| Item 2.05 | Costs Associated with Exit or Disposal Activities. |
On January 31, 2021, the Board of Directors (the “Board”) of Aerpio Pharmaceuticals, Inc. (the “Company”) approved a plan to reduce operating costs and better align its workforce with the needs of its ongoing business. The plan reduces its current workforce by 7 employees, representing approximately 58% of the Company’s workforce. This plan is expected to be substantially complete by March 31, 2021. As a result of this plan, the Company estimates that it will incur one-time employee related expenses of approximately $1.2 million which includes severance benefits, payment of healthcare insurance premiums and outplacement assistance for specified periods. Each affected employee’s eligibility for such severance benefits is contingent upon such employee’s execution of a separation agreement, which includes a general release of claims against the Company. The Company anticipates that the majority of such employee related costs will be paid during the 2021 fiscal year. The costs that the Company expects to incur in connection with the plan are subject to a number of assumptions, and actual results may differ from the Company’s original estimate. The Company may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the plan. If the Company subsequently determines that it will incur additional significant costs associated with the plan, it will amend this Current Report on Form 8-K to disclose such information.
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Departure of Kevin Peters, M.D. as Chief Scientific Officer and Chief Medical Officer
On January 26, 2021, we notified Kevin Peters, M.D., the Company’s Chief Scientific Officer and Chief Medical Officer, of the planned termination of his employment as part of the Company’s proposed reduction in force discussed above. It is anticipated that in connection with such termination, the Company and Dr. Peters will enter into a transition services agreement pursuant to which the effective date of Dr. Peters’ departure will be determined and certain other transitional services to be provided by Dr. Peters will be agreed upon.
Amendment to Employment Agreement for Joseph Gardner, Ph.D., President and Founder
On January 31, 2021, the Company also entered into the second amendment to its employment agreement with Joseph Gardner, Ph.D., the Company’s President and Founder. Subject to the terms and conditions of his employment agreement, as amended, certain severance terms applicable to Dr. Gardner were amended, and all other terms of Dr. Gardner’s employment agreement remained unmodified. Pursuant to the employment agreement, as amended, if Dr. Gardner’s employment ends for any reason, Dr. Gardner will receive any current base salary through the date of termination, unpaid expense reimbursements, unused vacation accrued through the date of termination, and any vested benefits under any employee benefit plan through the date of termination. If Dr. Gardner’s employment is terminated by the Company without cause (as defined in his employment agreement) or by Dr. Gardner for good reason (as defined in his employment agreement), then, in addition to the accrued benefits described in the preceding sentence, and subject to Dr. Gardner’s execution of a separation agreement containing, among other things, a release of claims against the Company, Dr. Gardner will be entitled to receive: (i) a lump sum in cash in an amount equal to 12 months of current base salary, (ii) a monthly cash payment for 12 months for medical
