ITEM
10. Directors, Executive Officers and Corporate Governance
Directors
The
following table sets forth certain information about the current directors of our Company. Directors are elected to hold office
until the next annual meeting of stockholders and until their successors are elected and qualified.
Directors
|
|
Age
|
|
Year
First
Became Director
|
Ashleigh
Palmer (Co-Founder, President and Chief Executive Officer)
|
|
57
|
|
|
2016
|
|
Jeffrey
Bluestone
|
|
67
|
|
|
2019
|
|
Avery
Catlin
|
|
71
|
|
|
2018
|
|
Anthony
DiGiandomenico
|
|
53
|
|
|
2017
|
|
Sean
Doherty
|
|
51
|
|
|
2019
|
|
Wayne
Pisano (Chairman)
|
|
65
|
|
|
2018
|
|
The
following biographical descriptions set forth certain information with respect to the directors of our Board, based on information
furnished to us by each director.
Ashleigh
Palmer, B.Sc., MBA – Co-Founder, President and Chief Executive Officer, Director
Mr.
Palmer is a co-founder of Provention and has served as our President and CEO and on the board of directors since inception in
2016. Mr. Palmer currently serves as a non-executive director on the board of Third Pole, a clinical-stage biopharmaceutical company
developing electric generated inhaled nitric oxide for certain life-threatening and debilitating critical care and chronic cardiopulmonary
conditions. Mr. Palmer is also President of Creative BioVentures™ Corp. (CBV), a strategic advisory firm serving the biopharma
industry. Since founding CBV in 2002, Mr. Palmer has advised numerous clients regarding corporate positioning and strategy, fund
raising, merger and acquisition transactions, clinical development and commercialization, and has undertaken a number of CEO and
board level transformational leadership and turnaround assignments for both public and private biopharma companies. From 2015
through 2017, Mr. Palmer served as Executive Chairman of Celimmune, LLC, a clinical development-stage immunotherapy company dedicated
to developing therapies for celiac disease and refractory celiac disease. Celimmune was acquired by Amgen Inc. in November 2017.
Mr. Palmer served as Chief Executive Officer of Unigene Laboratories, Inc., a biopharmaceutical company, from 2010 to July 2013
in conjunction with a substantial restructuring of Unigene’s debt. Following the debtholder’s acquisition of substantially
all of Unigene’s assets, Unigene filed for bankruptcy in July 2013. Prior to founding Celimmune and CBV, Mr. Palmer was
Vice President, Business Development for British Oxygen’s Ohmeda Pharmaceutical Products, Inc., where he was instrumental
in its sale to a consortium led by Baxter International Inc. by spinning out the company’s inhaled nitric oxide assets as
INO Therapeutics, Inc. (now Ikaria/Mallinckrodt). Under his leadership, as founding President and CEO, INO Therapeutics developed
and commercialized the world’s first selective pulmonary vasodilator, INOmax®, establishing a time-based pricing, orphan
drug franchise, subsequently acquired by Mallinckrodt in 2015 for $2.3 billion. Earlier in his career, Mr. Palmer held positions
of increasing responsibility in sales and marketing leadership at Reckitt Benckiser. Mr. Palmer received his MBA from the University
of Bradford and his B.Sc. honors in Biochemistry and Applied Molecular Biology from the University of Manchester. Mr. Palmer’s
30-plus years of extensive experience in the areas of corporate strategy formulation and preclinical and clinical drug evaluation,
business and product development and commercialization make him a valuable member of our board of directors.
Jeffrey
Bluestone – Director
Dr.
Bluestone joined our board of directors in March 2019. Dr. Bluestone currently serves as the president and CEO of Sonoma Biotherapeutics.
He also currently serves as the A.W. and Mary Margaret Clausen Distinguished Professor at University of California San Francisco
(UCSF). He previously served as President and CEO of the Parker Institute for Cancer Immunotherapy from June 2015 to December
2019 and the director of the Hormone Research Institute in the Diabetes Center from 2000 to December 2019. From 2010 to 2015,
Dr. Bluestone served as Executive Vice Chancellor and Provost at UCSF. Dr. Bluestone was the founding director of the Immune Tolerance
Network, the largest NIH-funded multicenter clinical immunology research program, testing novel immunotherapies in transplantation,
autoimmunity and asthma/allergy. He was appointed by former Vice President, Joe Biden as a member of the Blue Ribbon Panel of
scientific experts to guide the National Cancer Moonshot Initiative and also served as a senior investigator at the National Cancer
Institute of the National Institutes of Health. Dr. Bluestone is a highly accomplished scientific researcher whose work over nearly
three decades has focused on understanding the basic processes that control T-cell activation and immune tolerance in autoimmunity,
organ transplantation and cancer. His research has led to the development and commercialization of multiple immunotherapies, including
the first FDA-approved drug targeting T-cell co-stimulation to treat autoimmune disease and organ transplantation and the first
CTLA-4 antagonist drugs approved by the FDA for the treatment of metastatic melanoma. Dr. Bluestone was part of the team of early
developers of a novel anti-CD3 monoclonal antibody, now called teplizumab, a pro-tolerogenic drug that has shown clinical activity
in type 1 diabetes (T1D), psoriatic arthritis, and the reversal of kidney transplant rejection. He received his B.S. and M.S.
from Rutgers University and his Ph.D. in immunology from the Weill Cornell Graduate School of Medical Science. Dr. Bluestone’s
extensive scientific experience in autoimmunity and clinical development of FDA-approved therapies make him a valuable member
of our board of directors.
Avery
Catlin – Director
Mr.
Catlin joined our board of directors in September 2018. He currently serves on the Board of Corbus Pharmaceutical Holdings, Inc.
Mr. Catlin previously served as Senior Vice President and Chief Financial Officer of Celldex Therapeutics, Inc., where he raised
more than $500 million from equity, convertible debt and private placement transactions, as well as devised and led financial
strategies to successfully complete several asset acquisitions. Prior to Celldex, Mr. Catlin held senior financial and operational
positions with biopharma companies Endogen, Inc. and Repligen Corporation. Mr. Catlin earned a B.A. in Psychology from the University
of Virginia and an MBA from Babson College. He is also a certified public accountant. Mr. Catlin’s more than 22 years of
experience as a senior financial officer of public biopharmaceutical companies make him a valuable member of our board of directors.
Anthony
DiGiandomenico – Director
Mr.
DiGiandomenico joined our board of directors in April 2017. He also serves on the board of directors of ENDRA Life Sciences Inc.,
a developer of enhanced ultrasound technology, since July 2013. Since he co-founded MDB in 1997, Mr. DiGiandomenico has been enabling
investment into early-stage disruptive technologies. He has worked alongside a wide range of companies in the biotechnology, medical
devices, high technology, and renewable energy spaces. Mr. DiGiandomenico holds an MBA from the Haas School of Business at the
University of California, Berkeley and a BS in Finance from the University of Colorado. Mr. DiGiandomenico’s financial expertise,
general business acumen and significant executive leadership experience position him well to make valuable contributions to our
board of directors.
Sean
Doherty – Director
Mr.
Doherty joined our board of directors in September 2019. Mr. Doherty is the Executive Chair of the JDRF T1D Fund, a $100.0 million
venture philanthropy fund using a cutting-edge approach to catalyze an investment market in type one diabetes. He led the concept-creation,
design and capital financing of the fund, and he has driven its strategy since its inception in 2016. He served on the JDRF International
Board and its Executive Committee from 2016 to 2019. He retired from his role as Managing Director of Bain Capital, LP, a private
global investment firm, which he joined in 2005 as the firm’s first general counsel. He had a diverse operational and constituency
management role at Bain Capital, where he led crisis management, press and external communications, government relations, branding
and philanthropic initiatives and was involved in governance and capital raising. Earlier in his career he worked at Ropes &
Gray LLP, and he was a law clerk to a federal district judge in Boston. Mr. Doherty received a J.D. magna cum laude from Harvard
Law School and a B.A. magna cum laude in Government from Harvard College. Prior to law school, he was a Lieutenant in the U.S.
Navy, in which he served on a Middle East Force frigate from 1990-94. Mr. Doherty is a member of the board of directors of IM
Therapeutics.
Wayne
Pisano – Director
Mr.
Pisano joined our board of directors in April 2018 and has served as the Chairman of the board since October 2019. He also serves
on the board of directors of Immunovaccine Inc., a biopharmaceutical company, since October 2011, and Oncolytics, Inc., a biotechnology
company, since May 2013. Mr. Pisano served as president and CEO of VaxInnate, a biotechnology company, from January 2012 until
November 2016. Prior to VaxInnate, Mr. Pisano was at Sanofi Pasteur from 1997 to 2011 and was President and CEO there from 2007
until his retirement in 2011. He has a bachelor’s degree in biology from St. John Fisher College, New York and an MBA from
the University of Dayton, Ohio. Mr. Pisano’s depth of experience across the spectrum of commercial operations, public immunization
policies and pipeline development make him a valuable member of our board of directors.
Executive
Officers
The
following table sets forth certain information regarding our executive officers:
Name
of Individual
|
|
Age
|
|
Position
and Office
|
Ashleigh
Palmer
|
|
57
|
|
Co-Founder,
President, Chief Executive Officer, Director
|
Andrew
Drechsler
|
|
48
|
|
Chief
Financial Officer
|
Francisco
Leon
|
|
48
|
|
Co-Founder,
Chief Scientific Officer
|
Eleanor
Ramos
|
|
64
|
|
Chief
Medical Officer
|
Jason
Hoitt
|
|
42
|
|
Chief
Commercial Officer
|
Our
executive officers are elected by, and serve at the discretion of, our Board. The business experience for the past five years,
and in some instances, for prior years, of each of our executive officers is as follows:
Ashleigh
Palmer
For
Mr. Palmer’s biography, please see the section above entitled “Directors.”
Andrew
Drechsler
Mr.
Drechsler joined Provention as Chief Financial Officer (CFO) in September 2017. Mr. Drechsler has over 20 years of financial and
operational leadership experience in life sciences companies. Prior to Provention, Mr. Drechsler was most recently CFO of Insmed
Incorporated from 2012 to 2017. Mr. Drechsler’s prior roles also include: CFO of VaxInnate Corporation, a privately held
clinical-stage biotechnology company that developed vaccines for infectious diseases; CFO of publicly-traded Valera Pharmaceuticals
where he completed an initial public offering; controller for Abbott Laboratories’ Point of Care Division, which was publicly-traded
as i-STAT Corporation prior to being acquired by Abbott; controller of Biomatrix, Inc., which was publicly-traded prior to being
acquired by Genzyme. Mr. Drechsler graduated magna cum laude from Villanova University with a BS in Accounting and received his
certified public accountant license in New Jersey.
Francisco
Leon
Dr.
Leon, co-founder of Provention and its Chief Scientific Officer, joined Provention in October 2017. Dr. Leon brings to the Company
a breadth of experience and expertise from his academic and industry careers in the fields of immunology and immune-mediated disease
clinical research. Dr. Leon was most recently the Chief Executive Officer and Chief Medical Officer of Celimmune, LLC, a clinical
development-stage immunotherapy company dedicated to developing transformational therapies for celiac disease and refractory celiac
disease (intestinal lymphoma). Celimmune was acquired by Amgen Inc. in November 2017. Prior to founding Celimmune in 2015, Dr.
Leon served as Vice President and Head of Translational Medicine at Johnson & Johnson’s Janssen Pharmaceuticals, where
he led early-stage clinical development in immunology. Before joining Janssen in 2010, Dr. Leon served as Chief Medical Officer
at Alba Therapeutics; Director of Clinical Development, Inflammation & Respiratory at Medimmune (AstraZeneca); and Director
of Clinical Discovery, Immunology & Oncology at Bristol-Myers Squibb. Prior to joining the biopharma industry, Dr. Leon served
as a Postdoctoral Fellow at the National Institutes for Allergy and Infectious Diseases (NIAID) of the National Institutes of
Health (NIH). In 2011, he became an Associate Professor of Medicine at Jefferson Medical College in Philadelphia, where he continues
to contribute to the clinical research efforts of the Department of Gastroenterology. Dr. Leon is a clinical and translational
immunologist who received his M.D. and Ph.D. from Autónoma University in Madrid, Spain, and his specialization in Clinical
Immunology from Ramon y Cajal Hospital, Madrid, Spain. He is a Fellow of the American Gastroenterology Association. In his 20
years of experience in translational immunology, Dr. Leon has authored or co-authored more than 85 peer-reviewed articles and
book chapters, as well as several issued patents and patent applications.
Eleanor
Ramos
Dr.
Ramos joined Provention in July 2017 and is its Chief Medical Officer. Dr. Ramos’ background includes significant clinical
expertise in autoimmunity, inflammation, organ transplant rejection and the treatment of acute and chronic viral infections. Prior
to joining Provention, Dr. Ramos served as a Chief Medical Officer of Global Blood Therapeutics Inc., a biopharmaceutical company
dedicated to developing novel therapeutics to treat blood-based and hypoxemic pulmonary disorders from 2014 to 2016. Her past
experience includes roles as Chief Medical Officer of Theraclone Sciences, a therapeutic antibody discovery and development company,
where she oversaw the development of clinical programs in viral diseases including severe influenza from 2011 to 2014, and as
Chief Medical Officer at ZymoGenetics, Inc., overseeing its clinical portfolio across infectious diseases/hepatitis C, immunology/lupus
nephritis, oncology and hemostasis from 2009 to 2011. Dr. Ramos is currently a member of the Scientific Advisory Board of EpiVax
Oncology, a private biotechnology company focused on developing personalized cancer vaccines, and a member of the Board of Directors
of ASK, a non-profit organization dedicated to increasing awareness of lung cancer in women, particularly those of Asian descent.
Her experience also encompasses leading the Clinical Trials Group at the Immune Tolerance Network, a collaborative network for
clinical research funded by the National Institute of Allergy and Infectious Diseases. She holds a medical degree and undergraduate
degree from Tufts University, along with advanced training in the subspecialty of nephrology with a focus on transplantation immunology
at Brigham and Women’s Hospital, Harvard Medical School.
Jason
Hoitt
Mr.
Hoitt joined Provention as its Chief Commercial Officer in January 2020. Prior to joining Provention, Mr. Hoitt served as Chief
Commercial Officer at Dova Pharmaceuticals (acquired by Swedish Orphan Biovitrum AB) from December 2018 to December 2019 where
he led all commercial efforts including the pre-launch and launch strategy and execution for DOPTELET ® (avatrombopag) targeting
chronic immune thrombocytopenia. Prior to Dova Pharmaceuticals, Mr. Hoitt served as Vice President and Head of Sales at Insmed
Incorporated from May 2017 to December 2018. From 2013 to May 2017, Mr. Hoitt held various leadership roles in Medical Affairs
and US Sales at Sarepta Therapeutics. From 2010 to 2013, Mr. Hoitt held senior positions in both marketing and sales at Vertex
Pharmaceuticals. From 2004 to 2010, Mr. Hoitt held various positions at Gilead Sciences. Mr. Hoitt began his career in 1999 as
a bench researcher at Boston’s New England Medical Center, Tufts Medical School, which led to biopharmaceutical roles at
AstraZeneca and Schering Oncology-Biotech. Mr. Hoitt holds a B.A. in Spanish from the College of the Holy Cross in Worcester,
MA.
There
are no family relationships among any of our directors and executive officers.
Corporate
Governance
The
Board of Directors and Its Committees
Board
of Directors
Our
Board is currently composed of six directors. Our directors hold office until their successors have been elected and qualified
or until the earlier of their resignation or removal.
We
have no formal policy regarding board diversity. Our priority in selection of board members is identification of members who will
further the interests of our stockholders through his or her established record of professional accomplishment, the ability to
contribute positively to the collaborative culture among board members, knowledge of our business and understanding of the competitive
landscape.
Our
Board met twelve times in 2019. Each of the directors attended at least 75% of the aggregate of (i) the total number of meetings
of our Board (held during the period for which such directors served on the Board) and (ii) the total number of meetings of all
committees of our Board on which the director served (during the periods for which the director served on such committee or committees).
All directors serving at the time of the 2019 Annual Meeting of Stockholders attended the 2019 Annual except for Mr. Bluestone,
Mr. Catlin and Mr. DiGiandomenico. We do not have a formal policy requiring members of the Board to attend our annual meetings.
Board
Committees
Our
Board has established an Audit Committee, a Compensation Committee and a Nominating and Governance Committee. Our Board may establish
other committees to facilitate the management of our business. Our Audit Committee and Compensation Committee consist of Mr. Catlin,
Mr. DiGiandomenico and Mr. Pisano. Mr. Catlin is the Board’s audit committee financial expert. Our Nominating and Governance
Committee consists of Mr. DiGiandomenico, Mr. Pisano and Mr. Doherty.
Audit
Committee
The
Board has established an Audit Committee currently consisting of Mr. Catlin (Chairman), Mr. DiGiandomenico and Mr. Pisano. The
Audit Committee’s primary functions are to oversee and review: the integrity of the Company’s financial statements
and other financial information furnished by us, our compliance with legal and regulatory requirements, our systems of internal
accounting and financial controls, the independent auditor’s engagement, qualifications, performance, compensation and independence,
related party transactions, and compliance with our Code of Business Conduct and Ethics.
The
Audit Committee also appoints (and recommends that the Board submit for shareholder ratification), compensates, retains and oversees
the independent auditor retained for the purpose of preparing or issuing an audit report or other related service. In addition,
the Audit Committee discusses guidelines and policies related to risk assessment and risk management with us, prepares an Audit
Committee report in accordance with SEC regulations, sets policies regarding the hiring of employees or former employees of our
independent auditors, reviews and investigates any matters pertaining to integrity of management, including conflicts of interest,
reviews related party transactions, reviews financial reporting and accounting standards, meets with officers as necessary, reviews
the independence of the independent public accountants and reviews the adequacy of our internal accounting controls.
Each
member of the Audit Committee is “independent” as that term is defined under the applicable rules of the SEC and the
applicable rules of The Nasdaq Capital Market. The Board has determined that each Audit Committee member has sufficient knowledge
in financial and auditing matters to serve on the Committee. The Board determined that Mr. Catlin is an “audit committee
financial expert,” as defined under the applicable rules of the SEC and The Nasdaq Marketplace Rules. The Audit Committee
met four times during 2019. Our Board has adopted an Audit Committee Charter, which is available for viewing at www.proventionbio.com.
Compensation
Committee
The
Board has established a Compensation Committee currently consisting of Mr. Pisano (Chairman), Mr. Catlin and Mr. DiGiandomenico.
The primary functions of the Compensation Committee are to facilitate the Board’s discharge of its responsibilities relating
to the evaluation and compensation of our executives, oversee the administration of our compensation plan, review and determine
director compensation, and prepare any reports on executive compensation required by the SEC and The Nasdaq Global Select Market.
The
Compensation Committee also establishes, in consultation with our senior management, and periodically reviews, a general compensation
strategy for us and our subsidiaries, reviews the chief executive officer’s compensation and evaluates his or her performance
(at least annually), reviews and discusses compensation disclosure as may be required by the SEC, reviews and makes recommendations
with respect to incentive compensation plans and equity-based plans, and conducts or authorizes investigations or studies of any
matters within the scope of Compensation Committee’s responsibilities.
To
determine executive compensation, the Compensation Committee, with input from the chief executive officer (who shall not participate
in the deliberations regarding his or her own compensation), at least annually reviews and makes recommendations to the Board
of appropriate compensation levels or other terms of employment for each of the four executives. The Compensation Committee considers
all factors it deems relevant. Our executive management team has engaged the services of Radford Rewards Consulting (part of AON
plc), a compensation consulting firm, to provide the Compensation Committee with guidance regarding the amount and types of compensation
that we provide to our executives and directors and how our compensation practices compare to the compensation practices of other
companies. Radford Rewards Consulting does not provide any services to us other than the services provided to assist the Compensation
Committee in their compensation recommendations. The Compensation Committee believes that Radford Rewards Consulting does not
have any conflicts of interest in advising the Compensation Committee under applicable SEC rules or Nasdaq listing standards.
The
Compensation Committee met three times during 2019. Our Board has determined that each member of the Compensation Committee currently
serving is independent under the listing standards, is a “non-employee director” as defined in Rule 16b-3 promulgated
under the Exchange Act and is an “outside director” as defined in Section 162(m) of the Internal Revenue Code of 1986,
as amended. Our Board has adopted a Compensation Committee Charter, which is available for viewing at www.proventionbio.com.
Nominating
and Corporate Governance Committee
The
Board has established a Nominating and Corporate Governance Committee consisting of Mr. DiGiandomenico (Chairman), Mr. Doherty
and Mr. Pisano. The primary functions of the Nominating and Corporate Governance Committee are to identify, review the qualifications
of, and recommend to the Board, proposed nominees for election to the Board (consistent with criteria approved by the Board),
select, or recommend that the Board select, the director nominees for the next annual meeting of stockholders, and oversee the
annual evaluation of the Board and management.
The
Nominating and Corporate Governance Committee also makes recommendations to the full Board regarding the size and composition
of the Board and the criteria for Board and committee membership, establishes procedures to be followed by stockholders in submitting
recommendations for director candidates, establishes a process for identifying and evaluating nominees for the Board, retains
advisory firms to help identify director candidates, and reviews stockholder proposals and proposed responses.
The
Nominating and Corporate Governance Committee met one time during 2019. All members of the Nominating and Governance Committee
are independent directors as defined under the Nasdaq listing standards. Our Board has adopted a Nominating and Corporate Governance
Charter, which is available for viewing at www.proventionbio.com.
Stockholder
Nominations for Directorships
Stockholders
may recommend individuals to the Nominating and Corporate Governance Committee for consideration as potential director candidates
by submitting their names and background to the Secretary of the Company at the address set forth below under “Stockholder
Communications.” All such recommendations will be forwarded to the Nominating and Corporate Governance Committee, which
will review and only consider such recommendations if appropriate biographical and other information is provided, as described
below, on a timely basis. All security holder recommendations for director candidates must be received by the Company in the timeframe(s)
set forth under the heading “Stockholder Proposals” below.
|
●
|
the
name and address of record of the security holder;
|
|
|
|
|
●
|
a
representation that the security holder is a record holder of the Company’s securities, or if the security holder is
not a record holder, evidence of ownership in accordance with Rule 14a-8(b)(2) of the Securities Exchange Act of 1934;
|
|
|
|
|
●
|
the
name, age, business and residential address, educational background, current principal occupation or employment, and principal
occupation or employment for the preceding five (5) full fiscal years of the proposed director candidate;
|
|
|
|
|
●
|
a
description of the qualifications and background of the proposed director candidate and a representation that the proposed
director candidate meets applicable independence requirements;
|
|
|
|
|
●
|
a
description of any arrangements or understandings between the security holder and the proposed director candidate; and
|
|
|
|
|
●
|
the
consent of the proposed director candidate to be named in the proxy statement relating to the Company’s annual meeting
of stockholders and to serve as a director if elected at such annual meeting.
|
Assuming
that appropriate information is provided for candidates recommended by stockholders, the Nominating and Corporate Governance Committee
will evaluate those candidates by following substantially the same process, and applying substantially the same criteria, as for
candidates submitted by members of the Board or other persons, as described above and as set forth in its written charter.
Board
Leadership Structure and Role in Risk Oversight
The
positions of our chairman of the Board and chief executive officer are separated. Separating these positions allows our chief
executive officer to focus on our day-to-day business, while allowing the chairman of the Board to lead our Board in its fundamental
role of providing advice to and independent oversight of management. Our Board recognizes the time, effort and energy that the
chief executive officer must devote to his position in the current business environment, as well as the commitment required to
serve as our chairman, particularly as our Board’s oversight responsibilities continue to grow. Our Board also believes
that this structure ensures a greater role for the independent directors in the oversight of our Company and active participation
of the independent directors in setting agendas and establishing priorities and procedures for the work of our Board. This leadership
structure also is preferred by a significant number of our stockholders. Our Board believes its administration of its risk oversight
function has not affected its leadership structure.
Although
our bylaws do not require our chairman and chief executive officer positions to be separate, our Board believes that having separate
positions is the appropriate leadership structure for us at this time and demonstrates our commitment to good corporate governance.
Risk
is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of
risks, including those described under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the
fiscal year ended December 31, 2019 and other reports filed with the SEC. Our Board is actively involved in oversight of risks
that could affect us. This oversight is conducted primarily by our full Board, which has responsibility for general oversight
of risks.
Our
Board will satisfy this responsibility through full reports by each committee chair regarding the committee’s considerations
and actions, as well as through regular reports directly from officers responsible for oversight of particular risks within our
Company. Our Board believes that full and open communication between management and our Board is essential for effective risk
management and oversight.
Stockholder
Communications
The
Board will give appropriate attention to written communications that are submitted by stockholders and will respond if and as
appropriate. Absent unusual circumstances or as contemplated by committee charters, and subject to advice from legal counsel,
our Secretary is primarily responsible for monitoring communications from stockholders and for providing copies or summaries of
such communications to the Board as he considers appropriate.
Communications
from stockholders will be forwarded to all directors if they relate to important substantive matters or if they include suggestions
or comments that the Secretary considers to be important for the Board to know. Communication relating to corporate governance
and corporate strategy are more likely to be forwarded to the Board than communications regarding personal grievances, ordinary
business matters, and matters as to which we tend to receive repetitive or duplicative communications.
Stockholders
who wish to send communications to the Board should address such communications to: The Board of Directors, Provention Bio, Inc.,
P.O. Box 666, Oldwick, NJ 08858, Attention: Secretary.
Code
of Business Conduct and Ethics
We
have adopted a Code of Business Conduct and Ethics that applies to our directors, officers and employees. The purpose of the Code
of Business Conduct and Ethics is to deter wrongdoing and to provide guidance to directors, officers and employees to help them
recognize and deal with ethical issues, to provide mechanisms to report unethical or illegal conduct and to contribute positively
to our culture of honesty and accountability. We have established a means for individuals to report a violation or suspected violation
of the Code of Business Conduct and Ethics anonymously, including those violations relating to accounting, internal controls or
auditing matters, and federal securities laws. Our Code of Business Conduct and Ethics is publicly available on our website at
www.proventionbio.com. If we make any substantive amendments to the Code of Business Conduct and Ethics or grant any waiver, including
any implicit waiver from a provision of the Code of Business Conduct and Ethics to our directors or executive officers, we will
disclose the nature of such amendments or waiver on our website or in a current report on Form 8-K.
Limitation
of Directors’ Liability and Indemnification
The
Delaware General Corporation Law (the “DGCL”) authorizes corporations to limit or eliminate, subject to certain
conditions, the personal liability of directors to corporations and their stockholders for monetary damages for breach of their
fiduciary duties. Our certificate of incorporation limits the liability of our directors to the fullest extent permitted by Delaware
law. In addition, we have entered into indemnification agreements with each of our directors and officers whereby we have agreed
to indemnify those directors and officers to the fullest extent permitted by law, including indemnification against expenses and
liabilities incurred in legal proceedings to which the director or officer was, or is threatened to be made, a party by reason
of the fact that such director or officer is or was a director, officer, employee or agent of the Company, provided that such
director or officer acted in good faith and in a manner that the director or officer reasonably believed to be in, or not opposed
to, the best interests of the Company.
We
have director and officer liability insurance to cover liabilities our directors and officers may incur in connection with their
services to us, including matters arising under the Securities Act. Our certificate of incorporation and bylaws also provide that
we will indemnify our directors and officers who, by reason of the fact that he or she is one of our officers or directors, is
involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative related to their board role
with us.
There
is no pending litigation or proceeding involving any of our directors, officers, employees or agents in which indemnification
will be required or permitted. We are not aware of any threatened litigation or proceeding that may result in a claim for such
indemnification.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers, and persons who are beneficial
owners of more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership
with the SEC. These persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file.
Based
solely upon our review of copies of Forms 3, 4 and 5 furnished to us, we believe that all of our directors, executive officers
and any other applicable stockholders timely filed all reports required by Section 16(a) of the Exchange Act during the fiscal
year ended December 31, 2019, except Anthony DiGiandomenico was delinquent in filing a Form 4 report in December 2019. Such filing
has been made as of the time of filing this proxy statement.
ITEM
11. Executive Compensation
Summary
Compensation Table
The
following table shows the compensation awarded to or earned by our chief executive officer, chief financial officer and the two
most highly-compensated executive officers (other than the chief executive officer and chief financial officer) who were serving
as executive officers as of December 31, 2019 and 2018. The persons listed in the following table are referred to herein as the
“named executive officers.” We had no other executive officers in 2019 and 2018.
SUMMARY
COMPENSATION TABLE
Name and Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Option
Awards
($) (1)
|
|
|
All Other
Compensation
($) (2)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ashleigh Palmer
|
|
|
2019
|
|
|
|
500,000
|
|
|
|
140,000
|
|
|
|
3,308,260
|
|
|
|
11,200
|
|
|
|
3,959,460
|
|
Chief Executive Officer
|
|
|
2018
|
|
|
|
425,000
|
|
|
|
147,500
|
|
|
|
-
|
|
|
|
11,000
|
|
|
|
583,500
|
|
Andrew Drechsler
|
|
|
2019
|
|
|
|
390,000
|
|
|
|
109,200
|
|
|
|
3,308,260
|
|
|
|
11,200
|
|
|
|
3,818,660
|
|
Chief Financial Officer
|
|
|
2018
|
|
|
|
360,000
|
|
|
|
128,000
|
|
|
|
-
|
|
|
|
11,000
|
|
|
|
499,000
|
|
Francisco Leon
|
|
|
2019
|
|
|
|
425,000
|
|
|
|
102,000
|
|
|
|
3,308,260
|
|
|
|
11,200
|
|
|
|
3,846,460
|
|
Chief Scientific Officer
|
|
|
2018
|
|
|
|
395,000
|
|
|
|
158,500
|
|
|
|
-
|
|
|
|
11,000
|
|
|
|
564,500
|
|
Eleanor Ramos
|
|
|
2019
|
|
|
|
425,000
|
|
|
|
144,500
|
|
|
|
3,308,260
|
|
|
|
11,200
|
|
|
|
3,888,960
|
|
Chief Medical Officer
|
|
|
2018
|
|
|
|
395,000
|
|
|
|
128,625
|
|
|
|
-
|
|
|
|
11,000
|
|
|
|
534,625
|
|
(1)
|
Represents
the aggregate grant date fair value for grants made in 2019 and 2018 computed in accordance with FASB ASC Topic 718. This
calculation assumes that the executive will perform the requisite service for the award to vest in full. The assumptions used
in valuing options are described in note 10 to our financial statements included in our 2019 Annual Report on Form 10-K, filed
with the Securities and Exchange Commission on March 12, 2020.
|
(2)
|
The
compensation included in the “All Other Compensation” column for 2019 and 2018 includes matching contributions
that we made under our 401(k) plan of $11,200 and $11,000, respectively for Mr. Palmer, Mr. Drechsler, Dr. Leon, and Dr. Ramos.
|
Narrative
Disclosure to Summary Compensation Table
Employment
Agreements
The
material terms of each named executive officer’s employment agreement or arrangement are described below.
The
base salary and target annual incentive bonus for each of our named executives for our fiscal year ended December 31, 2019, is
listed in the table below:
Name
|
|
2019 Base Salary
|
|
|
2019 Target Incentive Bonus
|
|
Ashleigh Palmer
|
|
$
|
500,000
|
|
|
|
40
|
%
|
Andrew Drechsler
|
|
$
|
390,000
|
|
|
|
40
|
%
|
Francisco Leon
|
|
$
|
425,000
|
|
|
|
40
|
%
|
Eleanor Ramos
|
|
$
|
425,000
|
|
|
|
40
|
%
|
Ashleigh
Palmer
In
April 2017, we entered into an employment agreement with Ashleigh Palmer, our co-founder and President and Chief Executive Officer,
for an initial term ending on April 25, 2020 unless earlier terminated. Compensation under the agreement included an annual salary
of $425,000, with annual review and adjustment at the discretion of the compensation committee or the board of directors, a signing
bonus of $35,000, and an annual incentive bonus of 25% of annual salary based on the achievement of our corporate objectives and
the executive’s individual objectives, in each case as established by the compensation committee or the board. In 2019,
Mr. Palmer’s salary was increased by the Board of Directors to $500,000, with an annual incentive bonus target of 40%. In
January 2020, the Board of Directors, after performing a peer company review, approved an additional increase to Mr. Palmer’s
salary to $595,000, with an annual incentive bonus of 50%. The agreement also provided for the grant of stock options to purchase
shares of our common stock. The agreement may be terminated by us without cause or by the executive for good reason, each as defined
in the agreement, in which case, among other things and subject to certain requirements of the agreement, the executive would
be entitled severance in the amount of 12 months of base salary and accelerated vesting for equity awards that would have vested
within 12 months of the expiration date; provided that, in the event of a termination by us without cause or by the executive
for good reason within 24 months following a change in control of the company, as defined in the agreement, the executive will
be entitled to 18 months of severance and accelerated equity awards vesting of 18 months.
Andrew
Drechsler
In
September 2017, we entered into an employment agreement with Andrew Drechsler, our Chief Financial Officer. Compensation under
the agreement included an annual salary of $360,000, with annual review and adjustment at the discretion of the compensation
committee or the board of directors, and an annual incentive bonus of 25% of annual salary based on the achievement of our corporate
objectives and the executive’s individual objectives, in each case as established by the compensation committee or the board.
In 2019, Mr. Drechsler’s salary was increased by the Compensation Committee to $390,000, with an annual incentive bonus
target of 40%. In January 2020, the Compensation Committee, after performing a peer company review, approved an additional increase
to Mr. Drechsler’s salary to $425,000, with an annual incentive bonus target of 40%. The agreement also provided for the
grant of stock options to purchase shares of our common stock. The agreement may be terminated by us without cause or by the executive
for good reason, each as defined in the agreement, in which case, among other things and subject to certain requirements of the
agreement, the executive would be entitled severance in the amount of nine months of base salary and accelerated vesting for equity
awards that would have vested within six months of the termination date; provided that, in the event of a termination by us without
cause or by the executive for good reason within 24 months following a change in control of the company, as defined in the agreement,
the executive will be entitled to nine months of severance and accelerated vesting for equity awards that would have vested within
12 months of the termination date.
Francisco
Leon
In
April 2017, we entered into a consulting and employment agreement with Francisco Leon, our co-founder and Chief Scientific Officer,
for an initial term ending on April 25, 2020 unless earlier terminated. Compensation under the agreement included a monthly consulting
fee of $15,000 through September 30, 2017, the period during which the executive served as a consultant to us, and an annual salary
of $395,000 commencing October 1, 2017, when the executive ceased to be a consultant and commenced his employment as Chief Scientific
Officer, with annual review and adjustment at the discretion of the compensation committee or the board of directors, a signing
bonus of $35,000, and an annual incentive bonus of 25% of annual salary based on the achievement of our corporate objectives and
the executive’s individual objectives, in each case as established by the compensation committee or the board. In 2019,
Mr. Leon’s salary was increased by the Compensation Committee to $425,000, with an annual incentive bonus target of 40%.
In January 2020, the Compensation Committee, after performing a peer company review, approved an additional increase to Mr. Leon’s
salary to $435,000, with an annual incentive bonus target of 40%. The agreement also provided for the grant of stock options to
purchase shares of the Company’s common stock. The agreement may be terminated by us without cause or by the executive for
good reason, each as defined in the agreement, in which case, among other things and subject to certain requirements of the agreement,
the executive would be entitled severance in the amount of 12 months of base salary and accelerated vesting for equity awards
that would have vested within 12 months of the termination date; provided that, in the event of a termination by us without cause
or by the executive for good reason within 24 months following a change in control of the company, as defined in the agreement,
the executive will be entitled to 18 months of severance and accelerated equity awards vesting of 18 months.
Eleanor
Ramos
In
June 2017, we entered into an employment agreement with Eleanor Ramos, our Chief Medical Officer, for an initial term ending on
July 1, 2020 unless earlier terminated. Compensation under the agreement included an annual salary of $395,000, with annual
review and adjustment at the discretion of the compensation committee or the board of directors, and an annual incentive bonus
of 25% of annual salary based on the achievement of our corporate objectives and the executive’s individual objectives,
in each case as established by the compensation committee or the board. In 2019, Dr. Ramos’s salary was increased by the
Compensation Committee to $425,000, with an annual incentive bonus target of 40%. In January 2020, the Compensation Committee,
after performing a peer company review, approved an additional increase to Dr. Ramos’s salary to $435,000, with an annual
incentive bonus target of 40%. The agreement also provided for the grant of stock options to purchase shares of our common stock.
The agreement may be terminated by us without cause or by the executive for good reason, each as defined in the agreement, in
which case, among other things and subject to certain requirements of the agreement, the executive would be entitled severance
in the amount of six months of base salary and accelerated vesting for equity awards that would have vested within six months
of the termination date; provided that, in the event of a termination by us without cause or by the executive for good reason
within 24 months following a change in control of the company, as defined in the agreement, the executive will be entitled to
nine months of severance and accelerated equity award vesting of 12 months.
Outstanding
Equity Awards at Fiscal Year End
The
following table sets forth certain information, on an award-by-award basis, concerning unexercised options to purchase common
stock, restricted shares of common stock and common stock that has not yet vested for each named executive officer and outstanding
as of December 31, 2019.
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR END - 2019
Name and Position
|
|
Number of Securities Underlying Unexercised Options (#) Exercisable
|
|
|
Number of Securities Underlying Unexerised
Options (#) Unexercisable
|
|
|
Option
Exercise
Price ($)
|
|
|
Option
Expiration
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
Ashleigh Palmer
|
|
|
338,575
|
|
|
|
203,145
|
(1)
|
|
|
2.50
|
|
|
4/25/2027
|
Chief Executive Officer
|
|
|
-
|
|
|
|
400,000
|
(4)
|
|
|
12.54
|
|
|
6/24/2029
|
Andrew Drechsler
|
|
|
342,118
|
|
|
|
189,602
|
(2)
|
|
|
2.50
|
|
|
9/11/2027
|
Chief Financial Officer
|
|
|
-
|
|
|
|
400,000
|
(4)
|
|
|
12.54
|
|
|
6/24/2029
|
Francisco Leon
|
|
|
338,575
|
|
|
|
203,145
|
(1)
|
|
|
2.50
|
|
|
4/25/2027
|
Chief Scientific Officer
|
|
|
-
|
|
|
|
400,000
|
(4)
|
|
|
12.54
|
|
|
6/24/2029
|
Eleanor Ramos
|
|
|
352,118
|
|
|
|
189,602
|
(3)
|
|
|
2.50
|
|
|
9/11/2027
|
Chief Medical Officer
|
|
|
-
|
|
|
|
400,000
|
(4)
|
|
|
12.54
|
|
|
6/24/2029
|
(1)
|
These
options vest in eight equal semi-annual installments beginning in October 2017 and ending in April 2021.
|
|
|
(2)
|
Forty
percent of these options will vest in four equal annual installments beginning in September 2018 and ending in September 2022.
Sixty percent of these options will vest upon the achievement of certain performance-based milestones.
|
|
|
(3)
|
Forty percent of these options will vest in four
equal annual installments beginning in July 2018 and ending in July 2022. Sixty percent of these options will vest upon the
achievement of certain performance-based milestones.
|
|
|
(4)
|
Forty
percent of these options will vest in four equal annual installments beginning in June 2020 and ending in June 2023. Sixty
percent of these options will vest upon the achievement of certain performance-based milestones.
|
Compensation
of Directors
Non-Employee
Director Compensation Policy
Our
director compensation policy provides for the following cash compensation to our non-employee directors:
|
●
|
each non-employee director receives an annual base fee of $35,000;
|
|
|
|
|
●
|
our chairman of the board of directors receives an annual fee of $30,000;
|
|
|
|
|
●
|
our chairman of our audit committee receives an annual fee of $15,000; our chairman of our compensation committee receives an annual fee of $12,000; and our chairman of our nominating and governance committee receives an annual fee of $7,500.
|
|
●
|
other members of the audit committee, compensation committee and nominating and governance committee receive an annual fee of $7,500, $6,000 and $5,000, respectively.
|
This
policy provides for the following equity compensation to our non-employee directors:
|
●
|
upon
appointment, each non-employee director receives an initial stock option grant to purchase shares of our common stock.
|
|
|
|
|
●
|
at
each annual meeting, each non-employee director will receive an annual stock option grants to purchase shares of our common
stock.
|
The
initial stock option grants for each non-employee director vest in eight equal semi-annual installments over a four-year period.
Annual stock options granted to our non-employee directors, subject to the director’s
continued service on our board, vest, or will vest, over a one-year period through the earlier of the business day before the
next annual meeting of stockholders or the first anniversary of the grant date, at which time they vest in full.
All
cash fees under the director compensation policy are paid on a quarterly basis and no per meeting fees are paid. We also reimburse
non-employee directors for reasonable expenses incurred in connection with attending Board and committee meetings.
We
will also continue to reimburse our non-employee directors for their reasonable out-of-pocket expenses incurred in attending board
and committee meetings.
Except
as set forth in the table below, the non-employee directors did not receive any cash or equity compensation during 2019. A non-employee
director is a director who is not employed by us and who does not receive compensation from us (other than for services as a director)
or has a business relationship with us that would require disclosure under certain SEC rules. Mr. Palmer, our Chief Executive
Officer and a member of our board of directors, did not receive any compensation from us during our fiscal year ended December
31, 2019 for his service as a director and is not included in the table below.
DIRECTOR
COMPENSATION
Name
|
|
Fees earned or paid in cash
($)
|
|
|
Option
Awards
($) (1)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeffery Bluestone
|
|
|
24,167
|
|
|
|
378,010
|
(2)
|
|
|
-
|
|
|
|
402,177
|
|
Avery Catlin
|
|
|
55,250
|
|
|
|
191,116
|
(3)
|
|
|
-
|
|
|
|
246,366
|
|
Anthony DiGiandomenico
|
|
|
49,625
|
|
|
|
191,116
|
(3)
|
|
|
-
|
|
|
|
240,741
|
|
Sean Doherty
|
|
|
10,486
|
|
|
|
714,649
|
(4)
|
|
|
-
|
|
|
|
725,135
|
|
Wayne Pisano
|
|
|
58,208
|
|
|
|
191,116
|
(3)
|
|
|
-
|
|
|
|
249,324
|
|
(1)
|
Represents
the aggregate grant date fair value for grants made in 2019 computed in accordance with FASB ASC Topic 718. This calculation
assumes that the non-employee director will perform the requisite service for the award to vest in full. The assumptions used
in valuing options are described in note 10 to the Company’s financial statements included in its Annual Report on Form
10-K, filed with the Securities and Exchange Commission on March 12, 2020.
|
(2)
|
Includes
Mr. Bluestone’s initial stock option grant to purchase 128,981 shares of the Company’s common stock upon commencement
of his position as director in March 2019 and his annual director’s stock option grant in June 2019 to purchase 24,000
shares of the Company’s common stock.
|
(3)
|
Includes
annual director’s stock option grant in June 2019 to purchase 24,000 shares of the Company’s common stock
|
(4)
|
Includes
Mr. Doherty’s initial stock option grant to purchase 128,981 shares of the Company’s common stock upon commencement
of his position as director in September 2019.
|