Indicate by check mark if the registrant is a well-known
seasoned issuer, as defined by Rule 405 of the Securities Act.
¨
Yes
þ
No
Indicate by check mark if the registrant is not required
to file reports pursuant to Section 13 or Section 15(d) of the Act.
¨
Yes
þ
No
Indicate by check mark whether the registrant: (1) has
filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
þ
Yes
¨
No
Indicate by check mark whether the registrant has
submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and
posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files).
þ
Yes
¨
No
Indicate by check mark if disclosure of delinquent
filers pursuant to item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s
knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment
to this Form 10-K.
þ
Indicate by check mark whether the registrant is
a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company.
Indicate by check mark whether the registrant is
a shell company (as defined in Rule 12b-2 of the Act). Yes
¨
No
þ
The aggregate market value of the Registrant’s
voting stock held by non-affiliates of the Registrant as of June 30, 2015 was approximately $16.4 million. Shares of voting
stock held by each executive officer and director and by each person who owns 10% or more of the Registrant’s voting stock
have been excluded in that such persons may be deemed affiliates of the Registrant. This determination of affiliate status is not
necessarily a conclusive determination for other purposes.
As of April 22, 2016, the Registrant had 14,994,051
shares of common stock, par value $0.0001 per share, issued and outstanding.
This Amendment No. 1 to Form 10-K (this “Amendment”)
amends our Annual Report on Form 10-K for the fiscal year ended December 31, 2015 (the “Original Filing”), which was
filed with the Securities and Exchange Commission, or SEC, on March 22, 2016.
We
are filing this Amendment to present the information required by Items 10, 11, 12, 13 and 14 of Part III of Form 10-K
because a definitive proxy statement containing such information will not be filed within 120 days after the end of our fiscal
year covered by the Original Filing.
This Amendment amends and restates
in its entirety Items 10, 11, 12, 13 and 14 of Part III and amends Part IV of the Original Filing. Except as expressly
set forth herein, this Amendment does not reflect events occurring after the date of the Original Filing or modify or update any
of the other disclosures contained therein in any way other than as required to reflect the amendments discussed above. Accordingly,
this Amendment should be read in conjunction with the Original Filing and our other filings with the SEC.
Unless the context requires otherwise,
all references in this Amendment, or this Report, to “Rock Creek,” “Company,” “we,” “our,”
“us,” “our company” and similar terms refer to Rock Creek Pharmaceuticals, Inc. and its wholly owned subsidiaries.
Part III
|
ITEM 10.
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
Directors
The following table and text set forth
the name, age and positions of each of our current directors, together with certain biographical information.
|
|
|
Name
|
Age
|
Position
|
|
|
|
Lee M. Canaan (1)(2)(3)
|
59
|
Director
|
Michael J. Mullan, MBBS (MD) PhD
|
59
|
Chairman and CEO
|
Sunitha Chudru Samuel (2)(3)
|
39
|
Director
|
Robert W. Scannell (1)(2)(3)
|
57
|
Director
|
Scott P. Sensenbrenner (1)
|
46
|
Director
|
(1)
|
Member of the Audit Committee.
|
(2)
|
Member of the Compensation Committee.
|
|
(3)
|
Member of the Nominating and Corporate Governance Committee.
|
|
Lee M. Canaan
. Ms. Canaan has served
as a member of our Board of Directors since August 1, 2014. Ms. Canaan has been a portfolio manager at Braeburn Capital Partners,
LLC, a private investment fund, since September 2003. During her time with Braeburn Capital Partners, Ms. Canaan founded and established
the fund’s investment management business. In addition, Ms. Canaan served as the Corporate Development Partner of Quantum
Ventures of Michigan, LLC, a private equity firm, from September 2011 to November 2012. Prior to founding Braeburn, Ms. Canaan
was on the high yield bond investment team at AIM Management, part of the Invesco family of investment management services. Ms.
Canaan began her financial career as an analyst and investment manager in the corporate treasury operations of ARCO, a Fortune
100 oil and gas company acquired by BP in 2000. Prior to that, she was a geophysicist for AMOCO Production Company. Ms. Canaan
received an MBA in Finance from The Wharton School at the University of Pennsylvania, a Masters in Geophysics from the University
of Texas at Austin, and a BS in Geological Sciences from the University of Southern California. She currently holds the Chartered
Financial Analyst (CFA) designation.
Ms. Canaan is on the board of Panhandle
Oil and Gas (NYSE: PHX), where she serves on the Governance and Nominating (chairman) and Audit committees. She also
served as a director of Equal Energy Ltd. (NYSE: EQU) and was a member of the Audit and the Reserves committees from May 2013 until
the company was sold in July 2014. Previous public company board service includes Noble International (NASDAQ: NOBL)
and Oakmont Acquisition Corporation (AMEX: OMAC).
Ms. Canaan understands the history of our
Company from the perspective of both a long-time shareholder and professional investment manager. Her extensive experience in the
public and private capital markets as well as financial analysis, mergers and acquisitions, and prior public-company board experience
provides value to our Company’s Board of Directors in its efforts to finance our pharmaceutical development and evaluate
potential partnering or other strategic activities.
Michael John Mullan MBBS(MD),PhD.
Dr.
Mullan has served as a member of our Board of Directors since December 2013. Dr. Mullan was elected as our Chief Executive Officer
and Chairman of our Board following the Annual Meeting held on December 27, 2013. Dr. Mullan is a global leader in medical
research and until October 2013 he served as Chief Executive Officer and President of the Roskamp Institute. He currently serves
as a consultant to the Roskamp Institute and is CEO of Archer Pharmaceuticals, Inc.
Dr. Mullan brings a highly unique set of skills
to our Board as a seasoned executive, physician and clinical researcher. In light of our Company’s focus on the development
of pharmaceutical products, Dr. Mullan’s scientific and clinical background are highly appropriate. Further, Dr. Mullan has
important experience acting in a leadership position in medical research organizations and is well-known and respected in his field.
Dr. Mullan has co-authored more than 200
articles on an array of medical topics, including novel treatments for central nervous system disorders such as Alzheimer's disease.
Dr. Mullan received his medical degree, MBBS (MD) and PhD in Molecular Genetics from London University.
Dr.
Sunitha Chundru Samuel
. Dr. Samuel has served as a member of our Board of Directors since April 20, 2015. Dr. Samuel has been
the Chief Executive Officer of Sierra Molecular Corporation (“Sierra”), a privately-held pharmaceutical development
company, since 2009. Dr. Samuel also serves on the board of directors of Sierra. Prior to her service with Sierra, Dr. Samuel
co-founded Cambridge Devices, Inc., a company focused on developing technologies to capture, process and analyze tissue identification
test information, in 2004.
Dr. Samuel’s
extensive experience as a founder and executive of medical device and pharmaceutical development companies will provide valuable
insights to the Company’s Board of Directors relating to the Company’s research and development of pharmaceutical products,
as well as its development and management of strategic partnerships. Dr. Samuel can also provide our Board of Directors and management
valuable insights regarding sales and marketing of the Company’s products if the Company obtains requisite regulatory approvals
to market such products.
Robert W. Scannell
. Mr. Scannell
has served as a member of our Board of Directors since November 17, 2015. Mr. Scannell is a co-founder and has been a General Partner,
since October 2014, of Iaso Advisors, LLC, an investment fund that invests in healthcare assets. Mr. Scannell was the founder and
a General Partner, from October 1994 to October 2014, of Tradewinds Investment Management, LP, an investment fund that for the
past 20 years has managed numerous funds investing in emerging markets, distressed businesses, and deep-value strategies. Prior
to founding Tradewinds, Mr. Scannell spent 8 years in Institutional Sales at Merrill Lynch Capital Markets. He holds a BA and MBA
from Penn State University, a JD from Concord Law School, and is a CFA charter holder. He also sits on the boards of Chalkzen,
Inc. and Mobiplex, Inc., both of which are privately held technology companies. We believe that Mr. Scannell’s extensive
experience with investment and capital raising in the healthcare sector will be a valuable asset to our Board of Directors and
stockholders.
Scott P. Sensenbrenner.
Mr. Sensenbrenner
has served as a member of our Board of Directors since December 2013. Mr. Sensenbrenner has extensive experience in the areas of
nutraceutical marketing, supply chain, operations and financial management in the natural products industry. Mr. Sensenbrenner
has served as the Chief Executive Officer and a director for Enzymedica Inc., a market leader in the area of enzymes supplementation,
since 2009. From 2004 to 2009, Mr. Sensenbrenner acted as Vice President of Marketing and Sales for Thorne Research and from 2001
to 2004 he served as the Group Director of the Nutrition Division for Perrigo, Inc. Mr. Sensenbrenner led the marketing efforts
at Enzymatic Therapy in the 1990s, when the firm introduced many of the leading products sold in the natural products industry
today including Glucosamine, CoQ10, St. John’s Wort, 7Keto, Policosanol, Red Yeast Rice, Standardized Herbs, IP-6, KAVA,
and Black Cohosh. In each of these roles, Mr. Sensenbrenner designed and orchestrated business strategies and executed category-changing
product introductions. Mr. Sensenbrenner also served as an advisory director of Z Trim Holdings, a public company, from 2006 to
2007. Mr. Sensenbrenner received his Bachelor of Science degree in Journalism from the University of Wisconsin. Mr. Sensenbrenner
also serves on the board of the Roskamp Institute.
Mr. Sensenbrenner’s nutraceutical
and pharmaceutical marketing experience will be valuable given that a key component of the corporate transition matters is a focus
on market acceptance of pharmaceutical products (as well as continuing to market the Company’s existing nutraceutical supplements
and our cosmetic line of products). Thus, if our Company obtains any requisite regulatory approvals to market pharmaceutical products,
we expect Mr. Sensenbrenner will be able to provide the our Board of Directors and our management with valuable insight and guidance
with respect to the marketing of such products.
Executive Officers
The following table and text set forth
the name, age and positions of each of our current executive officers, together with certain biographical information.
|
|
|
|
Name
|
Age
|
|
Position
|
Michael J. Mullan, MBBS (MD) PhD
|
59
|
|
Chief Executive Officer
|
|
|
|
|
Willaim L. McMahon
|
63
|
|
Chief Financial Officer
|
Michael John Mullan MBBS(MD),PhD.
Please
see “Directors” above.
William L. McMahon
. Mr. McMahon served
at the Chief Financial Officer for Neptune Minerals, Inc., a company engaged in deep ocean minerals exploration and resource development.
Mr. McMahon joined Neptune Minerals in January 2012 after serving as an interim CFO while as a partner in Tatum LLC, a firm specializing
in interim CFO positions, and continues to serve as Neptune’s Chief Financial Officer on a part-time basis. Prior to Neptune,
from January 2011 to January 2012 Mr. McMahon served as a Partner of Tatum LLC, where he was responsible for interim CFO positions
for clients of Tatum. From January 2010 to January 2011, Mr. McMahon as an independent contractor providing financial management
consulting services to privately held manufacturing clients. During the course of his career, Mr. McMahon has participated in raising
equity and debt capital, working with senior lenders and private equity partners. During his 35 plus year career, Mr. McMahon has
also served as Chief Financial Officer, Controller and Treasurer for various small to medium size public and private companies.
Mr. McMahon has a diverse industry background working in manufacturing, distribution, transportation and logistics, retail and
hospitality as well as defense, high tech and wireless communication. Mr. McMahon holds a Bachelor of Science in Accounting degree
from DePaul University in Chicago, Illinois.
Section 16 (a) Beneficial Ownership Reporting Compliance
Section 16 of the Securities Exchange
Act of 1934, as amended, requires directors and executive officers and persons, if any, owning more than ten percent of a class
of our company’s equity securities to file with the Securities and Exchange Commission initial reports of ownership and reports
of changes in ownership of our company’s equity and equity derivative securities. Based solely upon a review of the copies
of such reports and written representations from reporting persons, we believe that all Section 16(a) filing requirements
applicable to our officers, directors and greater than ten percent stockholders were complied with on a timely basis for the year
ended December 31, 2015.
Material
Changes to Nominee Recommendation Procedures
There
are no material changes to the procedures by which stockholders may recommend nominees to our Board.
Code of Corporate Conduct
We have adopted a Code of Corporate Conduct
that applies to all of our company’s directors, officers (including our Chief Executive Officer, Chief Financial Officer,
Controller and any person performing similar functions) and employees. The Code of Ethics may be found on our company’s website
at:
www.rockcreekpharmaceuticals.com
.
We
will disclose any amendment to the Code of Corporate Conduct or waiver of a provision of the Code of Corporate Conduct, including
the name of the person to whom the waiver was granted, on our website on the Investor Relations page within four business days
following the date of such amendment or waiver.
Information contained on our website is not part of this Report and is not
incorporated in this Report by reference.
Audit Committee
We currently maintain an Audit Committee
which has responsibility for the appointment of our independent registered public accountants, reviews our internal accounting
procedures and financial statements, and consults with and reviews the services provided by our independent registered public accountants,
including the results and scope of their audits. The Audit Committee is currently comprised of Ms. Canaan and Mssrs. Scannell and
Sensenbrenner, , each of whom are independent under the applicable rules of the Securities and Exchange Commission and The Nasdaq
Global Market. The Board of Directors has determined that Ms. Lee M. Canaan, who is the Chairman of the Audit Committee, also qualifies
as an “Audit Committee Financial Expert” as defined by the rules of the Securities and Exchange Commission.
ITEM 11.
EXECUTIVE COMPENSATION
The purpose of this Executive Compensation
section is to provide material information about the compensation of the following current and former executive offices, who are
referred to as our Named Executive Officers or “Named Executives”: Michael John Mullan, MBBS (MD) PhD, our Chairman
and Chief Executive Officer, Christopher C. Chapman, our former President, and Benjamin M. Dent, our former CFO.
Summary Compensation Table
The following table summarizes the compensation
paid to the Named Executives during 2014 and 2015, for services rendered in all capacities to our Company and its subsidiaries.
Name and
Principal Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Options
($)
(1)
|
|
|
All Other
Compensation
($)
|
|
|
Total($)
|
|
Michael J. Mullan
|
|
|
2014
|
|
|
|
600,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
73,728
|
(3)
|
|
|
673,728
|
|
Chief Executive Officer
|
|
|
2015
|
|
|
|
600,000
|
(2)
|
|
|
-
|
|
|
|
-
|
|
|
|
58,987
|
(3)
|
|
|
658,987
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Christopher C. Chapman
(4)
|
|
|
2014
|
|
|
|
300,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
84,770
|
(5)
|
|
|
384,770
|
|
President
|
|
|
2015
|
|
|
|
150,000
|
(6)
|
|
|
-
|
|
|
|
-
|
|
|
|
132,617
|
(7)
|
|
|
207,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benjamin M. Dent
(8)
|
|
|
2014
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
Chief Financial Officer
|
|
|
2015
|
|
|
|
96,923
|
|
|
|
|
|
|
|
|
|
|
|
18,085
|
(9)
|
|
|
115,007
|
|
|
(1)
|
Amounts represent the grant date fair value of the stock
options vested in the respective year. For the assumptions used in calculating the value of these awards, see Note 8 to our consolidated
financial statements included in Item 15 of our Annual Report on Form 10-K for the year ended December 31, 2015.
|
|
(2)
|
Includes $133,306 of stock issued in lieu of cash compensation.
|
|
(3)
|
Represents $18,000 for auto allowance and $55,728 in
life and disability insurance for 2014 and $18,000 for auto allowance and $40,987 in life and disability insurance for 2015.
|
|
(4)
|
Dr. Chapman resigned from our Company effective June
30, 2015.
|
|
(5)
|
Represents $18,000 in auto allowance $60,400 in life insurance and disability premiums,
$1,200 in club dues, $5,530 in matching contributions by our company under our 401(k) Plan.
|
|
(6)
|
Includes $57,712 cash compensation paid in stock.
|
|
(7)
|
Represents $75,000 in severance, $9,000 in auto allowance, $40,137 in life insurance and
disability
premiums, $610 in club membership and $7,870 in matching contributions by our company under our 401(k) Plan.
|
|
(8)
|
Mr. Dent was not employed by the Company in 2014. Mr.
Dent resigned from our Board of Directors effective February 1, 2015 to become the CFO of our Company. Mr. Dent resigned
as our CFO effective August 14, 2015.
|
|
(9)
|
Represents temporary housing reimbursements made to Mr.
Dent.
|
Employment Agreements
Dr. Mullan
We entered into an executive employment
agreement with Dr. Mullan in December 2013, which expired on December 27, 2015. In 2015, the base salary of Dr. Mullan was $600,000
pursuant to this employment agreement. However, in view of the Company’s limited financial resources during the last fiscal
quarter of 2014 and continuing to date, Dr. Mullan voluntarily agreed to defer the payment of his base salary until March 29, 2015.
On February 20, 2015, our Board of Directors and Compensation Committee approved the payment of such deferred salary (net of taxes
withheld and other legally required withholdings) in shares of Company common stock issued under the Company’s 2008 Incentive
Award Plan based on the volume weighted average price of the Company’s shares as of the relevant payment date. Such shares
were issued to Dr. Mullan on June 15, 2015. Dr. Mullan and our Compensation Committee have agreed to continue to abide by the expired
agreement on a month by month basis in 2016 until a new agreement is executed.
Our Compensation Committee has determined
that certain elements of Dr. Mullan’s employment agreement should be modified to take into account the significant changes
that have occurred with respect to the Company since December 2013, as well as the Company’s limited capital resources. In
anticipation of the potential modifications and in order to conserve cash resources, in addition to agreeing to temporarily defer
his base salary and accept shares in lieu of deferred salary, Dr. Mullan agreed to defer the payment of any cash bonuses and performance-based
stock awards (and the vesting of his performance-based option awards) to which he may be otherwise entitled under his employment
agreement until such time as he and the Compensation Committee have completed discussions regarding the potential amendment or
modification of his employment agreement. We anticipate executing a new employment agreement with Dr. Mullan in 2016.
The executive employment agreement with
Dr. Mullan contains a severance provision that provide for continued payments of salary and benefits as described below:
Without Cause
. Upon a termination without
cause, Dr. Mullan shall be entitled to all salary, benefits, bonuses and other compensation that would be due to him had he served
out the remainder of the term of his employment agreement. With respect to Dr. Mullan’s equity awards, such awards shall
not vest and accelerate, but rather will continue to vest pursuant to the terms of his employment agreement..
Good Reason
. Upon a termination for
good reason, Dr. Mullan shall be entitled to the same benefits as described above related to a termination without cause.
Change of Control
. Upon a termination
following a change of control of the Company, Dr. Mullan shall be entitled to (i) a cash payment of $2.5 million, (ii) a payment
related to any tax liability incurred by him under Section 280G of the Code, and (iii) all outstanding equity awards would become
fully vested and accelerate.
“Change in Control”
means: (a) a change in ownership or control of the Company
effected through a transaction or series of transactions whereby any person or persons acting in concert directly or indirectly
acquires beneficial ownership of securities of the Company possessing more than fifty present (50%) of the total combined voting
power of the Company’s securities outstanding immediately after such transaction, or (b) a sale or disposition, in one or
a series of related transactions, of all or substantially all of the assets of the Company to any person or persons acting in concert.
Death
. Upon death, Dr. Mullan’s
estate would be entitled to all salary and accrued benefits that would have been payable by us to him during the one year period
immediately following death. In addition, all outstanding equity awards would become fully vested and accelerate.
Disability
. Upon a termination for
disability, Dr. Mullan shall be entitled to the same benefits as described above related to a termination upon death.
If Dr. Mullan terminated his employment without cause,
or we terminated his employment for good reason, he would only be entitled to accrued and unpaid salary, and all unvested equity
awards would be forfeited by him.
The employment agreement with Dr. Mullan
and our other executive officers each contain (or contained, as applicable) noncompetition covenants following the termination
of employment as well as covenants relating to the treatment of confidential information disclosed to them during their employment
with our Company. The noncompetition covenants prohibit these individuals from owning a company or accepting employment with an
entity that competes in the same field as our Company or soliciting business of the same or similar type being carried on by our
Company for a period of one year following termination of employment.
Outstanding Equity Awards as of December 31, 2015
The following table provides information
regarding the stock options held by the Named Executives as of December 31, 2015. All time-based stock options were fully
vested and exercisable as of December 31, 2015.
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(1)
|
|
|
Option
Exercise
Price
($)
|
|
|
Option
Expiration
Date
|
|
Christopher C Chapman
|
|
|
2,000
|
|
|
|
|
|
|
|
72.25
|
|
|
|
9/22/16
|
|
|
|
|
2,000
|
|
|
|
|
|
|
|
25.25
|
|
|
|
9/22/17
|
|
|
|
|
2,000
|
|
|
|
|
|
|
|
100.75
|
|
|
|
9/22/18
|
|
|
|
|
2,000
|
|
|
|
|
|
|
|
24.50
|
|
|
|
9/22/19
|
|
|
|
|
2,000
|
|
|
|
|
|
|
|
68.00
|
|
|
|
4/5/20
|
|
|
|
|
2,000
|
|
|
|
|
|
|
|
57.50
|
|
|
|
9/22/20
|
|
|
|
|
2,000
|
|
|
|
|
|
|
|
72.00
|
|
|
|
9/22/21
|
|
|
|
|
2,000
|
|
|
|
|
|
|
|
75.50
|
|
|
|
4/5/22
|
|
|
|
|
2,000
|
|
|
|
|
|
|
|
98.25
|
|
|
|
9/22/22
|
|
|
|
|
2,000
|
|
|
|
|
|
|
|
47.50
|
|
|
|
9/22/23
|
|
|
|
|
20,000
|
|
|
|
|
|
|
|
31.25
|
|
|
|
12/27/23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Michael J. Mullan
|
|
|
40,000
|
|
|
|
80,000
|
|
|
|
31.25
|
|
|
|
12/27/23
|
|
|
|
|
|
|
|
|
120,000
|
|
|
|
29.00
|
|
|
|
1/2/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Benjamin M. Dent
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
(1)
|
These stock options are subject to performance based
vesting criteria as follows: (a) 40,000 shares will vest on the date of the Company’s first Investigational New Drug (IND)
and/or Clinical Trial Application (CTA) filing occurring after December 27, 2013; (b) 40,000 shares will vest on the last day
of first calendar quarter occurring after December 27, 2013 within which the Company’s cash receipts attributable to operations
of the Company’s consumer products line of business exceeds expenses (without regard to overhead) attributable to such operation;
(c) 40,000 shares will vest on the last day of the first calendar quarter occurring after December 27, 2013 within which earnings
of the Company (without regard to interest, depreciation, amortization or taxes) is reported as positive; and (d) 80,000 shares
will vest on the date of commencement of human clinical trials with respect to the Company’s first IND and/or CTA filing
occurring after December 27, 2013. Notwithstanding the foregoing and as described above under “
Employment Agreements
,
” the Compensation Committee and Dr. Mullan has mutually agreed to defer any payment or vesting of the above stock awards
and options until the Compensation Committee and Dr. Mullan complete their discussions with the Compensation Committee regarding
potential changes to his employment agreement.
|
Board of Director Compensation
In compensating directors, our Company
has sought to use a combination of payments for participation in director and committee meetings, initial anniversary stock option
grants and periodic stock option grants. The combination of payments for meeting attendance and stock option grants is intended
to motivate and align the interests of the directors with those of our Company. Also, we have sought to use the combination of
payments to directors for attendance at meetings and stock option grants to attract directors who have particular skills and expertise
that would complement our Company’s mission, particularly in the areas of finance, new product development, medical research,
and other health-related areas.
Each of our Company’s independent
directors, or the “Independent Directors,” is granted a stock option to purchase up to 2,000 shares of our common stock
on the date such Independent Director is first elected to the Board of Directors, vesting in equal installments on each of the
first two anniversaries of the date of grant. As an annual retainer, each Independent Director additionally receives a stock option
to purchase up to 2,000 shares of our common stock granted on each anniversary of such Independent Director’s initial election
to the Board of Directors, exercisable immediately. Each Independent Director also receives a payment of $4,500 for participation
in each meeting of the Board of Directors and any committee meeting attended in person and $3,500 for participation in each meeting
of the Board of Directors and any committee meeting attended telephonically, subject to a cap of $6,000 for multiple in-person
or telephonic meetings on the same day. Additionally, the chairman of the Audit Committee is to receive a separate fee of $20,000
per year for services in that capacity, although the fee has been waived at times in the past, and the chairman of the Compensation
Committee is to receive a separate fee of $15,000 per year for services in that capacity.
Directors who are employees of our Company
receive compensation in their capacity as employees but do not receive any compensation for Board or committee meetings, nor do
they receive the “options package” made available to individuals serving as Independent Directors.
The following table sets forth, for our
Company’s 2015 Independent Directors, certain information regarding fees earned and equity awards granted during the year
ended December 31, 2015.
Name
|
|
Fees Earned or
Paid in Cash
($)
(1)
|
|
|
Option Grant
Date Fair Value
($)
(2)
|
|
|
Total
($)
|
|
Lee M. Canaan
(3)
|
|
|
84,500
|
|
|
|
1,900
|
|
|
|
86,400
|
|
Benjamin M. Dent
(3)
|
|
|
3,500
|
|
|
|
-
|
|
|
|
3,500
|
|
Edward J. McDonnell
(3)
|
|
|
16,500
|
|
|
|
-
|
|
|
|
16,500
|
|
Sunitha Chundru Samuel
(3)
|
|
|
52,000
|
|
|
|
2,800
|
|
|
|
54,800
|
|
Robert W. Scannell
(3)
|
|
|
3,500
|
|
|
|
1,300
|
|
|
|
4,800
|
|
Scott P. Sensenbrenner
(3)
|
|
|
69,500
|
|
|
|
1,000
|
|
|
|
70,500
|
|
|
(1)
|
This column represents the amount of compensation earned
by each 2015 Independent Director during 2015 in the form of director fees.
|
|
(2)
|
Amounts represent the grant date fair value of the stock
options. For the assumptions used in calculating the value of these awards, see Note 13 to our consolidated financial statements
included in Item 15 of the Annual Report on Form 10-K for the year ended December 31, 2015.
|
|
(3)
|
Ms. Canaan and Mr. Sensenbrenner were elected to serve
one year terms as director at our annual stockholder meeting held on April 10, 2015. Mr. Dent resigned from his Board positon
effective February 1, 2015 to accept the CFO position with the Company. Mr. Dent resigned as the Company’s CFO
effective August 14, 2015. Mr. McDonnell was elected to serve a one year term at our annual stockholder meeting held
on November 21, 2014, and resigned from the Board April 2, 2015, and his stock options, which had not yet vested, were terminated
on that date. Ms. Sunitha Chudru Samuel was elected to the Board of Directors on April 20, 2015. Mr. Robert W. Scannell
was elected to the Board of Directors on November 17, 2015.
|
The following represents the number of
options granted to each Independent Director in 2015 and the total number of options held by each such Independent Director as
of December 31, 2015.
Name
|
|
Options
Granted 2015
|
|
|
2015 Vested
Options
|
|
|
Option
Exercise Price
($)
|
|
|
Option
Expiration
Date
|
|
|
Total Options
Outstanding as of
December 31, 2015
|
|
Lee M. Canaan
(1)
|
|
|
2,000
|
|
|
|
3,000
|
|
|
|
1.18
|
|
|
|
8/1/25
|
|
|
|
4,000
|
|
Edward J. McDonnell
(1)
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Sunitha Chundru Samuel
(1)
|
|
|
2,000
|
|
|
|
-
|
|
|
|
3.00
|
|
|
|
04/20/25
|
|
|
|
2,000
|
|
Scott P. Sensenbrenner
(1)
|
|
|
2,000
|
|
|
|
3,000
|
|
|
|
0.72
|
|
|
|
12/27/25
|
|
|
|
6,000
|
|
Robert W. Scannell
(1)
|
|
|
2,000
|
|
|
|
-
|
|
|
|
0.91
|
|
|
|
11/17/25
|
|
|
|
2,000
|
|
|
(1)
|
Ms. Canaan and Mr. McDonnell were initially elected to
the Board on August 1, 2014 and November 21, 2014, respectfully. Ms. Samuel was elected to the board on April 20, 2015.
Initial stock options awarded to directors vest over a two year period, therefore, 1,000 vested on their anniversary dates in
2015. Mr. McDonnell resigned prior to his anniversary date; accordingly, no options vested and all were forfeited. As of December
31, 2015, none of the options issued to Dr. Samuel vested. The shares vesting in 2015 for Mr. Sensenbrenner include 50% of the
shares from his initial grant on December 27, 2013 and his anniversary grant of 2,000 shares in 2015.
|
As of April 22, 2016, we are in arrears in paying board fees
in the amount of $262,475 for Committee Chair stipends and meetings held since December 2014.
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
The following table sets forth, as of April
22, 2016, certain information with respect to the beneficial ownership of our Company’s common stock by each beneficial owner
of more than 5% of our Company’s common stock, each director, each current named executive officer, and all directors and
executive officers of our Company as a group. As of April 22, 2016, there were 14,944,051 shares of our Company’s common
stock outstanding.
Name
|
|
Shares
Beneficially
Owned
(1)
|
|
|
Percentage
Owned
(2)
|
|
Named Executive Officers
|
|
|
|
|
|
|
Michael J. Mullan
(3)
|
|
|
74,376
|
|
|
|
*
|
|
Christopher C. Chapman
(4)
|
|
|
71,711
|
|
|
|
*
|
|
Benjamin M. Dent
|
|
|
-
|
|
|
|
-
|
|
Directors Who Are Not Named Executive Officers
|
|
|
|
|
|
|
|
|
Lee M. Canaan
(5)
|
|
|
3,000
|
|
|
|
*
|
|
Sunitha Chundru Samuel
(6)
|
|
|
6,500
|
|
|
|
|
|
Robert W. Scannell
(7)
|
|
|
1,297,891
|
|
|
|
8.3
|
%
|
Scott P. Sensenbrenner
(8)
|
|
|
6,000
|
|
|
|
*
|
|
All Directors and Executive Officers
as a Group (7 Persons)
(9)
|
|
|
1,459,478
|
|
|
|
9.2
|
%
|
Other Beneficial Owners of 5% or More of the Outstanding Common Stock of the Company
|
|
|
|
|
|
|
|
|
None
|
|
|
|
|
|
|
|
|
|
*
|
Denotes less than 1% beneficial ownership.
|
|
(1)
|
Beneficial ownership is determined in accordance with
rules of the SEC and includes shares over which the indicated beneficial owner exercises voting and/or investment power. Shares
of common stock subject to options or warrants currently exercisable or exercisable within 60 days are deemed outstanding for
purposes of computing the percentage ownership of the person holding such securities, but not deemed outstanding for purposes
of computing the percentage ownership of any other person. Except as indicated, and subject to community property laws where applicable,
the persons named in the table above have sole voting and investment power with respect to all shares of voting stock shown as
beneficially owned by them. Unless otherwise noted, the address for each of the above stockholders is c/o Rock Creek Pharmaceuticals,
Inc., 2040 Whitfield Ave., Suite 300, Sarasota, Florida 34243.
|
|
(2)
|
The “Percentage Owned” calculations are based
on the outstanding shares of our common stock as of April 22, 2016.
|
|
(3)
|
Includes 40,000 shares that Dr. Mullan has the right
to acquire upon exercise of stock options, on or before the 60
th
day following April 22, 2016.
|
|
(4)
|
Includes 40,000 shares that Dr.Chapman has the right
to acquire upon exercise of stock options, on or before the 60
th
day following April 22, 2016.
|
|
(5)
|
Ms. Canaan was granted a stock option for 2,000 shares
upon her appointment to our Board of Directors on August 1, 2014. Those option shares will vest in 1,000 share increments on August
1, 2015 and August 1, 2016. Ms. Canaan also received her Board of Directors anniversary grant of options to purchase
2,000 shares on August 1, 2015, which vested immediately. Includes 3,000 shares that Ms. Canaan has the right to acquire upon exercise of stock options, on or before
the 60
th
day following April 22, 2016.
|
|
(6)
|
Dr. Samuel was granted a stock options for 2,000 shares
upon her appointment to our Board of Directors on April 20, 2015. Those option shares will vest in 1,000 share increments on April
20, 2016 and April 20, 2017. Number of shares beneficially owned include the right to purchase 1,000 shares if vested
options are exercised. Includes 5,500 shares of common stock and 1,000 shares that Dr. Samuel has the right to acquire upon the
exercise of stock options, on or before the 60
th
day following April 22, 2016. Does not include Dr. Samuel’s Board
of Director unvested portion of stock option grant of 1,000 shares, which vest April 20, 2017.
|
|
(7)
|
Mr. Scannell was granted a stock option for 2,000 shares upon his appointment to our Board of
Directors on November 17, 2014. Those option shares will vest in 1,000 share increments on November 17, 2016 and November 17,
2017. Includes 593,629 shares of common stock and 704,262 shares exercisable on or before the 60
th
day following
April 22, 2016 from warrants. Does not include Mr. Scannell’s Board of Director stock option grant of 2,000 shares,
which vest in 1,000 share increments on November 27, 2016 and November 27, 2017.
|
|
(8)
|
Mr. Sensenbrenner was granted a stock option for 2,000 shares upon his election to our Board
of Directors at our 2013 annual meeting of stockholders. Those option shares vested in 1,000 share increments on December 27,
2014 and December 27, 2015. He also received his Board of Directors anniversary grant of options to purchase 2,000 shares on
December 27, 2014 and December 27, 2015 both of which vested immediately. Includes 6,000 shares that Mr. Sensenbrenner has the right to acquire upon exercise of stock options,
on or before the 60
th
day following April 22, 2016.
|
|
(9)
|
Includes 9,000 shares of common stock that the directors and
officers have the right to acquire upon the exercise of options, and 704,262 shares of common stock that the directors and officers
have the right to acquire upon the exercise of warrants, on or before the 60
th
day following April 22, 2016.
|
Equity Compensation Plan Information
The following table provides certain information,
as of December 31, 2015, with respect to our equity compensation plans under which our common stock is authorized for issuance:
Plan Category
|
|
Number of Shares
to be Issued Upon
Exercise of
Outstanding
Options
and Rights
(a)
|
|
|
Weighted-
Average
Exercise
Price of
Outstanding
Options
and Rights
(b)
|
|
|
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation Plans
(excluding Column a)
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity Compensation Plans Approved by Stockholders
|
|
|
850,600
|
|
|
$
|
45.11
|
|
|
|
-
|
|
As of April 22, 2016, the Company had no
available securities remaining under the plans as a result of option and share grants made under the plans after December 31, 2013
and as a result of an increase in the number of shares that are potentially issuable to our Company’s Chief Executive Officer
under existing contingent performance-based grants.
ITEM 13.
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|
Transactions with Related Persons
Related party license
agreement
Our company is the licensee under a license
agreement, or License Agreement, with Regent Court Technologies, LLC, of which Jonnie R. Williams, Sr., our company’s former
CEO, and Francis E. O’Donnell, Jr., M.D., the beneficiary of the O’Donnell Trust, are the owners. The License Agreement
provides, among other things, for the grant of an exclusive, worldwide, irrevocable license to our company, with the right to
grant sublicenses, to make, use and sell tobacco and products containing tobacco under the licensor’s patent rights and
know-how relating to the processes for curing tobacco so as to significantly prevent the formation of certain toxic carcinogens
present in tobacco and tobacco smoke, namely Tobacco Specific Nitrosamines, and to develop products containing such tobacco, whether
such patent rights and know-how are now in existence or hereinafter developed. Our company is obligated to pay to Regent Court
a royalty of 2% on all net sales of products by us and any affiliated sub-licensees, and 6% on all fees and royalties received
by us from unaffiliated sub-licensees, less any related research and development costs incurred by our company. The License Agreement
expires with the expiration of the last of any applicable patents. Thirteen United States patents have been issued, and additional
patent applications are pending. To date, our company has paid no royalties under the License Agreement. The License Agreement
may be terminated by our company upon thirty days written notice or by Regent Court if there is a default in paying royalties
or a material breach by our company or the purchase of our company’s stock or assets.
Roskamp Institute and related entities
The Roskamp Institute
is a not-for-profit private medical research organization in Sarasota, Florida whose stated purpose is understanding causes of
and finding cures for neuropsychiatric and neurodegenerative disorders and addictions. Dr. Mullan is a co-founder of the Roskamp
Institute and formerly served as the Chief Executive Officer of the Roskamp Institute.
In addition, the Company
entered into a Research and Royalty Agreement with an affiliate of the Roskamp Institute pursuant to which the Company pays royalties
of 5% of Anatabloc
®
sales to this affiliate (such royalties being equal to
$0.0 (zero) and $0.1 million in 2015, and 2014, respectively). During the same two year period, the Company has paid research-related
fees of $0.8 million and $0.6 million to the Roskamp Institute and its wholly owned for-profit subsidiary, SRQ Bio, LLC.
The Company also entered
into a lease agreement with the Roskamp Institute, effective March 1, 2014, pursuant to which the Roskamp Institute is leasing
office space to the Company. This office space, which is now being used as the Company’s principal executive office, is located
in Sarasota, Florida. Under the terms of the lease agreement, the Company is obligated to pay rent in the amount of $2,000 per
month plus applicable sales tax to the Roskamp Institute. It also paid a $2,000 security deposit in connection with the lease agreement.
The lease agreement has a 24 month term, after which the Company may elect to continue the lease for up to three additional 12
month periods. Effective as of April 1, 2014, the Company entered into an amendment to the lease agreement pursuant to which the
Roskamp Institute is leasing it additional space (at the same location) at an additional cost of $250 per month. For the years
ended December 31, 2015 and 2014 respectively, Rock Creek has paid $27 thousand and $30 thousand in rent to the Roskamp Institute
pursuant to the lease agreement, as amended, and $0 (zero) and $42 thousand for administrative services.
In 2014, the Company entered into a Master Services Agreement and a Royalty Agreement with the Roskamp Institute
and SRQ Bio LLC, pursuant to which the Company engaged their research services on various projects, under terms and conditions as described
in Task Orders (as defined in the Agreements). These projects relate to the Company’s ongoing drug development programs and the Developed
Products or Services (as defined in the Agreements), arising from these projects, if successfully commercialized, may require Royalty
payments from us of 5% of any proceeds received by us. To date no royalty payments have been paid or are payable under these current
projects.
As of December 31,
2015 and December 31, 2014, the Company owed Roskamp and its affiliates $0.6 million and $0.1 million, respectively.
Director Independence
The standards relied upon by our Board
of Directors in affirmatively determining whether a director is “independent” in compliance with the rules of The Nasdaq
Capital Market are the standards set forth in the Nasdaq Marketplace Rules and the applicable listing requirements thereof. In
addition, no director will qualify as independent unless our Board of Directors affirmatively determines that the director has
no relationship that may interfere with the director’s exercise of independent judgment.
Our Board, in applying the above-referenced
standards, affirmatively determined that the following current members of our Board are independent: Lee M. Canaan, Scott P. Sensenbrenner,
Sunitha Chundru Samuel, and Robert W. Scannell. It was further determined that Dr. Michael J. Mullan and Dr. Christopher Chapman
(until his resignation from the Company and his Board positon effective June 30, 2015) were not independent by virtue of their
positions as executive officers of our Company.
In addition, Messrs. Dent and McDonnell,
who resigned from our Board of Directors on February 1, 2015 and April 2, 2015, respectively, were considered to be independent
during their time on the Board.
As part of the Board of Director’s
process in making independence determinations, each director that has been determined to be independent has provided responses
to questionnaires confirming that (i) all of the above-cited objective criteria for independence are satisfied and (ii) he
or she has no other relationship that could interfere with his or her ability to exercise independent judgment.
|
ITEM 14.
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
The Audit Committee has established its
pre-approval policies and procedures, pursuant to which the Audit Committee approved the following audit services, provided by
Cherry Bekaert LLP in 2014 and 2015. Consistent with the Audit Committee’s responsibility for engaging our company’s
independent auditors, all audit and permitted non-audit services require pre-approval by the Audit Committee. The full Audit Committee
approves proposed services and fee estimates for these services. The Audit Committee chairperson or his designee has been designated
by the Audit Committee to approve any services arising during the year that were not pre-approved by the Audit Committee. Services
approved by the Audit Committee chairperson are communicated to the full Audit Committee at its next regular meeting and the Audit
Committee reviews services and fees for the fiscal year.
The following table sets forth the aggregate
audit fees and tax fees and expenses billed to us by Cherry Bekaert for the fiscal years ended December 31, 2014 and December 31,
2015:
|
|
2014
|
|
|
2015
|
|
Audit Fees
|
|
$
|
175,000
|
|
|
$
|
259,500
|
|
Tax Fees
|
|
|
133,000
|
(1)
|
|
|
34,000
|
(1)
|
Total
|
|
$
|
308,000
|
|
|
$
|
293,500
|
|
|
(1)
|
Fees for preparation of local, state and federal tax
returns.
|