<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. _______________)
<TABLE>
<S> <C>
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 Rule 14a-11(c) or Rule 14a-12
CYTOCLONAL PHARMACEUTICS 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)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
--------------------------------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
--------------------------------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act
Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):
--------------------------------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
--------------------------------------------------------------------------------------------------------
(5) Total fee paid:
--------------------------------------------------------------------------------------------------------
[ ] Fee paid previously with preliminary materials:
--------------------------------------------------------------------------------------------------------
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2)
and identify the filing 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.
(1) Amount previously paid:
--------------------------------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
--------------------------------------------------------------------------------------------------------
(3) Filing Party:
--------------------------------------------------------------------------------------------------------
(4) Date Filed:
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</TABLE>
<PAGE> 2
CYTOCLONAL PHARMACEUTICS INC.
9000 HARRY HINES BOULEVARD
SUITE 621
DALLAS, TEXAS 75235
(214) 353-2922
---------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD TUESDAY, AUGUST 31, 1999
---------------------
Dear Stockholder:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
Cytoclonal Pharmaceutics Inc., a Delaware corporation (the "Company"), will be
held at 9000 Harry Hines Boulevard, Suite 601, Dallas, Texas 75235, on Tuesday,
August 31, 1999, 9:00 a.m., local time (the "Annual Meeting").
At the Annual Meeting, the stockholders will be requested to act upon the
following matters:
1. To elect five (5) directors, each for a term of one (1) year or
until their respective successors are elected and qualify; and
2. To transact such other business as may properly come before the
Annual Meeting or any adjournment thereof.
The close of business on July 6, 1999, has been fixed as the record date
for the determination of stockholders entitled to notice of and to vote at the
Annual Meeting (the "Record Date"). The transfer books of the Company will
remain open following the Record Date.
All stockholders are cordially invited to attend the Annual Meeting.
Whether or not you expect to attend, you are requested to sign, date and return
the enclosed proxy promptly. Stockholders who execute proxies retain the right
to revoke them at any time prior to the voting thereof by filing written notice
of such revocation with the Secretary of the Company, by submission of a duly
executed proxy bearing a later date or by voting in person at the Annual Meeting
of Stockholders. Attendance at the Annual Meeting will not in and of itself
constitute revocation of a proxy. Any written notice revoking a proxy should be
sent to Cytoclonal Pharmaceutics Inc., 9000 Harry Hines Boulevard, Suite 621,
Dallas, Texas 75235, Attention: Daniel Shusterman, Secretary. A return envelope
which requires no postage if mailed in the United States is enclosed for your
convenience.
By Order of the Board of Directors,
Daniel Shusterman, Secretary
Dallas, Texas
July 16, 1999
<PAGE> 3
CYTOCLONAL PHARMACEUTICS INC.
9000 HARRY HINES BOULEVARD
SUITE 621
DALLAS, TEXAS 75235
(214) 353-2922
---------------------
PROXY STATEMENT
---------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD TUESDAY, AUGUST 31, 1999
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Cytoclonal Pharmaceutics Inc., a Delaware corporation
(the "Company"), of proxies in the enclosed form for the annual meeting of
Stockholders to be held at 9000 Harry Hines Boulevard, Suite 601, Dallas, Texas
75235, on Tuesday, August 31, 1999, at 9:00 a.m., local time (the "Annual
Meeting"), and for any adjournment or adjournments thereof, for the purposes set
forth in the foregoing Notice of Annual Meeting of Stockholders. The persons
named in the enclosed proxy form will vote the shares for which they are
appointed in accordance with the directions of the stockholders appointing them.
In the absence of such directions, such shares will be voted FOR the election of
each director-nominee named proposal 1 listed below (the "Proposal") and, in
their best judgment, will be voted on any other matters as may come before the
Annual Meeting. Any stockholder giving such a proxy has the power to revoke the
same at any time before it is voted by (i) filing written notice of such
revocation with the Secretary of the Company, (ii) submission of a duly executed
proxy bearing a later date or (iii) voting in person at the Annual Meeting of
Stockholders. Attendance at the Annual Meeting will not in and of itself
constitute a revocation of a proxy. Any written notice revoking a proxy should
be sent to Mr. Daniel Shusterman, Secretary, Cytoclonal Pharmaceutics Inc., 9000
Harry Hines Boulevard, Suite 621, Dallas, Texas 75235. A return envelope which
requires no postage if mailed in the United States is enclosed for your
convenience.
The principal executive offices of the Company are located at 9000 Harry
Hines Boulevard, Suite 621, Dallas, Texas 75235. The telephone number of the
Company is (214) 353-2922. The approximate date on which this Proxy Statement
and the accompanying form of proxy will first be sent or given to the Company's
stockholders is July 16, 1999 (the "Mailing Date").
VOTING SECURITIES
Only holders of the Company's shares of Common Stock, par value $.01 per
share (the "Common Stock"), and Series A Convertible Preferred Stock, par value
$.01 per share (the "Preferred Stock," and together with the Common Stock, the
"Shares"), of record as of the close of business on the Record Date, are
entitled to vote at the Annual Meeting. On the Record Date, an aggregate of
11,058,053 Shares were issued and outstanding, consisting of 10,343,412 shares
of Common Stock and 714,641 shares of Preferred Stock. Each outstanding Share is
entitled to one (1) vote upon all matters to be acted upon at the Annual
Meeting.
A majority of the Shares, represented in person or by proxy, constitutes a
quorum. If a quorum is present, a plurality vote of the Shares present, in
person or by proxy, at the Annual Meeting and entitled to vote is required for
the election of any director in Proposal 1. In case a quorum shall not be
present at the Annual Meeting, a majority in interest of the stockholders
entitled to vote at the Annual Meeting, present in person or by proxy, shall
have the power to adjourn such Annual Meeting from time to time, without notice
other than announcement at the Annual Meeting until the requisite amount of
Shares entitled to vote shall be present. Abstentions are considered Shares
present and entitled to vote, and therefore have the same legal effect as a vote
AGAINST a matter presented at the Annual Meeting. Any Shares held in street name
for which the broker or nominee receives no instructions from the beneficial
owner, and as to which such broker or nominee does not have discretionary voting
authority, will be
1
<PAGE> 4
considered as Shares not entitled to vote and will therefore not be considered
in the tabulation of the votes. Proxy ballots are received and tabulated by the
Company's transfer agent, American Stock Transfer & Trust Co., and certified by
the inspector of election.
PROPOSAL 1
ELECTION OF DIRECTORS
At the Annual Meeting, five (5) directors will be elected by the
stockholders to serve until the next annual stockholder meeting or until their
successors are elected and qualified. The accompanying form of proxy will be
voted FOR the election of the nominees listed below to serve as directors unless
the proxy contains contrary instructions. Management has no reason to believe
that the nominees will not be candidates or will be unable to serve as
directors. However, in the event that the nominees should become unable or
unwilling to serve as directors, the proxy will be voted FOR the election of
such persons as shall be designated by the directors.
The following table sets forth the name and age of each director-nominee
and the year during which each individual initially began serving as a director
of the Company:
DIRECTOR NOMINEES:
<TABLE>
<CAPTION>
NAME AGE YEAR FIRST BECAME A DIRECTOR
---- --- ----------------------------
<S> <C> <C>
Arthur P. Bollon, Ph.D.(1).................................. 56 1991
Ira J. Gelb, M.D.(1)(2)..................................... 71 1994
Irwin C. Gerson(1)(2)....................................... 69 1995
Walter M. Lovenberg, Ph.D.(2)............................... 64 1995
Gary E. Frashier............................................ 63 1999
</TABLE>
- ---------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
THE BOARD OF DIRECTORS OF THE COMPANY UNANIMOUSLY RECOMMENDS A VOTE "FOR"
THE ELECTION OF THE ABOVE-NAMED NOMINEES AS DIRECTORS. PROXIES SOLICITED BY THE
BOARD OF DIRECTORS WILL BE SO VOTED UNLESS STOCKHOLDERS SPECIFY OTHERWISE IN
THEIR PROXIES.
BIOGRAPHICAL INFORMATION:
Certain information about the nominee-directors is set forth below. This
information has been furnished to the Company by the individuals named.
Arthur P. Bollon, Ph.D., (age 56) a director-nominee and founder of the
Company, has since the Company's inception in 1991 served as the Company's
Chairman of the Board of Directors, President, Chief Executive Officer and,
until March 1995, Treasurer. Dr. Bollon received his Ph.D. from the Institute of
Microbiology at Rutgers University and was a Post Doctoral Fellow at Yale
University. Dr. Bollon has served as consultant to a number of major companies,
including Merck, Sharp & Dohme and Diamond, Shamrock, and has served on the
Board of Directors and Advisory Boards of several biotechnology companies,
including Viragen, Inc., Wadley Biosciences Corp. and American Bionetics, Inc.
From 1987 to 1991, Dr. Bollon served as President and Chief Executive Officer of
the Wadley/Phillips Partnership. Prior to that time, he was Director of Genetic
Engineering and Chairman of the Department of Molecular Genetics at the Wadley
Institutes of Molecular Medicine. In his capacities at the Wadley/Phillips
Partnership and Wadley Institutes, Dr. Bollon played a leading role in bringing
the technology that forms the basis of the Company from conception to reality.
Ira J. Gelb, M.D., (age 71) a director-nominee, has been a director of the
Company since April 1994. Dr. Gelb received his M.D. from New York University
School of Medicine in 1951. After finishing his
2
<PAGE> 5
training in cardiology at the Mount Sinai Hospital in New York City in 1957, Dr.
Gelb continued his association with that institution until his retirement in
1992. During this period, he was appointed Attending Cardiologist and Associate
Clinical Professor at the Mount Sinai School of Medicine. Other appointments
included Adjunct Associate Clinical Professor of Cardiology at Cornell Medical
School, Adjunct Clinical Professor of Cardiology at New York Medical College,
Cardiology Consultant at Lawrence Hospital, Bronxville, N.Y. and United
Hospital, Portchester, N.Y. Dr. Gelb is a former President of the American Heart
Association, Westchester-Putnam Chapter, and was a Senior Assistant Editor with
the American Journal of Cardiology from 1968 to 1983, when he became a founding
editor of the Journal of the American College of Cardiology (the "JACC"). Dr.
Gelb continued as a Senior Assistant Editor of JACC until his retirement in
1992. Since that time, he has served on the boards of various pharmaceutical
companies. Since 1992, Dr. Gelb has been an Honorary Lecturer at The Mount Sinai
School of Medicine. Dr. Gelb has also served as the Clinical Coordinator of
Biomedical Programs and Professor of Chemistry & Biochemistry at Florida
Atlantic University ("FAU") since 1998, an Adjunct Professor and a member of
FAU's Foundation Board since October 1996 and FAU's Steering Committee since
1997. Dr. Gelb has served as a member of the Board of Directors of the American
Heart Association, Boca Raton Division since December 1996 and was appointed
President in June 1999. In 1998, Boca Raton Community Hospital added Dr. Gelb as
a member to its Foundation Board. In November 1998, Dr. Gelb was appointed
Voluntary Professor of Medicine at the University of Miami School of Medicine.
Irwin C. Gerson, (age 69) a director-nominee, has been a director of the
Company since March 1995. Since January 1998, Mr. Gerson has served as Chairman
Emeritus of Lowe McAdams Healthcare. From 1995 until December 1997, Mr. Gerson
served as Chairman of Lowe McAdams Healthcare and prior thereto had been, since
1986, Chairman and Chief Executive Officer of William Douglas McAdams, Inc., one
of the largest advertising agencies in the U.S. specializing in pharmaceutical
communications to healthcare professionals. Mr. Gerson has a B.S. in Pharmacy
from Fordham University and an MBA from the NYU Graduate School of Business
Administration. He is a director of Andrx Corporation, a Nasdaq-listed public
company. In 1992, Mr. Gerson received an honorary Doctor of Humane Letters from
the Albany College of Pharmacy. Mr. Gerson serves as a Trustee of Long Island
University, Chairman of The Council of Overseers-Arnold and Marie Schwartz
College of Pharmacy, member of the Board of Trustees of the Albany College of
Pharmacy and, from 1967 through 1974, was a lecturer on sales management
pharmaceutical marketing at the Columbia College School of Pharmacy. Mr. Gerson
also has served as a Member of the Board of Governors, New York Council,
American Association of Advertising Agencies, a Director of Business
Publications Audit, a Director of the Connecticut Grand Opera, and a Director of
the Stamford Chamber Orchestra. Mr. Gerson previously served as a director of
the foundation of Pharmacists and Corporate Americans for AIDS Education, the
Pharmaceutical Advertising Council, Penn Dixie Industries, Continental Steel
Corporation, the Nutrition Research Foundation and as a Trustee of the
Chemotherapy Foundation.
Walter M. Lovenberg, Ph.D., (age 64) a director-nominee, has been a
director of the Company since August 1995. From 1989 to 1993, Dr. Lovenberg
served as Executive Vice President and member of the Board of Directors of
Marion Merrell Dow Inc. Dr. Lovenberg also served as the President of the Marion
Merrell Dow Research Institute from 1989 to 1993 and Vice President from 1986
through 1989. Prior to joining Marion Merrell Dow in 1958, Dr. Lovenberg was a
Senior Scientist and Chief of Biochemical Pharmacology at the National
Institutes of Health. Dr. Lovenberg has served President of Lovenberg
Associates, Inc. since 1993. Since 1997, Dr. Lovenberg has served as Chief
Executive Officer of Helicon Therapeutics Inc., a private company, and since
1992 and 1995, Dr. Lovenberg has served as a director of Xenometrix, Inc. and a
director of Inflazyme Pharmaceutics, Ltd. (which is traded on the Toronto
Exchange). Also, since 1994, Dr. Lovenberg has served as director of OSI
Pharmaceuticals, Inc., a Nasdaq-listed public company. Dr. Lovenberg received a
Ph.D. in Biochemistry from George Washington University in 1962 and a B.S. in
Biochemistry and an M.S. in Agriculture from Rutgers University in 1958 and
1956, respectively. Dr. Lovenberg, who serves as Executive Editor of Analytical
Biochemistry and Editor (USA) of Neurochemistry International, is a consulting
editor to several other scientific journals. Dr. Lovenberg has been the
recipient of many awards, including a Fulbright-Hays Senior Scholar Award
3
<PAGE> 6
and a Public Health Service Superior Service Award. Dr. Lovenberg is a member of
the American College of Neuropsychopharmacology, the American Society of
Neurochemistry and the American Society of Biochemistry and Molecular Biology.
Gary E. Frashier, (age 63) a director-nominee, commenced serving as a
director of the Company on June 28, 1999. Since December 1997, Mr. Frashier has
served as Chairman of the Board of Directors of OSI Pharmaceuticals, Inc.
("OSIP"), a Nasdaq-listed public company engaged in the discovery and
development of novel, small-molecule pharmaceutical products for
commercialization by the pharmaceutical industry. Mr. Frashier was Chief
Executive Officer of OSIP from March 1990 until October 1998. From March 1994 to
December 1997, Mr. Frashier also served as Vice Chairman of the Board of OSIP,
and was President of OSIP from March 1990 to March 1994. From April 1987 to
February 1990, Mr. Frashier served as the President, Chief Executive Officer and
director of Genex Corporation, a then publicly-traded biotechnology company
specializing in protein engineering. From January 1984 to March 1987, Mr.
Frashier served as Chairman and Chief Executive Officer of Continental Water
Systems, Inc., a privately-held corporation. Mr. Frashier currently serves as a
director of Anaderm Research Corp. and Helicon Therapeutics, Inc., both of which
are privately-held companies. Mr. Frashier received his B.S. in chemical
engineering from Texas Tech University in 1958 and M.S. in Management from MIT
in 1970. Mr. Frashier also serves as a director of Atlantic Biopharmaceutics,
Inc. a privately-held company.
MEETINGS OF THE BOARD:
During the fiscal year ended December 31, 1998, there were four (4) formal
meetings of the Board of Directors, several actions by unanimous consent and
several informal meetings. The Board of Directors has an Audit Committee and
Compensation Committee. During the fiscal year ended December 31, 1998, there
were four (4) formal meetings of the Audit Committee and four (4) formal
meetings of the Compensation Committee. With the exception of Gary Frashier who
commenced serving as a director of the Company on June 28, 1999, each director
of the Company attended all Board meetings and committee meetings of which he
was a member during the fiscal year ended December 31, 1998.
COMMITTEES OF THE BOARD OF DIRECTORS:
The Audit Committee serves at the pleasure of the Board of Directors, and
is authorized to review proposals of the Company's auditors regarding annual
audits, recommend the engagement or discharge of the auditors, review
recommendations of such auditors concerning accounting principles and the
adequacy of internal controls and accounting procedures and practices, to review
the scope of the annual audit, to approve or disapprove each professional
service or type of service other than standard auditing services to be provided
by the auditors, and to review and discuss the audited financial statements with
the auditors. Its members are Arthur P. Bollon, Ph.D., Ira J. Gelb, M.D., and
Irwin C. Gerson.
The Compensation Committee serves at the pleasure of the Board of
Directors, and is authorized to establish salaries, incentives and other forms
of compensation for officers, directors and certain key employees and
consultants, administer the Company's various incentive compensation and benefit
plans, including the Company's 1992 Stock Option Plan and 1996 Stock Option
Plan, and recommend policies relating to such plans. Its members are Ira J.
Gelb, M.D., Irwin C. Gerson and Walter Lovenberg, Ph.D.
The Company does not have a formal Stock Option Committee, Nominating
Committee or Executive Committee of the Board of Directors.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE:
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers, directors and persons who beneficially own
more than 10% of a registered class of the Company's equity securities to file
with the Securities and Exchange Commission (the "Commission") initial reports
of ownership and reports of changes in beneficial ownership of common stock and
other equity securities of the Company. Such executive officers, directors and
greater than 10% beneficial owners are required by the
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<PAGE> 7
Commission's regulation to furnish the Company with copies of all Section 16(a)
forms filed by such reporting persons.
Based solely upon the Company's review of such forms furnished to the
Company and written representations from certain reporting persons, the Company
believes that Company's executive officers, directors and greater than 10%
beneficial owners have complied with all applicable filing requirements.
EXECUTIVE COMPENSATION
The following summary compensation table sets forth the aggregate
compensation paid by the Company to its Chief Executive Officer and to the
Company's four (4) other most highly compensated executive officers whose annual
compensation exceeded $100,000 for the fiscal year ended December 31, 1998
(each, a "Named Executive Officer") for services during the fiscal years ended
December 31, 1998, 1997 and 1996:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
------------
AWARDS
ANNUAL COMPENSATION ------------
-------------------------------------------- SECURITIES
OTHER UNDERLYING
COMPENSATION STOCK
NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($)(1) OPTIONS #
- --------------------------- ---- ---------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Arthur P. Bollon, Ph.D.................. 1998 $186,230 -- $6,000 100,000
- -- Chairman, President and 1997 $180,856 -- $6,000 95,000
Chief Executive Officer 1996 $165,951 -- $6,000 150,000
</TABLE>
- ---------------
(1) Consisting of car allowances.
During the fiscal year ended December 31, 1998, deliberations concerning
executive officer compensation were made by the Company's Compensation Committee
whose members include Ira J. Gelb, M.D., Irwin C. Gerson and Walter D.
Lovenberg, Ph.D.
OPTION GRANTS IN FISCAL 1998:
The following table sets forth certain information with respect to options
granted to the Named Executive Officer during the year ended December 31, 1998:
OPTION/SAR GRANTS IN FISCAL YEAR 1998
<TABLE>
<CAPTION>
INDIVIDUAL GRANTS
------------------------------------------------------------------
INDIVIDUAL GRANTS
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS/SARS EXERCISE OR
UNDERLYING GRANTED TO BASE
OPTIONS/SARS EMPLOYEES IN PRICE
NAME GRANTED(#) FISCAL YEAR ($/SH) EXPIRATION DATE
- ---- ------------ ----------------- ----------- -----------------
<S> <C> <C> <C> <C>
Arthur P. Bollon, Ph.D.,.......... 25,000 8.4 $3.56 September 1, 2008
- -- Chairman, President and 75,000 25.3 $4.75 October 7, 2008
Chief Executive Officer
</TABLE>
5
<PAGE> 8
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF
UNDERLYING UNEXERCISED IN-
UNEXERCISED THE-MONEY
OPTIONS/SARS AT OPTIONS/SARS AT
SHARES FY-END(#) FY-END(#)
ACQUIRED ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE(1)
- ---- ----------- ----------- -------------------- ---------------------
<S> <C> <C> <C> <C>
Arthur P. Bollon, Ph.D........ 0 0 387,000/158,000 $2,660,625/$1,086,250
- -- Chairman, President and
Chief Executive Officer
</TABLE>
- ---------------
(1) Based on the fair market value of the Company's Common Stock on December 31,
1998, as determined by the Company's Board of Directors.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
Generally, under the Securities Exchange Act of 1934, a person is deemed to
"beneficially own" securities which that person has the right to acquire within
60 days. The following table sets forth certain information regarding the
beneficial ownership of our capital stock as of the Record Date by each person
deemed to be the beneficial owner of more than 5% of any class of our capital
stock, each of our directors and all directors and executive officers as a
group, without naming them. Information as to Kinder Investments, L.P.; Peyser
Associates, L.L.C., the general partner of Kinder; and Brian A. Wasserman, the
managing partner of Peyser, was derived from the Schedules 13G, as amended,
filed by such stockholders with the SEC on April 8, 1998, and, except for the
percentage ownership, reflects the information contained therein as of the date
such Schedules 13G, as amended, were filed. Except as otherwise indicated, each
of the persons named has sole voting and investment power with respect to the
shares shown below.
<TABLE>
<CAPTION>
COMMON STOCK SERIES A PREFERRED STOCK
-------------------------- --------------------------
AMOUNT AND AMOUNT AND PERCENT OF
NATURE NATURE ALL VOTING
OF BENEFICIAL PERCENT OF OF BENEFICIAL PERCENT OF SECURITIES
NAME AND ADDRESS OF BENEFICIAL OWNER(1) OWNERSHIP(2) CLASS(2) OWNERSHIP(3) CLASS(3) (4)
- --------------------------------------- ------------- ---------- ------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Janssen-Meyers Associates, L.L.P.(5)... 2,684,279 24.2% 24,200 3.4% 22.7%
Bruce Meyers(6)....................... 1,840,446 16.8% 24,200 3.4% 15.7%
Peter W. Janssen(7)................... 1,187,547 11.0% -- -- 10.3%
Kinder Investments, L.P.(8)........... 708,000 6.8% -- -- 6.4%
Peyser Associates, L.L.C.(9).......... 708,000 6.8% -- -- 6.4%
Brian A. Wasserman(10)................ 708,000 6.8% -- -- 6.4%
Arthur P. Bollon, Ph.D.(11)........... 615,400 5.7% -- -- 5.4%
Ira J. Gelb, M.D.(12)................. 110,000 1.1% -- -- 1.0%
Irwin C. Gerson(13)................... 110,000 1.1% -- -- 1.0%
Walter M. Lovenberg, Ph.D.(14)........ 112,500 1.1% -- -- 1.0%
Gary E. Frashier(15).................. -- -- -- -- --
Directors and executive officers as a
group (6 persons)(16)............... 1,004,900 9.0% -- -- 8.5%
</TABLE>
- ---------------
* Less than 1%
Except as otherwise indicated, each of the persons named has sole voting and
investment power with respect to the shares shown below.
(1) Except as otherwise indicated, the address of each beneficial owner is c/o
the Company, 9000 Harry Hines Boulevard, Suite 621, Dallas, Texas 75235.
6
<PAGE> 9
(2) Calculated on the basis of 10,343,412 shares of Common Stock outstanding.
Shares of Common Stock underlying options or warrants exercisable within 60
days of the date hereof are deemed to be outstanding for purposes of
calculating the beneficial ownership of securities of the holder of such
options or warrants.
(3) Calculated on the basis of 714,641 shares of Preferred Stock outstanding.
(4) Calculated on the basis of an aggregate of 11,058,053 shares of Common Stock
and Preferred Stock. Shares of Common Stock underlying options and warrants
exercisable within 60 days of the date hereof are deemed to be outstanding
for purposes of calculating beneficial ownership of securities of the holder
of such options or warrants. This calculation excludes shares of Common
Stock issuable upon the conversion of Preferred Stock.
(5) The address for Janssen-Meyers Associates, L.P. is 17 State Street, New
York, New York 10004. Messrs. Bruce Meyers and Peter Janssen are each 50%
stockholders and the sole officers and directors of the corporate general
partner of Janssen-Meyers. Calculation includes (i) 262,184 shares of Common
Stock issuable upon the exercise of options granted Janssen-Meyers in
connection with the Company's initial public offering in November 1995, (ii)
81,530 shares of Common Stock issuable upon the exercise of an option
granted Janssen-Meyers in connection with the Company's private placement in
April 1998, and (iii) shares of Common Stock and Preferred Stock
beneficially owned by Messrs. Meyers and Janssen. See (6) and (7) below.
(6) Mr. Meyers' address is c/o Janssen-Meyers referenced in note (5) above.
Calculation includes (i) 1,139,208 shares of Common Stock, (ii) 24,200
shares of Common Stock issuable upon the conversion of Preferred Stock,
(iii) 159,284 shares of Common Stock issuable upon the exercise of options
originally granted Janssen-Meyers in connection with the Company's initial
public offering in November 1995 which were transferred to Mr. Meyers, (iv)
14,000 shares of Common Stock issuable upon the exercise of Class C Warrants
and underlying Class D Warrants, (v) 9,650 shares of Common Stock issuable
upon the exercise of Class D Warrants, (vi) 50,327 shares of Common Stock
issuable upon the exercise of an option originally granted Janssen-Meyers in
connection with the Company's private placement in April 1999 which were
transferred to Mr. Myers, (vii) 30,563 shares of Common Stock issuable upon
the exercise of Class E Warrants, (viii) 62,000 shares of Common Stock held
by The Meyers Foundation of which Mr. Meyers has voting control, (ix) 7,500
shares of Common Stock which Mr. Meyers has the right to receive from the
Company within 60 days from the date hereof and (x) shares of Common Stock
held by Janssen-Meyers or which Janssen-Meyers has the right to acquire
within 60 days hereof. See note (5) above.
(7) Mr. Janssen's address is c/o Janssen-Meyers referenced in note (5) above.
Calculation includes (i) 720,563 shares of Common Stock, (ii) 123,270
shares of Common Stock issuable upon the exercise of options, and (iii)
shares of Common Stock held by Janssen-Meyers or which Janssen-Meyers has
the right to acquire within 60 days hereof. Does not include 397,575 shares
of Common Stock issuable upon the exercise of warrants not exercisable
within 60 days hereof. See note (5) above.
(8) The address for Kinder Investments, L.P. is 779 CR403, Greenville, New York
12083. Ownership consists of 668,000 shares of Common Stock and 40,000
shares of Common Stock issuable upon the exercise of Class A Warrants.
(9) Ownership consists of securities beneficially owned by Kinder Investment,
L.P. Peyser Associates, L.L.C. is the general partner of Kinder
Investments, L.P. See note (8) above.
(10) Ownership consists of securities beneficially owned by Kinder Investments,
L.P. Mr. Wasserman is the managing partner of Peyser Associates, L.L.C.,
and has sole voting and dispositive control of shares owned by Kinder
Investments, L.P. See note (8) above.
(11) Calculation includes 184,400 shares of Common Stock and 431,000 shares of
Common Stock issuable upon the exercise of options. Does not include
options to purchase 189,000 shares of Common Stock not exercisable within
60 days of the date hereof.
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<PAGE> 10
(12) Calculation includes 110,000 shares of Common Stock issuable upon the
exercise of options. Does not include options to purchase 19,000 shares of
Common Stock not exercisable within 60 days of the date hereof.
(13) Calculation includes 110,000 shares of Common Stock issuable upon the
exercise of options. Does not include options to purchase 19,000 shares of
Common Stock which are not exercisable within 60 days of the date hereof.
(14) Calculation includes 2,500 shares of Common Stock, 110,000 shares of Common
Stock issuable upon the exercise of options and 3,000 shares of Common
Stock issuable upon the exercise of warrants. Does not include options to
purchase 19,000 shares of Common Stock which are not exercisable within 60
days of the date hereof.
(15) Calculation does not include options to purchase 50,000 shares of Common
Stock which are not exercisable within 60 days of the date hereof.
(16) Calculation includes 191,900 shares of Common Stock and 813,000 shares of
Common Stock issuable upon the exercise of options and warrants. Does not
include options to purchase 216,000 shares of Common Stock not exercisable
within 60 days of the date hereof.
EXECUTIVE OFFICERS
The executive officers of the Company are identified in the table below.
Each executive officer of the Company serves at the pleasure of the Board of
Directors.
<TABLE>
<CAPTION>
YEAR BECAME AN
NAME AGE EXECUTIVE OFFICER POSITION
- ---- --- ----------------- --------
<S> <C> <C> <C>
Arthur P. Bollon, Ph.D................ 56 1991 Chairman, President and Chief
Executive Officer
Daniel Shusterman..................... 35 1994 Secretary, Treasurer, Chief Financial
Officer and Vice President of
Operations
</TABLE>
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL
ARRANGEMENTS:
Since 1992, Arthur P. Bollon, Ph.D. has been employed by the Company as
President pursuant to an employment agreement. Such agreement was extended in
October 1998 and unless otherwise terminated, such agreement will expire on
November 6, 2003. As extended, the agreement provides for the payment to Dr.
Bollon of a base salary of $200,000 per year with annual increases of not less
that 5% per year. In the event Dr. Bollon's employment is terminated without
just cause or due to a Disability (as defined in the employment agreement), the
employment agreement provides that Dr. Bollon shall receive severance payments
of equal monthly installments at the base rate until the earlier of the
expiration of the term or the expiration of 36 months. Dr. Bollon also receives
a car expense allowance of $500 per month under the employment agreement. In
November 1992, the Company granted Dr. Bollon options to purchase 200,000 shares
of Common Stock at an exercise price of $1.65 per share. In April 1996, the
Company granted Dr. Bollon options to purchase 50,000 shares of Common Stock at
an exercise price of $4.125 per share. In December 1996, the Company granted Dr.
Bollon options to purchase 100,000 shares of Common Stock at an exercise price
of $2.25 per share. In January 1997, the Company granted Dr. Bollon options to
purchase 50,000 shares of Common Stock at an exercise price of $2.375 per share.
In June 1997, the Company granted Dr. Bollon options to purchase 20,000 shares
of Common Stock at an exercise price of $2.6875 per share. In September 1997,
the Company granted Dr. Bollon options to purchase 25,000 shares of Common Stock
at an exercise price of $4.3125 per share. In September 1998, the Company
granted Dr. Bollon options to purchase 25,000 shares of Common Stock at an
exercise price equal to $3.56 per share. In October 1998, the Company granted
Dr. Bollon options to purchase 75,000 shares of Common Stock at an exercise
price of $4.75 per share. All such options are exercisable to the extent of 40%
after six months of continuous employment from the date of grant and to the
extent of
8
<PAGE> 11
an additional 20% on and after each of the first three anniversaries of the date
of grant. As of the Record Date, Dr. Bollon has not exercised any of the
foregoing options.
Each of the Company's executive officers and the Company's principal
scientists have entered into confidentiality and patent assignment agreements
with the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION:
The Compensation Committee consists of Ira J. Gelb, M.D., Irwin C. Gerson
and Walter Lovenberg, Ph.D. No member of the Compensation Committee is a current
or former officer or employee of the Company. There are no compensation
committee interlocks between the Company and any other entities involving any of
the executive officers or directors of such other entities.
COMPENSATION OF DIRECTORS:
Each director who is not an officer or an employee of the Company (an
"Outside Director") received $1,000 per month in compensation through June 1999.
Commencing July 1999, each non-employee director will receive $1,500 per month
in compensation. During the fiscal year ended December 31, 1998, three (3)
Outside Directors each received options to purchase 25,000 shares of Common
Stock, which options to purchase (i) 15,000 shares of Common Stock are
exercisable at $3.56 pr share, and (ii) 10,000 shares of Common Stock are
exercisable at $4.75 per share. In June 1999, the Company granted Mr. Gary E.
Frashier, a director of the Company, ten-year options to purchase 50,000 shares
of common stock at an exercise price equal to $6.00 per share. Such options vest
in 20% annual increments, commencing on the one year anniversary date of the
date of grant. The exercise price of each share underlying such options is equal
to the fair market value of the Common Stock on the date of grant. See
"Employment Contracts and Termination of Employment and Change-In-Control
Arrangements."
BOARD OF DIRECTORS COMPENSATION REPORT
The Company strives to apply a uniform philosophy to compensation for all
of its employees, including the members of its senior management. This
philosophy is based on the premise that the achievements of the Company result
from the combined and coordinated efforts of all employees working toward common
goals and objectives.
The goals of the Company's compensation program are to align remuneration
with business objectives and performance, and to enable the Company to retain
and competitively reward executive officers who contribute to the long-term
success of the Company. The Company's compensation program for executive
officers is based on the following principles, which are applicable to
compensation decisions for all employees of the Company. The Company attempts to
pay its executive officers competitively in order that it will be able to retain
the most capable people in the industry. Information with respect to levels of
compensation being paid by comparable companies is obtained from various
publications and surveys.
During the last fiscal year, the compensation of executive officers
consisted principally of salary. Salary levels have been set based upon
historical levels, amounts being paid by comparable companies and performance.
1992 Stock Option Plan
In October 1992, the Board of Directors of the Company adopted the
Cytoclonal Pharmaceutics Inc. 1992 Stock Option Plan (the "1992 Plan") which
provides for the awarding of incentive stock options and nonqualified stock
options for the Company's Common Stock to selected key employees, directors,
consultants and advisors of the Company. The 1992 Plan authorizes the awarding
of up to an aggregate of 520,000 stock options for the same number of shares of
the Company's Common Stock in the aggregate. The awards under the 1992 Plan are
subject to restrictions on transferability, are forfeitable in certain
circumstances and are exercisable at such time or times and during such period
as shall be set forth in the option agreement evidencing such option. The
Company registered the shares of Common Stock issuable
9
<PAGE> 12
under the 1992 Plan with the Commission on a Registration Statement on Form S-8
pursuant to the Securities Act of 1933, as amended (the "Act").
1996 Stock Option Plan
In April 1996, the Board of Directors adopted the 1996 Stock Option Plan
(the "1996 Plan") which provided for the awarding of incentive and nonqualified
stock options to selected key employees, directors, consultants and advisors to
the Company to purchase 750,000 of the Company's Common Stock. At an adjournment
of the 1998 Annual Stockholder Meeting, the Company's stockholders approved
amending the 1996 Plan to increase the number of options available for grant to
1,500,000 for the same number of shares of the Company's Common Stock. The
awards under the 1996 Plan are subject to instructions on transferability, are
forfeitable in certain circumstances and are exercisable at such time or times
and during such period as shall be set forth in the option agreement evidencing
such option. As of December 31, 1998, option to purchase 485,000 shares of the
Company's Common Stock were available for future grant, options to purchase
5,400 shares of Common Stock had been exercised and options to purchase
1,009,600 shares remain outstanding under the 1996 Plan. Between the Record Date
and the Annual Meeting, the Compensation Committee of the Board of Directors of
the Company may decide by resolution to grant additional options authorized
under the 1996 Plan. The Company has registered the 750,000 shares of Common
Stock issuable under the 1996 Plan with the Commission on a Registration
Statement on Form S-8 pursuant to the Act and intends to register the remaining
750,000 shares of Common Stock issuable upon the exercise of option issuable
under the 1996 Plan pursuant to Registration Statement on Form S-8 in the near
future.
In consideration for his services as the Company's President and Chief
Executive Officer for the fiscal year ended December 31, 1998, Dr. Arthur P.
Bollon received compensation consisting of $186,230, a car allowance of $6,000
and incentive stock options to purchase 25,000 and 75,000 shares of the
Company's Common Stock at exercise prices of $3.56 and $4.75 per share,
respectively. As a founder and executive officer of the Company, Dr. Bollon's
scientific expertise, managerial efforts, ingenuity and leadership are a vital
factor to the Company's past and future success, including the following during
the fiscal year ended December 31, 1998:
- - In April and May 1998, Dr. Bollon assisted the Company in completing a private
placement under Rule 506 of Regulation D of the Securities Act of 1933 of
units consisting of an aggregate of 671,026 shares of the Company's Common
Stock and 335,540 of the Company's Class E Warrants for which the Company
received net proceeds of approximately $4,837,000.
- - In June 1998, Dr. Bollon successfully negotiated a agreement and research and
development agreement with Bristol-Myers Squibb Company ("Bristol-Myers
Squibb"), an industry leader, by which the Company granted Bristol-Myers
Squibb exclusive sublicenses under the Company's respective agreements with
the Research & Development Institute at Montana State University and the
Washington State University Research Foundation relating to technologies for
the production of Paclitaxel, the active ingredient in Bristol-Myers Squibb's
largest selling cancer product. The agreement is for a term of ten years,
subject to earlier termination at the option of Bristol-Myers Squibb, and
requires Bristol-Myers Squibb to pay the Company certain fees, milestone
payments, research and development support and minimum and sales-based
royalties. During the year ended December 31, 1998, revenues of $1,183,000
were earned under this agreement.
- - In August 1998, Dr. Bollon successfully negotiated the Company's third license
agreement with the Regents of the University of California at Los Angeles (the
"Regents") whereby the Company was granted exclusive rights to make, use,
sell, offer for sale, and import products relating to a patent entitled,
"Peptide Antiestrogen Compositions and Methods for Treating Breast Cancer,"
filed by the Regents.
- - In December 1998, Dr. Bollon assisted the Company in obtaining an exclusive
license to technology for the fungal production of Telomerase, the so-called
"immortality enzyme," from the Research & Development Institute at Montana
State University.
10
<PAGE> 13
- - In late 1998 through early 1999, Dr. Bollon assisted the Company in acquiring
proprietary technology for rational-based drug design developed by Dorit Arad,
Ph.D. and in the employment of Dr. Arad as the Company's Vice President of
Drug Design.
The Compensation Committee
--Ira J. Gelb, M.D., Irwin C. Gerson and Walter Lovenberg, Ph.D.
PERFORMANCE GRAPH
The graph below compares the four-year cumulative shareholder total return
based upon an initial $100 investment (assuming the reinvestment of dividends)
for the Company's shares of Common Stock on the date of the Company's initial
public offering on November 2, 1995 with the comparable return for the Nasdaq
Market Index and a peer issuer index selected on an industry basis. The peer
group index includes 188 biopharmaceutical companies whose common stock has been
registered under Section 12 of the Securities Exchange Act of 1934 for at least
the time frame set forth in the graph.
The total shareholder returns depicted in the graph are not necessarily
indicative of future performance. The Performance Graph and related disclosure
shall not be deemed to be incorporated by reference in any filing by the Company
under the Securities Act of 1933 or the Securities Exchange Act of 1934, except
to the extent that the Company specifically incorporates the graph and such
disclosure by reference.
CUMULATIVE TOTAL RETURN
AMONG CYTOCLONAL PHARMACEUTICS INC.,
NASDAQ MARKET INDEX AND SIC CODE INDEX
PERFORMANCE GRAPH
<TABLE>
<CAPTION>
PEER GROUP
(188 BIOPHARMACEUTICAL
CYTOCLONAL PHARMAC COMPANIES) NASDAQ MARKET INDEX
------------------ ---------------------- -------------------
<S> <C> <C> <C>
'11/02/95' 100.00 100.00 100.00
'12/31/95' 94.44 101.13 110.99
'12/31/96' 47.22 125.67 136.97
'12/31/97' 152.78 153.73 199.02
'12/31/98' 152.78 216.82 282.28
</TABLE>
ASSUMES $100 INVESTED ON NOVEMBER 2, 1995
11
<PAGE> 14
PROPOSAL 2
OTHER BUSINESS
The Board of Directors knows of no business which will be presented at the
Annual Meeting other than as stated herein and in the Notice of Meeting attached
hereto. If, however, other matters are properly brought before the Annual
Meeting, it is the intention of the persons named in the accompanying form of
proxy to vote the shares represented thereby on such matters as directed by the
Board of Directors.
The management of the Company does not know of any matters other than those
stated in this Proxy Statement which are to be presented for action at the
Annual Meeting. If any other matters should properly come before the Annual
Meeting, it is intended that proxies in the accompanying form will be voted on
any such matters in accordance with the judgment of the persons voting such
proxies.
STOCKHOLDER PROPOSALS TO BE PRESENTED
AT THE NEXT ANNUAL MEETING
Stockholder Proposals. Proposals of stockholders intended to be presented
at the Company's 2000 Annual Stockholder Meeting (i) must be received by the
Company at its offices no later than April 17, 2000, (ii) may not exceed 500
words and (iii) must otherwise satisfy the conditions established by the
Commission for stockholder proposals to be included in the Company's Proxy
Statement for that meeting.
Discretionary Proposals. Stockholders intending to commence their own proxy
solicitations and present proposals from the floor of the 2000 Annual
Stockholder Meeting in compliance with Rule 14a-4 promulgated under the Exchange
Act of 1934, as amended, must notify the Company before June 1, 2000 of such
intentions. After such date, the Company's proxy in connection with the 2000
Annual Stockholder Meeting may confer discretionary authority on the Board to
vote.
GENERAL
The Company will bear the cost of preparing, assembling and mailing the
Proxy, Proxy Statement and other material which may be sent to the stockholders
in connection with this solicitation. In addition to the solicitation of proxies
by use of the mails, officers and regular employees may solicit the return of
proxies. The Company may reimburse persons holding stock in their names or in
the names of other nominees for their expense in sending proxies and proxy
material to principals. In addition, American Stock Transfer & Trust Company,
6201 15th Avenue, Brooklyn, New York 11219, the Company's transfer agent, has
been engaged to mail proxies on behalf of the Company. Proxies may be solicited
by mail, personal interview, telephone and telegraph.
THE COMPANY WILL PROVIDE WITHOUT CHARGE TO EACH PERSON BEING SOLICITED BY
THIS PROXY STATEMENT, UPON THE WRITTEN REQUEST OF ANY SUCH PERSON, A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1998, AS
FILED WITH THE COMMISSION, INCLUDING THE FINANCIAL STATEMENTS AND THE SCHEDULES
THERETO. ALL SUCH REQUESTS SHOULD BE DIRECTED TO MR. DANIEL SHUSTERMAN,
SECRETARY, CYTOCLONAL PHARMACEUTICS INC., 9000 HARRY HINES BOULEVARD, SUITE 621,
DALLAS, TEXAS 75235.
By Order of the Board of Directors
Daniel Shusterman, J.D., Secretary
Dated: July 16, 1999
12
<PAGE> 15
PROXY
CYTOCLONAL PHARMACEUTICS INC.
9000 HARRY HINES BOULEVARD, SUITE 621, DALLAS, TEXAS 75235
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Arthur P. Bollon, Ph.D. and Daniel
Shusterman, J.D. as proxies ("Proxies"), each with the power to appoint his
substitute, and hereby authorizes them to represent and to vote, as designated
below, all the entitled voting stock of Cytoclonal Pharmaceutics Inc., a
Delaware corporation (the "Company"), held of record by the undersigned on July
6, 1999, at the Annual Meeting of Stockholders to be held at 9000 Harry Hines
Boulevard, Suite 601, Dallas, Texas 75235, on August 31, 1999, 9:00 a.m., local
time or any adjournment thereof.
PROPOSAL 1. ELECTION OF DIRECTORS.
Nominees: Arthur P. Bollon, Ph.D., Ira J. Gelb, M.D.,
Irwin C. Gerson, Walter M. Lovenberg, Ph.D.
and Gary E. Frashier.
[ ] FOR all nominees [ ] WITHHOLDING AUTHO
(except as marked to the contrary below) as to all nominees
(INSTRUCTION: To withhold authority to vote for any individual nominee, print
that nominee's name on the line provided below.)
Withheld for:
-----------------------------------------------
In their discretion, the Proxies are authorized to vote upon such
other business as may properly come before the meeting. This proxy when properly
executed will be voted in the manner directed herein by the undersigned
stockholder.
IF NO DIRECTION IS MADE, THE PROXIES WILL HAVE DISCRETIONARY AUTHORITY
TO VOTE ON THE ABOVE-LISTED MATTER TO BE PRESENTED AT THE ANNUAL MEETING. IN
SUCH EVENT, THE PROXIES INTEND TO VOTE FOR THE ELECTION OF EACH DIRECTOR-NOMINEE
NAMED IN PROPOSAL 1.
PLEASE SIGN EXACTLY AS NAME APPEARS BELOW.
WHEN SHARES ARE HELD BY JOINT TENANTS,
BOTH SHOULD SIGN.
Dated: , 1999
---------
Signature:
---------------------------------------------
Print Name:
--------------------------------------------
Signature if held jointly:
-----------------------------
(When signing as attorney, executor, administrator, trustee or
guardian, please give full title as such. If a corporation, please sign in full
corporate name by President or other authorized officer. If a partnership,
please sign in partnership name by authorized person.)
