| Item 2.05 | Costs Associated with Exit or Disposal Activities. |
On June 10, 2019, the Board of Directors (the “Board”) of Tetraphase Pharmaceuticals, Inc. (the “Company”) authorized the implementation of a restructuring of its organization, including a 20% reduction in headcount, designed to focus its cash resources on commercializing XERAVA® primarily in the hospital setting. The majority of the roles eliminated in the reduction in headcount are research and development based and general and administrative positions. The reduction in headcount did not reduce any headcount in the commercial organization. The Company expects to complete the reduction in headcount by the end of the second quarter of 2019. Following the restructuring, over 50% of the Company’s full-time employees are expected to be commercial and medical affairs personnel. The Company expects that the reorganization and other cost-saving efforts will result in an approximate $8.2 million reduction in net cash required for operating activities on an annualized basis. The Company estimates it will incur aggregate restructuring charges of approximately $2.4 million consisting ofpre-tax charges for severance and other costs, but excluding anynon-cash charges related to the modification of equity awards. These restructuring charges are expected to be in incurred primarily during the second and third quarters of 2019. These estimates are subject to a number of assumptions, and actual results may differ. The Company may also incur additional costs not currently contemplated due to events that may occur as result of or that are associated with the restructuring.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers. |
Larry Edwards
On June 10, 2019, the Board appointed Larry Edwards as President and Chief Executive Officer, effective August 1, 2019. Mr. Edwards, the Company’s current Chief Operating Officer, will succeed Guy Macdonald, who will remain on the Board after August 1, 2019.
The Board also approved an increase in the size of the Board from seven to eight and the election of Mr. Edwards to the Board effective August 1, 2019. Mr. Edwards was elected as a Class I director to serve until the Company’s 2020 annual meeting of stockholders and until his successor is duly elected and qualified or until his earlier death, resignation or removal. Mr. Edwards will not receive separate compensation for services rendered as a director and will not serve on any committees of the Board.
Mr. Edwards, age 47, has served as the Company’s Chief Operating Officer since March 2018. From December 2016 to February 2018, Mr. Edwards served as the Company’s Senior Vice President, Chief Commercial Officer and from January 2016 to December 2016 as the Company’s Vice President, Commercial Operations. He also served as the Company’s Vice President, Marketing from July 2015 to January 2016. Prior to joining the Company, from April 2014 to June 2015, Mr. Edwards served as Senior Director, Marketing at Cubist Pharmaceuticals, Inc., a publicly traded biopharmaceutical company acquired by Merck & Co. in January 2015. Mr. Edwards previously served in various roles at Merck & Co., a publicly traded pharmaceutical company, from 1999 to April 2014, most recently serving as Global Marketing Director, Clostridium Difficile and New Infectious Disease Products. Mr. Edwards received a B.S. from Ohio University.
There are no family relationships between Mr. Edwards and any of the Company’s directors or executive officers. There are no transactions between Mr. Edwards or any of his immediate family members and the Company or any of its subsidiaries that would be required to be reported under Item 404(a) ofRegulation S-K.
In connection with Mr. Edwards’ promotion, Mr. Edwards’ annual base salary will be increased to $500,000, effective August 1, 2019, and his an annual bonus target will be increased to 55% of his annual salary. The Board also approved a grant effective August 1, 2019, pursuant to and in accordance with the Company’s 2013 Stock Incentive Plan, as amended, of (1) a time-based restricted stock unit (“RSU”) award for 150,000 shares of the Company’s common stock , which award will vest in equal annual installments over a three-year period, and (2) a performance-based RSU award for 50,000 shares of the Company’s common stock, which performance-based RSUs may be earned upon the achievement of various milestones and, if earned, will vest no later than August 1, 2022, subject in each case to continued service.
