Exchange Act of 1934
Proxy Statement Pursuant to Section 14(a) of the
Securities
(Amendment No.--)
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Filed by a Party other than the Registrant [ ]
Check the appropriate box:
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[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 240.14-11(c) or 240.14a-12
Interferon Sciences, Inc.
(Name of Registrant as Specified In Its Charter)
Andrea D. Kantor
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1),
or, 14a-6(j)(2).
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Exchange Act Rule 14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a
6(i)(4)
and 0-11.
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transaction applies: COMMON STOCK
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Set forth the amount on which the filing fee is
calculated and state how it was determined.
[ ] 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
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<PAGE>
INTERFERON SCIENCES, INC.
783 Jersey Avenue
New Brunswick, New Jersey 08901
___________
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held June 19, 1996
To The Stockholders:
The Annual Meeting of Stockholders of Interferon
Sciences, Inc. (the "Company") will be held at the Brunswick
Hilton and Towers, 3 Tower Center Boulevard, East Brunswick,
New Jersey on the 19th day of June, 1996 at 1:30 P.M., local
time, for the following purposes:
1. To elect ten Directors to serve until the next
Annual Meeting and until their respective successors are
elected and qualify.
2. To transact such other business as may properly come
before the meeting or any adjournment thereof.
Only stockholders of record as of the close of business
on April 22, 1996 are entitled to receive notice of and to
vote at the meeting. A list of such stockholders shall be open
to the examination of any stockholder during ordinary business
hours, for a period of ten days prior to the meeting, at the
principal executive offices of the Company, 783 Jersey Avenue,
New Brunswick, New Jersey.
By Order of the Board of Directors
Donald W. Anderson
Secretary
New Brunswick, New Jersey
April 29, 1996
If you do not expect to be present at the meeting, please fill in,
date and sign the enclosed Proxy and return it promptly in the enclosed
return envelope.
INTERFERON SCIENCES, INC.
783 Jersey Avenue
New Brunswick, New Jersey 08901
New Brunswick, New Jersey
April 29, 1996
PROXY STATEMENT
The accompanying Proxy is solicited by and on behalf of
the Board of Directors of Interferon Sciences, Inc., a Delaware
corporation (the "Company"), for use only at the Annual Meeting
of Stockholders to be held at the Brunswick Hilton and Towers,
3 Tower Center Boulevard, East Brunswick, New Jersey on the
19th day of June, 1996, at 1:30 P.M., local time, and at any
adjournments thereof. The approximate date on which this Proxy
Statement and the accompanying Proxy were first given or sent
to security holders was April 29, 1996.
Each Proxy executed and returned by a stockholder may be
revoked at any time thereafter, by written notice to that
effect to the Company, attention of the Secretary, prior to the
Annual Meeting, or to the Chairman, or the Inspectors of
Election, at the Annual Meeting, or by the execution and return
of a laterdated Proxy, except as to any matter voted upon prior
to such revocation.
The Proxies in the accompanying form will be voted in
accordance with the specifications made and where no
specifications are given, such Proxies will be voted FOR the
nominees for election as directors named herein. In the
discretion of the proxy holders, the Proxies will also be voted
FOR or AGAINST such other matters as may properly come before
the meeting. The management of the Company is not aware that
any other matters are to be presented for action at the
meeting. The election of directors will be determined by a
plurality of the votes of the shares of common stock, par value
$.01 per share (the "Common Stock"), present in person or
represented by proxy at the Annual Meeting and entitled to vote
on the election of directors. Accordingly, in the case of
shares that are present or represented at the Meeting for
quorum purposes, not voting such shares for a particular
nominee for director, including by withholding authority on the
Proxy, will not operate to prevent the election of such nominee
if he or she otherwise receives affirmative votes.
VOTING SECURITIES
The Board of Directors has fixed the close of business on
April 22, 1996 as the record date for the determination of
stockholders entitled to receive notice of and to vote at the
Annual Meeting. The issued and outstanding stock of the Company
on April 22, 1996 consisted of 34,448,768 shares of Common
Stock, each entitled to one vote. A quorum of the stockholders
is constituted by the presence, in person or by proxy, of
holders of record of Common Stock, representing a majority of
the number of votes entitled to be cast. National Patent
Development Corporation ("NPDC"), which beneficially owns
7,475,148 shares of the outstanding Common Stock as of April
22, 1996 (representing approximately 21.7% of the votes
entitled to be cast at the meeting), has advised the Company
that it currently intends to vote all of the shares of Common
Stock it beneficially owns for the election of the directors
named herein.
PRINCIPAL STOCKHOLDERS
The following table sets forth the number of shares of
Common Stock beneficially owned as of April 11, 1996, by each
person who is known by the Company to own beneficially more than
5% of the Company's outstanding Common Stock.
Name and Address Number of shares Percentage
of Beneficial Owner Beneficially Owned Of Class(1)
National Patent 7,475,148(2) 21.7%
Development Corporation
Martin M. Pollak 7,967,648(2)(3) 22.8%
Jerome I. Feldman 7,981,598(2)(4) 22.8%
David Blech 800,000(5) 2.3%
Nicholas L. Madonia, Trustee 2,287,500(6)(7) 6.6%
Mordecai Jofen, Trustee 240,834(8) 0.7%
Biotechnology Investment Group, L.L.C. 2,710,834(9) 7.9%
__________
(1) The percentage of class calculation assumes for each
beneficial owner that all of the options or warrants are
exercised in full only by the named beneficial owner and
that no other options or warrants are deemed to be
exercised by any other stockholders.
(2) Includes (i) 5,300,148 shares of Common Stock owned by
NPDC, (ii) 1,359,375 shares of Common Stock owned by Five
Star Group, Inc. ("FSGI"), and (iii) 815,625 shares of
Common Stock owned by MXL Industries, Inc. ("MXL"). FSGI
and MXL each is a wholly owned subsidiary of NPDC. Based
upon the common stock and Class B Stock of NPDC
outstanding at April 1, 1996, Jerome I. Feldman and Martin
M. Pollak, officers and directors of NPDC, and directors
of the Company, controlled in the aggregate approximately
10.2% of the voting power of all voting securities of
NPDC. This percentage for Mr. Feldman and Mr. Pollak would
increase to approximately 45.8% if they exercised all of
the presently outstanding and currently exercisable stock
options to purchase shares of the common stock and Class B
Stock of NPDC held by them. Accordingly, Messrs. Feldman
and Pollak, through their ownership of NPDC common stock,
may be deemed to beneficially own the shares of Common
Stock beneficially owned by NPDC, FSGI and MXL. However,
Messrs. Feldman and Pollak disclaim beneficial ownership
of such 7,475,148 shares. 6,975,148 of the shares of
Common Stock owned by NPDC, FSGI and MXL have been pledged
to a bank as collateral to secure indebtedness owed to
such bank. The address of NPDC and Messrs. Pollak and
Feldman is 9 West 57th Street, Suite 4170, New York, New
York, 10019.
(3) Includes (i) 7,475,148 shares of Common Stock beneficially
owned by NPDC, (ii) 1,000 shares of Common Stock held by
Mr. Pollak"s wife, and (iii) 490,000 shares of Common
Stock issuable upon exercise of currently exercisable
stock options held by Mr. Pollak. Mr. Pollak disclaims
beneficial ownership of the shares of Common Stock owned
by NPDC and his wife.
(4) Includes (i) 7,475,148 shares of Common Stock beneficially
owned by NPDC, (ii) 2,950 shares of Common Stock held by
certain members of Mr. Feldman's family, and (iii) 490,000
shares of Common Stock issuable upon exercise of currently
exercisable stock options held by Mr. Feldman. Mr.
Feldman disclaims beneficial ownership of the shares of
Common Stock owned by NPDC and his family.
(5) Excludes (i) 1,130,000 shares of Common Stock held by
Freedom Charitable Remainder Trust ("Freedom") of which
David Blech is the income beneficiary but not the trustee,
(ii) 480,000 shares of Common Stock held by Frontier
Charitable Remainder Trust ("Frontier") of which David
Blech is the income beneficiary but not the trustee, (iii)
430,000 shares of Common Stock held by Sentinel Charitable
Remainder Trust, ("Sentinel") of which David Blech is the
income beneficiary but not the trustee, (iv) 247,500
shares of Common Stock held by the Blech Family Trust (the
"Blech Family Trust") of which David Blech is the income
beneficiary but not the trustee, and (v) 240,834 shares of
Common Stock held by the Edward A. Blech Charitable
Remainder Trust ("Edward Blech Trust") of which David
Blech is the income beneficiary but not the trustee. Mr.
Blech disclaims beneficial ownership of the shares of
Common Stock held by Freedom, Frontier, Sentinel, Blech
Family Trust, and Edward Blech Trust. Mr. Blech's address
is 225 Lafayette Street, Suite 1206, New York, New York
10012.
(6) Based, in part, on a Schedule 13D filed by the beneficial
owner with the Securities and Exchange Commission (the
"Commission").
(7) Includes 1,130,000 shares of Common Stock held by Freedom,
480,000 shares of Common Stock held by Frontier, 430,000
shares of Common Stock held by Sentinel, and 247,500 held
by Blech Family Trust, of which trusts Mr. Blech is the
income beneficiary but not the trustee. As sole trustee
of each of the trusts, Mr. Madonia has the right to vote
and dispose of the shares held by such trusts. Mr. Blech
disclaims beneficial ownership of such shares of Common
Stock. Mr. Madonia's address is c/o Madonia, Pilles &
Co., P.A., 30 Outwater Lane, Garfield, New Jersey 07026.
(8) Includes 240,834 shares of Common Stock held by Edward
Blech Trust. As sole trustee of such trust, Mr. Jofen has
the right to vote and dispose of the shares held by such
trust. Mr. Blech disclaims the beneficial ownership of
such shares of Common Stock. Mr. Jofen's address is 418
Avenue I, Brooklyn, New York 11231.
(9) The members of Biotechnology Investment Group, L.L.C.
("BIG"), which is a limited liability company, are:
Collinson Howe Venture Partners, Inc. (formerly known as
Schroder Venture Advisers, Inc.)(Jeffery J. Collinson is
its president and its sole director and majority owner);
Mordechai Jofen, 418 Avenue I, Brooklyn, New York 11231,
as trustee of the Edward Blech Trust; and Wilmington Trust
Company, 1100 N. Market Street, Wilmington, Delaware
19890, as voting trustee. Such persons may have shared
voting and dispositive power over these shares. All of
the shares of Common Stock owned by BIG have been pledged
to Citibank, N.A. as collateral to secure indebtedness
owed to such bank. The address of BIG is 1055 Washington
Blvd., Stamford, CT 06901.
SECURITY OWNERSHIP OF DIRECTORS AND NAMED EXECUTIVE OFFICERS
The following table sets forth, as of April 22, 1996,
beneficial ownership of shares of Common Stock of the Company
by each director, each of certain executive officers and all
directors and executive officers as a group.
Name Total Number of Percent Of Total Number of
Shares of Common Shares Beneficially
Beneficially Stock Owned,
Owned Owned Shares Which May Be
Acquired Within 60 Days
Martin M. Pollak(1)(3)(5) 7,967,648 22.8% 490,000
Jerome I. Feldman(2)(3)(5) 7,981,598 22.8 490,000
Samuel H. Ronel, Ph.D. 311,000 * 310,500
Stanley G. Schutzbank, Ph.D 321,000 * 320,500
Ogden R. Reid(3)(4) 10,100 * 10,000
Lawrence M. Gordon 219,500 * 219,500
Scott N. Greenberg 182,500 * 182,000
Leon Botstein, Ph.D. 20,000 * 20,000
Roald Hoffmann, Ph.D.(4) 5,000 * 5,000
Sheldon L. Glashow (4) 5,000 * 5,000
Directors and Executive 2,237,050 6.014 2,215,000
Officers as a Group (13
persons)
___________
* The number of shares owned is less than one percent of the
outstandingshares of Common Stock.
(1) See footnotes (2) and (3) to Principal Stockholders table.
(2) See footnotes (2) and (4) to Principal Stockholders table.
(3) Member of the Executive Committee.
(4) Member of the Audit Committee.
(5) Member of the Compensation Committee.
ELECTION OF DIRECTORS
Ten directors will be elected at the meeting to hold
office until the next Annual Meeting of Stockholders and until
their respective successors are elected and qualify. The By-
Laws of the Company permit the Board of Directors to fix the
number of directors at no less than three nor more than fifteen
persons and the Board of Directors has fixed the number of
directors at ten persons. The Proxies solicited by this proxy
statement may not be voted for a greater number of persons than
the number of nominees named. It is intended that these Proxies
will be voted for the following nominees, but the holders of
these Proxies reserve discretion to cast votes for individuals
other than the nominees for director named below in the event
of the unavailability of any such nominee. The Company has no
reason to believe that any of the nominees will become
unavailable for election. Set forth below are the names of the
nominees, the principal occupation of each, the year in which
first elected a director of the Company and certain other
information concerning each of the nominees.
Martin M. Pollak has been Chairman of the Board since
1981. He is a founder of NPDC (a holding company) and has been
Executive Vice President, Treasurer, and a director of NPDC
since 1959. Mr. Pollak is Chief Executive Officer, President
and a director of American Drug Company ("ADC"), a subsidiary
of NPDC which markets American-made generic pharmaceutical
products in Russia. He has been Chairman of the Board of
General Physics Corporation ("GPC"), a subsidiary of NPDC which
provides engineering, environmental training, and technical
support services to commercial nuclear and fossil power
utilities and to the United States Department of Defense and
Energy, since 1988, and a director since 1987; Chairman of the
Executive Committee of GTS Duratek, Inc. ("Duratek"), a company
which provides waste treatment solutions for radioactive,
hazardous, mixed, and other wastes, from 1985 to 1995 and a
director since 1982; Chairman of the Board and director of
SGLG, Inc.("SGLG"), a subsidiary of NPDC, which is a holding
company with a 19% interest in GSE Systems, Inc. ("GSE"), a
software simulator company, since 1991; and a director of GSE
since 1994. Mr. Pollak is Chairman of the Czech and Slovak
United States Economic Council, a trustee of the Board of
Trustees of the Worcester Foundation for Experimental Biology
and a director of Brandon Systems Corporation, a personnel
recruiting company, since 1986. Age 68.
Jerome I. Feldman has been the Chairman of the Executive
Committee of the Company since 1981. He has also been the
Treasurer of the Company since 1984. Mr. Feldman is founder of,
and since 1959 has been President, Chief Executive Officer, and
a director of, NPDC. Mr. Feldman is Chairman of the Board of
and a consultant to ADC. He has been Chairman of the Executive
Committee of GPC since 1988 and a director of GPC since 1987;
Chairman of the Board of Duratek from 1985 to 1995 and a
director since 1982; Chairman of the Executive Committee and a
Director of SGLG since 1991; and a director of GSE since 1994.
He has been a director of Hamilton Financial Services, Inc., a
financial service company, since 1983. He is a trustee of the
New England Colleges Fund and of Bard College. Age 67.
Samuel H. Ronel, Ph.D. has been Vice Chairman since
January 1996 and was President, Chief Executive Officer, and a
director of the Company from 1981 to January 1996. He was
responsible for the interferon research and development program
since its inception in 1979. Dr. Ronel joined NPDC in 1970 and
has served as the Vice President of Research and Development of
NPDC since 1976 and as the President of Hydro Med Sciences, a
division of NPDC, since 1976. Dr. Ronel served as President of
the Association of Biotechnology Companies, an international
organization representing United States and foreign
biotechnology firms, from 1986-1988 and has served as a member
of the Board of Directors until 1993. Dr. Ronel was elected to
the Board of Directors of the Biotechnology Industry Organization
in 1993. Age 60.
Lawrence M. Gordon has been Chief Executive Officer and a
director of the Company since January 1996, Vice President of
the Company from 1991 to 1996, General Counsel of the Company
from 1984 to January 1996, General Counsel of NPDC since 1986,
and Vice President of NPDC since 1991. He was Associate
General Counsel of NPDC from 1983 through 1986. Mr. Gordon has
been a director of GPC since 1994. Age 42.
Stanley G. Schutzbank, Ph.D. has been President of the
Company since January 1996, Executive Vice President of the
Company from 1981 to January 1996, and a director of the
Company since 1981 and has been associated with the interferon
research and development program since its inception in 1979.
He is involved with all facets of administration and planning
of the Company and has coordinated compliance with FDA
regulations governing manufacturing and clinical testing of
interferon, leading to the approval of ALFERON N Injection in
1989. Dr. Schutzbank joined NPDC in 1972 and has served as the
Corporate Director of Regulatory and Clinical Affairs of NPDC
since 1976 and as Executive Vice President of Hydro Med
Sciences since 1982. Dr. Schutzbank is a member of the
Regulatory Affairs Professionals Society and has served as
Chairman of the Regulatory Affairs Certification Board since
inception until 1994. Dr. Schutzbank received the 1991 Richard
E. Greco Regulatory Affairs Professional of the Year Award for
his leadership in developing the United States Regulatory
Affairs Certification Program. In September 1995, Dr.
Schutzbank was elected to serve as President-elect in 1996,
President in 1997, and Chairman of the Board in 1998 of the
Regulatory Affairs Professionals Society. Age 50.
Leon Botstein, Ph.D. has been a Director of the Company
since 1981 and has been President of Bard College, Annandale-on
Hudson, New York since 1975. Dr. Botstein was a Director of
Intelogic Trace, Inc., a computer maintenance and support
service company from 1985 to 1995. Age 49.
Scott N. Greenberg has been a director of the Company
since January 1996, Vice President, Chief Financial Officer,
and a director of NPDC since 1989, a director of GPC since
1987, a director of SGLG since 1991, and Chief Financial
Officer of ADC since 1994. Age 39.
Ogden R. Reid has been a director of the Company since
1982; a director of NPDC since 1979; a Director of GPC since
1988; and Vice Chairman of the Board of GPC since 1992. He was
Vice Chairman and a director of Duratek from 1991 to 1995. He
has also been a director of Royce Laboratories, Inc., a generic
drug company since 1995. Mr. Reid was Editor and Publisher of
the New York Herald Tribune and of its International Edition,
an United States Ambassador to Israel, a six term member of the
U.S. Congress and a New York State Environmental Commissioner.
Age 70.
Roald Hoffmann, Ph.D. has been a director of the Company
since 1991 and a director of NPDC since 1988. Dr. Hoffmann is a
John A. Newman Professor of Physical Science at Cornell
University since 1974 and is a member of the National Academy
of Sciences and the American Academy of Arts and Sciences. In
1981 he shared the Nobel Prize in Chemistry with Dr. Kenichi
Fukui. Age 58.
Sheldon L. Glashow, Ph.D. has been a director of the
Company since 1991. He has been a director of GPC since 1987, a
director of GSE since 1995, a director of CalCol, Inc., a
pharmaceutical company, since 1994, and was a director of
Duratek from 1985 to 1995. Dr. Glashow is the Higgins Professor
of Harvard University and was a Distinguished Professor and
Visiting Professor of Physics at Boston University. In 1971, he
received the Nobel Prize in Physics. Age 64.
Section 16 (a)
Section 16(a) of the Securities Exchange Act of 1934
requires the Company's officers and directors, and persons who
own more than 10% of a registered class of the Company's equity
securities, to file reports of ownership and changes in
ownership with the Commission and the National Association of
Securities Dealers, Inc. Officers, directors, and greater than
10% shareholders are required by SEC regulation to furnish the
Company with copies of all Section 16(a) forms they file.
Based solely on its review of copies of such forms
received by it and written representations from certain
reporting persons that no Forms 5 were required for those
persons, the Company believes that during the period January 1,
1995 to March 1, 1996, all filing requirements applicable to
its officers, directors, and greater than 10% beneficial owners
were complied with, except that Mei-June Liao, Ph.D. filed an
untimely report on Form 3.
Board of Directors
The Board of Directors has the responsibility for
establishing broad corporate policies and for the overall
performance of the Company, although it is not involved in day-
to-day operating details. Members of the Board are kept
informed of the Company's business by various reports and
documents sent to them as well as by operating and financial
reports made at Board and Committee meetings. The Board held
four meetings in 1995 at which all of the directors attended
meetings of the Board and Committees on which they served,
except for Dr. Leon Botstein, who attended fewer than 75% of
the meetings. Directors' Fees and Other Compensation
Directors who are not employees of the Company received a
fee of $1,000 for each meeting of the Board of Directors
attended, but do not receive any additional compensation for
service on committees of the Board of Directors. Officers of
the Company do not receive additional compensation for serving
as directors.
Executive Committee
The Executive Committee, consisting of Martin M. Pollak,
Jerome I. Feldman and Ogden R. Reid, meets on call and has
authority to act on most matters during the intervals between
Board meetings. The committee formally acted five times in 1995
through unanimous written consent.
Audit Committee
The Audit Committee reviews the internal controls of the
Company and the objectivity of its financial reporting. It
meets with appropriate Company financial personnel and the
Company's independent certified public accountants in
connection with these reviews. This committee recommends to the
Board the appointment of the independent certified public
accountants, to serve as auditors for the following year in
examining the books and records of the Company. This Committee
met once in 1995. The Audit Committee currently consists of
Ogden R. Reid, Roald Hoffmann and Sheldon L. Glashow.
Compensation Committee
The Compensation Committee, consisting of Martin M. Pollak
and Jerome I. Feldman, meets on call and has the authority to
act with respect to the compensation of officers and employees
of the Company. The Committee met once in 1995.
EXECUTIVE COMPENSATION
The following table presents the compensation paid by the Company to its
then President and Chief Executive Officer and the Company's most highly
compensated executive officers for 1995.
SUMMARY COMPENSATION TABLE
<TABLE>
Annual Compensation Long Term Compensation
Awards
Annual All Other
Compen- Stock Compen-
Salary Bonus sation Options sation
Name and Principal Position Year ($) ($) ($) (#) ($)(1)
<S> <C> <C> <C> <C> <C> <C>
Samuel H. Ronel, Ph.D.(2) 1995 146,563 -0- -0- 75,000 3,500
Vice Chairman of the Board 1994 133,710 30,000 -0- 230,500 3,696
1993 135,339 -0- -0- -0- 3,598
Stanley G. Schutzbank,
Ph.D.(2) 1995 188,818 -0- -0- 125,000 3,500
President 1994 143,250 50,000 -0- 230,500 3,696
1993 137,100 -0- -0- -0- 3,548
Drew Stoudt(2) 1995 114,018 -0- -0- 25,000 2,417
Vice President, Regulatory 1994 88,354 20,359 -0- 98,000 2,329
Affairs and Quality 1993 88,415 -0- -0- -0- 2,508
Mei-June Liao. Ph.D. 1995 108,546 -0- -0- 5,000 2,605
Vice President, Research and 1994 92,061 -0- -0- 15,500 2,209
Development 1993 88,579 -0- -0- -0- 2,126
__________
(1) Matching contributions by the Company to the 401(k) Savings Plan, which
became effective on March 1, 1992.
(2) Dr. Ronel has been Vice Chairman of the Company since January 1996 and was
President and Chief Executive Officer until January 1996. Dr. Schutzbank has been
President of the Company since January 1996 and was Executive Vice President of the
Company until January 1996. Drs. Ronel and Schutzbank and Mr. Stoudt devote a portion
of their time to the business of NPDC. For the year ended December 31, 1995, 71% of Dr.
Ronel's and 90% of Dr. Schutzbank's and Mr. Stoudt's time was allocated and
charged to the Company. For the years ended December 31, 1994 and 1993, the
percentages allocated were 75% and 80%, respectively for Dr. Schutzbank and Mr.
Stoudt and 71% and 75% for Dr. Ronel for the years ended December 31, 1994 and
1993, respectively
</TABLE>
Option Grants in 1995
<TABLE>
The following table sets forth certain information relating to options granted
in 1995 to purchase shares of Common Stock of the Company.
Potential
Realizable
Value at Assumed
Annual Rates of
% of Total Stock Price
Options Exercise Appreciation for
Options Granted to or Base Option Term(2)
Granted Employees in Price Expiration
Name (#)(1) 1995 ($/Sh) Date 5% 10%
<S> <C> <C> <C> <C> <C> <C>
Samuel H. Ronel, Ph.D 25,000 4.4% $1.56 12/14/2000 $10,792 $23,848
50,000 8.8% 2.10 10/02/2000 29,010 64,104
Stanley G. Schutzbank, 25,000 4.4% 1.56 12/14/2000 10,792 23,848
Ph.D. 100,000 17.5% 2.10 10/02/2000 58,019 128,207
Drew Stoudt 25,000 4.4% 2.10 10/02/2000 14,505 32,052
Mei-June Liao, Ph.D. 5,000 .9% 2.10 10/02/2000 2,901 6,410
__________________
The 5% and 10% assumed rates of stock appreciation used to calculate
potential gains to optionees are mandated by the rules of the Commission.
(1) Options were granted at 100% of fair market value on the date of the
grant.
(2) Represents gain that would be realized assuming the options were held
for the entire five year term and the stock price increased at compounded rates
of 5% and 10% from a base price of $1.56 and $2.10 per share, respectively. The
potential realizable values per option or per share under such 5% and 10% rates
of stock appreciation would be $.43 and $.95 from a base price of $1.56 and $.58
and $1.28 from a base price of $2.10, respectively. These amounts represent
assumed rates of appreciations only. Actual gain, if any, on stock exercises and
Common Stock holdings will be dependent on overall market conditions and
on the future performance of the Company and its Common Stock. There can
be no assurance that the amount reflected in this table will be achieved.
</TABLE>
The following table sets forth information for the named executive officers
regarding the exercise of options during 1995 and unexercised options held at
the end of 1995.
AGGREGATED OPTION EXERCISES AT DECEMBER 31, 1995
AND YEAR-END OPTION VALUES
<TABLE>
Shares Number of Unexercised Value of Unexercised
Acquired Options at December 31, In-The-Money Options at
on Value 1995($)(#) December 31,1995($)(1)
Exercise(#) Realized($) Exercisable/Unexercisable Exercisable/Unexercisable
<S> <C> <C> <C> <C> <C> <C>
Samuel H.
Ronel, Ph.D. -0- -0- 310,500 70,000 $1,563 $6,250
Stanley G.
Schutzbank, Ph.D -0- -0- 320,500 110,000 $1,563 $6,250
Drew Stoudt -0- -0- 98,000 25,000 -0- -0-
Mei-June
Liao, Ph.D. -0- -0- 18,000 22,000 -0- -0-
___________
(1) Calculated based on the closing price of the Common Stock ($1.875) as reported by NASDAQ on December 29, 1995.
</TABLE>
Board Compensation Committee Report on Executive Compensation
The Compensation Committee is responsible for administering
the compensation program for the executive officers of the
Company. The Compensation Committee is currently comprised of
Messrs. Feldman and Pollak.
The Compensation Committee's executive compensation
policies are designed to enhance the financial performance of
the Company and thus stockholder value, by significantly
aligning the financial interest of the key executives with those
of stockholders. An executive's salary is determined by an
assessment of the significance of the executive's contribution
to the operations of the Company.
The executive compensation program is reviewed in total
considering all of the component parts: base salary, annual
bonus, and long-term incentive compensation in the form of stock
options and the 401(K) Savings Plan. The compensation components
consist generally of lower base salaries together with higher
performance compensation through bonuses and stock options.
In evaluating the reasonableness of compensation paid to
the Company's executive officers, the Committee takes into
account how compensation compares to compensation paid by
competing companies as well as the Company's performance and the
individual contribution of each executive officer.
The Compensation Committee has from time to time
recommended to the Stock Option Committee the grant of stock
options to the Company's senior management, including the named
executive officers, whose performance had a significant effect
on the success of the Company. These option grants to management
reinforce the Compensation Committee's philosophy that
management compensation should be closely linked with
stockholder value.
The Company has certain broad-based employee benefit plans
in which all employees, including the named executive officers,
are permitted to participate on the same terms and conditions
relating to eligibility and subject to the same limitations on
amounts that may be contributed. In 1995, the Company also made
a matching contribution to the 401(k) Savings Plan for those
participants.
DR. RONEL'S 1995 COMPENSATION. The Compensation Committee
discussed the appropriate compensation philosophy and
compensation components for Dr. Ronel.
Included in this review was information pertaining to
substantial progress in the development of the Company's
international and domestic marketing and distribution
opportunities with a number of independent distributors and
multinational pharmaceutical companies. Dr. Ronel was also
integrally involved in the successful consummation of the
financing transaction with Sunrise Securities Corp. pursuant to
which the Company completed the sale of 12,000,000 shares of
Common Stock for an aggregate of $14,400,000 (the
"August/September Offering").
MARTIN M. POLLAK JEROME I. FELDMAN
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PERFORMANCE GRAPH
The following graph compares the performance of the
Company for the period 1990 through 1995 with the performance
of the Nasdaq Market Index and the Dow Jones Industry Group BTC
Biotechnology. The graph illustrates and compares the 5 year
cumulative total return of a $100 investment on December 31,
1990 in Interferon Common Stock, NASDAQ Market Index and Dow
Jones Industry Group BTC-Biotechnology. The values are as of
December 31 of specified year assuming that dividends are
reinvested.
COMPANY 1990 1991 1992 1993 1994 1995
INTERFERON
SCIENCES, INC. 100 218.18 78.79 113.64 32.58 45.45
INDUSTRY INDEX 100 226.21 191.92 177.95 159.02 277.91
BROAD MARKET 100 128.38 129.64 155.50 163.26 211.77
CERTAIN TRANSACTIONS
Agreements with NPDC
Transfer Agreement As of January 1, 1981, NPDC entered into
an agreement (the "Transfer Agreement") with the Company
pursuant to which NPDC (i) licensed to the Company in
perpetuity all of its right, title, and interest in and to
certain intellectual property and technology rights (the
"Intangible Assets") relating to its programs in human
leukocyte interferon and recombinant DNA and hybridoma
technology, and (ii) transferred to the Company its rights
under certain consulting, supply, and research agreements (the
"Agreements"). In consideration of the license and transfer of
the Intangible Assets and the Agreements, the Transfer
Agreement provides that the Company will pay to NPDC a royalty
of $1,000,000. Such amount is payable if and when the Company
generates net income before income taxes, and is limited to 25%
of such net income before taxes per year until the amount is
paid in full.
Management Agreement As of January 1, 1981, NPDC entered
into a management agreement (the "Management Agreement") with
the Company pursuant to which certain legal, financial and
administrative services have been provided by employees of
NPDC. The fee for such services is $120,000 per annum. In
addition, the Management Agreement provided that certain other
services provided by NPDC's employees, such as maintenance,
shipping and receiving, purchasing, secretarial work,
information retrieval, and regulatory compliance, would be paid
for by the Company on an "as used" basis at NPDC's approximate
cost. During 1995, NPDC charged $1,121,145 to the Company for
such other services. Commencing January 1, 1996, the Management
Agreement was amended to provide that such other services will
be provided by employees of the Company to NPDC on an "as used"
basis at the Company's approximate cost. The Company is also
covered under certain of NPDC's insurance policies and pays its
proportionate share of insurance costs.
Lease Agreement The Company owns two free standing
buildings aggregating approximately 44,000 square feet located
in New Brunswick, New Jersey. The Company and NPDC have entered
into an agreement for the sharing of the office, warehouse and
laboratory facility. The Company occupies approximately 25,000
square feet, shares approximately 9,000 square feet with NPDC,
and leases approximately 10,000 square feet of space to NPDC at
such location. During 1995, NPDC paid the Company as rent
NPDC's proportionate share of such occupancy costs (based on
both square feet occupied and number of personnel), which
amounted to $181,992.
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While the above-described agreements were negotiated with
a principal stockholder of the Company which was then its
parent, the Company nevertheless believes that such agreements
are equivalent economically to arms-length transactions with a
third party.
Agreements with David Blech and Related Parties
On May 28, 1993, David Blech, the Chief Executive Officer,
sole shareholder and a director of D. Blech & Company,
Incorporated ("DBC"), and the Company entered into a Purchase
Agreement (the "Purchase Agreement"), pursuant to which Mr.
Blech or his designees purchased for $4.00 per unit, an
aggregate of 2,500,000 units ("Units"), each Unit consisting of
two shares of Common Stock, one Class A Warrant (the "Class A
Warrants") to purchase one share of Common Stock at an exercise
price of $3.25 per share, and one Class B Warrant (the "Class B
Warrant") to purchase one share of Common Stock at an exercise
price of $5.00 per share. The Class A Warrants and the Class B
Warrants expire on August 31, 2000. The following acquisitions
were made in installments pursuant to the Purchase Agreement:
(i) two charitable remainder trusts, of which Mr. Blech is the
income beneficiary but not the trustee, purchased an aggregate
of 1,050,000 Units, (ii) Mr. Blech purchased 1,187,500 Units,
(iii) Mark S. Germain, a Managing Director of DBC, purchased
250,000 Units, and (iv) an unaffiliated purchaser purchased
12,500 Units. The purchasers have certain demand registration
rights as to the securities acquired by them under the Purchase
Agreement. Under the Purchase Agreement, Mr. Blech had the
right (which was never exercised) to cause the Company to
nominate two designees of Mr. Blech (the "Blech Designees") to
the Board of Directors of the Company as long as Mr. Blech and
the other purchasers under the Purchase Agreement beneficially
owned, in the aggregate, at least 2,000,000 shares of Common
Stock. In 1993, the Company paid DBC a $500,000 fee for its
services in connection with the Purchase Agreement.
Pursuant to the Purchase Agreement, a 10-year Voting
Agreement (the "Voting Agreement") among David Blech, NPDC,
FSGI, and MXL became effective as of May 28, 1993 pursuant to
which NPDC, FSGI and MXL agreed to (a) vote all of their shares
of Common Stock for the election of the Blech Nominees as
directors of the Company unless Mr. Blech and the other
purchasers under the Purchase Agreement dispose of more than
1,000,000 shares of Common Stock and (b) restrict transfer of
the Common Stock held by them for one year, subject to certain
exceptions. Pursuant to the Voting Agreement, Mr. Blech and
the other purchasers under the Purchase Agreement agreed to
vote for the election of two nominees of NPDC as directors of
the Company unless NPDC, MXL and FSGI disposed of any shares of
Common Stock (other than up to 2,000,000 shares of Common Stock
disposed of in exchange for debt obligations of NPDC, MXL or
FSGI). Concurrently with the execution of the Purchase
Agreement, the Company entered into a consulting agreement with
DBC under which the Company agreed to pay $100,000 per year,
payable monthly, to DBC for advisory services with respect to the
Company's field of interest and business, strategic and commercial
matters related to the biotechnology industry. The term of the
Consulting Agreement was for one year commencing on June 1, 1993,
and was renewed on the same terms for an additional one-year period
which expired on June 1, 1995. David Blech and the Company were
unaffiliated prior to the transactions described above, which were
negotiated on an arm's-length basis.
On May 13, 1994, the Company filed a registration
statement with the Securities and Exchange Commission, which
statement was amended on July 1, 1994 and was subsequently
amended again on August 10, 1994, covering a proposed public
offering of 2,000,000 shares of the Company's Common Stock to
be managed by DBC as underwriter. On September 22, 1994, DBC
could not meet certain minimum capital requirements and was
forced to discontinue its operations. Consequently, the
Company had to cancel the proposed public offering of Common
Stock.
On December 6, 1994, the Company entered into a Purchase
and Exchange Agreement with Mr. Blech and certain other parties
pursuant to which Sentinel Charitable Remainder Trust, a trust
of which Mr. Blech is the income beneficiary, but not the
trustee, purchased 430,000 shares of Common Stock for $1 per
share or an aggregate purchase price of $430,000. The purchase
price was negotiated on an arms-length basis and the shares
were sold at a discount to market value as a result of the
Company"s need for additional working capital. In addition,
pursuant to such agreement, David Blech and certain other
parties agreed to exchange 2,250,000 Class A Warrants and
2,250,000 Class B Warrants for 900,000 shares of Common Stock.
The issuance and exchange of the shares of Common Stock
pursuant to the Purchase and Exchange Agreement were completed
in April 1995. In connection with and in consideration for the
Purchase and Exchange Agreement described above, Mr. Blech and
certain other parties and the Company entered into an agreement
(i) terminating and canceling the Voting Agreement discussed
above, (ii) deleting in its entirety a provision of the
Purchase Agreement with respect to conflicting "piggyback"
registration rights, and (iii) deleting in its entirety the
provision of the Purchase Agreement with respect to Board
representation and nomination rights of the Blech Designees.
Other Transactions
On May 3, 1995, NPDC, BIG, and Edward Blech Trust
committed to loan the Company $600,000, $220,000 and $100,000,
respectively. All of such loans were made by July 6, 1995.
Such loans bore interest at prime plus 2% and matured on the
earlier of (1) the first date that the Company receives gross
proceeds of at least $7,500,000 from a public offering (the
"Public Offering") of Common Stock and (ii) November 2, 1995.
If the indebtedness matured as a result of the Public Offering,
repayment of principal of the indebtedness was permitted to be
made, at the option of the Company, by delivery of shares of
Common Stock valued at the public offering price per share in
the Public Offering. On July 17, 1995, NPDC and BIG loaned the
Company an additional $500,000 and $150,000, respectively, and
between July 17 and August 22, 1995 NPDC loaned the Company an
additional $300,000 on the same terms as the terms of the
earlier loans except that the Company did not have the option
to repay the principal of such additional indebtedness by
delivery of shares of Common Stock. All such indebtedness was
repaid out of the proceeds of the August/September Offering.
NPDC, BIG, and Edward Blech Trust used a portion of such funds
to purchase 500,000, 183,334 and 83,334 shares of Common Stock
respectively, in the August/September Offering.
The Company has forgiven a $150,000 loan to Lawrence M.
Gordon, Chief Executive Officer and a director of the Company,
and also has forgiven $18,000 of accrued interest on such loan.
Such loan had been due July 9, 1997 and bore interest at a rate
of 6% per annum.
STOCKHOLDER PROPOSALS
Stockholders may present proposals for inclusion in the
Company's 1997 proxy statement provided they are received by
the Company no later than January 13, 1997, and are otherwise
in compliance with applicable Securities and Exchange
Commission regulations.
GENERAL
So far as is now known, there is no business other than
that described above to be presented for action by the
stockholders at the meeting, but it is intended that the
proxies will be voted upon any other matters and proposals that
may legally come before the meeting and any adjournments
thereof in accordance with the discretion of the persons named
therein.
COST OF SOLICITATION
The cost of solicitation of proxies will be borne by the
Company. It is expected that the solicitations will be made
primarily by mail, but regular employees or representatives of
the Company may also solicit proxies by telephone or telegraph
and in person, and arrange for brokerage houses and other
custodians, nominees and fiduciaries to send proxy material to
their principals at the expense of the Company.
Donald W. Anderson
Secretary
INTERFERON SCIENCES, INC.
COMMON STOCK Annual Meeting of Stockholders PROXY
To Be Held June 19, 1996
This proxy is solicited on behalf of the Board of Directors
Revoking any such prior appointment, the undersigned, a
stockholder of Interferon Sciences, Inc. hereby appoints
Jerome I. Feldman and Martin M. Pollak, and each of them,
attorneys and agents of the undersigned, with full power of
substitution, to vote all shares of the Common Stock of the
undersigned in said Company at the Annual Meeting of
Stockholders of said Company to be held at the Brunswick
Hilton and Towers, 3 Tower Center Boulevard, East Brunswick,
New Jersey on June 19, 1996, at 1:30 P.M. Eastern Standard
Daylight Savings Time and at any adjournments thereof, as
fully and effectually as the undersigned could do if personally
present and voting, hereby approving, ratifying and confirming
all that said attorneys and agents or their substitutes may
lawfully do in place of the undersigned as indicated below.
This proxy when properly executed will be voted as directed.
If no direction is indicated, this proxy will be voted for
proposals (1) (2) and (3).
1. Election of Directors: Martin M. Pollak, Jerome I.
Feldman, Samuel H. Ronel, Lawrence M. Gordon, Stanley G. Schutzbank,
Leon Botstein, Scott N. Greenberg, Ogden R. Reid, Roald Hoffmann and
Sheldon L. Glashow.
For All
(Except
Nominees
Written
(INSTRUCTION: To withhold For Withhold Below)
authority to vote for any
individual nominee, write
that nominee's name in the
space provided below)
2. Upon any other matters which may properly come before the
meeting or any adjournments thereof.
Please sign exactly as name appear below.
Dated , 1996
Signature
Signature if held jointly
Please mark, sign, date and
return the proxy card promptly
using the enclosed envelope.
When shares are held by joint
tenants both should sign. When
signing as attorney, as executor,
administrator, trustee or an,
please give full title as such.
corporation, please sign in full
corporate name by President
or other authorized officer. If
a partnership please sign in
partnership name by authorized
person.
