UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

 

 

SCHEDULE 14A

 

INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION

 

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Aevi Genomic Medicine, Inc.

 

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AEVI GENOMIC MEDICINE, INC.

435 Devon Park Drive, Suite 715

Wayne, Pennsylvania 19087

 

Supplement to Proxy Statement

For the 2018 Annual Meeting of Stockholders

to be held on june 14, 2018

 

This supplement is dated May 15, 2018 and is first being made available to stockholders of the Company on or about May 15, 2018.

 

These supplemental disclosures to the definitive revised proxy statement on Schedule 14A filed by Aevi Genomic Medicine, Inc. (the “ Company ”) with the Securities and Exchange Commission (the “ SEC ”) on May 1, 2018 (the “ Proxy Statement ”) are being made to revise certain information contained in the Proxy Statement regarding equity awards granted to Michael F. Cola, our Chief Executive Officer, Brian D. Piper, our Chief Financial Officer and Garry A. Neil, M.D., our Chief Scientific Officer.

 

It has come to our attention that certain option grants in August 2017 to Mr. Cola, Mr. Piper and Dr. Neil exceeded the applicable annual limit set forth in the Aevi Genomic Medicine, Inc. Stock Incentive Plan, as amended (the “ Plan ”). We and Mr. Cola, Mr. Piper and Dr. Neil have agreed to cancel portions of such awards to reduce the number of options granted to meet the Plan limitation. 

 

Michael F. Cola

 

On August 11, 2017, the Compensation Committee of our Board of Directors (the “ Compensation Committee ”) approved the grant of an option to Mr. Cola, to acquire 500,000 shares of our common stock. Options to purchase 450,000 shares under this grant are null and void and Mr. Cola has acknowledged the reduction to the number of options shares granted to meet the plan limitation. 

 

Brian D. Piper

 

On August 11, 2017, the Compensation Committee approved the grant of an option to Mr. Piper, to acquire 380,000 shares of our common stock. Options to purchase 270,000 shares under this grant are null and void and Mr. Piper has acknowledged the reduction to the number of options shares granted to meet the plan limitation. 

 

Garry A. Neil, M.D.

 

On August 11, 2017, the Compensation Committee approved the grant of an option to Dr. Neil, to acquire 400,000 shares of our common stock. Options to purchase 300,000 shares under this grant are null and void and Dr. Neil has acknowledged the reduction to the number of options shares granted to meet the plan limitation. 

 

The 1,020,000 stock options referred to above that were null and void are herein referred to as the “ Voided Options .”

 

May 2018 Option Awards

 

When informed of the overage, the Compensation Committee reviewed the original size and terms of the stock option awards made to Mr. Cola, Mr. Piper and Dr. Neil on August 11, 2017 and their total compensation packages. After consideration, the Compensation Committee determined that the awards (both when viewed alone, and in the context of their respective total compensation packages) were consistent with our current compensation philosophy. Having reaffirmed that the August 11, 2017 stock option awards made to each of Mr. Cola, Mr. Piper and Dr. Neil were appropriate and reasonable, notwithstanding the Plan limitations then in effect, the Compensation Committee determined that it should issue additional option awards to Mr. Cola, Mr. Piper and Dr. Neil with respect to a number of shares equal to the number of shares covered by the Voided Options. In evaluating this additional option award, the Compensation Committee took into account the significant retention incentive represented by the option award, its alignment to the long-term interests of our stockholders and competitive market practices, the elimination of the “performance-based compensation” exception under Section 162(m) of the Internal Revenue Code pursuant to the 2017 Tax Cuts and Jobs Act, and the reasonableness of the grant size relative to our peer group companies.

 

  - 2 -  

 

 

Accordingly, effective May 14, 2018, the Compensation Committee issued a new stock option award to (i) Mr. Cola with respect to 450,000 shares, (ii) Mr. Piper with respect to 270,000 shares and (iii) Dr. Neil with respect to 300,000 shares (together, the “ May Awards ”). The May Awards have an exercise price equal to $1.51, the fair market value of our common stock on the date of grant. One third of the May Awards vest on the first anniversary of the grant date with the remaining option shares vesting in 24 equal monthly installments beginning one month following the first anniversary of the grant date, subject to the executive’s continuous service through each vesting date. By virtue of the elimination of the “performance-based compensation” exception under Section 162(m) of the Internal Revenue Code pursuant to the 2017 Tax Cuts and Jobs Act, the May Awards are not intended to qualify as “performance-based compensation” for purposes of the Plan.

 

To reflect the foregoing, the following compensation disclosures in the Proxy Statement are revised as follows (revised text is bold and underlined):

 

Compensation Discussion and Analysis

 

Summary Compensation Table

 

Each of Mr. Cola’s, Mr. Piper’s and Dr. Neil’s “Option Award” amount for 2017 and “Total” amount for 2017 of this table are restated as follows, to eliminate disclosure related to the Voided Options (there are no changes in the remainder of, or the footnotes to, this table):

 

 

Name and 
Principal
Position 		  Year     Salary
($) 		    Bonus
($) 		    Option
Awards (1)
($) 		    All Other 
Compensation (2)
($) 		    Total
($) 		 
Michael F. Cola     2017       450,000       283,500       711,850       34,719       1,480,069  
President and Chief Executive     2016       450,000       299,250       737,500       37,446       1,524,196  
Officer     2015       450,000       267,750       1,129,500       34,840       1,882,090  
                                                 
Brian D. Piper     2017       311,596       215,001       594,790       21,787       1,143,174  
Chief Financial Officer and Corporate Secretary     2016       290,985       139,673       409,050       20,878       860,586  
      2015       215,000       63,963       217,450       20,170       516,583  
                                                 
Garry A. Neil     2017       410,000       203,688       614,300       10,380       1,238.368  
Chief Scientific Officer     2016       410,000       236,160       545,400       12,119       1,203,679  
      2015       410,000       209,100       869,800       11,309       1,500,209  

 

(1) Amounts included in this column reflect the aggregate grant date fair value of awards granted in the specified year computed in accordance with FASB ASC Topic 718. For a discussion of the assumptions made in the valuation of the awards reported in this column, please refer to Note 2(i) to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017.

 

(2) Represents health care benefits.

 

  - 3 -  

 

 

2017 Grants of Plan-Based Awards Table

 

Each of Mr. Cola’s, Mr. Piper’s and Dr. Neil’s rows of this table are restated as follows, to eliminate disclosure related to the Voided Options (there are no changes in the remainder of, or the footnotes to, this table):

 

Name   Grant
Date 		  All Other
Option
Awards:
Number of
Securities
Underlying
Options (1)
(#) 		    Exercise or 
Base Price of 
Option 
Awards
($/Sh) 		    Grant Date 
Fair Value 
of Stock 
and Option 
Awards (4)
($) 		 
Michael F. Cola   2/17/2017     250,000 (2)   $ 4.91     $ 674,500  
Michael F. Cola   8/11/2017     50,000 (3)     1.32       37,350  
Brian D. Piper   2/17/2017     190,000 (2)     4.91       512,620  
Brian D. Piper   8/11/2017     110,000 (3)     1.32       82,170  
Garry A. Neil   2/17/2017     200,000 (2)     4.91       539,600  
Garry A. Neil   8/11/2017     100,000 (3)     1.32       74,700  

 

(1) All options reported in this table were granted under the Stock Incentive Plan.

 

(2) These options vest in three equal annual installments beginning on the first anniversary of the grant date.

 

(3) One third of these granted options vest on the first anniversary of the grant date with the remaining options vesting in 24 equal monthly installments beginning one month following the first anniversary of the grant date.

 

(4) Amounts included in this column reflect the aggregate grant date fair value of awards granted in the specified year computed in accordance with FASB ASC Topic 718. For a discussion of the assumptions made in the valuation of the awards reported in this column, please refer to Note 2(i) to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2017.

 

  - 4 -  

 

 

Outstanding Equity Awards at 2017 Fiscal Year-End

 

Each of Mr. Cola’s, Mr. Piper’s and Dr. Neil’s rows of this table are restated as follows, to eliminate disclosure related to the Voided Options (there are no changes in the remainder of, or the footnotes to, this table):  

 

        Option Awards
Name   Grant
Date 		  Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable 		    Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable 		    Option
Exercise
Price
($) 		    Option
Expiration
Date
Michael F. Cola   8/11/2017     —       50,000 (1)   $ 1.32     8/11/2027
    2/17/2017     —       250,000 (2)     4.91     2/17/2027
    4/15/2016     83,333       166,667 (2)     4.83     4/15/2026
    2/18/2015     42,087       —       7.01     2/18/2025
    2/18/2015     125,000       125,000 (3)     7.01     2/18/2025
    4/16/2014     17,327       —       6.45     4/16/2024
    9/13/2013     1,500,000       —       4.22     9/13/2023
Brian D. Piper   8/11/2017     —       110,000 (4)     1.32     8/11/2027
    2/17/2017     —       190,000 (5)     4.91     2/17/2027
    4/15/2016     50,000       100,000 (5)     4.83     4/15/2026
    2/18/2015     25,000       25,000 (6)     7.01     2/18/2025
    4/16/2014     250,000       —       6.45     4/16/2024
Garry A. Neil   8/11/2017     —       100,000 (7)     1.32     8/11/2027
    2/17/2017     —       200,000 (8)     4.91     2/17/2027
    4/15/2016     66,666       133,334 (8)     4.83     4/15/2026
    2/18/2015     100,000       100,000 (9)     7.01     2/18/2025
    4/16/2014     13,532       —       6.45     4/16/2024
    9/13/2013     900,000       —       4.22     9/13/2023

   

(1) One third of these granted options vest on the first anniversary of the grant date with the remaining options vesting in 24 equal monthly installments beginning one month following the first anniversary of the grant date, subject to Mr. Cola’s continuous service through each vesting date.

 

(2) These options will vest in three equal annual installments beginning on the first anniversary of the grant date, subject to Mr. Cola’s continuous service through each vesting date.

 

(3) These options will vest in four equal annual installments beginning on the first anniversary of the grant date, subject to Mr. Cola’s continuous service through each vesting date.

 

(4) One third of these granted options vest on the first anniversary of the grant date with the remaining options vesting in 24 equal monthly installments beginning one month following the first anniversary of the grant date, subject to Mr. Piper’s continuous service through each vesting date.

 

  - 5 -  

 

 

(5) These options will vest in three equal annual installments beginning on the first anniversary of the grant date, subject to Mr. Piper’s continuous service through each vesting date.

 

(6) These options will vest in four equal annual installments beginning on the first anniversary of the grant date, subject to Mr. Piper’s continuous service through each vesting date.

 

(7) One third of these granted options vest on the first anniversary of the grant date with the remaining options vesting in 24 equal monthly installments beginning one month following the first anniversary of the grant date, subject to Dr. Neil’s continuous service through each vesting date.

 

(8) These options will vest in three equal annual installments beginning on the first anniversary of the grant date, subject to Dr. Neil’s continuous service through each vesting date.

 

(9) These options will vest in four equal annual installments beginning on the first anniversary of the grant date, subject to Dr. Neil’s continuous service through each vesting date.

 

Equity Compensation Plan Information

 

The “Equity compensation plans approved by security holders” row of this table is restated as follows, to reflect that the Voided Options were not outstanding:  

 

The following table provides information as of December 31, 2017 regarding the common stock that may be issued as stock grants or upon exercise of options, warrants and rights under all of our equity compensation plans, including individual compensation arrangements.

 

Plan Category   Number of Shares 
to Be
Issued Upon 
Exercise of
Outstanding 
Options and
Warrants (1) 		    Weighted 
Average
Exercise Price of
Outstanding 
Options
and Warrants 		    Number of Shares
Remaining Available 
for
Future Issuance 
Under
Equity 
Compensation
Plans (Excluding 
Securities
Reflected in Column 
(a)) 		 
    (a)     (b)     (c)  
Equity compensation plans approved by security holders     6,234,152 (2)   $ 4.84       1,921,270  
Equity compensation plans not approved by security holders     3,875,000 (3)   $ 4.35       —  
Total     10,109,152     $ 4.66       1,921,270  

  

(1) The number of shares is subject to adjustment in the event of stock splits and other similar events.

 

  - 6 -  

 

 

(2) Consists of options awarded under the Stock Incentive Plan.

 

(3) Consists of:

 

  (i) Inducement awards granted in September 2013 outside of the Stock Incentive Plan to Mr. Cola (1,500,000 options), Dr. Leaman (800,000 options) and Dr. Neil (900,000 options).  Dr. Leaman’s options expired on February 9, 2018;

 

  (ii) Inducement awards of an aggregate of 275,000 options granted outside of the Stock Incentive Plan to two new employees in December 2015 having an exercise price of $7.37 per share and expiring on October 12 , 2025.  125,000 of which expired as of December 31, 2017;

 

  (iii) An inducement award of 100,000 options granted outside of the Stock Incentive Plan to a new employee in February 2016 having an exercise price of $3.64 per share and expiring on February 16 , 2026;

 

  (iv) An inducement award of 200,000 options granted outside of the Stock Incentive Plan to a new employee in March 2016 having an exercise price of $4.42 per share and expiring on March 7, 2026;

 

  (v) An inducement award of 100,000 options granted outside of the Stock Incentive Plan to a new employee in April 2016 having an exercise price of $5.07 per share and expiring on April 19, 2026;

 

  (vi) Warrants to purchase an aggregate of 125,000 shares of common stock issued as compensation to consultants, as further described in Note 7 to the condensed consolidated financial statements included herein.

 

PROPOSAL 2: APPROVAL OF AN AMENDMENT TO OUR STOCK INCENTIVE PLAN

 

The first paragraph in this section is revised as follows:

 

Our Stock Incentive Plan was initially adopted in March 2006, amended and restated as of March 5, 2012, and, with stockholder approval, subsequently amended, most recently in 2016. Following the most recent amendment, up to 9,178,571 shares of our common stock are currently authorized to be issued pursuant to options and other equity awards granted under the Stock Incentive Plan, 6,921,633 shares of which have been issued or have been allocated to be issued as of April 20, 2018 and 2,256,938 shares remain available for future issuance as of April 20, 2018. Additionally, in April 2018, the Compensation Committee of our Board, or the Committee, approved grants of stock options to our directors and members of our senior management that are conditioned on stockholder approval of the proposed amendment to the Stock Incentive Plan, as further described below.

 

The first two paragraphs in the section titled “New Plan Benefits” are revised as follows:

 

On April 17, 2018, the Committee awarded 1,510,000 options to purchase shares of our common stock at an exercise price of $1.55 per share of common stock to members of our senior management and non-employee directors. These April 2018 option awards will be forfeited if stockholders do not approve the amendment to the Stock Incentive Plan contemplated in this Proposal 2 and recipients of these stock options will not be entitled to any compensation in lieu thereof. However, the Committee may then decide in its discretion to take other actions or enter into other compensation arrangements to retain or motivate those employees. The Committee concluded that these options are appropriate and necessary to retain and motivate officers and directors. On May 14, 2018, the Compensation Committee issued options to purchase an aggregate of 1,020,000 shares of our common stock at an exercise price of $1.51 per share to Mr. Cola, Mr. Piper and Dr. Neil. These May 2018 option awards are not subject to forfeiture if stockholders do not approve the amendment to the Stock Incentive Plan contemplated in this Proposal 2. All of the foregoing option grants are subject to vesting.

 

  - 7 -  

 

 

The following table summarizes the April 2018 option awards approved by the Committee that are subject to forfeiture if the amendment to the Stock Incentive Plan contemplated in this Proposal 2 is not approved by stockholders:

 

The table immediately following the foregoing two amended paragraphs remains unchanged from the version included in the Proxy Statement.

 

 

 

Except for the corrections set forth above, this supplement does not change any other portions of the Proxy Statement. This supplement should be read in conjunction with the Proxy Statement.

 

SUPPLEMENTAL DISCLOSURES

 

These supplemental disclosures contain important additional information and should be read in conjunction with the Proxy Statement, which should be read in its entirety. The information provided in the Proxy Statement continues to apply, except as described in these supplemental disclosures. Please read this supplement and the Proxy Statement (including its annexes) carefully. To the extent information in these supplemental disclosures differs from, updates or conflicts with information contained in the Proxy Statement, the information in these supplemental disclosures is the more current information.

 

References to sections and subsections herein are references to the corresponding sections and subsections in the Proxy Statement and references to page numbers herein are references to page numbers in the Proxy Statement. Except as otherwise specifically noted in this supplement, “we,” “our,” “us” and similar words in this supplement refer to Aevi Genomic Medicine, Inc. In addition, we refer to Aevi Genomic Medicine, Inc. as the “Company.” Defined terms used but not defined herein have the meanings set forth in the Proxy Statement.

 

WHERE YOU CAN FIND MORE INFORMATION

 

We are subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and file annual, quarterly and current reports, proxy statements and other information with the SEC. You can read our SEC filings, including the Proxy Statement and this supplement, through the Internet at the SEC’s website at http://www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facility at 100 F Street, NE, Room 1580, Washington, D.C. 20549. You may obtain information on the operation of the SEC’s public reference facilities by calling the SEC at 1-800-SEC-0330.

 

  - 8 -  

 

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