Form 4: Day One Biopharma COO/CFO Option Repricing

Day One Biopharmaceuticals' COO and CFO, Charles N. York II, had his stock options repriced to $8.99, contingent on a 12-month retention period.

Summary

• Charles N. York II, the Chief Operating Officer and Chief Financial Officer of Day One Biopharmaceuticals, Inc. (DAWN), had several of his 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 repriced options is $8.99 per share, which was the closing price on Nasdaq on the effective date, applied if lower than the original exercise price.
• To exercise the repriced options at the new price, Mr. York is required to remain in service with the Issuer through a 'Retention Period'.
• The Retention Period commenced on November 6, 2025, and concludes on the earliest of November 6, 2026 (the 12-month anniversary of the effective date) or a Corporate Transaction.
• The transaction involved the disposition of options with original exercise prices ranging from $11.87 to $23.41 and the simultaneous acquisition of new options for the same number of shares at the $8.99 exercise price.
• A total of 1,088,667 shares underlying stock options were affected by this repricing.
• The transactions were exempt from certain short-swing profit rules pursuant to Rule 16b-6(d) and Rule 16b-3 of the Exchange Act.

Sentiment

Score: 4

Explanation: The repricing of executive stock options is generally viewed with mixed sentiment. While it can be positive for executive retention and motivation, it often signals past stock underperformance, which is a negative for existing shareholders. The requirement for a retention period adds a layer of commitment from the executive, but the underlying reason for repricing (underwater options) suggests challenges.

Positives

• The repricing re-incentivizes a key executive (COO and CFO) by making his stock options 'in-the-money' or closer to it, potentially aligning his interests with future stock price appreciation.
• The 'Retention Period' condition ensures the executive remains with the company for at least 12 months, or until a corporate transaction, providing stability in leadership.

Negatives

• Option repricing typically occurs when a company's stock price has significantly declined, rendering previously granted options 'underwater' and reducing their incentive value, implying past underperformance of the stock.
• Repricing can be viewed negatively by existing shareholders as it effectively grants new options at a lower price, potentially diluting future shareholder value or signaling a lack of confidence in the stock's ability to recover to previous highs.

Risks

• The necessity for option repricing suggests a risk of executive dissatisfaction or potential departure if options remain underwater, which the company is addressing to mitigate this risk.
• If the stock price continues to decline, even the repriced options may become underwater again, potentially requiring further compensation adjustments or leading to executive retention challenges.

Future Outlook

The repricing and associated retention period indicate the company's intent to retain its COO and CFO for at least the next 12 months or until a significant corporate transaction, suggesting a focus on leadership stability and strategic execution during this period.

Industry Context

Option repricing is a common practice in the biotechnology and pharmaceutical industries, particularly for early-stage or growth companies whose stock prices can be highly volatile based on clinical trial results, regulatory approvals, or market sentiment. It is often used to re-motivate executives when stock performance has lagged, ensuring key talent remains engaged despite market fluctuations.

Comparison to Industry Standards

• Option repricing is a recognized, albeit sometimes controversial, executive compensation tool used across various industries, including biotech.
• The condition of a 'Retention Period' is a standard mechanism to ensure continued service from the executive in exchange for the repriced options, aligning with best practices for executive retention post-repricing.
• The use of the closing price on Nasdaq as the new exercise price is a common and transparent method for setting the repriced strike price.

Corporate Governance

Stakeholder Impact

• Shareholders: Potential negative impact due to implied past stock underperformance and potential future dilution from lower-priced options. However, retaining key management can be seen as positive for long-term stability.
• Employees: May signal the company's commitment to retaining key talent, potentially boosting morale, but could also highlight challenges in stock performance.
• Management (Charles N. York II): Directly benefits from the repricing, increasing the incentive value of his options and tying his compensation more closely to future stock appreciation from the current level.

Next Steps

• Charles N. York II must remain in service with Day One Biopharmaceuticals through the Retention Period (until November 6, 2026, or a Corporate Transaction) to benefit from the repriced options.
• The company will continue to monitor executive compensation and retention strategies.

Key Dates

Keywords

Day One Biopharmaceuticals, DAWN, SEC Form 4, stock options, option repricing, executive compensation, Charles N. York II, corporate governance, insider transaction