As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 9/19/14  Emmaus Life Sciences, Inc.        DEF 14A    10/23/14    1:1.1M                                   Merrill Corp-MD/FA

Document/Exhibit                   Description                      Pages   Size 

 1: DEF 14A     Definitive Proxy Solicitation Material              HTML    659K 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 (Amendment No.     )
Filed by the Registrant  x
Filed by a Party other than the Registrant  o
Check the appropriate box:
o	Preliminary Proxy Statement
o	Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
x	Definitive Proxy Statement
o	Definitive Additional Materials
o	Soliciting Material under §240.14a-12
EMMAUS LIFE SCIENCES, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
x	No fee required.
o	Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
	(1)		Title of each class of securities to which transaction applies:
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o	Fee paid previously with preliminary materials.
o	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
	(1)	Amount Previously Paid:
	(2)	Form, Schedule or Registration Statement No.:
	(3)	Filing Party:
	(4)	Date Filed:

 

 

EMMAUS LIFE SCIENCES, INC.

20725 S. Western Avenue, Suite 136

Torrance, California 90501

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held On October 23, 2014

 

Dear Stockholder:

 

You are cordially invited to attend the 2014 Annual Meeting of Stockholders of Emmaus Life Sciences, Inc. (the “Annual Meeting”). The Annual Meeting will be held on Thursday, October 23, 2014, at 9:00 a.m. Pacific Time at the DoubleTree Hotel located at 21333 Hawthorne Blvd., Torrance, California 90503 for the following purposes:

 

1.	To elect the directors named in the accompanying Proxy Statement to hold office until the 2015 Annual Meeting of Stockholders;
2.	To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2014;
3.	To conduct a non-binding advisory vote on our 2013 executive compensation;
4.	To ratify a recent amendment to our 2011 Stock Incentive Plan; and
5.	To transact such other business as may properly come before the Annual Meeting and any adjournment or postponement thereof.

 

 

These items of business are more fully described in the Proxy Statement accompanying this notice.

 

Important Notice Regarding the Availability of Proxy Materials for the Annual Stockholders’ Meeting to be Held on October 23, 2014: the 2014 Proxy Statement for the Annual Meeting of Stockholders and our Annual Report for the fiscal year ended December 31, 2013 are available at http://EmmausLifeSciences.investorroom.com.

 

The Board has fixed the close of business on September 18, 2014 as the record date (the “Record Date”) for the determination of stockholders entitled to notice of, and to vote at, this Annual Meeting or any postponement or adjournment thereof. Accordingly, only stockholders of record at the close of business on the Record Date are entitled to notice of, and shall be entitled to vote at, this Annual Meeting and any postponement or adjournment thereof.

 

Sincerely yours,

 

/s/ Henry McKinnell, Jr.
Henry A. McKinnell, Jr., Ph.D.
Chairman, Emmaus Life Sciences, Inc.
/s/ Yutaka Niihara
Yutaka Niihara, MD, MPH
President and Chief Executive Officer,
Emmaus Life Sciences, Inc.

 

September 19, 2014

 

 

EMMAUS LIFE SCIENCES, INC.

20725 S. Western Avenue, Suite 136

Torrance, California 90501

310-214-0065

 

 

PROXY STATEMENT

 

 

2014 ANNUAL MEETING OF STOCKHOLDERS

To Be Held On October 23, 2014

 

 

Emmaus Life Sciences, Inc., a Delaware corporation (“Emmaus,” “we,” or the “Company”), is furnishing proxy materials, including this proxy statement, to you in connection with the solicitation of proxies by our Board of Directors for use at our 2014 Annual Meeting of Stockholders (the “Annual Meeting”) to be held on October 23, 2014, at 9:00 a.m. Pacific time at the DoubleTree Hotel located at 21333 Hawthorne Blvd., Torrance, California 90503 (the “Annual Meeting”), and at any adjournment or postponement thereof.

 

This proxy statement, the attached notice of the Annual Meeting, accompanying proxy card and our Annual Report on Form 10-K for the fiscal year ended December 31, 2013 (collectively, the “proxy materials”) are first being mailed to stockholders on or about September 23, 2014.

 

Important Notice Regarding the Availability of Proxy Materials for the Annual Stockholders’ Meeting to be Held on October 23, 2014: the 2014 Proxy Statement for the 2014 Annual Meeting of Stockholders and our Annual Report for the fiscal year ended December 31, 2013 are available at http://EmmausLifeSciences.investorroom.com.

 

Purpose of the Annual Meeting

 

The Annual Meeting is being held for the following purposes:

 

1.	To elect seven directors to hold office until the next annual meeting of stockholders and until their successors are elected and qualified or until their earlier resignation or removal;
2.	To ratify the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2014;
3.	To conduct a non-binding advisory vote on our 2013 executive compensation;
4.	To ratify a recent amendment to our 2011 Stock Incentive Plan; and
5.	To transact such other business as may properly come before the meeting and any adjournment or postponement thereof.

 

Record Date; Shares Outstanding and Entitled to Vote

 

Our Board of Directors has fixed September 18, 2014 as the record date (the “Record Date”) for the determination of holders of our common stock entitled to notice of, and to vote at, the Annual Meeting and any adjournment or postponement thereof. At the close of business on the Record Date, we had 27,863,420 shares of common stock issued and outstanding. No other shares of our capital stock are entitled to notice of, or to vote at, the Annual Meeting. Each stockholder of record as of the Record Date is entitled to one vote per proposal at the Annual Meeting for each share of common stock held by such stockholder on the Record Date.

 

Our certificate of incorporation and bylaws do not provide stockholders with cumulative voting rights. However, Section 708 of the California Corporations Code, currently applicable to us by virtue of Section 2115 of the California Corporations Code, may require that we permit cumulative voting. Under Section 2115, certain foreign corporations (including Emmaus, which is not organized under California law) that are not listed on a recognized national securities exchange are placed in a special category if they have characteristics of ownership and operations that indicate significant contacts with California. Although the Delaware Supreme Court has held that Section 2115 does not apply to Delaware corporations, California courts may still apply Section 2115 to foreign corporations. For purposes of the annual meeting, we intend to permit cumulative voting for the election of directors if a stockholder properly requests to cumulate votes. No stockholder, however, will be entitled to cumulate votes unless a stockholder has given notice at the meeting prior to voting of the stockholder’s intention to cumulate the stockholder’s votes. If any stockholder has given such notice, all stockholders may cumulate their votes for candidates in nomination, in which event votes represented by proxies delivered pursuant to this proxy statement may be cumulated, in the discretion of the proxy holders, in accordance with the recommendation of the Board of Directors. Discretionary authority to cumulate votes in such event is, therefore, solicited in this proxy statement.

 

1

 

How to Vote Your Shares

 

Stockholder of Record - If you hold your shares in your own name, there are three ways to vote:

 

·	By Mail.    You may vote by proxy by marking the enclosed proxy card, dating and signing it, and returning it in the postage-paid envelope provided.
·	By Internet.     You may in accordance with instructions from our transfer agent vote at: https://secure.corporatestock.com/vote.php.
·	In Person.    You may vote in person at the Annual Meeting. We will give you a ballot when you arrive. You may still attend the Annual Meeting and vote in person if you have already voted by proxy or given your proxy authorization.

 

YOUR VOTE IS VERY IMPORTANT. You should submit your vote by proxy even if you plan to attend the Annual Meeting and vote in person.

 

Revoking Your Proxy

 

Any proxy given may be revoked at any time before it is voted by notifying the Corporate Secretary of the Company in writing of such revocation, by duly executing and delivering another proxy bearing a later date, or by attending and voting in person at the Annual Meeting. Any written notice of revocation should be sent to: Emmaus Life Sciences, Inc., 20725 S. Western Avenue, Suite 136, Torrance, California 90501, Attention: Corporate Secretary.

 

Proxies and Counting of Votes

 

If you provide specific voting instructions on your proxy card or when voting via the Internet in accordance with instructions from our transfer agent, your shares will be voted at the Annual Meeting in accordance with your instructions. If no direction is given, the shares represented by the proxy will be voted:

 

·	“For” each of the nominees to our Board of Directors named herein;
·	“For” the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2014;
·	“For” the approval of the non-binding advisory resolution approving the Company’s executive compensation; and
·	“For” the ratification of the recent amendment to our 2011 Stock Incentive Plan.

 

All properly executed proxies delivered pursuant to this solicitation and not revoked will be voted at the Annual Meeting in accordance with the directions given. Representatives of our transfer agent will assist us in the tabulation of the votes.

 

Our bylaws contain provisions establishing orderly procedures for the advance notice of business to be brought before meetings of the Company’s stockholders. This “advance notice” bylaw provides that stockholders may present business at an annual meeting only through compliance with the procedures in the bylaw or the SEC’s rules governing proposals to be included in company proxy statements. The notice period for stockholder presentation of business at our 2014 Annual Meeting has passed, and accordingly we do not expect any matters, other than those set forth in this proxy statement, to come before the Annual Meeting. If any other matters properly come before the Annual Meeting or any adjournment or postponement thereof, your proxy includes discretionary authority on the part of the individuals appointed to vote your common stock or act on those matters according to their best judgment, including adjournment of the Annual Meeting.

 

2

 

PROPOSAL 1 — ELECTION OF DIRECTORS

 

The Company’s Bylaws provide that the Board of Directors or stockholders may establish, increase or decrease the number of directors. The Company currently has seven authorized members on its Board of Directors.

 

At the Annual Meeting, our stockholders will vote on the election of seven directors to serve for one-year terms until the 2015 annual meeting of stockholders and until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal. Upon the recommendation of the Compensation, Nominating and Corporate Governance Committee, our Board of Directors has unanimously nominated Yutaka Niihara, M.D., MPH, Henry A. McKinnell, Jr., Ph.D., Tracey C. Doi, Duane K. Kurisu, Akiko M. Miyashita, Phillip M. Satow and Mayuran Sriskandarajah as nominees for election as directors at the Annual Meeting. Unless you otherwise instruct us, your properly executed proxy that is returned in a timely manner will be voted for election of these seven nominees. The director nominees are all current directors of the Company and have indicated that they are willing and able to serve as directors. If any of the nominees becomes unable or unwilling to serve, your proxy will be voted for a nominee designated by the present Board to fill the vacancy. You can find information about the nominees below under the section “Board of Directors and Executive Officers.”

 

Vote Required

 

You may vote in favor of any or all of the nominees and you may also withhold your vote as to any or all of the nominees. If a quorum exists at the Annual Meeting, the affirmative vote of a plurality of all of the votes cast at the Annual Meeting is required for the election of each of the nominees for director. In other words, the seven nominees receiving the highest number of affirmative votes will be elected as directors to serve until the next annual meeting of stockholders and until their successors are duly elected and qualified. If stockholders do not specify the manner in which their shares represented by a validly executed proxy solicited by the Board of Directors are to be voted on this proposal, such shares will be voted in favor of all of the nominees. Votes withheld and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote, although they will count toward the presence of a quorum.

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ALL NOMINEES.

 

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PROPOSAL 4 — RATIFICATION OF THE RECENT AMENDMENT TO
THE COMPANY’S 2011 STOCK INCENTIVE PLAN

 

On July 17, 2014, the Board of Directors authorized and adopted an amendment (the “Amendment”) to Section 1.5(a) of the Company’s 2011 Stock Incentive Plan (the “Plan”). The Amendment increased the total number of shares of common stock of the Company with respect to which awards may be granted pursuant to the Plan (the “Cap”) from 6,000,000 to 9,000,000 (subject to adjustment as set forth in the Plan). Except for this increase in the Cap, the terms of the Plan, including the adjustment mechanisms set forth therein, are unchanged.

 

The purpose of the Amendment is to permit the Company to issue additional awards under the Plan to directors, officers and employees, consistent with the Company’s objectives of retaining talented personnel and aligning the interests of management with the long-term interests of its stockholders.

 

The Plan provides that the Board may amend the Plan, provided that no such amendment shall materially impair any rights or materially increase any obligations under any award theretofore made under the Plan without the consent of the participant. Accordingly, the Amendment did not require the approval of the Company’s stockholders. The Board, however, values the opinions expressed by stockholders in their vote on this proposal and will consider the outcome of the vote when making future decisions regarding the Plan and awards thereunder.

 

At the Annual Meeting, our stockholders will be asked to ratify the amendment to the 2011 Stock Incentive Plan that increased the total number of shares of common stock of the Company with respect to which awards may be granted pursuant to the Plan from 6,000,000 to 9,000,000.

 

If this proposal is not approved and the increase in the number of shares authorized for issuance under the Plan is not ratified by our stockholders, the Plan, as amended, will continue to be in full force and effect. However, awards granted with respect to the additional shares authorized by the Amendment will not qualify as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

 

Additional information regarding the Plan and the Amendment, including a summary of the Plan, as amended, may be found in this Proxy Statement under the heading “EXECUTIVE COMPENSATION — Summary Description of Our 2011 Stock Incentive Plan As Amended.” The summary may not contain all of the information that is important to you. You are therefore encouraged to read the complete text of the Plan, which is attached as Annex A.

 

Vote Required

 

You may vote in favor or against this proposal and you may also abstain from voting. Assuming a quorum is present at the Annual Meeting, the affirmative vote of a majority of all votes cast at the Annual Meeting is required to ratify the amendment of the Plan. If stockholders do not specify the manner in which their shares represented by a validly executed proxy solicited by the Board of Directors are to be voted on this proposal, such shares will be voted in favor of the amendment of the Plan. For purposes of the vote on this matter, abstentions and broker non-votes will not be counted as votes cast and will have no effect on the result of the vote. Abstentions and broker non-votes will, however, count toward the presence of a quorum.

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” THE RATIFICATION OF

THE AMENDMENT TO THE 2011 STOCK INCENTIVE PLAN

 

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BOARD OF DIRECTORS AND EXECUTIVE OFFICERS

 

Information Concerning Directors and Director Nominees

 

Each of the persons named below has been nominated for election as a director of the Company at this Annual Meeting to serve for a term of one year ending at the 2015 annual meeting of stockholders and thereafter until his/her successor is duly elected and has qualified or until his/her death, resignation or removal. The nominees are currently serving as directors of the Company.

 

Name		Age		Position/Committee Membership
Yutaka Niihara, M.D., MPH		54		President, Chief Executive Officer (CEO) and Director
Henry A. McKinnell, Jr., Ph.D. (1)(2)		71		Chairman of the Board
Tracey C. Doi (1)(2)		53		Director
Duane K. Kurisu (1)(2)		60		Director
Akiko Moni Miyashita (1)(2)		58		Director
Phillip M. Satow (1)(2)		72		Director
Mayuran Sriskandarajah (“Mayu Sris”)		34		Director

 

(1) Member of the Audit Committee (Tracey C. Doi, Chairman).

(2) Member of Compensation, Nominating and Corporate Governance Committee (Akiko Moni Miyashita, Chairman)

 

Our bylaws provide that each director elected or appointed to our Board of Directors shall hold office until the next annual meeting of stockholders following such election or appointment and until the director’s successor is elected and qualified, or until the director’s earlier resignation or removal. Our bylaws provide that vacancies on our Board of Directors, including those resulting from an increase in the authorized number of directors, may be filled by a majority of the remaining directors, even if less than a quorum, or by a sole remaining director. Any director appointed as a result of a vacancy holds office until the next annual meeting of stockholders and until a successor is elected and qualified. Our Board of Directors has set the current number of authorized directors at seven. Accordingly, seven directors have been nominated by our Board of Directors for election at the Annual Meeting.

 

Background of Nominees for Election to the Board

 

Each of our current directors has been nominated for re-election to our Board of Directors. The paragraphs below provide information about each director that includes each director’s principal occupation and business experience during at least the past five years, the names of other publicly held companies at which he or she currently serves as a director or has served as a director during the past five years, information regarding involvement in certain legal or administrative proceedings during the past ten years, if applicable, and the experience, qualifications, attributes or skills that led the Compensation, Nominating and Corporate Governance Committee and our Board of Directors to determine that the person should serve on our Board of Directors.

 

Yutaka Niihara, M.D., MPH, has served as the President and Chief Executive Officer of the Company since May 2011 and has served as the President, Chief Executive Officer and Chairman of the Board of Emmaus Medical, Inc. (“Emmaus Medical”) since 2003. Since May 2005, Dr. Niihara has also served as the President, Chief Executive Officer and Medical Director of Hope International Hospice, Inc. (“Hope Hospice”). From June 1992 to October 2009, Dr. Niihara served as a physician specialist for Los Angeles County. Dr. Niihara is the principal inventor of the patented L-glutamine therapy for treatment of sickle cell disease. Dr. Niihara has been involved in patient care and research for sickle cell disease during most of his career and is a widely published author in the area of sickle cell disease. Dr. Niihara is board-certified by the American Board of Internal Medicine/Medical Oncology and the American Board of Internal Medicine/Hematology. He is licensed to practice medicine in both the U.S. and Japan. Dr. Niihara is a Professor of Medicine at the David Geffen School of Medicine at UCLA. Dr. Niihara received his B.A. in Religion from Loma Linda University in 1982 and obtained his MD degree from the Loma Linda University School of Medicine in 1986. Dr. Niihara is qualified to serve on our Board of Directors due to his knowledge and experience.

 

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Henry A. McKinnell, Jr., Ph.D. has served as our Chairman of the Board since May 2011 and as a director of Emmaus Medical since April 2010. Dr. McKinnell served as the Chairman of the Board of Pfizer Inc. (NYSE: PFE), a pharmaceutical company, from May 2001 until December 2006. He retired from Pfizer, Inc. and its board in February 2007. He also served as Chief Executive Officer of Pfizer, Inc. from January 2001 to July 2006. He served as President of Pfizer, Inc. from May 1999 to May 2001, and as President of Pfizer Pharmaceuticals Group from January 1997 to April 2001. Dr. McKinnell served as Chief Operating Officer of Pfizer, Inc. from May 1999 to December 2000 and as Executive Vice President from 1992 to 1999. Since October 1997, Dr. McKinnell has served as a member of the board of directors of Moody’s Corporation (NYSE: MCO), where he serves as Chairman and a member of the audit committee, the governance and compensation committee and Moody’s investor services committee. Dr. McKinnell served as a director of Optimer Pharmaceuticals, Inc. (NasdaqGM: OPTR), a global biopharmaceutical company, from January 2011 to March 2012. Dr. McKinnell served as Optimer’s Chief Executive Officer from February 2013 to October 2013 and as Chairman of the Optimer Board from April 2012 to October 2013. He also served as Optimer’s lead independent director from March 2012 to February 2013. Dr. McKinnell serves as Chairman of the Board of the Accordia Global Health Foundation. He is Chairman Emeritus of the Connecticut Science Center, and is a member of the Academic Alliance for AIDS Care and Prevention in Africa. He served as director of ExxonMobil Corporation from 2002 to 2007 and John Wiley & Sons from 1996 to 2005. Dr. McKinnell holds a Bachelor’s Degree in business from the University of British Columbia, and M.B.A. and Ph.D. degrees from the Stanford University Graduate School of Business.  We believe that Dr. McKinnell is qualified to serve on our Board of Directors due to his extensive experience and leadership in the pharmaceutical industry, in addition to his substantial involvement with business and civic organizations and years of experience as an officer and director of publicly traded companies.

 

Tracey C. Doi has served as a director since August 2011. Since 2003, Ms. Doi has served as group vice president and chief financial officer of Toyota Motor Sales, U.S.A., Inc., an automotive company and sales, marketing and distribution arm for Toyota, Lexus and Scion in the United States. Ms. Doi is responsible for corporate finance, tax, customs, treasury, accounting, procurement and administrative services. Ms. Doi serves on Toyota Motor Sales’ audit, risk and benefit committees, as well as an officer or director of several Toyota Motor Sales subsidiaries. Ms. Doi joined Toyota in 2000 as vice president, corporate controller and was promoted to chief financial officer in 2003. Prior to that, she held financial executive positions with AT&T Wireless, a wireless telecommunications company, L.A. Cellular Telephone Company, a wireless telecommunications company, and L.A. Gear, Inc., a footwear company. Ms. Doi received a bachelor’s degree in business economics from UCLA in 1983 and is a certified public accountant (inactive). Ms. Doi serves on the Federal Reserve Bank of San Francisco’s Economic Advisory Council, the board of governors for the Japanese American National Museum, and the board of directors for the US-Japan Council. The Company believes that Ms. Doi is qualified to serve as a director of the Company due to her business and financial management experience, including her position as a chief financial officer, and her knowledge of audit committee functions.

 

Duane K. Kurisu is the Chairman, Chief Executive Officer and owner of aio, LLC, dba aio Group, a holding company for brands focused on Hawaii and the Pacific in the areas of media, sports and food. He is the owner, director and Vice President of Nutricopia, Inc., a nutraceuticals company; the owner, Manager and Chief Executive Officer of PacificBasin Communications, LLC, a publishing company; and the owner and a Manager of K&F 1984 LLC, a real estate company. Mr. Kurisu has served on the board of Central Pacific Financial Corp. (NYSE:CPF), a bank holding company, since January 25, 2012. Mr. Kurisu also served as a director of Central Pacific Financial Corp. from September 2004 to May 2008. Mr. Kurisu is also the owner, director and Vice President of Hawaii Winter Baseball, Inc., a professional baseball league in Hawaii. Mr. Kurisu holds a B.B.A. and a M.B.A. from the University of Hawaii. The Company believes that Mr. Kurisu is qualified to serve as a director of the Company due to his business and financial management experience, including his experience in the nutraceutical industry.

 

Akiko Moni Miyashita is an independent advisor on mergers and acquisitions (M&A). Until October 2011, Ms. Miyashita was Vice President, Corporate Development at IBM. Ms. Miyashita’s over 30 year career at IBM included serving for 15 years in executive M&A roles including Vice President, M&A Strategy and Investments, Managing Director of M&A Integration, and Director of Corporate Development Asia Pacific, headquartered in Tokyo. Ms. Miyashita currently serves on the Board of Trustees of the Children’s Hospital of Philadelphia; the Executive Advisory Board of the University of Denver’s Daniels School of Business, the International Executive Advisory Council of The Navigators, and the Board of Directors of the US-Japan Council. Ms. Miyashita holds a B.S. degree in Marketing from the University of Colorado, Leeds School of Business and a M.B.A. from the University of Denver, Daniels School of Business. The Company believes that Ms. Miyashita is qualified to serve as a director of the Company due to her business and financial management experience, including her significant experience with M&A.

 

10

 

Phillip M. Satow is currently Chairman of the Board of Directors of JDS Therapeutics, LLC, an innovative health care company and holding company with respect to Nutrition 21, LLC, a leader in the nutritional supplement industry. Mr. Satow was co-founder, Chairman and CEO of JDS Pharmaceuticals, LLC (“JDS Pharmaceuticals”), a specialty pharmaceutical company focused in the fields of psychiatric and women’s health treatments. JDS Pharmaceuticals was sold to Noven Pharmaceuticals, Inc. in 2008. Prior to founding JDS Pharmaceuticals, Mr. Satow served as Executive Vice President of Forest Laboratories, Inc. (“Forest”), President of Forest Pharmaceuticals, Inc., and as a member of Forest’s Board of Directors. Prior to joining Forest, Mr. Satow served as Vice President and General Manager of the Wallace Laboratories Division of Carter—Wallace, Inc. In addition, Mr. Satow has held executive positions at Pfizer, including Director of Marketing with Pfizer Laboratories, and as Vice President of Pfizer Europe. Mr. Satow holds a B.A. from Columbia College and an M.A. in Economics from Georgetown University. Mr. Satow served for four years as a U.S. naval officer. We believe that Mr. Satow is qualified to serve on our Board of Directors due to his extensive experience and leadership in the pharmaceutical industry, in addition to his involvement with business and civic organizations and experience as an officer and director of publicly traded companies.

 

Mayuran Sriskandarajah (“Mayu Sris”) is a Founding Partner and Managing Director of Sarissa Capital Management LP. (“Sarissa”). He previously served as an Investment Analyst at Icahn Capital from 2005 to 2010 and as a consultant in 2011, where he contributed to all aspects of the activist investing process with the goal of proactively creating substantial value. Prior to joining Icahn Capital, Mr. Sris served as a consultant at Bain & Company from 2002 to 2005 working with both corporate and private equity clients. Previously, he served as an investment banker at Wasserstein Perella & Company where he advised technology clients on merger and acquisition transactions. In addition, from 2006 to 2010, Mr. Sris was a member of the board of directors of Viskase Companies, a publicly-traded company. Mr. Sris received his A.B. degree from Brown University. The Company believes that Mr. Sris is qualified to serve as a director of the Company due to his business and financial management experience, including his investment banking experience.

 

Executive Officers and Executive Management

 

Our current executive officers, their ages and positions are as follows:

 

Name		Age		Position
Yutaka Niihara, M.D., MPH		54		President, Chief Executive Officer and Director
Willis C. Lee		54		Chief Operating Officer
Peter B. Ludlum		59		Executive Vice President and Chief Financial Officer
Lan T. Tran, MPH		38		Chief Administrative Officer and Corporate Secretary
Yasushi Nagasaki		47		Senior Vice President, Finance
Charles Stark, Pharm.D		59		Senior Vice President, Research and Development

 

Background of Officers and Executive Management

 

The following is a brief summary of the background of each executive officer of the Company. For biographical information regarding Dr. Niihara, please see “Nominees for Election to the Board,” above.

 

Willis C. Lee, MS has served as our Chief Operating Officer since May 2011. Mr. Lee served as a director of Emmaus Life Sciences, Inc. from May 2011 to May 2014 and also served as the Co-Chief Operating Officer and Chief Financial Officer and as a director of Emmaus Medical from March 2010 to May 2011. Prior to that, he was the Controller at Emmaus Medical from February 2009 to February 2010. From 2004 to 2010, Mr. Lee led worldwide sales and business development of Yield Dynamics product group at MKS Instruments, Inc., a provider of instruments, subsystems, and process control solutions for the semiconductor, flat panel display, solar cell, data storage media, medical equipment, pharmaceutical manufacturing, and energy generation and environmental monitoring industries. Mr. Lee also served as President and Managing Director of Kenos Inc., a private service provider that provides funeral services to individuals, from January 2004 to December 2008. Mr. Lee held various managerial and senior positions at semiconductor companies such as MicroUnity Systems Engineering, Inc., a private semiconductor company that designs and develops new generation multimedia processors for computers and cable control boxes, from August 1995 to July 1996, HPL, Inc., a public semiconductor company that provides a software platform that enables data-driven decisions by gathering, managing and analyzing semiconductor manufacturing data, from June 2000 to October 2002, Syntricity, Inc., a private semiconductor software company that provides a software platform that enables data-driven decisions by gathering, managing and analyzing semiconductor manufacturing data, from November 2002 to April 2004 and also at Reden & Anders, a subsidiary of United Healthcare that provides actuarial services including capitation and risk assessment analyses for healthcare insurance carriers, from September 1996 to June 2000. Mr. Lee received his B.S. and M.S. in Physics from University of Hawaii (1984) and University of South Carolina (1986), respectively.

 

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Peter B. Ludlum was appointed Executive Vice President and Chief Financial Officer of the Company effective April 2, 2012. Mr. Ludlum previously served as the Chief Financial Officer of Energy and Power Solutions, Inc. from April 2008 to March 2012. Mr. Ludlum also served as the Financial Compliance Officer from April 2006 to March 2008 and the Chief Financial Officer from April 2005 to April 2006 of Applied Medical Resources Corporation. Mr. Ludlum also served as Group Controller for IsoTis S.A. from October 2003 to April 2005. IsoTis S.A. acquired GenSci Regeneration Sciences Inc. in October 2003 where Mr. Ludlum served as Vice President and Chief Financial Officer from December 1999 to October 2003. Prior to his position at GenSci, Mr. Ludlum had served as the Vice President Finance and Chief Financial Officer from November 1996 to December 1999 of Pacific Biometrics, Inc. Earlier in his career Mr. Ludlum had worked for Derlan Industries, Ltd. as Corporate Controller and Treasurer and in various positions at Mobil Oil Corporation, and for subsidiaries of Bechtel Corporation and PacifiCorp. Mr. Ludlum is a Certified Management Accountant (CMA). He received a B.S. in Business and Economics with a major in accounting from Lehigh University in 1977 and a Masters in Business Administration with a concentration in Finance from California State University, Fullerton in 1991.

 

Lan T. Tran, MPH has served as the Chief Administrative Officer and Corporate Secretary of the Company since May 2011 and has served as the Co-Chief Operating Officer and Corporate Secretary of Emmaus Medical since April 2010 and as the Chief Compliance Officer of Emmaus Medical since May 2008. Prior to joining Emmaus Medical, Ms. Tran was with LABioMed from September 1999 to April 2008 and held positions of increasing responsibility including Grants and Contracts Trainee from September 1999 to March 2000, Grants and Contracts Officer from April 2000 to August 2004, Associate Director, Pre-Clinical/Clinical Trials Unit from September 2004 to June 2005, Director, Pre-Clinical/Clinical Trials Unit from July 2005 to June 2007, and Assistant Vice President, Research Administration from June 2007 to April 2008. In her position as Director, Pre-Clinical/Clinical Trials Unit and Assistant Vice President, Research Administration, Ms. Tran was part of the executive management team of LABioMed and responsible for all administrative aspects of research in her assigned area at LABioMed, which had a research budget of $61,000,000 in 2008. Ms. Tran holds a B.S. in Psychobiology from UCLA, which was awarded in 1999, and a Masters of Public Health from UCLA which was awarded in 2002.

 

Yasushi Nagasaki was appointed as the Senior Vice President, Finance of the Company effective April 2, 2012 and continues as an officer of the Company. From May 2011 to April 1, 2012, Mr. Nagasaki served as the Company’s Chief Financial Officer. From September 2005 until joining our Company, Mr. Nagasaki was the Chief Financial Officer of Hexadyne Corporation, an aerospace and defense supplier. From May 2003 to August 2005, Mr. Nagasaki was the Controller at Upsilon Intertech Corporation. Mr. Nagasaki received a B.A. in Commerce in 1992 from Waseda University and an M.A. in International Policy Studies in 1994 from the Monterey Institute of International Studies.

 

Charles Stark, Pharm.D. was appointed Senior Vice President of Research and Development and member of the executive management team of the Company effective November 2013. Dr. Stark previously served as Director of Clinical Development at Bavarian Nordic, Inc., an immunotherapeutic company, from March 2013 to November 2013. Dr. Stark had also served as Associate Director of Medical Affairs from July 2010 to March 2013 for the Dendreon Corporation, an immunotherapeutic company, and prior to his position at Dendreon, he was the Director, Medical Science Liaisons (cardiovascular, metabolic and oncology) from July 1999 to July 2010 at Pfizer, Inc., a pharmaceutical company. Dr. Stark served as the Director of Investigational Drug Services and Clinical Research at LA BioMed at Harbor UCLA from 1989 to 2003 and at the Health Research Association at USC Medical Center from 1995 to 1999. Dr. Stark has also served as a faculty member at the University of Southern California School of Pharmacy since1997. Dr. Stark received his Pharm.D. from the University of Southern California in 1982 and completed his residency at the Veteran’s Affairs Medical Center in West Los Angeles in 1983.

 

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Family Relationships

 

There are no family relationships among any of the officers and directors of the Company.

 

Involvement in Certain Legal Proceedings

 

On September 23, 2011, Peter B. Ludlum, our current Chief Financial Officer, was serving as the Chief Financial Officer of Energy and Power Solutions, Inc. (“EPS”) when EPS filed for bankruptcy protection under Chapter 11 of the U.S. Bankruptcy Code. The bankruptcy filing was made in part to effect a sale of EPS’ primary assets pursuant to Section 363 of the U.S. Bankruptcy Code. Such sale closed in December 2011 and EPS has concluded all other operations.

 

Other than as described above, there have been no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any director, executive officer, promoter or control person of the Company during the past ten years.

 

The Company is not aware of any legal proceedings in which any director, nominee, or officer of the Company, or any associate of any such director, nominee, or officer of the Company, is a party adverse to the Company or any of its subsidiaries or has a material interest adverse to the Company or any of its subsidiaries.

 

CORPORATE GOVERNANCE

 

Board of Directors and Committees and Director Independence

 

Our Board of Directors has determined that each of Henry A. McKinnell, Jr., Tracey C. Doi, Duane K. Kurisu, Akiko M. Miyashita, Phillip M. Satow and Mayuran Sriskandarajah is an “independent” director as defined by the NASDAQ Marketplace Rules, even though such definition does not currently apply to us because our shares are not listed on the NASDAQ Stock Market LLC or any other exchange, and all applicable rules and regulations of the SEC. All members of the Audit and the Compensation, Nominating and Corporate Governance Committees satisfy the “independence” standards applicable to members of each such committee. The Board of Directors made this affirmative determination regarding these directors’ independence based on discussions with the directors and on its review of the directors’ responses to a standard questionnaire regarding employment and compensation history; affiliations, family and other relationships; and transactions with the Company. The Board of Directors considered relationships and transactions between each director or any member of his or her immediate family and the Company and its subsidiaries and affiliates.

 

Audit Committee

 

We established our Audit Committee on May 3, 2011. The Audit Committee consists of Dr. McKinnell, Ms. Doi, Mr. Kurisu, Ms. Miyashita and Mr. Satow each of whom is an independent director as defined by the NASDAQ Marketplace Rules. Ms. Doi serves as Chairman of the Audit Committee. Each of Dr. McKinnell, Ms. Doi, Mr. Kurisu, Ms. Miyashita and Mr. Satow qualifies as an “audit committee financial expert” as defined under Item 407(d) of Regulation S-K. The purpose of the Audit Committee is to represent and assist our Board of Directors in its general oversight of our accounting and financial reporting processes, audits of the financial statements and internal control and audit functions. The Audit Committee’s responsibilities include:

 

·

The appointment, replacement, compensation, and oversight of work of the independent registered public accounting firm, including resolution of disagreements between management and the independent registered public accounting firm regarding financial reporting, for the purpose of preparing or issuing an audit report or performing other audit, review or attest services.

 

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·                                          Reviewing and discussing with management and the independent registered public accounting firm various topics and events that may have significant financial impact on our company or that are the subject of discussions between management and the independent registered public accounting firm.

 

The Board of Directors has adopted a written charter for the Audit Committee. A copy of the Audit Committee Charter is available on our website at www.Emmausmedical.com.

 

Compensation, Nominating and Corporate Governance Committee

 

We established our Compensation Committee and Nominating and Corporate Governance Committee on May 3, 2011. On May 9, 2013, we combined these two committees into one. The Compensation, Nominating and Corporate Governance Committee consists of Dr. McKinnell, Ms. Doi, Mr. Kurisu, Ms. Miyashita and Mr. Satow, each of whom is an independent director as defined by the NASDAQ Marketplace Rules. Ms. Miyashita is the Chairman of the committee. The Compensation, Nominating and Corporate Governance Committee is responsible for the design, review, recommendation and approval of compensation arrangements for our directors, executive officers and key employees, and for the administration of our equity incentive plans, including the approval of grants under such plans to our employees, consultants and directors, assists in the selection of director nominees, approves director nominations to be presented for stockholder approval at our annual general meeting, recommends to the Board of Directors candidates to fill any vacancies on our Board of Directors, considers any nominations of director candidates validly made by stockholders, and reviews and considers developments in corporate governance practices. The Compensation, Nominating and Corporate Governance Committee also reviews and determines compensation of our executive officers, including our Chief Executive Officer. The Board of Directors has adopted a written charter for the Compensation, Nominating and Corporate Governance Committee. A copy of the Compensation, Nominating and Corporate Governance Committee charter is available on our website at www.Emmausmedical.com.

 

Director Designation Agreement

 

In connection with the private placement of securities we completed on September 11, 2013, we entered into an agreement (the “Director Designation Agreement”) with Dr. Niihara, T.R. Winston & Company, LLC (“TRW”), who served as our placement agent, and Sarissa, an investor in the private placement. Pursuant to the Director Designation Agreement, we agreed to expand the size of our Board of Directors by three members to a total of eight directors, with one member to be designated by TRW and two members to be designated by Sarissa to fill the newly-created vacancies.

 

Mr. Satow was designated to serve as a member of the Board by TRW pursuant to its rights under the Director Designation Agreement.

 

Mr. Sris was designated to serve as a member of the Board by Sarissa pursuant to its rights under the Director Designation Agreement. Another designee of Sarissa is expected to be elected to the Board, at which time the Company expects to further expand the size of the Board to eight members.

 

The Director Designation Agreement provides that, prior to the date such designations first become effective, without the prior approval of TRW and Sarissa, we will not approve, effect, amend or enter into any agreements or transactions, or create or assume any obligations, other than those expressly contemplated in the Director Designation Agreement or undertaken in the ordinary course of business consistent with past practice.

 

The Director Designation Agreement also provides that each of Dr. Niihara, TRW and Sarissa agree to vote all shares of our common stock and any other class of our voting securities owned or controlled by them, and otherwise to use their respective commercially reasonable best efforts as stockholders, to elect as directors each of the TRW and Sarissa designees and every other candidate nominated for election to the Board of Directors by the Compensation, Nominating and Corporate Governance Committee of the Board.

 

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Pursuant to the Director Designation Agreement, until the closing of a qualified initial public offering (as defined in the subscription agreements for the private placement), we are required to obtain unanimous approval of the Board for a detailed annual budget, certain related party transactions, and certain other corporate transactions.

 

Code of Business Conduct and Ethics

 

On May 3, 2011, our Board of Directors approved a Code of Conduct and Ethics (the “Code of Ethics”) that applies to all of the directors, officers and employees of the Company. The Code of Ethics addresses, among other things, honesty and ethical conduct, conflicts of interest, compliance with laws, regulations and policies, including disclosure requirements under the federal securities laws, confidentiality, trading on inside information, and reporting of violations of the code. A copy of the Code of Ethics is available on our website at www.Emmausmedical.com. Requests for copies of the Code of Ethics should be sent in writing to Emmaus Life Sciences, Inc., 20725 S. Western Avenue, Ste. 136, Torrance, California 90501-1884, Attention: Corporate Secretary.

 

Meetings of the Board and its Committees

 

Our Board of Directors meets on a regular basis as often as necessary to fulfill its responsibilities, including at least once each quarter, and our independent directors meet at least annually in executive session without the presence of non-independent directors and management. During 2013, our Board of Directors met nine times, the Audit Committee met four times, the Compensation Committee met one time and the Nominating and Governance Committee met one time. The Compensation Committee and the Nominating and Governance Committee were merged in late 2013 and the committee as combined held two meeting in 2013. Each of the current directors who was on the Board of Directors during 2013 attended 75% or more of the aggregate of (i) the total number of Board meetings held during the period of such member’s service and (ii) the total number of meetings of committees on which such member served during the period of such member’s service.

 

The Company does not have a policy requiring its directors to attend our annual meeting of stockholders, although we encourage all of our directors to attend our annual meetings of stockholders.

 

Board Leadership Structure and Role in Risk Oversight

 

Our leadership is structured such that the chair of our Board of Directors and chief executive officer positions are separated. Dr. McKinnell, an independent director, has served as chairman of our Board of Directors since May 2011. We believe, at this time, having an independent chairman of our Board of Directors with extensive executive experience in the life science industry has provided our Board of Directors with consistent, experienced and independent leadership that enhances the effectiveness of our Board of Directors as a whole.

 

Our Company faces a variety of risks, including investment risk, liquidity risk, and operational risk. Our Board of Directors is responsible for oversight of risks facing our company, while our management is responsible for day-to-day management of risk. Our Board of Directors, as a whole, directly administers its risk oversight function. In addition, the risk oversight function is also administered through the standing committees of our Board of Directors, which oversee risks inherent in their respective areas of responsibility, reporting to our Board of Directors regularly and involving our Board of Directors as necessary. For example, the Audit Committee oversees our financial exposure and financial reporting related risks, and the Compensation, Nominating and Corporate Governance Committee oversees risks related to our compensation programs and practices. Our Board of Directors as a whole directly oversees our strategic and business risk, including product development risk, through regular interactions with our management and, from time-to-time, input from independent advisors. We believe our Board’s leadership structure supports its role in risk oversight, with our executive officers responsible for assessing and managing risks facing our company on a day-to-day basis and the chair and other members of our Board of Directors providing oversight of such risk management.

 

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DIRECTOR NOMINATIONS

 

Criteria for Board Membership

 

In recommending candidates for appointment or election to our Board of Directors, the Compensation, Nominating and Corporate Governance Committee considers the appropriate balance of experience, skills and characteristics required of our Board of Directors, and seeks to insure that at least a majority of the directors are independent applying the NASDAQ Marketplace Rules, that members of the Audit Committee meet the financial literacy and sophistication requirements under the NASDAQ Marketplace Rules and that at least one of member of the Audit Committee qualifies as an “audit committee financial expert” under SEC rules. Nominees for director are selected on the basis of their depth and breadth of experience, wisdom, integrity, ability to make independent analytical inquiries, understanding of our business environment, willingness to devote adequate time to Board duties, the interplay of the nominee’s experience and skills with those of other directors and the extent to which the nominee would be a desirable addition to our Board of Directors and any of its committees.

 

In addition, our bylaws require that any candidate for nomination, whether nominated by the Board of Directors or by a stockholder, must deliver to the Secretary of the Company certain information with respect to his or her background, qualifications, stock ownership and independence and certain written assurances concerning the absence of voting commitments that could interfere with his or her fiduciary duties and compliance with corporate governance and other policies.

 

Other than the foregoing, there are no stated minimum criteria for director nominees, although the Compensation, Nominating and Corporate Governance Committee may also consider such other factors as it may deem are in the best interests of our company and our stockholders. The Compensation, Nominating and Corporate Governance Committee does not have a policy regarding Board diversity, but it takes diversity of professional experience and perspective within the pharmaceutical and biotechnology industries and diversity of backgrounds, cultures, education, experience, skills, thought, perspectives, personal qualities and attributes, and geographic profiles (i.e., where the individuals have lived and worked), as well as race, ethnicity, gender, national origin and other categories into account in identifying and selecting director nominees.

 

Stockholder Nominations

 

Stockholders may nominate individuals to stand for election to our Board of Directors. Any such nomination, however, must be made in compliance with provisions in our bylaws governing such nominations, which require, among other things, that the nominating stockholder give advance notice to the Company. The notice period for stockholder nominations of director candidates for the Annual Meeting has passed without any such nominations having been made. As described under “CORPORATE GOVERNANCE—Director Designation Agreement” above, TRW and Sarissa have the right pursuant to the Director Designation Agreement to designate one and two individuals, respectively, for election to our Board of Directors.

 

If you would like to nominate someone to stand for election to our Board of Directors at our 2015 Annual Meeting, please review the Company’s advance-notice bylaw, which is available online as Exhibit 3.1 to the Current Report on Form 8-K that the Company filed on March 6, 2013. See also “Nominations and Stockholder Proposals for 2015 Annual Meeting” below for information on submitting nominations and proposals to the Company.

 

Process for Identifying and Evaluating Nominees

 

Each year before recommending to our Board of Directors a slate of nominees for director, the Compensation, Nominating and Corporate Governance Committee considers each incumbent director’s performance on our Board of Directors and whether the incumbent director’s nomination would be consistent with the criteria for Board membership described above and other guidelines included in our corporate governance guidelines, including ensuring that the composition of our Board of Directors is such that it maintains an openness to new ideas and a willingness to critically re-examine the status quo. In the ordinary course, absent special circumstances or a material change in the criteria for Board membership, the Compensation, Nominating and Corporate Governance Committee will recommend for nomination incumbent directors with skills and experience that are relevant to our business and who are willing to continue in service. If an incumbent director is not willing to stand for re-election, or if a vacancy on our Board of Directors occurs between annual stockholder meetings and our Board of Directors determines to fill such vacancy, the Compensation, Nominating and Corporate Governance Committee will identify the desired skills and experience of a new nominee based on the criteria for Board membership described above and any specific needs of our Board of Directors at the time. The Compensation, Nominating and Corporate Governance Committee will then seek suggestions from other members of our Board of Directors and our management team as to individuals meeting such criteria. Potential nominees will be selected based on input from members of our Board of Directors, our management team and, if the Compensation, Nominating and Corporate Governance Committee deems appropriate, a third-party search firm. The Compensation, Nominating and Corporate Governance Committee will evaluate each potential nominee’s qualifications and check relevant references. In addition, such individuals will be interviewed by at least one member of the Compensation, Nominating and Corporate Governance Committee. Following this process, the Compensation, Nominating and Corporate Governance Committee will determine whether to recommend to our Board of Directors that a potential nominee be presented as a nominee for election by the stockholders or appointed to fill a vacancy on our Board of Directors, as the case may be. Historically, our Board of Directors nominates for election at our annual stockholder meetings the individuals recommended by the Compensation, Nominating and Corporate Governance Committee.

 

16

 

COMMUNICATIONS WITH DIRECTORS

 

If any stockholder wishes to contact our Board of Directors, or any individual director, the stockholder must submit the inquiry in writing to: Emmaus Life Sciences, Inc., 20725 S. Western Avenue, Suite 136, Torrance, California 90501, Attention: Corporate Secretary, and specify whether the communication is directed to the entire Board or to a particular director. Submitting stockholders should indicate they are a stockholder of our company. Company personnel will screen stockholder letters and, depending on the subject matter, will: forward the inquiry to the chairman of our Board of Directors, who may forward the inquiry to a particular director if the inquiry is directed to a particular director; forward the inquiry to the appropriate personnel within our company (for instance, if it is primarily commercial in nature); attempt to handle the inquiry directly (for instance, if it is a request for information about our company or a stock-related matter); or not forward the inquiry, if it relates to an improper or inappropriate topic or is otherwise irrelevant.

 

BENEFICIAL OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

Beneficial ownership is determined in accordance with the rules of the SEC. In computing the number of shares beneficially owned by a person and the percentage of ownership of that person, shares of common stock subject to options, warrants and convertible notes held by that person that are currently exercisable or become exercisable within 60 days of August 31, 2014 are deemed outstanding even if they have not actually been exercised. Those shares, however, are not deemed outstanding for the purpose of computing the percentage ownership of any other person.

 

The following table sets forth certain information with respect to beneficial ownership of our common stock based on issued and outstanding shares of common stock owned by:

 

·                  Each person known to be the beneficial owner of 5% or more of our outstanding common stock;

 

·                  Each named executive officer;

 

·                  Each director; and

 

·                  All of our executive officers and directors as a group.

 

The number of shares of our common stock outstanding as of August 31, 2014 excludes 5,680,795 shares of common stock underlying outstanding options, 5,903,388 shares of common stock underlying outstanding warrants and 2,573,574 shares of common stock underlying outstanding principal and accrued interest amount on convertible notes (as of August 31, 2014). Unless otherwise indicated, the persons and entities named in the table have sole voting and sole investment power with respect to the shares set forth opposite the stockholder’s name, subject to community property laws, where applicable. Unless otherwise indicated in the table or its footnotes, the address of each Director or Executive Officer who is a stockholder listed in the table is c/o Emmaus Life Sciences, Inc., 20725 S. Western Avenue, Ste. 136, Torrance, California 90501.

 

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Name of Beneficial Owner		Title		Amount and Nature of Beneficial Ownership of Shares of Common Stock		Percent of Class(1)
Directors and Executive Officers
Yutaka Niihara, M.D., MPH		President, Chief Executive Officer and Director		11,093,940	(2)(13)	37.8	%
Peter B. Ludlum		Executive Vice President and Chief Financial Officer		280,778	(3)	1.0	%
Yasushi Nagasaki		Senior Vice President, Finance		582,636	(4)	2.0	%
Willis C. Lee		Chief Operating Officer		702,984	(5)	2.5	%
Lan T. Tran, MPH		Chief Administrative Officer and Corporate Secretary		524,683	(6)	1.8	%
Henry A. McKinnell, Jr., Ph.D.		Chairman of the Board		632,128	(7)	2.2	%
Tracey C. Doi		Director		199,333	(8)	*
Duane K. Kurisu		Director		—		*
Akiko M. Miyashita		Director		—		*
Phillip M. Satow		Director		14,626	(9)	*
Mayu Sris		Director		—		*
Officers and Directors as a Group (total of 11 persons)				14,031,110	(10)	43.7	%
5% or More Owners
Daniel R. and Yuka I. Kimbell				2,434,028	(11)	8.7	%
Sarissa Capital Management LP				1,997,657	(12)(13)	7.0	%

 

*                                         Less than 1%.

 

(1)                                 Based on 27,863,420 shares of common stock issued and outstanding as of August 31, 2014. This excludes 2,504,249 shares previously owned by AFH Advisory cancelled by the Company’s transfer agent on June 28, 2013 pursuant to a court order. The Company continues to present these shares in its financial statements as outstanding until the right of appeal has lapsed and all contingencies have been resolved.

 

(2)                                 Includes 9,529,711 shares that are held jointly by Dr. Niihara and Soomi Niihara, his wife. Also includes 44,229 shares for which Dr. Niihara is custodian. Dr. Niihara may be deemed the indirect beneficial owner of these securities since he has sole voting and investment control over the securities. Also includes 1,000,000 shares underlying warrants to purchase shares of common stock, 444,444 shares underlying stock options and 55,556 shares underlying warrants to purchase shares of common stock owned by Hope Hospice. Dr. Niihara is the chief executive officer of Hope Hospice and has voting and investment power over such shares.

 

(3)                                 Includes 277,778 shares underlying options to purchase shares of common stock.

 

(4)                                 Includes 138,192 shares of common stock underlying outstanding convertible notes (as of August 31, 2014) and 444,444 shares underlying stock options.

 

(5)                                 Includes 46,071 shares of common stock underlying outstanding convertible notes (as of August 31, 2014), 444,444 shares underlying stock options and 35,556 shares underlying warrants to purchase shares of common stock owned by MLPF&S Cust. FBO Willis C. Lee.

 

(6)                                 Includes 56,945 shares underlying warrants to purchase shares of common stock and 444,444 shares underlying stock options.

 

(7)                                 Includes 500,000 shares underlying warrants to purchase shares of common stock and options to purchase 132,128 shares of common stock.

 

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(8)                                 Includes 8,000 shares that are held jointly by Tracey & Mark Doi, her husband. Also, includes 153,333 shares underlying stock options and 38,000 shares underlying warrants to purchase shares of common stock owned by Tracey and Mark Doi.

 

(9)                                 Includes 14,626 shares of common stock underlying outstanding convertible notes (as of August 31, 2014).

 

(10)                          Includes options to purchase 2,341,017 shares of common stock, warrants to purchase 1,686,057 shares of common stock and 198,889 (as of August 31, 2014) shares of common stock underlying outstanding convertible notes.

 

(11)                          Includes 44,229 shares of common stock held by the holder as custodian. Daniel and Yuka Kimbell may be deemed the indirect beneficial owner of these securities since they have sole voting and investment control over the securities. The address for this stockholder is 16 N. Marengo St., Suite 307, Pasadena, CA 91101.

 

(12)                          Includes (i) 1,192,801 shares of common stock held by Sarissa Capital Domestic Fund LP (“Sarissa Domestic”), consisting of 715,121 shares of common stock and 477,680 shares underlying warrants to purchase shares of common stock, and (ii) 804,856 shares of common stock held by Sarissa Capital Offshore Master Fund LP (“Sarissa Offshore”), consisting of 482,536 shares of common stock and 322,320 shares underlying warrants to purchase shares of common stock. Sarissa, as the investment advisor to Sarissa Domestic and Sarissa Offshore (collectively, the “Sarissa Funds”), may be deemed to beneficially own the 1,997,657 aggregate shares beneficially owned by the Sarissa Funds on the basis of its sole or shared power to vote or direct the vote of such shares and/or its sole or shared power to dispose or direct the disposition of such shares. By virtue of his position as the Chief Investment Officer of Sarissa Capital and as the managing member of Sarissa Capital’s general partner, Dr. Alexander J. Denner may also be deemed to have the shared power to vote or direct the vote of (and the shared power to dispose or direct the disposition of) the 1,997,657 shares beneficially owned by the Sarissa Funds. The address for this stockholder is 660 Steamboat Road Greenwich, CT 06830.

 

(13)                          Dr. Niihara, Sarissa and TRW are parties to the Director Designation Agreement described in this Proxy Statement under the heading “CORPORATE GOVERNANCE—Director Designation Agreement.” These parties beneficially own, in the aggregate, 13,720,274 shares of common stock, including 2,539,556 shares underlying warrants to purchase shares of common stock and 444,444 shares underlying stock options, representing aggregate beneficial ownership of 45.9%.

 

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

Subsidiaries

 

Emmaus Medical Inc., Newfield Nutrition Corporation (“Newfield”), Emmaus Medical Japan, Inc. (“EM Japan”) and Emmaus Medical Europe Ltd. (“EM Europe”) are either directly or indirectly wholly-owned subsidiaries of the Company. Each of these subsidiaries has interlocking executive and director positions with us and with each other. Dr. Niihara and Mr. Lee are directors of Newfield. Dr. Niihara is a director of EM Japan. Dr. Niihara and Ms. Tran are directors of EM Europe. The officers of the Company are also the officers of Emmaus Medical and Newfield and hold the same officer positions in Emmaus Medical and Newfield as they do in the Company.

 

Merger and AFH Advisory

 

Pursuant to the Agreement and Plan of Merger, dated April 21, 2011 (the “Merger Agreement”) among AFH Merger Sub, Inc. (“AFH Merger Sub”), AFH Holding and Advisory, LLC (“AFH Advisory”) and Emmaus Medical, AFH Merger Sub merged with and into Emmaus Medical with Emmaus Medical continuing as the surviving entity (the “Merger”). As a result of the Merger, Emmaus Medical became a wholly-owned subsidiary of the Company. In connection with the Merger, the Company changed its corporate name from “AFH Acquisition IV, Inc.” to “Emmaus Holdings, Inc.” Subsequently, on September 14, 2011, we changed our name from “Emmaus Holdings, Inc.” to “Emmaus Life Sciences, Inc.”

 

Upon consummation of the Merger, (i) each outstanding share of Emmaus Medical common stock was exchanged for 29.48548924976 shares of our common stock, (ii) each outstanding Emmaus Medical option and warrant, which was exercisable for one share of Emmaus Medical common stock, was exchanged for an option or warrant, as applicable, exercisable for 29.48548924976 shares of our common stock, and (iii) each outstanding convertible note of Emmaus Medical, which was convertible for one share of Emmaus Medical common stock, was exchanged for a convertible note exercisable for 29.48548924976 shares of our common stock. As a result of the Merger, Emmaus Medical security holders received an aggregate of 20,673,714 of our shares of common stock, options and warrants to purchase an aggregate of 326,507 shares of common stock, and convertible notes to purchase an aggregate of 271,305 shares of our common stock, or 85% of our issued and outstanding common stock on a fully diluted basis. Immediately after the closing of the Merger, we had issued and outstanding:  24,423,714 shares of common stock, no shares of preferred stock, options to purchase 23,590 shares of common stock, warrants to purchase 302,918 shares of common stock, and convertible notes convertible into 271,305 shares of our common stock.

 

The Merger resulted in a change in control of our company from AFH Advisory, which is owned by Mr. Amir F. Heshmatpour, to the former security holders of Emmaus Medical. In connection with the change in control, we appointed new persons to our Board of Directors and elected new officers of the Company. Mr. Heshmatpour, an officer and director of the Company prior to the consummation of the Merger, resigned from all of his officer positions with the Company at the time the transaction was consummated. Mr. Heshmatpour resigned from the Board of Directors on April 24, 2012.

 

Since July 2012, we have been engaged in litigation with AFH Advisory, which was the majority stockholder of AFH Acquisition IV immediately prior to its combination with Emmaus Medical pursuant to the Merger in May 2011. In September 2012, AFH Advisory, Griffin Ventures, Ltd. (“Griffin”) and The Amir & Kathy Heshmatpour Family Foundation (the “Foundation”) filed a complaint against the Company in the Superior Court of Delaware. In October 2012, the Company filed counterclaims against the plaintiffs and third-party claims against Amir Heshmatpour. On June 27, 2013, the Superior Court of the State of Delaware issued an order implementing a partial summary judgment in favor of the Company. The order, among other things, (i) stated that the letter of intent previously entered into between the Company and AFH Advisory (the “Letter of Intent”) was properly terminated as of July 19, 2012 by the Company, and (ii) ordered the transfer agent for the Company to effect the cancellation of 2,504,249 shares of the Company’s common stock held by AFH Advisory, Griffin and the Foundation. The cancellation of such shares, which represented approximately 10 percent of the Company’s common stock, was effected by the Company’s transfer agent on June 28, 2013.

 

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EXECUTIVE COMPENSATION

 

Summary Compensation Table

 

The following table sets forth information concerning the compensation earned by our chief executive officer, chief financial officer and our next three most highly compensated executive officers for the two fiscal years ended December 31, 2013 and 2012.

 

Name and Position		Year		Salary			Bonus			Option Awards(1)			Total
Yutaka Niihara, M.D., MPH		2013		$	250,000		$	—		$	1,583,035		$	1,833,035
President, Chief Executive Officer and Director		2012		250,000			—			840,686			1,090,686
Willis C. Lee		2013		180,000			20,000			1,583,035			1,783,035
Chief Operating Officer		2012		180,000			—			840,686			1,020,686
Peter B. Ludlum		2013		180,000			50,000			1,583,035			1,813,035
Executive Vice President and Chief Financial Officer		2012		135,000			—			—			135,000
Lan T. Tran, MPH		2013		180,000			20,000			1,583,035			1,783,035
Chief Administrative Officer and Corporate Secretary		2012		180,000			—			840,686			1,020,686
Yasushi Nagasaki		2013		180,000			20,000			1,583,035			1,783,035
Senior Vice President, Finance		2012		180,000			—			840,686			1,020,686

 

(1)         The Company has calculated the grant date fair value of the option grants utilizing the Black-Scholes-Merton Option pricing model.  Accordingly, the fair value of the underlying shares was determined based on recent transactions by the Company to sell shares to third parties and other factors determined by management to be relevant to the valuation of such shares. The fair value of the options was determined through the Black Scholes Option pricing model with the following inputs:

 

		2013			2012
Stock price		$	3.60		$	3.60
Exercise price		$	3.60		$	3.60
Term		10 years			10 years
Risk-Free Rate		1.89		%	2.22		%
Dividend Yield		0		%	0		%
Volatility		119.30		%	141.70		%

 

The amounts in this column represent the aggregate grant date fair value of option awards granted to the directors in 2013, calculated in accordance with the provisions of FASB ASC Topic 718, “Stock Compensation”. The actual value of any option award will depend on the excess of our stock price over the exercise price on the date the option award is exercised. The actual value realized upon exercise of the option awards may be higher or lower than the value shown in this column.

 

Total compensation for Dr. Niihara, Mr. Lee and Ms. Tran for the years ended December 31, 2013 and 2012 did not include an amount for the annual performance bonus pursuant to their respective employment agreements. We did not grant performance-based cash bonuses in 2013 and 2012 in part because of management’s emphasis on preserving available capital to fund operating expenses. Additionally, specific performance criteria were not established for our executive officers for 2013 or 2012. Each of our executive officers waived any right under their respective employment agreement to an annual performance bonus for 2013 and 2012, and the Company did not incur any liability as a result of not granting such performance-based cash bonuses.

 

In December 2013, the Compensation, Nominating and Corporate Governance Committee approved discretionary bonuses for each of Messrs. Lee, Ludlum, and Nagasaki and Ms. Tran as shown in the table above under the heading “Bonuses.”

 

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On April 2, 2012, the Board of Directors of the Company authorized and approved option grants to the named executive officers in the amounts set forth below, with a term of 10 years and an exercise price of $3.60 per share, the fair market value of a share of Common Stock as of the grant date, as determined by the Board of Directors.

 

Name		Title		Number of Options
Dr. Yutaka Niihara		Chief Executive Officer, President and Director		250,000
Willis C. Lee		Chief Operating Officer		250,000
Yasushi Nagasaki		Senior Vice President, Finance		250,000
Lan T. Tran		Chief Administrative Officer and Corporate Secretary		250,000

 

The options granted to each named executive officer will vest as follows: each option will vest annually in equal amounts (or as close to an equal amount as possible) over a period of three years with the first one-third (1/3) of such amount to vest one year from the grant date.

 

On February 28, 2013, the Board of Directors of the Company authorized and approved option grants to the named executive officers in the amounts set forth below, with a term of 10 years and an exercise price of $3.60 per share, the fair market value of a share of Common Stock as of the grant date, as determined by the Board of Directors.

 

Name		Title		Number of Options
Dr. Yutaka Niihara		Chief Executive Officer, President and Director		500,000
Willis C. Lee		Chief Operating Officer		500,000
Peter B. Ludlum		Executive Vice President and Chief Financial Officer		500,000
Yasushi Nagasaki		Senior Vice President, Finance		500,000
Lan T. Tran		Chief Administrative Officer and Corporate Secretary		500,000

 

The options granted to each named executive officer will vest as follows: one-third (1/3) will vest on the first anniversary of the grant date, and the remaining two-thirds (2/3) will vest in approximately equal monthly installments over a period of two years thereafter.

 

Outstanding Equity Awards at 2013 Fiscal Year End

 

The following table sets forth information regarding outstanding equity awards held by our named executive officers at the end of fiscal 2013.

 

Name		Number of Securities Underlying Unexercised Options (#) Exercisable		Number of Securities Underlying Unexercised Options (#) Unexercisable (1)(2)		Option Exercise Price			Option Expiration Date
Yutaka Niihara, M.D., MPH		83,333		166,667	(1)	$	3.60		4/1/2022
		—		500,000	(2)	$	3.60		2/28/2023
Willis C. Lee		83,333		166,667	(1)	$	3.60		4/1/2022
		—		500,000	(2)	$	3.60		2/28/2023
Peter Ludlum		—		500,000	(2)	$	3.60		2/28/2023
Lan T. Tran, MPH		83,333		166,667	(1)	$	3.60		4/1/2022
		—		500,000	(2)	$	3.60		2/28/2023
Yasushi Nagasaki		83,333		166,667	(1)	$	3.60		4/1/2022
		—		500,000	(2)	$	3.60		2/28/2023

 

(1)                                 Options will vest annually in equal amounts (or as close to an equal amount as possible) over a period of three years, on each of April 1, 2013, 2014 and 2015.

 

(2)                                 One-third (1/3) of the options vested on February 28, 2014, the first anniversary of the grant date. The remaining two-thirds (2/3) vest in approximately equal monthly installments over a period of two years thereafter.

 

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Employment Agreements

 

On April 5, 2011, we entered into employment agreements with Yutaka Niihara, M.D., MPH, our Chief Executive Officer, Willis C. Lee, our Chief Operating Officer, and Lan T. Tran, MPH, our Chief Administrative Officer. On April 8, 2011, we entered into an employment agreement with Yasushi Nagasaki, our former Chief Financial Officer and current Senior Vice President, Finance. On April 2, 2012, we entered into an employment agreement with Peter B. Ludlum, our Executive Vice President and Chief Financial Officer (the employment agreements, collectively, are referred to as the “Employment Agreements”). Each of the Employment Agreements has an initial 2-year term, unless terminated earlier. Mr. Nagasaki’s employment agreement expired in April 2013, and Mr. Ludlum’s employment agreement expired in April 2014. The Employment Agreements for Dr. Niihara, Mr. Lee and Ms. Tran automatically renew for additional one year periods unless the Company or the officer provides notice of non-renewal at least sixty (60) days prior to the expiration of the then current term.

 

Base Salary, Bonus and Other Compensation. Dr. Niihara’s, Mr. Lee’s and Ms. Tran’s base salary is $250,000, $180,000 and $180,000 per year, respectively, which will be reviewed at least annually. In addition to base salary, the officers may be entitled to receive an annual performance bonus based on the officer’s performance for the previous year. The Employment Agreements each provide that the respective officer’s performance for the previous year will be measured against a set of targets and goals as mutually established by us and the officer. To date, our Board of Directors and the Compensation, Nominating and Corporate Governance Committee have evaluated an officer’s performance on an overall basis related to the Company’s progress on major milestones, without reliance on specific position by position pre-established targets and goals. The officers are also eligible to receive paid vacation, and participate in health and other benefit plans and will be reimbursed for reasonable and necessary business expenses.

 

Equity Compensation. The Employment Agreements state that at the end of each calendar year on December 31, or as soon as reasonably practicable after such date (each a “Grant Date”), the Company will grant non-qualified ten-year stock options with a Black Scholes value of $100,000 to Dr. Niihara, $50,000 to Mr. Lee, and $40,000 to Ms. Tran, in each case with an exercise price per share equal to the “Fair Market Value” (as such term is defined in the Company’s 2011 Stock Incentive Plan) on the applicable Grant Date. One-third of the options granted to each officer will vest on the first anniversary of the applicable Grant Date, one-third will vest on the second anniversary of the applicable Grant Date and the final one-third will vest on the third anniversary of the applicable Grant Date. Any unvested options will vest immediately upon a change in control (as defined below), termination of the officer’s employment other than a voluntary termination by the officer or a termination of the officer for cause. In the event that the officer is terminated for any reason other than cause, death or disability or retirement, each option, to the extent that it is exercisable at the time of such termination, shall remain exercisable for the 90 day period following such termination, but in no event following the expiration of its term. In the event that the officer’s employment terminates on account of death, disability or, with respect to any non-qualified stock option, retirement, each option granted that is outstanding and vested as of the date of such termination shall remain exercisable by such officer (or the officer’s legal representatives, heirs or legatees) for the one year period following such termination, but in no event following the expiration of its term.

 

Severance Compensation. If Dr. Niihara’s, Mr. Lee’s or Ms. Tran’s employment is terminated for any reason during the term of his or her respective employment agreement, other than without cause or good reason, each will be entitled to receive his or her base salary prorated through the termination date, any expense reimbursement due and owing for reasonable and necessary business expenses, and unpaid vacation benefits (the “Voluntary Termination Benefits”). If Dr. Niihara’s, Mr. Lee’s or Ms. Tran’s employment is terminated due to death or disability of such officer during the term of his or her respective employment agreement, then such officer will also receive an amount equal to his or her target annual performance bonus, and for a termination due to disability only, 6 additional months of his or her base salary to be paid out over a 6-month period and payment of COBRA benefits of up to 6 months following the termination. If Dr. Niihara’s employment is terminated without cause or Dr. Niihara resigns with good reason (not within 2 years following a change in control), he will receive the Voluntary Termination Benefits and, provided he signs a Release, a severance package equal to one year of his base salary to be paid out over a 12-month period, a pro rata amount of the annual performance bonus for the calendar year in which the termination date occurs based on the achievement of any applicable performance terms or goals for the year, and payment of COBRA benefits of up to 12 months following the termination. If the employment of any of Mr. Lee, or Ms. Tran is terminated without cause or any of them resigns with good reason (not within 2 years following a change in control) during the term of his or her respective employment agreement, he or she will receive the Voluntary Termination Benefits and, provided he or she signs a Release, a severance package equal to 6 months of his or her base salary to be paid out over a 6-month period, an amount equal to half of the targeted annual performance bonus, and payment of COBRA benefits of up to 6 months following the termination.

 

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Termination with cause includes a proven act of dishonesty, fraud, embezzlement or misappropriation of Company proprietary information; a conviction of, or plea of nolo contendere to, a felony or a crime involving moral turpitude; willful misconduct which cannot be cured on reasonable notice to the officer; or the officer’s habitual failure or refusal to perform his duties if such failure or refusal is not cured within 20 days after receiving written notice thereof from the Board of Directors. Good reason includes a reduction of more than 10% to the officer’s base salary or other compensation (except as part of a general reduction for all executive employees); a material diminution of the officer’s authority, responsibilities, reporting or job duties (except for any reduction for cause); the Company’s material breach of the Employment Agreement; or, in the case of Dr. Niihara, Mr. Lee and Ms. Tran, a relocation of the business requiring the officer to move or drive to work more than 40 miles from its current location. The officer may terminate the Employment Agreement for good reason if he or she provides written notice to the Company within ninety (90) days of the event constituting good reason and the Company fails to cure the good reason within thirty (30) days after receiving such notice.

 

Change of Control. The Employment Agreements will not be terminated upon a change of control. A change of control means any merger or reorganization where the holders of the Company’s capital stock prior the transaction own fewer than 50% of the shares of capital stock after the transaction, an acquisition of 50% of the voting power of the Company’s outstanding securities by another entity, or a transfer of at least 50% of the fair market value of the Company’s assets. Upon Dr. Niihara’s termination without cause or good reason that occurs within 2 years after a change of control, he will receive the Voluntary Termination Benefits and, provided he signs a release of all claims relating to his employment, a severance package equal to 2 years of his base salary to be paid out over a 12-month period, an amount equal to double the targeted annual performance bonus, payment of COBRA benefits of up to 18 months following the termination, and a one-time cash payment of $3.0 million. Upon Mr. Lee’s or Ms. Tran’s termination without cause or good reason that occurs within 2 years after a change of control, he or she will receive the Voluntary Termination Benefits and, provided he or she signs a Release, a severance package equal to 1 year of his or her base salary to be paid out over a 12-month period, an amount equal to the full year targeted annual performance bonus, and payment of COBRA benefits of up to 12 months following the termination. Mr. Lee and Ms. Tran will also receive a one-time cash payment of $200,000. In addition, each officer’s unvested equity awards shall vest upon such termination and the officer will have 36 months in which to sell or exercise such awards (subject to expiration of the term of such options). The officer will also be free from all lock-up or other contractual restrictions upon the free sale of shares that are subject to waiver by the Company upon such termination.

 

Director Compensation

 

In 2013 our compensation plan called for our non-employee directors to receive compensation of $700 for each in-person Board meeting that they attend, $400 for each telephonic Board meeting that they attend and $400 for each committee meeting. Our employee directors do not receive additional compensation for their services as a director. We expect the Board of Directors to hold four in-person meetings and two telephonic meetings each calendar year. Pursuant to the 2011 Stock Incentive Plan, non-officer directors receive as a minimum an annual grant of 10,000 options. Such grants will vest annually in quarterly installments. Additionally, the Chairman of the Board receives a one-time retainer grant of 10,000 options and each committee chair receives a one-time retainer grant of 2,000 options which will vest on a cliff basis for the first one-third (1/3) granted and monthly on a prorata basis for the remaining two-thirds (2/3) thereafter in equal amounts (or as close to an equal amount as possible) over a period of three (3) years from the grant date.

 

In addition, the non-employee directors each received a grant of 250,000 options in 2013 which will vest annually in equal amounts (or as close to an equal amount as possible) over a period of three years.

 

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The following table shows information regarding the compensation earned during the fiscal year ended December 31, 2013 by the non-employee members of our Board of Directors. Compensation earned during the fiscal year ended December 31, 2013 by our employee directors, Yutaka Niihara, M.D., MPH and Willis C. Lee, who do not receive compensation for their services as a director, is reported above under the heading “Summary Compensation Table.”

 

Name		Fees Earned or Paid in Cash			Option Awards (2)(3)			Total
Henry A. McKinnell, Jr., Ph.D.		$	6,000		$	827,518		$	833,518
Tracey C. Doi		7,100			827,518			834,618
Maurice J. DeWald (1)		7,200			827,518			834,718
Total		$	20,300		$	2,482,554		$	2,502,854

 

(1)         Mr. DeWald resigned from the board of directors on May 8, 2014.

(2)         The amounts in this column represent the aggregate grant date fair value of option awards granted to the directors in 2013, calculated in accordance with the provisions of FASB ASC Topic 718, “Stock Compensation”. The actual value of any option award will depend on the excess of our stock price over the exercise price on the date the option award is exercised. The actual value realized upon exercise of the option awards may be higher or lower than the value shown in this column. The Company has calculated the grant date fair value of the option grants utilizing the Black-Scholes-Merton Option pricing model.  Accordingly, the fair value of the underlying shares was determined based on recent transactions by the Company to sell shares to third parties and other factors determined by management to be relevant to the valuation of such shares. The fair value of the options was determined through the Black Scholes Option pricing model with the following inputs:

 

		February 28, 2013
Stock price		$	3.60
Exercise price		$	3.60
Term		10 years
Risk-Free Rate		1.89		%
Dividend Yield		0		%
Volatility		119.30		%

 

(3)         As of December 31, 2013, our non-employee directors had option awards outstanding pursuant to the 2011 Stock Incentive Plan to purchase the following number of shares of our common stock:

 

Name		Number of Securities Underlying Unexercised Options ($) Exercisable (Vested)		Number of Securities Underlying Unexercised Options ($) Unexercisable (Unvested)		Option Exercise Price			Option Expiration Date
Henry A. McKinnell, Jr., Ph.D.		11,795	(1)	—		$	3.05		6/30/2015
		27,000		—		$	3.60		12/19/2021
		—		250,000	(3)	$	3.60		2/28/2023
		10,000		—		$	3.60		2/28/2023
Tracey C. Doi		10,000		—		$	3.60		12/19/2021
		25,000	(2)	50,000	(2)	$	3.60		4/2/2022
		—		250,000	(3)	$	3.60		2/28/2023
		10,000		—		$	3.60		2/28/2023
Maurice J. DeWald		12,000		—		$	3.60		12/19/2021
		25,000	(2)	50,000	(2)	$	3.60		4/2/2022
		—		250,000	(3)	$	3.60		2/28/2023
		10,000		—		$	3.60		2/28/2023

 

(1)                                 Includes options to purchase 11,795 shares that vested as of December 31, 2012 and are exercisable at $3.05 per share through 2015, which award was issued prior to the commencement of the 2011 Stock Incentive Plan.

(2)                                 Options vest in equal annual amounts (or as close to an equal amount as possible) over a period of three years with the first one-third (1/3) vesting on April 1, 2013.

(3)                                 Options vest annually in equal amounts (or as close to an equal amount as possible) over a period of three years with the first one-third (1/3) vesting on February 28, 2014.

 

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