September 17, 1996
Dear Shareholder:
The Annual Meeting of Shareholders of Aphton Corporation will be held on
Tuesday, October 15, 1996, at 9:00 A.M. at the Hyatt Regency Miami, located at
400 S.E. Second Avenue, Miami, Florida 33131.
The Notice of Annual Meeting and the Proxy Statement are enclosed herewith.
Shareholders will be asked to elect four directors for the ensuing year. The
four current directors, Philip C. Gevas, Nicholas J. Stathis, Robert S. Basso
and William A. Hasler, are nominees for election. Your Board of Directors
recommends that you vote "for" the proposal to elect them.
Please review the Proxy Statement and at your earliest convenience sign,
date and return the enclosed proxy card so that your shares will be represented
at the meeting. A prepaid return envelope is enclosed for this purpose.
Yours truly,
- ----/S/-------
Philip C. Gevas
Chairman, President and Chief Executive Officer
PCG/ma
encl.
September 17, 1996
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
October 15, 1996
The Annual Meeting of Shareholders of Aphton Corporation, a California
corporation, will be held at Hyatt Regency Miami, located at 400 S.E. Second
Avenue, Miami, Florida 33131, on Tuesday, October 15, 1996, at 9:00 A.M. for the
following purposes:
(1) To elect directors to hold office until the next Annual
Meeting of Shareholders and thereafter until their successors
are duly elected and qualified;
(2) To transact such other business as may properly come before
the meeting.
On any business day from October 1, 1996 until October 14, 1996, during ordinary
business hours, shareholders may examine the list of shareholders for any
purpose germane to the meeting at the Office of the Company's attorneys, White &
Case, First Union Financial Center, 200 South Biscayne Boulevard, Miami, Florida
33131.
The Board of Directors has fixed the close of business on Thursday, September 5,
1996, as the record date for determination of shareholders entitled to be
notified and to vote at the Annual Meeting.
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ANNUAL MEETING. TO ENSURE
YOUR REPRESENTATION AT THE MEETING, THE BOARD REQUESTS THAT YOU SIGN, DATE AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING SELF-ADDRESSED, STAMPED ENVELOPE.
YOUR PROXY WILL NOT BE USED IF YOU ARE PRESENT AT THE MEETING AND WISH TO VOTE
YOUR SHARES PERSONALLY.
By Order of the Board of Directors
- ------/S/------
Philip C. Gevas
Chairman, President and
Chief Executive Officer
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
OF APHTON CORPORATION
October 15, 1996
---------------------
INTRODUCTION
This Proxy Statement is being mailed on or about September 17, 1996, to
shareholders of Aphton Corporation (the "Company") in connection with the
solicitation of Proxies by the Company's Board of Directors for use at the
Company's Annual Meeting of Shareholders to be held on October 15, 1996, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting of
Shareholders. The accompanying proxy, and all expenses incident to the
solicitation, are to be paid by the Company.
The persons named in the accompanying proxy have advised the Company that they
intend to vote the proxies received by them in their discretion for as many
director nominees as the votes represented by such proxies are entitled to elect
(see "Election of Directors"). Any shareholder may revoke his or her proxy at
any time prior to its use by filing with the Secretary of the Company a written
notice of revocation or a duly executed proxy bearing a later date.
Only shareholders of record at the close of business on Thursday, September 5,
1996, will be entitled to notice of and to vote at the meeting or any
adjournments thereof. At such record date, the Company had outstanding and
entitled to vote 12,913,149 shares of common stock. Each share of stock is
entitled to one vote on all matters other than the election of directors. In
connection with the election of directors, each shareholder is entitled to
cumulate his or her votes. Reference is made to "Election of Directors."
ELECTION OF DIRECTORS
In voting for directors of the Company, each shareholder has the right to
cumulate his or her votes and give one candidate a number of votes equal to the
number of directors to be elected, multiplied by the number of votes to which
his or her shares are entitled, or to distribute his or her votes on the same
principle among as many candidates as he or she shall see fit. The candidates
receiving the highest number of votes, up to the number of directors to be
elected, shall be elected. For a shareholder to exercise cumulative voting
rights, such shareholder must give notice of his or her intention to cumulate
his or her votes at the meeting prior to the voting.
The Company's Board of Directors presently consists of four directors. The
persons who are elected directors will hold office until the next Annual Meeting
of Shareholders and thereafter until their successors are duly elected, and
qualified.
Set forth below are the names and principal occupations of those persons who are
nominees for election as directors, all of whom are presently directors of the
Company, and the respective number of shares of voting stock of the Company
beneficially owned, directly or indirectly, by them and by all directors and
officers as a group as of July 31, 1996, according to information furnished to
the Company by such persons.
Shares
Beneficially Percent
Name and Principal Year First Owned as of of
Occupation Age elected July 31, 1996 class
---------- --- ------ -------------- -----------
Philip C. Gevas 63 1981 1,979,050(1) 15.3
Chairman, President and
Chief Executive Officer
Aphton Corporation
Robert S. Basso, President 51 1988 30,166 (2)
Correspondent Services
Corporation
William A. Hasler, Dean of the 54 1991 35,000 (2)
Graduate and Undergraduate
Schools of Business, University
of California, Berkeley
Nicholas John Stathis 72 1994 48,466 (2)
Attorney
All Directors and Officers
as a group (6 persons) 2,202,882 17.1
- ----------------------------
(1) Includes 120,000 shares in a trust of which Mr. Gevas is an uncompensated
trustee with no pecuniary interest in the trust assets.
(2) Less than 1% of total outstanding shares.
Mr. Gevas has served the Company in his current capacity and has been a
director of the Company since its inception. Mr. Basso has been a director of
the Company since February, 1988. He has been employed in his present capacities
with Correspondent Services Corporation since January, 1990. Prior thereto, for
more than ten years, Mr. Basso was employed by Merrill Lynch as President of a
wholly-owned subsidiary and in other executive management capacities. William A.
Hasler has been a director of the Company since October, 1991. Mr. Hasler is the
Dean of both the Graduate and Undergraduate Schools of Business at the
University of California, Berkeley. Dean Hasler was formerly Vice Chairman of
KPMG Peat Marwick, responsible for management consulting. Dean Hasler is also a
governor of the Pacific Stock Exchange and a director of The Gap, Inc., Walker
Interactive Systems, Tenera, Inc., and TCSI. Nicholas John Stathis, Esq. has
been a director of the Company since January, 1994. Mr. Stathis is retired from
the law firm of White & Case, where he was of counsel from 1989 to 1993. Prior
to that he was partner, Botein, Hays & Sklar, from 1984 to 1989.
Directors do not receive any fees for services on the Board. Board members are
reimbursed for their expenses for each meeting attended.
If for any reason one or more of the nominees named above should not be
available as a candidate for director, an event that the Board of Directors does
not anticipate, the persons named in the enclosed proxy will vote for such other
candidate or candidates as may be nominated by the Board and discretionary
authority to do so is included in the Proxy.
Committee Meetings of the Board of Directors
The Company's Board of Directors held four general meetings and three committee
meetings during fiscal 1996. The Board of Directors has two standing committees:
an Audit Committee, consisting of Messrs. Hasler (Chairman), Basso and Gevas
(non-voting); and a Compensation Committee, consisting of Messrs. Basso
(Chairman) and Hasler. The Audit Committee reviews the financial statements of
the Company, reviews the independent accountants' scope of engagement,
performance and fees and reviews the adequacy of the Company's internal
financial control procedures. This Committee held two meetings during fiscal
1996. The Compensation Committee reviews and recommends remuneration
arrangements for various key executives. This Committee held one meeting during
fiscal 1996. Each Committee member attended all of the meetings of the Committee
on which he was a member during fiscal 1996.
The Compensation Committee Report
The Compensation Committee of the Board approves compensation objectives, policy
and compensation for the Company's executive officers, including the individuals
named in the Summary Compensation table below.
The Compensation Committee is comprised of Messrs. Basso and Hasler who are
independent outside directors.
The Compensation Committee seeks to provide rewards which are closely linked to
Company and individual performance and ensure that compensation is at a level
which enables the Company to attract and retain the high quality employees it
needs. In addition, the committee considers performance factors particular to
each executive officer, such as the performance where such officer had
responsibility and individual managerial accomplishments.
Compensation of the Chief Executive Officer
The Compensation Committee believes that Mr. Gevas' total compensation as Chief
Executive Officer reflects his performance in meeting the goals established by
the Committee.
In determining Mr. Gevas' total compensation, the Compensation Committee
considered the Company's overall performance and Mr. Gevas' individual
performance by the measures described above for determining executive officers'
compensation. It also considered the compensation and company performance of the
chief executive officers of other leading companies, as well as incentives for
future performance.
The Company's performance as measured in the context of the
biotechnology/biopharmaceutical industry and Mr. Gevas' contributions thereto,
both management and scientific, have met the Company objectives. This
performance is illustrated, in part, by the shareholder value as shown by the
following stock price performance graph (as required by the SEC). The graph
begins April 30, 1991. The graph compares the Company's stock price appreciation
with the stock price appreciation of both the Nasdaq Composite Index and a peer
group of biotechnology/ biopharmaceutical companies which, like Aphton, had an
initial public offering (IPO) during 1991.
The foregoing report has been furnished by the Compensation Committee
consisting of Messrs. Hasler and Basso (Chairman).
Stock Price Performance Graph
The following graph illustrates a comparison of the cumulative total stockholder
return (change in stock price) of Aphton's Common Stock with the CRSP Total
Return Index for the Nasdaq Stock Market (the Nasdaq Composite Index) and a Peer
Group composed of other biotechnology/biopharmaceutical companies which had IPOs
during the same year as Aphton (and are still publicly traded). The following
graph commences as of April 30,1991, with a $100 investment in the Company, the
Nasdaq index and the Peer Group (whose composition reflects the average of the
share values as reported on the dates shown). Graphic comparisons are required
by the Securities and Exchange Commission and are not intended to forecast or be
indicative of possible future performances of the Company's Common Stock.
Aphton believes that the best date for Aphton shareholders to begin comparisons
is the first date of trading in the Company's stock. Aphton also believes that
the best peer group for graphic comparisons is the biotechnology/
biopharmaceutical companies which, like Aphton, had IPOs during 1991 (the
initial date of investments of $100). However, Aphton is not aware of any such
published "third-party" index or listing; thus, the Peer Group names and graph
was prepared by the Company based on data provided to Aphton by Nasdaq. The Peer
Group is composed of Cygnus Therapeutic Systems, Regeneron Pharmaceuticals,
Cephalon Inc., Medimmune Inc., Isis, ImmuLogic Pharmaceutical, ICOS Corp.,
Cambridge NeuroScience, Genelabs Technologies, COR Therapeutics, Curative
Technologies, Alkermes, Osteotech, Vertex, Genetic Therapy, Somatogen Inc.,
SyStemix Inc., Biomatrix, IDEC Pharmaceuticals, Sepracor Inc., CellPro Inc.,
Anergen Inc., Alteon Inc., Athena Neuroscience, ImClone Systems, Cytel, Magainin
Pharmaceuticals, DNX Corp. and Genta. Other biotechnology/biopharmaceutical
companies which had IPOs in 1991 are not included here if they no longer exist
or are no longer publicly traded.
4/30/91 4/30/92 4/30/93 4/29/94 4/28/95 4/30/96
Aphton Corporation 100 237 196 252 193 285
All US & Foreign on NASDAQ 100 121 140 156 178 259
Biotech Peer Group 100 86 65 54 48 96
Executive Compensation
The following table sets forth, for each of the last five fiscal years, the
annual compensation paid by the Company, together with long-term and other
compensation, for the Chief Executive Officer and the other highest compensated
Executive Officers of the Company in all capacities in which they served.
<TABLE>
Summary Compensation Table
Annual Compensation Long-Term Compensation
---------------------------- --------------------------------------
Awards Payouts
--------------------- -----------
Other Long-Term
Fiscal Annual Restricted Incentive All Other
Name, Age and Year Compensation Stock Options/ Plan Compen-
Principal Position End Salary($) Bonus($) ($) Award(s)($) SARs(#) Payouts($) sation ($)
--- --------- -------- --- ----------- ------- ---------- ----------
- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Philip C. Gevas (63) 1996 200,000 200,000* - - - - -
Chief Executive 1995 200,000 200,000 - - - - -
Officer, President 1994 180,000 200,000 - - 400,000 - -
and Chief Financial 1993 172,500 120,000 - - - - -
Officer 1992 150,000 60,000 - - 200,000 - -
Dov Michaeli, M.D., 1996 150,000 60,000* - - - - -
Ph.D. (61) Senior 1995 150,000 60,000 - - - - -
Vice President, 1994 110,000 60,000 - - 150,000 - -
Director of Medical 1993 110,000 30,000 - - - - -
Science 1992 103,334 8,333 - - 120,000 - -
-
Richard Ascione, 1996 125,000 25,000 - - - - -
Ph.D.(60) Vice 1995 112,500 25,000 - - - - -
President, Director 1994 - - - - 50,000 - -
of Laboratory of
Molecular Medicine
Paul Broome, MB., 1996 132,300 26,450 - - - - -
Ch.B., MFPM (46) 1995 112,500 25,000 - - - - -
Vice President and 1994 - - - - 50,000 - -
Medical Director,
Clinical Trials and
Regulatory Affairs
<FN>
*Accrued but unpaid at year end.
</FN>
</TABLE>
Option Grants in Last Fiscal Year
No option or stock appreciation rights were granted during the fiscal year ended
April 30, 1996.
Option Exercises and Fiscal Year-End Values
The following table sets forth information concerning the unexercised options
held as of the end of the fiscal year. No officers exercised options during the
fiscal year.
<TABLE>
Option/SAR Exercises and Year-End Value Table
Aggregated Option/SAR Exercises in Last Fiscal Year, and FY-End Option/SAR Value
Value of Unexercised
Number of Unexercised In-the-Money Options/
Options/ SARs at FY-End($)(1)
SARs at FY-End(#)
------------------------------
Shares
Acquired
on Value
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ----------------------
<S> <C> <C> <C> <C> <C> <C>
Philip C. Gevas - - 600,000 - 2,370,000 -
- ----------------------
Dov Michaeli, M.D.,
Ph.D. - - 370,000 - 3,122,500 -
- ----------------------
Richard Ascione, - - - 50,000 - 262,500
Ph.D.
- ----------------------
Paul Broome, MB.,
Ch.B., MFPM - - - 50,000 - 262,500
<FN>
(1) Market value of shares covered by in-the-money options on April 30, 1996,
less option exercise price. Options are in-the-money if the market value
of the shares covered thereby is greater than the option exercise price.
The market value is the closing price at April 30, 1996, as quoted by
Nasdaq.
</FN>
</TABLE>
Long-Term Incentive Plans - Awards in Fiscal Year
No long-term incentive plan awards were granted during the fiscal year ended
1996.
Principal Shareholders
To the Company's knowledge, except as hereinafter described, no single
shareholder of record owned or beneficially owned, as of July 31, 1996, more
than 5% of the Company's common stock. As of July 31, 1996, Cede & Co., a
nominee of securities depositories for various segments of the financial
industry, held approximately 5,300,000 shares, representing approximately 41% of
the Company's outstanding common stock, none of which was owned beneficially by
Cede & Co. The Company believes that each of the entities or individuals named
below beneficially owns 5% or more of the Company's common stock.
Name and Address of Number of Shares % of Common Stock
Beneficial Owner
Eliezer Benjamini, Ph.D. 1,473,500 11.4
26 Harter Avenue
P. O. Box 1049
Woodland, CA 95776
Philip C. Gevas 1,979,050 15.3
26 Harter Avenue (1)
P. O. Box 1049
Woodland, CA 95776
Richard L. Littenberg, M.D. 1,446,250 11.2
26 Harter Avenue
P. O. Box 1049
Woodland, CA 95776
Robert J. Scibienski, Ph.D. 1,613,800 12.5
26 Harter Avenue
P. O. Box 1049
Woodland, CA 95776
All Executive Officers and 2,202,882 17.1
Directors as a group (6 persons)
- ----------------------------
(1) Includes 120,000 shares in a trust of which Mr. Gevas is an uncompensated
trustee with no pecuniary interest in the trust assets.
Shareholder Proposals
If a shareholder intends to have a proposal presented at the next Annual Meeting
of Shareholders, tentatively scheduled for the fourth quarter of 1997, such a
proposal must be received by the Company at its principal executive offices
prior to July 31, 1997.
Miscellaneous
Coopers & Lybrand has been the Company's independent accountants for a number of
years and has been selected to continue in such capacity for the current fiscal
year. It is anticipated that a representative from Coopers & Lybrand will be
available to answer questions raised at the Annual Meeting of Shareholders and
will be afforded the opportunity to make any statements the representative may
desire to make.
The Board of Directors knows of no other matters that are likely to come before
the meeting. If any such matters should properly come before the meeting,
however, it is intended that the persons named in the accompanying form of proxy
will vote such proxy in accordance with their best judgment on such matters.
By Order of the Board of Directors
- ------/S/------
Philip C. Gevas
Chairman and Secretary
