SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /x/
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/x/ Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 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
(214) 905-5100
May 14, 1999
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
Monday, June 28, 1999 at 10:00 a.m., local time, at the New York Athletic
Club, 180 Central Park South, New York, New York 10019, (212) 247-5100 (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 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
(214) 905-5100
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on June 28, 1999
PLEASE TAKE NOTICE that the Annual Meeting of Stockholders (the "Meeting")
of Access Pharmaceuticals, Inc. (the "Company" or "Access") will be held at
the New York Athletic Club, 180 Central Park South, New York, New York 10019,
(212) 247-5100, on Monday, June 28, 1999, at 10:00 a.m., local time, for the
following purposes:
1. To elect one Class 1 Director, 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 to increase the number of shares issuable under the plan.
3. To consider and vote upon a proposal to amend the Company's 1995 Stock
Option Plan to adjust the number of options to be granted to non-employee
directors.
4. To consider and act upon a proposal to ratify the appointment of Grant
Thornton LLP as independent accountants for the Company for the fiscal
year ending December 31, 1999.
5. 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 29, 1999, 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, 1998 accompanies the Proxy
Statement.
Information relating to the proposals is set forth in the accompanying Proxy
Statement dated May 14, 1999. 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 14, 1999
<PAGE>
------------------------------------------
Stockholders are cordially invited to attend the Meeting in person. YOUR
VOTE IS IMPORTANT. If you do not expect to attend the 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
(214) 905-5100
__________________
PROXY STATEMENT
__________________
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On June 28, 1999
This Proxy Statement is furnished by Access Pharmaceuticals, Inc., a
Delaware corporation (the "Company" or "Access"), to holders of common stock,
par value $.01 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 Monday, June 28, 1999 at 10:00 a.m., local time, at the New York
Athletic Club, 180 Central Park South, New York, New York 10019,
(212) 247-5100. This Proxy Statement and the accompanying form of proxy is
first being sent to holders of Common Stock on or about May 14, 1999. 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 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 29, 1999, the record date
for the Meeting, there were outstanding and entitled to vote
3,429,402 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 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.
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, 1998 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 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
<PAGE>
financial statements and management's discussion and analysis
of financial condition and results of operations for the
fiscal year ended December 31, 1998.
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.
Nominee for Term Expiring at the Annual Meeting of
Stockholders in 2002 (Class 1 Directors)
Max Link, Ph.D., is currently the only member of the Class
1 Directors. He has served as a Director since 1996. His term
expires at the Meeting. If elected at the Meeting, Dr. Link
will serve for a term of three years expiring on the date of
the annual meeting of Stockholders in 2002. The terms of the
other four Directors will continue as indicated below.
Business and Experience of Nominees for Director
Max Link, Ph.D. has been a director of the Company since
June 1996. He also is a member of the Audit & Finance,
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, from
1993 until 1994, he served as Chief Executive Officer of
Corange Limited. Prior to joining Corange, Dr. Link served in
a number of positions with Sandoz Pharma Ltd., including Chief
Executive Officer, from 1987 until 1992, and Chairman from
1992 until 1993. Dr. Link currently serves on the board of
directors of eight other publicly-traded life science
companies: Alexion Pharmaceuticals, Inc., Cell Therapeutics,
Inc., CytRx Corporation, Discovery Laboratories, Inc., Human
Genome Sciences, Inc., Procept, Inc., Protein Design Labs,
Inc. and Sulzes Medica, Ltd. Dr. Link received his Ph.D. in
Economics from the University of St. Gallen in 1970.
The nominee has consented to serve as a Director of the
Company and the Board of Directors has no reason to believe
that the nominee will be unavailable. There is no family
relationship among any of the Directors or nominees.
The Board recommends a vote "FOR" the proposed nominee to the Board.
UNLESS OTHERWISE INDICATED THRERON, THE ACCOMPANYING PROXY WILL BE VOTED
FOR THE NOMINEE 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 THE NOMINEE IS UNABLE OR UNWILLING TO SERVE.
2
<PAGE>
Information With Respect to Directors Whose Terms Continue and
Executive Officers
Director Whose Term Expires at the Annual Meeting in 2000
(Class 2 Director)
Stephen B. Howell, M.D. has served as a Director of the
Company since 1996. Dr. Howell is a member of the Compensation
Committee of the Board of Directors. 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 Beacon
Laboratories.
Directors Whose Term Expires at the Annual Meeting in 2001
(Class 3 Directors)
Mr. Herbert H. McDade, Jr. was elected a Director of the
Company in 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 Group from 1979 to 1986. He was 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 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 1990 to 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 1986 to 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 24 years.
Mr. J. Michael Flinn has served as a Director of the
Company since 1983. He also is a member of the Audit & Finance
and Nominating 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
3
<PAGE>
serves as a board member of Oridigm Corporation, Lonesome Dove
Petroleum and Carroll College.
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.
David P. Nowotnik, Ph.D. has been Vice President Research
and Development since November 1998. Prior to joining Access,
Dr. Nowotnik had been with Guilford Pharmaceuticals, Inc. from
1994 until 1998 in the position of Senior Director, Product
Development responsible for a team of scientists developing
polymeric controlled-release drug delivery systems. From 1988
to 1994 he was with Bristol-Myers Squibb working in the area
of discovery of technetium radiopharmaceuticals and MRI
contrast agents. From 1977 to 1988 he was with Amersham
International leading the project which resulted in the
discovery and development of Ceretec.
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.
Officers and Directors
The directors and executive officers of the Company are as
follows:
<TABLE>
<CAPTION>
Name Age Position Held with Access
- ----------------------- ---- ------------------------------
<S> <C> <S>
Herbert H. McDade, Jr. 72 Chairman of the Board of Directors
Kerry P. Gray 46 President, Chief Executive
Officer, Director
J. Michael Flinn 65 Director
Stephen. B. Howell. M.D. 54 Director
Max Link, Ph.D. 58 Director
David P. Nowotnik, Ph.D. 50 Vice President Research & Development
Stephen B. Thompson 45 Chief Financial Officer, Treasurer
</TABLE>
Meetings of The Board of Directors and Committees
The Board of Directors of the Company held a total of six
meetings in 1998. The Company has a Nominating Committee
comprised of J. Michael Flinn and Max Link. The Company also
has an Audit & Finance Committee comprised of J. Michael
Flinn, Max Link and Herbert H. McDade, Jr. The members of the
Audit & Finance
4
<PAGE>
committee met one time during 1998 to review auditing
activities. The Board of Directors also has a Compensation
Committee, presently composed of Stephen B. Howell, Max Link
and J. Michael Flinn. The Compensation Committee met twice in
1998. During the fiscal year ended December 31, 1998 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. In addition the Company
reimbursed each director, whether an employee or not, expenses
of attending board and committee meetings. Subject to
Stockholder approval, each non-employee director will also be
entitled to receive stock options to purchase 5,000 shares of
Common Stock of the Company on the date of each Annual Meeting
of Stockholders and 20,000 shares of Common Stock of the
Company when he/she is first appointed as Director.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's Directors, Executive Officers
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, Executive 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 representations from the Company's
Directors and executive officers during the fiscal year ended
December 31, 1998, 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,
1998, 1997 and 1996.
The remainder of this page is intentionally left blank.
5
<PAGE>
<TABLE>
<CAPTION>
Summary Compensation Table
Long-term
Annual Compensation Compensation
Awards
-------------------------- ---------------------
Name and Securities Underlying All Other
Principal Position Year Salary Bonus Options Compens.
- -------------------- ----- --------- -------- --------------------- --------
<S> <C> <C> <C> <C> <C>
Kerry P. Gray
President and CEO (1) 1998 $236,497 $0 160,000 $1,200 (2)
1997 221,025 0 0 573 (2)
1996 201,250 0 10,000 2,616 (2)
W. Eric Bowditch
Vice President
Business
Development (3) 1998 $103,565 $0 0 $0
1997 135,243 11,271 1,500 27,671 (4)
1996 69,360 0 3,500 0
</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) The Company paid Mr. Gray for certain expenses in the amount of $1,200
for life insurance in 1998, $573 for long-term disability in 1997, and
in the aggregate amount of $2,616 for life insurance and long-term
disability in 1996.
(3) Mr. Bowditch was Vice President Business Development between June 21,
1996 and September 25, 1998.
(4) The Company paid Mr. Bowditch for reimbursement of moving expenses,
selling and purchasing housing costs in the aggregate of $27,671 in 1997.
Options Grants in 1998
<TABLE>
<CAPTION>
INDIVIDUAL OPTION GRANTS IN LAST FISCAL YEAR
Percent of Potential Realizable
Number of Total Options Value at Assumed
Securities Granted to Annual Rates of
Underlying Employees in Exercise Expiration Stock Appreciation
Name Options Fiscal Year Price Date For Option Term (2)
- ---------------- ---------- --------- -------- -------- ---------------------
5% 10%
--------- ---------
<S> <C> <C> <C> <C> <C> <C>
Kerry P. Gray(1) 160,000 52% $3.00 06/18/08 $302,000 $765,000
</TABLE>
(1) Mr. Gray had 100,000 options vest on the grant date and are exercisable.
The remaining 60,000 options vest 2.083% monthly after twelve months from
the grant date and are cumulatively exercisable 48 months after the grant
date.
(2) Potential realizable value is based on the assumption that the price per
share of Common Stock appreciates at the assumed annual rate of stock
appreciation for the option term. There is no assurance that the assumed
5% and 10% annual rates of appreciation (compounded annually) will
actually be realized over the term of
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<PAGE>
the option. The assumed 5% and 10% annual rates are set forth
in accordance with the rules and regulations adopted by the
Securities and Exchange Commission and do not represent the
Company's estimate of stock price appreciation.
Option Exercises and Year-End Value Table
This table includes the number of shares covered by both
exercisable and non-exercisable stock options as of December
31, 1998. Also reported are the values of "in-the-money" stock
options which represent the positive spread between the
exercise price of any such existing stock options and the
year-end price of the Company's Common Stock.
<TABLE>
<CAPTION>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FY-END
OPTION VALUES
Number of Value of
Securities Underlying Unexercised In-
Unexercised The-Money
Number of Options (#) Options (1)
Shares Acquired Value
Name On Exercise (#) Realized ($) Exercisable/ Exercisable/
Unexercisable Unexercisable
- -------- --------------- -------- ------------- -------------
<S> <C> <C> <C> <C>
K. Gray - - 100,000/60,000 $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 1998, as determined by the closing price of the stock on
the OTC Bulletin Board, less the exercise price payable for such shares,
in accordance with the rules and regulations adopted by the Securities
and Exchange Commission.
On June 18, 1998, in connection with the recapitalization of the Company,
all stock options granted under the 1995 Stock Option Plan were cancelled
and new stock options were issued to directors, employees and consultants at
an exercise price of $3.00 per share.
Compensation Pursuant to Agreements and Plans
Employment Agreements
The Company is party to an employment agreement (the
"Employment Agreement") with Kerry P. Gray which expires March
31, 2001 and thereafter may be automatically renewed for
successive one-year periods. Under this agreement, Mr. Gray is
currently entitled to receive an annual base salary of
$240,429 subject to adjustment by the Board of Directors. Mr.
Gray is eligible to participate in all Company employee
benefit programs available to executives. Mr. Gray is also
eligible to receive: i) a bonus payable in cash and Common
Stock related to the attainment of reasonable performance
goals specified by the Board of Directors; ii) stock options
at the discretion of the Board of Directors; iii) long-term
disability insurance to provide compensation equal to at least
60% of his annual base salary; and, iv) term life insurance
coverage of $400,000.
7
<PAGE>
Mr. Gray is entitled to certain severance benefits in the
event that his employment is terminated by the Company without
cause or by Mr. Gray following a change of control. In the
event the Employment Agreement is terminated for any reason by
the Company, other than for cause, Mr. Gray would receive the
salary due for the remaining term of the agreement or 18
months, whichever is longer. The Company will also continue
benefits for such period. In the event that Mr. Gray's
employment is terminated within six months following a change
in control or by Mr. Gray upon the occurrence of certain
events following a change in control, Mr. Gray would receive
two years salary and his target bonus. The Company will also
continue benefits for such period. The Employment Agreement
contains a covenant not to compete with the Company for up to
18 months following the termination date.
Certain Relationships and Related Transactions
David F. Ranney, MD. Dr. Ranney, a former director and
officer of Access, beneficially owns 457,380 shares of Common
Stock, which represents 13.3% 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 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 so long as Dr. Ranney
beneficially owns 10% or more of the issued and outstanding
stock of the Company.
Herbert H. McDade, Jr. 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 1998, 1997 and 1996, Thoma Corporation, of which Mr.
McDade is a principal, was paid an aggregate amount of
$72,000, $72,000 and $60,000, respectively in consulting fees.
Richard Stone Richard Stone is a managing director of
Sunrise Securities Corp., which acted as Placement Agent in
the 1998 private placement of Common Stock of Access and is
acting as Placement Agent in the Company's current 1999
offering. Mr. Stone received 109,904 shares of Common Stock
and warrants to purchase 98,473 shares of Common Stock at
$3.00 per share in the Company's 1998 private placements.
Until August 1, 2001, Sunrise has the right to designate one
individual for election to the Company's Board of Directors
and, if Sunrise exercises such right, the Company is required
to use its best efforts to cause such individual to be
elected. In addition, if Sunrise does not exercise such right,
the Company shall permit a representative of Sunrise to attend
and observe all Board of Directors meetings. Sunrise has not
designated any individual for election to the Company's Board
of Directors; however, a representative of Sunrise has
regularly attended meetings of the Company's Board of
Directors.
The remainder of this page is intentionally left blank.
8
<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 28, 1999 by (i) each person who is known by the Company
to beneficially own more than five percent of Common Stock of
the Company; (ii) each director of the Company; (iii) each of
the named 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) 60,988 1.7%
Kerry P. Gray (3) 179,040 5.1%
J. Michael Flinn (4) 13,975 *
Stephen B. Howell (5) 14,000 *
Max Link (6) 12,000 *
Stephen B. Thompson (7) 7,023 *
David F. Ranney (8) 457,380 13.3%
Nicholas Madonia, Individually
and as Trustee (9) 270,884 7.9%
Richard Stone (10) 221,877 6.3%
All Directors and Executive Officers
as a group (consisting of 7 persons) 287,026 7.9%
</TABLE>
* Less than 1%
(1) Includes Common Stock held plus all options and warrants exercisable
within 60 days after April 28, 1999. 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 13,781 shares
of Common Stock and 7,591 exercisable SARs pursuant to the 1987 Stock
Option Plan and presently exercisable options for the purchase of 12,500
shares of Common Stock pursuant to the 1995 Stock Option Plan. Also
includes 1,000 shares of Common Stock owned by Thoma Corporation of which
Mr. McDade is the beneficial owner.
(3) Including presently exercisable options for the purchase of 115,000 shares
of Common Stock pursuant to the 1995 Stock Option Plan.
(4) Including presently exercisable options for the purchase of 2,500 and
10,000 shares of Common Stock pursuant to the 1987 and 1995 Stock Option
Plans, respectively.
(5) Including presently exercisable options for the purchase of 750 and 11,250
shares of Common Stock pursuant to the 1987 and 1995 Stock Option Plans,
respectively.
(6) Including presently exercisable options for the purchase of 10,000 shares
of Common Stock pursuant to the 1995 Stock Option Plan.
(7) Including presently exercisable options for the purchase of 5,000 shares
of Common Stock pursuant to the 1995 Stock Option Plan.
9
<PAGE>
(8) Dr. David F. Ranney, 3539 Courtdale Drive, Dallas, Texas, 75234 is known
to be the beneficial owner of more than five percent of the Common Stock
of the Company.
(9) Mr. Nicholas Madonia owns 940 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. Currently,
77,239 shares of Common Stock are held by Sentinel.
Mr. Madonia is also the trustee of the Century Charitable
Remainder Trust, the Ocean Charitable Remainder Trust, the
Frontier 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 46,511 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 146,194 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.
(10) Mr. Richard Stone, 44 West 77th Street, New York, New
York, 10024, owns 123,404 shares of Common Stock and has
warrants to purchase 98,473 shares of Common Stock at $3.00
per share with expiration dates between April 1 and July 30,
2003, is known to be the beneficial owner of more than five
percent of the Common Stock of the Company. Mr. Stone is a
principal of the Placement Agent for the Company's 1998
private placements and the current ongoing 1999 private
placement. The information set forth in this footnote is based
on a Schedule 13D filed by Mr. Stone on September 29, 1998.
PROPOSAL 2
AMENDMENT OF 1995 STOCK OPTION PLAN TO INCREASE THE NUMBER OF SHARES
ISSUABLE UNDER THE PLAN
The Board of Directors of Access has authorized, subject to
Stockholder ratification, and only effective upon the closing
or cancellation of the Offering (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 seventeen
percent (17%) of the total outstanding shares of Common Stock
of the Company after the final closing of the Offering or
cancellation of the Offering. Currently, the Plan authorizes
the issuance of up to 548,271 shares of Common Stock.
The Company has engaged an investment bank to assist the
Company to raise a minimum of $3,000,000 and a maximum of
$8,000,000 through a private placement of Common Stock at a
proposed price of $3.00 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.
On March 1, 1999, the Company and a wholly owned
subsidiary of the Company entered into a merger agreement with
Virologix Corporation ("Virologix"), whereby upon consummation
of the merger, Virologix will become a wholly owned subsidiary
of the Company. The closing of the merger is subject to
certain conditions, including the condition that the Company
raise at least $3.0 million in equity financing. Virologix is
a privately held company focused on the development of product
candidates for the prevention and treatment of viral diseases,
including HIV. Under the terms of the agreement, the Virologix
shareholders will receive 1,000,000 shares of Common Stock of
the Company. It is anticipated that the closing of the
acquisition will take place during the second quarter of 1999.
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 29, 1999 there were options outstanding under
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<PAGE>
the Plan to purchase an aggregate of 301,500 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 40,530 shares of Access Common Stock.
Subject to the closing of the Offering, and assuming a
closing of the Virologix merger, the total shares of Common
Stock of the Company (i) outstanding, and (ii) issuable under
the Plan, depending on the amount raised, 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>
$ 3,000,000 5,429,000 923,000 301,500
$ 5,500,000 6,263,000 1,065,000 301,500
$ 8,000,000 7,096,000 1,206,000 301,500
</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 and give the Company the
ability to attract and maintain qualified employees.
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 currently may be granted covering up to an
aggregate of 548,271 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. 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
11
<PAGE>
value of the Common Stock on the date of the grant. The
reported closing price of the Common Stock on the OTC
Bulletin Board on April 28, 1998 was $3.25 per share.
Payment for shares purchased upon exercise of an option
must be made in full in cash or by check, 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; provided that the Committee may grant options that
are transferable without payment of consideration to immediate
family members of the optionee or to trusts or partnerships
for such family members the Committee may also amend
outstanding options to provide for such transferability.
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. 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. 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.
12
<PAGE>
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
AMENDMENT OF THE COMPANY'S 1995 STOCK OPTION PLAN TO ADJUST THE
NUMBER OF OPTIONS TO BE GRANTED TO NON-EMPLOYEE DIRECTORS
The Plan presently provides for formula grants to each
director of the Company who is not an employee of the Company
as follows: on the date the non-employee director is initially
elected or appointed to the Board of Directors he/she receives
a receives a non-statutory option to purchase 1,500 shares of
Commons Stock and annually each director receives a non-
statutory option to purchase 333 shares of Common Stock. The
Board of Directors has authorized, subject to Stockholder
ratification, an amendment to the Plan which would provide for
the number of options to be granted to non-employee directors
to be adjusted as follows: on the date the non-employee
director is initially elected or appointed to the Board of
Directors he/she receive a non-statutory option to purchase
20,000 shares of Commons Stock and annually each director
would receive a non-statutory option to purchase 5,000 shares
of Common Stock. Each such option would have an exercise price
equal to the fair market value of the Common Stock on the date
of grant.
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 to non-employee
director under its stock option plan and give the Company the ability
to attract and maintain qualified individuals to
serve on the Board of Directors.
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.
13
<PAGE>
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has appointed, subject to ratification by the
Stockholders at the Meeting, the accounting firm of Grant Thornton LLP
as principal independent accountants for the Company for the fiscal year
ending December 31, 1999. Grant Thornton LLP has served in this
capacity since December 1998.
KPMG LLP was previously the principal accountants for Access
Pharmaceuticals, Inc. On October 22, 1998, that firm resigned. The
decision to change accountants was not recommended by the audit
committee of the board of directors. In connection with the audits of
fiscal years ended December 31, 1997 and 1996, and the subsequent
interim period through October 22, 1998, there were no disagreements
with KPMG LLP on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedures, which
disagreements if not resolved to their satisfaction would have caused
them to make reference in connection with their opinion to the subject
matter of the disagreement.
Effective December 15, 1998, the Company engaged Grant Thornton LLP,
independent certified public accountants, as its principal accountants.
During the last two fiscal years, the Company did not consult with Grant
Thornton LLP regarding any of the matters or events set forth in
Item 304 (a) (2) (i) and (ii) of Regulation S-K.
Representatives of Grant Thornton LLP are not expected to
be present at the Meeting but will be available to respond to
appropriate questions concerning the 1998 audit in writing.
UNLESS OTHERWISE INDICATED THEREON, THE ACCOMPANYING PROXY WILL BE VOTED
FOR THE APPROVAL OF GRANT THORNTON LLP. YOUR BOARD OF DIRECTORS RECOMMENDS
A VOTE FOR RATIFICATION OF THE APPOINTMENT OF GRANT THORNTON LLP AS
PRINCIPAL INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 1999.
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, subject to applicable laws and the Company's Charter and
Bylaws, should come before the meeting; or (iv) any 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.
14
<PAGE>
STOCKHOLDER PROPOSALS FOR 2000 ANNUAL MEETING
The annual meeting of Stockholders in 2000 is expected to
be held on or about June 27, 2000. Stockholder proposals,
other than nominations for directors, must be received by the
Company no later than January 11, 2000 to be considered for
inclusion in the Company's proxy materials relating to that
meeting. Nominations for election as director must be made by
written notice to the Company not later than one hundred and
twenty days in advance of the meeting.
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 14,1999, 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 Monday, June 28, 1999 at 10:00 a.m., local time, at the New York
Athletic Club, 180 Central Park South, New York, New York 10019,
(212) 247-5100, 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
Nominee: Max Link FOR WITHHOLD AUTHORITY
[ ] [ ]
2. Proposal to amend Company's 1995 Stock
Option Plan to increase the number of FOR AGAINST ABSTAIN
shares issuable under the plan. [ ] [ ] [ ]
3. Proposal to amend Company's 1995 Stock
Option Plan to adjust the number of
options to be granted FOR AGAINST ABSTAIN
to non-employee directors. [ ] [ ] [ ]
4. Proposal to ratify and approve the
appointment of Grant Thornton LLP as the
Independent Public Accountants of the Company
for the year ending December 31, 1999. 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.
