Form 8-K - Current report

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): May 11, 2024

   

VIRACTA THERAPEUTICS, INC.

(Exact name of Registrant as Specified in Its Charter)


Delaware	000-51531	94-3295878
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

2533 S. Coast Hwy. 101, Suite 210
Cardiff, California		92007
(Address of Principal Executive Offices)		(Zip Code)

    Registrant’s Telephone Number, Including Area Code: (858) 400-8470

   

(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:

☐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 each exchange on which registered
Common Stock, par value $0.0001 per share	VIRX	The Nasdaq Stock Market LLC

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

Appointment of Chief Financial Officer

On May 11, 2024, the Board of Directors (“Board”) of Viracta Therapeutics, Inc. (the “Company”) appointed Michael Faerm to serve as the Company’s Chief Financial Officer, effective May 13, 2024 (the “effective date”). In connection with Mr. Faerm’s appointment as Chief Financial Officer, Mr. Faerm will also serve as the Company’s principal financial officer and principal accounting officer, and Melody Burcar, the Company’s Senior Vice President of Finance, will no longer serve as the Company’s interim principal financial officer and interim principal accounting officer. Ms. Burcar will continue to serve as the Company’s Senior Vice President of Finance.

Mr. Faerm most recently served in a consulting role as Interim Chief Financial Officer of Harpoon Therapeutics, Inc., a publicly-traded immunotherapy company, from October 2023 to March 2024. From April 2021 to March 2023, Mr. Faerm served as Chief Financial Officer of Artiva Biotherapeutics, Inc., a natural killer (NK) cell-based therapy company. From 2019 to 2021, Mr. Faerm served as a consulting and interim Chief Financial Officer and Chief Business Officer to various biopharmaceutical companies through his consulting firm, MEF Consulting LLC. From 2015 to 2018, Mr. Faerm served as Chief Business Officer of Innoviva, Inc. (formerly Theravance, Inc.), a publicly-traded biopharmaceutical company. Prior to Innoviva, Mr. Faerm served as a senior pharmaceuticals equity research analyst at Wells Fargo Securities and at Credit Suisse. Mr. Faerm holds a M.B.A. from Harvard Business School, a M.S. in civil engineering from Stanford University and a B.S. in civil engineering from Columbia University.

Chief Financial Officer Compensation Arrangements

Also on May 11, 2024, the Compensation Committee of the Board (the “Compensation Committee”) approved, and the Company entered into, an Executive Employment Agreement with Mr. Faerm (the “employment agreement”), to be effective on the effective date. Mr. Faerm’s employment under the employment agreement is at will and may be terminated at any time by the Company or by Mr. Faerm. Pursuant to the employment agreement, Mr. Faerm will receive an annual base salary of $480,000 and a discretionary annual target bonus of up to forty percent (40%) of his annual base salary (the “target bonus”), based on the achievement of performance objectives to be determined by the Board or an authorized committee thereof. Under the employment agreement, for the Company’s 2024 fiscal year, any bonus payable to Mr. Faerm will be prorated for the portion of the year that Mr. Faerm is employed by the Company.

Pursuant to the employment agreement, Mr. Faerm will also receive an option to purchase 500,000 shares of the Company’s common stock (the “initial option”) with an exercise price per share equal to the per share fair market value of the Company’s common stock on the date of grant. The initial option will vest with respect to twenty-five percent (25%) of the total number of shares granted on the first anniversary of the effective date, and with respect to one-forty-eighth (1/48) of the total number of shares granted on the last day of each one-month period of Mr. Faerm’s service to the Company thereafter. Also pursuant to the employment agreement, if, on or before December 31, 2024, the Company completes a financing that extends the Company’s runway through the end of fiscal year 2025, as determined by the Board, Mr. Faerm will receive an additional option to purchase 340,000 shares of the Company’s common stock (the “financing option”). The financing option will have an exercise price per share equal to the per share fair market value of the Company’s common stock on the date of grant and will vest according to the same vesting schedule as the initial option. The initial option and the financing option will each be granted pursuant and subject to the terms and conditions of the Company’s equity incentive plans.

If the Company terminates Mr. Faerm’s employment other than for “cause,” death or “disability,” or Mr. Faerm resigns for “good reason” outside the period beginning three (3) months prior to a “change in control” (as all such terms are defined in the employment agreement) and ending twelve (12) months following a change in control (such period, the “change in control period”), Mr. Faerm will be entitled to: (i) continued payment of his base salary, as in effect immediately prior to his termination date, for a period of twelve (12) months; and (ii) reimbursement by the Company for the cost of continuation of health coverage for Mr. Faerm and his eligible dependents pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for up to twelve (12) months.

If the Company terminates Mr. Faerm’s employment other than for cause, death or disability, or Mr. Faerm resigns for good reason during the change in control period, Mr. Faerm will be entitled to: (i) a lump sum payment equal to twelve (12) months of his base salary as in effect immediately prior to Mr. Faerm’s termination date; (ii) a lump sum payment equal to one hundred percent (100%) of Mr. Faerm’s target bonus for the year in which such termination occurs; (iii) reimbursement by the Company for the cost of premiums for continued coverage under COBRA for up to twelve (12) months; and (iv) acceleration of the unvested portion of any stock options or

other equity awards held by Mr. Faerm immediately prior to termination (with any performance-based vesting assumed at target performance).

If a change in control occurs while Mr. Faerm remains employed by the Company, fifty percent (50%) of the unvested portion of any stock options or other equity awards held by Mr. Faerm that remain outstanding as of immediately prior to such change in control shall immediately vest.

The foregoing severance benefits are conditioned upon Mr. Faerm signing and not revoking a release of claims within 60 days following his employment termination date and his continuing compliance with the terms of a confidentiality and information agreement.

If any of the payments provided for under the employment agreement or otherwise payable to Mr. Faerm would constitute “parachute payments” within the meaning of Section 280G of the Internal Revenue Code and would be subject to the related excise tax under Section 4999 of the Internal Revenue Code, then he will be entitled to receive either full payment of benefits or such lesser amount that would result in no portion of the benefits being subject to the excise tax, whichever results in the greater amount of after tax benefits to him.

The summary of Mr. Faerm’s executive employment agreement set forth above does not purport to be complete and is qualified in its entirety by reference to the full text of the executive employment agreement, which is attached to this Current Report on Form 8-K as Exhibit 10.1 and incorporated by reference herein.

In addition, the Company has entered into its standard form of indemnification agreement with Mr. Faerm. The form indemnification agreement was filed with the Securities and Exchange Commission on December 23, 2004, as Exhibit 10.5 to the Company’s Registration Statement on Form S-1 and is incorporated herein by reference. Mr. Faerm has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended, nor are any such transactions currently proposed. There is no arrangement or understanding between Mr. Faerm or any other person pursuant to which Mr. Faerm was selected as an officer. There are no family relationships between Mr. Faerm and any of the Company’s directors or executive officers.

Increase in Shares Reserved Under Inducement Plan

On May 11, 2024, in connection with the appointment of Mr. Faerm as the Chief Financial Officer of the Company and the approval of his employment agreement, the Board also approved increasing the number of shares of common stock reserved under the Company’s 2021 Inducement Equity Incentive Plan (the “Inducement Plan”) by 1,200,000 shares, to a new total of 3,575,000 shares of common stock. As previously disclosed, the Board adopted the Inducement Plan without stockholder approval pursuant to Rule 5635(c)(4) and Rule 5635(c)(3) of the Nasdaq Listing Rules. In accordance with Rule 5635(c)(4) of the NASDAQ Listing Rules, awards under the Inducement Plan may only be made to individuals not previously employees or non-employee directors of the Company (or following such individuals’ bona fide period of non-employment with the Company), as an inducement material to the individuals’ entry into employment with the Company or in connection with a merger or acquisition, to the extent permitted by Rule 5635(c)(3) of the NASDAQ Listing Rules.

Item 7.01. Regulation FD Disclosure.

On May 14, 2024, the Company issued a press release announcing the appointment of Mr. Faerm as the Company’s Chief Financial Officer. A copy of the press release is furnished herewith as Exhibit 99.1.

The information set forth under this Item 7.01, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such filing, unless expressly incorporated by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits



Exhibit Number		Description

10.1		Employment Agreement by and between the Company and Michael Faerm, dated as of May 11, 2024
99.1		Press Release, dated May 14, 2024
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

SIGNATURES

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 thereunto duly authorized.


			Viracta Therapeutics, Inc

Date:	May 14, 2024	By:	/s/ Mark Rothera
			Mark Rothera President and Chief Executive Officer

Exhibit 10.1

VIRACTA THERAPEUTICS, INC. EXECUTIVE EMPLOYMENT AGREEMENT

This Employment Agreement (this “Agreement”) by and between Viracta Therapeutics, Inc. (the “Company”) and Michael E. Faerm (“Executive”) is effective as of May 13, 2024 (the “Effective Date”).

Duties and Scope of Employment.

(a)

Positions and Duties. Executive will serve as Chief Financial Officer of the Company. Executive will render such business and professional services in the performance of Executive’s duties, consistent with Executive’s position within the Company, as will reasonably be assigned to Executive by the President & CEO or the Board of Directors (the “Board”). For clarification, the Executive may serve in his position from a hybrid location, in accordance with Section (d). The period of Executive’s employment from the Effective Date is referred to herein as the “Employment Term.”

(b)

Obligations. During the Employment Term, Executive shall perform Executive’s duties faithfully and to the best of Executive’s ability and shall devote substantially all of Executive’s business efforts and time to the Company. For the duration of the Employment Term, Executive agrees not to actively engage in any other employment, occupation, or consulting activity for any direct or indirect remuneration which would conflict or interfere with the performance of such services without the prior approval of the Board. Notwithstanding the foregoing, Executive shall have the right, with the prior written consent of the Board, to serve as a member of the board of directors or comparable governing bodies (including any board committees) of one for-profit business.

(c)

At-Will Employment. The parties agree that Executive’s employment with the Company will be “at-will” employment and may be terminated at any time with or without cause or notice. Executive understands and agrees that neither Executive’s job performance nor promotions, commendations, bonuses or the like from the Company give rise to or in any way serve as the basis for modification, amendment, or extension, by implication or otherwise, of Executive’s employment with the Company. However, as described in this Agreement, Executive may be entitled to severance benefits depending on the circumstances of Executive’s termination of employment with the Company.

(d)

Work Location. Executive’s primary work location will be the Company office in Cardiff, California. Notwithstanding the foregoing, to the extent that it does not interfere with the performance of Executive’s duties, Executive may work from his home office in California; provided that the Company may in its discretion determine to set a minimum requirement for Executive to work from the Company’s headquarters. Executive shall allocate sufficient time working in person at the Company’s headquarters in Cardiff, California, while incorporating considerations such as travel restrictions, social distancing measures, virtual conferences and internet-based meetings against business impact and timely execution on deliverables.

Compensation.

(a)

Base Compensation. During the Employment Term, the Company will pay Executive an annual salary of $480,000, less applicable withholdings, as compensation for Executive’s services (the “Base Salary”), which will be paid periodically in accordance with the Company’s normal payroll practice. Executive’s salary will be subject to review and adjustments may be made in the Company’s sole discretion.

(b)

Employee Benefits. During the Employment Term, Executive will be entitled to participate in the employee benefit plans and programs currently and hereafter maintained by the Company of general applicability to other senior executives of the Company, including, without limitation, the Company’s 401(k) retirement plan, employee stock purchase plan, group medical, dental, vision, disability, life insurance, and flexible-spending account plans, if any, pursuant to the terms and conditions of such plans. The Company reserves the right to cancel or change the benefit plans and programs it offers to its employees at any time.

(c)

Paid Time Off/Vacation. During the Employment Term, Executive will be entitled to accrue paid time-off/vacation in accordance with the Company’s paid-time off policies. Accrued and unused vacation will carry over from year to year, as required by applicable California law, up to a cap of no more than 30 days.

(d)

Target Bonus. Executive will be eligible to receive an annual bonus of up to forty percent (40%) of the Executive’s Base Salary (the “Target Bonus”), less applicable withholdings, upon achievement of performance objectives to be determined in good faith by the Board or an authorized committee thereof (the “Committee”) in its sole discretion. The Target Bonus, or any portion thereof, will be paid as soon as practicable after the Board determines such bonus has been earned. In order to earn any bonus, Executive must be employed by the Company on the date the bonus is paid. Executive will not be eligible for a bonus if Executive’s employment with the Company terminates prior to the payment date, regardless of whether Executive or the Company initiates the termination, and independent of whether the termination is with or without cause. For 2024, the Target Bonus will be prorated for the portion of the year that the Executive was employed by the Company.

Equity.

(a)

Initial Option. As soon as practicable following the Effective Date and subject to approval by the Board or the Compensation Committee of the Board, as a material inducement to Executive’s acceptance of employment with the Company, Executive will be granted a stock option to purchase 500,000 shares of the Company’s common stock, with an exercise price per share equal to the per share fair market value of the Company’s common stock on the date of grant (the “Initial Option”). The Initial Option will be granted pursuant to the Company’s equity incentive plans (the plan under which such Initial Option is granted is referred to herein as the “Plan”). The Initial Option will vest with respect to twenty-five percent (25%) of the total number of shares of the Company’s common stock subject to the Initial Option on the first anniversary of the Effective Date, and with respect to one-forty-eighth (1/48) of the total number of shares of the Company's common stock subject to the Initial Option on the last day of each one-month period of Executive’s service to the Company

thereafter. The Initial Option will be subject to the terms and conditions of the Plan and any form of stock option agreement issued thereunder.

(b)

Financing Option. As a further material inducement to Executive’s acceptance of employment with the Company, subject to approval by the Board or the Compensation Committee of the Board, if, on or before December 31, 2024, the Company receives net proceeds from one or more equity financings that the Board or the Compensation Committee, in their reasonable good faith judgment, determine are sufficient to provide the Company with working capital to fund its operations through the end of fiscal year 2025 (a “Qualified Financing”), then Executive will be granted an additional stock option to purchase 340,000 shares of the Company’s common stock (the “Financing Option”). The Financing Option will be granted on or about the first trading day in an open window under the Company’s insider trading policy following the date of the Qualified Financing and with an exercise price per share equal to the per share fair market value of the Company’s common stock on the date of grant. The Financing Option will be granted pursuant to the Plan and will vest according to the same vesting schedule as the Initial Option. The Financing Option will be subject to the terms and conditions of the Plan and any form of stock option agreement issued thereunder.

(c)

Executive will be eligible to receive additional awards of stock options, restricted stock units or other equity awards pursuant to any plans or arrangements the Company may have in effect from time to time. The Board or the Committee will determine in its discretion whether Executive will be granted any such equity awards and the terms of any such award in accordance with the terms of any applicable plan or arrangement that may be in effect from time to time.

Expenses. The Company will reimburse Executive for reasonable travel, entertainment or other expenses incurred by Executive in the furtherance of or in connection with the performance of Executive’s duties hereunder, in accordance with the Company’s expense reimbursement policy as in effect from time to time.

Severance Benefits; Change in Control Benefits.

(a)

Non-CIC Qualified Termination. If the Company terminates Executive’s employment with the Company outside of the Change in Control Period (as defined below) other than for Cause (as defined below), death or Disability (as defined in the Company’s 2021 Equity Incentive Plan (the “Plan”)), or Executive resigns from Executive’s employment with the Company for Good Reason (as defined below) (such a termination, a “Qualified Termination”), then, subject to Section 6, Executive will be entitled to the following:

(i)

continued payment of Executive’s annual Base Salary, at the level in effect immediately prior to Executive’s termination date, for a period of twelve (12) months following the date of the Qualified Termination, with the first payment paid on the first Company payroll date following the effective date of the Release (as defined below) (and to include any amounts that otherwise would have been paid between the termination date and the payment date); and

(ii)

reimbursement by the Company for the cost of premiums for Executive and Executive’s covered dependents, if any, for group health insurance continuation

coverage under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) for up to twelve (12) months following Executive’s termination of employment (the “COBRA Premium Reimbursement”), provided that (x) Executive and Executive’s covered dependents timely elect and remain eligible for continued coverage under COBRA and (y) such COBRA Premium Reimbursement does not result in excise tax penalties for the Company under applicable laws (including, without limitation, Section 2716 of the Public Health Service Act). Notwithstanding the preceding, if the Company determines in its sole discretion that it cannot provide COBRA reimbursement benefits without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company will instead provide the Executive a taxable payment in an amount equal to the monthly COBRA premium that the Executive would be required to pay to continue the Executive’s group health coverage in effect on the date of termination of employment (which amount will be based on the premium for the first month of COBRA coverage), which payments will be made regardless of whether the Executive elects COBRA continuation coverage and will commence in the month following the month of the termination date and continue for the period of months indicated in this section.

(b)

CIC Qualified Termination. Upon a Qualified Termination occurring during the period beginning three (3) months prior to a Change in Control (as defined in the Plan) and ending twelve (12) months following a Change in Control (the “Change in Control Period”) Period, then, subject to Section 7, Executive will be entitled to the following:

(i)

a lump sum payment equal to twelve (12) months of Executive’s annual Base Salary, at the level in effect immediately prior to Executive’s termination date, paid on the first Company payroll date following the effective date of the Release;

(ii)

a lump sum payment equal to hundred percent (100%) of Executive’s target bonus for the year in such the Qualified Termination occurred, paid on the first Company payroll date following the effective date of the Release;

(iii)

COBRA Premium Reimbursement for up to twelve (12) months following Executive’s termination of employment, provided that (x) Executive and Executive’s covered dependents timely elect and remain eligible for continued coverage under COBRA and (y) such COBRA Premium Reimbursement does not result in excise tax penalties for the Company under applicable laws (including, without limitation, Section 2716 of the Public Health Service Act). Notwithstanding the preceding, if the Company determines in its sole discretion that it cannot provide COBRA reimbursement benefits without potentially violating applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company will instead provide the Executive a taxable payment in an amount equal to the monthly COBRA premium that the Executive would be required to pay to continue the Executive’s group health coverage in effect on the date of termination of employment (which amount will be based on the premium for the first month of COBRA coverage), which payments will be made regardless of whether the Executive elects COBRA continuation coverage and will commence in the month following the month of the termination date and continue for the period of months indicated in this section; and

(iv)

one hundred percent (100%) of the unvested portion of any stock options or other equity award held by Executive that remain outstanding as of immediately

prior to the date of such Qualified Termination shall immediately vest and become exercisable (but, in no case, will more than 100% of the shares subject to any award vest and become exercisable); provided, however, that any stock options or other equity award held by Executive that, at any time such equity award is outstanding, is subject to performance-based vesting, will vest assuming target performance. For purposes of clarity, any stock options or other equity award held by Executive as of any Qualified Termination not within the Change in Control Period will remain outstanding for three (3) months following such Qualified Termination in order to give effect to this provision.

(c)

Non-Duplication of Payment or Benefits. For purposes of clarity, in the event of that a Change in Control occurs within three (3) months following a Qualified Termination, any severance payments and benefits to be provided to the Executive under Section 5(b) will be reduced by any amounts that already were provided to the Executive under Section 5(a).

(d)

Change in Control. Upon a Change in Control (as defined in the Stock Plan), then 50% of the unvested portion of any stock options or other equity award held by Executive that remain outstanding as of immediately prior to such Change in Control shall immediately vest and become exercisable.

(e)

Termination for Cause, Death or Disability; Voluntary Resignation without Good Reason. If Executive’s employment with the Company terminates voluntarily by Executive for any reason (except upon resignation for Good Reason), for Cause by the Company or due to Executive’s death or disability, then (i) all vesting will terminate immediately with respect to Executive’s outstanding equity awards, (ii) all payments of compensation by the Company to Executive hereunder will terminate immediately (except as to amounts already earned), and (iii) Executive will only be eligible for severance benefits in accordance with the Company’s established policies, if any, as then in effect and subject to any conditions set forth by the Company as to the receipt of such severance benefits.

Conditions to Receipt of Payments; No Duty to Mitigate.

(a)

Separation Agreement and Release of Claims. The receipt of any payments or benefits pursuant to Section 5 will be subject to Executive signing and not revoking a separation agreement and release of claims in a form reasonably satisfactory to the Company (the “Release”) and provided that such Release becomes effective and irrevocable no later than sixty (60) days following the termination date (such deadline, the “Release Deadline”). If the Release does not become effective by the Release Deadline, Executive will forfeit any rights to severance or benefits under this Agreement. In no event will severance payments or benefits be paid or provided until the Release becomes effective and irrevocable.

(b)

Limitation on Payments.

(i)

In the event that the payments and benefits provided for in this Agreement or other payments and benefits payable or provided to Executive (i) constitute “parachute payments” within the meaning of Section 280G of the Code and (ii) but for this Section 6(b), would be subject to the excise tax imposed by Section 4999 of the Code, then your payments and benefits under this Agreement or other payments or benefits (the “280G Amounts”) will be either:

(x)

delivered in full, or

(y)

delivered as to such lesser extent which would result in no portion of such payments and benefits being subject to the excise tax under Section 4999 of the Code, whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999 of the Code, results in your receipt on an after-tax basis, of the greatest amount of 280G Amounts, notwithstanding that all or some portion of the 280G Amounts may be taxable under Section 4999 of the Code.

(ii)

Reduction Order. In the event that a reduction of 280G Amounts is being made in accordance with this Section 6(b), the reduction will occur, with respect to the 280G Amounts considered parachute payments within the meaning of Section 280G of the Code, in the following order:

(1)

reduction of cash payments in reverse chronological order (that is, the cash payment owed on the latest date following the occurrence of the event triggering the excise tax will be the first cash payment to be reduced);

(2)

cancellation of equity awards that were granted “contingent on a change in ownership or control” within the meaning of Code Section 280G in the reverse order of date of grant of the awards (that is, the most recently granted equity awards will be cancelled first);

(3)

reduction of the accelerated vesting of equity awards in the reverse order of date of grant of the awards (that is, the vesting of the most recently granted equity awards will be cancelled first); and

(4)

reduction of employee benefits in reverse chronological order (that is, the benefit owed on the latest date following the occurrence of the event triggering the excise tax will be the first benefit to be reduced).

In no event will Executive have any discretion with respect to the ordering of payments or benefits.

(iii)

Firm. Unless the Company and Executive otherwise agree in writing, any determination required under this Section 6(b) will be made in writing by a nationally recognized accounting or valuation firm (the “Firm”) selected by the Company, whose determination will be conclusive and binding upon you and the Company for all purposes. For purposes of making the calculations required by this Section 6(b), the Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and Executive will furnish to the Firm such information and documents as the Firm may reasonably request in order to make a determination under this Section 6(b). The Company will bear all costs and make all payments for the Firm’s services relating to any calculations contemplated by this Section 6(b).

(c)

Section 409A.

(i)

Notwithstanding anything to the contrary in this Agreement, no severance pay or benefits to be paid or provided to Executive, if any, pursuant to this Agreement, when considered together with any other severance payments or separation benefits that are considered deferred compensation under Section 409A of the Code, and the final regulations and any guidance promulgated thereunder (“Section 409A”) (together, the “Deferred Compensation Separation Benefits”) will be paid or otherwise provided until Executive has a “separation from service” within the meaning of Section 409A.

(ii)

Any severance payments or benefits under this Agreement that would be considered Deferred Compensation Severance Benefits will be paid on, or, in the case of installments, will not commence until, the sixtieth (60th) day following Executive’s separation from service. Any installment payments that would have been made to Executive during the sixty (60) day period immediately following Executive’s separation from service but for the preceding sentence will be paid to Executive on the sixtieth (60th) day following Executive’s separation from service and the remaining payments shall be made as provided in this Agreement.

(iii)

Notwithstanding anything to the contrary in this Agreement, if Executive is a “specified employee” within the meaning of Section 409A at the time of Executive’s termination (other than due to death), then the Deferred Compensation Separation Benefits that are payable within the first six (6) months following Executive’s separation from service, will become payable on the first payroll date that occurs on or after the date six (6) months and one (1) day following the date of Executive’s separation from service. All subsequent Deferred Compensation Separation Benefits, if any, will be payable in accordance with the payment schedule applicable to each payment or benefit. Notwithstanding anything herein to the contrary, if Executive dies following Executive’s separation from service, but prior to the six (6) month anniversary of the separation from service, then any payments delayed in accordance with this paragraph will be payable in a lump sum as soon as administratively practicable after the date of Executive’s death and all other Deferred Compensation Separation Benefits will be payable in accordance with the payment schedule applicable to each payment or benefit. Each payment and benefit payable under this Agreement is intended to constitute separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.

(iv)

Any amount paid under this Agreement that satisfies the requirements of the “short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury Regulations will not constitute Deferred Compensation Separation Benefits for purposes of clause (i) above.

(v)

Any amount paid under this Agreement that qualifies as a payment made as a result of an involuntary separation from service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that does not exceed the Section 409A Limit (as defined below) will not constitute Deferred Compensation Separation Benefits for purposes of clause (i) above.

(vi)

The foregoing provisions are intended to comply with the requirements of Section 409A so that none of the severance payments and benefits to be provided hereunder will be subject to the additional tax imposed under Section 409A, and any ambiguities herein will be interpreted to so comply. The Company and Executive agree to work together in good faith to consider amendments to this Agreement and to take such reasonable actions which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition prior to actual payment to Executive under Section 409A. In no event will the Company have any liability or obligation to reimburse, indemnify, or hold harmless Executive (or any other person) for any taxes or costs that may be imposed on or incurred by Executive (or any other person) as a result of Section 409A.

(d)

Confidential Information Agreement. Executive’s receipt of any payments or benefits under Section 5 will be subject to Executive continuing to comply with the terms of Confidential Information Agreement (as defined in Section 8).

(e)

No Duty to Mitigate. Executive will not be required to mitigate the amount of any payment contemplated by this Agreement, nor will any earnings that Executive may receive from any other source reduce any such payment.

Definitions.

(a)

Cause. For purposes of this Agreement, “Cause” is defined as (i) an act of material dishonesty made by Executive in connection with Executive’s responsibilities as an employee, (ii) Executive’s conviction of, or plea of nolo contendere to, a felony or any crime involving fraud, embezzlement or any other act of moral turpitude, (iii) Executive’s gross misconduct, (iv) Executive’s unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom Executive owes an obligation of nondisclosure as a result of Executive’s relationship with the Company; (v) Executive’s willful breach of any obligations under any written agreement or covenant with the Company; or (vi) Executive’s continued failure to perform Executive’s employment duties after Executive has received a written demand of performance from the Company which specifically sets forth the factual basis for the Company’s belief that Executive has not substantially performed Executive’s duties and has failed to cure such non-performance to the Company’s satisfaction within 10 business days after receiving such notice.

(b)

Good Reason. For purposes of this Agreement, “Good Reason” means Executive’s resignation within thirty (30) days following the expiration of any Company cure period (discussed below) following the occurrence of one or more of the following, without Executive’s consent: (i) the assignment to Executive of any duties, or the reduction of Executive’s duties, either of which results in a material diminution of Executive’s authority, duties, or responsibilities with the Company in effect immediately prior to such assignment, or the removal of Executive from such position and responsibilities; provided, however, that a reduction in duties, position or responsibilities solely by virtue of the Company being acquired and made part of a larger entity, whether as a subsidiary, business unit or otherwise (as, for example, when the Chief Executive Officer of the Company remains the Chief Executive Officer of the Company following a Change in Control where the Company

becomes a wholly owned subsidiary of the acquiror, but is not made the Chief Executive Officer of the acquiring corporation) will not constitute “Good Reason;” (ii) a material reduction of Executive’s Base Salary (in other words, a reduction of more than 10% of Executive’s Base Salary in any one year); (iii) a material change in the geographic location at which Executive must perform services other than as contemplated by Section 1(d) (in other words, the relocation of Executive to a facility that is more than fifty (50) miles from the location Executive must initially perform services); and (iv) the failure of the Company to obtain assumption of this Agreement by any acquirer or successor. Executive will not resign for Good Reason without first providing the Company with written notice of the acts or omissions constituting the grounds for “Good Reason” within ninety (90) days of the initial existence of the grounds for “Good Reason” and a reasonable cure period of not less than thirty (30) days following the date of such notice.

(c)

Section 409A Limit. For purposes of this Agreement, “Section 409A Limit” will mean the lesser of two (2) times: (i) Executive’s annualized compensation based upon the annual rate of pay paid to Executive during the Company’s taxable year preceding the Company’s taxable year of Executive’s termination of employment as determined under Treasury Regulation 1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with respect thereto; or (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Code for the year in which Executive’s employment is terminated.

Confidential Information. Executive agrees to abide by the terms of the Confidential Information, Invention Assignment and Arbitration Agreement (the “Confidential Information Agreement”) entered into on or about the Effective Date.

Cooperation. The parties agree that certain matters in which the Executive will be involved during the Employment Term may necessitate the Executive’s cooperation in the future. Accordingly, following the termination of the Executive’s employment for any reason, to the extent reasonably requested by the Company, the Executive shall cooperate with the Company in connection with matters arising out of the Executive’s service to the Company; provided that, the Company shall make reasonable efforts to minimize disruption of the Executive’s other activities. The Company shall reimburse the Executive for reasonable expenses incurred in connection with such cooperation and, to the extent that Executive is required to spend substantial time on such matters, the Company shall compensate Executive at an hourly rate based on the Executive's Base Salary at the time of termination of the Executive’s employment.

10.

Representation of the Executive. The Executive represents and warrants to the Company that:

(a)

The Executive is not, as of the Effective Date, currently employed or engaged as an independent contractor with any other entity, and Executive’s acceptance of employment with the Company and the performance of his duties hereunder will not conflict with or result in a violation of, a breach of, or a default under any contract, agreement or understanding to which he is a party or is otherwise bound.

(b)

The Executive’s acceptance of employment with the Company and the performance of his duties hereunder will not violate any non-solicitation, non-competition or other similar covenant or agreement of a prior employer.

11.

Assignment. This Agreement will be binding upon and inure to the benefit of (a) the heirs, executors and legal representatives of Executive upon Executive’s death and (b) any successor of the Company. Any such successor of the Company will be deemed substituted for the Company under the terms of this Agreement for all purposes. For this purpose, “successor” means any person, firm, corporation or other business entity which at any time, whether by purchase, merger or otherwise, directly or indirectly acquires all or substantially all of the assets or business of the Company. None of the rights of Executive to receive any form of compensation payable pursuant to this Agreement may be assigned or transferred except by will or the laws of descent and distribution. Any other attempted assignment, transfer, conveyance or other disposition of Executive’s right to compensation or other benefits will be null and void.

Notices. All notices, requests, demands and other communications called for hereunder will be in writing and will be deemed given (i) on the date of delivery if delivered personally, (ii) one (1) day after being sent by a well established commercial overnight service, or (iii) four (4) days after being mailed by registered or certified mail, return receipt requested, prepaid and addressed to the parties or their successors at the following addresses, or at such other addresses as the parties may later designate in writing:

If to the Company:

Viracta Therapeutics, Inc.

2533 South Coast Highway 101, Suite 210

Cardiff, CA 92007

Attn: Chief Executive Officer

If to Executive:

at the last residential address known by the Company.

12.

Severability. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement will continue in full force and effect without said provision. The parties further agree that any such court is expressly authorized to modify any such unenforceable provision of this Agreement in lieu of severing such unenforceable provision from this Agreement in its entirety, whether by rewriting the offending provision, deleting any or all of the offending provision, adding additional language to this Agreement or by making such other modifications as it deems warranted to carry out the intent and agreement of the parties as embodied herein to the maximum extent permitted by law. The parties expressly agree that this Agreement as so modified by the court shall be binding upon and enforceable against each of them.

13.

Arbitration. Executive agrees that any and all controversies, claims, or disputes with anyone (including the Company and any employee, officer, director, shareholder or benefit plan of the Company in their capacity as such or otherwise) arising out of, relating to, or resulting from Executive’s service to the Company, will be subject to arbitration in accordance with the provisions of the Confidential Information Agreement.

14.

Integration. This Agreement, together with the Confidential Information Agreement, the Company’s equity incentive plans and the other equity documents referred to herein, represents the entire agreement and understanding between the parties as to the subject matter herein and

supersedes all prior or contemporaneous agreements whether written or oral. This Agreement may be modified only by agreement of the parties by a written instrument executed by the parties that is designated as an amendment to this Agreement.

15.

Modification: Waiver of Breach. No provision of this Agreement may be amended or modified unless such amendment or modification is agreed to in writing and signed by the Executive and by the Board or its designee. The waiver of a breach of any term or provision of this Agreement, which must be in writing, will not operate as or be construed to be a waiver of any other previous or subsequent breach of this Agreement.

16.

Headings. All captions and section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.

17.

Tax Withholding. All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.

18.

Governing Law. This Agreement will be governed by the laws of the State of California (with the exception of its conflict of laws provisions).

19.

Acknowledgment. Executive acknowledges that Executive has had the opportunity to discuss this matter with and obtain advice from Executive’s private attorney, has had sufficient time to, and has carefully read and fully understands all the provisions of this Agreement, and is knowingly and voluntarily entering into this Agreement.

20.

Counterparts. This Agreement may be executed in counterparts, and each counterpart will have the same force and effect as an original and will constitute an effective, binding agreement on the part of each of the undersigned.

Remainder of Page Intentionally Left Blank

IN WITNESS WHEREOF, each of the parties has executed this Agreement (in the case of the Company, by a duly authorized officer or director), effective as of the Effective Date.

COMPANY:

VIRACTA THERAPEUTICS, INC.

/s/ Mark Rothera

By: Mark Rothera

Title: President & Chief Executive Officer

EXECUTIVE:

/s/ Michael E. Faerm

Michael E. Faerm

Exhibit 99.1

Viracta Therapeutics Appoints Michael Faerm as Chief Financial Officer

San Diego, May 14, 2024 – Viracta Therapeutics, Inc. (Nasdaq: VIRX), a clinical-stage precision oncology company focused on the treatment and prevention of virus-associated cancers that impact patients worldwide, today announced the appointment of Michael Faerm as Chief Financial Officer, effective immediately. Mr. Faerm is a seasoned biotech executive with more than 25 years of experience in life sciences companies, equity research and investment banking.

“We are delighted to welcome Mike, an accomplished life sciences industry & Wall Street veteran who we believe will be instrumental in supporting our next phase of development,” said Mark Rothera, President and Chief Executive Officer of Viracta. “The encouraging clinical data generated to date underscores the potential of Nana-val’s innovative ‘Kick and Kill’ approach to effectively address the unmet treatment needs for patients with EBV-associated cancers. As we advance Nana-val through late-stage development and towards several pivotal milestones, we look forward to leveraging Mike’s strategic, operational and financial leadership.”

Mr. Faerm added, “I am thrilled to join Viracta at this exciting time and relish the opportunity to make a meaningful impact on the company’s future. I look forward to working with the talented team at Viracta to progress the development of Nana-val and advance the company’s mission to bring innovative therapies to patients with virus-associated cancers.”

Mr. Faerm most recently served as Interim Chief Financial Officer at Harpoon Therapeutics, Inc., which was acquired by Merck for approximately $680 million, and where he helped lead a $150 million PIPE financing. Prior to Harpoon, Mr. Faerm was the Chief Financial Officer of Artiva Biotherapeutics, Inc., where he led financial strategy and operations, and oversaw the company’s investor relations, financial planning, accounting and facilities functions. Previously, Mr. Faerm served as a consulting and interim Chief Financial Officer and Chief Business Officer for numerous biopharma companies. Prior to this, Mr. Faerm served as the Chief Business Officer of Innoviva, Inc. (formerly Theravance, Inc.), and earlier, worked in business development and strategic finance roles at Forest Laboratories and Regeneron Pharmaceuticals. Mr. Faerm’s Wall Street experience includes Credit Suisse and Wells Fargo Securities, where he was a senior equity research analyst covering the pharmaceutical sector, and Merrill Lynch, where he was an investment banker executing a wide range of strategic and capital markets transactions in biopharma and other healthcare sectors. Mr. Faerm earned his MBA from Harvard Business School, an M.S. in civil engineering from Stanford University, and a B.S. in civil engineering from Columbia University.

About Viracta Therapeutics, Inc.

Viracta is a clinical-stage precision oncology company focused on the treatment and prevention of virus-associated cancers that impact patients worldwide. Viracta’s lead product candidate is an all-oral combination therapy of its proprietary investigational drug, nanatinostat, and the antiviral agent valganciclovir (collectively referred to as Nana-val). Nana-val is currently being evaluated in multiple ongoing clinical trials, including a pivotal, global, multicenter, open-label Phase 2 basket trial for the treatment of multiple subtypes of relapsed or refractory (R/R) Epstein-Barr virus-positive (EBV+) lymphoma (NAVAL-1), as well as a multinational, open-label Phase 1b/2 clinical trial for the treatment of patients with recurrent or metastatic (R/M) EBV+ nasopharyngeal carcinoma (NPC) and other advanced EBV+ solid tumors. Viracta is also pursuing the application of its “Kick and Kill” approach in other EBV-related diseases.

For additional information, please visit www.viracta.com.

Forward-Looking Statements

This communication contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, statements regarding: the ability of Viracta’s product candidates to effectively address the unmet treatment needs for patients with EBV-associated cancers, the details, timeline and expected progress for Viracta's ongoing and anticipated clinical trials and updates regarding the same, the announced changes to management, statements concerning or implying Viracta’s future performance, goals and potential, and the ability of management personnel to contribute to the execution of Viracta’s vision, performance, goals and potential. Risks and uncertainties related to Viracta that may cause actual results to differ materially from those expressed or implied in any forward-looking statement include, but are not limited to: Viracta's ability to successfully enroll patients in and complete its ongoing and planned clinical trials; Viracta's plans to develop and commercialize its product candidates, including all oral combinations of nanatinostat and valganciclovir; the timing of initiation of Viracta's planned clinical trials; the timing of the availability of data from Viracta's clinical trials; previous preclinical and clinical results may not be predictive of future clinical results; the timing of any planned investigational new drug application or new drug application; Viracta's plans to research, develop, and commercialize its current and future product candidates; the clinical utility, potential benefits, and market acceptance of Viracta's product candidates; Viracta's ability to manufacture or supply nanatinostat, valganciclovir, and pembrolizumab for clinical testing; and Viracta's estimates regarding its ability to fund ongoing operations into 2025, future expenses, capital requirements, and need for additional financing in the future.

If any of these risks materialize or underlying assumptions prove incorrect, actual results could differ materially from the results implied by these forward-looking statements. Additional risks and uncertainties that could cause actual outcomes and results to differ materially from those contemplated by the forward-looking statements are included under the caption "Risk Factors" and elsewhere in Viracta's reports and other documents that Viracta has filed, or will file, with the SEC from time to time and available at www.sec.gov.

The forward-looking statements included in this communication are made only as of the date hereof. Viracta assumes no obligation and does not intend to update these forward-looking statements, except as required by law or applicable regulation.

Investor Relations Contact:

Ashleigh Barreto

Head of Investor Relations & Corporate Communications

Viracta Therapeutics, Inc.

abarreto@viracta.com

SOURCE Viracta Therapeutics, Inc.

Document And Entity Information	May 11, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	May 11, 2024
Entity Registrant Name	Viracta Therapeutics, Inc.
Entity Central Index Key	0001061027
Entity Emerging Growth Company	false
Entity File Number	000-51531
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	94-3295878
Entity Address, Address Line One	2533 S. Coast Hwy. 101, Suite 210
Entity Address, City or Town	Cardiff
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92007
City Area Code	(858)
Local Phone Number	400-8470
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, par value $0.0001 per share
Trading Symbol	VIRX
Security Exchange Name	NASDAQ