DEF: Neumora Therapeutics Seeks Stockholder Approval for Option Repricing and Reverse Stock Split

Neumora Therapeutics is asking stockholders to approve the repricing of certain stock options and a reverse stock split at its upcoming annual meeting.

Summary

• Neumora Therapeutics is holding its Annual Meeting of Stockholders virtually on May 28, 2025.
• Stockholders will vote on the election of two Class II directors, ratification of Ernst & Young LLP as the independent auditor, approval of the repricing of certain stock options, and approval of amendments to the company's certificate of incorporation to effect a reverse stock split.
• The proposed reverse stock split would be at a ratio ranging from 1-for-5 to 1-for-30, as determined by the Board of Directors.
• The Board recommends voting FOR all proposals.
• The company had 161,747,922 shares of common stock outstanding as of April 28, 2025.
• The Board may implement the reverse stock split to improve the perception of the common stock, maintain Nasdaq listing compliance, and encourage investor interest.
• The company is requesting stockholders approve a one-time repricing of certain outstanding stock options granted to employees, non-employee members of the Board and consultants under its 2023 Incentive Award Plan and its 2020 Equity Incentive Plan, covering a total of 21,809,159 shares of common stock.

Sentiment

Score: 5

Explanation: The document presents a mixed sentiment. While it highlights positive actions like the reverse stock split and option repricing aimed at improving the company's position, it also acknowledges the underlying issues such as the declining stock price and the failure of a clinical study. The language is generally neutral and factual.

Positives

• The reverse stock split could improve the perception of the company's stock as an investment.
• The reverse stock split could help maintain compliance with Nasdaq listing requirements.
• The reverse stock split could encourage increased investor interest in the company's stock.
• The repricing of stock options is expected to restore the incentive and retentive benefit of the Eligible Options.
• The Board believes that the Repricing is in the best interests of the Company and its stockholders.

Negatives

• The market price per share of the common stock after the Reverse Stock Split will not rise in proportion to the reduction in the number of shares of common stock outstanding immediately before the Reverse Stock Split.
• Even if the market price per share of the common stock after the Reverse Stock Split rises, such market price may not be sustained or may not be sufficient to achieve or maintain compliance with the Minimum Bid Price Rule.
• The Reverse Stock Split may not increase the company's ability to attract and retain employees and other service providers.
• The Reverse Stock Split may not result in more normalized trading in the company's common stock or decrease the market volatility of the company's common stock.
• The Reverse Stock Split may not result in a per share price that will increase the level of investment in the company's common stock by institutional investors or increase analyst and broker interest in the company.

Risks

• The market price of the common stock may not increase proportionally after the reverse stock split.
• The increased market price may not be sustained or sufficient to maintain Nasdaq compliance.
• The reverse stock split may not improve employee retention or market volatility.
• The reverse stock split may not attract institutional investors or increase analyst coverage.
• The failure of the KOASTAL-1 study to reach its primary endpoint has resulted in the company's Service Providers holding options with exercise prices meaningfully above the recent trading range of the company's common stock.

Future Outlook

The Board has the authority to effect the Reverse Stock Split at any time prior to the one-year anniversary of the date on which the Reverse Stock Split Amendment is approved by our stockholders. The Boards decision as to whether and when to effect the Reverse Stock Split will be based on a number of factors, including, without limitation, the anticipated impact of the Reverse Stock Split on the trading price and trading volume of our common stock, the anticipated impact on our market capitalization, our need for shares of common stock to fulfill our corporate purposes, financing activities, and general market and economic conditions.

Management Comments

• The Board believes that the Repricing is in the best interests of the Company and its stockholders and recommends that the stockholders vote for approval of this Proposal No. 3.
• The Board believes that the Reverse Stock Split Amendments are in the best interests of the Company and its stockholders and recommends that the stockholders vote for approval of this Proposal No. 4.

Industry Context

Reverse stock splits are often used by companies to regain compliance with stock exchange listing requirements or to improve the marketability of their stock. Option repricing is a tool used to re-incentivize employees when a company's stock price has declined significantly.

Comparison to Industry Standards

• Many companies listed on the Nasdaq Global Select Market must maintain a minimum bid price of $1.00 per share to remain listed.
• Companies like Cassava Sciences (SAVA) and Ocugen (OCGN) have faced similar challenges with maintaining their stock price above the minimum bid price.
• Repricing stock options is a common practice in the biotech industry when stock prices decline, similar to actions taken by companies like Puma Biotechnology (PBYI) and Agenus (AGEN).

Management Changes

Corporate Governance

Related Party Transactions

• In December 2023, we issued 6,072,445 shares of common stock based on the volume weighted average price per share prior to the date the milestone was met and paid $2.3 million in cash in satisfaction of the Phase 3 navacaprant milestone to the former equity holders of BlackThorn and participants in the carveout plan.
• Amgen Inc., one of our greater than 5% stockholders, is party to two license agreements and a research and collaboration agreement with us.
• We are party to an amended and restated investors rights agreement with certain holders of our common stock, including entities with which certain of our directors are affiliated.

Stakeholder Impact

• Shareholders: The reverse stock split and option repricing could impact the value of their investments.
• Employees: The option repricing is intended to re-incentivize employees.
• Customers: No direct impact on customers is mentioned.
• Suppliers: No direct impact on suppliers is mentioned.
• Creditors: No direct impact on creditors is mentioned.

Next Steps

• Stockholder vote on the proposals at the Annual Meeting on May 28, 2025.
• Board decision on whether and when to implement the reverse stock split.
• Implementation of the option repricing if approved by stockholders.

Key Dates

Keywords

reverse stock split, proxy statement, stock options, annual meeting, directors, ratification, Ernst & Young, independent auditor, repricing, stockholders, Neumora Therapeutics