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[LOGO]
CRESCENDO PHARMACEUTICALS CORPORATION
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 6, 1999 AT 11:00 A.M.
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 6, 1999 at 11:00 a.m., for the following purposes:
1. To elect two Class II directors to hold office for a term ending in 2002
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 11, 1999 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, 1999
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.
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CRESCENDO PHARMACEUTICALS CORPORATION
PROXY STATEMENT
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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 1999 Annual Meeting of Stockholders (the
"Annual Meeting") to be held at 11:00 a.m. on Thursday, May 6, 1999 at 950 Page
Mill Road, Palo Alto, California 94304; telephone number (650) 494-5000.
Holders of record of Crescendo Class A Common Stock and Class B Common Stock
as of the close of business on March 11, 1999 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 Market(SM) 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, 1999. Directors and officers 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 II directors are to be elected at the 1999 annual meeting, Class III
directors are to be elected at the annual meeting to be held in the year 2000,
and Class I directors are to be elected at the annual meeting in the year 2001.
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NOMINEES
Two Class II 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 2002 and until his successor has been elected and qualified, or until
his earlier death, resignation or removal. The current Class II directors, the
nominees for election at the Annual Meeting, are M. David MacFarlane, PhD and
Gerald J. Papariello, PhD. Dr. MacFarlane is currently Regulatory Advisor of
Genentech, Inc. Dr. Papariello is currently a consultant to research-based
pharmaceutical companies. Both Dr. MacFarlane and Dr. Papariello have extensive
experience in fields critical to Crescendo's success, and have indicated their
willingness to continue to serve as directors of Crescendo.
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>
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DIRECTOR
CONTINUOUSLY
NAME AND POSITIONS WITH CRESCENDO IN ADDITION TO DIRECTOR SINCE
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NOMINEES (CLASS II DIRECTORS)
M. David MacFarlane, PhD........................................................ 1997
Gerald J. Papariello, PhD....................................................... 1997
INCUMBENTS
CLASS I DIRECTORS
Gary L. Neil, PhD............................................................... 1997
President and Chief Executive Officer
Terrence F. Blaschke, MD........................................................ 1997
CLASS III DIRECTORS
Jerry T. Jackson................................................................ 1997
Ley S. Smith.................................................................... 1997
</TABLE>
BUSINESS EXPERIENCE OF DIRECTORS
NOMINEES (CLASS II DIRECTORS)
M. David MacFarlane, PhD, 58, has been Regulatory Advisor at Genentech,
Inc., a biotechnology company, since February 1998 and was Genentech's Vice
President of Regulatory Affairs from 1989 to February 1998. 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.
Gerald J. Papariello, PhD, 65, is a private consultant to research-based
pharmaceutical companies in the areas of developmental operations and
organizational principles. He retired in 1996 after a 30-year career with
Wyeth-Ayerst Research division of Wyeth Laboratories, a subsidiary of American
Home
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Products Corporation. During that time, he held several senior research
management positions, most recently serving as Vice President, Chemical and
Pharmaceutical Development from 1993 to 1996.
INCUMBENTS
CLASS I DIRECTORS
Gary L. Neil, PhD, 58, 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. At Wyeth-Ayerst, among other positions, Dr. Neil 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. and Geron
Corporation.
Terrence F. Blaschke, MD, 56, 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 has worked as a special government employee for 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.
CLASS III DIRECTORS
Jerry T. Jackson, 57, 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, 64, 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 also serves as a
director of National City Corp.
MEETINGS AND COMMITTEES OF THE BOARD
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
met once in 1998, recommends, for the full Board's approval, Crescendo's
compensation arrangements for its Chief Executive Officer 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 met once during 1998, consults 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
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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.
The Board of Directors met six times in 1998. Each director attended all of
the meetings of the full Board and the committee on which he served.
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 Corporation (described under "Certain
Transactions").
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, 1998. All
other officers of Crescendo are employees of ALZA and do not receive any
compensation from Crescendo for their services.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
ANNUAL -------------
COMPENSATION SECURITIES
------------------------------------ UNDERLYING
NAME AND PRINCIPAL POSITIONS YEAR SALARY BONUS OPTIONS
- - --------------------------------------------------------------- --------- ------------- ---------- -------------
<S> <C> <C> <C> <C>
Gary L. Neil, PhD
President and Chief Executive Officer........................ 1998 $ 302,567 $ 120,000 --
1997 76,149(1) -- 50,000
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(1) Dr. Neil commenced employment with Crescendo on September 30, 1997.
1998 STOCK OPTION GRANTS
No options to purchase Crescendo shares were granted during 1998.
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1998 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 stock. Dr. Neil did not exercise any options
during 1998.
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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......................................... 12,500 37,500 $ 32,813 $ 98,438
</TABLE>
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(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,
1998 ($13.625) 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 (the "Exchange Act")
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 Securities and
Exchange Commission ("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, its directors, executive officers and greater than 10% stockholders
complied with all Section 16(a) filing requirements in 1998.
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 initial 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 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 also advised the Committee that the key components of Dr. Neil's first
year's compensation were to be (i) salary, which was 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 was intended to align Dr. Neil's long-term interests in Crescendo's
long-term success with the interests of Crescendo's stockholders.
In November 1998, the Committee reviewed with Dr. Neil, Crescendo's other
executive officers and representatives of ALZA, Dr. Neil's performance in terms
of his objectives for 1998, and his progress in
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furthering Crescendo's goals. The Committee believed, as a result of its review,
that Dr. Neil's 1998 performance was outstanding, and awarded him a 10% salary
increase and a bonus of $120,000.
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 considers the deductibility limits of Section 162(m) in
determining executive compensation.
COMPENSATION COMMITTEE
Terrence F. Blaschke, MD
Jerry T. Jackson
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COMPARISON OF CUMULATIVE TOTAL RETURN AMONG CRESCENDO,
THE NASDAQ BIOTECHNOLOGY 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. Crescendo Class A Common Stock
commenced regular way trading on The Nasdaq Stock Market(SM) on September 30,
1997. Set forth below is a line-graph illustrating the performance of Crescendo
Class A Common Stock from September 30, 1997 through December 31, 1998. 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.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
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COMPARISON OF CUMULATIVE TOTAL RETURN AMONG CRESCENDO, THE NASDAQ
<S> <C> <C> <C> <C>
BIOTECHNOLOGY INDEX AND THE NASDAQ COMPOSITE INDEX
9/30/97 12/31/97 3/31/98 6/30/98
CRESCENDO $100.00 $100.54 $109.78 $110.33
NASDAQ BIOTECHNOLOGY $100.00 $88.61 $98.95 $92.73
NASDAQ COMPOSITE $100.00 $93.16 $108.90 $112.40
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COMPARISON OF CUMULATIVE TOTAL RETURN AMONG CRESCENDO, THE NASDAQ
<S> <C> <C>
BIOTECHNOLOGY INDEX AND THE NASDAQ COMPOSITE INDEX
9/30/98 12/31/98
CRESCENDO $114.67 $118.48
NASDAQ BIOTECHNOLOGY $93.11 $127.85
NASDAQ COMPOSITE $100.48 $130.08
</TABLE>
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BENEFICIAL STOCK OWNERSHIP
The following table sets forth beneficial ownership of Crescendo Class A and
Class B Common Stock as of March 2, 1999, 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
OF BENEFICIAL PERCENT OF
NAME OWNERSHIP CLASS(1)
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<S> <C> <C>
CLASS A COMMON STOCK:
Farallon Capital Management, L.L.C. and other
entities..................................... 1,129,945 22.8%
One Maritime Plaza, Suite 1325
San Francisco, CA 94111 (2)
Woodbourne Partners, L.P. and related
entities..................................... 945,000 19.0
200 N. Broadway, Suite 825
St. Louis, MO 63102 (3)
J.P. Morgan & Co. Incorporated................. 435,238 8.7
60 Wall Street
New York, NY 10260 (4)
Lehman Brothers Holdings, Inc.................. 313,458 6.3
American Express Tower
3 World Financial Center
New York, NY 10285 (5)
Terrence F. Blaschke, MD....................... 11,765 --
Jerry T. Jackson............................... 2,500 --
M. David MacFarlane, PhD....................... 3,000 --
Gary L. Neil, PhD.............................. 16,500 --
Gerald J. Papariello, PhD...................... 2,500 --
Ley S. Smith................................... 2,500 --
All executive officers and directors as a group
(8 persons).................................. 41,578 --
CLASS B COMMON STOCK:
ALZA Corporation............................... 1,000 100%
950 Page Mill Road
Palo Alto, CA 94304 (6)
</TABLE>
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(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. 8 to their
Schedule 13D filed with the SEC as of March 4, 1999. Such Schedule 13D was
filed by Farallon Capital Partners, L.P., Farallon Capital Institutional
Partners, L.P., Farallon Capital Institutional Partners II, L.P., Farallon
Capital Institutional Partners III, L.P., Tinicum Partners, L.P. and
Farallon Capital (CP) Investors, L.P. (collectively, the "PARTNERSHIPS"),
each with respect to the Crescendo Class A Shares directly held by it, by
Farallon Capital Management, L.L.C. (" FCMLLC") with respect to the
Crescendo Class A Shares directly held by certain accounts managed by FCMLLC
and by Farallon Partners, L.L.C. ("FPLLC") and the individuals listed below,
as described below. As the general partner of each of the Partnerships,
FPLLC may, for purposes of Rule 13d-3 under the Exchange Act be deemed to
own beneficially
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the 691,845 Class A Shares held by the Partnerships. As the managing members
of FPLLC, Enrique H. Boilini, David I. Cohen, Joseph F. Downes, William F.
Duhamel, Fleur E. Fairman, Jason M. Fish, Andrew B. Fremder, Richard B.
Fried, William F. Mellin, Stephen L. Millham, Meridee A. Moore and Thomas F.
Steyer may each, for purposes of Rule 13d-3 under the Exchange Act, be
deemed to own beneficially the 691,845 Class A Shares held, in aggregate, by
the Partnerships. As the managing members of FCMLLC, each of Enrique H.
Boilini, David I. Cohen, Joseph F. Downes, William F. Duhamel, Jason M.
Fish, Andrew B. Fremder, Richard B. Fried, William F. Mellin, Stephen L.
Millham, Meridee A. Moore and Thomas F. Steyer may, for purposes of Rule
13d-3 under the Exchange Act, be deemed the beneficial owner of the 438,100
Class A Shares held by the accounts managed by FCMLLC. FPLLC, FCMLLC and
each managing member of FPLLC and FCMLLC, disclaims any beneficial ownership
of such Class A Shares. All of the above-mentioned entities and persons
disclaim group attribution.
(3) Information is as provided by the holders in Amendment No. 1 to their
Schedule 13D filed with the SEC as of February 16, 1999. The related
entities included in the filing are Forsythe Joint Venture-- 50,000 shares,
and Clayton Management Company and John Weil--945,000 shares. With respect
to such shares, the holders have provided the following information: (i)
neither Woodbourne Partners, L.P. nor Forsythe Joint Venture has voting or
dispositive power as to any shares; and (ii) Clayton Management Company and
John Weil, its president, have sole voting and dispositive power as to all
of the shares.
(4) Information is as provided by the holder in its Schedule 13G filed with the
SEC as of February 22, 1999. The holder has sole voting power with respect
to 340,314 shares.
(5) Information is as provided by the holder in its Schedule 13G/A filed with
the SEC as of February 25, 1999.
(6) ALZA holds beneficially and of record all outstanding shares of Class B
Common Stock of Crescendo. ALZA Corporation 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").
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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 1998,
Crescendo incurred research and development expenses of approximately $95.3
million. Under a technology license agreement pursuant to which ALZA granted
Crescendo a license to certain ALZA technology, Crescendo incurred expenses of
$10.7 million for technology fees during fiscal 1998, 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 1998
were approximately $224,000.
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 1998, Dr. Neil paid Crescendo $15,960 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, 1999. 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.
ANNUAL REPORT TO STOCKHOLDERS
Crescendo's Annual Report to Stockholders for the year ended December 31,
1998, containing the audited balance sheet as of December 31, 1998 and the
related statements of operations, stockholders' equity and cash flows for the
period ended December 31, 1998 and 1997, is being mailed with this Proxy
Statement to stockholders entitled to notice of the Annual Meeting.
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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 2000, that proposal must be received in
writing by the Secretary of Crescendo no later than December 1, 1999.
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, 1999
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.
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RECYCLED PAPER
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1685-PS-99
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CRESCENDO PHARMACEUTICALS
CORPORATION
C/O EQUISERVE
P.O. BOX 8040
BOSTON, MA 02265-8040
CPC33A DETACH HERE
.. .. .. .. .. .. ..
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 II Directors:
Nominees: Gerald Papariello, Ph.D. and M. David MacFarlane, Ph.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:________
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CPC33A DETACH HERE
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PROXY
CRESCENDO PHARMACEUTICALS CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) GARY L. NEIL 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 6, 1999 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
