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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
Crescendo Pharmaceuticals Corporation
- --------------------------------------------------------------------------------
(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)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(4) Date Filed:
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Notes:
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[CRESCENDO LOGO]
CRESCENDO PHARMACEUTICALS CORPORATION
----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 2000 AT 9:00 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 1900 Charleston Road, Mountain
View, California, on Thursday, May 18, 2000 at 9:00 a.m., for the following
purposes:
1. To elect two Class III directors to hold office for a term ending in
2003 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 22, 2000 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
Mountain View, California
April 11, 2000
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 2000 Annual Meeting of
Stockholders (the "Annual Meeting") to be held at 9:00 a.m. on Thursday, May
18, 2000 at 1900 Charleston Road, Mountain View, California 94043; telephone
number (650) 564-5600.
Only holders of record of Crescendo Class A Common Stock and Class B Common
Stock as of the close of business on March 22, 2000 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
4,871,273 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(R) 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 April 11, 2000. 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 III directors are to be elected at the 2000 annual
meeting, Class I directors are to be elected at the annual meeting to be held
in the year 2001, and Class II directors are to be elected at the annual
meeting in the year 2002.
Nominees
Two Class III 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 2003 and until his successor has been elected and
qualified, or until his earlier death, resignation or removal. The current
Class III directors, the nominees for election at the Annual Meeting, are
Jerry T. Jackson and Ley S. Smith. Both Mr. Jackson and Mr. Smith have
extensive experience in fields critical to Crescendo's success, and have
indicated their willingness to continue to serve as directors of Crescendo.
1
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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>
Name and Positions with Crescendo in Addition to Director
Director Continuously Since
------------------------------------------------ ------------------
<S> <C>
Nominees (Class III Directors)
Jerry T. Jackson....................................... 1997
Ley S. Smith........................................... 1997
Incumbents
Class I Directors
Gary L. Neil, PhD...................................... 1997
President and Chief Executive Officer
Terrence F. Blaschke, MD............................... 1997
Class II Directors
M. David MacFarlane, PhD............................... 1997
Gerald J. Papariello, PhD.............................. 1997
</TABLE>
Business Experience of Directors
Nominees (Class III Directors)
Jerry T. Jackson, 58, 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 currently serves as a director of COR Therapeutics, Inc., Molecular
Biosystems, Inc. and Alexion Pharmaceuticals, Inc.
Ley S. Smith, 65, 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 Corporation and MDS, Inc.
Incumbents
Class I Directors
Gary L. Neil, PhD, 59, is the President and Chief Executive Officer of
Crescendo Pharmaceuticals Corporation and has been since September 1997. 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.
2
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Terrence F. Blaschke, MD, 57, has served on the faculty of Stanford
University for over 25 years and is Professor of Medicine and Molecular
Pharmacology and Chief of the Division of Clinical Pharmacology at the
Stanford University School of Medicine. He is currently Vice President,
Collaborative Programs, at Pharsight Corporation, a company providing software
and consulting services to the pharmaceutical industry, while on leave from
Stanford. 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 II Directors
M. David MacFarlane, PhD, 59, was Regulatory Advisor at Genentech, Inc., a
biotechnology company, from February 1998 to August 1999, 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, 66, 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 the
Wyeth-Ayerst Research division of Wyeth Laboratories, Inc., a subsidiary of
American Home 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.
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 1999, 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 twice during 1999, 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 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 seven times in 1999. Each director attended at
least 75% of the meetings of the full Board and the committees of the Board 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 ("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, 1999. All
other officers of Crescendo are employees of ALZA and do not receive any
compensation from Crescendo for their services.
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation Awards
-------------------- -------------------
Name and Principal Securities All Other
Positions Year Salary Bonus Underlying Options Compensation
- ------------------ ---- -------- -------- ------------------- ------------
<S> <C> <C> <C> <C> <C>
Gary L. Neil, PhD
President and Chief
Executive Officer..... 1999 $341,689 $175,000 -- $2,000(1)
1998 302,567 120,000 -- --
1997 76,149(2) -- 50,000 --
</TABLE>
- --------
(1) Amounts shown are amounts contributed by Crescendo to Dr. Neil's 401(k)
account.
(2) Dr. Neil commenced employment with Crescendo on September 30, 1997.
1999 STOCK OPTION GRANTS
No options to purchase Crescendo shares were granted during 1999.
1999 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 1999.
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Options at Fiscal Year In-the-Money Options at
End Fiscal Year End(1)
------------------------- -------------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Gary L. Neil, PhD........... 25,000 25,000 $179,689 $179,689
</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
30, 1999 ($18.1875) minus the exercise price of "in-the-money" options.
SECTION 16 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 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 1999.
4
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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 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 1998 and 1999, 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 1999, and his progress in furthering
Crescendo's goals. The Committee believed, in both 1998 and 1999, as a result
of its review, that Dr. Neil's performance was outstanding, and that he made
impressive progress in accomplishing Crescendo's goals and objectives. In
1998, the Committee awarded Dr. Neil a 10% salary increase and a bonus of
$120,000. In connection with its 1999 review, the Committee awarded Dr. Neil
an 8% salary increase and a bonus of $175,000.
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
5
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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(R) 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,
1999. 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.
<TABLE>
<CAPTION>
9/30/97 12/31/97 3/31/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 9/30/99 12/31/99
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
CNDO $100.00 $100.54 $109.78 $110.33 $114.67 $118.48 $123.91 $150.00 $157.07 $158.15
Nasdaq Biotech 100.00 88.61 98.95 92.73 93.11 127.85 145.67 148.28 172.31 257.79
Nasdaq Composite 100.00 93.27 109.14 112.76 100.91 130.74 146.88 160.41 164.11 243.30
</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 1, 2000, 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:
Farallon Capital Management, L.L.C.
and other entities................... 1,157,845 23.7%
One Maritime Plaza, Suite 1325
San Francisco, CA 94111(2)
Woodbourne Partners, L.P. and related
entities............................. 956,100 19.6
200 N. Broadway, Suite 825
St. Louis, MO 63102(3)
J.P. Morgan & Co. Incorporated........ 361,893 7.4
60 Wall Street
New York, NY 10260(4)
Lehman Brothers Holdings, Inc......... 299,398 6.1
American Express Tower
3 World Financial Center
New York, NY 10285(5)
Terrence F. Blaschke, MD(6)........... 14,865 --
Jerry T. Jackson(6)................... 5,000 --
M. David MacFarlane, PhD(6)........... 5,500 --
Gary L. Neil, PhD(6).................. 29,000 --
Gerald J. Papariello, PhD(6).......... 5,000 --
Ley S. Smith(6)....................... 5,000 --
All executive officers and directors
as a group (8 persons)(6)............ 69,228 1.4
Class B Common Stock:
ALZA Corporation...................... 1,000 100%
1900 Charleston Road
Mountain View, CA 94043(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 on March 23, 2000. 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. and Tinicum Partners, L.P.
(collectively, the "Partnerships") hold 687,545 shares in the aggregate.
Certain accounts managed by Farallon Capital Management, L.L.C.
("FCMLLC") hold in the aggregate 470,300 shares. As the general partner
of each of the Partnerships, Farallon Partners, L.L.C. ("FPLLC") may, for
purposes of Rule 13d-3 under the Exchange Act be deemed to own
beneficially the 687,545 shares held, in the aggregate, 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, Thomas F. Steyer and Mark C. Wehrly may
each, for purposes of Rule 13d-3 under the Exchange Act, be deemed to own
beneficially the 687,545 shares held, in the aggregate, by the
Partnerships. As the managing members of FCMLLC, each of Enrique H.
Boilini,
7
<PAGE>
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, Thomas F. Steyer and Mark C. Wehrly may, for purposes of
Rule 13d-3 under the Exchange Act, be deemed the beneficial owner of the
470,300 shares held by the accounts managed by FCMLLC. Each of the
Partnerships has shared dispositive and voting power with respect to the
shares held by such Partnership. FPLLC has shared dispositive and voting
power with respect to the shares held by all of the Partnerships. Each of
the accounts managed by FCMLLC has shared dispositive and voting power with
respect to the shares held by such account. Each of the managing members of
FPLLC and/or FCMLLC has shared dispositive and voting powers with respect
to the shares held by the Partnerships and of the accounts managed by
FCMLLC. FPLLC, FCMLLC and each managing member of FPLLC and FCMLLC
disclaims any beneficial ownership of such shares. All of the above-
mentioned entities and persons disclaim group attribution.
(3) Information is as provided by the holders in Amendment No. 2 to their
Schedule 13G filed with the SEC as of February 14, 2000. The related
entities included in the filing are Forsythe Joint Venture--50,000 shares
and Clayton Management Company and John Weil--956,100 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 Amendment No. 2 to its
Schedule 13G filed with the SEC as of February 10, 2000. The holder has
sole voting power with respect to 338,100 shares and sole dispositive
power with respect to all of the shares.
(5) Information is as provided by the holder in Amendment No. 2 to its
Schedule 13G filed with the SEC as of February 14, 2000. The holder has
sole voting and dispositive power with respect to all of the shares.
(6) Includes outstanding stock options exercisable on or before April 30,
2000 to purchase the number of shares of Crescendo Class A Common Stock
as follows: 5,000 for Dr. Blaschke; 5,000 for Mr. Jackson; 5,000 for Dr.
MacFarlane; 25,000 for Dr. Neil; 5,000 for Dr. Papariello; and 5,000 for
Mr. Smith.
(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").
8
<PAGE>
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
1999, Crescendo incurred research and development expenses of approximately
$91.0 million. Under a technology license agreement pursuant to which ALZA
granted Crescendo a license to certain ALZA technology, Crescendo incurred
expenses of approximately $6.7 million for technology fees during fiscal 1999,
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 1999 were $232,475.
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 1999, 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, 2000. 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,
1999, containing the audited balance sheets as of December 31, 1999 and 1998
and the related statements of operations, stockholders' equity and cash flows
for the periods ended December 31, 1999 and 1998 and the periods from
inception to December 31, 1997 and December 31, 1999, is being mailed with
this Proxy Statement to stockholders entitled to notice of the Annual Meeting.
9
<PAGE>
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 2001, that proposal
must be received in writing by the Secretary of Crescendo no later than
December 13, 2000.
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
Mountain View, California
April 11, 2000
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.
10
<PAGE>
1685-PS-00
<PAGE>
PROXY
CRESCENDO PHARMACEUTICALS CORPORATION
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) GARY L. NEIL, PH.D. 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 of
Crescendo Pharmaceuticals Corporation to be held on May 18, 2000 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). IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE PROPOSAL. 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
votes as in
[X] this example.
THE BOARD OF DIRECTORS OF CRESCENDO PHARMACEUTICALS CORPORATION UNANIMOUSLY
RECOMMENDS A VOTE "FOR" THE FOLLOWING PROPOSAL:
1. To elect as Class III Directors:
Nominees: (01) Jerry T. Jackson and (02) Ley S. Smith
FOR WITHHELD
ALL FROM ALL
NOMINEES [_] [_] NOMINEES
<TABLE>
<CAPTION>
[_] ______________________________
<S> <C> <C>
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: ____________
</TABLE>
