Item 2.05 Costs Associated with Exit or Disposal Activities.
On February 27, 2023, Apexigen, Inc. (the "Company") announced that it is
implementing a corporate restructuring to extend its cash runway as it reviews
and explores strategic alternatives. As part of the restructuring, which was
approved by the Company's Board of Directors on February 23, 2023, the Company
plans to reduce the size of its workforce by 55%, impacting up to 11 of its 20
employee positions. The Company expects to eliminate six employee positions by
the end of February 2023 and five additional positions by the end of April 2023.
On February 26, 2023, the Compensation Committee of the Company's Board of
Directors (the "Committee") approved a retention plan in connection with the
corporate restructuring in order to retain certain employees required to explore
strategic alternatives and maintain operations as it explores those strategic
alternatives. Under the retention plan, certain employees will receive retention
cash awards and awards of restricted stock units. These retention cash awards
will become payable and the restricted stock unit awards will vest upon the
earliest of the occurrence of (i) certain actions relating to a strategic
transaction, (ii) June 30, 2023 and/or September 30, 2023, depending on the
employee, and (iii) such employee's earlier termination, subject to certain
exceptions.
The total costs related to the Company's cost-cutting measures and retention
plan are estimated to be approximately (i) $1.1 million in employee termination
costs primarily related to severance costs, which are expected to be incurred in
the first and second quarters of 2023, and (ii) $0.6 million in employee
retention costs primarily related to the retention plan, which are expected to
be incurred in the second and third quarters of 2023.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
As part of the retention plan approved by the Committee on February 26, 2023,
Francis Sarena, the Company's President and Chief Operating Officer, and William
Duke, the Company's Chief Financial Officer, will each be entitled to receive a
retention cash award of $150,000 and an award of 150,000 restricted stock units.
40% of such retention cash awards will become payable and 40% of the restricted
stock unit awards will vest upon the earliest of (i) the signing of a definitive
agreement for specified strategic transactions, (ii) June 30, 3023, and (iii)
Mr. Sarena's or Mr. Duke's, as applicable, earlier termination without cause,
subject to certain conditions. The remaining 60% of such retention cash awards
will become payable and the remaining 60% of such restricted stock unit awards
will vest upon the earliest of (i) the closing of such strategic transaction,
(ii) September 30, 2023, and (iii) Mr. Sarena's or Mr. Duke's, as applicable,
earlier termination without cause, subject to certain conditions.
Item 8.01 Other Events.
On February 27, 2023, the Company issued a press release announcing that it had
engaged Ladenburg Thalmann to serve as strategic advisor in its review of
strategic alternatives. A copy of the press release is attached hereto as
Exhibit 99.1 and is incorporated herein by reference.
Forward Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, including, but not
limited to, statements related to the Company's corporate restructuring, and the
Company's ability to explore and consummate a strategic transaction; the
anticipated amount of costs associated with the planned corporate restructuring;
and the timing of retention payments and vesting of related retention equity
awards. Any statements contained herein that are not statements of historical
fact may be deemed to be forward-looking statements. In addition, any statements
that refer to projections, forecasts or other characterizations of future events
or circumstances, including any underlying assumptions, are forward-looking
statements. The words "anticipate," "believe," "continue," "could," "estimate,"
"expect," "intends," "may," "might," "plan," "possible," "potential," "predict,"
"project," "should," "would" and similar expressions may identify
forward-looking statements, but the absence of these words does not mean that a
statement is not forward-looking. The forward-looking statements contained in
this Current Report on Form 8-K are based on certain assumptions and analyses
made by Apexigen's management in light of their respective experience and their
perception of historical trends, current conditions and expected future
developments and their potential effects on the Company, as well as other
factors they believe are appropriate in the circumstances. There can be no
assurance that future developments affecting the Company will be those that the
Company has anticipated. Should any of the Company's assumptions prove
incorrect, actual results may vary in material respects from those projected in
these forward-looking statements. Factors that could cause actual results to
differ are discussed under the heading "Risk Factors" and in other sections of
the Company's filings with the SEC, and in its current and periodic reports
filed or furnished from time to time with the SEC. All forward-looking
statements in this Current Report on Form 8-K are made as of the date hereof,
based on information available to the Company and the Company assumes no
obligation to update or revise any forward-looking statement, whether as a
result of new information, future events or otherwise, except as may be required
under applicable securities laws.
Item 9.01 Financial Statements and Exhibits.
(d) List of Exhibits.
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Exhibit No. Description
99.1 Press Release dated February 27, 2023.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document).
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