SCHEDULE 14a
Information Required in Proxy Statement
Reg. Section 240.14a-101.
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 Section 240.14a-11(c) or Section 240.14a-12
SYNAPTIC PHARMACEUTICAL CORPORATION
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(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[_] 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:
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(2) Form, Schedule or Registration Statement No.:
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(4) Date Filed:
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SYNAPTIC PHARMACEUTICAL CORPORATION
April 1, 1999
To the Stockholders of SYNAPTIC PHARMACEUTICAL CORPORATION:
On behalf of the Board of Directors, I cordially invite you to attend
the 1999 Annual Meeting of Stockholders of Synaptic Pharmaceutical Corporation.
The Annual Meeting will be held on Thursday, May 6, 1999, at 10:00 a.m., local
time, at the offices of the Company located at 215 College Road, Paramus, New
Jersey 07652.
A description of the business to be conducted at the Annual Meeting is
set forth in the attached Notice of Annual Meeting of Stockholders and in the
attached Proxy Statement. Also enclosed is a copy of our 1998 Annual Report to
Stockholders.
It is important that your views be represented at the Annual Meeting
whether or not you are able to be present. Accordingly, please mark, sign, date
and return promptly in the accompanying envelope (to which no postage need be
affixed if mailed in the United States) the enclosed proxy card. By returning
the proxy card, you can help the Company avoid the expense of duplicate proxy
solicitations and possibly having to reschedule the Annual Meeting if a quorum
of outstanding shares is not present or represented by proxy. If you attend the
Annual Meeting and wish to change your proxy vote, you may do so simply by
voting in person at the Annual Meeting.
Sincerely,
/s/ Kathleen P. Mullinix
------------------------
Kathleen P. Mullinix
Chairman, President and
Chief Executive Officer
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SYNAPTIC PHARMACEUTICAL CORPORATION
215 College Road
Paramus, New Jersey 07652-1431
---------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
---------------------------
To the Stockholders of SYNAPTIC PHARMACEUTICAL CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Synaptic Pharmaceutical Corporation (the "Annual Meeting") will be held on
Thursday, May 6, 1999, at 10:00 a.m., local time, at the offices of the Company
located at 215 College Road, Paramus, New Jersey 07652, for the following
purposes:
1.To elect three Class III directors to the Board of Directors
to hold office until the 2002 Annual Meeting of Stockholders or until
such directors' respective successors shall have been elected and
qualified or until their earlier resignation, removal, death or
incapacity;
2. To ratify the appointment by the Board of Directors of
Ernst & Young LLP as the independent auditors of the Company for the
fiscal year ending December 31, 1999; and
3. To transact such other business as may properly come before
the meeting or any adjournment thereof.
This Notice is accompanied by a form of proxy, a Proxy Statement and
the Company's 1998 Annual Report to Stockholders. The foregoing items of
business are more fully described in the Proxy Statement.
Stockholders entitled to notice of and to vote at the Annual Meeting
were determined as of the close of business on Monday, March 8, 1999, the record
date fixed by the Board of Directors for such purpose. To ensure your
representation at the Annual Meeting, you are urged to mark, sign, date and
return the enclosed proxy as promptly as possible in the postage-paid envelope
provided. If you attend the Annual Meeting and vote in person, your proxy will
be revoked automatically and only your vote at the Annual Meeting will be
counted. The prompt return of your proxy will assist us in preparing for the
Annual Meeting.
By Order of the Board of Directors,
/s/Lisa L. Reiter
-----------------
Lisa L. Reiter
Secretary
Paramus, New Jersey
April 1, 1999
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SYNAPTIC PHARMACEUTICAL CORPORATION
215 College Road
Paramus, New Jersey 07652-1431
------------------------------------
PROXY STATEMENT
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For the Annual Meeting of Stockholders
To Be Held
May 6, 1999
GENERAL
This Proxy Statement is furnished to stockholders of Synaptic
Pharmaceutical Corporation (the "Company") in connection with the solicitation
by the Board of Directors of the Company of proxies to be voted at the Annual
Meeting of Stockholders to be held on Thursday, May 6, 1999, at 10:00 a.m.,
local time, or at any adjournment thereof (the "Annual Meeting"). The Annual
Meeting will be held at the offices of the Company located at 215 College Road,
Paramus, New Jersey 07652.
This Proxy Statement, together with the Notice of Annual Meeting of
Stockholders, the form of proxy and Synaptic's Annual Report to Stockholders,
are being mailed on or about April 1, 1999, to all stockholders of record at the
close of business on March 8, 1999 (the "Record Date").
Record Date, Outstanding Shares and Voting
Only stockholders of record at the close of business on the Record Date
will be entitled to vote at the Annual Meeting and any adjournment thereof. At
the Record Date, 10,740,636 shares of the Company's Common Stock, par value $.01
per share (the "Common Stock"), were outstanding. Each share outstanding as of
the Record Date will be entitled to one vote, and stockholders may vote in
person or by proxy. Cumulative voting is not permitted with respect to any
proposal to be acted upon at the Annual Meeting. For information concerning
stock ownership of certain stockholders, see "Security Ownership of Certain
Beneficial Owners and Management."
The presence, in person or by proxy, of the holders of a majority of
the outstanding shares of Common Stock entitled to vote at the Annual Meeting is
necessary to constitute a quorum. Votes withheld from any nominee for election
as director, abstentions and broker "non-votes" are counted as present for
purposes of determining the presence or absence of a quorum for the transaction
of business. A "non-vote" occurs when a nominee holding shares for a beneficial
owner votes on one proposal, but does not vote on another proposal because, in
respect of such other proposal, the nominee does not have discretionary voting
power and has not received instructions from the beneficial owner.
The election of directors by the stockholders shall be determined by a
plurality of the votes cast by stockholders entitled to vote, and votes withheld
will not be counted toward the achievement of a plurality. On all other matters
being submitted to the stockholders, the affirmative vote of a majority of the
shares present in person or represented by proxy at the meeting and entitled to
vote on each such matter is required for approval. An automated system
administered by the Company's transfer agent tabulates the votes. The vote on
each matter submitted to stockholders is tabulated separately. Abstentions are
included in the number of shares present and voting on each matter. Broker
non-votes are not considered for the particular matter and
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have the practical effect of reducing the number of affirmative votes required
to achieve a majority for such matter by reducing the total number of votes from
which the majority is calculated.
If properly executed and received by the Company before the Annual
Meeting, any proxy representing shares of Common Stock entitled to be voted at
the Annual Meeting and specifying how it is to be voted will be voted
accordingly. Any proxy representing shares of Common Stock entitled to be voted
at the Annual Meeting which fails to specify how it is to be voted on a proposal
for which a specification may be made will be voted on such proposal in
accordance with the recommendation of the Board of Directors.
Revocability of Proxies
Any proxy given pursuant to this solicitation may be revoked by the
person giving it at any time before its use by delivering to the Company a
written notice of revocation or a duly executed proxy bearing a later date or by
attending the Annual Meeting and voting in person.
Solicitation
The cost of soliciting proxies will be borne by the Company. In
addition, the Company expects to reimburse brokerage firms and other persons
representing beneficial owners of Common Stock for their expenses in forwarding
solicitation materials to such beneficial owners. The original solicitation of
proxies by mail may be supplemented by solicitation by certain of the Company's
directors, officers and regular employees, without additional compensation, in
person or by mail, telephone, facsimile or telegram.
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PROPOSAL NO. 1
ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation, as
amended (the "Certificate"), provides that the authorized number of directors
shall be not less than three nor more than fifteen and that the number of
directors within this range shall be stated in the Company's Amended and
Restated By-laws, as they may be amended from time to time (the "By-laws"). In
addition, the Certificate divides the Board of Directors into three classes as
nearly equal in size as possible. The term of office of the Class III directors
expires at the Annual Meeting, the term of office of the Class I directors
expires at the 2000 Annual Meeting of Stockholders and the term of office of the
Class II directors expires at the 2001 Annual Meeting of Stockholders. Vacancies
on the Board of Directors and newly created directorships resulting from any
increase in the authorized number of directors constituting the whole Board of
Directors may be filled by a majority of the directors then in office. A
director elected to fill a vacancy or newly created directorship shall serve for
the remainder of the full term of the class of directors in which the vacancy
occurred or the directorship is created and until such director's successor is
elected and qualified, or until such director's earlier resignation, removal,
death or incapacity.
The By-laws provide that the number of directors constituting the whole
Board is eight. The Board of Directors is presently composed of eight members,
two of whom are Class I directors, three of whom are Class II directors and
three of whom are Class III directors. All of the Class III directors, Dr. Zola
P. Horovitz, Mr. Patrick J. McDonald and Dr. Kathleen P. Mullinix, have agreed
to serve as directors for an additional term, if elected. If elected at the
Annual Meeting, the three nominees will serve until the 2002 Annual Meeting and
until their respective successors have been elected and qualified, or until
their earlier resignation, removal, death or incapacity.
Directors are elected by a plurality of the votes present in person or
by proxy and entitled to vote at the Annual Meeting. Unless otherwise
instructed, the proxy holders will vote the proxies received by them for the
nominees named below. Proxy holders will not vote the proxies received by them
for more than three nominees. In the event that any nominee of the Company is
unavailable to serve as a director at the time of the Annual Meeting, the
proxies will be voted for any substitute nominee who shall be designated by the
present Board of Directors. Management has no reason to believe that any nominee
will be unavailable to serve.The three individuals receiving the highest number
of affirmative votes will be elected as Class III directors of the Company.
Nominees for Election for a Three-Year Term Expiring at the 2002
Annual Meeting of Stockholders
Zola P. Horovitz, Ph.D., 64, became a director of the Company in
September 1994. Since 1994, Dr. Horovitz has served as a consultant to
biotechnology and pharmaceutical companies. From August 1991 to May 1994, Dr.
Horovitz served as Vice President, Business Development and Planning,
Pharmaceutical Group of Bristol-Myers Squibb ("BMS"). From 1989 to 1991, Dr.
Horovitz served as Vice President, Licensing of BMS, and from 1987 to 1989, Dr.
Horovitz served as Vice President, Scientific Liaison of E.R. Squibb, Inc. Prior
to 1987, Dr. Horovitz spent approximately 30 years in various management
positions in biological research. Dr. Horovitz is also a director of Avigen
Inc., Biocryst Pharmaceuticals, Clinicor Inc., Diacrin, Inc., Magainin
Pharmaceuticals, Procept, Inc. and Roberts Pharmaceutical Corporation and a
number of private companies.
Patrick J. McDonald, 58, became a director of the Company in March
1999. From 1989 until his retirement in October 1998, Mr McDonald served as
Executive Director of Corporate Licensing of Merck & Co., Inc., concluding many
arrangements with companies located in the U.S., Europe and Japan. During the
prior 22 years, Mr. McDonald was involved in a variety of disciplines at Merck,
including sales, advertising,
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marketing and business development. Mr. McDonald holds a B.A. in Biology from
the University of St. Thomas and an M.B.A. in Finance/Marketing from Rutgers
University.
Kathleen P. Mullinix, Ph.D., 55, Chairman of the Board, President and
Chief Executive Officer, is one of the founders of the Company. Dr. Mullinix
joined the Company in October 1987 as its Senior Vice President and Treasurer
and became a director in November 1987. In November 1988, Dr. Mullinix became
the Company's President, in October 1989, Dr. Mullinix became the Company's
Chief Executive Officer and in April 1996, Dr. Mullinix became the Chairman of
the Board. From 1981 until 1987, Dr. Mullinix was Vice Provost of Columbia
University in the City of New York. Dr. Mullinix holds a Ph.D. in Chemical
Biology from Columbia University in the City of New York, completed a
Postdoctoral Fellowship at Harvard University and received a B.A. in Chemistry
from Trinity College.
Directors Continuing in Office Until the 2000 Annual Meeting of Stockholders
Alison Taunton-Rigby, Ph.D., 54, became a director of the Company in
October 1993. Since 1996, Dr. Taunton-Rigby has been the President and Chief
Executive Officer of Aquila Biopharmaceuticals, Inc., the successor-in-interest
of the therapeutics business of Cambridge Biotech Corporation. From 1995 to
1996, Dr. Taunton-Rigby was the President and Chief Executive Officer of
Cambridge Biotech Corporation. In 1995, prior to Dr. Taunton-Rigby's joining the
company, Cambridge Biotech filed a Chapter 11 petition in Federal Bankruptcy
Court. From 1993 to 1994, Dr. Taunton-Rigby was the Chief Executive Officer of
Mitotix, Inc., another biotechnology company. From 1987 to 1993, Dr.
Taunton-Rigby was Senior Vice President, Biotherapeutics at Genzyme Corporation.
Dr. Taunton-Rigby is also a director of Aquila Biopharmaceuticals, Inc. Dr.
Taunton-Rigby is a graduate of the Advanced Management Program at Harvard
Business School and holds a Ph.D. in Chemistry and a B.Sc. in Chemistry from the
University of Bristol in England.
Sandra Panem, Ph.D., 52, became a director of the Company in April
1996. Since August 1994, Dr. Panem has been the President of Vector Fund
Management, L.P., an affiliate of Vector Securities International, Inc., and is
responsible for managing the day-to-day operations of the Vector Later-Stage
Equity Fund, L.P. and the Vector Later-Stage Equity Fund II, L.P., funds the
principal focus of which is investing in emerging life science companies. From
1992 to 1994, Dr. Panem served as Vice President and Portfolio Manager for the
Oppenheimer Global BioTech Fund, a mutual fund that invested in biotechnology
companies. She received a B.S. degree in Biochemistry and a Ph.D. in
Microbiology from the University of Chicago. Dr. Panem is a director of Martek
Biosciences Corporation and StressGen Biotechnologies, and is also a director of
several private companies.
Directors Continuing in Office Until the 2001 Annual Meeting
Jonathan J. Fleming, 41, has served as a director of the Company since
October 1989. Mr. Fleming served as Chairman of the Board from October 1989
through March 1996. He has been a general partner of Oxford Bioscience Partners
II Management Corp., a venture capital fund manager, since 1996, and a general
partner of Medica Venture Partners, L.P., a venture capital fund, since 1994.
Mr. Fleming has also been a general partner of MVP Ventures, an international
venture capital group active in both Europe and North America, since 1988. From
1985 to 1988, Mr. Fleming was a Vice President of TVM Techno Venture Management,
a venture capital firm. Mr. Fleming is a director of Selfcare Inc., a healthcare
company, and is also a director of several private companies. Mr. Fleming
received a B.A. from The University of California at Berkeley and an M.P.A. in
Industrial Economics from Princeton University.
Eric R. Kandel, M.D., 69, is one of the founders of the Company. He has
been a director of and consultant to the Company since 1987. Dr. Kandel has been
University Professor of Columbia University in
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the City of New York since 1983, and a Senior Investigator of the Howard Hughes
Institute since 1984. In addition, Dr. Kandel is the founding director of the
Center for Neurobiology and Behavior of Columbia University in the City of New
York, a member of the National Academy of Sciences and the winner of numerous
awards and honors, including the National Medal of Science (1988) and the Lasker
Award. Dr. Kandel is the co-author with James H. Schwartz and Thomas J. Jessel
of Principles of Neural Science, the standard textbook in neurobiology, and a
leading figure in neuroscience.
John E. Lyons, 73, became a director of the Company in October 1991.
From 1987 until his retirement in 1991, Mr. Lyons served as Vice Chairman and
Executive Vice President of Merck and Co., Inc. During the 35 years prior to
becoming Executive Vice President, Mr. Lyons served Merck in a variety of
positions. Mr. Lyons is also a director of Matrix Pharmaceutical Corporation and
Immunex Corporation. Mr. Lyons holds a B.Sc. in Chemistry from Fordham
University.
Recommendation of the Board of Directors
The Board of Directors recommends a vote "FOR" the nominees for Class
III director listed above.
Committees of the Board of Directors
The Company has an Audit Committee, a Compensation Committee and a
Nominating Committee.
The Audit Committee oversees actions taken by the Company's independent
auditors and reviews the Company's internal accounting controls. The Audit
Committee currently consists of Mr. Fleming and Dr. Horovitz. The Audit
Committee did not hold any meetings during the fiscal year ended December 31,
1998.
The Compensation Committee makes recommendations to the Board of
Directors regarding compensation for directors and certain employees of and
consultants to the Company and administers the Company's 1988 Amended and
Restated Incentive Plan and 1996 Incentive Plan. The Compensation Committee
currently consists of Mr. Fleming and Drs. Panem and Taunton-Rigby. The
Compensation Committee held six meetings during the fiscal year ended December
31, 1998.
The Nominating Committee is authorized to define and recommend to the
Board of Directors criteria for the selection of potential candidates to serve
on the Board of Directors and to identify, when appropriate, potential
candidates who satisfy such criteria. The Nominating Committee considers
nominees recommended by stockholders on a case-by-case basis. Any stockholder
desiring to nominate a qualified individual for election to the Board of
Directors at the 2000 Annual Meeting of Stockholders should submit the name and
credentials of such nominee to the Secretary of the Company by no later than
January 1, 2000. The Nominating Committee currently consists of Drs. Horovitz,
Panem and Taunton-Rigby. The Nominating Committee did not hold any meetings
during the fiscal year ended December 31, 1998.
Attendance at Meetings of the Board of Directors and Committees Thereof
The Board of Directors of the Company held a total of seven meetings during the
fiscal year ended December 31, 1998. Each incumbent director who served as a
director during such year attended at least 75% of the aggregate of: (i) the
total number of meetings of the Board of Directors held during such year; and
(ii) the total number of meetings of the committees of the Board of Directors on
which such director served that were held during such year, except Dr. Kandel,
who attended four out of the seven meetings of the Board of Directors.
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COMPENSATION AND OTHER INFORMATION
CONCERNING OFFICERS, DIRECTORS AND CERTAIN STOCKHOLDERS
Executive Officers
The executive officers of the Company are appointed annually by the
Board of Directors and serve at the discretion of the Board of Directors. Set
forth below are the names of and certain biographical information regarding the
executive officers of the Company.
Name Age Position
------ --- --------
Kathleen P. Mullinix....... 55 Chairman of the Board, President and
Chief Executive Officer
Robert L. Spence........... 52 Senior Vice President, Chief
Financial Officer and Treasurer
Theresa A. Branchek........ 45 Vice President for Research
Lisa L. Reiter............. 39 Vice President, General Counsel and
Secretary
Richard L. Weinshank....... 42 Vice President of Business Development
Robert L. Spence, Senior Vice President, Chief Financial Officer and
Treasurer, joined the Company in March 1990 as the Company's Controller. In June
1991, Mr. Spence became the Company's Chief Financial Officer, Treasurer and
Secretary. Mr. Spence held the position of Secretary until February 1994. In
December 1996, Mr. Spence became a Senior Vice President of the Company. During
the twenty years prior to his joining the Company, Mr. Spence held various
financial and operating positions with Becton Dickinson & Company, a medical
supplies manufacturing and distribution company. His last position with Becton
Dickinson before he joined the Company was Director of Finance and Operations of
the Primary Care Diagnostics Division. Mr. Spence holds an M.B.A. in Accounting
and a B.S. in Business Management from Fairleigh Dickinson University.
Theresa A. Branchek, Ph.D., Vice President for Research, joined the
Company in April 1989 as Staff Scientist in the Company's Molecular Pharmacology
Department. In September 1989, Dr. Branchek became the Company's Director,
Department of Pharmacology and in January 1997, Dr. Branchek became the
Company's Vice President, Pharmacology and New Technologies. Dr. Branchek became
the Company's Vice President for Research in April 1998. From 1985 until she
joined the Company, Dr. Branchek served as Associate Research Scientist in the
Department of Anatomy and Cell Biology at Columbia University in the City of New
York. Dr. Branchek holds an A.B. in Biology from Cornell University and a Ph.D.
in Biology from the University of Oregon. Her postdoctoral training was at
Columbia University in the City of New York, where she was a Pharmacology and
Morphology Fellow of the Pharmaceutical Manufacturer's Foundation, Inc.
Lisa L. Reiter, Vice President, General Counsel and Secretary, joined
the Company in February 1994 as General Counsel and Secretary. In September
1995, Ms. Reiter became a Vice President of the Company. From 1985 to 1994, Ms.
Reiter was an attorney with the law firm of O'Sullivan Graev & Karabell in New
York City. Ms. Reiter holds an LL.M. in Taxation from New York University School
of Law, a J.D. from The University of Houston Law Center and a B.A. from
Vanderbilt University.
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Richard L. Weinshank, Ph.D., Vice President of Business Development,
joined the Company in October 1988 as Staff Scientist in the Company's Molecular
and Cell Biology Department. In March 1990, Dr. Weinshank assumed the position
of Director, Department of Molecular and Cell Biology, and in February 1995,
became Director of Business Development. In January 1996, Dr. Weinshank became
Vice President of Business Development. From April 1985 to September 1988, Dr.
Weinshank was a Postdoctoral Fellow at Memorial Sloan-Kettering Cancer Center.
Dr. Weinshank holds a B.A. in Philosophy from The State University of New York
at Buffalo, a Ph.D. in Biochemistry from The University of California at
Riverside and an M.B.A. from Columbia University Graduate School of Business in
the City of New York.
See "Proposal No. 1 - Election of Directors" for biographical
information regarding Dr. Kathleen P. Mullinix, who is also a director.
Certain Relationships and Related Transactions
Novartis Produkte AG, an owner of more than five percent of the
Company's outstanding shares of Common Stock at December 31, 1998, is an
affiliate of Novartis Pharma AG ("Novartis"). Novartis provided research funding
to the Company during the fiscal year ended December 31, 1998, pursuant to the
terms of the Research and License Agreement dated as of August 4, 1994, as
amended, and the Research and License Agreement dated as of May 31, 1996. The
aggregate amount of such research funding in 1998 was $2,041,000.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and ten
percent stockholders to file reports of ownership of equity securities of the
Company and changes in such ownership with the Securities and Exchange
Commission (the "SEC") and The Nasdaq Stock Market and to furnish copies of such
reports to the Company. Based solely upon a review of copies of such reports
furnished to the Company during or with respect to the fiscal year ended
December 31, 1998, or written representations that no such filings were
required, the Company believes that, during the fiscal year ended December 31,
1998, all such filing requirements were met, except by: (i) Dr. Robert I. Taber,
the Company's Senior Vice President for Research and Development until his
resignation on April 1, 1998; (ii) Dr. Theresa A. Branchek, who became the
Company's Vice President for Research on April 1, 1998; and (iii) BVF Partners
L.P., Biotechnology Value Fund, L.P. and BVF Inc. (the "BVF Entities"), which
are collectively a ten percent stockholder of the Company within the meaning of
Section 16(a) of the Exchange Act. Each of Dr. Taber and Dr. Branchek
inadvertently made one filing late. The BVF Entities initially filed a Form 4
for certain transactions that occurred during the month of September (the
"Initial Form 4") two days late. In addition, on or about January 13, 1999, the
BVF Entities filed an amendment to the Initial Form 4 disclosing acquisitions of
an aggregate of 32,600 shares of Common Stock in six transactions effected on
September 4, 8, and 18, 1998, which transactions were not disclosed on the
Initial Form 4.
Director Compensation
Each nonemployee director is entitled to receive $1,500 for each
meeting of the Board of Directors attended by such director and each nonemployee
director who is a member of a committee of the Board of Directors is entitled to
receive $250 for each meeting of such committee attended by such director. Each
nonemployee director is also entitled to reimbursement for all of such
director's reasonable out-of-pocket expenses incurred in connection with
attending such meetings. In addition, each nonemployee director is automatically
granted, on June 1 of each year (or on such later date as of which he or she is
first elected as
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director) for so long as such individual is a nonemployee director of the
Company, a nonstatutory stock option to purchase 2,500 shares of Common Stock.
Each such option has an exercise price per share equal to the last trade price
of the Common Stock as reported on The Nasdaq Stock Market on the date of grant.
The option becomes exercisable as to 1/24th of the shares covered thereby at the
end of each full calendar month following the grant date and has a term of ten
years beginning on such date, subject to earlier termination upon the optionee's
cessation of service on the Board of Directors.
Executive Compensation
Summary of Cash and Certain Other Compensation
The following tables set forth certain information concerning the
compensation paid or accrued by the Company for services rendered to the Company
in all capacities for each of the fiscal years ended December 31, 1998, 1997 and
1996, by the Company's Chief Executive Officer and its four other executive
officers (collectively, the "Named Executive Officers"):
Long-Term
Name and Compen-
Principal sation
Position Annual Compensation Awards
-------- ------------------- ------
Securi-
Other ties All
Annual Under- Other
Compen- lying Compen-
Year Salary Bonus sation(1) Options sation(2)
---- ------ ----- --------- ------- -----------
Kathleen P. Mullinix
Chairman of the Board,
President and Chief
Executive Officer 1998 $262,500 $115,000 48,015(3) 50,000 $ 4,324 (4)
1997 250,000 115,000 -- 124,800 4,095 (4)
1996 218,400 115,000 -- 35,000(5) 4,061 (4)
Theresa A. Branchek(6)
Vice President
for Research 1998 187,500 62,500(7) -- 30,000(8) 4,329 (9)
1997 125,000 25,000 -- 5,000 3,970 (9)
1996 110,000 20,000 -- 20,500(10) 3,561 (9)
Robert L. Spence
Senior Vice President,
Chief Financia1
Officer and Treasurer 1998 170,000 42,500 -- 13,000 324(11)
1997 160,000 40,000 -- 37,400 340(11)
1996 145,600 45,000 -- 30,000(5) 306(11)
Lisa L. Reiter
Vice President, General
Counsel and Secretary
1998 170,000 42,500 -- 8,000 4,324(12)
1997 158,000 35,000 -- 27,800 4,090(12)
1996 137,280 45,000 -- 25,000(5) 4,061(12)
Richard L. Weinshank
Vice President of
Business Development 1998 165,000 30,000 -- 10,000 4,329(13)
1997 131,250 25,000 21,728(14) 25,000 33,231(13)
1996 125,000 10,000 -- 15,500 47,441(13)
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(1) Other Annual Compensation for each Named Executive Officer does not
include perquisites and other personal benefits for 1998, 1997 and 1996,
the aggregate annual amount of which for such officer was less than the
lesser of $50,000 or 10% of the total annual salary and bonus reported for
such officer.
(2) All Other Compensation of a Named Executive Officer includes matching
contributions, if any, made by the Company to the account of such officer
pursuant to the Company's 401(k) plan, which was adopted by the Company in
1990. The Company makes matching contributions in an amount equal to 50%
of the lesser of: (i) the participant's contributions and (ii) the lesser
of 5% of the participant's compensation and $8,000. Each participant
becomes fully vested in the Company's contributions allocated to his or
her account upon completion of six years of service (not including any
service prior to the time an employee attained 18 years of age).
(3) Other Annual Compensation for 1998 includes$38,155 of health care premiums
and reimbursements.
(4) All Other Compensation for 1998,1997 and 1996 includes: $4,000, $3,750 and
$3,750, respectively, in matching contributions made by the Company to the
401(k) account of Dr. Mullinix; and $324, $345 and $311, respectively,
in life insurance premiums.
(5) The number of securities underlying options includes 10,000 shares of
Common Stock subject to an option granted in March 1996 to compensate the
Named Executive Officer for performance during the fiscal year ended
December 31, 1995.
(6) Dr. Branchek became an executive officer of the Company on April 1, 1998.
Prior to that time, Dr. Branchek served as the Company's Vice President,
Pharmacology and New Technologies.
(7) This bonus amount includes a $25,000 bonus paid to Dr. Branchek upon her
promotion to Vice President for Research on April 1, 1998.
(8) The number of securities underlying options includes 25,000 shares of
Common Stock subject to an option granted to Dr. Branchek in May 1998 in
connection with her promotion to Vice President for Research on April 1,
1998.
(9) All Other Compensation for 1998, 1997 and 1996 includes: $4,000, $3,625
and $3,250, respectively, in matching contributions made by the Company to
the 401(k) account of Dr. Branchek; and $329, $345 and $311, respectively,
in life insurance premiums.
(10) The number of securities underlying options includes: 17,500 shares of
Common Stock subject to an option granted to Dr. Branchek in December 1996
in connection with her promotion to Vice President, Pharmacology and New
Technologies on January 1, 1997; and 3,000 shares of Common Stock subject
to an option granted in May 1996 to compensate Dr. Branchek for
performance during the fiscal year ended December 31, 1995.
(11) All Other Compensation for 1998, 1997 and 1996 represents life insurance
premiums.
(12) All Other Compensation for 1998,1997 and 1996 includes: $4,000, $3,750 and
$3,750, respectively, in matching contributions made by the Company to the
401(k) account of Ms.Reiter; and $324, $340 and $311,respectively, in life
insurance premiums.
(13) All Other Compensation for 1998, 1997 and 1996 includes: $0, $29,600 and
$44,000, respectively, in tuition costs; $4,000, $3,286 and $3,130,
respectively, in matching contributions made by the Company to the 401(k)
account of Dr. Weinshank; and $329, $345 and $311, respectively, in life
insurance premiums.
(14) Other Annual Compensation for 1997 includes $21,728in health care premiums
and reimbursements.
9
<PAGE>
Option Grants In Last Fiscal Year
The following table sets forth certain information regarding options
granted during the fiscal year ended December 31, 1998, by the Company to the
Named Executive Officers:
Potential
Realizable
Value at
Assumed Annual
Rates of Stock
Price Appreciation
Individual Grants for Option Term (1)
------------------------------------------ -------------------
% of
Total
(#) Options Exer-
Secur- Granted cise
ities to or
Under- Employ- Base
lying ees in Price Expir-
Options Fiscal ($/per ation
Name Granted 1998 share) Date 5%($) 10%($)
- ---- -------- ----- ------ -------- ------- ---------
Kathleen P. Mullinix.. 50,000(2) 14.73% 13.1250 12/03/08 412,712 1,045,893
Theresa A. Branchek... 5,000(2) 1.47% 13.1250 12/03/08 41,271 104,589
25,000(3) 7.36% 14.4375 05/12/08 226,992 575,241
Robert L. Spence...... 13,000(2) 3.83% 13.1250 12/03/08 107,305 271,932
Lisa L. Reiter........ 8,000(2) 2.36% 13.1250 12/03/08 66,034 167,343
Richard L. Weinshank.. 10,000(2) 2.95% 13.1250 12/03/08 82,542 209,179
(1) The potential realizable value of each option grant is calculated by
assuming that the market price of the underlying securities at the date of
grant appreciates in value from such date to the end of the option term at
the annual rates of five percent and ten percent, respectively, and then
subtracting the aggregate exercise price of the option.
(2) These options become exercisable as to 25% of the shares on January 1 of
each of 2000, 2001, 2002 and 2003. Exercisability of these options is
subject to acceleration on the occurrence of certain events.
(3) These options become exercisable as to 25% of the shares on April 1 of each
of 1999, 2000, 2001 and 2002. Exercisability of these options is subject to
acceleration on the occurrence of certain events.
Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Value
The following table sets forth certain information concerning each
exercise of stock options during the fiscal year ended December 31, 1998, by the
Named Executive Officers and unexercised stock options held by the Named
Executive Officers as of the end of such fiscal year.
Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Options at Options at
12/31/98 (#) 12/31/98 ($)(1)
---------------- ------------------
Shares
Acquired Aggregate
on Value Exer- Unexer- Exer- Unexer-
Name Exercise Realized($) cisable cisable cisable cisable
- -------------------- -------- ----------- ------- ------- --------- -------
Kathleen P. Mullinix. -- -- 158,373 166,250 1,575,397 267,500
Theresa A. Branchek.. -- -- 20,816 50,598 210,884 91,008
Robert L. Spence..... 6,397 72,021(2) 18,900 62,375 29,913 147,338
Lisa L. Reiter....... 4,000 40,960(3) 32,602 44,563 235,918 104,457
Richard L. Weinshank. -- -- 23,816 45,098 236,259 123,070
(1) Value of each unexercised in-the-money option was determined by multiplying
the number of shares underlying the option by the excess of the fair market
value of the Common Stock on December 31, 1998
10
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($15.00 per share, the last trade price on such date, as reported by The
Nasdaq Stock Market), over the per share exercise price of the option.
(2) Aggregate value realized was determined by multiplying (i) the number of
shares acquired on exercise of the options by (ii) the excess of (A)
$13.125 (which was the last trade price on December 3, 1998, the exercise
date, as reported by The Nasdaq Stock Market) over (B) $1.76 (which was the
per share exercise price of the options).
(3) Aggregate value realized was determined by multiplying (i) the number of
shares acquired on exercise of the option by (ii) the excess of (A) $12.00
(which was the last trade price on April 9, 1998, the exercise date, as
reported by The Nasdaq Stock Market) over (B) $1.76 (which was the per
share exercise price of the options).
All of the agreements pursuant to which options have been granted to
the Named Executive Officers include provisions pursuant to which such options
become immediately exercisable in connection with the occurrence of certain
types of corporate transactions specified therein.
Employment Agreements
Kathleen P. Mullinix
Dr. Mullinix is employed under a four-year employment agreement with
the Company entered into effective as of October 1, 1997. The employment
agreement permits either Dr. Mullinix or the Company to terminate Dr. Mullinix's
employment upon 90 days' prior written notice. If the termination is initiated
by the Company without "cause" or by Dr. Mullinix for "good reason" (as such
terms are defined in the employment agreement), Dr. Mullinix is entitled to
receive severance compensation equal to her base salary for a period of 12
months following her termination, as well as continuation of benefits during
such period and immediate vesting of any restricted stock and/or options then
held by her. If the termination is initiated by Dr. Mullinix other than for good
reason, Dr. Mullinix is entitled to receive severance compensation equal to her
base salary for a period of nine months following her termination, as well as
continuation of benefits during such period, but all further vesting of any
restricted stock and/or options then held by her ceases as of the date of
termination. In addition, if Dr. Mullinix's employment with the Company is
terminated under certain circumstances in connection with a "change in control"
(as such term is defined in the employment agreement), Dr. Mullinix is entitled
to receive severance compensation equal to her base salary for a period of 12
months following such termination, as well as continuation of benefits during
such period and immediate vesting of any restricted stock and/or options then
held by her.
Other Named Executive Officers
Each of Mr. Spence and Ms. Reiter is employed under a four-year
employment agreement with the Company effective as of January 1, 1998, and
February 7, 1998, respectively. Each of Drs. Weinshank and Branchek is employed
under an employment agreement with the Company which was automatically extended
for an additional one-year period, effective as of January 1, 1999, and April 1,
1999, respectively. The four employment agreements are in substantially the same
form, except for terms relating to compensation and duties and responsibilities.
Each of such agreements provides that if the Named Executive Officer is
terminated by the Company without cause, such officer will be entitled to
receive severance compensation equal to such officer's base salary for a period
of six months following his or her termination. In addition, if the employment
of any such Named Executive Officer is terminated under certain circumstances in
connection with a "Change in Control" (as defined in his or her employment
agreement), then such Named Executive Officer is entitled to receive severance
compensation equal to such officer's base salary for a period of six months
following such termination, and all of the stock options, stock bonus awards and
restricted stock grants then held by such Named Executive Officer will
immediately become exercisable or vest, as the case may be.
11
<PAGE>
In addition to their current base salaries of $180,000, $177,000,
$172,000 and $208,000, respectively, Mr. Spence, Ms. Reiter and Drs. Weinshank
and Branchek are eligible to receive cash bonuses each year based upon their
achievement of performance milestones set by the President of the Company. See
"Compensation Committee Report on Executive Compensation" below.
Compensation Committee Report on Executive Compensation
The Compensation Committee of the Board of Directors has furnished the
following report on its policies with respect to the compensation of executive
officers of the Company. The report is not deemed to be "soliciting material" or
to be "filed" with the SEC or subject to the SEC's proxy rules or to the
liabilities of Section 18 of the Exchange Act, and the report shall not be
deemed to be incorporated by reference into any prior or subsequent filing by
the Company under the Securities Act of 1933, as amended, or the Exchange Act.
Decisions regarding compensation of the Company's executive officers
generally are made by the Compensation Committee of the Board of Directors. The
Compensation Committee consists entirely of outside directors. During the fiscal
year ended December 31, 1998, Jonathan J. Fleming, Sandra Panem and Alison
Taunton-Rigby served as members of the Compensation Committee. All decisions of
the Compensation Committee regarding the compensation of the Company's executive
officers are reviewed by the Board of Directors, except for decisions regarding
grants under the Company's option plans, which are made solely by the
Compensation Committee.
General Executive Compensation Policy
The Company's executive compensation policy is designed to attract to
the Company qualified individuals who have the potential as executive officers
to contribute to the long-term growth and success of the Company and thereby
enhance stockholder value, to motivate such executive officers to perform at the
highest of professional levels so as to maximize their contribution to the
Company and to retain such executive officers. Accordingly, the Company's
executive compensation policy is to offer the Company's executive officers
competitive compensation opportunities which are tied to their contribution to
the growth and success of the Company and their personal performance. Each
executive officer's compensation package is comprised of three elements: (i)
base salary which reflects individual performance and, together with annual
bonus awards, is designed primarily to be competitive with compensation levels
in the industry, (ii) annual bonus awards which are payable in cash and tied to
corporate performance for the year, as well as individual performance goals, and
(iii) periodic stock option grants which strengthen the mutuality of interests
between the executive officer and the Company's stockholders.
Implementation of Executive Compensation Policy
The following describes the manner in which the Compensation
Committee's executive compensation policy was implemented with respect to the
fiscal year ended December 31, 1998. Also summarized below are several of the
more important factors which were considered in establishing the components of
each executive officer's compensation package for the 1998 fiscal year.
Additional factors were also taken into account, and the Compensation Committee
may, in its discretion, apply entirely different factors, particularly different
measures of performance, in setting executive compensation for future fiscal
years, but it is expected that all compensation decisions will be designed to
further the general compensation policy set forth above.
Base Salary. Each year, the Chief Executive Officer recommends to the
Compensation Committee new base salary levels for the Company's executive
officers (such new base salary levels being subject to the floor provided in the
respective employment agreements of such officers). In formulating such
recommendations, the Chief Executive Officer considers industry, peer group and
national surveys of compensation, as well as the past and expected future
contributions of the individual executive
12
<PAGE>
officers. The Compensation Committee then reviews the recommendations in light
of its assessment of each officer's past performance and its expectation as to
future contributions, as well as the survey data, and arrives at new base salary
levels for each of the Named Executive Officers, including the Chief Executive
Officer. These new base salary levels are then recommended by the Compensation
Committee to the Board of Directors for approval.
Annual Bonus Awards. Annual bonus awards are earned by each of the Company's
executive officers based upon his or her satisfaction of performance milestones
set at the beginning of the year. These milestones may be based upon corporate
performance or individual performance, or both. The minimum amount of such
awards, assuming satisfaction of the performance milestones, may be set forth in
the executive officer's employment agreement. The Compensation Committee may
determine that such bonus awards should be higher than the minimum amounts set
forth in the employment agreements based upon any number of factors, including
those factors (such as past and expected future contributions and survey data)
which it considers in arriving at new base salary levels and other indicia of
performance that may not have been taken into account in setting the performance
milestones. Such other indicia of performance may include, among other things,
the progress of the Company's research and development programs and business
development activities, as well as the Company's success in securing capital
sufficient to assist it in furthering its research activities. Each year, the
Chief Executive Officer determines whether each of the other executive officers
has satisfied his or her performance milestones, whether, in light of such
determination, cash bonus awards should be made to such executive officers and
if such awards should be made, whether the amounts thereof should be higher than
the minimum amounts set forth in the employment agreements. Thereafter, the
Chief Executive Officer makes recommendations to the Compensation Committee. The
Compensation Committee then reviews the Chief Executive Officer's
recommendations and determines the amount of each bonus award to recommend to
the Board of Directors for approval. With respect to the fiscal year ended
December 31, 1998, each of the Named Executive Officers earned a cash bonus
award based upon his or her satisfaction of performance milestones, combined
with a subjective assessment of individual performance. In determining the
amount of each cash bonus award, the Compensation Committee also considered
survey data to ensure, where appropriate, that the total compensation of each
executive officer was competitive within the industry. These cash bonus awards
ranged from approximately 18.2% to 43.8% of the base salaries of the Named
Executive Officers.
Stock Option Grants. Beginning as of January 1,1996, all grants of stock options
by the Company to its executive officers are made pursuant to its 1996 Incentive
Plan (the "1996 Incentive Plan"). On December 3, 1998, the Compensation
Committee approved the grant of stock options to all of its executive officers
in respect of their performance during the fiscal year ending December 31, 1998.
In determining the number of shares of Common Stock covered by each of these
grants, the Compensation Committee considered the same factors which it
generally considers in determining the salaries and cash bonus awards of
executive officers. These grants were also designed to further the Company's
executive compensation policy.
CEO Compensation
In setting the compensation payable to Kathleen P. Mullinix, the
Compensation Committee has sought to be competitive with other companies in the
industry, while at the same time tying a significant portion of such
compensation to Company performance. An employment agreement dated as of October
1, 1997, sets forth the terms and conditions of Dr. Mullinix's employment with
the Company.
Dr. Mullinix's base salary for the fiscal year ended December 31, 1998,
was established based upon the Compensation Committee's evaluation of the
Company's performance and Dr. Mullinix's personal performance, as well as its
objective of having Dr. Mullinix's base salary remain competitive with salaries
being paid to similarly situated chief executive officers. Accordingly, her 1998
base salary was set by the Compensation Committee at $262,500.
13
<PAGE>
The remaining components of Dr. Mullinix's compensation in respect of
the fiscal year ended December 31, 1998, were entirely dependent upon Dr.
Mullinix's performance during such year, which was in turn tied directly to the
Company's performance. The Compensation Committee determined to award Dr.
Mullinix a $115,000 cash bonus, as well as stock options to purchase 50,000
shares of Common Stock. These awards reflected the Compensation Committee's
assessment of her favorable performance, which included her satisfaction of the
performance goals established by the Compensation Committee at the beginning of
the fiscal year ended December 31, 1998, as well as the corporate performance of
the Company during such year. In particular, the Compensation Committee
considered the consummation of the Company's collaboration with Grunenthal GmbH,
the Company's license agreement with Glaxo Group Limited and the extensions of
the Company's collaborations with Merck & Co., Inc., and Eli Lilly and Company,
as well as the scientific progress made in each of the Company's collaborations
and in internal programs. The stock options were granted at exercise prices
equal to the fair market value of the Common Stock on the date of grant and are
subject to vesting.
Submitted by the
Members of the Compensation Committee
Jonathan J. Fleming
Sandra Panem
Alison Taunton-Rigby
14
<PAGE>
Stock Performance Graph
The following graph compares the percentage change in the cumulative
stockholder return on the Company's Common Stock with the cumulative total
return on The Nasdaq Stock Market Index and the BioCentury 100 Index (the
"Line-Of-Business Index"). The Line-Of-Business Index, which is calculated and
published on a weekly basis, represents the cumulative weekly close of 100
bioscience stocks. The comparison assumes that $100 was invested in each of the
following: (i) the Company's Common Stock at the initial public offering price
prior to trading on December 14, 1995 (ii) the Nasdaq Market Index prior to
trading on December 14, 1995 and (iii) the Line-Of-Business Index after closing
on December 15, 1995 (This date was chosen for the Line-Of-Business Index since
it was the date nearest the Company's initial public offering date for which the
Line-Of-Business Index was published.). Total return assumes reinvestment of
dividends, however, the Company has not paid dividends on its Common Stock and
no dividends are included in the representation of Company stock performance.
The stock price performance on the graph is not necessarily indicative of future
price performance.
[GRAPHIC OMITTED]
Actual values expressed in the above performance graph are disclosed in
the following table:
Beginning
of --------------December 31,--------------
Period 1995 1996 1997 1998
------- ------- ------- ------ -------
Company $100.00 $106.00 $ 96.00 $ 87.00 $120.00
Nasdaq Market Index $100.00 $ 99.63 $122.55 $150.45 $211.12
Line-Of-Business Index $100.00 $114.30 $105.50 $ 84.00 $ 93.82
15
<PAGE>
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Common Stock as of February 15, 1999, with respect
to (i) each person known by the Company to be the beneficial owner of more than
5% of the Common Stock, (ii) each of the Company's directors, (iii) each of the
Named Executive Officers and (iv) all directors and officers as a group.
Amount
and Nature
of Beneficial Percentage
Name and Address of Beneficial Owner(1) Ownership of Total(2)
- ------------------------------------------- ------------ -----------
Wanger Asset Management, L.P............... 1,051,000(3) 9.8%
227 West Monroe Street, Suite 3000
Chicago, Illinois 60606
Gilder, Gagnon, Howe & Co., LLC............ 761,600(4) 7.1%
1775 Broadway, 26th Floor
New York, New York 10019
BVF Partners L.P........................... 751,217(5) 7.0%
333 West Wacker Drive, Suite 1600
Chicago, Illinois 60606
Novartis Produkte A.G...................... 695,715(6) 6.5%
Schwarzwaldallee 215
CH-4002 Basle
Switzerland
Jonathan J. Fleming........................ 104,097(7) 1.0%
Zola P. Horovitz, Ph.D..................... 10,332(8) *
Eric R. Kandel, M.D........................ 17,679(9) *
John E. Lyons.............................. 10,229(10) *
Patrick J. McDonald........................ 0 *
Kathleen P. Mullinix, Ph.D................. 264,917(11) 2.4%
Sandra Panem, Ph.D......................... 6,632(12) *
Alison Taunton-Rigby, Ph.D................. 10,332(13) *
Theresa A. Branchek, Ph.D.................. 42,098(14) *
Lisa L. Reiter............................. 47,768(15) *
Robert L. Spence........................... 77,814(16) *
Richard L. Weinshank, Ph.D................. 38,723(17) *
All directors and officers as a group
(12 persons).............................. 630,621(18) 5.7%
- ----------------------
* Less than 1%.
(1) Except as otherwise indicated above, the address of each stockholder
identified above is c/o the Company, 215 College Road, Paramus, New Jersey
07652. Except as indicated in the other footnotes to this table, each
person named in this table has sole voting and investment power with
respect to all shares of Common Stock beneficially owned by such person.
(2) Share ownership in the case of each person listed above includes shares
issuable upon the exercise of options held by such person as of February
15, 1999, that may be exercised within 60 days after such date for
purposes of computing the percentage of Common Stock owned by such person,
but not for purposes of computing the percentage of Common Stock owned by
any other person.
(3) These shares are beneficially owned by Wanger Asset Management, L.P.
("WAM"), Wanger Asset Management Ltd. ("WAM Ltd.") and Acorn Investment
Trust ("Acorn"). WAM is an investment advisor registered under the
Investment Advisers Act of 1940. WAM Ltd. is the general partner of WAM.
Acorn is an investment company registered under the Investment Company Act
of 1940. The information
16
<PAGE>
relating to WAM, WAM Ltd. and Acorn contained herein was obtained from
Amendment No. 2 to a Schedule 13G filed with the SEC on February 23, 1999.
(4) These shares are beneficially owned by Gilder, Gagnon, Howe & Co. LLC
("Gilder, Gagnon"), a broker or dealer registered under Section 15 of the
Securities Exchange Act of 1934. The information relating to Gilder,
Gagnon contained herein was obtained from a Schedule 13G filed with the
SEC on February 22, 1999.
(5) These shares are beneficially owned by BVF Partners L.P. ("Partners"), and
BVF Inc. ("BVF Inc."), the general partner and investment advisor to
Partners. Partners is the general partner of Biotechnology Value Fund,
L.P. ("BVF, L.P."), an investment limited partnership which beneficially
owns 393,967 of such shares. The information relating to Partners, BVF
Inc. and BVF, L.P. contained herein was obtained from Amendment No. 1 to a
Schedule 13D filed with the SEC on December 24, 1998.
(6) The information relating to Novartis Produkte AG was obtained from
Amendment No. 1 to a Schedule 13G filed with the SEC on March 6, 1998.
(7) Consists of an aggregate of (a) 96,865 shares of Common Stock held by
Chestnut III Limited Partnership ("CIII"), Chestnut Capital International
III Limited Partnership ("CCI"), MVP Investors Limited Partnership
("MVP"), Late Stage Fund 1990 Limited Partnership ("LSFI") and Late Stage
Fund 1991 Limited Partnership ("LSFII"), (b) 200 shares of Common Stock
owned by the individual retirement account of Amy Fleming, Mr. Fleming's
spouse, (c) 200 shares of Common Stock owned by the individual retirement
account of Mr. Fleming, (d) 1,000 shares of Common Stock owned jointly by
Mr. Fleming and his spouse, Amy Fleming and (e) 5,832 shares of Common
Stock which Mr. Fleming has the right to acquire within 60 days after
February 15, 1999. Mr. Fleming, a director of the Company, is a general
partner of each of (i) MVP Capital Limited Partnership, which is
investment general partner of CCI, LSFI and LSFII, (ii) Chestnut III
Management Limited Partnership, which is investment general partner of
CIII and (iii) MVP. Mr. Fleming has shared voting and investment power
with respect to the shares referred to in the foregoing clause (a) and may
be deemed to be the beneficial owner of such shares. Mr. Fleming disclaims
beneficial ownership of all of such shares, except those shares
representing his pro rata interest in the partnerships referred to
therein. Mr. Fleming may also be deemed to be the beneficial owner of the
other shares referred to in the foregoing clauses (b) through (e). Mr.
Fleming expressly disclaims beneficial ownership of the shares referred to
in clause (b).
(8) Consists of an aggregate of (a) 4,500 shares of Common Stock and (b) 5,832
shares of Common Stock which Dr. Horovitz has the right to acquire within
60 days after February 15, 1999.
(9) Consists of an aggregate of (a) 11,847 shares of Common Stock and (b)
5,832 shares of Common Stock which Dr. Kandel has the right to acquire
within 60 days after February 15, 1999.
(10) Consists of an aggregate of (a) 4,397 shares of Common Stock and (b) 5,832
shares of Common Stock which Mr. Lyons has the right to acquire within 60
days after February 15, 1999.
(11) Consists of an aggregate of (a) 92,415 shares of Common Stock, (b) 379
shares of Common Stock owned by the individual retirement account of Dr.
Mullinix and (c) 172,123 shares of Common Stock which Dr. Mullinix has the
right to acquire within 60 days after February 15, 1999.
(12) Consists of an aggregate of (a) 800 shares of Common Stock and (b) 5,832
shares of Common Stock which Dr. Panem has the right to acquire within 60
days after February 15, 1999.
(13) Consists of an aggregate of (a) 4,500 shares of Common Stock and (b) 5,832
shares of Common Stock which Dr. Taunton-Rigby has the right to acquire
within 60 days after February 15, 1999.
(14) Consists of (a) 7,684 shares of Common Stock and (b) 34,414 shares of
Common Stock which Dr. Branchek has the right to acquire within 60 days
after February 15, 1999.
(15) Consists of (a) 4,853 shares of Common Stock and (b) 42,915 shares of
Common Stock which Ms. Reiter has the right to acquire within 60 days
after February 15, 1999.
(16) Consists of (a) 38,980 shares of Common Stock, (b) 7,684 shares of Common
Stock held by Linda Spence, Mr. Spence's spouse, as custodian for Blake
Spence, Mr. Spence's son, under the Uniform Gifts to Minors Act, and (c)
31,150 shares of Common Stock which Mr. Spence has the right to acquire
within 60 days after February 15, 1999. Mr. Spence disclaims beneficial
ownership of the shares held by Linda Spence.
17
<PAGE>
(17) Consists of (a) 5,684 shares of Common Stock and (b) 33,039 shares of
Common Stock which Dr. Weinshank has the right to acquire within 60 days
after February 15, 1999.
(18) Includes (a) 281,988 shares of Common Stock and (b) 348,633 shares of
Common Stock which such persons have the right to acquire within 60 days
of February 15, 1999. Included are shares held by venture capital funds
with which directors and officers listed above are associated.
PROPOSAL NO. 2
RATIFICATION OF
INDEPENDENT AUDITORS
The Company is asking the stockholders to ratify the appointment of
Ernst & Young LLP as the Company's independent auditors for the fiscal year
ending December 31, 1999. The affirmative vote of the holders of a majority of
the shares represented and voting at the Annual Meeting will be required to
ratify the appointment of Ernst & Young LLP.
In the event the stockholders fail to ratify the appointment, the Board
of Directors will reconsider the appointment. Even if the appointment is
ratified, the Board of Directors, in its discretion, may direct the appointment
of a different independent auditing firm at any time during the year if the
Board of Directors believes that such a change would be in the Company's and its
stockholders' best interests.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting, will have the opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions.
Recommendation of the Board of Directors
The Board of Directors recommends that the stockholders vote "FOR" the
ratification of the appointment of Ernst & Young LLP to serve as the Company's
independent auditors for the fiscal year ending December 31, 1999.
STOCKHOLDER PROPOSALS FOR 2000 PROXY STATEMENT
Stockholder proposals that are intended to be presented at the
Company's annual meeting of stockholders to be held in 2000 must be received by
the Company no later than January 1, 2000, in order to be included in the proxy
statement and related proxy materials.
ANNUAL REPORT ON FORM 10-K
THE COMPANY WILL MAIL WITHOUT CHARGE, UPON WRITTEN REQUEST, A COPY OF
THE COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS,
SCHEDULES AND LIST OF EXHIBITS. THE COMPANY WILL FURNISH A COPY OF ANY EXHIBIT
TO SUCH REPORT UPON WRITTEN REQUEST AND PAYMENT OF THE COMPANY'S REASONABLE
EXPENSES IN FURNISHING SUCH EXHIBIT. REQUESTS SHOULD BE SENT TO THE CHIEF
FINANCIAL OFFICER OF THE COMPANY AT 215 COLLEGE ROAD, PARAMUS, NEW JERSEY 07652.
18
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OTHER BUSINESS
The Board of Directors knows of no other business that will be
presented for consideration at the Annual Meeting. If other matters are properly
brought before the Annual Meeting, however, it is the intention of the persons
named in the accompanying proxy to vote the shares represented thereby on such
matters in accordance with their best judgment.
Dated: April 1, 1999
By Order of the Board of Directors
Lisa L. Reiter
Secretary
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SYNAPTIC PHARMACEUTICAL CORPORATION
215 College Road
Paramus, New Jersey 07652
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Lisa L. Reiter and Robert L. Spence,
the Secretary and the Treasurer, respectively, of Synaptic Pharmaceutical
Corporation (the "Company"), or each of them, as proxies, with all powers of
substitution, to represent and vote, as set forth on the reverse side, the
shares of Common Stock of the Company held of record by the undersigned at the
close of business on March 8, 1999, at the 1999 Annual Meeting of Stockholders
of the Company, which is being held at the offices of the Company at 215 College
Road, Paramus, New Jersey, on Thursday, May 6, 1999, at 10:00 a.m., local time,
and at any postponements or adjournments of such meeting, with all powers which
the undersigned would possess if personally present at such meeting or at any
such postponement or adjournment, and, in their discretion, to vote such shares
upon any other business that may properly come before the meeting or any
adjournment thereof.
(TO BE MARKED, SIGNED AND DATED ON THE REVERSE SIDE)
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FOLD AND DETACH HERE
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SYNAPTIC PHARMACEUTICAL CORPORATION
ANNUAL MEETING OF STOCKHOLDERS -- MAY 6, 1999
|X| PLEASE MARK VOTES AS IN THIS EXAMPLE
The Board of Directors recommends a vote "FOR" Items 1 and 2 below.
1. Election of Directors
FOR [_] WITHHOLD [_] FOR ALL NOMINEES LISTED BELOW EXCEPT [_]
Nominees: Zola P. Horovitz, Patrick J. McDonald and Kathleen P. Mullinix
(INSTRUCTION: To withhold authority to vote for any individual nominee, mark
"For All Nominees Listed Below Except" and write that nominee's name in the
space to the right hereof.)
2. Ratification of Appointment of Independent Auditors
FOR [_] WITHHOLD [_] ABSTAIN [_]
Unless otherwise specified by the undersigned, the proxy will be voted "FOR"
Proposal Nos. 1 and 2 and will be voted by the proxyholders at their discretion
upon any other business that may properly come before the Annual Meeting or any
adjournment thereof.
CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING. [_]
Signature(s) Date
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NOTE: Please sign as name appears hereon. Joint owners should each sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such.
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FOLD AND DETACH HERE
PROPOSALS TO BE VOTED UPON AT THE ANNUAL MEETING
Proposal No. 1. To elect three Class III directors to the Board of Directors.
Proposal No. 2. To ratify the appointment of Ernst & Young as the independent
auditors of the Company for the fiscal year ending
December 31, 1999.
