Form 4: Day One Biopharma CCO's Options Repriced to $8.99

Day One Biopharmaceuticals' Chief Commercial Officer, Lauren Merendino, had over 510,000 stock options repriced to an exercise price of $8.99 per share.

Summary

• Lauren Merendino, Chief Commercial Officer of Day One Biopharmaceuticals, Inc. (DAWN), had a total of 510,200 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 all repriced options is $8.99 per share, which was the closing price on Nasdaq as of the effective date.
• The repriced options replace previous grants with higher exercise prices of $12.54, $14.44, and $11.87.
• To exercise the repriced options at the new price, the Reporting Person must remain in service with the Issuer through a 'Retention Period,' which ends on the earliest of the 12-month anniversary of the Effective Date or a Corporate Transaction, with exceptions for death or Disability.
• The transactions were exempt pursuant to Rule 16b-6(d) and Rule 16b-3 of the Exchange Act.

Sentiment

Score: 5

Explanation: The repricing of executive stock options is a compensation adjustment, not a direct indicator of operational performance. While it benefits the executive by lowering the exercise price, it also reflects a prior decline in the stock price and could be viewed neutrally to slightly negatively by shareholders due to potential dilution and the 'do-over' aspect. It's a compensation adjustment rather than a performance indicator.

Positives

• The Chief Commercial Officer benefits from a significantly lower exercise price for her stock options, enhancing their intrinsic value and incentive.
• The repricing aims to re-incentivize and retain a key executive, which can be crucial for the company's strategic objectives.
• The retention period condition ties the executive's benefit directly to continued service to the company.

Negatives

• Option repricing can be viewed negatively by existing shareholders as it effectively gives executives a 'do-over' on underwater options, potentially signaling a lack of confidence in the stock's recovery to previous highs.
• The repricing reflects that the company's stock price had fallen below the original grant prices, indicating past underperformance relative to those grant dates.
• Potential for increased dilution if the repriced options are exercised, although the total number of underlying shares remains the same.

Risks

• The market price of Day One Biopharmaceuticals' common stock could fall below the new exercise price of $8.99, rendering the repriced options underwater again.
• The executive must remain in service through the Retention Period to fully benefit from the repriced options, introducing a contingency to the incentive.
• Investor perception of option repricing can be negative, potentially impacting shareholder sentiment and stock valuation.

Future Outlook

The repricing of stock options for the Chief Commercial Officer, coupled with a retention period, indicates a strategic move to maintain executive incentive and commitment for at least 12 months following the effective date or until a corporate transaction.

Management Comments

• The Issuer's Board of Directors approved an option repricing on October 7, 2025, effective 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; provided that the additional premium payment will not be required if the Reporting Person's service to the Issuer is terminated by reason of death or Disability (as defined in the Company's 2021 Equity Incentive Plan ('the Plan')).
• 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 (as defined in the Plan). All of the other terms of the options remain unchanged.

Industry Context

Option repricing is a common practice in industries with high stock price volatility, such as biotechnology, to re-incentivize executives when options become underwater. This mechanism is often employed to retain key talent and align executive incentives with current market realities, especially after periods of stock price decline.

Comparison to Industry Standards

• Option repricing is a recognized tool for executive retention and motivation in volatile industries like biotechnology, where stock prices can fluctuate significantly.
• While specific comparable companies or projects are not detailed, the practice of repricing underwater options is a known strategy to re-align executive compensation with current market valuations and maintain incentive.

Corporate Governance

Related Party Transactions

• The repricing of stock options for Lauren Merendino, the Chief Commercial Officer, constitutes a related party transaction between the company and an executive officer.

Stakeholder Impact

• Shareholders: Potential for increased dilution if the repriced options are exercised, and a possible negative perception regarding executive compensation practices, although it aims to retain key talent.
• Executive (Lauren Merendino): Significantly improved incentive and potential financial benefit due to the lower exercise price, contingent on continued service.
• Employees: May impact morale or perception of fairness regarding compensation practices, depending on broader company policies.

Next Steps

• The Chief Commercial Officer must remain in service with Day One Biopharmaceuticals through the specified Retention Period to fully benefit from the repriced options.
• The options will continue to vest according to their original schedules, subject to continued service.

Key Dates

Recommendation

The repricing of executive stock options is a compensation adjustment, not a direct indicator of operational performance. While it aims to re-incentivize the Chief Commercial Officer, it also reflects a previous decline in stock price. Without further operational or financial updates, a 'hold' recommendation is appropriate as the event itself doesn't fundamentally alter the company's investment thesis but rather adjusts executive incentives.

Keywords

Day One Biopharmaceuticals, DAWN, Stock Options, Option Repricing, Executive Compensation, Lauren Merendino, SEC Form 4, Biotechnology, Pharmaceuticals, Corporate Governance