July 1, 1998
Dear Shareholder:
The Annual Meeting of Shareholders of Aphton Corporation will be held on
Wednesday, July 29, 1998, 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 in three classes. The four
current directors, Philip C. Gevas, Nicholas J. Stathis, Robert S. Basso and
William A. Hasler, are nominees for election. The Class 1 nominee is Robert S.
Basso whose term of office would expire at the 1999 Annual Meeting of
Shareholders. The Class 2 nominee is Nicholas J. Stathis whose term of office
would expire at the 2000 Annual Meeting of Shareholders. The Class 3 nominees
are Philip C. Gevas and William A. Hasler whose term of office would expire at
the 2001 Annual Meeting of Shareholders. Your Board of Directors recommends that
you vote "for" these nominees.
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.
<PAGE>
July 1, 1998
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
July 29, 1998
The Annual Meeting of Shareholders of Aphton Corporation, a Delaware
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, July 29, 1998, at 9:00 A.M. for the following purposes:
(1) To elect four directors in three classes to hold office until the 1999,
2000 or 2001 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 July 15, 1998 until July 28, 1998, 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 Wednesday, June 17,
1998, 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
<PAGE>
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
OF APHTON CORPORATION
July 29, 1998
_____________________
INTRODUCTION
This Proxy Statement is being mailed on or about July 1, 1998, 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 July 29, 1998, 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 Wednesday, June 17,
1998, 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 14,200,000 shares of common stock. Each share of
stock is entitled to one vote on all matters.
ELECTION OF DIRECTORS
The Company's Board of Directors presently consists of four directors. The
persons who are elected directors will hold office until the 1999, 2000 or 2001
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 May 31, 1998, according to information furnished to
the Company by such persons.
Shares Beneficially
Name and Principal Year First Owned as of
Occupation Age Elected May 31, 1998 Percent of Class
Philip C. Gevas 65 1981 1,949,050(1) 13.7
Chairman, President and
Chief Executive Officer
Aphton Corporation
William A. Hasler 56 1991 35,000 (2)
Co-Chief Executive Officer
and Vice-Chairman
Aphton Corporation
Robert S. Basso, President 53 1988 30,166 (2)
Correspondent Services
Corporation.
Nicholas John Stathis 74 1994 50,000 (2)
Attorney
All Directors and Officers
as a group (7 persons) 2,176,416 15.3
____________________________
(1) Includes 90,000 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 and continues to serve in the capacities of
Chairman, President and Chief Executive Officer and has been a director of the
Company since its inception. William A. Hasler was elected Vice Chairman in
October, 1996 and has been a director of the Company since October, 1991. Mr.
Hasler was the Dean of both the Graduate and Undergraduate Schools of Business
at the University of California, Berkeley until July 1, 1998 when he became the
Co-Chief Executive Officer of Aphton Corporation. Dean Hasler was formerly Vice
Chairman of KPMG Peat Marwick, responsible for management consulting worldwide.
Dean Hasler is a director of Solectron Corporation, Walker Interactive Systems,
TCSI Corporation, Tenera, Inc. and is Public Governor of the Pacific Exchange.
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. 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 five general meetings and two committee
meetings during the nine months ended January 31, 1998. 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 one
meetings during fiscal 1998. The Compensation Committee reviews and recommends
remuneration arrangements for various key executives. This Committee held one
meeting during fiscal 1998. Each Committee member attended all of the meetings
of the Committee on which he was a member during fiscal 1998.
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.
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 or exceeding 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 or exceeded the Company objectives.
This performance included the structuring and negotiation with another
significant pharmaceutical company for a strategic alliance. The following stock
price performance graph is provided as required by the Securities and Exchange
Commission. 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, and includes the measurement point as defined
and required by the SEC.
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 in 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). Five year graphic comparisons are required by
the Securities and Exchange Commission (SEC). An additional comparison
commencing with a $100 investment in the Company, the Nasdaq index and the Peer
Group at the required measurement date of January 31, 1993 is included. These
graphs 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.
1991 1/31 1/29 1/31 1/31 1/31 1/31 1/30 5/29
Period from IPO IPO 1992 1993 1994 1995 1996 1997 1998 1998
Aphton Corporation 100 304 220 350 139 146 318 177 200
All US & Foreign on NASDAQ 100 131 147 171 161 227 296 348 403
Biotech Peer Group 100 160 136 118 63 133 128 139 143
1/29 1/31 1/31 1/31 1/31 1/30 5/29
Five years ended 1/31/98 1993 1994 1995 1996 1997 1998 1998
Aphton Corporation 100 159 63 67 146 80 80
All US & Foreign on NASDAQ 100 116 109 154 201 236 274
Biotech Peer Group 100 87 47 98 94 102 102
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 Period Compensation Stock Options/ Plan Compen-
Principal Position End Salary($) Bonus($) ($) Award(s) ($) SARs(#) Payouts($) sation ($)
<C> <C> <C> <C> <C> <C> <C> <C> <C>
- ----------------------
Philip C. Gevas (65) *1998 150,000 200,000 - - - - -
Chief Executive 1997 200,000 200,000 - - - - -
Officer, President 1996 200,000 200,000 - - - - -
and Chief Financial 1995 180,000 200,000 - - - - -
Officer 1994 172,500 120,000 - - 400,000 - -
Dov Michaeli, M.D., *1998 112,500 60,000 - - - - -
Ph.D. (61) Senior 1997 150,000 60,000 - - - - -
Vice President, 1996 150,000 60,000 - - - - -
Director of Medical 1995 150,000 60,000 - - - - -
Science 1994 110,000 30,000 - - 150,000 - -
Richard Ascione, *1998 87,500 25,000 - - - - -
Ph.D.(60) Vice 1997 125,000 25,000 - - - - -
President, Director 1996 125,000 25,000 - - - - -
of Laboratory of 1995 112,500 25,000 - - - - -
Molecular Medicine 1994 - - 50,000
Paul Broome, MB., *1998 93,750 30,000 - - - - -
Ch.B., MFPM (46) 1997 135,000 30,000 - - - - -
Vice President and 1996 132,300 26,450 - - - - -
Medical Director, 1995 112,500 25,000 - - - - -
Clinical Trials and 1994 - - - - 50,000 - -
Regulatory Affairs
________________________________________
*Nine month fiscal period ended January 31, 1998
</TABLE>
Option Grants in Last Fiscal Year
No options or stock appreciation rights were granted during the nine months
ended January 31, 1998.
Option Exercises and Fiscal Year-End Values
The following table sets forth information concerning the unexercised options
held as of the end of the fiscal year. No officers exercised options during the
fiscal year.
<TABLE>
Option/SAR Exercises and Year-End Value Table
Aggregated Option/SAR Exercises in Last Fiscal Year, and FY-End Option/SAR Value
Value of Unexercised
Number of Unexercised In-the-Money Options/
Shares Options/ SARs at FY-End($)(1)
SARs at FY-End(#)
-----------------------------
Acquired Value
Name on Realized($) Exercisable Unexercisable Exercisable Unexercisable
Exercise(#)
<C> <C> <C> <C> <C> <C> <C>
- -----------------------
Philip C. Gevas - - 600,000 - - -
- -----------------------
Dov Michaeli, M.D.,
Ph.D. - - 370,000 - 1,225,000 -
- -----------------------
Richard Ascione, Ph.D. - - - 50,000 - -
- -----------------------
Paul Broome, MB.,
Ch.B., MFPM - - - 50,000 - -
(1) Market value of shares covered by in-the-money options on January 31, 1998,
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 January 31, 1998, as quoted by Nasdaq.
</TABLE>
Long-Term Incentive Plans - Awards in Fiscal Year
No long-term incentive plan awards were granted during the nine months ended
January 31, 1998.
Principal Shareholders
To the Company's knowledge, except as hereinafter described, no single
shareholder of record owned or beneficially owned, as of May 31, 1998, more than
5% of the Company's common stock. As of May 31, 1998, Cede & Co., a nominee of
securities depositories for various segments of the financial industry, held
approximately 7,000,000 shares, representing approximately 50% 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 Number of Shares % of Common Stock
Beneficial Owner
Smith Barney Mutual Funds Management, 1,481,900 10.4
Inc
388 Greenwich Street
Legal Dept, 20th Floor
New York, New York 10013
Philip C. Gevas 1,949,050 13.7
P. O. Box 1049 (1)
Woodland, CA 95776
Richard L. Littenberg, M.D. 1,146,250 8.0
P. O. Box 1049
Woodland, CA 95776
Robert J. Scibienski, Ph.D. 1,613,800 11.4
P. O. Box 1049
Woodland, CA 95776
All Executive Officers and 2,176,416 15.3
Directors as a group (7 persons)
____________________________
(1) Includes 90,000 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 1999.
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
