<PAGE>
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 Section 240.14a-11(c) or Section
240.14a-12
MAXIM PHARMACEUTICALS
- --------------------------------------------------------------------------------
(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)(1)
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>
[LETTERHEAD]
January 13, 1999
Dear Stockholder:
On behalf of the Board of Directors and management of Maxim
Pharmaceuticals, Inc., I invite you to our Annual Meeting to be held on
Friday, February 19, 1999, 10:00 a.m. EST at the American Stock Exchange,
Board of Governors Room, 13th Floor, 86 Trinity Place, New York, New York.
At the meeting we will highlight the recent progress made in advancing the
commercialization of MAXAMINE-TM-, our immunotherapeutic for cancer and
infectious diseases. We will also share our vision and plans for continuing the
rapid development of your Company in the upcoming year. We hope that it will be
possible for many of you to attend in person.
It is important to us that your shares be represented at the Annual Meeting
whether or not you plan to attend. You can be sure your shares are voted at the
meeting in accordance with your preferences by properly completing, signing and
returning your proxy card in the enclosed envelope as soon as possible.
We also invite those of you in Europe unable to attend the Annual Meeting
to attend a management update meeting to be held Monday, February 22, 1999, 8:00
a.m. Swedish Time, at the Stockholm Stock Exchange Hall, Kallargrand 2,
Stockholm, Sweden. If you plan to attend the European management update meeting
you must still return your proxy card in advance of the Annual Meeting to ensure
that your shares are voted at the Annual Meeting.
Thank you for your continuing interest and support.
Sincerely,
/s/ LARRY G. STAMBAUGH
Larry G. Stambaugh
Chairman of the Board
<PAGE>
MAXIM PHARMACEUTICALS, INC.
8899 UNIVERSITY CENTER LANE, SUITE 400
SAN DIEGO, CALIFORNIA 92122
(619) 453-4040
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD FEBRUARY 19, 1999
To the Stockholders of Maxim Pharmaceuticals, Inc.:
The Annual Meeting of the Stockholders of Maxim Pharmaceuticals, Inc.
will be held Friday, February 19, 1999, 10:00 a.m. EST at The American Stock
Exchange, Board of Governors Room, 13th Floor, 86 Trinity Place, New York, New
York, for the following purposes as are more fully described in the accompanying
Proxy Statement:
1. To elect one Director to the Board of Directors to hold office for a
three-year term or until his successor is elected and qualified. The
following person is a nominee for election to the Board of Directors
by holders of the Common Stock: Colin B. Bier, Ph.D.
2. To consider and act upon a proposal to ratify the initial
selection of KPMG Peat Marwick LLP as the Company's independent
public accountants for the fiscal year ending September 30, 1999;
and
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Stockholders of record at the close of business on January 4, 1999, are
entitled to vote at the Annual Meeting or any adjournment, postponement or
continuation thereof.
To assure that your shares will be voted at the meeting, you are requested
to complete, date and sign the enclosed proxy card and return it promptly in the
enclosed, postage-paid, addressed envelope. No additional postage is required
if mailed in the United States. If you attend the meeting, you may revoke your
proxy and vote in person on all matters submitted at the meeting even though you
have previously mailed your proxy card. Please note, however, that if your
shares are held of record by a broker, bank or other nominee and you wish to
vote at the Annual Meeting, you must obtain from the record holder a proxy
issued in your name.
By order of the Board of Directors,
/s/ DALE A. SANDER
Dale A. Sander
Secretary
San Diego, California
January 13, 1999
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. YOUR VOTE
IS IMPORTANT REGARDLESS OF THE NUMBER OF SHARES YOU OWN. PLEASE EXECUTE THE
ENCLOSED PROXY AND RETURN IT PROMPTLY IN THE ENVELOPE PROVIDED.
<PAGE>
MAXIM PHARMACEUTICALS, INC.
8899 UNIVERSITY CENTER LANE, SUITE 400
SAN DIEGO, CALIFORNIA 92122
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
FEBRUARY 19, 1999
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Maxim Pharmaceuticals, Inc., a Delaware corporation (the "Company"), for use at
the Annual Meeting of Stockholders to be held on February 19, 1999, at
10:00 a.m., EST (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at The American Stock Exchange,
Board of Governors Room, 86 Trinity Place, New York, New York. The Company
intends to mail this proxy statement and accompanying proxy card on or about
January 13, 1999 to all stockholders entitled to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of Common Stock beneficially owned
by others to forward to such beneficial owners. The Company may reimburse
persons representing beneficial owners of Common Stock for their costs of
forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, facsimile,
telegram or personal solicitation by directors, officers or other regular
employees of the Company. No additional compensation will be paid to directors,
officers or other regular employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on
January 4, 1999 will be entitled to notice of and to vote at the Annual
Meeting. At the close of business on January 4, 1999, the Company had
outstanding and entitled to vote 9,915,570 shares of Common Stock. Each
holder of record of Common Stock on such date will be entitled to one vote
for each share held on all matters to be voted upon at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards
a quorum, but are not counted for any purpose in determining whether a matter
has been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 8899
University Center Lane, Suite 400, San Diego, California 92122, a written notice
of revocation or a duly executed proxy bearing a later date, or it may be
revoked by attending the meeting and voting in person. Attendance at the
meeting will not, by itself, revoke a proxy.
STOCKHOLDER PROPOSALS
The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2000 Annual
Meeting pursuant to Rule 14a-8, "Shareholder Proposals," of the Securities and
Exchange Commission is September 13, 1999. Pursuant to the Company's Bylaws,
the deadline for submitting a stockholder proposal or a nomination for a
director that is not to be included in such proxy statement and proxy is
December 22, 1999. Stockholders are also advised to review the Company's
Bylaws, which contain additional requirements with respect to stockholder
proposals and director nominations.
1
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Restated Certificate of Incorporation and Bylaws provide
that the Board of Directors shall be divided into three classes, each class
consisting of one or two directors, with each class having a three-year term.
Vacancies on the Board may be filled only by persons elected by a majority
of the remaining directors. A director elected by the Board to fill a
vacancy (including a vacancy created by an increase in the Board of
Directors) shall serve for the remainder of the full term of the class of
directors in which the vacancy occurred and until such director's successor
is elected and qualified.
The Board of Directors is presently composed of five members. There is one
director in the class whose term of office expires in 1999. The nominee for
election to this class is currently a director of the Company who was previously
elected by the stockholders. If elected at the Annual Meeting, the nominee
would serve until the 2002 annual meeting and until his successor is elected and
has qualified, or until such director's earlier death, resignation or removal.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented by
executed proxies will be voted, if authority to do so is not withheld, for the
election of the nominee named below. In the event that the nominee should be
unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of such substitute nominee as management may
propose. The person nominated for election has agreed to serve if elected, and
management has no reason to believe that the nominee will be unable to serve.
Set forth below is biographical information for the person nominated and
each person whose term of office as a director will continue after the Annual
Meeting.
NOMINEE FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2002 ANNUAL MEETING
COLIN B. BIER, PH.D.: Dr. Bier, age 52, has served as a director of the
Company since 1994. Dr. Bier has served as Managing Director of ABA
BioResearch, an independent bioregulatory affairs consulting firm, since 1988.
Dr. Bier is also a director of Boston Life Sciences, Inc., BioChem Vaccins, a
subsidiary of BioChem Pharmaceuticals, NYMOX Pharmaceuticals Corporation,
Receptagen Corp. and Sparta Pharmaceuticals, Inc.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF THE NAMED NOMINEE.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2000 ANNUAL MEETING
F. DUWAINE TOWNSEN: Mr. Townsen, age 65, has served as a director of the
Company since 1993. Mr. Townsen has served as a Managing Partner of Ventana
Growth Funds, a group of five venture capital funds, since 1983. Prior to that,
Mr. Townsen served as Chairman of the Board of Directors and Chief Executive
Officer of Kay Laboratories, Inc., a manufacturer of medical products.
Mr. Townsen is a certified public accountant. Mr. Townsen is also a director of
Cymer, Inc.
THEODOR H. HEINRICHS: Mr. Heinrichs, age 71, served as General Partner
of the Hambrecht & Quist Life Science Venture from 1985 to 1997. Previously,
Mr. Heinrichs also served as Chairman and Chief Executive Officer of Cutter
Laboratories, Inc. and Chairman and Chief Executive Officer of Miles
Laboratories, Inc.
2
<PAGE>
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2001 ANNUAL MEETING
PER-OLOF MARTENSSON: Mr. Martensson, age 61, has served as a director of
the Company from 1993 to 1995 and again beginning in 1996. Since 1998, and from
1991 to 1997, Mr. Martensson has served as President and Chief Executive Officer
of Karo Bio AB, a pharmaceutical company; he is also a director of the company.
From 1997 to 1998 Mr. Martensson served as Chairman of Karo Bio. Since 1990,
Mr. Martensson has owned and operated POM Advisory Services AB, an independent
consulting firm. From 1992 to 1995, Mr. Martensson served as Chairman of
Skandigen AB, a diversified investment company. From 1987 to 1990, Mr.
Martensson served as President of Pharmacia LEO Therapeutics AB, and as
Executive Vice President of Pharmacia AB, both biopharmaceutical companies.
From 1985 to 1990, Mr. Martensson served as President and Chief Executive
Officer of AB LEO, a biopharmaceutical company. Mr. Martensson is also a
director of AB Elekta. Mr. Martensson received an M.S. in Pharmacy from The
Royal Institute of Pharmaceutical Sciences (Kungliga Farmacevtiska Institutet)
in Stockholm, Sweden.
LARRY G. STAMBAUGH: Mr. Stambaugh, age 51, has served as the Company's
Chairman of the Board of Directors, President and Chief Executive Officer since
1993. From 1989 to 1992, Mr. Stambaugh served in a number of positions at ABC
Laboratories, Inc., an international contract science research laboratory,
including Chairman of the Board of Directors, President and Chief Executive
Officer. From 1983 to 1989, Mr. Stambaugh served as Executive Vice President
and Chief Financial Officer of CNB Financial Corporation, a multi-bank holding
company. Mr. Stambaugh received a B.A. in business administration from Washburn
University and is a certified public accountant.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended September 30, 1998, the Board of Directors
held five meetings. The Board has an Audit Committee, a Compensation Committee,
a Nominating Committee and a Technology Committee which all operate
independently of the Company's management.
The Audit Committee, composed solely of outside directors, meets at least
annually with the Company's independent auditors to, among other things, review
the results and scope of the annual audit and discuss the Company's financial
statements and receive and consider comments as to controls, adequacy of staff
and management performance and procedures in connection with audit and financial
controls. The Audit Committee also makes recommendations to the Board regarding
the retention of independent auditors. The Audit Committee is currently
composed of Mr. Townsen, Dr. Bier and Mr. Martensson. It met once during the
fiscal year ended September 30, 1998.
The Compensation Committee, composed solely of outside directors, makes
recommendations concerning salaries and incentive compensation, administers and
awards stock options to employees and consultants under the Company's equity
incentive plans and otherwise determines compensation levels and performs such
other functions regarding compensation as the Board may delegate. The
Compensation Committee is currently composed of Messrs. Townsen, Bier and
Martensson. It met one time during the fiscal year ended September 30, 1998.
The Nominating Committee interviews, evaluates, nominates and recommends
individuals for membership on the Company's Board of Directors and committees
thereof and nominates specific individuals to be elected as officers of the
Company by the Board of Directors. No procedure has been established for the
consideration of nominees recommended by stockholders. The Nominating Committee
is currently composed of Messrs. Stambaugh, Townsen and Martensson. This
committee met once during the fiscal year ended September 30, 1998.
The Technology Committee meets with management to evaluate and make
recommendations regarding the progress of the Company's technologies and product
development activities. The Technology Committee is currently comprised of
Mr. Martensson and Dr. Bier. This committee met once during the fiscal year
ended September 30, 1998.
3
<PAGE>
During the fiscal year ended September 30, 1998, each Board member, with
the exception of Mr. Martensson, attended 75% or more of the aggregate of the
meetings of the Board and of the committees on which he served, held during the
period for which he was a director or committee member, respectively.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected KPMG Peat Marwick LLP as the Company's
independent public accountants for the fiscal year ending September 30, 1999 and
has further directed that management submit the selection of independent
auditors for ratification by the stockholders at the Annual Meeting. KPMG Peat
Marwick LLP has audited the Company's financial statements since 1994.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
Annual Meeting, will have an opportunity to make a statement if they so desire
and will be available to respond to appropriate questions. Stockholders
ratification of the selection of KPMG Peat Marwick LLP as the Company's
independent public accountants is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of KPMG Peat Marwick
LLP to the stockholders for ratification as a matter of good corporate practice.
If the stockholders fail to ratify the selection, the Audit Committee and the
Board will reconsider whether or not to retain that firm. Even if the selection
is ratified, the Audit Committee and the Board at their discretion may direct
the appointment of a different independent accounting firm at any time during
the year if they determine that such a change would be in the best interests of
the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of KPMG Peat Marwick LLP.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE
IN FAVOR OF PROPOSAL 2.
4
<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of January 4, 1999 by: (i) each nominee for
director; (ii) each director; (iii) each executive officer listed in the table
entitled Compensation of Executive Officers (iv) all executive officers and
directors of the Company as a group; and (v) all those known by the Company to
be beneficial owners of more than five percent of its Common Stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNER (1) BENEFICIAL OWNERSHIP
-------------------- ---------------------------------------
NUMBER OF SHARES PERCENT OF TOTAL (2)
---------------- --------------------
<S> <C> <C>
Clearwater Funds (3)...................... 1,016,083 10.13%
611 Druid Hills Road East, No. 200
Clearwater, FL 34616
HealthCap KB (4).......................... 677,747 6.63%
Sturegatan 34
SE 114 36, Stockholm, Sweden
S-E-Banken Funds (5)...................... 506,666 5.11%
Kastanjevagen 4
S-13246 Saltsjo-300, Sweden
F. Duwaine Townsen (6).................... 326,500 3.27%
8880 Rio San Diego Drive, Suite 500
San Diego, CA 92108
Larry G. Stambaugh (7).................... 298,284 2.93%
Colin B. Bier, Ph.D.(8)................... 50,000 *
Theodor H. Heinrichs (9).................. 1,000 *
Per-Olof Martensson (10).................. 55,333 *
Kurt R. Gehlsen, Ph.D. (11)............... 23,552 *
Dale A. Sander (12)....................... 17,532 *
Geoffrey B. Altman (13)................... 10,174 *
All Directors and Officers as a Group (9 782,375 7.78%
persons) (14)
</TABLE>
- ----------------------
* Less than 1%
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the Securities
and Exchange Commission (the "SEC"). Except as otherwise indicated, the
Company believes that each of the beneficial owners of the shares listed
above, based on information furnished by such owners, has sole investment
and voting power with respect to shares indicated as beneficially owned,
subject to community property laws where applicable.
(2) Percentage of beneficial ownership is based on an aggregate of 9,915,570
shares of Common Stock outstanding as of January 4, 1999, adjusted as
required by rules promulgated by the SEC.
5
<PAGE>
(3) Includes (i) 829,000 shares held by Clearwater Fund IV, LLC, and 73,183
shares held by Clearwater Offshore Fund, Ltd. and (ii) 113,900 redeemable
warrants exercisable within 60 days of January 4, 1999.
(4) Includes 310,100 redeemable warrants exercisable within 60 days of January
4, 1999.
(5) Includes 8,000 shares subject to warrants exercisable within 60 days of
January 4, 1999.
(6) Includes (i) 16,666 shares held by Ventana II, (ii) 1,825 shares held by
Ventana Growth Capital Fund V L.P., and (iii) 215,745 shares and 833 shares
subject to warrants exercisable within 60 days of January 4, 1999 held by
Ventana Partnership III L.P. Mr. Townsen, a director of the Company, is a
general partner of each of the aforementioned entities. Mr. Townsen
disclaims beneficial ownership of all shares held by such entities except
to the extent of his pecuniary interest therein, if any. Includes 35,181
shares held jointly by Mr. Townsen and his wife. Also includes 55,000
shares subject to stock options exercisable within 60 days of January 4,
1999 and 1,250 shares subject to warrants exercisable within 60 days of
January 4, 1999 held by Mr. Townsen.
(7) Includes 1,000 shares and 1,000 redeemable warrants exercisable within 60
days of January 4, 1999 held by Mr. Stambaugh's spouse, and 270,833 shares
subject to stock options exercisable within 60 days of January 4, 1999.
(8) Includes 50,000 shares subject to stock options exercisable within 60 days
of January 4, 1999.
(9) Includes 1,000 shares held by Hematec, Inc.. Mr. Heinrichs, a director of
the Company, is the principal equity shareholder of Hematec, Inc. Mr.
Heinrichs disclaims beneficial ownership of all shares held by such entity
except to the extent of his pecuniary interest therein, if any.
(10) Includes 55,000 shares subject to stock options exercisable within 60 days
of January 4, 1999.
(11) Includes 21,733 shares subject to stock options exercisable within 60 days
of January 4, 1999.
(12) Includes 17,250 shares subject to stock options exercisable within 60 days
of January 4, 1999.
(13) Includes 5,000 shares subject to stock options exercisable within 60 days
of January 4, 1999.
(14) Includes 1,000 shares subject to redeemable warrants, 2,083 shares subject
to warrants and 474,816 shares subject to stock options exercisable within
60 days of January 4, 1999. See Notes 6-13.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file. To the Company's knowledge, based solely upon a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required during the fiscal year ended September 30, 1998, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent stockholders were complied with.
6
<PAGE>
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
The Company has adopted a director compensation policy under which each
non-employee director of the Company will receive an annual fee of $4,000 and a
per-meeting fee of $1,000, if attended in person, or $500 if attended by
telephone. Each non-employee director will also receive a fee of $250 per
committee meeting attended ($500 per committee meeting attended in the capacity
as that committee's chairperson). In the fiscal year ended September 30, 1998,
the total compensation paid to non-employee directors was $36,375. In addition,
each non-employee director will receive an automatic stock option grant of
10,000 shares of Common Stock upon his election or reelection to the Board and
5,000 shares annually if he attends at least 75% of the meetings held during a
fiscal year. Non-employee directors are also eligible for reimbursement for
their expenses incurred in connection with attendance at Board meetings in
accordance with Company policy. In connection with his reelection as a director
at the February 20, 1998 annual meeting of stockholders of the Company, the
Company granted Mr. Martensson a fully vested option to purchase 10,000 shares
of Common Stock at an exercise price of $15.75 per share. Additionally, on March
2, 1998, Mr. Townsen, Mr. Martensson and Mr. Bier were each granted a fully
vested option to purchase 5,000 shares of Common Stock at an exercise price of
$15.75 for attending at least 75% of the Board meetings held during the fiscal
year ended September 30, 1997. Mr. Stambaugh was granted stock options on
November 9, 1998 in connection with his services as President and Chief
Executive Officer. See "Compensation of Executive Officers" below. In
addition, entities affiliated with certain of the directors have, from time to
time, entered into transactions with the Company. See "Certain Transactions."
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company, their positions with the Company and
experience are set forth below.
<TABLE>
<CAPTION>
Year in
which he
became an
Name Position(s) Age Officer
- ---- ----------- --- -------
<C> <C> <C> <C>
Larry G. Stambaugh President and Chief 51 1993
Executive Officer
Kurt R. Gehlsen, Ph.D. Vice President, Development 42 1996
and Chief Technical Officer
Dale A. Sander Vice President, Finance, 39 1996
Chief Financial Officer
and Secretary
Geoffrey B. Altman Vice President, Marketing and 37 1998
Sales
Ram B. Rastogi, Ph.D. Vice President, Clinical Affairs 51 1999
</TABLE>
The officers of the Company hold office at the discretion of the Board of
Directors of the Company. During Fiscal 1998, the officers of the Company
devoted substantially all of their business time to the affairs of the Company
for the period in which they were employed, and they intend to do so during
Fiscal 1999.
LARRY G. STAMBAUGH has served as the Company's Chairman of the Board of
Directors, President and Chief Executive Officer since 1993. From 1989 to 1992,
Mr. Stambaugh served in a number of positions at ABC Laboratories, Inc., an
international contract science research laboratory, including Chairman of the
Board of Directors, President and Chief Executive Officer. From 1983 to 1989,
Mr. Stambaugh served as Executive Vice President and Chief Financial Officer of
CNB Financial Corporation, a multi-bank holding company. Mr. Stambaugh received
a B.A. in business administration from Washburn University and is a certified
public accountant.
7
<PAGE>
KURT R. GEHLSEN, PH.D. joined the Company as Chief Technical Officer and
Vice President, Development in 1996. From 1991 to 1995, Dr. Gehlsen served as
Chairman of the Board of Directors, President and Chief Executive Officer of
Trauma Products, Inc., a biomedical company. From 1989 to 1991, Dr. Gehlsen
served as Senior Research Scientist and Head, Division of Molecular and Cellular
Biology, Pharmacia Experimental Medicine Division of Pharmacia, Inc., a
biopharmaceutical company and as Vice President, Chief Operating Officer and
Director of Molecular and Cellular Biology for the La Jolla Institute for
Experimental Medicine. Dr. Gehlsen received a B.S. in biology from the
University of Arizona and a Ph.D. from the University of Arizona College of
Medicine.
DALE A. SANDER joined the Company in 1996 as Chief Financial Officer, Vice
President, Finance and Secretary. From 1993 to 1996, Mr. Sander served as Chief
Financial Officer of Pacific Pharmaceuticals, Inc., a biotech company. From
1991 to 1993, Mr. Sander served as Chief Financial Officer of Tactyl
Technologies, Inc., a medical device manufacturer. Prior to 1991 he worked for
over nine years with Ernst & Young, an international professional service firm.
Mr. Sander is a Certified Public Accountant and has a B.S. in Accounting from
San Diego State University.
GEOFFREY B. ALTMAN joined the Company in 1997. From 1997 to 1998, he
served as Senior Director, Marketing and Sales of the Company. From 1994 to
1997, Mr. Altman served as Director of Worldwide Marketing Development and
Director of U.S. Sales and Marketing of Agouron Pharmaceuticals. Prior to 1994,
Mr. Altman worked for six years with Amgen Inc. as Product Manager for the
launch of the drug Neupogen-Registered Trademark- and as Associate Director
responsible for the United States marketing of Neupogen.
RAM B. RASTOGI, Ph.D. joined the Company in 1999. Dr. Rastogi served
from 1995 to 1998 as Vice President, Product Development (Global) at PPD
Pharmaco, a contract research organization. Dr. Rastogi also directed
clinical development activities in various positions with Ciba-Geigy (now
Novartis) from 1985 to 1995 and American Cyanamid from 1980 to 1985. Dr.
Rastogi has managed successful regulatory filings for 16 products in the
oncology, infectious disease, neuropsychiatric, rheumatology and
cardiovascular therapeutic areas.
8
<PAGE>
COMPENSATION OF EXECUTIVE OFFICERS
The following table shows, for each of the three fiscal years ending
September 30, 1998, compensation awarded or paid to or earned by the Company's
Chief Executive Officer, its other two executive officers at September 30, 1998
and one additional individual who became an executive officer subsequent to
September 30, 1998 (collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
--------------------------------------------------------------------------------------
OTHER ANNUAL SECURITIES
COMPENSATION UNDERLYING
PRINCIPAL POSITION (1) YEAR SALARY ($) BONUS ($) (2) ($) (4) OPTIONS (#)
---------------------- ---- ---------- ------------- ------- -----------
<S> <C> <C> <C> <C> <C>
Larry G. Stambaugh 1998 $275,000 $57,750 $ 7,523 83,334
President and Chief Executive Officer 1997 $225,000 $60,000 $ 692 83,333
1996 $180,000 $67,500 $ - 233,333
Kurt R. Gehlsen, Ph.D. (3) 1998 $175,000 $27,000 $ 5,531 -
Vice President, Development and Chief 1997 $140,000 $20,000 $ 808 23,334
Technical Officer 1996 $126,000 (5) $ - $ - 66,666
Dale A. Sander (3) 1998 $150,000 $27,000 $ 4,901 -
Vice President, Finance, 1997 $125,000 $15,000 $ 721 75,000
Chief Financial Officer and Secretary 1996 $ - $ - $ - -
Geoffrey B. Altman (3) 1998 $125,000 $ - $ 1,731 -
Senior Director, Marketing and Sales 1997 $125,000 (5) $ - $ - 20,000
1996 $ - $ - $ - -
</TABLE>
- ----------------------------
(1) The principal position for each of the Named Executive Officers reflects
the offices and titles held by each of them for the fiscal year ended
September 30, 1998.
(2) Bonuses are reflected in the fiscal year earned.
(3) Dr. Gehlsen , Mr. Sander and Mr. Altman's employment commenced in May 1996,
October 1996 and September 1997, respectively.
(4) Other Annual Compensation is comprised of the Company's nondiscretionary
matching contribution to its 401(k) plan.
(5) Dr. Gehlsen's fiscal year 1996 salary and Mr. Altman's fiscal year 1997
salary have been annualized.
9
<PAGE>
The Company grants options to its Executive Officers under its 1993
Long-Term Incentive Plan (the "Incentive Plan"). A total of 1,300,000 shares
of Common Stock have been reserved for issuance under the Incentive Plan. As
of January 13, 1999, 130,690 shares had been issued upon the exercise of
stock awards granted under the Incentive Plan, 1,040,483 shares were subject
to outstanding stock options and 128,827 shares remained available for future
grants. During the fiscal year ended September 30, 1998, under the Incentive
Plan, the Company granted to all current executive officers as a group
options to purchase 83,334 shares at an exercise price of $14.50 per share,
to all employees (excluding executive officers) as a group options to
purchase 75,500 shares at exercise prices of $9.00 to $20.25 per share and to
all current directors who are not officers as a group options to purchase
25,000 shares at an exercise price of $15.75 per share.
The Incentive Plan provides for grants of incentive stock options to
employees (including officers and directors) and nonstatutory stock options,
restricted stock purchase awards, stock bonuses and stock appreciation rights
to employees (including officers and directors) of and consultants to the
Company. To date, only incentive stock options and nonstatutory stock options
have been awarded under the Incentive Plan. Incentive stock options granted
under the Incentive Plan are intended to qualify as "incentive stock options"
within the meaning of section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"). Nonstatutory stock options granted under the Incentive
Plan are intended not to qualify as incentive stock options under the Code.
With respect to employee-officers, directors, employee-directors and
consultant-directors, the Incentive Plan is administered by the Compensation
Committee. The Chief Executive Officer administers the Incentive Plan with
respect to all other employees and consultants.
Incentive stock options may be granted under the Incentive Plan only to
employees (including directors and officers) of the Company and its
affiliates. Employees (including directors and officers), directors and
consultants are eligible to receive awards other than incentive stock options
under the Incentive Plan. No employee, director or consultant is eligible to
receive awards covering more than 200,000 shares of Common Stock in any
calendar year. In general, the exercise price of incentive stock options
under the Incentive Plan may not be less than the fair market value of the
Common Stock subject to the option on the date of the option grant. No
incentive stock option may be granted under the Incentive Plan to any person
who, at the time of the grant, owns (or is deemed to own) stock possessing
more than 10% of the total combined voting power of the Company or any
affiliate of the Company, unless the option's exercise prices is at least
110% of the fair market value of the stock subject to the option on the date
of grant, and the term of the option does not exceed five years from the date
of grant. For incentive stock options granted under the Incentive Plan, the
aggregate fair market value, determined at the time of grant, of the shares
of Common Stock with respect to which such options are exercisable for the
first time by an optionee during any calendar year (under all such plans of
the Company and its affiliates) may not exceed $100,000. In the event of a
decline in the value of the Company's Common Stock, the Compensation
Committee has the authority to offer optionees the opportunity to replace
outstanding higher priced options, whether incentive or nonstatutory, with
new lower priced options. Shares covered by currently outstanding options
typically vest at a rate of 20% or 25% every year following the date of
grant, so that the shares would be fully vested on the fifth or fourth
anniversary of the date of the grant, assuming the optionee's continued
employment or services as an employee, consultant or director. In general,
the maximum term of options under the Incentive Plan is ten years. Options
outstanding under the Incentive Plan have a term of seven years from the date
of grant. Notwithstanding this, incentive stock options granted to employees
generally terminate 90 days following termination of the optionees's
employment, or in some cases longer if termination of employment is a result
of the optionee's death or disability. Certain of the Company's executive
officers hold options which terminate upon the earlier of (a) the termination
of the optionee's employment with cause; (b) one year after (i) the
termination of optionee's employment without cause, (ii) any significant
reduction or adverse change in the nature or scope of the optionee's
authority, duties, status, position or compensation which would be a basis
for optionee to terminate any applicable employment agreement, (iii)
termination following a change of control of the Company or (iv) optionee's
retirement, death or disability; or (c) seven years after the date of grant.
10
<PAGE>
If there is any change in the stock subject to the Incentive Plan or
subject to any award granted under the Incentive Plan (through merger,
consolidation, reorganization, recapitalization, stock dividend, dividend in
property other than cash, stock split, liquidating dividend, combination of
shares, exchange of shares, change in corporate structure or otherwise), the
Incentive Plan and awards outstanding thereunder will be appropriately adjusted
as to the class and the maximum number of shares subject to such plan and the
class, number of shares and price per share of stock subject to such outstanding
awards.
The following table shows, for the fiscal year ended September 30, 1998,
certain information regarding options granted to the Named Executive Officers.
OPTION GRANTS DURING YEAR ENDED SEPTEMBER 30, 1998
<TABLE>
<CAPTION>
POTENTIAL REALIZED
NUMBER OF VALUE AT ASSUMED
SECURITIES % OF TOTAL ANNUAL RATE OF STOCK
UNDERLYING OPTIONS PRICE APPRECIATION FOR
OPTIONS GRANTED TO EXERCISE PRICE OPTION TERM($) (2)
GRANTED EMPLOYEES IN PER SHARE EXPIRATION ------------------
NAME (#) (1) FISCAL YEAR ($/Sh) DATE 5% 10%
- -------------------------- --------- ----------- -------------- ---------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
Larry G. Stambaugh (3) 83,334 52.47% $14.50 10/30/04 $491,917 $1,146,376
Kurt R. Gehlsen, Ph.D. (3) - - - - - -
Dale A. Sander (3) - - - - - -
Geoffrey B. Altman (3) - - - - - -
</TABLE>
- ------------------
(1) Consists of stock options granted pursuant to the Incentive Plan. The
maximum term of each option granted is seven years from the date of grant.
The exercise price is equal to the market value of the stock on the grant
date as adjusted for subsequent stock splits.
(2) In accordance with the rules of the SEC, shown are the gains or "option
spreads" that would exist for the respective options granted. These gains
are based on the assumed rates of annually compounded stock price
appreciation of 5% and 10% from the date the option was granted over the
full option term. These assumed annually compounded rates of stock price
appreciation are mandated by the rules of the SEC and do not represent the
Company's estimates or projection of future Common Stock prices.
(3) On November 9, 1998, options were granted based upon performance during the
fiscal year ended September 30, 1998, as follows: Larry G. Stambaugh,
75,000 shares; Kurt R. Gehlsen, Ph.D., 35,000 shares; Dale A. Sander,
30,000 shares; and Geoffrey B. Altman, 35,000 shares. Each option had an
exercise price of $12.875 per share, an expiration date of November 9, 2005
and generally vest over four years.
11
<PAGE>
The following table sets forth certain information for the Named Executive
Officers with respect to the exercise of options to purchase Common Stock during
the fiscal year ended September 30, 1998 and the number and value of securities
underlying unexercised options held by the Named Executive Officers as of
September 30, 1998.
AGGREGATED OPTION EXERCISES IN THE YEAR ENDED
SEPTEMBER 30, 1998 AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
SHARES COMMON STOCK UNDERLYING VALUE OF UNEXERCISED
ACQUIRED UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS AT
ON VALUE SEPTEMBER 30, 1998 SEPTEMBER 30, 1998 ($)(2)
EXERCISE REALIZED ------------------ -------------------------
NAME (#) ($)(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ---------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
25,000 $298,438 270,834 104,166 $2,546,873 $ 242,184
Larry G. Stambaugh
Kurt R. Gehlsen, Ph.D. 26,600 376,725 21,734 41,666 $ 197,096 $ 383,435
Dale A. Sander 12,000 93,375 17,250 45,750 $ 101,672 $ 270,141
Geoffrey B. Altman - - 5,000 15,000 $ 10,938 $ 32,813
</TABLE>
- --------------
(1) Represents the fair market value of the underlying shares on the date of
exercise less the exercise or base price, and does not necessarily imply
that the shares were sold by the optionee.
(2) The fair market value of the underlying shares on September 30,1998 less
the exercise price.
EMPLOYMENT AGREEMENTS
Pursuant to an executive employment agreement between the Company and
Larry G. Stambaugh, the Chairman, President and Chief Executive Officer of
the Company, dated November 9, 1998, Mr. Stambaugh receives an annual salary
of not less than $310,000, an annual bonus in an amount up to 30% of his
annualized base salary and equity compensation as determined by the Board of
Directors. The term of Mr. Stambaugh's employment agreement expires on
December 31, 2001. The employment agreement also provides that, if Mr.
Stambaugh's employment is terminated without cause or upon constructive
discharge, he will receive a severance payment equal to his then annual base
salary plus health care insurance coverage for one year or the remainder of
the term of his employment agreement, whichever is greater. Mr. Stambaugh's
stock option agreements provide that such options will become fully
exercisable in the event his employment is terminated without cause or
following a change in control of the Company. In addition, the Company has
agreed to pay a portion of the cost of maintaining a life insurance policy in
the amount of $1,000,000 on Mr. Stambaugh's behalf.
Pursuant to an executive employment agreement between the Company and Kurt
R. Gehlsen, Ph.D., the Chief Technical Officer and Vice President, Development
of the Company, dated October 1, 1998, Dr. Gehlsen receives an annual salary of
not less than $190,000 and an annual bonus in an amount up to 25% of his
annualized base salary and equity compensation as determined by the Board of
Directors. The term of Dr. Gehlsen's employment agreement expires on
December 31, 2000. The employment agreement provides that if Dr. Gehlsen's
employment is terminated without cause he will be entitled to continuation of
his then base salary and health benefits for six months. Dr. Gehlsen's stock
option agreements provide that such options will become fully exercisable in the
event his employment is terminated without cause or following a change in
control of the Company.
Pursuant to an executive employment agreement between the Company and Dale
A. Sander, the Chief Financial Officer and Vice President, Finance of the
Company, dated October 1, 1998, Mr. Sander receives an annual salary of not less
than $170,000 and an annual bonus in an amount up to 20% of his annualized base
salary and equity compensation as determined by the Board of Directors. The
term of Mr. Sander's employment agreement expires on December 31, 2000. The
employment agreement provides that if Mr. Sander's employment is terminated
without cause he will be entitled to continuation of his then base salary and
health benefits for six months. Mr. Sander's stock option
12
<PAGE>
agreements provide that such options will become fully exercisable in the
event his employment is terminated without cause or following a change in
control of the Company.
Pursuant to an executive employment agreement between the Company and
Geoffrey B. Altman, Vice President, Marketing and Sales of the Company, dated
October 1, 1998, Mr. Altman receives an annual salary of not less than $145,000
and an annual bonus in an amount up to 20% of his annualized base salary and
equity compensation as determined by the Board of Directors. The term of
Mr. Altman's employment agreement expires on December 31, 2000. The employment
agreement provides that if Mr. Altman's employment is terminated without cause
he will be entitled to continuation of his then base salary and health benefits
for six months. Mr. Altman's stock option agreements provide that such options
will become fully exercisable in the event his employment is terminated without
cause or following a change in control of the Company.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS ON EXECUTIVE
COMPENSATION(1)
The Company's executive compensation program is administered by the
Compensation Committee (the "Committee") of the Board of Directors. The
Committee is appointed by the Board and is comprised of three outside,
non-employee Directors. The Committee has responsibility for all
compensation matters concerning the Company's executive officers.
COMPENSATION PHILOSOPHY
The Board's executive compensation program strongly links management pay
with the Company's annual and long-term performance. The program is intended to
attract, motivate and retain senior management by providing compensation
opportunities that are consistent with Company performance. The program
provides for base salaries which reflect such factors as level of
responsibility, individual performance, internal fairness and external
competitiveness; annual incentive cash bonus awards which are payable upon the
Company's achievement of annual financial and management objectives approved by
the Board; and long-term incentive opportunities in the form of stock options
and other equity incentives which strengthen the mutuality of interest between
management and the Company's stockholders. Each executive officer's target
total annual compensation (i.e., salary plus bonus) is determined after a review
of independent survey data regarding similarly situated executives at firms in
the Company's industry. While the income tax implications of the compensation
program to the Company and its division executive officers are continually
assessed, including the $1 million per covered employee limitation on the
compensation expenses deductible by the Company, they are not presently a
significant factor in the administration of the program.
The Company strives to provide compensation opportunities which emphasize
effectively rewarding management for the achievement of critical performance
objectives. The Committee supports a pay-for-performance policy that determines
compensation amounts based on Company and individual performance. While the
establishment of base salaries turns principally on the factors noted above,
annual incentive bonuses for senior corporate executives are based on the
performance of the Company as a whole. In addition, the program provides stock
incentive opportunities designed to align the interests of executives and other
key employees with other stockholders through the ownership of Common Stock.
The following is a discussion of each of the elements of the Company's executive
compensation program including a description of the decisions and actions taken
by the Committee with respect to compensation in fiscal 1998 for the Chief
Executive Officer and all executive officers as a group.
- -------------------------
(1) The material in this report is not soliciting material," is not deemed
"filed" with the SEC, and is not to be incorporated by reference into any
filing of the Company under the Securities Act of 1933, as amended (the
"Securities Act") or the Exchange Act, whether made before or after the
date hereof and irrespective of any general incorporation language
contained in such filing.
13
<PAGE>
MANAGEMENT COMPENSATION PROGRAM
Compensation paid to the Company's executive officers for fiscal 1998
(as reflected in the foregoing tables with respect to the Named Executive
Officers) consisted of the following elements: base salary, annual incentive
cash bonuses under the Company's incentive bonus plans and stock options and
other equity incentives under the Incentive Plan.
BASE SALARY
With respect to determining the base salary of executive officers, the
Committee takes into consideration a variety of factors including the
executive's levels of responsibility and individual performance, and the
salaries of similar positions in the Company and in comparable companies in
the Company's industry. The Committee believes that its process for
determining and adjusting the base salary of executive officers is fully
consistent with sound personnel practices. Annual adjustments in base
salaries typically are made effective at the beginning of the fiscal year for
which they are intended to apply and therefore reflect in large part the
prior year's business and individual performance achievements.
ANNUAL INCENTIVE BONUS PROGRAM
The Company's incentive bonus program for its executive officers (including
the Named Executive Officers) is based on the achievement of annual performance
targets and other management objectives which are established annually, but
which are subject to adjustment as the Committee deems appropriate. The
Company's targets and objectives consist of operating, strategic and financial
goals that are considered to be critical to the Company's fundamental long-term
goal -- building stockholder value. For fiscal 1998 these goals were:
- Increasing shareholder value and securing additional financing.
- Further advancing the commercialization of the MAXAMINE-TM- product
candidate, including advancement of pivotal human clinical testing.
- Implementing strategies relating to the marketing and manufacturing of
MAXAMINE.
- Identifying additional potential applications for the Company's key
products and technologies
Final calculation of the Company's financial performance and determination
and payment of the awards is made as soon as is practicable after the completion
of the Company's fiscal year. Individual incentive bonus awards to executive
officers for the Company's 1998 fiscal year were determined by the Committee
based on application of the aforementioned factors to the Company's performance
for fiscal 1998 and were paid after its conclusion.
1993 LONG-TERM INCENTIVE PLAN
The long term incentive element of the Company's management compensation
program provides for grants of stock awards, which now include (i) incentive
stock options, (ii) nonstatutory stock options, (iii) stock bonuses, (iv) rights
to purchase restricted stock and (v) stock appreciation rights. These
discretionary stock awards are granted and administered by the Committee under
the Incentive Plan which is intended to create an opportunity for employees of
the Company to acquire an equity ownership interest in the Company and thereby
enhance their efforts in the service of the Company and its stockholders. The
compensatory and administrative features of the Incentive Plan conform in all
material respects to the design of standard comparable plans in industry and
are, in the Committee's estimation, fair and reasonable.
Stock options granted to the Company's executive officers and other
employees of the Company typically include vesting provisions of up to five
years. The Committee believes that by rationing the exercisability of these
stock options over future years, the executive retention impact of the
Incentive Plan will be strengthened and management's motivation to enhance the
value of the Company's stock will be constructively influenced.
CHIEF EXECUTIVE OFFICER COMPENSATION
Mr. Stambaugh's annual incentive bonus award for fiscal 1998 was earned
under the same plan applicable to all other executive officers of the Company.
Based on the performance of the Company in the prior fiscal year and the
Committee's assessment of Mr. Stambaugh's ongoing personal performance in the
position of Chief Executive Officer, Mr. Stambaugh received an annual incentive
bonus award equal to approximately 21% of his
14
<PAGE>
fiscal 1998 year-end salary. Among the factors considered by the Committee in
its consideration of Mr. Stambaugh's bonus were the continued progress of the
commercialization of MAXAMINE, including the advancement of three Phase III
cancer clinical trials and the completion of three corporate collaborations,
and the completion of a $38 million follow-on offering.
Mr. Stambaugh was granted stock options under the Incentive Plan for 83,334
shares of Common Stock on October 30, 1997, at the option price of $14.50 per
share, and 75,000 shares on November 9, 1998, at the option price of $12.875 per
share. He is eligible to receive additional option grants in the future at the
discretion of the Committee. Among the factors considered by the Committee in
its consideration of Mr. Stambaugh's option grant in November 1998 were the
factors discussed above.
SECTION 162(m) OF THE INTERNAL REVENUE CODE
Section 162(m) of the Code limits the Company to a deduction for federal
income tax purposes of no more than $1 million of compensation paid to certain
executive officers in a taxable year. Compensation above $1 million may be
deducted if it is "performance-based compensation" within the meaning of the
Code.
The statute containing this law and the applicable Treasury regulations
offer a number of transitional exceptions to this deduction limit for
pre-existing compensation plans, arrangements and binding contracts. As a
result, the Committee believes that at the present time it is quite unlikely
that the compensation paid to any Named Executive Officer in a taxable year
which is subject to the deduction limit will exceed $1 million. The
Committee has determined that stock options granted under the Incentive Plan
with an exercise price at least equal to the fair market value of the
Company's common stock on the date of grant shall be treated as
"performance-based compensation" under Section 162(m) of the Code. The
Compensation Committee has not yet established a policy for determining which
other forms of incentive compensation awarded to its Named Executive Officers
shall be designed to qualify as "performance-based compensation." The
Compensation Committee intends to continue to evaluate the effects of the
statute and any Treasury regulations and to comply with Code Section 162(m)
in the future to the extent consistent with the best interests of the Company.
F. Duwaine Townsen
Per-Olof Martensson
Colin B. Bier
15
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above, the Company's compensation committee consists of
Messrs. Townsen, Martensson and Bier, none of which have ever served as officers
or employees of the Company.
PERFORMANCE MEASUREMENT COMPARISON(1)
The following graph shows a comparison of cumulative total returns on an
investment of $100 cash in the Company, the Hambrecht & Quist Biotech Index and
the American Stock Exchange Market Index for the period that commenced July 10,
1996 (the date on which the Company's Common Stock was first traded on the
American Stock Exchange) and ended on September 30, 1998. The graph assumes
that all dividends have been reinvested.
Researy Data Group Peer Group Total Return Worksheet
Maxim Pharmaceuticals Inc. (MMP)
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURN
--------------------------------------
7/11/96 9/96 9/97 9/98
<S> <C> <C> <C> <C>
MAXIM PHARMACEUTICALS, INC. 100.00 135.00 206.67 197.50
AMEX MARKET VALUE 100.00 99.08 124.75 112.16
HAMBRECHT & QUIST BIOTECHNOLOGY 100.00 106.23 112.68 118.39
</TABLE>
- ----------------------------
(1) This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any filing of the Company
under the Securities Act or the Exchange Act whether made before or after
the date hereof and irrespective of any general incorporation language in
any such filing.
16
<PAGE>
CERTAIN TRANSACTIONS
On September 30, 1998, the Company registered 938,483 shares of Common
Stock pursuant to an agreement with Clearwater Fund IV, LLC and Clearwater
Offshore Fund, Ltd. (collectively the "Clearwater Funds") a beneficial holder of
more than 5% of the outstanding Common Stock of the Company.
The Company has also entered into an employment agreement with each of the
Named Executive Officers, as described under the caption "Employment
Agreements." As described in "Compensation of Directors" and "Compensation of
Executive Officers," the Company has granted stock options to certain directors
and executive officers of the Company. The Company has entered into indemnity
agreements with each of its directors and officers and currently maintains
directors and officers insurance coverage.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors
/s/ DALE A. SANDER
-------------------------------------
Dale A. Sander
Secretary
January 13, 1999
A COPY OF THE COMPANY'S ANNUAL REPORT TO THE SECURITIES AND EXCHANGE
COMMISSION ON FORM 10-K FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1998 IS
AVAILABLE WITHOUT CHARGE UPON WRITTEN REQUEST TO: INVESTOR RELATIONS, MAXIM
PHARMACEUTICALS, INC., 8899 UNIVERSITY CENTER LANE, SUITE 400, SAN DIEGO,
CALIFORNIA 92122.
<PAGE>
MAXIM PHARMACEUTICALS, INC.
PROXY
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS OF THE COMPANY FOR THE
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON FEBRUARY 19, 1999
The undersigned hereby (i) acknowledge(s) receipt of the Notice of Annual
Meeting of Stockholders and Proxy Statement dated January 13, 1999, relating to
the Annual Meeting of Stockholders of MAXIM PHARMACEUTICALS, INC. (the
"Company") to be held February 19, 1999 and (ii) appoints Larry G. Stambaugh and
Dale A. Sander as proxies, with full power of substitution, and authorizes them,
or either of them, to vote all shares of Common Stock of the Company standing in
the name of the undersigned at said meeting or any postponement, continuation
and adjournment thereof, with all powers that the undersigned would possess if
personally present, upon the matters specified below and upon such other matters
as may be properly brought before the meeting, conferring discretionary
authority upon such proxies as to such other matters. THIS PROXY, WHEN PROPERLY
EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED
STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR THE NOMINEE
LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2.
STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE IN PERSON EVEN THOUGH THEY HAVE
PREVIOUSLY MAILED THIS PROXY CARD.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEE LISTED IN PROPOSAL 1 AND FOR
PROPOSAL 2.
(CONTINUED ON REVERSE SIDE)
<PAGE>
(CONTINUED FROM REVERSE SIDE)
<TABLE>
<S> <C> <C> <C>
1. To elect one director to hold office until the 2002 Annual
Meeting of Stockholders.
Colin B. Bier, Ph.D.
/ / FOR nominee listed above / / WITHHOLD AUTHORITY to vote
for nominee listed above.
</TABLE>
2. To ratify the Board of Directors' initial selection of KPMG Peat Marwick LLP
as the Company's independent public accountants for the fiscal year ended
September 30, 1999.
/ / FOR / / AGAINST / / ABSTAIN
Please check this box if you plan to attend the meeting. / /
Please sign exactly as name
appears hereon. When shares are
held by joint tenants, both should
sign. When signing as executor,
administrator, trustee or
guardian, please give full title
as such. If a corporation, please
sign in full corporate name by
President or other authorized
officer. If a partnership, please
sign in partnership name by
authorized person.
__________________________________
__________________________________
Signature(s) Date
Please mark, date, sign and mail
this proxy card in the envelope
provided. No postage is required
for domestic mailing.
