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SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE
SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section240.14a-11(c) or Section240.14a-12
LIDAK PHARMACEUTICALS
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] 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
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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LIDAK PHARMACEUTICALS
9393 TOWNE CENTRE DRIVE, SUITE 200
SAN DIEGO, CALIFORNIA 92121
------------------------
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 20, 1998
------------------------
A Special Meeting of Shareholders of LIDAK Pharmaceuticals will be held at
the offices of the Company at 9393 Towne Centre Drive, Suite 200, San Diego,
California 92121 on November 20, 1998, at 1:30 p.m. for the following purposes:
1. To consider and vote upon a proposal to amend Article I of the
Company's Articles of Incorporation (the "Articles of Incorporation") to
change the name of the Company.
2. To transact such other business as may properly come before the
meeting or any adjournment or postponement of the meeting.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
Only shareholders of record at the close of business on September 15, 1998
will be entitled to notice of and to vote at the meeting or any adjournment
thereof. Each of these shareholders is cordially invited to be present and vote
at the meeting in person.
By Order of the Board of Directors,
/s/ GREGORY P. HANSON
--------------------------------------
GREGORY P. HANSON
Secretary
San Diego, California
September 30, 1998
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND DATE THE
ENCLOSED PROXY CARD AND RETURN IT PROMPTLY. THIS IS IMPORTANT BECAUSE A MAJORITY
OF THE SHARES MUST BE REPRESENTED, EITHER IN PERSON OR BY PROXY, TO CONSTITUTE A
QUORUM. IF YOU ATTEND THE MEETING, YOU MAY VOTE IN PERSON EVEN THOUGH YOU SEND
IN YOUR PROXY NOW.
<PAGE> 3
LIDAK PHARMACEUTICALS
9393 TOWNE CENTRE DRIVE, SUITE 200
SAN DIEGO, CALIFORNIA 92121
------------------------
PROXY STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON NOVEMBER 20, 1998
------------------------
GENERAL INFORMATION
Your proxy in the enclosed form is solicited by the Board of Directors (the
"Board") of LIDAK Pharmaceuticals, a California corporation (the "Company"), for
use at a special meeting of the Company's shareholders (the "Shareholders") to
be held at 9393 Towne Centre Drive, Suite 200, San Diego, California 92121 on
November 20, 1998, at 1:30 p.m. (the "Special Meeting") for the purposes set
forth in the accompanying notice and at any adjournment or postponement of the
Special Meeting. The mailing of this Proxy Statement and the accompanying form
of proxy to the Shareholders is expected to commence on or about October 5,
1998.
The shares represented by any proxy in the enclosed form will be voted in
accordance with the instructions given on the proxy if the proxy is properly
executed and is received by the Company prior to the close of voting at the
Special Meeting or any adjournment or postponement thereof. Proxies received by
the Company on which no contrary instruction has been given will be voted FOR
the adoption of an amendment to Article I of the Company's Articles of
Incorporation (the "Articles of Incorporation") to change the name of the
Company to "Avanir Pharmaceuticals". A shareholder giving a proxy has the power
to revoke it at any time before it is exercised. A proxy may be revoked by
filing with the Secretary of the Company an instrument revoking it or a duly
executed proxy bearing a later date. The powers of the proxy holders will be
suspended if the person executing the proxy is present at the Special Meeting
and votes in person.
Copies of solicitation material will be furnished to brokerage houses,
fiduciaries, and custodians holding shares in their names which are beneficially
owned by others ("record holders") to forward to such beneficial owners. In
addition, the Company may reimburse such persons for their cost of forwarding
the solicitation material to such beneficial owners. Original solicitation of
proxies by mail may be supplemented, if deemed desirable or necessary, by one or
more of telephone, telegram, facsimile, or personal solicitation by directors,
officers, or employees of the Company. No additional compensation will be paid
for any such services. The Company reserves the right, if deemed desirable or
necessary, to retain a proxy solicitation firm or other third parties to deliver
solicitation material to record holders for distribution by them to their
principals and to assist the Company in collecting or soliciting proxies from
such holders. The costs of these services, exclusive of out-of-pocket costs, is
not expected to exceed $10,000. Except as described above, the Company does not
intend to solicit proxies other than by mail.
SHARES OUTSTANDING AND VOTING RIGHTS
Only holders of shares of the Company's Class A Common Stock ("Class A
Shares") and the Company's Class B Common Stock ("Class B Shares") of record as
at the close of business on September 15, 1998 (the "Record Date") are entitled
to notice of and to vote at the Special Meeting. On the Record Date, there were
issued and outstanding 39,814,017 Class A Shares and 49,000 Class B Shares
(collectively, the "Shares") (see Footnotes 4 and 5 to"Security Ownership of
Certain Beneficial Owners and Management," below, for information on certain
Class B Shares claimed to be owned by Dr. Katz). Each Class A Share is entitled
to one vote and each Class B Share is entitled to five votes on all matters to
be voted upon at the Special Meeting. The presence, in person or by proxy duly
authorized, of the holders of a majority of the Shares will constitute a quorum
for the transaction of business at the Special Meeting and any continuation or
adjournment thereof. Broker non-votes (i.e. shares held by a broker or nominee
which are represented at the
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Special Meeting, but with respect to which such broker or nominee is not
empowered to vote on a particular purpose) will be counted in determining
whether a quorum is present at the Special Meeting. The proposal to amend the
Articles of Incorporation in the enclosed proxy must be approved by the vote of
a majority of the outstanding Shares. Any shares not voted (whether by
abstention, broker non-votes or otherwise) will have the effect of a vote
against the proposal.
Your execution of the enclosed proxy will not affect your right as a
shareholder to attend the Special Meeting and to vote in person. Any shareholder
giving a proxy has a right to revoke it at any time by either (i) a later-dated
proxy, (ii) a written revocation sent to and received by the Secretary of the
Company prior to the Special Meeting, or (iii) attendance at the Special Meeting
and voting in person.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership (as defined by Rule 13d-3 under the Securities Exchange Act of 1934,
as amended (the "Exchange Act")) of the Company's voting shares (Class A Shares
and Class B Shares) as of September 15, 1998 by: (i) each director and named
executive officer of the Company; (ii) all current executive officers and
directors of the Company as a group; and (iii) each person or "group" of persons
(as defined under Section 13(d)(3) of the Exchange Act) known by the Company to
own beneficially five percent (5%) or more of the outstanding shares or voting
power of the Company's voting securities. The table is based upon information
supplied by directors, officers and principal shareholders. Unless otherwise
indicated, each of the listed persons has sole voting and sole investment power
with respect to the Shares beneficially owned, subject to community property
laws where applicable.
<TABLE>
<CAPTION>
AMOUNT AND PERCENT OF
NAME AND ADDRESS OF NATURE OF TOTAL
BENEFICIAL BENEFICIAL PERCENT OF VOTING
TITLE OF CLASS OWNER OR IDENTITY OF GROUP(1) OWNERSHIP(2) CLASS(2) POWER(3)
-------------- ----------------------------- ------------ ---------- ----------
<S> <C> <C> <C> <C>
Class A Common Stock David H. Katz(4)(5) 3,441,193 8.18% 12.03%
Class B Common Stock 375,000 88.44%
Class A Common Stock George P. Rutland(6) 232,500 * *
Class B Common Stock --
Class A Common Stock Edward L. Hennessy, Jr.(7) 60,000 * *
Class B Common Stock --
Class A Common Stock Kenneth E. Olson(8)(9) 223,400 * *
Class B Common Stock 16,000 24.62%
Class A Common Stock Stuart A. Samuels(10) 45,000 * *
Class B Common Stock --
Class A Common Stock Gerald J. Yakatan(11) 252,895 * *
Class B Common Stock --
Class A Common Stock Dennis J. Carlo(12) 10,000 * *
Class B Common Stock --
Class A Common Stock Michael W. George(13) 10,000 * *
Class B Common Stock --
Class A Common Stock Joseph E. Smith(14) 10,000 * *
Class B Common Stock --
Class A Common Stock Timothy R. Russell(15) 205,553 * *
Class B Common Stock --
Class A Common Stock James E. Berg(16) 103,716 * *
Class B Common Stock --
Class A Common Stock J. David Hansen(17) -- * *
Class B Common Stock --
Class A Common Stock Gregory P. Hanson(18) 1,500 * *
Class B Common Stock --
Class A Common Stock All officers and Directors a group 4,595,757 10.72% 14.53%
Class B Common Stock (thirteen persons)(19)(20) 391,000 88.86%
</TABLE>
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- ---------------
* Percentage of shares beneficially owned does not exceed 1%.
(1) The address for all persons shown, except Dr. Katz, is c/o LIDAK
Pharmaceuticals, 9393 Towne Centre Drive, Suite 200, San Diego, California
92121. The address for Dr. Katz is 1775 La Jolla Rancho Road, La Jolla,
California 92037.
(2) Based upon 39,814,017 shares of Class A Common Stock and 49,000 shares of
Class B Common Stock outstanding as of September 15, 1998. The percentage
ownership and voting power for each shareholder (or all directors and
executive officers as a group), is calculated by assuming the exercise or
conversion of all warrants, options and convertible securities exercisable
or convertible within 60 days of September 15, 1998 held by such
shareholder and the nonexercise and nonconversion of all other outstanding
warrants, options and convertible securities. See Footnote 5, below.
(3) Percentage of total voting power is based upon total cumulative voting
power of Class A Common Stock and Class B Common Stock combined as of
September 15, 1998. Each share of Class A Common Stock entitles the holder
to one vote per share on matters to be voted on by shareholders; each share
of Class B Common Stock entitles the holder to five votes per share on
matters to be voted on by shareholders. The percentage ownership and voting
power for each shareholder (or all directors and executive officers as a
group), is calculated by assuming the exercise or conversion of all
warrants, options and convertible securities exercisable or convertible
within 60 days of September 15, 1998 held by such shareholder and the
nonexercise and nonconversion of all other outstanding warrants, options
and convertible securities.
(4) Includes 1,196,003 shares of Class A Common Stock held by Dr. Katz and
2,000 shares held by his wife, options to purchase 1,827,000 shares of
Class A Common Stock and 386,190 shares of Class A Common Stock issuable
upon the exercise of Class D Warrants and options to purchase 30,000 shares
of Class A Common Stock held by his wife. Does not include options to
purchase 10,000 shares of Class A Common Stock which are not exercisable
within 60 days of September 15, 1998.
In Amendment No. 2 to Schedule 13D dated September 3, 1998 (the "Schedule
13D Amendment No. 2"), filed by Dr. Katz with the Securities and Exchange
Commission (the "SEC"), Dr. Katz stated that he and his wife
(collectively, the "Katz Parties") have entered into a Settlement and
Rescission Agreement to settle certain litigation with Mitchell J. Stein,
HealthMed, Inc. ("HealthMed"), National Trust Properties and the Trammel
Trust (collectively, the "HealthMed Parties") relating to the Stock
Purchase Agreement, the Purchase Rights Agreement, the Voting Trust
Agreement, each dated January 12, 1998, between Dr. Katz and HealthMed,
and the Promissory Note entered into between Dr. Katz and HealthMed on
January 12, 1998 (collectively the "Katz Agreements") as described in
Amendment No. 1 to Schedule 13D filed by Dr. Katz, dated March 27, 1998.
Pursuant to the terms of the Settlement and Rescission Agreement
("Settlement Agreement") and related court order, the Katz Agreements have
been rescinded in their entirety as between the parties. With regard to
the impact of the Settlement Agreement on the Company's records, Dr. Katz
has taken the position that one effect of the Settlement Agreement is that
234,000 shares of Common Stock (which had converted into Class A Common
Stock at the date the Katz Agreements were executed by operation of the
Company's Articles of Incorporation which require such conversion upon
transfer of Class B Shares into trust) should be reinstated to Class B
Shares. The Company has informed Dr. Katz that it disagrees with his claim
that these Class A Shares should be reclassified to Class B Shares based
on its interpretation of its Articles of Incorporation. These shares are
referred below as the "Disputed Class A Shares." The Company understands
that Dr. Katz may seek a judicial determination of his rights to Class B
Shares (in lieu of the Disputed Class A Shares) under the Company's
Articles of Incorporation. If Dr. Katz obtains such a determination in his
favor in advance of the Special Meeting, the Company intends to provide to
Dr. Katz the voting rights he would have enjoyed had he held these Class B
Shares on the Record Date of the Special Meeting. The effect of a judicial
determination in Dr. Katz' favor could increase his voting rights by as
much as 936,000.
Dr. Katz has further stated in his Amendment No. 3 to Schedule 13D dated
September 18, 1998 ("Schedule 13D Amendment No. 3") that he is the
beneficial owner of 3,264,096 Class A Shares and
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619,000 Class B Shares. Of that total, he states that he has the sole
power to vote and dispose of 3,215,193 Class A Shares and 609,000 Class B
Shares, and that his wife has the sole power to vote and dispose of 46,903
Class A Shares and 10,000 Class B Shares. The Schedule 13D Amendment No. 3
reports the 234,000 Disputed Class A Shares as Class B Shares in the
number of Class B Shares Dr. Katz reports as beneficially owned. As
discussed above, the Company treats these shares as outstanding shares of
Class A Common Stock. Additionally, Dr. Katz' filing appears to include
canceled options to purchase 40,000 and 14,952 shares of Class A Common
Stock issued to Dr. Katz and his wife, respectively, and 10,000 canceled
options to exercise Class B Common Stock issued to his wife. Such options
have been canceled by the Company because the options were not exercised
within the defined exercise period specified by the stock option plans
following the termination dates of employment.
(5) Includes options to purchase 375,000 Class B Shares granted under Dr. Katz'
employment agreement. Dr. Katz has given notice to the Company of his
intent to exercise these options. Dr. Katz agreed in July 1996 not to
exercise these options until an adequate number of Class B Shares were
available. The Company has informed Dr. Katz that it is not in a position
to issue Dr. Katz such shares at the present time. The Company's ability to
issue such shares in their entirety depends, in part, upon a number of
factors, including resolution of the disagreement referenced in Footnote 4,
above. The number set forth in the table assumes that such shares will be
exercisable within 60 days of September 15, 1998.
(6) Includes 222,500 shares of Class A Common Stock over which Mr. Rutland
exercises sole voting and investment power, and options to purchase 10,000
Class A Shares. Does not include options to purchase 25,000 shares of Class
A Common Stock which are not exercisable within 60 days of September 15,
1998.
(7) Includes 50,000 shares of Class A Common Stock and options to purchase
10,000 shares of Class A Common Stock. Does not include options to purchase
25,000 shares of Class A Common Stock which are not exercisable within 60
days of September 15, 1998.
(8) Includes 36,400 shares of Class A Common Stock and options to purchase
187,000 shares of Class A Common Stock. Does not include options to
purchase 20,000 shares of Class A Common Stock which are not exercisable
within 60 days of September 15, 1998.
(9) Includes 16,000 options to purchase shares of Class B Common Stock.
(10) Includes options to purchase 45,000 shares of Class A Common Stock. Does
not include options to purchase 20,000 shares of Class A Common Stock which
are not exercisable within 60 days of September 15, 1998.
(11) Includes 20,000 shares of Class A Common Stock and options to purchase
232,895 shares of Class A Common Stock. Does not include options to
purchase 207,105 shares of Class A Common Stock which are not exercisable
within 60 days of September 15, 1998.
(12) Includes options to purchase 10,000 shares of Class A Common Stock. Does
not include options to purchase 25,000 shares of Class A Common Stock which
are not exercisable within 60 days of September 15, 1998.
(13) Includes options to purchase 10,000 shares of Class A Common Stock. Does
not include options to purchase 25,000 shares of Class A Common Stock which
are not exercisable within 60 days of September 15, 1998.
(14) Includes options to purchase 10,000 shares of Class A Common Stock. Does
not include options to purchase 25,000 shares of Class A Common Stock which
are not exercisable within 60 days of September 15, 1998.
(15) Includes 5,000 shares of Class A Common Stock and options to purchase
200,553 shares of Class A Common Stock. Does not include options to
purchase 19,447 shares of Class A Common Stock which are not exercisable
within 60 days of September 15, 1998.
(16) Includes options to purchase 103,716 shares of Class A Common Stock. Does
not include options to purchase 35,284 shares of Class A Common Stock which
are not exercisable within 60 days of September 15, 1998.
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(17) Does not include options to purchase 100,000 shares of Class A Common Stock
which are not exercisable within 60 days of September 15, 1998.
(18) Includes 1,500 shares of Class A Common Stock. Does not include options to
purchase 100,000 shares of Class A Common Stock which are not exercisable
within 60 days of September 15, 1998.
(19) Includes 1,533,403 shares of Class A Common Stock, options to purchase
2,676,164 shares of Class A Common Stock and 386,190 shares issuable upon
the exercise of Class D Warrants. Does not include 636,836 options to
purchase Class A Common Stock not exercisable within 60 days of September
15, 1998.
(20) Includes options to purchase 391,000 shares of Class B Common Stock. See
Footnote 5, above.
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PROPOSAL ONE
AMENDMENT TO THE ARTICLES OF INCORPORATION
TO CHANGE THE NAME OF THE COMPANY
(ITEM 1 ON THE PROXY CARD)
GENERAL
On August 28, 1998, the Board approved, and recommended for adoption by
shareholders at the Special Meeting, an amendment to Article 1 of the Articles
of Incorporation to change the name of the Company to "Avanir Pharmaceuticals."
For the reasons described below, the Board believes that it would be in the best
interests of the Company and its shareholders to make such change to the name of
the Company. To accomplish this name change, it is necessary to amend the
applicable provision of the Articles of Incorporation.
PROPOSAL
Significant changes have occurred in the Company's Board, executive
management and product commercialization strategy. The Board believes that
changing the name of the Company would reflect these significant changes and
would be a positive component of its repositioning. After careful consideration
and the advice of corporate name consultants, the Board believes that "Avanir
Pharmaceuticals" would complement the Company's new organization and strategic
emphasis.
The change of the Company's name will not affect in any way the validity of
currently outstanding stock certificates. Shareholders will not be required to
surrender or exchange any stock certificates that they currently hold. However,
the Company has reserved and will request that The Nasdaq Stock Market allow the
Company to use a new ticker symbol "AVNR."
The Board believes that the adoption of the proposed amendment to the
Articles of Incorporation is in the best interests of the Company and its
shareholders. Accordingly, the Board is proposing that Article 1 of the Articles
of Incorporation be amended to change the name of the Company to "Avanir
Pharmaceuticals."
The full text of Article 1 of the Articles of Incorporation, is proposed to
be amended as follows:
"The name of this corporation is Avanir Pharmaceuticals."
VOTE REQUIRED; RECOMMENDATION OF BOARD OF DIRECTORS
The affirmative vote of the holders of a majority of the outstanding shares
will be required to approve the amendment to Article 1 of the Company's Articles
of Incorporation to change the name of the Company to Avanir Pharmaceuticals.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
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OTHER BUSINESS
The Company knows of no other matters to be submitted at the Special
Meeting. If any other matters are properly brought before the Special Meeting or
any adjournment thereof, it is the intention of the persons named in the
enclosed proxy to vote the shares that they represent in accordance with their
judgment. In order for any shareholder to submit a proposal for other business
to be acted upon at the Special Meeting, he or she must provide the Secretary of
the Company with not less than ten (10) days' advance written notice thereof in
the form prescribed by the Company's Bylaws.
Each shareholder is urged to complete, date, sign and promptly return the
enclosed proxy card.
By Order of the Board of Directors
/s/ GREGORY P. HANSON
--------------------------------------
GREGORY P. HANSON
Secretary
San Diego, California
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LIDAK PHARMACEUTICALS
9393 Towne Centre Drive, Suite 200
San Diego, California 92121
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Gerald J. Yakatan,
Ph.D. and Gregory P. Hanson, and each of them, as true and lawful agents and
proxies with full power of substitution in each, to represent the undersigned at
the Special Meeting of Shareholders of LIDAK Pharmaceuticals to be held at the
offices of the Company at 9393 Towne Centre Drive, Suite 200, San Diego,
California 92121, on November 20, 1998, at 1:30 p.m., local time, and at any
adjournments thereof, and to vote as designated.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
"FOR" THE AMENDMENT TO THE COMPANY'S ARTICLES OF INCORPORATION TO CHANGE THE
NAME OF THE COMPANY AND AS THE PROXY HOLDER MAY DETERMINE IN HIS DISCRETION WITH
REGARD TO ANY OTHER MATTER PROPERLY BROUGHT BEFORE THE MEETING.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE.
YOUR VOTE IS IMPORTANT! PLEASE VOTE.
(Continued on reverse side)
<PAGE> 11
BACK OF CARD
1. AMEND THE ARTICLES OF INCORPORATION TO CHANGE THE NAME OF THE COMPANY
Vote For ____ Vote Against ____ Abstain ____
and to vote on such other business as may properly come before the meeting
Dated: , 1998
Signature of Shareholder(s)
Signature of Shareholder(s)
Please sign exactly as name appears hereon. When
shares are held by joint tenants, both should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please give
full title as such. If a corporation, please
sign in full corporate name by president or
other authorized officer. If a partnership,
please sign in partnership name by authorized
person.
THANK YOU FOR VOTING.
