SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[ ] Definitive Additional Materials [ ] Soliciting Material
Pursuant to Rule 14a-11(c) or Rule 14a-12
EPIX Medical, 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transactions 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:
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<PAGE>
EPIX MEDICAL, INC.
71 Rogers Street
Cambridge, Massachusetts 02142
(617) 499-1400
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 20, 1997
Notice is hereby given that the 1997 Annual Meeting of Stockholders of
EPIX Medical, Inc., a Delaware corporation (the "Company"), will be held on
Friday, June 20, 1997, at 10:00 a.m. at the Royal Sonesta Hotel, 5 Cambridge
Parkway, Cambridge, Massachusetts, to consider and act upon the following
matters:
1. To elect two (2) members of the Board of Directors;
2. To approve amendments to the Company's 1992 Equity Incentive Plan to
increase the number of shares of the Company's common stock as to which
awards may be granted under such plan by 500,000 shares and to limit
the number of shares of the Company's common stock that may be subject
to awards that may be granted under such plan to any individual in any
fiscal year to 300,000 shares; and
3. To transact such other business as may properly come before the meeting
or any adjournments thereof.
Only stockholders of record at the close of business on April 22, 1997
will be entitled to vote at the meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. THEREFORE,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE YOUR PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN
THE UNITED STATES. IF YOU ATTEND THE MEETING AND WISH TO VOTE IN PERSON, YOUR
PROXY WILL NOT BE USED.
By order of the Board of Directors,
Michael D. Webb
Secretary
Cambridge, Massachusetts
April 30, 1997
<PAGE>
EPIX MEDICAL, INC.
71 Rogers Street
Cambridge, Massachusetts 02142
(617) 499-1400
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement, with the enclosed proxy card, is being furnished on
behalf of the Board of Directors of EPIX Medical, Inc. (the "Company") for
use at the Company's 1997 Annual Meeting of Stockholders to be held on
Friday, June 20, 1997, at 10:00 a.m. at the Royal Sonesta Hotel, 5 Cambridge
Parkway, Cambridge, Massachusetts, and at any adjournments thereof (the
"Meeting").
When the proxy card of a stockholder is duly executed and returned, the
shares represented thereby will be voted in accordance with the voting
instructions given on the proxy by the stockholder. If no such voting
instructions are given on a proxy card with respect to one or more proposals,
the shares represented by that proxy card will be voted, with respect to the
election of directors, for the nominees named herein, and with respect to
other proposals, in accordance with the recommendations of the Board.
Stockholders may revoke their proxies at any time prior to any vote at the
Meeting by written notice of revocation to the Secretary of the Company at or
before the Meeting, by submission of a duly executed proxy card bearing a
later date or by voting in person by ballot at the Meeting.
This Proxy Statement and the enclosed proxy card are first being mailed or
otherwise furnished to all stockholders of the Company entitled to notice of
and to vote at the Meeting on or about April 30, 1997.
VOTING SECURITIES AND VOTES REQUIRED
Holders of the Company's common stock, $0.01 par value per share ("Common
Stock"), of record on the books of the Company at the close of business on
April 22, 1997 (the "Record Date") are entitled to notice of and to vote at
the Meeting. On the Record Date, there were 8,678,294 shares of Common Stock
issued and outstanding, each of which entitles the holder to one vote on each
matter submitted to a vote at the Meeting.
The presence, in person or by proxy, of the holders of a majority of the
Company's Common Stock entitled to vote at the Meeting is necessary to
constitute a quorum at the Meeting. Pursuant to the Delaware General
Corporation Law and the Company's Restated Certificate of Incorporation and
Amended and Restated By-laws (the "By-laws"), the directors are elected by a
plurality of the votes properly cast at the Meeting. Abstentions, votes
withheld and broker non-votes will not be treated as votes cast for this
purpose and will not affect the outcome of the election. A "broker non-vote"
occurs when a registered broker holding a customer's shares in the name of
the broker has not received voting instructions on a matter from the customer
and is barred by applicable rules from exercising discretionary authority to
vote on the matter and so indicates on the proxy.
The affirmative vote of the holders of a majority of the shares of Common
Stock present, or represented, and entitled to vote is required to approve
the proposed amendments to the Company's 1992 Equity Incentive Plan (the
"Equity Plan"). Broker non-votes will not be counted as present, or
represented, and entitled to vote for these purposes and, therefore, will not
affect the outcome of the vote. Abstentions will be counted as present, or
represented, and entitled to vote and, accordingly, will have the effect of
negative votes.
<PAGE>
SHARE OWNERSHIP
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of April 1, 1997 by (i)
each person known by the Company to own beneficially 5% or more of the Common
Stock, (ii) each Named Executive Officer (as defined in "Executive
Compensation" below), (iii) each director of the Company and (iv) all
directors and executive officers of the Company as a group:
<TABLE>
<CAPTION>
Shares of Common Stock
Beneficially Owned (1)
-----------------------
Beneficial Owner Shares Percent
- ---------------- ------------ ----------
<S> <C> <C>
Bessemer Venture Partners III
L.P. and certain related persons (2) 1,809,385 20.8%
Bessemer Venture Partners
1025 Old Country Road
Suite 205
Westbury, NY 11590
Accel IV L.P. and certain related persons (3) 1,697,093 19.5%
One Embarcadero Center
Suite 3820
San Francisco, CA 94111
Daiichi Radioisotope Laboratories, Ltd. (4) 578,885 6.7%
17-10, Kyobashi 1-chome Chuo-ku
Tokyo, 104 Japan
Affiliates of Advent International Corporation (5) 455,019 5.2%
101 Federal Street
Boston, MA 02110
Randall B. Lauffer, Ph.D. (6) 1,266,664 14.6%
Michael D. Webb (7) 171,845 2.0%
James E. Smith, Ph.D. (8) 58,666 *
E. Kent Yucel, M.D. (9) 33,334 *
Susan M. Flint (10) 22,667 *
Christopher F.O. Gabrieli (11) 1,809,385 20.8%
Luke B. Evnin, Ph.D. (12) 1,697,093 19.5%
Stanley T. Crooke, M.D., Ph.D. 11,041 *
All current executive officers and directors as a group
(10 persons)(13) 5,109,494 57.1%
</TABLE>
-----------------
* Indicates less than 1%.
(1) The persons and entities named in the table have sole voting and
investment power with respect to the shares beneficially owned by them,
except as noted below. Share numbers include shares of Common Stock
issuable pursuant to the outstanding options and warrants that may be
exercised within the 60-day period following April 1, 1997.
(2) Consists of 1,525,520 shares and a warrant to purchase 13,333
exercisable within the 60-day period following April 1, 1997 held by
Bessemer Venture Partners III L.P. and an aggregate amount of 270,532
shares held by BVP III Special Situations L.P. and certain persons and
entities related to Bessemer Venture Partners III L.P. as to which
Bessemer Venture Partners III L.P. has voting and investment control,
including 99,127 shares owned by Christopher F.O. Gabrieli and 6,761
shares held by the Gabrieli Family Foundation, of which Mr. Gabrieli is
President.
2
<PAGE>
William T. Burgin, Robert H. Buescher, Christopher F.O. Gabrieli, G.
Felda Hardymon and David J. Cowan are the voting General Partners of
Deer III & Co., the General Partner of Bessemer Venture Partners III
L.P. and BVP III Special Situations L.P. and disclaim beneficial
ownership of shares and the warrant held by Bessemer Venture Partners
III L.P. and shares held by BVP III Special Situations L.P. except to
the extent of their partnership interest.
(3) Consists of an aggregate amount of 1,683,761 shares and warrants to
purchase an aggregate amount of 13, 332 shares exercisable within the
60-day period following April 1, 1997 held by Accel IV L.P., Accel
Investors '93 L.P., Ellmore C. Patterson Partners, Accel Keiretsu L.P.,
Prosper Partners and certain persons and entities related to Accel IV
L.P., including 17,860 shares owned by Luke B. Evnin. Accel IV
Associates L.P. is the General Partner of Accel IV L.P. and has voting
and investment control over the shares held by Accel IV L.P. Arthur C.
Patterson, James R. Swartz, James W. Breyer, Paul H. Klingenstein, Luke
B. Evnin, Eugene D. Hill, III, G. Carter Sednaoui and the Swartz Family
Partnership L.P. are the General Partners of Accel IV Associates L.P.
Messrs. Patterson, Swartz, Klingenstein, Breyer, Evnin and Sednaoui are
the General Partners of Accel Investors '93 L.P. and have voting and
investment control over shares held by Accel Investors '93 L.P. Mr.
Patterson is the sole General Partner of Ellmore C. Patterson Partners
and has voting and investment control over shares held by Ellmore C.
Patterson Partners. Accel Partners & Co. L.P. is the General Partner of
Accel Keiretsu L.P. and has voting and investment control over shares
held by Accel Keiretsu L.P. Messrs. Patterson and Swartz are the
co-owners and partners of Accel Partners & Co. L.P. Messrs. Klingenstein
and Sednaoui are the attorneys-in-fact for Prosper Partners and disclaim
beneficial ownership of shares held by Prosper Partners.
(4) Osamu Ikeda, M.D., President and Chief Executive Officer of Daiichi
Radioisotope Laboratories, Ltd., has voting and investment control over
these shares.
(5) Includes shares held by the following venture capital funds managed by
Advent International Corporation: Rovent II Limited Partnership, Advent
Performance Materials Limited Partnership, Adwest Limited Partnership
and Advent Partners Limited Partnership. In its capacity as manager of
these funds, Advent International Corporation exercises sole voting and
investment power with respect to all shares held by these funds. Advent
International Corporation exercises its voting and investment power
through a group of three persons, none of whom may act independently and
a majority of whom must act in concert to exercise voting or investment
power over the beneficial holdings of such entity. Therefore, no
individual in this group is deemed to share voting or investment power.
(6) Includes 26,666 shares held by Dr. Lauffer's wife and 16,000 shares held
in a trust for the benefit of Dr. Lauffer's children as to which Dr.
Lauffer disclaims beneficial ownership. Also includes 1,000,000 shares
held by a trust for the benefit of Dr. Lauffer as to which shares Dr.
Lauffer has voting and investment control.
(7) Includes 97,679 shares subject to options exercisable within the 60-day
period following April 1, 1997.
(8) Consists of shares subject to options exercisable within the 60-day
period following April 1, 1997.
(9) Consists of shares subject to options exercisable within the 60-day
period following April 1, 1997.
(10) Consists of shares subject to options exercisable within the 60-day
period following April 1, 1997.
(11) See footnote (2) above. Mr. Gabrieli disclaims beneficial ownership of
these shares except to the extent of his proportionate pecuniary
interest therein or with respect to shares held in his name.
(12) See footnote (3) above. Dr. Evnin disclaims beneficial ownership of
these shares except to the extent of his proportionate pecuniary
interest in shares held by Accel IV L.P. and Accel Investors '93 L.P. or
with respect to shares held in his name.
(13) See footnotes (2), (3) and (6)-(12) above. Includes an additional 36,666
shares subject to options exercisable within the 60-day period following
April 1, 1997.
3
<PAGE>
PROPOSAL 1:
ELECTION OF DIRECTORS
In accordance with Section 2 of Article II of the By-laws, the Board has
fixed the number of directors to constitute the full Board for the ensuing
year at five. At the Meeting, two Class I directors will be elected to hold
office for three years until their respective successors are duly elected and
qualified. The Board has nominated Randall B. Lauffer and Luke B. Evnin for
election for a term of office expiring in 2000. Each of the nominees is
currently a director of the Company and has consented to be nominated and to
serve if elected. In the event either of these nominees shall be unable to
serve as a director, the shares represented by the proxy will be voted for
the person, if any, who is designated by the Board to replace the nominee. In
the event that a vacancy occurs during the year, such vacancy may be filled
by the Board for the remainder of the full term.
The following table contains certain information about nominees for
election to the Board for directors and each other person whose term of
office as a director will continue after the Meeting.
<TABLE>
<CAPTION>
Present
Director Term
Name and Age Business Experience and Other Directorships Since Expires
- ------------- ------------------------------------------- -------- -------
<S> <C> <C> <C>
Nominees for Directors:
Class I Directors
Luke B. Evnin, Ph.D.*# Dr. Evnin is a General Partner at Accel Partners, a venture capital 1994 1997
(age 33) firm, where he has been involved in the firm's biomedical investing
activities since September 1990. He currently serves on the boards
of directors of several private companies.
Randall B. Lauffer, Ph.D. Dr. Lauffer, the Chief Scientific Officer of the Company, founded 1988 1997
(age 39) the Company in November 1988 and served as Chief Executive Officer
of the Company until December 1994, as Chairman of the Board until
October 1996 and as Secretary until November 1996. From November
1983 to March 1992, Dr. Lauffer was a member of the faculty of Harvard
Medical School, serving most recently as Assistant Professor of
Radiology from 1987 to 1992. During this time he was also Director
of the NMR Contrast Media Laboratory at Massachusetts General Hospital
as well as an NIH Postdoctoral Fellow and an NIH New Investigator.
Continuing Directors:
Class II Director
Stanley T. Crooke, M.D., Ph.D.* Dr. Crooke has served as Chairman and Chief Executive Officer of 1996 1998
(age 52) Isis Pharmaceuticals Inc., a pharmaceuticals company, since January
1989. Dr. Crooke serves on the boards of directors of GeneMedicine,
Inc., Sibia Neuroscience, Inc. and the Biotechnology Industry
Organization. 1996 1998
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
Present
Director Term
Name and Age Business Experience and Other Directorships Since Expires
- ------------- ------------------------------------------- -------- -------
<S> <C> <C> <C>
Class III Directors
Christopher F.O. Gabrieli*# Mr. Gabrieli is Chairman of the Board of the Company. Since September 1994 1999
(age 37) 1986, Mr. Gabrieli has been a General Partner at Deer II & Co.,
Deer III & Co. and Deer IV & Co., the General Partners of Bessemer
Venture Partners II L.P., Bessemer Venture Partners III L.P. and
Bessemer Venture Partners IV L.P., affiliated venture capital
partnerships, where he is responsible for the firm's venture capital
investment activities in healthcare and the life sciences. He is
a director of Isis Pharmaceuticals, Inc., where he was a co-founder,
Opta Food Ingredients, Inc. and several privately held health care
companies.
Michael D. Webb Mr. Webb has served as President and Chief Executive Officer of 1994 1999
(age 38) the Company since December 1994 and as Secretary of the Company
since November 1996. Mr. Webb worked for Ciba-Corning Diagnostics,
Inc., a medical instrumentation and diagnostic products company,
from April 1989 to December 1994, most recently as Senior Vice
President, Worldwide Marketing and Strategic Planning. From 1984
to 1989, Mr. Webb was a senior consultant specializing in healthcare
and life sciences at Booz, Allen & Hamilton, Inc., a consulting
firm.
</TABLE>
-----------------
* Member of the Compensation Committee.
# Member of the Audit Committee.
During the year ended December 31, 1996, the Board held four meetings.
Each of the directors attended at least 75% of the Board meetings and
meetings of committees of the Board of which he was a member. In addition,
from time to time, the members of the Board of Directors and its committees
may act by unanimous written consent pursuant to Delaware law in lieu of a
meeting.
The Audit Committee, which currently consists of Dr. Evnin and Mr.
Gabriel, reviews with the Company's independent accountants the scope of the
annual audit, discusses the adequacy of internal accounting controls and
procedures, and performs general oversight with respect to the accounting
principles applied in the financial reporting of the Company. The Audit
Committee did not meet in 1996.
The Compensation Committee currently consists of Drs. Crooke and Evnin and
Mr. Gabrieli. The Compensation Committee's functions are to recommend to the
full Board the amount, nature and method of payment of compensation of all
executive officers and certain other key employees and consultants of the
Company and to administer the Company's equity incentive, stock option and
stock purchase plans. The Compensation Committee held one meeting in 1996.
5
<PAGE>
Director Compensation
Directors receive no compensation for their service on the Board of
Directors, except pursuant to the 1996 Director Stock Option Plan (the "Director
Plan"). All of the directors who are not employees of the Company (the "Eligible
Directors") are currently eligible to participate in the Director Plan. There
are 66,666 shares of Common Stock reserved for issuance under the Director Plan.
Upon the election or reelection of an Eligible Director, such director is
automatically granted an option to purchase 6,665 shares of Common Stock. Each
Eligible Director continuing in office after each annual meeting of stockholders
is also automatically granted an option to purchase 6,665 shares of Common
Stock. Options become exercisable with respect to 1,333 shares on each
anniversary date of grant for a period of five years, provided that the optionee
is still a director of the Company at the opening of business on such date. Each
option has a term of ten years. The exercise price for each option is equal to
the last sale price for the Common Stock on the business day immediately
preceding the date of grant, as reported on the Nasdaq National Market. The
exercise price may be paid in cash, shares of Common Stock or a combination of
both.
EXECUTIVE COMPENSATION
The Compensation Committee Report on Executive Compensation and the tables
set forth below provide information about the compensation of executive
officers of the Company.
Compensation Committee Report on
Executive Compensation
The Compensation Committee (the "Committee"), which currently consists of
Mr. Christopher F.O. Gabrieli and Drs. Luke B. Evnin and Stanley T. Crooke,
is responsible for the administration of the Company's compensation program
for the executive officers of the Company, including the Chief Executive
Officer and the other executive officers named in the summary compensation
table below. The Committee is also responsible for administrating the Equity
Plan. The Company's compensation programs are designed to provide a
competitive level of total compensation which, at the Company's present stage
of development, is heavily weighted toward equity incentive compensation
linked to the Company's performance. This program includes base salary and
both annual and long-term incentive compensation.
Compensation Philosophy
The design and implementation of the Company's executive compensation
programs are based on a series of guiding principles derived from the Company's
values, business strategy and management requirements. These principles may be
summarized as follows:
(bullet) attract, motivate and retain high caliber individuals who are
responsible for leading the Company in achieving or exceeding
corporation goals and to increase total return to stockholders;
(bullet) provide a total compensation program where a significant portion
of compensation is linked to the achievement of individual
performance objectives as well as both short-term and long-term
Company performance;
(bullet) align the financial interests of the management team with those
of the Company and its stockholders; and
(bullet) emphasize reward for performance at the individual, team and
Company levels.
Base Salary
Each fiscal year, the Committee establishes base salaries for individual
executive officers based upon (i) industry and peer group surveys prepared by
independent consultants, (ii) the responsibilities, scope and complexity of each
position, (iii) the individual's tenure in the position and (iv) performance
judgments as to each individual's past and expected future contributions. The
performance of the companies surveyed is not considered by the Committee. The
Chief Executive Officer recommends the base salary amount for each officer other
than himself. The Committee then reviews
6
<PAGE>
with the Chief Executive Officer and approves, with appropriate
modifications, an annual base salary plan for the Company's executive
officers other than the Chief Executive Officer.
In general, the Committee reviews and fixes the base salary of the Chief
Executive Officer based on comparable competitive compensation data as well
as the Committee's assessment of such officer's past performance and its
expectations as to such officer's future contributions in leading the
Company. For 1996, the Chief Executive Officer's base salary remained the
same as his base salary in 1995, $175,000, reflecting the Company's
compensation philosophy of emphasizing equity incentive compensation.
Annual Cash Short-Term Incentives
The Company does not currently have a formal cash short-term incentive plan
and generally does not pay cash bonuses to its executive officers except on a
discretionary basis. The Committee may, in its discretion, award cash bonuses
when it determines that the Company and its executive officers have made
extraordinary accomplishments during the year. In establishing bonus amounts,
the Committee generally considers the Company's accomplishments during the year
as well as the performance of each officer in his or her respective area of
accountability and each officer's respective contribution to the overall success
of the Company. At the beginning of each year, the Board of Directors
establishes objectives for the Company. After the completion of the year, the
Committee reviews the attainment of corporate and individual objectives and, if
deemed appropriate, may award bonuses based on the extent to which corporate
objectives were met or exceeded and individual contributions to overall Company
performance.
The Company achieved several milestones in 1996, including: the
consummation of a venture capital financing; the execution of collaboration
agreements with Daiichi Radioisotope Laboratories, Ltd. for the development
and commercialization of the Company's lead product candidate, MS-325, in
Japan and with Mallinckrodt Inc. for the development and commercialization of
MS-325 for the rest of the world; the filing of an Investigational Drug
Application ("IND") for MS-325 with the U.S. Food and Drug Administration
("FDA"); the commencement of a Phase I clinical trial for MS-325 in the
United States; and the filing of a Registration Statement on Form S-1 with
the Securities and Exchange Commission in connection with the Company's
initial public offering. In recognition of the Chief Executive Officer's
leadership in the achievement of these corporate milestones and his
contributions to the Company, the Chief Executive Officer was awarded a bonus
in the amount of $65,000.
Equity-Based Long-Term Incentive Compensation
Long-term incentives for the Company's employees are provided through stock
option grants under the Company's Equity Plan, which are generally provided
through initial stock option grants at the date of hire and periodic additional
grants. The option grants are intended to motivate the executive officers to
improve long-term Company performance and to align the financial interests of
the management team with those of the Company and its stockholders. Awards take
into account each officer's scope of responsibility and specific assignments,
strategic and operational goals applicable to the officer, anticipated
performance and contributions of the officer and competitive market data for
similar positions. Options are granted with an exercise price equal to the fair
market value of the Company's Common Stock on the date of grant. The standard
vesting schedule provides that a portion of the shares subject to each option
vest and become exercisable annually over a five-year period. Certain options
granted under the Equity Plan, including some of the options granted to the
named Executive Officers, are subject to different vesting schedules, including
schedules that are based on the achievement of certain milestone events
determined by the Committee.
In 1996, the Chief Executive Officer received options to purchase 83,333
shares of Common Stock at an exercise price of $5.25 per share. The shares
subject to this option vest on August 7, 2005, provided that approximately
17% of such shares may vest upon the earlier achievement of each of the
following milestones with respect to the development of MS-325 (or a
clinically equivalent vascular agent, as determined by the Company's Board of
Directors): (i) commencement of Phase III clinical trails; (ii) the first
anniversary of the date of commencement of Phase III clinical trials; (iii)
the second anniversary of the date of commencement of Phase III clinical
trails; (iv) the first anniversary of the date of
7
<PAGE>
receipt of approval of a New Drug Application ("NDA"); and (v) the second
anniversary of the date of receipt of approval of an NDA. Sixteen percent of
the shares covered by the option may also vest earlier upon the date of
receipt of approval of an NDA for MS-325 (or a clinically equivalent vascular
agent, as determined by this Company's Board of Directors).
Compensation Deductibility
The Committee has considered the potential impact of Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code") on the Company's
compensation programs. Section 162(m) of the Code limits a publicly held
company's tax deduction for compensation paid to the chief executive officer and
the other four most highly paid officers. Generally, amounts paid in excess of
$1.0 million to a covered executive in any year cannot be deducted. Certain
performance based compensation that has been approved by stockholders is not
subject to the limit. The Company's policy is to qualify its executive officers'
compensation for deductibility under applicable tax laws to the extent
reasonable. The Board of Directors determined in April 1997 that it would be
advisable to establish individual limits on the number of shares of Common Stock
subject to options that may be granted to any individual in any fiscal year
under the Equity Plan to qualify for the exclusion from the limitation on
deductibility, and the Company is seeking stockholder approval for such
limitation. See "Proposal 2: Amendments to 1992 Equity Incentive Plan." The
Committee will continue to assess the impact of Section 162(m) of the Code on
its compensation practices and determine what further action, if any, is
appropriate.
By the EPIX Medical, Inc.
Compensation Committee,
Stanley T. Crooke
Luke B. Evnin
Christopher F.O. Gabrieli
8
<PAGE>
Comparative Stock Performance Graph
The following graph shows the cumulative stockholder return of the
Company's Common Stock from January 30, 1997 (the first trading day for the
Company's Common Stock) through March 31, 1997 as compared with that of the
Nasdaq (U.S. Companies) Index and the Nasdaq Pharmaceutical Stocks Index. The
graph assumes the investment of $100 in the Company's Common Stock and each
of the comparison groups on January 30, 1997 and assumes the reinvestment of
dividends. The Company has never declared a dividend on the Common Stock of
the Company. The stock price performance depicted in the graph below is not
necessarily indicative of future price performance.
Comparison of Cumulative Total Return Among EPIX Medical, Inc.,
Nasdaq (U.S. Companies) Index and Nasdaq Pharmaceutical Stocks Index
[LINE CHART]
<TABLE>
<CAPTION>
1/30/97 2/28/97 3/31/97
<S> <C> <C> <C>
EPIX Medical, Inc. $100.00 $105.36 $94.64
Nasdaq Stock Market (U.S.) $100.00 $ 95.24 $89.04
Nasdaq Pharm. Stocks $100.00 $101.54 $88.32
</TABLE>
9
<PAGE>
The following table sets forth certain compensation information for the Chief
Executive Officer of the Company and the four other most highly compensated
executive officers of the Company whose salary and bonus for the year ended
December 31, 1996 exceeded $100,000 (together, the "Named Executive Officers").
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation All Other
Annual Compensation Awards Compensation
---------------------------------------------- ---------------
Securities
Bonus Underlying
Name and Principal Position Year Salary ($) ($)(1) Options (#) ($)
------------------------------ ------------------- ----------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Michael D. Webb 1996 175,000 65,000 83,333 --
President and Chief Executive 1995 175,000 -- -- 30,000(2)
Officer
James E. Smith, Ph.D. 1996 192,615(4) 63,000 139,999 --
Executive Vice President, 1995 82,238(5) -- -- --
Research and Development (3)
Randall B. Lauffer, Ph.D. 1996 160,000 -- -- 1,100(6)
Chief Scientific Officer 1995 158,367 -- -- 1,100(6)
E. Kent Yucel, M.D. 1996 132,637(8) 8,750 133,333 --
Senior Vice President and 1995 1,500(9) -- 10,666 --
Chief Medical Officer (7)
Susan M. Flint 1996 107,500 44,800 16,666 --
Vice President, Regulatory 1995 98,282(11) -- 46,666 --
Affairs (10)
</TABLE>
-----------------
(1) Bonuses were earned in the year indicated and are generally paid in the
subsequent year.
(2) Consists of payment made in connection with the commencement of
employment with the Company.
(3) Dr. Smith became an employee of the Company in February 1996. Prior
thereto, he was engaged as a consultant to the Company.
(4) Includes compensation in the amount of $37,200 paid by the Company for
consulting services.
(5) Consists of compensation paid by the Company for consulting services.
(6) Consists of life insurance premiums paid by the Company on behalf of Dr.
Lauffer on a policy for the benefit of Dr. Lauffer.
(7) Dr. Yucel became an employee of the Company in June 1996. Prior thereto,
he was engaged as a consultant to the Company.
(8) Includes compensation in the amount of $59,720 paid by the Company for
consulting services.
(9) Consists of compensation paid by the Company for consulting services.
(10) Ms. Flint became an employee of the Company in April 1995. Prior
thereto, she was engaged as a consultant to the Company.
(11) Includes compensation in the amount of $26,282 paid by the Company for
consulting services.
10
<PAGE>
The following table sets forth certain information regarding options
granted during the fiscal year ended December 31, 1996 by the Company to the
Named Executive Officers.
Option Grants In Last Fiscal Year
<TABLE>
<CAPTION>
Potential Realizable
Value
Individual Grant at Assumed Annual
--------------------------------------------------------- Rates
Number of Percent of of Stock Price
Securities Total Options Appreciation
Underlying Granted to Exercise or for Option Term (1)
Options Employees in Base Price Expiration ---------------------
Name Granted (#) Fiscal Year (%) ($/share) Date 5% ($) 10% ($)
- -------------------------- ------------- ---------------- ------------- ------------ --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Michael D. Webb 83,333(2) 11.1 5.250 8/7/06 275,140 697,260
James E. Smith, Ph.D 100,000(3) 13.3 0.825 2/1/06 51,884 131,484
33,333(4) 4.4 5.250 8/7/06 110,055 278,902
Randall B. Lauffer, Ph.D 0 -- -- -- -- --
E. Kent Yucel, M.D 133,333(5) 17.7 4.50 6/17/06 377,336 956,243
Susan M. Flint 16,666(6) 2.2 5.250 8/7/06 55,026 139,447
</TABLE>
(1) The dollar amounts under these columns are the result of calculations at
the 5% and 10% rates set by the Securities and Exchange Commission and,
therefore, are not intended to forecast possible future appreciation, if
any, in the price of the underlying Common Stock. No gain to the
optionees is possible without an increase in price of the underlying
Common Stock, which will benefit all stockholders proportionately.
(2) The option becomes exercisable as to 16.8% of the shares covered by such
option:
(bullet) upon the earlier of (i) commencement of Phase III clinical trials
for MS-325 or a clinically equivalent vascular agent as
determined by the Company's Board of Directors or (ii) August 7,
2005;
(bullet) upon the earlier of (i) the first anniversary of the date of
commencement of Phase III clinical trials for MS-325 or a
clinically equivalent vascular agent as determined by the
Company's Board of Directors or (ii) August 7, 2005;
(bullet) upon the earlier of (i) the second anniversary of the date of
commencement of Phase III clinical trials for MS-325 or a
clinically equivalent vascular agent as determined by the
Company's Board of Directors or (ii) August 7, 2005;
(bullet) upon the earlier of (i) the first anniversary of the date of
receipt of NDA approval for MS-325 or a clinically equivalent
vascular agent as determined by the Company's Board of Directors
or (ii) August 7, 2005; and
(bullet) upon the earlier of (i) the second anniversary of the date of
receipt of NDA approval for MS-325 or a clinically equivalent
vascular agent as determined by the Company's Board of Directors
or (ii) August 7, 2005.
The option also becomes exercisable as to 16% of the shares covered by such
option upon the earlier of (i) the date of receipt of NDA approval for
MS-325 or a clinically equivalent vascular agent as determined by the
Company's Board of Directors or (ii) August 7, 2005.
(3) The option became exercisable as to 16% of the shares covered by such
option on each of February 23, 1996 and 1997. The option also became
exercisable as to 20% of the shares on August 21, 1996 (30 days after the
receipt by the FDA of the Company's MS-325 IND filing for MS-325). The
option becomes exercisable as to 16% of the shares covered by such option
on February 23 of each of 1998, 1999 and 2000.
(4) The option becomes exercisable as to 50% of the shares covered by such
option upon the earlier of (i) commencement of Phase III clinical trials
for MS-325 or a clinically equivalent vascular agent as determined by the
Company's Board of Directors or (ii) August 7, 2004. The option also
becomes exercisable as to 50% of the shares covered upon the earlier of
(i) receipt of NDA approval for MS-325 or a clinically equivalent
vascular agent as determined by the Company's Board of Directors or (ii)
August 7, 2004.
11
<PAGE>
(5) The option became exercisable with respect to 16,667 shares on July 17,
1996. The option also became exercisable with respect to 16,667 shares on
September 13, 1996 and becomes exercisable with respect to 16,667 shares
on September 13 of each of 1997, 1998, 1999 and 2000. The option also
becomes exercisable with respect to 16,666 shares:
(bullet) upon the earlier of (i) commencement of Phase III clinical trials
for MS-325 or a clinically equivalent vascular agent as determined
by the Company's Board of Directors or (ii) June 13, 2005; and
(bullet) upon the earlier of (i) the date of receipt of NDA approval for
MS-325 or a clinically equivalent vascular agent as determined by
the Company's Board of Directors or (ii) June 13, 2005.
(6) The option becomes exercisable as to 50% of the shares covered by such
option upon the earlier of (i) commencement of Phase III clinical trials
for MS-325 or a clinically equivalent vascular agent as determined by the
Company's Board of Directors or (ii) August 7, 2004. The option also
becomes exercisable as to 50% of the shares covered by such option upon
the earlier of (i) receipt of NDA approval for MS-325 or a clinically
equivalent vascular agent as determined by the Board of Directors or (ii)
August 7, 2004.
The following table sets forth certain information concerning exercisable
and unexercisable stock options held by the Named Executive Officers as of
December 31, 1996.
Aggregated Option Exercises In Last Fiscal Year And
Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying
Unexercised Value of Unexercised
Options at In-The-Money Options
Shares Fiscal Year-End (#) at Fiscal Year-End ($)(1)
Acquired on Value --------------------------- ---------------------------
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---------------------- ------------- ------------- --------------------------- ---------------------------
<S> <C> <C> <C> <C>
Michael D. Webb 33,333 268,197 105,179/241,955 846,270/1,547,105
James E. Smith, Ph.D -- -- 42,666/97,333 327,462/599,532
Randall B. Lauffer, -- -- -- --
Ph.D. (2)
E. Kent Yucel, M.D -- -- 35,467/108,532 149,707/465,487
Susan M. Flint -- -- 14,667/48,665 118,012/311,632
</TABLE>
-----------------
(1) Based on the difference between the fair market value of the underlying
shares of Common Stock on December 31, 1996 as determined by the Board of
Directors and the option exercise price.
(2) Dr. Lauffer does not hold any stock options.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee currently consists of Drs. Crooke and Evnin and
Mr. Gabrieli. Dr. Evnin is a General Partner of Accel Partners, a venture
capital firm and a principal stockholder of the Company. Mr. Gabrieli is a
General Partner of Deer II & Co., the General Partner of Bessemer Venture
Partners III L.P., a principal stockholder of the Company. See "Stock Ownership"
and "Certain Transactions."
12
<PAGE>
CERTAIN TRANSACTIONS
In May 1995, the Company issued convertible promissory notes to Bessemer
Venture Partners III L.P., Accel IV L.P. and certain related persons in the
aggregate principal amount of $1,500,000 bearing interest at a rate of 10%
per annum and convertible into shares of Series C Convertible Preferred Stock
at a conversion price of $4.54 per share (the "1995 Convertible Notes"). Mr.
Gabrieli, Chairman of the Company, is a General Partner of Deer III & Co.,
the General Partner of Bessemer Venture Partners III L.P. See footnotes (2)
and (11) to the table set forth under "Share Ownership." Dr. Evnin, a
director of the Company, is a General Partner of Accel IV Associates L.P.,
the General Partner of Accel IV L.P. See footnotes (3) and (12) to the table
set forth under "Share Ownership."
In November and December 1995, Accel IV L.P., Bessemer Venture Partners
III L.P. and certain related persons made bridge loans to the Company in an
aggregate principal amount of $1,200,000 in exchange for promissory notes
bearing interest at a rate of 10% per annum and convertible into shares of
the Company's securities in the Company's next permanent equity financing
(the "1995 Bridge Notes").
In January 1996, the 1995 Convertible Notes were amended and restated (the
"Amended 1995 Convertible Notes") to, among other things, change the
conversion price to between $1.51 and $2.25 per share, depending on certain
events of conversion. At such time, the Company also issued additional
convertible promissory notes to the holders of the Amended 1995 Convertible
Notes in an aggregate principal amount of $1,515,862 (the "1996 Convertible
Notes") with the same terms as the Amended 1995 Convertible Notes in exchange
for cash and the surrender of the 1995 Bridge Notes (including accrued
interest thereon).
In February 1996, Accel IV L.P., Bessemer Venture Partners III L.P. and
certain related persons made bridge loans to the Company in the aggregate
principal amount of $600,000 in exchange for promissory notes bearing
interest at a rate of 10% per annum (the "1996 Bridge Notes").
In March 1996, the Company entered into a Development and License
Agreement with Daiichi. Pursuant to such agreement, the Company granted
Daiichi an exclusive license to develop and market MS-325 in Japan in
exchange for an up-front fee of $3.0 million and future milestone payments
for up to an aggregate of $3.3 million and royalty payments on net sales of
MS-325 in Japan. In addition, pursuant to the agreement with Daiichi, in May
and August 1996, the Company sold an aggregate of 868,329 shares of Series E
Convertible Preferred Stock to Daiichi (which converted into an aggregate
amount of 578,886 shares of Common Stock upon the closing of this offering)
at a price of $5.76 per share.
In May 1996, the Company sold 1,700,002 shares of Series D Convertible
Preferred Stock (which converted into 1,133,325 shares of Common Stock upon
the closing of the Company's initial public offering) at a price of $3.00 per
share (the "Series D Financing"). In connection with the Series D Financing,
Accel IV L.P., Bessemer Venture Partners III L.P. and certain related persons
surrendered their respective 1996 Bridge Notes as partial payment for their
respective shares of Series D Preferred Stock and each received cash payments
from the Company in the aggregate amount of $9,698 for accrued interest on
their respective 1996 Bridge Notes. Through the Series D Financing, Accel IV
L.P. and certain related persons purchased 266,668 shares (244,267 shares
held by Accel IV L.P., 9,867 shares held by Accel Investors '93 L.P., 5,067
shares held by Accel Keiretsu L.P., 5,867 shares held by Ellmore C. Patterson
Partners and 1,600 shares held by Prosper Partners), Bessemer Venture
Partners III L.P. and certain related persons purchased 266,667 shares
(213,696 shares held by Bessemer Venture Partners III L.P. and 40,983 shares
held by certain related persons, including 9,990 shares held directly by Mr.
Gabrieli and 1,998 shares held by the Gabrieli Family Foundation, of which
Mr. Gabrieli is President), affiliates of Advent International Corporation
purchased 666,667 shares (365,000 shares held by Rovent II Limited
Partnership, 200,000 shares held by Advent Performance Materials Limited
Partnership, 66,667 shares held by Adwest Limited Partnership and 35,000
shares held by Advent Partners Limited Partnership) and Fidelity Ventures
Ltd. purchased 500,000 shares.
Concurrently with the Series D Financing, Accel IV L.P., Bessemer Ventures
Partners III L.P. and certain related persons converted the entire principal
amount of their respective Amended 1995 Convertible Notes and 1996
Convertible
13
<PAGE>
Notes, plus accrued interest, into 1,432,318 shares of Series C Convertible
Preferred Stock (which converted into 954,872 shares of Common Stock upon the
closing of the Company's initial public offering) as follows: 656,006 shares
held by Accel IV L.P.; 26,498 shares held by Accel Investors '93 L.P.; 13,607
shares held by Accel Keiretsu L.P.; 15,755 shares held by Ellmore C.
Patterson Partners; 4,296 shares held by Prosper Partners); 642,837 shares
held by Bessemer Venture Partners III L.P.; and 43,386 shares held by certain
persons related to Bessemer Venture Partners III L.P., including 25,328
shares held directly by Mr. Gabrieli and 4,605 shares held by the Gabrieli
Family Foundation.
In May 1996, the Company repurchased from Dr. Lauffer, a director and
executive officer of the Company, 66,666 shares of Common Stock at a price
per share of $4.05.
In April 1996, the Company made a loan to Dr. Lauffer in the principal
amount of $50,000 and bearing interest at the rate of 6.51% per annum (the
Applicable Federal Rate for long term loans announced for such month) secured
by a pledge of 14,814 shares of the Company's Common Stock held by Dr.
Lauffer. As of March 31, 1997, the outstanding amount on this loan was
$53,219.33. In May 1996, the Company made a loan to Dr. Lauffer in the
principal amount of $180,000 bearing interest at the rate of 6.83% per annum
(the Applicable Federal Rate for long term loans announced for May 1996) and
secured by a pledge of 44,444 shares of the Company's Common Stock held by
Dr. Lauffer. As of March 31, 1997, the outstanding amount on this loan was
$190,273.07. Each of these loans is subject to acceleration upon the
voluntary termination of Dr. Lauffer's employment, among other events.
In February 1997, Bessemer Venture Partners III L.P. and certain persons
and entities related to Bessemer Venture Partners III L.P. and Accel IV L.P.
purchased an aggregate amount of 344,740 shares of the Company's Common Stock
in connection with the Company's initial public offering on the same terms as
sales to other investors in the offering at the initial public offering price
per share of $7.00.
PROPOSAL 2: AMENDMENTS TO 1992 EQUITY INCENTIVE PLAN
General
The Equity Plan was originally adopted by the Company in July 1992. The
Equity Plan was subsequently amended and restated, and the aggregate number of
shares of Common Stock reserved for issuance thereunder is currently 1,599,901
shares (including shares subject to options already granted). The Equity Plan is
designed to provide the Company flexibility in awarding equity incentives by
providing for multiple types of incentives that may be awarded. The purpose of
the Equity Plan is to attract and retain key employees of and consultants to the
Company and to enable them to participate in the long-term growth of the
Company.
Amendment
In April 1997, the Board of Directors voted, subject to stockholder approval,
to amend the Equity Plan to increase the aggregate number of shares of Common
Stock available thereunder by an additional 500,000 shares to an aggregate of
2,099,901 shares, subject to adjustment for stock-splits and similar capital
changes. The Company believes that this increase is necessary and appropriate to
enable the Company to attract and retain the quality of employees and
consultants whose services are considered essential to the Company's future
progress, to encourage such employees' and consultants' ownership in the Company
and to provide them with an incentive to remain as employees or consultants of
the Company.
In addition to the increase in the number of shares available for awards
under the Equity Plan, the Board of Directors adopted, subject to stockholder
approval, an amendment to the Equity Plan to limit the number of shares of
Common Stock that may be subject to awards under the Equity Plan granted to
any individual in any fiscal year to 300,000 shares. This amendment is
intended to allow awards to executive officers under the Equity Plan to meet
one of the requirements for exemption from the $1.0 million limit on
deductibility of executive officer compensation imposed by Section 162(m) of
the Code.
Administration and Eligibility
The Equity Plan provides for the grant of stock options (incentive and
nonstatutory), stock appreciation rights, performance shares, restricted stock
or stock units for the purchase of shares of Common Stock. Awards under the
Equity
14
<PAGE>
Plan can be granted to officers, employees and other individuals as
determined by the Compensation Committee, each of whose members is a
"disinterested person" within the meaning of Rule 16b-3 under the Securities
and Exchange Act of 1934, as amended (the "Exchange Act"). The Compensation
Committee administers the Equity Plan and selects the participants and
establishes the terms and conditions of each option or other equity right
granted under the Equity Plan, including the exercise price, the number of
shares subject to options or other equity rights and the time at which such
options become exercisable. The Compensation Committee has adopted guidelines
for the number of options awarded to each new employee of the Company, other
than executive officers. The guidelines may be changed by the Compensation
Committee at any time. Subject to certain limitations the Compensation
Committee may delegate to one or more executive officers of the Company the
power to make awards to participants who are not subject to Section 16 of the
Exchange Act. The Compensation Committee has authorized the Chief Executive
Officer to grant options to purchase up to 20,000 shares of Common Stock each
to such participants. In order to comply with the requirements of Rule 16b-3
under the Exchange Act, grants of awards made in 1997 under the Equity Plan
to participants who are subject to Section 16 of the Exchange Act are made by
the entire Board of Directors.
The exercise price of all "incentive stock options" ("ISOs") within the
meaning of Section 422 of the Code granted under the Equity Plan must be at
least equal to the fair market value of the option shares on the date of grant.
The term of any ISO granted under the Equity Plan may not exceed ten years. The
Company's standard vesting schedule provides that a portion of the shares
subject to each option vest and become exercisable monthly over a five-year
period. Certain options granted under the Equity Plan, including some of the
options granted to the Named Executive Officers, are subject to different
vesting schedules, including schedules that are based on the achievement of
certain milestone events. See "Executive Compensation--Compensation Committee
Report on Executive Compensation--Stock Options" and "--Option Grants in Last
Fiscal Year."
As of April 1, 1997, approximately 37 employees were eligible to
participate in the Equity Plan. The closing price of the Company's Common
Stock as reported on the Nasdaq National Market on April 3, 1997 was $6.00.
Equity Plan Activity
As of April 1, 1997, options to purchase an aggregate of 1,517,318 shares of
Common Stock had been granted under the Equity Plan, of which options to
purchase 63,657 shares had been cancelled. Options to purchase 235,006 shares
had been exercised as of such date. As of such date, 646,240 shares remained
available for the granting of awards under the Equity Plan, including the
500,000 shares added by the amendment for which stockholder approval is being
requested. No stock appreciation rights or awards other than option grants have
been granted under the Equity Plan to date.
Federal Income Tax Consequences Relating to Stock Options
Incentive Stock Options. An optionee does not realize taxable income upon
the grant or exercise of an ISO under the Equity Plan. If no disposition of
shares issued to an optionee pursuant to the exercise of an ISO is made by the
optionee within two years from the date of grant or within one year from the
date of exercise, then (a) upon sale of such shares, any amount realized in
excess of the option price (the amount paid for the shares) is taxed to the
optionee as long-term capital gain and any loss sustained will be a long-term
capital loss and (b) no deduction is allowed to the Company for Federal income
tax purposes. The exercise of ISOs gives rise to an adjustment in computing
alternative minimum taxable income that may result in alternative minimum tax
liability for the optionee.
If shares of Common Stock acquired upon the exercise of an ISO are
disposed of prior to the expiration of the two-year and one-year holding
periods described above (a "disqualifying disposition") then (a) the optionee
realizes ordinary income in the year of disposition in an amount equal to the
excess (if any) of the fair market value of the shares at exercise (or, if
less, the amount realized on a sale of such shares) over the option price
thereof and (b) the Company is entitled to deduct such amount. Any further
gain realized is taxed as a short-term or long-term capital gain and does not
result in any deduction to the Company. A disqualifying disposition in the
year of exercise will generally avoid the alternative minimum tax
consequences of the exercise of an ISO.
15
<PAGE>
Nonstatutory Stock Options. No income is realized by the optionee at the
time a nonstatutory option is granted. Upon exercise, (a) ordinary income is
realized by the optionee in an amount equal to the difference between the
option price and the fair market value of the shares on the date of exercise
and (b) the Company receives a tax deduction for the same amount. Upon
disposition of the shares, appreciation or depreciation after the date of
exercise is treated as a short-term or long-term capital gain or loss and
will not result in any deduction by the Company.
Votes Required
The affirmative vote of the holders of a majority of the shares of Common
Stock present, or represented, and entitled to vote at the Meeting is required
for the approval of the proposed amendments to the Equity Plan.
Board Recommendation
The Board of Directors of the Company believes that the amendments to the
Equity Plan are in the best interest of the Company and its stockholders and
recommends a vote FOR the proposal to approve the amendments to the Equity Plan.
INFORMATION CONCERNING AUDITORS
The firm of Ernst & Young LLP, independent auditors, audited the Company's
financial statements for the year ended December 31, 1996. The Board of
Directors has appointed Ernst & Young LLP to serve as the Company's
independent auditors for the fiscal year ending December 31, 1997.
Representatives of Ernst & Young LLP are expected to be present at the
Meeting to respond to appropriate questions and will be given the opportunity
to make a statement should they desire to do so.
STOCKHOLDER PROPOSALS FOR THE 1998 ANNUAL MEETING
In order to be considered for inclusion in the Company's proxy materials
for the 1998 Annual Meeting of Stockholders, stockholder nominations of
persons for election to the Board and proposals of business to be considered
by the stockholders must be received by the Company no later than December
31, 1997. Proposals should be sent to the attention of the Secretary at the
Company's offices at 71 Rogers Street, Cambridge, Massachusetts 02142.
ADVANCE NOTICE PROVISIONS FOR
STOCKHOLDER PROPOSALS AND NOMINATIONS
The By-laws provide that in order for a stockholder to bring business
before or propose director nominations at an annual meeting, the stockholder
must give written notice to the Secretary of the Company not less than 50
days nor more than 75 days prior to the meeting. The notice must contain
specified information about the proposed business or each nominee and the
stockholder making the proposal or nomination. If less than 65 days notice or
prior public disclosure of the date of the annual meeting is given or made to
stockholders, the notice given by the stockholder must be received not later
than the 15th day following the day on which the notice of such annual
meeting date was mailed or public disclosure made, whichever first occurs.
EXPENSES OF SOLICITATION
The cost of soliciting proxies, including expenses in connection with
preparing and mailing this Proxy Statement, will be borne by the Company.
Proxies may be solicited by directors, officers or regular employees of the
Company by mail, by telephone, in person or otherwise. No such person will
receive additional compensation for such solicitation. In addition, the
Company will request banks, brokers and other custodians, nominees and
fiduciaries to forward proxy material to the beneficial owners of Common
Stock and to obtain voting instructions from such beneficial owners. The
Company will reimburse such firms for their reasonable expenses in forwarding
proxy materials and obtaining voting instructions.
16
<PAGE>
OTHER MATTERS
The Meeting is called for the purposes set forth in the notice. The Board
of Directors does not know of any matter for action by the stockholders at
the Meeting other than the matters described in the notice. However, the
enclosed proxy confers discretionary authority on the persons named therein
with respect to matters which are not known to the directors at the date of
printing hereof and which may properly come before the Meeting. It is the
intention of the persons named in the proxy to vote in accordance with their
best judgment on any such matter.
Copies of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1996 as filed with the Securities and Exchange Commission
are available to stockholders upon written request addressed to the President
at the Company's offices at 71 Rogers Street, Cambridge, Massachusetts 02142.
Whether or not you intend to be present at the Meeting, you are urged to
fill out, sign, date and return the enclosed proxy at your earliest
convenience.
17
<PAGE>
(front of card)
EPIX MEDICAL, INC.
71 Rogers Street, Cambridge, Massachusetts 02142
PROXY FOR THE 1997 ANNUAL MEETING OF STOCKHOLDERS
June 20, 1997
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned does hereby appoint Michael D. Webb, Jeffrey R. Lentz
and William T. Whelan, and each of them acting singly, the attorneys and proxies
of the undersigned, with full power of substitution, with all the powers which
the undersigned would possess if personally present, to vote all of the shares
of capital stock of EPIX Medical, Inc. (the "Company") that the undersigned is
entitled to vote at the Annual Meeting of Stockholders of the Company to be held
at the Royal Sonesta Hotel, 5 Cambridge Parkway, Cambridge, Massachusetts on
Friday, June 20, 1997 at 10:00 a.m., and at any and all adjournments thereof,
hereby acknowledging receipt of the Proxy Statement for such meeting and
revoking any proxy heretofore given with respect to such shares.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED STOCKHOLDER(S). IF NO SPECIFICATION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2. IN THEIR DISCRETION, THE PROXIES ARE ALSO
AUTHORIZED TO VOTE UPON SUCH MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
See Reverse Side
(Continued and to be signed reverse side.)
<PAGE>
(back of card)
[X] Please mark votes
as in this example.
1. Proposal to elect directors.
Nominees: Luke B. Evnin, Ph.D.
Randall B. Lauffer, Ph.D.
[ ] FOR all nominees [ ] WITHHELD for all nominees
FOR, except vote withheld from the following nominee(s):
[ ]
--------------------------------------------------------------------
2. Proposal to amend the Company's 1992 Equity Incentive Plan to increase
the aggregate number of shares of the Company's common stock as to
which awards may be granted under such plan by 500,000 shares and to
limit the number of shares of the Company's common stock that may be
subject to awards granted under such plan to any individual in any
fiscal year to 300,000 shares.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
PLEASE SIGN, DATE AND MAIL THIS PROXY TODAY
MARK HERE FOR ADDRESS CHANGE AND
NOTE AT LEFT [ ]
Date:___________________________________
Signature_______________________________
Date:___________________________________
________________________________________
Signature (if held jointly)
Please sign exactly as name appears on
stock certificate. When shares are held
by joint tenants, both should sign. When
signing as attorney, 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.
