UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant x☒ Filed by a Partyparty other than the Registrant ¨☐
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Preliminary Proxy Statement | ||
Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | ||
Definitive Proxy Statement | ||
Definitive Additional Materials | ||
Soliciting Material Pursuant to §240.14a-12 |
OXiGENE,Mateon Therapeutics, Inc.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
No fee required. | ||||
Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | ||||
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April 26, 2017
TO OUR STOCKHOLDERS:
You are cordially invited to attend the 2017 annual meeting of stockholders of Mateon Therapeutics, Inc., to be held at 10:00 a.m., local time, on Friday, June 9, 2017, at the offices of the Company’s counsel, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., 44 Montgomery Street, 36th Floor, San Francisco, California 94104.
Details regarding the meeting, the business to be conducted at the meeting, and information about Mateon Therapeutics, Inc., that you should consider when you vote your shares are described in this proxy statement.
At the annual meeting, five (5) persons will be elected to our Board of Directors. In addition, we will ask stockholders to ratify the selection of OUM & Co. LLP as our independent registered public accounting firm for our fiscal year ending December 31, 2017. The Board of Directors recommends the approval of both of the proposals. Such other business will be transacted as may properly come before the annual meeting.
Under Securities and Exchange Commission rules that allow companies to furnish proxy materials to shareholders over the Internet, we have elected to deliver our proxy materials to the majority of our shareholders over the Internet. This delivery process allows us to provide shareholders with the information they need, while at the same time lowering the cost of delivery. On April 26, 2017, we will begin sending to our stockholders a Notice of Internet Availability of Proxy Materials (the “Notice”) containing instructions on how to access our proxy statement for our 2017 Annual Meeting of Shareholders and our 2016 annual report to shareholders. The Notice also provides instructions on how to vote online or by telephone and includes instructions on how to receive a paper copy of the proxy materials by mail.
We hope you will be able to attend the annual meeting. Whether you plan to attend the annual meeting or not, it is important that you cast your vote either in person or by proxy. You may vote over the Internet as well as by telephone or by mail. When you have finished reading the proxy statement, you are urged to vote in accordance with the instructions set forth in this proxy statement. We encourage you to vote by proxy so that your shares will be represented and voted at the meeting, whether or not you can attend.
Thank you for your continued support of Mateon Therapeutics, Inc. We look forward to seeing you at the annual meeting.
Sincerely, |
/s/ William D. Schwieterman, M.D. |
William D. Schwieterman, M.D. |
President and Chief Executive Officer |
701 GATEWAY BOULEVARD, SUITE 210
SOUTH SAN FRANCISCO, CALIFORNIA 94080
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 1, 20169, 2017
TO OUR STOCKHOLDERS:
Please take notice that the 20162017 annual meeting of stockholders (the “Annual Meeting”) of OXiGENE,Mateon Therapeutics, Inc., a Delaware corporation, will be held on Wednesday,Friday, June 1, 2016,9, 2017, at 10:00 a.m., local time, in the Monterey conference room at the Embassy Suites Hotel, 250 Gateway Boulevard, Southoffices of the Company’s counsel, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., 44 Montgomery Street, 36th Floor, San Francisco, California 94080,94104, for the following purposes:
1. To elect five members to the Board of Directors to hold office until the 20172018 annual meeting of stockholders or until their successors are duly elected and qualified;
2. To approve a proposed amendment to the OXiGENE, Inc. 2015 Equity Incentive Plan to increase the number of shares available for the grant of awards thereunder by 1,500,000 shares;
3. To authorize the filing of an amendment to the Company’s Restated Certificate of Incorporation to effect a reverse stock split of our common stock, $0.01 par value per share, at a ratio in the range of 1:5 to 1:10, such ratio within that range to be determined in the discretion of the Board of Directors, and the filing of such amendment to be implemented, if at all, not later than December 2, 2016;
4. To approve the adjournment of the Annual Meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes to approve Proposal 3;
5. To approve by an advisory vote the compensation of our named executive officers, as disclosed in this proxy statement;
6. To ratify the appointment of ErnstOUM & YoungCo. LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2016;2017; and
7.3. To transact such other business as may be properly brought before the Annual Meeting and any adjournments thereof.
The Board of Directors recommends a vote “for” the election of each director nominee and a “for” vote for the second third, fourth, fifth and sixth proposalsproposal listed above.
The Board of Directors has fixed the close of business on April 18, 2016,13, 2017, as the record date for the determination of stockholders entitled to notice of and to vote at the Annual Meeting and at any adjournments thereof. You may vote if you were a record holder of OXiGENEMateon shares at the close of business Eastern Time on this date. A list of stockholders of record will be available at the meeting and, during the 10 days prior to the meeting, at our principal executive offices located at 701 Gateway Boulevard, Suite 210, South San Francisco, California 94080.
All stockholders are cordially invited to attend the Annual Meeting.Whether you plan to attend the Annual Meeting or not, it is important that you cast your vote either in person or by proxy. When you have finished reading the proxy statement, we urge you to vote by following the instructions in the Notice of Internet Availability of Proxy Materials that you previously received and to submitsubmitting your proxy by the Internet, telephone or mail in order to ensure the presence of a quorum. You may change or revoke your proxy at any time before it is voted at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS |
/s/ William D. Schwieterman, M.D. |
William D. Schwieterman, M.D. |
President and Chief Executive Officer |
April 25, 201626, 2017
701 GATEWAY BOULEVARD, SUITE 210
SOUTH SAN FRANCISCO, CALIFORNIA 94080
(650) 635-7000
PROXY STATEMENT FOR THE OXiGENE,MATEON THERAPEUTICS, INC.
20162017 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
June 1, 2016JUNE 9, 2017
This proxy statement, along with the accompanying notice of the 20162017 annual meeting of stockholders (the “Annual Meeting”) of OXiGENE,Mateon Therapeutics, Inc., contains information about the Annual Meeting, including any adjournments or postponements of the Annual Meeting. We are holding the Annual Meeting at 10:00 a.m., local time, on Wednesday,Friday, June 1, 2016, in the Monterey conference room9, 2017, at the Embassy Suites Hotel, 250 Gateway Boulevard, Southoffices of the Company’s counsel, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., 44 Montgomery Street, 36th Floor, San Francisco, California 94080.94104.
In this proxy statement, we refer to OXiGENE,Mateon Therapeutics, Inc. as “OXiGENE,“Mateon,” “the Company,” “we,” “our” and “us.”
This proxy statement relates to the solicitation of proxies by our Board of Directors for use at the Annual Meeting.
On or about April 25, 2016,26, 2017, we will begin sending this proxy statement, the attachedImportant Notice Regarding the Availability of Annual Meeting of Stockholders and the enclosed proxy cardProxy Materials to all stockholders entitled to vote at the Annual Meeting.annual meeting.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE SHAREHOLDER MEETING TO BE HELD ON JUNE 9, 2017 This proxy statement Additionally, you can find a copy of our Although not part of thisweand our 2016 annual report to stockholders are available for viewing, printing and downloading at www.proxyvote.com. To view these materials please have your12-digit control number(s) available that appears on your Notice or proxy card. On this website, you can also sending, along with thiselect to receive future distributions of our proxy statement,statements and annual reports to stockholders by electronic delivery.2015 annual report,Annual Report on Form10-K, which includes our financial statements for the fiscal year ended December 31, 2015.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE
SHAREHOLDER MEETING TO BE HELD ON JUNE 1, 2016,
This proxy statement and our 2015 annual report to stockholders are available for viewing, printing, and downloading at www.proxydocs.com/oxgn.
Additionally, you can find a copy of our Annual Report on Form 10-K, which includes our financial statements for the fiscal year ended December 31, 2015, on the website of the SEC, at www.sec.gov, or in the “SEC Filings” section of the “Investors & Media”News” section of our website at www.oxigene.com.www.mateon.com. You may also obtain a printed copy of our Annual Report on Form10-K, including our financial statements, free of charge, from us by sending a written request to OXiGENE,Mateon Therapeutics, Inc., 701 Gateway Boulevard, Suite 210, South San Francisco, CA 94080. Exhibits will be provided upon written request and payment of an appropriate processing fee.
The Annual Meeting will be held on Wednesday,Friday, June 1, 2016,9, 2017, at 10:00 a.m., local time, in the Monterey conference room at the Embassy Suites Hotel, 250 Gateway Boulevard, Southoffices of the Company’s counsel, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., 44 Montgomery Street, 36th Floor, San Francisco, CA 94080.California 94104. You are urged to attend the Annual Meeting and vote in person. If you are unable to attend the Annual Meeting and vote in person, the Board of Directors would appreciate your prompt vote either electronically via the Internet or telephone or via regular mail. We strongly encourage you to vote electronically, if you are given that option.
IMPORTANT INFORMATION ABOUT THE ANNUAL MEETING AND VOTING
Why is the Company Soliciting My Proxy? You received this proxy statement and the accompanying Notice of Annual Meeting of Stockholders because our Board of Directors is soliciting your proxy to vote at the Annual Meeting and any adjournments of the Annual Meeting. This proxy statement along with the accompanying Notice of Annual Meeting of Stockholders summarizes the purposes of the meeting and the information you need to know to vote at the Annual Meeting.
We have made available to you on the Internet or have sent you this proxy statement, the Notice of Annual Meeting of Stockholders, the proxy card and a copy of our Annual Report on Form10-K for the fiscal year ended December 31, 2015,2016, because you owned shares of OXiGENEMateon common stock on the record date, April 18, 2016.13, 2017. The Company intends to commence distribution of the Important Notice Regarding the Availability of Proxy Materials, which we refer to throughout this proxy statement as the Notice, and, if applicable, the proxy materials to stockholders on or about April 25, 2016.26, 2017.
Why Did I Receive a Notice in the Mail Regarding the Internet Availability of Proxy Materials Instead of a Full Set of Proxy Materials? As permitted by the rules of the U.S. Securities and Exchange Commission, or the SEC, we may furnish our proxy materials to our stockholders by providing access to such documents on the Internet, rather than mailing printed copies of these materials to each stockholder. Most stockholders will not receive printed copies of the proxy materials unless they request them. We believe that this process should expedite stockholders’ receipt of proxy materials and lower the costs of the annual meeting. If you received a Notice by mail or electronically, you will not receive a printed or email copy of the proxy materials, unless you request one by following the instructions included in the Notice. Instead, the Notice instructs you as to how you may access and review all of the proxy materials and submit your proxy on the Internet. If you requested a paper copy of the proxy materials, you may authorize the voting of your shares by following the instructions on the proxy card, in addition to the other methods of voting described in this proxy statement.
Who Can Vote. Record holders of our common stock at the close of business Eastern Time on the record date, April 18, 2016,13, 2017, may vote at the Annual Meeting. On April 18, 2016,13, 2017, approximately 4240 record holders held 26,544,934 shares of our outstanding common stock. Our common stock is our only outstanding class of voting stock.
You do not need to attend the Annual Meeting to vote your shares. Shares represented by valid proxies, received in time for the Annual Meeting and not revoked prior to the Annual Meeting, will be voted at the Annual Meeting. For instructions on how to change or revoke your proxy, see “May I Change or Revoke My Proxy?” below.
How Many Votes You Have. Each share of our common stock that you own entitles you to one vote.
How You Can Vote. You can only vote your shares if you are either present in person or represented by proxy at the Annual Meeting. Whether you plan to attend the Annual Meeting or not, we urge you to vote by proxy. All shares represented by valid proxies that we receive through this solicitation, and that are not revoked, will be voted in accordance with your instructions on the proxy card or as instructed via Internet or telephone. You may specify whether your shares should be voted for or withheld for each nominee for director, and whether your shares should be voted for, against or abstained with respect to each of the other proposals.proposal. If you properly submit a proxy without giving specific voting instructions, your shares will be voted in accordance with the Board of Directors’ recommendations as noted below. Voting by proxy will not affect your right to attend the Annual Meeting. If your shares are registered directly in your name through our stock transfer agent, American Stock Transfer & Trust Company, LLC (“AST”), or you have stock certificates registered in your name, you may vote:
• | By Internet or by telephone. Follow the instructions included in the Notice or, if you received printed materials, in the proxy card to vote by Internet or telephone. |
• | By mail. If you received a proxy card by mail, you can vote by mail by completing, signing, dating and returning the proxy card as instructed on the card. If you sign the proxy card but do not specify how you want your shares voted, they will be voted in accordance with the Board of Directors’ recommendations as noted below. |
• | In person at the meeting. If you attend the meeting, you may deliver your completed proxy card in person or you may vote by completing the ballot, which will be available at the meeting. |
If your shares are held in “street name” (held in the name of a bank, broker, or other holder of record), you will receive voting instructions from the holder of record. You must follow the instructions of the holder of record in order for your shares to be voted. Telephone and Internet voting also will be offered to stockholders owning shares through certain banks and brokers. If your shares are not registered in your own name and you plan to vote your shares in person at the Annual Meeting, you should contact your broker or agent to obtain a legal proxy or broker’s proxy card and bring it to the Annual Meeting in order to vote.
Telephone and Internet voting facilities for stockholders of record will be available 24 hours a day and will close at 11:59 p.m. Eastern Time on May 31, 2016.June 8, 2017.
Recommendations of the Board of Directors.
The Board of Directors recommends that you vote:
“FOR” the election of the five director nominees;
and
“FOR” the amendment to the OXiGENE, Inc. 2015 Equity Incentive Plan (the “2015 Plan”) to increase the number of shares available for the grant of awards thereunder by 1,500,000 shares;
“FOR” the approval of the proposed amendment to the Restated Certificate of Incorporation of OXiGENE, Inc., as amended to date (as amended, the “Charter”), to effect a reverse stock split of our common stock, $0.01 par value per share, at a ratio in the range of 1:5 to 1:10, such ratio to be determined by the Board of Directors (the “Reverse Stock Split”), and the filing of such amendment to be implemented, if at all, not later than December 2, 2016;
“FOR” the adjournment of the Annual Meeting, if a quorum is present, to solicit additional proxies if there are not sufficient votes to approve the amendment of the Charter to authorize the Reverse Stock Split;
“FOR” the compensation of our named executive officers, as disclosed in this proxy statement; and
“FOR” the ratification of the appointment of ErnstOUM & YoungCo. LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2016.
If any other matter is properly presented, the proxy holdersholder will vote your shares in accordance with theirhis or her best judgment. At the time this proxy statement was first made available, we knew of no matters that needed to be acted on at the Annual Meeting, other than those discussed in this proxy statement.
May I Change or Revoke My Proxy? If you give us your proxy, you may change or revoke it at any time before the Annual Meeting. You may change or revoke your proxy in any one of the following ways:
if you submitted a proxy card, by signing a new proxy card with a date later than your previously delivered proxy and submitting it as instructed above;
byre-voting by Internet or by telephone as instructed above;
by delivering a written notice of revocation before the Annual Meeting with a date later than your previously delivered proxy card to our principal offices at 701 Gateway Boulevard, Suite 210, South San Francisco, California 94080; or
by attending the Annual Meeting in person and voting in person. Attending the Annual Meeting in person will not in and of itself revoke a previously submitted proxy. You must specifically request at the Annual Meeting that it be revoked.
Your most current vote, whether by telephone, Internet or proxy card is the one that will be counted.
How to Vote if You Receive More Than One Proxy Card. You may receive more than one proxy card if you hold shares of our common stock in more than one account, which may be in registered form or held in street name. Please vote in the manner described under “How You Can Vote” for each account to ensure that all of your shares are voted.
How Your Shares Will Be Voted if You Do Not Vote. If your shares are registered in your name or if you have stock certificates, they will not be counted if you do not vote as described above under “How You Can Vote.” If your shares are held in street name and you do not provide voting instructions to the bank, broker, or
other nominee that holds your shares as described above, the bank, broker, or other nominee that holds your
shares has the authority to vote your unvoted shares only on the proposals authorizing the amendment of the Charterproposal to effect the Reverse Stock Split, authorizing the adjournment of the Annual Meeting to solicit additional proxies if there are insufficient votes to approve the amendment of the Charter to effect the Reverse Stock Split, and on the ratification ofratify the appointment of our independent registered public accounting firm (Proposals 3, 4 and 6(Proposal 2 of this proxy statement) without receiving instructions from you. Therefore, we encourage you to provide voting instructions to your bank, broker, or other nominee. This ensures your shares will be voted at the Annual Meeting and in the manner you desire. A “brokernon-vote” will occur if your broker cannot vote your shares on a particular matter because it has not received instructions from you and does not have discretionary voting authority on that matter or because your broker chooses not to vote on a matter for which it does have discretionary voting authority.
Your bank, broker, or other nominee does not have the ability to vote your uninstructed shares in the election of directors, the approval of the proposed amendment to the 2015 Plan or in the approval of any matters relating to executive compensation.directors. Therefore, if you hold your shares in street name it is critical that you cast your vote if you want your vote to be counted for the election of directors, the approval of the proposed amendment to the 2015 Plan and the approval of the compensation of our named executive officers, as disclosed in this proxy statement (Proposals(Proposal 1 2 and 5 of this proxy statement). In the past, if you held your shares in street name and you did not indicate how you wanted your shares to be voted in the election of directors, your bank, broker, or other nominee was allowed to vote your shares on your behalf in the election of directors as it deemed appropriate.
Confidentiality of Votes. We will keep all the proxies, ballots and voting tabulations private. We only let Mediant Communications Inc.,Matthew M. Loar, our Chief Financial Officer who has been appointed as the inspector of election (the “Inspector of Election”), RR Donnelley,Broadridge Financial Solutions, Inc., which is assisting us with our proxy process, AST our proxy solicitor, Morrow & Co., LLC, and other members of the Company’s management team examine these documents unless further disclosure is necessary to meet legal requirements.
Voting in Person. If you plan to attend the Annual Meeting and vote in person, we will give you a ballot when you arrive. However, if your shares are held in the name of your broker, bank, or other nominee, you must bring an account statement or letter from the nominee indicating that you were the beneficial owner of the shares on April 18, 2016,13, 2017, the record date, for determining who is entitled to vote.
What Vote is Required to Approve Each Proposal and How are Votes Counted?
Proposal 1: Elect Directors | The nominees for director who receive the most votes (also known as a “plurality” of the votes cast) will be elected. You may vote either FOR all of the nominees, WITHHOLD your vote from all of the nominees or WITHHOLD your vote from any one or more of the nominees. Votes that are withheld will not be included in the vote tally for the election of the directors. Brokerage firms do not have authority to vote customers’ unvoted shares held by the firms in street name for the election of the directors. As a result, any shares not voted by a customer will be treated as a brokernon-vote. Such brokernon-votes will have no effect on the results of this vote. | |
Proposal 2: |
The affirmative vote of a majority of the votes cast affirmatively or negatively is required to ratify the selection of our independent registered public accounting firm. Abstentions will have no effect on the results of this vote. Brokerage firms have authority to vote customers’un-voted shares held by the firms in street name on this proposal. If a broker does not exercise this authority, such brokernon-votes will have no effect on the results of this vote. We are not required to obtain the approval of our stockholders to select our independent registered public accounting firm. However, if our stockholders do not ratify the selection of |
What Are the Costs of Soliciting these Proxies? We will pay all of the costs of soliciting these proxies. Our directors and employees may solicit proxies in person or by telephone, fax or email. We will pay these
employees and directors no additional compensation for these services. We will ask banks, brokers and other institutions, nominees, and fiduciaries to forward these proxy materials to their principals and to obtain authority to execute proxies. We will then reimburse them for their expenses.
We have engaged Morrow & Co., LLC to act as our proxy solicitor in connection with the proposals to be acted upon at the Annual Meeting. Pursuant to our agreement with Morrow & Co., LLC, they will, among other things, provide advice regarding proxy solicitation issues and solicit proxies from our stockholders on our behalf in connection with the Annual Meeting. For these services, we will pay a fee of approximately $7,500 plus expenses.
Quorum. The presence, in person or by proxy, of the holders of a majority of the outstanding shares of our common stock is necessary to constitute a quorum at the Annual Meeting. Votes of stockholders of record who are present at the meeting (in person or by proxy) and abstentions are counted for purposes of determining whether a quorum exists. If a broker has voted on at least one agenda item, then brokernon-votes are counted for purposes of determining whether a quorum exists.
Where to Find the Voting Results of the Annual Meeting. The preliminary voting results will be announced at the Annual Meeting, and we will publish preliminary, or final results if available, in a Current Report onForm 8-K within four business days of the Annual Meeting. If final results are unavailable at the time we file theForm 8-K, then we will file an amended report on
Form 8-K to disclose the final voting results within four business days after the final voting results are known.
Householding of Annual Disclosure Documents. Securities and Exchange Commission (“SEC”)SEC rules concerning the delivery of annual disclosure documents allow us or your broker to send a single set of our proxy materials to any household at which two or more of our stockholders reside, if we or your broker believe that the stockholders are members of the same family. This practice, referred to as “householding,” benefits both you and us. It reduces the volume of duplicate information received at your household and helps to reduce our expenses. The rule applies to our annual reports, proxy statements, and information statements. Once you receive notice from your broker or from us that communications to your address will be “householded,” the practice will continue until you are otherwise notified or until you revoke your consent to the practice. Stockholders who participate in householding will continue to have access to and utilize separate proxy voting instructions.
If your household received a single set of proxy materials this year, but you would prefer to receive your own copy, please contact our transfer agent, AST, by calling their toll free number,1-800-937-5449.
If you do not wish to participate in “householding” and would like to receive your own set of OXiGENE’sMateon’s proxy materials in future years, follow the instructions described below. Conversely, if you share an address with another OXiGENEMateon stockholder and together both of you would like to receive only a single set of proxy materials, follow these instructions:
If your OXiGENEMateon shares are registered in your own name, please contact our transfer agent, AST, and inform them of your request by calling them at1-800-937-5449 or writing them at 6201 15th Avenue, Brooklyn, NY 11219.
If a broker or other nominee holds your OXiGENEMateon shares, please contact the broker or other nominee directly and inform them of your request. Be sure to include your name, the name of your brokerage firm and your account number.
Electronic Delivery of Company Stockholder Communications. Most stockholders can elect to view or receive copies of future proxy materials over the Internet instead of receiving paper copies in the mail.
You can choose this option and save the Company the cost of producing and mailing these documents by:
following the instructions provided on your Notice or proxy card; or
following the instructions provided when you vote over the Internet.
Attending the Annual Meeting. The Annual Meeting will be held at 10:00 a.m, local time, on Wednesday,Friday, June 1, 2016 in the Monterey conference room9, 2017, at the Embassy Suites Hotel, 250 Gateway Boulevard, Southoffices of the Company’s counsel, Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., 44 Montgomery Street, 36th Floor, San Francisco, CA 94080. When you arrive at the Embassy Suites Hotel, signs will direct you to the appropriate meeting room.California 94104.
PROPOSAL 1: ELECTION OF DIRECTORS
Our Board of Directors currently consists of sixfive members, including fourthree members who are “Non-Employee“Non-Employee Directors” within the meaning of Rule16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Under our Amended and RestatedBy-laws (the “By-laws”“By-laws”), the number of members of our Board of Directors is fixed from time to time by the Board of Directors. On March 21, 2016,17, 2017, our Board of Directors accepted the recommendation of the Nominating Committee and voted to nominate for election Dr. David J. Chaplin, Mr. Frederick W. Driscoll, Dr. Gerald McMahon, Dr. Simon C. Pedder, Mr. Donald R. Reynolds, Dr. Bobby W. Sandage, Jr. and Dr. William D. Schwieterman, at the Annual Meeting for a term of one year to serve until the 20172018 annual meeting of stockholders and until their respective successors have been elected and qualified. On March 18, 2016, Ms. Tamar D. Howson notified the Company that she would not be standing for re-election at the Annual Meeting.
Our Board of Directors has reviewed the materiality of any relationship that each of our directors has with the Company, either directly or indirectly. Based upon this review, our Board has determined that each of the nominees except for Dr. Chaplin and Dr. Schwieterman qualify as “independent directors” as defined under the rules of The NASDAQ Stock Market.Market and OTC Markets’ OTCQX Rules for U.S. Companies.
Proxies received in connection with the Annual Meeting will be voted for no more than five director nominees. A plurality of the shares voted affirmatively at the Annual Meeting is required to elect each nominee as a director. We will vote your shares as you specify on your proxy card. If you sign, date and return the proxy card but do not specify how you want your shares voted, we will vote them FOR the election of the nominees listed below. If unforeseen circumstances (such as death or disability) make it necessary for the Board of Directors to substitute another person for any of the nominees, we will vote your shares FOR that other person. If we do not name a substitute nominee, the size of the Board of Directors will be reduced.
Set forth below are the names of the persons nominated as directors, their ages, their offices in the Company, if any, their principal occupations or employment for at least the past five years, the length of their tenure as directors and the names of other public companies in which such persons hold or have held directorships during at least the past five years. Additionally, information about the specific experience, qualifications, attributes or skills that led to our Board of Directors’ conclusion at the time of filing of this proxy statement that each person listed below should serve as a director is set forth below. Each nominee for election to the Board of Directors has consented to being named as a nominee and has agreed to serve if elected. If elected, each director would serve for aone-year term, expiring at the 20172018 annual meeting of stockholders and until his successor is elected. Each nominee for election to the Board of Directors is currently serving as a director.
The information set forth below with respect to each nominee has been furnished to us by that nominee. The ages of the nominees are as of March 21, 2016.17, 2017.
DAVID J. CHAPLIN, PH.D.
Age: | ||
Director Since: | 2013 | |
Principal Occupation: | Since May 2015, Dr. Chaplin has served as |
Business Experience: | Prior to serving as our Chief Scientific Officer, Dr. Chaplin served as our President and Chief Executive Officer from May 2014 until May 2015, and Dr. Chaplin previously served as our Head of Research and Development from July 2000 until August 2011. From May 2014 to December 2016, Dr. Chaplin provided consulting services to Mateon through Aston Biopharma Ltd., aUK-based entity which is controlled by Dr. Chaplin. | ||
From 1999 to 2000, Dr. Chaplin served as Vice President of Oncology at Aventis Pharma in Paris, where he was in charge of drug development from preclinical through |
Marion Roussell, Dr. Chaplin was Senior Director of Oncology at RPR from 1998 to 1999. From 1992 to 1998, Dr. Chaplin headed up the Cancer Research Campaign’s (“CRC”) Tumor Microcirculation Group, based at the Gray Laboratory Cancer Research Trust, Mount Vernon Hospital, London. During this time, he was also a member of the CRC Phase I/II clinical trials committee. Dr. Chaplin also served as Section Head of Cancer Biology at Xenova in the U.K. from 1990 to 1992, and held a senior staff appointment at the British Columbia Cancer Research Centre from 1982 to 1990. Dr. Chaplin has a B.Sc. in chemistry from the University of Essex, a M.Sc. in pharmacology from the University of Southampton, and completed his Ph.D. in tumor biology at the University of London. | ||
Other Directorships: | Since January 2012, Dr. Chaplin has been a director of Smart Matrix Ltd, a privately held company based in the UK, which develops treatments for wound healing. Since July 2012, Dr. Chaplin has also been a director of PHusis Therapeutics, Inc., a privately held biopharmaceutical company. Since July 2013, Dr. Chaplin has been a Director of Aston Biopharma, a privateUK-based company that provides Scientific Consulting Services. Dr. Chaplin was also appointed as a director of Fast Biopharma in June 2016. Fast Biopharma is a private company based in the UK and is involved in the generation of antibody-based therapeutics. | |
Director Qualifications: | The Board believes that Dr. Chaplin’s expertise as one of the developers of the Company’s technology and his |
SIMON C. PEDDER, PH.D.
Age: | ||
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Director Since: | ||
2016 | ||
Principal Occupation: | Dr. Pedder currently serves as the Vice President of Corporate Strategy and Business Development of Athenix, Inc., a private global specialty oncology pharmaceutical company. |
Business Experience: | From April 2014 through June 2015, Dr. Pedder served as the President and Chief Executive Officer of Cellectar Biosciences, Inc., a biopharmaceutical company developing compounds for the treatment, diagnosis and imaging of cancer, and served as Cellectar’s Acting Chief Executive Officer from October 2013 until April 2014. Dr. Pedder also served as a member of the board of directors of Cellectar from October 2013 until June 2015. From May 2004 through July 2012, Dr. Pedder served as President, Chief Executive Officer and as a director of Chelsea Therapeutics, Inc., a public development stage biopharmaceutical company. Dr. Pedder has a Bachelor of Environmental Studies from the University of Waterloo, a Master of Science in Toxicology from Concordia University and a Ph.D. in Pharmacology from the Medical College at the University of Saskatchewan College of Medicine. | ||
Other Directorships: | Dr. Pedder currently serves on the board of directors of Eboo Pharmaceuticals, Inc., a private development-stage pharmaceutical company, Ballantyne Therapeutics, Inc., a private pharmaceutical development company, and Atlantic Research Group, a private contract research organization. Dr. Pedder also served as a member of the board of directors of Cellectar from October 2013 until June 2015. | ||
Director Qualifications: | The Board believes Dr. Pedder’s experience in cancer drug development and his experience managing public life sciences companies qualify Dr. Pedder to serve as a director of the Company and led to the Board’s conclusion that Dr. Pedder should be a member of the Board of Directors. |
DONALD J. REYNOLDS
Age: | 54 | |
Director Since: | 2016 | |
Principal Occupation: | Mr. Reynolds is a practicing attorney and partner at the law firm of Wyrick Robbins Yates & Ponton LLP with experience in the areas of capital markets, securities law, mergers & acquisitions, venture capital and general corporate law. Mr. Reynolds also currently teaches Securities Regulation at Campbell University’s law school and guest lectures on corporate governance at the University of North Carolina Chapel Hill’s Kenan-Flagler Business School. | |
Business Experience: | Since Mr. Reynolds’s elevation to partner at the law firm of Wyrick Robbins Yates & Ponton LLP in 1996, he has participated in a variety of the firm’s internal committees, including the firm’s Executive Committee, Strategic Planning Committee, Nominating Committee and Compensation Committee. Mr. Reynolds received his B.A. from Whitman College and his J.D. from New York University School of Law. He is currently licensed to practice law in California and North Carolina. | |
Other Directorships: | Mr. Reynolds currently serves as a member of the board of directors of Atlantic Research Group, Inc., a private clinical research organization, and as Chair of the board of directors of USA Taekwondo, thenon-profit national governing body for the sport. | |
Director Qualifications: | The Board believes that Mr. Reynolds’s extensive experience as a practicing capital markets attorney qualifies Mr. Reynolds to serve as a director of the Corporation and led to the Board’s conclusion that he should be a member of the Board. |
BOBBY W. SANDAGE, JR., PH.D.
Age: | ||
Director Since: | 2016 | |
Principal Occupation: | Dr. Sandage currently serves as the president and chief executive officer of Euclises Pharmaceuticals, Inc., a private drug discovery and development company advancingcyclooxygenase-2(COX-2) inhibitors for cancer therapy. Since August of 2016, he has served as a general partner of Cultivation Capital, a venture capital firm specializing in investments in private technology and life sciences companies. | |
Business Experience: | Dr. Sandage provided services as an independent consultant for pharmaceutical companies from May 2013 until December of 2014. From April 2011 until April of 2013, he served as the president and chief executive officer of Coronado Biosciences, Inc. (now renamed Fortress Biotech, Inc.), a public biotechnology company dedicated to developing and commercializing pharmaceutical and biotechnology products in a variety of therapeutic fields, and as the vice president and head of oncology research and development for Covidien Pharmaceuticals, a specialty pharmaceuticals company, a position he held from March 2010 until March of 2011. From November 1991 to December of 2009, Dr. Sandage held various positions at Indevus Pharmaceuticals, Inc., a specialty pharmaceuticals company which was acquired by Endo Pharmaceuticals in 2009, including executive vice president of research and development and chief scientific officer. Prior to joining Indevus Pharmaceuticals, Dr. Sandage held senior drug development positions at DuPont Merck Pharmaceutical Company, DuPont Critical Care (formerly American Critical Care) and Merrell Dow |
Pharmaceuticals. Dr. Sandage received B.S. in pharmacy from the University of Arkansas and a Ph.D. in clinical pharmacy from Purdue University. | ||
Other Directorships: | Dr. Sandage is currently a member of the board of directors of Immunophotonics, Inc., a private cancer vaccine development company, EDIS Solutions, LLC, a private healthcare information technology company, and Euclises Pharmaceuticals, Inc. | |
Director Qualifications: | The Board believes that Dr. Sandage’s experience managing public life sciences companies and his extensive prior work on New Drug Applications, qualify Dr. Sandage to serve as a director of the Corporation and led to the Board’s conclusion that Dr. Sandage should be a member of the Board of Directors. |
WILLIAM D. SCHWIETERMAN, M.D.
Age: | 59 | |
Director Since: | 2007 | |
Principal Occupation: | Since May 2015, Dr. Schwieterman has served as President and Chief Executive Officer of | |
Business Experience: | Dr. Schwieterman is a board-certified internist and a rheumatologist. Dr. Schwieterman was previously a part-time employee of Perceptive Advisors, LLC, a hedge fund based in New York, NY. From 2009 to 2014, Dr. Schwieterman was the Chief Medical Officer of Chelsea Therapeutics, Inc., a publicly traded biopharmaceutical development company, where he led the Chelsea Therapeutics clinical development team toward the approval of droxidopa for the treatment of symptoms of Parkinson’s disease and other neurogenerative diseases. Dr. Schwieterman was formerly Chief of the Medicine Branch and Chief of the Immunology and Infectious Disease Branch in the Division of Clinical Trials at the Food and Drug Administration (the “FDA”). In these capacities and others, Dr. Schwieterman spent 10 years at the FDA in the Center for Biologics overseeing a wide range of clinical development plans for a large number of different types of molecules. Dr. Schwieterman holds a B.S. and M.D. from the University of Cincinnati. |
Other Directorships: | Dr. Schwieterman does not currently serve, and has not served in the past five years, as a member of the board of directors of another reporting company or of any registered investment company. | ||
Director Qualifications: | The Board believes that Dr. Schwieterman’s medical training and his expertise with regulatory matters involving the FDA and the clinical trials process are invaluable skills that Dr. Schwieterman brings to his Board service and led to the Board’s conclusion that Dr. Schwieterman should be a member of the Board of Directors. |
A plurality of the shares voted for each nominee at the Annual Meeting is required to elect each nominee as a director.
THE BOARD OF DIRECTORS RECOMMENDS THE ELECTION TO THE BOARD OF DIRECTORS OF EACH DIRECTOR NOMINEE NAMED ABOVE, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR OF THE ELECTION OF SUCH NOMINEES UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY.
PROPOSAL 2: APPROVAL OF INCREASE IN AUTHORIZED SHARES FOR THE EQUITY
INCENTIVE PLAN
General
On March 21, 2016, our Board of Directors approved an amendment to the 2015 Plan, effective upon approval by our stockholders at the Annual Meeting, to increase the number of shares authorized for issuance of awards under the 2015 Plan from 4,000,000 shares of our common stock to an aggregate of 5,500,000 shares of our common stock. The 2015 Plan will continue to allow additional shares to be issued under the 2015 Plan if options outstanding under the OXiGENE, Inc. 2005 Stock Plan (the “2005 Plan”) are cancelled, forfeited, surrendered, or terminated for any reason whatsoever after expiration of the 2005 Plan, provided that no more than 725,781 shares shall be added to the 2015 Plan from the 2005 Plan. The 2015 Plan was approved by our Board of Directors and stockholders in 2015.
As of April 18, 2016, options to purchase 3,404,449 shares of common stock are outstanding under the 2015 Plan, options to purchase 457,088 shares of common stock are outstanding under the 2005 Plan, no shares have been issued upon the exercise of options granted under the 2015 Plan, 83,295 shares have been issued upon the exercise of options granted under the 2005 Plan and 864,244 options remain available for issuance under the 2015 Plan. By its terms, the 2015 Plan may be amended by the Board of Directors, provided that any amendment which the Board of Directors determines requires stockholder approval is subject to receiving such stockholder approval.
This amendment is being submitted to you for approval at the Annual Meeting in order to ensure (i) favorable federal income tax treatment for grants of incentive stock options under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) continued eligibility to receive a federal income tax deduction for certain compensation paid under our Plan by complying with Section 162(m) of the Code. Approval by our stockholders of the 2015 Plan is also required by the listing rules of The NASDAQ Stock Market.
Generally, shares of common stock reserved for awards under the 2015 Plan that lapse or are canceled will be added back to the share reserve available for future awards. However, shares of common stock tendered in payment for an award or shares of common stock withheld for taxes will not be available again for grant. The 2015 Plan provides that no participant may receive awards for more than 500,000 shares of common stock in any fiscal year. This number will remain set at 500,000 even if Proposal 3, relating to the proposed Reverse Stock Split, is approved by our shareholders and implemented by our Board.
Our Board, the Compensation Committee and management all believe that the effective use of stock-based long-term incentive compensation is vital to our ability to achieve strong performance in the future. The Plan will maintain and enhance the key policies and practices adopted by our management and Board of Directors to align employee and stockholder interests. In addition, our future success depends, in large part, upon our ability to maintain a competitive position in attracting, retaining and motivating key personnel. We believe that the increase in the number of shares available for issuance under our Plan is essential to permit our management to continue to provide long-term, equity-based incentives to present and future key employees, consultants and directors. Accordingly, our Board of Directors believes approval of the amendment to increase the aggregate number of shares available for issuance under the Plan is in our best interests and those of our stockholders and recommends a vote “FOR” the approval of the amendment to the Plan.
The following is a brief summary of the 2015 Plan as in effect prior to the proposed amendment. The material features discussed below are present in the current version of the 2015 Plan and are not subject to amendment. This summary is qualified in its entirety by reference to the text of the 2015 Plan, a copy of which is attached as Appendix B to this proxy statement.
Material Features of the 2015 Plan.
Eligibility. The 2015 Plan allows us, under the direction of our Compensation Committee, to make grants of stock options, restricted and unrestricted stock awards, and other stock-based awards to employees, consultants and directors. The purpose of these awards is to attract and retain key individuals, further align employee and stockholder interests, and provide additional incentive for them to promote our success or the success of our affiliates. The 2015 Plan provides an essential component of the total compensation package, reflecting the importance that we place on aligning the interests of key individuals with those of our stockholders. All employees, directors, and consultants of the Company and its affiliates are eligible to participate in the 2015 Plan. As of April 18, 2016, there were approximately 20 individuals eligible to participate. On April 18, 2016, the closing market price per share of our common stock was $0.76, as reported by The NASDAQ Stock Market.
Performance Goals. The 2015 Plan is structured to comply with the requirements imposed by Section 162(m) of the Code and related regulations in order to preserve, to the extent desirable, the tax deduction available to us for awards made under the 2015 Plan. Section 162(m) of the Code generally denies a public corporation a deduction for compensation in excess of $1,000,000 paid to each of its Covered Employees (as defined in the next sentence) unless the compensation is exempt from the $1,000,000 limitation because it qualifies as performance-based compensation. Our “Covered Employees” include our CEO, CFO and CSO. We believe that it is in the best interests of us and our stockholders to maintain the structure of the 2015 Plan so that we are in a position to maximize corporate deductibility of executive compensation to the extent that it may be desirable to do so. In order to qualify as performance-based compensation, the compensation paid under a plan to Covered Employees must be paid under pre-established objective performance goals determined and certified by a committee comprised of outside directors. In addition to other requirements for the performance-based compensation exception, stockholders must be advised of, and must approve, the material terms (or changes in material terms) of the performance goals under which compensation is to be paid. Material terms include: (i) the employees eligible to receive compensation; (ii) a description of the business criteria on which performance goals are based; and (iii) either the maximum amount of the compensation to be paid if the performance goal is met or the formula used to calculate the amount of compensation if the performance goal is met. In addition, stock options also generally qualify as “performance-based compensation” under Section 162(m) as long as they are not granted in excess of the approved annual limitation. The material terms of the performance goals under the 2015 Plan are not being changed and our stockholders approved these performance goals at our 2015 annual stockholder meeting.
In order for the Company to have the ability to grant awards under the 2015 Plan that qualify as “performance-based compensation” under Section 162(m) of the Code, the 2015 Plan provides that our Compensation Committee may require that the vesting of certain awards be conditioned on the satisfaction of performance criteria related to objectives of the Company, an affiliate of the Company or a division or strategic business unit of the Company in which the relevant participant is employed, such as: (i) income or earnings including operating income, earnings before or after taxes, interest, depreciation, amortization, and/or extraordinary or special items; (ii) net income excluding amortization of intangible assets, depreciation and impairment of goodwill and intangible assets and/or excluding charges attributable to the adoption of new accounting pronouncements; (iii) earnings or book value per share (basic or diluted); (iv) return on assets (gross or net), return on investment, return on capital, return on invested capital or return on equity; (v) stock price or total shareholder return; (vi) cost targets, reductions and savings, expense management, productivity and efficiencies; (vii) operational objectives, consisting of one or more objectives based on achieving progress in research and development programs or achieving regulatory milestones related to development and or approval of products; and (viii) other strategic business criteria, consisting of one or more objectives based on meeting specified goals. As discussed above, if we determine to make awards under the 2015 Plan subject to the attainment of these performance goals, our Compensation Committee intends that compensation paid under the 2015 Plan will not be subject to the deductibility limitation imposed under Section 162(m) of the Code.
Stock Options. Stock options granted under the 2015 Plan may either be incentive stock options (“ISOs”), which are intended to satisfy the requirements of Section 422 of the Code, or non-qualified stock options, which
are not intended to meet those requirements. ISOs may be granted to employees of the Company and its affiliates. Non-qualified options may be granted to employees, directors and consultants of the Company and its affiliates. The exercise price of a stock option may not be less than 100% of the fair market value of our common stock on the date of grant. If an ISO is granted to an individual who owns more than 10% of the combined voting power of all classes of our capital stock, the exercise price may not be less than 110% of the fair market value of our common stock on the date of grant and the term of the ISO may not be longer than five years. Options may not have a term longer than ten years, except that if an ISO is granted to an individual who owns more than 10% of the combined voting power of all classes of our capital stock, it may not have a term longer than five years from the date of the grant unless otherwise provided in the option agreement.
Award agreements for stock options include rules for exercise of the stock options after termination of service. Options may not be exercised unless they are vested, and no option may be exercised after the end of the term set forth in the award agreement. Generally, stock options will be exercisable for three months after termination of service for any reason other than death or total and permanent disability, and for twelve months after termination of service on account of death or total and permanent disability.
Restricted Stock. Restricted stock is common stock that is subject to restrictions, including a prohibition against transfer and a substantial risk of forfeiture, until the end of a “restricted period” during which the grantee must satisfy certain vesting conditions. If the grantee does not satisfy the vesting conditions by the end of the restricted period, the restricted stock is forfeited.
During the restricted period, the holder of restricted stock has the rights and privileges of a regular stockholder, except that the restrictions set forth in the applicable award agreement apply. For example, the holder of restricted stock may vote and receive dividends on the restricted shares; but he or she may not sell the shares until the restrictions are lifted.
Other Stock-Based Awards. The 2015 Plan also authorizes the grant of other types of stock-based compensation including, but not limited to stock appreciation rights, phantom stock awards, and stock unit awards. Our Compensation Committee may award such stock-based awards subject to such conditions and restrictions as it may determine. These conditions and restrictions may include continued employment with us through a specified restricted period.
Plan Administration. In accordance with the terms of the 2015 Plan, our Board of Directors has authorized our Compensation Committee to administer the 2015 Plan. The Compensation Committee may delegate part of its authority and powers under the 2015 Plan to one or more of our directors and/or officers, but only our Board of Directors or our Compensation Committee can make awards to participants who are directors or executive officers of the Company. In accordance with the provisions of the 2015 Plan, our Compensation Committee determines the terms of awards, including:
which employees, directors and consultants will be granted awards;
the number of shares subject to each award;
the vesting provisions of each award;
the termination and cancellation provisions applicable to awards; and
all other terms and conditions upon which each award may be granted in accordance with the 2015 Plan.
In addition, our Compensation Committee may, in its discretion, amend any term or condition of any outstanding award, other than reducing the exercise price or purchase price, provided that (i) the term or condition as amended is not prohibited by the 2015 Plan; (ii) any amendment does not impair the rights of a participant under any award previously granted without that participant’s consent; and (iii) any amendment will be made only after the Compensation Committee determines whether the amendment would cause any adverse tax consequences to the participant.
Stock Dividends and Stock Splits. If our common stock shall be subdivided or combined into a greater or smaller number of shares or if we issue any shares of common stock as a stock dividend, the number of shares of our common stock deliverable upon exercise of an option issued or upon issuance of an award shall be appropriately increased or decreased proportionately, and appropriate adjustments shall be made in the purchase price per share to reflect such subdivision, combination, or stock dividend.
Corporate Transactions. Upon a merger or other reorganization event, the Compensation Committee or the successor board, may, in its sole discretion, take any one or more of the following actions pursuant to the 2015 Plan, as to some or all outstanding awards:
provide that all outstanding options shall be assumed or substituted by the successor corporation;
upon written notice to a participant provide that the participant’s unexercised options will terminate immediately prior to the consummation of such transaction unless exercised by the participant;
in the event of a merger pursuant to which holders of our common stock will receive a cash payment for each share surrendered in the merger, make or provide for a cash payment to the participants equal to the difference between the merger price times the number of shares of our common stock subject to such outstanding options, and the aggregate exercise price of all such outstanding options, in exchange for the termination of such options;
provide that outstanding awards shall be assumed or substituted by the successor corporation, become realizable or deliverable, or restrictions applicable to an award will lapse, in whole or in part, prior to or upon the merger or reorganization event; and
with respect to stock grants and in lieu of any of the foregoing, the Compensation Committee or the successor board may provide that, upon consummation of the transaction, each outstanding stock grant shall be terminated in exchange for payment of an amount equal to the consideration payable upon consummation of such transaction to a holder of the number of shares of common stock comprising such award (to the extent such stock grant is no longer subject to any forfeiture or repurchase rights then in effect or, at the discretion of the Compensation Committee, all forfeiture and repurchase rights being waived upon such transaction).
Amendment and Termination. The 2015 Plan may be amended by our stockholders. It may also be amended by the Compensation Committee, provided that any amendment approved by the Compensation Committee which is of a scope that requires stockholder approval as required by the rules of The NASDAQ Stock Market, in order to ensure favorable federal income tax treatment for any incentive stock options under Code Section 422, or for any other reason is subject to obtaining such stockholder approval. However, no such action may adversely affect any rights under any outstanding award without the holder’s consent.
Duration of Plan. The 2015 Plan will expire by its terms on February 26, 2025.
Federal Income Tax Considerations. The material federal income tax consequences of the issuance and exercise of stock options and other awards under the 2015 Plan, based on the current provisions of the Code and regulations, are as follows. Changes to these laws could alter the tax consequences described below. This summary assumes that all awards granted under the 2015 Plan are exempt from or comply with, the rules under Section 409A of the Code related to nonqualified deferred compensation.
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Limitation on Our Deductions. As a result of Section 162(m) of the Code, our deduction for certain awards under the 2015 Plan may be limited to the extent that a Covered Employee receives compensation in excess of $1,000,000 a year (other than for performance-based compensation that otherwise meets the requirements of Section 162(m) of the Code.) Certain grants under our 2015 Plan may qualify as performance-based compensation.
New Plan Benefits. The following table shows the total number of awards expected to be made under the 2015 Plan to the identified individuals and groups, which awards are subject to the approval of the amendment of the 2015 Plan by our stockholders:
The amounts of any future grants under the 2015 Plan are not determinable as awards under the 2015 Plan and will be granted at the sole discretion of the Compensation Committee, or other delegated persons and we cannot determine at this time either the persons who will receive awards under the 2015 Plan or the amount or types of any such awards.
For these reasons, the Board of Directors has recommended adopting an amendment to the 2015 Plan to increase the number of shares authorized to be granted thereunder. The affirmative vote of a majority of the shares cast affirmatively or negatively at the Annual Meeting is required to amend the 2015 Plan.
THE BOARD OF DIRECTORS RECOMMENDS APPROVAL OF THE ADOPTION OF AN AMENDMENT TO THE 2015 PLAN TO INCREASE BY 1,500,000 SHARES THE AGGREGATE NUMBER OF SHARES WHICH MAY BE GRANTED UNDER THE PLAN. PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR OF THE AMENDMENT UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
PROPOSAL 3: TO AUTHORIZE THE FILING OF AN AMENDMENT TO THE COMPANY’S RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF OUR COMMON STOCK, $0.01 PAR VALUE PER SHARE, AT A RATIO IN THE RANGE OF 1:5 TO 1:10, SUCH RATIO WITHIN THAT RANGE TO BE DETERMINED IN THE SOLE DISCRETION OF THE BOARD OF DIRECTORS, AND THE FILING OF SUCH AMENDMENT TO BE IMPLEMENTED, IF AT ALL, NOT LATER THAN DECEMBER 2, 2016.
General
Our Board of Directors has adopted and is recommending that our stockholders approve an amendment to our Charter, and thereby authorize the Board of Directors, in their discretion, to effect the Reverse Stock Split no later than December 2, 2016. Holders of our common stock, $0.01 par value per share, are being asked to approve the proposal that Article Fourth of the Charter be amended to effect the Reverse Split (such split to combine a number of outstanding shares of our common stock between five (5) and ten (10), such number consisting of only whole shares, into one (1) share of common stock). Pursuant to the law of the State of Delaware, our state of incorporation, the Board of Directors must adopt this amendment to our Charter and submit the amendment to stockholders for their approval. The form of amendment to our Charter to effect the Reverse Stock Split is attached as Appendix C to this proxy statement. The amendment will permit the Board of Directors to effect the Reverse Stock Split at any time on or prior to December 2, 2016. The Board of Directors may effect only one reverse stock split as a result of this authorization. The Board of Directors’ decision as to whether and when to effect the Reverse Stock Split will be based on a number of factors, including market conditions, existing and expected trading prices for our common stock, and the continued listing requirements of The NASDAQ Capital Market. Although our stockholders may approve the Reverse Stock Split, we will not effect the Reverse Stock Split if the Board of Directors does not deem it to be in the best interests of the Company and its stockholders. The Reverse Stock Split, if authorized pursuant to this resolution and if determined by the Board of Directors, in their discretion, to be in the best interests of the Company and its stockholders, will be effected, if at all, on or prior to December 2, 2016.
The proposed amendment to our Charter to effect the Reverse Stock Split will not change the number of authorized shares of common stock or preferred stock, or the par value of common stock or preferred stock. As of the date of this proxy statement, we have no definitive, specific plans, arrangements or understandings relating to the issuance of a material amount of additional shares of authorized common stock that will become available following the reverse stock split in the near term.
Purpose and Background of the Reverse Stock Split
On December 1, 2015, we received a deficiency letter from The NASDAQ Stock Market LLC indicating that, for the last 30 consecutive business days ended November 30, 2015, the bid price for our common stock had closed below the minimum $1.00 per share required for continued inclusion on The NASDAQ Capital Market under NASDAQ Listing Rule 5550(a)(2). Pursuant to NASDAQ Listing Rule 5810(c)(3)(A), we were afforded 180 calendar days, or until May 31, 2016, to regain compliance with the minimum bid price requirement. Our common stock will continue to be listed on The NASDAQ Capital Market during this grace period. In the event we do not regain compliance by May 31, 2016, we may be provided an additional 180-day compliance period, if we demonstrate that the Company meets the applicable market value of publicly held shares requirement for continued listing and all other applicable standards for initial listing on The NASDAQ Capital Market (except the bid price requirement), and provide written notice of our intention to cure the minimum bid price deficiency during this second grace period, including a cure through the implementation of a reverse stock split. If the Company fails to qualify for the second grace period or fails to regain compliance during the second grace period, the Company’s stock will be subject to delisting by NASDAQ.
On March 21, 2016, the Board of Directors approved the proposal authorizing the Reverse Stock Split for the following reasons:
the Board of Directors believes that effecting the Reverse Stock Split could be an effective means of regaining compliance with the bid price requirement for continued listing of our common stock on The NASDAQ Capital Market; and
the Board of Directors believes that a higher stock price may help generate investor interest in the Company and help attract, retain, and motivate employees.
The Board of Directors further believes that some potential employees are less likely to work for a company with a low stock price, regardless of size of the company’s market capitalization.
If the Reverse Stock Split successfully increases the per share price of our common stock, as to which no assurance can be given, the Board of Directors believes this increase may facilitate future financings and enhance our ability to attract, retain, and motivate employees and other service providers.
NASDAQ Requirements for Continued Listing
Our common stock is quoted on The NASDAQ Capital Market under the symbol “OXGN.” One of the requirements for continued listing on the NASDAQ Capital Market is maintenance of a minimum closing bid price of $1.00 per share. On April 18, 2016, the closing market price per share of our common stock was $0.76, as reported by The NASDAQ Capital Market.
On December 1, 2015, we received a deficiency letter from The NASDAQ Stock Market LLC indicating that the bid price for our common stock had closed below the minimum $1.00 per share required for continued inclusion on The NASDAQ Capital Market as noted above.
We cannot be sure that our share price will comply with the requirements for continued listing of our common stock on The NASDAQ Capital Market in the future, or that we will comply with the other continued listing requirements. If our common stock loses its status on The NASDAQ Capital Market, our common stock would likely trade in the over-the-counter market.
If our shares were to trade on the over-the-counter market, selling our common shares could be more difficult because smaller quantities of shares would likely be bought and sold, and transactions could be delayed. In addition, in the event our common shares are delisted, broker-dealers have certain regulatory burdens imposed upon them, which may discourage broker-dealers from effecting transactions in our common shares, further limiting the liquidity of our common shares. These factors could result in lower prices and larger spreads in the bid and ask prices for common shares.
Such delisting from The NASDAQ Capital Market and continued or further declines in our share price could also greatly impair our ability to raise additional necessary capital through equity or debt financing.
In light of the factors mentioned above, our Board of Directors unanimously approved this proposal as a potential means of increasing the bid price of our common stock to above $1.00 per share and of maintaining the bid price of our common stock above $1.00 per share in compliance with The NASDAQ Stock Market requirements.
Potential Increased Investor Interest
In approving this proposal, the Board of Directors considered that the Company’s common stock may not appeal to brokerage firms that are reluctant to recommend lower priced securities to their clients. 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.
There are risks associated with the Reverse Stock Split, including that the Reverse Stock Split may not result in a sustained increase in the per share price of our common stock.
We cannot predict whether the Reverse Stock Split will increase the market price for our common stock on a sustained basis. The history of similar stock split combinations for companies in like circumstances is varied. There is no assurance that:
the market price per share of our common stock after the Reverse Stock Split will rise in proportion to the reduction in the number of shares of our common stock outstanding before the Reverse Stock Split;
the Reverse Stock Split will result in a per share price that will attract brokers and investors who do not trade in lower priced stocks;
the Reverse Stock Split will result in a per share price that will increase our ability to attract and retain employees and other service providers; and
the market price per share will either exceed or remain in excess of the $1.00 minimum bid price as required by NASDAQ, or that we will otherwise meet the requirements of NASDAQ for continued inclusion for trading on The NASDAQ Capital Market.
The market price of our common stock will also be based on our performance and other factors, some of which are unrelated to the number of shares outstanding. If the Reverse Stock Split is effected and the market price of our common stock declines, the percentage decline as an absolute number and as a percentage of our overall market capitalization may be greater than would occur in the absence of the Reverse Stock Split. Furthermore, the liquidity of our common stock could be adversely affected by the reduced number of shares that would be outstanding after the Reverse Stock Split.
Principal Effects of the Reverse Stock Split
If the stockholders approve the proposal to authorize the Board of Directors to implement the Reverse Stock Split and the Board of Directors implements the Reverse Stock Split, we will amend the existing provision of our Charter relating to our authorized capital to add the following paragraph at the end thereof:
“Upon the effectiveness of the certificate of amendment to the restated certificate of incorporation containing this sentence, each [*] shares of the Common Stock issued and outstanding as of the date and time immediately preceding [date on which the certificate of amendment is filed], the effective date of a reverse stock split (the “Split Effective Date”), shall be automatically changed and reclassified, as of the Split Effective Date and without further action, into one (1) fully paid and non-assessable share of Common Stock. There shall be no fractional shares issued. A holder of record of Common Stock on the Split Effective Date who would otherwise be entitled to a fraction of a share of Common Stock shall, in lieu of such fractional share, be entitled to receive one whole share of Common Stock by virtue of rounding up such fractional share to the next highest whole share.”
By approving this amendment, stockholders will approve the combination of any whole number of shares of common stock between and including five (5) and ten (10) into one (1) share. The certificate of amendment filed with the Secretary of State of the State of Delaware will include only that number determined by the Board of Directors to be in the best interests of the Corporation and its stockholders. In accordance with these resolutions, the Board of Directors will not implement any amendment providing for a different split ratio.
The Reverse Stock Split will be effected simultaneously for all issued and outstanding shares of common stock and the exchange ratio will be the same for all issued and outstanding shares of common stock. The
Reverse Stock Split will affect all of our stockholders uniformly and will not affect any stockholder’s percentage ownership interests in the Company, except to the extent that the Reverse Stock Split results in any of our stockholders owning a fractional share. After the Reverse Stock Split, the shares of our common stock will have the same voting rights and rights to dividends and distributions and will be identical in all other respects to our common stock now authorized. Our common stock outstanding following the reverse stock split will remain fully paid and non-assessable. The Reverse Stock Split will not affect the Company continuing to be subject to the periodic reporting requirements of the Exchange Act. The Reverse Stock Split is not intended to be, and will not have the effect of, a “going private transaction” covered by Rule 13e-3 under the Exchange Act.
The Reverse Stock Split may result in some stockholders owning “odd-lots” of less than 100 shares of our common stock. Brokerage commissions and other costs of transactions in odd-lots are generally higher than the costs of transactions in “round-lots” of even multiples of 100 shares.
Book-Entry Shares
If the Reverse Stock Split is effected, stockholders who hold uncertificated shares (i.e., shares held in book-entry form and not represented by a physical stock certificate), either as direct or beneficial owners, will have their holdings electronically adjusted automatically by our transfer agent (and, for beneficial owners, by their brokers or banks that hold in “street name” for their benefit, as the case may be) to give effect to the Reverse Stock Split.
Stockholders who hold uncertificated shares as direct owners will be sent a statement of holding from our transfer agent that indicates the number of post-reverse stock split shares of our common stock owned in book-entry form.
Certificated Shares
As soon as practicable after the effective date of the Reverse Stock Split, stockholders will be notified that the Reverse Stock Split has been effected. The Company expects that our transfer agent will act as exchange agent for purposes of implementing the exchange of stock certificates. Holders of pre-split shares will be asked to surrender to the exchange agent certificates representing pre-split shares in exchange for certificates representing post-split shares in accordance with the procedures to be set forth in a letter of transmittal to be sent by the Company or its exchange agent. No new certificates will be issued to a stockholder until such stockholder has surrendered such stockholder’s outstanding certificate(s) together with the properly completed and executed letter of transmittal to the exchange agent. Any pre-split shares submitted for transfer, whether pursuant to a sale or other disposition, or otherwise, will automatically be exchanged for post-split shares.STOCKHOLDERS SHOULD NOT DESTROY ANY STOCK CERTIFICATE(S) AND SHOULD NOT SUBMIT ANY CERTIFICATE(S) UNTIL REQUESTED TO DO SO.
Beginning on the effective time of the Reverse Stock Split, each certificate representing pre-split shares will be deemed for all corporate purposes to evidence ownership of post-split shares.
Fractional Shares
No fractional shares will be issued in connection with the Reverse Stock Split. Stockholders of record on the effective date of the split who otherwise would be entitled to receive fractional shares because they hold a number of pre-split shares not evenly divisible by the number of pre-split shares for which each post-split share is to be exchanged, will in lieu of a fractional share, be entitled upon surrender to the exchange agent of certificates representing such pre-split shares, to receive one whole share of Common Stock by virtue of rounding up such fractional share to the next highest whole share. The ownership of such a whole share will give the holder thereof the same voting, dividend, and other rights as are held by other holders of Common Stock.
Stockholders should be aware that receipt of a whole share of Common Stock resulting from the rounding up of a fractional share interest to the next highest whole share may have tax consequences. Each holder should seek advice based on the holder’s particular circumstances from an independent tax advisor.
Effect on Stock Plans
As of April 18, 2016, options to purchase 3,861,537 shares of common stock are outstanding under the 2015 Plan and 2005 Plan and 864,244 options remain available for issuance under the 2015 Plan. If the Reverse Stock Split is approved by our stockholders and our Board of Directors decides to implement the Reverse Stock Split, as of the effective date, the number of all outstanding equity awards, the number of shares available for issuance and the exercise price, grant price or purchase price, as applicable, relating to any award under our stock plans, will be proportionately adjusted using the reverse stock split ratio selected by our Board of Directors (subject to the treatment of fractional shares to be determined by our Board of Directors). Our Board of Directors has also authorized the Company to effect any other changes necessary, desirable or appropriate to give effect to the Reverse Stock Split, including any applicable technical, conforming changes. For example, if a 1-for-5 reverse stock split is effected, the 864,244 shares that remain available for issuance under the 2015 Plan as of April 18, 2016, would be adjusted to equal approximately 172,848 shares. In addition, the exercise price per share under each outstanding stock option would be increased by 5 times and the number of shares subject to each outstanding stock option would be decreased by 5 times, such that upon an exercise, the aggregate exercise price payable by the optionee to the Company would remain the same. Notwithstanding the foregoing, following the Reverse Stock Split, the maximum number of shares for which a participant may receive awards under the 2015 Plan in any fiscal year, of 500,000 shares, will remain set at 500,000 shares.
Accounting Matters
The Reverse Stock Split will not affect the stockholders’ equity accounts on our balance sheet. However, because the par value of our common stock will remain unchanged on the effective date of the split, the components that make up the common stock capital account and the additional paid-in capital account will change by offsetting amounts. Depending on the size of the reverse stock split the Board of Directors decides to implement, the stated capital component will be reduced to an amount between one-fifth (1/5) and one-tenth (1/10) of its present amount, and the additional paid-in capital component will be increased with the amount by which the stated capital is reduced. The per share net income or loss and net book value of our common stock will be increased because there will be fewer shares of common stock outstanding. Prior periods’ per share amounts will be restated to reflect the Reverse Stock Split.
No Dissenters’ Rights
Under the Delaware General Corporation Law, the Company’s stockholders will not be entitled to dissenters’ rights with respect to the Reverse Stock Split, and we do not intend to independently provide stockholders with any such right.
Material United States Federal Income Tax Consequences of the Reverse Stock Split
Each holder of common stock is hereby notified that any discussion of U.S. Federal tax issues in this proxy statement has been included by the Company in furtherance of the Reverse Stock Split on the terms described herein, and each such holder should seek advice based on his, her, or its particular circumstances from an independent tax advisor.
The following discussion describes the anticipated material United States Federal income tax consequences to “U.S. holders” (as defined below) of Company capital stock relating to the Reverse Stock Split. This discussion is based upon the Internal Revenue Code of 1986, as amended (the “Code”), Treasury Regulations, judicial authorities, published positions of the Internal Revenue Service (“IRS”), and other applicable authorities,
all as currently in effect and all of which are subject to change or differing interpretations (possibly with retroactive effect). We have not obtained a ruling from the IRS or an opinion of legal or tax counsel with respect to the tax consequences of the Reverse Stock Split. The following discussion is for information purposes only and is not intended as tax or legal advice. Each holder should seek advice based on the holder’s particular circumstances from an independent tax advisor.
For purposes of this discussion, the term “U.S. holder” means a beneficial owner of Company capital stock that is for United States Federal income tax purposes:
This discussion assumes that a U.S. holder holds Company capital stock as a capital asset within the meaning of Code Section 1221. This discussion does not address all of the tax consequences that may be relevant to a particular Company stockholder or to Company stockholders that are subject to special treatment under United States Federal income tax laws including, but not limited to, financial institutions, tax-exempt organizations, insurance companies, regulated investment companies, persons that are broker-dealers, traders in securities who elect the mark-to-market method of accounting for their securities, or Company stockholders holding their shares of Company capital stock as part of a “straddle,” “hedge,” “conversion transaction,” or other integrated transaction. This discussion also does not address the tax consequences to the Company, or to Company stockholders that own 5% or more of the Company’s capital stock, are affiliates of Company, or are not U.S. holders. In addition, this discussion does not address other United States Federal taxes (such as gift or estate taxes or alternative minimum taxes), the tax consequences of the reverse stock split under state, local, or foreign tax laws or certain tax reporting requirements that may be applicable with respect to the reverse stock split. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax consequences set forth below.
If a partnership (or other entity treated as a partnership for United States Federal income tax purposes) is a Company stockholder, the tax treatment of a partner in the partnership (or any equity owner of such other entity) will generally depend upon the status of the person and the activities of the partnership or other entity treated as a partnership for United States Federal income tax purposes.
Tax Consequences of the Reverse Stock Split Generally
We believe that the Reverse Stock Split will qualify as a “reorganization” under Section 368(a)(1)(E) of the Code. Accordingly, provided that the fair market value of the post- Reverse Stock Split shares is equal to the fair market value of the pre-reverse stock split shares surrendered in the Reverse Stock Split:
A U.S. holder will not recognize any gain or loss as a result of the Reverse Stock Split.
A U.S. holder’s aggregate tax basis in his, her, or its post- Reverse Stock Split shares will be equal to the aggregate tax basis in the pre-reverse stock split shares exchanged therefor.
A U.S. holder’s holding period for the post- Reverse Stock Split shares will include the period during which such stockholder held the pre- Reverse Stock Split shares surrendered in the reverse stock split.
Reservation of Right to Abandon Reverse Stock Split
We reserve the right to not file the certificate of amendment and to abandon any reverse stock split without further action by our stockholders at any time before the effectiveness of the filing with the Secretary of the State of Delaware of the certificate of amendment, even if the authority to effect this amendment is approved by our stockholders at the Annual Meeting. By voting in favor of a reverse stock split, you are expressly also authorizing the Board to delay, not proceed with, and abandon, this proposed amendment if it should so decide, in its discretion, that such action is in the best interests of our stockholders.
Vote Required and Board of Directors’ Recommendation
Approval of the amendment to our Charter to effect the Reverse Stock Split requires an affirmative vote of a majority of the common stock outstanding and entitled to vote at the Annual Meeting. Abstentions and broker non-votes will be counted towards the vote total for this proposal and will have the same effect as “against” votes.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE PROPOSAL TO AUTHORIZE THE FILING OF AN AMENDMENT TO THE COMPANY’S RESTATED CERTIFICATE OF INCORPORATION TO EFFECT A REVERSE STOCK SPLIT OF OUR COMMON STOCK, $0.01 PAR VALUE PER SHARE, AT A RATIO IN THE RANGE OF 1:5 TO 1:10, SUCH RATIO WITHIN THAT RANGE TO BE DETERMINED IN THE SOLE DISCRETION OF THE BOARD OF DIRECTORS, AND THE FILING OF SUCH AMENDMENT TO BE IMPLEMENTED, IF AT ALL, NOT LATER THAN DECEMBER 2, 2016.
PROPOSAL 4: THE ADJOURNMENT OF THE ANNUAL MEETING
Our stockholders are being asked to consider and vote upon an adjournment of the Annual Meeting, if necessary, if a quorum is present, to solicit additional proxies if there are not sufficient votes in favor of approval of a proposed amendment to our restated certificate of incorporation to effectuate a reverse stock split as described in Proposal 3.
Approval of the adjournment of the Annual Meeting requires an affirmative vote of a majority of the votes properly cast for or against this proposal at the Annual Meeting. Abstentions and broker non-votes (to the extent a broker does not exercise its authority to vote) will not be counted towards, and will have no effect on, the vote total for this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE ADJOURNMENT OF THE ANNUAL MEETING, IF A QUORUM IS PRESENT, TO SOLICIT ADDITIONAL PROXIES IF THERE ARE NOT SUFFICIENT VOTES TO APPROVE PROPOSAL 3, AND PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF THE ADJOURNMENT UNLESS A STOCKHOLDER HAS INDICATED OTHERWISE ON THE PROXY.
PROPOSAL 5: ADVISORY VOTE ON APPROVAL OF EXECUTIVE COMPENSATION AS DISCLOSED IN THIS PROXY STATEMENT
We are seeking your advisory vote as required by Section 14A of the Exchange Act, on the approval of the compensation of our named executive officers as described in the compensation tables and related material contained in this proxy statement. Because your vote is advisory, it will not be binding on our Compensation Committee or our Board of Directors. However, the Compensation Committee and the Board will review the voting results and take them into consideration when making future decisions regarding executive compensation. We have determined to hold an advisory vote to approve the compensation of our named executive officers every three years, and the next such advisory vote will occur at the 2019 annual meeting of Stockholders.
Our compensation philosophy is designed to align each executive’s compensation with OXiGENE’s short-term and long-term performance and to provide the compensation and incentives needed to attract, motivate and retain key executives who are crucial to our long-term success. Consistent with this philosophy, a significant portion of the total compensation opportunity for each of our executives is directly related to performance factors that measure our progress against the goals of our strategic and operating plans, as well as our performance against that of our peer companies.
In accordance with the rules of the SEC, the following resolution, commonly known as a “say-on-pay” vote, is being submitted for a stockholder vote at the Annual Meeting:
“RESOLVED, that the compensation paid to the named executive officers of OXiGENE, INC., as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation tables and the related material disclosed in this proxy statement, is hereby APPROVED.”
The affirmative vote of a majority of the votes present or represented by proxy and entitled to vote at the Annual Meeting is required to approve, on an advisory basis, this resolution.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO APPROVE THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS, AND PROXIES SOLICITED BY THE BOARD WILL BE VOTED IN FAVOR OF SUCH APPROVAL UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY.
PROPOSAL 6: RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TheOn December 9, 2016, with the approval of the Audit Committee, has appointedwe dismissed Ernst & Young LLP (“E&Y”) as our independent registered public accounting firm. The audit reports of E&Y on our financial statements for the fiscal years ended December 31, 2015 and 2014 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles.
During the fiscal years ended December 31, 2015 and 2014, and the subsequent periods through December 9, 2016, the date of E&Y’s dismissal, there were no disagreements with E&Y on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreement, if not resolved to the satisfaction of E&Y, would have caused E&Y to make reference to the subject matter of the disagreements in connection with its reports. None of the reportable events described under Item 304(a)(1)(v) of RegulationS-K occurred within our two most recent fiscal years or the subsequent interim period through December 9, 2016. In accordance with Item 304(a)(3) of RegulationS-K, Mateon provided E&Y with a copy of the statements set forth above prior to the time the Current Report on Form8-K reporting E&Y’s dismissal was filed with the SEC. Mateon requested that E&Y furnish it with a letter addressed to the SEC stating whether E&Y agreed with the above statements. A copy of that letter, dated December 14, 2016, is filed as Exhibit 16.1 to our Current Report on Form8-K filed with the SEC on December 15, 2016.
On December 9, 2016, the Audit Committee also authorized the appointment of OUM & Co. LLP (“OUM”) as our new independent registered public accounting firm for the fiscal year ending December 31, 2016. OUM was appointed as our independent registered public accounting firm on December 12, 2016. During the fiscal years ended December 31, 2015 and 2014, and the subsequent interim period through December 12, 2016, neither Mateon, nor anyone on its behalf, consulted OUM regarding either (i) the application of accounting principles to a specific transaction, either completed or proposed; or the type of audit ouropinion that might be rendered on the registrant’s financial statements, forand no written report or oral advice was provided to Mateon that OUM concluded was an important factor considered by Mateon in reaching its decision as to an accounting, auditing, or financial reporting issue; or (ii) any matter that was either the year ending December 31, 2016. Our Boardsubject of Directors proposes that our stockholders vote for ratificationa disagreement (as defined in paragraph 304(a)(1)(iv) of such appointment. Ernst & Young LLP audited ourRegulationS-K and the related instructions) or a reportable event (as described in paragraph 304(a)(1)(v) of RegulationS-K). OUM’s report on Mateon’s financial statements for the fiscal year ended December 31, 2015. 2016 did not contain an adverse opinion or a disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope, or accounting principles, but did contain an explanatory paragraph regarding uncertainty about Mateon’s ability to continue as a going concern.
We expect that one or more representatives of ErnstOUM & YoungCo. LLP will be present at the Annual Meeting by telephone and will be available to respond to appropriate stockholder questions and may make a statement at the Annual Meeting if they desire to do so.
The submission of this matter to our stockholders at the Annual Meeting is not required by law or by ourBy-laws. The Board of Directors is nevertheless submitting it to the stockholders to ascertain their view. If this proposal is not approved at the Annual Meeting by the stockholders, the Audit Committee intends to reconsider, but might not change, its appointment of ErnstOUM & YoungCo. LLP as the Company’s independent registered public accounting firm.
The following table presents fees for professional audit services rendered by Ernstour independent public accounting firm, OUM & YoungCo. LLP, for the audit of the Company’s annual financial statements for the years ended December 31, 20152016 and December 31, 2014,2015, and fees billed for other services rendered by Ernst & Young LLP during those periods.
2015 | 2014 | |||||||
Audit fees:(1) | $ | 286,383 | $ | 266,747 | ||||
Audit-related:(2) | — | — | ||||||
Tax Fees:(3) | — | 25,890 | ||||||
All other fees:(2) | — | — | ||||||
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$ | 286,383 | $ | 292,637 | |||||
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2016 | 2015 | |||||||
Audit fees(1) | $ | 104,000 | $ | 60,000 | ||||
Audit-related fees(2) | — | — | ||||||
Tax fees(2) | — | — | ||||||
All other fees(2) | — | — | ||||||
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|
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$ | 104,000 | $ | 60,000 | |||||
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(1) | Audit fees consisted of audit work performed in the preparation and audit of the annual financial statements, review of quarterly financial statements, as well as work that generally only the independent registered public accounting firm can reasonably be expected to provide, such as the provision of consents and comfort letters in connection with the filing of registration statements and statutory audits. Ernst & Young LLP was engaged as our independent public accounting firm through December 9, 2016, when we terminated their services. Because we engaged OUM & Co. LLP as our independent public accounting firm following the filing of our third quarter 2016 Quarterly Report on Form10-Q, we did not incur any costs for the review of quarterly financial statements from OUM & Co. LLP for the fiscal years ending December 31, 2016 or 2015. |
(2) | There were no fees incurred in this category by our principal accounting firm in either |
Policy on Audit CommitteePre-Approval of Audit and Permissible
Non-audit Services of Independent Registered Public Accounting Firm
Consistent with SEC policies regarding auditor independence, the Audit Committee has responsibility for appointing, setting compensation, and overseeing the work of the independent registered public accounting firm. In recognition of this responsibility, the Audit Committee has established a policy topre-approve all audit and permissiblenon-audit services provided by the independent registered public accounting firm.
Prior to engagement of the independent registered public accounting firm for the next year’s audit, management will submit an aggregate of services expected to be rendered during that year for each of four categories of services to the Audit Committee for approval.
1. | Audit services include audit work performed in the preparation and audit of the annual financial statements, review of quarterly financial statements, as well as work that generally only the independent auditor can reasonably be expected to provide, such as the provision of consents and comfort letters in connection with the filing of registration statements. |
2. | Audit-related services are for assurance and related services that are traditionally performed by the independent auditor, including due diligence related to mergers and acquisitions, employee benefit plan audits, and special procedures required to meet certain regulatory requirements. |
1.Audit services include audit work performed in the preparation and audit of the annual financial statements, review of quarterly financial statements, as well as work that generally only the independent auditor can reasonably be expected to provide, such as the provision of consents and comfort letters in connection with the filing of registration statements.
3. | Tax services consist principally of assistance with tax compliance and reporting, as well as certain tax planning consultations. |
2.Audit-related services are for assurance and related services that are traditionally performed by the independent auditor, including due diligence related to mergers and acquisitions, employee benefit plan audits, and special procedures required to meet certain regulatory requirements.
3.Tax services consist principally of assistance with tax compliance and reporting, as well as certain tax planning consultations.
Prior to engagement, the Audit Committeepre-approves4. Other Fees are those associated with services not captured in the other categories. The Company generally does not request such services from the independent auditor. Prior to engagement, the Audit Committee pre-approves these services by category of service. The fees are budgeted, and the Audit Committee requires the independent registered public accounting firm and management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the original pre-approval. In those instances, the Audit Committee requires specific pre-approval before engaging the independent registered public accounting firm.The Audit Committee may delegate pre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any pre-approval decisions to the Audit Committee at its next scheduled meeting.Approval of the ratification of appointment of our independent registered public accounting firm requires an affirmative vote of a majority of the votes cast on the proposal at the Annual Meeting.THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO RATIFY THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF THE RATIFICATION UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY.
MANAGEMENT AND CORPORATE GOVERNANCE
The Board of Directors
Our Board of Directors currently consists of six members: Dr. David J. Chaplin, Frederick W. Driscoll, Tamar D. Howson, Dr. Gerald McMahon, Dr. Simon Pedder and Dr. William Schwieterman. Under our By-laws, the number of members of our Board of Directors is fixed from time to time by the Board of Directors, and directors serve in office until the next annual meeting of stockholders and until their successors have been elected and qualified. Ms. Howson informed the Company that she will not stand for re-election at the Annual Meeting. Effective on the date of the Annual Meeting, the size of the Board will be reduced from six authorized seats to five authorized seats.
Committees of the Board and Meetings
Meeting Attendance. During the fiscal year ended December 31, 2015, the Board of Directors held eight meetings, and the various committees of the Board met a total of seven times. The Board of Directors has established three committees whose functions and current members are noted below. The Audit Committee, the Compensation Committee, and the Nominating and Governance Committee (collectively, the “Board Committees”) are committees of the Board of Directors and consist solely of members of the Board of Directors. Each director who served during fiscal year 2015 attended 75% or more of the aggregate number of meetings of the Board of Directors and Board Committees on which he or she served during fiscal year 2015. The Board has also adopted a policy under which each member of the Board is required to make every effort to attend each annual meeting of our stockholders. All directors in office at the time of our annual meeting of stockholders in 2015 attended our 2015 annual meeting.
Audit Committee. The Audit Committee consists of Mr. Driscoll (Chairman), Dr. McMahon, and Ms. Howson. During fiscal year 2015, the Audit Committee held four meetings. Our Audit Committee has the authority to retain and terminate the services of our independent registered public accounting firm, reviews our annual financial statements, considers matters relating to accounting policy and internal controls, and reviews the scope of our annual audits. The Board has determined that both Mr. Driscoll and Dr. McMahon are “audit committee financial experts,” as the SEC has defined that term in Item 407 of Regulation S-K. Please also see the “Audit Committee Report” set forth elsewhere in this proxy statement. The Board of Directors has adopted a charter for the Audit Committee, which is reviewed and reassessed annually by the Audit Committee. A copy of the Audit Committee’s written charter is publicly available on our website at www.oxigene.com.
SEC rules require that we disclose our compliance with NASDAQ Listing Rules regarding the independence of our Audit Committee members and inclusion in the Audit Committee of any non-independent director. All members of our Audit Committee qualify as independent under the definition promulgated by The NASDAQ Stock Market.
Compensation Committee. The Compensation Committee consists of Ms. Howson (Chairperson), Mr. Driscoll, and Dr. McMahon. During fiscal year 2015, the Compensation Committee held two meetings. The Compensation Committee’s roles and responsibilities are set forth in the Compensation Committee’s written charter, and include making recommendations to the Board of Directors regarding the compensation philosophy and compensation guidelines for our executives, the role and performance of our executive officers, and appropriate compensation levels for our Chief Executive Officer (or “CEO”), which are determined without the CEO present, and other executives based on a comparative review of compensation practices of similarly situated businesses. The Compensation Committee also makes recommendations to the Board regarding the design and implementation of our compensation plans and the establishment of criteria and the approval of performance results relative to our incentive plans. Our Compensation Committee also administers our 2015 Plan. Each member of the Compensation Committee qualifies as independent under the definition promulgated by The NASDAQ Stock Market and qualifies as a “Non-Employee Director” within the meaning ofRule 16b-3 under the Exchange Act.
The Compensation Committee reviews and assesses the three main components of each named executive officer’s compensation: base salary, incentive compensation, and equity compensation. Adjustments to base salary are generally only made when there has been a change in the scope of the responsibilities of the named executive officer or when, based on a review of the base salary component of executive officers in companies of a similar size and stage of development, the Compensation Committee members believe that an adjustment is warranted in order to remain competitive. The executive management of the Company determines and agrees with the Compensation Committee on its corporate goals and objectives for the ensuing year. At the end of each year, the attainment of each objective is assessed and incentive awards may be made to each executive based on his or her contribution to achieving the objectives. Awards are made based on either provisions of an executive’s employment agreement, or an assessment of each executive’s equity compensation position relative to the Company’s other executives.
The Compensation Committee also typically reviews our director compensation on at least an annual basis.
The Compensation Committee has the authority to directly retain the services of independent consultants and other experts to assist in fulfilling its responsibilities. In 2014, the Compensation Committee engaged the services of Radford, an Aon Hewitt Company (“Radford”), a national executive compensation consulting firm, to assist the Compensation Committee in defining the appropriate market of the Company’s peer companies for executive and director compensation and practices and in benchmarking our executive and director compensation program against the peer group. Radford performed these services solely on behalf of the Compensation Committee and had no relationship with the Company or management except as it may have related to the performance of such services. The Compensation Committee has assessed the independence of Radford pursuant to SEC rules and the corporate governance rules of The NASDAQ Stock Market and concluded that no conflict of interest exists that would prevent Radford from independently representing the Compensation Committee.
A copy of the Compensation Committee’s written charter is publicly available on our website at www.oxigene.com.
Compensation Committee Interlocks and Insider Participation. None of the members of our Compensation Committee is or has been employed by us in the last completed fiscal year. In addition, none of our executive officers served during fiscal year 2015 as a member of the Board of Directors or Compensation Committee, or other committee serving an equivalent function, of any entity that has an executive officer who serves on our Board or Compensation Committee.
Nominating and Governance Committee. During fiscal year 2015, the Nominating and Governance Committee held one meeting. The Nominating and Governance Committee consists of Mr. Driscoll, Ms. Howson, and Dr. McMahon (Chairman). The Nominating and Governance Committee’s role and responsibilities are set forth in the Nominating and Governance Committee’s written charter and include making recommendations to the full Board as to the size and composition of the Board and making recommendations as to particular nominees to the Board. All members of the Nominating and Governance Committee qualify as independent under the definition promulgated by The NASDAQ Stock Market.
If a stockholder wishes to nominate a candidate to be considered for election as a director at the 2017 annual meeting of stockholders using the procedures set forth in the By-laws, it must follow the procedures described below under “Stockholder Proposals and Nominations for Director” at the end of this proxy statement.
In addition, the Nominating and Governance Committee may consider candidates recommended by stockholders, as well as from other sources, such as current directors or officers, third-party search firms or other appropriate sources. For all potential candidates, the Nominating and Governance Committee may consider all factors it deems relevant, such as a candidate’s personal integrity and sound judgment, business and professional skills and experience, independence, knowledge of the biotechnology industry, possible conflicts of interest, diversity, the extent to which the candidate would fill a present need on the Board, and concern for the long-term
interests of the stockholders. In general, persons recommended by stockholders will be considered on the same basis as candidates from other sources. If a stockholder wishes simply to propose a candidate for consideration as a nominee by the Nominating and Governance Committee, it should submit any pertinent information regarding the candidate to the Chairman of the Nominating and Governance Committee by mail at 701 Gateway Boulevard, Suite 210, South San Francisco, California 94080. The Nominating and Governance Committee considers issues of diversity among its members in identifying and considering nominees for director, and strives where appropriate to achieve a diverse balance of backgrounds, perspectives, experience, age, gender, ethnicity and country of citizenship of the Board and its committees.
A copy of the Nominating and Governance Committee’s written charter is publicly available on our website at www.oxigene.com.
Board of Directors Leadership Structure
Our current Board leadership structure separates the positions of CEO and Chairman of the Board of Directors, although we do not have a corporate policy requiring that structure. The Board believes that this separation is appropriate for the organization at this time because it allows for a division of responsibilities and a sharing of ideas between individuals having different perspectives. Our CEO, who is also a member of our Board of Directors, is primarily responsible for our operations and strategic direction, while our Board Chairman, who is an independent member of the Board, is primarily focused on matters pertaining to corporate governance and management oversight. While the Board believes that this is the most appropriate structure at this time, the Board retains the authority to change the Board structure, including the possibility of combining the CEO and Chairman of the Board positions, if it deems such a change to be appropriate in the future.
The Chairman of the Board of Directors provides leadership to the Board and works with the Board to define its activities and the calendar for fulfillment of its responsibilities. The Chairman of the Board of Directors approves the meeting agendas after input from management, facilitates communication among members of the Board and presides at meetings of our Board and stockholders. Mr. Driscoll has served as Chairman of the Board of Directors since January 1, 2014.
The Chairman of the Board of Directors, the Chairman of the Audit Committee, the CEO, and the other members of the Board work in concert to provide oversight of our management and affairs. We believe that the leadership of the Chairman of the Board fosters a culture of open discussion and deliberation, with a thoughtful evaluation of risk, to support our decision-making. Our Board encourages communication among its members and between management and the Board to facilitate productive working relationships. Working with the other members of the Board, the Chairman also works to ensure that there is an appropriate balance and focus among key board responsibilities such as strategic development, review of operations and risk oversight.
The Board of Directors’ Role in Risk Oversight
The Board plays an important role in risk oversight through direct decision-making authority with respect to significant matters and the oversight of management by the Board and its committees. In particular, the Board administers its risk oversight function through (1) the review and discussion of regular periodic reports to the Board and its committees on topics relating to the risks that we face, (2) the required approval by the Board (or a committee of the Board) of significant transactions and other decisions, (3) the direct oversight of specific areas of our business by the Audit and Compensation Committees, and (4) regular periodic reports from our auditors and outside advisors regarding various areas of potential risk, including, among others, those relating to our internal control over financial reporting. The Board also relies on management to bring significant matters impacting us to the Board’s attention.
Pursuant to the Audit Committee’s charter, the Audit Committee is responsible for discussing the guidelines and policies that govern the process by which our exposure to financial risk is assessed and managed by
management. As part of this process, the Audit Committee discusses our major financial risk exposures and steps that management has taken to monitor, control, and report such exposure. In addition, we, under the supervision of the Audit Committee, have established procedures available to all employees for the anonymous and confidential submission of complaints relating to any matter to encourage employees to report questionable activities directly to our senior management and the Audit Committee.
Because of the role of the Board in risk oversight, the Board believes that any leadership structure that it adopts must allow it to effectively oversee the management of the risks relating to our operations. The Board recognizes that there are different leadership structures that could allow it to effectively oversee the management of the risks relating to our operations; however, the Board believes its current leadership structure enables it to effectively provide oversight with respect to such risks.
Stockholder Communications to the Board
Generally, stockholders who have questions or concerns should contact our Investor Relations department at (650) 635-7000. However, any stockholders who wish to address questions regarding our business directly with the Board of Directors, or any individual director, should submit his or her questions to the appropriate director using the Investor Relations email link in the “Contact Us” section on the Company’s website at www.oxigene.com. Communications will be distributed to the Board, or to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communications. Items that are unrelated to the duties and responsibilities of the Board may be excluded, such as:
junk mail and mass mailings;
management to report actual fees versus the budget periodically throughout the year by category of service. During the year, circumstances may arise when it may become necessary to engage the independent registered public accounting firm for additional services not contemplated in the originalpre-approval. In those instances, the Audit Committee requires specificpre-approval before engaging the independent registered public accounting firm.
The Audit Committee may delegatepre-approval authority to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, anypre-approval decisions to the Audit Committee at its next scheduled meeting.
Approval of the ratification of appointment of our independent registered public accounting firm requires an affirmative vote of a majority of the votes cast on the proposal at the Annual Meeting.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE TO RATIFY THE APPOINTMENT OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM, AND PROXIES SOLICITED BY THE BOARD OF DIRECTORS WILL BE VOTED IN FAVOR OF THE RATIFICATION UNLESS A STOCKHOLDER INDICATES OTHERWISE ON THE PROXY.
MANAGEMENT AND CORPORATE GOVERNANCE
The Board of Directors
Our Board of Directors currently consists of five members: Dr. David J. Chaplin, Dr. Simon C. Pedder, Mr. Donald R. Reynolds, Dr. Bobby W. Sandage, Jr. and Dr. William D. Schwieterman. Under ourBy-laws, the number of members of our Board of Directors is fixed from time to time by the Board of Directors, and directors serve in office until the next annual meeting of stockholders and until their successors have been elected and qualified.
Committees of the Board and Meetings
Meeting Attendance. During the fiscal year ended December 31, 2016, the Board of Directors held eight meetings, and the various committees of the Board met a total of ten times. The Board of Directors has established three committees whose functions and current members are noted below. The Audit Committee, the Compensation Committee, and the Nominating and Governance Committee (collectively, the “Board Committees”) are committees of the Board of Directors and consist solely of members of the Board of Directors. Each director who served during fiscal year 2016 attended 75% or more of the aggregate number of meetings of the Board of Directors and Board Committees on which he or she served during fiscal year 2016. The Board has also adopted a policy under which each member of the Board who chooses to attend the annual meeting of our stockholders is expected to do so at his or her own expense. One director in office at the time of our annual meeting of stockholders in 2016 standing forre-election attended our 2016 annual meeting, William D. Schwieterman, M.D., and two shareholders attended the meeting.
Audit Committee. The Audit Committee consists of Dr. Sandage (Chairman), Dr. Pedder and Mr. Reynolds. During fiscal year 2016, the Audit Committee held five meetings. Our Audit Committee has the authority to retain and terminate the services of our independent registered public accounting firm, reviews our annual financial statements, considers matters relating to accounting policy and internal controls, and reviews the scope of our annual audits. The Board has determined that Dr. Sandage is an “audit committee financial expert,” as the SEC has defined that term in Item 407 of RegulationS-K. Please also see the “Audit Committee Report” set forth elsewhere in this proxy statement. The Board of Directors has adopted a charter for the Audit Committee, which is reviewed and reassessed annually by the Audit Committee. A copy of the Audit Committee’s written charter is publicly available on our website at www.mateon.com. All members of our Audit Committee qualify as independent under the definition promulgated by The NASDAQ Stock Market and OTC Markets’ OTCQX Rules for U.S. Companies.
Compensation Committee. The Compensation Committee consists of Dr. Pedder (Chairperson), Mr. Reynolds and Dr. Sandage. During fiscal year 2016, the Compensation Committee held three meetings. The Compensation Committee’s roles and responsibilities are set forth in the Compensation Committee’s written charter, and include making recommendations to the Board of Directors regarding the compensation philosophy and compensation guidelines for our executives, the role and performance of our executive officers, and appropriate compensation levels for our Chief Executive Officer (or “CEO”), which are determined without the CEO present, and other executives based on a comparative review of compensation practices of similarly situated businesses. The Compensation Committee also makes recommendations to the Board regarding the design and implementation of our compensation plans and the establishment of criteria and the approval of performance results relative to our incentive plans. Our Compensation Committee also administers our 2015 Plan and our 2017 Plan. Each member of the Compensation Committee qualifies as independent under the definition promulgated by The NASDAQ Stock Market and OTC Markets’ OTCQX Rules for U.S. Companies, and qualifies as a“Non-Employee Director” within the meaning ofRule 16b-3 under the Exchange Act.
The Compensation Committee reviews and assesses the three main components of each named executive officer’s compensation: base salary, incentive compensation, and equity compensation. Adjustments to base salary are generally only made when there has been a change in the scope of the responsibilities of the
named executive officer or when, based on a review of the base salary component of executive officers in companies of a similar size and stage of development, the Compensation Committee members believe that an adjustment is warranted in order to remain competitive. The executive management of the Company determines and agrees with the Compensation Committee on its corporate goals and objectives for the ensuing year. At the end of each year, the attainment of each objective is assessed and incentive awards may be made to each executive based on his or her contribution to achieving the objectives. Awards are made based on either provisions of an executive’s employment agreement, or an assessment of each executive’s equity compensation position relative to the Company’s other executives.
The Compensation Committee also typically reviews our director compensation on at least an annual basis.
The Compensation Committee has the authority to directly retain the services of independent consultants and other experts to assist in fulfilling its responsibilities. In 2016, the Compensation Committee engaged the services of Radford, an Aon Hewitt Company (“Radford”), a national executive compensation consulting firm, to assist the Compensation Committee in defining the appropriate market of the Company’s peer companies for executive and director compensation and practices and in benchmarking our executive and director compensation program against the peer group, with an emphasis on equity compensation. Radford performed these services solely on behalf of the Compensation Committee and had no relationship with the Company or management except as it may have related to the performance of such services. The Compensation Committee has assessed the independence of Radford pursuant to SEC rules and the corporate governance rules of The NASDAQ Stock Market and concluded that no conflict of interest exists that would prevent Radford from independently representing the Compensation Committee.
A copy of the Compensation Committee’s written charter is publicly available on our website at www.mateon.com.
Compensation Committee Interlocks and Insider Participation. None of the members of our Compensation Committee is or has been employed by us in the last completed fiscal year. In addition, none of our executive officers served as a member of the Board of Directors or Compensation Committee, or other committee serving an equivalent function, of any entity that has an executive officer who serves on our Board or Compensation Committee during fiscal year 2016.
Nominating and Governance Committee. During fiscal year 2016, the Nominating and Governance Committee held two meeting. The Nominating and Governance Committee consists of Mr. Reynolds (Chairman), Dr. Pedder and Dr. Sandage. The Nominating and Governance Committee’s role and responsibilities are set forth in the Nominating and Governance Committee’s written charter and include making recommendations to the full Board as to the size and composition of the Board and making recommendations as to particular nominees to the Board. All members of the Nominating and Governance Committee qualify as independent under the definition promulgated by The NASDAQ Stock Market and OTC Markets’ OTCQX Rules for U.S. Companies.
If a stockholder wishes to nominate a candidate to be considered for election as a director at the 2018 annual meeting of stockholders using the procedures set forth in theBy-laws, it must follow the procedures described below under “Stockholder Proposals and Nominations for Director” at the end of this proxy statement.
In addition, the Nominating and Governance Committee may consider candidates recommended by stockholders, as well as from other sources, such as current directors or officers, third-party search firms or other appropriate sources. For all potential candidates, the Nominating and Governance Committee may consider all factors it deems relevant, such as a candidate’s personal integrity and sound judgment, business and professional skills and experience, independence, knowledge of the biotechnology industry, possible conflicts of interest, diversity, the extent to which the candidate would fill a present need on the Board, and concern for the long-term
interests of the stockholders. In general, persons recommended by stockholders will be considered on the same basis as candidates from other sources. If a stockholder wishes simply to propose a candidate for consideration as a nominee by the Nominating and Governance Committee, it should submit any pertinent information regarding the candidate to the Chairman of the Nominating and Governance Committee by mail at 701 Gateway Boulevard, Suite 210, South San Francisco, California 94080. The Nominating and Governance Committee considers issues of diversity among its members in identifying and considering nominees for director, and strives where appropriate to achieve a diverse balance of backgrounds, perspectives, experience, age, gender, ethnicity and country of citizenship of the Board and its committees.
A copy of the Nominating and Governance Committee’s written charter is publicly available on our website at www.mateon.com.
Board of Directors Leadership Structure
The Board does not have a policy regarding the separation of the roles of CEO and Chairman of the Board, as the Board believes it is in the best interests of the Company to periodically make that determination based on the position and direction of the Company and the membership of the Board. The Board has determined that having an employee director serve as Chairman is in the best interest of the Company’s stockholders at this time.
The Chairman of the Board of Directors provides leadership to the Board and works with the Board to define its activities and the calendar for fulfillment of its responsibilities. The Chairman of the Board of Directors approves the meeting agendas after input from management, facilitates communication among members of the Board and presides at meetings of our Board and stockholders. Dr. Schwieterman has served as Chairman of the Board of Directors since August 18, 2016.
The Chairman of the Board of Directors, the Chairman of the Audit Committee, the CEO and the other members of the Board work in concert to provide oversight of our management and affairs. We believe that the leadership of the Chairman of the Board fosters a culture of open discussion and deliberation, with a thoughtful evaluation of risk, to support our decision-making. Our Board encourages communication among its members and between management and the Board to facilitate productive working relationships. Working with the other members of the Board, the Chairman also works to ensure that there is an appropriate balance and focus among key board responsibilities such as strategic development, review of operations and risk oversight.
The Board of Directors’ Role in Risk Oversight
The Board plays an important role in risk oversight through direct decision-making authority with respect to significant matters and the oversight of management by the Board and its committees. In particular, the Board administers its risk oversight function through (1) the review and discussion of regular periodic reports to the Board and its committees on topics relating to the risks that we face, (2) the required approval by the Board (or a committee of the Board) of significant transactions and other decisions, (3) the direct oversight of specific areas of our business by the Audit and Compensation Committees, and (4) regular periodic reports from our auditors and outside advisors regarding various areas of potential risk, including, among others, those relating to our internal control over financial reporting. The Board also relies on management to bring significant matters impacting us to the Board’s attention.
Pursuant to the Audit Committee’s charter, the Audit Committee is responsible for discussing the guidelines and policies that govern the process by which our exposure to financial risk is assessed and managed by management. As part of this process, the Audit Committee discusses our major financial risk exposures and steps that management has taken to monitor, control, and report such exposure. In addition, we, under the supervision of the Audit Committee, have established procedures available to all employees for the anonymous and confidential submission of complaints relating to any matter to encourage employees to report questionable activities directly to our senior management and the Audit Committee.
Because of the role of the Board in risk oversight, the Board believes that any leadership structure that it adopts must allow it to effectively oversee the management of the risks relating to our operations. The Board recognizes that there are different leadership structures that could allow it to effectively oversee the management of the risks relating to our operations; however, the Board believes its current leadership structure enables it to effectively provide oversight with respect to such risks.
Stockholder Communications to the Board
Generally, stockholders who have questions or concerns should contact our Investor Relations department at(650) 635-7000. However, any stockholders who wish to address questions regarding our business directly with the Board of Directors, or any individual director, should submit his or her questions to the appropriate director using the Investor Relations email link in the “Contact Us” section on the Company’s website at www.mateon.com. Communications will be distributed to the Board, or to any individual director or directors as appropriate, depending on the facts and circumstances outlined in the communications. Items that are unrelated to the duties and responsibilities of the Board may be excluded, such as:
In addition, any material that is unduly hostile, threatening, or illegal in nature may be excluded, provided that any communication that is filtered out will be made available to any outside director upon request.
Our whistleblower hotline is accessible by telephone at844-990-0002, bye-mail at reports@lighthouse-services.com, and online at http://www.lighthouse-services.com/Mateon.
EXECUTIVE OFFICERS OF THE COMPANY
See “Proposal 1 – Election of Directors” above for the biography of our President and Chief Executive Officer, William D. Schwieterman, M.D. and for the biography of our Chief Scientific Officer, David J. Chaplin, Ph.D.
Matthew M. Loar, age 54, was appointed as our Chief Financial Officer in July 2015. Mr. Loar was previously Chief Financial Officer of KineMed, Inc., a privately held biotechnology company, from January 2014 to July 2015. From January 2010 to January 2014, Mr. Loar was an independent financial consultant to companies in the biopharmaceutical industry. While consulting, he also served as acting Chief Executive Officer and Chief Financial Officer of Neurobiological Technologies, Inc. (NTI), a publicly traded pharmaceutical company, beginning in February 2010 and currently continuing, and as Chief Financial Officer of Virolab, Inc., a biotechnology company, from May 2011 to August 2012. Previously, he was Chief Financial Officer of NTI from April 2008 to December 2009. Earlier in his career, Mr. Loar was Chief Financial Officer of Osteologix, Inc., a publicly traded pharmaceutical company, from 2006 to 2008, and of Genelabs Technologies, Inc., a publicly traded biopharmaceutical and diagnostics company, from 1995 to 2006. Mr. Loar currently serves on the board of directors of NTI. Mr. Loar received a B.A. in Legal Studies from the University of California, Berkeley and is a Certified Public Accountant (inactive) in California. We have an employment agreement with Mr. Loar, as further described under “Execution Compensation – Narrative Disclosure to Summary Compensation Table.”
The Audit Committee of the Board of Directors, the members of which have been appointed by the Board of Directors and which consists entirely of directors who meet the independence and experience requirements of The NASDAQ Stock Market and the independence requirements of the OTC Markets’ OTCQX Rules for U.S. Companies, has furnished the following report:
The Audit Committee assists the Board in overseeing and monitoring the integrity of our financial reporting process, compliance with legal and regulatory requirements and the quality of internal and external audit processes. This committee’s role and responsibilities are set forth in our charter adopted by the Board, which is available on our website at www.mateon.com. This committee reviews and reassesses our charter annually and recommends any changes to the Board for approval. The Audit Committee is responsible for overseeing our overall financial reporting process, and for the appointment, compensation, retention, and oversight of the work of OUM & Co. LLP. In fulfilling its responsibilities for the financial statements for fiscal year 2016, the Audit Committee took the following actions:
resumes and other forms of job inquiries;
surveys; and
solicitations or advertisements.
In addition, any material that is unduly hostile, threatening, or illegal in nature may be excluded, provided that any communication that is filtered out will be made available to any outside director upon request.
Our whistleblower hotline is accessible by telephone at 844-990-0002, by e-mail at reports@lighthouse-services.com, and online at http://www.lighthouse-services.com/oxigene.
EXECUTIVE OFFICERS OF THE COMPANY
See “Proposal 1 — Election of Directors” above for the biography of our President and Chief Executive Officer, William D. Schwieterman, M.D. and for the biography of our Chief Scientific Officer (or “CSO”), David J. Chaplin, Ph.D.
Matthew M. Loar, age 53, was appointed as our Chief Financial Officer in July 2015. Mr. Loar was previously Chief Financial Officer of KineMed, Inc., a privately held biotechnology company, from January 2014 to July 2015. From January 2010 to January 2014, Mr. Loar was an independent financial consultant to companies in the biopharmaceutical industry. While consulting, he also served as acting Chief Executive Officer and Chief Financial Officer of Neurobiological Technologies, Inc. (NTI), a publicly traded pharmaceutical company, beginning in February 2010 and currently continuing, and as Chief Financial Officer of Virolab, Inc., a biotechnology company, from May 2011 to August 2012. Previously, he was Chief Financial Officer of NTI from April 2008 to December 2009. Earlier in his career, Mr. Loar was Chief Financial Officer of Osteologix, Inc., a publicly traded pharmaceutical company, from 2006 to 2008, and of Genelabs Technologies, Inc., a publicly traded biopharmaceutical and diagnostics company, from 1995 to 2006. Mr. Loar currently serves on the board of directors of NTI. Mr. Loar received a B.A. in Legal Studies from the University of California, Berkeley and is a Certified Public Accountant (inactive) in California. We have an employment agreement
Based on the Audit Committee’s review of the audited financial statements and discussions with management and OUM & Co. LLP, the Audit Committee recommended to the Board that the audited financial statements be included in our Annual Report on Form10-K for the fiscal year ended December 31, 2016, for filing with the SEC.
RESPECTFULLY SUBMITTED,
Members of the Mateon Therapeutics, Inc. Audit Committee
Bobby W. Sandage, Jr., Ph.D.
Simon C. Pedder, Ph.D.
Donald R. Reynolds
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our directors and executive officers, and persons who own more than 10% of our common stock to file with the SEC and us initial reports of beneficial ownership and reports of changes in beneficial ownership of our common stock and other equity securities. For these purposes, the term “other equity securities” would include options granted under the Mateon Therapeutics, Inc. 2005 Stock Plan (the “2005 Stock Plan”), the Mateon Therapeutics, Inc. 2015 Equity Incentive Plan (the “2015 Plan”) and the Mateon Therapeutics, Inc. 2017 Equity Incentive Plan (the “2017 Plan”). To our knowledge, based solely on a review of the forms and written representations received by us from our Section 16 reporting persons, during the fiscal year ended December 31, 2016, all Section 16(a) filing requirements applicable to the reporting persons were properly and timely satisfied.
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Our Audit Committee reviews and approves in advance all related person transactions.
On July 21, 2014, Mateon entered into a consultancy agreement with Dr. Schwieterman, a member of our Board of Directors at the time, to provide consulting services regarding regulatory development of our investigational drugs. We paid Dr. Schwieterman $21,600 for services performed under this consultancy agreement between January 1, 2015 and May 11, 2015. Dr. Schwieterman was appointed our President and Chief Executive Officer on May 12, 2015, the consultancy agreement was terminated effective with this appointment, and no further consultancy payments were made. The compensation Dr. Schwieterman received from the Company during 2015, as further described under “Executive Compensation,” includes compensation received under his consultancy agreement prior to his appointment as President and Chief Executive Officer.
In January 2013, Mateon entered into a consultancy agreement with Dr. Chaplin and also appointed Dr. Chaplin to our Board of Directors. On August 8, 2013, this consultancy agreement was assigned to Aston Biopharma LTD, an entity which is controlled by Dr. Chaplin. Dr. Chaplin is a resident of the United Kingdom, and the services he performs for Mateon while in the United Kingdom are conducted through Aston Biopharma LTD. Services Dr. Chaplin performs for Mateon while he is in the United States are paid directly to Dr. Chaplin. We paid Aston Biopharma LTD approximately $190,000 and $105,750 as compensation for services Dr. Chaplin performed while in the United Kingdom under this consultancy agreement during 2015 and 2016, respectively, and his compensation for services as an employee was reduced by these amounts. On October 25, 2016, Aston Biopharma LTD and Mateon agreed to terminate the consultancy agreement effective as of January 1, 2017.The compensation Dr. Chaplin received from the Company as further described under “Executive Compensation” includes compensation received under our consultancy agreement with Aston Biopharma LTD. From May 15, 2014, until May 12, 2015, Dr. Chaplin served as our President and Chief Executive Officer, and since May 12, 2015, Dr. Chaplin has served as our Chief Scientific Officer.
On June 14, 2012, we entered into a License Agreement with Angiogene Pharmaceuticals Ltd. (the “License Agreement”), pursuant to which we obtained certain rights to patent applications held by Angiogene in exchange for our payment of certain upfront fees, milestone payments, and royalty payments to Angiogene. In October 2012, Dr. Chaplin became the beneficial owner of 16.7% of the then issued and outstanding equity of Angiogene, and Dr. Chaplin’s spouse also became the beneficial owner of 16.7% of the then issued and outstanding equity of Angiogene. During 2015, we paid $75,000 to Angiogene under the License Agreement. No payments were made to Angiogene during 2016. On March 31, 2016, we sent a letter to Angiogene terminating the License Agreement.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables set forth certain information with respect to the beneficial ownership of our common stock as of April 13, 2017, for (a) each of our executive officers named in the Summary Compensation Table, (b) each of our directors, (c) all of our current directors and executive officers as a group, and (d) each stockholder known by us to own beneficially more than 5% of our common stock. Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respect to the securities. We deem shares of common stock that may be acquired by an individual or group within 60 days of April 13, 2017, pursuant to the exercise of options or warrants to be outstanding for the purpose of computing the percentage ownership of such individual or group, but such shares are not deemed to be outstanding for the purpose of computing the percentage ownership of any other person shown in the tables. Except as indicated in footnotes to these tables, we believe that the stockholders named in these tables have sole voting and investment power with respect to all shares of common stock shown to be beneficially owned by them based on information provided to us by these stockholders. Ownership determinations are based on 26,544,934 shares of common
stock outstanding on April 13, 2017. Unless otherwise indicated, the address of each stockholder is c/o Mateon Therapeutics, Inc., 701 Gateway Boulevard, Suite 210, South San Francisco, CA 94080.
Name of Beneficial Owner | Number of Shares of Mateon Common Stock Beneficially Owned and Nature of Ownership | Percent of Class | ||||||
Directors and Named Executive Officers | ||||||||
David J. Chaplin, Ph.D. | 407,361 | (1) | 1.5 | % | ||||
William D. Schwieterman, M.D. | 387,242 | (2) | 1.4 | % | ||||
Matthew M. Loar | 231,770 | (3) | * | |||||
Simon C. Pedder, Ph.D. | 130,341 | (4) | * | |||||
Donald R. Reynolds | 56,369 | (5) | * | |||||
Bobby W. Sandage, Jr., Ph.D. | 26,369 | (6) | * | |||||
All current directors and executive officers as a group (6 persons) | 1,239,452 | (7) | 4.5 | % |
* | Less than 1%. |
|