Item 9A. Controls and Procedures
ITEM 9A.
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management, under the supervision and with the participation of our Principal Executive Officer (our Chief Executive Officer) and Principal Financial Officer (our Chief Financial and Operating Officer), has evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2021. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e)
and 15d-15(e)
under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
Management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2021, our Principal Executive Officer and Principal Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Internal Control Over Financial Reporting
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f)
under the Exchange Act. Our management conducted an assessment of the effectiveness of our internal control over financial reporting based on the criteria set forth in “Internal Control-Integrated Framework (2013)” issued by the Committee of Sponsoring Organization of the Treadway Commission. Based on this assessment, management concluded that, as of December 31, 2021, our internal control over financial reporting was effective.
This Annual Report on Form 10-K
does not include an attestation report of our independent registered public accounting firm on internal control over financial reporting due to an exemption established by the JOBS Act for “emerging growth companies.”
Changes in Internal Control Over Financial Reporting
No change in our internal control over financial reporting (as defined in Rules 13a-15(f)
and 15d-15(f)
under the Exchange Act) occurred during the three months ended December 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
OTHER INFORMATION
Amended and Restated Executive Officer Compensation Agreements
Effective March 3, 2022, we entered into amended and restated employment agreements with our Chief Executive Officer (principal executive officer), Chief Financial and Operating Officer (principal financial
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officer) and other of our executive officers, which were approved by the compensation committee of our board of directors and/or our board of directors of, as applicable.
Jason Gardner, D.Phil.
Dr. Gardner’s amended and restated employment agreement provides for the payment of an annual base salary and annual incentive compensation, which are subject to review and redetermination by our board of directors. Dr. Gardner’s current base salary for fiscal year 2022 is $565,000 and he is eligible to earn an annual incentive with a target amount equal to 55% of his base salary. Dr. Gardner is also eligible to participate in the employee benefit plans available to our employees, subject to the terms of those plans.
Pursuant to his amended and restated employment agreement, in the event Dr. Gardner is terminated by us without “cause” (as defined in the agreement) or he resigns for “good reason” (as defined in the agreement), subject to the delivery of a fully effective general release of claims against us and all related persons and entities, a reaffirmation of all of Dr. Gardner’s Continuing Obligations (as defined in the agreement) and, in our sole discretion, a one year post-employment noncompetition covenant, Dr. Gardner will be entitled to receive (i) a cash severance equal to one (1) times his base salary, plus a pro-rata portion
of his target annual incentive compensation, payable over the 12-month period
following the termination of his employment, and (ii) up to 12 monthly cash payments equal to the monthly contribution for health insurance for Dr. Gardner.
In the event Dr. Gardner is terminated by us without cause or he resigns for good reason, each during the three months before through 12 months following a change in control (as defined in the agreement), subject to the delivery of a fully effective general release of claims against us and all related persons and entities, a reaffirmation of all of Dr. Gardner’s continuing obligations (as defined in the agreement) and, in our sole discretion, a one year post-employment noncompetition covenant, Dr. Gardner will not be entitled to receive the severance benefits described above, but will instead be entitled to the following: (i) a lump sum cash severance equal to 1.5 times his base salary, plus 150% of his target annual incentive compensation, (ii) for all outstanding time-based stock options and other time-based stock-based awards held by Dr. Gardner, full accelerated vesting of such awards, and (iii) up to 18 monthly cash payments equal to the monthly contribution for health insurance for Dr. Gardner.
The payments and benefits provided under Dr. Gardner’s amended and restated employment agreement in connection with a change in control may not be eligible for federal income tax deduction for us pursuant to Section 280G of the Internal Revenue Code. These payments and benefits may also be subject to an excise tax under Section 4999 of the Internal Revenue Code. If the payments or benefits payable to Dr. Gardner in connection with a change in control would be subject to the excise tax imposed under Section 4999 of the Internal Revenue Code, then those payments or benefits will be reduced if such reduction would result in a higher net after-tax benefit
to him. Furthermore, if the payments and benefits provided under Dr. Gardner’s amended and restated employment agreement in connection with a change in control would otherwise violate any applicable nondiscrimination rules or cause the reimbursement of claims to be taxable under the Patient Protection and Affordable Care Act of 2010, together with the Health Care and Education Reconciliation Act of 2010 or Section 105(h) of the Internal Revenue Code, then the health insurance payments shall be treated as taxable payments (subject to customary and required taxes and employment-related deductions) and be subject to imputed income tax treatment to the extent necessary to eliminate any discriminatory treatment or taxation. If we determine that we cannot provide the health insurance payments for Dr. Gardner without potentially violating applicable law, we shall instead provide Dr. Gardner with a taxable lump-sum
payment in an amount equal to the sum of the monthly (or then remaining) health insurance contributions described above.
Pursuant to his amended and restated employment agreement, Dr. Gardner is subject to standard confidentiality and nondisclosure, assignment of intellectual property work product and post-termination noncompetition and non-solicitation of
employees, consultants and customers covenants.
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Stephen F. Mahoney
Mr. Mahoney’s amended and restated employment agreement provides for the payment of an annual base salary and annual incentive compensation, which are subject to review and redetermination by the compensation committee of our board of directors. Mr. Mahoney’s base salary for fiscal year 2022 is $448,000, and he is eligible to earn an annual incentive with a target amount equal to 40% of his base salary. Mr. Mahoney is also eligible to participate in the employee benefit plans available to our employees, subject to the terms of those plans.
Pursuant to his amended and restated employment agreement, in the event Mr. Mahoney is terminated by us without “cause” (as defined in the agreement) or he resigns for “good reason” (as defined in the agreement), subject to the delivery of a fully effective general release of claims against us and all related persons and entities, a reaffirmation of all of Mr. Mahoney’s continuing obligations (as defined in the agreement) and, in our sole discretion, a one year post-employment noncompetition covenant, Mr. Mahoney will be entitled to receive (i) a cash severance equal to 0.75 times his base salary plus a pro-rata portion
of his target annual incentive compensation, payable over the 12-month period
following the termination of his employment and (ii) up to nine monthly cash payments equal to the monthly contribution for health insurance for Mr. Mahoney.
In the event Mr. Mahoney is terminated by us without cause or he resigns for good reason, each during the three months before through 12 months following a change in control (as defined in the agreement), subject to the delivery of a fully effective release of claims, Mr. Mahoney will not be entitled to receive the severance benefits described above, but will instead be entitled to the following: (i) a lump sum cash severance equal to one times his base salary, plus 100% of his target annual incentive compensation, (ii) for all outstanding time-based stock options and other time-based stock-based awards held by Mr. Mahoney, full accelerated vesting of such awards, and (iii) up to 12 monthly cash payments equal to the monthly contribution for health insurance for Mr. Mahoney.
The payments and benefits provided under Mr. Mahoney’s amended and restated employment agreement in connection with a change in control may not be eligible for federal income tax deduction for us pursuant to Section 280G of the Internal Revenue Code. These payments and benefits may also be subject to an excise tax under Section 4999 of the Internal Revenue Code. If the payments or benefits payable to Mr. Mahoney in connection with a change in control would be subject to the excise tax imposed under Section 4999 of the Internal Revenue Code, then those payments or benefits will be reduced if such reduction would result in a higher net after-tax benefit
to him. Furthermore, if the payments and benefits provided under Mr. Mahoney’s amended and restated employment agreement in connection with a change in control would otherwise violate any applicable nondiscrimination rules or cause the reimbursement of claims to be taxable under the Patient Protection and Affordable Care Act of 2010, together with the Health Care and Education Reconciliation Act of 2010 or Section 105(h) of the Internal Revenue Code, then the health insurance payments shall be treated as taxable payments (subject to customary and required taxes and employment-related deductions) and be subject to imputed income tax treatment to the extent necessary to eliminate any discriminatory treatment or taxation. If we determine that we cannot provide the health insurance payments for Mr. Mahoney without potentially violating applicable law, we shall instead provide Mr. Mahoney with a taxable lump-sum
payment in an amount equal to the sum of the monthly (or then remaining) health insurance contributions described above.
Pursuant to his amended and restated employment agreement, Mr. Mahoney is subject to standard confidentiality and nondisclosure, assignment of intellectual property work product and post-termination noncompetition and non-solicitation of
employees, consultants and customers covenants.
Director Resignation and Board Class Reapportionment
On March 3, 2022, solely in order to provide for an equal apportionment of directors among the three classes of the Company’s classified board of directors, Thomas O. Daniel, M.D. tendered his resignation from the
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board of directors as a class III director whose term of office expires at the Company’s annual meeting of stockholders to be held in 2024, with such resignation effective immediately, and, with the recommendation of the nominating and corporate governance committee of the Company’s board of directors, was appointed to the board of directors immediately thereafter as a class I director whose term of office expires at the Company’s annual meeting of stockholders to be held in 2022. Dr. Daniel was also re-appointed to the position of chair of the compensation committee and member of the research and development committee of the board of directors. After giving effect to Dr. Daniel’s resignation and immediate re-election to the Company’s board of directors, there are now three directors in each of class I, class II and class III.
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this Item 10 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2022 Annual Meeting of Stockholders and is incorporated herein by reference.
ITEM 11.
EXECUTIVE COMPENSATION
The information required by this Item 11 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2022 Annual Meeting of Stockholders and is incorporated herein by reference.
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information required by this Item 12 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2022 Annual Meeting of Stockholders and is incorporated herein by reference.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information required by this Item 13 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2022 Annual Meeting of Stockholders and is incorporated herein by reference.
ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by this Item 14 will be included in our definitive proxy statement to be filed with the SEC with respect to our 2022 Annual Meeting of Stockholders and is incorporated herein by reference.
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PART IV
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
1. Financial Statements
For a list of the financial statements included herein, see Index to the Consolidated Financial Statements on page 133 of this Annual Report on Form 10-K,
incorporated into this Item by reference.
2. Financial Statement Schedules
Financial statement schedules have been omitted because they are either not required or not applicable or the information is included in the consolidated financial statements or the notes thereto.
3. Exhibits
The exhibits required by Item 601 of Regulation S-K
and Item 15(b) of this Annual Report on Form 10-K
are listed in the Exhibit Index immediately preceding the signature page of this Annual Report on Form 10-K.
The exhibits listed in the Exhibit Index are incorporated by reference herein.
ITEM 16.
FORM 10-K
SUMMARY
None.
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Exhibit Index
Exhibit
Number
Description
3.1
Amended and Restated Certificate of Incorporation of the Registrant (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-38541) filed with the Securities and Exchange Commission on June 25, 2018).
3.2
Amended and Restated By-laws of the Registrant (Incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (File No. 001-38541) filed with the Securities and Exchange Commission on June 25, 2018).
4.1
Specimen Common Stock Certificate (Incorporated by reference to Exhibit 4.1 to the Registrant’s Registration Statement on Form S-1/A (File No. 333-225178) filed with the Securities and Exchange Commission on June 8, 2018).
4.2
Second Amended and Restated Investors’ Rights Agreement by and among the Registrant and certain of its stockholders dated April 2, 2018 (Incorporated by reference to Exhibit 4.2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-225178) filed with the Securities and Exchange Commission on May 24, 2018).
4.3
Description of Securities of the Registrant (Incorporated by reference to Exhibit 4.3 to the Registrant’s Annual Report on Form 10-K (File No. 001-38541) filed with the Securities and Exchange Commission on March 3, 2020).
10.1#
2016 Stock Option and Grant Plan, as amended, and forms of award agreements thereunder (Incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-225178) filed with the Securities and Exchange Commission on May 24, 2018).
10.2#
2018 Stock Option and Incentive Plan and forms of award agreements thereunder (Incorporated by reference to Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1/A (File No. 333-225178) filed with the Securities and Exchange Commission on June 8, 2018).
10.3#
Senior Executive Cash Incentive Bonus Plan (Incorporated by reference to Exhibit 10.3 to the Registrant’s Registration Statement on Form S-1 (File No. 333-225178) filed with the Securities and Exchange Commission on May 24, 2018).
10.4#
Form of Director and Officer Indemnification Agreement (Incorporated by reference to Exhibit 10.5 to the Registrant’s Registration Statement on Form S-1 (File No. 333-225178) filed with the Securities and Exchange Commission on May 24, 2018).
10.5#
2019 Employee Stock Purchase Plan (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-38541) filed with the Securities and Exchange Commission on June 11, 2019).
10.6†
License Agreement by and between the Registrant and President and Fellows of Harvard College, dated as of November 2, 2016 (Incorporated by reference to Exhibit 10.6 to the Registrant’s Registration Statement on Form S-1 (File No. 333-225178) filed with the Securities and Exchange Commission on May 24, 2018).
10.7†
Master Development and Manufacturing Agreement by and between the Registrant and Bachem Americas, Inc., dated as of February 13, 2018 (Incorporated by reference to Exhibit 10.10 to the Registrant’s Registration Statement on Form S-1/A (File No. 333-225178) filed with the Securities and Exchange Commission on June 18, 2018).
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Exhibit
Number
Description
10.8†
Exclusive Research, Development Option and License Agreement by and between the Registrant and Heidelberg Pharma Research GmbH, dated as of March 1, 2018 (Incorporated by reference to Exhibit 10.11 to the Registrant’s Registration Statement on Form S-1 (File No. 333-225178) filed with the Securities and Exchange Commission on May 24, 2018).
10.8.1
Letter Agreement, effective as of February 28, 2019, by and between the Registrant and Heidelberg Pharma Research GmbH, relating to the Exclusive Research, Development Option and License Agreement by and between the Registrant and Heidelberg Pharma Research GmbH, dated as of March 1, 2018 (Incorporated by reference to Exhibit 10.12.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-231097) filed with the Securities and Exchange Commission on April 29, 2019).
10.8.2†
Amendment, effective as of July 4, 2019, pursuant to the Exclusive Research, Development Option and License Agreement by and between the Registrant and Heidelberg Pharma Research GmbH, dated as of March 1, 2018 (Incorporated by reference to Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-38541) filed with the Securities and Exchange Commission on November 13, 2019).
10.9
Sublease by and between the Registrant and Novartis Institutes for BioMedical Research, Inc., dated as of May 4, 2018 (Incorporated by reference to Exhibit 10.13 to the Registrant’s Registration Statement on Form S-1 (File No. 333-225178) filed with the Securities and Exchange Commission on May 24, 2018).
10.9.1
First Amendment to Sublease Agreement, dated as of December 13, 2018, by and between the Registrant and Novartis Institutes for BioMedical Research, Inc. (Incorporated by reference to Exhibit 10.14.1 to the Registrant’s Registration Statement on Form S-1 (File No. 333-231097) filed with the Securities and Exchange Commission on April 29, 2019).
10.9.2
Second Amendment to Sublease Agreement, dated as of August 19, 2020, by and between the Registrant and Novartis Institutes for BioMedical Research, Inc. (Incorporated by reference to Exhibit 10.14.2 to the Registrant’s Annual Report on Form 10-K (File No. 001-38541) filed with the Securities and Exchange Commission on March 3, 2021).
10.10
Securities Purchase Agreement, among the Registrant and certain of its stockholders dated May 12, 2021 (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-38541) filed with the Securities and Exchange Commission on May 12, 2021).
10.11*^
Master Services Agreement, dated as of May 22, 2019, by and between the Registrant and Heidelberg Pharma Research GmbH.
10.12*#
Amended and Restated Employment Agreement by and between the Registrant and Jason Gardner, effective March 3, 2022.
10.13*#
Amended and Restated Employment Agreement by and between the Registrant and Stephen Mahoney, effective March 3, 2022.
21.1*
List of Subsidiaries of the Registrant.
23.1*
Consent of KPMG LLP, independent registered public accounting firm.
24.1*
Power of Attorney (included on signature page to this Annual Report on Form 10-K).
31.1*
Certification of Principal Executive Officer pursuant to Rules 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*
Certification of Principal Financial Officer pursuant to Rules 13a-14(a) or 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**
Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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Exhibit
Number
Description
101SCH*
Inline XBRL Taxonomy Extension Schema Document.
101CAL*
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101LAB*
Inline XBRL Taxonomy Extension Labels Linkbase Document.
101PRE*
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101DEF*
Inline XBRL Taxonomy Extension Definition Linkbase Document.
104*
Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101).
*
Filed herewith.
**
Furnished herewith.
#
Represents management compensation plan, contract or arrangement.
†
Application has been made to the Securities and Exchange Commission for confidential treatment of certain provisions. Omitted material for which confidential treatment has been requested has been filed separately with the Securities and Exchange Commission.
^
Portions of this exhibit have been omitted in accordance with the rules of the Securities and Exchange Commission.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MAGENTA THERAPEUTICS, INC.
Date: March 8, 2022
By:
/s/ Stephen Mahoney
Stephen Mahoney
Chief Financial and Operating Officer
(Principal Financial and Accounting Officer)
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POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes and appoints Jason Gardner and Stephen Mahoney, and each of them, with full power of substitution and resubstitution and full power to act without the other, as his or her true and lawful attorney-in-fact
and agent to act in his or her name, place and stead and to execute in the name and on behalf of each person, individually and in each capacity stated below, and to file any and all amendments to this annual report on Form 10-K
and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact
and agents, and each of them, full power and authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-fact
and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Jason Gardner, D.Phil.
President, Chief Executive Officer and Director
(Principal Executive Officer)
March 8, 2022
Jason Gardner, D.Phil.
/s/ Stephen Mahoney
Chief Financial and Operating Officer
(Principal Financial and Accounting Officer)
March 8, 2022
Stephen Mahoney
/s/ Jeffrey Albers
Director
March 8, 2022
Jeffrey Albers
/s/ Bruce Booth, D.Phil.
Director
March 8, 2022
Bruce Booth, D.Phil.
/s/ Alexis A. Borisy
Director
March 8, 2022
Alexis A. Borisy
/s/ Thomas O. Daniel, M.D.
Director
March 8, 2022
Thomas O. Daniel, M.D.
/s/ Alison F. Lawton
Director
March 8, 2022
Alison F. Lawton
/s/ Anne M. McGeorge
Director
March 8, 2022
Anne M. McGeorge
/s/ Amy L. Ronneberg
Director
March 8, 2022
Amy L. Ronneberg
/s/ David T. Scadden, M.D.
Director
March 8, 2022
David T. Scadden, M.D.
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