<PAGE>
BIOTRANSPLANT INCORPORATED
BUILDING 75, THIRD AVENUE
CHARLESTOWN NAVY YARD
CHARLESTOWN, MASSACHUSETTS 02129
NOTICE OF 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 19, 1998
The 1998 Annual Meeting of Stockholders of BioTransplant Incorporated (the
"Company") will be held at Hale and Dorr LLP, 60 State Street, Boston,
Massachusetts, on Tuesday, May 19, 1998 at 10:00 a.m., local time, to consider
and act upon the following matters:
1. To elect six directors for the ensuing year.
2. To ratify the selection by the Board of Directors of Arthur Andersen LLP as
the Company's independent accountants for 1998.
3. To transact such other business as may properly come before the meeting or
any adjournment thereof.
Stockholders of record at the close of business on April 1, 1998 are
entitled to notice of, and to vote at, the meeting. The stock transfer books of
the Company will remain open for the purchase and sale of the Company's Common
Stock.
All stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors
STEVEN D. SINGER, SECRETARY
Charlestown, Massachusetts
April 15, 1998
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY CARD AND PROMPTLY MAIL IT IN THE ENCLOSED ENVELOPE IN
ORDER TO ASSURE REPRESENTATION OF YOUR SHARES AT THE MEETING. NO POSTAGE NEED BE
AFFIXED IF THE PROXY CARD IS MAILED IN THE UNITED STATES.
<PAGE>
BIOTRANSPLANT INCORPORATED
BUILDING 75, THIRD AVENUE
CHARLESTOWN NAVY YARD
CHARLESTOWN, MASSACHUSETTS 02129
PROXY STATEMENT FOR THE 1998 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 19, 1998
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of BioTransplant Incorporated (the "Company")
for use at the 1998 Annual Meeting of Stockholders to be held on May 19, 1998
(the "Annual Meeting") and at any adjournment or adjournments of that meeting.
All proxies will be voted in accordance with the instructions contained therein,
and if no choice is specified, the proxies will be voted in favor of the matters
set forth in the accompanying Notice of Meeting. Any proxy may be revoked by a
stockholder at any time before it is exercised by delivery of written revocation
to the Secretary of the Company.
The Company's Annual Report for the year ended December 31, 1997 is being
mailed to stockholders with the mailing of this Notice and Proxy Statement on or
about April 15, 1998.
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED
DECEMBER 31, 1997, AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION, EXCEPT
FOR EXHIBITS, WILL BE FURNISHED WITHOUT CHARGE TO ANY STOCKHOLDER UPON WRITTEN
REQUEST OF THE VICE PRESIDENT OF FINANCE, BIOTRANSPLANT INCORPORATED, BUILDING
75, THIRD AVENUE, CHARLESTOWN NAVY YARD, CHARLESTOWN, MASSACHUSETTS 02129.
VOTING SECURITIES AND VOTES REQUIRED
On April 1, 1998, the record date for the determination of stockholders
entitled to notice of and to vote at the Annual Meeting, there were outstanding
and entitled to vote an aggregate of 8,578,743 shares of Common Stock of the
Company, $.01 par value per share ("Common Stock"). Each share is entitled to
one vote.
Under the Company's Bylaws, the holders of a majority of the shares of
Common Stock issued, outstanding and entitled to vote on any matter shall
constitute a quorum with respect to that matter at the Annual Meeting. Shares of
Common Stock present in person or represented by proxy (including shares which
abstain or do not vote with respect to one or more of the matters presented for
stockholder approval) will be counted for purposes of determining whether a
quorum is present.
The affirmative vote of the holders of a plurality of votes cast by the
stockholders entitled to vote at the Annual Meeting is required for the election
of directors. The affirmative vote of the holders of a majority of the shares of
Common Stock voting on the matter is required for the approval of each of the
other matters to be voted upon.
Shares which abstain from voting as to a particular matter, and shares held
in "street name" by brokers or nominees, who indicate on their proxies that they
do not have discretionary authority to vote such shares as to a particular
matter, will not be counted as votes in favor of such matter, and will also not
be counted as votes cast or shares voting on such matter. Accordingly,
abstentions and "broker non-votes" will have no effect on the voting on a matter
that requires the affirmative vote of a certain percentage of the votes cast or
shares voting on a matter, such as the election of directors and the
ratification of independent accountants.
1
<PAGE>
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information, as of January 31, 1998
or such later date as is noted, with respect to the beneficial ownership of the
Company's Common Stock by (i) each person known by the Company to own
beneficially more than 5% of the outstanding shares of Common Stock, (ii) each
director and nominee, (iii) each executive officer named in the Summary
Compensation Table under the heading "Compensation of Executive Officers" below
and (iv) all directors and executive officers of the Company as a group.
The number of shares of Common Stock beneficially owned by each director or
executive officer is determined under the rules of the Securities and Exchange
Commission (the "Commission"), and the information is not necessarily indicative
of beneficial ownership for any other purpose. Under such rules, beneficial
ownership includes any shares as to which the individual has sole or shared
voting power or investment power and also any shares which the individual has
the right to acquire within 60 days after January 31, 1998 through the exercise
of any stock option or other right. Unless otherwise indicated, each person has
sole investment and voting power (or shares such power with his spouse) with
respect to the shares set forth in the following table. The inclusion herein of
any shares deemed beneficially owned does not constitute an admission of
beneficial ownership of those shares.
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
COMMON STOCK COMMON STOCK
NAME AND ADDRESS BENEFICIARY OWNED OUTSTANDING
- -------------------------------------------------------------------------------- ----------------- -----------------
<S> <C> <C>
Entities affiliated with HealthCare Ventures LLC (1)............................ 2,703,500 30.8%
44 Nassau Street
Princeton, New Jersey 08542
Rho Management Trust II (2)..................................................... 750,288 8.7
c/o Rho Management Company, Inc.
767 Fifth Avenue
New York, New York 10153
Funds managed by Hambrecht & Quist Capital Management Inc. (3).................. 740,451 8.6
50 Rowes Wharf
Boston, Massachusetts 02110
Novartis Pharma Inc............................................................. 532,125 6.2
Lichstrasse
CH--40002
Basel, Switzerland
State of Wisconsin Investment Board (4)......................................... 435,000 5.1
P.O. Box 7842
Madison, Wisconsin 53707
Elliot Lebowitz, Ph.D. (5)...................................................... 183,608 2.1
Donald R. Conklin (6)........................................................... 3,625 *
William W. Crouse (7)........................................................... 2,703,500 30.8
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
SHARES OF PERCENTAGE OF
COMMON STOCK COMMON STOCK
NAME AND ADDRESS BENEFICIARY OWNED OUTSTANDING
- -------------------------------------------------------------------------------- ----------------- -----------------
<S> <C> <C>
James C. Foster, J.D. (8)....................................................... 15,356 *
Daniel O. Hauser, Ph.D. (9)..................................................... 532,125 6.2
Daniel P. Kearney, J.D. (10).................................................... 1,875 *
Robert A. Vukovich, Ph.D. (11).................................................. 11,250 *
James Hope, Ph.D. (12).......................................................... 39,567 *
Julia L. Greenstein, Ph.D. (13)................................................. 37,783 *
Mary White-Scharf, Ph.D. (14)................................................... 23,982 *
Robert Kauffman, M.D., Ph.D (15)................................................ 12,500 *
All directors and executive officers as a group (12 persons) (16)............... 3,571,178 40.8
</TABLE>
- ------------------------
* Represents holdings of less than one percent.
(1) Includes 1,570,886 shares of Common Stock held by HealthCare Ventures II,
L.P. ("HCV II") (including 78,877 shares which HCV II has the right to
acquire within 60 days of January 31, 1998 upon the exercise of warrants),
874,539 shares of Common Stock held by HealthCare Ventures III, L.P. ("HCV
III") (including 99,705 shares which HCV III has the right to acquire within
60 days of January 31, 1998 upon the exercise of warrants), and 258,075
shares of Common Stock held by HealthCare Ventures IV, L.P. ("HCV IV")
(including 29,571 shares which HCV IV has the right to acquire within 60
days of January 31, 1998 upon the exercise of warrants).
(2) Includes 38,466 shares of Common Stock which Rho Management Trust II
("RMT-II") has the right to acquire within 60 days of January 31, 1998 upon
the exercise of warrants. Jan Philipp F. Reemtsma, Joshua Ruch and Fero
Ventures Limited may be deemed to beneficially own the shares held by RMT-
II, and retain voting and dispositive rights for such shares and the right
to revoke such shares.
(3) Includes 360,108 shares of Common Stock held by Hambrecht & Quist Health
Care Investors ("H&Q Health") (including 10,210 shares which H&Q Health has
the right to acquire within 60 days of January 31, 1998 upon the exercise of
warrants) and 300,432 shares of Common Stock held by Hambrecht & Quist Life
Science Investors ("H&Q Life") (including 17,722 shares which H&Q Life has
the right to acquire within 60 days of January 31, 1998 upon the exercise of
warrants). Hambrecht & Quist Capital Management Inc. serves as the
investment advisor to H&Q Health and H&Q Life. The respective general
partners of H&Q Health and H&Q Life exercise sole voting and investment
power with respect to the shares held by each fund.
(4) Information based solely on a Schedule 13G filed with the Commission on
January 22, 1998.
(5) Includes 109,534 shares of Common Stock which Dr. Lebowitz has the right to
acquire within 60 days of January 31, 1998 upon the exercise of stock
options.
(6) Includes 625 shares of Common Stock which Mr. Conklin has the right to
acquire within 60 days of January 31, 1998 upon the exercise of stock
options.
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<PAGE>
(7) Consists solely of shares held of record by HCV II, HCV III and HCV IV. Mr.
Crouse is a general partner of HealthCare Partners II, L.P., HealthCare
Partners III, L.P., HealthCare Partners IV, L.P. ("HCP II", "HCP III" and
"HCP IV", respectively), the general partners, respectively, of HCV II, HCV
III and HCV IV. Mr. Crouse, together with the other general partners of HCV
II, HCV III and HCV IV, respectively, shares voting and investment control
with respect to the shares owned by HCV II, HCV III and HCV IV. The same
individuals serve as general partners of HCP II, HCP III and HCP IV,
respectively.
(8) Includes 2,856 shares of Common Stock owned by Charles River Laboratories,
Inc., a wholly-owned subsidiary of Bausch & Lomb, Inc. ("CRL"). Mr. Foster,
a director of the Company, is the President and Chief Executive Officer of
CRL and may be deemed to beneficially own the shares held by CRL, although
he disclaims beneficial ownership.
(9) Consists solely of shares of Common Stock owned by Novartis Pharma Inc.
("Novartis"). Dr. Hauser, a director of the Company, is the Head of
Preclinical Development and Project Management, Operations in the United
States for Novartis Pharmaceutical Inc., an affiliate of Novartis. Dr.
Hauser may be deemed to beneficially own the shares held by Novartis
although he disclaims beneficial ownership.
(10) Includes 1,250 shares of Common Stock which Mr. Kearney has the right to
acquire within 60 days of January 31, 1998 upon the exercise of stock
options. Mr. Kearney will not be standing for re-election to the Board of
Directors.
(11) Includes 8,125 shares of Common Stock which Dr. Vukovich has the right to
acquire within 60 days of January 31, 1998 upon the exercise of stock
options.
(12) Includes 39,267 shares of Common Stock which Dr. Hope has the right to
acquire within 60 days of January 31, 1998 upon the exercise of stock
options. Also includes 300 shares of Common Stock held by Dr. Hope's minor
children. Dr. Hope disclaims beneficial ownership of the shares held by his
children.
(13) Consists solely of shares of Common Stock which Dr. Greenstein has the
right to acquire within 60 days of January 31, 1998 upon the exercise of
stock options.
(14) Includes 23,382 shares of Common Stock which Dr. White-Scharf has the right
to acquire within 60 days of January 31, 1998 upon the exercise of stock
options. Also includes 600 shares of Common Stock held by Dr. White-Scharf's
minor children. Dr. White-Scharf disclaims beneficial ownership of the
shares held by her children.
(15) Consists solely of shares of Common Stock which Dr. Kauffman has the right
to acquire within 60 days of January 31, 1998 upon the exercise of stock
options.
(16) Includes 449,482 shares of Common Stock which all directors and executive
officers as a group may acquire upon the exercise of outstanding stock
options and warrants exercisable within 60 days of January 31, 1998.
ELECTION OF DIRECTORS
The persons named in the enclosed proxy will vote to elect as directors the
six nominees named below, unless the proxy is marked otherwise. Mr. Daniel
Kearney will not be standing for re-election. If a stockholder returns a proxy
without contrary instructions, the persons named as proxies will vote to elect
as
4
<PAGE>
directors the nominees named below, each of whom is currently a member of the
Board of Directors of the Company.
Because Mr. Kearney will not be standing for re-election, a vacancy exists
on the Board of Directors. In accordance with the Company's Certificate of
Incorporation and Bylaws, this vacancy may be filled prior to the Company's 1999
Annual Meeting of Stockholders only by a majority vote of the remaining
directors.
Each director will be elected to hold office until the 1999 Annual Meeting
of Stockholders and until his successor is duly elected and qualified. The
nominees have indicated their willingness to serve, if elected; however, if any
nominee should be unable to serve, the shares of Common Stock represented by
proxies may be voted for a substitute nominee designated by the Board of
Directors.
There are no family relationships between or among any officers or directors
of the Company.
Set forth below are the name and age of each member of the Board of
Directors, and the positions and offices held by him, his principal occupation
and business experience during the past five years, the names of other publicly
held companies of which he serves as a director and the year of the commencement
of his term as a director of the Company. Information with respect to the number
of shares of Common Stock beneficially owned by each director, directly or
indirectly, as of January 31, 1998, appears above under the heading "Stock
Ownership of Certain Beneficial Owners and Management."
NOMINEES FOR DIRECTOR
ELLIOT LEBOWITZ, PH.D., age 57, has served as President and Chief Executive
Officer and as a member of the Board of Directors of the Company since April
1991. From 1985 to 1991, he served as Vice President for Research and
Development at C.R. Bard, Inc., a medical device company ("Bard"), directing
internal and collaborative research and development programs for Bard's Vascular
Systems, Cardiosurgery and Cardiopulmonary Divisions. From 1981 until 1985, Dr.
Lebowitz served as Director of Long Range Research and Development at DuPont
Corporation, a diversified health care company, developing
immunopharmaceuticals. From 1977 until 1981, he served as Division Manager of
the Medical Products Division of New England Nuclear Corporation which
developed, manufactured and sold radiopharmaceuticals for in vivo diagnosis.
Earlier in his career, Dr. Lebowitz served at Brookhaven National Laboratories,
a United States Department of Energy research facility, where he developed
Thallium-20 1, a radiopharmaceutical for the diagnosis of coronary artery
disease. Dr. Lebowitz was a founder of Diagnostic Isotopes, Inc., a
radiopharmaceutical company which was subsequently acquired by Hoffmann-La Roche
Inc., a pharmaceutical company. He was also a founder of Procept, Inc., a
biopharmaceutical company which focuses on rational drug design. He holds a B.A.
from Columbia College and a Ph.D. from Columbia University.
DONALD R. CONKLIN, age 61, has served as a director of the Company since
January 1997. From February to December 1996, he served as Chairman of
Schering-Plough Health Care Products ("Schering-Plough Health Care"), a
wholly-owned subsidiary of Schering-Plough Corporation, a pharmaceutical
company. From 1995 to February 1996, he served as President of Schering-Plough
Health Care, and from 1986 until September 1994, he served as Executive Vice
President and President of Schering-Plough Pharmaceuticals. He received his B.A.
from Williams College and his M.B.A. from Rutgers University. Mr. Conklin also
serves on the Board of Directors of Cytotherapeutics, Inc. and Vertex
Pharmaceuticals, Inc.
WILLIAM W. CROUSE, age 55, has served as a director of the Company since
June 1995. Since 1994, Mr. Crouse has served as Vice Chairman of HealthCare
Ventures LLC and as a general partner of
5
<PAGE>
HealthCare Partners I, L.P. ("HCP I"), HCP II, HCP III and HCP IV, the general
partners of HealthCare Ventures I, L.P. ("HCV I"), HCV II, HCV III, and HCV IV,
respectively. Mr. Crouse served as Worldwide President of Ortho Diagnostic
Systems, a medical device company, and Vice President of Johnson & Johnson
International, a pharmaceutical company, from 1987 to 1994. Mr. Crouse has more
than 30 years experience in the pharmaceutical industry. He also serves as a
director of Dendreon Corporation, Allelix Biopharmaceuticals, Raritan Bancorp,
The New York Blood Center and Liberty Science Center. Mr. Crouse received his
B.S. in finance and economics from Lehigh University and his M.B.A. from Pace
University.
JAMES C. FOSTER, J.D., age 47, has served as a director of the Company since
February 1992. Since 1992, he has served as President and Chief Executive
Officer of Charles River Laboratories, Inc., a wholly-owned subsidiary of Bausch
& Lomb, Inc. ("CRL"), a supplier of research animals and animal-related products
and services. Previously, he served in various capacities with CRL since 1976.
Mr. Foster received his B.S. in psychology from Lake Forest College, his J.D.
from the Boston University School of Law and his M.A. in Science and Management
from the Massachusetts Institute of Technology.
DANIEL O. HAUSER, PH.D., age 60, has served as a director of the Company
since January 1994. Since January 1997, he has served as the head of Preclinical
Development & Project Management, Operations in the United States for Novartis,
a pharmaceutical corporation. From 1992 until January 1997, he served as
President of Sandoz Research Institute, in East Hanover, New Jersey and as
Senior Vice President of Research and Development for Sandoz Pharmaceutical
Corporation. From 1965 to 1992, he served in various positions at the Pharma
Division of Sandoz Pharma Ltd. (Switzerland) and from 1985 to 1992, served as
Senior Vice President. Dr. Hauser received his M.S. and Ph.D. in chemistry from
the Swiss Federal Institute of Technology (Switzerland) and was a Post-doctoral
Research Fellow in the Department of Chemistry at the Israel Institute of
Technology (Haifa).
ROBERT A. VUKOVICH, PH.D., age 54, has served as a director of the Company
since March 1994. Since 1997, he has served as Chairman of the Board of Roberts
Pharmaceutical Corporation, a pharmaceutical company he founded. From 1983 to
1997, he served as Chairman of the Board and Chief Executive Officer of Roberts
Pharmaceutical Corporation. From 1979 to 1983, he served as the Director of the
Division of Developmental Therapeutics of the Revlon Health Care Group, a
pharmaceutical company. He received his B.S. from Allegheny College and his
Ph.D. in Pharmacology-Toxicology with a minor in Pathology from Jefferson
Medical College. Dr. Vukovich also serves on the Board of Directors of Cypros
Pharmaceutical Corp. and Pacific Pharmaceuticals, Inc.
RETIRING DIRECTOR
DANIEL P. KEARNEY, J.D., age 58, has served as a director of the Company
since March 1996. From 1991 to 1998, Mr. Kearney served as President of Aetna
Life Insurance and Annuity Company ("Aetna"), a wholly-owned subsidiary of Aetna
Life & Casualty Company, an insurance company. In addition, he served as
Executive Vice President and Chief Investment Officer of Aetna Life & Casualty
Company. Prior to joining Aetna in 1991, Mr. Kearney served as President and
Chief Executive Officer of the Resolution Trust Corporation Oversight Board (the
"Oversight Board"), a federal regulatory agency created to oversee the
liquidation of the assets of failed savings and loan institutions. Immediately
prior to joining the Oversight Board, Mr. Kearney was a principal at Aldrich,
Eastman and Waltch, Inc., a pension fund advisor. Mr. Kearney graduated from
Michigan State University and received a Masters in Economics from Michigan
State University. He received his J.D. from the University of Chicago Law
School. He also serves on the Board of Directors of MBIA, Inc.
6
<PAGE>
BOARD AND COMMITTEE MEETINGS
The Company has a standing Audit Committee of the Board of Directors, which
provides the opportunity for direct contact between the Company's independent
accountants and the Board of Directors. The Audit Committee has responsibility
for recommending the appointment of the Company's independent accountants,
reviewing the scope and results of audits and reviewing the Company's internal
accounting control policies and procedures. The Audit Committee held two
meetings in 1997. The members of the Audit Committee are Messrs. Foster and
Kearney.
The Company also has a standing Compensation Committee of the Board of
Directors, which makes recommendations concerning salaries and incentive
compensation for employees of and consultants to the Company, establishes and
approves salaries and incentive compensation for certain senior officers and
employees and administers and grants stock options pursuant to the Company's
stock option plans. The Compensation Committee held two meetings during 1997.
The members of the Compensation Committee are Mr. Crouse and Dr. Vukovich. See
"Report of the Compensation Committee" below.
The Company does not have a nominating committee or a committee serving a
similar function. Nominations are made by and through the full Board of
Directors.
The Board of Directors held six meetings during 1997. Each director attended
at least 75% of the total number of meetings of the Board of Directors and all
committees of the Board on which he served.
COMPENSATION FOR DIRECTORS
The Company's non-employee directors who are not affiliated with HealthCare
Ventures LLC, Novartis or CRL, receive $1,000, plus reasonable travel and
out-of-pocket expenses, for each meeting of the Board of Directors attended and
are entitled to participate in the Company's 1994 Directors' Equity Plan (the
"Equity Plan"), as described below.
On January 2, 1997, options to purchase 3,125 shares of Common Stock at an
exercise price of $6.50 per share and 625 shares of restricted Common Stock at a
purchase price of $0.04 per share were granted to Mr. Conklin under the Equity
Plan, and on November 20, 1997, options to purchase 12,500 shares of Common
Stock at an exercise price of $6.50 per share were granted to Mr. Conklin under
the Company's 1997 Stock Incentive Plan.
SUMMARY OF THE EQUITY PLAN
Under the Equity Plan, directors of the Company who are neither officers or
employees of the Company or of any subsidiary of the Company, nor affiliated
with HealthCare Ventures LLC, Novartis or CRL, shall each receive upon his or
her appointment as a director of the Company: (i) nonstatutory stock options to
purchase 3,125 shares of Common Stock at fair market value on the date of grant
("Initial Options") and (ii) 625 shares of restricted stock, subject to a
repurchase option, at a purchase price of $0.04 per share (the "Restricted
Stock"). The Initial Options vest over five equal annual installments beginning
on the first anniversary of the date of grant and the Restricted Stock will vest
in four equal annual installments beginning on the first anniversary of the date
of grant.
The Board of Directors may suspend or discontinue the Equity Plan or amend
it in any respect; provided, however, that without the approval of the
stockholders, no amendment may change the number of shares subject to the Equity
Plan, change the designation of the class of directors eligible to receive
7
<PAGE>
awards, or materially increase the benefits accruing to participants under the
Equity Plan. The Equity Plan may not be amended more than once during any
six-month period.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE. The following table sets forth certain
information with respect to the annual and long-term compensation for the last
two fiscal years of the Company's Chief Executive Officer and the Company's four
other executive officers whose total annual salary and bonus for 1997 exceeded
$100,000 (collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM COMPENSATION
AWARDS
ANNUAL COMPENSATION -----------------------
-------------------------------- SECURITIES UNDERLYING
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#)
- --------------------------------------------------------- --------- ---------- --------- -----------------------
<S> <C> <C> <C> <C>
Elliot Lebowitz, Ph.D. .................................. 1997 $ 240,559 -0- 65,133
Chief Executive Officer 1996 228,913 -0- 71,021
1995 215,000 -0- 16,218
James Hope, Ph.D. ....................................... 1997 $ 172,482 $ -0- 16,100
Senior Vice President of Development 1996 164,135 -0- 22,670
1995 147,784 -0- 10,312
Julia L. Greenstein, Ph.D. .............................. 1997 $ 193,717 $ -0- 30,000
Senior Vice President of Research 1996 185,193 -0- 22,930
1995 168,586 -0- 8,000
Robert Kauffman, M.D., Ph.D.(1).......................... 1997 $ 190,300 $ -0- 5,000
Vice President of Clinical Affairs 1996 95,138 63,000 50,000
1995 -- -- --
Mary White-Scharf, Ph.D.................................. 1997 $ 136,624 $ -0- 39,200
Vice President of Research 1996 131,602 -0- 31,322
1995 107,171 -0- 10,936
</TABLE>
- ------------------------
(1) Dr. Kauffman joined the Company in June 1996.
8
<PAGE>
OPTION GRANT TABLE. The following table sets forth certain information
regarding options granted during the year ended December 31, 1997 by the Company
to the Named Executive Officers.
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
------------------------------------------------------------------ VALUE AT ASSUMED
PERCENT OF ANNUAL RATES OF STOCK
NUMBER OF TOTAL OPTIONS PRICE APPRECIATION FOR
SECURITIES GRANTED TO EXERCISE OR OPTION TERM(2)
UNDERLYING OPTIONS EMPLOYEES IN BASE PRICE EXPIRATION ----------------------
NAME GRANTED(#)(1) FISCAL YEAR(%) (#SH) DATE 5% ($) 10% (%)
- -------------------------------- ------------------- ----------------- ------------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Elliot Lebowitz, Ph.D. ......... 28,300 7.0% $ 6.75 5/21/07 $ 120,135 $ 304,445
16,833 4.2% 6.50 1/2/07 68,810 174,379
20,000 4.9% 6.63 12/9/07 83,329 211,171
James Hope, Ph.D. .............. 9,100 2.2% 5.63 7/31/07 32,192 81,580
7,000 1.7% 6.63 12/9/07 29,165 73,910
Julia L. Greenstein, Ph.D. ..... 5,600 1.4% 7.25 4/8/07 25,533 64,706
16,400 4.0% 6.75 5/21/07 69,619 176,427
8,000 2.0% 6.63 12/9/07 33,331 84,468
Robert Kauffman, M.D., Ph.D. ... 5,000 1.2% 6.63 12/9/07 20,832 52,793
Mary White-Scharf, Ph.D. ....... 10,700 2.6% 6.88 11/19/07 46,263 117,240
20,500 5.1% 6.75 5/21/07 87,023 220,534
8,000 2.0% 6.63 12/9/07 33,331 84,468
</TABLE>
- ------------------------
(1) Options granted in 1997 become exercisable in four equal annual
installments, commencing twelve months after the vesting commencement date,
which is typically the date of grant.
(2) Amounts represent hypothetical gains that could be achieved for options if
exercised at the end of the option term. These gains are based on assumed
rates of stock price appreciation of 5% and 10% compounded annually from the
date options were granted to their expiration date. Actual gains, if any, on
stock option exercises will depend on the future performance of the Common
Stock on the date on which options were exercised.
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<PAGE>
YEAR-END OPTION TABLE. The following table sets forth certain information
regarding stock options held as of December 31, 1997 by the Named Executive
Officers.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL YEAR- IN THE MONEY OPTIONS AT
END(#) FISCAL YEAR-END($)(1)
-------------------------- --------------------------
EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
Elliot Lebowitz, Ph.D..................................... 102,892 130,571 $ 217,599 $ 32,616
James Hope, Ph.D.......................................... 38,322 38,260 86,109 14,560
Julia L. Greenstein, Ph.D................................. 28,483 57,447 42,370 25,610
Robert Kauffman, M.D.,Ph.D................................ 12,500 42,500 0 0
Mary White-Scharf, Ph.D................................... 21,109 68,474 48,150 19,239
</TABLE>
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(1) Value is based on the closing sales price of the Company's Common Stock on
the Nasdaq Stock Market on December 31, 1997 ($5.75), the last trading day
of the Company's 1997 fiscal year, less the applicable option exercise
price.
SEVERANCE AGREEMENTS WITH EXECUTIVE OFFICERS
Under the terms of an agreement with Dr. Lebowitz, the Company's President
and Chief Executive Officer, in the event of involuntary termination of Dr.
Lebowitz' employment, he is eligible to receive six months of base salary from
the Company. Under the terms of agreements with Dr. Hope, Senior Vice President
of Development, and Dr. Greenstein, Senior Vice President of Research and Chief
Scientific Officer, in the event of a termination of employment without cause,
the terminated officer is eligible to receive six months of base salary, which
will be discontinued if the officer secures other employment. Furthermore, if at
the end of such six-month period Dr. Hope is unable to secure other employment,
then Dr. Hope and the Company have agreed to negotiate an additional severance
payment of up to six months of base salary.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of copies of reports filed by all officers of the
Company who are persons required to file reports ("Reporting Persons") pursuant
to Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") or written representations from certain Reporting Persons that
no Form 5 filing was required for such persons, the Company believes that during
fiscal 1997 all filings required to be made by its Reporting Persons were timely
made in accordance with the requirements of the Exchange Act.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee of the Company, which is currently comprised of
two non-employee directors, Mr. Crouse and Dr. Vukovich, makes recommendations
concerning salaries and incentive
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compensation for employees of and consultants to the Company, establishes and
approves salaries and incentive compensation for certain senior officers and
employees and administers and grants stock options pursuant to the Company's
stock option plans.
The Company's executive compensation program is designed to promote the
achievement of the Company's business goals, and, thereby, to maximize corporate
performance and stockholder returns. Executive compensation consists of a
combination of base salary and stock-based incentives. The Compensation
Committee considers stock incentives to be a critical component of an
executive's compensation package in order to help align executive interests with
stockholder interests.
COMPENSATION PHILOSOPHY
The objectives of the executive compensation program are to align
compensation with business objectives and individual performance, and to enable
the Company to attract, retain and reward executive officers who are expected to
contribute to the long-term success of the Company. The Compensation Committee's
executive compensation philosophy is based on the principles of competitive and
fair compensation and sustained performance.
- COMPETITIVE AND FAIR COMPENSATION
The Company is committed to providing an executive compensation program
that helps attract and retain highly qualified executives. To ensure that
compensation is competitive, the Compensation Committee compares the
Company's compensation practices with those of other companies in the
industry and sets the Company's compensation guidelines based on this
review. The Compensation Committee believes compensation for the Company's
executive officers is within the range of compensation paid to executives
with comparable qualifications, experience and responsibilities in the same
or similar business and of comparable size and success. The Compensation
Committee also strives to achieve equitable relationships both among the
compensation of individual officers and between the compensation of
officers and other employees throughout the organization.
- SUSTAINED PERFORMANCE
Executive officers are rewarded based upon a subjective assessment of
corporate performance and individual performance. Corporate performance is
evaluated by reviewing the extent to which strategic and business plan
goals are met, including such factors as achievement of operating budgets,
establishment of strategic licensing and development alliances with third
parties, timely development of new processes and products and performance
relative to competitors. Individual performance is evaluated by reviewing
attainment of specified individual objectives and the degree to which
teamwork and Company values are fostered.
In evaluating each executive officer's performance, the Compensation
Committee generally conforms to the following process:
- Company and individual goals and objectives generally are set at the
beginning of the performance cycle.
- At the end of the performance cycle, the accomplishment of the executive's
goals and objectives and his contributions to the Company are evaluated
and the results are communicated to the executive.
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- The executive's performance is then compared with peers within the Company
and the comparative results, combined with comparative compensation
practices of other companies in the industry, is then used to determine
salary and stock compensation levels.
Annual compensation for the Company's executives generally consists of two
elements--salary and stock options.
The salary for executives is generally set by reviewing compensation for
competitive positions in the market and the historical compensation levels of
the executives. Increases in annual salaries are based on actual individual
performance against targeted performance and various subjective performance
criteria. Targeted performance criteria vary for each executive based on his
area of responsibility, and may include continued innovation in development of
the Company's technology, implementation of financing strategies and
establishment of strategic licensing and development alliances with third
parties. Subjective performance criteria include an executive's ability to
motivate others, develop the skills necessary to grow as the Company matures,
recognize and pursue new business opportunities and initiate programs to enhance
the Company's growth and success. The Compensation Committee does not use a
specific formula based on these targeted performance and subjective criteria,
but instead makes an evaluation of each executive officer's contributions in
light of all such criteria.
Compensation at the executive officer level also includes the long-term
incentives afforded by stock options. The stock option program is designed to
promote the identity of long-term interests between the Company's employees and
its shareholders and assist in the retention of executives. The size of option
grants is generally intended to reflect the executive's position with the
Company and his contributions to the Company, including his success in achieving
the individual performance criteria described above. The option program
generally uses a four-year vesting period to encourage key employees to continue
in the employ of the Company. All stock options granted to executive officers in
1997 were granted at fair market value on the date of grant. During 1997, all
current executive officers received options to purchase an aggregate of 185,666
shares of Common Stock, at a weighted average exercise price of $6.66 per share.
COMPLIANCE WITH INTERNAL REVENUE CODE SECTION 162(M). Section 162(m) of the
Internal Revenue Code of 1986, as amended (the "Code"), disallows a tax
deduction to public companies for compensation over $1.0 million paid to the
corporation's Chief Executive Officer and four other most highly compensated
executive officers. Qualifying performance-based compensation will not be
subject to the deduction limit if certain requirements are met. The Company
intends to structure the performance-based portion of the compensation of its
executive officers in a manner that complies with Section 162(m) of the Code to
mitigate any disallowance of deductions.
DR. LEBOWITZ' 1997 COMPENSATION
Dr. Lebowitz is eligible to participate in the same executive compensation
plans available to the other executives officers of the Company. The
Compensation Committee believes that Dr. Lebowitz' annual compensation,
including the portion of his compensation based upon the Company's stock option
program, has been set at a level competitive with other companies in the
industry.
Dr. Lebowitz' salary for 1997 increased to $240,559 from $228,913 in 1996.
In 1997, Dr. Lebowitz was granted stock options to purchase 65,133 shares of the
Company's Common Stock at a weighted average exercise price of $6.65 per share.
All such options were granted to Dr. Lebowitz at an exercise price equal to the
fair market value of the Company's Common Stock on the date of grant. In
determining whether to grant stock options to Dr. Lebowitz, the Compensation
Committee considered Dr. Lebowitz' overall
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compensation package relative to that of other chief executives in the Company's
industry and past option grants as well as an assessment of continuing progress
of the Company's business plan.
Compensation Committee
William W. Crouse
Robert A. Vukovich, Ph.D.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The current members of the Compensation Committee are Messrs. Crouse and
Vukovich. No member of the Compensation Committee was at any time during 1997,
or formerly, an officer or employee of the Company or any subsidiary of the
Company, nor has any member of the Compensation Committee had any relationship
with the Company requiring disclosure under Item 404 of Regulation S-K under the
Exchange Act.
No executive officer of the Company has served as a director or member of
the Compensation Committee (or other committee serving an equivalent function)
of any other entity, one of whose executive officers served as a director of or
member of the Compensation Committee of the Company.
COMPARATIVE STOCK PERFORMANCE
The comparative stock performance graph below compares the cumulative
stockholder return on the Common Stock of the Company for the period from May 8,
1996, the date of the Company's initial public offering, through December 31,
1997 with the cumulative total return on (i) the Total Return Index for the
Nasdaq Stock Market (U.S. Companies) (the "Nasdaq Composite Index") and (ii) the
Nasdaq Pharmaceutical Index (assuming the investment of $100 in the Company's
Common Stock (at the initial public offering price), in the Nasdaq Composite
Index and in the Nasdaq Pharmaceutical Index on May 8, 1996 and reinvestment of
all dividends). Measurement points are on May 8, 1996, the last trading day of
the year ended December 31, 1996 and the last trading day of the year ended
December 31, 1997.
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
BIOTRANSPLANT INCORPORATED NASDAQ COMPOSITE INDEX NASDAQ PHARMACEUTICAL INDEX
<S> <C> <C> <C>
5/8/96 $100.00 $100.00 $100.00
12/31/96 $ 68.00 $ 109.00 $ 91.00
12/31/97 $ 61.00 $ 134.00 $ 97.00
</TABLE>
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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In March 1991, the Company entered into a supply agreement with CRL. Under
the terms of the agreement, CRL provides the Company with miniswine and
miniswine organs for research and development purposes in exchange for payments
based on future commercial sales of miniswine products by the Company. James C.
Foster, President and Chief Executive Officer of CRL, is a director of the
Company.
In 1993, the Company and Novartis entered into a collaboration agreement for
the development and commercialization of xenotransplantation products utilizing
gene transduction, which was subsequently amended and restated in September
1995. Under the agreement, Novartis has committed research funding of $20.0
million, all of which had been received as of December 31, 1997, and agreed to
pay license fees of $10.0 million, all of which had been received as of December
31, 1997. Novartis has also agreed to fund all of the development and
premarketing costs of the licensed products, a portion of which may be repayable
from the Company's operating profits from sales of the XenoMune System if the
Company elects to co-promote, and a portion of which must be repaid within 90
days following submission of a product license application to the Food and Drug
Administration for such products.
In October 1997, the Company entered into a collaboration and license
agreement with Novartis to develop and commercialize transplantation products
utilizing the Company's proprietary mixed bone marrow chimerism technology.
Under the agreement, the Company may receive from Novartis research funding,
license fees and milestone payments of up to $36 million. As of December 31,
1997, research funding of $3.5 million and license fees of $2.0 million had been
received. In addition to research funding, Novartis will also fund certain
development and premarketing costs of such products and portions of these costs,
under certain circumstances, may be repayable.
Dr. Hauser, Ph.D., a director of the Company, is head of Preclinical
Development & Project Management, Operations in the United States for Novartis
Pharmaceutical Inc., an affiliate of Novartis.
RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors, upon the recommendation of the Audit Committee, has
selected the firm of Arthur Andersen LLP as the Company's independent
accountants for the current fiscal year. Arthur Andersen LLP has served as the
Company's independent accountants since inception. Although stockholder approval
of the Board of Directors' selection of Arthur Andersen LLP is not required by
law, the Board of Directors believes that it is advisable to give stockholders
an opportunity to ratify this selection. If this proposal is not approved at the
Annual Meeting, the Board of Directors will reconsider its selection of Arthur
Andersen LLP. Representatives of Arthur Andersen LLP are expected to be present
at the Annual Meeting and will have the opportunity to make a statement if they
desire to do so and will also be available to respond to appropriate questions
from stockholders.
BOARD RECOMMENDATION
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF ARTHUR ANDERSEN LLP AS THE COMPANY'S INDEPENDENT ACCOUNTANTS.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the meeting. However, if any other matters are properly presented to the
meeting, it is the intention of the persons
14
<PAGE>
named in the accompanying proxy to vote, or otherwise act, in accordance with
their judgment on such matters.
All costs of solicitation of proxies will be borne by the Company. In
addition to solicitations by mail, the Company's directors, officers and regular
employees, without additional remuneration, may solicit proxies by telephone,
telegraph and personal interviews. Brokers, custodians and fiduciaries will be
requested to forward proxy soliciting material to the owners of stock held in
their names, and the Company will reimburse them for their reasonable
out-of-pocket expenses incurred in connection with the distribution of proxy
materials.
DEADLINE FOR SUBMISSION OF STOCKHOLDER PROPOSALS FOR THE 1999 ANNUAL MEETING
Proposals of stockholders intended to be presented at the 1999 Annual
Meeting of Stockholders must be received by the Company at its principal office
in Charlestown, Massachusetts not later than December 16, 1998 for inclusion in
the proxy statement for that meeting.
By Order of the Board of Directors,
STEVEN D. SINGER, SECRETARY
April 15, 1998
THE BOARD OF DIRECTORS ENCOURAGES STOCKHOLDERS TO ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. A PROMPT RESPONSE WILL
GREATLY FACILITATE ARRANGEMENTS FOR THE MEETING AND YOUR COOPERATION WILL BE
APPRECIATED. STOCKHOLDERS WHO ATTEND THIS MEETING MAY VOTE THEIR STOCK
PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
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<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 Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section240.14a-11(c) or
Section240.14a-12
<TABLE>
<CAPTION>
BIOTRANSPLANT INCORPORATED
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<S> <C>
(Name of Registrant as Specified In Its Charter)
<CAPTION>
BIOTRANSPLANT INCORPORATED
- ---------------------------------------------------------------------------------------------------
<S> <C>
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
</TABLE>
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:
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(4) Date Filed:
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<PAGE>
Appendix A
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BIOTRANSPLANT INCORPORATED
PROXY SOLICITED BY BOARD OF DIRECTORS
Annual Meeting of Stockholders -- May 19, 1998
Those signing on the reverse side, revoking any prior proxies, hereby
appoint(s) Elliot Lebowitz, Richard Capasso and Steven D. Singer, or each of
them with full power of substitution, as proxies for those signing on the
reverse side to act and vote at the 1998 Annual Meeting of Stockholders of
BioTransplant Incorporated and at any adjournments thereof as indicated upon
all matters referred to on the reverse side and described in the Proxy
Statement for the Meeting, and, in their discretion, upon any other matters
which may properly come before the Meeting.
This proxy when properly executed will be voted in the manner directed by
the undersigned stockholder(s). If no other indication is made, the proxies
shall vote "for" proposal numbers 1, 2 and 3.
A vote for the director nominees, and for proposal numbers 2 and 3 is
recommended by the Board of Directors.
PLEASE VOTE, DATE AND SIGN ON OTHER SIDE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE
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<PAGE>
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
BIOTRANSPLANT INCORPORATED
May 19, 1998
<TABLE>
<CAPTION>
Please Detach and Mail in the Envelope Provided
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A /X/ Please mark your votes as in this example.
FOR all nominees WITHHOLD AUTHORITY FOR AGAINST ABSTAIN
listed at right to vote for all
(except as marked nominees listed
to the contrary) at right
<S> <C> <C> <C> <C> <C> <C> <C>
1. Election of / / / / Nominees: 2. Ratify the selection / / / / / /
Directors Elliot Lebowitz, Ph.D. of Arthur Andersen
Donald R. Conklin LLP as the Company's
INSTRUCTIONS: To withhold authority to vote for William W. Crouse independent
individual nominee(s), mark the box labeled "FOR" James C. Foster, J.D. accountants for 1998
and strike a line through such nominee(s) name in Daniel O. Hauser, Ph.D.
the list at right. Your shares will be voted for the Robert A. Vukovich, Ph.D.
remaining nominee(s).
3. To transact such / / / / / /
other business as
may properly come
before the meeting
or any adjournment
thereof.
Please read the reverse side of this card.
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY
CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
HAS YOUR ADDRESS DO YOU HAVE ANY
CHANGED? COMMENTS?
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Signature _____________________________ Date: ______________ Signature __________________________ Date: ________________
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</TABLE>
