<PAGE>
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
[X] Definitive Proxy Statement RULE 14A-6(E)(2))
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S)240.14a-11(c) or (S)240.14a-12
AUTOIMMUNE INC.
-----------------------------------------------------
(Name of Registrant as Specified In Its Charter)
AUTOIMMUNE INC.
-----------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) 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:
________________________________________________________________________
<PAGE>
[LOGO] AUTOIMMUNE INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 15, 1997
The Annual Meeting of Shareholders of AutoImmune Inc. (the "Company") will
be held on Thursday, May 15, 1997 at 3:00 o'clock in the afternoon, Eastern
Standard Time, at the BankBoston Auditorium, First Floor, 100 Federal Street,
Boston, Massachusetts, for the following purposes:
1. To elect a Board of Directors to serve for the ensuing year and until
their successors are duly elected and qualified.
2. To consider and act upon a proposal to amend the AutoImmune Inc.
Amended and Restated 1988 Stock Option Plan by increasing the number
of shares thereunder by 600,000 shares.
3. To consider and act upon such other business and matters or proposals
as may properly come before said Annual Meeting or any adjournment or
adjournments thereof.
The Board of Directors has fixed March 16, 1997 as the record date for
determining the shareholders having the right to receive notice of and to vote
at said Annual Meeting.
By Order of the Board of Directors
Constantine Alexander
Secretary
Lexington, Massachusetts
March 26, 1997
IF YOU DO NOT EXPECT TO BE PRESENT AT THIS MEETING AND WISH YOUR SHARES OF
CAPITAL STOCK TO BE VOTED, YOU ARE REQUESTED TO SIGN AND MAIL PROMPTLY THE
ENCLOSED PROXY WHICH IS BEING SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. A
RETURN ENVELOPE WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES IS
ENCLOSED FOR THAT PURPOSE.
<PAGE>
AUTOIMMUNE INC.
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
MAY 15, 1997
This proxy statement is furnished in connection with the solicitation by and
on behalf of the Board of Directors of AutoImmune Inc. (the "Company") of
proxies for use at the Annual Meeting of Shareholders of the Company to be
held, pursuant to the accompanying Notice of Annual Meeting, on Thursday, May
15, 1997, and at any adjournment or adjournments thereof (the "Annual
Meeting"). Action will be taken at the Annual Meeting to elect a Board of
Directors to serve for the ensuing year and until their successors are duly
elected and qualified and to act upon a proposal to amend the Company's
Amended and Restated 1988 Stock Option Plan (the "Stock Option Plan") by
increasing by 600,000 the number of shares that may be subject to options
thereunder.
If a shareholder specifies in the proxy how it is to be voted, it will be
voted in accordance with such specification, but if proxies which are signed
and returned do not specify how they are to be voted, the proxies will be
voted FOR the election of the nominees for directors named herein and FOR
approval of the other proposals described herein. Any shareholder giving a
proxy in the accompanying form retains the power to revoke it at any time
before it is exercised by a written revocation received by the Secretary of
the Company or by executing and returning to the Company a proxy bearing a
later date. Any shareholder who attends the Annual Meeting in person will not
be deemed thereby to revoke the proxy unless such shareholder affirmatively
indicates thereat his or her intention to vote the shares in person.
The Company's principal executive offices are located at 128 Spring Street,
Lexington, Massachusetts 02173. The Company mailed this proxy statement and
related form of proxy on or about March 26, 1997 to its shareholders of record
on March 16, 1997.
ANNUAL REPORT AND INDEPENDENT ACCOUNTANTS
The Company's Annual Report to Shareholders for the fiscal year ended
December 31, 1996, including financial statements and the report of Price
Waterhouse LLP ("Price Waterhouse") thereon, is being mailed herewith to each
of the Company's shareholders of record on March 16, 1997. The Board of
Directors has selected Price Waterhouse as the Company's independent
accountants for the current fiscal year. Representatives of Price Waterhouse
are expected to be present at the Annual Meeting where they will have the
opportunity to make a statement if they desire to do so and will be available
to respond to appropriate questions.
VOTING SECURITIES
The holders of record of shares of Common Stock of the Company on March 16,
1997 may vote at the Annual Meeting. On that date, there were outstanding and
entitled to vote 16,374,470 shares of Common Stock. Each share of Common Stock
is entitled to one vote on each of the matters listed in the Notice of Annual
Meeting. So long as a quorum is present at the Annual Meeting, (i) the
directors shall be elected by a plurality of the votes cast at the Annual
Meeting by the holders of shares entitled to vote at the Meeting and (ii) the
amendment to the Stock Option Plan may be approved by the affirmative vote of
the holders of shares representing a majority of the shares present or
represented at the Annual Meeting and entitled to vote thereon. With regard to
the election of directors, votes may be cast in favor or withheld; votes that
are withheld will have no effect on the outcome of the election of directors.
With regard to the proposal to amend the Stock Option Plan, abstentions will
have the effect of a vote against the proposal and broker non-votes will have
no effect on whether the proposal is approved.
<PAGE>
ELECTION OF DIRECTORS
The Company's By-Laws provide that the number of directors that shall
constitute the Board of Directors shall be determined by the Board of
Directors from time to time, but in no event shall the number of directors be
less than three. The Company's Board of Directors has currently set the number
of directors at six.
It is the intention of the persons named as proxies in the accompanying form
of proxy (unless authority to vote therefor is specifically withheld) to vote
for the election of the persons named in the following table, all of whom are
now directors of the Company, to serve for the ensuing year and until their
successors are elected and qualified. In the event that any of the nominees
becomes unavailable (which is not now anticipated by the Company), the persons
named as proxies have discretionary authority to vote for a substitute. The
Board of Directors has no reason to believe that any of said persons will be
unwilling or unable to serve if elected.
<TABLE>
<CAPTION>
DIRECTOR
NAME AGE SINCE
---- --- --------
<S> <C> <C>
Robert C. Bishop, Ph.D. ................................... 54 1992
Hugh A. D'Andrade.......................................... 58 1994
Allan R. Ferguson.......................................... 54 1988
R. John Fletcher........................................... 51 1991
Henri A. Termeer........................................... 50 1992
Barry Weinberg............................................. 58 1988
</TABLE>
Robert C. Bishop, Ph.D. has served as President and Chief Executive Officer
of the Company since he joined the Company in May 1992. For more than five
years prior to joining the Company, Dr. Bishop held senior management
positions at Allergan, Inc., an eye and skin care company, including
President, Allergan Medical Optics from 1986 to 1988; Senior Vice President,
Corporate Development of Allergan, Inc. from December 1988 to August 1989,
President, Allergan Pharmaceuticals, Inc. from August 1989 to February 1991
and Group President, Therapeutics for Allergan's worldwide pharmaceutical,
surgical and neurotoxin businesses from February 1991 to May 1992. From 1976
through 1986, Dr. Bishop served as an executive of American Hospital Supply
Corporation. Dr. Bishop received his B.A. degree and a Ph.D. in biochemistry
from the University of Southern California and his M.B.A. from the University
of Miami. Dr. Bishop is a director of Quintiles Transnational Corp., a
contract research, sales and marketing company serving the healthcare
industry.
Hugh A. D'Andrade has been Vice Chairman and Chief Administrative Officer of
Schering-Plough Corporation since January 1996 and was Executive Vice
President (Administration) of Schering-Plough Corporation from January 1984 to
January 1996. Mr. D'Andrade is also a director of Schering-Plough Corporation.
Allan R. Ferguson has been General Partner of Atlas Venture, an
international venture capital fund which invests in early stage health care
companies, and leader of its Life Science team, since April 1994. He has also
been a Managing Partner of Aspen Venture Partners, L.P., a limited partnership
formed to carry on the venture capital activities of 3i Ventures in the United
States, since March 1991. Mr. Ferguson joined 3i Ventures in August 1986 as a
Senior Vice President, and was President of 3i Ventures before it sold its
portfolio to Aspen Venture Partners, L.P. in 1991. Prior to joining 3i
Ventures, Mr. Ferguson held a number of senior management positions at Johnson
& Johnson and Damon Biotech, Inc. Mr. Ferguson is also a director of ArQule,
Inc.
R. John Fletcher is the founder and Chief Executive Officer of Fletcher
Spaght, Inc., a management consulting firm founded in 1983 specializing in
strategy development for high technology and health care businesses. Prior to
founding Fletcher Spaght, Inc., Mr. Fletcher was a senior member of The Boston
Consulting Group, Inc. Mr. Fletcher is a director of Cayenne Software, Inc.
and Nitinol Medical Technologies, Inc.
Henri A. Termeer has been President since 1983, Chief Executive Officer
since 1985 and Chairman of the Board of Directors since 1988, of Genzyme
Corporation, an international health care company that develops,
2
<PAGE>
manufactures and markets its own products. Prior to joining Genzyme in 1983,
he spent 10 years in various management positions at Baxter International
Laboratories, Inc. Mr. Termeer is also a director of ABIOMED, Inc., H2Q
Healthcare Investors, Genzyme Corp., Genzyme Transgenics Corp. and Diacrin,
Inc. Mr. Termeer is also a Trustee of Hambrecht & Quist Healthcare Investors,
Inc. and Hambrecht & Quist Life Sciences, Inc., closed-end investment
companies whose investment advisor is Hambrecht & Quist Capital Management
Incorporated, an affiliate of Hambrecht & Quist LLC.
Barry Weinberg is Chairman of the Board of Directors. From September 1988 to
May 1992, Mr. Weinberg was President of the Company. He is a co-founder and
for more than five years has been President of CW Group, Inc., a venture
capital management firm specializing in the health care industry.
CERTAIN INFORMATION CONCERNING THE BOARD OF DIRECTORS
The Board of Directors currently has formed the following committees:
(a) Compensation Committee, consisting of Messrs. Ferguson, Fletcher and
Termeer, whose function is to review compensation paid to the Company's
officers and employees and to administer the Company's stock option plans.
(b) Audit Committee, consisting of Messrs. Ferguson, Fletcher and
Termeer, whose function is to consult with the Company's independent
auditors to ascertain compliance with appropriate audit procedures.
During fiscal 1996, the Board of Directors met six times, the Compensation
Committee met eight times, and the Audit Committee met twice. Each director
attended at least 75% of the aggregate of the total number of meetings of the
Board of Directors and the total number of meetings of the committees on which
he served that were held in fiscal 1996 during the period that he served.
Directors do not receive any fees for service on the Board of Directors but
they are reimbursed for their expenses for each meeting attended. Pursuant to
the Stock Option Plan for Nonemployee Directors, as amended (the "Nonemployee
Director Plan"), each director who is not an employee of the Company
automatically receives an option to purchase 25,000 shares of Common Stock of
the Company immediately following the annual meeting of shareholders at which
he is first elected and an option to purchase 6,500 shares of Common Stock
annually thereafter if he continues to be eligible under the terms of the
Nonemployee Director Plan. In addition, each nonemployee director who is a
member of any standing committee of the Board of Directors automatically
receives an additional option to purchase 1,000 shares of Common Stock of the
Company immediately following his first election to a standing committee of
the Board of Directors (a "Committee Initial Grant"). An option to purchase
1,000 shares of Common Stock is automatically granted every four years to a
director who continues to be a member of the standing committee for which he
received a Committee Initial Grant provided that the director continues to be
eligible under the terms of the Nonemployee Director Plan. The exercise price
of options granted under the Nonemployee Director Plan is equal to the closing
sale price of a share of the Company's Common Stock on the Nasdaq National
Market System on the date the option is granted. The options become
exercisable in four equal annual installments commencing one year after the
date of grant, provided that the director continues to be eligible under the
terms of the Nonemployee Director Plan. In 1996, Hugh A. D'Andrade, Allan R.
Ferguson, R. John Fletcher, Henri A. Termeer and Barry Weinberg each received
an option to purchase 6,500 shares of Common Stock under the Nonemployee
Director Plan.
All directors hold office until the next meeting of the shareholders of the
Company and until their successors are elected and qualified. There are no
family relationships among directors or executive officers of the Company.
3
<PAGE>
EXECUTIVE COMPENSATION
The following table contains a summary of the annual, long-term and other
compensation for each of the Company's fiscal years ended December 31, 1994,
1995 and 1996 of those persons who were, at December 31, 1996, the Chief
Executive Officer and the four other most highly compensated executive
officers of the Company. The Company did not grant any restricted stock awards
or stock appreciation rights or make any long term incentive plan payments in
1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------- ------------
AWARDS
SECURITIES
SALARY BONUS UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTIONS(#) COMPENSATION($)
- --------------------------- ---- ---------- --------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
Robert C. Bishop........ 1994 249,971 68,715 40,000 1,000(1)
President and 1995 264,933 79,459 -- 741(1)
Chief Executive Officer 1996 283,308 85,000 15,000 1,040(1)
Fredric G. Bader........ 1994 138,681 25,000 40,000 1,000(1)
Vice President, 1995 149,969 32,000 -- 1,000(1)
Operations 1996 161,923 39,500 10,000 1,000(1)
Malcolm J.F. Fletcher... 1994 132,562 22,500 40,000 2,711(1)
Vice President, 1995 140,324 26,000 -- 200(1)
Clinical and Regulatory 1996 148,262 27,000 9,000 100(1)
Affairs
Michael W. Rogers....... 1994 -- -- -- --
Vice President, Chief 1995 66,923(2) 13,000 165,000 11,288(3)
Financial Officer 1996 154,423 30,000 9,000 12,572(3)
and Treasurer
Jo Ann Wallace.......... 1994 33,846(2) 4,700 140,000 --
Vice President, 1995 130,000 25,000 -- 1,155(3)
Corporate Development 1996 140,000 28,000 9,000 12,096(3)
</TABLE>
- --------
(1) Represents expenses for personal financial planning for which the Company
reimbursed Dr. Bishop, Mr. Bader and Dr. Fletcher and, in the case of Dr.
Fletcher in fiscal 1994, also represents $2,111 in relocation expenses for
which Dr. Fletcher was reimbursed by the Company.
(2) Mr. Rogers became employed by the Company on July 21, 1995, and Ms.
Wallace became employed by the Company on October 10, 1994.
(3) Represents expenses for relocation for which Mr. Rogers and Ms. Wallace
were reimbursed by the Company.
EMPLOYMENT AGREEMENT
The Company entered into an employment agreement with Dr. Robert C. Bishop
effective May 1, 1992, pursuant to which Dr. Bishop received a starting base
salary of $240,000 per year to be reviewed annually by the Board of Directors,
plus a mutually-agreed upon bonus in the event that certain milestones, which
are determined annually, are achieved. In addition, pursuant to his employment
agreement, Dr. Bishop received options in fiscal 1992 to purchase 450,000
shares of the Company's Common Stock at a price of $1.33 per share. If the
Company terminates Dr. Bishop's employment without cause, he is entitled to
receive six months severance pay. Either party may terminate Dr. Bishop's
employment agreement upon reasonable notice to the other party.
4
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to options granted
during fiscal 1996 under the Company's Stock Option Plan to the named
executive officers.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
NUMBER OF PERCENT OF TOTAL STOCK PRICE
SECURITIES OPTIONS APPRECIATION
UNDERLYING GRANTED TO FOR OPTION TERM
OPTIONS EMPLOYEES IN EXERCISE EXPIRATION --------------------
NAME GRANTED(#)(1) FISCAL YEAR(2) PRICE(3) DATE 5% 10%
---- ------------- ---------------- -------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Robert C. Bishop........ 15,000(4) 6.5% $9.38 8/27/06 $ 88,485 $ 224,240
Fredric G. Bader........ 10,000(4) 4.3 9.38 8/27/06 58,990 149,493
Malcolm J.F. Fletcher... 9,000(4) 3.9 9.38 8/27/06 53,091 134,544
Michael W. Rogers....... 9,000(4) 3.9 9.38 8/27/06 53,091 134,544
Jo Ann Wallace.......... 9,000(4) 3.9 9.38 8/27/06 53,091 134,544
</TABLE>
- --------
(1) All of the options granted qualify as incentive options under Section 422
of the Internal Revenue Code.
(2) A total of 232,300 options were granted to employees in fiscal 1996 under
the Stock Option Plan.
(3) The exercise price may be paid in cash, by check or, in the discretion of
the Committee, in shares of Common Stock valued at fair market value on
the date of exercise or by delivery of a personal recourse note bearing
interest payable not less than annually at no less than 100% of the lowest
applicable Federal rate, as defined in Section 1274(d) of the Internal
Revenue Code, or by any combination of the foregoing.
(4) Twenty-five percent of the options become exercisable on August 27, 1997
and an additional 25% become exercisable on each anniversary of that date
if the participant is then employed by the Company. Under the Stock Option
Plan, the Committee may at any time accelerate the exercisability of any
option.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND YEAR-END OPTION VALUES
The following table sets forth information as of December 31, 1996
concerning unexercised stock options held by the Chief Executive Officer and
the named executive officers.
<TABLE>
<CAPTION>
VALUE OF SECURITIES
NUMBER OF SECURITIES UNDERLYING UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY OPTIONS AT
SHARES OPTIONS AT FISCAL YEAR END FISCAL YEAR END($)(1)
ACQUIRED ON VALUE ------------------------------ -------------------------
NAME EXERCISE (#) REALIZED ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ------------ ------------ ------------- -------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert C. Bishop........ -- -- 450,000 170,000 $6,322,500 $1,343,750
Fredric G. Bader........ 10,000 106,700 76,500 150,000 1,074,825 1,205,000
Malcolm J.F. Fletcher... 10,000 120,500 64,000 144,000 899,200 1,162,750
Michael W. Rogers....... -- -- 12,500 161,500 67,250 874,450
Jo Ann Wallace.......... -- -- 12,500 136,500 131,250 1,392,750
</TABLE>
- --------
(1) Based upon a fair market value of $15.38 for a share of the Company's
common stock which was the closing price for a share on December 31, 1996.
5
<PAGE>
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is comprised of three
non-employee directors. The Committee is responsible for the establishment and
administration of the Company's executive compensation program. In addition,
the Committee is responsible for the granting of awards under and the
administration of the Company's Stock Option Plan, the Nonemployee Director
Plan and the AutoImmune Inc. Employee Stock Purchase Plan.
The Compensation Committee's basic policy in setting compensation for the
Company's executive officers is to ensure that compensation is (a) designed to
align the interests of executive management with the long term interests of
the shareholders and (b) competitive with the compensation paid by other
development stage biotechnology companies in order to attract and retain
executives, and to base compensation on each individual's contribution to the
Company's success. The Committee's objective is to have each executive's
compensation package contingent on the Company's operational and, ultimately,
financial success, as well as on individual performance milestones. The
Committee reviews the Chief Executive Officer's performance and sets his
compensation annually. Compensation recommendations for the Company's other
executive officers are made by the Chief Executive Officer and reviewed by the
Compensation Committee.
The cash compensation paid to each executive officer in fiscal 1996 was
comprised of two fundamental elements: base salary and a variable incentive
bonus. The Committee continues to believe that long term equity-based
incentive compensation (in the form of stock options) which is performance
driven and intended to align management's interest with the interests of the
Company's shareholders constitutes an equally fundamental element of each
executive officer's total compensation package. As a result, in 1996, the
Committee granted options to purchase an aggregate of 52,000 shares of the
Company's common stock to the Company's executive officers. The Committee's
policy generally is that executive officers having higher levels of
responsibility should have a compensation package that places greater emphasis
and dependence upon the Company's success and stock appreciation than on base
salary.
The three components of the executive officers' compensation are discussed
below.
BASE SALARY. The base salary in fiscal 1996 for each of the executive
officers, including Dr. Bishop, the President and Chief Executive Officer, was
established based on the performance of the individual as well as on a review
of the compensation paid to persons holding comparable positions in other
development stage biotechnology companies. To determine the compensation paid
by these comparable companies, the Committee reviewed several published salary
surveys. Dr. Bishop's base salary has been set above the average paid to the
chief executive officers of comparable companies in recognition of Dr.
Bishop's extensive experience and because he joined the Company at an early
stage in its development.
INCENTIVE BONUS. Each executive officer, including the Chief Executive
Officer, was eligible to receive an incentive bonus in fiscal 1996 based upon
his or her achievement of specific goals tied to operational milestones. Each
individual's goals were designed to assist the Company to achieve its overall
corporate objectives. Each executive's goals were determined by the Committee
and approved by the Board of Directors. The goals for fiscal 1996 were based
on the Company's need to advance its clinical trial programs and to continue
building a strong scientific and management team. In addition, a portion of
Dr. Bishop's bonus was discretionary based upon results achieved by the
Company to which Dr. Bishop contributed, as determined by the Committee. Each
goal in an individual's bonus program is weighted according to its importance
in achieving Company-wide objectives.
The amount of bonus as a percentage of base salary that each executive
officer was eligible to receive in fiscal 1996 was set by the Committee at a
level sufficient to provide a meaningful incentive to each individual and to
align his or her interests with the Company's objectives. There was no minimum
guaranteed bonus for any of the executive officers in fiscal 1996.
6
<PAGE>
The Committee reviewed each executive officer's performance, including the
performance of the Chief Executive Officer, to determine if the executive
officer had achieved his or her goals. For fiscal 1996, Dr. Bishop earned 100%
of the bonus he was eligible to receive and each executive officer earned at
least 91% of the bonus he or she was eligible to receive.
STOCK OPTIONS. In fiscal 1996, the Committee recommended, and the Board of
Directors approved, grants of incentive stock options to the executive
officers which were designed to provide an incentive to these individuals to
work as a team to achieve long term objectives of the Company. These options
become exercisable in four equal annual installments beginning on the first
anniversary of the date of grant.
Respectfully submitted,
Allan R. Ferguson
R. John Fletcher
Henri A. Termeer
7
<PAGE>
COMPARISON OF TOTAL RETURN AMONG AUTOIMMUNE INC.,
AMEX BIOTECHNOLOGY INDEX AND THE NASDAQ COMPOSITE INDEX
The following graph compares, for the period commencing January 21, 1993
(the effective date of the registration of the initial public offering of
shares of the Company's Common Stock under the Securities Act of 1933) and
ending on December 31, 1996, the cumulative total return of the Company's
Common Stock with the NASDAQ Composite Index and the AMEX Biotechnology Index,
assuming the investment of $100 on January 21, 1993. The Company has not paid
any dividends on its Common Stock.
[GRAPH APPEARS HERE]
<TABLE>
<CAPTION> AMEX
Measurement period Biotech NASDAQ
(Fiscal Year Covered) AutoImmune Inc. Index Index
- --------------------- --------------- -------- --------
<S> <C> <C> <C>
Measurement PT -
01/21/93 $100.00 $100.00 $100.00
FYE 12/31/93 $ 54.00 $ 74.00 $111.00
FYE 12/31/94 $ 41.00 $ 53.00 $ 97.00
FYE 12/31/95 $ 80.00 $ 78.00 $153.00
FYE 12/31/96 $110.00 $ 85.00 $188.00
</TABLE>
8
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the beneficial
ownership of the Company's Common Stock as of March 1, 1997 by (i) those
persons known to the Company to be the beneficial owners of more than five
percent of the outstanding shares of Common Stock of the Company, (ii) each of
the Company's directors, (iii) the executive officers named in the Summary
Compensation Table, and (iv) all directors and officers of the Company as a
group. All information with respect to beneficial ownership by the Company's
directors, officers or beneficial owners has been furnished by the respective
director, officer or beneficial owner, as the case may be. The number of
shares set forth below includes shares beneficially owned by spouses and minor
children; the named persons disclaim any beneficial interest in the shares so
included.
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT
NAME AND ADDRESS OF BENEFICIAL OWNERS BENEFICIALLY OWNED(1) OWNED
- ------------------------------------- --------------------- -------
<S> <C> <C>
FIVE PERCENT OR GREATER SHAREHOLDERS
State of Wisconsin Investment Board.............. 1,590,000 9.71%
P.O. Box 7842
Madison, WI 53707
Four Partners.................................... 1,415,900 8.65%
667 Madison Avenue
New York, NY 10021
Dawson-Samberg Capital Management, Inc........... 900,000 5.50%
354 Pequot Avenue, P.O. Box 760
Southport, CT 06490
DIRECTORS
Robert C. Bishop................................. 504,907(2) 3.00%
Hugh A. D'Andrade................................ 66,000(3) *
Allan R. Ferguson................................ 606,805(4) 3.70%
R. John Fletcher................................. 33,395(5) *
Henri A. Termeer................................. 49,750(6) *
Barry Weinberg................................... 180,433(7) 1.10%
NAMED EXECUTIVE OFFICERS
Robert C. Bishop................................. 504,907(2) 3.00%
Fredric G. Bader................................. 84,561(8) *
Malcolm J. F. Fletcher........................... 65,520(9) *
Michael W. Rogers................................ 12,500(10) *
Jo Ann Wallace................................... 17,707(11) *
Directors and officers as a group (10 persons)... 1,621,578 9.45%
</TABLE>
- --------
* Less than 1%
(1) Except as otherwise noted, each person referenced in the table has sole
voting and investment power with respect to such person's shares.
(2) Includes 450,000 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of the date of this table.
(3) Includes 10,000 shares of Common Stock held by a trust of which Mr.
D'Andrade is a trustee and 13,500 shares of Common Stock issuable upon
the exercise of options that are exercisable within 60 days of the date
of this table.
(4) Includes 571,625 shares of Common Stock owned by Aspen Venture Partners,
L.P. of which Mr. Ferguson serves as Managing Partner, 15,000 shares of
Common Stock issuable to Aspen Venture Associates, L.P., the General
Partner of Aspen Venture Partners, L.P., upon the exercise of options,
9,630 shares of Common Stock owned by Mr. Ferguson, 4,500 shares of
Common Stock that Mr. Ferguson has the right to acquire within 60 days of
the date of this table pursuant to options, 3,250 shares of Common Stock
owned jointly by Mr. Ferguson and his spouse, 800 shares of Common Stock
owned by Mr. Ferguson's spouse and 2,000 shares of Common Stock owned by
Mr. Ferguson as custodian for his children. Mr. Ferguson has shared
voting and investment power with respect to all such shares of Common
Stock except that Mr. Ferguson has sole voting and investment power with
respect to the 9,630 shares of
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Common Stock owned by him and said 4,500 shares of Common Stock issuable
upon the exercise of options and no voting and investment power with
respect to the 800 shares held by his spouse. Mr. Ferguson disclaims
beneficial ownership of the 800 shares of Common Stock owned by his spouse
and the 2,000 shares of Common Stock owned by Mr. Ferguson as custodian
for his children.
(5) Includes 60 shares of Common Stock owned by Mr. Fletcher's minor children
and 13,250 shares of Common Stock issuable upon the exercise of options
that are exercisable within 60 days of the date of this table.
(6) Includes 29,750 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of the date of this table.
(7) Includes 93,000 shares of Common Stock issuable to Mr. Weinberg upon the
exercise of options that are exercisable within 60 days of the date of
this table.
(8) Includes 76,500 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of the date of this table and
5,777 shares owned jointly by Dr. Bader and his spouse.
(9) Includes 64,000 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of the date of this table and
20 shares of Common Stock owned by Dr. Fletcher's child.
(10) Includes 12,500 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of the date of this table.
(11) Includes 12,500 shares of Common Stock issuable upon the exercise of
options that are exercisable within 60 days of the date of this table and
5,207 shares owned jointly by Ms. Wallace and another.
-------------------------------
PROPOSAL TO APPROVE THE AMENDMENT TO THE
AMENDED AND RESTATED 1988 STOCK OPTION PLAN
On March 3, 1997, upon the recommendation of the Compensation Committee, the
Board of Directors adopted, subject to approval by the shareholders, an
amendment to the Stock Option Plan that would increase the maximum number of
shares subject to options under the Stock Option Plan from 3,100,000 to
3,700,000 to allow for the grant of options to key employees who are in a
position to make significant contributions to the Company, as well as to other
persons or entities who perform services for the Company. As the Stock Option
Plan will expire next year, this increase is intended to make available the
number of shares that the Company estimates would be subject to option grants
in the ordinary course through next year's annual meeting.
The Stock Option Plan provides for the granting of options intending to
qualify as incentive stock options ("ISOs") as defined in Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code") and nonstatutory stock
options, ("NSOs"). As of December 31, 1996, options to purchase 2,298,011
shares of Common Stock were outstanding under the Stock Option Plan. If
shareholder approval of the amendment to the Stock Option Plan is obtained,
there will be available for future grant under the Stock Option Plan options
with respect to 1,173,835 shares of Common Stock plus any additional shares
covered by the unexercised portion of options previously granted under the
Stock Option Plan, which hereafter expire or terminate. As of March 10, 1997,
the Company had 73 employees. Based on the closing price of a share of the
Company's Common Stock on March 10, 1997, which was $12.50, the market value
of the shares of Common Stock subject to options that are outstanding and
would be available for future grants under the Stock Option Plan was
$43,398,075 on that date.
The Stock Option Plan is administered by the Compensation Committee of the
Company's Board of Directors. Among other things, the Compensation Committee
determines, subject to the provisions of the Stock
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Option Plan, who is eligible to receive an option, the participants to whom
options will be granted, the nature of the options to be granted and the terms
and conditions of each option, including, without limitation, the exercise
price, vesting schedule and term thereof.
The exercise price of ISOs granted under the Stock Option Plan may not be
less than the fair market value of the shares at the time the option is
granted and the exercise price of NSOs granted under the Stock Option Plan may
not be less than 50% of the fair market value of the shares at the time the
option is granted. Options may be exercisable for a period of not more than
ten years from the date of grant, subject to earlier termination on the
optionee's death, disability or termination of employment, and may not be
assigned or otherwise transferred except by will or by the laws of descent and
distribution. Shares subject to options granted under the Stock Option Plan
which have lapsed or terminated may again be available for options granted
under the Stock Option Plan. Subject to the foregoing and certain other
restrictions set forth in the Stock Option Plan, the time or times at which
options granted under the Stock Option Plan may be exercised, and any
conditions pertaining to such exercise, are determined by the Compensation
Committee. The Compensation Committee may at any time accelerate the time when
an option not immediately exercisable in full may be exercised in whole or in
part. In the event the Company sells all or substantially all of its assets or
engages in a merger or combination with any other company (other than a merger
or combination in which holders of the Company's voting securities immediately
prior to the merger or combination own 50% or more of the outstanding voting
securities in the resulting corporation), all outstanding options, including
unvested options, become immediately exercisable and the Committee may, in its
sole discretion, cancel all outstanding options, including all outstanding
options or, in the case of a merger or consolidation issue replacement
options.
For Federal income tax purposes, no taxable income results to the optionee
upon the grant of an ISO or upon the issuance of shares to the optionee upon
the exercise of the ISO, unless the optionee is then subject to alternative
minimum tax, discussed below. Correspondingly, no deduction is allowed to the
Company upon either the grant or the exercise of an ISO. However, if the
aggregate fair market value (determined at the time the option is granted) of
the Common Stock covered by ISOs which are exercisable for the first time in a
calendar year exceeds $100,000, the excess will not be treated as shares
acquired through the exercise of an ISO.
If shares acquired upon the exercise of an ISO are not disposed of either
within the two-year period following the date the option is granted or within
the one-year period following the date the shares are transferred to the
optionee pursuant to exercise of the option, the difference between the amount
realized on any disposition thereafter and the option price will be treated as
long-term capital gain or loss to the optionee. If a disposition occurs before
the expiration of the requisite holding periods, then the lower of (i) any
excess of the fair market value of the shares at the time of exercise of the
option over the option price or (ii) the actual gain realized on disposition,
will be deemed to be compensation to the optionee and will be taxed at
ordinary income rates. In such event the Company will be entitled to a
corresponding deduction from its income, provided the Company withholds and
deducts to the extent required by then applicable law. Any such increase in
the income of the optionee or deduction from the income of the Company
attributable to such disposition is treated as an increase in income or a
deduction from income in the taxable year in which the disposition occurs. Any
excess of the amount realized by the optionee on disposition over the fair
market value of the shares at the time of exercise will be treated as capital
gain.
Alternative minimum taxable income in excess of a taxpayer's exemption
amount is subject to the alternative minimum tax, which is imposed on
individuals at a flat rate of 26% of the first $175,000 and 28% of the balance
and is payable to the extent it exceeds the regular income tax. The excess of
the fair market value on the date of exercise over the option price of shares
acquired on exercise of ISOs generally constitutes an item of alternative
minimum taxable income for the purpose of the alternative minimum tax, and the
payment of any alternative minimum tax resulting therefrom will not increase
the optionee's basis for the shares acquired for regular income tax purposes.
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Under the Code, a person who is granted a NSO will not have taxable income
at the date of grant; however, an optionee who thereafter exercises such an
option will be deemed to have received compensation income in an amount equal
to the difference between the option price and the fair market value of the
shares on the date of exercise. The optionee's basis for such shares will be
increased by the amount which is deemed compensation income. For the year in
which a NSO is exercised, the Company will be entitled to a deduction in the
same amount as the optionee is required to include in his or her income,
provided the Company withholds and deducts to the extent required by then
applicable law. When the optionee disposes of such shares, he or she will
recognize capital gain or loss.
As of December 31, 1996, under the Stock Option Plan, (i) Robert C. Bishop
had received options to purchase a total of 620,000 shares of Common Stock,
(ii) Fredric G. Bader had received options to purchase a total of 240,000
shares of Common Stock, (iii) Malcolm J. F. Fletcher had received options to
purchase a total of 219,000 shares of Common Stock, (iv) Michael W. Rogers had
received options to purchase a total of 174,000 shares of Common Stock, (v) Jo
Ann Wallace had received options to purchase a total of 149,000 shares of
Common Stock, (vi) all current executive officers as a group had received
options to purchase 1,402,000 shares of Common Stock, (vii) as a group the
Company's current directors who are not executive officers have received
options to purchase 208,000 shares of Common Stock, (viii) Aspen Venture
Partners, L.P., an associate of Allan R. Ferguson, a director of the Company,
had received an option to purchase 15,000 shares of the Company's Common
Stock, (ix) associates of R. John Fletcher, a director of the Company, had
received options to purchase 16,116 shares of the Company's Common Stock, and
(x) all non-executive officer employees as a group had received options to
purchase 539,450 shares of the Company's Common Stock. Because options are
granted from time to time by the Compensation Committee to those persons who
the Compensation Committee determines in its discretion should receive
options, the benefits and amounts that may be received in the future by
persons eligible to participate in the Stock Option Plan is not presently
determinable.
THE BOARD OF DIRECTORS URGES THE SHAREHOLDERS TO VOTE FOR THE APPROVAL OF
THE PROPOSED AMENDMENT. PROXIES WILL BE VOTED IN THE MANNER SPECIFIED THEREIN
WITH RESPECT TO APPROVAL AND, IF NO SPECIFICATION IS MADE, IN FAVOR OF
APPROVAL.
COMPLIANCE WITH SECTION 16(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, executive officers and persons who own more than ten
percent of a registered class of the Company's equity securities to file with
the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the Company. Officers, directors and greater than ten percent beneficial
owners are required to furnish the Company with copies of all Section 16(a)
forms they file.
To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1996, all
Section 16(a) filing requirements applicable to the Company's officers,
directors and greater then ten percent beneficial owners were complied with.
PROPOSALS TO SHAREHOLDERS
Proposals to shareholders intended to be presented at the next annual
meeting of shareholders must be received by the Company at its principal
executive offices by November 26, 1997 for inclusion in the proxy statement
and form of proxy relating to that meeting and must comply with the applicable
requirements of federal securities laws.
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OTHER MATTERS
The Board of Directors knows of no business which will be presented for
consideration at the Annual Meeting other than that shown above. However, if
any such other business should come before the Annual Meeting, it is the
intention of the persons named as proxies in the enclosed form of proxy to
vote the proxies in respect of any such business in accordance with their best
judgment.
The cost of preparing, assembling and mailing this proxy material will be
borne by the Company. The Company may solicit proxies otherwise than by use of
the mail, in that certain officers and regular employees of the Company,
without additional compensation, may use their personal efforts, by telephone
or otherwise, to obtain proxies. Such assistance may take the form of
personal, telephonic or written solicitation or any combination thereof. All
costs of solicitation will be borne by the Company. The Company will also
request persons, firms and corporations holding shares in their names, or in
the names of their nominees, which shares are beneficially owned by others, to
send this proxy material to and obtain proxies from such beneficial owners and
will reimburse such holders for their reasonable expenses in doing so.
By Order of the Board of Directors
Constantine Alexander
Secretary
March 26, 1997
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AUTOIMMUNE INC.
ANNUAL MEETING OF SHAREHOLDERS -- MAY 15, 1997
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder hereby appoints Robert C. Bishop and Michael W.
Rogers, and each of them individually, proxies for the undersigned, with full
power of substitution and re-substitution, to represent the undersigned and to
vote all shares of common stock of AUTOIMMUNE INC. (the "Company") that the
undersigned is entitled to vote at the Annual Meeting of Shareholders of the
Company to be held on Wednesday, May 15, 1997 and at any and all adjournments
thereof (the "Meeting"), as follows:
1. Election of Directors. Nominees:
Barry Weinberg Robert C. Bishop, Ph.D. Hugh A. D'Andrade
Allan R.Ferguson R. John Fletcher Henri A. Termeer
[_] FOR [_] WITHHELD
FOR, except vote withheld for the following nominee(s), if any:
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2. Approval of the proposal to amend AutoImmune Inc.'s Amended and Restated
1988 Stock Option Plan by increasing the number of shares thereunder by 600,000
shares.
[_] FOR [_] AGAINST
3. Authorizing proxyholders to vote in their discretion as to such matters as
may properly come before the Meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED HEREIN. IF NO
DIRECTION IS GIVEN, THIS PROXY WILL BE VOTED FOR ALL OF THE NOMINEES FOR
DIRECTOR AND FOR THE OTHER PROPOSALS LISTED ABOVE, INCLUDING AUTHORIZING THE
PROXYHOLDERS TO VOTE IN THEIR DISCRETION AS TO ALL MATTERS THAT MAY PROPERLY
COME BEFORE THE MEETING.
PLEASE SIGN ON REVERSE
<PAGE>
------------------------------------
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Signature(s)
Dated: ______________________ , 1997
NOTE: Please sign exactly as name
or names appear above. When signing
as Attorney, Executor, Trustee,
Guardian, or Officer of a
corporation, please give title as
such. For joint accounts, all named
holders should sign.
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PLEASE SIGN, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
