May 29, 2000
Dear Shareholder:
The Annual Meeting of Shareholders of Aphton Corporation will be held on
Wednesday, June 21, 2000, 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 two directors in one class. The Class 2
nominees are Nicholas John Stathis and Georges Hibon whose term of office would
expire at the 2003 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/me
encl.
May 29, 2000
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
June 21, 2000
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, June 21, 2000, at 9:00 A.M. for the following purposes:
(1) To elect two directors in one class to hold office until the 2003 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 June 7, 2000 until June 20, 2000, 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 Monday, May 8, 2000,
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 APHTO CORPORATION
June 21, 2000
INTRODUCTION
This Proxy Statement is being mailed on or about May 29, 2000, 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 June 21, 2000, 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 Monday, May 8, 2000,
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
16,183,899 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 five directors. The
persons who are elected director will hold office until the 2003 Annual Meeting
of Shareholders and thereafter until their successor is duly elected, and
qualified.
Set forth below is the names and principal occupations of those persons who 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 8, 2000, according to
information furnished to the Company by such persons. Mr. Georges Hibon and Mr.
Nicholas John Stathis are the Class 2 nominees for election.
<TABLE>
<S> <C> <C> <C> <C>
Shares Beneficially
Name and Principal Occupation Year First Owned as of
Age Elected May 19, 2000 Percent of Class
Philip C. Gevas, Class 3
Chairman, President and Chief
Executive Officer, Aphton 66 1981 1,859,050 11.5
Corporation
William A. Hasler, Class 3 58 1991 70,000 (1)
Co-Chief Executive Officer and
Vice-Chairman, Aphton Corporation
Robert S. Basso, Class 1 55 1988 30,166 (1)
President, Correspondent Services
Corporation
Geoorges Hibon, Class 2 62 2000 0 (1)
Former Chairman and Chief Executive
Officer, Pasteur Merieux Connaught, NA
Nicholas John Stathis, Class 2 76 1994 50,000 (1)
Attorney
All Directors and Officers
as a group (12 persons) 2,124,216 13.1
____________________________
(1) Less than 1% of total outstanding shares.
</TABLE>
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 appointed Co-Chief Executive Officer of Aphton Corporation in July,
1998. Previously, he was the Dean of both the Graduate and Undergraduate Schools
of Business at the University of California, Berkeley since 1991. Prior thereto,
Mr. Hasler was Vice Chairman of KPMG Peat Marwick, responsible for management
consulting worldwide. Mr. Hasler also is a director of Solectron Corporation,
Walker Interactive Systems, TCSI Corporation, Tenera, Inc. and is a 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. Georges
Hibon was elected a director in 2000. During the previous ten years Mr. Hibon
served as the Chairman and Chief Executive Officer of Pasteur Merieux Connaught,
NA, Chairman of Virogenetics, and as the Senior Vice President of Pasteur
Merieux Connaught, NA. 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 either Mssrs. Hibon or Stathis 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 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 four committee
meetings during the year ended January 31, 2000. The Board of Directors has two
standing committees: an Audit Committee, consisting of Messrs. Basso (Chairman),
Hasler and Stathis; and a Compensation Committee, consisting of Messrs. Basso
(Chairman) and Stathis. 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 four meetings during fiscal
2000. The Compensation Committee reviews and recommends remuneration
arrangements for various key executives. This Committee held four meetings
during fiscal 2000. Each Committee member attended all of the meetings of the
Committee on which he was a member during fiscal 2000.
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 Stathis.
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. Basso (Chairman) and Stathis.
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, 1995 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 Pharmaceuticals, ImmuLogic Pharmaceutical,
ICOS Corp., Cambridge NeuroScience, Genelabs Technologies, COR Therapeutics,
Curative Technologies, Alkermes, Osteotech, Vertex, Genetic Therapy, IDEC
Pharmaceuticals, Sepracor Inc., CellPro Inc., Alteon Inc., ImClone Systems,
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. Because of this, Aphton's relative stock price
performance is negatively impacted from what is commonly called in the financial
industry a "survivor bias."
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
1991 1/31 1/29 1/31 1/31 1/31 1/31 1/30 1/29 1/31
Period from IPO IPO 1992 1993 1994 1995 1996 1997 1998 1999 2000
Aphton Corporation 100 304 220 350 139 146 318 177 223 350
All US & Foreign on NASDAQ* 100 131 147 171 161 227 296 348 535 858
Biotech Peer Group 100 160 136 118 63 133 128 139 179 222
1/31 1/31 1/31 1/30 1/29 1/31
Five years ended January 31, 2000 1995 1996 1997 1998 1999 2000
Aphton Corporation 100 105 228 128 160 238
All US & Foreign on NASDAQ* 100 125 163 192 302 474
Biotech Peer Group 100 60 57 63 81 352
</TABLE>
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, the Co-Chief Executive Officer
and the other highest compensated Executive Officers of the Company in all
capacities in which they served.
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Summary Compensation Table
Annual Compensation Long-Term Compensation
------------------------------- --------------------------------------
Awards Payouts
---------------------- -----------
Long-Term
Other Incentive
Name, Age and Fiscal Annual Restricted Plan All Other
Principal Position Period Compen-sation Stock Options/ Payouts($) Compen-
End Salary($) Bonus($) ($) Award(s)($) SARs(#) sation ($)
------------------------
Philip C. Gevas (66) 2000 200,000 200,000 - - - - -
Chairman of the Board of 1999 200,000 200,000 - - - - -
Directors, Chief Executive*1998 150,000 200,000 - - - - -
Officer and President 1997 200,000 200,000 - - - - -
1996 200,000 200,000 - - - - -
William A. Hasler (58), 2000 180,000 - - - 150,000 - -
Vice-Chairman of the 105,000 - - - - - -
Board of Directors and (Note !)
Co-Chief Executive Officer
Dov Michaeli, M.D., 2000 150,000 60,000 - - - - -
Ph.D. (62) Senior Vice 1999 150,000 60,000 - - - - -
President, Director of *1998 112,500 60,000 - - - - -
Medical Science 1997 150,000 60,000 - - - - -
1996 150,000 60,000 - - - - -
Paul Broome, MB., 2000 135,000 30,000 - - - - -
Ch.B., MFPM (48) 1999 135,000 30,000 - - - - -
Vice President and *1998 93,750 30,000 - - - -
Medical Director, 1997 135,000 30,000 - - - -
Clinical Trials and 1996 132,300 25,000 - - - -
Regulatory Affairs
Richard Ascione, 2000 130,000 30,000 - - - - -
Ph.D.(62) Vice 1999 125,000 25,000 - - -
President, Director of *1998 87,500 25,000 - - - - -
Laboratory of 1997 125,000 25,000 - - - - -
Molecular Medicine 1996 125,000 25,000 - - - - -
________________________________________
Note 1. For the seven months ended January 31, 1999
*Nine month fiscal period ended January 31, 1998
</TABLE>
Option Grants in Last Fiscal Year
Warrants to purchase 150,000 shares of common stock were granted during the year
ended January 31, 2000 to William Hasler. The following table shows the options
to purchase the Company's Common Stock granted to Mr. Hasler and the potential
value of such grants if the stock price were to appreciate at the rates of 5%,
or 10%, compounded annually over the exercise term of the options. Also shown is
the potential gain of all outstanding shares of Common Stock held by the
Company's shareholders as of January 31, 2000, using the last sale price of
$24.50 per share and the same appreciation rates compounded over the same
period. The 5% and 10% rates of appreciation are required to be disclosed by the
rules of the Securities and Exchange Commission ("SEC") and are not intended to
forecast possible future actual appreciation, if any, in the Company's stock
prices. The Company did not use an alternative present value formula permitted
by the rules of the SEC because in the Company's view, potential future unknown
or volatile factors result in there being no such formula that can determine
with reasonable accuracy the present value of such option grants.
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Percent of Total
Options/ Options/SARs Exercise
SARs Granted to or Base
Granted Employees Price Expiration
Name (#) in Fiscal Year ($/Sh) Date 5% 10%
---------- -------------------- ---------- ----------- ------------ ---------------
William A. Hasler 150,000 100 14.75 12/31/2015
4,577,242 9,154,493
All Stockholders N/A N/A 24.50 N/A 790,340,000 1,580,700,000
</TABLE>
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. None of these officers exercised options
during the fiscal year.
Option/SAR Exercises and Year-End Value Table
Aggregated Option/SAR Exercises in Last Fiscal Year,
and FY-End Option/SAR Value
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Number of Unexercised Value of Unexercised
Options/ In-the-Money Options/
Shares SARs at FY-End(#) SARs at FY-End($)(1)
----------------------------
Acquired on Value
------------------------------ Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
Name
Philip C. Gevas - - 600,000 - $5,520,000 -
William A. Hasler - - 186,000 $1,813,500
Dov Michaeli, M.D, Ph.D. - - 370,000 - $5,065,000
Richard Ascione, Ph.D. - - - 50,000 - $585,000
Paul Broome, MB., Ch.B., MFPM - - - 50,000 - $585,000
</TABLE>
(1) Market value of shares covered by in-the-money options on January 31, 2000,
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, 2000, as quoted by Nasdaq.
Long-Term Incentive Plans - Awards in Fiscal Year
No long-term incentive plan awards were granted during the year ended January
31, 2000.
Principal Shareholders
To the Company's knowledge, except as hereinafter described, no single
shareholder of record owned or beneficially owned, as of May 8, 2000, more than
5% of the Company's common stock. As of May 8, 2000, Cede & Co., a nominee of
securities depositories for various segments of the financial industry, held
approximately 11,012,000 shares, representing approximately 69% 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.
<TABLE>
<S> <C> <C>
Name and Address of
Beneficial Owner Number of Shares % of Common Stock
Smith Barney Mutual Funds Management, 1,856,900 11.5
Inc
388 Greenwich Street
Legal Dept, 20th Floor
New York, New York 10013
Philip C. Gevas 1,859,050 11.5
P.O. Box 1049
Woodland, CA 95776
Richard L. Littenberg, M.D. 846,250 5.2
P.O. Box 1049
Woodland, CA 95776
Robert J. Scibienski, Ph.D. 1,413,800 8.7
P.O. Box 1049
Woodland, CA 95776
All Executive Officers and 2,124,216 13.1
Directors as a group (10 persons)
</TABLE>
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 2001.
Miscellaneous
Ernst & Young LLP has been voted the Company's independent accountants for the
fiscal year 2001.
It is anticipated that a representative from PricewaterhouseCoopers LLP, the
Company's independent accountants for many fiscal years, 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
