Blueprint
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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Preliminary
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Definitive
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Definitive
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Soliciting
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AZURRX BIOPHARMA, INC.
(Name
of Registrant as Specified in Its Charter)
_________________________________
(Name
of Person(s) Filing Proxy Statement, if other than the
Registrant)
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AzurRx BioPharma, Inc.
760 Parkside Avenue
Downstate Biotechnology Incubator, Suite 304
Brooklyn, New York 11226
Tel. (646) 699-7855
October
19, 2017
Dear
Stockholders of AzurRx BioPharma, Inc.:
You are
cordially invited to attend the Annual Meeting of Stockholders (the
“Annual
Meeting” or the “Meeting”) of AzurRx BioPharma,
Inc., which will be held at the Crown Plaza Hotel located at 690 US
Highway 46, Fairfield, New Jersey 07004, on November 28, 2017 at
9:00 AM, Eastern Standard Time.
In connection with the Annual Meeting, enclosed is our proxy
statement, describing the matters to be presented to stockholders
at the Meeting, and a proxy card. Please give this information your
careful attention. Whether or not you attend the Annual Meeting, it
is important that your shares be represented and voted at the
Meeting. You may submit your vote on the Internet or by telephone.
If you are a holder of record, you may also vote by mail by
completing, dating and signing the enclosed proxy card and
returning it in the enclosed, postage-paid envelope furnished for
that purpose. If you decide to attend the Annual Meeting, you will
be able to vote in person, even if you have previously submitted
your proxy, whether by Internet, telephone, or mail, which will be
superseded by the vote you cast at the Annual Meeting.
Our
Board of Directors has unanimously approved the proposals set forth
in the proxy statement and we recommend that you vote in favor of
each such proposal.
We look
forward to seeing you at the Annual Meeting.
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Johan
M. (Thijs) Spoor
Chief Executive Officer
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YOUR VOTE IS IMPORTANT
All stockholders are cordially invited to attend the Annual Meeting
in person. However, to ensure your representation at the Annual
Meeting, you are urged to vote by Internet, telephone or mail as
promptly as possible. Submitting your vote assures that a quorum
will be present at the Annual Meeting and will avoid the additional
expense of duplicate proxy solicitations. Any stockholder attending
the Annual Meeting may vote in person, even if he or she has
returned a proxy.
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AzurRx BioPharma, Inc.
760 Parkside Avenue
Downstate Biotechnology Incubator, Suite 304
Brooklyn, New York 11226
Tel. (646) 699-7855
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on November 28, 2017
Dear
Stockholders of AzurRx BioPharma, Inc.:
We are
pleased to invite you to attend the Annual Meeting of Stockholders
(the “Annual
Meeting” or “Meeting”) of AzurRx BioPharma,
Inc., a Delaware corporation (the “Company,” “us,” “we,” or “our”), which will be held at the
Crown Plaza Hotel located at 690 US Highway 46, Fairfield, New
Jersey 07004, on November 28, 2017 at 9:00 AM Eastern Standard
Time, for the following purposes:
1.
to
elect six directors to our Board of Directors, each to serve until
our next annual meeting of stockholders, or until their respective
successor is elected and qualified;
2.
to
ratify the appointment of Mazars
USA LLP (formerly, WeiserMazars) , as our independent
auditors for the year ending December 31, 2017; and
3.
to
vote upon such other matters as may properly come before the Annual
Meeting or any adjournment or postponement of the Annual
Meeting.
These
matters are more fully discussed in the attached proxy
statement.
The
close of business on September 29, 2017 (the “Record Date”) has been fixed as
the Record Date for the determination of stockholders entitled to
notice of and to vote at the Annual Meeting or any adjournments or
postponements thereof. Only holders of record of our common stock
at the close of business on the Record Date are entitled to notice
of and to vote at the Annual Meeting. A complete list of these
stockholders will be available for examination by any of our
stockholders for purposes pertaining to the Annual Meeting at our
corporate offices, 760 Parkside Avenue, Downstate Biotechnology
Incubator, Suite 304, Brooklyn, New York 11226, during normal
business hours for a period of ten days prior to the
Annual Meeting, and at the time and place of the Annual
Meeting.
Whether or not you expect to attend in person,
we urge you to vote your shares as promptly as possible by
Internet, telephone or mail so that your shares may be represented
and voted at the Annual Meeting. If your shares are held in
the name of a bank, broker or other fiduciary, please follow the
instructions on the voting instruction card furnished by the record
holder.
Our
Board of Directors recommends that you vote “FOR” each
of the director nominees identified in Proposal No. 1 and
“FOR” Proposal No. 2. Each of these Proposals are
described in detail in the accompanying proxy
statement.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL
MEETING TO BE HELD ON NOVEMBER 28, 2017:
THE ANNUAL REPORT AND PROXY STATEMENT
ARE AVAILABLE ONLINE AT: WWW.PROXYVOTE.COM.
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By
Order of the Board of Directors,
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Johan
M. (Thijs) Spoor
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President, Chief Executive Officer and Director
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Brooklyn,
New York
October
19, 2017
AzurRx BioPharma, Inc.
760 Parkside Avenue
Downstate Biotechnology Incubator, Suite 304
Brooklyn, New York 11226
Tel. (646) 699-7855
PROXY STATEMENT
The
enclosed proxy is solicited on behalf of the Board of Directors
(“Board”) of
AzurRx BioPharma, Inc., a Delaware corporation (the
“Company”), for
use at the Company’s 2017 Annual Meeting of Stockholders (the
“Annual
Meeting” or the “Meeting”) to be held on November
28, 2017 at 9:00 AM Eastern Standard Time, and at any adjournment
or postponement thereof, at the Crown Plaza Hotel located at 690 US
Highway 46, Fairfield, New Jersey 07004. This proxy statement,
the enclosed proxy card and a copy of our Annual Report on Form
10-K for the year ended December 31, 2016 (the “Annual Report”) are first being
mailed to stockholders entitled to vote on or about October 19,
2017.
This
proxy statement and the Annual Report can also be accessed online
as of October 19, 2017 at: www.proxyvote.com.
Voting
The
specific proposals to be considered and acted upon at our Annual
Meeting are each described in this proxy statement. Only
holders of our common stock as of the close of business on
September 29, 2017 (the “Record Date”) are entitled to
notice of and to vote at the Annual Meeting. On the Record Date,
there were 11,421,702 shares of common stock issued and
outstanding. Each holder of common stock is entitled to one vote
for each share held as of the Record Date.
Quorum
In
order for any business to be conducted at the Annual Meeting, the
holders of more than 50% of the shares entitled to vote must be
represented at the Annual Meeting, either in person or by properly
executed proxy. If a quorum is not present at the scheduled time of
the Annual Meeting, the stockholders who are present may adjourn
the Annual Meeting until a quorum is present. The time and place of
the adjourned Annual Meeting will be announced at the time the
adjournment is taken, and no other notice will be given. An
adjournment will have no effect on the business that may be
conducted at the Annual Meeting.
Required Vote for Approval
Proposal No. 1: Election of Directors.
The six nominees who receive the greatest number of votes cast at
the Annual Meeting by the shares present, either in person or by
proxy and entitled to vote, will be elected.
Proposal No. 2: Ratification of Appointment of
Auditors. The affirmative “FOR” vote of a
majority of the shares present in person or by proxy at the Annual
Meeting and entitled to vote is required for the ratification of
the selection of Mazars USA LLP, formerly WeiserMazars
(“Mazars USA”),
as our independent registered public accounting firm for the
current fiscal year.
Abstentions
and Broker Non-Votes
All
votes will be tabulated by the inspector of election appointed for
the Annual Meeting, who will separately tabulate affirmative and
negative votes, abstentions and broker non-votes. An abstention is
the voluntary act of not voting by a stockholder who is present at
a meeting and entitled to vote. A broker “non-vote”
occurs when a broker nominee holding shares for a beneficial owner
does not vote on a particular proposal because the nominee does not
have discretionary power for that particular item and has not
received instructions from the beneficial owner. If you hold your
shares in “street name” through a broker or other
nominee, your broker or nominee may not be permitted to exercise
voting discretion with respect to some of the matters to be acted
upon. If you do not give your broker or nominee specific
instructions regarding such matters, your proxy will be deemed a
“broker non-vote.”
Under
Delaware law and our Bylaws, each matter (other than the election
of directors) is determined by the vote of the holders of a
majority of the voting power present or represented by proxy. For
these matters, abstentions and broker non-votes will not be counted
as votes in favor of such proposals, and will also not be counted
as shares voting on such matter, but will be counted for the
purposes of determining whether there is a quorum present at the
Annual Meeting. Accordingly, abstentions and broker non-votes will
have no effect on the voting on the proposals referenced
above.
Voting and Revocation of Proxies
If your
proxy is properly returned to the Company, the shares represented
thereby will be voted at the Annual Meeting in accordance with the
instructions specified thereon. If you return your proxy without
specifying how the shares represented thereby are to be voted, the
proxy will be voted (i) FOR the election of the six
director nominees named in this proxy statement,
(ii) FOR ratification of the appointment
of Mazars USA as our independent auditors for the current fiscal
year, and (iii) at the discretion of the proxy holders on any other
matter that may properly come before the Annual Meeting or any
adjournment or postponement thereof.
You may
revoke or change your proxy at any time before the Annual Meeting
by filing, with our Corporate Secretary at our principal executive
offices, located at 760 Parkside Avenue, Downstate Biotechnology
Incubator, Suite 304, Brooklyn, New York 11226, a notice of
revocation or another signed proxy with a later date. You may also
revoke your proxy by attending the Annual Meeting and voting in
person. Attendance at the Annual Meeting alone will not revoke
your proxy. If you are a stockholder whose shares are not
registered in your own name, you will need additional documentation
from your broker or record holder to vote personally at the Annual
Meeting.
Solicitation
We will
bear the entire cost of solicitation, including the preparation,
assembly, printing and mailing of this proxy statement and the
Annual Report, as well as the preparation and posting of this proxy
statement, the Annual Report and any additional solicitation
materials furnished to the stockholders. Copies of any solicitation
materials will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially
owned by others so that they may forward this solicitation material
to such beneficial owners. In addition, we may reimburse such
persons for their costs in forwarding the solicitation materials to
such beneficial owners. The original solicitation of proxies may be
supplemented by a solicitation by telephone, e-mail or other means
by our directors, officers or employees. No additional compensation
will be paid to these individuals for any such services. Except as
described above, we do not presently intend to solicit proxies
other than by e-mail, telephone and mail.
MATTERS TO BE CONSIDERED AT THE ANNUAL MEETING
PROPOSAL NO. 1
ELECTION OF DIRECTORS
General
Our
Bylaws provide that the Board of Directors (“Board”) shall consist of one or
more members, and that upon any change in the number of directors,
any newly created directorships or eliminated directorships shall
be apportioned by the remaining members of the Board or by
stockholders. The Company’s Board currently consists of six
directors, each of whom has been nominated by the Nominating and
Corporate Governance Committee for election at the Annual Meeting.
The six director nominees for election at the Annual Meeting
consist of: Johan M. (Thijs) Spoor, Edward J. Borkowski, Maged
Shenouda, Charles J. Casamento, Dr. Alastair Riddell, and Dr. Vern
Schramm.
Each
nominee has confirmed that he is able and willing to continue
serving as a director if elected. If any of the nominees becomes
unable or unwilling to serve, your proxy will be voted for the
election of a substitute nominee recommended by the current
Board.
Required Vote and Recommendation
The
election of directors requires the affirmative vote of a plurality
of the voting shares present or represented by proxy and entitled
to vote at the Annual Meeting. The six nominees receiving the
highest number of affirmative votes will be elected. Unless
otherwise instructed or unless authority to vote is withheld,
shares represented by executed proxies will be voted
“FOR” the election of the nominees.
The
Board recommends that the stockholders vote “FOR” the election of
Messrs. Spoor, Borkowski, Shenouda, Casamento, and Drs. Riddell and
Schramm.
The
following sections sets forth certain information regarding the
nominees for election as directors of the Company. There are no
family relationships between any of the directors and the
Company’s executive officers.
BOARD OF DIRECTORS
Name
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Age
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Position
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Johan
M. (Thijs) Spoor
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45
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President,
Chief Executive Officer and Director
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Maged
Shenouda
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53
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Chief
Financial Officer and Director
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Edward
J. Borkowski (1)(2)
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58
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Director
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Alastair
Riddell, M.D., Ph.D. (1)(2)
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67
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Director
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Charles
J. Casamento (2)
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71
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Director
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Vern
Lee Schramm, Ph.D.
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76
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Director
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(1)
Member of the
Compensation Committee and the Nominating and Corporate Governance
Committee.
(2)
Member of the Audit
Committee.
Johan M. (Thijs) Spoor has been our
Chief Executive Officer since January 2016, President since April
2015, and Chairman from June 2014 to September 2015. From September
2010 until December 2015, he was the Chief Executive Officer of
FluoroPharma Medical, Inc. (OTCQB: FPMI), where he served as
Chairman of the Board from June 2012 until December 2015. From
December 2008 until February 2010, he worked at Oliver Wyman as a
consultant to pharmaceutical and medical device companies. Mr.
Spoor was an equity research analyst at J.P. Morgan from July 2007
through October 2008 and at Credit Suisse from November 2005
through July 2007, covering the biotechnology and medical device
industries. He holds a Pharmacy degree from the University of
Toronto as well as an MBA from Columbia
University.
We
believe that Mr. Spoor’s background in pharmacy, finance and
accounting and as a healthcare research analyst, as well as his
experience at both large and small healthcare companies, provides
him with a broad familiarity of the range of issues confronting the
Company, which qualifies him to serve as a member of our Board of
Directors.
Maged
Shenouda joined our Board of Directors in October 2015
and was appointed to serve as the Company’s Chief Financial
Officer in September 2017. Mr. Shenouda, a financial professional
in the biotechnology industry, was the head of business development
at Retrophin, Inc. from January 2014 until November 2014. From
January 2012 until September 2013, he served as head of East coast
operations for the Blueprint Life Science Group. Prior
thereto, Mr. Shenouda was a financial analyst, first at UBS from
January 2004 until March 2010 and later at Stifel Nicolaus from
June 2010 until November 2011. He currently serves on the board of
directors of Relmada Therapeutics, Inc. (OTCQB: RLMD). Mr. Shenouda
received an MBA from Rutgers Graduate School
of Management and BS in Pharmacy from St. John's College
of Pharmacy. He is a Registered Pharmacist in New Jersey and
California.
We
believe that Mr. Shenouda’s extensive knowledge of our
industry, his role in the governance of publicly held companies,
and his directorships in other life science companies qualify him
to serve as a member of our Board of Directors.
Edward Borkowski joined our Board
of Directors in May 2015, and is currently the Chairman of the
Board. Mr. Borkowski is a healthcare executive who previously
served as the Chief Financial Officer of Concordia International,
an international specialty pharmaceutical company. Prior to that,
he was the Chief Financial Officer of Amerigen Pharmaceuticals, a
generic pharmaceutical company with a focus on oral controlled
release products. Before working with Amerigen, he was the Chief
Financial Officer and Executive Vice President of Mylan N.V. In
addition, Mr. Borkowski previously held the position of Chief
Financial Officer with Convatec, a global medical device company
focused on wound care and ostomy, and Carefusion, a global medical
device company for which he helped lead its spin-out from Cardinal
Health into an independent public company. Mr. Borkowski also held
senior financial positions at Pharmacia and American Home Products
(Wyeth). He started his career with Arthur Andersen & Co. after
graduating from Rutgers University with an MBA in accounting. Mr.
Borkowski also graduated from Allegheny College with a degree in
Economics and Political Science. He is currently a Trustee and an
executive committee member of Allegheny College, and serves on the
board of directors of Co-Diagnostics, Inc.
We
believe Mr. Borkowski’s extensive healthcare and financial
experience, together with his experience with public companies,
provide the Company and management with valuable experience as the
Company executes its business plan.
Dr. Alastair Riddell joined our Board
of Directors in September 2015. He is also currently Chairman of a
private UK biotech company, Nemesis Biosciences Ltd, Chairman of a
UK AIM listed medical imaging company, Feedback plc, and Chairman
of the South West Academic Health Science Network, which fosters
links between the NHS, industry and universities. Dr. Riddell
has over 30 years’ experience in the pharmaceutical, life
science and biotech industries. After ten years directing phases
1-4 clinical trials of antibiotics, oncology and intensive care
products for companies including Lederle (now Pfizer) and Centocor
(now J&J), he spent five years managing sales and marketing for
oncology and imaging products for Amersham International (now GE
Healthcare). This led to 12 years as Chief Executive Officer for
three UK biotech companies, Pharmagene Laboratories, Ltd.
(“Pharmagene”),
Paradigm Therapeutics, Ltd. (“Paradigm”),
and Stem Cell Sciences, Inc. (“Stem Cell
Sciences”). In these roles, he
was the principal involved in the initial public offering of
Pharmagene on the London Stock Exchange, and the sale of Paradigm
and Stem Cell Sciences to Takeda in Japan and Stem Cells, Inc. in
the U.S., respectively. Dr. Riddell has since had several roles in
UK government initiatives related to promoting cooperation between
pharmaceutical companies and the NHS and assessing projects for
funding with Innovate UK. He began his career as a doctor in a
variety of hospital specialties and in general practice. Dr.
Riddell holds both Bachelor of Science and a Bachelor of Medical
Sciences degrees, and was recently awarded a Doctorate of Science,
Honoris Causa by Aston University.
We believe that Dr. Riddell’s background as a doctor
with experience in a variety of hospital specialties coupled
with his experience in the life sciences industry, including
directing all phases of clinical trials before moving to sales,
marketing, and general management, qualifies him to serve as a
member of our Board of Directors.
Charles J. Casamento joined our Board
of Directors in March 2017. Since 2007, he has been an executive
director and principal of The Sage Group, a health care advisory
group. In addition, Mr. Casamento is currently a member of the
Fordham University Science Council. He was President and Chief
Executive Officer of Osteologix from October 2004 until April 2007.
He was the founder of Questcor Pharmaceuticals, where he was
President, Chief Executive Officer and Chairman. At Questcor, he
acquired Acthar, a product whose sales eventually exceeded $1.0
billion. At RiboGene, Inc. he was President, Chief Executive
Officer and Chairman, and he was also co-founder, President and
Chief Executive Officer of Indevus (formerly Interneuron
Pharmaceuticals). He has held senior management positions at
Genzyme Corporation, where he was Senior Vice President, American
Hospital Supply, where he was Vice President of Business
Development for the Critical Care Division, Johnson & Johnson,
Hoffmann-LaRoche and Sandoz. Mr. Casamento currently sits on the
board of directors of International Stem Cell Corporation, Relmada
Therapeutics Inc., and Eton Pharmaceuticals, Inc. He holds a
Bachelor's Degree in Pharmacy from Fordham University in New York
City and an MBA from Iona College in New Rochelle, New
York.
We
believe that Mr. Casemento’s expertise and knowledge of the
financial community combined with his experience in the healthcare
sector qualify him to serve as a member of our Board of
Directors.
Dr. Vern Lee Schramm
joined our Board of Directors in October 2017, and has served as a
University Professor of the Albert Einstein College of Medicine
since July 1999. Dr. Schramm served as the Chairman of the
Department of Chemistry at the Albert Einstein College of Medicine
until 2015. His fields of interest include enzymatic transition
state analysis, transition state inhibitor design, biological
targets for inhibitor design, and mechanisms of
N-ribosyltransferases. Dr. Schramm was elected to the National
Academy of Sciences in 2007, has been awarded the Ruth Merns
Endowed Chair of Biochemistry, and served as the associate editor
for the Journal of the American Chemical Society from 2003 to 2012.
A frequent lecturer and presenter in topics related to chemical
biology, Dr. Schramm has been a consultant and advisor to Pico
Pharmaceuticals, Metabalon Biochemistry, Sirtris Scientific, and
BioCryst Pharmaceuticals. Dr. Schramm obtained his BS in
Bacteriology with an emphasis in chemistry from South Dakota State
College, a Master’s Degree in Nutrition with an emphasis in
biochemistry from Harvard University, and a Ph.D. in Mechanism of
Enzyme Action, Department of Biochemistry, from Australian National
University.
We
believe that Dr. Schramm’s substantial experience in
biochemistry and knowledge of the chemistry related to non-systemic
biologics will assist the Board of Directors in developing its
product candidates.
Non-Executive Director Compensation
Each of our non-executive directors are
compensated at a rate of $35,000 per year, payable in cash or
shares of common stock, for service on the Board of Directors and
the various Board committees, and receives an annual grant of
30,000 shares of our common stock. In addition, each non-executive
director serving as a director at the time of the Company’s
initial public offering was granted a one-time IPO-related payment
of $30,000, which was accrued at December 31, 2016 and was paid by
the issuance of shares of our common stock under our Amended and
Restated 2014 Omnibus Equity Incentive Plan (the
“2014 Plan”) in October 2017.
The following table sets forth certain information
relating to the compensation for each of our directors, who is not
also an executive officer of the Company, for the year ended
December 31, 2016. Compensation for executive officers who are also
serving as directors is available in section titled
“Summary Compensation
Table” below.
Name(1)
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Fees Earned or Paid in Cash
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Edward
J. Borkowski
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$36,250
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$168,750
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$0
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$0
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$205,000
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Maged Shenouda(2)
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$106,250
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$112,500
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$0
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$0
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$218,750
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Alastair
Riddell
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$36,250
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$112,500
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$0
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$0
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$148,750
|
(1)
Mr.
Charles J. Casamento and Dr. Vern Scramm did not begin serving on
our Board of Directors until March 2017 and October 2017,
respectively, and, accordingly, neither director received any
compensation from the Company during the year ended December 31,
2016.
(2)
Maged
Shenouda, who served as a non-executive member of our Board of
Directors during the year ended December 31, 2016, also earned
$70,000 in 2016 as a financial consultant and this amount is
included in accounts payable at December 31, 2016. Due to his
appointment as our Chief Financial Officer in September 2017, Mr.
Shenouda is no longer a non-executive member of our Board of
Directors.
In July 2016, we issued 45,000 shares of restricted common stock to
Mr. Borkowski and 30,000 shares of restricted common stock to each
of Mr. Shenouda and Dr. Riddell. The shares of restricted common
stock vest as follows: (i) 50% upon the first commercial sale in
the United States of MS1819, and (ii) 50% upon our total market
capitalization exceeding $1.0 billion for 20 consecutive trading
days, in each case subject to the earlier determination of a
majority of the Board.
In
February 2017, we issued 30,000 options with a ten-year term at an
exercise price of $4.48 to each of Messrs. Borkowski and Shenouda,
and Dr. Riddell, that vest 10,000 immediately and the balance
monthly over 24 months.
Compensation Committee Interlocks and Insider
Participation
None
of our executive officers currently serves, or has served during
the last three years, on the compensation committee of any other
entity that has one or more officers serving as a member of our
Board of Directors.
Although
Mr. Shenouda did act as a member of the Company’s
Compensation Committee prior to his appointment as Chief Financial
Officer during the last fiscal year ending December 31, 2016, he
resigned from the Compensation Committee when he was appointed
Chief Financial Officer of the Company in October of 2017 in order
to comply with Compensation Committee independence
requirements.
Board Attendance at Board of Directors, Committee and Stockholder
Meetings
Our
Board of Directors met six times and acted by unanimous written
consent four times during the fiscal year ended December 31,
2016. Our Audit Committee met four times and our
Compensation Committee met two times, and our Compensation
Committee requested action by the entire Board of Directors twice
during the same period. Our Nominating and Corporate
Governance Committee met once during the fiscal year ended December
31, 2016. Each director serving during fiscal 2016
attended all of the meetings of the Board of Directors and the
committees of the Board upon which such director served that were
held during the term of his service.
We do
not have a formal policy regarding attendance by members of the
Board of Directors at our annual meeting of stockholders, but
directors are encouraged to attend. We did not hold an annual
meeting of stockholders during our fiscal year ended December 31,
2016.
Director Independence
The
Board of Directors has reviewed the independence of our directors
based on the listing standards of the NASDAQ Stock Market. Based on
this review, the Board of Directors determined that each of Messrs.
Borkowski and Casamento, and Drs. Riddell and Schramm, are
independent as defined in Rule 5605(a)(2) of the NASDAQ Stock
Market Rules. In making this determination, our Board of Directors
considered the relationships that each of these non-employee
directors has with us and all other facts and circumstances our
Board of Directors deemed relevant in determining their
independence. As required under applicable NASDAQ rules, we
anticipate that our independent directors will meet in regularly
scheduled executive sessions at which only independent directors
are present.
Board Committees
Our
Board of Directors has established the following three standing
committees: Audit Committee, Compensation Committee, and Nominating
and Corporate Governance Committee. Our Board of Directors has
adopted written charters for each of these committees. Copies of
the charters are available on our website. Our Board of Directors
may establish other committees as it deems necessary or appropriate
from time to time.
Audit Committee
The
Audit Committee is responsible for, among other
matters:
●
appointing,
compensating, retaining, evaluating, terminating, and overseeing
our independent registered public accounting
firm;
●
discussing with our
independent registered public accounting firm the independence of
its members from its management;
●
reviewing with our
independent registered public accounting firm the scope and results
of their audit;
●
approving all audit
and permissible non-audit services to be performed by our
independent registered public accounting firm;
●
overseeing the
financial reporting process and discussing with management and our
independent registered public accounting firm the interim and
annual financial statements that we file with the Securities and
Exchange Commission ("SEC");
●
reviewing and
monitoring our accounting principles, accounting policies,
financial and accounting controls, and compliance with legal and
regulatory requirements;
●
coordinating the
oversight by our Board of Directors of our code of business conduct
and our disclosure controls and procedures;
●
establishing
procedures for the confidential and/or anonymous submission of
concerns regarding accounting, internal controls or auditing
matters; and
●
reviewing and
approving related-person transactions.
Our
Audit Committee currently consists of Messrs. Borkowski and
Casamento, and Dr. Riddell, with Mr. Borkowski serving as the
Chairman. The rules of the NASDAQ stock market require our Audit
Committee to consist entirely of independent directors. Our Board
of Directors has affirmatively determined that Messrs. Borkowski
and Casamento, and Dr. Riddell, meet the definition of
“independent director” for purposes of serving on an
Audit Committee under Rule 10A-3 and the NASDAQ Stock Market
Rules. Our Board of Directors has determined that Messrs. Borkowski
and Casamento each qualify as an “audit committee financial
expert,” as such term is defined in Item 407(d)(5) of
Regulation S-K.
Compensation Committee
The
Compensation Committee is responsible for, among other
matters:
●
reviewing key
employee compensation goals, policies, plans and
programs;
●
reviewing and
approving the compensation of our directors and executive
officers;
●
reviewing and
approving employment agreements and other similar arrangements
between us and our executive officers; and
●
appointing and
overseeing any compensation consultants or advisors.
Our
Compensation Committee consists of Mr. Borkowski and Dr. Riddell,
with Dr. Riddell serving as the Chairman. The rules of the NASDAQ
stock market require our Compensation Committee consist entirely of
independent directors. Our Board of Directors has affirmatively
determined that Mr. Borkowski and Dr. Riddell meet the definition
of “independent director” for purposes of serving on a
Compensation Committee under the rules of the NASDAQ Stock
Market.
Nominating and Corporate Governance Committee
The
purpose of the Nominating and Corporate Governance Committee is to
assist the Board of Directors in identifying qualified individuals
to become members of the Board of Directors, in determining the
composition of the Board of Directors and in monitoring the process
to assess Board effectiveness. In addition, the Nominating and
Corporate Governance Committee will be responsible for developing
and recommending to our Board corporate governance guidelines
applicable to the Company and advising our Board of Directors on
corporate governance matters. Our Nominating and Corporate
Governance Committee consists of Mr. Borkowski and Dr. Riddell,
with Mr. Borkowski serving as the Chairman.
Board Leadership Structure
Currently, our principal executive officer is
Johan M. (Thijs) Spoor and our Chairman of the Board is Edward
J. Borkowski. Our Board of Directors has determined
that it is in the best interests of the Board and the Company to
separate the roles of the Chief Executive Officer and Chairman of
the Board. The Board believes this structure increases the
Board’s independence from management and, in turn, leads to
better monitoring and oversight of management. Although the Board
believes the Company is currently best served by separating the
role of Chairman of the Board and Chief Executive Officer, the
Board of Directors
will review and consider the continued appropriateness of this
structure on an annual basis.
Risk Oversight
Our
Board of Directors
oversees a company-wide approach to risk management, determines the
appropriate risk level for us generally, assesses the specific
risks faced by us and reviews the steps taken by management to
manage those risks. Although our Board of Directors has ultimate
oversight responsibility for the risk management process, its
committees oversee risk in certain specified areas.
Specifically, our
Compensation Committee is responsible for overseeing the management
of risks relating to our executive compensation plans and
arrangements, and the incentives created by the compensation awards
it administers. Our Audit Committee oversees management of
enterprise risks and financial risks, as well as potential
conflicts of interests. Our Board of Directors
will be responsible for overseeing the management of risks
associated with the independence of our Board.
Code of Business Conduct and Ethics
Our
Board of Directors adopted a code of business conduct and ethics
that applies to our directors, officers and employees. A copy of
this code is available on our website. We intend to disclose on our
website any amendments to the code of business conduct and ethics
and any waivers of the code of business conduct and ethics that
apply to our principal executive officer, principal financial
officer, principal accounting officer, controller, or persons
performing similar functions.
Director Nomination Process
The
Nominating and Corporate Governance Committee identifies director
nominees by first considering those current members of the Board of
Directors who are willing to continue service. Current members of
the Board of Directors with skills and experience that are relevant
to our business and who are willing to continue service are
considered for re-nomination, balancing the value of continuity of
service by existing members of the Board of Directors with that of
obtaining a new perspective. Nominees for director are selected by
a majority of the members of the Board of Directors. Although the
Company does not have a formal diversity policy, in considering the
suitability of director nominees, the Nominating and Corporate
Governance Committee considers such factors as it deems appropriate
to develop a Board and committees that are diverse in nature and
comprised of experienced and seasoned advisors. Factors considered
by the Nominating and Corporate Governance Committee include
judgment, knowledge, skill, diversity, integrity, experience with
businesses and other organizations of comparable size, including
experience in the biopharma industry, clinical studies, FDA
compliance, intellectual property, business, finance,
administration or public service, the relevance of a
candidate’s experience to our needs and experience of other
Board members, experience with accounting rules and practices, the
desire to balance the considerable benefit of continuity with the
periodic injection of the fresh perspective provided by new
members, and the extent to which a candidate would be a desirable
addition to the Board of Directors and any committees of the
Board.
The
Nominating and Corporate Governance Committee and the Board of
Directors may consider suggestions for persons to be nominated for
director that are submitted by stockholders. The Nominating and
Corporate Governance Committee will evaluate stockholder
suggestions for director nominees in the same manner as it
evaluates suggestions for director nominees made by management,
then-current directors or other appropriate sources.
Section 16(a) Beneficial Ownership Reporting
Compliances
Section
16(a) of the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”), requires our officers, directors, and persons
who beneficially own more than 10% of our common stock to file
reports of ownership and changes in ownership with the SEC.
Officers, directors, and greater-than-ten-percent shareholders are
also required by the SEC to furnish us with copies of all Section
16(a) forms that they file.
Based
solely upon a review of these forms that were furnished to us, we
believe that all reports required to be filed by these individuals
and persons under Section 16(a) of the Exchange Act were filed
during the year ended December 31, 2016, and that such filings were
timely.
Stockholder Communications
If you
wish to communicate with the Board of
Directors, you may send your communication in writing
to:
AzurRx
BioPharma, Inc.
760
Parkside Avenue
Downstate
Biotechnology Incubator, Suite 304
Brooklyn,
New York 11226
Attn:
Corporate Secretary
You
must include your name and address in the written communication and
indicate whether you are a stockholder of the Company. The
Secretary will review any communication received from a
stockholder, and all material and appropriate communications from
stockholders will be forwarded to the appropriate director or
directors or committee of the Board of Directors
based on the subject matter.
EXECUTIVE OFFICERS AND EXECUTIVE COMPENSATION
Executive Officers
The
Company’s executive officers are appointed by the
Board of Directors
and serve at the discretion of the Board, subject to the terms of
any employment agreements they may have with the Company. The
following is a brief description of the present and past business
experience of each of the Company’s current executive
officers.
Name
|
Age
|
Position
|
Johan
M. (Thijs) Spoor
|
45
|
President,
Chief Executive Officer and Director
|
Maged
Shenouda
|
53
|
Chief
Financial Officer and Director
|
Daniel
Dupret
|
60
|
Chief
Scientific Officer
|
Johan M (Thijs)
Spoor. Please see Mr. Spoor’s biography on page
3 of this proxy
statement, under the section titled “Directors.”
Maged Shenouda.
Please see Mr. Shendouda’s biography on page 3 of this proxy
statement, under the section titled “Directors.”
Daniel Dupret has served as
President of AzurRx SAS since its formation in 2007, and as our
Chief Scientific Officer since the acquisition of AzurRx SAS in
June 2014. Previously, Dr. Dupret founded Proteus SA in 1998 and
served as its President and Chief Executive Officer from 1998 to
2007. He founded Appligene SA in 1985 and served as its Chief
Scientific Officer, then President and Chief Executive Officer
until 1998. From 1982 to 1985, he served as project leader at
Transgene SA. In parallel to his biotechnology career, Daniel
Dupret served as an advisor for the French government and the
European commission in connection with grant commission and funding
of early-stage biotechnology companies. From 2003 to 2007, he
served as President of the Board of the University of
Nîmes.
Summary Compensation Table
The
following table provides information regarding the compensation
paid during the years ended December 31, 2016 and 2015 to our
principal executive officer, principal financial officer and
certain of our other executive officers, who are collectively
referred to as “named executive officers” elsewhere in
this proxy statement.
Name
and Principal Position (1)
|
|
|
|
|
|
|
Johan M. (Thijs)
Spoor,
|
2016
|
$336,458
|
-0-
|
$210,000
|
-0-
|
$546,458
|
President and Chief
Executive Officer
|
2015
|
$478,400
|
-0-
|
-0-
|
-0-
|
$478,400
|
|
|
|
|
|
|
Daniel
Dupret,
|
2016
|
$204,215
|
-0-
|
-0-
|
-0-
|
$204,215
|
Chief Scientific
Officer
|
2015
|
$204,675
|
-0-
|
-0-
|
-0-
|
$204,675
|
(1)
As Mr.
Shenouda was appointed to serve as the Company’s Chief
Financial Officer in September 2017, he was not one of the
Company’s named executive officers for the year ended
December 31, 2016, and is not included in this table.
Overview of Our Fiscal 2016 and 2015 Executive
Compensation
Elements of Compensation
Our
executive compensation program consisted of the following
components of compensation in 2016 and 2015:
Base Salary. Each named executive
officer receives a base salary for the expertise, skills, knowledge
and experience he offers to our management team. Base salaries are
periodically adjusted to reflect:
●
The
nature, responsibilities, and duties of the officer’s
position;
●
The
officer’s expertise, demonstrated leadership ability, and
prior performance;
●
The
officer’s salary history and total compensation, including
annual cash incentive awards and annual equity incentive awards;
and
●
The
competitiveness of the officer’s base salary.
Each
named executive officer’s base salary for fiscal 2016 and
2015 is listed in the Summary Compensation Table.
Employment Agreements and Potential Payments upon Termination or
Change of Control
Johan M. (Thijs) Spoor
Effective as of
January 1, 2016, we entered into an employment agreement with Mr.
Spoor to serve as our President and Chief Executive Officer for a
term of three years. The employment agreement with Mr. Spoor
provides for a base annual salary of $350,000, which annual salary
was increased to $425,000 upon completion of our initial public
offering and listing of our common stock on the NASDAQ Stock
Market. Mr. Spoor’s annual salary is subject an annual
milestone bonus, at the sole discretion of the Board of Directors
based on his attainment of certain financial, clinical development,
and/or business milestones to be established annually by our Board
of Directors or Compensation Committee. The employment
agreement is terminable by either party at any time. In the event
of termination by us without cause or by Mr. Spoor for good reason
not in connection with a change of control, as those terms are
defined in the agreement, he is entitled to twelve months’
severance payable over such period. In the event of termination by
us without cause or by Mr. Spoor for good reason in connection with
a change of control, as those terms are defined in the agreement,
he will receive his eighteen months’ severance.
Subject
to any required consents from third parties, on or as promptly as
practicable following the effective date, Mr. Spoor shall be
granted 100,000 shares of restricted common stock that are to be
issued as follows: (i) 50,000 upon the first commercial sale in the
United States of MS1819, and (ii) 50,000 upon our total market
capitalization exceeding $1.0 billion for 20 consecutive trading
days, in each case subject to the earlier determination of a
majority of the Board of
Directors.
In
addition, subject to any required consents from third parties, Mr.
Spoor’s employment agreement provided for the issuance to Mr.
Spoor of a ten-year option to be governed by the terms of the 2014
Plan to purchase 380,000 shares of common stock, which options
vested or will vest as follows: (i) 100,000 upon consummation of
the initial public offering; (ii) 50,000 upon initiation of a Phase
II clinical trial in the United States for MS1819; (iii) 50,000
completion of a Phase II clinical trial in the United States for
MS1819; (iv) 100,000 upon initiation of a Phase III clinical trial
in the United States for MS1819; (v) 50,000 upon initiation of a
Phase I clinical trial in the United States for any product other
than MS181; and (vi) 30,000 upon the determination of a majority of
our Board. The employment agreement contains standard confidential
and proprietary information, and one-year non-competition and
non-solicitation provisions.
On
February 3, 2017, Mr. Spoor was issued a ten-year option to
purchase 100,000 shares of common stock at an exercise price of
$4.48 per share, which option vested immediately. In addition, on
September 29, 2017, Mr. Spoor was issued 100,000 shares of
restricted common stock, subject to vesting conditions. Each of the
above-referenced issuances were in satisfaction of the
Company’s obligation to issue the 380,000 options to Mr.
Spoor under the terms of his employment agreement.
Maged Shenouda
Pursuant to the employment agreement entered into
by the Company and Mr. Shenouda on September 26, 2017, Mr. Shenouda
will serve as the Company’s Executive Vice-President of
Corporate Development and Chief Financial Officer for a term of
three years, during which time he will receive a base salary of
$275,000, which amount may be increased by the Company at any time
during the term of the agreement. In addition to the base salary,
Mr. Shenouda will be eligible to receive a cash bonus based on the
achievement of certain financial, clinical development, and/or
business milestones, which milestones will be established annually
by the Company’s Board of Directors or the Compensation
Committee (the “Annual Milestone
Bonus”). Upon execution
of Mr. Shenouda’s employment agreement, Mr. Shenouda became
entitled to receive options to purchase 100,000 shares of the
Company’s common stock pursuant to the Company’s 2014
Plan (the “Option”), which Option will vest as follows so
long as Mr. Shenouda is serving as either Executive
Vice-President of Corporate Development or as Chief Financial
Officer: (i) 75% upon acceptance of a US IND for MS1819, and (ii)
25% upon the completion of a Phase IIa clinical trial for MS1819.
The Option shall have a per share exercise price equal to the
closing price of the Company’s common stock on the NASDAQ
Capital Market on the trading day immediately prior to the date of
issuance, and will expire on September 25,
2027.
The
Company may terminate Mr. Shenouda’s employment agreement at
any time, with or without Cause, as such term is defined in the
agreement. If the Company terminates the agreement without Cause,
or if the agreement is terminated due to a Change of Control, as
such term is defined in the agreement, Mr. Shenouda will be
entitled to (i) all salary owed through the date of termination;
(ii) any unpaid Annual Milestone Bonus; (iii) severance in the
form of continuation of his salary for the greater of a period of
12 months following the termination date or the remaining term of
the employment agreement; (iv) payment of premiums to cover COBRA
for a period of 12 months following the termination date; (v) a
prorated annual bonus equal to the target Annual Milestone Bonus,
if any, for the year of termination multiplied by the formula set
forth in the agreement; and (vi) immediate accelerated vesting of
any unvested options or other unvested awards.
Daniel Dupret
If we
terminate Dr. Dupret’s employment other than for cause, we
will pay him twelve months of his base salary as
severance.
Outstanding Equity Incentive Awards at Fiscal Year-End
There
were no outstanding equity awards held by our named executive
officers as of December 31, 2016.
Warrant Exercises and Stock Vested
No
officers or directors exercised warrants and no stock vested during
the years ended December 31, 2016.
Amended and Restated 2014 Omnibus Equity Incentive
Plan
Our
Board of Directors and stockholders have adopted and approved the
2014 Plan, which is a comprehensive incentive compensation plan
under which we can grant equity-based and other incentive awards to
our officers, employees, directors, consultants and advisers. The
purpose of the 2014 Plan is to help us attract, motivate and retain
such persons with awards under the 2014 Plan and thereby enhance
stockholder value.
Administration. The 2014 Plan is
administered by the Compensation Committee of the Board
of
Directors, which consists of two members of the Board, each
of whom is a “non-employee director” within the meaning
of Rule 16b-3 promulgated under the Exchange Act and an
“outside director” within the meaning of Section 162(m)
of the Internal Revenue Code (the “Code”). Among other things, the
Compensation Committee has complete discretion, subject to the
express limits of the 2014 Plan, to determine the directors,
employees and nonemployee consultants to be granted an award, the
type of award to be granted the terms and conditions of the award,
the form of payment to be made and/or the number of shares of
common stock subject to each award, the exercise price of each
option and base price of each stock appreciation right
(“SAR”), the
term of each award, the vesting schedule for an award, whether to
accelerate vesting, the value of the common stock underlying the
award, and the required withholding, if any. The Compensation
Committee may amend, modify or terminate any outstanding award,
provided that the participant’s consent to such action is
required if the action would impair the participant’s rights
or entitlements with respect to that award. The Compensation
Committee is also authorized to construe the award agreements, and
may prescribe rules relating to the 2014 Plan. Notwithstanding the
foregoing, the Compensation Committee does not have any authority
to grant or modify an award under the 2014 Plan with terms or
conditions that would cause the grant, vesting or exercise thereof
to be considered nonqualified “deferred compensation”
subject to Code Section 409A.
Grant of Awards; Shares Available for
Awards. The 2014 Plan provides for the grant of stock
options, SARs, performance share awards, performance unit awards,
distribution equivalent right awards, restricted stock awards,
restricted stock unit awards and unrestricted stock awards to
non-employee directors, officers, employees and nonemployee
consultants of the Company or its affiliates. The aggregate number
of shares of common stock that may be issued under the 2014 Plan
shall not exceed 10% of the issued and outstanding shares of common
stock on an as converted basis (the “As Converted Shares”), on a
rolling basis. For calculation purposes, the As Converted Shares
shall include all shares of common stock and all shares of common
stock issuable upon the conversion of outstanding preferred stock
and other convertible securities, but shall not include any shares
of common stock issuable upon the exercise of options, warrants and
other convertible securities issued pursuant to the 2014 Plan. The
number of authorized shares of common stock reserved for issuance
under the 2014 Plan shall automatically be increased concurrently
with our issuance of fully paid and non-assessable shares of As
Converted Shares. Shares shall be deemed to have been
issued under the 2014 Plan solely to the extent actually issued and
delivered pursuant to an award. If any award expires, is cancelled,
or terminates unexercised or is forfeited, the number of shares
subject thereto is again available for grant under the 2014
Plan.
The
number of shares of common stock for which awards may be granted
under the 2014 Plan to a participant who is an employee in any
calendar year is limited to 300,000 shares. Future new hires and
additional non-employee directors and/or consultants would be
eligible to participate in the 2014 Plan as well. The number of
stock options and/or shares of restricted stock to be granted to
executives and directors cannot be determined at this time as the
grant of stock options and/or shares of restricted stock is
dependent upon various factors such as hiring requirements and job
performance.
Stock Options. The 2014 Plan provides
for either “incentive stock options”
(“ISOs”), which
are intended to meet the requirements for special federal income
tax treatment under the Code, or “nonqualified stock
options” (“NQSOs”). Stock options may be
granted on such terms and conditions as the Compensation Committee
may determine; provided,
however, that the per share exercise price under a stock
option may not be less than the fair market value of a share of
common stock on the date of grant and the term of the stock option
may not exceed 10 years (110% of such value and five years in the
case of an ISO granted to an employee who owns (or is deemed to
own) more than 10% of the total combined voting power of all
classes of the Company's capital stock or a parent or subsidiary of
the Company). ISOs may only be granted to employees. In addition,
the aggregate fair market value of common stock covered by one or
more ISOs (determined at the time of grant), which are exercisable
for the first time by an employee during any calendar year may not
exceed $100,000. Any excess is treated as a NQSO.
Stock Appreciation Rights. A SAR
entitles the participant, upon exercise, to receive an amount, in
cash or stock or a combination thereof, equal to the increase in
the fair market value of the underlying common stock between the
date of grant and the date of exercise. SARs may be granted in
tandem with, or independently of, stock options granted under the
2014 Plan. A SAR granted in tandem with a stock option (i) is
exercisable only at such times, and to the extent, that the related
stock option is exercisable in accordance with the procedure for
exercise of the related stock option; (ii) terminates upon
termination or exercise of the related stock option (likewise, the
common stock option granted in tandem with a SAR terminates upon
exercise of the SAR); (iii) is transferable only with the related
stock option; and (iv) if the related stock option is an ISO, may
be exercised only when the value of the stock subject to the stock
option exceeds the exercise price of the stock option. A SAR that
is not granted in tandem with a stock option is exercisable at such
times as the Compensation Committee may specify.
Performance Shares and Performance Unit
Awards. Performance share and performance unit awards
entitle the participant to receive cash or shares of common stock
upon the attainment of specified performance goals. In the case of
performance units, the right to acquire the units is denominated in
cash values.
Distribution Equivalent Right Awards. A
distribution equivalent right award entitles the participant to
receive bookkeeping credits, cash payments and/or common stock
distributions equal in amount to the distributions that would have
been made to the participant had the participant held a specified
number of shares of common stock during the period the participant
held the distribution equivalent right. A distribution equivalent
right may be awarded as a component of another award under the 2014
Plan, where, if so awarded, such distribution equivalent right will
expire or be forfeited by the participant under the same conditions
as under such other award.
Restricted Stock Awards and Restricted Stock
Unit Awards. A restricted stock award is a grant or sale of
common stock to the participant, subject to our right to repurchase
all or part of the shares at their purchase price (or to require
forfeiture of such shares if issued to the participant at no cost)
in the event that conditions specified by the Compensation
Committee in the award are not satisfied prior to the end of the
time period during which the shares subject to the award may be
repurchased by or forfeited to us. Our restricted stock unit
entitles the participant to receive a cash payment equal to the
fair market value of a share of common stock for each restricted
stock unit subject to such restricted stock unit award, if the
participant satisfies the applicable vesting
requirement.
Unrestricted Stock Awards. An
unrestricted stock award is a grant or sale of shares of our common
stock to the participant that is not subject to transfer,
forfeiture or other restrictions, in consideration for past
services rendered to the Company or an affiliate or for other valid
consideration.
Change-in-Control Provisions. In
connection with the grant of an award, the Compensation Committee
may provide that, in the event of a change in control, such award
will become fully vested and immediately exercisable.
Amendment and Termination. The
Compensation Committee may adopt, amend and rescind rules relating
to the administration of the 2014 Plan, and amend, suspend or
terminate the 2014 Plan, but no such amendment or termination will
be made that materially and adversely impairs the rights of any
participant with respect to any award received thereby under the
2014 Plan without the participant’s consent, other than
amendments that are necessary to permit the granting of awards in
compliance with applicable laws. We have attempted to structure the
2014 Plan so that remuneration attributable to stock options and
other awards will not be subject to the deduction limitation
contained in Code Section 162(m).
PROPOSAL
NO. 2
RATIFICATION OF THE APPOINTMENT OF
MAZARS USA TO SERVE AS OUR
REGISTERED PUBLIC ACCOUNTING FIRM FOR THE CURRENT FISCAL
YEAR
Upon
recommendation of the Audit Committee of the Board
of
Directors, the Board appointed Mazars USA LLP, formerly
WeiserMazars (“Mazars
USA”), as our independent registered public accounting
firm for the current fiscal year and hereby recommends that the
stockholders ratify such appointment.
The
Board of Directors
may terminate the appointment of Mazars USA as the Company’s
independent registered public accounting firm without the approval
of the Company’s stockholders whenever the Board deems such
termination necessary or appropriate.
Representatives of
Mazars USA will be present at the Annual Meeting or available by
telephone and will have an opportunity to make a statement if they
so desire and to respond to appropriate questions from
stockholders.
Audit Fees
The
following table presents fees for professional services billed by
Mazars USA for the fiscal years ended December 31, 2016 and
2015.
|
For the years ended
December 31,
|
|
|
|
Audit fees(1)
|
$284,779
|
$114,373
|
Audit-related fees(2)
|
181,437
|
33,000
|
Tax fees(3)
|
12,600
|
2,000
|
All other fees(4)
|
-
|
-
|
Total
|
$478,816
|
$149,373
|
(1)
Professional services rendered by Mazars USA for the audit of our
annual financial statements and review of financial statements
included in our Form 10-Q’s.
(2)
The
aggregate fees billed for assurance and related services by Mazars
USA that are reasonably related to the performance of the audit or
review of our financial statements and are not reported under Note
1 above.
(3)
The
aggregate fees billed for professional services rendered by Mazars
USA for tax compliance, tax advice, and tax planning.
(4)
The
aggregate fees billed for products and services provided by Mazars
USA other than the services reported in Notes 1–3
above.
Required Vote and Recommendation
Ratification of the
selection of Mazars USA as the Company’s independent auditors
for the fiscal year ending December 31, 2017 requires the
affirmative vote of a majority of the shares present or represented
by proxy and entitled to vote at the Annual Meeting. Unless
otherwise instructed on the proxy or unless authority to vote is
withheld, shares represented by executed proxies will be voted
“FOR” the ratification of Mazars USA as the
Company’s independent auditors for the fiscal year ending
December 31, 2017.
The Board recommends that stockholders vote
“FOR”
the ratification of the selection of Mazars USA as our independent
auditors for the fiscal year ending December 31, 2017.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDERS MATTERS
The following tables set forth information regarding shares of our
common stock beneficially owned as of October 19, 2017
by:
(i)
|
each of
our officers and directors;
|
(ii)
|
all
officers and directors as a group; and
|
(iii)
|
each
person known by us to beneficially own five percent or more of the
outstanding shares of our common stock. Percent
ownership is calculated based on 11,554,146 shares of common stock
outstanding at October 19, 2017.
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Name and Address of Beneficial Owner (1)
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Number
of Shares (2)
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Percent Ownership of Class (3)
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Johan
M. (Thijs) Spoor, President and Chief Executive
Officer (4)
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539,885
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4.6%
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Daniel
Dupret, Chief Scientific Officer
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–
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*
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Maged
Shenouda, Chief Financial Officer, Director (5)
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89,167
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*
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Alastair
Riddell, Director (6)
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79,167
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*
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Edward
J. Borkowski, Director (7)
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364,653
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3.1%
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Charles
J. Casamento, Director
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17,500
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*
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Vern
Lee Schramm, Ph.D., Director
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–
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*
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All
directors and executive officers as a group (7
persons)
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1,090,372
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9.1%
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5% Stockholders
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|
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Edmond
Burke Ross, Jr. (8)(9)
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2,433,153
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19.7%
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Pelican
Partners LLC (10)
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1,787,796
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15.5%
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ADEC
Private Equity (11)
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1,676,009
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13.7%
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EBR
Ventures, LLC (9)(12)
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700,000
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6.0%
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* Less
than 1%.
(1)
Unless otherwise
indicated, the address of such individual is c/o AzurRx BioPharma,
Inc., 760 Parkside Avenue, Downstate Biotechnology Incubator, Suite
304, Brooklyn, NY 11226.
(2)
Beneficial
ownership is determined in accordance with the rules of the SEC and
generally includes voting or investment power with respect to
securities. All entries exclude beneficial ownership of shares
issuable pursuant to warrants, options or other derivative
securities that have not vested or that are not otherwise
exercisable as of the date hereof or which will not become vested
or exercisable within 60 days of October 19, 2017.
(3)
Percentages are
rounded to nearest percent. Percentages are based on 11,554,146
shares of common stock outstanding. Warrants, options or other
derivative securities that are presently exercisable or exercisable
within 60 days are deemed to be beneficially owned by the person
holding such derivative securities for the purpose of computing the
percentage ownership of that person, but are not treated as
outstanding for the purpose of computing the percentage of any
other person.
(4)
Includes (i) 34
shares of common stock; (ii) 100,000 restricted shares of common
stock; (iii) 100,000 shares of common stock issuable upon exercise
of options; (iv) 300,000 shares of common stock that may be
purchased pursuant to options granted by third parties at an
exercise price of $1.00 per share; and (v) 39,851 shares of common
stock held in a trust for the benefit of Mr. Spoor’s spouse
and minor children. Mr. Spoor disclaims beneficial ownership
with respect to such shares of common stock held in
trust.
(5)
Includes (i) 42,500
shares of common stock; (ii) 30,000 restricted shares of common
stock; and (iii) 16,667 shares of common stock issuable upon the
exercise of stock options.
(6)
Includes (i) 32,500
shares of common stock; (ii) 30,000 restricted shares of common
stock; and (iii) 16,667 shares of common stock issuable upon the
exercise of stock options.
(7)
Includes (i)
275,626 shares of common stock; (ii) 45,000 restricted shares of
common stock; (iii) 13,680 shares of common stock issuable upon the
exercise of warrants; (iv) 16,667 shares of common stock issuable
upon exercise of options; and (v) 13,680 shares of common stock
issuable upon exercise of warrants held by Nancy McCormick, Mr.
Borkowski’s spouse.
(8)
Based upon
information contained in a Schedule 13D filed by Burke Edmund Ross,
Jr. on June 13, 2017. Includes a total of 1,659,840 shares of
common stock and warrants to purchase up to 773,313 shares of
common stock. Of these holdings, (i) 1,676,009 shares are held by
ADEC Private Equity Investment, LLC, which include 1,031,268 shares
of common stock and 644,741 shares issuable upon exercise of
warrants; (ii) 700,000 shares are held by EBR Ventures, LLC, which
include 600,000 shares of common stock and 100,000 shares issuable
upon exercise of warrants; and (iii) 57,144 shares held by CEDA
Investments, LLC, which include 28,572 shares of common stock and
28,572 shares issuable upon exercise of warrants. Mr. Ross is the
Manager of EBR Ventures, LLC, ADEC Private Equity Investment, LLC
and CEDA Investments, LLC, and has voting and dispositive power
over the shares of common stock held by such entities. The address
of Mr. Ross and such entities is c/o JDJ Family Office Services,
P.O. Box 962049, Boston, MA 02196.
Shares owned and
percentages for Burke Edmond Ross, ADEC Private Equity, and EBR
Ventures, LLC are partially duplicative as Mr. Ross holds voting
and dispositive power over the shares held by ADEC Private Equity
and EBR Ventures, LLC.
(10)
Based upon
information contained in a Schedule 13G filed by Matthew Balk on
August 28, 2017. The address of such entity is P.O. Box 2422,
Westport, CT 06880. Matthew Balk is the managing member of Pelican
Partners LLC, and has voting and dispositive power over the shares
of common stock held by such entity.
(11)
Based upon
information contained in a Schedule 13D filed by Burke Edmund Ross,
Jr. on June 13, 2017. As indicated in
Note 8 above, includes 644,741 shares of common stock issuable upon
the exercise of warrants. Mr. Ross has voting and dispositive power
over the shares held by such entity.
(12)
Based upon
information contained in a Schedule 13D filed by Burke Edmund Ross,
Jr. on June 13, 2017. As indicated in
Note 8 above, includes 100,000 shares of common stock issuable upon
the exercise of warrants. Mr. Ross has voting and dispositive power
over the shares held by such
entity.
Certain
Relationships and Related Transactions
During the year ended December 31, 2015, the
Company employed the services of JIST Consulting
(“JIST”), a company controlled by Johan M. (Thijs)
Spoor, the Company’s Chief Executive Officer, as a consultant
for business strategy, financial modeling, and capital raising.
Included in accounts payable December 31, 2016 is $508,300 for JIST
relating to Mr. Spoor’s services. Mr. Spoor received no other
compensation from the Company other than as specified in his
employment agreement.
During the year ended December 31, 2015, the
Company's then President, Christine Rigby-Hutton, was employed
through Rigby-Hutton Management Services
(“RHMS”).
Ms. Rigby-Hutton resigned from the Company effective April 20,
2015. Included in accounts payable at December 31, 2016 is $38,453
for RHMS for Ms. Rigby-Hutton’s services.
From
October 1, 2015 through December 31, 2015, the Company used the
services of Edward Borkowski as a financial consultant. Mr.
Borkowski is a member of the Board of Directors and the Chairman of
the Company’s Audit Committee. At December 31, 2016, $90,000
was accrued for Mr. Borkowski’s services.
In
July 2016, the Company granted 45,000 shares of restricted common
stock to Mr. Borkowski and 30,000 shares of restricted common stock
to each of Mr. Shenouda and Dr. Riddell, members of the
Company’s Board of Directors. The shares of restricted common
stock will be issued as follows: (i) 50% upon the first commercial
sale in the United States of MS1819, and (ii) 50% upon our total
market capitalization exceeding $1.0 billion for 20 consecutive
trading days, in each case subject to the earlier determination of
a majority of the members of the Board of Directors.
Beginning
October 1, 2016, the Company utilized the services of Maged
Shenouda as a financial consultant. Mr. Shenouda is the
Company’s current Chief Financial Officer, and a member of
the Board of Directors. The Company accrued $80,000 in expenses for
the year ended December 31, 2016 for Mr. Shenouda’s services
as a financial consultant.
On
February 3, 2017, the Board of Directors granted 30,000 options
each to Messrs. Borkowksi and Shenouda, and to Dr. Riddell, with a
total value of $348,210. In addition, the Board granted 100,000
options to Mr. Spoor with a value of $386,900, which options vested
immediately.
In
August 2015, we issued $3.0 million of original issue discounted
convertible notes and warrants to purchase 273,598 shares of common
stock to ADEC Private Equity Investment, LLC, an entity controlled
by Burke Ross. The notes automatically convert into that number of
shares of common stock equal to the aggregate principal amount of
the notes plus any accrued but unpaid interest, multiplied by 1.25,
divided by $4.65. In addition, in September 2016, we
agreed to issue warrants to purchase an aggregate of 371,142 shares
of common stock to ADEC Private Equity Investment, LLC in
connection with its execution of an amendment to the securities
purchase agreement that included, among other things, a 180-day
lock-up agreement.
Policy and Procedures Governing Related Party
Transactions
The
Board of Directors is committed to upholding the highest legal and
ethical conduct in fulfilling its responsibilities and recognizes
that related party transactions can present a heightened risk of
potential or actual conflicts of interest.
The
SEC rules define a related party transaction to include any
transaction, arrangement or relationship which: (i) we are a
participant; (ii) the amount involved exceeds $120,000; and (iii)
executive officer, director or director nominee, or any person who
is known to be the beneficial owner of more than 5% of our common
stock, or any person who is an immediate family member of an
executive officer, director or director nominee or beneficial owner
of more than 5% of our common stock had or will have a direct or
indirect material interest.
Although
we do not maintain a formal written procedure for the review and
approval of transactions with such related persons, it is our
policy for the disinterested members of our Board of Directors to
review all related party transactions on a case-by-case
basis. To receive approval, a related-party transaction must
have a legitimate business purpose for us and be on terms that are
fair and reasonable to us and our stockholders and as favorable to
us and our stockholders as would be available from non-related
entities in comparable transactions.
All
related party transactions must be disclosed in our applicable
filings with the SEC as required under SEC rules.
REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF
DIRECTORS
The Audit Committee has reviewed and discussed
with management and Mazars USA,
our independent registered public accounting firm, the audited
consolidated financial statements in the AzurRx BioPharma,
Inc. Annual Report on Form 10-K for
the year ended December 31, 2016. The Audit Committee has also
discussed with Mazars USA those matters required to be discussed by
Public Company Accounting Oversight Board
(“PCAOB”) Auditing Standard No.
61.
Mazars
USA also provided the Audit Committee
with the written disclosures and the letter required by the
applicable requirements of the PCAOB regarding the independent
auditor’s communication with the Audit Committee concerning
independence. The Audit Committee has discussed with the registered
public accounting firm their independence from our
Company.
Based
on its discussions with management and the registered public
accounting firm, and its review of the representations and
information provided by management and the registered public
accounting firm, including as set forth above, the Audit Committee
recommended to our Board of Directors that the audited financial
statements be included in our Annual Report on Form 10-K for the
year ended December 31, 2016.
|
Respectfully Submitted,
Edward
J. Borkowski, Chairman
Alastair
Riddell
Charles
J. Casamento
|
The information contained above under the caption
“Report of the Audit Committee
of the Board of Directors” shall not be deemed to be soliciting
material or to be filed with the SEC, nor shall such information be
incorporated by reference into any future filing under the
Securities Act of 1933, as amended, or the Securities Exchange Act
of 1934, as amended, except to
the extent that we specifically incorporate it by reference into
such filing.
ADDITIONAL INFORMATION
Deadline for Receipt of Stockholder Proposals for the 2018 Annual
Meeting
Pursuant to Rule 14a-8 under the Exchange Act,
stockholder proposals to be included in our next proxy statement
must be received by us at our principal executive offices at
760 Parkside Avenue, Downstate Biotechnology Incubator, Suite 304,
Brooklyn, NY 11226, addressed to our
Corporate Secretary, no later than 90 days nor more than 120 days
prior to the first anniversary of the preceding year’s annual
meeting. These proposals must comply with applicable Delaware law,
the rules and regulations promulgated by the SEC and the procedures
set forth in our Bylaws.
We
reserve the right to reject, rule out of order, or take other
appropriate action with respect to any proposal that does not
comply with these and all other applicable
requirements.
Householding of Proxy Materials
The SEC
has adopted rules that permit companies and intermediaries (e.g.,
brokers) to satisfy the delivery requirements for proxy statements
and annual reports with respect to two or more stockholders sharing
the same address by delivering a single proxy statement and annual
report addressed to those stockholders. This process, which is
commonly referred to as “householding,” potentially
means extra convenience for stockholders and cost savings for
companies.
A
number of brokers with account holders who are stockholders of the
Company will be “householding” the Company’s
proxy materials. A single set of the Company’s proxy
materials will be delivered to multiple stockholders sharing an
address unless contrary instructions have been received from the
affected stockholders. Once you have received notice from your
broker that they will be “householding” communications
to your address, “householding” will continue until you
are notified otherwise or until you revoke your consent. If, at any
time, you no longer wish to participate in
“householding” and would prefer to receive a separate
set of the Company’s proxy materials, please notify your
broker or direct a written request to the Company at 760 Parkside
Avenue, Downstate Biotechnology Incubator, Suite 304, Brooklyn, NY
11226, or contact us at (646) 699-7855. The Company undertakes to
deliver promptly, upon any such oral or written request, a separate
copy of its proxy materials to a stockholder at a shared address to
which a single copy of these documents was delivered. Stockholders
who currently receive multiple copies of the Company’s proxy
materials at their address and would like to request
“householding” of their communications should contact
their broker, bank or other nominee, or contact the Company at the
above address or phone number.
Other Matters
At the
date of this proxy statement, the Company knows of no other
matters, other than those described above, that will be presented
for consideration at the Annual Meeting. If any other business
should come before the Annual Meeting, it is intended that the
proxy holders will vote all proxies using their best judgment in
the interest of the Company and the stockholders.
The
Board invites you to attend the Annual Meeting in person. Whether
or not you expect to attend the Annual Meeting in person, please
submit your vote by Internet, telephone or mail as promptly as
possible so that your
shares will be represented at the Annual Meeting.
REGARDLESS
OF WHETHER YOU PLAN TO ATTEND THE ANNUAL MEETING IN
PERSON, PLEASE READ THE ACCOMPANYING PROXY STATEMENT AND THEN
VOTE BY INTERNET, TELEPHONE OR MAIL AS PROMPTLY AS
POSSIBLE. VOTING PROMPTLY WILL SAVE US ADDITIONAL
EXPENSE IN SOLICITING PROXIES AND WILL ENSURE THAT YOUR SHARES ARE
REPRESENTED AT THE ANNUAL MEETING.
By
order of the Board of Directors,
Johan
M. (Thijs) Spoor
Chief Executive Officer
AZURRX BIOPHARMA, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
AZURRX
BIOPHARMA, INC.
FOR THE 2017 ANNUAL MEETING OF STOCKHOLDERS
The
undersigned revokes all previous proxies and constitutes and
appoints Johan M. (Thijs) Spoor and Maged Shenouda, and each of
them, his or her true and lawful agent and proxy with full power of
substitution in each, to represent and to vote on behalf of the
undersigned all of the shares of AzurRx BioPharma, Inc. (the
“Company”)
which the undersigned is entitled to vote at the Company’s
2017 Annual Meeting of Stockholders (the “Annual Meeting”), to be held at
the Crown Plaza Hotel, 690 US Highway 46, Fairfield, New Jersey on
November 28, 2017 at 9:00 a.m., local time, and at any
adjournment(s) or postponement(s) thereof, upon the following
proposals, each of which are more fully described in the Notice of
Annual Meeting of Stockholders and Proxy Statement for the Annual
Meeting (receipt of which is hereby acknowledged).
This proxy when properly executed will be
voted in the manner directed herein by the undersigned stockholder.
If no direction is made, this proxy will be voted FOR each nominee identified in
Proposal No. 1 and FOR Proposal No. 2, each of
which have been proposed by our Board of Directors, and in the
discretion of the proxy holder upon other matters as may properly
come before the Annual Meeting.
(continued and to be signed on reverse side)
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1.
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ELECTION
OF DIRECTORS
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Nominees:
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FOR
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WITHHELD
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01
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Johan
M. (Thijs) Spoor
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☐
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☐
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02
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Maged
Shenouda
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☐
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☐
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03
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Edward
J. Borkowski
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☐
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☐
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04
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Alastair
Riddell, M.D., Ph.D.
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☐
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☐
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05
|
Charles
J. Casamento
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☐
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☐
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06
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Vern
Lee Schramm, Ph.D.
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☐
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☐
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2.
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RATIFYING
THE APPOINTMENT OF MAZARS USA LLP AS AZURRX BIOPHARMA, INC.’S
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING DECEMBER 31,
2017
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FOR
☐
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AGAINST
☐
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ABSTAIN
☐
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IN HIS
OR HER DISCRETION, THE PROXY IS AUTHORIZED TO VOTE UPON OTHER
MATTERS AS MAY PROPERLY COME BEFORE THE ANNUAL
MEETING.
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☐ I WILL ATTEND THE
ANNUAL MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING
THE ENCLOSED ENVELOPE.
Signature
of Stockholder _______________________ Signature of Stockholder
_________________________
(IF
HELD
JOINTLY)
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Dated:
________________________________,
2017
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Note: This proxy must be signed exactly as
the name appears hereon. When shares are held by joint tenants,
both should sign. If the signer is a corporation, please sign full
corporate name by duly authorized officer, giving full title as
such. If the signer is a partnership, please sign in partnership
name by authorized person.