| Item 1.01. | Entry into a Material Definitive Agreement. |
On November 14, 2024, Omega Therapeutics, Inc. (the “Company”) entered into an Amended and Restated Shared Space Arrangement (collectively, the “A&R SSAs”) with each of Apriori Bio, Inc. (“Apriori”) and Prologue Medicines, Inc. (formerly Flagship Labs 89, Inc.) (“Prologue”) and a Shared Space Arrangement (collectively, with the A&R SSAs, the “SSAs”) with Flagship Labs 107, Inc. (“FL 107”), each effective as of November 18, 2024 (the “Effective Date”), pursuant to which the Company agreed to sublease an aggregate of (i) approximately 21,764 rentable square feet from the Effective Date until April 1, 2025 (the “April Effective Date”) and (ii) approximately 22,350 rentable square feet from the April Effective Date until August 31, 2026 (the “Termination Date”), in each case, located at 140 First Street, Cambridge, Massachusetts, 02141 (the “Premises”). The Company leases an aggregate of approximately 89,246 rentable square feet of office and laboratory space (consisting of approximately 78,380 rentable square feet for shared space arrangements) located at the Premises pursuant to its lease (the “Lease”) with ARE-MA Region No. 94, LLC (the “Landlord”). Each A&R SSA amends and restates, in its entirety, the prior arrangements entered into between the Company and each of Apriori and Prologue, dated as of August 1, 2023, as further amended on July 1, 2024, and as amended and restated on September 1, 2024. Each of Apriori, Prologue and FL 107 is a “Licensee” under their respective SSA and an affiliate of Flagship Pioneering, Inc., a significant stockholder of the Company.
The term of each SSA is subject to amendment by the mutual agreement among the Company, the Licensee and the Landlord. Each SSA provides that the respective Licensee will pay to the Company a monthly license fee that is a proportionate share of the actual base rent, operating expenses and other costs for the use and occupancy of the subleased portion of the Premises charged by the Landlord under the Lease and paid by the Company. Such proportionate share will be (i) in the case of each of Apriori and Prologue, 12.9% from the Effective Date until the April Effective Date and 13.2% thereafter until the Termination Date and (ii) in the case of FL 107, 2.0% from the Effective Date through the Termination Date. The Company may terminate any SSA and require the applicable Licensee to immediately vacate the Premises if such Licensee causes a default under the Lease, is in default of any provision in the SSA or acts in a manner deemed by the Company, in its sole discretion, as dangerous or threatening.
Each SSA contains customary covenants, obligations and indemnities in favor of either party.
The foregoing description of the SSAs is a summary and is qualified in its entirety by reference to the SSAs, which are filed herewith as Exhibits 10.1, 10.2 and 10.3 to this Current Report on Form 8-K, and are incorporated herein by reference.
| Item 5.02. | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
On November 14, 2024 (the “Transition Date”), Mahesh Karande tendered his resignation as President and Chief Executive Officer and as a member of the Board of Directors (the “Board”) of the Company, effective immediately. On the Transition Date, the Board appointed Kaan Certel, Ph.D., the Company’s Chief Business Officer, to serve as the Company’s President and Chief Executive Officer and elected Dr. Certel to serve as a Class I director to fill the vacancy on the Board created by Mr. Karande’s resignation, in each case, effective immediately.
Dr. Certel, 54, served as the Company’s Chief Business Officer from May 28, 2024 to November 14, 2024. Previously, Dr. Certel served as the Chief Business Officer at BioCity Biopharma (“BioCity”), a clinical-stage oncology company, from September 2023 to May 2024. Prior to his role at BioCity, Dr. Certel was Head of Oncology External Innovation at Sanofi, a global pharmaceutical company, from May 2017 to September 2023. Dr. Certel received a Ph.D. in Genetics from the University of Iowa and completed a postdoctoral fellowship at the Koch Institute for Integrative Cancer Research at the Massachusetts Institute of Technology. The Board believes Dr. Certel is qualified to serve on the Board due to his extensive scientific expertise and business development experience in the biopharmaceutical industry.
In connection with Dr. Certel’s appointment, the Company and Dr. Certel entered into an amended and restated employment agreement (the “Employment Agreement”), pursuant to which Dr. Certel will serve as President and Chief Executive Officer and will receive an annual base salary of $520,000 and will have a target annual bonus amount equal to 50% of his annual base salary. Under the Employment Agreement, if the Company terminates Dr. Certel’s employment without “cause” or he resigns for “good reason” (in each case, within the meaning of the Employment Agreement), subject to his timely executing a release of claims and continued compliance with certain restrictive covenants, Dr. Certel will be entitled to receive (i) an amount equal to 0.75 times his annual base salary, payable in the form of salary continuation in regular installments over the 9-month period following termination, (ii) payment of any earned but unpaid annual bonus for the year prior to the year of termination, and (iii) payment for continued health coverage pursuant to COBRA, less the amount he would have paid for coverage as an active employee, for up to 9 months following termination. If we terminate Dr. Certel’s employment without “cause” or he resigns for “good reason,” in either case, on or within 12 months following a “change in control” (within the meaning of the Employment Agreement), then, in lieu of the severance payments and benefits described above, subject to his timely executing a release of claims and continued compliance with certain restrictive covenants, Dr. Certel will be entitled to receive (a) severance equal to one times his annual base salary payable in equal installments over the 12-month period following termination, (b) payment of any earned but unpaid annual bonus for the year prior to the year of termination, (c) payment for continued health coverage pursuant to COBRA, less the amount he would have paid for coverage as an active employee, for up to 12 months following termination, (d) a lump sum payment equal to one times his annual target bonus for the year of termination and (e) full accelerated vesting of all unvested equity or equity-based awards that vest solely based on continued employment or service. In addition, in connection with Dr. Certel’s appointment, the Company approved the grant of a stock option to purchase 340,000 shares of the Company’s common stock to Dr. Certel, effective November 15, 2024, which option vests as to 25% of the underlying shares on the first anniversary of the date of grant and in equal quarterly installments over the following three years.
There is no arrangement or understanding between Dr. Certel and any other person pursuant to which he was selected as a director of the Company, and there is no family relationship between either of Dr. Certel and any of the Company’s other directors or executive officers.
In connection with Mr. Karande’s separation from the Company, the Company and Mr. Karande have entered into a separation agreement and release (the “Separation Agreement”), pursuant to which Mr. Karande will be entitled to receive, unless he timely revokes the Separation Agreement, (i) continued payment of his base salary during the period beginning on his separation date and ending on the earlier of May 25, 2025 or the date he commences full-time employment with a subsequent employer or is retained as a full-time consultant (the “Severance Period”), (ii) payment for continued health coverage pursuant to COBRA, less the amount he would have paid for coverage as an active employee, during the Severance Period, (iii) an amount equal to 50% of his target annual bonus for 2024 payable in November 2024, and, unless Mr. Karande commences full-time employment with a subsequent employer or is retained as a full-time consultant, an additional amount in respect of the remaining 50% of his 2024 annual bonus based on the Board’s determination of the achievement of applicable performance criteria, payable on or about the date on which annual bonuses for 2024 are paid in the ordinary course to actively employed senior executives of the Company, but in no event later than March 15, 2025, (iv) a lump sum payment of $250,000 if during the Severance Period the Company enters into a business development transaction meeting specified criteria, and (v) continued vesting of his time-based options during the Severance Period, and extended exercisability of his exercisable Company stock options until May 25, 2025. The Separation Agreement restricts Mr. Karande from transferring any Company common stock he owns until May 25, 2025 and further provides that Mr. Karande will provide consulting services as reasonably requested by the Company until May 25, 2025. Mr. Karande’s benefits under the Separation Agreement are subject to his continued compliance with his obligations under the Separation Agreement, including certain restrictive covenants.
The foregoing descriptions of the Employment Agreement and the Separation Agreement do not purport to be complete and are qualified in their entirety by reference to the full text of the Employment Agreement and Separation Agreement, respectively, copies of which are attached as Exhibits 10.4 and 10.5 to this Current Report on Form 8-K, and are incorporated herein by reference.
