Item 2.02 Results of Operations and Financial Condition
On January 6, 2023, Elevation Oncology, Inc. (the "Company") issued a press
release which reported that, as of December 31, 2022, the Company had
preliminary unaudited cash, cash equivalents and marketable securities totaling
$90.3 million, which the Company expects will enable it to fund its operating
expenses and capital expenditure requirements into the fourth quarter of 2024,
without giving effect to financial covenant compliance under the Company's debt
facility. This amount is preliminary and unaudited, may change, was prepared by
management, is based on the most current information available to management,
and is subject to completion by management of the financial statements as of and
for the year ended December 31, 2022, including completion of the review
procedures, final adjustments and other developments that may arise between now
and the time the financial results for this period are finalized, and completion
of the audit of such financial statements.
The information in this Item 2.02 shall not be deemed to be "filed" for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or otherwise subject to the liabilities of that section or Sections 11
and 12(a)(2) of the Securities Act of 1933, as amended (the "Securities Act").
The information contained in this Item 2.02 shall not be incorporated by
reference into any other filing under the Exchange Act or under the Securities
Act, except as shall be expressly set forth by specific reference in such
filing.
Departure of Directors or Certain Officers; Election of Directors;
Item 5.02. Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers
Chief Executive Officer Separation Agreement
On January 5, 2023, the Company and Shawn M. Leland, the President and Chief
Executive Officer ("CEO") of the Company, entered into a Separation Agreement
(the "Separation Agreement") following the mutual agreement between the
Company's Board of Directors (the "Board") and Dr. Leland regarding his
departure from his current positions with the Company. Pursuant to the
Separation Agreement, Dr. Leland ceased his role as the Company's President and
Chief Executive Officer, effective January 5, 2023 (the "Separation Date"), and
resigned as a director of the Board, effective as of the Separation Date. This
mutual agreement was not the result of any disagreement with the Company on any
matter relating to its operations, policies or practices.
From the Separation Date until January 5, 2024 (the "Advisory End Date"), Dr.
Leland will continue as an advisor of the Company. The Company will enter into
an advisory agreement (the "Advisory Agreement") with Dr. Leland, pursuant to
which Dr. Leland has agreed to serve as a non-employee advisor to the Company
until the Advisory End Date.
Subject to Dr. Leland's execution of a general release of claims, the terms of
the Separation Agreement, and the terms of the Advisory Agreement, Dr. Leland
will be entitled to receive the following benefits: (i) a lump sum payment in
the gross amount of $574,750, equal to twelve (12) months of his annual salary;
(ii) a lump sum payment in the gross amount of $300,306.88, which reflects Dr.
Leland's earned bonus for the 2022 fiscal year; (iii) the amount of COBRA
premiums he would be required to pay to maintain group healthcare coverage as in
effect on the Separation Date for twelve (12) months following the Separation
Agreement; and (iv) accelerated vesting in his outstanding equity awards with
respect to the number of shares that would have vested if Dr. Leland had
remained in service for twelve (12) months following the Separation Date. In
exchange for providing consulting services to the Company through the Advisory
End Date, Dr. Leland's existing equity awards will continue to vest during the
term of the Advisory Agreement and Dr. Leland will be entitled to exercise his
vested equity awards until the twelve (12) month anniversary of the Advisory End
Date.
The foregoing description of the Separation Agreement is qualified in its
entirety by reference to the complete text of the Separation Agreement, a copy
of which will be filed with the Company's Quarterly Report on Form 10-Q for the
three months ending March 31, 2023.
Interim Chief Executive Officer and President Appointment
Effective as of the Separation Date, the Board appointed Joseph J. Ferra, Jr.,
the Company's Chief Financial Officer, to succeed Dr. Leland as Interim Chief
Executive Officer and President. Mr. Ferra will also remain Chief Financial
Officer while serving as Interim Chief Executive Officer. Mr. Ferra, age 47, has
served as the Company's Chief Financial Officer since June 2021. Mr. Ferra
joined the Company from Syros Pharmaceuticals, Inc., where he served as Chief
Financial Officer from March 2018 to June 2021. Prior to Syros, Mr. Ferra was
employed at JMP Securities LLC, where he served as Managing Director from March
2014 to March 2018, Head of East Coast Healthcare Banking from March 2015 to
March 2017 and Co-Head of Healthcare Investment Banking from March 2017 to March
2018. Previously, he was employed by UBS Investment Bank from September 2009 to
March 2014 serving, most recently, as Executive Director of global healthcare
investment banking. Mr. Ferra received a B.S. in chemistry with distinction from
Purdue University and an M.B.A. from The Stephen M. Ross School of Business at
the University of Michigan. There are no arrangements or understandings between
Mr. Ferra and any other persons, pursuant to which he was appointed as Interim
Chief Executive Officer, there are no family relationships among any of the
Company's directors or executive officers and Mr. Ferra, and he
has no direct or indirect material interest in any transaction required to be
disclosed pursuant to Item 404(a) of Regulation S-K.
Mr. Ferra is party to a Change in Control and Severance Agreement with the
Company, a form of which is filed as Exhibit 99.1 to the report filed by the
Company on Form 8-K on August 6, 2021, and which will be amended in connection
with Mr. Ferra's appointment as Interim Chief Executive Officer (as amended, the
"Amended Severance Agreement") to reflect severance benefits consistent with a
Chief Executive Officer position. Under the Amended Severance Agreement, during
the term of Mr. Ferra's service as Interim Chief Executive Officer, if Mr. Ferra
is terminated other than for "cause", Mr. Ferra will be entitled to (i) a
lump-sum payment equal to twelve (12) months of his base salary; (ii) payment of
COBRA premiums until the earlier of (a) the date upon which Mr. Ferra becomes
eligible to receive substantially similar health insurance coverage from another
company or (b) twelve (12) months to maintain group healthcare coverage as in
effect on the date of his termination; and (iii) accelerated vesting of Mr.
Ferra's outstanding equity awards as if an additional twelve (12) months of
vesting had occurred for any outstanding and unvested awards as of the date of
his termination. In connection with a "change in control" (as defined in the
Amended Severance Agreement), if Mr. Ferra is terminated within twelve (12)
months following a "change in control" for any reason other than "cause," or
resigns for "good reason," Mr. Ferra will be entitled to (i) a lump-sum payment
equal to eighteen (18) months of his base salary; (ii) one hundred fifty percent
(150%) of his annual target bonus; (iii) payment of COBRA premiums until the
earlier of (a) the date upon which Mr. Ferra becomes eligible to receive
substantially similar health insurance coverage from another company or (b)
eighteen (18) months following termination; and (iv) accelerated vesting of Mr.
Ferra's outstanding equity awards (provided that performance-based awards shall
accelerate at the greater of target levels or actual achievement) such that 100%
of such equity awards shall become fully vested and exercisable as of the date
of his termination. Additionally, in connection with Mr. Ferra's appointment as
Interim Chief Executive Officer, on January 5, 2023, the Board approved certain
adjustments to Mr. Ferra's compensation terms for such position, which includes
an increase in monthly base salary of $10,000, an increase in target bonus
amount to 50% and a one-time stock option grant of 30,000 shares that will vest
in equal monthly installments over six months from the grant date. The
adjustments to Mr. Ferra's cash compensation in relation to his appointment as
Interim Chief Executive Officer will be prorated for time served in that role.
Mr. Ferra is also party to the Company's standard form of indemnification
agreement. The form of the indemnification agreement was previously filed by the
Company as Exhibit 10.1 to the Form S-1/A filed by the Company with the
Securities and Exchange Commission (SEC) on June 21, 2021, and incorporated by
reference herein.
Item 8.01 Other Events
On January 6, 2023, the Company announced a pipeline prioritization and
realignment of resources to advance its EO-3021 product candidate. The Company
is pausing further investment in the clinical development of its seribantumab
product candidate and realigning its resources to focus on advancing EO-3021 and
other pipeline programs. The Company intends to pursue further development of
seribantumab only in collaboration with a partner. As part of this realignment,
the Company's workforce will be reduced by approximately 30%.
This current report contains forward-looking statements within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995, including, but not limited to, anticipated preclinical and clinical
development activities, expected timing of announcements of clinical results,
potential benefits of the Company's product candidates, potential opportunities
to expand the Company's product candidate pipeline, potential market
opportunities for the Company's product candidates, the ability of the Company's
product candidates to treat their targeted indications, the ability of Elevation
Oncology to achieve cost savings and the Company's expectations about its cash
runway. All statements other than statements of historical fact are statements
that could be deemed forward-looking statements. These forward-looking
statements may be accompanied by such words as "aim," "anticipate," "believe,"
"could," "estimate," "expect," "forecast," "goal," "intend," "may," "might,"
"plan," "potential," "possible," "will," "would," and other words and terms of
similar meaning. Although the Company believes that the expectations reflected
in such forward-looking statements are reasonable, the Company cannot guarantee
future events, results, actions, levels of activity, performance or
achievements, and the timing and results of biotechnology development and
potential regulatory approval is inherently uncertain. Further information on
potential risk factors that could affect the Company's business and financial
results are detailed in its most recent Quarterly Report on Form 10-Q for the
quarter ended September 30, 2022, filed with the SEC, and its other reports as
filed with the SEC. The Company undertakes no obligation to publicly update any
forward-looking statement, whether written or oral, that may be made from time
to time, whether as a result of new information, future developments or
otherwise.
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