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AVEO > SEC Filings for AVEO > Form 8-K on 4-Jun-2013All Recent SEC Filings

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Form 8-K for AVEO PHARMACEUTICALS INC


4-Jun-2013

Costs Associated with Exit or Disposal Activities, Change in Directors o


Item 2.05. Costs Associated with Exit or Disposal Activities.

(d) On May 29, 2013, the Board of Directors (the "Board") of AVEO Pharmaceuticals, Inc. (the "Company") approved a strategic restructuring of the Company that will refocus the Company's efforts on the on-going clinical development of tivozanib in colorectal and breast cancer and on the advancement of key pipeline and preclinical assets. The Board made this determination due to the significant likelihood that the U.S. Food and Drug Administration will make an adverse determination with respect to the Company's New Drug Application for tivozanib in advanced renal cell carcinoma ("RCC"), as well as the decision by the Company's partner Astellas Pharma Inc. not to proceed with a European filing for tivozanib and not to support future clinical trials in RCC.

As part of this restructuring, the Company has no plans at this time to pursue the development of tivozanib in RCC. The Company will eliminate approximately 140 positions across the organization. The Company expects the restructuring to be substantially completed by June 30, 2013, with the elimination of approximately 120 of the 140 positions, and to be fully completed by December 31, 2013. The Company currently expects this restructuring will result in total restructuring charges of approximately $7.5 to $8.5 million during the year ending December 31, 2013, consisting of severance and benefit costs associated with the targeted staff reductions. The Company is continuing to review the potential impact of the restructuring, specifically with respect to its facilities requirements after the restructuring and alternatives with respect to its lease commitments for its headquarters and laboratory space in Cambridge, Massachusetts, and is unable to estimate any additional restructuring costs or charges at this time. If the Company subsequently determines that it will incur additional major costs and restructuring charges, it will amend this Current Report on Form 8-K with respect to such determination. This restructuring is expected to extend the Company's cash runway for at least two years, which is beyond the anticipated data read-outs from the Company's on-going trials of tivozanib and AV-203.

The full text of the press release announcing the restructuring is attached as Exhibit 99.3 to this Current Report and is incorporated herein by reference.



Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(b) On May 29, 2013, Elan Ezickson notified the Board that he intends to resign as Executive Vice President, Chief Operating Officer of the Company, effective as of July 31, 2013, to pursue new opportunities.

(e)(i) At the annual meeting of shareholders of the Company held on May 29, 2013 (the "2013 Annual Meeting"), the Company's shareholders approved the amendment and restatement of the Company's 2010 Stock Incentive Plan (the "2010 Incentive Plan"). The Amended and Restated 2010 Stock Incentive Plan (the "Amended 2010 Incentive Plan"), which had previously been adopted by the Board subject to shareholder approval, increased the number of shares of common stock reserved for issuance under the 2010 Plan by 3,000,000 and adopted a fungible share method for counting awards against the number of shares available for issuance under the Amended 2010 Incentive Plan. The number of shares of common stock reserved for issuance under the Amended 2010 Incentive Plan is the sum of
(i) 7,875,000 shares of common stock plus (ii) the number of shares of common stock subject to awards granted under the Company's 2002 Stock Incentive Plan which expire, terminate or are otherwise surrendered, cancelled, forfeited or repurchased by the Company at their original issuance price pursuant to a contractual repurchase right, up to a maximum of 625,000 shares.

Under the fungible share counting provision in the Amended 2010 Incentive Plan, any award that is not a "full-value award" will be counted against the number of shares available for issuance under the Amended 2010 Incentive Plan as one share for each share of common stock subject to such award, and any award that is a full-value award will be counted as 1.5 shares for each one share of common stock subject to such full-value award, subject to adjustment in the event of changes in capitalization and other similar events. A "full-value award" is any restricted stock award, restricted stock unit award, or other stock-based award with a per share price or per unit purchase price lower than 100% of the fair market value (as defined under the Amended 2010 Incentive Plan) of the Company's common stock on the date of grant.


The following brief description of the Amended 2010 Incentive Plan is qualified in its entirety by reference to the complete text of the plan, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference:

Types of Awards

The Amended 2010 Incentive Plan provides for the grant of incentive stock options intended to qualify under Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"), nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock-based and cash-based awards ("Awards").

Certain of the Awards described below are subject to minimum vesting requirements, as specified below under "-Minimum Vesting Requirements."

Incentive Stock Options and Nonqualified Stock Options. Optionees receive the right to purchase a specified number of shares of the Company's common stock at a specified option price and subject to such other terms and conditions as are specified in connection with the option grant. Options may not be granted at an exercise price that is less than the fair market value of the Company's common stock on the date of grant, provided that if the Board approves the grant of an option with an exercise price to be determined on a future date, the exercise price will be not less than 100% of the fair market value of the Company's common stock on such future date. Options may not be granted for a term in excess of ten years. The Amended 2010 Incentive Plan permits the following forms of payment of the exercise price of options: (i) payment by cash, by check or in connection with a "cashless exercise" through a broker, (ii) subject to certain conditions and to the extent provided in the applicable option agreement or approved by the Board, by delivery of shares of common stock to the Company,
(iii) to the extent provided in an applicable nonqualified stock option agreement or approved by the Board, by delivery of a notice of "net exercise,"
(iv) to the extent provided in the applicable option agreement or approved by the Board, by any other lawful means, or (v) by any combination of these forms of payment.

Director Options. The Company's non-employee directors receive an automatic grant of nonqualified stock options to purchase 30,000 shares of common stock upon commencement of service on the Board ("Initial Grant") and an automatic grant of nonqualified stock options to purchase an additional 12,500 shares of common stock on the date of each annual meeting ("Annual Grant"), provided that in the case of each Annual Grant, such director must (i) be serving as a director immediately prior to and immediately following the annual meeting and
(ii) have served on the Board for at least six months. Initial Grants and Annual Grants will (i) have an exercise price equal to the fair market value of the Company's common stock on the date of grant, (ii) expire on the earlier of 10 years from the date of grant or three months following cessation of service on the Board and (iii) contain such other terms and conditions as the Board determines. The Amended 2010 Incentive Plan provides that Initial Grants shall vest in thirty-six equal monthly installments commencing on the first day of the month following the date of grant and Annual Grants shall vest in twelve equal monthly installments commencing on the first day of the month following the date of grant (or, in the case of Annual Grants, if earlier, on the date that is one business day prior to the Company's next annual meeting), provided, in either case, that the individual is still serving on the Board on each vesting date. No additional vesting will take place after the non-employee director ceases to serve as a director. The Board may provide for accelerated vesting in the case of death, disability, a Change in Control Event (as defined below), attainment of mandatory retirement age, or retirement following at least 10 years of board . . .



Item 5.07 Submission of Matters to a Vote of Security Holders.

At the annual meeting of shareholders of the Company held on May 29, 2013, the Company's shareholders voted on the following proposals:

1. The following nominees were elected to the Company's Board of Directors for terms expiring at the 2014 annual meeting of shareholders.

                                   For           Withheld        Broker Non-Votes
       Mr. Kenneth Bate          36,220,529         189,041              9,359,622
       Dr. Robert Epstein        36,313,154          96,416              9,359,622
       Dr. Anthony Evnin         36,198,679         210,891              9,359,622
       Mr. Tuan Ha-Ngoc          36,281,977         127,593              9,359,622
       Dr. Raju Kucherlapati     36,215,135         194,435              9,359,622
       Mr. Henri Termeer         36,209,696         199,874              9,359,622
       Mr. Kenneth Weg           29,403,123       7,006,447              9,359,622
       Dr. Robert Young          36,309,693          99,877              9,359,622

2. The amendment and restatement of the Company's 2010 Stock Incentive Plan, reserving up to an additional 3,000,000 shares of common stock for issuance under the 2010 Stock Incentive Plan and providing for certain other amendments, was approved.

                         For:                  30,383,482
                         Against:               6,015,760
                         Abstain:                  10,328
                         Broker Non-Votes:      9,359,622

3. Amendment No. 1 to the Company's 2010 Employee Stock Purchase Plan, reserving up to an additional 514,000 shares of common stock for issuance under the 2010 Employee Stock Purchase Plan, was approved.

                         For:                  36,178,994
                         Against:                 183,512
                         Abstain:                  47,064
                         Broker Non-Votes:      9,359,622



4. A non-binding, advisory proposal on the compensation of the Company's named executive officers was approved.

                         For:                  36,064,841
                         Against:                 311,987
                         Abstain:                  32,742
                         Broker Non-Votes:      9,359,622

5. The appointment of Ernst & Young LLP as the independent registered public accounting firm for the Company for the fiscal year ending December 31, 2013 was ratified.

                             For:         45,427,727
                             Against:        304,098
                             Abstain:         37,367




Item 8.01 Other Events.

(i) On May 31, 2013, a class action lawsuit was filed against the Company and certain of its officers in the United States District Court for the District of Massachusetts, captioned Christine Krause v. AVEO Pharmaceuticals, Inc., et al., No. 1:13-cv-11320-JLT. The complaint purports to be brought on behalf of shareholders who purchased the Company's common stock between January 3, 2012 and May 1, 2013. The complaint generally alleges that the Company and certain of its officers violated Sections 10(b) and/or 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder by making allegedly false and/or misleading statements concerning the phase 3 trial design and results for the TIVO-1 study in an effort to lead investors to believe that the drug would receive approval from the FDA. The complaint seeks unspecified damages, interest, attorneys' fees, and other costs. The Company denies any allegations of wrongdoing and intends to vigorously defend against this lawsuit. However, there is no assurance that the Company will be successful in its defense or that insurance will be available or adequate to fund any settlement or judgment or the litigation costs of this action. Moreover, the Company is unable to predict the outcome or reasonably estimate a range of possible loss at this time.

(ii) On June 4, 2013, the Company issued a press release announcing the restructuring described in this Current Report on Form 8-K. The full text of the press release is furnished as Exhibit 99.3 to this Current Report on Form 8-K and is incorporated herein by reference.



Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

99.1 Amended and Restated 2010 Stock Incentive Plan

99.2 2010 Employee Stock Purchase Plan, as amended by Amendment No. 1 thereto

99.3 Press Release


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