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
/X/ Definitive proxy statement
/ / Confidential, for use of the Commission only as permitted by
/ / Rule 14a-6(e)(2)
/ / 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)(4) and
0-1.1
1) Title of each class of securities to which transaction applies:
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2) Aggregate number of securities to which transaction applies:
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3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11:
0-11:
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4) Proposed maximum aggregate value of transaction:
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5) Total fee paid:
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/ / Fee previously paid 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:
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2) Form, Schedule or Registration Statement No.:
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3) Filing party:
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4) Date filed:
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TRIANGLE PHARMACEUTICALS, INC.
4 UNIVERSITY PLACE, 4611 UNIVERSITY DRIVE
DURHAM, NORTH CAROLINA 27707
MAY 19, 1997
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 Siena
Hotel, 1505 E. Franklin Street, Chapel Hill, North Carolina, on June 24, 1997
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.
Dr. David W. Barry
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 JUNE 24, 1997
--------------------
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 Siena Hotel, 1505 E.
Franklin Street, Chapel Hill, North Carolina, on June 24, 1997 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 the Board of Directors. The Board has nominated the
following persons for election at the Annual Meeting: David W. Barry, M.D.,
M. Nixon Ellis, Ph.D., Anthony B. Evnin, Ph.D., Standish M. Fleming, Karl Y.
Hostetler, M.D., George McFadden and Peter McPartland.
2. To ratify the appointment of Price Waterhouse LLP as the
Company's independent accountants for the fiscal year ending
December 31, 1997.
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 May 9, 1997 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
May 19, 1997
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. WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING,
PLEASE COMPLETE, SIGN AND DATE THE ACCOMPANYING PROXY AND RETURN IT PROMPTLY IN
THE ENCLOSED RETURN ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED
STATES. YOU MAY REVOKE YOUR PROXY IN THE MANNER DESCRIBED IN THE ACCOMPANYING
PROXY STATEMENT. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON, IF YOU WISH
TO DO SO, EVEN IF YOU HAVE PREVIOUSLY SENT IN YOUR PROXY.
TRIANGLE PHARMACEUTICALS, INC
4 UNIVERSITY PLACE, 4611 UNIVERSITY DRIVE
DURHAM, NORTH CAROLINA 27707
_________________________________
PROXY STATEMENT
_________________________________
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD
JUNE 24, 1997
The enclosed proxy is solicited on behalf of the Board of Directors of
Triangle Pharmaceuticals, Inc., a Delaware corporation ("Triangle" or the
"Company"), for use at the annual meeting of stockholders to be held on June 24,
1997, 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 Siena Hotel,
1505 E. Franklin Street, Chapel Hill, North Carolina. All stockholders of
record on May 9, 1997 will be entitled to notice of and to vote at the Annual
Meeting. This Proxy Statement and accompanying proxy (the "Proxy") were first
mailed to stockholders on or about May 19, 1997.
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 May 9, 1997, the record date for determination of stockholders entitled
to vote at the Annual Meeting, there were 17,585,108 shares of Common Stock
outstanding. Each holder of Common Stock is entitled to one vote on all matters
brought before 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.
-2-
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors of the Company is currently composed of seven
members. The Company's Second Restated Certificate of Incorporation provides
that, beginning with the Annual Meeting, the Board of Directors will be
classified into three classes of directors serving staggered three-year
terms, with one class of directors to be elected at each subsequent annual
meeting of stockholders. All of the current members of the Board of
Directors have been nominated to continue to serve on the Board. Messrs.
Fleming and Hostetler have been nominated to stand for election to the Board
for terms to expire at the 1998 annual meeting of stockholders or until their
successors are elected and have qualified, Messrs. Ellis and Evnin have been
nominated to stand for election to the Board of Directors for terms to expire
at the 1999 annual meeting of stockholders or until their successors are
elected and have qualified, and Messrs. Barry, McFadden and McPartland have
been nominated to stand for election to the Board of Directors for terms to
expire at the 2000 annual meeting of stockholders or until their successors
are elected and have qualified. Each person nominated for election has
agreed to serve if elected, and management has no reason to believe that any
nominee will be unavailable to serve.
VOTE REQUIRED
The two candidates for the class of directors whose terms expire at the
1998 annual meeting of stockholders, the two candidates for the class of
directors whose terms expire at the 1999 annual meeting of stockholders and
the three candidates for the class of directors whose terms expire at the
2000 annual meeting of stockholders receiving the highest number of
affirmative votes of the stockholders entitled to vote at the Annual Meeting
will be elected directors of Triangle. Unless otherwise instructed, the
proxyholders will vote each returned proxy for the nominees named below for
election to the class indicated below, or for as many nominees of the Board
of Directors as possible, such votes to be distributed among such nominees in
the manner as the proxyholders see fit.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The Board of Directors unanimously recommends a vote FOR the nominees
listed below.
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 53 2000 Chairman of the Board and
Chief Executive Officer
M. Nixon Ellis, Ph.D 1994 47 1999 President, Chief Operating
Officer and Director
Anthony B. Evnin, Ph.D.(1) 1995 56 1999 Director
Standish M. Fleming (2) 1995 50 1998 Director
Karl Y. Hostetler, M.D 1995 57 1998 Director
George McFadden (1) 1995 56 2000 Director
Peter McPartland (2) 1996 43 2000 Director
- ------------------
(1) Member of Compensation Committee.
(2) Member of Audit Committee.
-3-
BUSINESS EXPERIENCE OF NOMINEES FOR ELECTION TO TERMS EXPIRING IN 1998
STANDISH M. FLEMING has served as a director of the Company since July
1995. 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 three privately-held companies.
KARL Y. HOSTETLER, M.D. has served as a director of the Company since
July 1995. Dr. Hostetler has served as a professor of medicine at the
University of California, San Diego and has practiced medicine at the
Veterans Affairs Medical Center in San Diego since January 1973. From June
1987 through June 1992, Dr. Hostetler served as a director and as Vice
President of Research and Development of Vical Incorporated, a gene therapy
company. Dr. Hostetler received a B.A. in chemistry from DePauw University
and an M.D. from Western Reserve University.
BUSINESS EXPERIENCE OF NOMINEES FOR ELECTION TO TERMS EXPIRING IN 1999
M. NIXON ELLIS, PH.D. has served as a director of the Company since July
1995 and as President and Chief Operating Officer since September 1995. Prior
to joining the Company, Dr. Ellis served as Global Brand Director,
HIV/Retrovir-Registered Trademark- of Wellcome plc ("Wellcome"), a
pharmaceutical company, from January through June 1995, where he was
responsible for managing a $300 million worldwide business. From April 1993
through December 1994, Dr. Ellis served as Assistant Director, Group
Licensing of Wellcome. Prior to that, Dr. Ellis served as Assistant Division
Director, Virology of Burroughs Wellcome, a pharmaceutical company and an
indirect, wholly-owned subsidiary of Wellcome, from March 1991 to March 1993.
Prior to assuming his management responsibilities at Wellcome, Dr. Ellis'
research focused on the disease producing potential of drug resistant viral
mutants. Dr. Ellis received a B.S. in biology from the University of South
Carolina, an M.B.A. from the University of North Carolina, and an M.S. in
medical microbiology and a Ph.D. in microbiology from the University of
Georgia.
ANTHONY B. EVNIN, PH.D. has served as a director of the Company since
November 1995. 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: Arris
Pharmaceutical Corporation, Centocor, Inc., Genetics Institute, Inc. (where
he serves as Chairman of the Board), Ribozyme Pharmaceuticals, Inc. and
SUGEN, Inc., all of which are biopharmaceutical companies, Escalon Medical
Corp. (formerly Intelligent Surgical Lasers, Inc.), an ophthalmic company,
Kopin Corporation, a semiconductor device company, and Opta Food Ingredients,
Inc., a food ingredients company.
BUSINESS EXPERIENCE OF NOMINEES FOR ELECTION TO TERMS EXPIRING IN 2000
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 of Directors 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 the first anti-HIV drug, AZT. 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
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.
-4-
GEORGE MCFADDEN has served as a director of the Company since November
1995. 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), Chemical Leaman
and Squaw Valley Corp., and of one publicly-held packaging company, Ball Corp.
PETER MCPARTLAND has served as a director of the Company since June 1996.
Mr. McPartland has served as a director of Schroder Ventures Life Sciences
Advisers (UK) Ltd., a venture capital firm, since July 1995. He served as a
principal of Schroder Venture Advisers from April 1988 through July 1995. Mr.
McPartland received a B.Sc. in pharmacology from University College, London.
Mr. McPartland currently serves as Chairman of the Board of Cerebrus Limited
(a private, United Kingdom company).
BOARD MEETINGS AND COMMITTEES
The Company's Board of Directors met a total of eight times during the
year ended December 31, 1996. Each of the directors nominated for reelection
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.
The Company has a standing Compensation Committee currently composed of
Messrs. Evnin and McFadden. The Compensation Committee met once in 1996.
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.
The Company also has a standing Audit Committee composed of Messrs.
Fleming and McPartland. The Audit Committee met once in 1996. 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 provides that, beginning with the Annual Meeting, all eligible
non-employee directors will automatically receive an option to purchase 1,334
shares of Common Stock for the first year of the directors' Board term and
1,333 shares of Common Stock for each additional year remaining on the
director's Board term following the automatic option grant. 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 year of service following
such grant.
-5-
PROPOSAL 2
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Company is asking the stockholders to ratify the selection of Price
Waterhouse LLP as the Company's independent accountants for the year ending
December 31, 1997.
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 Price
Waterhouse LLP. In the event the stockholders fail to ratify the appointment,
the Triangle Board will reconsider its selection. Even if the selection is
ratified, the Triangle Board, in its discretion, may direct the appointment of a
different independent accounting firm at any time during the year if the
Triangle Board believes that such a change would be in Triangle's and its
stockholders' best interests.
Representatives of Price Waterhouse 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 OF DIRECTORS
The Board of Directors unanimously recommends a vote FOR the ratification
and approval of the selection of Price Waterhouse LLP to serve as Triangle's
independent accountants for the year ending December 31, 1997.
-6-
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of February 28, 1997 for all those
known by the Company to be beneficial owners of more than 5% of its outstanding
Common Stock.
SHARES BENEFICIALLY OWNED
------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER (1) NUMBER (1) PERCENT (2)
- ---------------------------------------------- --------------- --------------
George McFadden (3). . . . . . . . . . . . . . 2,315,000 13.2%
745 Fifth Avenue
New York, NY 10151
Venrock Associates (4) . . . . . . . . . . . . 2,066,667 11.8%
30 Rockefeller Plaza
New York, NY 10112
Forward Ventures II, L.P. (5). . . . . . . . . 1,771,461 10.1%
9255 Towne Centre Drive, Suite 300
San Diego, CA 92121
David W. Barry, M.D. (6) . . . . . . . . . . . 1,303,881 7.4%
4 University Place, 4611 University Drive
Durham, NC 27707
The Wellcome Trust (7) . . . . . . . . . . . . 1,300,000 7.4%
183 Euston Road
London, England NN1 2BE
- ---------------------
(1) Except as otherwise indicated, 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.
(2) Percentage ownership is based on 17,585,108 shares of Common Stock
outstanding on February 28, 1997, and is calculated pursuant to Rule
13d-3(d)(1) under the Securities Exchange Act of 1934, as amended.
(3) Includes 100,000 shares, 200,000 shares, 600,000 shares, 240,000 shares,
510,000 shares, 90,000 shares, 75,000 shares and 100,000 shares of Common
Stock beneficially owned by (i) McFadden Brothers, (ii) McFadden
Securities, L.P., (iii) a family trust under the will of Alexander B.
McFadden, (iv) three family trusts for the benefit of Mr. McFadden's
children, (v) other family members, (vi) a former family member, (vii) a
former family member as custodian for one of Mr. McFadden's children and
(viii) a retirement plan for employees of Chemical Leaman Corporation and
affiliated corporations, respectively. 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.
(4) Includes 685,736 shares of Common Stock beneficially owned by Venrock
Associates II, L.P. Anthony B. Evnin, Ph.D., a director of the Company, is
a general partner of Venrock Associates and Venrock Associates II, L.P.
Dr. Evnin disclaims beneficial ownership of these shares other than to the
extent of his individual partnership interests, but exercises shared voting
and investment power with respect to all such shares.
(5) Includes 233,663 shares of Common Stock beneficially owned by Forward
Ventures III, L.P. 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. Mr. Fleming disclaims
beneficial ownership of these shares
-7-
other than to the extent of his individual partnership and member interests,
but exercises shared voting and investment power with respect to all such
shares.
(6) Includes 25,381 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of February 28, 1997.
(7) All shares beneficially owned by The Wellcome Trust Limited as trustee of
The Wellcome Trust.
COMMON STOCK OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of February 28, 1997 by (i) each
director and nominee named under "Election of Directors," (ii) each of the
Company's officers named under "Executive Compensation and Other
Information--Summary of Cash and Certain Other Compensation" and (iii) all
directors and executive officers of the Company as a group.
SHARES BENEFICIALLY OWNED
------------------------------
NAME AND ADDRESS OF BENEFICIAL OWNER (1) NUMBER (1) PERCENT (2)
- ---------------------------------------------- --------------- --------------
David W. Barry, M.D. (3). . . . . . . . . . . 1,303,881 7.4%
M. Nixon Ellis, Ph.D. (4) . . . . . . . . . . 635,298 3.6%
Anthony B. Evnin, Ph.D. (5) . . . . . . . . . 2,066,667 11.8%
30 Rockefeller Plaza
New York, NY 10112
Standish M. Fleming (6) . . . . . . . . . . . 1,771,461 10.1%
9255 Towne Centre Drive, Suite 300
San Diego, CA 92121
Karl Y. Hostetler, M.D (7). . . . . . . . . . 410,400 2.3%
14024 Rue St. Raphael
Del Mar, CA 92104
George McFadden (8) . . . . . . . . . . . . . 2,315,000 13.2%
745 Fifth Avenue
New York, NY 10151
Peter McPartland (9). . . . . . . . . . . . . 653,750 3.7%
20 Southampton Street
London WC2E 7QG
United Kingdom
Phillip A. Furman (10). . . . . . . . . . . . 231,924 1.3%
Chris A. Rallis (11). . . . . . . . . . . . . 249,313 1.4%
Carolyn S. Underwood (12) . . . . . . . . . . 185,162 1.0%
All directors and executive officers as
a group (15 persons) (3)-(13) . . . . . . . . 10,163,995 55.8%
- ----------------
(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 persons named in the table is:
4 University Place, 4611 University Drive, Durham, North Carolina 27707.
-8-
(2) Percentage of ownership is based on 17,585,108 shares of Common Stock
outstanding on February 28, 1997, and is calculated pursuant to
Rule 13d-3(d)(1) under the Securities Exchange Act of 1934, as amended.
(3) Includes 25,381 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of February 28, 1997.
(4) Includes 230,867 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of February 28, 1997.
(5) Includes 1,380,931 shares and 685,736 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.
(6) Includes 1,475,000 shares and 233,633 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.
(7) All shares of Common Stock are beneficially owned by a family trust.
(8) Includes 100,000 shares, 200,000 shares, 600,000 shares, 240,000 shares,
510,000 shares, 90,000 shares, 75,000 shares and 100,000 shares of Common
Stock beneficially owned by (i) McFadden Brothers, (ii) McFadden
Securities, L.P., (iii) a family trust under the will of Alexander B.
McFadden, (iv) three family trusts for the benefit of Mr. McFadden's
children, (v) other family members, (vi) a former family member, (vii) a
former family member as custodian for one of Mr. McFadden's children and
(viii) a retirement plan for employees of Chemical Leaman Corporation and
affiliated corporations, respectively. 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.
(9) All shares beneficially owned by Schroder Venture Managers Limited, as
manager for Schroder Ventures International Life Sciences Fund LP1,
Schroder Ventures International Life Sciences Fund LP2, Schroder Ventures
International Life Sciences Fund Trust and Schroder Venture Managers
Limited, as investment manager for the Schroder Ventures International Life
Sciences Fund Co-investment Scheme. Mr. McPartland is a director of
Schroder Ventures Life Sciences Advisers (UK) Ltd., a wholly-owned
subsidiary of Schroder Ventures Life Sciences Advisors Limited, which acts
as an advisor to Schroder Venture Managers Limited. Mr. McPartland
disclaims beneficial ownership of these shares other than to the extent of
his individual interest arising from his position as a director of Schroder
Ventures Life Science Advisers (UK) Ltd.
(10) Includes 56,795 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of February 28, 1997.
(11) Includes 57,970 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of February 28, 1997. Also
includes 500 shares held separately by Mr. Rallis' wife and 500 shares
held by Mr. Rallis' wife as custodian for their children under the
Uniform Gift to Minors Act.
(12) Includes 168,535 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of February 28, 1997. Also
includes 500 shares held by Ms. Underwood as custodian for her son under
the Uniform Gift to Minors Act.
(13) Includes 637,790 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of February 28, 1997.
-9-
EXECUTIVE OFFICERS AND KEY EMPLOYEES
The executive officers and key employees of the Company as of March 31,
1997 are as follows:
NAME AGE POSITION
- -------------------------------------------- --- ----------------------------------------------
David W. Barry, M.D. ....................... 53 Chairman of the Board and Chief Executive
Officer
M. Nixon Ellis, Ph.D. ...................... 47 Director, President and Chief Operating
Officer
Phillip A. Furman, Ph.D. ................... 52 Vice President, Research and Chief Scientific
Officer
James A. Klein, Jr. ........................ 34 Chief Financial Officer and Treasurer
Bruce J. McCreedy, Jr., Ph.D. .............. 37 Vice President, Clinical Diagnostics
Anne F. McKay............................... 42 Vice President, Drug Regulatory Affairs
George R. Painter, III, Ph.D. .............. 46 Vice President, Chemistry and Technical
Development
Chris A. Rallis, J.D. ...................... 43 Vice President, Business Development,
General Counsel and Secretary
Franck S. Rousseau, M.D. ................... 39 Vice President, Medical Affairs and Chief
Medical Officer
Carolyn S. Underwood........................ 40 Vice President, Marketing and Investor
Relations
John Delehanty, Ph.D........................ 48 Director of Clinical Research
Cary P. Moxham, Ph.D........................ 37 Director of Project Development
George M. Szczech, D.V.M., Ph.D............. 54 Director of Toxicology and Pharmacology
DAVID W. BARRY, M.D. has been nominated to serve as a director of the
Company. See "Election of Directors" for a discussion of Dr. Barry's
business experience.
M. NIXON ELLIS, PH.D. has been nominated to serve as a director of the
Company. See "Election of Directors" for a discussion of Dr. Ellis' business
experience.
PHILLIP A. FURMAN, PH.D. has served as Vice President, Research and Chief
Scientific Officer of the Company since September 1995. Prior to joining the
Company, Dr. Furman served as Director, Virology of Burroughs Wellcome from
July 1989 through June 1995, where he played a significant role in the
development of both AZT and acyclovir. Dr. Furman's research while at
Burroughs Wellcome focused on the structure and function of nucleic acid
polymerizing enzymes. He is a co-inventor of the use of AZT for HIV therapy
as well as a co-inventor of the use of FTC to treat HBV infections. Dr.
Furman received a B.S. in biology from Piedmont College, an M.A. in
microbiology from the University of Southern Florida and a Ph.D. in
microbiology from Tulane University.
JAMES A. KLEIN, JR. has served as Chief Financial Officer and Treasurer
of the Company since November 1995, and served as Secretary and Treasurer
from July through November 1995. Prior to joining the Company, Mr. Klein
served as International Research, Development and Medical Financial
Controller of Wellcome from May 1994 through June 1995. From June 1992
through May 1994, Mr. Klein served as Senior Financial Analyst of Burroughs
Wellcome. Prior to that, Mr. Klein held various management positions in
finance at Burroughs
-10-
Wellcome. Mr. Klein received a B.A. in accounting from the University of
Mississippi and is a certified public accountant.
BRUCE J. MCCREEDY, JR., PH.D. has served as Vice President, Clinical
Diagnostics since joining the Company in March 1997. Prior to joining the
Company, Dr. McCreedy served in the following positions at Laboratory
Corporation of America (formerly Roche Biomedical Laboratories): Associate
Vice President of Infectious Diseases and Clinical Trials from July 1995 to
February 1997, Director of Infectious Diseases and Clinical Trials from 1993
to 1995, and Associate Director of Infectious Diseases from 1990 to 1993.
While at Laboratory Corporation of America, Dr. McCreedy was involved in the
development of diagnostic test systems for the detection and quantitation of
human retroviruses and hepatitis B and C viruses. Dr. McCreedy received his
B.S. degree from Wake Forest University in medical microbiology and his Ph.D.
in microbiology from the Bowman Gray School of Medicine.
ANNE F. MCKAY has served as Vice President, Drug Regulatory Affairs since
October 1996. Prior to joining the Company, Ms. McKay served as Director of
Regulatory Affairs with Medco Research, Inc. from July 1995 to September
1996. Prior to joining Medco, Ms. McKay served as Director of Regulatory
Affairs, North America, with Burroughs Wellcome, and held various other
regulatory positions during a 15-year tenure at Burroughs Wellcome. While at
Burroughs Wellcome, Ms. McKay's department was responsible for providing
support for various FDA submissions, including the NDA submissions for AZT
and acyclovir. Ms. McKay received her B.S. in animal science from Michigan
State University.
GEORGE R. PAINTER, III, PH.D. has served as Vice President, Chemistry and
Technical Development of the Company since January 1996. From July 1995
through January 1996, Dr. Painter served as Director of Research Process for
Glaxo Wellcome ("Glaxo") and from June 1993 through July 1995, Dr. Painter
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 FTC. He is also a co-inventor of the use of FTC
to treat HBV infections. Dr. Painter received a B.S. in chemistry, an M.S.
in physical chemistry and a Ph.D. in organic chemistry from Emory.
CHRIS A. RALLIS, J.D. has served as Vice President, Business Development,
General Counsel and Secretary of the Company since November 1995. Prior to
joining the Company, Mr. Rallis served in the following positions with
Burroughs Wellcome: Vice President, Planning and Business Development from
February 1994 to June 1995; Director, Planning and Business Development from
June 1993 through February 1994; and Assistant General Counsel from June 1991
through June 1993. During Mr. Rallis' tenure at Burroughs Wellcome, his
department was responsible for finalizing licensing agreements with Emory and
Vertex Pharmaceuticals Incorporated and a consumer healthcare joint venture
with Warner-Lambert Company. Mr. Rallis received an A.B. degree in economics
from Harvard College and a J.D. from Duke University.
FRANCK S. ROUSSEAU, M.D. joined the Company as Vice President, Medical
Affairs and Chief Medical Officer in March 1997. 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 his baccalaureate from the University
of Paris and his M.D. from the University of Paris, College of Medicine.
CAROLYN S. UNDERWOOD has served as Vice President, Marketing of the
Company since January 1996 and assumed responsibility for Investor Relations
in November 1996. Prior to joining the Company, Ms. Underwood served as
Director, CNS Marketing of Glaxo from June 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.
-11-
JOHN DELEHANTY, PH.D. has served as the Director of Clinical Research of
the Company since September 1996. Prior to joining the Company, Dr. Delehanty
served as Associate Director of Infectious Diseases with Burroughs Wellcome (and
later with Glaxo) since 1983. While at Burroughs Wellcome, Dr. Delehanty led the
development of several topical antiviral drugs. Dr. Delehanty has also worked at
the National Research Council and World Health Organization. Dr. Delehanty
received a B.S. in biology from Villanova University and a Ph.D. in genetics
from Florida State University/Oak Ridge National Laboratory.
CARY P. MOXHAM, PH.D. has served as Director of Project Development since
February 1996. Prior to joining the Company, Dr. Moxham served as Research
Scientist with Burroughs Wellcome (and later with Glaxo) since 1986. From
September 1994 to February 1996, Dr. Moxham served as International Project
Leader for Burroughs Wellcome (and later as Product Development Leader with
Glaxo), where he led the international development of two humanized monoclonal
antibodies for the treatment of solid tumors. Dr. Moxham received a B.S. in
biology and chemistry from Union College and a Ph.D. in biochemical pharmacology
from the State University of New York at Stony Brook.
GEORGE M. SZCZECH, D.V.M., PH.D. has served as the Director of Toxicology
and Pharmacology of the Company since January 1996. Prior to joining the
Company, Dr. Szczech served as Associate Director of the Division of Toxicology
and Pathology at Burroughs Wellcome from 1992 to 1995, and as Senior Toxicologic
Pathologist from 1985 to 1992. Dr. Szczech has over 20 years experience in
pharmaceutical development with specialization in all aspects of product safety
assessment. In positions at Burroughs Wellcome, the Mead Johnson Company (now a
subsidiary of Bristol-Myers Squibb) and Upjohn Company (now Pharmacia & Upjohn),
he performed and published research dealing with the safety of a wide variety of
pharmaceuticals. Much of his work involved establishing laboratories and
procedures in the area of reproductive and developmental toxicology. Dr Szczech
earned his D.V.M. at the University of Minnesota and his Ph.D. at Purdue
University and is board certified in veterinary pathology and in toxicology.
-12-
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 period from inception (July 12, 1995) to December 31, 1995 and for the year
ended December 31, 1996:
SUMMARY COMPENSATION TABLE
- --------------------------------------------------------------------------------
Annual Long-Term
Compensation(1) Compensation
---------------
Awards
----------------------------------
Securities All Other
Name and Underlying Compen-
Principal Year Salary Bonus Options/SARs sation
Position ($) ($) (#) ($)(2)
- ------------------------------------------------------------------------------------
David W. Barry, M.D........ 1996 205,333 20,000 197,214 11,370
Chairman and Chief 1995(3) 100,000 8,000 0 0
Executive Officer
M. Nixon Ellis, Ph.D....... 1996 180,000 17,500 230,867 1,394
Director, President 1995(3) 87,500 2,000 0 0
and Chief Operating
Officer
Phillip A. Furman, Ph.D.... 1996 155,000 15,000 56,795 3,114
Vice President, 1995(3) 75,000 1,500 0 0
Research and
Chief Scientific Officer
Chris A. Rallis, J.D....... 1996 158,333 16,500 57,970 1,147
Vice President, 1995(3) 25,000 0 0 0
Business Development,
General Counsel
and Secretary
Carolyn S. Underwood....... 1996 151,177 26,250 184,035 328
Vice President, 1995(3) 0 0 0 0
Marketing and
Investor Relations
- ------------------------------------------------------------------------------------
(1) The aggregate amount of perquisites and other personal benefits, if any,
did not exceed the lesser of $50,000 or 10% of the total annual salary and
bonus reported for each Named Executive Officer and has therefore been
omitted.
(2) Represents the amounts paid by the Company during 1996 for the premiums for
both individual and group term life insurance policies for the benefit of
the Named Executive Officers.
(3) Represents the aggregate compensation paid by the Company during the period
from the Company's inception (July 12, 1995) to December 31, 1995.
-13-
STOCK OPTIONS
The following table sets forth information concerning stock option grants
made to each of the Named Executive Officers during the year ended December 31,
1996. The Company did not grant any stock appreciation rights during the year
ended December 31, 1996.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
- ------------------------------------------------------------------------------------------------------------------
Potential Realizable
Value at Assumed
Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term
- ------------------------------------------------------------------------------------------------------------------
Number of Percent of
Securities Total Options/
Underlying SARs Granted
Option/ to Employees Exercise or
SARs in Fiscal Base Price Expiration
Name Granted(1)(2) Year(%)(3) ($/Sh)(4) Date 5% ($)(5) 10% ($)(5)
- -----------------------------------------------------------------------------------------------------------------
David W. Barry, M.D. ......... 171,833(6) 12 0.0825(7) 2/14/06 23,092 36,769
25,381 2 9/06/06 289,401 460,822
7.0000
M. Nixon Ellis, Ph.D. ........ 208,542 14 0.0750 2/14/06 25,477 40,568
22,325 2 7.0000 9/06/06 254,556 405,337
Phillip A. Furman, Ph.D. ..... 37,407 3 0.0750 2/14/06 4,570 7,277
19,388 1 7.0000 9/06/06 221,067 352,012
Chris A. Rallis, J.D. ........ 37,407 3 0.0750 2/14/06 4,570 7,277
20,563 1 7.0000 9/06/06 234,465 373,346
Carolyn S. Underwood ......... 150,000 10 0.0750 2/14/06 18,325 29,180
19,035 1 7.0000 9/06/06 217,042 345,603
15,000(8) 1 6.0000(9) 9/06/06 146,601 233,437
- -----------------------------------------------------------------------------------------------------------------
(1) All options were granted under the Company's 1996 Stock Option/Stock
Issuance Plan.
(2) Unless otherwise indicated, each option is immediately exercisable and
vests as follows: 25% after 12 months of service measured from the start
of employment or, in some cases, the date of the option grant, and the
remaining 75% thereafter in a series of 36 equal monthly installments.
The shares subject to each option will immediately vest in the event the
Company is acquired by a merger or asset sale, unless the Company's
repurchase rights with respect to those shares are transferred to the
acquiring entity. The options further provide that the shares subject to
each option will immediately vest even if the Company's repurchase rights
are transferred to 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.
The grant dates for the above options are as follows:
-14-
Name Options Granted (#) Grant Date
- ----------------------------- ----------------------- --------------
David W. Barry, M.D. .......... 171,833(6) 2/14/96
25,381 9/06/96
M. Nixon Ellis, Ph.D. ......... 208,542 2/14/96
22,325 9/06/96
Phillip A. Furman, Ph.D. ...... 37,407 2/14/96
19,388 9/06/96
Chris A. Rallis, J.D. ......... 37,407 2/14/96
20,563 9/06/96
Carolyn S. Underwood .......... 150,000 2/14/96
19,035 9/06/96
15,000(8) 9/06/96
(3) The Company granted options to acquire an aggregate of 1,451,000 shares of
Common Stock to the Company's officers and employees in 1996.
(4) 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 Board
of Directors or the Compensation Committee of the Board of Directors. 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 of Directors or
the Compensation Committee. The fair market value of shares of Common
Stock is determined in accordance with certain provisions of the 1996 Stock
Option/Stock Issuance 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.
(5) 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 applicable 5-year or 10-year option term will be at
the assumed 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.
(6) This option is immediately exercisable and vests as follows: 20% after 12
months of service measured from the grant date, and the remaining 80%
thereafter in a series of 48 equal monthly installments. The shares
subject to this option will immediately vest in the event the Company is
acquired by a merger or assets sale, unless the Company's repurchase rights
with respect to those shares are transferred to the acquiring entity. The
option further provides that the shares subject to the option will
immediately vest even if the Company's repurchase rights are transferred to
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.
(7) Represented 110% of the fair market value of the underlying shares of
Common Stock on the date the option was granted as determined by the Board
of Directors.
(8) This option is immediately exercisable and was fully vested on the date the
option was granted.
(9) Represented 85% of the fair market value of the underlying shares of Common
Stock on the date the option was granted as determined by the Compensation
Committee of the Board of Directors.
OPTION EXERCISES AND HOLDINGS
The following table provides information concerning option exercises during
the year ended December 31, 1996 by the Named Executive Officers and the value
of unexercised options held by each of the Named Executive Officers as of
December 31, 1996. The Company did not grant any stock appreciation rights
during the year ended December 31, 1996.
-15-
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION/SAR VALUES
- ----------------------------------------------------------------------------------------------------------------------------------
Number of Securities Underlying Value of Unexercised In-The-
Unexercised Options/SARs at Money Options/SARs at
December 31, 1996(#) December 31, 1996($)(2)
--------------------------------------------------------------------------
Shares Value
Acquired on Realized
Name Exercise (#) ($)(1) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------------------------------------------------------------------------------------------------------------------
David W. Barry, M.D. .......... 171,833 157,657 25,381 0 402,923 0
M. Nixon Ellis, Ph.D. ......... 0 0 230,867 0 5,109,167 0
Phillip A. Furman, Ph.D. ...... 0 0 56,795 0 1,160,664 0
Chris A. Rallis, J.D. ......... 0 0 57,970 0 1,179,317 0
Carolyn S. Underwood .......... 15,500 70,215 168,535 0 3,621,906 0
- ----------------------------------------------------------------------------------------------------------------------------------
(1) Value is defined as the fair market price of the Company's Common Stock
on the date of exercise less the exercise price.
(2) Value is defined as the fair market price of the Company's Common Stock
at December 31, 1996 less the exercise price. On December 31, 1996, the
closing selling price of a share of the Company's Common Stock on the
Nasdaq National Market was $22.875.
EMPLOYMENT CONTRACTS AND CHANGE OF CONTROL ARRANGEMENTS
In October 1996, the Company entered into an employment agreement with
Dr. David W. Barry, the Company's Chairman and Chief Executive Officer.
Pursuant to the agreement, the Company has employed Dr. Barry at a base
salary of $216,000 per year for a period of two years, subject to increase
by the Company's Board of Directors. 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 three
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
three 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.
All of the options awarded by the Company to the Named Executive
Officers during the year ended December 31, 1996, 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 Company's repurchase rights
with respect to these shares are transferred to the acquiring entity. The
options further provide that the shares subject to each option will
immediately vest even if the Company's repurchase rights are transferred to
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.
-16-
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 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.
See "Certain Relationships and Related Transactions."
During the year ended December 31, 1996, the Board of Directors awarded
options to the Company's executive officers and other employees and
established the levels of compensation for the Company's executive officers.
Dr. Barry, the Company's Chairman and Chief Executive Officer, and
Dr. Ellis, a director and the Company's President and Chief Operating
Officer, each participated in the deliberations of the Board of Directors
regarding executive compensation that occurred during 1996, including the
deliberations regarding his own compensation. See "Certain Relationships
and Related Transactions" for a description of certain material transactions
between the Company and Dr. Barry and Dr. Ellis.
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 AND THE PERFORMANCE
GRAPH ON PAGE 20 SHALL NOT BE INCORPORATED INTO ANY SUCH FILINGS.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
The Board of Directors 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 and cancer. The Board of Directors, 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 Board 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, the Board evaluates other indications of performance, such as
the progress of the Company in obtaining rights to drug candidates, raising
the capital needed for its operations and achieving milestones in the
development of its drug candidates, in making executive compensation
decisions.
The basic components of the Company's compensation packages for its
executive officers include the following:
- Base Salary
- Annual Incentives
- Long-term Incentives
- Benefits
-17-
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 Board of Directors believes it achieved this level of aggregate
executive compensation during 1996. 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.
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 1996, the Board
attempted to keep the base salaries of the Company's officers at a level
around the median range of the salaries of officers in comparable companies.
In addition, the Board considered the following factors in setting the base
salaries for executive officers during 1996: the Company's success in
obtaining rights to additional drug candidates and raising significant
capital, the Company's progress in the development of its drug candidates,
and any special expertise of a particular executive. During 1996, the base
salaries for the Named Executive Officers (excluding Dr. Barry and Carolyn
Underwood because she was not employed during 1995) increased on an
annualized basis by an average of approximately 12% over their annualized
base salaries during the period from the Company's inception (July 12, 1995)
through December 31, 1995 (the "Inception Period").
ANNUAL INCENTIVES in the form of cash bonuses are awarded by the Board
based upon its evaluation of the performance of each executive officer and
the achievement of Company goals during the year. In 1996, annual incentive
compensation awarded to the Named Executive Officers (excluding Dr. Barry)
averaged approximately 10% of base salary and totaled in the aggregate
$75,250. Although the awards were granted based on the significant milestones
achieved by the Company during 1996, the amount of each award was
significantly below the average awards for comparable companies, reflecting
the Board's objective of placing more weight upon long-term incentives than
upon base salary and annual incentives.
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 1996, the Named Executive Officers (excluding Dr. Barry) were
granted ten-year options to purchase an aggregate of 529,667 shares of the
Company's Common Stock at exercise prices ranging from $0.075 to $7.00 per
share. Almost all of the 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 Board based on the significant milestones
achieved by the Company during 1996, except in the case of the grant of an
option to purchase 150,000 shares of Common Stock awarded to Ms. Underwood,
which was granted as part of her initial compensation package upon the
commencement of her employment with the Company. The Board 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 Board believes that the option grants were within
the median range of the 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.
CEO COMPENSATION
Dr. Barry's 1996 base salary of $205,333 represented an increase on an
annualized basis of approximately 3% over his annualized base salary during
the Inception Period. The cash bonus paid to Dr. Barry increased
-18-
from $8,000 during the Inception Period to $20,000 during 1996. Although the
increases were based on the significant milestones achieved by the Company
during 1996, the amount of Dr. Barry's base salary and cash bonus were
significantly below the average for chief executive officers of comparable
companies, reflecting the Board'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 Board 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 1996,
Dr. Barry received ten-year options to purchase an aggregate of 197,214
shares of the Company's Common Stock at exercise prices ranging from $0.0825
to $7.00 per share. All of the options vest over a four or five 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
1996. The Board believes that the option grants were within the median range
of the option grants to chief executive officers in comparable companies,
although 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 Board'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.
BOARD OF DIRECTORS
David W. Barry, M.D.
M. Nixon Ellis, Ph.D.
Anthony B. Evnin, Ph.D.
Standish M. Fleming
Karl Y. Hostetler, M.D.
George McFadden
Peter McPartland
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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.
[Performance graph included here]
CUMULATIVE TOTAL RETURN
----------------------------
11/01/96 12/31/96
TRIANGLE PHARMACEUTICALS, INC. 100 229
NASDAQ STOCK MARKET-US 100 106
NASDAQ PHARMACEUTICALS 100 103
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company's Registration Statement on Form S-1 pursuant to which the
Company completed its initial public offering ("IPO") was declared effective on
October 31, 1996. As part of the IPO, each share of the Company's Preferred
Stock automatically converted into one share of Common Stock and all outstanding
warrants to purchase shares of the Company's Preferred Stock automatically
converted into the right to acquire an equivalent number of shares of Common
Stock at the same exercise price.
In October 1996, the Company entered into an Employment Agreement with
Dr. Barry, the Company's Chairman and Chief Executive Officer. See
"Executive Compensation and Other Information--Employment Contracts and
Change of Control Arrangements."
Since its inception in July 1995, the Company issued, in private placement
transactions, shares of its Preferred Stock as follows: 5,231,671 shares of
Series A Preferred Stock at a price of $0.75 per share (and warrants to purchase
up to 130,000 shares of Series A Preferred Stock at an exercise price of
$0.75 per share); and 3,706,234 shares of Series B Preferred Stock at a price of
$5.00 per share (and warrants to purchase up to 16,000 shares of Series B
Preferred Stock at an exercise price of $5.00 per share). The purchasers of
Preferred Stock included, among others, the following executive officers,
directors and holders of more than five percent of the Company's outstanding
stock and their respective affiliates: (i) Venrock Associates and Venrock
Associates II (of which Dr. Evnin is a general partner) invested a total of
$4,100,000; (ii) George McFadden and several related entities and individuals
invested a total of $4,000,000; (iii) Forward Ventures II, L.P. and Forward
Ventures Vanguard Fund (of which Mr. Fleming is indirectly a general partner)
invested a total of $3,788,000; (iv) The Wellcome Trust (to which Schroder
Ventures Life Sciences Advisors Limited, of which Mr. McPartland is indirectly
a director, acts as an advisor) invested a total of $5,000,000; (v) Dr. Barry
invested a total of $400,000; (vi) Dr. Ellis invested a total of $441,000; and
(vii) Dr. Hostetler invested a total of $125,000. As part of these financings,
the Company granted registration rights to the investors that acquired the
Preferred Stock.
In November 1995, the Company entered into a license agreement and
separate consulting agreements with Dr. Hostetler, one of the Company's
directors and a member of the Company's Scientific Advisory Board, and Dr.
Dennis Carson, another member of the Company's Scientific Advisory Board.
Pursuant to the license agreement, Dr. Hostetler granted the Company an
exclusive worldwide license to his rights to Acyclovir Monophosphate
("ACVMP") and Drs. Hostetler and Carson granted the Company an exclusive
worldwide license to their rights to 2-CdAP (the "ACVMP and 2-CdAP
Technologies"). As consideration for the exclusive license of the ACVMP and
2-CdAP Technologies, the Company sold shares of Common Stock to Drs.
Hostetler and Carson. The interests of Drs. Hostetler and Carson in the
shares of Common Stock vest over time as they continue to serve as
consultants to the Company. The Company also agreed to make two separate
milestone payments of $1.0 million each and to make royalty payments ranging
from 3% to 8% of net sales of products incorporating the ACVMP and 2-CdAP
Technologies to Drs. Hostetler and Carson. The Company is obligated to hold
harmless Drs. Hostetler and Carson against any claims or losses caused by or
arising out of the Company's use of the ACVMP and 2-CdAP Technologies. Drs.
Hostetler and Carson have the right to terminate the license agreement or
convert the exclusive license to a nonexclusive license in the event that the
Company does not satisfy certain development, marketing and milestone
obligations. Additional termination events include the failure of the Company
to pay royalties to Drs. Hostetler and Carson when due.
Under the terms of the consulting agreement with Dr. Hostetler, the
Company paid Dr. Hostetler an initial fee of $3,000 and agreed to sell to Dr.
Hostetler shares of the Company's Series A Preferred Stock and to pay him an
annual fee of $25,000 in consideration of the consulting services Dr.
Hostetler agreed to provide in the antiviral and anticancer fields. The
consulting agreement will terminate in November 1999, unless earlier
terminated by the Company.
In July 1995, Dr. Barry, the Chairman and Chief Executive Officer of the
Company, and Forward Ventures II, L.P., a holder of more than five percent of
the Company's outstanding stock, and of which Mr. Fleming, a director of the
Company, is a general partner, purchased 800,000 and 375,000 shares of Common
Stock, respectively, at $0.01 per share (the then fair market value of the
Common Stock as determined by the Company's Board). These shares represented
all of the shares of Common Stock issued in this financing. In
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November 1995, Dr. Hostetler and Mr. Fleming, directors of the Company, Dr.
Ellis, a director and executive officer of the Company, and Dr. Furman, Dr.
Sandra Lehrman and Mr. Klein, all executive officers of the Company at that
time, purchased 300,000, 62,500, 200,000, 150,000, 150,000 and 100,000 shares
of Common Stock, respectively, at $0.01 per share (the then fair market value
of the Common Stock as determined by the Company's Board). A total of
1,345,000 shares of Common Stock were issued in this financing. In December
1995, Mr. Rallis, an executive officer of the Company, purchased 150,000
shares of Common Stock at $0.01 per share (the then fair market value of the
Common Stock as determined by the Company's Board). The Company exercised
its option to repurchase all 150,000 shares of Common Stock from Dr. Lehrman
upon her departure from the Company in July 1996.
The Company believes that all of the transactions set forth above were
made on terms no less favorable to the Company than could have been obtained
from unaffiliated third parties. All future transactions between the Company
and its officers, directors, principal stockholders and their respective
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.
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. 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 the period from October 1996 (the first period for
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which Section 16(a) reports were required to be filed) through December 31,
1996, all Section 16(a) filing requirements applicable to its officers,
directors and greater than 10% stockholders were satisfied.
STOCKHOLDER PROPOSALS FOR 1997 PROXY STATEMENT
Stockholder proposals that are intended to be presented at the Company's
annual meeting of stockholders to be held in 1998 must be received by the
Company no later than January 20, 1998, in order to be included in the proxy
statement and related proxy materials.
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, SCHEDULES 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.
OTHER BUSINESS
The Board of Directors 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: May 19, 1997 By Order of the Board of Directors
Chris A. Rallis AS SECRETARY
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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 Tuesday, June 24, 1997, 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 Meeting and
any adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1 AND 2.
(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.
JUNE 24, 1997
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:
Standish M. Fleming and Karl Y. Hostetler, M.D. will stand for election to
the Board for terms to expire in 1998.
M. Nixon Ellis, Ph.D. and Anthony B. Evnin, Ph.D. will stand for election to
the Board for terms to expire in 1999.
David W. Barry, M.D., George McFadden and Peter McPartland will stand for
election to the Board for terms to expire in 2000.
2. Ratification of Accountants: Ratification and approval of the selection of
Price Waterhouse LLP as independent accountants for the fiscal year ending
December 31, 1997.
/ / FOR / / AGAINST / / ABSTAIN
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.
CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING / /
- ----------------------------- -------------------------------
SIGNATURE OF STOCKHOLDER PRINTED NAME OF STOCKHOLDER
- ---------------------------- Dated: , 1997
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.