crsp-def14a_20210610.htm

  

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

 

Filed by the Registrant                              Filed by a Party other than the Registrant  

Check the appropriate box:

 

Preliminary Proxy Statement

 

 

Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

 

 

Definitive Proxy Statement

 

 

Definitive Additional Materials

 

 

Soliciting Material Pursuant to §240.14a-12

 

CRISPR THERAPEUTICS AG

(Name of Registrant as Specified in Its Charter)

(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)

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(3)

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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.

 

 

 

 

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CRISPR THERAPEUTICS AG

Baarerstrasse 14

6300 Zug

Switzerland

+41 (0) 41 561 32 77

NOTICE OF INVITATION TO 2021 ANNUAL GENERAL MEETING OF SHAREHOLDERS

To Be Held On June 10, 2021

 

Please read the “Important Notice Regarding COVID 19 (Coronavirus) in Switzerland” on page 6 of this notice.

 

Dear Shareholders:

You are cordially invited to the 2021 annual general meeting of shareholders, or the 2021 Annual General Meeting of CRISPR Therapeutics AG, or the Company, to be held on June 10, 2021 at 8:00 a.m. Central European Summer Time (2:00 a.m. Eastern Daylight Time) at the offices of Walder Wyss Ltd., Seefeldstrasse 123, 8008 Zurich, Switzerland. At the 2021 Annual General Meeting, the Company’s board of directors, or the Board of Directors, will ask the Company’s shareholders to consider and vote on the following matters:

 

1.

The approval of the annual report, the consolidated financial statements and the statutory financial statements of the Company for the year ended December 31, 2020.

The Board of Directors proposes to approve the annual report, the consolidated financial statements and the statutory financial statements of the Company for the year ended December 31, 2020 and to take note of the reports of the auditors. Copies of these documents are available for download at www.proxydocs.com/CRSP.

 

2.

The approval of the appropriation of financial results.

The Board of Directors proposes to carry forward the net loss resulting from the appropriation of financial results as follows:

 

Proposed Appropriation of Net Income: in Swiss Francs (“CHF”)

 

 

 

 

 

 

 

 

Balance brought forward from previous years

 

CHF

 

 

 

(256,578,970

)

 

Net loss for the period (on a stand-alone unconsolidated basis):

 

CHF

 

 

 

(398,304,620

)

 

Total accumulated net loss:

 

CHF

 

 

 

(654,883,590

)

 

Resolution proposed by the Board of Directors:

 

 

 

 

 

 

 

 

- RESOLVED, that the net loss for the period of CHF

   (398,304,620) shall be carried forward.

 

 

 

 

 

 

 

 

 

 


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3.

The discharge of the members of the Board of Directors and Executive Committee.

The Board of Directors proposes that the members of the Board of Directors and the Executive Committee of the Company be discharged from personal liability for the business year ended December 31, 2020.

 

4.

The election and re-election of the members to the Board of Directors.

The Board of Directors proposes that Rodger Novak, M.D. be re-elected as member of the Board of Directors and Chairman of the Board of Directors and that each of Samarth Kulkarni, Ph.D., Bradley Bolzon, Ph.D., Ali Behbahani, M.D., H Edward Fleming Jr., M.D., Simeon J. George, M.D., John T. Greene, Katherine A. High, M.D., and Douglas A. Treco, Ph.D. be elected or re-elected, as appropriate, as directors, each for a term extending until completion of the 2022 annual general meeting of shareholders.

 

4.a

Re-election of Rodger Novak, M.D., as member and Chairman

 

4.b

Re-election of Samarth Kulkarni, Ph.D.

 

4.c

Re-election of Ali Behbahani, M.D.

 

4.d

Re-election of Bradley Bolzon, Ph.D.

 

4.e

Re-election of Simeon J. George, M.D.

 

4.f

Re-election of John T. Greene

 

4.g

Re-election of Katherine A. High, M.D.

 

4.h

Re-election of Douglas A. Treco, Ph.D.

 

4.i

Election of H Edward Fleming Jr., M.D.

 

5.

The re-election of the members of the Compensation Committee.

The Board of Directors proposes to re-elect, as appropriate, each of Ali Behbahani, M.D., Simeon J. George, M.D., and John T. Greene as members of the Compensation Committee of the Board of Directors, each for a term extending until completion of the 2022 annual general meeting of the shareholders.

 

5.a

Re-election of Ali Behbahani, M.D.

 

5.b

Re-election of Simeon J. George, M.D.

 

5.c

Re-election of John T. Greene

 

6.

The approval of the compensation for the Board of Directors and the Executive Committee.

The Board of Directors proposes to hold the following separate votes on the non-performance-related and the variable compensation of the Board of Directors and the Executive Committee:

6.a Binding vote on total non-performance-related compensation for members of the Board of Directors from the 2021 Annual General Meeting to the 2022 annual general meeting of shareholders.

The Board of Directors proposes that shareholders approve the total maximum amount of non-performance-related compensation for the members of the Board of Directors covering the period from the 2021 Annual General Meeting to the 2022 annual general meeting of shareholders, i.e., USD $507,000 (cash base compensation plus social security costs).

6.b Binding vote on equity for members of the Board of Directors from the 2021 Annual General Meeting to the 2022 annual general meeting of shareholders.

The Board of Directors proposes that shareholders approve the maximum grant of equity or equity linked instruments for the members of the Board of Directors covering the period from the 2021 Annual General Meeting to the 2022 annual general meeting of shareholders with maximum value of USD $11,738,100 (equity grant date value plus social security costs).

 


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6.c Binding vote on total non-performance-related compensation for members of the Executive Committee from July 1, 2021 to June 30, 2022.

The Board of Directors proposes that shareholders approve the total maximum amount of non-performance-related cash compensation for the members of the Executive Committee covering the period from July 1, 2021 to June 30, 2022, i.e., USD $3,514,207 (cash base compensation plus social security costs).

6.d Binding vote on total variable compensation for members of the Executive Committee for the current year ending December 31, 2021.

 The Board of Directors proposes that shareholders approve the total maximum amount of variable compensation for the members of the Executive Committee for the current year ending December 31, 2021, i.e., USD $2,693,933 (cash compensation plus social security costs).

6.e Binding vote on equity for members of the Executive Committee from the 2021 Annual General Meeting to the 2022 annual general meeting of shareholders.

The Board of Directors proposes that shareholders approve the maximum of equity or equity linked instruments for the members of the Executive Committee covering the period from the 2021 Annual General Meeting of shareholders to the 2022 annual general meeting of shareholders with maximum value of USD $55,827,593 (equity grant date value plus social security costs).

 

7.

The approval of an increase in the Conditional Share Capital for Employee Equity Plans.

The Board of Directors proposes to increase the Company’s conditional share capital for employee equity plans by 5,000,000 Common Shares in order to cover any future share issuances due to the exercise of equity incentive awards under the Company’s employee equity plans and amend art. 3c para. 1 of the Articles of Association as follows:

 

Art. 3c Conditional Share Capital for Employee Benefit Plans

The share capital of the Company shall be increased by an amount not exceeding CHF 624,192.99 through the issue of a maximum of 20,806,433 registered shares, payable in full, each with a nominal value of CHF 0.03, in connection with the exercise of option rights granted to any employee of the Company or a subsidiary, and any consultant, members of the Board of Directors, or other person providing services to the Company or a subsidiary.

Art. 3c Bedingtes Aktienkapital für Mitarbeiterbeteiligungspläne

Das Aktienkapital kann durch die Ausgabe von höchstens 624,192.99 voll zu liberierenden Namenaktien im Nennwert von je CHF 0.03 um höchstens CHF 20,806,433 durch Ausübung von Optionsrechten erhöht werden, welche Mitarbeitenden der Gesellschaft oder ihrer Tochtergesellschaften, Personen in vergleichbaren Positionen, Beratern, Verwaltungsratsmitgliedern oder anderen Personen, welche Dienstleistungen zu Gunsten der Gesellschaft erbringen, gewährt wurden.

 


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8.

The approval of increasing the maximum size of the Board of Directors.

The Board of Directors proposes to increase the maximum size of the Board of Directors to 10 members, and to amend art. 20 of the Articles of Association to reflect the foregoing as follows:

 

Art. 20 Number of Members, Term of Office

The Board of Directors shall consist of at least 3 and not more than 10 members. The chairman and the members of the Board of Directors are individually elected by the General Meeting for a term of one year until the end of the next Ordinary General Meeting, provided that he/she does not resign or is not replaced during his term.

 

The members of the Board of Directors may be re-elected without limitation. The maximum age limit of members of the Board shall be 75 years. When a member of the Board of Directors reaches this age limit during his term of office, such term shall automatically extend to the next ordinary shareholders' meeting. The shareholders' meeting may resolve to grant an exception to the age limit.

 

Art. 20 Anzahl der Mitglieder, Amtsdauer

Der Verwaltungsrat besteht aus mindestens 3 und höchstens 10 Mitgliedern. Der Präsident sowie die Mitglieder des Verwaltungsrates werden jeweils für die Dauer von einem Jahr bis zum Ende der nächsten ordentlichen Generalversammlung einzeln gewählt. Vorbehalten bleiben vorheriger Rücktritt oder Abberufung.

 

Die Mitglieder des Verwaltungsrates sind jederzeit wieder wählbar. Die oberste Altersgrenze von Mitgliedern des Verwaltungsrats beträgt 75 Jahre. Wenn ein Mitglied des Verwaltungsrats diese Altersgrenze während seiner Amtszeit erreicht, wird diese automatisch zur nächsten ordentlichen Generalversammlung verlängert. Die Generalversammlung kann eine Ausnahme von der Altersgrenze beschliessen.

 

9.

The approval of increasing the maximum number of authorized share capital and extending the date by which the Board of Directors may increase the share capital.

The Board of Directors proposes to increase the authorized share capital to 39,316,975 shares, to extend the date by which the Board of Directors may increase the share capital to June 10, 2023, and to amend art. 3a para 1 of the Articles of Association to reflect the foregoing as follows:

 

Art. 3a Authorized Share Capital

The Board of Directors is authorized to increase the share capital, in one or several steps until 10 June 2023, by a maximum amount of CHF 1’179’509.25 by issuing a maximum of 39,316,975 registered shares with a par value of CHF 0.03 each, to be fully paid up. An increase of the share capital (i) by means of an offering underwritten by a financial institution, a syndicate or another third party or third parties, followed by an offer to the then-existing shareholders of the Company and (ii) in partial amounts shall also be permissible.

 

Art. 3a Genehmigtes Kapital

Der Verwaltungsrat ist ermächtigt, jederzeit bis zum 10. Juni 2023, das Aktienkapital im Maximalbetrag von CHF 1’179’509.25 durch Ausgabe von höchstens 39,316,975 vollständig zu liberierende Namenaktien mit einem Nennwert von je CHF 0.03 zu erhöhen. Eine Erhöhung des Aktienkapitals (i) durch die Zeichnung von Aktien aufgrund eines von einem Finanzinstitut, eines Verbandes, einer anderen Drittpartei oder Drittparteien unter-zeichneten Angebots, gefolgt von einem An-gebot gegenüber den zu diesem Zeitpunkt bestehenden Aktionären der Gesellschaft sowie (ii) in Teilbeträgen ist zulässig.

 

 

10.

The re-election of the independent voting rights representative.

The Board of Directors proposes the re-election of lic. iur. Marius Meier, Attorney at Law, Lautengartenstrasse 7, CH-4052 Basel, as the independent voting rights representative until the closing of the 2022 annual general meeting of shareholders.

 


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11.

The re-election of the auditors.

The Board of Directors proposes to re-elect Ernst & Young AG as the Company’s statutory auditor for the term of office of one year and the re-election of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2021.

 

12.

The transaction of any other business that may properly come before the 2021 Annual General Meeting or any adjournment or postponement thereof.

 

In light of the global spread of the SARS-CoV-2 virus (coronavirus) and the COVID-19 pandemic and the uncertainty whether our chairman or any member of the Board of Directors will be able to personally attend the 2021 Annual General Meeting, the Board of Directors may make an ad hoc proposal for the election of an ad hoc chairperson of the 2021 Annual General Meeting if neither our chairman nor any other member of the Board of Directors is able to preside at the 2021 Annual General Meeting. Please read the “Important Notice Regarding COVID-19 (Coronavirus) in Switzerland” below.

 

The foregoing items of business are more fully described in the attached proxy statement, which forms a part of this notice and is incorporated herein by reference. Shareholders of record at the close of business on April 16, 2021 will be entitled to notice of and to vote at the 2021 Annual General Meeting or any adjournment or postponement thereof.

We have elected to provide access to our proxy materials over the Internet under the Securities and Exchange Commission’s “notice and access” rules. We believe that providing our proxy materials over the Internet expedites shareholders’ receipt of proxy materials, lowers costs and reduces the environmental impact of our annual general meeting.

Due to the current spread of the SARS-CoV-2 virus (coronavirus) and the COVID-19 pandemic in Switzerland and globally, and in accordance with the Swiss Federal Act on the Statutory Principles for Federal Council Ordinances on Combating the COVID-19 Epidemic of 25 September 2020, and the Ordinance 3 on Measures to Combat the Coronavirus (COVID-19), enacted by the Swiss Federal Council on June 19, 2020, in each case as amended from time to time (the COVID-19 Regime), the Board of Directors has decided that shareholders can exercise their rights at the 2021 Annual General Meeting through the independent voting rights representative, as in-person attendance of shareholders at the 2021 Annual General Meeting will not be possible. Under current Swiss statutory corporate law, virtual meetings are not permitted, and under the COVID-19 Regime, voting is permitted only by ballot or electronic means or through the independent voting rights representative. Please read the “Important Notice Regarding COVID-19 (Coronavirus) in Switzerland” on page 6 of this Notice of Invitation to 2021 Annual General Meeting of Shareholders. We encourage you to read this proxy statement and submit your proxy or voting instructions as soon as possible. Please review the instructions on each of your voting options described in the proxy statement.

 

Thank you for your ongoing support and continued interest in CRISPR Therapeutics AG.

 

 

By Order of the Board of Directors,

 

Rodger Novak, M.D.

Chairman of the Board of Directors

Zug, Switzerland

April 28, 2021

 

 


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Important Notice Regarding Internet Availability of Proxy Materials: This proxy statement and our 2021 annual report to shareholders, or the Annual Report, which includes our Annual Report on Form 10-K for the year ended December 31, 2020, are available at www.proxydocs.com/CRSP. These documents are also available to any shareholder who wishes to receive a paper copy by calling (866) 648-8133, by emailing paper@investorelections.com or by submitting a request over the Internet at www.investorelections.com/CRSP.

 

Important Notice Regarding COVID-19 (Coronavirus) in Switzerland: In light of the global spread of the SARS-CoV-2 virus (coronavirus) and the COVID-19 pandemic, to protect the health of our shareholders and employees, and in accordance with the Swiss Federal Act on the Statutory Principles for Federal Council Ordinances on Combating the COVID-19 Epidemic of 25 September 2020, as amended from time to time, and the Ordinance 3 on Measures to Combat the Coronavirus (COVID-19), enacted by the Swiss Federal Council on June 19, 2020, as amended from time to time (also referred to as the COVID-19 Regime), the Board of Directors has decided that shareholders can again exercise their rights at the 2021 Annual General Meeting exclusively through the independent voting rights representative, as in-person attendance at the 2021 Annual General Meeting will not be possible. We do not expect the members of the Board of Directors (other than the Chairman) and the management to be present at the 2021 Annual General Meeting, and questions, requests for information, proposals for motions, ad hoc proposals (including the election of an ad hoc chairperson for the 2021 Annual General Meeting if neither our chairman nor any other member of the Board of Directors is able to preside at the 2021 Annual General Meeting) and statements made for the record by shareholders may only be submitted in writing or electronically in advance to the 2021 Annual General Meeting. Shareholders are advised that, depending on the spread of the SARS-CoV-2 virus (coronavirus) and the COVID-19 pandemic over the course of the next weeks, changes to the applicable laws, rules, regulations and restrictions imposed by applicable Swiss and other governmental authorities, including the COVID-19 Regime, may be made with little or no advance notice and affect the 2021 Annual General Meeting.

 

 

 


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TABLE OF CONTENTS

 

INFORMATION CONCERNING SOLICITATION AND VOTING

1

IMPORTANT INFORMATION ABOUT THE ANNUAL GENERAL MEETING AND VOTING

2

BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

6

Election of Directors

6

Corporate Governance Matters

9

Code of Business Conduct and Ethics

9

Board Leadership Structure and Risk Oversight

9

Board Determination of Independence

10

Board of Director Meetings and Attendance

11

Communicating with the Independent Directors

11

Committees of the Board of Directors

11

Director Nomination Process

14

Compensation Committee Interlocks and Insider Participation

15

Policies and Procedures for Related Person Transactions

15

Related Person Transactions

15

EXECUTIVE OFFICERS

17

EXECUTIVE COMPENSATION

18

Compensation Discussion and Analysis

18

Executive Summary

18

Overview of Executive Compensation Program

18

Say on Pay

19

Governance of Executive Compensation Program

20

Primary Elements of Executive Compensation Program

23

Other Employee Benefits

29

Other Compensation Policies and Practices

30

NEO Compensation Tables

32

Summary Compensation Table

32

Grants of Plan-Based Awards for Fiscal Year 2020

34

Outstanding Equity Awards at Fiscal Year-End

35

Option Exercises and Stock Vested in Fiscal Year 2020

36

Potential Payments on Termination or Change in Control

37

Employment Arrangements with our NEOs

38

COMPENSATION COMMITTEE REPORT

42

CEO PAY RATIO DISCLOSURE

43

                Pay Ratio Disclosure

43

                Pay Ratio Methodology

43

DIRECTOR COMPENSATION

44

Director Compensation Table

45

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

46

REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS

47

MATTERS TO BE VOTED ON

48

Proposal 1: Approval of the Annual Report, the Consolidated Financial Statements and the Statutory Financial Statements of CRISPR Therapeutics AG

48

Proposal 2: Approval of the Appropriation of Financial Results

49

Proposal 3: Discharge of the Members of the Board of Directors and Executive Committee

50

Proposal 4: Election of Eight Directors

51

Proposal 5: Election of Members of the Compensation Committee

53

Proposal 6: Approval of the Compensation for the Board of Directors and the Members of the Executive Committee

54

Proposal 7: Increase of the Conditional Share Capital for Employee Equity Plans

56

 


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Proposal 8: Approval of Increasing the Maximum size of the Board of Directors

58

Proposal 9: Approval of Increasing the Maximum Number of Authorized Share Capital and Extending the Date by which the Board of Directors may Increase Authorized Share Capital

60

Proposal 10: Re-Election of Independent Voting Rights Representative

62

Proposal 11: Re-election of Ernst & Young AG as our statutory auditor for the term office of one year and the election of Ernst & Young LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2020

63

TRANSACTION OF OTHER BUSINESS

65

STOCK OWNERSHIP AND REPORTING

66

Security Ownership of Certain Beneficial Owners and Management

66

Restrictions on Voting Rights

68

OTHER MATTERS

70

Shareholder Proposals and Directors Nominations

70

Householding of Annual General Meeting Materials

70

 

 


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CRISPR THERAPEUTICS AG

Baarerstrasse 14

6300 Zug

Switzerland

+41 (0)41 561 32 77

 

PROXY STATEMENT

 

2021 ANNUAL GENERAL MEETING OF SHAREHOLDERS

To Be Held on June 10, 2021

 

INFORMATION CONCERNING SOLICITATION AND VOTING

This proxy statement and the enclosed proxy card are being furnished in connection with the solicitation of proxies by the board of directors, or the Board of Directors, of CRISPR Therapeutics AG, or the Company, for use at the 2021 annual general meeting of shareholders, or the 2021 Annual General Meeting, to be held on June 10, 2021 at 8:00 a.m. Central European Summer Time (2:00 a.m. Eastern Daylight Time) at the offices of Walder Wyss Ltd., Seefeldstrasse 123, 8008 Zurich, Switzerland, and at any adjournment thereof. Please read the “Important Notice Regarding COVID-19 (Coronavirus) in Switzerland” on page 6 of the Notice of Invitation to 2021 Annual General Meeting of Shareholders.

Unless otherwise stated, all references to “us,” “our,” “CRISPR,” “CRISPR Therapeutics,” “we,” the “Company” and similar designations refer to CRISPR Therapeutics AG and its consolidated subsidiaries. References to our website are inactive textual references only, and the contents of our website are not incorporated by reference into this proxy statement.

This proxy statement summarizes information about the proposals to be considered at the meeting and other information you may find useful in determining how to vote. The proxy card is the means by which you actually authorize another person to vote your shares in accordance with your instructions. We are making this proxy statement, the related proxy card and our annual report to shareholders for the year ended December 31, 2020, or the Annual Report, available to shareholders for the first time on or about April 28, 2021.

A copy of our Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the United States Securities and Exchange Commission, or the SEC, except for exhibits, will be furnished without charge to any shareholder upon written or oral request to CRISPR Therapeutics, Inc., 610 Main Street, Cambridge, Massachusetts 02139, on the internet at www.proxydocs.com/CRSP, by calling (866) 648-8133, by emailing paper@investorelections.com or by submitting a request over the Internet at www.investorelections.com/CRSP. This proxy statement and our Annual Report on Form 10-K for the year ended December 31, 2020 are also available on the SEC’s website at www.sec.gov.

 

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IMPORTANT INFORMATION ABOUT THE ANNUAL GENERAL MEETING AND VOTING

Q.

Why did I receive these proxy materials?

A.

Our Board of Directors has made these materials available to you on the Internet in connection with the solicitation of proxies for use at our 2021 Annual General Meeting to be held on June 10, 2021 at 8:00 a.m. Central European Summer Time (2:00 a.m. Eastern Daylight Time) at the offices of Walder Wyss Ltd., Seefeldstrasse 123, 8008 Zurich, Switzerland. As a holder of common shares, you are invited to the 2021 Annual General Meeting and are requested to vote on the items of business described in this proxy statement. Please read the “Important Notice Regarding the Spread of the COVID-19 (Coronavirus) in Switzerland” on page 6 of this Notice of Invitation to 2021 Annual General Meeting of Shareholders. This proxy statement includes information that is designed to assist you in voting your shares and that we are required to provide to you under SEC rules and applicable Swiss laws.

Q.

Why did I receive a notice in the mail regarding the Internet availability of proxy materials instead of a full set of proxy materials?

A.

In accordance with the SEC rules, we may furnish proxy materials, including this proxy statement and our Annual Report, to our shareholders by providing access to such documents on the Internet instead of mailing printed copies. If you would like to receive a paper copy of our proxy materials, you should follow the instructions for requesting such materials in the notice.

Q.

What is the purpose of the 2021 Annual General Meeting?

A.

At the 2021 Annual General Meeting, shareholders will consider and vote on the following matters:

 

1.

The approval of the Annual Report, the consolidated financial statements and the statutory financial statements of the Company for the year ended December 31, 2020 (Proposal 1);

 

2.

The approval of the appropriation of financial results (Proposal 2);

 

3.

The discharge of the members of the Board of Directors and the Executive Committee (Proposal 3);

 

4.

The election and re-election of nine directors to our Board of Directors, including the chairman of the Board of Directors, each for a term extending until the completion of the 2022 annual general meeting of shareholders (Proposals 4.a-4.i);

 

5.

The re-election of the members of the Compensation Committee of the Board of Directors (Proposals 5.a-5.c);

 

6.

The approval of the compensation for the Board of Directors and the members of the Executive Committee (Proposals 6.a-6.e);

 

7.

The approval of an increase in the Conditional Share Capital for Employee Equity Plans (Proposal 7);

 

8.

The approval of increasing the maximum size of the Board of Directors (Proposal 8);

 

9.

The approval of increasing the maximum number of authorized share capital and extending the date by which the Board of Directors may increase the share capital (Proposal 9);

 

10.

The re-election of the independent voting rights representative (Proposal 10);

 

11.

The re-election of Ernst & Young AG as our statutory auditor for the term of office of one year and the re-election of Ernst & Young LLP as our independent registered public accounting firm for the year ending December 31, 2021 (Proposal 11); and

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12.

The transaction of any other business that may properly come before the 2021 Annual General Meeting or any adjournment or postponement thereof.

Q.

Who can vote at the 2021 Annual General Meeting?

A.

To be entitled to vote, you must have been a shareholder of record at the close of business on April 16, 2021, the record date for our 2021 Annual General Meeting. As of the record date, there were 75,759,011 common shares outstanding and entitled to vote at the 2021 Annual General Meeting. Members of our Board of Directors and our Executive Committee are not allowed to vote on the proposal to discharge the members of the Board of Directors and the Executive Committee from personal liability for the business year ended December 31, 2020.

Q.

How many votes do I have?

A.

Each common share that you own as of the record date will entitle you to one vote on each matter considered at the 2021 Annual General Meeting. There is no cumulative voting in the election of directors.

Q.

How do I vote?

A.

If you are the “record holder” of your shares, meaning that your shares are registered in your name in the records of our transfer agent, American Stock Transfer & Trust Company, LLC, and not through a bank, brokerage firm or other nominee, you may vote your shares at the meeting by proxy as follows:

 

1.

Over the Internet: To vote over the Internet, please go to the following website: www.proxypush.com/crsp, and follow the instructions on that website for submitting your proxy electronically. If you vote over the Internet, you do not need to complete and mail your proxy card or vote your proxy by telephone. You must specify how you want your shares voted, or your Internet vote cannot be completed and you will receive an error message. You must submit your Internet proxy before 11:59 p.m., Central European Summer Time (5:59 p.m. Eastern Daylight Time), on June 9, 2021, the day before the 2021 Annual General Meeting, for your proxy to be valid and your vote to count.

 

2.

By Telephone: To vote by telephone, please call 866-286-3217, and follow the instructions provided on the proxy card. If you vote by telephone, you do not need to complete and mail your proxy card or vote your proxy over the Internet. You must specify how you want your shares voted and confirm your vote at the end of the call, or your telephone vote cannot be completed. You must submit your telephonic proxy before 11:59 p.m., Central European Summer Time (5:59 p.m. Eastern Daylight Time), on June 9, 2021, the day before the 2021 Annual General Meeting, for your proxy to be valid and your vote to count.

 

3.

By Mail: To vote by mail, you must mark, sign and date the proxy card and then mail the proxy card in accordance with the instructions on the proxy card. If you vote by mail, you do not need to vote over the Internet or by telephone. Broadridge Financial Solutions, Inc. must receive the proxy card not later than June 9, 2021, the day before the 2021 Annual General Meeting, for your proxy to be valid and your vote to count. If you return your proxy card but do not specify how you want your shares voted on any particular matter, they will be voted in accordance with the recommendations of our Board of Directors.

No In Person Attendance at the 2021 Annual General Meeting: Due to the current spread of the SARS-CoV-2 virus (coronavirus) and the COVID-19 pandemic in Switzerland and globally, in-person attendance of shareholders at the 2021 Annual General Meeting will not be possible. Please read the “Important Notice Regarding COVID-19 (Coronavirus) in Switzerland” on page 6 of this Notice of Invitation to 2021 Annual General Meeting of Shareholders.

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If your shares are held in “street name,” meaning they are held for your account by an intermediary, such as a broker, then you are deemed to be the beneficial owner of your shares, and the broker that actually holds the shares for you is the record holder and is required to vote the shares it holds on your behalf according to your instructions. The proxy materials, as well as voting and revocation instructions, should have been forwarded to you by the broker that holds your shares. In order to vote your shares, you will need to follow the instructions that your broker provides you. Many brokers solicit voting instructions over the Internet or by telephone.

If you do not give instructions to your broker, your broker will still be able to vote your shares with respect to certain “routine” items. The following proposals are considered routine items:

 

-

Proposal No. 1 (approval of the annual report, the consolidated financial statements and statutory financial statements for the year ended December 31, 2020);

 

-

Proposal No. 10 (re-election of the independent voting rights representative); and

 

-

Proposal No. 11 (election of Ernst & Young AG as our statutory auditor and election of Ernst & Young LLP as our independent registered public accounting firm).

Accordingly, your broker may vote your shares in its discretion with respect to these proposals even if you do not give voting instructions.

Although brokers have discretionary authority to vote shares on “routine” matters, they do not have authority to vote shares on “non-routine” matters under applicable stock exchange rules. We believe that the following proposals to be voted on at the 2021 Annual General Meeting will be considered to be “non-routine” under the applicable stock exchange rules and, if you do not give your broker voting instructions on such proposals, your broker may not vote your shares with respect to these matters and your shares will be counted as “broker non-votes” with respect to the proposal. A “broker non-vote” occurs when shares held by a broker are not voted with respect to a particular proposal because the broker does not have or did not exercise discretionary authority to vote on the matter and has not received voting instructions from its clients. As a result, a broker non-vote is neither a vote cast nor a vote represented, respectively.

 

-

Proposal No. 2 (approval of the appropriation of financial results);

 

-

Proposal No. 3 (discharge of the members of the Board of Directors and Executive Committee);

 

-

Proposal Nos. 4.a-4.i (election and re-election of nine directors and the chairman to our Board of Directors);

 

-

Proposal Nos. 5.a-5.c (re-election of the members of the Compensation Committee);

 

-

Proposal Nos. 6.a-6.e (compensation for the Board of Directors and the members of the Executive Committee);

 

-

Proposal No. 7 (approval of an increase in the conditional capital for employee equity plans);

 

-

Proposal No. 8 (approval of increasing the maximum size of the Board of Directors);

 

-

Proposal No. 9 (approval of increasing the maximum number of authorized share capital and extending the date by which the Board of Directors may increase the share capital);

Q.

Can I change my vote?

A.

If your shares are registered directly in your name, you may revoke your proxy and change your vote at any time before the vote is taken at the 2021 Annual General Meeting. To do so, you must do one of the following:

 

1.

Vote over the Internet or by telephone as instructed above. Only your latest Internet or telephone vote is counted.

 

2.

Sign and return a new proxy card. Only your latest dated and timely received proxy card will be counted.

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3.

Give our corporate secretary written notice before or at the 2021 Annual General Meeting that you want to revoke your proxy.

If your shares are held in “street name,” you may submit new voting instructions by contacting your broker or other nominee.

Q.

How many shares must be represented to have a quorum and hold the 2021 Annual General Meeting?

A.

There is no quorum requirement for the meeting. Under Swiss law, public companies do not have specific quorum requirements for shareholder meetings, and our Articles of Association do not otherwise provide for a quorum requirement.

Q.

What vote is required to approve each matter and how are votes counted?

A.

Each proposal, except proposals 7, 8 and 9, requires the affirmative vote of a majority of the share votes cast at the 2021 Annual General Meeting, excluding unmarked, invalid and non-exercisable votes and abstentions.

Proposals 7, 8 and 9 require the affirmative vote of at least two thirds of the represented share votes at the 2021 Annual General Meeting.

Q.

How does the Board of Directors recommend that I vote on the proposals?

A.

Our Board of Directors recommends that you vote “FOR” each of the proposals.

Q.

Are there other matters to be voted on at the 2021 Annual General Meeting?

A.

We do not know of any matters that may come before the 2021 Annual General Meeting other than the proposals set forth in this notice. If any other matters are properly presented at the annual general meeting, the persons named in the accompanying proxy intend to vote, or otherwise act, in accordance with their judgment on the matter.

Q.

Where can I find the voting results?

A.

We plan to announce preliminary voting results at the 2021 Annual General Meeting and will report final voting results in a Current Report on Form 8-K filed with the SEC within four business days following the end of the meeting.

Q.

What are the costs of soliciting these proxies?

A.

We will bear the cost of soliciting proxies. In addition to solicitation by mail, our directors, officers and employees may solicit proxies by telephone, e-mail, facsimile and in person without additional compensation. We may reimburse brokers or persons holding shares in their names, or in the names of their nominees, for their expenses in sending proxies and proxy material to beneficial owners. We have retained Georgeson LLC to assist in the solicitation of proxies for a fee of approximately $22,500 plus customary costs and expenses for these services.

Q.

Whom should I contact if I have any questions?

A.

If you have any questions about the 2021 Annual General Meeting or your ownership of our common shares, please contact Michael Esposito, our Executive Director, Controller. He may be contacted before June 9, 2021 at 610 Main Street, Cambridge, Massachusetts 02139; telephone: +1 617-315-4600. Alternatively, any questions may be directed by e-mail to: secretary@crisprtx.com.

 

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BOARD OF DIRECTORS AND CORPORATE GOVERNANCE

Election of Directors

Our Board of Directors is comprised of one class, with members holding office for one year terms. There are currently eight directors on our Board of Directors (Rodger Novak, M.D., Samarth Kulkarni, Ph.D., Bradley Bolzon, Ph.D., Ali Behbahani, M.D., Simeon J. George, M.D., John T. Greene, Katherine A. High, M.D. and Douglas A. Treco, Ph.D.), whose terms expire at the 2021 Annual General Meeting, subject to such director’s earlier death, resignation or removal.

Set forth below are the names and certain information for each member and nominee of the Board of Directors, as of March 15, 2021. The information presented includes each director and nominee’s principal occupation and business experience for the past five years, and the names of other public companies of which he or she has served as a director during the past five years. The information presented below regarding the specific experience, qualifications, attributes and skills of each director and nominee led our nominating and corporate governance committee and our Board of Directors to conclude that he or she should serve as a director and be nominated for directorship at the 2021 Annual General Meeting. In addition, we believe that each director and nominee possesses the attributes or characteristics which the nominating and corporate governance committee expects of each director. These attributes and characteristics are further described in “—Corporate Governance Matters—Director Nomination Process.” There are no family relationships among any of our directors or executive officers.

 

Name

 

Age

 

Position(s)

Ali Behbahani, M.D. (1a)(1b)(2a)(2b)

 

44

 

Director

Bradley Bolzon, Ph.D. (2a)(2b)

 

61

 

Director

H Edward Fleming Jr., M.D.

 

58

 

Director nominee

Simeon J. George, M.D. (1a)(1b)(3a)(3b)

 

44

 

Director

John T. Greene (1a)(1b)(3a)(3b)

 

55

 

Director

Katherine A. High, M.D. (2a)(2b)

 

69

 

Director

Samarth Kulkarni, Ph.D.

 

42

 

Chief Executive Officer

Rodger Novak, M.D.

 

53

 

Chairman and President

Douglas A. Treco, Ph.D. (3a)(3b)

 

63

 

Director

 

(1a)

Current member of the Compensation Committee.

(1b)

Subject to and following the election of directors at the 2021 Annual General Meeting, will be a member of the Compensation Committee.

(2a)

Current member of the Nominating and Corporate Governance Committee.

(2b)

Subject to and following the election of directors at the 2021 Annual General Meeting, will be a member of the Nominating and Corporate Governance Committee.

(3a)

Current member of the Audit Committee.

(3b)

Subject to and following the election of directors at the 2021 Annual General Meeting, will be a member of the Audit Committee.

Nominee for Re-Election as Member and Chairman of the Board of Directors

Rodger Novak, M.D., Co-Founder, Chairman and President: Dr. Novak co-founded CRISPR Therapeutics AG in November 2013, has served as a director on our Board of Directors since inception, served as our Chief Executive Officer until December 1, 2017 and, since that date, has served as our President and since December 21, 2017 as our Chairman. In addition to his roles with the Company, Dr. Novak also joined SR One Capital Management, LP, or SR One, in November 2020 as a Venture Partner based in Switzerland supporting SR One on new company formation and early-stage investment. Prior to joining our company, Dr. Novak served as Global Head Anti-infectives Research and Development at Sanofi, a pharmaceutical company. Prior to Sanofi, Dr. Novak co-founded Nabriva Therapeutics AG, a biopharmaceutical company, in January 2006, and served as its Chief Operating Officer from inception to May 2012. From March 2003 to January 2006, Dr. Novak served as the Deputy Head of the Antibiotic Research Institute at Sandoz GmbH. Dr. Novak was appointed as Professor for Microbiology at the Vienna Biocenter in March 2001. Dr. Novak received an M.D. from Philipps University of Marburg, Germany. He continued with post-doctoral work in New York City at The Rockefeller University, St. Jude

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Children’s Research Hospital and the Skirball Institute of Biomolecular Medicine at NYU Langone Medical Center. Dr. Novak has authored numerous publications, including articles in Nature, Nature Medicine and Molecular Cell and is a co-inventor of five patents. We believe Dr. Novak’s experience as our Chief Executive Officer, as well as his experience in the biopharmaceutical industry, qualifies him to serve on our Board of Directors.

Nominee for Election as Member

H Edward Fleming Jr., M.D.: Dr. Fleming is a Senior Partner at McKinsey and Company, or McKinsey, in the Silicon Valley Office in Redwood City, California. He is the global leader of McKinsey’s R&D practice where he is responsible for its client service and knowledge development on R&D topics. Dr. Fleming earned his B.A. in Chemistry from Harvard University, his M.D. from Vanderbilt University, and completed internal medicine training at Johns Hopkins Hospital and subspecialty training in pulmonary and critical care medicine at the University of California, San Francisco.  Dr. Fleming joined McKinsey in 1997 where he has focused on healthcare, working closely with life sciences, biopharmaceutical, medical device and technology companies of all sizes to improve their performance. Dr. Fleming serves on the Board of Visitors for Vanderbilt’s School of Basic Sciences. We believe Dr. Fleming’s experience in the healthcare industry, including working closely with biopharmaceutical companies on strategy, operational performance and R&D innovation, qualifies him to serve on our Board of Directors.

Nominees for Re-Election as Member

Ali Behbahani, M.D., M.B.A., Director: Dr. Behbahani has served on our Board of Directors since April 2015. Dr. Behbahani joined New Enterprise Associates, Inc., or NEA, in 2007 and is a General Partner on the healthcare team. Dr. Behbahani also has served as a member of the board of directors of Adaptimmune Therapeutics plc, a biopharmaceutical company, since September 2014, Nkarta, Inc., a biopharmaceutical company, since August 2015 and as chairman since August 2019, Oyster Point Pharma, Inc., a biopharmaceutical company, since July 2017 and as chairman since October 2020, Genocea Biosciences, Inc., a biopharmaceutical company, since February 2018 and Black Diamond Therapeutics, Inc., an oncology company, since December 2018. Dr. Behbahani previously served as a member of the board of directors of Nevro Corp., a medical device company, from August 2014 to March 2019. Prior to joining NEA, Dr. Behbahani served as a consultant in business development at The Medicines Company, a pharmaceutical company. In addition, Dr. Behbahani formerly served as a Venture Associate at Morgan Stanley and as a Healthcare Investment Banking Analyst at Lehman Brothers. Dr. Behbahani received an M.D. from the University of Pennsylvania School of Medicine, an M.B.A. from the Wharton School of the University of Pennsylvania and a B.S. in Biomedical Engineering, Electrical Engineering and Chemistry from Duke University. We believe Dr. Behbahani’s experience in the biopharmaceutical industry, as well as his experience as a member on the boards of directors of multiple companies in the industry, qualifies him to serve on our Board of Directors.

Bradley Bolzon, Ph.D., Director: Dr. Bolzon has served on our Board of Directors since April 2014. Dr. Bolzon is Chairman and Managing Director of Versant Venture Management, LLC, where he has been employed since May 2004. Dr. Bolzon also has served as a member of the board of directors of Black Diamond Therapeutics, Inc., an oncology company, since December 2017. Dr. Bolzon previously served as a member of the board of directors of Flexion Therapeutics, Inc., a pharmaceutical company, from its inception in 2007 to June 2014. From February 2000 to May 2004, Dr. Bolzon served as Executive Vice President, Global Head of Business Development, Licensing & Alliances of F. Hoffman-La Roche Ltd., a pharmaceutical company. Dr. Bolzon also formerly served as Head of Cardiovascular Research at Eli Lilly and Company. Dr. Bolzon received a Ph.D. in Pharmacology and an M.S. in Pharmacology from the University of Toronto. He continued with post-doctoral work at the University of Ottawa Heart Institute. We believe Dr. Bolzon’s experience in the biopharmaceutical industry qualifies him to serve on our Board of Directors.

Simeon J. George, M.D., Director: Dr. George has served on our Board of Directors since April 2015. Dr. George is the Chief Executive Officer of SR One Capital Management, LP, a trans-Atlantic biotech venture capital firm, where he has been employed since September 2020. SR One Capital Management, LP spun out of GlaxoSmithKline plc in November 2020. Previously, Dr. George was the Chief Executive Officer and President of S.R. One, Limited, previously an indirect, wholly-owned subsidiary of GlaxoSmithKline plc, where he had been employed since 2007. Dr. George also has served as a director of Nkarta Therapeutics, Inc. since February 2020 (and previously from July 2015 to September 2017), Turning Point Therapeutics, Inc. since May 2017, and Design Therapeutics, Inc. since February 2020. In addition, Dr. George previously served as a director on the boards of the

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following biotechnology companies: Principia Biopharma Inc. from February 2011 to September 2020, Progyny, Inc. from May 2012 to October 2019, HTG Molecular Diagnostics, Inc. from June 2011 to October 2015 and Genocea Biosciences, Inc. from April 2010 to December 2014. Dr. George also served as a consultant at Bain & Company from October 2006 to August 2007. Dr. George received an M.D. from the University of Pennsylvania School of Medicine, an M.B.A. from the Wharton School of the University of Pennsylvania, and a B.A. in Neuroscience from Johns Hopkins University. We believe Dr. George’s experience in the biopharmaceutical industry, as well as his experience as a member on the boards of directors of multiple companies in the industry, qualifies him to serve on our Board of Directors.

John T. Greene, Director: Mr. Greene has served on our Board of Directors since June 2019. Since September 2019, Mr. Greene has served as Executive Vice President and Chief Financial Officer of Discover Financial Services. From November 2016 to April 2018, Mr. Greene served as Executive Vice President, Chief Financial Officer and Treasurer of Bioverativ, Inc., a global biopharmaceutical company. Prior to joining Bioverativ, Mr. Greene was the Chief Financial Officer of Willis Group Holdings, risk advisory, insurance and reinsurance brokerage company, from June 2014 until January 2016. Before joining Willis Group, Mr. Greene held senior executive roles at HSBC, the global financial services company, for eight years, including Chief Financial Officer for Retail Bank and Wealth Management business. Prior to HSBC, Mr. Greene worked for 12 years in various roles at General Electric Company. Mr. Greene has an undergraduate degree from the State University of New York, and an M.B.A. from Northwestern University’s Kellogg School of Management. We believe Mr. Greene’s experience in the biotechnology industry, as well as his experience as an executive at several large companies in other business sectors, qualifies him to serve on our Board of Directors.

Katherine A. High, M.D, Director: Dr. High has served on our Board of Directors since June 2019. Since January 2021, Dr. High has served as the President, Therapeutics of Asklepios BioPharmaceutical, Inc., or AskBio, a subsidiary of Bayer AG, and as a member of AskBio’s board of directors. Previously, Dr. High co-founded Spark Therapeutics, Inc. and from September 2014 to December 2019, she served as its President and as a member of its board of directors and served as its Head of Research & Development from September 2017 to February 2020. Dr. High also has served as a director of Incyte Corporation since March 2020. From 2004 to 2014, Dr. High was a Professor at the Perelman School of Medicine at the University of Pennsylvania, an Investigator at Howard Hughes Medical Institute and the Director of the Center for Cellular and Molecular Therapeutics at the Children’s Hospital of Philadelphia. She completed a five-year term from 2000 to 2005 on the U.S. Food and Drug Administration Advisory Committee on Cell, Tissue and Gene Therapies and is a past president of the American Society of Gene & Cell Therapy. Dr. High holds an A.B. in chemistry from Harvard University, an M.D. from the University of North Carolina School of Medicine, a business certification from the University of North Carolina Business School Management Institute for Hospital Administrators and an honorary M.A. from The University of Pennsylvania. We believe Dr. High’s experience as an executive and scientific leader in the life sciences industry qualifies her to serve on our Board of Directors.

Samarth Kulkarni, Ph.D., Chief Executive Officer and Director: Dr. Kulkarni has served as our Chief Executive Officer since December 1, 2017 and a member of our Board of Directors since June 2018. Previous to that, Dr. Kulkarni served as our President and Chief Business Officer from May 2017 to November 30, 2017 and, before that, as our Chief Business Officer from August 2015 when he joined our company. Prior to joining our company, Dr. Kulkarni was at McKinsey & Company from 2006 to July 2015, with various titles, his most recent being Partner within the Pharmaceuticals and Biotechnology practice. Dr. Kulkarni also has served as a member of the board of directors of Repare Therapeutics Inc., an oncology company, since November 2019, as well as Black Diamond Therapeutics, Inc., an oncology company, since December 2019. Dr. Kulkarni received a Ph.D. in Bioengineering and Nanotechnology from the University of Washington and a B. Tech. from the Indian Institute of Technology. Dr. Kulkarni has authored several publications in leading scientific and business journals. We believe Dr. Kulkarni’s experience as our Chief Executive Officer, his previous experience as our President and Chief Business Officer, and his experience in the biopharmaceutical industry, qualifies him to serve on our Board of Directors.

Douglas A. Treco, Ph.D., Director: Dr. Treco has served on our Board of Directors since June 2020. Since April 2021, Dr. Treco has served as Chief Executive Officer of Alchemab Therapeutics (London, England) and as a member of its board of directors. Previously, Dr. Treco co-founded Ra Pharmaceuticals, Inc., a biopharmaceutical company, in 2008, which was acquired by UCB S.A. in April 2020. He served as its president and chief executive officer and a member of its board of directors from its inception in 2008 through July 2020. Dr.Treco also has served as a member of the board of directors of Inozyme Pharma Inc., a biopharmaceutical company, since May

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2020 and has been a scientific advisor to Lightstone Ventures since November 2020. Dr. Treco was an entrepreneur-in-residence with Morgenthaler Ventures between January 2008 and May 2014. In 1988, he co-founded Transkaryotic Therapies Inc., a biopharmaceutical company, which was acquired in 2005 by Shire Pharmaceuticals Group plc. Dr. Treco was a visiting scientist in the Department of Molecular Biology at Massachusetts General Hospital and a lecturer in genetics at Harvard Medical School from 2004 to 2007. Dr. Treco received his Ph.D. in biochemistry and molecular biology from the State University of New York, Stony Brook, and performed postdoctoral studies at the Salk Institute for Biological Studies and Massachusetts General Hospital. We believe Dr. Treco’s experience as an executive and scientific leader in the life sciences industry, in particular, his unique focus on rare disease, gene targeting, and gene therapy, qualifies him to serve on our Board of Directors.

Corporate Governance Matters

Our Board of Directors believes that good corporate governance is important to ensure that our company is managed for the long-term benefit of shareholders. This section describes key corporate governance guidelines and practices that our Board of Directors has adopted. Complete copies of our Articles of Association, our Organizational Rules, corporate governance guidelines, committee charters for each of our Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee, and Code of Business Conduct and Ethics are available on the “Investors & Media—Corporate Governance” section of our website, which is located at www.crisprtx.com. Alternatively, you can request a copy of any of these documents by writing us at CRISPR Therapeutics, Inc., 610 Main Street, Cambridge, Massachusetts 02139, Attention: Investor Relations.

Code of Business Conduct and Ethics

Our Board of Directors has adopted a Code of Business Conduct and Ethics, or the Code of Conduct, that is applicable to all of our employees, executive officers and directors, which is available on our website www.crisprtx.com. The Audit Committee of our Board of Directors is responsible for overseeing the Code of Conduct. Approval of the Audit Committee is required for any waivers of the Code of Conduct for employees, executive officers and directors. Any amendments to the Code of Conduct, or any waivers of its requirements, will be disclosed on our website.

Board Leadership Structure and Risk Oversight

Board Leadership Structure

As a general policy, our Board of Directors believes that separation of the positions of chairman and chief executive officer reinforces the independence of the Board of Directors from management, creates an environment that encourages objective oversight of management’s performance and enhances the effectiveness of the Board of Directors as a whole. Accordingly, we currently separate the roles of chief executive officer and chairman of the Board of Directors, with Dr. Kulkarni serving as our chief executive officer and Dr. Novak serving as chairman of the Board of Directors. As chief executive officer, Dr. Kulkarni is responsible for managing our executive leadership team and, together with that team, setting the strategic direction for our company and the day-to-day leadership and performance of our company, while the chairman of the Board of Directors presides over meetings of the Board of Directors, including executive sessions, and performs oversight responsibilities. Our Board of Directors has three standing committees that currently consist of, and are chaired by, independent directors. Our Board of Directors delegates substantial responsibilities to the committees, which then report their activities and actions back to the full Board of Directors. We believe that the independent committees of our Board of Directors and their chairpersons promote effective independent governance. We believe this structure represents an appropriate allocation of roles and responsibilities for our company at this time because it strikes an effective balance between management and independent leadership participation in our Board of Directors proceedings.

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Risk Oversight

Our Board of Directors oversees the management of risks inherent in the operation of our business and the implementation of our business strategies. Our Board of Directors performs this oversight role by using several different levels of review. In connection with its reviews of the operations and corporate functions of our company, our Board of Directors addresses the primary risks associated with those operations and corporate functions. In addition, our Board of Directors reviews the risks associated with our company’s business strategies periodically throughout the year as part of its consideration of undertaking any such business strategies.

Each committee of our Board of Directors also oversees the management of our company’s risk that falls within the committee’s areas of responsibility. In performing this function, each committee has full access to management, as well as the ability to engage advisors. Our chief executive officer reports to the Audit Committee and Board of Directors and is responsible for identifying, evaluating and implementing risk management controls and methodologies to address any identified risks. In connection with its risk management role, our Audit Committee meets privately with representatives from our independent registered public accounting firm and our chief executive officer. The Audit Committee oversees the operation of our risk management program, including the identification of the primary risks associated with our business and periodic updates to such risks, and reports to our Board of Directors regarding these activities.

Board Determination of Independence

Rule 5605 of the Nasdaq Listing Rules requires a majority of a listed company’s board of directors to be comprised of independent directors within one year of listing. In addition, the Nasdaq Listing Rules require that, subject to specified exceptions, each member of a listed company’s audit, compensation and nominating and corporate governance committees be independent under the Securities Exchange Act of 1934, as amended, or the Exchange Act. Audit committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Exchange Act, and compensation committee members must also satisfy the independence criteria set forth in Rule 10C-1 under the Exchange Act. Under Rule 5605(a)(2) of the Nasdaq Listing Rules, a director will only qualify as an “independent director” if, in the opinion of our Board of Directors, that person does not have a relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. In order to be considered independent for purposes of Rule 10A-3, a member of an audit committee of a listed company may not, other than in his or her capacity as a member of the audit committee, the Board of Directors, or any other committee of the Board of Directors, accept, directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries or otherwise be an affiliated person of the listed company or any of its subsidiaries. In order to be considered independent for purposes of Rule 10C-1, the Board of Directors must consider, for each member of a compensation committee of a listed company, all factors specifically relevant to determining whether a director has a relationship to such company which is material to that director’s ability to be independent from management in connection with the duties of a compensation committee member, including, but not limited to: (1) the source of compensation of the director, including any consulting advisory or other compensatory fee paid by such company to the director; and (2) whether the director is affiliated with the company or any of its subsidiaries or affiliates.

Our Board of Directors has undertaken a review of its composition, the composition of its committees and the independence of each director. Based upon information requested from and provided by each director concerning his or her background, employment and affiliations, including family relationships, our Board of Directors has determined that the following members of the Board of Directors, Ali Behbahani, M.D., Bradley Bolzon, Ph.D., Simeon J. George, M.D., John T. Greene, Katherine A. High, M.D., and Douglas A. Treco, Ph.D., as well as the nominee to be elected to the Board of Directors at the 2021 Annual General Meeting, H Edward Fleming Jr., M.D., do not have any relationships that would interfere with the exercise of independent judgment in carrying out the responsibilities of a director and that each of these non-employee directors is “independent” as that term is defined under the applicable rules and regulations of the SEC, and the listing requirements and rules of the Nasdaq Listing Rules. In making this determination, our Board of Directors considered the current and prior relationships that each non-employee director has with our company and all other facts and circumstances our Board of Directors deemed relevant in determining their independence, including the beneficial ownership of our common shares by each non-employee director.

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Board of Director Meetings and Attendance

Our Board of Directors held six formal meetings during 2020. During 2020, each of the directors then in office attended at least 75% of the aggregate of the number of Board of Directors meetings and the number of meetings held by all committees of the Board of Directors on which such director then served.

Although we do not have a formal policy regarding attendance by members of our Board of Directors at our annual general meeting, we encourage all of our directors to attend. Due to the spread of the SARS-CoV-2 virus (coronavirus) and the COVID-19 pandemic in Switzerland and globally, in-person attendance at our 2020 annual general meeting was not possible. As a result, our Chairman of the Board of Directors, Rodger Novak, was the only member of the Board of Directors who attended our 2020 annual general meeting of shareholders.

Communicating with the Independent Directors

Our Board of Directors will give appropriate attention to written communications that are submitted by shareholders, and will respond if and as appropriate. The chairman of the Board of Directors is primarily responsible for monitoring communications from shareholders and for providing copies or summaries to the other directors as he considers appropriate.

Shareholders who wish to send communications on any topic to our Board of Directors should address such communications to CRISPR Therapeutics AG, Baarerstrasse 14, 6300 Zug, Switzerland, Attn: General Counsel and Secretary, telephone +41 (0)41 561 32 77 and CRISPR Therapeutics, Inc., 610 Main Street, Cambridge, Massachusetts 02139, Attn: General Counsel and Secretary, telephone: +1 617 315-4600.

Committees of the Board of Directors

We have established an Audit Committee, a Compensation Committee, and a Nominating and Corporate Governance Committee. Each of these committees operates under a charter that has been approved by our Board of Directors. A copy of each committee’s charter can be found under the “Investors & Media—Corporate Governance” section of our website, which is located at www.crisprtx.com.

Audit Committee

Our Audit Committee currently consists of Simeon J. George, M.D, John T. Greene and Douglas A. Treco, Ph.D, and subject to and following the election of directors at the 2021 Annual General Meeting, each will continue serving as a member of our Audit Committee Our Board of Directors has determined that each member of our Audit Committee is independent under the Nasdaq listing standards and Rule 10A-3(b)(1) of the Exchange Act. The chair of our Audit Committee is Mr. Greene, and if Mr. Greene is re-elected to the Board of Directors at the 2021 Annual General Meeting, Mr. Greene will continue serving as the chair of our Audit Committee. Our Board of Directors has determined that Mr. Greene is an “Audit Committee financial expert” within the meaning of SEC regulations. Our Board of Directors has also determined that each member of our Audit Committee can read and understand fundamental financial statements in accordance with applicable requirements. In arriving at these determinations, the Board of Directors has examined each Audit Committee member’s scope of experience and the nature of their employment in the corporate finance sector. The Audit Committee held four formal meetings during 2020.

The Audit Committee has the responsibility to, among other things:

 

review and assess the qualifications, independence, performance and effectiveness of the independent auditor;

 

review the scope of the prospective audit by the independent auditor, the estimated fees, and any other matters pertaining to the audit;

 

approve any audit and non-audit services proposed to be provided by the independent auditor to ensure independent auditor independence;

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review and assess the independent auditor’s report, management letters and take notice of all comments of the independent auditor on accounting procedures and systems of control, and review the independent auditor’s reports with management;

 

be responsible for the resolution of disagreements between the management and the independent auditor;

 

review and evaluate the lead audit partner of the independent audit team and confirm and evaluate their rotation;

 

review, discuss with the chief financial officer and the independent auditor and recommend that our Board of Directors approve (i) the quarterly financial statements, (ii) reports and releases intended for publication and (iii) any other financial statements intended for publication to consider significant financial reporting issues and judgments made in connection with the preparation of our financial statements, including any significant changes in our selection or application of accounting principles;

 

review with the management and the independent auditor in separate meetings any analysis or other written communication prepared by the management and/or the independent auditor setting forth significant financial reporting issues and judgments made in connection with the preparation of the financial statements, including critical accounting policies, the effect of regulatory and accounting initiatives, as well as off-balance sheet transactions and structures on our financial statements;

 

review and recommend that our Board of Directors approve our quarterly financial statements for the first three quarters of each calendar year and the corresponding financial results releases;

 

review in cooperation with the independent auditor and the management whether the accounting principles applied are appropriate in view of our size and complexity;

 

periodically review our policies and procedures for risk management and assess the effectiveness thereof including discussing with management our major financial risk exposures and the steps that have been taken to monitor and control such exposures;

 

discuss with management and external advisors any legal matters that may have a material impact on our financial statements and any material reports or inquiries from regulatory or governmental agencies which could materially impact our contingent liabilities and risks;

 

review our disclosure controls and procedures and internal control over financial reporting including significant deficiencies and material weaknesses in the design or operation of internal controls over financial reporting; recommend, based upon its review and discussions with management and the independent registered public accounting firm, whether our audited financial statements shall be included in our Annual Report on Form 10-K;

 

prepare the Audit Committee report required by the rules of the SEC to be included in our annual proxy statement;

 

establish procedures for the receipt, retention and treatment of complaints received regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters;

 

approve any related person transaction in accordance with our related person transaction policy and inform the Board of Directors about the decision of the Audit Committee; and

 

approve any activities in connection with legal actions, litigations or other official proceedings and inform the Board of Directors about any ongoing activities related to legal actions.

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Compensation Committee

Our Compensation Committee currently consists of Ali Behbahani, M.D., Simeon J. George, M.D. and John T. Greene and, subject to and following the election of directors at the 2021 Annual General Meeting, each will continue serving as a member of our Compensation Committee. Our Board of Directors has determined that each member of our Compensation Committee is independent under the Nasdaq listing standards, is an outside director within the definition of Section 162(m) of the U.S. Internal Revenue Code of 1986, as amended, or the Code, and is a “non-employee director” for purposes of Rule 16b-3 promulgated by the SEC, and Rule 10C-1(b)(1) of the Exchange Act. The chair of our Compensation Committee is Dr. George, and if Dr. George is re-elected to the Board of Directors at the 2021 Annual General Meeting, Dr. George will continue serving as the chair of our Compensation Committee. The Compensation Committee held four formal meetings during 2020.

Our Compensation Committee has the responsibility to, among other things:

 

review and recommend that our Board of Directors approve the compensation of our executive officers;

 

review and recommend to our Board of Directors the compensation of our directors;

 

review and recommend that our Board of Directors approve the terms of compensatory arrangements with our executive officers;

 

review management succession plans;

 

administer our share and equity incentive plans;

 

select independent compensation consultants and assess whether there are any conflicts of interest with any of the committee’s compensation advisers;

 

review and approve, or recommend that our Board of Directors approve, incentive compensation and equity plans, and any other compensatory arrangements for our executive officers and other senior management, as appropriate;

 

review and establish general policies relating to compensation and benefits of our employees and reviewing our overall compensation philosophy; reviewing and discussing with management the compensation discussion and analysis to be included in our annual proxy statement or Annual Report on Form 10-K;

 

annually review corporate goals and objectives relevant to the compensation of our chief executive officer and our other executive officers;

 

evaluate the performance of our chief executive officer and our other executive officers in light of such corporate goals and objectives and make recommendations to the Board of Directors for approval of the compensation of our chief executive officer and our other executive officers based on such evaluation;

 

review and approve the compensation of all members of our senior management (other than the executive officers), including with respect to any incentive-compensation plans and equity-based plans;

 

review and establish our overall management compensation, philosophy and policy;

 

oversee and administer our compensation and similar plans; and

 

review and make such recommendations to the Board of Directors as deemed advisable with regard to our policies and procedures for the grant of equity-based awards.

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Nominating and Corporate Governance Committee

Our Nominating and Corporate Governance Committee, or the Nominating Committee, currently consists of Ali Behbahani, M.D., Bradley Bolzon, Ph.D. and Katherine A. High, M.D, and, subject to and following the election of directors at the 2021 Annual General Meeting, each will continue serving as a member of our Nominating Committee. Our Board of Directors has determined that each member of the Nominating Committee is independent under the Nasdaq listing standards. The current chair of our Nominating Committee is Dr. Behbahani, and if Dr. Behbahani is re-elected to the Board of Directors at the 2021 Annual General Meeting, Dr. Behbahani will continue serving as the chair of our Nominating Committee. The Nominating Committee held one formal meeting during 2020.

The Nominating Committee has the responsibility to, among other things:

 

identify, evaluate and select, or recommend that our Board of Directors approve, nominees for election to our Board of Directors;

 

evaluate the performance of our Board of Directors and of individual directors;

 

consider and make recommendations to our Board of Directors regarding the composition of the committees of the Board of Directors;

 

review developments in corporate governance practices evaluate the adequacy of our corporate governance practices and reporting;

 

develop and make recommendations to our Board of Directors regarding corporate governance practices, guidelines and matters; and

 

oversee an annual evaluation of the Board of Directors’ performance.

Director Nomination Process

The process followed by our Nominating Committee to identify and evaluate director candidates includes requests to board members and others for recommendations, meetings from time to time to evaluate biographical information and background material relating to potential candidates and interviews of selected candidates by members of the Nominating Committee and our Board of Directors.

Criteria and Diversity

In considering whether to recommend to our Board of Directors any particular candidate for inclusion in our Board of Directors’ slate of recommended director nominees, including candidates recommended by shareholders, the Nominating Committee applies the criteria set forth in our corporate governance guidelines. These criteria include the candidate’s experience at a strategic or policymaking level in a business, government, non-profit or academic organization of high standing, accomplishments in the candidate’s respective field, the candidate’s reputation for high ethical and moral standards, the candidate’s time and ability to devote to the affairs of the company, and to the extent applicable, the candidates history of actively contributing to any boards of directors on which the candidate has previously served.

The director biographies set forth in this proxy statement indicate each nominee’s experience, qualifications, attributes and skills that led our Nominating Committee and our Board of Directors to conclude he or she should continue to serve as a director. Our Nominating Committee and our Board of Directors believe that each of the nominees has the individual attributes and characteristics required of each of our directors, and the nominees as a group possess the skill sets and specific experience desired of our Board of Directors as a whole.

We do not have a policy (formal or informal) with respect to diversity, but we believe that our board, taken as a whole, should embody a diverse set of skills, experiences and backgrounds. In this regard, our Nominating Committee and our Board of Directors also take into consideration the diversity (with respect to gender, race and national origin) of our board members but do not make any particular weighting of diversity or any other characteristic in evaluating nominees and directors. Our Nominating Committee’s and our Board of Directors’ priority in selecting board members is identification of persons who will further the interests of our shareholders.

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Shareholder Nominations

Under our Articles of Association, one or more registered shareholders who together represent shares representing at least the lesser of (i) ten percent of our issued share capital or (ii) an aggregate par value of one million Swiss francs may demand that an item be placed on the agenda of a meeting of shareholders. The relevant provisions of our Articles of Association regarding the right of one or more registered shareholders who together represent shares representing at least the lesser of (i) ten percent of our issued share capital or (ii) an aggregate par value of one million Swiss francs to demand that an item be placed on the agenda of a meeting of shareholders are available on our website at http://ir.crisprtx.com. You may also contact the General Counsel and Secretary of the Company at secretary@crisprtx.com to request a copy of the relevant provisions of our Articles of Association.

Nominations of director candidates by registered shareholders must follow the rules for shareholder proposals described under “Other Matters—Shareholder Proposals and Directors Nominations.” Assuming that appropriate biographical and background material has been provided on a timely basis, the Nominating Committee will evaluate shareholder-recommended candidates by following substantially the same process, and applying substantially the same criteria, as it follows for candidates submitted by others. If the Board of Directors determines to nominate a shareholder-recommended candidate and recommends his or her election, then his or her name will be included in our proxy card for the next annual general meeting.

Compensation Committee Interlocks and Insider Participation

None of the members of our Compensation Committee and Nominating and Corporate Governance Committees is currently, or has been at any time, one of our officers or employees. None of our executive officers currently serves, or has served during the last year, as a member of the board of directors or compensation committee of any entity that has one or more executive officers serving as a member of our Board of Directors, Compensation Committee, or Nominating Committee.

Policies and Procedures for Related Person Transactions

Our Board of Directors has adopted a written related person transaction policy to set forth policies and procedures for the review and approval or ratification of related person transactions. This policy covers any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships, in which we were or are to be a participant and any director or executive officer, director nominee, holder of 5% or more of any class of our voting securities or any member of the immediate family of or entities affiliated with any of the foregoing had or will have a direct or indirect material interest, including, without limitation, purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by us of a related person. Any such transaction must be presented to our Audit Committee for review, consideration and approval. In approving or rejecting any such proposal, our Audit Committee is to consider the relevant facts and circumstances available and deemed relevant to the Audit Committee, including, but not limited to, the extent of the related party’s interest in the transaction, and whether the transaction is on terms no less favorable to us than terms we could have generally obtained from an unaffiliated third party under the same or similar circumstances.

Related Person Transactions

Other than the compensation arrangements for our named executive officers and directors, which are described elsewhere in the “Executive Compensation” and “Director Compensation” sections of this proxy statement, set forth below is a description of transactions since January 1, 2020 to which we were or are a party, and in which:

 

the amounts involved exceeded or will exceed $120,000; and

 

any of our directors, executive officers, nominees for director or holders of more than 5% of our capital stock, or any member of the immediate family of, or person sharing the household with, the foregoing persons, had or will have a direct or indirect material interest.

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Registration Rights Agreement

As of March 15, 2020, 4,667,505 holders of common shares are entitled to certain rights with respect to registration of such shares under the Securities Act of 1933, as amended, or the Securities Act. These shares are referred to as registrable securities. The holders of the registrable securities are entitled to the demand, piggyback and Form S-3 registration rights described below.

The registration of registrable securities pursuant to the exercise of the registration rights would enable the holders to trade these registrable securities without restriction under the Securities Act when the applicable registration statement is declared effective. We will pay the registration expenses of the shares registered pursuant to the demand, piggyback and Form S-3 registrations described below.

Generally, in an underwritten offering, the underwriters, if any, have the right, subject to specified conditions, to limit the number of registrable securities the holders may include. The demand, piggyback and Form S-3 registration rights described below will expire on October 24, 2021, or with respect to any particular holder, at such time that such holder can sell its shares under Rule 144 of the Securities Act during any ninety-day period.

Demand Registration Rights

The holders of the registrable securities are entitled to certain demand registration rights. The holders of at least two-thirds (66 2/3%) of the registrable securities then outstanding may make a written request that we register all or a portion of their registrable securities, subject to certain specified exceptions. Such request for registration must cover securities the aggregate proceeds of which, after payment of underwriting discounts, commissions and other expenses related to such registration, would exceed $10,000,000. In no event will we be required to effect more than two demand registrations.

Piggyback Registration Rights

If we propose to register for offer and sale any of our securities under the Securities Act in an offering for cash, either for our own account or for the account of other security holders, the holders of registrable securities will be entitled to certain “piggyback” registration rights allowing them to include their registrable securities in such registration, subject to certain marketing and other limitations. As a result, whenever we propose to file a registration statement under the Securities Act in connection with a public offering for our own account or for the account of any shareholder, the holders of these registrable securities are entitled to notice of the registration and have the right, subject to limitations that the underwriters may impose on the number of shares included in the registration, to include their registrable securities in the registration.

Form S-3 Registration Rights

The holders of registrable securities are entitled to certain Form S-3 registration rights. Any holder of registrable securities can make a request that we register for offer and sale all or any portion of their registrable securities on Form S-3 or any similar short form registration statement if we are qualified to file a registration statement on Form S-3, subject to certain specified exceptions. Such request for registration on Form S-3 must cover securities the aggregate offering price of which, before payment of the underwriting discounts and commissions, equals or exceeds $2.0 million. We will not be required to effect more than one registration on Form S-3 within any 12-month period.

 

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EXECUTIVE OFFICERS

Certain information regarding our executive officers who are not also directors, as of March 15, 2021, is set forth below.

 

Name

 

Age

 

Position(s)

Tony W. Ho, M.D.

 

55

 

Executive Vice President, Research and Development

James R. Kasinger

 

49

 

General Counsel and Secretary

Lawrence O. Klein, Ph.D.

 

38

 

Chief Operating Officer

Michael J. Tomsicek

 

55

 

Chief Financial Officer

 

Tony W. Ho, M.D., Executive Vice President, Research and Development: Dr. Ho has served as our Executive Vice President, Research and Development since August 2017. Prior to joining our company, Dr. Ho held a number of roles at AstraZeneca between 2012 and 2017, where he most recently was Senior Vice President and Head of Oncology Integration and Innovation. Before that, he was Vice President and Global Medicine Leader, where he led the development and commercialization of two key drugs for AstraZeneca – Lynparza, a PARP inhibitor for ovarian cancer and Imfinizi (anti-PD-L1), AstraZeneca’s first immuno-oncology drug for bladder cancer. Prior to joining AstraZeneca, Dr. Ho was the Neurology and Ophthalmology Clinical Section Head at Merck Research Laboratories, Merck & Co., Inc. Earlier in his career, Dr. Ho was the co-founder and Chief Scientific Officer of Neuronyx, Inc., a regenerative medicine company. Dr. Ho completed his B.S. in Electrical Engineering at the University of California, Los Angeles, and received his M.D. from the Johns Hopkins University School of Medicine.

James R. Kasinger, General Counsel and Secretary: Mr. Kasinger has served as our General Counsel and Secretary since May 2017. Prior to joining our company, Mr. Kasinger served as the General Counsel and Secretary of Moderna, Inc., a biotechnology company, from April 2014 to May 2017. Prior to these roles, Mr. Kasinger was a partner at Goodwin Procter LLP, where he represented life sciences, technology and other high-growth companies. Mr. Kasinger started his legal career at Testa, Hurwitz & Thibeault. Mr. Kasinger holds a J.D. from Boston College Law School and a B.A. from Wheaton College.

Lawrence O. Klein, Ph.D., Chief Operating Officer: Dr. Klein has served as our Chief Operating Officer since January 2020 and remains responsible for business development activities; before that, Dr. Klein served as our Chief Business Officer from January 2019 to January 2020, our Senior Vice President, Business Development and Strategy from November 2017 through December 2018 and as our Vice President, Strategy from February 2016 to November 2017. Before joining our company, from October 2014 to February 2016, Dr. Klein was an Associate Partner at McKinsey & Company, where he was a leader in the biotech practice and served a number of biotechnology companies on a wide range of topics from strategy to operations. Dr. Klein received a Ph.D. from Stanford University, where he conducted research in the field of T cell immunology, and he holds a B.S. from the University of Wisconsin at Madison. Dr. Klein also has served as a member of the board of directors of Dyne Therapeutics, Inc., a biotechnology company, since September 2019.

Michael J. Tomsicek, Chief Financial Officer: Mr. Tomsicek has served as our Chief Financial Officer since November 2017. Prior to joining our company, Mr. Tomsicek served as Chief Financial Officer of Abiomed, a publicly-traded provider of medical devices, from July 2015 to August 2017. Before that, Mr. Tomsicek was Senior Vice President, Chief Financial Officer at Cubist Pharmaceuticals. He was at Cubist from August 2010 to January 2015 (through its sale to Merck) and held a series of roles of increasing responsibility leading finance, investor relations and strategic sourcing through a period of dynamic growth at the company. Prior to Cubist, Mr. Tomsicek spent nearly eight years at General Electric Healthcare, as finance manager in global operations, and then as chief financial officer of its ultrasound business. Mr. Tomsicek holds a B.S. in engineering and an M.B.A., both from the University of Wisconsin. Mr. Tomsicek also has served as a member of the board of directors of Milestone Pharmaceuticals Inc., a biopharmaceutical company, since April 2019.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This Compensation Discussion and Analysis, or CDA, describes our executive compensation program and the 2020 compensation for our named executive officers, or NEOs. This CDA should be read with the compensation tables and related disclosures for our NEOs.

Our NEOs for 2020 were as follows:

 

Samarth Kulkarni Ph.D., our Chief Executive Officer, or CEO;

 

Tony W. Ho M.D., our Executive Vice President, Research and Development;

 

James R. Kasinger, our General Counsel and Corporate Secretary;

 

Lawrence O. Klein Ph.D., our Chief Operating Officer; and

 

Michael J. Tomsicek, our Chief Financial Officer.

Executive Summary

We are a leading gene editing company focused on the development of CRISPR/Cas9-based therapeutics. CRISPR/Cas9 stands for Clustered Regularly Interspaced Short Palindromic Repeats (CRISPR)/CRISPR-associated protein 9 (Cas9) and is a revolutionary technology for gene editing, the process of precisely altering specific sequences of genomic DNA. We aim to apply this technology to disrupt, delete, correct and insert genes to treat genetically-defined diseases and to engineer advanced cellular therapies. We believe that our scientific expertise, together with our gene-editing approach, may enable an entirely new class of highly effective and potentially curative therapies for patients with both rare and common diseases for whom current biopharmaceutical approaches have had limited success. Our most advanced programs target the genetically-defined diseases transfusion-dependent beta thalassemia, or TDT, and severe sickle cell disease, or SCD, two hemoglobinopathies with high unmet medical need. We are also progressing several gene-edited allogeneic cell therapy programs, beginning with three allogeneic chimeric antigen receptor T cell, or CAR-T, candidates for the treatment of hematological and solid tumor cancers.

Overview of Executive Compensation Program

Executive Compensation Philosophy

Our executive compensation program is guided by our overarching philosophy of paying for demonstrable performance. Consistent with this philosophy, we have designed our executive compensation program to achieve the following primary goals:

 

attract, motivate and retain top-performing senior executives;

 

establish compensation opportunities that are competitive and reward performance; and

 

align the interests of our senior executives with the interests of our shareholders to drive the creation of sustainable long-term value.

Executive Compensation Program Design

Our executive compensation program is designed to be reasonable and competitive, and balance our goal of attracting, motivating, rewarding and retaining top-performing senior executives with our goal of aligning their interests with those of our shareholders. The Compensation Committee annually evaluates our executive compensation program to ensure that it is consistent with our short-term and long-term goals and the dynamic nature of our business, and makes a recommendation to the Board of Directors.

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Our executive compensation program consists of a mix of compensation elements that balance achievement of our short-term goals with our long-term performance. We provide short-term incentive compensation opportunities in the form of annual cash bonuses, which focus on our achievement of annual corporate goals. We also provide long-term incentive compensation opportunities in the form of equity awards.

Say-on-Pay

We have developed a compensation policy that is designed to attract and retain key executives responsible for our success and motivate management to enhance long-term shareholder value. We believe our compensation policy strikes an appropriate balance between the implementation of responsible, measured compensation practices and the effective provision of incentives for our named executive officers to exert their best efforts for our success.

Pursuant to Swiss law and Article 18 of our Articles of Association, our shareholders must annually approve (i) the non-performance-related compensation of our Executive Committee for the 12-month period starting on July 1 following the annual general meeting, (ii) the variable compensation for the Executive Committee for the current calendar year and (iii) the grant of options or shares in the Company to the Executive Committee from the annual general meeting of shareholders to the next annual general meeting of shareholders. At our 2020 annual general meeting, shareholders approved the proposed compensation for the Executive Committee.

The Compensation Committee was mindful of shareholder support for our pay-for-performance compensation philosophy at our 2019 annual general meeting when setting fiscal year 2020 compensation for our Board of Directors and Executive Committee.  The Compensation Committee also took into account shareholder support of our Executive Committee’s compensation at the 2020 annual general meeting in maintaining our general compensation practices in fiscal year 2020 and setting the compensation for our Board of Directors and Executive Committee, to be resolved upon by the shareholders at the 2021 Annual General Meeting.

Moreover, as part of our commitment to excellence in corporate governance, and as required by Section 14A(a)(1) of the Exchange Act, periodically we must provide our shareholders with an opportunity to provide an advisory vote related to the compensation of our named executive officers, commonly known as the “say-on-pay” proposal. The SEC say-on-pay vote generally covers the calendar year prior to the date of our proxy statement. As such vote is advisory, it is not binding upon our Board of Directors or our Compensation Committee and neither the Board of Directors nor the Compensation Committee are required to take any action as a result of the outcome of such vote. However, our Compensation Committee carefully considers the outcome of this vote when considering future executive compensation policies.

As reported in our current report on Form 8-K, filed with the SEC on June 13, 2019, at our 2019 annual general meeting, approximately 99% of the votes cast on our SEC Say-on-Pay proposal supported the compensation paid to our named executive officers. At our 2019 annual general meeting, we also held a separate non-binding advisory shareholder vote on the frequency of future shareholder advisory votes regarding the compensation program for our named executive officers, commonly referred to as a “say-on-frequency” vote. At the 2019 annual general meeting, our shareholders approved, on an advisory basis, a proposal to take the say-on-pay vote every three years until the next required say-on-frequency vote. Our next say-on-frequency vote will occur at our 2022 annual general meeting. We believe holding that vote every three years is appropriate given that we are required to seek binding say-on-pay votes under Swiss law annually (see above and Proposal 6), which provides our shareholders a consistent and clear communication channel for shareholder concerns about our executive pay programs.

We will continue to engage with our shareholders and consider the results from this year’s binding votes and future advisory and binding votes on board and executive compensation as well as feedback from our shareholders. For more information regarding our binding votes on aggregate compensation, see “Proposal 6 – Approval of Compensation for the Board of Directors and the Executive Committee.”

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Governance of Executive Compensation Program

Our executive compensation program is also designed to incorporate sound practices for compensation governance. Below we summarize such practices.

What We Do:

 

Maintain an Independent Compensation Committee. The Compensation Committee consists solely of independent directors.

 

Retain an Independent Compensation Advisor. The Compensation Committee engages its own compensation advisor to provide information and analysis related to annual executive compensation decisions, including the 2020 executive compensation decisions, and other advice on executive compensation independent of management.

 

Review Executive Compensation Annually. The Compensation Committee annually reviews our compensation strategy, including a review and determination of our compensation peer group used for comparative purposes.

 

Design Compensation At-Risk. Our executive compensation program is designed so that a significant portion of our NEOs’ compensation is “at risk” based on our corporate performance, as well as equity-based, to align the interests of our executive officers and shareholders.

 

Use a Pay-for-Performance Philosophy. The majority of our NEOs’ compensation is directly linked to corporate performance and includes a significant long-term equity component, thereby making a substantial portion of each NEO’s total compensation dependent upon our stock price and/or total shareholder return.

 

Use Double Trigger Change-in-Control Protection.  Change-in-control payments and benefits to our NEOs occur only upon a qualifying termination of employment, not merely upon a change in control.

What We Don’t Do:

 

No Executive Retirement Plans. We do not offer pension arrangements or retirement plans or arrangements to our executive officers that are different from or in addition to those offered to our other employees.

 

No Special Perquisites. We do not provide perquisites to our executive officers.

 

No Special Health and Welfare Benefits. Our executive officers participate in our health and welfare benefits programs on the same basis as our other employees.

 

No Post-Employment Tax Payment Reimbursement. We do not provide any tax reimbursement payments (including “gross-ups”) on any change-in-control or severance payments or benefits.

 

No Hedging or Pledging Our Equity Securities. We prohibit our executive officers, the members of our Board of Directors and certain other employees from hedging or pledging our securities without pre-approval by the Audit Committee.

 

No Stock Option Re-Pricing. Our 2016 Plan and 2018 Plan do not permit stock options to be repriced to a lower exercise or strike price without the approval of our shareholders.

Role of the Compensation Committee and the Board of Directors

The Compensation Committee discharges many of the responsibilities of our Board of Directors relating to the compensation of our executive officers, including our NEOs. The Compensation Committee oversees and evaluates our compensation and benefits policies generally, and the compensation plans, policies and practices applicable to our CEO and other executive officers. As described below, the Compensation Committee retains a compensation consultant to provide support in its review and assessment of our executive compensation program.

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At the beginning of the year, the Compensation Committee reviews and recommends to the Board of Directors that it approve of the primary elements of compensation—base salary increases, annual cash bonuses, and annual equity awards—for our CEO and members of our Executive Committee (which includes our other NEOs). In addition, the Compensation Committee may deem it advisable to review and approve subsequent compensation opportunities for our NEOs, and may deem it advisable to recommend such opportunities to the Board of Directors for final review and approval.

Compensation-Setting Factors

When reviewing and recommending to the Board of Directors the amount of each compensation element and the target total compensation opportunity for our NEOs, the Compensation Committee considers the following factors:

 

our performance against the annual corporate goals established by the Compensation Committee in consultation with management;

 

each NEO’s skills, experience and qualifications relative to other similarly-situated executives at the companies in our compensation peer group;

 

the scope of each NEO’s role compared to other similarly-situated executives at the companies in our compensation peer group;

 

the performance of each NEO, based on an assessment of his or her contributions to our overall performance, ability to lead his or her department and work as part of a team, all of which reflect our core values;

 

compensation parity among our NEOs and other executive officers;

 

our retention goals;

 

our financial performance relative to our peers;

 

the compensation practices of our compensation peer group and the positioning of each NEO’s compensation in a ranking of peer company compensation levels; and

 

the recommendations provided by our CEO with respect to the compensation of our other NEO’s and our other executive officers.

These factors provide the framework for compensation decisions for each of our executive officers, including our NEOs. The Compensation Committee and the Board of Directors, as applicable, do not assign relative weights or rankings to these factors, and do not consider any single factor as determinative in the compensation of our executive officers. Rather, the Compensation Committee and the Board of Directors, as applicable, rely on their own knowledge and judgment in assessing these factors and making compensation decisions.

Role of Management

In discharging its responsibilities, the Compensation Committee works with management, including our CEO. Our management assists the Compensation Committee by providing information on corporate and individual performance, market compensation data and management’s perspective on compensation matters.

In addition, at the beginning of each year, our CEO reviews the performance of our other executive officers, including our other NEOs, based on our achievement of our annual corporate goals and each executive officer’s achievement of his or her departmental and individual goals established for the prior year and his or her overall performance during that year. The Compensation Committee solicits and reviews our CEO’s recommendations for base salary increases, annual cash bonuses, annual long-term incentive compensation and other compensation opportunities for our other executive officers, including our other NEOs, and considers our CEO’s recommendations in determining such compensation, but has the authority to make the final decision independent of the CEO’s recommendation.

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Role of Compensation Consultant

The Compensation Committee engages an external compensation consultant to assist it by providing information, analysis and other advice relating to our executive compensation program. Since 2016 the Compensation Committee has engaged a third-party compensation consultant, Radford, part of the Rewards Solutions practice of Aon plc, or Radford, to advise on executive compensation matters. For 2020, the Compensation Committee again engaged Radford as its compensation consultant to advise on executive compensation matters including:

 

review and analysis of the compensation for our executive officers, including our NEOs;

 

review and analysis of market practice and support in the consideration and amendment of our post-employment compensation policy for our executive officers;

 

research, development and review of our compensation peer group; and

 

support on other compensation matters as requested throughout the year.

Radford reports directly to the Compensation Committee and to the Compensation Committee chairman. Radford also coordinates with our management for data collection and job matching for our executive officers. Radford did not provide any other services to us in 2020. The Compensation Committee has evaluated Radford’s independence pursuant to the listing standards of the relevant Nasdaq Listing Rules and SEC rules and has determined that no conflict of interest has arisen as a result of the work performed by Radford.

Role of Market Data

For purposes of comparing our executive compensation against the competitive market, the Compensation Committee reviews and considers the compensation levels and practices of a group of peer companies. This compensation peer group consists of public biotechnology companies that are similar to us in terms of revenue, market capitalization, stage of development, geographical location and number of employees. The Compensation Committee reviews our compensation peer group at least annually and makes adjustments to our peer group if necessary, taking into account changes in both our business and our peer companies’ businesses.

In August 2019, the Compensation Committee, with the assistance of Radford, reviewed and updated our compensation peer group for 2020, referred to as our 2020 peer group, considering the acquisition of certain peer companies, as applicable, the increase in our market capitalization, and the increase in our headcount, as reflected in the following criteria:

 

publicly-traded companies primarily headquartered in the United States;

 

companies in the biotechnology sector with a focus on gene editing and gene therapy;

 

market value—in most cases, between $900M and $8.0B;

 

the stage of development primarily pre-commercial companies through recently commercial companies;

 

in general, companies that went public within the last 5 years; and

 

similar headcount—in most cases, within a range of 100 and 900 employees.

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Based on a review of the analysis prepared by Radford, the Compensation Committee approved the updated compensation peer group below for 2020.

 

2020 peer group

Acceleron Pharma

 

Blueprint Medicines

 

MyoKardia

Agios Pharmaceuticals

 

Denali Therapeutics

 

REGENXBIO

Akcea Therapeutics

 

Editas Medicine

 

Sangamo Therapeutics

Allogene Therapeutics

 

Epizyme

 

Spark Therapeutics

AnaptysBio

 

Global Blood Therapeutics

 

Ultragenyx Pharmaceutics

Audentes Therapeutics

 

Intellia Therapeutics

 

Xencor

bluebird bio

 

Moderna

 

 

 

The Compensation Committee uses market data—from our compensation peer group and from the Radford Global Life Sciences Compensation survey—as one factor in evaluating whether the compensation for our executive officers is competitive in the market. We generally align compensation to the 60th percentile of our peer group. In addition, the Compensation Committee and the Board of Directors, as applicable, also rely on their own knowledge and judgment in evaluating market data and making compensation decisions.

Primary Elements of Executive Compensation Program

To achieve our compensation objectives, we provide executives with a total compensation package consisting primarily of the following fixed and variable compensation elements:

 

Compensation Element

 

Purpose

Base Salary

 

Recognize performance of job responsibilities and attract and retain individuals with superior talent

 

 

 

Annual Cash Incentive Program

 

Provide short-term incentives to attain key business objectives

 

 

 

Equity Incentive Awards

 

Promote the maximization of shareholder value by aligning the interests of our executive officers and shareholders

 

We do not have a specific policy regarding the percentage allocation between short-term and long-term, or fixed and variable, compensation elements.

Our executive officers, including our NEOs, are also eligible to participate in our standard employee benefit plans, such as our retirement, health and welfare benefits plans, on the same basis as our other employees. In addition, as described below, our executive officers, including our NEOs, are entitled to certain change-in-control payments and benefits, and our CEO is also entitled to certain termination payments and benefits not in connection with a change in control.

Base Salary

We pay base salaries to our executive officers, including our NEOs, as the fixed portion of their compensation to provide them with a reasonable degree of financial certainty, and to attract and retain top-performing individuals. At the time of hire, base salaries are determined for our executive officers, including our NEOs. Typically, at the beginning of each year, the Compensation Committee reviews base salaries for our executive officers, including our NEOs, to determine if an increase is appropriate. In addition, base salaries may be adjusted in the event of a promotion or significant change in responsibilities.

2020 Base Salary

In February 2020, the Compensation Committee reviewed the base salaries of our executive officers, including our NEOs. The Compensation Committee considered the factors described above under “Compensation-Setting Factors,” including an analysis prepared by Radford. The Compensation Committee recommendation aimed

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to generally align the base salaries of our executive officers, including our NEOs, to the 60th percentile of our peer group, which resulted in a greater base salary adjustment for our CEO. Thereafter, the Compensation Committee recommended to the Board of Directors to adjust the annual base salaries of our NEOs set forth below, effective as of January 1, 2020, and the Board of Directors approved that recommendation.

The actual base salaries paid to our NEOs in 2020 are set forth in the “Summary Compensation Table” below.

 

 

 

2019 Annual

Base Salary

 

 

2020 Annual

Base Salary

 

 

Percentage

Increase

(Decrease)

 

Samarth Kulkarni, Ph.D.

 

$

550,200

 

 

$

625,000

 

 

13.6%

 

Tony W. Ho, M.D.

 

$

431,575

 

 

$

451,000

 

 

4.5%

 

James R. Kasinger

 

$

376,900

 

 

$

403,500

 

 

7.1%

 

Lawrence O. Klein, Ph.D.(1)

 

$

360,400

 

 

$

420,000

 

 

16.5%

 

Michael J. Tomsicek

 

$

394,250

 

 

$

422,000

 

 

7.0%

 

 

(1)

Dr. Klein was promoted to Chief Operating Officer effective January 26, 2020, and such promotion resulted in a higher salary associated with the new position.

Annual Cash Bonuses

We provide short-term incentive compensation opportunities to our executive officers, including our NEOs, in the form of annual cash bonuses to drive our short-term success under our senior executive cash incentive bonus plan. The annual cash bonus review provides that:

 

the Compensation Committee will establish the annual corporate performance goals and weighting;

 

the Compensation Committee will establish a target bonus opportunity for each executive;

 

annual cash bonuses may not be paid unless and until the Compensation Committee makes a determination with respect to achievement of the annual corporate performance goals; and

 

the Compensation Committee may adjust annual cash bonuses based on individual performance, and based on such other terms and conditions as it may in its discretion determine.

The Compensation Committee may also make certain immaterial rounding adjustments to the annual cash bonuses.

Corporate Performance Goals

At the end of each year, the Compensation Committee, after reviewing management’s proposal, establishes the annual corporate performance goals that it believes will be the most significant drivers of our short-term and long-term success. The corporate performance goals include target achievement dates based on calendar quarters. The Compensation Committee then recommends to the Board of Directors that it approve of the proposed corporate performance goals. Each corporate performance goal has a percentage weighting, and may include an additional percentage weighting for overachievement, based on the Compensation Committee’s assessment of the goal’s relative significance. Each executive officer, including each NEO, is eligible to receive an annual performance-based cash bonus based primarily on achievement of corporate performance goals as assessed by our Compensation Committee and Board of Directors with input on individual performance achievement from our CEO. Each executive officer, including each NEO, has a target annual bonus award amount, expressed as a percentage of each NEO’s base salary then in effect. After the fiscal year is completed, the Compensation Committee reviews actual performance against the stated goals and determines subjectively what it believes to be the appropriate level of cash bonus, if any, for our NEOs.

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Further, as a general matter, at the end of the year for which the corporate performance goals have been established, the Compensation Committee, after reviewing management’s self-assessment, evaluates our achievement of the prior year’s corporate performance goals, and our overall success for the year, and determines the total percentage achievement level for the Company. The Compensation Committee then recommends to the Board of Directors that it approve of such percentage achievement level for the Company.

In addition, our CEO evaluates the other executive officers’ individual performance, including the other NEOs’ individual performance, and makes recommendations for total percentage achievement level for such executive officer. Such evaluation is made, in part, by considering the performance relative to the executive officer’s functional attainments and impact on corporate goals, as well as other factors related to conformance with the Company’s core values and policies and the expected competencies and skills for the executive officer’s role. The Compensation Committee considers our CEO’s recommendations, and independently reviews and approves the total percentage achievement level for each of the executive officers and independently evaluates our CEO’s performance using similar criteria used in the CEO’s evaluation of the other executive officers. Since an executive officer’s total percentage achievement level is determined by taking the Company’s percentage achievement level for the most recently completed fiscal year together with the individual executive officer’s percentage achievement level awarded in connection with the annual performance review cycle, the total percentage achievement level for such executive officer could exceed the stated percentage achievement level for the Company. The Compensation Committee then recommends to the Board of Directors that it approve the total percentage achievement level for each executive officer, including our NEOs.

For 2020, the actual bonus amounts for our NEOs were reviewed and approved by our Compensation Committee and the Board of Directors.

Target Annual Bonuses

At the beginning of each year, the Compensation Committee reviews the annual target bonuses for our executive officers, including our NEOs and, if appropriate, makes a recommendation to the Board of Directors to adjust the annual target bonus for our NEOs. The Compensation Committee considers the factors described above and benchmarking analyses prepared by Radford, with an emphasis on market data from our compensation peer group for comparable positions. Target annual bonuses are the same for executive officers, including our NEOs, who are at the same level, and represent a specific percentage of annual base salary.

2020 Target Annual Bonus

In February 2020, the Compensation Committee reviewed the target annual bonuses of our executive officers, including our NEOs. The Compensation Committee considered the factors described in the “Annual Cash Bonus” above as well as the benchmarking analyses prepared by Radford, particularly the market data from the companies in the compensation peer group. The Compensation Committee recommendation aimed to generally align the target annual bonuses of our executive officers, including our NEOs, to the 60th percentile of our peer group. Thereafter, the Compensation Committee recommended to the Board of Directors to approve of the 2020 target annual bonuses of our NEOs below, and the Board of Directors accepted that recommendation and approved the same.

 

 

 

2019 Target

Annual Bonus

 

 

2020 Target

Annual Bonus

 

Samarth Kulkarni, Ph.D.

 

 

55

%

 

 

60

%

Tony W. Ho, M.D.

 

 

45

%

 

 

45

%

James R. Kasinger

 

 

40

%

 

 

40

%

Lawrence O. Klein, Ph.D.

 

 

40

%

 

 

40

%

Michael J. Tomsicek

 

 

40

%

 

 

40

%

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2020 Corporate Performance Goals

In November 2019, the Compensation Committee and the Board of Directors approved our 2020 annual corporate performance goals and weightings, as summarized below.

 

Category

 

Corporate Goal(s)

 

Weighting

 

 

 

 

 

Program Goals

 

•     Advance certain clinical activities related to beta-thalassemia & sick cell disease, including certain manufacturing activities related to commercial readiness

 

60%

 

 

•     Advance clinical activities related to our lead I/O programs

•     Advance additional programs

 

 

Platform and Capabilities

 

•     Continue scaling the organization and advancing platform activities, including manufacturing readiness

 

25%

G&A Goals

 

•     Raise additional capital, including advancing strategic partnerships and alliances

 

15%

 

 

Our executive compensation program seeks to incentivize and reward strong corporate performance. In the fourth quarter of 2020, the Compensation Committee evaluated our achievement of the 2020 corporate performance goals, considering whether we had achieved each goal, the weighting established for each goal, management’s self-assessment, and our overall corporate performance in 2020. The Compensation Committee determined that we successfully achieved each of the 2020 corporate performance goals and exceeded such corporate goals up to 140% achievement level. Thereafter, the Compensation Committee recommended to the Board of Directors the foregoing, and the Board accepted that recommendation and approved the same.

Highlights of our 2020 corporate performance include:

 

Program Goals:

 

Hemoglobinopathies: We, together with our partner Vertex Pharmaceuticals Incorporated, or Vertex, advanced our clinical development programs for CTX001TM, an investigational, autologous, CRISPR/Cas9 gene-edited hematopoietic stem cell therapy being evaluated for patients suffering from severe hemoglobinopathies:

 

o

For the Phase 1/2 open-label clinical trial, CLIMB THAL-111, in TDT: clinical enrollment and dosing of a certain number of patients.

 

o

For the Phase 1/2 open-label clinical trial, CLIMB SCD-121, in severe SCD: clinical enrollment and dosing of a certain number of patients.

 

o

In December 2020 during the Scientific Plenary Session at the American Society of Hematology Annual Meeting and Exposition, we and Vertex presented data from ten patients treated with CTX001 in the ongoing Phase 1/2 CLIMB clinical trials – seven patients with TDT and three patients with severe SCD. A subset of the results were also published in the New England Journal of Medicine.

 

o

Grant of certain regulatory designations from the U.S. Food and Drug Administration and European Medicines Agency.

 

Immuno-oncology: We advanced multiple clinical development programs within our wholly-owned allogenic CRISPR/Cas9 gene-edited immuno-oncology portfolio:

 

o

CTX110TM, our lead immuno-oncology candidate, is an investigational, healthy donor-derived gene-edited allogeneic CAR-T therapy targeting cluster of differentiation 19.

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o

For our ongoing Phase 1 single-arm, multi-center, open-label clinical trial, CARBON, that is designed to assess the safety and efficacy of several dose levels of CTX110 for the treatment of relapsed or refractory B-cell malignancies: advance clinical activities, including dosing of a certain number of patients.

 

o

In the fourth quarter of 2020, we released preliminary clinical data from the first 11 patients treated with CTX110 in the ongoing CARBON trial.

 

o

CTX120TM is an investigational, healthy donor-derived gene-edited allogeneic CAR-T therapy targeting B-cell maturation antigen.

 

o

For our ongoing Phase 1 single-arm, multi-center, open-label clinical trial that is designed to assess the safety and efficacy of several dose levels of CTX120 for the treatment of relapsed or refractory multiple myeloma: advance clinical activities, including dosing of a certain number of patients.

 

o

CTX130TM is an investigational, healthy donor-derived gene-edited allogeneic CAR-T investigational therapy targeting cluster of differentiation 70, or CD70, an antigen expressed on various solid tumors and hematologic malignancies.

 

o

For our two independent, ongoing Phase 1 single-arm, multi-center, open-label clinical trials that are designed to assess the safety and efficacy of several dose levels of CTX130 for the treatment of relapsed or refractory renal cell carcinoma and various types of lymphoma, respectively: advance clinical activities, including dosing of a certain number of patients.  

 

 

Advanced additional wholly-owned and partnered programs.

 

Platform & Capabilities:

 

We entered into a lease agreement with Breakthrough Properties for a new location in Boston, Massachusetts. The new facility will consolidate our various office and laboratory locations in the greater Boston area into a single location and support our anticipated future growth for five to seven years from the date of occupancy, which is expected in 2022.

 

We announced that we are building a new cell therapy manufacturing facility in Framingham, Massachusetts, for clinical and commercial production of our investigational cell therapy product candidates. The facility is being designed to provide GMP manufacturing according to U.S. Food and Drug Administration and European Medicines Agency regulations and guidelines to support clinical supply and commercial product upon potential regulatory approval.

 

G&A Goals:

 

We raised over an aggregate of $970 million in net proceeds from a follow-on offering of our common shares in the third quarter of 2020 and sales in 2020 under our at-the-market financing facility.

2020 Annual Cash Bonuses

In the first quarter of 2021, the Compensation Committee considered our CEO’s recommendations with respect to our executive officers, including our other NEOs, individual performance for 2020 and independently evaluated the same for each executive officer, including our CEO using similar criteria used in the CEO’s evaluation of the other executive officers. Thereafter, the Compensation Committee recommended to the Board of Directors the total percentage achievement level based on corporate performance goals and individual performance for each of our executive officers, including our other NEOs, and the Board accepted that recommendation and approved the same.

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The table below sets forth the target annual cash bonus each NEO was eligible to earn and the actual bonus amount earned by our NEOs for 2020.

 

 

 

Target Annual

Cash Bonus ($)

 

 

Annual

Cash Bonus ($)

 

Samarth Kulkarni, Ph.D.

 

$

375,000

 

 

$

543,750

 

Tony W. Ho, M.D.

 

$

202,950

 

 

$

288,189

 

James R. Kasinger

 

$

161,400

 

 

$

234,030

 

Lawrence O. Klein, Ph.D.

 

$

168,000

 

 

$

243,600

 

Michael J. Tomsicek

 

$

168,800

 

 

$

244,760

 

 

Long-Term Incentive Compensation

We view long-term incentive compensation in the form of equity awards as an important element of our executive compensation program. The value of equity awards is directly related to share price appreciation over time, which incentivizes our executive officers to achieve long-term corporate goals and create long-term value for our shareholders. Equity awards also help us attract and retain top-performing executive officers in a competitive market.

As we mature as a company, we have evolved the mix of equity awards we grant and have started to deploy different equity vehicles consistent with the practice of our peer group companies. Specifically, we grant our employees, including our NEOs, a mix of stock options and RSUs. At the time of hire, equity awards are granted to our executive officers, including our NEOs. In addition, during our annual employee performance cycle, as a general practice, we grant a mix of equity awards to employees, including our NEOs, twice yearly with the initial award made during the third or fourth quarter of the year for which the equity grant is awarded and the remainder of the annual equity grant is awarded during the first quarter of the following year. We believe granting equity awards bi-annually will better deliver a more consistent equity value to our employees. As a general practice, the first tranche of awards are comprised of 100% stock options and equate roughly to one-third of a typical annual option grant and the second tranche of awards are comprised of a mix of equity awards roughly equating to two-thirds of a typical annual option grant, as well as restricted stock units adjusted for performance. For more information on our equity award grant policy, see “Other Compensation Policies and Practices—Equity Award Grant Policy” below.

At the beginning of each year, the Compensation Committee typically reviews the equity awards for our executive officers, including our NEOs, and determines, based upon performance in the prior year, the amounts of the annual equity awards it deems reasonable and appropriate based on the factors described above under “Compensation-Setting Factors” as well as the benchmarking analyses prepared by Radford. In addition, the Compensation Committee may deem it advisable to grant subsequent equity awards to our executive officers, in the event of a promotion, significant change in responsibilities, recognition for achievement of other performance milestones, recognition of other contributions to the Company, or for purposes of retention.

2020-2021 Annual Equity Awards Based on 2020 Performance

 

 

 

Stock Options

(Number of Shares)(1)

 

 

Restricted Stock

Units

(Number of Shares)(2)

 

Samarth Kulkarni, Ph.D. (3)

 

 

147,333

 

 

 

36,000

 

Tony W. Ho, M.D. (4)

 

 

40,000

 

 

 

9,000

 

James R. Kasinger (5)

 

 

37,026

 

 

 

9,000

 

Lawrence O. Klein, Ph.D. (6)

 

 

50,000

 

 

 

12,000

 

Michael J. Tomsicek (7)

 

 

37,026

 

 

 

9,000

 

 

(1)

The stock options vest, and become exercisable, over a four-year period, with 1/48th of the underlying shares vesting on a monthly basis after the vesting commencement date, so that all of the underlying shares will be vested on the date four years after the vesting commencement date, so long as the NEO remains an employee or other service provider.

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(2)

Restricted stock units are subject to time-based vesting criteria established by the Compensation Committee. Vesting terms for restricted stock units granted in 2020 are described in the footnotes to the Outstanding Equity Awards at December 31, 2020 table below. Restricted stock units granted in March 2021 will vest annually over four years.

(3)

The equity incentive awards summarized above for Dr. Kulkarni reflect an award of 47,333 stock options granted in October 2020, as well as an award of 100,000 stock options and 36,000 restricted stock units granted in March 2021.

(4)

The equity incentive awards summarized above for Dr. Ho reflect an award of 16,666 stock options granted in October 2020, as well as an award of 23,334 stock options and 9,000 restricted stock units granted in March 2021.

(5)

The equity incentive awards summarized above for Mr. Kasinger reflect an award of 11,666 stock options granted in October 2020, as well as an award of 25,360 stock options and 9,000 restricted stock units granted in March 2021.

(6)

The equity incentive awards summarized above for Dr. Klein reflect an award of 16,666 stock options granted in October 2020, as well as an award of 33,334 stock options and 12,000 restricted stock units granted in March 2021.

(7)

The equity incentive awards summarized above for Mr. Tomsicek reflect an award of 11,666 stock options granted in October 2020, as well as an award of 25,360 stock options and 9,000 restricted stock units granted in March 2021.

Other Employee Benefits

Health and Welfare Benefits

Our executive officers, including our NEOs, are eligible to participate in the same employee benefit plans that are generally available to all of our employees, subject to the satisfaction of certain eligibility requirements, such as medical, dental, and life and disability insurance plans. We pay, on behalf of our employees, the premiums for health, life and disability insurance.

401(k) Savings Plan

Our U.S. executive officers, including our NEOs, are eligible to participate in a tax-qualified retirement plan, or the 401(k) Plan, on the same basis as our other employees. The 401(k) Plan provides eligible U.S. employees with an opportunity to save for retirement on a tax advantaged basis. Eligible employees are able to defer eligible compensation subject to applicable annual Code limits. Employees’ pre-tax contributions are allocated to each participant’s individual account and are then invested in selected investment alternatives according to the participants’ directions. Employees are fully vested in their contributions. Our 401(k) Plan is intended to be qualified under Section 401(a) of the Code with our 401(k) Plan’s related trust intended to be tax exempt under Section 501(a) of the Code. As a tax-qualified retirement plan, contributions to our 401(k) Plan and earnings and matching amounts on those contributions are not taxable to the employees until distributed from our 401(k) Plan. We have the ability to make matching contributions under the 401(k) plan. Our 401(k)-match is competitive with other companies in our industry. We contributed approximately $1.9 million in matching contributions for 2020.

Employee Stock Purchase Plan

Pursuant to our employee stock purchase plan, employees, including our NEOs, have an opportunity to purchase our common shares at a discount on a tax-qualified basis through payroll deductions. The employee stock purchase plan is designed to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code. The purpose of the employee stock purchase plan is to encourage our employees, including our NEOs, to become our shareholders and better align their interests with those of our other shareholders.

Special Perquisites

We do not provide special perquisites to our executive officers, including our NEOs.

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Employment Arrangements with our NEOs

We have entered into employment agreements with each of our NEOs in connection with their employment with us. These employment agreements provide for certain notice periods and severance benefits, as described in the “Employment Agreements with our NEOs” section below. The Compensation Committee believes that it is in the best interests of our shareholders to extend these benefits to our executives to reinforce and encourage retention and focus of shareholder value creation without distraction.

Other Compensation Policies and Practices

Equity Award Grant Policy

We have adopted an equity award grant policy that sets forth the process and timing for us to follow when we grant equity awards to our employees, including our executive officers, or advisors or consultants to us pursuant to any of our equity compensation plans. Pursuant to the policy, all grants of equity awards must be approved in advance by, as applicable, our Board of Directors, the Compensation Committee or, subject to the delegation requirements in the policy, our CEO.

 

Each year, the Compensation Committee recommends to the Board of Directors, and the Board of Directors approves, an annual budget for all equity awards to be made during that year.

 

Annual equity awards to employees, including our NEOs, are granted twice yearly, with the initial award made during the third or fourth quarter of the year for which the equity grant is awarded and the remainder of the annual equity grant is awarded during the first quarter of the following year.

 

The Board of Directors has delegated to our CEO the ability to grant equity awards to existing and new employees (senior vice president and below), consultants and other qualified individuals provided that such grants are consistent with the equity award grant policy and related guidelines that are reviewed and approved annually by the Compensation Committee.

 

Equity awards to our NEOs and members of the Board of Director are effective on the date of approval by our Board of Directors, or such later date as specified in such approval. Our Board of Directors retains the discretion to grant equity awards at other times to the extent appropriate for such awards.

In addition, our equity award grant policy sets forth the manner in which our equity awards will be priced. The dollar value of restricted stock and restricted stock units will be determined by multiplying the number of shares of our common stock underlying the award by the closing market price on the Nasdaq Global Market of a share of our common stock on the effective date of grant. The exercise price of all stock options will be at least equal to the closing market price on the Nasdaq Global Market of our common shares on the effective date of grant.

Policy Prohibiting Hedging and Pledging

Our Insider Trading Policy prohibits our executive officers, the non-employee members of our Board of Directors and certain designated employees who in the course of the performance of their duties have access to material, nonpublic information regarding our company from engaging in the following transactions:

 

selling any of our securities that they do not own at the time of the sale (a “short sale”);

 

buying or selling puts, calls, other derivative securities of our company or any derivative securities that provide the economic equivalent of ownership of any of our securities or an opportunity, direct or indirect, to profit from any change in the value of our securities or engaging in any other hedging transaction with respect to our securities at any time without the prior approval of the Audit Committee;

 

using our securities as collateral in a margin account; and

 

pledging our securities as collateral for a loan (or modifying an existing pledge) unless the pledge has been approved by the Audit Committee.

As of the date of this proxy statement, none of our NEOs had previously sought or obtained approval from the Audit Committee to engage in any hedging or pledging transaction involving our securities.

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Tax and Accounting Considerations

Deductibility of Executive Compensation

Generally, Section 162(m) of the Code, or Section 162(m), disallows a federal income tax deduction for public corporations of remuneration in excess of $1 million paid in any fiscal year to certain specified executive officers. For taxable years beginning before January 1, 2018 (i) these executive officers consisted of a public corporation’s chief executive officer and up to three other executive officers (other than the chief financial officer) whose compensation is required to be disclosed to shareholders under the Securities Exchange Act of 1934 because they are our most highly-compensated executive officers and (ii) qualifying “performance-based compensation” was not subject to this deduction limit if specified requirements are met.

Pursuant to the Tax Cuts and Jobs Act of 2017, which was signed into law on December 22, 2017, or the Tax Act, for taxable years beginning after December 31, 2017, the remuneration of a public corporation’s chief financial officer is also subject to the deduction limit. In addition, subject to certain transition rules (which apply to remuneration provided pursuant to written binding contracts which were in effect on November 2, 2017 and which are not subsequently modified in any material respect), for taxable years beginning after December 31, 2017, the exemption from the deduction limit for “performance-based compensation” is no longer available. Consequently, for fiscal years beginning after December 31, 2017, all remuneration in excess of $1 million paid to a specified executive will not be deductible.

In designing our executive compensation program and determining the compensation of our executive officers, including our NEOs, the Compensation Committee considers a variety of factors, including the potential impact of the Section 162(m) deduction limit. However, the Compensation Committee will not necessarily limit executive compensation to that which is or may be deductible under Section 162(m). The deductibility of some types of compensation depends upon the timing of an executive officer’s vesting or exercise of previously granted rights. Further, interpretations of and changes in the tax laws, and other factors beyond the Compensation Committee’s control also affect the deductibility of compensation. The Compensation Committee will consider various alternatives to preserving the deductibility of compensation payments and benefits to the extent consistent with its compensation goals.

To maintain flexibility to compensate our executive officers in a manner designed to promote our short-term and long-term corporate goals, the Compensation Committee has not adopted a policy that all compensation must be deductible. The Compensation Committee believes that our shareholders’ interests are best served if its discretion and flexibility in awarding compensation is not restricted in order to allow such compensation to be consistent with the goals of our executive compensation program, even though some compensation awards may result in non-deductible compensation expense.

Accounting for Stock-Based Compensation

We follow the Financial Accounting Standard Board’s Accounting Standards Codification Topic 718, or FASB ASC Topic 718, for our stock-based compensation awards. FASB ASC Topic 718 requires us to measure the compensation expense for all share-based payment awards made to our employees and non-employee members of our Board of Directors, including stock options to purchase shares of our common stock and other stock awards, based on the grant date “fair value” of these awards. This calculation is performed for accounting purposes and reported in the executive compensation tables required by the federal securities laws, even though the recipient of the awards may never realize any value from their awards.

Taxation of “Parachute” Payments

Sections 280G and 4999 of the Code provide that executive officers and directors who hold significant equity interests and certain other service providers may be subject to significant additional U.S. taxes if they receive payments or benefits in connection with a change in control of the company that exceeds certain prescribed limits, and that the company (or a successor) may forfeit a deduction on the amounts subject to this additional tax. We have not agreed to provide any executive officer, including any NEO, with a “gross-up” or other reimbursement payment for any tax liability that the executive officer might owe as a result of the application of Sections 280G or 4999 of the Code.

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Section 409A of the Internal Revenue Code

Section 409A of the Code imposes additional significant taxes in the event that an executive officer, director or service provider receives “deferred compensation” that does not satisfy the requirements of Section 409A of the Code. Although we do not maintain a traditional nonqualified deferred compensation plan, Section 409A of the Code does apply to certain severance arrangements, bonus arrangements and equity awards. We structure all our severance arrangements, bonus arrangements and equity awards in a manner to either avoid the application of Section 409A or, to the extent doing so is not possible, to comply with the applicable requirements of Section 409A of the Code.

NEO Compensation Tables

Summary Compensation Table

The following table sets forth information regarding total compensation awarded to, earned by and paid to each of our NEOs during the fiscal years ended December 31, 2020, 2019 and 2018, to the extent he was a NEO in such year.

 

Name

 

Year

 

Salary

 

 

Bonus

 

 

Share

Awards

(1)

 

 

Option

Awards

(1)

 

 

Non-Equity

Incentive

Compensation

(2)

 

 

All Other

Compensation

(3)

 

 

Total

 

Samarth Kulkarni, Ph.D.

 

2020

 

$

625,000

 

 

$

 

 

$

1,585,785

 

 

$

6,343,596

 

 

$

543,750

 

 

$

7,125

 

 

$

9,105,256

 

Chief Executive Officer

 

2019

 

$

550,200

 

 

$

 

 

$

8,775,600

 

 

$

6,495,579

 

 

$

438,785

 

 

$

5,568

 

 

$

16,265,732

 

 

 

2018

 

$

517,500

 

 

$

 

 

$

 

 

$

8,841,070

 

 

$

357,075

 

 

$

9,625

 

 

$

9,725,270

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tony W. Ho, M.D.

 

2020

 

$

451,000

 

 

$

 

 

$

614,213

 

 

$

2,368,031

 

 

$

288,189

 

 

$

168,811

 

(5)

$

3,890,244

 

EVP, Research and Development

 

2019

 

$

431,575

 

 

$

 

 

$

3,333,900

 

 

$

1,948,674

 

 

$

281,603

 

 

$

9,800

 

 

$

6,005,552

 

 

 

2018

 

$

415,976

 

 

$

 

 

$

 

 

$

3,466,188

 

 

$

258,321

 

 

$

9,625

 

 

$

4,150,110

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

James R. Kasinger

 

2020

 

$

403,500

 

 

$

 

 

$

379,695

 

 

$

1,563,531

 

 

$

234,030

 

 

$

11,400

 

 

$

2,592,156

 

General Counsel

 

2019

 

$

376,900

 

 

$

 

 

$

1,924,600

 

 

$

1,688,850

 

 

$

218,602

 

 

$

9,800

 

 

$

4,218,752

 

 

 

2018

 

$

357,182

 

 

$

 

 

$

 

 

$

2,597,974

 

 

$

197,164

 

 

$

9,625

 

 

$

3,161,945

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Lawrence O. Klein, Ph.D. (4)

 

2020

 

$

420,000

 

 

$

 

 

$

614,213

 

 

$

2,368,031

 

 

$

243,600

 

 

$

11,400

 

 

$

3,657,244

 

Chief Operating Officer

 

2019

 

$

360,400

 

 

$

 

 

$

3,984,600

 

 

$

1,549,003

 

 

$

209,032

 

 

$

9,800

 

 

$

6,112,835

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Michael J. Tomsicek

 

2020

 

$

422,000

 

 

$

 

 

$

379,695

 

 

$

1,563,531

 

 

$

244,760

 

 

$

11,400

 

 

$

2,621,386

 

Chief Financial Officer

 

2019

 

$

394,250

 

 

$

 

 

$

1,462,600

 

 

$

1,948,673

 

 

$

228,665

 

 

$

9,800

 

 

$

4,043,988

 

 

 

2018

 

$

380,000

 

 

$

 

 

$

 

 

$

1,653,972

 

 

$

209,760

 

 

$

9,625

 

 

$

2,253,357

 

 

(1)

The amounts reported in the “Share Awards” and “Option Awards” columns above represent the aggregate grant date fair value of the stock options and restricted stock units granted to such named executive officers during 2018, 2019 and 2020 as computed in accordance with FASB ASC Topic 718, not including any estimates of forfeitures related to service-based vesting conditions. See Note 11 of “Notes to Consolidated Financial Statements” in our Annual Report on Form 10-K for the year ended December 31, 2020 and filed with the SEC on February 16, 2021 for a discussion of assumptions made in determining the aggregate grant date fair value of our stock option and restricted stock unit awards. Note that the amounts reported in these columns reflect the accounting cost for these stock options and restricted stock units and do not correspond to the actual economic value that may be received by the named executive officers from the stock options and restricted stock units.

(2)

Amounts reported in this column represent cash incentive payments under our annual cash incentive program earned based on achievement of company goals and/or individual performance during the applicable year and paid in the first quarter of the following year.

(3)

Amounts represent the employer matching contribution to the executive’s 401(k) plan contributions during the relevant year.

(4)

Dr. Klein was not considered an NEO in 2018. Dr. Klein served as our Chief Business Officer from January 2, 2019 until January 25, 2020 and was subsequently promoted to our Chief Operating Officer effective January 26, 2020.

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(5)

During the relevant year, amount includes $11,400 received by Dr. Ho in employer matching contributions to his 401(k) plan contributions, as well as $157,411.18 for relocation reimbursement (inclusive of $46,200.18 in tax gross up) that Dr. Ho negotiated for when joining the Company.

 

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Grants of Plan-Based Awards for Fiscal Year 2020

The following table sets forth the individual awards made to each of our NEOs during 2020. For a description of the types of awards indicated below, please see our “Compensation Discussion and Analysis” above:

 

Name

 

Grant Date(1)

 

Estimated future

payouts under

non-equity

incentive plan

awards: Target

($)(2)

 

 

All other

stock awards:

Number of

shares of

stock or units

(#)(3)

 

 

All other

option awards:

Number of

securities

underlying

options (#)(4)

 

 

 

Exercise or

base price of

stock and

option

awards

($/Share)(5)

 

 

Grant date

fair value of

stock and

option

awards

($)(6)

 

Samarth Kulkarni, Ph.D.

 

 

 

 

375,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3/10/2020

 

 

 

 

 

35,500

 

 

 

 

 

 

 

44.67

 

 

 

1,585,785

 

 

 

3/10/2020

 

 

 

 

 

 

 

 

142,000

 

 

 

 

44.67

 

 

 

3,816,960

 

 

 

10/5/2020

 

 

 

 

 

 

 

 

47,333

 

 

 

 

86.75

 

 

 

2,526,636

 

Tony W. Ho., M.D.

 

 

 

 

202,950

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3/10/2020

 

 

 

 

 

13,750

 

 

 

 

 

 

 

44.67

 

 

 

614,213

 

 

 

3/10/2020

 

 

 

 

 

 

 

 

55,000

 

 

 

 

44.67

 

 

 

1,478,400

 

 

 

10/5/2020

 

 

 

 

 

 

 

 

16,666

 

 

 

 

86.75

 

 

 

889,631

 

James R. Kasinger

 

 

 

 

161,400