Form 4: Day One Biopharma Reprices Executive Stock Options

Day One Biopharmaceuticals repriced stock options for General Counsel Adam Dubow to $8.99 per share, aiming to restore incentive value.

Summary

• Day One Biopharmaceuticals, Inc. [DAWN] repriced stock options for its General Counsel and Secretary, Adam Dubow.
• The repricing was approved by the 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, if lower than the original exercise price.
• A total of 360,000 previously granted options (90,000 at $23.41, 90,000 at $14.44, 90,000 at $11.87) were effectively exchanged for new options at the $8.99 price.
• An additional 309,000 stock options were acquired at an exercise price of $8.99, vesting 100% on November 6, 2026.
• The repriced options are subject to a "Retention Period" requiring continued service for 12 months from the effective date or until a Corporate Transaction.
• The transactions were exempt under Rule 16b-6(d) and Rule 16b-3 of the Exchange Act.
• Following these transactions, Adam Dubow beneficially owns 579,000 stock options with an exercise price of $8.99.

Sentiment

Score: 4

Explanation: The repricing is positive for the executive as it restores incentive value, but it reflects negatively on the company's past stock performance, which led to the options being underwater. The retention clause is a positive for governance.

Positives

• Restores incentive value for a key executive (General Counsel & Secretary) by repricing underwater stock options to a lower, more current market price of $8.99.
• Includes a retention period condition, requiring the executive to remain in service for at least 12 months or until a corporate transaction, aligning executive incentives with company stability.

Negatives

• Option repricing can be viewed negatively by shareholders as it effectively grants new options at a lower price, potentially diluting shareholder value or signaling past underperformance.
• The original options were significantly underwater (e.g., $23.41, $14.44, $11.87 vs. new $8.99), indicating a substantial decline in the company's stock price since the original grants.

Risks

• Potential for shareholder dissatisfaction due to the repricing of executive stock options, especially if the company's stock performance does not improve significantly.
• Risk of executive departure if the retention period conditions are not met or if the stock price continues to underperform, despite the repricing.

Future Outlook

The repricing aims to re-incentivize a key executive, suggesting management's focus on retaining talent and potentially signaling an expectation for future stock price appreciation from the current $8.99 level. The retention period ties the executive's incentives to continued service and potential corporate transactions.

Management Comments

• "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."

Industry Context

Option repricings are common in industries, particularly biotechnology or high-growth sectors, where stock prices can be volatile. When a company's stock price significantly declines, options granted at higher prices become "underwater," losing their incentive value. Repricing is a mechanism used to re-align executive incentives with current market realities and retain key talent, especially when competitors might offer more attractive compensation packages.

Comparison to Industry Standards

• Option repricing is a practice seen across various industries, particularly in biotech where stock volatility is high. Companies like Moderna (MRNA) or BioNTech (BNTX), while not directly comparable in terms of specific repricing events, operate in a sector where executive compensation often includes significant equity components that can be impacted by market fluctuations.
• The inclusion of a "Retention Period" is a standard corporate governance practice to ensure that repriced options continue to serve their purpose of retaining key personnel and aligning their interests with long-term company performance, rather than just providing a short-term benefit.
• The exemption under Rule 16b-6(d) and Rule 16b-3 of the Exchange Act indicates that the repricing was structured to comply with SEC regulations regarding insider trading and short-swing profits, which is a standard legal requirement for such transactions.

Corporate Governance

Stakeholder Impact

• Shareholders: Potential negative perception due to the repricing of underwater options, which can signal past stock underperformance and potential future dilution. However, it could also be seen as a necessary step to retain key talent.
• Employees (Executive): Highly positive impact for Adam Dubow, as his stock options regain significant intrinsic value, restoring a key component of his compensation and incentive to remain with the company.

Next Steps

• Adam Dubow must remain in service through the Retention Period (12 months from November 6, 2025, or until a Corporate Transaction) to exercise the repriced options at the new price.
• The 309,000 newly acquired options will vest 100% on November 6, 2026, subject to continued service.
• Other repriced options will continue to vest monthly according to their original schedules, subject to continued service.

Key Dates

Recommendation

The option repricing indicates that the company's stock has underperformed, leading to underwater options. While the repricing is a positive for executive retention and motivation, it doesn't inherently signal an immediate turnaround or strong future performance. Investors should hold and monitor for broader operational improvements and financial results rather than making a buy or sell decision solely based on this executive compensation adjustment.

Keywords

Day One Biopharmaceuticals, DAWN, Stock Options, Option Repricing, Executive Compensation, Adam Dubow, SEC Form 4, Corporate Governance, Incentive Plan