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| 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:
___________________________________________________________________________
(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 July 29, 1997
----------
To the Shareholders of
Titan Pharmaceuticals, Inc.
Notice is hereby given that the Annual Meeting of the Shareholders of Titan
Pharmaceuticals, Inc. (the "Company") will be held on July 29, 1997 at 8:30 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 eight directors;
2. To approve and ratify a proposed amendment to the Amended and Restated
Certificate of Incorporation of the Company increasing from 30,000,000
to 50,000,000 the number of authorized shares of Common Stock;
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 June 23, 1997 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: June 25, 1997
<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
July 29, 1997, at 8:30 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
June 25, 1997.
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 June 23, 1997 are entitled to
vote at the meeting. On the record date, the Company had outstanding and
entitled to vote 13,046,102 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 proposed amendment to
the Amended and Restated Certificate of Incorporation (the "Certificate") and
the appointment of Ernst & Young LLP, 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 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.
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of June 23, 1997, 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.
<TABLE>
<CAPTION>
Shares Beneficially Percent of Shares
Name and Address of Beneficial Owner (1) Owned (2) Beneficially Owned
------------------------------------- ------------------ -----------------
<S> <C> <C>
Louis R. Bucalo, M.D. ........................ 438,914(3) 3.4%
Ernst-Gunter Afting, M.D., Ph.D. ............. 2,500(4) *
Richard C. Allen, Ph.D. ...................... 102,488(4) *
Sunil Bhonsle ................................ 173,648(4) 1.3
Michael K. Hsu ............................... 24,846(5) *
Hubert Huckel, M.D. .......................... 5,000(4) *
Marvin E. Jaffe, M.D. ........................ 5,000(4) *
Lindsay A. Rosenwald, M.D. ................... 662,534(6) 5.1
Konrad M. Weis, Ph.D. ........................ 54,352(7) *
Kenneth J. Widder, M.D. ...................... 17,737(7) *
Invesco Trust Company ........................ 1,220,538(8) 9.4
7800 E. Union Avenue
Denver, CO 80237
All executive officers and directors
as a group (10) persons .................... 1,487,019(9) 11.4%
</TABLE>
- ----------
*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 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 228,683 shares issuable upon exercise of outstanding options.
(4) Represents shares issuable upon exercise of outstanding options.
(5) Includes 13,814 shares issuable upon exercise of outstanding options and
warrants.
(6) Includes (i) 90,084 shares held by entities owned by Mr. Rosenwald, and
(ii) 269,654 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."
(7) Includes 10,117 shares issuable upon exercise of outstanding options.
(8) Represents shares held by three mutual funds managed by Invesco Funds
Group, Inc. or Invesco Trust Company.
(9) See Notes (3) through (7) above.
2
<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. ... 38 President, Chief Executive Officer and Director
Sunil Bhonsle ........... 47 Executive Vice President and Chief Operating
Officer
Richard C. Allen, Ph.D. . 54 Executive Vice President
Robert E. Farrell ....... 47 Executive Vice President and Chief Financial
Officer
LOUIS R. BUCALO, M.D., is a co-founder of the Company and of each of the
Company's operating companies -- Ansan Pharmaceuticals, Inc. ("Ansan"), Ingenex,
Inc. ("Ingenex"), ProNeura, Inc. ("ProNeura"), Theracell, Inc. ("Theracell") and
Trilex Pharmaceuticals, Inc. ("Trilex") (collectively, 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.
ROBERT E. FARRELL joined the Company as Executive Vice President and Chief
Financial Officer in September 1996. Mr. Farrell was employed by Fresenius USA,
Inc. from 1991 until August 1996 where he served in various capacities,
including Vice President Administration, Chief Financial Officer and General
Counsel. His last position was Corporate Group Vice President. Mr. Farrell holds
a B.A. from the University of Notre Dame and a J.D. from the University of
California.
3
<PAGE>
ELECTION OF DIRECTORS
At the meeting, eight 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 that the accompanying proxy will
be voted for the election, as directors, of the eight 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 eight 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. .............. 38 President, Chief Executive Officer
and Director
Ernst-Gunter Afting, M.D., Ph.D. ... 54 Director
Michael K. Hsu(2) .................. 48 Director
Hubert Huckel, M.D.(3) ............. 66 Director
Marvin E. Jaffe, M.D.(2) ........... 61 Director
Lindsay A. Rosenwald, M.D.(1)(3) ... 42 Director
Konrad M. Weis, Ph.D.(1) ........... 68 Director
Kenneth J. Widder, M.D.(1)(3) ...... 44 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 owned subsidiary 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 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. 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
4
<PAGE>
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 Sano Corporation and Thermogenesis Corp.
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.
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 biotechnology and biopharmaceutical venture capital firm, since October
1991, the Chairman and President of Paramount Capital Investment, LLC, a
merchant banking firm, since 1995, and the Chairman and President of Paramount
Capital, Inc., an investment banking firm, since February 1992. In June 1994,
Dr. Rosenwald founded Paramount Capital Asset Management, Inc., a money
management firm specializing in the biotechnology and health sciences industry.
From 1987 until 1991, Dr. Rosenwald was a Managing Director, Corporate Finance
at Blair & Co., an investment banking firm. Dr. Rosenwald also is a director of
Ansan, Atlantic Pharmaceuticals, Inc., Avigen, Inc., BioCryst Pharmaceuticals,
Inc., Neose Techonolgies, Inc., Sparta Pharmaceuticals, Inc., Vim Rx
Pharmaceuticals, Inc. and Xenometrix, Inc., and is Chairman of the Board or a
director of a number of privately held companies 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 Baker
Company, Visible Genetics 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 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
("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 $8.50 per share
when he joined the Board of Directors in May 1996. Immediately after the Annual
Meeting of Shareholders, each of the Company's directors will receive Director
Options to purchase 2,000 shares of Common Stock at an exercise price equal to
fair market value on the date of grant.
5
<PAGE>
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 six times during 1996 and also took action by
unanimous written consent. The Executive Committee met one time and also took
action by unanimous written consent, and the Compensation Committee met three
times. Each of the current directors of the Company attended at least 75% of the
aggregate of (i) the meetings of the Board of Directors and (ii) 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 D.H. Blair Investment Banking Corp.
("Blair"), to nominate a designee of Blair to the Company's Board of Directors
until 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, 1996 (collectively, the "named executive officers") for
services during the fiscal years ended December 31, 1996, 1995 and 1994:
Summary Compensation Table
Annual Compensation
-----------------------------
Name and Principal Position Year Salary Bonus
--------------------------- ---- -------- -----------
Louis R. Bucalo ................................ 1996 $210,000 $ 42,000(3)
President and Chief Executive Officer(1) 1995 $188,000 $ 0
1994 $206,000 $ 35,000
Sunil Bhonsle .................................. 1996 $185,000 $ 9,250(3)
Executive Vice President and 1995 $ 50,104 $ 0
Chief Operating Officer(1) 1994 $ 0 $ 0
Richard C. Allen ............................... 1996 $185,000 $ 15,500(3)
Executive Vice President(2) 1995 $166,000 $ 0
1994 $ 0 $ 0
- ----------
(1) A portion of the cash compensation paid to Dr. Bucalo and Mr. Bhonsle is
allocable to the Operating Companies during 1996 and 1995 pursuant to
management services arrangements between the Company and the Operating
Companies.
(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.
(3) Bonuses pertain to fiscal year 1995 and have been accrued by the Company.
Bonuses will be paid (with interest at the rate of prime plus 1% commencing
May 1, 1996) only if (i) one-half of the warrants issued in the Company's
initial public offering in January 1996 have been exercised by December 31,
1997 or (ii) the Company completes a financing of at least $7 million in
gross proceeds.
6
<PAGE>
Option Grants in Last Fiscal Year
The following table contains information concerning the stock option grants
made to the named executive officers during the fiscal year ended December 31,
1996. No stock appreciation rights were granted to these individuals during such
year.
Individual Grant
Number of ---------------------------------------------
Securities
Underlying % of Total
Options Options Granted Exercise or
Granted to Employees in Base Price Expiration
Name (#)(1) Fiscal Year ($/Sh) (2) Date
----- ------------ -------------- ------------ ----------
Louis R. Bucalo ... 10,000 1.0% $5.00 01/18/2001
104,100 10.2% $7.13 04/02/2006
433,088 (2)42.6% $10.75 08/06/2006
Sunil Bhonsle ..... 42,200 4.2% $7.13 04/02/2006
175,086 (2)17.2% $10.75 08/06/2006
Richard C. Allen .. 13,700 1.3% $7.13 04/02/2006
61,961 (2)6.1% $10.75 08/06/2006
- ----------
(1) 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.
(2) One-half of the shares of Common Stock issuable upon exercise of the
options is subject to repurchase by the Company at $10.75 unless (i)
one-half of the warrants issued in the Company's initial public offering in
January 1996 have been exercised by December 31, 1997 or (ii) there is a
50% increase in the Company's unit value or market capitalization between
August 2, 1996 and December 31, 1997.
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, 1996 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- 113,640 515,303 $470,461 $304,875
Sunil Bhonsle ............ -0- 50,576 282,523 $207,653 $638,721
Richard C. Allen ......... -0- 47,415 86,152 $109,107 $305,789
</TABLE>
- ----------
(1) Based on the fair market value of the Company's Common Stock at year-end,
$8.25 per share, 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.
7
<PAGE>
Employment Agreements
The Company is a party to employment agreements with each of Dr. Bucalo,
President and Chief Executive Officer, Sunil Bhonsle, Executive Vice President
and Chief Operating Officer of the Company, Robert E. Farrell, Executive Vice
President and Chief Financial Officer of the Company, and 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.
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 agreement with Mr. Farrell 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. Farrell'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. Farrell has
also been granted certain options that vest over five years if he remains
employed by the Company.
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.
The Company has agreed with Blair 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 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.
8
<PAGE>
CERTAIN TRANSACTIONS
In March and April 1993, the Company borrowed an aggregate of $700,000 from
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 lender received warrants which are currently exercisable to
purchase an aggregate of 20,355 shares of Common Stock 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 Dr. Rosenwald of shares of Series
A Preferred Stock which subsequently converted into 215,135 shares of Common
Stock.
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 of 469,107 shares of Common Stock exercisable at $4.50 per share. Dr.
Rosenwald serves as the President and Chairman of Paramount. Dr. Rosenwald
received warrants to purchase 221,221 of the aforementioned shares of Common
Stock.
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 received warrants to purchase
17,961 of such shares.
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.
9
<PAGE>
APPROVAL AND RATIFICATION OF THE AMENDMENT TO THE
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
The Board of Directors has adopted and recommends to the shareholders
approval of a proposed amendment to the Company's Certificate to increase the
authorized number of shares of Common Stock from 30,000,000 to 50,000,000. The
proposed increase in the authorized numbers of shares of Common Stock has been
recommended by the Board of Directors to assure that an adequate supply of
authorized unissued shares of Common Stock is available for general corporate
needs.
As of June 23, 1997, in addition to the 13,046,102 shares of Common Stock
outstanding, the Company had (i) an aggregate of 1,611,437 shares of Common
Stock reserved for issuance upon exercise of options granted under the Company's
1993 and 1995 Stock Option Plans, of which options to purchase 1,391,572 shares
of Common Stock are outstanding and (ii) 8,795,522 shares of Common Stock
issuable upon exercise of other outstanding options and warrants; leaving
approximately 6,546,939 additional shares of Common Stock available for
issuance. If the amendment to the Certificate is approved, there will be
26,546,939 authorized shares of Common Stock available for issuance, on such
terms and conditions as may be determined by the Board of Directors.
While the Company has no specific plans, arrangements, or agreements to
issue shares of Common Stock other than those described above, the Board of
Directors believes it is advisable and in the best interests of the Company to
have available authorized but unissued shares of Common Stock in an amount
adequate to provide for the future needs of the Company. The additional
authorized shares of Common Stock will benefit the Company by providing
flexibility to the Board of Directors without further action or authorization by
shareholders (except as required by law), in responding to business needs and
opportunities as they arise, or for other proper corporate purposes. These
corporate purposes might include acquisitions of property, technology rights or
securities of other corporations, stock dividends, stock splits, employee stock
options, convertible debt financings, the obtaining of capital funds through
public and private offerings of shares of Common Stock or of securities
convertible into technologies or other assets, or to compensate employees or
retain consultants. The issuance of any additional shares of Common Stock will
be on terms deemed to be, at the time of such issuances, in the best interests
of the Company and its shareholders. If such additional authorized shares of
Common Stock are subsequently issued to other than existing shareholders, the
percentage interest of existing shareholders in the Company will be reduced.
Holders of shares of Common Stock have no pre-emptive rights with respect to
future issuances of shares of Common Stock.
The Board of Directors is not aware of any attempt to gain control of the
Company nor is it recommending this amendment to increase the number of
authorized shares of Common Stock in response to any specific effort to obtain
control of the Company. The proposed amendment to increase the number of
authorized shares of Common Stock is not designed as nor intended to be an
anti-takeover measure; however the authorized but unissued shares of Common
Stock could be used by incumbent management to make a change in control of the
Company more difficult and time-consuming. Under certain circumstances, such
unissued shares of Common Stock could be used to create obstacles or to
frustrate persons seeking to effect a takeover or otherwise gain control of the
Company with a view to instituting a merger, sale of all or part of the
Company's assets, or other similar transaction which may not be in the best
interest of the shareholders.
It is expected that the proposed amendment, if approved by the
shareholders, will be made effective on or about August 4, 1997 by the filing
and recording of an appropriate Certificate of Amendment as required under
Delaware law.
10
<PAGE>
The Board of Directors recommends a vote FOR the proposed amendment, and
the persons named in the accompanying proxy will vote in accordance with the
choice specified thereon or, if no choice is properly indicated, in favor of the
amendment.
APPOINTMENT OF INDEPENDENT AUDITORS
The Management of the Company recommends the appointment of Ernst & Young
LLP, as the Company's independent auditors. Ernst & Young LLP has been the
Company's auditors for the past three 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 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, 1996
(as filed with the Securities and Exchange Commission) including the financial
statements thereto. All such requests should be directed to Robert E. Farrell,
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,
1997 is expected to be held in June 1998. 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, 1998, 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: June 25, 1997
11
<PAGE>
PROXY
TITAN PHARMACEUTICALS, INC.
ANNUAL MEETING OF SHAREHOLDERS
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 July 29, 1997 at 8:30 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 contrary below) to vote for all nominees
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., 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 Amended and Restated
Certificate of Incorporation to increase from 30,000,000 to 50,000,000 the
number of authorized shares of Common Stock
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
Amended and Restated Certificate of Incorporation 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:_____________________________, 1997
________________________________________
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.)
