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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB/A
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE E ACT OF 1934
For the fiscal year ended December 31, 1997
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________ to _____________
Commission File Number: 0-22613
ANTIVIRALS INC.
(Name of small business issuer in its charter)
OREGON 93-0797222
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
ONE S.W. COLUMBIA STREET, SUITE 1105, PORTLAND, OREGON 97258
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: 503-227-0554
Securities registered under Section 12(b) of the Exchange Act: NONE
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, NO PAR VALUE
(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the Registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days:
Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-KSB or any
amendment to this Form 10-KSB. [ ]
Issuer's revenues for its most recent fiscal year were $14,345. The aggregate
market value of voting stock held by nonaffiliates of the Registrant was
$76,020,354 as of March 20, 1998, based upon the last sales price as reported on
the Nasdaq National Market.
The number of shares outstanding of the Registrant's Common Stock as of
March 20, 1998, was 11,158,951 shares.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
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<PAGE>
ANTIVIRALS INC.
FORM 10-KSB/A INDEX
PART III
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
Item 9. Directors, Executive Officers, Promoters and Control Persons;
Compliance with Section 16(a) of the Exchange Act. . . . . . . . . . . . 3
Item 10. Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . 6
Item 11. Security Ownership of Certain Beneficial Owners and
Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Item 12. Certain Relationships and Related Transactions . . . . . . . . . . . . . 10
Item 13. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . 12
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
</TABLE>
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<PAGE>
This Form 10-KSB/A amends the Registrant's Form 10-KSB for the Fiscal Year
ended December 31, 1997, as filed with the Securities and Exchange Commission on
March 30, 1998.
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information with respect to the
directors and executive officers of ANTIVIRALS:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
John A. Beaulieu (1,2,3) 63 Chairman of the Board
Denis R. Burger, Ph.D. (1) 54 President, Chief Executive Officer,
Director
Gordon W. Duncan, Ph.D. 65 Vice President of Regulatory Affairs
and Clinical Development
Patrick L. Iversen, Ph.D. 43 Vice President of Research and
Development, Director
Alan P. Timmins (1) 38 Chief Operating Officer, Chief
Financial Officer, Director
Dwight D. Weller, Ph.D. (1) 46 Senior Vice President of Chemistry and
Manufacturing, Director
Nick Bunick (3) 61 Director
James B. Hicks, Ph.D. (2) 51 Director
Joseph Rubinfeld, Ph.D. (2) 65 Director
</TABLE>
------------------------------
(1) Member of the Executive Committee.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
JOHN A. BEAULIEU has served as a director at ANTIVIRALS since 1991 and
was elected Chairman in January 1996. He is the Managing Partner of Cascadia
Pacific Management, LLC ("CPM"). CPM is the contract manager for the Oregon
Resource and Technology Development Fund, a state-funded venture capital
fund. Mr. Beaulieu is also a general partner in Seed Management, a Vancouver
B.C.-based venture capital firm. Mr. Beaulieu is a director of TCC
Communications, Biozyme Inc., Virtual Corp., EPC Inc., and PuriPonics LLC.
Mr. Beaulieu received his BS&C degree in Accounting and an M.B.A. from the
University of Santa Clara.
DENIS R. BURGER, PH.D. has served as President and Chief Executive
Officer of ANTIVIRALS since January 1997, Chief Executive Officer of
ANTIVIRALS since January 1996, and as a director of ANTIVIRALS since 1991.
From 1992 to 1995, he was President and Chief Operating Officer of
ANTIVIRALS. He co-founded Epitope, Inc., a biotechnology company, and served
as Chairman from 1981 to 1990. Dr. Burger has also been a member of Sovereign
Ventures, LLC, a biotechnology consulting and merchant banking venture since
1991. Dr. Burger is a member of the Board of Directors of Cellegy
Pharmaceuticals, Inc. and SuperGen, Inc. Dr. Burger held the positions of
Assistant Professor, Associate Professor and Professor at the Oregon Health
Sciences University ("OHSU") from 1969 to 1986. Dr. Burger received a B.A.
in Bacteriology and Immunology from the University of California, Berkeley,
and his M.S. and Ph.D. degrees in Microbiology and Immunology from the
University of Arizona.
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<PAGE>
GORDON W. DUNCAN, PH.D. has served as Vice President of Regulatory
Affairs and Clinical development of ANTIVIRALS since 1997. From 1991 to
1996, he was Vice President for Research and a Director of ProCyte
Corporation, and previously served as Vice President for Administration of
Upjohn Laboratories (now part of Pharmacia and Upjohn) for more than 20
years. He is a founding and current director of the Program for Appropriate
Technology in Health, a Senior Project Officer with the Concept Foundation,
and the Executive Vice President and Chief Operating Officer for Women's
Capital Corporation. Dr. Duncan received a B.S. in Animal Husbandry from
Cornell University and an M.S. and Ph.D. in Physiology from Iowa State
University.
PATRICK L. IVERSEN, PH.D. has served as Vice President of Research and
Development and a director of ANTIVIRALS since 1997. From 1987 through 1997,
Dr. Iversen was on staff at the University of Nebraska Medical Center, most
recently as a Professor in the College of Medicine. Dr. Iversen, who has
published extensively on antisense research and development, additionally
served as a consultant to various pharmaceutical and biotechnology companies,
including GLAXO Inc., Innovir Pharmaceuticals, Lynx Therapeutics, and Isis
Pharmaceuticals, as well as to the ANTIVIRALS. Dr. Iversen holds a B.S. in
Biology from Westminster College and a Ph.D. in Biochemical Pharmacology and
Toxicology from the University of Utah, followed by post-doctoral work at the
Eppley Institute for Research in Cancer and Allied Diseases.
ALAN P. TIMMINS has served as Chief Operating Officer and Chief
Financial Officer of ANTIVIRALS since October 1996, as Executive Vice
President and Chief Financial Officer since 1992, and as a director of
ANTIVIRALS since 1997. From 1981 to 1991, he served in a variety of
positions at the firm of Price Waterhouse LLP, most recently as a Senior
Manager specializing in high technology and emerging growth companies. Mr.
Timmins received a B.B.A. in Accounting and Management from the University of
Portland and an M.B.A. from Stanford University. He is a Certified Public
Accountant.
DWIGHT D. WELLER, PH.D. has served as Senior Vice President of Chemistry
and Manufacturing since 1997, as Vice President of Research and Development
of ANTIVIRALS since 1992, and as a director of ANTIVIRALS since 1991. He
joined the faculty of Oregon State University in 1978 as Assistant Professor
and was an Associate Professor in the Chemistry Department from 1984 to 1992.
Dr. Weller received a B.S. in Chemistry from Lafayette College and a Ph.D.
in Chemistry from the University of California at Berkeley, followed by
postdoctoral work in Bio-Organic Chemistry at the University of Illinois.
NICK BUNICK has served as a director of ANTIVIRALS since 1992. Mr.
Bunick is the President and Chairman of the Board of three real estate
development companies and one investment management company. From 1987 to
1990, he was a Vice President of In-Focus Systems, Inc., a company that
specializes in the design and manufacturing of flat panel display products.
Mr. Bunick received a B.S. in Business Administration and Marketing from the
University of Florida.
JAMES B. HICKS, PH.D. has served as a director of ANTIVIRALS since 1997.
He has served as the Chief Executive Officer, Chief Scientist and a director
of Hedral Therapeutics, Inc., a biotechnology company, since its founding in
1993. Previously, he was a founding scientist and a Senior Scientific
Director at ICOS Corporation from 1990 to 1993, and Director
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<PAGE>
of the PPG Industries/Scripps Joint Research Program at Scripps Clinic, as
well as an Adjunct Member of the Molecular Biology Department in the Research
Institute of Scripps Clinic from 1986 to 1990. From 1978 through 1986, he
was Senior Scientist and Lab Chief of the Delbruck Laboratory at Cold Spring
Harbor Laboratory. Dr. Hicks received his B.A. degree in Biology from
Willamette University and his Ph.D. in Molecular Biology from the University
of Oregon, followed by post-doctoral research at Cornell University.
JOSEPH RUBINFELD, PH.D. has served as a director of ANTIVIRALS since
1996. He has served as Chief Executive Officer, President, Chief Scientific
Officer and a director of SuperGen, Inc. since its inception in 1991. Dr.
Rubinfeld was one of the four initial founders of Amgen, Inc. in 1980 and
served as Vice President and Chief of Operations until 1983. From 1987 to
1990, he was Senior Director at Cetus Corporation. From 1968 to 1980, Dr.
Rubinfeld was employed at Bristol-Myers Squibb (formerly Bristol-Myers
International Corporation) in a variety of positions, most recently as Vice
President and Director of Research and Development. He received his B.S. in
Chemistry from C.C.N.Y., and his M.A. and Ph.D. degrees in Chemistry from
Columbia University.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During 1997, ANTIVIRALS' Board of Directors held seven (7) meetings.
Each incumbent director attended more than seventy-five percent (75%) of the
aggregate of the total number of meetings held by the Board of Directors and
the total number of meetings held by all committees of the Board on which he
served during the period that he served.
The Board of Directors has appointed a standing Audit Committee which,
during the fiscal year ended December 31, 1997, conducted no meetings. The
members of the Audit Committee currently are John A. Beaulieu and Nick
Bunick. The Audit Committee reviews the scope of the independent annual
audit, the independent public accountants' letter to the Board of Directors
concerning the effectiveness of ANTIVIRALS' internal financial and accounting
controls and the Board of Directors' response to that letter, if deemed
necessary. The Board of Directors also has appointed a Compensation
Committee which reviews executive compensation and makes recommendations to
the full Board regarding changes in compensation, and also administers
ANTIVIRALS' stock option plans. During the fiscal year ended December 31,
1997, the Compensation Committee held two (2) meetings. The members of the
Compensation Committee currently are John A. Beaulieu, James B. Hicks, Ph.D.,
and Joseph Rubinfeld, Ph.D.
DIRECTOR COMPENSATION
Directors who are not employees of ANTIVIRALS receive a nonqualified
option to purchase 33,334 shares of Common Stock at an exercise price equal
to the fair market value of the Common Stock on the date of the grant
pursuant to ANTIVIRALS' 1992 Stock Incentive Plan, which vest over four
years. In addition, Dr. Rubinfeld is reimbursed for expenses for attendance
at Board meetings.
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<PAGE>
SCIENTIFIC ADVISORY COMMITTEE
ANTIVIRALS has established relationships with a group of scientific
advisors with expertise in their respective fields that complement
ANTIVIRALS' product research and development. The following individuals
serve on the Scientific Advisory Committee to ANTIVIRALS' Board of Directors:
CHRISTOPHER K. MATHEWS, PH.D. is Chairman of the Scientific Advisory
Committee. He is the Chairman of the Biochemistry-Biophysics Department at
Oregon State University. Dr. Mathews received a B.A. from Reed College and a
Ph.D. in Biochemistry from the University of Washington. He performed
postdoctoral work in Biochemistry at the University of Pennsylvania. Dr.
Mathews joined the Scientific Advisory Committee in 1994 and was a director
of ANTIVIRALS from 1991 to 1994.
STEVEN H. HEFENEIDER, PH.D. has been a staff immunologist at the
Veterans Administration Medical Center in Portland, Oregon since 1985 and
Research Associate Professor in the Department of Medicine at OHSU since
1987. He received a B.S. in biology from the University of Oregon, an M.S.
in genetics from the University of Minnesota and a Ph.D. in Microbiology and
Immunology from OHSU in 1981.
DAVID J. HINRICHS, PH.D. is a Research Scientist at the Veterans
Administration Medical Center in Portland, Oregon and a Professor of
Microbiology and Immunology at OHSU. From 1976 to 1985 he was a Professor of
Microbiology at Washington State University. He received a Ph.D. in
Microbiology from the University of Arizona in 1967.
JEFFREY D. HOSENPUD, M.D. has been Chief of Cardiology and a Professor
of Medicine at the Medical College of Wisconsin in Milwaukee since 1994. Dr.
Hosenpud was Professor of Medicine and Head of the Cardiac Transplant
Medicine at OHSU from 1980 to 1994, and Medical Director for the Registry of
the International Society for Heart & Lung Transplantation since 1993. Dr.
Hosenpud completed his M.D. at the University of California, Los Angeles.
ITEM 10. EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning the
compensation of ANTIVIRALS' Chief Executive Officer and each of the three (3)
other most highly compensated executive officers of ANTIVIRALS (the "named
executive officers") for the fiscal years ending December 31, 1997 and 1996.
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<PAGE>
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------------
SECURITIES
ANNUAL COMPENSATION UNDERLYING
------------------------------------ STOCK OPTIONS ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS GRANTED COMPENSATION(1)
- ------------------------------------------------- ---- ------ ----- ------- ---------------
<S> <C> <C> <C> <C> <C>
Denis R. Burger, Ph.D. 1997 $216,650 $25,000 100,000 $3,558
President and Chief Executive Officer(1) 1996 121,925 -- 2,443
James E. Summerton, Ph.D. 1997 120,333 50,000 2,712
President and Chief Scientific Officer(1) 1996 92,483 -- 2,712
Alan P. Timmins 1997 130,400 25,000 50,000 2,265
Chief Operating Officer and 1996 76,959 -- 2,262
Chief Financial Officer
Dwight Weller, Ph.D. 1997 130, 817 50,000 2,412
Senior Vice President of 1996 82,066 -- 2,412
Chemistry and Manufacturing
</TABLE>
- ------------------------------
(1) Dr. Summerton resigned in September, 1997 and Dr. Burger assumed the title
of President at that time.
STOCK OPTIONS
The following table sets forth information concerning options granted to
the named executives during the year ended December 31, 1997, under ANTIVIRALS'
1992 Stock Incentive Plan.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
NUMBER OF PRICE APPRECIATION FOR
SECURITIES PERCENT OF TOTAL OPTION TERM (2)
UNDERLYING OPTIONS OPTIONS GRANTED EXERCISE PRICE EXPIRATION ----------------------------------
NAME GRANTED (1) EMPLOYEES IN 1997 PER SHARE DATE 5% 10%
- ------------------- ---------------------- --------------------- --------------- ------------- ---------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
John Beaulieu -- -- -- -- -- --
Denis Burger 100,000 19.91% $6.38 06/12/2007 $410,601 $1,031,722
Gordon Duncan 50,000 9.95% 6.90 06/12/2007 223,411 560,204
Patrick L. Iversen 100,000 19.91% 6.69 09/11/2007 430,754 1,082,026
Alan Timmins 50,000 9.95% 6.38 06/12/2007 205,300 515,861
Dwight Weller 50,000 9.95% 6.38 06/12/2007 205,300 515,861
Nick Bunick -- -- -- -- -- --
James B. Hicks 33,334 6.64% 6.00 02/28/2007 125,781 318,755
Joseph Rubinfeld -- -- -- -- -- --
</TABLE>
- ------------------------------
(1) 15,000 options granted in 1997 for Dr. Duncan and options granted for
Drs. Iversen and Hicks become exercisable starting 12 months after the grant
date, with one-quarter of the options becoming exercisable at that time with an
additional one-quarter of the options becoming exercisable on the second, third
and fourth anniversary dates of the option grant, respectively. Options granted
in 1997 for Dr. Duncan become exercisable starting 12 months after the grant
date, with 5,000 options becoming exercisable at that time with an additional
5,000 options becoming exercisable on the second anniversary date of the option
grant, 12,500 options becoming exercisable on the third anniversary of the
option grant with the successful filing of an IND and 12,500 options becoming
exercisable on the fourth anniversary of the option grant with the successful
filing of an IND. All remaining options granted in 1997 become exercisable
immediately on the grant date.
(2) The amounts shown are hypothetical gains based on the indicated assumed
rates of appreciation of the Common Stock compounded annually for a ten-year
period. Actual gains, if any, on stock option exercises are dependent on the
future performance of the Common Stock and overall stock market conditions.
There can be no assurance that the Common Stock will appreciate at any
particular rate or at all in future years.
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<PAGE>
OPTION EXERCISES AND HOLDINGS
The following table provides information, with respect to the named
executive officers, concerning the exercise of options during the year ended
December 31, 1997, and unexercised options held as of December 31, 1997.
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT OPTIONS AT
SHARES DECEMBER 31, 1997 DECEMBER 31, 1997 (2)
ACQUIRED ON VALUE ----------------------------------- ---------------------------------
NAME EXERCISE REALIZED (1) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
-------------------- -------------- ----------------- ----------------- --------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
John Beaulieu -- -- 33,334 -- $ 75,085 --
Denis Burger -- -- 465,735 -- 860,897 --
Gordon Duncan -- -- -- 50,000 -- $ 15,138
Patrick L. Iversen -- -- -- 100,000 -- 12,500
Alan Timmins 491 $ 1,137 123,333 33,334 166,008 62,085
Dwight Weller -- -- 144,018 -- 229,233 --
Nick Bunick -- -- 33,334 -- 75,085 --
James B. Hicks -- -- -- 33,334 -- 27,084
Joseph Rubinfeld -- -- 8,333 25,001 6,771 20,313
</TABLE>
- ------------------------------
(1) The value realized is based on the difference between the market price
at the time of exercise of the options and the applicable exercise price.
(2) Represents the total gain which would be realized if all in-the-money
options held at December 31, 1997, were exercised, determined by multiplying the
number of shares underlying the options by the difference between the per share
option exercise price and the fair market value of $6.8125 per share at
December 31, 1997. An option is in-the-money if the fair market value of the
underlying shares exceeds the exercise price of the option.
SECTION 16 REPORTS
Section 16(a) of the Exchange Act requires ANTIVIRALS' directors and
officers, and persons who own more than ten percent (10%) of a registered class
of ANTIVIRALS' equity securities, to file initial reports of ownership and
reports of changes in ownership with the Commission. Such persons also are
required to furnish ANTIVIRALS with copies of all Section 16(a) reports they
file.
Based solely on its review of the copies of such reports received by it
with respect to fiscal 1997, or written representations from certain reporting
persons, ANTIVIRALS believes that all filing requirements applicable to its
directors, officers and persons who own more than ten percent (10%) of a
registered class of ANTIVIRALS' equity securities have been complied with for
fiscal 1997, except for the late filing of Forms 3, upon the Company's becoming
a registrant under the Securities Exchange Act of 1934, by John A. Beaulieu,
Denis R. Burger, Ph.D., Alan P. Timmins, Dwight D. Weller, Ph.D., James E.
Summerton, Ph.D., Nick Bunick, Joseph Rubinfeld, Ph.D., James B. Hicks, Ph.D.,
James E. Reinmuth, Ph.D., Frederick C. Pearson, and Donald R. Johnson.
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<PAGE>
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
ownership of ANTIVIRALS Common Stock as of April 28, 1998, with respect to:
(i) each person known by ANTIVIRALS to beneficially own more than five percent
(5%) of the outstanding shares of ANTIVIRALS Common Stock, (ii) each of
ANTIVIRALS' directors, (iii) each of ANTIVIRALS' named executive officers and
(iv) all directors and executive officers as a group.
<TABLE>
<CAPTION>
Shares Percent of
Beneficially Shares
Name and Address of Beneficial Owner Owned (1) Outstanding
------------------------------------ ------------ -----------
<S> <C> <C>
James E. Summerton, Ph.D. (2) 2,394,587 21.5%
2680 S.W. 3rd Street
Corvallis, OR 97333
John A. Beaulieu (3) 890,786 8.0%
4370 N.E. Halsey, Suite 233
Portland, OR 97213
Oregon Resource and Technology (4) 890,786 8.0%
Development Fund
4370 N.E. Halsey, Suite 233
Portland, OR 97213
Wayne Embree (5) 857,452 7.7%
4370 N.E. Halsey, Suite 233
Portland, OR 97213
Denis R. Burger, Ph.D. (6) 473,553 4.1%
ANTIVIRALS Inc.
1 S.W. Columbia, Suite 1105
Portland, OR 97258
Dwight D. Weller, Ph.D (7) 448,869 4.0%
ANTIVIRALS Inc.
4575 S.W. Research Way, Suite 200
Corvallis, OR 97333
Nick Bunick (8) 200,734 1.8%
ANTIVIRALS Inc.
1 S.W. Columbia, Suite 1105
Portland, OR 97258
Alan P. Timmins (9) 185,491 1.6%
ANTIVIRALS Inc.
1 S.W. Columbia, Suite 1105
Portland, OR 97258
James B. Hicks, Ph.D. (10) 8,333 *
ANTIVIRALS Inc.
1 S.W. Columbia, Suite 1105
Portland, OR 97258
Joseph Rubinfeld, Ph.D. (11) 16,667 *
ANTIVIRALS Inc.
1 S.W. Columbia, Suite 1105
Portland, OR 97258
All executive officers and directors as a group 4,624,019 38.5%
(10 persons)
</TABLE>
- -------------------------
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock
subject to options and warrants currently exercisable or convertible, or
exercisable or convertible within sixty (60) days of April 28, 1998, are
deemed beneficially owned and outstanding for computing the percentage of
the person holding such securities, but are not considered outstanding for
computing the percentage of any other person.
(2) Includes 727,154 shares held jointly or by others over which Dr. Summerton
exercises voting and investment power.
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<PAGE>
(3) Includes 33,334 shares subject to options exercisable within sixty (60)
days of April 28, 1998, of which Mr. Beaulieu is the record owner. ORTDF
is the beneficial owner of all of the 33,334 options for which Mr. Beaulieu
is the record owner. Includes 857,452 shares of Common Stock issued to
Cascadia Pacific Management, LLC for the benefit of ORTDF.
(4) Includes 33,334 shares subject to options held of record by Mr. Beaulieu
and exercisable within sixty (60) days of April 28, 1998, and 957,942
shares issued to Cascadia Pacific Management, LLC for the benefit of ORTDF.
See Note 3 above.
(5) Includes 957,452 shares of Common Stock issued to Cascadia Pacific
Management, LLC for the benefit of ORTDF.
(6) Includes 34,434 shares held by Sovereign Ventures, LLC, a limited liability
company in which Dr. Burger is a general partner. Also includes 432,402
shares subject to options exercisable within sixty (60) days of April 28,
1998.
(7) Includes 247,634 shares held jointly or by others over which Dr. Weller
exercises voting and investment power, 172,018 shares subject to options
exercisable by Dr. Weller and 2,551 shares subject to options exercisable
by Dr. Weller's spouse within sixty (60) days of April 28, 1998.
(8) Includes 50,667 shares held jointly or by others over which Mr. Bunick
exercises voting and investment power. Includes 33,334 shares subject to
options exercisable within sixty (60) days of April 28, 1998.
(9) Includes 185,000 shares subject to options exercisable within sixty (60)
days of April 28, 1998.
(10) Includes 8,334 shares subject to options exercisable within sixty (60) days
of April 28, 1998.
(11) Includes 16,667 shares subject to options exercisable within sixty (60)
days of April 28, 1998.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
James E. Summerton, Ph.D., the former President, former Chief Scientific
Officer, and a former director of the Company, is the general partner of
Anti-Gene Development Group ("AGDG"), and was the general partner of NEU-GENE
Development Group ("NGDG"). AGDG was founded in 1981 and NGDG was founded in
1984 to own and fund the Company's development of gene-targeted therapeutics and
NEU-GENE technology. NGDG and AGDG were combined in 1989, with AGDG as the
surviving entity. The Company entered into numerous research and development
contracts with AGDG and NGDG, all of which were completed or were superseded by
the Technology Transfer Agreement described below.
On February 9, 1993, the Company and AGDG entered into a Technology
Transfer Agreement wherein effective May 19, 1993, AGDG conveyed all
intellectual property in its control related to antisense technology (the
"Intellectual Property") to the Company. As part of the conveyance, the Company
tendered to AGDG for liquidation all partnership units received pursuant to an
exchange offer and received a 49.37 percent undivided interest in the
intellectual property. The Company then purchased the remaining undivided
interest in the Intellectual Property in consideration of payments of 4.05% of
gross revenues in excess of $200 million, if any, sales of products by the
Company which would, in the absence of the Technology Transfer Agreement,
infringe a valid claim under any patent transferred to the Company (the
"Technology Fees"). The Company's obligation to make payments of the Technology
Fees with respect to a particular product terminates upon the expiration of all
patents transferred to the Company pursuant to the Technology Transfer Agreement
related to that product.
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<PAGE>
Pursuant to a License and Option Agreement by and between AGDG and the
Company dated February 9, 1993 (the "License Agreement"), the Company granted to
AGDG a royalty-free nonexclusive license to use the Intellectual Property for
internal research and development and to sell small quantities of products
incorporating the Intellectual Property. In addition, if AGDG develops any
specific prototype products which incorporate any of the Intellectual Property,
the Company has the right to commercialize and market such products in
consideration of payments of 4.05% of gross revenues, in excess of the
$200 million exemption for all products utilizing the Intellectual Property, to
AGDG. If the Company elects not to commercialize the proposed AGDG product or
fails to meet certain product development milestones, the Company is required to
grant AGDG a license to develop and market the proposed product (an "AGDG
License"). The Company is entitled to payments for the AGDG license but only if
the proposed product incorporates patented improvements developed by the Company
to the Intellectual Property. The amount of the license fee payable to the
Company by AGDG pursuant to an AGDG License, if any, is equal to the percentage
payable to AGDG for products sold by the Company and covered by the Technology
Transfer Agreement. AGDG also has the right to obtain an exclusive royalty-free
license to use, develop, make, sell, distribute and sublicense products
utilizing the Intellectual Property at such time as the Company has less than 10
full-time employees engaged in developing, testing or marketing products based
upon the Intellectual Property for a period of at least 180 consecutive days.
On January 20, 1997, AGDG and the Company amended the Technology Transfer
Agreement to reduce the Technology Fees arising from the sale of diagnostic
products from 4.05% to 2% and to remove the $200 million exemption with respect
to sales of such diagnostic products. The Company also granted to AGDG
royalty-bearing licenses to make, use and sell certain quantities of product
derived from the Intellectual Property.
Pursuant to an August 4, 1992, restatement of earlier agreements between
Oregon Resource and Technology Development Fund ("ORTDF"), the Company, AGDG and
Dr. Summerton, warrants to purchase 600,000 shares of the Company's Common Stock
have been issued to ORTDF. John A. Beaulieu was president of ORTDF and a
director of the Company at that time. The warrants held by ORTDF are currently
exercisable at a purchase price of $.0003 per share. In connection with this
issuance to ORTDF, they acquired certain rights to register such shares under
the Securities Act. See "Description of Securities -- Registration Rights." In
May 1993, ORTDF acquired warrants to purchase an additional 357,500 shares in
exchange for 325 partnership units in AGDG conveyed to the Company. Such
warrants carry no registration rights. In March 1996, ORTDF exercised its
warrants in a cashless exercise for which ORTDF acquired 957,452 shares of the
Company's Common Stock.
Effective July 1, 1992, the Company entered into a consulting arrangement
with a former director of the Company, pursuant to which the Company agreed to
pay $3,500 per month for 24 months, and agreed to issue 11,000 shares of Common
Stock of the Company for no additional consideration. Under this arrangement,
and for services rendered prior to such date, the former director received
$10,500 in 1994, $52,500 in 1993 (including a $10,500 advance on 1994 payments),
and $69,500 in 1992.
Donald R. Johnson, Ph.D., a director of the Company, performed consulting
services and incurred reimbursable expenses for the Company for which he was
paid approximately $7,000 in 1995, $13,500 in 1994, and $6,500 in 1993.
-11-
<PAGE>
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
EXHIBITS
The following exhibits are filed herewith and this list is intended to
constitute the exhibit index:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------
<S> <C>
3.1 Third Restated Articles of Incorporation of ANTIVIRALS INC. (1)
3.2 Bylaws of ANTIVIRALS INC. (1)
4.1 Form of Specimen Certificate for Common Stock (1)
4.2 Form of Warrant for Purchase of Common Stock (1)
4.3 Form of Warrant Agreement (1)
4.4 Form of Representative's Warrant (1)
10.1 1992 Stock Incentive Plan (1)
10.2 Employment Agreement with Denis R. Burger, Ph.D., dated
November 4, 1996 (1)
10.3 Employment Agreement with James Summerton, Ph.D., dated
November 4, 1996 (1)
10.4 Employment Agreement with Alan P. Timmins, dated November 4,
1996 (1)
10.5 Employment Agreement with Dwight Weller, Ph.D., dated November 4,
1996 (1)
10.6 Technology Transfer Agreement between Anti-Gene Development Group
and ANTIVIRALS INC., dated February 9, 1992 (1)
10.7 Amendment to Technology Transfer Agreement between Anti-Gene
Development Group and ANTIVIRALS INC., dated January 20, 1996 (1)
10.8 License and Option Agreement between Anti-Gene Development Group
and ANTIVIRALS INC., dated February 9, 1993 (1)
10.9 Commercial Lease between Research Way Investments, Landlord, and
ANTIVIRALS INC., Tenant, dated June 15, 1992 (1)
10.10 Lease between Benjamin Franklin Plaza, Inc., Landlord, and
ANTIVIRALS INC., Tenant, dated June 17, 1992 (1)
10.11 First Amendment to Lease between Benjamin Franklin Plaza, Inc.,
Landlord, and ANTIVIRALS INC., Tenant, dated July 24, 1995 (1)
10.12 Employment Agreement with Patrick L. Iversen, Ph.D., dated
July 14, 1997 (2)
23.0 Consent of Arthur Andersen LLP (2)
27.0 Financial Data Schedule (2)
</TABLE>
-12-
<PAGE>
-------------------------
(1) Incorporated by reference to Exhibits to Registrant's
Registration Statement on Form SB-2, as amended and filed with
the Securities and Exchange Commission on May 29, 1997
(Commission Registration No. 333-20513).
(2) Incorporated by reference to Exhibits to Registrant's Annual
Report on Form 10-KSB for the fiscal year ended December 31,
1997, and filed with the Securities and Exchange Commission on
March 30, 1998.
REPORTS ON FORM 8-K
On November 6, 1997, the Company filed the following current report on
Form 8-K under Item 5 -- Other Events:
DATE OF REPORT TOPIC
-------------- -----
November 6, 1997 Signing of a Letter of Intent to acquire
IMMUNOTHERAPY Corporation
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: April 30, 1998.
ANTIVIRALS INC.
By: /s/ Denis R. Burger, Ph.D.
----------------------------------------
Denis R. Burger, Ph.D.
Chief Executive Officer and Director
-13-
<PAGE>
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in their capacities indicated, on April 30, 1998:
Signature: Title:
/s/ DENIS R. BURGER, PH.D. President, Chief Executive Officer and
- ------------------------------- Director (Principal Executive Officer)
Denis R. Burger, Ph.D.
Chief Operating Officer, Chief Financial
/s/ ALAN P. TIMMINS Officer (Principal Financial and
- ------------------------------- Accounting Officer), and Director
Alan P. Timmins
/s/ PATRICK L. IVERSEN, PH.D. Vice President of Research and
- ------------------------------- Development,
Patrick L. Iversen, Ph.D. and Director
/s/ DWIGHT D. WELLER, PH.D. Senior Vice President of Chemistry and
- ------------------------------- Manufacturing, and Director
Dwight D. Weller, Ph.D.
/s/ JOHN A. BEAULIEU Chairman of the Board
- -------------------------------
John A. Beaulieu
/s/ NICK BUNICK Director
- -------------------------------
Nick Bunick
/s/ JAMES B. HICKS, PH.D. Director
- -------------------------------
James B. Hicks, Ph.D.
/s/ JOSEPH RUBINFELD, PH.D. Director
- -------------------------------
Joseph Rubinfeld, Ph.D.
-14-
