Item 2.05 Costs Associated with Exit or Disposal Activities.
On January 22, 2021, the board of directors (the "Board") of Millendo
Therapeutics, Inc. (the "Company") approved a corporate restructuring plan (the
"Plan") furthering its ongoing efforts to align Company resources with its
current strategy and operations. In connection with the Plan, the Company plans
to reduce its workforce by up to 85%, with the majority of the reduction in
personnel expected to be completed by April 15, 2021. The Company expects to
provide severance payments and continuation of group health insurance coverage
for a specified period to the affected employees. The Company also plans to
enter into retention arrangements with employees who are expected to remain with
the Company. The Company estimates that it will incur costs of up to $5.0
million to $5.5 million for termination benefits and retention arrangements
related to the Plan, substantially all of which will be cash expenditures. The
costs related to the Plan are subject to a number of assumptions, and actual
results may differ materially. The Company may also incur other charges or cash
expenditures not currently contemplated due to events that may occur as a result
of, or associated with, the Plan. If the Company subsequently determines that it
will incur additional significant costs in connection with the Plan, it will
amend this Current Report to disclose such information.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Appointment of Chief Executive Officer and Director
On January 22, 2021, the Board appointed Louis J. Arcudi III as the Company's
Chief Executive Officer, President and Principal Executive Officer, effective
February 1, 2021, at which time he will also join the Company's Board. Mr.
Arcudi has served as the Chief Financial Officer of the Company and its
predecessor since November 2018. From December 2007 through October 2018, he
served as Senior Vice President of Operations and Chief Financial Officer at
Idera Pharmaceuticals. Prior to Idera, from June 2002 to December 2007, he
served as Vice President of Finance and Administration for Peptimmune, Inc.
where he handled all financial business and operations. Mr. Arcudi obtained an
MBA from Bryant College and a B.S. in accounting and information systems from
the University of Southern New Hampshire.
Mr. Arcudi does not have a family relationship with any director or executive
officer of the Company or person nominated or chosen by the Company to become a
director or executive officer, and there are no arrangements or understandings
between Mr. Arcudi and any other person pursuant to which Mr. Arcudi was
selected to serve as Chief Executive Officer. Except as described herein, there
have been no transactions involving Mr. Arcudi that would require disclosure
under Item 404(a) of Regulation S-K under the Securities Exchange Act of 1934,
as amended (the "Exchange Act").
In connection with his appointment as Chief Executive Officer, Mr. Arcudi
entered into an amended and restated employment agreement with the Company,
effective February 1, 2021 (the "Arcudi Employment Agreement"). Pursuant to the
Arcudi Employment Agreement, Mr. Arcudi will serve as the Company's President
and Chief Executive Officer and will earn an annual base salary of $447,600,
subject to applicable deductions and withholdings. Mr. Arcudi will continue to
be eligible for an annual performance bonus targeted at 40% of his annual base
salary based upon the assessment the Board, or a designated committee thereof,
of Mr. Arcudi's performance and attainment of targeted goals as set by the Board
or designated committee thereof. In addition, Mr. Arcudi will be eligible to
earn retention bonuses of up to a total of $630,000 in the aggregate and paid in
two equal installments, conditioned upon his continued employment with the
Company through (1) June 30, 2021 and (2) the earlier of December 31, 2021 or
the closing of a Change in Control of the Company (as defined in the Arcudi
Employment Agreement), and his execution of release agreements in favor of the
Company. Mr. Arcudi will also be eligible for a transaction bonus of $250,000 in
the event that the Company undergoes a Change in Control during Mr. Arcudi's
employment term.
Pursuant to the terms of the Arcudi Employment Agreement, if Mr. Arcudi is
terminated by the Company without "Cause" or he resigns employment for "Good
Reason" (each, as defined in the Arcudi Employment Agreement), and subject to
delivery to the Company of a separation agreement including a general release of
claims in favor of the Company, Mr. Arcudi will be entitled to payment of his
COBRA health insurance premiums for a twelve (12) month period. If such a
termination without Cause or resignation for Good Reason takes place within
three (3) months prior to or twelve (12) months following the effective date of
a "Change in Control" (as defined in the Arcudi Employment Agreement), Mr.
Arcudi will be entitled to: (a) payment of his COBRA health insurance premiums
for an eighteen (18) month period; and (b) accelerated vesting of all unvested
equity awards such that all unvested equity awards shall become immediately
vested and exercisable. Mr. Arcudi is also a party to the Company's standard
form of indemnification agreement, the form of which has been filed as Exhibit
10.1 to the Company's Current Report on Form 8-K, filed with the Securities and
Exchange Commission on December 13, 2018 .
A copy of the Arcudi Employment Agreement is expected to be filed as an exhibit
to the Company's Annual Report on Form 10-K for the year ended December 31,
2020.
Appointment of Executive Chair
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In connection with the above appointment of Mr. Arcudi, Julia C. Owens, Ph.D.
will step down from her role as Chief Executive Officer, President and Principal
Executive Officer, effective January 31, 2021, pursuant to a Separation
Agreement entered into between the Company and Dr. Owens on January 27, 2021
(the "Owens Separation Agreement"). Dr. Owens will remain on the Board and serve
in an advisory role as Executive Chair of the Board, effective February 1, 2021,
pursuant to an Executive Chair Offer Letter entered into between the Company and
Dr. Owens on January 27, 2021 (the "EC Agreement").
Pursuant to the Owens Separation Agreement, Dr. Owens will receive the following
severance benefits: (a) a lump sum payment in the amount of $789,450.12, less
applicable deductions and withholdings; (b) a lump sum payment of Dr. Owens's
annual bonus for 2021 in the amount of $394,725, less applicable deductions and
withholdings; and (c) continuation of COBRA health insurance premiums for an
eighteen (18) month period that is funded by the Company. The Owens Separation
Agreement contains release covenants that are binding upon Dr. Owens.
Pursuant to the EC Agreement, Dr. Owens will be paid a stipend of $10,000 per
month on a quarterly basis, in addition to any cash and equity compensation
provided to non-employee members of the Board plus cash and equity compensation
provided to the individual acting as the Board chair, all pursuant to the
Company's non-employee director compensation policy, and all of her currently
outstanding options to purchase Common Stock will continue to vest pursuant to
their current vesting schedule while she serves as Executive Chair.
Copies of the Owens Separation Agreement and the EC Agreement are expected to be
filed as exhibits to the Company's Annual Report on Form 10-K for the year ended
December 31, 2020.
Appointment of Chief Financial Officer
On January 27, 2021, the Board appointed Jennifer Minai-Azary as the Company's
Chief Financial Officer, Principal Financial Officer and Principal Accounting
Officer, effective February 1, 2021. Ms. Minai-Azary has served as the VP,
Finance, as well as in other finance roles, of the Company and its predecessor
since July 2013. From August 2011 through July 2013, she served as Director,
Technical Accounting at PAREXEL International. Ms. Minai-Azary started her
career in Ernst & Young's audit practice in 2000 and held positions of
increasing responsibility where she managed financial statement audits for
publicly and privately held clients within a variety of industries. Ms.
Minai-Azary holds a Master of Accounting and a B.B.A. from the University of
Michigan and is a certified public accountant.
Ms. Minai-Azary does not have a family relationship with any director or
executive officer of the Company or person nominated or chosen by the Company to
become a director or executive officer, and there are no arrangements or
understandings between Ms. Minai-Azary and any other person pursuant to which
Ms. Minai-Azary was selected to serve as Chief Financial Officer, principal
financial officer and principal accounting officer. Except as described herein,
there have been no transactions involving Ms. Minai-Azary that would require
disclosure under Item 404(a) of Regulation S-K under the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
In connection with her appointment as Chief Financial Officer, Ms. Minai-Azary
entered into an amended and restated employment agreement with the Company
effective February 1, 2021 (the "Minai-Azary Employment Agreement"). Pursuant to
the Minai-Azary Employment Agreement, Ms. Minai-Azary will serve as the
Company's Chief Financial Officer and will earn an annual base salary of
$310,000. Ms. Minai-Azary will continue to be eligible for an annual performance
bonus targeted at 30% of her annual base salary based upon the assessment by the
Board or Compensation Committee, of Ms. Minai-Azary's performance and attainment
of targeted goals as set by the Board or Compensation Committee. In addition,
Ms. Minai-Azary will be eligible to earn retention bonuses of up to a total of
$403,000 in the aggregate and paid in two equal installments, conditioned upon
her continued employment with the Company through (1) June 30, 2021 and (2) the
earlier of December 31, 2021 or the closing of a Change in Control of the
Company (as defined in the Minai-Azary Employment Agreement), and her execution
of release agreements in favor of the Company.
Pursuant to the terms of the Minai-Azary Employment Agreement, if Ms.
Minai-Azary is terminated by the Company without "Cause" or she resigns
employment for "Good Reason" (each, as defined in the Minai-Azary Employment
Agreement), and subject to delivery to the Company of a separation agreement
including a general release of claims in favor of the Company, Ms. Minai-Azary
will be entitled to: (a) payment of her COBRA health insurance premiums for a
twelve (12) month period; and (b) twelve (12) months of professional services
outplacement assistance with an outplacement vendor funded by the Company. If
such a termination without Cause or resignation for Good Reason takes place
within three (3) months prior to or twelve (12) months following the effective
date of a "Change in Control" (as defined in the Minai-Azary Employment
Agreement), Ms. Minai-Azary will also be entitled to accelerated vesting of all
unvested equity awards such that all unvested equity awards shall become
immediately vested and exercisable. Ms. Minai-Azary is also a party to the
Company's standard form of indemnification agreement, the form of which has been
filed as Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with
the Securities and Exchange Commission on December 13, 2018 .
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A copy of the Minai-Azary Employment Agreement is expected to be filed as an
exhibit to the Company's Annual Report on Form 10-K for the year ended December
31, 2020.
Separation Agreement with Chief Development Officer
Pursuant to the Plan, Ryan Zeidan, Ph.D., the Company's Chief Development
Officer, is stepping down and will pursue other opportunities, effective January
29, 2021. In connection with Dr. Zeidan's departure, the Company entered into a
separation agreement with Dr. Zeidan (the "Zeidan Separation Agreement") on
January 25, 2021. The Zeidan Separation Agreement provides that Dr. Zeidan is
entitled to the following severance benefits: (a) a lump sum payment in the
amount of $345,000, less applicable deductions and withholdings; (b) a lump sum
payment of Dr. Zeidan's annual bonus for 2021 in the amount of $138,000, less
applicable deductions and withholdings; and (c) continuation of COBRA health
insurance premiums for a twelve (12) month period that is funded by the Company.
The Separation Agreement contains release covenants that are binding upon Dr.
Zeidan.
A copy of the Zeidan Separation Agreement is filed as Exhibit 10.1 to this
Current Report on Form 8-K. The foregoing description of the Zeidan Separation
Agreement is a summary only and is qualified in its entirety by the full text of
the Zeidan Separation Agreement, which is incorporated herein by reference.
Resignation of Directors
On January 27, 2021, Dr. Mary Lynne Hedley and Mr. Habib Dable submitted their
resignations as members of the Board and all committees thereof, effective as of
January 31, 2021 and the Board accepted such resignations. Dr. Hedley was the
chair of the Nomination and Governance Committee (the "Nominating Committee") of
the Board and Mr. Dable was a member of the Compensation Committee. Dr. Hedley's
and Mr. Dable's resignations from the Board are not due to any disagreement with
the Company on any matter relating to the Company's operations, policies or
practices.
Committee Appointments
In connection with the above Board member changes, on January 22, 2021, the
Board appointed Dr. Geoff Nichol to serve as a member of the Audit Committee.
Dr. John Howe, III will remain a member of the Audit Committee, and Mr. James
Hindman will remain as Chair of the Audit Committee. Dr. Howe will remain a
member of the Compensation Committee and Dr. Carol Gallagher will remain as
Chair of the Compensation Committee. Dr. Nichol will remain a member of the
Nominating Committee, and Dr. Gallagher was appointed as Chair of the Nominating
Committee. Lastly, Carole Nuechterlein will step down from the Nominating
Committee and the Audit Committee.
Special Note Regarding Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements within the
meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act
and the Private Securities Litigation Reform Act of 1995, which statements
involve substantial risks and uncertainties. Forward-looking statements
generally relate to future events or our future financial or operating
performance. In some cases, forward-looking statements can be identified because
they contain words such as "may," "will," "should," "expects," "plans,"
"anticipates," "could," "intends," "target," "projects," "contemplates,"
"believes," "estimates," "predicts," "potential" or "continue" or the negative
of these words or other similar terms or expressions that concern the Company's
expectations, strategy, plans or intentions. Forward-looking statements
contained in this Current Report on Form 8-K include, but are not limited to,
statements about the Company's corporate restructuring and costs associated
. . .
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
No. Description
10.1 S eparation A greement, by and among Millendo Therapeutics, Inc .
and Ryan K. Zeidan, dated January 25, 2021
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