8-K
PALISADE BIO, INC. (PALI)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d)
of
the Securities Exchange Act of 1934
Dateof Report (Date of earliest event reported): September 11, 2023 (September 5, 2023)
PALISADE
BIO, INC.
(Exactname of Registrant as Specified in Its Charter)
| Delaware | 001-33672 | 52-2007292 |
|---|---|---|
| (State or Other Jurisdiction<br><br> <br>of Incorporation) | (Commission<br><br> <br>File Number) | (IRS Employer<br><br> <br>Identification No.) |
| 7750 El Camino Real<br><br> <br>Suite 5200 | ||
| --- | --- | |
| Carlsbad, California | 92009 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’stelephone number, including area code: (858) 704-4900
N/A
(Formername or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written<br> communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting<br> material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement<br> communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement<br> communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities
registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.01 per share | PALI | Nasdaq Capital Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item1.01. Entry into a Material Definitive Agreement.
The disclosure set forth in Item 5.02 of this Current Report on Form 8-K to the extent required by this Item 1.01 is incorporated herein by reference.
Item3.02. Unregistered Sale of Equity Securities.
The disclosure in Item 5.02 of this Current Report on Form 8-K regarding the issuance of the Inducement Grants to Mitchell Jones, M.D., Ph.D. are incorporated by reference into this Item 3.02. The Inducement Grants are exempt from the registration requirements of the Securities Act of 1933, as amended, by virtue of Section 4(a)(2) thereof and/or Regulation D promulgated thereunder.
Item 5.02.Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of CertainOfficers.
Appointmentof Mitchell Jones, M.D., Ph.D. as Chief Medical Officer.
On September 11, 2023, Palisade Bio, Inc. (the “Company”) announced that Mitchell Jones, M.D., Ph.D. (“Dr. Jones”) has been appointed Chief Medical Officer effective September 5, 2023 (the “Effective Date”).
Dr. Jones, age 45, has over 16 years of medical and pharmaceutical experience directing translational and clinical activities for therapeutic product candidates in inflammatory bowel disease, metabolic disease, hepatic infectious disease, and oncology. During his career, Dr. Jones has served in a number of positions related to the strategy and development of novel therapies. From November 2022 until joining the Company, Dr. Jones served as VP, Corporate Development and Strategy for Chemomab, Inc. (Nasdaq: CMMB), a clinical stage biotechnology company focused on fibro-inflammatory diseases. Additionally, since November 2022, he has served in as a consultant for Novome Biotechnologies, Inc. and xBiome, Inc., both with development programs in inflammatory bowel disease. Additionally, from August 2020 through November 2022, Dr. Jones served as VP, Clinical Discovery and Development for Finch Therapeutics Group, Inc. (Nasdaq: FNCH), a company focused on developing immune modulating therapies including for serious GI infection and inflammatory bowel disease. From May 2015 through July 2020, Dr. Jones served as VP, Translational and Clinical Development for Biora Therapeutics, Inc. (Nasdaq: BIOR), a company focused on the development of targeted and local acting immune modulating therapies for the treatment of inflammatory bowel disease, where he assisted in securing over $100 million in investor capital. Dr. Jones holds a BS in Physiology, a Master of Biomedical Engineering, a Doctor of Medicine, and a Doctor of Biomedical Philosophy, all from McGill University in Canada.
There is no arrangement or understanding between Dr. Jones and any other person pursuant to which Dr. Jones was selected as the Company’s Chief Medical Officer. Except as described herein, there are no existing or currently proposed transactions to which the Company or any of its subsidiaries is a party and in which Dr. Jones has a direct or indirect material interest. There are no family relationships between Dr. Jones and any of the directors or officers of the Company or any of its subsidiaries.
EmploymentRelated Contracts
GeneralTerms
On September 5, 2023, the Company and Dr. Jones entered into an at-will employment agreement (the “Employment Agreement”). Pursuant to the terms of the Employment Agreement, Dr. Jones (i) will receive a base salary of $415,000 per year and will be eligible to receive an annual cash bonus based on the achievement of certain performance goals with a target of 40% of his base salary and (ii) will be eligible to receive an annual market-based stock option grant as determined by the Board of Directors of the Company (“Board”), or a committee thereof.
InducementGrants
As an inducement to Dr. Jones’ employment, on September 5, 2023 (“Grant Date”) the Company issued Dr. Jones (i) an option to purchase 75,000 shares of the Company’s common stock (“Inducement Options”) and (ii) 54,700 restricted stock units (“Inducement RSUs”) (collectively, the Inducement Options and Inducement RSUs, the “Inducement Grants”). The Inducement Options (i) have a term of ten (10) years from the Grant Date, (ii) an exercise price per share of $0.6897, the closing price of the Company’s common stock on the Grant Date, and (iii) vest quarterly over three (3) years beginning on the Grant Date. The Inducement RSUs vest as follows: (i) 4,556 shares vest on November 6, 2023 (“Initial RSU Vest Date”) and (ii) the remaining 50,144 vest in equal installments over the following eleven (11) quarterly periods from the Initial RSU Vest Date. The Inducement Grants were issued pursuant to the Company’s 2021 Inducement Plan, as amended (the “Inducement Plan”) and in accordance with Nasdaq Listing Rule 5635(c)(4).
SeveranceBenefits
Pursuant to the terms of the Employment Agreement, if the Company terminates Dr. Jones’ employment without “Cause” or Dr. Jones resigns for “Good Reason,” as each term is defined in the Employment Agreement, Dr. Jones will be eligible for the continued payment of his base salary (in accordance with regular payroll practices) and COBRA benefits for nine (9) months following the termination date (collectively, the “Severance Benefits”).
In the event that the Company terminates Dr. Jones’ employment without “Cause” or Dr. Jones resigns for “Good Reason” within three (3) months immediately prior to or twelve (12) months after the effective date of a “Change in Control” as such term is defined in the Employment Agreement (the “Change in Control Period”), then in lieu of the Severance Benefits described above, Dr. Jones will be eligible for (i) a lump sum payment equal to the sum of (x) twelve (12) months of base salary plus (y) 100% of the target bonus in effect at the time of termination, (ii) the continued payment of COBRA benefits for twelve (12) months, and (iii) the immediately and full acceleration of 100% of outstanding equity awards that are subject to time-based vesting (collectively, the “Change in Control Severance Benefits”).
The Severance Benefits and Change in Control Severance Benefits, as applicable, are contingent on Dr. Jones entering into release of claims satisfactory to the Company.
OtherAgreements
Dr. Jones also entered into the Company’s standard (i) confidential information and invention assignment agreement governing the ownership of any inventions and confidential information and (ii) indemnification agreement for the Company’s officers and directors.
The foregoing summary of certain terms of the Employment Agreement are qualified in their entirety by the terms of the Employment Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.01.
Departureof Herbert Slade, MD, FAAAI as the Company’s Chief Medical Officer
On September 5, 2023, in connection with the hiring of Dr. Jones as described in this Current Report on Form 8-K, Dr. Herbert Slade ceased to serve as the Company’s Chief Medical Officer. Dr. Slade will continue to provide services to the Company on a consulting basis.
Item 8.01 Other Events
On September 11, 2023, the Company issued a press release announcing (i) Dr. Jones’ appointment as Chief Medical Officer and (ii) the issuance of the Inducement Grants issued pursuant to the Inducement Plan to Dr. Jones. A copy of the press release is attached to this Current Report on Form 8-K as Exhibit 99.01.
Item 9.01 Financial Statement and Exhibits.
| Exhibit<br><br> <br>No. | Description |
|---|---|
| 10.01 | Form of Employment Agreement with Mitchell Jones, dated September 5, 2023 |
| 99.01 | Press Release dated September 11, 2023 |
| 104 | Cover<br> Page Interactive Data File (embedded within the Inline XBRL document) |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report on Form 8-K to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: | September<br> 11, 2023 | Palisade<br> Bio, Inc. | |
|---|---|---|---|
| By: | /s/ J.D. Finley | ||
| J.D.<br> Finley | |||
| Chief<br> Executive Officer |
E****xhibit10.01
PALISADEBIO, INC.
EXECUTIVEEMPLOYMENT AGREEMENT
This Executive Employment Agreement (the “Agreement”) is made and entered into effective as of September 5, 2023 (the “Effective Date”), by and between Mitchell Jones, M.D., Ph.D. (“Executive*”*) and Palisade Bio, Inc. (the “Company”).
Now,Therefore, in consideration of the mutual promises and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
1. Employmentby the Company.
**1.1 Position.**Executive shall serve as the Company’s Chief Medical Officer and shall report to the Company’s Chief Executive Officer (“CEO”). During the term of Executive’s employment with the Company, Executive will devote Executive’s best efforts and substantially all of Executive’s business time and attention to the business of the Company, except for approved vacation periods and reasonable periods of illness or other incapacities permitted by the Company’s general employment policies.
1.2 Dutiesand Location. Executive shall perform such duties as are customarily associated with the position of Chief Medical Officer and such other duties as are assigned to Executive by the CEO. Executive will provide services remotely, but will be required to travel to the Company’s primary office location shall be the Company’s headquarters located in Carlsbad, California. Subject to the terms of this Agreement, the Company reserves the right to (a) reasonably require Executive to perform Executive’s duties at places other than Executive’s primary office location from time to time and to require reasonable business travel, and (b) modify Executive’s job title and duties as it deems necessary and appropriate in light of the Company’s needs and interests from time to time.
1.3 Policiesand Procedures. The employment relationship between the parties shall be governed by the general employment policies and practices of the Company, except that when the terms of this Agreement differ from or are in conflict with the Company’s general employment policies or practices, this Agreement shall control.
2. CashCompensation.
2.1 BaseSalary. For services to be rendered hereunder, Executive shall receive a base salary at the rate of $415,000 per year (the “BaseSalary”), less standard payroll deductions and withholdings and payable in accordance with the Company’s regular payroll schedule. The Board (or the Compensation Committee thereof) may review Executive’s Base Salary for adjustment from time to time.
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**2.2 Bonus.**Executive will be eligible to be considered for a discretionary annual performance bonus of up to 40% of the Base Salary, based on achievement of individual and/or corporate performance targets, metrics and/or objectives to be determined and approved by the Board or the Compensation Committee thereof, including pursuant to an annual incentive plan or similar plan approved by the Board or the Compensation Committee thereof, if any. Any such bonus would be paid after the close of the fiscal year and after determination by the Board (or the Compensation Committee thereof) of (i) the level of achievement of the applicable individual and corporate performance targets, metrics and/or objectives and (ii) the amount of the annual incentive compensation earned by Executive (if any). No annual incentive compensation is guaranteed and, in addition to the other conditions for earning such compensation, Executive must remain an employee in good standing of the Company on the annual incentive compensation payment date in order to be eligible for any annual incentive compensation. The Board (or the Compensation Committee thereof) may review Executive’s annual performance bonus amount for adjustment from time to time. Executive’s first year discretionary performance bonus will not be pro-rated for Executive’s time of employment and Executive will be eligible to earn his full target annual performance bonus amount based upon a full year Base Salary, subject to the achievement of the achievement of the corporate and individual performance targets, metrics, and/or objectives.
3. Reserved.
4. StandardCompany Benefits; Expenses. Executive shall, in accordance with Company policy and the terms and conditions of the applicable Company benefit plan documents, be eligible to participate in the benefit and fringe benefit programs provided by the Company to its executive officers and other employees from time to time. Any such benefits shall be subject to the terms and conditions of the governing benefit plans and policies and may be changed by the Company in its discretion. The Company will reimburse Executive for reasonable travel, entertainment or other expenses incurred by Executive in furtherance or in connection with the performance of Executive’s duties hereunder, in accordance with the Company’s expense reimbursement policy as in effect from time to time.
5. EquityAwards.
5.1 InducementGrant. Executive shall be entitled to participate in the Company’s 2021 Equity Incentive Plan, as amended, (the “2021Plan”) and to the extent applicable and lawful, the Company’s 2021 Inducement Plan, as amended (“Inducement Plan”) in accordance with their terms. Subject to approval of the Company’s Compensation Committee and contingent upon Executive’s execution of this Agreement, Executive shall be entitled to receive 54,700 inducement restricted stock units (“InducementRSUs”) and 75,000 inducement common stock purchase options (“Inducement Options”) (collectively, the “Inducement Securities”) on the date Executive commences his employment (“Inducement GrantDate”). The Inducement Securities will vest quarterly over three (3) years with: (i) the vesting of the Inducement Options commencing on the Inducement Grant Date and (ii) the vesting of the Inducement RSUs will be adjusted to the Company’s current vesting schedule of employee restricted stock units, with 8.33% of the applicable Inducement RSUs vesting on November 6, 2023, and the balance vesting in equal quarterly amounts over the following eleven (11) quarters. The Inducement Options will have an exercise price equal to $0.6897, the closing price of the Company’s common stock on the Inducement Grate Date, and a term of ten (10) years from issuance. All of the Inducement Securities will be issued pursuant to the Inducement Plan. To the extent the Inducement Options do not qualify for incentive stock option treatment at grant, such amount will be treated as a nonqualified stock option.
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5.2 AnnualOption Awards. Executive will be eligible to receive an annual market based stock option grant (the “Annual Stock Option Grant”) issued pursuant to the terms of one of the Company’s equity incentive plans. The actual amount of such grant, if any, will be determined by the Board (or a committee thereof) based upon Company performance and any other factors that the Board (or a committee thereof), in its reasonable good faith discretion, deems appropriate. Executive’s achievement of such milestones, as well as the amount of any Annual Stock Option Grant, if any, shall be determined by the Board (or a committee thereof) in its reasonable good faith discretion. In connection with such grants, the Executive shall enter into the Company’s standard stock option agreement which will incorporate the vesting schedule and other terms as determined by the Board (or a committee thereof).
5.3 AdditionalGrants. Executive may be eligible to receive additional grants of Company equity awards in the sole discretion of and subject to the approval of the Board.
6. ProprietaryInformation Obligations.
6.1 ProprietaryInformation Agreement. Executive will continue to abide by the Company’s standard Confidential Information and Invention Assignment Agreement attached hereto as Exhibit A (“Proprietary Agreement”).
6.2 Third-PartyAgreements and Information. Executive represents and warrants that Executive’s employment by the Company does not conflict with any prior employment or consulting agreement or other agreement with any third party, and that Executive will perform Executive’s duties to the Company without violating any such agreement. Executive represents and warrants that Executive does not possess confidential information arising out of prior employment, consulting, or other third party relationships, that would be used in connection with Executive’s employment by the Company, except as expressly authorized by that third party. During Executive’s employment by the Company, Executive will use in the performance of Executive’s duties only information that is generally known and used by persons with training and experience comparable to Executive’s own, common knowledge in the industry, otherwise legally in the public domain, or obtained or developed by the Company or by Executive in the course of Executive’s work for the Company.
7. OutsideActivities and Non-Competition and No-Solicit.
7.1 OutsideActivities. Throughout Executive’s employment with the Company, Executive may serve on one (1) corporate, civic, not-for-profit board or committee so long as such activities do not interfere with the performance of Executive’s duties hereunder or present a conflict of interest with the Company or its affiliates. Subject to the restrictions set forth herein, and only with prior written disclosure to and consent of the CEO, Executive may engage in other types of business or public activities. The Company may rescind such consent, if the Board determines, in its sole discretion, that such activities compromise or threaten to compromise the Company’s or its affiliates’ business interests or conflict with Executive’s duties to the Company or its affiliates.
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7.2 Non-CompetitionDuring Employment. Except as otherwise provided in this Agreement, during Executive’s employment by the Company, Executive will not, without the express written consent of the Board, directly or indirectly serve as an officer, director, stockholder, employee, partner, proprietor, investor, joint venturer, associate, representative or consultant of any person or entity engaged in, or planning or preparing to engage in, business activity competitive with any line of business engaged in (or planned to be engaged in) by the Company or its affiliates; provided, however, that Executive may purchase or otherwise acquire up to (but not more than) one percent (1%) of any class of securities of any enterprise (without participating in the activities of such enterprise) if such securities are listed on any national or regional securities exchange. In addition, Executive will be subject to certain restrictions (including restrictions continuing after Executive’s employment ends) under the terms of the Proprietary Agreement.
7.3 Non-Solicitation. Executive agrees that during the period of employment with the Company and for twelve (12) months after the date Executive’s employment is terminated for any reason, Executive will not, either directly or through others, solicit or encourage or attempt to solicit or encourage any employee, independent contractor, or consultant of the Company to terminate his or her relationship with the Company in order to become an employee, consultant or independent contractor to or for any other person or entity.
8. Terminationof Employment; Severance and Change in Control Benefits.
8.1 At-WillEmployment. Executive’s employment relationship is at-will. Either Executive or the Company may terminate the employment relationship at any time, with or without Cause (as defined below) or advance notice. In the event Executive’s employment with the Company is terminated for any reason, Executive will be entitled to all of Executive’s earned compensation and benefits or otherwise as required by law through the date of termination. For the avoidance of doubt, Executive shall not be entitled to any additional compensation or benefits hereunder in the event Executive’s employment is terminated for Cause, due to Executive’s resignation without Good Reason, upon Executive’s death or Executive’s Disability (as defined below); provided that this Section 8.1 does not purport to alter (a) any separate agreement entered into after the Effective Date and pursuant which Executive is expressly entitled to benefits or other compensation on or after the events set forth in this sentence, including, if applicable, the grants issued pursuant to the Company’s equity incentive plans, or (b) any agreements between the Executive and any third party, including insurance policies or the like. If Executive’s employment terminates due to an Involuntary Termination (as defined below), Executive will be eligible to receive the additional compensation and benefits described in Sections 8.2 and 8.3, as applicable.
8.2 TerminationWithout Cause or Resignation for Good Reason Unrelated to Change in Control. If at any time following the Effective Date, except during the Change in Control Period (as defined below), (i) the Company terminates Executive’s employment without Cause (as defined below and other than as a result of Executive’s death or Disability), or (ii) Executive resigns for Good Reason (as defined below), and provided in any case such termination constitutes a “separation from service”, as defined under Treasury Regulation Section 1.409A-1(h)) (a “Separation from Service”) (such termination described in (i) or (ii), an “InvoluntaryTermination”), Executive shall be entitled to receive the following severance benefits, subject in all events to Executive’s compliance with Section 8.4 below:
(i) Executive shall receive severance pay in the form of continuation of Executive’s Base Salary in effect (ignoring any decrease that forms the basis for Executive’s resignation for Good Reason, if applicable) on the effective date of Executive’s Involuntary Termination for the nine (9) months (the “Severance Period”) after the date of such termination; and
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(ii) If Executive is eligible for and timely elects to continue Executive’s health insurance coverage under the Company’s group health plans under the Consolidated Omnibus Budget Reconciliation Act of 1985 or the state equivalent (“COBRA”) following Executive’s termination date, the Company will pay the COBRA group health insurance premiums for Executive and Executive’s eligible dependents until the earliest of (A) the close of the Severance Period, (B) the expiration of Executive’s eligibility for the continuation coverage under COBRA, or (C) the date when Executive becomes eligible for substantially equivalent health insurance coverage in connection with new employment or self-employment. For purposes of this Section, references to COBRA premiums shall not include any amounts payable by Executive under a Section 125 health care reimbursement plan under the U.S. Internal Revenue Code. Notwithstanding the foregoing, if at any time the Company determines, in its sole discretion, that it cannot pay the COBRA premiums without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then regardless of whether Executive elects continued health coverage under COBRA, and in lieu of providing the COBRA premiums, the Company will instead pay Executive on the last day of each remaining month of the Severance Period, a fully taxable cash payment equal to the COBRA premiums for that month, subject to applicable tax withholdings (such amount, the “Health Care BenefitPayment”). The Health Care Benefit Payment shall be paid in monthly installments on the same schedule that the COBRA premiums would otherwise have been paid and shall be equal to the amount that the Company would have otherwise paid for COBRA premiums, and shall be paid until the earlier of (i) expiration of the Severance Period or (ii) the date when Executive becomes eligible for substantially equivalent health insurance coverage in connection with new employment or self-employment.
The salary continuation payments described in this Section 8.2 will be paid in substantially equal installments on the Company’s regular payroll schedule and subject to standard deductions and withholdings over the Severance Period following termination; provided, however, that no payments will be made prior to the effectiveness of the Release (defined below). On the effective date of the Release, the Company will pay Executive the salary continuation payments that Executive would have received on or prior to such date in a lump sum under the original schedule but for the delay while waiting for the effectiveness of the release, with the balance of the cash severance being paid as originally scheduled.
8.3 TerminationWithout Cause or Resignation for Good Reason During Change in Control Period. In the event of an Involuntary Termination at any time following the Effective Date and during the time period commencing three (3) months immediately prior to the effective date of a Change in Control (as defined below) and ending on the date that is twelve (12) months after the effective date of a Change in Control (the “Change in Control Period”), in lieu of the payments and benefits described in Section 8.2, and subject in all events to Executive’s compliance with Section 8.4 below, the Executive shall be entitled to the following severance benefits:
(i) Executive shall receive a severance payment equal to the sum of (x) twelve (12) months’ (the “Change in Control Severance Period”) of Executive’s base salary in effect (ignoring any decrease that forms the basis for Executive’s resignation for Good Reason, if applicable) on the effective date of Executive’s Involuntary Termination plus (y) an amount equal to Executive’s target bonus in effect at the time of termination (as set forth in Section 2.2 above), or if none, the last target bonus in effect for Executive, less standard deductions and withholdings, to be paid in a lump sum no later than ten (10) days following the later of (A) the effectiveness of the Release (as defined below) or (B) the effective date of the Change in Control;
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(ii) If Executive is eligible for and timely elects to continue Executive’s health insurance coverage under the Company’s group health plans under COBRA following Executive’s termination date, the Company will pay the COBRA group health insurance premiums for Executive and Executive’s eligible dependents until the earliest of (A) the close of the Change in Control Severance Period, (B) the expiration of Executive’s eligibility for the continuation coverage under COBRA, or (C) the date when Executive becomes eligible for substantially equivalent health insurance coverage in connection with new employment or self-employment. For purposes of this Section, references to COBRA premiums shall not include any amounts payable by Executive under a Section 125 health care reimbursement plan under the U.S. Internal Revenue Code. Notwithstanding the foregoing, if at any time the Company determines, in its sole discretion, that it cannot pay the COBRA premiums without potentially incurring financial costs or penalties under applicable law (including, without limitation, Section 2716 of the Public Health Service Act), then regardless of whether Executive elects continued health coverage under COBRA, and in lieu of providing the COBRA premiums, the Company will instead pay Executive on the last day of each remaining month of the Change in Control Severance Period, a fully taxable cash payment equal to the Healthcare Benefit Payment. The Health Care Benefit Payment shall be paid in monthly installments on the same schedule that the COBRA premiums would otherwise have been paid and shall be equal to the amount that the Company would have otherwise paid for COBRA premiums, and shall be paid until the earlier of (i) expiration of the Change in Control Severance Period or (ii) the date when Executive becomes eligible for substantially equivalent health insurance coverage in connection with new employment or self-employment; and
(iii) Notwithstanding anything to the contrary set forth in any equity incentive plan or any award agreement, or successor thereto, the vesting of all of Executive’s then-outstanding stock awards, that are subject to time-based vesting shall be fully accelerated such that on the effective date of such termination one hundred percent (100%) of the shares subject to time-based vesting in such stock awards granted to Executive prior to the effective date of such termination shall be fully vested and immediately exercisable by Executive. Such fully vested awards will be exercisable within the later of (i) ninety (90) days from the date of termination or (ii) ninety (90) days from the date of the transaction resulting in the Change in Control. Treatment of any performance-based vesting equity awards will be governed solely by the terms of the agreements under which such awards were granted and will not be eligible to accelerate vesting pursuant to the foregoing provision.
8.4 Conditionsand Timing for Severance Benefits. The severance benefits set forth in Sections 8.2 and 8.3 above are expressly conditioned upon: (i) Executive’s continuing to comply with Executive’s obligations under Executive’s Proprietary Agreement; and (ii) Executive signing and not revoking a general release of legal claims in the form provided by the Company which shall include a nondisparagement provision and a full general release of claims against the Company and related persons and entities and a commitment from Executive to comply with Executive’s continuing obligations under Executive’s Proprietary Agreement, but will not include a release of any rights or claims for indemnification Executive may have pursuant to any written indemnification agreement with the Company to which Executive is a party, the Company’s bylaws, or applicable law (the “Release”) within the applicable deadline set forth therein and permitting the Release to become effective in accordance with its terms, which must occur no later than forty-five (45) days following the date of termination (the “Release Deadline”).
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8.5 Definitions. For purposes of this Agreement:
(i) “Cause” means, with respect to Executive, the occurrence of any of the following events: (i) Executive’s commission of any felony or any crime involving fraud, dishonesty or moral turpitude under the laws of the United States or any state thereof; (ii) Executive’s attempted commission of, or participation in, a fraud or act of dishonesty against the Company; (iii) Executive’s intentional, material violation of any contract, Company policy, or agreement between Executive and the Company or of any statutory duty owed to the Company that has not been cured, if curable, within fifteen (15) days after written notice from the Board (or a committee thereof) of such violation; (iv) Executive’s unauthorized use or disclosure of the Company’s confidential information or trade secrets; or (v) Executive’s gross misconduct that has not been cured, if curable, within fifteen (15) days after written notice from the Board requesting that the Executive cure such misconduct.
**(ii) *“Disability”***means the inability of Executive to engage in substantially gainful Company activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months, and shall be determined by the Board on the basis of such medical evidence as the Board deems warranted under the circumstances.
(iii) “GoodReason” means Executive’s resignation from employment with the Company (or successor to the Company, if applicable) due to any of the following actions taken by the Company (or successor to the Company, if applicable) without Executive’s prior written consent thereto: (1) a material reduction in Executive’s base salary, which the parties agree is a reduction of at least 10% of Executive’s base salary (unless pursuant to a salary reduction program applicable generally to the Company’s similarly situated employees); (2) a material reduction in Executive’s authority, duties or responsibilities; and (3) a breach of a material provision of this Agreement by the Company. Notwithstanding the foregoing, in order to resign for Good Reason, Executive must provide written notice to the Company within thirty (30) days after the first occurrence of the event giving rise to Good Reason setting forth the basis for Executive’s resignation and allow the Company at least thirty (30) days from receipt of such written notice to cure such event, and, if such event is not reasonably cured within such period, Executive’s resignation from all positions Executive then holds with the Company is effective not later than thirty (30) days after the expiration of the cure period.
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8.6 Section409A. It is intended that all of the benefits and other payments payable under this Agreement satisfy, to the greatest extent possible, an exemption from the application of Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”) and the regulations and other guidance thereunder and any state law of similar effect (collectively “Section 409A”), and this Agreement will be construed to the greatest extent possible as consistent with those provisions, and to the extent not so exempt, this Agreement (and any definitions hereunder) will be construed in a manner that complies with Section 409A, and any ambiguities herein shall be interpreted accordingly. Specifically, the benefits under this Agreement are intended to satisfy the exemptions from application of Section 409A provided under Treasury Regulations Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9) and each installment of severance benefits is a separate “payment” for purposes of Treasury Regulations Section 1.409A-2(b)(2)(i). However, if such exemptions are not available and Executive is, upon Separation from Service, a “specified employee” for purposes of Section 409A, then, solely to the extent necessary to avoid adverse personal tax consequences under Section 409A, the timing of the severance benefits payments shall be delayed until the earlier of (i) six (6) months and one day after Executive’s Separation from Service, or (ii) Executive’s death. Severance benefits shall not commence until Executive has a Separation from Service. If the severance benefits are not covered by one or more exemptions from the application of Section 409A and the Release could become effective in the calendar year following the calendar year in which Executive’s Separation from Service occurs, the Release will not be deemed effective, for purposes of payment of severance, any earlier than the Release Deadline. Except to the minimum extent that payments must be delayed because Executive is a “specified employee” or until the effectiveness of the Release, all severance amounts will be paid as soon as practicable in accordance with the Company’s normal payroll practices.
8.7 Section280G. If any payment or benefit Executive will or may receive from the Company or otherwise (a “Payment”) would (i) constitute a “parachute payment” within the meaning of Section 280G of the Code, and (ii) but for this sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then such Payment will be equal to the Reduced Amount (defined below). The “Reduced Amount” will be either (l) the largest portion of the Payment that would result in no portion of the Payment (after reduction) being subject to the Excise Tax or (2) the entire Payment, whichever amount after taking into account all applicable federal, state and local employment taxes, income taxes, and the Excise Tax (all computed at the highest applicable marginal rate, net of the maximum reduction in federal income taxes which could be obtained from a deduction of such state and local taxes), results in Executive’s receipt, on an after-tax basis, of the greatest amount of the Payment. If a reduction in the Payment is to be made so that the Payment equals the Reduced Amount, (x) the Payment will be paid only to the extent permitted under the Reduced Amount alternative, and the Executive will have no rights to any additional payments and/or benefits constituting the Payment, and (y) reduction in payments and/or benefits will occur in the following order: (1) reduction of cash payments; (2) cancellation of accelerated vesting of equity awards other than stock options; (3) cancellation of accelerated vesting of stock options; and (4) reduction of other benefits paid to Executive. In the event that acceleration of vesting of equity award compensation is to be reduced, such acceleration of vesting will be cancelled in the reverse order of the date of grant of Executive’s equity awards. In no event will the Company or any stockholder be liable to Executive for any amounts not paid as a result of the operation of this Section. The professional firm engaged by the Company for general tax purposes as of the day prior to the effective date of the change in control will perform the foregoing calculations. If the tax firm so engaged by the Company is serving as accountant or auditor for the acquirer, the Company will appoint a nationally recognized tax firm to make the determinations required hereunder. The Company will bear all expenses with respect to the determinations by such firm required to be made hereunder. If the tax firm determines that no Excise Tax is payable with respect to a Payment, either before or after the application of the Reduced Amount, it will furnish the Company and Executive with documentation that no Excise Tax is reasonably likely to be imposed with respect to such Payment. Any good faith determinations of the tax firm made hereunder will be final, binding and conclusive upon the Company and Executive.
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9. DisputeResolution. To ensure the rapid and economical resolution of disputes that may arise in connection with Executive’s employment with the Company, Executive and the Company agree that any and all disputes, claims, or causes of action, in law or equity, including but not limited to statutory claims, arising from or relating to the enforcement, breach, performance, or interpretation of this Agreement, Executive’s employment with the Company, or the termination of Executive’s employment from the Company, will be resolved pursuant to the Federal Arbitration Act, 9 U.S.C. §1-16, and to the fullest extent permitted by law, by final, binding and confidential arbitration conducted in San Diego, California by JAMS, Inc. (“JAMS”) or its successors, under JAMS’ then applicable rules and procedures for employment disputes (which can be found at https://www.jamsadr.com/rules-employment-arbitration/, and which will be provided to Executive on request); provided that the arbitrator shall: (a) have the authority to compel adequate discovery for the resolution of the dispute and to award such relief as would otherwise be permitted by law; and (b) issue a written arbitration decision including the arbitrator’s essential findings and conclusions and a statement of the award. Executive and the Company shall be entitled to all rights and remedies that either would be entitled to pursue in a court of law. Both Executive and the Companyacknowledge that by agreeing to this arbitration procedure, they waive the right to resolve any such dispute through a trial by juryor judge or administrative proceeding. The Company shall pay all filing fees in excess of those which would be required if the dispute were decided in a court of law, and shall pay the arbitrator’s fee. Nothing in this Agreement is intended to prevent either the Company or Executive from obtaining injunctive relief in court to prevent irreparable harm pending the conclusion of any such arbitration.
10. GeneralProvisions.
**10.1 Notices.**Any notices provided must be in writing and will be deemed effective upon the earlier of personal delivery (including personal delivery by fax or email) or the next day after sending by overnight carrier, to the Company at its primary office location and to Executive at the address as listed on the Company payroll.
**10.2 Severability.**Whenever possible, each provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in such jurisdiction to the extent possible in keeping with the intent of the Parties.
**10.3 Waiver.**Any waiver of any breach of any provisions of this Agreement must be in writing to be effective, and it shall not thereby be deemed to have waived any preceding or succeeding breach of the same or any other provision of this Agreement.
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10.4 CompleteAgreement. This Agreement, together with the Proprietary Agreement, and the Indemnification Agreement attached hereto as ExhibitB, constitutes the entire agreement between Executive and the Company with regard to the subject matter hereof and is the complete, final, and exclusive embodiment of the Company’s and Executive’s agreement with regard to this subject matter. This Agreement is entered into without reliance on any promise or representation, written or oral, other than those expressly contained herein, and it supersedes any other such promises, warranties or representations (including, but not limited to, the Prior Agreements). It cannot be modified or amended except in a writing signed by a duly authorized officer of the Company, with the exception of those changes expressly reserved to the Company’s discretion in this Agreement.
**10.5 Counterparts.**This Agreement may be executed in separate counterparts, any one of which need not contain signatures of more than one party, but both of which taken together will constitute one and the same Agreement.
**10.6 Headings.**The headings of the paragraphs hereof are inserted for convenience only and shall not be deemed to constitute a part hereof nor to affect the meaning thereof.
10.7 Successorsand Assigns. This Agreement is intended to bind and inure to the benefit of and be enforceable by Executive and the Company, and their respective successors, assigns, heirs, executors and administrators, except that Executive may not assign any of Executive’s duties hereunder and Executive may not assign any of Executive’s rights hereunder without the written consent of the Company, which shall not be withheld unreasonably.
10.8 TaxWithholding. All payments and awards contemplated or made pursuant to this Agreement will be subject to withholdings of applicable taxes in compliance with all relevant laws and regulations of all appropriate government authorities. Executive acknowledges and agrees that the Company has neither made any assurances nor any guarantees concerning the tax treatment of any payments or awards contemplated by or made pursuant to this Agreement. Executive has had the opportunity to retain a tax and financial advisor and fully understands the tax and economic consequences of all payments and awards made pursuant to the Agreement.
10.9 Choiceof Law. All questions concerning the construction, validity and interpretation of this Agreement will be governed by the laws of the State of California.
[Signature Page Follows]
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InWitness Whereof, the parties have executed this Agreement on the date first written above.
| Palisade Bio, Inc. | |
|---|---|
| By: | |
| Name: | J.D.<br> Finley |
| Title: | Chief<br> Executive Officer |
| Executive: Mitchell Jones | |
| Mitchell Jones, M.D., Ph.D. |
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ExhibitA
ProprietaryAgreement
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ExhibitB
IndemnificationAgreement
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Exhibit99.01
PalisadeBio Appoints GI Clinical Expert and Biotech Entrepreneur Mitchell Jones, M.D., Ph.D. as Chief Medical Officer
AnnouncesAwarding of Inducement Grant to New Chief Medical Officer
Carlsbad,CA – September 11, 2023 – Palisade Bio, Inc. (Nasdaq: PALI) (“Palisade” or the “Company”), a biopharmaceutical company advancing therapies for acute and chronic gastrointestinal (GI) complications, today announced the appointment of Mitchell Jones, M.D., Ph.D., as Chief Medical Officer.
Dr. Jones has a proven track record of successfully developing oral biotherapeutics and locally acting immunomodulating therapeutics designed to act locally within the gastrointestinal tract, including for inflammatory bowel disease. Throughout his career, Dr. Jones has established a reputation for not only developing technologies and implementing strategies to de-risk programs from the translational through the clinical development arc, but he has also monetized, through sale or going public, several of the assets he has developed.
“We are delighted to welcome Mitch to Palisade Bio as our Chief Medical Officer. His extensive experience in the GI space and demonstrated skill at launching and directing program strategy from early development through late-stage clinical studies or monetization will be instrumental as we move forward with our newly expanded GI-focused pipeline. His leadership and background in translational and clinical research related to locally acting therapeutics for the treatment of inflammatory bowel disease positions him as a valuable addition to the Palisade team,” commented J.D. Finley, Chief Executive Officer of Palisade Bio.
Dr. Jones added, “This is truly an exciting time for Palisade Bio. Patients with IBD have treatment options with low clinical response rates, side effects, and tolerability issues. I believe our recently acquired license to the assets of Giiant Pharma provides Palisade Bio with the potential to offer significantly new treatment options that could have a positive impact on the quality of life for patients living with IBD.”
Dr. Jones most recently served as Vice President of Corporate Development & Strategy at Chemomab Therapeutics, a Nasdaq-listed clinical-stage biotechnology company focused on the discovery and development of innovative therapeutics for fibrotic and inflammatory diseases with high unmet need. In his role at Chemomab, Dr. Jones was responsible for spearheading corporate development and strategy, including guiding program development and company strategy, evaluating and illustrating differentiation in the competitive landscape, directing external collaborations and strategic partnerships, supporting financings and evaluating potential mergers or acquisitions. Prior to Chemomab, he served as Vice President Clinical Discovery and Development at Nasdaq-listed Finch Therapeutics, where he contributed to a successful IPO and helped oversee the early clinical development of novel therapeutics for treating IBD, chronic hepatitis B virus infection, and immunotherapy in solid tumors. Additionally, he served as Vice President, Innovation and Clinical Translational Development at Nasdaq-listed Biora Therapeutics, formerly known as Progenity, where he developed and implemented a strategic roadmap encompassing all aspects of the business while contributing to both a $125 million venture financing and the company’s subsequent IPO. During his tenure at Biora, Dr. Jones also served as Vice President of Translational and Clinical Development where he successfully built the GI therapeutics division.
Additionally, Dr. Jones played an instrumental role as Head of Research & Development (CMO/CSO) and Founder of Interface Therapeutics where he was successful at developing a novel sampling platform that used multi-omics analysis of samples from remote sections of GI tract to discover and develop locally acting therapeutics including for IBD. Interface Therapeutics was acquired by Biora Therapeutics (formerly Progenity). Dr. Jones began his career as the founder of Micropharma, serving as Head of Research & Development (CMO/CSO) where he discovered, developed, and implemented clinical drug development programs, including all phases of clinical development, for microbiome-based therapeutics for metabolic and inflammatory disease. Dr. Jones is the author or co-author of numerous scientific publications and an inventor on almost 200 filed or granted patents.
Dr. Jones received his M.D. and Ph.D. degrees, and a Masters in biomedical engineering and a Bachelor of Science degree, from McGill University in Canada.
InducementGrant
As an inducement for Dr. Jones to join the Company as CMO, the Compensation Committee of the Company’s Board approved the grant of an inducement award in accordance with Nasdaq Listing Rule 5635(c)(4). The inducement grant was made effective as of and contingent upon the commencement of Dr. Jones’ employment with the Company on September 5, 2023, and consists of: (i) 54,700 restricted stock units, or RSUs and (ii) 75,000 common stock purchase options. The options have a term of ten (10) years, an exercise price per share of $0.6897, and vest quarterly over three (3) years provided that Mr. Jones remains employed by the Company. With respect to the RSUs, 4,556 shares vest on November 6, 2023, and the remaining 50,144 vest in equal installments over the following eleven (11) quarterly periods. The inducement grants were issued pursuant to the terms and conditions of the Company’s 2021 Inducement Plan, as amended.
AboutPalisade Bio
Palisade Bio is a biopharmaceutical company focused on developing therapeutics that protect the integrity of the intestinal barrier. The Company utilizes over three decades of research and established science that links the role of intestinal barrier biology with human disease to advance novel therapeutics that target and improve the integrity of the intestinal barrier.
The Company believes that addressing the disruption of the intestinal barrier can fundamentally change the way diseases are treated and establish new standards of patient care. For more information, please go to www.palisadebio.com.
ForwardLooking Statements
This communication contains “forward-looking” statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements regarding the Company’s intentions, beliefs, projections, outlook, analyses or current expectations concerning, among other things: the extent of our cash runway; our ability to successfully develop our licensed technologies; estimates about the size and growth potential of the markets for our product candidates, and our ability to serve those markets, including any potential revenue generated; future regulatory, judicial, and legislative changes or developments in the United States (U.S.) and foreign countries and the impact of these changes; our ability to build a commercial infrastructure in the U.S. and other markets; our ability to compete effectively in a competitive industry; our ability to identify and qualify additional manufacturers to provide API and manufacture drug product; our ability to enter into commercial supply agreements; the success of competing technologies that are or may become available; our ability to attract and retain key scientific or management personnel; the accuracy of our estimates regarding expenses, future revenues, capital requirements and needs for additional financing; our ability to obtain funding for our operations; our ability to attract collaborators and strategic partnerships; and the impact of the COVID-19 pandemic on our business, and operations, and supply. Any statements contained in this communication that are not statements of historical fact may be deemed to be forward-looking statements. These forward-looking statements are based upon the Company’s current expectations. Forward-looking statements involve risks and uncertainties. The Company’s actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties, which include, without limitation, the Company’s ability to advance its clinical programs, the uncertain and time-consuming regulatory approval process; and the Company’s ability to achieve additional financing to fund future operations. Additional risks and uncertainties can be found in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the Securities and Exchange Commission (“SEC”) on March 22, 2023 as well as the Company’s Quarterly Report on Form 10-Q, for the six months period ended June 30, 2023, filed with the SEC on August 10, 2023. These forward-looking statements speak only as of the date hereof and the Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based.
PalisadeBio Investor Relations Contact
JTC Team, LLC
Jenene Thomas
833-475-8247
PALI@jtcir.com
Source: Palisade Bio