Item 2.02 Results of Operations and Financial Condition.
On May 10, 2022, Inovio Pharmaceuticals, Inc. (the "Company") issued a press
release announcing its financial results for the three months ended March 31,
2022. A copy of this press release is furnished as Exhibit 99.1 hereto and is
incorporated by reference herein.
In accordance with General Instruction B.2 of Form 8-K, the information in this
Item 2.02 and Exhibit 99.1 hereto are being furnished and shall not be deemed
"filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or otherwise subject to the liabilities of that
section, nor shall it be deemed incorporated by reference in any filing by the
Company under the Securities Act of 1933, as amended (the "Securities Act"), or
the Exchange Act, whether made before or after the date hereof, regardless of
any incorporation language in such a filing, except as expressly set forth by
specific reference in such a filing.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain
Officers.
(b) Resignation of J. Joseph Kim as President, Chief Executive Officer and
Director
On May 9, 2022, J. Joseph Kim, President and Chief Executive Officer of the
Company, resigned from those positions and also resigned as a member of the
Company's Board of Directors (the "Board"), in each case effective upon the
filing of the Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 2022, which is expected to occur on May 10, 2022 (such filing date,
the "Separation Date"). Dr. Kim will no longer stand for re-election at the
Company's 2022 annual meeting of stockholders to be held on May 16, 2022.
(c)(e) Appointment of Jacqueline E. Shea as President and Chief Executive
Officer
On May 10, 2022, the Board appointed Dr. Jacqueline Shea, currently the
Company's Chief Operating Officer, to serve as the Company's President and Chief
Executive Officer, effective upon the effectiveness of Dr. Kim's resignation
from those roles. Biographical information about Dr. Shea is contained in the
Company's definitive proxy statement for its 2022 annual meeting of stockholders
filed with the Securities and Exchange Commission on March 25, 2022 and is
incorporated herein by reference.
There are no related party transactions between Dr. Shea and the Company that
would require disclosure under Item 404(a) of Regulation S-K, and there is no
family relationship between Dr. Shea and any of the Company's directors or other
executive officers.
In connection with Dr. Shea's appointment as President and Chief Executive
Officer, on May 10, 2022, the Board approved, at the recommendation of the
Compensation Committee of the Board, an increase in her base salary from
$495,000 to $700,000, a one-time promotion bonus of $100,000 and an increase in
her target bonus opportunity from 50% of her current annual base salary to 60%
of her increased base salary.
In addition, on May 10, 2022, the Board approved the grant to Dr. Shea of equity
awards as follows: (a) a stock option to purchase 309,400 shares, which will
vest in four equal installments, with 25% vesting immediately on the grant date
and 25% vesting on each anniversary of the grant date thereafter, and (b) a
restricted stock unit for 198,000 shares, which will vest over three years in
three equal installments beginning on the first anniversary of the grant date,
subject in each case to Dr. Shea's continued service through the applicable
vesting date. The stock option grant will have an exercise price equal to the
closing price of the Company's common stock on the grant date.
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Each award described above is subject to the terms and conditions of the award
agreements pursuant to which they are granted. Dr. Shea will remain eligible for
additional future equity awards as may be determined by the Board, or a
committee thereof, in accordance with the Company's equity incentive plans.
(e) Separation Agreement with J. Joseph Kim
On May 10, 2022, Dr. Kim and the Company entered into a Separation Agreement
(the "Separation Agreement") that is materially consistent with, but supersedes,
Dr. Kim's employment agreement with the Company, which was filed as
Exhibit 10.19 to the Company's Annual Report on Form 10-K for the year ended
December 31, 2021 and filed with the Securities and Exchange Commission on
March 1, 2022. The Separation Agreement provides that Dr. Kim will receive,
subject to him executing a general release of claims in favor of the Company and
not revoking the agreement within the period provided by law to do so (the end
of such period, the "Effective Date"), the following separation payments and
benefits: (i) cash severance of $1,491,074, representing 24 months of his base
salary in effect as of the Separation Date, subject to standard deductions and
withholdings, payable in a lump sum within 10 days after November 11, 2022;
(ii) additional cash severance of $939,074, subject to standard deductions and
withholdings, payable in a lump sum within 10 days after November 11, 2022;
(iii) a COBRA subsidy payment of $93,913.70, paid in installments over the
24-month period following the Separation Date, provided that the first payment
will be made within 10 days after November 11, 2022, which will be inclusive of
installments otherwise payable prior to that date. The COBRA subsidy payment
equals the gross amount of 24 months of payments for premiums under Company's
health plans for Dr. Kim and his dependents, grossed up by 45% to offset the
payroll taxes and withholdings to be deducted.
Under the terms of the equity award agreements for Dr. Kim's outstanding RSUs,
as of the Separation Date, the RSUs will become fully vested. As soon as
practicable, but no later than June 9, 2022, one-half of the RSUs will be
settled in shares of Company's common stock, and one-half will be settled in
cash, based on the fair market value of the Company's common stock on the date
of settlement.
Under the terms of the Separation Agreement, the Company has agreed to retain
Dr. Kim as a non-employee advisor to the Company through May 10, 2025 (the
"Advisory Period"). Dr. Kim has agreed to provide services for up to five hours
per week for the first six months of the Advisory Period, with a de minimis time
commitment thereafter. In exchange for the advisory services, the Company has
agreed to pay Dr. Kim a $15,000 monthly retainer for the first six months of the
Advisory Period, then a $5,000 monthly retainer for the second six months of the
Advisory Period and a $25,000 annual retainer for the last two years of the
Advisory Period. Dr. Kim's outstanding stock options will continue to vest
during the Advisory Period, and the Company has agreed to extend the exercise
period of Dr. Kim's vested stock options so that they remain exercisable until
five years after the Separation Date or, if earlier, the original expiration
date of the vested options.
In addition to the foregoing benefits, for one year from the Separation Date,
Dr. Kim will have continued access to an executive coach at the Company's
expense. The Company will also reimburse Dr. Kim for up to $15,000 in legal
expenses incurred in connection with the negotiation of the Separation
Agreement.
The foregoing description of the Separation Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of the
Separation Agreement, a copy of which will be filed as an exhibit to the
Company's Quarterly Report on Form 10-Q for the quarter ending June 30, 2022.
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Item 7.01. Regulation FD Disclosure.
On May 10, 2022, the Company issued a press release announcing the management
transition. A copy of this press release is furnished herewith as Exhibit 99.2
to this Current Report. The information contained in this Item 7.01 and in the
press release furnished as Exhibit 99.2 shall not be deemed "filed" for purposes
of Section 18 of the Exchange Act and is not incorporated by reference into any
of the Company's filings under the Securities Act or the Exchange Act, whether
made before or after the date hereof, except as shall be expressly set forth by
specific reference in any such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit
Number
99.1 Press Release, dated May 10, 2022, "INOVIO Reports First Quarter
2022 Financial Results and Program Developments."
99.2 Press Release, dated May 10, 2022, "INOVIO Announces the Appointment
of Jacqueline Shea, Ph.D., as Chief Executive Officer."
104 Cover Page Interactive Data File (formatted as inline XBRL).
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