Form 4: Day One Director's Options Repriced Lower

Day One Biopharmaceuticals' director Garry A Nicholson had over 100,000 stock options repriced to a lower exercise price of $8.99, subject to a retention period.

Summary

• Day One Biopharmaceuticals, Inc. director Garry A Nicholson had 103,735 stock options repriced on November 6, 2025.
• The repricing, approved by the Issuer's Board of Directors on October 7, 2025, set a new exercise price of $8.99 per share.
• This new price is the closing price on Nasdaq as of the effective date and applies if lower than the original exercise price.
• The repriced options replace previous options with exercise prices of $25.84 (33,900 shares), $12.69 (37,500 shares), and $13.87 (32,335 shares).
• To exercise the repriced options at the new price, the Reporting Person must remain in service with the Issuer through a Retention Period.
• The Retention Period began on November 6, 2025, and concludes on the earliest of the 12-month anniversary of this date or a Corporate Transaction.
• All other terms of the options remain unchanged, and the options are fully vested.
• These transactions were exempt under Rule 16b-6(d) and Rule 16b-3 of the Exchange Act.

Sentiment

Score: 7

Explanation: The repricing of options to a lower exercise price is a positive development for the director, as it increases the potential value of their equity holdings. For the company, it's a mechanism to retain key personnel, though it could be viewed neutrally or slightly negatively by some shareholders due to potential dilution or perceived lack of performance accountability for original grants.

Positives

• Garry A Nicholson's stock options were repriced to a significantly lower exercise price of $8.99, reducing the cost to acquire shares.
• The repricing benefits the director by making the options more 'in-the-money' or reducing their 'out-of-the-money' status, increasing their potential value.
• The options are fully vested, meaning the director has immediate rights to the underlying shares upon exercise, subject to the retention period.

Negatives

• The director is required to remain in service with the Issuer through a Retention Period to exercise the repriced options at the new, lower price.

Risks

• The value of the repriced options is still subject to the future market price of Day One Biopharmaceuticals' common stock.
• Failure to remain in service through the Retention Period would result in the inability to exercise the options at the repriced lower price.

Future Outlook

The repricing includes a 'Retention Period' requiring the director to remain in service for at least 12 months from November 6, 2025, or until a Corporate Transaction, to benefit from the lower exercise price. This indicates a desire to retain the director's service.

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 (as defined in the Plan).
• 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 can occur in various industries, often when a company's stock price has significantly declined, making existing options 'underwater' (exercise price higher than market price). This practice aims to re-incentivize executives and directors by restoring the potential value of their equity awards, thereby encouraging retention and alignment with future stock price recovery. It's a common mechanism in biotech/pharma where stock volatility can be high.

Comparison to Industry Standards

• Option repricing is a known, albeit sometimes controversial, practice in corporate compensation, particularly in industries with high stock price volatility like biotechnology.
• The requirement of a "Retention Period" is a common safeguard to ensure continued service and align the repricing with future performance, rather than being a pure windfall.
• The repricing to the closing market price on the effective date is a standard method for determining the new exercise price in such events.

Corporate Governance

Related Party Transactions

• The repricing of stock options for Garry A Nicholson, a director of Day One Biopharmaceuticals, Inc., constitutes a related party transaction as it involves a transaction between the company and a member of its board.

Stakeholder Impact

• Shareholders: Could view the repricing as a necessary step to retain a director, or potentially as a negative if it's perceived as rewarding underperformance or leading to increased dilution. The lower exercise price means more shares could be issued at a lower cost to the director.
• Employees: May see this as a precedent for future equity adjustments, potentially impacting morale or expectations regarding their own equity awards.
• Directors/Executives: The repricing serves as a retention incentive for the director and potentially for other executives whose options might also be underwater.

Next Steps

• Garry A Nicholson must remain in service with Day One Biopharmaceuticals, Inc. through the Retention Period to exercise the repriced options at the new $8.99 price.
• The Retention Period will conclude on the earliest of November 6, 2026 (12-month anniversary) or a Corporate Transaction.

Key Dates

Keywords

Day One Biopharmaceuticals, DAWN, stock options, option repricing, executive compensation, director compensation, Form 4, SEC filing, equity incentive plan, corporate governance