<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 (S)240.14a-11(c) or (S)240.14a-12
CRESCENDO PHARMACEUTICALS CORPORATION
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
[X]No fee required.
[_]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[_]Fee paid previously with preliminary materials.
[_]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
Notes:
<PAGE>
[LOGO OF CRESCENDO PHARMACEUTICALS CORPORATION]
CRESCENDO PHARMACEUTICALS CORPORATION
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 7, 1998 AT 11:00 AM
To the Stockholders of Crescendo Pharmaceuticals Corporation:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of Crescendo
Pharmaceuticals Corporation will be held at 950 Page Mill Road, Palo Alto,
California, on Thursday, May 7, 1998 at 11:00 am, for the following purposes:
1. To elect two Class I directors to hold office for a term ending in 2001
and until their successors are elected; and
2. To transact such other business as may properly be presented at the
meeting and at any adjournments or postponements thereof.
Only holders of record of Crescendo Pharmaceuticals Corporation's Class A
and Class B Common Stock at the close of business on March 12, 1998 are
entitled to notice of, and to vote at, the meeting and any adjournments or
postponements thereof.
By Order of the Board of Directors,
DAVID R. HOFFMANN
Secretary
Palo Alto, California
March 31, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE SIGN THE
ACCOMPANYING PROXY CARD AND RETURN IT AS SOON AS POSSIBLE IN THE
ACCOMPANYING POSTPAID ENVELOPE. YOUR DOING SO MAY SAVE CRESCENDO THE EXPENSE
OF A SECOND MAILING.
<PAGE>
CRESCENDO PHARMACEUTICALS CORPORATION
PROXY STATEMENT
---------------------
To the Stockholders of Crescendo Pharmaceuticals Corporation:
The accompanying proxy is solicited on behalf of the Board of Directors (the
"Board") of Crescendo Pharmaceuticals Corporation ("Crescendo"), a Delaware
corporation, for use at Crescendo's 1998 Annual Meeting of Stockholders (the
"Annual Meeting") to be held at 11:00 am on Thursday, May 7, 1998 at 950 Page
Mill Road, Palo Alto, California 94304; telephone number (650) 494-5600.
Holders of record of Crescendo Class A Common Stock and Class B Common Stock
as of the close of business on March 12, 1998 are entitled to notice of, and
to vote at, the Annual Meeting and any adjournments or postponements thereof.
At the close of business on that date, Crescendo had outstanding 4,965,470
shares of Class A Common Stock, par value $.01 per share, and 1,000 shares of
Class B Common Stock, par value $1.00 per share. Holders of Class A Common
Stock and Class B Common Stock vote together as a class as to the matters to
be presented at the meeting and are entitled to one vote for each share of
Class A Common Stock or Class B Common Stock held. Crescendo Class A Common
Stock trades on The Nasdaq Stock MarketSM under the symbol CNDO.
Any stockholder giving a proxy in the form accompanying this Proxy Statement
has the power to revoke the proxy prior to its use. A proxy can be revoked (i)
by an instrument of revocation delivered prior to the Annual Meeting to the
Secretary of Crescendo, (ii) by a duly executed proxy bearing a later date or
time than the date or time of the proxy being revoked, or (iii) at the Annual
Meeting if the stockholder is present and elects to vote in person. Mere
attendance at the Annual Meeting will not serve to revoke a proxy.
Broker non-votes, and shares held by stockholders present in person or by
proxy at the meeting but abstaining on a vote, will be counted in determining
whether a quorum is present at the Annual Meeting. The vote required for the
election of directors is described below. For any other proposal properly
presented at the Annual Meeting, abstentions by stockholders present in person
or by proxy at the meeting are counted as votes against a proposal for
purposes of determining whether or not the proposal has been approved, whereas
broker non-votes are not counted for purposes of determining whether a
proposal has been approved.
This Proxy Statement and the accompanying proxy card are being mailed to
Crescendo stockholders on or about March 31, 1998. Directors, officers and
other employees of Crescendo may solicit proxies by personal interview,
telephone or facsimile, without special compensation. Any costs of such
solicitation will be borne by Crescendo.
ELECTION OF DIRECTORS
Crescendo's Restated Certificate of Incorporation provides for three classes
of directors: Class I, Class II and Class III. Only one class of directors is
elected at each annual meeting of stockholders, each director to serve for a
three-year term. In accordance with the Restated Certificate of Incorporation,
Class I directors are to be elected at the 1998 annual meeting, Class II
directors are to be elected at the 1999 annual meeting and Class III directors
are to be elected at the annual meeting in the year 2000.
NOMINEES
Two Class I directors are to be elected to the Crescendo Board of Directors
at the Annual Meeting, each to serve until the annual meeting of stockholders
to be held in 2001 and until his successor has been elected and qualified, or
until his earlier death, resignation or removal. The current Class I
directors, the nominees for election at the Annual Meeting, are Gary L. Neil,
PhD and Terrence F. Blaschke, MD. Dr. Neil is currently also the President and
Chief Executive Officer of Crescendo. Both Dr. Blaschke and Dr. Neil have
extensive experience in fields critical to Crescendo's success, and have
indicated their willingness to continue to serve as directors of Crescendo.
1
<PAGE>
If either nominee is unable or unwilling to serve as a director, proxies may
be voted for a substitute nominee designated by the present Board. The Board
has no reason to believe that either nominee will be unable or unwilling to
serve as a director if elected. Proxies received will be voted "FOR" the
election of both nominees unless marked to the contrary. Pursuant to
applicable Delaware corporation law, assuming the presence of a quorum, two
directors will be elected from among those persons duly nominated for such
positions by a plurality of the votes actually cast by stockholders entitled
to vote at the meeting who are present in person or by proxy. Thus, nominees
who receive the first and second highest number of votes in favor of their
election will be elected, regardless of the number of abstentions or broker
non-votes.
The following table provides the names of the nominees for election as
directors, and of each other director, and indicates the periods during which
such persons have served as directors of Crescendo.
<TABLE>
<CAPTION>
DIRECTOR
CONTINUOUSLY
NAME AND POSITIONS WITH CRESCENDO IN ADDITION TO DIRECTOR SINCE
--------------------------------------------------------- ------------
<S> <C>
NOMINEES (CLASS I DIRECTORS)
Gary L. Neil, PhD.......................................... 1997
President and Chief Executive Officer
Terrence F. Blaschke, MD................................... 1997
INCUMBENTS
CLASS II DIRECTORS
M. David MacFarlane, PhD................................... 1997
Gerald J. Papariello, PhD.................................. 1997
CLASS III DIRECTORS
Jerry T. Jackson........................................... 1997
Ley S. Smith............................................... 1997
</TABLE>
BUSINESS EXPERIENCE OF DIRECTORS
NOMINEES (CLASS I DIRECTORS)
Gary L. Neil, PhD, 57, is the President and Chief Executive Officer of
Crescendo Pharmaceuticals Corporation. Dr. Neil was a director and the
President and Chief Executive Officer of Therapeutic Discovery Corporation
from 1993 until September 1997. Prior to joining Therapeutic Discovery
Corporation, from 1989 to 1993 Dr. Neil was with the Wyeth-Ayerst Research
division of Wyeth Laboratories, Inc., a subsidiary of American Home Products
Corporation, a large pharmaceutical company, where, among other positions, he
served as Executive Vice President and was responsible for Wyeth-Ayerst's
worldwide research and development activities. Prior to that time, Dr. Neil
served for 23 years in various scientific and management positions with the
Upjohn Company. Dr. Neil is a director of Allergan Specialty Therapeutics Inc.
Terrence F. Blaschke, MD, 55, has served on the faculty of Stanford
University for over 20 years and is currently Professor of Medicine and
Molecular Pharmacology and Chief of the Division of Clinical Pharmacology at
the Stanford University School of Medicine. Dr. Blaschke also serves as an
independent consultant working with pharmaceutical and biotechnology
companies. He is currently working on a special assignment with the U.S. Food
and Drug Administration ("FDA") and has served as the chairman of the FDA's
Generic Drugs Advisory Committee. Dr. Blaschke was a director of Therapeutic
Discovery Corporation.
INCUMBENTS
CLASS II DIRECTORS
M. David MacFarlane, PhD, 57, has been Vice President, Regulatory Advisor at
Genentech, Inc., a biotechnology company, since February 1997 and was
Genentech's Vice President of Regulatory Affairs from 1989 to February 1997.
Prior to joining Genentech, Dr. MacFarlane had 15 years of regulatory
experience in the pharmaceutical industry, including working with Glaxo, Inc.
as Director of Research, Professional Services and Vice President, Regulatory
Affairs.
2
<PAGE>
Gerald J. Papariello, PhD, 64, is a private consultant to research-based
pharmaceutical companies, including the Wyeth-Ayerst Research division of
Wyeth Laboratories, Inc., a subsidiary of American Home Products Corporation,
in the area of developmental operations and organizational principles. He
retired in 1996 after a 30-year career with Wyeth-Ayerst Research, most
recently serving as Vice President, Chemical and Pharmaceutical Development
from 1993 to 1996.
CLASS III DIRECTORS
Jerry T. Jackson, 56, was employed by Merck & Co. Inc., a large
pharmaceutical company, from 1965 until his retirement in 1995. From 1993
until his retirement, Mr. Jackson served as Executive Vice President of Merck
with responsibilities for International Human Health, Worldwide Vaccines, the
AgVet division, Astra/Merck U.S. Operations and Corporate Worldwide Marketing.
He is currently Chairman of Transcend Therapeutics, Inc. and also serves as a
director of COR Therapeutics, Inc., Molecular Biosystems, Inc. and SunPharm
Corporation.
Ley S. Smith, 63, retired in 1997 from a 39-year career with Pharmacia &
Upjohn, Inc., a large pharmaceutical company, where he was Executive Vice
President from 1995 to 1997 and President and Chief Operating Officer of The
Upjohn Co. from 1993 to 1995. Prior to that time, he held a number of senior
international management positions with Upjohn. Mr. Smith is a director of
First of America Corp.
MEETINGS AND COMMITTEES OF THE BOARD
Prior to the distribution of Crescendo Class A Common Stock to the
stockholders of ALZA Corporation ("ALZA") on September 30, 1997, all of the
directors of Crescendo were employees of ALZA. In October of 1997, the
directors affiliated with ALZA were replaced with Gary L. Neil, PhD (who was
appointed President and Chief Executive Officer of Crescendo on September 30,
1997) and Dr. Neil appointed the remaining directors in October and November
of 1997. Crescendo's independent Board of Directors met one time during 1997.
The Board currently has two standing committees: the Compensation Committee
and the Audit Committee. The current members of the Compensation Committee are
Terrence F. Blaschke, MD and Jerry T. Jackson. The Compensation Committee,
which did not meet in 1997, will recommend for the full Board's approval
Crescendo's compensation arrangements for its Chief Executive Officer
beginning in 1998 and any grants of stock options under Crescendo's 1997 Stock
Option Plan. The members of the Audit Committee are M. David MacFarlane, PhD,
Gerald J. Papariello, PhD and Ley S. Smith. The Audit Committee, which did not
meet during 1997, will consult with Crescendo's independent auditors
concerning their audit plan, the results of their audit, the appropriateness
of accounting principles used by Crescendo and the adequacy of Crescendo's
internal controls.
Crescendo has no nominating committee. Crescendo's Bylaws provide that
stockholders may nominate candidates for election as directors by delivery of
written notice to Crescendo's Secretary at least sixty days in advance of the
stockholders' meeting or ten days after notice of the meeting is first given
to stockholders, whichever is later. Any such notice must set forth the name
and address of the nominating stockholder and the nominee, and such
information concerning both such persons as would be required by the rules and
regulations of the Securities and Exchange Commission ("SEC") to be included
in a proxy statement soliciting proxies for the election of the nominee. The
notice must be accompanied by the written consent of the nominee to serve as a
director, if elected.
During 1997, each director who had been appointed to the Board by the time
of its initial meeting attended the meeting of the full Board held in October
of 1997. There were no committee meetings in 1997.
Each director who is not an employee of Crescendo receives an annual
retainer fee of $25,000. Pursuant to the automatic grant provisions of
Crescendo's 1997 Stock Option Plan, each non-employee director of Crescendo
receives, on the effective date of his appointment or election to the Board,
options to purchase 10,000 shares of Crescendo Class A Common Stock at the
fair market value on the date of grant. The options vest in four equal annual
installments, commencing on the first anniversary of the date of grant, unless
the exercise date is automatically accelerated in the event of the
liquidation, dissolution, merger, consolidation or sale of Crescendo or upon
the exercise of the Purchase Option held by ALZA (described under "Certain
Transactions").
3
<PAGE>
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth, with respect to Crescendo's Chief Executive
Officer, certain information relating to compensation paid or accrued for his
services in all capacities during the fiscal year ended December 31, 1997. All
other officers of Crescendo are employees of ALZA and do not receive any
compensation from Crescendo for their services.
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION
COMPENSATION AWARDS
------------ ------------
SECURITIES
UNDERLYING
NAME AND PRINCIPAL POSITIONS YEAR SALARY(1) OPTIONS
- ---------------------------- ---- ------------ ------------
<S> <C> <C> <C>
Gary L. Neil, PhD. .............................. 1997 $76,149 50,000
President and Chief Executive Officer
</TABLE>
- -------
(1) Dr. Neil commenced employment with Crescendo on September 30, 1997.
1997 OPTION GRANTS
The following table sets forth certain information relating to options to
purchase Crescendo Class A Common Stock granted in 1997 to Crescendo's Chief
Executive Officer. All other officers of Crescendo are employees of ALZA and
have not been granted any options to purchase Crescendo shares. In addition,
the table shows (i) hypothetical gains that would exist for such options based
on assumed rates of annual compound stock price appreciation of 0%, 5% and 10%
per year from the date the options were granted over the full option term and
(ii) hypothetical amounts that would be realized assuming that ALZA exercised
the Purchase Option (described under "Certain Transactions") for $100 million.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE
AT ASSUMED ANNUAL RATES OF
STOCK PRICE APPRECIATION
INDIVIDUAL GRANTS FOR OPTION TERM (1)
-------------------------------------------- --------------------------
PERCENT OF POTENTIAL
TOTAL AMOUNT REALIZED
NUMBER OF OPTIONS IF ALZA'S
SECURITIES GRANTED PURCHASE OPTION
UNDERLYING TO EMPLOYEES EXERCISE IS EXERCISED
OPTIONS IN FISCAL PRICE PER EXPIRATION 0% 5% 10% FOR
NAME GRANTED(2) YEAR SHARE(3) DATE PER YEAR PER YEAR PER YEAR $100 MILLION(4)
---- ---------- ------------ --------- ---------- -------- -------- -------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Gary L. Neil, PhD. ..... 50,000 100% $11.00 9/30/2007 $ -- $345,892 $876,558 $437,000
</TABLE>
- -------
(1) The amounts represent certain assumed rates of appreciation over the
exercise price per share (before taxes). Actual gains, if any, on stock
option exercises are dependent on the future performance of Crescendo
Class A Common Stock. There can be no assurance that any of the values
reflected in this table will be achieved.
(2) The options to purchase Class A Common Stock were granted for a term of
ten years and are exercisable in four equal annual installments of 12,500
shares each beginning on September 30, 1998. The options would become
immediately exercisable in the event that certain change in control events
were to occur, including upon exercise of the Purchase Option held by ALZA
(described under "Certain Transactions"). All unvested options are subject
to early termination in the event of the termination of Dr. Neil's
relationship with Crescendo. The options were granted at fair market value
on the date of grant. Under the terms of Crescendo's 1997 Stock Option
Plan, the Compensation Committee retains discretion, subject to plan
limits, to modify the terms (including the exercise price and vesting
dates) of outstanding options.
(3) Options were granted at an exercise price equal to the fair market value
of Crescendo Class A Common Stock, which is the average of the high and
low price reported on The Nasdaq Stock MarketSM, on the date of grant.
(4) For a description of the Purchase Option held by ALZA, see "Certain
Transactions."
4
<PAGE>
1997 AGGREGATED OPTION EXERCISES AND FISCAL YEAR END OPTION VALUES
The following table sets forth certain information relating to fiscal year
end option values with respect to Crescendo's Chief Executive Officer. All
other officers of Crescendo are employees of ALZA and have not been granted
any options to purchase Crescendo Class A Common Stock. Dr. Neil did not
exercise any options during 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
YEAR END FISCAL YEAR END (1)
------------------------- -------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Gary L. Neil, PhD. ......... -- 50,000 -- $28,125
</TABLE>
- --------
(1) Market value of Crescendo Class A Common Stock at fiscal year end based on
the closing sales price as reported on the composite tape on December 31,
1997 ($11.5625) minus the exercise price of "in-the-money" options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires Crescendo's
directors and executive officers, and persons who own more than 10% of
Crescendo Class A or Class B Common Stock, to file reports of ownership and
changes in ownership of such stock with the SEC. Directors, executive officers
and greater than 10% stockholders are required by SEC regulations to furnish
Crescendo with copies of all Section 16(a) forms they file.
Based solely on a review of the copies of such forms furnished to Crescendo
or written representations that no Forms 5 were required, Crescendo believes
that, except as described below, from September 30, 1997 (the date Crescendo's
directors, officers and greater than 10% stockholders became subject to
Section 16(a)) through December 31, 1997, its directors, executive officers
and greater than 10% stockholders complied with all Section 16(a) filing
requirements. Crescendo believes, based on its review of a Schedule 13D and
amendments thereto and copies of Forms 3 and 4 furnished to Crescendo by
Woodbourne Partners, L.P., a greater than 10% stockholder of Crescendo, that
Woodbourne Partners, L.P. and related entities did not file, until March of
1998, a Form 3 upon becoming a 10% stockholder in October of 1997 and Forms 4
for approximately 14 transactions in October, November and December of 1997.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors is
generally responsible for decisions concerning the compensation to be paid to
Crescendo's executive officers who are not employees of ALZA. The Committee
consists of Dr. Blaschke and Mr. Jackson, each of whom is a non-employee
director of Crescendo.
The annual compensation of Crescendo's Chief Executive Officer, Gary L.
Neil, PhD, for his first year with Crescendo was agreed upon by Dr. Neil and
ALZA prior to the distribution by ALZA to its stockholders of Crescendo Class
A Common Stock and prior to the appointment to the Board of the current
members of the Compensation Committee. ALZA has advised Crescendo that in
determining the compensation to be paid to Dr. Neil in his first year as Chief
Executive Officer, ALZA's goal was to provide compensation that would align
Dr. Neil's compensation with Crescendo's business and financial objectives and
reward Dr. Neil for strategic management and the achievement of Crescendo's
objectives. ALZA has advised this Committee that the key components of Dr.
Neil's first year's compensation were to be (i) salary, which is based on
factors such as Dr. Neil's primary responsibility for meeting Crescendo's
business and financial objectives and a comparison to similar positions of
responsibility at other companies; (ii) an annual cash bonus award, to be
based on Dr. Neil's performance and the performance of Crescendo, measured in
terms of attainment of Crescendo's financial and business objectives; and
(iii) a stock option grant, which is intended to align Dr. Neil's long-term
interests in Crescendo's long-term success with the interests of Crescendo's
stockholders.
5
<PAGE>
Section 162(m) of the Internal Revenue Code generally places a $1 million
per person limit on the deduction a publicly held corporation may take for
compensation paid to its chief executive officer and its four other highest
paid executive officers unless, in general, the compensation is exempt as
"performance based." For stock compensation to be "performance based," Section
162(m) requires a limit to be set on the number of options that may be granted
to employees subject to the deduction cap. Crescendo's 1997 Stock Option Plan
places a limit of 50,000 as the maximum number of shares as to which options
may be granted to any executive officer during any one-year period. These
limitations allow gains realized upon exercise of options to qualify as
"performance based" and, therefore, to be excluded from compensation subject
to the $1 million deductibility limit. Crescendo believes that all of its
compensation paid to date meets the requirements for deductibility. In
general, the Committee will consider the deductibility limits of Section
162(m) in determining executive compensation.
COMPENSATION COMMITTEE
Terrence F. Blaschke, MD
Jerry T. Jackson
6
<PAGE>
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG CRESCENDO,
THE NASDAQ PHARMACEUTICALS INDEX AND THE NASDAQ COMPOSITE INDEX
The rules of the SEC require that Crescendo include in this Proxy Statement
a line graph presentation comparing cumulative stockholder returns with a
broad equity market index and either a published industry or line-of-business
index or an index of peer companies selected by Crescendo. Although the Class
A Common Stock of Crescendo was registered under Section 12 of the Securities
Exchange Act of 1934 on September 5, 1997, Crescendo Class A Common Stock did
not commence regular way trading on The Nasdaq Stock MarketSM until September
30, 1997 (which is the date Crescendo Class A Common Stock was distributed to
the stockholders of ALZA). Set forth below is a line-graph illustrating the
performance of Crescendo Class A Common Stock beginning on September 30, 1997
through December 31, 1997. There can be no assurance that the performance of
Crescendo Class A Common Stock will continue into the future with the same or
similar trends depicted in the graph below. The price of Crescendo Class A
Common Stock will be limited by ALZA's Purchase Option (described under
"Certain Transactions") and the likelihood and timing of its exercise.
PERFORMANCE GRAPH APPEARS HERE
<TABLE>
<CAPTION>
COMPANY NAME 9/30/97 10/31/97 11/30/97 12/31/97
- -------------- ------- -------- -------- --------
<S> <C> <C> <C> <C>
Cresendo $100.0 $ 99.8 $ 99.9 $100.1
Nasdaq Pharmaceuticals 100.0 99.5 99.2 99.0
Nasdaq Composite 100.0 99.5 99.5 99.3
</TABLE>
7
<PAGE>
BENEFICIAL STOCK OWNERSHIP
The following table sets forth beneficial ownership of Crescendo Class A and
Class B Common Stock as of March 2, 1998, except as otherwise noted, (i) by
each person, entity or "group" of persons or entities known by Crescendo to be
beneficial owners of more than 5% of Crescendo Class A or Class B Common
Stock, (ii) by each director (including nominees) and (iii) by all executive
officers and directors as a group. Except as described below, each person has
sole voting and dispositive power with respect to the securities described in
the table.
<TABLE>
<CAPTION>
AMOUNT AND NATURE PERCENT OF
NAME OF BENEFICIAL OWNERSHIP CLASS(1)
- ---- ----------------------- ----------
<S> <C> <C>
CLASS A COMMON STOCK:
Woodbourne Partners, L.P. and related
entities.................................. 862,500 17.4%
200 N. Broadway, Suite 825
St. Louis, MO (2)
Funds managed by Farallon Capital
Management, L.L.C. ....................... 617,900 12.4
One Maritime Plaza, Suite 1325
San Francisco, CA (3)
J.P. Morgan & Co. Incorporated and its
subsidiaries.............................. 509,561 10.3
60 Wall Street
New York, NY (4)
Zesiger Capital Group, L.L.C. ............. 379,765 7.6
320 Park Avenue, 30th Floor
New York, NY (5)
Lehman Brothers Holdings, Inc. ............ 248,000 5.0
American Express Tower
3 World Financial Center
New York, NY (6)
Terrence F. Blaschke, MD................... 65 --
Jerry T. Jackson........................... -- --
M. David MacFarlane, PhD .................. 500 --
Gary L. Neil, PhD ......................... 4,000 --
Gerald J. Papariello, PhD ................. -- --
Ley S. Smith............................... -- --
All executive officers and directors as a
group (8 persons)......................... 4,978 --
CLASS B COMMON STOCK:
ALZA Corporation........................... 1,000 100%
950 Page Mill Road
Palo Alto, CA (7)
</TABLE>
- --------
(1) Percentages are not shown if holdings total less than 1% of total
outstanding shares.
(2) Information is as provided by the holders in Amendment No. 2 to their
Schedule 13D filed with the SEC as of March 6, 1998. The holders disclaim
beneficial ownership of all of the shares reported as beneficially owned.
The holders have shared voting and dispositive power with respect to all
shares.
(3) Information is as provided by the holders in Amendment No. 2 to their
Schedule 13D filed with the SEC as of March 13, 1998. The holders have
shared voting and dispositive power with respect to all shares.
(4) Information is as provided by the holders in Amendment No. 1 to their
Schedule 13G filed with the SEC as of February 13, 1998. As to such
shares, the holders have provided the following information: sole voting
power -- 344,707 shares; shared voting power -- 510 shares; sole
dispositive power -- 507,271 shares; and shared dispositive power -- 1,780
shares.
8
<PAGE>
(5) Information is as provided by the holder in its Schedule 13G filed with
the SEC as of February 10, 1998. The holder disclaims beneficial ownership
of all of the shares reported as beneficially owned. The holder has sole
voting power with respect to 210,700 shares and sole dispositive power
with respect to all such shares.
(6) Information is as provided by the holder in its Schedule 13G filed with
the SEC as of February 13, 1998. The holder has sole voting and
dispositive power with respect to all shares.
(7) ALZA holds beneficially and of record all outstanding shares of Class B
Common Stock of Crescendo. ALZA is also deemed, under the rules and
regulations of the SEC, to be the beneficial owner of all outstanding
shares of Crescendo Class A Common Stock by virtue of the Purchase Option
(described under "Certain Transactions").
CERTAIN TRANSACTIONS
ALZA has an option, exercisable in ALZA's sole discretion, to purchase all
(but not less than all) of the outstanding shares of Crescendo Class A Common
Stock (the "Purchase Option"). The Purchase Option is exercisable at any time
until January 31, 2002 (which exercise period may be shortened or lengthened
in certain circumstances). If the Purchase Option is exercised, the exercise
price will be the greatest of:
(a) $100 million;
(b) 25 times the worldwide payments made by or due from ALZA to Crescendo
with respect to any product during the four calendar quarters prior to
the exercise of the Purchase Option (or, for a product which has not
been sold during each of such four calendar quarters, 100 times the
average of such payments for each calendar quarter in which the product
has been sold), but in each case less any amounts previously paid by
ALZA to exercise any buy-out option with respect to any product;
(c) the fair market value of one million shares of ALZA Common Stock; or
(d) $325 million less all amounts paid by or due from Crescendo under its
development agreement with ALZA (described below).
ALZA and Crescendo entered into a development agreement pursuant to which
ALZA conducts research and development activities on behalf of Crescendo. For
activities conducted by ALZA under the development agreement during fiscal
1997, Crescendo incurred research and development expenses of approximately
$28 million. Under a technology license agreement pursuant to which ALZA
granted Crescendo a license to certain ALZA technology, Crescendo incurred
expenses of $4 million for technology fees during fiscal 1997 which were
recorded as research and development expenses. ALZA also performs certain
administrative services for Crescendo under a services agreement which is
terminable at the option of Crescendo at any time on 60 days' notice. Expenses
incurred by Crescendo for services rendered under the services agreement
during fiscal 1997 were approximately $42,000.
In 1997, Crescendo assumed a loan in the amount of $300,000 to Gary L. Neil,
PhD, President and Chief Executive Officer of Crescendo, which was made in
connection with the purchase of his California residence. The loan bears
interest at the rate of 5.32% per annum and is payable in full on or before
September 8, 2002. Accrued interest is payable by June 30 and December 31 of
each year. In 1997, Dr. Neil paid Crescendo $4,023 of accrued interest on the
loan. Repayment of the loan is secured by a first deed of trust on Dr. Neil's
residence.
INDEPENDENT AUDITORS
Ernst & Young LLP has acted as Crescendo's independent auditors since
Crescendo's inception and has been selected as Crescendo's independent
auditors for the year ending December 31, 1998. A representative of Ernst &
Young LLP will be present at the Annual Meeting, will have an opportunity to
make a statement if he or she desires to do so, and will be available to
respond to appropriate questions.
9
<PAGE>
ANNUAL REPORT TO STOCKHOLDERS
Crescendo's Annual Report to Stockholders for the year ended December 31,
1997, containing the audited balance sheet as of December 31, 1997 and the
related statements of operations, stockholders' equity and cash flows for the
period ended December 31, 1997, is being mailed with this Proxy Statement to
stockholders entitled to notice of the Annual Meeting.
STOCKHOLDER PROPOSALS
Crescendo will, in future proxy statements of the Board, include stockholder
proposals complying with the applicable rules of the SEC and the procedures
set forth in Crescendo's Bylaws. In order for a proposal by a stockholder to
be included in the proxy statement of the Board relating to the annual meeting
of stockholders to be held in the spring of 1999, that proposal must be
received in writing by the Secretary of Crescendo no later than November 24,
1998.
OTHER MATTERS
The Board knows of no other matters that will be presented at the Annual
Meeting. If, however, any other matter is properly presented at the Annual
Meeting, the proxy solicited hereby will be voted in accordance with the
judgment of the proxyholders.
By Order of the Board of Directors,
DAVID R. HOFFMANN
Secretary
Palo Alto, California
March 31, 1998
YOU ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING IN PERSON. WHETHER OR
NOT YOU PLAN TO ATTEND THE MEETING, YOU ARE REQUESTED TO SIGN AND RETURN THE
ACCOMPANYING PROXY CARD AS SOON AS POSSIBLE IN THE ACCOMPANYING POSTPAID
ENVELOPE. YOUR DOING SO MAY SAVE CRESCENDO THE EXPENSE OF A SECOND MAILING.
LOGO
RECYCLED PAPER
<PAGE>
DETACH HERE
PROXY
CRESCENDO PHARMACEUTICALS CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) SUZANNE C. MARTIN and DAVID R. HOFFMANN,
or either of them, each with full power of substitution, the lawful
attorneys and proxies of the undersigned to attend the Annual Meeting of
Stockholders to be held on May 7, 1998 and any adjournments or postponements
thereof, to vote the number of shares the undersigned would be entitled to vote
if personally present, and to vote in their discretion upon any other business
that may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
BY THE UNDERSIGNED STOCKHOLDER(S). THIS PROXY MAY BE REVOKED AT ANY TIME PRIOR
TO THE TIME IT IS VOTED BY ANY MEANS DESCRIBED IN THE ACCOMPANYING PROXY
STATEMENT.
SEE REVERSE SEE REVERSE
SIDE CONTINUED AND TO BE SIGNED ON REVERSE SIDE SIDE
<PAGE>
PLEASE MARK
[X] VOTES AS IN
THIS EXAMPLE.
THE BOARD OF DIRECTORS OF CRESCENDO PHARMACEUTICALS CORPORATION UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL:
1. To elect as Class I Directors:
NOMINEES: Gary L. Neil, Ph.D. and Terrence F. Blaschke, M.D.
FOR WITHHELD
[_] [_]
[_]
---------------------------------------------
For all nominees except as noted above
MARK HERE FOR ADDRESS CHANGE AND NOTE AT LEFT [_]
WHEN NO CHOICE IS INDICATED, THIS PROXY WILL BE VOTED "FOR" THE ABOVE PROPOSAL.
Please date and sign exactly as name(s) appear(s) herein. If shares are held
jointly, each holder should sign. Please give full title and capacity in which
signing if not signing as an individual stockholder.
Signature:_______________ Date:_______ Signature:_____________ Date:________
