September 23, 1997
Dear Shareholder:
The Annual Meeting of Shareholders of Aphton Corporation will be held on
Wednesday, October 22, 1997, at 9:00 A.M. at the offices of White & Case,
located at First Union Financial Center, 200 South Biscayne Boulevard, Miami,
Florida 33131-2352.
The Notice of Annual Meeting and the Proxy Statement are enclosed herewith.
Shareholders will be asked to elect four directors. 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"
these proposals.
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
Philip C. Gevas
Chairman, President and Chief Executive Officer
PCG/ma
encl.
September 23, 1997
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
October 22, 1997
The Annual Meeting of Shareholders of Aphton Corporation, a California
corporation, will be held at the offices of White & Case, located at First Union
Financial Center, 200 South Biscayne Boulevard, Miami, Florida 33131-2352., on
Wednesday, October 22, 1997, 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 8, 1997 until October 21, 1997, 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 Tuesday,
September 9, 1997, 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
Philip C. Gevas
Chairman, President and
Chief Executive Officer
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
OF APHTON CORPORATION
October 22, 1997
---------------------
INTRODUCTION
This Proxy Statement is being mailed on or about September 9, 1997, 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 22, 1997, 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 Tuesday, September
9, 1997, 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 approximately 13,665,000 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, 1997, according to information furnished
to the Company by such persons.
Shares Beneficially
Name and Principal Year First Owned as of Percent
Occupation Age Elected July 31, 1996 of Class
Philip C. Gevas 64 1981 1,979,050(1) 14.5
Chairman, President and
Chief Executive Officer
Aphton Corporation
Robert S. Basso, President 52 1988 30,166 (2)
Correspondent Services
Corporation.
William A. Hasler, Dean of the 55 1991 35,000 (2)
Graduate and Undergraduate
Schools of Business, University
of California, Berkeley
Nicholas John Stathis 73 1994 48,466 (2)
Attorney
All Directors and Officers
as a group (6 persons) 2,202,882 16.2
- ----------------------------
(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 was elected Vice Chairman in October, 1996 and 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 a director of The Gap, Inc., Walker
Interactive Systems, TCSI Corporation and Tenera, Inc. 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
Committee Meetings of the Board
The Company's Board of Directors held four general meetings and six committee
meetings during fiscal 1997. 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
1997. The Compensation Committee reviews and recommends remuneration
arrangements for various key executives. This Committee held one meeting during
fiscal 1997. Each Committee member attended all of the meetings of the Committee
on which he was a member during fiscal 1997.
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 included the structuring, negotiation, and execution of the
strategic alliance agreement with Pasteur Merieux Connaught (Rhone-Poulenc
Group). The following stock price performance graph is provided as required by
the Securities and Exchange Commission. The graph begins April 30, 1992. 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 30,1992, 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 (SEC) 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 $100). However, Aphton is not aware of any such
published "third-party" index or listing; thus, the Peer Group names and graph
was prepared by the Company based on data provided to Aphton by Nasdaq. The Peer
Group is composed of Cygnus Therapeutic Systems, Regeneron Pharmaceuticals,
Cephalon Inc., Medimmune Inc., Isis, ImmuLogic Pharmaceutical, ICOS Corp.,
Cambridge NeuroScience, Genelabs Technologies, COR Therapeutics, Curative
Technologies, Alkermes, Osteotech, Vertex, Genetic Therapy, Somatogen Inc.,
Biomatrix, IDEC Pharmaceuticals, Sepracor Inc., CellPro Inc., Anergen Inc.,
Alteon Inc., ImClone Systems, Cytel, Magainin Pharmaceuticals and Genta. Other
biotechnology/biopharmaceutical companies which had IPOs in 1991 are not
included here if they no longer exist or are no longer publicly traded.
4/30/92 4/30/93 4/30/94 4/29/95 4/28/96 4/30/97
Aphton Corporation 100 83 106 81 120 88
All US & Foreign on NASDAQ 100 114 127 145 212 223
Biotech Peer Group 100 76 63 56 112 85
Executive Compensation
The following table sets forth, for each of the last five fiscal years, the
annual compensation paid by the Company, together with long-term and other
compensation, for the Chief Executive Officer and the other highest compensated
Executive Officers of the Company in all capacities in which they served.
<TABLE>
Summary Compensation Table
Annual Compensation Long-Term Compensation
------------------------------- --------------------------------------
Awards Payouts
--------------------- -----------
Other Long-Term
Fiscal Annual Restricted Incentive All Other
Name, Age and Year Compen-sation Stock Options/ Plan Compen-
Principal Position End Salary($) Bonus($) ($) Award(s)($) SARs(#) Payouts($) sation ($)
--- --------- -------- --- ----------- ------- ---------- ----------
- ----------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Philip C. Gevas (63) 1997 200,000 200,000 - - - - -
Chief Executive 1996 200,000 200,000 - - - - -
Officer, President 1995 200,000 200,000 - - - - -
and Chief Financial 1994 180,000 200,000 - - 400,000 - -
Officer 1993 172,500 120,000 - - - - -
Dov Michaeli, M.D., 1997 150,000 60,000 - - - - -
Ph.D. (61) Senior 1996 150,000 60,000 - - - - -
Vice President, 1995 150,000 60,000 - - - - -
Director of Medical 1994 110,000 60,000 - - 150,000 - -
Science 1993 110,000 30,000 - - - - -
Richard Ascione, 1997 125,000 25,000 - - - - -
Ph.D.(60) Vice 1996 125,000 25,000 - - - - -
President, Director 1995 112,500 25,000 - - - - -
of Laboratory of 1994 - - - - 50,000 - -
Molecular Medicine
Paul Broome, MB., 1997 135,000 30,000 - - - - -
Ch.B., MFPM (46) 1996 132,300 26,450 - - - - -
Vice President and 1995 112,500 25,000 - - - - -
Medical Director, 1994 - - - - 50,000 - -
Clinical Trials and
Regulatory Affairs
</TABLE>
Option Grants in Last Fiscal Year
No options or stock appreciation rights were granted during the fiscal year
ended April 30, 1997.
Option Exercises and Fiscal Year-End Values
The following table sets forth information concerning the unexercised options
held as of the end of the fiscal year. No officers exercised options during the
fiscal year.
<TABLE>
Option/SAR Exercises and Year-End Value Table
Aggregated Option/SAR Exercises in Last Fiscal Year, and FY-End Option/SAR Value
Value of Unexercised
Number of Unexercised In-the-Money Options/
Options/ SARs at FY-End($)(1)
SARs at FY-End(#)
-----------------------------
Shares
Acquired Value
Name on Realized($) Exercisable Unexercisable Exercisable Unexercisable
Exercise(#)
- -----------------------
<S> <C> <C> <C> <C> <C> <C>
Philip C. Gevas - - 600,000 - - -
- -----------------------
Dov Michaeli, M.D.,
Ph.D. - - 370,000 - 1,375,000 -
- -----------------------
Richard Ascione, Ph.D. - - - 50,000 - -
- -----------------------
Paul Broome, MB.,
Ch.B., MFPM - - - 50,000 - -
<FN>
(1) Market value of shares covered by in-the-money options on April 30, 1997,
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, 1997, as quoted by Nasdaq.
</FN>
</TABLE>
<PAGE>
Long-Term Incentive Plans - Awards in Fiscal Year
No long-term incentive plan awards were granted during the fiscal year ended
1997.
Principal Shareholders
To the Company's knowledge, except as hereinafter described, no single
shareholder of record owned or beneficially owned, as of July 31, 1997, more
than 5% of the Company's common stock. As of July 31, 1997, Cede & Co., a
nominee of securities depositories for various segments of the financial
industry, held approximately 6,100,000 shares, representing approximately 45% 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, based on a
review of filings made with the SEC.
Name and Address of
Beneficial Owner Number of Shares % of Common Stock
Smith Barney Mutual Funds Management, 1,481,900 10.9
Inc
388 Greenwich Street
Legal Dept, 20th Floor
New York, New York 10013
Eliezer Benjamini, Ph.D. 731,500 5.4
P. O. Box 1049
Woodland, CA 95776
Joy Benjamini 731,500 5.4
P. O. Box 1049
Woodland, CA 95776
Philip C. Gevas 1,979,050 14.5
P. O. Box 1049 (1)
Woodland, CA 95776
Richard L. Littenberg, M.D. 1,246,250 9.1
P. O. Box 1049
Woodland, CA 95776
Robert J. Scibienski, Ph.D. 1,613,800 11.8
P. O. Box 1049
Woodland, CA 95776
All Executive Officers and 2,202,882 16.2
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, such a proposal must be received by the Company at its
principal executive offices prior to the end of fiscal year 1998.
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
Philip C. Gevas
Chairman and Secretary
