SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Amendment No. 1
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 Rule 14a-11(c) or Rule 14a-12
ACCESS PHARMACEUTICALS, 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:
<PAGE>
ACCESS PHARMACEUTICALS, INC.
2600 Stemmons Freeway, Suite 176
Dallas, Texas 75207
May 6, 1998
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders of
Access Pharmaceuticals, Inc. (the "Company" or "Access") to be held on June
12, 1998 at 10:00 a.m. local time, at the Westchester Marriott, 670 White
Plains Road, Tarrytown, New York 10591, (914) 631-2200 (the "Meeting").
The Notice of Annual Meeting and the Proxy Statement that follow describe the
business to be considered and acted upon by the stockholders at the Meeting.
The Board of Directors unanimously recommends that Access' stockholders
approve the proposals. Please carefully review the information contained in
the Proxy Statement.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, IT IS VERY IMPORTANT
THAT YOU MARK, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD IN THE ENVELOPE
PROVIDED AS SOON AS POSSIBLE. IF YOU ATTEND THE MEETING,YOU MAY REVOKE
THE PROXY AT THAT TIME BY REQUESTING THE RIGHT TO VOTE IN PERSON.
Sincerely,
/s/ Herbert H. McDade, Jr.
----------------------------
Herbert H. McDade, Jr.
Chairman of the Board of Directors
<PAGE>
ACCESS PHARMACEUTICALS, INC.
2600 Stemmons Freeway, Suite 176
Dallas, Texas 75207
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on June 12, 1998
PLEASE TAKE NOTICE that the Annual Meeting of Stockholders (the "Meeting") of
Access Pharmaceuticals, Inc. (the "Company" or "Access") will be held at the
Westchester Marriott, 670 White Plains Road, Tarrytown, New York 10591,
(914) 631-2200, on June 12, 1998, at 10:00 a.m. local time. The meeting will
convene at 10:00 a.m. for the following purposes:
1. To elect three Class 3 Directors, to hold office for a term of three years.
2. To consider and vote upon a proposal to amend the Company's 1995
Stock Option Plan.
3. To consider and act upon a proposal to ratify the appointment of KPMG
Peat Marwick LLP as independent accountants for the Company for the
fiscal year ending December 31, 1998.
4. To transact such other business as may properly come before the
meeting or any postponements or adjournments thereof.
Stockholders of record at the close of business on April 30, 1998, the record
date for the Meeting, are entitled to receive notice of, and to vote at the
Meeting and any adjournment or postponement thereof. The Company's Annual
Report for the fiscal year ended December 31, 1997 accompanies the Proxy
Statement.
Information relating to the proposals is set forth in the accompanying Proxy
Statement dated May 6, 1998. Please carefully review the information
contained in the Proxy Statement, which is incorporated into this Notice.
By Order of the Board of Directors,
/s/ Herbert H. McDade, Jr.
--------------------------
Herbert H. McDade, Jr.
Chairman of the Board of Directors
Dallas, Texas
May 6, 1998
----------------------------------------------------------
Stockholders are cordially invited to attend the Annual Meeting in person.
YOUR VOTE IS IMPORTANT. If you do not expect to attend the Annual Meeting,
or if you do plan to attend but wish to vote by proxy, please complete, date,
sign and mail the enclosed proxy card in the return envelope provided
addressed to Access Pharmaceuticals, Inc., c/o American Stock Transfer &
Trust Co., 40 Wall Street, 46th Floor, New York, New York 10005 ("American
Stock Transfer"). Proxies will also be accepted by transmission of a telegram,
cablegram or telecopy provided that such telegram, cablegram or telecopy
contains sufficient information from which it can be determined that the
transmission was authorized by the stockholder. American Stock Transfer &
Trust Company's telecopy number is (718) 234-2287.
<PAGE>
ACCESS PHARMACEUTICALS, INC.
2600 Stemmons Freeway, Suite 176
Dallas, Texas 75207
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On June 12, 1998
This Proxy Statement is furnished by Access
Pharmaceuticals, Inc., a Delaware corporation (the
"Company" or "Access"), to holders of common stock, par
value $.04 per share (the "Common Stock"), in connection
with the solicitation of proxies by the Board of
Directors of the Company for use at the Annual Meeting of
Stockholders of the Company, and at any and all
adjournments or postponements thereof (the "Meeting").
The Meeting will be held on Friday, June 12, 1998 at
10:00 a.m., local time, at the Westchester Marriott, 670 White
Plains Road, Tarrytown, New York 10591, (914) 631-2200.
This Proxy Statement and the accompanying form of proxy is first
being sent to holders of Common Stock on or about May 6, 1998.
The Company's mailing address and the location of its principal
executive offices are at 2600 Stemmons Freeway, Suite 176, Dallas,
Texas 75207, (214) 905-5100.
A stockholder signing and returning the enclosed
proxy may revoke it at any time before it is exercised by
voting in person at the Annual Meeting, by submitting
another proxy bearing a later date or by giving notice in
writing to the Secretary of the Company not later than
the day prior to the Meeting. All proxies returned prior
to the meeting will be voted in accordance with
instructions contained therein.
At the close of business on April 30, 1998, the
record date for the Meeting, there were outstanding and
entitled to vote 41,514,582 shares of Common Stock. The
Company has no other outstanding voting securities. Each
outstanding share of Common Stock is entitled to one
vote. A complete list of stockholders entitled to vote at
the meeting will be available for examination by any
stockholder for any purpose germane to the meeting at the
Company's principal executive offices, during normal
business hours, at least ten business days prior to the
Annual Meeting. The Bylaws of the Company require that a
majority of the shares entitled to vote, present in
person or by proxy, shall constitute a quorum for the
conduct of business at the meeting. Abstentions and
broker non-votes are counted for purposes of determining
the presence or absence of a quorum for the transaction
of business. Abstentions are counted in tabulations of
the votes cast on proposals presented to the
stockholders, whereas broker non-votes are not counted
for purposes of determining whether a proposal has been
approved.
Stockholders have the right to vote cumulatively for
the election of Directors. This means that in the voting
at the Meeting each stockholder, or his proxy, may
multiply the number of his shares by three (the number of
directors to be elected) and then cast the resulting
total number of for a single nominee, or distribute such
votes on the ballot among the three nominees as desired.
The proxies submitted to the Board of Directors in
response to this solicitation may, at the discretion of
the proxy holder, accumulate the votes of the shares they
represent. However, the Board of Directors requires any
stockholder otherwise electing to exercise his cumulative
voting rights, if voting in person, to so indicate prior
to the beginning of the Meeting or if voting by proxy
given to someone other than those designated by the Board
of Directors in this solicitation to so indicate on said
proxy.
All expenses in connection with solicitation of
proxies will be borne by the Company. The Company will
also request brokers, dealers, banks and voting trustees,
and their nominees, to forward this Proxy Statement, the
accompanying form of proxy and the Annual Report for the
fiscal year of the Company ended December 31, 1997 to
beneficial owners and will reimburse such record holders
for their expense in forwarding solicitation material.
The Company expects to solicit proxies primarily by mail,
but Directors, officers and regular employees of the
<PAGE>
Company may also solicit in person, by telephone or by
telecopy.
The Board of Directors does not know of any matters
which will be brought before the Meeting other than those
matters specifically set forth in the Notice of Annual
Meeting. However, if any other matter properly comes
before the Meeting, it is intended that the persons named
in the enclosed form of proxy, or their substitutes
acting thereunder, will vote on such matter in accordance
with their best judgement.
This proxy statement should be read in conjunction
with the Annual Report of the Company, including
financial statements and management's discussion and
analysis of financial condition and results of operations
for the fiscal year ended December 31, 1997.
PROPOSAL 1
Election of Directors
The Company's Certificate of Incorporation and
Bylaws presently provide that the Board of Directors of
the Company (the "Board of Directors" or the "Board")
shall consist of three to fifteen members, shall be
divided into three classes as nearly equal in number as
possible, and that each Director shall serve for a term
of three years and until his successor is elected and
qualified or until his earlier resignation, death or
removal. By resolution, the Board has set the number of
its members at six. The term of office of one class of
Director expires each year in rotation so that one class
is elected at each annual meeting for a three-year term.
The Board presently consists of five members.
Nominees for Term Expiring at the Annual Meeting of
Stockholders in 2001 (Class 3 Directors)
Mr. Herbert H. McDade, Jr., Mr. Kerry P. Gray and
Mr. J. Michael Flinn are the members of the Class 3
Directors. Mr. McDade has served as a Director since 1988
and is currently Chairman of the Board of Directors; Mr.
Gray has served as a Director since 1996 and is currently
President and CEO; and Mr. Flinn has served as a Director
since 1983. Messrs. McDade, Gray and Flinn's terms
expire at the Annual Meeting. If elected at the Annual
Meeting, all three will serve for a term of three years
expiring on the date of the Annual Meeting of
Stockholders in 2001. The terms of the other two
Directors will continue as indicated below.
Business and Experience of Nominees for Director
Mr. Herbert H. McDade, Jr. was elected a Director of
the Company in January 1988 and presently is Chairman of
the Board of Directors. In February 1989, he was elected
Vice-Chairman of the Board of Directors and Chief
Executive Officer of the Company. In June 1989, he was
elected Chairman of the Board of Directors and Treasurer
in addition to his responsibilities as Chief Executive
Officer, and from 1990 to January 1996 he was President
of the Company. Mr. McDade served in such capacities
until January 25, 1996. He is also a member of the Audit
& Finance Committee of the Board of Directors. He is
currently President and Chief Executive Officer of the
Thoma Corporation, a closely-held health care consulting
company. In addition, he also serves on the Boards of
CytRx Corporation, Shaman Pharmaceuticals, Inc.,
Discovery Laboratories, Inc. and Clarion Pharmaceuticals,
Inc. From 1986 to 1987 he served as Chairman of the Board
of Directors and President of Armour Pharmaceutical Co.,
a wholly-owned subsidiary of Rorer Group, Inc. Prior to
1986 he served for approximately 13 years in various
executive positions at Revlon, Inc., including President
of the International Division of the Revlon Health Care
2
<PAGE>
Group from 1979 to 1986. He was also previously
associated for twenty years in various executive
capacities with The Upjohn Company. From January 1989 to
July 1995 he served on the Board of Access
Pharmaceuticals, Inc., a Texas corporation ("API").
Mr. Kerry P. Gray has been President and a Chief
Executive Officer and a Director of the Company since
January 25, 1996. Prior to such time, from June 1993, he
served as President and Chief Executive Officer of API.
Previously, Mr. Gray served as Vice President and Chief
Financial Officer of PharmaSciences, Inc., a company he
co-founded to acquire technologies in the drug delivery
area. From May 1990 to August 1991, Mr. Gray was Senior
Vice President, Americas, Australia and New Zealand of
Rhone-Poulenc Rorer, Inc. Prior to the Rorer/Rhone
Poulenc merger, he had been Area Vice President Americas
of Rorer International Pharmaceuticals. Previously, from
January 1986 to May 1988, he was Vice President, Finance
of Rorer International Pharmaceuticals, having served in
that same capacity for the Revlon Health Care Group of
companies before their acquisition by Rorer Group.
Between 1975 and 1985, he held various senior financial
positions in Revlon Health Care Group. Mr. Gray's
experience in the pharmaceutical industry totals 23
years.
Mr. J. Michael Flinn has served as a Director of the
Company since 1983. He also is a member of the Audit &
Finance, Nominating and Compensation Committees of the
Board of Directors. Since 1970 he has been an investment
counselor. Currently he is a consultant to the Operations
Group of United Asset Management. Previously from 1970 to
1996 he was a principal with the investment counseling
firm of Sirach Capital Management, Inc. He assisted in
the management of pension, profit sharing, individual,
corporate and foundation accounts totaling over $6.5
billion. He serves as a board member of Oridigm
Corporation, Lonesome Dove Petroleum and Carroll College.
The nominees have consented to serve as Directors of
the Company and the Board of Directors has no reason to
believe that the nominees will be unavailable. There is
no family relationship among any of the Directors or
nominees.
The Board recommends a vote "FOR" the proposed nominees to the Board.
UNLESS OTHERWISE INDICATED THRERON, THE ACCOMPANYING
PROXY WILL BE VOTED FOR THE NOMINEES NAMED ABOVE.
HOWEVER, THE PERSONS DESIGNATED AS PROXIES RESERVE THE
RIGHT TO CAST VOTES FOR ANOTHER PERSON DESIGNATED BY THE
BOARD OF DIRECTORS IN THE EVENT ANY NOMINEES ARE UNABLE
OR UNWILLING TO SERVE.
Information With Respect to Directors Whose Terms
Continue and Executive Officers
Director Whose Term Expires at the Annual Meeting in 1999
(Class 1 Director)
Max Link, Ph.D. has been a director of the Company
since June 1996. He also is a member of the Compensation
and Nominating Committees of the Board of Directors. He
has held a number of executive positions with
pharmaceutical and health care companies. Most recently,
he served as Chief Executive Officer of Corange Limited,
from May 1993 until June 1994. Prior to joining Corange,
Dr. Link served in a number of positions with Sandoz
Pharma Ltd., including Chief Executive Officer, from 1987
until April 1992, and Chairman, from April 1992 until May
1993. Dr. Link currently serves on the board of directors
of eight other publicly-traded life science companies:
Alexion Pharmaceuticals, Inc., Cell Therapeutics, CytRx
Corporation, Discovery Laboratories, Inc.,
3
<PAGE>
Human Genome Sciences, Inc, Procept, Inc., Protein Design Labs, Inc.
and Sulges Medica, Ltd. Dr. Link received his Ph.D. in
Economics from the University of St. Gallen in 1970.
Director Whose Term Expires at the Annual Meeting in 2001
(Class 2 Director)
Stephen B. Howell, M.D. has served as a Director of
the Company since November 4, 1996. Dr. Howell is a
professor of medicine at the University of California,
San Diego, and Director of the Clinical Investigation and
Development Therapeutics program of the UCSD Cancer
Center. Dr. Howell is a recipient of the Milken
Foundation prize for his contributions to the field of
cancer chemotherapy. He also serves on the National
Research Council of the American Cancer Society and the
editorial boards of several medical journals. Dr. Howell
also serves on the Board of Directors of DepoTech
Corporation and Beacon Laboratories.
Executive Officers
In addition to executive officers of the Company who
are also directors, set forth below is the business
experience of the other executive officers of the
Company.
Mr. W. Eric Bowditch has been Vice President
Business Development of the Company since June 1996. He
has over 25 years experience in the pharmaceutical
industry. From 1992 to 1996, he was with Ohmeda
Pharmaceutical Products Division Inc., a company focused
on anesthesia and acute care pharmaceuticals, as Director
Business Development. From 1984 to 1991, Mr. Bowditch was
Worldwide Director, Strategic Marketing and Business
Development with Rhone-Poulenc Rorer. Previously, Mr.
Bowditch held a number of marketing and business
development positions with Revlon Healthcare Group,
Squibb and Boehringer Ingelheim in the UK.
Mr. Stephen B. Thompson has been Chief Financial
Officer of the Company since January 25, 1996. Previously
from 1990 to 1996 he was Controller and Administration
Manager of API. From 1989 to 1990, he was Controller of
Robert E. Woolley, Inc. a hotel real estate company where
he was responsible for accounting, finances and investor
relations. Previously, from 1985 to 1989, he was
Controller of OKC Limited Partnership, an oil and gas
company where he was responsible for accounting, finances
and SEC reporting. Between 1975 and 1985 he held various
accounting and finance positions with Santa Fe
International Corporation.
Richard G. Van Inwegen, Ph.D. joined the Company in
May 1996 as Vice President Pre-Clinical and Clinical
Development. Prior to joining Access he was with Chemex
from 1991 to 1995 as Vice President of Clinical Research.
Previously, Dr. Van Inwegen held positions with Roberts
Pharmaceuticals for two years as assistant director of
clinical research, the Rorer Company as department
manager of immunology specializing in hypersensitivity
for three years, and the Revlon Health Care Group where
he was involved in various areas of pharmaceutical
research and development for ten years. He holds a B.A.
in biology and an M.A. in cell physiology from State
University of New York, Binghampton, and a Ph.D. from the
University of Illinois in physiology.
4
<PAGE>
Officers and Directors
The directors and executive officers of the Company are as follows:
<TABLE>
Name Age Position Held with ACCESS
- ---------------------------- --- -------------------------
<S> <C> <C>
Herbert H. McDade, Jr. 71 Chairman of the Board of Directors
Kerry P. Gray 45 President, Chief Executive
Officer, Treasurer, Director
J. Michael Flinn 64 Director
Stephen. B. Howell. M.D. 53 Director
Max Link, Ph.D. 57 Director
W. Eric Bowditch 51 Vice President Business Development
Stephen B. Thompson 44 Chief Financial Officer
Richard G. Van Inwegen, Ph.D. 53 Vice President Preclinical
& Clinical Development
</TABLE>
Meetings of The Board of Directors and Committees
The Board of Directors of the Company held a total
of four meetings in 1997. The Company has a Nominating
Committee comprised of J. Michael Flinn and Max Link. The
Company also has an Audit & Finance Committee comprised
of Herbert H. McDade, Jr. and J. Michael Flinn. The
members of the Audit & Finance committee met one time
during 1997 to review auditing activities. The Board of
Directors also has a Compensation Committee, presently
composed of Max Link, J. Michael Flinn and Stephen B.
Howell. The Committee met twice in 1997. During the
fiscal year ended December 31, 1997 each Director
attended at least 75% of the aggregate of the total
number of such meetings of the Board and at least 75% of
the aggregate of the total number of meetings held by all
committees on which the individual director served.
Compensation of Directors
Each Director who is not an employee of the Company
receives a quarterly fee of $1,250, plus $1,000 for each
board meeting which he attends and $500 for each
committee meeting he attends as member of the Audit and
Finance and/or Compensation Committees. Each Committee
Chairman also received $250 for each meeting he attends.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's Directors, Executive officers
5
<PAGE>
and persons who own more than ten percent of a registered
class of the Company's equity securities ("10% holders"),
to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in
ownership of common stock and other equity securities of
the Company. Directors, officers and 10% holders are
required by SEC regulation to furnish the Company with
copies of all of the Section 16(a) reports they file.
Based solely on a review of reports furnished to the
Company or written representatives from the Company's
Directors and executive officers during the fiscal year
ended December 31, 1997, all Section 16(a) filing
requirements applicable to its Directors, officers and
10% holders were complied with.
Executive Compensation
The following table sets forth the aggregate
compensation paid by the Company to the CEO and each of
the most highly compensated executive officers of the
Company whose aggregate salary and bonus exceeded
$100,000 for services rendered in all capacities to the
Company for the years ended December 31, 1997 and 1996.
None of the current executives were executive officers of
the Company in 1995.
<TABLE>
<CAPTION>
Summary Compensation Table
Long-term
Annual Compensation Compensation
Awards
- --------------------------------------------------- ------------
Name and Securities Underlying All Other
Principal Position Year Salary Bonus Options/SARs (#) Compens.
- -------------------------- ------ --------- -------- --------------------- ---------
<S> <C> <C> <C> <C> <C>
Kerry P. Gray 1997 $ 221,025 $ 0 0 $ 573 (4)
President and CEO(1) 1996 201,250 0 200,000 2,616 (4)
W. Eric Bowditch 1997 $ 135,243 $ 11,271 30,000 $ 27,671 (5)
Vice President Business 1996 69,360 0 70,000 0
Development(2)
Richard G. Van Inwegen, PhD 1997 $ 119,850 $ 3,400 0 $ 0
Vice President Clinical and 1996 78,400 0 70,000 97,073 (6)
Preclinical Development(3)
</TABLE>
(1) Mr. Gray, President and CEO, became an officer of the Company on January
25, 1996. Previously he held the same position at API.
(2) Mr. Bowditch, Vice President Business Development, became an officer of
the Company on June 21, 1996.
(3) Dr. Van Inwegen, Vice President Clinical and Preclinical Development,
became an officer of the Company on June 21, 1996.
(4) The Company paid Mr. Gray for certain expenses for life insurance in the
amount of $573 for 1997 and
6
<PAGE>
for life insurance and long-term disability in the aggregate amount of
$2,616 for 1996.
(5) The Company paid Mr. Bowditch for reimbursement of moving expenses,
selling and purchasing housing costs in the aggregate of $27,671 in 1997.
(6) The Company paid Dr. Van Inwegen reimbursement of moving expenses, selling
and purchasing housing costs in the aggregate of $51,773 in 1996. Dr. Van
Inwegen was also paid consulting fees of $45,300 in 1996 before he was
employed by the Company.
Options/SARs Grants in 1997
The following table provides information regarding stock options granted
to the named executive officers during 1997.
<TABLE>
<CAPTION>
INDIVIDUAL OPTION GRANTS IN LAST FISCAL YEAR
Percent of
Total Options Potential Realizable
Granted to Value at Assumed
Number of Employees Annual Rates of
Securities in Stock Appreciation
Underlying Fiscal Exercise Expiration For Option Term (2)
Name Options Year Price Date 5% 10%
- -------------------- -------- -------- ------ -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
W. Eric Bowditch (1) 30,000 23% $.66 04/15/07 $12,452 $31,556
</TABLE>
(1) Mr. Bowditch's options became exercisable upon the consummation of a
transaction between the Company and Strakan Limited in February 1998.
(2) Potential realizable value is based on the assumption that the price per
share of Common Stock appreciates at the assumed annual rate of stock
appreciation for the option term. There is no assurance that the assumed 5%
and 10% annual rates of appreciation (compounded annually) will actually be
realized over the term of the option. The assumed 5% and 10% annual rates
are set forth in accordance with the rules and regulations adopted by the
Securities and Exchange Commission and do not represent the Company's estimate
of stock price appreciation.
7
<PAGE>
Options/SARs Exercise and Year-End Value Table
This table includes the number of shares covered by both exercisable and
non-exercisable stock options/SARs as of December 31, 1997. Also reported
are the values for "in-the-money" stock options/SARs which represent the
positive spread between the exercise price of any such existing stock
options/SARs and the year-end price of the Company's common stock. There
were no SARs granted or exercised by the officers during 1997.
<TABLE>
<CAPTION>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION/SAR VALUES
Number of
Securities Value of
Underlying Unexercised In-
Unexercised The-Money
Number of Options/SARs(#) Options/SARs($) (1)
Shares Acquired Value
Name on Exercise (#) Realized($) Exercisable/ Exercisable/
Unexercisable Unexercisable
- --------------- -------------- ----------- ---------------- -------------
<S> <C> <C> <C> <C>
K. Gray - - 75,000 / 200,000 $0 / $0
W. Bowditch - - 47,500 / 100,000 $0 / $0
R. Van Inwegen - - 90,577 / 125,577 $0 / $0
</TABLE>
(1) Amounts disclosed in these columns do not reflect amounts actually
received by the named executive officers but are calculated based on the
difference between fair market value of the Company's Common Stock at the
end of 1997, as determined by the Company's Board of Directors, less the
exercise price payable for such shares, in accordance with the rules and
regulations adopted by the Securities and Exchange Commission.
Certain Relationships and Related Transactions
Dr. David Ranney. Dr. David Ranney, a former director
and officer of Access, beneficially owns, 9,147,608
shares of Common Stock which represents 22.0% of the
outstanding shares of Common Stock. See "Security
Ownership of Certain Beneficial Owners and Management."
Dr. Ranney and Access have entered into a Stockholder's
Agreement providing for, among other matters, (1) certain
rights of Dr. Ranney to be nominated or to have his
nominee nominated for election to the Board of Directors
of Access at any election of Access Directors; (2) so
long as Dr. Ranney beneficially owns 15% or more of the
issued and outstanding stock of the Company he agrees to
vote all such shares for which he has voting power on any
proposal presented to the stockholders of the Company in
the manner recommended by a majority of the Board of
Directors, as defined; and, (3) a right of first refusal
of Dr. Ranney to license or purchase certain technology
and intellectual property of Access under certain
conditions.
In April 1994 the Company and Dr. Ranney entered into
a Patent Purchase Agreement, as amended, which provides
for the assignment of the rights to certain patents to
Access. Under the terms of the Patent Purchase Agreement
Dr. Ranney has retained certain rights and interests in
the intellectual property as provided in the
8
<PAGE>
Stockholder's Agreement, including a non-exclusive right
to use the inventions and technology covered by or
relating to the patents for his own research, teaching or
other academic related purposes, for research and
development of uses or implementations of the inventions
or technology improvements. Access maintains the first
right to negotiate the acquisition of any new inventions
or technology improvements developed by Dr. Ranney
relating to the technology. Access has agreed to pay Dr.
Ranney a royalty of three quarters of one percent (0.75%)
of Access gross revenues derived from products covered by
the patents and to pay certain minimum payments which
began in 1994, and which are subject to further
modifications.
In addition the Patent Purchase Agreement, as
amended, establishes certain additional rights of Dr.
Ranney. The patent assignment will terminate in the event
Access fails to pay the amounts due to Dr. Ranney
pursuant to the Agreement, files a petition in
bankruptcy, fails to commercially develop the patents or
creates a security interest in the patents without Dr.
Ranney's approval. Also, in the event that parts of the
Access technology are not being developed after January
25, 2000, Dr. Ranney has the right of first refusal to
license or acquire at fair market value development
rights to such parts of the Access technology.
Dr. Ranney has signed an Assignment of Intellectual
Property whereby all rights, title and interest in and to
all subsequent inventions and confidential information
will become the sole and exclusive property of Access at
the earlier of the date of conception or development or
until May 31, 1998 for inventions related to the Access
technology.
The Company and Dr. Ranney have also entered into a
Letter Agreement dated March 5, 1998, which among other
matters provides for the immediate termination of the
Assignment of Intellectual Property Agreement, the
payment of certain amounts to Dr. Ranney and, upon such
payment, the termination not later than 60 days after the
date of the Letter Agreement of the Patent Purchase
Agreement, as amended, and permanent assignment to Access
of the patents covered by the Patent Purchase Agreement.
Herbert McDade. In consideration for the
termination of his employment with Access, Mr. McDade and
Access entered into an agreement on October 4, 1995,
pursuant to which, among other things, (i) Mr. McDade
became a consultant to Access, providing consulting
services to Access at least four days each month; (ii)
Mr. McDade is paid a base of $1,500 per day of
consulting; and (iii) the period for exercise of all
options and SARs owned by Mr. McDade was extended from
three months after the termination of his employment with
Access to the expiration of the option or SAR. During
1996 and 1997, Thoma Corporation, of which Mr. McDade is
a principal, was paid an aggregate amount of $72,000 and
$60,000, respectively in consulting fees.
9
<PAGE>
Security Ownership of Certain Beneficial Owners and Management
Based solely upon information made available to the
Company, the following table sets forth certain
information with respect to the beneficial ownership of
Common Stock as of April 1, 1998 by (i) each person who
is known by the Company to beneficially own more than
five percent of Common Stock; (ii) each director of the
Company; (iii) each of the executive officers; and (iv)
all executive officers and directors as a group. Except
as otherwise indicated, the holders listed below have
sole voting and investment power with respect to all
shares of Common Stock beneficially owned by them.
<TABLE>
<CAPTION>
Common Stock Beneficially Owned
Name Number of Shares(1) % of Class
- -------------------------------- ------------------- ------------
<S> <C> <C>
Herbert H. McDade. Jr. (2) 1,025,665 2.4%
Kerry P. Gray (3) 1,145,790 2.8%
J. Michael Flinn (4) 72,833 *
Stephen B. Howell (5) 91,667 *
Max Link (6) 76,667 *
W. Eric Bowditch (7) 87,500 *
Stephen B. Thompson (8) 55,451 *
Richard G. Van Inwegen (9) 126,925 *
David F. Ranney 9,147,608 22.0%
Nicholas Madonia, Individually and
as Trustee(10) 6,617,729 15.5%
All Directors and Executive Officers
as a group (consisting of 8 persons) 2,682,498 6.3%
</TABLE>
* Less than 1%
(1) Includes Common Stock held plus all options and warrants exercisable
within 60 days after April 1, 1998. Unless otherwise indicated, the persons
listed have sole voting and investment powers with respect to all such shares.
(2) Including presently exercisable options for the purchase of 30,883 shares
of Common Stock pursuant to the Non-Employee Director Plans of 1987 and 1995,
and 320,625 shares of Common Stock and 151,829 SARs exercisable pursuant to
the 1987 Stock Option Plan.
(3) Including presently exercisable options for the purchase of 75,000 shares
of Common Stock pursuant to the 1995 Stock Option Plan.
(4) Including presently exercisable options for the purchase of 63,333 shares
of Common Stock pursuant to the Non-Employee Director Plans of 1987 and 1995.
(5) Including presently exercisable options for the purchase of 36,667 shares
of Common Stock pursuant to the Non-Employee Director Plan of 1995 and 15,000
shares of Common Stock pursuant to the 1987 Stock Option Plan.
(6) Including presently exercisable options for the purchase of 36,667 shares
of Common Stock pursuant to the Non-Employee Director Plan of 1995.
(7) Including presently exercisable options for the purchase of 57,500 shares
of Common Stock pursuant to the 1995 Stock Option Plan.
(8) Including presently exercisable options for the purchase of 15,000 shares
of Common Stock pursuant to the 1995 Stock Option Plan.
(9) Including presently exercisable options for the purchase of 35,000 shares
of Common Stock pursuant to the 1995 Stock Option Plan and 55,577 shares of
Common Stock pursuant to the 1987 Stock Option Plan.
10
<PAGE>
(10) Mr. Nicholas Madonia owns 18,800 shares of Common Stock. Mr Madonia is
the trustee of the Sentinel Charitable Remainder Trust ("Sentinel"),
30 Outwater Lane, Garfield, New Jersey, which is known to
Access to be the beneficial owner of more than five percent of the Common
Stock. In addition to 1,544,799 shares of Common Stock held by Sentinel,
Sentinel has an option to purchase until January 1, 1999, up to 500,000
units at $2.50 per unit. The units consist of 500,000 shares of Common
Stock, 500,000 warrants with an expiration date of January 1, 2000 and an
exercise price of $6.25 and 200,000 Warrants with an expiration date of
January 1, 2000 and an exercise price of $2.50.
Mr. Madonia is also the trustee of the Century Charitable Remainder Trust,
the Ocean Charitable Remainder Trust, the Lake Charitable Remainder Trust,
the Beacon Charitable Remainder Trust, the Freedom Charitable Remainder
Trust, the Oak Charitable Remainder Trust and the Celestial Charitable
Remainder Trust (together, the "Charitable Remainder Trusts"). The Charitable
Remainder Trusts are known by Access to be the beneficial owners of an
aggregate of 930,239 shares of Common Stock and as such Mr. Madonia, as
trustee is deemed to be a beneficial owner of the securities held by them.
Mr. Madonia is also the trustee of the Blech Family Trust, beneficial owner
of 2,923,891 shares of Common Stock, and as such may be deemed to be a
beneficial owner of the securities held by it. Mr. Madonia disclaims
beneficial ownership of all shares held by the trusts. The information set
forth in this footnote is based on a Schedule 13D filed by Mr. Madonia on
April 9, 1997.
PROPOSAL 2
AMENDMENT OF 1995 STOCK OPTION PLAN
The Board of Directors of Access has authorized, subject to stockholder
ratification, and only effective upon (i) the closing of the Offering (as
defined below) and (ii) the effectiveness of the Recapitalization (as defined
below), an amendment to the 1995 Stock Option Plan, as amended ("the Plan"),
which would provide for the ability of the Compensation Committee to issue
options to officers, directors, employees and consultants to purchase common
stock of the Company in the aggregate amount equal to sixteen percent (16%)
of the total outstanding shares of common stock of the Company immediately
after the Recapitalization and the final closing of the Offering. Currently,
the Plan authorizes the issuance of up to 2,000,000 shares of common stock.
The shareholders of the Company on April 14, 1998 approved a recapitalization
of the Company (the "Recapitalization") through a one-for-twenty reverse stock
split of the Company's Common Stock and a decrease in the number of
authorized shares of Common Stock from 60.0 million, $.04 par value per share,
to 20.0 million shares, $.01 par value per share, and a decrease of the
authorized shares of preferred stock from 10.0 million to 2.0 million shares.
The Company has not effected the Recapitalization as of the date of this
proxy statement.
The Company has engaged an investment bank to assist the Company to raise a
minimum of $2,800,000 and a maximum of $7,800,000 through a private placement
of common stock at a proposed price of $.15 per share (the "Offering").
There can be no assurance that the Offering will be successful or that the
terms of the Offering will not be required to be modified in order to effect
a closing of the Offering.
The purpose of the Plan is to provide for the issuance of Access Common Stock
to allow for grants to officers, directors, employees and consultants of the
Company. As of April 1, 1998 there were options outstanding under the Plan
to purchase an aggregate of approximately 615,000 shares of Access Common
Stock. The Plan was adopted on January 25, 1996 and replaced the 1987 Stock
Awards Plan. No further grants have been or can be made under the 1987 Stock
Awards Plan. There are currently options outstanding under the Company's 1987
Stock Awards Plan to purchase an aggregate of approximately 1,028,745 shares
of Access Common Stock.
Subject to the closing of the Offering and the effectiveness of the
Recapitalization, the Board of Directors has authorized the cancellation of
all options currently issued under the Plan (615,000 options as of the date of
this proxy statement) in exchange for the grant of new options under the Plan,
as amended, to officers, directors, employees and consultants of the Company
in an amount that would equal 8% of the outstanding the shares of
11
<PAGE>
common stock of the Company immediately after the Offering and the
Recapitalization, at an exercise price of $.15 per share.
All such new options would be subject to new vesting requirements commencing
on the date of the grant. For example, after the Recapitalization and closing
of the Offering, the total shares of common stock of the Company (i)
outstanding, (ii) issuable under the Plan and (iii) subject to options granted
under the Plan would be approximately as follows:
<TABLE>
Amount Raised Total Shares Options Issuable Options Outstanding
In the Offering Outstanding Under the Plan Under the Plan
- ------------------ ------------ ------------------- -------------------
<S> <C> <C> <C>
$ 2,800,000 3,009,000 480,000 250,000
$ 4,800,000 3,676,000 590,000 295,000
$ 6,800,000 4,342,000 700,000 330,000
</TABLE>
The Board of Directors believes that the proposed amendment to the Plan would
put the Company in line with other biomedical companies at a similar stage of
development as the Company with respect to the number of options issuable
and outstanding under its stock option plans.
General. The Plan authorizes the granting of "incentive stock options" as
defined in Section 422A of the Code and non-qualified stock options. See
"Administration."
Securities Subject to the Plan and Market Value. Under the Plan, options may
be granted covering up to an aggregate of 14,000,000 shares of Common Stock.
The Plan provides for appropriate adjustments in the number and kind
of shares subject to the Plan in the event of a stock split, stock dividend,
or certain other similar changes in the Common Stock, and in the event of a
reorganization, merger, consolidation or certain other types of
recapitalization of the Company.
Eligibility to Participate. Any executive, other key employee or director of,
or advisor or consultant to, the Company or of any of the Company's
subsidiaries or parent corporation is eligible to be granted options under
the Plan. No election by any such person is required to participate in the
Plan.
Administration. The Plan is administered by a committee (the "Committee")
consisting of two or more directors appointed by the Board, each of whom is
a "disinterested person" as defined by Rule 16b-3 under the Exchange Act. The
Committee is authorized to determine which employees of the Company are
executive or other key employees and select from among the executive or other
key employees and the advisors the individuals to whom options are to be
granted, to determine the number of shares to be subject to such options, to
determine the terms and conditions of the options, all consistent with the
terms of the Plan.
Stock Options. The Committee in its discretion may issue stock options which
qualify as incentive stock options under the Code nor non-qualified stock
options. The Committee will determine the time or times when each stock option
becomes exercisable, the period within which it remains exercisable and the
price per share at which it is exercisable, provided that no incentive stock
option shall be exercised more than ten years after it is granted and no other
options shall be exercised more than ten years and one day after it is granted,
and further provided that the exercise price of incentive stock options shall
not be less than 100% of the fair market value of the Common Stock on the
date of the grant. The reported closing price of the Common Stock on the OTC
12
<PAGE>
Bulletin Board on April 1, 1998 was 0.25 per share.
Notwithstanding the above description, option grants to non-employee directors
under the Plan will be made on a formula basis only, whereby each director of
the Company will receive, upon her or his initial election or appointment
to the Board, options exercisable for 30,000 shares of Common Stock and, will
receive, each year she or he is on the Board, options exercisable for 6,667
shares of Common Stock.
Payment for shares purchased upon exercise of an option must be made in full
in cash or check, by payment through a broker in accordance with Regulation T
of the Federal Reserve Board or by such other mode of payment as the
Committee may approve, including payment in whole or in part in shares of
the Common Stock, when the option is exercised. No option is transferable
except by will or the laws of descent and distribution or pursuant to a
qualified domestic relations order, as defined by the Code or in Title I of
the Employee Retirement Income Security Act of 1974, as amended.
All options granted under the Plan terminate on the earliest of (a) the
expiration of the term specified in the option document, which may not exceed
ten years from the date of grant; (b) the expiration of three months from the
date an option holder's employment or service with the Company or its
subsidiaries or parent terminates for any reason other than disability or
death; (c) the expiration of one year from the date an option holder's
employment or service with the Company, its subsidiaries or its parent
terminates by reason of such option holder's disability or death. The
Committee, in its discretion, may provide for additional limitations on the
term of any option.
Tax Aspects of the Plan. The following discussion is intended to briefly
summarize the general principles of federal income tax law applicable to
options granted under the Plan. A recipient of an incentive stock option
will not recognize taxable income under either the grant or exercise of an
incentive stock option. The option holder will recognize long-term
capital gain or loss on a disposition of the shares acquired upon exercise
of an incentive stock option, provided the option holder does not dispose of
those shares within two years from the date the incentive stock option was
granted or within one year after the shares were transferred to such option
holder. Currently, for regular federal income tax purposes, long-term
capital gain on a sale of stock generally is taxed at a maximum rate of 20%
or 28%, depending on the holding period, while ordinary income may be subject
to a tax at a maximum rate of 39.6%. If the option holder satisfies
requirements for capital gain treatment, then the Company will not be
allowed a deduction by reason of the grant or exercise of an incentive stock
option.
As a general rule, if the option holder disposes of the shares before
satisfying both holding period requirements (a "disqualifying disposition"),
the gain recognized by the option holder on the disqualifying disposition
will be taxed as ordinary income to the extent of the difference between (i)
the lesser of the fair market value of the shares on the date of exercise or
the amount received for the shares in the disqualifying disposition, and
(ii) the adjusted basis of the shares, and the Company will be entitled to a
deduction in that amount. The gain (if any) in excess of the amount
recognized as ordinary income on a disqualifying disposition will be
long-term or short-term capital gain, depending on the length of
time the option holder held the shares prior to the disposition.
The amount by which the fair market value of a share at the time of exercise
exceeds the option price will be included in the computation of such option
holder's "alternative minimum taxable income" in the year the option holder
exercises the incentive stock option. Currently, the maximum alternative
minimum tax rate for
13
<PAGE>
individuals is 28%. If an option holder pays
alternative minimum tax with respect to the exercise of an incentive stock
option, then the amount of such tax paid will be allowed as a credit against
regular liability in a subsequent year to the extent that the regular
liability exceeds the alternative minimum tax liability for such subsequent
year. The option holder's basis in the shares for purposes of the
alternative minimum tax will be adjusted when income is included in
alternative minimum taxable income.
A recipient of a non-qualified stock option generally will not recognize
taxable income at the time of grant, and the Company will not be allowed a
deduction by reason of the grant. Such an option holder will recognize
ordinary income in the taxable year in which the option holder exercises
the non-qualified stock option, in an amount equal to the excess of the fair
market value of the shares received upon exercise, at the time of exercise
of such options, over the exercise price of the option, and the Company will
be allowed a deduction in that amount. Upon disposition of the shares
subject to the option, an option holder will recognize long-term or
short-term capital gain or loss, depending upon the length of time the
shares were held prior to disposition, equal to the difference between the
amount realized on disposition and the option holder's basis in a share
subject to the option (which basis ordinarily is the fair market value of
the shares subject to the option on the date the option was exercised).
UNLESS OTHERWISE INDICATED THEREON, THE ACCOMPANYING PROXY WILL BE VOTED FOR
THE APPROVAL TO AMEND THE COMPANY'S 1995 STOCK OPTION PLAN AS DESCRIBED ABOVE.
YOUR BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE PROPOSED
AMENDMENT.
PROPOSAL 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed, subject to ratification by the
stockholders at the Annual Meeting, the accounting firm of KPMG Peat
Marwick LLP as principal independent accountants for the Company for the
fiscal year ending December 31, 1998. KPMG Peat Marwick LLP has served in
this capacity since 1979.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
Annual Meeting and to be available to respond to appropriate questions
concerning the 1997 audit. Such representatives will have the opportunity
to make a statement if they desire to do so at the meeting and to respond to
appropriate questions.
UNLESS OTHERWISE INDICATED THEREON, THE ACCOMPANYING PROXY WILL BE VOTED FOR
THE APPROVAL OF KPMG PEAT MARWICK LLP. YOUR BOARD OF DIRECTORS RECOMMENDS A
VOTE FOR RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK LLP AS PRINCIPAL
INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING DECEMBER 31, 1998.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors of the Company
has no knowledge of any matters to be presented for consideration at the
Annual Meeting other than those referred to above. If (i) any matters not
within the knowledge of the Board of Directors as of the date of this Proxy
Statement should properly come before the meeting; (ii) a person not named
herein is nominated at the meeting for election as a Director because a
nominee named herein is unable to serve or for good cause will not serve;
(iii) any proposals properly omitted from this Proxy Statement and the form
of proxy should come before the meeting; or (iv) any
14
<PAGE>
matters should arise incident to the conduct of the meeting, then the proxies
will be voted in accordance with the recommendations of the Board of
Directors of the Company.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
The Annual Meeting of Stockholders in 1999 is expected to be held on or about
June 11, 1999. Stockholder proposals to be considered for presentation to the
Annual Meeting of Stockholders in 1999 must be received by the Board of
Directors of the Company for inclusion in the Company's Proxy Statement and
form of proxy relating to the 1999 Annual Meeting on or before January 1, 1999.
EACH STOCKHOLDER IS URGED TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY
CARD IN THE ENCLOSED ENVELOPE PROVIDED FOR THAT PURPOSE AND ADDRESSED TO ACCESS
PHARMACEUTICALS, INC. c/o AMERICAN STOCK TRANSFER & TRUST CO., 40 WALL STREET,
46TH FLOOR, NEW YORK, NEW YORK 10005, A PROMPT RESPONSE IS HELPFUL AND YOUR
COOPERATION WILL BE APPRECIATED.
By Order of the Board of Directors,
/s/ Herbert H. McDade, Jr.
--------------------------
Herbert H. McDade, Jr.
Chairman of the Board of Directors
15
<PAGE>
ACCESS PHARMACEUTICALS, INC.
2600 Stemmons Freeway, Suite 176, Dallas, Texas 75207
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned having received the Notice of Annual Meeting of Stockholders
and Proxy Statement dated May 6, 1998, and revoking any proxy heretofore
given, hereby appoints each of Herbert H. McDade, Jr. and Kerry P. Gray or
either of them, proxies of the undersigned with full power of substitution,
to cumulate votes and to vote all shares of common stock of Access
Pharmaceuticals, Inc. which the undersigned is entitled to vote at a Annual
Meeting of Stockholders to be held June 12, 1998 at 10:00 a.m., at the
Westchester Marriott, 670 White Plains Road, Tarrytown, New York 10591,
(914) 631-2200, or any adjournment thereof.
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 the Proposal.
In their discretion, the Proxies are authorized to vote on any other matters
which may properly come before the Annual Meeting or any adjournment thereof
as set forth in the Proxy Statement.
(continued, and to be signed on the reverse side)
SEE REVERSE SIDE
[ X ] PLEASE MARK YOUR VOTE THIS WAY
1. Election of Directors
FOR WITHHOLD AUTHORITY
[ ] [ ]
Cumulative Votes for one or more nominees as follows:
________ Herbert H. McDade, Jr.
________ Kerry P. Gray
________ J. Michael Flinn
(INSTRUCTION: To withhold authority to vote for any individual nominee,
check the box to vote "FOR" all nominees and strike a line through
the nominee's name above)
2. Proposal to amend Company's
1995 Stock Option Plan. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
3. Proposal to ratify and approve the
appointment of KPMG Peat Marwick LLP
as the Independent Public Accountants
of the Company for the year ending
December 31, 1998. FOR AGAINST ABSTAIN
[ ] [ ] [ ]
PLEASE MARK, SIGN AND DATE BELOW AND RETURN THIS PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.
Proxies will also be accepted by transmission of a telegram, cablegram or
telecopy provided that such telegram, cablegram or telecopy contains
sufficient information from which it can be determined that the transmission
was authorized by the stockholder. Telegrams or cablegrams may be addressed
to American Stock Transfer & Trust Co. ("American Stock Transfer") at the
address appearing on the attached envelope. American Stock Transfer's telecopy
number is (718) 234-2287.
Shares Held: ___________
THIS PROXY IS SOLICITED ON BEHALF OF ACCESS PHARMACEUTICALS, INC.'S BOARD OF
DIRECTORS AND MAY BE REVOKED BY THE STOCKHOLDER PRIOR TO EXERCISE.
Signature __________________ ________ ___________________________ _______
Date Signature (if held jointly) Date
NOTE:Please sign exactly as name appears hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian,
please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a
partnership, please sign in partnership name by authorized person.
