Item 9A. Controls and Procedures
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of December 31, 2022, management, with the participation of our Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of the design and operation of 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 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, 2022, the design and operation of our disclosure controls and procedures were effective at a reasonable assurance level.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting for our company. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP and includes those policies and procedures that: (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) 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 our company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our company’s assets that could have a material effect on the financial statements.
Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements prepared for external purposes in accordance with generally accepted accounting principles. 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.
Our management, with the participation of our Chief Executive Officer (principal executive officer) and Chief Operating and Financial Officer (principal financial officer), assessed the effectiveness of our internal control over financial reporting as of December 31, 2022. In making this assessment, our management used the criteria set forth in the Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on its assessment, management concluded that our internal control over financial reporting was effective as of December 31, 2022 based on those criteria.
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Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rules 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the fourth quarter ended December 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. We are continually monitoring and assessing the COVID-19 situation to minimize the impact to the design and operating effectiveness of our internal controls .
Item 9B. Other Information.
Costs Associated with Exit or Disposal Activities
On March 9, 2023, we announced a corporate restructuring and portfolio prioritization to focus our resources on the late-stage clinical development of OP-1250 for the treatment of ER+/HER2- metastatic breast cancer. As part of this restructuring, our workforce will be reduced by approximately 25%, affecting employees across research, early development, and general and administrative functions.
This workforce reduction is expected to be completed by the end of the first quarter of 2023. Affected employees will be eligible to receive severance and other benefits, contingent upon such employee’s execution and the effectiveness of a separation agreement, which includes a general release of claims against us. We estimate that these severance and other costs will result in a one-time accounting charge of approximately $2.8 million in the first quarter of 2023, $2.7 million of which is attributable to cash expenditures expected to be paid in the same quarter, and expect that payment of these costs will also be made in the first quarter of 2023. The charges that we expect to incur in connection with the restructuring are subject to a number of assumptions, and actual results may differ materially. We may also incur additional costs not currently contemplated due to events that may occur as a result of, or that are associated with, the restructuring.
Departure of Directors or Certain Officers; Compensatory Arrangements of Certain Officers
As part of the restructuring, each of Kinney Horn, our Chief Business Officer, and Cyrus Harmon, Ph.D., our Chief Research Officer, will cease their employment with us, effective March 24, 2023, or the Separation Date, and has entered into a separation agreement with us. Pursuant to the separation agreement entered into with Mr. Horn, subject to the effectiveness of a general release of claims, Mr. Horn will (i) receive 12 months of his base salary and medical insurance coverage premiums, plus a pro-rated portion of his target bonus for 2023, for a total of approximately $0.5 million, less required deductions and withholdings, (ii) provide ongoing consulting and advisory services to us until such services are terminated by us or Mr. Horn pursuant to the terms of a consulting agreement, and (iii) upon the Separation Date and pursuant to the terms of his existing employment agreement with us, be entitled to accelerated vesting of options to purchase 39,384 shares of our common stock held as of the Separation Date. Pursuant to the separation agreement entered into with Dr. Harmon, subject to the effectiveness of a general release of claims, Dr. Harmon will be entitled to receive 12 months of his base salary and medical insurance coverage premiums, plus a pro-rated portion of his target bonus for 2023, for a total of approximately $0.6 million, less required deductions and withholdings. We expect that Dr. Harmon will continue in his role as a member of our Board of Directors.
“At the Market” Equity Offering Program
On March 9, 2023, we entered into a Sales Agreement, or the ATM Agreement, with Oppenheimer & Co., Inc., or the Agent, pursuant to which we may offer and sell, from time to time through the Agent, at our option, shares of our common stock for aggregate sales proceeds of up to $100 million, or the Shares. The issuance and sale, if any, of Shares under the ATM Agreement will be pursuant to our effective registration statement on Form S-3 (File No. 333-263117), and the related prospectus supplement dated March 9, 2023, in each case filed with the SEC.
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Pursuant to the ATM Agreement, the Agent may sell the Shares in sales deemed to be “at-the-market” equity offerings as defined in Rule 415 promulgated under the Securities Act, including sales made directly on or through the Nasdaq Global Select Market. We may sell Shares in amounts and at times to be determined by us from time to time through the Agent and subject to the terms and conditions of the ATM Agreement, but we have no obligation to sell any of the Shares under the ATM Agreement. The offer and sale of the Shares pursuant to the ATM Agreement will terminate upon the earlier of (a) the issuance and sale of all of the Shares subject to the ATM Agreement or (b) the termination of the ATM Agreement.
We have agreed to pay the Agent a commission of up to 3.0% of the aggregate gross proceeds from any Shares sold by the Agent and to provide the Agent with customary indemnification and contribution rights, including for liabilities under the Securities Act. We also will reimburse the Agent for certain specified expenses in connection with entering into the ATM Agreement. The ATM Agreement contains customary representations and warranties and conditions to the placements of the Shares pursuant thereto.
The foregoing summary of the ATM Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the ATM Agreement, which is attached as Exhibit 1.1 to this Annual Report on Form 10-K. Cooley LLP, counsel to Olema, has issued a legal opinion relating to due authorization and valid issuance of the Shares, a copy of which, including the consent included therein, is attached as Exhibit 5.1 to this Annual Report on Form 10-K.
This Annual Report on Form 10-K shall not constitute an offer to sell or the solicitation of an offer to buy the Shares, nor shall there be any offer, solicitation, or sale of the Shares in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state.
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.
Information required by this item regarding directors and director nominees, executive officers, the board of directors and its committees, and certain corporate governance matters is incorporated by reference to the information set forth under the captions “Proposal No. 1—Election of Directors,” “Corporate Governance and Board of Directors Matters” and “Executive Officers” in our Proxy Statement for our 2023 Annual Meeting of Stockholders. Information required by this item regarding compliance with Section 16(a) of the Exchange Act, if applicable, is incorporated by reference to the information set forth under the caption “Delinquent Section 16(a) Reports” in our Proxy Statement.
Our written code of business conduct and ethics (the “Code of Conduct”) applies to all of our employees, officers and directors, including our principal executive officer, principal financial officer and principal accounting officer or controller. The Code of Conduct is available on our corporate website at https://www.olema.com/ in the Investors & Media section under “Corporate Governance.” If we make any substantive amendments to our Code of Conduct or grant any of our directors or executive officers any waiver, including any implicit waiver, from a provision of our Code of Conduct, we will disclose the nature of the amendment or waiver on our website or in a Current Report on Form 8-K. Information contained in, or that can be accessed through, our website is not incorporated by reference herein, and you should not consider information on our website to be part of this Annual Report.
Item 11. Executive Compensation.
Information required by this item regarding executive compensation is incorporated by reference to the information set forth under the captions “Executive Compensation” and “Director Compensation” in our Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
Information required by this item regarding security ownership of certain beneficial owners and management is incorporated by reference to the information set forth under the caption “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in our Proxy Statement.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
Information required by this item regarding certain relationships, related transactions and director independence is incorporated by reference to the information set forth under the caption “Transactions with Related Persons and Indemnification” and “Corporate Governance and Board Matters” in our Proxy Statement.
Item 14. Principal Accountant Fees and Services.
Information required by this item regarding principal accounting fees and services is incorporated by reference to the information set forth under the caption “Proposal No. 4—Ratification of Selection of Independent Registered Public Accounting Firm” in our Proxy Statement.
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PART IV
Item 15. Exhibit and Financial Statement Schedules.
(a) The following documents are filed as part of this Annual Report:
1. Consolidated Financial Statements. See Index to Consolidated Financial Statements in Part II Item 8 of this Annual Report.
2. Consolidated Financial Statement Schedules . None. All financial statement schedules are omitted because they are not applicable, not required under the instructions, or the requested information is included in the financial statements or notes thereto.
3. Exhibits . The following is a list of exhibits filed with this Annual Report or incorporated herein by reference:
Incorporation by Reference
Exhibit
Number
Exhibit
Description
Form
File No.
Exhibit
Filing
Date
Filed
Herewith
1.1
Sales Agreement by and between Registrant and Oppenheimer & Co. Inc., dated March 9, 2023.
X
3.1
Amended and Restated Certificate of Incorporation .
8-K
001-39712
3.1
11/23/2020
3.2
Amended and Restated Certificate of Bylaws .
8-K
001-39712
3.1
12/16/2022
4.1
Form of Common Stock Certificate .
S-1
333-249748
4.1
10/30/2020
4.2
Amended and Restated Investors’ Rights Agreement, by and among the Registrant and certain of its stockholders, dated September 30, 2020.
S-1
333-249748
4.2
10/30/2020
4.3
Description of Capital Stock .
10-K
001-39712
4.3
3/17/2021
5.1
Opinion of Cooley LLP.
X
10.1#
Olema Pharmaceuticals, Inc. 2014 Stock Plan, as amended.
S-1
333-249748
10.1
10/30/2020
10.2#
Forms of Stock Option Grant Notice, Stock Option Agreement, Early Exercise Stock Purchase Agreement and Notice of Exercise and Restricted Stock Award Grant Notice and Restricted Stock Award Agreement under the Olema Pharmaceuticals, Inc. 2014 Stock Plan.
S-1
333-249748
10.2
10/30/2020
10.3#
Olema Pharmaceuticals, Inc. 2020 Equity Incentive Plan.
S-1/A
333-249748
10.3
11/16/2020
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Incorporation by Reference
Exhibit
Number
Exhibit
Description
Form
File No.
Exhibit
Filing
Date
Filed
Herewith
10.4#
Forms of Stock Option Grant Notice and Stock Option Agreement under the Olema Pharmaceuticals, Inc. 2020 Equity Incentive Plan.
S-1
333-249748
10.4
10/30/2020
10.5#
Forms of Restricted Stock Unit Grant Notice and Restricted Stock Unit Award Agreement under the Olema Pharmaceuticals, Inc. 2020 Equity Incentive Plan.
S-1
333-249748
10.5
10/30/2020
10.6#
Olema Pharmaceuticals, Inc. 2020 Employee Stock Purchase Plan.
S-1/A
333-249748
10.6
11/16/2020
10.7#
Olema Pharmaceuticals, Inc. 2020 Non-Employee Director Compensation Policy.
S-1/A
333-249748
10.7
11/16/2020
10.8#
Form of Indemnification Agreement by and between the Registrant and its directors and executive officers.
S-1
333-249748
10.8
10/30/2020
10.9#
Amended and Restated Offer Letter by and between the Registrant and Sean Bohen, dated November 13, 2020.
S-1/A
333-249748
10.9
11/16/2020
10.10#
Amended and Restated Offer Letter by and between the Registrant and Cyrus L. Harmon, dated November 13, 2020.
S-1/A
333-249748
10.10
11/16/2020
10.11#
Amended and Restated Offer Letter by and between the Registrant and Kinney Horn, dated November 13, 2020.
S-1/A
333-249748
10.11
11/16/2020
10.12#
Amended and Restated Offer Letter by and between the Registrant and Shane Kovacs, dated November 13, 2020.
S-1/A
333-249748
10.12
11/16/2020
10.13#
Amended and Restated Offer Letter by and between the Registrant and Peter Kushner, dated November 13, 2020.
S-1/A
333-249748
10.13
11/16/2020
10.14#
Amended and Restated Offer Letter by and between the Registrant and David Myles, dated November 13, 2020.
S-1/A
333-249748
10.14
11/16/2020
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Incorporation by Reference
Exhibit
Number
Exhibit
Description
Form
File No.
Exhibit
Filing
Date
Filed
Herewith
10.15#
Amended and Restated Offer Letter by and between the Registrant and John B. Moriarty, Jr., dated November 13, 2020.
S-1/A
333-249748
10.15
11/16/2020
10.16
Clinical Collaboration and Supply Agreement by and between the Registrant and Novartis Institutes for BioMedical Research, Inc., dated July 22, 2020.
S-1
333-249748
10.16
10/30/2020
10.17#
Olema Pharmaceuticals, Inc. 2022 Inducement Plan
10-K
001-39712
10.17
2/28/2022
10.18#
Form of Stock Option Agreement and Option Grant Notice under the Inducement Plan.
10-K
001-39712
10.18
2/28/2022
10.19#
Offer Letter by and between the Registrant and Naseem Zojwalla, dated December 15, 2021.
10-K
001-39712
10.19
2/28/2022
10.20¥
Drug Discovery Collaboration and License Agreement by and between the Registrant and Aurigene Discovery Technologies Limited, dated June 7, 2022 .
10-Q
001-39712
10.1
8/9/2022
21.1
Subsidiaries of the Registrant as of December 31, 2022.
X
23.1
Consent of Independent Registered Public Accounting Firm.
X
23.2
Consent of Cooley LLP (included in Exhibit 5.1).
X
24.1
Power of Attorney (included on the Signatures page of this Annual Report on Form 10-K).
X
31.1
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
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Incorporation by Reference
Exhibit
Number
Exhibit
Description
Form
File No.
Exhibit
Filing
Date
Filed
Herewith
31.2
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
X
32.1 †
Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
32.2 †
Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
X
101.INS
XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL Document
X
101.SCH
XBRL Taxonomy Extension Schema Document
X
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
X
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
X
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
X
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
X
104
Cover Page Interactive Data File – The cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
X
# Indicates management contract or compensatory plan or arrangement.
† The certifications attached as Exhibit 32.1 and Exhibit 32.2 that accompany 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.
¥
Pursuant to Item 601(b)(10) of Regulation S-K, portions of this exhibit have been omitted as the Registrant has determined that the omitted information is the type that the Registrant customarily and actually treats as private or confidential and is not material.
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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 Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Olema Pharmaceuticals, Inc.
Date: March 9, 2023
By:
/s/ Sean Bohen, M.D., Ph.D.
Sean Bohen, M.D., Ph.D.
Chief Executive Officer
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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.
Olema Pharmaceuticals, Inc.
Date: March 9, 2023
By:
/s/ Shane Kovacs
Shane Kovacs
Chief Operating and Financial Officer
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Sean Bohen, M.D., Ph.D. and Shane Kovacs, and each of them, as his or her true and lawful attorneys-in-fact and agents, with full power of substitution for him or her, and in his or her name 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 exhibits thereto and other documents in connection therewith, with the U.S. 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 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, and either of them, his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Name
Title
Date
/s/ Sean Bohen, M.D., Ph.D.
President, Chief Executive Officer and Director
March 9, 2023
Sean Bohen, M.D., Ph.D.
( Principal Executive Officer )
/s/ Shane Kovacs
Chief Operating and Financial Officer
March 9, 2023
Shane Kovacs
( Principal Financial and Accounting Officer )
/s/ Ian Clark
Director
March 9, 2023
Ian Clark
/s/ Cynthia Butitta
Director
March 9, 2023
Cynthia Butitta
/s/ Cyrus L. Harmon
Director
March 9, 2023
Cyrus L. Harmon
/s/ Sandra J. Horning, M.D.
Director
March 9, 2023
Sandra J. Horning, M.D.
/s/ Gorjan Hrustanovic, Ph.D.
Director
March 9, 2023
Gorjan Hrustanovic, Ph.D.
/s/ Yi Larson
Director
March 9, 2023
Yi Larson
/s/ Andrew Rappaport
Director
March 9, 2023
Andrew Rappaport
/s/ Graham Walmsley, M.D., Ph.D.
Director
March 9, 2023
Graham Walmsley, M.D., Ph.D.
175