(Exact name of Registrant as specified in its Charter)

 

 

Securities registered pursuant to Section 12(b) of the Act:

 

 

i

 

 

10-K/A.

 

 

®

 

®

®

®

 

(co-founder),

 

 

1

 

 

2

 

Microsoft-NVS

 

 

CAR-T

 

 

CAR-T

 

®

 

CAR-T

 

Directors

 

co-investigator

 

 

F-star

 

 

 

3

 

 

18-year

 

 

tri-specific

 

 

4

 

 

There are no family relationships among any of our directors or executive officers.

Section 16(a) of the Exchange Act requires our directors, executive officers and beneficial owners of more than 10% of our equity securities to file reports of holdings and transactions in securities of the Company with the SEC.

Based solely on a review of on Forms 3, 4 and 5 and any amendments thereto filed electronically with the Securities and Exchange Commission with respect to the most recent fiscal year and written representations from the reporting persons, we believe all Section 16(a) filing requirements were satisfied in 2022.

Our board of directors has adopted a Code of Business Conduct and Ethics. The Code of Business Conduct and Ethics applies to all of our employees, officers (including our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions), agents and representatives, including directors and consultants.

 

 

10-K/A

 

 

10-K/A

 

 

10-K,

 

 

10-K/A

 

 

10-K.

 

5

The members of our audit committee are Christopher Martell, Renee Gaeta and Diem Nguyen, Ph.D., M.B.A. Mr. Martell is the chair of the audit committee. Ms. Gaeta and Dr. Nguyen have served as members of the audit committee since August 2022. Drs. Gandhi and Meirav previously served as members of the audit committee until their resignations from our board of directors in August 2022. Our board of directors has determined that all members of our audit committee meet the requirements for financial literacy under the applicable rules and regulations of the SEC and the Nasdaq listing rules and that Mr. Martell and Ms. Gaeta are each an “audit committee financial expert” (within the meaning of applicable SEC regulations). Each of the members of the audit committee is independent pursuant to applicable Nasdaq listing standards.

There have been no material changes to the procedures by which our stockholders may recommend nominees to the board of directors.

As permitted by Delaware law, provisions in our amended and restated certificate of incorporation and amended and restated bylaws limit or eliminate the personal liability of directors for a breach of their fiduciary duty of care as a director. The duty of care generally requires that, when acting on behalf of the corporation, a director exercise an informed business judgment based on all material information reasonably available to him or her. Consequently, a director will not be personally liable to us or our stockholders for monetary damages or breach of fiduciary duty as a director, except for liability for:

 

 

 

 

 

non-monetary

 

As permitted by Delaware law, our amended and restated bylaws provide that:

 

 

 

If Delaware law is amended to authorize corporate action further eliminating or limiting the personal liability of a director or officer, then the liability of our directors or officers will be so eliminated or limited to the fullest extent permitted by Delaware law, as so amended. Our amended and restated bylaws will also permit us to secure insurance on behalf of any officer, director, employee or other agent for any liability arising out of his or her actions in connection with their services to us, regardless of whether our bylaws permit such indemnification. We have obtained such insurance.

 

6

In addition to the indemnification that is provided for in our amended and restated certificate of incorporation and amended and restated bylaws, we have entered into indemnification agreements with each of our directors and executive officers, which may be broader than the specific indemnification provisions contained in the Delaware General Corporation Law. These indemnification agreements may require us, among other things, to indemnify our directors and executive officers for some expenses, including attorneys’ fees, expenses, judgments, fines and settlement amounts incurred by a director or executive officer in any action or proceeding arising out of his service as one of our directors or executive officers or any other company or enterprise to which the person provides services at our request. We believe that these provisions and agreements are necessary to attract and retain qualified individuals to serve as directors and executive officers.

 

10-K.

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the Securities Act), may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that, in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act, and is, therefore, unenforceable.

There is no pending litigation or proceeding naming any of our directors or officers as to which indemnification is being sought, nor are we aware of any pending or threatened litigation that may result in claims for indemnification by any director or officer.

 

As an emerging growth company, we have opted to comply with the executive compensation disclosure rules applicable to “smaller reporting companies,” as such term is defined in the rules promulgated under the Securities Act. This section provides an overview of the compensation awarded to and earned by each individual who served as our principal executive officer at any time during the year ended December 31, 2022 and to our next two most highly compensated executive officers in respect of their service to our company for our year ended December 31, 2022. We refer to these individuals as our named executive officers. Our named executive officers are:

 

 

 

 

 

 

7

The following table sets forth information regarding compensation awarded to and earned by our named executive officers for services rendered to us in all capacities during our years ended December 31, 2022 and 2021.

 

 

Our named executive officers each receive a base salary to compensate them for services rendered to our company. The base salary payable to each named executive officer is intended to provide a fixed component of compensation reflecting the executive’s skill set, experience, role and responsibilities. Base salaries are reviewed annually, typically in connection with our annual performance review process, approved by our board of directors or the compensation committee, and may be adjusted from time to time to realign salaries with market levels after taking into account individual responsibilities, performance, and experience.

For the fiscal year ended December 31, 2022, the annual base salaries for Dr. Tak, Dr. Barone and Dr. Tyagarajan were $670,000, $388,500, and $360,000, respectively.

For the fiscal year ended December 31, 2022, each of the named executive officers was eligible to earn an annual cash bonus based on the achievement of certain corporate and individual performance milestones. The target annual bonus for each of Dr. Tak, Dr. Barone and Dr. Tyagarajan for the fiscal year ended December 31, 2022 were 50%, 40% and 35% of annual base salary, respectively.

 

8

Although we do not have a formal policy with respect to the grant of equity incentive awards to our executive officers, or any formal equity ownership guidelines applicable to them, we believe that equity grants provide our executive officers with a strong link to our long-term performance, create an ownership culture and help to align the interests of our executive officers and our stockholders. In addition, we believe that equity grants with a time-based vesting feature promote executive retention because this feature incentives our executive officers to remain in our employment during the vesting period. Accordingly, our board of directors periodically reviews the equity incentive compensation of our executives, including our named executive officers, and from time to time may grant equity incentive awards to them in the form of stock options.

We typically grant stock option awards at the start of employment to each executive officer and our other employees as well as on an annual basis for retention purposes. We award our stock options on the date our board of directors or the CEO approves the grant. We set the option exercise price equal to the fair market value of our common stock on the date of grant.

 

tax-qualified

 

 

pre-tax

 

 

tax-qualified

 

All of our named executive officers are eligible to participate in our employee benefit plans, including our medical, dental and vision insurance plans, in each case on the same basis as all of our other full-time employees.

We believe the perquisites described above are necessary and appropriate to provide a competitive compensation package to our named executive officers.

 

10b5-1

 

 

10b5-1

 

 

10b5-1

 

We have entered into employment agreements with each of our named executive officers.

Effective September 12, 2020, we entered into an employment agreement with Dr. Tak (the Tak Employment Agreement), for the position of President and Chief Executive Officer. The Tak Employment Agreement provides for an annual base salary and an annual bonus opportunity. Pursuant to the Tak Employment Agreement, Dr. Tak’s annual base salary increased to $670,000 per year effective on the first anniversary of the commencement of his employment because the Company completed an underwritten public offering prior to such date. The Tak Employment Agreement provided for a

 

9

 

3-month

 

Pursuant to the Tak Employment Agreement, in the event that Dr. Tak’s employment is terminated by us without cause or by Dr. Tak for good reason outside of the 3 month period preceding and 12 month period following the first event constituting a change in control (such period, the “change in control period”), subject to the execution and effectiveness of a severance and release of claims agreement within 60 days of such termination, he will be entitled to receive (i) an amount equal to 12 months of base salary plus Dr. Tak’s target bonus for the then-current year, less any payments Dr. Tak receives pursuant to his restrictive covenants agreement with the Company, payable in installments over 12 months commencing within 60 days of termination, and (ii) subject to the Dr. Tak’s timely election to continue COBRA health coverage and copayment of premium amounts at the applicable active employees’ rate, we will continue to pay the share of the premiums that we would have paid to provide health insurance to Dr. Tak until the earlier of (A) 12 months following termination or (B) Dr. Tak’s eligibility for group medical plan benefits under any other employer’s group medical plan. In the event that such termination occurs during the change in control period, Dr. Tak will, subject to the execution and effectiveness of a general severance and release of claims agreement within 60 days of such termination, be entitled to receive (x) a lump sum payment equal to 1.5 times the sum of Dr. Tak’s then-current base salary (or base salary in effect immediately prior to the change in control, if higher), plus his target bonus for the then-current year (or his target bonus in effect immediately prior to the change in control, if higher), less any payments pursuant to Dr. Tak receives pursuant to his restrictive covenants agreement with the Company, and (y) the benefits set forth in clause (ii) of the preceding sentence but for a period of 18 months. In addition, pursuant to the Tak Employment Agreement, all equity awards held by Dr. Tak that are subject to time-based vesting will fully accelerate as of the earlier of the consummation of a “change in control” of the Company (as defined in the Tak Employment Agreement) or the termination of Dr. Tak’s employment by the Company without cause or by Dr. Tak for good reason. Furthermore, in the event of a change of control or Dr. Tak’s termination without cause or for good reason, Dr. Tak will have no less than 12 months to exercise vested, unexpired stock options.

Effective February 3, 2022, we entered into an employment agreement with Dr. Barone (the Barone Employment Agreement), for the position of Chief Scientific Officer. The Barone Employment Agreement provides for an annual base salary and an annual target bonus opportunity. Dr. Barone is eligible to participate in the employee benefit plans available to our employees, subject to the terms of those plans.

Pursuant to the Barone Employment Agreement, in the event that Dr. Barone’s employment is terminated by us without cause or by Dr. Barone for good reason, subject to the execution and effectiveness of a severance and release of claims agreement within 60 days of such termination, she will be entitled to receive (i) an amount equal to nine months of base salary plus Dr. Barone’s target bonus for the then-current year, less any payments Dr. Barone receives pursuant to her restrictive covenants agreement with the Company, payable in installments over 9 months commencing within 60 days of termination, and (ii) subject to the Dr. Barone’s timely election to continue COBRA health coverage and copayment of premium amounts at the applicable active employees’ rate, we will continue to pay the share of the premiums that we would have paid to provide health insurance to Dr. Barone

 

10

until the earlier of (A) nine months following termination, (B) Dr. Barone’s eligibility for group medical plan benefits under any other employer’s group medical plan or (C) the cessation of Dr. Barone’s health continuation rights under COBRA; provided, however, that if the Company determines that it cannot pay such amounts to the group health plan provider or the COBRA provider (if applicable) without potentially violating applicable law, then the Company shall convert such payments to payroll payments directly to Dr. Barone for the time period specified above. Pursuant to the Barone Employment Agreement, all equity awards held by Dr. Barone that are subject to time-based vesting will fully accelerate if Dr. Barone’s employment is terminated by the Company without “cause” or by Dr. Barone for “good reason” within one month prior to or 12 months following the consummation of a “change in control” (as such terms are defined in the Barone Employment Agreement).

Effective April 14, 2022, we entered into an employment agreement with Dr. Tyagarajan (the Tyagarajan Employment Agreement), for the position of Chief Technical and Development Officer. The Tyagarajan Employment Agreement provides for an annual base salary and an annual target bonus opportunity. Pursuant to the Tyagarajan Employment Agreement, Dr. Tyagarajan received a signing bonus in the gross amount of $20,000, which is subject to repayment if Dr. Tyagarajan voluntarily terminates her employment with the Company or if the Company terminates her employment for reasons excluding redundancy, ill health or a transfer of the part of the business in which he works within 12 months of the commencement of her employment. Dr. Tyagarajan is eligible to participate in the employee benefit plans available to our employees, subject to the terms of those plans.

Pursuant to the Tyagarajan Employment Agreement, in the event that Dr. Tyagarajan’s employment is terminated by us without cause or by Dr. Tyagarajan for good reason, subject to the execution and effectiveness of a severance and release of claims agreement within 60 days of such termination, she will be entitled to receive (i) an amount equal to nine months of base salary plus Dr. Tyagarajan’s target bonus for the then-current year, less any payments Dr. Tyagarajan receives pursuant to her restrictive covenants agreement with the Company, payable in installments over 9 months commencing within 60 days of termination, and (ii) subject to the Dr. Tyagarajan’s timely election to continue COBRA health coverage and copayment of premium amounts at the applicable active employees’ rate, we will continue to pay the share of the premiums that we would have paid to provide health insurance to Dr. Tyagarajan until the earlier of (A) nine months following termination, (B) Dr. Tyagarajan’s eligibility for group medical plan benefits under any other employer’s group medical plan or (C) the cessation of Dr. Tyagarajan’s health continuation rights under COBRA; provided, however, that if the Company determines that it cannot pay such amounts to the group health plan provider or the COBRA provider (if applicable) without potentially violating applicable law, then the Company shall convert such payments to payroll payments directly to Dr. Tyagarajan for the time period specified above. Pursuant to the Tyagarajan Employment Agreement, all equity awards held by Dr. Tyagarajan that are subject to time-based vesting will fully accelerate if Dr. Tyagarajan’s employment is terminated by the Company without “cause” or by Dr. Tyagarajan for “good reason” within one month prior to or 12 months following the consummation of a “change in control” (as such terms are defined in the Tyagarajan Employment Agreement).

 

11

The following table sets forth information concerning outstanding equity awards held by our named executive officers as of December 31, 2022.

 

 

We believe that although a portion of the compensation provided to our executive officers and other employees is performance-based, our executive compensation program does not encourage excessive or unnecessary risk taking.

 

12

This is primarily due to the fact that our compensation programs are designed to encourage our executive officers and other employees to remain focused on both short-term and long-term strategic goals. As a result, we do not believe that our compensation programs are reasonably likely to have a material adverse effect on us.

Director Compensation

 

non-employee

 

 

non-employee

 

 

non-employee

 

 

 

 

 

 

 

 

13

 

non-employee

 

 

non-employee

 

 

non-employee

 

 

 

 

non-employee

 

 

one-time

 

non-qualified

 

 

non-employee

 

 

non-qualified

 

 

The following table provides information relating to our equity compensation plans as of December 31, 2022. As of December 31, 2022, we had two equity compensation plans, our 2021 Stock Option and Incentive Plan and our Employee Stock Purchase Plan, which were approved by our Board of Directors and our stockholders.

 

 

14

The following table sets forth certain information known to us regarding beneficial ownership of our capital stock outstanding as of April 15, 2023 for:

 

 

 

 

We have determined beneficial ownership in accordance with the rules of the SEC, and the information is not necessarily indicative of beneficial ownership for any other purpose. These rules generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities as well as any shares of common stock that the person has the right to acquire within 60 days of April 15, 2023 through the exercise of stock options or other rights. These shares are deemed to be outstanding and beneficially owned by the person holding those options for the purpose of computing the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them. Each individual or entity shown on the table has furnished information with respect to beneficial ownership. Except as otherwise indicated below, the address of each officer, director and five percent stockholder listed below is c/o Candel Therapeutics, Inc., 117 Kendrick St, Suite 450, Needham, Massachusetts 02494.

The percentage of beneficial ownership in the table below is based on 28,919,810 shares of common stock deemed to be outstanding as of April 15, 2023.

 

 

 

15

Stockholders who want to communicate with members of the Board, including the independent directors, individually or as a group, should address their communications to the Board, the Board members or the Board committee, as the case may be, and send them by mail to c/o Candel Therapeutics, Inc., 117 Kendrick St, Suite 450, Needham, Massachusetts 02494. The Chair of the Audit Committee will forward all such communications directly to such Board members. Any such communications may be made on an anonymous and confidential basis.

 

16

 

non-management

 

 

Our Board of Directors has established an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance committee, each of which operates pursuant to a charter adopted by our Board of Directors. We believe that the composition and functioning of all of our committees will comply with the applicable requirements of Nasdaq, the Sarbanes-Oxley Act of 2002 and SEC rules and regulations that will be applicable to us. We intend to comply with future requirements to the extent they become applicable to us.

 

10-K/A

 

 

10-K,

 

 

10-K/A

 

 

10-K.

 

The following is a description of transactions or series of transactions since January 1, 2021 to which we were or will be a party, in which:

 

 

 

10-K/A

 

In July 2021, in connection with our initial public offering, we completed our initial public offering of common stock, or the IPO, at which time we issued 9,000,000 shares of our common stock at a price to the public of $8.00 per share, and on August 13, 2021, we issued an additional 887,994 common shares at $8.00 per share as a partial exercise of the underwriters’ option to purchase additional shares, resulting in total net proceeds to us of $71.3 million, after deducting underwriting discounts and commissions and offering expenses. Upon closing of the IPO, all outstanding shares of our convertible preferred stock automatically converted into 7,066,398 shares of common stock.

Certain of our directors, executive officers and our 5% stockholders purchased shares of our common stock in our IPO at the initial public offering price. The following table sets forth the number of shares of our common stock purchased by directors, executive officers and 5% stockholders and their affiliates and the aggregate purchase price paid for such shares.

 

17

 

 

co-sale

 

 

10-K.

We have entered into employment agreements with each of our named executive officers. See “Item 11 –Executive Compensation – Employment Arrangements and Severance Agreements with our Named Executive Officers.”

We have granted stock options to certain of our executive officers and members of our board of directors. See “Item 11 – Executive Compensation.”

As permitted by Delaware law, provisions in our amended and restated certificate of incorporation and amended and restated bylaws limit or eliminate the personal liability of directors for a breach of their fiduciary duty of care as a director. In addition, we have entered into indemnification agreements with each of our executive officers and the members of our board of directors which may require us to indemnify them. See “Item 11 – Executive Compensation – Limitations on Liability and Indemnification.”

Ellka Holdings, LLC (Ellka) was originally established in 2007 as an LLC for the purpose of acquiring and managing investment properties owned by two of our founders and significant shareholders, Laura Aguilar, M.D., Ph.D., and Estuardo Aguilar-Cordova, M.D., inf., Ph.D., and their children’s trusts. Ellka is owned and operated by Dr. Aguilar and Dr. Aguilar-Cordova, and members of their immediate family. Dr. Aguilar-Cordova is a member of our board of directors. In January 2008, we entered into an operating lease agreement with a term through December 31, 2022 with Ellka, for the space in which we operated in Auburndale, MA. This lease was terminated in February 2021 when we entered into a termination agreement and made a termination payment of $115,000 to Ellka, which payment was included in operating expenses for the year ended December 31, 2020. In May 2016, we entered into a separate lease agreement with Ellka for another space, also in Auburndale, MA. We entered into a renewed lease for this space on July 26, 2018, which expired on July 31, 2019. We paid Ellka a total of $17,500 and $0 in rent in 2021 and 2022, respectively, under these lease agreements.

 

18

Our board of directors reviews and approves transactions with directors, officers and holders of 5% or more of our voting securities and their affiliates, each a related party. Prior to our initial public offering in July 2021, the material facts as to the related party’s relationship or interest in the transaction were disclosed to our board of directors prior to their consideration of such transaction, and the transaction was not considered approved by our board of directors unless a majority of the directors who are not interested in the transaction approved the transaction. Further, when stockholders were entitled to vote on a transaction with a related party, the material facts of the related party’s relationship or interest in the transaction were disclosed to the stockholders, who must have approved the transaction in good faith.

In connection with our initial public offering in July 2021, our board of directors adopted a written related party transactions policy that provides that such transactions must be approved by our audit committee. This policy became effective on the date on which the registration statement related to our initial public offering was declared effective by the SEC. Pursuant to this policy, the audit committee has the primary responsibility for reviewing and approving or disapproving “related party transactions,” which are transactions between us and related persons in which the aggregate amount involved exceeds or may be expected to exceed $120,000 and in which a related person has or will have a direct or indirect material interest. For purposes of this policy, a related person will be defined as a director, executive officer, nominee for director, or greater than 5% beneficial owner of our common stock, in each case since the beginning of the most recently completed year, and their immediate family members.

 

10A-3

 

 

10C-1

 

 

10A-3

 

 

10C-1,

 

Some of our directors are affiliated with and serve on the board of directors as representatives of entities which beneficially own or owned 5% or more of our common stock, as indicated below:

 

 

19

case-by-case

 

 

10-K.

 

10-K.

 

10-K/A.

 

 

 

21

 

 

 

22