<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / 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
ABGENIX, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/x/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11
(1) Title of each class of securities to which transaction applies:
------------------------------------------------------------------------
(2) Aggregate number of securities to which 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:
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<PAGE>
ABGENIX, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 2, 1999
TO THE STOCKHOLDERS:
Notice is hereby given that the 1999 Annual Meeting of Stockholders of
Abgenix, Inc., a Delaware corporation (the "Company"), will be held on
Wednesday, June 2, 1999 at 1:00 P.M., local time, at the Company's principal
executive offices located at 7601 Dumbarton Circle, Fremont, California 94555
for the following purposes:
1. To elect directors of the Company.
2. To confirm the appointment of Ernst & Young LLP as the Company's
independent auditors for the 1999 fiscal year.
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
These matters are more fully described in the Proxy Statement accompanying
this Notice.
Only stockholders of record at the close of business on April 30, 1999 are
entitled to vote at the Annual Meeting.
All stockholders are cordially invited to attend the meeting in person.
However, to assure your representation at the meeting, you are urged to sign and
return the enclosed Proxy as promptly as possible in the postage-prepaid
envelope enclosed for that purpose. Any stockholder attending the meeting may
vote in person even if the stockholder has returned a proxy.
Sincerely,
R. Scott Greer
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Fremont, California
May 11, 1999
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IMPORTANT
TO ENSURE YOUR REPRESENTATION AT THE MEETING, PLEASE MARK, SIGN, DATE AND RETURN
THE ENCLOSED PROXY CARD AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE-PREPAID
ENVELOPE. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON EVEN IF YOU RETURNED
A PROXY.
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<PAGE>
ABGENIX, INC.
PROXY STATEMENT
1999 ANNUAL MEETING OF STOCKHOLDERS
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed Proxy is solicited on behalf of Abgenix, Inc., a Delaware
corporation (the "Company"), for use at the Annual Meeting of Stockholders (the
"Annual Meeting") to be held Wednesday, June 2, 1999 at 1:00 P.M., local time,
or at any adjournment thereof, for the purposes set forth herein and in the
accompanying Notice of Annual Meeting of Stockholders. The Annual Meeting will
be held at the Company's principal executive offices located at 7601 Dumbarton
Circle, Fremont, California 94555. The Company's telephone number at that
location is (510) 608-6500.
This Proxy Statement is being mailed on or about May 11, 1999 to all
stockholders entitled to vote at the Annual Meeting.
RECORD DATE AND VOTING SECURITIES
Stockholders of record at the close of business on April 30, 1999 (the
"Record Date") are entitled to notice of and to vote at the Annual Meeting.
The Company has one series of common shares outstanding, designated Common
Stock. At the Record Date, 14,902,327 shares of the Company's common
stock, $0.0001 par value, were issued and outstanding and held of record by
244 stockholders.
REVOCABILITY OF PROXIES
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Secretary of
the Company a written notice of revocation or a duly executed proxy bearing a
later date or by attending the Annual Meeting and voting in person.
VOTING; QUORUM; ABSTENTIONS AND BROKER NON-VOTES
Each stockholder is entitled to one vote for each share held as of the
Record Date. Stockholders will not be entitled to cumulate their votes in the
election of directors (Proposal One). A plurality of the Votes Cast (see
definition below) at the Annual Meeting is required for the election of
directors. For all other proposals, the affirmative vote of the majority of
the Votes Cast at the Annual Meeting is required for approval.
The required quorum for the transaction of business at the Annual
Meeting is a majority of the shares of common stock issued and outstanding on
the Record Date and entitled to vote at the Annual Meeting, present in person
or represented by proxy. Shares that are voted "FOR," "AGAINST" or "ABSTAIN"
from a matter are treated as being present at the Annual Meeting for
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purposes of establishing a quorum and are also treated as votes eligible to
be cast by the common stock, present in person or represented by proxy, at
the Annual Meeting and "entitled to vote on the subject matter" (the "Votes
Cast") with respect to such matter. If a quorum is not present or
represented, then either the chairman of the Annual Meeting or the
stockholders entitled to vote at the Annual Meeting, present in person or
represented by proxy, will have the power to adjourn the Annual Meeting from
time to time, without notice other than an announcement at the Annual
Meeting, until a quorum is present. At any adjourned Annual Meeting at which
a quorum is present, any business may be transacted that might have been
transacted at the Annual Meeting as originally notified. If the adjournment
is for more than thirty days, or if after the adjournment a new record date
is fixed for the adjourned Annual Meeting, a notice of the adjourned meeting
shall be given to each stockholder of record entitled to vote at the
adjourned Annual Meeting.
Although there is no definitive statutory or case law authority in
Delaware as to the proper treatment of abstentions, the Company believes that
abstentions should be counted for purposes of determining both the presence
or absence of a quorum for the transaction of business and the total number
of Votes Cast with respect to a particular matter. Therefore, in the absence
of controlling precedent to the contrary, the Company intends to treat
abstentions in this manner.
Broker non-votes, however, shall be treated differently. In a 1988
Delaware case, BERLIN V. EMERALD PARTNERS, the Delaware Supreme Court held
that, while broker non-votes may be counted for purposes of determining the
presence or absence of a quorum for the transaction of business, broker
non-votes should not be counted for purposes of determining the number of
Votes Cast with respect to the particular proposal on which the broker has
expressly not voted. Consequently, broker non-votes with respect to proposals
set forth in this Proxy Statement will not be considered Votes Cast and,
accordingly, will not affect the determination as to whether the requisite
majority of Votes Cast has been obtained with respect to a particular matter.
Therefore, for purposes of the election of directors, neither
abstentions nor broker non-votes will have any effect on the outcome of the
vote. For all other proposals, abstentions will have the same effect as votes
against these proposals and broker non-votes will not have any effect on the
outcome of the vote.
PROXIES IN THE ACCOMPANYING FORM THAT ARE PROPERLY EXECUTED AND RETURNED
WILL BE VOTED AT THE ANNUAL MEETING IN ACCORDANCE WITH THE INSTRUCTIONS ON
THE PROXY. ANY PROPERLY EXECUTED PROXY ON WHICH THERE ARE NO INSTRUCTIONS
INDICATED ABOUT A SPECIFIED PROPOSAL WILL BE VOTED AS FOLLOWS: (I) FOR THE
ELECTION OF THE SIX PERSONS NAMED IN THIS PROXY STATEMENT AS THE BOARD OF
DIRECTORS' NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS AND (II) FOR THE
RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS INDEPENDENT AUDITORS
OF THE COMPANY. NO BUSINESS OTHER THAN THAT SET FORTH IN THE ACCOMPANYING
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS IS EXPECTED TO COME BEFORE THE
ANNUAL MEETING. SHOULD ANY OTHER MATTER REQUIRING A VOTE OF STOCKHOLDERS
PROPERLY ARISE, THE PERSONS NAMED IN THE PROXY WILL VOTE THE
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SHARES THEY REPRESENT AS THE BOARD OF DIRECTORS MAY RECOMMEND. THE PERSONS
NAMED IN THE PROXY MAY ALSO, AT THEIR DISCRETION, VOTE THE PROXY TO ADJOURN
THE ANNUAL MEETING FROM TIME TO TIME.
SOLICITATION
The cost of soliciting proxies will be borne by the Company. The Company
may reimburse brokerage firms and other persons representing beneficial
owners of shares for their expenses in forwarding solicitation material to
such beneficial owners. Proxies may also be solicited by certain of the
Company's directors, officers and regular employees, without additional
compensation, personally or by telephone, facsimile or telegram.
STOCKHOLDER PROPOSALS TO BE PRESENTED AT NEXT ANNUAL MEETING
Stockholders who intend to present a proposal for inclusion in the
Company's proxy materials for the 2000 Annual Meeting of Stockholders must
submit the proposal to the Company no later than January 12, 2000.
Stockholders who intend to present a proposal at the 2000 Annual Meeting of
Stockholders without inclusion of such proposal in the Company's proxy
materials for the 2000 Annual Meeting are required to provide notice of such
proposal to the Company no later than March 28, 2000. The Company reserves
the right to reject, rule out of order, or take other appropriate action with
respect to any proposal that does not comply with these and other applicable
requirements.
SECTION 16(a) COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and officers and persons
who own more than 10% of a registered class of the Company's equity
securities to file reports of ownership and reports of changes in the
ownership with the Securities and Exchange Commission (the "SEC"). Such
persons are required by SEC regulations to furnish the Company with copies of
all Section 16(a) forms they file.
Based solely on its review of the copies of such forms submitted to it
during the year ended December 31, 1998 (the "Last Fiscal Year"), the Company
believes that, during the Last Fiscal Year, all directors and officers timely
filed all applicable reports.
SHARE OWNERSHIP OF DIRECTORS, OFFICERS AND CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's common stock as of March 31, 1999 by
(1) each person, or group of affiliated persons, who is known by the Company
to own beneficially more than 5% of the common stock, (2) each of the
Company's directors, (3) each of the Company's executive officers and (4) all
of the Company's directors and executive officers as a group.
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<PAGE>
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED
-------
BENEFICIAL OWNER NUMBER PERCENT(1)
- ---------------- ------ ---------
<S> <C> <C>
Cell Genesys, Inc.(2)
342 Lakeside Drive
Foster City, CA 94404....................................................... 3,392,034 22.9%
Omega Venture Partners(3)
555 California Street, Suite 2600
San Francisco, CA 94104..................................................... 851,351 5.8
Joseph E. Maroun(4) ........................................................ 3,572,281 24.1
Stephen A. Sherwin, M.D.(5)................................................. 3,464,362 23.3
Raju S. Kucherlapati, Ph.D.(6).............................................. 3,435,518 23.2
M. Kathleen Behrens, Ph.D.(7)............................................... 149,790 1.0
R. Scott Greer(8)........................................................... 252,768 1.7
C. Geoffrey Davis, Ph.D.(9)................................................. 90,309 *
Raymond M. Withy, Ph.D.(10)................................................. 91,561 *
Kurt W. Leutzinger(11)...................................................... 53,621 *
John A. Lipani, M.D.(12).................................................... 59,783 *
Mark B. Logan(13)........................................................... 13,633 *
All directors and executive officers as a group (10 persons)(14)............ 4,399,558 28.7%
</TABLE>
- ----------
* Represents beneficial ownership of less than one percent of the common
stock.
(1) Beneficial ownership is determined in accordance with the rules of
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Except as indicated by
footnote, and subject to community property laws where applicable, the
stockholders named in the table above have sole voting and investment power
with respect to all shares of common stock shown as beneficially owned by
them. Percentage of beneficial ownership is based on 14,684,953 shares of
common stock outstanding as of March 31, 1999. Under the rules of the
Securities and Exchange Commission, beneficial ownership also includes any
shares which the beneficial owner has the right to acquire within sixty
days of March 31, 1999 through the exercise of any stock options or stock
purchase warrants.
(2) Consists of 3,270,367 shares and 121,667 shares issuable pursuant to
warrants exercisable within 60 days of March 31, 1999 (the "CG Shares").
(3) Includes 362,545 shares held by Crossover Fund II, L.P., 67,663 shares held
by Crossover Fund IIA, L.P., 334,079 shares held by Omega Ventures II, L.P.
and 87,064 shares held by Omega Ventures II Cayman, L.P.
(4) Includes the CG Shares. Also includes 26,401 shares issuable upon exercise
of options exercisable within 60 days of March 31, 1999. Mr. Maroun is a
director and beneficial stockholder of Cell Genesys, Inc. ("Cell Genesys").
As such, he may be deemed to have voting and dispositive power over the CG
Shares. However, Mr. Maroun disclaims beneficial ownership of the CG Shares
except to the extent of his pro rata pecuniary interest therein based upon
his beneficial ownership of the capital stock of Cell Genesys.
(5) Includes the CG Shares. Also includes, 72,328 shares issuable upon exercise
of options exercisable within 60 days of March 31, 1999. Dr. Sherwin is an
officer, director and beneficial stockholder of Cell Genesys. As such, he
may be deemed to have voting and dispositive power over the CG Shares.
However, Dr. Sherwin disclaims beneficial
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<PAGE>
ownership of the CG Shares except to the extent of his pro rata pecuniary
interest therein based upon his beneficial ownership of the capital stock
of Cell Genesys.
(6) Includes the CG Shares. Also includes, 33,484 shares issuable upon exercise
of options exercisable within 60 days of March 31, 1999. Dr. Kucherlapati
is a director and beneficial stockholder of Cell Genesys. As such, he may
be deemed to have voting and dispositive power over the CG Shares. However,
Dr. Kucherlapati disclaims beneficial ownership of the shares of the CG
Shares except to the extent of his pro rata pecuniary interest therein
based upon his beneficial ownership of the capital stock of Cell Genesys.
(7) Includes 56,280 shares held by Bayview Investors, LTD, 50,000 shares held
by The Robertson Stephens Orphan Fund, L.P. and 17,500 shares held by The
Robertson Stephens Orphan Offshore Fund, L.P. (the "Robertson Stephens
Investment Management Co. Shares"). Also includes 10,625 shares issuable
upon exercise of options exercisable within 60 days of March 31, 1999. Dr.
Behrens, a managing director of Robertson Stephens Investment Management
Co., disclaims beneficial ownership of the Robertson Stephens Investment
Management Co. Shares except to the extent of her pro rata pecuniary
interests therein.
(8) Includes 112,999 shares issuable upon exercise of options exercisable
within 60 days of March 31, 1999.
(9) Includes 90,309 shares issuable upon exercise of options exercisable within
60 days of March 31, 1999.
(10) Includes 54,893 shares issuable upon exercise of options exercisable within
60 days of March 31, 1999.
(11) Includes 53,533 shares issuable upon exercise of options exercisable within
60 days of March 31, 1999.
(12) Includes 59,783 shares issuable upon exercise of options exercisable within
60 days of March 31, 1999.
(13) Includes 13,633 shares issuable upon exercise of options exercisable within
60 days of March 31, 1999.
(14) Includes 527,988 shares issuable upon exercise of options exercisable
within 60 days of March 31, 1999 and 121,667 shares subject to warrants.
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<PAGE>
PROPOSAL NO. 1:
ELECTION OF DIRECTORS
A Board of six directors will be elected at the Annual Meeting. Unless
otherwise instructed, the proxy holders will vote the proxies received by them
for the six nominees named below, all of whom are presently directors of the
Company. If any nominee is unable or declines to serve as a director at the time
of the Annual Meeting, the proxies will be voted for any nominee who shall be
designated by the present Board of Directors to fill the vacancy. It is not
expected that any nominee will be unable to or will decline to serve as a
director. If stockholders nominate additional persons for election as directors,
the proxy holder will vote all proxies received by him to assure the election of
as many of the Board of Directors' nominees as possible, with the proxy holder
making any required selection of specific nominees to be voted for. The term of
office of each person elected as a director will continue until the next Annual
Meeting of Stockholders or until that person's successor has been elected.
VOTE REQUIRED
The six nominees receiving the highest number of affirmative votes of the
Votes Cast shall be elected as directors.
RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" THE NOMINEES LISTED BELOW.
NOMINEES FOR DIRECTOR
<TABLE>
<CAPTION>
Director
Name of Nominee Age Principal Occupation Since
--------------- --- -------------------- -----
<S> <C> <C> <C>
R. Scott Greer......................... 40 President and Chief Executive Officer of Abgenix 1996
Chairman of the Board, President and Chief Executive
Stephen A. Sherwin, M.D. .............. 50 Officer of Cell Genesys 1996
Managing Director of Robertson Stephens Investment
M. Kathleen Behrens, Ph.D. ............ 46 Management Co. 1997
Raju S. Kucherlapati, Ph.D. ........... 56 Professor, Albert Einstein College of Medicine 1996
Chairman of the Board, President and Chief Executive
Mark B. Logan.......................... 60 Officer of VISX, Incorporated 1997
Retired President of the International Group and Senior
Joseph E. Maroun....................... 69 Vice President, Bristol-Myers Squibb 1996
</TABLE>
R. SCOTT GREER has served as the Company's President and Chief Executive
Officer and as one of its directors since June 1996. He also serves as a
director of Xenotech. From July 1994 to July
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1996, Mr. Greer was Senior Vice President of Corporate Development at Cell
Genesys. From April 1991 to July 1994, Mr. Greer was Vice President of
Corporate Development and from April 1991 to September 1993 was Chief
Financial Officer of Cell Genesys. From 1986 to 1991, Mr. Greer held various
positions at Genetics Institute, Inc., a biotechnology company, including
Director, Corporate Development. Mr. Greer received a B.A. in economics from
Whitman College and an M.B.A. from Harvard University and is a certified
public accountant.
STEPHEN A. SHERWIN, M.D., has served as the Company's Chairman of the
Board since June 1996. Since March 1990, Dr. Sherwin has served as President,
Chief Executive Officer and a director of Cell Genesys. Since March 1994, he
has served as Chairman of the Board of Cell Genesys. From 1983 to 1990, Dr.
Sherwin held various positions at Genentech, Inc., a biotechnology company,
most recently as Vice President, Clinical Research. Dr. Sherwin currently
serves as a Director of the California Healthcare Institute. Dr. Sherwin
received a B.A. in biology from Yale University and an M.D. from Harvard
Medical School.
M. KATHLEEN BEHRENS, PH.D., has served as one of the Company's directors
since December 1997. Dr. Behrens joined Robertson Stephens Investment
Management Co. in 1983 and became a general partner in 1986 and a managing
director in 1993. In 1988, Dr. Behrens joined the venture capital group of
Robertson Stephens Investment Management Co. and has helped in the founding
of three biotechnology companies: Mercator Genetics, Inc., Protein Design
Laboratories, Inc. and COR Therapeutics, Inc. Dr. Behrens is currently
president and a director of the National Venture Capital Association. Dr.
Behrens received a Ph.D. in microbiology from the University of California,
Davis, where she performed genetic research for six years.
RAJU S. KUCHERLAPATI, PH.D., has served as one of the Company's
directors since June 1996. Dr. Kucherlapati was a founder of Cell Genesys and
has served as a director of Cell Genesys since 1988. Since July 1989, he has
been the Saul and Lola Kramer Professor and the Chairman of the Department of
Molecular Genetics at the Albert Einstein College of Medicine. Dr.
Kucherlapati also serves as a director of Megabios Corp. and Millennium
Pharmaceuticals, Inc. Dr. Kucherlapati received a B.S. in biology from Andhra
University in India and a Ph.D. in genetics from the University of Illinois,
Urbana.
MARK B. LOGAN has served as one of the Company's directors since August
1997. Mr. Logan has served as Chairman of the Board, President and Chief
Executive Officer of VISX, Incorporated, a medical device company, since
November 1994. From January 1992 to October 1994, he was Chairman of the
Board and Chief Executive Officer of INSMED Pharmaceuticals, Inc., a
pharmaceutical company. Previously, Mr. Logan held several senior management
positions at Bausch & Lomb, Inc., a medical products company, including
Senior Vice President, Healthcare and Consumer Group and also served as a
member of its board of directors. Mr. Logan received a B.A. from Hiram
College and a PMD from Harvard Business School.
JOSEPH E. MAROUN has served as one of the Company's directors since July
1996 and has served as a director of Cell Genesys since June 1995. Mr. Maroun
spent 30 years with Bristol-Myers Squibb, a pharmaceuticals company, serving
until his retirement in 1990, at which time he was President of the
International Group, Senior Vice President of the corporation, and a member
of its
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<PAGE>
Policy Committee. He also headed the U.S.-Japan Pharmaceutical Advisory
Group. Mr. Maroun received a B.A. from the University of Witwaterrand,
Johannesburg.
There are no family relationships among our directors or executive
officers.
BOARD MEETINGS AND COMMITTEES
The Board of Directors held five meetings during the Last Fiscal Year
and acted twice by unanimous written consent. No nominee who was director
during the entire fiscal year attended fewer that 75% of the meetings of the
Board of Directors and of the committees of the Board on which the director
served.
The Board of Directors has an Audit Committee and a Compensation
Committee. It does not have a nominating committee or a committee performing
the functions of a nominating committee. From time to time, the Board may
create various ad hoc committees for special purposes. No such committee is
currently functioning.
During the Last Fiscal Year, the Audit Committee consisted of Dr.
Sherwin, Mr. Logan and Dr. Behrens. The Audit Committee makes recommendations
to the Board of Directors regarding the selection of the Company's
independent auditors, reviews the results and scope of the audit and other
services provided by the independent auditors and reviews and evaluates the
Company's control functions. The responsibilities of the Audit Committee were
executed by the Board of Directors during the Last Fiscal Year. During each
meeting of the Board of Directors in the Last Fiscal Year, the Board of
Directors reviewed and discussed financial presentations and related matters.
The Board of Directors also met with the Company's independent auditors to
discuss the audit for the Last Fiscal Year. The Audit Committee held no
meetings during the Last Fiscal Year.
During the Last Fiscal Year, the Compensation Committee consisted of Dr.
Sherwin and Mr. Logan. The Compensation Committee makes recommendations
regarding the Company's various incentive compensation and benefit plans and
determines salaries for the Company's executive officers and incentive
compensation for the Company's employees and consultants. The
responsibilities of the Compensation Committee were executed primarily by the
Board of Directors during the Last Fiscal Year. During each meeting of the
Board of Directors in the Last Fiscal Year, the Board of Directors reviewed
and discussed compensation matters. The Compensation Committee held one
meeting on November 20, 1998.
BOARD COMPOSITION
The Company has entered into a governance agreement with Cell Genesys
which provides that so long as Cell Genesys or a group to which it belongs
owns a specific percentage of the Company's outstanding voting stock, Cell
Genesys or the group shall have the right to nominate a fixed number of
directors to serve on the Company's Board. The table below sets forth details
of this arrangement:
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<TABLE>
<CAPTION>
PERCENTAGE OWNERSHIP NUMBER OF DIRECTORS
-------------------- -------------------
<S> <C>
50% or more............................................. 4 out of 7
Less than 50% but greater than 25%...................... 3 out of 7
Less than 25% but greater than 15%...................... 1 out of 7
</TABLE>
The governance agreement also provides that Cell Genesys and each of the
Company's officers and directors who owns voting stock shall agree to vote
for the persons nominated as set forth above. As of March 31, 1999, Cell
Genesys beneficially owned 3,392,034 shares, or 22.9 percent, of the
Company's outstanding common stock.
DIRECTOR COMPENSATION
The Company's non-employee directors currently receive $5,000 per year
in retainer plus $1,000 per Board meeting attended as cash compensation for
their service as members of the Board of Directors, and are reimbursed for
certain expenses in connection with attendance at Board and Committee
meetings. The Company provides $500 per meeting as additional compensation
for committee participation or special assignments of the Board of Directors.
From time to time, certain directors have received grants of options to
purchase shares of the Company's common stock pursuant to the 1996 Incentive
Stock Plan. On June 4, 1997, R. Scott Greer, Stephen A. Sherwin, Raju S.
Kucherlapati and Joseph E. Maroun received options to purchase 67,500,
10,000, 7,500, and 7,500 shares of common stock, respectively, at a per share
exercise price of $2.50. On August 8, 1997, Mark B. Logan received an option
to purchase 30,000 shares of common stock at a per share exercise price of
$4.00. On December 11, 1997, Raju S. Kucherlapati received an option to
purchase 20,000 shares of common stock at a per share exercise price of
$5.00. There were no other director option grants in 1997. On February 18,
1998, R. Scott Greer, Stephen A. Sherwin, M. Kathleen Behrens, Raju S.
Kucherlapati, Mark B. Logan and Joseph E. Maroun received options to purchase
40,000, 5,900, 30,000, 4,400, 3,200 and 4,400 shares of common stock,
respectively, at a per share exercise price of $6.00. On June 15, 1998,
Stephen A. Sherwin received options to purchase 10,000 shares of common stock
at a per share exercise price of $10.00. Pursuant to the 1998 Director Option
Plan, each non-employee director who is re-elected at the 1999 Annual Meeting
will be eligible to receive a nondiscretionary, automatic grant of an option
to purchase 7,500 shares of the Company's common stock (10,000 shares in the
case of Stephen A. Sherwin, M.D., the Chairman of the Board) at an exercise
price per share equal to the closing price of one share of the Company's
common stock on the date of grant.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None of the members of the Company's Compensation Committee was, at any
time since the Company's formation, an officer or employee of Abgenix. None
of the Company's executive officers serves as a member of the board of
directors or compensation committee of any entity that has one or more
executive officers serving as a member of the Abgenix Board of Directors or
Compensation Committee. See "Certain Transactions" for a description of
transactions between Abgenix and entities affiliated with members of the
Compensation Committee.
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VOTE REQUIRED
The affirmative vote of a plurality of the Votes Cast will be required
for the election of directors.
RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" THE ELECTION OF R. SCOTT GREER, STEPHEN A. SHERWIN, M.D., M. KATHLEEN
BEHRENS, PH.D., RAJU KUCHERLAPATI, PH.D., MARK B. LOGAN AND JOSEPH E. MAROUN.
PROPOSAL NO. 2:
CONFIRMATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has selected Ernst & Young LLP, independent
auditors, to audit the financial statements of the Company for the 1999
fiscal year ending December 31, 1999 and recommends that the stockholders
confirm such selection. This firm has audited the Company's financial
statements since the Company's inception. In the event of a negative vote,
the Board of Directors will reconsider its selection. Representatives of
Ernst & Young LLP are expected to be present at the Annual Meeting with the
opportunity to make a statement if they desire to do so, and are expected to
be available to respond to appropriate questions.
VOTE REQUIRED
The affirmative vote of the majority of the Votes Cast will be required
to ratify the appointment of Ernst & Young LLP as the Company's independent
auditors for the 1999 fiscal year ending December 31, 1999.
RECOMMENDATION
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT THE STOCKHOLDERS VOTE
"FOR" THE RATIFICATION OF THE APPOINTMENT OF ERNST & YOUNG LLP AS THE
COMPANY'S INDEPENDENT AUDITORS FOR THE 1999 FISCAL YEAR ENDING DECEMBER 31,
1999.
-11-
<PAGE>
EXECUTIVE OFFICER COMPENSATION
EXECUTIVE OFFICERS
In addition to R. Scott Greer, the Company's President and Chief Executive
Officer and one of its directors, whose biography appears above, the following
table sets forth as of March 31, 1999 information concerning the Company's other
executive officers:
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
C. Geoffrey Davis, Ph.D.......................... 47 Vice President, Research
Kurt W. Leutzinger............................... 48 Vice President, Finance and Chief Financial Officer
John A. Lipani, M.D.............................. 58 Vice President, Clinical Development
Raymond M. Withy, Ph.D........................... 44 Vice President, Corporate Development
</TABLE>
C. GEOFFREY DAVIS, PH.D., has served as the Company's Vice President,
Research since June 1996. From January 1995 to June 1996, Dr. Davis was
Director of Immunology at the Xenotech Division of Cell Genesys. From
November 1991 to December 1994, he served at Repligen Corporation, a
biotechnology company, first as Principal Investigator and then as Director
of Immunology. Dr. Davis received a B.A. from Swarthmore College and a Ph.D.
in immunology from the University of California, San Francisco.
KURT W. LEUTZINGER has served as the Company's Vice President, Finance
and Chief Financial Officer since July 1997. From June 1987 to July 1997, Mr.
Leutzinger was a Vice President of General Electric Investments and a
portfolio manager of the $27 billion General Electric Pension Fund. There, he
was responsible for private equity investments with a focus on medical
technology. He also serves as a director of C3, Inc. Mr. Leutzinger received
a B.A. in economics from Fairleigh Dickinson University and an M.B.A. in
finance from New York University and is a certified public accountant.
JOHN A. LIPANI, M.D., has served as the Company's Vice President,
Clinical Development since April 1997. From 1992 to April 1997, Dr. Lipani
was Group Director of Inflammation and Tissue Repair at SmithKline Beecham
Corporation, a pharmaceutical company. From 1989 to 1992, Dr. Lipani held
clinical development positions at various biopharmaceutical companies,
including Immunex Corporation, Norwich Eaton Pharmaceuticals, Inc. and
Centocor, Inc. He received a B.A. from Villanova University and an M.D. from
Tulane Medical School.
RAYMOND M. WITHY, PH.D., has served as the Company's Vice President,
Corporate Development since June 1996. He also serves as a director of
Xenotech. From May 1993 to June 1996, Dr. Withy served in various positions
at Cell Genesys, most recently as Director of Business Development. From 1991
to May 1993, Dr. Withy was a private consultant to the biotechnology industry
in areas of strategic planning, business development and licensing. From 1984
to 1991, Dr. Withy was an Associate Director and Senior Scientist at Genzyme
Corporation, a biotechnology company. Dr. Withy received a B.Sc. in chemistry
and biochemistry and a Ph.D. in biochemistry, both from the University of
Nottingham.
-12-
<PAGE>
COMPENSATION INFORMATION
SUMMARY COMPENSATION TABLE. The following table sets forth the
compensation paid by Abgenix during the years ended December 31, 1998 and
1997 to the Company's President and Chief Executive Officer and to the
Company's four other most highly compensated executive officers, each of
whose aggregate compensation during the Last Fiscal Year exceeded $100,000
(the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
AWARDS
---------
ANNUAL COMPENSATION SECURITIES
-------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY BONUS OPTIONS COMPENSATION
- --------------------------- ----------- ------ ----- ---------- ------------
<S> <C> <C> <C> <C> <C>
R. Scott Greer.................................. 1998 $267,120 $ -- 40,000 $ --
President and Chief Executive Officer 1997 252,000 55,200 67,500 4,112(1)
C. Geoffrey Davis, Ph.D......................... 1998 165,350 -- 10,000 --
Vice President, Research 1997 152,250 21,750 25,500 1,974(2)
Kurt W. Leutzinger(3)........................... 1998 179,830 -- 12,750 19,638(4)
Vice President, Finance and Chief Financial 1997 81,555 -- 100,000 127,059(5)
Officer
John A. Lipani, M.D.(6)......................... 1998 180,147 -- 12,750 607(7)
Vice President, Clinical Development 1997 131,250 -- 100,000 64,585(8)
Raymond M. Withy, Ph.D.......................... 1998 165,350 -- 10,000 --
Vice President, Corporate Development 1997 152,250 21,750 25,500 --
</TABLE>
- ----------
(1) Consists of imputed interest income on a loan from Abgenix to Mr. Greer.
(2) Consists of imputed interest income on a loan from Abgenix to Dr. Davis.
(3) Mr. Leutzinger has been the Company's Vice President, Finance and Chief
Financial Officer since July 1997. His 1997 annualized salary was $175,000.
(4) Consists of $18,734 for reimbursement of relocation expenses and $904 for
imputed interest income on a loan from Abgenix to Mr. Leutzinger.
(5) Consists of $126,568 for reimbursement of relocation expenses and $491 for
imputed interest income on a loan from Abgenix to Mr. Leutzinger.
(6) Dr. Lipani has been the Company's Vice President, Clinical Development
since April 1997. His 1997 annualized salary was $175,000.
(7) Consists of imputed interest income on a loan from Abgenix to Dr. Lipani.
(8) Consists of $63,232 for reimbursement of relocation expenses and $1,353 for
imputed interest income on a loan from Abgenix to Dr. Lipani.
-13-
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR. The following table provides
information relating to stock options awarded to each of the Named Executive
Officers during the year ended December 31, 1998. All such options were awarded
under the Company's 1996 Incentive Stock Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT ASSUMED
-------------------------------------------------- ANNUAL RATES OF
NUMBER OF PERCENT OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION
UNDERLYING GRANTED FOR OPTIONS TERM(4)
OPTIONS IN FISCAL EXERCISE EXPIRATION ----------- ----------
NAME GRANTED(1) 1998(2) PRICE(3) DATE 5% 10%
- ---- ----------- ------------ ---------- ----------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C>
R. Scott Greer......................... 40,000 11.3% $ 6.00 2/17/08 $150,935 $382,498
C. Geoffrey Davis, Ph.D................ 10,000 2.8 6.00 2/17/08 37,734 95,625
Kurt W. Leutzinger..................... 12,750 3.6 6.00 2/17/08 48,110 121,921
John A. Lipani, M.D.................... 12,750 3.6 6.00 2/17/08 48,110 121,921
Raymond M. Withy, Ph.D................. 10,000 2.8 6.00 2/17/08 37,734 95,625
</TABLE>
- ----------
(1) The options granted to Mr. Greer and Drs. Davis and Withy became
exercisable as to 1/48th of the option shares on the date of grant and an
additional 1/48th of the option shares become exercisable on the first day
of each calendar month thereafter, with full vesting occurring four years
after the date of grant. The options granted to Mr. Leutzinger and Dr.
Lipani become exercisable as to 25% of the option shares one year from
their respective dates of hire and 1/48th of the option shares become
exercisable on the first day of each calendar month thereafter, with full
vesting occurring four years after their dates of hire. In each case,
vesting is subject to the optionee's continued relationship with Abgenix.
Such options expire ten years from the date of grant, or earlier upon
termination of employment.
(2) Based on an aggregate of 353,551 options granted by Abgenix in the year
ended December 31, 1998 to its employees, non-employee directors of and
consultants, including the Named Executive Officers.
(3) Options were granted at an exercise price equal to the fair market value of
the Company's common stock, as determined by the Board of Directors on the
date of grant.
(4) The 5% and 10% assumed annual rates of compounded stock price appreciation
are mandated by rules of the Securities and Exchange Commission. There can
be no assurance provided to any executive officer or any other holder of
the Company's securities that the actual stock price appreciation over the
option term will be at the assumed 5% and 10% levels or at any other
defined level. Unless the market price of the Company's common stock
appreciates over the option term, no value will be realized from the option
grants made to the executive officers. The potential realizable value is
calculated by assuming that the fair value of the common stock on the date
of grant of $6.00 per share appreciates at the indicated rate for the
entire term of the option and that the option is exercised at the exercise
price and sold on the last day of its term at the appreciated price. The
potential realizable value computation is net of the applicable exercise
price, but does not take into account applicable federal or state income
tax consequences and other expenses of option exercises or sales of
appreciated stock.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
VALUES. The following table sets forth for each of the Named Executive
Officers the number of shares of common stock acquired and the dollar value
realized upon exercise of options during the year ended December 31,
-14-
<PAGE>
1998 and the number and value of securities underlying unexercised options
held at December 31, 1998:
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND YEAR-END VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS AT
SHARES DECEMBER 31, 1998 DECEMBER 31, 1998(2)
ACQUIRED VALUE ----------------------------- ----------------------------
NAME ON EXERCISE REALIZED(1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- ----------- ---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
R. Scott Greer...................... 31,875 $ 207,189 63,744 179,641 $ 940,226 $2,571,888
C. Geoffrey Davis, Ph.D............. -- -- 73,009 62,491 1,109,914 908,211
Kurt W. Leutzinger.................. -- -- 38,603 74,147 519,637 986,051
John A. Lipani, M.D................. -- -- 44,853 67,897 684,740 1,010,948
Raymond M. Withy, Ph.D.............. 25,416 188,078 37,593 62,491 555,654 908,211
</TABLE>
- ----------
(1) Value realized reflects the fair market value of the Company's common stock
underlying the option on the date of exercise minus the aggregate exercise
price of the option.
(2) Value of unexercised in-the-money options are based on a value of $16.25
per share, the closing price of the Company's common stock on December 31,
1998. Amounts reflected are based on the value of $16.25 per share, minus
the per share exercise price, multiplied by the number of shares underlying
the option.
CHANGE IN CONTROL ARRANGEMENTS
The Company's Board of Directors has approved a plan which provides that in
the event of a change in control of Abgenix, the options of each Abgenix
employee whose employment is terminated without cause within 24 months of the
change in control will become exercisable in full. For this purpose, a change in
control includes: (i) a person becoming the beneficial owner of 50% or more of
the Company's outstanding voting securities, (ii) certain changes in the
composition of the Company's Board of Directors occurring within a two-year
period or (iii) a merger or consolidation in which Abgenix stockholders
immediately before the transaction own immediately after the transaction less
than a majority of the outstanding voting securities of the surviving entity, or
its parent.
CERTAIN TRANSACTIONS
INCORPORATION AND ORGANIZATION
Pursuant to the terms of the stock purchase and transfer agreement
between Abgenix and Cell Genesys, the Company issued 1,691,667 shares of
series A senior convertible preferred stock to Cell Genesys in exchange for
$10 million, and we issued 2,058,333 shares of series 1 subordinated
convertible preferred stock to Cell Genesys in exchange for research,
development and manufacturing technology, patents and other intellectual
property specific to the antibody therapy programs to be pursued by Abgenix,
including Cell Genesys' interest in Xenotech, and certain
-15-
<PAGE>
equipment, furniture and fixtures leased by Cell Genesys. Abgenix is
responsible for the remaining lease obligations for such capital equipment,
which total approximately $30,000 per month. Cell Genesys also assigned
Abgenix two notes receivable totaling $150,000.
On July 15, 1996, Abgenix, in exchange for a loan in the principal
amount of up to $4,000,000, issued a convertible promissory note to Cell
Genesys that subsequently was converted into 666,667 shares of series A
preferred stock at a conversion price of $6.00 upon the closing of the series
B preferred stock financing in December 1997. Also, in connection with, and
contemporaneous to, the series B preferred stock financing, the shares of
series A senior convertible preferred stock, and the shares of series 1
subordinated convertible preferred stock were converted into an aggregate
3,750,000 shares of series A preferred stock. See "Preferred Stock
Financings."
Simultaneously with the execution of the stock purchase and transfer
agreement, Abgenix entered into a governance agreement, tax sharing
agreement, services agreement, and patent assignment agreement with Cell
Genesys. In addition, the Company entered into an immunization services
agreement, gene therapy agreement, and voting agreement with Cell Genesys.
The immunization services agreement, gene therapy agreement, and voting
agreement were superceded by the gene therapy rights agreement.
The governance agreement with Cell Genesys provides that so long as Cell
Genesys or a group to which it belongs owns a specific percentage of the
Company's outstanding voting stock, Cell Genesys or the group shall have the
right to nominate a fixed number of directors to serve on the Company's
Board. The table below sets forth details of this arrangement:
<TABLE>
<CAPTION>
PERCENTAGE OWNERSHIP NUMBER OF DIRECTORS
-------------------- -------------------
<S> <C>
50% or more.......................................... 4 out of 7
Less than 50% but greater than 25%................... 3 out of 7
Less than 25% but greater than 15%................... 1 out of 7
</TABLE>
The governance agreement also provides that Cell Genesys and each of the
Company's officers and directors who owns voting stock shall agree to vote
for the persons nominated as set forth above.
The tax sharing agreement provides for the allocation of federal and
state tax liabilities between Abgenix and Cell Genesys. Pursuant to the terms
of the agreement, the Company will pay to Cell Genesys the federal and state
income and franchise tax liability that the Company would have owed if Cell
Genesys had filed a separate tax return. If the Company realizes a loss or
credit that reduces the consolidated tax liability of Cell Genesys, then Cell
Genesys shall pay Abgenix the amount of the reduction. The agreement shall
remain in effect with respect to any taxable year for which consolidated or
combined returns are filed by Cell Genesys as a common parent corporation and
Abgenix is an includable party in such consolidated return. As of December
31, 1998, Cell Genesys' ownership of the Company's outstanding capital stock
was 30.2%. Therefore, a consolidated tax return will not be filed for 1998.
-16-
<PAGE>
Pursuant to the terms of the services agreement, Cell Genesys provided
certain administrative services for a quarterly fee. In fiscal 1997, these
fees totaled $60,000. No fees were incurred in 1998, and Cell Genesys no
longer provides services under this agreement.
Pursuant to the terms of the patent assignment agreement, Cell Genesys
assigned Abgenix all of its rights in and to certain patents and patent
applications related to antibody development.
OTHER TRANSACTIONS WITH CELL GENESYS
On January 23, 1997 and March 27, 1997, the Company issued two warrants
to purchase an aggregate of 121,667 shares of series A preferred stock
(convertible into 121,667 shares of common stock) to Cell Genesys at the
exercise price per share of $6.00 in return for providing guarantees for the
Loan and Security Agreement with Silicon Valley Bank and the Master Lease
Agreement with Transamerica Business Credit Corporation.
In October 1997, Cell Genesys extended a short-term, convertible line of
credit facility to Abgenix. The credit facility terminated in accordance with
its terms, without Abgenix drawing upon the credit facility, upon the closing
of the series B preferred stock financing in December 1997.
In November 1998, Cell Genesys sold 1,146,300 shares of Abgenix common
stock to certain individuals and entities in a private placement. Pursuant to
that sale, the Company agreed to register the shares under the Securities Act
for resale to the public. Under the registration rights agreement, the
Company must use reasonable efforts to cause this registration statement to
be declared effective by the Securities and Exchange Commission as soon as
practicable and to keep this registration statement, or a replacement,
continuously effective under the Securities Act until the earlier of (1)
November 18, 2000 or (2) such time as the selling stockholders have sold all
shares offered by this prospectus, or a replacement prospectus.
BANCBOSTON ROBERTSON STEPHENS INC. RELATIONSHIP
M. Kathleen Behrens, Ph.D., one of the Company's directors, is also a
managing director of Robertson Stephens Investment Management Co. Robertson
Stephens Investment Management Co. was formerly affiliated with BancBoston
Robertson Stephens Inc. BancBoston Robertson Stephens Inc. acted as one of
the Company's placement agents in the series B preferred stock financing in
December 1997 and as the managing underwriter for the Company's initial
public offering in July 1998. BancBoston Robertson Stephens Inc. received
approximately $759,000 in fees for services provided in the private
placement. Also, persons and entities currently or formerly affiliated with
Robertson Stephens Investment Management Co. and BancBoston Robertson
Stephens Inc. purchased, in the aggregate, 784,616 shares of the series B
preferred stock for an aggregate purchase price of approximately $5.1
million. BancBoston Robertson Stephens Inc. together with the other
underwriters received approximately $1.6 million in discounts and commissions
in connection with its services as the managing underwriter of the Company's
initial public offering. In connection with Cell Genesys' sale of shares of
the Company's common stock to certain individuals and entities, BancBoston
Robertson Stephens Inc. received approximately $475,000 in fees in connection
with its services as placement agent. BancBoston Robertson Stephens Inc.,
together with the other underwriters, received approximately $2,887,200 for
underwriting discounts and commissions in
-17-
<PAGE>
connection with its services as the managing underwriter of the Company's
March 1999 public offering.
PREFERRED STOCK FINANCINGS
In connection with the initial public offering of the Company's common
stock in July 1998, each outstanding share of preferred stock was converted
into one share of common stock. The following directors and holders of more
than 5% of the Company's outstanding stock purchased the following shares of
the Company's preferred stock prior to the consummation of the initial public
offering.
<TABLE>
<CAPTION>
PREFERRED STOCK
---------------
PREFERRED STOCKHOLDER SERIES A SERIES B
- --------------------- -------- --------
<S> <C> <C>
Cell Genesys(1)............................................................ 4,538,334 --
Robertson Stephens Investment Management Co. Entities(2)................... -- 769,231
Stephen A. Sherwin, M.D.(3)................................................ 4,538,334 --
M. Kathleen Behrens, Ph.D.(4).............................................. -- 784,616
Raju Kucherlapati, Ph.D.(5)................................................ 4,538,334 10,000
Joseph E. Maroun(6)........................................................ 4,538,334 153,846
</TABLE>
- ----------
(1) Includes 121,667 shares issuable pursuant to outstanding warrants to
purchase series A preferred stock.
(2) Includes 56,280 shares held by Bayview Investors, LTD, 224,145 shares held
by Crossover Fund II, L.P., 67,663 shares held by Crossover Fund IIA, L.P.,
334,079 shares held by Omega Ventures II, L.P., 87,064 shares held by Omega
Ventures II Cayman, L.P. (collectively, the "RSIM Shares"). Each of the
above entities is currently or formerly affiliated with Robertson Stephens
Investment Management Co.
(3) Includes 4,416,667 shares held by Cell Genesys and 121,667 shares issuable
pursuant to outstanding warrants to purchase series A preferred stock
(collectively, the "Cell Genesys Owned Shares"). Dr. Sherwin is an officer,
director and beneficial stockholder of Cell Genesys. As such, he may be
deemed to have voting and dispositive power over the Cell Genesys Owned
Shares. However, Dr. Sherwin disclaims beneficial ownership of the Cell
Genesys Owned Shares except to the extent of his pro rata pecuniary
interest therein.
(4) Includes the RSIM Shares. Dr. Behrens, a managing director of Robertson
Stephens Investment Management Co., disclaims beneficial ownership of the
RSIM Shares except to the extent of her pro rata pecuniary interest
therein. Currently, Crossover Fund II, Crossover Fund IIA, Omega Ventures
II, L.P. and Omega Ventures II Cayman, L.P. are no longer affiliated with
Robertson Stephens Investment Management Co.
(5) Includes the Cell Genesys Owned Shares. Dr. Kucherlapati is a director and
beneficial stockholder of Cell Genesys. As such, he may be deemed to have
voting power over the Cell Genesys Owned Shares. However, Dr. Kucherlapati
disclaims beneficial ownership of the Cell Genesys Owned Shares except to
the extent of his pro rata pecuniary interest therein.
(6) Includes the Cell Genesys Owned Shares. Mr. Maroun is a director and
beneficial stockholder of Cell Genesys. As such, he may be deemed to have
voting and dispositive power over the Cell Genesys Owned Shares. However,
Mr. Maroun disclaims beneficial ownership of the Cell Genesys Owned Shares
except to the extent of his pro rata pecuniary interest therein.
-18-
<PAGE>
Certain holders of the Company's common stock are entitled to certain
registration rights.
Three of the Company's directors, Stephen A. Sherwin, M.D., Raju S.
Kucherlapati, Ph.D. and Joseph E. Maroun are also directors of Cell Genesys.
Dr. Sherwin is also the Chairman of the Board and Chief Executive Officer of
Cell Genesys.
TRANSACTIONS WITH EMPLOYEES
On May 27, 1997, John A. Lipani, M.D., the Company's Vice President,
Clinical Development, and Abgenix entered into a relocation loan agreement
pursuant to which we loaned $100,000 to Dr. Lipani in exchange for a
promissory note secured by a deed of trust. No interest accrues on the loan
until May 27, 2002. The outstanding principal balance as of March 31, 1999
was $100,000. In addition, Dr. Lipani received a $35,000 loan from Abgenix to
assist with relocation expenses. The $35,000 loan, which is evidenced by a
promissory note, was forgiven in April 1998 when Dr. Lipani completed 12
months of employment with Abgenix.
On December 2, 1992, R. Scott Greer, the Company's President and Chief
Executive Officer, and Cell Genesys entered into a relocation loan agreement
pursuant to which Cell Genesys loaned $100,000 to Mr. Greer in exchange for
an interest-free promissory note secured by shares of Cell Genesys' common
stock owned by Mr. Greer. In June 1996, Cell Genesys assigned its rights
under the promissory note to Abgenix. Mr. Greer repaid the entire loan to
Abgenix in September 1997.
On April 21, 1995, C. Geoffrey Davis, Ph.D., the Company's Vice
President, Research, and Cell Genesys entered into a relocation loan
agreement pursuant to which Cell Genesys loaned $30,000 to Dr. Davis in
exchange for a promissory note secured by a deed of trust. No interest
accrues on the loan until January 1, 2000. In June 1996, Cell Genesys
assigned its rights under the promissory note to Abgenix. As of March 31,
1999, the outstanding principal balance was $30,000.
On August 26, 1997, Kurt W. Leutzinger, the Company's Vice President,
Finance and Chief Financial Officer, received a $25,000 loan from Abgenix to
assist with relocation expenses. The $25,000 loan, which is evidenced by a
full recourse promissory note, was forgiven in July 1998 when Mr. Leutzinger
completed 12 months of employment with Abgenix. On February 27, 1998, Mr.
Leutzinger and Abgenix entered into a relocation loan agreement pursuant to
which Abgenix loaned $100,000 to Mr. Leutzinger in exchange for a promissory
note secured by a deed of trust. No interest accrues on the loan until June
30, 2003. As of March 31, 1999, the outstanding principal balance of the
promissory note was $100,000.
The Company has entered into indemnification agreements with each of its
directors and executive officers.
All future transactions, including any loans from Abgenix to its
officers, directors, principal stockholders or affiliates, will be approved
by a majority of the Board of Directors, including a majority of the
independent and disinterested members of the Board of Directors or, if
required by law, a majority of disinterested stockholders, and will be on
terms no less favorable to Abgenix than could be obtained from unaffiliated
third parties.
-19-
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
THE FOLLOWING REPORT IS PROVIDED TO STOCKHOLDERS BY THE MEMBERS OF THE
COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS.
In addition to executive compensation matters, the Compensation Committee
is responsible for making recommendations to the Board of Directors concerning
salaries and incentive compensation for employees of and consultants to the
Company. The Compensation Committee also has the authority and power to grant
stock options to the Company's employees and consultants.
The goal of the Company's compensation policies is to align executive
compensation with business objectives, corporate performance, and to attract and
retain executives who contribute to the long-term success and value of the
Company. The Company endeavors to achieve its compensation goals through the
implementation of policies that are based on the following principles:
- THE COMPANY PAYS COMPETITIVELY FOR EXPERIENCED, HIGHLY-SKILLED
EXECUTIVES:
The Company operates in a competitive and rapidly changing
biopharmaceutical industry. Executive base compensation is targeted to
the median salary paid to comparable executives in companies of
similar size, location, and with comparable responsibilities. The
individual executive's salary is adjusted annually based on individual
performance, corporate performance, and the relative compensation of
the individual compared to the comparable medians.
- THE COMPANY REWARDS EXECUTIVES FOR SUPERIOR PERFORMANCE:
The Committee believes that a substantial portion of each executive's
compensation should be in the form of bonuses. Executive bonuses are
based on a combination of individual performance and the attainment of
corporate goals. Individual performance goals are based on specific
objectives which must be met in order for the Company to achieve its
corporate goals. In order to attract and retain executives who are
qualified to excel in the biopharmaceutical industry, the Company
awards higher bonuses based on performance in excess of the corporate
goals.
- THE COMPANY STRIVES TO ALIGN LONG-TERM STOCKHOLDER AND EXECUTIVE
INTERESTS:
In order to align the long-term interests of executives with those of
stockholders, the Company grants all employees, and particularly
executives, options to purchase stock. Options are granted at the
closing price of one share of the Company's Common Stock on the date
of grant and will provide value only when the price of the Common
Stock increases above the exercise price. Options are subject to
vesting provisions designed to encourage executives to remain employed
by the Company. Additional options are granted from time to time based
on individual performance and the prior level of grants.
-20-
<PAGE>
COMPENSATION OF R. SCOTT GREER, PRESIDENT AND CHIEF EXECUTIVE OFFICER
Mr. Greer's salary and stock option grant for fiscal 1998 are consistent
with the criteria described above and with the Compensation Committee's
evaluation of his overall leadership and management of Abgenix. 1998 was a
year of significant accomplishments for the Company. Abgenix made significant
progress in advancing its product pipeline, expanding its list of
XenoMouse-TM- technology collaborations, and maintaining its financial
strength. Three treatment indications are presently undergoing clinical
trials, including psoriasis, graft-versus-host disease, and rheumatoid
arthritis. In addition, the Company completed its inital public offering in
July 1998, raising approximately $20 million. Mr. Greer has continued to lead
Abgenix in using its assets effectively and to their best advantage, while
also conservatively managing Abgenix's financial resources. Mr. Greer's
compensation for 1998 is set forth in the Summary Compensation Table
appearing on page 13.
SUMMARY
The Committee believes that the Company's compensation policy as practiced
to date by the Committee and the Board has been successful in attracting and
retaining qualified employees and in tying compensation directly to corporate
performance relative to corporate goals. The Company's compensation policy will
evolve over time as the Company attempts to achieve the many short-term goals it
faces while maintaining its focus on building long-term stockholder value
through technological leadership and development and expansion of the market for
the Company's products.
Respectfully submitted,
Stephen A. Sherwin, M.D.
Mark B. Logan
THE FOREGOING COMPENSATION COMMITTEE REPORT SHALL NOT BE DEEMED TO BE
"SOLICITING MATERIAL" OR TO BE "FILED" WITH THE SEC, NOR SHALL SUCH INFORMATION
BE INCORPORATED BY REFERENCE INTO ANY FUTURE FILING UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR THE EXCHANGE ACT, EXCEPT TO THE
EXTENT THE COMPANY SPECIFICALLY INCORPORATES IT BY REFERENCE INTO SUCH FILING.
-21-
<PAGE>
PERFORMANCE GRAPH
The following graph shows a comparison of total stockholder return for
holders of the Company's Common Stock from July 2, 1998, the date of the
Company's initial public offering, through December 31, 1998 compared with the
Nasdaq Stock Market, U.S. Index, and the Nasdaq Pharmaceutical Index. This graph
is presented pursuant to SEC rules. The Company believes that while total
stockholder return can be an important indicator of corporate performance, the
stock prices of medical device stocks like that of the Company are subject to a
number of market-related factors other than company performance, such as
competitive announcements, mergers and acquisitions in the industry, the general
state of the economy, and the performance of other biopharmaceutical stocks.
<TABLE>
<CAPTION>
Nasdaq Stock Nasdaq Pharmaceutical
Abgenix, Inc. Market (U.S.) Index
------------- ------------- ---------------------
<S> <C> <C> <C>
7/2/98 100 100 100
7/31/98 103 99 101
8/31/98 84 80 77
9/30/98 89 91 95
10/31/98 114 94 101
11/30/98 150 104 106
12/31/98 203 117 126
</TABLE>
* $100 invested on 7/2/98 in stock or on 6/30/98 in index - including
reinvestment of dividends. Fiscal year ending December 31 (the Company's last
fiscal year ended December 31, 1998).
THE INFORMATION CONTAINED IN THE STOCK PERFORMANCE GRAPH SHALL NOT BE
DEEMED TO BE "SOLICITING MATERIAL" OR TO BE "FILED" WITH THE SEC, NOR SHALL SUCH
INFORMATION BE INCORPORATED BY REFERENCE INTO ANY FUTURE FILING UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR THE EXCHANGE ACT,
EXCEPT TO THE EXTENT THE COMPANY SPECIFICALLY INCORPORATES IT BY REFERENCE INTO
SUCH FILING.
-22-
<PAGE>
OTHER MATTERS
The Company knows of no other matters to be submitted to the meeting. If
any other matters properly come before the meeting, the persons named in the
accompanying form of proxy will vote the shares represented by proxy as the
Board may recommend or as the proxy holders, acting in their sole discretion,
may determine.
THE COMPANY WILL MAIL WITHOUT CHARGE TO ANY STOCKHOLDER UPON WRITTEN
REQUEST A COPY OF THE COMPANY'S ANNUAL REPORT AND REPORT ON FORM 10-K FOR THE
YEAR ENDED DECEMBER 31, 1998, INCLUDING THE FINANCIAL STATEMENTS, SCHEDULES AND
A LIST OF EXHIBITS. REQUESTS SHOULD BE SENT TO STOCKHOLDER RELATIONS, ABGENIX,
INC., 7601 DUMBARTON CIRCLE, FREMONT, CALIFORNIA 94555.
THE BOARD OF DIRECTORS
Dated: May 11, 1999
-23-
<PAGE>
PROXY
ABGENIX, INC.
PROXY SOLICITED BY BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 2, 1999
The undersigned, revoking all prior proxies, hereby appoints R. Scott Greer
and Kurt W. Leutzinger, and either of them, as proxy or proxies, with full power
of substitution and revocation, to vote all shares of common stock of Abgenix,
Inc. (the "Company") of record in the name of the undersigned at the close of
business on April 30, 1999, at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held on Wednesday, June 2, 1999, or at any adjournment thereof,
upon the following matters:
1. Election of the following directors: R. Scott Greer, Stephen A. Sherwin,
M.D., M. Kathleen Behrens, Ph.D., Raju S. Kucherlapati, Ph.D., Mark B.
Logan, Joseph E. Maroun
/ / FOR ALL NOMINEES / / WITHHOLD FOR ALL NOMINEES
FOR ALL NOMINEES EXCEPT THE FOLLOWING:
(Mark no box and write the name(s) of the nominee(s) withheld in the space
provided below.)
- --------------------------------------------------------------------------------
(CONTINUED ON REVERSE SIDE)
<PAGE>
2. Ratification of appointment of Ernst & Young LLP as independent auditors
for the 1999 fiscal year.
/ / For / / Against / / Abstain
3. In their discretion, the Proxies are authorized to vote upon such matters
as may properly come before the Annual Meeting, or any adjournments
thereof.
Please mark, date, sign and mail this proxy promptly in the enclosed
envelope.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL
BE VOTED FOR PROPOSALS 1 AND 2. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR
PROPOSALS 1 AND 2.
Please sign your name exactly as it appears below. In the case of shares
owned in joint tenancy or as tenants in common, all should sign. Fiduciaries
should indicate their title and authority.
Dated: , 1999.
---------------
-----------------------------------
-----------------------------------
-----------------------------------
(Signature(s)
