Item 5.02 Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.
On January 23, 2021, Kelvin Neu notified IGM Biosciences, Inc. (the "Company")
of his resignation from the Company's board of directors (the "Board"), which
resignation was effective as of January 26, 2021 and was not due to any
disagreement with the Company on any matter related to the Company's operations,
policies or practices.
On January 24, 2021, Felix J. Baker, Ph.D. was appointed to the Board to serve
as a Class III director, with a term beginning on January 26, 2021 and expiring
at the Company's 2022 annual meeting of the stockholders. Dr. Baker is
Co-Managing Member of Baker Bros. Advisors LP., a biotechnology-focused
investment adviser to fund partnerships whose investors are primarily endowments
and foundations, which Dr. Baker founded, together with his brother Julian
Baker, in 2000. Dr. Baker holds a B.S. and a Ph.D. in Immunology from Stanford
University, where he also completed two years of medical school.
Dr. Baker will serve on the Board as the designee of 667, L.P. and Baker
Brothers Life Sciences, L.P. (together, the "Baker Bros. Funds") pursuant to
that certain Nominating Agreement, dated as of June 28, 2019, by and between the
Company and the Baker Bros. Funds (the "Nominating Agreement"), a copy of which
has been filed as Exhibit 10.15 to the Company's Registration Statement on Form
S-1 (File No. 333-233365) filed with the Securities and Exchange Commission on
August 19, 2019. The Baker Bros. Funds together hold more than 10% of the
Company's outstanding capital stock. Baker Bros. Advisors (GP) LLC, Dr. Baker
and Julian Baker as managing members of Bros. Advisors (GP) LLC, and Baker Bros.
Advisors LP may be deemed to be beneficial owners of the securities of the
Company directly held by the Baker Bros. Funds, and disclaim beneficial
ownership of such securities except to the extent of their pecuniary interest
therein.
In accordance with the Company's outside director compensation policy (the
"director compensation policy"), Dr. Baker will receive annual cash compensation
of $20,000 for his services as a member of the Board, payable quarterly in
arrears on a pro-rata basis. Under the director compensation policy, beginning
with compensation paid for the 2022 calendar year, Dr. Baker may elect to
convert 0%, 50% or 100% of such cash compensation into a number of restricted
stock units of the Company ("Retainer Award") having a grant value equal to the
aggregate amount of the elected percentage of such cash compensation payable to
Dr. Baker for the applicable quarter (as determined on the applicable date of
grant of such Retainer Award), calculated based on the volume weighted average
price of one share over the Company's fourth quarter of the year immediately
preceding the year of the date of grant. All restricted stock units underlying
such quarterly Retainer Awards will be fully vested upon grant and will be
settled in shares as soon as administratively practicable following each date of
grant.
In connection with Dr. Neu's resignation and Dr. Baker's appointment to the
Board, the options to purchase the Company's common stock previously granted by
the Company to Dr. Neu in respect of Dr. Neu's Board service were amended to
provide that, with respect to 9,250 unvested shares subject to such options (the
"Unvested Options"), so long as an individual designated by the Baker Bros.
Funds pursuant to the Nominating Agreement is serving as an outside director of
the Company, Dr. Neu will be deemed to remain a service provider to the Company
(the "Options Amendment"). Therefore, with Dr. Baker's appointment to the Board,
such Unvested Options will continue to vest in accordance with the terms of the
applicable stock option agreements, as amended by the Options Amendment.
Pursuant to the policies of Baker Bros. Advisors LP, Dr. Neu does not have any
right to the pecuniary interest in the shares underlying such stock options or
the restricted stock units issued to Dr. Neu in respect of his Board service,
and the Baker Bros. Funds are entitled to an indirect proportionate pecuniary
interest in such shares. Baker Bros. Advisors LP has voting and investment power
over such stock options, restricted stock units, common stock, common stock
underlying such stock options and common stock issued from the exercise of stock
options received by Dr. Neu as director compensation. Baker Bros. Advisors (GP)
LLC, and Dr. Baker and Julian Baker as managing members of Baker Bros. Advisors
(GP) LLC, may be deemed to have the power to vote or direct the vote of and the
power to dispose or direct the disposition of such stock options, restricted
stock units, common stock, common stock underlying such stock options and common
stock issued from the exercise of stock options received by Dr. Neu as director
compensation.
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Dr. Baker declined the grant of the initial award of a nonstatutory stock option
to purchase shares of the Company's common stock that Dr. Baker would otherwise
have been entitled to under the terms of the director compensation policy in
connection with his appointment to the Board. Dr. Baker will be eligible for
equity awards on the same terms as other continuing non-employee members of the
Board. Currently, the director compensation policy provides that on the same
date as annual equity award grants are made to the Company's executive officers,
each non-employee director will automatically be granted a nonstatutory stock
option to purchase 10,000 shares of the Company's common stock (the "Annual
Option"). Each Annual Option will vest as to 1/12th of the shares subject to the
Annual Option each month that is completed after the date of the first annual
meeting of the Company's stockholders following the date of grant (each, an
"Annual Meeting") after the date the Annual Option is granted, provided that the
Annual Option will vest in full on the earlier of (i) the 12-month anniversary
of the first Annual Meeting following the date of grant, or (ii) the date of the
second regularly scheduled Annual Meeting after the date of grant, in each case
provided that Dr. Baker remains a non-employee director through the applicable
vesting date.
On December 11, 2020, the Baker Bros. Funds purchased an aggregate of 666,666
pre-funded warrants of the Company with an exercise price of $0.01 per share for
$89.99 per share in an underwritten public offering. The pre-funded warrants are
exercisable immediately on a 1-for-1 basis into shares of the Company's common
stock, to the extent that after giving effect to such exercise the holders
thereof, their affiliates and any persons who are members of a Section 13(d)
group with the holders or their affiliates in the aggregate would beneficially
own, for purposes of Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, no more than 9.99% of the outstanding shares of the Company's common
stock.
On December 7, 2020, the Company entered into a registration rights agreement
with the Baker Bros. Funds (the "RRA"), pursuant to which the Company granted
certain registration rights to the Baker Bros. Funds, which form of RRA has been
filed as Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the
Securities and Exchange Commission on December 7, 2020. Additionally, the
Company and certain stockholders, including the Baker Bros. Funds, are parties
to an amended and restated investor rights agreement, dated June 28, 2019, a
copy of which has been filed as Exhibit 4.2 to the Company's Registration
Statement on Form S-1 (File No. 333-233365) filed with the Securities and
Exchange Commission on August 19, 2019.
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