<PAGE> 1
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
(Amendment No. )
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
Avigen, 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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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
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paid previously. Identify the previous filing by registration statement
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1.
<PAGE> 2
LOGO
1201 Harbor Bay Parkway, #1000
Alameda, CA 94502
------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held on November 19, 1998
------------------------
TO THE STOCKHOLDERS OF AVIGEN, INC.:
Notice Is Hereby Given that the Annual Meeting of Stockholders of Avigen,
Inc., a Delaware corporation (the "Company"), will be held on Thursday, November
19, 1998, at 9:00 a.m. local time at 1201 Harbor Bay Parkway, #1000, Alameda, CA
for the following purpose:
1. To elect one director to hold office until the 2001 Annual Meeting of
Stockholders and until his successor is elected.
2. To ratify the selection of Ernst & Young, LLP as independent auditors of
the Company for its fiscal year ending June 30, 1999.
3. To transact such other business as may properly come before the meeting
or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on October 12, 1998,
as the record date for the determination of stockholders entitled to notice of
and to vote at this Annual Meeting and at any adjournment or postponement
thereof.
By Order of the Board of Directors
LOGO
Thomas J. Paulson
Secretary
Alameda, California
October 23, 1998
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN PERSON.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO ENSURE YOUR
REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE PREPAID IF
MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF YOU HAVE
GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE MEETING. PLEASE
NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A BROKER, BANK OR OTHER
NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST OBTAIN FROM THE RECORD
HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE> 3
LOGO
1201 HARBOR BAY PARKWAY, #1000
ALAMEDA, CA 94502
------------------------
PROXY STATEMENT
------------------------
FOR ANNUAL MEETING OF STOCKHOLDERS
NOVEMBER 19, 1998
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
Avigen, Inc., a Delaware corporation (the "Company"), for use at the Annual
Meeting of Stockholders to be held on November 19, 1998, at 9:00 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 1201 Harbor Bay Parkway, #1000, Alameda, CA. The
Company intends to mail this proxy statement and accompanying proxy card on or
about October 23, 1998, to all stockholders entitled to vote at the Annual
Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies, including
preparation, assembly, printing and mailing of this proxy statement, the proxy
and any additional information furnished to stockholders. Copies of solicitation
materials will be furnished to banks, brokerage houses, fiduciaries and
custodians holding in their names shares of Common Stock beneficially owned by
others to forward to such beneficial owners. The Company may reimburse persons
representing beneficial owners of Common Stock for their costs of forwarding
solicitation materials to such beneficial owners. Original solicitation of
proxies by mail may be supplemented by telephone, telegram or personal
solicitation by directors, officers or other regular employees of the Company.
No additional compensation will be paid to directors, officers or other regular
employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on October
12, 1998 will be entitled to notice of and to vote at the Annual Meeting. At the
close of business on October 12, 1998 the Company had outstanding and entitled
to vote 7,364,406 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, 1201
Harbor Bay Parkway, #1000, Alameda, CA 94502, a written notice of revocation or
a duly executed proxy bearing a later date, or it may be revoked by attending
the meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
<PAGE> 4
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the
Company's 1999 Annual Meeting of Stockholders must be received by the Company
not later than July 20, 1999 in order to be included in the proxy statement and
proxy relating to that Annual Meeting. Stockholders are also advised to review
the Company's By-laws, which contain additional requirements with respect to
advance notice of stockholder proposals and director nominations.
PROPOSAL 1
ELECTION OF DIRECTORS
The Company's Amended and Restated Certificate of Incorporation and Amended
and Restated By-laws provide that the Board of Directors shall be divided into
three classes, each class consisting, as nearly as possible, of one-third of the
total number of directors, with each class having a three-year term. Vacancies
on the Board may be filled only by persons elected by a majority of the
remaining directors. A director elected by the Board to fill a vacancy
(including a vacancy created by an increase in the Board of Directors) shall
serve for the remainder of the full term of the class of directors in which the
vacancy occurred and until such director's successor is elected and qualified,
or until such director's earlier death, resignation or removal.
The Board of Directors is presently composed of seven members. At the
Annual Meeting, the term of office of the two current Class III Directors shall
expire and neither of the two current Class III Directors will be standing for
re-election. There is one nominee for Class III director, and said nominee is
currently a Class I director of the Company, previously elected by the
stockholders. If elected at the Annual Meeting, the nominee would serve until
the 2001 Annual Meeting of Stockholders and until his successor is elected and
has qualified, or until such director's earlier death, resignation or removal.
If not elected at the Annual Meeting, the nominee would remain a Class I
director of the Company and serve until the 1999 Annual Meeting of Stockholders.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote at the meeting. Shares represented by
executed proxies will be voted, if authority to do so is not withheld, for the
election of the nominee named below. In the event that the 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. The person nominated for election has agreed to serve if elected, and
management has no reason to believe that the nominee will be unable to serve.
Set forth below is biographical information for each person nominated and
each person whose term of office as a director will continue after the Annual
Meeting.
NOMINEES FOR ELECTION FOR A THREE-YEAR TERM EXPIRING AT THE 2001 ANNUAL MEETING
CLASS III DIRECTOR
JOHN MONAHAN, PH.D.
John Monahan, Ph.D., 51, has served as President, Chief Executive Officer
and a director of the Company since its inception in 1992. Prior to joining
Avigen, Dr. Monahan was Vice President of Research and Development at Somatix
Therapy Corporation ("Somatix"), a gene therapy company, from 1989 to 1992,
where he was responsible for the initiation and development of all research
programs. From 1983 to 1988, he was Director of Molecular and Cell Biology at
Berlex Laboratories, a pharmaceutical company. From 1981 to 1983, he was Group
Research Chief at Hoffmann La Roche, a pharmaceutical company. Dr. Monahan
received his Ph.D. in biochemistry from McMaster University, Hamilton, Canada
and his B.S. in science from University College, Dublin, Ireland.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF THE NAMED NOMINEE.
2
<PAGE> 5
DIRECTORS CONTINUING IN OFFICE UNTIL THE 1999 ANNUAL MEETING
CLASS I DIRECTORS
ZOLA HOROVITZ, PH.D.
Zola Horovitz, Ph.D., 64, has served as a director of the Company since
November 1994. From 1991 through May 1994, Dr. Horovitz served as Vice
President, Business Development and Planning and from 1990 to 1991 as Vice
President, Licensing at Bristol-Myers Squibb Co. ("Bristol-Myers"), a
pharmaceutical and healthcare products company. Prior to this, Dr. Horovitz
served from 1959 through 1989 in various positions at the Squibb Institute for
Medical Research, including Vice President, Research, Planning & Scientific
Liaison, Vice President, Drug Development, and Vice President, Biological and
Pharmaceutical R&D. Dr. Horovitz currently serves on the Board of Directors of
Biocryst Pharmaceuticals, Diacrin, Inc., Roberts Pharmaceuticals, Magainin
Pharmaceuticals, Procept Corp., Synaptic Pharmaceuticals and Clinicor, Inc., all
of which are biotechnology companies. From 1975 through 1993 Dr. Horovitz served
on the Scientific Advisory Council at Princeton University and from 1976 through
1989 on the Advisory Board of Rutgers University College of Pharmacy. Dr.
Horovitz received a Ph.D. in Pharmacology, and both a M.S. in Pharmacology and
B.S. in Pharmacy from the University of Pittsburgh.
YUICHI IWAKI, M.D., PH.D.
Yuichi Iwaki, M.D., Ph.D., 49, has served as a director of the Company
since November 1994. Since 1992, Dr. Iwaki has held two professorships at the
University of Southern California School of Medicine in the Departments of
Urology, Pathology and Surgery and is Director of the Transplantation Immunology
and Immunogenetic Laboratory. In addition, he holds visiting professorships at
Tokai University School of Medicine and Nihon University School of Medicine in
Japan and at the University of Pittsburgh School of Medicine. Prior to joining
the University of Southern California Medical School faculty in 1992, Dr. Iwaki
held professorships at the University of Pittsburgh in the Departments of
Urology and Pathology from 1989 through 1991. Dr. Iwaki received an M.D. and a
Ph.D. from Sapporo Medicine School in Sapporo, Japan.
JOHN MONAHAN, PH.D.
If Dr. Monahan is not elected at the Annual Meeting to serve as a Class III
director, he will continue to serve as a Class I director. Dr. Monahan's
biography appears above.
DIRECTORS CONTINUING IN OFFICE UNTIL THE 2000 ANNUAL MEETING
CLASS II DIRECTORS
PHILIP J. WHITCOME, PH.D.
Philip J. Whitcome, Ph.D., 50, has served as a director of the Company
since December 1992. In April 1995, Dr. Whitcome was elected Chairman of the
Board and from March 1996 to September 1996 he served as acting Chief Financial
Officer. From 1988 to 1994, Dr. Whitcome was President and Chief Executive
Officer of Neurogen Corporation, a biopharmaceutical company. From 1981 to 1988,
Dr. Whitcome was employed at Amgen Inc. ("Amgen"), a biopharmaceutical company,
serving most recently as Director of Strategic Planning. Prior to joining Amgen,
he served as Manager of Corporate Development for Medical Products at
Bristol-Myers, and held research and marketing management positions with the
Diagnostics Division of Abbott Laboratories, a pharmaceutical and medical
products company. Dr. Whitcome holds a Ph.D. in Molecular Biology from the
University of California at Los Angeles, a M.B.A. from the Wharton School at the
University of Pennsylvania and a B.S. in Physics from Providence College.
JOHN K.A. PRENDERGAST, PH.D.
John K.A. Prendergast, Ph.D., 44, is a co-founder of the Company and has
served as a director of the Company since December 1992. From December 1992 to
March 1996, Dr. Prendergast also served as a Vice President and the Treasurer of
the Company. Dr. Prendergast has also served as a Managing Director of
3
<PAGE> 6
Paramount Capital Investments, LLC, The Castle Group, Ltd., a medical technology
venture capital firm, since 1991. Dr. Prendergast is a co founder and director
of a number of publicly held biotechnology companies including AVAX
Technologies, Inc., Atlantis Pharmaceuticals, Inc., Avigen, Inc., and
Xenometrix. Dr. Prendergast received M.Sc. and Ph.D. degrees from the University
of New South Wales, Sydney, Australia and a C.S.S. in Administration and
Management from Harvard University.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended June 30, 1998 the Board of Directors held four
meetings. During this period, all of the directors attended at least 75% of the
aggregate of the total of meetings of the Board of Directors.
The Board has an Audit Committee and a Compensation Committee. During the
fiscal year ended June 30, 1998 the Compensation Committee met twice and the
Audit Committee met three times. During this period, all of the directors except
three attended or participated in at least 75% of the total number of meetings
held by all committees of the Board on which each such director served. Drs.
Horovitz and Rosenwald attended two of the three meetings of the Audit Committee
and Dr. Prendergast attended one of the three meetings of the Audit Committee.
The Audit Committee meets with the Company's independent auditors to review
the results of the annual audit and discuss the financial statements, it
recommends to the Board the independent auditors to be retained and receive and
consider the accountants' comments as to controls, adequacy of staff and
management performance and procedures in connection with audit and financial
controls. The Audit Committee is composed of three non-employee directors: Drs.
Horovitz, Prendergast and Rosenwald.
The Compensation Committee makes recommendations concerning salaries and
incentive compensation, awards stock options to employees and consultants under
the Company's stock option plans and otherwise determines compensation levels
and performs such other functions regarding compensation as the Board may
delegate. The Compensation Committee is composed of two non-employee directors:
Dr. Horovitz and Mr. Shaykin.
The Board of Directors has no standing Nominating Committee or any
committee performing the functions of such committee.
PROPOSAL 2
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 June 30, 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 1992.
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 Amended and
Restated 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.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
4
<PAGE> 7
MANAGEMENT
EXECUTIVE OFFICERS
The names of the executive officers of the Company and certain information
about them are set forth below:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
John Monahan, Ph.D. ............... 51 President, Chief Executive Officer
and Director
Thomas J. Paulson.................. 52 Vice President, Finance and Chief
Financial Officer and Secretary
Wanda deVlaminck................... 56 Vice President, Clinical and
Regulatory Affairs
Robert M. Maurer................... 46 Vice President, Business
Development
</TABLE>
Biographical information for Dr. Monahan is set forth under Proposal 1
above.
Thomas J. Paulson was appointed Vice President, Finance and Chief Financial
Officer and Secretary of the Company effective September 20, 1996. Prior to
joining Avigen, Mr. Paulson was president of Paulson Associates, a biotechnology
consulting firm. From its inception in 1989 until 1994, Mr. Paulson was Chief
Financial Officer of Neurogen Corporation. From 1986 to 1989, he was Director of
Finance at CibaCorning Diagnostics, Gilford Systems. From 1984 to 1986, Mr.
Paulson served as financial director at Quidel Corporation. From 1971 to 1984,
Mr. Paulson held various financial management positions at Abbott Laboratories.
Mr. Paulson holds a M.B.A. from the University of Chicago Graduate School of
Business and a B.B.A. in Accounting from Loyola University in Chicago.
Wanda deVlaminck has served as Vice President, Clinical and Regulatory
Affairs of the Company since its inception in 1992 and from March 1996 to
September 1996 she served as Secretary. From 1989 to 1992, Ms. deVlaminck was
Vice President, Regulatory Affairs at Somatix. In this position, she was
responsible for Somatix's compliance with all local, state and federal
regulations pertaining to environmental issues, personnel safety and products
that come under the jurisdiction of the FDA. In addition, Ms. deVlaminck managed
intellectual property and license agreements at Somatix. From 1988 to 1989, Ms.
deVlaminck worked on assignments in Israel, Japan, and the United States as a
regulatory affairs consultant. From 1983 to 1988, she was Senior Director
Regulatory Affairs at Cetus Corporation, a biotechnology company. Ms. deVlaminck
received a B.S. degree in microbiology from the University of California at
Berkeley and is a licensed Public Health Microbiologist in California.
Robert M. Maurer was appointed Vice President, Business Development
effective November 1996. From 1995 to 1996, Mr. Maurer served as Vice President
of Strategic Marketing at Promega Corporation. Mr. Maurer co-founded Molecular
Geriatrics Corporation and served as Chief Operating Officer, Secretary and
Treasurer from 1992 to 1995, as well as Chief Financial Officer from 1992 to
1993. From 1974 to 1992, Mr. Maurer held various management positions at Abbott
Laboratories. Mr. Maurer holds a M.B.A. from Harvard Graduate School of Business
Administration with emphasis on industrial and international marketing and sales
and a B.A. degree in economics and mathematics from Carleton College in
Minnesota.
5
<PAGE> 8
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Except as noted, the following table sets forth certain information
regarding the ownership of the Company's Common Stock as of September 1, 1998
by: (i) each director and nominee for director; (ii) each of the executive
officers named in the Summary Compensation Table employed by the Company in that
capacity on September 1, 1998; (iii) all executive officers and directors of the
Company as a group; and (iv) all those known by the Company to be beneficial
owners of more than five percent of its Common Stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP(1)
-----------------------
NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES TOTAL
---------------- --------- ----------
<S> <C> <C>
Lindsay A. Rosenwald, M.D.(2).......................... 570,891 7.81
c/o The Castle Group, Ltd.
375 Park Avenue
New York, NY 10152
Philip J. Whitcome, Ph.D.(3)........................... 536,085 7.33
c/o Avigen, Inc.
1201 Harbor Bay Parkway, #1000
Alameda, CA 94502
Dementional Fund Advisors(4)........................... 515,000 7.05
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401-1038
John Monahan, Ph.D.(5)................................. 254,928 3.49
Yuichi Iwaki, M.D., Ph.D.(6)........................... 131,091 1.79
Wanda deVlaminck(7).................................... 110,100 1.51
John K.A. Prendergast, Ph.D.(8)........................ 60,528 *
Leonard P. Shaykin(9).................................. 52,566 *
Zola Horovitz, Ph.D.(10)............................... 9,691 *
Robert M. Maurer(11)................................... 48,281 *
Thomas J. Paulson (12)................................. 58,071 *
All executive officers and directors as a group (11
persons)(13)......................................... 1,831,962 25.06
</TABLE>
- ---------------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules 13D and 13G if any filed with the
Securities and Exchange Commission (the "SEC"). Unless otherwise indicated
in the footnotes to this table and subject to community property laws where
applicable, the Company believes that each of the stockholders named in
this table has sole voting and investment power with respect to the shares
indicated as beneficially owned. Applicable percentages are based on
7,309,033 shares outstanding on September 1, 1998, adjusted as required by
rules promulgated by the SEC.
(2) Includes 1,650 shares issuable upon the exercise of options held by Dr.
Rosenwald that are exercisable within 60 days of the date of this table and
warrants to purchase 23,877 shares of Common Stock held by Dr. Rosenwald.
Also includes 160,573 shares held by Dr. Rosenwald's immediate family
members and 66,914 shares held in trust for the benefit of Dr. Rosenwald's
immediate family members, which he disclaims beneficial ownership of except
to the extent of his pecuniary interest therein. Also includes 5,130 shares
of Common Stock and warrants to purchase 3,221 shares of Common Stock held
by the Aries Domestic Fund. Dr. Rosenwald is President of the sole general
partner of the Aries Domestic Fund and disclaims beneficial ownership of
such shares except to the extent of his pecuniary interest therein. Also
includes 5,130 shares of Common Stock and warrants to purchase 2,318 shares
of Common Stock held by the Aries Trust. Dr. Rosenwald is President of the
sole investment advisor to the Aries Trust and disclaims beneficial
ownership of such shares except to the extent of his pecuniary
6
<PAGE> 9
interest therein. Includes 89,606 shares of Common Stock held by Huntington
Street Co. and June Street Co. Dr. Rosenwald is the sole proprietor of both
entities.
(3) Includes 516,898 shares issuable upon the exercise of options held by Dr.
Whitcome that are exercisable within 60 days of the date of this table.
Also includes 19,187 shares of Common Stock held by the Whitcome Family
Trust. Dr. Whitcome is a trustee of the Whitcome Family Trust and disclaims
beneficial ownership of such shares except to the extent of his pecuniary
interest therein.
(4) The number of shares provided in this table for Dementionar Fund Advisors
reflects its ownership as of June 30, 1998
(5) Includes 23,624 shares issuable upon the exercise of options held by Dr.
Monahan that are exercisable within 60 days of the date of this table.
(6) Includes 28,723 shares issuable upon the exercise of options held by Dr.
Iwaki that are exercisable within 60 days and warrants to purchase 88,374
shares of Common Stock. Also includes 5,130 shares of Common Stock and
warrants to purchase 3,221 shares of Common Stock held by the Aries
Domestic Fund. Dr. Iwaki is a director of the Aries Domestic Fund and
disclaims beneficial ownership of such shares except to the extent of his
pecuniary interest therein.
(7) Includes 50,129 shares issuable upon the exercise of options held by Ms.
deVlaminck that are exercisable within 60 days of the date of this table.
(8) Includes 1,650 shares issuable upon the exercise of options held by Dr.
Prendergast that are exercisable within 60 days of the date of this table.
(9) Includes 7,998 shares issuable upon the exercise of options held by Mr.
Shaykin that are exercisable within 60 days of the date of this table and
warrants to purchase 2,500 shares of Common Stock.
(10) Includes 9,691 shares issuable upon the exercise of options held by Dr.
Horovitz that are exercisable within 60 days of the date of this table.
(11) Includes 48,281 shares issuable upon the exercise of options held by Mr.
Maurer that are exercisable within 60 days of the date of this table.
(12) Includes 57,071 shares issuable upon the exercise of options held by Mr.
Paulson that are exercisable within 60 days of the date of this table
(13) Includes shares described in the notes above, as applicable. Includes an
aggregate of 745,715 shares issuable upon exercise of certain options and
warrants which certain executive officers and directors of the Company have
the right to acquire within 60 days of the date of this table.
COMPLIANCE WITH THE REPORTING REQUIREMENTS OF SECTION 16(A)
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 June 30, 1998, all Section
16(a) filing requirements applicable to its officers, directors and greater than
ten percent beneficial owners were complied with.
7
<PAGE> 10
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
The members of the Board of Directors currently receive one thousand
dollars ($1,000.00) in cash compensation per Board meeting attended and five
hundred dollars ($500.00) in cash compensation per committee meeting attended
for their services as members of the Board of Directors and as committee members
and are eligible for reimbursement for their expenses incurred in connection
with attendance at Board and committee meetings in accordance with Company
policy.
Each non-employee director of the Company also receives stock options
grants under the 1996 Non-Employee Directors' Stock Option Plan (the "Directors'
Plan"). The maximum number of shares of Common Stock that may be issued pursuant
to options granted under the Directors' Plan is 200,000. The Directors' Plan is
administered by the Board of Directors, unless the Board delegates
administration to a committee comprised of not less than two members of the
Board.
Option grants under the Directors' Plan are non-discretionary. On the date
of the annual meeting of stockholders each year, 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 since the previous year's annual meeting of stockholders
is automatically granted under the Directors' Plan, without any further action
by the Company, the Board of Directors or the stockholders of the Company, an
option to purchase 5,000 shares of Common Stock of the Company. If the
non-employee director has not served as a director since the previous year's
annual meeting of stockholders he or she shall be automatically granted an
option to purchase the number of shares of Common Stock of the Company (rounded
up to the nearest whole share) determined by multiplying 5,000 shares by a
fraction, the numerator of which is the number of days the person continuously
has been a non-employee director as of the date of such grant and the
denominator of which is 365. No other options may be granted at any other time
under the Directors' Plan.
The exercise price of options under the Directors' Plan is equal to 100% of
the fair market value of the Common Stock subject to the option on the date of
the grant. Options granted under the Directors' Plan may not be exercised until
the date upon which such optionee, or the affiliate of such optionee, as the
case may be, has provided one year of continuous service as a non-employee
director following the date of grant of such option, whereupon such option shall
become exercisable as to 33% of the option shares, 34% of the option shares
shall become exercisable two years after the date of grant, and 33% shall become
exercisable three years after the date of grant, in accordance with its terms.
The term of option granted under the Directors' Plan is ten years. The
Directors' Plan will terminate in March 2006, unless earlier terminated by the
Board.
In the event of a merger, consolidation, reverse reorganization,
dissolution, sale of substantially all of the assets of the Company, or certain
other changes in the beneficial ownership of the Company's securities
representing at least 50% change of such ownership, the options outstanding
under the Directors' Plan will automatically become fully vested and will
terminate if not exercised prior to such event.
In the fiscal year ended June 30, 1998, the compensation of the
non-employee directors included options to Drs. Whitcome, Horovitz, Iwaki,
Prendergast and Rosenwald and Messrs. Pratt and Shaykin to purchase 5,000 shares
each, of Common Stock at an exercise price of $3.25 per share the fair market
value of such Common Stock on the date of grant. As of September 1, 1998, no
options had been exercised under the Directors' Plan.
In October 1996, Dr. Whitcome entered into a consulting agreement with the
Company. Pursuant to the agreement, Dr. Whitcome performed consulting services
for which he received a fee of $8,333 per month and was eligible for
reimbursement of certain expenses incurred in connection with his performance of
consulting services. This agreement was renewed on October 1, 1997 and during
the fiscal year ended June 30, 1998, Dr. Whitcome received payments totaling
$100,000 under this agreement.
8
<PAGE> 11
SUMMARY OF COMPENSATION
The following table shows for the fiscal years ended June 30, 1998, 1997
and 1996, compensation awarded or paid to, or earned by, the Company's Chief
Executive Officer and its other four most highly compensated executive officers
at June 30, 1998 (the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL AWARDS(1)
COMPENSATION -------------------------
--------------- SECURITIES ALL OTHER
SALARY BONUS UNDERLYING COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) OPTIONS(#) ($)(2)
--------------------------- ---- ------- ----- ---------- ------------
<S> <C> <C> <C> <C> <C>
John Monahan, Ph.D............................. 1998 210,000 -- 20,000 1,891
President and Chief Executive Officer 1997 200,000 -- 15,000 2,236
1996 163,274 -- 11,286 576
Wanda deVlaminck............................... 1998 196,100 -- 10,000 1,875
Vice President, Clinical and Regulatory 1997 185,000 -- 50,000 --
Affairs
1996 132,017 -- 16,930 492
Gary J. Kurtzman, M.D.(3)...................... 1998 185,400 -- 10,000 403
Vice President, Research and Development 1997 180,000 -- 50,000 --
1996 125,000 -- 16,930 461
Thomas Paulson(4).............................. 1998 167,000 -- 10,000 1,713
Chief Financial Officer 1997 160,000 -- 100,000 22,319(5)
Robert Maurer(6)............................... 1998 165,300 -- 10,000 1,704
Vice President, Business Development 1997 160,000 -- 100,000 52,926(7)
</TABLE>
- ---------------
(1) The Company has no restricted stock awards, stock appreciation rights (SARs)
or long-term incentive plans (LTIPs).
(2) Represents insurance premiums paid by the Company with respect to term life
insurance for the benefit of the named executive.
(3) Dr. Kurtzman resigned as Vice President, Research and Development of the
Company effective July 1998.
(4) Mr. Paulson became an executive officer for the Company on September 20,
1996. He received salary payments totalling approximately $124,000 during
fiscal year ended June 30, 1997.
(5) Represents reimbursement of $22,319 in relocation expenses in connection
with Mr. Paulson's relocation to California.
(6) Mr. Maurer became an executive officer of the Company on November 4, 1996.
He received salary payments totalling approximately $104,000 during fiscal
year ended June 30, 1997.
(7) Represents reimbursement of $52,926 in relocation expenses in connection
with Mr. Maurer's relocation to California.
9
<PAGE> 12
STOCK OPTION GRANTS AND EXERCISES
The Company has granted options to its executive officers under its 1993
Stock Option Plan (the "1993 Plan") and in the future will grant options to
executive officers under its 1996 Equity Incentive Plan (the "1996 Plan")
(collectively the "Plans"). As of June 30, 1998, options to purchase a total of
1,534,411 shares were outstanding under the Plans and options to purchase
600,002 shares remained available for grant under the 1996 Plan. In March 1996,
the Board of Directors determined that no further options would be granted under
the 1993 Plan.
The following tables show for the fiscal year ended June 30, 1998, certain
information regarding options granted to, exercised by, and held at year end by,
the Named Executive Officers:
OPTION GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
INDIVIDUAL GRANTS ANNUAL RATES OF
----------------------------------------------------- STOCK
PERCENT OF TOTAL PRICE APPRECIATION
OPTIONS FOR
OPTIONS GRANTED TO EXERCISE OR OPTION TERM(1)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION --------------------
NAME (#)(2) FISCAL YEAR%(3) ($/SH) DATE 10%($) 5%($)
---- ------- ---------------- ----------- ---------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
John Monahan....................... 20,000 8.03% $3.50 06/30/07 44,023 111,562
Wanda deVlaminck................... 10,000 4.01% $3.50 06/30/07 22,011 55,781
Gary J. Kurtzman, M.D.............. 10,000 4.01% $3.50 06/30/07 22,011 55,781
Thomas Paulson..................... 10,000 4.01% $3.50 06/30/07 22,011 55,781
Robert Maurer...................... 10,000 4.01% $3.50 06/30/07 22,011 55,781
</TABLE>
- ---------------
(1) The potential realizable value is based on the term of the option at the
time of grant (10 years). Assumed stock price appreciation of 5% and 10% is
used pursuant to rules promulgated by the commission. The potential
realizable value is calculated by assuming that the stock price on the date
of grant appreciates at the indicated rate, for the entire term of the
option and that the option is exercised and sold on the last day of its term
at the appreciated price. No gain to the optionee is possible unless the
stock price increases over the option term.
(2) Options granted become exercisable at the rate of 6.25% of the shares
subject to the option each quarter for four years. The options expire 10
years from the date of grant, or earlier upon termination of employment.
(3) Based on 249,025 options granted to employees and directors of, and
consultants to, the Company during the fiscal year ended June 30, 1998.
10
<PAGE> 13
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR, AND FY-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY
AT OPTIONS AT
SHARES FY-END(#) FY-END($)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE(1) UNEXERCISABLE(2)
---- ----------- ----------- --------------------- ----------------------
<S> <C> <C> <C> <C>
John Monahan........................ -- -- 17,135/29,151 23,379/10,623
Wanda deVlaminck.................... -- -- 39,674/45,156 57,717/17,443
Gary J. Kurtzman, M.D............... -- -- 71,485/46,076 154,963/20,251
Thomas Paulson...................... -- -- 47,954/65,432 7,017/3,185
Robert Maurer....................... -- -- 39,375/70,625 -/-
</TABLE>
- ---------------
(1) Reflects shares vested and unvested at June 30, 1998. Certain options
granted under the 1993 Plan are immediately exercisable, but are subject to
the Company's right to repurchase unvested shares on termination of
employment.
(2) Fair market value of the Company's Common Stock at June 30, 1998 ($3.50)
minus the exercise price of the options.
EMPLOYMENT AGREEMENTS
In August and October 1992, the Company entered into employment agreements
with John Monahan, the Company's President and Chief Executive Officer, and with
Wanda deVlaminck, the Company's Vice President, Clinical and Regulatory Affairs.
The employment agreements provide for, among other items: (i) a minimum base
salary of at least $150,000 and $120,000 per year for Dr. Monahan and Ms.
DeVlaminck, respectively, and (ii) severance payments and benefits at the
standard compensation rate for 12 months or until new employment in the gene
therapy field is commenced, unless termination is for just cause. The employment
agreements automatically renew for successive one year periods unless 30 days
prior written notice is provided by either party or unless terminated by either
party for just cause.
In August and October 1996, the Company entered into employment agreements
with Thomas J. Paulson, the Company's Vice President and Chief Financial
Officer, and with Robert M. Maurer, the Company's Vice President, Business
Development. The employment agreements provide for, among other items, (i) a
minimum base salary of $160,000 per year for Messrs. Paulson and Maurer, and
(ii) a one time stock option grant to purchase 100,000 shares of common stock of
Avigen at a price and vesting schedule to be determined by the Board for Messrs.
Paulson and Maurer.
REPORT OF THE COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
ON EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE REPORT(1)
The Compensation Committee of the Board of Directors ("Committee") is
currently composed of Dr. Horovitz and Mr. Shaykin, none of whom are currently
officers or employees of the Company. The Committee is responsible for
establishing the Company's compensation programs for all employees, including
executives. For executive officers, the Committee evaluates performance and
determines compensation policies and levels.
- ---------------
1The material in this report is not "soliciting material," is not deemed
"filed" with the SEC, and is not to be incorporated by reference into any filing
of the Company under the 1933 Act or 1934 Act, whether made before or after the
date hereof and irrespective of any general incorporation language contained in
such filing.
11
<PAGE> 14
Compensation Philosophy
The primary goal of the compensation program is to align compensation with
business objectives and performance. The Company's aim is to attract, retain and
reward executive officers and other key employees who contribute to the
long-term success of the Company and to motivate those individuals to enhance
long-term stockholder value. To establish this relationship between executive
compensation and creation of stockholder value, the Board of Directors has
adopted a total compensation package comprised of base salary, bonus and stock
option awards. Key elements of this philosophy are:
- The Company pays competitively with biotechnology companies with which
the Company competes for talent.
- The Company maintains annual incentive opportunities sufficient to
provide motivation to achieve specific operating goals and to generate
rewards that bring total compensation to competitive levels.
- The Company provides significant equity-based incentives for executives
and other key employees to ensure that they are motivated over the
long-term to respond to the Company's business challenges and
opportunities as owners and not just as employees.
Base Salary. The Committee annually reviews each executive officer's base
salary. Among the factors taken into consideration are (1) individual and
corporate performance, (2) levels of responsibility, (3) prior experience, (4)
breadth of knowledge of the industry, and (5) competitive pay practices.
Bonus. The Company believes that executive performance may be maximized via
a system of annual incentive awards. The actual incentive awards earned depend
on the extent to which the Company and individual performance objectives are
achieved. During the fiscal year, the Compensation Committee will review and
approve the annual performance objectives for the Company and the individual
officers. The Company's objectives consist of operating, strategic and financial
goals that are considered to be critical to the Company's overall goal: building
stockholder value. Given the Company's early stage of development and current
financial position, the Board of Directors did not grant any bonuses during the
fiscal year ended June 30, 1998. For the next fiscal year the Board of Directors
determined that the primary goals in building stockholder value were:
- understanding, identifying and developing products in the research
pipeline as candidates for clinical testing
- implementing strategies relating to the development of manufacturing
capacity for clinical testing
- establishing strategic corporate collaborations to facilitate product
development and provide support for clinical testing
- identifying additional potential uses for products which are currently
under development
Long-Term Incentives. The Company's long-term incentive program consists of
the Plans. The Plans utilize vesting periods (generally four years) to encourage
key employees to continue in the employ of the Company. Through option grants,
executives receive significant equity incentives to build long-term stockholder
value. The exercise price of options granted under the Plans generally is 100%
of fair market value of the underlying stock on the date of grant. Employees
receive value from these grants only if the Company's Common Stock appreciates
over the long-term. The size of option grants is determined based on competitive
practices at leading companies in the biotechnology industry and the Company's
philosophy of significantly linking executive compensation with stockholder
interests.
CHIEF EXECUTIVE OFFICER COMPENSATION
Dr. Monahan's base salary, bonus and grants of stock options were
determined in accordance with the criteria described in the "Base Salary,"
"Bonus," and "Long Term Incentives" sections of this report. Dr. Monahan's Base
Salary of $210,000 reflects the Board's subjective assessment of (1) his
performance, (2) his skills in relation to other CEOs in the Company's industry,
(3) the Board's confidence in Dr. Monahan's ability to lead the Company's
continued development, and (4) the Board's assessment of the
12
<PAGE> 15
Company's performance. Considering these factors, the Committee set Dr.
Monahan's base annual salary through the fiscal year ending June 30, 1999 at
$210,000.
CERTAIN TAX CONSIDERATIONS
Section 162(m) of the Internal Revenue Code (the "Code") limits the Company
to a deduction for federal income tax purposes of not more than $1 million of
compensation paid to certain executive officers in a taxable year. Compensation
above $1 million may be deducted if it is "performance-based compensation"
within the meaning of the Code.
The Board of Directors believes that at the present time it is unlikely
that the compensation paid to any executive officer in a taxable year will
exceed $1 million. Therefore, the Board of Directors has not established a
policy for determining which forms of incentive compensation awarded to
executive officers shall be designed to qualify "performance based
compensation."
From the disinterested members of the Board of Directors and Compensation
Committee:
Zola Horovitz, Ph.D.
Leonard P. Shaykin
13
<PAGE> 16
PERFORMANCE MEASUREMENT COMPARISON(1)
The following graph shows the total stockholder return of an investment of
$100 in cash on June 30, 1998 for (i) the Company's Common Stock, (ii) the
Nasdaq Stock Market (U.S.) and (iii) the American Stock Exchange Biotechnology
Index (the "AMEX Biotech"). All values assume reinvestment of the full amount of
all dividends and are calculated as of May 22nd and June of each year:
<TABLE>
<CAPTION>
NASDAQ AMEX
COMPOSITE BIOTECHNOLOGY
'AVIGEN, INC.' INDEX INDEX
<S> <C> <C> <C>
5/22/95 100 100 100
6/28/96 88 95 90
6/30/97 44 116 92
6/30/98 44 152 94
</TABLE>
(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.
14
<PAGE> 17
CERTAIN TRANSACTIONS
In October 1996, Dr. Whitcome entered into a consulting agreement with the
Company. Pursuant to the agreement, Dr. Whitcome performed consulting services
for which he received a fee of $8,333 per month. This agreement was renewed on
October 1, 1997 and during the fiscal year ended June 30, 1998, Dr. Whitcome
received payments totaling $100,000 under this agreement.
INDEMNIFICATION
The Company has entered into indemnity agreements with certain officers and
directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided for
therein, for expenses, damages, judgments, fines and settlements he may be
required to pay in actions or proceedings which he is or may be made a party by
reason of his position as a director, officer or other agent of the Company, and
otherwise to the full extent permitted under Delaware law and the Company's
Amended and Restated Bylaws.
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
Thomas J. Paulson
Secretary
October 23, 1998
15
<PAGE> 18
(This page intentionally left blank.)
<PAGE> 19
AVIGEN, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON NOVEMBER 19, 1998
The undersigned hereby appoints PHILIP J. WHITCOME and THOMAS J. PAULSON,
and each of them, as attorneys and proxies of the undersigned, with full power
of substitution, to vote all of the shares of stock of Avigen, Inc. which the
undersigned may be entitled to vote at the Annual Meeting of Stockholders of
Avigen, Inc. to be held at 1201 Harbor Bay Parkway, #1000, Alameda, California
on Thursday, November 19, 1998, at 9:00 a.m. local time, and at any and all
continuations and adjournments thereof, with all powers that the undersigned
would possess if personally present, upon and in respect of the following
matters and in accordance with the following instructions, with discretionary
authority as to any and all other matters that may properly come before the
meeting.
UNLESS A CONTRARY DIRECTION IS INDICATED, THIS PROXY WILL BE VOTED FOR ALL
NOMINEES LISTED IN PROPOSAL 1 AND FOR PROPOSAL 2, AS MORE SPECIFICALLY DESCRIBED
IN THE PROXY STATEMENT. IF SPECIFIC INSTRUCTIONS ARE INDICATED, THIS PROXY WILL
BE VOTED IN ACCORDANCE THEREWITH.
MANAGEMENT RECOMMENDS A VOTE FOR THE NOMINEE FOR DIRECTOR ON THE REVERSE
SIDE OF THIS PROXY CARD.
(CONTINUED ON OTHER SIDE)
SEE REVERSE
SIDE
<PAGE> 20
Please mark your
[X] votes as in this
example
<TABLE>
<CAPTION>
If all nominees WITHHOLD
listed at right (except AUTHORITY MANAGEMENT RECOMMENDS A VOTE FOR PROPOSAL 2
as marked to the to vote for all
contrary ballot) nominees listed at right FOR AGAINST ABSTAIN
<S> <C> <S> <C> <C> <C> <S> <S>
PROPOSAL ONE [ ] [ ] Nominee Proposal 2. [ ] [ ] [ ]
To elect one John Monahan, Ph.D To ratify the
director to hold office until the 2001 Annual Meeting of appointment by the Board of Directors
Stockholders of Ernst & Young LLP as the auditors
for the fiscal year ending
June 30,1999.
To withhold authority to vote for any nominee(s)
write such nominee(s) below:
- ---------------------------------------------------------
</TABLE>
PLEASE VOTE, DATE AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED
RETURN ENVELOPE WHICH IS POSTAGE PREPAID IF MAILED IN THE UNITED
STATES.
SIGNATURE(S) DATED , 1998
--------------------------------------------- ----------
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 name by authorized person.
