RIBOGENE INC / CA/, DEF 14A, 1999-04-22

RIBOGENE INC / CA/
DEF 14A, 1999-04-22
COMMERCIAL PHYSICAL & BIOLOGICAL RESEARCH

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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
[ ] Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12

RiboGene, Inc.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement if Other Than the Registrant)

Payment of Filing Fee (Check the appropriate box)

[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

1. Title of each class of securities to which transaction applies:

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2. Aggregate number of securities to which transaction applies:

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3. Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee
is calculated and state how it was determined):

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4. Proposed maximum aggregate value of transaction:

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5. Total fee paid:

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[ ] Fee paid previously with preliminary materials.

[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.

6. Amount Previously Paid:

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7. Form, Schedule or Registration Statement No.:

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9. Date Filed:

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LOGO

April 16, 1999

To Our Stockholders:

You are cordially invited to attend the annual meeting of Stockholders of
RiboGene, Inc. to be held at the New York Palace Hotel, 455 Madison Avenue, New
York, New York 10022 on Monday, May 17, 1999 at 9:30 a.m. local time.

The matter expected to be acted upon at the meeting is described in detail
in the following Notice of Annual Meeting of Stockholders and Proxy Statement.

It is important that you use this opportunity to take part in the affairs
of your Company by voting on the business to come before this meeting. WHETHER
OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
PROMPTLY RETURN THE ACCOMPANYING PROXY IN THE ENCLOSED POSTAGE-PAID ENVELOPE SO
THAT YOUR SHARES MAY BE REPRESENTED AT THE MEETING. Returning the Proxy does not
deprive you of your right to attend the meeting and to vote your shares in
person.

We look forward to seeing you at the meeting.

Sincerely,
LOGO
Charles J. Casamento
Chairman, President and
Chief Executive Officer
<PAGE> 3

LOGO

26118 RESEARCH ROAD
HAYWARD, CALIFORNIA 94545

------------------------

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 17, 1999

TO THE STOCKHOLDERS OF RIBOGENE, INC.:

NOTICE IS HEREBY GIVEN that the annual meeting of stockholders of RiboGene,
Inc., a Delaware corporation (the "Company" or "RiboGene"), will be held on May
17, 1999 at 9:30 a.m. local time at the New York Palace Hotel, 455 Madison
Avenue, New York, New York 10022, to consider and vote upon the following
proposals:

1. To elect directors to serve for the ensuing year and until their
successors are elected.

2. To approve the amendment of RiboGene's 1997 Equity Incentive Plan (the
"Equity Incentive Plan") to increase the aggregate number of shares of
Common Stock authorized for issuance thereunder from 800,000 shares to
1,500,000 shares.

3. To ratify the Board of Director's selection of Ernst & Young LLP as the
Company's independent auditors for the fiscal year ending December 31,
1999.

4. To transact such other business as may properly come before the RiboGene
annual meeting or any adjournment or postponement thereof.

The proposed amendment and other related matters are more fully described
in the Proxy Statement accompanying this notice.

Stockholders of record at the close of business on March 31, 1999, are
entitled to notice of, and to vote at, the annual meeting and any adjournments
or postponements thereof.

All stockholders are cordially invited to attend the Company's annual
meeting in person. Whether or not you expect to attend, WE URGE YOU TO COMPLETE,
SIGN AND DATE THE ENCLOSED PROXY CARD AND RETURN IT PROMPTLY IN THE ENVELOPE
PROVIDED.

By Order of the Board of Directors
LOGO
Alan C. Mendelson
Secretary

Hayward, California
April 16, 1999
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[RIBOGENE, INC. LOGO]
26118 RESEARCH ROAD
HAYWARD, CALIFORNIA 94545

------------------------

PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS

MAY 17, 1999

GENERAL

The enclosed proxy is solicited on behalf of the Board of Directors of
RiboGene, Inc., a Delaware corporation (the "Company"), for use at the Annual
Meeting of Stockholders to be held on May 17, 1999, at 9:30 a.m. local time (the
"Annual Meeting"), or at any adjournment or postponement thereof, for the
purposes set forth herein and in the accompanying Notice of Annual Meeting. The
Annual Meeting will be held at the New York Palace Hotel, 455 Madison Avenue,
New York, New York 10022. The Company intends to mail this proxy statement and
accompanying proxy card on or about April 16, 1999, to all stockholders entitled
to vote at the Annual Meeting.

SOLICITATION

The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of Common Stock beneficially owned by
others to forward to such beneficial owners. The Company may reimburse persons
representing beneficial owners of Common Stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by directors, officers or other regular employees of the Company
or, at the Company's request, D.F. King & Co., Inc. No additional compensation
will be paid to directors, officers or other regular employees for such
services, but D.F. King & Co., Inc. will be paid its customary fee, estimated to
be about $4,000.

VOTING RIGHTS AND OUTSTANDING SHARES

Only holders of record of Common Stock at the close of business on March
31, 1999 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on March 31, 1999, the Company had outstanding and entitled to
vote 5,783,956 shares of Common Stock.

Each holder of record of Common Stock on such date will be entitled to one
vote for each share held on all matters to be voted upon at the Annual Meeting.

All votes will be tabulated by the inspector of election appointed for the
meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.

REVOCABILITY OF PROXIES

Any person giving a proxy pursuant to this solicitation has the power to
revoke it at any time before it is voted. It may be revoked by filing with the
Secretary of the Company at the Company's principal executive office, 26118
Research Road, Hayward, California 94545, a written notice of revocation or a
duly executed

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proxy bearing a later date, or it may be revoked by attending the meeting and
voting in person. Attendance at the meeting will not, by itself, revoke a proxy.

STOCKHOLDER PROPOSALS

The deadline for submitting a stockholder proposal for inclusion in the
Company's proxy statement and form of proxy for the Company's 2000 annual
meeting of stockholders pursuant to Rule 14a-8 of the Securities and Exchange
Commission is December 18, 1999. The deadline for submitting a stockholder
proposal or a nomination for director that is not to be included in such proxy
statement and proxy is not later than the close of business on the sixtieth
(60th) day nor earlier than the close of business on the ninetieth (90th) day
prior to the first anniversary of the preceding year's annual meeting.

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PROPOSAL 1

ELECTION OF DIRECTORS

There are five nominees for the five Board positions presently authorized
in the Company's Bylaws. Each director to be elected will hold office until the
next annual meeting of stockholders and until his successor is elected and has
qualified, or until such director's earlier death, resignation or removal. Each
nominee listed below is currently a director of the Company, all directors
having been elected by the Board.

Shares represented by executed proxies will be voted, if authority to do so
is not withheld, for the election of the five nominees named below. In the event
that any nominee should be unavailable for election as a result of an unexpected
occurrence, such shares will be voted for the election of such substitute
nominee as management may propose. Each person nominated for election has agreed
to serve if elected and management has no reason to believe that any nominee
will be unable to serve.

Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote.

THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.

NOMINEES

The names of the nominees and certain information about them are set forth
below:

<TABLE>
<CAPTION>
NAME AGE POSITION HELD WITH THE COMPANY
---- --- ------------------------------
<S> <C> <C>
Mr. Charles J. Casamento.......... 53 President, Chief Executive Officer and
Chairman of the Board
Mr. Digby W. Barrios.............. 61 Director
Mr. Frank J. Sasinowski........... 46 Director
Mr. Jon S. Saxe................... 62 Director
Roger G. Stoll, Ph.D.............. 56 Director
</TABLE>

Mr. Casamento joined the Company as President, Chief Executive Officer and
Chairman of the Board in June 1993. Prior to joining the Company, he was
co-founder, President and Chief Executive Officer of Interneuron
Pharmaceuticals, Inc., a biopharmaceutical company, from March 1989 until May
1993. Mr. Casamento has also held management positions at Genzyme Corporation,
American Hospital Supply, Johnson & Johnson, Hoffmann LaRoche Inc. and Sandoz
Inc. Mr. Casamento is also a director of CORTEX Pharmaceuticals, a
biopharmaceutical company and two not-for-profit organizations. Mr. Casamento
holds a bachelor's degree in Pharmacy from Fordham University and an M.B.A.
degree from Iona College.

Mr. Barrios joined the Company's Board of Directors in August 1996. He is
currently a consultant to the pharmaceutical and biotechnology industries. From
1982 to 1992, Mr. Barrios served in various positions with Boehringer Ingelheim
Corporation, a pharmaceutical manufacturer, most recently as the President and
Chief Executive Officer. Mr. Barrios also serves as a director of Allelix
Biopharmaceuticals, a biopharmaceutical company; Cypros, Inc., a
biopharmaceutical company; Drug Royalty Corporation, a technology investment
company; Roberts Pharmaceutical Corporation, a pharmaceutical company; Sepracor,
Inc., a pharmaceutical company; Sheffield Pharmaceuticals, a pharmaceutical
company; and several private organizations. Mr. Barrios holds a B.S. in
Chemistry and Biology from Loyola University.

Mr. Sasinowski joined the Company's Board of Directors in March 1998. Since
1987, he has been a partner with Hyman, Phelps & McNamara, P.C., a food and drug
law firm. From December 1983 to June 1987, Mr. Sasinowski served in various
positions with the United States Food and Drug Administration. Mr. Sasinowski
holds a Masters of Science in nutritional sciences and a Masters of Public
Health from the University of California at Berkeley. He also earned a Bachelor
of Science in biological sciences and genetics from Cornell University and a
Juris Doctorate from the Georgetown University Law Center.

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Mr. Saxe joined the Company's Board of Directors in April 1994. He has been
a director since 1989 and since January 1995 President of Protein Design Labs,
Inc., a biotechnology company. From May 1993 to May 1995, he served as President
of Saxe Associates, a biotechnology consulting firm. Mr. Saxe also serves as a
director of ID Biomedical Corporation, a diagnostics and vaccine development
company, and Incyte Pharmaceuticals, Inc., a genomics company. Mr. Saxe holds a
B.S. degree in Chemical Engineering from Carnegie-Mellon university, a Juris
Doctorate from George Washington University School of Law and an L.L.M. from New
York University School of Law.

Dr. Stoll joined the Company's Board of Directors in June 1998. He has been
Executive Vice-President of Fresenius Medical Care North America, since the end
of 1998. Prior to that, he was President and Chief Executive Officer of Ohmeda,
Inc., a medical goods and services company, from 1991 to 1998. From May 1986 to
October 1991, Dr. Stoll was a senior executive within Bayer, AG, where he served
as Executive Vice-President and General Manager of its worldwide Diagnostic
Business Group. Dr. Stoll currently serves on the board of directors of St. Jude
Medical, Inc., a cardiovascular medical devices company, and Collaborative
Clinical Research, Inc, a clinical research company. Dr. Stoll holds a B.S.
degree in Pharmacy from Ferris State University and a Ph.D. in Biopharmaceutics
from the University of Connecticut, and did post-doctoral studies at the
University of Michigan.

BOARD COMMITTEES AND MEETINGS

The Board of Directors, which held 9 meetings during the year ended
December 31, 1998, has an Audit Committee and a Compensation Committee.

The Audit Committee recommends engagement of the Company's independent
auditors and approves services performed by such auditors, including the review
and evaluation of the Company's accounting system and its system of internal
controls in connection with the Company's annual audit. During the year ended
December 31, 1998, the Audit Committee met one time. Messrs. Barrios and Saxe
serve as members of the Audit Committee.

The Compensation Committee sets guidelines for the administration of all
salaries within the Company, approves recommendations for officers' salaries,
administers incentive compensation and awards stock options to employees and
consultants under the Company's Equity Incentive Plans and otherwise determines
compensation levels. During the year ended December 31, 1998, the Compensation
Committee met two times. Messrs. Sasinowski and Saxe and Dr. Stoll serve as
members of the Compensation Committee and Dr. Stoll serves as Chairman of the
Compensation Committee.

During the year ended December 31, 1998, all of the directors attended at
least 90% of the total number of meetings of the Board of Directors and
committees on which they served.

PROPOSAL 2

APPROVAL OF AMENDMENT TO THE 1997 EQUITY INCENTIVE PLAN

Stockholders are being asked to approve an amendment to the Company's 1997
Equity Incentive Plan (the "Equity Incentive Plan") to increase the number of
shares of common stock reserved for issuance thereunder from 800,000 shares to
1,500,000 (an increase of 700,000 shares). The Board of Directors of the Company
(the "Board") approved the proposed amendment described above on January 26,
1999, to be effective upon approval by the Company's stockholders. Approval of
the amendment of the Equity Incentive Plan requires the affirmative vote of the
holders of a majority of the shares present in person or represented by proxy
and entitled to vote at the RiboGene annual meeting.

The Board believes that the availability of additional option shares is an
important element in the overall success of the Company. The Board believes that
the Company's ability to recruit and retain personnel with strong
pharmaceutical, biotechnology and healthcare expertise is critical to the
Company's success. Given the intense competition for such personnel, the Board
believes that its ability to offer competitive compensation

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packages, including those with equity-based incentive components, is
particularly important in order to attract and retain qualified candidates.

The Board also believes that the availability of additional option shares
is an important element in the successful integration of acquired businesses.
Part of the Company's strategy includes acquiring complementary businesses,
technology and service offerings. In order to successfully integrate such
businesses, technology and service offerings, the Company may be required to
offer equity incentives under the Equity Incentive Plan to new employees and
officers. In addition, the Board believes that equity based incentives are
favorable because they align the interests of the Company's management and
employees with those of the Company's stockholders.

THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.

Unless otherwise indicated, the following summary of the principal
provisions of the Plan assumes the approval of this Proposal 2.

SUMMARY OF THE PROVISIONS OF THE 1997 EQUITY INCENTIVE PLAN

GENERAL

The 1997 Equity Incentive Plan (the "Equity Incentive Plan") was adopted by
the Board on October 18, 1997, and was approved by the Company's stockholders in
April 1998. The Company adopted the Equity Incentive Plan in order to provide
qualified employees, directors and consultants with an opportunity to share in
the Company's growth and to purchase the Company's common stock. The Equity
Incentive Plan also assists the Company in obtaining qualified employees,
directors and consultants and in building a satisfying long-term relationship
with existing employees, directors and consultants through recognition of their
contributions to the Company.

The Equity Incentive Plan provides for the grant of incentive stock
options, nonstatutory stock options, restricted stock purchase awards and stock
bonuses under the Internal Revenue Code of 1986, as amended (the "Code"), to
employees (including officers and employee-directors) and nonstatutory stock
options, restricted stock purchase awards and stock bonuses to employees
(including officers and employee-directors), directors and consultants of the
Company (options, nonstatutory options, stock bonuses and rights to purchase
restricted stock are hereinafter referred to collectively as "Stock Awards").
The Equity Incentive Plan is administered by the Compensation Committee (the
"Committee") of the Board which determines recipients and types of awards to be
granted, including the exercise price number of shares subject to the award and
the exercisability thereof.

The Committee believes that all employees, directors and consultants should
be compensated based on their contribution to the Company and to building
sustainable long-term value for the Company's stockholders. In determining
specific compensation programs, the Committee considers individual and group
performance, including successful achievement of business, management and
research objectives, and maintenance of strong relationships with the Company's
collaborators. The Committee strives to design compensation programs that will
tie individual rewards to the Company's success and align interests between
officers and stockholders of the Company. The Committee also strives to design
compensation programs that help retain its officers and encourage personal and
professional development and growth.

STOCK SUBJECT TO THE EQUITY INCENTIVE PLAN

Prior to the proposed amendment of the Equity Incentive Plan, there were
800,000 shares of common stock authorized for issuance under the Equity
Incentive Plan. The amendment to the Equity Incentive Plan proposed hereby would
increase the number of shares authorized under the Equity Incentive Plan to
1,500,000 shares. As of February 28, 1999, 110,000 shares of restricted stock
have been issued out of the

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Equity Incentive Plan, no shares of common stock had been issued upon the
exercise of options granted under the Equity Incentive Plan, options to purchase
687,930 shares of common stock (not including 129,000 shares that were granted
subject to stockholder approval) at a weighted average exercise price of $4.2094
were outstanding, and 2,070 shares remained available for future grant. If Stock
Awards granted under the Equity Incentive Plan expire or otherwise terminate
without being exercised, the shares not purchased or accepted pursuant to such
Stock Awards revert to and again become available for issuance under the Equity
Incentive Plan.

ADMINISTRATION

As authorized by the Equity Incentive Plan, the Board has delegated
administration of the Equity Incentive Plan to the Committee, which determines
to whom and on what dates the options will be granted, the types of Stock Awards
to be granted, and the terms of such Stock Awards including the exercise price,
number of shares subject to the Stock Awards and the exercisability thereof. The
Committee currently consists of Messrs. Sasinowski and Saxe and Dr. Stoll, all
of whom are "non-employee directors" as that term is defined under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act"), and
"outside directors" as that term is defined pursuant to Section 162(m) of the
Code. The decision to grant a Stock Award is made according to position
guidelines established by the Committee. The Committee also has the authority to
construe and interpret any of the provisions of the Equity Incentive Plan or any
Stock Awards granted thereunder. As used herein with respect to the Equity
Incentive Plan, the "Board" refers to the Committee and to the Board itself.

ELIGIBILITY

Incentive stock options may be granted under the Equity Incentive Plan only
to employees (including directors if they are also employees) of the Company and
its affiliates. Employees, directors and consultants are eligible to receive
Stock Awards under the Equity Incentive Plan other than incentive stock options.

No incentive stock option may be granted under the Equity Incentive Plan to
any person who, at the time of the grant, owns (or is deemed to own) stock
possessing more than 10% of the total combined voting power of the Company or
any affiliate of the Company (a "Ten Percent Stockholder"), unless the option
price is at least 110% of the fair market value on the date of grant of the
stock subject to the option, and the term of the option does not exceed five
years from the date of grant.

TERMS OF STOCK AWARDS

The following is a description of the permissible terms of Stock Awards
under the Equity Incentive Plan. Individual Stock Award grants may be more
restrictive as to any or all of the permissible terms described below.

EXERCISE PRICE OF OPTIONS; PAYMENT. The exercise price of incentive stock
options under the Equity Incentive Plan may not be less than the fair market
value of the common stock subject to the option on the date of the option grant,
and in some cases (see "Eligibility" above), may not be less than 110% of such
fair market value. The exercise price of each nonstatutory stock option under
the Equity Incentive Plan may not be less than 85% of such fair market value.

The exercise price of options granted under the Equity Incentive Plan must
be paid either: (i) in cash at the time the option is exercised; or (ii) at the
discretion of the Board, (A) by delivery of other common stock of the Company,
(B) pursuant to a deferred payment or other arrangement or (C) in any other form
of legal consideration acceptable to the Board.

In the event of a decline in the value of the Company's common stock, the
Board has the authority to offer optionees the opportunity to replace
outstanding higher priced options, whether incentive or nonstatutory, with new
lower priced options. To the extent required by Code Section 162(m), an option
repriced under the Equity Incentive Plan is deemed to be canceled and a new
option granted. Both the option deemed to have been canceled and the new option
deemed to have been granted will be counted against the eight hundred

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thousand (800,000) or one million five hundred thousand (1,500,000) (upon
approval by stockholders) share limitation under the Equity Incentive Plan. The
Board also has the authority to include as part of an option agreement a
provision entitling the optionee to a further option in the event that the
optionee exercises his or her option by surrendering other shares of Common
Stock as payment of the exercise price.

OPTION EXERCISE. Stock options granted under the Equity Incentive Plan
generally may be exercised at any time, but are subject to a repurchase right in
favor of the Company which lapses in accordance with a vesting schedule under
which generally 1/8 of the underlying shares vest six months following the date
of grant, and the remaining shares vest in equal successive monthly installments
over each of the next forty-two (42) months until fully vested or terminated as
provided in the Equity Incentive Plan or related agreements. Shares covered by
options granted in the future under the Equity Incentive Plan may be subject to
different vesting terms (which may be based on performance or other criteria).

TERM OF OPTIONS. The maximum term of options to be granted under the Equity
Incentive Plan is ten years, except that in certain cases (see "Eligibility")
the maximum term is five years. Options granted under the Equity Incentive Plan
generally are non-transferable. An option generally terminates 3 months after
the termination of all services (as an employee, director or consultant) of the
optionee to the Company or an affiliate of the Company, unless (a) termination
is due to such person's disability, in which case the option generally may be
exercised at any time within 12 months of such termination; (b) the termination
of employment is due to such person's death, in which case the option generally
may be exercised at any time within 18 months of such termination; or (c) the
option by its terms specifically provides otherwise. Individual options by their
terms may provide for exercise within a longer period of time following
termination of employment or the director or consulting relationship.

STOCK AWARDS OTHER THAN OPTIONS. Any stock bonuses or restricted stock
purchase awards granted under the Equity Incentive Plan may be in such form and
may contain such terms and conditions as the Board shall deem appropriate. The
purchase price under any restricted stock purchase agreement may not be less
than eighty-five percent (85%) of the fair market value of the Company's common
stock on the date of grant. The purchase price of stock pursuant to a stock
purchase agreement must be paid either: (i) in cash at the time of purchase;
(ii) at the discretion of the Board, according to a deferred payment or other
arrangement with the person to whom the common stock is sold; or (iii) in any
other form of legal consideration that may be acceptable to the Board in its
discretion. Eligible participants may be awarded stock pursuant to a stock bonus
agreement in consideration of past services actually rendered to the Company or
for its benefit.

Shares of common stock sold or awarded under the Equity Incentive Plan may,
but need not, be subject to a repurchase option in favor of the Company in
accordance with a vesting schedule determined by the Board. In the event a
person ceases to be an employee of or ceases to serve as a director of or
consultant to the Company or an affiliate of the Company, the Company may
repurchase or otherwise reacquire any or all of the shares of the common stock
held by that person that have not vested as of the date of termination of such
services under the terms of the applicable stock bonus or restricted stock
purchase agreement between the Company and such person.

ADJUSTMENT PROVISIONS

If there is any change in the stock subject to the Equity Incentive Plan or
subject to any Stock Award (through merger, consolidation, reorganization,
recapitalization, stock dividend, dividend in property other than cash, stock
split, liquidating dividend, combination of shares, exchange of shares, change
in corporate structure or other transaction not involving the receipt of
consideration by the Company), the Equity Incentive Plan and Stock Awards
outstanding thereunder will be appropriately adjusted as to the class and the
maximum number of shares subject to the Equity Incentive Plan and the class and
the maximum number of shares and price per share of stock subject to outstanding
Stock Awards.

Certain adjustments in Stock Awards outstanding under the Equity Incentive
Plan may be made upon a Change in Control of the Company. The Equity Incentive
Plan defines "Change in Control" as (i) a dissolution, liquidation, or sale of
all or substantially all of the Company's assets; (ii) a merger or consolidation
in which the Company is not the surviving corporation; (iii) a reverse merger in
which the Company is the
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surviving corporation but the shares of common stock outstanding immediately
before the merger are converted by virtue of the merger into other property; or
(iv) the acquisition by any person, entity or group within the meaning of
Section 13(d) or 14(d) of the Exchange Act, or any comparable successor
provisions (excluding any employee benefit Equity Incentive Plan, or related
trust, sponsored or maintained by the Company or any Affiliate of the Company)
of the beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act, or comparable successor rule) of securities of the Company
representing at least fifty percent (50%) of the combined voting power entitled
to vote in the election of directors.

Upon a Change in Control of the Company the surviving or acquiring
corporation may assume Stock Awards outstanding under the Equity Incentive Plan
or substitute similar stock awards for those outstanding under the Equity
Incentive Plan. If the surviving or acquiring corporation assumes such Stock
Awards or substitutes similar stock awards, and the service of the holder of
such awards is involuntarily terminated (including voluntary termination in some
circumstances, but not including termination for cause or due to death or
disability) within 13 months after the Change in Control, then the vesting of
those assumed Stock Awards or substituted stock awards and the time during which
such awards may be exercised will accelerate. If the surviving or acquiring
corporation refuses to assume such Stock Awards or to substitute similar stock
awards for such Stock Awards, then (i) the vesting of Stock Awards held by
persons still serving the Company or an affiliate (whether as an employee,
director or consultant) and the time during which such Stock Awards may be
exercised will accelerate prior to the Change in Control and those Stock Awards
will terminate if not exercised after such acceleration and at or prior to the
Change in Control; and (ii) all other Stock Awards outstanding under the Equity
Incentive Plan will terminate if not exercised prior to the Change in Control.
Persons whose services are terminated (other than for cause, disability or
death) by the Company within the 60 days prior to a Change in Control also
receive full vesting of their Stock Awards.

DURATION, AMENDMENT AND TERMINATION

The Board may suspend or terminate the Equity Incentive Plan without
stockholder approval or ratification at any time. Unless sooner terminated, the
Equity Incentive Plan will terminate on March 7, 2008.

The Board may also amend the Equity Incentive Plan at any time or from time
to time. However, no amendment will be effective unless approved by the
stockholders of the Company within twelve months before or after its adoption by
the Board if the amendment would: (i) modify the requirements as to eligibility
for participation (to the extent such modification requires stockholder approval
in order for the Equity Incentive Plan to satisfy Section 422 of the Code, if
applicable, or Rule 16b-3 of the Exchange Act); (ii) increase the number of
shares reserved for Stock Awards; or (iii) change any other provision of the
Equity Incentive Plan in any other way if such modification requires stockholder
approval in order to comply with Rule 16b-3 of the Exchange Act or the
requirements of Section 422 of the Code, or Nasdaq or securities exchange
listing requirements to which the Company is then subject.

RESTRICTIONS ON TRANSFER

Under the Equity Incentive Plan, Stock Awards granted are generally
non-transferable, with certain exceptions for transfers pursuant to a will or
the laws of descent and distribution, or, excepting incentive stock options,
pursuant to a domestic relations order. However, the Equity Incentive Plan
permits the Board to grant nonstatutory stock options that are more broadly
transferable.

FEDERAL INCOME TAX INFORMATION

INCENTIVE STOCK OPTIONS. Incentive stock options under the Equity Incentive
Plan are intended to be eligible for the favorable federal income tax treatment
accorded "incentive stock options" under the Code.

There generally are no federal income tax consequences to the optionee or
the Company by reason of the grant or exercise of an incentive stock option.
However, the exercise of an incentive stock option may increase or create the
optionee's alternative minimum tax liability, if any.

8
<PAGE> 12

If an optionee holds stock acquired through exercise of an incentive stock
option for at least two years from the date on which the option is granted and
at least one year from the date on which the shares are transferred to the
optionee upon exercise of the option, any gain or loss on a disposition of such
stock will be long-term capital gain or loss. Generally, if the optionee
disposes of the stock before the expiration of either of these holding periods
(a "disqualifying disposition"), at the time of disposition, the optionee will
realize taxable ordinary income equal to the lesser of (a) the excess of the
stock's fair market value on the date of exercise over the exercise price, or
(b) the optionee's actual gain, if any, on the purchase and sale. The optionee's
additional gain, or any loss, upon the disqualifying disposition will be a
capital gain or loss, which will be long-term or short-term depending on the
length of time the stock was held. Capital gains currently are generally subject
to lower tax rates than ordinary income. The maximum long-term capital gains
rate for federal income tax purposes is currently 20% while the maximum rate
applicable to ordinary income or short-term capital gain is effectively 39.6% at
the present time. Slightly different rules may apply to optionees who acquire
stock subject to certain repurchase options or who are subject to Section 16(b)
of the Exchange Act.

To the extent the optionee recognizes ordinary income by reason of a
disqualifying disposition, the Company will generally be entitled (subject to
the requirement of reasonableness, the provisions of Section 162(m) of the Code
and the satisfaction of a tax reporting obligation) to a corresponding business
expense deduction in the tax year in which the disqualifying disposition occurs.

NONSTATUTORY STOCK OPTIONS. Nonstatutory stock options granted under the
Equity Incentive Plan generally have the following federal income tax
consequences:

There are no tax consequences to the optionee or the Company by reason of
the grant of a nonstatutory stock option. Upon exercise of a nonstatutory stock
option, the optionee normally will recognize taxable ordinary income equal to
the excess of the stock's fair market value on the date of exercise over the
option exercise price. Generally, with respect to employees, the Company is
required to withhold from regular wages or supplemental wage payments an amount
based on the ordinary income recognized. Subject to the requirement of
reasonableness, the provisions of Section 162(m) of the Code and the
satisfaction of a reporting obligation, the Company will generally be entitled
to a business expense deduction equal to the taxable ordinary income realized by
the optionee. Upon disposition of the stock, the optionee will recognize a
capital gain or loss equal to the difference between the selling price and the
sum of the amount paid for such stock plus any amount recognized as ordinary
income upon exercise of the option. Such gain or loss will be long-term or
short-term depending on the length of time the stock was held. Slightly
different rules may apply to optionees who acquire stock subject to certain
repurchase options or who are subject to Section 16(b) of the Exchange Act.

RESTRICTED STOCK AND STOCK BONUSES. Restricted stock and stock bonuses
granted under the Equity Incentive Plan generally have the following federal
income tax consequences:

Upon acquisition of stock under a restricted stock or stock bonus award,
the recipient normally will recognize taxable ordinary income equal to the
excess of the stock's fair market value over the purchase price, if any.
However, to the extent the stock is subject to certain types of vesting
restrictions, the taxable event will be delayed until the vesting restrictions
lapse unless the recipient elects to be taxed on receipt of the stock.
Generally, with respect to employees, the Company is required to withhold from
regular wages or supplemental wage payments an amount based on the ordinary
income recognized. Subject to the requirement of reasonableness, Section 162(m)
of the Code and the satisfaction of a tax reporting obligation, the Company will
generally be entitled to a business expense deduction equal to the taxable
ordinary income realized by the recipient. Upon disposition of the stock, the
recipient will recognize a capital gain or loss equal to the difference between
the selling price and the sum of the amount paid for such stock, if any, plus
any amount recognized as ordinary income upon acquisition (or vesting) of the
stock. Such capital gain or loss will be long-term or short-term depending on
the length of time the stock was held from the date ordinary income was
measured. Slightly different rules may apply to persons who acquire stock
subject to forfeiture under Section 16(b) of the Exchange Act.

POTENTIAL LIMITATION ON COMPANY DEDUCTIONS. As part of the Omnibus Budget
Reconciliation Act of 1993, the U.S. Congress amended the Code to add Section
162(m), which denies a deduction to any publicly-
9
<PAGE> 13

held corporation for compensation paid to a covered employee in a taxable year
to the extent that non-performance-based compensation paid to such a covered
employee exceeds $1 million. It is possible that compensation attributable to
Stock Awards, when combined with all other types of compensation received by a
covered employee from the Company, may cause this limitation to be exceeded in
any particular year.

Certain kinds of compensation, including qualified "performance-based
compensation," are disregarded for purposes of the deduction limitation.
Treasury regulations issued under Section 162(m) of the Code provide that
compensation attributable to stock options will qualify as performance-based
compensation if: (i) the Equity Incentive Plan contains a per-employee
limitation on the number of shares for which stock options may be granted during
a specified period; (ii) the per-employee limitation is approved by the
stockholders; (iii) the award is granted by a compensation committee comprised
solely of "outside directors"; and (iv) the exercise price of the award is no
less than the fair market value of the stock on the date of grant. Restricted
stock and stock bonuses qualify as performance-based compensation under these
Treasury regulations only if: (i) the award is granted by a compensation
committee comprised solely of "outside directors"; (ii) the award is granted (or
exercisable) only upon the achievement of an objective performance goal
established in writing by the compensation committee while the outcome is
substantially uncertain; (iii) the compensation committee certifies in writing
prior to the granting (or exercisability) of the award that the performance goal
has been satisfied; and (iv) prior to the granting (or exercisability) of the
award, stockholders have approved the material terms of the award (including the
class of employees eligible for such award, the business criteria on which the
performance goal is based, and the maximum amount (or formula used to calculate
the amount) payable upon attainment of the performance goal).

ERISA. The Equity Incentive Plan is not subject to any of the provisions of
the Employee Retirement Income Security Act of 1974 ("ERISA").

PROPOSAL 3

RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS

The Board of Directors has selected Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending December 31, 1999, and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting. Ernst & Young LLP
has audited the Company's financial statements since its inception in 1989.
Representatives of Ernst & Young LLP are expected to be present at the Annual
Meeting, will have an opportunity to make a statement if they so desire and will
be available to respond to appropriate questions.

Stockholder ratification of the selection of Ernst & Young LLP as the
Company's independent auditors is not required by the Company's Bylaws or
otherwise. However, the Board is submitting the selection of Ernst & Young LLP
to the stockholders for ratification as a matter of good corporate practice. If
the stockholders fail to ratify the selection, the Audit Committee and the Board
will reconsider whether or not to retain that firm. Even if the selection is
ratified, the Audit Committee and the Board in their discretion may direct the
appointment of different independent auditors at any time during the year if
they determine that such a change would be in the best interests of the Company
and its stockholders.

The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of Ernst & Young LLP. Abstentions will be
counted toward the tabulation of votes cast on proposals presented to the
stockholders and will have the same effect as negative votes. Broker non-votes
are counted towards a quorum, but are not counted for any purpose in determining
whether this matter has been approved.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE IN FAVOR OF PROPOSAL 3.

10
<PAGE> 14

SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding the ownership
of RiboGene common stock as of February 28, 1999 by: (i) each stockholder who is
known by RiboGene to own beneficially more than 5% of RiboGene common stock;
(ii) each named executive officer of RiboGene; (iii) each director of RiboGene;
and (iv) all directors and executive officers of RiboGene as a group.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY
OWNED(1)
--------------------
NAME OF BENEFICIAL OWNER NUMBER PERCENT
------------------------ --------- -------
<S> <C> <C>
Dr. Lindsay Rosenwald(2).................................... 1,235,948 19.17%
787 Seventh Avenue
New York, NY 10019
Abbott Laboratories......................................... 682,495 11.80%
100 Abbott Park Road
Abbott Park, IL 60064
The Aries Trust(3).......................................... 487,343 8.26%
787 Seventh Avenue
New York, NY 10019
Digby Barrios(4)............................................ 3,034 *
Charles J. Casamento(5)..................................... 433,799 7.09%
Laura S. Lehman(6).......................................... 153,247 2.60%
Timothy E. Morris(7)........................................ 151,879 2.57%
Frank J. Sasinowski......................................... 0 *
Jon S. Saxe................................................. 3,034 *
Roger G. Stoll, Ph.D........................................ 0 *
All executive officers and directors as a group (7
persons)(8)............................................... 744,993 11.73%
</TABLE>

- ---------------
* Less than one percent

(1) Calculated in accordance with Rule 13d-3 promulgated under the Exchange Act
based on 5,783,956 shares of capital stock outstanding as of February 28,
1999.

(2) Includes 480,378 shares issuable upon exercise of outstanding Placement
Agent Unit Options, 368,596 shares held by The Aries Trust and 202,870
shares by the Aries Fund. Also includes 118,747 shares issuable upon
exercise of outstanding Class A Warrants and Placement Agent Unit Options
held by The Aries Trust and 65,357 shares issuable upon exercise of Class A
Warrants and Placement Agent Unit Options held by the Aries Fund. Dr.
Rosenwald is the general partner of the Aries Fund and the investment
manager to The Aries Trust. Dr. Rosenwald disclaims beneficial ownership of
the securities held by the Aries Fund and The Aries Trust, except to the
extent of his pecuniary interest therein, if any.

(3) Includes 118,747 shares issuable upon the exercise of Class A Warrants and
Placement Agent Unit Options.

(4) Consists of options to purchase 3,034 shares exercisable within 60 days of
February 28, 1999.

(5) Includes 7,274 shares held by various family members of Mr. Casamento that
Mr. Casamento may be deemed to beneficially own; 58,512 shares subject to
repurchase as of February 28, 1999; and options to purchase 333,717 shares
exercisable within 60 days of February 28, 1999.

(6) Includes 31,674 shares subject to repurchase as of February 28, 1999 and
options to purchase 115,931 shares exercisable within 60 days of February
28, 1999.

(7) Includes 32,790 shares subject to repurchase as of February 28, 1999 and
options to purchase 114,382 shares exercisable within 60 days of February
28, 1999.

(8) See footnotes(4) - (7).

11
<PAGE> 15

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 (the "1934 Act")
requires the Company's directors and executive officers, and persons who own
more than ten percent of a registered class of the Company's equity securities,
to file with the SEC initial reports of ownership and reports of changes in
ownership of Common Stock and other equity securities of the Company. Officers,
directors and greater than ten percent stockholders are required by SEC
regulation to furnish the Company with copies of all Section 16(a) forms they
file.

To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31 1998, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with.

COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS

COMPENSATION OF DIRECTORS

Each non-employee director of the Company receives a per meeting fee of
$2,000. In the fiscal year ended December 31, 1998, the total compensation paid
to non-employee directors was $20,500. The members of the Board of Directors are
also eligible for reimbursement for their expenses incurred in connection with
attendance at Board meetings in accordance with Company policy.

Each non-employee director of the Company also receives stock option grants
under the 1997 Non-Employee Directors' Stock Option Plan (the "Directors'
Plan"). Only non-employee directors of the Company or an affiliate of such
directors (as defined in the Code) are eligible to receive options under the
Directors' Plan. Options granted under the Directors' Plan are intended by the
Company not to qualify as incentive stock options under the Code.

Option grants under the Directors' Plan are non-discretionary. Each member
of the Company's Board of Directors who is not an employee of the Company shall
be automatically granted, on the date of his initial election or appointment to
the Board, an option to purchase 10,000 shares of Common Stock of the Company.
Thereafter, immediately following the Annual Meeting of Stockholders each year
(or the next business day should such date be a legal holiday), each member of
the Company's Board of Directors who is not an employee of the Company and has
served as a non-employee director for at least six months or, where specified by
the non-employee director, an affiliate of such director, is automatically
granted under the Directors' Plan, without further action by the Company, the
Board of Directors or the stockholders of the Company, an option to purchase
2,500 shares of Common Stock of the Company. No other options may be granted at
any time under the Directors' Plan. The exercise price of options granted under
the Directors' Plan is 100% of the fair market value of the Common Stock subject
to the option on the date of the option grant. An initial option grant under the
Directors' Plan shall become exercisable in four (4) equal annual installments
measured from the date of grant, commencing on the one (1)-year anniversary of
the date of grant of the option. An annual grant under the Directors' Plan shall
become exercisable one (1) year from the date of grant, provided that, with
respect to any grant under the Directors' Plan, the optionee has, during the
entire period prior to such vesting installment date, continuously served as a
non-employee director. The term of options granted under the Directors' Plan is
ten years. In the event of a merger of the Company with or into another
corporation or a consolidation, acquisition of assets or other change-in-control
transaction involving the Company, the vesting of each option will accelerate
and the option will terminate if not exercised prior to the consummation of the
transaction.

In the last fiscal year, the Company granted two stock options, each for
10,000 shares, to two new non-employee directors of the Company at an exercise
price per share of $5.63. The Company also granted two stock options, each for
6,965 shares, to two continuing non-employee directors of the Company, at an
exercise price per share of $5.63. All grants were made pursuant to the Equity
Incentive Plan. The fair market value of the Company's Common Stock on the date
of the grants was $6.625 per share (based on the closing sales

12
<PAGE> 16

price reported on the American Stock Exchange for the date of grant). As of
February 28, 1999, none of these options had been exercised.

COMPENSATION OF EXECUTIVE OFFICERS

The following table shows, for the fiscal years ended December 31, 1998,
1997 and 1996, compensation awarded or paid to, or earned by, the Company's
executive officers at December 31, 1998 (the "Named Executive Officers"):

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION AWARDS
ANNUAL ----------------------------
COMPENSATION(1) RESTRICTED SECURITIES ALL OTHER
FISCAL -------------------- STOCK UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) AWARDS($)(3) OPTIONS(#)(4) ($)(1)(2)
--------------------------- ------- --------- -------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Charles J. Casamento.......... 1998 325,000 250,000 125,000 450,000 66,825
President, Chief Executive 1997 325,000 50,000 -- 17,136 66,407
Officer and Chairman of 1996 275,000 80,000 -- 9,374 65,750
the Board
Laura S. Lehman............... 1998 170,700 49,675 75,000 150,000 --
Vice President of Research 1997 160,000 -- -- 14,280 --
1996 140,000 35,000 -- 1,785 39,195
Timothy E. Morris............. 1998 173,800 45,000 75,000 159,000 --
Vice President, Finance & 1997 162,100 40,525 -- 6,069 --
Administration, Chief
Financial 1996 142,100 -- -- 5,355 --
Officer and Assistant
Secretary
</TABLE>

- ---------------
(1) In accordance with the Commission rules, other annual compensation in the
form of perquisites and other personal benefits has been omitted where the
aggregate amount of such perquisites and other personal benefits constitutes
less than the lesser of $50,000 or 10% of the total annual salary and bonus
for the named executive officer for the fiscal year.

(2) The amounts for Mr. Casamento reflect, in fiscal year 1998, $47,775 in loan
forgiveness and $19,050 paid by the Company for life insurance and
disability insurance premiums; in fiscal year 1997, $47,613 in loan
forgiveness and $18,794 paid by the Company for life insurance and
disability premiums; and, in fiscal year 1996, $47,193 in loan forgiveness
and $18,557 paid by the Company for life insurance and disability insurance
premiums. The amounts for Ms. Lehman in fiscal year 1996 reflect $37,247 in
relocation costs and $1,948 in medical insurance coverage.

(3) The amounts represent restricted stock bonus awards with vesting provisions
that are tied to performance-based conditions and subject to milestone
vesting. Of the awards, 50,000, 30,000 and 30,000 shares of common stock,
respectively, to Messrs. Casamento and Morris and Dr. Lehman reflect a per
share price of $2.50, the closing per share price on December 21, 1998, the
date the shares were granted.

(4) Includes options to purchase 200,000, 69,000 and 60,000 shares granted to
Messrs. Casamento and Morris and Dr. Lehman, respectively, and options
subject to performance based milestones to purchase 250,000, 90,000 and
90,000, shares granted to Messrs. Casamento and Morris and Dr. Lehman,
respectively.

13
<PAGE> 17

OPTION GRANTS IN LAST FISCAL YEAR

The following table contains information concerning the grant of stock
options to the Named Executive Officers during the fiscal year ended December
31, 1998.

<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------- POTENTIAL
PERCENTAGE REALIZABLE VALUE AT
NUMBER OF OF TOTAL ASSUMED ANNUAL
SECURITIES OPTIONS RATES OF STOCK PRICE
UNDERLYING GRANTED TO EXERCISE APPRECIATION
OPTIONS EMPLOYEES OR BASE FOR OPTION TERM(3)
GRANTED IN FISCAL PRICE EXPIRATION --------------------
NAME (#) 1998(1) ($/SH)(2) DATE 5%($) 10%($)
---- ---------- ---------- --------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Charles J. Casamento..... 200,000 14.2% 5.63 06/04/08 708,135 1,794,554
250,000 17.8% 2.50 12/21/08 393,059 996,089
Laura S. Lehman, Ph.D.... 60,000 4.3% 5.63 06/04/08 212,441 538,366
90,000 6.4% 2.50 12/21/08 141,501 358,592
Timothy E. Morris........ 69,000 4.9% 5.63 06/04/08 244,307 619,121
90,000 6.4% 2.50 12/21/08 141,501 358,592
</TABLE>

- ---------------
(1) Based on options to purchase 1,405,329 shares of Common Stock granted to
employees in fiscal 1998.

(2) The exercise price is equal to 85% to 100% of the fair market value of the
Common Stock at the date of grant, as determined by the Board of Directors
at the time of grant.

(3) The potential realizable value is calculated based on the term of the option
at the time of grant (ten years). Stock price appreciation of five percent
and ten percent is assumed pursuant to rules promulgated by the Securities
and Exchange Commission and does not represent the Company's prediction of
the stock price performance. The potential realizable value is calculated by
assuming that the fair value of the Common Stock at the date of the grant,
as determined by the Board of Directors, appreciates at the indicated rate
for the entire term of the option and that the option is exercised at the
exercise price and sold on the last day of its term at the appreciated
price.

In 1998, no shares of Common Stock were purchased by Mr. Casamento, Dr.
Lehman and Mr. Morris, pursuant to purchase rights granted under the 1993 Stock
Plan and the 1997 Equity Incentive Plan.

AGGREGATED OPTION EXERCISES IN FISCAL YEAR 1998
AND FISCAL YEAR-END 1998 OPTION VALUES

In 1998, no options for shares of Common Stock were exercised by Mr.
Casamento, Dr. Lehman and Mr. Morris, pursuant to purchase rights granted under
the 1993 Stock Plan and the 1997 Equity Incentive Plan.

EMPLOYMENT AGREEMENTS AND CHANGE OF CONTROL AGREEMENTS

In May 1993, the Company entered into an employment agreement with Charles
J. Casamento, President, Chief Executive Officer and Chairman of the Board of
Directors of the Company. The agreement provides for an annual base salary of
$200,000, subject to annual review. On the first day of his employment and on
the first and second anniversary of his employment, the Company loaned Mr.
Casamento $40,000 (for a total of $120,000) in the form of three-year notes with
interest rates of 3.62%, 5.63% and 5.97% per annum, respectively. These loans
were made in connection with cost-of-living adjustments and could be forgiven,
at the election of the Board of Directors, for so long as Mr. Casamento remained
employed by the Company. In addition, in October 1993, the Company provided Mr.
Casamento with a bridge loan in the aggregate amount of $250,000, which loan
subsequently was repaid by Mr. Casamento in October 1994. The $40,000 loan due
in 1996 was forgiven by the Board. In 1997 the Board approved a bonus of up to
$150,000 to be paid to Mr. Casamento in the event of a merger or an initial
public offering of the Company's Common Stock, and up to an additional $150,000
for the achievement of specific goals ($50,000 per goal). In 1997 the Board paid
Mr. Casamento $50,000 in connection with the Company's private placement of
Series F Preferred Stock and forgave the $40,000 loan due in 1997. In 1998, the
Board paid Mr. Casamento a bonus of $150,000 upon the

14
<PAGE> 18

closing of the Company's initial public offering of its Common Stock, a bonus of
$50,000 for execution of collaboration with Dainippon Pharmaceuticals for joint
discovery of antibacterial compounds, and a bonus of $50,000 for execution of
the collaboration with Roberts Pharmaceuticals for marketing of Emitasol in
North America. The Board also forgave Mr. Casamento's final $40,000 loan.

In July 1995, the Company entered into a Change of Control agreement with
Mr. Casamento that provides for certain severance benefits in the event his
employment is involuntarily terminated other than for "cause" at any time within
12 months after, or in contemplation of, a Change of Control (defined as a
reorganization in which the current stockholders hold less than a 50% ownership
interest in the surviving entity consummated without the approval of the Board
of Directors, a sale of all or substantially all of the Company's assets, a
liquidation of the Company or a transaction in which more than half of the
Company's Board of Directors is replaced). Severance benefits include a lump-sum
payment equal to 12 months' salary and the continued payment of medical benefits
during the 12 months following termination. In addition, all loans issued by the
Company to Mr. Casamento will be forgiven automatically upon a Change of
Control. The Change of Control agreement also provides that all options held by
Mr. Casamento will immediately vest, and the exercise period of such options
will be extended to a date one year from the earlier of the termination date or
the date upon which any relevant lock-up agreements expire.

In July 1995, the Company also entered into Change of Control agreements
with Dr. Lehman and Mr. Morris that provide for certain severance benefits in
the event their employment is terminated, other than for cause, at any time
within 12 months after, or in contemplation of, a Change of Control. Severance
benefits payable to Dr. Lehman and Mr. Morris include a lump-sum payment equal
to six months' salary and continuation of certain medical benefits for the
six-month period following termination. Dr. Lehman and Mr. Morris will receive
an additional six months of vesting on their stock options, and the exercise
term of such options will extend to 12 months from the earlier of the
termination date or the expiration of any relevant lock-up agreements.

Pursuant to an agreement between the Company and Mr. Morris, dated June 30,
1995, in the event that Mr. Morris's employment with the Company is
involuntarily terminated, he is entitled to continue to receive his then current
salary for a period of six months after the termination date.

The Company also has entered into letter agreements with Dr. Lehman and Mr.
Morris, providing each with a bonus payment of 25% of their annual salary upon
the achievement of certain objectives.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Prior to the formation of the Compensation Committee in March 1997, the
Board of Directors made all determinations with respect to executive officer
compensation. Of the directors who participated in deliberations concerning
executive officer compensation, either prior to the formation of the
Compensation Committee or in their capacity as a member of the Compensation
Committee, none have served as officers of the Company other than Mr. Casamento,
who has served as President and Chief Executive Officer of the Company since
June 1993. Certain of the Company's directors have purchased securities of the
Company individually or through an affiliated entity.

REPORT OF THE COMPENSATION AND STOCK OPTION COMMITTEE
OF THE BOARD OF DIRECTORS ON
EXECUTIVE COMPENSATION

RESPONSIBILITIES AND COMPOSITION OF THE COMMITTEE

The Compensation Committee (the "Committee") of the Company's Board of
Directors (the "Board") is responsible for (i) recommending the type and level
of compensation for directors, officers and employees of the Company, and (ii)
administering the Company's equity incentive Equity Incentive Plans. The
Committee is also responsible for reviewing the performance of the Company's
executive officers. Compensation for directors, officers and employees of the
Company are approved by the Board.

15
<PAGE> 19

The Committee is composed of three members of the Board: Roger G. Stoll,
Frank J. Sasinowski and Jon S. Saxe. Messrs. Saxe and Sasinowski and Dr. Stoll
have never served as employees of the Company or its subsidiaries.

This report describes the philosophy that underlies the components of the
Company's executive compensation programs. It also describes the details of the
key elements of such programs, as well as the rationale for compensation paid to
the Company's Chief Executive Officer and its officers in general.

COMPENSATION PHILOSOPHY AND OBJECTIVES

The Committee believes that all officers and employees should be
compensated based on their contribution to the Company and to building
sustainable long-term value for the Company's stockholders. In determining
specific compensation programs, the Committee considers individual and group
performance, including successful achievement of business, management and
research objectives, and maintenance of strong relationships with the firm's
collaborators. The Committee strives to design compensation programs that will
tie individual rewards to the Company's success and align interests between
officers, employees and stockholders of the Company. The Committee also strives
to design compensation programs that help retain its officers and employees and
encourage personal and professional development and growth.

COMPENSATION OF OFFICERS GENERALLY

Officer compensation programs typically consist of four components: base
salaries, bonuses, equity incentives and other compensation. Base salaries are
established on the basis of the officer's experience, salary history and
contribution to the Company. Bonuses are established on the basis of individual
achievement of established objectives and overall corporate performance. Equity
incentives typically consist of stock purchases and stock option grants under
the Company's equity incentive Plans. Stock options are granted as inducements
to employment with the Company, to aid in retention and to align the interest of
such officers with those of the Company's stockholders. Other compensatory
components typically consist of loans granted to officers in connection with
purchases of shares of the Company's common stock under the Company's equity
incentive Plans, relocation expenses, insurance premiums and similar payments.
All components are evaluated annually to ensure that such components are
appropriate and consistent with the strategic business objectives of the
Company, corporate culture, and with enhancing stockholder value.

BASE SALARY

Base salaries for the Company's officers are established at competitive
levels according to the salaries attributable to comparable positions at
comparable companies within the healthcare, management consulting and
information services industries. The Committee reviews the base salary of each
officer annually. The Committee considers each officer's level of
responsibility, experience and overall contribution to the Company. The
Committee also considers equity and fairness in setting the base salary of its
officers. In making salary recommendations, the Committee exercises discretion
based on the foregoing criteria. The Committee does not apply a specific formula
to determine the weight of each factor considered.

BONUSES

Bonuses for the Company's officers are determined based on the attainment
of specific business, management and research objectives. These objectives vary
depending upon the position or role of the individual officer. The Committee
also considers each officer's contribution to the Company's financial
performance and organizational growth. The Board establishes specific objectives
for each officer the beginning of each year.

STOCK OPTIONS AND OTHER EQUITY INCENTIVES

The Committee administers the following equity incentive Plans for the
Company: (i) the 1997 Equity Incentive Plan, (ii) the 1997 Non-Employee
Directors' Stock Option Plan and (iii) the 1993 Stock Option Plan (collectively,
the "Plans"). The Company's officers can receive stock option grants and other
equity-
16
<PAGE> 20

based incentives under the 1997 Equity Incentive Plan and the 1993 Stock Option
Plan. The Company's officers may also receive non-statutory stock option grants
that are not pursuant to any of the Company's Plans.

Options to purchase shares of the Company's Common Stock are granted as
incentives to the Company's officers to aid in the retention of such officers
and to align the interests of such officers with those of the stockholders.

The Committee grants incentive stock options to officers and employees of
the Company. Options granted during 1998 were granted at a price equal to 85% to
100% of the fair market value of the Company's common stock on the date of
grant.

POLICY ON DEDUCTIBILITY OF COMPENSATION

Section 162(m) of the Internal Revenue Code of 1986, as amended (the
"Code"), provides in general that companies may not deduct in any taxable year
compensation in excess of $1,000,000 paid to any Named Executive Officer, except
to the extent such excess constitutes performance-based compensation. In order
for incentive compensation to qualify as performance based compensation under
Section 162(m), the Company's discretion to grant awards must be strictly
limited. The Company does not currently intend to qualify its incentive
compensation Equity Incentive Plans under Section 162(m). The policy of the
Company is to qualify future compensation arrangements to ensure deductibility,
except in those cases where stockholder value is maximized by an alternative
approach.

CHIEF EXECUTIVE OFFICER COMPENSATION

Mr. Casamento's salary during 1998 as President and Chief Executive Officer
was $325,000. Following the Committee's review of the Company's performance
during 1998 and Mr. Casamento's performance during 1998, the Committee awarded
Mr. Casamento a 1998 merit bonus of $250,000. In addition, the Committee has set
Mr. Casamento's annual salary for 1999 at $341,250. In determining Mr.
Casamento's 1998 bonus and 1999 salary, the Committee took into account (i) Mr.
Casamento's recent performance as CEO of the Company, (ii) the scope of Mr.
Casamento's responsibilities, and (iii) the Board's confidence in Mr. Casamento
to lead the Company's continued development. As a reward for past service and an
incentive for future performance, in December 1998 the Compensation Committee
also granted Mr. Casamento an option to purchase 250,000 shares of Common Stock
and a restricted stock bonus of 50,000 shares.

The foregoing report has been approved by all of the members of the
Committee.(1)

THE COMPENSATION COMMITTEE

Roger G. Stoll, Chairman
Frank J. Sasinowski
Jon S. Saxe

- ---------------
1 This Section is not "soliciting material," is not deemed filed with the SEC
and is not to be incorporated by reference in any filing of the Company under
the 1933 Act or the 1934 Act whether made before or after the date hereof and
irrespective of any general incorporation language in any such filing.
17
<PAGE> 21

PERFORMANCE MEASUREMENT COMPARISON(1)

The following graph shows the total stockholder return as of December 31,
1998, on an investment of $100 in cash in (i) the Company's Common Stock, (ii)
the Standard & Poor's 500 Index (the "S&P 500") and (iii) the Standard & Poor's
Biotechnology Index (the "S&P Biotech").

COMPARISON OF 7 MONTH CUMULATIVE TOTAL RETURN*
AMONG RIBOGENE, INC., THE S & P 500 INDEX
AND THE S & P BIOTECHNOLOGY INDEX

<TABLE>
<CAPTION>
RIBOGENE, INC. S & P 500 S & P BIOTECHNOLOGY
-------------- --------- -------------------
<S> <C> <C> <C>
5/28/98 100 100 100
12/31/98 39 112 175
</TABLE>

* $100 INVESTED ON 5/28/98 IN STOCK OR ON 4/30/98
IN INDEX -- INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.

CERTAIN TRANSACTIONS

In July 1993, Mr. Casamento purchased an aggregate of 10,710 shares of
Common Stock. In March 1994, August 1996 and March 1997, Mr. Casamento purchased
an aggregate of 30,794 shares of Common Stock pursuant to purchase rights issued
under the 1993 Stock Plan. In payment for such Common Stock, Mr. Casamento
issued promissory notes to the Company in the aggregate principal amount of
$108,293. Such notes accrue interest at 5.47%, 5.29%, 6.73% and 6.32% per annum,
respectively. As of January 26, 1999, $95,992 of the aggregate principal amount
of such notes remained outstanding plus an aggregate of $19,974 accrued
interest. At the January 26, 1999 Board of Directors Meeting, the notes were
forgiven in consideration of services previously rendered, and Mr. Casamento has
no further obligations to the company with respect to such notes, provided that
Mr. Casamento shall be liable for all income taxes payable with respect to such
forgiveness of such notes.

In October 1996 and March 1997, Dr. Lehman purchased an aggregate of 3,927
shares of Common Stock pursuant to purchase rights issued under the 1993 Stock
Plan. In payment for such Common Stock,

Dr. Lehman issued promissory notes to the Company in the aggregate principal
amount of $12,375. Such notes accrue interest at 6.61% and 6.32% per annum,
respectively. As of January 26, 1999, $12,375 of the aggregate principal amount
of such notes remained outstanding plus an aggregate of $1,801 accrued interest.
At the January 26, 1999 Board of Directors Meeting, the notes were forgiven in
consideration of services previously rendered, and Dr. Lehman has no further
obligations to the company with respect to such notes, provided that Dr. Lehman
shall be liable for all income taxes payable with respect to such forgiveness of
such notes.

In October 1996 and March 1997, Mr. Morris purchased an aggregate of 7,497
shares of Common Stock pursuant to purchase rights issued under the 1993 Stock
Plan. In payment for such Common Stock, Mr. Morris issued promissory notes to
the Company in the aggregate principal amount of $23,625. Such notes accrue
interest at 6.73% and 6.32% per annum, respectively. As of January 26, 1999,
$23,625 of the aggregate principal amount of such notes remained outstanding
plus an aggregate of $3,836 accrued interest. At the January 26, 1999 Board of
Directors Meeting, the notes were forgiven in consideration of services
previously rendered, and Mr. Morris has no further obligations to the company
with respect to such notes, provided that Mr. Morris shall be liable for all
income taxes payable with respect to such forgiveness of such notes.

In July 1994, Mr. Saxe purchased an aggregate of 3,034 shares of Common
Stock pursuant to purchase rights issued under the 1993 Stock Plan. In payment
for such Common Stock, Mr. Saxe issued a promissory note to the Company in the
principal amount of $12,750. Such notes accrue interest at 6.72% per annum. As
of January 26, 1999, $12,750 of the aggregate principal amount of such notes
remained outstanding plus an aggregate of $4,409 accrued interest. At the
January 26, 1999 Board of Directors Meeting, the notes were forgiven in
consideration of services previously rendered, and Mr. Saxe has no further
obligations to the Company with respect to such notes, provided that Mr. Saxe
shall be liable for all income taxes payable with respect to such forgiveness of
such notes.

OTHER MATTERS

The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the accompanying
proxy to vote on such matters in accordance with their best judgment.

By Order of the Board of Directors
LOGO
Alan C. Mendelson
Secretary

Hayward, California
April 16, 1999

19
<PAGE> 23

RIBOGENE, INC.

26118 RESEARCH ROAD
HAYWARD, CALIFORNIA 94545

ANNUAL MEETING OF STOCKHOLDERS
MAY 17, 1999

THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
OF RIBOGENE, INC. (THE "COMPANY")

The undersigned hereby appoints Charles J. Casamento and Timothy E. Morris,
and each of them or their designee(s), with full power of substitution, to act
as attorneys and proxies of the undersigned, to vote all of the shares of the
Common Stock of the Company which the undersigned is entitled to vote at the
Annual Meeting of Stockholders (the "Meeting"), to be held at the New York
Palace Hotel, 455 Madison Avenue, New York, New York, on Monday, May 17, 1999 at
9:30 a.m. local time, and at any and all adjournments or postponements thereof,
with all of the powers which the undersigned would possess if personally
present, upon and in respect of the following proposal and in accordance with
the following instructions, with discretionary authority as to any and all other
matters that may properly come before the meeting. The proposal referred to
herein is described in detail in the accompanying joint proxy
statement/prospectus.

THE SIGNED PROXY WILL BE VOTED AS DIRECTED, BUT IF NO INSTRUCTIONS ARE
SPECIFIED, THIS SIGNED PROXY WILL BE VOTED FOR THE PROPOSITIONS STATED, IF ANY
OTHER BUSINESS IS PRESENTED AT SUCH MEETING, THIS SIGNED 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.

(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
-----------
SEE REVERSE
SIDE
-----------
<PAGE> 24

PLEASE MARK
[ ] VOTES AS IN
THIS EXAMPLE

PLEASE MARK, DATE, SIGN AND RETURN THIS PROXY CARD PROMPTLY IN THE ENCLOSED
POSTPAID RETURN ENVELOPE. THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE
FOLLOWING PROPOSALS.

1. To elect as director FOR WITHHELD NOMINEES: Charles J. Casamento
the nominees listed at [ ] [ ] Digby W. Barrios
right (except as marked Frank J. Sasinowski
to the contrary below) Jon S. Saxe
Roger G. Stoll, Ph.D.

(INSTRUCTIONS: TO WITHHOLD THE AUTHORITY TO VOTE FOR ONE INDIVIDUAL
NOMINEE, WRITE THE NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)

----------------------------------------------------------------------------

FOR WITHHELD ABSTAIN
2. To approve the amendment of RiboGene's 1997 Equity [ ] [ ] [ ]
Incentive Plan to increase the aggregate number
of shares of Common Stock authorized for issuance
thereunder from 800,000 to 1,500,000 shares.

3. To ratify the Board of Director's selection of FOR WITHHELD ABSTAIN
Ernst & Young LLP as the Company's independent [ ] [ ] [ ]
accountants for the fiscal year ending
December 31, 1999.

4. To transact such other business as may properly FOR WITHHELD ABSTAIN
come before the RiboGene annual meeting or any [ ] [ ] [ ]
adjournment or postponement thereof.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE
"FOR" THE ABOVE LISTED PROPOSITIONS.

SHOULD THE UNDERSIGNED BE PRESENT AND
ELECT TO VOTE AT THE MEETING, OR AT ANY
ADJOURNMENTS THEREOF, AND AFTER
NOTIFICATION TO THE SECRETARY OF THE
COMPANY AT THE MEETING OF THE STOCKHOLDER'S
DECISION TO TERMINATE THIS PROXY, THE POWER
OF SAID ATTORNEYS AND PROXIES SHALL BE
DEEMED TERMINATED AND OF NO FURTHER FORCE
AND EFFECT. THE UNDERSIGNED MAY ALSO REVOKE
THIS PROXY BY FILLING A SUBSEQUENTLY DATED
PROXY OR BY WRITTEN NOTIFICATION TO THE
SECRETARY OF THE COMPANY OF HIS OR HER
DECISION TO TERMINATE THIS PROXY.

THE UNDERSIGNED ACKNOWLEDGES RECEIPT
FROM THE COMPANY PRIOR TO THE EXECUTION OF
THIS PROXY OF A NOTICE OF ANNUAL MEETING OF
STOCKHOLDERS, A PROXY STATEMENT DATED APRIL
9, 1999, AND THE 1999 ANNUAL REPORT.

SIGNATURE(S): DATE:
---------------------------------------------- ---------------

Please sign exactly as your name appears hereon. If the stock is registered in
the names of two or more persons, each should sign. Executors, administrators,
trustees, guardians and attorneys-in-fact should add their titles. If signer is
a corporation, please give full corporate name and have a duly authorized
officer sign, stating title. If signer is a partnership, please sign in
partnership named by authorized person.