Form 4: Day One Bio Director's Stock Options Repriced

Day One Biopharmaceuticals' director, Saira Ramasastry, had her stock options repriced to an exercise price of $8.99 per share, effective November 6, 2025.

Summary

• Saira Ramasastry, a Director at Day One Biopharmaceuticals, Inc. (DAWN), had her stock options repriced.
• The repricing was approved by the Issuer's Board of Directors on October 7, 2025, and became effective on November 6, 2025.
• The new exercise price for the options is $8.99 per share, which was the closing price on Nasdaq on the effective date.
• Previously held options with higher exercise prices, ranging from $12.69 to $16.29, were effectively exchanged for new options at the $8.99 price.
• A total of 186,116 stock options were repriced.
• To exercise the repriced options at the new price, the Reporting Person must remain in service through a 'Retention Period' (12 months from the effective date or a Corporate Transaction), unless termination is due to death or Disability.
• All other terms of the options remain unchanged, and the options are fully vested.
• The transactions are exempt pursuant to Rule 16b-6(d) and Rule 16b-3 of the Exchange Act.

Sentiment

Score: 4

Explanation: The repricing of stock options indicates a significant decline in the company's stock price, which is a negative signal. However, the action itself is a strategic move by management to re-incentivize a key director and retain talent, which can be seen as a positive for future stability and performance. The 'Retention Period' adds a layer of commitment.

Positives

• The repricing aligns the option exercise price with the current market value, potentially increasing the incentive for the director to drive future stock price appreciation.
• The requirement for the director to remain in service for a 'Retention Period' (12 months or until a Corporate Transaction) provides an incentive for continued commitment and retention of key talent.
• The options are fully vested, meaning the director has immediate rights to the underlying shares upon exercise, subject to the retention period.

Negatives

• Option repricing can be viewed negatively by shareholders as it effectively grants a 'do-over' for underwater options, potentially diluting shareholder value if the stock price recovers.
• The company's stock price has likely fallen significantly for options to be repriced from original exercise prices ranging from $12.69 to $16.29 down to $8.99, indicating past underperformance.

Risks

• Shareholder dissatisfaction due to potential dilution from repriced options and the perception of management being 'bailed out' for poor stock performance.
• The necessity for option repricing suggests a decline in the company's stock price, which may indicate underlying business challenges or negative market sentiment.
• While the 'Retention Period' aims to secure the director's service, the repricing itself might signal concerns about executive retention if not for such incentives.

Future Outlook

The repricing of options, while a past event, implies a future incentive for the director to remain with the company and work towards increasing shareholder value, especially given the 'Retention Period' requirement. This action aims to re-align management incentives with future stock performance.

Management Comments

• On October 7, 2025, the Issuer's Board of Directors approved an option repricing... whereby the Reporting Person's options were repriced on November 6, 2025... with a new exercise price of $8.99 (if lower than the original exercise price), the closing price on Nasdaq as of the Effective Date.
• In order to exercise the repriced options at the new exercise price, the Reporting Person is required to remain in service with the Issuer through the Retention Period.
• The 'Retention Period' commenced on the Effective Date and ends upon the earliest of (i) the 12-month anniversary of the Effective Date and (ii) a Corporate Transaction.
• All of the other terms of the options remain unchanged. Such transactions were exempt pursuant to Rule 16b-6(d) and Rule 16b-3 of the Exchange Act, as applicable.
• The options are fully vested.

Industry Context

Option repricing is a common practice in industries, particularly biotechnology or high-growth sectors, where stock prices can be volatile. It is often used to re-incentivize management when options go 'underwater' (exercise price is higher than the current market price), aiming to retain talent and align their interests with future stock price recovery.

Comparison to Industry Standards

• Option repricing is a known mechanism for retaining key personnel in volatile industries like biotech, especially when stock prices have declined significantly, making existing options less valuable as an incentive.
• The inclusion of a 'Retention Period' is a standard corporate governance practice to ensure continued service and prevent immediate exercise and departure after repricing, aligning with best practices for executive compensation adjustments.

Corporate Governance

Stakeholder Impact

• Shareholders: Potential for negative perception due to option repricing (seen as a 'bailout' for management) and potential future dilution if options are exercised. However, it could also be seen as a necessary step to retain key talent and re-align incentives.
• Employees (specifically the director): Positive impact as their equity incentives are re-valued, increasing motivation and retention, subject to the retention period.

Next Steps

• The director must remain in service through the 'Retention Period' to exercise the repriced options at the new price.
• Monitoring the company's stock performance and future strategic announcements will be crucial to assess the effectiveness of this incentive and the company's overall trajectory.

Key Dates

Recommendation

The option repricing itself is a neutral to slightly negative event, indicating past stock underperformance. However, it's a mechanism to re-incentivize a key director, which is positive for retention and future alignment of interests. Without broader financial context from other filings, a 'hold' recommendation is appropriate, suggesting investors monitor future performance and the impact of this incentive. The repricing doesn't fundamentally change the company's business prospects but addresses a compensation issue.

Keywords

Day One Biopharmaceuticals, DAWN, SEC Form 4, Stock Options, Option Repricing, Director Compensation, Equity Incentive Plan, Corporate Governance, Saira Ramasastry