Item 4.01. Change in Registrant's Certifying Accountant.
For accounting purposes, the Merger is treated as a reverse acquisition and, as
such, the historical financial statements of the accounting acquirer, NeuroBo,
which have been audited by BDO LLP ("BDO"), will become the historical financial
statements of the Company. In a reverse acquisition, a change of accountants is
presumed to have occurred unless the same accountant audited the pre-transaction
financial statements of both the legal acquirer and the accounting acquirer, and
such change is generally presumed to occur on the date the reverse acquisition
is completed.
On December 31, 2019, the Audit Committee of the Company's board of directors
approved the dismissal of Ernst & Young LLP ("E&Y") as the Company's independent
registered public accounting firm and the engagement of BDO as the independent
registered public accounting firm to audit the Company's financial statements
for the fiscal year ended December 31, 2019, which will reflect NeuroBo as the
accounting acquirer.
The reports of E&Y on the Company's financial statements for each of the two
fiscal years ended December 31, 2018 and December 31, 2017 did not contain an
adverse opinion or a disclaimer of opinion, nor were they qualified or modified
as to uncertainty, audit scope or accounting principles.
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In connection with the audits of the Company's financial statements for each of
the two fiscal years ended December 31, 2018 and December 31, 2017 and the
interim period between December 31, 2018 and the date of E&Y's dismissal, there
were no "disagreements" (as that term is defined in Item 304(a)(1)(iv) of
Regulation S-K and related instructions) between the Company and E&Y on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure which, if not resolved to the satisfaction of E&Y,
would have caused E&Y to make reference to the subject matter of the
disagreement in its reports.
Within the fiscal years ended December 31, 2018 and December 31, 2017 and the
interim period between December 31, 2018 and the date of E&Y's dismissal, there
were no "reportable events" (as that term is defined in Item 304(a)(1)(v) of
Regulation S-K and related instructions).
The Company delivered to E&Y copies of the Form 8-K (on December 29, 2019) and
the Amendment No. 1 to the Form 8-K (on January 5, 2020), and requested that E&Y
provide a letter addressed to the Securities and Exchange Commission stating
whether or not it agrees with the statements made in response to this Item and,
if not, stating the respects in which it does not agree. A copy of E&Y's letter
dated January 6, 2020 is attached as Exhibit 16.1 hereto.
Item 5.02. Departure of Directors or Certain Officers;
Election of Directors; Appointment of Certain Officers; Compensatory
Arrangements of Certain Officers.
Directors
In accordance with the Merger Agreement, on December 30, 2019, in connection
with the closing of the Merger, Charles L. Bisgaier, Ph.D., Kenneth Kousky,
Pedro Lichtinger and Andrew Sassine resigned from the Company's board of
directors and committees of the board of directors on which they respectively
served, which resignations were not the result of any disagreements with the
Company relating to the Company's operations, policies or practices.
The Merger Agreement initially provided that at or immediately after the closing
of the Merger, the size of the Company's board of directors will be fixed at ten
members, consisting of one member designated by the Company, who is Steven
Gullans, Ph.D., and nine members designated by NeuroBo. On December 30, 2019,
the parties agreed to waive this provision of the Merger Agreement as it relates
to the composition of the Company's board of directors following the closing of
the Merger such that the board of directors will consist of seven members total,
one member designated by the Company, who is Steven Gullans, Ph.D., and six
members designated by NeuroBo. Accordingly, following the closing of the Merger
the board of directors and its committees will be reconstituted, with
Dr. Gullans and Na Yeon (Irene) Kim appointed as Class I directors of the
Company, whose terms expire at the Company's 2020 annual meeting of
stockholders, Jeong Gyun Oh and Jason Groves appointed as Class II directors of
the Company, whose terms expire at the Company's 2021 annual meeting of
stockholders and Jeong Gu (Richard) Kang, Michael Salsbury and Tae Heum (Ted)
Jeong appointed as Class III directors of the Company, whose terms expire at the
Company's 2022 annual meeting of stockholders. Ms. Kim will serve as chairperson
of the board of directors. Biographical information for Dr. Kang and
Messrs. Salsbury and Groves is set forth below. Dr. Roy Freeman, who had
previously been a director of NeuroBo, has stepped down from the board of
directors of NeuroBo and was not appointed as a director of the Company
effective upon the closing of the Merger. NeuroBo also determined not to
designate certain other individuals named in the Proxy Statement that were
anticipated to be designated as of the date thereof.
Dr. Jeong and Messrs. Groves and Salsbury were appointed to the Company's Audit
Committee (with Dr. Jeong serving as chair of the committee and audit committee
financial expert); Ms. Kim and Mr. Oh
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were appointed to the Company's Compensation Committee (with Ms. Kim serving as
chair of the committee); and Messrs. Groves, Oh and Salsbury were appointed to
the Company's Nominating and Corporate Governance Committee (with Mr. Salsbury
serving as chair of the committee). Each of the directors will also enter into
an indemnification agreement with the Company on December 31, 2019. For
additional information regarding the indemnification agreements between the
Company and each of its directors, please refer to the form of indemnification
agreement filed herewith as Exhibit 10.5.
Biographical information for the newly appointed directors (other than with
respect to Dr. Kang and Messrs. Salsbury and Groves) and disclosure regarding
related party transactions involving NeuroBo and the newly appointed directors
are included in the Proxy Statement and incorporated herein by reference. On
December 30, 2019, the board of directors of NeuroBo approved the payment or
reimbursement of legal fees and costs incurred jointly and severally by certain
stockholders of NeuroBo, including E&Healthcare Fund II, E&Healthcare Fund
No. 6, E&Healthcare Fund No. 7 (collectively, the "E&Healthcare Funds"), JK
BioPharma Solutions, Inc. and Eun Soo Kang, in connection with the Merger and
certain other matters directly related to the Company's business that required
resolution in connection with the closing of the Merger. The total amount of
such legal fees and costs is estimated at $240,000 through December 31, 2019.
Na Yeon (Irene) Kim, is the Chief Executive Officer of the sole general partner
of each of the E&Healthcare Funds, and as such may be deemed to have an indirect
interest in such matters. Jeong Gyun Oh is the President and Chief Executive
Officer of JK BioPharma Solutions, Inc. and the spouse of Eun Soo Kang, and as
such may be deemed to have an indirect interest in such matters.
Dr. Jeong Gu (Richard) Kang, age 48, has served as an officer of
NeoImmuneTech, Inc., a biotechnology company developing T cell-centered novel
immunotherapeutics, since May 2014, most recently as Co-President and Chief
Executive Officer and a member of the board of directors. Mr. Kang held various
officer positions at NeuroBo, including as President and Chief Operating
Officer, from September 2017 through February 2019 and also served on NeuroBo's
board of directors from July 2017 to February 2019. He was reappointed to
NeuroBo's board of directors in December 2019. Dr. Kang also served as President
and Chief Executive Officer of JK BioPharma Solutions, Inc. from January 2013 to
February 2019. Dr. Kang received a Ph.D. in Molecular Plant Pathology from The
University of Edinburgh, a M.S. in Plant Molecular Genetics from Seoul National
University and a B.S. in Horticultural Science from Seoul National University.
Jason L. Groves, Esq., age 48, is the Executive Vice President and General
Counsel of Medifast, Inc. (NYSE: MED), a publicly held leading manufacturer and
distributor of clinically-proven, healthy-living products and programs. He has
served in this position since November 2011, and as Corporate Secretary since
June 2015. Preceding and during his current position, Mr. Groves was a
Medifast, Inc., director from 2009 to 2015, serving on the Audit Committee from
2009 to 2011. Mr. Groves was Assistant Vice President of Government Affairs for
Verizon Maryland from 2003 until 2011, after having joined Verizon in 2001. A
United States Army veteran, Mr. Groves was a direct-commissioned Judge Advocate
in the United States Army Judge Advocate General's (JAG) Corps. As a JAG
officer, he practiced law and had the distinction of prosecuting criminal cases
in the District Court of Maryland as a Special Assistant United States Attorney.
Mr. Groves recently completed nine years with the Anne Arundel Medical Center
Board of Trustees, chairing their international captive insurance company board
for eight years. Mr. Groves received his Bachelor of Science degree, cum laude,
in Hospitality Management from Bethune-Cookman University, and obtained his
Juris Doctor from North Carolina Central University School of Law.
Mr. Michael Salsbury, age 70, has served as Counsel to Verisma Systems, Inc., a
provider of cloud-based automated disclosure management systems, since
September 2017. From February 2013 to
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July 2017, he served as Secretary and General Counsel to Best Doctors, Inc., a
provider of expert medical opinions. Mr. Salsbury has more than 25 years'
experience as a senior executive with public and private companies and private
law practice. Mr. Salsbury received a J.D. and M.B.A. from University of
Virginia and a B.A. from Dartmouth College.
Executive Officers
In accordance with the Merger Agreement, on December 30, 2019, the employment of
the Company's Chief Executive Officer and President, Dr. Gullans, Chief
Scientific Officer, Dr. Bisgaier, and Chief Commercial Officer, Mr. Reno,
terminated in connection with the closing of the Merger. Following the
termination of such officers' employment and execution of a general release of
claims, pursuant to their employment agreements, Dr. Gullans, Dr. Bisgaier and
Mr. Reno are entitled to receive a lump sum cash payment in an amount equal to
$75,000, $330,000 and $297,536, respectively, subject to a reduction for
withholding tax, and each such officer's restricted stock award granted on
July 24, 2019 representing 12,000, 4,000 and 4,000 shares, respectively, of the
Company's common stock fully vested immediately prior to the closing of the
Merger. John L. Brooks, III's relationship with NeuroBo ended prior to the
Merger and he will not be employed by the Company in any capacity.
On December 31, 2019, the Company's board of directors appointed Jeong Gu
(Richard) Kang as the Company's President, Chief Executive Officer, Secretary
and as Interim Principal Financial Officer and Treasurer, effective January 1,
2020, Mark Versavel, M.D., Ph.D., M.B.A., as the Company's Chief Medical Officer
and Nicola Shannon as the Company's Vice President, Clinical Operations.
Dr. Gullans continued as Interim Chief Executive Officer until the effective
date of Dr. Kang's appointment. Each of Dr. Kang, Mr. Versavel and Ms. Shannon
will enter into an indemnification agreement with the Company, a form of which
is attached hereto as Exhibit 10.5. There are no family relationships among any
of the Company's directors and executive officers.
Mr. Jeong Gu (Richard) Kang. The Compensation Committee of the Company's Board
of Directors and Dr. Kang are negotiating the terms his employment with the
Company.
Dr. Mark Versavel. Dr. Versavel, age 61, has served as NeuroBo's Chief Medical
Officer since February 2018. Dr. Versavel has also been the founder and owner of
vZenium LLC, providing consulting services to life sciences companies engaged in
central nervous system clinical development, since March 2014 and, since
March 2019, has served as the Chief Medical Officer of Cavion, Inc., a
privately-held, clinical stage biotechnology company developing therapeutics for
neurological diseases. From May 2014 until December 2018, Dr. Versavel also
provided advisory services to life sciences companies through the privately-held
staffing agency, Atrium Staffing. Dr. Versavel also served as the Chief Medical
Officer of Alzheon, Inc., a privately-held, clinical-stage biopharmaceutical
company developing medicines for patients with Alzheimer's disease, from
September 2013 until September 2015. From March 2014 until November 2015,
Dr. Versavel was also a principal of Akta Pharmaceutical Development, an
international, privately-held company engaged in providing consulting services
for biopharmaceutical companies. Dr. Versavel has over 25 years of clinical
development experience in neuropathic pain and multiple neurology and psychiatry
indications across the areas of clinical pharmacology, early and late phase
clinical trials, and in the support of marketed products in the public companies
Bayer AG, Schering AG, Parke Davis, Pfizer and Sunovion. Dr. Versavel received
his M.D. from the University of Antwerp, his Ph.D. in clinical pharmacology from
the Humboldt University of Berlin and his M.B.A. from the University of
Michigan.
Dr. Versavel remains engaged under the terms of the Second Versavel Consulting
Agreement described in the Proxy Statement, a copy of which is attached as
hereto as Exhibit 10.3. The monthly consulting fee is now $29,750 per month.
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During the year ended December 31, 2018, vZenium LLC earned $178,499 in monthly
consulting fees and was paid $4,325 as reimbursements for expenses.
Ms. Nicola Shannon. Ms. Shannon, age 61, has served as NeuroBo's Vice President
of Clinical Operations since October 2018. From May 2018 until September 2018,
Ms. Shannon served as the Vice President of Clinical Operations of Kaleido
Biosciences, Inc., a publicly-traded, clinical-stage health care company focused
on leveraging the microbiome organ to treat disease and improve human health,
and from June 2016 until April 2018, Ms. Shannon served as the Executive
Director of Clinical Operations for Tetraphase Pharmaceuticals, a
publicly-traded, biopharmaceutical company seeking to use chemistry technology
to create, develop and commercialize novel tetracyclines for serious and
life-threatening conditions. Ms. Shannon was also the Senior Director of
Clinical Operations for Cubist Pharmaceuticals, a publicly-traded,
biopharmaceutical company (subsequently acquired by Merck & Co.) focusing on the
research, development and commercialization of pharmaceutical
products-particularly those designed to treat drug resistant pathogens, from
October 2014 until March 2016. In addition, Ms. Shannon was a Director of
Clinical Development for AstraZeneca Pharmaceuticals, Inc., a publicly-traded,
global pharmaceutical company and Senior Director of Clinical Operations at
Vertex Pharmaceuticals, a publicly-traded, global biotechnology company.
Ms. Shannon brings more than 25 years of experience in clinical operations and
clinical development, Phase 1 - 4 trials, clinical strategy, quality, and
process improvement to NeuroBo. Ms. Shannon is a Registered Nurse and holds a
. . .
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
Exhibit
No. Description
2.1± Agreement and Plan of Merger and Reorganization, dated July 24, 2019,
by and among the Registrant, GR Merger Sub Inc. and NeuroBo
Pharmaceuticals, Inc. (incorporated by reference from Exhibit 2.1 to
the Current Report on Form 8-K filed with the SEC on July 25, 2019,
File No. 001-37809).
2.2 First Amendment to Agreement and Plan of Merger and Reorganization,
dated October 29, 2019, by and among the Registrant, GR Merger Sub Inc.
and NeuroBo Pharmaceuticals, Inc. (incorporated by reference from
Exhibit 2.1 to the Current Report on Form 8-K, as filed with the
Securities and Exchange Commission on October 29, 2019, File
No. 001-37809).
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3.1* Certificate of Amendment (Reverse Stock Split) to the Third Amended
and Restated Certificate of Incorporation of the Company.
3.2* Certificate of Amendment (Name Change) to the Third Amended and
Restated Certificate of Incorporation of the Company.
10.1+* Contingent Value Rights Agreement, dated as of December 30, 2019, by
and among the Company, Grand Rapids Holders Representative, LLC,
Computershare Inc. and Computershare Trust Company, N.A.
10.2@* 2019 Equity Incentive Plan.
10.3@* Consulting Agreement by and between vZenium LLC, owned and managed
entirely by Mark Versavel, and NeuroBo Pharmaceuticals, Inc., dated
February 1, 2018; Replacement Consulting Agreement, dated May 1, 2018
and extension of such agreement, dated January 1, 2019.
10.4@* Offer Letter, dated as of August 20, 2018, by and between Nicola
Shannon and NeuroBo.
10.5@* Form of Indemnification Agreement between NeuroBo
Pharmaceuticals, Inc. and each of its directors and executive
officers.
16.1 Letter from Ernst & Young LLP
99.1* Press Release dated December 30, 2019.
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± All schedules (or similar attachments) have been omitted from this filing
pursuant to Item 601(b)(2) of Regulation S-K. NeuroBo Pharmaceuticals, Inc.
will furnish copies of any schedules to the U.S. Securities and Exchange
Commission upon request.
@ Management contract or compensatory plan or arrangement.
* Previously filed as exhibits to the Form 8-K
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