Form 4: Day One Biopharma Director's Options Repriced Lower

Day One Biopharmaceuticals' Director Natalie C. Holles had 178,835 stock options repriced to an exercise price of $8.99, contingent on a retention period.

Summary

• Day One Biopharmaceuticals, Inc. (DAWN) Director Natalie C. Holles had a total of 178,835 stock options repriced.
• The repricing, approved by the Board of Directors on October 7, 2025, became effective on November 6, 2025.
• The new exercise price for all repriced options is $8.99, which was the closing price on Nasdaq on the effective date.
• Previously, these options had exercise prices ranging from $12.69 to $16.29.
• To exercise the repriced options at the new lower price, Ms. Holles must remain in service with the Issuer through a 'Retention Period'.
• The Retention Period ends on the earliest of November 6, 2026 (12-month anniversary of the effective date) or a Corporate Transaction.
• The requirement for an additional premium payment is waived if service terminates due to death or Disability.
• All other terms of the options remain unchanged, and the options are fully vested.
• The transactions were exempt under Rule 16b-6(d) and Rule 16b-3 of the Exchange Act.

Sentiment

Score: 7

Explanation: The repricing of options at a lower exercise price is a positive development for the director, enhancing the value of their equity compensation. For the company, it's a strategic move to retain key talent, which is generally positive, though it could be viewed with mixed sentiment by shareholders depending on the context of the stock performance.

Positives

• Director Natalie C. Holles benefits from a significantly lower exercise price of $8.99 for 178,835 stock options, increasing their intrinsic value.
• The repricing aligns the option exercise price with the current market value, potentially improving management's incentive and retention.
• The options are fully vested, meaning the director has immediate rights to the underlying shares once conditions are met.

Negatives

• The ability to exercise at the new lower price is contingent on Ms. Holles remaining in service through a 'Retention Period' (until November 6, 2026, or a Corporate Transaction).
• The company is effectively granting a benefit to a director, which could be viewed negatively by some shareholders if not justified by performance or retention needs.

Risks

• Retention Risk: If the reporting person does not remain in service through the Retention Period, they will not be able to exercise the options at the repriced lower value.

Future Outlook

The repricing is intended to incentivize the director to remain in service with the company for at least 12 months following the effective date, or until a Corporate Transaction occurs, to benefit from the lower exercise price.

Management Comments

• "On October 7, 2025, the Issuer's Board of Directors approved an option repricing (the 'Repricing') whereby the Reporting Person's options were repriced on November 6, 2025 (the 'Effective Date') 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."

Industry Context

Option repricing is a strategy sometimes employed by biotechnology or growth companies, particularly when their stock price has declined significantly below previous option grant prices. It aims to restore the incentive value of employee and director stock options, thereby aiding in retention and motivation. This practice is common in industries where talent retention is critical and equity compensation is a significant component of overall remuneration.

Comparison to Industry Standards

• Option repricing is a recognized, albeit sometimes controversial, practice in the biotechnology and pharmaceutical sectors, especially for companies like Day One Biopharmaceuticals (DAWN) that are often in development stages and subject to significant stock price volatility.
• Companies such as Biogen (BIIB) or Moderna (MRNA) have, at various times, faced similar challenges with underwater options, leading to discussions or implementations of repricing strategies to retain key talent.
• The condition of a 'Retention Period' is a standard mechanism to ensure that the repricing serves its intended purpose of incentivizing continued service, aligning with best practices for such equity adjustments.
• The exemption under Rule 16b-6(d) and Rule 16b-3 indicates compliance with SEC regulations for insider transactions involving certain equity compensation plans.

Corporate Governance

Related Party Transactions

• The repricing of stock options for Natalie C. Holles, a Director of Day One Biopharmaceuticals, Inc., constitutes a related party transaction.

Stakeholder Impact

• Shareholders: Potential for increased director retention and motivation, but also potential for perceived dilution or questions regarding the justification for repricing if the stock has underperformed.
• Employees: May signal the company's commitment to using equity compensation as a retention tool, potentially boosting morale if similar actions are taken for other employees, or creating disparity if not.
• Director (Natalie C. Holles): Directly benefits from increased intrinsic value of stock options, enhancing personal wealth and incentive to remain with the company.

Next Steps

• Natalie C. Holles must remain in service with Day One Biopharmaceuticals, Inc. through the Retention Period (until November 6, 2026, or a Corporate Transaction) to exercise the repriced options at the new $8.99 price.

Key Dates

Recommendation

This filing details an insider transaction (option repricing) for a director. While it's a positive for the director and a retention strategy for the company, it doesn't provide fundamental financial performance data to warrant a 'buy' or 'sell' recommendation. The repricing itself is a governance action, and while it can influence sentiment, it's not typically a primary driver for a strong investment recommendation without broader context on company performance and outlook. A 'hold' is appropriate as it acknowledges the event without suggesting a change in investment thesis based solely on this Form 4.

Keywords

Day One Biopharmaceuticals, DAWN, Natalie C. Holles, stock options, option repricing, SEC Form 4, insider transaction, corporate governance, equity incentive, director compensation