Item 9A. Controls and Procedures
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of December 31, 2023, management, with the participation and supervision of our Chief Executive Officer and Chief Financial Officer, have evaluated our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and the Chief Financial Officer, to allow timely decisions regarding required disclosures.
Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of December 31, 2023, the design and operation of our disclosure controls and procedures were effective at a reasonable assurance level.
Inherent Limitations on Controls and Procedures
Our management, including the principal executive officer and principal financial officer, does not expect that our disclosure controls and procedures and our internal control over financial reporting will prevent all error and all fraud. A control system, no matter how well designed and operated, can only provide reasonable assurances that the objectives of the control system are met. The design of a control system reflects resource constraints; the benefits of controls must be considered relative to their costs. Because there are inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, for our company have been or will be detected. As these inherent limitations are known features of the disclosure and financial reporting processes, it is possible to design into the processes safeguards to reduce, though not eliminate, these risks. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events. While our disclosure controls and procedures and our internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives, there can be no assurance that any design will succeed in achieving its stated goals under all future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with the policies or procedures. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Management’s Annual Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining an adequate internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) for our company. Our management, including our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework set forth in “Internal Control—Integrated Framework” issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on an evaluation under that framework, our management concluded that our internal control over financial reporting was effective at the reasonable assurance level as of December 31, 2023.
The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report in Part II, Item 8 of this Annual Report on Form 10-K.
Changes in Internal Control over Financial Reporting
There has been no change in our internal control over financial reporting during the quarter ended December 31, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Lyell Immunopharma, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Lyell Immunopharma, Inc.’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Lyell Immunopharma, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive loss, convertible preferred stock and stockholder’s equity (deficit) and cash flows for each of the three years in the period ended December 31, 2023, and the related notes and our report dated February 28, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
San Mateo, California
February 28, 2024
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Item 9B. Other Information.
During the quarter ended December 31, 2023, none of our directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement as defined in Item 408(a) and (c) of Regulation S-K, respectively.
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.
Our Board of Directors adopted a Code of Business Conduct and Ethics, which applies to all of our employees, officers and directors. This includes our principal executive officer, principal financial officer and principal accounting officer or controller, or persons performing similar functions. The full text of our Code of Business Conduct and Ethics may be viewed at the investors relations portion of our website at https://ir.lyell.com, in the section entitled “Governance Highlights” under “Corporate Governance.” We intend to satisfy the disclosure requirements under Item 5.05 of the SEC Form 8-K regarding an amendment to, or waiver from, a provision of our Code of Business Conduct and Ethics by posting such information on our website at the website address and location specified above.
The remainder of the information required by this item is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2023 .
Item 11. Executive Compensation.
The information required by this item is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2023 .
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this item is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2023 .
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this item is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2023 .
Item 14. Principal Accountant Fees and Services.
The information required by this item is incorporated by reference to our Proxy Statement for the 2024 Annual Meeting of Stockholders to be filed with the SEC within 120 days of the fiscal year ended December 31, 2023 .
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PART IV
Item 15. Exhibit and Financial Statement Schedules.
(a) The following documents are being filed as part of this report:
(1) The following financial statements and the Report of Independent Registered Public Accounting Firm are included in Part II, Item 8:
Page
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)
88
Consolidated Balance Sheets
90
Consolidated Statements of Operations and Comprehensive Loss
91
Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)
92
Consolidated Statements of Cash Flows
93
Notes to Consolidated Financial Statements
94
(2) All financial statement schedules are omitted because the information is inapplicable or presented in the Notes to Consolidated Financial Statements.
(3) The following Exhibits are filed as part of this report.
Incorporation by Reference
Exhibit
Number Exhibit Description Form File Number Exhibit/
Appendix
Reference Filing
Date Filed
Herewith
3.1 Amended and Restated Certificate of Incorporation.
S-8 333-257249 4.1 6/21/2021
3.2 Amended and Restated Bylaws.
10-Q
001-40502
3.2 11/07/2023
4.1 Form of Common Stock Certificate.
S-1/A 333-256470 4.1 6/9/2021
4.2 Amended and Restated Investors’ Rights Agreement, by and among the Registrant and certain of its stockholders, dated March 5, 2020.
S-1 333-256470 4.2 5/25/2021
4.3 Description of Securities
10-K
001-40502
4.3 2/28/2023
10.1 Lyell Immunopharma, Inc. 2018 Equity Incentive Plan, as amended.
S-1 333-256470 10.1 5/25/2021
10.2 Forms of Stock Option Grant Notice, Stock Option Agreement and Notice of Exercise and Restricted Stock Award Agreement under the Lyell Immunopharma, Inc. 2018 Equity Incentive Plan.
S-1 333-256470 10.2 5/25/2021
10.3 Lyell Immunopharma, Inc. 2021 Equity Incentive Plan.
S-8
333-257249
99.3 6/21/2021
10.4 Forms of Stock Option Grant Notice, Stock Option Agreement and Notice of Exercise under the Lyell Immunopharma, Inc. 2021 Equity Incentive Plan.
S-1/A 333-256470 10.4 6/9/2021
10.5 Forms of Restricted Stock Unit Grant Notice and Award Agreement under the Lyell Immunopharma, Inc. 2021 Equity Incentive Plan.
S-1/A 333-256470 10.5 6/9/2021
10.6 Lyell Immunopharma, Inc. 2021 Employee Stock Purchase Plan.
S-8
333-257249
99.6 6/21/2021
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Incorporation by Reference
Exhibit
Number Exhibit Description Form File Number Exhibit/
Appendix
Reference Filing
Date Filed
Herewith
10.7 Lyell Immunopharma, Inc. Non-Employee Director Compensation Policy.
10-Q
001-40502
10.2 11/7/2023
10.8 Lyell Immunopharma, Inc. Officer Severance Plan.
10-K 001-40502 10.8 3/29/2022
10.9 Form of Indemnification Agreement by and between the Registrant and its directors and executive officers.
S-1 333-256470 10.9 5/25/2021
10.10 Amended Offer Letter by and between the Registrant and Richard Klausner, dated July 23, 2020.
S-1 333-256470 10.10 5/25/2021
10.11 Offer Letter, by and between the Registrant and Lynn Seely, dated December 14, 2022
8-K 001-40502 10.2 12/16/2022
10.12 Offer Letter by and between the Registrant and Charles Newton, dated February 3, 2021.
S-1 333-256470 10.12 5/25/2021
10.13 R elease and Separation Agreement, by and between the Registrant and Rahsaan Thompson, effective June 24, 2023.
10-Q 001-40502 10.1 8/8/2023
10.14 Offer Letter by and between the Registrant and Stephen Hill, dated May 9, 2019.
S-1 333-256470 10.14 5/25/2021
10.15 O ffer Letter by and between the Registrant and Matthew Lang, dated May 12, 2023.
10-Q
001-40502
10.1 11/07/2023
10.16 O ffer Letter by and between the Registrant and Gary Lee, dated Nove m b er 24, 2021.
X
10.17 Severance Waiver by and between the Registrant and Stephen Hill, dated April 19, 2022.
10-Q 001-40502 10.1 5/10/2022
10.18 Separation, Transition and General Release Agreement, by and between Elizabeth Homans and Lyell Immunopharma, Inc., dated December 15, 2022
8-K 001-40502 10.1 12/16/2022
10.19 License Agreement by and between the Registrant and The Board of Trustees of the Leland Stanford Junior University, dated January 29, 2019.
S-1 333-256470 10.16 5/25/2021
10.20
Success Payment Agreement, by and between the Registrant and The Board of Trustees of the Leland Stanford Junior University, dated October 1, 2020.
S-1 333-256470 10.17 5/25/2021
10.21 Success Payment Agreement, by and between the Registrant and Fred Hutchinson Cancer Research Center, dated December 19, 2018.
S-1 333-256470 10.18 5/25/2021
10.22 Standard Office Lease for Building C by and between the Registrant and Bre Wa Office Owner LLC, dated August 28, 2019.
S-1 333-256470 10.19 5/25/2021
10.23 Standard Office Lease for Building E by and between the Registrant and Bre Wa Office Owner LLC, dated August 28, 2019.
S-1 333-256470 10.20 5/25/2021
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Incorporation by Reference
Exhibit
Number Exhibit Description Form File Number Exhibit/
Appendix
Reference Filing
Date Filed
Herewith
10.24 Lease by and between the Registrant and BMR-500 Fairview Avenue LLC, dated November 27, 2018, as amended.
S-1 333-256470 10.21 5/25/2021
10.25 Lease Agreement by and between the Registrant and ARE-San Francisco No. 65, LLC, dated August 15, 2019, as amended.
S-1 333-256470 10.22 5/25/2021
23.1 Consent of independent registered public accounting firm.
X
24.1 Power of Attorney (included on signature page).
X
31.1 Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a).
X
31.2 Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a).
X
32.1+
Certifications of Principal Executive Officer and Principal Financial Officer Pursuant to 18 U.S.C. Section 1350.
X
97.1 Incentive Compensation Recoupment Policy dated September 6, 2023.
X
101.INS XBRL Instance Document. The XBRL instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema Document. X
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document. X
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document. X
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document. X
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document. X
104 Cover Page Interactive Data File. Formatted as Inline XBRL and contained in Exhibit 101.
*Portions of this exhibit (indicated by [*]) have been omitted because the registrant has determined that the information is both not material and is the type that the registrant treats as private or confidential.
+ The certifications attached as Exhibit 32.1 accompanying this Annual Report on Form 10-K are not deemed filed with the Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K, irrespective of any general incorporation language contained in such filing.
Item 16. Form 10-K Summary.
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Act of 1934, the Registrant has duly caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of South San Francisco, State of California on February 28, 2024.
LYELL IMMUNOPHARMA, INC.
By: /s/ LYNN SEELY
Name: Lynn Seely, M.D.
Title: President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Lynn Seely, Charles Newton and Matthew Lang, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign 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 requisite and necessary to be done in connection therewith, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or any of them, or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1934, this Annual Report on Form 10-K has been signed by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:
Signature Title Date
/s/ LYNN SEELY President, Chief Executive Officer and Director February 28, 2024
Lynn Seely, M.D. (Principal Executive Officer)
/s/ CHARLES NEWTON Chief Financial Officer February 28, 2024
Charles Newton (Principal Financial and Accounting Officer)
/s/ RICHARD D. KLAUSNER Chair of the Board of Directors February 28, 2024
Richard D. Klausner, M.D.
/s/ HANS BISHOP Director February 28, 2024
Hans Bishop
/s/ OTIS BRAWLEY Director February 28, 2024
Otis Brawley, M.D.
/s/ CATHERINE FRIEDMAN Director February 28, 2024
Catherine Friedman
/s/ ELIZABETH NABEL Director February 28, 2024
Elizabeth Nabel, M.D.
/s/ ROBERT NELSEN Director February 28, 2024
Robert Nelsen
/s/ WILLIAM RIEFLIN Director February 28, 2024
William Rieflin
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