TETRAPHASE PHARMACEUTICALS INC (Form: 8-K, Received: 06/12/2019 16:17:16)

/s/ Maria Stahl

Date: June 12, 2019

Maria Stahl

Senior Vice President, General Counsel

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(D)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): June 10, 2019

Tetraphase Pharmaceuticals, Inc.

(Exact name of registrant as specified in charter)

Delaware

001-35837

20-5276217

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)

480 Arsenal Way

Watertown, Massachusetts

02472

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (617) 715-3600

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, $0.001 par value per share	TTPH	Nasdaq Global Select Market

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.05

Costs Associated with Exit or Disposal Activities.

On June 10, 2019, the Board of Directors (the “Board”) of Tetraphase Pharmaceuticals, Inc. (the “Company”) authorized the implementation of a restructuring of its organization, including a 20% reduction in headcount, designed to focus its cash resources on commercializing XERAVA ^® primarily in the hospital setting. The majority of the roles eliminated in the reduction in headcount are research and development based and general and administrative positions. The reduction in headcount did not reduce any headcount in the commercial organization. The Company expects to complete the reduction in headcount by the end of the second quarter of 2019. Following the restructuring, over 50% of the Company’s full-time employees are expected to be commercial and medical affairs personnel. The Company expects that the reorganization and other cost-saving efforts will result in an approximate $8.2 million reduction in net cash required for operating activities on an annualized basis. The Company estimates it will incur aggregate restructuring charges of approximately $2.4 million consisting of pre-tax charges for severance and other costs, but excluding any non-cash charges related to the modification of equity awards. These restructuring charges are expected to be in incurred primarily during the second and third quarters of 2019. These estimates are subject to a number of assumptions, and actual results may differ. The Company may also incur additional costs not currently contemplated due to events that may occur as result of or that are associated with the restructuring.

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangement of Certain Officers.

Larry Edwards

On June 10, 2019, the Board appointed Larry Edwards as President and Chief Executive Officer, effective August 1, 2019. Mr. Edwards, the Company’s current Chief Operating Officer, will succeed Guy Macdonald, who will remain on the Board after August 1, 2019.

The Board also approved an increase in the size of the Board from seven to eight and the election of Mr. Edwards to the Board effective August 1, 2019. Mr. Edwards was elected as a Class I director to serve until the Company’s 2020 annual meeting of stockholders and until his successor is duly elected and qualified or until his earlier death, resignation or removal. Mr. Edwards will not receive separate compensation for services rendered as a director and will not serve on any committees of the Board.

Mr. Edwards, age 47, has served as the Company’s Chief Operating Officer since March 2018. From December 2016 to February 2018, Mr. Edwards served as the Company’s Senior Vice President, Chief Commercial Officer and from January 2016 to December 2016 as the Company’s Vice President, Commercial Operations. He also served as the Company’s Vice President, Marketing from July 2015 to January 2016. Prior to joining the Company, from April 2014 to June 2015, Mr. Edwards served as Senior Director, Marketing at Cubist Pharmaceuticals, Inc., a publicly traded biopharmaceutical company acquired by Merck & Co. in January 2015. Mr. Edwards previously served in various roles at Merck & Co., a publicly traded pharmaceutical company, from 1999 to April 2014, most recently serving as Global Marketing Director, Clostridium Difficile and New Infectious Disease Products. Mr. Edwards received a B.S. from Ohio University.

There are no family relationships between Mr. Edwards and any of the Company’s directors or executive officers. There are no transactions between Mr. Edwards or any of his immediate family members and the Company or any of its subsidiaries that would be required to be reported under Item 404(a) of Regulation S-K.

In connection with Mr. Edwards’ promotion, Mr. Edwards’ annual base salary will be increased to $500,000, effective August 1, 2019, and his an annual bonus target will be increased to 55% of his annual salary. The Board also approved a grant effective August 1, 2019, pursuant to and in accordance with the Company’s 2013 Stock Incentive Plan, as amended, of (1) a time-based restricted stock unit (“RSU”) award for 150,000 shares of the Company’s common stock , which award will vest in equal annual installments over a three-year period, and (2) a performance-based RSU award for 50,000 shares of the Company’s common stock, which performance-based RSUs may be earned upon the achievement of various milestones and, if earned, will vest no later than August 1, 2022, subject in each case to continued service.

Guy Macdonald

Mr. Macdonald will remain a member Board after August 1, 2019. Subject to his execution of a mutually acceptable separation agreement and release, Mr. Macdonald will receive the severance benefits applicable to terminations without cause under his employment agreement, as amended. The Company also expects to enter into a consulting agreement with Mr. Macdonald under which Mr. Macdonald is expected to provide consulting services through December 15, 2019 at an hourly rate not to exceed $500.00 per hour. Under the terms of the consulting agreement, upon the expiration of the consulting agreement any and all unvested time-based RSUs then held by Mr. Macdonald and earned but unvested performance-based RSUs then held by Mr. Macdonald would vest. Mr. Macdonald will not receive any fees under the Company’s director compensation program while he is serving as a consultant to the Company.

Dr. Larry Tsai

On June 10, 2019, Larry Tsai, M.D. resigned from his position as the Company’s Chief Medical Officer in order to pursue other interests. Dr. Tsai’s resignation is effective June 24, 2019. The Company intends to conduct a search for a candidate to assume Dr. Tsai’s duties.

Item 5.07.

Submission of Matters to a Vote of Security Holders.

The Company held its 2019 annual meeting of stockholders on June 10, 2019 (the “Annual Meeting”). At the Annual Meeting, the Company’s stockholders voted in the following manner with respect to the following proposals:

The election class III directors, each to serve for a three-year term expiring at the 2022 annual meeting of stockholders. The final voting results were as follows:


Nominee	For		Withheld		Non-Votes
Garen Bohlin		15,580,792		3,124,638		21,147,126
John Freund		6,359,088		12,346,342		21,147,126

The amendment of the Company’s 2014 Employee Stock Purchase Plan to increase the number of shares of common stock reserved for issuance thereunder from 300,000 to 600,000 was approved as follows:


For:			16,653,499
Against:			2,035,925
Abstain:			16,006
Broker Non Votes:			21,147,126

The ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2019 was approved as follows:


For:			39,083,126
Against:			647,211
Abstain:			122,219

The compensation of the Company’s named executive officers, as disclosed in the proxy statement for the Annual Meeting , was approved on an advisory, non-binding basis. The final voting results were as follows:


For:			14,226,370
Against:			4,444,196
Abstain:			34,864
Broker Non Votes:			21,147,126

Item 7.01

Regulation FD Disclosure.

On June 12, 2019, the Company issued a press release in which it announced the restructuring and management changes described above. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated by reference into this Item 7.01.

The information set forth in or incorporated by reference into this Item 7.01, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01

Financial Statements and Exhibits.

(d)

Exhibits


Exhibit No.		Description

99.1		Press Release issued by Tetraphase Pharmaceuticals, Inc., dated June 12, 2019.

Forward-Looking Statements

This report contains forward-looking statements. All statements other than statements of historical facts contained herein are forward-looking statements reflecting the current beliefs and expectations of management made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, estimates of employee headcount reductions and the Company’s estimated restructuring charges. Such forward-looking statements involve known and unknown risks, uncertainties, and other important factors that may cause the Company’s actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others, the risks and uncertainties in estimating the Company’s restructuring charges, future cash operating expenses, sufficiency of cash and cash equivalents and expected changes in number of employees. For a further description of the risks and uncertainties that could cause actual results to differ from those expressed in these forward-looking statements, as well as risks relating to the Company’s business in general, see its Annual Report on Form 10-K filed on March 15, 2019 and its Quarterly Report on Form 10-Q filed on May 8, 2019. The Company does not plan to publicly update or revise any forward-looking statements contained in this report, whether as a result of any new information, future events, changed circumstances or otherwise.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Exhibit 99.1

LOGO

Tetraphase Pharmaceuticals Announces Corporate Reorganization Aimed at

Maximizing XERAVA ^TM (Eravacycline) Commercial Opportunity

Company to Eliminate Internal Research Function and Explore Pipeline Out-licensing

Opportunities to Focus the Company’s Resources on XERAVA ^TM Commercial Success

Workforce and R&D Expense Reduction Expected to Result in

Annualized Savings of Approximately $8 Million

Larry Edwards Named President and Chief Executive Officer;

Guy Macdonald to Remain on Board of Directors

WATERTOWN, Mass., June 12, 2019 – Tetraphase Pharmaceuticals, Inc. (NASDAQ:TTPH), (“Tetraphase” or “the Company”) today announced a corporate reorganization in order to maximize the commercial opportunity for XERAVA ^TM (eravacycline), the Company’s novel tetracycline antibacterial indicated for the treatment of complicated intra-abdominal infections (cIAI) in patients 18 years of age and older. This reorganization will include elimination of the Company’s internal research function and an exploration of out-licensing opportunities for the Company’s pipeline of innovative early-stage antibiotics and oncology product candidates. As part of the reorganization, Larry Edwards, who currently serves as Chief Operating Officer, will succeed Guy Macdonald as President and Chief Executive Officer following a transition period that will last through August 1, 2019. Mr. Edwards will join the Tetraphase Board of Directors (“the Board”) in August, and Mr. Macdonald will remain a director and, in addition, serve as a consultant to the Company into December 2019.

“XERAVA is a critically important new addition to the hospital antibiotic armamentarium, and we firmly believe that by implementing this reorganization we can concentrate our efforts and resources entirely on ensuring its commercial success,” said Mr. Macdonald. “Despite the urgent public health crisis stemming from a need for newer, more effective antibiotics, the process of launching one requires a long runway and unwavering perseverance. The Board and I believe that Larry, with his extensive experience launching novel antibiotics, is the right person to lead Tetraphase through the XERAVA launch period, and that a singularly focused organization is central to the success of our mission.”

“The changes we are undertaking are intended to enable Tetraphase to focus all of its resources on the commercial success of XERAVA, and I am honored to lead this effort going forward,” said Mr. Edwards. “As a result of the efforts of our field force, we are seeing a strong uptake for Xerava in the US, where we continue to see double digit monthly growth in sales of cartons with a mean growth of 40% per month over the last three months. Currently, in the second quarter of 2019 we are tracking to double our net sales as compared to the first quarter and continuing to observe increased formulary uptake. Tetraphase owes its many innovations, including the discovery of XERAVA, TP-271, TP-6076 and TP-2846, to its foundational chemistry platform, making the decision to eliminate our research group particularly difficult. We look forward to exploring opportunities for additional value creation through the out-licensing of our innovative early-stage antibiotics and oncology portfolio. We wish the best for those affected by this reorganization and will endeavor to make their transitions to other opportunities as smooth as possible.”

In addition to the promotion of Mr. Edwards, Maria Stahl, Senior Vice President and General Counsel of Tetraphase, has been promoted to Chief Business Officer. In this new role, her responsibilities will include overseeing other corporate functions, including finance, business development and investor relations. The reorganization will also include the departure of Tetraphase’s Chief Medical Officer, Larry Tsai, M.D. and Chief Scientific Officer, Jacques Dumas, Ph.D. Dr. Tsai has been an outstanding contributor to Tetraphase’s development programs. Dr. Tsai is resigning his position effective June 24, 2019. Dr. Dumas’ position is being eliminated effective July 19, 2019. Dr. Dumas is expected to enter into a consulting relationship with the Company in order to support the out licensing of TP-2846, the Company’s novel drug candidate for acute myeloid leukemia. Dr. Dumas leadership was critical in the development effort leading to TP-2846. Elimination of the Company’s research function and certain corporate support functions will result in a reduction in force of approximately 20%, or 24 employees. The Company expects that the reorganization and other cost-saving efforts will result in an approximate $8.2 million reduction in net cash required for operating activities on an annualized basis. Tetraphase estimates that the reorganization will be substantially completed by the third quarter of 2019 and that the Company will incur approximately $2.4 million of pre-tax charges for severance and other costs, primarily during the second and third quarters of 2019.

About XERAVA ^TM

XERAVA (eravacycline for injection) is a tetracycline class antibacterial indicated for the treatment of complicated intra-abdominal infections (cIAI) in patients 18 years of age and older. XERAVA was investigated for the treatment of cIAI as part of the Company’s IGNITE ( I nvestigating G ram- N egative I nfections T reated with E ravacycline) Phase 3 program. In the first pivotal Phase 3 trial in patients with cIAI, twice-daily intravenous (IV) XERAVA met the primary endpoint by demonstrating statistical non-inferiority of clinical response compared to ertapenem and was well-tolerated. In the second Phase 3 clinical trial in patients with cIAI, twice-daily IV XERAVA met the primary endpoint by demonstrating statistical non-inferiority of clinical response compared to meropenem and was well-tolerated. In both trials, XERAVA achieved high cure rates in patients with Gram-negative pathogens, including resistant isolates.

Important Safety Information

XERAVA is contraindicated for use in patients with known hypersensitivity to eravacycline, tetracycline-class antibacterial drugs, or to any of the excipients. Life-threatening hypersensitivity (anaphylactic) reactions have been reported with XERAVA.

The use of XERAVA during tooth development (last half of pregnancy, infancy and childhood to the age of eight years) may cause permanent discoloration of the teeth (yellow-gray-brown) and enamel hypoplasia.

The use of XERAVA during the second and third trimester of pregnancy, infancy and childhood up to the age of eight years may cause reversible inhibition of bone growth.

Clostridium difficile associated diarrhea (CDAD) has been reported with use of nearly all antibacterial agents and may range in severity from mild diarrhea to fatal colitis.

The most common adverse reactions observed in clinical trials (incidence ³ 3%) were infusion site reactions (7.7%), nausea (6.5%), and vomiting (3.7%).

XERAVA is structurally similar to tetracycline-class antibacterial drugs and may have similar adverse reactions. Adverse reactions including photosensitivity, pseudotumor cerebri, and anti-anabolic action which has led to increased BUN, azotemia, acidosis, hyperphosphatemia, pancreatitis, and abnormal liver function tests, have been reported for other tetracycline-class antibacterial drugs, and may occur with XERAVA. Discontinue XERAVA if any of these adverse reactions are suspected.

To report SUSPECTED ADVERSE REACTIONS, contact Tetraphase Pharmaceuticals Inc., at 1-833-7-XERAVA (1-833-793-7282) or FDA at 1-800-FDA-1088 or www.fda.gov/medwatch.

Please see full Prescribing Information for XERAVA at www.XERAVA.com.

About Tetraphase Pharmaceuticals, Inc.

Tetraphase Pharmaceuticals, Inc., is a biopharmaceutical company using its proprietary chemistry technology to create novel tetracyclines for serious and life-threatening conditions, including infections caused by many of the multidrug-resistant bacteria highlighted as urgent public health threats by the World Health Organization and the Centers for Disease Control and Prevention. The Company has created more than 3,000 novel tetracycline compounds using its proprietary technology platform. Tetraphase’s lead product XERAVA ^TM is approved for the treatment of complicated intra-abdominal infections by the U.S. Food and Drug Administration and the European Medicines Agency. Please visit www.tphase.com for more company information.

Forward-Looking Statements

Any statements in this press release about our future expectations, plans and prospects, including statements regarding our strategy, future operations, prospects, plans and objectives, including the anticipated benefits of the restructuring, and other statements containing the words “anticipates,” “believes,” “expects,” “plans,” “will” and similar expressions, constitute forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including our cash resources and the expected revenue from sales of Xerava will be sufficient to fund our operations in the future; whether the restructuring and the focus on our commercial operations will result in the reduced expenses and other benefits that we anticipate; and other clinical, regulatory and commercial risk factors discussed in the “Risk Factors” section of our quarterly report on Form 10-Q for the period ended March 31, 2019, filed with the Securities and Exchange Commission on May 8, 2019. In addition, the forward-looking statements included in this press release represent our views as of June 12, 2019. We anticipate that subsequent events and developments will cause our views to change. However, while we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so.

Investor and Media Contact:

Argot Partners

Maeve Conneighton

212-600-1902

maeve@argotpartners.com