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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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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
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 14a-12
Only (as permitted by Rule 14a-6(c)(2))
[ ] Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2)
TARGETED GENETICS CORPORATION
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
CALCULATION OF FILING FEE
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PER UNIT PRICE OR
OTHER
UNDERLYING VALUE
AGGREGATE NUMBER OF
OF TRANSACTION
TITLE OF EACH CLASS SECURITIES TO COMPUTED
OF WHICH PURSUANT TO PROPOSED MAXIMUM
SECURITIES TO WHICH TRANSACTION EXCHANGE AGGREGATE VALUE OF
TRANSACTION APPLIES: APPLIES: ACT RULE 0-11: TRANSACTION: TAL FEE PAID:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
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<S> <C>
Amount Previously Paid: _______________ Filing Party: _______________
Form, Schedule or
Registration Statement no.: ___________ Date Filed: _________________
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[TARGETED GENETICS LOGO]
March 24, 1997
Dear Shareholder:
You are cordially invited to attend the 1997 Annual Meeting of Shareholders
(the "Annual Meeting") of Targeted Genetics Corporation ("Targeted Genetics"),
which will be held on Wednesday, May 7, 1997, at 9:00 a.m., local time, at the
Company's headquarters, located at 1100 Olive Way, Suite 100, Seattle,
Washington.
At the Annual Meeting, you will be asked to consider and vote upon a
proposal to amend the Targeted Genetics 1994 Stock Option Plan for Nonemployee
Directors (the "NED Plan") to increase the number of shares issuable under the
plan. In addition, you will be asked to elect four directors to Targeted
Genetics' Board of Directors.
TARGETED GENETICS' BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE
AMENDMENT TO THE NED PLAN AND FOR THE ELECTION OF THE NOMINEES FOR DIRECTOR.
You should read carefully the accompanying Notice of Annual Meeting of
Shareholders and the Proxy Statement for additional related information.
Whether or not you plan to attend the Annual Meeting, please complete, sign
and date the enclosed proxy card and return it promptly in the enclosed
postage-prepaid envelope. Your stock will be voted in accordance with the
instructions you have given in your proxy. If you attend the Annual Meeting, you
may vote in person if you wish, even though you previously have returned your
proxy card. Your prompt cooperation will be greatly appreciated.
Sincerely,
/s/ H. STEWART PARKER
H. Stewart Parker
President and Chief Executive Officer
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD.
<PAGE> 3
TARGETED GENETICS CORPORATION
1100 OLIVE WAY, SUITE 100
SEATTLE, WASHINGTON 98101
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD MAY 7, 1997
TO THE SHAREHOLDERS OF TARGETED GENETICS CORPORATION:
The Annual Meeting of Shareholders (the "Annual Meeting") of Targeted
Genetics Corporation, a Washington corporation ("Targeted Genetics"), will be
held on Wednesday, May 7, 1997, at 9:00 a.m., local time, at the Company's
headquarters, located at 1100 Olive Way, Suite 100, Seattle, Washington, for the
following purposes:
1. To consider and vote upon a proposal to amend the Targeted Genetics
1994 Stock Option Plan for Nonemployee Directors (the "NED Plan") to
increase the number of shares of Targeted Genetics common stock, par value
$.01 per share (the "Common Stock"), issuable under the plan.
2. To elect two Class 3 directors to Targeted Genetics' Board of
Directors to hold office until the third annual meeting of shareholders
following such election and until their successors are elected and
qualified.
3. To elect one Class 2 director to Targeted Genetics' Board of
Directors to hold office until the second annual meeting of shareholders
following such election and until his successor is elected and qualified.
4. To elect one Class 1 director to Targeted Genetics' Board of
Directors to hold office until the next annual meeting of shareholders
following such election and until his successor is elected and qualified.
5. To transact such other business as may properly come before the
Annual Meeting or any adjournments or postponements thereof.
Only holders of record of shares of Common Stock at the close of business
on March 7, 1997, the record date for the Annual Meeting, are entitled to notice
of and to vote at the Annual Meeting and any adjournments or postponements
thereof.
The affirmative vote of the holders of shares representing a majority of
the total votes cast, in person or by proxy, at the Annual Meeting is required
to approve the amendment of the NED Plan. The directors elected will be the four
candidates receiving the greatest number of votes cast, in person or by proxy,
at the Annual Meeting.
WHETHER OR NOT YOU PLAN TO ATTEND THE ANNUAL MEETING, PLEASE COMPLETE, SIGN
AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENCLOSED
POSTAGE-PREPAID ENVELOPE. YOUR STOCK WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS YOU HAVE GIVEN IN YOUR PROXY. YOUR PROXY MAY BE REVOKED AT ANY TIME
BEFORE IT IS VOTED BY SIGNING AND RETURNING A LATER-DATED PROXY WITH RESPECT TO
THE SAME SHARES, BY FILING WITH THE SECRETARY OF TARGETED GENETICS A WRITTEN
REVOCATION BEARING A LATER DATE OR BY ATTENDING AND VOTING IN PERSON AT THE
ANNUAL MEETING.
By Order of the Board of Directors
/s/ JAMES A. JOHNSON
James A. Johnson
Secretary
Seattle, Washington
March 24, 1997
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TARGETED GENETICS CORPORATION
------------------------
PROXY STATEMENT
This Proxy Statement is being furnished to holders of shares of common
stock, par value $.01 per share (the "Common Stock"), of Targeted Genetics
Corporation, a Washington corporation ("Targeted Genetics" or the "Company"), in
connection with the solicitation of proxies by Targeted Genetics' Board of
Directors (the "Board") for use at the 1997 Annual Meeting of Shareholders to be
held on Wednesday, May 7, 1997, at the Company's headquarters, located at 1100
Olive Way, Suite 100, Seattle, Washington, commencing at 9:00 a.m., local time,
and at any adjournments or postponements thereof (the "Annual Meeting"). The
approximate date of the mailing of this proxy statement and proxy is March 24,
1997.
MATTERS TO BE CONSIDERED AT THE MEETING
At the Annual Meeting, shareholders of record of Targeted Genetics as of
the close of business on March 7, 1997 will consider and vote upon (i) a
proposal to amend the Targeted Genetics 1994 Stock Option Plan for Nonemployee
Directors (the "NED Plan") to increase the number of shares of Common Stock
issuable under the plan from 120,000 to 300,000; (ii) the election of two Class
3 directors to the Board to hold office until the third annual meeting of
shareholders following such election and until their successors are elected and
qualified; (iii) the election of one Class 2 director to the Board to hold
office until the second annual meeting of shareholders following such election
and until his successor is elected and qualified; (iv) the election of one Class
1 director to the Board to hold office until the next annual meeting of
shareholders following such election and until his successor is elected and
qualified; and (v) such other business as may properly come before the Annual
Meeting or any adjournments or postponements thereof.
THE BOARD HAS APPROVED THE AMENDMENT TO THE NED PLAN AND RECOMMENDS THAT
TARGETED GENETICS SHAREHOLDERS VOTE "FOR" APPROVAL OF THE AMENDMENT TO THE NED
PLAN, AND "FOR" ELECTION OF THE NOMINEES FOR DIRECTOR. See "AMENDMENT OF THE NED
PLAN" and "ELECTION OF DIRECTORS."
RECORD DATE; SHARES ENTITLED TO VOTE; VOTE REQUIRED
The close of business on March 7, 1997 (the "Record Date") has been fixed
as the record date for determining the holders of shares of Common Stock who are
entitled to notice of and to vote at the Annual Meeting. As of the Record Date,
there were 20,205,434 shares of Common Stock outstanding and entitled to vote.
The holders of record on the Record Date of shares of Common Stock are entitled
to one vote per share of Common Stock. The presence, in person or by proxy, of
the holders of shares representing a majority of the voting power of the shares
of Common Stock entitled to vote is necessary to constitute a quorum for the
transaction of business at the Annual Meeting.
The affirmative vote of the holders of shares representing a majority of
the total votes cast, in person or by proxy, at the Annual Meeting is required
to approve the amendment to the NED Plan. The directors elected will be the four
candidates receiving the greatest number of votes cast by the holders of shares
of Common Stock present, in person or by proxy, at the Annual Meeting. Holders
of shares of Common Stock are not entitled to cumulate votes in the election of
directors. As of the Record Date, directors and executive officers of Targeted
Genetics and their affiliates may be deemed to be beneficial owners of
approximately 17% of the outstanding voting shares of Common Stock. Each of the
directors and executive officers of Targeted Genetics plans to vote or direct
the vote of all shares of Common Stock over which he or she has voting control
in favor of the amendment to the NED Plan and the election of the nominees for
director.
Abstention from voting and broker nonvotes will have no effect on either
the approval of the amendment to the NED Plan or the election of directors since
they will not represent votes cast at the Annual Meeting for such purposes.
<PAGE> 5
PROXIES
Shares of Common Stock represented by properly executed proxies received at
or prior to the Annual Meeting that have not been revoked will be voted at the
Annual Meeting in accordance with the instructions contained therein. Shares of
Common Stock represented by properly executed proxies for which no instruction
is given will be voted "FOR" approval of the amendment to the NED Plan and "FOR"
election of the nominees for director. Targeted Genetics shareholders are
requested to complete, sign, date and return promptly the enclosed proxy card in
the postage-prepaid envelope provided for this purpose to ensure that their
shares are voted. A shareholder may revoke a proxy by submitting at any time
prior to the vote on the approval of the amendment to the NED Plan and the
election of the nominees for director a later-dated proxy with respect to the
same shares, by delivering written notice of revocation to the Secretary of
Targeted Genetics at any time prior to such vote or by attending the Annual
Meeting and voting in person. Mere attendance at the Annual Meeting will not in
and of itself revoke a proxy.
If the Annual Meeting is postponed or adjourned for any reason, at any
subsequent reconvening of the Annual Meeting all proxies will be voted in the
same manner as such proxies would have been voted at the original convening of
the Annual Meeting (except for any proxies that have theretofore effectively
been revoked or withdrawn), notwithstanding that they may have been effectively
voted on the same or any other matter at a previous meeting.
PROXY SOLICITATION
Targeted Genetics will bear the cost of soliciting proxies from its
shareholders. In addition to solicitation by mail, directors, officers and
employees of Targeted Genetics may solicit proxies by telephone, telegram or
otherwise. Such directors, officers and employees of Targeted Genetics will not
be additionally compensated for such solicitation, but may be reimbursed for
out-of-pocket expenses incurred in connection therewith. Brokerage firms,
fiduciaries and other custodians who forward soliciting material to the
beneficial owners of shares of Common Stock held of record by them will be
reimbursed for their reasonable expenses incurred in forwarding such material.
AMENDMENT OF THE NED PLAN
PROPOSED AMENDMENT
The Board recommends the adoption of an amendment to the NED Plan (the
"Amendment") that increases the number of shares of Common Stock issuable under
the plan from 120,000 to 300,000 shares. On January 14, 1997, the Board
unanimously approved the Amendment subject to approval of the Amendment by
Targeted Genetics' shareholders at the Annual Meeting. A copy of the amended NED
Plan will be furnished by Targeted Genetics to any shareholder upon written
request to the Secretary of Targeted Genetics.
The Board believes that the Amendment is necessary to attract and retain
the services of experienced and knowledgeable nonemployee directors in a
competitive biotechnology industry where its competitors utilize various stock
option plans and cash remuneration to attract such individuals. Furthermore,
Targeted Genetics pays no cash compensation to its nonemployee directors.
Options granted under the NED Plan and reimbursement of travel expenses related
to attendance at board meetings are the only compensation provided to
nonemployee directors of the Company.
DESCRIPTION OF THE NED PLAN
The NED Plan, originally approved by the Board and by the Targeted Genetics
shareholders in March 1994, provides for awards of nonqualified stock options
("NSOs") to nonemployee directors. Currently, an aggregate of 120,000 shares of
Common Stock may be issued under the NED Plan. The NED Plan provides for initial
automatic grants of NSOs to nonemployee directors of Targeted Genetics at an
exercise price equal to the fair market value per share at the date of grant.
Each nonemployee director initially elected or appointed to the Board receives,
upon such election or appointment, an option to purchase 15,000 shares of Common
Stock. Each nonemployee director receives only one such initial grant. In
addition
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to the initial grant, each nonemployee director receives an annual grant,
beginning in the calendar year after such nonemployee director's initial
election or appointment, of an option to purchase 5,000 shares of Common Stock.
All options granted under the NED Plan will vest in three equal annual
installments beginning one year after the date of grant. The exercise price of
an option granted under the NED Plan is based upon the fair market value of the
Common Stock, as reported on the Nasdaq Stock Market on the date of grant.
As of March 3, 1997, options to purchase an aggregate of 104,000 shares of
Common Stock have been granted under the NED Plan. In 1996, Mark Richmond,
Martin P. Sutter and Austin M. Long, III each received an option to purchase
15,000 shares of Common Stock. Also in 1996, Jeremy Curnock Cook, Stephen A.
Duzan, James D. Grant and Donald E. O'Neill each received an option to purchase
5,000 shares of Common Stock.
During a nonemployee director's lifetime, an option granted under the NED
Plan may be exercised only by such optionee and is nontransferable other than by
(a) will or the laws of descent and distribution or (b) gift or other transfer
to a spouse or other immediate family member or any trust or estate in which
such optionee, or such optionee's spouse or other immediate family member, has a
substantial beneficial interest. In addition, an optionee may designate in
writing during the optionee's lifetime a beneficiary to receive and exercise
options in the event of the optionee's death. Options expire 10 years after the
date of grant or, if earlier, three months after a nonemployee director's
termination of service as a director or twelve months after a nonemployee
director's death.
Upon the occurrence of certain events, including certain mergers,
consolidations, reorganizations (other than a mere reincorporation or the
creation of a holding company) or sales of assets, the optionee will have the
right immediately prior to the transaction to exercise his or her options in
whole or in part without regard to whether the vesting requirements have been
satisfied. To the extent any option is not exercised, it will terminate.
However, in a stock merger, unexercised options will be assumed, or equivalent
options will be substituted, by the successor corporation. Any such assumed or
equivalent option will be 100% vested; provided, however, that no acceleration
of vesting will occur if, in the opinion of the Company's independent
accountants, such acceleration would render unavailable "pooling of interests"
accounting treatment for a transaction where such treatment is sought.
Unless sooner terminated by either the Board or the shareholders of
Targeted Genetics, the NED Plan will terminate on March 2, 2004.
FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain federal income tax consequences
of participation in the NED Plan. The discussion is general in nature and does
not address issues related to the tax circumstances of any particular optionee.
The discussion is based on federal income tax laws in effect on the date hereof
and is, therefore, subject to possible future changes in law. The discussion
does not address state, local or foreign consequences.
There are no tax consequences to Targeted Genetics or the optionee upon the
grant of an NSO under the NED Plan. Upon exercise of an NSO, the optionee
recognizes ordinary income equal to the difference between the exercise price of
the shares and the fair market value of the shares on the date of exercise. The
optionee, as a nonemployee director, will not be subject to employee payroll and
withholding tax on such income. However, the income recognized upon the exercise
of options may be subject to backup withholding at the rate of 31% if the
optionee fails to furnish a proper taxpayer identification number to Targeted
Genetics in the manner required by law or fails to otherwise comply with the
backup withholding rules. Upon exercise of an NSO granted under the NED Plan,
Targeted Genetics will be entitled to a tax deduction equal to the income
recognized by the optionee, provided that the deduction is not disallowed by the
Internal Revenue Code of 1986, as amended (the "Code").
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<PAGE> 7
ELECTION OF DIRECTORS
In accordance with the Amended and Restated Bylaws of Targeted Genetics
(the "Bylaws"), the Board shall be composed of not less than one nor more than
nine directors. At present, there are eight directors, each of whom is placed
into one of three classes such that, to the extent possible, there is an equal
number of directors in each class. At the first election of directors to the
classified Board, which took place in 1994, each Class 1 director was elected to
serve a one-year term, each Class 2 director was elected to serve a two-year
term and each Class 3 director was elected to serve a three-year term. After the
first election of directors to the classified Board, generally every director
elected to the Board holds office for a term of three years and until his or her
successor is elected and qualified. However, if the size of the Board is
increased, as it was in 1996, a newly elected or appointed director may be
designated to a class such that he or she initially must be elected to a shorter
term.
Pursuant to the terms of the Agreement and Plan of Merger, dated April 16,
1996, among the Company, TGC Acquisition Corporation and RGene Therapeutics,
Inc. (the "Merger Agreement"), Austin M. Long, III was appointed to the Board as
a Class 1 director and Martin P. Sutter was appointed to the Board as a Class 2
director. On January 14, 1997, Mr. Long expressed his intent not to stand for
election to the Board at the Annual Meeting.
At the Annual Meeting, two Class 3 directors are to be elected, each to
hold office for a term of three years, one Class 2 director is to be elected to
hold office for a term of two years, and one Class 1 director is to be elected
to hold office for a term of one year. H. Stewart Parker and Mark Richmond have
been nominated for election to the Board as Class 3 directors, Martin P. Sutter
has been nominated for election to the Board as a Class 2 director, and Jack L.
Bowman has been nominated for election to the Board as a Class 1 director. It is
intended that votes will be cast pursuant to the accompanying proxy for the
election of these nominees unless contrary instructions are received. If any
nominee should become unavailable for any reason, it is intended that votes will
be cast for a substitute nominee designated by the Board. The Board has no
reason to believe that any of the nominees named will be unable to serve if
elected.
NOMINEES
H. STEWART PARKER (age 41) managed the formation of Targeted Genetics as a
wholly owned subsidiary of Immunex Corporation ("Immunex") and has been
President, Chief Executive Officer and a director since the Company's inception
in 1989. She served in various capacities at Immunex from August 1981 through
December 1991, most recently as Vice President, Corporate Development. Ms.
Parker also served as President and a director of Receptech Corporation, a
company formed by Immunex in 1989 to accelerate the development of soluble
cytokine receptor products ("Receptech"), from February 1991 to January 1993.
She received her B.A. and M.B.A. from the University of Washington.
MARK RICHMOND (age 66) has been a director of the Company since July 1996.
He is a business consultant in addition to a Research Fellow of the School of
Public Policy, University College London. From January 1993 until his retirement
in February 1996, Dr. Richmond was employed by Glaxo Wellcome plc (previously
Glaxo plc) and served as Director of Research. Previously, from October 1990
until December 1993 he was Chairman of the Science and Engineering Research
Council, London. Dr. Richmond received his Ph.D. and D.Sc. from Cambridge
University, England.
MARTIN P. SUTTER (age 41) was appointed to the Board pursuant to the terms
of the Merger Agreement. Mr. Sutter has been a General Partner of
Essex/Woodlands Health Ventures, L.P., a venture capital firm, since September
1994. He has also been the Managing General Partner of The Woodlands Venture
Partners, L.P. since October 1988. Mr. Sutter is currently a member of the
Biomedical Advisory Board of the Houston Advanced Research Center, Chairman of
the Board of Aronex Pharmaceuticals, Inc. and Zonagen, Inc. and a director of
various private biomedical companies.
JACK L. BOWMAN (age 64) was nominated for directorship in March 1997. From
1987 until January 1994, Mr. Bowman was a company group chairman at Johnson &
Johnson, having primary responsibility for a group of companies in the
diagnostic, blood glucose monitoring and pharmaceutical businesses. From 1980 to
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1987, Mr. Bowman held various positions at American Cyanamid Company, most
recently as Executive Vice President. Mr. Bowman was a member of the board of
trustees of The Johns Hopkins University and currently serves as a director of
Cell Therapeutics, Inc., Cellegy Pharmaceuticals, Inc., CytRx Corporation, NeoRx
Corporation, and PharmaGenics, Inc.
CONTINUING DIRECTORS -- TERMS EXPIRE 1998
JEREMY CURNOCK COOK (age 48) is a Director of Rothschild Asset Management
Limited and has been responsible for the Rothschild Bioscience Unit since 1987.
Mr. Cook founded the International Biochemicals Group in 1975 which he
subsequently sold to Royal Dutch Shell in 1985, remaining as Managing Director
until 1987. He is also a director of Cell Therapeutics, Inc., Creative
BioMolecules Inc., Ribozyme Pharmaceuticals Inc. and SUGEN, Inc. as well as
several public and privately held companies outside the US, including
International Biotechnology Trust plc (U.K.). Mr. Cook holds an MA in Natural
Sciences from Trinity College Dublin.
DONALD E. O'NEILL (age 71) has been a director of the Company since
November 1992. From March 1971 to March 1991, he held various positions at
Warner-Lambert Company (a healthcare company), most recently as Executive Vice
President, Chairman of International Operations and a member of the Board of
Directors. He currently serves on the Board of Directors of Alliance
Pharmaceutical Corp., Cytogen Corporation, Fuisz Technologies, Inc., Immunogen,
Inc., MDL Information Systems, Inc. and New Jersey Resources Corporation.
CONTINUING DIRECTORS -- TERMS EXPIRE 1999
STEPHEN A. DUZAN (age 55) has been a director of the Company since its
inception in 1989. He is currently Chairman, Chief Executive Officer and a
Director of Key Computer Systems, Inc. Mr. Duzan was a co-founder of Immunex,
and served as its Chief Executive Officer and as a director from its formation
in 1981 until his retirement in September 1993. He also served as President of
Immunex from 1981 through 1990. He currently serves on the board of directors of
International Biotechnology Trust plc (U.K.), Ergo Science Corporation and a
number of private companies and nonprofit organizations.
JAMES D. GRANT (age 64) has been a director of the Company since February
1993. He is a business consultant in addition to serving as Chairman of the
Board of T Cell Sciences, Inc. (a biotechnology company). Mr. Grant previously
served as Chairman and Chief Executive Officer from 1986 until his retirement in
1992. Previously he was Vice President of CPC International, Inc. (a
multinational food and industrial products company) from 1972 to 1986. Mr. Grant
served as Deputy Commissioner of the FDA from 1969 to 1972, and was Vice
Chairman of the Advisory Committee on the FDA ("Edwards Committee") from 1990 to
1991. Mr. Grant currently serves on the Board of Directors of Biocompatibles,
Ltd. (U.K.) and International Biotechnology Trust plc (U.K.).
DIRECTOR COMPENSATION
Directors who are employees of Targeted Genetics do not receive any fee for
their services as directors. Directors who are not employees of Targeted
Genetics are compensated pursuant to the NED Plan. Additionally, nonemployee
directors are reimbursed for travel expenses incurred related to attendance at
meetings.
COMMITTEES OF THE BOARD AND MEETINGS
Targeted Genetics has established standing committees of the Board,
including Audit, Compensation and Nominating Committees. Each of these
committees is responsible to the full Board, and its activities are therefore
subject to approval of the Board. The functions performed by these committees
can be summarized as follows.
Audit Committee. The Audit Committee reviews the corporate accounting and
reporting practices, internal accounting controls, audit plans and results,
investment policies, and financial reports of Targeted
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Genetics in order to ensure that Targeted Genetics' assets are appropriately
safeguarded and to ensure the quality and integrity of its financial records.
Additionally, the Audit Committee recommends to the Board the independent
auditors to be retained by Targeted Genetics. Between January 1, 1996 and
October 17, 1996, the members of this committee were Jeremy Curnock Cook, James
D. Grant and Donald E. O'Neill. On October 17, 1996, Mr. Grant's and Mr.
O'Neill's service on the committee ceased and Martin P. Sutter and Austin M.
Long, III were appointed to the committee. The Audit Committee met twice,
telephonically, during 1996. Messrs. O'Neill and Cook, two of the three members
at the time of the first meeting, were in attendance, and Mr. Grant was absent.
Messrs. Cook and Sutter attended the second meeting, and Mr. Long was absent.
Compensation Committee. The Compensation Committee establishes salaries,
incentives and other forms of compensation for directors and officers of
Targeted Genetics. This committee also administers Targeted Genetics' various
incentive compensation and benefit plans, including stock option plans, and
recommends the establishment of policies relating to such incentive compensation
and benefit plans. The members of this committee are Stephen A. Duzan, James D.
Grant and Donald E. O'Neill. This committee met four times, once telephonically,
during 1996. All members were in attendance at 75% or more of such meetings.
Nominating Committee. The Nominating Committee makes recommendations to the
Board concerning the desired qualifications of prospective candidates to fill
vacancies on the Board. The members of this committee are H. Stewart Parker and
James D. Grant. This Committee did not meet in 1996. The Nominating Committee
will consider shareholder recommendations for director-nominees that are
submitted in accordance with the procedures established in the Bylaws.
During 1996, there were eight meetings of the Board, five of which were
held telephonically. All directors other than Dr. Richmond and Messrs. Sutter
and Long were in attendance at over 75% of such meetings. Because Dr. Richmond
and Messrs. Sutter and Long were initially appointed to the Board on July 17,
1996, they did not attend Board meetings prior to that date. Dr. Richmond and
Messrs. Sutter and Long were each in attendance at two of the three Board
meetings held on or after such date.
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EXECUTIVE COMPENSATION
COMPENSATION SUMMARY
The following table sets forth the compensation for services rendered
during the fiscal years ended December 31, 1996, 1995 and 1994 for Targeted
Genetics' Chief Executive Officer and its other executive officers whose salary
and bonus exceeded $100,000 for the fiscal year ended December 31, 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
ANNUAL COMPENSATION SHARES
-------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTION(#) COMPENSATION($)
- ------------------------------------- ---- ----------- ---------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
H. Stewart Parker(1) 1996 200,000 42,500 35,522 2,783
President and Chief Executive 1995 165,000 41,250 39,186 235
Officer 1994 154,000 45,000 50,000 137
Barrie J. Carter, Ph.D.(2) 1996 154,000 26,180 24,112 9,027
Executive Vice President and 1995 140,000 28,000 26,982 6,018
Director of Research 1994 132,550 30,000 40,000 5,975
and Development
Richard Daifuku, M.D., Ph.D.(3) 1996 168,000 21,420 -- 14,783
Vice President, Clinical Affairs 1995 150,974 -- 40,000 65,303
1994 -- -- -- --
James A. Johnson(4) 1996 141,000 17,978 22,045 2,783
Vice President, Finance, Chief 1995 128,000 19,200 25,038 103
Financial Officer, Treasurer 1994 102,500 -- 60,000 96
and Secretary
</TABLE>
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(1) Other compensation consists of matching contributions to a 401(k) savings
plan of $2,375 in 1996 and excess life insurance premiums of $408, $235 and
$137 in 1996, 1995 and 1994, respectively.
(2) Other compensation consists of matching contributions to a 401(k) savings
plan of $2,375 in 1996, extinguishment of debt associated with initial
purchases of Common Stock of $5,500 in each of the three years presented and
excess life insurance premiums of $1,152, $518 and $475 in 1996, 1995 and
1994, respectively.
(3) Dr. Daifuku began his employment with Targeted Genetics on January 23, 1995.
Other compensation consists of matching contributions to a 401(k) savings
plan of $2,375 in 1996, extinguishment of debt associated with relocation
costs of $12,000 in 1996 and 1995, reimbursement of relocation expenses of
$53,079 in 1995 and excess life insurance premiums of $408 and $224 in 1996
and 1995, respectively.
(4) Mr. Johnson began his employment with Targeted Genetics on March 1, 1994.
Other compensation consists of matching contributions to a 401(k) savings
plan of $2,375 in 1996 and excess life insurance premiums of $408, $103 and
$96 in 1996, 1995 and 1994, respectively.
7
<PAGE> 11
OPTION GRANTS
The following table sets forth certain information regarding options
granted during the fiscal year ended December 31, 1996 to Targeted Genetics'
Chief Executive Officer and its other executive officers named above in the
Summary Compensation Table.
OPTION GRANTS IN FISCAL 1996
<TABLE>
<CAPTION>
POTENTIAL
REALIZABLE
VALUE AT ASSUMED
ANNUAL
INDIVIDUAL GRANTS RATES OF STOCK
--------------------------------------------------------------- PRICE
NUMBER OF PERCENT OF APPRECIATION FOR
SHARES TOTAL OPTIONS OPTION
UNDERLYING GRANTED TO EXERCISE TERM(3)
OPTIONS EMPLOYEES IN PRICE EXPIRATION -------------------
NAME GRANTED(#)(1) FISCAL YEAR(1)(2) ($/SHARE) DATE 5%($) 10%($)
- ------------------ ------------- ----------------- --------- --------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
H. Stewart Parker 35,522 13.3% $5.00 1/16/2006 111,698 283,065
Barrie J. Carter,
Ph.D. 24,112 9.0% $5.00 1/16/2006 75,820 192,142
Richard Daifuku,
M.D., Ph.D. -- -- -- -- -- --
James A. Johnson 22,045 8.3% $5.00 1/16/2006 69,320 175,670
</TABLE>
- ---------------
(1) Options are granted at the fair market value on the date of grant and vest
over five years with 20% of each grant becoming exercisable annually
beginning on the first anniversary of the date of grant. Certain changes in
control of Targeted Genetics can trigger accelerated vesting of stock
options and rights to related payments.
(2) Options to purchase 267,157 shares of Common Stock were granted by the
Company to its employees during 1996.
(3) The dollar amounts under these columns are the result of calculations at
assumed rates of 5% and 10% and are not intended to forecast future
appreciation. No value will be realized if the stock price does not exceed
the exercise price of the options.
OPTION EXERCISES AND YEAR-END VALUES
The following table sets forth certain information as of December 31, 1996,
regarding options held by Targeted Genetics' Chief Executive Officer and its
other executive officers named above in the Summary Compensation Table. None of
such individuals exercised any options during the fiscal year ended December 31,
1996.
AGGREGATED FISCAL 1996 YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
TOTAL NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS AT IN-THE-MONEY OPTIONS
FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(1)
----------------------------- -----------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ------------------------------------------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C>
H. Stewart Parker.......................... 59,837 104,871 130,319 47,274
Barrie J. Carter, Ph.D..................... 21,396 69,698 2,698 10,793
Richard Daifuku, M.D., Ph.D................ 8,000 32,000 4,000 16,000
James A. Johnson........................... 29,008 78,075 34,504 58,015
</TABLE>
- ---------------
(1) This amount is the aggregate number of the outstanding options multiplied by
the difference between $4.50 (the closing price of the Common Stock as
reported on the Nasdaq National Market on December 31, 1996) and the
exercise price of such options.
8
<PAGE> 12
CHANGE IN CONTROL ARRANGEMENTS
Senior Management Employment Agreements. In October 1996, the Company
entered into Senior Management Employment Agreements with each of Ms. Parker,
Drs. Carter and Daifuku and Mr. Johnson. These agreements provide that upon a
"change in control" (as defined in the agreements) each such executive will be
entitled to receive an annual base salary no less than his or her salary in
effect prior to the change in control and an annual bonus at least equal to the
average of his or her annual bonuses for the three prior years. In addition,
each such executive will be entitled to insurance coverage and other employee
benefits no less favorable than the Company's benefits in effect prior to the
change in control. If during the two-year period after a change in control any
such executive's employment is terminated by the Company for any reason other
than death, disability or "cause" or by the executive for "good reason" (as such
terms are defined in the agreements), such executive will be entitled to certain
additional benefits, including a lump sum payment equal to one and one-half of
(or, in the case of Ms. Parker, two times) the sum of (i) such executive's
annual salary prior to the change in control (or on the date of termination, if
such executive's salary is higher on such date), and (ii) a percentage of such
salary equal to the executive's percentage bonus for the year prior to the
change in control. If no such bonus was paid, or if the bonus cannot be
determined, the applicable percentage will be 10%. In addition, any such
terminated executive will be entitled to payment of an amount sufficient to
compensate such executive for any excise tax, including interest and penalties,
imposed under Section 4999 of the Code and to continuation of life insurance,
disability, health and dental, and other similar employee benefits for one year
following termination. The Senior Management Employment Agreements may be
terminated upon 30 days prior written notice; provided, however, that the
Company will remain liable for any obligations arising prior to such
termination.
Option Plans. Under the Company's 1992 Restated Stock Option Plan (the
"1992 Plan"), upon a "change in control" (as defined in the 1992 Plan), each
outstanding option becomes 100% vested immediately prior to the change in
control, unless (a) in the opinion of the Company's independent accountants,
such accelerated vesting would render unavailable pooling of interests
accounting treatment for the change in control, (b) such option is assumed or
replaced with a comparable option by the successor corporation following the
change in control, or (c) such option is replaced with a cash incentive program
that preserves the spread existing at the time of the change in control and
provides for payouts in accordance with the option's vesting schedule. Unless
assumed by a successor corporation, all options under the 1992 Plan terminate
upon a change in control. Any options held by an executive officer or other
employee of the Company that are assumed or replaced and do not otherwise
accelerate upon a change in control will become 100% vested if, within two years
following the change in control, the optionee's employment is terminated, other
than termination by the Company for "cause" or by the employee without "good
reason" (as such terms are defined in the 1992 Plan).
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors (the "Committee")
consists of Stephen A. Duzan, James D. Grant and Donald E. O'Neill, all of whom
are nonemployee directors. The Committee is responsible for the Company's
executive compensation program and for administering the Company's 1992 Amended
and Restated Stock Option Plan (the "Option Plan"). On an annual basis, the
Committee evaluates the performance and compensation of the Company's executive
officers.
The Company's executive compensation philosophy is to pay competitively in
order to attract qualified executive personnel capable of leading the Company to
achievement of its business objectives; retain and motivate these executives to
achieve superior performance; link individual compensation to individual and
company performance; and align executive's financial interests with those of the
Company's shareholders.
The Company's executive compensation program includes the following
components:
- competitive base salaries, targeting the 50th percentile of base
salaries paid by other biotechnology companies of comparable size and
mission with which the Company competes for qualified executives;
9
<PAGE> 13
- annual bonuses which are structured to encourage executives to focus on
the achievement of important short-term corporate objectives; and
- long-term incentives, in the form of stock option grants, which provide
financial rewards on the same basis as those realized by the Company's
shareholders.
Base Salaries. In December 1995, the Committee met to consider the
compensation levels of the Company's executives, which were reviewed in
comparison to: (1) a published survey of salaries paid to executives at over 200
companies within the biotechnology industry, and at a subset of approximately 60
publicly-held companies with 51 to 150 employees (the "Industry Survey"); and
(2) the salary levels of executives at the following publicly traded gene
therapy companies: Cell Genesys, Inc., Genetic Therapy, Inc., Gene Medicine,
Inc., Somatix Therapy Corporation, and Vical Incorporated (the "Industry
Subgroup"). For purposes of the Company's Performance Graph peer group index,
all five of these companies are included together with approximately 200 other
biotechnology and pharmaceutical companies.
Based on the foregoing comparisons and other information available from
publicly-held biotechnology companies in general, the base salaries of the
Company's executives were determined to be below the Industry Survey medians and
below the average of salaries paid by the Industry Subgroup and therefore below
the Committee's goal for compensating the Company's executives. In particular,
for Ms. Parker, the Committee concluded that her base salary in 1995 was
substantially below the Industry Survey median and the amounts paid to chief
executive officers of all companies in the Industry Subgroup. Accordingly, the
Committee directed a 21% increase in Ms. Parker's base salary for 1996. Although
Ms. Parker's salary was increased substantially, it remained below the 50th
percentile targeted by the Committee.
Dr. Carter and Mr. Johnson each received increases of approximately 10% in
their base salary, and Dr. Daifuku received an increase of 5%. Such increases
placed the base salaries of such officers in approximately the 50th percentile
of salaries paid to officers in similar positions according to the Industry
Survey.
Cash Bonuses. In January 1997, the Committee met to evaluate the
performance of the Company's executive management with respect to a series of
goals that were set in early 1996. The goals covered completion of at least one
significant corporate collaboration; accrual of patients into clinical trials;
completion of a transaction strengthening the Company's technology base;
scale-up of AAV manufacturing to support expanded clinical trials; optimization
of the REM process for CTLs; and achievement of proof of concept in certain
early-stage research programs. No formal relative weighting was applied to the
goals; however, the first two goals were identified as management's highest
priorities. The Committee concluded that all goals had been met, except the
first goal related to completion of a collaboration transaction. Although such a
transaction was completed during the year with Laboratories Fournier S.C.A., the
Committee concluded that it did not fully meet the requirements of the first
goal.
In recognition of the fact that all of the management goals except one were
met, the successful acquisition of RGene Therapeutics, Inc., and the successful
completion of a public offering of common stock, the Committee awarded cash
bonuses equal to 85% of target levels, which targets were 25% of base pay for
Ms. Parker, 20% of base pay for Dr. Carter, and 15% of base pay for Mr. Johnson
and Dr. Daifuku. These bonuses were paid in January 1997.
Stock Option Grants. Stock options are granted to provide a long-term
incentive opportunity that is directly linked to an increase in shareholder
value. They are granted with an exercise price equal to the market value of the
Common Stock on the date of the grant, have a term of ten years, and become
exercisable in 20% annual increments beginning one year after the date of grant.
To encourage stock retention, all options are granted as incentive stock options
to the maximum extent possible under the Code.
As part of the design of the Company's executive compensation program, the
Company has adopted a formula for use in establishing the number of stock option
grants to be awarded annually to the Company's executives. The formula is as
follows: the number of shares on which options are to be awarded equals the
executive's base salary (multiplied by a factor of 1.25 in the case of Ms.
Parker) divided by the average closing price of the Company's stock over the
twenty trading days ending on the date of the stock option grant. Based
10
<PAGE> 14
on performance factors, the Committee may adjust the number of options produced
by the formula upward or downward.
In January 1996, the Committee granted options to the Company's executive
officers based on the formula described above, without adjustment. Ms. Parker,
Dr. Carter, and Mr. Johnson received stock options for 35,522 shares, 24,112
shares, and 22,045 shares, respectively. Dr. Daifuku becomes eligible for such a
grant beginning in 1997.
The Committee has not adopted a policy with respect to the application of
Section 162(m) of the Code, which generally imposes an annual corporate
deduction limitation of $1 million on the compensation of certain executive
officers. Pursuant to Section 162(m), compensation above $1 million may be
deducted if it is "performance based" within the meaning of the Code. Stock
options granted under the Option Plan qualify as "performance-based
compensation."
Compensation Committee
Stephen A. Duzan
James D. Grant
Donald E. O'Neill
11
<PAGE> 15
PERFORMANCE GRAPH
The graph below compares the cumulative total shareholder return on the
Common Stock with the cumulative total return of the Nasdaq Stock Market Total
Return Index and the Nasdaq Pharmaceutical Stocks Index, an index of all
companies whose stocks are traded on the Nasdaq Stock Market and whose Primary
Standard Industrial Classification Code Number is 283, Pharmaceutical Companies.
The graph shows the value of $100 invested on May 20, 1994 (the date of Targeted
Genetics' initial public offering) in Targeted Genetics Common Stock, the Nasdaq
Stock Market Total Return Index and the Nasdaq Pharmaceutical Stocks Index.
COMPARISON OF CUMULATIVE TOTAL RETURN AMONG TARGETED GENETICS CORPORATION,
NASDAQ STOCK MARKET TOTAL RETURN INDEX AND NASDAQ PHARMACEUTICAL STOCKS INDEX
<TABLE>
<CAPTION>
MEASUREMENT PERIOD NASDAQ STOCK NASDAQ PHARMA-
(FISCAL YEAR COVERED) TARGETED GENETICS MARKET CEUTICAL STOCKS
<S> <C> <C> <C>
MAY 20, 1994 100 100 100
DEC. 30, 1994 87.50 104.43 96.53
DEC. 29, 1995 93.83 147.66 176.46
DEC. 31, 1996 75.00 181.64 176.46
</TABLE>
12
<PAGE> 16
PRINCIPAL TARGETED GENETICS SHAREHOLDERS
The following table sets forth, as of March 3, 1997, certain information
with respect to the beneficial ownership of shares of Common Stock by (i) each
person known by Targeted Genetics to own beneficially more than 5% of the shares
of Common Stock, (ii) each director and director nominee of Targeted Genetics,
(iii) each of Targeted Genetics' executive officers for whom compensation is
reported in this Proxy Statement, and (iv) all directors and executive officers
of Targeted Genetics as a group. Except as otherwise noted, Targeted Genetics
believes that the beneficial owners of the shares of Common Stock listed below,
based on information furnished by such owners, have sole voting and investment
power with respect to such shares.
<TABLE>
<CAPTION>
PERCENT
NAME AND ADDRESS OF AMOUNT AND NATURE OF OF
BENEFICIAL OWNER BENEFICIAL OWNERSHIP CLASS
------------------------------------------------------ -------------------- -------
<S> <C> <C>
5% OWNERS:
Immunex Corporation................................. 2,613,122 13.0%
51 University Street
Seattle, WA 98101
Wellington Management Company....................... 1,919,000(1) 9.5%
75 State Street
Boston, MA 02109
State of Wisconsin Investment Board................. 1,762,500(2) 8.7%
121 E. Wilson Street
P.O. Box 7842
Madison, WI 53707
International Biotechnology Trust plc............... 1,750,000(3) 8.6%
c/o Rothschild Asset Management Limited
Five Arrows House
St. Swithin's Lane
London, England EC4N 8NR
DIRECTORS, DIRECTOR NOMINEE AND EXECUTIVE OFFICERS:
H. Stewart Parker................................... 211,443(4) 1.0%
Barrie J. Carter, Ph.D.............................. 158,280(5) *
Richard Daifuku, M.D., Ph.D. ....................... 16,000(6) *
James A. Johnson.................................... 49,424(7) *
Jack L. Bowman...................................... -- --
Jeremy Curnock Cook................................. 1,755,000(3)(8) 8.6%
Stephen A. Duzan.................................... 20,197(9) *
James D. Grant...................................... 14,267(6) *
Austin M. Long, III................................. 206,255(10) 1.0%
Donald E. O'Neill................................... 24,267(11) *
Mark Richmond, Ph.D., D.Sc. ........................ -- --
Martin P. Sutter.................................... 1,132,728(12) 5.6%
All directors, director nominee and executive 3,587,861 17.3%
officers as a group (12 persons).................
</TABLE>
- ---------------
* Less than 1%.
(1) Includes warrants to purchase 44,000 shares of Common Stock.
(2) Includes warrants to purchase 100,000 shares of Common Stock.
(3) Represents 1,450,000 shares of Common Stock and warrants to purchase
300,000 shares of Common Stock owned by International Biotechnology Trust
plc ("IBT"), an investment trust the shares of which are traded on the
London Stock Exchange. Mr. Cook is a management director of Rothschild
Asset
13
<PAGE> 17
Management Limited, the investment manager and secretary of IBT, and
thereby has power to direct IBT's investments. Mr. Cook disclaims
beneficial ownership of the securities owned by IBT.
(4) Includes 74,778 shares subject to options that may be exercised within 60
days.
(5) Includes 31,615 shares subject to options that may be exercised within 60
days.
(6) Represents shares subject to options that may be exercised within 60 days.
(7) Includes 46,424 shares subject to options that may be exercised within 60
days.
(8) Includes 5,000 shares subject to options that may be exercised within 60
days.
(9) Includes warrants to purchase 1,666 shares of Common Stock and 11,867
shares subject to options that may be exercised within 60 days.
(10) Represents 206,255 shares of Common Stock owned by the University of Texas
Board of Regents. Mr. Long is the Director of Private Investments at the
University of Texas and thereby has power to vote the securities. Although
for purposes of the Exchange Act Mr. Long is deemed to be the beneficial
owner of such securities, Mr. Long expressly disclaims that he is, in fact,
the beneficial owner of such securities.
(11) Includes warrants to purchase 2,000 shares of Common Stock and 14,267
shares subject to options that may be exercised within 60 days.
(12) Represents 367,452 shares of Common Stock owned by The Woodlands Venture
Fund, L.P. and 765,276 shares of Common Stock owned by The Woodlands/Essex
Venture Partners III, L.P. Mr. Sutter is (i) a General Partner of The
Woodlands/Essex Management Partners, L.P., which is the General Partner of
The Woodlands/Essex Venture Partners III, L.P., and (ii) the Managing
General Partner of The Woodlands Venture Partners, L.P., which is the
General Partner of The Woodlands Venture Fund, L.P., and thereby has the
power to vote the securities. Although for purposes of the Exchange Act Mr.
Sutter is deemed to be the beneficial owner of such securities, Mr. Sutter
expressly disclaims that he is, in fact, the beneficial owner of such
securities.
SECTION 16 REPORTING
Section 16(a) of the Exchange Act requires Targeted Genetics' officers and
directors, and persons who own more than 10% of a registered class of Targeted
Genetics' equity securities, to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (the "Commission").
Officers, directors and greater than 10% shareholders are required by Commission
regulations to furnish Targeted Genetics with copies of all Section 16(a) forms
they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain reporting persons that no such forms were
required for those persons, Targeted Genetics believes that during calendar year
1996 all filing requirements applicable to its officers, directors and greater
than 10% shareholders were complied with.
INDEPENDENT AUDITORS
Representatives of Ernst & Young LLP are expected to attend the Annual
Meeting and will have an opportunity to make a statement and to respond to
appropriate questions from shareholders.
OTHER BUSINESS
The Board does not intend to present any business at the Annual Meeting
other than as set forth in the accompanying Notice of Annual Meeting of
Shareholders, and has no present knowledge that any others intend to present
business at the meeting. If, however, other matters requiring the vote of the
shareholders properly come before the Annual Meeting or any adjournment or
postponement thereof, the persons named in the accompanying form of proxy will
have discretionary authority to vote the proxies held by them in accordance with
their judgment as to such matters.
14
<PAGE> 18
PROPOSALS BY TARGETED GENETICS SHAREHOLDERS
Shareholder proposals intended to be presented at Targeted Genetics' 1998
Annual Meeting of Shareholders must be received by Targeted Genetics not later
than November 24, 1997 for inclusion in the proxy materials for such meeting.
ANNUAL REPORT AND FORM 10-K
A copy of Targeted Genetics' 1996 Annual Report is being mailed with this
Proxy Statement to each shareholder of record. Targeted Genetics shareholders
not receiving a copy of such Annual Report may obtain one without charge by
writing or calling Investor Relations, Targeted Genetics Corporation, 1100 Olive
Way, Suite 100, Seattle, Washington 98101, (206) 623-7612.
A copy of Targeted Genetics' Annual Report on Form 10-K for the year ended
December 31, 1996, as filed with the Commission, will be provided without charge
to each shareholder of record who submits a written request therefor addressed
to Investor Relations, Targeted Genetics Corporation, 1100 Olive Way, Suite 100,
Seattle, Washington 98101, (206) 623-7612.
15
<PAGE> 19
TARGETED GENETICS CORPORATION
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE
ANNUAL MEETING OF SHAREHOLDERS -- MAY 7, 1997
The undersigned hereby appoint(s) H. Stewart Parker and James A.
Johnson and each of them as proxies, with full power of substitution, to
represent and vote as designated all shares of Common Stock of Targeted
Genetics Corporation held of record by the undersigned on March 7, 1997 at the
Annual Meeting of Shareholders of the Company to be held at the Company's
headquarters, located at 1100 Olive Way, Suite 100, Seattle, Washington, at
9:00 a.m. on Wednesday, May 7, 1997, with authority to vote upon the matters
listed below and with discretionary authority as to any other matters that may
properly come before the meeting or any adjournment or postponement thereof.
(1) APPROVAL OF AMENDMENT TO STOCK FOR AGAINST ABSTAIN
OPTION PLAN FOR NONEMPLOYEE / / / / / /
DIRECTORS
(2) ELECTION OF CLASS 1 DIRECTOR WITHHOLD
CLASS 2 DIRECTORS AND CLASS 3 AUTHORITY
DIRECTORS FOR the to vote for the
Nominees: Jack L. Bowman (Class 1) Nominees Nominees
Martin P. Sutter (Class 2) / / / /
H. Stewart Parker (Class 3)
Mark Richmond (Class 3)
WITHHOLD for the following only: (write the
name(s) of the nominee(s) in the space below)
---------------------------------------------
unless otherwise directed, all votes will be
apportioned equally among those person for
whom authority is given to vote
IMPORTANT--PLEASE DATE AND SIGN ON THE OTHER SIDE
<PAGE> 20
SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED BY THE
SHAREHOLDER IN THE SPACE PROVIDED. IF NO DIRECTION IS GIVEN, THIS PROXY WILL
BE VOTED "FOR" ITEM 1 AND "FOR THE NOMINEES" IN ITEM 2.
The Board of Directors recommends a vote "FOR" Item 1 and "FOR the
Nominees" in Item 2.
Date
------------------------------
Signature(s)
-----------------------
Date
------------------------------
Signature(s)
-----------------------
Please sign exactly as your name appears hereon.
Attorneys, trustees, executors and other fiduciaries
acting in a representative capacity should sign their
names and give their titles. An authorized person
should sign on behalf of corporations, partnerships,
associations, etc. and give his or her title. If your
shares are held by two or more persons, each person
must sign. Receipt of the notice of meeting and proxy
statement is hereby acknowledged.
/ / I plan to attend the Annual Meeting
-2-
