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. )
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Check the appropriate box:
[X] Preliminary Proxy Statement [ ] Confidential, for Use of
the Commission only (as
permitted by Rule
14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ANTIGENICS INC.
----------------------------------------------
(Name of Registrant as Specified in Its Charter)
----------------------------------------------
(Name of Person(s) Filing Proxy Statement,
if other than the Registrant)
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[ ] Check box if any part of the fee is offset as provided by Exchange
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statement number, or the form or schedule and the date of its filing.
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(4) Date Filed:
ANTIGENICS INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Our 2002 Annual Meeting of Stockholders will be held at the Academy of
Sciences, 2 East 63rd Street, New York, New York at 5:00 p.m., May 22, 2002 for
the following purposes:
1. To elect Dr. Garo H. Armen and Mr. Tom Dechaene as directors to hold
office for a term of three years and until their respective successors
are elected and qualified;
2. To approve an amendment to our Certificate of Incorporation to
increase the authorized preferred stock from 1,000,000 to 25,000,000
shares, increasing the total authorized capital stock from 101,000,000
to 125,000,000 shares;
3. To approve an amendment to our Certificate of Incorporation to provide
that the number of directors that shall constitute the whole board of
directors shall be fixed by resolution of the board of directors but
in no event shall be less than one or more than fifteen; and
4. To transact any other business that may properly come before the
meeting or any adjournment of the meeting.
Only stockholders of record at the close of business on April 5, 2002 will
be entitled to vote at the meeting or any adjournment. A list of these
stockholders will be open for examination by any stockholder for any purpose
germane to the meeting for ten days before the meeting during ordinary business
hours at the company's offices at 630 Fifth Avenue, Suite 2100, New York, New
York 10111.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED AT THE MEETING. THEREFORE,
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE YOUR PROXY AND
RETURN IT IN THE ENCLOSED ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. IF YOU ATTEND THE MEETING AND WISH TO VOTE IN PERSON, YOUR PROXY
WILL NOT BE USED.
By order of the board of directors,
Paul M. Kinsella, Secretary
Dated: April 19, 2002
ANTIGENICS INC.
630 Fifth Avenue, Suite 2100
New York, New York 10111
Telephone: (212) 332-4774
---------------
Proxy Statement
---------------
Our board of directors is soliciting your proxy with the enclosed proxy
card for use at our 2002 Annual Meeting of Stockholders to be held at 5:00 p.m.
on Wednesday, May 22, 2002 and at any adjournments of the meeting. This proxy
statement and accompanying proxy are first being sent or given to stockholders
on or about April 19, 2002.
The principal business expected to be transacted at the meeting, as more
fully described below, will be the election of two directors and amendments to
our Certificate of Incorporation.
The authority granted by an executed proxy may be revoked at any time
before its exercise by filing with our Secretary a written revocation or a duly
executed proxy bearing a later date or by voting in person at the meeting.
We will bear the cost of the solicitation of proxies, including the charges
and expenses of brokerage firms and others for forwarding solicitation material
to beneficial owners of stock. In addition to the use of mails, proxies may be
solicited by our officers and employees in person or by telephone.
Only stockholders of record at the close of business on April 5, 2002 will
be entitled to vote at the meeting. On that date, we had outstanding 33,066,476
shares of common stock, $0.01 par value, each of which is entitled to one vote.
The presence at the meeting, in person or by proxy, of a majority in interest of
the voting capital stock issued and outstanding and entitled to vote at the
meeting will constitute a quorum for the transaction of business. Abstentions
and broker non-votes will be considered present for purposes of determining the
presence of a quorum. Broker non-votes are proxies submitted by brokers that do
not indicate a vote for one or more proposals because the brokers do not have
discretionary voting authority and have not received instructions from the
beneficial owners on how to vote on these proposals.
ELECTION OF DIRECTORS
The number of directors is fixed at eight for the coming year and these
directors are divided into three classes. At the meeting, directors will be
elected to hold office for three years and until their successors are elected
and qualified. Dr. Garo H. Armen and Mr. Tom Dechaene, both of whom are
presently serving as directors, have been nominated for re-election by our board
of directors. Unless the enclosed proxy withholds authority to vote for these
directors or is a broker non-vote, the shares represented by such proxy will be
voted for the election of Dr. Armen and Mr. Dechaene as the board's nominees. If
either of these nominees is unable to serve, which is not expected, the shares
represented by the enclosed proxy will be voted for such other candidate as may
be nominated by the board of directors.
VOTE REQUIRED
Directors will be elected by a plurality of the votes cast by the
stockholders entitled to vote on the election of directors at the meeting.
Abstentions, broker non-votes and votes withheld will not be treated as votes
cast for this purpose and will not affect the outcome of the election.
The following table contains certain information about the nominees for
director and each other person whose term of office as a director will continue
after the meeting.
PRESENT
TERM
NAME AND AGE BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS EXPIRES
------------ ------------------------------------------------------- --------
Garo H. Armen, Ph.D.* Garo Armen, Ph.D. co-founded Antigenics in 1994 and has 2002
Age: 49 been the Chairman of the Board and Chief Executive
Officer since inception, and was President until
January 2002. Dr. Armen was previously a Senior Vice
President of Research for Dean Witter Reynolds,
focusing on the chemical and pharmaceutical industries.
Dr. Armen has also served as an Associate Professor at
the Merchant Marine Academy and as a research associate
at the Brookhaven National Laboratory. He currently
serves as a director of Elan Corporation, Plc. and
Color Kinetics Inc. Dr. Armen received his Ph.D. in
physical chemistry from the City University of New York
in 1979. Since 1990, Dr. Armen has been the managing
general partner of Armen Partners, L.P., an investment
partnership specializing in public and private
healthcare and biotechnology investments.
2
PRESENT
TERM
NAME AND AGE BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS EXPIRES
------------ ------------------------------------------------------- --------
Noubar Afeyan, Ph.D. Noubar Afeyan, Ph.D. has been a director since 1998. 2004
Age: 39 Dr. Afeyan is Senior Managing Director and Chief
Executive Officer of Flagship Ventures, an
entrepreneurship and venture capital firm he co-founded
in 1999 that comprises a family of related funds
including NewcoGen Group, AGTC Funds, and OneLiberty
Funds. Dr. Afeyan was Senior Vice President and Chief
Business Officer of Applera Corp., a life sciences
company, (formerly PE Corp.) until August 1999. Prior
to its acquisition by PE Corp., Dr. Afeyan was the
Chairman and Chief Executive Officer of PerSeptive
Biosystems, a company that he founded in 1987 to
develop, manufacture and market instruments and
chemical reagents used to purify, analyze and
synthesize biomolecules. Dr. Afeyan served as Chairman
of the Board of ChemGenics Pharmaceuticals, Inc. during
1996 and 1997. He is also a member of the board of
directors of several private companies. Dr. Afeyan
received his undergraduate degree in Chemical
Engineering from McGill University and his Ph.D. in
Biochemical Engineering from the Massachusetts
Institute of Technology and currently serves as Senior
Lecturer at the MIT Sloan School of Management.
Gamil G. de Chadarevian Gamil de Chadarevian has served as Vice Chairman of the 2003
Age: 50 Board since 1995 and was our Executive Vice President
International from 1998 to 2001. Until April 1998, he
was Managing Director of Special Projects at Alza
International, a pharmaceutical company. From 1992 to
1993, Mr. de Chadarevian was the Vice President of
Corporate Development for Corange London Limited, a
pharmaceutical equipment manufacturing company. Prior
to 1992, Mr. de Chadarevian held positions at Pasfin
Servizi Finanziara SpA, GEA Consulenza and Credit
Suisse. He is also co-founder and serves as an advisor
to several private health care companies in the United
States and Europe. Mr. de Chadarevian is the co-founder
and currently Vice Chairman of Ikonisys, Inc. and
CambriaTech Holding S.A., which are privately-held
companies. He also serves on the Advisory Board of
Syntek Capital AG. Mr. de Chadarevian received a Lic.
Oec. Publ. Degree from the University of Zurich in
Switzerland.
Tom Dechaene* Tom Dechaene has been a director since 1999. Mr. 2002
Age: 42 Dechaene is currently Chief Financial Officer of
SurfCast, Inc., a software development company and has
served in such position since 2000. He was with
Deutsche Bank from 1991 through 1999, most recently as
a director in the Principal Investments Group within
the Equity Capital Markets division. He serves on the
boards of several privately-held companies. Mr.
Dechaene holds a law degree from Ghent University,
Belgium, a degree in Applied Economics from the
University of Antwerp and an MBA from INSEAD, France.
3
PRESENT
TERM
NAME AND AGE BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS EXPIRES
------------ ------------------------------------------------------- --------
Sanford M. Litvack Sanford M. Litvack has been a director since March 2003
Age: 65 2001. Mr. Litvack is currently "Of Counsel" to the
international law firm of Dewey Ballantine. From 1994
until 1999, Mr. Litvack held the position of Senior
Executive Vice President and Chief of Corporate
Operations of The Walt Disney Company. From 1999 to
December 31, 2000, he served as Vice Chairman of the
Company. Mr. Litvack also served on the board of
directors of The Walt Disney Company. Prior to joining
Disney, Mr. Litvack was a member of the executive
committee and chairman of the litigation department of
Dewey Ballantine. Mr. Litvack received a bachelor's
degree from the University of Connecticut and a law
degree from Georgetown Law Center.
Pramod K. Srivastava, Pramod K. Srivastava, Ph.D. co-founded Antigenics in 2004
Ph.D. Age: 47 1994, has served as Chairman of the Scientific Advisory
Board since inception and is our Chief Scientific
Officer. Dr. Srivastava is the Director of the Center
for Immunotherapy of Cancer and Infectious Diseases at
the University of Connecticut. He has held positions at
Fordham University and the Mount Sinai School of
Medicine. He performed his postdoctoral training at
Yale University and the Sloan-Kettering Institute for
Cancer Research. Dr. Srivastava serves on the
Scientific Advisory Council of the Cancer Research
Institute, New York, and was a member of the
Experimental Immunology Study Section of the National
Institutes of Health of the United States Government
from 1994 until 1999. Dr. Srivastava is a past
recipient of the First Independent Research Support &
Transition Award of the National Institutes of Health
(1987), the Irma T. Hirschl Scholar Award (1988), the
Investigator Award of the Cancer Research Institute,
New York (1991), the Mildred Scheel Lectureship (1994),
and the Sigma Tau Foundation Speakership (1996). In
1997, he was inducted into the Roll of Honor of the
International Union against Cancer and was listed in
the Who's Who in Science and Engineering. He is among
the twenty founding members of the Academy of Cancer
Immunology. Dr. Srivastava earned his Ph.D. in
Biochemistry from the Centre for Cellular and Molecular
Biology, Hyderabad, India. Dr. Srivastava is a director
of Ikonisys, Inc. and CambriaTech Holding S.A.
Martin Taylor Martin Taylor has been a director since June 1999. He 2003
Age: 49 is currently chairman of the W.H. Smith Group Plc., a
retail company selling education, entertainment and
information products, and is an advisor to Goldman
Sachs International. From 1993 until 1998, Mr. Taylor
held the position of Chief Executive Officer of
Barclays Bank Plc. Mr. Taylor has served as a member of
the UK Government's Council for Science and Technology.
He is also a member of the board of directors of
Syngenta A.G. and RTL SA. Mr. Taylor was educated at
Balliol College, Oxford University.
4
PRESENT
TERM
NAME AND AGE BUSINESS EXPERIENCE AND OTHER DIRECTORSHIPS EXPIRES
------------ ------------------------------------------------------- --------
Samuel D. Waksal, Ph.D. Samuel D. Waksal has been a director since September 2004
Age: 54 2001. He is currently President and Chief Executive
Officer of ImClone Systems Incorporated, a
biotechnology company, and has held such positions
since 1987 and 1985, respectively. He has served as
Visiting Investigator of the National Cancer Institute,
Immunology Branch; Research Associate of the Department
of Genetics, Stanford University Medical School;
Assistant Professor of Pathology at Tufts University
School of Medicine; and Senior Scientist at the Tufts
Cancer Research Center. He serves on the boards of
several privately-held companies. Dr. Waksal was a
founding board member of the NY Biotechnology
Association and sits on its Executive Committee. He is
also on the Board of Advisors of The Rockefeller
University.
*Nominee for election as director.
COMMITTEES OF THE BOARD
Since January 1, 2001, the Compensation Committee consisted of Mr. Litvack
(from March 2001 through the present), Mr. Taylor (from January 2001 through the
present) and Mr. Panoz (from January 2001 through July 2001). Mr. Panoz resigned
from the board in July 2001 and Dr. Waksal was appointed to the committee upon
his election to the board of directors in September 2001. Dr. Waksal resigned
from the Compensation Committee in December 2001 upon his appointment to the
Corporate Governance Committee. The Compensation Committee acts for the board of
directors with respect to our compensation practices and their implementation.
It sets and implements the compensation of our executive officers and
administers the 1999 Equity Incentive Plan and the 1999 Employee Stock Purchase
Plan. The Compensation Committee held three meetings in 2001. For more
information about the Compensation Committee, see the "Compensation Committee
Report on Executive Compensation" on page 8.
Since January 1, 2001, the Audit and Finance Committee consisted of Mr.
Dechaene (from January 2001 through the present), Mr. Taylor (from January 2001
through the present) and Mr. Panoz (from January 2001 through July 2001). Dr.
Waksal was appointed to the committee upon his election to the board of
directors in September 2001. The Audit and Finance Committee is responsible for
providing the board of directors with an independent review of our financial
health, controls and reporting. Its primary functions are to recommend
independent auditors to the board of directors, review the results of the annual
audit and the auditors' reports, and ensure the adequacy of our financial
controls and procedures. The Audit and Finance Committee held four meetings in
2001. Messrs. Taylor and Dechaene and Dr. Waksal are each "independent
directors" as defined by the current rules of the Nasdaq National Stock Market.
The Audit and Finance Committee operates under a written charter adopted by our
board of directors. For more information about the Audit and Finance Committee,
see the "Report of the Audit and Finance Committee" on page 12.
We did not have a nominating committee during 2001. In December 2001, we
created a Corporate Governance Committee, which will act as our nominating
committee.
ATTENDANCE AT MEETINGS
The board of directors held six meetings during 2001, and each director
attended at least 75% of all meetings of the board and of all committees of the
board on which he served.
5
DIRECTOR COMPENSATION
We reimburse directors for out-of-pocket and travel expenses incurred while
attending board of director and committee meetings. We have generally granted to
each director an option to purchase 17,200 shares vesting in three equal annual
installments beginning on the date when that director joined our board.
Beginning in 2002, each board member will receive an annual option grant to
purchase 5,000 shares of common stock vesting over three years.
6
STOCK PERFORMANCE GRAPH
The following graph shows the cumulative total stockholder return on our
common stock over the period from February 4, 2000 (the first trading day of
common stock) to December 31, 2001, as compared with that of the Nasdaq Stock
Market Index and the Nasdaq Pharmaceuticals Index, based on an initial
investment of $100 in each on February 4, 2000. Total stockholder return is
measured by dividing share price change plus dividends, if any, for each period
by the share price at the beginning of the respective period, and assumes
reinvestment of dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN OF ANTIGENICS INC.,
NASDAQ STOCK MARKET (U.S. COMPANIES) INDEX AND
AND NASDAQ PHARMACEUTICALS INDEX
[GRAPH]
2/4/00 12/31/00 12/31/01
------ -------- --------
Antigenics Inc. 100 18.025 26.723
Nasdaq Stock Market (U.S. Companies) Index 100 58.063 46.045
Nasdaq Pharmaceuticals Index 100 101.580 86.565
7
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee Report set forth below describes the
compensation policies applicable to our executive officers.
Overall Policy. Our executive compensation program is designed to be
closely linked to corporate performance and returns to stockholders. To this
end, we have developed an overall compensation strategy and compensation plan
that tie a portion of executive compensation to Antigenics' success. In
addition, through the use of stock options, we ensure that a part of the
executives' compensation is closely tied to appreciation in Antigenics' stock
price. The overall objectives of this strategy are to attract and retain the
best possible executive talent, to motivate these executives to achieve the
goals inherent in our business strategy, to link executive and stockholder
interests through equity based plans and, finally, to provide a compensation
package that recognizes individual contributions as well as overall business
results.
We determine the compensation of all corporate officers, including the four
most highly compensated corporate executives named in the Summary Compensation
Table. We take into account the views of our chief executive officer and review
a number of compensation surveys to ensure the competitiveness of the
compensation offered by Antigenics for the purposes of recruiting and retaining
key management.
The key elements of Antigenics' executive compensation consist of base
salary, performance based bonuses and stock options. Our policies with respect
to each of these elements are discussed below. In addition, while the elements
of compensation described below are considered separately, we take into account
the full compensation package afforded to the individual, including insurance
and other employee benefits.
Antigenics' executive compensation policies were not applied to Dr. Armen,
our chairman and chief executive officer, during 2001. Dr. Armen has a
significant equity position in Antigenics stock and, in an effort to conserve
the company's cash, Dr. Armen requested that he be paid only a nominal salary
during 2001. Given Dr. Armen's critical role in Antigenics' progress during
2001, the application of our executive compensation policies to Dr. Armen would
have resulted in the payment to him of significantly higher compensation. In
future years, the company plans to pay Dr. Armen at a level more consistent with
his contributions to the company.
Base Salaries. Base salaries for new executive officers are initially
determined by evaluating the responsibilities of the position held and the
experience of the individual. In making determinations regarding base salaries,
we consider generally available information regarding salaries prevailing in the
industry, but do not utilize any particular indices or peer groups.
Annual salary adjustments are determined by evaluating Antigenics'
financial performance and the performance of particular aspects of the business
under the control of the particular executive officer. Where appropriate, we
also consider non-financial performance measures. These non-financial
performance measures may include such factors as efficiency gains, new
responsibilities assumed by the executive, quality improvements and improvements
in relations with collaborators and employees. No particular weight is given to
any of these non-financial factors.
The base salary for 2001 for each of the executive officers, except Dr.
Armen, was based on the performance of the individual and the other benefits
provided to such individual as well as a review of compensation paid to persons
holding comparable positions in other biotechnology companies. As described
above, Dr. Armen requested that he be paid only a nominal base salary of
$150,000 in 2001.
8
Performance-based Bonuses. We believe that some portion of overall cash
compensation for senior executives should be "at risk," i.e., contingent upon
successful implementation of the company's strategy. In determining the target
bonus of a particular executive, we consider salary survey data and level of
strategic contribution to the company's performance. The determination of
individual bonus payments is determined after consideration of each executive's
individual performance and that of the company as a whole, generally on a
calendar-year basis.
Stock Options. We grant stock options to executive officers under the 1999
Equity Incentive Plan. During 2001, stock options were generally granted with an
exercise price at the fair market value of the common stock on the date of
grant. Our current policy is to grant stock options at prices equal to the fair
market value of the common stock on the date of grant. The stock options vest
over various periods of time, normally five years or upon the achievement of
specified milestones. Stock option grants are designed to encourage the creation
of stockholder value over the long term since the full benefit of the
compensation package cannot be realized unless stock price appreciation is
achieved, and, once achieved, is maintained and improved upon. Stock option
grants therefore align the interests of executive officers and employees with
those of stockholders. In determining the amount of these grants, we evaluate
the job level of the executive, responsibilities to be assumed in the upcoming
year, and responsibilities in prior years, and also take into account the size
of the officer's awards in the past.
Conclusion. As described above, a very significant portion of Antigenics'
executive compensation is linked directly to individual and corporate
performance and stock appreciation. We intend to continue the policy of linking
executive compensation to Antigenics' performance and returns to stockholders,
recognizing that the ups and downs of the business cycle from time to time may
result in an imbalance for a particular period.
By the Compensation Committee,
Martin Taylor
Sanford Litvack
9
EXECUTIVE COMPENSATION
COMPENSATION OF OUR EXECUTIVE OFFICERS
The following table summarizes the compensation paid to or earned during
the fiscal years ended December 31, 1999, 2000 and 2001 by our chief executive
officer and all of our other executive officers whose salary and bonus exceeded
$100,000. We refer to these persons as named executive officers.
SUMMARY COMPENSATION TABLE
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION ------------
-------------------- SHARES
OTHER UNDERLYING OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) OPTIONS(#) COMPENSATION
--------------------------- ---- --------- -------- ---------- ------------
Garo H. Armen, Ph.D., Chairman and
Chief Executive Officer ................... 2001 $150,000 $ -- $200,000(1)
2000 $150,000 $ -- -- $350,000(1)
1999 $150,000 $ -- 254,682 $ 50,000(1)
Russell H. Herndon, President and Chief
Operating Officer ......................... 2001(2) $312,500 $ 93,750 250,000 --
Elma Hawkins, Ph.D., Vice Chairman .......... 2001 $245,385 $ 50,000 49,000 --
2000 $211,797 $ 40,000 63,374 --
1999 $200,000 $ 25,000 -- --
Neal Gordon, Ph.D., Senior Vice President ... 2001 $182,500 $ 30,000 -- --
2000 $156,011 $ 20,000 35,633 --
1999 $136,282 $ 20,000 9,634 --
--------------
(1) Represents the premium we paid for an executive split-dollar life insurance
policy. Under this policy, under some circumstances, we would be entitled
to a refund of the premiums paid.
(2) Mr. Herndon joined us in January 2001 as Chief Operating Officer and became
President in January 2002.
2001 OPTION GRANTS
The following table contains certain information regarding stock option
grants during the twelve months ended December 31, 2001 by us to the named
executive officers:
10
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE
NUMBER OF PERCENT OF AT ASSUMED ANNUAL RATES OF
SECURITIES TOTAL OPTIONS EXERCISE STOCK PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OR BASE OPTION TERM(1)
OPTIONS EMPLOYEES IN PRICE EXPIRATION ----------------------------
NAME GRANTED(#) FISCAL YEAR ($/SHARE) DATE 5%($) 10%($)
---- ---------- ------------- --------- ---------- ----------------------------
Garo H. Armen, Ph.D., Chairman
and Chief Executive Officer..... -- -- -- -- $ -- $ --
Russell H. Herndon, President
and Chief Operating Officer..... 250,000(2) 32% $ 11.50 1/2011 $1,808,072 $4,582,010
Elma Hawkins, Ph.D., Vice
Chairman........................ 49,000(3) 6% $ 16.25 8/2011 $ 500,757 $1,269,017
Neal Gordon, Ph.D., Senior Vice
President....................... -- -- -- -- $ -- $ --
------------------
(1) The dollar amounts under these columns are the result of calculations at
rates set by the SEC and, therefore, are not intended to forecast possible
future appreciation, if any, in the price of the underlying common stock.
For purposes of calculating potential realizable values, we assume that the
market price appreciates from this price at the indicated rate for the
entire term of each option and that each option is exercised and sold on
the last day of its term at the appreciated price.
(2) This option becomes exercisable as to 50,000 shares on each of January 15,
2002, January 15, 2003, January 15, 2004, January 15, 2005 and January 15,
2006.
(3) This option becomes exercisable as to 9,800 shares on each of August 15,
2002, August 15, 2003, August 15, 2004, August 15, 2005 and August 15,
2006.
OPTION EXERCISES AND YEAR-END OPTION VALUES
The following table provides information about the number of shares issued
upon option exercises by the named executive officers during the year ended
December 31, 2001, and the value realized by the named executive officers. The
table also provides information about the number and value of options held by
the named executive officers at December 31, 2001.
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES YEAR-END(#) FISCAL
ACQUIRED ON VALUE --------------------------- YEAR END($)(1)
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
Garo H. Armen, Ph.D.,
Chairman and Chief
Executive Officer............ -- -- 249,004 57,287 $1,874,338 $ 248,053
Russell H. Herndon,
President and Chief
Operating Officer............ -- -- -- 250,000 $ -- $1,225,000
Elma Hawkins, Ph.D., Vice
Chairman..................... -- -- 153,808 96,192 $2,142,392 $ 262,187
Neal Gordon, Ph.D., Vice
President of Operations...... -- -- 22,632 41,557 $ 187,329 $ 274,986
------------------
(1) Based on the difference between the option exercise price and the closing
price of the underlying shares of common stock on December 31, 2001 as
reported on the Nasdaq National Market ($16.40).
11
EMPLOYMENT AND CONSULTING AGREEMENTS
Under an employment agreement dated June 1, 1998, we agreed to employ Elma
Hawkins, Ph.D. for one year at an annual base salary of $200,000, which is
subject to performance and merit based increases. The agreement is automatically
renewed for successive one-year periods unless either party terminates the
agreement. If we terminate Dr. Hawkins without cause, as that term is defined in
the agreement, she is entitled to her base salary through the end of the
one-year term during which the termination occurs. If we terminate Dr. Hawkins
either because we eliminate her position or because there is a change in control
of Antigenics, we are obligated to pay her cash or stock equal to one year's
base salary.
In March 1995, in exchange for Dr. Pramod Srivastava's consulting services,
we agreed to pay him $1,500 per day. This obligation expires in March 2005 but
will be automatically extended for additional one-year periods unless either
party decides not to extend the agreement. In 2001, we paid Dr. Srivastava
approximately $120,000 for his consulting services.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Since January 1, 2001, the Compensation Committee consisted of Mr. Panoz
(from January 2001 through July 2001), Mr. Litvack (from March 2001 through the
present) and Mr. Taylor (from January 2001 through the present). Dr. Waksal was
appointed to the committee upon his election to the board of directors in
September 2001 and resigned from the Compensation Committee in December 2001
upon his appointment to the Corporate Governance Committee. Although none of the
Compensation Committee members are officers or employees of Antigenics, Dr.
Armen, our chairman and chief executive officer, has participated in
compensation discussions with the committee.
REPORT OF THE AUDIT AND FINANCE COMMITTEE
In the course of its oversight of our financial reporting process, the
Audit and Finance Committee of the board of directors has (i) reviewed and
discussed with management our audited consolidated financial statements for the
fiscal year ended December 31 2001, (ii) discussed with KPMG LLP, our
independent auditors, the matters required to be discussed by Statement on
Auditing Standards No. 61, Communication with Audit Committees, and (iii)
received the written disclosures and the letter from the auditors required by
Independence Standards Board Standard No. 1, Independence Discussions with Audit
Committees, discussed with the auditors their independence, and considered
whether the provision of nonaudit services by the auditors is compatible with
maintaining their independence.
Based on the foregoing review and discussions, the Committee recommended to
the board of directors that the audited consolidated financial statements be
included in our Annual Report on Form 10-K for the year ended December 31, 2001
for filing with the Securities and Exchange Commission.
By the Audit and Finance Committee,
Tom Dechaene
Martin Taylor
Samuel Waksal, Ph.D.
12
PROPOSAL TO AMEND OUR
CERTIFICATE OF INCORPORATION
TO INCREASE OUR AUTHORIZED PREFERRED STOCK
GENERAL
Our board has approved an amendment to our Certificate of Incorporation to
increase the number of authorized shares of our preferred stock from 1,000,000
to 25,000,000, subject to stockholder approval. As of April 5, 2002, there were
no shares of preferred stock outstanding.
Under the terms of our Certificate of Incorporation, the board is expressly
authorized to provide for the issuance of all or any shares of the preferred
stock, in one or more series, and to fix for each such series the dividend
rates, conversion prices, voting rights, redemption prices, maturity dates and
other terms as it may determine in its discretion and as may be permitted by the
General Corporation Law of Delaware. The issuance and terms of the additional
shares of the preferred stock that would be authorized by the proposed amendment
also would be determined by the board in its discretion.
The board of directors believes that it is prudent to increase the
authorized number of shares of preferred stock to the proposed level in order to
increase flexibility in structuring financings and establishing strategic
relationships. Increasing the number of shares of authorized preferred stock
would permit us, for example, to sell a series of preferred stock within a
conventional market price range without using a depository structure. The
additional shares of preferred stock may also be used to acquire or invest in
complementary businesses or products or to obtain rights to use complementary
technologies.
We have no current plans to issue any portion of the additional authorized
shares of preferred stock that would result from the amendment.
POSSIBLE EFFECTS OF THE PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION
If the stockholders approve the amendment, the board of directors generally
will have the ability to authorize the issuance of additional shares of
preferred stock without a further vote of the stockholders. The issuance of
shares of preferred stock would decrease the proportionate equity interest of
our current stockholders and, depending upon the price paid for such additional
shares, could result in dilution to our current stockholders.
The ability of the board of directors to issue shares of preferred stock
provides the board with flexibility to negotiate with a potential acquirer and
could be used by the board to discourage, delay or make more difficult a change
in control. For example, such shares could be privately placed with purchasers
who are aligned with the board of directors in opposing an acquisition attempt,
or, without further stockholder approval, the board could adopt a stockholders
rights plan that would give certain stockholders the right to acquire additional
shares of common stock at a below-market price. Our current Certificate of
Incorporation provides for 1,000,000 shares of authorized preferred stock. Given
the board's discretion in establishing the terms of a particular series of
preferred stock under the existing Certificate of Incorporation, the board has
considerable flexibility to respond to an unsolicited bid, including the ability
to adopt a stockholders rights plan. The primary motivation for this proposal,
consequently, is enhancing our flexibility in structuring financings, strategic
alliances and acquisitions. If we were to use all or substantially all of our
authorized preferred stock for other purposes, however, absent the proposed
increase, our ability to use preferred stock for defensive purposes would be
reduced. Accordingly, stockholders should be aware that approval of the
amendment could facilitate future efforts to deter or prevent a change in
control, including a transaction in which the stockholders might otherwise
receive a premium for their shares over then current market prices.
13
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of our
outstanding common stock will constitute the approval of the proposed amendment
to the Certification of Incorporation. Abstentions and broker non-votes will
count as votes against the amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL
14
PROPOSAL TO AMEND OUR
CERTIFICATE OF INCORPORATION
TO PROVIDE THAT THE BOARD OF DIRECTORS MAY SET THE NUMBER OF
DIRECTORS COMPRISING THE BOARD OF DIRECTOR
Our board of directors has approved, subject to shareholder approval, an
amendment to our Certificate of Incorporation that provides that the number of
directors that shall constitute the whole board shall be fixed by resolution of
the board of directors but in no event shall be less than one or more than
fifteen. Currently, our bylaws provide that the number of directors that shall
constitute the whole board shall be fixed by resolution of the board of
directors but in no event shall be less than one. This proposed amendment would
limit the number of directors on the board to fifteen and would restrict the
ability of stockholders to change the number of directors constituting the whole
board without the approval of the board. The board of directors has adopted a
conforming amendment to our bylaws that will become effective if stockholders
approve the proposed amendment to the Certificate of Incorporation.
Under the General Corporation Law of Delaware and pursuant to our current
bylaws, stockholders have the power to amend our bylaws to change the number of
directors comprising the board of directors or to take the power to set the
number of directors away from the board. By moving to the Certificate of
Incorporation the provision authorizing the board to set the number of
directors, if the amendment is approved, future changes to this authority would
require board action. In addition, if the amendment is approved, stockholder
approval would be required for any future increase in the size of the board to
more than fifteen members.
POSSIBLE EFFECTS OF THE PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION
If the stockholders approve the amendment, the board of directors will have
the authority to set the number of directors comprising the whole board between
one and fifteen, and the stockholders will not have the ability to modify this
number absent action by the board of directors. This could have an anti-takeover
effect by making it more difficult for a person or group to obtain control over
the company. We have a staggered board with three classes of directors. This
means that only approximately one-third of our directors are up for election at
each annual meeting. The amendment would require board of directors' approval of
an increase in the size of the board that would result in a majority of the
directors being elected at a single meeting.
VOTE REQUIRED
The affirmative vote of the holders of a majority of the shares of our
outstanding common stock will constitute the approval of the proposed amendment
to the Certification of Incorporation. Abstentions and broker non-votes will
count as votes against the amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THIS PROPOSAL
15
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On May 18, 2000, we became a limited partner of the Applied Genomic
Technology Capital Fund, L.P., referred to as the Capital Fund, and committed to
invest $3,000,000 in the Capital Fund. As of December 31, 2001, we had invested
$825,000 in the Capital Fund and future contributions to the Capital Fund will
be made as authorized by the fund's general partner. The general partner of the
Capital Fund is AGTC Partners, L.P. and NewcoGen Group Inc. is the general
partner of AGTC Partners, L.P. Noubar Afeyan, Ph.D., one of our directors, is
the chairman and senior managing director and chief executive officer of
Flagship Ventures, a partnership of funds including NewcoGen Group Inc. and AGTC
Partners, L.P. In addition, Dr. Armen, our chairman and chief executive officer
and one of our directors, is a director of NewcoGen Group Inc.
16
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of our stock as of March 19, 2002:
- each person, or group of affiliated persons, who is known by
Antigenics to beneficially own more than 5% of the common stock;
- each of its directors;
- each of its named executive officers; and
- all of its directors and current executive officers as a group.
Except as otherwise noted, the persons or entities in this table have sole
voting and investing power with respect to all the shares of common stock
beneficially owned by them, subject to community property laws, where
applicable.
The "Number of Shares Beneficially Owned" column below is based on an
assumed 33,066,017 shares of Antigenics stock outstanding as of March 19, 2002.
For purposes of the table below, Antigenics deems shares of Antigenics stock
subject to options that are currently exercisable or exercisable within 60 days
of March 19, 2002, to be outstanding and to be beneficially owned by the person
holding the options for the purpose of computing the percentage ownership of the
person, but does not treat them as outstanding for the purpose of computing the
percentage ownership of any other person.
NUMBER OF SHARES PERCENTAGE
BENEFICIAL OWNER(1) BENEFICIALLY OWNED OF TOTAL
-------------------
Antigenics Holdings L.L.C.(2)................ 11,154,274(2) 33.7%
Garo H. Armen, Ph.D.(2)...................... 461,291(3) 1.4%
Pramod K. Srivastava, Ph.D.(2)............... 182,477(4) *
Gamil G. de Chadarevian...................... 1,661,290(5) 5.0%
Elma Hawkins, Ph.D........................... 170,397(6) *
Russell H. Herndon Ph.D...................... 50,466(7) *
Neal Gordon, Ph.D............................ 32,985(8) *
Noubar Afeyan, Ph.D.(2)...................... 172,731(9) *
Tom Dechaene................................. 11,467(4) *
Sanford Litvack.............................. 8,734(10) *
Martin Taylor................................ 66,103(11) *
Samuel Waksal, Ph.D.......................... --- *
All current executive officers and directors
as a group (11 persons)(2)................. 2,817,941(12) 8.5%
------------------
* Indicates less than 1%
(1) The address of each stockholder is Antigenics Inc., 630 Fifth Avenue, Suite
2100, New York, New York 10111.
17
(2) Founder Holdings Inc. owns approximately 79% of the outstanding members'
equity of Antigenics Holdings. Antigenics Holdings owns 38% of our stock.
Drs. Armen and Srivastava are managers of Antigenics Holdings. Dr. Armen is
a director of Founder Holdings. The following individuals beneficially own
the indicated percentages of Founder Holdings outstanding common stock:
INDIVIDUAL PERCENTAGE
---------- ----------
Garo Armen, Ph.D......................................... 43.1%.
Pramod Srivastava, Ph.D.................................. 24.2%.
Noubar Afeyan, Ph.D...................................... 1.1%.
Lawrence Feinberg........................................ 22.1%.
The following individuals own the indicated percentage interests in
Antigenics Holdings:
INDIVIDUAL PERCENTAGE
---------- ----------
Garo Armen, Ph.D. ....................................... 13.6%.
Pramod Srivastava, Ph.D. ................................. 6.2%
(3) Includes (a) 150,000 shares of our stock held by Armen Partners L.P., of
which Dr. Armen is general partner, and (b) 306,291 shares of our stock
issuable upon exercise of options currently exercisable or exercisable
within 60 days of March 19, 2002. Dr. Armen disclaims beneficial ownership
of the shares held by Armen Partners L.P. except to the extent of his
pecuniary interest therein.
(4) Consists solely of shares of our stock issuable upon exercise of options
currently exercisable or exercisable within 60 days of March 19, 2002.
(5) Includes (a) 1,479,488 shares of our stock held by Biovision, Inc., a
corporation of which Mr. de Chadarevian is the sole stockholder and (b)
144,802 shares of our stock issuable upon exercise of options currently
exercisable or exercisable within 60 days of March 19, 2002.
(6) Includes 165,606 shares of our stock issuable upon exercise of options
currently exercisable or exercisable within 60 days of March 19, 2002.
(7) Includes 50,000 shares of our stock issuable upon exercise of options
currently exercisable or exercisable within 60 days of March 19, 2002.
(8) Includes 31,985 shares of our stock issuable upon exercise of options
currently exercisable or exercisable within 60 days of March 19, 2002 and
1,000 shares of our stock owned by Mr. Gordon's wife.
(9) Includes 167,731 shares of our stock issuable upon exercise of options
currently exercisable or exercisable within 60 days of March 19, 2002.
(10) Includes 5,734 shares of our stock issuable upon exercise of options
currently exercisable or exercisable within 60 days of March 19, 2002.
(11) Includes 28,670 shares of our stock issuable upon exercise of options and a
warrant currently exercisable or exercisable within 60 days of March 19,
2002.
(12) Includes 1,095,038 shares of our stock issuable upon exercise of options
and a warrant currently exercisable or exercisable within 60 days of March
19, 2002 and excludes the shares held by Antigenics Holdings as described
in footnote (2). See footnotes (3) through (11).
18
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our executive officers and directors are required under Section 16(a) of
the Securities Exchange Act of 1934, as amended, to file reports of ownership
and changes in ownership of our securities with the Securities and Exchange
Commission. Copies of those reports must also be furnished to us.
Based solely on a review of the copies of reports furnished to us and
written representations that no other reports were required, we believe that
during our 2001 fiscal year, our directors, executive officers and 10%
beneficial owners complied with all applicable Section 16(a) filing
requirements.
INFORMATION CONCERNING AUDITORS
The firm of KPMG LLP, independent accountants, has audited our accounts
since our inception and will do so for 2002. The board of directors has
appointed KPMG LLP to serve as our independent auditors for our fiscal year
ending December 31, 2002. Representatives of KPMG LLP are expected to attend the
annual meeting to respond to appropriate questions, and will have the
opportunity to make a statement if they desire.
The fees for services provided by KPMG LLP to us in 2001 were as follows:
Audit Fees ............................................ $120,945
Financial Information Systems Design and
Implementation Fees ................................. None
All Other Fees ........................................ $342,880
STOCKHOLDER PROPOSALS
Assuming our 2003 Annual Meeting of Stockholders is not more than 30 days
before or 30 days after May 22, 2003, if you wish to bring business before or
propose director nominations at the 2003 Annual Meeting, you must give written
notice to Antigenics by March 8, 2003 (the date 75 days before the anniversary
of the 2002 Annual Meeting).
If you intend to bring such a proposal or nomination at the 2003 Annual
Meeting, and you would like us to consider the inclusion of your proposal or
nomination in our proxy statement for the meeting, you must provide written
notice to Antigenics of such proposal or nomination prior to December 23, 2002.
Notices of stockholder proposals and nominations shall be delivered in
writing to Garo H. Armen, Ph.D., Chairman and Chief Executive Officer,
Antigenics Inc., 630 Fifth Avenue, Suite 2100, New York, New York 10111.
19
OTHER MATTERS
The board of directors does not know of any business to come before the
meeting other than the matters described in the notice. If other business is
properly presented for consideration at the meeting, the enclosed proxy
authorizes the persons named therein to vote the shares in their discretion.
20
FORM OF PROXY CARD
ANTIGENICS INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS MAY 22, 2002
The undersigned stockholder of Antigenics Inc. (the "Company") hereby
appoints Garo H. Armen, Ph.D., Paul M. Kinsella and Suzette Rodriguez O'Connor,
and each of them acting singly, the attorneys and proxies of the undersigned,
with full power of substitution, to vote on behalf of the undersigned all of the
shares of capital stock of the Company that the undersigned is entitled to vote
at the Annual Meeting of Stockholders of the Company to be held on May 22, 2002,
and at all adjournments thereof, hereby revoking any proxy heretofore given with
respect to such shares.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY
THE UNDERSIGNED STOCKHOLDER(S). IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE
VOTED FOR ALL PROPOSALS. IN THEIR DISCRETION, THE PROXIES ARE ALSO AUTHORIZED TO
VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME BEFORE THE MEETING.
PLEASE SIGN AND MAIL THIS PROXY TODAY
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE.)
(REVERSE SIDE OF PROXY CARD)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
ANTIGENICS INC.
May 22, 2002
|X| Please mark your votes as in this example
WITHHELD
FOR from
all nominees all nominees
1. Proposal to elect directors |_| |_| Nominees: Dr. Garo H. Armen
Tom Dechaene
For, except withheld from the following nominee(s):
-----------------------------------------
FOR AGAINST ABSTAIN
2. Proposal to approve an amendment to our |_| |_| |_|
Certificate of Incorporation to increase
the authorized preferred stock from
1,000,000 to 25,000,000, increasing the
total authorized capital stock from
101,000,000 to 125,000,000.
3. Proposal to approve an amendment to our |_| |_| |_|
Certificate of Incorporation to provide
that the number of directors that shall
constitute the whole board shall be fixed
by a resolution of the board of directors
but in no event shall be less than one or
more than fifteen.
Mark here for |_|
Address Change
and Note on
Left
-------------------------- ------------ ------------------------------ ----------
SIGNATURE DATE: SIGNATURE (IF HELD JOINTLY) DATE:
NOTE: Please sign exactly as name appears on stock certificate. When shares are
held by joint tenants, both should sign. When signing as 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.
2