s severance benefits will be either delivered in full or delivered as to such lesser extent that would result in no portion of the severance benefits being subject to such excise tax, whichever results in the receipt by the named executive officer, on an after-tax basis, of the greatest portion of such total severance and other benefits.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 29
EXECUTIVE COMPENSATION
For purposes of the employment agreements, “cause” generally means a named executive officer’s (1) commission of an act of fraud or dishonesty against us; (2) willful failure to substantially perform his or her duties or material violation of the employment agreement, which failure or violation continues for 30 days or more following written notice to such named executive officer; (3) loss of any permit, license, accreditation or other authorization necessary for such named executive officer to perform his or her duties; (4) conviction of a felony or a plea of “no contest” to a felony; or (5) conduct that is likely, in the judgment of our Board, to materially adversely affect our reputation that continues for 5 days or more following written notice by us of such conduct.
Change of Control
For purposes of the employment agreements, a “change of control” shall generally be deemed to have occurred upon the happening of any of the following events: (1) the consummation by us of a plan of dissolution or liquidation; (2) the consummation of the sale or disposition of all or substantially all of our assets; (3) the consummation by us of a merger, consolidation or other shareholder-approved fundamental business transaction in which we are a participant with another entity where our shareholders, immediately prior to the referenced transaction, will not beneficially own, immediately after the referenced transaction, shares or other equity interests entitling such shareholders to more than 50% of all votes to which all equity holders of the surviving entity would be entitled in the election of directors; (4) a third party shall have become the beneficial owner of, or shall have obtained voting control over, more than fifty percent (50%) of our outstanding shares of the common stock; or (5) a majority of the Board shall have been members of the Board for less than twenty-four (24) months.
A named executive officer will receive the payments and benefits described above if he or she resigns within 12 months of a change of control, because we and/or our successor: (1) materially and adversely change such named executive officer’s status, responsibilities or perquisites; (2) reduce such named executive officer’s base salary, except as part of an across the board decrease in which such executive officer’s percentage reduction is not more than any other executive officer, or reduce such named executive officer’s target bonus opportunity; or (3) require such officer to be principally based at any office or location more than 50 miles from such named executive officer’s principal office prior to the change of control, subject to a 30 day cure period, in each case, if we fail to cure these circumstances within 30 days after receiving notice from the named executive officer of his or her basis to resign.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 30
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Since January 1, 2020, we have engaged in the following transactions with our directors, executive officers, holders of more than 5% of our voting securities, and affiliates or immediate family members of our directors, executive officers, and holders of more than 5% of our voting securities. We believe that all of these transactions were on terms as favorable as could have been obtained from unrelated third parties.
EMPLOYMENT OF CERTAIN RELATED PERSONS
Mr. Chris Sharr, Ms. Henwood’s brother, has been our Vice President, Manufacturing since the Separation in November 2019. Mr. Sharr earned $388,109 in compensation in 2021, including base salary, bonus, equity compensation, which is determined in accordance with ASC 718, and any other compensation including 401(k) matching contributions, the cost of medical benefits and life and disability insurance premiums. The assumptions made in the valuation of Mr. Sharr’s equity compensation are included in Note 14 of the Notes to the Annual Financial Statements included in our 2021 Annual Report. Mr. Sharr’s compensation was approved by our Compensation Committee and Audit Committee.
Ms. Diane Myers, Ms. Henwood’s sister, has been our Senior Vice President, Regulatory and Quality since the Separation in November 2019. Ms. Myers earned $480,959 in compensation in 2021, including base salary, bonus, equity compensation, which is determined in accordance with ASC 718, and any other compensation including 401(k) matching contributions, the cost of medical benefits and life and disability insurance premiums. The assumptions made in the valuation of Ms. Myers’ equity compensation are included in Note 14 of the Notes to the Annual Financial Statements included in our 2021 Annual Report. Ms. Myers’ compensation was approved by our Compensation Committee and Audit Committee.
Each of Ms. Myers and Mr. Sharr participate in our general welfare and benefit plans. Ms. Henwood does not have a material interest in the employment of Ms. Myers or Mr. Sharr, nor does she share a household with any of them. Our Compensation Committee and Audit Committee approve the compensation of all related persons.
FINANCING ARRANGEMENTS WITH ARMISTICE CAPITAL
Armistice Capital Master Fund, Ltd., or Armistice, is a related party due to the fact it owns, or has the right to acquire, 9.99% of our common stock.
November 2020 Registered Direct Offering
On November 22, 2020, we entered into a Securities Purchase Agreement with Armistice whereby Armistice purchased 81,429 shares of our common stock and warrants exercisable for an aggregate of 289,330 shares of common stock at an exercise price of $42.00 per share, at a combined offering price of $41.475 per share. We also offered and sold to Armistice pre-funded warrants to purchase an aggregate of 207,902 shares of common stock, at an exercise price of $0.35 per share in lieu of shares of common stock at Armistice’s election, at a purchase price of $41.125 per pre-funded warrant.
December 2020 Registered Direct Offering
On December 16, 2020, we entered into a Securities Purchase Agreement with Armistice whereby Armistice purchased 121,428 shares of our common stock and warrants exercisable for an aggregate of 294,298 shares of common stock at an exercise price of $41.30 per share at a combined offering price of $40.775 per share. We also offered and sold to Armistice pre-funded warrants to purchase an aggregate of 172,869 shares of common stock, at an exercise price of $0.35 per share in lieu of shares of common stock at Armistice’s election, at a purchase price of $40.425 per pre-funded warrant.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 31
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
January 2021 Warrant Exercise and Registered Direct Offering
On January 21, 2021, we entered into an inducement offer letter agreement with Armistice, pursuant to which we offered warrants exercisable for an aggregate of 294,298 shares of common stock at an offering price of $4.375 per warrant in exchange for the exercise of Armistice’s warrants that were issued to it on December 21, 2020, at an exercise price of $41.30 per warrant. The new warrants have an exercise price of $56.00 per share.
February 2021 Registered Direct Offering
On February 8, 2021, we entered into a Securities Purchase Agreement with certain institutional investors, including Armistice, pursuant to which we agreed to issue and sell, in a registered direct offering, 314,286 shares of our common stock, par value $0.01 per share at an offering price of $56.00 per share, including 71,428 shares which were sold to Armistice in such offering.
May 2021 Registered Direct Offering
On May 31, 2021, we entered into a Securities Purchase Agreement with certain institutional investors, including Armistice, pursuant to which we agreed to issue and sell, in a registered direct offering, 400,815 shares of our common stock, par value $0.01 per share at an offering price of $29.75 per share, including 240,488 shares which were sold to Armistice in such offering. We also offered and sold to Armistice warrants to purchase an aggregate of 240,488 shares of common stock, at an exercise price of $31.50 per share.
December 2021 Registered Direct Offering
On December 27, 2021, we entered into a Securities Purchase Agreement with certain institutional investors, including Armistice, pursuant to which we agreed to issue and sell, in a registered direct offering, 42,289.3 shares of our Series A Preferred Stock, par value $0.01 per share, with a stated value of $100.00 per share, including 24,000 shares which were sold to Armistice in such offering. We also offered and sold to Armistice warrants to purchase an aggregate of 205,714 shares of common stock, at an exercise price of $11.20 per share.
February 2022 Public Offering
On February 22, 2022, we entered into an Underwriting Agreement with H.C. Wainwright & Co., LLC, or Wainwright, pursuant to which we offered and sold, in a public offering, 1,831,631 shares of common stock, par value (ii) pre-funded warrants exercisable for an aggregate of 1,677,141 shares of common stock and (iii) warrants exercisable for an aggregate of 3,508,772 shares of common stock, with an exercise price of $3.25 per share at a public offering price of (i) $2.85 per share of common stock and accompanying warrant, and (ii) $2.84 for pre-funded warrant and accompanying warrant. Armistice participated in the offering and purchased 460,000 shares of common stock, 1,469,825 pre-funded warrants and 1,929,825 warrants to purchase common stock.
POLICIES AND PROCEDURES FOR RELATED PERSON TRANSACTIONS
Our Board has adopted a written related party transaction policy that governs the review and approval of related party transactions. This policy covers any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant, where the amount involved exceeds $120,000 and a related person had or will have a direct or indirect material interest. Pursuant to this policy, if we want to enter into a transaction with a related party or an affiliate of a related party, the Audit Committee will review the proposed transaction to determine, based on applicable rules of Nasdaq and the SEC, whether such transaction requires pre-approval by the Audit Committee. If pre-approval is required, the proposed transaction will be reviewed at the next regular or special meeting of the Audit Committee, and we may not enter into a related party transaction unless the Audit Committee has specifically confirmed in writing that either no further reviews are necessary or that all requisite corporate reviews have been obtained. In reviewing and approving any such transactions, our Audit Committee is tasked to consider all relevant facts and circumstances with respect to the transaction and shall evaluate all available options, including ratification, revision or termination of the transaction. All of the transactions described
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 32
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
under “Certain Relationships and Related Party Transactions” in this Proxy Statement either were approved or ratified in compliance with this policy.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 33
EQUITY COMPENSATION PLAN INFORMATION
Plan Category |
| (a) Number of securities to be issued upon exercise of outstanding options and other rights |
|
| (b) Weighted- average exercise price of outstanding options and other rights(1) |
|
| (c) 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 |
|
| 134,451 (2) |
|
|
| $81.52 |
|
|
| 93,376 |
Equity compensation plans not approved by security holders(4) |
|
| 32,036 (3) |
|
|
| $52.04 |
|
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| - |
Total |
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| 166,487 |
|
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| $75.85 |
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| 93,376 |
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Other information with respect to this item is set forth in this Proxy Statement under the headings “Security Ownership of Directors, Certain Beneficial Owners and Management,” “Executive Compensation,” and “Director Compensation,” and is incorporated herein by reference.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 34
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial ownership of common stock as of March 29,September 30, 2022 by (a) each person known by us to be the beneficial owner of more than 5% of the outstanding shares of common stock, (b) each named executive officer identified inof the “Summary Compensation Table” above,Company, (c) each director and nominee for director,of the Company, and (d) all executive officers and directors as a group.
The percentage of common stock outstanding is based on 6,412,97920,003,745 shares of our common stock outstanding as of March 29,September 30, 2022,. and 20,003.745 shares of Series B Preferred to be outstanding upon issuance of the Series B Preferred Stock dividend on October 3, 2022. For purposes of the table below, and in accordance with the rules of the SEC,Securities and Exchange Commission (the “SEC”), we deem shares of common stock subject to options and warrants that are currently exercisable or exercisable within sixty days of March 29,September 30, 2022 to be outstanding and to be beneficially owned by the person holding the options or warrants for the purpose of computing the percentage ownership of that person, but we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person. Except as otherwise noted, each of the persons or entities in this table has sole voting and investing power with respect to all of the shares of common stock beneficially owned by them, subject to community property laws, where applicable. Except as otherwise noted below, the street address of each beneficial owner is c/o Baudax Bio, Inc., 490 Lapp Road, Malvern, PA 19355.
| Shares Beneficially Owned | |
Name of Beneficial Owner | Number of Shares | Percentage |
5% or Greater Shareholders |
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Armistice Capital Master Fund, Ltd.(1) 510 Madison Avenue, 22nd Floor New York, New York 10022 | 640,657 | 9.99% |
Named Executive Officers and Directors |
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Gerri Henwood (2) | 19,337 | * |
Richard S. Casten (3) | 6,293 | * |
Alfred Altomari (4) | 5,119 | * |
William L. Ashton (5) | 4,816 | * |
Arnold Baskies, M.D. (6) | 2,951 | * |
Winston J. Churchill (7)(8) | 42,232 | * |
Andrew Drechsler (9) | 2,665 | * |
Wayne Weisman (8)(10) | 38,312 | * |
All executive officers and directors as a group (8 persons) (11) | 88,595 | 1.4% |
| SHARES BENEFICIALLY OWNED | ||||||||||||||||
| NAMEOF BENEFICIAL OWNER | NUMBER OF SHARESOF COMMON STOCK | NUMBER OF SHARESOF SERIES B PREFERRED STOCK | PERCENTAGE OF COMMON STOCK | PERCENTAGE OF SERIES B PREFERRED STOCK | ||||||||||||
5% or Greater Shareholders | ||||||||||||||||
Armistice Capital Master Fund, Ltd.(1) 510 Madison Avenue, 22nd Floor New York, New York 10022 | 2,220,373 | - | 9.99% | * | ||||||||||||
Intracoastal Capital LLC(2) 245 Palm Trail Delray Beach, FL 33483 | 1,091,652 | - | 5.5% | * | ||||||||||||
Named Executive Officers and Directors | ||||||||||||||||
Gerri Henwood(3) | 22,926 | 8.354 | * | * | ||||||||||||
Jillian Dilmore(4) | 625 | 0.133 | * | * | ||||||||||||
Richard S. Casten(5) | 3,893 | 3.893 | * | * | ||||||||||||
William L. Ashton(6) | 6,428 | 3.061 | * | * | ||||||||||||
Arnold Baskies(7) | 4,849 | 2.469 | * | * | ||||||||||||
Winston J. Churchill(8)(9) | 43,844 | 40.477 | * | * | ||||||||||||
Andrew Drechsler(10) | 4,563 | 2.183 | * | * | ||||||||||||
Wayne Weisman(9)(11) | 39,924 | 36.557 | * | * | ||||||||||||
| All executive officers and directors as a group (8 persons)(12) | 93,922 | 63.997 | * | * | ||||||||||||
* | Less than 1% |
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 35
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
| Notice of Special Meeting of Shareholdersand Proxy Statement | 6 |
| (3) | Ms. Henwood holds (i) 8,354 shares of our common stock, which includes 571 shares of our common stock held by Ms. Henwood’s husband, Thomas Henwood, and (ii) stock options to purchase |
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| Mr. |
| (6) | Mr. Ashton holds 3,061 shares of our common stock and stock options to purchase 3,367 shares of our common stock that may be exercised within 60 days of |
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| (9) |
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| (10) | Mr. |
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| 7 |
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ITEM 1: APPROVAL OF AN AMENDMENT TO THE CHARTER TO EFFECT A REVERSE STOCK SPLIT OF OUR OUTSTANDING SHARES OF COMMON STOCK BY A RATIO OF ANY WHOLE NUMBER BETWEEN 1-FOR-5 AND 1-FOR-40, THE IMPLEMENTATION AND TIMING OF WHICH SHALL BE SUBJECT TO THE DISCRETION OF THE BOARD
We are seeking shareholder approval to grant the Board discretionary authority to amend the Charter to effect a reverse stock split of our outstanding shares of common stock by a ratio of any whole number between 1-for-5 and 1-for-40 (the “Reverse Split”).
The Reverse Split will not change the number of authorized shares of common stock or Series B Preferred Stock or the relative voting power of such holders of our outstanding common stock and Series B Preferred Stock. The number of authorized but unissued shares of our common stock will materially increase and will be available for reissuance by the Company. The Reverse Split, if effected, would affect all of our shareholders uniformly.
The Board unanimously approved, and recommended seeking shareholder approval of the Reverse Split, on September 30, 2022. If this Reverse Split is approved by the shareholders, the Board will have the authority, in its sole discretion, without further action by the shareholders, to effect the Reverse Split. The Board’s decision as to whether and when to effect the Reverse Split, if approved by the shareholders, will be based on a number of factors, including prevailing market conditions, existing and expected trading prices for our common stock, actual or forecasted results of operations, and the likely effect of such results on the market price of our common stock.
A reverse stock split will also affect our outstanding stock options, restricted stock units and shares of common stock issued under our 2019 Equity Incentive Plan, as well as our outstanding warrants. Under these plans and securities, the number of shares of common stock deliverable upon exercise or grant must be appropriately adjusted and appropriate adjustments must be made to the purchase price per share to reflect the Reverse Split.
The Reverse Split is not being proposed in response to any effort of which we are aware to accumulate our shares of common stock or obtain control of the Company, nor is it a plan by management to recommend a series of similar actions to the Board or our shareholders.
There are certain risks associated with a reverse stock split, and we cannot accurately predict or assure the Reverse Split will produce or maintain the desired results (for more information on the risks see the section below entitled “Certain Risks Associated with a Reverse Stock Split”). The Board believes that the benefits to the Company outweigh the risks and recommends that you vote in favor of granting the Board the discretionary authority to effect the Reverse Split.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF AN AMENDMENT TO THE CHARTER TO EFFECT A REVERSE STOCK SPLIT OF OUR OUTSTANDING SHARES OF COMMON STOCK BY A RATIO OF ANY WHOLE NUMBER BETWEEN 1-FOR-5 AND 1-FOR-40, THE IMPLEMENTATION AND TIMING OF WHICH SHALL BE SUBJECT TO THE DISCRETION OF THE BOARD |  |
Reasons for the Reverse Stock Split
The Board believes that effecting the Reverse Split would increase the price of our common stock which would, among other things, help us to:
Meet certain listing requirements of the Nasdaq Capital Market;
DELINQUENT SECTION 16(a) REPORTS
| Notice of Special Meeting of Shareholdersand Proxy Statement | 8 |
Section 16(a)
Appeal to a broader range of investors to generate greater interest in the Company; and
Improve perception of our common stock as an investment security.
Meet Listing Requirements – Our common stock is listed on the Nasdaq Capital Market under the symbol BXRX. On July 6, 2022, we received a deficiency letter from the Nasdaq Listing Qualifications Department of the Exchange Act requiresNasdaq Stock Market LLC (“Nasdaq”), notifying us that, for the last 30 consecutive business days, the closing bid price for our officerscommon stock was below the minimum $1.00 per share required for continued listing on the Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (“Rule 5550(a)(2)”). In accordance with Nasdaq Listing Rule 5810(c)(3)(A), we were given 180 calendar days, or until January 2, 2023, to regain compliance with Rule 5550(a)(2). If at any time before January 2, 2023, the bid price of our common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, Nasdaq will provide written confirmation that the Company has achieved compliance. Although we believe that implementing the Reverse Split is likely to lead to compliance with the Rule 5550(a)(2), there can be no assurance that the closing share price after implementation of the Reverse Split will succeed in restoring such compliance.
Appeal to a Broader Range of Investors to Generate Greater Investor Interest in the Company – An increase in our stock price may make our common stock more attractive to investors. Brokerage firms may be reluctant to recommend lower-priced securities to their clients lower-priced securities. Many institutional investors have policies prohibiting them from holding lower-priced stocks in their portfolios, which reduces the number of potential purchasers of our common stock. Investment funds may also be reluctant to invest in lower-priced stocks. Investors may also be dissuaded from purchasing lower-priced stocks because the brokerage commissions, as a percentage of the total transaction, tend to be higher for such stocks. Moreover, the analysts at many brokerage firms do not monitor the trading activity or otherwise provide coverage of lower-priced stocks. Giving the Board the ability to effect the Reverse Split, and directors, and persons who own more than ten percentthereby increase the price of our common stock, would give the Board the ability to address these issues if it is deemed necessary.
Improve the Perception of Our Common Stock as an Investment Security – The Board believes that effecting the Reverse Split is one potential means of increasing the share price of our common stock to file reportsimprove the perception of ownershipour common stock as a viable investment security. Lower-priced stocks have a perception in the investment community as being risky and changes in ownership on Forms 3, 4 and 5speculative, which may negatively impact not only the price of our common stock, but also our market liquidity.
Certain Risks Associated with the SEC. As a matter of practice, we assist manyReverse Split
The Reverse Split May Not Increase the Price of our directorsCommon Stock over the Long-Term – As noted above, the principal purpose of the Reverse Split is to increase the trading price of our common stock to meet the minimum stock price standards of Nasdaq. However, the effect of the Reverse Split on the market price of our common stock cannot be predicted with any certainty, and we cannot assure you that the Reverse Split will accomplish this objective for any meaningful period of time, or at all. While we expect that the reduction in the number of outstanding shares of common stock will proportionally increase the market price of our common stock, we cannot assure you that the Reverse Split will increase the market price of our common stock by a multiple of the Reverse Split ratio, or result in any permanent or sustained increase in the market price of our common stock. The market price of our common stock may be affected by other factors which may be unrelated to the number of shares outstanding, including the Company’s business and financial performance, general market conditions, and prospects for future success.
The Reverse Split May Decrease the Liquidity of our Common Stock – The Board believes that the Reverse Split may result in an increase in the market price of our common stock, which could lead to increased interest in our common stock and possibly promote greater liquidity for our stockholders. However, the Reverse Split will also reduce the total number of outstanding shares of common stock, which may lead to reduced trading and a smaller number of market makers for our common stock, particularly if the price per share of our common stock does not increase as a result of the Reverse Split.
| Notice of Special Meeting of Shareholdersand Proxy Statement | 9 |
The Reverse Split May Result in Some Stockholders Owning “Odd Lots” That May Be More Difficult to Sell or Require Greater Transaction Costs per Share to Sell – If the Reverse Split is implemented, it will increase the number of stockholders who own “odd lots” of less than 100 shares of common stock. A purchase or sale of less than 100 shares of common stock (an “odd lot” transaction) may result in incrementally higher trading costs through certain brokers, particularly “full service” brokers.
Therefore, those stockholders who own fewer than 100 shares of common stock following the Reverse Split may be required to pay higher transaction costs if they sell their common stock.
The Reverse Split May Lead to a Decrease in our Overall Market Capitalization – The Reverse Split may be viewed negatively by the market and, consequently, could lead to a decrease in our overall market capitalization. If the per share market price of our common stock does not increase in proportion to the Reverse Split ratio, or following such increase does not maintain or exceed such price, then the value of our Company, as measured by our market capitalization, will be reduced. Additionally, any reduction in our market capitalization may be magnified as a result of the smaller number of total shares of common stock outstanding following the Reverse Split.
Determination of the Reverse Stock Split Ratio
The Board believes that shareholder approval of a range of potential Reverse Split ratios is in the best interests of our Company and stockholders because it is not possible to predict market conditions at the time the Reverse Split would be implemented. We believe that a range of Reverse Split ratios provides us with the most flexibility to achieve the desired results of the Reverse Split. The Reverse Split ratio to be selected by our Board will be not more than 1-for-40.
The selection of the specific Reverse Split ratio will be based on several factors, including, among other things:
our ability to maintain the listing of our common stock on The Nasdaq Capital Market;
the per share price of our common stock immediately prior to the Reverse Split;
the expected stability of the per share price of our common stock following the Reverse Split;
the likelihood that the Reverse Split will result in increased marketability and liquidity of our common stock;
prevailing market conditions;
general economic conditions in our industry; and
our market capitalization before and after the Reverse Split.
We believe that granting our Board the authority to set the ratio for the Reverse Split is essential because it allows us to take these factors into consideration and to react to changing market conditions. If the Board chooses to implement the Reverse Split, the Company will make a public announcement regarding the determination of the Reverse Split ratio.
Effects of the Reverse Split
If our shareholders approve the proposed Reverse Split and the Board elects to effect the Reverse Split, our issued and outstanding shares of common stock, for example, would decrease at a rate of approximately one (1) share of common stock for every ten (10) shares of common stock currently outstanding in a one-for-ten split. The Reverse Split would be effected simultaneously for all of our common stock, and the exchange ratio would be the same for all shares of common stock. The Reverse Split would affect all of our shareholders uniformly and would not affect any shareholders’ percentage ownership interests in the Company, except to the extent that it results in a shareholder receiving cash in lieu of fractional shares. The Reverse Split would not affect the relative voting or other rights that accompany the shares of our common stock, except to the extent that it results in a shareholder receiving cash in lieu of fractional shares. Common stock issued pursuant to the Reverse Split would
| Notice of Special Meeting of Shareholdersand Proxy Statement | 10 |
remain fully paid and non-assessable. The Reverse Split would not affect our securities law reporting and disclosure obligations, and we would continue to be subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended. We have no current plans to take the Company private. Accordingly, the Reverse Split is not related to a strategy to do so.
In addition to the change in the number of shares of common stock outstanding, the Reverse Split would have the following effects:
Increase the Per Share Price of our Common Stock – By effectively condensing a number of pre-split shares into one share of common stock, the per share price of a post-split share is generally greater than the per share price of a pre-split share. The amount of the initial increase in per share price and the duration of such increase, however, is uncertain. The Board may utilize the Reverse Split as part of its plan to maintain the required minimum per share price of the common stock under the Nasdaq listing standards.
Increase in the Number of Shares of Common Stock Available for Future Issuance – By reducing the number of shares outstanding without reducing the number of shares of available but unissued common stock, the Reverse Split will increase the number of authorized but unissued shares. The Board believes the increase is appropriate for use to fund the future operations of the Company. Although the Company does not have any pending acquisitions for which shares are expected to be used, the Company may also use authorized shares in connection with the financing of future acquisitions.
The following table contains approximate information relating to our common stock, based on share information as of September 30, 2022:
| Current | After the Reverse if the Minimum | After the if the Maximum | ||||||||||||||||||||||
| Authorized common stock | 190,000,000 | 190,000,000 | 190,000,000 | |||||||||||||||||||||
| Common stock issued and outstanding | 20,003,745 | 4,000,749 | 500,093 | |||||||||||||||||||||
| Warrants to purchase common stock outstanding | 31,298,007 | 6,259,601 | 782,450 | |||||||||||||||||||||
| Common stock issuable upon exercise of outstanding stock options, and settlement of restricted stock units | 606,888 | 121,378 | 15,172 | |||||||||||||||||||||
| Common stock reserved for issuance for future grants under 2019 Equity Incentive Plan | 115,442 | 23,088 | 2,886 | |||||||||||||||||||||
| Common stock authorized but unissued and unreserved/unallocated | 137,975,918 | 179,595,184 | 188,699,398 | |||||||||||||||||||||
| Authorized Preferred Stock | 10,000,000 | 10,000,000 | 10,000,000 | |||||||||||||||||||||
Although the Reverse Split would not have any dilutive effect on our shareholders, the Reverse Split without a reduction in the number of shares authorized for issuance would reduce the proportion of shares owned by our shareholders relative to the number of shares authorized for issuance, giving the Board an effective increase in
| Notice of Special Meeting of Shareholdersand Proxy Statement | 11 |
the authorized shares available for issuance, in its discretion. The Board from time to time may deem it to be in the best interests of the Company to enter into transactions and other ventures that may include the issuance of shares of our common stock. If the Board authorizes the issuance of additional shares subsequent to the Reverse Split, the dilution to the ownership interest of our existing shareholders may be greater than would occur had the Reverse Split not been effected.
Require Adjustment to Currently Outstanding Securities Exercisable or Convertible into Shares of our Common Stock – The Reverse Split would effect a reduction in the number of shares of common stock issuable upon the exercise or conversion of our outstanding stock options, settlement of restricted stock units and exercise of our outstanding warrants in proportion to the reverse stock split ratio. The exercise price of outstanding options and warrants would increase, likewise in proportion to the reverse stock split ratio.
Require Adjustment to the Number of Shares of Common Stock Available for Future Issuance Under our 2019 Equity Incentive Plan – In connection with any reverse stock split, the Board would also make a corresponding reduction in the number of shares available for future issuance under the foregoing plan so as to avoid the effect of increasing the number of authorized but unissued shares available for future issuance under such plans.
Procedure for Effecting Reverse Stock Split
If the Reverse Split is approved by our shareholders, the Board, in its sole discretion, would determine whether to implement the Reverse Split, taking into consideration the factors discussed above, and, if implemented, determine the ratio of the Reverse Split. We would then file Articles of Amendment amending the Charter with the Secretary of the Commonwealth of Pennsylvania. The form of the Articles of Amendment is attached to this Proxy Statement as Appendix A and is considered a part of this Proxy Statement. Upon the filing of the Articles of Amendment, without any further action on our part or our shareholders, the issued shares of common stock held by shareholders of record as of the effective date of the Reverse Split would be converted into a lesser number of shares of common stock calculated in accordance with the Reverse Split ratio of any whole number between 1-for-5 and 1-for-40.
Effect on Beneficial Holders (i.e., Shareholders Who Hold in “Street Name”)
If the proposed Reverse Split is approved and effected, we intend to treat common stock held by shareholders in “street name,” through a bank, broker or other nominee, in the same manner as shareholders whose shares are registered in their own names. Banks, brokers or other nominees will be instructed to effect the Reverse Split for their customers holding common stock in “street name.” However, these banks, brokers or other nominees may have different procedures than registered shareholders for processing the Reverse Split. If you hold shares of common stock with a bank, broker or other nominee and have any questions in this regard, you are encouraged to contact your bank, broker or other nominee.
Effect on Registered “Book-Entry” Holders (i.e., Shareholders That are Registered on the Transfer Agent’s Books and Records but do not Hold Certificates)
All of our registered holders of common stock hold their shares electronically in book-entry form with our transfer agent, Broadridge Corporate Issuer Solutions, Inc. These shareholders do not have stock certificates evidencing their ownership of common stock. They are, however, provided with a statement reflecting the number of shares registered in their accounts. If a shareholder holds registered shares in book-entry form with our transfer agent, no action needs to be taken to receive post-reverse stock split shares or fractional shares, if applicable. If a shareholder is entitled to post-reverse stock split shares, a transaction statement will automatically be sent to the shareholder’s address of record indicating the number of shares (including fractional shares) of common stock held following the Reverse Split.
| Notice of Special Meeting of Shareholdersand Proxy Statement | 12 |
Fractional Shares
No fractional shares will be issued in connection with the Reverse Split. Shareholders of record who otherwise would be entitled to receive fractional shares will be entitled to an amount in cash (without interest or deduction) equal to the fraction of one share to which such shareholder would otherwise be entitled multiplied by the product of: (i) the average of the closing prices of our common stock on the Nasdaq Capital Market for the five consecutive trading days immediately preceding the effective date of the Reverse Split and (ii) the reverse stock split factor chosen by the Board. Except for the right to receive the cash payment in lieu of fractional shares, shareholders will not have any voting, dividend or other rights with respect to the fractional shares they would otherwise be entitled to receive.
Shareholders should be aware that, under the escheat laws of the various jurisdictions where shareholders may reside, where we are domiciled, and where the funds will be deposited, sums due for fractional interests that are not timely claimed after the effective date of the Reverse Split may be required to be paid to the designated agent for each such jurisdiction, unless correspondence has been received by us or the exchange agent concerning ownership of such funds within the time permitted in such jurisdiction. Thereafter, shareholders otherwise entitled to receive such funds will have to seek to obtain them directly from the state to which they were paid.
Accounting Matters
The par value of our common stock would remain unchanged at $0.01 per share, if the Reverse Split is effected.
The Company’s shareholders’ equity in its consolidated balance sheet would not change in total. However, the Company’s stated capital (i.e., $0.01 par value times the number of shares issued and outstanding), would be proportionately reduced based on the reduction in shares of common stock outstanding. Additional paid in capital would be increased by an equal amount, which would result in no overall change to the balance of shareholders’ equity.
Additionally, net income or loss per share for all periods would increase proportionately as a result of the Reverse Split since there would be a lower number of shares outstanding. We do not anticipate that any other material accounting consequences would arise as a result of the Reverse Split.
Potential Anti-Takeover Effect
Even though the proposed Reverse Split would result in an increased proportion of unissued authorized shares to issued shares, which could, under certain circumstances, have an anti-takeover effect (for example, by permitting issuances that would dilute the stock ownership of a person seeking to effect a change in the composition of the Board or contemplating a tender offer or other transaction for the combination of us with another company), the Reverse Split is not being proposed in response to any effort of which we are aware to accumulate shares of our common stock or obtain control of us, nor is it part of a plan by management to recommend a series of similar amendments to the Board and our shareholders.
No Appraisal Rights
Our shareholders are not entitled to appraisal rights with respect to the Reverse Split, and we will not independently provide shareholders with any such right.
Federal Income Tax Consequences of a Reverse Stock Split
The following discussion is a summary of certain U.S. federal income tax consequences of the reverse stock split to the Company and to shareholders that hold shares of common stock as capital assets for U.S. federal income tax purposes. This discussion is based upon provisions of the U.S. Internal Revenue Code of 1986, as amended
| Notice of Special Meeting of Shareholdersand Proxy Statement | 13 |
(the “Code”), the Treasury regulations promulgated under the Code, and U.S. administrative rulings and court decisions, all as in effect on the date hereof and all of which are subject to change, possibly with retroactive effect, and differing interpretations. Changes in these authorities may cause the U.S. federal income tax consequences of the reverse stock split to vary substantially from the consequences summarized below.
This summary does not address all aspects of U.S. federal income taxation that may be relevant to shareholders in light of their particular circumstances or to shareholders who may be subject to special tax treatment under the Code, including, without limitation, dealers in securities, commodities or foreign currency, persons who are treated as non-U.S. persons for U.S. federal income tax purposes, certain former citizens or long-term residents of the United States, insurance companies, tax-exempt organizations, banks, financial institutions, small business investment companies, regulated investment companies, real estate investment trusts, retirement plans, persons that are partnerships or other pass-through entities for U.S. federal income tax purposes, persons whose functional currency is not the U.S. dollar, traders that mark-to-market their securities, persons subject to the alternative minimum tax, persons who hold their shares of common stock as part of a hedge, straddle, conversion or other risk reduction transaction, or who acquired their shares of common stock pursuant to the exercise of compensatory stock options, the vesting of previously restricted shares of stock or otherwise as compensation. If a partnership or other entity classified as a partnership for U.S. federal income tax purposes holds shares of common stock, the tax treatment of a partner thereof will generally depend upon the status of the partner and upon the activities of the partnership. If you are a partner in a partnership holding shares of the Company’s common stock, you should consult your tax advisor regarding the tax consequences of the Reverse Split.
The Company has not sought and will not seek an opinion of counsel or a ruling from the Internal Revenue Service (the “IRS”), regarding the federal income tax consequences of the Reverse Split. The state and local tax consequences of the Reverse Split may vary as to each shareholder, depending on the jurisdiction in which such shareholder resides. This discussion should not be considered as tax or investment advice, and the tax consequences of the reverse stock split may not be the same for all shareholders. Shareholders should consult their own tax advisors to know their individual federal, state, local and foreign tax consequences.
Tax Consequences to the Company – We believe that the Reverse Split will constitute a reorganization under Section 368(a)(1)(E) of the Code. Accordingly, we should not recognize taxable income, gain or loss in connection with the Reverse Split. In addition, we do not expect the Reverse Split to affect our ability to utilize our net operating loss carryforwards.
Tax Consequences to Shareholders – Shareholders should not recognize any gain or loss for U.S. federal income tax purposes as a result of the Reverse Split, except to the extent of any cash received in lieu of a fractional share of common stock (which fractional share will be treated as received and then exchanged for cash). Each shareholder’s aggregate tax basis in the common stock received in the Reverse Split, including any fractional share treated as received and then exchanged for cash, should equal the shareholder’s aggregate tax basis in the common stock exchanged in the Reverse Split. In addition, each shareholder’s holding period for the common stock it receives in the Reverse Split should include the shareholder’s holding period for the common stock exchanged in the Reverse Split.
In general, a shareholder who receives cash in lieu of a fractional share of common stock pursuant to the Reverse Split should be treated for U.S. federal income tax purposes as having received a fractional share pursuant to the Reverse Split and then as having received cash in exchange for the fractional share and should generally recognize capital gain or loss equal to the difference between the amount of cash received and the shareholder’s tax basis allocable to the fractional share. Any capital gain or loss will generally be long term capital gain or loss if the shareholder’s holding period in the fractional share is greater than one year as of the effective date of the Reverse Split. Special rules may apply to cause all or a portion of the cash received in lieu of a fractional share to be treated as dividend income with respect to certain shareholders who own more than a minimal amount of common stock (generally more than 1%) or who exercise some control over the affairs of the Company. Shareholders should consult their own tax advisors regarding the tax effects to them of receiving cash in lieu of fractional shares based on their particular circumstances.
| Notice of Special Meeting of Shareholdersand Proxy Statement | 14 |
Interests of Directors and Executive Officers
Our directors and executive officers have no substantial interests, directly or indirectly, in the matters set forth herein regarding the proposed Reverse Split except to the extent of their ownership of shares of our common stock.
Reservation of Right to Abandon Reverse Stock Split
We reserve the right to abandon the Reverse Split without further action by preparing initial ownership reports and reporting ownership changes, and typically file these reports on their behalf. To our knowledge, based solely on our reviewshareholders at any time before the effectiveness of the copies of such reports filed electronicallyfiling with the SECSecretary of the Commonwealth of Pennsylvania of the Articles of Amendment to the Charter, even if the authority to effect the Reverse Split has been approved by our shareholders at the Special Meeting. By voting in favor of the Reverse Split, you are expressly also authorizing the Board to delay, not to proceed with, and on written information given to us byabandon, the reporting persons, we believeReverse Split if it should so decide, in its sole discretion, that all Section 16(a) filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied with on a timely basis duringsuch action is in the fiscal year ended December 31, 2021, except that, due to administrative errors, (i) one Form 4 for Gerri Henwood was filed late on December 14, 2021 and (ii) one Form 4 for Gerri Henwood was filed late on December 23, 2021.
Noticebest interests of Annual Meeting of Shareholders and 2022 Proxy Statement | 36the Company.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF AN AMENDMENT TO THE CHARTER TO EFFECT A REVERSE STOCK SPLIT OF OUR OUTSTANDING SHARES OF COMMON STOCK BY A RATIO OF ANY WHOLE NUMBER BETWEEN 1-FOR-5 AND 1-FOR-40, THE IMPLEMENTATION AND TIMING OF WHICH SHALL BE SUBJECT TO THE DISCRETION OF THE BOARD | |
ITEM 2: APPROVAL OF ADJOURNMENT OF THE SPECIAL MEETING TO BE VOTED ONTHE EXTENT THERE ARE INSUFFICIENT VOTES AT THE SPECIAL MEETING TO APPROVE THE PRECEDING PROPOSAL
PROPOSAL 1: ELECTION OF CLASS III DIRECTORS FOR A THREE-YEAR TERM EXPIRING IN 2025
AtIn the Annualevent that the number of shares of common stock present virtually or represented by proxy at the Special Meeting our shareholders will vote onand voting “FOR” the electionadoption of two Class III director nominees namedthe foregoing proposal in this Proxy Statement as directors,is insufficient to approve such proposal, we may move to adjourn the Special Meeting in order to enable us to solicit additional proxies in favor of the adoption of such proposal. If the adjournment is for more than thirty days, a notice of the adjourned meeting shall be given to each shareholder of record entitled to serve until our 2025 Annual Meeting of Shareholders and until their respective successors are elected and qualified. Our Board has unanimously nominated Arnold Baskies, M.D. and Winston Churchill for election to our Boardvote at the AnnualSpecial Meeting.
EachFor the avoidance of doubt, any proxy authorizing the adjournment of the nominees has agreedSpecial Meeting shall also authorize successive adjournments thereof, at any meeting so adjourned, to be named andthe extent necessary for us to serve, and we expect each nominee to be able to serve if elected. If any nominee is unable to serve,solicit additional proxies in favor of the Governance Committee will recommend to our Board a replacement nominee. The Board may then designate the other nominee to stand for election. If you voted for the unavailable nominee, your vote will be cast for his or her replacement.adoption of such proposal.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THE APPROVAL OF ADJOURNMENT OF THE SPECIAL MEETING TO THE EXTENT THERE ARE INSUFFICIENT VOTES AT THE SPECIAL MEETING TO APPROVE THE PRECEDING PROPOSAL | |
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2022
| Notice of Special Meeting of Shareholdersand Proxy Statement | 15 |
The Audit Committee of the Board has appointed and engaged KPMG to serve as our independent registered public accounting firm to audit the consolidated financial statements of the Company and its subsidiaries for the 2022 fiscal year, and to perform audit-related services. KPMG has served as our independent registered public accounting firm since 2019.
| OTHER INFORMATION |
Shareholders are hereby asked to ratify the Audit Committee’s appointment of KPMG as our independent registered public accounting firm for the 2022 fiscal year.
The Audit Committee is solely responsible for selecting our independent auditors. Although shareholder ratification of the appointment of KPMG to serve as our independent registered public accounting firm is not required by law or our organizational documents, the Board has determined that it is desirable to seek shareholders ratification as a matter of good corporate governance in view of the critical role played by independent registered public accounting firms in maintaining the integrity of financial controls and reporting. If the shareholders do not ratify the appointment of KPMG, the Audit Committee will reconsider its selection and whether to engage an alternative independent registered public accounting firm.
Representatives of KPMG are expected to virtually attend the Annual Meeting where they will be available to respond to appropriate questions and, if they desire, to make a statement.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 37
ITEMS TO BE VOTED ON (continued)
The AnnualSpecial Meeting is called for the purposes set forth in the Notice. OurThe Board does not know of any other matters to be considered by the shareholders at the AnnualSpecial Meeting other than the matters described in the Notice. However, the enclosed proxy confers discretionary authority on the persons named in the proxy card with respect to matters that may properly come before the AnnualSpecial Meeting and that are not known to ourthe Board at the date this Proxy Statement was printed. It is the intention of the persons named in the proxy card to vote in accordance with their best judgment on any such matter.
REQUIREMENTS FOR SUBMISSION OF SHAREHOLDER PROPOSALS FOR NEXT YEAR’S ANNUAL MEETING
ShareholdersFor shareholders intending to present a proposal to be considered for inclusion in the proxy statement for our 2023 Annual Meeting of Shareholders, such shareholder proposals must be received by us no later than the close of business on December 1, 2022. If we change the date of the 2023 Annual Meeting of Shareholders by more than 30 days from the anniversary of this year’s Annual Meeting, shareholder proposals must be received no later than the close of business on the tenth day following the day on which notice of the meeting was mailed or public disclosure of the date of the meeting was made, whichever occurs first in order to be considered for inclusion in our proxy statement. Proposals must be sent via registered, certified, or express mail (or other means that allows the shareholder to determine when the proposal was received by the Corporate Secretary) to the Corporate Secretary, Baudax Bio, Inc., 490 Lapp Road, Malvern, PA 19355. Proposals must contain the information required under our Amended and Restated Bylaws (the “Bylaws”), a copy of which is available upon request to our Corporate Secretary, and also must comply with the SEC’s regulations regarding the inclusion of shareholder proposals in Company-sponsored proxy materials.
Shareholders intending to present a proposal or nominate a director for election at our 2023 Annual Meeting of Shareholders without having the proposal or nomination included in our proxy statement must comply with the requirements set forth in ourthe Bylaws. OurThe Bylaws require, among other things, that our Corporate Secretary receive the proposal or nomination no earlier than the close of business on the 120th day, and no later than the close of business on the 90th day, prior to the first anniversary of the preceding year’s Annual Meeting. Accordingly, for our 2023 Annual Meeting of Shareholders, our Corporate Secretary must receive the proposal or nomination no earlier than January 4, 2023 and no later than the close of business on February 3, 2023. The proposal or nomination must contain the information required by the Bylaws, a copy of which is available upon request to our Corporate Secretary. If the shareholder does not meet the applicable deadlines or comply with the requirements of SEC Rule 14a-4, we may exercise discretionary voting authority under proxies we solicit to vote, in accordance with our best judgment, on any such proposal.
SHAREHOLDER COMMUNICATIONS TO THE BOARD
Shareholders and other interested parties may communicate with the Board by writing to the Corporate Secretary, Baudax Bio, Inc., 490 Lapp Road, Malvern, PA 19355. Communications intended for a specific director or directors should be addressed to their attention to the Corporate Secretary at the address provided above. Communications received from shareholders are forwarded directly to Board members as part of the materials mailed in advance of the next scheduled Board meeting following receipt of the communications. The Board has authorized the Corporate Secretary, in her discretion, to forward communications on a more expedited basis if circumstances warrant or to exclude a communication if it is illegal, unduly hostile or threatening, or similarly inappropriate. Advertisements, solicitations for periodical or other subscriptions, and other similar communications generally will not be forwarded to the directors.
| Notice of Special Meeting of Shareholdersand Proxy Statement | 16 |
AVAILABILITY OF MATERIALS
Our 2021 Annual Report on Form 10-K for the fiscal year ended December 31, 2021, including the financial statements and financial statement schedules, has been filed with the SEC and provides additional information about us, which is incorporated by reference herein. It is available on the internet at www.baudaxbio.com and is available in paper form (other than exhibits thereto) by first class mail or other equally prompt means to beneficial owners of our common stock, without charge, upon written request to President and Chief Executive Officer, Baudax Bio, Inc., 490 Lapp Road, Malvern, PA 19355. In addition, it is available to beneficial and record holders of our common stock at www.proxyvote.com.
| Notice of Special Meeting of Shareholdersand Proxy Statement | 17 |
APPENDIX A
PROPOSED AMENDMENT TO AMENDED AND RESTATED ARTICLES OF INCORPORATION
Articles of Amendment of Baudax Bio, Inc.
In compliance with the requirements of the applicable provisions (relating to articles of amendment) of the Pennsylvania Business Corporation Law of 1988, as amended, the undersigned, desiring to amend its Amended and Restated Articles of Incorporation, hereby states that:
| 1. | The name of the Corporation is Baudax Bio, Inc. (the “Corporation”). |
| 2. | The address of the Corporation’s registered office in the Commonwealth of Pennsylvania is 490 Lapp Road, Malvern, Pennsylvania 19355, Chester County. |
| 3. | The Corporation was incorporated under the Pennsylvania Business Corporation Law of 1988. |
| 4. | The date of the Corporation’s incorporation was July 6, 2015. |
| 5. | The amendment shall be effective upon filing these Articles of Amendment in the Pennsylvania Department of State. |
| 6. | The amendment was adopted by the Corporation by the Board of Directors and shareholders of the Corporation under 15 Pa.C.S. §§ 1912(a) and 1914(a). |
| 7. | The amendment adopted by the Corporation is: |
RESOLVED, that the Amended and Restated Articles of Incorporation of the Corporation is hereby amended by amending and restating the first paragraph of Article IV in its entirety as follows:
“The total number of shares of capital stock which the Corporation shall have authority to issue is 200,000,000, which (i) 190,000,000 shall be designated as common stock, par value $0.01 per share (the “Common Stock”), and (ii) 10,000,000 shares shall be a class designated as undesignated preferred stock, par value $0.01 per share (the “Undesignated Preferred Stock”).” As of the effective date of the filing of the Articles of Amendment containing this Amendment with the Pennsylvania Department of State (the “Effective Date”), every [ __ ]1 (the “Reverse Split Factor”) outstanding shares of Common Stock shall without further action by this Corporation or the holder thereof be combined into and automatically become one share of Common Stock (the “Reverse Stock Split”). No fractional shares will be issued in connection with the Reverse Stock Split. A shareholder of record who otherwise would be entitled to receive fractional shares will be entitled to receive cash (without interest and subject to applicable withholding taxes) in lieu of such fractional shares in an amount equal to the product obtained by multiplying such fractional share of Common Stock by the Reverse Split Factor times the average closing price per share of Common Stock on the securities trading market on which the shares were traded for the five trading days immediately preceding the effective date of this amendment to the Amended and Restated Articles of Incorporation.”
Except as set forth in these Articles of Amendment, the Amended and Restated Articles of Incorporation remain in full force and effect.
Notice of Annual Meeting of Shareholders and 2022 Proxy Statement | 38
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date SCAN TO VIEW MATERIALS & VOTE To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. 0 0 0 0 0 0 0000555729_1 R1.0.0.24 For Withhold For All All All Except1 The Board of Directors recommends you vote FORwill have the following: 1. Electiondiscretion to effect the Reverse Stock Split at a ratio of Directors Nominees 01) Arnold Baskies, M.D. 02) Winston Churchill any whole number between 1-for-5 and 1-for-40.
BAUDAX BIO, INC.
C/O BROADRIDGE CORPORATE ISSUER SOLUTIONS, INC.
P.O. BOX 1342
BRENTWOOD, NY 11717
VOTE BY INTERNET
Before The Meeting - Go to www.proxyvote.com or scan the QR Barcode above
Use the Internet to transmit your voting instructions and for electronic delivery of information. Vote by 11:59 P.M. ETp.m. Eastern Time on 05/03/November 2, 2022. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.
During The Meeting - Go to www.virtualshareholdermeeting.com/BXRX2022 BXRX2022SM
You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions.
VOTE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions. Vote by 11:59 P.M. ETp.m. Eastern Time on 05/03/November 2, 2022. Have your proxy card in hand when you call and then follow the instructions.
VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. The Board of Directors recommends you vote
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
D91667-S53102 KEEP THIS PORTION FOR the following proposal: For Against Abstain 2. Ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the 2022 fiscal year. NOTE: Such other business as may properly come before the meeting or any adjournment thereof. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.YOUR RECORDS
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
BAUDAX BIO, INC. | ||||||||||||||||||||
The Board of Directors recommends you vote FOR the following proposals: | For | Against | Abstain | |||||||||||||||||
1. Approval of an amendment to the Amended and Restated Articles of Incorporation to effect a reverse stock split of the Company’s outstanding shares of common stock by a ratio of any whole number between 1-for 5 and 1-for 40 (the “Reverse Stock Split Proposal”). | ☐ | ☐ | ☐ | |||||||||||||||||
2. Approval of adjournment of the Special Meeting to the extent there are insufficient votes at the Special Meeting to approve the Reserve Stock Split Proposal. | ☐ | ☐ | ☐ | |||||||||||||||||
| Yes | No | |||||||||||||||||||
Q. Your Series B Preferred Stock will be voted in the same manner as you’ve instructed your common stock on Proposals 1 & 2. If you wish to vote your Series B shares in a DIFFERENT manner, indicate YES and provide instructions on proposals 1a. and 2a. | ☐ | ☐ | ||||||||||||||||||
| For | Against | Abstain | ||||||||||||||||||
1a. To vote my Series B Preferred Stock differently on Proposal 1: | ☐ | ☐ | ☐ | |||||||||||||||||
2a. To vote my Series B Preferred Stock differently on Proposal 2: | ☐ | ☐ | ☐ | |||||||||||||||||
NOTE: Such other business as may properly come before the meeting or any adjournment thereof. | ||||||||||||||||||||
Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | ||||||||||||||||||||
| Signature [PLEASE SIGN WITHIN BOX] | Date | Signature (Joint Owners) | Date | |||||||||||||||||
0000555729_2 R1.0.0.24 Important Notice Regarding the Availability of Proxy Materials for the AnnualSpecial Meeting:
The Notice & Proxy Statement and Form 10-KShareholder Letter are available at www.proxyvote.com BAUDAX BIO, INC. 2022 Annual Meeting of Shareholders May 4, 2022 - 9:00 AM EDT This proxy is solicited by the Board of Directors The undersigned hereby appoints Gerri Henwood and Jillian Dilmore, or either of them, as proxies, each with the power to appoint their substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of Common Stock of BAUDAX BIO, INC. that the undersigned is entitled to vote at the 2022 Annual Meeting of Shareholders to be held virtually at 9:00 AM, EDT, on May 4, 2022 via www.virtualshareholdermeeting.com/BXRX2022, and any adjournment or postponement thereof. This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, this proxy will be voted in accordance with the Board of Directors' recommendations. Continued and to be signed on reverse sidewww.proxyvote.com.
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D91668-S53102
BAUDAX BIO, INC. Special Meeting of Shareholders November 3, 2022 - 9:00 AM EDT This proxy is solicited by the Board of Directors | ||
The undersigned hereby appoints Gerri Henwood and Jillian Dilmore, or either of them, as proxies, each with the power to appoint their substitute, and hereby authorizes them to represent and to vote, as designated on the reverse side of this ballot, all of the shares of common stock or preferred stock of BAUDAX BIO, INC. that the undersigned is entitled to vote at the Special Meeting of Shareholders to be held virtually at 9:00 AM, EDT, on November 3, 2022 via www.virtualshareholdermeeting.com/BXRX2022SM, and any adjournment or postponement thereof. | ||
This proxy, when properly executed, will be voted in the manner directed herein. If no such direction is made, | ||
Continued and to be signed on reverse side | ||