SCHEDULE 14a
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14a INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
TRIANGLE PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[GRAPHIC OMITTED]
4 UNIVERSITY PLACE, 4611 UNIVERSITY DRIVE
DURHAM, NORTH CAROLINA 27707
April 7, 2000
To the Stockholders of
TRIANGLE PHARMACEUTICALS, INC.:
You are cordially invited to attend the Annual Meeting of the
Stockholders of Triangle Pharmaceuticals, Inc., to be held at The University
Club, 3100 Tower Boulevard, Durham, NC 27707 on May 18, 2000 at 10:00 a.m.
Details of the business to be conducted at the Annual Meeting are given
in the attached Notice of Annual Meeting and Proxy Statement which you are urged
to read carefully.
If you do not plan to attend the Annual Meeting, please sign, date, and
return the enclosed proxy promptly in the accompanying reply envelope. If you
decide to attend the Annual Meeting and wish to change your proxy vote, you may
do so automatically by voting in person at the Annual Meeting.
We look forward to seeing you at the Annual Meeting.
David W. Barry, M.D.
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
YOUR VOTE IS IMPORTANT
IN ORDER TO ASSURE YOUR REPRESENTATION AT THE ANNUAL MEETING, YOU ARE
REQUESTED TO COMPLETE, SIGN AND DATE THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE
AND RETURN IT IN THE ENCLOSED ENVELOPE (TO WHICH NO POSTAGE NEED BE AFFIXED IF
MAILED IN THE UNITED STATES).
TRIANGLE PHARMACEUTICALS, INC.
4 UNIVERSITY PLACE, 4611 UNIVERSITY DRIVE
DURHAM, NORTH CAROLINA 27707
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 2000
------------------
To the Stockholders of
TRIANGLE PHARMACEUTICALS, INC.
The Annual Meeting of Stockholders of Triangle Pharmaceuticals, Inc.
("Triangle" or the "Company") will be held at The University Club, 3100 Tower
Boulevard, Durham, NC 27707 on May 18, 2000 at 10:00 a.m. (the "Annual Meeting")
to consider and vote upon the following matters, which are more fully described
in the accompanying Proxy Statement:
1. To elect two (2) directors to the class of directors whose
term expires in 2003. The Board has nominated the following persons for
reelection at the Annual Meeting: David W. Barry, M.D. and George
McFadden.
2. To ratify the appointment of PricewaterhouseCoopers LLP as
the Company's independent accountants for the fiscal year ending
December 31, 2000.
3. To transact such other business as may properly come before
the Annual Meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. All stockholders of record at the close of
business on March 24, 2000 will be entitled to vote at the Annual Meeting and at
any adjournment thereof. The transfer books will not be closed. A list of
stockholders entitled to vote at the Annual Meeting will be available for
inspection at the offices of the Company.
By Order of the Board of Directors
Chris A. Rallis, SECRETARY
April 7, 2000
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN, PLEASE
READ THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED
ENVELOPE.
TRIANGLE PHARMACEUTICALS, INC.
4 UNIVERSITY PLACE, 4611 UNIVERSITY DRIVE
DURHAM, NORTH CAROLINA 27707
---------------------------------
PROXY STATEMENT
---------------------------------
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
MAY 18, 2000
The enclosed proxy is solicited on behalf of the Board of Directors
(the "Board") of Triangle Pharmaceuticals, Inc., a Delaware corporation
("Triangle" or the "Company"), for use at the annual meeting of stockholders to
be held on May 18, 2000, and at any adjournment or postponement of the annual
meeting (the "Annual Meeting"). The Annual Meeting will be held at 10:00 a.m. at
The University Club, 3100 Tower Boulevard, Durham, NC 27707. All stockholders of
record on March 24, 2000 will be entitled to notice of and to vote at the Annual
Meeting. The Company intends to mail this Proxy Statement and the accompanying
proxy (the "Proxy") to stockholders on or about April 7, 2000.
The mailing address of the principal executive office of the Company is
4 University Place, 4611 University Drive, Durham, North Carolina 27707.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Annual
Meeting are summarized in the accompanying Notice of Annual Meeting of
Stockholders (collectively, the "Proposals"). Each Proposal is described in more
detail in this Proxy Statement.
VOTING RIGHTS AND SOLICITATION
VOTING
On March 24, 2000, the record date for determination of stockholders
entitled to vote at the Annual Meeting, there were 37,696,599 shares of Common
Stock. Each holder of Common Stock is entitled to one vote on all matters
brought before the Annual Meeting.
The holders of a majority of the stock issued and outstanding and
entitled to vote, present in person or by proxy, shall constitute a quorum at
the Annual Meeting. Holders of Common Stock representing a total of 18,848,300
votes present in person or by proxy shall constitute a quorum at the Annual
Meeting. Abstentions and broker nonvotes will be counted for purposes of
determining whether a quorum is present at the Annual Meeting and abstentions
will have the effect of negative votes.
REVOCABILITY OF PROXIES
Any person giving a proxy has the power to revoke it at any time before
its exercise. It may be revoked by filing with the Secretary of the Company at
the Company's principal executive office, 4 University Place, 4611 University
Drive, Durham, North Carolina 27707, a notice of revocation or another signed
Proxy with a later date. You may also revoke your Proxy by attending the Annual
Meeting and voting in person.
SOLICITATION
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the Proxy
and any additional soliciting materials furnished to stockholders. Copies of
solicitation materials will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially owned by others
so that they may forward the solicitation materials to such beneficial owners.
In addition, the Company may reimburse such persons for their costs of
forwarding the solicitation materials to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by solicitation by
telephone, telegram or other means by directors, officers, employees or agents
of the Company. No additional compensation will be paid to these individuals for
any such services. Except as described above, the Company does not presently
intend to solicit proxies other than by mail.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides for a classified
Board consisting of three classes of directors serving staggered three-year
terms, with each class consisting as nearly as possible of one-third of the
total number of directors. The Bylaws of the Company provide for a Board
consisting of such number of directors as may be fixed from time to time by
resolution of two-thirds of the members of the Board or by two-thirds of the
stockholders at an annual meeting of stockholders of the Company. On August 25,
1999, the Board expanded the number of directors constituting the Board from
seven to eight, with two classes consisting of three directors and the third
class consisting of two directors. Two directors are to be elected at the Annual
Meeting for a term expiring at the 2003 annual meeting of stockholders or until
their successors have been duly elected and qualified.
The Board has nominated David W. Barry, M.D. and George McFadden to
stand for reelection to the class of directors whose term expires at the 2003
annual meeting of stockholders or until their successors are elected and have
qualified. M. Nixon Ellis resigned as President and director of the Company
effective as of March 20, 2000. Effective as of March 21, 2000, Chris A. Rallis
was elected to the Board to fill the vacancy created by the resignation of Dr.
Ellis, with his term expiring at the 2002 annual meeting of stockholders. Each
person nominated for reelection has agreed to serve if elected, and management
has no reason to believe that any nominee will be unavailable to serve. In the
event any of the nominees is unable or declines to serve as a director at the
time of the Annual Meeting, the proxies will be voted for any nominee who may be
designated by the present Board to fill the vacancy. Unless otherwise
instructed, the proxy holders will vote the proxies received by them FOR the
nominees named below.
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NOMINEES
The following table sets forth information regarding the nominees.
YEAR FIRST CLASS
ELECTED TERMINATION
NAME DIRECTOR AGE YEAR POSITION
- -------------------------- -------------------- ----------- -------------------- --------------------------
David W. Barry, M.D. 1995 56 2003 Chairman of the Board and
Chief Executive Officer
George McFadden (1) 1995 59 2003 Director
- ---------------
(1) Member of Compensation Committee.
BUSINESS EXPERIENCE OF NOMINEES (FOR ELECTION TO TERMS EXPIRING IN 2003)
DAVID W. BARRY, M.D. has served as Chairman of the Board and Chief
Executive Officer since July 1995 and served as the Company's President from
July through September 1995. Prior to joining the Company, Dr. Barry served as a
member of the Board and as the Director of Research, Development and Medical
Affairs of Wellcome from May 1994 through May 1995. From May 1989 through May
1994, Dr. Barry served as Vice President, Research, Development and Medical
Affairs of Burroughs Wellcome. Dr. Barry is considered a leader in the field of
antiviral therapy and is one of the co-inventors of AZT, the first drug to treat
the human immunodeficiency virus ("HIV"). Dr. Barry also directed the clinical
development of the first selective anti-herpes drug, acyclovir. Before joining
Burroughs Wellcome in 1977, Dr. Barry spent five years at the United States Food
and Drug Administration ("FDA") in various capacities, including Director of the
Influenza Task Force of the Bureau of Biologics and Acting Deputy Director of
the Division of Virology at the Bureau of Biologics. Dr. Barry received a B.A.
in French literature from Yale College and an M.D. from Yale University. Dr.
Barry is currently a director of Family Health International, a not-for-profit
company engaged in the business of family planning, and Molecular Biosystems,
Inc., a publicly-held medical diagnostics company. Dr. Barry is a consultant to
Life Science Ventures GmbH, a European venture capital company, and is also
Chairman of the Inter-Company Collaboration on AIDS Drug Development, a
pharmaceutical industry consortium.
GEORGE MCFADDEN has served as a director of the Company since November
1995 and as a member of the Compensation Committee since August 1996. Since
1979, Mr. McFadden has served as a general partner of McFadden Brothers, an
investment company. Mr. McFadden received a B.A. in business from Vanderbilt
University and an M.B.A. from Columbia University. Mr. McFadden is currently a
director of three privately-held companies, Washington, Inc. (where he serves as
Chairman of the Board), Cryogenics Holdings, Inc. and Squaw Valley Corp.
BUSINESS EXPERIENCE OF CONTINUING DIRECTORS WITH TERMS EXPIRING IN 2001 (AGE)
STANDISH M. FLEMING (52) has served as a director of the Company since
July 1995 and as a member of the Audit Committee since June 1996. Since April
1993, Mr. Fleming has been a general partner of Forward Ventures, a venture
capital firm. Mr. Fleming also served in an advisory position with Forward
Ventures from February 1992 through April 1993. Prior to that, Mr. Fleming
joined Ventana, a venture capital firm, in 1986 and served as a fund manager
from January 1990 through January 1992. Mr. Fleming received a B.A. in English
from Amherst College and an M.B.A. from the University of California, Los
Angeles. Mr. Fleming currently serves as a director of four privately-held
companies.
DENNIS B. GILLINGS, PH.D. (55) has served as a director of the Company
since May 1998. Dr. Gillings is Chairman and Chief Executive Officer of
Quintiles Transnational Corp., which he founded in
-3-
1982. Quintiles Transnational Corp. is a provider of contract research, sales
and marketing services to the pharmaceutical, biotechnology and medical device
industries. Dr. Gillings served as a professor at the University of North
Carolina at Chapel Hill from 1972 to 1988, and he currently serves on the
University of North Carolina School of Public Health Foundation Board. Dr.
Gillings received a Diploma in mathematical statistics from the University of
Cambridge in 1967 and a Ph.D. in mathematics from the University of Exeter,
England, in 1972. Dr. Gillings is currently a director of several privately-held
companies.
HENRY G. GRABOWSKI, PH.D. (59) has served as a director of the Company
since May 1998 and as a member of the Audit Committee since June 1998. Dr.
Grabowski has served as a professor in the Economics Department, Duke
University, since 1976 and as the Director of the Program in Pharmaceuticals and
Health Economics, Duke University, since 1983. Dr. Grabowski is considered a
leader in the field of, and has authored and co-authored numerous books,
monographs and articles concerning pharmaceutical regulation and innovation. Dr.
Grabowski has served as an advisor to numerous private and public organizations,
including the Institute of Medicine, the National Science Foundation and the
General Accounting Office. Dr. Grabowski is an adjunct scholar at the American
Enterprise Institute and he currently serves as Associate Editor of the THE
QUARTERLY REVIEW OF ECONOMICS AND FINANCE and the JOURNAL OF RESEARCH IN
PHARMACEUTICAL ECONOMICS. Dr. Grabowski received a B.S. in engineering physics
from Lehigh University in 1962 and a Ph.D. in economics from Princeton
University in 1967.
BUSINESS EXPERIENCE OF CONTINUING DIRECTORS WITH TERMS EXPIRING IN 2002 (AGE)
ANTHONY B. EVNIN, PH.D. (59) has served as a director of the Company
since November 1995 and as a member of the Compensation Committee since August
1996. Since 1975, Dr. Evnin has been a general partner of Venrock Associates, a
venture capital firm. Dr. Evnin received an A.B. in chemistry from Princeton
University and a Ph.D. in chemistry from Massachusetts Institute of Technology.
Dr. Evnin is currently a director of several privately-held companies and the
following publicly-held companies: Caliper Technologies Corp., a diagnostics
company, and Ribozyme Pharmaceuticals, Inc., a biopharmaceutical company.
ARTHUR J. HIGGINS (44) has served as a director of the Company since
August 1999. Mr. Higgins joined Abbott Laboratories in August 1987, as division
manager for pharmaceutical products in the United Kingdom. Since then, he has
held a variety of management positions, including divisional vice president,
international business development. In 1995, Mr. Higgins was named divisional
vice president, Pacific, Asia and Africa, and in 1996, was elected Vice
President, Pacific, Asia and Africa operations, for the international division.
In February 1998, he was elected Senior Vice President, Pharmaceutical
Operations. Mr. Higgins received a B.S. in biochemistry from Strathclyde
University, Scotland.
CHRIS A. RALLIS, J.D. (46) has served as a director of the Company and
as President, Chief Operating Officer and General Counsel since March 2000, as
Executive Vice President, Business Development and General Counsel from August
1999 through February 2000, and as Vice President, Business Development, General
Counsel and Secretary from November 1995 through July 1999. Prior to joining the
Company, Mr. Rallis served in the following positions with Burroughs Wellcome:
Vice President, Planning and Business Development; Director, Planning and
Business Development; and Assistant General Counsel. During Mr. Rallis' tenure
at Burroughs Wellcome, his department was responsible for finalizing licensing
agreements with Emory University and Vertex Pharmaceuticals Incorporated, and a
consumer healthcare joint venture with Warner-Lambert Company. Mr. Rallis
received his A.B. degree in economics from Harvard College and a J.D. from Duke
University.
BOARD MEETINGS AND COMMITTEES
The Company's Board met a total of six times and acted by written
consent three times during the year ended December 31, 1999. Each director
attended at least 75% of the aggregate of (i) the total meetings of the Board
and (ii) the total number of meetings held by all committees of the Board on
which he served,
-4-
with respect to the Board meetings and Committee meetings, respectively, held in
that portion of 1999 during which the director was serving as a member of the
Board.
The Company has a Compensation Committee currently composed of Dr.
Evnin and Mr. McFadden. The Compensation Committee met once and acted by written
consent five times in 1999. The Compensation Committee reviews and acts on
matters relating to compensation levels and benefit plans for executive officers
and key employees of the Company, including salary and stock options. The
Compensation Committee is also responsible for granting stock awards, stock
options and stock appreciation rights and other awards to be made under the
Company's existing incentive compensation plans. To assist the Compensation
Committee in administering benefit plans for non-executive employees of the
Company, the Board has designated a Secondary Committee, which is currently
composed of Dr. Barry and Mr. Rallis. The Secondary Committee acted by written
consent 14 times in 1999.
The Company also has an Audit Committee currently composed of Mr.
Fleming and Dr. Grabowski. The Audit Committee met once in 1999. The Audit
Committee assists in selecting the independent accountants, designating the
services they are to perform and in maintaining effective communication with
those accountants.
DIRECTOR COMPENSATION
The Company reimburses its directors for all reasonable and necessary
travel and other incidental expenses incurred in connection with their
attendance at meetings of the Board. In addition, the Company's 1996 Stock
Incentive Plan (the "1996 Plan") provides that each eligible non-employee
director will automatically receive an option to purchase 2,000 shares of Common
Stock upon a director's initial election or appointment to the Board and 2,000
shares of Common Stock for each full or partial year of the director's term,
measured from the date of each annual meeting of stockholders. For eligible
non-employee directors reelected to the Board, the 1996 Plan provides for the
automatic grant of an option to purchase 2,000 shares of Common Stock for each
full or partial year of the term to which the director is reelected, measured
from the date of each annual meeting of stockholders. These options will have an
exercise price equal to 100% of the fair market value of the Company's Common
Stock on the grant date and will become exercisable in annual installments after
the completion of each full or partial year of service following such grant.
Under this Automatic Option Grant Program, on May 14, 1999 (the date of
the Company's 1999 annual meeting of stockholders) Dr. Evnin, who was a
non-employee director reelected to the Board, received an automatic option grant
to purchase 6,000 shares. The exercise price per share in effect under this
option is $17.313, the fair market value per share of the Company's Common Stock
on the grant date. Provided that the director continues to serve on the Board,
the 6,000 option shares held by Dr. Evnin become exercisable in successive
increments of 2,000 shares on the day immediately preceding the date of each
subsequent annual meeting of stockholders until the automatic option becomes
fully exercisable for all of the option shares.
Under this Automatic Option Grant Program, on August 25, 1999 (the date
the Board of Directors elected Arthur Higgins to the Board) Mr. Higgins, the
newly-elected non-employee director, received an automatic option grant to
purchase 8,000 shares. The exercise price per share in effect under the option
is $20.313, the fair market value per share of the Company's Common Stock on the
grant date. Options to purchase 2,000 of the 8,000 shares were immediately
exercisable when granted. Provided that the director continues to serve on the
Board, the remaining 6,000 option shares held by Mr. Higgins become exercisable
in successive increments of 2,000 shares on the day immediately preceding the
date of each subsequent annual meeting of stockholders until the automatic
option becomes fully exercisable for all of the option shares.
-5-
Under the 1996 Plan prior to its amendment on May 15, 1998, each of the
current non-employee directors received, on June 24, 1997 (the date of the
Company's 1997 annual meeting of stockholders), an automatic option grant to
purchase the following number of shares: Dr. Evnin (2,667 shares), Mr. Fleming
(1,334 shares) and Mr. McFadden (4,000 shares). The exercise price per share in
effect under each of these options is $23.63, the fair market value per share of
the Company's Common Stock on the grant date.
VOTE REQUIRED
The two candidates for the class of directors whose terms expire at the
2003 annual meeting of stockholders receiving the highest number of affirmative
votes of the stockholders entitled to vote at the Annual Meeting will be
reelected directors of Triangle. Unless otherwise instructed, the proxyholders
will vote each returned proxy FOR the nominees named above, or for as many
nominees of the Board as possible, such votes to be distributed among such
nominees in the manner as the proxyholders see fit.
RECOMMENDATION OF THE BOARD
The Board unanimously recommends a vote FOR the nominees listed above.
PROPOSAL 2
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Company is asking the stockholders to ratify the selection of
PricewaterhouseCoopers LLP as the Company's independent accountants for the year
ending December 31, 2000.
VOTE REQUIRED
The affirmative vote of a majority of the stockholders represented and
voting at the Annual Meeting will be required to ratify the selection of
PricewaterhouseCoopers LLP. In the event the stockholders fail to ratify the
appointment, the Board will reconsider its selection. Even if the selection is
ratified, the Board, in its discretion, may direct the appointment of a
different independent accounting firm at any time during the year if the Board
believes that such a change would be in Triangle's and its stockholders' best
interests.
Representatives of PricewaterhouseCoopers LLP are expected to be
present at the Annual Meeting, will have the opportunity to make a statement if
they desire to do so and will be available to respond to appropriate questions.
RECOMMENDATION OF THE BOARD
The Board unanimously recommends a vote FOR the ratification and
approval of the selection of PricewaterhouseCoopers LLP to serve as Triangle's
independent accountants for the year ending December 31, 2000.
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PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of January 31, 2000 by (i)
each person known by the Company to beneficially own more than five percent of
the Company's Common Stock, (ii) each of the Company's directors and nominees
for director, (iii) the Company's Chief Executive Officer and the four
additional most highly compensated executive officers of the Company and (iv)
all directors and executive officers of the Company as a group.
AMOUNT AND NATURE OF
BENEFICIAL OWNERSHIP
------------------------
COMMON STOCK (2)
----------------
NAME AND ADDRESS OF BENEFICIAL OWNER (1) NUMBER PERCENT
---------------------------------------- -------- -------
Abbott Laboratories (3).................................. 6,573,428 17.5%
100 Abbott Park Road
Abbott Park, IL 60064-3500
T. Rowe Price Associates, Inc. (4)....................... 2,441,500 6.5%
100 East Pratt Street
Baltimore, MD 21202
Funds advised by Soros Fund Management LLC (5)........... 1,964,500 5.2%
888 Seventh Avenue, Suite 3300
New York, NY 10106
Duquesne Fund, L.P. (6).................................. 775,000 2.1%
Box N9204
Charlotte House, Charlotte Street
Nassau, Bahamas
David W. Barry, M.D. (7)................................. 1,362,153 3.6%
M. Nixon Ellis, Ph.D. (8)(9)............................. 601,043 1.6%
Anthony B. Evnin, Ph.D. (10)............................. 1,049,324 2.8%
Standish M. Fleming (11)................................. 864,785 2.3%
George McFadden (12)..................................... 2,118,667 5.6%
Dennis B. Gillings, Ph.D. (13)........................... 14,000 *
Henry G. Grabowski, Ph.D. (14)........................... 7,000 *
Arthur J. Higgins (15)................................... 6,573,428 17.5%
Chris A. Rallis, J.D. (8)(16)............................ 282,808 *
Franck S. Rousseau, M.D. (8)(17)......................... 102,131 *
Carolyn S. Underwood (8)(18)............................. 206,915 *
All directors and executive officers
as a group (13 persons) (7)-(19)..................... 13,381,818 35.0%
---------- -----
- -----------------------------
* Less than 1%.
(1) Except as otherwise indicated, (i) the persons named in the table have
sole voting and investment power with respect to all shares of Common
Stock shown as beneficially owned by them, subject to community
property laws, where applicable and (ii) the address of all
stockholders listed in the table is: 4 University Place, 4611
University Drive, Durham, North Carolina 27707. Beneficial ownership is
calculated pursuant to Rule 13d-3(d)(1) under the Securities Exchange
Act of 1934, as amended. The addresses of individual directors and
nominees for election to the Board are indicated in their corresponding
footnotes.
(2) On January 31, 2000, 37,580,695 shares of Common Stock were issued and
outstanding.
(3) Includes 2,000 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 2000
beneficially owned by Arthur J. Higgins. Mr. Higgins, a director of the
Company, is a Senior Vice President of Abbott Laboratories. Mr. Higgins
disclaims beneficial ownership of the shares beneficially owned by
Abbott Laboratories.
(4) These securities are owned by various individual and institutional
investors which T. Rowe Price Associates, Inc. ("Price Associates")
serves as investment advisor with power to direct investments and/or
sole power to vote the securities. For purposes of the reporting
requirements of the Securities Exchange Act of 1934, Price Associates
is deemed to be a beneficial owner of such securities; however, Price
Associates expressly disclaims that it is, in fact, the beneficial
owner of such securities.
-7-
(5) Includes shares of Common Stock held by the following entities that are
advised by Soros Fund Management LLC ("SFM LLC"): (i) 1,000,000 shares
of Common Stock held for the account of Quantum Industrial Partners LDC
and (ii) 964,500 shares of Common Stock held for the account of Quantum
Partners LDC. Stanley F. Druckenmiller is the Lead Portfolio Manager
and a Member of the Management Committee of SFM LLC, and is also the
sole managing member of Duquesne LLC ("Duquesne"), an investment
advisory firm which serves as a discretionary investment advisor to
Duquesne Fund, L.P.
(6) Stanley F. Druckenmiller is the sole managing member of Duquesne and is
also the Lead Portfolio Manager and a Member of the Management
Committee of SFM LLC.
(7) Includes 87,673 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 2000,
500,000 shares of Common Stock held by Barry Asset Partners, L.P., a
Georgia limited partnership of which Dr. Barry serves as a general and
limited partner, and 25,980 shares of Common Stock held by the Barry
Charitable Foundation, Inc., a charitable North Carolina corporation of
which Dr. Barry serves as President.
(8) Excludes an aggregate of 1,971 shares of Common Stock purchased by
certain executive officers upon the conclusion of the purchase
interval, ending February 29, 2000, under the Company's Employee Stock
Purchase Plan.
(9) Includes 65,867 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 2000,
147,183 shares of Common Stock held in a family trust, and 375 shares
of Common Stock held by the Ellis Charitable Foundation, Inc., a
charitable North Carolina corporation of which Dr. Ellis serves as
President. Dr. Ellis resigned as President and director of the Company
effective as of March 20, 2000.
(10) Includes 2,667 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 2000. Also
includes 669,231 shares and 332,672 shares of Common Stock beneficially
owned by Venrock Associates and Venrock Associates II, L.P.,
respectively. Dr. Evnin is a general partner of Venrock Associates and
Venrock Associates II, L.P. and consequently shares voting and
investment power with respect to all such shares. Dr. Evnin disclaims
beneficial ownership of these shares other than to the extent of his
individual partnership interest. Dr Evnin's address is 30 Rockefeller
Plaza, New York, New York 10112.
(11) Includes 3,334 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 2000. Also
includes 520,000 shares and 233,663 shares of Common Stock beneficially
owned by Forward Ventures II, L.P. and Forward Ventures III, L.P.,
respectively. Mr. Fleming is a general partner of Forward II
Associates, L.P., which is the general partner of Forward Ventures II,
L.P., and a managing member of Forward III Associates, L.L.C., which is
the general partner of Forward Ventures III, L.P., and consequently
shares voting and investment power with respect to all such shares. Mr.
Fleming disclaims beneficial ownership of these shares other than to
the extent of his individual partnership and member interests. Mr.
Fleming's address is 9255 Towne Centre Drive, Suite 300, San Diego,
California 92121.
(12) Includes 2,667 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 2000. Also
includes a total of 1,716,000 shares of Common Stock beneficially owned
by each of the following persons in the amounts indicated: (i) McFadden
Brothers (41,000 shares), (ii) McFadden Securities, L.P. (90,000
shares), (iii) a family trust under the will of Alexander B. McFadden
(600,000 shares), (iv) three family trusts for the benefit of Mr.
McFadden's children (210,000 shares), (v) other family members (560,000
shares), (vi) a former family member (90,000 shares) and (vii) a former
family member as custodian for one of Mr. McFadden's children (125,000
shares). Mr. McFadden exercises shared voting and investment power with
respect to all such shares. Mr. McFadden disclaims beneficial ownership
of these shares other than to the extent of his pecuniary interest in
the shares beneficially owned by McFadden Brothers, McFadden
Securities, L.P. and the family trust under the will of Alexander B.
McFadden. Mr. McFadden's address is 745 Fifth Avenue, New York, New
York 10151.
(13) Includes 4,000 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 2000. Dr.
Gilling's address is 4709 Creekstone Drive, Durham, North Carolina
27703.
(14) Includes 4,000 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 2000 and
3,000 shares of Common Stock held in a pension fund. Dr. Grabowski's
address is Duke University, 305 Social Sciences, Box 90097, Durham,
North Carolina, 27708.
(15) Includes 2,000 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 2000 and
6,571,428 shares of Common Stock beneficially owned by Abbott
Laboratories. Mr. Higgins is a Senior Vice President of Abbott
Laboratories, and disclaims beneficial ownership of the shares
beneficially owned by Abbott Laboratories. Mr. Higgins' address is 100
Abbott Park Road, Abbott Park, IL 60064.
(16) Includes 93,762 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 2000. Also
includes 500 shares held separately by Mr. Rallis' wife, 1,500 shares
held by Mr. Rallis' wife as custodian for their children under the
Uniform Gift to Minors Act and 6,000 shares held by The Rallis Richner
Foundation, Inc., a charitable North Carolina corporation of which Mr.
Rallis serves as President.
(17) Includes 99,836 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 2000.
(18) Includes 200,077 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 2000. Also
includes 500 shares held by Ms. Underwood as custodian for her son
under the Uniform Gift to Minors Act.
(19) Includes 639,802 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 2000.
-8-
EXECUTIVE OFFICERS
The executive officers of the Company as of March 31, 2000 are as
follows:
NAME AGE POSITION
- ----------------------------------- ---- -------------------------------------------------------------------
David W. Barry, M.D.................. 56 Chairman of the Board and Chief Executive Officer
Chris A. Rallis, J.D................. 46 President, Chief Operating Officer, General Counsel and Director
George R. Painter, III, Ph.D......... 49 Executive Vice President, Research and Development
Franck S. Rousseau, M.D.............. 42 Executive Vice President, Medical Affairs and Chief Medical Officer
Thomas R. Staab, II.................. 32 Acting Chief Financial Officer and Treasurer
Carolyn S. Underwood................. 43 Executive Vice President, Commercial Operations
DAVID W. BARRY, M.D. is Chairman of the Board and Chief Executive
Officer of the Company. See "Election of Directors" for a discussion of Dr.
Barry's business experience.
CHRIS A. RALLIS, J.D. is the President, Chief Operating Officer,
General Counsel and a director of the Company. See "Election of Directors" for a
discussion of Mr. Rallis' business experience.
GEORGE R. PAINTER, III, PH.D. has served as Executive Vice President,
Research and Development since August 1999, as Vice President, Research and
Development from July 1997 through July 1999, and as Vice President, Chemistry
and Technical Development of the Company from January 1996 through June 1997.
From July 1995 through January 1996, Dr. Painter served as Director of Research
Process for Glaxo Wellcome plc ("Glaxo"), a pharmaceutical company, and from
June 1993 through July 1995, he served as Assistant Director of Virology for
Burroughs Wellcome. While at Burroughs Wellcome, Dr. Painter led the
international development of both an HIV protease inhibitor and Coviracil(R)
(emtricitabine), formerly known as FTC. Dr. Painter received a B.S. in
chemistry, an M.S. in physical chemistry and a Ph.D. in organic chemistry from
Emory University.
FRANCK S. ROUSSEAU, M.D. has served as Executive Vice President,
Medical Affairs and Chief Medical Officer since August 1999, and as Vice
President, Medical Affairs and Chief Medical Officer from March 1997 through
July 1999. From 1995 through March 1997, Dr. Rousseau served as Associate
Director, International Antiviral Clinical Research for Glaxo. Prior to joining
Glaxo, Dr. Rousseau was Director of Infectious Diseases and HIV Clinical
Research at Wellcome France from 1993 through 1995. From 1990 through 1993, Dr.
Rousseau was a Clinical Research Physician with the French National Agency for
Research Against AIDS. Dr. Rousseau has been involved with the clinical
development of several anti-HIV drugs. Dr. Rousseau received the equivalent of a
B.A. from the University of Paris and his M.D. from the University of Paris,
College of Medicine.
THOMAS R. STAAB, II has served as acting Chief Financial Officer and
Treasurer since August 1999, and as Director of Treasury Services and SEC
Reporting from January 1998 to July 1999. Prior to joining the Company, Mr.
Staab served eight years in various positions with PricewaterhouseCoopers LLP
(formerly Price Waterhouse), including most recently as Audit Manager. While at
PricewaterhouseCoopers, Mr. Staab was responsible for providing audit and
business advisory services to private and publicly-owned national and
multinational corporations in the biotechnology, pharmaceutical, pulp and paper,
and communications industries. Mr. Staab's broad base of experience includes
particular specialization in SEC reporting, consolidation issues, mergers and
acquisitions, United States and European accounting standards, equity financing,
and risk analysis. Mr. Staab received a B.S. in business administration and an
M.A. from the University of North Carolina, and is a Certified Public
Accountant.
CAROLYN S. UNDERWOOD has served as Executive Vice President, Commercial
Operations since August 1999, as Vice President, Commercial Operations from
January 1998 through July 1999, as Vice
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President, Marketing and Investor Relations of the Company from November 1996
through December 1997 and as Vice President, Marketing from January 1996 through
November 1996. Prior to joining the Company, Ms. Underwood served as Director,
CNS Marketing of Glaxo from June 1995 through December 1995. Prior to that, Ms.
Underwood served as Director, Marketing Division of Nippon Wellcome KK, a
pharmaceutical company of which Wellcome was one of the joint venture partners,
from February 1994 through June 1995. Ms. Underwood also served as Senior
Director of Marketing of Burroughs Wellcome from July 1991 through January 1994.
Ms. Underwood received a B.S. in nursing from the University of North Carolina,
Chapel Hill.
-10-
EXECUTIVE COMPENSATION AND OTHER INFORMATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table sets forth information concerning the aggregate
compensation paid by the Company to the Company's Chief Executive Officer and to
the four additional most highly compensated executive officers (the "Named
Executive Officers") for services rendered in all capacities to the Company for
the years ended December 31, 1997, 1998 and 1999:
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION
COMPENSATION(1) AWARDS
--------------- ------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND SALARY BONUS OPTIONS/SARS COMPENSATION
PRINCIPAL POSITION YEAR ($) ($) (#) ($)(2)
----------------------------------- ------- ----------- ----------- ----------- ----------------
David W. Barry, M.D................ 1999 260,398 170,000 50,000 16,663
Chairman and Chief 1998 239,000 72,000 50,000 14,550
Executive Officer 1997 221,375 84,102 60,000 13,335
M. Nixon Ellis, Ph.D............... 1999 227,850 130,125 43,445 1,605
President and Director 1998 210,000 63,000 38,000 1,445
1997 194,750 74,822 40,000 1,310
Chris A. Rallis, J.D............... 1999 209,405 282,524 (3) 30,000 3,375
Executive Vice President, 1998 193,000 95,628 23,000 2,220
Business Development and 1997 179,270 69,044 38,000 2,125
General Counsel
Franck S. Rousseau, M.D............ 1999 187,470(4) 111,775 35,223 (4) 2,000
Executive Vice President, 1998 170,000(5) 55,000 25,058 (5) 455
Medical Affairs and 1997(6) 113,095 48,102 118,362 --
Chief Medical Officer
Carolyn S. Underwood............... 1999 194,215 108,988 32,937 105
Executive Vice President, 1998 179,000 69,749 23,000 421
Commercial Operations 1997 166,050 63,614 32,000 421
- --------------------
(1) The aggregate amount of perquisites and other personal benefits, if
any, did not exceed the lesser of $50,000 or 10% of the total annual
salary and bonus reported for each Named Executive Officer and has
therefore been omitted.
(2) Represents the amounts paid by the Company (i) during 1999, 1998 and
1997 in the form of premiums for individual life insurance policies for
the benefit of the Named Executive Officers and (ii) during 1999, 1998
and 1997, respectively, as matching 401(k) contributions in the
following amounts for the following Named Executive Officers: Dr.
Barry, $1,863, $1,000 and $945; Mr. Rallis, $2,000, $1,000 and $1,000;
and Dr. Rousseau, $2,000, $455 and $0.
(3) Includes 6,235 shares of Common Stock granted to Mr. Rallis on June 25,
1999 under the Company's Stock Issuance Program under the Stock
Incentive Plan. The fair market value of the shares on June 25, 1999
was $16.25.
(4) Excludes an aggregate of $10,000 of Dr. Rousseau's $197,470 salary
earned in 1999 allocated toward the acquisition of options to purchase
2,237 shares of Common Stock under the Company's Salary Investment
Option Grant Program for $4.468 per underlying share, which amount is
equal to 1/3 of the fair market value of the underlying shares of
Common Stock on the date of grant. The options were granted on January
29, 1999, were fully vested as of December 31, 1999, and are
exercisable at a price of $8.938 per share, which amount is equal to
2/3 of the fair market value of the underlying shares of Common Stock
on the date of grant.
-11-
(5) Excludes an aggregate of $12,000 of Dr. Rousseau's $182,000 salary
earned in 1998 allocated toward the acquisition of options to purchase
2,058 shares of Common Stock under the Company's Salary Investment
Option Grant Program for $5.83 per underlying share, which amount is
equal to 1/3 of the fair market value of the underlying shares of
Common Stock on the date of grant. The options were granted on January
7, 1998, were fully vested as of December 31, 1998, and are exercisable
at a price of $11.67 per share, which amount is equal to 2/3 of the
fair market value of the underlying shares of Common Stock on the date
of grant.
(6) Dr. Rousseau was not employed by the Company prior to March 31, 1997.
STOCK OPTIONS
The following table sets forth information concerning stock option
grants made to each of the Named Executive Officers during the year ended
December 31, 1999. The Company did not grant any stock appreciation rights to
the Named Executive Officers during the year ended December 31, 1999.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
---------------------------------------------------------------
POTENTIAL REALIZABLE VALUE AT
PERCENT OF ASSUMED ANNUAL RATES OF
NUMBER OF TOTAL OPTIONS/ STOCK
SECURITIES SARS GRANTED PRICE APPRECIATION FOR
UNDERLYING TO EMPLOYEES EXERCISE OR OPTION TERM (4)
OPTIONS/SARS IN FISCAL BASE PRICE EXPIRATION ------------------------------------
NAME GRANTED(1) YEAR (%)(2) ($/SH)(3) DATE 0%($) 5%($) 10%($)
- ---------------------------- --------------- -------------- ------------ -------------- ----------- ---------- ------------
David W. Barry, M.D......... 50,000(6) 5.1 13.25 12/15/09 0 416,643 1,055,854
M. Nixon Ellis, Ph.D........ 3,445(5) 0.4 16.25 6/24/09 0 35,206 89,220
40,000(6) 4.1 13.25 12/15/09 0 333,314 844,684
Chris A. Rallis, J.D........ 30,000(6) 3.1 13.25 12/15/09 0 249,986 633,513
Frank S. Rousseau, M.D...... 2,237(7) 0.2 8.938(8) 1/28/09 10,000(8) 28,855 57,790
2,986(5) 0.3 16.25 6/24/09 0 30,516 77,332
30,000(6) 3.1 13.25 12/15/09 0 249,986 633,513
Carolyn S. Underwood........ 2,937(5) 0.3 16.25 6/24/09 0 30,015 76,063
30,000(6) 3.1 13.25 12/15/09 0 249,986 633,513
- ---------------------
(1) All options were granted under the 1996 Stock Incentive Plan (the "1996
Plan"). Unless otherwise indicated, each option vests and becomes
exercisable as follows: 25% after 12 months of service measured from
the date of the option grant (indicated by footnote for each grant),
and the remaining 75% thereafter in a series of 36 equal monthly
installments.
(2) The Company granted options to acquire an aggregate of 976,547 shares
of Common Stock to the Company's officers and employees in 1999.
(3) Unless otherwise indicated, the exercise price per share of options
granted represented the fair market value of the underlying shares of
Common Stock on the dates the respective options were granted as
determined by the Compensation Committee of the Board. The exercise
price may be paid in cash or in shares of Common Stock valued at fair
market value on the exercise date or a combination of cash or shares or
any other form of consideration approved by the Board or the
Compensation Committee. The fair market value of shares of Common Stock
is determined in accordance with certain provisions of the 1996 Plan
based on the closing selling price per share of a share of Common Stock
on the date in question on the Nasdaq National Market.
(4) There is no assurance provided to any Named Executive Officer or any
other holder of the Company's securities that the actual stock price
appreciation over the 10-year option term will be at the assumed 0%, 5%
or 10% levels or at any other defined level. Unless the market price of
the Common Stock does in fact appreciate over the option term, no value
will be realized from the option grants made to the Named Executive
Officers.
(5) Options granted on June 25, 1999 pursuant to the Company's
Discretionary Option Grant Program. The shares subject to each option
will immediately vest in the event the Company is acquired by a merger
or asset sale, unless
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the options are assumed by the acquiring entity. The options further
provide that the shares subject to each option will immediately vest
even if options are assumed by the acquiring entity if the Named
Executive Officer's employment is terminated involuntarily (which
includes, among other things, a reduction in the responsibilities of
the Named Executive Officer) at any time within 12 months after the
merger or asset sale.
(6) Options granted on December 16, 1999 pursuant to the Company's
Discretionary Option Grant Program. The shares subject to each option
will immediately vest in the event the Company is acquired by a merger
or asset sale, unless the options are assumed by the acquiring entity.
The options further provide that the shares subject to each option will
immediately vest even if options are assumed by the acquiring entity if
the Named Executive Officer's employment is terminated involuntarily
(which includes, among other things, a reduction in the
responsibilities of the Named Executive Officer) at any time within 12
months after the merger or asset sale.
(7) Options granted on January 29, 1999 pursuant to the Company's Salary
Investment Option Grant Program. The options vested in 12 equal
installments over each month in 1999. The shares subject to each option
will immediately vest in the event that there is a change in control or
other hostile takeover of the Company.
(8) Pursuant to the Company's Salary Investment Option Grant Program, Dr.
Rousseau allocated an aggregate of $10,000 of his $197,470 salary
earned in 1999 toward the acquisition of the options for $4.468 per
underlying share, which amount is equal to 1/3 of the fair market value
of the underlying shares of Common Stock on the date of grant. The
options are exercisable at a price of $8.938 per share, which amount is
equal to 2/3 of the fair market value of the underlying shares of
Common Stock on the date of grant.
OPTION EXERCISES AND HOLDINGS
The following table provides information concerning option exercises
during the year ended December 31, 1999 by the Named Executive Officers and the
value of unexercised options held by each of the Named Executive Officers as of
December 31, 1999. No stock appreciation rights were exercised during the year
ended December 31, 1999.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT
SHARES AT FY-END (#) DECEMBER 31, 1999($)(1)
ACQUIRED ON VALUE ------------------------------ --------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE(2) UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------- ------------- -------------- -------------- ------------- ----------- -------------
David W. Barry, M.D............ -- -- 80,798 104,583 154,398 18,462
M. Nixon Ellis, Ph.D........... 208,542 $3,425,302 60,992 82,778 134,804 13,539
Chris A. Rallis, J.D.......... -- -- 89,949 59,021 599,224 8,616
Franck S. Rousseau, M.D........ 1,000 ($1,000) 91,000 86,643 5,943 16,001
Carolyn S. Underwood........... -- -- 196,640 59,832 1,929,764 9,846
(1) Value is defined as the fair market price of the Company's Common Stock
at December 31, 1999 less the exercise price. On December 31, 1999, the
closing selling price of a share of the Company's Common Stock on the
Nasdaq National Market was $12.813.
(2) These options are immediately exercisable but the Named Executive
Officers' interests in certain of the option shares vest over time. All
unvested shares purchased by the Named Executive Officers are subject
to repurchase by the Company at the exercise price per share. As of
December 31, 1999, Dr. Barry's interest in 4,759 of these option shares
was unvested, Dr. Ellis' interest in 4,186 of these option shares was
unvested, Mr. Rallis' interest in 5,415 of these option shares was
unvested, Dr. Rousseau's interest in all of these option shares was
vested, and Ms. Underwood's interest in 6,694 of these option shares
was unvested.
-13-
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL ARRANGEMENTS
The Company entered into an employment agreement with Dr. David W.
Barry, the Company's Chairman and Chief Executive Officer, as of November 23,
1998. Pursuant to the agreement, the Company has employed Dr. Barry at a base
salary of $239,000 per year for a period of two years, subject to increase by
the Company's Board. The Company has also agreed to provide to Dr. Barry any
other benefits that are provided to the Company's other executive officers. Dr.
Barry's employment is terminable at will by either the Company or Dr. Barry. In
the event Dr. Barry's employment is terminated by the Company for any reason or
Dr. Barry resigns at any time within two years of the date of the agreement, the
Company has agreed to continue to pay Dr. Barry's then-current base salary for a
period of two years and Dr. Barry has agreed that during the two-year period he
will not serve as the chairman, chief executive officer or president of, or
participate in or direct the development of drugs for the treatment of viral
diseases for, any for-profit business in the pharmaceutical industry that
competes in the United States with the Company. In addition, in the event that
Dr. Barry's employment is terminated by the Company without cause at any time
within two years of the date of the agreement, the Company has agreed to
accelerate the vesting of any unvested stock and/or options held by Dr. Barry.
The agreement will terminate automatically in the event of any change in control
of the Company.
In February 1999, the Company also entered into employment agreements
with the President and each Vice President of the Company, including each Named
Executive Officer. M. Nixon Ellis resigned as President and director of the
Company effective as of March 20, 2000. Effective as of March 21, 2000, Chris A.
Rallis was elected as a director of the Company and was appointed President and
Chief Operating Officer of the Company. Mr. Rallis also retains his position as
General Counsel of the Company. Under these employment agreements, the President
and each Vice President is employed until December 31, 2000, with automatic
renewals from year to year thereafter, unless otherwise terminated. The
President and each Vice President is also eligible to participate in the
Company's retirement and welfare benefit plans. The President's and each Vice
President's employment is terminable at will by either the Company or such
President or Vice President. In the event the President's or a Vice President's
employment is terminated by the Company without cause or the Company elects not
to renew the President's or a Vice President's term, the Company has agreed to
continue to pay such President's or Vice President's then-current base salary
for a period of eighteen months and to accelerate by 12 months the vesting of
unvested stock and/or options, subject to such President's or Vice President's
agreement during the eighteen-month period not to engage in the same or similar
function area in any for-profit pharmaceutical business that competes with the
Company in the field of HIV/hepatitis B within North America. In addition, in
the event that, within 12 months following a change in control, the President's
or a Vice President's employment is terminated by the Company without cause, the
President or a Vice President resigns for good reason, or the Company elects not
to renew the President's or a Vice President's term, the Company has agreed to
continue to pay such President's or Vice President's then-current base salary
for a period of two years and to accelerate totally the vesting of any unvested
stock and/or options.
All of the options awarded by the Company to the Named Executive
Officers during the year ended December 31, 1999 provide that the shares subject
to each option will immediately vest in the event the Company is acquired by a
merger or asset sale, unless the options are assumed by the acquiring entity.
The options further provide that the shares subject to each option will
immediately vest even if the options are assumed by the acquiring entity if the
Named Executive Officer's employment is terminated involuntarily (which
includes, among other things, a reduction in the responsibilities of the Named
Executive Officer) at any time within twelve months after the merger or asset
sale.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company's Compensation Committee was established in June 1996. Its
members are Dr. Evnin and Mr. McFadden. Dr. Evnin is a general partner of
Venrock Associates and Venrock Associates II, L.P., both of which purchased
preferred stock from the Company as part of several private placement
transactions
-14-
completed by the Company during the years ended December 31, 1995 and 1996. Mr.
McFadden and several affiliated individuals and entities also purchased
preferred stock from the Company as part of these financings.
NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THE COMPANY'S
PREVIOUS FILINGS UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED (THE "EXCHANGE ACT"),
THAT MIGHT INCORPORATE FUTURE FILINGS, INCLUDING THIS PROXY STATEMENT, IN WHOLE
OR IN PART, THE FOLLOWING REPORT OF THE COMPENSATION COMMITTEE AND THE
PERFORMANCE GRAPH ON PAGE 18 SHALL NOT BE INCORPORATED INTO ANY SUCH FILINGS.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") offers this report
regarding compensation for the Company's executive officers and Chief Executive
Officer.
GENERAL COMPENSATION POLICY
The Company's primary objective is to maximize the value of its shares
over time. Accomplishing this objective requires the Company to successfully
develop and market safe and effective drugs, primarily for the treatment of
viral diseases. The Committee, with this objective in mind, authorizes
compensation packages for the Company's executive officers designed to retain
and attract top quality management and to encourage them to contribute to the
achievement of the Company's business objectives. In addition, the Committee
attempts to establish compensation packages that are comparable to the packages
received by executives of similar companies and reasonable in light of the
Company's expenditures on its drug development programs.
The Company compensates its executive officers with a combination of
salary and incentives designed to encourage efforts to achieve both the
short-term and long-term goals of the Company. The compensation structure
attempts to reward both individual contributions as well as the Company's
overall performance. Many traditional measures of corporate performance, such as
earnings per share or sales growth, are less applicable to the performance of
development stage pharmaceutical companies, like the Company, than to mature
pharmaceutical companies or companies in other industries. As a result, in
making executive compensation decisions the Committee evaluates other
indications of performance, such as the progress of the Company in achieving
milestones in the development of its drug candidates, in obtaining rights to
drug candidates and in raising the capital needed for its operations.
The basic components of the Company's compensation packages for its
executive officers include the following:
- Base Salary
- Annual Incentives
- Long-term Incentives
- Benefits
Each officer's package contains a mix of these elements and is designed
to provide a level of compensation competitive with the compensation paid to
comparable officers of companies of similar size in similar industries. Based on
various surveys of executive compensation within the Company's industry, the
Committee believes it achieved this level of aggregate executive compensation
during 1999. The Company favors a compensation structure that aligns the
long-term interests of its executive officers with the interests of its
stockholders, and as a result places more weight upon long-term incentives in
the form of stock options than upon base salary and annual incentives.
-15-
BASE SALARY and increases in base salary are determined by both
individual and Company performance and the salary levels in effect for companies
of similar size in similar industries. During 1999, the Committee sought to set
the base salaries of the Company's officers at a level around the 75th
percentile of the range of salaries of officers in comparable companies. In
addition, the Committee considered the following factors in setting the base
salaries for executive officers during 1999: the Company's success in achieving
milestones in the development of its drug candidates, in obtaining rights to
drug candidates and in raising the capital needed for its operations, and any
special expertise of a particular executive. During 1999, the base salaries for
the Named Executive Officers (excluding Dr. Barry) increased by an average of
approximately 8.5% over their annualized base salaries during 1998.
ANNUAL INCENTIVES in the form of cash bonuses are awarded by the
Committee based upon its evaluation of the performance of each executive officer
and the achievement of Company goals during the year, which for 1999 included
the establishment of an alliance to assist in the marketing of the Company's
drug candidates in the future. In 1999, annual incentive compensation awarded to
the Named Executive Officers (excluding Dr. Barry) averaged approximately 64.1%
of base salary and totaled in the aggregate $532,093. The awards reflect the
Committee's objective to provide a level of compensation competitive with the
compensation paid to comparable officers of companies of similar size in similar
industries.
LONG-TERM INCENTIVE compensation in the form of stock options is
expected to be the largest element of total compensation over time. Grants of
stock options are designed to align the long-term interests of each officer with
the interests of the Company's stockholders and to provide long-term incentives
for the individual officer to remain with the Company. Stock options provide
each officer with a significant incentive to manage the Company from the
perspective of an owner with an equity stake in the business. The size of the
option grant to each officer is based on the officer's current position and
expected future contributions to the Company's business. Awards of stock options
are designed to have an expected aggregate exercise value over time equal to a
multiple of salary which will create a significant opportunity for stock
ownership.
During 1999, the Named Executive Officers (excluding Dr. Barry) were
granted ten-year options to purchase an aggregate of 139,368 shares of the
Company's Common Stock, excluding options to acquire 2,237 shares of Common
Stock granted to Dr. Rousseau under the Company's Salary Investment Option Grant
Program. Of the 139,368 option shares granted, 9,368 were granted in June 1999
at an exercise price of $16.25 per share and 130,000 were granted in December
1999 at an exercise price of $13.25 per share. All of the options (other than
Dr. Rousseau's Salary Investment options) vest over a four year period as long
as the Named Executive Officer continues to remain employed by the Company. The
options were awarded by the Committee based on the significant milestones
achieved by the Company during 1999. The Committee also considered the total
percentage of outstanding shares beneficially owned by the Named Executive
Officers as compared to the stock ownership of similar officers at comparable
companies. The Committee believes that the option grants were at a level around
the 50th percentile of the range of option grants to officers in comparable
companies.
BENEFITS offered to the Company's executive officers serve as a safety
net of protection against the financial catastrophes that can result from
illness, disability or death. Benefits offered to the Company's executive
officers are substantially the same as those offered to all the Company's
regular employees.
-16-
CEO COMPENSATION
Dr. Barry's 1999 base salary of $260,398 represented an increase of
approximately 9% over his base salary during 1998. The cash bonus paid to Dr.
Barry increased from $72,000 during 1998 to $170,000 during 1999. The amount of
Dr. Barry's base salary and cash bonus were below the average for chief
executive officers of comparable companies, reflecting the Committee's
objective, particularly in the case of Dr. Barry, of placing more weight upon
long-term incentives than upon base salary and annual incentives.
The Committee expects that the stock options granted to Dr. Barry
will represent the largest element of his compensation and provide a direct
link between Dr. Barry's compensation and the Company's performance. During
1999, Dr. Barry received ten-year options to purchase 50,000 shares of the
Company's Common Stock at an exercise price of $13.25 per share. All of the
options vest over a four year period as long as Dr. Barry continues to remain
employed by the Company. As with the other Named Executive Officers, the
options granted to Dr. Barry were awarded based on the significant milestones
achieved by the Company during 1999. The Committee believes that the option
grants were at a level not exceeding the 50th percentile of the range of
option grants to chief executive officers in comparable companies.
Additionally, the total percentage of outstanding shares beneficially owned
by Dr. Barry is above the median as compared to the stock ownership of
similar officers at comparable companies. It is the Committee's judgment that
Dr. Barry's scientific and management leadership is extremely important to
the Company, and it is therefore essential to provide Dr. Barry with a
significant unvested stock ownership position in the Company.
COMPENSATION COMMITTEE
Anthony B. Evnin, Ph.D.
George McFadden
-17-
PERFORMANCE GRAPH
The following graph compares total stockholder returns since the
Company became a reporting company under the Exchange Act to the Nasdaq CRSP
Total Return Index ("Nasdaq Broad Index") for the Nasdaq Stock Market (U.S.
Companies) and the Nasdaq CRSP Pharmaceutical Index ("Nasdaq Pharmaceutical
Index"). The total return for each of the Company's Common Stock, the Nasdaq
Broad Index and the Nasdaq Pharmaceutical Index assumes the reinvestment of
dividends, although dividends have not been declared on the Company's Common
Stock. The Nasdaq Pharmaceutical Index is made up of all companies with the
standard industrial classification (SIC) Code 283 (category description
"Drugs"). The companies comprising the Nasdaq Pharmaceutical Index are available
upon written request to Investor Relations at the Company's executive offices.
The stockholder return shown on the graph below is not necessarily indicative of
future performance and the Company will not make or endorse any predictions as
to future stockholder returns.
[GRAPHIC: PERFORMANCE GRAPH]
CUMULATIVE TOTAL RETURN
------------------------------------------------------------
DECEMBER 31,
November 1, -----------------------------------------------
1996 1996 1997 1998 1999
----------- -------- -------- --------- -----------
TRIANGLE PHARMACEUTICALS, INC. 100 229 146 136 128
NASDAQ STOCK MARKET-US 100 106 130 183 331
NASDAQ PHARMACEUTICALS 100 103 106 136 252
-18-
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In February 1999, the Company entered into employment agreements with
the President and each Vice President of the Company. See "Executive
Compensation and Other Information--Employment Contracts and Change of Control
Arrangements."
The Company has entered into a number of agreements with certain direct
or indirect wholly-owned subsidiaries of Quintiles Transnational Corp.
(collectively, "Quintiles") pursuant to which Quintiles has rendered or has
agreed to render contract services on behalf of Triangle, including, among other
services, clinical monitoring, pre-clinical testing, drug product formulation
and packaging and central laboratory services. Dennis B. Gillings, Ph.D., a
director of the Company, is the Chairman and Chief Executive Officer and a
significant shareholder of Quintiles Transnational Corp. The Company paid
Quintiles nominal amounts in 1996 and approximately $450,000, $1,271,000 and
$4,105,000 during 1997, 1998 and 1999 respectively, for services rendered.
In August 1999, the Company completed a worldwide strategic alliance
with Abbott Laboratories ("Abbott") for six antiviral compounds. Pursuant to
terms of the alliance, Triangle and Abbott will collaborate with respect to the
clinical development, registration, distribution and marketing of various
proprietary pharmaceutical products for the prevention and treatment of HIV and
hepatitis B virus. Abbott purchased 6,571,428 shares of Triangle common stock at
$18.00 per share, and will have the right on or after June 30, 2002 to cause
Triangle to register those shares for resale in the public market. Arthur J.
Higgins is a Senior Vice President of Abbott and is one of Triangle's directors.
The Company has a policy that all material transactions between the
Company and its officers, directors, principal stockholders and other affiliates
will be approved in accordance with the Delaware General Corporation Law by a
majority of the Board, including a majority of the independent and disinterested
directors of the Board, and will be on terms no less favorable to the Company
than could be obtained from unaffiliated third parties.
The Company's Second Restated Certificate of Incorporation eliminates,
subject to certain exceptions, directors' personal liability to the Company or
its stockholders for monetary damages for breaches of fiduciary duties. The
Second Restated Certificate of Incorporation does not, however, eliminate or
limit the personal liability of a director for (i) any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General Corporation Law
or (iv) for any transaction from which the director derived an improper personal
benefit.
The Company's Restated Bylaws provide that the Company shall indemnify
its directors and executive officers to the fullest extent permitted under the
Delaware General Corporation Law, and may indemnify its other officers,
employees and other agents as set forth in the Delaware General Corporation Law.
In addition, the Company has entered into indemnification agreements with its
directors and officers. The indemnification agreements contain provisions that
require the Company, among other things, to indemnify its directors and
executive officers against certain liabilities (other than liabilities arising
from intentional or knowing and culpable violations of law) that may arise by
reason of their status or service as directors or executive officers of the
Company or other entities to which they provide service at the request of the
Company and to advance expenses they may incur as a result of any proceeding
against them as to which they could be indemnified. The Company believes that
these provisions and agreements are necessary to attract and retain qualified
directors and officers. The Company has obtained an insurance policy covering
directors and officers for claims that such directors and officers may otherwise
be required to pay or for which the Company is required to indemnify them,
subject to certain exclusions.
-19-
As of the date of this proxy statement, there is no pending litigation
or proceeding involving a director, officer, employee or other agent of the
Company as to which indemnification is being sought, nor is the Company aware of
any pending or threatened litigation that may result in claims for
indemnification by any director, officer, employee or other agent.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Triangle's officers and
directors, and persons who own more than 10% of a registered class of Triangle's
equity securities, to file reports of ownership and changes in ownership with
the SEC and the Nasdaq Stock Market. Officers, directors and greater than 10%
stockholders are required by SEC regulations to furnish Triangle with copies of
all reports they file pursuant to Section 16(a).
Based solely on a review of the copies of such reports furnished to
Triangle, or written representations that no Form 5s were required, Triangle
believes that, during 1999, all Section 16(a) filing requirements applicable to
its officers, directors and greater than 10% stockholders were satisfied, except
that the reporting of the exercise of stock options by Mr. Rousseau was not
reported on a timely basis.
-20-
DEADLINE FOR STOCKHOLDER PROPOSALS
Stockholder proposals that are intended to be presented at the
Company's annual meeting of stockholders to be held in 2001 must be received by
the Company no later than December 8, 2000, in order to be included in the proxy
statement and related proxy materials.
In addition, if the Company has not received notice prior to February
21, 2001 of any matter a stockholder intends to propose for a vote at the annual
meeting of stockholders to be held in 2001, then a proxy solicited by the Board
of Directors may be voted on such matter in the discretion of the proxyholder.
FORM 10-K
THE COMPANY WILL MAIL WITHOUT CHARGE, UPON WRITTEN REQUEST, A COPY OF
ITS ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND LIST OF
EXHIBITS. REQUESTS SHOULD BE SENT TO THE ATTENTION OF INVESTOR RELATIONS AT THE
COMPANY'S EXECUTIVE OFFICES WHICH ARE LOCATED AT 4 UNIVERSITY PLACE, 4611
UNIVERSITY DRIVE, DURHAM, NORTH CAROLINA 27707.
INFORMATION REQUIRED BY ITEM 13(A) OF SCHEDULE 14A IS HEREBY
INCORPORATED BY REFERENCE FROM THE COMPANY'S ANNUAL REPORT ON FORM 10-K.
OTHER BUSINESS
The Board knows of no other business that will be presented for
consideration at the Annual Meeting. If other matters are properly brought
before the Annual Meeting, however, it is the intention of the persons named in
the accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
Dated: April 7, 2000 Order of the Board of Directors
Chris A. Rallis, SECRETARY
-21-
PROXY CARD
TRIANGLE PHARMACEUTICALS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David W. Barry and Chris A. Rallis
jointly and severally, as proxies, with full power of substitution and
resubstitution, to vote all shares of stock which the undersigned is entitled to
vote at the Annual Meeting of Stockholders of Triangle Pharmaceuticals, Inc. to
be held on Thursday, May 18, 2000, or at any postponements or adjournments
thereof, as specified on the reverse, and to vote in his discretion on such
other business as may properly come before the Annual Meeting and any
adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 and 2.
UNLESS OTHERWISE SPECIFIED BY THE UNDERSIGNED, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1 AND 2 AND WILL BE VOTED BY THE PROXYHOLDERS AT THEIR DISCRETION AS
TO ANY OTHER MATTERS PROPERLY TRANSACTED AT THE MEETING OR ANY ADJOURNMENTS
THEREOF. TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS JUST
SIGN BELOW, NO BOXES NEED BE CHECKED.
(PLEASE SIGN AND DATE ON REVERSE SIDE)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
TRIANGLE PHARMACEUTICALS, INC.
MAY 18, 2000
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
A /X/ PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
1. Election of Directors:
/ / Vote FOR all nominees at right (except as withheld in the space below)
/ / Vote WITHHELD from all nominees
Instruction: To withhold authority to vote for any individual nominee, check
the box "Vote FOR" and write the nominee's name on the line below.
- -------------------------------------------------------------------------------
NOMINEES:
David W. Barry, M.D. and George McFadden will stand for reelection to the Board
for terms to expire in 2003.
2. Ratification of Accountants: To ratify and approve the selection of
PricewaterhouseCoopers LLP as independent accountants for the fiscal year ending
December 31, 2000.
/ / FOR / / AGAINST / / ABSTAIN
CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING / /
- ---------------------------- -------------------------------
SIGNATURE OF STOCKHOLDER PRINTED NAME OF STOCKHOLDER
- ---------------------------- Dated: , 2000
TITLE (IF APPROPRIATE)
-------------------------
Note: Please sign exactly as name appears hereon. If signing as attorney,
executor, administrator, trustee or guardian, please give full title as
such, and, if signing for a corporation, give your title. When shares are
in the names of more than one person, each should sign.