SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary proxy statement |_| Confidential, For use of the
|X| Definitive proxy statement Commission only (as permitted
|_| Definitive additional materials by Rule 14a-6(e)(2))
|_| Soliciting material pursuant
to Rule 14a-11(c) or Rule 14a-12
Titan Pharmaceuticals, Inc.
(Name of Registrant as Specified in Its Charter)
Titan Pharmaceuticals, Inc.
(Name of Person(s) Filing Proxy Statement)
Payment of filing fee (Check the appropriate box):
|X| $125 per Exchange Act Rule 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
|_| $500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
---------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
---------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11:(1)
---------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
---------------------------------------------------------------------------
(5) Total fee paid
|_| Fee paid previously, with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing of which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount previously paid:
---------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
---------------------------------------------------------------------------
(3) Filing party:
---------------------------------------------------------------------------
(4) Date filed:
---------------------------------------------------------------------------
- ----------
(1) Set forth the amount on which the filing fee is calculated and state how it
was determined.
<PAGE>
TITAN PHARMACEUTICALS, INC.
400 Oyster Point Boulevard
Suite 505
South San Francisco, California 94080
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To be held October 18, 1996
To the Shareholders of
Titan Pharmaceuticals, Inc.
Notice is hereby given that the Annual Meeting of the Shareholders of Titan
Pharmaceuticals, Inc. will be held on October 18, 1996 at 9:30 a.m. local time
at the offices of the Company, 400 Oyster Point Boulevard, Suite 505, South San
Francisco, California 94080. The meeting is called for the following purpose:
1. To elect a board of nine directors;
2. To approve an amendment to the Company's 1995 Stock Option Plan in
order to increase the number of shares of Common Stock reserved for
issuance thereunder from 300,000 to 1,300,000;
3. To approve the appointment of Ernst & Young LLP as the independent
auditors of the Company; and
4. To consider and take action upon such other matters as may properly
come before the meeting or any adjournment or adjournments thereof.
The close of business on August 28, 1996 has been fixed as the record date
for the determination of shareholders entitled to notice of, and to vote at, the
meeting. The stock transfer books of the Company will not be closed. A list of
the shareholders entitled to vote at the meeting may be examined at the
Company's offices during the ten-day period preceding the meeting.
All shareholders are cordially invited to attend the meeting. Whether or
not you expect to attend, you are respectfully requested by the Board of
Directors to sign, date and return the enclosed proxy promptly. Shareholders who
execute proxies retain the right to revoke them at any time prior to the voting
thereof. A return envelope which requires no postage if mailed in the United
States is enclosed for your convenience.
By Order of the Board of Directors,
Louis R. Bucalo, M.D.
President and Chief Executive Officer
Dated: September 4, 1996
<PAGE>
TITAN PHARMACEUTICALS, INC.
400 Oyster Point Boulevard
Suite 505
South San Francisco, California 94080
PROXY STATEMENT
ANNUAL MEETING OF SHAREHOLDERS
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Titan Pharmaceuticals, Inc. (the "Company")
for the Annual Meeting of Shareholders to be held at the offices of the Company,
400 Oyster Point Boulevard, Suite 505, South San Francisco, California 94080 on
October 18, 1996, at 9:30 a.m. and for any adjournment or adjournments thereof,
for the purposes set forth in the accompanying Notice of Annual Meeting of
Shareholders. Any shareholder giving such a proxy has the power to revoke it at
any time before it is voted. Written notice of such revocation should be
forwarded directly to the Secretary of the Company, at the above stated address.
If the enclosed proxy is properly executed and returned, the shares
represented thereby will be voted in accordance with the directions thereon and
otherwise in accordance with the judgment of the persons designated as proxies.
Any proxy on which no direction is specified will be voted in favor of the
actions described in this Proxy Statement and for the election of the nominees
set forth under the caption "Election of Directors."
The approximate date on which this Proxy Statement and the accompanying
form of proxy will first be mailed or given to the Company's shareholders is
September 4, 1996.
Your vote is important. Accordingly, you are urged to sign and return the
accompanying proxy card whether or not you plan to attend the meeting. If you do
attend, you may vote by ballot at the meeting, thereby cancelling any proxy
previously given.
VOTING SECURITIES
Only holders of shares of common stock, $.01 par value per share ("Common
Stock") of record at the close of business on August 28, 1996 are entitled to
vote at the meeting. On the record date, the Company had outstanding and
entitled to vote 12,302,179 shares of Common Stock, each entitled to one vote
upon all matters to be acted upon at the meeting. A majority in interest of the
outstanding Common Stock represented at the meeting in person or by proxy shall
constitute a quorum. The affirmative vote of a plurality of the Common Stock so
represented is necessary to elect the nominees for election as directors and the
affirmative vote of a majority of the Common Stock so represented, excluding
broker non-votes, is necessary to approve and ratify the amendment to the 1995
Stock Option Plan and the appointment of Ernst & Young, LLP, independent
certified public accountants as the independent auditors of the Company.
Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business. If a
shareholder, present in person or by proxy, abstains on any matter, the
shareholder's
<PAGE>
shares will not be voted on such matter. Thus, an abstention from voting on any
matter has the same legal effect as a vote "against" the matter even though the
shareholder may interpret such action differently. Except for determining the
presence or absence of a quorum for the transaction of business, broker
non-votes are not counted for any purpose in determining whether a matter has
been approved.
The Company expects to mail this Proxy Statement and the accompanying form
of proxy on or about September 4, 1996.
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of August 28, 1996, certain information
concerning the beneficial ownership of the Company's Common Stock by (i) each
shareholder known by the Company to own beneficially five percent or more of the
outstanding Common Stock of the Company; (ii) each director; (iii) each
executive officer of the Company; and (iv) all executive officers and directors
of the Company as a group, and their percentage ownership and voting power.
Shares Beneficially Percent of Shares
Name and Address of Beneficial Owner(1) Owned(2) Beneficially Owned
- --------------------------------------- ------------------ ------------------
Louis R. Bucalo, M.D.................. 338,172 (3) 2.72%
Ernst-Gunter Afting, M.D., Ph.D....... 0 *
Richard C. Allen, Ph.D................ 63,775 (4) *
Sunil Bhonsle......................... 132,913 (5) 1.07
Michael K. Hsu........................ 22,346 (6) *
Hubert Huckel, M.D.................... 2,500 (7) *
Marvin E. Jaffe, M.D.................. 2,500 (7) *
Peter M. Kash......................... 152,452 (8) 1.23
Lindsay A. Rosenwald, M.D............. 660,034 (9) 5.25
Konrad M. Weis, Ph.D.................. 51,852 (10) *
Kenneth J. Widder, M.D................ 15,237 (10) *
Invesco Trust Company................. 1,220,538 (11) 9.92
7800 E. Union Avenue
Denver, CO 80237
All executive officers and directors
as a group (11) persons........... 1,441,781 (12) 11.07%
- ------------------
*Less than one percent.
(1) Unless otherwise indicated, the address of such individual is c/o Titan
Pharmaceuticals, Inc., 400 Oyster Point Boulevard, Suite 505, South San
Francisco, California 94080.
(2) In computing the number of shares beneficially owned by a person and the
percentage ownership of a person, shares of Common Stock of the Company
subject to options held by that person that are currently exercisable or
exercisable within 60 days are deemed outstanding. Such shares, however,
are not deemed outstanding for purposes of computing the percentage
ownership of each other person. Except as indicated in the footnotes to
this
-2-
<PAGE>
table and pursuant to applicable community property laws, the persons
named in the table have sole voting and investment power with respect to
all shares of Common Stock.
(3) Includes 127,943 shares issuable upon exercise of outstanding options.
28,506 of such shares are subject to (i) obtaining stockholder approval of
an increase in the number of shares reserved for issuance under the 1995
Stock Option Plan and (ii) if such approval is obtained, repurchase by the
Company upon the occurrence of certain events.
(4) Represents shares issuable upon exercise of outstanding options. 3,871 of
such shares are subject to (i) obtaining stockholder approval of an
increase in the number of shares reserved for issuance under the 1995 Stock
Option Plan and (ii) if such approval is obtained, repurchase by the
Company upon the occurrence of certain events.
(5) Represents shares issuable upon exercise of outstanding options. 10,945 of
such shares are subject to (i) obtaining stockholder approval of an
increase in the number of shares reserved for issuance under the 1995 Stock
Option Plan and (ii) if such approval is obtained, repurchase by the
Company upon the occurrence of certain events.
(6) Includes 11,314 shares issuable upon exercise of outstanding options.
(7) Represents shares issuable upon exercise of outstanding options.
(8) Includes 112,517 shares issuable upon exercise of outstanding options and
warrants and 3,411 shares held in trust for the benefit of his son. See
"Certain Transactions."
(9) Includes (i) 90,084 shares held by entities owned by Mr. Rosenwald, and
(ii) 267,154 shares issuable upon exercise of outstanding options and
warrants. Does not include (i) 94,589 shares held by his wife; (ii) 40,536
shares held by his wife in trust for the benefit of their children; (iii)
585,718 shares held by or underlying warrants held by Venturetek L.P., a
limited partnership, the limited partners of which include Dr. Rosenwald's
wife and children; or (iv) shares underlying Class A Warrants held by The
Aries Trust and The Aries Domestic Fund L.P. as to which Dr. Rosenwald
serves as investment manager and President of the general partner,
respectively. Dr. Rosenwald disclaims beneficial ownership as to all of
such shares. See "Certain Transactions."
(10) Includes 7,617 shares issuable upon exercise of outstanding options.
(11) Represents shares held by three mutual funds managed by Invesco Funds
Group, Inc. or Invesco Trust Company.
(12) See Notes (3) through (10) above.
-3-
<PAGE>
EXECUTIVE OFFICERS
The following sets forth the names and ages of the executive officers of
the Company, their respective positions and offices, and their respective
principal occupations or employments during the last five years.
Name Age Office
---- --- ------
Louis R. Bucalo, M.D. 37 President, Chief Executive
Officer and
Director
Sunil Bhonsle 46 Executive Vice
President and Chief
Operating Officer
Richard C. Allen, Ph.D. 52 Executive Vice
President
LOUIS R. BUCALO, M.D., is a co-founder of the Company and of each of the
Company's operating companies -- Ansan, Inc. ("Ansan"), Ingenex, Inc., ProNeura,
Inc. ("ProNeura"), Theracell, Inc. ("Theracell") and Trilex Pharmaceuticals,
Inc. (the "Operating Companies") -- and has served as the Company's President
and Chief Executive Officer since January 1993. Dr. Bucalo has served as a
director of the Company since March 1993. Dr. Bucalo also serves as Chairman of
the Board of each of the Operating Companies except Theracell and as Chief
Executive Officer of ProNeura. From July 1990 to April 1992, Dr. Bucalo was
Associate Director of Clinical Research at Genentech, Inc. a biotechnology
company. Dr. Bucalo holds an M.D. from Stanford University and a B.A. in
biochemistry from Harvard University.
SUNIL BHONSLE joined the Company as Executive Vice President and Chief
Operating Officer in September 1995. Mr. Bhonsle served in various positions,
including Vice President and General Manager, Plasma Supply and Manager,
Inventory and Technical Planning, at Bayer Corporation from July 1975 until
April 1995. Mr. Bhonsle holds an M.B.A. from the University of California at
Berkeley and a B.Tech. in chemical engineering from the Indian Institute of
Technology.
RICHARD C. ALLEN, PH.D., was appointed Executive Vice President of the
Company in August 1995. He also currently serves as President and Chief
Executive Officer of Theracell, which he joined in January 1995 and President
and Chief Operating Officer of ProNeura. From 1974 until December 1994, Dr.
Allen was employed by Hoechst-Roussel Pharmaceuticals, Inc. in various
capacities serving last as Vice President and General Manager of the
Neuroscience Strategic Business Unit from June 1991 to December 1994. Dr. Allen
holds a Ph.D. in medicinal chemistry and a B.S. in pharmacy from the Medical
College of Virginia.
The Company is seeking a chief financial officer and is currently engaged
in negotiations with a prospective candidate.
ELECTION OF DIRECTORS
At the meeting, nine directors will be elected by the shareholders to
serve until the next Annual Meeting of Shareholders or until their successors
are elected and shall qualify. It is intended
-4-
<PAGE>
that the accompanying proxy will be voted for the election, as directors, of the
nine persons named below, unless the proxy contains contrary instructions. The
Company has no reason to believe that any of the nominees will not be a
candidate or will be unable to serve. However, in the event that any of the
nominees should become unable or unwilling to serve as a director, the persons
named in the proxy have advised that they will vote for the election of such
person or persons as shall be designated by the Management.
The following sets forth the names and ages of the nine nominees for
election to the Board of Directors, their respective principal occupations or
employments during the past five years and the period during which each has
served as a director of the Company.
Name Age Position
---- --- --------
Louis R. Bucalo, M.D.(1).......... 37 President, Chief
Executive Officer
and Director
Ernst-Gunter Afting, M.D., Ph.D... 53 Director
Michael K. Hsu(2)................. 46 Director
Hubert Huckel, M.D.(3)............ 64 Director
Marvin E. Jaffe, M.D.(2).......... 59 Director
Peter M. Kash..................... 35 Director
Lindsay A. Rosenwald, M.D.(1)(3) 41 Director
Konrad M. Weis, Ph.D.(1).......... 67 Director
Kenneth J. Widder, M.D.(1)(3)..... 42 Director
- -----------------
(1) Member of Executive Committee
(2) Member of Audit Committee
(3) Member of Compensation Committee
LOUIS R. BUCALO, M.D. See biographical information set forth above under
"Executive Officers."
ERNST-GUNTER AFTING, M.D., PH.D., has served as a director of the Company
since May 1996. Dr. Afting has served as the President of the GSF-National
Center for Environment and Health, a government research center in Germany since
1995. From 1984 until 1995, he was employed in various capacities by the Hoechst
Group, serving as Divisional Head of the Pharmaceuticals Division of the Hoechst
Group from 1991 to 1993 and as President and Chief Executive Officer of Roussel
Uclaf (a majority stockholder of Hoechst AG) in Paris from 1993 until 1995.
MICHAEL K. HSU has served as a director of the Company since March 1993. He
currently serves as Director of Corporate Finance of National Securities
Corporation. Mr. Hsu has been the United States biotechnology venture capital
representative for the government of Taiwan, Republic of China for the past 10
years. From November 1994 through October 1995, he served as Director -
Corporate Finance of Coleman and Company Securities. Since March 1989, Mr. Hsu
has served as President of APS Bioventures Co., which, until November 1994, was
an investment banking division of RAS Securities Corp. Mr. Hsu previously held
various executive positions with Steinberg and
-5-
<PAGE>
Lyman Health Care Company, Ventana Venture Growth Fund, Asian Pacific Venture
Group (Thailand) and D. Blech Company.
HUBERT HUCKEL, M.D. has served as a director of the Company since October
1995. Dr. Huckel is a consultant in the health care field. From 1964 until his
retirement in December 1992, Dr. Huckel served in various positions with The
Hoechst Group. At the time of his retirement, he was Chairman of the Board of
Hoechst-Roussel Pharmaceuticals, Inc., Chairman and President of Hoechst-Roussel
Agri-Vet Company and a member of the Executive Committee and Board of Hoechst
Celanese Corporation. He currently serves on the Board of Directors of Royce
Laboratories, Inc. and Sano Corporation.
MARVIN E. JAFFE, M.D. has served as a director of the Company since October
1995. From 1988 until April 1994, Dr. Jaffe served as President of R.W. Johnson
Pharmaceutical Research Institute where he was responsible for the research and
development activities in support of a number of Johnson & Johnson companies,
including ORTHO-McNeil Pharmaceuticals, ORTHO Biotech and CILAG. From 1970 until
1988, he was Senior Vice President of Merck Research Laboratories. He currently
serves on the Board of Directors of Chiroscience, plc and Immunomedics, Inc.
PETER M. KASH is a co-founder of Ansan and has served as a director of the
Company since March 1993. Mr. Kash has served as Senior Managing Director of
Paramount Capital, Inc. since August 1991. From August 1988 until August 1991,
he was employed with D.H. Blair & Co., Inc. ("Blair"), a brokerage firm. Mr.
Kash serves on the Board of Directors of Ansan.
LINDSAY A. ROSENWALD, M.D., is a co-founder of the Company and has served
as a director of the Company since March 1993. Dr. Rosenwald co-founded
Interneuron Pharmaceuticals, Inc. and has served as its Chairman since February
1989. Dr. Rosenwald has been the Chairman and President of The Castle Group,
Ltd., a New York medical venture capital firm ("Castle"), since October 1991,
and the Chairman and President of Paramount Capital, Inc., an investment banking
firm, since February 1992. Prior thereto, Dr. Rosenwald was a Managing Director,
Corporate Finance at Blair. Dr. Rosenwald also is a director of BioCryst
Pharmaceuticals, Inc., Sparta Pharmaceuticals, Inc., Atlantic Pharmaceuticals,
Inc., Xenometrix, Inc., Avigen, Inc., Neose Technologies, Inc., VimRX
Pharmaceuticals, Inc., and Ansan and is Chairman of the Board or a director of a
number of privately held companies founded by Castle in the biotechnology or
pharmaceutical fields.
KONRAD M. WEIS, PH.D., has served as a director of the Company since March
1993. Dr. Weis is Honorary Chairman, and from 1974 to 1992 served as President
and Chief Executive Officer of Bayer Corporation, at which time he retired. Dr.
Weis serves as a director of PNC Equity Management Company, Michael Bayer
Company and Dravo Company.
KENNETH J. WIDDER, M.D. has served as a director of the Company since March
1993. Dr. Widder has served as Chairman and Chief Executive Officer of Molecular
Biosystems, Inc., a company engaged in the development of diagnostic contrast
imaging agents for ultrasound, since 1981. Dr. Widder serves on the Board of
Directors of Wilshire Technologies, Inc. and Digivision.
Director Compensation
Non-employee directors are entitled to receive $2,000 for each Board and
committee meeting attended, although certain directors forego such fees, and are
reimbursed for their expenses in attending such meetings. Directors are not
precluded from serving the Company in any other capacity and receiving
compensation therefor. In addition, directors are entitled to receive options
-6-
<PAGE>
("Director Options") pursuant to the Company's 1995 Stock Option Plan. Director
Options are exercisable in four equal annual installments commencing six months
from the date of grant and expire the earlier of 10 years after the date of
grant or 90 days after the termination of the director's service on the Board of
Directors. In January 1996, each of the Company's current directors other than
Dr. Afting received Director Options to purchase 10,000 shares of Common Stock
at an exercise price of $5.00 per share. Dr. Afting received Director Options to
purchase 10,000 shares of Common Stock at an exercise price of $5.00 per share
when he joined the Board of Directors in May 1996.
Board Committees and Designated Directors
The Board of Directors has an Executive Committee, a Compensation Committee
and an Audit Committee. The Executive Committee exercises all the power and
authority of the Board of Directors in the management of the Company between
Board meetings, to the extent permitted by law. The Compensation Committee makes
recommendations to the Board concerning salaries and incentive compensation for
officers and employees of the Company and may administer the Company's 1995
Stock Option Plan. The Audit Committee reviews the results and scope of the
audit and other accounting related matters.
The Board of Directors met five times during 1995 and also took action by
unanimous written consent. The Executive Committee met three times and also took
action by unanimous written consent, and the Compensation Committee met one
time. Each of the current directors of the Company attended at least 75% of the
meetings of the Board of Directors and meetings of any Committees of the Board
on which such person served which were held during the time such person served.
The Company has agreed, if requested by Blair, to nominate a designee of
Blair to the Company's Board of Directors for a period of five years ending
January 18, 2001.
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the aggregate
compensation awarded to, earned by, or paid to the Chief Executive Officer and
to executive officers whose annual compensation exceeded $100,000 for the fiscal
year ended December 31, 1995 (collectively, the "named executive officers") for
services during the fiscal years ended December 31, 1995, 1994 and 1993:
-7-
<PAGE>
Summary Compensation Table
Annual Compensation
Name --------------------
and Principal Position Year Salary Bonus
- ---------------------- ---- ------ -----
Louis R. Bucalo ............................. 1995 $188,000 (1) $ 0
President and Chief Executive Officer ..... 1994 $206,000 $ 35,000
............................... 1993 $144,000 $ 0
Richard C. Allen ............................ 1995 $166,000 $ 0
Executive Vice President(2) .............. 1994 $ 0 $ 0
............................... 1993 $ 0 $ 0
- ----------
(1) A portion of the cash compensation paid to Dr. Bucalo is allocable to the
Operating Companies pursuant to management services arrangements between
them and the Company.
(2) Dr. Allen also serves as President and Chief Executive Officer of Theracell
and President and Chief Operating Officer of ProNeura. Dr. Allen receives
his entire salary from Theracell which he joined in January 1995.
On April 19, 1996, the Compensation Committee agreed to grant Dr. Bucalo
and Dr. Allen a cash bonus of $42,000 and $15,500, respectively, payment of
which will be deferred (with interest at the rate of prime plus 1% commencing
May 1, 1996) until such time, if ever, as one-half of the warrants issued in the
Company's initial public offering in January 1996 have been exercised.
Option Grants in Last Fiscal Year
The following table contains information concerning the stock option grants
made to the named executive officers during the fiscal year ended December 31,
1995. No stock appreciation rights were granted to these individuals during such
year.
<TABLE>
<CAPTION>
Number of Individual Grant
Securities ------------------------------------------------------
Underlying % of Total
Options Options Granted Exercise or
Granted to Employees in Base Price Expiration
Name (#)(1) Fiscal Year ($/Sh)(2) Date
- ------- --------- ----------- ---------- ---------
<S> <C> <C> <C> <C>
Louis R. Bucalo ............ -0- -0- -0- N/A
Richard C. Allen ........... 57,906 26.5% $ 1.35 8/1/2005
</TABLE>
- ------------------
(1) Each of the options listed in the table is immediately exercisable. The
shares purchasable thereunder are subject to the repurchase by the Company
at the original exercise price paid per share upon the optionee's cessation
of service prior to the fourth anniversary of the option grant of such
shares. Such repurchase right lapsed with respect to 7,721 shares on August
1, 1995 and will lapse with respect to 10,037 of such shares on August 1,
1996 and 1/48th of
-8-
<PAGE>
the balance of such shares at the commencement of each of the first 48
months commencing September 1996.
(2) The exercise price may be paid in cash, in shares of Common Stock valued at
the fair market value on the exercise date or through a cashless exercise
procedure involving a same-day sale of the purchase shares. The Company may
also finance the option exercise by loaning the optionee sufficient funds
to pay the exercise price for the purchased shares, together with any
federal and state income tax liability incurred by the optionee in
connection with such exercise.
Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values
The following table sets forth information concerning option exercises and
option holdings for the fiscal year ended December 31, 1995 with respect to the
named executive officers. No stock appreciation rights were exercised during
such year or were outstanding at the end of that year.
<TABLE>
<CAPTION>
Number of Securities Value of
Underlying Unexercised Unexercised in-the-Money
Shares Options at FY-End (#) Options at FY-End(1)
Acquired ------------------------------- -------------------------------
Name on Exercise(#) Exercisable Unexercisable(2) Exercisable Unexercisable(2)
- --------------- --------------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Louis R. Bucalo..... -0- 37,471 44,284 $161,500 $190,864
Richard C. Allen.... -0- 7,721 50,185 $27,410 $178,157
</TABLE>
- ----------------
(1) Based on the fair market value of the Company's Common Stock at year-end,
$4.90 per share (as determined by the Company's Board of Directors), less
the exercise price payable for such shares.
(2) Options are immediately exercisable for all the option shares; however,
since a portion of the shares purchasable upon exercise of the options are
subject to repurchase by the Company at the original exercise price per
share upon the optionee's cessation of service, such options are deemed
unexercisable for purposes of this table. As of August 28, 1996, the
repurchase right has lapsed as to 21,960 of such shares.
Employment Agreements
The Company is a party to employment agreements with each of Dr. Louis R.
Bucalo, President and Chief Executive Officer, Sunil Bhonsle, Executive Vice
President and Chief Operating Officer of the Company and Dr. Richard C. Allen,
Executive Vice President of the Company. All of the agreements contain
confidentiality provisions.
The agreement with Dr. Bucalo expires in February 1999 and provides for a
current base annual salary of $210,000, subject to annual increases of 5% and
bonuses of up to 20% at the discretion of the Board of Directors. In the event
of the termination of the agreement with Dr. Bucalo, other than for reasons
specified therein, the Company is obligated to make severance payments equal to
his base annual salary for the greater of the balance of the term of the
agreement or 18 months.
Dr. Allen receives no salary from the Company (his primary compensation is
from Theracell) but has been granted certain stock options which vest over five
years if he remains employed by the Company.
-9-
<PAGE>
The agreement with Mr. Bhonsle provides for a base annual salary of
$185,000 subject to automatic annual increases, based on increases in the
consumer price index, and bonuses of up to 20% at the discretion of the Board of
Directors. In the event Mr. Bhonsle's employment is terminated other than for
"good cause" (as defined), the Company is obligated to make severance payments
equal to his base annual salary for between six and nine months. Mr. Bhonsle has
also been granted certain options that vest over five years if he remains
employed by the Company.
The Company has agreed with D.H. Blair Investment Banking Corp., the
underwriter of the Company's initial public offering, that notwithstanding the
provisions of the foregoing employment agreements, the compensation of the
executive officers who were employed at the time of the Company's initial public
offering in January 1996 will not increase from current levels prior to August
23, 1997.
COMPLIANCE WITH SECTION 16(a) OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers, directors and persons who beneficially own
more than 10% of a registered class of the Company's equity securities to file
with the Securities and Exchange Commission initial reports of ownership and
reports of changes in ownership of common stock and other equity securities of
the Company. Such executive officers, directors, and greater than 10% beneficial
owners are required by SEC regulation to furnish the Company with copies of all
Section 16(a) forms filed by such reporting persons.
Based solely on the Company's review of such forms furnished to the Company
and written representations from certain reporting persons, the Company believes
that all filing requirements applicable to the Company's executive officers,
directors and greater than 10% beneficial owners were complied with.
CERTAIN TRANSACTIONS
In March and April 1993, the Company borrowed an aggregate of $1,200,000
from Venturetek, L.P. and Dr. Lindsay A. Rosenwald, the co-founder and a
director of the Company. See "Principal Shareholders." The loan was evidenced by
10% promissory notes payable on demand. The lenders received warrants which are
currently exercisable to purchase an aggregate of 13,327 and 20,355 shares of
Common Stock, respectively, at an exercise price of $4.50 per share. In June
1995, the notes, together with accrued interest, were cancelled in consideration
of the issuance to Venturetek L.P. and Dr. Rosenwald of shares of Series A
Preferred Stock which subsequently converted into 151,388 and 215,135 shares of
Common Stock, respectively.
In April and May 1993, Dr. Rosenwald made loans to the Company in the
aggregate principal amount of $1,014,000. Such loans were repaid, together with
accrued interest at the rate of 7% per annum, from the proceeds of the private
placement of Series A Preferred Stock described below.
Between July and November 1993, Paramount Capital, Inc. ("Paramount") acted
as placement agent in connection with the Company's private placement of Series
A Preferred Stock. Paramount received $1,729,575 in commissions and a $576,525
expense allowance in consideration for its services. In addition, designees of
Paramount received warrants to purchase Series A Preferred Stock in connection
with the private placement which currently represent warrants to purchase an
aggregate
-10-
<PAGE>
of 469,107 shares of Common Stock exercisable at $4.50 per share. Dr. Rosenwald
and Peter M. Kash, directors of the Company, serve as the President and
Chairman, and a Managing Director, respectively, of Paramount. Dr. Rosenwald and
Mr. Kash received warrants to purchase 221,221 and 96,191 of the aforementioned
shares of Common Stock, respectively.
In January 1995, the Company agreed to issue warrants to purchase an
aggregate of 7,395 shares of Common Stock at an exercise price of $3.25 per
share to Ray Dirks Research ("RDR") or its designees for services rendered in
connection with a license transaction. Michael Hsu, a director of the Company,
serves as a consultant to RDR and received one-half of such warrants.
In February 1995, Paramount acted as placement agent in connection with the
Company's private placement of Series B Preferred Stock. Paramount received
$103,125 in commissions and a $45,375 expense allowance for services rendered in
connection with such private placement. In addition, designees of Paramount
received Series B Preferred Stock purchase warrants which currently represent
warrants to purchase an aggregate of 46,350 shares of Common Stock at an
exercise price of $3.92 per share. Dr. Rosenwald and Mr. Kash received warrants
to purchase 17,961 and 8,709 of such shares, respectively.
Between August and October 1995, The Aries Domestic Fund L.P. and The Aries
Trust loaned the Company an aggregate of $250,000 evidenced by the promissory
notes (the "Investor Notes") which bore interest at the rate of 12% per annum
and were payable on the earlier of the closing of an initial public offering or
one year from the date of issuance. In accordance with their terms, the
principal amount of the Investor Notes was converted into $250,000 principal
amount of 10% promissory notes (the "Bridge Notes") and 125,000 Class A Warrants
as part of a bridge financing completed in October 1995. Accrued interest on the
Investor Notes was repaid in January, 1996. Repayment of the principal and
accrued interest on the Bridge Notes was made upon completion of the Company's
initial public offering in January 1996. Dr. Rosenwald is the President of the
general partner of The Aries Domestic Fund L.P. and serves as investment manager
for The Aries Trust.
The Company believes that all of the transactions set forth above were made
on terms no less favorable to the Company than could have been obtained from
unaffiliated third parties. The Company has adopted a policy that all future
transactions, including loans, between the Company and its officers, directors,
principal shareholders and their affiliates will be approved by a majority of
the Board of Directors, including a majority of the independent and
disinterested outside directors on the Board of Directors, and will continue to
be on terms no less favorable to the Company than could be obtained from
unaffiliated third parties.
PROPOSAL - AMENDMENT TO THE 1995 STOCK OPTION PLAN
At the Annual Meeting, the shareholders are being asked to approve an
amendment to the Company's 1995 Stock Option Plan (the "Plan") in order to
increase the number of shares reserved for issuance thereunder by 1,000,000
shares, from 300,000 shares to 1,300,000 shares of Common Stock. The Plan was
adopted by the Board of Directors on October 18, 1995 and approved by the
shareholders. On August 6, 1996, the Board of Directors adopted this amendment
to the Plan and recommends that the shareholders approve such amendment.
Summary of the Plan
-11-
<PAGE>
The Plan currently covers 300,000 shares of Common Stock and employees,
officers and directors of, and consultants or advisers to, the Company and any
subsidiary corporations are eligible to receive incentive stock options
("incentive options") within the meaning of Section 422 of the Internal Revenue
Code of 1986, as amended (the "Code") and/or options that do not qualify as
incentive options ("non-qualified options"). The Plan, which expires in October
2005, will be administered by the Board of Directors or a committee of the Board
of Directors. The purposes of the Plan are to ensure the retention of existing
executive personnel, key employees, directors, consultants and advisors who are
expected to contribute to the Company's future growth and success and to provide
additional incentive by permitting such individuals to participate in the
ownership of the Company, and the criteria to be utilized by the Board of
Directors or the committee in granting options pursuant to the Plan will be
consistent with these purposes. The Plan provides for automatic grants of
options to certain directors.
Options granted under the Plan may be either incentive options or
non-qualified options. Incentive options granted under the Plan are exercisable
for a period of up to 10 years from the date of grant at an exercise price which
is not less than the fair market value of the Common Stock on the date of the
grant, except that the term of an incentive option granted under the Plan to a
stockholder owning more than 10% of the outstanding voting power may not exceed
five years and its exercise price may not be less than 110% of the fair market
value of the Common Stock on the date of the grant. To the extent that the
aggregate fair market value, as of the date of grant, of the shares for which
incentive options become exercisable for the first time by an optionee during
the calendar year exceeds $100,000, the portion of such option which is in
excess of the $100,000 limitation will be treated as a nonqualified option.
Options granted under the Plan to officers, directors or employees of the
Company may be exercised only while the optionee is employed or retained by the
Company or within 90 days of the date of termination of the employment
relationship or directorship. However, options which are exercisable at the time
of termination by reason of death or permanent disability of the optionee may be
exercised within 12 months of the date of termination of the employment
relationship or directorship. Upon the exercise of an option, payment may be
made by cash or by any other means that the Board of Directors or the committee
determines. No options may be granted under the Plan after October 2005.
Options may be granted only to such employees, officers and directors of,
and consultants and advisors to, the Company or any subsidiary of the Company as
the Board of Directors or the committee shall select from time to time in its
sole discretion, provided that only employees of the Company or a subsidiary of
the Company shall be eligible to receive incentive options. An optionee may be
granted more than one option under the Plan. The Board of Directors or the
committee will, in its discretion, determine (subject to the terms of the Plan)
who will be granted options, the time or times at which options shall be
granted, and the number of shares subject to each option, whether the options
are incentive options or nonqualified options, and the manner in which options
may be exercised. In making such determination, consideration may be given to
the value of the services rendered by the respective individuals, their present
and potential contributions to the success of the Company and its subsidiaries
and such other factors deemed relevant in accomplishing the purpose of the Plan.
The Plan may be amended or terminated by the Board at any time. Any
amendment which would increase the aggregate number of shares of Common Stock as
to which options may be granted under the Plan, materially increase the benefits
under the Plan, or modify the class of persons eligible to receive options under
the Plan shall be subject to the approval of the Company's shareholders. No
amendment or termination may adversely affect any outstanding option without the
written consent of the optionee.
-12-
<PAGE>
The following table sets forth information with respect to options granted
under the Plan since its effective date (excluding any options granted subject
to approval of the foregoing amendment to the Plan) and options granted subject
to approval of the foregoing amendment to the Plan (the "Contingent Options").
<TABLE>
<CAPTION>
Number of Shares Average
Covered by Options Number of Shares Exercise
Granted (Excluding Covered by Price Per
Name of Grantee Contingent Options) Contingent Options Share
- --------------- ------------------- ------------------ ---------------
<S> <C> <C> <C>
Louis R. Bucalo, M.D., President 114,100 433,088 $7.125
and Chief Executive Officer
Richard C. Allen, Ph.D., Executive 13,700 61,931 $7.125
Vice President
All current executive officers
as a group 160,000 670,135 $7.125
All current directors who are not
executive officers as a group 80,000 -- $5.00
All employees, including all current
officers who are not executive
officers, as a group 24,500 -- $7.125
</TABLE>
APPOINTMENT OF INDEPENDENT AUDITORS
The Management of the Company recommends the appointment of Ernst & Young
LLP, independent certified public accountants, as the Company's independent
auditors. Ernst & Young LLP has been the Company's auditors for the past two
fiscal years and has no direct or indirect financial interest in the Company. A
representative of Ernst & Young LLP is expected to be present at the Annual
Meeting of Shareholders with the opportunity to make a statement if he or she
desires to do so, and shall be available to respond to appropriate questions.
GENERAL
The Management of the Company does not know of any matters other than those
stated in this Proxy Statement which are to be presented for action at the
meeting. If any other matters should properly come before the meeting, it is
intended that proxies in the accompanying form will be voted on any such other
matters in accordance with the judgment of the persons voting such proxies.
Discretionary authority to vote on such matters is conferred by such proxies
upon the persons voting them.
The Company will bear the cost of preparing, printing, assembling and
mailing the proxy, Proxy Statement and other material which may be sent to
Shareholders in connection with this solicitation. It is contemplated that
brokerage houses will forward the proxy materials to beneficial
-13-
<PAGE>
owners at the request of the Company. In addition to the solicitation of proxies
by use of the mails, officers and regular employees of the Company may solicit
proxies without additional compensation, by telephone or telegraph. The Company
does not expect to pay any compensation for the solicitation of proxies.
The Company will provide without charge to each person being solicited by
this Proxy Statement, on the written request of any such person, a copy of the
Annual Report of the Company on Form 10-KSB for the year ended December 31, 1995
(as filed with the Securities and Exchange Commission) including the financial
statements thereto. All such requests should be directed to Sunil Bhonsle, 400
Oyster Point Boulevard, Suite 505, South San Francisco, California 94080.
SHAREHOLDER PROPOSALS
The Annual Meeting of Shareholders for the fiscal year ending December 31,
1996 is expected to be held in June 1997. All proposals intended to be presented
at the Company's next Annual Meeting of Shareholders must be received at the
Company's executive office no later than April 25, 1997, for inclusion in the
Proxy Statement and form of proxy related to that meeting.
By Order of the Board of Directors,
Louis R. Bucalo, M.D.,
President and Chief
Executive Officer
Dated: September 4, 1996
-14-
<PAGE>
PROXY
TITAN PHARMACEUTICALS, INC.
ANNUAL MEETING OF STOCKHOLDERS
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Dr. Louis R. Bucalo or Sunil Bhonsle as
proxy to represent the undersigned at the Annual Meeting of Shareholders to be
held at 400 Oyster Point Boulevard, Suite 505, South San Francisco, California
94080 on October 18, 1996 at 9:30 a.m., local time, and at any adjournments
thereof, and to vote the shares of Common Stock the undersigned would be
entitled to vote if personally present, as indicated below.
1. Election of Directors
FOR all nominees listed below [ ] WITHHOLDING AUTHORITY [ ]
(except as marked to the to vote for all nominees
contrary below) listed below
Louis R. Bucalo, M.D., Ernst-Gunter Afting, M.D., Ph.D.
Michael K. Hsu, Hubert Huckel, M.D., Marvin E. Jaffe, M.D.,
Peter M. Kash, Lindsay A. Rosenwald, M.D., Konrad M. Weis, Ph.D. and
Kenneth J. Widder, M.D.
(INSTRUCTION: To withhold authority to vote for any individual nominee,
print that nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
2. Approval of an amendment to the Company's 1995 Stock Option Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. Approval and ratification of the appointment of Ernst & Young LLP as
independent auditors.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
<PAGE>
The shares of Common Stock represented by this proxy will be voted as
directed; however, if no direction is given, the shares of Common Stock will be
voted FOR the election of the nominees, FOR the approval of the amendment to the
1995 Stock Option plan and FOR the approval and ratification of the appointment
of Ernst & Young LLP as the independent auditors of the Company.
If any other business is presented at the meeting, this proxy will be voted
by those named in this proxy in their best judgment. At the present time, the
Board of Directors knows of no other business to be presented at the meeting.
DATED:_______________________, 1996
____________________________________
Signature
____________________________________
Signature if held jointly
(Please date, sign as name appears at
the left, and return promptly. If the
shares are registered in the names of
two or more persons, each person
should sign. When signing as Corporate
Officer, Partner, Executor,
Administrator, Trustee or Guardian,
please give full title. Please note
any changes in your address alongside
the address as it appears in the
proxy.)
