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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 [_]
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
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
GeneMedicine, Inc.
- --------------------------------------------------------------------------------
(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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(3) Filing Party:
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(4) Date Filed:
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Notes:
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GENEMEDICINE, INC.
8301 New Trails Drive
The Woodlands, TX 77381-4248
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 11, 1998
TO THE STOCKHOLDERS OF GeneMedicine, inc.:
Notice Is Hereby Given that the Annual Meeting of Stockholders of
GeneMedicine, inc., a Delaware corporation (the "Company"), will be held on
Thursday, June 11, 1998 at 3:00 p.m. local time, at the Company's offices at
8301 New Trails Drive, The Woodlands, Texas, for the following purposes:
1. To elect two directors to serve until the 2001 Annual Meeting of
Stockholders and until their successors are elected.
2. To transact such other business as may properly come before the
meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on April 24,
1998 as the record date for the determination of stockholders entitled to notice
of and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
Richard A. Waldron
Vice President, Chief Financial Officer
and Secretary
The Woodlands, Texas
May 5, 1998
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN
PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE,
SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE
YOUR REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID
IF MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING.
PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK
OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE
RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE>
GENEMEDICINE, INC.
8301 New Trails Drive
The Woodlands, Texas 77381-4248
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
JUNE 11, 1998
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
GeneMedicine, inc., a Delaware corporation (the "Company"), for use at the
Annual Meeting of Stockholders to be held on June 11, 1998, at 3:00 p.m. local
time (the "Annual Meeting"), or at any adjournment or postponement thereof, for
the purposes set forth herein and in the accompanying Notice of Annual Meeting.
The Annual Meeting will be held at the offices of the Company, 8301 New Trails
Drive, The Woodlands, Texas. The Company intends to mail this proxy statement
and accompanying proxy card on or about May 5, 1998 to all stockholders entitled
to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies
including preparation, assembly, printing and mailing of this proxy statement,
the proxy and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses, fiduciaries
and custodians holding in their names shares of Common Stock beneficially owned
by others to forward to such beneficial owners. The Company may reimburse
persons representing beneficial owners of Common Stock for their costs of
forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or
other regular employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock and Series B Preferred Stock at
the close of business on April 24, 1998 will be entitled to notice of and to
vote at the Annual Meeting. At the close of business on April 24, 1998, the
Company had outstanding and entitled to vote 14,515,101 shares of Common Stock
and 3,750,000 shares of Series B Preferred Stock.
Each holder of record of Common Stock on such date will be entitled to
one vote for each share held on all matters to be voted upon at the Annual
Meeting. Each Holder of record of Series B Preferred Stock will be entitled to
one vote for each three and one-half shares held on all matters to be voted upon
at the Annual Meeting.
All votes will be tabulated by the inspector of election appointed for
the meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power
to revoke it at any time before it is voted. It may be revoked by filing with
the Secretary of the Company at the Company's principal executive office, 8301
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New Trails Drive, The Woodlands, TX 77381-4248, a written notice of revocation
or a duly executed proxy bearing a later date, or it may be revoked by attending
the meeting and voting in person. Attendance at the meeting will not, by
itself, revoke a proxy.
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the
Company's 1999 Annual Meeting of Stockholders must be received by the Company
not later than January 3, 1999 in order to be included in the proxy statement
and proxy relating to that Annual Meeting.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation and
By-laws provide that the Board of Directors shall be divided into three classes,
designated as Class I, Class II and Class III, respectively, each class
consisting, as nearly as possible, of one third of the total number of
directors, with each class having a three-year term. Vacancies on the Board,
including those created by an increase in the number of authorized directors,
may be filled only by persons elected by a majority of the remaining directors.
A director elected by the Board to fill a vacancy (including a vacancy created
by an increase in the number of authorized directors) shall serve for the
remainder of the full term of the class of directors in which the vacancy
occurred and until such director's successor is elected and qualified.
The Board of Directors is presently composed of six members. There are
two directors in the class whose term of office expires in 1998. Each of the
nominees for election to this class is currently a director of the Company who
was previously elected by the stockholders. If elected at the Annual Meeting,
each of the nominees would serve until the 2001 annual meeting and until his
successor is elected and has qualified, or until such director's earlier death,
resignation or removal.
Directors are elected by a plurality of votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented by
executed proxies will be voted, if authority to do so is not withheld, for the
election of the two nominees named below. In the event that any nominee should
be unavailable for election as a result of an unexpected occurrence, such shares
will be voted for the election of such substitute nominee as management may
propose. Each person nominated for election has agreed to serve if elected, and
management has no reason to believe that any nominee will be unable to serve.
Set forth below is biographical information for each person nominated
and each person whose term of office as a director will continue after the
Annual Meeting.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2001 ANNUAL MEETING
MR. EDWARD L. CAHILL, age 45, has been a director of the Company since
November 1995. Mr. Cahill is a partner of Cahill, Warnock & Company, an asset
management and venture capital firm. He was previously a managing director at
Alex. Brown & Sons Incorporated, where he led the firm's health care investment
banking group. He also is a director of Automated Healthcare, Inc. and the
Maryland Bioprocessing Center. Mr. Cahill earned an A.B. degree from Williams
College and a master's degree in management from Yale University.
MR. ARTHUR M. PAPPAS, age 50, has been a director of the Company since
January 1995. Mr. Pappas is Chairman and Chief Executive Officer of A.M. Pappas
& Associates, LLC., an international management and consulting services company
and investor in the high technology life science industries. From 1989 until
1994, Mr. Pappas held executive and board positions with Glaxo Holdings plc, a
pharmaceutical company, where his most recent position was as a member of the
main Board of Directors with responsibilities for operations in Asia Pacific,
Latin America and Canada.
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Mr. Pappas' 27 years of experience in the health care industry also includes
positions with the pharmaceutical companies of Merrell Dow Pharmaceuticals and
Abbott Laboratories International, Inc. Mr. Pappas is a member of the Board of
Directors of Quintiles Transnational Corp., KeraVision, Inc., Embrex, Inc., and
one private company. Mr. Pappas received a B.S. degree in Biology from the Ohio
State University and a M.B.A. degree in Finance from Xavier University.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE
DIRECTORS CONTINUING IN OFFICE UNTIL THE 1999 ANNUAL MEETING
STANLEY T. CROOKE, M.D., PH.D., age 53, has been a director of the
Company since March 1992 and its Chairman of the Board since March 1996. Dr.
Crooke has been Chief Executive Officer and a director of Isis Pharmaceuticals,
Inc. ("Isis"), a biotechnology company, since he co-founded Isis in January
1989, and he has served as Chairman of the Board of Isis since February 1991.
From 1980 until January 1989, Dr. Crooke was employed by SmithKline Beckman
Corporation ("SmithKline"), a pharmaceutical company, most recently as President
of Research and Development of SmithKline & French Laboratories. Prior to
joining SmithKline, he served as Vice President and Associate Research Director
of Bristol Laboratories, a subsidiary of Bristol-Myers Squibb Company, a
pharmaceutical company. Dr. Crooke is a member of the Board of Directors of
SIBIA Neurosciences, Inc., EPIX Medical Inc., and Biotechnology Industry
Organization. Dr. Crooke received a Ph.D. degree in Pharmacology and an M.D.
degree from Baylor College of Medicine, where he served for a number of years as
Adjunct Professor of Pharmacology. He currently serves as Adjunct Professor of
Pharmacology at the University of California, San Diego.
BERT W. O'MALLEY, M.D., age 61, one of the Company's founders, has been a
director of the Company since April 1998. Dr. O'Malley has been Chairman of the
Department of Cell Biology at Baylor College of Medicine and a Director of the
Baylor Center for Population Research and Reproductive Biology since 1973. He
is a member of the National Academy of Science and the Institute of Medicine and
the author of more than 500 scientific publications. Dr. O'Malley's scientific
work has included major achievements in the areas of medical endocrinology and
reproduction with potentially broad application to the diagnosis of human
genetic diseases and the treatment of breast and prostatic cancer. His work
includes the invention of the Company's proprietary GeneSwitch/TM/ technology
that allows for the greater control of the level and duration of the expression
of the therapeutic protein produced by a gene medicine. Dr. O'Malley holds a
B.S. and a M.D. degree from the University of Pittsburgh.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2000 ANNUAL MEETING
MR. DAVID F.J. LEATHERS, age 55, has been a director of the Company
since May 1993. Mr. Leathers has been a director of Abingworth Management
Limited, a venture capital firm based in London, since 1987. Prior to 1987, Mr.
Leathers was an Investment Director at N.M. Rothschild & Sons Limited, a London-
based merchant bank. Mr. Leathers is also a director of several private
companies. Mr. Leathers is a Chartered Accountant in the United Kingdom.
ERIC TOMLINSON, D.SC., PH.D., age 50, one of the Company's founders,
has been Vice Chairman of the Board of Directors since April 1998 and a director
of the Company since July 1992. Dr. Tomlinson was President and Chief Executive
Officer of the Company from July 1992 until April 1998. Dr. Tomlinson was
President and Chief Executive Officer of Somatix Corporation from February 1990
until 1991, and served as a consultant there from April 1991 until March 1992.
From 1984 to 1990, he was worldwide Head of Advanced Drug Delivery Research for
Ciba-Geigy Pharmaceuticals, where he led its multidisciplinary program in site-
specific drug delivery. From 1979 to 1984, Dr. Tomlinson was Professor of
Pharmaceutical Chemistry at Amsterdam University. Dr. Tomlinson received a
Ph.D. and a D.Sc. degree from London University and an honorary D.Sc. degree
magna cum laude from the United
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Kingdom Council for National Academic Awards. He was a Fulbright-Hays Scholar
and has authored or co-authored more than 210 scientific publications.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 31, 1997, the Board of Directors
held four regular meetings, one special telephonic meeting and one strategic
review meeting. The Board has an Audit Committee, a Compensation Committee and
a Nominating Committee.
The Audit Committee meets with the Company's independent auditors at
least annually to: review the results of the annual audit and discuss the
financial statements; recommend to the Board the independent auditors to be
retained; and receive and consider the accountants' comments as to controls,
adequacy of staff and management performance and procedures in connection with
audit and financial controls. The Audit Committee is composed of three non-
employee directors: Mr. Leathers, Mr. Pappas and Mr. Cahill. The Audit Committee
met one time during the fiscal year ended December 31, 1997.
The Compensation Committee makes recommendations concerning salaries
and incentive compensation, awards stock options to employees and consultants
under the Company's stock option plans and otherwise determines compensation
levels and performs such other functions regarding compensation as the Board may
delegate. The Compensation Committee is composed of three non-employee
directors: Dr. Crooke, Mr. Leathers and Mr. Pappas. The Compensation Committee
met four times during the fiscal year ended December 31, 1997.
The Nominating Committee interviews, evaluates, nominates and
recommends individuals for membership on the Company's Board of Directors and
committees thereof and nominates specific individuals to be elected as officers
of the Company by the Board of Directors. No procedure has been established for
the consideration of nominees recommended by stockholders. Dr. Crooke is
currently the sole member of the Nominating Committee. During the fiscal year
ended December 31, 1997 this Committee did not meet.
During the fiscal year ended December 31, 1997, all directors attended
at least 75% of the aggregate of the meetings of the Board, and of the
committees on which they served, held during the period for which they were a
director or committee member, respectively.
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SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
ownership of the Company's Common Stock as of April 11, 1998 by: (i) each
director and nominee for director; (ii) each of the "Named Executive
Officers"(as defined below); (iii) all executive officers and directors of the
Company as a group; and (iv) all those known by the Company to be beneficial
owners of more than five percent of its Common Stock.
BENEFICIAL OWNERSHIP (1)
------------------------
NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES TOTAL
- ---------------- ---------- ----------
Entities affiliated with Roche Holding Ltd (2)
Grenzacherstrasse 124, CH-4070
Basel, Switzerland 4,072,595 24.4%
Biotechnology Investment Group, L.L.C
1055 Washington Blvd
Stamford, CT 06901 (3) 1,047,155 6.7%
Abingworth Bioventures
c/o Sanne & Cie
Boite Postale 566
L-2015 Luxembourg (4) 987,144 6.3%
State of Wisconsin Investment Board
121 East Wilson
Madison, WI 53702 930,000 6.0%
Michael G. Jesselson
1301 Avenue of the Americas, Suite 4101
New York, NY 10019 (5) 831,700 5.3%
Josef F. Bossart (6) 120,112 *
Edward L. Cahill (6) 16,250 *
Stanley T. Crooke (6) 49,196 *
Norman Hardman (6) 65,444 *
David F.J. Leathers (3)(6) 1,006,736 6.5%
Bert W. O'Malley (6) 124,806 *
Arthur M. Pappas (6) 33,250 *
Kathryn N. Stankis (6) 59,003 *
Eric Tomlinson (6) 407,919 2.6%
Richard A. Waldron (6) 63,077 *
All executive officers and directors
as a group (12 persons) (7) 2,115,688 13.0%
- --------------------
* Less than 1 percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G filed with the Securities
and Exchange Commission (the "SEC"). Unless otherwise indicated in the
footnotes to this table and subject to community property laws where
applicable, the Company believes that each of the stockholders named in
this table has sole voting and investment power with respect to the shares
indicated as beneficially owned. Applicable percentages are based on
15,586,529 shares outstanding on April 11, 1998, (assuming conversion of
the outstanding shares of the Company's Series B Preferred Stock) adjusted
as required by rules promulgated by the SEC.
(2) Includes 2,142,856 and 1,929,739 of Common Stock beneficially held by
Syntex Corporation ("Syntex") and Corange International Limited
("Corange"), respectively. Syntex is a wholly owned subsidiary of Roche
Capital Corporation, a Panamanian corporation, which in turn is a wholly
owned subsidiary of Sapac Corporation Limited ("Sapac"). Sapac is
incorporated as a non-resident corporation under the laws of the Province
of New Brunswick, Canada with its principal executive offices in Uruguay.
Sapac is, in turn, a
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wholly owned subsidiary of Roche Holding Ltd, a Swiss corporation
("Holding"). On March 5, 1998, Roche Healthcare Limited, a Bermuda
corporation, consummated its acquisition of all of the outstanding capital
stock of Corange. Roche Healthcare Limited is a wholly owned subsidiary of
Roche Finance Ltd., a Swiss corporation, which in turn, is a wholly owned
subsidiary of Holding. Syntex ownership includes (i) 3,750,000 shares of
Series B Preferred Stock reflected on an as converted basis, at a
conversion rate of one (1) share of Common Stock for each three and one-
half (3.5) shares of Series B Preferred Stock (for an aggregate of
1,071,428 shares of Common Stock) and (ii) 1,071,428 shares of Common Stock
issuable upon exercise of a warrant that expires in April 1999 and has an
exercise price of $21.00 per share. Corange has agreed to invest $20
million in the common equity of the Company at $4 million per year. The
first four $4 million equity investments were made in July 1995, February
1996, February 1997 and February 1998 in which 444,444, 418,629, 533,333
and 533,333 shares of Common Stock were issued at $9.00, $9.56, $7.50 and
$7.50 per share, respectively. According to its agreement with the Company,
Corange will make an additional $4 million equity investment in February
1999 at a minimum price of $7.50 per share. Dr. Paul Sacher, an individual
and citizen of Switzerland has, pursuant to an agreement, the power to vote
a majority of the voting securities of Holding. The business address of Dr.
Sacher is Haus auf Burg, Muensterplatz 4, Basel 4051, Switzerland.
(3) Includes (i) 999,062 shares in which investment and voting authority is
shared with The Edward Blech Trust and The Wilmington Trust as voting
trustee, (ii) 35,714 shares held by Schroders Incorporated ("Schroders"),
and (iii) 12,379 shares held with sole investment and voting authority.
Collinson Howe Venture Partners, Inc. ("CHVP") is the Managing Member of
Biotechnology Investment Group, L.L.C. CHVP also advises Schroders under
advisory agreements and shares investment and voting power over the shares
held by Schroders.
(4) David F.J. Leathers, a director of the Company, is a Director of Abingworth
Management Limited, the investment advisor to Abingworth Bioventures. Mr.
Leathers is a shareholder of Abingworth Bioventures, but not an officer or
director thereof. Mr. Leathers disclaims beneficial ownership of all such
shares except to the extent of his shareholder interest therein.
(5) Includes (i) 507,500 shares held directly by Michael G. Jesselson, (ii)
302,700 held in a trust in which Michael G. Jesselson, Benjamin J.
Jesselson, Erica Jesselson and Lucy Lang are trustees, and (iii) 21,500
shares held by Michael G. Jesselson's spouse, Linda Jesselson.
(6) Includes shares which certain executive officers and directors of the
Company have the right to acquire within 60 days after the date of this
table pursuant to outstanding options as follows: Josef F. Bossart, 59,140
shares; Edward L. Cahill, 16,250 shares; Stanley T. Crooke, 30,625 shares;
Norman Hardman, 65,444 shares; David F.J. Leathers, 19,592 shares; Bert W.
O'Malley, 65,412 shares; Arthur M. Pappas, 26,250 shares; Kathryn N.
Stankis, 31,190 shares; Eric Tomlinson, 225,593 shares; Richard A. Waldron,
58,500 shares; and all executive officers and directors as a group, 664,804
shares.
(7) Includes shares described in notes (4), and (6) above.
COMPLIANCE WITH THE REPORTING REQUIREMENTS OF SECTION 16(A)
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than ten percent of a registered
class of the Company's equity securities, to file with the SEC initial reports
of ownership and reports of changes in ownership of Common Stock and other
equity securities of the Company. Officers, directors and greater than ten
percent stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.
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To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1997, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.
INDEPENDENT AUDITORS
Arthur Andersen LLP has audited the Company's financial statements
since its inception in 1992. Representatives of Arthur Andersen LLP are expected
to be present at the Annual Meeting, will have an opportunity to make a
statement if they so desire and will be available to respond to appropriate
questions. The Board of Directors has not yet selected independent auditors for
the fiscal year ending December 31, 1998. The Company is in the process of
reviewing if Arthur Andersen LLP can continue to serve as independent auditors
in light of a family relationship issue which has arisen due to the recent
appointment of a Board of Director member. After resolution of this issue, the
Board of Directors will select independent auditors for the fiscal year ending
December 31, 1998.
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
During 1997, each non-employee director of the Company received a per
meeting fee of $2,000 (plus $500 for each committee meeting attended by
committee members). In the fiscal year ended December 31, 1997, non-employee
directors as a group received $57,000 in cash compensation for service on the
Board of Directors and committees thereof. The members of the Board of
Directors are also eligible for reimbursement for their expenses incurred in
connection with attendance at Board meetings in accordance with Company policy.
In July 1996, the Company entered into a consulting agreement with
Bert W. O'Malley. The consulting agreement requires the Company to pay Dr.
O'Malley $2,000 for each day of consulting work authorized by the Company.
During 1997, the Company paid $52,250 under this agreement. In addition, in
July 1996 and July 1997, the Company entered into sponsored research agreements
with Baylor College of Medicine ("Baylor") under which Dr. O'Malley was
specified as Principal Investigator. During 1997, the Company paid $189,000 to
Baylor under these sponsored research agreements. The Company is committed to
paying $101,000 in 1998 under the current research agreement.
Non-employee directors of the Company are eligible to receive stock
option grants under the Company's Non-Employee Directors' Stock Option Plan (the
"Directors' Plan"). Only non-employee directors of the Company or an affiliate
(as defined in the Internal Revenue Code) of the Company are eligible to receive
options under the Directors' Plan. During the year ended December 31, 1997,
under the Directors' Plan the Company granted to all non-employee Directors as a
group options to purchase 25,000 shares of the Company's Common Stock at an
exercise price of $6.88 per share.
Option grants under the Director's Plan are non-discretionary. Each
person who becomes a non-employee director of the Company shall, upon the date
of initial election as a non-employee director, be granted an option to purchase
30,000 shares of Common Stock of the Company. In addition, annually on April
26th, each non-employee director who has been a non-employee director for at
least six months shall be granted an option to purchase 5,000 shares of Common
Stock of the Company. No other options may be granted under the Directors' Plan.
The exercise price of options granted under the Directors' Plan shall be equal
to 100% of the fair market value of the Common Stock subject to the option on
the date of the option grant. All options under the Directors' Plan vest over a
period of four years from the date of grant in four equal installments
commencing on the first anniversary of the date of grant. The term of options
granted under the Directors' Plan is ten years. In the event of a dissolution or
liquidation of the Company, a merger or consolidation in which the Company is
not the surviving corporation, a reverse merger in which the Company is the
surviving corporation by the shares of the Company's Common Stock outstanding
immediately preceding the merger were converted by virtue of the merger into
other property, or any capital
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reorganization in which more than 50% of the shares of the Company entitled to
vote are exchanged, the vesting of any outstanding options under the Directors'
Plan shall accelerate and such options shall terminate if unexercised prior to
the occurrence of the event.
COMPENSATION OF EXECUTIVE OFFICERS
The following table provides certain summary information concerning
compensation paid to, or earned by, during the last three fiscal years the
Company's Chief Executive Officer and its four other most highly compensated
executive officers, determined as of the end of the last fiscal year in
accordance with the rules of the SEC (the "Named Executive Officers"):
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
--------------- ------------
Securities
Salary Bonus Underlying All Other
Name and Principal Position Year ($) ($) Options(#) Compensation
--------------------------- ---- ------ ----- ---------- ------------
<S> <C> <C> <C> <C> <C>
Dr. Eric Tomlinson 1997 304,164 - 50,000 -
President and Chief Executive Officer(2) 1996 282,850 - 40,000 -
1995 258,750 - 20,000 7,835
Dr. Norman Hardman 1997 165,865 25,000 150,000 56,419
Senior Vice President and
Chief Operating Officer(3)
Dr. Josef F. Bossart
Vice President and Chief Business Officer(4) 1997 150,417 25,000 135,000 79,605
Mr. Richard A. Waldron 1997 178,637 - 8,333 -
Vice President and Chief Financial Officer(5) 1996 167,842 - 88,333(6) 20,890
1995 71,634 15,000 - 38,549
Ms. Kathryn N. Stankis 1997 132,294 - 5,000 -
Vice President, Human Resources 1996 126,998 - 10,000 -
1995 122,253 - 5,500 3,424
Dr. Thomas H. Rossing 1997 141,954 25,000 - -
Former - Vice President, Clinical Development 1996 112,931 50,000 100,000 62,097
& Regulatory Affairs
</TABLE>
(1) During 1997 (i) Dr. Hardman and Dr. Bossart received relocation assistance
of $62,097 and $71,688, respectively and (ii) Dr. Bossart received $7,917
for consulting services prior to his employment by the Company. During
1996, Dr. Rossing and Mr. Waldron received relocation assistance of $62,097
and $20,890, respectively. During 1995, Dr. Tomlinson, Mr. Waldron and Ms.
Stankis received relocation assistance allowance of $7,835, $38,549 and
$3,424, respectively, in connection with moves to The Woodlands.
(2) Dr. Tomlinson was appointed Vice Chairman of the Board of Directors in
April 1998.
(3) Dr. Hardman joined the Company as Senior Vice President and Chief
Scientific Officer in April 1997. In January 1998 he was appointed Senior
Vice President and Chief Operating Officer and in April 1998 he was
appointed President and Chief Operating Officer.
8
<PAGE>
(4) Dr. Bossart joined the Company as Vice President and Chief Business Officer
in March 1997.
(5) Mr. Waldron joined the Company as Vice President and Chief Financial
Officer in July 1995.
(6) Includes options repriced in 1996 of 80,000 shares.
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under its Option
Plan. As of December 31, 1997, options to purchase a total of 2,099,906 shares
were outstanding under the Plan and options to purchase 1,163,837 shares
remained available for grant thereunder. The 1993 Stock Option Plan (the "Option
Plan") provides for the grant of both incentive and nonstatutory stock options.
The exercise price of incentive stock options under the Option Plan may not be
less than the fair market value of the Common Stock subject to the option on the
date of the option grant. The exercise price of nonstatutory stock options
under the Option Plan may not be less than 85% of the fair market value of the
Common Stock subject to the option on the date of the option grant. The Options
granted under the Option Plan typically vest in 48 monthly installments starting
on the date of grant and have term of 10 years.
No option may be granted under the Option Plan to any person who, at
the time of the grant, owns (or is deemed to own) stock possessing more than 10%
of the total combined voting power of the Company or any affiliate of the
Company, unless the option exercise price is at least 110% of the fair market
value of the stock subject to the option on the date of grant, and the term of
the option does not exceed five years from the date of grant. For incentive
stock options granted under the Option Plan, the aggregate fair market value,
determined at the time of grant, of the shares of Common Stock with respect to
which such options are exercisable for the first time by an optionee during any
calendar year (under all such plans of the Company and its affiliates) may not
exceed $100,000. No employee may be granted options under the Option Plan
during a calendar year to purchase in excess of 250,000 shares of Common Stock.
The Option Plan provides that, in the event of a dissolution or
liquidation of the Company, specified type of merger or other corporate
reorganization, to the extent permitted by law, any surviving corporation will
be required to either assume options outstanding under the Option Plan or
substitute similar options for those outstanding under such plan, or such
outstanding options will continue in full force and effect. In the event that
any surviving corporation declines to assume or continue options outstanding
under the Option Plan, or to substitute similar options, then the time during
which such options may be exercised will be accelerated and the options
terminated if not exercised during such time. The acceleration of an option in
the event of an acquisition or similar corporate event may be viewed as an anti-
takeover provision, which may have the effect of discouraging a proposal to
acquire or otherwise obtain control of the Company.
The following tables show for the fiscal year ended December 31, 1997,
certain information regarding options granted to, exercised by and held at year
end by the Named Executive Officers:
9
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential
Realizable Value at
% of Assumed Annual
Total Options Appreciation
Granted to Rates of Stock Price
Number of Employees Exercise for Option Term (2)
Options in Fiscal Price Expiration ---------------------
Name Granted(#) Year (1) ($/Share) Date 5% ($) 10% ($)
- ---- --------- ------------- ---------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Dr. Tomlinson 50,000 6.6% 6.875 07/08/07 216,183 547,849
Dr. Hardman 150,000 19.8% 7.5625 04/16/07 713,402 1,807,902
Dr. Bossart 135,000 17.9% 7.5625 04/16/07 642,062 1,627,111
Mr. Waldron 1,667 0.2% 6.875 07/08/07 7,208 18,265
6,666 0.7% 4.8125 10/29/07 20,175 51,127
Ms. Stankis 5,000 0.7% 6.875 07/08/07 21,618 54,785
- --------------------
</TABLE>
(1) Based on 755,943 options granted in 1997, including grants to executive
officers.
(2) The potential realizable value is calculated based on the terms of the
option at its time of grant (10 years in the case of all options). It is
calculated by assuming that the stock price on the date of grant appreciates
at the indicated annual rate, compounded annually for the entire term of the
option and that the option is exercised and sold on the last day of its term
for the appreciated stock price.
AGGREGATED OPTION EXERCISES IN 1997 AND 1997 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#) FY-End ($)(1)
---------------- --------------------
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($)(1) Unexercisable Unexercisable
- ----------------- --------------- ---------------- -------------------- ----------------
<S> <C> <C> <C> <C>
Dr. Tomlinson 10,000 40,750 200,370 / 83,487 624,114 / 31,238
Dr. Hardman -- -- 50,000 / 100,000 0 / 0
Dr. Bossart -- -- 47,250 / 87,750 0 / 0
Mr. Waldron -- -- 44,719 / 51,947 21,261 / 24,259
Ms. Stankis 8,205 38,224 39,263 / 14,116 104,644 / 1,365
</TABLE>
- -------------------
(1) The value realized or the value of in-the-money options is based upon the
fair market value of the Company's Common Stock at exercise date or December
31, 1997 ($5.0625 per share), respectively, minus the exercise price of the
options.
EMPLOYMENT AGREEMENTS AND CHANGE-IN CONTROL ARRANGEMENTS
In January 1998, the Company and Dr. Tomlinson entered into an
employment agreement providing for a base salary of $310,128 per year. The
agreement, which can be extended by mutual agreement, has a term of six (6)
months and provides for reimbursement of costs for health, medical and other
benefits. The agreement also provides for reimbursement of reasonable closing
costs, up to a maximum of $30,000, incurred by Dr. Tomlinson in connection
10
<PAGE>
with the sale of his home prior to the later of December 31, 1999 or eighteen
months after expiration of the agreement. In the event closing costs are
reimbursed as described above, Dr. Tomlinson will be entitled to receive an
additional amount that is equal to the taxes, if any, imposed on Dr. Tomlinson
as a result of such reimbursement. Upon termination of his employment (other
than voluntary termination by him), Dr. Tomlinson will be entitled to: (i)
continuation of his then base salary and continued reimbursement of health,
medical and other benefits through the later of December 31, 1999 or eighteen
months after such termination; and (ii) acceleration of vesting of all
outstanding options and a two-year extension of the exercise period of such
options. Upon voluntary termination of his employment prior to expiration of the
agreement, Dr. Tomlinson will be entitled to: (i) continuation of his then base
salary and continued reimbursement of health, medical and other benefits for
eighteen months; and (ii) acceleration of eighteen months vesting of all
outstanding options and a two-year extension of the exercise period of such
options.
In June 1995, the Company entered into an employment agreement with
Richard A. Waldron providing for an annual base salary of $150,000, subject to
annual review. The agreement has an initial term of four years and will renew
automatically each year thereafter. If the Company terminates Mr. Waldron's
agreement prior to the expiration of the agreement, the Company will be
obligated to pay Mr. Waldron's salary and benefits for a period of three months
following the date of termination.
The Board has adopted a Change-of-Control Severance Plan for its
employees, including executive officers (the "Severance Plan"). An Eligible
Employee is eligible for benefits under the Severance Plan if, within 12 months
of a Change of Control, such Eligible Employee's employment with the Company is
(i) voluntarily terminated for Good Reason or (ii) involuntarily terminated for
a reason other than Cause.
Benefits payable under the Severance Plan generally include: (i) a
cash payment equal to up to 12 months of an Eligible Employee's base pay in
effect prior to termination, such payment based upon (A) the length of time such
employee was employed by the Company, (B) the position held at termination and
(C) whether such employee has been designated a "Key Employee;" (ii)
acceleration of vesting of a portion of the options held by an Eligible
Employee, depending upon the length of time such employee was employed by the
Company; and (iii) continuation of certain health, vision and dental benefits.
For Executive Officers, benefits under the Severance Plan also include
acceleration of vesting of all the options held by such executive officer and,
subject to certain limitations, extension of the period during which such
options may be exercised.
An "Eligible Employee" is defined in the Severance Plan to include all
full-time regular employees of the Company who are not otherwise excluded from
participating in the Severance Plan.
A "Change of Control" is defined in the Severance Plan to include: (i)
a dissolution or liquidation of the Company; (ii) a merger or consolidation in
which the Company is not the surviving corporation in which the Company's
stockholders immediately prior to the transaction do not hold beneficial
ownership of at least 50% of the outstanding voting shares of the new or
continuing corporation, (iii) a reverse merger in which the Company is the
surviving corporation but the shares of the Company's Common Stock outstanding
immediately preceding the merger are converted by virtue of the merger into
other property, whether in the form of securities, cash or otherwise; (iv) at
least a majority of the outstanding corporate shares of the Company are sold,
exchanged or otherwise disposed of, in one transaction or a series of related
transactions and the Company's stockholders immediately prior to such
transaction or transactions do not hold beneficial ownership of at least 50% of
the outstanding voting shares of the Company or of the ownership interests of
the entity for which such shares of the Company were exchanged (taking into
account only such shareholders' ownership of the Company prior to the time such
transaction or transactions commenced); or (v) the Company sells all or
substantially all of its assets to a single purchaser or to a group of
associated purchasers.
"Good Reason" is defined in the Severance Plan to include: (i) a
reduction of the Eligible Employee's rate of compensation (base salary and
bonus) as in effect immediately prior to the effective date of a Change of
Control; (ii) except as permitted under any employment contract with the
Eligible Employee, a change in the Eligible Employee's responsibilities,
authority, titles or offices resulting in diminution of position, with certain
exceptions;
11
<PAGE>
(iii) a request that the Eligible Employee relocate to a worksite that is more
than twenty-five (25) miles from his or her prior worksite, unless the employee
accepts such relocation opportunity, or to be absent from such regular place of
employment on travel status or otherwise to a greater degree than was customary
during the six (6) month period immediately preceding the effective date of a
Change of Control; (iv) except as permitted under any employment contract with
the Eligible Employee, a material reduction in duties; (v) a failure or refusal
of the successor company to assume the Company's obligations under the Severance
Plan; or (vi) material breach by the Company or any successor to the Company of
any of the material provisions of the Severance Plan.
"Cause" is defined in the Severance Plan to mean: (i) conviction of, a
guilty plea with respect to, or a plea of nolo contendere to a charge that the
Eligible Employee has committed a felony under the laws of the United States or
of any state, or a crime involving moral turpitude, including, but not limited
to, fraud, theft, embezzlement or any crime that results in or is intended to
result in personal enrichment at the expense of the Company; (ii) material
breach of any agreement entered into between the Eligible Employee and the
Company that impairs the Company's interest therein; (iii) willful misconduct or
gross neglect by the Eligible Employee of the Eligible Employee's duties; or
(iv) engagement in any activity that constitutes a material conflict of interest
with the Company.
The Severance Plan terminates on May 17, 2000. The Board may extend
the term of the Severance Plan or amend or discontinue the Severance Plan at any
time, provided that, for the 12 month period following a Change of Control, the
Severance Plan may not be amended and no Eligible Employee may be reclassified
in any manner that would adversely affect the interests of the Eligible
Employees, except with the written consent of the Eligible Employee or Eligible
Employees so affected. No amendment or termination of the Severance Plan shall
affect the right to any unpaid benefit of any Eligible Employee whose
termination date has occurred prior to amendment or termination of the Severance
Plan.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD
OF DIRECTORS ON EXECUTIVE COMPENSATION (1)
During 1997, the Compensation Committee of the Board of Directors was
composed of Stanley T. Crooke, M.D., Ph.D., David F.J. Leathers and Arthur M.
Pappas. The Committee is responsible for establishing and maintaining the
Company's policies governing employee compensation and administrating the
Company's employee benefit plans, including the Company's 401-K Plan, the Option
Plan and the Employee Stock Purchase Plan.
The Compensation Committee makes recommendations concerning salaries
and incentive compensation, awards stock options to employees and consultants
under the Company's stock option plans and otherwise determines compensation
levels and performs such other functions regarding compensation as the Board may
delegate. The goal of the Compensation Committee is to align compensation with
the Company's business objectives and performance in order to enable the Company
to attract, retain and reward executive officers and other key employees who
contribute to the long-term success of the Company and to motivate them to
enhance long-term stockholder value. Key elements of this philosophy are:
* The Committee endeavors to establish compensation that is competitive with
leading biotechnology companies with which the Company competes for talent.
To ensure that pay is competitive, the Committee regularly compares its pay
practices with these companies and sets its pay parameters based on this
review.
* The Company maintains annual incentive payment opportunities sufficient to
provide motivation to achieve specific operating goals and to generate
rewards that bring total compensation to competitive levels.
* The Company provides significant equity-based incentives for executives and
other key employees to ensure that they are motivated over the long term to
respond to the Company's business challenges and opportunities.
- -----------------------
(1) This Section is not "soliciting material," is not deemed "filed" with the
SEC and is not to be incorporated by reference in any filing of the Company
under the Securities Act of 1933 or the Securities Exchange Act of 1934 whether
made before or after the date hereof and irrespective of any general
incorporation language in any such filing.
12
<PAGE>
The Committee annually reviews each executive officer's compensation.
When reviewing compensation, the Committee considers individual and corporate
performance against specified Company objectives and the Committee's subjective
evaluation of their performance, levels of responsibility, prior experience,
breadth of knowledge and competitive pay practices.
During 1997, the Committee retained Radford Associates Consulting
Group to conduct a comprehensive review of base salaries and incentive
compensation of all employees, including executive officers, as compared to
biotechnology companies of similar size and status, both nationally and
regionally. The group of similar companies is not necessarily the same as the
companies included in the market indices included in the performance graph in
this proxy statement. The Company has implemented broad banding of
salaries/positions. Broad banding clusters jobs or tiers of positions within
broad salary bands. The Company believes that broad banding will give it both
the flexibility to recruit scientists from diverse disciplines and the ability
to move high-performers along their bands at appropriate rates.
At the start of each year, the Committee meets to review and approve
the annual performance objectives for the Company. The Company objectives
consist of operating, strategic and financial goals that are considered to be
critical to the Company's fundamental long-term goal: building stockholder
value. The Committee evaluates each officer's contribution to achievement of
Company objectives as well as individual performance and determines salary and
bonus levels, within the applicable band, on the basis of such evaluation.
The Option Plan and the Employee Stock Purchase Plan enable the
Company to provide employees with equity incentives that further align the
interests of stockholders and management by encouraging employees to participate
in the building of long-term value in the Company. New options are granted to
employees on an annual basis and include vesting periods (generally over four
years) to provide continuing financial incentives. Options are generally granted
with exercise prices equal to the fair market value on grant date. The size of
option grants to an individual is based on the individual's position within the
Company and performance in the past year.
Section 162(m) of the Code limits the Company to a deduction for
federal income tax purposes of no more than $1 million of compensation paid to
certain Named Executive Officers in a taxable year. Compensation above $1
million may be deducted if it is "performance-based compensation" within the
meaning of the Code. The statute containing this law and the applicable
Treasury regulations offer a number of transitional exceptions to this deduction
limit for pre-existing compensation plans, arrangements and binding contracts.
As a result, the Compensation Committee believes that at the present time it is
quite unlikely that the compensation paid to any Named Executive Officer in a
taxable year which is subject to the deduction limit will exceed $1 million.
Therefore, the Compensation Committee has not yet established a policy for
determining which forms of incentive compensation awarded to its Named Executive
Officers shall be designed to qualify as "performance-based compensation." The
Compensation Committee intends to continue to evaluate the effects of the
statute and the Treasury regulations and to comply with Code Section 162(m) in
the future to the extent consistent with the best interests of the Company.
The Committee bases the compensation of the Chief Executive Officer,
Dr. Tomlinson, in large part upon the Company's performance, while taking into
account the compensation practices of competitive companies of comparable size
in the biotechnology industry. The Company made progress during 1997 including:
(i) the clinical advancement of the Company's IL-2 Gene Medicine, (ii)
advancement and solidification of key patent positions, (iii) significant
additions to strengthen the Company's management team, and (iv) continued
progress in the development of the Company's non-viral gene therapy technologies
and the expansion of product opportunities. In light of the achievement of
certain Company objectives, salaries paid and stock options granted to persons
in similar positions at similarly situated companies, and Dr. Tomlinson's
contributions during his annual review period ended July 1, 1997, the Committee
authorized a base salary of $310,100, a 4% merit increase over the prior year.
The Committee also unanimously approved a total option grant of 50,000 shares,
including a performance option grant of 20,000 shares and an adjustment option
grant of 30,000 shares for Dr. Tomlinson.
Stanley T. Crooke, M.D., Ph.D.
David F.J. Leathers
Arthur M. Pappas
13
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
As noted above, the Company's Compensation Committee consists of Dr.
Crooke, Mr. Leathers and Mr. Pappas. No executive officer of the Company is a
member of the Compensation Committee. There are no interlocks between the
members of the Compensation Committee and the executive officers of the Company.
PERFORMANCE MEASUREMENT COMPARISON(1)
The following graph shows the cumulative total stockholder return of
an investment of $100 in cash for the period from July 13, 1994 (the effective
date of the Company's Initial Public Offering) to December 31, 1997 for (i) the
Company's Common Stock, (ii) the Nasdaq Stock Market Index (U.S.) and (iii) the
Nasdaq Pharmaceutical Stock Index. All values assume reinvestment of the full
amount of all dividends:
COMPARISON OF TOTAL CUMULATIVE RETURN ON INVESTMENT
GMED Nasdaq US Nasdaq Pharma
7/11/94 100 100 100
7/31/94 108 102 103
8/31/94 108 109 114
9/30/94 55 108 113
10/31/94 43 110 109
11/30/94 38 107 109
12/31/94 42 107 106
1/31/95 43 108 112
2/28/95 47 113 116
3/31/95 72 117 114
4/30/95 73 120 117
5/31/95 72 123 119
6/30/95 112 133 133
7/31/95 108 143 144
8/31/95 115 146 161
9/30/95 127 150 166
10/31/95 88 149 160
11/30/95 87 152 168
12/31/95 102 151 193
1/31/96 120 152 210
2/29/96 90 158 206
3/31/96 80 158 201
4/30/96 79 172 212
5/31/96 85 179 219
6/30/96 75 171 196
7/31/96 53 156 174
8/31/96 60 165 187
9/30/96 55 177 200
10/31/96 44 176 191
11/30/96 45 186 188
12/31/96 76 186 194
1/31/97 93 200 210
2/28/97 117 188 212
3/31/97 83 176 184
4/30/97 92 182 173
5/31/97 107 202 199
6/30/97 103 208 199
7/31/97 60 230 205
8/31/97 53 230 202
9/30/97 55 244 223
10/31/97 61 231 212
11/30/97 72 232 205
12/31/97 68 229 200
(1) This report is not "soliciting material," is not deemed "filed" with the SEC
and is not to be incorporated by reference into any filing of the Company under
the Securities Act of 1933 or the Exchange Act whether made before or after the
date hereof and irrespective of any general incorporation language in any such
filing.
14
<PAGE>
CERTAIN TRANSACTIONS
In July 1996, the Company entered into a consulting agreement with
Bert W. O'Malley. The consulting agreement requires the Company to pay Dr.
O'Malley $2,000 for each day of consulting work authorized by the Company.
During 1997, the Company paid $52,250 under this agreement. In addition, in
July 1996 and July 1997, the Company entered into sponsored research agreements
with Baylor under which Dr. O'Malley was specified as Principal Investigator.
During 1997, the Company paid $189,000 to Baylor under these sponsored research
agreements. The Company is committed to paying $101,000 in 1998 under the
current research agreement.
The Company's By-laws provide that the Company will indemnify its
directors and executive officers and may indemnify its other officers, employees
and agents to the fullest extent permitted by Delaware law. The Company is also
empowered under its By-laws to enter into indemnification contracts with its
directors and officers and to purchase insurance on behalf of any person it is
required or permitted to indemnify. Pursuant to this provision, the Company has
entered into indemnity agreements with each of its directors and officers.
Effective February 1995, the Company and Corange International Ltd.,
the parent company of Boehringer Mannheim entered into a multi-year alliance
agreement to develop gene therapy products to treat selected cancer indications.
Under the terms of the agreement, Boehringer Mannheim has agreed to fund $25
million, plus certain amounts for achievement of milestones, for research and
development at the Company, with payments to the Company of $5 million per year,
plus milestones, for five years. Research and development funding of $4.6, $5.0
and $5.5 million, including a $0.5 million milestone payment in 1997, were
received in 1995, 1996 and 1997, respectively. Because the Company may be
obligated, upon certain circumstances, to conduct research and development in an
amount not to exceed $5 million at the end of the five-year agreement, the
Company has recognized contract revenue at 80 percent of research funding. In
addition, Boehringer Mannheim has agreed to invest $20 million in the common
equity of the Company at $4 million per year. The first four $4 million equity
investments were made in July 1995, February 1996, February 1997 and February
1998 in which 444,444, 418,629, 533,333 and 533,333 common shares were issued at
$9.00, $9.56, $7.50 and $7.50 per share, respectively. The price per share for
common equity investments by Boehringer Mannheim for the years 1996 through 1999
is based upon the 15 consecutive trading days immediately preceding February 1
for each year, with the purchase in 1996 at a 20 percent premium. In no case
shall the purchase price be less than $7.50 per share. All payments to the
Company beginning in 1997 are subject to the achievement of certain milestones.
The Company also granted Boehringer Mannheim a three-year option to expand the
collaboration to include additional cancer indications.
OTHER MATTERS
The Board of Directors knows of no other matters that will be
presented for consideration at the Annual Meeting. If any other matters are
properly brought before the meeting, it is the intention of the persons named in
the accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
Richard A. Waldron
Vice President, Chief Financial Officer and Secretary
May 5, 1998
15
<PAGE>
GENEMEDICINE, INC
8301 New Trails Drive
The Woodlands, TX 77381-4248
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
Annual Meeting of Stockholders to be held on June 11, 1998
- --------------------------------------------------------------------------------
The undersigned hereby appoints Eric Tomlinson, D.Sc., Ph.D. and Richard A.
Waldron and each of them, with full power of substitution, as attorneys and
proxies to represent the undersigned at the Annual Meeting of Stockholders of
GeneMedicine, inc., a Delaware corporation (the ?Company?), to be held at 3:00
p.m. local time on Thursday, June 11, 1998 at GeneMedicine, inc., 8301 New
Trials Drive, The Woodlands, Texas and at any continuations or adjournments
thereof, to vote the shares of stock of the Company which the undersigned may be
entitled to vote at such meeting in the name of and place of the undersigned
with all the power which the undersigned would possess if personally present, as
set forth below and, in their discretion upon such other business as may
properly come before the meeting.
This proxy is solicited on behalf of the Board of Directors. Any proxy
heretofore given by the undersigned with respect to such stock is hereby
revoked. This proxy will be voted as specified or, if no contrary direction is
made, this proxy will be voted for the election of directors as set forth in the
proxy statement and as said proxies deem advisable on such other matters as may
properly come before the meeting.
THIS PROXY IS CONTINUED ON THE REVERSE SIDE AND IS TO BE SIGNED
Please mark your votes
as in this example
<TABLE>
<CAPTION>
<S> <C> <C> <C>
FOR both nominees WITHHOLD authority
listed at right to vote for both nominees
1. To elect two (Except as marked to listed at right THE BOARD OF DIRECTORS
directors to serve the contrary below) RECOMMENDS A VOTE FOR
until the year 2001 THE NOMINEES FOR DIRECTOR
Annual Meeting of LISTED BELOW:
Stockholders and Edward L. Cahill
until their successors Arthur M. Pappas
are elected
To withhold authority to vote for a nominee, write such nominee name below.
____________________________________________________________
IMPORTANT
It is important that your shares be represented
at the meeting. Accordingly, whether or not
you expect to attend the meeting, please sign,
date and promptly return this proxy in the
enclosed envelope.
SIGNATURE______________________ DATE______________ SIGNATURE______________________ DATE______________
IF HELD JOINTLY
Please sign exactly as your name appears hereon. When shares are held by joint tenants both should sign. When signing as
attorney-in-fact, executor, administrator, trustee or guardian, please sign as such and include such title. If a corporation,
please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name
by authorized person.
</TABLE>
