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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-1
Corvas International, Inc.
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(Named of Registrant as Specified In Its Charter)
Management of Corvas International, Inc.
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(Name of Person(s) Filing Proxy Statement
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(j)(2).
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] 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. (1)
--------------------------------------------------
4) Proposed maximum aggregate value of transaction:
--------------------------------------------------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
[ ] 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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[LOGO]
3030 Science Park Road
San Diego, California 92121
(619) 455-9800
April 15, 1997
Dear Stockholder:
The Annual Meeting of Stockholders will be held on Thursday, May 15, 1997,
at 2:00 p.m. at the Sheraton Grande Torrey Pines located at 10950 North Torrey
Pines Road, La Jolla, California.
The formal notice of the Annual Meeting and the Proxy Statement have been
made a part of this invitation.
After reading the Proxy Statement, please complete, date, sign and return,
at an early date, the enclosed Proxy in the enclosed postage-prepaid envelope.
YOUR SHARES CANNOT BE VOTED UNLESS YOU SIGN, DATE AND RETURN THE ENCLOSED PROXY
OR ATTEND THE ANNUAL MEETING IN PERSON. WHETHER OR NOT YOU PLAN TO ATTEND THE
ANNUAL MEETING, IT IS IMPORTANT THAT YOU RETURN THE ENCLOSED PROXY TO ENSURE
THAT YOUR SHARES WILL BE REPRESENTED. Any stockholder returning the enclosed
Proxy may revoke it prior to its exercise by voting in person at the meeting or
by filing with the Secretary of the Company a written revocation or a duly
executed Proxy bearing a later date.
A copy of the Company's Annual Report to Stockholders is also enclosed.
The Board of Directors and Management look forward to seeing you at the
meeting.
Sincerely yours,
RANDALL E. WOODS
President and Chief Executive Officer
<PAGE>
CORVAS INTERNATIONAL, INC.
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 15, 1997
Notice is hereby given that the Annual Meeting of Stockholders of
Corvas International, Inc., (the "Company") will be held at the Sheraton Grande
Torrey Pines located at 10950 North Torrey Pines Road, La Jolla, California, on
May 15, 1997, 2:00 p.m., for the following purposes:
1. To elect three directors to hold office until the 2000 Annual Meeting
of Stockholders.
2. To ratify KPMG Peat Marwick as the Company's independent public
accountants for 1997.
3. To transact such other business as may properly come before the Annual
Meeting and any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this notice.
The Board of Directors has fixed the close of business on March 17,
1997, as the record date for determining the stockholders entitled to notice of
and to vote at the Annual Meeting and any adjournment thereof. A COMPLETE LIST
OF STOCKHOLDERS ENTITLED TO VOTE WILL BE AVAILABLE AT THE CORPORATE SECRETARY'S
OFFICE, 3030 SCIENCE PARK ROAD, SAN DIEGO, CALIFORNIA, FOR TEN DAYS BEFORE THE
MEETING.
ALL STOCKHOLDERS ARE INVITED TO ATTEND THE ANNUAL MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, DATE,
SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE
YOUR REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID
IF MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK
OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST BRING TO THE
MEETING A LETTER FROM THE BROKER, BANK OR OTHER NOMINEE CONFIRMING YOUR
BENEFICIAL OWNERSHIP OF THE SHARES. ADDITIONALLY, IN ORDER TO VOTE AT THE
MEETING, YOU MUST OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
By Order of the Board of Directors,
JOHN E. CRAWFORD
Executive Vice President,
Chief Financial Officer
and Corporate Secretary
San Diego, California
April 15, 1997
<PAGE>
CORVAS INTERNATIONAL, INC.
----------------
PROXY STATEMENT
-------------
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Corvas International, Inc., a Delaware corporation (the "Company" or "Corvas"),
for use at the Annual Meeting of Stockholders to be held on May 15, 1997, at
2:00 p.m. (the "Annual Meeting"), or at any adjournment thereof, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting. The
Annual Meeting will be held at the Sheraton Grande Torrey Pines located at 10950
Torrey Pines Road, La Jolla, California. The Company intends to mail this Proxy
Statement and accompanying proxy card on or about April 15, 1997, to all
stockholders entitled to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies including
preparation, assembly, printing and mailing of this Proxy Statement, the proxy
and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of Common Stock beneficially owned
by others to forward to such beneficial owners. The Company may reimburse
persons representing beneficial owners of Common Stock for their costs of
forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or
other regular employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of the Company's Common and Series A and B Preferred
Stock at the close of business on March 17, 1997, will be entitled to notice of
and to vote at the Annual Meeting. At the close of business on March 17, 1997,
the Company had outstanding and entitled to vote 13,827,079 shares of Common
Stock, 1,000,000 shares of Series A Preferred Stock and 250,000 shares of Series
B Preferred Stock. Each holder of record of Common Stock, Series A Preferred
Stock and Series B Preferred Stock on March 17, 1997 will be entitled to one
vote for each share held on all matters to be voted upon.
All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted toward the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted toward a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
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REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 3030
Science Park Road, San Diego, California 92121, a written notice of revocation
or a duly executed proxy bearing a later date, or it may be revoked by attending
the meeting and voting in person. Attendance at the meeting will not, by
itself, revoke a proxy.
STOCKHOLDER PROPOSALS FOR 1998 ANNUAL MEETING
Proposals of stockholders that are intended to be presented at the
Company's 1998 Annual Meeting of Stockholders must be received by the Company
not later than December 16, 1997 in order to be included in the proxy statement
and proxy relating to that Annual Meeting.
PROPOSAL ONE
ELECTION OF DIRECTORS
The Company's Certificate of Incorporation and By-laws provide that the
Board of Directors shall be divided into three classes, each class consisting,
as nearly as possible, of one-third of the total number of directors, with each
class having a three-year term. Vacancies on the Board may be filled only by
persons elected by a majority of the remaining directors. A director elected by
the Board to fill a vacancy (including a vacancy created by an increase in the
Board of Directors) shall serve for the remainder of the full term of the class
of directors in which the vacancy occurred and until such director's successor
is elected and qualified.
The Board of Directors is presently composed of nine members. Walter De
Logi resigned from the Board of Directors on April 3, 1996 and David S.
Kabakoff, Ph.D., resigned from the Board of Directors on February 20, 1997, at
which time the number of authorized directors was reduced from ten to nine.
There are three directors in the class whose term of office expires in 1997.
All three of the nominees for election are currently directors of the Company.
Michael Sorell, M.D. and Nicole Vitullo were appointed by the Board in April
1996 to fill vacancies due to the resignation of Walter De Logi and an increase
in the number of seats on the Board of Directors. John H. Fried, Ph.D. was
previously elected by the stockholders. If elected at the Annual Meeting, each
of the nominees would serve until the annual meeting to be held in the year
2000, and until his/her successor is elected and has qualified, or until such
director's earlier death, resignation or removal.
Directors will be elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented by
executed proxies will be voted, if authority to do so is not withheld, for the
election of the three nominees named below. In the event that any of the
nominees should be unavailable for election as a result of an unexpected
occurrence, such shares will be voted for the election of such substitute
nominee as management may propose. All three persons nominated for election
have agreed to serve if elected, and management has no reason to believe that
any of the nominees will be unable to serve.
The Company's executive officers and directors (and entities affiliated
with them), in the aggregate, own approximately 19.8% of the Company's voting
stock. These stockholders will be able to influence significantly the election
of the Board of Directors.
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Set forth below is biographical information for all persons nominated and
for each person whose term of office as a director will continue after the
Annual Meeting.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM
EXPIRING AT THE 2000 ANNUAL MEETING (CLASS II)
JOHN H. FRIED, PH.D. Dr. Fried, age 67, was elected as Chairman of the
Board in February 1997, and has been a director of the Company since May 1992.
Since March 1992, he has been President of Fried & Company, Inc., a
biopharmaceutical consulting firm. Dr. Fried served in various executive
capacities at Syntex Corporation ("Syntex"), a pharmaceutical company, from
April 1964 to March 1992. He served as President of Syntex Research from 1976
to March 1992, Senior Vice President of Syntex from 1981 to 1985, and Vice
Chairman from 1985 to January 1993. Dr. Fried is also Chairman of the Board of
Alexion Pharmaceuticals, Inc.
MICHAEL SORELL, M.D. Dr. Sorell, age 49, was appointed a director in April
1996. Since March 1996, he has been the Managing Partner of MS Capital, LLC, an
advisement firm based in New York. From July 1986 to February 1992, he was
associated with Morgan Stanley & Co. ("Morgan Stanley"), an investment banking
firm, in various capacities, the last being Principal. From March 1992 to July
1994, he was a partner in a joint venture with Essex Investment Management of
Boston, an investment management firm. In August 1994, he rejoined Morgan
Stanley as the emerging growth strategist and principal where he served until
February 1996. Prior to that, he was on staff at Memorial Sloan-Kettering
Cancer Center and worked in clinical development at Schering-Plough Corporation,
a pharmaceutical company. Dr. Sorell also serves on the Board of Directors of
Dynagen, Inc.
NICOLE VITULLO. Ms. Vitullo, age 39, was appointed a director in April
1996. She has been a Vice President since November 1992, and a Senior Vice
President since November 1996, with Rothschild Asset Management, Inc., which
manages two publicly traded funds, International Biotechnology Trust ("IBT")
and Biotechnology Investments, Limited. She served as Director of Corporate
Communications at Cephalon, Inc., a neuropharmaceutical company, from July 1991
to November 1992. Prior to that, she was Manager, Healthcare Investments at
Eastman Kodak Company. She also serves on the Boards of Directors of Cytel
Corporation, Anergen, Inc. and Cadus Pharmaceuticals Corporation.
MANAGEMENT RECOMMENDS A VOTE IN FAVOR OF EACH NAMED NOMINEE.
BOARD OF DIRECTORS INFORMATION
DIRECTORS CONTINUING IN OFFICE UNTIL THE 1998 ANNUAL MEETING (CLASS III)
THOMAS S. EDGINGTON, M.D. Dr. Edgington, age 65, a founder of Corvas, has
been a director since May 1987 and served as Chairman of the Board from that
time until February 1991. He is a Member of The Scripps Research Institute
("Scripps"), with which he has been affiliated since 1965. Since 1968, Dr.
Edgington has also been adjunct Professor of Pathology at the University of
California, San Diego, and, from 1968 to 1974, he was the head of the Department
of Pathology and Laboratory Medicine which he founded at Scripps. He has been
Vice President for Research, Chairman of the National Research Committee and a
member of the Board of Directors of the American Heart Association. He was a
member of the Board of Directors and the Past-President of the Federation of
American Societies for Experimental Biology.
THEODOR H. HEINRICHS. Mr. Heinrichs, age 70, joined the Board of Directors
in February 1988. He also served as Chief Executive Officer and Chairman of the
Board from February 1991 through November 1991 and January 1996, respectively.
Mr. Heinrichs is a general partner with
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Hambrecht & Quist Life Science Venture Partners ("H&Q LSV"), a venture capital
firm, with whom he was been affiliated since 1985. Mr. Heinrichs served as
Chairman of the Board of Directors of Telios Pharmaceuticals, Inc. ("Telios"), a
biotechnology company, from January until June 1994. Telios filed for
protection under Chapter 11 in the Federal Bankruptcy Court in January 1995 and
was subsequently acquired by INTEGRA, L.S. Mr. Heinrichs also served as Chief
Executive Officer of Canji, Inc. ("Canji"), a biopharmaceutical company, from
its inception through March 1993, and was Chairman of the Board until March
1995. Canji was acquired by Schering-Plough Corporation in 1996.
M. BLAKE INGLE, PH.D. Dr. Ingle, age 54, was elected a director in January
1994. Dr. Ingle was the President and Chief Executive Officer of Canji from
March 1993 to February 1996, when it was acquired by Schering-Plough. Prior to
that, he was employed in a variety of capacities with the IMCERA Group, Inc., a
healthcare company, consisting of Mallinckrodt Medical, Mallinckrodt Specialty
Chemicals and Pitman Moore, from 1980 to 1993, most recently serving as
President/Chief Executive Officer. Dr. Ingle was a director of Telios and was
its Chief Executive Officer from December 1994 to January 1995. He currently
serves on the Boards of Director for Synbiotics Corporation and Vical, Inc. and
as a member of the Board of Trustees at La Jolla Cancer Research Foundation.
RANDALL E. WOODS. Mr. Woods, age 45, was appointed President and Chief
Executive Officer and elected a director of Corvas in May 1996. Prior to
joining Corvas, Mr. Woods served as President of the U.S. Operations, Boehringer
Mannheim Pharmaceuticals Corporation, a pharmaceutical company, from March 1994
to March 1996, and was Vice President of Marketing and Sales from December 1993
to March 1994. From 1973 to December 1993, he served in various capacities at
Eli Lilly and Company ("Eli Lilly"), a pharmaceutical company, where he was most
recently responsible for the marketing of hospital products. Mr. Woods received
an M.B.A. degree from Western Michigan University.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 1999 ANNUAL MEETING (CLASS I)
GERARD VAN ACKER. Mr. Van Acker, age 53, has been a director since March
1991. Mr. Van Acker has been President and Chief Executive Officer of
Gewestelijke Investeringsmaatschappij voor Vlaanderen, N.V. (The Investment
Company for Flanders) ("GIMV"), based in Antwerp, Belgium, since founding it in
1980. He was a co-founder and the first President of Plant Genetic Systems,
N.V. ("Plant Genetic Systems"), (who, along with its affiliates, PGS
International, N.V., a Netherlands corporation ("PGS International Netherlands")
and PGS International, N.V., a Belgium corporation ("PGS International Belgium")
are collectively referred to herein as "PGS"). Since October 1989 Mr. Van Acker
has also been a director of BARCO, N.V.
W. LEIGH THOMPSON, JR., M.D., PH.D. Dr. Thompson, age 58, was appointed a
director in January 1996. Dr. Thompson retired in December 1994 as Chief
Scientific Officer of Eli Lilly, where he had served in various capacities since
1982. He has served as the President and Chief Executive Officer of Profound
Quality Resources, Ltd., a consulting company, since January 1995 and serves on
the Boards of Directors for GeneMedicine, Inc., Chrysalis International
Corporation (formerly DNX Corporation), Guilford Pharmaceuticals, Inc., Orphan
Medical, Inc., Ergo Sciences Corporation, La Jolla Pharmaceuticals, Medarex,
Inc. and BAS, Inc.
Mr. Van Acker was nominated for election as a director in accordance with
an agreement among the Company, GIMV and PGS entered into in March 1991 under
which the Company issued shares of preferred stock (subsequently converted to
Common Stock) to GIMV and PGS. Pursuant to such agreement, the Company has
agreed that, for as long as the holders of such shares of stock hold not less
than 10% of the voting power of the Company, it will nominate for
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election to the Board of Directors the number of persons designated by such
holders that they would be entitled to elect under cumulative voting.
EXECUTIVE OFFICERS
Set forth below is information regarding the executive officers of the
Company as of March 17, 1997.
Name Age Position
---- --- --------
Randall E. Woods 45 President and Chief Executive
Officer
John E. Crawford 42 Executive Vice President, Chief
Financial Officer and
Corporate Secretary
William C. Ripka, Ph.D. 57 Senior Vice President,
Chemical Research
George P. Vlasuk, Ph.D. 41 Executive Vice President,
Research and Development
BACKGROUND OF EXECUTIVE OFFICERS WHO ARE NOT DIRECTORS
JOHN E. CRAWFORD. Mr. Crawford, a founder of Corvas, has been Chief
Financial Officer since the Company's organization in May 1987, Executive Vice
President since April 1989 and Secretary since March 1991. Mr. Crawford also
served as President from May 1987 to April 1989, Chief Operating Officer from
April 1989 to February 1991, Secretary from May 1987 to June 1989 and as a
director from May 1987 to March 1991. Mr. Crawford received an M.B.A. from the
University of Chicago Graduate School of Business.
WILLIAM C. RIPKA, PH.D. Dr. Ripka joined Corvas in May 1990 as Vice
President, Pharmaceutical Research. In January 1995, Dr. Ripka was promoted to
Senior Vice President, Chemical Research. Prior to joining Corvas, he was
employed for twenty-four years by E.I. duPont de Nemours & Co. in various
research positions, most recently as Research Fellow and Supervisor of Drug
Design and Molecular Modeling. Dr. Ripka received his Ph.D. in physical organic
chemistry from the University of Illinois.
GEORGE P. VLASUK, PH.D. Dr. Vlasuk joined Corvas in August 1991 as
Director, Molecular Pharmacology. He served as Executive Director, Molecular
Pharmacology from July 1993 to January 1995, and from January 1995 to September
1996 as Vice President, Biological Research. In September 1996, Dr. Vlasuk was
promoted to Executive Vice President, Research and Development. Before joining
Corvas, he was employed for six years at Merck Sharp & Dohme Research
Laboratories, most recently as Associate Director of Hematology Research. Dr.
Vlasuk received his Ph.D. in biochemistry from Kent State University.
COMMITTEES AND MEETINGS OF THE BOARD
During the fiscal year ended December 31, 1996, the Board of Directors held
eight meetings and took action by unanimous written consent without a meeting on
two other occasions during such fiscal year. The Company has three standing
committees of the Board of Directors: an Executive Committee, a Compensation and
Stock Option Committee and an Audit Committee. The Company does not have a
standing Nominating Committee.
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In 1996, the Executive Committee consisted of Dr. Kabakoff as Chairman, Dr.
Edgington and Mr. Heinrichs (who resigned in January 1996), Dr. Ingle (who was
appointed in January 1996) and Mr. Woods (who was appointed in May 1996).
Following Dr. Kabakoff's resignation from the Board on February 20, 1997, an
action was taken by the Board to reconstitute the Committee to consist of Dr.
Fried, Dr. Ingle and Mr. Woods. The Executive Committee is authorized to
exercise the full authority of the Board of Directors except with respect to (i)
those matters not permitted by the Delaware General Corporation Law to be
delegated to any committee, (ii) approval of obligations of the Company in
amounts greater than $100,000, (iii) approval of annual operating plans,
business plans and major strategic decisions and (iv) approval of other major
transactions such as corporate partnerships or financing plans. The Executive
Committee did not hold any meetings during 1996.
For the period of January 1, 1996, through April 3, 1996, the Compensation
and Stock Option Committee consisted of Mr. Heinrichs, as Chairman, Dr. Fried
and Mr. Van Acker. On April 3, 1996, Ms. Vitullo was appointed to the Committee
to replace Mr. Van Acker. On February 21, 1997, Dr. Fried and Mr. Heinrichs
resigned, Dr. Thompson was appointed to the Committee and Ms. Vitullo became
Chairwoman. The Compensation and Stock Option Committee is authorized to
exercise all powers and authority of the Board of Directors in all compensation
matters, including the establishment of rates of salary, bonuses, retirement and
other compensation for all directors, officers and such other personnel of the
Company as the Board of Directors may from time to time designate. It also
exercises the authority of the Board of Directors in the administration of the
Company's 1991 Incentive and Compensation Plan and its Employee Stock Purchase
Plan. The Compensation and Stock Option Committee held four meetings during
1996.
From January 1, 1996 through April 3, 1996, the Audit Committee consisted
of Dr. De Logi, as Chairman, Dr. Edgington and Dr. Ingle. Since April 3, 1996,
the Audit Committee has been comprised of Mr. Van Acker, Chairman, Dr. Sorell
and Dr. Ingle. The Audit Committee oversees the Company's accounting and
financial reporting policies, makes recommendations to the Board of Directors
regarding appointment of independent accountants, reviews with the independent
accountants the accounting principles and practices followed by the Company and
the adequacy thereof, reviews the Company's annual audit and financial results
and any material change in accounting principles, policies and procedures and
makes recommendations to the Board of Directors with regard to any of the
preceding. The Audit Committee held two meetings during 1996.
During the fiscal year ended December 31, 1996, all directors attended at
least 75% of the aggregate of the Board of Directors meetings held while they
were serving as directors and at least 75% of the aggregate of the Committee
meetings in which they were entitled to participate, except for Dr. Sorell, who
attended 70% of the aggregate of the Board and committee meetings in which he
was entitled to participate.
COMPENSATION AND STOCK OPTION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Mr. Heinrichs, who served on the Compensation and Stock Option Committee of
the Board until February 21, 1997, also served as Chief Executive Officer of the
Company from February 1991 to November 1991.
PROPOSAL TWO
RATIFICATION OF INDEPENDENT PUBLIC ACCOUNTANTS
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Upon the recommendation of the Audit Committee, the Board of Directors has
appointed the firm of KPMG Peat Marwick LLP ("KPMG Peat Marwick") as the
Company's independent auditors for the year ending December 31, 1997, subject to
ratification by the stockholders at the Annual Meeting. KPMG Peat Marwick has
audited the Company's financial statements since the Company's inception in
March 1987. Representatives of KPMG Peat Marwick are expected to be present at
the Company's Annual Meeting. They will have an opportunity to make a
statement, if they desire to do so, and will be available to respond to
appropriate questions.
Stockholder ratification of the selection of KPMG Peat Marwick as the
Company's independent public accountants is not required by the Company's By-
laws or otherwise. However, the Board is submitting the selection of KPMG Peat
Marwick to the stockholders for ratification as a matter of good corporate
practice. If the stockholders fail to ratify the selection, the Audit Committee
and the Board will reconsider whether or not to retain that firm. Even if the
selection is ratified, the Audit Committee and the Board in their discretion may
direct the appointment of a different independent accounting firm at any time
during the year if they determine that such a change would be in the best
interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares represented
and voting at the meeting will be required to ratify the selection of KPMG Peat
Marwick. The Company's executive officers and directors (and entities
affiliated with them), in the aggregate, own approximately 19.8% of the
Company's voting stock. These stockholders will be able to influence
significantly the passage of this proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL TWO.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
5% STOCKHOLDERS
The following table sets forth certain information regarding beneficial
ownership of the Company's stock as of March 17, 1997 by each stockholder known
by the Company to be the beneficial owner of more than 5% of a class of the
Company's voting securities. Unless otherwise indicated in the footnotes to
this table, each of the stockholders named in this table has sole voting power
and investment power with respect to the shares indicated as beneficially owned.
Applicable percentages are based on 15,077,079 combined shares of Common Stock,
Series A Preferred Stock and Series B Preferred Stock outstanding on an as-
converted basis adjusted as required by rules promulgated by the Securities and
Exchange Commission ("SEC"). Ownership information is based upon information
furnished by the respective entities, including any Schedule 13D or 13G.
SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
BENEFICIAL OWNER OWNED OWNED
---------------- ------ ------
Rothschild Asset Management Ltd.
International Biotechnology Trust plc (1).........2,800,000 17.0%
Five Arrows House
St. Swithin's Lane
London EC4N 8NR
England
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Wanger Asset Management, L.P.
227 West Monroe, Suite 3000
Chicago, IL 60606-5016
AKKAD (Acorn Fund) (2).......................1,600,000 10.1%
c/o State Street Bank & Trust
225 Franklin Street
Boston, Massachusetts 02110
Hoechst Schering AgrEvo GmbH
AgrEvo/Hoechst AG
6230 Frankfurt-am-Main
Germany
PGS International N.V.(3)..................1,334,793 8.9%
Prins Hendriklaan 20
1075 BC Amsterdam, The Netherlands
Schering Corporation(4)...........................1,250,000 8.3%
2000 Galloping Hill Road
Kenilworth, New Jersey 07033
GIMV, N.V.(5).....................................1,142,857 7.6%
Karel Oomsstraat 37
2018 Antwerp, Belgium
T. Rowe Price Associates, Inc.(6).................1,130,000 7.5%
100 East Pratt St.
Baltimore, Maryland 21202
- ---------------------
(1) Includes 1,400,000 shares of Common Stock issuable upon exercise of
warrants exercisable within 60 days. Ms. Vitullo is a Senior Vice
President of Rothschild Asset Management, Inc., an affiliate of Rothschild
Asset Management, Ltd., which manages the IBT fund, and disclaims
beneficial ownership of such shares owned by IBT.
(2) Includes 800,000 shares of Common Stock issuable upon exercise of warrants
exercisable within 60 days.
(3) PGS International Netherlands was acquired by Hoechst Schering AgrEvo GmbH,
which shares voting and dispository rights to all 1,334,793 shares with PGS
International Netherlands. PGS International Belgium, a subsidiary of PGS
International Netherlands, holds 300,000 of those shares in its name and
1,034,793 shares are held in the name of Chelsea, N.V., a subsidiary of
Plant Genetic Systems which is a subsidiary of PGS International Belgium.
(4) Includes 1,000,000 shares of Series A Convertible Preferred Stock and
250,000 shares of Series B Convertible Preferred Stock, on an as-converted
basis.
(5) Held by a subsidiary, Take Off Fonds, N.V. Mr. Van Acker is the President
and Chief Executive Officer of GIMV and disclaims beneficial ownership of
these shares.
(6) These securities are owned by various individual and institutional
investors, including T. Rowe Price New Horizons Funds, Inc., which owns
900,000 shares, for which T. Rowe Price Associates, Inc. ("Price
Associates") serves as investment advisor with power to direct investments
and/or sole power to vote the securities. For purposes of the reporting
8
<PAGE>
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), Price Associates is deemed to be a beneficial owner of
such securities; however, Price Associates expressly disclaims that it is,
in fact, the beneficial owner of such securities.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of March 17, 1997 by (i) each director and
nominee for director, (ii) each of the Named Executive Officers, and (iii) all
directors and executive officers as a group. Except as otherwise indicated, the
Company believes that the beneficial owners of the Common Stock listed below,
based on information furnished by such owners, have sole investment and voting
power with respect to such shares, subject to community property laws where
applicable. Applicable percentages are based on 15,077,079 shares of Common
Stock, Series A Preferred Stock and Series B Preferred Stock outstanding on an
as-converted basis adjusted as required by rules promulgated by the Commission.
Ownership information is based upon information furnished by the respective
individuals, including any filings under Section 16 of the Exchange Act.
SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
DIRECTORS: OWNED OWNED
- ---------- ------ ------
Nicole Vitullo(1)................................ 2,800,000 17.0%
Gerard Van Acker(2).............................. 1,161,071 7.7%
Thomas S. Edgington, M.D.(3)..................... 311,418 2.1%
John H. Fried, Ph.D.(4).......................... 44,750 *
Theodor H. Heinrichs(5).......................... 32,572 *
M. Blake Ingle, Ph.D.(6)......................... 18,500 *
W. Leigh Thompson, Jr., M.D., Ph.D.(7)........... 1,250 *
Michael Sorell, M.D.............................. -- --
SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY
EXECUTIVE OFFICERS: OWNED OWNED
- ------------------- ------ ------
David S. Kabakoff, Ph.D.(8) ..................... 266,722 1.8%
John E. Crawford(9).............................. 219,421 1.5%
Randall E. Woods(10)............................. 82,250 *
9
<PAGE>
William C. Ripka, Ph.D.(11)...................... 75,802 *
George P. Vlasuk, Ph.D.(12)...................... 56,025 *
Donald E. Picker, Ph.D.(13)...................... -- --
Howard R. Soule, Ph.D.(14)....................... -- --
All directors and officers as
group (15 persons)(15)........................... 5,069,781 29.8%
- --------------------
* Less than 1%.
(1) Includes 1,400,000 shares of Common Stock and 1,400,000 shares of Common
Stock issuable upon exercise of warrants exercisable within 60 days owned
by IBT. Ms. Vitullo is a Senior Vice President of Rothschild Asset
Management, Inc., an affiliate of Rothschild Asset Management, Ltd., which
manages the IBT fund. Ms. Vitullo disclaims beneficial ownership of such
shares owned by IBT.
(2) Includes 18,214 shares of Common Stock issuable upon exercise of options
exercisable within 60 days and 1,142,857 shares beneficially owned by
GIMV, of which Mr. Van Acker is the President and Chief Executive Officer.
Mr. Van Acker disclaims beneficial ownership of such shares beneficially
owned by GIMV.
(3) Includes 55,704 shares of Common Stock issuable upon exercise of options
exercisable within 60 days. Also includes 255,714 shares held in a trust
for which Dr. Edgington is both a trustee and a beneficiary.
(4) Includes 39,750 shares of Common Stock issuable upon exercise of options
exercisable within 60 days.
(5) Includes 23,928 shares of Common Stock issuable upon exercise of options
exercisable within 60 days and 4,439 shares of Common Stock beneficially
owned by Hambrecht & Quist Group. Mr. Heinrichs is a general partner of
H&Q LSV, an investment fund of Hambrecht & Quist Group, and disclaims
beneficial ownership of such shares beneficially owned by Hambrecht &
Quist Group.
(6) Includes 7,500 shares of Common Stock issuable upon exercise of options
exercisable within 60 days.
(7) Represents 1,250 shares of Common Stock issuable upon exercise of options
exercisable within 60 days.
(8) Includes 4,000 shares of Common Stock held in a trust by Dr. Kabakoff's
spouse as custodian for his minor children, and 129,758 shares issuable
upon exercise of options exercisable within 60 days. Dr. Kabakoff
resigned as President and Chief Executive Officer of the Company
effective May 1, 1996 and as Chairman of the Board on February 20, 1997.
(9) Includes 159,928 shares of Common Stock held in a trust for which Mr.
Crawford is both a trustee and a beneficiary and 59,373 shares issuable
upon exercise of options exercisable within 60 days.
(10) Includes 81,250 shares of Common Stock issuable upon exercise of options
exercisable within 60 days.
10
<PAGE>
(11) Represents 75,802 shares of Common Stock issuable upon exercise of
options exercisable within 60 days.
(12) Includes 53,882 shares of Common Stock issuable upon exercise of options
exercisable within 60 days.
(13) Dr. Picker resigned from the Company and as of the date of his
resignation, he owned no Corvas stock.
(14) Dr. Soule resigned from the Company on December 31, 1996, and as of
March 17, 1997 he owned no Corvas stock.
(15) Includes 1,946,411 shares of Common Stock issuable upon exercise of
warrants and options exercisable within 60 days. See notes (1) through
(12) above.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the directors and officers of
the Company, and persons who own more than 10% of a registered class of the
Company's equity securities ("Reporting Persons"), to file with the SEC initial
reports of ownership and reports of changes in ownership of Corvas Common Stock.
Specific due dates for these reports have been established and the Company is
required to disclose in this proxy statement any failure to file by these dates
during 1996.
To the Company's knowledge, all of these requirements were satisfied for
fiscal year 1996.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Members of the Board of Directors generally do not receive compensation for
service as directors or for service as members of any committee of the Board,
except as noted. Dr. Edgington received annual compensation of $36,000 for
service as a non-employee member of the Executive Committee in 1996, and
continued to receive that rate of compensation until completion of his service
on the Executive Committee on February 20, 1997. Dr. Ingle, Dr. Sorell and Dr.
Thompson currently receive compensation at the rate of $12,000 per year for
service as outside directors unaffiliated with any principal stockholder. Until
February 21, 1997, Dr. Fried also received compensation of $12,000 annually for
service as an outside director unaffiliated with any principal stockholder.
Currently, Dr. Fried is compensated at the rate of $30,000 per year for service
as Chairman of the Board unaffiliated with any principal stockholder. The
members of the Board are also eligible for reimbursement for their expenses
incurred in connection with attendance at Board meetings in accordance with
Company policy.
In addition, directors have received, and will receive in the future, stock
options under the Company's equity incentive plans or otherwise. Under the 1991
Incentive and Compensation Plan (the "1991 Plan"), each non-employee director of
the Company receives a non-discretionary stock option grant of 5,000 shares
annually at an exercise price of 85% of the fair market value of the Common
Stock on the date of the grant. Options granted to the non-employee directors
under the 1991 Plan are not intended by the Company to qualify as incentive
stock options under the Internal Revenue Code of 1986, as amended (the "Code"),
nor do they disqualify the members of the Compensation and Stock Option
Committee as "disinterested directors." Upon being named Chairman of the Board,
on February 21, 1997, Dr. Fried was granted stock options for 25,000 shares of
the Company's Common Stock, at an exercise price of 100% of the fair market
value of
11
<PAGE>
the Common Stock on the date of the grant. The options have a maximum term of
10 years from the grant date, subject to earlier termination upon Dr. Fried's
termination of service with the Company, and vest over a four year period, 25%
on the first anniversary date of the grant and 6.25% each quarter thereafter
until fully vested.
Pursuant to an agreement executed in 1988, Dr. Edgington received $24,000
for scientific consulting services rendered to the Company through September
1996, when the agreement was terminated by the parties.
In June 1992, the Company entered into a consulting agreement with Dr.
Fried pursuant to which Dr. Fried received fees of $12,000 annually for
scientific services rendered to the Company. The agreement was terminated
effective February 21, 1997, upon Dr. Fried's appointment as Chairman of the
Board.
On May 1, 1996, the Company entered into a Consulting Agreement with Dr.
Kabakoff pursuant to which Dr. Kabakoff received a fee of $8,500 for scientific
services rendered to the Company, and for his service as interim President and
Chief Executive Officer until Mr. Woods was appointed President and Chief
Executive Officer of the Company. Under the agreement, Dr. Kabakoff will
continue to serve as a consultant and on the Board of Directors and, as
consideration for performing such service after July 1, 1996, Dr. Kabakoff's
previously granted stock options will continue to vest during the term of the
agreement. Dr. Kabakoff resigned as Chairman of the Board on February 20, 1997,
and effective that date, the Consulting Agreement was amended whereby the
agreement will terminate December 31, 1998.
On May 1, 1996, the Company entered into a consulting agreement with Mr.
Heinrichs pursuant to which Mr. Heinrichs presently receives fees of $12,000
annually for consulting services rendered to the Company.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table sets forth for the years ended December 31, 1996, 1995 and
1994, compensation awarded, or paid to and earned by, the Company's Chief
Executive Officer, the Company's former Chief Executive Officer, and the three
other most highly compensated executive officers at December 31, 1996 (which
were the only persons meeting the requirements to appear in the table), and
three other executives who left the Company in 1996 (and would otherwise have
been an officer named in the table below), whose salary and bonus were in excess
of $100,000 for services rendered to the Company during the fiscal year ended
December 31, 1996 (collectively, the "Named Executive Officers"). Officers
serve at the discretion of the Board of Directors, subject to existing
employment agreements for Messrs. Woods and Crawford, and Drs. Vlasuk and Ripka.
See "Employment and Consulting Agreements."
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
-------------------- -------------------
(a) (b) (c) (d) (g) (i)
Shares
Name and Underlying All Other
Principal Salary(1) Bonus Options(2) Compensation(3)
Position Year ($) ($) (#) ($)
-------- ---- --------- ----- --------- ---------------
<S> <C> <C> <C> <C> <C>
Randall E. Woods(4) 1996 192,000 6,025 375,000 88,447
President & Chief
12
<PAGE>
Executive Officer
William C. Ripka, Ph.D. 1996 170,000 -0- 45,000 5,412
Senior Vice President 1995 165,000 -0- 68,000 4,694
Chemical Research 1994 160,000 12,000 25,000 4,732
George P. Vlasuk, Ph.D.(5) 1996 162,872 -0- 120,000 1,111
Executive Vice President 1995 130,160 -0- 63,257 843
Research & Development
John E. Crawford 1996 137,000 10,000 30,000 2,820
Executive Vice President 1995 129,000 -0- 85,000 2,725
& Chief Financial Officer 1994 125,000 12,000 35,000 2,637
David S. Kabakoff, Ph.D.(6) 1996 109,000 20,000 50,000 10,340
Former President and 1995 212,000 -0- 164,285 3,971
Chief Executive Officer 1994 205,000 24,000 65,000 3,974
Donald H. Picker, Ph.D.(7) 1996 125,000 23,325 250,000 129,050
Former Executive Vice
President and Chief
Operating Officer
Howard R. Soule, Ph.D.(8) 1996 140,000 -0- 15,000 2,591
Former Vice President 1995 127,500 -0- 40,000 2,406
Product Development 1994 121,500 12,000 35,000 2,365
</TABLE>
____________________
(1) Includes amounts earned but deferred into the Company's 401(k) Compensation
Deferral and Savings Plan ("401(k) Plan") at the election of the executive.
(2) The Company has not issued any restricted stock awards or stock
appreciation rights ("SARs") to date. On January 16, 1995, the Stock
Option and Compensation Committee of the Board of Directors approved an
offer for all employees, including officers, to exchange outstanding
options with exercise prices greater than $2.44 per share for an equivalent
number of options issued under the 1991 Plan at the fair market value on
January 16, 1995. The new options did not vest for six months from the
date of grant (twelve months for executive officers), at which time the
options became vested in the equivalent percentage as the canceled options
at the time of cancellation. After the initial vesting of at least 25%,
the remainder of the options vest 6.25% per quarter. The options remain
exercisable for ten years from the new grant date. For each employee, the
receipt of the replacement grant was subject to the employee's consent to
the cancellation of the original grants.
(3) Includes amounts paid on behalf of executives for long-term disability
insurance premiums and life insurance premiums. See also footnotes 4, 6
and 8.
(4) Mr. Woods was appointed as President and Chief Executive Officer of the
Company on May 10, 1996. The amount set forth under Column (d), entitled
"Bonus", represents the amount of interest which would have been payable
under an interest-free loan from the Company to Mr. Woods. The amount set
forth under Column (i), entitled "All Other Compensation", includes amounts
paid on behalf of Mr. Woods for relocation expenses in the amount of
$69,933 and $18,514 in relocation gross-up payments.
13
<PAGE>
(5) On September 5, 1996, Dr. Vlasuk was appointed as Executive Vice President,
Research and Development of the Company.
(6) Dr. Kabakoff resigned as President and Chief Executive Officer of the
Company effective May, 1996 and as Chairman of the Board of Directors on
February 20, 1997. The amount set forth under Column (i), entitled "All
Other Compensation", includes consulting fees of $8,500 paid to Dr.
Kabakoff in May 1996.
(7) Dr. Picker resigned as Executive Vice President and Chief Operating Officer
of the Company effective July 8, 1996. The amount set forth under Column
(d), entitled "Bonus", includes forgiveness of $20,000 of a secured loan
made by the Company to Dr. Picker in connection with his relocation to San
Diego, as well as discounted interest in the amount of $3,325 on said loan.
The amount set forth under Column (i), entitled "All Other Compensation",
includes a severance payment in the amount of $125,000 and payment of $2,990
in lieu of unemployment insurance compensation in accordance with the terms
of Dr. Picker's separation agreement with the Company, as well as $1,060 for
long-term disability insurance premiums and life insurance premiums.
(8) Dr. Soule resigned as a Vice President, Product Development, of the Company
effective December 31, 1996.
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under its 1991 Plan.
As of December 31, 1996, options to purchase a total of 1,525,029 shares had
been granted and were outstanding under the 1991 Plan, stock awards had been
made under the 1991 Plan totaling 5,400 and options to purchase 694,571 shares
remained available for grant thereunder.
OPTION GRANTS IN LAST FISCAL YEAR
The following tables set forth certain information regarding options
granted to the Named Executive Officers during the year ended December 31, 1996:
<TABLE>
<CAPTION>
Potential
Realizable Value at
Assumed Annual
Rates of Stock Price
Appreciation
Individual Grants for Option Term (4), (5)
----------------------- --------------------------
(a) (b) (c) (d) (e) (f) (g)
Number % of
of Total
Shares Options
Underlying Granted to Exercise
Options Employees or Base Expira-
Granted in Fiscal Price tion
Name (#)(1) Year(2) ($/Share)(3) Date 5% 10%
---- ---------- ---------- ------------- ------ --- ---
<S> <C> <C> <C> <C> <C> <C>
Mr. Woods 325,000 30.11% $5.0625 05/09/06 $1,034,738 $2,622,204
50,000 4.63% $4.1875 12/04/06 $131,675 $333,690
Dr. Ripka 15,000 1.38% $4.3750 01/10/06 $ 41,271 $ 104,589
14
<PAGE>
10,000 .92% $4.1875 12/04/06 $26,335 $66,738
Dr. Vlasuk 20,000 1.85% $4.3750 01/10/06 $55,028 $139,452
100,000 9.26% $4.1875 09/04/06 $263,350 $667,380
Mr. Crawford 15,000 1.38% $4.3750 01/10/06 $ 41,271 $104,589
15,000 1.38% $4.1875 12/04/06 $39,502 $100,107
Dr. Kabakoff(6) 50,000 4.63% $4.3750 01/10/06 $137,571 $348,631
Dr. Picker(7) 250,000 23.16% $4.3750 08/07/06 $54,688 $109,376
Dr. Soule(8) 15,000 1.38% $4.3750 01/10/06 $3,281 $ 6,563
_________________
</TABLE>
(1) Options generally vest over a four year period, 25% on the first
anniversary of the grant date and 6.25% each quarter thereafter until fully
vested, and have a maximum term of 10 years measured from the grant date,
subject to earlier termination upon the optionee's cessation of service
with the Company. Upon certain corporate events resulting in a change in
control, at the discretion of the Board of Directors, (i) the outstanding
options will be assumed or replaced by substitute options granted by any
surviving corporation, or (ii) the outstanding options will become
exercisable for a minimum of 30 days prior to such event.
(2) Based on an aggregate of 1,079,350 shares subject to options granted to
employees in fiscal 1996, including grants to Named Executive Officers.
(3) The exercise price is equal to 100% of the fair market value of the Common
Stock on the date of grant, as determined by the Compensation and Stock
Option Committee.
(4) The 5% and 10% assumed rates of appreciation are suggested by the rules of
the SEC and do not represent the Company's estimate or projection of the
future Common Stock price. There can be no assurance that any of the
values reflected in the table will be achieved. Actual gains, if any, on
stock option exercises and Common Stock holdings are dependent upon a
number of factors, including the future performance of the Common Stock,
overall market conditions and the timing of option exercises, if any.
(5) The potential realizable value is calculated based on the term of the
option at its time of grant (10 years in all cases above). It is
calculated by assuming that the stock price on the date of grant
appreciates at the indicated annual rate, compounded annually for the
entire term of the option and that the option is exercised and sold on the
last day of its term for the appreciated stock price. No gain to the
optionee is possible unless the stock price increases over the option term,
which will benefit all stockholders. For example, a stockholder who
purchased one share of stock on January 10, 1996, at $4.1875, held the
stock for 10 years and sold it on January 10, 2006 while the stock
appreciated at 5% and 10% would have profits of $2.63 and $6.67,
respectively, on his $4.1875 investment.
(6) Dr. Kabakoff resigned as President and Chief Executive Officer of the
Company effective May, 1996 and as Chairman of the Board of Directors on
February 20, 1997.
(7) Dr. Picker resigned as Executive Vice President and Chief Operating Officer
of the Company effective July 8, 1996.
(8) Dr. Soule resigned as Vice President, Product Development of the
Company effective December 31, 1996.
15
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND FISCAL YEAR-END OPTION
VALUES
The following table sets forth information with respect to the exercise of
stock options by the Named Executive Officers, during the fiscal year ended
December 31, 1996, and the number and value of securities underlying unexercised
options held by the Named Executive Officers as of December 31, 1996:
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Value of
Number of Unexercised
Unexercised In-the-Money
Options at Fiscal Options at Fiscal
Year-End (#)(2) Year-End ($)(3)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($)(1) Unexercisable Unexercisable
---- --------------- --------------- -------------- -------------
<S> <C> <C> <C> <C>
Mr. Woods -0- -0- -0-/375,000 -0-/207,812
Dr. Ripka -0- -0- 62,615/51,813 235,536/118,818
Dr. Vlasuk -0- -0- 41,069/142,188 136,041/227,247
Mr. Crawford -0- -0- 47,186/67,814 152,242/149,632
Dr. Kabakoff(4) 30,000 $129,000 129,746/108,282 465,101/249,309
Dr. Picker(5) -0- -0- -0/-0- -0-/-0-
Dr. Soule(6) -0- -0- 78,994/-0- 271,422/-0-
</TABLE>
____________________
(1) Value realized is calculated on the basis of the fair market value of the
Company's Common Stock on the date of exercise minus the exercise price and
does not necessarily indicate that the optionee sold such stock.
(2) Includes options granted under the 1987 Stock Option Plan (the "1987
Plan"), the Second Stock Option Plan (the "1989 Plan") and the 1991 Plan.
Options granted under the 1987 Plan and the 1989 Plan generally vest at the
rate of 25% per year over four years and have a term of 10 years. In
December 1991, the Board of Directors voted to terminate the 1987 Plan and
the 1989 Plan, and no additional grants of options have been made under
either of such plans since they were terminated. Options granted under the
1991 Plan generally have the vesting schedule reflected in Footnote 1 of
"Stock Option Grants and Exercises".
(3) Amounts reflected are based on the fair market value of the Company's
Common Stock at December 31, 1996 ($5.50) minus the exercise price of the
options.
(4) Dr. Kabakoff resigned as President and Chief Executive Officer of the
Company effective May, 1996 and as Chairman of the Board of Directors on
February 20, 1997.
16
<PAGE>
(5) Dr. Picker resigned as Executive Vice President and Chief Operating Officer
of the Company effective July 8, 1996. By their terms, all options held by
Dr. Picker expired without being exercised following his resignation.
(6) Dr. Soule resigned as Vice President, Product Development of the Company
effective December 31, 1996. He exercised all of his options in January
1997.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
In May 1996, the Company entered into an employment agreement with Mr.
Woods which provided for an annual base salary of $300,000, and a grant of
options to purchase 325,000 shares of common stock of the Company under the
Company's Stock Option Plan. The options vest at 25% of the shares following
twelve months of continuous service with the Company and thereafter, at the rate
of 6.25% per quarter for each subsequent quarter of completed service. Under
the agreement, if Mr. Woods' employment was terminated by the Company without
cause within one year of his hire date (or, under specified conditions,
including a change of control of the Company, Mr. Woods voluntarily terminates
his employment), he would be entitled to continue to receive his then-current
base salary and benefits for a period of one year, as well as stock option
vesting acceleration in order for Mr. Woods to receive one-fourth of the shares
granted following such termination. The agreement also provided that if such
termination occurred after the first year of employment, Mr. Woods would receive
his then-current base salary, as well as all benefits and stock option vesting
for a period of one hundred eighty days from the date of such termination.
In addition, under the employment agreement, the Company agreed to lend Mr.
Woods the amount of $200,000 in connection with his relocation to San Diego
County, California. The loan is evidenced by an interest-free promissory note
(the "Note"), secured by his former residence in Maryland. The Note was
originally due on the earlier of the sale of the Maryland property or December
7, 1996 and was extended on December 4, 1996 for a period of one year to allow
Mr. Woods the further opportunity to sell the property, to be payable on the
earlier of the sale of the residence or December 7, 1997. If Mr. Woods'
employment with the Company is terminated for any reason, the outstanding
balance of the Note shall become due and payable within 90 days of such
termination.
The Company entered into an employment agreement with Mr. Crawford in April
1989. which allowed, but did not require, changes in compensation from time to
time. The agreement provided that in the event Mr. Crawford's employment is
terminated by the Company without cause (or, under specified conditions,
including a change of control of the Company, he voluntarily terminates his
employment), Mr. Crawford would be entitled to continue to receive his then-
current salary and benefits for a period of 180 days following termination.
In March 1997, the Company entered into employment agreements with Mr.
Woods and Mr. Crawford which replaced their prior agreements, and new agreements
with Dr. Vlasuk and Dr. Ripka. Under the agreements, the current salaries for
Mr. Woods, Mr. Crawford, Dr. Ripka and Dr. Vlasuk are $315,000, $150,000,
$175,000 and $200,000, respectively. The agreements allow, but do not require,
changes in compensation from time to time. The agreements provide that in the
event the employment of the officer is terminated without cause, or if the
officer terminates his employment upon a change of control of the Company (or
within six months thereafter) or in the event of a violation of the agreement by
the Company, such officer is entitled to continue to receive a lump sum payment
equal to his then-current annual base salary and benefits for a period of one
year following termination and immediate vesting of all stock options held by
the officer. Upon such officer's death or total disability, as defined in the
agreement, the officer or his estate or personal representative shall be
entitled to receive his then-current base salary and benefits for a period of
three months.
17
<PAGE>
In March 1989, the Company entered into an employment agreement with Dr.
Kabakoff. The agreement allowed, but did not require, changes in compensation
from time to time. The agreement also provided that in the event Dr. Kabakoff's
employment was terminated by the Company without cause (or, under specified
conditions, including a change of control of the Company, he voluntarily
terminated his employment), Dr. Kabakoff would be entitled to continue to
receive his then-current salary and benefits for a period of 180 days following
such termination.
Dr. Kabakoff resigned as President and Chief Executive Officer of the
Company in May 1996, and as Chairman of the Board of Directors on February 20,
1997, and received the sum of $8,500 for consulting services and services as
interim President and Chief Executive Officer for the month of May 1996.
In February 1996, the Company entered into an employment agreement with Dr.
Picker which provided for an annual base salary of $250,000 and a grant to
purchase 250,000 shares of Common Stock of the Company under the Company's Stock
Option Plan. In the event Dr. Picker's employment is terminated by the Company
without cause, he shall be entitled to continue to receive his then-current
salary and benefits for a period of 180 days following termination. Dr.
Picker's agreement also allowed a one-time housing loan. See "Certain
Transactions."
Dr. Picker resigned as Executive Vice President and Chief Operating
Officer of the Company in July 1996, and is no longer employed with the
Company. In accordance with the separation agreement entered into between
Dr. Picker and the Company, Dr. Picker received the amount of $125,000, which
was equal to six months of his base salary, payment in the amount of $2,990
in lieu of unemployment compensation, and health insurance benefits through
December 31, 1996. Pursuant to the separation agreement, the Company forgave
the remaining $60,000 of the principal balance outstanding on an unsecured
note and agreed not to accelerate loan payments under a secured note due by
Dr. Picker upon termination of his employment. See "Certain Transactions".
The Company also agreed to allow Dr. Picker a three month grace period for
payment of interest on the secured note, with any and all interest accrued
during that period to be paid to the Company no later than April 1, 1997, or
earlier if Dr. Picker obtained full-time employment. In exchange for the
above-referenced consideration, Dr. Picker released the Company from any and
all obligations which may have arisen directly or indirectly from Dr.
Picker's employment with the Company and the termination thereof.
Dr. Soule resigned as Vice President of Product Development of the Company
effective December 31, 1996 (the "Separation Date"). In accordance with a
separation agreement entered into between the Company and Dr. Soule dated
January 28, 1997, Dr. Soule will continue to receive his current base salary
for a period of six months from the Separation Date, along with health insurance
benefits until the earlier of June 1, 1997, or the date on which he commences
full-time employment with another company. The agreement also provided
accelerated vesting of Dr. Soule's stock options such that as of December 31,
1996, the number of shares vested under the stock options would equal the number
of shares that would have vested through June 30,1997. Under the agreement, all
stock options terminated 30 days after the Separation Date if not exercised by
Dr. Soule. In exchange for the consideration given under the agreement, Dr.
Soule has agreed to serve as an outside consultant to the Company for the period
of January 1, 1997 through June 30, 1997, or until he commences full-time
employment with another company, whichever shall occur first. Dr. Soule also
agreed to release the Company from any and all obligations which may have arisen
directly or indirectly from Dr. Soule's employment with the Company and the
termination thereof.
REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
18
<PAGE>
OF THE BOARD OF DIRECTORS ON EXECUTIVE COMPENSATION (1)
The Compensation and Stock Option Committee of the Board of Directors (the
"Committee") consists of Ms. Vitullo (who was appointed to the Committee in
April 1996) and Dr. Thompson (who was appointed to the Committee in February
1997). Mr. Heinrichs and Dr. Fried both resigned from the Committee in February
1997. None of the members are currently officers or employees of the Company.
The Committee is responsible for setting and administering the Company's
policies governing employee compensation and administering the Company's
employee benefit plans, as well as reviewing and granting options to the
executive officers and all eligible employees. The Committee evaluates the
performance of management and determines compensation policies and levels. The
full Board of Directors reviews the Committee's recommendations regarding the
compensation of executive officers and has the ultimate responsibility regarding
compensation decisions. The Board approved the Committee's recommendations in
1996.
COMPENSATION PROGRAM
Annual compensation for the Company's executive officers consists of three
elements: a cash salary, stock option grants and event-driven cash bonus
awards. As in previous years, in making compensation determinations, the
Committee reviewed past and present compensation information with respect to
management at other biotechnology companies in similar geographic areas and at
similar stages of growth and development, as well as a number of industry
surveys regarding short- and long-term executive compensation. This includes
certain companies which are components of either or both of the Nasdaq CRSP
Total Return Index for The Nasdaq Stock Market (U.S. Companies) ("Nasdaq U.S.")
or Nasdaq Pharmaceutical Index ("Nasdaq PH"), the market indices included in the
performance graph included in this Proxy Statement. Based in part on this
survey information, the Committee generally sets salaries in the median range
for companies of comparable size in similar industries. The Committee also
considers the individual performance and responsibilities of the executive
officers. Currently, the executive officers are compensated at approximately
the median for comparable companies reviewed by the Committee or are slightly
above the median for those officers whose experience and responsibilities are
above the average level described for the position surveyed.
Section 162(m) of the Code limits the Company to a deduction for federal
income tax purposes of no more than $1,000,000 of compensation paid to certain
Named Executive Officers in a taxable year. Compensation above $1,000,000 may
be deducted if it is "performance-based compensation" within the meaning of the
Code.
The Committee has determined that stock awards granted under the Company's
1991 Incentive and Compensation Plan with an exercise price at least equal to
the fair market value of the Company's Common Stock on the date of grant shall
be treated as "performance-based compensation." As a result, the Company's
stockholders approved an amendment to this plan in June 1996 which generally
allows any compensation recognized by a Named Executive Officer as a result of
the grant of such a stock award to be deductible by the Company.
In making executive compensation decisions, the Committee believes that
compensation of executives should be directly linked to overall Company
performance and the long-term value created for its stockholders, as well as
individual performance. To this end, the Company's compensation programs,
including salary and incentives, seek to provide competitive
____________________
(1) The material in this report is not "soliciting material," is not deemed
filed with the SEC and is not to be incorporated by reference in any filing
of the Company under the Securities Act of 1933 (the "1933 Act") or the
Exchange Act.
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compensation that is reflective of Company and individual performance. The
Company considers a number of factors, including the following, in determining
the elements of compensation for its executive officers.
- Compensation should be meaningfully related to the long-term value
created for stockholders.
- Compensation programs should support the short- and long-term
strategic goals and objectives of the Company.
- Compensation programs should reflect and promote the Company's values,
and reward individuals based on their contributions to the Company's
success.
- In order to attract and retain well qualified executives, the
Company's compensation decisions may take into account competitive pay
levels.
- While base compensation should be based on individual contribution,
the actual amounts earned by executives in variable compensation
programs, such as stock options, should be dictated by how the Company
performs.
BASE SALARY. The Committee's policy is to review base salary for the Chief
Executive Officer and each of the Company's executive officers in late fall each
year for the following year. In September 1996 the Board of Directors promoted
one executive whose annual review cycle was scheduled for year end 1996. Based
on increased responsibilities as well as outstanding performance prior to the
promotion, the executive received approximately a 27% increase. In December
1996, all executive base salaries were reviewed for the fiscal year 1997. Based
on performance issues as outlined below, the executives received an average
increase of 5.7%. The Committee reviewed executive salaries for other
biotechnology companies at a comparable stage of development and financial
condition. The Committee also reviewed a number of criteria, including
performance of the Company and the individual executive, relative experience and
responsibilities and competitive pay practices. Performance criteria for the
company are related to the stage of the Company's development. Such criteria
for the Company's current stage of development include growth and strengthening
of existing collaborative agreements, achievement of product development
milestones, progress in pre-clinical trials of new lead compounds, progress in
clinical research and new drug discovery programs, successful completion of a
private placement of stock and an offering of registered stock to one buyer,
continued presentation of information to the scientific community, and
recruitment and retention of key personnel. All executives except the Chief
Executive Officer and one other officer, who resigned from the Company in
December 1996, received increases ranging from 2.9% to 9.5%, which was
comparable to the range of increases for all employees.
STOCK OPTION GRANTS. The Company uses its stock option program to further align
the interests of stockholders and management by creating common incentives
related to the possession by management of a substantial economic interest in
the long-term appreciation of the Company's common stock. In September 1996,
the Committee granted new options to one executive who was promoted. In
December 1996, the Committee also granted options to executive officers based on
performance and contributions during the previous years. Items considered by
the Committee were each officer's position and responsibilities, the individual
officer's performance and contributions for the period reviewed, the equity
incentives paid to comparable officers at similar companies, the number of
previously granted options, and the desire to provide greater incentives during
1997 to meet Company objectives.
ANNUAL BONUS. The Committee has discretionary authority to award bonuses to
executive officers and to other key employees based on individual and Company
performance. The Company has not established a specific annual bonus program
with preset goals. The Committee reviewed Company achievements and individual
performance during 1996. The types of achievements the Committee reviewed were
attainment of major product research and development milestones, entry into
collaborative relationships, obtaining corporate financing and meeting the
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Company's budget. The Committee awarded a bonus to the Chief Financial Officer
on the completion of the registration statement related to the private placement
of equity securities which took place in February 1996.
COMPANY PERFORMANCE/CHIEF EXECUTIVE OFFICER COMPENSATION. Mr. Woods was named
President and Chief Executive Officer in May 1996 at a salary reviewed by the
Board of Directors and approved by the Committee. The Committee looked at a
number of factors in determining the base salary and initial stock option grant,
including past experience in the industry, level of responsibility and
competitive pay practices. For the remainder of 1996, Mr. Woods led the Company
in continued progress in its strategic planning, business development programs
and ongoing collaborations. The Committee took note of his contributions and in
December 1996, to recognize Mr. Woods' efforts and accomplishments in a
challenging business environment, the Committee approved a 5% year-end 1996
salary increase, as well as a grant for options to purchase 50,000 shares of
Common Stock.
In January 1996, the Committee recognized Dr. Kabakoff's efforts and
accomplishments and approved a 20.3% year-end 1995 salary increase, as well
as a grant for options to purchase 50,000 shares of common stock and a cash
bonus contingent upon the completion of the private placement of equity
securities which took place in February 1996. Dr. Kabakoff resigned as the
President and Chief Executive Officer of the Company in May 1996. During the
period of January 1996 through May 1996, Dr. Kabakoff contributed to ongoing
collaborations, strategic planning and the preclinical development of drug
candidates, as well as continuing his responsibilities in the business
development area and financial activities of the Company
Theodor H. Heinrichs John H. Fried
Leigh Thompson Nicole Vitullo
PERFORMANCE MEASURE COMPARISON
The following graph compares total stockholder returns of the Company since
its initial offering of common stock to the public on January 30, 1992, to two
indices: The Nasdaq US and the Nasdaq PH. The total return for each of the
Company's stock, the Nasdaq US and the Nasdaq PH assumes the reinvestment of
dividends, although dividends have not been declared on the Company's Common
Stock. The Nasdaq US tracks the aggregate price performance of equity
securities of companies traded on The Nasdaq Stock Market. The Nasdaq PH tracks
the aggregate price performance of equity securities of pharmaceutical companies
listed under SIC code 283 ("Drugs") and traded on The Nasdaq Stock Market. The
Company's Common Stock is traded on The Nasdaq Stock Market and is a component
of both the Nasdaq US and the Nasdaq PH.(1)
Comparison of Partial Year 1992 and Full Years 1993-1996
Total Cumulative Return on Investment(2)
Date NASDAQ US NASDAQ PHAR Corvas
- ------------------------------------------------------------
Jan-92 100.000 100.000 100.000
Mar-92 97.439 82.956 69.792
Jun-92 90.779 69.586 50.000
Sep-92 94.510 65.528 42.708
Dec-92 109.951 79.740 65.625
Mar-93 112.014 57.400 41.667
Jun-93 114.165 60.491 45.833
Sep-93 123.788 65.580 34.375
Dec-93 126.218 71.074 37.500
Mar-94 120.909 57.969 31.250
Jun-94 115.258 50.599 26.042
Sep-94 124.801 57.002 20.833
Dec-94 123.379 53.505 17.708
Mar-95 134.445 57.763 15.625
Jun-95 153.784 67.158 20.833
Sep-95 172.294 83.652 37.500
Dec-95 174.344 97.730 46.875
Mar-96 182.944 101.847 45.833
Jun-96 197.138 98.963 40.625
Sep-96 203.837 101.194 38.542
Dec-96 213.663 97.976 46.875
____________________
(1) The material in this report is not "soliciting material," is not deemed
filed with the SEC and is not to be incorporated by reference in any filing
of the Company under the Securities Act of 1933 (the "1933 Act") or the
Exchange Act.
(2) Assumes $100 invested on January 30, 1992 in the Company's Common Stock,
the Nasdaq US and the Nasdaq PH.
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CERTAIN TRANSACTIONS
In December 1994, the Company entered into a strategic alliance agreement
with Schering Corporation and Schering-Plough Ltd. ("Schering-Plough") to
collaborate on the discovery and commercialization of oral drugs for the
prevention and treatment of chronic cardiovascular disorders. The initial
collaboration covered development of inhibitors of thrombin, a key blood-
clotting enzyme. In addition, Schering-Plough acquired an exclusive option,
which was exercised in December 1996, to expand the program to include
inhibitors of a second significant blood coagulation enzyme, Factor Xa.
Under the terms of the agreement, Schering-Plough compensated the Company
for the costs of research and preclinical development of thrombin inhibitors
over a two year period which ended December 31, 1996, and has committed to
compensate the Company for the costs of research and preclinical development
of Factor Xa inhibitors over two years. Schering-Plough, which is
responsible for certain preclinical development and all clinical trials and
regulatory activities, received exclusive worldwide manufacturing and
marketing rights for resulting thrombin inhibitors, and exclusive worldwide
marketing rights for any resulting Factor Xa inhibitors. The Company
retained certain manufacturing rights to the Factor Xa inhibitors. The
Company has received a milestone payment and may also receive additional
milestone payments and royalties on sales of therapeutics resulting from its
alliance with Schering-Plough. However, there can be no assurance that
products will be successfully developed and commercialized under this
alliance.
In connection with this alliance, Schering-Plough paid certain fees and
purchased 1,000,000 shares of preferred stock of the Company in 1994 resulting
in net proceeds of $4,864,000. Revenue of $4,000,000 was recognized under this
agreement in 1996. To date, Corvas has received a total of $24,000,000 from
Schering-Plough under the alliance. Schering-Plough purchased an additional
250,000 shares of preferred stock of the Company in December 1996 when it
exercised its option for Factor Xa, which resulted in net proceeds of
$2,000,000. Schering-Plough beneficially owns approximately 8.3% of the
outstanding securities of the Company on an as-converted basis.
In February 1996, the Company loaned $300,000 to Dr. Picker, the
Executive Vice President and Chief Operating Officer of the Company, in
connection with his employment with the Company. The loans were evidenced by
two promissory notes, one in the amount of $180,000 secured by his primary
residence in San Diego County, California, at an interest rate of 6% per
annum (the "Secured Note"), and one in the amount of $120,000, unsecured and
bearing no interest (the "Unsecured Note"). A payment in the amount of
$160,000 of the outstanding principal balance of the Secured Note has been
received, and the Company has forgiven the remaining $20,000 outstanding
principal balance. The sum of $60,000 of the outstanding principal balance
of the Unsecured Note was repaid in March 1996. Dr. Picker resigned from the
Company in July 1996, and on February 21, 1997, pursuant to the terms of Dr.
Picker's separation agreement, the Company forgave the remaining $60,000 of
the principal balance of the Unsecured Note.
On June 7, 1996, as a recruiting incentive, the Company loaned Mr. Woods
$200,000 at no interest in connection with his relocation to San Diego
County, California. The loan was secured by his former residence in
Maryland. The loan was originally due on the earlier of the sale of the
Maryland property or December 7, 1996. The loan was extended on December 4,
1996, to allow Mr. Woods the further opportunity to sell the residence, and
the note is now due on the earlier of the sale of the Maryland property or
December 7, 1997. As further incentive to Mr. Woods, the Company agreed to
pay the mortgage on the Maryland property until the property was sold. The
mortgage payments are partially offset by monthly rental payments. If Mr.
Woods' employment with the Company is terminated for any reason, the
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outstanding principal balance of the loan shall become due and payable within 90
days of such termination.
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.
By Order of the Board of Directors,
April 15, 1997 JOHN E. CRAWFORD
Executive Vice President,
Chief Financial Officer
and Corporate Secretary
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CORVAS INTERNATIONAL, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Randall E. Woods and John E. Crawford, or
either of them, each with full power of substitution, as proxies to vote at the
Annual Meeting of Stockholders of Corvas International, Inc. (the "Company") to
be held on May 15, 1997 at 2:00 p.m., local time, at the Sheraton Grande Torrey
Pines located at 10950 Torrey Pines Road, La Jolla, California, and at any
adjournment or adjournments thereof, hereby revoking any proxies heretofore
given, to vote all shares of common stock of the Company held or owned by the
undersigned as directed below, and in their discretion upon such other matters
as may come before the meeting.
THIS PROXY WILL BE VOTED AS SPECIFIED, OR IF NO CHOICE IS SPECIFIED, WILL
BE VOTED FOR ALL NOMINEES FOR ELECTION LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2.
IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL BE VOTED IN ACCORDANCE
THEREWITH.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEES FOR DIRECTOR LISTED AND IN
FAVOR OF PROPOSAL 2.
(TO BE SIGNED ON REVERSE SIDE)
<PAGE>
A/X/ Please mark your
votes as in this
example.
Nominees: John H. Fried, Ph.D.
FOR WITHHELD Michael Sorell, M.D.
1. Election of / / / / Nicole Vitullo
Directors
For, except vote withheld from the following nominee(s)
FOR AGAINST ABSTAIN
2. Ratification of KPMG Peat Marwick as / / / / / /
the Company's independent public accoun-
tants for fiscal year 1997.
