Item 1.01 Entry into a Material Definitive Agreement
Private Placement and Securities Purchase Agreement
On August 9, 2017, Aevi Genomic Medicine, Inc. (“the Company”)
entered into a securities purchase agreement (the “Purchase Agreement”) with the Children’s Hospital of Philadelphia
Foundation (“CHOP Foundation”) as the lead purchaser and certain other existing institutional and accredited investors
(collectively, the “Purchasers”), providing for the sale by the Company of an aggregate of
22,222,222
shares
(the “Shares”) of its common stock, $0.0001 par value per share (the “Common Stock”), and warrants to purchase
up to an aggregate of
3,953,904
shares of Common Stock (the “Warrants”)
at a purchase price of $1.26 per share of Common Stock and accompanying Warrants (the “Offering”). The purchase price
to be paid for the securities represents a 3% premium to the volume weighted-average price based on the closing bid on the Nasdaq
Global Market for the ten trading days prior to and including, August 4, 2017. The Warrants will be exercisable at price of $2.84
per share of Common Stock, and will expire five years after the date of issuance. The CHOP Foundation has committed to provide
up to an additional $5.0 million of equity financing through June 30, 2018, subject to certain terms and conditions.
The aggregate gross proceeds for the Offering will be approximately
$28.0 million. The Company intends to use the net proceeds from the Offering primarily to further the development of its two
lead clinical programs, to support its ongoing collaboration with the Children’s Hospital of Philadelphia, to develop other
product candidates and for general corporate purposes. The closing of the Offering (the “Closing”) is subject to the
stockholder approval discussed below and the satisfaction of customary closing conditions.
The CHOP Foundation will enter into a lock-up agreement at Closing,
pursuant to which it will agree to certain restrictions on transfer of the securities purchased by it until the earliest of (i)
June 30, 2018, (ii) two business days after the release of data from the Company’s ongoing AEVI-001 Phase 2 trial and (iii)
the occurrence of a Material Adverse Change (as defined in the Purchase Agreement).
From the date of the Purchase Agreement until the later of (i)
the effective date of the Resale Registration Statement (as defined below) or (ii) if the CHOP Foundation’s lock-up agreement
is no longer in effect, thirty (30) days after such effective date, the Company will be prohibited from issuing any shares of Common
Stock or Common Stock equivalents, subject to certain permitted exceptions.
The CHOP Foundation will have the right to nominate a director
to the Company’s Board of Directors so long as it beneficially owns at least 10% of the Company’s outstanding Common
Stock.
Jefferies LLC served as financial advisor to the Company and
Evercore Group LLC served as financial advisor to the CHOP Foundation in connection with the Offering.
The Offering is exempt from the registration requirements of
the Securities Act of 1933, as amended (the “Securities Act”), pursuant to the exemption for transactions by an issuer
not involving any public offering under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D of the Securities
Act and in reliance on similar exemptions under applicable state laws. Each of the Purchasers has represented that it is an accredited
investor within the meaning of Rule 501(a) of Regulation D, and was acquiring the securities for investment only and not with a
view towards, or for resale in connection with, the public sale or distribution thereof. The securities were offered without any
general solicitation by the Company or its representatives.
The securities sold and issued in the Offering have not been
registered under the Securities Act or any state securities laws and may not be offered or sold in the United States absent registration
with the Securities and Exchange Commission (the “SEC”) or an applicable exemption from the registration requirements.
Stockholder Approval
The Closing is subject to the Company obtaining stockholder
approval pursuant to Nasdaq Listing Rule 5635. The Company intends to file a preliminary proxy statement followed by a definitive
proxy statement with the SEC relating to the stockholder approval to be voted on by the Company’s stockholders at a special
meeting expected to be held in October 2017. If stockholder approval for the Offering is not obtained within 90 days of signing
the Purchase Agreement, the Purchasers have the right to terminate the Offering and the Company will be obligated to pay up to
an aggregate of $1.0 million of the Purchasers’ fees and expenses.
Registration Rights Agreement
In connection with the Offering, the Company entered into a
registration rights agreement (the “Registration Rights Agreement”) with the Purchasers. Pursuant to the Registration
Rights Agreement, the Company agreed to prepare and file a registration statement (the “Resale Registration Statement”)
with the SEC within 60 days after the Closing for purposes of registering the resale of the Shares and the shares of Common
Stock issuable upon exercise of the Warrants. The Company also agreed to use commercially reasonable efforts to cause the Resale
Registration Statement to be declared effective by the SEC within 90 days after the Closing (120 days in the event the Resale Registration
Statement is reviewed by the SEC). The Company also granted the Purchasers certain demand and piggyback registration rights. The
Company also agreed, among other things, to indemnify the selling holders under the registration statements from certain liabilities
and to pay all fees and expenses incident to the Company’s performance of or compliance with the Registration Rights Agreement.
Transaction Documents
The representations, warranties and covenants contained in the
Purchase Agreement were made solely for the benefit of the parties to the Purchase Agreement and may be subject to limitations
agreed upon by the contracting parties. In addition, such representations, warranties and covenants (i) are intended as a
way of allocating the risk between the parties to the Purchase Agreement and not as statements of fact, and (ii) may apply
standards of materiality in a way that is different from what may be viewed as material by stockholders of, or other investors
in, the Company. Accordingly, the Purchase Agreement is filed with this report only to provide investors with information regarding
the terms of transaction, and not to provide investors with any other factual information regarding the Company. Stockholders should
not rely on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state
of facts or condition of the Company. Moreover, information concerning the subject matter of the representations and warranties
may change after the date of the Purchase Agreement, which subsequent information may or may not be fully reflected in public disclosures.
The foregoing description of the Offering and the Purchase Agreement,
the Warrants and the Registration Rights Agreement, is qualified in its entirety by reference to the form of Purchase Agreement,
the form of Warrant and the form of Registration Rights Agreement, which are filed hereto as Exhibits 10.1, 4.1 and 10.2 respectively.