Item 5. Other Information
Item 5. Other Information.
Effective August 8, 2023, we entered into an Open Market Sales Agreement (the “Sales Agreement”) with Jefferies LLC (the “Sales Agent”), pursuant to which we may, from time to time, sell up to an aggregate amount of $300.0 million of our Class A common stock through our Sales Agent in an “at-the-market” offering (the “ATM Offering”). We are not required to sell shares under the Sales Agreement. We will pay the Sales Agent a commission of up to 3% of the aggregate gross proceeds we receive from all sales of our Class A common stock under the Sales Agreement. The Sales Agreement continues until the earlier of selling all shares available under the Sales Agreement or terminated by written notice from either of the parties. No sales have been made under the Sales Agreement.
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The ATM Offering is being made under a prospectus supplement dated August 8, 2023, and related prospectus to be filed with the Securities and Exchange Commission pursuant to our automatically effective shelf registration statement on Form S-3ASR (Registration No. 333-264845).
A copy of the Sales Agreement is attached as Exhibit 10.6 to this Quarterly Report. The foregoing description of the Sales Agreement does not purport to be complete and is qualified in its entirety by reference to Exhibit 10.6. A copy of the opinion of Wilson Sonsini Goodrich & Rosati, P.C. relating to the validity of the securities issued in the ATM Offering is filed as Exhibit 5.1 to this Quarterly Report.
We are also filing a prospectus supplement dated August 8, 2023, and related prospectus with the Securities and Exchange Commission pursuant to our automatically effective shelf registration statement on Form S-3ASR (Registration No. 333-264845) to register for resale the shares of Class A common stock issued to NVIDIA Corporation in July 2023. See Note 14, “Subsequent Events” to the Condensed Consolidated Financial Statements for additional details. A copy of the opinion of Wilson Sonsini Goodrich & Rosati, P.C. relating to the validity of such shares is filed as Exhibit 5.2 to this Quarterly Report.
On June 21, 2023 , Zavain Dar , a member of our Board of Directors , adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 20,141 shares of the Company’s Class A common stock until June 21, 2024.
The following information regarding executive compensation is provided supplementally:
Outstanding Equity Awards at 2022 Fiscal Year-End Table
The following table sets forth information concerning outstanding equity awards held by our named executive officers (NEOs) as of December 31, 2022.
Option Awards
Stock Awards
Name
Grant Date
Vesting Commencement Date
Number of
Securities
Underlying
Unexercised
Options Exercisable
(#)
Number of
Securities
Underlying
Unexercised
Options Unexercisable
(#)
Option
Exercise
Price
($/share)
Option
Expiration
Date
Number of Shares or Units of Stock that Have Not Vested
(#)
Market Value of Shares or Units of Stock that Have Not Vested
($) (1)
Christopher Gibson
12/31/2020 (2)
12/31/2020
31,250
750,000
2.48
12/31/2030
—
—
2/4/2022 (3)
2/4/2022
86,737
329,613
11.40
2/4/2032
—
—
2/4/2022 (4)
2/4/2022
5,436
—
11.40
2/4/2032
—
—
2/4/2022 (5)
2/4/2022
—
—
—
—
169,143
1,304,093
Tina Marriott Larson
7/23/2018 (6)
7/23/2018
562,000
—
1.06
7/23/2028
—
—
12/31/2020 (3)
12/31/2020
75,000
75,000
2.48
12/31/2030
—
—
2/4/2022 (3)
2/4/2022
33,170
126,056
11.40
2/4/2032
—
—
2/4/2022 (4)
2/4/2022
4,784
—
11.40
2/4/2032
—
—
2/4/2022 (5)
5/15/2022
—
—
—
—
64,688
498,744
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Michael Secora
3/4/2020 (7)
3/4/2020
468,750
351,562
2.22
3/4/2030
—
—
3/4/2020 (8)
3/4/2020
900,000
600,000
2.22
3/4/2030
—
—
2/4/2022 (3)
2/4/2022
24,306
92,378
11.40
2/4/2032
—
—
2/4/2022 (4)
2/4/2022
3,914
—
11.40
2/4/2032
—
—
2/4/2022 (5)
5/15/2022
—
—
—
—
47,404
365,485
Shafique Virani
3/4/2020 (7)
—
407,580
234,375
2.22
3/04/2020 (7)
—
—
2/4/2022 (3)
2/4/2022
16,760
63,690
11.40
2/4/2032
—
—
2/4/2022 (4)
2/4/2022
5,436
—
11.40
2/4/2032
—
—
2/4/2022 (5)
5/15/2022
—
—
—
—
32,683
251,986
Ramona Doyle
—
—
—
—
—
—
—
—
1. The amount in this column is calculated by multiplying the number of RSUs by the closing price of our common stock on the Nasdaq Global Select Market on December 30, 2022 (the last business day of fiscal 2022), which was $7.71.
2. Represents an option to purchase shares of our Class A common stock which vests as to one forty-eighth (1/48th) of the shares subject to the award shall vest one month after the vesting commencement date, and one forty-eighth (1/48th) of the shares subject to the award shall vest each month thereafter. Under the Equity Exchange Agreement, Dr. Gibson has the right to exchange the shares of Class A common stock received upon exercise of this option for shares of Class B common stock in accordance with the terms of the Equity Exchange Agreement.
3. Represents an option to purchase shares of our Class A common stock which vests as to one forty-eighth (1/48th) of the shares subject to the award shall vest one month after the vesting commencement date, and one forty-eighth (1/48th) of the shares subject to the award shall vest each month thereafter.
4. Represents an option to purchase shares of our Class A common stock that is fully vested and exercisable on the vesting commencement date pursuant to our 2021 Short-Term Incentive plan.
5. Represents RSUs that vest as to one one-sixteenth (1/16th) of the units subject the RSU beginning May 15, 2022 and every three months thereafter.
6. Represents an option to purchase shares of our Class A common stock. Twenty-Five percent (25%) of the shares subject to the award vested on July 16, 2019, and one-forty-eighth (1/48th) of the shares subject to the award vest each month thereafter.
7. Represents an option to purchase shares of our Class A common stock. One forty-eighth (1/48th) of the shares subject to the award vested on April 1, 2020, and one forty-eighth (1/48th) of the shares subject to the award vest each month thereafter.
8. Represents an option to purchase 1,500,000 shares of our Class A common stock that vest becomes cumulatively vested as to the following number of shares subject to the option upon each occurrence of certain liquidity events, subject to Mr. Secora’s continued service through the date of such Liquidity Event:
Liquidity Event Value
Cumulative Vested Shares
Greater than $7.11
150,000
Greater than $9.24
300,000
Greater than $12.02
450,000
Greater than $15.63
600,000
Greater than $20.32
750,000
Greater than $29.46
900,000
Greater than $42.72
1,050,000
Greater than $61.95
1,200,000
Greater than $89.83
1,350,000
Greater than $103.26
1,500,000
Once a number of shares subject to the option have vested upon the occurrence of a liquidity event, the number of vested shares subject to the option will not be reduced if the Liquidity Event Value in a subsequent liquidity event is lower than the Liquidity Event Value in the prior liquidity event.
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Option Exercises and Stock Vested
Option Awards
Stock Awards
Name
Number of
Shares Acquired on Exercise
(#)
Value Realized on Exercise
($) (1)
Number of Shares Acquired on Vesting
(#)
Value Realized on Vesting
($) (2)
Christopher Gibson
690,104
3,520,561
41,750
427,685
Tina Marriott Larson
150,500
1,280,277
17,317
178,957
Michael Secora
—
—
12,895
133,476
Shafique Virani
45,000
445,758
10,260
107,637
Ramona Doyle
265,625
2,146,210
4,798
40,911
1. The value realized when the stock options were exercised represents (i) the excess of the closing price of a share of our common stock as reported on the Nasdaq Global Market on the date of exercise over the per share exercise price of the stock option, multiplied by (ii) the number of option shares exercised.
2. The value realized upon vesting of RSUs is calculated by multiplying the number of restricted stock awards or RSUs vested by the closing price market price of a share of our common stock as reported on the Nasdaq Global Market on the vest date.
Estimated Payments Upon Termination or Change In Control
The following table provides an estimate of the payments and benefits that would be provided in the circumstances described in the Company’s 2023 Proxy Statement under the heading “Potential Payments Upon Termination or Change In Control—Executive Change In Control And Severance Plan” for each of the NEOs (other than Dr. Doyle), assuming the triggering event took place on December 30, 2022 (the last business day of fiscal 2022) and based on the closing of our common stock on the Nasdaq Global Select Market on that date, which was $7.71. With respect to our former NEO, Ramona Doyle, who ceased employment with us during 2022, the table below reflects the following severance benefits that Dr. Doyle received as a result of such separation: (i) a lump sum payment of $336,600, representing 9 months of her annual base salary, and (ii) a taxable lump sum payment of $10,858, which is an amount equal to the premium cost of continued health coverage under COBRA for a period of 9 months.
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Potential Payable Upon Termination Without Cause, Resignation for Good Reason, or Death or Disability
Name
Without a Change in Control
($)
With a Change in Control
($)
Christopher Gibson
Salary
520,000
520,000
Annual Incentive
—
520,000
Value of Accelerated Vesting
—
5,390,030
Healthcare Benefits
21,145
21,145
Tina Marriott Larson
Salary
343,200
457,600
Annual Incentive
—
457,600
Value of Accelerated Vesting
—
907,338
Healthcare Benefits
13,942
18,589
Michael Secora
Salary
273,000
364,000
Annual Incentive
—
364,000
Value of Accelerated Vesting
—
5,589,560
Healthcare Benefits
15,859
21,145
Shafique Virani
Salary
382,500
510,000
Annual Incentive
—
510,000
Value of Accelerated Vesting
—
1,538,705
Healthcare Benefits
13,942
18,589
Ramona Doyle
Salary
336,600
—
Annual Incentive
—
—
Value of Accelerated Vesting
—
—
Healthcare Benefits
10,858
—
Item 6. Exhibits.
Exhibit Index:
Incorporated by Reference
Exhibit number Description Form File No. Exhibit No. Filing Date Filed / Furnished Herewith
3.1 Amended and Restated Certificate of Incorporation of Recursion Pharmaceuticals, Inc.
8-K 001-40323 3.1 April 21, 2021
3.2 Amended and Restated Bylaws of Recursion Pharmaceuticals, Inc.
8-K 001-40323 3.2 April 21, 2021
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4.1 Amended and Restated Investors’ Rights Agreement by and among the Registrant and certain of its stockholders, dated September 1, 2020.
S-1/A 333-254576 4.1 April 15, 2021
4.2 Specimen Class A common stock certificate of the Registrant.
S-1/A 333-254576 4.2 April 15, 2021
4.3 Exchangeable Share Support Agreement , dated May 8, 2023.
S-3ASR 333-272281 4.2 May 30, 2023
4.4 Registration Agreement , dated May 16, 2023 , by and among the Registrant, Valence Discovery, Inc., and certain shareholders of Valence Discovery, Inc.
S-3ASR 333-272281 4.3 May 30, 2023
4.5 Registration Agreement , dated May 25, 2023 , by and among the Registrant, Recursion Canada Inc., and certain shareholders of Cyclica Inc.
8-K 001-40323 4.1 June 9, 2023
5.1 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation
X
5.2 Opinion of Wilson Sonsini Goodrich & Rosati, Professional Corporation
X
10.1 Employment Offer Letter, dated May 19, 2023, between the Registrant and Dr. David Mauro, M.D., Ph.D.
X
10.2 Stock Purchase Agreement, dated July 11, 2023, by and among the Registrant and NVIDIA.
8-K 001-40323 10.1 July 12, 2023
10.3 Registration Rights Agreement, dated July 11, 2023, by and among the Registrant and NVIDIA.
8-K 001-40323 10.2 July 12, 2023
10.4 Cyclica Inc. Second Amended and Restated Stock Option Plan
S-8 333-272282 4.4 May 30, 2023
10.5 Valence Discovery Inc. Stock Option Plan dated April 17, 2018 as amended and restated on November 16, 2021
S-8 333-272027 4.4 May 18, 2023
10.6 Open Market Sales Agreement dated August 8, 2023 by and between the Registrant and Jefferies LLC
X
23.1 Consent of Wilson Sonsini Goodrich & Rosati, P.C. (included in the opinion filed as Exhibit 5.1 )
X
23.2 Consent of Wilson Sonsini Goodrich & Rosati, P.C. (included in the opinion filed as Exhibit 5.2 )
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
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 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.
X
101.INS XBRL Instance 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 (formatted as Inline XBRL and contained in Exhibit 101) X
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* The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended. Such certifications will not be deemed to be incorporated by reference into any filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that the Registrant specifically incorporates it by reference.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized on August 8, 2023.
RECURSION PHARMACEUTICALS, INC.
By: /s/ Christopher Gibson
Christopher Gibson
Chief Executive Officer
(Principal Executive Officer)
By: /s/ Michael Secora
Michael Secora
Chief Financial Officer
(Principal Financial and Accounting Officer)
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