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. )
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Filed by a Party other than the Registrant [ ]
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Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
TRIANGLE PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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[LETTERHEAD OF TRIANGLE PHARMACEUTICALS]
4 University Place, 4611 University Drive
Durham, North Carolina 27707
April 5, 1999
To the Stockholders of
TRIANGLE PHARMACEUTICALS, INC.:
You are cordially invited to attend the Annual Meeting of the Stockholders
of Triangle Pharmaceuticals, Inc., to be held at The University Club, 3100
Tower Boulevard, Durham, NC 27707 on May 14, 1999 at 10:00 a.m.
Details of the business to be conducted at the Annual Meeting are given
in the attached Notice of Annual Meeting and Proxy Statement which you are urged
to read carefully.
If you do not plan to attend the Annual Meeting, please sign, date, and
return the enclosed proxy promptly in the accompanying reply envelope. If you
decide to attend the Annual Meeting and wish to change your proxy vote, you may
do so automatically by voting in person at the Annual Meeting.
We look forward to seeing you at the Annual Meeting.
David W. Barry, M.D.
Chairman and Chief Executive Officer
YOUR VOTE IS IMPORTANT
In order to assure your representation at the Annual Meeting, you are
requested to complete, sign and date the enclosed proxy as promptly as possible
and return it in the enclosed envelope (to which no postage need be affixed if
mailed in the United States).
TRIANGLE PHARMACEUTICALS, INC.
4 University Place, 4611 University Drive
Durham, North Carolina 27707
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 14, 1999
------------------
To the Stockholders of
TRIANGLE PHARMACEUTICALS, INC.
The Annual Meeting of Stockholders of Triangle Pharmaceuticals, Inc.
("Triangle" or the "Company") will be held at The University Club, 3100 Tower
Boulevard, Durham, NC 27707 on May 14, 1999 at 10:00 a.m. (the "Annual Meeting")
to consider and vote upon the following matters, which are more fully described
in the accompanying Proxy Statement:
1. To elect two (2) directors to the class of directors whose
term expires in 2002. The Board has nominated the following persons
for reelection at the Annual Meeting: M. Nixon Ellis, Ph.D. and
Anthony B. Evnin, Ph.D.
2. To approve the terms of the issuance by the Company, on December
24, 1998, of 170,000 shares of Series A Preferred Stock, par value $0.001
per share, at a price of $100.00 per share (the "Preferred Stock
Financing").
3. To ratify the appointment of PricewaterhouseCoopers LLP as the
Company's independent accountants for the fiscal year ending December 31,
1999.
4. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. All stockholders of record at the close of
business on March 26, 1999 will be entitled to vote at the Annual Meeting and at
any adjournment thereof. The transfer books will not be closed. A list of
stockholders entitled to vote at the Annual Meeting will be available for
inspection at the offices of the Company.
By Order of the Board of Directors
Chris A. Rallis, Secretary
April 5, 1999
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN, PLEASE
READ THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED
ENVELOPE.
TRIANGLE PHARMACEUTICALS, INC.
4 University Place, 4611 University Drive
Durham, North Carolina 27707
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PROXY STATEMENT
---------------------------------
For the Annual Meeting of Stockholders
To Be Held
May 14, 1999
The enclosed proxy is solicited on behalf of the Board of Directors (the
"Board") of Triangle Pharmaceuticals, Inc., a Delaware corporation ("Triangle"
or the "Company"), for use at the annual meeting of stockholders to be held on
May 14, 1999, and at any adjournment or postponement of the annual meeting (the
"Annual Meeting"). The Annual Meeting will be held at 10:00 a.m. at The
University Club, 3100 Tower Boulevard, Durham, NC 27707. All stockholders of
record on March 26, 1999 will be entitled to notice of and to vote at the Annual
Meeting. The Company intends to mail this Proxy Statement and the accompanying
proxy (the "Proxy") to stockholders on or about April 8, 1999.
The mailing address of the principal executive office of the Company is 4
University Place, 4611 University Drive, Durham, North Carolina 27707.
PURPOSE OF MEETING
The specific proposals to be considered and acted upon at the Annual
Meeting are summarized in the accompanying Notice of Annual Meeting of
Stockholders (collectively, the "Proposals"). Each Proposal is described in more
detail in this Proxy Statement.
VOTING RIGHTS AND SOLICITATION
Voting
On March 26, 1999, the record date for determination of stockholders
entitled to vote at the Annual Meeting, there were 28,927,319 shares of Common
Stock and 170,000 shares of Series A Preferred Stock outstanding. Each holder of
Common Stock is entitled to one vote on all matters brought before the Annual
Meeting. Each holder of Series A Preferred Stock is entitled to approximately
7.9 votes per share of Series A Preferred Stock, voting together with the
holders of Common Stock as a single class, on all matters brought before the
Annual Meeting, except with respect to Proposal 2 concerning stockholder
approval of the terms of the Series A Preferred Stock issuance. With respect to
Proposal 2, only the votes of holders of Common Stock will be considered.
The holders of a majority of the stock issued and outstanding and entitled
to vote, present in person or by proxy, shall constitute a quorum at the Annual
Meeting. As the holders of all issued and outstanding shares of Series A
Preferred Stock represent a total of 1,346,534 possible votes which may be cast
at the Annual Meeting, holders of stock (both Common Stock and Series A
Preferred Stock) representing a total of 15,136,927 votes present in person or
by proxy shall constitute a quorum at the Annual Meeting. Abstentions and broker
nonvotes will be counted for purposes of determining whether a quorum is present
at the Annual Meeting and abstentions will have the effect of negative votes.
Revocability of Proxies
Any person giving a proxy has the power to revoke it at any time before
its exercise. It may be revoked by filing with the Secretary of the Company at
the Company's principal executive office, 4 University Place, 4611 University
Drive, Durham, North Carolina 27707, a notice of revocation or another signed
Proxy with a later date. You may also revoke your Proxy by attending the Annual
Meeting and voting in person.
Solicitation
The Company will bear the entire cost of solicitation, including the
preparation, assembly, printing and mailing of this Proxy Statement, the Proxy
and any additional soliciting materials furnished to stockholders. Copies of
solicitation materials will be furnished to brokerage houses, fiduciaries and
custodians holding shares in their names that are beneficially owned by others
so that they may forward the solicitation materials to such beneficial owners.
In addition, the Company may reimburse such persons for their costs of
forwarding the solicitation materials to such beneficial owners. The original
solicitation of proxies by mail may be supplemented by solicitation by
telephone, telegram or other means by directors, officers, employees or agents
of the Company. No additional compensation will be paid to these individuals for
any such services. Except as described above, the Company does not presently
intend to solicit proxies other than by mail.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation provides for a classified Board
consisting of three classes of directors serving staggered three-year terms,
with each class consisting as nearly as possible of one-third of the total
number of directors. The Bylaws of the Company provide for a Board consisting of
such number of directors as may be fixed from time to time by resolution of
two-thirds of the members of the Board or by two-thirds of the stockholders at
an annual meeting of stockholders of the Company. The Board has fixed the number
of directors to constitute the full Board at seven, with two classes consisting
of two directors and the third class consisting of three directors. Two
directors are to be elected at the Annual Meeting for a term expiring at the
2002 annual meeting of stockholders or until their successors have been duly
elected and qualified.
The Board has nominated M. Nixon Ellis, Ph.D. and Anthony B. Evnin, Ph.D.
to stand for reelection to the class of directors whose term expires at the 2002
annual meeting of stockholders or until their successors are elected and have
qualified. Each person nominated for reelection has agreed to serve if elected,
and management has no reason to believe that any nominee will be unavailable to
serve. In the event any of the nominees is unable or declines to serve as a
director at the time of the Annual Meeting, the proxies will be voted for any
nominee who may be designated by the present Board to fill the vacancy. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
FOR the nominees named below.
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Nominees
The following table sets forth information regarding the nominees
Year First Class
Elected Termination
Name Director Age Year Position
---- -------- --- ---- --------
M. Nixon Ellis, Ph.D. 1995 49 2002 President, Chief Operating
Officer and Director
Anthony B. Evnin, Ph.D.(1) 1995 58 2002 Director
- ---------------
(1) Member of Compensation Committee.
Business Experience of Nominees (for Election to Terms Expiring in 2002)
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(R)
of Wellcome plc ("Wellcome"), a pharmaceutical company, from January 1995
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 Co. ("Burroughs
Wellcome"), a pharmaceutical company, 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, Chapel Hill, 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 and as a member of the Compensation Committee since August 1996.
Since 1975, Dr. Evnin has been a general partner of Venrock Associates, a
venture capital firm. Dr. Evnin received an A.B. in chemistry from Princeton
University and a Ph.D. in chemistry from Massachusetts Institute of Technology.
Dr. Evnin is currently a director of several privately-held companies and the
following publicly-held companies: AxyS Pharmaceuticals, Inc., Centocor, Inc.,
and Ribozyme Pharmaceuticals, Inc., all of which are biopharmaceutical
companies, and Opta Food Ingredients, Inc., a food ingredients company.
Business Experience of Continuing Directors with Terms Expiring in 2000 (Age)
David W. Barry, M.D. (55) has served as Chairman of the Board and Chief
Executive Officer since July 1995 and served as the Company's President from
July through September 1995. Prior to joining the Company, Dr. Barry served as
a member of the Board and as the Director of Research, Development and Medical
Affairs of Wellcome from May 1994 through May 1995. From May 1989 through May
1994, Dr. Barry served as Vice President, Research, Development and Medical
Affairs of Burroughs Wellcome. Dr. Barry is considered a leader in the field of
antiviral therapy and is one of the co-inventors of AZT, the first drug to
treat the human immunodeficiency virus ("HIV"). Dr. Barry also directed the
clinical development of the first selective anti-herpes drug, acyclovir.
Before joining Burroughs Wellcome in 1977, Dr. Barry spent five years at the
United States Food and Drug Administration ("FDA") in various capacities,
including Director of the Influenza Task Force of the Bureau of Biologics and
Acting Deputy Director of the Division of Virology at the Bureau of Biologics.
Dr. Barry received a B.A. in French literature from Yale College and an M.D.
from Yale University. Dr. Barry is currently a director of Family Health
International, a not-for-profit company engaged in the business of family
planning, and Molecular Biosystems, Inc., a publicly-
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held medical diagnostics company. Dr. Barry is a consultant to Life Science
Ventures GmbH, a European venture capital company, and is also Chairman of the
Inter-Company Collaboration on AIDS Drug Development, a pharmaceutical industry
consortium.
George McFadden (58) has served as a director of the Company since
November 1995 and as a member of the Compensation Committee since August 1996.
Since 1979, Mr. McFadden has served as a general partner of McFadden Brothers,
an investment company. Mr. McFadden received a B.A. in business from
Vanderbilt University and an M.B.A. from Columbia University. Mr. McFadden is
currently a director of three privately-held companies, Washington, Inc. (where
he serves as Chairman of the Board), Cryogenics Holdings, Inc. and Squaw Valley
Corp., and of one publicly-held packaging company, Ball Corp.
Business Experience of Continuing Directors with Terms Expiring in 2001 (Age)
Standish M. Fleming (51) has served as a director of the Company since
July 1995 and as a member of the Audit Committee since June 1996. Since April
1993, Mr. Fleming has been a general partner of Forward Ventures, a venture
capital firm. Mr. Fleming also served in an advisory position with Forward
Ventures from February 1992 through April 1993. Prior to that, Mr. Fleming
joined Ventana, a venture capital firm, in 1986 and served as a fund manager
from January 1990 through January 1992. Mr. Fleming received a B.A. in English
from Amherst College and an M.B.A. from the University of California, Los
Angeles. Mr. Fleming currently serves as a director of four privately-held
companies.
Dennis B. Gillings, Ph.D. (54) has served as a director of the Company
since May 1998. Dr. Gillings is Chairman and Chief Executive Officer of
Quintiles Transnational Corp., which he founded in 1982. Quintiles
Transnational Corp. is a provider of contract research, sales and marketing
services to the pharmaceutical, biotechnology and medical device industries.
Dr. Gillings served as a professor at the University of North Carolina at
Chapel Hill from 1972 to 1988, and he currently serves on the University of
North Carolina School of Public Health Foundation Board. Dr. Gillings received
a Diploma in mathematical statistics from the University of Cambridge in 1967
and a Ph.D. in mathematics from the University of Exeter, England, in 1972.
Dr. Gillings is currently a director of several privately-held companies.
Henry G. Grabowski, Ph.D. (58) has served as a director of the Company
since May 1998 and as a member of the Audit Committee since June 1998. Dr.
Grabowski has served as a professor in the Economics Department, Duke
University, since 1976 and as the Director of the Program in Pharmaceuticals
and Health Economics, Duke University, since 1983. Dr. Grabowski is considered
a leader in the field of, and has authored and co-authored numerous books,
monographs and articles concerning pharmaceutical regulation and innovation.
Dr. Grabowski has served as an advisor to numerous private and public
organizations, including the Institute of Medicine, the National Science
Foundation and the General Accounting Office. Dr. Grabowski is an adjunct
scholar at the American Enterprise Institute and he currently serves as
Associate Editor of the The Quarterly Review of Economics and Finance and the
Journal of Research in Pharmaceutical Economics. Dr. Grabowski received a B.S.
in engineering physics from Lehigh University in 1962 and a Ph.D. in economics
from Princeton University in 1967.
Board Meetings and Committees
The Company's Board met a total of eight times and acted by written
consent twice during the year ended December 31, 1998. Each director attended at
least 75% of the aggregate of (i) the total meetings of the Board and (ii) the
total number of meetings held by all committees of the Board on which he served,
with respect to the Board meetings and Committee meetings, respectively, held in
that portion of 1998 during which the director was serving as a member of the
Board.
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The Company has a Compensation Committee currently composed of Dr. Evnin
and Mr. McFadden. The Compensation Committee met once and acted by written
consent four times in 1998. The Compensation Committee reviews and acts on
matters relating to compensation levels and benefit plans for executive officers
and key employees of the Company, including salary and stock options. The
Compensation Committee is also responsible for granting stock awards, stock
options and stock appreciation rights and other awards to be made under the
Company's existing incentive compensation plans. To assist the Compensation
Committee in administering benefit plans for non-executive employees of the
Company, the Board has designated a Secondary Committee composed of Drs. Barry
and Ellis. The Secondary Committee acted by written consent 12 times in 1998.
The Company also has an Audit Committee currently composed of Mr. Fleming
and Dr. Grabowski. The Audit Committee met twice in 1998. The Audit Committee
assists in selecting the independent accountants, designating the services they
are to perform and in maintaining effective communication with those
accountants.
Director Compensation
The Company reimburses its directors for all reasonable and necessary
travel and other incidental expenses incurred in connection with their
attendance at meetings of the Board. In addition, the Company's 1996 Stock
Incentive Plan (the "1996 Plan") provides that each eligible non-employee
director will automatically receive an option to purchase 2,000 shares of Common
Stock upon a director's initial election or appointment to the Board and 2,000
shares of Common Stock for each full or partial year of the director's term,
measured from the date of each annual meeting of stockholders. For eligible
non-employee directors reelected to the Board, the 1996 Plan provides for the
automatic grant of an option to purchase 2,000 shares of Common Stock for each
full or partial year of the term to which the director is reelected, measured
from the date of each annual meeting of stockholders. These options will have an
exercise price equal to 100% of the fair market value of the Company's Common
Stock on the grant date and will become exercisable in annual installments after
the completion of each full or partial year of service following such grant.
Under this Automatic Option Grant Program, on May 15, 1998 (the date of
the Company's 1998 annual meeting of stockholders) each of the newly-elected
non-employee directors, Drs. Gillings and Grabowski, received an automatic
option grant to purchase 8,000 shares, and Mr. Fleming, who was reelected to the
Board, received an automatic option grant to purchase 6,000 shares. The exercise
price per share in effect under each of these options is $16.00, the fair market
value per share of the Company's Common Stock on the grant date. For each of
Drs. Gillings and Grabowski, options to purchase 2,000 of the 8,000 shares were
immediately exercisable when granted. Provided that the director continues to
serve on the Board, the remaining 6,000 option shares held by each of Drs.
Gillings and Grabowski, as well as all 6,000 option shares held by Mr. Fleming,
become exercisable in successive increments of 2,000 shares on the day
immediately preceding the date of each subsequent annual meeting of stockholders
until the automatic option becomes fully exercisable for all of the option
shares.
Under the 1996 Plan prior to its amendment on May 15, 1998, each of the
current non-employee directors received, on June 24, 1997 (the date of the
Company's 1997 annual meeting of stockholders), an automatic option grant to
purchase the following number of shares: Dr. Evnin (2,667 shares), Mr. Fleming
(1,334 shares) and Mr. McFadden (4,000 shares). The exercise price per share in
effect under each of these options is $23.63, the fair market value per share of
the Company's Common Stock on the grant date.
-5-
Vote Required
The two candidates for the class of directors whose terms expire at the
2002 annual meeting of stockholders receiving the highest number of affirmative
votes of the stockholders entitled to vote at the Annual Meeting will be
reelected directors of Triangle. Unless otherwise instructed, the proxyholders
will vote each returned proxy FOR the nominees named above, or for as many
nominees of the Board as possible, such votes to be distributed among such
nominees in the manner as the proxyholders see fit.
Recommendation of the Board
The Board unanimously recommends a vote FOR the nominees listed above.
PROPOSAL 2
APPROVAL OF THE TERMS OF THE PREFERRED STOCK FINANCING
On December 24, 1998, the Company completed a private placement of 170,000
newly issued shares of Series A Preferred Stock, par value $0.001 per share
(the "Preferred Stock"), at a price of $100.00 per share (the "Preferred Stock
Financing"). The gross proceeds from the sale of the Preferred Shares were
$17,000,000, with net proceeds to the Company equal to approximately
$15,600,000.
The Board has adopted a resolution submitting to the stockholders for
their approval a proposal to approve the terms of the Preferred Stock Financing.
Each share of Preferred Stock will convert automatically into ten shares of
Common Stock of the Company upon the earlier of stockholder approval or December
24, 1999, resulting in the issuance of a total of 1,700,000 shares of Common
Stock. If the stockholders do not approve the terms of the Preferred Stock
Financing, the holders of the Preferred Stock will be entitled to receive a
dividend of $5.00 per share.
The Company intends to use the net proceeds from the Preferred Stock
Financing, including the interest thereon, for general corporate purposes,
including the Company's drug development programs, such as preclinical testing
and clinical trials, the payment of license fees, the costs of obtaining patent
protection and other payments to licensors, the potential acquisition of
additional drug candidates, the development of a commercial infrastructure, the
development of computerized systems to support clinical trials and working
capital.
Terms of the Preferred Stock Financing
The shares of Preferred Stock were issued pursuant to certain Purchase
Agreements, each dated as of December 22, 1998 (the "Purchase Agreements"), and
have certain rights set forth in a Certificate of Designations, Preferences and
Rights (the "Certificate of Designations"). The sale of the Preferred Stock was
made in a private placement to selected accredited institutional investors. The
shares are restricted and may not be transferred or sold, except as permitted by
the Purchase Agreements and pursuant to a registration of the shares of
Preferred Stock or an available exemption from registration.
If the stockholders do not approve the terms of the Preferred Stock
Financing, each share of Preferred Stock will remain outstanding until December
24, 1999, at which time it will convert automatically into ten shares of Common
Stock of the Company, and the holders of the Preferred Stock will be entitled to
receive a dividend of $5.00 per share. This dividend will be payable, at the
Company's option,
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in cash or Common Stock. Except for this conditional dividend, the holders of
the Preferred Stock have no preferential rights to dividends or distributions
(including liquidating distributions) from the Company. Instead, the holders of
Preferred Stock are entitled to receive pro rata distributions with the holders
of Common Stock on an as converted basis.
Each holder of Preferred Stock is entitled to approximately 7.9 votes per
share, voting together with the holders of Common Stock as a single class, on
all matters submitted to a vote of the stockholders, except with respect to this
Proposal 2, on which only the votes of holders of Common Stock will be
considered. Without the consent of the holders of a majority of the outstanding
shares of Preferred Stock, the Company may not authorize, issue or sell
additional shares of Preferred Stock, amend or modify the Certificate of
Designations or, with certain limited exceptions, redeem shares of Common Stock
without also redeeming shares of Preferred Stock. In addition, the holders of
Preferred Stock are entitled to notice in the event of certain proposed
corporate actions. The holders of Preferred Stock have no other special voting
rights or special consent rights, except as may be required by law. In the event
that Proposal 2 is approved by the stockholders, each holder of Preferred Stock
will receive ten shares of Common Stock in exchange therefor, resulting in an
immediate increase in voting rights of approximately 2.1 votes per share of
Preferred Stock held prior to the automatic conversion, or an absolute increase
in the aggregate voting rights outstanding of 353,466 votes.
Pursuant to the terms of each Purchase Agreement, the Company has agreed
to file a resale registration statement with the Securities and Exchange
Commission (the "SEC") relating to the sale of the Common Stock issuable upon
conversion of the outstanding shares of Preferred Stock within 30 days after the
conversion date. The Company has agreed to prepare and file such amendments and
supplements to the registration statement as may be necessary to keep the
registration statement effective until December 24, 2000, the second anniversary
of the closing of the sale of the Preferred Stock.
Effect on Outstanding Common Stock
The issuance of the Preferred Stock and the Common Stock issuable upon the
conversion of the outstanding shares of Preferred Stock will dilute the voting
rights of each existing stockholder.
Vote Required
The affirmative vote of a majority of the holders of Common Stock
represented and voting at the Annual Meeting will be required to approve the
terms of the Preferred Stock Financing. Pursuant to the Certificate of
Designations, the holders of Preferred Stock are not entitled to cast a vote on
this Proposal 2.
Recommendation of the Board
The Board unanimously recommends a vote FOR the approval of the terms of
the Preferred Stock Financing.
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PROPOSAL 3
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Company is asking the stockholders to ratify the selection of
PricewaterhouseCoopers LLP as the Company's independent accountants for the year
ending December 31, 1999.
Vote Required
The affirmative vote of a majority of the stockholders represented and
voting at the Annual Meeting will be required to ratify the selection of
PricewaterhouseCoopers LLP. In the event the stockholders fail to ratify the
appointment, the Board will reconsider its selection. Even if the selection is
ratified, the Board, in its discretion, may direct the appointment of a
different independent accounting firm at any time during the year if the Board
believes that such a change would be in Triangle's and its stockholders' best
interests.
Representatives of PricewaterhouseCoopers LLP are expected to be present
at the Annual Meeting, will have the opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
Recommendation of the Board
The Board unanimously recommends a vote FOR the ratification and approval
of the selection of PricewaterhouseCoopers LLP to serve as Triangle's
independent accountants for the year ending December 31, 1999.
-8-
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of January 31, 1999 by (i)
each person known by the Company to beneficially own more than five percent of
the Company's Common Stock or Series A Preferred Stock, (ii) each of the
Company's directors and nominees for director, (iii) the Company's Chief
Executive Officer and the four additional most highly compensated executive
officers of the Company and (iv) all directors and executive officers of the
Company as a group. All shares of Series A Preferred Stock vote with the Common
Stock and each share is subject to automatic conversion into ten shares of
Common Stock upon certain events. Please see "Proposal 2 -- Approval Of The
Terms Of The Preferred Stock Financing" above.
Amount and Nature of Beneficial Ownership
---------------------------------------------------------------------
Common Stock,
Common Stock(2) Preferred Stock(3) As adjusted (4)
--------------- ------------------ ---------------
Name And Address Of Beneficial Owner (1) Number Percent Number Percent Number Percent
- ---------------------------------------- -------- -------- -------- ------- -------- --------
Funds advised by Soros Fund Management LLC (5)........ 1,989,500 6.9% -- -- 1,989,500 6.5%
888 Seventh Avenue, Suite 3300
New York, NY 10106
Duquesne Fund, L.P. (6) .............................. 800,000 2.8% -- -- 800,000 2.6%
Box N9204
Charlotte House, Charlotte Street
Nassau, Bahamas
Alta Partners ........................................ -- -- 100,000 58.8% 1,000,000 3.3%
One Embarcadero Center, Suite 4050
San Francisco, CA 94111
Chase Capital Partners ............................... -- -- 70,000 41.2% 700,000 2.3%
380 Madison Avenue
New York, NY 10017
David W. Barry, M.D. (7) ............................. 1,327,779 4.6% -- -- 1,327,779 4.3%
M. Nixon Ellis, Ph.D. (8)(9) ......................... 628,055 2.2% -- -- 628,055 2.1%
Anthony B. Evnin, Ph.D. (10) ......................... 1,468,705 5.1% -- -- 1,468,705 4.8%
Standish M. Fleming (11) ............................. 1,344,553 4.7% -- -- 1,344,553 4.4%
George McFadden (12) ................................. 2,366,334 8.2% -- -- 2,366,334 7.7%
Dennis B. Gillings, Ph.D. (13) ....................... 12,000 * -- -- 12,000 *
Henry G. Grabowski, Ph.D. (14) ....................... 3,000 * -- -- 3,000 *
Chris A. Rallis, J.D. (8)(15) ........................ 261,677 * -- -- 261,677 *
Franck S. Rousseau, M.D. (8)(16) ..................... 61,518 * -- -- 61,518 *
Carolyn S. Underwood (8)(17) ......................... 191,553 * -- -- 191,553 *
All directors and executive officers
as a group (15 persons) (7)-(18) ................. 8,323,077 28.0% -- -- 8,323,077 27.2%
- ----------
* Less than 1%.
(1) Except as otherwise indicated, (i) the persons named in the table have
sole voting and investment power with respect to all shares of Common
Stock and Preferred Stock shown as beneficially owned by them, subject to
community property laws, where applicable and (ii) the address of all
stockholders listed in the table is: 4 University Place, 4611 University
Drive, Durham, North Carolina 27707. Beneficial ownership is calculated
pursuant to Rule 13d-3(d)(1) under the Securities Exchange Act of 1934, as
amended. The addresses of individual directors and nominees for election
to the Board are indicated in their corresponding footnotes.
(2) On January 31, 1999, 28,901,255 shares of Common Stock were issued and
outstanding.
(3) On January 31, 1999, 170,000 shares of Series A Preferred Stock were
issued and outstanding.
-9-
(4) Assumes the conversion of all outstanding shares of Series A Preferred
Stock into 1,700,000 shares of Common Stock, resulting in an as adjusted
number of shares of Common Stock outstanding equal to 30,601,255 shares as
of January 31, 1999.
(5) Includes shares of Common Stock held by the following entities that are
advised by Soros Fund Management LLC ("SFM LLC"): (i) 1,000,000 shares of
Common Stock held for the account of Quantum Industrial Partners LDC, (ii)
964,500 shares of Common Stock held for the account of Quantum Partners
LDC, and (iii) 25,000 shares of Common Stock held for the account of
Quasar International Partners C.V. Stanley F. Druckenmiller is the Lead
Portfolio Manager and a Member of the Management Committee of SFM LLC, and
is also the sole managing member of Duquesne LLC ("Duquesne"), an
investment advisory firm which serves as a discretionary investment
advisor to Duquesne Fund, L.P.
(6) Stanley F. Druckenmiller is the sole managing member of Duquesne and is
also the Lead Portfolio Manager and a Member of the Management Committee
of SFM LLC.
(7) Includes 51,631 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 1999, 500,000
shares of Common Stock held by Barry Asset Partners, L.P., a Georgia
limited partnership of which Dr. Barry serves as a general and limited
partner, and 27,648 shares of Common Stock held by the Barry Charitable
Foundation, Inc., a charitable North Carolina corporation of which Dr.
Barry serves as President.
(8) Excludes an aggregate of 4,109 shares of Common Stock purchased by certain
executive officers upon the conclusion of the purchase interval, ending
February 26, 1999, under the Company's Employee Stock Purchase Plan.
(9) Includes 248,364 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 1999, 152,333
shares of Common Stock held in a family trust, and 15,875 shares of Common
Stock held by the Ellis Charitable Foundation, Inc., a charitable North
Carolina corporation of which Dr. Ellis serves as President.
(10) Includes 1,334 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 1999. Also
includes 963,082 shares and 478,754 shares of Common Stock beneficially
owned by Venrock Associates and Venrock Associates II, L.P., respectively.
Dr. Evnin is a general partner of Venrock Associates and Venrock
Associates II, L.P. and consequently shares voting and investment power
with respect to all such shares. Dr. Evnin disclaims beneficial ownership
of these shares other than to the extent of his individual partnership
interest. Dr Evnin's address is 30 Rockefeller Plaza, New York, New York
10112.
(11) Includes 1,334 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 1999. Also
includes 1,025,000 shares and 233,663 shares of Common Stock beneficially
owned by Forward Ventures II, L.P. and Forward Ventures III, L.P.,
respectively. Mr. Fleming is a general partner of Forward II Associates,
L.P., which is the general partner of Forward Ventures II, L.P., and a
managing member of Forward III Associates, L.L.C., which is the general
partner of Forward Ventures III, L.P., and consequently shares voting and
investment power with respect to all such shares. Mr. Fleming disclaims
beneficial ownership of these shares other than to the extent of his
individual partnership and member interests. Mr. Fleming's address is 9255
Towne Centre Drive, Suite 300, San Diego, California 92121.
(12) Includes 1,334 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 1999. Also
includes a total of 1,965,000 shares of Common Stock beneficially owned by
each of the following persons in the amounts indicated: (i) McFadden
Brothers (100,000 shares), (ii) McFadden Securities, L.P. (200,000
shares), (iii) a family trust under the will of Alexander B. McFadden
(650,000 shares), (iv) three family trusts for the benefit of Mr.
McFadden's children (240,000 shares), (v) other family members (560,000
shares), (vi) a former family member (90,000 shares) and (vii) a former
family member as custodian for one of Mr. McFadden's children (125,000
shares). Mr. McFadden exercises shared voting and investment power with
respect to all such shares. Mr. McFadden disclaims beneficial ownership of
these shares other than to the extent of his pecuniary interest in the
shares beneficially owned by McFadden Brothers, McFadden Securities, L.P.
and the family trust under the will of Alexander B. McFadden. Mr.
McFadden's address is 745 Fifth Avenue, New York, New York 10151.
(13) Includes 2,000 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 1999. Dr.
Gilling's address is 4709 Creekstone Drive, Durham, North Carolina 27703.
(14) Includes 2,000 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 1999 and 1,000
shares of Common Stock held in a pension fund. Dr. Grabowski's address is
Duke University, 305 Social Sciences, Box 90097, Durham, North Carolina,
27708.
(15) Includes 74,589 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 1999. 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.
(16) Includes 60,641 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 1999.
(17) Includes 182,529 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 1999. Also
includes 500 shares held by Ms. Underwood as custodian for her son under
the Uniform Gift to Minors Act.
(18) Includes 854,085 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of January 31, 1999.
-10-
EXECUTIVE OFFICERS
The executive officers of the Company as of March 31, 1999 are as follows:
Name Age Position
---- --- --------
David W. Barry, M.D. ......... 55 Chairman of the Board and Chief Executive
Officer
M. Nixon Ellis, Ph.D. ........ 49 Director, President and Chief Operating
Officer
Phillip A. Furman, Ph.D. ..... 54 Chief Scientific Officer
James A. Klein, Jr. .......... 36 Chief Financial Officer and Treasurer
Bruce J. McCreedy, Jr., Ph.D. 39 Vice President, Clinical Virology and
Diagnostics
Anne F. McKay ................ 44 Vice President, Drug Regulatory Affairs
George R. Painter, III, Ph.D. 48 Vice President, Research and Development
Chris A. Rallis, J.D. ........ 45 Vice President, Business Development,
General Counsel and Secretary
Franck S. Rousseau, M.D. ..... 41 Vice President, Medical Affairs and Chief
Medical Officer
Carolyn S. Underwood ......... 42 Vice President, Commercial Operations
David W. Barry, M.D. is Chairman of the Board and Chief Executive
Officer of the Company. See "Election of Directors" for a discussion of Dr.
Barry's business experience.
M. Nixon Ellis, Ph.D. is the President, Chief Operating Officer and 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 Chief Scientific Officer since July
1997, and served as Vice President, Research and Chief Scientific Officer of the
Company from September 1995 through June 1997. 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
Coviracil (TM) (emtricitibine), formerly known as FTC, to treat hepatitis B
virus ("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
since November 1995, and served as Secretary and Treasurer from July 1995
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 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
Virology and Diagnostics since August 1997 and served as Vice President,
Clinical Diagnostics of the Company from March 1997 through July 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.
-11-
McCreedy received his B.S. degree from Wake Forest University in medical
microbiology and a 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. ("Medco") 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, Research and
Development since July 1997, and served as Vice President, Chemistry and
Technical Development of the Company from January 1996 through June 1997. From
July 1995 through January 1996, Dr. Painter served as Director of Research
Process for Glaxo Wellcome plc ("Glaxo"), a pharmaceutical company, and from
June 1993 through July 1995, he served as Assistant Director of Virology for
Burroughs Wellcome. While at Burroughs Wellcome, Dr. Painter led the
international development of both an HIV protease inhibitor and Coviracil. He
is also a co-inventor of the use of Coviracil 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 University.
Chris A. Rallis, J.D. has served as Vice President, Business
Development, General Counsel and Secretary 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
University 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. has served as Vice President, Medical Affairs
and Chief Medical Officer since 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 the equivalent of a B.A. 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, Commercial Operations
since January 1998. Ms. Underwood served as Vice President, Marketing and
Investor Relations of the Company from November 1996 through December 1997 and
served as Vice President, Marketing from January 1996 through November 1996.
Prior to joining the Company, Ms. Underwood served as Director, CNS Marketing of
Glaxo from June 1995 through December 1995. Prior to that, Ms. Underwood served
as Director, Marketing Division of Nippon Wellcome KK, a pharmaceutical company
of which Wellcome was one of the joint venture partners, from February 1994
through June 1995. Ms. Underwood also served as Senior Director of Marketing of
Burroughs Wellcome from July 1991 through January 1994. Ms. Underwood received a
B.S. in nursing from the University of North Carolina, Chapel Hill.
-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 years ended December 31, 1996, 1997 and 1998:
Summary Compensation Table
Long Term
Compensation
Annual ------------
Compensation(1) Awards
------------------- ------------
Securities
Underlying All Other
Name and Salary Bonus Options/SARs Compensation
Principal Position Year ($) ($) (#) ($)(2)
- ---------------------------------------- ----- ------- ------ ------------ ------------
David W. Barry, M.D. .................. 1998 239,000 72,000 50,000 14,550
Chairman and Chief 1997 221,375 84,102 60,000 13,335
Executive Officer 1996 205,333 20,000 197,214 11,070
M. Nixon Ellis, Ph.D. .................. 1998 210,000 63,000 38,000 1,445
President, Director and 1997 194,750 74,822 40,000 1,310
Chief Operating Officer 1996 180,000 17,500 230,867 1,200
Chris A. Rallis, J.D. .................. 1998 193,000 95,628 23,000 2,220
Vice President, Business 1997 179,270 69,044 38,000 2,125
Development, General 1996 158,333 16,500 57,970 1,035
Counsel and Secretary
Franck S. Rousseau, M.D. ............... 1998 170,000(3) 55,000 25,058(3) 455
Vice President, Medical 1997(4) 113,095 48,102 118,362 --
Affairs and Chief Medical Officer 1996(4) -- -- -- --
Carolyn S. Underwood .................. 1998 179,000 69,749 23,000 421
Vice President, Commercial 1997 166,050 63,614 32,000 421
Operations 1996 151,177 26,250 184,035 211
- ----------
(1) The aggregate amount of perquisites and other personal benefits, if any, did
not exceed the lesser of $50,000 or 10% of the total annual salary and bonus
reported for each Named Executive Officer and has therefore been omitted.
(2) Represents the amounts paid by the Company (i) during 1998, 1997 and 1996 in
the form of premiums for individual life insurance policies for the benefit
of the Named Executive Officers and (ii) during 1998 and 1997, respectively,
as matching 401(k) contributions in the following amounts for the following
Named Executive Officers: Dr. Barry, $1,000 and $945; Mr. Rallis, $1,000 and
$1,000; and Dr. Rousseau, $910 and $0.
(3) Excludes an aggregate of $12,000 of Dr. Rousseau's $182,000 salary earned in
1998 allocated toward the acquisition of options to purchase 2,058 shares of
Common Stock under the Company's Salary Investment Option Grant Program for
$5.83 per underlying share, which amount is equal to 1/3 of the fair market
value of the underlying shares of Common Stock on the date of grant. The
options were granted on January 7, 1998, were fully vested as of December
31, 1998, and are exercisable at a price of $11.67 per share, which amount
is equal to 2/3 of the fair market value of the underlying shares of Common
Stock on the date of grant.
(4) Dr. Rousseau was not employed by the Company prior to March 31, 1997.
-13-
Stock Options
The following table sets forth information concerning stock option grants
made to each of the Named Executive Officers during the year ended December 31,
1998. The Company did not grant any stock appreciation rights to the Named
Executive Officers during the year ended December 31, 1998.
Option/SAR Grants In Last Fiscal Year
Individual Grants
-------------------------------------------------
Percent of Potential Realizable Value at
Number of Total Options/ Assumed Annual Rates of Stock
Securities SARs Granted Price Appreciation for
Underlying to Employees Exercise or Option Term (4)
Options/SARs in Fiscal Base Price Expiration -------------------------------
Name Granted(1) Year (%)(2) ($ Sh)(3) Date 0%($) 5%($) 10%($)
- --------------------- ----------- ----------- --------- ------- ----- ----- ------
David W. Barry, M.D. ......... 35,000(5) 4.5 16.00 5/14/08 352,181 892,496
15,000(6) 1.9 11.13 11/23/08 0 104,947 265,956
M. Nixon Ellis, Ph.D. ........ 27,000(5) 3.5 16.00 5/14/08 271,682 688,497
11,000(6) 1.4 11.13 11/23/08 0 76,961 195,034
Chris A. Rallis, J.D. ........ 16,000(5) 2.1 16.00 5/14/08 160,997 407,998
7,000(6) 0.9 11.13 11/23/08 0 48,975 124,113
Frank S. Rousseau, M.D. ...... 2,058(7) 0.3 11.67(8) 1/6/08 12,000(8) 34,648 69,397
10,000(5) 1.3 16.00 5/14/08 0 100,623 254,999
13,000(6) 1.7 11.13 11/23/08 0 90,954 230,495
Carolyn S. Underwood ......... 15,000(5) 1.9 16.00 5/14/08 0 150,935 382,498
8,000(6) 1.0 11.13 11/23/08 0 55,972 141,843
- ----------
(1) All options were granted under the 1996 Stock Incentive Plan (the "1996
Plan"). Unless otherwise indicated, each option vests and becomes
exercisable as follows: 25% after 12 months of service measured from the
date of the option grant (indicated by footnote for each grant), and the
remaining 75% thereafter in a series of 36 equal monthly installments.
(2) The Company granted options to acquire an aggregate of 780,125 shares of
Common Stock to the Company's officers and employees in 1998.
(3) Unless otherwise indicated, the exercise price per share of options granted
represented the fair market value of the underlying shares of Common Stock
on the dates the respective options were granted as determined by the
Compensation Committee of the Board. The exercise price may be paid in cash
or in shares of Common Stock valued at fair market value on the exercise
date or a combination of cash or shares or any other form of consideration
approved by the Board or the Compensation Committee. The fair market value
of shares of Common Stock is determined in accordance with certain
provisions of the 1996 Plan based on the closing selling price per share of
a share of Common Stock on the date in question on the Nasdaq National
Market.
(4) There is no assurance provided to any Named Executive Officer or any other
holder of the Company's securities that the actual stock price appreciation
over the 10-year option term will be at the assumed 0%, 5% or 10% levels or
at any other defined level. Unless the market price of the Common Stock does
in fact appreciate over the option term, no value will be realized from the
option grants made to the Named Executive Officers.
(5) Options granted on May 15, 1998 pursuant to the Company's Discretionary
Option Grant Program. The shares subject to each option will immediately
vest in the event the Company is acquired by a merger or asset sale, unless
the options are assumed by the acquiring entity. The options further provide
that the shares subject to each option will immediately vest even if options
are assumed by the acquiring entity if the Named Executive Officer's
employment is terminated involuntarily (which includes, among other things,
a reduction in the responsibilities of the Named Executive Officer) at any
time within 12 months after the merger or asset sale.
(6) Options granted on November 24, 1998 pursuant to the Company's Discretionary
Option Grant Program. The shares subject to each option will immediately
vest in the event the Company is acquired by a merger or asset sale, unless
-14-
the options are assumed by the acquiring entity. The options further provide
that the shares subject to each option will immediately vest even if options
are assumed by the acquiring entity if the Named Executive Officer's
employment is terminated involuntarily (which includes, among other things,
a reduction in the responsibilities of the Named Executive Officer) at any
time within 12 months after the merger or asset sale.
(7) Options granted on January 7, 1998 pursuant to the Company's Salary
Investment Option Grant Program. The options vested in 12 equal installments
over each month in 1998. The shares subject to each option will immediately
vest in the event that there is a change in control or other hostile
takeover of the Company.
(8) Pursuant to the Company's Salary Investment Option Grant Program, Dr.
Rousseau allocated an aggregate of $12,000 of his $182,000 salary earned in
1998 toward the acquisition of the options for $5.83 per underlying share,
which amount is equal to 1/3 of the fair market value of the underlying
shares of Common Stock on the date of grant. The options are exercisable at
a price of $11.67 per share, which amount is equal to 2/3 of the fair market
value of the underlying shares of Common Stock on the date of grant.
Option Exercises and Holdings
The following table provides information concerning option exercises
during the year ended December 31, 1998 by the Named Executive Officers and the
value of unexercised options held by each of the Named Executive Officers as of
December 31, 1998. No stock appreciation rights were exercised during the year
ended December 31, 1998.
Aggregated Option/SAR Exercises In Last Fiscal Year
and Fiscal Year-End Option/SAR Values
Number of Value of Unexercised
Unexercised Options In-the-Money Options at
Shares at FY-End (#) December 31, 1998($)(1)
Acquired on Value ----------------------------- ------------------------
Name Exercise (#) Realized ($) Exercisable(2) Unexercisable Exercisable Unexercisable
- ---- ------------ ------------ -------------- ------------- ----------- -------------
David W. Barry, M.D. ....... -- -- 47,879 87,502 1 68,149 37,500
M. Nixon Ellis, Ph.D. ...... -- -- 245,867 63,000 2,973,647 27,500
Chris A. Rallis, J.D. ..... -- -- 72,218 46,752 643,095 17,500
Franck S. Rousseau, M.D. ... -- -- 52,694 90,726 0 32,500
Carolyn S. Underwood ....... -- -- 180,533 43,002 2,062,957 20,000
- ----------
(1) Value is defined as the fair market price of the Company's Common Stock at
December 31, 1998 less the exercise price. On December 31, 1998, the closing
selling price of a share of the Company's Common Stock on the Nasdaq
National Market was $13.63.
(2) These options are immediately exercisable but the Named Executive Officers'
interests in certain of the option shares vest over time. All unvested
shares purchased by the Named Executive Officers are subject to repurchase
by the Company at the exercise price per share. As of December 31, 1998, Dr.
Barry's interest in 11,104 of these option shares was unvested, Dr. Ellis'
interest in 70,592 of these option shares was unvested, Mr. Rallis'
interest in 19,908 of these option shares was unvested, Dr. Rousseau's
interest in all of these option shares was vested, and Ms. Underwood's
interest in 48,953 of these option shares was unvested.
-15-
Employment Contracts and Change of Control Arrangements
The Company entered into an employment agreement with Dr. David W. Barry,
the Company's Chairman and Chief Executive Officer, as of November 23, 1998.
Pursuant to the agreement, the Company has employed Dr. Barry at a base salary
of $239,000 per year for a period of two years, subject to increase by the
Company's Board. The Company has also agreed to provide to Dr. Barry any other
benefits that are provided to the Company's other executive officers. Dr.
Barry's employment is terminable at will by either the Company or Dr. Barry. In
the event Dr. Barry's employment is terminated by the Company for any reason or
Dr. Barry resigns at any time within two years of the date of the agreement, the
Company has agreed to continue to pay Dr. Barry's then-current base salary for a
period of two years and Dr. Barry has agreed that during the two-year period he
will not serve as the chairman, chief executive officer or president of, or
participate in or direct the development of drugs for the treatment of viral
diseases for, any for-profit business in the pharmaceutical industry that
competes in the United States with the Company. In addition, in the event that
Dr. Barry's employment is terminated by the Company without cause at any time
within two years of the date of the agreement, the Company has agreed to
accelerate the vesting of any unvested stock and/or options held by Dr. Barry.
The agreement will terminate automatically in the event of any change in control
of the Company.
In February 1999, the Company also entered into employment agreements with
each officer of the Company, including each Named Executive Officer. Under these
employment agreements, each officer is employed until December 31, 2000, with
automatic renewals from year to year thereafter, unless otherwise terminated.
Each officer is also eligible to participate in the Company's retirement and
welfare benefit plans. Any officer's employment is terminable at will by either
the Company or such officer. In the event an officer's employment is terminated
by the Company without cause or the Company elects not to renew the officer's
term, the Company has agreed to continue to pay such officer's then-current base
salary for a period of eighteen months and to accelerate by 12 months the
vesting of unvested stock and/or options, subject to such officer's agreement
during the eighteen-month period not to engage in the same or similar function
area in any for-profit pharmaceutical business that competes with the Company in
the field of HIV/hepatitis B within North America. In addition, in the event
that, within 12 months following a change in control, an officer's employment is
terminated by the Company without cause, the officer resigns for good reason, or
the Company elects not to renew the officer's term, the Company has agreed to
continue to pay such officer's then-current base salary for a period of two
years and to accelerate totally the vesting of any unvested stock and/or
options.
All of the options awarded by the Company to the Named Executive Officers
during the year ended December 31, 1998 provide that the shares subject to each
option will immediately vest in the event the Company is acquired by a merger or
asset sale, unless the options are assumed by the acquiring entity. The options
further provide that the shares subject to each option will immediately vest
even if the options are assumed by the acquiring entity if the Named Executive
Officer's employment is terminated involuntarily (which includes, among other
things, a reduction in the responsibilities of the Named Executive Officer) at
any time within twelve months after the merger or asset sale.
Compensation Committee Interlocks and Insider Participation
The Company's Compensation Committee was established in June 1996. Its
members are Dr. Evnin and Mr. McFadden. Dr. Evnin is a general partner of
Venrock Associates and Venrock Associates II, L.P., both of which purchased
preferred stock from the Company as part of several private placement
transactions 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. Mr.
McFadden received a finder's fee of $500,000 in connection with the
-16-
private placement of 2,000,000 shares of Common Stock by the Company in June
1997. See "Certain Relationships and Related Transactions."
Notwithstanding anything to the contrary set forth in the Company's
previous filings under the Securities Act of 1933, as amended (the "Securities
Act"), or the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
that might incorporate future filings, including this Proxy Statement, in whole
or in part, the following report of the Compensation Committee and the
performance graph on page 20 shall not be incorporated into any such filings.
Compensation Committee Report on Executive Compensation
The Compensation Committee (the "Committee") offers this report regarding
compensation for the Company's executive officers and Chief Executive Officer.
General Compensation Policy
The Company's primary objective is to maximize the value of its shares
over time. Accomplishing this objective requires the Company to successfully
develop and market safe and effective drugs, primarily for the treatment of
viral diseases. The Committee, with this objective in mind, authorizes
compensation packages for the Company's executive officers designed to retain
and attract top quality management and to encourage them to contribute to the
achievement of the Company's business objectives. In addition, the Committee
attempts to establish compensation packages that are comparable to the packages
received by executives of similar companies and reasonable in light of the
Company's expenditures on its drug development programs.
The Company compensates its executive officers with a combination of
salary and incentives designed to encourage efforts to achieve both the
short-term and long-term goals of the Company. The compensation structure
attempts to reward both individual contributions as well as the Company's
overall performance. Many traditional measures of corporate performance, such as
earnings per share or sales growth, are less applicable to the performance of
development stage pharmaceutical companies, like the Company, than to mature
pharmaceutical companies or companies in other industries. As a result, in
making executive compensation decisions the Committee evaluates other
indications of performance, such as the progress of the Company in achieving
milestones in the development of its drug candidates, in obtaining rights to
drug candidates and in raising the capital needed for its operations.
The basic components of the Company's compensation packages for its
executive officers include the following:
o Base Salary
o Annual Incentives
o Long-term Incentives
o Benefits
Each officer's package contains a mix of these elements and is designed to
provide a level of compensation competitive with the compensation paid to
comparable officers of companies of similar size in similar industries. Based on
various surveys of executive compensation within the Company's industry, the
Committee believes it achieved this level of aggregate executive compensation
during 1998. 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.
-17-
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 1998, the Committee sought to set the base
salaries of the Company's officers at a level around the 75th percentile of the
range of salaries of officers in comparable companies. In addition, the
Committee considered the following factors in setting the base salaries for
executive officers during 1998: the Company's success in achieving milestones in
the development of its drug candidates, in obtaining rights to drug candidates
and in raising the capital needed for its operations, and any special expertise
of a particular executive. During 1998, the base salaries for the Named
Executive Officers (excluding Dr. Barry) increased by an average of
approximately 11% over their annualized base salaries during 1997.
Annual Incentives in the form of cash bonuses are awarded by the Committee
based upon its evaluation of the performance of each executive officer and the
achievement of Company goals during the year. In 1998, annual incentive
compensation awarded to the Named Executive Officers (excluding Dr. Barry)
averaged approximately 37% of base salary and totaled in the aggregate $283,377.
The awards reflect the Committee's objective to provide a level of compensation
competitive with the compensation paid to comparable officers of companies of
similar size in similar industries.
Long-Term Incentive compensation in the form of stock options is expected
to be the largest element of total compensation over time. Grants of stock
options are designed to align the long-term interests of each officer with the
interests of the Company's stockholders and to provide long-term incentives for
the individual officer to remain with the Company. Stock options provide each
officer with a significant incentive to manage the Company from the perspective
of an owner with an equity stake in the business. The size of the option grant
to each officer is based on the officer's current position and expected future
contributions to the Company's business. Awards of stock options are designed to
have an expected aggregate exercise value over time equal to a multiple of
salary which will create a significant opportunity for stock ownership.
During 1998, the Named Executive Officers (excluding Dr. Barry) were
granted ten-year options to purchase an aggregate of 107,000 shares of the
Company's Common Stock, excluding options to acquire 2,058 shares of Common
Stock granted to Dr. Rousseau under the Company's Salary Investment Option Grant
Program. Of the 107,000 option shares granted, 68,000 were granted in May 1998
at an exercise price of $16.00 per share and 39,000 were granted in November
1998 at an exercise price of $11.13 per share. All of the options (other than
Dr. Rousseau's Salary Investment options) vest over a four year period as long
as the Named Executive Officer continues to remain employed by the Company. The
options were awarded by the Committee based on the significant milestones
achieved by the Company during 1998. The Committee also considered the total
percentage of outstanding shares beneficially owned by the Named Executive
Officers as compared to the stock ownership of similar officers at comparable
companies. The Committee believes that the option grants were at a level around
the 75th percentile of the range of option grants to officers in comparable
companies.
Benefits offered to the Company's executive officers serve as a safety net
of protection against the financial catastrophes that can result from illness,
disability or death. Benefits offered to the Company's executive officers are
substantially the same as those offered to all the Company's regular employees.
CEO Compensation
Dr. Barry's 1998 base salary of $239,000 represented an increase of
approximately 8% over his base salary during 1997. The cash bonus paid to Dr.
Barry decreased from $84,102 during 1997 to $72,000 during 1998. The amount of
Dr. Barry's base salary and cash bonus were below the average for chief
-18-
executive officers of comparable companies, reflecting the Committee's
objective, particularly in the case of Dr. Barry, of placing more weight upon
long-term incentives than upon base salary and annual incentives.
The Committee expects that the stock options granted to Dr. Barry will
represent the largest element of his compensation and provide a direct link
between Dr. Barry's compensation and the Company's performance. During 1998, Dr.
Barry received ten-year options to purchase an aggregate of 50,000 shares of the
Company's Common Stock, including 35,000 option shares at an exercise price of
$16.00 per share and 15,000 option shares at an exercise price of $11.13 per
share. All of the options vest over a four year period as long as Dr. Barry
continues to remain employed by the Company. As with the other Named Executive
Officers, the options granted to Dr. Barry were awarded based on the significant
milestones achieved by the Company during 1998. The Committee believes that the
option grants were at a level around the 75th percentile of the range of option
grants to chief executive officers in comparable companies. Additionally, the
total percentage of outstanding shares beneficially owned by Dr. Barry is above
the median as compared to the stock ownership of similar officers at comparable
companies. It is the Committee's judgment that Dr. Barry's scientific and
management leadership is extremely important to the Company, and it is therefore
essential to provide Dr. Barry with a significant unvested stock ownership
position in the Company.
COMPENSATION COMMITTEE
Anthony B. Evnin, Ph.D.
George McFadden
-19-
Performance Graph
The following graph compares total stockholder returns since the Company
became a reporting company under the Exchange Act to the Nasdaq CRSP Total
Return Index ("Nasdaq Broad Index") for the Nasdaq Stock Market (U.S. Companies)
and the Nasdaq CRSP Pharmaceutical Index ("Nasdaq Pharmaceutical Index"). The
total return for each of the Company's Common Stock, the Nasdaq Broad Index and
the Nasdaq Pharmaceutical Index assumes the reinvestment of dividends, although
dividends have not been declared on the Company's Common Stock. The Nasdaq
Pharmaceutical Index is made up of all companies with the standard industrial
classification (SIC) Code 283 (category description "Drugs"). The companies
comprising the Nasdaq Pharmaceutical Index are available upon written request to
Investor Relations at the Company's executive offices. The stockholder return
shown on the graph below is not necessarily indicative of future performance and
the Company will not make or endorse any predictions as to future stockholder
returns.
[GRAPHIC OMITTED]
Cumulative Total Return
-----------------------------------
December 31,
November 1, ----------------------
1996 1996 1997 1998
---- ---- ---- ----
TRIANGLE PHARMACEUTICALS, INC. 100 229 146 136
NASDAQ STOCK MARKET-US 100 106 130 183
NASDAQ PHARMACEUTICALS 100 103 106 136
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In November 1998, the Company entered into a new Employment Agreement
with Dr. Barry, the Company's Chairman and Chief Executive Officer. In
February 1999, the Company entered into employment agreements with each
executive officer of the Company. See "Executive Compensation and Other
Information--Employment Contracts and Change of Control Arrangements."
As part of the private placement completed on June 6, 1997, the purchasers
received certain registration rights as well as the right, until June 6, 1999,
to nominate one designee to serve on the Company's Board, subject to the prior
approval of the Company's Chairman and certain other limitations. In the private
placement transaction, the company issued 2,000,000 shares of Common Stock to
the Duquesne Fund, L.P. and to three entities associated with Soros Fund
Management LLC, which three entities collectively own more than 5% of the
Company's Common Stock. Stanley F. Druckenmiller, the Lead Portfolio Manager and
a Member of the Management Committee of SFM LLC, is also the sole managing
member of Duquesne LLC, an investment advisory firm which serves as a
discretionary investment advisor to Duquesne Fund, L.P. On January 23, 1998, the
Company filed a Registration Statement on Form S-3 registering for resale the
2,000,000 shares (plus an additional 789,500 shares acquired prior to the
private placement). The Company was introduced to the purchasers by Mr.
McFadden, a director of the Company, who received a finder's fee of $500,000 in
connection with the transaction.
The Company has entered into a number of agreements with certain direct or
indirect wholly-owned subsidiaries of Quintiles Transnational Corp.
(collectively, "Quintiles") pursuant to which Quintiles has rendered or has
agreed to render contract services on behalf of Triangle, including, among other
services, clinical monitoring, pre-clinical testing, drug product formulation
and packaging and central laboratory services. Dennis B. Gillings, Ph.D., a
director of the Company, is the Chairman and Chief Executive
-20-
Officer and a significant shareholder of Quintiles Transnational Corp. The
Company paid Quintiles nominal amounts in 1996 and approximately $450,000 and
$1,271,000 during 1997 and 1998, respectively, for services rendered.
In June 1998, Dr. Gillings purchased 10,000 shares of Common Stock
directly from the Company pursuant to the Stock Issuance Program under the 1996
Plan. Dr. Gillings paid a total of $161,250 for the shares, equal to $16.125 per
share, which was the fair market value of the shares on the date of purchase.
The Company has a policy that all material transactions between the
Company and its officers, directors, principal stockholders and other affiliates
will be approved in accordance with the Delaware General Corporation Law by a
majority of the Board, including a majority of the independent and disinterested
directors of the Board, and will be on terms no less favorable to the Company
than could be obtained from unaffiliated third parties.
The Company's Second Restated Certificate of Incorporation eliminates,
subject to certain exceptions, directors' personal liability to the Company or
its stockholders for monetary damages for breaches of fiduciary duties. The
Second Restated Certificate of Incorporation does not, however, eliminate or
limit the personal liability of a director for (i) any breach of the director's
duty of loyalty to the Company or its stockholders, (ii) acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General Corporation Law
or (iv) for any transaction from which the director derived an improper personal
benefit.
The Company's Restated Bylaws provide that the Company shall indemnify its
directors and executive officers to the fullest extent permitted under the
Delaware General Corporation Law, and may indemnify its other officers,
employees and other agents as set forth in the Delaware General Corporation Law.
In addition, the Company has entered into indemnification agreements with its
directors and officers. The indemnification agreements contain provisions that
require the Company, among other things, to indemnify its directors and
executive officers against certain liabilities (other than liabilities arising
from intentional or knowing and culpable violations of law) that may arise by
reason of their status or service as directors or executive officers of the
Company or other entities to which they provide service at the request of the
Company and to advance expenses they may incur as a result of any proceeding
against them as to which they could be indemnified. The Company believes that
these provisions and agreements are necessary to attract and retain qualified
directors and officers. The Company has obtained an insurance policy covering
directors and officers for claims that such directors and officers may otherwise
be required to pay or for which the Company is required to indemnify them,
subject to certain exclusions.
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.
-21-
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires Triangle's officers and
directors, and persons who own more than 10% of a registered class of Triangle's
equity securities, to file reports of ownership and changes in ownership with
the SEC and the Nasdaq Stock Market. Officers, directors and greater than 10%
stockholders are required by SEC regulations to furnish Triangle with copies of
all reports they file pursuant to Section 16(a).
Based solely on a review of the copies of such reports furnished to
Triangle, or written representations that no Form 5s were required, Triangle
believes that, during 1998, all Section 16(a) filing requirements applicable to
its officers, directors and greater than 10% stockholders were satisfied.
DEADLINE FOR STOCKHOLDER PROPOSALS
Stockholder proposals that are intended to be presented at the Company's
annual meeting of stockholders to be held in 2000 must be received by the
Company no later than December 7, 1999, 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 AND LIST OF
EXHIBITS. REQUESTS SHOULD BE SENT TO THE ATTENTION OF INVESTOR RELATIONS AT THE
COMPANY'S EXECUTIVE OFFICES WHICH ARE LOCATED AT 4 UNIVERSITY PLACE, 4611
UNIVERSITY DRIVE, DURHAM, NORTH CAROLINA 27707.
INFORMATION REQUIRED BY ITEM 13(A) OF SCHEDULE 14A IS HEREBY INCORPORATED
BY REFERENCE FROM THE COMPANY'S ANNUAL REPORT ON FORM 10-K.
OTHER BUSINESS
The Board knows of no other business that will be presented for
consideration at the Annual Meeting. If other matters are properly brought
before the Annual Meeting, however, it is the intention of the persons named in
the accompanying proxy to vote the shares represented thereby on such matters in
accordance with their best judgment.
Dated: April 5, 1999 Order of the Board of Directors
Chris A. Rallis, Secretary
-22-
PROXY CARD
TRIANGLE PHARMACEUTICALS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David W. Barry and Chris A. Rallis jointly
and severally, as proxies, with full power of substitution and resubstitution,
to vote all shares of stock which the undersigned is entitled to vote at the
Annual Meeting of Stockholders of Triangle Pharmaceuticals, Inc. to be held on
Friday, May 14, 1999, or at any postponements or adjournments thereof, as
specified on the reverse, and to vote in his discretion on such other business
as may properly come before the Annual Meeting and any adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2 AND 3.
UNLESS OTHERWISE SPECIFIED BY THE UNDERSIGNED, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2 AND 3 AND WILL BE VOTED BY THE PROXYHOLDERS AT THEIR DISCRETION
AS TO ANY OTHER MATTERS PROPERLY TRANSACTED AT THE MEETING OR ANY ADJOURNMENTS
THEREOF. TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS JUST
SIGN BELOW, NO BOXES NEED BE CHECKED.
(PLEASE SIGN AND DATE ON REVERSE SIDE)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
TRIANGLE PHARMACEUTICALS, INC.
MAY 14, 1999
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:
M. Nixon Ellis, Ph.D. and Anthony B. Evnin, Ph.D. will stand for reelection to
the Board for terms to expire in 2002.
2. Approval of Preferred Stock Financing: To approve the terms of the issuance
by the Company, on December 24, 1998, of 170,000 shares of Series A Preferred
Stock, par value $0.001 per share, at a price of $100.00 per share.
/ / FOR / / AGAINST / / ABSTAIN
3. Ratification of Accountants: To ratify and approve the selection of
PricewaterhouseCoopers LLP as independent accountants for the fiscal year ending
December 31, 1999.
/ / FOR / / AGAINST / / ABSTAIN
CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING / /
- ------------------------------ -------------------------------
SIGNATURE OF STOCKHOLDER PRINTED NAME OF STOCKHOLDER
- ------------------------------ Dated: , 1999
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.