UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) (Rule 14a-101) of the Securities Exchange Act of 1934
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by the Registrant ☒
Filed
by a Party other than the Registrant ☐
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Preliminary Proxy Statement |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
Celcuity
Inc.
(Name
of Registrant as Specified in its Charter)
(Name
of Person(s) Filing Proxy Statement, if Other Than the Registrant)
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of Filing Fee (Check the appropriate box):
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11. |
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unit price or other underlying value of transaction computed pursuant to Exchange Act Rule
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Fee paid previously with preliminary materials. |
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CELCUITY
INC.
16305
36th Avenue North, Suite 100
Minneapolis,
MN 55446
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 11, 2023
TO
THE STOCKHOLDERS OF CELCUITY INC.:
Please
Take Notice that Celcuity Inc. (“Celcuity”)
will hold its 2023 Annual Meeting of Stockholders at the offices of Celcuity Inc., 16305 36th Avenue North, Suite 100, Minneapolis,
MN 55446, on May 11, 2023 at 9:00 a.m. local time. Celcuity is holding this meeting for the purpose of considering and taking appropriate
action with respect to the following:
| 1. | To
elect the seven director nominees named in the Proxy Statement to the Celcuity Board of Directors,
to serve until the earlier of the next annual meeting of stockholders, the election of such
director’s successor, or such director’s death, resignation or removal; |
| | |
| 2. | To
ratify the appointment of Boulay PLLP as Celcuity’s independent registered public accounting
firm for the year ending December 31, 2023; |
| | |
| 3. | To
approve, on an advisory basis, named executive officer (NEO) compensation; |
| | |
| 4. | To
approve a 1,500,000 share increase to the Celcuity Inc. Amended and Restated 2017 Stock Incentive
Plan; and |
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| 5. | To
transact any other business as may properly come before the meeting or any adjournments thereof,
including matters incident to the conduct of the meeting. |
Holders
of record of Celcuity common stock at the close of business on March 14, 2023 will be entitled to vote at the meeting or any adjournments
thereof. Your attention is directed to the Proxy Statement accompanying this Notice for a more complete statement of the matters to be
considered at the meeting. A copy of the Annual Report on Form 10-K for the year ended December 31, 2022 also accompanies this Notice.
|
By
Order of the Board of Directors, |
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/s/ Brian F. Sullivan |
|
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Chairman
of the Board of Directors and |
|
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Date:
March 31, 2023 |
Chief Executive Officer |
Your
vote is important. To vote your shares, please vote by telephone or Internet, as directed in the Proxy Statement, or if you received
a proxy card or voting instruction form by mail, please complete, sign, date and mail the proxy card or voting instruction form promptly
in the envelope provided. The prompt return of proxies will save Celcuity the expense of further requests for proxies.
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 11, 2023:
This
Notice, the Proxy Statement, and the Annual Report on Form 10-K are available at www.proxyvote.com and on the Investor Relations section
of Celcuity’s website at www.celcuity.com/home/investors/.
CELCUITY
INC.
16305
36th Avenue North, Suite 100
Minneapolis,
MN 55446
PROXY
STATEMENT
2023
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 11, 2023
This
Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of Celcuity
Inc., a Delaware corporation (“Celcuity,” the “Company,” “we,” “our” or “us”),
for use at the 2023 Annual Meeting of Stockholders (the “Annual Meeting”) to be held at the Celcuity corporate offices, 16305
36th Avenue North, Suite 100, Minneapolis, MN 55446, at 9:00 a.m. local time on May 11, 2023.
Purposes
of the Annual Meeting
The
purposes of the Annual Meeting are:
| 1. | To
elect the seven director nominees named in this Proxy Statement to the Celcuity Board of
Directors, to serve until the earlier of the next annual meeting of stockholders, the election
of such director’s successor, or such director’s death, resignation or removal; |
| | |
| 2. | To
ratify the appointment of Boulay PLLP as Celcuity’s independent registered public accounting
firm for the year ending December 31, 2023; |
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| 3. | To
approve, on an advisory basis, named executive officer compensation; |
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| 4. | To
approve a 1,500,000 share increase to the Celcuity Inc. Amended and Restated 2017 Stock Incentive
Plan; and |
| | |
| 5. | To
transact any other business as may properly come before the Annual Meeting or any adjournments
thereof, including matters incident to the conduct of the Annual Meeting. |
Action
may be taken on any one of the foregoing proposals on the date specified above for the Annual Meeting, or on any date or dates to which
the Annual Meeting may be adjourned.
Notice
and Access Delivery
In
accordance with rules and regulations adopted by the U.S. Securities and Exchange Commission (the “SEC”), we have elected
to provide our beneficial owners and stockholders of record access to our proxy materials over the Internet. Beneficial owners are stockholders
whose shares are held in the name of a broker, bank, or other nominee (i.e., in “street name”). Accordingly, a Notice of
Internet Availability of Proxy Materials (the “Notice”) will be mailed on or about March 31, 2023 to our beneficial owners
and stockholders of record who owned our common stock at the close of business on March 14, 2023. Beneficial owners and stockholders
of record will have the ability to access the proxy materials on a website referred to in the Notice or to request a printed set of the
proxy materials be sent to them by following the instructions in the Notice. Beneficial owners and stockholders of record who have previously
requested to receive paper copies of our proxy materials will receive paper copies of the proxy materials instead of a Notice.
You
can choose to receive our future proxy materials electronically by visiting www.proxyvote.com. Your choice to receive proxy materials
electronically will remain in effect until you instruct us otherwise by following the instructions contained in your Notice and visiting
www.proxyvote.com, sending an email to sendmaterial@proxyvote.com, or calling 1-800-579-1639.
Solicitation
This
solicitation is made by Celcuity, and Celcuity will pay the cost of soliciting proxies for the Annual Meeting. In addition to soliciting
proxies by mail, we may solicit proxies personally or by telephone, email, facsimile or other means of communication by our directors,
officers and employees. These persons will not specifically be compensated for these activities, but they may be reimbursed for reasonable
out-of-pocket expenses in connection with this solicitation. We will not specifically engage any employees or paid solicitors for the
purpose of soliciting proxies for the Annual Meeting. We will arrange with brokerage firms and other custodians, nominees and fiduciaries
to forward solicitation materials to the beneficial owners of shares held of record by these persons. We will reimburse these brokerage
firms, custodians, nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them in connection with this solicitation.
Record
Date and Shares Outstanding
Only
holders of record of our common stock at the close of business on March 14, 2023 will be entitled to vote at the Annual Meeting or any
adjournments thereof. As of March 14, 2023, there were 21,689,425 shares of our common stock outstanding and entitled to vote. Each share
of common stock entitles the holder thereof to one vote upon each matter to be presented at the Annual Meeting.
If
you are a stockholder of record, you may vote in person at the Annual Meeting, vote by proxy using the enclosed proxy card (if you received
paper copies of the proxy materials), vote by proxy over the telephone, or vote by proxy over the Internet. Whether or not you plan to
attend the Annual Meeting, we urge you to vote by proxy to ensure your vote is counted. You may still attend the Annual Meeting and vote
in person even if you have already voted by proxy.
| ● | To
vote in person, come to the Annual Meeting and we will give you a ballot when you arrive. |
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| ● | If
you received paper copies of the proxy materials, to vote using the proxy card, simply complete,
sign and date the enclosed proxy card and return it promptly in the envelope provided. If
you return your signed proxy card to us before the Annual Meeting, we will vote your shares
as you direct. |
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| ● | To
vote over the telephone, dial toll-free 1-800-690-6903 using a touch-tone phone and follow
the recorded instructions. Please have available the 16-Digit Control Number from the enclosed
proxy card, if you received one, or from your Notice. Your vote must be received by 11:59
p.m., Eastern Time (10:59 p.m., Central Time) on May 10, 2023, to be counted. |
| | |
| ● | To
vote over the Internet, go to www.proxyvote.com to complete an electronic proxy card. Please
have available the 16-Digit Control Number from the enclosed proxy card, if you received
one, or from your Notice. Your vote must be received by 11:59 p.m., Eastern Time (10:59 p.m.,
Central Time) on May 10, 2023, to be counted. |
We
are providing Internet proxy voting to allow you to vote your shares online, with procedures designed to ensure the authenticity and
correctness of your proxy vote instructions. However, please be aware that you must bear any costs associated with your Internet access,
such as usage charges from Internet access providers and telephone companies.
If
you are a beneficial owner of shares registered in the name of your broker, bank, or other nominee, you may have received a proxy card
and voting instructions with these proxy materials from that organization rather than from us. Simply complete and mail the proxy card
to ensure that your vote is submitted to your broker. Alternatively, you may vote by telephone or over the Internet as instructed by
your broker. To vote in person at the Annual Meeting, you must obtain a valid proxy from your broker. Follow the instructions from your
broker included with these proxy materials or contact your broker to request a proxy form.
Quorum
A
quorum, consisting of a majority of the outstanding shares of our common stock entitled to vote at the Annual Meeting, must be present
in person or by proxy before any action can be taken by the stockholders at the Annual Meeting. Abstentions and withheld votes are counted
as present and entitled to vote for purposes of determining a quorum.
If
you are a beneficial owner of shares registered in the name of your broker, bank, or other nominee, such shares may be voted by the broker
on “routine” matters, which includes ratification of the appointment of our independent registered public accounting firm
(Proposal 2). All other proposals in this Proxy Statement are considered “non-routine.” Your broker will not be able to vote
your shares on non-routine matters being considered at the Annual Meeting unless you have given instructions to your broker prior to
the Annual Meeting on how to vote your shares. When the broker does not obtain direction to vote the shares, the broker’s abstention
is referred to as a “broker non-vote.” Broker non-votes will be considered present for quorum purposes at the Annual Meeting.
So
long as a quorum is present at the beginning of the Annual Meeting, the stockholders present may continue to transact business until
adjournment, even if enough stockholders have left the Annual Meeting to leave less than a quorum, and even if any stockholder present
in person or by proxy refuses to vote or participate in the Annual Meeting. If the Annual Meeting is adjourned for any reason, the approval
of the proposals may be considered and voted upon by stockholders at the subsequent reconvened meeting. All proxies will be voted in
the same manner as they would have been voted at the original Annual Meeting except for any proxies that have been properly withdrawn
or revoked.
Board
Recommendation and Voting of Proxies
The
Board recommends a vote:
| ● | FOR
the election of each of the director nominees (Proposal 1). |
| ● | FOR
the ratification of the appointment of Boulay PLLP as our independent registered public
accounting firm for the year ending December 31, 2023 (Proposal 2). |
| ● | FOR
the approval, on an advisory basis, of named executive officer compensation (Proposal
3). |
| ● | FOR
the approval of a 1,500,000 share increase to the Celcuity Inc. Amended and Restated
2017 Stock Incentive Plan (Proposal 4). |
If
you complete and submit your proxy before the Annual Meeting, the persons named as proxy agents will vote the shares represented by your
proxy in accordance with your instructions. If you submit a proxy without giving voting instructions, your shares will be voted in the
manner recommended by the Board on all matters presented in this Proxy Statement. If any other matters are properly presented for consideration
at the Annual Meeting, including, among other things, consideration of a motion to adjourn the Annual Meeting to another time or place
(including, without limitation, for the purpose of soliciting additional proxies), the persons named as proxy agents will have discretion
to vote on those matters in accordance with their best judgment. We do not currently anticipate that any other matters will be raised
at the Annual Meeting.
Vote
Required
For
the election of directors, you have the option to vote “For” or “Withhold” authority to vote for any of the director
nominees. Assuming a quorum is present, a plurality of the votes cast is required for the election of directors. This means that the
seven director nominees with the most votes will be elected. If you “Withhold” authority to vote on any or all nominees,
your vote will have no effect on the outcome of the election. If you hold your shares in “street name” and do not provide
instructions to your broker, your broker will not have discretionary authority with respect to the proposal to elect directors and will
therefore provide a “broker non-vote.” Since broker non-votes are not deemed votes cast, they will have no effect on the
outcome of the election.
For
the ratification of the appointment of Boulay PLLP as our independent registered public accounting firm, you have the option to vote
“For,” “Against” or “Abstain” from voting. Assuming a quorum is present, the affirmative vote of
a majority of the shares of common stock of Celcuity represented at the Annual Meeting, either in person or by proxy, and entitled to
vote is required to ratify the appointment of Boulay PLLP as our independent registered public accounting firm. If you “Abstain”
from voting with respect to this proposal, your shares will be counted as present and entitled to vote and your vote will have the same
effect as a vote against the proposal. If you hold your shares in “street name” and do not provide instructions to your broker,
your broker will have discretionary authority to vote your shares with respect to this proposal.
For
the approval, on an advisory basis, of the compensation of our named executive officers, you have the option to vote “For,”
“Against” or “Abstain” from voting. Assuming a quorum is present, the affirmative vote of a majority of the shares
of common stock of Celcuity represented at the Annual Meeting, either in person or by proxy, and entitled to vote is required to approve
the compensation of our named executive officers. If you mark “Abstain” from voting with respect to this proposal, your shares
will be counted as present and entitled to vote and your vote will have the same effect as a vote against the proposal. If you hold your
shares in “street name” and do not provide instructions to your broker, your broker will not have discretionary authority
to vote your shares with respect to this proposal and will therefore provide a “broker non-vote.” Since broker non-votes
are not deemed present and entitled to vote on this proposal, they will have no effect on the outcome of the proposal. The vote on approval
of the compensation of our named executive officers is an advisory vote, which means that the result of the vote is not binding on the
Company, our Board or the Compensation Committee. To the extent there is any significant vote against our named executive officer compensation
as disclosed in this Proxy Statement, the Board and the Compensation Committee will evaluate whether any actions are necessary to address
the concerns of stockholders.
For
the approval of the 1,500,000 share increase to the Celcuity Inc. Amended and Restated 2017 Stock Incentive Plan, you have the option
to vote “For,” “Against” or “Abstain” from voting. Assuming a quorum is present, the affirmative
vote of a majority of the shares of common stock of Celcuity represented at the Annual Meeting, either in person or by proxy, and entitled
to vote is required to approve the 1,500,000 share increase to the Celcuity Inc. Amended and Restated 2017 Stock Incentive Plan. If you
“Abstain” from voting with respect to this proposal, your shares will be counted as present and entitled to vote and your
vote will have the same effect as a vote against the proposal. If you hold your shares in “street name” and do not provide
instructions to your broker, your broker will not have discretionary authority to vote your shares with respect to this proposal and
will therefore provide a “broker non-vote.” Since broker non-votes are not deemed votes cast, they will have no effect on
the outcome of the proposal.
Revocability
of Proxies
Any
person giving a proxy for the Annual Meeting has the power to revoke it at any time before it is voted. If you are a record holder of
your shares, you may revoke your proxy in any one of the following ways: (1) sending a written notice of revocation dated after the date
of the proxy to our Corporate Secretary, Celcuity Inc., 16305 36th Avenue North, Suite 100, Minneapolis, MN 55446; (2) submitting
a properly signed proxy with a later date; (3) submitting a new vote by telephone or Internet; or (4) attending the Annual Meeting and
voting in person. Attendance at the Annual Meeting will not, in and of itself, constitute a revocation of a proxy.
If
you are a beneficial owner of shares registered in the name of your broker, bank, or other nominee, you must contact them in order to
find out how to revoke your proxy.
Householding
The
SEC has adopted rules that permit companies and brokers, banks and other nominees to satisfy the delivery requirements for proxy statements
and annual reports, with respect to two or more stockholders sharing the same address and who do not participate in electronic delivery
of proxy materials, by delivering a single copy of such documents addressed to those stockholders. This process, which is commonly referred
to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
Brokers,
banks and other nominees may be “householding” Company proxy materials. This means that only one copy of the proxy materials
may have been sent to multiple stockholders in a household. If, at any time, you no longer wish to participate in householding and would
prefer to receive a separate proxy statement and annual report from the other stockholder(s) sharing your address, please: (i) notify
your broker, bank or other nominee, (ii) direct your written request to our Chief Financial Officer, Celcuity Inc., 16305 36th Avenue
North, Suite 100, Minneapolis, MN 55446, or (iii) contact us at (763) 392-0123. The Company will undertake to deliver promptly, upon
any such oral or written request, a separate copy of the proxy materials to a stockholder at a shared address to which a single copy
of these documents was delivered. Stockholders who currently receive multiple copies of proxy materials at their address and would like
to request householding of their communications should notify their broker, bank or other nominee, or contact us at the above address
or phone number.
Other
Business
Our
Board currently has no knowledge of any matters to be presented at the Annual Meeting other than those referred to in this Proxy Statement.
The solicited proxies give discretionary authority to the proxy agents named therein to vote in accordance with the recommendation of
the Board if any other matters are presented.
FINANCIAL
INFORMATION
Our
2022 Annual Report on Form 10-K filed with the SEC, including, but not limited to, the balance sheets and the related statements of operations,
changes in stockholders’ equity and cash flows for Celcuity as of and for the years ended December 31, 2022 and 2021 accompanies
these materials. A copy of the 2022 Annual Report on Form 10-K may be obtained without charge upon request to our Chief Financial Officer,
Celcuity Inc., 16305 36th Avenue North, Suite 100, Minneapolis, MN 55446. Our 2022 Annual Report on Form 10-K is also available
on our website at www.celcuity.com/home/investors/sec-filings/.
PROPOSAL
NO. 1
ELECTION OF DIRECTORS
Celcuity’s
business and affairs are managed under the direction of the Board. All our directors are elected at each annual meeting to serve until
their successors are duly elected or until their earlier death, resignation or removal. If any of the nominees for director at the Annual
Meeting becomes unavailable for election for any reason (none being presently known), the proxy agents will have discretionary authority
to vote, pursuant to the proxies, for a suitable substitute or substitutes selected in accordance with the best judgment of the proxy
agents.
Nominees
for Election
The
Board, upon the recommendation of the Nominating and Corporate Governance Committee, has nominated the seven persons named in the table
below for election as directors at the Annual Meeting. Each nominee listed below currently serves as a director of Celcuity.
Name of Nominee | |
Age | | |
Position Held with Celcuity Inc. | |
Director Since | |
Richard E. Buller | |
| 73 | | |
Director | |
| 2019 | |
David F. Dalvey | |
| 64 | | |
Director | |
| 2014 | |
Leo T. Furcht | |
| 76 | | |
Director | |
| 2019 | |
Lance G. Laing | |
| 61 | | |
Director, Chief Science Officer, Vice President, and Secretary | |
| 2012 | |
Polly A. Murphy | |
| 58 | | |
Director | |
| 2022 | |
Richard J. Nigon | |
| 75 | | |
Director | |
| 2017 | |
Brian F. Sullivan | |
| 61 | | |
Chairman of the Board and Chief Executive Officer | |
| 2012 | |
The
Board has determined that each of Richard E. Buller, David F. Dalvey, Leo T. Furcht, Polly A. Murphy, and Richard J. Nigon qualifies
as an independent director under the rules of the Nasdaq Stock Market (the “Nasdaq Listing Rules”). Accordingly, the Board
is and will be composed of a majority of independent directors.
Set
forth below with respect to each director nominee standing for election at the Annual Meeting is each nominee’s principal occupation
and business experience during at least the past five years, the names of other publicly-held companies for which such nominee serves
or has served as a director during such period, and the experience, qualifications, attributes or skills that has led the Board to conclude
that each nominee should serve as a director of the Company.
Richard
E. Buller, M.D., Ph.D., was appointed to Celcuity’s Board in December 2019. Dr. Buller has over 15 years of experience leading
oncology clinical development and translational medicine departments at major pharmaceutical companies. He has participated in the development
of 15 drugs and several companion diagnostics that received U.S. FDA approval. Dr. Buller most recently served as Head Oncology Clinical
Development and Vice President of Translational Oncology at Pfizer, Inc, one of the world’s largest pharmaceutical companies, until
he retired in 2016. He had previously served as Vice President of Translational Medicine at Exelixis, a leading biopharmaceutical company,
where he led efforts to study patients selected by molecular testing for inclusion in their phase 2 and phase 3 clinical trials. He began
his pharmaceutical company career at GlaxoSmithKline as Director of the Oncology Medicine Development Center. Prior to his leadership
positions in drug development, he was Professor of Gynecologic Oncology at the University of Iowa, where he led laboratory research focused
on identifying genomic variants involved in ovarian cancer. He received his M.D. from the Baylor College of Medicine, where he also received
his Ph.D. in cell biology. Among other attributes, skills, and qualifications, the Board believes Dr. Buller is uniquely qualified to
serve as a director based on his oncology drug and diagnostic development expertise.
David
F. Dalvey has served as a member of Celcuity’s Board since February 2014. Mr. Dalvey has more than 30 years of experience in
the fields of corporate finance and venture capital, working primarily with growth-oriented technology and life-science businesses. He
has over 10 years of corporate finance advisory experience with two national investment banks, completing over 150 individual transactions.
He has been the General Partner of Brightstone Venture Capital, a venture capital management company since September 2000. Brightstone
is a 25-year old venture capital management company that has raised and managed ten venture partnerships. Previously, he held management
positions with R.J. Steichen and Company, an investment bank, from 1995 to 2000, The Food Fund LP, a venture capital firm, from 1992
to 1995 and Wessels, Arnold & Henderson, an investment bank, from 1987 to 1992. Mr. Dalvey served on the board of directors for Navarre
Corporation (now Speed Commerce, Inc.) from 2009 until November 2012, on the board of managers for Blue Rock Market Neutral Fund, a mutual
fund registered under the Investment Company Act of 1940, from 2000 to 2014 and on the board of directors for Digitiliti, Inc. from July
2011 until October 2012. Mr. Dalvey has significant operational exposure as a board director or advisor to many other public and privately
held growth businesses and has served on these companies’ audit, strategic or governance committees, including companies such as
HomeSpotter, Definity Health, AppTec Laboratories, CHF Solutions, BiteSquad, Agiliti, and Nature Vision. Mr. Dalvey received a B.S. in
Business/Management Economics from University of Minnesota. Among other attributes, skills, and qualifications, the Board believes Mr.
Dalvey is uniquely qualified to serve as a director based on his leadership experience in operating both public and private companies
and his experience working in the investment community and with investment firms, which enable him to bring valuable insight and knowledge
to our Board.
Leo
T. Furcht, M.D., was appointed to Celcuity’s Board in May 2019. Dr. Furcht is currently Allen-Pardee Professor of Cancer Biology
and Head of the Department of Laboratory Medicine and Pathology at the University of Minnesota and a member of the Division of Molecular
Pathology and Genomics. He served as Chairman of the Board of Directors for University of Minnesota Physicians, the Medical School practice
plan with approximately 700 physicians, from 2004-2014. He was also the founding Director of the Biomedical Engineering Center from 1990-2001,
where he led efforts to establish stem cell and molecular diagnostics expertise at the University of Minnesota. He has published more
than 180 scientific papers and holds more than 30 patents in the fields of polypeptides, biomaterials, and adult stem cells. His business
experience includes co-founding two medical technology companies, South Bay Medical, a medical device company that was acquired by Mentor
Corporation, and Diascreen, a diagnostics company, which was later acquired by Chronimed. Among other attributes, skills, and qualifications,
the Board believes Dr. Furcht is uniquely qualified to serve as a director based on his research in tumor cell behavior and extracellular
matrix proteins, his role as Head of the University of Minnesota’s Department of Laboratory Medicine and Pathology, and his experience
in several biotechnology start-ups.
Lance
G. Laing, Ph.D. is our co-founder and has served as Chief Science Officer, Vice President, Secretary and a director since we commenced
operations in 2012. Dr. Laing’s career spans more than 20 years in drug discovery research and technology development. He received
his doctorate in biophysics and biochemistry from The Johns Hopkins University and completed a National Institutes of Health post-doctoral
fellowship at Washington University Medical School. He has received 24 U.S. patents and has an additional U.S. patent pending. His drug
discovery research career began at Scriptgen/Anadys Pharmaceuticals (purchased by Novartis), where he worked under Professor Peter Kim,
who became President of Merck Research. He also was Director of Chemistry and Bioapplications and Director of Detection Product Development
for two companies that each developed instruments similar to those Celcuity uses to perform the CELsignia tests. His work at these two
instrument companies gave him unique expertise and experience in developing a variety of patented applications for these instruments.
Most recently, he served as an executive director for an international drug discovery and development company. Among other attributes,
skills, and qualifications, the Board believes Dr. Laing is uniquely qualified to serve as a director based on his significant research,
medical and scientific expertise.
Polly
A. Murphy, D.V.M., Ph.D., was appointed to Celcuity’s Board in September 2022. Dr. Murphy has served as Chief Business Officer
at UroGen Pharma, Inc. since August 2020. Prior to that, Dr. Murphy served in various leadership roles at Pfizer, Inc. from September
2012 to August 2020, including as Vice President and Head of Commercial Development Pfizer Oncology Business Unit from January 2019 to
August 2020, Vice President and Head of Global Marketing and Commercial Development, Pfizer Oncology Business Unit from June 2017 to
December 2018, and as Vice President and Head of Strategy and Business Development for Pfizer China from November 2013 to May 2018. Since
August 2020, Dr. Murphy has served on the board of directors of Atea Pharmaceuticals, Inc., a publicly held company. Dr. Murphy received
her D.V.M. and Ph.D. from Iowa State University and her M.B.A. from Nova Southeastern University. Among other attributes, skills, and
qualifications, the Board believes Dr. Murphy is uniquely qualified to serve as a director based on her extensive experience in strategy,
development and commercialization within the pharmaceutical industry.
Richard
J. Nigon, is currently Senior Vice President of Cedar Point Capital, LLC., a private company that raises capital for early-stage
companies, where he has served since 2007. Mr. Nigon has also been a board member for Northern Technologies International Corp. since
February 2010, including serving as its non-executive Chairman of the board of directors since November 2012. Mr. Nigon also serves as
a director of several private companies. Mr. Nigon previously served as a board member for Tactile Systems Technology from September
2012 to May 2022, Vascular Solutions, Inc. from November 2000 to February 2017, when it was acquired by Teleflex, Incorporated and as
a board member for Virtual Radiologic Corporation from May 2007 until it was acquired in July 2010. From February 2001 until December
2006, Mr. Nigon was a Director of Equity Corporate Finance for Miller Johnson Steichen Kinnard, a privately held investment firm, which
was acquired in December 2006 by Stifel Nicolaus, a brokerage and investment banking firm. After that acquisition, Mr. Nigon became a
Managing Director of Private Placements of Stifel Nicolaus until May 2007. From February 2000 to February 2001, Mr. Nigon served as the
Chief Financial Officer of Dantis, Inc., a web hosting company. Prior to joining Dantis, Mr. Nigon was employed by Ernst & Young
LLP from 1970 to 2000, where he served as a partner from 1981 to 2000. While at Ernst & Young, Mr. Nigon served as the Director of
Ernst & Young’s Twin Cities Entrepreneurial Services Group and was the coordinating partner on several publicly-traded companies
in the consumer retailing and manufacturing sectors. Among other attributes, skills, and qualifications, the Board believes Mr. Nigon
is qualified to serve as a director because of his extensive public accounting and auditing experience, including experience with emerging
growth companies. The Board also believes that Mr. Nigon will bring a strong background in financial controls and reporting, financial
management, financial analysis, SEC reporting requirements, and mergers and acquisitions. His strategic planning expertise gained through
his management and leadership roles at private investment firms also makes him well-suited to serve as a member of the Board.
Brian
F. Sullivan is our co-founder and has served as Chairman of the Board and Chief Executive Officer since we commenced operations in
2012. Mr. Sullivan has over 30 years of experience founding and building successful, high growth technology companies. He was Chairman
and CEO of SterilMed, a medical device reprocessing company, from 2003, when he led an investment group to acquire a majority interest,
until its sale to Ethicon Endo-Surgery Inc., a Johnson & Johnson company, for $330 million in 2011. Previously, he was co-founder
and Chief Executive Officer of Recovery Engineering, a filtration company, which he took public and subsequently sold to Procter &
Gamble for $265 million in 1999. Since 2003, Mr. Sullivan has served on the board of directors of Entegris, Inc., a publicly-held company.
Mr. Sullivan has received nine U.S. patents and has several patents pending. He graduated magna cum laude with distinction from
Harvard College with an A.B. in economics. Among other attributes, skills, and qualifications, the Board believes Mr. Sullivan is uniquely
qualified to serve as a director based on his extensive operational and business development experience, and his knowledge in building
stockholder value, growing a company from inception and navigating significant corporate transactions and the public company process.
Vote
Required
Assuming
a quorum is present, the affirmative vote of a plurality of the votes cast at the Annual Meeting is required for the election of directors.
THE
BOARD OF DIRECTORS RECOMMENDS THAT THE
STOCKHOLDERS VOTE FOR THE SLATE OF NOMINEES NAMED ABOVE.
PROPOSAL
NO. 2
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Boulay
PLLP (“Boulay”), an independent registered public accounting firm, has audited the Company’s financial statements for
the years ended December 31, 2022 and 2021. The Audit Committee appointed Boulay as the Company’s independent registered public
accounting firm for the year ending December 31, 2023 and has also reviewed and approved the scope and nature of the services to be performed
for Celcuity by Boulay. Representatives of Boulay are expected to be present at the Annual Meeting to make a statement if they wish to
do so, and to respond to appropriate stockholder questions. The engagement agreement entered into with Boulay for 2023 is subject to
mediation and arbitration procedures as the sole method for resolving disputes.
Ratification
of the appointment of Boulay as the Company’s independent registered public accounting firm is not required to be submitted to
our stockholders for a vote. The Sarbanes-Oxley Act of 2002 requires the Audit Committee to be directly responsible for the appointment,
compensation and oversight of the audit work of the independent registered public accounting firm. However, the Board is submitting this
matter to the stockholders for ratification as a matter of good corporate governance. If the appointment of Boulay is not ratified by
the stockholders at the Annual Meeting, the Audit Committee may reconsider whether to retain Boulay, and may retain Boulay or another
firm without resubmitting the matter to the Company’s stockholders. Even if the stockholders vote in favor of ratification of the
appointment, the Audit Committee may, in its discretion, direct the appointment of a different independent registered public accounting
firm at any time during the year if it determines that such a change would be in the best interests of the Company and the stockholders.
Representatives
of Boulay regularly attend meetings of the Audit Committee. The Audit Committee pre-approves and reviews audit and non-audit services
performed by Boulay, as well as the fees charged by Boulay for such services. In its pre-approval and review of non-audit service fees,
the Audit Committee considers, among other factors, the possible effect of the performance of such services on Boulay’s independence.
To avoid potential conflicts of interest, publicly traded companies are prohibited from obtaining certain non-audit services, such as
bookkeeping or actuarial services, from its independent registered public accounting firm. In 2022 and 2021, we did not obtain any of
these prohibited services from Boulay. For additional information concerning the Audit Committee and its relationship with Boulay, see
“Corporate Governance” and “Audit Committee Report” below.
Audit
and Non-Audit Fees Billed to the Company by Independent Registered Public Accounting Firm
The
following table summarizes the fees we were billed for audit and non-audit services rendered by Boulay for 2022 and 2021.
| |
2022 | | |
2021 | |
Audit Fees | |
$ | 100,900 | | |
$ | 69,068 | |
Audit-Related Fees | |
| - | | |
| - | |
Tax Fees | |
| 4,240 | | |
| 3,800 | |
All Other Fees | |
| 46,415 | | |
| 52,362 | |
Total | |
$ | 151,555 | | |
$ | 125,230 | |
Audit
Fees. These fees were for professional services rendered for 2022 and 2021 in connection with the audit of our annual financial statements
and review of the financial statements included in our Quarterly Reports on Form 10-Q. The amounts also include fees for services that
are normally provided by Boulay in connection with statutory and regulatory filings and engagements for the years identified.
Audit-Related
Fees. These fees were for assurance and related services that were related to the performance of the audit or review of our financial
statements and were not reported under the caption “Audit Fees.” This category may include fees related to the performance
of audits and attestation services not required by statute or regulations, or accounting consultations about the application of generally
accepted accounting principles to proposed transactions.
Tax
Fees. These fees were for tax compliance, tax planning, tax advice and corporate tax services. Corporate tax services encompass a
variety of permissible services, including technical tax advice related to tax matters; assistance with withholding-tax matters; assistance
with state and local taxes; preparation of reports to comply with local tax authority transfer pricing documentation requirements; and
assistance with tax audits.
All
Other Fees. These fees were primarily for services related to our shelf registration statement and the offerings conducted thereunder.
Pre-Approval
Policy
The
charter of the Audit Committee requires the pre-approval of all non-audit services before any such non-audit services are performed for
the Company. The charter of the Audit Committee is posted on the Company’s website at www.celcuity.com/home/investors/corporate-governance/.
We formed our Audit Committee in connection with our initial public offering in 2017.
Vote
Required
Assuming
a quorum is present, the affirmative vote of a majority of the shares of common stock of Celcuity represented at the Annual Meeting,
either in person or by proxy, and entitled to vote is required to ratify the appointment of Boulay as our independent registered public
accounting firm.
THE
BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR RATIFICATION OF THE APPOINTMENT OF OUR INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM.
PROPOSAL
NO. 3
ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION
The
Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), require companies to provide their stockholders with the opportunity to vote to approve, on a non-binding, advisory basis,
the compensation of their named executive officers. In accordance with the preference of our stockholders, as expressed in a non-binding
advisory vote on the frequency of advisory votes on executive compensation, the Board has determined to hold annual advisory votes on
the compensation of the Named Executive Officers
We
seek to closely align the interests of our named executive officers with the interests of our stockholders. We designed our compensation
program to reward our named executive officers for their individual performance and contributions to our overall business objectives,
and for achieving and surpassing the financial goals set by our Compensation Committee and our Board.
The
vote on this resolution is not intended to address any specific element of compensation. Instead, the vote relates to the overall compensation
of our named executive officers, as described in this Proxy Statement in accordance with the compensation disclosure rules of the SEC.
Accordingly,
we ask our stockholders to vote on the following resolution at the Annual Meeting:
“RESOLVED,
that the Company’s stockholders approve, on an advisory basis, the compensation of the named executive officers, as disclosed in
the Company’s Proxy Statement for the 2023 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the
SEC, including the summary compensation table and the other related tables and disclosure.”
While
the Board and especially the Compensation Committee intend to carefully consider the results of the voting on this proposal when making
future decisions regarding executive compensation, the vote is not binding on the Company or the Board and is advisory in nature. To
the extent there is any significant vote against the compensation of our named executive officers, the Board and the Compensation Committee
will evaluate what actions may be necessary to address our stockholders’ concerns.
Vote
Required
Assuming
a quorum is present, the affirmative vote of a majority of the shares of common stock of Celcuity represented at the Annual Meeting,
either in person or by proxy, and entitled to vote is required to approve the compensation of our named executive officers. This vote
is advisory and is not binding on the Company, the Board or the Compensation Committee.
THE
BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE APPROVAL OF THE COMPENSATION OF THE NAMED EXECUTIVE OFFICERS.
PROPOSAL
NO. 4
APPROVAL OF A 1,500,000 SHARE INCREASE TO THE AMENDED AND RESTATED 2017 STOCK
INCENTIVE PLAN
The
Board has approved, subject to stockholder approval, an amendment to the Celcuity Inc. Amended and Restated 2017 Stock Incentive Plan,
or the 2017 Plan, to allocate 1,500,000 additional shares for issuance under the 2017 Plan.
Proposed
Changes
The
only proposed changes to the 2017 Plan are to increase the number of shares allocated to the 2017 Plan by 1,500,000 shares and to make
a corresponding 1,500,000 share increase to the number of shares that may be issued under the 2017 Plan pursuant to the exercise of incentive
stock options. No other changes to the 2017 Plan are proposed or recommended.
Description
of the Plan
Purpose.
The purpose of the 2017 Plan is to advance the interests of the Company and its stockholders by enabling us to attract and retain persons
of skill and ability to perform services for the Company by providing an incentive to such individuals through equity participation in
the Company and by rewarding such individuals who contribute to the achievement of our economic objectives. As of December 31, 2022,
62 individuals were eligible for selection to receive awards under the Plan.
Shares
Available. We initially reserved 750,000 shares of our common stock to be issued under our 2017 Plan and reserved an additional 500,000
shares in each of 2021 and 2022 for a total of 1,000,000. In addition, the number of shares reserved for issuance was automatically increased
by 102,540, 102,998, 149,189, and 216,673 shares on January 1, 2020, 2021, 2022 and 2023, respectively, and will increase automatically
on January 1 of each of 2024 through 2027 by the number of shares equal to 1.0% of the aggregate number of outstanding shares of our
common stock as of the immediately preceding December 31. However, our Board may reduce the amount of the increase in any particular
year. Any shares of common stock that are subject to an award that lapses, expires, is forfeited or for any reason is terminated unexercised
or unvested and any shares of common stock that are subject to an award that is settled or paid in cash or any form other than shares
of common stock will automatically again become available for issuance under the 2017 Plan. Any shares of common stock that constitute
the forfeited portion of a restricted stock award, however, will not become available for re-issuance under the 2017 Plan after they
have been so forfeited. Any shares of common stock withheld to satisfy tax withholding obligations on an award or to pay the exercise
price of a stock option will not become available for re-issuance under the 2017 Plan after they have been withheld for such purposes.
As of March 14, 2023, 94,885 shares had been issued or withheld under the 2017 Plan, 1,886,392 shares were subject to outstanding awards,
and 340,123 shares were available for additional grants under the 2017 Plan.
As
we continue to execute on our growth plans, we anticipate further equity grants to new and existing employees. We expect that our current
reserves under the 2017 Plan, including expected increases under the annual increase provisions, will not be sufficient to allow us to
meet our growth targets over the next several years. The proposed 1,500,000 share increase will allow us to meet this expected need and
enable us to better plan for our future growth and development.
Awards
Available. Our 2017 Plan authorizes the award of stock options, restricted stock awards, or RSAs, stock appreciation rights, or SARs,
restricted stock units, or RSUs, performance awards and stock bonuses. No person will be eligible to receive more than 250,000 shares
in any calendar year under our 2017 Plan other than a new employee of ours, who will be eligible to receive no more than 500,000 shares
under the 2017 Plan in the calendar year in which the employee commences employment. After giving effect to the amendment proposed herein,
no more than 3,250,000 shares will be issued pursuant to the exercise of incentive stock options.
Our
2017 Plan provides for the grant of awards to our employees, directors, consultants, independent contractors and advisors, provided the
consultants, independent contractors, directors and advisors are natural persons that render services not in connection with the offer
and sale of securities in a capital-raising transaction. The awards granted may vest based on time and/or achievement of performance
conditions.
Stock
options granted under the 2017 Plan may either be granted as incentive stock options or as non-qualified stock options. Our Compensation
Committee may provide for options to be exercised only as they vest or to be immediately exercisable with any shares issued on exercise
being subject to our right of repurchase that lapses as the shares vest. The exercise price of stock options must be at least equal to
the fair market value of our common stock on the date of grant. The maximum term of options granted under our 2017 Plan is ten years.
An
RSA is a grant by us of shares of our common stock subject to restrictions. The price (if any) of an RSA will be determined by the Compensation
Committee. Unless otherwise determined by the Compensation Committee at the time of award, vesting will cease on the date the participant
no longer provides services to us and unvested shares will be forfeited to or repurchased by us.
SARs
provide for a payment, or payments, in cash or shares of our common stock, 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 up to a maximum amount of cash or number of shares.
RSUs
represent 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 an RSU has not been forfeited, then on the date
specified in the RSU agreement, we will deliver to the holder of the RSU whole shares of our common stock (which may be subject to additional
restrictions), cash or a combination of our common stock and cash.
Performance
shares are performance awards that cover a number of shares of our common stock that may be settled 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
conditions.
Stock
bonuses may be granted as additional compensation for service or performance and, therefore, will not be issued in exchange for cash.
Transferability.
Awards granted under our 2017 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. Options granted under
our 2017 Plan generally may be exercised for a period of three months after the termination of the optionee’s service to us, for
a period of 12 months in the case of death or disability, or such longer period as our Compensation Committee may provide. Options generally
terminate immediately upon termination of employment for cause.
Certain
Adjustments. In the event there is a specified type of change in our capital structure without our receipt of consideration, such
as a stock split, appropriate adjustments will be made to the number of shares reserved under our 2017 Plan, the maximum number of shares
that can be granted in a calendar year and the number of shares and exercise price, if applicable, of all outstanding awards under our
2017 Plan.
Change
of Control and Other Corporate Events. Our 2017 Plan provides that, in the event of specified types of mergers or consolidations,
a sale, lease, or other disposition of all or substantially all of our assets or other corporate transactions, outstanding awards under
our 2017 Plan may be assumed or replaced by any surviving or acquiring corporation; the surviving or acquiring corporation may substitute
similar awards for those outstanding under our 2017 Plan; outstanding awards may be settled for the full value of such outstanding award
(whether or not then vested or exercisable) in cash, cash equivalents, or securities (or a combination thereof) of the successor entity
with payment deferred until the date or dates the award would have become exercisable or vested; or outstanding awards may be terminated
for no consideration. Our Board or its Compensation Committee has the discretion to provide that a stock award under our 2017 Plan will
immediately vest as to all or any portion of the shares subject to the stock award at the time of a corporate transaction or in the event
a participant’s service with us or a successor entity is terminated actually or constructively within a designated period following
the occurrence of the transaction. Stock awards held by participants under our 2017 Plan will not vest automatically on such an accelerated
basis unless specifically provided in the participant’s applicable award agreement. In the event of a corporate transaction, the
vesting of all awards granted to non-employee directors shall accelerate and such awards shall become exercisable (as applicable) in
full upon the consummation of the corporate transaction.
Termination;
Amendment. Our 2017 Plan will terminate on September 6, 2027, unless it is terminated earlier by our board of directors. Our Board
may amend or terminate our 2017 Plan at any time. Our Board generally may amend our 2017 Plan, without stockholder approval unless required
by applicable law.
Plan
Administration. Our 2017 Plan is administered by our Compensation Committee or by our Board acting in place of our Compensation Committee.
The Compensation Committee has the authority to construe and interpret our 2017 Plan, grant awards, amend or modify any outstanding award
(subject to certain limitations), and make all other determinations necessary or advisable for the administration of the plan. This authority
includes the ability to modify the number of shares or other terms and conditions of an award, extend the term of an award, accelerate
the exercisability or vesting or otherwise terminate any restrictions relating to an award, reduce the exercise price of any outstanding
option, accept the surrender of any outstanding award or, to the extent not previously exercised or vested, authorize the grant of new
awards in substitution for surrendered awards.
Tax
Consequences
Options
and SARs. Stock options granted under the 2017 Plan may either be granted as incentive stock options, which are governed by Internal
Revenue Code Section 422, as amended, or as non-qualified stock options, which are governed by Internal Revenue Code Section 83, as amended.
Generally, no federal income tax is payable by the participant upon the grant or exercise of an incentive stock option and no deduction
is taken by us. If the participant holds the stock acquired upon exercise of the option for a certain period, all appreciation in the
value of the shares will be taxed at favorable capital gains tax rates. If the required holding period is not met, then any appreciation
in the stock up to the date of exercise will be taxed at ordinary income tax rates. If after exercise, the participant disposes of the
shares within a certain time period, we will be entitled to deduct the appreciation on the shares at the time of exercise. Under current
tax laws, if a participant exercises a non-qualified stock option, the participant will be taxed on the difference between the fair market
value of the stock on the exercise date and the exercise price and we will be entitled to a corresponding tax deduction. Similar rules
apply to SARs.
RSAs,
RSUs and Performance Shares. RSAs, RSUs and performance shares under the 2017 Plan generally are not subject to federal income tax
when awarded, unless, solely in the case of RSAs, the participant properly elects to accelerate the tax recognition. RSAs are generally
subject to ordinary income tax at the time the restrictions lapse, and performance shares are taxed at the time the performance targets
are met. RSUs are generally subject to ordinary tax at the time of payment, even if vested earlier. We are entitled to a corresponding
deduction at the time the participant recognizes taxable income on the RSAs, RSUs or performance shares.
The
foregoing is only a summary of the effect of U.S. federal income taxation with respect to the grant and exercise of awards under the
2017 Plan. It does not purport to be complete, and does not discuss the tax consequences of an individual’s death or the provisions
of the income tax laws of any municipality, state or foreign country in which any eligible individual may reside.
New
Plan Benefits
The
awards, if any, that will be made to eligible persons under the Plan are subject to the discretion of the Compensation
Committee and, therefore, we cannot currently determine the benefits or number of shares subject to awards that may be granted
in the future to our executive officers, employees and directors under the 2017 Plan. Therefore, a New Plan Benefits Table has not been
provided.
Vote
Required
Assuming
a quorum is present, the affirmative vote of a majority of the shares of common stock of Celcuity represented at the Annual Meeting,
either in person or by proxy, and entitled to vote is required to approve the 1,500,000 share increase in the number of shares authorized
under our 2017 Plan. Abstentions will have the same effect as a vote against this proposal, but broker non-votes will have no effect
on the outcome of this proposal.
THE
BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR APPROVAL OF THE 1,500,000 SHARE INCREASE IN THE NUMBER OF
SHARES AUTHORIZED UNDER OUR 2017 PLAN.
CORPORATE
GOVERNANCE
Our
Board believes that adherence to good corporate governance principles is essential to running our business efficiently, to maintaining
our integrity in the marketplace, and to ensuring that the Company is managed for the long-term benefit of our stockholders. The Board
recognizes that maintaining and ensuring good corporate governance is a continuous process. Our Board has adopted the Celcuity Inc. Code
of Ethical Business Conduct for Senior Financial Officers (the “Code of Ethics”) and a charter for each committee of the
Board. The Code of Ethics and the Charters of the Audit Committee, the Compensation Committee and the Nominating and Governance Committee,
as amended from time to time, are available on the Company’s website at www.celcuity.com/home/investors/corporate-governance/ and
will be provided in printed form to any stockholder who requests them from us. Requests should be directed to Investor Relations, Celcuity
Inc., 16305 36th Avenue North, Suite 100, Minneapolis, MN 55446.
Board
of Directors
Our
bylaws provide that the size of our Board will be determined from time to time by resolution of our Board. Under our bylaws, a director
elected for an indefinite term serves until the next regular meeting of the stockholders and until the director’s successor is
elected, or until the earlier death, resignation or removal of the director. Our bylaws provide that members of our Board will be elected
by a plurality vote of our stockholders.
Director
Independence
The
Board has determined that Richard E. Buller, David F. Dalvey, Leo T. Furcht, Polly A. Murphy, and Richard J. Nigon are independent directors
under the Nasdaq Listing Rules. In evaluating independence, the Board considered Mr. Nigon’s role as a broker with Cedar Point
Capital, LLC, which served as our placement agent for certain private placements prior to our initial public offering and that we have
paid Dr. Buller certain consulting fees in connection with services he has provided to us based on his expertise in translational medicine.
The Board determined that these relationships will not interfere with the exercise of independent judgment by these individuals.
Board
Leadership Structure
Our
bylaws provide our Board with flexibility to combine or separate the positions of Chairman of our Board and Chief Executive Officer and/or
to implement a presiding or lead director in accordance with its determination that utilizing one or the other structure would be in
the best interests of the Company. Currently, Brian F. Sullivan, our Chief Executive Officer, is the Chairman of our Board. Our Board
does not currently have a lead independent director. We believe that this leadership structure is appropriate at this time because:
| ● | it
promotes unified leadership and direction for the Company; |
| | |
| ● | it
allows for a single, clear focus for management to execute the Company’s strategic
initiatives and business plans; |
| | |
| ● | our
Chief Executive Officer is in the best position to chair board meetings and to ensure that
the key business issues and risks facing the Company are brought to the Board’s attention;
and |
| | |
| ● | we
can more effectively execute our strategy and business plans to maximize stockholder value
if the Chairman of the Board is also a member of the management team. |
Our
Board will periodically review our leadership structure and may make such changes in the future as it deems appropriate.
Family
Relationships
Dr.
Laing, our Chief Science Officer and a director, is a brother-in-law of Mr. Sullivan, the Chairman of our Board and Chief Executive Officer.
Involvement
in Certain Legal Proceedings
To
the best of our knowledge, none of our directors or executive officers have, during the past ten years, been involved in any legal proceedings
described in subparagraph (f) of Item 401 of Regulation S-K.
Risk
Oversight
Our
Board has oversight responsibility for the Company’s risk management process. The Board administers its oversight function through
its committees, but it retains responsibility for general oversight of risks. The committee chairs are responsible for reporting findings
regarding material risk exposure to the Board as quickly as possible. The Board delegates to the Audit Committee oversight responsibility
to review our Code of Ethics, including whether the Code of Ethics is successful in preventing illegal or improper conduct, and our management’s
risk assessments and management’s financial risk management policies, including the policies and guidelines used by management
to identify, assess and manage our exposure to financial risk. Our Compensation Committee assesses and monitors any major compensation-related
risk exposures and the steps management should take to monitor or mitigate such exposures.
Code
of Ethics and Certain Restrictions on Stock Transactions
We
have adopted a Code of Ethics applicable to our principal executive officer and principal financial and accounting officer, in accordance
with Section 406 of the Sarbanes-Oxley Act, the rules of the SEC promulgated thereunder, and the Nasdaq Listing Rules. If any changes
are made to, or any waivers given from, the Code of Ethics, these events would be disclosed on our website or in a Current Report on
Form 8-K filed with the SEC within four business days of such event. The Code of Ethics is posted on our website at www.celcuity.com/home/investors/corporate-governance/.
Additionally,
under our Insider Trading Policy, executive officers and directors should not “margin” or pledge Celcuity stock, whether
for the purchase of Celcuity stock or any other securities; and the Company’s directors and executive officers should not buy or
sell puts or calls with respect to Celcuity securities.
MEETINGS
AND COMMITTEES OF THE BOARD OF DIRECTORS
During
2022, our Board met five times. During 2022, all directors attended in person or via video conference 100% of the meetings that occurred
during each director’s service on the Board.
The
standing committees of our Board are the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee.
During 2022, the Audit Committee met five times and the Compensation Committee met two times and the Nominating and Corporate Governance
Committee met two times. All directors attended 100% of the meetings of each committee on which they served.
Executive
Sessions; Attendance at Annual Meeting of Stockholders
The
independent members of the Board periodically meet outside the presence of management. The Audit Committee has adopted a policy of meeting
in executive session, without management being present, on a regular basis. During 2022, the members of the Audit Committee met in executive
session once.
The
Board’s policy is that each member of the Board should attend our annual meetings of stockholders whenever practical and that at
least one member of the Board must attend each annual meeting. All seven members of the Board then seated attended each of the 2022 annual
meeting of stockholders and the special meeting of stockholders held on September 1, 2022 in person or via video conference.
Audit
Committee
We
have established an Audit Committee in accordance with Section 3(a)(58)(A) of the Exchange Act. The primary duties and responsibilities
of our Audit Committee are to oversee (1) the integrity of our accounting and financial reporting processes and the audits of our financial
statements; (2) our systems of internal controls; (3) our Code of Ethics; and (4) our compliance with legal and regulatory requirements.
In addition, our Audit Committee appoints and monitors the independence, qualifications and performance of our independent auditors,
provides an avenue of communication between our independent auditors, management and the Board, and reviews and approves related party
transactions as required by the Nasdaq Listing Rules.
Mr.
Dalvey, Dr. Furcht, Mr. Nigon and Dr. Murphy are the members of our Audit Committee. Mr. Dalvey, Dr. Furcht and Mr. Nigon served as members
of the Audit Committee for all of 2022, and Dr. Murphy was elected to the Audit Committee on November 9, 2022. The members of the Audit
Committee are “independent directors” as that term is defined in Rules 5605(a)(2) and 5605(c)(2)(A) of the Nasdaq Listing
Rules and Rule 10A-3 of the Exchange Act. The Board has determined that Mr. Nigon and Mr. Dalvey are each an “audit committee financial
expert” as defined by Item 407(d)(5)(ii) of Regulation S-K. The Audit Committee operates under a written charter that satisfies
the applicable standards of the SEC and the Nasdaq Listing Rules.
Compensation
Committee
We
have established a Compensation Committee. Our Compensation Committee reviews and approves corporate goals and objectives relevant to
compensation of our chief executive officer and other executive officers, evaluates the performance of these officers in light of those
goals and objectives, and sets the compensation of these officers based on such evaluations. The Compensation Committee also reviews
and makes recommendations to the Board with respect to director compensation and the issuance of stock options, restricted stock and
other awards under our equity compensation plans. The Compensation Committee reviews and prepares the necessary compensation disclosures
required by the SEC. Additionally, the Compensation Committee reviews and evaluates, on an annual basis, the Compensation Committee charter
and performance.
Our
Compensation Committee has approved the compensation arrangements currently in place for our named executive officers. The Compensation
Committee evaluates the performance of our Chairman and Chief Executive Officer and determines his compensation based on this evaluation
without our Chairman and Chief Executive Officer present during voting or deliberations on his compensation. With respect to the other
named executive officers, the Compensation Committee considers the recommendations of our Chairman and Chief Executive Officer as to
performance evaluations and recommended compensation arrangements.
The
Compensation Committee may approve executive compensation arrangements or, in its discretion, may recommend such matters to the full
Board for approval. All executive compensation is based on assessments of executive performance, which are prepared by the Compensation
Committee and submitted to the full Board for review and discussion. All Compensation Committee recommendations regarding director compensation
are subject to approval by the full Board. Pursuant to its charter, the Compensation Committee may delegate any of its responsibilities
to a subcommittee comprised of one or more members of the Compensation Committee.
Dr.
Buller, Mr. Dalvey, Dr. Furcht and Dr. Murphy are the members of our Compensation Committee. Dr. Buller, Mr. Dalvey and Dr. Furcht served
as members of the Compensation Committee for all of 2022, and Dr. Murphy was elected to the Compensation Committee on November 9, 2022.
The members of the Compensation Committee are “independent directors” as that term is defined in Rule 5605(a)(2) of the Nasdaq
Listing Rules and qualify as “non-employee directors” under Rule 16b-3 of the Exchange Act.
Nominating
and Corporate Governance Committee
We
have established a Nominating and Corporate Governance Committee. Dr. Buller, Dr. Furcht, and Mr. Nigon are the members of our Nominating
and Corporate Governance Committee. The members of the Nominating and Corporate Governance Committee are “independent directors”
as that term is defined in Rule 5605(a)(2) of the Nasdaq Listing Rules. The principal functions of the Nominating and Corporate Governance
Committee are to:
| ● | develop
and recommend to the Board minimum qualifications for director nominees; |
| | |
| ● | identify
and evaluate potential candidates for the Board and committee positions; |
| | |
| ● | recommend
to the Board a slate of nominees for election as directors at our annual meetings of stockholders; |
| | |
| ● | recommend
to the Board individuals to be appointed to the Board in connection with vacancies or newly
created director positions and the termination of directors for cause or other appropriate
reasons; |
| | |
| ● | review
the size and composition of the Board and its committees; |
| | |
| ● | oversee
our corporate governance practices; |
| | |
| ● | evaluate
and make recommendations regarding stockholder proposals submitted to the Board for inclusion
in the company’s proxy statement; and |
| | |
| ● | develop,
recommend and oversee an annual self-evaluation process for the Board and its committees. |
QUALIFICATIONS
OF CANDIDATES FOR ELECTION TO THE BOARD
The
Nominating and Corporate Governance Committee identifies and recommends candidates it believes are qualified to stand for election as
directors of Celcuity or to fill any vacancies on the Board. In identifying director candidates, the Nominating and Corporate Governance
Committee may retain third party search firms. The Nominating and Governance Committee will make reasonable efforts to include at least
one qualified woman or minority candidate in the initial list of director candidates for potential recommendation to the Board.
In
order to evaluate and identify director candidates, the Nominating and Corporate Governance Committee considers the suitability of each
director candidate, including the current members of the Board, in light of the current size, composition and current perceived needs
of the Board. The Nominating and Corporate Governance Committee seeks highly qualified and experienced director candidates and considers
many factors in evaluating such candidates, including issues of character, judgment, independence, background, age, expertise, diversity
of experience, length of service and other commitments. This includes giving due consideration to contributions to diversity on the Board.
In particular, the Board will consider the manner in which a nominee’s appointment would impact the overall composition of the
Board with regard to diversity of viewpoint, professional experience, education, skill, race, ethnicity, gender identity, sexual orientation,
and national origin.
The
Nominating and Corporate Governance Committee does not assign any particular weight or priority to any of these factors. The Nominating
and Corporate Governance Committee has established the following minimum requirements for director candidates: being able to read and
understand fundamental financial statements; having at least 10 years of relevant business experience; having no identified conflicts
of interest as a director of Celcuity; having not been convicted in a criminal proceeding other than traffic violations during the ten
years before the date of selection; and being willing to comply with any code of ethics of the Company. Exceptional candidates who do
not meet all of these criteria may still be considered. The Nominating and Corporate Governance Committee retains the right to modify
these minimum qualifications, the factors considered in assessing potential candidates, and the adoption or amendment of any policies
related to the recruitment and nomination of potential candidates, including without limitation, for compliance with the recently adopted
Nasdaq board diversity rules discussed below.
The
Nominating and Corporate Governance Committee may review director candidates by reviewing information provided to it, through discussions
with persons familiar with the candidate, or other actions that the Nominating and Corporate Governance Committee deems proper. After
such review and consideration, the Nominating and Corporate Governance Committee designates any candidates who are to be interviewed
and by whom they are to be interviewed. After interviews, the Nominating and Corporate Governance Committee recommends for Board approval
of any new directors to be nominated.
The
Nominating and Corporate Governance Committee will consider director candidates recommended by stockholders in the same manner that it
considers all director candidates. Stockholders who wish to nominate a qualified candidate for the 2024 annual meeting must submit such
nomination in writing to our Corporate Secretary, Celcuity Inc., 16305 36th Avenue North, Suite 100, Minneapolis, MN 55446,
in accordance with the stockholder proposal requirements summarized under “Stockholder Proposals” below.
NASDAQ
BOARD DIVERSITY RULES AND MATRIX
On
August 6, 2021, the SEC approved new board diversity rules for Nasdaq-listed companies. As of August 8, 2022, we are required to disclose
on an annual basis our directors’ voluntary, self-identified demographic information using a standardized board diversity matrix
(“Board Diversity Matrix”). To comply with this requirement, the following Board Diversity Matrix provides the self-identified
demographic information for our directors as of March 14, 2023 and March 15, 2022. Each of the categories listed in the table below has
the meaning as set forth in Nasdaq Rule 5605(f).
Board Diversity Matrix |
| |
As of March 14, 2023 | | |
As of March 15, 2022 | |
Total Number of Directors | |
| 7 | | | |
| 6 | | |
| |
| Female | | |
| Male | | |
| Non-Binary | | |
| Female | | |
| Male | | |
| Non-Binary | |
Part I: Gender Identity |
Directors | |
| 1 | | |
| 6 | | |
| 0 | | |
| 0 | | |
| 6 | | |
| 0 | |
Part II: Demographic Background |
African American or Black | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | |
Alaskan Native or Native American | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | |
Asian | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | |
Hispanic or Latinx | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | |
Native Hawaiian or Pacific Islander | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | |
White | |
| 1 | | |
| 6 | | |
| 0 | | |
| 0 | | |
| 6 | | |
| 0 | |
Two or More Races or Ethnicities | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | |
LGBTQ+ | |
| 0 | | | |
| 0 | | |
Did Not Disclose Demographic Background | |
| 0 | | | |
| 0 | | |
In
addition, the new board diversity rules require that, by August 7, 2023, our Board have at least one diverse director that self-identifies
as female, LGBTQ+, and/or an underrepresented minority, and by August 7, 2026, two diverse directors (including at least one that self-identifies
as female and another who self-identifies as female, LGBTQ+, and/or an underrepresented minority). If we do not meet these criteria,
we will be required to disclose the reasons for non-compliance. We intend to meet the requirements by the specified deadlines, provided
that no assurances can be made that we will be able to attract and retain one or more directors meeting such requirements. Please note
that the specific requirements and deadlines for the Nasdaq diversity rules vary depending on whether we continue to qualify as a smaller
reporting company and the specific filing dates of the applicable proxy statement for our annual meetings, and as such, the preceding
summary of the rules is subject to change from time to time.
BOARD
OF DIRECTORS VACANCIES
Our
bylaws authorize only our Board to fill vacant directorships, including newly created seats. In addition, the number of directors constituting
our Board is permitted to be set only by a resolution adopted by our Board. These provisions prevent a stockholder from increasing the
size of our Board and then gaining control of our Board by filling the resulting vacancies with its own nominees. This makes it more
difficult to change the composition of our Board but promotes continuity of management.
STOCKHOLDER
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
Our
stockholders may contact our Board, or any committee of our Board, by regular mail at Chief Executive Officer, Celcuity Inc., 16305 36th
Avenue North, Suite 100, Minneapolis, MN 55446. All communications will be reviewed by management and, if appropriate to the duties
and responsibilities of the Board, forwarded to the appropriate director or directors or to the full Board, as appropriate.
DIRECTOR
COMPENSATION
During
2022, Celcuity’s non-employee directors received compensation in the form of an equity award with a fair market value of $90,000
as of May 17, 2022, the date of grant. Each director could elect to receive the equity award in the form of restricted stock, stock options
or a combination of both. Dr. Buller received the equity award in the form of restricted stock and a stock option. Dr. Buller received
3,273 shares of restricted stock, which was determined by dividing $18,000 by the closing price of a share of the Company’s common
stock on the date of grant. The restricted stock will vest with respect to 100% of the shares on April 30, 2023. Dr. Buller also received
a stock option for the purchase of 19,558 shares, the number of shares that results in the option having a Black Scholes value of $72,000
as of the date of grant. Mr. Dalvey, Dr. Furcht and Mr. Nigon received the equity award in the form of a stock option. Each stock option
is for the purchase of 24,449 shares, the number of shares that results in the option having a Black Scholes value of $90,000 as of the
date of grant. The stock options have an exercise price of $5.50 per share, which is equal to the closing price of a share of the Company’s
common stock on the date of grant. The above stock options will vest and become exercisable with respect to 100% of the shares on April
30, 2023 and will remain exercisable for the remainder of the 10-year term. Dr. Murphy was elected to the Board on September 12, 2022
and was awarded 10,000 stock options at an exercise price of $8.31, the closing price of the Company’s common stock on September
12, 2022. The options will vest and become exercisable as to 2,500 shares on each of September 12, 2023, 2024, 2025 and 2026. Dr. Murphy
was also granted 16,300 stock options at an exercise price of $8.31 and will vest and become exercisable on April 30, 2023. The Compensation
Committee has not yet determined compensation for the non-employee directors for 2023.
In
addition, non-employee directors are reimbursed for their out-of-pocket expenses incurred in connection with services as a director.
Fiscal
Year 2022 Director Compensation
The
table below summarizes the compensation paid by the Company to its non-employee directors for the fiscal year ended December 31, 2022.
Mr. Sullivan and Dr. Laing are not included in this table since they are each an employee of the Company and receive no compensation
for their services as a director. Each of Mr. Sullivan and Dr. Laing are included in the Summary Compensation Table under “Executive
Compensation” below.
Name | |
Stock
Awards (1)(2) | | |
Option Awards (1)(3)(4) | | |
All Other Compensation | | |
Total | |
Richard E. Buller | |
$ | 18,000 | | |
$ | 79,927 | | |
$ | 11,547 | (5) | |
$ | 109,474 | |
David F. Dalvey | |
$ | - | | |
$ | 120,131 | | |
$ | - | | |
$ | 120,131 | |
Leo T. Furcht | |
$ | - | | |
$ | 108,815 | | |
$ | - | | |
$ | 108,815 | |
Polly A. Murphy | |
$ | - | | |
$ | 150,600 | | |
$ | - | | |
$ | 150,600 | |
Richard J. Nigon | |
$ | - | | |
$ | 124,294 | | |
$ | - | | |
$ | 124,294 | |
| (1) | Reflects
the aggregate grant date fair value of equity awards to each director during 2022, calculated
in accordance with FASB ASC Topic 718. Dr. Buller received 3,273 shares of restricted stock
and an option to purchase 19,558 shares of common stock at an exercise price of $5.50. Dr.
Furcht, Mr. Dalvey and Mr. Nigon each received an option to purchase 24,449 shares of common
stock at an exercise price of $5.50. Dr. Murphy options to purchase 10,000 and 16,300 shares
of common stock, respectively at an exercise price of $8.31. Refer to “Note 12 –
Stock-Based Compensation” in the audited financial statements included in Item 8 of
our Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion of the
assumptions used in calculating the award amount. |
| (2) | The
aggregate number of shares of restricted stock held by each of the directors listed in the
table above as of December 31, 2022 was as follows: Dr. Buller, 9,148 shares of restricted
stock; Mr. Dalvey, 9,325 shares of restricted stock. Dr. Furcht, Dr. Murphy or Mr. Nigon
hold no shares of restricted stock. |
| | |
| (3) | The
aggregate number of stock options held by each of the directors listed in the table above
as of December 31, 2022 was as follows: Dr. Buller, options to purchase 39,077 shares; Mr.
Dalvey, options to purchase 55,868 shares; Dr. Furcht, options to purchase 61,430 shares;
Dr. Murphy, options to purchase 26,300 shares; and Mr. Nigon, options to purchase 70,831
shares. |
| | |
| (4) | Effective
May 17, 2022, the Company decreased the exercise price of certain stock options to $5.50
per share. All other terms of the options remained the same including, but not limited to,
the vesting terms and expiration dates. The aggregate number of stock options held by each
of the following directors that were repriced was as follows: Dr. Buller, 6,865 options;
Mr. Dalvey, 18,765 options; Dr. Furcht, 10,673 options; and Mr. Nigon, 21,074 options. The
amounts shown under “Option Awards” include the amount by which the fair value
of the modified options exceeded the fair value of the original options as of the date of
such modification, as follows: Dr. Buller, $7,927; Mr. Dalvey, $30,131; Dr. Furcht, $18,815;
and Mr. Nigon, $34,294. |
| | |
| (5) | Represents
consulting fees paid in connection with translational medicine consulting services. |
BENEFICIAL
OWNERSHIP OF COMMON STOCK
The
following table contains information regarding the beneficial ownership of Celcuity’s common stock as of March 14, 2023 (except
as otherwise indicated) by (i) each person who is known by Celcuity to beneficially own more than 5% of the outstanding shares of our
common stock; (ii) each director of Celcuity; (iii) each director nominee; (iv) each named executive officer of Celcuity; and (v) all
executive officers and directors as a group. Unless otherwise noted, each person or group identified possesses sole voting and investment
power with respect to such shares and the business address of each person is c/o Celcuity Inc., 16305 36th Avenue North, Suite
100, Minneapolis, MN 55446.
Name of Beneficial Owner | |
Amount and Nature of Beneficial Ownership (1)(2) | | |
Percent of Class (3) | |
5% Stockholders | |
| | | |
| | |
Commodore Capital Master LP (4) | |
| 2,259,872 | | |
| 9.99 | % |
Growth Equity Opportunities 18 VGE, LLC (5) | |
| 2,268,524 | | |
| 9.99 | % |
RA Capital Healthcare Fund, L.P. (6) | |
| 2,251,875 | | |
| 9.99 | % |
Soleus Private Equity Fund II, L.P. and affiliates (7) | |
| 2,288,014 | | |
| 9.99 | % |
Venrock Healthcare Capital Partners III, L.P. and affiliates (8) | |
| 2,173,586 | | |
| 9.99 | % |
Morgan Stanley (9) | |
| 1,091,841 | | |
| 5.03 | % |
Officers and Directors | |
| | | |
| | |
Richard E. Buller | |
| 47,925 | | |
| * | |
David F. Dalvey (10) | |
| 315,193 | | |
| 1.45 | % |
Leo T. Furcht | |
| 61,680 | | |
| * | |
Vicky Hahne | |
| 103,978 | | |
| * | |
Lance G. Laing | |
| 1,386,008 | | |
| 6.35 | % |
Polly A. Murphy | |
| 21,300 | | |
| * | |
Richard J. Nigon | |
| 189,731 | | |
| * | |
Brian F. Sullivan | |
| 3,539,514 | | |
| 15.93 | % |
All directors and executive officers as a group (8 individuals) | |
| 5,665,329 | | |
| 24.95 | % |
*
less than 1%
| (1) | The
beneficial ownership reported in the table includes shares of common stock the beneficial
owners have the right to acquire within 60 days of March 14, 2023 upon the exercise of stock
options or warrants, subject to the Beneficial Ownership Limitation described in note 2 below. |
| (2) | With
respect to 5% stockholders other than Morgan Stanley, the beneficial ownership shown above
includes (a) the number of shares of common stock that may be acquired upon the conversion
of shares of Series A Preferred Stock acquired pursuant to the Securities Purchase Agreement,
dated May 15, 2022 by and among the Company and the purchasers named therein (the “Securities
Purchase Agreement”), and (b) the number of shares of common stock that may be acquired
upon exercise of warrants issued under the Securities Purchase Agreement, assuming any such
conversions or exercises occur within 60 days of March 14, 2023; provided, however, that
the maximum number of shares of common stock that may be acquired upon such conversions or
exercises is limited such that the beneficial ownership of such stockholder and its affiliates
will not exceed 9.99% (the “Beneficial Ownership Limitation”). |
With
respect to officer and directors, the beneficial ownership shown above includes the number of shares of common stock the beneficial owners
have the right to acquire within 60 days of March 14, 2023 upon the exercise of stock options or warrants, as follows: Dr. Buller, 39,077
shares; Mr. Dalvey, 55,868 shares; Dr. Furcht, 61,430 shares; Ms. Hahne, 90,681 shares; Dr. Laing, 136,008 shares; Dr. Murphy 16,300
shares; Mr. Nigon, 93,699 shares; Mr. Sullivan, 522,871 shares; and all directors and executive officers as a group, 1,015,934 shares.
| (3) | Calculated
based on 21,689,425 issued and outstanding shares of Celcuity common stock as of March 14,
2023, plus, for each individual, any securities that such individual has the right to acquire
within 60 days of March 14, 2023. |
| (4) | In
a Schedule 13G/A filed on February 14, 2023, Commodore Capital Master LP reported shared
voting power and shared dispositive power over 2,257,412 shares of common stock as of December
31, 2022, consisting of (i) 1,327,952 shares of common stock, (ii) 233,810 shares of common
stock issuable upon conversion of the Series A Preferred Stock, subject to the Beneficial
Ownership Limitation described in Note 2 above, and (iii) 695,650 shares of common stock
issuable upon exercise of warrants, subject to the Beneficial Ownership Limitation. Based
on information known to the Company, Commodore Capital Master LP beneficially owned 2,259,872
shares as of as of March 14, 2023, including 931,920 shares that could be acquired upon the
conversion of Series A Preferred Stock or exercise of warrants, subject to the Beneficial
Ownership Limitation. The reported ownership does not include an additional 1,052,860 shares
of common stock issuable to Commodore Capital Master LP upon conversion of Series A Preferred
Stock or exercise of the warrants without giving effect to the Beneficial Ownership Limitation.
Commodore Capital LP, a Delaware limited partnership (the “Firm”) is the investment
manager to Commodore Capital Master LP. Michael Kramarz and Robert Egen Atkinson are the
managing partners of the Firm and exercise investment discretion with respect to the shares
reported herein. The address for Commodore Capital Master LP and the Firm is 444 Madison
Avenue, Floor 35, New York, New York 10022. |
| (5) | In
a Schedule 13D/A filed on September 12, 2022, Growth Equity Opportunities 18 VGE, LLC (“GEO”)
reported shared voting power and shared dispositive power over 1,520,001 shares of common
stock, as of September 1, 2022, consisting of (i) 1,250,001 shares of common stock and (ii)
270,000 shares of common stock issuable upon the conversion of the Series A Preferred Stock
or exercise of warrants, subject to the Beneficial Ownership Limitation described in Note
2 above. Based on information known to the Company, GEO beneficially owned 2,268,524 shares
as of as of March 14, 2023, including 1,018,523 shares that could be acquired upon the conversion
of Series A Preferred Stock or exercise of warrants subject to the Beneficial Ownership Limitation.
The reported ownership does not include an additional 2,601,037 shares of common stock issuable
to GEO upon conversion of Series A Preferred Stock or exercise of the warrants without giving
effect to the Beneficial Ownership Limitation. NEA 18 Venture Growth Equity, L.P. (“NEA
18 VGE”) is the sole member of GEO; NEA Partners 18 VGE, L.P. (“NEA Partners
18 VGE”) is the sole general partner of NEA 18 VGE; and NEA 18 VGE GP, LLC (“NEA
18 VGE LLC” and, together with NEA Partners 18 VGE, the “Control Entities”)
is the sole general partner of NEA Partners 18 VGE. Ali Behbahani (“Behbahani”),
Carmen Chang (“Chang”), Anthony A. Florence, Jr. (“Florence”), Liza
Landsman (“Landsman”), Mohamad H. Makhzoumi (“Makhzoumi”), Edward
T. Mathers (“Mathers”), Scott D. Sandell (“Sandell”), Peter W. Sonsini
(“Sonsini”), Paul Walker (“Walker”) and Rick Yang (“Yang”)
(together, the “Managers”) are the managers of NEA 18 VGE LLC. The address of
the principal business office of GEO, NEA 18 VGE, each Control Entity and Sandell is New
Enterprise Associates, 1954 Greenspring Drive, Suite 600, Timonium, MD 21093. The address
of the principal business office of Behbahani and Mathers is New Enterprise Associates, 5425
Wisconsin Avenue, Suite 800, Chevy Chase, MD 20815. The address of the principal business
office of Chang, Makhzoumi, Sonsini, Walker and Yang is New Enterprise Associates, 2855 Sand
Hill Road, Menlo Park, California 94025. The address of the principal business office of
Florence and Landsman is New Enterprise Associates, 104 5th Avenue, 19th Floor, New York,
NY 10001. |
| (6) | In
a Schedule 13G/A filed on February 14, 2023, RA Capital Healthcare Fund, L.P. (the “Fund”)
reported shared voting power and shared dispositive power over 2,249,421 shares of common
stock as of December 31, 2022, consisting of (i) 1,400,001 shares of common stock and (ii)
849,420 shares of common stock issuable upon the conversion of Series A Preferred Stock or
the exercise of warrants, subject to the Beneficial Ownership Limitation described in Note
2 above. Based on information known to the Company, the Fund beneficially owned 2,251,875
shares as of as of March 14, 2023, including 851,874 shares that could be acquired upon the
conversion of Series A Preferred Stock or exercise of warrants subject to the Beneficial
Ownership Limitation. The reported ownership does not include an additional 2,252,476 shares
of common stock issuable to the Fund upon conversion of Series A Preferred Stock or exercise
of the warrants without giving effect to the Beneficial Ownership Limitation. RA Capital
Healthcare Fund GP, LLC is the general partner of the Fund. The Fund has delegated to RA
Capital Management, L.P. the sole power to vote and the sole power to dispose of all securities
held in the Fund’s portfolio, including the shares reported herein The general partner
of RA Capital Management, L.P. is RA Capital Management GP, LLC, of which Dr. Peter Kolchinsky
and Mr. Rajeev Shah are the controlling persons. The address of the above referenced entities
and persons is 200 Berkeley Street, 18th Floor, Boston, MA 02116. |
| (7) | In
a Schedule 13G/A filed on February 14, 2023, Soleus Private Equity Fund II, L.P. (“Soleus
PE”) and Soleus Capital Master Fund, L.P. (“Master Fund”) reported shared
voting power and shared dispositive voting power over 2,285,554 shares of common stock as
of December 31, 2022, consisting of shares of common stock that are either held by Soleus
PE and/or Master Fund, or that may be acquired upon the conversion of Series A Preferred
Stock or the exercise of warrants that are held by Soleus PE and/or Master Fund, subject
to the Beneficial Ownership Limitation described in Note 2 above. Based on information known
to the Company, Soleus PE and/or Master Fund beneficially owned 2,288,014 shares as of as
of March 14, 2023, including shares of common stock that are either held by Soleus PE and/or
Master Fund, or that may be acquired upon the conversion of Series A Preferred Stock or the
exercise of warrants that are held by Soleus PE and/or Master Fund, subject to the Beneficial
Ownership Limitation. The reported ownership does not include an additional 4,157,005 shares
of common stock issuable to Soleus PE and/or Master Fund upon conversion of Series A Preferred
Stock or exercise of the warrants without giving effect to the Beneficial Ownership Limitation.
Soleus Private Equity GP II, LLC (“Soleus GP”) is the general partner of Soleus
PE, and Soleus PE GP II, LLC is the sole manager of Soleus GP. Mr. Guy Levy is the sole managing
member of Soleus PE GP II, LLC. Soleus Capital, LLC is the general partner of Master Fund,
and Soleus Capital Group, LLC is the sole managing member of Soleus Capital, LLC. Mr. Guy
Levy is the sole managing member of Soleus Capital Group, LLC. The address of the above referenced
entities and persons is 104 Field Point Road, 2nd Floor, Greenwich, CT 06830. |
| (8) | In
a Schedule 13G/A filed on February 14, 2023, Venrock Healthcare Capital Partners III, L.P.,
VHCP Co-Investment Holdings III, LLC, and Venrock Healthcare Capital Partners EG, L.P. (collectively,
the Venrock Entities) reported shared voting power and shared dispositive power over 2,171,125
shares of common stock as of December 31, 2022, consisting of (i) 570,789 shares held by
Venrock Healthcare Capital Partners III, L.P.; (ii) 57,101 shares held by VHCP Co-Investment
Holdings III, LLC; and (iii) 1,543,235 shares held by Venrock Healthcare Capital Partners
EG, L.P. The reported ownership included 65,739 shares that could be acquired by the Venrock
Entities upon the conversion of Series A Preferred Stock or the exercise of warrants subject
to the Beneficial Ownership Limitation described in Note 2 above. Based on information known
to the Company, the Venrock Entities beneficially owned 2,173,586 shares as of as of March
14, 2023, including 68,200 shares that could be acquired upon the conversion of Series A
Preferred Stock or exercise of warrants subject to the Beneficial Ownership Limitation. The
reported ownership does not include an additional 3,913,320 shares of common stock issuable
to the Venrock Entities upon conversion of Series A Preferred Stock or exercise of the warrants
without giving effect to the Beneficial Ownership Limitation. VHCP Management III, LLC is
the general partner of Venrock Healthcare Capital Partners III, L.P. and the manager of VHCP
Co-Investment Holdings III, LLC. VHCP Management EG, LLC is the general partner of Venrock
Healthcare Capital Partners EG, L.P. Dr. Bong Koh and Nimish Shah are the voting members
of VHCP Management III, LLC and VHCP Management EG, LLC. The address of the above referenced
entities and persons is 7 Bryant Park, 23rd Floor, New York, NY 10018. |
| (9) | In
a Schedule 13G filed on February 8, 2023, Morgan Stanley reported shared voting power over
1,023,379 shares of common stock and shared dispositive power over 1,091,841 shares of common
stock as of December 31, 2022. The address of Morgan Stanley is 1585 Broadway, New York,
New York, 10036. |
| (10) | Mr.
Dalvey’s beneficial ownership includes 250,000 shares of common stock owned by Brightstone
Venture Capital Fund, LP, of which Mr. Dalvey is the General Partner. |
EXECUTIVE
OFFICERS
The
following table identifies our current executive officers, the positions they hold, and their current age. Our executive officers are
appointed by our Board of Directors to hold office until their successors are elected or their earlier death, resignation or removal.
Name | |
Age | | |
Positions |
Brian F. Sullivan | |
| 61 | | |
Chairman of the Board and Chief Executive Officer |
Lance G. Laing | |
| 61 | | |
Chief Science Officer, Vice President, Secretary and Director |
Vicky Hahne | |
| 57 | | |
Chief Financial Officer |
For
biographical information about Mr. Sullivan and Dr. Laing, please refer to Proposal 1 entitled “Election of Directors.” Biographical
information about Ms. Hahne is as follows:
Vicky
Hahne, Chief Financial Officer
Ms.
Hahne joined as our Chief Financial Officer in July 2017. She has more than 25 years of financial leadership experience, including the
most recent 15 years in the healthcare industry. Prior to joining Celcuity, Ms. Hahne served as Controller of Respiratory Technologies
Inc., a medical device manufacturer, from 2015 to 2017. While at Respiratory Technologies, she played a key role in the due diligence
process to sell the company to Koninklijke Philips. In 2014, she served as Controller for Ability Network Inc., a healthcare information
technology company. From 2007 to 2012, Ms. Hahne served as Controller of SterilMed Inc., a medical device reprocessing company, where
she was significantly involved in the sale of the company to Johnson & Johnson. Prior to these roles, Ms. Hahne held several senior
financial positions at SimonDelivers Inc., including Chief Financial Officer. Ms. Hahne has extensive experience in early stage, high
growth companies with responsibilities including financial controls and stewardship, financial analysis, mergers and acquisitions, building
infrastructure and systems. She received a B.S. degree in Finance and Accounting from Northern State University and received her CPA
certificate in 1990.
EXECUTIVE
COMPENSATION
Overview
The
compensation of our executive officers is structured with the goal of providing a competitive compensation program that will enable us
to attract and retain highly-qualified executives, which is necessary to achieve our financial and strategic objectives and create long-term
value for our stockholders. Our Chief Executive Officer, Chief Science Officer, and Chief Financial Officer (collectively, our “named
executive officers”) are currently compensated with a base salary and performance-based incentive pay. In addition, we have equity
incentive plans and an employee stock purchase plan, under which we grant and have granted options and other equity awards to our named
executive officers, employees, directors, consultants and independent contractors. See the “Employee Benefit Plans” subsection
below for additional information on these plans.
Incentive
Pay
We
provide our named executive officers and other senior managers the opportunity to earn incentive payments under a performance-based incentive
pay program. Payments under the incentive program are based in part on achievement of individual goals and upon the Company’s achievement
of milestones that advance our core business strategies. Individual goals and milestones are approved by our Compensation Committee.
Each participant is granted the opportunity to earn incentive pay up to a maximum percentage of his or her base salary. The range of
milestone-based incentive pay for each of our named executive officers is 30 - 80% of base salary. Incentive payments under the incentive
program may be made entirely in the form of equity awards or partly in cash and partly in the form of equity awards. Incentive payments
ranging from 30 to 80% of base salary were made under the program for the fiscal year 2022 to Mr. Sullivan, Dr. Laing, and Ms. Hahne.
Mr. Sullivan’s incentive payment was made entirely in the form of an equity award in 2022.
Employment
Agreements, Severance and Change in Control Agreements
We
have not entered into employment agreements, severance agreements or change-of-control agreements with our named executive officers.
Mr. Sullivan, Dr. Laing, and Ms. Hahne have each entered into a confidentiality, assignment of inventions and non-competition agreement
with us, which provides, among other things, that the named executive officer will not engage in a competitive business or solicit our
employees or consultants for a period of 24 months after termination of employment.
Summary
Compensation Table
The
following table summarizes the compensation for fiscal 2022 and 2021 of Celcuity’s named executive officers:
Name and Principal Position | |
Year | | |
Salary (1) | | |
Option Awards (1)(2)(3) | | |
Non-Equity Incentive Plan Compensation | | |
Total | |
Brian F. Sullivan | |
| 2022 | | |
$ | 105,769 | | |
$ | 1,145,640 | | |
$ | - | | |
$ | 1,251,409 | |
Chairman and Chief Executive Officer | |
| 2021 | | |
$ | 259,615 | | |
$ | 1,065,670 | | |
$ | - | | |
$ | 1,325,285 | |
Lance G. Laing | |
| 2022 | | |
$ | 325,385 | | |
$ | 280,115 | | |
$ | - | | |
$ | 605,500 | |
Chief Science Officer | |
| 2021 | | |
$ | 344,423 | | |
$ | 477,888 | | |
$ | 103,500 | | |
$ | 925,811 | |
Vicky Hahne | |
| 2022 | | |
$ | 210,000 | | |
$ | 159,823 | | |
$ | - | | |
$ | 369,823 | |
Chief Financial Officer | |
| 2021 | | |
$ | 191,923 | | |
$ | 306,334 | | |
$ | 42,600 | | |
$ | 540,857 | |
| (1) | In
May 2022, Mr. Sullivan elected to receive an equity award in lieu of cash compensation for
the 14-month period commencing June 1, 2022, and Dr. Laing and Ms. Hahne each elected to
receive an equity award in lieu of a portion of his or her cash compensation for such 14-month
period. |
| (2) | Reflects
the aggregate grant date fair value of equity awards to each named executive officer during
2022 and 2021, calculated in accordance with FASB ASC Topic 718. Refer to “Note 12
– Stock-Based Compensation” in the audited financial statements included in Item
8 of our Annual Report on Form 10-K for the year ended December 31, 2022 for a discussion
of the assumptions used in calculating the award amount. |
| (3) | Effective
May 17, 2022, the Company decreased the exercise price of certain stock options to $5.50
per share. All other terms of the options remained the same including, but not limited to,
the vesting terms and expiration dates. Mr. Sullivan held 166,336 options that were repriced,
which had a weighted average exercise price prior to the decrease of $19.76 per share. Dr.
Laing held 93,534 options that were repriced, which had a weighted average exercise price
prior to the decrease of $19.43 per share. Ms. Hahne held 30,186 options that were repriced,
which had a weighted average exercise price prior to the decrease of $20.70 per share. The
amounts shown under “Option Awards” for 2022 include the amount by which the
fair value of the modified options exceeded the fair value of the original options as of
the date of such modification, as follows: Mr. Sullivan: $237,390; Dr. Laing: $140,564; and
Ms. Hahne: $43,821. |
Outstanding
Equity Awards at Fiscal Year End 2022
The
following table lists the outstanding equity awards held by each of our named executive officers as of December 31, 2022:
| |
| |
OPTION AWARDS |
Name | |
Grant Date | |
Number of Securities Underlying Unexercised Options (#) Exercisable | | |
Number of Securities Underlying Unexercised Options (#) Unexercisable | | |
Option Exercise Price ($) | | |
Option Expiration Date |
Brian F. Sullivan | |
5/17/2017 | |
| 21,500 | | |
| 0 | | |
$ | 8.40 | | |
5/17/2027 |
| |
9/19/2017 | |
| 8,220 | | |
| 0 | | |
$ | 5.50 | | |
9/19/2027 |
| |
8/13/2018 | |
| 3,769 | | |
| 0 | | |
$ | 5.50 | | |
8/13/2028 |
| |
10/17/2018 | |
| 14,675 | | |
| 0 | | |
$ | 5.50 | | |
10/17/2028 |
| |
8/12/2019 | |
| 4,985 | | |
| 0 | | |
$ | 5.50 | | |
8/12/2029 |
| |
8/12/2019 | |
| 41,666 | | |
| 8,334 | (1) | |
$ | 5.50 | | |
8/12/2029 |
| |
8/12/2020 | |
| 17,281 | | |
| 0 | | |
$ | 5.90 | | |
8/12/2030 |
| |
8/12/2020 | |
| 11,666 | | |
| 8,334 | (2) | |
$ | 5.90 | | |
8/12/2030 |
| |
12/28/2020 | |
| 5,540 | | |
| 5,541 | (3) | |
$ | 5.50 | | |
12/28/2030 |
| |
2/2/2021 | |
| 5,893 | | |
| 6,966 | (4) | |
$ | 5.50 | | |
2/2/2031 |
| |
3/18/2021 | |
| 5,201 | | |
| 6,688 | (5) | |
$ | 5.50 | | |
3/18/2031 |
| |
4/12/2021 | |
| 5,628 | | |
| 7,881 | (6) | |
$ | 5.50 | | |
4/12/2031 |
| |
8/11/2021 | |
| 17,000 | | |
| 0 | | |
$ | 5.50 | | |
8/11/2031 |
| |
8/11/2021 | |
| 6,666 | | |
| 13,334 | (7) | |
$ | 5.50 | | |
8/11/2031 |
| |
10/27/2021 | |
| 1,915 | | |
| 4,654 | (8) | |
$ | 5.50 | | |
10/27/2031 |
| |
5/17/2022 | |
| 125,000 | | |
| 125,000 | (9) | |
$ | 5.50 | | |
5/17/2032 |
Lance G. Laing | |
5/17/2017 | |
| 16,125 | | |
| 0 | | |
$ | 8.40 | | |
5/17/2027 |
| |
9/19/2017 | |
| 4,110 | | |
| 0 | | |
$ | 5.50 | | |
9/19/2027 |
| |
10/17/2018 | |
| 1,834 | | |
| 0 | | |
$ | 5.50 | | |
10/17/2028 |
| |
8/12/2019 | |
| 41,666 | | |
| 8,334 | (10) | |
$ | 5.50 | | |
8/12/2029 |
| |
8/12/2020 | |
| 11,666 | | |
| 8,334 | (11) | |
$ | 5.90 | | |
8/12/2030 |
| |
12/28/2020 | |
| 1,385 | | |
| 1,386 | (12) | |
$ | 5.50 | | |
12/28/2030 |
| |
2/2/2021 | |
| 1,473 | | |
| 1,742 | (13) | |
$ | 5.50 | | |
2/2/2031 |
| |
3/18/2021 | |
| 1,300 | | |
| 1,673 | (14) | |
$ | 5.50 | | |
3/18/2031 |
| |
4/12/2021 | |
| 2,814 | | |
| 3,940 | (15) | |
$ | 5.50 | | |
4/12/2031 |
| |
8/11/2021 | |
| 6,666 | | |
| 13,334 | (16) | |
$ | 5.50 | | |
8/11/2031 |
| |
10/27/2021 | |
| 547 | | |
| 1,330 | (17) | |
$ | 5.50 | | |
10/27/2031 |
| |
5/17/2022 | |
| 19,205 | | |
| 19,207 | (18) | |
$ | 5.50 | | |
5/17/2032 |
Vicky Hahne | |
5/17/2017 | |
| 37,500 | | |
| 0 | | |
$ | 8.40 | | |
5/17/2027 |
| |
7/5/2018 | |
| 3,000 | | |
| 0 | | |
$ | 5.50 | | |
7/05/2028 |
| |
10/17/2018 | |
| 932 | | |
| 0 | | |
$ | 5.50 | | |
10/17/2028 |
| |
8/12/2019 | |
| 2,500 | | |
| 500 | (19) | |
$ | 5.50 | | |
8/12/2029 |
| |
8/12/2020 | |
| 5,833 | | |
| 4,167 | (20) | |
$ | 5.90 | | |
8/12/2030 |
| |
12/28/2020 | |
| 561 | | |
| 561 | (21) | |
$ | 5.50 | | |
12/28/2030 |
| |
2/2/2021 | |
| 596 | | |
| 705 | (22) | |
$ | 5.50 | | |
2/2/2031 |
| |
3/18/2021 | |
| 526 | | |
| 678 | (23) | |
$ | 5.50 | | |
3/18/2031 |
| |
4/12/2021 | |
| 1,585 | | |
| 2,221 | (24) | |
$ | 5.50 | | |
4/12/2031 |
| |
8/11/2021 | |
| 5,000 | | |
| 10,000 | (25) | |
$ | 5.50 | | |
8/11/2031 |
| |
10/27/2021 | |
| 239 | | |
| 582 | (26) | |
$ | 5.50 | | |
10/27/2031 |
| |
5/17/2032 | |
| 15,964 | | |
| 15,966 | (27) | |
$ | 5.50 | | |
5/17/2032 |
| (1) | This
option vests as to 1,041.67 shares in 8 installments on the 1st of each of month
beginning January 1, 2023 and ending August 1, 2023. |
| (2) | This
option vests as to 416.67 shares in 20 installments on the 1st of each of month
beginning January 1, 2023 and ending August 1, 2024. |
| (3) | This
option vests as to 230.85 shares in 24 installments on the 1st of each of month
beginning January 1, 2023 and ending December 1, 2024. |
| (4) | This
option vests as to 267.90 shares in 26 installments on the 1st of each of month
beginning January 1, 2023 and ending February 1, 2025. |
| (5) | This
option vests as to 247.69 shares in 27 installments on the 1st of each of month
beginning January 1, 2023 and ending March 1, 2025. |
| (6) | This
option vests as to 281.44 shares in 28 installments on the 1st of each of month
beginning January 1, 2023 and ending April 1, 2025. |
| (7) | This
option vests as to 416.67 shares in 32 installments on the 1st of each of month
beginning January 1, 2023 and ending August 1, 2025. |
| (8) | This
option vests as to 136.85 shares in 34 installments on the 1st of each of month
beginning January 1, 2023 and ending October 1, 2025. |
| (9) | This
option vests as to 17,857.14 shares in 7 installments on the 1st of each of month
beginning January 1, 2023 and ending July 1, 2023. |
| (10) | This
option vests as to 1,041.67 shares in 8 installments on the 1st of each of month
beginning January 1, 2023 and ending August 1, 2023. |
| (11) | This
option vests as to 416.67 shares in 20 installments on the 1st of each of month
beginning January 1, 2023 and ending August 1, 2024. |
| (12) | This
option vests as to 57.73 shares in 24 installments on the 1st of each of month
beginning January 1, 2023 and ending December 1, 2024. |
| (13) | This
option vests as to 66.98 shares in 26 installments on the 1st of each of month
beginning January 1, 2023 and ending February 1, 2025. |
| (14) | This
option vests as to 61.94 shares in 27 installments on the 1st of each of month
beginning January 1, 2023 and ending March 1, 2025. |
| (15) | This
option vests as to 140.71 shares in 28 installments on the 1st of each of month
beginning January 1, 2023 and ending April 1, 2025. |
| (16) | This
option vests as to 416.67 shares in 32 installments on the 1st of each of month
beginning January 1, 2023 and ending August 1, 2025. |
| (17) | This
option vests as to 39.10 shares in 34 installments on the 1st of each of month
beginning January 1, 2023 and ending October 1, 2025. |
| (18) | This
option vests as to 2,743.71 shares in 7 installments on the 1st of each of month
beginning January 1, 2023 and ending July 1, 2023. |
| (19) | This
option vests as to 62.50 shares in 8 installments on the 1st of each of month
beginning January 1, 2023 and ending August 1, 2023. |
| (20) | This
option vests as to 208.33 shares in 20 installments on the 1st of each of month
beginning January 1, 2023 and ending August 1, 2024. |
| (21) | This
option vests as to 23.38 shares in 24 installments on the 1st of each of month
beginning January 1, 2023 and ending December 1, 2024. |
| (22) | This
option vests as to 27.10 shares in 26 installments on the 1st of each of month
beginning January 1, 2023 and ending February 1, 2025. |
| (23) | This
option vests as to 25.08 shares in 27 installments on the 1st of each of month
beginning January 1, 2023 and ending March 1, 2025. |
| (24) | This
option vests as to 79.29 shares in 28 installments on the 1st of each of month
beginning January 1, 2023 and ending April 1, 2025. |
| (25) | This
option vests as to 312.50 shares in 32 installments on the 1st of each of month
beginning January 1, 2023 and ending August 1, 2025. |
| (26) | This
option vests as to 17.10 shares in 34 installments on the 1st of each of month
beginning January 1, 2023 and ending October 1, 2025. |
| (27) | This
option vests as to 2,280.71 shares in 7 installments on the 1st of each of month
beginning January 1, 2023 and ending July 1, 2023. |
Pay
Versus Performance
We
are providing the following information about the relationship between executive compensation actually paid to our named executive officers
(NEOs) and certain financial performance measures of the Company for each of the last two fiscal years, in accordance with Item 402(v)
of Regulation S-K. For purposes of this disclosure, “compensation actually paid” to our NEOs is determined by making various
adjustments to the total compensation amounts reported in the Summary Compensation Table. The table below summarizes compensation amounts
reported in our Summary Compensation Table, as well as the adjusted amounts of “compensation actually paid” for fiscal 2022
and 2021. For our NEOs other than our principal executive officer (PEO), compensation is reported as an average.
The
following table sets forth information concerning the compensation of our NEOs for fiscal 2022 and 2021, and certain financial performance
measures of the Company for each fiscal year:
Year (1) | | |
Summary Compensation Table (SCT) Total for PEO | | |
Compensation Actually Paid (CAP) to PEO (2) | | |
Average SCT Total for Non-PEO NEOs | | |
Average CAP to Non-PEO NEOs (2) | | |
Value of Initial Fixed $100 Investment Based On Total Shareholder Return (TSR) (3) | | |
Net Loss (thousands) | |
| 2022 | | |
$ | 1,251,409 | | |
$ | 2,477,572 | | |
$ | 487,661 | | |
$ | 644,278 | | |
$ | 152.95 | | |
$ | (40,370 | ) |
| 2021 | | |
$ | 1,325,285 | | |
$ | 1,357,562 | | |
$ | 733,334 | | |
$ | 757,811 | | |
$ | 144.00 | | |
$ | (29,605 | ) |
| (1) | During
2022 and 2021, Brian F. Sullivan was our PEO, and Lance G. Laing and Vicky Hahne were our
Non-PEO NEOs. |
| (2) | In
order to calculate the “compensation actually paid” (CAP) to our NEOs, we are
required under the SEC rules to subtract from the total compensation amount in the summary
compensation table (SCT) the grant date fair value of equity awards (reflected in column
B in the table below), and add back the following (reflected in column C in the table below):
(i) the year-end fair value of any equity awards granted in the applicable year that are
outstanding and unvested as of the end of the year; (ii) the amount of change as of the end
of the applicable year (from the end of the prior fiscal year) in fair value of any awards
granted in prior years that are outstanding and unvested as of the end of the applicable
year; (iii) for awards that are granted and vest in the same applicable year, the fair value
as of the vesting date; (iv) for awards granted in prior years that vest in the applicable
year, the amount equal to the change as of the vesting date (from the end of the prior fiscal
year) in fair value; (v) for awards granted in prior years that are determined to fail to
meet the applicable vesting conditions during the applicable year, a deduction for the amount
equal to the fair value at the end of the prior fiscal year; and (vi) the dollar value of
any dividends or other earnings paid on stock or option awards in the applicable year prior
to the vesting date that are not otherwise reflected in the fair value of such award or included
in any other component of total compensation for the applicable year. In addition, if any
equity award has been modified during a fiscal year, the changes in fair value included pursuant
to the adjustments described above must take into account the excess fair value, if any,
of any such modified award over the fair value of the original award as of the date of such
modification. |
| |
SCT Total | | |
Options Deducted (a) | | |
Options Added (a)(b) | | |
Total CAP | |
| |
(A) | | |
(B) | | |
(C) | | |
A – B + C | |
PEO | |
| | | |
| | | |
| | | |
| | |
2022 | |
$ | 1,251,409 | | |
$ | 1,145,640 | | |
$ | 2,371,803 | | |
$ | 2,477,572 | |
2021 | |
$ | 1,325,285 | | |
$ | 1,065,670 | | |
$ | 1,097,947 | | |
$ | 1,357,562 | |
Average for Non-PEO NEOs | |
| | | |
| | | |
| | | |
| | |
2022 | |
$ | 487,661 | | |
$ | 219,969 | | |
$ | 376,586 | | |
$ | 644,278 | |
2021 | |
$ | 733,334 | | |
$ | 392,111 | | |
$ | 416,588 | | |
$ | 757,811 | |
| a. | The
fair value of stock options reported for CAP purposes in columns (B) and (C) is estimated
using a Black-Scholes option pricing model in accordance with the SEC rules. This model uses
both historical data and current market data to estimate the fair value of options and requires
several assumptions. |
| b. | Effective
May 17, 2022, the Company decreased the exercise price of certain stock options to $5.50
per share. The PEO held 166,336 options that were repriced, which had a weighted average
exercise price prior to the decrease of $19.76 per share. The Non-PEO NEOs collectively held
123,720 options that were repriced, which had a weighted average exercise price prior to
the decrease of $19.74 per share. All other terms of the options remained the same including,
but not limited to, the vesting terms and expiration dates. The amounts shown in column (C)
for 2022 include the amount by which the fair value of the modified options exceeded the
fair value of the original options as of the date of such modification, as follows: PEO:
$237,390; Non-PEO NEOs: $92,183. |
| (3) | TSR
represents the value, as of the end of each fiscal year, of $100 invested in our common stock
at the closing price on December 31, 2020, the last trading day before fiscal 2021. The per-share
market price of our common stock on such date was $9.16, and the per-share market prices
on the last trading days of fiscal 2021 and 2022 were $13.19 and $14.01, respectively. No
dividends or other distributions have been made with respect to our common stock. |
CAP
vs. TSR and Net Income. We are a clinical-stage biotechnology company focused on development of targeted therapies for treatment
of multiple solid tumor indications. We have not generated any revenue from sales to date, and we continue to incur significant research
and development and other expenses related to our ongoing operations. We provide our NEOs the opportunity to earn incentive awards in
the form of stock options under a performance-based incentive pay program, based on achievement of individual goals and the Company’s
achievement of milestones that advance our core business strategies. The Company believes that the use of equity awards in our performance-based
incentive pay program serves to align our NEOs’ outstanding and unvested awards with shareholders’ interests in the long
term. However, the CAP for our NEOs may not be correlated with the Company’s TSR or net income (loss) for any given year, including
the years set forth in the table, as our core business strategies are implemented over a period of years, and the market price of our
common stock is affected by many factors and may not reflect the achievement of milestones under our performance-based incentive pay
program. In addition, in May 2022 our PEO elected to receive an equity award in lieu of cash compensation for the 14-month period commencing
June 1, 2022, and each of our Non-PEO NEOs elected to receive an equity award in lieu of a portion of his or her cash compensation for
such 14-month period. The market price of our common stock increased 155% from $5.50 at the date of such equity awards to $14.01 at the
end of the 2022 fiscal year, resulting in a substantial increase in CAP for 2022. The impact of equity incentive compensation was greater
for the PEO’s CAP calculation because the portion of his compensation that was delivered in the form of equity incentives was greater
than for the Non-PEO NEOs.
Employee
Benefit Plans
2017
Stock Incentive Plan. Our Amended and Restated 2017 Stock Incentive Plan (the “2017 Plan”) was approved by our stockholders
at the Company’s annual meeting on May 14, 2020. The Company initially reserved a total of 750,000 shares for issuance under the
2017 Plan. At the Annual Meeting held on May 12, 2021, the stockholders approved a one-time, 500,000 share increase to the number of
shares reserved for issuance under the 2017 Plan. At the Annual Meeting held on May 12, 2022, the stockholders approved a one-time, 500,000
share increase to the number of shares reserved for issuance under the 2017 Plan. As of December 31, 2022, options to purchase 1,789,582
shares were outstanding and 242,435 shares remain available to issue. The number of shares reserved for issuance under the 2017 Plan
increases automatically on each January 1 through January 1, 2027 by the number of shares equal to 1.0% of the aggregate number of outstanding
shares of the Company’s common stock as of the immediately preceding December 31. However, the Board may reduce the amount of the
increase in any particular year, and the Board decided that no increase would occur on January 1, 2019. The Board did allow automatic
increases in the number of shares reserved for issuance by 102,540, 102,998, 149,189, and 216,673 shares on January 1, 2020, 2021, 2022,
and 2023 respectively, for a total of 459,108 shares remaining under the 2017 Plan as of January 1, 2023. The maximum permitted term
of options granted under the 2017 Plan is ten years. The 2017 Plan provides for share options, restricted stock awards, stock appreciation
rights, restricted stock units, performance awards and stock bonuses.
Our
2017 Plan provides that, in the event of specified types of mergers or consolidations, a sale, lease, or other disposition of all or
substantially all of our assets or other corporate transactions, outstanding awards under our 2017 Plan may be assumed or replaced by
any surviving or acquiring corporation; the surviving or acquiring corporation may substitute similar awards for those outstanding under
our 2017 Plan; outstanding awards may be settled for the full value of such outstanding award (whether or not then vested or exercisable)
in cash, cash equivalents, or securities (or a combination thereof) of the successor entity with payment deferred until the date or dates
the award would have become exercisable or vested; or outstanding awards may be terminated for no consideration. Our Board or its Compensation
Committee has the discretion to provide that a stock award under our 2017 Plan will immediately vest as to all or any portion of the
shares subject to the stock award at the time of a corporate transaction or in the event a participant’s service with us or a successor
entity is terminated actually or constructively within a designated period following the occurrence of the transaction. Stock awards
held by participants under our 2017 Plan will not vest automatically on such an accelerated basis unless specifically provided in the
participant’s applicable award agreement. In the event of a corporate transaction, the vesting of all awards granted to non-employee
directors shall accelerate and such awards shall become exercisable (as applicable) in full upon the consummation of the corporate transaction.
2017
Employee Stock Purchase Plan. Our 2017 Employee Stock Purchase Plan (the “ESPP”) was adopted by our Board on September
6, 2017 and approved by our stockholders at the Company’s annual meeting on May 10, 2018. The Company initially reserved a total
of 100,000 shares for issuance under the ESPP. As of December 31, 2022, 85,215 shares had been issued and 192,148 remain available for
issuance. The number of shares reserved for issuance under the ESPP increases automatically on the first day of each fiscal year by the
number of shares equal to 0.5% of the total outstanding number of shares of common stock. However, the Board may reduce the amount of
the increase in any particular year, and the Board decided that no increase would occur on January 1, 2019. The Board did allow an automatic
increase in the number of shares reserved for issuance by 51,270, 51,499, 74,594, and 108,337 shares on January 1, 2020, 2021, 2022 and
2023, respectively, for a total of 300,485 shares remaining under the ESPP as of January 1, 2023. The ESPP provides participating employees
with an opportunity to purchase shares of the Company’s common stock at a discount through payroll deductions. The ESPP is available
to all employees unless they are employed for less than 20 hours per week or own 5% or more of the total combined voting power or value
of the Company’s common stock. The ESPP is administered using overlapping 24 month offering periods, referred to as an Offering
Period. Each Offering Period has four six-month purchase periods. A new Offering Period and purchase period begin every six months on
May 1 and November 1 of each year. Participating employees may purchase common stock, on a voluntary after tax-basis, at a price equal
to 85% of the fair market value of a share of common stock on either the offering date or the purchase date, whichever is lower. If the
purchase date has a lower price, the employee will automatically be placed in the Offering Period beginning immediately after the purchase
date. If the Company is dissolved or liquidated, any purchase period or Offering Period will terminate immediately prior to the dissolution
or liquidation. If we sell substantially all of our assets to another company or engage in a merger or consolidation where our stockholders
will own less than 50% of shares of stock in the resulting company, the ESPP will either be assumed by the successor entity or a new
purchase date will be set before the transaction is completed, after which the ESPP will terminate.
2012
Equity Incentive Plan. Prior to adopting the 2017 Plan, our 2012 Equity Incentive Plan (the “2012 Plan”) was adopted
by the board of governors and approved by the members of Celcuity LLC on August 10, 2012 and was subsequently amended on November 12,
2012. We had originally reserved 625,000 shares for issuance under the 2012 Plan. As of December 31, 2022, options to purchase 187,004
of these shares were outstanding. We have ceased granting any additional awards under the 2012 Plan. However, any outstanding options
granted under the 2012 Plan will remain outstanding subject to the terms of our 2012 Plan and the related option agreements until such
outstanding options are exercised or until they terminate or expire by their terms. In the event of our merger, consolidation, sale of
substantially all assets, liquidation or dissolution or other change of control, the 2012 Plan provides that the Board may accelerate
the exercisability of awards, terminate the 2012 Plan and unexercised awards, continue the 2012 Plan with respect to outstanding awards,
replace or exchange incentive awards for similar securities of the successor, substitute the awards with similar awards of the successor
or provide for cash payment for outstanding awards (net of exercise price).
Retirement
Savings Plans. Celcuity maintains an employee benefit plan qualified under Section 401(k) of the Internal Revenue Code of 1986, as
amended. In 2022, the Company matched employee contributions up to $1,000 per employee per year. Effective January 1, 2023, the Company
contribution was changed to match 100% of a participant’s contributions on the first 2% of eligible compensation and 50% of the
participant’s contributions on the next 4% of eligible compensation.
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The
following table summarizes equity securities authorized for issuance under our equity compensation plans as of December 31, 2022:
Plan Category | |
Number of securities to be issued upon exercise of outstanding options, warrants and rights (a) | | |
Weighted average exercise price of outstanding options, warrants and rights (b) | | |
Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) (1)(2) | |
Equity compensation plans approved by stockholders | |
| 1,976,586 | | |
$ | 6.34 | | |
| 434,583 | |
Equity compensation plans not approved by stockholders | |
| - | | |
| - | | |
| - | |
Total | |
| 1,976,586 | | |
$ | 6.34 | | |
| 434,583 | |
| (1) | Includes
242,435 shares of common stock available for issuance under the 2017 Plan and 192,148 shares
of common stock available for issuance under the ESPP as of December 31, 2022. |
| (2) | Warrants
to purchase 7,266,102 shares of Company common stock also remain outstanding. These warrants
were not issued as part of an equity compensation plan and are not reflected in this table. |
DELINQUENT
SECTION 16(a) REPORTS
Section
16(a) of the Exchange Act requires the Company’s officers and directors, and persons who own more than 10% of a registered class
of the Company’s equity securities, to file reports of ownership on Form 3 and changes in ownership on Form 4 or Form 5 with the
SEC. Such officers, directors and 10% stockholders are also required by SEC rules to furnish the Company with copies of all Section 16(a)
forms they file.
Based
solely on its review of the copies of such forms received by it, or written representations from certain reporting persons, the Company
believes that, during the fiscal year ended December 31, 2022, all Section 16(a) filing requirements applicable to its officers, directors
and 10% stockholders were timely complied with, except that one Form 4, reporting an acquisition of shares of stock for Leo T. Furcht,
was filed late.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Except
as described below, since January 1, 2021, there were no related party transactions arising or existing requiring disclosure under applicable
Nasdaq Listing Rules or SEC rules and regulations.
Indemnification
Agreements
We
have entered into indemnification agreements with each of our directors and executive officers. These agreements, among other things,
require us to indemnify our directors and executive officers for certain expenses, including attorneys’ fees, judgments, penalties,
fines and settlement amounts actually incurred by these individuals in any action or proceeding arising out of their service to us or
any of our subsidiaries or any other company or enterprise to which these individuals provide services at our request. Subject to certain
limitations, our indemnification agreements also require us to advance expenses incurred by our directors and officers for the defense
of any action for which indemnification is required or permitted.
PIPE
Transaction
On
December 9, 2022, we issued 6,182,574 shares of common stock, 1,120,873 shares of Series A Preferred Stock and warrants exercisable for
6,956,450 shares of common stock to certain institutional and other accredited investors in a private placement pursuant to a securities
purchase agreement dated May 15, 2022. Pursuant to the securities purchase agreement, the closing (funding) of the private placement
occurred following dosage of the first patient in the Company’s Phase 3 study, VIKTORIA-1. Investors purchased shares of common
stock and Series A Preferred Stock at a price of $5.75 per share (on an as converted to common stock basis), with forty percent (40%)
warrant coverage (on an as converted to common stock basis) and customary resale registration rights. The warrants have an exercise price
of $8.05 per share. The private placement generated gross proceeds of approximately $100 million before deducting placement agent fees
and other offering expenses of $4.3 million. Brian F. Sullivan, the Chairman of the Board of Directors and our Chief Executive Officer,
participated in the private placement and purchased 260,869 shares of common stock for an aggregate purchase price of $1,499,996.75 and
was issued warrants to purchase 104,340 shares of common stock, on the same terms and conditions as the other Investors under the Securities
Purchase Agreement
Policies
and Procedures for Related Party Transactions
We
have a written related person transactions policy that our executive officers, directors, nominees for election as a director, beneficial
owners of more than 5% of our common stock, and any members of the immediate family of and any entity affiliated with any of the foregoing
persons, are not permitted to enter into a material related person transaction with us without the review and approval of our Audit Committee,
or a committee composed solely of independent directors in the event it is inappropriate for our Audit Committee to review such transaction
due to a conflict of interest. The policy provides that any request for us to enter into a transaction with an executive officer, director,
nominee for election as a director, beneficial owner of more than 5% of our common stock or with any of their immediate family members
or affiliates in which the amount involved exceeds $120,000 will be presented to our Audit Committee for review, consideration and approval.
In approving or rejecting any such proposal, our Audit Committee will consider the relevant facts and circumstances available and deemed
relevant to the Audit Committee, including, but not limited to, whether the transaction is on terms no less favorable than terms generally
available to an unaffiliated third party under the same or similar circumstances and the extent of the related person’s interest
in the transaction.
AUDIT
COMMITTEE REPORT
Management
is responsible for Celcuity’s financial reporting process, including the system of internal controls, and for preparing Celcuity’s
financial statements in accordance with accounting principles generally accepted in the United States of America. Our independent registered
public accounting firm is responsible for auditing those financial statements and expressing an opinion as to their conformity with accounting
principles generally accepted in the United States of America. The Audit Committee’s responsibility is to monitor and review these
processes. The members of the Audit Committee rely, without independent verification, on the information provided to them and on the
representations made by Celcuity’s management and the independent registered public accounting firm.
During
2022, the Audit Committee, consisting of Richard J. Nigon (chairman), David F. Dalvey, and Leo T. Furcht held five meetings. Polly A.
Murphy was appointed to the Audit Committee on November 9, 2022. The meetings were designed to, among other things, facilitate and encourage
communication among the Audit Committee, management and Celcuity’s independent registered public accounting firm, Boulay PLLP (“Boulay”).
The Audit Committee discussed with Boulay the overall scope and plans for its 2022 audit. The Audit Committee met with Boulay, with and
without management present, to discuss the results of its examinations and its evaluations of Celcuity’s system of internal controls.
During
the meetings held in 2022, the Audit Committee reviewed and discussed, among other things:
| ● | Celcuity’s
financial statements, its Quarterly Reports on Form 10-Q, and any reports received from the
independent registered public accounting firm; |
| ● | recent
accounting pronouncements and the Company’s significant accounting policies; |
| ● | disclosure
controls and procedures and internal controls over financial reporting; and |
| ● | engagement
of Celcuity’s independent registered public accounting firm. |
In
March 2023, the Audit Committee reviewed and discussed the 2022 audited financial statements and notes to the financial statements proposed
for inclusion in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 with management and Boulay,
including a discussion of the application of accounting principles generally accepted in the United States, the reasonableness of significant
judgments, and the clarity of disclosures in the financial statements. The Audit Committee also has discussed with our independent registered
public accounting firm the firm’s independence from management, including whether the provision of non-audit services is compatible
with maintaining the firm’s independence, and matters required to be discussed by the applicable requirements of the Public Company
Accounting Oversight Board. The Audit Committee received the written disclosures and the letter from the independent registered public
accounting firm required by the Public Company Accounting Oversight Board regarding such firm’s communications with the Audit Committee
concerning independence and has discussed with such firm its independence.
Based
on this review and prior discussions with management and the independent registered public accounting firm, the Audit Committee recommended
to the Board that Celcuity’s audited financial statements be included in its Annual Report on Form 10-K for the fiscal year ended
December 31, 2022 as filed with the SEC.
Audit
Committee
Richard
J. Nigon (chairman)
David F. Dalvey
Leo T. Furcht
Polly
A. Murphy
STOCKHOLDER
PROPOSALS
Any
stockholder desiring to submit a proposal for action by the stockholders at our next annual meeting, which will be our 2024 annual meeting,
must satisfy the requirements set for in the advance notice provision under our bylaws. To be timely submitted for our 2024 annual meeting,
any such proposal must be delivered in writing to our Corporate Secretary at the principal executive offices of the Company between the
close of business on January 12, 2024 and the close of business on February 11, 2024. If the date of the 2024 annual meeting is advanced
more than 30 days prior to or delayed by more than 60 days after the first anniversary of the 2023 Annual Meeting, notice by the stockholder
must be delivered not earlier than the close of business on the 120th day prior to the 2024 annual meeting and not later than
the close of business on the later of the 90th day prior to the 2024 annual meeting or, if the first public announcement of
the date of the 2024 annual meeting is less than 100 days prior to the date of the 2024 annual meeting, the 10th day following
the day on which public announcement of the date of the 2024 annual meeting is first made.
Notwithstanding
the foregoing, if the number of directors to be elected to our Board is increased and no public announcement naming all of the nominees
for director or specifying the size of the increased Board is made by the Company at least 100 days prior to the first anniversary of
the 2023 Annual Meeting, a stockholder’s notice will be considered timely, but only with respect to nominees for any new positions
created by such increase, if the stockholder delivers such notice to our Corporate Secretary at the principal executive offices of the
Company not later than the close of business on the 10th day following the day on which a public announcement naming all of
the nominees for director or specifying the size of the increased Board is first made by the Company. Notice sent to the Company must
comply with the requirements set forth in the Company’s bylaws. You are advised to review the Company’s bylaws, and due to
the complexity of the respective rights of the stockholders and the Company in this area, you are advised to consult with your legal
counsel with respect to such rights.
In
addition to satisfying the foregoing provisions of our bylaws, to comply with the universal proxy rules under the Exchange Act, stockholders
who intend to solicit proxies in support of director nominees other than the Company’s nominees must provide notice that sets forth
the information required by Rule 14a-9 under the Exchange Act no later than March 12, 2024, which is 60 days prior to the anniversary
of the 2023 Annual Meeting.
In
addition, any stockholder proposal intended to be included in the proxy statement for the 2024 annual meeting must also satisfy Rule
14a-8 of the Exchange Act and be received no later than December 2, 2023. If the date of the 2024 annual meeting is moved by more than
30 days from the first anniversary of the 2023 Annual Meeting, then notice must be received within a reasonable time before we begin
to print and send proxy materials.
|
By
Order of the Board of Directors: |
|
|
|
/s/ Brian F. Sullivan |
|
|
|
Chairman
of the Board of Directors and Chief
Executive Officer |
|
|
Dated:
March 31, 2023 |
|
IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE 2023
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 11, 2023.
The
Notice, this Proxy Statement, and the Annual Report on Form 10-K are available at www.proxyvote.com and on the Investor Relations section
of Celcuity’s website at www.celcuity.com/home/investors/.
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