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

(Amendment No.  )

 

 

Filed by the Registrant ☒

Filed by a Party other than the Registrant ☐

Check the appropriate box:

 

☐		Preliminary Proxy Statement
☐		Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
☒		Definitive Proxy Statement
☐		Definitive Additional Materials
☐		Soliciting Material Pursuant to § 240.14a-12

Regulus Therapeutics Inc.

(Name of Registrant as Specified In Its Charter)

Not Applicable

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check all boxes that apply)

☒		No fee required.
☐		Fee paid previously with preliminary materials.
☐		Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 

REGULUS THERAPEUTICS INC.

4224 Campus Point Court, Suite 210

San Diego, California 92121

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held On May 16, 2024

Dear Stockholder:

You are cordially invited to attend the 2024 Annual Meeting of Stockholders (the “Annual Meeting”) of Regulus Therapeutics Inc., a Delaware corporation (the “Company”). The meeting will be held on May 16, 2024 at 9:00 a.m. local time at the Company’s principal executive offices located at 4224 Campus Point Court, Suite 210, San Diego, CA 92121 for the following purposes:

 

1.

To elect the ten nominees for director named herein to serve until the next annual meeting of stockholders and their successors are duly elected and qualified, or until their earlier death, resignation or removal;

 

2.

To ratify the selection by the Audit Committee of the Board of Directors of Ernst & Young LLP as the independent registered public accounting firm of the Company for its fiscal year ending December 31, 2024;

 

3.

To approve, on an advisory basis, the compensation of the Company’s named executive officers;

 

4.

To indicate, on an advisory basis, the preferred frequency of holding stockholder advisory votes on the compensation of the Company’s named executive officers;

 

5.

To approve an amendment to the Regulus Therapeutics Inc. 2019 Equity Incentive Plan (the “2019 Plan”), to, among other things, increase the number of shares of our common stock authorized for issuance under the 2019 Plan by 9,500,000 and modify the calculation of the annual automatic share reserve increase to take into account shares of common stock issuable upon conversion or exercise of convertible preferred stock and prefunded warrants; and

 

6.

To conduct any other business properly brought before the meeting.

These items of business are more fully described in the proxy statement accompanying this notice.

The record date for the annual meeting is April 18, 2024. Only stockholders of record at the close of business on that date may vote at the meeting or any adjournment thereof.

By Order of the Board of Directors

 

Christopher Aker

Corporate Secretary

San Diego, California

April 19, 2024

 

 

REGULUS THERAPEUTICS INC.

4224 Campus Pointe Court, Suite 210

San Diego, California 92121

PROXY STATEMENT

FOR THE 2024 ANNUAL MEETING OF STOCKHOLDERS

To Be Held On May 16, 2024

QUESTIONS AND ANSWERS ABOUT THESE PROXY MATERIALS AND VOTING

Why am I receiving these materials?

We have sent you these proxy materials because the Board of Directors (the “Board” or “Board of Directors”) of Regulus Therapeutics Inc. (sometimes referred to as “we,” “us,” the “Company” or “Regulus”) is soliciting your proxy to vote at the 2024 Annual Meeting of Stockholders, including at any adjournments or postponements of the meeting. You are invited to attend the annual meeting to vote on the proposals described in this proxy statement. However, you do not need to attend the meeting to vote your shares. Instead, you may simply complete, sign and return the enclosed proxy card, or follow the instructions below to submit your proxy over the phone or through the internet.

We intend to first mail these proxy materials on or about April 24, 2024 to all stockholders of record entitled to vote at the annual meeting.

How do I attend the annual meeting?

The meeting will be held on May 16, 2024 at 9:00 a.m. local time at 4224 Campus Point Court, Suite 210, San Diego, California 92121. Directions to the annual meeting may be found at www.regulusrx.com. Information on how to vote in person at the annual meeting is discussed below.

Who can vote at the annual meeting?

Only stockholders of record at the close of business on April 18, 2024 will be entitled to vote at the annual meeting. On this record date, there were 65,465,251 shares of common stock outstanding and entitled to vote.

Stockholder of Record: Shares Registered in Your Name

If on April 18, 2024, your shares were registered directly in your name with the Company’s transfer agent, Computershare, then you are a stockholder of record. As a stockholder of record, you may vote in person at the meeting or vote by proxy. Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted.

Beneficial Owner: Shares Registered in the Name of a Broker or Bank

If on April 18, 2024, your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials should be forwarded to you by that organization. The organization holding your account is considered to be the stockholder of record for purposes of voting at the annual meeting. As a beneficial owner, you have the right to direct your broker or other agent regarding how to vote the shares in your account. You are also invited to attend the annual meeting. However, since you are not the stockholder of record, you may not vote your shares in person at the meeting unless you request and obtain a valid proxy from your broker or other agent.

 

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What am I voting on?

There are five matters scheduled for a vote:

 

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Proposal 1: To elect the Board’s ten nominees for director named herein to serve until the next annual meeting of stockholders and until their successors are duly elected and qualified, or until their earlier death, resignation or removal (“Proposal 1”);

 

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Proposal 2: To ratify the selection by the Audit Committee of the Board of Directors of Ernst & Young LLP as the independent registered public accounting firm of the Company for its fiscal year ending December 31, 2024 (“Proposal 2”);

 

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Proposal 3: To approve, on an advisory basis, the compensation of the Company’s named executive officers, as disclosed in this proxy statement (“Proposal 3”);

 

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Proposal 4: To indicate, on an advisory basis, the preferred frequency of holding stockholder advisory votes on the compensation of the Company’s named executive officers (“Proposal 4”); and

 

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Proposal 5: To approve an amendment to the Regulus Therapeutics Inc. 2019 Equity Incentive Plan (the “2019 Plan”), to, among other things, increase the number of shares of our common stock authorized for issuance under the 2019 Plan by 9,500,000 and modify the calculation of the annual automatic share reserve increase to take into account shares of common stock issuable upon conversion or exercise of convertible preferred stock and prefunded warrants (as amended, the “Amended 2019 Plan”) (“Proposal 5”).

What if another matter is properly brought before the meeting?

The Board of Directors knows of no other matters that will be presented for consideration at the annual meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the proxy to vote on those matters in accordance with their best judgment. Discretionary authority for them to do so is provided for in the proxy card.

How do I vote?

You may either vote “For” all the nominees to the Board of Directors or you may “Withhold” your vote for any nominee you specify. With regard to Proposal 4, the advisory vote on how frequently we should solicit stockholder advisory approval of executive compensation, you may vote for any one of the following: one year, two years or three years, or you may abstain from voting on that matter. For all other matters, you may vote “For” or “Against” or abstain from voting.

The procedures for voting are fairly simple:

Stockholder of Record: Shares Registered in Your Name

If you are a stockholder of record, you may vote in person at the annual meeting, over the telephone, through the internet or vote by proxy using the enclosed proxy card.

Whether or not you plan to attend the meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the meeting and vote in person even if you have already voted by proxy.

 

•

To vote using the proxy card, simply complete, sign and date the enclosed proxy card and return it promptly in the postage-paid envelope provided. If you return your signed proxy card to us before the annual meeting, we will vote your shares as you direct.

 

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To vote over the telephone, dial toll-free 1-800-652-8683 using a touch-tone phone and follow the recorded instructions. You will be asked to provide the company number and control number from the enclosed proxy card. Your vote must be received by 11:59 p.m. Eastern Time on May 15, 2024 to be counted.

 

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To vote through the internet, go to www.investorvote.com/RGLS to complete an electronic proxy card. You will be asked to provide the company number and control number from the enclosed proxy card. Your vote must be received by 11:59 p.m. Eastern Time on May 15, 2024 to be counted.

 

•

To vote in person, come to the annual meeting and we will give you a ballot when you arrive.

Beneficial Owner: Shares Registered in the Name of Broker or Bank

If you are a beneficial owner of shares registered in the name of your broker, bank, or other agent, you should have received a voting instruction form with these proxy materials from that organization rather than from Regulus. You must follow these instructions to ensure that your vote is counted. To vote in person at the annual meeting, you must obtain a valid proxy from your broker, bank or other agent. Follow the instructions from your broker or bank included with these proxy materials, or contact your broker or bank to request a proxy form.

 

How many votes do I have?

On each matter to be voted upon, you have one vote for each share of common stock you owned as of the close of business on April 18, 2024.

What happens if I do not vote?

Stockholder of Record: Shares Registered in Your Name

If you are a stockholder of record and do not vote by completing a proxy card, or by telephone, through the internet, or in person at the annual meeting, your shares will not be voted.

Beneficial Owner: Shares Registered in the Name of Broker or Bank

If you are a beneficial owner and do not instruct your broker, bank, or other agent how to vote your shares, the question of whether your broker or nominee will still be able to vote your shares depends on whether the particular proposal is considered to be a routine matter under applicable rules. Brokers and nominees can use their discretion to vote uninstructed shares with respect to matters that are considered to be routine under applicable rules, but not with respect to non-routine matters. Under applicable rules and interpretations, non-routine matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, elections of directors (even if not contested), executive compensation (including any advisory stockholder votes on executive compensation and on the frequency of stockholder votes on executive compensation), and certain corporate governance proposals, even if management-supported. Accordingly, your broker or nominee may not vote your shares on Proposals 1, 3, 4 or 5, without your instructions, but may vote your shares on Proposal 2.

If you are a beneficial owner of shares held in street name, and you do not plan to attend the annual meeting, in order to ensure your shares are voted in the way you would prefer, you must provide voting instructions to your broker, bank or other agent by the deadline provided in the materials you receive from your broker, bank or other agent.

What if I return a proxy card or otherwise vote but do not make specific choices?

If you return a signed and dated proxy card or otherwise vote without marking voting selections, your shares will be voted, as applicable, “For” the election of all ten nominees for director named herein, as described in

 

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Proposal 1, “For” the ratification of the selection by the Audit Committee of the Board of Ernst & Young LLP as the independent registered public accounting firm of the Company for its fiscal year ending December 31, 2024, as described in Proposal 2, “For” the approval of the stockholder advisory vote on the compensation of our named executive officers, as described in Proposal 3, for “One Year” as the preferred frequency of stockholder advisory votes to approve executive compensation, as described in Proposal 4, and “For” the approval of the amendment to our 2019 Equity Incentive Plan, as described in Proposal 5. If any other matter is properly presented at the meeting, your proxyholder (one of the individuals named on your proxy card) will vote your shares using his or her best judgment.

Who is paying for this proxy solicitation?

We will pay for the entire cost of soliciting proxies. In addition to these proxy materials, our directors and employees may also solicit proxies in person, by telephone, or by other means of communication. Directors and employees will not be paid any additional compensation for soliciting proxies. We may also reimburse brokerage firms, banks and other agents for the cost of forwarding proxy materials to beneficial owners.

What does it mean if I receive more than one set of proxy materials?

If you receive more than one set of proxy materials, your shares may be registered in more than one name or in different accounts. Please follow the voting instructions on the proxy cards in the proxy materials to ensure that all of your shares are voted.

Can I change my vote after submitting my proxy?

Stockholder of Record: Shares Registered in Your Name

Yes. You can revoke your proxy at any time before the final vote at the meeting. If you are the record holder of your shares, you may revoke your proxy in any one of the following ways:

 

•

You may submit a properly completed proxy card with a later date.

 

•

You may grant a subsequent proxy by telephone or through the internet.

 

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You may send a timely written notice that you are revoking your proxy to Regulus Therapeutics Inc.’s Secretary at its principal executive offices located at 4224 Campus Point Court, Suite 210, San Diego, California 92121.

 

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You may attend the annual meeting and vote in person. Simply attending the meeting will not, by itself, revoke your proxy.

Your most current proxy card or telephone or internet proxy is the one that is counted.

Beneficial Owner: Shares Registered in the Name of Broker or Bank

If your shares are held by your broker or bank as a nominee or agent, you should follow the instructions provided by your broker or bank.

When are stockholder proposals and director nominations due for next year’s annual meeting?

To be considered for inclusion in the Company’s proxy materials for next year’s annual meeting of stockholders, your proposal must be submitted in writing by December 25, 2024 to the attention of the Secretary of Regulus Therapeutics Inc. at 4224 Campus Point Court, Suite 210, San Diego, California 92121. The submission of a stockholder proposal does not guarantee that it will be included in the Company’s proxy materials.

 

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If you wish to submit a proposal (including a director nomination) at the meeting that is not to be included in the Company’s proxy materials for next year’s annual meeting, your written request must be received by the Secretary for Regulus Therapeutics Inc. at 4224 Campus Point Court, Suite 210, San Diego, California 92121 between January 16, 2025 and February 15, 2025. You are also advised to review the Company’s Bylaws, which contain additional requirements about advance notice of stockholder proposals and director nominations. In addition to satisfying the foregoing requirements under the Company’s Bylaws, the notice given by any stockholder who intends to solicit proxies in support of director nominees other than the Company’s nominees must comply with any additional requirements of Rule 14a-19 under the Securities Exchange Act of 1934, as amended.

How are votes counted?

Votes will be counted by the inspector of election appointed for the meeting, who will separately count, (1) for Proposal 1, votes “For,” “Withhold” and broker non-votes, (2) for Proposal 2, votes “For,” “Against,” and abstentions, (3) for Proposal 3, votes “For,” “Against,” abstentions and broker non-votes, (4) for Proposal 4, votes for frequencies of “One Year,” “Two Years” and “Three Years,” abstentions and broker non-votes, and (5) for Proposal 5, votes “For,” “Against,” abstentions and broker non-votes. Abstentions will be counted towards the vote total for Proposals 2 and 3 and will have the same effect as “Against” votes. Abstentions will be counted towards the vote total for Proposal 4 and will have the same effect as votes “Against” each of the proposed voting frequencies. Abstentions will have no effect on Proposal 5. Broker non-votes will be counted for purposes of determining the presence of a quorum but will not be counted towards the vote total for and will have no effect on any proposal. Proposal 2 is considered a routine matter on which a broker, bank or other agent has discretionary authority to vote, so we do not expect there to be any broker non-votes on that proposal.

What are “broker non-votes”?

As discussed above, when a beneficial owner of shares held in “street name” does not give instructions to the broker or nominee holding the shares as to how to vote on matters deemed to be non-routine under applicable rules, the broker or nominee may not vote the shares. These unvoted shares are counted as “broker non-votes.”

How many votes are needed to approve each proposal?

 

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For Proposal 1, regarding the election of directors, the ten nominees receiving the most “For” votes from the holders of shares present in person or represented by proxy and entitled to vote on the election of directors will be elected. Only votes “For” will affect the outcome. However, if the number of votes “For” any of the ten nominees does not exceed the number of “Withheld” votes cast with respect to such nominee’s election (from the holders of votes of shares either present in person or represented by proxy and entitled to vote), such nominee will promptly tender his or her resignation as a director, and the Nominating and Corporate Governance Committee of the Board will make a recommendation to the Board as to whether to accept or reject such director’s resignation.

 

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To be approved, Proposal 2, regarding the ratification of the selection by the Audit Committee of the Board of Directors of Ernst & Young LLP as the independent registered public accounting firm of the Company for its fiscal year ending December 31, 2024, must receive “For” votes from the holders of a majority of shares present in person or represented by proxy and entitled to vote generally on the subject matter. Abstentions will have the same effect as “Against” votes. We do not expect there to be any broker non-votes on Proposal 2.

 

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To be approved, Proposal 3, regarding the approval on an advisory basis of the compensation of the Company’s named executive officers, must receive “For” votes from the holders of a majority of shares present in person or represented by proxy and entitled to vote generally on the subject matter. Abstentions will have the same effect as “Against” votes. Broker non-votes will have no effect.

 

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To be approved, Proposal 4, an advisory vote on the frequency of advisory voting on the compensation paid to the Company’s named executive officers, a frequency must receive “For” votes from the holders of a majority of shares present in person or represented by proxy and entitled to vote generally on the subject matter. Abstentions will have the same effect as “Against” votes for each of the proposed frequencies. However if no one frequency receives “For” votes from the holders of a majority of shares present in person or represented by proxy and entitled to vote generally on the subject matter, we will consider the frequency receiving the highest number of affirmative votes to be the frequency preferred by our stockholders. Broker non-votes will have no effect.

 

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Pursuant to Nasdaq Listing Rules, to be approved, Proposal 5, regarding the approval of the amendment to our 2019 Equity Incentive Plan, must receive “For” votes from a majority of the votes cast on the proposal. Abstentions and broker non-votes will have no effect.

What is the quorum requirement?

A quorum of stockholders is necessary to hold a valid meeting. A quorum will be present if stockholders holding at least a majority of the shares outstanding on the record date and entitled to vote are present at the meeting in person or represented by proxy. On the record date, there were 65,465,251 shares outstanding and entitled to vote. Thus, the holders of 32,732,626 shares must be present in person or represented by proxy at the meeting to have a quorum.

Your shares will be counted towards the quorum only if you submit a valid proxy (or one is submitted on your behalf by your broker, bank or other nominee) or if you vote in person at the meeting. Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, the chair of the meeting or the holders of a majority of shares present at the meeting in person or represented by proxy may adjourn the meeting to another date.

How can I find out the results of the voting at the annual meeting?

Preliminary voting results will be announced at the annual meeting. In addition, final voting results will be published in a current report on Form 8-K that we expect to file within four business days after the completion of the annual meeting. If final voting results are not available to us in time to file a Form 8-K within four business days after the meeting, we intend to file a Form 8-K to publish preliminary results and, within four business days after the final results are known to us, file an additional Form 8-K to publish the final results.

What proxy materials are available on the internet?

The proxy statement and annual report to stockholder are available at www.edocumentview.com/RGLS.

 

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PROPOSAL 1

ELECTION OF DIRECTORS

Our Board of Directors currently consists of ten directors. There are ten nominees for director this year, consisting of our incumbent directors. Each director to be elected and qualified will hold office until the next annual meeting of stockholders and until his or her successor is elected, or, if sooner, until the director’s death, resignation or removal. Each of the nominees listed below is currently a director of the Company who was previously elected by the stockholders, except for Dr. Klassen who was appointed by the Board in June 2023. Directors are elected by a plurality of the votes of the holders of shares present in person or represented by proxy and entitled to vote on the election of directors. The ten nominees receiving the highest number of affirmative votes will be elected. Pursuant to the Company’s Corporate Governance Principles, if the number of votes “For” any of the ten nominees does not exceed a majority of the total number of votes cast (excluding abstentions and broker non-votes) with respect to such nominee’s election (from the holders of votes of shares either present in person or represented by proxy and entitled to vote on the matter), such nominee will promptly tender his or her resignation as a director, and the Nominating and Corporate Governance Committee of the Board will make a recommendation to the Board as to whether to accept or reject such director’s resignation. The Board may accept or reject the resignation in its discretion. Shares represented by executed proxies will be voted, if authority to do so is not withheld, for the election of the ten nominees named below. If any nominee becomes unavailable for election as a result of an unexpected occurrence, your shares may be voted for the election of a substitute nominee proposed by Regulus. Each person nominated for election has agreed to serve if elected. The Company’s management has no reason to believe that any nominee will be unable to serve.

It is the Company’s policy to invite nominees for directors to attend the annual meeting. None of our current directors attended our 2023 Annual Meeting of Stockholders, except for Mr. Hagan.

Nominees

The following is a brief biography of each nominee for director and a discussion of the specific experience, qualifications, attributes or skills of each nominee that led the Nominating and Corporate Governance Committee to recommend that person as a nominee for director, as of the date of this proxy statement.

The Nominating and Corporate Governance Committee seeks to assemble a Board that, as a whole, possesses the appropriate balance of professional and industry knowledge, financial expertise and high-level management experience necessary to oversee and direct the Company’s business. To that end, the Nominating and Corporate Governance Committee has identified and evaluated nominees in the broader context of the Board’s overall composition, with the goal of recruiting members who complement and strengthen the skills of other members and who also exhibit integrity, collegiality, sound business judgment and other qualities that the Nominating and Corporate Governance Committee views as critical to effective functioning of the Board. The brief biographies below include information, as of the date of this proxy statement, regarding the specific and particular experience, qualifications, attributes or skills of each director or nominee that led the Nominating and Corporate Governance Committee to recommend that person as a nominee. However, each of the members of the Nominating and Corporate Governance Committee may have a variety of reasons why he or she believes a

 

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particular person would be an appropriate nominee for the Board, and these views may differ from the views of other members.

 

Name		Age				Position Held With the Company
Dr. Stelios Papadopoulos			75			Chair of the Board of Directors
Ms. Kathryn J. Collier			56			Director
Dr. David Baltimore			86			Director
Mr. Joseph P. Hagan			55			Director and Chief Executive Officer
Dr. Alice S. Huang			85			Director
Dr. Preston S. Klassen			55			Director, President and Head of Research & Dev.
Mr. Jake R. Nunn			53			Director
Dr. William H. Rastetter			76			Director
Dr. Hugh Rosen			65			Director
Ms. Pascale Witz, MBA, MSc			57			Director

Stelios Papadopoulos, Ph.D. Chair of the Board, has served on our Board of Directors since our conversion to a corporation in January 2009 and as our Chair since June 2013, and prior to that was a director of Regulus Therapeutics LLC since July 2008. Since December 1994, Dr. Papadopoulos has served as a director and, since 1998, as Chair of the Board for Exelixis, Inc., a publicly held biotechnology company, which he co-founded. From July 2008 until June 2023, Dr. Papadopoulos served as a member of the board of directors of Biogen Inc. (formerly Biogen Idec Inc.), a publicly held biopharmaceutical company, and served as its Chair of the board of directors from June 2014 until June 2023. From August 2020 until June 2023, Dr. Papadopoulos served as Chair of the board of Eucrates Biomedical Acquisition Corp., a special purpose acquisition corporation. From 2000 to 2006, Dr. Papadopoulos served as Vice Chair with Cowen and Co., LLC, an investment banking firm. From 1987 to 2000, Dr. Papadopoulos served in several positions with PaineWebber, Incorporated, most recently as Chair of PaineWebber Development Corp., a PaineWebber subsidiary focusing on biotechnology. Dr. Papadopoulos holds an M.S. in Physics, a Ph.D. in Biophysics and an MBA in Finance from New York University. Our Nominating and Corporate Governance Committee believes that Dr. Papadopoulos is qualified to serve on our Board of Directors due to his knowledge and expertise regarding the biotechnology and healthcare industries, his broad leadership experience on various boards and his experience with financial matters.

David Baltimore, Ph.D. has served on our Board of Directors since our conversion to a corporation in January 2009, and prior to that was a director of Regulus Therapeutics LLC since November 2007. Dr. Baltimore is currently President Emeritus and Judge Shirley Hufstedler Distinguished Professor of Biology at the California Institute of Technology (“Caltech”), and before that from 1997 to 2006, Dr. Baltimore served as President of the California Institute of Technology. From 1968 to 1972, Dr. Baltimore served as an associate professor at the Massachusetts Institute of Technology, and from 1972 to 1997 was a professor at the Massachusetts Institute of Technology. From 1990 to 1994, Dr. Baltimore served as professor at The Rockefeller University where he also served as the President from July 1990 to December 1991. Dr. Baltimore served as a director of Amgen Inc., a publicly held biotechnology company from 1997 to May 2018, and also served as a director of Immune Design Corp., a publicly held biotechnology company, from 1997 until its acquisition by Merck & Co., Inc. in February 2019. In 1975, Dr. Baltimore received the Nobel Prize in Medicine as a co-recipient. Dr. Baltimore holds a Ph.D. in Biology from The Rockefeller University and a B.A. with High Honors in Chemistry from Swarthmore College. Our Nominating and Corporate Governance Committee believes that Dr. Baltimore is qualified to serve on our Board of Directors due to the many years Dr. Baltimore has spent in scientific academia, which has provided him with a deep understanding of our industry and our activities.

Kathryn J. Collier has served on our Board of Directors since April 2018. From March 2022 until January 2024, Ms. Collier served as the Senior Vice President of Corporate Finance for Pattern Energy Group LP, a privately held renewable energy company. From July 2019 to March 2022, Ms. Collier served as the Vice President for Audit Services of Sempra Energy (“Sempra”), a publicly traded energy services holding company overseeing the internal audit function for Sempra, including the Financial Leadership Program and audit

 

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oversight of Sempra’s operating companies. From March 2019 to July 2019, Ms. Collier served as the Chief Strategy and Origination Officer for Sempra LNG, a wholly owned subsidiary of Sempra. From August 2018 to March 2019, Ms. Collier served as Chief Financial Officer and Chief Administrative Officer for Sempra North America Infrastructure. Ms. Collier also previously served as Vice President and Treasurer for Sempra from April 2012 to August 2018. Prior to joining Sempra in 2012, Ms. Collier held several executive positions within global corporation and investment banking at Bank of America Merrill Lynch. Ms. Collier holds a B.S. in accounting from Valparaiso University. Our Nominating and Corporate Governance Committee believes that Ms. Collier is qualified to serve on our Board of Directors due to her extensive financial and operational experience, her experience in investment banking and her corporate governance experience with various boards.

Joseph P. Hagan has served as our Chief Executive Officer and principal executive officer since May 2017. Mr. Hagan previously served as our President and Chief Executive Officer from May 2017 until June 2023 and our Chief Operating Officer, principal financial officer and principal accounting officer from January 2016 to May 2017. From June 2011 through December 2015, Mr. Hagan served as the Executive Vice President, Chief Financial Officer and Chief Business Officer of Orexigen Therapeutics, Inc. (“Orexigen”). From May 2009 to June 2011, Mr. Hagan served as Orexigen’s Senior Vice President, Corporate Development, Strategy and Communications. From September 1998 to April 2008, Mr. Hagan served as Managing Director of Amgen Ventures. Prior to starting the Amgen Ventures Fund, Mr. Hagan served as Head of corporate development for Amgen Inc. (“Amgen”). Before joining Amgen, Mr. Hagan spent five years in the bioengineering labs at Genzyme and Advanced Tissue Sciences. Mr. Hagan served on the board of directors of Aurinia Pharmaceuticals, Inc. from February 2018 to June 2023, and he also previously served on the board of directors of Zosano Pharma Corp., from May 2015 to May 2022. He received an M.B.A. from Northeastern University and a B.S. in Physiology and Neuroscience from the University of California, San Diego. Our Nominating and Corporate Governance Committee believes that Mr. Hagan’s expertise in business development, commercialization and financing of public companies qualify him to serve on our Board of Directors.

Alice S. Huang, Ph.D. has served on our Board of Directors since January 2021. Dr. Huang is currently Senior Faculty Associate of Biology and Biological Engineering at the California Institute of Technology (“Caltech”), having joined Caltech in July 1997. Previous to her tenure at Caltech she was Dean for Science and Professor of Biology at New York University, Professor of Microbiology and Molecular Genetics at Harvard Medical School and Director, Laboratories of Infectious Disease at Boston Children’s Hospital. She also served as director of Virus-Host Interactions in Cancer for 15 years, a training program at Harvard funded by the National Cancer Institute. Dr. Huang has served on the Board of Trustees of the Keck Graduate Institute since 1998 and has previously served on the Board of Trustees of Waksman Foundation for Microbiology, the Rockefeller Foundation, Public Agenda, Johns Hopkins University, the Health Effects Institute, and the University of Massachusetts. Dr. Huang is serving on the advisory boards of the Institute for Basic Biomedical Sciences at Johns Hopkins University School of Medicine since 2008 as well as the Schlesinger Library at Radcliffe Institute since 2018. She has previously served on the advisory boards of the National Foundation for Infectious Diseases, the US Army Medical Research and Development Command and Food and Drug Administration. She has been a fellow of the American Association of Women in Science since 1978, American Academy of Microbiology since 1982, Academia Sinica in Taiwan since July 1990, and the American Association for the Advancement of Science since 2000, serving as its president from 2010 to 2011. Dr. Huang received her B.A., M.A. and Ph.D. degrees from the Johns Hopkins University. Our Nominating and Corporate Governance Committee believes that Dr. Huang is qualified to serve on our Board of Directors due to the many years she has spent in scientific academia, which has provided her with a deep understanding of our scientific activities.

Preston S. Klassen, M.D. Dr. Klassen has served on our Board and as our President and Head of Research and Development since June 2023. Dr. Klassen previously served as President and Chief Operating Officer of Zura Bio Limited from February to April 2023. From June 2020 to February 2023, Dr. Klassen served as President and Chief Executive Officer and as a member of the Board of Directors of Metacrine, Inc., a biopharmaceutical company. From March 2017 to June 2020, Dr. Klassen served as Executive Vice President,

 

9

Head of Research and Development and Chief Medical Officer of Arena Pharmaceuticals, Inc., a biopharmaceutical company. From June 2016 to March 2017, he was Chief Medical Officer of Laboratoris Sanifit S.L., a biotechnology company, and prior to that, from November 2009 to May 2016, was Executive Vice President, Head of Global Development at Orexigen Therapeutics, Inc. Dr. Klassen also held several positions of increasing responsibility at Amgen Inc., including Therapeutic Area Head for Nephrology. Before joining Amgen, he was a faculty member in the Division of Nephrology at Duke University Medical Center. From February 2014 to May 2020, Dr. Klassen served on the board of directors of Conatus Pharmaceuticals Inc., a publicly traded biotechnology company that merged with Histogen Inc. in May 2020. Dr. Klassen holds a B.S. in Chemistry from Central University of Iowa. Dr. Klassen received his medical degree from the University of Nebraska College of Medicine and completed his residency in internal medicine, fellowship in nephrology, and Master of Health Sciences degree at Duke University. Our Nominating and Corporate Governance Committee believes that Dr. Klassen’s expertise in nephrology, business development, commercialization and research and development qualify him to serve on our Board of Directors.

Jake R. Nunn has served on our Board of Directors since June 2019. Since January 2023, Mr. Nunn has served as a Venture Partner with SR One Capital Management, a venture capital firm. Previously, Mr. Nunn was a venture advisor at New Enterprise Associates, Inc. (“NEA”), a venture capital firm, where he was a partner from June 2006 until January 2019. Prior to joining NEA, he served as a partner and an analyst for the MPM BioEquities Fund, a life sciences fund at MPM Capital, L.P., a private equity firm. Previously, he was a healthcare research analyst and portfolio manager at Franklin Templeton Investments and an investment banker with Alex Brown & Sons. Mr. Nunn has served on the board of directors of Trevena, Inc., a publicly held biotechnology company focused on the central nervous system since July 2013, Addex Therapeutics Ltd., a publicly-held biopharmaceutical company focused on allosteric modulators for neurological disorders since June 2018. Mr. Nunn served on the board of directors of Oventus Medical Ltd., a publicly held medical device company from February 2020 until September 2023 and Hexima Limited, a publicly-held biopharmaceutical company focused on novel anti-fungals from September 2021 until June 2022. Mr. Nunn also served on the board of directors of Dermira, Inc., a publicly held biopharmaceutical company focused on dermatology, from May 2011 until its acquisition by Eli Lilly and Company in February 2020. From 2009 to May 2015, Mr. Nunn served on the board of directors of Hyperion Therapeutics, Inc. and from 2008 to February 2016, Mr. Nunn served on the board of directors of TriVascular Technologies, Inc. Mr. Nunn received his A.B. in economics from Dartmouth College and his M.B.A. from the Stanford Graduate School of Business. He also holds the Chartered Financial Analyst designation and is a member of the CFA Society of San Francisco. Our Nominating and Corporate Governance Committee believes that Mr. Nunn is qualified to serve on our Board of Directors due to his extensive financial experience, his experience in investment banking and his corporate governance experience with various boards.

William H. Rastetter, Ph.D. has served on our Board of Directors since April 2013. Dr. Rastetter is co-founder and Chairman of the non-profit, San Diego Squared, that focuses on preparing students from underserved communities for careers in STEM. From 2006 to February 2013, Dr. Rastetter served as a partner in the venture capital firm, Venrock. He served as Chief Executive Officer of IDEC Pharmaceuticals Corp. (“IDEC Pharmaceuticals”) from December 1986 through November 2003, and as Chair from May 1996 to November 2003. Upon the merger of IDEC Pharmaceuticals and Biogen Inc. in November 2003, Dr. Rastetter served as Executive Chair of Biogen Idec until the end of 2005. Dr. Rastetter served as Chair of the board of Illumina, Inc., a publicly held biotechnology company, from 2005 to January 2016 and served on its board of directors from 1998 to January 2016. He was a founder of Receptos, Inc. in 2009 and served as its Chair until the sale of the publicly held company to Celgene Corporation in 2015. Currently, he has served as the Chair of the board of directors of Fate Therapeutics, Inc., a publicly held biotechnology company, since November 2011; Chair of the board of directors of Neurocrine Biosciences, Inc., a publicly held biotechnology company, since May 2011 and on its board of directors since February 2010; on the board of directors of Grail, Inc., a privately held company, since January 2016, and as its Chair from August 2017 to November 2018. Dr. Rastetter served on the board of directors of Cerulean Pharma Inc. (“Cerulean”), a publicly held biotechnology company since January 2014, as its lead independent director from April 2014 to June 2016, and as its Chair from June 2016 until July 2017 when

 

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Cerulean and Daré Bioscience Inc. completed a reverse merger and he currently serves as Chair of the board of the surviving company, Daré Bioscience Inc., a publicly-traded company. In addition, he serves as an advisor to Illumina Ventures. He is the author of numerous scientific papers and patent applications in the fields of organic and bioorganic chemistry, protein and enzyme engineering, and biotechnology. Dr. Rastetter holds an S.B. in Chemistry from the Massachusetts Institute of Technology and received his M.A. and Ph.D. in Chemistry from Harvard University. Our Nominating and Corporate Governance Committee believes that Dr. Rastetter’s knowledge and expertise regarding the biotechnology industry and his leadership experience on various biotechnology company boards of directors qualifies him to serve on our Board of Directors.

Hugh Rosen, M.D., Ph.D. has served on our Board of Directors since June 2016. Dr. Rosen has served as a professor at the Scripps Research Institute of La Jolla (“TSRI”) since 2002 and as its Chair of Molecular and Cellular Biology since August 2023. From April 2017 until March 2023, Dr. Rosen served as the President and Chair of the Board of ActivX Biosciences, Inc., a wholly owned biopharmaceutical subsidiary of Kyorin Pharmaceutical Co., Ltd. Prior to joining TSRI, Dr. Rosen served in various capacities with Merck Research Laboratories most recently serving as Executive Director in Immunology, Rheumatology and Infectious Diseases and Chair of the Worldwide Business Strategy Team for Antibacterials and Antifungals, reporting to the Management Committee. Dr. Rosen was a scientific founder of Receptos, Inc., now a wholly owned biopharmaceutical subsidiary of Celgene Corporation, and of BlackThorn Therapeutics, now Neumora Therapeutics, Inc., a publicly held biopharmaceutical company. He received his M.D. from the University of Cape Town, South Africa and his Ph.D. in Physiological Sciences from Oxford. Our Nominating and Corporate Governance Committee believes that Dr. Rosen is qualified to serve on our Board of Directors due to the many years Dr. Rosen has spent in scientific academia as well as the biopharmaceutical industry, which has provided him with a deep understanding of our industry and our activities.

Pascale Witz, MBA, MSc has served on our Board of Directors since June 2017. Ms. Witz is the founder and since November 2016, the president of PWH Advisors, a consultancy firm advising management at life science companies and investment firms. From September 2015 through May 2016, Ms. Witz served as the Executive Vice President, Diabetes & Cardiovascular for Sanofi, S.A. (“Sanofi”). Prior to that position, Ms. Witz served as the Executive Vice President, Global Divisions and Strategic Development, commencing in July 2013. During her tenure at Sanofi, she launched multiple medicines across three continents, and strengthened the pipeline through licensing and partnerships. From 2009 to 2013, Ms. Witz served as President and CEO of General Electric’s (“GE”) Pharmaceutical Diagnostics, an integrated pharmaceutical organization. Ms. Witz joined GE Healthcare in 1996, where she held various positions of increasing responsibilities and lead global businesses based out of the USA, France and the UK. She formerly worked for Becton Dickinson Pharmaceutical Systems from 1991 to 1996. Ms. Witz has served on the board of Fresenius Medical Care AG & Co. KGaA, since May 2016, and Revvity, Inc. (formerly PerkinElmer, Inc.), since October 2017. Ms. Witz also served on the board of Horizon Pharma from August 2017 until its acquisition by Amgen, Inc. in October 2023, TESARO, Inc., from May 2018 until its acquisition by GlaxoSmithKline plc in January 2019, and Savencia SA from May 2016 to April 2018. Ms. Witz received her MBA from INSEAD, Fountainbleu, France and her M.S. in Biochemistry from the Institut National des Sciences Appliquées (INSA), Lyon, France. She was also a Ph.D. student in Molecular Biology at the Centre National de la Recherche Scientifique, Strasbourg, France. Our Nominating and Corporate Governance Committee believes that Ms. Witz is qualified to serve on our Board of Directors due to her knowledge, expertise and prior employment in the pharmaceutical industry and her experience on other company boards, which has provided her with a deep understanding of our industry and our activities.

THE BOARD OF DIRECTORS RECOMMENDS

A VOTE FOR EACH NAMED NOMINEE

 

11

INDEPENDENCE OF THE BOARD OF DIRECTORS

As required under the Nasdaq Stock Market (“Nasdaq”) listing standards, a majority of the members of a listed company’s Board of Directors must qualify as “independent,” as affirmatively determined by the Board of Directors. The Board consults with the Company’s counsel to ensure that the Board’s determinations are consistent with relevant securities and other laws and regulations regarding the definition of “independent,” including those set forth in pertinent listing standards of Nasdaq, as in effect from time to time.

Consistent with these considerations, after review of all relevant identified transactions or relationships between each director, or any of his family members, and the Company, its senior management and its independent auditors, the Board has affirmatively determined that all of our directors, except for Mr. Hagan and Dr. Klassen who are executive officers of the Company, are independent directors within the meaning of the applicable Nasdaq listing standards.

FAMILY RELATIONSHIPS

Except for David Baltimore, Ph.D. and Alice S. Huang, Ph.D., who are spouses, there are no family relationships between any of our directors or executive officers.

BOARD LEADERSHIP STRUCTURE

Our Board of Directors is currently chaired by Stelios Papadopoulos, Ph.D. As a general policy, our Board of Directors believes that separation of the positions of Chair and Chief Executive Officer reinforces the independence of the Board of Directors from management, creates an environment that encourages objective oversight of management’s performance and enhances the effectiveness of the Board of Directors as a whole. As such, Mr. Hagan serves as our Chief Executive Officer while Dr. Papadopoulos serves as our Chair of the Board of Directors but is not an officer. We expect and intend the positions of Chair of the Board of Directors and Chief Executive Officer to continue to be held by separate individuals in the future.

ROLE OF THE BOARD IN RISK OVERSIGHT

One of the key functions of our Board of Directors is informed oversight of our risk management process. The Board of Directors does not have a standing risk management committee, but rather administers this oversight function directly through the Board of Directors as a whole, as well as through various standing committees of our Board of Directors that address risks inherent in their respective areas of oversight. In particular, our Board of Directors is responsible for monitoring and assessing strategic risk exposure, and our Audit Committee has the responsibility to consider and discuss our major financial risk exposures and the steps our management has taken to monitor and control these exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. The Audit Committee also monitors compliance with legal and regulatory requirements, and oversees our cybersecurity risk management processes. Our Nominating and Corporate Governance Committee monitors the effectiveness of our corporate governance practices, including whether they are successful in preventing illegal or improper liability-creating conduct. Our Compensation Committee assesses and monitors whether any of our compensation policies and programs has the potential to encourage excessive risk-taking.

MEETINGS OF THE BOARD OF DIRECTORS

The Board of Directors met six times during the last fiscal year and four times in executive session. All directors who served in 2023 attended at least 75% of the aggregate number of meetings of the Board and of the committees on which they served, held during the portion of the last fiscal year for which they were directors or committee members, respectively.

 

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INFORMATION REGARDING COMMITTEES OF THE BOARD OF DIRECTORS

The Board maintains an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The following table provides membership and meeting information for the year ended December 31, 2023 for each of the Board committees:

 

Name

Audit

Compensation

Nominating and Corporate Governance

Dr. David Baltimore

X

*

Kathryn J. Collier

X

*

Dr. Alice S. Huang

X

Jake Nunn

X

Dr. Stelios Papadopoulos

X

X

Dr. William H. Rastetter

X

*

Dr. Hugh Rosen

X

Pascale Witz

X

Total meetings in 2023

4

5

2

 

*	Committee Chairperson

Below is a description of each committee of the Board of Directors. Each of the committees has authority to engage legal counsel or other experts or consultants, as it deems appropriate to carry out its responsibilities. Our Board of Directors has determined that each member of each committee meets the applicable Nasdaq rules and regulations regarding “independence” and that each member is free of any relationship that would impair his or her individual exercise of independent judgment with regard to the Company.

Audit Committee

The Audit Committee of our Board of Directors was established by our Board of Directors in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to oversee the Company’s corporate accounting and financial reporting processes and audits of its financial statements. For this purpose, our Audit Committee performs several functions. Our Audit Committee, among other things, evaluates the performance of and assesses the qualifications of the independent auditors; determines and approves the engagement of the independent auditors; determines whether to retain or terminate the existing independent auditors or to appoint and engage new independent auditors; reviews and approves the retention of the independent auditors to perform any proposed permissible non-audit services; monitors the rotation of partners of the independent auditors on the Company’s audit engagement team as required by law; reviews and approves or rejects transactions between the Company and any related persons; confers with management and the independent auditors regarding the effectiveness of our internal control over financial reporting; establishes procedures, as required under applicable law, for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters and the confidential and anonymous submission by employees of concerns regarding questionable accounting or auditing matters; reviews and discusses with management and the Company’s auditors the Company’s guidelines and policies with respect to risk assessment and risk management, including cybersecurity risks, and other policies; and meets to review the Company’s annual audited financial statements and quarterly financial statements with management and the independent auditor, including a review of the Company’s disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Our Audit Committee is currently composed of three directors: Ms. Collier (who Chairs the Audit Committee), Mr. Nunn and Dr. Papadopoulos. Our Board of Directors has adopted a written charter of the Audit Committee that is available to stockholders on the Company’s website at www.regulusrx.com. Our Board of

 

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Directors reviews the Nasdaq listing standards definition of independence for Audit Committee members on an annual basis and has determined that all members of our Audit Committee are independent (as independence is currently defined in Rule 5605(c)(2)(A) of the Nasdaq listing standards).

Our Board of Directors has determined that Ms. Collier qualifies as an “audit committee financial expert,” as defined in applicable SEC rules. Our Board of Directors has made a qualitative assessment of Ms. Collier’s level of knowledge and experience based on a number of factors, including her formal education, her experience in the investment banking industry and as the holder of various positions with responsibility for finance of a subsidiary of a major publicly traded energy services holding company.

Report of the Audit Committee of the Board of Directors*

The Audit Committee has reviewed and discussed the audited financial statements for the fiscal year ended December 31, 2023 with management of the Company. The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”) and the SEC. The Audit Committee has also received the written disclosures and the letter from the independent registered public accounting firm required by applicable requirements of the PCAOB regarding the independent accountants’ communications with the Audit Committee concerning independence, and has discussed with the independent registered public accounting firm the accounting firm’s independence. Based on the foregoing, the Audit Committee has recommended to the Board of Directors that the audited financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

Ms. Kathryn J. Collier (Chair)

Dr. Stelios Papadopoulos

Mr. Jake Nunn

 

*

This material is not “soliciting material,” is not deemed “filed” with the SEC and is not to be incorporated by reference in any filing of the Company under the Exchange Act or the Securities Act of 1933, as amended (the “Securities Act”), whether made before or after the date hereof and irrespective of any general incorporation language in any such filing.

Compensation Committee

The Compensation Committee is currently composed of three directors: Dr. Rastetter (who chairs the Compensation Committee), Dr. Huang, and Ms. Witz. The Board of Directors reviews the Nasdaq listing standards definition of independence for Compensation Committee members on an annual basis and has determined that all members of the Company’s Compensation Committee are independent (as independence is currently defined in Rule 5605(d)(2)(A of the Nasdaq listing standards). The Compensation Committee has adopted a written charter that is available to stockholders on the Company’s website at www.regulusrx.com.

The Compensation Committee acts on behalf of the Board to review, adopt and/or recommend for adoption and oversee the Company’s compensation strategy, policies, plans and programs. The functions of the Compensation Committee include, among other things:

 

•

reviewing and approving (or if it deems appropriate, making recommendations to the full Board of Directors regarding) our overall compensation strategy and policies, including corporate performance goals and objectives to support and reinforce the Company’s long-term strategic goals, relevant to the Company’s compensation plans and programs;

 

•

evaluating and approving (or, if it deems appropriate, making recommendations to the full Board of Directors regarding) the compensation plans and programs advisable for the Company, as well as the modification or termination of existing plans and programs;

 

14

•

evaluating risks associated with our compensation policies and practices and assessing whether risks arising from our compensation policies and practices for our employees are reasonably likely to have a material adverse effect on us;

 

•

establishing policies with respect to equity compensation arrangements, with the objective of appropriately balancing the perceived value of equity compensation and the dilutive and other costs of that compensation to the Company;

 

•

establishing elements of corporate performance for purposes of increasing or decreasing compensation;

 

•

administering our equity incentive plans, including establishing policies on the timing and pricing of equity awards for newly hired employees, promotions and annual grants for executives and non-executive employees and directors;

 

•

establishing policies with respect to votes by our stockholders to approve executive compensation as required by Section 14A of the Exchange Act and determining our recommendations regarding the frequency of advisory votes on executive compensation, as well as reviewing the considering the results of any advisory vote on executive compensation;

 

•

reviewing regional and industry-wide compensation practices and trends to assess the competitiveness of our executive compensation programs and evaluating the effectiveness of our compensation policy and strategy in achieving expected benefits to us;

 

•

reviewing and making recommendations to the full Board of Directors regarding the adequacy of the type and amount of compensation to be paid or awarded to our non-employee board members;

 

•

reviewing and approving (or, if it deems appropriate, making recommendations to the full Board of Directors regarding) the terms of any employment agreements, severance arrangements, change-of-control protections and any other compensatory arrangements (including, without limitation, any material perquisites and any other form of compensation) for the Company’s executive officers (other than the Chief Executive Officer of the Company), including reviewing and approving (or, if it deems appropriate, making recommendations to the full Board of Directors regarding) any payments, compensation or other awards under such agreements and arrangements;

 

•

recommending to the full Board of Directors for its approval the terms of any employment agreements, severance arrangements, change-of-control protections and any other compensatory arrangements (including, without limitation, any material perquisites and any other form of compensation) for the Company’s Chief Executive Officer;

 

•

reviewing and approving (or, if it deems appropriate, making recommendations to the full Board of Directors regarding) any compensation arrangement for any executive officer involving any subsidiary, special purpose or similar entity;

 

•

considering and, if appropriate, establishing a policy designed to encourage executive officers and directors to acquire and hold a meaningful equity interest in the Company;

 

•

evaluating the efficacy of the Company’s compensation policy and strategy in achieving expected benefits to the Company and otherwise furthering the Committee’s policies;

 

•

reviewing and assessing the independence of compensation consultants, legal counsel and other advisors as required by Section 10C of the Exchange Act;

 

•

reviewing the adequacy of its charter on a periodic basis;

 

•

reviewing with management and approving our disclosures under the caption “Compensation Discussion and Analysis” in our periodic reports or proxy statements to be filed with the SEC, as applicable; and

 

•

to the extent applicable, preparing the compensation committee report as required by SEC rules.

 

15

The Compensation Committee recommends to the full Board of Directors for its approval the compensation and other terms of employment of our Chief Executive Officer and evaluates the Chief Executive Officer’s performance in light of relevant performance goals and objectives, taking into account, among other things, the policies of the Compensation Committee and the Chief Executive Officer’s performance in fostering a corporate culture that promotes the highest levels of integrity and the highest ethical standards; the Chief Executive Officer’s role in developing and executing the Company’s long-term strategic plan and conducting the business of the Company in a manner appropriate to enhance long-term stockholder value; achievement of any other corporate performance goals and objectives deemed relevant to the Chief Executive Officer as established by the Board of Directors; and achievement of the Chief Executive Officer’s individual performance goals and objectives established by the Compensation Committee.

The Compensation Committee reviews, determines and approves (or, if it deems appropriate, recommends to the full Board of Directors for its approval), the individual and corporate performance goals and objectives of the Company’s other officers and determines and approves (or, if it deems appropriate, recommends to the full Board of Directors for its determination and approval) the compensation and other terms of employment of each such executive officer, taking into consideration the executive officer’s success in achieving his or her individual performance goals and objectives and the corporate performance goals and objectives deemed relevant to the executive officer as established by the Compensation Committee.

Compensation Committee Processes and Procedures

Typically, the Compensation Committee meets at least four times annually and with greater frequency if necessary. The agenda for each meeting is usually developed by the Chair of the Compensation Committee, in consultation with the Chief Executive Officer. The Compensation Committee meets regularly in executive session. However, from time to time, various members of management and other employees as well as outside advisors or consultants may be invited by the Compensation Committee to make presentations, to provide financial or other background information or advice or to otherwise participate in Compensation Committee meetings. The Chief Executive Officer may not participate in, or be present during, any deliberations or determinations of the Compensation Committee regarding his compensation. The charter of the Compensation Committee grants the Compensation Committee full access to all books, records, facilities and personnel of the Company, as well as authority to obtain, at the expense of the Company, advice and assistance from internal and external legal, accounting or other advisors and consultants and other external resources that the Compensation Committee considers necessary or appropriate in the performance of its duties. In particular, the Compensation Committee has the sole authority to retain compensation consultants to assist in its evaluation of executive and director compensation, including the authority to approve the consultant’s reasonable fees and other retention terms.

During fiscal year 2023, the Compensation Committee engaged Aon/Radford as a compensation consultant. The Committee engaged Aon/Radford to provide a competitive assessment of the Company’s executive compensation programs compared to executive compensation paid to executives at selected publicly traded peer companies. Following a gap analysis of the peer companies, Aon/Radford made certain recommendations to the Compensation Committee to make modest increases in the level of equity grants to the Company’s executive team and to increase annual cash compensation for certain Company executives. In addition, the Compensation Committee engaged Aon/Radford to assess its non-employee director compensation program as compared to the Company’s peer companies. Following that analysis, no changes to cash compensation were recommended; however a modest increase in equity compensation was recommended. Following the Company’s private placement equity financing in April 2023 which added 62,500,167 shares of common stock (on a fully diluted basis) to the Company’s outstanding shares and the Company’s 2023 meeting of shareholders, in which shareholders approved an addition of 5,000,000 shares to the Company’s 2019 Equity Incentive Plan, the Compensation Committee requested additional benchmarking from Aon concerning equity ownership by the Company’s NEOs and directors as a percentage of ownership of shares as compared to the Company’s peers. The Compensation Committee analyzed whether the work of Aon/Radford as a compensation consultant raised any

 

16

conflict of interest, taking into consideration the following factors: (i) the provision of other services to the Company by the compensation consultant; (ii) the amount of fees from the Company paid to the compensation consultant as a percentage of the firm’s total revenue; (iii) the policies and procedures of the compensation consultant that are designed to prevent conflicts of interest; (iv) any business or personal relationship of the compensation consultant or the individual compensation advisors employed by this firm with an executive officer of the Company; (v) any business or personal relationship of the individual compensation advisors with any member of the Compensation Committee; and (vi) any stock of the Company owned by the compensation consultant or the individual compensation advisors employed by this firm. The Compensation Committee concluded, based on its analysis of the above factors, that the work of Aon/Radford and the individual compensation advisors employed by it as compensation consultants to the Company has not created any conflict of interest.

Under its charter, the Compensation Committee may form, and delegate authority to, subcommittees as appropriate. In 2012, the Compensation Committee formed a Non-Management Stock Option Committee, currently composed of Mr. Hagan, to which it delegated authority to grant, without any further action required by the Compensation Committee, stock options to employees who are not officers of the Company. The purpose of this delegation of authority is to enhance the flexibility of option administration within the Company and to facilitate the timely grant of options to non-management employees, particularly new employees, within specified limits approved by the Compensation Committee. In particular, the subcommittee may grant options only within pre-approved guidelines and not to any employee who will have a vice president title or higher. Typically, as part of its oversight function, the Committee will review on a regular basis the list of grants made by the subcommittee. During fiscal year 2023, the subcommittee exercised its authority to grant options to purchase an aggregate of 753,750 shares of the Company’s common stock to non-officer employees.

Historically, the Compensation Committee has made most of the significant adjustments to annual compensation, determined bonus and equity awards and established new performance objectives at one or more meetings held during the last quarter of the year. However, the Compensation Committee also considers matters related to individual compensation, such as compensation for new executive hires, as well as high-level strategic issues, such as the efficacy of the Company’s compensation strategy, potential modifications to that strategy and new trends, plans or approaches to compensation, at various meetings throughout the year. Generally, the Compensation Committee’s process comprises two related elements: the determination of compensation levels and the establishment of performance objectives for the current year.

For executives other than the Chief Executive Officer, the Compensation Committee solicits and considers evaluations and recommendations submitted to the Committee by the Chief Executive Officer. In the case of the Chief Executive Officer, the evaluation of his performance is conducted by the Compensation Committee, which makes recommendations to the full Board of Directors regarding any adjustments to his compensation as well as awards to be granted. In making such recommendations for determining the long-term incentive component of the Chief Executive Officer’s compensation, the Compensation Committee shall take into consideration the Company’s performance and relative stockholder return, the value of similar incentive awards given to chief executive officers of comparable companies, the awards given to the Company’s Chief Executive Officer in past years, other elements of the Chief Executive Officer’s compensation including total compensation and such other criteria as the Committee deems advisable.

For all executives and directors as part of its deliberations, the Compensation Committee may review and consider, as appropriate, materials such as financial reports and projections, operational data, tax and accounting information, tally sheets that set forth the total compensation that may become payable to executives in various hypothetical scenarios, executive and director stock ownership information, company stock performance data, analyses of historical executive compensation levels and current Company-wide compensation levels and recommendations of the Company’s General Counsel, including analyses of executive and director compensation paid at other companies identified by the Company’s General Counsel.

 

17

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee of the Board of Directors is responsible for identifying, reviewing and evaluating candidates to serve as directors of the Company (consistent with criteria approved by the Board), reviewing and evaluating incumbent directors, recommending to the Board for selection candidates for election to the Board of Directors, making recommendations to the Board regarding the membership of the committees of the Board, assessing the performance of the Board, and monitoring the Company’s adherence to its Code of Business Conduct and Ethics.

The Nominating and Corporate Governance Committee is currently composed of three directors: Dr. Baltimore (who Chairs the Nominating and Corporate Governance Committee), Dr. Papadopoulos and Dr. Rosen. All members of the Nominating and Corporate Governance Committee are independent (as independence is currently defined in Rule 5605(a)(2) of the Nasdaq listing standards). The Nominating and Corporate Governance Committee has adopted a written charter that is available to stockholders on the Company’s website and www.regulusrx.com.

The Nominating and Corporate Governance Committee believes that candidates for director, both individually and collectively, can and do provide the integrity, experience, judgment, commitment (including having sufficient time to devote to the Company and level of participation), skills, diversity and expertise appropriate for the Company. In assessing the directors, both individually and collectively, the Nominating and Corporate Governance Committee may consider the current needs of the Board and the Company to maintain a balance of knowledge, experience and capability in various areas. However, the Nominating and Corporate Governance Committee retains the right to modify these qualifications from time to time. Candidates for director nominees are reviewed in the context of the current composition of the Board, the operating requirements of the Company and the long-term interests of stockholders. In conducting this assessment, the Nominating and Corporate Governance Committee typically considers diversity (including diversity of gender, race, national origin and other self-identified diversity characteristics), age, skills and such other factors as it deems appropriate given the current needs of the Board and the Company, to maintain a balance of knowledge, experience and capability. In the case of incumbent directors whose terms of office are set to expire, the Nominating and Corporate Governance Committee reviews these directors’ overall service to the Company during their terms, including the number of meetings attended, level of participation, quality of performance and any other relationships and transactions that might impair the directors’ independence. In the case of new director candidates, the Nominating and Corporate Governance Committee also determines whether the nominee is independent for Nasdaq purposes, which determination is based upon applicable Nasdaq listing standards, applicable SEC rules and regulations and the advice of counsel, if necessary. The Nominating and Corporate Governance Committee then uses its network of contacts to compile a list of potential candidates, but may also engage, if it deems appropriate, a professional search firm. The Nominating and Corporate Governance Committee conducts any appropriate and necessary inquiries into the backgrounds and qualifications of possible candidates after considering the function and needs of the Board. The Nominating and Corporate Governance Committee meets to discuss and consider the candidates’ qualifications and then selects a nominee for recommendation to the Board by majority vote. The Nominating and Corporate Governance Committee assesses diversity, including self-identified diversity characteristics, in connection with the annual nomination process as well as in new director searches.

The Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders. The Nominating and Corporate Governance Committee does not intend to alter the manner in which it evaluates candidates, including the minimum criteria set forth above, based on whether or not the candidate was recommended by a stockholder. Stockholders who wish to recommend individuals for consideration by the Nominating and Corporate Governance Committee to become nominees for election to the Board may do so by delivering a written recommendation to the Nominating and Corporate Governance Committee at the Company’s principal executive offices, Attn: Secretary, no later than the 90th day and no earlier than the 120th day prior to the one year anniversary of the preceding year’s annual meeting. Submissions

 

18

must include (1) the name and address of the Company stockholder on whose behalf the submission is made; (2) the number of Company shares that are owned beneficially by such stockholder as of the date of the submission; (3) the full name of the proposed candidate; (4) a description of the proposed candidate’s business experience for at least the previous five years; (5) the complete biographical information for the proposed candidate; (6) a description of the proposed candidate’s qualifications as a director; and (7) any other information required by the Company Bylaws. The Company may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as an independent director of the Company or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such proposed nominee.

Board Diversity

 

Board Diversity Matrix (as of March 31, 2024)
Total Number of Directors: 10
		Female				Male				Non-Binary				Did Not Disclose Gender
Directors			3				5				—				2
Number of Directors Who Identify In Any of the Categories Below:
African-American or Black			—				—				—				—
Alaskan Native, Native American, Native Hawaiian or Pacific Islander			—				—				—				—
Asian			1				—				—				—
Hispanic or Latinx			—				—				—				—
White			2				5				—				—
Two or More Races or Ethnicities			—				—				—				—
LGTBQ+			—				—				—				—
Did Not Disclose Demographic Background			—								—				2

Our Board Diversity Matrix as of March 31, 2023 can be found in our definitive proxy statement for our 2023 Annual Meeting of Stockholders, filed with the SEC on April 28, 2023.

Stockholder Communications with the Board of Directors

The Company’s Board has adopted a formal process by which stockholders may communicate with the Board or any of its directors. Stockholders who wish to communicate with the Board may do so by sending written communications addressed to the Secretary of Regulus Therapeutics Inc. at the Company’s principal executive offices. Each communication must set forth: the name and address of the Company stockholder on whose behalf the communication is sent; and the number of Company shares that are owned beneficially by such stockholder as of the date of the communication. Each communication will be reviewed by the Company’s Secretary to determine whether it is appropriate for presentation to the Board or relevant directors.

Communications determined by the Company’s Secretary to be appropriate for presentation to the Board or any relevant directors are submitted to the Board or relevant directors on a periodic basis.

Code of Ethics

The Company has adopted a Code of Business Conduct and Ethics that applies to all directors, officers (including our principal executive officer, principal financial officer and principal accounting officer) and employees. The Code of Business Conduct and Ethics is available on the Company’s website at www.regulusrx.com under the Corporate Governance section of our Investor Relations page. If the Company makes any substantive amendments to the Code of Business Conduct and Ethics that applies to our principal

 

19

executive officer, principal financial officer, principal accounting officer, controller or persons performing similar functions, or grants any waiver from a provision of the Code of Business Conduct and Ethics to any of these specified individuals that is required to be disclosed pursuant to SEC rules and regulations, the Company will promptly disclose the nature of the amendment or waiver on its website.

Hedging Policy

The Company’s insider trading and window period policy provides that no officer, director, other employee or consultant of the Company may engage in short sales, transactions in put or call options, hedging transactions or other inherently speculative transactions with respect to the Company’s stock at any time. In addition, no officer, director, other employee or consultant of the Company may margin, or make any offer to margin, any of the Company’s stock, including without limitation, borrowing against such stock, at any time.

 

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PROPOSAL 2

RATIFICATION OF SELECTION OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Audit Committee has selected Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2024 and has further directed that management submit the selection of independent registered public accounting firm for ratification by the stockholders at the annual meeting. Ernst & Young has audited the Company’s financial statements since its incorporation in 2009. Representatives of Ernst & Young are expected to be present at the annual meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions.

Neither the Company’s Bylaws nor other governing documents or law require stockholder ratification of the selection of Ernst & Young as the Company’s independent registered public accounting firm. However, the Audit Committee is submitting the selection of Ernst & Young to the stockholders for ratification as a matter of good corporate practice. If the stockholders fail to ratify the selection, the Audit Committee will reconsider whether or not to retain that firm. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of different independent auditors at any time during the year if they determine that such a change would be in the best interests of the Company and its stockholders.

The affirmative vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote at the annual meeting will be required to ratify the selection of Ernst & Young. Abstentions will be counted toward the tabulation of votes on proposals presented to the stockholders and will have the same effect as votes “Against”. We do not expect there to be any broker non-votes on this proposal.

Principal Accounting Fees and Services

The following table represents aggregate fees incurred by the Company for the fiscal years ended December 31, 2023 and December 31, 2022, by Ernst & Young LLP (“Ernst & Young”), the Company’s principal accountant. All fees described below were pre-approved by the Audit Committee.

 

		Fiscal Year Ended
		2023				2022
		(in thousands)
Audit Fees(1)		$	517			$	422
Audit-related Fees			—				—
Tax Fees			—				—
All Other Fees			—				52
Total Fees		$	517			$	474

 

(1)

Audit fees consist of fees incurred for professional services by Ernst & Young for audit and quarterly review of our financial statements and review of our registration statements on Form S-3 and Form S-8, and related services that are normally provided in connection with statutory and regulatory filings or engagements.

In connection with the audit of each of the 2023 and 2022 financial statements, the Company entered into engagement agreements with Ernst & Young, which sets forth the terms by which Ernst & Young will perform audit services for the Company. Such agreements are subject to alternative dispute resolution procedures.

Pre-Approval Policies and Procedures

The Audit Committee must pre-approve the audit and non-audit services rendered by the Company’s independent registered public accounting firm.

THE BOARD OF DIRECTORS RECOMMENDS

A VOTE FOR PROPOSAL 2

 

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PROPOSAL 3

ADVISORY VOTE ON EXECUTIVE COMPENSATION

At the 2018 Annual Meeting of Stockholders, the stockholders indicated their preference that the Company solicit a non-binding advisory vote on the compensation of the named executive officers, commonly referred to as a “say-on-pay vote,” every year. The Board has adopted a policy that is consistent with that preference. If stockholders approve the “One Year” option as the frequency of future say-on-pay votes under Proposal 4, we expect that we will conduct our next say-on-pay vote at our 2025 annual meeting of stockholders.

This vote is not intended to address any specific item of compensation, but rather the overall compensation of the Company’s named executive officers and the philosophy, policies and practices described in this proxy statement. The compensation of the Company’s named executive officers subject to the vote is disclosed in the “Executive Compensation” section, including the compensation tables and the related narrative disclosure, contained in this proxy statement. As discussed in those disclosures, the Company believes that its compensation policies and decisions are focused on pay-for-performance principles and strongly aligned with our stockholders’ interests.

Accordingly, the Board is asking the stockholders to indicate their support for the compensation of the Company’s named executive officers as described in this proxy statement by casting a non-binding advisory vote “FOR” the following resolution:

“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of Regulation S-K, including the compensation tables and narrative discussion is hereby APPROVED.”

Because the vote is advisory, it is not binding on the Board or the Company. Nevertheless, the views expressed by the stockholders, whether through this vote or otherwise, are important to management and the Board and, accordingly, the Board and the Compensation Committee intend to consider the results of this vote in making determinations in the future regarding executive compensation arrangements.

Vote Required

Approval of this proposal requires the vote of the holders of a majority of the shares present in person or represented by proxy and entitled to vote on this matter at the annual meeting. Abstentions will be counted toward the tabulation of votes on proposals presented to the stockholders and will have the same effect as votes “Against”. Broker non-votes will have no effect.

THE BOARD OF DIRECTORS RECOMMENDS

A VOTE FOR PROPOSAL 3

 

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EXECUTIVE COMPENSATION

The Company is a “smaller reporting company” under Item 10 of Regulation S-K promulgated under the Exchange Act, and the following compensation disclosure is intended to comply with the requirements applicable to smaller reporting companies. Although the rules allow the Company to provide less detail about its executive compensation program, the Compensation Committee is committed to providing the information necessary to help stockholders understand its executive compensation-related decisions. Accordingly, this section includes supplemental narratives that describe the 2023 executive compensation program for our Named Executive Officers.

Named Executive Officers. The following individuals are our “Named Executive Officers” or “NEOs” for the year ended December 31, 2023:

 

•

Joseph P. Hagan, our Chief Executive Officer;

 

•

Christopher R. Aker, our Senior Vice President and General Counsel; and

 

•

Cris Calsada, our Chief Financial Officer.

Summary Compensation Table

The following table shows, for the fiscal years ended December 31, 2023 and December 31, 2022, compensation awarded to, paid to, or earned by, the Named Executive Officers.

 

Name		Year				Salary ($)				Stock Awards ($)(1)				Option Awards ($)(2)				Non Equity Incentive Plan Compensation ($)(3)				Other Income ($)(4)				Total ($)
Joseph Hagan			2023				615,800				88,000				1,528,091				332,532				9,900				2,575,123
Chief Executive Officer			2022				597,875				102,800				319,710				322,853				9,150				1,352,388
Christopher Aker			2023				387,700				33,300				475,845				178,342				9,900				1,085,087
SVP & General Counsel			2022				357,000				30,840				95,913				167,790				9,150				660,693
Cris Calsada			2023				390,000				33,300				455,674				179,400				9,900				1,068,174
Chief Financial Officer			2022				340,725				30,840				95,913				160,141				9,150				636,719

 

(1)

In accordance with SEC rules, this column reflects the aggregate grant date fair value of the restricted stock units (“RSUs”) granted during the years indicated, computed in accordance with Financial Accounting Standard Board ASC Topic 718 for stock-based compensation transactions (“ASC 718”). Assumptions used in the calculation of these amounts are included in Note 10 to the Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023. These amounts do not reflect the actual economic value that will be realized by the Named Executive Officer upon the vesting of the RSU or the sale of the common stock underlying such stock awards. The grant date fair value of the RSUs granted during 2023 that vest based on performance conditions is reported based on the probable outcome of such performance conditions, as determined in accordance with ASC 718, which is the same as the grant date fair value of such awards at the grant date, assuming that the highest level of performance conditions will be achieved. Our named executive officers were also granted additional performance-vesting RSUs in August 2023 (described below) and based on the probable outcome at the time of grant we determined the grant date fair value to be $0. Assuming that the highest level of performance conditions were to be achieved, the grant date fair value for the performance-vesting RSUs granted to our Named Executive Officers would be $595,000 with respect to Mr. Hagan, $190,800 with respect to Mr. Aker and $170,000 with respect to Ms. Calsada.

(2)

In accordance with SEC rules, this column reflects the aggregate grant date fair value of stock options granted during the years indicated, computed in accordance with ASC 718. Assumptions used in the calculation of these amounts are included in Note 10 to the Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023. These amounts do not reflect the actual economic value

 

23

that will be realized by the Named Executive Officer upon the exercise of the stock options, or the sale of the common stock underlying such stock options.

(3)	Amounts shown include annual performance bonuses paid to Mr. Hagan, Mr. Aker and Ms. Calsada, earned for the years indicated. For more information, see below under “Annual Performance-Based Bonus Opportunity.”

(4)	Amounts shown represent 401(k) plan matching contributions.

Narrative Disclosure to Summary Compensation Table

The three principal components of our executive compensation program for our Named Executive Officers in 2023 were base salary, annual performance-based (cash) bonus opportunity and equity compensation. We do not have any formal policies for allocating compensation among salary, performance bonus awards and equity grants, short-term and long-term compensation or among cash and non-cash compensation. Instead, the Compensation Committee uses its judgment to establish a total compensation program for each named executive officer that is a mix of current, short-term and long-term incentive compensation, and cash and non-cash compensation, that it believes appropriate to achieve the goals of our executive compensation program and our corporate objectives. In line with our pay for performance philosophy, we structured a significant portion of our Named Executive Officers’ 2023 compensation to be variable, at risk and tied directly to our measurable performance in the form of performance-based bonuses and equity incentives.

The Compensation Committee uses the services of an independent compensation consultant who is retained by, and reports directly to, the Compensation Committee to provide the Compensation Committee with an additional external perspective with respect to its evaluation of relevant market and industry practices. Since 2013, the Compensation Committee has engaged Aon/Radford, as a third-party, independent compensation consultant to assist the Compensation Committee in establishing overall compensation levels. Aon/Radford conducts analyses and provides advice on, among other things, the appropriate peer group, executive compensation for our executive officers and compensation trends in the life sciences industry.

The peer group of companies used by the Compensation Committee in making 2023 executive compensation decisions was comprised of the following companies:

 

Adial Pharmaceuticals (ADIL)		Assembly* Biosciences (ASMB)		aTyr Pharma (LIFE)		BioCardia (BCDA)		Calithera* Bioscience (CALA)		Capricor Therapeutics (CAPR)
Cidara Therapeutics (CDTX)		CohBar (CWBR)		ContraFect (CFRX)		Corvus Pharmaceuticals (CRVS)		Daré Bioscience (DARE)		Eledon Pharmaceuticals (ELDN)
Infinity Pharmaceuticals (INFI)		Lineage Cell Therapeutics (LCTX)		Otonomy (OTIC)		Pulmatrix (PULM)		Rezolute* (RZLT)		Synlogic (SYBX)
Tenax Therapeutics (TENX)		TRACON Pharmaceuticals (TCON)

 

*New	Peer for 2023

This peer group was recommended by Aon/Radford and approved by the Compensation Committee in late-2022 based on the following parameters: biopharmaceutical companies that were pre-commercial and with programs in early clinical development, had market values generally under $200 million and with a preference for companies with headcounts under 100. At the time we choose our peer group companies, our market value

 

24

was approximately $23.4 million and our headcount was 23 employees. Based upon changes in our market value from 2020 to 2022, and merger, acquisition and liquidation activity, the peer group listed above included three new peer companies and four companies were removed from the 2022 peer group.

Pay for Performance/At-Risk Pay

Our executive compensation program is designed to reward achievement of the specific strategic goals that we believe will advance our business strategy and create long-term value for our stockholders. Consistent with our goal of attracting, motivating and retaining a high-caliber executive team, our executive compensation program is designed to pay for performance. We utilize compensation elements that meaningfully align our NEOs’ interests with those of our stockholders to create long-term value. As such, a significant portion of our Chief Executive Officer’s and other executive officers’ compensation is “at-risk”, performance-based compensation, in the form of long-term equity awards (including, in 2023, performance-vesting equity awards) and annual cash incentives that are only earned if we achieve measurable corporate metrics. The charts below show the 2023 total reported pay mix of our Chief Executive Officer, Mr. Hagan, and our other NEOs and the portion of each individual’s aggregate reported pay that is tied directly to performance, consisting of annual performance bonus earned and equity incentives awarded (based on such equity incentives’ grant date fair value as reported in the “Summary Compensation Table”).

 

 

 

*	Reflects 2023 cash compensation, consisting of annual base salaries and performance bonus earned, and 2023 equity awards granted, based on such equity incentives’ grant date fair value as reported in the “Summary Compensation Table,” for each of our NEOs. Totals may not add to 100% due to rounding.

Base Salary

In December 2022, the Compensation Committee reviewed the base salaries for our Named Executive Officers, the market data from Aon/Radford, our 3% Company-wide corporate merit increase target for base salaries, the scope of each executive’s responsibilities for 2022, each executive’s prior experience and internal pay equity in order to determine 2023 base salaries of our NEOs. In addition, each NEO’s salary was increased to more closely align with the 25th percentile of base salary for positions similar to that at the Company’s peer companies.

The Named Executive Officers’ 2023 annual base salaries (effective January 1, 2023) and increases from 2022 annual base salaries approved by the Compensation Committee (or the Board of Directors, with respect to Mr. Hagan) were as follows:

 

Name		2023 Base Salary ($)				Increase from 2022 Base Salary (%)
Joseph P. Hagan			615,800				3.0	%
Christopher R. Aker			387,700				8.6	%
Cris Calsada			390,000				14.5	%

 

25

Annual Performance-Based Bonus Opportunity

The annual performance-based (cash) bonus each Named Executive Officer is eligible to receive is based on (1) the individual’s target bonus, as a percentage of base salary, (2) a Company-based performance factor (“CPF”), and (3) an individual performance factor (“IPF”). The actual performance-based bonus paid, if any, is calculated by taking into consideration the executive officer’s annual base salary, target bonus percentage, percentage attainment of the CPF and percentage attainment of the IPF.

Each Named Executive Officer’s target bonus for 2023, represented as a percentage of base salary, or a target bonus percentage, was 50% of base salary, with the exception of Mr. Hagan, which was 60% of base salary. The Compensation Committee determined the target bonuses of each of our NEOs, other than our Chief Executive Officer, should be consistent to promote internal equity and reinforce teamwork across our leadership team.

Except for the Chief Executive Officer whose entire annual bonus depends upon the CPF, 80% of each NEO’s annual bonus is dependent upon the CPF, with the remaining 20% annual bonus dependent upon such individual’s IPF.

At the end of the year, our Compensation Committee approves the extent to which we achieved the CPF based on achievement of the applicable annual corporate goals. The extent to which each individual Named Executive Officer achieves his or her IPF is determined based on our Chief Executive Officer’s review and recommendation to our Compensation Committee. Our Compensation Committee makes the final decisions with respect to each IPF.

Additionally, our Compensation Committee has the discretion to determine the weighting of each of the goals that comprise the CPF and IPF. Our Compensation Committee may award a bonus in an amount above or below the amount resulting from the calculation described above, based on other factors that our Compensation Committee determines, in its sole discretion, are material to our corporate performance and provide appropriate incentives to our executives; for example, based on events or circumstances that arise after the original CPF and IPF goals are set. Our Compensation Committee did not exercise any such discretion in 2023.

The CPF and IPF goals are determined by our Compensation Committee and communicated to our Named Executive Officers each year, prior to or shortly following the beginning of the year to which they relate. The CPF is composed of several goals that relate to our annual corporate goals and various business accomplishments which vary from time to time depending on our overall strategic objectives. The IPF is composed of factors that relate to each Named Executive Officer’s ability to drive his or her own performance and the performance of his or her direct employee reports towards reaching our corporate goals. The proportional emphasis placed on each goal within the CPF and IPF may vary from time to time depending on our overall strategic objectives and our Compensation Committee’s subjective determination of which goals have more impact on our performance.

For 2023, the CPF goals related primarily to advancing our most promising program, RGLS8429 for the treatment of autosomal dominant polycystic kidney disease (“ADPKD”) in the clinic, while also making progress on our preclinical pipeline. The specific 2023 CPF goals were as follows:

Goals Related to our Lead Clinical Program of RGLS8429 in Autosomal Dominate Polycystic Kidney Disease (ADPKD):

 

•

Execute on Phase 1b ADPKD Clinical Study timelines including obtaining Cohort 1 data by the end of third quarter of 2023, Cohort 2 data by end of 2023 and complete enrollment of Cohort 3 by end of 2023.

 

•

Strategically execute on certain Phase 2/3 ADPKD Readiness Activities.

 

•

Initiate long-term GLP toxicology study.

 

26

•

Confirm potential path for accelerated approval

 

•

Formulate feasibility and potential development plan for a pre-filled syringe/auto injector device.

 

•

Select contract manufacturers for future clinical trial drug supply of RGLS8429.

 

•

Complete engineering batch prior to initiation of GMP manufacturing campaign.

Goals related to our Preclinical Pipeline:

 

•

Execute plan to validate microRNA targets for additional nephrology related indications and explore other possible indications for RGLS8429.

 

•

Explore opportunities to expand indications for RGLS8429.

 

•

Identify development leads for top CNS indications.

 

•

Validate other targets for treatment of nephrology or CNS diseases to expand research portfolio. Secure financing to extend cash runway through end of 2024.

In January 2024, after careful review, our Board of Directors, upon the recommendation of our Compensation Committee, concluded that we had achieved 90% of our CPF goals, based on the following:

 

•

We obtained Cohort 1 data in September 2023 and completed enrollment of Cohort 3 by year end 2023.

 

•

We completed the specified regulatory activities concerning our Phase 2 program.

 

•

We commenced a development plan for a pre-filled syringe/auto injector device.

 

•

We selected a contract manufacturer future clinical trial drug supply and completed the engineering batch with the selected vendor.

 

•

We commenced the long term GLP toxicology study.

 

•

We validated other miR targets for nephrology indications and commenced work evaluating RGLS8429 in additional indications.

 

•

We advanced our preclinical CNS programs toward candidate nomination.

Although we made progress with our RGLS8429 clinical program for the treatment of ADPKD, we did not succeed in our efforts to obtain Cohort 2 data by year end 2023. Further, while we successfully concluded a financing in April 2023, the $15 million in funds raised were not sufficient to extend our cash runway through the end of 2024.

The IPF goals varied by individual and included individual performance contributions towards maintaining a leading position in microRNA research, accelerating efforts in microRNA therapeutic development, supporting our growth with additional capital, fostering a culture of value creation, attracting and retaining key talent and building good processes and policies.

Based on our Chief Executive Officer’s recommendations and our Compensation Committee’s deliberations with respect to each Named Executive Officer’s individual performance against the IPF, our Compensation Committee and Board of Directors approved a performance-based bonus for each of our Named Executive Officers as set forth in the table below based on a 90% CPF achievement and the achievement of IPF as indicated in the table below:

 

Name		Target Bonus ($)				IPF Achievement (%)				Cash Bonus Paid ($)
Joseph P. Hagan		$	369,480				—			$	332,532
Christopher Aker(1)		$	193,850				100	%		$	178,342
Cris Calsada(2)		$	195,000				100	%		$	179,400

 

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(1)	Mr. Aker’s performance-based bonus was approved based on 90% CPF and 100% IPF in recognition of his ongoing legal support of the RGLS8429 clinical study and manufacturing activities, and his operational contributions to the Company and his role in recruiting additional managerial talent.

(2)	Ms. Calsada’s performance-based bonus was approved based on the 90% CPF and 100% IPF in recognition of her leadership in securing the financing in April 2023, financial oversight of our ongoing RGLS8429 development activities and her new duties managing personnel associated with manufacturing.

Equity-Based Incentive Awards

The Compensation Committee believes equity incentives motivate executive officers to achieve our business objectives by tying incentives to the appreciation of our common stock and, in the case of performance- vesting awards, measurable performance goals. In the recent past, we have primarily granted equity awards in the form of RSUs that vest based on achievement of specific Company performance goals. As part of its year-end grants to NEOs, the Compensation Committee granted performance-vesting RSUs in addition to time-vesting stock options. In addition, on August 10, 2023 following our 2023 Annual Meeting of Stockholders wherein our stockholders voted in favor of a proposal to increase the aggregate number of shares available under our 2019 Plan, we made an additional grant of time based stock options to all employees and additionally performance-vesting RSUs to our executive team, including our NEOs. The additional grants were made to enable us to have a competitive equity incentive program to compete with our peer group for key talent.

2023 Stock Option Awards and RSUs. In 2023, each of our Named Executive Officers were granted time-vesting stock options and performance-vesting RSUs in the amounts listed below.

 

Name		Time-Vesting Stock Options (# of shares)(1)				Performance-Vesting Restricted Stock Units (# of shares)(2)
Joseph P. Hagan			1,412,500				497,500
Christopher R. Aker			438,750				153,750
Cris Calsada			420,000				147,500

 

(1)

Consists of stock options in the amounts of 100,000 to Mr. Hagan, 45,000 to Mr. Aker and 45,000 to Ms. Calsada granted on January 11, 2023 at an exercise price of $1.48 per share. Each such option vests in equal monthly installments over a 48 month period following January 1, 2022, subject to the recipient’s continued service to the Company through each such vesting date. Also includes a grant of stock options in the amount of 1,312,500 granted to Mr. Hagan, 393,750 granted to Mr. Aker and 375,000 granted to Ms. Calsada on August 10, 2023 at an exercise price of $1.36 per share.

(2)

Consists of a performance-vesting RSU award granted on January 11, 2023 in the amounts of 60,000 to Mr. Hagan, 22,500 to Mr. Aker and 22,500 to Ms. Calsada. The shares commenced vesting upon achievement of a specified development goal related to our RGLS8429 program. On January 12, 2024, the Compensation Committee concluded the goal had been achieved and vesting of the shares commenced. Fifty percent of the shares subject to the award immediately vested with the remaining shares vesting on the first anniversary of the vesting commencement date. Also consists of a performance-vesting RSU award granted on August 10, 2023 in the amounts of 437,500 shares to Mr. Hagan, 131,250 shares to Mr. Aker and 125,000 shares to Ms. Calsada. The shares will commence vesting only upon achievement of a specified development goal related to our RGLS8429 program. Once the development goals are achieved, 50% of the shares subject to the grant will immediately vest with the remaining 50% vesting on the first anniversary of the vesting commencement date.

Other Compensation

Our Named Executive Officers are eligible to participate in all of our employee benefit plans, including our medical, dental, vision, group life and disability insurance plans, in each case on the same basis as other employees. We also pay the premiums for term life insurance and long-term disability for all of our employees, including our Named Executive Officers. None of our Named Executive Officers participate in or have account

 

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balances in qualified or non-qualified defined benefit plans sponsored by us. We generally do not provide perquisites or personal benefits to our Named Executive Officers, although we may from time to time provide reasonable benefits as our Compensation Committee determines appropriate.

All of our full-time employees in the United States, including our Named Executive Officers, are eligible to participate in our 401(k) plan, which is a retirement savings defined contribution plan established in accordance with Section 401(a) of the Internal Revenue Code of 1986, as amended (the “Code”). Pursuant to our 401(k) plan, employees may elect to defer their eligible compensation into the plan on a pre-tax basis, up to the statutorily prescribed annual limit of $22,500 in 2023 (additional salary deferrals not to exceed $7,500 are available to those employees 50 years of age or older) and to have the amount of this reduction contributed to our 401(k) plan. In 2023, we provided a $0.50 match for every dollar our employees elected to defer up to 6% of their eligible compensation. In general, eligible compensation for purposes of the 401(k) plan includes an employee’s wages, salaries, fees for professional services and other amounts received for personal services actually rendered in the course of employment with us to the extent the amounts are includible in gross income, and subject to certain adjustments and exclusions required under the Code. The 401(k) plan currently does not offer the ability to invest in our securities.

Agreements with Named Executive Officers

Employment Agreements. We have entered into employment agreements with each of our Named Executive Officers. The agreements provide for at-will employment and for certain base salary, target bonus and severance payments to our Named Executive Officers.

Employment Agreement with Mr. Hagan. We previously entered into an employment agreement with Mr. Hagan, with an effective date of January 1, 2016. Pursuant to his employment agreement, Mr. Hagan is entitled to receive an annual base salary and is eligible to earn an annual performance bonus.

Employment Agreement with Mr. Aker. In July 2018, we entered into an amended and restated employment agreement with Mr. Aker. Pursuant to his amended and restated employment agreement, Mr. Aker is entitled to receive an annual base salary and is eligible to earn an annual performance bonus.

Employment Agreement with Ms. Calsada. In August 2019, we entered into an employment agreement with Ms. Calsada upon her commencement of employment as our Chief Financial Officer. Pursuant to her employment agreement, Ms. Calsada is entitled to receive an annual base salary and is eligible to earn an annual performance bonus.

Change in Control and Severance Benefits

Under the terms of the employment agreements with each of our Named Executive Officers described above, either we or the executive may terminate the executive’s employment at any time. Each of our Named Executive Officers is eligible, under the terms of his or her respective employment agreement, to receive, in exchange for a release of claims, severance benefits upon the termination of employment either by us without cause or by the executive for good reason, with additional severance benefits provided in the event the termination is in connection with a change in control.

In addition, the terms of the equity awards granted to our Named Executive Officers are subject to the terms of our equity plans and award agreements thereunder, which includes accelerated vesting provisions upon certain material change in control transactions. We do not provide any excise tax gross-ups on change-in-control benefits.

If we terminate a Named Executive Officer’s employment “without cause” (other than due to his/her death or complete disability) or if the Named Executive Officer resigns for “good reason” at any time other than during

 

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the period beginning one month before and ending 12 months following a change in control, the Named Executive Officer will receive, subject to our receiving an effective release and waiver of claims, (1) a lump sum severance payment equal to 12 months (or 18 months for the Chief Executive Officer) of such Named Executive Officer’s then-current base salary (disregarding any decrease that forms the basis for a resignation for good reason), (2) a lump sum cash amount equal to 229.56% multiplied by the total cost of the projected premiums for group medical, dental and vision insurance for a period of 12 months (or 18 months for the Chief Executive Officer) and (3) vesting acceleration of all outstanding options and other equity incentive awards subject to time-vesting held by the Named Executive Officer as of such termination or resignation.

If we terminate a Named Executive Officer’s employment without cause (other than due to his/her death or complete disability) or if the Named Executive Officer resigns for good reason, in each case during the period beginning one month before and ending 12 months following a change in control, in addition to the severance payment described above, we will also be obligated to pay, subject to receiving an effective release and waiver of claims, a lump sum payment equal to the target amount of the Named Executive Officer’s annual performance bonus for the year of termination or resignation.

In addition, and pursuant to each Named Executive Officer’s employment agreement, all outstanding stock options subject to vesting based on Company performance that are held by such Named Executive Officer immediately before a change in control shall become fully vested and exercisable as of immediately before, and contingent upon, the change in control, provided that such Named Executive Officer remains employed by us as of such date. These options are described below in the table entitled Outstanding Equity Awards at Fiscal Year-End.

 

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Outstanding Equity Awards at Fiscal Year-End

The following table shows certain information regarding outstanding equity awards as of December 31, 2023, for the Named Executive Officers:

 

		Option Awards(1)
Name		Grant Date				Vesting Commencement Date				Number of Securities Underlying Unexercised Stock Options (#) Excerciseable				Number of Securities Underlying Unexercised Stock Options (#) Unexerciseable				Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)				Option Exercise Price ($)				Option Expiration Date				Equity Incentive Plan Awards: Number of Shares or Units of Stock That Have Not Vested (#)				Equity Incentive Plan Awards: Market Value of Shares or Units of Stock That Have Not Vested ($)
Joseph P. Hagan			2/5/2019	(2)			1/1/2019				6,500												9.50				2/4/2029
			2/5/2019	(3)			5/14/2019				1,000												9.50				2/4/2029
			10/10/2019	(2)			10/10/2019				99,999												6.40				10/9/2029
			1/22/2020	(2)			1/1/2020				88,125				1,875								13.10				1/21/2030
			1/22/2020	(4)			5/10/2022				29,999												13.10				1/21/2030
			1/22/2020	(5)															29,999				13.10				1/21/2030
			2/4/2021	(2)			1/1/2021				43,750				16,250								15.90				2/3/2031
			1/12/2022	(2)			1/1/2022				76,673				83,327								2.60				1/12/2032
			1/11/2023				1/1/2023				22,916				77,084								1.48				1/20/2033
			1/11/2023	(7)			1/12/2024																								30,000				38,400
			8/10/2023	(2)			8/10/2023				109,374				1,203,126								1.36				8/09/2033
			8/10/2023	(5)																											437,500				560,000
Christopher Aker			2/5/2019	(2)			1/1/2019				2,500												9.50				2/4/2029
			2/5/2019	(2)			5/14/2019				750												9.50				2/4/2029
			10/10/2019	(2)			10/10/2019				33,500												6.40				10/9/2029
			1/22/2020	(2)			1/1/2020				20,563				437								13.10				1/21/2030
			1/22/2020	(4)			5/10/2022				7,000												13.10				1/21/2030
			1/22/2020	(5)															7,000				13.10				1/21/2030
			2/4/2021	(2)			1/1/2021				13,125				4,875								15.90				2/3/2031
			1/12/2022	(2)			1/1/2022				23,002				24,997								2.60				1/11/2032
			1/11/2023				1/1/2023				10,312				34,688								1.48				1/20/2033
			1/11/2023	(7)			1/12/2024																								11,250				14,400
			8/10/2023	(2)			8/10/2023				32,812				360,938								1.36				8/09/2033
			8/10/2023	(5)																											131,250				168,000
Cris Calsada			8/30/2019	(6)			8/30/2019				10,000												6.20
			10/10/2019	(2)			10/10/2019				21,000												6.40
			1/22/2020	(4)							5,000												13.10
			1/22/2020	(5)															5,000				13.10
			1/22/2020	(2)							14,687				312								13.10
			2/4/2021	(2)							10,943				4,056								15.90
			1/12/2022	(2)							23,002				24,997								2.60
			1/11/2023				1/1/2023				10,312				24,688								1.48				1/20/2033
			1/11/2023	(7)			1/12/2024																								11,250				14,400
			8/10/2023	(2)			8/10/2023				31,249				343,751								1.36				8/09/2033
			8/10/2023	(5)																											125,000				160,000

 

(1)	Stock awards granted prior to October 2019 were granted under the 2012 Equity Incentive Plan. Stock awards granted thereafter were granted under the 2019 Plan. The terms of the 2012 Equity Incentive Plan and 2019 Plan are described below under “Equity Compensation Plans and Other Benefit Plans.”

 

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(2)	Consists of stock options vesting in equal monthly installments over a 48 month period, subject to the recipient’s continued service to the Company through each such vesting date.

(3)

Consists of a performance-vesting stock option with an exercise price of $9.50 per share, which only vests upon achievement of a previously specified performance objective. On May 14, 2019, the Board of Directors concluded the Company had met the criteria to commence vesting of the performance-vesting stock option consisting of a Board-approved transaction which the Board, in its sole discretion, determines is reasonably expected to provide adequate cash runway for achievement of the Company’s strategic objectives. Because of the achievement of the performance objective, 50% of the shares subject to the grant immediately vested with the remaining shares vesting in equal monthly installments over the following 24 months, subject to the recipient’s continued service to the Company through each such vesting date.

(4)

Consists of performance-vesting stock option with an exercise price of $13.10 per share which only vest upon achievement of a previously specified performance objective related to our most advanced clinical program, and in each case only if achieved by December 31, 2024. Upon achievement of the performance objective, 100% of the shares subject to the grant immediately vest. On May 10, 2022, our Board of Directors concluded the Company had met the criteria to commence vesting of one of the performance-vesting stock option consisting of the submission by the Company of a regulatory filing in support of its clinical program. Because of the achievement of the performance objective, 100% of the shares subject to the grant immediately vested.

(5)

Consists of a performance-vesting RSU award which vests only upon achievement of a specified development goal related to our RGLS8429 program. Upon achievement of the goal, 50% of the shares subject to the award will immediately vest with the remaining shares vesting on the first anniversary of the vesting commencement date.

(6)

Consists of a stock option that vests as follows: 25% of the shares subject to the grant vest on the first anniversary of the grant with the remainder vesting in equal monthly installments over a 36 month period, subject to the recipient’s continued service to the Company through each such vesting date.

(7)

Consists of a performance-vesting RSU which vests only upon achievement of a specified development goal related to our RGLS8429 program. On January 12, 2024, our Compensation Committee concluded the Company had met the criteria to commence vesting of the RSU based upon the Company’s full enrollment in Cohort 3 of the Company’s clinical study. Because of the achievement of the performance objective, 50% of the shares subject to the goal immediately vested with the remaining to vest on the first anniversary of the vesting commencement date.

Equity Compensation Plans

From October 2012 until August 2019, all equity awards (other than inducement awards) were granted pursuant to our 2012 Equity Incentive Plan (the “2012 Plan”). Beginning in August 2019, most equity awards (other than inducement awards) have been, and will be granted, pursuant to our 2019 Plan. In addition, we have granted inducement awards to new employees under our 2021 Inducement Plan (the “2021 Inducement Plan”). The terms of these plans are described below.

2019 Equity Incentive Plan

The 2019 Plan, which became effective in August 2019, provides for the grant of incentive stock options (“ISOs”), within the meaning of Section 422 of the Code, nonstatutory stock options (“NSOs”), stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based stock awards, and other forms of equity compensation (collectively, “stock awards”). Additionally, the 2019 Plan provides for the grant of performance cash awards. ISOs may be granted only to employees, subject to certain limitations. All other awards may be granted to employees, including officers, and to non-employee directors and consultants. As of December 31, 2023, under the 2019 Plan, there were outstanding stock options to purchase 5,644,343 shares of our common stock and 1,161,250 RSUs outstanding. 819,549 shares of our common stock remained available for the grant of stock awards under the 2019 Plan. If our stockholders approve Proposal 5, the 2019 Plan will be amended, effective as of the date of the annual meeting, as described in Proposal 5.

 

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Our Board of Directors, or a duly authorized committee thereof, has the authority to administer the 2019 Plan. Our Board of Directors has delegated its authority to administer the 2019 Plan to our Compensation Committee under the terms of our Compensation Committee’s charter. Our Board of Directors or our Compensation Committee may also delegate certain authority to one or more of our officers. Our Board of Directors or its authorized committee is referred to herein as the plan administrator.

Stock options are generally granted with an exercise price equal to the fair market value of our common stock on the date of grant, vest at the rate specified by the plan administrator (often over a four-year period) and may have a term up to a maximum of 10 years. The exercise price for an ISO or NSO generally cannot be less than 100% of the fair market value of our common stock on the date of grant. Unless the terms of an optionee’s stock option agreement provides otherwise, if an optionee’s service relationship with us, or any of our affiliates, ceases for any reason other than disability, death or cause, the optionee may generally exercise any vested options for a period of three months following the cessation of service. The option term may be extended in the event that exercise of the option following such a termination of service is prohibited by applicable securities laws or our insider trading policy. If an optionee’s service relationship with us, or any of our affiliates, ceases due to disability or death, or an optionee dies within a certain period following cessation of service, the optionee or a beneficiary may generally exercise any vested options for a period of 12 months in the event of disability and 18 months in the event of death. In the event of a termination for cause, options generally terminate immediately upon the termination of the individual. In no event may an option be exercised beyond the expiration of its term.

Restricted stock units generally stop vesting upon the holder’s termination of service with us and any unvested restricted stock units are forfeited, unless otherwise provided in an agreement with the holder.

Corporate transactions. In the event of certain specified significant corporate transactions (as defined in the 2019 Plan), the plan administrator has the discretion to take any of the following actions with respect to stock awards:

 

•

arrange for the assumption, continuation or substitution of a stock award by a surviving or acquiring entity or parent company;

 

•

arrange for the assignment of any reacquisition or repurchase rights held by us to the surviving or acquiring entity or parent company;

 

•

accelerate the vesting of the stock award and provide for its termination prior to the effective time of the corporate transaction;

 

•

arrange for the lapse of any reacquisition or repurchase right held by us;

 

•

cancel or arrange for the cancellation of the stock award in exchange for such cash consideration, if any, as our Board of Directors may deem appropriate; or

 

•

make a payment equal to the excess of (a) the value of the property the participant would have received upon exercise of the stock award over (b) the exercise price otherwise payable in connection with the stock award.

Change in control. The plan administrator may provide, in an individual award agreement or in any other written agreement between a participant and us, that the stock award will be subject to additional acceleration of vesting and exercisability in the event of a change in control (as defined in the 2019 Plan). For example, a stock award may provide for accelerated vesting upon the participant’s termination without cause or resignation for good reason in connection with a change in control. In the absence of such a provision, no such acceleration of the stock award will occur.

Repricings. The plan administrator may not: (i) reduce the exercise price of any outstanding options, or (ii) cancel any outstanding options that have an exercise price greater than the current fair market value of the Company’s common stock in exchange for cash or other stock awards under the 2019 Plan, unless the stockholders of the Company have approved such an action within twelve months prior to such an event.

 

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Amendment and termination. The Board has the authority to amend, suspend, or terminate the 2019 Plan, provided that such action does not materially impair the existing rights of any participant without such participant’s written consent. No ISOs may be granted after the tenth anniversary of the date our Board of Directors adopted the 2019 Plan.

2012 Equity Incentive Plan

The 2012 Plan became effective in connection with our initial public offering in October 2012, and was in effect until the approval by our stockholders of our 2019 Plan. The 2012 Plan provided for the grant of ISOs, NSOs, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance-based stock awards, and other forms of equity compensation, or collectively, stock awards. Additionally, the 2012 Plan provided for the grant of performance cash awards. ISOs were to be granted only to employees, subject to certain limitations. All other awards could be granted to employees, including officers, and to non-employee directors and consultants. As of December 31, 2023, there were outstanding stock options to purchase 13,357 shares of our common stock granted under the 2012 Plan.

Our Board of Directors, or a duly authorized committee thereof, administered the 2012 Plan. Our Board of Directors had delegated its authority to administer the 2012 Plan to our Compensation Committee under the terms of our Compensation Committee’s charter. Our Board of Directors also delegated certain authority to one or more of our officers. Our Board of Directors or its authorized committee is referred to herein as the plan administrator.

Stock options are generally granted with an exercise price equal to the fair market value of our common stock on the date of grant, vest at the rate specified by the plan administrator (often over a four-year period) and may have a term up to a maximum of 10 years. The exercise price for an ISO or NSO generally cannot be less than 100% of the fair market value of our common stock on the date of grant. Unless the terms of an optionee’s stock option agreement provides otherwise, if an optionee’s service relationship with us, or any of our affiliates, ceases for any reason other than disability, death or cause, the optionee may generally exercise any vested options for a period of three months following the cessation of service. The option term may be extended in the event that exercise of the option following such a termination of service is prohibited by applicable securities laws or our insider trading policy. If an optionee’s service relationship with us, or any of our affiliates, ceases due to disability or death, or an optionee dies within a certain period following cessation of service, the optionee or a beneficiary may generally exercise any vested options for a period of 12 months in the event of disability and 18 months in the event of death. In the event of a termination for cause, options generally terminate immediately upon the termination of the individual. In no event may an option be exercised beyond the expiration of its term. Restricted stock units generally stop vesting upon the holder’s termination of service with us and any unvested restricted stock units are forfeited, unless otherwise provided in an agreement with the holder.

Corporate transactions. In the event of certain specified significant corporate transactions (as defined in the 2012 Plan), the plan administrator has the discretion to take any of the following actions with respect to stock awards:

 

•

arrange for the assumption, continuation or substitution of a stock award by a surviving or acquiring entity or parent company;

 

•

arrange for the assignment of any reacquisition or repurchase rights held by us to the surviving or acquiring entity or parent company;

 

•

accelerate the vesting of the stock award and provide for its termination prior to the effective time of the corporate transaction;

 

•

arrange for the lapse of any reacquisition or repurchase right held by us;

 

•

cancel or arrange for the cancellation of the stock award in exchange for such cash consideration, if any, as our Board of Directors may deem appropriate; or

 

 

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•

make a payment equal to the excess of (a) the value of the property the participant would have received upon exercise of the stock award over (b) the exercise price otherwise payable in connection with the stock award.

Change in control. The plan administrator may provide, in an individual award agreement or in any other written agreement between a participant and us, that the stock award will be subject to additional acceleration of vesting and exercisability in the event of a change in control (as defined in the 2012 Plan). For example, a stock award may provide for accelerated vesting upon the participant’s termination without cause or resignation for good reason in connection with a change in control. In the absence of such a provision, no such acceleration of the stock award will occur.

2021 Inducement Plan

The 2021 Inducement Plan, which was adopted by our Board of Directors in November 2021, provides for the grant of NSOs, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance- based stock and cash awards, and other forms of equity compensation, or collectively, stock awards which may be granted only to persons as a material inducement to their commencement of employment with us, pursuant to Rule 5635(c)(4) of the Nasdaq Listing Rules.

Our Board of Directors, or a duly authorized committee thereof, has the authority to administer the 2021 Inducement Plan. Our Board of Directors has delegated its authority to administer the 2021 Inducement Plan to our Compensation Committee under the terms of our Compensation Committee’s charter. Grants under the 2021 Inducement Plan must be approved by the Compensation Committee (comprised of independent directors) or a majority of our independent directors (as defined in Rule 5605(a)(2) of the Nasdaq Listing Rules) in order to comply with the exemption from the stockholder approval requirement for “inducement grants” provided under Rule 5635(c)(4) of the Nasdaq Listing Rules. The terms of the Inducement Plan and awards granted thereunder are generally the same as the terms of our 2019 Plan as it relates to similar awards granted under our 2019 Plan.

As of December 31, 2023, under the 2021 Inducement Plan, there were outstanding stock options to purchase 530,000 shares of our common stock and 500,000 share of our common stock remained available for the grant of stock awards under the 2021 Inducement Plan.

2022 Employee Stock Purchase Plan

Additional long-term equity incentives are provided through the 2022 Employee Stock Purchase Plan (the “ESPP”), which became effective in June 2022. The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Code. Our Board of Directors has delegated its authority to administer the ESPP to our Compensation Committee. Under the ESPP, generally all of our regular employees (including our Named Executive Officers during their employment with us) may participate and may contribute, normally through payroll deductions, up to 15% of their earnings for the purchase of our common stock. The ESPP is implemented through a series of offerings of purchase rights to eligible employees. Under the ESPP, we may specify offerings with a duration of not more than 27 months, and may specify shorter purchase periods within each offering. Each offering will have one or more purchase dates on which our common stock will be purchased for employees participating in the offering. Unless otherwise determined by our Compensation Committee, shares are purchased for accounts of employees participating in the ESPP at a price per share equal to the lower of (a) 85% of the fair market value of our common stock on the first date of an offering or (b) 85% of the fair market value of our common stock on the date of purchase.

 

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DIRECTOR COMPENSATION

The following table shows certain information with respect to the compensation of all non-employee directors of the Company for the fiscal year ended December 31, 2023:

 

Name		Fees Earned or Paid in Cash($)(1)				Option Awards ($)(2)(3)(4)				Total ($)
David Baltimore, Ph.D.			48,000				47,441				95,441
Kathryn J. Collier			60,000				47,441				107,441
Alice S. Huang, Ph.D.			46,000				47,441				93,441
Jake Nunn			50,000				47,441				97,441
Stelios Papadopoulos, Ph.D.			84,000				47,441				131,441
William H. Rastetter, Ph.D.			52,000				47,441				99,441
Hugh Rosen, M.D., Ph.D.			46,000				47,441				93,441
Pascale Witz			46,000				47,441				93,441

 

(1)	Amounts listed represent cash payments made for Board and Committee service which were earned in 2023.

(2)

Amounts listed represent the aggregate grant date fair value amount computed as of the grant date of each option awarded during 2023 in accordance with ASC 718. Assumptions used in the calculation of these amounts are included in Note 10 to the Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2023.

(3)

Represents the annual option grant to purchase 30,000 shares of our common stock granted to each of our non-employee directors serving on June 13, 2023 under our non-employee director compensation policy, as further described below and a special option grant to purchase 15,000 shares of our common stock granted to each non-employee director on August 10, 2023. The latter grant is further explained below.

(4)	As of December 31, 2023, each non-employee director held outstanding options to purchase 64,975 shares with the exception of Dr. Huang who held 66,000 shares. As of December 31, 2023, none of our non-employee directors held unvested stock awards other than options.

We maintain a non-employee director compensation policy (our “director compensation policy”), that became effective following our initial public offering. Under our non-employee director compensation policy as in effect for the year ended December 31, 2023, we provide cash compensation in the form of an annual retainer of $40,000 to each of our non-employee directors (our “Eligible Directors”) other than the chair of the Board, to whom we provide a $70,000 cash retainer. We also pay an additional annual retainer of $20,000 to the chair of our Audit Committee, $10,000 to other Eligible Directors who serve on our Audit Committee, $12,000 to the chair of our Compensation Committee, $6,000 to other Eligible Directors who serve on our Compensation Committee, $8,000 to the chair of our Nominating and Corporate Governance Committee and $4,000 to other Eligible Directors who serve on our Nominating and Corporate Governance Committee. We have reimbursed and will continue to reimburse our non-employee directors for travel, lodging and other reasonable expenses incurred in attending meetings of our Board of Directors and committees of our Board of Directors.

Directors who are also employees do not receive cash or equity compensation for service on our Board of Directors in addition to the compensation payable for their service as our employees.

Pursuant to our director compensation policy, each Eligible Director who is first elected to our Board of Directors is granted an option to purchase shares and/or RSU awards covering shares of the Company’s common stock on the date of his or her initial election to our Board of Directors. Each continuing Eligible Director also receives an annual option grant and/or RSU award at our annual meeting of stockholders. Per the director compensation policy, the Board of Directors will determine the number of shares underlying the awards and the vesting schedules.

 

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In December 2022, the Board of Directors, upon the recommendation of the Compensation Committee, approved an annual option grant to purchase 30,000 shares to each Eligible Director re-elected at our annual meeting of stockholders in 2023. No recommendation was made for any new Eligible Director as none were expected to be appointed in 2023. In August 2023, the Board of Directors, upon the recommendation of the Compensation Committee, granted a stock option to purchase 15,000 shares to each Eligible Director. The recommendation was made following analysis and recommendations by Aon concerning the total options held by our directors as compared with the Company’s peers as a percentage of the Company. In December 2023, the Board of Directors, upon the recommendation of the Compensation Committee, approved an annual option grant to purchase 30,000 shares to each Eligible Director re-elected at our annual meeting of stockholders in 2024.

Each initial option granted to such Eligible Directors described above will vest and become exercisable with respect to one-third of the shares subject to the option on the first anniversary of the date of grant and the balance of the shares will vest and become exercisable in a series of 24 equal monthly installments thereafter, such that the option is fully vested on the third anniversary of the date of grant, subject to the Eligible Director continuing to provide services to us through such dates. Each annual option granted to such Eligible Directors described above will vest and become exercisable in 12 equal monthly installments such that the option will be fully vested on the first anniversary of the date of grant, or as of the date of the next annual meeting of the Company’s stockholders, whichever occurs first and subject to the Eligible Director continuing to provide services to us through such dates. The term of each option granted to an Eligible Director is 10 years and, in general, may remain exercisable with respect to the then-vested shares for up to 12 months following the termination of such Eligible Director’s continuous service. All awards granted under our director compensation policy will vest in full upon the closing of a change in control of the Company.

The options granted to our non-employee directors are granted under our 2019 Plan, the terms of which are described in more detail above under “Equity Compensation Plans—2019 Equity Incentive Plan.”

ITEM 402(V) PAY VERSUS PERFORMANCE

The disclosure included in this section is prescribed by SEC rules and does not necessarily align with how the Company or the Compensation Committee view the link between the Company’s performance and NEO pay. This disclosure is intended to comply with the requirements of Item 402(v) of Regulation S-K applicable to “smaller reporting companies.” For additional information about our pay for performance compensation philosophy and how we seek to align executive compensation with the Company’s performance, refer to “Executive Compensation” beginning on page 23.

Required Tabular Disclosure of Pay Versus Performance

The amounts set forth below under the headings “Compensation Actually Paid to PEO” and “Average Compensation Actually Paid to Non-PEO NEOs” have been calculated in a manner consistent with Item 402(v) of Regulation S-K. Use of the term “compensation actually paid” is required by the SEC’s rules and as a result of the calculation methodology required by the SEC, such amounts differ from compensation actually received by the individuals and the compensation decisions described in the “Executive Compensation” section above. Our

 

37

Chief Executive Officer is our principal executive officer and is referred to as PEO in the headers to the following tables.

 

PAY VERSUS PERFORMANCE
Year		Summary Compensation Table Total for PEO(1) ($)				Compensation Actually Paid to PEO(2) ($)				Average Summary Compensation Table Total for Non-PEO NEOs(3) ($)				Average Compensation Actually Paid to Non-PEO NEOs(2) ($)				Value of Initial Fixed $100 Investment Based On Total Shareholder Return(4) ($)				Net Income (Loss) (thousands)(5) ($)
(a)		(b)				(c)				(d)				(e)				(f)				(g)
2023			2,565,223				2,400,021				1,076,631				1,021,717				9.48				(30,037	)
2022			1,343,238				954,461				639,581				533,937				10.15				(28,323	)
2021			1,822,247				(503,048	)			757,466				172,348				23.33				(27,808	)

 

(1)	The dollar amounts reported in column (b) are the amounts of total compensation reported for Mr. Hagan (our Chief Executive Officer) for each corresponding year in the “Total” column of the Summary Compensation Table. Refer to “Executive Compensation—Summary Compensation Table.”

(2)

The dollar amounts reported in column (c) and (e) represent the amount of “compensation actually paid” to Mr. Hagan and the average amount of “compensation actually paid” to our non-PEO NEOs, respectively, as computed in accordance with Item 402(v) of Regulation S-K. The dollar amounts do not reflect the actual amount of compensation earned by or paid to our NEOs during the applicable year. In accordance with the requirements of Item 402(v) of Regulation S-K, the following adjustments were made to the reported total compensation for each year to determine the compensation actually paid:

 

		PEO 2023 ($)				Average of Non-PEO NEOs 2023 ($)
Summary Compensation Table Total			2,575,123				1,076,631
Deduct: Grant Date Fair Value of “Stock Awards” and “Option Awards” columns as reported in Summary Compensation Table			1,616,091				499,060
Add: Year-End Fair Value of Equity Awards Granted in the Year			1,373,658				420,347
Add: Change in Fair Value of Outstanding and Unvested Equity Awards Granted in Prior Fiscal Year			(23,031	)			(6,227	)
Add: Fair Value at Vesting of Option Awards and Stock Awards Granted in Fiscal Year That Vested During Fiscal Year			151,315				48,127
Add: Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year			(6,153	)			(1,661	)
Deduct: Fair Value at the End of the Prior Year of Equity Awards that Failed to Meet Vesting Conditions in the Year			54,800				16,440
Compensation Actually Paid		$	2,400,021			$	1,021,717

 

(3)

The dollar amounts reported in column (d) represent the average of the amounts reported for the non-PEO NEOs as a group in the “Total” column of the Summary Compensation Table in each applicable year. The non-PEO NEOs included for purposes of calculating the average amounts in each applicable year are Mr. Aker and Ms. Calsada.

(4)

TSR is determined based on the value of an initial fixed investment of $100 on December 31, 2020. Cumulative TSR is calculated by dividing the sum of the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and the difference between the Company’s share price at the end and the beginning of the measurement period by the Company’s share price at the beginning of the measurement period.

(5)	Net loss attributable to the Company as reported in our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.

 

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Required Narrative Disclosure to Pay Versus Performance Table

In accordance with Item 402(v) of Regulation S-K, we are providing the following descriptions of the relationships between information presented in the Pay Versus Performance table above.

Compensation Actually Paid and Net Loss

Because the Company is a pre-commercial stage company, we had no revenue during the periods presented. Consequently, we do not use net income (loss) as a performance measure in our executive compensation program. Moreover, as a pre-commercial stage company with no revenue, we do not believe there is any meaningful relationship between our net loss and compensation actually paid to our NEOs during the periods presented.

 

 

 

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Compensation Actually Paid and Cumulative TSR

The chart below shows the relationship between the compensation actually paid to our PEO and the average compensation actually paid to our non-PEO NEOs, on the one hand, to the Company’s cumulative TSR over the three years presented in the table, on the other.

 

 

All information provided above under the “Item 402(v) Pay Versus Performance” heading will not be deemed to be incorporated by reference into any filing of the Company under the Securities Act, or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing, except to the extent the Company specifically incorporates such information by reference.

 

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PROPOSAL 4

ADVISORY VOTE ON THE FREQUENCY OF HOLDING STOCKHOLDER ADVISORY VOTES ON THE COMPENSATION OF THE COMPANY’S NAMED EXECUTIVE OFFICERS.

The Dodd-Frank Wall Street Reform and Consumer Protection Act, and Section 14A of the Exchange Act, enable the Company’s stockholders, at least once every six years, to indicate their preference regarding how frequently the Company should solicit a non-binding advisory vote on the compensation of the Company’s named executive officers as disclosed in the Company’s proxy statement. Accordingly, the Company is asking its stockholders to indicate whether they would prefer an advisory vote every year, every other year or every three years. Alternatively, stockholders may abstain from casting a vote. For the reasons described below, the Board recommends that the stockholders select a frequency of one year.

After careful consideration, our Board of Directors has determined that holding an advisory vote on executive compensation every year is the most appropriate policy for us at this time, and recommends that stockholders vote for future advisory votes on executive compensation to occur every year. While our executive compensation program is designed to promote a long-term connection between pay and performance, our Board of Directors recognizes that executive compensation disclosures are made annually. Our Board of Directors considered that an annual advisory vote on executive compensation will allow our stockholders to provide us with their direct input on our compensation philosophy, policies and practices as disclosed in the proxy statement every year. However, stockholders should note that because the advisory vote on executive compensation occurs well into the compensation year, and because the different elements of our executive compensation program are designed to operate as part of an integrated program, it may not be appropriate or feasible to modify our executive compensation program in consideration of any one year’s advisory vote on executive compensation by the time of the following year’s annual meeting of stockholders.

We understand that our stockholders may have different views as to what is the best approach for us, and we look forward to hearing from our stockholders on this proposal.

Accordingly, our Board of Directors is asking stockholders to indicate their preferred voting frequency by voting for every year, every two years or every three years.

While our Board of Directors believes that its recommendation is appropriate at this time, the stockholders are not voting to approve or disapprove that recommendation, but are instead asked to indicate their preferences, on an advisory basis, as to whether the non-binding advisory vote on the approval of our executive officer compensation practices should be held every year, every two years or every three years. Under our bylaws, to be approved, a frequency must receive “For” votes from the holders of a majority of shares present in person or represented by proxy and entitled to vote generally on the subject matter. Abstentions will have the same effect as “Against” votes for each of the proposed frequencies. However if no one frequency receives “For” votes from the holders of a majority of shares present in person or represented by proxy and entitled to vote generally on the subject matter, we will consider the frequency receiving the highest number of affirmative votes to be the frequency preferred by our stockholders. Broker non-votes will have no effect.

Our Board of Directors and the Compensation Committee value the opinions of our stockholders in this matter, and, to the extent there is any significant vote in favor of one frequency over the other options, our Board will consider the stockholders’ concerns and evaluate any appropriate next steps. However, because this vote is advisory and, therefore, not binding on us or our Board may decide that it is in the best interests of our stockholders that we hold an advisory vote on executive compensation more or less frequently than the option preferred by our stockholders. The vote will not be construed to create or imply any change or addition to our fiduciary duties or those of our Board.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE

In Favor of ONE YEAR FOR PROPOSAL 4

 

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PROPOSAL 5

APPROVAL OF AN AMENDMENT TO THE 2019 EQUITY INCENTIVE PLAN

The Board of Directors is requesting stockholder approval of an amendment to the Regulus Therapeutics Inc. 2019 Equity Incentive Plan (the “2019 Plan”), as proposed to be amended in accordance with this Proposal 5. We refer to the 2019 Plan, as proposed to be amended, as the “Amended 2019 Plan” in the proxy statement. The 2019 Plan was previously amended in 2023 upon approval of our shareholders.

The Amended 2019 Plan contains the following material changes from the 2019 Plan:

 

•

Subject to adjustment for certain changes in our capitalization, the aggregate number of shares of our common stock that may be issued under the Amended 2019 Plan will not exceed 18,574,542 shares, which is an increase of 9,500,000 shares over the aggregate number of shares of our common stock that may be issued under the 2019 Plan.

 

•

Subject to adjustment for certain changes in our capitalization, the aggregate maximum number of shares of our common stock that may be issued pursuant to the exercise of incentive stock options under the Amended 2019 Plan will be 55,000,000 shares, which is an increase of 37,585,501 shares over the aggregate maximum number of shares of our common stock that may be issued pursuant to the exercise of incentive stock options under the 2019 Plan.

 

•

Modifies the calculation of the number of shares of our common stock added automatically on January 1 of each year after the approval of the Amended 2019 Plan through (and including) January 1, 2029 (the “Evergreen Mechanism”), to be equal to 5.0% of the sum of (x) the total number of shares of common stock outstanding on December 31st of the preceding calendar year plus (y) the total number of shares of common stock issuable upon conversion of shares of convertible preferred stock outstanding on December 31st of the preceding calendar year plus (z) the total number of shares of common stock issuable upon cash exercise of prefunded warrants outstanding on December 31st of the preceding calendar year.

Why We Are Asking Our Stockholders to Approve the Amended 2019 Plan

We are seeking stockholder approval of the Amended 2019 Plan primarily to increase the number of shares available for the grant of stock options, restricted stock unit awards and other awards by 9,500,000 shares and to change the annual evergreen formula to reflect shares of common stock that would otherwise be issued and outstanding but for beneficial ownership limitations applicable to our investors, which will enable us to have a competitive equity incentive program to compete with our peer group for key talent.

Our stockholders’ approval of the Amended 2019 Plan will allow us to continue to grant stock options, restricted stock unit awards and other awards at levels determined appropriate by the Board of Directors or Compensation Committee. The Amended 2019 Plan will also allow us to further utilize a broad array of equity incentives in order to secure and retain the services of our employees and directors, and to continue to provide long-term incentives that align the interests of our employees and directors with the interests of our stockholders.

Stockholder Approval

If this Proposal 5 is approved by our stockholders, the Amended 2019 Plan will become effective as of the date of the Annual Meeting. In the event that our stockholders do not approve this Proposal 5, the Amended 2019 Plan will not become effective and the 2019 Plan will continue in its current form.

 

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Why You Should Vote for the Amended 2019 Plan

The Amended 2019 Plan Balances Compensation and Governance Best Practices

The Amended 2019 Plan contains certain provisions that are designed to protect our stockholders’ interests and to reflect corporate governance best practices including:

 

•

Repricing is not allowed without prior stockholder approval. The Amended 2019 Plan prohibits the repricing of stock options and stock appreciation rights without prior stockholder approval.

 

•

No discounted stock options or stock appreciation rights. All stock options and stock appreciation rights granted under the Amended 2019 Plan must have an exercise price equal to or greater than the fair market value of our common stock on the date the stock option or stock appreciation right is granted.

 

•

Limit on non-employee director compensation. The aggregate value of all compensation granted or paid, as applicable, to any individual for service as a non-employee director with respect to any calendar year, including awards granted and cash fees paid by the Company to such non-employee director, will not exceed (i) $750,000 in total value or (ii) in the event such non-employee director is first appointed or elected to the Board of Directors during such period, $1,000,000 in total value, in each case calculating the value of any equity awards based on the grant date fair value of such equity awards for financial reporting purposes.

 

•

No liberal change in control definition. The change in control definition in the Amended 2019 Plan is not a “liberal” definition. A change in control transaction must actually occur in order for the change in control provisions in the Amended 2019 Plan to be triggered.

 

•

Material amendments require stockholder approval. The Amended 2019 Plan requires stockholder approval of any material revisions to the Amended 2019 Plan. In addition, certain other amendments to the Amended 2019 Plan require stockholder approval.

 

•

Awards subject to forfeiture/clawback. Awards granted under the Amended 2019 Plan will be subject to recoupment in accordance with our Incentive Compensation Recoupment Policy and any other clawback policy that we adopt. In addition, we may impose other clawback, recovery or recoupment provisions in an award agreement, including a reacquisition right in respect of previously acquired shares or other cash or property upon the occurrence of cause.

Overhang

The following table provides certain information regarding our equity incentive program.

 

		As of March 31, 2024
Total number of shares of common stock subject to outstanding stock options			7,174,752
Weighted-average exercise price of outstanding stock options		$	2.41
Weighted-average remaining term of outstanding stock options			8.92 years
Total number of shares of common stock subject to outstanding restricted stock unit awards			1,428,250
Total number of shares of common stock available for grant under the 2019 Plan(1)			471,540
Total number of shares of common stock available for grant under the 2021 Inducement Plan(1)			500,000

 

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		As of April 18, 2024
Total number of shares of common stock outstanding on an as-converted basis(2)			102,511,140
Per-share closing price of common stock as reported on Nasdaq Capital Market(3)		$	2.88

 

(1)	As of April 18, 2024, there were no shares of common stock available for grant under any of our equity incentive plans, other than the 2019 Plan and the 2021 Inducement Plan, as described in this table.

(2)

Includes shares of common stock issuable upon conversion of outstanding shares of our non-voting convertible preferred stock. Such shares of non-voting convertible preferred stock were issued to investors in private placement financings in lieu of shares of common stock due to investor need for beneficial ownership blocker securities.

(3)	Reflects the closing price of our common stock on March 28, 2024, the last trading day of the quarter.

Please also refer to “Equity Compensation Plan Information” on page 57.

We Manage Our Equity Incentive Award Use Carefully, and Dilution Is Reasonable

Our Board and its Compensation Committee (the “Compensation Committee”) continue to believe that equity incentive awards such as stock options and restricted stock unit awards are a vital part of our overall compensation program and enhance our ability to retain, recruit and motivate our personnel who are critical to our ability to execute successfully and implement our plans to advance RGLS8429 for the treatment of ADPKD and to advance our preclinical programs. Our compensation philosophy reflects broad-based eligibility for equity incentive awards, and we grant awards to substantially all of our employees because equity awards align the interests of our employees with those of our stockholders and are an important contributing factor to our success and the future growth of our business. Further, unlike most of our peer companies, we grant equity awards to our executive officers whose vesting is contingent on meeting pre-defined performance criteria, thereby further ensuring alignment with value creation. However, we recognize that equity incentive awards dilute existing stockholders, and, therefore, we must responsibly manage the growth of our equity compensation program. We are committed to effectively monitoring our equity compensation share reserve, including our “burn rate,” to ensure that we maximize stockholders’ value by granting the appropriate number of equity incentive awards necessary to attract, reward, and retain employees. In addition, the vesting of some of our equity awards granted to our Named Executive Officers is contingent on meeting pre-defined performance criteria, thereby ensuring alignment with value creation.

The following table shows our responsible historical dilution and burn rate percentages.

 

As of December 31		2023				2022				2021
Full Dilution(1)			30	%			11	%			18	%
Gross Burn Rate (as discussed in greater detail below)(2)			39	%			9	%			11	%

 

(1)	Full Dilution is calculated as (shares available for grant + shares subject to outstanding equity incentive awards)/(weighted average common stock outstanding + shares available for grant + shares subject to outstanding equity incentive awards).

(2)

Gross Burn Rate is calculated as (shares subject to options granted + shares subject to other equity incentive awards granted)/weighted average common stock outstanding on an as-converted basis. Weighted average common stock outstanding on an as-converted basis includes shares of common stock issuable upon conversion of outstanding shares of our non-voting convertible preferred stock.

Current Equity Holdings and Reserves Are Inadequate

We believe that the shares currently available for grant under the 2019 Plan will be insufficient to meet our anticipated retention and recruiting needs. As of the record date of the Annual Meeting, shares remaining

 

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available for future grant under the 2019 Plan represented approximately 0.72% of our outstanding shares of common stock on an as-converted basis and outstanding equity awards covered approximately 7.2% of our outstanding shares of common stock on an as-converted basis.

The Size of Our Share Reserve Increase Request Is Reasonable

If this Proposal 5 is approved by our stockholders, we will have 9,500,000 new shares available for grant after our Annual Meeting, and a total of 9,971,540 shares will be available for grant after the Annual Meeting under the Amended 2019 Plan, representing approximately 9.7% of our outstanding shares of common stock on an as-converted basis as of the record date for the Annual Meeting.

Additionally, the Amended 2019 Plan includes an annual evergreen increase that our stockholders previously approved in 2019, to allow our Board the flexibility to include additional shares, up to 5% of the number of shares of our common stock outstanding (or, if this Proposal 5 is adopted, 5% of the sum of (x) the total number of shares of common stock outstanding on December 31st of the preceding calendar year plus (y) the total number of shares of common stock issuable upon conversion of shares of convertible preferred stock outstanding on December 31st of the preceding calendar year plus (z) the total number of shares of common stock issuable upon cash exercise of prefunded warrants outstanding on December 31st of the preceding calendar year (which sunsets after January 1, 2029).

We Manage Our Burn Rate Responsibly

We are committed to effectively monitoring our equity incentive plan share reserve, including our “burn rate,” to ensure that we maximize stockholders’ value by granting the appropriate number of equity incentive awards necessary to attract, reward and retain key personnel. Our 3-year average burn rate (as calculated as described in the footnote to the table below) is 13.6%.

The following table provides detailed information regarding the activity related to our equity incentive plans for fiscal years 2023, 2022, and 2021.

 

		Fiscal Year 2023				Fiscal Year 2022				Fiscal Year 2021
Total number of shares of common stock subject to stock options granted			5,007,500				569,596				335,047
Total number of shares of common stock subject to restricted stock unit awards granted			1,161,250				84,800				44,550
Weighted-average number of shares of common stock outstanding(1)			18,960,401				15,259,958				8,569,854
Burn Rate(2)			33	%			4	%			4	%

 

(1)

Represents shares of common stock outstanding and shares issuable upon conversion of preferred stock. Does not include shares issuable upon exercise of warrants and options, and settlement of restricted stock units. Refer to Note 2 to our financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.

(2)	Burn rate is calculated as (shares subject to options granted + shares subject to other equity incentive awards granted)/weighted average common stock outstanding.

Description of the Amended 2019 Plan

A summary of the principal features of the Amended 2019 Plan follows below. The summary is qualified by the full text of the Amended 2019 Plan that is attached as Appendix A to this proxy statement.

 

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Purpose

The Amended 2019 Plan is designed to secure and retain the services of our employees, directors and consultants, provide incentives for our employees and directors to exert maximum efforts for the success of the Company and its affiliates, and provide a means by which our employees, directors and consultants may be given an opportunity to benefit from increases in the value of our common stock.

Types of Awards

The Amended 2019 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock and cash awards and other stock awards.

Shares Available for Awards

Subject to adjustment for certain changes in our capitalization, the aggregate number of shares of our common stock that may be issued under the Amended 2019 Plan will not exceed 18,574,542 shares, which is the sum of (i) 272,577 shares that were approved at the Company’s 2019 Annual Meeting of Stockholders, plus (ii) an additional 416,686 shares that became available pursuant to the milestone closing under our May 2019 securities purchase agreement, plus (iii) the number of unallocated shares remaining available for grant under the 2012 Equity Incentive Plan (the “2012 Plan”) as of the effective date of the 2019 Plan, plus (iv) the Prior Plans’ Returning Shares (as defined below), as such shares become available from time to time, plus (v) 5,000,000 shares approved by our Shareholders in 2023, plus (vi) the 9,500,000 new requested shares. In addition, the number of shares of our common stock reserved for issuance under the Amended 2019 Plan will automatically increase on January 1 of each year, for a period of not more than ten years, beginning on January 1, 2021, and continuing through January 1, 2029, by 5.0% of the total number of shares of our capital stock outstanding on December 31 of the preceding calendar year (or, if this Proposal 5 is adopted, by 5.0% of the of the sum of (x) the total number of shares of common stock outstanding on December 31st of the preceding calendar year plus (y) the total number of shares of common stock issuable upon conversion of shares of convertible preferred stock outstanding on December 31st of the preceding calendar year plus (z) the total number of shares of common stock issuable upon cash exercise of prefunded warrants outstanding on December 31st of the preceding calendar year), or a lesser number of shares as may be determined by our Board of Directors.

The term “Prior Plans’ Returning Shares” refers to the following shares of our common stock subject to any outstanding stock award granted under either of the 2012 Plan or our 2009 Equity Incentive Plan: (i) any shares subject to such stock award that are not issued because such stock award expires or otherwise terminates without all of the shares covered by such stock award having been issued; (ii) any shares issued pursuant to such stock award that are forfeited back to us because of a failure to vest or otherwise return to us; and (iii) any shares that are reacquired, withheld (or not issued) to satisfy a tax withholding obligation in connection with an award or to satisfy the purchase price or exercise price of an award.

The following shares of our common stock will also become available again for issuance under the Amended 2019 Plan: (i) any shares subject to a stock award granted under the Amended 2019 Plan that are not issued because such stock award expires or otherwise terminates without all of the shares covered by such stock award having been issued; (ii) any shares subject to a stock award granted under the Amended 2019 Plan that are not issued because such stock award is settled in cash; (iii) any shares issued pursuant to a stock award granted under the Amended 2019 Plan that are forfeited back to or repurchased by us because of a failure to vest; and (iv) any shares that are reacquired by us to satisfy a tax withholding obligation in connection with an award or to satisfy the purchase price or exercise price of an award.

Eligibility

All of our (including our affiliates’) employees, consultants and non-employee directors are eligible to participate in the Amended 2019 Plan and may receive all types of awards other than incentive stock options.

 

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Incentive stock options may be granted under the Amended 2019 Plan only to our (including our affiliates’) employees.

As of April 18, 2024, we (including our affiliates) had approximately 29 employees, 13 consultants and eight non-employee directors.

Non-Employee Director Compensation Limit

Under the Amended 2019 Plan, the maximum number of shares of our common stock subject to stock awards granted during any one calendar year to any of our non-employee directors, taken together with any cash fees paid by the Company to such non-employee director during such calendar year, will not exceed $750,000 in total value, or $1,000,000 with respect to the calendar year in which the individual is first appointed or elected to the Board of Directors (calculating the value of any such stock awards based on the grant date fair value of such stock awards for financial reporting purposes).

Administration

The Amended 2019 Plan will be administered by our Board of Directors, which may in turn delegate authority to administer the Amended 2019 Plan to a committee. Our Board of Directors has delegated concurrent authority to administer the Amended 2019 Plan to our Compensation Committee. Our Board of Directors and Compensation Committee are each considered to be a Plan Administrator for purposes of this Proposal 5.

Subject to the terms of the Amended 2019 Plan, the Plan Administrator may determine the recipients, the types of awards to be granted, the number of shares of our common subject to or the cash value of awards, and the terms and conditions of awards granted under the Amended 2019 Plan, including the period of their exercisability and vesting. The Plan Administrator also has the authority to provide for accelerated exercisability and vesting of awards. Subject to the limitations set forth below, the Plan Administrator also determines the fair market value applicable to a stock award and the exercise or strike price of stock options and stock appreciation rights granted under the Amended 2019 Plan.

The Plan Administrator may also delegate to one or more persons or bodies the authority (i) to designate recipients, other than officers and other than themselves, to be recipients of stock awards, (ii) to determine the number of shares of our common stock subject to such stock awards and (iii) to determine the terms of such stock awards. The Plan Administrator will fix the terms of such delegation in accordance with applicable law.

Repricing; Cancellation and Re-Grant of Stock Awards

Under the Amended 2019 Plan, the Plan Administrator does not have the authority to reprice any outstanding stock option or stock appreciation right by reducing the exercise or strike price of the stock option or stock appreciation right or to cancel any outstanding stock option or stock appreciation right that has an exercise or strike price greater than the then-current fair market value of our common stock in exchange for cash or other stock awards without obtaining the approval of our stockholders. Such approval must be obtained within 12 months prior to such an event.

Stock Options

Stock options may be granted under the Amended 2019 Plan pursuant to stock option agreements. The Amended 2019 Plan permits the grant of stock options that are intended to qualify as incentive stock options, or ISOs, and nonstatutory stock options, or NSOs.

The exercise price of a stock option granted under the Amended 2019 Plan may not be less than 100% of the fair market value of our common stock on the date of grant and, in some cases (see “Limitations on Incentive Stock Options” below), may not be less than 110% of such fair market value.

 

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The term of stock options granted under the Amended 2019 Plan may not exceed ten years and, in some cases (see “Limitations on Incentive Stock Options” below), may not exceed five years. Except as otherwise provided in a participant’s stock option agreement or other written agreement with us or one of our affiliates, if a participant’s service relationship with us or any of our affiliates (referred to in this Proposal 5 as “continuous service”) terminates (other than for cause and other than upon the participant’s death or disability), the participant may exercise any vested stock options for up to three months following the participant’s termination of continuous service. Except as otherwise provided in a participant’s stock option agreement or other written agreement with us or one of our affiliates, if a participant’s continuous service terminates due to the participant’s disability or death (or the participant dies within a specified period, if any, following termination of continuous service), the participant, or his or her beneficiary, as applicable, may exercise any vested stock options for up to 12 months following the participant’s termination due to the participant’s disability or for up to 18 months following the participant’s death. Except as explicitly provided otherwise in a participant’s stock option agreement or other written agreement with us or one of our affiliates, if a participant’s continuous service is terminated for cause (as defined in the Amended 2019 Plan), all stock options held by the participant will terminate upon the participant’s termination of continuous service and the participant will be prohibited from exercising any stock option from and after such termination date. Unless otherwise provided in a participant’s stock option agreement, the term of a stock option may be extended if the exercise of the stock option following the participant’s termination of continuous service (other than for cause and other than upon the participant’s death or disability) would be prohibited by applicable securities laws or if the sale of any common stock received upon exercise of the stock option following the participant’s termination of continuous service (other than for cause) would violate our insider trading policy. In no event, however, may a stock option be exercised after its original expiration date.

Acceptable forms of consideration for the purchase of our common stock pursuant to the exercise of a stock option under the Amended 2019 Plan will be determined by the Plan Administrator and may include payment: (i) by cash, check, bank draft or money order payable to us; (ii) pursuant to a program developed under Regulation T promulgated by the Federal Reserve Board; (iii) by delivery to us of shares of our common stock (either by actual delivery or attestation); (iv) by a net exercise arrangement (for NSOs only); or (v) in other legal consideration approved by the Plan Administrator.

Stock options granted under the Amended 2019 Plan may vest and become exercisable in cumulative increments, as determined by the Plan Administrator at the rate specified in the stock option agreement. Shares covered by different stock options granted under the Amended 2019 Plan may be subject to different vesting schedules as the Plan Administrator may determine.

The Plan Administrator may impose limitations on the transferability of stock options granted under the Amended 2019 Plan in its discretion. Generally, a participant may not transfer a stock option granted under the Amended 2019 Plan other than by will or the laws of descent and distribution or, subject to approval by the Plan Administrator, pursuant to a domestic relations order or an official marital settlement agreement. However, the Plan Administrator may permit transfer of a stock option in a manner that is not prohibited by applicable tax and securities laws. In addition, subject to approval by the Plan Administrator, a participant may designate a beneficiary who may exercise the stock option following the participant’s death.

Limitations on Incentive Stock Options

The aggregate fair market value, determined at the time of grant, of shares of our common stock with respect to ISOs that are exercisable for the first time by a participant during any calendar year under all of our stock plans may not exceed $100,000. The stock options or portions of stock options that exceed this limit or otherwise fail to qualify as ISOs are treated as NSOs. No ISO may be granted to any person who, at the time of

 

48

grant, owns or is deemed to own stock possessing more than 10% of our total combined voting power or that of any affiliate unless the following conditions are satisfied:

 

•

the exercise price of the ISO must be at least 110% of the fair market value of our common stock on the date of grant; and

 

•

the term of the ISO must not exceed five years from the date of grant.

Subject to adjustment for certain changes in our capitalization, the aggregate maximum number of shares of our common stock that may be issued pursuant to the exercise of ISOs under the Amended 2019 Plan is 55,000,000 shares.

Stock Appreciation Rights

Stock appreciation rights may be granted under the Amended 2019 Plan pursuant to stock appreciation right agreements. Each stock appreciation right is denominated in common stock share equivalents. The strike price of each stock appreciation right will be determined by the Plan Administrator, but will in no event be less than 100% of the fair market value of our common stock on the date of grant. The Plan Administrator may also impose restrictions or conditions upon the vesting of stock appreciation rights that it deems appropriate. The appreciation distribution payable upon exercise of a stock appreciation right may be paid in shares of our common stock, in cash, in a combination of cash and stock, or in any other form of consideration determined by the Plan Administrator and set forth in the stock appreciation right agreement. Stock appreciation rights will be subject to the same conditions upon termination of continuous service and restrictions on transfer as stock options under the Amended 2019 Plan.

Restricted Stock Awards

Restricted stock awards may be granted under the Amended 2019 Plan pursuant to restricted stock award agreements. A restricted stock award may be granted in consideration for cash, check, bank draft or money order payable to us, the participant’s services performed for us or any of our affiliates, or any other form of legal consideration acceptable to the Plan Administrator. Shares of our common stock acquired under a restricted stock award may be subject to forfeiture to or repurchase by us in accordance with a vesting schedule to be determined by the Plan Administrator. Rights to acquire shares of our common stock under a restricted stock award may be transferred only upon such terms and conditions as are set forth in the restricted stock award agreement. Upon a participant’s termination of continuous service for any reason, any shares subject to restricted stock awards held by the participant that have not vested as of such termination date may be forfeited to or repurchased by us.

Restricted Stock Unit Awards

Restricted stock unit awards may be granted under the Amended 2019 Plan pursuant to restricted stock unit award agreements. Payment of any purchase price may be made in any form of legal consideration acceptable to the Plan Administrator. A restricted stock unit award may be settled by the delivery of shares of our common stock, in cash, in a combination of cash and stock, or in any other form of consideration determined by the Plan Administrator and set forth in the restricted stock unit award agreement. Restricted stock unit awards may be subject to vesting in accordance with a vesting schedule to be determined by the Plan Administrator. Except as otherwise provided in a participant’s restricted stock unit award agreement or other written agreement with us or one of our affiliates, restricted stock units that have not vested will be forfeited upon the participant’s termination of continuous service for any reason.

Performance Stock Awards

A performance stock award is a stock award that is payable (including that may be granted, may vest, or may be exercised) contingent upon the attainment of pre-determined performance goals during a performance period. A performance stock award may require the completion of a specified period of continuous service. The length of any

 

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performance period, the performance goals to be achieved during the performance period, and the measure of whether and to what degree such performance goals have been attained will be determined by the Plan Administrator. In addition, to the extent permitted by applicable law and the performance stock award agreement, the Plan Administrator may determine that cash may be used in payment of performance stock awards.

A performance cash award is a cash award that is payable contingent upon the attainment of pre-determined performance goals during a performance period. A performance cash award may require the completion of a specified period of continuous service. The length of any performance period, the performance goals to be achieved during the performance period, and the measure of whether and to what degree such performance goals have been attained will be determined by the Plan Administrator. The Plan Administrator may specify the form of payment of performance cash awards, which may be cash or other property, or may provide for a participant to have the option for his or her performance cash award to be paid in cash or other property.

Performance goals under the Amended 2019 Plan will be based on any one or more of the following performance criteria: (i) sales; (ii) revenues; (iii) assets; (iv) expenses; (v) market penetration or expansion; (vi) earnings from operations; (vii) earnings before or after deduction for all or any portion of interest, taxes, depreciation, amortization, incentives, service fees or extraordinary or special items, whether or not on a continuing operations or an aggregate or per share basis; (viii) net income or net income per common share (basic or diluted); (ix) return on equity, investment, capital or assets; (x) one or more operating ratios; (xi) borrowing levels, leverage ratios or credit rating; (xii) market share; (xiii) capital expenditures; (xiv) cash flow, free cash flow, cash flow return on investment, or net cash provided by operations; (xv) stock price, dividends or total stockholder return; (xvi) development of new technologies or products; (xvii) sales of particular products or services; (xviii) economic value created or added; (xix) operating margin or profit margin; (xx) customer acquisition or retention; (xxi) raising or refinancing of capital; (xxii) successful hiring of key individuals; (xxiii) resolution of significant litigation; (xxiv) acquisitions and divestitures (in whole or in part); (xxv) joint ventures and strategic alliances; (xxvi) spin-offs, split-ups and the like; (xxvii) reorganizations; (xxviii) recapitalizations, restructurings, financings (issuance of debt or equity) or refinancings; (xxix) strategic business criteria, consisting of one or more objectives based on the following goals: achievement of timely development, design management or enrollment, meeting specified market penetration or value added, payor acceptance, patient adherence, peer reviewed publications, issuance of new patents, establishment of or securing of licenses to intellectual property, product development or introduction (including, without limitation, any clinical trial accomplishments, regulatory or other filings, approvals or milestones, discovery of novel products, maintenance of multiple products in pipeline, product launch or other product development milestones), geographic business expansion, cost targets, cost reductions or savings, customer satisfaction, operating efficiency, acquisition or retention, employee satisfaction, information technology, corporate development (including, without limitation, licenses, innovation, research or establishment of third party collaborations), manufacturing or process development, legal compliance or risk reduction, patent application or issuance goals, or goals relating to acquisitions, divestitures or other business combinations (in whole or in part), joint ventures or strategic alliances; and (xxx) other measures of performance selected by the Board of Directors.

Performance goals may be based on a company-wide basis, with respect to one or more business units, divisions, affiliates or business segments, and in either absolute terms or relative to the performance of one or more comparable companies or the performance of one or more relevant indices. Unless specified otherwise by the Plan Administrator (i) in the award agreement at the time the award is granted or (ii) in such other document setting forth the performance goals at the time they are established, the Plan Administrator will appropriately make adjustments in the method of calculating the attainment of performance goals for a performance period as follows: (1) to exclude restructuring and/or other nonrecurring charges; (2) to exclude exchange rate effects; (3) to exclude the effects of changes to generally accepted accounting principles; (4) to exclude the effects of any statutory adjustments to corporate tax rates; (5) to exclude the effects of items that are “unusual” in nature or occur “infrequently” as determined under generally accepted accounting principles; (6) to exclude the dilutive effects of acquisitions or joint ventures; (7) to assume that any business divested by us achieved performance objectives at targeted levels during the balance of a performance period following such divestiture; (8) to exclude

 

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the effect of any change in the outstanding shares of our common stock by reason of any stock dividend or split, stock repurchase, reorganization, recapitalization, merger, consolidation, spin-off, combination or exchange of shares or other similar corporate change, or any distributions to common stockholders other than regular cash dividends; (9) to exclude the effects of stock based compensation and the award of bonuses under our bonus plans; (10) to exclude costs incurred in connection with potential acquisitions or divestitures that are required to be expensed under generally accepted accounting principles; (11) to exclude the goodwill and intangible asset impairment charges that are required to be recorded under generally accepted accounting principles; (12) to exclude the effect of any other unusual, non-recurring gain or loss or other extraordinary item; and (13) to make other appropriate adjustments selected by the Plan Administrator.

In addition, the Plan Administrator retains the discretion to reduce or eliminate the compensation or economic benefit due upon the attainment of any performance goals and to define the manner of calculating the performance criteria it selects to use for a performance period.

Other Stock Awards

Other forms of stock awards valued in whole or in part by reference to, or otherwise based on, our common stock may be granted either alone or in addition to other stock awards under the Amended 2019 Plan. Subject to the terms of the Amended 2019 Plan, the Plan Administrator will have sole and complete authority to determine the persons to whom and the time or times at which such other stock awards will be granted, the number of shares of our common stock to be granted and all other terms and conditions of such other stock awards.

Clawback/Recoupment

Awards granted under the Amended 2019 Plan will be subject to recoupment in accordance with our Incentive Compensation Recoupment Policy and any other clawback policy that we adopt. In addition, the Plan Administrator may impose other clawback, recovery or recoupment provisions in an award agreement, including a reacquisition right in respect of previously acquired shares or other cash or property upon the occurrence of cause.

Changes to Capital Structure

In the event of certain capitalization adjustments, the Plan Administrator will appropriately adjust: (i) the class(es) and maximum number of securities subject to the Amended 2019 Plan; (ii) the class(es) and maximum number of securities that may be issued pursuant to the exercise of ISOs; and (iii) the class(es) and number of securities and price per share of stock subject to outstanding stock awards.

Corporate Transaction and Change in Control

The following provisions will apply to outstanding awards under the Amended 2019 Plan in the event of a corporate transaction (as defined in the Amended 2019 Plan and described below) or a change in control (as defined in the Amended 2019 Plan and described below), unless otherwise provided in the instrument evidencing the award or in any other written agreement between us or one of our affiliates and the participant. For purposes of this Proposal 5, the term “Transaction” will mean such corporate transaction or change in control.

In the event of a Transaction, any surviving or acquiring corporation (or its parent company) may assume or continue any or all outstanding awards under the Amended 2019 Plan, or may substitute similar awards for such outstanding awards (including, but not limited to, awards to acquire the same consideration paid to the stockholders of the Company pursuant to the Transaction), and any reacquisition or repurchase rights held by the Company in respect of shares issued pursuant to any outstanding awards under the Amended 2019 Plan may be assigned by the Company to the surviving or acquiring corporation (or its parent company). The terms of any such assumption, continuation or substitution will be set by the Plan Administrator.

 

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In the event of a Transaction in which the surviving or acquiring corporation (or its parent company) does not assume or continue outstanding awards under the Amended 2019 Plan, or substitute similar awards for such outstanding awards, then with respect to any such awards that have not been assumed, continued or substituted and that are held by participants whose continuous service has not terminated prior to the effective time of the Transaction (the “Current Participants”), the vesting (and exercisability, if applicable) of such awards will be accelerated in full (and with respect to performance stock awards, vesting shall be deemed satisfied at the greater of the target level or actual performance measured in accordance with the performance goals as of the date of the Transaction) to a date prior to the effective time of the Transaction (contingent upon the closing or completion of the Transaction) as the Plan Administrator will determine (or, if the Plan Administrator does not determine such a date, to the date that is five days prior to the effective time of the Transaction), and such awards will terminate if not exercised (if applicable) prior to the effective time of the Transaction in accordance with the exercise procedures determined by the Plan Administrator, and any reacquisition or repurchase rights held by the Company with respect to such awards will lapse (contingent upon the effectiveness of the Transaction). With respect to the vesting of awards that will accelerate upon the occurrence of a Transaction pursuant to the above and are settled in cash, such cash payment will be made no later than 30 days following the occurrence of the Transaction.

In the event of a Transaction in which the surviving or acquiring corporation (or its parent company) does not assume or continue outstanding awards under the Amended 2019 Plan, or substitute similar awards for such outstanding awards, then with respect to any such awards that have not been assumed, continued or substituted and that are held by participants other than the Current Participants, such awards will terminate if not exercised (if applicable) prior to the occurrence of the Transaction in accordance with the exercise procedures determined by the Plan Administrator; provided, however, that any reacquisition or repurchase rights held by the Company with respect to such awards will not terminate and may continue to be exercised notwithstanding the Transaction.

Notwithstanding the foregoing, in the event any outstanding award under the Amended 2019 Plan held by a participant will terminate if not exercised prior to the effective time of a Transaction, the Plan Administrator may provide that the participant may not exercise such award but instead will receive a payment, in such form as may be determined by the Plan Administrator, equal in value, at the effective time, to the excess, if any, of (i) the value of the property the participant would have received upon the exercise of such award, over (ii) any exercise price payable by the participant in connection with such exercise.

Outstanding awards under the Amended 2019 Plan may be subject to additional acceleration of vesting and exercisability upon or after a change in control as may be provided in the participant’s award agreement or in any other written agreement with us or one of our affiliates, but in the absence of such provision, no such acceleration will occur.

For purposes of the Amended 2019 Plan, a corporate transaction generally will be deemed to occur in the event of the consummation of: (i) a sale or other disposition of all or substantially all of our consolidated assets; (ii) a sale or other disposition of at least 50% of our outstanding securities; (iii) a merger, consolidation or similar transaction following which we are not the surviving corporation; or (iv) a merger, consolidation or similar transaction following which we are the surviving corporation but the shares of our common stock outstanding immediately prior to the transaction are converted or exchanged into other property by virtue of the transaction.

For purposes of the Amended 2019 Plan, a change in control generally will be deemed to occur in the event: (i) a person, entity or group acquires, directly or indirectly, our securities representing more than 50% of the combined voting power of our then outstanding securities, other than by virtue of a merger, consolidation, or similar transaction; (ii) there is consummated a merger, consolidation, or similar transaction and, immediately after the consummation of such transaction, our stockholders immediately prior thereto do not own, directly or indirectly, more than 50% of the combined outstanding voting power of the surviving entity or the parent of the surviving entity in substantially the same proportions as their ownership of our outstanding voting securities immediately prior to such transaction; (iii) there is consummated a sale, lease, exclusive license or other

 

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disposition of all or substantially all of our consolidated assets, other than a sale, lease, exclusive license or other disposition to an entity in which more than 50% of the entity’s combined voting power is owned by our stockholders in substantially the same proportions as their ownership of our outstanding voting securities immediately prior to such sale or other disposition; or (iv) a majority of our Board of Directors becomes comprised of individuals who were not serving on our Board of Directors on the date the 2019 Plan was adopted by the Board of Directors, or the incumbent board, or whose nomination, appointment, or election was not approved by a majority of the incumbent board still in office.

Plan Amendments and Termination

The Board of Directors (or a committee of one or more directors delegated by the Board of Directors) will have the authority to amend or terminate the Amended 2019 Plan at any time. However, except as otherwise provided in the Amended 2019 Plan or an award agreement, no amendment or termination of the Amended 2019 Plan may materially impair a participant’s rights under his or her outstanding awards without the participant’s written consent.

We will obtain stockholder approval of any amendment to the Amended 2019 Plan as required by applicable law and listing requirements. No incentive stock options may be granted under the Amended 2019 Plan after the tenth anniversary of the earlier of the date the Amended 2019 Plan was most recently adopted by the Board of Directors or approved by the stockholders.

U.S. Federal Income Tax Consequences

The following is a summary of the principal United States federal income tax consequences to participants and us with respect to participation in the Amended 2019 Plan. This summary is not intended to be exhaustive and does not discuss the income tax laws of any local, state or foreign jurisdiction in which a participant may reside. The information is based upon current federal income tax rules and therefore is subject to change when those rules change. Because the tax consequences to any participant may depend on his or her particular situation, each participant should consult the participant’s tax adviser regarding the federal, state, local and other tax consequences of the grant or exercise of an award or the disposition of stock acquired under the Amended 2019 Plan. The Amended 2019 Plan is not qualified under the provisions of Section 401(a) of the Code, and is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974. Our ability to realize the benefit of any tax deductions described below depends on our generation of taxable income as well as the requirement of reasonableness, the provisions of Section 162(m) of the Code and the satisfaction of our tax reporting obligations.

Nonstatutory Stock Options

Generally, there is no taxation upon the grant of an NSO if the stock option is granted with an exercise price equal to the fair market value of the underlying stock on the grant date. Upon exercise, a participant will recognize ordinary income equal to the excess, if any, of the fair market value of the underlying stock on the date of exercise of the stock option over the exercise price. If the participant is employed by us or one of our affiliates, that income will be subject to withholding taxes. The participant’s tax basis in those shares will be equal to their fair market value on the date of exercise of the stock option, and the participant’s capital gain holding period for those shares will begin on that date.

We will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the participant.

Incentive Stock Options

The Amended 2019 Plan provides for the grant of stock options that are intended to qualify as “incentive stock options,” as defined in Section 422 of the Code. Under the Code, a participant generally is not subject to

 

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ordinary income tax upon the grant or exercise of an ISO. If the participant holds a share received upon exercise of an ISO for more than two years from the date the stock option was granted and more than one year from the date the stock option was exercised, which is referred to as the required holding period, the difference, if any, between the amount realized on a sale or other taxable disposition of that share and the participant’s tax basis in that share will be long-term capital gain or loss.

If, however, a participant disposes of a share acquired upon exercise of an ISO before the end of the required holding period, which is referred to as a disqualifying disposition, the participant generally will recognize ordinary income in the year of the disqualifying disposition equal to the excess, if any, of the fair market value of the share on the date of exercise of the stock option over the exercise price. However, if the sales proceeds are less than the fair market value of the share on the date of exercise of the stock option, the amount of ordinary income recognized by the participant will not exceed the gain, if any, realized on the sale. If the amount realized on a disqualifying disposition exceeds the fair market value of the share on the date of exercise of the stock option, that excess will be short-term or long-term capital gain, depending on whether the holding period for the share exceeds one year.

For purposes of the alternative minimum tax, the amount by which the fair market value of a share of stock acquired upon exercise of an ISO exceeds the exercise price of the stock option generally will be an adjustment included in the participant’s alternative minimum taxable income for the year in which the stock option is exercised. If, however, there is a disqualifying disposition of the share in the year in which the stock option is exercised, there will be no adjustment for alternative minimum tax purposes with respect to that share. In computing alternative minimum taxable income, the tax basis of a share acquired upon exercise of an ISO is increased by the amount of the adjustment taken into account with respect to that share for alternative minimum tax purposes in the year the stock option is exercised.

We are not allowed a tax deduction with respect to the grant or exercise of an ISO or the disposition of a share acquired upon exercise of an ISO after the required holding period. If there is a disqualifying disposition of a share, however, we will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the participant, provided that either the employee includes that amount in income or we timely satisfy our reporting requirements with respect to that amount.

Restricted Stock Awards

Generally, the recipient of a restricted stock award will recognize ordinary income at the time the stock is received equal to the excess, if any, of the fair market value of the stock received over any amount paid by the recipient in exchange for the stock. If, however, the stock is not vested when it is received (for example, if the employee is required to work for a period of time in order to have the right to sell the stock), the recipient generally will not recognize income until the stock becomes vested, at which time the recipient will recognize ordinary income equal to the excess, if any, of the fair market value of the stock on the date it becomes vested over any amount paid by the recipient in exchange for the stock. A recipient may, however, file an election with the Internal Revenue Service, within 30 days following his or her receipt of the stock award, to recognize ordinary income, as of the date the recipient receives the award, equal to the excess, if any, of the fair market value of the stock on the date the award is granted over any amount paid by the recipient for the stock.

The recipient’s basis for the determination of gain or loss upon the subsequent disposition of shares acquired from a restricted stock award will be the amount paid for such shares plus any ordinary income recognized either when the stock is received or when the stock becomes vested.

We will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the restricted stock award.

 

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Restricted Stock Unit Awards

Generally, the recipient of a restricted stock unit award structured to comply with the requirements of Section 409A of the Code (“Section 409A”) or an exemption to Section 409A will recognize ordinary income at the time the stock is delivered equal to the excess, if any, of the fair market value of the stock received over any amount paid by the recipient in exchange for the stock. To comply with the requirements of Section 409A, the stock subject to a restricted stock unit award may generally only be delivered upon one of the following events: a fixed calendar date (or dates), separation from service, death, disability or a change in control. If delivery occurs on another date, unless the restricted stock unit award otherwise complies with or qualifies for an exemption to the requirements of Section 409A, in addition to the tax treatment described above, the recipient will owe an additional 20% federal tax and interest on any taxes owed.

The recipient’s basis for the determination of gain or loss upon the subsequent disposition of shares acquired from a restricted stock unit award will be the amount paid for such shares plus any ordinary income recognized when the stock is delivered.

We will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the restricted stock unit award.

Stock Appreciation Rights

Generally, if a stock appreciation right is granted with an exercise price equal to the fair market value of the underlying stock on the grant date, the recipient will recognize ordinary income equal to the fair market value of the stock or cash received upon such exercise. We will generally be entitled to a tax deduction equal to the taxable ordinary income realized by the recipient of the stock appreciation right.

Section 162(m) Limitations

Under Section 162(m) of the Code (“Section 162(m)”), compensation paid to any publicly held corporation’s “covered employees” that exceeds $1 million per taxable year for any covered employee is generally non-deductible. Awards granted under the Amended 2019 Plan will be subject to the deduction limit under Section 162(m) and will not be eligible to qualify for the performance-based compensation exception under Section 162(m) pursuant to the transition relief provided by the Tax Cuts and Jobs Act.

New Plan Benefits under Amended 2019 Plan

The following table sets forth the benefits or amounts that will be received by or allocated to each of the individuals and groups indicated below under the Amended 2019 Plan, if such benefits or amounts are determinable.

 

Name and Position		Number of Shares
Joseph P. Hagan President, Chief Executive Officer and Director		(1)
Christopher R. Aker Senior Vice President and General Counsel		(1)
Cris Calsada Chief Financial Officer		(1)
All current executive officers as a group		(1)
All current directors who are not executive officers as a group		(2)
All employees, including all current officers who are not executive officers, as a group		(1)

 

(1)	Awards granted under the Amended 2019 Plan to our executive officers and other employees are discretionary and are not subject to set benefits or amounts under the terms of the Amended 2019 Plan. Our

 

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Board and our Compensation Committee have not granted any awards under the Amended 2019 Plan subject to stockholder approval of this Proposal 5.

(2)

Awards granted under the Amended 2019 Plan to our non-employee directors are discretionary and are not subject to set benefits or amounts under the terms of the Amended 2019 Plan. However, pursuant to our current compensation program for non-employee directors, each of our continuing non-employee directors is eligible to receive an annual grant of a stock option to purchase 30,000 shares of our common stock as of the date of the 2024 annual meeting. As such, on the date of the Annual Meeting, stock options to purchase an aggregate of 240,000 shares will be granted to our continuing non-employee directors. On and after the date of the Annual Meeting, any such stock options will be granted under the Amended 2019 Plan if this Proposal 5 is approved by our stockholders. For additional information regarding our current compensation program for non-employee directors, please see “Director Compensation” below.

Plan Benefits under the 2019 Plan

The following table sets forth, for each of the individuals and various groups indicated, the total number of shares of our common stock subject to awards that have been granted under the 2019 Plan as of April 18, 2024.

2019 Plan

 

Name and Position		As of April 18, 2024 Number of Shares
Joseph P. Hagan Chief Executive Officer and Director			2,760,490
Preston S. Klassen, M.D. President and Head of Research and Development			830,000
Christopher R. Aker Senior Vice President and General Counsel			835,249
Cris Calsada Chief Financial Officer			813,497
All current executive officers as a group			6,069,243
All current directors who are not executive officers as a group			520,825
Each nominee for election as a director:
Stelios Papadopoulos, Ph.D.			64,975
Kathryn J. Collier			64,975
David Baltimore, Ph.D.			64,975
Joseph P. Hagan			2,760,490
Alice S. Huang, Ph.D.			66,000
Preston S. Klassen, M.D.			830,000
Jake R. Nunn			64,975
William H. Rastetter, Ph.D.			64,975
Hugh Rosen, M.D., Ph.D.			64,975
Pascale Witz, MBA, MSc			64,975
Each associate of any executive officers, current directors or director nominees(1)			0
Each other person who received or is to receive 5% of awards			0
All employees, including all current officers who are not executive officers, as a group			1,588,882

 

(1)	Excludes “associates” who are already listed above and are current director nominees for election.

 

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Equity Compensation Plan Information

The following table provides information as of December 31, 2023, with respect to shares of our common stock that may be issued under our existing equity compensation plans:

 

		(a)				(b)				(c)
Plan Category		Number of securities to be issued upon exercise of outstanding options, awards, warrants and rights				Weighted- average exercise price of outstanding options, awards, warrants and rights				Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by stockholders:
2012 Equity Incentive Plan			13,357	(1)		$	20.70				—
2019 Equity Incentive Plan			6,805,592	(2)		$	4.17				819,459
2022 Employee Stock Purchase Plan			—				—				137,424
Equity compensation plans not approved by stockholders:
2021 Inducement Plan			500,000	(1)		$	1.89				500,000
Total			7,318,949								1,456,883

 

(1)	All shares issuable upon exercise of options.

(2)	Consists of 5,644,343, shares issuable upon exercise of options and 1,161,250 shares issuable upon settlement of restricted stock units.

Vote Required

The affirmative vote of a majority of the votes cast at the meeting will be required to approve this Proposal 5. Abstentions and broker non-votes will have no effect.

THE BOARD OF DIRECTORS RECOMMENDS

A VOTE FOR PROPOSAL 5.

 

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EXECUTIVE OFFICERS

The following table sets forth our current executive officers, their ages, and the positions held by each such person with the Company:

 

Name		Age				Position Held With the Company
Joseph P. Hagan			55			Chief Executive Officer
Christopher Aker			63			Senior Vice President and General Counsel
Cris Calsada			54			Chief Financial Officer
Preston S. Klassen, M.D.			55			President and Head of Research and Development

The biographical information for Mr. Hagan and Dr. Klassen is set forth above under Proposal 1.

Christopher Aker has served as our Senior Vice President and General Counsel since January 2019, and before that served as our Senior Director, Legal Affairs from February 2011 to January 2019. Prior to joining us, Mr. Aker served as the Senior Director, Administration and Senior Corporate Counsel for Phenomix Corporation (“Phenomix”), a privately held biopharmaceutical company, and was responsible for operational and legal oversight. Prior to Phenomix, Mr. Aker was Senior Corporate Counsel at SUGEN, Inc. (“SUGEN”), a wholly- owned subsidiary of Pharmacia, until its acquisition by Pfizer Inc. Prior to SUGEN, Mr. Aker was in private practice with various law firms. Mr. Aker received his B.A. in International Relations from the University of California, Davis and his J.D. from Santa Clara University.

Cris Calsada joined Regulus in August 2019 and currently serves as our Chief Financial Officer. Prior to joining us, she served as Chief Financial Officer for Sanifit Therapeutics, S.A. (“Sanifit”) from December 2017 to August 2019. Prior to her employment with Sanifit, Ms. Calsada was self-employed as a finance consultant to various life sciences companies. From 2004 until its acquisition in 2015, she served in positions of increasing responsibility with Ambrx, Inc. (“Ambrx”), most recently serving as its Chief Operating Officer and Vice President of Finance. Prior to Ambrx, she worked for Sony Online Entertainment as its Executive Director of Finance and Controller. Earlier in her career, she practiced as a certified public accountant. Ms. Calsada received a B.S. in Business Administration with emphasis in Accounting from San Diego State University and an M.B.A. from the University of Southern California Marshall School of Business.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the ownership of the Company’s common stock as of March 31, 2024 by: (i) each of our directors; (ii) each of our Named Executive Officers as defined above under the heading “Executive Compensation”; (iii) each person known by us to beneficially own more than 5% of our common stock and (iv) all of our current executive officers and directors as a group.

Beneficial ownership is determined in accordance with the rules of the SEC and includes voting and investment power with respect to the securities. This table is based upon information supplied by officers, directors and principal stockholders and Schedules 13D and 13G filed with the SEC. Except as indicated by footnote, and subject to applicable community property laws, we believe the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them.

Percentage of beneficial ownership is based on 65,465,251 shares of common stock outstanding as of March 31, 2024. The number of shares of common stock used to calculate the percentage ownership of each listed person includes the shares of common stock underlying shares of convertible preferred stock and warrants and options held by such persons that are exercisable and restricted stock units which will vest, within 60 days following March 31, 2024. Unless otherwise indicated, the address for the persons and entities listed in the table below is c/o Regulus Therapeutics Inc., 4224 Campus Point Court, Suite 210, San Diego, CA 92121.

 

		Beneficial Ownership
Beneficial Owner		Number of Shares				Percent of Total
Greater than 5% Stockholders
Federated Hermes Kaufmann Funds(1)			13,075,145				19.90	%
4000 Ericsson Drive Warrendale, PA 15086
Deep Track Biotechnology Master Fund Ltd(2)			6,906,741				9.99	%
200 Greenwich Ave, 3rd Floor Greenwich, CT 06830
Entities affiliated with New Enterprise Associates, Inc.(3)			6,551,266				9.99	%
1954 Greenspring Dr., Suite 600 Timonium Maryland 21093
Entities affiliated with Octagon Investments Master Fund LP(4)			6,551,266				9.99	%
654 Madison Avenue, 21st Floor New York, NY 10065
RA Capital Management, L.P.(5)			6,250,000				9.55	%
200 Berkeley Street, 18th Floor Boston, MA 02116
Vivo Opportunity Fund Holdings, L.P.(6)			5,000,000				7.64	%
192 Lytton Avenue Palo Alto, CA 94301
Entities affiliated with Adage Capital Advisors, L.L.C.(7)			3,737,417				5.71	%
200 Clarendon Street, 52nd Floor Boston, MA 02116
Named Executive Officers and Directors
Christopher Aker(8)			212,468				*
David Baltimore, Ph.D.(9)			61,284				*
Cris Calsada(10)			189,681				*
Kathryn J. Collier(11)			61,465				*
Joseph P. Hagan(12)			742,004				1.12	%
Alice S. Huang, Ph.D.(13)			59,750				*
Preston Klassen(14)			52,186				*
Jake R. Nunn(15)			58,725				*
Stelios Papadopoulos, Ph.D.(16)			1,218,296				1.85	%
William H. Rastetter, Ph.D.(17)			129,663				*
Hugh Rosen, M.D., Ph.D. (18)			60,496				*
Pascale Witz, MBA, MSc(19)			79,961				*
All current executive officers and directors as a group (12 persons)(20)			2,925,979				4.35	%

 

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*	Less than one percent.

(1)

Consists of an aggregate of 12,852,654 shares of common stock and 222,491 shares of common stock issuable upon conversion of Series A-4 convertible preferred stock held collectively by (i) Federated Hermes Kaufmann Small Cap Fund, a portfolio of Federated Hermes Equity Funds (“Federated Hermes Kaufmann Small Cap Fund”), (ii) Federated Hermes Kaufmann Fund, a portfolio of Federated Hermes Equity Funds (“Federated Hermes Kaufmann Fund”), and (iii) Federated Hermes Kaufmann Fund II, a portfolio of Federated Hermes Insurance Series (“Federated Hermes Kaufmann Fund II” and, collectively with the Federated Hermes Kaufmann Small Cap Fund and the Federated Hermes Kaufmann Fund, the “Federated Hermes Kaufmann Funds”). The number of shares beneficially owned by the Federated Hermes Kaufmann Funds in the aggregate is limited by a beneficial ownership limitation applicable to shares of nonvoting Class A-4 convertible preferred stock held by the Federated Hermes Kaufmann Funds, which limit the number of shares the Federated Hermes Kaufmann Funds can beneficially own upon conversion of the Class A-4 convertible preferred stock to a maximum of 19.90% of our outstanding common stock, a beneficial ownership limitation applicable to shares of nonvoting Class A-5 convertible preferred stock held by the Federated Hermes Kaufmann Funds, which limit the number of shares the Federated Hermes Kaufmann Funds can beneficially own upon conversion of the Class A-5 convertible preferred stock to a maximum of 9.99% of our outstanding common stock and a beneficial ownership limitation applicable to shares of our nonvoting Class A-6 convertible preferred stock held by the Federated Hermes Kaufmann Funds, which limit the shares that the Federated Hermes Kaufmann Funds can beneficially own upon conversion of the Class A-6 convertible preferred stock to a maximum of 14.99% of our outstanding stock.

(2)

Consists of 3,266,566 shares of common stock and 3,640,175 shares of common stock issuable upon conversion of Class A-6 convertible preferred stock held by Deep Track Biotechnology Master Fund Ltd. (“Deep Track Master Fund”). The number of shares beneficially owned by Deep Track Master Fund in the aggregate is limited by beneficial ownership limitations applicable to shares of Class A-6 convertible preferred stock, which limit the number of shares Deep Track Master Fund can beneficially own to a maximum of 9.99% of our outstanding common stock. Deep Track Capital, LP (the “Investment Manager”) serves as the investment manager of Deep Track Master Fund and may be deemed to beneficially own the shares held by Deep Track Master Fund. Deep Track Capital GP, LLC (the “General Partner”) is the general partner of the Investment Manager. David Kroin is the Chief Investment Officer of the Investment Manager and managing member of the General Partner and may be deemed to beneficially own the shares held by Deep Track Master Fund.

(3)

Consists of 6,467,802 shares of common stock and 83,464 shares of common stock issuable upon exercise of warrants (collectively, the “GEO Shares”) held by Growth Equity Opportunities Fund V, LLC (“GEO V”). New Enterprise Associates 16, L.P. (“NEA 16”), is the sole member of GEO V, NEA Partners 16, L.P. (“NEA Partners 16”), is the sole general partner of NEA 16 and NEA 16 GP, LLC (“NEA 16 LLC”), is the sole general partner of NEA Partners 16. Forest Baskett, Ali Behbahani, Carmen Chang, Anthony A. Florence, Jr., Mohamad H. Makhzoumi, Scott D. Sandell and Paul Walker (collectively, the “Managers”), are the managers of NEA 16 LLC. The persons named herein are referred to individually herein as a NEA Reporting Person and collectively as the NEA Reporting Persons. GEO V is the record owner of the GEO V Shares. As the sole member of GEO V, NEA 16 may be deemed to own beneficially the GEO V Shares. As the general partner of NEA 16, NEA Partners 16 may be deemed to own beneficially the GEO V Shares. As the sole general partner of NEA Partners 16, NEA 16 LLC may be deemed to own beneficially the GEO V Shares. Each of the Managers of NEA 16 LLC may be deemed to own beneficially the GEO V Shares. The number of shares beneficially owned by the NEA Reporting Persons in the aggregate is limited by beneficial ownership limitations applicable to shares issuable upon exercise of warrants to purchase common stock and shares issuable upon conversion of shares of Class A-1 convertible preferred stock, Class A-2 convertible preferred stock, Class A-3 convertible preferred stock, Class A-4 convertible preferred stock, Class A-5 convertible preferred stock, and Class A-6 convertible preferred stock held by GEO V, which limit the number of shares the NEA Reporting Persons can beneficially own to a maximum of 9.99% of our outstanding common stock.

 

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(4)

Consists of (i) 4,280,302 shares of common stock and 83,464 shares of common stock issuable upon conversion of Class A-6 convertible preferred stock held by Octagon Investments Master Fund LP and (ii) 2,187,500 shares of common stock held by Octagon Private Opportunities Fund II LP. The number of shares beneficially owned by Octagon Investments Master Fund LP in the aggregate is limited by beneficial ownership limitations applicable to shares of Class A-6 convertible preferred stock, which limit the number of shares Octagon Investments Master Fund LP can beneficially own to a maximum of 9.99% of our outstanding common stock. The entities affiliated with Octagon are managed by Octagon Capital Advisors LP.

(5)

Consists of 6,250,000 shares of common stock held by RA Capital Healthcare Fund, L.P. (the “Fund”). RA Capital Healthcare Fund GP, LLC is the general partner of the Fund. The general partner of RA Capital Management, L.P. (“RA Capital”) is RA Capital Management GP, LLC, of which Dr. Kolchinsky and Mr. Shah are the controlling persons. RA Capital serves as investment adviser for the Fund and may be deemed a beneficial owner of the shares of common stock held by the Fund. The Fund has delegated to RA Capital the sole power to vote and the sole power to dispose of all securities held in the Fund’s portfolio, including the shares of common stock reported herein. Because the Fund has divested voting and investment power over the reported securities it holds and may not revoke that delegation on less than 61 days’ notice, the Fund disclaims beneficial ownership of the securities it holds except for purposes of determining its obligations under Section 13(d) of the Exchange Act. As managers of RA Capital, Dr. Kolchinsky and Mr. Shah may be deemed beneficial owners of any securities of the Company beneficially owned by RA Capital. RA Capital, Dr. Kolchinsky, and Mr. Shah disclaim beneficial ownership of the shares of common stock reported herein except for purposes of determining his obligations under Section 13(d) of the Exchange Act.

(6)	Consists of 5,000,000 shares of common stock held by Vivo Opportunity Fund Holdings, L.P. Vivo Opportunity, LLC is the general partner of Vivo Opportunity Fund Holdings, L.P.

(7)

Consists of 3,737,417 shares of common stock held by Adage Capital Partners, LP (“Adage”). Bob Atchinson and Phillip Gross are the managing members of Adage Capital Advisors, L.L.C., which is the managing member of Adage Capital Partners GP, L.L.C., which is the general partner of Adage, and each such person or entity, as the case may be, has shared voting and/or investment power over the securities held by Adage Capital Partners, LP and may be deemed the beneficial owner of such shares, and each such person or entity, as the case may be, disclaims beneficial ownership of such securities except to the extent of their respective pecuniary interest therein.

(8)	Consists of 10,056 shares of common stock held by Mr. Aker and 202,412 shares of common stock that Mr. Aker has the right to acquire from us within 60 days of March 31, 2024 pursuant to the exercise of stock options.

(9)

Consists of 2,559 shares of common stock held by Dr. Baltimore and 58,725 shares of common stock that Dr. Baltimore has the right to acquire from us within 60 days of March 31, 2024 pursuant to the exercise of stock options. Does not include shares beneficially owned by Dr. Huang and reflected in note (13) below. Drs. Baltimore and Huang are spouses and therefore they may be deemed to beneficially own the shares held by one another.

(10)	Consists of 5,782 shares of common stock held by Ms. Calsada and 183,899 shares of common stock that Ms. Calsada has the right to acquire from us within 60 days of March 31, 2024 pursuant to the exercise of stock options.

(11)	Consists of 2,740 shares of common stock held by Ms. Collier and 58,725 shares of common stock that Ms. Collier has the right to acquire from us within 60 days of March 31, 2024 pursuant to the exercise of stock options.

(12)

Consists of (i) 57,112 shares of common stock held by Joseph P. Hagan and 671,012 shares of common stock that Mr. Hagan has the right to acquire from us within 60 days of March 31, 2024 pursuant to the exercise of stock options and (ii) 13,880 shares of common stock issuable upon the exercise of warrants held by Pacific Premier Trust Custodian FBO Joseph Hagan IRA (“Pacific Premier”). Mr. Hagan is the economic beneficiary and may be deemed to be the beneficial owner of the shares held by Pacific Premier.

(13)	Consists of 59,750 shares of common stock that Dr. Huang has the right to acquire from us within 60 days of March 31, 2024 pursuant to the exercise of stock options. Does not include shares beneficially owned by

 

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Dr. Baltimore and reflected in note (9) above. Drs. Baltimore and Huang are spouses and therefore they may be deemed to beneficially own the shares held by one another.

(14)	Consists of 52,186 shares of common stock that Mr. Klassen has the right to acquire from us within 60 days of March 31, 2024 pursuant to the exercise of stock options.

(15)	Consists of 58,725 shares of common stock that Mr. Nunn has the right to acquire from us within 60 days of March 31, 2024 pursuant to the exercise of stock options.

(16)

Consists of 978,388 shares of common stock, 181,183 shares of common stock issuable upon the exercise of warrants to purchase common stock and 58,725 shares of common stock that Dr. Papadopoulos has the right to acquire from us within 60 days of March 31, 2024 pursuant to the exercise of stock options.

(17)

Consists of 39,056 shares of common stock, 31,882 shares of common stock issuable upon the exercise of warrants to purchase common stock, and 58,725 shares of common stock that Dr. Rastetter has the right to acquire from us within 60 days of March 31, 2024 pursuant to the exercise of stock options held by The Rastetter Family Trust, or the Rastetter Trust. Dr. Rastetter is trustee of the Rastetter Trust and may be deemed to be the beneficial owner of the shares held by the Rastetter trust.

(18)	Consists of 1,771 shares of common stock held by Dr. Rosen and 58,725 shares of common stock that Dr. Rosen has the right to acquire from us within 60 days of March 31, 2024 pursuant to the exercise of stock options.

(19)

Consists of 4,733 shares of common stock, 9,733 shares of common stock issuable upon the exercise of warrants to purchase common stock, 6,770 shares of common stock issuable upon the conversion of Class A-2 preferred stock held by Pascale Witz and 58,725 shares of common stock that Ms. Witz has the right to acquire from us within 60 days of March 31, 2024 pursuant to the exercise of stock options.

(20)	Includes all shares described in notes (8) through (19) above.

Equity Compensation Plan Information

The following table provides information as of December 31, 2023, with respect to shares of our common stock that may be issued under our existing equity compensation plans:

 

		(a)				(b)				(c)
Plan Category		Number of securities to be issued upon exercise of outstanding options, awards, warrants and rights				Weighted-average exercise price of outstanding options, awards, warrants and rights				Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
Equity compensation plans approved by stockholders:
2012 Equity Incentive Plan			13,357	(1)		$	20.70				—
2019 Equity Incentive Plan			6,805,593	(2)		$	4.71				819,549
2022 Employee Stock Purchase Plan			—				—				137,424
Equity compensation plans not approved by stockholders:
2021 Inducement Plan			500,000	(1)		$	1.89				500,000

 

(1)	All shares issuable upon exercise of options.

(2)	Consists of 5,644,343 shares issuable upon exercise of options and 1,161,250 shares issuable upon settlement of restricted stock units.

 

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TRANSACTIONS WITH RELATED PERSONS

We have adopted a written related-person transactions policy that sets forth our policies and procedures regarding the identification, review, consideration, approval and oversight of “related-person transactions.” A “related-person transaction” is a past, present or future transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we and any “related person” are participants involving an amount that exceeds the lesser of $120,000 or 1% of the average of our total assets at year-end of the last two completed fiscal years.

Transactions involving compensation for services provided to us by an employee, consultant or director are not considered related-person transactions under this policy. A “related person,” as determined since the beginning of our last fiscal year, is any executive officer, director or a holder of more than five percent of our common stock, including any of their immediate family members and any entity owned or controlled by such persons.

The policy imposes an affirmative duty upon each director and executive officer to identify any transaction involving them, their affiliates or immediate family members that may be considered a related party transaction before such person engages in the transaction. Under the policy, where a transaction has been identified as a related-person transaction, management must present information regarding the proposed related-person transaction to our audit committee (or, where review by our audit committee would be inappropriate, to another independent body of our board of directors) for review. The presentation must include a description of, among other things, the material facts, the direct and indirect interests of the related persons, the benefits of the transaction to us and whether any alternative transactions are available. In considering related-person transactions, our audit committee or other independent body of our board of directors takes into account the relevant available facts and circumstances including, but not limited to:

 

•

the risks, costs and benefits to us of the transaction;

 

•

the impact on a director’s independence in the event the related person is a director, immediate family member of a director or an entity with which a director is affiliated;

 

•

the terms of the transaction;

 

•

the availability of other sources for comparable services or products; and

 

•

the terms available to or from, as the case may be, unrelated third parties or to or from our employees generally.

In the event a director has an interest in the proposed transaction, the director must recuse himself or herself from the deliberations and approval. Our policy requires that, in reviewing a related party transaction, our audit committee must consider, in light of known circumstances, and determine in the good faith exercise of its discretion whether the transaction is in, or is not inconsistent with, the best interests of us and our stockholders.

We describe below transactions and series of similar transactions, since January 1, 2022 with respect to which we were a party, will be a party, or otherwise benefited, in which:

 

•

the amounts involved exceeded or will exceed the lesser of $120,000 or 1% of the average of our total assets at year end of the last two completed fiscal years; and

 

•

a director, executive officer, holder of more than 5% of our common stock or any member of their immediate family had or will have a direct or indirect material interest.

We also describe below certain other transactions with our directors, executive officers and stockholders. We believe that the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.

 

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Private Placement Financing Transaction

On April 13, 2023, we entered into a Securities Purchase Agreement (the “2023 Purchase Agreement”) with certain institutional and other accredited investors, pursuant to which we agreed to sell and issue shares of common stock and shares of our newly designated non-voting Class A-5 convertible preferred stock (the “2023 Private Placement”).

On April 14, 2023, we completed the closing of the 2023 Private Placement (the “2023 Closing”) pursuant to which we sold and issued (i) 2,615,536 shares of common stock at a purchase price of $0.9001 per share, and (ii) 140,827 shares of non-voting Class A-5 convertible preferred stock, in lieu of shares of common stock, at a price of $90.01 per share. Each share of non-voting Class A-5 convertible preferred stock is convertible into 100 shares of common stock, subject to certain beneficial ownership conversion limitations.

The participants in the 2023 Private Placement included the following directors and holders of more than five percent of our common stock or entities affiliated with them. The following table sets forth the aggregate number of shares of common stock and Class A-5 convertible preferred stock issued to these related parties in the 2023 Closing.

 

Name of Related Person		Common Stock Issued in the 2023 Closing				Class A-5 Convertible Preferred Stock Issued in the 2023 Closing				Aggregate Purchase Price of Common Stock and Preferred Stock Purchased in the Private Placement
Federated Hermes Kaufmann Funds			970,752				90,282			$	9,000,056.70
Entities affiliated with New Enterprise Associates, Inc.			500,465				50,545			$	5,000,024.00
Stelios Papadopoulos, Ph.D. Chair of the Board			222,198				—			$	200,000.42

On March 11, 2024, we entered into a Securities Purchase Agreement (the “2024 Purchase Agreement”) with certain institutional and other accredited investors, pursuant to which we agreed to sell and issue shares of common stock and shares of our newly designated non-voting convertible preferred stock (the “2024 Private Placement”).

On March 14, 2024, we completed the closing of the 2024 Private Placement (the “2024 Closing”) pursuant to which we sold and issued (i) 45,108,667 shares of common stock at a purchase price of $1.60 per share, and (ii) 173,915 shares of non-voting Class A-6 convertible preferred stock, in lieu of shares of common stock, at a price of $160.00 per share. Each share of non-voting Class A-6 convertible preferred stock is convertible into 100 shares of common stock, subject to certain beneficial ownership conversion limitations.

The participants in the 2024 Private Placement included the following directors and holders of more than five percent of our common stock or entities affiliated with them. The following table sets forth the aggregate

 

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number of shares of common stock and Class A-6 convertible preferred stock issued to these related parties in the 2024 Closing.

 

Name of Related Person		Common Stock Issued in the 2024 Closing				Class A-6 Convertible Preferred Stock Issued in the 2024 Closing				Aggregate Purchase Price of Common Stock and Preferred Stock Purchased in the Private Placement
Federated Hermes Kaufmann Funds			8,977,076				66,480			$	25,000,121.60
Entities affiliated with New Enterprise Associates, Inc.			4,522,223				17,278			$	10,000,036.80
Entities affiliated with DAFNA Life Science Funds			625,000				—			$	1,000,000.00
Stelios Papadopoulos, Ph.D. Chair of the Board			250,000				—			$	400,000.00

Indemnification Agreements

We have entered into separate indemnification agreements with our directors and executive officers, in addition to the indemnification provided for in our bylaws. These agreements, among other things, require us to indemnify our directors and executive officers for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by a director or executive officer in any action or proceeding arising out of his or her services as one of our directors or executive officers or any other company or enterprise to which the person provides services at our request. We believe that these indemnification agreements, together with the provisions in our bylaws, are necessary to attract and retain qualified persons as directors and officers.

HOUSEHOLDING OF PROXY MATERIALS

The SEC has adopted rules that permit companies and intermediaries (e.g., brokers) to satisfy the delivery requirements for proxy statements and notices with respect to two or more stockholders sharing the same address by delivering a single proxy statement or single notice. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.

This year, a number of brokers with account holders who are Regulus Therapeutics Inc. stockholders will be “householding” the Company’s proxy materials. A single proxy statement or notice will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. Once you have received notice from your broker that they will be “householding” communications to your address, “householding” will continue until you are notified otherwise or until you revoke your consent. If, at any time, you no longer wish to participate in “householding” and would prefer to receive a separate proxy statement or notice, please notify your broker or Regulus Therapeutics Inc. Direct your written request to Regulus Therapeutics Inc., Attn: Secretary, 4224 Campus Point Court, Suite 210, San Diego, California 92121, or contact our Secretary at Regulus Therapeutics Inc. by telephone at (858) 202-6300. Stockholders who currently receive multiple copies of the proxy statement and notice at their addresses and would like to request “householding” of their communications should contact their brokers.

 

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OTHER MATTERS

The Board of Directors knows of no other matters that will be presented for consideration at the annual meeting. If any other matters are properly brought before the meeting, it is the intention of the persons named in the proxy to vote on such matters in accordance with their best judgment. Discretionary authority for them to do so is provided for in the proxy card and other forms of proxy.

 

April 19, 2024

A copy of the Company’s Annual Report to the Securities and Exchange Commission on Form 10-K for the fiscal year ended December 31, 2023 is available without charge upon written request to: Secretary, Regulus Therapeutics Inc., 4224 Campus Point Court, Suite 210, San Diego, California 92121.

 

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APPENDIX A

REGULUS THERAPEUTICS INC.

2019 EQUITY INCENTIVE PLAN

ADOPTED BY THE BOARD OF DIRECTORS: JUNE 15, 2019

APPROVED BY THE STOCKHOLDERS: AUGUST 1, 2019

AMENDED BY THE BOARD OF DIRECTORS: APRIL 20, 2023

APPROVED BY THE STOCKHOLDERS: JUNE 13, 2023

AMENDED BY THE BOARD OF DIRECTORS: APRIL 17, 2024

APPROVED BY THE STOCKHOLDERS: MAY 16, 2024

1. GENERAL.

(a) Successor to and Continuation of Prior Plan. The Plan is intended as the successor to and continuation of the Regulus Therapeutics Inc. 2012 Equity Incentive Plan, as amended (the “2012 Plan”). From and after 12:01 a.m. Pacific time on the Effective Date, no additional stock awards will be granted under the 2012 Plan. All Awards granted on or after 12:01 a.m. Pacific Time on the Effective Date will be granted under this Plan. All stock awards granted under the 2012 Plan will remain subject to the terms of the 2012 Plan.

(i) Any shares that would otherwise remain available for future grants under the 2012 Plan as of 12:01 a.m. Pacific Time on the Effective Date (the “2012 Plan’s Available Reserve”) will cease to be available under the 2012 Plan at such time. Instead, that number of shares of Common Stock equal to the 2012 Plan’s Available Reserve will be added to the Share Reserve (as further described in Section 3(a) below) and be then immediately available for grants and issuance pursuant to Stock Awards hereunder, up to the maximum number set forth in Section 3(a) below.

(ii) In addition, from and after 12:01 a.m. Pacific time on the Effective Date, with respect to the aggregate number of shares subject, at such time, to outstanding stock awards granted under the 2012 Plan or the Regulus Therapeutics Inc. 2009 Equity Incentive Plan (together with the 2012 Plan, the “Prior Plans”) that (A) expire or terminate for any reason prior to exercise or settlement; (B) are forfeited because of the failure to meet a contingency or condition required to vest such shares or otherwise return to the Company; or (C) are reacquired, withheld (or not issued) to satisfy a tax withholding obligation in connection with an award or to satisfy the purchase price or exercise price of a stock award (such shares the “Returning Shares”) will immediately be added to the Share Reserve (as further described in Section 3(a) below) as and when such a share becomes a Returning Share, up to the maximum number set forth in Section 3(a) below.

(b) Eligible Award Recipients. Employees, Directors and Consultants are eligible to receive Awards.

(c) Available Awards. The Plan provides for the grant of the following Awards: (i) Incentive Stock Options, (ii) Nonstatutory Stock Options, (iii) Stock Appreciation Rights (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards, (vi) Performance Stock Awards, (vii) Performance Cash Awards, and (viii) Other Stock Awards.

(d) Purpose. This Plan, through the granting of Awards, is intended to help the Company secure and retain the services of eligible award recipients, provide incentives for such persons to exert maximum efforts for the success of the Company and any Affiliate, and provide a means by which the eligible recipients may benefit from increases in value of the Common Stock.

2. ADMINISTRATION.

(a) Administration by Board. The Board will administer the Plan. The Board may delegate administration of the Plan to a Committee or Committees, as provided in Section 2(c).

 

A-1

(b) Powers of Board. The Board will have the power, subject to, and within the limitations of, the express provisions of the Plan:

(i) To determine: (A) who will be granted Awards; (B) when and how each Award will be granted; (C) what type of Award will be granted; (D) the provisions of each Award (which need not be identical), including when a person will be permitted to exercise or otherwise receive cash or Common Stock under the Award; (E) the number of shares of Common Stock subject to, or the cash value of, an Award; and (F) the Fair Market Value applicable to a Stock Award.

(ii) To construe and interpret the Plan and Awards granted under it, and to establish, amend and revoke rules and regulations for administration of the Plan and Awards. The Board, in the exercise of these powers, may correct any defect, omission or inconsistency in the Plan or in any Award Agreement or in the written terms of a Performance Cash Award, in a manner and to the extent it will deem necessary or expedient to make the Plan or Award fully effective.

(iii) To settle all controversies regarding the Plan and Awards granted under it.

(iv) To accelerate, in whole or in part, the time at which an Award may be exercised or vest (or at which cash or shares of Common Stock may be issued).

(v) To suspend or terminate the Plan at any time. Except as otherwise provided in the Plan or an Award Agreement, suspension or termination of the Plan will not materially impair a Participant’s rights under his or her then-outstanding Award without his or her written consent except as provided in subsection (viii) below.

(vi) To amend the Plan in any respect the Board deems necessary or advisable, including, without limitation, by adopting amendments relating to Incentive Stock Options and certain nonqualified deferred compensation under Section 409A of the Code and/or to bring the Plan or Awards granted under the Plan into compliance with the requirements for Incentive Stock Options or ensuring that they are exempt from or compliant with the requirements for nonqualified deferred compensation under Section 409A of the Code, subject to the limitations, if any, of applicable law. If required by applicable law or listing requirements, and except as provided in Section 9(a) relating to Capitalization Adjustments, the Company will seek stockholder approval of any amendment of the Plan that (A) materially increases the number of shares of Common Stock available for issuance under the Plan, (B) materially expands the class of individuals eligible to receive Awards under the Plan, (C) materially increases the benefits accruing to Participants under the Plan, (D) materially reduces the price at which shares of Common Stock may be issued or purchased under the Plan, (E) materially extends the term of the Plan, or (F) materially expands the types of Awards available for issuance under the Plan. Except as otherwise provided in the Plan or an Award Agreement, no amendment of the Plan will materially impair a Participant’s rights under an outstanding Award without the Participant’s written consent.

(vii) To submit any amendment to the Plan for stockholder approval, including, but not limited to, amendments to the Plan intended to satisfy the requirements of (A) Section 422 of the Code regarding “incentive stock options” or (B) Rule 16b-3.

(viii) To approve forms of Award Agreements for use under the Plan and to amend the terms of any one or more Awards, including, but not limited to, amendments to provide terms more favorable to the Participant than previously provided in the Award Agreement, subject to any specified limits in the Plan that are not subject to Board discretion; provided however, that a Participant’s rights under any Award will not be impaired by any such amendment unless (A) the Company requests the consent of the affected Participant, and (B) such Participant consents in writing. Notwithstanding the foregoing, (1) a Participant’s rights will not be deemed to have been impaired by any such amendment if the Board, in its sole discretion, determines that the amendment, taken as a whole, does not materially impair the Participant’s rights, and (2) subject to the limitations of applicable law, if any, the Board may amend the terms of any one or more Awards without the

 

A-2

affected Participant’s consent (I) to maintain the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code; (II) to change the terms of an Incentive Stock Option, if such change results in impairment of the Award solely because it impairs the qualified status of the Award as an Incentive Stock Option under Section 422 of the Code; (III) to clarify the manner of exemption from, or to bring the Award into compliance with, Section 409A of the Code; or (IV) to comply with other applicable laws or listing requirements.

(ix) Generally, to exercise such powers and to perform such acts as the Board deems necessary or expedient to promote the best interests of the Company and that are not in conflict with the provisions of the Plan or Awards.

(x) To adopt such procedures and sub-plans as are necessary or appropriate to permit participation in the Plan by Employees, Directors or Consultants who are foreign nationals or employed outside the United States (provided that Board approval will not be necessary for immaterial modifications to the Plan or any Award Agreement that are required for compliance with the laws of the relevant foreign jurisdiction).

(c) Delegation to Committee.

(i) General. The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration of the Plan is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee of the Committee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board will thereafter be to the Committee or subcommittee, as applicable). Any delegation of administrative powers will be reflected in resolutions, not inconsistent with the provisions of the Plan, adopted from time to time by the Board or Committee (as applicable). The Board may retain the authority to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some or all of the powers previously delegated.

(ii) Rule 16b-3 Compliance. The Committee may consist solely of two or more Non-Employee Directors, in accordance with Rule 16b-3.

(d) Delegation to Other Person or Body. The Board or any Committee may delegate to one or more persons or bodies the authority to do one or more of the following to the extent permitted by applicable law: (i) designate recipients, other than Officers, of Stock Awards, provided that no person or body may be delegated authority to grant a Stock Award to themself; (ii) determine the number of shares of Common Stock subject to such Stock Awards; and (iii) determine the terms of such Stock Awards; provided, however, that the Board or Committee action regarding such delegation will fix the terms of such delegation in accordance with applicable law, including without limitation Sections 152 and 157 of the Delaware General Corporation Law. Unless provided otherwise in the Board or Committee action regarding such delegation, each Stock Award granted pursuant to this section will be granted on the applicable form of Stock Award Agreement most recently approved for use by the Board or the Committee, with any modifications necessary to incorporate or reflect the terms of such Stock Award. Notwithstanding anything to the contrary herein, neither the Board nor any Committee may delegate to any person or body (who is not a Director or that is not comprised solely of Directors, respectively) the authority to determine the Fair Market Value pursuant to Section 13(x)(iii) below.

(e) Effect of Board’s Decision. All determinations, interpretations and constructions made by the Board in good faith will not be subject to review by any person and will be final, binding and conclusive on all persons.

(f) Cancellation and Re-Grant of Stock Awards. Neither the Board nor any Committee will have the authority to: (i) reduce the exercise price or strike price of any outstanding Options or Stock Appreciation Rights under the Plan, or (ii) cancel any outstanding Options or Stock Appreciation Rights that have an exercise price or strike price greater than the current Fair Market Value of the Common Stock in exchange for cash or other Stock Awards under the Plan, unless the stockholders of the Company have approved such an action within twelve months prior to such an event.

 

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3. SHARES SUBJECT TO THE PLAN.

(a) Share Reserve.

(i) Subject to Section 9(a) relating to Capitalization Adjustments and Section 3(a)(ii) regarding automatic increases, the aggregate number of shares of Common Stock that may be issued pursuant to Stock Awards will not exceed 18,574,542 shares (the “Share Reserve”), which number is the sum of (A) 272,577 shares that were approved at the Company’s 2019 Annual Meeting of Stockholders, plus (B) an additional 416,686 shares that became available upon the Milestone Closing, plus (C) an additional 5,000,000 shares that were approved at the Company’s 2023 Annual Meeting of Stockholders, plus (D) 2,920,164 cumulative shares available as a result of automatic increases under the terms of this Plan on January 1, 2021, January 1, 2022, January 1, 2023 and January 1, 2024, plus (E) an additional 9,500,000 shares that were approved at the Company’s 2024 Annual Meeting of Stockholders, plus (F) the number of shares subject to the 2012 Plan’s Available Reserve, plus (G) the number of shares that are Returning Shares, as such shares become available from time to time.

(ii) In addition, the Share Reserve will automatically increase on January 1st of each year, commencing on January 1, 2025 and ending on (and including) January 1, 2029, in an amount equal to 5.0% of the sum of (A) total number of shares of Capital Stock outstanding on December 31st of the preceding calendar year, plus (B) the total number of shares of Capital Stock issuable upon conversion of shares of Convertible Preferred Stock outstanding on December 31st of the preceding calendar year (without regard to any beneficial ownership limitations applicable thereto), plus (C) the total number of shares of Capital Stock issuable upon cash exercise of Prefunded Warrants outstanding on December 31st of the preceding calendar year (without regard to any beneficial ownership limitations applicable thereto). Notwithstanding the foregoing, the Board may act prior to January 1st of a given year to provide that there will be no January 1st increase in the Share Reserve for such year or that the increase in the Share Reserve for such year will be a lesser number of shares of Common Stock than would otherwise occur pursuant to the preceding sentence.

(iii) For clarity, the Share Reserve in this Section 3(a) is a limitation on the number of shares of Common Stock that may be issued pursuant to the Plan. Accordingly, this Section 3(a) does not limit the granting of Stock Awards except as provided in Section 7(a). Shares may be issued in connection with a merger or acquisition as permitted by NASDAQ Listing Rule 5635(c) or, if applicable, NYSE Listed Company Manual Section 303A.08, NYSE American Company Guide Section 711 or other applicable rule, and such issuance will not reduce the number of shares available for issuance under the Plan.

(b) Reversion of Shares to the Share Reserve. If a Stock Award or any portion thereof (i) expires or otherwise terminates without all of the shares covered by such Stock Award having been issued or (ii) is settled in cash (i.e., the Participant receives cash rather than stock), such expiration, termination or settlement will not reduce (or otherwise offset) the number of shares of Common Stock that may be available for issuance under the Plan. If any shares of Common Stock issued pursuant to a Stock Award are forfeited back to or repurchased by the Company because of the failure to meet a contingency or condition required to vest such shares in the Participant, then the shares that are forfeited or repurchased will revert to and again become available for issuance under the Plan. Any shares reacquired by the Company in satisfaction of tax withholding obligations on a Stock Award or as consideration for the exercise or purchase price of a Stock Award will again become available for issuance under the Plan.

(c) Incentive Stock Option Limit. Subject to the provisions of Section 9(a) relating to Capitalization Adjustments, the aggregate maximum number of shares of Common Stock that may be issued pursuant to the exercise of Incentive Stock Options will be 55,000,000 shares of Common Stock.

(d) Limitation on Grants to Non-Employee Directors. The maximum number of shares of Common Stock subject to Stock Awards granted under the Plan or otherwise during any one calendar year to any Non-Employee Director, taken together with any cash fees paid by the Company to such Non-Employee Director during such calendar year for service on the Board, will not exceed $750,000 in total value (calculating the value

 

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of any such Stock Awards based on the grant date fair value of such Stock Awards for financial reporting purposes), or, with respect to the calendar year in which a Non-Employee Director is first appointed or elected to the Board, $1,000,000.

(e) Source of Shares. The stock issuable under the Plan will be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the open market or otherwise.

4. ELIGIBILITY.

(a) Eligibility for Specific Stock Awards. Incentive Stock Options may be granted only to employees of the Company or a “parent corporation” or “subsidiary corporation” thereof (as such terms are defined in Sections 424(e) and 424(f) of the Code). Stock Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants; provided, however, that Stock Awards may not be granted to Employees, Directors and Consultants who are providing Continuous Service only to any “parent” of the Company, as such term is defined in Rule 405 of the Securities Act, unless (i) the stock underlying such Stock Awards is treated as “service recipient stock” under Section 409A of the Code (for example, because the Stock Awards are granted pursuant to a corporate transaction such as a spin off transaction), (ii) the Company, in consultation with its legal counsel, has determined that such Stock Awards are otherwise exempt from Section 409A of the Code, or (iii) the Company, in consultation with its legal counsel, has determined that such Stock Awards comply with the distribution requirements of Section 409A of the Code.

(b) Ten Percent Stockholders. A Ten Percent Stockholder will not be granted an Incentive Stock Option unless the exercise price of such Option is at least 110% of the Fair Market Value on the date of grant and the Option is not exercisable after the expiration of five years from the date of grant.

5. PROVISIONS RELATING TO OPTIONS AND STOCK APPRECIATION RIGHTS.

Each Option or SAR will be in such form and will contain such terms and conditions as the Board deems appropriate. All Options will be separately designated Incentive Stock Options or Nonstatutory Stock Options at the time of grant, and, if certificates are issued, a separate certificate or certificates will be issued for shares of Common Stock purchased on exercise of each type of Option. If an Option is not specifically designated as an Incentive Stock Option, or if an Option is designated as an Incentive Stock Option but some portion or all of the Option fails to qualify as an Incentive Stock Option under the applicable rules, then the Option (or portion thereof) will be a Nonstatutory Stock Option. The provisions of separate Options or SARs need not be identical; provided, however, that each Award Agreement will conform to (through incorporation of provisions hereof by reference in the applicable Award Agreement or otherwise) the substance of each of the following provisions:

(a) Term. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, no Option or SAR will be exercisable after the expiration of ten years from the date of its grant or such shorter period specified in the Award Agreement.

(b) Exercise Price. Subject to the provisions of Section 4(b) regarding Ten Percent Stockholders, the exercise or strike price of each Option or SAR will be not less than 100% of the Fair Market Value of the Common Stock subject to the Option or SAR on the date the Award is granted. Notwithstanding the foregoing, an Option or SAR may be granted with an exercise or strike price lower than 100% of the Fair Market Value of the Common Stock subject to the Award if such Award is granted pursuant to an assumption of or substitution for another option or stock appreciation right pursuant to a Corporate Transaction and in a manner consistent with the provisions of Section 409A and, if applicable, Section 424(a) of the Code. Each SAR will be denominated in shares of Common Stock equivalents.

(c) Purchase Price for Options. The purchase price of Common Stock acquired pursuant to the exercise of an Option may be paid, to the extent permitted by applicable law and as determined by the Board in its sole discretion, by any combination of the methods of payment set forth below. The Board will have the authority to

 

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grant Options that do not permit all of the following methods of payment (or otherwise restrict the ability to use certain methods) and to grant Options that require the consent of the Company to use a particular method of payment. The permitted methods of payment are as follows:

(i) by cash, check, bank draft or money order payable to the Company;

(ii) pursuant to a program developed under Regulation T as promulgated by the Federal Reserve Board that, prior to the issuance of the stock subject to the Option, results in either the receipt of cash (or check) by the Company or the receipt of irrevocable instructions to pay the aggregate exercise price to the Company from the sales proceeds;

(iii) by delivery to the Company (either by actual delivery or attestation) of shares of Common Stock;

(iv) if an Option is a Nonstatutory Stock Option, by a “net exercise” arrangement pursuant to which the Company will reduce the number of shares of Common Stock issuable upon exercise by the largest whole number of shares with a Fair Market Value that does not exceed the aggregate exercise price; provided, however, that the Company will accept a cash or other payment from the Participant to the extent of any remaining balance of the aggregate exercise price not satisfied by such reduction in the number of whole shares to be issued. Shares of Common Stock will no longer be subject to an Option and will not be exercisable thereafter to the extent that (A) shares issuable upon exercise are used to pay the exercise price pursuant to the “net exercise,” (B) shares are delivered to the Participant as a result of such exercise, and (C) shares are withheld to satisfy tax withholding obligations; or

(v) in any other form of legal consideration that may be acceptable to the Board and specified in the applicable Award Agreement.

(d) Exercise and Payment of a SAR. To exercise any outstanding SAR, the Participant must provide written notice of exercise to the Company in compliance with the provisions of the Stock Appreciation Right Agreement evidencing such SAR. The appreciation distribution payable on the exercise of a SAR will be not greater than an amount equal to the excess of (i) the aggregate Fair Market Value (on the date of the exercise of the SAR) of a number of shares of Common Stock equal to the number of Common Stock equivalents in which the Participant is vested under such SAR, and with respect to which the Participant is exercising the SAR on such date, over (ii) the aggregate strike price of the number of Common Stock equivalents with respect to which the Participant is exercising the SAR on such date. The appreciation distribution may be paid in Common Stock, in cash, in any combination of the two or in any other form of consideration, as determined by the Board and contained in the Award Agreement evidencing such SAR.

(e) Transferability of Options and SARs. The Board may, in its sole discretion, impose such limitations on the transferability of Options and SARs as the Board will determine. In the absence of such a determination by the Board to the contrary, the following restrictions on the transferability of Options and SARs will apply:

(i) Restrictions on Transfer. An Option or SAR will not be transferable except by will or by the laws of descent and distribution (or pursuant to subsections (ii) and (iii) below), and will be exercisable during the lifetime of the Participant only by the Participant. The Board may permit transfer of the Option or SAR in a manner that is not prohibited by applicable tax and securities laws. Except as explicitly provided herein, neither an Option nor a SAR may be transferred for consideration.

(ii) Domestic Relations Orders. Subject to the approval of the Board or a duly authorized Officer, an Option or SAR may be transferred pursuant to the terms of a domestic relations order, official marital settlement agreement or other divorce or separation instrument as permitted by Treasury Regulations Section 1.421-1(b)(2). If an Option is an Incentive Stock Option, such Option may be deemed to be a Nonstatutory Stock Option as a result of such transfer.

 

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(iii) Beneficiary Designation. Subject to the approval of the Board or a duly authorized Officer, a Participant may, by delivering written notice to the Company, in a form approved by the Company (or the designated broker), designate a third party who, on the death of the Participant, will thereafter be entitled to exercise the Option or SAR and receive the Common Stock or other consideration resulting from such exercise. In the absence of such a designation, the executor or administrator of the Participant’s estate will be entitled to exercise the Option or SAR and receive the Common Stock or other consideration resulting from such exercise. However, the Company may prohibit designation of a beneficiary at any time, including due to any conclusion by the Company that such designation would be inconsistent with the provisions of applicable laws.

(f) Vesting Generally. The total number of shares of Common Stock subject to an Option or SAR may vest and therefore become exercisable in periodic installments that may or may not be equal. The Option or SAR may be subject to such other terms and conditions on the time or times when it may or may not be exercised (which may be based on the satisfaction of Performance Goals or other criteria) as the Board may deem appropriate. The vesting provisions of individual Options or SARs may vary. The provisions of this Section 5(f) are subject to any Option or SAR provisions governing the minimum number of shares of Common Stock as to which an Option or SAR may be exercised.

(g) Termination of Continuous Service. Except as otherwise provided in the applicable Award Agreement or other agreement between the Participant and the Company, if a Participant’s Continuous Service terminates (other than for Cause and other than upon the Participant’s death or Disability), the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Award as of the date of termination of Continuous Service) within the period of time ending on the earlier of (i) the date three months following the termination of the Participant’s Continuous Service (or such longer or shorter period specified in the applicable Award Agreement), and (ii) the expiration of the term of the Option or SAR as set forth in the Award Agreement. If, after termination of Continuous Service, the Participant does not exercise his or her Option or SAR (as applicable) within the applicable time frame, the Option or SAR will terminate.

(h) Extension of Termination Date. Except as otherwise provided in the applicable Award Agreement, if the exercise of an Option or SAR following the termination of the Participant’s Continuous Service (other than for Cause and other than upon the Participant’s death or Disability) would be prohibited at any time solely because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act, then the Option or SAR will terminate on the earlier of (i) the expiration of a total period of time (that need not be consecutive) equal to the applicable post termination exercise period after the termination of the Participant’s Continuous Service during which the exercise of the Option or SAR would not be in violation of such registration requirements, and (ii) the expiration of the term of the Option or SAR as set forth in the applicable Award Agreement. In addition, unless otherwise provided in a Participant’s Award Agreement, if the sale of any Common Stock received on exercise of an Option or SAR following the termination of the Participant’s Continuous Service (other than for Cause) would violate the Company’s insider trading policy, then the Option or SAR will terminate on the earlier of (A) the expiration of a period of time (that need not be consecutive) equal to the applicable post-termination exercise period after the termination of the Participant’s Continuous Service during which the sale of the Common Stock received upon exercise of the Option or SAR would not be in violation of the Company’s insider trading policy, or (B) the expiration of the term of the Option or SAR as set forth in the applicable Award Agreement.

(i) Disability of Participant. Except as otherwise provided in the applicable Award Agreement or other agreement between the Participant and the Company, if a Participant’s Continuous Service terminates as a result of the Participant’s Disability, the Participant may exercise his or her Option or SAR (to the extent that the Participant was entitled to exercise such Option or SAR as of the date of termination of Continuous Service), but only within such period of time ending on the earlier of (i) the date 12 months following such termination of Continuous Service (or such longer or shorter period specified in the Award Agreement), and (ii) the expiration of the term of the Option or SAR as set forth in the Award Agreement. If, after termination of Continuous Service, the Participant does not exercise his or her Option or SAR within the applicable time frame, the Option or SAR (as applicable) will terminate.

 

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(j) Death of Participant. Except as otherwise provided in the applicable Award Agreement or other agreement between the Participant and the Company, if (i) a Participant’s Continuous Service terminates as a result of the Participant’s death, or (ii) the Participant dies within the period (if any) specified in the Award Agreement for exercisability after the termination of the Participant’s Continuous Service for a reason other than death, then the Option or SAR may be exercised (to the extent the Participant was entitled to exercise such Option or SAR as of the date of death) by the Participant’s estate, by a person who acquired the right to exercise the Option or SAR by bequest or inheritance or by a person designated to exercise the Option or SAR upon the Participant’s death, but only within the period ending on the earlier of (A) the date 18 months following the date of death (or such longer or shorter period specified in the Award Agreement), and (B) the expiration of the term of such Option or SAR as set forth in the Award Agreement. If, after the Participant’s death, the Option or SAR is not exercised within the applicable time frame, the Option or SAR will terminate.

(k) Termination for Cause. Except as explicitly provided otherwise in a Participant’s Award Agreement or other individual written agreement between the Company or any Affiliate and the Participant, if a Participant’s Continuous Service is terminated for Cause, the Option or SAR will terminate immediately upon such Participant’s termination of Continuous Service, and the Participant will be prohibited from exercising his or her Option or SAR from and after the date of such termination of Continuous Service).

(l) Non-Exempt Employees. If an Option or SAR is granted to an Employee who is a non-exempt employee for purposes of the Fair Labor Standards Act of 1938, as amended, the Option or SAR will not be first exercisable for any shares of Common Stock until at least six (6) months following the date of grant of the Option or SAR (although the Award may vest prior to such date). Consistent with the provisions of the Worker Economic Opportunity Act, (i) if such non-exempt Employee dies or suffers a Disability, (ii) upon a Corporate Transaction in which such Option or SAR is not assumed, continued, or substituted, (iii) upon a Change in Control, or (iv) upon the Participant’s retirement (as such term may be defined in the Participant’s Award Agreement in another agreement between the Participant and the Company, or, if no such definition, in accordance with the Company’s then current employment policies and guidelines), the vested portion of any Options and SARs may be exercised earlier than six months following the date of grant. The foregoing provision is intended to operate so that any income derived by a non-exempt employee in connection with the exercise or vesting of an Option or SAR will be exempt from his or her regular rate of pay. To the extent permitted and/or required for compliance with the Worker Economic Opportunity Act to ensure that any income derived by a non-exempt employee in connection with the exercise, vesting or issuance of any shares under any other Stock Award will be exempt from the employee’s regular rate of pay, the provisions of this Section 5(l) will apply to all Stock Awards and are hereby incorporated by reference into such Stock Award Agreements.

6. PROVISIONS OF STOCK AWARDS OTHER THAN OPTIONS AND SARS.

(a) Restricted Stock Awards. Each Restricted Stock Award Agreement will be in such form and will contain such terms and conditions as the Board will deem appropriate. To the extent consistent with the Company’s bylaws, at the Board’s election, shares of Common Stock may be (x) held in book entry form subject to the Company’s instructions until any restrictions relating to the Restricted Stock Award lapse; or (y) evidenced by a certificate, which certificate will be held in such form and manner as determined by the Board. The terms and conditions of Restricted Stock Award Agreements may change from time to time, and the terms and conditions of separate Restricted Stock Award Agreements need not be identical. Each Restricted Stock Award Agreement will conform to (through incorporation of the provisions hereof by reference in the agreement or otherwise) the substance of each of the following provisions:

(i) Consideration. A Restricted Stock Award may be awarded in consideration for (A) cash, check, bank draft or money order payable to the Company, (B) past services to the Company or an Affiliate, or (C) any other form of legal consideration (including future services) that may be acceptable to the Board, in its sole discretion, and permissible under applicable law.

 

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