- - -----------------------------------------------------------------------------
FORM 10-K/A
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C., 20549
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1996
Commission file number 0-20713
ENTREMED, INC.
--------------
(Exact name of registrant as specified in its charter)
DELAWARE 58-1959440
- - ------------------------ ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
Suite 200, 9610 Medical Center Drive, Rockville, Md 20850
- - --------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (301) 217-9858
- - ---------------------------------------------------
Securities registered pursuant to Section 12(g) of the Act:
TITLE NAME OF EXCHANGE
- - ----- ----------------
Common Stock, Par Value $.01 Per Share Nasdaq National Market
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchage Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
reqired to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filer pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this form 10-K or any amendment to this
Form 10-K [X]
As of March 31, 1997, 12,138,869 shares of common stock were outstanding. The
aggregate market value of the shares of common stock held by non-affiliates was
approximately $127,514,445.
- - -----------------------------------------------------------------------------
-1-
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth the names and ages of the executive officers
and directors of the Company:
NAME AGE POSITION
John W. Holaday, Ph.D. (1) 51 Chairman of the Board, President, Chief
Executive Officer and Director
Edward R. Gubish, Ph.D. 48 Senior Vice President, Research and
Development
Leo Einck, Ph.D. 46 Vice President, Research Operations
R. Nelson Campbell 32 Chief Financial Officer
John C. Thomas, Jr. 43 Secretary/Treasurer
Carl Alving, M.D. 57 Director
Donald S. Brooks (2)(3) 61 Director
Bart Chernow, M.D. 49 Director
Samuel R. Dunlap, Jr. (1)(2) 47 Executive Advisor and Director
Mark C.M. Randall (3) 34 Director
Leon E. Rosenberg, M.D. 64 Director
Wendell M. Starke (1)(2) 54 Director
- - -------------
(1) Member of Executive Committee
(2) Member of Compensation Committee
(3) Member of Audit Committee
-2-
JOHN W. HOLADAY, PH.D. (51) is a co-founder of the Company and has
served as its President and Chief Executive Officer and a director since August
1992 and its Chairman of the Board since November 1995. From May 1989 to August
1992, he was a co-founder of Medicis Pharmaceutical Corp. where he served as
Scientific Director, Senior Vice President for Research and Development and
director. From 1968 to 1989, he served at the Walter Reed Army Institute of
Research, where he founded the Neuropharmacology Branch in 1980. Dr. Holaday
serves as an officer and fellow in several biomedical societies and has authored
and edited numerous scientific articles in journals and books. His current
academic positions include Associate Professor of Anesthesiology and Critical
Care Medicine and Senior Lecturer in Medicine at The Johns Hopkins University of
Medicine, Baltimore, Maryland; Adjunct Professor of Pharmacology and Psychiatry
at the Uniformed Services University School of Medicine, Bethesda, Maryland; and
Clinical Assistant Professor of Surgery at the University of Connecticut Health
Center, Farmington, Connecticut.
EDWARD R. GUBISH, PH.D. (48) has served as Senior Vice President of
Research and Development since January 1997, prior to that he served as Vice
President - Regulatory and Clinical Development of the Company since November
1995 and has been employed by the Company since October 1993. From 1990 to
September 1993, Dr. Gubish served as senior director of Regulatory Affairs for
Baker Norton Pharmaceuticals (IVAX) and Fujisawa Pharmaceuticals. From 1986 to
1990, Dr. Gubish served as Chief of regulatory affairs for the AIDS Division at
the National Institutes of Health and as a scientific and administrative contact
for sponsors of new biological products and IND submissions for the Center for
Drugs and Biologics at the FDA.
LEO EINCK, PH.D. (46) has served as Vice President of Research
Operations since January 1997, Vice President of Extramural Programs of the
Company from November 1995 to January 1997 and from September 193 to November
1995 as Director of Sponsored Research. From 1985 to September 1993, Dr. Einck
was the Director of Operations for HEM Pharmaceuticals, a company engaged in the
development of biopharmaceutical agents. From 1980 to 1985, Dr. Einck was a
researcher in molecular biology at the National Institutes of Health.
R. NELSON CAMPBELL (32) has served as Chief Financial Officer since
January 1997. From November 1991 to June 1996, Mr. Campbell was employed by
OsteoArthritis Sciences, Inc., a private drug discovery company where he was a
co-founder and served as Vice President of Business Development and Treasurer.
From 1986 to 1991, he was with the internation investment banking firms of
Merrill Lynch Capital Markets, Nomura Securities International and lastly Daiwa
America Securities, Inc., where he was engaged in corporate finance and merger
transactions.
-3-
JOHN C. THOMAS, JR. (43) has served part-time as Chief Financial
Officer of the Company since its inception in September 1991. Mr. Thomas has
also served as the Chief Financial Officer of several other companies, including
Credit Depot Corporation, a public company engaged in loan financing (from
August 1990 to March 1993 and from January 1995 until April 1996), Tapistron
International, Inc., a public company engaged in the development of technology
for the textile industry (from August 1991 until July 1995), and Sealite
Sciences, a private biotechnology company (from June 1991 to March 1993). Mr.
Thomas is a certified public accountant.
CARL ALVING, M.D. (57) is a co-founder of the Company and has been a
director of the Company since August 1992. He has been Chief of the Department
of Membrane Biochemistry at the Walter Reed Army Institute of Research since
1978. Dr. Alving has been the inventor of a number of patented technologies in
the fields of drug delivery and immunology.
DONALD S. BROOKS (61) has been a director of the Company since April
1996. Since July 1993, Mr. Brooks has been a practicing attorney with the law
firm Carella Byrne Bain Gilfillan Cecchi Stewart & Olstein, Roseland, New
Jersey, which represents the Company on certain matters. Prior thereto, Mr.
Brooks was employed by Merck & Co., Inc. for 27 years, most recently, from 1986
to 1993, as Senior Counsel. From 1980 to 1985, Mr. Brooks served as a U.S.
employer delegate to the Chemical Industries Committee International Labor
Organization in Geneva, Switzerland.
BART CHERNOW, M.D. (49) is a co-founder of the Company and has been a
director since the Company's inception. Dr. Chernow has served as
Physician-in-Chief at Sinai Hospital of Baltimore since 1990 and as a Professor
of Medicine, Anesthesiology and Critical Care at The Johns Hopkins University
School of Medicine part-time since 1990. Dr. Chernow is the Editor-in-Chief of
the Journal of Critical Care Medicine. From 1987 to 1990. Dr. Chernow was the
Director of the Henry K. Beecher Memorial Research Laboratories and Attending
Physician of Critical Care (anesthesia) at the Massachusetts General Hospital,
Harvard Medical School, where he also served as an Associate Professor.
SAMUEL R. DUNLAP, JR. (47) has served as an Executive Advisor and a
director to the Company since August 1992. Mr. Dunlap also has (i) served as
Chairman of Dunlap & Partners, Ltd., a financial consulting firm in Atlanta,
Georgia, since October 1988, (ii) served as a director of Credit Depot
Corporation, of which he was a founder, since December 1986, (iii) served as
Vice President of MEDigital, Inc. since August 1996, (iv) from 1992 through
1996, served as a director to First Pacific Networks, Inc., a publicly-held
telecommunications company, (v) served as a director and a consultant of Golf
Training Systems, Inc., a public company, from August 1994 until December 1995
and (vi) served as a director from July 1991 until February 1994 and an
Executive Advisor from July 1991 until November 1994 of Tapistron International,
Inc. From April 1986 until December 1988, Mr. Dunlap served as Executive Vice
President and director of CytRx Corporation, a publicly-held pharmaceutical
company ("CytRx") of which he was a founder. Mr. Dunlap also served as Executive
Vice President of Elan Pharmaceutical Research Corp., a publicly-held company,
from August 1982 to December 1983 and President and a director of such entity
from January 1984 to January 1985.
-4-
MARK C.M. RANDALL (34) has been a director of the Company since April
1996. Since 1985, Mr. Randall has been associated with Sarasin International
Securities Limited, London, England, a wholly-owned subsidiary of Bank Sarasin &
Cie, a private bank based in Switzerland, where he has been Director since 1994.
LEON E. ROSENBERG, M.D. (64) has been a director of the Company since
January 1996. Dr. Rosenberg was named Senior Vice President, Scientific Affairs
of Bristol-Myers Squibb Company in January 1997. For the previous five and
one-half years, he served that company as the President of Bristol-Myers Squibb
Pharmaceutical Research Institute. From 1984 to September 1991, Dr. Rosenberg
served as the dean of the Yale University School of Medicine. Dr. Rosenberg is a
member of the National Academy of Sciences and serves on the Board of Directors
of Research!America, SEQ Ltd., Somatic Therapy Corporation, Cadus Pharmaceutical
Corporation and the Whitehead Institute for Biomedical Research. He is on the
Board of Participants of the Intercompany Collaboration for AIDS Drug
Development and Chairman of its Scientific Panel.
WENDELL M. STARKE (54) has been a director of the Company since April
1994. Mr. Starke is a Chartered Financial Analyst and a Chartered Investment
Counselor. Mr. Starke was President of INVESCO Capital Management, Inc. from
1979 to 1991 and has been its Chairman since 1991. In 1992, he became Chairman
of INVESCO, Inc., the parent company of INVESCO Capital Management and other
INVESCO money management subsidiaries with 1995 year-end assets of over $75
billion under management in the United States. Mr. Starke also serves as a
member of the Board, Global Chief Investment Officer and Chairman of the Global
Asset Allocation Committee of INVESCO, PLC, the London-based parent company of
the worldwide INVESCO organization.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the 1934 Act requires the Company's executive
officers, directors and persons who beneficially own more than 10% of a
registered class of the Company's equity securities to file with the S.E.C.
initial reports of ownership and reports of changes in ownership of common stock
and other equity securities of the Company. Such executive officers, directors,
and greater than 10% beneficial owners are required by S.E.C. regulation to
furnish the Company with copies of all Section 16(a) forms filed by such
reporting persons.
Based solely on the Company's review of such forms furnished to the
Company and written representations from certain reporting persons, the Company
believes that all filing requirements applicable to the Company's executive
officers, directors and greater than 10% beneficial owners were complied with.
-5-
ITEM 11. EXECUTIVE COMPENSATION
The following summary compensation table sets forth the aggregate
compensation paid or accrued by the Company to the Chief Executive Officer and
to executive officers whose annual compensation exceeded $100,000 for fiscal
1996 (collectively, the "named executive officers") for services during the
fiscal years ended December 31, 1996 and 1995:
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
LONG TERM
COMPENSATION ALL OTHER
SALARY BONUS COMPEN- AWARD COMPEN-
NAME AND PRINCIPAL POSITION YEAR ($) SATION ($) OPTION (NO.) SATION ($)
- - ---------------------------- ------ ----- ---------- ------------ ----------
John W. Holaday, Ph.D. 1996 250,000 80,000 105,000 18,221(1)
Chairman, President and Chief 1995 200,000 100,000 270,001 18,369(1)
Executive Officer
Edward R. Gubish, Ph.D. 1996 140,000 42,000 75,000 5,670(2)
Vice President, Regulatory 1995 126,600 10,750 70,000 5,818(2)
and Clinical Development
Leo Einck, Ph.D. 1996 100,100 21,500 20,000 --
Vice President, 1995 91,000 10,750 10,000 5,818(2)
Extramural Programs
Carol A. Nacy, Ph.D. 1996 166,083 -- -- 190,000(3)
Former Executive Vice President 1995 175,000 60,750 166,667 --
John C. Thomas, Jr. 1996 96,880 21,500 38,000 --
1995 48,220 3,170 6,667 5,818(2)
- - ---------------------------
(1) $12,551 of such amount represents the premiums paid by the Company with
respect to a split-dollar life insurance policy on the life of Dr.
Holaday. Premiums paid by the Company on such policy are treated as
non-interest bearing advances to the insured for the policy. The
initial proceeds of any death benefit are required to be used to repay
the indebtedness, and the balance of the insurance proceeds are payable
as designated by the insured. See "Employment Contracts and Termination
of Employment and Change-in-Control Arrangements" below. The remaining
amount represents group health insurance premiums paid on behalf of
such officer.
(2) Includes group health insurance premiums paid on behalf of such
officer.
(3) Represents the amount accrued during fiscal 1996 pursuant to a
consulting arrangement entered into with Dr. Nacy upon her resignation
from the Company, which resignation became effective October 30, 1996.
The first installment of such amount ($47,500) was paid in fiscal 1996
and the remainder is payable in three equal quarterly installments on
February 1, May 1, and August 1, 1997. See "Employment Contracts and
Termination of Employment and Change-in-Control Arrangements" below.
-6-
The following table sets forth certain information with respect to
individual grants of stock options and warrants made during the fiscal year
ended December 31, 1996 to each of the named executive officers.
OPTION AND WARRANT GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS
-----------------
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% of Total ANNUAL RATES OF
Options/SARs STOCK PRICE APPRECIA-
Options/ Granted to Exercise TION FOR OPTION TERM
SARs Employees or Base Expiration ---------------------
NAME Granted (#) In Fiscal Year Price ($/SH) Date 5% ($) 10% ($)
- - ---- ----------- -------------- ------------ ---- ------ -------
John W. Holaday, 100,000 16.1% 14.00 12/23/06 880,452 2,231,239
Ph.D. ...................... 5,000 .80% 16.25 12/31/06 51,098 129,492
Carol A. Nacy, Ph.D. .......... -- -- -- -- -- --
Edward R. Gubish, Ph.D. ....... 75,000 12.1% 14.00 12/23/06 660,339 1,673,430
Leo Einck, Ph.D................ 20,000 3.2% 14.00 12/23/06 176,090 446,248
John C. Thomas, Jr............. 38,000 6.1% 14.00 12/23/06 334,572 847,871
- - -------------------
The following table sets forth information concerning all option
holdings for the fiscal year ended December 31, 1996 for each of the named
executive officers:
AGGREGATED OPTION AND WARRANT/EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/VALUE
Value of Unexercised
Shares Number of Unexercised In-the-Money Options at
Acquired Value Options at FY-End (#) FY-End ($)
Name On Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- - ---- --------------- ------------ ------------------------- -------------------------
John W. Holaday, Ph.D. ....... -- -- 273,335/208,334 2,929,180/1,485,423
Carol A. Nacy, Ph.D........... 15,686 $154,899 170,000/58,203 2,417,500/574,755
Edward R. Gubish, Ph.D. ...... -- -- 82,083/102,917 682,601/587,399
Leo Einck, Ph.D. ............. -- -- 41,667/61,667 378,337/494,587
John C. Thomas, Jr............ -- -- 127,835/28,500 1,579,938/64,125
- - -----------------
-7-
COMPENSATION OF DIRECTORS
Directors of the Company receive a fee of $2,000 per in-person meeting
attended and are reimbursed for expenses actually incurred in connection with
attending such meetings. Directors are also awarded initial grants of
non-qualified stock options to purchase 15,000 shares of Common Stock upon
joining the Board of Directors and annual grants of non-qualified stock options
to purchase 5,000 shares of Common Stock. In addition, each member of the Audit
Committee and the Compensation Committee will receive annual grants of
non-qualified stock options to purchase 1,000 shares of Common Stock and each
member of the Executive Committee will receive annual grants of non-qualified
stock options to purchase 5,000 shares of Common Stock. All such automatic
grants will be awarded on July 1, 1997. In addition, each director (except for
Dr. Rosenberg, who has declined all option grants) received certain option
grants in fiscal 1996, as described in "Participation in the Plans" set forth
under Proposal 2.
The Company entered into a three year consulting agreement with Samuel
R. Dunlap commencing January 1, 1996 that provides for annual payments of
$90,000.
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS
In April 1996, effective as of January 1, 1996, the Company entered
into a three-year employment agreement with John W. Holaday, Ph.D., Chairman and
Chief Executive Officer of the Company. The agreement provides for an annual
base salary of $250,000 per year. The Company may terminate the agreement
without cause and, upon such termination, Dr. Holaday will be entitled to
receive his base salary through the end of the initial term of the agreement
(subject to an offset for salary received from subsequent employment). The
agreement contains confidentiality and non-competition provisions.
The Company is the beneficiary of a $1,000,000 key person life
insurance policy on the life of Dr. Holaday. In addition, the Company maintains
a $2,000,000 split-dollar life insurance policy on the life of Dr. Holaday at an
annual cost of approximately $12,550. Premiums paid by the Company on such
policy are treated as non-interest bearing advances to the insured for the
policy. The initial proceeds of any death benefit are required to be used to
repay the indebtedness, and the balance of the insurance proceeds are payable as
designated by the insured.
Each of the Company's employees has entered into a Proprietary
Information and Invention Assignment Agreement providing, among other things,
that such employee will not disclose any confidential information or trade
secrets in any unauthorized manner and that all inventions of such officer
relating to the Company's current or anticipated business during the term of
employment become the Company's property.
Effective October 30, 1996, Carol A. Nacy, Ph.D. resigned her position
as Executive Vice President of the Company. In connection therewith, the Company
entered into a one-year consulting arrangement providing for annual compensation
of $190,000, which amount is payable in four equal quarterly installments
beginning November 1, 1996.
-8-
In the event of certain transactions, including those which may result
a change in control, as defined under the Company's 1996 Plan, unvested
installments of options to purchase Shares of the Company may become immediately
exercisable.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During fiscal 1996, the members of the Compensation Committee were:
Samuel R. Dunlap, Jr., Wendell M. Starke and Donald S. Brooks.
The Company has in the past maintained a consulting arrangement with
Mr. Dunlap and in January 1996 entered into a new three year consulting
agreement with Mr. Dunlap that provides for annual payments of $90,000.
Donald S. Brooks is of counsel to the law firm Carella Byrne Bain
Gilfillan Cecchi Stewart & Olstein, which provides certain legal services to the
Company.
BOARD COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION (1)
The goal of the Company's executive compensation policy is to ensure
that an appropriate relationship exists between executive compensation and the
creation of stockholder value, while at the same time attracting, motivating and
retaining senior management. The Compensation Committee's informal executive
compensation philosophy (which applies generally to all Company management,
including the President and Chief Executive Officer, John W. Holaday, Ph.D.)
considers a number of factors, which may include:
. providing levels of compensation competitive with companies at a comparable
stage of development and in the Company's geographic area;
. integrating management's compensation with the achievement of performance
goals;
. rewarding above average corporate performance; and
. recognizing and providing incentive for individual initiative and
achievement.
During fiscal 1996, the compensation of senior management was weighted
in part toward short-term incentives, including compensation contingent upon the
Company achieving certain business and financial objectives. The Compensation
Committee also endorses the position that equity ownership by senior management
is beneficial in aligning senior management's and stockholders' interest in the
enhancement of stockholder value by providing senior management with longer-term
incentives. Accordingly, compensation structures for senior management generally
include a combination of salary, bonuses and stock options. Specific executive
officer base salary and bonus awards are determined with respect to performance
during the previous fiscal year, based on a range of measures and internal
targets set before the start of each fiscal year and in part by comparison to
the compensation of executive officers of comparable biotechnology and
pharmaceutical companies. The Compensation Committee considers the Company's
performance under these measures and uses its subjective judgment and discretion
in approving individual compensation.
-9-
- - -----------
(1) The material in this report is not deemed filed with the S.E.C. and is
not incorporated by reference in any filing of the Company under the
1933 Act or the 1934 Act, whether made before or after the date of this
amendment and irrespective of any general incorporation language in
such filing.
STOCK PRICE PERFORMANCE PRESENTATION
The following chart compares the cumulative total stockholder return on
the Company's Shares with the cumulative total stockholder return of (i) the
Nasdaq Market-U.S. Index and (ii) the Hambrecht & Quist Biotechnology Index:
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG ENTREMED, INC.
NASDAQ MARKET-U.S. INDEX AND
HAMBRECHT & QUIST BIOTECHNOLOGY INDEX (1)
6/12/9 6/96 7/96 8/96 9/96 10/96 11/96 12/96
------ ---- ---- ---- ---- ----- ----- -----
ENTREMED, INC. 100 100 68 102 108 102 104 108
NASDAQ 100 96 87 92 99 98 104 104
MARKET-U.S.
INDEX
HAMBRECHT & 100 93 89 93 99 98 96 96
QUIST
BIOTECHNOLOGY
- - -------
(1) Assumes $100 invested on June 12, 1996 and assumes dividends
reinvested. Measurement points begin with the date of the
Company's initial public offering ("IPO") and include the last
day of each month beginning with the month in which the IPO
occurred, through and including December 31, 1996. The
material in this chart is not deemed filed with the S.E.C. and
is not incorporated by reference in any filing of the Company
under the Securities Act of 1993, as amended, (the "1933 Act")
or the 1934 Act, whether made before or after the date of this
amendment and irrespective of any general incorporation
language in such filing.
-10-
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of March 31, 1997, certain
information concerning stock ownership of all persons known by the Company to
own beneficially 5% or more of the Shares, each director, each executive officer
named under "Executive Compensation" and all directors and executive officers of
the Company as a group.
Amount and
Nature of Percentage of
Name And Address Beneficial Outstanding
Of Beneficial Owner (1) Ownership Class
- - ----------------------- --------- -----
John W. Holaday, Ph.D.................... 983,567(2) 7.20%
Carl R. Alving, M.D...................... 775,235(3) 6.38
Donald S. Brooks......................... 45,001(4) *
Bart Chernow, M.D........................ 703,917(3) 5.79
Samuel R. Dunlap, Jr..................... 432,567(5) 3.46
Leo Einck, Ph.D.......................... 42,667(6) *
Edward R. Gubish, Ph.D................... 83,083(7) *
Mark C.M. Randall........................ 45,001(8) *
Leon E. Rosenberg, M.D................... - (9) -
Wendell M. Starke........................ 282,336(10) 2.31
Bristol-Myers Squibb Company 986,110(11) 7.84
P.O. Box 4000
Princeton, New Jersey 08543..............
D.H. Blair Investment Banking Corp. 1,000,000(12) 8.24
44 Wall Street
New York, New York 10005.................
Steve Gorlin 695,575(13) 5.73
5115 New Peachtree Road
Suite 200
Chamblee, Georgia 30341.................
All executive officers and directors of 3,541,791(14) 26.72
the Company as a group (11
persons)..............................
- - -----------
*Less than 1%
-11-
(1) Unless otherwise indicated, the address of each beneficial owner identified
is: c/o EntreMed, Inc., 9610 Medical Center Drive, Suite 200, Rockville,
Maryland 20850.
(2) Includes 273,335 shares issuable upon exercise of options and warrants
which are currently exercisable and 126,666 shares held by a limited
partnership of which Dr. Holaday is the general partner. Does not
include 208,334 shares issuable upon exercise of options not
exercisable within 60 days.
(3) Includes 15,002 shares issuable upon exercise of options which are
currently exercisable.
(4) Includes 45,001 shares issuable upon exercise of options which are
currently exercisable.
(5) Includes 364,999 shares issuable upon exercise of options and warrants
which are currently exercisable. Does not include 100,000 shares
issuable upon exercise of options not exercisable within 60 days.
(6) Includes 41,667 shares issuable upon exercise of options which are
currently exercisable. Does not include 61,667 shares issuable upon
exercise of options not exercisable within 60 days.
(7) Includes 82,083 shares issuable upon exercise of options which are
currently exercisable. Does not include 102,917 shares issuable upon
exercise of options not exercisable within 60 days.
(8) Includes 45,001 shares issuable upon exercise of options which are
currently exercisable. Does not include 20,000 shares issuable upon
exercise of options not exercisable within 60 days.
(9) Does not include shares owned by Bristol-Myers Squibb Company, of which
Dr. Rosenberg is the Senior Vice President, Scientific Affairs.
Dr. Rosenberg disclaims beneficial ownership of any shares held by
Bristol-Myers Squibb.
(10) Includes 88,984 shares issuable upon exercise of options and warrants
which are currently exercisable. Does not include 40,761 shares owned
by various family members of Mr. Starke, as to which Mr. Starke
disclaims beneficial ownership.
(11) Includes 444,444 shares issuable upon exercise of warrants which are
currently exercisable.
(12) Excludes (i) 343,466 shares owned by the adult children and grandchildren
of J. Morton Davis, the sole stockholder of D.H. Blair Investment Banking
Corp. ("Blair") and (ii) 18,000 shares owned by the Vice Chairman of Blair
and his children, as to all of which shares Blair disclaims beneficial
ownership. Also excludes an aggregate of 1,061,563 shares owned by Steve
Gorlin and June Gorlin, Mr. Gorlin's former wife, a portion of which are
subject to the Gorlin Pledge (as defined below).
-12-
(13) A portion of the shares owned by Mr. Gorlin are pledged to Blair and J.
Morton Davis to secure obligations owed by Mr. Gorlin to Blair (the
"Gorlin Pledge"). Such shares may be voted by Mr. Gorlin until such
time as a default occurs under the Gorlin Pledge or the underlying
obligation. Does not include 381,192 shares owned by June Gorlin, as to
which Mr. Gorlin disclaims beneficial ownership.
(14) Includes 1,117,659 shares issuable upon exercise of options and
warrants which are currently exercisable. Does not include 569,334
shares issuable upon exercise of options not exercisable within 60
days.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company entered into a three year consulting agreement with Samuel
R. Dunlap, Jr. commencing January 1, 1996 that provides for annual payments of
$90,000. In May 1996 effective August 1995, the Company entered into a
termination agreement with Steve Gorlin, a co-founder and former director of the
Company, superceding a previous consulting agreement with Mr. Gorlin, that
provides for annual payments of $90,000 per year for a three year period.
Donald S. Brooks is of counsel to the law firm Carella Byrne Bain
Gilfillan Cecchi Stewart & Olstein, which provides certain legal services to the
Company.
Option grants for fiscal 1996 to named executive officers are set forth
in the table above entitled "Option and Warrant Grants in Last Fiscal Year." In
addition, during fiscal 1996, the Company granted under the Plans options to
purchase an aggregate of (i) 313,000 Shares to the Company's current executive
officers, including 100,000 and 5,000 Shares exercisable at $14.00 and $16.25,
respectively, to John W. Holaday, Ph.D., 75,000 Shares exercisable at $14.00 to
Edward R. Gubish, Ph.D., 75,000 Shares exercisable at $14.00 to R. Nelson
Campbell, 20,000 Shares exercisable at $14.00 to Leo Einck, Ph.D., and 38,000
Shares exercisable at $14.00 to John C. Thomas, Jr.; and (ii) 116,668 Shares to
the Company's directors who are not executive officers, including 5,000 Shares
exercisable at $16.25 to each of Carl Alving, M.D., Donald S. Brooks, Bart
Chernow, M.D., Samuel R. Dunlap, Jr. Mark C.M. Randall and Wendell M. Starke,
and 33,334 Shares exercisable at $15.00 per Share to each of Donald S. Brooks
and Mark C.M. Randall and 20,000 Shares exercisable at $14.00 to Mark C.M.
Randall. Such options were granted at per Share prices ranging from $9.00 to
$16.25.
-13-
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ENTREMED, INC.
By: /S/ JOHN C. THOMAS, JR.
-------------------------------------
John C. Thomas, Jr.
Secretary/Treasurer
Dated: April 29, 1997
-14-