Item 3.01. Notice of Delisting or Failure to Satisfy a Continued Listing Rule or Standard; Transfer of Listing
On March 25, 2022, Randy Saluck and Lea Verny, each a member of the board of directors (the “Board”) of the Company, resigned from their positions as members of Board, effective immediately. At the time of their resignations, Mr. Saluck and Ms. Verny each served on the audit, nominating and corporate governance and compensation committees of the Board. As a result of these resignations, the Company is no longer in compliance with several of the Nasdaq Stock Market’s (“NASDAQ”) governance rules.
First, under NASDAQ Listing Rule 5605(b)(1), a majority of the directors on the Board must be independent directors, as defined under the NASDAQ rules. As of the effective time of the resignations of Mr. Saluck and Ms. Verny, the Board is comprised of one director who is independent under the NASDAQ Listing Rules and two directors who are not independent.
Second, under NASDAQ Listing Rule 5605(c)(2)(A), the audit committee of the Board must be comprised of at least three independent directors, as defined under the NASDAQ rules. As of the effective time of the resignations of Mr. Saluck and Ms. Verny, the audit committee of the Board is comprised of one director who is independent under the NASDAQ Listing Rules.
Third, under NASDAQ Listing Rules 5605(d)(2)(A) and 5605(d)(5), the compensation committee of the Board must be comprised of at least two independent directors, as defined under the NASDAQ Rules. As of the effective time of the resignations of Mr. Saluck and Ms. Verny, the compensation committee of the Board is comprised of only one director who is independent under the NASDAQ Listing Rules.
On March 28, 2022, the Company provided formal notice to NASDAQ disclosing the Company’s noncompliance with NASDAQ’s governance requirements as described above. Under NASDAQ’s rules, because the Company has only one independent director and one independent audit committee member, there is no available cure period within which the Company can regain compliance with the rules pertaining to the composition of the Board and the audit committee of the Board. Instead, the Company has until May 19, 2022 to submit a plan to NASDAQ to regain compliance. If NASDAQ accepts the plan, NASDAQ can grant an extension of up to 180 calendar days from April 4, 2022, the date of NASDAQ’s letter to the Company regarding this noncompliance matter, to evidence compliance. The Company intends to submit a plan to NASDAQ to regain compliance by or before May 19, 2022.
In accordance with Nasdaq Listing Rule 5605(d)(4), the Company is granted a cure period to regain compliance with the rules pertaining to the composition of the compensation committee of the Board, which cure period will expire upon the earlier of the Company’s next annual stockholders’ meeting or March 25, 2023; provided, however, that if the Company’s next annual stockholders’ meeting is held before September 21, 2022, then the Company must evidence compliance no later than September 21, 2022. The Board intends to appoint one or more new independent directors to fill the vacancies on the compensation committee of the Board prior to the expiration of such cure period in order to regain compliance with NASDAQ Listing Rule 5605(d)(2)(A) pertaining to the compensation committee of the Board.
Forward Looking Statements
This Current Report contains forward-looking statements that involve risks and uncertainties intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995, as amended. All statements other than statements of current or historical fact contained in this Current Report, including statements regarding the Company’s expected clinical development timeline for the Company’s product candidates, future financial position, business strategy, new products, budgets, liquidity, cash flows, projected costs, regulatory approvals, the impact of any laws or regulations applicable to the Company, and plans and objectives of management for future operations, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “should,” “estimate,” “expect,” “intend,” “may,” “plan,” “project,” “will,” and similar expressions, as they relate to us, are intended to identify forward-looking statements. We have based these forward-looking statements on the current expectations about future events held by management. While we believe these expectations are reasonable, such forward-looking statements are inherently subject to risks and uncertainties, many of which are beyond the Company’s control. The Company’s actual future results may differ materially from those discussed here for various reasons. The Company discusses many of these risks under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K filed with the SEC on March 22, 2021, as updated by the Company’s other filings with the SEC, including the proxy statement/prospectus filed with the SEC on June 4, 2021,.
Given these uncertainties, you should not place undue reliance on these forward-looking statements. The forward-looking statements included in this Current Report are made only as of the date hereof. We do not undertake any obligation to update any such statements or to publicly announce the results of any revisions to any of such statements to reflect future events or developments.