Form 4: PepGen Director Joshua Resnick Granted 16,000 Stock Options, Disclaims Personal Beneficial Ownership

PepGen Inc. director Joshua Resnick was granted 16,000 stock options with an exercise price of $1.51, though he disclaims personal beneficial ownership due to an arrangement with RA Capital Management, L.P.

Summary

• Joshua Resnick, a Director of PepGen Inc. (PEPG), was granted 16,000 stock options on June 4, 2025.
• The stock options have an exercise price of $1.51 per share.
• These options will vest in full upon the earlier of the first anniversary of the grant date (June 4, 2026) or the date of the next Annual Meeting.
• Vesting will cease if Mr. Resnick no longer serves as a director, unless the Board of Directors determines otherwise.
• Mr. Resnick holds these stock options for the benefit of RA Capital Healthcare Fund, L.P., RA Capital Nexus Fund II, L.P., and a separately managed account, under an arrangement with RA Capital Management, L.P.
• He is obligated to turn over any net cash or stock received upon exercise to RA Capital Management, L.P., which will offset advisory fees owed by the aforementioned funds/account.
• Consequently, Mr. Resnick disclaims beneficial ownership of the stock option and the underlying common stock.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the grant of options is a positive for aligning interests, the disclaimer of personal beneficial ownership by the director makes it less directly impactful for individual alignment, as the benefit accrues to the investment fund he represents. It's a routine compensation event.

Positives

• The grant of stock options to a director can align their interests with those of shareholders, encouraging long-term value creation.
• The exercise price of $1.51 is relatively low, suggesting potential for future upside if the stock price increases.

Negatives

• Joshua Resnick disclaims beneficial ownership of the options and underlying shares, meaning he does not personally benefit from their value, which could reduce direct personal alignment with shareholder interests.
• The options are held for the benefit of RA Capital funds, indicating that the primary beneficiary of this compensation is the investment firm rather than the individual director.

Risks

• The vesting of the options is contingent on continued service as a director, and cessation of service would typically halt vesting.
• The disclaimer of beneficial ownership by the director means his personal financial incentive from these specific options is indirect, potentially impacting the degree of personal alignment with the company's performance.
• The value of the options is subject to the future market price of PepGen Inc. common stock.

Future Outlook

The stock options granted to Director Joshua Resnick are set to vest upon the earlier of the first anniversary of the grant date (June 4, 2026) or the date of the next Annual Meeting, provided he continues to serve as a director.

Management Comments

• "This option shall vest in full upon the earlier of (i) the first anniversary of the date of grant or (ii) the date of the next Annual Meeting; provided, however, that all vesting shall cease if the individual ceases to serve as a director, unless the Board of Directors determines that the circumstances warrant continuation of vesting."
• "Under the Reporting Person's arrangement with RA Capital Management, L.P. (the 'Adviser'), the Reporting Person holds the stock option for the benefit of the RA Capital Healthcare Fund, L.P. (the 'Fund'), RA Capital Nexus Fund II, L.P. (the 'Nexus Fund II'), and a separately managed account (the 'Account'). The Reporting Person is obligated to turn over to the Adviser any net cash or stock received upon exercise of the stock option, which will offset advisory fees owed by the Fund, the Nexus Fund II, and the Account to the Adviser. The Reporting Person therefore disclaims beneficial ownership of the stock option and underlying Common Stock."

Industry Context

The granting of stock options is a common form of equity compensation for directors in publicly traded companies, aiming to align their interests with long-term shareholder value. The specific arrangement where a director holds options for the benefit of an investment fund is typical when the director is a representative of that fund, as is often the case with venture capital or institutional investors on a company's board.

Comparison to Industry Standards

• Granting stock options as part of director compensation is a standard practice across industries, including biotechnology and pharmaceuticals, to incentivize performance and retention.
• The vesting schedule (one year or next annual meeting) is a common approach for director equity awards, balancing immediate incentive with long-term commitment.
• The arrangement where the director disclaims personal beneficial ownership and holds the options for the benefit of an investment fund (RA Capital Management, L.P.) is standard for directors who serve as representatives of institutional investors, ensuring that the benefits accrue to the fund they represent rather than the individual.

Related Party Transactions

• Joshua Resnick holds the stock option for the benefit of RA Capital Healthcare Fund, L.P., RA Capital Nexus Fund II, L.P., and a separately managed account, under an arrangement with RA Capital Management, L.P. He is obligated to turn over any net cash or stock received upon exercise to RA Capital Management, L.P., which will offset advisory fees owed by the funds/account.

Stakeholder Impact

• Shareholders: The grant of options could lead to future dilution if exercised, but also aims to align the director's interests with long-term shareholder value.
• RA Capital Management, L.P. and its associated funds/accounts: These entities are the ultimate beneficiaries of the stock options, as any proceeds from exercise will offset advisory fees they owe.

Next Steps

• The stock options will vest upon the earlier of June 4, 2026, or the date of PepGen Inc.'s next Annual Meeting, provided Joshua Resnick continues to serve as a director.

Key Dates

Recommendation

Keywords

PepGen Inc., PEPG, Form 4, SEC filing, insider transaction, stock option, director compensation, beneficial ownership, RA Capital Management, equity compensation