<PAGE> 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 sec. 240.14a-11(c) or sec. 240.14a-12
ILEX ONCOLOGY, 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)(l) 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:
- --------------------------------------------------------------------------------
<PAGE> 2
ILEX ONCOLOGY, INC.
11550 IH-10 West, Suite 100
San Antonio, Texas 78230
Telephone: (210) 949-8200
April 28, 1999
Dear Stockholder:
On behalf of the Board of Directors, I cordially invite you to attend
the 1999 Annual Meeting of the Stockholders of ILEX Oncology, Inc. The Annual
Meeting will be held Wednesday, May 26, 1999, at 10:00 a.m. C.D.T. at the Omni
San Antonio Hotel, 9821 Colonnade Boulevard, San Antonio, Texas 78230. The
formal Notice of Annual Meeting is set forth in the enclosed material.
The matters expected to be acted upon at the meeting are described in
the attached Proxy Statement. Following the meeting, stockholders will have the
opportunity to ask questions and comment on ILEX Oncology, Inc.'s operations.
It is important that your views be represented whether or not you are
able to be present at the Annual Meeting. Please sign and return the enclosed
proxy card promptly.
We appreciate your investment in ILEX Oncology, Inc. and urge you to
return your proxy card as soon as possible.
Sincerely,
Richard L. Love
President and Chief Executive Officer
<PAGE> 3
ILEX ONCOLOGY, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of ILEX
Oncology, Inc. (the "Company") will be held on May 26, 1999, at 10:00 a.m.
C.D.T., at the Omni San Antonio Hotel, 9821 Colonnade Boulevard, San Antonio,
Texas, for the following purposes:
(1) A proposal to elect eight (8) directors to serve until
the next annual meeting of stockholders or until their successors are elected
and qualified;
(2) A proposal to ratify the appointment of Arthur Andersen
LLP as independent public accountants of the Company for the fiscal year ending
December 31, 1999; and
(3) To consider and act upon any other matter which may
properly come before the meeting or any adjournment thereof. The Board of
Directors is presently unaware of any other business to be presented to a vote
of the stockholders at the Annual Meeting.
Information with respect to the above matters is set forth in the
Proxy Statement that accompanies this Notice.
The Board of Directors of the Company has fixed the close of business
on March 31, 1999, as the record date for determining stockholders entitled to
notice of and to vote at the meeting. A complete list of the stockholders
entitled to vote at the meeting will be maintained at the Company's principal
executive offices during ordinary business hours for a period of ten (10) days
prior to the meeting. The list will be open to the examination of any
stockholder for any purpose germane to the meeting during this time. The list
will also be produced at the time and place of the meeting and will be open
during the whole time thereof.
By Order of the Board of Directors,
RICHARD L. LOVE
President and Chief Executive Officer
San Antonio, Texas
April 28, 1999
IMPORTANT
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. EVEN
IF YOU PLAN TO BE PRESENT, PLEASE MARK, SIGN, DATE AND RETURN THE ENCLOSED
PROXY AT YOUR EARLIEST CONVENIENCE IN THE ENVELOPE PROVIDED, WHICH REQUIRES NO
POSTAGE IF MAILED IN THE UNITED STATES. IF YOU ATTEND THE MEETING, YOU MAY VOTE
EITHER IN PERSON OR BY YOUR PROXY.
<PAGE> 4
ILEX ONCOLOGY, INC.
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 26, 1999
GENERAL INFORMATION
This Proxy Statement and the accompanying proxy are furnished to the
stockholders of ILEX Oncology, Inc., a Delaware corporation (the "Company" or
"ILEX"), in connection with the solicitation by the Board of Directors (the
"Board") of proxies for use at the Annual Meeting of Stockholders (the "Annual
Meeting" or "Meeting") to be held on May 26, 1999, at 10:00 a.m. C.D.T., at the
Omni San Antonio Hotel, 9821 Colonnade Boulevard, San Antonio, Texas 78230, and
at any adjournment or postponement thereof, for the purposes set forth in the
foregoing Notice of Annual Meeting of Stockholders. Properly executed proxies
received in time for the Meeting will be voted.
The securities of the Company entitled to vote at the Annual Meeting
consist of shares of common stock, $0.01 par value ("Common Stock"). At the
close of business on March 31, 1999 (the "Record Date"), there were outstanding
and entitled to vote 12,926,079 shares of Common Stock. The holders of record
of Common Stock on the Record Date will be entitled to one vote per share. The
Company's Certificate of Incorporation does not permit cumulative voting in the
election of directors.
The Annual Report to Stockholders for the year ended December 31,
1998, has been or is being furnished with this Proxy Statement, which is being
mailed on or about April 28, 1999, to the holders of record of Common Stock on
the Record Date. The Annual Report to Stockholders does not constitute a part
of the proxy materials.
VOTING AND PROXY PROCEDURES
Properly executed proxies received in time for the Meeting will be
voted. Stockholders are urged to specify their choices on the proxy, but if no
choice is specified, eligible shares will be voted for the election of the
eight nominees for director named herein and for ratification of the
appointment of Arthur Andersen LLP as the Company's independent public
accountants for the fiscal year ending December 31, 1999. At the date of this
Proxy Statement, management of the Company knows of no other matters which are
likely to be brought before the Annual Meeting. However, if any other matters
should properly come before the Annual Meeting, the persons named in the
enclosed proxy will have discretionary authority to vote such proxy in
accordance with their best judgment on such matters.
If the enclosed form of proxy is executed and returned, it may
nevertheless be revoked by a later-dated proxy or by written notice filed with
the Secretary of the Company at the Company's principal offices at any time
before the enclosed proxy is exercised. Stockholders attending the Annual
Meeting may revoke their proxies and vote in person. The Company's principal
offices are located at 11550 IH-10 West, Suite 100, San Antonio, Texas 78230.
The holders of a majority of the total shares of Common Stock issued
and outstanding at the close of business on the Record Date, whether present in
person or represented by proxy, will constitute a quorum for the transaction of
business at the Annual Meeting. The affirmative vote of a plurality of the
total shares of Common Stock present in person or represented by proxy and
entitled to vote at the Annual Meeting is required for the election of
directors, and the affirmative vote of a majority of the total shares of Common
Stock present in person or represented by proxy and entitled to vote at the
Annual Meeting is required for the ratification of the appointment of
1
<PAGE> 5
Arthur Andersen LLP as the Company's independent public accountants and any
other matters as may properly come before the Annual Meeting or any adjournment
thereof.
Abstentions are counted toward the calculation of a quorum, but are
not treated as either a vote for or against a proposal. An abstention has the
same effect as a vote against the proposal. Any unvoted position in a brokerage
account will be considered as not voted and will not be counted toward
fulfillment of quorum requirements.
The cost of solicitation of proxies will be paid by the Company. In
addition to solicitation by mail, proxies may be solicited by the directors,
officers and employees of the Company, without additional compensation (other
than reimbursement of out-of-pocket expenses), by personal interview,
telephone, telegram or otherwise. Arrangements will also be made with brokerage
firms and other custodians, nominees and fiduciaries who hold the voting
securities of record for the forwarding of solicitation materials to the
beneficial owners thereof. The Company will reimburse such brokers, custodians,
nominees and fiduciaries for reasonable out-of-pocket expenses incurred by them
in connection therewith.
2
<PAGE> 6
OWNERSHIP OF COMMON STOCK
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth as of the Record Date certain
information with respect to the Company's Common Stock beneficially owned by
each stockholder known by the Company to be the beneficial owner of more than
5% of the Company's Common Stock, each person serving as a director during
fiscal 1998, its nominees for director, each executive officer named in the
Summary Compensation Table and by all its directors and executive officers as a
group.
<TABLE>
<CAPTION>
SHARES PERCENTAGE OF OUTSTANDING
BENEFICIALLY SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED(1)(2) BENEFICIALLY OWNED(3)
- ------------------------------------ ----------- ---------------------
<S> <C> <C>
CTRC Research Foundation(4) 2,782,127 21.52%
8122 Datapoint
San Antonio, Texas 78229
Perseus, L.L.C.(5) 818,383 6.25%
The Army and Navy Club Building
1627 I Street N.W., Suite 610
Washington, D.C. 20006
Daniel D. Von Hoff, M.D.(6)(7) 394,925 3.05%
Richard L. Love(8) 305,580 2.36%
Deirdre K. Tessman, Ph.D.(9) 65,378 *
Gary V. Woods(11)(16)(20) 57,545 *
Timothy J. Williamson 49,500 *
A. Dana Callow, Jr.(13)(14) 38,801 *
Ruskin C. Norman, M.D.(11)(16)(17) 34,198 *
Pedro Santabarbara, M.D., Ph.D.(10) 21,409 *
John L. Cassis(11)(12) 15,130 *
Jason S. Fisherman, M.D.(11)(15) 12,630 *
Joseph S. Bailes, M.D.(18)(19) 9,056 *
Richard Marcel(21) 0 *
Alexander L. Weis, Ph.D.(22) 0 *
All executive officers and directors as a group
(12 persons)(7)(12)(13)(14)(15)(16)(18)(23) 1,015,152 7.74%
</TABLE>
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules and
regulations of the Securities and Exchange Commission. In computing the
number of shares of Common Stock beneficially owned by a person and the
percentage ownership of that person, shares of Common Stock subject to
options and warrants held by that person that are currently exercisable or
exercisable within 60 days of March 31, 1999, are deemed outstanding. Such
shares, however, are not deemed outstanding for the purposes of computing
the percentage ownership of any other person. Except as otherwise noted,
the street address of the named beneficial owner is 11550 IH-10 West,
Suite 100, San Antonio, Texas 78230.
(2) To the Company's knowledge, unless otherwise indicated below, the persons
and entities named in the table have sole voting and sole investment power
with respect to all shares beneficially owned, subject to community
property laws where applicable.
(3) Based on a total of 12,926,079 shares of Common Stock issued and
outstanding on March 31, 1999.
(4) Does not include 14,185 shares of Common Stock issuable upon exercise of
options granted to Mr. Woods and Dr. Norman, who are members of the Board
of Directors of The Cancer Therapy and Research Center of South Texas
("CTRC"). CTRC Research Foundation ("CTRC Research") is a wholly-owned
subsidiary of CTRC, and Mr. Woods and Dr. Norman have agreed to donate
economic gain from such options to CTRC.
(5) Perseus, L.L.C. is the sole manager of Perseus Pharmaceuticals, L.L.C. and
the sole manager, indirectly, of Perseus Capital, L.L.C. Represents
654,706 shares of Common Stock held by Perseus Pharmaceuticals, Inc. and
163,677 shares of Common Stock issuable upon exercise of warrants held by
Perseus Pharmaceuticals, Inc.
3
<PAGE> 7
(6) Includes 28,546 shares of Common Stock issuable upon exercise of options.
(7) Includes 1,000 shares of Common Stock held by Dr. Von Hoff's spouse.
(8) Includes 28,546 shares of Common Stock issuable upon exercise of options.
(9) Includes 23,294 shares of Common Stock issuable upon exercise of options.
(10) Represents 21,409 shares of Common Stock issuable upon exercise of
options.
(11) Includes 12,630 shares of Common Stock issuable upon exercise of options.
(12) Does not include 500,388 shares of Common Stock and warrants to purchase
24,552 shares of Common Stock beneficially owned by Cross-Atlantic
Partners, K/S and Cross-Atlantic Partners II, K/S (collectively the
"Partnerships") and 1,000 shares of Common Stock beneficially owned by
CAP/Hambro, L.P. Mr. Cassis, a principal of the Partnerships and
CAP/Hambro L.P., may be deemed to be a beneficial owner of the shares of
Common Stock beneficially owned by the Partnerships and CAP/Hambro L.P.
Mr. Cassis disclaims any such beneficial ownership.
(13) Excludes 64,129 shares of Common Stock issuable upon exercise of warrants
to Boston Capital Ventures III, Limited Partnership ("BCV"). Does not
include 557,622 shares beneficially owned by BCV. Mr. Callow, a general
partner of the general partner of BCV, may be deemed to be a beneficial
owner of the shares of Common Stock beneficially owned by BCV. Mr. Callow
disclaims beneficial ownership of such shares.
(14) Includes 1,081 shares of Common Stock issuable upon exercise of warrants,
12,630 shares of Common Stock issuable upon exercise of options, 500
shares held in Mr. Callow's IRA and 1,000 shares jointly held by Mr.
Callow and his spouse. Mr. Callow has assigned his economic interest in
the 12,630 shares of Common Stock issuable upon exercise of options to
BCV.
(15) Does not include 594,955 shares beneficially owned by entities under the
control of Advent International Corporation ("Advent"). Dr. Fisherman is a
Vice President of Advent and may be deemed to be the beneficial owner of
such shares. Dr. Fisherman disclaims beneficial ownership of such shares.
(16) Does not include 2,782,127 shares beneficially owned by CTRC Research. See
Footnote (4).
(17) Includes 1,159 shares of Common Stock issuable upon exercise of warrants.
(18) Does not include 626,788 shares of Common Stock beneficially owned by PRN
Research, Inc. ("PRN"). Dr. Bailes is an executive officer of PRN and may,
therefore, be deemed to be the beneficial owner of such shares of Common
Stock. Dr. Bailes disclaims beneficial ownership of such shares.
(19) Represents shares of Common Stock issuable upon exercise of options.
(20) Includes 3,274 shares of Common Stock issuable upon exercise of warrants.
(21) Mr. Marcel resigned from his positions with the Company effective March
15, 1999, and the information provided is from the Company's transfer
agent report dated March 31, 1999.
(22) Dr. Weis resigned from his positions with the Company effective January
23, 1998, and the information provided is from the Company's transfer
agent report dated March 31, 1999.
(23) Includes 184,001 shares of Common Stock issuable upon exercise of options
and 5,514 shares of Common Stock issuable upon exercise of warrants.
MATTERS TO COME BEFORE THE ANNUAL MEETING
PROPOSAL 1: ELECTION OF DIRECTORS
Eight directors (constituting the entire Board) are to be elected at
the Annual Meeting. All of the nominees named below are now directors of the
Company. All nominees have consented to be named and have indicated their
intent to serve if elected.
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<PAGE> 8
NOMINEES
<TABLE>
<CAPTION>
NAME AGE POSITION DIRECTOR SINCE
- ---- --- -------- --------------
<S> <C> <C> <C>
Richard L. Love 55 President, Chief Executive Officer 1993
and Director
Gary V. Woods 55 Chairman of the Board 1993
Joseph S. Bailes, M.D. 42 Director 1997
A. Dana Callow, Jr. 47 Director 1995
John L. Cassis 50 Director 1995
Jason S. Fisherman, M.D. 42 Director 1995
Ruskin C. Norman, M.D. 80 Director 1993
Daniel D. Von Hoff, M.D. 51 Director and Co-Chairman of 1994
Scientific Advisory Board
</TABLE>
Biographical information on these directors is set forth below under
"Further Information -- Board of Directors and Executive Officers." In
connection with the strategic collaboration with Physician Reliance Network,
Inc. ("PRN") in July 1997, Dr. Bailes was elected as a director of the Company.
As part of the strategic collaboration with PRN, the Company has agreed to
nominate a designee of PRN for election as director at each annual meeting of
stockholders until the year 2000. After such time, the Company will nominate a
designee of PRN for election as director so long as PRN (or its affiliates)
owns at least 800,000 shares of Common Stock.
It is the intention of the persons named in the enclosed proxy to vote
such proxy for the election of such nominees. Management of the Company does
not contemplate that any of such nominees will become unavailable for any
reason, but if that should occur before the meeting, proxies that do not
withhold authority to vote for directors will be voted for another nominee, or
other nominees, in accordance with the best judgment of the person or persons
appointed to vote the proxy.
The enclosed form of proxy provides a means for the holders of Common
Stock to vote for each of the nominees listed therein, to withhold authority to
vote for one or more of such nominees or to withhold authority to vote for all
nominees. Each properly executed proxy received in time for the Meeting will be
voted as specified therein, or if a stockholder does not specify in his or her
executed proxy how the shares represented by his or her proxy are to be voted,
such shares shall be voted for the nominees listed therein or for other
nominees as provided above. The director nominees receiving a plurality of the
votes cast at the Annual Meeting will be elected as directors. Abstentions and
broker non-votes will not be treated as a vote for or against any particular
director nominee and will not affect the outcome of the election.
COMMITTEES OF THE BOARD OF DIRECTORS
The business of the Company is managed under the direction of its
Board of Directors. The Board of Directors has established four standing
committees: Audit, Compensation, Stock Option and Relationship Oversight.
The Audit Committee recommends the selection of and confers with the
Company's independent public accountants regarding the scope and adequacy of
annual audits, reviews reports from the independent public accountants and
meets with the independent public accountants and with the Company's financial
personnel to review the adequacy of the Company's accounting principles,
financial controls and policies. The Audit Committee consists of three
non-employee directors: John L. Cassis, Ruskin C. Norman, M.D., and Jason S.
Fisherman, M.D.
5
<PAGE> 9
The Compensation Committee reviews the Company's compensation
philosophy and programs, exercises authority with respect to the payment of
direct salaries and incentive compensation to directors and officers of the
Company and makes recommendations to the Stock Option Committee regarding stock
option grants under the Stock Option Plan. The Compensation Committee consists
of three non-employee directors, Gary V. Woods, A. Dana Callow, Jr. and John L.
Cassis, and one employee director, Richard L. Love. Mr. Love does not
participate in decisions with respect to his own compensation.
The Stock Option Committee reviews recommendations from the
Compensation Committee with respect to option grants to employees and
consultants of the Company, and makes grants under and administers the Stock
Option Plan. The Stock Option Committee consists of three non-employee
directors, Gary V. Woods, A. Dana Callow, Jr. and John L. Cassis.
The Relationship Oversight Committee is comprised of Richard L. Love
and Dr. Jason S. Fisherman and reviews relationships between the Company's
directors, executive officers and members of its Scientific Advisory Board and
third parties to ensure such relationships are in the best interest of the
Company.
MEETINGS OF THE BOARD OF DIRECTORS
During 1998, the Board of Directors met seven (7) times, the
Compensation Committee met three (3) times, the Audit Committee met one (1)
time, the Stock Option Committee met three (3) times, and the Relationship
Oversight committee did not meet. With the exception of Joseph S. Bailes, M.D.,
each of the directors of the Company attended at least 75% of the aggregate of
the meetings of the Board of Directors and committees of which he was a member.
COMPENSATION OF DIRECTORS
Each non-employee director receives a fee of $1,000 for each board
meeting and committee meeting attended, if such committee meeting is held on a
different day than a Board of Director's meeting. In each case, the members of
the Board of Directors are reimbursed for their travel expenses to and from the
meetings. The members of the Board of Directors do not receive a fee for
telephonic meetings. In addition, each non-employee director is eligible to
receive option grants under the Company's Non-Employee Director Stock Option
Plan (NEDSOP). Upon their initial election to the Board, each non-employee
director receives an option grant of 17,128 shares of Common Stock which vests
in monthly increments over a four-year period. Additional option grants under
the NEDSOP are made at the discretion of the Board of Directors.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
ELECTION OF THE INDIVIDUALS NOMINATED FOR ELECTION AS
DIRECTORS
PROPOSAL 2: RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors, upon recommendation of its Audit Committee,
has appointed the firm of Arthur Andersen LLP to serve as independent public
accountants of the Company for the fiscal year ending December 31, 1999.
Although stockholder ratification is not required, the Board has directed that
such appointment be submitted to the stockholders of the Company for
ratification at the Annual Meeting. Arthur Andersen LLP has served as
independent public accountants of the Company with respect to the Company's
consolidated financial statements since the Company commenced operations in
1994 and is considered by management of the Company to be well qualified. If
the stockholders do not ratify the appointment of Arthur Andersen LLP, the
Board of Directors may reconsider the appointment.
Representatives of Arthur Andersen LLP will be present at the Annual
Meeting. They will have an opportunity to make a statement if they desire to do
so and will be available to respond to appropriate questions from stockholders.
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<PAGE> 10
Assuming the presence of a quorum, ratification of the appointment of
Arthur Andersen LLP requires the affirmative vote of a majority of the votes
cast by the holders of shares of Common Stock entitled to vote and present in
person or by proxy at the Annual Meeting. Abstentions and broker non-votes will
not be considered as a vote for or against the proposal and therefore will have
no effect on the outcome of the proposal. Proxies will be voted for or against
such approval in accordance with specifications marked thereon, and if no
specification is made, the proxies will be voted for such approval.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE
PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS OF THE COMPANY FOR THE
FISCAL YEAR ENDING DECEMBER 31, 1999
FURTHER INFORMATION
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
Set forth below is information with respect to each director and
executive officer of the Company as of March 31, 1999. The executive officers
are elected by the Board of Directors and serve at the discretion of the Board.
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Richard L. Love (1) (2) 55 President, Chief Executive Officer and Director
Michael T. Dwyer 53 Vice President and Chief Financial Officer, ILEX Oncology,
Inc., President and Chief Operating Officer, ILEX Oncology
Services, Inc.
Deirdre K. Tessman, Ph.D. 54 Senior Vice President, European Operations, ILEX Oncology
Services, Inc.
Timothy J. Williamson 55 Senior Vice President, Marketing and Business Development,
ILEX Products, Inc.
Pedro Santabarbara, M.D., Ph.D. 46 Vice President, Medical Affairs, ILEX Products, Inc.
Terry Rugg, MB.Ch.B, MMed, FFRad (T)(SA) 39 Vice President, Medical Affairs, ILEX Oncology Services, Inc.
Gary V. Woods (1) (3) 55 Chairman of the Board
Joseph S. Bailes, M.D. 42 Director
A. Dana Callow, Jr. (1) (3) 47 Director
John L. Cassis (1) (3) (4) 50 Director
Jason S. Fisherman, M.D. (2) (4) 42 Director
Ruskin C. Norman, M.D. (4) 80 Director
Daniel D. Von Hoff, M.D. 51 Director and Co-Chairman of Scientific Advisory Board
</TABLE>
- -----------
(1) Member of the Compensation Committee
(2) Member of the Relationship Oversight Committee
(3) Member of Stock Option Committee
(4) Member of the Audit Committee
7
<PAGE> 11
RICHARD L. LOVE has served as President, Chief Executive Officer and
Director of the Company since its inception in December 1993. Mr. Love has more
than 30 years of industry experience with more than 17 years in the biosciences
industry. Prior to forming ILEX, Mr. Love was Chief Operating Officer of CTRC
Research Foundation from April 1991 to September 1994. From 1983 through 1991,
Mr. Love served as CEO of Triton Biosciences Inc., a subsidiary of Shell Oil
Company, and led the sale of Triton Biosciences Inc. to Berlex Laboratories,
Inc., a subsidiary of Schering, A.G. Mr. Love earned his B.S. and M.S. in
Chemical Engineering from Virginia Polytechnic Institute.
MICHAEL T. DWYER has served as President and Chief Operating Officer
of ILEX Oncology Services, Inc. since March 1999, and as Vice President and
Chief Financial Officer of ILEX Oncology, Inc. since joining the Company in May
1998. Prior to that, he served as Senior Vice President and Chief Operating
Officer of CerebroVascular Advances, Inc., a San Antonio-based contract
research organization which was acquired by Quintiles Transnational Corporation
in July 1997. Mr. Dwyer is a Certified Public Accountant and spent 16 years
with Arthur Andersen LLC as a partner before joining CerebroVascular Advances,
Inc.
DEIRDRE K. TESSMAN, PH.D., has served as Senior Vice President,
European Operations since December 1997. From October 1994 to December 1997,
she served as Vice President, Drug Development of the Company. From January
1991 to October 1994, Dr. Tessman served as Director, Worldwide Pharmaceutical
Projects for Schering AG, and from 1987 to 1991 as Director of Pharmaceutical
Project Development at Triton Biosciences Inc. Dr. Tessman has also served as
Director of Clinical Research at Roskon Research Corporation, as Manager of
Clinical Research at Medco Research, Inc. and as a Scientist with
Warner-Lambert/Parke Davis. Dr. Tessman earned her B.S. from Marygrove College,
her M.B.A. from the University of Michigan and her Ph.D. from California Coast
University.
TIMOTHY J. WILLIAMSON has served as Senior Vice President, Marketing
and Business Development of the Company since October 1994. From April 1990
through October 1994, Mr. Williamson served as Vice President for Marketing and
Sales with Boehringer Mannheim Pharmaceutical Corporation ("Boehringer"). Prior
to joining Boehringer, Mr. Williamson served as Regional Sales Director at
Genentech, Inc. and held various positions with Merck Sharp & Dohme, the U.S.
pharmaceutical division of Merck & Co. Inc. Mr. Williamson holds his B.A. from
the University of Texas.
PEDRO SANTABARBARA, M.D., PH.D., has served as Vice President, Medical
Affairs for ILEX Products since August 1996. Prior to joining ILEX, he was
Director of Clinical Research Oncology for Rhone-Poulenc Rorer Pharmaceuticals
in North America from August 1994 to August 1996, and served Bristol-Myers
Squibb Company in its medical oncology departments in domestic and
international positions from February 1988 to August 1994. Dr. Santabarbara
holds his M.D. and Ph.D. degrees from the University of Barcelona where he
specialized in Internal Medicine and Medical Oncology.
TERRY RUGG, MB.CH.B, MMED, FFRAD (T) (SA), joined ILEX Oncology
Services in January 1999 as Vice President, Medical Affairs. Prior to joining
ILEX, Dr. Rugg held the position of Global head, Oncology with British Biotech,
Inc. in Annapolis, Maryland. Previously, with Zeneca Pharmaceuticals in
England, he was employed as a medical advisor for the Tomudex oncology program.
Dr. Rugg holds a doctorate degree from the University of Rhodesia, now
Zimbabwe, and is a Licentiate of the Royal Colleges of Medicine and Surgery,
Edinburgh and Glasgow. He also has specialist qualifications with a Master of
Medicine in clinical oncology and radiotherapy from the University of Natal and
completed a fellowship in Therapeutic Radiology at the College of Medicine of
South Africa.
GARY V. WOODS has served as a Director of ILEX since December 1993 and
was elected Chairman of the Board in October 1994. Since 1979, Mr. Woods has
been employed as President of McCombs Enterprises, Inc., an organization which
invests in automobile dealerships, oil and gas ventures, real estate and
broadcasting. He currently serves on the Board of Directors of several
organizations, including the Cancer Therapy and Research Center of South Texas
("CTRC"), and is Chairman of the Board of Trustees of CTRC Research Foundation
("CTRC Research"), the wholly-owned research subsidiary of CTRC. Mr. Woods
previously served as a director of Titan Holdings, Inc. and the Greater San
Antonio Chamber of Commerce. Mr. Woods also served as President of the San
Antonio Spurs, a professional basketball team, from 1988 to 1993. Mr. Woods
became President of the Minnesota
8
<PAGE> 12
Vikings of the National Football League in August 1998. Mr. Woods received his
B.B.A. from Southwest Texas State University and his M.B.A. from Southern
Methodist University and is a Certified Public Accountant.
JOSEPH S. BAILES, M.D. has served as a Director of ILEX since August
1997. He has been Executive Vice President and National Medical Director for
Physician Reliance Network, Inc. since its formation in 1993 and since 1986 has
been employed as an oncologist by Texas Oncology, P.A. A board certified
oncologist, Dr. Bailes received his medical degree from The University of Texas
Southwestern Medical School in Dallas. He also serves as Chairman of the
Clinical Practice Committee of the American Society of Clinical Oncology. Dr.
Bailes serves as an advisory director of Texas Regional Bancshares.
A. DANA CALLOW, JR. has been a Director of ILEX since October 1995.
Since January 1997 he has been managing general partner of Boston Millenia
Partners. Mr. Callow is also general partner of Boston Capital Ventures, which
he co-founded in 1982. Prior to that, he was a management consultant for
Braxton Associates, Inc. He is or has been a director of many companies,
including PAREXEL International, Inc., Medical Management of New England, Inc.,
Tektagen, Inc., and Continuity Marketing Corporation, Inc. Mr. Callow received
his A.B. from Tufts University and his M.B.A. from The Amos Tuck School at
Dartmouth College.
JOHN L. CASSIS has been a Director of ILEX since September 1995. Mr.
Cassis is a partner with Cross-Atlantic Partners, Inc., formerly Hambro Health
International, which he joined in 1994. Prior to that, he was a Director of
Salomon Brothers Inc, where he co-founded Salomon Brothers Venture Capital in
1986 and headed it from 1990 to 1994. From 1981 to 1986, Mr. Cassis was CEO of
Tower Hall, Inc., a private merchant bank. From 1976 to 1981, he was a Managing
Director of Ardshiel Associates, Inc. (currently Ardshiel Inc.), a merchant
bank. In 1972, Mr. Cassis was employed by Johnson & Johnson ("J&J") where he
founded the Johnson & Johnson Development Corporation, that firm's venture
capital arm, and was J&J's Manager of Acquisitions. Mr. Cassis is currently on
the Board of Directors of The Codman Group and National Healthcare Networks,
and is Chairman of the Board of Directors of IMPATH Inc. and Dome Imaging
Systems, Inc. Mr. Cassis received his A.B. and M.B.A. from Harvard University.
JASON S. FISHERMAN, M.D., has been a Director of ILEX since September
1995. Dr. Fisherman is currently a Vice President at Advent International
Corporation. Prior to joining Advent, Dr. Fisherman served as Senior Director
of Medical Research for Enzon, Inc. from 1991 to 1994. Between 1989 and 1992,
he managed clinical development of a number of anticancer drugs at the National
Cancer Institute (NCI). Dr. Fisherman is currently a director of several
private health care companies. Dr. Fisherman received his B.A. in Molecular
Biophysics and Biochemistry from Yale, his M.D. from the University of
Pennsylvania, and his M.B.A. from Wharton. He is board-certified in internal
medicine and medical oncology.
RUSKIN C. NORMAN, M.D., has been a Director of ILEX since December
1993. Dr. Norman is past member (Senior Partner) of Radiology Physician
Associates, as well as a previous President of St. Luke's Lutheran Hospital. In
1978, he held the post of Chairman of the National Medical Advisory Committee
of the American Health Care Association. Dr. Norman serves on the Board of
Directors of several companies, including CTRC and Compass Bank - San Antonio.
Dr. Norman holds his B.S. in Pharmacy from the St. Louis College of Pharmacy
and his M.D. from the Northwestern University Medical School.
DANIEL D. VON HOFF, M.D., has served as Co-Chairman, Scientific
Advisory Board and a Director of the Company since October 1994. Dr. Von Hoff
has been Director of the Institute for Drug Development ("IDD") and Chief
Executive Officer of CTRC Research since 1989 and 1995, respectively, and has
also been a Clinical Professor of Medicine at the University of Texas Health
Science Center-San Antonio ("UTHSCSA") since 1995. He is a holder of an NCI
grant to conduct Phase I trials with compounds from NCI. Over the past 18
years, Dr. Von Hoff has served on the FDA's Oncology Advisory Committee and was
a member of the Board of Directors of the American Society of Clinical
Oncology. He is currently a member of the Board of Directors and the President
of the American Association for Cancer Research and is the Director of Research
for PRN Research, Inc., a division of Physician Reliance Network. He is the
recipient of numerous awards and honors including the K. Bagshawe Honorary
Lecture for the British Association for Cancer Research, the EORTC Michel
Clavel Lectureship and the Therapeutic Frontiers Lecture Award from the
American College of Clinical Pharmacy. He is a Fellow of the American
Association for the Advancement of Science and is a recipient of both the
Outstanding Professor Award
9
<PAGE> 13
and the Presidential Teaching Award from UTHSCSA. Dr. Von Hoff holds his B.S.
from Carroll College and his M.D. from Columbia College of Physicians and
Surgeons.
All directors of the Company hold office until the next annual meeting
of stockholders and the election and qualification of their successors. Each
officer of the Company was chosen by the Board of Directors and serves at the
pleasure of the Board of Directors until his or her successor is appointed or
until his or her earlier resignation or removal in accordance with applicable
law.
SCIENTIFIC ADVISORY BOARD
The Company has organized a Scientific Advisory Board which consists of
recognized scientists with expertise in oncology. The members of the Scientific
Advisory Board are appointed by the Board of Directors and review and comment
upon the Company's ongoing and proposed scientific projects. The Scientific
Advisory Board also advises the Company on potential areas of clinical interest
and provides scientific evaluations on products under development. The
Scientific Advisory Board meets semi-annually and certain members meet in
smaller groups or individually with the Company as needed. The Company provides
each member of the Scientific Advisory Board, other than the Co-Chairmen, with a
stipend in the amount of $2,000 per meeting and a one-time grant of an option
for 5,710 shares of the Company's Common Stock. The Company also reimburses each
member for expenses incurred when traveling to and attending meetings.
All members of the Scientific Advisory Board have commitments to and/or
consulting contracts with other organizations, including potential competitors
of ILEX, that may limit their availability to the Company. None of these
individuals is expected to devote more than a small portion of his or her time
to the Company. The following are the members of ILEX's Scientific Advisory
Board:
For a biography of DANIEL D. VON HOFF, M.D., see "Board of Directors
and Executive Officers."
CHARLES A. COLTMAN, JR., M.D., is Professor of Medicine at the UTHSCSA
and the Director of the San Antonio Cancer Institute. He is President and CEO
of CTRC, Chairman of Southwest Oncology Group, and has received numerous
citations for his research in cancer control and the treatment of leukemia,
lymphomas, and Hodgkin's Disease. Dr. Coltman is Co-Chairman of ILEX's
Scientific Advisory Board with Daniel D. Von Hoff, M.D., and has served in such
position since November 1994. Dr. Coltman holds his M.D. from the University of
Pittsburgh School of Medicine.
DAVID SAMUEL ALBERTS, M.D., has been a Professor of Medicine and
Pharmacology at the Arizona Cancer Center, Tucson, since 1975, has been a
Director of Cancer Prevention and Control at the NCI since 1988, and served as
chairman of the Oncology Drug Advisory Committee to the FDA from 1982 to 1984.
Dr. Alberts received his B.S. from Trinity College in 1962, and his M.D. from
the University of Virginia in 1966.
LAWRENCE H. EINHORN, M.D., has been associated with Indiana University
since 1973 and currently holds the title of Distinguished Professor of
Medicine. Dr. Einhorn has won numerous awards related to his cancer research,
especially in testicular cancer, and is the recipient of a National Cancer
Institute Outstanding Investigator Grant from 1985 through 1999. Dr. Einhorn
received his M.D. degree from the State University of Iowa Medical School in
1967.
THOMAS R. FLEMING, PH.D., is Chair of the Department of Biostatistics
at the University of Washington and a member of the Fred Hutchinson Cancer
Research Center in Seattle. He has been extensively involved in the design,
conduct and analysis of clinical trials, most notably in AIDS and cancer
research. His areas of special research interest include survival analysis and
clinical trials methods with focus on the role of surrogate markers and data
safety and monitoring boards. Dr. Fleming is the author of the Fleming
Two-Stage Design, an innovative clinical trial design used extensively in
cancer research to reduce the costs and time needed to evaluate experimental
compounds. He received his B.A. in mathematics from the College of St. Thomas
and holds an M.A. and his Ph.D. in statistics, both from the University of
Maryland.
10
<PAGE> 14
MARK R. GREEN, M.D., is the Gilbreth Professor of Clinical Oncology,
Chief of Hematology Oncology and Director of the Hollings Cancer Center at the
Medical University of South Carolina in Charleston, South Carolina. Between
1985 and 1990, he served as the Director of the University of California San
Diego Cancer Center ("UCSD"), an NCI-designated Clinical Cancer Center, and, in
1992, Dr. Green was appointed the first Edwin and Evelyn Tasch Professor in
Cancer Research at UCSD. He held that position until moving to the Medical
University of South Carolina as Director of the Hollings Cancer Center in
August 1996. Dr. Green's research interests are in clinical investigation with
a focus in lung cancer. He attended Harvard College and Harvard Medical School,
receiving his B.A. degree in 1966, and his M.D. in 1970.
WAUN KI HONG, M.D., is an American Cancer Society Clinical Research
Professor, and Professor of Medicine and Chairman of the Department of
Thoracic/Head and Neck Medical Oncology at M.D. Anderson Cancer Center, where
he also holds the Charles A. LeMaistre Chair in Thoracic Oncology. He received
his oncology training at Memorial Sloan-Kettering Cancer Center, and afterward
served as Chief of Medical Oncology at the Boston V.A. Medical Center until
joining M.D. Anderson in 1984. Dr. Hong is dedicated to translational research
in both head and neck and lung cancer, and also focuses on the area of
chemoprevention.
ALEXANDRA M. LEVINE, M.D., joined the staff at the University of
Southern California School of Medicine in 1977 and is currently a professor of
Medicine and Chief, Division of Hematology and Medical Oncology. Dr. Levine
served as the Executive Associate Dean of the University of Southern California
School of Medicine from 1985 to 1990. Dr. Levine's research interests include
the hematologic malignancies. She began an active program in AIDS research in
1981, focused primarily on the cancers related to AIDS, and most recently on
HIV disease in women. She worked with Dr. Jonas Salk from 1987 until his death
in 1995 on a potential AIDS vaccine. Dr. Levine was appointed to the
Presidential HIV/AIDS Advisory Council by President Clinton in June 1995, and
currently serves as Chair of the Research Committee for the Presidential
Council. Dr. Levine graduated from the University of California at Berkeley,
and received her M.D. from the University of Southern California School of
Medicine. She received training in Internal Medicine and Hematology at the
University of Southern California School of Medicine, and in Oncology at Emory
University.
JEFFREY M. TRENT, PH.D., serves as both the Scientific Director and
the Chief of the Laboratory of Cancer Genetics, National Center for Human
Genome Research. Dr. Trent was recruited to the NIH Bethesda campus to
establish the Intramural Research Program of the National Center for Human
Genome Research. He received his Bachelor's Degree from Indiana University and
his Ph.D. from The University of Arizona. He remained on the faculty at The
University of Arizona for several years, where he served as the Director of
Basic Research for the Arizona Comprehensive Cancer Center. He then accepted an
Endowed Chair in Oncology at the University of Michigan in Ann Arbor where he
also directed the Basic Science Program of the Cancer Center. His research
interests are in the molecular genetics and cytogenetics of human cancer.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee is responsible for making all compensation
decisions for the named executives including determining base salary and annual
incentive compensation amounts and recommending stock option grants and other
stock-based compensation under the Stock Option Plan.
Overall Objectives of the Executive Compensation Program
The purpose of the Company's compensation plan is to attract, retain
and motivate key management employees. It is the philosophy of the Company to
pay its executives at levels commensurate with both Company and individual
performance. A primary consideration in developing the Company's executive
compensation programs is to link the long-term financial interests of
executives with those of the Company and its stockholders. Throughout 1998, the
Compensation Committee reviewed compensation for comparable organizations in
order to establish the Company's total compensation program and recommend
awards under the Stock Option Plan.
11
<PAGE> 15
Base Salary Program
It is the Company's policy to establish salaries at a level
approximating the average of the competitive levels in comparable research and
development organizations and to provide annual salary increases reflective of
the executive's performance, level of responsibility and position with the
Company. Based on a review of comparable organizations, Richard L. Love's base
annual salary for 1998 was $193,500.
Annual Incentive
Each year, the Compensation Committee evaluates the performance of the
Company as a whole, as well as the performance of each individual executive.
Factors considered include revenue growth, product acquisition, in-licensing
and out-licensing agreements and collaborative agreements. The Compensation
Committee does not utilize formalized mathematical formulas, nor does it assign
weightings to these factors. The Compensation Committee, in its sole
discretion, determines the amount, if any, of incentive payments to each
executive. The Compensation Committee believes that the Company's growth in
revenue requires subjectivity on the part of the Compensation Committee when
determining incentive payments. The Compensation Committee believes that
specific formulas restrict flexibility. Richard L. Love received a $23,220
bonus from the Company in 1998.
Stock Option Plan
On April 10, 1995, the Board of Directors of the Company adopted, and
the stockholders of the Company approved, the Stock Option Plan. The Stock
Option Plan, as amended, provides for the issuance of up to a maximum of
1,800,000 shares of the Company's Common Stock to key employees of and
consultants to the Company or any of its subsidiaries. Options granted under
the Stock Option Plan may be either incentive stock options ("ISOs") or options
which do not qualify as ISOs ("non-ISOs").
The Stock Option Plan is administered by a committee of at least two
non-employee members of the Board of Directors, chosen by the Board of
Directors, and is currently administered by the Stock Option Committee. The
current members of the Stock Option Committee are Messrs. Cassis, Callow and
Woods. The Compensation Committee has the authority to recommend to the Stock
Option Committee those individuals to whom stock options should be granted, the
number of shares to be covered by each option, the option price, the type of
option, the option period, the vesting restrictions, if any, with respect to
exercise of the option, the terms for payment of the option price and other
terms and conditions. Non-employee directors of the Company, which include
various members of the Compensation Committee and all of the members of the
Stock Option Committee, are not eligible to receive options under the Stock
Option Plan.
At December 31, 1998, the Company had granted options under the Stock
Option Plan to purchase an aggregate of 1,178,736 shares of Common Stock at a
weighted average exercise price per share of $7.07.
Section 162(m)
Section 162(m) of the Code currently imposes a $1 million limitation
on the deductibility of certain compensation paid to each of the Company's five
highest paid executives. Excluded from this limitation is compensation that is
"performance based." For compensation to be performance based it must meet
certain criteria, including being based on predetermined objective standards
approved by stockholders. In general, the Company believes that compensation
relating to options granted under the Stock Option Plan should be excluded from
the $1 million limitation calculation. Compensation relating to the Company's
incentive compensation awards do not currently qualify for exclusion from the
limitation, given the discretion that is provided to the Compensation Committee
in establishing the performance goals for such awards. The Compensation
Committee believes that maintaining the discretion to evaluate the performance
of the Company's management is an important part of its responsibilities and
inures to the benefit of the Company's stockholders. The Compensation
Committee, however, intends to take into account the potential application of
Section 162(m) with respect to incentive compensation awards and other
compensation decisions made by it in the future.
12
<PAGE> 16
Conclusion
The Compensation Committee believes these executive compensation
policies serve the interests of the stockholders and the Company effectively.
The Compensation Committee believes that the various pay vehicles offered are
appropriately balanced to provide increased motivation for executives to
contribute to the Company's overall future successes, thereby enhancing the
value of the Company for the stockholders' benefit.
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
Gary V. Woods
John L. Cassis
A. Dana Callow, Jr.
Richard L. Love
EXECUTIVE COMPENSATION
The following table summarizes all compensation awarded to, earned by
or paid for services rendered to the Company in all capacities during the years
ended December 31, 1996, 1997 and 1998 by the Company's Chief Executive Officer
and the Company's four other most highly compensated executive officers during
1998 (together, the "Named Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL ----------
COMPENSATION SECURITIES ALL OTHER
FISCAL ------------ UNDERLYING COMPENSATION
NAME & PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) OPTIONS (#) ($)
- ------------------------- ---- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Richard L. Love 1998 $ 193,500 $ 23,220 -- $ 3,400(1)
President and Chief 1997 $ 193,500 $ 38,700 -- $ 3,400(1)
Executive Officer 1996 $ 176,732 $ 45,000 -- $ 3,400(1)
Richard Marcel (2) 1998 $ 180,000 $ 18,000 -- --
Vice President and Chief 1997 -- -- -- --
Operating Officer, ILEX 1996 -- -- -- --
Oncology Services, Inc.
Timothy J. Williamson 1998 $ 140,868 $ 11,269 25,000 --
Senior Vice President, 1997 $ 135,450 $ 20,318 6,300 --
Marketing and Business 1996 $ 129,000 $ 25,800 47,500 --
Development, ILEX Products, Inc.
Deirdre K. Tessman, Ph.D 1998 $ 155,000 $ 19,200 -- --
Senior Vice President, 1997 $ 140,700 $ 21,105 6,500 --
European Operations, ILEX 1996 $ 134,000 $ 26,800 22,838 --
Oncology Services, Inc.
Pedro Santabarbara, M.D., 1998 $ 195,810 $ 23,497 -- --
Ph.D., Vice President, 1997 $ 183,000 $ 36,600 -- $ 40,499(3)
Medical Affairs, ILEX Products, 1996 $ 58,153 $ 15,000 42,818 $ 44,843(4)
Inc
</TABLE>
- -------------
1) Life insurance premiums paid by the Company.
2) Mr. Marcel resigned from his positions with the Company on March 15, 1999.
3) Represents relocation expenses paid by the Company.
4) Represents relocation expenses in the amount of $18,733, a signing bonus
of $25,000 and interest paid on a loan by the Company on behalf of Dr.
Santabarbara in the amount of $1,110.
13
<PAGE> 17
STOCK OPTION GRANTS IN FISCAL 1998
The following tables set forth information concerning individual
grants of stock options, exercises of stock options, and aggregate stock
options held for each of the Named Officers listed in the Summary Compensation
Table above for the year ended December 31, 1998:
OPTION GRANTS IN 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK PRICE
SECURITIES TOTAL OPTIONS EXERCISE APPRECIATION FOR
UNDERLYING GRANTED TO PRICE OPTION TERM(1)
OPTIONS EMPLOYEES IN PER SHARE EXPIRATION -------------------
NAME GRANTED (#) 1998 DATE 5% 10%
- ---- ----------- ------------- --------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Richard L. Love 0 -- -- -- -- --
Richard Marcel 0 -- -- -- -- --
Timothy J. Williamson 25,000 6.3% $9.75 10/21/03 $67,344 $148,812
Deirdre K. Tessman, Ph.D 0 -- -- -- -- --
Pedro Santabarbara, M.D., Ph.D. 0 -- -- -- -- --
</TABLE>
- ---------------
(1) The potential realizable value is calculated based on the term of the
option and is calculated by assuming that the fair market value of Common
Stock on the date of the grant as determined by the Board appreciates at
the indicated annual rate compounded annually for the entire term of the
option and that the option is exercised and the Common Stock received
therefor is sold on the last day of the term of the option for the
appreciated price. The 5% and 10% rates of appreciation are derived from
the rules of the Securities and Exchange Commission and do not reflect the
Company's estimate of future stock price appreciation. The actual value
realized may be greater than or less than the potential realizable values
set forth in the table.
AGGREGATE OPTION EXERCISES IN 1998 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
SHARES NUMBER OF SECURITIES VALUE OF UNEXERCISED IN-
ACQUIRED UNDERLYING UNEXERCISED THE-MONEY OPTIONS AT
UPON OPTION VALUE OPTIONS AT FY-END (#) FY-END ($)(1)
EXERCISE(#) REALIZED ------------------------- -----------------------------
NAME ($)(2) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Richard L. Love 0 0 28,546 0 $ 217,806 $ 0
Richard Marcel 0 0 10,000 30,000 37,500 112,500
Timothy J. Williamson 0 0 49,075 29,725 520,125 34,500
Deirdre K. Tessman, Ph.D. 2,854 14,270 19,210 16,294 153,556 23,521
Pedro Santabarbara, M.D., Ph.D. 0 0 12,704 21,409 65,044 11,882
</TABLE>
- --------------
(1) The dollar values have been calculated by determining the difference
between the fair market value of the securities underlying the options at
December 31, 1998 ($11.13) and exercise prices of the options.
(2) The value realized is determined as the difference between the fair market
value of the securities on the exercise date and the exercise price of the
options.
14
<PAGE> 18
EMPLOYMENT AGREEMENTS AND CHANGE-OF-CONTROL ARRANGEMENTS
Richard L. Love was party to an employment agreement with the Company
for a four-year period which expired in November 1998. The agreement provided
for an initial base salary of $175,000 per year. The agreement contained a
non-disclosure covenant and provided that for a period of one year after
termination of employment, Mr. Love could not compete with the Company by
engaging in certain Restricted Activities (as defined in the agreement). The
agreement provided that either party could terminate the agreement without
cause upon 30 days' notice.
Pedro Santabarbara, M.D., Ph.D. is a party to an employment agreement
dated August 27, 1996 with the Company. The agreement provides for an initial
base salary of $180,000 per year. The agreement provides that either party may
terminate the agreement without cause upon 30 days' notice; however, in the
event the Company elects to terminate the agreement without cause within four
years of the date of the agreement, the Company is required to pay Dr.
Santabarbara a severance payment. The agreement contains a non-disclosure
covenant and provides that for a period of one year after termination of
employment, Dr. Santabarbara will not compete with the Company, solicit its
customers or recruit its employees.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee of the Company's Board of
Directors are Messrs. Cassis, Callow, Woods and Love. The Compensation
Committee makes recommendations to the Board of Directors regarding executive
compensation matters, including decisions relating to salary and bonus and
grants of stock options. During the last fiscal year, Mr. Love participated in
deliberations concerning compensation of executive officers of the Company
other than himself.
15
<PAGE> 19
PERFORMANCE GRAPH
The Company's Common Stock has been traded publicly since February 21,
1997. Prior to such date, there was no established market for its Common Stock.
The following Performance Graph compares the Company's cumulative total
stockholder return on its Common Stock from February 21, 1997 (the first day
which the Common Stock was publicly traded), through December 31, 1998, with
the cumulative total return of the NASDAQ National Market and the NASDAQ
Pharmaceutical Index over the same period.
[GRAPH]
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG THE COMPANY, THE NASDAQ NATIONAL MARKET AND THE NASDAQ
PHARMACEUTICAL INDEX
<TABLE>
<CAPTION>
Total Returns Index For 2/21/97 6/30/97 12/31/97 6/30/98 12/31/98
- ----------------------- ------- ------- -------- ------- --------
<S> <C> <C> <C> <C> <C>
The Company 100.0 122.12 56.73 75.96 85.58
NASDAQ Market Index 100.0 108.52 118.81 142.90 167.42
NASDAQ Pharmaceutical Index 100.0 92.37 93.02 94.77 118.91
</TABLE>
16
<PAGE> 20
The foregoing graph is based on historical data and is not necessarily
indicative of future performance. This graph shall not be deemed to be
"soliciting material" or to be "filed" with the Commission or subject to
Regulations 14A and 14C under the Exchange Act or to the liabilities of Section
18 under the Exchange Act.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires that the Company's
directors, executive officers and persons who own more than 10% of a registered
class of the Company's equity securities file with the Commission initial
reports of ownership and reports of changes in ownership of Common Stock and
other equity securities of the Company. Directors, executive officers and
greater than 10% stockholders are required by Commission regulations to furnish
the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of
the Section 16(a) reports furnished to the Company and written representations
that no other reports were required, during the fiscal year ended December 31,
1998, all Section 16(a) filing requirements applicable to its directors,
executive officers and greater than 10% beneficial owners were complied with
the exception of: Deirdre Tessman filed one Form 4 late representing one stock
option exercise, Tim Williamson failed to file one Form 5 representing one
stock option acquisition, and Michael T. Dwyer filed his Form 3 late.
CERTAIN TRANSACTIONS
ILEX was formed in December 1993 for the purpose of conducting certain
advanced drug development programs and pursuing commercial opportunities of
CTRC. The Company and CTRC Research have an agreement not to commence any legal
action against it, in the case of CTRC Research, the Board of Directors of the
Company, other than Directors of the Company who are also employees or officers
of or consultants to ILEX, or, in the case of ILEX, the Board of Trustees of
CTRC Research, for any claim that would have been covered by any directors' and
officers' liability insurance policies maintained by CTRC or ILEX, as
applicable, subject to certain exceptions. This agreement terminated upon
consummation of the initial public offering of the Company's Common Stock on
February 20, 1997, but remains in effect with respect to any activity occurring
prior to the termination of the agreement.
The Company has a lease agreement with CTRC Research for office space,
a lab and a manufacturing facility. For the year ended December 31, 1998, the
Company paid CTRC Research approximately $280,000 related to these lease
agreements. The Company leases its manufacturing facility from a non-profit
corporation that is controlled by CTRC Research and the Texas Research and
Technology Foundation. Such lease provides that rent will be paid at a fixed
monthly rate plus a percentage of gross sales from the facility, as defined in
the lease. The Company was not required to begin making fixed monthly payments
until 1998 or payments based on a percentage of gross sales until certain gross
levels are achieved. At December 31, 1998, the Company had payables to CTRC
Research amounting to approximately $92,000 related to the aforementioned
services and lease agreements.
CTRC Research and Sanofi S.A. ("Sanofi") are parties to various
research and development funding agreements (the "Sanofi Agreements") pursuant
to which Sanofi has an exclusive option to license all products or rights
arising from the research conducted under the Sanofi Agreements. The Company
has entered into a subordinated option agreement (the "Subordinated Option
Agreement") with CTRC Research. The terms of the Subordinated Option Agreement
provide that, in the event Sanofi declines or fails to exercise its options to
license a CTRC Research product or right, ILEX has the first right to negotiate
with CTRC Research to license such product or right, and, upon the expiration
of the Sanofi Agreements, the first right to negotiate a funding and licensing
agreement with CTRC Research for programs unencumbered by Sanofi. The
Subordinated Option Agreement expires March 2000.
In June 1996, the Company entered into a services agreement with
Lipitek International, Inc. ("Lipitek"), a corporation whose sole stockholder
and chief executive officer is Dr. Alexander L. Weis, who served as Executive
Vice President, Chief Scientific Officer and Director of the Company until his
resignation from such positions on January 23, 1998. The scope of the services
to be performed by Lipitek pursuant to the agreement and the payment
17
<PAGE> 21
for such services will be agreed to by the parties on a project-by-project
basis. Subject to certain conditions, the agreement may be terminated on 30
days' notice by either party.
Subcontractors provide the Company with consulting services and
non-clinical and clinical testing related to certain of its contracts. During
the year ended December 31, 1998, the Company incurred approximately the
following expenses for subcontracting and consulting costs to the named related
parties:
<TABLE>
<S> <C>
CTRC Research $ 699,000
Dr. Von Hoff 351,462
Lipitek International, Inc. 322,417
</TABLE>
At December 31, 1998 the following subcontractor and consulting costs
were payable to the named related parties:
<TABLE>
<S> <C>
CTRC Research $ 99,000
</TABLE>
In July 1997, the Company and Dr. Von Hoff entered into a consulting
agreement, pursuant to which he receives an annual payment of $243,000 plus an
incentive payment of up to $125,000 based upon achievement by the Company of
certain revenue goals. The consulting agreement expires in June 2002.
18
<PAGE> 22
PROPOSALS FOR 2000 ANNUAL MEETING
The deadline for submission of shareholder proposals pursuant to Rule
14a-8 under the Securities Exchange Act of 1934 as amended ("Rule 14a-8"), for
inclusion in the Company's proxy statement for its Annual Meeting of
Stockholders in the year 2000 is December 30, 1999. After March 14, 2000,
notice to the Company of a shareholder proposal submitted otherwise than
pursuant to Rule 14a-8 will be considered untimely, and the person named in
proxies solicited by the Board of Directors of the Company for its Annual
Meeting of Stockholders in the year 2000 may exercise discretionary authority
voting power with respect to any such proposal as to which the Company does not
receive timely notice.
OTHER MATTERS
As of the date of this Proxy Statement, management does not intend to
present any other items of business and is not aware of any matters to be
presented for action at the Annual Meeting other than those described above.
However, if any other matters should come before the Annual Meeting, it is the
intention of the persons named as proxies in the accompanying proxy card to
vote in accordance with their best judgment on such matters.
By order of the Board of Directors,
RICHARD L. LOVE
President and Chief Executive Officer
San Antonio, Texas
April 28, 1999
19
<PAGE> 23
PROXY
----------------------------------------------
ILEX ONCOLOGY, INC.
PROXY -- ANNUAL MEETING OF STOCKHOLDERS -- MAY 26, 1999
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
Please mark, sign, date and return in the enclosed envelope.
The undersigned stockholder of ILEX Oncology, Inc. (the "Company")
hereby appoints Richard L. R Love and Michael T. Dwyer, or each of them,
proxies of the undersigned with full power of O substitution to vote at
the Annual Meeting of Stockholders of the Company to be held on Wednesday,
X May 26, 1999, at 10:00 a.m., C.D.T., at the Omni San Antonio Hotel, 9821
Colonnade Boulevard, San Y Antonio, Texas, and at any adjournment thereof,
the number of votes which the undersigned would be entitled to cast if
personally present:
(1) ELECTION OF DIRECTORS
[ ] FOR [ ] WITHHOLD AUTHORITY
all nominees listed below to vote for all nominees listed below
(except as marked below)
Richard L. Love Gary V. Woods A. Dana Callow, Jr.
John L. Cassis Jason S. Fisherman, M.D. Ruskin C. Norman, M.D.
Daniel D. Von Hoff, M.D. Joseph S. Bailes, M.D.
INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE,
DRAW A LINE THROUGH OR STRIKE OUT THAT NOMINEE'S NAME AS SET
FORTH ABOVE.
(2) PROPOSAL TO RATIFY THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE
COMPANY'S INDEPENDENT PUBLIC ACCOUNTANTS FOR THE FISCAL YEAR
ENDING DECEMBER 31, 1999.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
<PAGE> 24
(3) To consider and act upon any other matter which may properly
come before the meeting or any adjournment thereof; all as more
particularly described in the Proxy Statement dated April 28,
1999, relating to such meeting, receipt of which is hereby
acknowledged.
This proxy when properly executed will be voted in the manner
directed herein by the undersigned shareholder. If no direction is made,
this proxy will be voted FOR the nominees listed in Proposal 1 and FOR
Proposal 2.
--------------
--------------
Signature of Stockholder(s)
Please sign your name exactly as it appears
hereon. Joint owners must each sign. When signing
as attorney, executor, administrator, trustee or
guardian, please give your full title as it
appears hereon.
Dated __________________________, 1999.
