kldo-def14a_20210614.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

SCHEDULE 14A

(Rule 14a-101)

Information Required in Proxy Statement

Schedule 14A Information

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

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

 

Kaleido Biosciences, Inc.

(Name of Registrant as Specified in its Charter)

 

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

 

Payment of Filing Fee (Check the appropriate box):

 

No fee required.

 

 

 

Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

(1)

Title of each class of securities to which transaction applies:

 

 

 

 

(2)

Aggregate number of securities to which transaction applies:

 

 

 

 

(3)

Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

 

 

 

(4)

Proposed maximum aggregate value of transaction:

 

 

 

 

(5)

Total fee paid:

 

 

 

 

 

 

Fee paid previously with preliminary materials.

 

 

 

Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

(1)

Amount Previously Paid:

 

 

 

 

(2)

Form, Schedule or Registration Statement No.:

 

 

 

 

(3)

Filing Party:

 

 

 

 

(4)

Date Filed:

 

 

 

 

 

 


 

 

 

 

KALEIDO BIOSCIENCES, INC.

65 Hayden Ave

Lexington, Massachusetts 02421

NOTICE OF 2021 ANNUAL MEETING OF STOCKHOLDERS

To be held on June 14, 2021

Notice is hereby given that the 2021 Annual Meeting of Stockholders, or Annual Meeting, of Kaleido Biosciences, Inc., will be held on June 14, 2021 at 9:00 a.m. Eastern Time, solely by means of remote communication in a virtual-only format. You will not be able to attend the Annual Meeting physically. You will be able to attend and participate in the Annual Meeting online by registering at www.proxydocs.com/KLDO.  This will allow you to listen to the meeting live, submit questions and vote. The purpose of the Annual Meeting is the following:

1.

To elect three Class II directors to our board of directors, to serve until the 2024 annual meeting of stockholders and until his or her successor has been duly elected and qualified, or until his or her earlier death, resignation or removal;

2.

To ratify the appointment of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2021; and

3.

To transact any other business properly brought before the Annual Meeting or any adjournment or postponement of the Annual Meeting.

 

The proposal for the election of directors relates solely to the election of Class I directors nominated by the board of directors.

Only Kaleido Biosciences, Inc. stockholders of record at the close of business on April 19, 2021, will be entitled to vote at the Annual Meeting and any adjournment or postponement thereof.

We are pleased to take advantage of Securities and Exchange Commission rules that allow companies to furnish their proxy materials over the Internet. We are mailing to our stockholders a Notice of Internet Availability of Proxy Materials, or Notice, instead of a paper copy of our proxy materials and our 2020 Annual Report to Stockholders, or 2020 Annual Report. The Notice contains instructions on how to access those documents and to cast your vote via the Internet. The Notice also contains instructions on how to request a paper copy of our proxy materials and our 2020 Annual Report. This process allows us to provide our stockholders with the information they need on a more timely basis, while reducing the environmental impact and lowering the costs of printing and distributing our proxy materials.

Your vote is important. Whether or not you are able to attend the meeting, it is important that your shares be represented. To ensure that your vote is recorded promptly, please vote as soon as possible, even if you plan to attend the meeting, by submitting your proxy via the Internet at the address listed on the proxy card or by signing, dating and returning the proxy card.

We intend to hold our annual meeting solely by means of remote communication. Please monitor our annual meeting website at www.proxydocs.com/KLDO for updated information. If you are planning to attend our annual meeting, please check the website one week prior to the meeting date. As always, we encourage you to vote your shares prior to the annual meeting.

 

 

By order of the board of directors,

 

/s/ Daniel L. Menichella

 

Daniel L Menichella

 

President and Chief Executive Officer

 

 

 


 

Lexington, Massachusetts

 

May 5, 2021

 

 

 

 


 

 

 

Table of Contents

 

 

 

Page

PROXY STATEMENT

 

1

PROPOSAL NO. 1 – ELECTION OF CLASS I DIRECTORS

 

5

PROPOSAL NO. 2 – RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS KALEIDO’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2020

 

10

CORPORATE GOVERNANCE

 

12

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

 

30

PRINCIPAL STOCKHOLDERS

 

33

REPORT OF THE AUDIT COMMITTEE

 

35

HOUSEHOLDING

 

36

STOCKHOLDER PROPOSALS

 

36

OTHER MATTERS

 

36

 

 

 

 

 

i


 

 

 

 

KALEIDO BIOSCIENCES, INC.

65 Hayden Ave

Lexington, Massachusetts 02421

PROXY STATEMENT

FOR THE 2021 ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD JUNE 14, 2021

This proxy statement contains information about the 2021 Annual Meeting of Stockholders, or the Annual Meeting, of Kaleido Biosciences, Inc., which will be held on June 14, 2021 at 9:00 a.m. Eastern Time, solely by means of remote communication in a virtual-only format. The board of directors of Kaleido Biosciences, Inc. is using this proxy statement to solicit proxies for use at the Annual Meeting. In this proxy statement, the terms “Kaleido,” “we,” “us,” and “our” refer to Kaleido Biosciences, Inc. The mailing address of our principal executive office is Kaleido Biosciences, Inc., 65 Hayden Ave, Lexington, Massachusetts 02421.

All properly submitted proxies will be voted in accordance with the instructions contained in those proxies. If no instructions are specified, the proxies will be voted in accordance with the recommendation of our board of directors with respect to each of the matters set forth in the accompanying Notice of Meeting. You may revoke your proxy at any time before it is exercised at the meeting by giving our corporate secretary written notice to that effect.

We made this proxy statement and our Annual Report to Stockholders for the fiscal year ended December 31, 2020 available to stockholders on or about May 5, 2021.

We are an “emerging growth company” under applicable federal securities laws and therefore permitted to conform with certain reduced public company reporting requirements. As an emerging growth company, we provide in this proxy statement the scaled disclosure permitted under the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, including the compensation disclosures required of a “smaller reporting company,” as that term is defined in Rule 12b-2 promulgated under the Securities Exchange Act of 1934, as amended, or the Exchange Act. In addition, as an emerging growth company, we are not required to conduct votes seeking approval, on an advisory basis, of the compensation of our named executive officers or the frequency with which such votes must be conducted. We will remain an “emerging growth company” until the earliest of (i) the last day of the fiscal year following the fifth anniversary of our initial public offering; (ii) the last day of the fiscal year in which our total annual gross revenue is equal to or more than $1.07 billion; (iii) the date on which we have issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission. Even after we are no longer an “emerging growth company,” we may remain a “smaller reporting company.”

Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be Held on June 14, 2021:

This proxy statement and our 2020 Annual Report to Stockholders are available for viewing, printing and downloading at www.proxydocs.com/KLDO.

A copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as filed with the Securities and Exchange Commission (SEC), except for exhibits, will be furnished without charge to any stockholder upon written request to Kaleido Biosciences, Inc., 65 Hayden Ave, Lexington, Massachusetts 02421, Attention: Corporate Secretary. This proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 2020 are also available on the SEC’s website at www.sec.gov.

1


 

GENERAL INFORMATION

When are this proxy statement and the accompanying materials scheduled to be sent to stockholders?

We have elected to provide access to our proxy materials to our stockholders via the Internet. Accordingly, on or about May 5, 2021, we will begin mailing a Notice of Internet Availability of Proxy Materials, or Notice. Our proxy materials, including the Notice of the 2021 Annual Meeting of Stockholders, this proxy statement and the accompanying proxy card or, for shares held in street name (i.e., held for your account by a broker or other nominee), a voting instruction form, and the 2020 Annual Report to Stockholders, or 2020 Annual Report, will be mailed or made available to stockholders on the Internet on or about the same date.

Why did I receive a Notice of Internet Availability of Proxy Materials instead of a full set of proxy materials?

Pursuant to rules adopted by the Securities and Exchange Commission, or SEC, for most stockholders, we are providing access to our proxy materials over the Internet rather than printing and mailing our proxy materials. We believe following this process will expedite the receipt of such materials and will help lower our costs and reduce the environmental impact of our annual meeting materials. Therefore, the Notice was mailed to holders of record and beneficial owners of our common stock starting on or about May 5, 2021. The Notice provides instructions as to how stockholders may access and review our proxy materials, including the Notice of the 2021 Annual Meeting of Stockholders, this proxy statement, the proxy card and our 2020 Annual Report, on the website referred to in the Notice or, alternatively, how to request that a copy of the proxy materials, including a proxy card, be sent to them by mail. The Notice also provides voting instructions. In addition, stockholders of record may request to receive the proxy materials in printed form by mail or electronically by e-mail on an ongoing basis for future stockholder meetings. Please note that, while our proxy materials are available at the website referenced in the Notice, and our Notice of the 2021 Annual Meeting of Stockholders, this proxy statement and our 2020 Annual Report are available on our website, no other information contained on either website is incorporated by reference in or considered to be a part of this proxy statement.

Who is soliciting my vote?

Our board of directors is soliciting your vote for the Annual Meeting.

When is the record date for the Annual Meeting?

The record date for determination of stockholders entitled to vote at the Annual Meeting is the close of business on April 19, 2021.

How many votes can be cast by all stockholders?

There were 42,518,653 shares of our common stock, par value $0.0001 per share, outstanding on April 19, 2021, all of which are entitled to vote with respect to all matters to be acted upon at the Annual Meeting of the Stockholders on June 14, 2021, or the Annual Meeting. Each stockholder of record is entitled to one vote for each share of our common stock held by such stockholder. None of our shares of undesignated preferred stock were outstanding as of April 19, 2021.

How do I vote?

In Person

If you are a stockholder of record, you may vote in person at the Annual Meeting. We will provide instructions for how to do so electronically during the meeting. If you hold your shares through a bank or broker and wish to vote in person at the meeting, you must obtain a valid proxy from the firm that holds your shares.

By Proxy

If you do not wish to vote in person or will not be attending the Annual Meeting, you may vote by proxy. You can vote by proxy over the Internet by following the instructions provided in the Notice, or, if you requested printed copies of the proxy materials by mail, you can vote by mailing your proxy as described in the proxy materials. In order to be counted, proxies submitted by Internet must be received by the cutoff time of 11:59 p.m. Eastern Time on June 11, 2021. Proxies submitted by mail must be received before the start of the Annual

2


 

Meeting. If you complete and submit your proxy before the Annual Meeting, the persons named as proxies will vote the shares represented by your proxy in accordance with your instructions. If you submit a proxy without giving voting instructions, your shares will be voted in the manner recommended by the board of directors on all matters presented in this proxy statement, and as the persons named as proxies may determine in their discretion with respect to any other matters properly presented at the Annual Meeting. You may also authorize another person or persons to act for you as proxy in a writing, signed by you or your authorized representative, specifying the details of those proxies’ authority. The original writing must be given to each of the named proxies, although it may be sent to them by electronic transmission if, from that transmission, it can be determined that the transmission was authorized by you.

If any other matters are properly presented for consideration at the Annual Meeting, including, among other things, consideration of a motion to adjourn the Annual Meeting to another time or place (including, without limitation, for the purpose of soliciting additional proxies), the persons named in your proxy and acting thereunder will have discretion to vote on those matters in accordance with their best judgment. We do not currently anticipate that any other matters will be raised at the Annual Meeting.

How do I revoke my proxy?

You may revoke your proxy by (1) following the instructions on the Notice and entering a new vote by mail that we receive before the start of the Annual Meeting or over the Internet by the cutoff time of 11:59 p.m. Eastern Time on June 13, 2021, (2) attending and voting at the Annual Meeting (although attendance at the Annual Meeting will not in and of itself revoke a proxy), or (3) by filing an instrument in writing revoking the proxy or another duly executed proxy bearing a later date with our Corporate Secretary. Any written notice of revocation or subsequent proxy card must be received by our Corporate Secretary prior to the taking of the vote at the Annual Meeting. Such written notice of revocation or subsequent proxy card should be hand delivered to our Corporate Secretary or sent to our principal executive offices at Kaleido Biosciences, Inc., 65 Hayden Ave, Lexington, Massachusetts 02421, Attention: Corporate Secretary.

If a broker, bank, or other nominee holds your shares, you must contact such broker, bank, or nominee in order to find out how to change your vote.

How is a quorum reached?

Our Amended and Restated Bylaws, or bylaws, provide that a majority of the shares entitled to vote, present in person or represented by proxy, will constitute a quorum for the transaction of business at the Annual Meeting.

Under the General Corporation Law of the State of Delaware, or DGCL, shares that are voted “abstain” or “withheld” and broker “non-votes” are counted as present for purposes of determining whether a quorum is present at the Annual Meeting. If a quorum is not present, the meeting may be adjourned until a quorum is obtained.

How is the vote counted?

Under our bylaws, any proposal other than an election of directors is decided by a majority of the votes properly cast for and against such proposal, except where a larger vote is required by law or by our Fifth Amended and Restated Certificate of Incorporation, or certificate of incorporation, or bylaws. Abstentions and broker “non-votes” are not included in the tabulation of the voting results on any such proposal and, therefore, do not have an impact on such proposals. A broker “non-vote” occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and has not received instructions from the beneficial owner.

If your shares are held in “street name” by a brokerage firm, your brokerage firm is required to vote your shares according to your instructions. If you do not give instructions to your brokerage firm, the brokerage firm will still be able to vote your shares with respect to certain “discretionary” items, but will not be allowed to vote your shares with respect to “non-discretionary” items. Proposal No. 1 is a “non-discretionary” item. If you do not instruct your broker how to vote with respect to this proposal, your broker may not vote for this proposal, and those votes will be counted as broker “non-votes.” Proposal No. 2 is considered to be a discretionary item, and your brokerage firm will be able to vote on this proposal even if it does not receive instructions from you.

3


 

To be elected, the directors nominated via Proposal No. 1 must receive a plurality of the votes cast and entitled to vote on the proposal, meaning that the director nominees receiving the most votes will be elected. Shares voting “withheld” have no effect on the election of directors.

Who pays the cost for soliciting proxies?

We are making this solicitation and will pay the entire cost of preparing and distributing the Notice and our proxy materials and soliciting votes. If you choose to access the proxy materials or vote over the Internet, you are responsible for any Internet access charges that you may incur. Our officers and employees may, without compensation other than their regular compensation, solicit proxies through further mailings, personal conversations, facsimile transmissions, e-mails, or otherwise. We have hired Mediant Communications, Inc. to assist us in the distribution of proxy materials and the solicitation of votes described above. Proxy solicitation expenses that we will pay include those for preparation, mailing, returning, and tabulating the proxies.

How may stockholders submit matters for consideration at an annual meeting?

The required notice must be in writing and received by our corporate secretary at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting. However, in the event that the date of the annual meeting is advanced by more than 30 days, or delayed by more than 60 days, from the first anniversary of the preceding year’s annual meeting, or if no annual meeting were held in the preceding year, a stockholder’s notice must be so received no earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of (A) the 90th day prior to such annual meeting and (B) the tenth day following the day on which notice of the date of such annual meeting was mailed or public disclosure of the date of such annual meeting was made, whichever first occurs.

In addition, any stockholder proposal intended to be included in the proxy statement for the next annual meeting of our stockholders in 2022 must also satisfy the requirements of SEC Rule 14a-8 under the Securities Exchange Act of 1934, as amended, or the Exchange Act, and be received not later than February 15, 2022. If the date of the annual meeting is moved by more than 30 days from the date contemplated at the time of the previous year’s proxy statement, then notice must be received within a reasonable time before we begin to print and send proxy materials. If that happens, we will publicly announce the deadline for submitting a proposal in a press release or in a document filed with the SEC.

How can I know the voting results?

We plan to announce preliminary voting results at the Annual Meeting and will publish final results in a Current Report on Form 8-K to be filed with the SEC within four business days following the Annual Meeting.

4


 

PROPOSAL NO. 1 – ELECTION OF CLASS II DIRECTORS

Our board of directors currently consists of eight members. In accordance with the terms of our certificate of incorporation and bylaws, our board of directors is divided into three classes, Class I, Class II and Class III, with members of each class serving staggered three-year terms. The members of the classes are divided as follows:

 

the Class I directors are Michael Bonney, Bonnie L. Bassler, Ph.D. and Geoffrey von Maltzahn, Ph.D. and their terms will expire at the annual meeting of stockholders to be held in 2023;

 

the Class II directors are Daniel L. Menichella, Jean Mixer and Anthony Quinn, M.D., Ph.D., and their terms will expire at the Annual meeting; and

 

the Class III directors are Grady Burnett, Theo Melas-Kyriazi and Anne Prener, M.D., Ph.D. and their terms will expire at the annual meeting of stockholders to be held in 2022.

Upon the expiration of the term of a class of directors, directors in that class will be eligible to be elected for a new three-year term at the annual meeting of stockholders in the year in which their term expires.

Our certificate of incorporation and bylaws provide that the authorized number of directors may be changed only by resolution of our board of directors. Our certificate of incorporation also provides that our directors may be removed only for cause by the affirmative vote of the holders of at least two-thirds (2/3) of the outstanding shares then entitled to vote in an annual election of directors, and that any vacancy on our board of directors, including a vacancy resulting from an enlargement of our board of directors, may be filled only by vote of a majority of our directors then in office, subject to the rights, if any, of the holders of any series of Undesignated Preferred Stock to elect directors and to fill vacancies in the board of directors relating thereto.

Our board of directors has nominated Daniel Menichella, Jean Mixer, and Anthony Quinn, M.D., Ph.D., for election as the Class II directors at the Annual Meeting. The nominees are presently directors and have indicated a willingness to continue to serve as directors, if elected. If the nominees become unable or unwilling to serve, however, the proxies may be voted for a substitute nominee selected by our board of directors.

We have no formal policy regarding board diversity. Our priority in selection of board members is identification of members who will further the interests of our stockholders through their established record of professional accomplishment, their ability to contribute positively to the collaborative culture among board members, and their knowledge of our business and understanding of the competitive landscape.

Nominees for Election as Class II Directors

The following table identifies our director nominees, sets forth their principal occupation and business experience during the last five years and provides their ages as of May 1, 2021.

 

Name

 

Positions and Offices Held with Kaleido

 

Director

Since

 

Age

 

Daniel L. Menichella

 

Director, President and Chief Executive Officer

 

2020

 

 

61

 

Jean Mixer

 

Director

 

2019

 

 

54

 

Anthony G. Quinn, M.D., Ph.D.

 

Director

 

2015

 

 

59

 

 

Daniel L. Menichella has served as our Chief Executive Officer and President and as a Director since October 2020. Prior to becoming Chief Executive Officer, he served as the chief executive officer for CureVac Inc.’s U.S. subsidiary in January 2017 before taking over as CEO of the international company in June 2018. Prior to that, Mr. Menichella was Chief Business Officer at several companies, including Bamboo Therapeutics Inc. from 2015-2016, Applied Genetic Technologies Corporation (AGTC) from 2013-2015 and Zyngenia, Inc. from 2011-2013. Mr. Menichella also led Business Development and Corporate Strategy functions at Talecris Biopharmaceuticals from 2007-2011 and at Merck KGaA from 2002-2007. He earned his Bachelor of Arts from Harvard University and his Master of Business Administration from the University of North Carolina at Chapel Hill. We believe that Mr. Menichella is qualified to serve on our board of directors based on our review of his experience, qualifications, attributes and skills, including experience in operations management and executive leadership.

 

5


 

 

Jean Mixer has served as a Director of our company since October 2019. Ms. Mixer has more than 25 years of experience in healthcare and 15 years serving on public company boards. She is founder and CEO of mixerconsulting. Ms. Mixer was Chief Digital Transformation Officer and Vice President Strategy, at Boston Children’s Hospital, a Harvard affiliate from 2014 to 2020. Prior to that, she was a partner at the Boston Consulting Group, a global strategy consulting firm where she worked for over a decade. Ms. Mixer has broad experience across the healthcare value chain, including working with executive management and Boards of leading biopharmaceutical, pharmacy/PBMs, medical device and digital health companies, and as well as providers and payers. She began her career at J.P. Morgan in New York. Ms. Mixer previously served on the Board of Directors of NxStage Medical, Inc. from 2012 to 2019, when it was acquired for $2 billion. She received a master’s degree in Management from the Kellogg School of Management, Northwestern University. We believe Ms. Mixer’s extensive experience with respect to strategy, mergers and acquisitions, finance, leadership, and governance qualifies her to serve on our board of directors.

 

Anthony G. Quinn, M.D., Ph.D. has served as a Director for our company since February 2016. Currently Dr. Quinn is President and Chief Executive Officer of Aeglea BioTherapeutics, Inc., a biotechnology company where he has served on the Board of Directors since April 2015, as CEO since July 2018 and as interim CEO from July 2017 to July 2018. Prior to that, from October 2015 to July 2017 he worked as a private consultant for IDBioPharm Consulting LLC, a consulting firm. From August 2009 to June 2015, Dr. Quinn served as Head of Research & Development and Chief Medical Officer for Synageva BioPharma Corp., a publicly traded biopharmaceutical company that was acquired by Alexion Pharmaceuticals, Inc. in June 2015. Following the acquisition, Dr. Quinn worked for Alexion Pharmaceuticals, Inc., a pharmaceutical company, from June 2015 to September 2015. Dr. Quinn received his BMSc. in general pathology and his MB ChB (M.D.) from the University of Dundee, U.K. and his Ph.D. in cancer research from the University of Newcastle in Tyne, U.K. He completed a postdoctoral fellowship at University of California, San Francisco before being appointed Professor of Dermatology at Barts & The London School of Medicine, U.K. He is a fellow of the Royal College of Physicians London. He has also served as a member of the board of directors for Generation Bio since December 2017. We believe Dr. Quinn is qualified to serve on our board of directors because of his medical and clinical experience in the biopharmaceutical industry, including the development of therapeutics for rare diseases.

The proxies will be voted in favor of the above nominees unless a contrary specification is made in the proxy. The nominees have consented to serve as our directors if elected. However, if the nominees are unable to serve or for good cause will not serve as a director, the proxies will be voted for the election of such substitute nominee as our board of directors may designate.

The board of directors recommends voting “FOR” the election of Daniel L. Menichella, Jean Mixer, and Anthony G. Quinn, M.D., PhD. as the Class II directors, to serve for a three-year term ending at the annual meeting of stockholders to be held in 2024.

Directors Continuing in Office

The following table identifies our continuing directors, sets forth their principal occupation and business experience during the last five years and provides their ages as of May 1, 2021.

 

Name

 

Position and Officers Held with Kaleido

 

Director

Since

 

Class and Year in Which

Term Will Expire

 

Age

 

Theo Melas-Kyriazi

 

Director

 

2019

 

Class III - 2022

 

 

61

 

Grady Burnett

 

Director

 

2018

 

Class III - 2022

 

 

48

 

Anne Prener, M.D., Ph.D

 

Director

 

2020

 

Class III - 2022

 

 

63

 

Michael Bonney

 

Director

 

2017

 

Class I - 2023

 

 

62

 

Bonnie L Bassler, Ph.D.

 

Director

 

2018

 

Class I - 2023

 

 

59

 

Geoffrey von Maltzahn, Ph.D.

 

Director

 

2015

 

Class I - 2023

 

 

40

 

 

6


 

 

Class III Directors (Term Expires at 2022 Annual Meeting)

Theo Melas-Kyriazi has served as a Director for our company since July 2019. Mr. Melas-Kyriazi has served as Chief Financial Officer of Levitronix Technologies Inc. and its predecessor companies since 2006. Levitronix Technologies Inc. manufactures and sells magnetically-levitated pumps primarily to microelectronics and life sciences customers. Mr. Melas-Kyriazi also serves as an Executive Partner at Flagship Pioneering, an innovation enterprise that conceives, creates, resources and grows first-in-category life sciences companies, which he joined in April 2019. Mr. Melas-Kyriazi has served as a board member of Evelo Biosciences, Inc. since 2017 and of Codiak Biosciences, Inc. since 2019. He also served as a director at Valeant Pharmaceuticals International, Inc from 2003 to 2016. From 1986 to 2004, Mr. Melas-Kyriazi served in a variety of management roles at Thermo Fisher Scientific. Mr. Melas-Kyriazi received his M.B.A. from Harvard Business School. We believe Mr. Melas-Kyriazi's extensive financial and business experience in life sciences companies qualifies him to serve on our board of directors.

Grady Burnett has served as a Director of our company since September 2018. Mr. Burnett currently serves as the General Partner at Bow Capital, an early stage venture capital firm, a position he has held since co-founding the company in July 2016. Previously, he served as the President and Chief Operating Officer of HackerRank, a technology company, from September 2015 until July 2016. Before that, from September 2013 until October 2014, Mr. Burnett served as the Chief Operating Officer of Flurry, Inc., a mobile analytics, monetization and advertising company. Mr. Burnett has also served as Vice President of Global Sales and Operations at Facebook, Inc. from 2009 to 2013 and was also previously the Director of North American Sales and Operations for Google LLC’s AdWords team. Mr. Burnett is a member of the board of directors of East Palo Alto Tennis & Tutoring, Menlo School and Kenshoo, Ltd. He has an M.B.A. from the Harvard Business School and a bachelor’s degree from the University of Michigan. We believe that Mr. Burnett is qualified to serve on our board of directors based on our review of his experience, qualifications, attributes and skills, including his experience in scaling companies and driving revenue growth.

 

Anne Prener, M.D., Ph.D. has served as a Director of our company since April 2020. Dr. Prener is currently a Venture Partner at SV Health Investors, a role she has held since September of 2020 and President and CEO of Imbria Pharmaceuticals, where she has served since July 2020. Dr. Prener has more than 25 years of leadership experience within life sciences companies and served as CEO and Director of Freeline Ltd. from July of 2017 to June of 2019. Dr. Prener has led companies and teams across several therapeutic areas, including a focus on rare diseases. Prior to joining Freeline, she served as CEO of Gyroscope Therapeutics Ltd., a gene therapy company focused on eye diseases, from August 2016 to July 2020. Before that, Dr. Prener was Global Therapeutic Area Head of Hematology and Vice President, Clinical Research Hematology at Baxalta from October 2014 to July 2016. Earlier in her career, Dr. Prener held several positions of increasing responsibility at Novo Nordisk, most recently serving as Senior Vice President, Hemophilia R&D Portfolio, where she was instrumental in building a portfolio of late stage and commercial hemophilia products. Dr. Prener serves on the Boards of Directors of Renovacor, Inc. since January of 2020, Rubius Therapeutics, Inc. since December 2019 and Galecto, Inc. since January of 2021.  Dr. Prener previously served as a director of Gyroscope Therapeutics Ltd. from July 2017 to March 2020 and of Cellinta Ltd. from March 2020 to June 2020. She holds a Ph.D. in epidemiology and an M.D., both from the University of Copenhagen. We believe Dr. Prener is qualified to serve on our board of directors because of her medical and clinical experience in the biopharmaceutical industry, including the scaling of companies from preclinical stage to fully integrated biotechnology organizations.

 

Class I Directors (Term Expires at 2023 Annual Meeting)

 

Michael Bonney has served as the Chair of the Board of Directors since October 2020. Mr. Bonney has also served as Managing Director of Sasanoa Advisory Group Enterprises, LLC, a CEO advisory firm, since June 2019.  Previously, Mr. Bonney served as our Chief Executive Officer and Chair of the Board of Directors from June 2017 until August 2018 and as Executive Chair of the Board of Directors from August 2018 until October 2020. Mr. Bonney has also served as Chairman of the board of directors of Magenta Therapeutics, Inc., a biotechnology company, since June 2018, and he previously served as Executive Chairman from November 2016 until June 2018. Prior to that, he served as Partner at Third Rock Ventures, LLC, a venture capital firm, from January 2016 to July 2016. Before joining Third Rock Ventures, LLC, Mr. Bonney served as CEO and Director at Cubist Pharmaceuticals, Inc., a biopharmaceutical company, from 2003 until 2015, when it was acquired by Merck. In addition to his role as Chairman of the board of Magenta, Mr. Bonney chairs the board of directors of Alnylam Pharmaceuticals, Inc. Mr. Bonney serves as a board member of Bristol-Myers Squibb, since the acquisition of Celgene in November 2019. Mr. Bonney previously served on the boards of Sarepta Therapeutics, Inc. from December 2017 to March 2020, Syros Therapeutics from June 2018 to March 2020 since June 2018. Global Blood Therapeutics from 2016 to 2017, Revolution Medicines from 2016 to 2017, and

7


 

NPS Pharmaceuticals, Inc. from 2005 to 2015. He received a B.A. in economics from Bates College. We believe that Mr. Bonney is qualified to serve on our board of directors based on our review of his experience, qualifications, attributes and skills, including his extensive experience in leadership roles at other biotech ventures.

 

Bonnie L. Bassler, Ph.D. has served as a Director of our company since December 2018. Dr. Bassler currently serves in several roles at Princeton University, including, Chair of the Department of Molecular Biology since 2013, associated faculty member of the Department of Chemistry since 2010, Director for Recruiting and Diversity in the Sciences since 2008, investigator at the Howard Hughes Medical Institute since 2005, professor in the Department of Molecular Biology since 1994 and associate faculty member of the Princeton Environmental Institute since 1996. Previously, Dr. Bassler served as the Director of the Council on Science and Technology at Princeton University from July 2008 to June 2013. Dr. Bassler has served as a board member of Regeneron Pharmaceuticals, Inc. since 2016, a board member of Cidara Therapeutics since 2021, as a Trustee of the Alfred P. Sloan Foundation since 2014, and previously served as a board member of Sanofi from November 2014 to September 2016. Dr. Bassler served as a board member of the American Association for the Advancement of Science from January 2012 to December 2016. She was a member of the National Science Board from January 2010 until May 2016. She received a B.S. in biochemistry from the University of California-Davis and a Ph.D. in biochemistry from John Hopkins University. We believe that Dr. Bassler is qualified to serve on our board of directors based on our review of her experience, qualifications, attributes and skills, including her extensive experience in scientific research roles at elite universities.

 

Geoffrey von Maltzahn, Ph.D. has served as a Director for our company since August 2015, and also acts as an advisor on new innovation opportunities for our product platform, technology and approach to targeting the microbiome organ. He is a General Partner at Flagship Pioneering an innovation enterprise that conceives, creates, resources and grows first-in-category life sciences companies, focused on company origination and has been with Flagship since 2009. Dr. von Maltzahn was founder of our company and served as our Chief Executive Officer from January 2015 to June 2017 and as Chief Innovation Officer from June 2017 to September 2018. Dr. von Maltzahn also serves as the Chief Innovation Officer of Indigo Agriculture, Inc., an agriculture biotechnology company he co-founded in 2013 as part of Flagship Pioneering’s Flagship Labs innovation foundry. Dr. von Maltzahn was also a member of the Flagship Pioneering founding team for Seres Therapeutics, Inc. in 2010, and he subsequently served as Chief Technology Officer at Seres in 2012. Prior to working on Seres, Dr. von Maltzahn worked on the Flagship Pioneering founding team for Axcella Health, Inc., a biotechnology company, in 2009, and he served as Vice President of Discovery at Axcella from 2009 until 2013. Dr. von Maltzahn has been a member of the Board of Directors of Sana Biotechnology since 2018.  He was awarded a Ph.D. in biomedical engineering and medical physics from MIT, a M.S. in bioengineering from the University of California, San Diego, and an S.B. in chemical engineering from MIT. We believe that Dr. von Maltzahn’s significant experience co-founding and leading numerous biotechnology companies makes him qualified to serve on our board of directors.

The proxies will be voted in favor of the above nominees unless a contrary specification is made in the proxy. The nominees have consented to serve as our directors if elected. However, if the nominees are unable to serve or for good cause will not serve as a director, the proxies will be voted for the election of such substitute nominee as our board of directors may designate.

There are no family relationships between or among any of our directors or executive officers. The principal occupation and employment during the past five years of each of our directors was carried on, in each case except as specifically identified in this proxy statement, with a corporation or organization that is not a parent, subsidiary or other affiliate of us. There is no arrangement or understanding between any of our directors and any other person or persons pursuant to which he or she is to be selected as a director.

There are no material legal proceedings to which any of our directors is a party adverse to us or any of our subsidiaries or in which any such person has a material interest adverse to us or our subsidiary.

Executive Officers Who Are Not Directors

The following table identifies our executive officers who are not directors, sets forth their current positions at Kaleido and provides their ages as of May 1, 2021.

 

8


 

 

Name

 

Position Held with Kaleido

 

Officer

Since

 

Age

 

William Duke, Jr.

 

Chief Financial Officer

 

2019

 

 

48

 

Johan van Hylckama Vlieg, Ph.D.

 

Chief Scientific Officer

 

2019

 

 

52

 

Jerald Korn

 

General Counsel and Chief Administrative Officer

 

2019

 

 

42

 

 

William Duke, Jr. has served as our Chief Financial Officer since November 2019.  Prior to joining us, Mr. Duke served as the chief financial officer for Pulmatrix, Inc from June 2015 to November 2019. Prior to Pulmatrix, Mr. Duke served as the Chief Financial Officer of Valeritas, Inc. a medical technology company, from January 2014 until June 2015 and from July 2011 until January 2014, he served as Valeritas’ Vice President and Corporate Controller. At Valeritas, Mr. Duke led the controller relationship, financial planning and analysis, investor relations and information technology functions. Prior to joining Valeritas, Mr. Duke was Senior Director, Finance for Genzyme Corporation, a biopharmaceutical company, from January 2010 to July 2011, where he had oversight responsibility for external reporting to the Securities and Exchange Commission, internal management reporting and worldwide financial consolidation. Prior to Genzyme, he was the Director of Finance and Accounting of Haemonetics Corporation, a medical device company, from May 2008 to January 2010 and held various senior financial roles with consulting services and emerging growth organizations. Mr. Duke holds a B.S. in Accounting from Stonehill College and a M.B.A. with a concentration in Finance from Bentley University and is a Certified Public Accountant.

Johan van Hylckama Vlieg, Ph.D. has served as our Chief Scientific Officer since July 2019. Dr. van Hylckama Vlieg has 25 years of experience leading teams and R&D programs in gut microbiology, probiotics and live biotherapeutics, and industrial biotechnology in industry and academia. Most recently, he served as Vice President for Microbiome and Human Health Innovation at Chr. Hansen in Denmark, responsible for new strain development for probiotic and therapeutic application, spanning discovery to clinical development and novel technology platforms. Previously, Dr. van Hylckama Vlieg worked at Danone Research and in several roles at NIZO Food Research. He completed his Ph.D. and post-doc in biochemistry at the University of Groningen in the Netherlands.

Jerald Korn has served as our General Counsel and Corporate Secretary since July 2019 and as General Counsel, Corporate Secretary and Chief Administrative Officer since January 2021. Prior to joining us, Mr. Korn served in various roles at TESARO, Inc. from April 2015 to July 2019, including General Counsel and Chief Administrative Officer, Global Chief Compliance Officer and Deputy General Counsel, and Assistant General Counsel and Compliance Officer.  Prior to TESARO, Mr. Korn served as Associate General Counsel at Cubist Pharmaceuticals, Inc. from August 2013 to March 2015, as Deputy Chief Compliance Officer at Millennium Pharmaceuticals from July 2011 to August 2013 and as Associate General Counsel and Compliance Officer at AMAG Pharmaceuticals, Inc. from August 2008 to July 2011. Prior to AMAG Pharmaceuticals, he was an associate in the law firm of Ropes & Gray LLP.  Mr. Korn holds a bachelor’s degree from Harvard University and J.D. from Boston University School of Law.

The principal occupation and employment during the past five years of each of our executive officers was carried on, in each case except as specifically identified in this proxy statement, with a corporation or organization that is not a parent, subsidiary or other affiliate of us. There is no arrangement or understanding between any of our executive officers and any other person or persons pursuant to which he was or is to be selected as an executive officer.

There are no material legal proceedings to which any of our executive officers is a party adverse to us or our subsidiary or in which any such person has a material interest adverse to us or our subsidiary.

9


 

PROPOSAL NO. 2 – RATIFICATION OF THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS KALEIDO’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2021

Kaleido’s stockholders are being asked to ratify the appointment by the audit committee of the board of directors of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021. Deloitte & Touche LLP has served as Kaleido’s independent registered public accounting firm since 2017.

The audit committee is solely responsible for selecting Kaleido’s independent registered public accounting firm for the fiscal year ending December 31, 2021. Stockholder approval is not required to appoint Deloitte & Touche LLP as Kaleido’s independent registered public accounting firm. However, the board of directors believes that submitting the appointment of Deloitte & Touche LLP to the stockholders for ratification is good corporate governance. If the stockholders do not ratify this appointment, the audit committee will reconsider whether to retain Deloitte & Touche LLP. If the selection of Deloitte & Touche LLP is ratified, the audit committee, at its discretion, may direct the appointment of a different independent registered public accounting firm at any time it decides that such a change would be in the best interest of Kaleido and its stockholders.

A representative of Deloitte & Touche LLP is expected to be present at the Annual Meeting and will have an opportunity to make a statement if he or she desires to do so and to respond to appropriate questions from our stockholders.

Kaleido incurred the following fees from Deloitte & Touche LLP for the audit of the consolidated financial statements and for other services provided during the years ended December 31, 2020 and 2019.

 

Fee Category

 

Fiscal Year

2020 ($)

 

 

Fiscal  Year

2019 ($)

 

Audit Fees(1)

 

$

536,287

 

 

$

357,419

 

Audit-Related Fees(2)

 

$

 

 

$

133,778

 

Tax Fees

 

 

 

 

 

 

All Other Fees(3)

 

$

1,895

 

 

$

1,895

 

Total Fees

 

$

538,182

 

 

$

493,092

 

 

(1)

Audit fees consist of fees for professional services rendered in connection with the audit of our annual consolidated financial statements, the review of the interim consolidated financial statements included in quarterly reports and services that are normally provided by Deloitte & Touche LLP, such as comfort letters, in connection with statutory and regulatory filings or engagements.

 

(2)

Audit-related fees consist of fees for accounting consultations and other services that were reasonable related to the performance of audits or reviews of our financial statements and were not reported above under “Audit Fees”.

 

(3)

All Other Fees consist of fees billed for products and services provided by the independent registered public accounting firm other than those disclosed above.

Audit Committee Pre-approval Policy and Procedures

Our audit committee has adopted policies and procedures relating to the approval of all audit and non-audit services that are to be performed by our independent registered public accounting firm. This policy provides that we will not engage our independent registered public accounting firm to render audit or non-audit services unless the service is specifically approved in advance by our audit committee or the engagement is entered into pursuant to the pre-approval procedure described below.

From time to time, our audit committee may pre-approve specified types of services that are expected to be provided to us by our independent registered public accounting firm during the next 12 months. Any such pre-approval details the particular service or type of services to be provided and is also generally subject to a maximum dollar amount.

 

During our 2020 and 2019 fiscal years, no services were provided to us by Deloitte & Touche LLP other than in accordance with the pre-approval policies and procedures described above.

10


 

The board of directors recommends voting “FOR” Proposal No. 2 to ratify the appointment of Deloitte & Touche LLP as Kaleido’s independent registered public accounting firm for the fiscal year ending December 31, 2021.

11


 

CORPORATE GOVERNANCE

Director Nomination Process

Our nominating and corporate governance committee is responsible for identifying individuals qualified to serve as directors, consistent with criteria approved by our board of directors, and recommending such persons to be nominated for election as directors, except where we are legally required by contract, law or otherwise to provide third parties with the right to nominate.

The process followed by our nominating and corporate governance committee to identify and evaluate director candidates includes requests to board members and others for recommendations, meetings from time to time to evaluate biographical information and background material relating to potential candidates, and interviews of selected candidates by management, recruiters, members of the committee and our board. The qualifications, qualities and skills that our nominating and corporate governance committee believes must be met by a committee recommended nominee for a position on our board of directors are as follows:

 

Nominees should demonstrate high standards of personal and professional ethics and integrity.

 

Nominees should have proven achievement and competence in the nominee’s field and the ability to exercise sound business judgment.

 

Nominees should have skills that are complementary to those of the existing board of directors.

 

Nominees should have the ability to assist and support management and make significant contributions to the Company’s success.

 

Nominees should have an understanding of the fiduciary responsibilities that is required of a member of the board of directors and the commitment of time and energy necessary to diligently carry out those responsibilities.

Stockholders may recommend individuals to the nominating and corporate governance committee for consideration as potential director candidates. Any such proposals should be submitted to our corporate secretary at our principal executive offices no later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the one-year anniversary of the date of the preceding year’s annual meeting and should include appropriate biographical and background material to allow the nominating and corporate governance committee to properly evaluate the potential director candidate and the number of shares of our stock beneficially owned by the stockholder proposing the candidate. Stockholder proposals should be addressed to Kaleido Biosciences, Inc., 65 Hayden Ave, Lexington, Massachusetts 02421, Attention: Corporate Secretary. Assuming that biographical and background material has been provided on a timely basis in accordance with our bylaws, any recommendations received from stockholders will be evaluated in the same manner as potential nominees proposed by the nominating and corporate governance committee. If our board of directors determines to nominate a stockholder recommended candidate and recommends his or her election, then his or her name will be included on our proxy card for the next annual meeting of stockholders. See “Stockholder Proposals” for a discussion of submitting stockholder proposals.

Director Independence

Applicable Nasdaq Stock Market LLC, or Nasdaq, rules require a majority of a listed company’s board of directors to be comprised of independent directors within one year of listing. In addition, the Nasdaq rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent and that audit committee members also satisfy independence criteria set forth in Rule 10A-3 under the Exchange Act and that compensation committee members satisfy independence criteria set forth in Rule 10C-1 under the Exchange Act. Under applicable Nasdaq rules, a director will only qualify as an “independent director” if, in the opinion of the listed company’s board of directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the board of directors, or any other board committee, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries. In addition, in affirmatively determining the independence of any director who will serve on a company’s compensation committee, Rule 10C-1 under the Exchange Act requires that a company’s board of directors must consider all factors specifically relevant to determining whether a director has a relationship to such company which is

12


 

material to that director’s ability to be independent from management in connection with the duties of a compensation committee member, including: the source of compensation to the director, including any consulting, advisory or other compensatory fee paid by such company to the director, and whether the director is affiliated with the company or any of its subsidiaries or affiliates.

In March 2021, our board of directors undertook a review of the composition of our board of directors and its committees and the independence of each director. Based upon information requested from and provided by each director concerning his background, employment and affiliations, including family relationships, our board of directors has determined that all members of the board of directors, except Michael Bonney, Daniel L. Menichella and Geoffrey von Maltzahn, are independent directors, including for purposes of the rules of Nasdaq and the SEC. In making such independence determination, our board of directors considered the relationships that each non-employee director has with us and all other facts and circumstances that our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director. In considering the independence of the directors listed above, our board of directors considered the association of our directors with the holders of more than 5% of our common stock. There are no family relationships among any of our directors or executive officers. Mr. Menichella is not an independent director under these rules because he is an executive officer of the Company. Mr. Bonney and Dr. von Maltzahn are not independent directors under these rules because each of them has served as an executive officer of the Company within the last three years.

Board Committees

Our board of directors has established an audit committee, a compensation committee, and a nominating and corporate governance committee. Each of the audit committee, compensation committee, and nominating and corporate governance committee operates under a charter that satisfies the applicable standards of the SEC and Nasdaq. Each such committee reviews its respective charter at least annually. A current copy of the charter for each of the audit committee, compensation committee, and nominating and corporate governance committee is posted on the corporate governance section of our website, https://investors.kaleido.com/corporate-governance/documents-charters.

Audit Committee

Theo Melas-Kyriazi, Jean Mixer and Grady Burnett serve on the audit committee, which is chaired by Theo Melas-Kyriazi. Our board of directors has determined that each member of the audit committee is “independent” for audit committee purposes as that term is defined in the rules of the SEC and the applicable Nasdaq rules, and each has sufficient knowledge in financial and auditing matters to serve on the audit committee. Our board of directors has designated each of Theo Melas-Kyriazi, Jean Mixer and Grady Burnett as an “audit committee financial expert,” as defined under the applicable rules of the SEC. During the fiscal year ended December 31, 2020, the audit committee met four times. The report of the audit committee is included in this proxy statement under “Report of the Audit Committee.” The functions of the audit committee include:

 

appointing, approving the compensation of and assessing the independence of our independent registered public accounting firm;

 

pre-approving auditing and permissible non-audit services, and the terms of such services, to be provided by our independent registered public accounting firm;

 

reviewing the overall audit plan with our independent registered public accounting firm and members of management responsible for preparing our financial statements;

 

reviewing and discussing with management and our independent registered public accounting firm our annual and quarterly financial statements and related disclosures as well as critical accounting policies and practices used by us;

 

coordinating the oversight and reviewing the adequacy of our internal control over financial reporting;

 

establishing policies and procedures for the receipt and retention of accounting-related complaints and concerns;

 

recommending based upon the audit committee’s review and discussions with management and our independent registered public accounting firm whether our audited financial statements shall be included in our Annual Report on Form 10-K;

13


 

 

monitoring the integrity of our financial statements and our compliance with legal and regulatory requirements as they relate to our financial statements and accounting matters;

 

preparing the audit committee report required by SEC rules to be included in our annual proxy statement;

 

reviewing all related person transactions for potential conflict of interest situations and approving all such transactions; and

 

reviewing quarterly earnings releases.

All audit and non-audit services, other than de minimis non-audit services, to be provided to us by our independent registered public accounting firm must be approved in advance by our audit committee.

Compensation Committee

Jean Mixer, Theo Melas-Kyriazi and Anthony Quinn, M.D., Ph.D., serve on the compensation committee, which is chaired by Anthony Quinn, M.D., Ph.D. Our board of directors has determined that each member of the compensation committee is “independent” as defined in the applicable Nasdaq rules. During the fiscal year ended December 31, 2020, the compensation committee met seven times. The functions of the compensation committee include:

 

annually reviewing and recommending to the board of directors the corporate goals and objectives relevant to the compensation of our Chief Executive Officer;

 

evaluating the performance of our Chief Executive Officer in light of such corporate goals and objectives and based on such evaluation (i) recommending to the board of directors the cash compensation of our Chief Executive Officer and (ii) recommending grants and awards to our Chief Executive Officer under equity-based plans;

 

reviewing and approving or recommending to the board of directors the cash compensation of our other executive officers;

 

reviewing and establishing our overall management compensation, philosophy and policy;

 

overseeing and administering our compensation and similar plans;

 

evaluating and assessing potential and current compensation advisors in accordance with the independence standards identified in the applicable Nasdaq rules;

 

reviewing and approving our policies and procedures for the grant of equity-based awards;

 

reviewing and recommending to the board of directors the compensation of our directors;

 

preparing the compensation committee report required by SEC rules, if and when required, to be included in our annual proxy statement; and

 

reviewing and approving the retention, termination or compensation of any consulting firm or outside advisor to assist in the evaluation of compensation matters.

Nominating and Corporate Governance Committee

Bonnie L. Bassler, Grady Burnett and Anne Prener, M.D., Ph.D. serve on the nominating and corporate governance committee, which is chaired by Bonnie L. Bassler. Our board of directors has determined that each member of the nominating and corporate governance committee is “independent” as defined in the applicable Nasdaq rules. During the fiscal year ended December 31, 2020, the nominating and corporate governance committee met one time. The functions of the nominating and corporate governance committee include:

 

developing and recommending to the board of directors criteria for board and committee membership;

 

establishing procedures for identifying and evaluating board of director candidates, including nominees recommended by stockholders;

 

reviewing the composition of the board of directors to ensure that it is composed of members containing the appropriate skills and expertise to advise us;

14


 

 

identifying individuals qualified to become members of the board of directors;

 

recommending to the board of directors the persons to be nominated for election as directors and to each of the board’s committees;

 

developing and recommending to the board of directors a code of business conduct and ethics and a set of corporate governance guidelines; and

 

overseeing the evaluation of our board of directors and management.

The nominating and corporate governance committee considers candidates for Board of Director membership suggested by its members and the Chief Executive Officer. Additionally, in selecting nominees for directors, the nominating and corporate governance committee will review candidates recommended by stockholders in the same manner and using the same general criteria as candidates recruited by the committee and/or recommended by our board of directors. Any stockholder who wishes to recommend a candidate for consideration by the committee as a nominee for director should follow the procedures described later in this proxy statement under the heading “Stockholder Proposals.” The nominating and corporate governance committee will also consider whether to nominate any person proposed by a stockholder in accordance with the provisions of our bylaws relating to stockholder nominations as described later in this proxy statement under the heading “Stockholder Proposals.”

Identifying and Evaluating Director Nominees. Our board of directors is responsible for filling vacancies on our board of directors and for nominating candidates for election by our stockholders each year in the class of directors whose term expires at the relevant annual meeting. The board of directors delegates the selection and nomination process to the nominating and corporate governance committee, with the expectation that other members of the board of directors, and of management, will be requested to take part in the process as appropriate.

Generally, the nominating and corporate governance committee identifies candidates for director nominees in consultation with management, through the use of search firms or other advisors, through the recommendations submitted by stockholders or through such other methods as the nominating and corporate governance committee deems to be helpful to identify candidates. Once candidates have been identified, the nominating and corporate governance committee confirms that the candidates meet all of the minimum qualifications for director nominees established by the nominating and corporate governance committee. The nominating and corporate governance committee may gather information about the candidates through interviews, detailed questionnaires, comprehensive background checks or any other means that the nominating and corporate governance committee deems to be appropriate in the evaluation process. The nominating and corporate governance committee then meets as a group to discuss and evaluate the qualities and skills of each candidate, both on an individual basis and taking into account the overall composition and needs of our board of directors. based on the results of the evaluation process, the nominating and corporate governance committee recommends candidates for the board of directors’ approval to fill a vacancy or as director nominees for election to the board of directors by our stockholders each year in the class of directors whose term expires at the relevant annual meeting.

Board and Committee Meetings Attendance

The full board of directors met eleven times during 2020. During 2020, each member of the board of directors attended in person or participated in 75% or more of the aggregate of (i) the total number of meetings of the board of directors (held during the period for which such person has been a director), and (ii) the total number of meetings held by all committees of the board of directors on which such person served (during the periods that such person served).

Director Attendance at Annual Meeting of Stockholders

We held a virtual annual meeting of stockholders in 2020 that was attended by six members of the board of directors.

Policy on Trading, Pledging and Hedging of Company Stock

Certain transactions in our securities (such as purchases and sales of publicly traded put and call options, and short sales) create a heightened compliance risk or could create the appearance of misalignment between

15


 

management and stockholders. In addition, securities held in a margin account or pledged as collateral may be sold without consent if the owner fails to meet a margin call or defaults on the loan, thus creating the risk that a sale may occur at a time when an officer or director is aware of material, non-public information or otherwise is not permitted to trade in Company securities. Our insider trading policy expressly prohibits derivative transactions of our stock by our executive officers, directors and employees. Our insider trading policy expressly prohibits purchases of any derivative securities that provide the economic equivalent of ownership.

Code of Business Conduct and Ethics

We have adopted a written code of business conduct and ethics that applies to our directors, officers and employees, including our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A current copy of the code is posted on the corporate governance section of our website, which is located at https://investors.kaleido.com/corporate-governance/documents-charters. If we make any substantive amendments to, or grant any waivers from, the code of business conduct and ethics for any officer or director, we will disclose the nature of such amendment or waiver on our website or in a current report on Form 8-K.

Board Leadership Structure and Board’s Role in Risk Oversight

Currently, the role of chair of the board is separated from the role of chief executive officer, and we plan to keep these roles separate. We believe that separating these positions allows our chief executive officer to focus on our day-to-day business, while allowing the chair of the board to lead the board of directors in its fundamental role of providing advice to and independent oversight of management. Our board of directors recognizes the time, effort, and energy that the chief executive officer is required to devote to her position in the current business environment, as well as the commitment required to serve as our chairman, particularly as the board of directors’ oversight responsibilities continue to grow. While our bylaws and our corporate governance guidelines do not require that our chair of the board and chief executive officer positions be separate, our board of directors believes that having separate positions is the appropriate leadership structure for us at this time and demonstrates our commitment to good corporate governance.

Risk is inherent to every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including risks relating to our financial condition, development and commercialization activities, operations, strategic direction, and intellectual property. Management is responsible for the day-to-day management of risks we face, while our board of directors, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, our board of directors has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.

The role of the board of directors in overseeing the management of our risks is conducted primarily through committees of the board of directors, as disclosed in the descriptions of each of the committees above and in the charters of each of the committees. The full board of directors (or the appropriate board committee in the case of risks that are under the purview of a particular committee) discusses with management our major risk exposures, their potential impact on us, and the steps we take to manage them. When a board committee is responsible for evaluating and overseeing the management of a particular risk or risks, the chairman of the relevant committee reports on the discussion to the full board of directors during the committee reports portion of the next board meeting. This enables the board of directors and its committees to coordinate the risk oversight role, particularly with respect to risk interrelationships.

Communication with the Directors of Kaleido

Any interested party with concerns about our company may report such concerns to the board of directors or the chairman of our board of directors and nominating and corporate governance committee, by submitting a written communication to the attention of such director at the following address:

 

c/o Kaleido Biosciences, Inc.

65 Hayden Ave

Lexington, Massachusetts 02421

United States

16


 

You may submit your concern anonymously or confidentially by postal mail. You may also indicate whether you are a stockholder, customer, supplier, or other interested party.

A copy of any such written communication may also be forwarded to Kaleido’s legal counsel and a copy of such communication may be retained for a reasonable period of time. The director may discuss the matter with Kaleido’s legal counsel, with independent advisors, with non-management directors, or with Kaleido’s management, or may take other action or no action as the director determines in good faith, using reasonable judgment, and applying his or her own discretion.

Communications may be forwarded to other directors if they relate to important substantive matters and include suggestions or comments that may be important for other directors to know. In general, communications relating to corporate governance and long-term corporate strategy are more likely to be forwarded than communications relating to ordinary business affairs, personal grievances, and matters as to which we tend to receive repetitive or duplicative communications.

The audit committee oversees the procedures for the receipt, retention, and treatment of complaints received by Kaleido regarding accounting, internal accounting controls, or audit matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting, internal accounting controls or auditing matters. Kaleido has also established a toll-free telephone number for the reporting of such activity, which is 866-290-6353.

Director Compensation

The table below shows all compensation earned by or paid to our non-employee directors during 2020. We also do not, and do not expect to, provide separate compensation to our directors who are also our employees, such as Mr. Menichella, our Chief Executive Officer and President, and consequently is not included in this table. The compensation received by Mr. Menichella during 2021 is set forth in the section of this proxy statement captioned “Executive Compensation—Summary Compensation Table.”

 

Name

 

Fees Paid

in

Cash($)(1)

 

 

Option

Awards($)

(2)

 

Total($)

 

Michael Bonney(3)

 

 

20,101

 

 

 

111,450

 

 

 

 

131,551

 

Bonnie Bassler, Ph.D.(4)

 

 

 

 

 

111,450

 

 

 

 

111,450

 

Grady Burnett(5)

 

 

 

 

 

111,450

 

 

 

 

111,450

 

Theo Melas-Kyriazi(6)

 

 

 

 

 

111,450

 

 

 

 

111,450

 

Jean Mixer(7)

 

 

 

 

 

111,450

 

 

 

 

111,450

 

Anthony G. Quinn, M.D. Ph.D.(8)

 

 

 

 

 

111,450

 

 

 

 

111,450

 

Anne Prener(9)

 

 

 

 

 

267,750

 

 

 

 

267,750

 

Geoffrey von Maltzahn, Ph.D. (10)

 

 

 

 

 

111,450

 

 

 

 

111,450

 

 

(1)

Amount represent Company paid employee benefit plans for Mr. Bonney pursuant to the term of the Bonney Agreement dated January 24, 2019. The amount reported represents $19,865 in health insurance, vision and dental premiums and $236 in group term life insurance premiums.

(2)

Amounts shown reflect the grant date fair value of stock option awards granted during 2020. The grant date fair value was computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC Topic 718, Compensation — Stock Compensation, disregarding the effect of estimated forfeitures related to service-based vesting. These amounts reflect the accounting cost for the stock options and do not correspond to the actual economic value that may be received by the director upon exercise of the stock options. See Note 8 to the financial statements in our Annual Report on Form 10-K for the year ended December 31, 2020 regarding assumptions we made in determining the fair value of option awards.

(3)

As of December 31, 2020, Mr. Bonney held 702,753 unexercised options.

(4)

As of December 31, 2020, Mr. Burnett held 28,125 unexercised options.

(5)

As of December 31, 2020, Mr. Melas-Kyriazi held 31,177 unexercised options.

(6)

As of December 31, 2020, Ms. Mixer held 32,125 unexercised options.

(7)

As of December 31, 2020, Dr. Quinn held 31,250 unexercised options.

(8)

As of December 31, 2020, Anne Prener held no unexercised options.

(9)

As of December 31, 2020, Dr. von Maltzahn held no unexercised options.

17


 

Under our director compensation program, we pay our non-employee directors a cash retainer for service on the board of directors and for service on each committee on which the director is a member. The chairman of each committee receives a higher retainer for such service. These fees are payable in arrears in four equal quarterly installments on the last day of each quarter, provided that the amount of such payment is prorated for any portion of such quarter that the director is not serving on our board of directors. Due to the COVID-19 global pandemic, the board of directors unanimously voted to decline compensation for fiscal year 2020. The fees paid to non-employee directors for service on the board of directors and for service on each committee of the board of directors on which the director is a member are as follows:

 

 

 

Member

Annual

Fee

 

 

Chairperson

Additional

Annual Fee

Board of Directors

 

$

35,000

 

 

 

$

30,000

 

 

Audit Committee

 

 

7,500

 

 

 

 

7,500

 

 

Compensation Committee

 

 

5,000

 

 

 

 

5,000

 

 

Nominating and Corporate Governance Committee

 

 

4,000

 

 

 

 

4,000

 

 

 

We also reimburse our non-employee directors for reasonable travel and out-of-pocket expenses incurred by our non-employee directors in connection with attending our meetings of the board of directors and committees thereof.

 

In addition, subject to the discretion of our board of directors, each non-employee director elected or appointed to our board of directors following the completion of our initial public offering received an option to purchase a number of shares, with a value equivalent to $440,000, with value determined in accordance with the reasonable assumptions and methodologies for calculating the fair value of options under ASC 718, on the date of such director’s election or appointment to the board of directors, which will vest annually over three years, subject to continued service through such vesting dates.

 

On the date of each annual meeting of stockholders of our company, each non-employee director will also receive an option to purchase a number of shares that will be determined based on external benchmarking and with input from a compensation consultant, which will vest in full of the earlier to occur of the first anniversary of the date of grant or the next annual meeting, subject to continued service as a director through such vesting date.

This program is intended to provide a total compensation package that enables us to attract and retain qualified and experienced individuals to serve as directors and to align our directors’ interests with those of our stockholders.

Executive Compensation

As an emerging growth company, we have opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies,” as such term is defined in the rules promulgated under the Securities Act. This section provides an overview of the compensation awarded to and earned by each individual who served as our principal executive officer at any time during our fiscal year ended December 31, 2020 our next two most highly compensated executive officers in respect of their service to our company for our fiscal year ended December 31, 2020 and a former executive officer who was one of the highest compensated individuals for 2020. We refer to these individuals as our named executive officers. Our named executive officers are:

 

Daniel L. Menichella, our President and Chief Executive Officer;

 

William Duke, Jr., our Chief Financial Officer;

 

Alison Lawton, our former President and Chief Executive Officer; and.

 

Katharine Knobil, M.D., our former Chief Medical Officer and Head of Research & Development.

 

18


 

 

 

Our executive compensation program has reflected our growth and development-oriented corporate culture. Compensation of our named executive officers has primarily consisted of a combination of base salary, bonuses and long-term incentive compensation. Our named executive officers, like all of our full-time employees, are eligible to participate in our health and welfare benefit plans. We currently evaluate our compensation values and philosophy and compensation plans and arrangements as circumstances require and review executive compensation annually, with input from a compensation consultant. As part of this review process, our board of directors and the compensation committee apply our values and philosophy, while considering the compensation levels needed to ensure our executive compensation program remains competitive. We also review whether we are meeting our retention objectives and the potential cost of replacing key employees. We receive input from an outside compensation consultant with respect to compensation paid to our named executive officers.

Summary Compensation Table

The following table sets forth information regarding compensation awarded to and earned by our named executive officers for services rendered to us in all capacities during our fiscal years ended December 31, 2020 and 2019 as well as for our former President and Chief Executive Officer and our former Chief Medical Officer, each of whom would have been one of our most highly compensated executive officers. On February 19, 2019, we effected a reverse stock split of shares of our common stock at a ratio of one-for-two, pursuant to an amendment to our amended and restated certificate of incorporation approved by our board of directors and stockholders. All issued and outstanding common shares and per share amounts have been retroactively adjusted to reflect this reverse stock split for all periods presented.

 

Name and Principal Position

 

Year

 

Salary

($)

 

 

 

Cash

Bonus

($)

 

 

Option

Awards

($)(1)

 

 

Non-Equity

Incentive Plan

Compensation

($)(2)

 

All Other

Compensation

($)

 

Total ($)

 

Daniel Menichella

 

2020

 

 

118,731

 

(3)

 

 

 

 

 

3,777,318

 

 

 

49,044

 

 

 

 

1,734

 

(4)

 

 

3,946,827

 

President and Chief Executive

   Officer

   (principal executive officer)

 

2019

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

William Duke, Jr.

 

2020

 

 

420,000

 

 

 

 

100,000

 

 

 

527,067

 

 

 

142,800

 

 

 

 

10,069

 

(5)

 

 

1,199,936

 

Chief Financial Officer

   (principal financial officer)

 

2019

 

 

44,692

 

 

 

 

 

 

 

1,675,995

 

 

 

 

 

 

 

277

 

(7)

 

 

1,720,964

 

Katharine Knobil, M.D.

 

2020

 

 

450,000

 

(6)

 

 

75,668

 

 

 

805,820

 

 

 

157,590

 

 

 

 

12,524

 

(9)

 

 

1,501,602

 

Former CMO & Head of R&D(8)

 

2019

 

 

450,000

 

 

 

 

200,000

 

 

 

583,729

 

 

 

170,252

 

 

 

 

47,783

 

(10)

 

 

1,451,764

 

Alison Lawton

 

2020

 

 

515,000

 

 

 

 

 

 

 

351,745

 

 

 

257,500

 

 

 

 

11,323

 

(11)

 

 

1,135,568

 

Former President and Chief Executive Officer

    (former principal executive officer)(12)

 

2019

 

 

500,000

 

 

 

 

250,000

 

 

 

2,101,475

 

 

 

276,563

 

 

 

 

11,196

 

(13)

 

 

3,139,234

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1)

The amounts reported in the “Option Awards” column reflects the aggregate grant date fair value of share-based compensation awarded during the indicated year computed in accordance with the provisions of Financial Accounting Standards Board Accounting Standards Codification (ASC) Topic 718. The assumptions used in calculating the grant-date fair value are set forth in Note 8 to our audited consolidated financial statements appearing elsewhere in this Annual Report.

(2)

The amounts reported represent cash incentive compensation based upon the Board’s assessment of the achievement of company and individual performance objectives for the year indicated. Cash incentive compensation for the year ended December 31, 2020, made in February 2021.

(3)

Mr. Menichella commenced employment with us in October 2020. His annual base salary for 2020 was $540,000.

(4)

The amount reported represents $683 for matching contributions made in February 2021 by the Company under its 401(k) plan, $100 in long-term disability insurance premiums, $742 in group term life insurance premiums in excess of statutory limits and $209 Massachusetts Paid Family and Medical Leave Act.

(5)

The amount reported represents $8,000 for matching contributions made in February 2021 by the Company under its 401(k) plan, $360 in long-term disability insurance premiums, $1,188 in group term life insurance premiums in excess of statutory limits, and $521 Massachusetts Paid Family and Medical Leave Act.

19


 

(6)

Mr. Duke commenced employment with us in November 2019. His annual base salary for 2019 was $420,000.

(7)

The amount reported represents $40 in long-term disability insurance premiums, $68 in group term life insurance premiums in excess of statutory limits, and $169 Massachusetts Paid Family and Medical Leave Act.

(8)   Dr.. Knobil resigned from her employment effective in January 2021.

(9)

The amount reported represents $8,000 for matching contributions made in February 2021 by the Company under its 401(k) plan, $480 in long-term disability insurance premiums, $2,322 in group term life insurance premiums in excess of statutory limits, $521 Massachusetts Paid Family and Medical Leave Act, and $1,201 in commuting expense reimbursements.

(10)

The amount reported represents $8,000 for matching contributions made in February 2020 by the Company under its 401(k) plan, $320 in long-term disability insurance premiums, $2,322 in group term life insurance premiums in excess of statutory limits, and $499 Massachusetts Paid Family and Medical Leave Act, $6,915 in company paid relocation services, and $29,567 in commuting expense reimbursements.

(11)

The amount reported represents $8,000 for matching contributions made in February 2021 by the Company under its 401(k) plan, $480 in long-term disability insurance premiums, $2,322 in group term life insurance premiums in excess of statutory limits, and $521 Massachusetts Paid Family and Medical Leave Act.

(12)

Ms. Lawton ceased to be an officer of the Company upon her resignation in July 2020.  Ms. Lawton continued to serve in the role of special advisor to the Office of the CEO until December 31, 2020 pursuant to an amendment to the Employment Agreement she entered into with us upon her resignation.  Pursuant to such agreement, her base salary payments were extended through her resignation date of December 31, 2020 and outstanding equity awards continue to vest through June 30, 2021, with no additional compensation during this period.  

(13)

The amount reported represents $8,000 for matching contributions made in February 2020 by the Company under its 401(k) plan, $320 in long-term disability insurance premiums, $2,322 in group term life insurance premiums in excess of statutory limits, and $554 Massachusetts Paid Family and Medical Leave Act.

Narrative to Summary Compensation Table

Our board of directors and compensation committee review compensation annually for our executives. In setting executive base salaries and bonuses and granting equity incentive awards, we consider compensation for comparable positions in the market, the historical compensation levels of our executives, individual performance as compared to our expectations and objectives, our desire to motivate our employees to achieve short- and long-term results that are in the best interests of our stockholders, and a long-term commitment to our company. We target a general competitive position, based on independent third-party benchmark analytics to inform the mix of compensation of base salary, bonus or long-term incentives.

Our board of directors has historically determined our executives’ compensation. Our compensation committee typically reviews and discusses management’s proposed compensation with the chief executive officer for all executives other than the chief executive officer. Based on those discussions and its discretion, taking into account the factors noted above, the compensation committee then recommends the compensation for each executive officer. Our board of directors discusses the compensation committee’s recommendations and ultimately approves the compensation of our executive officers without members of management present. In 2020, the compensation committee retained the services of Pay Governance as its external compensation consultant and the board of directors and the compensation committee considered Pay Governance’s input on certain compensation matters as they deemed appropriate. Pay Governance served at the discretion of the compensation committee and did not provide any other services to the Company during fiscal year 2020 other than those for which they were engaged by the compensation committee.

Our executive compensation program has reflected our growth and development-oriented corporate culture. Compensation of our named executive officers has primarily consisted of a combination of base salary, bonuses and long-term incentive compensation. Our named executive officers, like all of our full-time employees, are eligible to participate in our health and welfare benefit plans. We currently evaluate our compensation values and philosophy and compensation plans and arrangements as circumstances require and review executive compensation annually with input from a compensation consultant. As part of this review process, our board of directors and the compensation committee apply our values and philosophy, while considering the compensation levels needed to ensure our executive compensation program remains competitive. We also review whether we are meeting our retention objectives and the potential cost of replacing key employees.

20


 

Annual base salary

Each named executive officer’s base salary is a fixed component of annual compensation for performing specific duties and functions that has been established by our board of directors taking into account each individual’s role, responsibilities, skills, and experience. Base salaries for our named executive officers are reviewed annually by our compensation committee, typically in connection with our annual performance review process, and adjusted from time to time, based on the recommendation of the compensation committee, to realign salaries with market levels after taking into account individual responsibilities, performance and experience.

For the year ended December 31, 2020, the annual base salaries for each of Mr. Menichella and Mr. Duke were $540,000 and $420,000, respectively. Effective as of January 1, 2021, the annual base salary for Mr. Duke increased to $432,600.

Cash bonus

Our annual bonus program is intended to reward our named executive officers for meeting objective or subjective performance goals for a fiscal year. With respect to performance in fiscal year 2020, the target bonus opportunity as a percentage of base salary for each of Mr. Menichella and Mr. Duke was 50% and 40%, respectively.

Based on the Company’s achievement of certain performance goals and metrics related to our corporate objectives, the compensation committee (and in the case of our Chief Executive Officer the board of directors approved compensation committee recommendation) determined the bonuses for each named executive officer, which were paid in the amounts as set forth above in the Summary Compensation Table.

Equity Compensation

Although we do not have a formal policy with respect to the grant of equity incentive awards to our executive officers, or any formal equity ownership guidelines applicable to them, we believe that equity grants provide our executive officers with a strong link to our long-term performance, create an ownership culture and help to align the interests of our executive officers and our stockholders. In addition, we believe that equity grants with a time-based vesting feature promote executive retention because this feature incentives our executive officers to remain in our employment during the vesting period. Accordingly, our board of directors periodically reviews the equity incentive compensation of our executives, including our named executive officers, and from time to time may grant equity incentive awards to them in the form of stock options.

We typically grant stock option awards following the start of employment for each executive officer and our other employees, as well as on a twice annual basis for retention purposes. Our board of directors grants stock options at an option exercise price equal to the fair market value of our common stock on the date of grant.

During the fiscal year ended December 31, 2020, we granted stock options to each of our named executive officers, as shown in more detail in the “Outstanding Equity Awards at Fiscal Year End” table below.

2019 Stock Option and Incentive Plan

Our 2019 Stock Option and Incentive Plan, or 2019 Plan, was adopted by our board of directors on January 23, 2019, and approved by our stockholders on February 19, 2019. The 2019 Plan replaced our 2015 Stock Incentive Plan, or 2015 Plan, as our board of directors determined not to make additional awards under that plan following the consummation of our initial public offering. The 2019 Plan allows the board of directors’ compensation committee to make equity-based incentive awards to our officers, employees, directors and other key persons (including consultants).

We initially reserved 2,168,976 shares of our common stock for the issuance of awards under the 2019 Plan, or the Initial Limit. The 2019 Plan provides that the number of shares reserved and available for issuance under the plan will automatically increase each January 1, beginning on January 1, 2020, by 4% of the outstanding number of shares of our common stock on the immediately preceding December 31 or such lesser number of shares as determined by our compensation committee, or the Annual Increase. These limits are subject to adjustment in the event of a stock split, stock dividend or other change in our capitalization.

21


 

The shares of common stock underlying any awards that are forfeited, cancelled, held back upon exercise or settlement of an award to satisfy the exercise price or tax withholding, reacquired by us prior to vesting, satisfied without the issuance of stock, expire or are otherwise terminated (other than by exercise) under the 2019 Plan and 2015 Plan will be added back to the shares of common stock available for issuance under the 2019 Plan.

The maximum aggregate number of shares that may be issued in the form of incentive stock options shall not exceed the Initial Limit cumulatively increased on January 1, 2020 and on each January 1 thereafter by the lesser of the Annual Increase for such year plus shares added back as provided for above with respect to the 2015 Plan or 4,337,952 shares of common stock.

2015 Stock Incentive Plan

Our 2015 Plan, was approved and adopted by our board of directors on July 14, 2015, and approved by our stockholders on July 14, 2015. Under the 2015 Plan we initially reserved for issuance an aggregate of 1,000,000 shares of our common stock, and most recently increased the shares reserved and available for issuance to 8,395,974 shares of our common stock on December 4, 2018. The number of shares of common stock reserved for issuance under the 2015 Plan is subject to adjustment in the event of a stock split, reverse stock split, stock dividend, recapitalization, combination of shares, reclassification of shares, spin-off, or other similar change in our capitalization.

The shares of common stock underlying awards that are forfeited, cancelled, terminated, reacquired prior to vesting, satisfied without the issuance of shares of common stock, or withheld to cover the exercise price or tax withholding are added back to the shares of common stock available for issuance under the 2019 Plan.

The shares of common stock underlying awards that are forfeited, cancelled, terminated, reacquired prior to vesting, satisfied without the issuance of shares of common stock, or withheld to cover the exercise price or tax withholding are added back to the shares of common stock available for issuance under the 2019 Plan.

2019 Employee Stock Purchase Plan

On January 23, 2019, our board of directors adopted the 2019 Employee Stock Purchase Plan, or 2019 ESPP, and on February 19, 2019, our stockholders approved the 2019 ESPP, but the 2019 ESPP has not yet been implemented. The 2019 ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Code. The 2019 ESPP initially reserves and authorizes the issuance of up to a total of 180,748 shares of common stock to participating employees. The 2019 ESPP provides that the number of shares reserved and available for issuance will automatically increase each January 1, beginning on January 1, 2020, by the least of (i) 542,244 shares of Common Stock, (ii) 1% of the outstanding number of shares of our common stock on the immediately preceding December 31 or (iii) such lesser number of shares as determined by the 2019 ESPP administrator. The number of shares reserved under the 2019 ESPP is subject to adjustment in the event of a stock split, stock dividend or other change in our capitalization.

All employees whose customary employment is for more than 20 hours per week are eligible to participate in the 2019 ESPP. However, any participating employee who would own 5% or more of the total combined voting power or value of all classes of stock after an option were granted under the 2019 ESPP would not be eligible to purchase shares under the 2019 ESPP.

When the 2019 ESPP is implemented, we will make one or more offerings each year to our employees to purchase shares under the 2019 ESPP. Offerings will usually begin on each May 1 and November 1 and will continue for six-month periods, referred to as offering periods. Each eligible employee may elect to participate in any offering by submitting an enrollment form at least 15 business days before the relevant offering date.

Each employee who is a participant in the 2019 ESPP may purchase shares by authorizing payroll deductions of up to a specified percentage of his or her base compensation during an offering period. Unless the participating employee has previously withdrawn from the offering, his or her accumulated payroll deductions will be used to purchase shares on the last business day of the offering period at a price equal to 85% of the fair market value of the shares on the first business day or the last business day of the offering period, whichever is lower. Under applicable tax rules, an employee may purchase no more than $25,000 worth of shares of common stock, valued at the start of the purchase period, under the 2019 ESPP in any calendar year.

22


 

The accumulated payroll deductions of any employee who is not a participant on the last day of an offering period will be refunded. An employee’s rights under the 2019 ESPP terminate upon voluntary withdrawal from the plan or when the employee ceases employment with us for any reason.

The 2019 ESPP may be terminated or amended by our board of directors at any time. An amendment that increases the number of shares of common stock authorized under the 2019 ESPP and certain other amendments require the approval of our stockholders.

Senior Executive Cash Incentive Bonus Plan

In October 2018, our board of directors adopted the Senior Executive Cash Incentive Bonus Plan, or the SECIBP, Plan, but it has not yet been implemented.  The SECIBP provides for cash bonus payments based upon the attainment of performance targets established by our compensation committee. The payment targets are related to financial and operational measures or objectives with respect to our company, or Corporate Performance Goals, as well as individual performance objectives. Our compensation committee may select Corporate Performance Goals from among an enumerated list of corporate performance metrics.

Each executive officer who is selected to participate in the SECIBP will have a target bonus opportunity set for each performance period. The bonus formulas will be adopted in each performance period by the compensation committee and communicated to each executive. The SECIBP also permits the compensation committee to approve additional bonuses to executive officers in its sole discretion.

401(k) Savings Plan

 

Effective as of January 1, 2017, we adopted a tax-qualified retirement plan that provides eligible employees with an opportunity to save for retirement on a tax-advantaged basis. All participants’ interests in their contributions are 100% vested when contributed. During the first half of 2018, a matching contribution of 50% of employee contributions up to 6%, with a maximum of $8,000 per year was approved. Matching contributions vest 25% each year, 100% vested after 4 years of service. At the end of the year, contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participants’ directions. The retirement plan is intended to qualify under Section 401(a) of the Code.

Limitations on Liability and Indemnification

 

Our amended and restated certificate of incorporation contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by the Delaware General Corporation Law, or DGCL. Consequently, our directors are not personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for:

 

 

any breach of the director’s duty of loyalty to us or our stockholders;

 

any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

 

unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or

 

any transaction from which the director derived an improper personal benefit.

 

Our amended and restated by-laws require us to indemnify our directors and officers to the maximum extent not prohibited by the DGCL and allow us to indemnify other employees and agents as set forth in the DGCL. Subject to certain limitations, our amended and restated by-laws also require us to advance expenses incurred by our directors and officers for the defense of any action for which indemnification is required or permitted.

 

We have entered, and intend to continue to enter, into separate indemnification agreements with our directors, officers and certain of our key employees, in addition to the indemnification provided for in our amended and restated certificate of incorporation and amended and restated by-laws. These agreements, among other things, require us to indemnify our directors, officers and key employees for certain expenses, including attorneys’ fees, judgments, penalties, fines and settlement amounts actually incurred by these individuals in any action or proceeding arising out of their service to us or any of our subsidiaries or any other company or enterprise to which these individuals provide services at our request. Subject to certain limitations, our indemnification

23


 

agreements also require us to advance expenses incurred by our directors, officers and key employees for the defense of any action for which indemnification is required or permitted.

 

We believe that provisions of our amended and restated certificate of incorporation, amended and restated by-laws and indemnification agreements are necessary to attract and retain qualified directors, officers and key employees. We also maintain directors’ and officers’ liability insurance.

 

This description of the indemnification provisions of our amended and restated certificate of incorporation, our amended and restated bylaws and our indemnification agreements is qualified in its entirety by reference to these documents, each of which is attached as an exhibit to this Annual Report.

 

At present, there is no pending litigation or proceeding involving any of our directors or executive officers as to which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, executive officers or persons controlling us, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Health and Welfare Benefits

All of our full-time employees, including our named executive officers, are eligible to participate in our health and welfare plans, including medical and dental benefits, short-term and long-term disability insurance, and life insurance. We believe these perquisites are necessary and appropriate to provide a competitive compensation package to our named executive officers.

24


 

Outstanding Equity Awards at 2020 Fiscal Year End Table

The following table sets forth information concerning outstanding equity awards held by our named executive officers as of December 31, 2020.

 

 

OPTION AWARDS

 

 

STOCK AWARDS

NAME

Number of

Securities

Underlying

Unexercised

Options (#)

Exercisable

 

 

 

 

Number of

Securities

Underlying

Unexercised

Options (#)

Unexercisable

 

 

 

 

Equity

Incentive Plan

Awards:

Number of

Securities

Underlying

Unexercised

Unearned

Options (#)

 

 

Option

Exercise

Price ($)

 

 

Option

Expiration

Date

 

 

Number of

Shares Or

Units Of

Stock That

Have Not

Vested (#)

 

 

 

 

Market

Value Of

Shares Or

Units Of

Stock That

Have Not

Vested ($)(1)

 

 

Equity

Incentive

Plan

Awards:

Number of

Unearned

Shares, Units

or Other

Rights That

Have Not

Vested (#)

 

 

Daniel Menichella,

   President and

   Chief

   Executive

   Officer

   (Principal

   Executive

   Officer)

 

600,000

 

 

 

 

 

600,000

 

(2)

 

 

 

 

 

8.69

 

 

10/14/2030

 

 

 

 

 

 

 

 

 

 

 

 

 

Katharine Knobil, former CMO & Head of R&D

 

230,500

 

(3)

 

 

230,500

 

(3)

 

 

 

 

 

17.40

 

 

12/3/2028

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

31,250

 

 

(4

)

 

93,750

 

 

(4

)

 

 

 

 

6.56

 

 

11/14/2029

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

67,500

 

 

(5

)

 

 

 

 

6.00

 

 

4/14/2030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

67,500

 

 

(6

)

 

 

 

 

8.69

 

 

10/14/2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

28,343

 

 

(7

)

 

257,921

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

William Duke, Jr,

    Chief

   Financial

   Officer

   (Principal

   Accounting

   Officer)

 

67,500

 

 

(8

)

 

270,000

 

 

(8

)

 

 

 

 

8.71

 

 

11/28/2029

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

50,000

 

 

(9

)

 

 

 

 

6.00

 

 

4/14/2030

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

50,000

 

 

(10

)

 

 

 

 

8.69

 

 

10/14/2030

 

 

 

 

 

 

 

 

 

 

 

 

 

Alison Lawton, former President and Chief Executive Officer

 

121,563

 

 

(11

)

 

 

 

 

 

 

 

 

 

2.22

 

 

12/31/2022

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unless otherwise specified, all option awards vest over four years, with 25% vesting on the first anniversary of the vesting commencement date, and the remainder vesting in 12 equal quarterly installments thereafter, subject to continued employment with us.

(1)

The amount represents the number of shares of restricted stock or unvested restricted stock units multiplied by the market value of a share of our common stock based on the closing price on December 31, 2020, which was $9.10. Unless otherwise specified, all stock awards listed in the table are restricted stock awards.

(2)

The shares underlying this option vest 25% October 15, 2021, then in 12 equal quarterly installments thereafter.

(3)

The shares underlying this option vest 25% on December 3, 2019, then in 12 equal quarterly installments thereafter.

(4)

The shares underlying this option vest 25% on November 15, 2020, then in 12 equal quarterly installments thereafter.

(5)

The shares underlying this option vest 25% on April 15, 2021, then in 12 equal quarterly installments thereafter.

(6)

The shares underlying this option vest 25% on October 15, 2021, then in 12 equal quarterly installments thereafter.

(7)

The shares underlying this restricted stock unit shall fully vest effective April 15, 2021, pursuant to Dr. Knobil’s consulting agreement.

(8)

The shares underlying this option vests 25% on November 28, 2020, then in 12 equal quarterly installments thereafter.

(9)

The shares underlying this option vest 25% on April 15, 2021, then in 12 equal quarterly installments thereafter.

25


 

(10)

The shares underlying this option best 25% on October 15, 2021, then in 12 equal quarterly installment thereafter.

(11)

The shares underlying this option are fully vested and pursuant to Ms. Lawton’s consulting agreement, are available for exercise until December 31, 2022.

Employment Arrangements with Our Named Executive Officers

We have entered into employment agreements with each of our named executive officers that provide for specified payments and benefits in connection with a termination of employment in certain circumstances.  Our goal in providing these severance and change in control payments and benefits is to offer sufficient cash continuity protection such that the named executive officers who are our employees will focus their full time and attention on the requirements of the business rather than the potential implications for their respective positions. We prefer to have certainty regarding the potential severance amounts payable to the named executive officers, rather than negotiating severance at the time that a named executive officer’s employment terminates. We have also determined that accelerated vesting provisions with respect to outstanding equity awards in connection with a qualifying termination of employment in certain circumstances are appropriate because they encourage our named executive officers to stay focused on the business in those circumstances, rather than focusing on the potential implications for them personally. The employment agreements with our named executive officers require the named executive officers to execute a separation agreement containing a general release of claims in favor of us to receive any severance payments and benefits.

Daniel L. Menichella

On September 29, 2020, we entered into an employment agreement with Mr. Menichella, or the Menichella Employment Agreement. Pursuant to the terms of the Menichella Employment Agreement, Mr. Menichella serves as our Chief Executive Officer and President on an at-will basis. Mr. Menichella’s Employment Agreement provides him with a base salary, which is subject to periodic review and adjustment by our board of directors, and eligibility to receive cash incentive compensation as determined by our board of directors or compensation committee from time to time. Mr. Menichella’s current base salary is $540,000, and Mr. Menichella is eligible for an annual performance bonus currently targeted at 50% of his base salary. Mr. Menichella is also eligible to participate in the employee benefit plans generally available to our employees, subject to the terms of those plans.

In the event that Mr. Menichella is terminated by the Company without cause or resigns for good reason, Mr. Menichella will be entitled to (i) cash severance payments in an amount equal to twelve months of Mr. Menichella’s salary existing at the time of his termination plus an amount equal to the incentive compensation paid to Mr. Menichella during the fiscal year prior to his termination, payable in equal installments on the Company’s normal payroll cycle, provided that Mr. Menichella does not breach certain restrictive covenants set forth in his employment agreement; (ii) an extension of the period during which Mr. Menichella can exercise any of his vested options to purchase stock in the Company until the first anniversary of his termination; and (iii) reimbursement of COBRA premiums for health benefit coverage for him and his immediate family in an amount equal to the monthly employer contribution that the Company would have made to provide health insurance to Mr. Menichella had he remained employed with the Company for up to twelve months following the date of termination.

In the event that Mr. Menichella is terminated without cause or resigns for good reason within fifteen months following a “change in control” (as defined in the Employment Agreement), Mr. Menichella will be entitled to (i) cash severance payments in an amount equal to 1.5 times the sum of (x) twelve months of Mr. Menichella’s salary existing at the time of his termination, plus (y) his target annual bonus for the year of termination, payable in equal installments on the Company’s normal payroll cycle; (ii) reimbursement of COBRA premiums for health benefit coverage for him and his immediate family in an amount equal to the monthly employer contribution that the Company would have made to provide health insurance to Mr. Menichella had he remained employed with the Company for up to eighteen months following the date of termination; and (iii) the acceleration of vesting of all unvested equity awards held by Mr. Menichella immediately prior to such termination.

Alison Lawton

On January 24, 2019, we entered into an employment agreement with Ms. Lawton, or the Lawton Employment Agreement. Pursuant to the terms of the Lawton Employment Agreement, Ms. Lawton served as our Chief Executive Officer and President on an at-will basis. Ms. Lawton’s Employment Agreement provided her with a base salary, subject to periodic review and adjustment by our board of directors, and eligibility to receive cash incentive compensation as determined by our board of directors or compensation committee from time to time.

26


 

Ms. Lawton was also eligible to participate in the employee benefit plans generally available to our employees, subject to the terms of those plans.

On July 20, 2020, we agreed with Ms. Lawton to amend the Lawton Employment Agreement. The Amendment (i) updated the “Position and Duties” disclosure to include the role of special advisor in the Office of the CEO from July 20, 2020 through the Resignation Effective Date; (ii) added a “Resignation Effective Date” provision effective December 31, 2020; (iii)  revised the base salary term to extend salary payments through the Employee’s Resignation Effective Date; (iv) updated the “Incentive Compensation” disclosure to account for a short-term incentive payment for the 2020 calendar year equal to 50% of Ms. Lawton’s base salary payable when 2020 bonuses are paid to other executives of the Company;  and  (vi) amended the “Equity” provisions to allow for the following: (a) the 46,325 RSUs granted to Ms. Lawton on February 28, 2020 (with a market price at time of grant equal to $5.97) accelerated and vested effective on the Resignation Effective Date, (b) any options to purchase Common Stock in the Company that otherwise would have vested on or prior to June 30, 2021 had Ms. Lawton continued her employment through June 30, 2021, accelerated and vested effective on the Resignation Effective Date, and (c) the period during which Ms. Lawton can exercise any of her vested options to purchase Common Stock in the Company was extended until December 31, 2022. All other provisions in the Lawton Employment Agreement were unchanged and remained in full force and effect.

Other Employment Agreements with Executive Officers

In addition to the Menichella Employment Agreement and the Lawton Employment Agreement, we have also entered into employment agreements with each of our other executive officers, Dr. Katherine Knobil and Messrs. William Duke, Jr., Johan van Hylckama Vlieg and Jerald Korn. We refer to these agreements collectively as the Executive Employments Agreements.

The current base salaries and discretionary cash incentive bonus amounts for the executives under the Executive Employment Agreements, other than those already disclosed above, are as follows:

 

Executive

 

Title

 

Base Salary

 

 

Target Incentive

Discretionary Bonus (%)

 

Johan van Hylckama Vlieg

 

Chief Scientific Officer

 

$

394,936

 

 

 

40

%

Jerald Korn

 

General Counsel & Chief Administrative Officer

 

 

412,917

 

 

 

40

%

 

Under the Executive Employment Agreements, each of the executives will continue to serve on an at-will basis. The above base salaries are subject to periodic review and adjustment by our board of directors, and eligibility to receive cash incentive compensation as determined by our board of directors or compensation committee from time to time. The executives are also eligible to participate in the employee benefit plans generally available to our employees, subject to the terms of those plans.

The Executive Employment Agreements further provides that if the executive’s employment is terminated by us without Cause (as defined in the relevant Executive Employment Agreement) or the executive resigns for Good Reason (as defined in the relevant Executive Employment Agreement), then, subject to the timely execution and effectiveness of a separation agreement, including a general release of claims in our favor, the executive will be entitled to receive: (i) an amount equal to 12 months of base salary plus an amount equal to the incentive compensation paid to the executive in the year prior to the year of termination, payable in substantially equal monthly installments over 12 months following termination, (ii) if the executive was enrolled in our health care program immediately prior to the date of termination and properly elects to receive COBRA benefits, a monthly cash payment for 12 months of COBRA premiums at our normal rate of contribution for employees for coverage at the level in effect immediately prior to the date of termination and (iii) extension of the period during which the executive can exercise any of his or her vested options to purchase our stock until the anniversary of the executive’s date of termination.

27


 

In lieu of the severance payments and benefits set forth in the prior paragraph, in the event that the executive is terminated by us without Cause or he or she resigns for Good Reason, in each case within 15 months following a Change in Control (as defined in the relevant Executive Employment Agreement), subject to the timely execution and effectiveness of a separation agreement, including a general release of claims in our favor, the executive will be entitled to receive: (i) a lump sum cash amount equal to 1.5 times the sum of (A) his or her current base salary (or his or her base salary in effect prior to the Change in Control, if higher) plus (B) his or her target annual cash incentive compensation for the year of termination, (ii) if the executive is enrolled in our health care program immediately prior to the date of termination and properly elects to receive COBRA benefits, a monthly cash payment for 18 months of COBRA premiums at our normal rate of contribution for employees for coverage at the level in effect immediately prior to the date of termination, and (iii) notwithstanding anything to the contrary in any applicable award agreement, accelerated vesting of 100% of all Equity Awards (as defined in the relevant Executive Employment Agreement) held by the executive.

Each of the Menichella Employment Agreement and the Executive Employment Agreements also contains a Section 280G better-off cutback provision, which provides that, in the event that the payments or benefits provided to the named executive officer pursuant to his or her employment agreement or otherwise constitute parachute payments with the meaning of Section 280G of the Code, the payments or benefits to such executive will either be delivered in full or reduced to the extent necessary to avoid an excise tax under Section 4999 of the Code, whichever would result in the executive receiving the largest amount of payments or benefits on an after-tax basis. None of the employment agreements with our named executive officers requires us to provide any tax gross-up payments.

Other agreements

We have also entered into employee confidentiality, inventions, non-solicitation and non-competition agreements with each of our named executive officers. Under such agreements, each named executive officer has agreed (1) not to compete with us during his or her employment and for a period of one year after the termination of such employment, (2) not to solicit our employees during his or her employment and for a period of one year after the termination of such employment, (3) to protect our confidential and proprietary information and (4) to assign to us related intellectual property developed during the course of his or her employment.

Compensation Risk Assessment

We believe that although a portion of the compensation provided to our executive officers and other employees is performance-based, our executive compensation program does not encourage excessive or unnecessary risk taking.

This is primarily due to the fact that our compensation programs are designed to encourage our executive officers and other employees to remain focused on both short-term and long-term strategic goals. As a result, we do not believe that our compensation programs are reasonably likely to have a material adverse effect on us.

28


 

Equity Compensation Plan Information

The following table provides information as of December 31, 2020 with respect to the shares of our common stock that may be issued under our existing equity compensation plans.

 

 

 

Equity Compensation Plan Information

 

Plan Category

 

Number of

securities

to be issued

upon

exercise

of

outstanding

options,

warrants

and rights

 

 

Weighted

average

exercise

price

of

outstanding

options,

warrants

and rights

 

 

Number of

securities

remaining

available

for future

issuance

under equity

compensation

plans

(excluding

securities in

first column)

 

Equity compensation plans approved by security

   holders

 

 

7,248,371

 

 

$

8.19

 

 

 

3,405,628

 

Equity compensation plans not approved by

   security holders

 

 

 

 

 

 

 

 

 

Total

 

 

7,248,371

 

 

$

8.19

 

 

 

3,405,628

 

 

Includes the following plans: our 2015 Stock Incentive Plan, our 2019 Stock Option and Incentive Plan and our 2019 Employee Stock Purchase Plan.

29


 

CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

Certain Relationships and Transactions

Other than the compensation agreements and other arrangements described under “Executive Compensation” and “Director Compensation” in this proxy statement and the transactions described below, since January 1, 2019, there has not been and there is not currently proposed, any transaction or series of similar transactions to which we were, or will be, a party in which the amount involved exceeded, or will exceed, $120,000 (or, if less, 1% of the average of our total assets amounts at December 31, 2019 and 2020) and in which any director, executive officer, holder of five percent or more of any class of our capital stock or any member of the immediate family of, or entities affiliated with, any of the foregoing persons, had, or will have, a direct or indirect material interest.

There were no related party transactions for the twelve months ended December 31, 2020 and 2019.

Private Placement of Securities

 

Stockholder

 

Shares of Series C

Preferred Stock

 

 

Total Purchase Price

 

Flagship Pioneering Funds (1)

 

 

2,502,502

 

 

$

24,999,995

 

 

(1)

Flagship of Pioneering Funds consists of Nutritional Health Disruptive Innovation Fund, L.P. and Flagship Ventures Opportunities Fund I, L.P.

Participation in our IPO

Certain of our directors, executive officers and our 5% stockholders purchased shares of our common stock in our IPO at the initial public offering price. The following table sets forth the number of shares of our common stock purchased by directors, executive officers and 5% stockholders and their affiliates and the aggregate purchase price paid for such shares.

 

Name

 

Shares of

Common

Stock

Purchased(#)

 

 

Aggregate

Cash

Purchase

Price($)

 

Flagship Pioneering Funds (1)

 

 

933,333

 

 

 

13,999,995

 

Michael Bonney

 

 

71,250

 

 

 

1,072,800

 

Total

 

 

1,004,583

 

 

 

15,072,795

 

 

(1)

Flagship Pioneering Funds consists of Flagship Ventures Fund V, L.P., Nutritional Health Disruptive Innovation Fund, L.P., and Flagship Ventures Opportunities Fund I, L.P.

 

Participation in Public Offerings

Certain of our directors, executive officers and our 5% stockholders purchased shares of our common stock in underwritten public offerings of common stock at the public offering price. The following table sets forth the number of shares of our common stock purchased by directors, executive officers and 5% stockholders and their affiliates and the aggregate purchase price paid for such shares.

 

June 1, 2020 Public Offering

Name

 

Shares of Common Stock Purchased

 

 

Aggregate

Cash

Purchase

Price($)

 

Flagship Pioneering Funds (1)

 

 

2,000,000

 

 

$

15,000,000

 

Theo Melas-Kyriazi

 

 

33,333

 

 

 

249,998

 

30


 

 

 

 

1)

Flagship Pioneering Funds consists of Flagship Ventures Fund IV, L.P., Nutritional Health LTP Fund, L.P., and Flagship Ventures Opportunities Fund I, L.P.

 

February 3, 2021 Public Offering

Name

 

Shares of Common Stock Purchased

 

 

Aggregate

Cash

Purchase

Price($)

 

Flagship Pioneering Funds (1)

 

 

215,000

 

 

$

2,472,500

 

Daniel L. Menichella

 

 

20,000

 

 

 

230,000

 

 

(1)

Flagship Pioneering Funds consists of Flagship Ventures Fund V, L.P., Nutritional Health LTP Fund, L.P., and Flagship Ventures Opportunities Fund I, L.P.

Amended and Restated Investors’ Rights Agreement

We are a party to an amended and restated investors’ rights agreement, or the Investors’ Rights Agreement, dated as of February 21, 2018, with certain holders of our previously-outstanding preferred stock, including certain of our 5% stockholders and their affiliates and entities affiliated with certain of our officers and directors. The Investors’ Rights Agreement provides these holders the right to demand that we file a registration statement or request that their shares be covered by a registration statement that we are otherwise filing.

Limitation of Liability and Indemnification of Officers and Directors

Our certificate of incorporation contains provisions that limit the liability of our directors for monetary damages to the fullest extent permitted by the DGCL. Consequently, our directors are not personally liable to us or our stockholders for monetary damages for any breach of fiduciary duties as directors, except liability for:

 

any breach of their duty of loyalty to our company or our stockholders;

 

any act or omission not in good faith or that involves intentional misconduct or a knowing violation of law;

 

unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the DGCL; or

 

any transaction from which they derived an improper personal benefit.

Our bylaws require us to indemnify our directors and officers to the maximum extent not prohibited by the DGCL and allow us to indemnify other employees and agents as set forth in the DGCL. Subject to certain limitations, our bylaws also require us to advance expenses incurred by our directors and officers for the defense of any action for which indemnification is required or permitted.

We have entered, and intend to continue to enter, into separate indemnification agreements with our directors, officers and certain of our key employees, in addition to the indemnification provided for in our certificate of incorporation and bylaws. These agreements, among other things, require us to indemnify our directors, officers and key employees for certain expenses, including attorneys’ fees, judgments, penalties, fines and settlement amounts actually incurred by these individuals in any action or proceeding arising out of their service to us or any of our subsidiaries or any other company or enterprise to which these individuals provide services at our request. Subject to certain limitations, our indemnification agreements also require us to advance expenses incurred by our directors, officers and key employees for the defense of any action for which indemnification is required or permitted.

We believe that provisions of our certificate of incorporation, bylaws and indemnification agreements are necessary to attract and retain qualified directors, officers and key employees. We also maintain directors’ and officers’ liability insurance.

31


 

This description of the indemnification provisions of our certificate of incorporation, our bylaws and our indemnification agreements is qualified in its entirety by reference to these documents, each of which is attached as an exhibit to our Annual Report on Form 10-K.

At present, there is no pending litigation or proceeding involving any of our directors or executive officers as to which indemnification is required or permitted, and we are not aware of any threatened litigation or proceeding that may result in a claim for indemnification.

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, executive officers or persons controlling us, we have been informed that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

Related Person Transaction Policy

Our board of directors adopted a written related person transactions policy providing that transactions with our directors, officers and holders of five percent or more of our voting securities and their affiliates, each a related person, must be approved by our audit committee. Pursuant to this policy, the audit committee has the primary responsibility for reviewing and approving or disapproving “related person transactions,” which are transactions between us and related persons in which a related person has or will have a direct or indirect material interest. For purposes of this policy, a related person is defined as a director, executive officer, nominee for director, or greater than 5% beneficial owner of our common stock, in each case since the beginning of the most recently completed year, and their immediate family members.

As appropriate for the circumstances, the audit committee will review and consider:

 

the related person’s interest in the related person transaction;

 

whether the transaction was undertaken in the ordinary course of our business; and

 

whether the terms of the transaction are no less favorable to us than terms that could have been reached with an unrelated third party.

32


 

PRINCIPAL STOCKHOLDERS

The following table sets forth information, to the extent known by us or ascertainable from public filings, with respect to the beneficial ownership of our common stock as of April 19, 2021 by:

 

each person, or group of affiliated persons, who is known by us to be the beneficial owner of five percent or more of our outstanding common stock

 

each of our directors;

 

each of our named executive officers; and

 

all of our directors and executive officers as a group.

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Under those rules, beneficial ownership includes any shares as to which the individual or entity has sole or shared voting power or investment power, and includes securities that the individual or entity has the right to acquire, such as through the exercise of stock options, within 60 days of April 19, 2021. Except as noted by footnote, and subject to community property laws where applicable, we believe, based on the information provided to us, that the persons and entities named in the table below have sole voting and investment power with respect to all common stock shown as beneficially owned by them, subject to community property laws, where applicable.

Each individual or entity shown on the table has furnished information with respect to beneficial ownership. Except as otherwise indicated below, the address of each officer, director and five percent stockholder listed below is c/o Kaleido Biosciences, Inc., 65 Hayden Avenue, Lexington, MA 02421.

The percentage of beneficial ownership in the table below is based on a total of 42,518,653 shares of our common stock outstanding as of April 19, 2021.

 

 

 

COMMON STOCK

BENEFICIALLY OWNED

 

 

SHARES

PERCENTAGE

5% or Greater Shareholders

 

 

 

 

 

 

 

 

 

Flagship Pioneering Funds (1)

 

 

19,575,710

 

 

 

46

%

 

FMR LCC (2)

 

 

2,386,907

 

 

 

6

%

 

Directors, Named Executive Officers and Other Executive Officer

 

 

 

 

 

 

 

 

 

Daniel L. Menichella

 

 

20,000

 

 

*

 

 

Katharine Knobil, M.D. (3)

 

 

349,001

 

 

 

1

%

 

William Duke, Jr. (4)

 

 

84,375

 

 

*

 

 

Jerald Korn (5)

 

 

118,125

 

 

*

 

 

Johan van Hylckama Vlieg (6)

 

 

85,313

 

 

*

 

 

Michael Bonney (7)

 

 

2,516,679

 

 

 

5

%

 

Bonnie Bassler, Ph.D. (8)

 

 

28,125

 

 

*

 

 

Grady Burnett (9)

 

 

34,375

 

 

*

 

 

Theo Melas-Kyriazi (10)

 

 

64,510

 

 

*

 

 

Jean Mixer (11)

 

 

32,542

 

 

*

 

 

Anne Prener, M.D., Ph.D.(12)

 

 

10,000

 

 

*

 

 

Anthony G. Quinn, M.D.,Ph.D. (13)

 

 

62,853

 

 

*

 

 

Geoffrey von Maltzahn, Ph.D. (14)

 

 

342,366

 

 

*

 

 

All executive officers and directors as a group (13 persons)

 

 

3,748,264

 

 

 

9

%

 

 

* Represents beneficial ownership of less than one percent.

 

(1)

Consists of (a) 42,865 shares of common stock held by Flagship VentureLabs IV LLC (“VentureLabs IV”); (b) 1,685,444 shares of common stock held by Flagship Ventures Fund IV, L.P. (“Flagship Fund IV”); (c) 216,451 shares of common stock held by Flagship Ventures Fund 2007, L.P. (“Flagship 2007”); (d) 2,500,000 shares of common stock held by Flagship VentureLabs V LLC (“VentureLabs V”); (e) 2,560,096 Flagship Ventures Fund V, L.P. (“Flagship Fund V”); (f) 6,560,523 shares of common stock held by Nutritional Health Disruptive Innovation Fund, L.P. (“NHDI Fund”); (g) 639,360 shares of common stock held by Nutritional Health Side Fund, L.P. (“NHS Fund”); (h)

33


 

 

2,982,639 shares of common stock held by Flagship Ventures Opportunities Fund I, L.P. (“Opportunities Fund I”); (i) 738,333 shares of common stock held by Nutritional Health LTP Fund, L.P. (“Nutritional LTP”); and (j) 1,649,999 shares of common stock held by Cadena LLC (“Cadena” and together with VentureLabs IV, Flagship Fund IV, Flagship 2007, VentureLabs V, Flagship Fund V, NHDI Fund, NHS Fund, Opportunities Fund I and Nutritional LTP, the “Flagship Funds”). Flagship Fund IV is a member of VentureLabs IV and also serves as its manager.  The general partner of Flagship Fund IV is Flagship Ventures Fund IV General Partner LLC (“Flagship Fund IV GP”). The general partner of Flagship 2007 is Flagship Ventures Fund 2007 General Partner LLC (“Flagship 2007 GP”). Flagship Fund V is a member of VentureLabs V. The manager of VentureLabs V is Flagship VentureLabs V Manager LLC (“VentureLabs V Manager”).  The manager of VentureLabs V Manager is Flagship Pioneering, Inc. (“Flagship Pioneering”). The general partner of Flagship Fund V, NHDI Fund, and NHS Fund is Flagship Ventures Fund V General Partner LLC (“Flagship Fund V GP”). The general partner of Opportunities Fund I is Flagship Ventures Opportunities Fund I General Partner LLC (“Opportunities Fund I GP”). The general partner of Nutritional LTP is Nutritional Health LTP Fund General Partner LLC (“Nutritional LTP GP”). Noubar B. Afeyan Ph.D. is the sole member and manager of Nutritional LTP GP. Dr. Afeyan is the sole manager of Flagship Fund IV GP, Flagship 2007 GP, Flagship Fund V GP, Opportunities Fund I GP and Cadena and sole director and shareholder of Flagship Pioneering. Dr. Afeyan may be deemed to have sole voting, dispositive and investment control over all shares held by the Flagship Funds. The mailing address of the Flagship Funds is 55 Cambridge Parkway, Suite 800E, Cambridge Massachusetts 02142.

 

(2)

The information in the table above concerning the number of shares beneficially owned by FMR LLC was obtained from a Schedule 13G filed with the SEC by FMR LLC on February 7, 2020 reporting beneficial ownership at February 6, 2020.

 

(3)

Consists of 349,001 shares of common stock underlying options exercisable within 60 days of April 19, 2021. Dr. Knobil resigned from her employment effective in January 2021.

 

(4)

Consists of 113,750 shares of common stock underlying options exercisable within 60 days of April 19, 2021.

 

(5)

Consists of 118,125 shares of common stock underlying options exercisable within 60 days of April 19, 2021.

 

(6)

Consists of 85,313 shares of common stock underlying options exercisable within 60 days of April 19, 2021.

 

(7)

Consists of (i) 1,354,676 shares of common stock held directly by Mr. Bonney, (ii) 937,003 shares of common stock underlying options exercisable within 60 days of April 19, 2021 and (iii) 225,000 shares held in the Michael and Alison Bonney 2016 Irrevocable Trust, which has an independent trustee. Michael Bonney is a holder of 5% or more of our capital stock.

 

(8)

Consists of 28,125 shares of common stock underlying options exercisable within 60 days of April 19, 2021.

 

(9)

Consists of 34,375 shares of common stock underlying options exercisable within 60 days of April 19, 2021.

 

(10)

Consists of (i) 33,333 shares of common stock held directly by Mr. Melas-Kyriazi and (ii) 31,177 shares of common stock underlying options exercisable within 60 days of April 19, 2021.

 

(11)

Consists of 32,542 shares of common stock underlying options exercisable within 60 days of April 19, 2021.

 

(12)

Consists of 10,000 shares of common stock underlying options exercisable within 60 days of April 19, 2021.

 

(13)

Consists of 31,603 shares of common stock held directly by Dr. Quinn and (ii) 31,250 shares of common stock underlying options exercisable within 60 days of April 19, 2021.

 

(14)

Consists of 342,466 shares of common stock held directly by Dr. von Maltzahn and (ii) shares of common stock underlying options exercisable within 60 days of April 2021.

 

 

 

 

 

 

34


 

 

REPORT OF THE AUDIT COMMITTEE

The audit committee is appointed by the board of directors to assist the board of directors in fulfilling its oversight responsibilities with respect to (1) the integrity of Kaleido’s financial statements and financial reporting process and systems of internal controls regarding finance, accounting, and compliance with legal and regulatory requirements, (2) the qualifications, independence, and performance of Kaleido’s independent registered public accounting firm, (3) the performance of Kaleido’s internal audit function, if any, and (4) other matters as set forth in the charter of the audit committee approved by the board of directors.

Management is responsible for the preparation of Kaleido’s financial statements and the financial reporting process, including its system of internal control over financial reporting and its disclosure controls and procedures. The independent registered public accounting firm is responsible for performing an audit of Kaleido’s financial statements in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB) and issuing a report thereon. The audit committee’s responsibility is to monitor and oversee these processes.

In connection with these responsibilities, the audit committee reviewed and discussed with management and the independent registered public accounting firm the audited consolidated financial statements of Kaleido for the fiscal year ended December 31, 2020. The audit committee also discussed with the independent registered public accounting firm the matters required to be discussed by the PCAOB’s Auditing Standard No. 1301, Communication with Audit Committees. In addition, the audit committee received written communications from the independent registered public accounting firm confirming their independence as required by the applicable requirements of the PCAOB and has discussed with the independent registered public accounting firm their independence.

Based on the reviews and discussions referred to above, the audit committee recommended to the board of directors that the audited consolidated financial statements of Kaleido be included in Kaleido’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, that was filed with the SEC. The information contained in this report shall not be deemed to be (1) “soliciting material,” (2) “filed” with the SEC, (3) subject to Regulations 14A or 14C of the Exchange Act, or (4) subject to the liabilities of Section 18 of the Exchange Act. This report shall not be deemed incorporated by reference into any of our other filings under the Exchange Act or the Securities Act, except to the extent that we specifically incorporate it by reference into such filing.

 

 

THE AUDIT COMMITTEE OF THE BOARD OF

 

DIRECTORS OF KALEIDO BIOSCIENCES, INC.

 

 

 

Theo Melas-Kyriazi, Chairperson

 

 

 

Jean Mixer

 

 

 

Grady Burnett

 

May 4, 2021

35


 

HOUSEHOLDING

Some banks, brokers and other nominee record holders may be participating in the practice of “householding” proxy statements and annual reports. This means that only one copy of our documents, including the annual report to stockholders and proxy statement, may have been sent to multiple stockholders in your household. We will promptly deliver a separate copy of either document to you upon written or oral request to Kaleido Biosciences, Inc., 65 Hayden Avenue, Lexington, MA 02421, Attention: Corporate Secretary, telephone: (617) 674-9000. If you want to receive separate copies of the proxy statement or annual report to stockholders in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker or other nominee record holder, or you may contact us at the above address and phone number.

STOCKHOLDER PROPOSALS

A stockholder who would like to have a proposal considered for inclusion in our 2022 proxy statement must submit the proposal in accordance with the procedures outlined in Rule 14a-8 of the Exchange Act so that it is received by us no later than January 5, 2022. However, if the date of the 2022 Annual Meeting of Stockholders is changed by more than 30 days from the date of the previous year’s meeting, then the deadline is a reasonable time before we begin to print and send our proxy statement for the 2022 Annual Meeting of Stockholders. SEC rules set standards for eligibility and specify the types of stockholder proposals that may be excluded from a proxy statement. Stockholder proposals should be addressed to Kaleido Biosciences, Inc., 65 Hayden Avenue, Lexington, MA 02421, Attention: Corporate Secretary.

If a stockholder wishes to propose a nomination of persons for election to our board of directors or present a proposal at an annual meeting but does not wish to have the proposal considered for inclusion in our proxy statement and proxy card, our bylaws establish an advance notice procedure for such nominations and proposals. Stockholders at an annual meeting may only consider proposals or nominations specified in the notice of meeting or brought before the meeting by or at the direction of the board of directors or by a stockholder of record on the record date for the meeting, who is entitled to vote at the meeting and who has delivered timely notice in proper form to our corporate secretary of the stockholder’s intention to bring such business before the meeting.

The required notice must be in writing and received by our corporate secretary at our principal executive offices not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year’s annual meeting. However, in the event that the date of the annual meeting is advanced by more than 30 days, or delayed by more than 60 days, from the first anniversary of the preceding year’s annual meeting, a stockholder’s notice must be so received no earlier than the 120th day prior to such annual meeting and not later than the close of business on the later of (A) the 90th day prior to such annual meeting and (B) the tenth day following the day on which notice of the date of such annual meeting was mailed or public disclosure of the date of such annual meeting was made, whichever first occurs. For stockholder proposals to be brought before the 2022 Annual Meeting of Stockholders, the required notice must be received by our corporate secretary at our principal executive offices no earlier than February 14, 2022 and no later than March 16, 2022. Stockholder proposals and the required notice should be addressed to Kaleido Biosciences, Inc., 65 Hayden Avenue, Lexington, MA 02421, Attention: Investor Relations / Corporate Secretary.

OTHER MATTERS

Our board of directors does not know of any other matters to be brought before the Annual Meeting. If any other matters not mentioned in this proxy statement are properly brought before the meeting, the individuals named in the enclosed proxy intend to use their discretionary voting authority under the proxy to vote the proxy in accordance with their best judgment on those matters.

 

 

 

 

36


 

 

 

 

YOUR VOTE IS IMPORTANT! PLEASE VOTE BY: INTERNET Go To: www.proxypush.com/KLDO • Cast your vote online • Have your Proxy Card ready P.O. BOX 8016, CARY, NC 27512-9903 • Follow the simple instructions to record your vote PHONE Call 1-866-390-5421 • Use any touch-tone telephone • Have your Proxy Card ready • Follow the simple recorded instructions MAIL • Mark, sign and date your Proxy Card • Fold and return your Proxy Card in the postage-paid envelope provided You must register to attend the meeting online and/or participate at www.proxydocs.com/KLDO Kaleido Biosciences, Inc. Annual Meeting of Stockholders For Stockholders as of record on April 19, 2021 TIME: Monday, June 14, 2021 09:00 AM, Eastern Time PLACE: Annual Meeting to be held live via the Internet - please visit www.proxydocs.com/KLDO for registration details This proxy is being solicited on behalf of the Board of Directors The undersigned hereby appoints Daniel L. Menichella and Jerald Korn, and each or either of them, as the true and lawful attorneys of the undersigned, with full power of substitution and revocation, and authorizes them, and each of them, to vote all the shares of capital stock of Kaleido Biosciences, Inc. which the undersigned is entitled to vote at said meeting and any adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any adjournment thereof, conferring authority upon such true and lawful attorneys to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given. THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED IDENTICAL TO THE BOARD OF DIRECTORS RECOMMENDATION. This proxy, when properly executed, will be voted in the manner directed herein. In their discretion, the Named Proxies are authorized to vote upon such other matters that may properly come before the meeting or any adjournment or postponement thereof. You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board of Directors’ recommendation. The Named Proxies cannot vote your shares unless you sign (on the reverse side) and return this card. PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE

 


 

Proposal_Page - VIFL Kaleido Biosciences, Inc. Annual Meeting of Stockholders Please make your marks like this: X Use dark black pencil or pen only THE BOARD OF DIRECTORS RECOMMENDS A VOTE: FOR ON PROPOSALS 1 AND 2 BOARD OF DIRECTORS PROPOSAL YOUR VOTE RECOMMENDS 1. To elect three Class II directors to our board of directors, to serve until the 2024 annual meeting of stockholders and until his or her successor is duly elected and qualified: FOR WITHHOLD 1.01 Daniel L. Menichella FOR #P2# #P2# 1.02 Jean Mixer FOR #P3# #P3# 1.03 Anthony Quinn FOR #P4# #P4# FOR AGAINST ABSTAIN 2. To ratify the appointment of Deloitte & Touche LLP as our independent registered public FOR accounting firm for the fiscal year ending December 31, 2021 #P5# #P5# #P5# You must register to attend the meeting online and/or participate at www.proxydocs.com/KLDO Authorized Signatures - Must be completed for your instructions to be executed. Please sign exactly as your name(s) appears on your account. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy/Vote Form. Signature (and Title if applicable) Date Signature (if held jointly) Date