<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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:
[X] Preliminary Proxy Statement [_] CONFIDENTIAL, FOR USE OF THE
COMMISSION ONLY (AS PERMITTED
BY RULE 14A-6(E)(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
RIBOZYME PHARMACEUTICALS, INC.
- --------------------------------------------------------------------------------
(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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(4) Date Filed:
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Notes:
<PAGE>
RIBOZYME PHARMACEUTICALS, INC.
2950 Wilderness Place
Boulder, Colorado 80301
To our Shareholders:
You are cordially invited to attend the Annual Meeting of Shareholders of
Ribozyme Pharmaceuticals, Inc. (the "Company") to be held on the 19th day of
April, 2000, at 8:00 a.m., local time, at the principal offices of the Company,
2950 Wilderness Place, Boulder, Colorado. Your Notice of Annual Meeting, Proxy
Statement and Proxy are enclosed, as is the Company's 1999 Annual Report which
includes the Company's financial statements.
At the Annual Meeting, you will be asked to (1) elect seven directors; (2)
approve an increase in the Company's authorized common stock from 20,000,000 to
60,000,000 shares; (3) approve an increase in the number of shares subject to
options which may be granted under the Company's Stock Option Plan from
2,017,154 to 2,767,154; and (4) ratify the appointment of Ernst & Young LLP as
the Company's independent auditors for 2000. The Board of Directors has approved
the proposals described in the Proxy Statement and recommends that you vote
"FOR" each proposal.
Your vote is important. Whether or not you plan to attend the Annual
Meeting in person, we ask that you return your completed Proxy, using the
envelope provided, as soon as possible and in any case no later than 3:00 p.m.
on Tuesday, April 18, 2000.
Thank you for your continued support.
Very truly yours,
RIBOZYME PHARMACEUTICALS, INC.
Dr. Ralph E. Christoffersen
President and CEO
Date: March 17, 2000
<PAGE>
RIBOZYME PHARMACEUTICALS, INC.
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held April 19, 2000
TO OUR SHAREHOLDERS:
Notice is hereby given that pursuant to the call of its Board of Directors,
the Annual Meeting of Shareholders of Ribozyme Pharmaceuticals, Inc., a Delaware
corporation (the "Company"), will be held on Tuesday, April 19, 2000, at 8:00
a.m., local time, at 2950 Wilderness Place, Boulder, Colorado, for the following
purposes:
(1) To elect seven (7) directors of the Company to hold office until the
next Annual Meeting of Shareholders or until their respective successors shall
be elected and qualified.
(2) To approve an amendment to the Company's Certificate of Incorporation
to increase the number of authorized shares of common stock from 20,000,000 to
60,000,000.
(3) To approve an increase in the number of shares subject to options
which may be granted under the Company's Stock Option Plan by 750,000 from
2,017,154 to 2,767,154.
(4) To ratify the selection of Ernst & Young LLP as the Company's
independent auditors for 2000.
(5) To transact such other business as may be properly presented at the
meeting.
The names of the Board of Directors' nominees for directors of the Company
and descriptions of the other matters to be voted upon are set forth in the
accompanying Proxy Statement.
Only shareholders of record at the close of business on March 13, 2000,
will be entitled to vote at the meeting. To be sure that your shares are
represented at the meeting, you are urged to vote, sign, date and promptly
return the enclosed Proxy in the envelope provided. You may revoke your Proxy at
any time prior to the time it is voted.
By Order of the Board of Directors
Lawrence E. Bullock, Secretary
Date: March 17, 2000
Boulder, Colorado
IMPORTANT--PLEASE MAIL YOUR PROXY PROMPTLY. In order that there may be proper
representation at the meeting, you are urged to sign and return the enclosed
Proxy in the envelope provided as soon as possible so that it will be received
no later than 3:00 p.m., April 18, 2000. Shares of common stock represented by
Proxies which are returned unmarked will be voted in favor of (i) the Board
nominees, (ii) the amendment to the Certificate of Incorporation to increase the
authorized shares of common stock, (iii) the increase in shares which may be
granted under the Stock Option Plan and (iv) the ratification of Ernst & Young
LLP as the independent auditors and, in the discretion of management, upon such
other business as may properly be presented at the meeting.
-2-
<PAGE>
PROXY STATEMENT FOR THE
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 19, 2000
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
Proxies by management under the direction of the Board of Directors of the
Company for use at the Annual Meeting of Shareholders of the Company to be held
April 19, 2000. Only shareholders of record as of March 13, 2000, will be
entitled to notice of, and to vote at, the Annual Meeting. Each share is
entitled to one vote on the matters to be voted on at the Annual Meeting. As of
March 3, 2000, 11,940,230 shares of the Company's common stock were outstanding
held of record by approximately 165 shareholders.
The cost of soliciting Proxies will be borne by the Company. In addition to
use of the mail, Proxies may be solicited personally or by telephone or
facsimile by directors and officers who will not be specially compensated for
such solicitation. The Company has engaged American Stock Transfer & Trust
Company, the Company's transfer agent, to solicit Proxies held by brokers and
nominees. Brokerage firms and other custodians, nominees and fiduciaries will be
requested to forward these soliciting materials to their principals and the
Company will, upon request, reimburse them for the reasonable expenses of doing
so. The Company's transfer books will remain open between the record date and
meeting date.
This Proxy Statement and enclosed Proxy were first mailed to the Company's
shareholders on or about March 17, 2000.
Your Proxy is important in helping to achieve good representation at the
meeting. Any shareholder giving a Proxy has the right to revoke it at any time
before it is exercised; therefore, execution of the Proxy will not in any way
affect the shareholder's right to attend the meeting in person. Revocation may
be made prior to the meeting by written revocation or duly executed Proxy
bearing a later date sent to the Company, Attention: Lawrence E. Bullock,
Secretary, 2950 Wilderness Place, Boulder, Colorado 80301; or a Proxy may be
revoked personally at the Annual Meeting by written notice to the Secretary at
the Annual Meeting prior to the voting of the Proxy.
In the absence of specific instructions to the contrary, shares represented
by properly executed Proxies received by management, including unmarked Proxies,
will be voted to (i) elect the seven nominees to the Board described herein,
(ii) approve the amendment to the Certificate of Incorporation which increases
the number of authorized shares of common stock by 40,000,000 to 60,000,000,
(iii) approve the increase in the number of shares subject to options which may
be granted under the Company's Stock Option Plan from 2,017,154 to 2,767,154,
and (iv) ratify the selection of Ernst & Young LLP as the Company's independent
auditors for 2000. If a broker indicates on the Proxy that it does not have
discretionary authority to vote certain shares on a particular matter, these
shares will not be considered as present and entitled to vote with respect to
that matter.
The holders of a majority of the outstanding common stock, present in
person or by Proxy, are required for a quorum at the meeting. Cumulative voting
is not permitted. If a quorum is present at the meeting, the simple majority
vote of shares voting is required to (i) elect the seven directors, (ii) approve
the increase in the number of shares subject to options under the Stock Option
Plan and (iii) ratify the Company's independent auditors. The vote of the
holders of at least 66 2/3% of the outstanding common stock is required to amend
the Certificate of Incorporation.
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<PAGE>
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
As of March 3, 2000, there were 11,940,230 shares of Company Stock
outstanding, par value $.01, held of record by approximately 165 shareholders.
The following table summarizes information regarding the beneficial ownership of
the Company's outstanding securities as of March 3, 2000 (which includes shares
that may be acquired on the exercise of stock options vested or warrants
exercisable through May 3, 2000), by:
. each person or group that the Company knows owns more than 5% of the
outstanding shares of common stock,
. each of the Company's directors and nominees for directors,
. each executive officer listed in the Summary Compensation Table on page 9,
and
. all of the Company's current directors and executive officers as a group.
Beneficial ownership is determined in accordance with rules of the SEC and
includes shares over which the indicated beneficial owner exercises voting
and/or investment power. Shares of common stock subject to options or warrants
currently exercisable or exercisable within 60 days are deemed outstanding for
computing the percentage ownership of the person holding the options but are not
deemed outstanding for computing the percentage ownership of any other person.
Except as otherwise indicated in the footnotes to this table, the Company
believes that each shareholder identified in the table has sole voting and
investment power with respect to all shares listed opposite their names. Unless
otherwise indicated, the following officers, directors and shareholders can be
reached at the Company's principal offices.
<TABLE>
<CAPTION>
Number of Shares Percentage of
Name and Address Beneficially Owned Shares Outstanding
- ---------------- ------------------ ------------------
<S> <C> <C>
Elan International Services, Ltd............................ 2,142,276(1) 15.9%
102 St. James Court
Flatts, Smiths Parish
FL 04, Bermuda
Chiron Corporation.......................................... 1,063,868(2) 8.6%
4560 Horton Street
Emeryville, California 94608
International Biotechnology Trust plc....................... 1,012,633 8.5%
c/o Rothschild Asset Management, Ltd.
Five Arrows House
St. Swithin's Lane
London EC4N 8NR England
Schering Berlin Venture Corporation......................... 816,481(3) 6.9%
3400 Change Bridge Road
Monteville, New Jersey 07045
Ralph E. Christoffersen, Ph.D............................... 209,867(4) 1.7%
Jeremy L. Curnock Cook...................................... 1,022,633(5) 8.6%
Anthony B. Evnin, Ph.D...................................... 325,773(6) 2.7%
John Groom................................................. 2,142,276(1) 15.9%
David Ichikawa.............................................. 5,000(7) *
David T. Morgenthaler....................................... 95,563(8) *
Samuel R. Saks.............................................. - *
</TABLE>
-4-
<PAGE>
<TABLE>
<S> <C> <C>
Anders P. Wiklund............................ 14,444(9) *
Lawrence E. Bullock.......................... 63,455(10) *
J. Wayne Cowens.............................. 10,000(11) *
Alene Holzman................................ 39,778(12) *
Thomas H. Rossing, M.D....................... - *
Nassim Usman, Ph.D........................... 64,186(13) *
Executive officers and directors as a group
(10 persons)................................. 3,992,975(14) 32.6%
<S>
- ------------------------
</TABLE>
*Less than 1%.
(1) Includes 1,001,250 shares convertible from the Company's Series A
convertible exchangeable preferred stock assuming a conversion price of
$12.00 per share and 500,000 shares issuable upon exercise of warrants.
Mr. Groom is President, Chief Operating Officer and a director of Elan but
disclaims beneficial ownership of these shares.
(2) Includes 444,444 shares issuable upon exercise of warrants.
(3) Includes 138,598 shares convertible from outstanding debt assuming a
conversion price of $49.75 per share.
(4) Includes options to purchase 119,583 shares and 2,028 shares allocated to
Dr. Christoffersen under the Company's 401(k) Plan.
(5) Includes options to purchase 10,000 shares and 1,012,633 shares held by the
International Biotechnology Trust plc, for which Rothschild Asset
Management, Ltd. ("Rothschild") acts as investment advisor. Mr. Cook is a
director of Rothschild but disclaims beneficial ownership of these shares.
(6) Includes options to purchase 10,000 shares, 218,022 shares held by Venrock
Associates and 97,751 shares held by Venrock Associates II, L.P. Mr.
Evnin is a general partner of both partnerships and disclaims beneficial
ownership of these shares except to the extent of his general partnership
interests.
(7) Excludes 1,063,868 shares held by Chiron. Mr. Ichikawa is employed by
Chiron and disclaims beneficial ownership of those shares. Includes
options to purchase 5,000 shares.
(8) Includes options to purchase 10,000 shares, 75,563 shares held by
Morgenthaler Management Partners III and 10,000 shares held by Morgenthaler
Family Partnership. Mr. Morgenthaler is a general partner of both
partnerships and disclaims beneficial ownership of these shares except to
the extent of his general partnership interests.
(9) Includes options to purchase 14,444 shares.
(10) Includes options to purchase 47,394 shares and 2,028 shares allocated to
Mr. Bullock under the Company's 401(k) Plan.
(11) Includes options to purchase 10,000 shares.
(12) Includes options to purchase 33,000 shares and 1,877 shares allocated to
Ms. Holzman under the Company's 401(k) Plan.
(13) Includes options to purchase 62,158 shares and 2,028 shares allocated to
Dr. Usman under the Company's 401(k) Plan.
(14) Includes options to purchase 321,579 shares and 7,961 shares allocated to
executive officers under the Company's 401(k) Plan.
-5-
<PAGE>
PROPOSAL 1--ELECTION OF DIRECTORS
Directors and Nominees
In accordance with the Company's Bylaws, seven directors will be elected to
the Board of Directors to serve until the 2001 Annual Meeting of Shareholders or
until their successor has been duly elected and qualified. The Proxies will be
voted, unless authority to do so is withheld, in favor of the seven nominees
recommended by the Board. Each nominee is currently a member of the Board of
Directors of the Company, except for Mr. Groom and Dr. Saks. Dr. Evnin will not
be standing for reelection to the Board in order to pursue other opportunities.
The Board has no reason to anticipate that any nominee will decline or be unable
to serve as a director. In the event any nominee does decline or is unable to
serve, Proxies may be voted for the election of a substitute nominee or the
Board may reduce the number of directors to be elected. Certain information
regarding each nominee is set forth below.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Ralph E. Christoffersen, Ph.D. (1) 62 Chief Executive Officer, President and Director
David T. Morgenthaler (1) (2) 80 Chairman of the Board
Jeremy L. Curnock Cook (1) (3) 50 Director
Anthony B. Evnin, Ph.D.(1)(2) 59 Director
John Groom 61 Nominee
David Ichikawa (3) 47 Director
Samuel R. Saks, M.D. 45 Nominee
Anders P. Wiklund (2) (3) 59 Director
</TABLE>
________________________
(1) Member of the Executive Committee.
(2) Member of the Compensation Committee.
(3) Member of the Audit Committee.
Ralph E. Christoffersen, Ph.D., has served as Chief Executive Officer,
President and Director of Ribozyme Pharmaceuticals since June 1992. From 1989 to
June 1992, Dr. Christoffersen was Senior Vice President and Director of U.S.
Research at SmithKline Beecham Pharmaceuticals, a pharmaceutical company. From
1983 to 1989, he held senior management positions in research at The Upjohn
Company, a pharmaceutical company. Prior to joining The Upjohn Company, Dr.
Christoffersen served as a Professor of Chemistry and Vice Chancellor for
Academic Affairs at the University of Kansas and as President of Colorado State
University. He received his Ph.D. in Physical Chemistry from Indiana University.
David T. Morgenthaler has served as a director since February 1992 and was
elected Chairman of the Board in December 1995. Mr. Morgenthaler was a founder
of and has been Managing Partner of Morgenthaler Ventures, a private venture
capital firm, since 1968. He has been a director of a number of public and
private companies. Mr. Morgenthaler received his M.S. degree from the
Massachusetts Institute of Technology.
Jeremy L. Curnock Cook has served as a director since July 1995. Mr. Cook
is a director of Rothschild Asset Management, an investment fund, and has been
responsible for the Rothschild Bioscience Unit since 1987. Mr. Cook founded the
International Biochemicals Group in 1975 which he subsequently sold to Royal
Dutch Shell in 1985, remaining as Managing Director until 1987. He is also a
director of the International Biotechnology Trust plc, Creative BioMolecules
Inc., Targeted Genetics Inc., Cantab Pharmaceuticals plc, Cell Therapeutics,
Inc., Amrad Corporation, Vanguard Medica plc, Angiotech Pharmaceuticals, Inc.,
Inflazyme Pharmaceuticals, Inc. and Biocompatibles International plc. Mr. Cook
received an M.A. in Natural Sciences from Trinity College Dublin.
Anthony B. Evnin, Ph.D., has served as a director since February 1992. Dr.
Evnin has been a General Partner of Venrock Associates, a venture capital
partnership, since 1975. He is also a director of Caliper Technologies Corp. and
Triangle Pharmaceuticals, Incorporated. Dr. Evnin received his Ph.D. from the
Massachusetts Institute of Technology. Dr. Evnin will not be standing for
reelection to the Board.
-6-
<PAGE>
John Groom is a nominee to the Board. Mr. Groom has served as President,
Chief Operating Officer and a director of Elan Corporation plc since 1996. He
served as President and Chief Executive Officer of Athena Neurosciences, Inc.
from 1987 to 1996. Mr. Groom is also a director of IDEC Pharmaceuticals
Corporation and Ligand Pharmaceuticals, Inc, and is a public trustee of the
American Academy of Neurology Education and Research Foundation.
David Ichikawa has served as a director since May 1998. Mr. Ichikawa has
been employed by Chiron Corporation, a biotechnology company, since September
1994 and is currently Vice President of Finance and Operations. He has also held
management positions at Boehringer Mannhiem Corporation and Chiron (Cetus)
Corporation. Mr. Ichikawa received his M.B.A. from the University of California
at Berkeley.
Samuel R. Saks, M.D., is a nominee to the Board. Dr. Saks joined ALZA
Corporation in 1992 as the Vice President for Medical Affairs and in 1995 he
became Senior Vice President, Medical Affairs. In January 2000 he also became
Group Vice President of ALZA Pharmaceuticals. Dr. Saks received his M.D. with
honors from the University of Illinois and completed his residency in Internal
Medicine at the University of Texas Southwestern Medical Center at Dallas.
Anders P. Wiklund has served as a director since August 1994. Since January
1997, Mr. Wiklund has been the principal of Wiklund International, an advisory
firm to the biotechnology and pharmaceutical industries. From 1967 through 1996,
Mr. Wiklund served in numerous executive positions for the Kabi and Pharmacia
group of companies, including President and CEO of Kabi Vitrum Inc. and Kabi
Pharmacia, Incorporated. Mr. Wiklund is also a director of Medivir, A.B. and
InSite Vision, Inc., as well as serving on private company boards. Mr. Wiklund
received a Master of Pharmacy degree from the Pharmaceutical Institute in
Stockholm.
The Board of Directors recommends a vote FOR THE ELECTION OF THE SEVEN
---
NOMINEES FOR DIRECTOR NAMED ABOVE.
The officers of the Company hold office until their successors are
appointed by the Board of Directors (see "Executives and Executive
Compensation"). There are no arrangements or understandings between any of the
directors or nominees listed above or the officers, or any other persons,
pursuant to which any of the above directors have been selected as directors, or
officers have been selected as officers.
Board Committees and Meetings
The Board has established an Audit Committee, a Compensation Committee and
an Executive Committee. In 1999 there were five meetings of the Board of
Directors of the Company. All directors attended 75 percent or more of the
Company's Board meetings and meetings of Board committees on which they served.
The Board of the Company has no standing nominating committee. Nominees for the
Board of Directors are determined by the entire Board.
The Executive Committee, last year consisting of Messrs. Morgenthaler
(Chairman) and Cook and Drs. Christoffersen and Evnin, oversees the management
and operation of the Company's business. The Executive Committee met four times
in 1999.
The Compensation Committee, consisting of Dr. Evnin (Chairman)
and Messrs. Morgenthaler and Wiklund:
. reviews and recommends for Board approval grants of options pursuant to the
Company's Stock Option Plan,
. decides salaries and incentive compensation for the Company's employees and
consultants, and
. recommends compensation for executive officers (see "Report by the
Compensation Committee on Executive Compensation") for approval by the
Board.
The Compensation Committee met once in 1999.
-7-
<PAGE>
The Audit Committee, consisting of Messrs. Ichikawa (Chairman), Cook and
Wiklund:
. recommends to the Board the selection of independent auditors,
. reviews the results and scope of the audit and other services provided by
the Company's independent auditors, and
. reviews and evaluates the Company's audit and control functions.
The Audit Committee met once in 1999.
Director Compensation
Fees. All non-employee directors receive a fee of:
. $1,000 per day for each Board or Committee meeting attended in person, and
. $500 per day for participating telephonically in a Board or Committee
meeting.
Stock Options. Non-employee directors receive stock options for 5,000
shares of common stock annually under the Company's Stock Option Plan. The
options vest after one year of service.
Executives and Executive Compensation
Information regarding the Company's executive officers is set forth below.
<TABLE>
<CAPTION>
Name Age Position
- ---- --- --------
<S> <C> <C>
Ralph E. Christoffersen, Ph.D. (1) 62 Chief Executive Officer, President and Director
Lawrence E. Bullock 44 Vice President of Administration and Finance,
Chief Financial Officer and Secretary
J. Wayne Cowens, M.D. 51 Vice President of Clinical and Regulatory Affairs
Alene A. Holzman 43 Vice President of Corporate Development
Nassim Usman, Ph.D. 40 Senior Vice President of Research
</TABLE>
- ------------------------
(1) Ralph E. Christoffersen, Ph.D. is discussed on page 6.
Lawrence E. Bullock has served as Vice President of Administration and
Finance, Chief Financial Officer and Secretary since January 1996. From December
1990 to January 1996, Mr. Bullock was Chief Financial Officer, Director of
Finance and Administration and Secretary of La Jolla Pharmaceutical Company, a
biopharmaceutical company. Mr. Bullock received his M.B.A. from the University
of Utah.
J. Wayne Cowens, M.D., has served as Vice President of Clinical and
Regulatory Affairs since July 1999. From 1992 until July 1999, Dr. Cowens served
as Division Vice President of Product Development for Chiron Corporation, a
biotechnology company. During that time he served as Chiron's commercial
representative on the Ribozyme Pharmaceuticals/Chiron joint project team for the
development of ANGIOZYME. From 1990 until 1992, Dr. Cowens served as Director of
Clinical Oncology at Sterling-Winthrop, a pharmaceutical company, and from 1980
until 1990 as a Cancer Research Clinician in the Grace Cancer Drug Center at the
Roswell Park Cancer Center. Dr. Cowens received his M.D. degree from The Johns
Hopkins University.
Alene A. Holzman has served as Vice President of Corporate Development
since December 1999. Ms. Holzman served as Business Development and General
Manager of Target Validation and Discovery Business from April 1997 to December
1999. From January 1990 to March 1997, Ms. Holzman was Vice President of
ChemTrak Corporation, a medical technology firm, where she was responsible for
finance, business development and marketing and sales. From 1987 to 1990, she
was Vice President of CytoSciences, Inc., a biomedical company, and from 1981 to
-8-
<PAGE>
1987 she was Vice President of Marketing and Sales for Hana Biologics, Inc, a
biotechnology firm. Ms. Holzman received her M.B.A. from the University of
California at Berkeley.
Nassim Usman, Ph.D., has served as Senior Vice President of Research since
December 1999. From May 1996 to December 1999, Dr. Usman served as Vice
President of Research at Ribozyme Pharmaceuticals. From April 1994 until May
1996, Dr. Usman served as Director of Chemistry and Biochemistry Research and
from September 1992 until April 1994 Dr. Usman served as Senior Scientist in
Chemistry and Biochemistry. From January 1987 to September 1992, Dr. Usman was a
Postdoctoral Fellow and Scientist in the Departments of Biology and Chemistry at
the Massachusetts Institute of Technology. Dr. Usman received his Ph.D. in
Chemistry from McGill University.
The following table summarizes the compensation paid to or earned by the
Company's Chief Executive Officer and the other five most highly compensated
executive officers whose annual compensation exceeded $100,000 in 1999 ("Named
Executive Officers"). The "All Other Compensation" column shows matching
contributions in common stock made by the Company under the 401(k) Salary
Reduction Plan.
<TABLE>
<CAPTION>
Summary Compensation Table
Annual Compensation Long-term Compensation
--------------------------------------- ------------------------
Shares
Other Underlying All
Annual Options Other
Name and Principal Position Year Salary($) Bonus($) Comp.($) Granted(#) Comp.($)
- --------------------------- ---- --------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Ralph E. Christoffersen, Ph.D. 1999 297,000 64,000 -- 37,000 4,993
Chief Executive Officer and 1998 285,670 50,000 37,862(1) 198,748 4,998
President 1997 269,520 50,000 45,000(1) 129,450 4,744
Lawrence E. Bullock 1999 158,350 26,850 25,797(2) 24,000 4,993
Vice President of Administration 1998 150,800 25,000 75,883(2) 85,957 4,998
and Finance, CFO and Secretary 1997 136,254 25,000 35,524(2) 37,500 4,744
J. Wayne Cowens, Ph.D. (3) 1999 112,500 -- 110,269(4) 122,000 --
Vice President of Clinical Affairs
Alene A. Holzman (5) 1999 166,325 24,175 28,000(6) 42,000 4,993
Vice President of Corporate 1998 156,900 6,500 37,721(6) 100,000 4,998
Development 1997 108,557 12,500 28,389(6) 80,000 3,494
Thomas H. Rossing, M.D. (7) 1999 152,584 35,725 33,000(8) -- --
Former Vice President of Product 1998 250,650 -- 34,000(8) 110,624 4,998
Development 1997 105,859 22,000 84,008(8) 107,500 --
Nassim Usman, Ph.D. 1999 177,925 29,075 42,669(10) 42,000 4,993
Vice President of Research 1998 183,038(9) 23,000 25,841(10) 99,167 4,998
1997 158,004 -- 25,397(10) 45,000 4,744
</TABLE>
________________________
(1) Includes (a) $25,000 in each of 1997 and 1998 for forgiveness of a loan
made to Dr. Christoffersen for relocation expenses; and (b) $20,000 in 1997
and $12,862 in 1998 to assist him with the tax liability relating to the
loan forgiveness.
(2) Includes (a) $9,641 in 1997, representing implied interest related to an
interest-free loan made to Mr. Bullock for relocation expenses; (b) $15,000
in each of 1997, 1998 and 1999 for partial forgiveness of the loan;
(c)$7,883 in each of 1997 and 1998 and $7,797 in 1999 for taxes relating to
the loan; (d) $3,000 in each of 1997, 1998 and 1999 as reimbursements for
dependent daycare expenses; and (e) $50,000 in 1998 to
-9-
<PAGE>
reimburse Mr. Bullock for relocation expenses.
(3) Dr. Cowens joined the Company on July 1, 1999.
(4) Includes (a) $27,755 in 1999 representing implied interest relating to an
interest-free loan; (b) $14,426 in 1999 for taxes relating to the loan; (c)
$44,802 to reimburse Dr. Cowens for relocation expenses; and (d) $23,286
for taxes relating to relocation.
(5) Ms. Holzman joined the Company on April 1, 1997.
(6) Includes (a) $10,036 in 1997 representing implied interest related to an
interest-free loan made to Ms. Holzman for relocation expenses; (b) $15,853
and $9,721 in 1997 and 1998 respectively, to reimburse Ms. Holzman for
relocation expenses; (c) $25,000 in each of 1998 and 1999 for partial
forgiveness of the loan; and (d) $2,500 in 1997 and $3,000 in each of 1998
and 1999 as reimbursements for dependent daycare expenses.
(7) Dr. Rossing joined the Company on July 28, 1997 and resigned from the
Company on August 3, 1999.
(8) Includes (a) $14,901 in 1997 representing implied interest related to an
interest-free loan made to Dr. Rossing for relocation expenses; (b) $34,000
and $33,000 in 1998 and 1999, respectively, for partial forgiveness of the
loan; and (c) $69,107 in 1997 to reimburse Dr. Rossing for relocation
expenses.
(9) Includes $13,988 in additional salary for Dr. Usman's three-month temporary
position as Vice President of Atugen.
(10) Includes (a) $15,000 in each of 1997, 1998 and 1999 for partial forgiveness
of the loan; (b) $7,883 in each of 1997 and 1998, and $7,797 in 1999 for
taxes relating to the loan; (c) $2,496 in each of 1997 and 1998 and $3,000
in 1999 as reimbursements for dependent daycare expenses; (d) $11,102 in
1999 representing implied interest related to an interest-free loan; and
(e) $5,770 in 1999 for taxes relating to the loan.
Stock Option Plan
In March 1996 the Company amended, restated and merged its stock option
plans and named the resulting plan the 1996 Stock Option Plan ("Plan"). At March
3, 2000, 1,752,951 shares of common stock are reserved for issuance under the
Plan. As of March 3, 2000, options to purchase 1,694,814 shares were
outstanding under the Plan. Shareholders are being asked to approve an increase
in the number of shares subject to options which may be granted pursuant to the
Plan (see "Proposal 3"). The Plan will terminate in January 2006, unless earlier
terminated by the Board of Directors. The purposes of the Plan are to:
. attract and retain qualified personnel,
. provide additional incentives to the Company's employees, officers,
directors and consultants, and
. promote the success of the Company's business.
Under the Plan, the Company may grant or issue incentive stock options and
supplemental (non-qualified) stock options to its consultants, employees,
officers and directors.
Administration. The Board has delegated administration of the Plan to a
Compensation Committee comprised of three independent directors (see "Board
Committees"). Subject to the limitations set forth in the Plan, the Board or the
Compensation Committee has the authority to:
. select the persons to whom grants are to be made,
. designate the number of shares to be covered by each option,
. determine whether an option is an incentive stock option or a non-statutory
stock option,
. establish vesting schedules, and
. subject to restrictions, specify the type of consideration to be paid upon
exercise and to specify other terms of the options.
Terms. The maximum term of options granted under the Plan is ten years,
however, the maximum term is five years for incentive options granted to a
person who at that time owns 10% of the total combined voting power of all
classes of stock. The aggregate fair market value of the stock with respect to
which incentive stock options are first exercisable in any calendar year may not
exceed $100,000 per optionee. Any portion in excess of $100,000 shall be treated
as non-statutory stock options. Options granted under the Plan are non-
transferable and generally expire upon
-10-
<PAGE>
the earlier of the stated expiration date or three months after the termination
of an optionee's service. However, the expiration date would be 18 months in the
event the optionee's employment terminates by reason of death or 12 months in
the event the optionee's employment terminates due to disability, or a longer or
shorter period as may be specified in the option agreement.
The Board has discretion in connection with a merger, consolidation,
reorganization or similar corporate event where the Company is the surviving
corporation to prescribe the terms and conditions for the modifications of the
options granted under the Plan. If the Company is not the surviving corporation
in the event of its dissolution or liquidation, or its merger or consolidation,
all outstanding options will terminate unless assumed by another corporation.
No specific vesting schedule is required under the Plan. The exercise price
of incentive stock options must equal at least the fair market value of the
common stock on the date of grant, except that the exercise price of incentive
stock options granted to any person who at the time of grant owns stock
possessing more than 10% of the combined voting power of all classes of stock
must be at least 110% of the fair market value of the stock on the date of
grant. The exercise price on non-statutory stock options under the Plan may be
no less than 85% of the fair market value of the common stock on the date of
grant.
Repricing. In September 1998 the Board of Directors approved a repricing of
all employee stock options outstanding under the Plan. Pursuant to this
repricing, each executive officer holding options received 0.75 option for each
one option surrendered with a new vesting date and an exercise price of $3.00
per share. All non-executive employees who were option holders received one new
option for each one option surrendered with a new vesting date and an exercise
price of $3.00 per share. As a result of this repricing offer, 890,921 options
were canceled and 747,060 options were granted effective September 18, 1998.
The following table contains information about stock options granted to
each of the named executive officers and directors during 1999 under the Plan.
All options, other than performance-based options which are indicated by *, vest
in increments of 20% over a five-year period and become exercisable on the first
anniversary of the grant date. The exercise price of each option was equal to
the fair market value of the common stock on the date of the option grant as
determined by the Board of Directors. The options are granted for a term of ten
years, subject to earlier termination if employment is terminated. In 1999 the
Company granted options representing an aggregate of 589,259 shares of the
Company's common stock to employees and directors, including the named executive
officers.
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<PAGE>
<TABLE>
<CAPTION>
Option Grants in 1999
Individual Grants
-----------------------------------
% of Total
Number of Options Potential Realizable
Shares Granted Value at
Underlying to Annual Rate of Stock
Options Employees Exercise Price Appreciation
Granted in Price Expiration for Option Term(1)
-----------------------------
(#) 1999 ($/Share) Date 5%($) 10%($)
--- ---- --------- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Ralph E. Christoffersen............ 7,000 1.2% $8.13 12-02-09 35,790 90,700
30,000* 5.1% 8.13 12-02-09 153,387 388,714
------- ----
37,000 6.3%
Lawrence E. Bullock................ 12,000 2.0% 8.13 12-02-09 61,355 155,486
12,000* 2.0% 8.13 12-02-09 61,355 155,486
------- ----
24,000 4.0%
J. Wayne Cowens.................... 50,000 8.5% 4.31 07-01-09 135,527 343,451
50,000* 8.5% 4.31 07-01-09 135,527 343,451
11,000 1.9% 8.13 12-02-09 56,242 142,528
11,000* 1.9% 8.13 12-02-09 56,242 142,528
------- ----
122,000 20.8%
Alene A. Holzman................... 15,000 2.5% 5.56 05-21-09 52,450 132,918
13,500 2.3% 8.13 12-02-09 69,024 174,921
13,500* 2.3% 8.13 12-02-09 69,024 174,921
------- ----
42,000 7.1%
Thomas H. Rossing.................. -- -- -- -- -- --
Nassim Usman....................... 15,000 2.5% 5.56 05-21-09 52,450 132,918
13,500 2.3% 8.13 12-02-09 69,024 174,921
13,500* 2.3% 8.13 12-02-09 69,024 174,921
------- ----
42,000 7.1%
</TABLE>
_________________________
* These options become 100% vested upon the completion of various research or
business performance milestones.
(1) Amounts reported in these columns show hypothetical gains that may be
realized upon exercise of the options, assuming the market price of common
stock appreciates at the specified annual rates of appreciation, compounded
annually over the term of the options. These numbers are calculated based
upon rules promulgated by the SEC. Actual gains, if any, depend on the
future performance of common stock and overall market conditions.
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<PAGE>
The following table contains information about the stock options exercised
in 1999 and the number and value of stock options held by each named executive
officer as of December 31, 1999. A stock option is "in-the-money" if the closing
market price of common stock exceeds the exercise price of the stock option. The
value of "in-the-money" unexercised stock options set forth in the table
represents the difference between the exercise price of these options and the
closing sales price of the common stock on December 31, 1999, as reported by the
Nasdaq National Market ($10.50 per share).
<TABLE>
<CAPTION>
Aggregated Option Exercises in 1999 and
1999 Year-End Option Values
Number of
Securities Underlying Value of Unexercised
Shares Unexercised Options In-the-Money Options
Acquired On Value at December 31, 1999(#) at December 31, 1999($)
Name Exercise (#) Realized ($) Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ------------ ------------ ------------------------- -------------------------
<S> <C> <C> <C> <C>
Ralph E. Christoffersen -- -- 119,583/161,497 906,462/974,077
Lawrence E. Bullock -- -- 44,061/87,180 295,674/506,429
Alene A. Holzman -- -- 38,000/99,250 232,400/525,385
J. Wayne Cowens -- -- 10,000/112,000 61,900/609,240
Thomas H. Rossing 16,500 $37,125(1) -- --
Nassim Usman -- -- 53,658/102,492 391,538/543,458
</TABLE>
____________________
(1) Value realized is the difference between Dr. Rossing's exercise price of
$3.00 and the price of the common stock on the day of exercise ($5.25).
Employment Agreements
Ralph E. Christoffersen, Ph.D. In 1992 the Company entered into an
employment agreement with Ralph E. Christoffersen, Ph.D., President and Chief
Executive Officer, which, as amended, currently provides for:
. an annual salary of $309,000,
. an annual performance-based cash bonus of up to $80,000 (a bonus of $68,000
was received in January 2000 for 1999 performance), and
. stock options for common stock as reflected in the tables in this
"Executive Compensation" section.
Dr. Christoffersen's agreement may be terminated upon his death, disability
or for cause. If the Company terminates Dr. Christoffersen's employment, he is
entitled to receive all accrued salary and benefits up to his termination and,
unless he has been terminated for cause, nine months of severance pay at the
same monthly rate as in effect at the time of his termination. Dr.
Christoffersen shall also be paid a lump sum cash payment of up to $27,500.
Lawrence E. Bullock. In 1996 the Company entered into an employment
agreement with Lawrence E. Bullock, Vice President of Administration and
Finance, Chief Financial Officer and Secretary, which, as amended, currently
provides for:
. an annual salary of $166,275,
. an annual performance-based cash bonus of up to 20% of his current salary
(a bonus of $25,350 was received in January 2000 for 1999 performance),
. stock options for common stock as reflected in the tables in this
"Executive Compensation" section, and
. an interest-free loan of $75,000 made in 1996 and forgivable in five equal
annual installments, grossed-up for taxes, as long as Mr. Bullock remains
employed by the Company.
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<PAGE>
If the Company terminates Mr. Bullock's employment without cause, he is
entitled to six months' severance pay at his then current salary.
J. Wayne Cowens, Ph.D. In 1999 the Company entered into an employment
agreement with J. Wayne Cowens, Ph.D., Vice President of Clinical Affairs,
which, as amended, currently provides for:
. an annual salary of $230,625,
. an annual performance-based cash bonus of up to 20% of his current salary
(a bonus of $42,750 was received in January 2000 for 1999 performance),
. stock options for common stock as reflected in the tables in this
"Executive Compensation" section, and
. an interest-free loan of $150,000 made in 1999 and forgivable in five equal
installments, grossed-up for taxes, as long as Dr. Cowens remains employed
by the Company.
If the Company terminates Dr. Cowens' employment without cause, he will be
entitled to six months' severance pay at his then current salary.
Alene A. Holzman. In 1997 the Company entered into an employment agreement
with Alene A. Holzman, Vice President of Corporate Development, which, as
amended, currently provides for:
. an annual salary of $179,625,
. an annual performance-based cash bonus of up to 20% of her current salary
(a bonus of $30,000 was received in January 2000 for 1999 performance),
. stock options for common stock as reflected in the tables in this
"Executive Compensation" section, and
. an interest-free loan of $75,000 made in June 1997 and forgivable in three
equal installments as long as Ms. Holzman is employed by the Company.
If the Company terminates Ms. Holzman's employment without cause, she is
entitled to six months' severance pay at her then current salary.
Nassim Usman, Ph.D. In 1996 the Company entered into an employment
agreement with Nassim Usman, Ph.D., Vice President of Research, which, as
amended, currently provides for:
. an annual salary of $210,000,
. an annual performance-based cash bonus of up to 20% of his current salary
(a bonus of $32,000 was received in January 2000 for 1999 performance),
. stock options for common stock as reflected in the tables in this
"Executive Compensation" section, and
. an interest-free loan of $75,000 made in 1996 and an additional interest-
free loan of $60,000 made in 1999, both of which are forgivable in five
equal installments, grossed-up for taxes, as long as Dr. Usman remains
employed by the Company.
If the Company terminates Dr. Usman's employment without cause, he will be
entitled to six months' severance pay at his then current salary.
Employee Benefits
Executive Bonus Plan. The Company adopted an Executive Bonus Plan in March
1999. This Bonus Plan provides the Company's executive officers with the
opportunity to earn an annual bonus contingent upon their fulfillment of annual
goals as determined by the Compensation Committee comprised of three independent
directors. The Compensation Committee has complete authority to establish the
goals for each executive officer, to interpret all provisions of the Bonus Plan
and to make all other determinations necessary or advisable for the
administration of the Bonus Plan. The Compensation Committee may award each
executive officer with an annual bonus comprised of one or more of the
following:
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<PAGE>
. cash payment,
. stock options pursuant to the Company's stock option plan, or
. forgiveness of any portion of the principal of interest-free loans provided
to the executive officer.
Section 401(k) Plan. As part of its effort to attract and maintain high
quality staff, the Company adopted a 401(k) Salary Reduction Plan and Trust on
June 1, 1992. The Company's employees may make pre-tax elective contributions of
up to 20% of their salary, subject to limitations prescribed by law. All
contributions are paid to a trustee who invests for the benefit of members of
the 401(k) Plan. In March 1997, the 401(k) Plan was amended to provide that the
Company may match the employee's contributions with common stock. The Company
may amend or terminate the 401(k) Plan at any time, subject to legal
restrictions.
Employee Stock Purchase Plan. In March 1996 the Company adopted an Employee
Stock Purchase Plan (the "Purchase Plan"), which authorizes the issuance of up
to 300,000 shares of the Company's common stock to eligible employees.
Generally, each offering lasts for twenty-four months, and purchases are made on
each October 31 and April 30 during each offering. For example, the initial
offering began on April 11, 1996, and terminated on April 30, 1999. Common stock
is purchased for accounts of employees participating in the Purchase Plan at a
price per share equal to the lower of:
. 85% of the fair market value of a share of common stock on the date of
commencement of participation in the offering, or
. 85% of the fair market value of a share of common stock on the date of
purchase.
Generally, all regular employees, including executive officers, may participate
in the Purchase Plan and may authorize payroll deductions of up to 15% of their
base compensation for the purchase of common stock under the Purchase Plan. The
Company's Board of Directors has the authority to terminate the Purchase Plan at
its discretion. As of March 3, 2000, 164,239 shares had been issued pursuant to
the Purchase Plan.
Compensation Committee Interlocks
The members of the Company's Compensation Committee have no interlocking
relationships as defined under SEC regulations.
Report by the Compensation Committee on Executive Compensation
Responsibilities and Objectives. The Committee establishes and administers
the general compensation policies and plans for the Company and the specific
compensation levels for the executive officers and other key employees. The
Committee is responsible for conducting, at a minimum, annual reviews of
executive compensation and for taking certain actions regarding the compensation
of senior executives of the Company. The Committee determines the salary levels
for senior executives, and other key employees, and the types and amounts of
cash and other bonuses to be distributed to these individuals in accordance with
Bonus Plan. The Committee also determines grants of stock options pursuant to
the Plan.
This report is submitted by members of the Committee summarizing their
involvement in the compensation decisions and policies adopted by the Company
for the Company's executive officers.
General Policy. The Company's executive compensation practices are designed
to reward and provide an incentive for executives based on the achievements of
annual and long-term corporate and individual performance goals. Compensation
levels for executives are established after giving consideration to a variety of
quantitative measures including, but not limited to, Company financial and
operating performance, peer group comparisons and labor market conditions.
Before making decisions, the Committee elicits the recommendations and advice of
the CEO regarding appropriate or desired levels of compensation for management
personnel generally. The Committee has complete access to all necessary Company
personnel records, financial reports and other data, and may seek the advice
-15-
<PAGE>
of experts and analysts.
The ultimate purpose of the Company's compensation structure is to attract
and retain executives of the highest caliber and to motivate these executives to
put forth maximum effort toward the achievement of Company goals identified
through the strategic planning process of the Board and management. Also, the
compensation design emphasizes long-term incentives in the form of stock options
that will encourage these individuals to maintain their focus on the paramount
importance of long-term shareholder interests.
Components of Compensation. In evaluating executive compensation, the
Committee focuses upon several fundamental components: salary, annual bonus and
long-term incentive compensation consisting of stock options. The Committee's
recommendations are offered to the full Board of Directors and are ultimately
ratified, changed or rejected by the full Board.
Salary levels for senior executives and other officers are reviewed by the
Committee annually. The Company has entered into employment agreements with its
executive officers, as amended from time to time, which set forth the salary
level for each executive (see "Executive Compensation--Employment Agreements").
In establishing salary levels, the Committee has relied upon salary survey data
and other publicly available information. The Committee also considers the
experience of each executive officer as well as his or her past performance and
expected future performance.
The annual bonus component of executive compensation has historically been
provided to an executive, if and as appropriate, for obtaining pre-determined
corporate and individual goals. The Committee typically determines whether
annual bonuses will be awarded to executives for attainment of these goals at
the end of each year. Pursuant to the Bonus Plan, the Committee may award
bonuses comprised of cash, stock options and loan forgiveness based on the
executive officer's fulfillment of annual goals previously established by the
Committee. At that time, the Committee also sets the performance goals for the
upcoming year.
The third component of the Company's executive compensation strategy is
long-term incentive compensation pursuant to which executives receive stock
options pursuant to the Plan which are tied to the long-term appreciation of the
value of the Company Stock. The Plan offers executives the possibility of future
gains depending upon the executives' continued employment by, and contributions
to, the Company. The Committee believes that a portion of the total compensation
of senior executives over a period of years should consist of such long-term
incentive awards (see "Executive Compensation--Stock Option Plan").
Executive officers of the Company also are permitted to participate in the
Purchase Plan which is open to all of the Company's full-time employees. (See
"Executive Compensation--Employee Stock Purchase Plan.") The Purchase Plan
enables the Company's employees, including executive officers, to acquire
Company Stock at a discount to the market price by allocating up to 15 % of
their base salary (subject to certain limits) to the acquisition of such stock.
Review of Executive Compensation. The Committee, in making its
recommendations and determinations at year end 1999 regarding executive
compensation, was influenced by numerous positive considerations, including
achievement of all 1999 corporate goals as set forth in the 1999 budget and
planning process.
In light of the results in 1999, the Committee determined that increases in
executive compensation were justifiable, both to reward management for
accomplishments to date and to encourage future achievement of both short- and
long-term objectives. Accordingly, the Committee approved salary increases and
bonuses which it believes reflected appropriate rewards for management's
performance in 1999. The Committee also granted stock options to the executive
officers (see "Executive Compensation").
-16-
<PAGE>
Compensation of Chief Executive Officer. In assessing appropriate types and
amounts of compensation for the Chief Executive Officer, the Committee evaluates
both corporate and individual performance. Corporate factors included in the
evaluation are (i) market capitalization, (ii) number of products in clinical
and preclinical development, (iii) levels and quality of research, and (iv)
current and potential funds raised in equity offerings and collaborations.
Individual factors include initiation and implementation of successful business
strategic partnerships, maintenance of an effective management team and various
personal qualities, including leadership, commitment and professional standing.
Conclusion. For these and other reasons, the Committee recommended an
increase in salary for Dr. Christoffersen from $297,000 in 1999 to $309,000 in
2000. In addition, the Committee approved and recommended payment of a $68,000
cash bonus to Dr. Christoffersen after January 1, 2000. The Committee
also granted stock options for 37,000 shares of common stock under the Plan to
Dr. Christoffersen in 1999 (see "Executive Compensation"). The Committee
believes that these compensation amounts and awards reflect appropriate levels
given the Company's performance in 1999 and the individual performance of
management. The Committee also believes that these awards evidence the
Committee's philosophy to emphasize long-term incentive rewards tied to the
Company's performance.
Submitted by the Compensation Committee:
Anthony B. Evnin, Ph.D. (Chairman)
David T. Morgenthaler
Anders P. Wiklund
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<PAGE>
Company Performance
The following line graph presents the cumulative total shareholder return
for the Company Stock since April 11, 1996, when the Company's common stock was
listed on the Nasdaq National Market, compared with the Nasdaq Composite (US)
index and Nasdaq Biotech index. Trade prices are not always disclosed to
management. The graph assumes that $100 was invested on April 11, 1996 and that
dividends were reinvested.
[GRAPH APPEARS HERE]
- --------------------------------------------------------------------------------
4/11/96 12/31/96 12/31/97 12/31/98 12/31/99
- --------------------------------------------------------------------------------
Ribozyme $ 100.00 $ 110.00 $ 80.00 $ 43.75 $ 105.00
- --------------------------------------------------------------------------------
Nasdaq Biotech $ 100.00 $ 105.57 $ 105.50 $ 152.21 $ 306.74
- --------------------------------------------------------------------------------
Nasdaq Composite (US) $ 100.00 $ 117.67 $ 143.13 $ 199.85 $ 371.96
- --------------------------------------------------------------------------------
Certain Relationships and Related Transactions
The Company believes that the following transactions were in its best
interests. As a matter of policy, these transactions were, and all future
transactions between the Company and any of its officers, directors or principal
shareholders will be:
. approved by a majority of the independent members of the Board of
Directors,
. entered into on terms no less favorable to the Company than could be
obtained from unaffiliated third parties, and
. entered into in connection with bona fide business purposes.
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<PAGE>
Executive Loans. The Company made interest-free loans to its executive
officers. The Company has forgiven all or a portion of the outstanding principal
amount of each loan under the terms of each officer's employment agreement. See
"Management--Employment Agreements."
Balance as of
Name Loan Amount March 3, 2000
- ---- ----------- -------------
Ralph E. Christoffersen, Ph.D. $250,000(1) $ 0
Lawrence E. Bullock 75,000(2) 15,000
Nassim Usman, Ph.D. 135,000(3) 90,000
Alene A. Holzman 75,000(4) 25,000
J. Wayne Cowens, M.D. 150,000 150,000
__________________
(1) $50,000 forgiven in each of June 1993, January 1995, January 1996 and
January 1997, and $25,000 forgiven in each of January 1994 and January
1998.
(2) $15,000 forgiven in each of June 1997, January 1998, January 1999 and
January 2000.
(3) $15,000 forgiven in each of June 1997, May 1998 and May 1999.
(4) $25,000 forgiven in each of March 1998 and March 1999.
Chiron Transactions. Chiron and the Company granted each other licenses to
technologies and agreed to undertake research activities pursuant to a
collaboration agreement. Chiron purchased:
. 100,000 shares of the Company's common stock for a purchase price of
$3.60 per share,
. 107,095 shares of the Company's Series E Preferred Stock for a purchase
price of $37.35 per share, and
. a warrant at a price of $4.50 per warrant share, exercisable for 444,444
shares of common stock at an exercise price of $40.50 per share.
In 1996 the Company amended the warrant issuable to Chiron to reduce the
exercise price from $40.50 per share to $22.50 per share. When the Company
closed its initial public offering in April 1996, Chiron:
. purchased 377,202 shares of common stock for $3.6 million at the initial
public offering price less one-half of the underwriting discount,
. paid the Company $1.8 million to complete the purchase of its warrant, and
. received 35,127 additional shares of common stock pursuant to anti-dilutive
provisions.
Chiron also has a representative on the Company's Board of Directors.
In 1996 the Company entered into a second collaboration with Chiron for the
use of ribozymes to characterize gene function. The collaborations give Chiron
the right to develop and commercialize products that result from the
collaboration, and entitle the Company to receive product development milestone
payments and royalties on sales of commercial products. Chiron and the Company
each pay a portion of the research and development expenses of the
collaboration, and the Company agreed to provide Chiron $1.8 million, which was
paid in 1996 to fund cell culture assays of potential targets and research
related to potential target identification, development of delivery systems for
ribozyme drugs and other matters related to the Company's collaborations with
Chiron.
Schering AG Transaction. In 1997 the Company entered into a research
collaboration with Schering AG focusing on the use of ribozymes and related
technologies for gene function validation. Schering AG purchased:
. 212,766 shares of common stock for $2.5 million in 1997, and
. 465,117 shares of common stock for $2.5 million in 1998.
Separately, Schering AG provided loans of $2.0 million in 1997, 1998 and
1999. Schering AG will continue
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<PAGE>
to provide loans of up to $2.0 million annually for each year through 2001,
provided that the collaboration is continued in each of those years. The loans,
which carry an interest rate of 8.0% per annum, are convertible into equity at
Schering AG's option under certain circumstances. Principal and interest
payments are deferred until maturity of the loans in April 2004. Upon the
closing of the Company's registered public offering of 3,150,000 shares of
common stock, the Company will use a portion of the proceeds to repay
approximately $6.9 million of the amounts owed to Schering AG. As a result of
the formation of Atugen AG in 1998 described below, the Company now subcontracts
all of its existing target discovery and identification programs to Atugen;
however, as long as the collaboration continues with Schering AG, the Company
will continue to borrow against the loans.
In addition, Schering AG made research payments of $1.5 million in 1997 and
$2.0 million in 1998. Currently the Company subcontracts this program to Atugen
and therefore recorded no revenues related to Schering AG in 1999. Upon payment
of termination fees to the Company, the research collaboration may be terminated
at Schering AG's option at any time.
Atugen Transaction. In 1998 the Company and other investors formed Atugen
AG in Germany. Financing for Atugen was accomplished through a combination of
venture capital, an investment by the Company and German government grants and
loans. The Company contributed $2.0 million in cash to Atugen. The Company
currently owns a 48.4% equity interest in Atugen. All five of the Company's
executive officers and employees received shares of Atugen's common stock in the
formation at no cost to them, for which the Company will receive a one-time
compensation expense of approximately $81,000. During 1999, Atugen granted one
of the Company's executives an additional 25 shares of previously unissued
Atugen stock. Currently, these seven people hold approximately 6.0% of Atugen's
common stock.
As part of the formation, Atugen received exclusive royalty-free licenses
to the Company's extensive patents and technologies for target validation and
discovery. The Company received a one-time $2.0 million up-front license payment
in 1999. The Company currently is compensated for providing management and other
services to Atugen under the terms of a service agreement.
Eli Lilly Transaction. In March 1999, the Company entered into a
collaboration with Eli Lilly to conduct research, development and
commercialization of its anti-HCV ribozyme for the treatment of Hepatitis C.
Lilly purchased five shares of the Company's Series L convertible preferred
stock for $7.5 million in April 1999. Separately, Eli Lilly provided funding for
research of $1.7 million in 1999. Eli Lilly will pay approximately $2.9 million
for support of research in 2000, including a $500,000 milestone payment for the
IND filing. The Company could receive as much as $38 million from Eli Lilly
under the collaboration prior to commercialization if development milestones are
met. All payments are subject to some restrictions. Upon payment of termination
fees to the Company, the research collaboration may be terminated at Eli Lilly's
option at any time.
Elan Transaction. In January 2000 the Company entered into a joint venture
with Elan for the development and commercialization of HERZYME, the Company's
potential product to treat breast and other cancers. As part of the joint
venture, Medizyme, the Company contributed $12.0 million in initial funding to
Medizyme in exchange for 80.1% of Medizyme's capital stock. This capital
contribution was funded by the Company's sale to Elan of its Series A
convertible exchangeable preferred stock for $12.0 million. The Series A
preferred stock has a dividend rate of 6.0%. At the end of the development
period, expected to be mid-2002, Elan has the right to exchange the Series A
preferred stock for 30.1% of the capital stock of Medizyme owned by the Company
or convert it prior to January 2006 into up to approximately 1.2 million shares
of common stock.
Elan purchased 641,026 shares of common stock for $5.0 million and
committed to purchase an additional $5.0 million of common stock in May 2001 at
a per share price representing a premium of up to 30% of the price based on the
average closing price for the 45 trading days preceding the purchase, but not
less than such 45 trading-day average. In addition, Elan received warrants to
purchase 500,000 shares of common stock at an average exercise price of $18.00.
Medizyme paid a license fee of $15.0 million to Elan for the use of its
MEDIPAD(R) drug delivery
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<PAGE>
technology. As a result of this licensing transaction, it is likely that
Medizyme will capitalize the entire license fee and amortize the balance over
the three-year term of the agreement. The Company will account for its
investment in Medizyme under the equity method. The Company estimates that
Medizyme will require $15.0 million in funding through the development period to
cover future operating and development costs. Elan has provided the Company with
a $12.0 million credit facility on a draw-down basis to fund the Company's
portion of Medizyme's operating costs over a 30-month period. Elan may convert
this debt into shares of Series B convertible preferred stock. The Series B
preferred stock has a dividend rate of 12.0% and may be converted at any time
into common stock at a 50% premium to the average price of common stock for the
60 trading days prior to the time of the applicable draw down on the credit
facility.
PROPOSAL 2--AMENDMENT OF THE COMPANY'S
CERTIFICATE OF INCORPORATION
TO INCREASE AUTHORIZED COMMON STOCK
The Company's Certificate of Incorporation, as currently in effect,
provides that the authorized capital stock shall consist of twenty million
(20,000,000) shares of common stock, $0.01 par value, and five million
(5,000,000) shares of preferred stock, $0.01 par value. On March 6, 2000, the
Company's Board approved an amendment to the Certificate of Incorporation to
increase the number of shares of authorized common stock by 40,000,000 to a
total of 60,000,000 shares. The text of the amendment is set forth in Exhibit A
attached hereto. This amendment does not increase authorized shares of preferred
stock. As of March 3, 2000, the Company has 11,940,230 shares outstanding and an
additional 5,056,129 shares have been reserved for the following purposes:
. 1,752,951 shares issuable under the Company's stock option
plan;
. 1,337,458 shares issuable upon the exercise of outstanding warrants at a
weighted average exercise price of $18.00 per share;
. up to 200,000 shares issuable to Schering AG upon conversion of outstanding
debt;
. 300,000 shares issuable upon conversion of the Company's Series L
convertible preferred stock;
. up to 1,200,000 shares issuable upon conversion of the Company's Series A
convertible exchangeable preferred stock;
. 29,959 shares issuable under the Company's 401(k) salary reduction plan
and trust;
. 85,761 shares issuable under the Company's employee stock purchase plan;
and
. up to 150,000 shares issuable to Elan in May 2001.
On March 2, 2000, the Company filed a registration statement with the SEC
to offer 3,150,000 shares of its common stock. In order to have shares available
for this offering, the sole holder of the outstanding Series L convertible
preferred stock waived a requirement pursuant to the Company's agreement with it
that the Company reserve 1,500,000 shares of its common stock for issuance upon
conversion of the Series L preferred stock. In addition, the Company's Board of
Directors reduced the shares available for issuance pursuant to the Company's
401(K) Plan by 200,000 shares and pursuant to the Company's Employee Stock
Purchase Plan by 50,000 shares. If the proposed offering is successful, the
Company will have less than 4,000 shares available for issuance. As a result,
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<PAGE>
unless the amendment is approved and the number of authorized shares is
increased, the Company will be unable to issue additional shares to raise
additional equity financing, or in connection with potential future
collaborations or acquisitions. Moreover, unless the amendment is approved, the
Company would not have the shares available for the proposed increase in the
number of options available under the Company's Stock Option Plan (see "Proposal
3") or for other employee incentive or benefit plans. In addition, in connection
with the Company's joint venture with Elan Corporation plc, Elan has provided a
convertible credit facility to the Company to allow the Company to meet its
funding obligations of the joint venture in the future. In order to draw upon
this facility the Company must reserve additional common stock into which the
convertible note is ultimately convertible. Since the Company has few additional
shares available, it will not be able to draw on this credit facility unless the
amendment is approved.
If the amendment and increase in authorized shares is approved, the Company
will reserve 1,200,000 of the newly authorized shares for conversion of the
Series L preferred stock, an additional 200,000 shares for issuance under the
401(K) Plan to restore the amounts available under this plan to its original
amount and 50,000 shares under the Employee Stock Purchase Plan to restore the
amounts available under this plan to its original amount. If the proposed
amendment to the Stock Option Plan is approved, an additional 750,000 shares
will be reserved for issuance under that plan. In addition, as the Elan credit
facility is drawn upon, the Company will reserve from time to time such number
of shares of common stock into which the convertible note may be converted in
the future.
The proposal to increase the number of authorized shares of common stock to
60,000,000 shares is also being made to enable the Board of the Company to issue
additional shares from time to time as it determines desirable. Among the
possible purposes for which these additional shares would be available are the
declaration and issuance of stock dividends, issuance under the Stock Option
Plan and stock option plans that may be adopted in the future, issuance under
the 401(k) plan and the Employee Stock Purchase Plan, issuance in public or
private offerings to raise additional capital, issuance in acquisitions or
reservation for future issuance in the event additional convertible preferred
stock or convertible debt is issued.
The authorized but unissued shares of common stock could be used by the
incumbent Board of Directors to make a change in control of the Company more
difficult. Under certain circumstances, such shares could be used to frustrate
persons seeking to effect a takeover or otherwise gain control of the Company.
For example, it may be possible to privately place shares with purchasers who
might assist the Board in opposing a hostile takeover bid.
Company shareholders do not have preemptive rights to purchase common stock
in future issuances of Common Stock. Therefore, any future issuances of common
stock would dilute the ownership percentage and voting control of the current
shareholders and could decrease the per share earnings ratio and other per share
ratios.
The Company currently has no firm plans, understandings or agreements to
issue the additional authorized shares of common stock other than described
above or pursuant to its benefit plans. UNLESS REQUIRED BY LAW OR THE RULES OF
NASDAQ, NO FURTHER AUTHORIZATION OR VOTE OF COMPANY SHAREHOLDERS WILL BE NEEDED
FOR THE ISSUANCE OF ANY AUTHORIZED SHARES, INCLUDING ISSUANCE OF COMMON STOCK IN
FUTURE OFFERINGS.
The affirmative vote of the shareholders holding 66 2/3% of the outstanding
shares of common stock is required to approve the amendment to the Certificate
of Incorporation to increase the authorized shares of common stock to
60,000,000.
The Board recommends that shareholders vote FOR THE AMENDMENT TO THE
---
CERTIFICATE OF INCORPORATION TO INCREASE THE AUTHORIZED SHARES OF COMMON STOCK.
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<PAGE>
PROPOSAL 3--APPROVAL OF AN INCREASE IN THE NUMBER
OF OPTIONS WHICH MAY BE GRANTED UNDER THE
COMPANY'S 1996 STOCK OPTION PLAN
In March 1996, the Company amended, restated and merged its stock option
plans and named the resulting plan the 1996 Stock Option Plan (the "Plan"). The
Plan currently authorizes the grant of options to purchase up to 2,017,154
shares of the Company's common stock. As of March 3, 2000, options to purchase
1,694,814 shares were outstanding under the Plan. The Plan will terminate in
January 2006, unless earlier terminated by the Board of Directors. For a
detailed description of the Plan see "PROPOSAL 1--ELECTION OF DIRECTORS--Stock
Option Plan."
The Company's Board of Directors has proposed that the total number of
shares of common stock which may be issued upon the exercise of options granted
under the Plan be increased by 750,000, from 2,017,154 to 2,767,154 to insure
additional options are available in the future to compensate and motivate
existing employees and to attract employees in the future. Pursuant to the terms
of the Plan, an increase in the number of shares of common stock which may be
issued upon the exercise of options under the Plan must be approved by the
shareholders of the Company. In all other respects, the terms of the Plan will
remain unchanged.
The Board of Directors recommends that shareholders vote FOR APPROVAL OF AN
---
INCREASE OF 750,000 IN THE NUMBER OF SHARES OF COMMON STOCK WHICH MAY BE ISSUED
UPON THE EXERCISE OF OPTIONS GRANTED UNDER THE 1996 STOCK OPTION PLAN.
PROPOSAL 4--RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
Ernst & Young LLP has served as the Company's independent auditors since
1992 and for the years ended December 31, 1992, through December 31, 1999. At
the Annual Meeting, shareholders will be asked to ratify the appointment of
Ernst & Young LLP as the Company's independent auditors for the year ending
December 31, 2000.
Representatives of Ernst & Young LLP are expected to be present at the
Annual Meeting and will be available to respond to appropriate questions. Such
representatives of Ernst & Young LLP will also have the opportunity to make a
statement if they desire to do so.
The Board of Directors recommends that shareholders vote FOR RATIFICATION
---
OF THE SELECTION OF ERNST & YOUNG LLP AS THE COMPANY'S INDEPENDENT AUDITORS FOR
2000.
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<PAGE>
FILING OF SEC REPORTS
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
executive officers, directors and persons who beneficially own more than 10
percent of the common stock of the Company to file initial reports of ownership
and reports of changes in ownership with the SEC. Such persons are also required
by SEC regulations to furnish the Company with copies of these reports. Based
solely on a review of the copies of such reports furnished to the Company, the
Company believes that its executive officers, directors and greater than 10
percent beneficial owners complied with all Section 16(a) filing requirements,
except that Dr. Cowens inadvertently made a late filing when he was hired by the
Company.
FINANCIAL STATEMENTS
An annual report, including financial statements of the Company prepared in
conformity with generally accepted accounting principles, is being distributed
to all Company shareholders of record and is enclosed herewith. The Company's
annual report to the SEC on Form 10-K may be obtained without charge upon
written request directed to Lawrence E. Bullock, Secretary, 2950 Wilderness
Place, Boulder, Colorado 80301.
SHAREHOLDERS' PROPOSALS
It is expected that the 2001 Annual Meeting of Shareholders of the Company
will be held on or about May 18, 2001. Any proposals intended to be presented at
the 2001 Annual Meeting must be received at the Company's offices on or before
December 18, 2001, in order to be considered for inclusion in the Company's
Proxy Statement and form of Proxy relating to such meeting.
OTHER MATTERS
The Annual Meeting is called for the purposes set forth in this notice.
Management is not aware of any other matter that will come before the meeting.
However, if any other business should come before the meeting, your Proxy, if
signed and returned, will give to the persons designated in it discretionary
authority to vote according to their best judgment. It is the intention of the
persons named in the Proxy to vote pursuant to the Proxy in accordance with the
recommendations of management.
By Order of the Board of Directors
Lawrence E. Bullock, Secretary
Date: March 17, 2000
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<PAGE>
EXHIBIT A
ARTICLES OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
RIBOZYME PHARMACEUTICALS, INC.
Ribozyme Pharmaceuticals, Inc., a company organized and existing under the
laws of the State of Delaware, does hereby certify:
FIRST: The name of the corporation is Ribozyme Pharmaceuticals, Inc.
("Company").
SECOND: The following amendment to the Certificate of Incorporation was
adopted by the Board of Directors of the Company by unanimous written consent on
March __, 2000, and adopted by a vote of shareholders on April 19, 2000:
RESOLVED, that the Amended and Restated Certificate of Incorporation of the
Company (the "Certificate of Incorporation"), be amended by deleting
Article IV(A) in its entirety and substituting the following:
A. This corporation is authorized to issue two classes of stock to be
designated, respectively, "Common Stock" and "Preferred Stock." The total
number of shares which the corporation is authorized to issue is sixty-five
million (65,000,000) shares. Sixty million (60,000,000) shares shall be
Common Stock, each having a par value of $.01. Five million (5,000,000)
shares shall be Preferred Stock, each having a par value of $.01.
In all other respects, the Certificate of Incorporation shall remain
unchanged.
IN WITNESS WHEREOF, the Company has caused these Articles of Amendment to
the Certificate of Incorporation to be signed by Lawrence E. Bullock, Vice
President of Administration and Finance, CFO and Secretary, this ______ day of
April, 2000.
RIBOZYME PHARMACEUTICALS, INC.
Lawrence E. Bullock, Vice President of
Administration and Finance, CFO and Secretary
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<PAGE>
REVOCABLE PROXY
RIBOZYME PHARMACEUTICALS, INC.
Solicited by the Board of Directors for
Annual Meeting of Shareholders
April 19, 2000
The undersigned holder of common stock of Ribozyme Pharmaceuticals, Inc., a
Colorado corporation (the "Company"), acknowledges receipt of a copy of the
Notice of Annual Meeting of Shareholders dated March 17, 2000, and, revoking any
proxy heretofore given, hereby appoints Dr. Ralph E. Christoffersen and Dr.
Nassim Usman, and each of them, with full power to each of substitution as
attorneys and proxies to appear and vote all shares of common stock of the
Company registered in the name(s) of the undersigned and held by the undersigned
of record as of March 13, 2000, at the Annual Meeting of Shareholders of the
Company to be held at the Company's principal office, 2950 Wilderness Place,
Boulder, Colorado, on April 19, 2000, at 8:00 a.m., and at any postponements and
adjournments thereof, upon the following items as set forth in the Notice of
Annual Meeting and to vote according to their discretion on all other matters
which may be properly presented for action at the meeting. All properly executed
proxies will be voted as indicated.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED "FOR" THE FOLLOWING ITEMS:
(1) To elect as directors the nominees listed below.
____ FOR ALL nominees listed below (except as marked to the
contrary).
____ WITHHOLD AUTHORITY to vote for all nominees listed below.
Instruction: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THAT NOMINEE'S NAME IN THE LIST BELOW:
Ralph E. Christoffersen, Jeremy L. Curnock Cook, John Groom,
David T. Morgenthaler, Samuel R. Saks, Anders P. Wiklund, David
G. Ichikawa
(2) To approve an amendment to the Company's Certificate of
Incorporation to increase the number of authorized
shares of common stock by 40,000,000 to 60,000,000.
____ FOR ____ AGAINST ____ ABSTAIN
(3) To approve an increase in the number of shares subject to options
which may be granted under the Company's Stock Option Plan
by 750,000 to 2,767,154.
____ FOR ____ AGAINST ____ ABSTAIN
<PAGE>
(4) To ratify the selection of Ernst & Young LLP as independent
auditors for the Company for the year ending December 31, 2000.
____ FOR ____ AGAINST ____ ABSTAIN
(5) In their discretion, the proxy holders are authorized to vote
upon such other business as may properly come before the meeting
or matters incidental to the conduct of the meeting.
THIS PROXY IS SOLICITED BY AND ON BEHALF OF THE BOARD OF DIRECTORS AND MAY BE
REVOKED PRIOR TO ITS EXERCISE. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
PROPOSALS 1, 2, 3 AND 4. THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS
DIRECTED. IF NO DIRECTION IS MADE IT WILL BE VOTED "FOR" PROPOSALS 1, 2, 3 AND
4.
WITNESS my hand this ______ day of ____________________, 2000.
- ------------------------
(Please sign exactly as name appears hereon.
Name and Address of When signing as attorney, executor, administrator,
Company Shareholder(s) trustee or guardian, give full title as such. If a
corporation, please affix corporate seal. If a
partnership, please sign in partnership name by
authorized persons. If joint tenants, each joint
- ------------------------ tenant should sign.)
_____________________________
_____________________________
Signature of Shareholder(s)
WHETHER OR NOT YOU PLAN TO ATTEND THIS MEETING, PLEASE MARK, SIGN, DATE AND
RETURN THIS PROXY CARD PROMPTLY BY USING THE ENCLOSED POSTAGE-PAID ENVELOPE.
I/WE DO ____ DO NOT ___ EXPECT TO ATTEND THIS ANNUAL MEETING OF SHAREHOLDERS.
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