1
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 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ANTIGENICS 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 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
2
ANTIGENICS INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Our 2001 Annual Meeting of Stockholders will be held at the Academy of
Sciences, 2 East 63rd Street, New York, New York at 5:00 P.M., May 24, 2001 for
the following purposes:
1. To elect Mr. Donald Panoz, Dr. Noubar Afeyan and Dr. Pramod Srivastava
as directors to hold office for a term of three years and until their
respective successors are elected and qualified.
2. To transact any other business that may properly come before the
meeting or any adjournment of the meeting.
Only stockholders of record at the close of business on April 3, 2001 will
be entitled to vote at the meeting or any adjournment. A list of these
stockholders will be open for examination by any stockholder for any purpose
germane to the meeting for ten days before the meeting during ordinary business
hours at the offices of Palmer & Dodge LLP, One Beacon Street, Boston,
Massachusetts 02108.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. THEREFORE,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE YOUR PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. IF YOU ATTEND THE MEETING AND WISH TO VOTE IN PERSON, YOUR PROXY
WILL NOT BE USED.
By order of the Board of Directors,
Paul M. Kinsella, Secretary
Dated: April 30, 2001
3
ANTIGENICS INC.
630 Fifth Avenue, Suite 2100
New York, New York 10111
Telephone: (212) 332-4774
---------------
Proxy Statement
---------------
Our board of directors is soliciting your proxy with the enclosed proxy
card for use at our 2001 Annual Meeting of Stockholders to be held at 5:00 p.m.
on Thursday, May 24, 2001 and at any adjournments of the meeting. This proxy
statement and accompanying proxy are first being sent or given to stockholders
on or about April 30, 2001.
The principal business expected to be transacted at the meeting, as more
fully described below, will be the election of three directors.
The authority granted by an executed proxy may be revoked at any time
before its exercise by filing with our Secretary a written revocation or a duly
executed proxy bearing a later date or by voting in person at the meeting.
We will bear the cost of the solicitation of proxies, including the charges
and expenses of brokerage firms and others for forwarding solicitation material
to beneficial owners of stock. In addition to the use of mails, proxies may be
solicited by our officers and employees in person or by telephone.
Only stockholders of record at the close of business on April 3, 2001 will
be entitled to vote at the meeting. On that date, we had outstanding 27,405,113
shares of common stock, $0.01 par value, each of which is entitled to one vote.
The presence at the meeting, in person or by proxy, of a majority in interest of
the voting capital stock issued and outstanding and entitled to vote at the
meeting shall constitute a quorum for the transaction of business. Abstentions
and broker non-votes will be considered present for purposes of determining the
presence of a quorum. Broker non-votes are proxies submitted by brokers that do
not indicate a vote for one or more proposals because the brokers do not have
discretionary voting authority and have not received instructions from the
beneficial owners on how to vote on these proposals.
4
ELECTION OF DIRECTORS
The number of directors is fixed at eight for the coming year and these
directors are divided into three classes. At the meeting, directors will be
elected to hold office for three years and until their successors are elected
and qualified. Mr. Donald Panoz, Dr. Noubar Afeyan and Dr. Pramod Srivastava,
all of whom are presently serving as directors, have been nominated for
re-election by our board of directors. Unless the enclosed proxy withholds
authority to vote for these directors or is a broker non-vote, the shares
represented by such proxy will be voted for the election of Mr. Panoz, Dr.
Afeyan and Dr. Srivastava as the board's nominees. If any of these nominees are
unable to serve, which is not expected, the shares represented by the enclosed
proxy will be voted for such other candidate as may be nominated by the board of
directors.
VOTE REQUIRED
Directors will be elected by a plurality of the votes cast by the
stockholders entitled to vote on this proposal at the meeting. Abstentions,
broker non-votes and votes withheld will not be treated as votes cast for this
purpose and will not affect the outcome of the election.
The following table contains certain information about the nominees for
director and each other person whose term of office as a director will continue
after the meeting.
PRESENT TERM
NAME AND AGE BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS EXPIRES
- ----------------------------- ------------------------------------------------------------------ ------------
Garo H. Armen, Ph.D. Garo Armen, Ph.D. co-founded Antigenics in 1994 and has been the 2002
Age: 48 Chairman of the board and Chief Executive Officer since inception.
Dr. Armen was previously a Senior Vice President of Research for
Dean Witter Reynolds, focusing on the chemical and pharmaceutical
industries. Dr. Armen has also served as an Associate Professor at
the Merchant Marine Academy and as a research associate at the
Brookhaven National Laboratory. He currently serves as a director
of Elan Corporation, plc. and is managing general partner of Armen
Partner L.P. Dr. Armen is also a director of NewcoGen Group Inc.
and Color Kinetics Inc., both of which are privately held
companies. Dr. Armen received his Ph.D. degree in physical
chemistry from the City University of New York in 1979.
Gamil G. de Chadarevian Gamil de Chadarevian has served as Vice Chairman of the Board 2003
Age: 49 since 1995 and as Executive Vice President International since
1998. Until April of 1998, he was Managing Director of Special
Projects at Alza International, responsible for creating new
business opportunities in Europe. From 1992 to 1993, Mr. de
Chadarevian was the Vice President of Corporate Development for
Corange London Limited. Prior to 1992, Mr. de Chadarevian held
positions at Pasfin Servizi Finanziara SpA, GEA Consulenza and
Credit Suisse. He is also co-founder and serves as an advisor to
several private health care companies in the United States and
Europe. Mr. de Chadarevian is the co-founder and currently the
Vice Chairman of Ikonisys, Inc. and CambriaTech Holding S.A.,
which are privately held companies. He also serves on the Advisory
Board of Syntek Capital AG. Mr. de Chadarevian received a Lic.
Oec. Publ. Degree from the University of Zurich in Switzerland.
2
5
PRESENT TERM
NAME AND AGE BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS EXPIRES
- ----------------------------- ------------------------------------------------------------------ ------------
Donald Panoz* Donald Panoz has been a director since 1995 and is the Honorary 2001
Age: 65 Chairman of the board of directors. In 1969, Mr. Panoz founded
Elan Corporation, plc., a pharmaceutical research and development
company. Mr. Panoz was Chairman and Chief Executive Officer of
Elan Corporation from 1969 until his retirement in 1996. Mr. Panoz
is currently a Lecturer of Pharmacy at the University of Georgia
and he is Chairman of the board of directors of Sicor Inc. In
January 1995, Mr. Panoz was named Honorary Irish Consul General to
Bermuda. Mr. Panoz attended Pittsburgh University and Duquesne
University in Pennsylvania.
Martin Taylor Martin Taylor has been a director since June 1999. From 1993 until 2003
Age: 48 1998, Mr. Taylor held the position of Chief Executive Officer of
Barclays Bank PLC. Mr. Taylor was a member of the Council for
Science and Technology from 1995 to 2000 and, since November 1999,
has been chairman of the W.H. Smith Group PLC. In October 1999, he
became an advisor to Goldman Sachs International. He is also a
member of the board of directors of Syngenta A.G. and RTL. Mr.
Taylor was educated at Balliol College, Oxford University.
Noubar Afeyan, Ph.D.* Noubar Afeyan, Ph.D. has been a director since 1998. Dr. Afeyan is 2001
Age: 38 Chairman and CEO of NewcoGen Group, Managing Partner of AGTC
Funds, and is a partner at OneLiberty Ventures. Dr. Afeyan was
Senior Vice President and Chief Business Officer of Applera Corp.
(formerly PE Corp.) until August 1999. Prior to its acquisition by
PE Corp., Dr. Afeyan was the Chairman and Chief Executive Officer
of PerSeptive Biosystems, a company that he founded in 1987 to
develop, manufacture and market instruments and chemical reagents
used to purify, analyze and synthesize biomolecules. Dr. Afeyan
served as Chairman of the Board of ChemGenics Pharmaceuticals,
Inc. during 1996 and 1997. He is also a member of the board of
directors of EXACT Sciences Corporation and several private
companies. Dr. Afeyan received his undergraduate degree in
Chemical Engineering from McGill University and his Ph.D. in
Biochemical Engineering from the Massachusetts Institute of
Technology.
3
6
PRESENT TERM
NAME AND AGE BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS EXPIRES
- ----------------------------- ------------------------------------------------------------------ ------------
Sanford M. Litvack Sanford M. Litvack has been a director since March 2001. From 1994 2003
Age: 64 until 1999, Mr. Litvack held the position of senior executive vice
president and chief of corporate operations of The Walt Disney
Company. Mr. Litvack also served on the board of directors of The
Walt Disney Company, most recently as vice chairman of the board.
Prior to joining Disney, Mr. Litvack was a member of the executive
committee and chairman of the litigation department of the law
firm of Dewey Ballantine. Mr. Litvack is currently a member of the
board of directors of Pacificare Health Systems, Inc. and Compaq
Computer Corporation. Mr. Litvack received a bachelor's degree
from the University of Connecticut and a law degree from
Georgetown Law Center.
Tom Dechaene Tom Dechaene has been a director since 1999. Mr. Dechaene is 2002
Age: 41 currently the Chief Financial Officer of SurfCast, Inc. He was
with Deutsche Bank from 1991 through 1999, most recently as a
director in the Principal Investments Group within the Equity
Capital Markets division. Mr. Dechaene is a director of Color
Kinetics Inc., and Ikonisys, Inc., both of which are privately
held companies. Mr. Dechaene holds a law degree from Ghent
University, Belgium, a degree in Applied Economics from the
University of Antwerp and an MBA from INSEAD, France.
Pramod K. Srivastava, Ph.D.* Pramod K. Srivastava, Ph.D. co-founded Antigenics in 1994, has 2001
Age: 46 served as the Chairman of the scientific advisory board since
inception and is our Chief Scientific Officer. Dr. Srivastava is
the Director of the Center for Immunotherapy of Cancer and
Infectious Diseases at the University of Connecticut. He has held
positions at Fordham University and the Mount Sinai School of
Medicine. He performed his postdoctoral training at Yale
University and the Sloan-Kettering Institute for Cancer Research.
Dr. Srivastava serves on the Scientific Advisory Council of the
Cancer Research Institute, New York, and was a member of the
Experimental Immunology Study Section of the National Institutes
of Health of the United States Government from 1994 until 1999.
Dr. Srivastava is a past recipient of the First Independent
Research Support & Transition Award of the National Institutes of
Health (1987), the Irma T. Hirschl Scholar Award (1988), the
Investigator Award of the Cancer Research Institute, New York
(1991), the Mildred Scheel Lectureship (1994), and the Sigma Tau
Foundation Speakership (1996). In 1997, he was inducted into the
Roll of Honor of the International Union against Cancer and was
listed in the Who's Who in Science and Engineering. He is among
the twenty founding members of the Academy of Cancer Immunology.
Dr. Srivastava earned his Ph.D. in Biochemistry from the Centre
for Cellular and Molecular Biology, Hyderabad, India. Dr.
Srivastava is a director of Ikonisys, Inc. and CambriaTech Holding
S.A., both of which are privately held companies.
* Nominee for election as director.
4
7
COMMITTEES OF THE BOARD
In 2000, the compensation committee consisted of Dr. Afeyan (from January
1, 2000 through September 19, 2000), Mr. Brodsky (from January 1, 2000 through
August 11, 2000), Mr. Taylor (from January 1, 2000 through the present) and Mr.
Panoz (from September 14, 2000 through the present). Mr. Litvack was appointed
to the committee upon his election to the board of directors on March 8, 2001.
The compensation committee acts for the board of directors with respect to our
compensation practices and their implementation. It sets and implements the
compensation of our executive officers and administers the 1999 Equity Incentive
Plan and the 1999 Employee Stock Purchase Plan. The compensation committee
discussed compensation committee matters at each of the board of director
meetings held in 2000.
In 2000, the audit committee consisted of Dr. Afeyan (from January 1, 2000
through September 14, 2000), Mr. Dechaene (from January 1, 2000 through the
present), Mr. Taylor (from January 1, 2000 through the present) and Mr. Panoz
(from September 14, 2000 through the present). The audit committee is
responsible for providing the board of directors with an independent review of
our financial health, controls and reporting. Its primary functions are to
recommend independent auditors to the board of directors, review the results of
the annual audit and the auditors' reports, and ensure the adequacy of our
financial controls and procedures. The audit committee held two meetings in
2000. Messrs. Taylor, Dechaene and Panoz are each "independent directors" as
defined by the current rules of the Nasdaq National Stock Market. The audit
committee operates under a written charter adopted by our board of directors, a
copy of which is included as APPENDIX A to this proxy statement. For more
information about the audit committee, see the "Audit Committee Report" on page
12.
We do not have a nominating committee.
ATTENDANCE AT MEETINGS
The board of directors held six meetings during 2000, and each director
attended at least 75% of all meetings of the board and of all committees of the
board on which he served except Donald Panoz, who attended 22% of such meetings.
DIRECTOR COMPENSATION
We reimburse directors for out-of-pocket and travel expenses incurred while
attending board of director and committee meetings. We have generally granted to
each director an option to purchase 17,203 shares when that director has joined
our board.
5
8
STOCK PERFORMANCE GRAPH
The following graph shows the cumulative total stockholder return on our
common stock over the period from February 4, 2000 (the first trading day of
common stock) to December 31, 2000, as compared with that of the Nasdaq Stock
Market Index and the Nasdaq Pharmaceuticals Index, based on an initial
investment of $100 in each on February 4, 2000. Total stockholder return is
measured by dividing share price change plus dividends, if any, for each period
by the share price at the beginning of the respective period, and assumes
reinvestment of dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN OF ANTIGENICS INC.,
NASDAQ STOCK MARKET (U.S. COMPANIES) INDEX AND
AND NASDAQ PHARMACEUTICALS INDEX
[LINE GRAPH]
2/4/00 2/29/00 6/30/00 9/30/00 12/31/00
- ---------------------------------------------------------------------------------------------------------------------
Antigenics Inc. 100 33.198 27.088 24.033 18.025
- ---------------------------------------------------------------------------------------------------------------------
Nasdaq Stock Market (U.S. Companies) 100 108.296 94.158 86.650 58.063
Index
- ---------------------------------------------------------------------------------------------------------------------
Nasdaq Pharmaceuticals Index 100 99.895 111.121 121.998 101.580
- ---------------------------------------------------------------------------------------------------------------------
6
9
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee Report set forth below describes the
compensation policies applicable to our executive officers.
Overall Policy. Our executive compensation program is designed to be
closely linked to corporate performance and returns to stockholders. To this
end, we have developed an overall compensation strategy and specific
compensation plan that tie a portion of executive compensation to Antigenics'
success in meeting specified performance goals. In addition, through the use of
stock options, we ensure that a part of the executives' compensation is closely
tied to appreciation in Antigenics' stock price. The overall objectives of this
strategy are to attract and retain the best possible executive talent, to
motivate these executives to achieve the goals inherent in the our business
strategy, to link executive and stockholder interests through equity based plans
and, finally, to provide a compensation package that recognizes individual
contributions as well as overall business results.
We determine the compensation of all corporate officers, including the
three most highly compensated corporate executives named in the Summary
Compensation Table. We take into account the views of our chief executive
officer and review a number of compensation surveys to ensure the
competitiveness of the compensation offered by Antigenics for the purposes of
recruiting and retaining key management.
The key elements of Antigenics' executive compensation consist of base
salary, performance based bonuses and stock options. Our policies with respect
to each of these elements are discussed below. In addition, while the elements
of compensation described below are considered separately, we take into account
the full compensation package afforded to the individual, including insurance
and other employee benefits.
Antigenics' executive compensation policies were not applied to Dr. Armen,
our chief executive officer, during 2000. Dr. Armen has a significant equity
position in Antigenics stock and, in an effort to conserve the company's cash,
Dr. Armen requested that he be paid only a nominal salary during 2000. Given Dr.
Armen's critical role in Antigenics' progress during 2000, the application of
our executive compensation policies to Dr. Armen would have resulted in the
payment to him of significantly higher compensation. In future years, the
company is likely to pay Dr. Armen at a level more consistent with his
contributions to the company.
Base Salaries. Base salaries for new executive officers are initially
determined by evaluating the responsibilities of the position held and the
experience of the individual. In making determinations regarding base salaries,
we consider generally available information regarding salaries prevailing in the
industry, but do not utilize any particular indices or peer groups.
Annual salary adjustments are determined by evaluating Antigenics'
financial performance and the performance of particular aspects of the business
under the control of the particular executive officer. Where appropriate, we
also consider non-financial performance measures. These non-financial
performance measures may include such factors as efficiency gains, new
responsibilities assumed by the executive, quality improvements and improvements
in relations with collaborators and employees. No particular weight is given to
any of these non-financial factors.
The base salary for 2000 for each of the executive officers, except Dr.
Armen, was based on the performance of the individual and the other benefits
provided to such individual as well as a review of compensation paid to persons
holding comparable positions in other biotechnology companies. As described
above, Dr. Armen requested that he be paid only a nominal base salary of
$150,000 in 2000.
7
10
Performance-based Bonuses. We believe that some portion of overall cash
compensation for senior executives should be "at risk," i.e., contingent upon
successful implementation of the company's strategy. In determining the target
bonus of a particular executive, we consider salary survey data and level of
strategic contribution to the company's performance. The determination of
individual bonus payments is determined after consideration of each executive's
individual performance and that of the company as a whole, generally on a
calendar-year basis. As described above, Dr. Armen requested that he not be paid
a cash bonus for 2000.
Stock Options. We grant stock options to executive officers under the 1999
Equity Incentive Plan. During 2000, stock options were generally granted with an
exercise price at the fair market value of the common stock on the date of
grant. Our current policy is to grant most stock options at prices equal to the
fair market value of the common stock on the date of grant. The stock options
vest over various periods of time, normally five years or upon the achievement
of specified milestones. Stock option grants are designed to encourage the
creation of stockholder value over the long term since the full benefit of the
compensation package cannot be realized unless stock price appreciation is
achieved, and, once achieved, is maintained and improved upon. Stock option
grants therefore align the interests of executive officers and employees with
those of stockholders. In determining the amount of these grants, we evaluate
the job level of the executive, responsibilities to be assumed in the upcoming
year, and responsibilities in prior years, and also take into account the size
of the officer's awards in the past. Dr. Armen has a significant equity position
in Antigenics stock and requested that he not be granted any stock options
during 2000.
Conclusion. As described above, a very significant portion of Antigenics'
executive compensation is linked directly to individual and corporate
performance and stock appreciation. We intend to continue the policy of linking
executive compensation to Antigenics' performance and returns to stockholders,
recognizing that the ups and downs of the business cycle from time to time may
result in an imbalance for a particular period.
By the Compensation Committee,
Donald Panoz
Martin Taylor
Sanford Litvack
8
11
EXECUTIVE COMPENSATION
COMPENSATION OF OUR EXECUTIVE OFFICERS
The following table summarizes the compensation paid to or earned during
the fiscal years ended December 31, 1998, 1999 and 2000 by our chief executive
officer and all of our other executive officers whose salary and bonus exceeded
$100,000. We refer to these persons as named executive officers.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
----------------------- SHARES
OTHER UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION
- ------------------------------------------------ ---- --------- -------- ------------ -------------
Garo H. Armen, Ph.D., Chief Executive Officer... 2000 $150,000 -- -- $350,000(1)
1999 $150,000 -- 254,682 $ 50,000(1)
1998 $ -- -- -- --
Elma Hawkins, Ph.D., Vice Chairman.............. 2000 $211,797 $40,000 63,374 --
1999 $200,000 $25,000 -- --
1998 $200,000 $20,000 -- --
Neal Gordon, Ph.D., Senior Vice President....... 2000 $156,011 $20,000 35,633 --
1999 $136,282 $20,000 9,634 --
1998 $ 52,272(2) $28,750 18,924 --
- ---------------
(1) Represents the premium we paid for an executive split-dollar life insurance
policy. Under this policy, under some circumstances, we would be entitled
to a refund of the premiums paid.
(2) Dr. Gordon commenced employment with us in July 1998.
2000 OPTION GRANTS
The following table contains certain information regarding stock option
grants during the twelve months ended December 31, 2000 by us to the named
executive officers:
OPTION GRANTS IN LAST FISCAL YEAR
NUMBER OF PERCENT OF POTENTIAL REALIZABLE VALUE AT ASSUMED
SECURITIES TOTAL OPTIONS EXERCISE ANNUAL RATES OF STOCK PRICE APPRECIATION
UNDERLYING GRANTED TO OR BASE FOR OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ----------------------------------------
NAME GRANTED(#) FISCAL YEAR ($/SHARE) DATE 0%($) 5%($) 10%($)
- ------------------------------ ---------- ------------ --------- ---------- -------- -------- -----------
Garo H. Armen, Ph.D.,
Chief Executive Officer..... -- -- $ -- -- $ -- $ -- $ --
Elma Hawkins, Ph.D.,
Vice Chairman............... 1,000(2) 0.14% $13.50 2/10 $ 4,500 $ 15,821 $ 33,180
62,374(3) 8.55% $11.00 4/10 $ -- $431,494 $1,093,490
Neal Gordon, Ph.D.,
Senior Vice President....... 9,633(4) 1.32% $13.96 1/10 $38,918 $147,964 $ 315,263
1,000(5) 0.14% $13.50 2/10 $ 4,500 $ 15,821 $ 33,180
25,000(6) 3.43% $11.00 4/10 $ -- $172,947 $ 438,280
- -----------------
(1) The dollar amounts under these columns are the result of calculations at
rates set by the SEC and, therefore, are not intended to forecast possible
future appreciation, if any, in the price of the underlying common stock.
For options granted on or prior to February 4, 2000 (the first trading day
of our common stock) the potential realizable values are calculated on the
basis of our initial public offering price of $18.00. For options granted
on or after February 4, 2000, the potential realizable values are
calculated on the basis of the closing price of the stock on the trading
date immediately preceding the date on which the options are granted. For
purposes of calculating potential realizable values, we assume that the
market price appreciates from this price at the indicated rate for the
entire term of each option and that each option is exercised and sold on
the last day of its term at the appreciated price.
9
12
(2) This option became exercisable as to 100% of the underlying shares on
February 4, 2001.
(3) This option became exercisable as to 1.67% of the underlying shares on each
monthly anniversary of April 18, 2000 until March 28, 2001 and thereafter
becomes exercisable as to 1.67% of the underlying shares on April 28, 2001
and as to 20% of the underlying shares on each of April 18, 2002, 2003,
2004 and 2005.
(4) This option became exercisable as to 20% of the underlying shares on
January 31, 2001 and becomes exercisable as to 20% of the underlying shares
on each of January 3, 2002, 2003, 2004 and 2005.
(5) This option became exercisable as to 50% of the underlying shares on each
of February 4, 2001 and becomes exercisable as to 50% of the underlying
shares on February 4, 2002.
(6) This option becomes exercisable as to 20% of the underlying shares on each
of April 18, 2001, 2002, 2004 and 2005.
OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table provides information about the number of shares issued
upon option exercises by the named executive officers during the year ended
December 31, 2000, and the value realized by the named executive officers. The
table also provides information about the number and value of options held by
the named executive officers at December 31, 2000.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT FISCAL
SHARES OPTIONS AT FISCAL YEAR-END(#) YEAR END($)(1)
ACQUIRED ON VALUE ----------------------------- ------------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ----------- ------------- ----------- -------------
Garo H. Armen, Ph.D.,
Chief Executive Officer.......... -- -- 191,717 114,574 $ 496,101 $ --
Elma Hawkins, Ph.D.,
Vice Chairman.................... -- -- 145,942 55,058 $1,323,450 $ 3,379
Neal Gordon, Ph.D.,
Vice President of Operations..... -- -- 9,495 54,694 $ 43,231 $88,528
- -------------------
(1) Based on the difference between the option exercise price and the closing
price of the underlying shares of common stock on the last trading day of
the year 2000 as reported on the Nasdaq National Market ($11.0625).
EMPLOYMENT AND CONSULTING AGREEMENTS
Under an employment agreement dated June 1, 1998, we agreed to employ Elma
Hawkins, Ph.D. for one year at an annual base salary of $200,000, which is
subject to performance and merit based increases. The agreement is automatically
renewed for successive one-year periods unless either party terminates the
agreement. If we terminate Dr. Hawkins without cause, as that term is defined in
the agreement, she is entitled to her base salary through the end of the
one-year term during which the termination occurs. If we terminate Dr. Hawkins
either because we eliminate her position or because there is a change in control
of Antigenics, we are obligated to pay her cash or stock equal to one year's
base salary.
In March 1995, in exchange for Dr. Pramod Srivastava's consulting services,
we agreed to pay him $1,500 per day for up to three days per month. This
obligation expires in March 2005 but will be automatically extended for
additional one-year periods unless either we or Dr. Srivastava decides not to
extend the agreement.
10
13
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to our conversion from a limited liability company in February 2000,
a compensation committee consisting of Dr. Afeyan and Mr. Edward Brodsky, a
former director, reviewed salaries and incentive compensation for our employees
and consultants. The compensation committee of the board of directors currently
consists of Messrs. Taylor, Panoz and Litvack. Although none of the compensation
committee members are officers or employees of Antigenics, each of Dr. Armen,
our chief executive officer, and Mr. de Chadarevian, our executive vice
president international, have previously participated in compensation
discussions with the committee.
Dr. Afeyan was a member of Antigenics' compensation committee until
September 2000. Dr. Armen is a member of the board of directors of NewcoGen
Group Inc. of which Dr. Afeyan is chairman and chief executive officer.
REPORT OF THE AUDIT COMMITTEE
In the course of its oversight of our financial reporting process, the
Audit Committee of the board of directors has (i) reviewed and discussed with
management our audited financial statements for the fiscal year ended December
31 2000, (ii) discussed with KPMG LLP, our independent auditors, the matters
required to be discussed by Statement on Auditing Standards No. 61,
Communication with Audit Committees, and (iii) received the written disclosures
and the letter from the auditors required by Independence Standards Board
Standard No. 1, Independence Discussions with Audit Committees, discussed with
the auditors their independence, and considered whether the provision of
nonaudit services by the auditors is compatible with maintaining their
independence.
Based on the foregoing review and discussions, the Committee recommended to
the board of directors that the audited financial statements be included in our
Annual Report on Form 10-K for the year ended December 31, 2000 for filing with
the Securities and Exchange Commission.
By the Audit Committee,
Donald Panoz
Tom Dechaene
Martin Taylor
11
14
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
From our inception until August 2000, we subleased office space at cost
from GHA Management Corporation which is wholly owned by Dr. Armen. Dr. Armen is
our chairman and chief executive officer and we used the office space for our
corporate headquarters. We incurred an expense of approximately $211,000,
$281,000 and $268,000 for the years ended December 31, 1998, 1999 and 2000,
respectively. We believe that the terms of the sublease were at least as
favorable as terms we could have obtained in an arm's length transaction with an
independent third party. GHA Management assigned its lease with the RCPI Trust
to us in August 2000 and we will continue to use the office space for our
corporate headquarters. As of December 31, 2000, we had outstanding a letter of
credit for the benefit of GHA Management Corporation in connection with this
lease in the amount of approximately $78,000. The letter of credit expired in
January 2001.
On May 18, 2000, we became a limited partner of the Applied Genomic
Technology Capital Fund, L.P., referred to as the Capital Fund, and committed to
invest $3,000,000 in the Capital Fund. As of March 31, 2001, we had invested
$525,000 in the Capital Fund and future contributions to the Capital Fund will
be made as authorized by the fund's general partner. The general partner of the
Capital Fund is AGTC Partners, L.P. and NewcoGen Group Inc. is the general
partner of AGTC Partners, L.P. Noubar Afeyan, Ph.D., who is one of our
directors, is the chairman and chief executive officer of NewcoGen Group Inc.
and is also a principal of the Capital Fund. In addition, Dr. Armen, our chief
executive officer and one of our directors, is a director of NewcoGen Group Inc.
We have entered into an agreement with Elan Pharmaceuticals, Inc. and one
of Elan's wholly owned subsidiaries, Neurolab Limited, pursuant to which we
granted to Neurolab a license to use our product QS-21 in the field of
Alzheimer's disease. We have also entered into an agreement with these parties
to supply Neurolab with all of its required quantities of QS-21. Dr. Armen, our
chief executive officer and chairman of our board of directors, is a member of
the board of Elan Corporation, plc., an affiliate of Elan Pharmaceuticals, Inc.
12
15
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of our stock as of March 19, 2001:
- each person, or group of affiliated persons, who is known by
Antigenics to beneficially own more than 5% of the common stock;
- each of its directors;
- each of its named executive officers; and
- all of its directors and current executive officers as a group.
Except as otherwise noted, the persons or entities in this table have sole
voting and investing power with respect to all the shares of common stock
beneficially owned by them, subject to community property laws, where
applicable.
The "Number of Shares Beneficially Owned" column below is based on an
assumed 27,448,353 shares of Antigenics stock outstanding as of March 19, 2001.
For purposes of the table below, Antigenics deems shares of Antigenics stock
subject to options that are currently exercisable or exercisable within 60 days
of March 19, 2001, to be outstanding and to be beneficially owned by the person
holding the options for the purpose of computing the percentage ownership of the
person, but does not treat them as outstanding for the purpose of computing the
percentage ownership of any other person.
NUMBER OF SHARES
BENEFICIAL OWNER(1) BENEFICIALLY OWNED PERCENTAGE OF TOTAL
- ------------------- ------------------ -------------------
Antigenics Holdings L.L.C.(2)........................... 11,154,274(2) 40.1%
Garo H. Armen, Ph.D.(2)................................. 345,272(3) 1.2%
Pramod K. Srivastava, Ph.D.(2).......................... 182,477(4) *
Gamil G. de Chadarevian................................. 1,649,290(5) 6.0%
Elma Hawkins, Ph.D...................................... 154,808(6) *
Russell H. Herndon Ph.D................................. -- *
Neal Gordon, Ph.D....................................... 19,848(7) *
Donald Panoz............................................ 270,612(8) 1.0%
Noubar Afeyan, Ph.D.(2)................................. 169,291(9) *
Tom Dechaene............................................ 5,734(4) *
Sanford Litvack......................................... 3,000 *
Martin Taylor........................................... 60,370(10) *
All current executive officers and directors as a
group (11 persons)(2)................................ 2,860,702(11) 10.4%
- -----------------
* Indicates less than 1%
(1) The address of each stockholder is Antigenics Inc., 630 Fifth Avenue, Suite
2100, New York, New York 10111.
13
16
(2) Founder Holdings Inc. owns approximately 79% of the outstanding members
equity of Antigenics Holdings. Antigenics Holdings owns 40% of our stock.
Drs. Armen and Srivastava are managers of Antigenics Holdings. Dr. Armen is
a director of Founder Holdings. The following individuals beneficially own
the indicated percentages of Founder Holdings outstanding common stock:
INDIVIDUAL PERCENTAGE
---------- ----------
Garo Armen, Ph.D................................................. 43.1%
Pramod Srivastava, Ph.D.......................................... 24.2%
Noubar Afeyan, Ph.D.............................................. 1.1%
Lawrence Feinberg................................................ 22.1%
The following individuals own the indicated percentage interests in
Antigenics Holdings:
INDIVIDUAL PERCENTAGE
---------- ----------
Garo Armen, Ph.D................................................. 13.6%
Pramod Srivastava, Ph.D.......................................... 6.2%
(3) Includes (a) 91,268 shares of our stock held by Armen Partners L.P., of
which Dr. Armen is general partner, and (b) 249,004 shares of our stock
issuable upon exercise of options currently exercisable or exercisable
within 60 days of March 19, 2001. Dr. Armen disclaims beneficial ownership
of the shares held by Armen Partners L.P. except to the extent of his
pecuniary interest therein.
(4) Consists solely of shares of our stock issuable upon exercise of options
currently exercisable or exercisable within 60 days of March 19, 2001.
(5) Includes (a) 1,479,488 shares of our stock held by Biovision, Inc., a
corporation of which Mr. de Chadarevian is the sole stockholder and (b)
144,802 shares of our stock issuable upon exercise of options currently
exercisable or exercisable within 60 days of March 19, 2001.
(6) Includes 153,808 shares of our stock issuable upon exercise of options
currently exercisable or exercisable within 60 days of March 19, 2001.
(7) Includes 18,848 shares of our stock issuable upon exercise of options
currently exercisable or exercisable within 60 days of March 19, 2001 and
1,000 shares of our stock owned by Mr. Gordon's wife.
(8) Consists of (a) 17,203 shares of our stock issuable upon exercise of
options currently exercisable or exercisable within 60 days of March 19,
2001 and (b) 253,409 shares of our stock held by Fountainhead Holdings
Ltd., all of the capital stock of which is held by trusts, the
beneficiaries of which are the children and grandchildren of Mr. Panoz.
(9) Includes 164,291 shares of our stock issuable upon exercise of options
currently exercisable or exercisable within 60 days of March 19, 2001.
(10) Includes 23,212 shares of our stock issuable upon exercise of options and a
warrant currently exercisable or exercisable within 60 days of March 19,
2001.
(11) Includes 953,645 shares of our stock issuable upon exercise of options and
a warrant currently exercisable or exercisable within 60 days of March 19,
2001 and excludes the shares held by Antigenics Holdings as described in
footnote (2). See footnotes (3), (4), (5), (6), (7), (8), (9) and (10).
14
17
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our executive officers and directors are required under Section 16(a) of
the Securities Exchange Act of 1934, as amended, to file reports of ownership
and changes in ownership of our securities with the Securities and Exchange
Commission. Copies of those reports must also be furnished to us.
Based solely on a review of the copies of reports furnished to us and
written representations that no other reports were required, we believe that
during our 2000 fiscal year, our directors, executive officers and 10%
beneficial owners complied with all applicable Section 16(a) filing requirements
except that (1) a February 4, 2000 purchase of 1,000 shares of our common stock
by Dr. Hawkins was reported on a Statement of Changes in Beneficial Ownership on
Form 4 after the date on which the filing was required for the purchase and (2)
a February 4, 2000 purchase of 1,000 shares of our common stock by Dr. Gordon's
wife was reported on a Statement of Changes in Beneficial Ownership on Form 4
after the date on which the filing was required for the purchase.
INFORMATION CONCERNING AUDITORS
The firm of KPMG LLP, independent accountants, has audited our accounts
since our inception and will do so for 2001. The board of directors has
appointed KPMG LLP to serve as our independent auditors for our fiscal year
ending December 31, 2001. Representatives of KPMG LLP are expected to attend the
annual meeting to respond to appropriate questions, and will have the
opportunity to make a statement if they desire.
The fees for services provided by KPMG LLP to us in 2000 were as follows:
Audit Fees $ 90,000
Financial Information Systems
Design and Implementation Fees $ --
All Other Fees $145,700
STOCKHOLDER PROPOSALS
Assuming our 2002 Annual Meeting of Stockholders is not more than 30 days
before or 30 days after May 24, 2002, if you wish to bring business before or
propose director nominations at the 2002 Annual Meeting, you must give written
notice to Antigenics by March 10, 2002 (the date 75 days before the anniversary
of the 2001 Annual Meeting).
If you intend to bring such a proposal or nomination at the 2002 Annual
Meeting, and you would like us to consider the inclusion of your proposal or
nomination in our proxy statement for the meeting, you must provide written
notice to Antigenics of such proposal or nomination prior to December 25, 2001.
Notices of stockholder proposals and nominations shall be delivered in
writing to Garo H. Armen, Ph.D., Chief Executive Officer, Antigenics Inc., 630
Fifth Avenue, Suite 2100, New York, New York 10111.
15
18
OTHER MATTERS
The board of directors does not know of any business to come before the
meeting other than the matters described in the notice. If other business is
properly presented for consideration at the meeting, the enclosed proxy
authorizes the persons named therein to vote the shares in their discretion.
16
19
APPENDIX A
ANTIGENICS INC.
AUDIT COMMITTEE CHARTER
PURPOSE
The principal purpose of the Audit Committee is to assist the Board of
Directors in fulfilling its responsibility to oversee management's conduct of
the Company's financial reporting process, including by reviewing the financial
reports and other financial information provided by the Company, the Company's
systems of internal accounting and financial controls, and the annual
independent audit process.
In discharging its oversight role, the Committee is granted the power to
investigate any matter brought to its attention with full access to all books,
records, facilities and personnel of the Company and the power to retain outside
counsel, auditors or other experts for this purpose.
The outside auditor is ultimately accountable to the Board and the
Committee, as representatives of the stockholders. The Board and the Committee
shall have the ultimate authority and responsibility to select, evaluate and,
where appropriate, replace the outside auditor. The Committee shall be
responsible for overseeing the independence of the outside auditor.
This Charter shall be reviewed for adequacy on an annual basis by the
Board.
MEMBERSHIP
The Committee shall be comprised of not less than three members of the
Board, and the Committee's composition will meet the requirements of the Nasdaq
Audit Committee Requirements. Accordingly, all of the members will be directors:
- who have no relationship to the Company that may interfere with the
exercise of their independence from management and the Company; and
- who are financially literate or who become financially literate within a
reasonable period of time after appointment to the Committee.
In addition, at least one member of the Committee will have accounting or
related financial management expertise.
KEY RESPONSIBILITIES
The Committee's role is one of oversight, and it is recognized that the
Company's management is responsible for preparing the Company's financial
statements and that the outside auditor is responsible for auditing those
financial statements.
The following functions shall be the common recurring activities of the
Committee in carrying out its oversight function. The functions are set forth as
a guide and may be varied from time to time as appropriate under the
circumstances.
A-1
20
- - The Committee shall review with management and the outside auditor the
audited financial statements to be included in the Company's Annual Report
on Form 10-K and the Annual Report to Stockholders, and shall review and
consider with the outside auditor the matters required to be discussed by
Statement on Auditing Standards No. 61.
- - As a whole, or through the Committee chair, the Committee shall review with
the outside auditor, prior to filing with the Securities and Exchange
Commission, the Company's interim financial information to be included in
the Company's Quarterly Reports on Form 10-Q and the matters required to be
discussed by SAS No. 61.
- - The Committee shall periodically discuss with management and the outside
auditor the quality and adequacy of the Company's internal controls.
- - The Committee shall request from the outside auditor annually a formal
written statement delineating all relationships between the auditor and the
Company consistent with Independence Standards Board Standard No. 1,
discuss with the outside auditor any such disclosed relationships and their
impact on the outside auditor's independence, and take or recommend that
the Board take appropriate action regarding the independence of the outside
auditor.
The Committee, subject to any action that may be taken by the Board, shall
have the ultimate authority and responsibility to select (or nominate for
stockholder approval), evaluate and, where appropriate, replace the outside
auditor.
A-2
21
FORM OF PROXY CARD
ANTIGENICS INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS MAY 24, 2001
The undersigned stockholder of Antigenics Inc. (the "Company") hereby
appoints Garo H. Armen, Ph.D., Paul M. Kinsella and Suzette Rodriguez O'Connor,
and each of them acting singly, the attorneys and proxies of the undersigned,
with full power of substitution, to vote on behalf of the undersigned all of the
shares of capital stock of the Company that the undersigned is entitled to vote
at the Annual Meeting of Stockholders of the Company to be held on May 24, 2001,
and at all adjournments thereof, hereby revoking any proxy heretofore given with
respect to such shares.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER(S). IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL PROPOSALS. IN THEIR DISCRETION, THE PROXIES ARE ALSO AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
PLEASE SIGN AND MAIL THIS PROXY TODAY
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
22
(REVERSE SIDE OF PROXY CARD)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
ANTIGENICS INC.
May 24, 2001
[X] Please mark your votes as in this example
WITHHELD
FOR from
all nominees all nominees
1. Proposal to elect [ ] [ ] Nominees: Mr. Donald Panoz
directors Dr. Noubar Afeyan
Dr. Pramod Srivastava
For, except withheld from the following nominee(s):
- ---------------------------------------------------
Mark here for [ ]
Address Change
and Note on
Left
- ----------------------------- -------- --------------------------- --------
SIGNATURE DATE: SIGNATURE (IF HELD JOINTLY) DATE:
NOTE: Please sign exactly as name appears on stock certificate. When shares are
held by joint tenants, both should sign. When signing as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.