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

Day One Biopharmaceuticals' director, J. Scott Garland, had his stock options repriced to a lower exercise price of $8.99, effective November 6, 2025.

Summary

• J. Scott Garland, a Director at Day One Biopharmaceuticals, Inc. (DAWN), had a total of 146,607 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 original exercise prices for these options ranged from $12.69 to $24.65.
• The new exercise price for all repriced options is $8.99, which was the closing price on Nasdaq as of the effective date.
• To exercise the repriced options at the new price, J. Scott Garland is required to remain in service with the Issuer through a 'Retention Period'.
• The Retention Period ends on the earliest of the 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.
• These transactions were exempt pursuant to Rule 16b-6(d) and Rule 16b-3 of the Exchange Act.

Sentiment

Score: 4

Explanation: The repricing of options to a lower exercise price is generally a negative signal for shareholders as it often indicates a significant decline in the company's stock price, making previous options underwater. While it serves as a retention incentive for the director, it can be viewed as dilutive and reflects past underperformance.

Positives

• The repricing re-incentivizes Director J. Scott Garland by making his stock options 'in-the-money' again, potentially improving retention.
• The new exercise price of $8.99 aligns the options with the current market value, providing a more realistic incentive.

Negatives

• The need for option repricing typically indicates a significant decline in the company's stock price, reflecting past underperformance.
• Repriced options, if exercised, could lead to increased dilution for existing shareholders at a lower price point.

Risks

• The repricing signals that the company's stock price has fallen significantly, potentially impacting investor confidence.
• Future exercise of these repriced options could lead to dilution of existing shareholder value.
• The 'Retention Period' condition ties the director's incentive to continued service, but the repricing itself is a response to a negative stock performance.

Future Outlook

The repricing includes a 'Retention Period' requirement, meaning the director must remain in service for at least 12 months from the effective date (or until a Corporate Transaction) to benefit from the new exercise price. This aims to secure the director's continued contribution to the company.

Management Comments

• The Issuer's Board of Directors approved an option repricing on October 7, 2025, to adjust the exercise price of certain stock options.

Industry Context

Option repricing is a common practice in industries, particularly in volatile sectors like biotechnology, where stock prices can experience significant fluctuations. When a company's stock price falls substantially, existing stock options may become 'underwater' (exercise price is higher than the current market price), losing their incentive value. Repricing aims to restore this incentive and retain key talent.

Comparison to Industry Standards

• Option repricing is a recognized mechanism for executive retention, especially in the biotech sector where stock volatility is high and long-term incentives are crucial.
• While the filing does not provide specific comparable company data, such repricings are typically undertaken when a company's stock has underperformed, making existing options ineffective as a motivational tool.
• The structure, including a retention period, is a standard approach to ensure continued service in exchange for the repriced options.

Corporate Governance

Related Party Transactions

• The repricing of stock options for Director J. Scott Garland constitutes a transaction between the company and an insider, impacting executive compensation.

Stakeholder Impact

• Shareholders: Potential negative impact due to the signal of past stock underperformance and potential future dilution from the exercise of repriced options.
• Director J. Scott Garland: Positive impact through renewed incentive and potential for future gains from the repriced options, contingent on continued service.

Next Steps

• J. Scott Garland must remain in service with Day One Biopharmaceuticals through the Retention Period to benefit from the repriced options.

Key Dates

Recommendation

This filing details an option repricing for a director, which is a compensation event. While it signals past stock underperformance, it does not provide sufficient financial or operational data to make a definitive investment recommendation. Investors should consider this information within the broader context of the company's overall financial health, strategic direction, and market conditions. A 'hold' recommendation is appropriate as this single event doesn't fundamentally alter the long-term investment thesis without further context.

Keywords

Day One Biopharmaceuticals, DAWN, stock options, option repricing, Form 4, insider transaction, corporate governance, executive compensation