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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No.     )

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April 30, 2018
Dear Stockholders:

You are cordially invited to attend the 2018 Annual Meeting of Stockholders of Loxo Oncology, Inc. The meeting will be held at the Stamford Marriott Hotel & Spa, 243 Tresser Blvd., Stamford, CT 06901, on Wednesday, June 13, 2018 at 9:30 a.m. local time.

The matters expected to be acted upon at the Annual Meeting are described in detail in the accompanying Notice of Annual Meeting of Stockholders and Proxy Statement.

We are using the Internet as our primary means of furnishing proxy materials to stockholders. Consequently, most stockholders will not receive paper copies of our proxy materials. We will instead send these stockholders a notice with instructions for accessing the proxy materials online and voting in person, by telephone, by mail or via the Internet. The notice also provides information on how stockholders may obtain paper copies of our proxy materials free of charge, if they so choose.

Your vote is important. Whether or not you plan to attend the meeting, please cast your vote as soon as possible by Internet or telephone, or by completing and returning the enclosed proxy card in the postage-prepaid envelope to ensure that your shares will be represented. Your vote by written proxy will ensure your representation at the Annual Meeting regardless of whether you attend in person or not. Returning the proxy does not deprive you of your right to attend the meeting and to vote your shares in person.

We look forward to seeing you at the meeting.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR

THE STOCKHOLDER MEETING TO BE HELD ON JUNE 13, 2018:

THIS PROXY STATEMENT AND THE ANNUAL REPORT ARE AVAILABLE AT

www.proxyvote.com

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LOXO ONCOLOGY, INC.

281 Tresser Boulevard, 9th Floor

Stamford, CT 06901

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 13, 2018

To Our Stockholders:

NOTICE IS HEREBY GIVEN that the 2018 Annual Meeting of Stockholders of Loxo Oncology, Inc. will be held on Wednesday, June 13, 2018, at 9:30 a.m. local time at the Stamford Marriott Hotel & Spa, 243 Tresser Blvd., Stamford, CT 06901.

We are holding the meeting for the following purposes, which are more fully described in the accompanying proxy statement:

1. To elect three Class I directors of Loxo Oncology, Inc. each to serve until the third annual meeting of stockholders following this meeting and until his or her successor has been elected and qualified or until his or her earlier resignation or removal.

2. To ratify the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018.

3. To conduct a non-binding advisory vote on the compensation of our named executive officers as disclosed in the accompanying materials.

4.  To conduct a non-binding advisory vote on the frequency of holding future advisory votes on named executive officer compensation.

5. To amend and restate Loxo Oncology, Inc.’s 2014 Equity Incentive Plan to increase the number of shares reserved thereunder by an additional 1,500,000 shares, and to approve amendments to the 2014 Plan to (i) to increase the “evergreen” from 3% to 4% but to reduce the term of such “evergreen” to calendar years through January 1, 2023, (ii) impose a limit of 30,000 shares as the maximum number of shares that may be granted under the 2014 Plan to each of our non-employee directors each year, (iii) prohibit shares that are withheld from exercised shares for taxes, payment of exercise price in connection with the exercise of options or stock appreciation rights from returning to the total number of shares reserved for awards, (iv) provide for a prohibition on payment of dividends on unvested awards, (v) prohibit repricing without stockholder approval, (vi) prohibit transfer of awards to third-party institutions for value and (vii) make certain modifications to reflect changes to the tax law by 2017 tax legislation.

In addition, stockholders may be asked to consider and vote upon such other business as may properly come before the meeting or any adjournment or postponement thereof.

Only stockholders of record at the close of business on April 23, 2018 are entitled to notice of, and to vote at, the meeting and any adjournments thereof. For ten days prior to the meeting, a complete list of the stockholders entitled to vote at the meeting will be available for examination by any stockholder for any purpose germane to the meeting during ordinary business hours at our headquarters.

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Your vote as a Loxo Oncology, Inc. stockholder is very important. Each share of stock that you own represents one vote. For questions regarding your stock ownership, you may contact us through our website at http://ir.loxooncology.com or, if you are a registered holder, our transfer agent, American Stock Transfer & Trust Company, by email through the American Stock Transfer & Trust Company website at www.astfinancial.com or by phone at (800) 937-5449.

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YOUR VOTE IS IMPORTANT

WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, WE ENCOURAGE YOU TO VOTE AND SUBMIT YOUR PROXY BY INTERNET, TELEPHONE OR BY MAIL. FOR ADDITIONAL INSTRUCTIONS ON VOTING BY TELEPHONE OR THE INTERNET, PLEASE REFER TO YOUR PROXY CARD. TO VOTE AND SUBMIT YOUR PROXY BY MAIL, PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT IN THE ENCLOSED ENVELOPE. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY REVOKE YOUR PROXY AND VOTE IN PERSON. IF YOU HOLD YOUR SHARES THROUGH AN ACCOUNT WITH A BROKERAGE FIRM, BANK OR OTHER NOMINEE, PLEASE FOLLOW THE INSTRUCTIONS YOU RECEIVE FROM YOUR ACCOUNT MANAGER TO VOTE YOUR SHARES.

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LOXO ONCOLOGY, INC.

PROXY STATEMENT FOR 2018 ANNUAL MEETING OF STOCKHOLDERS

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LOXO ONCOLOGY, INC.

281 Tresser Boulevard, 9th Floor

Stamford, CT 06901

PROXY STATEMENT FOR THE 2018 ANNUAL MEETING OF STOCKHOLDERS

April 30, 2018

INFORMATION ABOUT SOLICITATION AND VOTING

The accompanying proxy is solicited on behalf of the board of directors of Loxo Oncology, Inc. for use at Loxo Oncology’s 2018 Annual Meeting of Stockholders (“Annual Meeting”) to be held on June 13, 2018, at 9:30 a.m. local time, and any adjournment or postponement thereof. This Proxy Statement and the accompanying proxy card, Notice of Annual Meeting, and Annual Report to Stockholders was first sent or made available, on or about April 30, 2018, to stockholders of record as of April 23, 2018 (the “Record Date”). For those stockholders receiving a Notice of Internet Availability of Proxy Materials, the Notice of Internet Availability of Proxy Materials was first mailed on or about April 30, 2018 to stockholders of record as of the Record Date. An electronic copy of this Proxy Statement and annual report on Form 10-K are available at www.proxyvote.com.

GENERAL INFORMATION ABOUT THE ANNUAL MEETING

Purpose of the Annual Meeting

At the Annual Meeting, stockholders will act upon the proposals described in this Proxy Statement for the 2018 Annual Meeting (“Proxy Statement”).

Record Date; Quorum

Only holders of record of common stock at the close of business on the Record Date will be entitled to vote at the Annual Meeting. At the close of business on the Record Date, we had 30,055,380 shares of common stock outstanding and entitled to vote.

The holders of a majority of the voting power of the shares of stock entitled to vote at the Annual Meeting as of the Record Date must be present at the Annual Meeting in order to hold the Annual Meeting and conduct business. This presence is called a quorum. Your shares are counted as present at the Annual Meeting if you are present and vote in person at the Annual Meeting or if you have properly submitted a proxy.

Voting Rights

In deciding all matters at the Annual Meeting, each holder of shares of common stock is entitled to one vote for each share of common stock held as of the close of business on the Record Date. We do not have cumulative voting rights for the election of directors. You may vote all shares owned by you as of the Record Date, including (i) shares held directly in your name as the stockholder of record, and (ii) shares held for you as the beneficial owner in street name through a broker, bank, trustee, or other nominee.

Stockholder of Record: Shares Registered in Your Name. If, on the Record Date, your shares were registered directly in your name with our transfer agent, American Stock Trust & Transfer Company, then you are considered the stockholder of record with respect to those shares. As a stockholder of record, you may vote at the Annual Meeting or vote by telephone, by Internet, or by filling out and returning the proxy card.

Beneficial Owner: Shares Registered in the Name of a Broker or Nominee. If, on the Record Date, your shares

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were held in an account with a brokerage firm, bank or other nominee, then you are the beneficial owner of the shares held in street name. As a beneficial owner, you have the right to direct your nominee on how to vote the shares held in your account, and your nominee has enclosed or provided voting instructions for you to use in directing it on how to vote your shares. However, the organization that holds your shares is considered the stockholder of record for purposes of voting at the Annual Meeting. Because you are not the stockholder of record, you may not vote your shares at the Annual Meeting unless you request and obtain a valid proxy from the organization that holds your shares giving you the right to vote the shares at the Annual Meeting.

Required Vote

Proposal 1: Each director will be elected by a plurality of the votes cast, which means that each of the three individuals nominated for election to the board of directors at the meeting will be elected if the number of votes cast “FOR” that nominee exceeds the number of votes “AGAINST” that nominee. You may either vote “FOR” or “AGAINST” one or more of the nominees. You may not cumulate votes in the election of directors.

Proposal 2: Approval of the ratification of the appointment of our independent registered public accounting firm will be obtained if the number of votes cast “FOR” the proposal at the meeting exceeds the number of votes “AGAINST” the proposal.

Proposal 3: The advisory vote on named executive officer compensation will be obtained if the number of votes cast “FOR” the proposal at the meeting exceeds the number of votes “AGAINST” the proposal. This vote is advisory and non-binding in nature.

Proposal 4: The advisory vote on the frequency of holding an advisory vote on named executive officer compensation will be the option of either “ONE YEAR,” “TWO YEARS,” or “THREE YEARS” that receives the highest number of votes. This vote is advisory and non-binding in nature.

Proposal 5: The approval of the amendments to our 2014 Equity Incentive Plan will be obtained if the majority of shares present at the meeting that are cast affirmatively or negatively vote “FOR” the proposal.

Broker non-votes occur when a broker, bank or other nominee holding shares for a beneficial owner does not vote on a particular matter because such broker, bank or other nominee does not have discretionary authority to vote on that matter and has not received voting instructions from the beneficial owner. Brokers, banks and other nominees typically do not have discretionary authority to vote on non-routine matters. Broker non-votes are counted for purposes of determining whether a quorum is present, and have no effect on the outcome of the matters voted upon. Under the rules and interpretations of The Nasdaq Stock Market Listing Rules, “non-routine” matters are matters that may substantially affect the rights or privileges of stockholders, such as mergers, stockholder proposals, elections of directors, executive compensation and certain corporate governance proposals, even if management-supported. At our Annual Meeting, only ratification of the appointment of our independent registered public accounting firm is considered a “routine” matter. Note that if you are a beneficial holder and do not provide specific voting instructions to your broker, the broker that holds your shares will not have discretionary authority to vote on the election of directors. Accordingly, we encourage you to provide voting instructions to your broker, whether or not you plan to attend the meeting.

Recommendations of the Board of Directors on Each of the Proposals Scheduled to be Voted on at the Annual Meeting

The board of directors recommends that you vote “FOR” each of the Class I directors named in this Proxy Statement (“Proposal No. 1”), “FOR” the ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018 (“Proposal No. 2”), “FOR” the non-binding advisory vote on named executive officer compensation (“Proposal No. 3”), “ONE YEAR” for the non-binding advisory vote on the frequency of holding an advisory vote on named executive officer compensation (“Proposal No. 4”) and “FOR” the approval of the Amended and Restated 2014 Equity Incentive Plan (“Proposal No. 5”). None of the directors or executive officers has any substantial interest in any matter to be acted upon, other than elections to office with respect to the directors so nominated.

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Voting Instructions; Voting of Proxies

If you are a stockholder of record, you may:

·                  vote in person—we will provide a ballot to stockholders who attend the Annual Meeting and wish to vote in person;

·                  vote via telephone or Internet—in order to do so, please follow the instructions shown on your proxy card; or

·                  vote by mail—complete, sign and date the proxy card enclosed herewith and return it before the Annual Meeting in the envelope provided.

Votes submitted by telephone or Internet must be received by 11:59 pm Eastern Time on June 12, 2018. Submitting your proxy, whether via the Internet, by telephone, or by mail, will not affect your right to vote in person should you decide to attend the Annual Meeting. If you are not the stockholder of record, please refer to the voting instructions provided by your nominee to direct it how to vote your shares. You may either vote “FOR” all of the nominees to the board of directors, or you may “WITHHOLD” your vote from any nominee you specify. For any other matter to be voted on you may vote “FOR” or “AGAINST” or “ABSTAIN” from voting. Your vote is important. Whether or not you plan to attend the Annual Meeting, we urge you to vote by proxy to ensure that your vote is counted.

All proxies will be voted in accordance with the instructions specified on the proxy card. If you sign a physical proxy card and return it without instructions as to how your shares should be voted on a particular proposal at the Annual Meeting, your shares will be voted in accordance with the recommendations of our board of directors stated above.

If you do not vote and you hold your shares in street name, and your broker does not have discretionary power to vote your shares, your shares may constitute “broker non-votes” (as described above) and will not be counted in determining the number of shares necessary for approval of the proposals. However, shares that constitute broker non-votes will be counted for the purpose of establishing a quorum for the Annual Meeting.

If you receive more than one proxy card, your shares are registered in more than one name or are registered in different accounts. To make certain all of your shares are voted, please follow the instructions included on each proxy card and vote each proxy card by telephone. If you are voting by mail, please complete, sign and return each proxy card to ensure that all of your shares are voted.

Expenses of Soliciting Proxies

Loxo Oncology will pay the expenses of soliciting proxies. Following the original mailing of the soliciting materials, Loxo Oncology and its agents, including directors, officers and other employees, without additional compensation, may solicit proxies by mail, electronic mail, telephone, facsimile, by other similar means, or in person. Following the original mailing of the soliciting materials, Loxo Oncology will request brokers, custodians, nominees and other record holders to forward copies of the soliciting materials to persons for whom they hold shares and to request authority for the exercise of proxies. In such cases, Loxo Oncology, upon the request of the record holders, will reimburse such holders for their reasonable expenses. If you choose to access the proxy materials through the Internet, you are responsible for any Internet access charges you may incur.

Revocability of Proxies

A stockholder who has given a proxy may revoke it at any time before it is exercised at the Annual Meeting by:

·                  delivering to the Compliance Officer of Loxo Oncology (by any means, including facsimile) a written notice stating that the proxy is revoked;

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·                  signing and delivering a proxy bearing a later date;

·                  voting again by telephone or Internet; or

·                  attending and voting at the Annual Meeting (although attendance at the Annual Meeting will not, by itself, revoke a proxy).

Please note, however, that if your shares are held of record by a broker, bank or other nominee and you wish to revoke a proxy, you must contact that firm to revoke any prior voting instructions.

Voting Results

Voting results will be tabulated and certified by the inspector of elections appointed for the Annual Meeting. The preliminary voting results will be announced at the Annual Meeting. The final results will be tallied by the inspector of elections and filed with the Securities and Exchange Commission (“SEC”) in a current report on Form 8-K within four business days of the Annual Meeting.

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BOARD OF DIRECTORS AND COMMITTEES OF THE BOARD; CORPORATE GOVERNANCE STANDARDS AND DIRECTOR INDEPENDENCE

Loxo Oncology is strongly committed to good corporate governance practices. These practices provide an important framework within which our board of directors and management can pursue our strategic objectives for the benefit of our stockholders.

Corporate Governance Guidelines

Our board of directors has adopted corporate governance guidelines that set forth the role of the board of directors, director independence standards, board structure and functions, director selection considerations, and other policies for the governance of the company (“Corporate Governance Guidelines”). Our Corporate Governance Guidelines are available on the Investors section of our website, which is located at http://ir.loxooncology.com/corporate-governance. Our nominating and governance committee reviews the Corporate Governance Guidelines periodically, and recommends changes to our board of directors as warranted.

Recoupment Policy

In April 2018, our Board of Directors adopted a clawback provision that provides our Board with the authority to recoup past incentive compensation in the event of a material restatement of our company’s financial results due to fraud or intentional misconduct of the executive officer.

Board Leadership Structure

Our Corporate Governance Guidelines provide that our board of directors shall be free to choose its chairperson in any way that it considers in the best interests of our company, and that the nominating and governance committee shall periodically consider the leadership structure of our board of directors and make such recommendations to the board of directors with respect thereto as the nominating and governance committee deems appropriate. Our Corporate Governance Guidelines also provide that, if deemed advisable, the independent directors may designate a “lead independent director.” In cases in which the chairperson and Chief Executive Officer are the same person, the chairperson schedules and sets the agenda for meetings of the board of directors, and the chairperson, or if the chairperson is not present, the lead independent director, chairs such meetings. In addition, the responsibilities of the lead independent director include: presiding over executive sessions of independent directors; serving as a liaison between the chairperson and the independent directors; being available, under appropriate circumstances, for consultation and direct communication with stockholders; and performing such other functions and responsibilities as requested by the board of directors from time to time.

Our board of directors believes that Loxo Oncology and our stockholders are best served by having Mr. Steven A. Elms, a member of the nominating and governance committee, serve as our non-executive Chairman. Our board of directors believes that the current board leadership structure, the composition of the board and corporate governance policies and practices provides effective independent oversight of management while allowing the board and management to benefit from its members’ extensive financial and business expertise in the biotechnology industry.

Our Board of Directors’ Role in Risk Oversight

Our board of directors, as a whole, has responsibility for risk oversight, although the committees of our board of directors oversee and review risk areas that are particularly relevant to them. The risk oversight responsibility of our board of directors and its committees is supported by our management reporting processes, which are designed to provide visibility to the board of directors and to our personnel that are responsible for risk assessment and information about the identification, assessment and management of critical risks and management’s risk mitigation strategies. These areas of focus include, but are not limited to, cybersecurity, competitive, economic, operational, financial (accounting, credit, liquidity, and tax), legal, regulatory, compliance and reputational risks. Each committee of the board of directors meets in executive session with key management personnel and representatives of outside advisors to oversee risks associated with their respective principal areas of focus. The audit committee reviews our major financial risk exposures and the steps management has taken to monitor and control such

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exposures, including our risk assessment and risk management policies and guidelines. The compensation committee reviews risks and exposures associated with compensation programs and arrangements, including incentive plans. The nominating and governance committee, together with the audit committee, reviews our major legal compliance risk exposures and monitors the processes put in place by management to mitigate these exposures, including our legal risk assessment and legal risk management policies and guidelines.

Director Independence

Our board of directors determines the independence of our directors by applying the applicable rules, regulations and listing standards of the Nasdaq Global Market (“Nasdaq”). These provide that a director is independent only if the board affirmatively determines that the director does not have a relationship with the company which, in the opinion of the board of directors, would interfere with the exercise of his or her independent judgment in carrying out the responsibilities of a director. They also specify various relationships that preclude a determination of director independence. Such relationships may include employment, commercial, accounting, family and other business, professional and personal relationships.

Applying these standards, the board annually reviews the independence of our directors, taking into account all relevant facts and circumstances. In its most recent review, our board of directors considered, among other things, the relationships that each non-employee director has with our company and all other facts and circumstances our board of directors deemed relevant in determining their independence, including the beneficial ownership of our capital stock by each non-employee director.

Based upon this review, our board of directors has determined that the following members of our board are currently independent as determined under applicable rules, regulations and listing standards of Nasdaq: Mr. Steven A. Elms, Mr. Alan Fuhrman, Mr. Tim M. Mayleben, Dr. Steve D. Harr and Mr. Avi Z. Naider. All members of our audit committee, compensation committee and nominating and governance committee must be independent directors under the applicable rules, regulations and listing standards of Nasdaq, subject to Nasdaq’s phase-in rules. Members of the audit committee also must satisfy a separate SEC independence requirement, which provides that (i) they may not accept directly or indirectly any consulting, advisory or other compensatory fee from Loxo Oncology or any of its subsidiaries other than their directors’ compensation, and (ii) they may not be an affiliated person of Loxo Oncology or any of its subsidiaries. Members of the compensation committee also must satisfy a separate SEC independence requirement and a related Nasdaq listing standard with respect to their affiliation with Loxo Oncology and any consulting, advisory or other fees they may have received from Loxo Oncology. Our board of directors has determined that, all members of our audit committee, compensation committee and nominating and governance committee are independent and satisfy the relevant SEC and Nasdaq independence requirements for such committees.

Board Committees

Our board of directors has established an audit committee, a compensation committee and a nominating and governance committee. The composition and responsibilities of each committee are described below. Each of these committees has a written charter approved by our board of directors. Copies of the charters for the audit committee, compensation committee and nominating and governance committee are available, without charge, by clicking on “Corporate Governance” in the Investors section of our website at http://ir.loxooncology.com. Members serve on these committees until their resignations or until otherwise determined by our board of directors.

Audit Committee

Our audit committee is comprised of Mr. Fuhrman, who is the chair of the audit committee, Mr. Elms and Mr. Naider. The members of our audit committee meet the requirements for independence under current Nasdaq and SEC rules, regulations and listing standards. Each member of our audit committee is financially literate as required by Nasdaq listing standards. In addition, our board of directors has determined that Mr. Fuhrman is an audit committee financial expert within the meaning of Item 407(d) of Regulation S-K under the Securities Act of 1933, as amended. This designation does not impose on him any duties, obligations or liabilities that are greater than are generally imposed on members of our audit committee and our board of directors. Our audit committee is directly responsible for, among other things:

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·                  selecting the independent registered public accounting firm to audit our financial statements;

·                  ensuring the independence of the independent registered public accounting firm;

·                  discussing the scope and results of the audit with the independent registered public accounting firm, and reviewing, with management and that firm, our interim and year-end operating results;

·                  establishing procedures for employees to anonymously submit concerns about questionable accounting or audit matters;

·                  considering the adequacy of our internal controls and internal audit function;

·                  reviewing material related party transactions or those that require disclosure; and

·                  approving or, as permitted, pre-approving all audit and non-audit services to be performed by the independent registered public accounting firm.

Compensation Committee

Our compensation committee is comprised of Mr. Mayleben, who is the chair of the compensation committee, Mr. Fuhrman and Mr. Harr. The composition of our compensation committee meets the requirements for independence under current Nasdaq and SEC rules, regulations and listing standards. Each member of this committee is also a non-employee director, as defined pursuant to Rule 16b-3 promulgated under the Securities Exchange Act of 1934, as amended (“Exchange Act”), an outside director, as defined pursuant to Section 162(m) of the Code and is “independent” as defined in Section 5605(a) (2) of the Nasdaq rules and Rule 10C-1 promulgated under the Exchange Act. The purpose of our compensation committee is to discharge the responsibilities of our board of directors relating to compensation of our executive officers. Our compensation committee is responsible for, among other things:

·                  reviewing and approving, or recommending that our board of directors approve, the compensation of our executive officers;

·                  reviewing and recommending to our board of directors the compensation of our non-employee directors;

·                  reviewing and approving, or recommending that our board of directors approve, the terms of any compensatory agreements with our executive officers;

·                  administering our stock and equity incentive plans;

·                  reviewing and approving, or making recommendations to our board of directors with respect to, incentive compensation and equity plans; and

·                  reviewing our overall compensation strategy.

The compensation committee has the sole authority and responsibility, subject to any approval by the board of directors which the compensation committee or legal counsel determines to be desirable or required by applicable law or the Nasdaq rules, to determine all aspects of executive compensation packages for the Chief Executive Officer and other executive officers. The compensation committee also makes recommendations to our board of directors regarding the form and amount of compensation of non-employee directors. The compensation committee may take into account the recommendations of the Chief Executive Officer with respect to compensation of the other executive officers, and the recommendations of the board of directors or any member of the board of directors with respect to compensation of the Chief Executive Officer and other executive officers.

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The compensation committee engaged an independent executive compensation consulting firm, Radford, an AON Hewitt Company (“Radford”), to evaluate our executive compensation program and practices and to provide advice and ongoing assistance on executive compensation matters for fiscal year 2017. Specifically, Radford was engaged to:

·                  provide compensation-related data for a peer group of companies to serve as a basis for assessing competitive compensation practices;

·                  review and assess our current director, CEO and other executive officer compensation policies and practices and equity profile relative to market practices;

·                  review and assess our current executive compensation program relative to market to identify any potential changes or enhancements to be brought to the attention of the compensation committee; and

·                  review market practices on employee stock purchase plans and other equity programs.

Representatives of Radford met informally with the chair of the compensation committee and attended the regular meetings of the compensation committee, including executive sessions from time to time without any members of management present. During fiscal year 2017, Radford worked directly with the compensation committee (and not on behalf of management) to assist the committee in satisfying its responsibilities and undertook no projects for management without the committee’s prior approval. The compensation committee has determined that none of the work performed by Radford during fiscal year 2017 raised any conflict of interest.

Nominating and Governance Committee

Our nominating and governance committee is comprised of Dr. Harr, who is the chair of the nominating and governance committee, Mr. Elms and Mr. Mayleben. The composition of our nominating and governance committee meets the requirements for independence under current Nasdaq and SEC rules, regulations and listing standards. Our nominating and governance committee is responsible for, among other things:

·                  identifying and recommending candidates for membership on our board of directors;

·                  developing, reviewing and recommending our Corporate Governance Guidelines and policies;

·                  reviewing proposed waivers of the code of business conduct and ethics for directors and executive officers;

·                  overseeing the evaluation of our board of directors on an annual basis; and

·                  assisting our board of directors on corporate governance matters.

Compensation Committee Interlocks and Insider Participation

During 2017, Mr. Fuhrman, Dr. Bonita, Dr. Harr and Mr. Mayleben served on our compensation committee. None of the members of our compensation committee in 2017 was at any time during 2017 or at any other time an officer or employee of Loxo Oncology, and none had or have any relationships with Loxo Oncology that are required to be disclosed under Item 404 of Regulation S-K. None of our executive officers has served as a member of the board of directors, or as a member of the compensation or similar committee, of any entity that has one or more executive officers who served on our board of directors or compensation committee during fiscal year 2017.

Code of Business Conduct and Ethics

We have adopted a Code of Business Conduct and Ethics for Directors (“Code of Conduct for Directors”) and a Code of Business Conduct and Ethics for Employees (“Code of Conduct for Employees”). Our Code of Conduct for Directors and our Code of Conduct for Employees are posted on the Investors section of our website located at http://ir.loxooncology.com by clicking on “Corporate Governance.” Any amendments or waivers of our Code of

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Conduct for Directors or our Code of Conduct for Employees pertaining to a member of our board of directors or one of our executive officers will be disclosed on our website at the above-referenced address.

Board and Committee Meetings and Attendance

Our board of directors and its committees meet throughout the year on a set schedule, and also hold special meetings and act by written consent from time to time. During fiscal year 2017, our board of directors met ten times, including telephonic meetings, the audit committee held five meetings, the compensation committee held five meetings and the nominating and governance committee held one meeting. None of the directors attended fewer than 75% of the aggregate of the total number of meetings held by the board of directors and the total number of meetings held by all committees of the board of directors on which such director served (during the period that such director served on the board of directors and any committee).

Board Attendance at Annual Stockholders’ Meeting

Our policy is to invite and encourage each member of our board of directors to be present at our annual meetings of stockholders. Mr. Fuhrman and Dr. Bilenker attended the 2017 Annual Stockholders’ Meeting.

Presiding Director of Non-Employee Director Meetings

The non-employee directors meet in regularly scheduled executive sessions without management to promote open and honest discussion, led by our non-executive Chairman, Mr. Elms.

Communication with Directors

Stockholders and interested parties who wish to communicate with our board of directors, non-management members of our board of directors as a group, a committee of the board of directors or a specific member of our board of directors (including our Chairman or lead independent director, if any) may do so by letters addressed to the attention of our Compliance Officer.

All communications are reviewed by the Compliance Officer and provided to the members of the board of directors consistent with a screening policy providing that unsolicited items, sales materials, abusive, threatening or otherwise inappropriate materials and other routine items and items unrelated to the duties and responsibilities of the board of directors not be relayed on to directors. Any communication that is not relayed is recorded in a log and made available to our board of directors.

The address for these communications is:

Loxo Oncology, Inc.
c/o Compliance Officer
281 Tresser Boulevard, 9th Floor
Stamford, CT 06901.

Nomination to the Board of Directors

Candidates for nomination to our board of directors are selected by our board of directors based on the recommendation of the nominating and governance committee in accordance with the committee’s charter, our certificate of incorporation and bylaws, our Corporate Governance Guidelines, and the criteria adopted by the board of directors regarding director candidate qualifications. In recommending candidates for nomination, the nominating and governance committee considers candidates recommended by directors, officers, employees, stockholders and others, using the same criteria to evaluate all candidates. Evaluations of candidates generally involve a review of background materials, internal discussions and interviews with selected candidates as appropriate and, in addition, the committee may engage consultants or third-party search firms to assist in identifying and evaluating potential nominees.

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Additional information regarding the process for properly submitting stockholder nominations for candidates for membership on our board of directors is set forth below under “Stockholder Proposals to Be Presented at Next Annual Meeting.”

Director Qualifications

With the goal of developing a diverse, experienced and highly qualified board of directors, the nominating and governance committee is responsible for developing and recommending to the board of directors the desired qualifications, expertise and characteristics of members of our board of directors, including the specific minimum qualifications that the committee believes must be met by a committee-recommended nominee for membership on the board of directors and any specific qualities or skills that the committee believes are necessary for one or more of the members of the board of directors to possess.

Since the identification, evaluation and selection of qualified directors is a complex and subjective process that requires consideration of many intangible factors, and will be significantly influenced by the particular needs of the board of directors from time to time, our board of directors has not adopted a specific set of minimum qualifications, qualities or skills that are necessary for a nominee to possess, other than those that are necessary to meet U.S. legal, regulatory and Nasdaq listing requirements and the provisions of our certificate of incorporation, bylaws, Corporate Governance Guidelines, and charters of the board committees. In addition, neither the board of directors nor the nominating and governance committee has a formal policy with regard to the consideration of diversity in identifying nominees. When considering nominees, the nominating and governance committee may take into consideration many factors including, among other things, a candidate’s independence, integrity, skills, financial and other expertise, breadth of experience, and knowledge about our business or industry and ability to devote adequate time and effort to responsibilities of the board of directors in the context of its existing composition. Through the nomination process, the nominating and governance committee seeks to promote board membership that reflects a diversity of business experience, expertise, viewpoints, personal backgrounds and other characteristics that are expected to contribute to the board of directors’ overall effectiveness. The brief biographical description of each director set forth in Proposal No. 1 below includes the primary individual experience, qualifications, attributes and skills of each of our directors that led to the conclusion that each director should serve as a member of our board of directors at this time.

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PROPOSAL NO. 1

ELECTION OF DIRECTORS

Our board of directors currently consists of eight directors and is divided into three classes. Each class serves for three years, with the terms of office of the respective classes expiring in successive years. Directors in Class I will stand for election at our Annual Meeting to be held on June 13, 2018. The terms of office of directors in Class II and Class III do not expire until the annual meetings of stockholders held in 2019 and 2020, respectively. At the recommendation of our nominating and governance committee, our board of directors proposes that each of the three Class I nominees named below, each of whom is currently serving as a director in Class I, be elected as a Class I director for a three-year term expiring at the 2021 Annual Meeting of Stockholders and until such director’s successor is duly elected and qualified or until such director’s earlier resignation or removal.

Shares represented by proxies will be voted “FOR” the election of each of the three nominees named below, unless the proxy is marked to “WITHHOLD” authority to so vote. If any nominee for any reason is unable to serve or for good cause will not serve, the proxies may be voted for such substitute nominee as the proxy holder might determine. Each nominee has consented to being named in this Proxy Statement and to serve if elected.

Nominees to the Board of Directors

The nominees, and their ages, occupations and length of board service are provided in the table below. Additional biographical descriptions of each nominee are set forth in the text below the table. These descriptions include the primary individual experience, qualifications, qualities and skills of each of our nominees that led to the conclusion that each director should serve as a member of our board of directors at this time.

(1) Member of the nominating and governance committee

(2) Member of the compensation committee

Dr. Joshua H. Bilenker, founder of Loxo Oncology, has served as President and Chief Executive Officer since June 2013 and as a member of our board of directors since June 2013. Since November 2013, Dr. Bilenker has served as an Operating Partner at Aisling Capital LLC, or Aisling Capital, an investment firm, where he was a Partner from January 2012 to October 2013 and previously served as a Principal from October 2008 to December 2011 and an Associate from April 2006 to September 2008. From 2004 to 2006, Dr. Bilenker served as a Medical Officer at the FDA in the Office of Oncology. Dr. Bilenker trained at the University of Pennsylvania in internal medicine and medical oncology, earning board certification in these specialties. He received his M.D. from The Johns Hopkins School of Medicine and his A.B. degree in English from Princeton University. We believe that Dr. Bilenker should serve on our board of directors due to his thorough knowledge of our company and his experience in finance and medicine.

Dr. Steve D. Harr has served on the board of directors since November 2016. From April 2014 to March 2018, Dr. Harr served as Chief Financial Officer and Head of Corporate Development of Juno Therapeutics. Previously, he served in various roles at Morgan Stanley, including as Managing Director and Head of Global Biotech Investment Banking from 2010 to 2014. Prior to that, Dr. Harr was Morgan Stanley’s lead biotech research analyst and co-head of Global Healthcare Research. Dr. Harr also serves on the board of directors of JW Therapeutics. Dr. Harr received his B.A. in Economics from the College of the Holy Cross, his M.D. from Johns Hopkins School of Medicine, and was an internal medicine resident at the University of California, San Francisco. We believe Dr. Harr should serve on our board of directors due to his financial expertise and knowledge of the biotechnology and healthcare industries.

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Tim M. Mayleben has served on the board of directors since July 2015. Mr. Mayleben currently serves as president and chief executive officer of Esperion Therapeutics and has been a member of the board of directors of Esperion since 2010. Prior to joining Esperion, Mr. Mayleben was president, CEO and a director of Aastrom Biosciences. Previously, he was president, chief operating officer and a director of NightHawk Radiology Holdings. Prior to joining NightHawk, Tim was chief operating officer of the original Esperion until its acquisition by Pfizer in 2004. Mr. Mayleben is a board member of several life science companies, including Kaléo Pharma and Marinus Pharmaceuticals and an advisor to the Wolverine Venture Fund. Mr. Mayleben earned an MBA with distinction from the J.L. Kellogg Graduate School of Management at Northwestern University, and a BBA from the University of Michigan, Ross School of Business. We believe that Mr. Mayleben should serve on our board of directors due to his public company experience and understanding of the pharmaceutical industry.

Continuing Directors

The directors who are serving for terms that end following the Annual Meeting, and their ages, occupations and length of board service, are provided in the table below. Additional biographical descriptions of each such director are set forth in the text below the table. These descriptions include the primary individual experience, qualifications, qualities and skills of each of our nominees that led to the conclusion that each director should serve as a member of our board of directors at this time.

(1) Member of the nominating and governance committee

(2) Member of the audit committee

(3) Member of the compensation committee

Dr. Keith T. Flaherty has served as a member of our board of directors since September 2013. He is Director of the Henri and Belinda Termeer Center for Targeted Therapy and Clinical Research, Massachusetts General Hospital Cancer Center, and is a Professor of Medicine at Harvard Medical School. He has worked as a physician at Massachusetts General Hospital since 2009. Dr. Flaherty serves on the board of directors of Clovis Oncology, Inc., a biopharmaceutical company. Dr. Flaherty trained in internal medicine at Brigham and Women’s Hospital, and in medical oncology at the University of Pennsylvania, earning board certifications in these specialties. He received his M.D. from The Johns Hopkins School of Medicine and his B.S. degree in Neurobiology from Yale University. We believe that Dr. Flaherty should serve on our board of directors due to his scientific background and experience as a clinician in the field of oncology.

Dr. Lori Kunkel has served on the board of directors since October 2014. She previously served as Acting Chief Medical Officer for Loxo Oncology. Prior to Loxo Oncology, Dr. Kunkel served as Chief Medical Officer at Pharmacyclics, a biopharmaceutical company, from November 2011 until August 2013 where she was responsible for building and leading an integrated clinical development and medical affairs organization highlighted by the approval of IMBRUVICA. Previously she served as Chief Medical Officer at Proteolix, a biotechnology company acquired by Onyx, where she oversaw the clinical development of KYPROLIS. Dr, Kunkel serves on the board of

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directors of Curis, Tocagen and Maverick Therapeutics. She previously served on the board of directors of Amphivena and Harpoon and is a clinical advisor on the scientific advisory boards of Amphvena, Atreca, Oryzon and Verastem. Dr. Kunkel trained in internal medicine at Baylor College of Medicine, and in hematology-oncology at USC and UCLA, earning board certification in these specialties. Dr. Kunkel received her M.D. from University of Southern California and her B.A. degree from University of California San Diego. We believe that Dr. Kunkel should serve on our board of directors due to her clinical development expertise and experience in the biopharmaceutical industry.

Steven A. Elms has served as a member of our board of directors since July 2013. He currently serves as a Managing Partner of Aisling Capital LLC, a private equity firm. He joined Aisling Capital LLC in 2000 from the life sciences investment banking group of Chase H&Q (formerly Hambrecht and Quist Group Inc.) where he was a principal. Mr. Elms serves on the board of directors of ADMA Biologics, Inc. Previously, Mr. Elms served on the board of directors of Ambit Biosciences Corp. from 2001 to 2014, MAP Pharmaceuticals, Inc. from 2004 to 2011 and has served on the boards of directors of a number of private companies. Mr. Elms received his B.A. in Human Biology from Stanford University and his M.B.A. from the Kellogg Graduate School of Management at Northwestern University. We believe that Mr. Elms should serve on our board of directors due to his extensive financial services background and experience in the pharmaceutical and healthcare industries.

Alan Fuhrman has served as a member of our board of directors since January 2015. Since December 2017, Mr. Fuhrman has served as chief financial officer of Amplyx Pharmaceuticals, a drug development company focused on life-threatening fungal infections. Prior to joining Amplyx, Mr. Fuhrman served as chief financial officer of Mirna Therapeutics, Inc., a clinical-stage microRNA company that merged with Synlogic, from September 2015 until August 2017. Mr. Fuhrman also served as the chief financial officer of Ambit Biosciences from October 2010 until its sale to Daiichi Sankyo in November 2014. Prior to this role, he served as chief financial officer of Naviscan, Inc., a privately-held medical imaging company from November 2008 until September 2010, and as chief financial officer of Sonus Pharmaceuticals, an oncology-focused biotechnology company, from September 2004 until August 2008. Earlier in his career, Mr. Fuhrman practiced as a CPA with Coopers and Lybrand. Mr. Fuhrman received B.S. degrees in both business administration and agricultural economics from Montana State University. We believe that Mr. Fuhrman should serve on our board of directors based on his financial expertise and his experience with public company accounting.

Avi Z. Naider has served as a member of our board of directors since September 2013. Mr. Naider is Chairman and CEO of ACES Risk Management Corp., a software company, a position he has held since January 2008. Mr. Naider is also a private investor and consultant to various companies. Prior to joining ACES, Mr. Naider founded an internet advertising software company, worked in private equity and was an associate at the Boston Consulting Group. Mr. Naider received his A.B. in the Woodrow Wilson School of Public and International Affairs from Princeton University. We believe that Mr. Naider should serve on our board of directors due to his experience founding and managing companies.

There are no family relationships among our directors and officers.

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Director Compensation

The following table provides information for the fiscal year ended December 31, 2017 regarding all compensation awarded to, earned by or paid to each person who served as a non-employee director for some portion of 2017. Dr. Bilenker, our Chief Executive Officer is not included in the table below because he did not receive additional compensation for services as a director. The compensation received by Dr. Bilenker as an employee is shown below in “Executive Compensation—Summary Compensation Table.”

(1)         Amounts shown in this column reflect the aggregate grant date fair value calculated in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic 718 (“ASC 718”) for awards granted during the fiscal year. There can be no assurance that this grant date fair value will ever be realized by the non-employee director. For information regarding the number of stock options held by each non-employee director as of December 31, 2017, see the “Option Awards” column in the table below.

(2)         Dr. Bonita’s cash payments were made to OrbiMed Advisors LLC. Dr. Bonita resigned the Company’s Board of Directors in December 2017.

(3)         Mr. Elms’ cash payments are made to Aisling Capital LLC.

(4)         Represents compensation paid to Dr. Flaherty for services as a Scientific Advisory Board member.

Our non-employee directors held the following number of outstanding stock options as of December 31, 2017.

(1) Includes 194,294 awards granted for services as a Scientific Advisory Board member.

(2) Includes 109,374 awards granted for services as a consultant.

Non-Employee Director Compensation Arrangements

Our board of directors has adopted a non-employee director compensation policy that provides for the following:

Cash Compensation. We provide an annual cash retainer fee of $40,000 to each of our non-employee directors for their services as a member of our board of directors and an additional $30,000 to our non-executive chairperson, as well as the following committee retainers: $16,500 for service as chair of the audit committee and $8,500 for service as a member of the audit committee; $12,500 for service as chair of the compensation committee and $5,250 for service as a member of the compensation committee; and $8,500 for service as chair of the nominating and governance committee and $5,000 for service as a member of the nominating and governance committee.

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Equity Awards. Each newly-elected or appointed non-employee director will be granted an option to purchase 17,500 shares of our common stock. Annually, each non-employee director will be granted an additional option to purchase 8,750 shares of our common stock, if the non-employee director has served continuously as a member of our board of directors for at least one year. Each initial stock option award will vest and become exercisable in three equal annual installments beginning on the first anniversary of the date of grant while each annual stock option award will vest and become exercisable in equal monthly installments over one year from the date of grant. The awards have 10-year terms and terminate three months following the date the director ceases to provide continuous services to Loxo Oncology or 12 months following that date if the termination is due to death or disability.

In addition to the awards provided for above, non-employee directors are eligible to receive discretionary equity awards.

Other Compensation. Non-employee directors receive no other form of remuneration, perquisites or benefits for their service as directors, but are reimbursed for their reasonable travel expenses incurred in attending board and committee meetings.

OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” ELECTION OF EACH OF

THE THREE NOMINATED DIRECTORS

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PROPOSAL NO. 2

RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

FIRM

Our audit committee has selected Ernst & Young LLP (“Ernst & Young”) as Loxo Oncology’s independent registered public accounting firm to perform the audit of Loxo Oncology’s financial statements for the fiscal year ending December 31, 2018 and recommends that stockholders vote for ratification of such selection. Although ratification by stockholders is not required by law, Loxo Oncology has determined that it is good practice to request ratification of this selection by the stockholders. In the event that Ernst & Young is not ratified by our stockholders, the audit committee will review its future selection of Ernst & Young as Loxo Oncology’s independent registered public accounting firm.

Prior to the engagement of Ernst & Young, CohnReznick LLP (“CohnReznick”) had been Loxo Oncology’s independent auditor for the years ended December 31, 2016 and 2015. In March 2017, our Audit Committee approved the dismissal of CohnReznick and appointed Ernst & Young as our independent auditor for the fiscal year ended December 31, 2017. CohnReznick’s reports on our consolidated financial statements for the fiscal years ended December 31, 2016 and 2015 did not contain any adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the fiscal years ended December 31, 2016 and 2015, and through March 15, 2017, (i) there have been no “disagreements” (as that term is used in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) between Loxo Oncology and CohnReznick on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of CohnReznick would have caused CohnReznick to make reference to the subject matter of the disagreement in connection with its reports on Loxo Oncology’s consolidated financial statements for such years, and (ii) there were no “reportable events” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K). We have given CohnReznick permission to respond fully to the inquiries of the successor auditor.

On March 15, 2017, our audit committee approved the appointment of Ernst & Young as the Company’s new independent registered public accounting firm, effective immediately, to perform independent audit services for the fiscal year ending December 31, 2017. During the fiscal years ended December 31, 2016 and 2015, and through March 15, 2017, neither Loxo Oncology nor anyone on its behalf, consulted Ernst & Young regarding either (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered with respect to our consolidated financial statements, in any case where a written report or oral advice was provided to us by Ernst & Young that Ernst & Young concluded was an important factor considered by us in reaching a decision as to any accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a “disagreement” (as that term is used in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a “reportable event” (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).

Representatives of Ernst & Young are expected to be present at the Annual Meeting, in which case they will be given an opportunity to make a statement at the Annual Meeting if they desire to do so, and will be available to respond to appropriate questions.

Independent Registered Public Accounting Firm Fees and Services

We regularly review the services and fees from our independent registered public accounting firm. These services and fees are also reviewed with our audit committee annually.

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During fiscal year 2017 fees for services provided by Ernst & Young were as follows:

(1) “Audit fees” include fees for audit services primarily related to the audits of our annual financial statements and internal controls over financial reporting; the review of our quarterly financial statements; comfort letters, consents, and assistance with and review of documents filed with the SEC, including our Registration Statement on Form S-3 filed in June 2017; and other accounting and financial reporting consultation and research work billed as audit fees or necessary to comply with the standards of the Public Company Accounting Oversight Board.

Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of Independent Registered Public Accounting Firm

Our audit committee’s policy is to pre-approve all audit and permissible non-audit services provided by the independent registered public accounting firm regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date. These services may include audit services, audit-related services, tax services and other services. Pre-approval is detailed as to the particular service or category of services and is generally subject to a specific budget. The independent registered public accounting firm and management are required to report periodically to the audit committee regarding the extent of services provided by the independent registered public accounting firm in accordance with this pre-approval, and the fees for the services performed to date.

All of the services relating to the fees described in the table above were pre-approved by our audit committee.

OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF PROPOSAL NO. 2

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PROPOSAL NO. 3

NON-BINDING ADVISORY VOTE ON COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS

We are seeking a non-binding, advisory stockholder vote on the compensation awarded to our named executive officers for the fiscal year ended December 31, 2017, known as a “Say on Pay” vote.

The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 enables our stockholders to vote to approve, on an advisory, non-binding basis, the compensation of our named executive officers as disclosed in this proxy statement in accordance with Section 14A of the Exchange Act. This is our first year holding such an advisory vote on the compensation of our named executive officers, commonly known as a “say-on-pay” vote, in connection with our annual meeting of stockholders.

As described in detail in the “Compensation Discussion and Analysis” and “Executive Compensation” sections of this proxy statement, our compensation program is designed to reward our executive officers at a level consistent with our overall strategic and financial performance and to provide remuneration sufficient to attract, retain and motivate them to exert their best efforts and create a successful company. Our philosophy is to tie a greater percentage of an executive officer’s compensation to stockholder returns and to keep cash compensation at a competitive level while providing the opportunity to be well-rewarded through equity if we perform well over time. We believe that our executive compensation program, with its balance of short-term incentives (including base salary and annual cash incentives tied to performance measures) and long-term incentives (including equity awards) reward sustained performance that is aligned with long-term stockholder interests. Stockholders are encouraged to read the Compensation Discussion and Analysis, the accompanying compensation tables, and the related narrative disclosure for a comprehensive explanation and analysis of our executive compensation policies and practices.

Based on the above, we request that stockholders approve on a non-binding advisory basis, the compensation of our named executive officers as described in this proxy statement pursuant to the following resolution:

RESOLVED, that the compensation paid to Loxo Oncology’s named executive officers, as disclosed in this proxy statement, including the “Compensation Discussion and Analysis” and “Executive Compensation” sections, compensation tables and narrative discussion, is hereby APPROVED.

Vote Required

Approval of named executive officer compensation requires the approval of a majority of the votes present or represented by proxy and entitled to vote thereon.

As an advisory vote, this proposal is non-binding. Although the vote is non-binding, the Board of Directors and the Compensation Committee value the opinions of our stockholders and will consider the outcome of the vote when making future compensation decisions for our named executive officers.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE “FOR” PROPOSAL NO. 3

TO APPROVE THE COMPENSATION AWARDED TO OUR NAMED EXECUTIVE OFFICERS.

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PROPOSAL NO. 4

NON-BINDING ADVISORY VOTE ON THE FREQUENCY OF HOLDING FUTURE ADVISORY VOTES

REGARDING NAMED EXECUTIVE OFFICER COMPENSATION

Under the Section 14A of the Exchange Act, at least every six years our stockholders are entitled to cast an advisory vote to indicate the frequency with which we should hold future non-binding votes to approve executive compensation, commonly known as a “say-when-on-pay” vote, or to abstain from voting.

We are requesting your non-binding vote to determine whether the frequency of the vote to approve the compensation of our named executive officers should be every one year, two years or three years. The board of directors and the compensation committee believe that annual votes will allow the compensation committee, management, and our stockholders to continue to engage in a timely, open and meaningful dialogue regarding our executive compensation philosophy, policies and practices.

Vote Required

The option of one year, two years or three years that receives the highest number of votes cast by the holders of shares represented in person or by proxy at the meeting and entitled to vote thereon will be the frequency for the advisory vote on named executive officer compensation that has been selected by stockholders. Abstentions and broker non-votes will have no effect on the outcome of the vote. As an advisory vote, the vote on Proposal 4 is not binding on us. However, the board of directors and the compensation and nominating and governance committees of the board of directors value the opinions of our stockholders and will consider the outcome of the vote when setting the frequency of the advisory vote on executive compensation.

Notwithstanding the board of directors’ recommendation and the outcome of the stockholder vote, the board of directors may, in the future, decide to conduct advisory votes on a more or less frequent basis and may vary its practice based on factors such as discussions with stockholders and the adoption of material changes to compensation programs.

THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR A FREQUENCY OF EVERY YEAR (ONE YEAR) FOR HOLDING FUTURE NON-BINDING VOTES TO APPROVE EXECUTIVE COMPENSATION.

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PROPOSAL NO. 5

APPROVAL OF AN AMENDMENT OF THE 2014 EQUITY INCENTIVE PLAN

General

In July 2014, our Equity Incentive Plan (“2014 Plan”) was initially adopted by our Board of Directors and subsequently approved by our stockholders in connection with our initial public offering. The material terms of the 2014 Plan were reapproved by our stockholders on June 10, 2015. The 2014 Plan provides for the grant of awards to eligible employees, directors, consultants, independent contractors and advisors in the form of stock options, restricted stock awards, stock bonus awards, stock appreciation rights, restricted stock units and performance awards (“Performance Awards”).

We are asking our stockholders to approve an amendment to the 2014 Plan to increase the authorized number of shares of our common stock reserved for issuance under the 2014 Plan by 1,500,000 shares, and to approve amendments to the 2014 Plan to (i) to increase the “evergreen” from 3% to 4% but to reduce the term of such “evergreen” to calendar years through January 1, 2023, (ii) impose a limit of 30,000 shares as the maximum number of shares that may be granted under the 2014 Plan to each of our non-employee directors each year, (iii) prohibit shares that are withheld from exercised shares for taxes, payment of exercise price in connection with the exercise of options or stock appreciation rights from returning to the total number of shares reserved for awards, (iv) provide for a prohibition on payment of dividends on unvested awards, (v) prohibit repricing without stockholder approval, (vi) prohibit transfer of awards to third-party institutions for value and (vii) make certain modifications to reflect changes to the tax law by 2017 tax legislation. The 2014 Plan currently has a recoupment provision requiring repayment to the company of any shares or other amount that may be paid in respect of equity awards in the event of certain acts of misconduct.

Reasons for Amendment of the 2014 Plan

We believe the proposed 2014 Plan amendments would enable us to continue to attract, retain and reward talented individuals who possess the skills necessary to expand our business and assist in the achievement of our strategic objectives. Competition for talent in our industry is intense. Traditionally, a cornerstone of our method for attracting and retaining top caliber employees and consultants has been our equity-based compensation programs, including the grant of options under the 2014 Plan. Allowing employees and consultants to participate in owning shares of our common stock helps align the objectives of our stockholders, our employees and our consultants and is important in attracting, motivating and retaining the highly skilled personnel that are essential to our success and creating long-term value for our stockholders. We also believe that our compensation model has helped us create an ownership culture among our employees and consultants.  Over 75% of the shares subject to employee equity grants made in 2017 were attributable to awards to our employees who were not Named Executive Officers.

The Board believes that the number of shares currently remaining available for issuance pursuant to future awards under the 2014 Plan (as of March 31, 2018) is not sufficient for future granting needs. We have grown rapidly since our initial public offering in 2014, from six full-time employees to 73 full-time employees at March 31, 2018. As of March 31, 2018, there were approximately 109 individuals eligible to participate in the 2014 Plan. Our Board, the Compensation Committee and management believe that the effective use of share-based long-term incentive compensation is vital to our ability to achieve strong performance in the future. The 2014 Plan will maintain and enhance the key policies and practices adopted by our management and Board to align employee and shareholder interests and to link compensation to our corporate performance. In addition, our future success depends, in large part, upon our ability to maintain a competitive position in attracting, retaining and motivating key personnel. We believe that the increase in the number of shares available for issuance under our 2014 Plan is essential to permit us to continue to provide long-term, equity-based incentives to present and future key employees, consultants and directors.

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Summary of the Proposal

We are asking our stockholders to approve an increase to the authorized number of shares of our common stock reserved for issuance under the 2014 Plan by 1,500,000 shares and to increase the “evergreen” from 3% to 4% and reducing the “evergreen” provision as noted below.

Other Corporate Governance Best Practice Features of the Amendment

We are also asking our stockholders to approve other features of the plan in accordance with best corporate governance practices including  (i)  to reduce the term of the “evergreen” provision to calendar years through January 1, 2023, (ii) impose a limit of 30,000 shares as the maximum number of shares that may be granted under the 2014 Plan to each of our non-employee directors each year, (iii) a prohibition on returning shares that have been withheld from exercised shares for taxes, payment of exercise price in connection with the exercise of options or stock appreciation rights from returning to the options share pool, (iv) provide for a prohibition on payment of dividends on unvested awards, (v) prohibit repricing without stockholder approval, (vi) prohibit transfer of awards to third-party institutions for value and (vii) make certain changes to reflect changes to the tax law by 2017 tax legislation. Our Board of Directors approved the 2014 Plan amendments on April 23, 2018, subject to approval by stockholders. If stockholders do not approve the 2014 Plan amendments, no shares will be added to the authorized number of shares reserved for issuance under the 2014 Plan, and the other 2014 Plan amendments will not take effect.

In evaluating the proposed 2014 Plan amendments, our Board of Directors considered a number of factors, including the costs of such amendments as well as an analysis of certain burn rate, dilution and overhang metrics as summarized below:

Equity Compensation Is a Critical Element of Our Compensation Policy. Offering a broad-based equity compensation program is vital to attracting and retaining highly skilled people in our competitive and fast-paced industry. We use equity awards under the 2014 Plan to increase incentives on the part of eligible employees, non-employee directors and consultants who provide significant services to the company and its affiliates. We believe that providing an equity stake in the future success of our business encourages our employees to be highly motivated to achieve our long-term business goals and to increase stockholder value. Their innovation and productivity are critical to our success. Accordingly, approving the amendments to the 2014 Plan is in the best interest of our stockholders because equity awards help us to:

·                  attract, motivate and retain talented employees, directors and consultants;

·                  align employee and stockholder interests; and

·                  link employee compensation with company performance.

We strongly believe that the approval of the 2014 Plan amendments will enable us to continue to use the 2014 Plan to achieve our goals in attracting and retaining our most valuable asset: our employees.

We Have Carefully Considered and Forecasted Our Need for Shares. After carefully forecasting our anticipated growth, hiring plans and retention needs and considering our historical grant and forfeitures rates, we anticipate that the additional shares we seek to add to the 2014 Plan, combined with the existing shares available for grant under the 2014 Plan as of March 31, 2018, and the “evergreen” will be sufficient to attract and retain employees through 2023. However, a change in business conditions or our strategy could alter this projection.

In determining the number of shares to reserve for issuance under the 2014 Plan, our Compensation Committee considered a number of factors, including:

·                  Historical Grant Practices. During the fiscal years 2015, 2016 and 2017, we granted equity awards pursuant to the 2014 Plan for 536,534, 826,476 and 700,500 shares, and returned 237,936, 64,301, and 63,347 shares, respectively, to the 2014 Plan in connection with withheld shares and canceled awards related to discontinuation of service. This represents gross burn rates of 3.18%, 3.95% and 2.50% for the years 2015, 2016 and 2017, respectively, and a three-year average gross burn rate of 3.21% of the weighted average shares of common stock outstanding.

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·                  Potential Dilution. Our fiscal year-end overhang rate, calculated by dividing (i) the number of shares subject to equity awards outstanding at the end of the fiscal year, plus the number of shares remaining available for issuance under the 2014 Plan by (ii) the number of shares outstanding at the end of the fiscal year, was 18.4%, 15.7% and 12.6%, respectively. If approved, the new shares reserved for issuance under the 2014 Plan would represent an additional potential equity dilution of approximately 5.0%.

·                  Expected Utilization. As of March 31, 2018, only 216,282 shares of our common stock remained available for future grant of awards under the 2014 Plan. If stockholders do not approve the proposed share increase, then based on historical usage rates under the 2014 Plan, we believe we will be unable to make grants, including our annual grants, during fiscal year 2019 and future years, and lose an important compensation tool aligned with stockholder interests to attract and retain key executives and employees.

Summary of the 2014 Plan

The material terms of the 2014 Plan, as would be amended by these proposed amendments, are summarized below. The summary is qualified in its entirety by reference to the full text of the 2014 Plan, which is attached as Appendix A to this proxy statement.

Purpose

The 2014 Plan allows us, under the direction of our Compensation Committee (or those persons to whom administration of the 2014 Plan, or part of the 2014 Plan, has been delegated or permitted by law) to make grants of stock options, restricted stock awards, stock bonus awards, stock appreciation rights, restricted stock units, performance shares and performance units to employees, directors, consultants, independent contractors and advisors. The purpose of these equity awards is to attract and retain talented employees, directors, consultants, independent contractors and advisors and further align their interests and those of our stockholders by continuing to link a portion of their compensation with our performance.

Summary of the 2014 Plan — Key Terms

Shares Authorized

We initially reserved 1,092,085 shares of our common stock to be issued under our 2014 Plan. These shares were increased automatically by 499,021, 587,331, 650,437 and 899,751 on January 1 of each of 2015, 2016, 2017 and 2018, respectively, and, if the 2014 Plan amendments are approved, it will increase automatically on the first day of January of each of 2019 through 2023 by the number of shares equal to 4% of the total outstanding shares of our common stock as of the immediately preceding December 31. However, our board of directors may reduce the amount of the increase in any particular year. In addition, the following shares are available for grant and issuance under our 2014 Plan:

·                  shares subject to options or stock appreciation rights granted under our 2014 Plan that cease to be subject to the option or stock appreciation right for any reason other than exercise of the option or stock appreciation right;

·                  shares subject to awards granted under our 2014 Plan that are subsequently forfeited or repurchased by us at the original issue price;

·                  shares subject to awards granted under our 2014 Plan that otherwise terminate without shares being issued;

·                  shares surrendered, cancelled or exchanged for cash or a different award (or combination thereof);

·                  shares of common stock reserved but not issued or subject to outstanding grants under our 2013 Equity Incentive Plan as of the date of our initial public offering;

·                  shares of common stock issuable upon the exercise of options or subject to other awards under our 2013 Equity Incentive Plan that cease to be subject to such options or other awards by forfeiture or otherwise will be available for grant and issuance under our 2014 Plan; and

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·                  shares of common stock issued under our 2013 Plan that are forfeited or repurchased by us are available for grant and issuance under our 2014 Plan.

As of March 31, 2018, we had 3,630,971 outstanding stock options under the 2014 Plan with a weighted average exercise price of $51.90 and weighted average remaining contractual term of 8.14 years. As of March 31, 2018, we had 216,282 shares available for grant in the 2014 Plan.

Other Features of the Plan

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Stock options may vest based on time or achievement of performance conditions or a combination of both. Stock options may be vested and exercisable within the times or upon the conditions as set forth in the award agreement and our compensation committee may provide for stock options to become exercisable at one time or from time to time, periodically or otherwise, in such number of shares or percentage of shares as it determines.

A restricted stock unit represents the right to receive shares of our common stock at a specified date in the future, subject to forfeiture of that right because of termination of employment or failure to achieve certain performance conditions. If a restricted stock unit has not been forfeited, then on the date specified in the restricted stock unit agreement, we will deliver to the holder of the restricted stock unit whole shares of our common stock (which may be subject to additional restrictions), cash or a combination of our common stock and cash. Unless otherwise determined in the award agreement or by the compensation committee, vesting will cease on the date the holder no longer provides services to us.

A restricted stock award is an offer by us to sell shares of our common stock subject to restrictions, which may vest based on time or achievement of performance conditions, or a combination of both. The price, if any, of a restricted stock award will be determined by the compensation committee. Unless otherwise determined in the award agreement or by the compensation committee, vesting will cease on the date the holder no longer provides services to us and unvested shares will be forfeited to or repurchased by us.

A stock appreciation right involves a payment, or payments, in cash or shares of our common stock (which may be subject to additional restrictions), to the holder based upon the difference between the fair market value of our common stock on the date of exercise and the stated exercise price at grant up to a maximum amount of cash or number of shares. Stock appreciation rights may vest based on time or achievement of performance conditions.

A performance award is an award of a cash bonus or a number of shares of our common stock that may be settled upon achievement of the pre-established performance goals in cash or by issuance of the underlying shares. These awards are subject to forfeiture prior to settlement because of termination of employment or failure to achieve the performance goals. As noted above, no person is eligible to receive more than $5,000,000 in performance awards in any calendar year.

Stock bonuses may be granted as additional compensation for service or performance and, therefore, will not be issued in exchange for cash.

Our 2014 Plan permits the grant of performance-based stock and cash awards up to $5,000,000 in any calendar year that may qualify as “performance-based” compensation that is not subject to the $1,000,000 limitation on income tax deductibility imposed by Section 162(m) of the Code. In addition to the grant of stock options or stock appreciation rights that are deemed to be performance-based if issued at fair market value, our Compensation Committee may structure awards so that the stock or cash will be issued or paid only following the achievement of certain pre-established performance goals during a designated performance period.

Our 2014 Plan is administered by our Compensation Committee, all of the members of which are outside directors as defined under applicable federal tax laws, or by our Board of Directors acting in place of our Compensation Committee. The Compensation Committee has the authority to construe and interpret our 2014 Plan, grant awards and make all other determinations necessary or advisable for the administration of the 2014 Plan, and has the full power to implement and carry out the 2014 Plan, except that our Board of Directors will establish the terms of the grant of any awards to non-employee directors.

Our Compensation Committee may establish performance goals under which performance-based awards may be made by selecting from one or more of the following performance criteria: (a) profit before tax; (b) billings; (c) revenue; (d) net revenue; (e) earnings (which may include earnings before interest and taxes, earnings before taxes, and net earnings); (f) operating income; (g) operating margin; (h) operating profit; (i) controllable operating profit, or net operating profit; (j) net profit; (k) gross margin; (l) operating expenses or operating expenses as a percentage of revenue; (m) net income; (n) earnings per share; (o) total stockholder return; (p) market share; (q) return on assets or net assets; (r) our stock price; (s) growth in stockholder value relative to a pre-determined

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index; (t) return on equity; (u) return on invested capital; (v) cash flow (including free cash flow or operating cash flows); (w) cash conversion cycle; (x) economic value added; (y) individual confidential business objectives; (z) contract awards or backlog; (aa) overhead or other expense reduction; (bb) credit rating; (cc) strategic plan development and implementation; (dd) succession plan development and implementation; (ee) improvement in workforce diversity; (ff) customer indicators; (gg) new product invention or innovation; (hh) attainment of research and development milestones; (ii) improvements in productivity; (jj) bookings; (kk) attainment of objective operating goals and employee metrics; and (ll) any other metric that is capable of measurement as determined by the Compensation Committee.

Awards granted under our 2014 Equity Incentive Plan may not be transferred in any manner other than by will or by the laws of descent and distribution or as determined by our Compensation Committee. Unless otherwise permitted by our Compensation Committee, stock options may be exercised during the lifetime of the optionee only by the optionee or the optionee’s guardian or legal representative. Stock options granted under our 2014 Equity Incentive Plan generally may be exercised for a period of three months after the termination of the optionee’s service to us for any reason other than for cause, death or disability, for a period of 12 months post-termination in the case of termination due to death or disability, or such longer period as our Compensation Committee may provide. Stock options generally terminate immediately upon termination of employment for cause. Unless otherwise determined by our Compensation Committee and as set forth in a participant’s award agreement, upon a termination of employment or service with us, the vesting of any shares of restricted stock awards, restricted stock units, stock bonus awards, options, stock appreciation rights or performance awards will cease on the date of termination of employment.

Adjustments / Compensation Events

In the event of an extraordinary cash dividend, stock dividend, recapitalization, stock split, reverse stock split, subdivision, combination, reclassification or similar change of our capital structure without consideration, the Board may approve, in its discretion, an adjustment of the number and kind of shares available for grant under the 2014 Plan, and subject to the various limitations set forth in the 2014 Plan, the number of shares subject to outstanding awards under the 2014 Plan, and the exercise price of outstanding stock options and of other awards.

In the event of a merger or consolidation, any and all outstanding awards may be assumed or replaced by the successor corporation. In the alternative, the successor corporation may substitute equivalent awards or provide substantially similar consideration to participants as was provided to stockholders. Outstanding awards that are not assumed, substituted or cashed out will accelerate in full and expire upon the closing of the merger or consolidation. In addition, in the event of specified change in control transactions, our compensation committee may accelerate the vesting of awards (a) immediately upon the occurrence of the transaction, whether or not the award is continued, assumed or substituted by a surviving corporation or its parent in the transaction, or (b) in connection with a termination of a participant’s service following such a transaction. In the event of a merger or consolidation, the vesting of all awards granted to non-employee directors shall accelerate and such awards shall become exercisable in full.

Our 2014 Plan will terminate on July 18, 2024, unless it is terminated earlier by our Board of Directors. Our Board of Directors may amend or terminate our 2014 Plan at any time. Our Board of Directors must obtain the approval of our stockholders if our Board of Directors amends our 2014 Plan in any manner that requires stockholder approval.

Recoupment

All awards under the 2014 Plan shall be subject to clawback or recoupment pursuant to any compensation clawback or recoupment policy adopted by the Board or required by law during the term of individual’s employment or other service with our company that is applicable to our executive officers, employees, directors or other service providers, and in addition to any other remedies available under such policy and applicable law, may require the cancelation of outstanding awards and the recoupment of any gains realized with respect to awards.

The summary of the 2014 Plan provided above is a summary of the principal features of the 2014 Plan. This summary, however, does not purport to be a complete description of all of the provisions of the 2014 Plan. It is qualified in its entirety by reference to the full text of the 2014 Plan. A copy of the 2014 Plan is attached as

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Appendix A to this Proxy Statement.

Federal Income Tax Consequences

The following is a brief summary of the federal income tax consequences applicable to awards granted under the 2014 Plan based on federal income tax laws in effect on the date of this Proxy Statement.

This summary is not intended to be exhaustive and does not address all matters that may be relevant to a particular participant. The summary does not discuss the tax laws of any state, municipality, or foreign jurisdiction, or the gift, estate, excise, payroll, or other tax laws other than federal income tax law. This summary does not discuss the impact of Section 280G of the Code governing parachute payments or Section 409A of the Code governing nonqualified deferred compensation plans. The following is not intended or written to be used, and cannot be used, for the purposes of avoiding taxpayer penalties. Because circumstances may vary, we advise all participants to consult their own tax advisors under all circumstances.

Stock Options and Stock Appreciation Rights. A recipient of a stock option or stock appreciation right will not recognize taxable income upon the grant of those awards. For NSOs and stock appreciation rights, the participant will recognize ordinary income upon exercise in an amount equal to the difference between the fair market value of the shares and the exercise price on the date of exercise. Any gain or loss recognized upon any later disposition of the shares generally will be a capital gain or loss. The acquisition of shares upon exercise of an ISO will not result in any taxable income to the participant, except, possibly, for purposes of the alternative minimum tax. The gain or loss recognized by the participant on a later sale or other disposition of such shares will either be long-term capital gain or loss or ordinary income, depending upon whether the participant holds the shares for the legally required period (currently more than two years from the date of grant and more than one year from the date of exercise). If the shares are not held for the legally required period, the participant will recognize ordinary income equal to the lesser of (i) the difference between the fair market value of the shares on the date of exercise and the exercise price, or (ii) the difference between the sales price and the exercise price. Any additional gain recognized on the sale generally will be short-term or long-term capital gain. Different and complex rules may apply to incentive stock options that are early exercisable, and we encourage participants holding such any such awards to seek the advice of their own tax counsel.

Restricted Stock Awards. For restricted stock awards, unless vested or the recipient elects under Section 83(b) of the Code to be taxed at the time of grant or purchase, the recipient will not have taxable income upon the grant, but will recognize ordinary income upon vesting equal to the fair market value of the shares at the time of vesting less the amount paid for such shares (if any). Any gain or loss recognized upon any later disposition of the shares generally will be a capital gain or loss.

Restricted Stock Units. A holder of a restricted stock unit does not recognize taxable income when the restricted stock unit is granted. When vested restricted stock units (and dividend equivalents, if any) are settled and distributed, the participant will recognize ordinary income equal to the amount of cash and/or the fair market value of shares received less the amount paid for such stock units (if any).

Other Share-Based Awards. The tax effects of other share-based awards will vary depending on the type, terms and conditions of those awards.

Performance Awards. No income generally will be recognized upon the grant of a performance award. Upon payment in respect of a performance award, the recipient generally will be required to include as taxable ordinary income in the year of receipt an amount equal to the amount of cash received and the fair market value of any nonrestricted shares of common stock or other property received.

ERISA Information

The plan is not subject to any of the provisions of the Employee Retirement Income Security Act of 1974, as amended.

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Impact of Section 162(m)

Section 162(m) of the Tax Code generally disallows public companies a tax deduction for federal income tax purposes of remuneration in excess of $1 million paid to certain executive officers.  While our Compensation Committee may consider the deductibility of awards as one factor in determining executive compensation, our Compensation Committee also looks at other factors in making its decisions and retains the flexibility to award compensation that it determines to be consistent with the goals of our executive compensation program even if the awards are not deductible by us for tax purposes.

Recent changes to Section 162(m) in connection with the passage of the Tax Cuts and Jobs Act repealed exceptions to the deductibility limit that were previously available for “qualified performance-based compensation” (including stock option grants, performance-based cash bonuses and performance-based equity awards, such as performance-based restricted stock units) effective for taxable years after December 31, 2017.  As a result, any compensation paid to certain of our executive officers in excess of $1 million will be non-deductible unless it qualifies for transition relief afforded by the Tax Cuts and Jobs Act to compensation payable pursuant to certain binding arrangements in effect on November 2, 2017 (including performance-based restricted stock units that were intended to qualify as performance-based compensation for purposes of Section 162(m) that were granted to our executive officers who were “covered employees” within the meaning of Section 162(m)). We believe that compensation expense incurred in respect of our stock options granted prior to November 2, 2017 will continue to be deductible pursuant to this transition rule. However, because of uncertainties in the interpretation and implementation of the changes to Section 162(m) in the Tax Cuts and Jobs Act, including the scope of the transition relief, we can offer no assurance of such deductibility.

New 2014 Plan Benefits

All awards to executive officers, employees and consultants are made at the discretion of the 2014 Plan administrator. We anticipate that the Board of Directors will award 8,750 shares of our common stock to each of our non-employee directors following the annual meeting. Using the closing price of our common stock on Nasdaq on the Record Date of $133.06 per share, this would be equal to an aggregate value of $1,164,275. Future awards to our officers, employees and consultants under the 2014 Plan are discretionary. As a result, the benefits and amounts that will be received or allocated by those individuals under the 2014 Plan are not determinable at this time.

History of Grants Under the 2014 Plan

From the inception of the 2014 Plan through March 31, 2018, options to purchase a total of 4,041,635 shares had been granted under the 2014 Plan, 174,622 of which had been exercised and 3,630,971 of which remained outstanding. The options outstanding as of March 31, 2018 had a weighted-average exercise price of $51.90 per share. The closing price per share of our common stock as reported by Nasdaq on the Record Date was $133.06. The following table summarizes the grants made to our named executive officers, all current executive officers as a group, all current non-employee directors as a group, and all current employees (excluding our executive officers and directors) as a group, from the inception of the 2014 Plan through March 31, 2018:

Additional information about outstanding grants under our 2014 Plan can be found in the Section entitled “Equity Compensation Plan Information” below.

Certain Interests of Directors

In considering the recommendation of our Board of Directors with respect to the re-approval of the material terms of the 2014 Plan, stockholders should be aware that the members of our Board of Directors have certain

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interests that may present them with conflicts of interest in connection with such proposal. As discussed above, directors are eligible to receive awards under the 2014 Plan. Please see Proposal No. 1—Election of Directors—Director Compensation for more detail about equity grants to our directors. Our Board of Directors recognizes that approval of this proposal may benefit our directors and their successors.

OUR BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” APPROVAL OF AMENDMENTS TO OUR 2014 EQUITY INCENTIVE PLAN

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to the beneficial ownership of our common stock as of March 31, 2018, by:

·                  each stockholder known by us to be the beneficial owner of more than 5% of our common stock;

·                  each of our directors or director nominees;

·                  each of our executive officers; and

·                  all of our directors, director nominees and executive officers as a group.

Percentage ownership of our common stock is based on 30,055,380 shares of our common stock outstanding on March 31, 2018. We have determined beneficial ownership in accordance with the rules of the SEC, and thus it represents sole or shared voting or investment power with respect to our securities. Unless otherwise indicated below, to our knowledge, the persons and entities named in the table have sole voting and sole investment power with respect to all shares that they beneficially owned, subject to applicable community property laws. We have deemed shares of our common stock subject to options that are currently exercisable or exercisable within 60 days of the record date to be outstanding and to be beneficially owned by the person holding the option for the purpose of computing the percentage ownership of that person but have not treated them as outstanding for the purpose of computing the percentage ownership of any other person.

Unless otherwise indicated, the address of each of the individuals and entities named below is c/o Loxo Oncology, Inc., 281 Tresser Boulevard, 9th Floor, Stamford, CT 06901.

*Represents beneficial ownership of less than one percent.

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(1)                                 Based on a Schedule 13G/A filed on February 13, 2018. Consists of 4,490,625 shares of our common stock held by FMR LLC. Members of the family of Edward C. Johnson 3d, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of FMR LLC such that they may be deemed to beneficially own the shares of common stock held directly by FMR LLC. The principal business address of FMR LLC is 245 Summer Street, Boston, Massachusetts 02210.

(2)                                 Consists of shares of common stock owned directly by Aisling Capital III, LP, or Aisling. The general partner of Aisling is Aisling Capital Partners III, LP, or Aisling GP. Mr. Elms is a Managing Partner and Dr. Bilenker is an Operating Partner of Aisling GP, which has established an investment committee that has voting and investment power with respect to these shares. Mr. Elms is a member of the investment committee of Aisling GP and, as such, may be deemed to have voting and investment power with respect to these shares. Dr. Bilenker is not a member of the investment committee and does not have voting and dispositive power with regard to these shares. Mr. Elms is also a Managing Member of Aisling Capital, LLC, which is the investment manager of Aisling, and a Member and Officer of Aisling Capital Partners III, LLC, the general partner of Aisling GP. The address of Aisling Capital III, LP and Aisling GP is 888 Seventh Avenue, 12th Floor, New York, NY 10106.

(3)                                 Based on a Schedule 13G filed on February 14, 2018. Sands Capital Management, LLC, or Sands Capital, has sole voting power with respect to 1,659,593 shares of our common stock and sole dispositive power with respect to 2,272,109 shares of our common stock.  These shares are beneficially owned by clients of Sands Capital. Sands Capital’s address is 1000 Wilson Blvd., Suite 3000, Arlington, VA 22209.

(4)                                 Based on a Schedule 13G/A filed February 8, 2018, Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP, and Wellington Management Global Holdings, Ltd., each a holding company, have shared voting power with respect to 1,864,853 shares and shared dispositive power with respect to 2,092,151 shares. The shares reported are owned by clients of the following investment advisers: Wellington Management Company LLP; Wellington Management Canada LLC; Wellington Management Singapore Pte Ltd; Wellington Management Hong Kong Ltd; Wellington Management International Ltd; Wellington Management Japan Pte Ltd; and Wellington Management Australia Pty Ltd, or collectively, the Wellington Investment Advisers. Wellington Investment Advisers Holdings LLP controls directly, or indirectly through Wellington Management Global Holdings, Ltd., the Wellington Investment Advisers. Wellington Investment Advisers Holdings LLP is owned by Wellington Group Holdings LLP, which is owned by Wellington Management Group LLP. The address for Wellington Management Company LLP is 280 Congress Street, Boston, MA 02210.

(5)                                 Based on a Schedule 13G filed on February 9, 2018. Consists of an aggregate of 1,972,919 shares of our common stock beneficially owned by The Vanguard Group, or Vanguard. Vanguard Fiduciary Trust Company, a wholly owned subsidiary of Vanguard, is the beneficial owner of 42,521 shares of our common stock as a result of its serving as investment manager of Vanguard’s collective trust accounts. Vanguard Investments Australia, Ltd., a wholly owned subsidiary of Vanguard, is the beneficial owner of 3,168 shares of our common stock as a result of its serving as investment manager of Vanguard’s Australian investment offerings. Vanguard’s address is 100 Vanguard Blvd., Malvern, PA 19355.

(6)                                 Based on a Schedule 13G filed on February 2, 2018. Consists of 1,841,336 shares of our common stock held by the following subsidiaries of BlackRock, Inc, or BlackRock:  BlackRock Advisors, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock (Luxembourg) S.A., BlackRock (Netherlands) B.V., BlackRock Fund Advisors, BlackRock Asset Management Ireland Limited, BlackRock Institutional Trust Company, National Association, BlackRock Financial Management, Inc., BlackRock Japan Co., Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC.  Blackrock’s address is 55 East 52nd Street, New York, NY 10055.

(7)                                 Based on a Schedule 13D/A filed January 24, 2018. Consists of 1,069,229 shares of common stock held by AI Loxo Holdings 2 LLC, or AI Loxo 2, and 672,288 shares of common stock held by AI Life Sciences Investments LLC, or AI Life. Each of (i) Access Industries, Inc., or Access, (ii) Access Industries Management, LLC, or AIM LLC, and (iii) Len Blavatnik may be deemed to beneficially own and share

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voting and investment power over the shares of common stock held directly by AI Loxo 2 because AIM LLC controls Al Loxo 2, Access owns all of the outstanding membership interests of AIM LLC, and Len Blavatnik controls each of Access, AIM LLC and AI Loxo 2. Each of Access, AIM LLC and Len Blavatnik, and each of their affiliated entities and the officers, partners, members and managers thereof, other than AI Loxo 2, disclaims beneficial ownership of the shares held by AI Loxo 2. Each of (i) Access Industries Holdings LLC, or AIH LLC, (ii) AIM LLC, (iii) Access and (iv) Len Blavatnik may be deemed to beneficially own and share investment and voting power over the shares of common stock held directly by AI Life because (i) Access owns all of the outstanding membership interests of AIM LLC, (ii) Len Blavatnik controls each of Access and AIM LLC and (iii) AIM LLC controls each of AI Life, AI-LSI Management LLC (the managing member of AI Life) and AI LSI SPV LLC (which holds certain membership interests in AI Life). Each of AIH LLC, AIM LLC, Access and Len Blavatnik, and each of their affiliated entities and the officers, partners, members and managers thereof, other than AI Life, disclaims beneficial ownership of the shares of Common Stock held by AI Life. The Blavatnik Family Foundation, or Foundation, may be deemed to have been acting together with certain AIM LLC, Access, AI Loxo 2 and/or AIH LLC, or collectively, the Access Reporting Persons, in connection with certain trading activities. Accordingly, as a precautionary matter, the Foundation reported ownership of shares by and transactions effected by the Foundation. The Foundation is a charitable trust that is managed by a board of managers consisting of Alex Blavatnik and Lincoln Benet. The Foundation received its shares of our common stock as a charitable contribution. The Foundation disposed of its shares of our common stock to fund its charitable purposes. The Foundation does not currently own any shares of our common stock, and may no longer be deemed to be acting together with the other Access Reporting Persons. Mr. Naider is the President of AI LSI Management LLC, the managing member of AI Life, and disclaims all beneficial, investment and voting power over the shares. The principal business address of Access Industries is 730 Fifth Avenue, 20th Floor, New York, NY 10019.

(8)                                 Based on a Schedule 13G filed on February 14, 2018. Consists of an aggregate of 1,595,137 shares of our common stock beneficially owned by T. Rowe Price Associates, Inc., or Price Associates. Price Associates does not serve as custodian of the assets of any of its clients; accordingly, in each instance only the client or the client’s custodian or trustee bank has the right to receive dividends paid with respect to, and proceeds from the sale of, such securities. The ultimate power to direct the receipt of dividends paid with respect to, and the proceeds from the sale of, such securities is vested in the individual and institutional clients which Price Associates serves as investment adviser. Any and all discretionary authority which has been delegated to Price Associates may be revoked in whole or in part at any time. Not more than 5% of our common stock is owned by any one client subject to the investment advice of Price Associates.

(9)                                 Based on a Schedule 13G/A filed on February 13, 2018. Consists of 1,543,192 shares of our common stock held directly by Adage Capital Partners, L.P., or ACP. Each of (i) Adage Capital Partners GP, L.L.C., or ACPGP, as general partner of ACP, (ii) Adage Capital Advisors, L.L.C., or ACA, as managing member of ACPGP, (iii) Robert Atchinson as managing member of ACA, managing member of ACPGP and general partner of ACP, and (iv) Phillip Gross, as managing member of ACA, managing member of ACPGP and general partner of ACP, may be deemed to beneficially share voting and dispositive power over the shares owned by ACP. ACP’s address is 200 Clarendon Street, 52nd floor, Boston, Massachusetts 02116.

(10)                          Consists of (a) 182,707 shares of our common stock held directly by Dr. Bilenker and (b) 819,222 shares of our common stock issuable to Dr. Bilenker upon the exercise of stock options that are exercisable within 60 days of March 31, 2018. Dr. Bilenker is an Operating Partner at Aisling GP, the general partner of Aisling, but is not a member of its investment committee and therefore does not have voting or dispositive power with regard to the shares held by Aisling (see note 1).

(11)                          Consists of 263,316 shares of our common stock issuable to Mr. Van Naarden upon the exercise of stock options that are exercisable within 60 days of March 31, 2018.

(12)                          Consists of 59,465 shares of our common stock issuable to Ms. Burstein upon the exercise of stock options that are exercisable within 60 days of March 31, 2018.

(13)                          Consists of (a) 3,438,920 shares of our common stock held directly by Aisling and (b) 41,332 shares of our

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common stock issuable to Mr. Elms upon the exercise of stock options that are exercisable within 60 days of March 31, 2018. Mr. Elms is a Managing Partner of Aisling GP and a member of its investment committee, a Managing Member of Aisling Capital, LLC, and a member and Officer of Aisling Capital Partners III, LLC, and, as such, may be deemed to have voting and investment power with respect to those shares (see note 1).

(14)                          Consists of (a) 9,732 shares of our common stock held directly by Dr. Flaherty and (b) 234,037 shares of our common stock issuable to Dr. Flaherty upon the exercise of stock options that are exercisable within 60 days after March 31, 2018.

(15)                          Consists of 41,332 shares of our common stock issuable to Mr. Fuhrman upon the exercise of stock options that are exercisable within 60 days after March 31, 2018.

(16)                          Consists of 15,291 shares of our common stock issuable to Dr. Harr upon the exercise of stock options that are exercisable within 60 days after March 31, 2018.

(17)                          Consists of (a) 11,840 shares of our common stock held directly by Dr. Kunkel and (b) 129,004 shares of our common stock issuable to Dr. Kunkel upon the exercise of stock options that are exercisable within 60 days after March 31, 2018.

(18)                          Consists of 25,311 shares of our common stock issuable to Mr. Mayleben upon the exercise of stock options that are exercisable within 60 days after March 31, 2018.

(19)                          Consists of (a) 126,118 shares of common stock held directly by Mr. Naider and (b) 41,332 shares of our common stock issuable to Mr. Naider upon the exercise of stock options that are exercisable within 60 days after March 31, 2018.

(20)                          Includes shares beneficially owned by directors and executive officers. Consists of 3,769,317 shares of common stock and 1,669,642 of our common stock underlying options that are exercisable within 60 days of March 31, 2018.

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EXECUTIVE OFFICERS

The names of our current executive officers, their ages and their positions are shown below.

Our board of directors chooses executive officers, who then serve at the board’s discretion. There is no family relationship among any of our directors or executive officers.

Dr. Joshua H. Bilenker, founder of Loxo Oncology, has served as President and Chief Executive Officer since June 2013 and as a member of our board of directors since June 2013. Since November 2013, Dr. Bilenker has served as an Operating Partner at Aisling Capital LLC, or Aisling Capital, an investment firm, where he was a Partner from January 2012 to October 2013 and previously served as a Principal from October 2008 to December 2011 and an Associate from April 2006 to September 2008. From 2004 to 2006, Dr. Bilenker served as a Medical Officer at the FDA in the Office of Oncology. Dr. Bilenker trained at the University of Pennsylvania in internal medicine and medical oncology, earning board certification in these specialties. He received his M.D. from The Johns Hopkins School of Medicine and his A.B. degree in English from Princeton University.

Jennifer Burstein has served as Senior Vice President of Finance since January 2018 and as Vice President of Finance since May 2015. Prior to Loxo Oncology, Ms. Burstein served as Vice President of Finance at Acorda Therapeutics, Inc., a public biotechnology company, from July 2010 until April 2015, where she held several positions of increasing responsibility in Finance from 2006 until being appointed Vice President of Finance. Prior to joining Acorda, from 2002 to 2006, she was with Eyetech Pharmaceuticals, Inc., a public biotechnology company, which is currently a subsidiary of Valeant Pharmaceuticals International, Inc., where she held several positions of increasing responsibility in Finance until being promoted to Senior Director, Accounting. Before Eyetech, Ms. Burstein worked in the Finance departments at several companies and in public accounting. Ms. Burstein received her B.S. in Business Administration and M.B.A. in Accounting from the State University of New York at Buffalo and has a CPA license in New York.

Jacob S. Van Naarden has served as our Chief Business Officer since December 2015, and prior to that he served as our Vice President of Corporate Development and Strategy, since May 2014. Prior to joining Loxo Oncology, Mr. Van Naarden was an analyst at HealthCor Management from June 2013 to May 2014. From August 2008 to June 2013, Mr. Van Naarden worked at Aisling Capital, initially as an analyst and later as an associate. Mr. Van Naarden started his career at Goldman Sachs, where he worked from July 2006 to June 2008. Mr. Van Naarden received his A.B. in Molecular Biology from Princeton University.

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EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Our primary objective with respect to executive compensation is to attract and retain individuals who possess knowledge, experience and skills that we believe are important to our business of developing highly selective medicines for patients with genetically defined cancers.  We require a highly educated, specialized and sought-after workforce and our product candidates involve long development cycles.  In light of these challenges, our compensation philosophy is to provide and effectively implement policies, plans and programs designed to attract, retain and motivate the workforce required for us to achieve our strategic as well as tactical goals and create long-term value for our shareholders.

This section provides an overview of the material components of our executive compensation program for our principal executive officer, our principal financial officer, and our other most highly compensated executive officer (our “Named Executive Officers”) during fiscal year 2017.  Our Named Executive Officers for fiscal year 2017 were:

·                  Joshua H. Bilenker, our President and Chief Executive Officer;

·                  Jacob S. Van Naarden, our Chief Business Officer; and

·                  Jennifer Burstein, our Senior Vice President of Finance.

Executive Summary

We believe that the compensation of our Named Executive Officers was aligned with our compensation philosophy and strong performance for fiscal year 2017.  We achieved outstanding results in fiscal year 2017 — short-and long-term and from both financial and strategic perspectives.  A few of our business highlights include the following:

·                  we entered into a global collaboration arrangement with Bayer Consumer Care AG (“Bayer”) to develop and commercialize larotrectinib and LOXO-195, as a result of which we and Bayer will co-promote our products in the U.S. and share commercial costs and profits.

·                  we initiated a rolling NDA submission to the U.S. Food and Drug Administration (FDA) for larotrectinib for the treatment of unresectable or metastatic solid tumors with NTRK-fusion proteins in adult and pediatric patients who require systemic therapy and who have progressed following prior treatment or who have no acceptable alternative treatments.

·                  we initiated clinical development and presented initial proof-of-concept clinical data for LOXO-292.

·                  we successfully purchased a new pipeline program, LOXO-305.

·                  we completed two underwritten public offerings of our common stock, resulting in gross proceeds of approximately $398.8 million and significantly strengthening our balance sheet.

·                  we increased our employee population from 31 to 60 employees during 2017, which included a number of key new hires across various scientific and business functions to support the furtherance of our corporate objectives.

Our continued success depends on our ability to continue to attract, retain, motivate and reward qualified scientific, clinical, manufacturing and sales and marketing management team members, who demonstrate the skills and experience necessary to execute on our mission and deliver increased stockholder value in a competitive market.  Consistent with this compensation philosophy and in support of a disciplined pay-for-performance culture, the majority of total compensation of our named executive officers was performance based in 2017.

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Compensation Governance and Best Practices

2017 Compensation Highlights

·                  Base Salaries.  Our Compensation Committee approved an increase in the base salary of our Named Executive Officers ranging between 3% and 6%, in light of each individual’s strong performance and in order to better align their base salaries with those of their counterparts at peer companies.

·                  Performance-Based Cash Incentives.  For 2017, the Compensation Committee selected corporate performance goals under our non-equity incentive program intended to support the advancement of our product candidate pipeline.  In early 2018, Our Named Executive Officers received annual cash bonuses at 120% of their target annual cash bonus opportunities.

·                  Equity-Based Long-Term Incentives.  For 2017, the Compensation Committee granted stock options to our Named Executive Officers with four-year vesting schedules dependent on continued employment, with exercise prices equal to 100% of grant date fair market value, as determined by the most recent closing price of our common stock as reported by Nasdaq as of the date of grant.  We granted approximately 72% of our Named Executive Officer’s total target compensation in the form of stock options, including grants made in March 2017, which tie executive compensation to increases or decreases in the value of our stock price.

·                  Severance Arrangements.  We amended our Chief Executive Officers’ offer letter and entered into severance agreements with each of our other Named Executive Officers in order to better align our compensation packages with competitive market data, promote retention and stability among our management team and reinforce incentives to create stockholder value.

How We Determined Executive Compensation

Role of the Compensation Committee

In general, our Compensation Committee is responsible for the design, implementation and oversight of our executive compensation program.  The Compensation Committee makes all decisions on compensation related to our executive officers, including our Chief Executive Officer.

In evaluating executive compensation, the Compensation Committee considers a number of factors, including (i) recommendations from our Chief Executive Officer with respect to his evaluation of each other executive’s individual performance and contributions; (ii) recommendations of other members of the Board of Directors with respect to their evaluation of the performance and contributions of Chief Executive Officer and other executives; (iii) our performance and each executive’s impact on such performance; (iv) each executive’s relative scope of responsibility and potential; (v) our historical executive compensation practices and philosophy; (vi) internal pay equity and (vii) competitive market data and analysis provided by the Compensation Committee’s independent consultant.  None of our executive officers participated in the Compensation Committee or Board discussion or approval of his or her own 2017 compensation.

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Compensation Consultant

The Compensation Committee has retained an independent compensation consultant firm, Radford, to assist the committee in its evaluation of our executive compensation program.  In particular, Radford was engaged to (i) provide compensation-related data for a peer group of companies to serve as a basis for assessing competitive compensation practices; (ii) review and assess our current director, Chief Executive Officer and other executive officer compensation policies and practices and equity profile relative to market practices; (iii) review and assess our executive compensation program relative to market to identify any potential changes or enhancements to be brought to the attention of the Compensation Committee; and (iv) review market practices on employee stock purchase plans and other equity programs. For a discussion related to Radford’s independence as a compensation consultant, please see the information provided under the heading “Board Of Directors and Committees of the Board; Corporate Governance Standards and Director Independence — Board Committees — Compensation Committee” in this Proxy Statement.

Use of Competitive Market Data

As noted above, the Compensation Committee annually reviews compensation data for companies within our “peer group” to better inform its assessment and determinations regarding the key components of our executive compensation program.  In 2017, in consultation with Radford, our Compensation Committee selected our peer group as follows:

*Added to the compensation peer group for 2017

In addition, we deleted the following companies from our 2017 peer group as they did not meet one or more of the criteria discussed above or were otherwise not considered to be a good fit based on geography or business:

Our peer group was selected using the following criteria: (i) biopharmaceutical companies in the pre-commercial Phase 2 or Phase 3 stage of development, (ii) with market capitalizations of between $200 million to $1.8 billion and (iii) with less than 100 employees.  At the time the Compensation Committee approved the peer group, we were at the 64th percentile for 30-day average market capitalization, and the lowest among the peer group for headcount at the time the peer group was approved.

The Compensation Committee believes the compensation practices of our peer group provide us with appropriate compensation benchmarks for evaluating the compensation of our Named Executive Officers.  Notwithstanding the similarities of the peer group to our company, due to the nature of our business, we compete for executive talent with many companies that are larger and more established than we are, or that possess greater resources than we do, as well as with prestigious academic and non-profit institutions.  This and other considerations, including market factors, the experience level of the executive and the executive’s performance against established corporate goals and individual objectives, may require that our Compensation Committee vary from its historic compensation practices or deviate from its general compensation philosophy under certain circumstances.

Executive Compensation for Fiscal Year 2017

Base Salary

Base salaries are intended to provide a reasonable degree of financial stability that we believe is necessary to retain our executives in a competitive marketplace.  In furtherance of these goals, the Compensation Committee conducts an annual review of base salaries as part of the total executive compensation package.  The Compensation

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Committee considers adjustments based on a number of factors including market data as well as the executive’s experience, scope of responsibility, leadership and performance.

Taking into account the foregoing considerations, in December 2016 the Compensation Committee approved increases to annual base salaries of our Named Executive Officers of between 3% and 6% for fiscal year 2017.  Specifically, the Compensation Committee approved (i) an approximately 6% increase in Dr. Bilenker’s base salary to bring his base salary to the market median, and (ii) an approximately 3% increase in each of Mr. Van Naarden and Ms. Burstein’s base salary, in light of their respective contributions to our strong performance during fiscal year 2016.  The base salary for Dr. Bilenker reflects approximately the 50th percentile of market data for our peer group in 2017.

Annual Performance-Based Incentive Compensation

Our annual cash bonuses are intended to motivate our executives to meet or exceed our near-term performance objectives, which advance our long-term strategic plans and, ultimately, stockholder value, over time. In 2017, eligible employees, including our Named Executive Officers, had the opportunity to earn cash bonuses based on the achievement of specific goals that support the advancement of our product candidate pipeline determined by the Compensation Committee in the first quarter of the fiscal year.  Taken as a whole, our corporate goals are intended to require each of our employee participants, including our Named Executive Officers, to reach challenging levels of achievement that will have a meaningful impact on stockholder value, either immediately or as a preparatory step to future growth.

Each of our Named Executive Officers has a target annual cash incentive opportunity expressed as a percentage of his or her annual base salary.  In determining the targeted annual cash bonus opportunity for each Named Executive Officer, the Compensation Committee has historically positioned around the 50th percentile based on our approved peer group, and also takes into consideration adjustments in light of each Named Executive Officer’s role and responsibility, criticality, and contribution to our performance.  Based on these considerations, in December 2016, the Compensation Committee approved an increase in Dr. Bilenker’s target bonus from 50% to 55% of his annual base salary.  The target bonus opportunities for our other Named Executive Officers remained consistent with 2016 levels.  The target bonus opportunity for Dr. Bilenker reflects approximately the 50th percentile of market data for our peer group in 2017.

In January 2018, the Compensation Committee reviewed our performance during 2017, and certified corporate achievement of 100% against each corporate goal and upside goals were also achieved, resulting in a total payout of 120% of target.  Given the operational nature of our corporate goals, the Compensation Committee did not establish minimum or threshold performance levels.  The categories of our corporate goals and the relative weightings assigned to each goal are set forth in the table below.

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Consistent with the achievement of our corporate milestones set forth above, the Compensation Committee approved cash bonuses for each of our Named Executive Officers as follows:

Long-Term Incentive Compensation

Long-term equity incentive grants are a meaningful retentive component of our compensation program.  Our equity incentives are intended to promote an ownership culture and encourage our executive officers to identify, pursue and invest in appropriate long-term strategies for increasing shareholder value.  The market for qualified and talented executives in the biopharmaceutical industry is highly competitive and we compete for talent with many companies, including major pharmaceutical companies that have greater resources than we do. Accordingly, we believe long-term incentive compensation in the form of equity awards is a crucial component of any competitive executive compensation package we offer. The Compensation Committee typically grants non-qualified stock options to each of our executive officers upon commencement of employment, and annually at the end of each fiscal year in conjunction with the review of each executive’s total compensation package or in connection with a promotion or as a special incentive.  We may also grant additional awards to our Named Executive Officers to reward demonstrated leadership and performance or as the Compensation Committee otherwise determines to be appropriate in order to align with our compensation goals.

All stock options granted to our Named Executive Officers are approved by our compensation committee. The size of these stock option grants vary among our Named Executive Officers based on their positions and annual performance assessments. All stock options granted to our Named Executive Officers have exercise prices equal to the fair market value of our common stock on the date of grant, so that the recipient will not realize any value from his or her options unless our share price increases above the exercise price. Accordingly, this portion of our Named Executive Officers’ compensation is “at risk” and is directly aligned with stockholder value creation.  In addition, the stock options granted to our Named Executive Officers typically vest over four years, which we believe provides an incentive to our Named Executive Officers to create value over the long-term and to remain with the company.

In determining the size of the annual stock option grants made to our Named Executive Officers in 2017, the Compensation Committee took into consideration, among other factors, market data as well as the Named Executive Officer’s performance, the retentive value of the executive’s vested and unvested awards, the overall cash and equity mix among peer companies, the number of shares available under the stockholder approved 2014 Equity Incentive

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Plan and projected equity compensation for existing and future employees. Based on these considerations, the Compensation Committee approved annual stock option awards to each of our Named Executive Officers in March 2017 as set forth below:

These stock option awards vest as to 1/48th the total number of shares subject to the option on each monthly anniversary of the grant date, subject to the executive’s continued service through each applicable vesting date.

Although we disclose the estimated values of these equity awards in our Summary Compensation Table at the time of grant for each covered fiscal year, the value of these awards that may be realizable by our executive officers will vary depending on the performance of our common stock and often differs significantly from the amounts reported in the Summary Compensation Table.

Employee Benefits

In addition to the primary elements of compensation described above, the Named Executive Officers also participate in broad-based employee benefits programs available to all of our employees, including health insurance, life and disability insurance, dental insurance and our 401(k) plan.

Perquisites and Other Personal Benefits

We do not provide perquisites or other personal benefits to our Named Executive Officers.  In the future, we may provide perquisites or other personal benefits in limited circumstances, such as where we believe it is appropriate to assist an individual executive officer in the performance of his or her duties, to make our executive officers more efficient and effective or for recruitment, motivation, recognition or retention purposes.

Separation Benefits

In March 2017, we entered into an amended and restated offer letter with Dr. Bilenker and entered into Change in Control and Severance Agreements with each of Mr. Van Naarden and Ms. Burstein, in order to provide for certain severance payments and benefits in the event of a qualifying termination of employment.  We believe these arrangements reinforce the commitment of our executives to pursue increased stockholder value amid personal uncertainties that may arise during times of transition, including in a transaction setting, and serve as an important retentive tool to promote stability in our management team through the completion of any such period.  The terms of the severance agreements are intended to be in line with competitive market practices and are described in more detail in under heading “—Offer Letters and Employment Arrangements” in this Proxy Statement.

Compensation Risk Assessment

Our Compensation Committee determined, after discussions with management and Radford, that our compensation policies and practices for all employees, including executive officers, do not create risks that are reasonably likely to have a material adverse effect on us.  In its assessment, the Compensation Committee considered the elements of total executive compensation, including (i) the significant weighting towards long-term equity compensation which vest over multiple years and (ii) annual cash incentive awards tied to multiple, varying goals such that no single goal determines a large percentage of compensation.  The Compensation Committee monitors our compensation programs on an annual basis and expects to make modifications as necessary to address any changes in our business or risk profile.

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Other Compensation-Related Practices and Considerations

Deductibility of Compensation

Section 162(m) of the Code generally disallows the deductibility by any publicly held corporation of individual compensation expenses in excess of $1 million paid to certain executive officers within a taxable year.  Recent changes to Section 162(m) in connection with the passage of the Tax Cuts and Jobs Act repealed exceptions to the deductibility limit that were previously available for “qualified performance-based compensation,” including stock option grants, effective for taxable years after December 31, 2017.  As a result, any compensation paid to certain of our executive officers in excess of $1 million will be non-deductible unless it qualifies for transition relief afforded to compensation payable pursuant to certain binding arrangements in effect on November 2, 2017. All other cash and equity compensation in excess of $1 million paid to certain executive officers will not be deductible.

The Compensation Committee seeks to balance the cost and benefit of tax deductibility with our executive compensation goals designed to promote long-term stockholder interests, and continues to reserve discretion to approve new compensation or modify existing compensation arrangements that result in a loss of deductibility when it believes that such payments are appropriate to attract and retain executive talent.  Accordingly, we expect that a portion of our future cash compensation and equity awards to executive officers will not be deductible under Section 162(m).

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REPORT OF THE COMPENSATION COMMITTEE

The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis included in this proxy statement with management and, based on such review and discussions, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be incorporated by reference in our Annual Report on Form 10-K for fiscal year 2017 and included in this proxy statement.

Summary Compensation Table

The following table provides information regarding all plan and non-plan compensation awarded to, earned by or paid to each of our Named Executive Officers for the fiscal years ended December 31, 2017, 2016 and 2015:

(1)         These amounts represent the grant date fair value of the stock options granted to the Named Executive Officers during fiscal years 2015, 2016 and 2017 as computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, or ASC 718. The assumptions used in calculating the grant date fair value of the stock options reported in the Option Awards column are set forth in Note 8 to the audited financial statements included in our annual report on Form 10-K for the year ending December 31, 2017 filed on March 1, 2018. Note that the amounts reported in this column reflect the accounting cost for these stock options, and do not correspond to the actual economic value that may be received by the Named Executive Officers from the options.

(2)         Ms. Burstein became the Vice President of Finance and Principal Financial Officer on May 1, 2015.

(3)         Mr. Van Naarden was appointed as a Named Executive Officer in March 2016.

(4)         Represents a one-time signing bonus for $20,000 paid in 2015.

(5)         Represents 2017 compensation paid in 2018.

(6)         Represents 2016 compensation paid in 2017.

(7)         Represents 2015 compensation paid in 2016.

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Grant of Plan-Based Awards

The following table provides information with regard to potential cash bonuses paid or payable in 2017 under our performance-based, non-equity incentive plan, and with regard to each equity award granted to each named executive officer for the fiscal year ended December 31, 2017:

(1)         These amounts consist of the cash award levels set in 2017 under the company’s executive incentive cash bonus plan. The amount actually earned by each named executive officer is included in the Non-Equity Incentive Plan Compensation column in the 2017 Summary Compensation Table. For more information about the 2017 executive bonus plan compensation for our named executive officers, see “Executive Compensation for Fiscal Year 2017 — Annual Performance-Based Incentive Compensation” under the Compensation Discussion and Analysis section above.

(2)         The amounts reported in this column represent the aggregate grant date fair value of the stock options, calculated in accordance with FASB ASC Topic 718, except that no forfeiture assumptions were included. For a discussion of the assumptions made in the valuations reflected in this column, see Note 8 of the Consolidated Financial Statements included in our Form 10-K for the year ended December 31, 2017. Note that amounts reported in this column reflect the accounting cost for these equity awards, and do not correspond to the actual economic value that may be received by the recipients of these equity awards.

Outstanding Equity Awards at December 31, 2017

The following table provides information regarding each outstanding equity award held by our Named Executive Officers as of December 31, 2017:

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(1)         All options are subject to terms as described in further detail below in “— Potential Payments Upon Termination or Change in Control”.

(2)         Notwithstanding the vesting schedule, each of these stock options were immediately exercisable in full as of the date of grant, with the underlying option shares subject to a lapsing right of repurchase in favor of us at the exercise price.

(3)         This stock option vests in equal monthly installments over a four-year period beginning on the vesting commencement date.

(4)         This stock option vests with 25% vesting on the first anniversary of the vesting commencement date, then an additional 1/48 vest monthly thereafter.

2017 Option Exercises