def14a
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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
Filed by the Registrant þ
Filed by a Party other than the Registrant o
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Check the appropriate box: |
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Preliminary Proxy Statement |
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
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Definitive Proxy Statement |
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Definitive Additional Materials |
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Soliciting Material Pursuant to §240.14a-12 |
Altus Pharmaceuticals 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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Payment of Filing Fee (Check the appropriate box): |
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No fee required. |
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. |
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Title of each class of securities to which transaction applies: |
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Aggregate number of securities to which transaction applies: |
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Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and
state how it was determined): |
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Proposed maximum aggregate value of transaction: |
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Fee paid previously with preliminary materials. |
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Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing: |
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Form, Schedule or Registration Statement No: |
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Date Filed: |
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June 13,
2006
Dear Stockholder,
We cordially invite you to attend our 2006 annual meeting of
stockholders to be held at 10:00 A.M., local time, on
Thursday, July 27, 2006, at the Hotel @ MIT, 20 Sidney
Street, Cambridge, MA 02139. The attached notice of annual
meeting and proxy statement describe the business we will
conduct at the meeting and provide information about Altus
Pharmaceuticals Inc. that you should consider when you vote your
shares.
When you have finished reading the proxy statement, please
promptly vote your shares by marking, signing, dating and
returning the proxy card in the enclosed envelope. We encourage
you to vote by proxy so that your shares will be represented and
voted at the meeting, whether or not you can attend in person.
Sincerely,
John P. Richard
Chairman of the Board
TABLE OF CONTENTS
June 13,
2006
NOTICE OF 2006 ANNUAL MEETING OF STOCKHOLDERS
TIME: 10:00 A.M., local time
DATE: July 27, 2006
PLACE: The Hotel @ MIT, 20 Sidney Street, Cambridge, MA 02139
PURPOSES:
1. To elect three Class I directors to serve
three-year terms expiring in 2009.
2. To ratify the appointment of Deloitte & Touche
LLP as the Companys independent registered public
accounting firm for the fiscal year ending December 31,
2006.
3. To consider any other business that is properly
presented at the meeting.
WHO MAY
VOTE:
You may vote if you were the record owner of Altus
Pharmaceuticals Inc. stock at the close of business on
May 30, 2006. A list of stockholders of record will be
available at the meeting and, during the 10 days prior to
the meeting, at the office of the Secretary at Altus
Pharmaceuticals Inc., 125 Sidney Street, Cambridge, MA 02139.
BY ORDER OF THE BOARD OF DIRECTORS
Jonathan I. Lieber
Treasurer
ALTUS
PHARMACEUTICALS INC.
125 Sidney Street, Cambridge,
Massachusetts 02139
(617) 299-2900
PROXY
STATEMENT FOR THE ALTUS PHARMACEUTICALS INC.
2006 ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON
JULY 27, 2006
GENERAL
INFORMATION ABOUT THE ANNUAL MEETING
Why Did
You Send Me this Proxy Statement?
We sent you this proxy statement and the enclosed proxy card
because Altus Pharmaceuticals Inc.s Board of Directors is
soliciting your proxy to vote at the 2006 annual meeting of
stockholders and any adjournments of the meeting to be held at
10:00 A.M., local time, on Thursday, July 27, 2006, at
the Hotel @ MIT, 20 Sidney Street, Cambridge, MA 02139.
This proxy statement along with the accompanying Notice of
Annual Meeting of Stockholders summarizes the purposes of the
meeting and the information you need to know to vote at the
annual meeting.
On June 16, 2006 we began sending this proxy statement, the
attached notice of annual meeting and the enclosed proxy card to
all stockholders entitled to vote at the meeting. Although not
part of this proxy statement, we are also sending our 2005
annual report along with this proxy statement, which includes
our financial statements for the fiscal year ended
December 31, 2005. You can also find a copy of our 2005
Annual Report on
Form 10-K
on the Internet through the Securities and Exchange
Commissions electronic data system called EDGAR at
www.sec.gov or through the Investor Relations section of
our website at www.altus.com.
Who Can
Vote?
Only stockholders who owned Altus Pharmaceuticals Inc. common
stock at the close of business on May 30, 2006 are entitled
to vote at the annual meeting. As of May 31, 2006 there
were 22,223,310 shares of Altus Pharmaceuticals Inc. common
stock outstanding and entitled to vote. The common stock is our
only outstanding class of voting stock.
You do not need to attend the annual meeting to vote your
shares. Shares represented by valid proxies, received in time
for the meeting and not revoked prior to the meeting, will be
voted at the meeting. A stockholder may revoke a proxy before
the proxy is voted by delivering to our Secretary a signed
statement of revocation or a duly executed proxy bearing a later
date. Any stockholder who has executed a proxy card but attends
the meeting in person may revoke the proxy and vote at the
meeting.
How Many
Votes Do I Have?
Each share of Altus Pharmaceuticals Inc. common stock that you
own entitles you to one vote.
How Do I
Vote?
Whether you plan to attend the annual meeting or not, we urge
you to vote by proxy. Voting by proxy will not affect your right
to attend the annual meeting. If your shares are registered
directly in your name, you may vote:
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By mail. Complete and mail the enclosed proxy
card in the enclosed postage prepaid envelope. Your proxy will
be voted in accordance with your instructions. If you sign the
proxy card but do not specify how you want your shares voted,
they will be voted as recommended by our Board of Directors.
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In person at the meeting. If you attend the
meeting, you may deliver your completed proxy card in person or
you may vote by completing a ballot, which will be available at
the meeting.
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If your shares are held in street name (held in the
name of a bank, broker or other nominee), you must provide the
bank, broker or other nominee with instructions on how to vote
your shares and can do so as follows:
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By mail. You will receive instructions from
your broker or other nominee explaining how to vote your shares.
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In person at the meeting. Contact the broker
or other nominee who holds your shares to obtain a brokers
proxy card and bring it with you to the meeting. You will not be
able to vote at the meeting unless you have a proxy card from
your broker.
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How Does
the Board of Directors Recommend That I Vote on the
Proposals?
The board of directors recommends that you vote as follows:
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FOR the election of the nominees for
director; and
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FOR ratification of the selection of
independent registered public accounting firm for our fiscal
year ending December 31, 2006.
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If any other matter is presented, the proxy card provides that
your shares will be voted by the proxy holder listed on the
proxy card in accordance with his or her best judgment. At the
time this proxy statement was printed, we knew of no matters
that needed to be acted on at the annual meeting, other than
those discussed in this proxy statement.
May I
Revoke My Proxy?
If you give us your proxy, you may revoke it at any time before
the meeting. You may revoke your proxy in any one of the
following ways:
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signing a new proxy card and submitting it as instructed above;
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notifying Altus Pharmaceuticals Inc.s Secretary in writing
before the annual meeting that you have revoked your
proxy; or
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attending the meeting in person and voting in person. Attending
the meeting in person will not in and of itself revoke a
previously submitted proxy unless you specifically request it.
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What if I
Receive More Than One Proxy Card?
You may receive more than one proxy card or voting instruction
form if you hold shares of our common stock in more than one
account, which may be in registered form or held in street name.
Please vote in the manner described under How Do I
Vote? for each account to ensure that all of your shares
are voted.
Will My
Shares be Voted if I Do Not Return My Proxy Card?
If your shares are registered in your name, they will not be
voted if you do not return your proxy card by mail or vote at
the meeting as described above under How Do I Vote?
If your shares are held in street name and you do not provide
voting instructions to the bank, broker or other nominee that
holds your shares as described above under How Do I
Vote?, the bank, broker or other nominee has the authority
to vote your unvoted shares on both Proposals 1 and 2 even
if it does not receive instructions from you. We encourage you
to provide voting instructions. This ensures your shares will be
voted at the meeting in the manner you desire. If your broker
cannot vote your shares on a particular matter because it has
not received instructions from you and does not have
discretionary voting authority on that matter or because your
broker chooses not to vote on a matter for which it does have
discretionary voting authority, this is referred to as a
broker non-vote.
2
What Vote
is Required to Approve Each Proposal and How are
Votes Counted?
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Proposal 1: Elect Directors |
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The nominees for director who receive the most votes (also known
as a plurality of the votes) will be elected.
Abstentions are not counted as voting on the matter for purposes
of electing directors. You may vote FOR all of the
nominees, WITHHOLD your vote from all of the nominees or
WITHHOLD your vote from any one or more of the nominees. Votes
that are withheld will not be included in the vote tally for the
election of directors. Brokerage firms have authority to vote
customers unvoted shares held by the firms in street name
for the election of directors. If a broker does not exercise
this authority, such broker non-votes will have no effect on the
results of this vote. |
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Proposal 2: Ratify Selection of Auditors |
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The affirmative vote of a majority of the votes cast at the
annual meeting is required to ratify the selection of
independent auditors. Abstentions will have no effect on the
voting on this proposal. Brokerage firms have authority to vote
customers unvoted shares held by the firms in street name
on this proposal. If a broker does not exercise this authority,
such broker non-votes will have no effect on the results of this
vote. We are not required to obtain the approval of our
stockholders to select our independent accountants. However, our
Board of Directors believes it is advisable to give stockholders
the opportunity to ratify this selection. If our stockholders do
not ratify the selection of Deloitte & Touche LLP as
our independent registered public accounting firm for the fiscal
year ending December 31, 2006, the Audit Committee of our
Board of Directors will reconsider its selection. |
Is Voting
Confidential?
We will keep all the proxies, ballots and voting tabulations
private. We only let our Inspectors of Election, Computershare
Investor Services, examine these documents. We will not disclose
your vote to management unless it is necessary to meet legal
requirements. We will, however, forward to management any
written comments you make, on the proxy card or elsewhere.
What Are
the Costs of Soliciting these Proxies?
We will pay all of the costs of soliciting these proxies. Our
directors and employees may solicit proxies in person or by
telephone, fax or email. We will pay these employees and
directors no additional compensation for these services. We will
ask banks, brokers and other institutions, nominees and
fiduciaries to forward these proxy materials to their principals
and to obtain authority to execute proxies. We will then
reimburse them for their expenses.
What
Constitutes a Quorum for the Meeting?
The presence, in person or by proxy, of the holders of a
majority of the outstanding shares of our common stock is
necessary to constitute a quorum at the meeting. Votes of
stockholders of record who are present at the meeting in person
or by proxy, abstentions and broker non-votes are counted for
purposes of determining whether a quorum exists.
Attending
the Annual Meeting
The annual meeting will be held at 10:00 A.M. local time on
Thursday, July 27, 2006 at the Hotel @ MIT, 20
Sidney Street, Cambridge, MA 02139. When you arrive at the Hotel
@ MIT, signs will direct you to the appropriate meeting rooms.
You need not attend the annual meeting in order to vote.
3
Householding
of Annual Disclosure Documents
In December 2000, the Securities and Exchange Commission adopted
a rule concerning the delivery of annual disclosure documents.
The rule allows us or your broker to send a single set of our
annual report and proxy statement to any household at which two
or more of our shareholders reside, if we or your broker believe
that the shareholders are members of the same family. This
practice, referred to as householding, benefits both
you and us. It reduces the volume of duplicate information
received at your household and helps to reduce our expenses. The
rule applies to our annual reports, proxy statements and
information statements. Once you receive notice from your broker
or from us that communications to your address will be
householded, the practice will continue until you
are otherwise notified or until you revoke your consent to the
practice. Each shareholder will continue to receive a separate
proxy card or voting instruction card.
If your household received a single set of disclosure documents
this year, but you would prefer to receive your own copy, please
contact our transfer agent, Computershare Investor Services,
by calling their toll free number, 1-877-282-1168.
If you do not wish to participate in householding
and would like to receive your own set of Altus Pharmaceuticals
Inc.s annual disclosure documents in future years, follow
the instructions described below. Conversely, if you share an
address with another Altus Pharmaceuticals Inc. shareholder and
together both of you would like to receive only a single set of
our annual disclosure documents, follow these instructions:
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If your Altus Pharmaceuticals Inc. shares are registered in your
own name, please contact our transfer agent, Computershare
Investor Services, and inform them of your request by calling
them at
1-877-282-1168,
via the internet at www.computershare.com or writing them at
Computershare Trust Company, N.A., P.O. Box 43078,
Providence, RI
02940-3078.
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If a broker or other nominee holds your Altus Pharmaceuticals
Inc. shares, please contact the broker or other nominee directly
and inform them of your request. Be sure to include your name,
the name of your brokerage firm and your account number.
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4
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information with respect
to the beneficial ownership of our common stock as of
May 31, 2006 for (a) the executive officers named in
the Summary Compensation Table on page 16 of this proxy
statement, (b) each of our directors and director nominees,
(c) all of our current directors and executive officers as
a group and (d) each stockholder known by us to own
beneficially more than 5% of our common stock. Beneficial
ownership is determined in accordance with the rules of the
Securities and Exchange Commission (the SEC) and
includes voting or investment power with respect to the
securities. We deem shares of common stock that may be acquired
by an individual or group within 60 days of May 31,
2006 pursuant to the exercise of options or warrants to be
outstanding for the purpose of computing the percentage
ownership of such individual or group, but are not deemed to be
outstanding for the purpose of computing the percentage
ownership of any other person shown in the table. Except as
indicated in footnotes to this table, we believe that the
stockholders named in this table have sole voting and investment
power with respect to all shares of common stock shown to be
beneficially owned by them based on information provided to us
by these stockholders. Percentage of ownership is based on
22,223,310 shares of common stock outstanding on
May 31, 2006.
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Shares Beneficially
Owned
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Name and Address**
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Number
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Percent
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Named Executive
Officers
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Sheldon Berkle(1)
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542,102
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2.4
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%
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Don G. Burstyn(2)
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174,443
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*
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Robert Gallotto(3)
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169,625
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*
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Jonathan I. Lieber(4)
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211,834
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*
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Alexey L. Margolin, Ph.D.(5)
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432,316
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1.9
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%
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Directors
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John P. Richard(6)
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111,429
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*
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Richard H. Aldrich(7)
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85,041
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Stewart Hen(8)
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4,307,163
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18.8
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%
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Peter L. Lanciano(9)
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699,394
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3.1
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%
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Jonathan S. Leff(10)
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4,307,163
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18.8
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%
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Manuel A. Navia, Ph.D.(11)
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119,930
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Harry H. Penner, Jr.(12)
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1,226
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Jonathan D. Root, M.D.(13)
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3,380,143
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15.0
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%
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Michael S. Wyzga(14)
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54,514
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All current directors and
executive officers as a group (18 persons)(15)
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10,600,552
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41.7
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%
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5% or More
Stockholders
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Warburg Pincus Private Equity
VIII, L.P.(16)
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4,307,163
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18.8
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%
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466 Lexington Avenue, New York, NY
10017
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Entities affiliated with
U.S. Venture Partners(17)
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3,371,421
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14.9
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%
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2735 Sand Hill Road, Menlo Park,
CA 94025
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Vertex Pharmaceuticals
Incorporated(18)
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2,780,243
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11.5
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%
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130 Waverly Street, Cambridge,
Massachusetts 02139
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Entities affiliated with Nomura
International plc(19)
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1,956,962
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8.7
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%
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Nomura House, 1 St.
Martins-le-Grand
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London EC1A 4NP, United Kingdom
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* |
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Represents beneficial ownership of less than 1% of the
outstanding shares of our common stock. |
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Unless otherwise indicated, the address of each beneficial owner
listed is c/o Altus Pharmaceuticals Inc., 125 Sidney
Street, Cambridge, Massachusetts 02139. |
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(1) |
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Consists of options to purchase 542,102 shares of common
stock. One quarter of the options vested on May 9, 2006,
and thereafter an additional 1/48th of the total underlying
option grant will vest on a monthly basis, such that all options
will be vested after four years. In addition, all of these
options are immediately exercisable for shares of restricted
stock, which are subject to a repurchase right by us that lapses
based on the vesting schedule set forth in the previous sentence. |
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(2) |
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Consists of options to purchase 174,443 shares of common
stock. 163,540 of such options have a term of ten years vesting
over four years, with 1/16th of the options vesting every
three months. 10,903 of these options have a term of ten years,
vesting over two years, with 1/8th of the options vesting
every three months. In addition, all of these options are
immediately exercisable for shares of restricted stock, which
are subject to a repurchase right by us that lapses based on the
vesting schedule set forth in the previous sentences. |
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(3) |
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Consists of options to purchase 169,625 shares of common
stock. 158,422 of such options have a term of ten years vesting
over four years, with 1/16th of the options vesting every
three months. 11,203 of these options have a term of ten years,
vesting over two years, with 1/8th of the options vesting
every three months. In addition, all of these options are
immediately exercisable for shares of restricted stock, which
are subject to a repurchase right by us that lapses based on the
vesting schedule set forth in the previous sentences. |
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(4) |
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Consists of options to purchase 211,834 shares of common
stock. 200,931 of such options have a term of ten years vesting
over four years, with 1/16th of the options vesting every
three months. 10,903 of such options have a term of ten years,
vesting over two years, with 1/8th of the options vesting
every three months. In addition, all of these options are
immediately exercisable for shares of restricted stock, which
are subject to a repurchase right by us that lapses based on the
vesting schedule set forth in the previous sentences. |
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(5) |
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Consists of 210,204 shares of common stock and options to
purchase 222,112 shares of common stock. 211,209 of such
options have a term of ten years vesting over four years, with
1/16th of the options vesting every three months. 10,903 of
such options have a term of ten years, vesting over two years,
with
1/8th of
the options vesting every three months. In addition, all of
these options are immediately exercisable for shares of
restricted stock, which are subject to a repurchase right by us
that lapses based on the vesting schedule set forth in the
previous sentence. |
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(6) |
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Consists of options to purchase 111,429 shares of common
stock. 68,687 of such options have a term of ten years vesting
over four years, with 1/16th of the options vesting every
three months. 42,742 of such options have a term of ten years
and vested immediately upon grant. In addition, all of the
options are immediately exercisable for shares of restricted
stock, which are subject to a repurchase right by us that lapses
based on the vesting schedule set forth above. |
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(7) |
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Consists of 30,527 shares of common stock and options to
purchase 54,514 shares of common stock. All options have a
term of ten years vesting over four years, with 1/16th of
the options vesting every three months. In addition, all of
these options are immediately exercisable for shares of
restricted stock, which are subject to a repurchase right by us
that lapses based on the vesting schedule set forth above. |
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(8) |
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Consists of the shares owned by Warburg Pincus Private Equity
VIII, L.P., and two affiliated partnerships, or collectively, WP
VIII, as described in footnote 16 below. Mr. Hen is a
partner of Warburg Pincus & Co., or WP, and a
managing director and member of Warburg Pincus LLC, or WP LLC.
Mr. Hen disclaims beneficial ownership of the shares owned
by WP VIII except to the extent of his pecuniary interest
therein. |
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(9) |
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Consists of 224,398 shares of common stock and options to
purchase 222,074 shares of common stock held by
Mr. Lanciano and 252,922 shares held in various trusts
for the benefit of Mr. Lancianos minor children. Does
not include 198,000 shares of common stock gifted by
Mr. Lanciano to other members of his family. All of the
options have a term of ten years and are exercisable until the
earlier of three months after Mr. Lanciano ceases to be a
member of our board of directors or December 31, 2006. The
options were vested as of October 31, 2005. |
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(10) |
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Consists of the shares owned by WP VIII as described in
footnote 16 below. Mr. Leff is a partner of WP and a
managing director and member of WP LLC. Mr. Leff disclaims
beneficial ownership of the shares owned by WP VIII except to
the extent of his pecuniary interest therein. |
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(11) |
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Consists of 71,958 shares of common stock and options to
purchase 47,972 shares of common stock. All options have a
term of ten years vesting over four years, with 1/16th of
the options vesting every three months. In addition, all of
these options are immediately exercisable for shares of
restricted stock, which are subject to a repurchase right by us
that lapses based on the vesting schedule set forth above. |
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(12) |
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Consists of options to purchase 1,226 shares of common
stock. All options have a term of ten years vesting over four
years, with 1/16th of the options vesting every three
months. All options become exercisable as they vest. |
|
(13) |
|
Consists of the shares owned by U.S. Venture Partners and
affiliated entities as described in footnote 17 below, in
addition to options to purchase 8,722 shares of common
stock. All options have a term of ten years vesting over four
years, with 1/16th of the options vesting every three
months. In addition, all of these options are immediately
exercisable for shares of restricted stock, which are subject to
a repurchase right by us that lapses based on the vesting
schedule set forth above. Dr. Root disclaims beneficial
ownership of the shares owned by the funds described in
footnote 17 except to the extent of his pecuniary interest
therein. |
|
(14) |
|
Consists of options to purchase 54,514 shares of common
stock. All options have a term of ten years vesting over four
years, with 1/16th of the options vesting every three
months. In addition, all of these options are immediately
exercisable for shares of restricted stock, which are subject to
a repurchase right by us that lapses based on the vesting
schedule set forth above. |
|
(15) |
|
Includes options to purchase 2,131,959 shares held by our
directors and executive officers. |
|
(16) |
|
Consists of 3,589,246 shares of common stock owned of
record by and warrants to purchase 717,917 shares of common
stock held by Warburg Pincus Private Equity VIII, L.P. and two
affiliated partnerships, or collectively, WP VIII. Warburg
Pincus Partners LLC, or WP Partners LLC, a subsidiary of Warburg
Pincus & Co., or WP, is the sole general partner of WP
VIII. WP VIII is managed by Warburg Pincus LLC, or WP LLC.
Charles R. Kaye and Joseph P. Landy are each Managing General
Partners of WP and Co-Presidents and Managing Members of WP LLC.
Messrs. Hen and Leff are general partners of WP and
Managing Directors and Members of WP LLC. Each of these
individuals disclaims beneficial ownership of the shares held by
WP VIII except to the extent of any pecuniary interest therein. |
|
(17) |
|
Consists of 2,947,459 shares of common stock owned of
record by and warrants to purchase 359,823 shares of common
stock held by U.S. Venture Partners VIII, L.P.;
21,696 shares of common stock owned of record by and
warrants to purchase 2,592 shares of common stock held by
USVP VIII Affiliates Fund, L.P.; 27,665 shares of common
stock owned of record by and warrants to purchase
3,303 shares of common stock held by USVP Entrepreneur
Partners VIII-A, L.P.; and 14,778 shares of common stock
owned of record by and warrants to purchase 1,765 shares of
common stock held by USVP Entrepreneur Partners VIII-B, L.P.
Voting
and/or
dispositive decisions with respect to the shares held by
U.S. Venture Partners VIII, L.P, USVP VIII Affiliates Fund,
L.P., USVP Entrepreneur Partners VIII-A, L.P. and USVP
Entrepreneur Partners VIII-B, L.P. are made by their managing
members: Dr. Root, Timothy Connors, Irwin Federman, Winston
Fu, Steven Krausz, David Liddle, Christopher Rust, and
Philip Young. Each disclaims beneficial ownership of the shares
held by the entities except to the extent of any pecuniary
interest therein. |
|
(18) |
|
Consists of 817,749 shares of common stock and warrants to
purchase 1,962,494 shares of common stock held by Vertex.
Vertex also holds 450,000 shares of redeemable preferred
stock, which are not convertible into common stock and which are
redeemable at the option of Vertex on or after December 31,
2010, or by us at any time. |
|
(19) |
|
Consists of 1,194,236 shares of common stock owned of
record by and warrants to purchase 100,044 shares of common
stock held by Nomura International plc; and 552,227 shares
of common stock owned of record by and warrants to purchase
110,455 shares of common stock held by Nomura Phase4
Ventures L.P. Nomura Phase4 Ventures Limited, as appointee of
Nomura International plc and as manager of Nomura Phase4
Ventures L.P. has voting and investment power over the shares
held by Nomura International plc |
7
|
|
|
|
|
and Nomura Phase4 Ventures L.P. Nomura Phase4 Ventures Limited
is a subsidiary of Nomura International plc which is a
subsidiary of Nomura Holdings Inc., a publicly traded company.
Mr. Yoshiki Hashimoto, the Head of Merchant Banking, Nomura
International plc, and Dr. Denise Pollard-Knight, the Head
of Nomura Phase4 Ventures, are the only two members of the board
of directors of Nomura Phase4 Ventures Limited and both of them,
acting together, exercise the voting and investment power of
Nomura Phase4 Ventures Limited. Mr. Hashimoto and
Dr. Pollard-Knight disclaim beneficial ownership over any
of the above shares. |
MANAGEMENT
The Board
of Directors
Our Restated Certificate of Incorporation and Restated Bylaws
provide that our business is to be managed by or under the
direction of our Board of Directors. Our Board of Directors is
divided into three classes for purposes of election. One class
is elected at each annual meeting of stockholders to serve for a
three-year term. Our Board of Directors currently consists of 10
members, divided into three classes as follows:
(1) Peter L. Lanciano, John P. Richard, Richard H.
Aldrich, and Harry H. Penner, Jr. constitute Class I,
(2) Jonathan S. Leff and Jonathan D. Root constitute
Class II, and (3) Manuel A. Navia, Sheldon Berkle,
Stewart Hen, and Michael S. Wyzga constitute Class III. The
terms of each of Mr. Lanciano and Mr. Aldrich will
expire at the 2006 annual meeting, and the Board thanks them for
their service to the Company.
On June 6, 2006, our Board of Directors voted to nominate
Harry H. Penner, Jr., Stewart Hen, and
John P. Richard for re-election as Class I
directors at the annual meeting for a term of three years to
serve until the 2009 annual meeting of stockholders, and until
their respective successors have been elected and qualified. The
Board has elected to nominate Mr. Hen for election at the
2006 annual meeting into Class I instead of Class III,
in order to have classes as equal in number as possible
following the expiration at the 2006 annual meeting of the terms
of Messrs. Lanciano and Aldrich.
Our restated certificate of incorporation and restated bylaws
provide that the authorized number of directors may be changed
only by resolution of the board of directors. As of the start of
the annual meeting, eight directors will be authorized.
Set forth below are the names of the persons nominated as
directors and directors whose terms do not expire this year,
their ages, their offices in the Company, if any, their
principal occupations or employment for the past five years, the
length of their tenure as directors and the names of other
public companies in which such persons hold directorships.
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position with the
Company
|
|
Sheldon Berkle
|
|
|
60
|
|
|
President and Chief Executive
Officer, Director
|
John P. Richard(1)
|
|
|
48
|
|
|
Chairman of the Board
|
Stewart Hen (2)(3)
|
|
|
39
|
|
|
Director
|
Jonathan S. Leff
|
|
|
37
|
|
|
Director
|
Manuel A.
Navia, Ph.D. (2)(3)
|
|
|
59
|
|
|
Director
|
Harry H. Penner, Jr.(1)
|
|
|
60
|
|
|
Director
|
Jonathan D. Root(2)
|
|
|
45
|
|
|
Director
|
Michael S. Wyzga(1)
|
|
|
51
|
|
|
Director
|
|
|
|
(1) |
|
Member of the Audit Committee. |
|
(2) |
|
Member of the Compensation Committee. |
|
(3) |
|
Member of the Nominating and Governance Committee. |
The following is a brief summary of the background of each of
our directors.
8
Sheldon Berkle joined Altus as our President and Chief
Executive Officer in May 2005 and was elected as a member of our
board of directors. Prior to joining us, Mr. Berkle served
as Executive Vice President of Boehringer Ingelheim
Pharmaceuticals Inc. from November 1994 to December 2003. In
this position, Mr. Berkle was responsible for United States
pharmaceutical operations, including portfolio management, new
product launches, commercialization, marketing, sales, business
development, mergers and acquisitions, strategic planning and
alliance management. Mr. Berkle was also a co-founder of
Boehringer Ingelheim Canada, a pharmaceutical company, and
served as its Chief Executive Officer from 1989 to 1994. From
January 2004 to April 2005, Mr. Berkle was not actively
employed. Mr. Berkle holds a B.Sc. in pharmacy from the
University of Manitoba and an M.B.A. from the University of
Toronto.
John P. Richard has served as chairman of our board of
directors since October 2004. Mr. Richard has served as an
independent strategic and commercial development advisor in the
biotechnology industry since April 1999. He currently serves as
Senior Business Advisor to GPC Biotech AG, a biotechnology
company, as a partner of Georgia Venture Partners, a
biotechnology investing firm, and as a consultant to Nomura
Phase4 Ventures. He also serves as a director of Targacept,
Inc., Zygogen, LLC, and Metastatix, Inc. Mr. Richard was
previously Executive Vice President, Business Development at
SEQUUS Pharmaceuticals, Inc., where he was responsible for
negotiating the acquisition of SEQUUS by ALZA Corporation. Prior
to joining SEQUUS, Mr. Richard held the positions of Vice
President, Corporate Development for VIVUS, Inc. and Senior Vice
President, Business Development of Genome Therapeutics
Corporation, where he was responsible for establishing numerous
pharmaceutical alliances. He was also co-founder and original
Chief Executive Officer of IMPATH Laboratories, Inc., a leading
cancer pathology reference laboratory in the United States.
Mr. Richard received his M.B.A. from Harvard Business
School and his B.S. from Stanford University.
Stewart Hen has served as a member of our board of
directors since May 2004. Mr. Hen has been with Warburg
Pincus LLC, a venture capital and private equity firm, since May
2000 and is currently a managing director, where he focuses on
investments in the life sciences sector, including
biotechnology, pharmaceuticals, specialty pharmaceuticals, drug
delivery and diagnostics. Prior to joining Warburg Pincus, he
was a management consultant at McKinsey & Company,
where he advised pharmaceutical and biotechnology companies on a
range of strategic management issues. Prior to joining McKinsey,
he worked at Merck in research and development and
manufacturing. Mr. Hen is also a director of Allos
Therapeutics, Inc. and Neurogen Corporation. Mr. Hen holds
an M.B.A. from The Wharton School at the University of
Pennsylvania, an M.S. in chemical engineering from the
Massachusetts Institute of Technology and a B.S. in chemical
engineering from the University of Delaware.
Jonathan S. Leff has served as a member of our board of
directors since May 2004. Mr. Leff has been a managing
director at Warburg Pincus LLC since January 2000. Mr. Leff
is responsible for Warburg Pincus North American
investment activities in biotechnology, pharmaceuticals and
related industries. Prior to joining Warburg Pincus,
Mr. Leff was a consultant at Oliver, Wyman & Co.
Mr. Leff is a director of Allos Therapeutics, Inc.,
Neurogen Corporation, InterMune, Inc., Sunesis Pharmaceuticals,
Inc. and ZymoGenetics, Inc. Mr. Leff received an A.B. in
government from Harvard College and an M.B.A. from Stanford
University.
Manuel A. Navia, Ph.D. is one of our founders and
has served as a member of our board of directors since 1992.
Dr. Navia is a drug discovery and development advisor in
the Boston area. Since March 2004, Dr. Navia has been an
Executive-in-Residence
at Oxford Bioscience Partners, a venture capital firm. In
addition, since March 2003, Dr. Navia has served as an
advisor and consultant to various companies in the biotechnology
industry. Prior to that time, from January 2001 to March 2003,
Dr. Navia was Executive Vice President for Research at
Essential Therapeutics, Inc., a biotechnology company. He was a
founder of The Althexis Company, Inc. in 1997, and served as its
President and Chief Executive Officer until January 2001, when
it merged with Microcide Pharmaceuticals Inc. to
form Essential Therapeutics. From 1989 to 1997,
Dr. Navia served as Vice President and Senior Scientist at
Vertex. Dr. Navia holds a Ph.D. and an M.S. in biophysics
from the University of Chicago and a B.A. in physics from New
York University.
Harry H. Penner, Jr. has served as a member of our
board of directors since April 2006. Mr. Penner has
28 years of increasing management responsibilities in the
pharmaceutical and biotechnology sectors. He is currently the
Chairman and CEO and co-founder of Marinus Pharmaceuticals.
Prior to co-founding Marinus
9
Pharmaceuticals, Mr. Penner served as Chairman and Chief
Executive Officer of Nascent BioScience, LLC, a firm engaged in
the creation and development of new biotechnology companies.
From 1993 to 2001, he was President, Chief Executive Officer and
Vice Chairman of Neurogen Corporation. Previously, he served as
Executive Vice President of Novo Nordisk A/S and President of
Novo Nordisk of North America, Inc. from 1988 to 1993. From 1985
to 1988 he was Executive Vice President and General Counsel of
Novo Nordisk
A/S. He has
served more recently as BioScience Advisor to the Governor and
the State of Connecticut, as Chairman of the Board of Directors
for the Connecticut Technology Council, as Co-Chairman of
Connecticut United for Research Excellence, and as Director of
the Connecticut Business and Industry Associates. He currently
serves on the Boards of Avant Immunotherapeutics, Inc. and
Ikonisys, Inc. and chairs the Board of Rib-X Pharmaceuticals,
Inc. Mr. Penner holds academic degrees from the University
of Virginia (BA), Fordham University (JD), and New York
University (LLM, International Law) and has completed senior
management programs at Stanford.
Jonathan D. Root, M.D. has served as a member of our
board of directors since September 2001. Having joined
U.S. Venture Partners, a venture capital firm, in July
1995, Dr. Root is presently a general partner and focuses
on investments in therapeutic medical devices, diagnostics, drug
discovery tools and services, and biopharmaceutical development.
Prior to joining U.S. Venture Partners, Dr. Root spent
nine years in clinical practice, most recently on the faculty
and clinical staff at The New York Hospital-Cornell Medical
Center in New York City, where he was an Assistant Professor of
Neurology and Director of the Neurology-Neurosurgery Special
Care Unit. Dr. Root holds an A.B. in economics/government
from Dartmouth College, an M.D. from the University of Florida
College of Medicine, and an M.B.A. from Columbia University.
Michael S. Wyzga has served as a member of our board of
directors since May 2004. Mr. Wyzga is Executive Vice
President and Chief Financial Officer of Genzyme Corporation, a
biotechnology company. Mr. Wyzga joined Genzyme as Vice
President and Corporate Controller in March 1998, was promoted
to Senior Vice President and Corporate Controller in December
1998, and to Chief Financial Officer in June 1999.
Mr. Wyzga became an Executive Vice President of Genzyme in
June 2003 and is responsible for its global financial reporting.
Prior to joining Genzyme, Mr. Wyzga was Chief Financial
Officer for Sovereign Hill Software, Inc. Prior to his role at
Sovereign Hill Software, Mr. Wyzga was the Chief Financial
Officer for CacheLink Corporation, and prior to that,
Mr. Wyzga held various management positions at Lotus
Development Corporation, including Vice President of Finance and
Director of Plans and Controls. Prior to joining Lotus,
Mr. Wyzga held management positions at Digital Equipment
Corporation. Mr. Wyzga received an M.B.A. in business
administration from Providence College and a B.S. in business
administration from Suffolk University.
Our Board has determined that the following continuing members
of the Board qualify as independent under the definition
promulgated by the Nasdaq Stock Market: Messrs. Hen, Leff,
Penner, and Wyzga, and Drs. Root and Navia.
Committees
of the Board of Directors and Meetings
Meeting Attendance. During the fiscal year
ended December 31, 2005 there were six meetings of our
Board of Directors, and the various committees of the Board met
a total of 18 times. No director attended fewer than 75% of the
total number of meetings of the Board and of committees of the
Board on which he or she served during fiscal 2005. The Board
has adopted a policy under which each member of the Board is
strongly encouraged to attend each annual meeting of our
stockholders. We completed our initial public offering in
January 2006. As a result, the 2006 annual meeting of
stockholders will be the first meeting of stockholders that we
hold as a public company.
Audit Committee. Our Audit Committee met four
times during fiscal 2005. This committee currently has three
members, Messrs. Richard, Penner and Wyzga. Our Audit
Committee has the authority to retain and terminate the services
of our independent auditors. In addition, our Audit Committee
pre-approves the engagement of our independent auditors, reviews
annual financial statements, considers matters relating to
accounting policy and internal controls and reviews the scope of
annual audits. A copy of the charter of the Audit Committee is
attached as Appendix A to this proxy statement. Nasdaq
rules require that all members of
10
the audit committee be independent directors, as defined by the
rules of the Nasdaq and the SEC, as such standards apply
specifically to members of audit committees. The Nasdaq rules
also permit a company, such as us, listing on the Nasdaq
National Market in connection with its initial public offering
to have only one member of the audit committee comply with the
independence requirements on the date of listing, provided that
a majority of the members satisfy the requirements within
90 days after listing and all of the members satisfy the
requirements within one year after listing. Our Board of
Directors has determined that Messrs. Penner and Wyzga
satisfy the independence requirements for service on the audit
committee, and we are seeking one additional independent
director to join the audit committee prior to the end of the
phase-in period referenced above. The Board has determined that
Mr. Wyzga is an audit committee financial
expert, as the Securities and Exchange Commission has
defined that term in Item 401 of
Regulation S-K.
Please also see the report of the Audit Committee set forth
elsewhere in this proxy statement.
Compensation Committee. Our Compensation
Committee met 14 times during fiscal 2005. This committee
currently has four members, Messrs. Aldrich and Hen, and
Drs. Navia and Root. As noted above, Mr. Aldrichs
term as a director will expire at the 2006 Annual Meeting. In
addition, Mr. Hen intends to resign from the Compensation
Committee effective upon the 2006 Annual Meeting. Our
Compensation Committee reviews, approves and makes
recommendations regarding our compensation policies, practices
and procedures to ensure that legal and fiduciary
responsibilities of the Board of Directors are carried out and
that such policies, practices and procedures contribute to our
success. The Compensation Committee is responsible for the
determination of the compensation of our Chief Executive
Officer, and shall conduct its decision making process with
respect to that issue without the chief executive officer
present. Our board of directors has determined that all of the
members of this committee satisfy the Nasdaq independence
requirements for service on the Compensation Committee. Please
also see the report of the Compensation Committee set forth
elsewhere in this proxy statement.
Nominating and Governance Committee. Our
Nominating and Governance Committee did not meet during fiscal
2005. The committee currently has two members, Mr. Hen and
Dr. Navia. This committees role is to make
recommendations to the full Board as to the size and composition
of the Board and its committees, and to evaluate and make
recommendations as to potential candidates. Our board of
directors has determined that Mr. Hen and Dr. Navia
satisfy the Nasdaq independence requirements for service on the
Nominating and Governance Committee. The Nominating and
Governance Committee may consider candidates recommended by
stockholders as well as from other sources such as other
directors or officers, third party search firms or other
appropriate sources. For all potential candidates, the
Nominating and Governance Committee may consider all factors it
deems relevant, such as a candidates personal integrity
and sound judgment, business and professional skills and
experience, independence, knowledge of the industry in which we
operate, possible conflicts of interest, diversity, the extent
to which the candidate would fill a present need on the Board,
and concern for the long-term interests of the stockholders. In
general, persons recommended by stockholders will be considered
on the same basis as candidates from other sources. If a
stockholder wishes to nominate a candidate to be considered for
election as a director at the 2007 Annual Meeting of
Stockholders using the procedures set forth in our Restated
Bylaws, it must follow the procedures described in Notice
of Stockholder Business and Nominations. If a stockholder,
who meets the minimum percentage ownership requirements that the
Board may establish from time to time, wishes simply to propose
a candidate for consideration as a nominee by the Nominating and
Governance Committee, the stockholder should submit the
recommendation to the Nominating and Governance Committee in
writing, by mail, courier or personal delivery. A nominating
recommendation must be accompanied by:
|
|
|
|
|
the name, address, including telephone number of the
recommending shareholder;
|
|
|
|
the number of our shares owned by the recommending shareholder
and the time period for which such shares have been held;
|
|
|
|
if the recommending shareholder is not a shareholder of record,
a statement from the record holder of the shares (usually a
broker or bank) verifying the holdings of the shareholder and a
statement from the recommending shareholder of the length of
time that the shares have been held. Alternatively, the
shareholder may furnish a current Schedule 13D,
Schedule 13G, Form 3, Form 4 or Form 5 filed
with
|
11
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|
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|
|
the Securities and Exchange Commission reflecting the holdings
of the shareholder, together with a statement of the length of
time that the shares have been held; and
|
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|
a statement from the shareholder as to whether the shareholder
has a good faith intention to continue to hold the reported
shares through the date of our next annual meeting of
stockholders.
|
A copy of the Nominating and Governance Committees written
charter is publicly available on our website at
www.altus.com.
Compensation Committee Interlocks and Insider
Participation. The members of our Compensation
Committee during 2005 were Messrs. Aldrich and Hen, and
Drs. Navia and Root. No member of our compensation
committee has at any time been an employee of ours. None of our
executive officers serves or served as a member of the board of
directors or compensation committee of any entity that has one
or more executive officers serving as a member of our board of
directors or compensation committee.
Drs. Root and Navia and Mr. Hen and their affiliates have
participated in transactions with us. For a detailed description
of these transactions, see the Certain Relationships and
Related Transactions section of this Proxy Statement.
Shareholder
Communications to the Board
Generally, shareholders who have questions or concerns should
contact our Investor Relations department at
(617) 299-2900.
However, any shareholders who wish to address questions
regarding our business directly with the Board of Directors, or
any individual director, should direct his or her questions in
writing to the Chairman of the Board at 125 Sidney Street,
Cambridge, MA 02139, by contacting our Investor Relations
department via
e-mail at
ir@altus.com or by using the Comments page of
our website at http://ir.altus.com/contactus.cfm.
Compensation
of Directors
Compensation
for Board Service
During 2005, our non-employee directors received the following
compensation for service on our board of directors and
committees thereof:
|
|
|
|
|
|
|
|
|
Name
|
|
Cash
|
|
|
Stock Options(1)
|
|
|
John P. Richard
|
|
$
|
30,000
|
|
|
|
55,606
|
|
Richard H. Aldrich
|
|
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20,000
|
|
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8,722
|
|
Lynne H. Brum(2)
|
|
|
10,000
|
|
|
|
|
|
Stewart Hen
|
|
|
10,000
|
|
|
|
|
|
Peter L. Lanciano
|
|
|
|
|
|
|
|
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Jonathan S. Leff
|
|
|
10,000
|
|
|
|
|
|
Manuel A. Navia, Ph.D.
|
|
|
20,000
|
|
|
|
8,722
|
|
Harry H. Penner, Jr.
|
|
|
|
|
|
|
|
|
Jonathan D. Root, M.D.
|
|
|
10,000
|
|
|
|
|
|
Michael S. Wyzga
|
|
|
30,000
|
|
|
|
10,903
|
|
|
|
|
(1) |
|
All options have a ten-year term and an exercise price of
$3.92 per share, and vest quarterly over four years, except
for (a) 30,530 options granted to Mr. Richard, which
were fully vested upon grant, (b) 5,451 options
granted to Mr. Richard, which have an exercise price of
$4.36 per share, and (c) 19,625 options granted on
April 3, 2006 to Mr. Penner, which have an exercise
price of $22.09 per share. In addition, all of these options,
except for those granted to Mr. Penner, may be exercised
immediately for shares of restricted stock, which are subject to
a repurchase right by us that lapses on the same vesting
schedule as the options. |
|
(2) |
|
Ms. Brum resigned from the Board of Directors effective
June 9, 2006. |
12
Our Board of Directors has adopted the following policy with
respect to compensation of directors, effective as of
January 26, 2006. Non-employee directors receive options to
purchase 17,444 shares of common stock, vesting quarterly
over a four-year period upon initial election to the board, and
options to purchase 8,722 shares, vesting quarterly over a
four-year period, each year thereafter. They also receive an
annual cash retainer of $20,000. Non-employee directors serving
as chairs of the nominating and governance committee and the
compensation committee also receive an option to purchase
4,361 shares of common stock initially and an option to
purchase 2,181 shares each year thereafter, each vesting
quarterly over a four-year period, as well as an annual cash
retainer of $10,000. The non-employee director serving as the
chair of the audit committee also receives an option to purchase
4,361 shares of common stock initially and an option to
purchase 2,181 shares each year thereafter, each vesting
quarterly over a four year period, as well as an annual cash
retainer of $12,500. Non-employee directors serving as members
of committees of the board, other than the chairs of those
committees, receive an option to purchase 2,181 shares of
common stock initially and an option to purchase
1,090 shares each year thereafter, each vesting quarterly
over a four-year period, as well as an annual cash retainer of
$5,000, for each committee on which such person serves.
Continued vesting of the options granted under the policy is
subject to continued service on the board.
Peter L. Lanciano. We have an agreement with
Peter L. Lanciano, our director and former Chairman of the
Board, President and Chief Executive Officer. Pursuant to the
agreement, effective October 29, 2004, Mr. Lanciano
resigned from his positions as our Chairman of the Board,
President and Chief Executive Officer, as well as from all
committees of our board of directors, and was appointed
Vice-Chairman of our board of directors. Pursuant to the
agreement, Mr. Lanciano provided management transition and
support services through October 31, 2005. In 2005,
Mr. Lanciano earned $283,000 under this agreement. In
November 2005, we amended Mr. Lancianos agreement to
permit him to exercise any of his stock options that had vested
as of October 31, 2005 until the earlier of three months
after he ceases to be a member of our board of directors or
December 31, 2006. In addition, Mr. Lanciano resigned
as Vice Chairman of the Board effective October 31, 2005
but will remain a member of our board of directors until the
2006 annual meeting, at which point his term as a director shall
expire.
John P. Richard. From October 2004 to June
2005, we had an arrangement with Mr. Richard, the chairman
of our board of directors, to provide management oversight
services during our search for a chief executive officer. For
such services, we granted him options to purchase
30,530 shares of our common stock and paid him $66,000 in
fees and $53,250 as a bonus in 2005. All options granted to
Mr. Richard under this arrangement have an exercise price
of $3.92 per share, a ten-year term and were fully vested as of
the date of grant.
Pursuant to our Amended and Restated 2002 Employee, Director and
Consultant Stock Plan, or the 2002 Stock Plan, in the event of a
merger or other reorganization event involving the Company that
also constitutes a change of control of the Company, as defined
in the 2002 Stock Plan, all options issued to directors, whether
or not employees, will become exercisable in full immediately
prior to such event.
13
Executive
Officers
The following table sets forth certain information regarding our
current executive officers. We have an employment agreement with
Sheldon Berkle, our President and Chief Executive Officer. All
other executive officers are at-will employees.
|
|
|
|
|
|
|
Name
|
|
Age
|
|
Position
|
|
Sheldon Berkle
|
|
|
60
|
|
|
President and Chief Executive
Officer
|
Burkhard Blank, M.D.
|
|
|
51
|
|
|
Senior Vice President, Medicine,
Regulatory Affairs and Project Management
|
Alexey L.
Margolin, Ph.D.
|
|
|
53
|
|
|
Senior Vice President of Research
and Pre-clinical Development and Chief Scientific Officer
|
Don G. Burstyn, Ph.D.
|
|
|
51
|
|
|
Vice President, Regulatory Affairs
and Quality Assurance
|
Robert Gallotto
|
|
|
41
|
|
|
Vice President, Strategic Planning
and Alliance Management
|
Alan
Kimura, M.D., Ph.D.
|
|
|
52
|
|
|
Vice President, Clinical
Development and Medical Affairs
|
Gerhard F. Klement(1)
|
|
|
53
|
|
|
Vice President, Manufacturing and
Technical Operations
|
Jonathan I. Lieber
|
|
|
36
|
|
|
Vice President, Chief Financial
Officer and Treasurer
|
Lauren M. Sabella
|
|
|
46
|
|
|
Vice President of Commercial
Development
|
|
|
|
(1) |
|
Mr. Klement has notified us of his intention to resign his
position with us effective June 30, 2006. |
Burkhard Blank, M.D. has served as our Senior Vice
President, Medicine, Regulatory Affairs and Project Management
since June 2006. Prior to joining us, Dr. Blank was Senior
Vice President for Medicine and Drug Regulatory Affairs at
Boehringer Inglelheim USA. Prior to this, Dr. Blank
established the International Project Management Department at
Boehringer Ingelheim GmbH, which had worldwide responsibility
for the planning and monitoring of all Phase I-IV
development projects and for drug regulatory affairs with
international submissions. Dr. Blank was also a member of
Boehringers International Development Committee, which was
responsible for steering Boehringers global drug
development portfolio. Dr. Blank holds a medical degree in
internal medicine from Universitaet Marburg, Germany.
Alexey L. Margolin, Ph.D. has served as our Chief
Scientific Officer since August 2004 and as our Senior Vice
President of Research and Pre-clinical Development since June
2006. He served as our Vice President of Science from 1996 to
2004 and as our Director of Research from 1993 to 1996. Prior to
joining us, Dr. Margolin was responsible for biocatalysis
activities on a global basis at Merrell Dow Research Institute.
From 1986 to 1988, he worked at the Massachusetts Institute of
Technology on enzyme-catalyzed processes. In 2003,
Dr. Margolin was elected a fellow of the American Institute
of Medicine and Biological Engineering. Dr. Margolin
received his M.S. in chemistry and Ph.D. in bio-organic
chemistry from Moscow University.
Don G. Burstyn, Ph.D. has served as our Vice
President, Regulatory Affairs and Quality Assurance since July
2004. Dr. Burstyn currently represents the Biotechnology
Industry Organization on the Product Quality Research Institute
Steering Committee. Before joining us, Dr. Burstyn served
as Vice President of Regulatory Affairs for Alkermes, Inc., a
biotechnology company, from December 1993 to March 2004, where
he was responsible for leading that companys activities
related to the approvals of Nutropin Depot and
Risperdal Consta. From 1987 to 1993, Dr. Burstyn held
various management positions at Biogen, Inc., including Director
of Quality and Director of Development Operations.
Dr. Burstyn worked from 1979 to 1987 as a microbiologist at
the FDA. He was awarded an FDA Award of Merit in 1985 and an FDA
Group Recognition Award in 1991. Dr. Burstyn holds a B.S.,
an M.S. and a Ph.D. in microbiology from the University of
Maryland, where he received the Isabel R. McDonald Memorial
Award in 1979.
14
Robert Gallotto currently serves as our Vice President,
Strategic Planning and Alliance Management. From January 2003
through December 2005, Mr. Gallotto served as our Vice
President, Commercial Development and Alliance Management.
Mr. Gallotto joined us in July 2001 as Director of
Commercial Development where he was responsible for marketing,
product planning and business development. Before joining us,
Mr. Gallotto served as Vice President of Marketing and
Business Development at Sage BioPharma, Inc., a
pharmaceutical company, from August 1999 to June 2001. From
January 1996 to July 1999, Mr. Gallotto served in various
positions at Serono, Inc. and Biogen, Inc., where he was
responsible for overall brand positioning, product launch
planning, strategic planning and key alliance management for a
portfolio of drugs including Gonal-F and Avonex. From 1987 to
1995, Mr. Gallotto served in various positions in sales,
marketing and managed healthcare with The Upjohn Company.
Mr. Gallotto received a B.S. in biology from Stonehill
College.
Alan Kimura, M.D., Ph.D. has served as our Vice
President, Clinical Development and Medical Affairs since May
2005. Prior to joining us, Dr. Kimura was Executive
Director, Clinical Affairs at Transkaryotic Therapies, Inc., a
pharmaceutical company, from June 2001 to May 2005, where he was
involved in the clinical development of protein-based therapies
for rare genetic diseases. Before joining Transkaryotic
Therapies, Dr. Kimura was the Director of Clinical
Development at Biochem Pharma, Inc., a pharmaceutical company,
from July 1999 to June 2001. Prior to that, Dr. Kimura held
various positions in clinical research and medical affairs at
SmithKline Beecham Biologicals S.A. and the Wyeth-Lederle
Vaccines division of American Home Products Corporation.
Dr. Kimura also held bacteriology research positions in the
research departments of the Praxis Biologicals and Lederle
Biologicals divisions of American Cyanamid Company.
Dr. Kimura received his M.D. from the University of Miami
School of Medicine. He received a Ph.D. and M.S. in microbiology
from the University of California, Davis and a B.A. in
bacteriology from the University of California, Berkeley.
Gerhard F. Klement has served as our Vice President,
Manufacturing and Technical Operations since November 2005.
Prior to joining us, from June 2005 to October 2005,
Mr. Klement served as Chief Technology Officer for the
worldwide Biologics and Chemicals Group at Lonza Biologics, a
contract manufacturer, where he was responsible for new
technologies and business development. From 2003 to June 2005,
Mr. Klement was the Head of Operations, USA and Chief
Operating Officer Biopharmaceuticals, Worldwide at Lonza
Biologics. In 2002, Mr. Klement was a self-employed
consultant. From 1994 to 2002, Mr. Klement held various
positions in manufacturing and engineering at Serono, Inc., a
biotechnology company. Mr. Klement holds a B.Sc. from the
University of Agriculture in Vienna, Austria. He received
executive training in general management and leadership from
IMD International Institute for Management
Development in Lausanne, Switzerland and Babson College.
Jonathan I. Lieber currently serves as our Vice
President, Chief Financial Officer and Treasurer.
Mr. Lieber joined us in July 2002 as our Vice President,
Finance. From 1998 to June 2002, Mr. Lieber was a member of
SG Cowens Health Care Investment Banking Group, most
recently as a vice president focused on the biotechnology and
specialty pharmaceuticals sectors. Prior to joining SG Cowen,
Mr. Lieber was a member of the Health Care and High Yield
Groups at Salomon Brothers Inc. Mr. Lieber received an
M.B.A. in finance from the Stern School of Business of New York
University and a B.Sc. in business administration from Boston
University.
Lauren M. Sabella has served as our Vice President of
Commercial Development since May 2006. Prior to joining Altus,
Ms. Sabella was employed by Boehringer Ingelheim
Pharmaceuticals Inc. for 18 years in positions of
increasing responsibility. Most recently, Ms. Sabella
served as Vice President Sales, Eastern Zone. Previously, she
was Executive Director, Marketing in Boehringers
Respiratory Medicine area, a key therapeutic franchise with
several products including
Atrovent®,
Combivent®,
and
Spiriva®
indicated for the treatment of COPD. Ms. Sabella holds a
B.B.A from Hofstra University.
15
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The following summary compensation table sets forth summary
information as to compensation earned by our Chief Executive
Officer, our four other most highly compensated executive
officers who were employed by us as of December 31, 2005
and earned more than $100,000 in salary and bonus for the year
ended December 31, 2005, and one additional executive
officer who was not employed by us as of December 31, 2005
but who earned more than $100,000 in salary and bonus for the
year ended December 31, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards
|
|
Payouts
|
|
|
|
|
|
|
Annual Compensation
|
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
Restricted
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
|
|
Annual
|
|
Stock
|
|
Options/
|
|
LTIP
|
|
All Other
|
Name and Principal
Position
|
|
Year
|
|
Salary
|
|
Bonus
|
|
Compensation
|
|
Awards
|
|
SARs (#)
|
|
Payouts
|
|
Compensation
|
|
Sheldon Berkle
|
|
|
2005
|
|
|
$
|
244,615
|
|
|
$
|
253,500
|
|
|
|
|
|
|
|
|
|
|
|
593,109
|
|
|
|
|
|
|
$
|
10,245
|
(2)
|
President and
|
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Executive Officer(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Don G. Burstyn,
|
|
|
2005
|
|
|
$
|
256,875
|
|
|
$
|
43,669
|
|
|
|
|
|
|
|
|
|
|
|
15,263
|
|
|
|
|
|
|
$
|
10,860
|
(4)
|
Ph.D., Vice President,
|
|
|
2004
|
|
|
$
|
120,192
|
|
|
$
|
25,000
|
|
|
|
|
|
|
|
|
|
|
|
159,180
|
|
|
|
|
|
|
$
|
966
|
(4)
|
Regulatory Affairs and Quality
Assurance(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Robert Gallotto,
|
|
|
2005
|
|
|
$
|
210,000
|
|
|
$
|
42,000
|
|
|
|
|
|
|
|
|
|
|
|
27,890
|
|
|
|
|
|
|
$
|
10,729
|
(5)
|
Vice President,
|
|
|
2004
|
|
|
$
|
200,325
|
|
|
$
|
38,000
|
|
|
|
|
|
|
|
|
|
|
|
47,973
|
|
|
|
|
|
|
$
|
10,904
|
(5)
|
Strategic Planning and Alliance
Management
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jonathan I. Lieber
|
|
|
2005
|
|
|
$
|
206,000
|
|
|
$
|
41,200
|
|
|
|
|
|
|
|
|
|
|
|
26,480
|
|
|
|
|
|
|
$
|
10,734
|
(6)
|
Vice President,
|
|
|
2004
|
|
|
$
|
198,430
|
|
|
$
|
38,000
|
|
|
|
|
|
|
|
|
|
|
|
32,708
|
|
|
|
|
|
|
$
|
11,089
|
(6)
|
Chief Financial Officer and
Treasurer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Alexey L. Margolin, Ph.D.,
|
|
|
2005
|
|
|
$
|
271,282
|
|
|
$
|
48,831
|
|
|
|
|
|
|
|
|
|
|
|
26,954
|
|
|
|
|
|
|
$
|
10,859
|
(7)
|
Senior Vice President
|
|
|
2004
|
|
|
$
|
269,585
|
|
|
$
|
52,000
|
|
|
|
|
|
|
|
|
|
|
|
45,792
|
|
|
|
|
|
|
$
|
11,140
|
(7)
|
of Research and Pre-clinical
Development and Chief Scientific Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Martin D. Williams
|
|
|
2005
|
|
|
$
|
263,039
|
|
|
$
|
30,000
|
|
|
|
|
|
|
|
|
|
|
|
141,735
|
|
|
|
|
|
|
$
|
10,755
|
(9)
|
Former Vice President and
|
|
|
2004
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Head of Corporate Development(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Mr. Sheldon Berkle was appointed our President and Chief
Executive Officer in May 2005. |
|
(2) |
|
Represents $9,450 in matching contributions under our 401(k)
plan and $795 in life insurance premiums in 2005. |
|
(3) |
|
Dr. Burstyn joined the company in July 2004. |
|
(4) |
|
Represents $966 in life insurance premiums in 2004 and $9,450 in
matching contributions under our 401(k) plan and $1,410 in life
insurance premiums in 2005. |
|
(5) |
|
Represents $9,225 in matching contributions under our 401(k)
plan and $1,679 in life insurance premiums in 2004 and $9,450 in
matching contributions under our 401(k) plan and $1,279 in life
insurance premiums in 2005. |
|
(6) |
|
Represents $9,225 in matching contributions under our 401(k)
plan and $1,864 in life insurance premiums in 2004 and $9,450 in
matching contributions under our 401(k) plan and $1,284 in life
insurance premiums in 2005. |
|
(7) |
|
Represents $9,225 in matching contributions under our 401(k)
plan and $1,915 in life insurance premiums in 2004 and $9,450 in
matching contributions under our 401(k) plan and $1,409 in life
insurance premiums in 2005. |
16
|
|
|
(8) |
|
Mr. Williams was employed by us from January 2005 through
December 2005. |
|
(9) |
|
Represents $9,450 in matching contributions under our 401(k)
plan and $1,305 in life insurance premiums. |
Option
Grants in Our Last Fiscal Year
The following table shows information regarding stock options
granted to the executive officers named in the summary
compensation table above during our fiscal year ended
December 31, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Individual Grants
|
|
Potential Realizable
|
|
|
|
Number of
|
|
|
% of Total
|
|
|
|
|
|
|
|
Value at Assumed
|
|
|
|
Securities
|
|
|
Options/SARs
|
|
|
Exercise
|
|
|
|
|
Annual Rates of
|
|
|
|
Underlying
|
|
|
Granted to
|
|
|
or Base
|
|
|
|
|
Stock Price Appreciation
|
|
|
|
Options/SARs
|
|
|
Employees in
|
|
|
Price
|
|
|
Expiration
|
|
for Option Term(2)
|
|
Name
|
|
Granted (#)(1)
|
|
|
Fiscal Year
|
|
|
($/Share)
|
|
|
Date
|
|
5%
|
|
|
10%
|
|
|
Sheldon Berkle
|
|
|
566,943
|
|
|
|
37.5
|
%
|
|
$
|
3.92
|
|
|
May 8, 2015
|
|
$
|
11,629,940
|
|
|
$
|
19,835,145
|
|
Don G. Burstyn
|
|
|
17,444
|
|
|
|
1.2
|
%
|
|
$
|
3.92
|
|
|
January 26, 2015
|
|
$
|
357,836
|
|
|
$
|
610,298
|
|
Robert Gallotto
|
|
|
37,069
|
|
|
|
2.5
|
%
|
|
$
|
3.92
|
|
|
January 26, 2015
|
|
$
|
760,412
|
|
|
$
|
1,296,901
|
|
Jonathan I. Lieber
|
|
|
21,805
|
|
|
|
1.4
|
%
|
|
$
|
3.92
|
|
|
January 26, 2015
|
|
$
|
447,295
|
|
|
$
|
762,873
|
|
Alexey L.
Margolin, Ph.D.
|
|
|
34,889
|
|
|
|
2.3
|
%
|
|
$
|
3.92
|
|
|
January 26, 2015
|
|
$
|
715,693
|
|
|
$
|
1,220,631
|
|
Martin D. Williams(3)
|
|
|
141,735
|
|
|
|
9.4
|
%
|
|
$
|
3.92
|
|
|
January 4, 2015
|
|
$
|
2,907,470
|
|
|
$
|
4,958,760
|
|
|
|
|
(1) |
|
The options were granted pursuant to our 2002 Employee, Director
and Consultant Stock Plan, which was amended and restated upon
the completion of our initial public offering on
January 26, 2006. Other than the options granted to Sheldon
Berkle, the options granted to the above named executive
officers are immediately exercisable for restricted stock,
subject to a repurchase right. The options vest or alternatively
the repurchase rights on any restricted stock lapse quarterly
over a four-year period from the date of grant. The type and
vesting schedule of Mr. Berkles options is included
in the description of his employment agreement below. |
|
(2) |
|
Options were granted with an exercise price per share equal to
the fair market value of our common stock on the date of grant,
as determined by our board of directors. The potential
realizable value is based on the assumption that our common
stock appreciates at the annual rate shown, compounded annually,
from the date of grant until the expiration of the ten-year term
of the option. These numbers are calculated based on SEC
requirements and do not reflect projections or estimates of
future stock price growth. Potential realizable values are
computed by: |
|
|
|
|
|
multiplying the number of shares of common stock underlying each
option by $15.00 per share, which was our initial public
offering price per share; |
|
|
|
assuming that the total stock value derived from that
calculation compounds at the annual 5% or 10% rate shown in the
table for the entire ten-year term of the option; and |
|
|
|
subtracting from that result the total option exercise price. |
|
|
|
|
|
Actual gains, if any, on stock option exercises will be
dependent on the future performance of the common stock. The
percentage of total options granted is based on an aggregate of
1,512,428 options granted by us to our employees in 2005,
including the executive officers listed in the table above. |
|
|
|
(3) |
|
At December 31, 2005, Mr. Williams was no longer
employed by us. As a result, 115,161 of his unvested options
were cancelled in December 2005 and 26,574 vested options remain
exercisable until September 30, 2006. |
17
Aggregated
Option Exercises in Last Fiscal Year and Fiscal Year-End Option
Values
The following table shows information regarding exercises of
options to purchase our common stock by each executive officer
named in the Summary Compensation Table during the fiscal year
ended December 31, 2005. The table also shows the aggregate
value of options held by each executive officer named in the
Summary Compensation Table as of December 31, 2005. Because
there was no public trading market for our common stock as of
December 31, 2005, the value realized upon the exercise of
options and the value of the unexercised
in-the-money
options at year-end have been calculated using our initial
public offering price of $15.00 per share minus the
applicable per share exercise price.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
|
|
|
Number of Securities
Underlying
|
|
|
Value of the Unexercised
|
|
|
|
Acquired
|
|
|
|
|
|
Unexercised Options
|
|
|
In-the-Money Options
|
|
|
|
on
|
|
|
Value
|
|
|
at Fiscal Year-End
|
|
|
at Fiscal Year-End
|
|
Name
|
|
Exercise
|
|
|
Realized(1)
|
|
|
Exercisable(2)
|
|
|
Unexercisable
|
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Sheldon Berkle
|
|
|
|
|
|
$
|
|
|
|
|
490,434
|
|
|
|
76,509
|
|
|
$
|
5,434,000
|
|
|
$
|
847,720
|
|
Don G. Burstyn
|
|
|
|
|
|
$
|
|
|
|
|
159,180
|
|
|
|
|
|
|
$
|
1,763,714
|
|
|
|
|
|
Robert Gallotto
|
|
|
|
|
|
$
|
|
|
|
|
141,735
|
|
|
|
|
|
|
$
|
1,519,398
|
|
|
|
|
|
Jonathan I. Lieber
|
|
|
|
|
|
$
|
|
|
|
|
185,346
|
|
|
|
|
|
|
$
|
2,053,634
|
|
|
|
|
|
Alexey L.
Margolin, Ph.D.
|
|
|
13,083
|
|
|
$
|
45,006
|
|
|
|
195,158
|
|
|
|
|
|
|
$
|
2,107,892
|
|
|
|
|
|
Martin D. Williams
|
|
|
|
|
|
$
|
|
|
|
|
26,574
|
|
|
|
|
|
|
$
|
294,440
|
|
|
|
|
|
|
|
|
(1) |
|
Amounts shown in this column do not necessarily represent actual
value realized from the sale of the shares acquired upon
exercise of the option because in many cases the shares are not
sold on exercise but continue to be held by the executive
officer exercising the option. The amounts shown represent the
difference between the option exercise price and the market
price on the date of exercise, which is the amount that would
have been realized if the shares had been sold immediately upon
exercise. |
|
(2) |
|
All of these options may be exercised immediately for shares of
restricted stock, which are subject to a repurchase right by us
that lapses on the same vesting schedule as the options. |
Equity
Compensation Plans
The following table provides certain aggregate information with
respect to all of the Companys equity compensation plans
in effect as of December 31, 2005.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(c)
|
|
|
|
|
|
|
|
|
|
Number of Securities
|
|
|
|
|
|
|
|
|
|
Remaining Available
|
|
|
|
(a)
|
|
|
(b)
|
|
|
for Future Issuance
|
|
|
|
Number of Securities to
|
|
|
Weighted-Average
|
|
|
Under Equity
|
|
|
|
be Issued Upon Exercise of
|
|
|
Exercise Price of
|
|
|
Compensation Plans
|
|
|
|
Outstanding Options,
|
|
|
Outstanding Options,
|
|
|
(Excluding Securities
|
|
Plan Category
|
|
Warrants and Rights
|
|
|
Warrants and Rights
|
|
|
Reflected in
Column(a))
|
|
|
Equity compensation plans approved
by security holders(1)
|
|
|
3,056,795
|
|
|
$
|
4.27
|
|
|
|
1,497,030
|
|
Equity compensation plans not
approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
3,056,795
|
|
|
$
|
4.27
|
|
|
|
1,497,030
|
|
|
|
|
(1) |
|
These plans consist of our 1993 Stock Option Plan and our
Amended and Restated 2002 Employee, Director and Consultant
Stock Plan. |
Employment
Contracts, Termination of Employment and
Change-in-Control
Arrangements
Sheldon Berkle. We entered into an employment
agreement with Sheldon Berkle, our President, Chief Executive
Officer and a director in May 2005. Pursuant to the agreement,
Mr. Berkle receives an annualized base salary of $400,000
and has an opportunity to earn an annual performance bonus of up
to 50% of his salary, based on achievement of a series of
personal and corporate objectives that our board of directors
and
18
Mr. Berkle define annually. Mr. Berkle also received a
signing bonus of $153,500. Such bonus replaced a loan from us to
Mr. Berkle in the amount of $150,000 at the commencement of
his employment, which loan was repaid prior to the filing of the
registration statement relating to our initial public offering.
He will be required to repay $75,000 of the bonus amount in the
event that he voluntarily terminates his employment or is
terminated for cause before May 9, 2007, less the amount of
taxes he incurred in connection with his receipt of such portion
of the bonus. Pursuant to the employment agreement, Mr. Berkle
will be entitled to 12 months severance at a rate
equal to his then-current base salary in the event that we
terminate his employment without cause or he resigns for good
reason, or if he resigns for good reason within six months after
a change in control, as defined in our 2002 Stock Plan. We have
agreed, in these circumstances, to assume payments under
Mr. Berkles house and automobile leases in the Boston
area for the
12-month
severance period, or, if shorter, until the expiration of the
respective terms of the leases, up to an aggregate of $25,000.
Upon appointment as our President and Chief Executive Officer,
Mr. Berkle received options to purchase 566,943 shares
of our common stock at an exercise price of $3.92 per
share. One quarter of the options vested on the first
anniversary of his employment, with the balance vesting monthly
for three additional years. Of the 566,943 options, options to
purchase 490,434 shares are immediately exercisable for
shares of restricted stock, which are subject to a repurchase
right by us that lapses based on the same vesting schedule as
the options.
Acceleration of Vesting of Stock Options Upon a Change of
Control. Pursuant to our 2002 Stock Plan, in the
event a merger or other reorganization event also constitutes a
change of control, all options issued to directors, whether or
not employees, shall become exercisable in full immediately
prior to such event.
Pursuant to the stock option agreements with our executive
officers, in the event that within one year after the date of a
change in control, as defined in our 2002 Stock Plan,
|
|
|
|
|
the executive officer is terminated for any reason other than
cause, as defined in our 2002 Stock Plan, or
|
|
|
|
the executive officer, as a condition to his or her remaining an
employee, is required to relocate at least 50 miles from
his or her current location of employment, or
|
|
|
|
there occurs a material adverse change in the executive
officers duties, authority or responsibilities which
causes his or her position with us to become of significantly
less responsibility or authority than his or her position was
immediately prior to the change in control, or
|
|
|
|
there occurs a material reduction in the executive
officers base salary from the base salary received
immediately prior to the change in control,
|
the executive officers options will be fully vested and
immediately exercisable as of the date of his or her last day of
employment, unless the options have otherwise expired or been
terminated pursuant to their terms or the terms of our 2002
Stock Plan.
REPORT OF
COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
This report is submitted by the Compensation Committee, which is
responsible for establishing and administering our executive
compensation policies and stock option plans. In 2005, this
committee was composed of Messrs. Aldrich and Hen, and
Drs. Navia and Root, none of whom is an employee of ours.
As noted above, Mr. Aldrichs term as a director will
expire at the 2006 Annual Meeting. This report addresses the
compensation policies for fiscal year 2005 as they affected
Sheldon Berkle, in his capacity as President and Chief Executive
Officer, and our other executive officers.
General
Policies
Under the supervision of the Committee, we have developed and
implemented compensation policies, plans and programs which
(i) provide a total compensation package which is intended
to be competitive within the industry so as to enable us to
attract and retain high-caliber executive personnel, and
(ii) seek to align the
19
financial interests of our employees with those of our
stockholders by relying heavily on long-term incentive
compensation that is tied to performance.
The primary components of executive compensation include base
salary, an annual bonus opportunity and long-term equity
incentives in the form of stock options. We rely on annual cash
incentives and stock options to motivate our executive officers
and other employees. This allows us to retain cash for research
and development projects. All of our executive officers named in
the Summary Compensation Table on page 16 receive
equity-based compensation awards under our 2002 Stock Plan as
part of their compensation. The equity compensation granted to
Mr. Berkle and to our other executive officers is
determined by the Committee. Equity-based compensation awards
granted by the Committee take into account each executive
officers scope of responsibility and specific assignments,
strategic and operational goals applicable to the executive
officer, anticipated actual performance levels and contributions
of the officer towards reaching those performance levels, and
competitive market data for similar positions at biotechnology
companies of similar size and stage of development. The
Committee assigns no specific weight to any of the foregoing
factors when making determinations as to the size of stock
option grants.
The executive officers are also eligible to earn an annual cash
bonus, the amount of which is based upon (i) the position
level of the executive officer, (ii) the achievement of
corporate objectives, and (iii) the attainment of specific
individual non-financial performance objectives.
With respect to each executive officer other than the Chief
Executive Officer, the Committee meets annually with the Chief
Executive Officer to review the officers performance over
the prior year, based upon achievement of strategic and
operational performance goals applicable to the responsibilities
of the particular officer. For example, review of the
performance of principal scientific officers would include our
progress made with respect to the clinical and pre-clinical
development of our various product candidates; and review of the
performance of the Chief Financial Officer would include
efficiencies achieved in financial operations and use and
management of corporate funds. With respect to the Chief
Executive Officer, the Committee meets annually to review his
performance over the preceding year, based upon achievement of
strategic and operational performance goals applicable to the
entire company, including progress in clinical and pre-clinical
development of product candidates, business development
objectives including collaborations and licensing agreements and
financial objectives. In addition, grants to either the Chief
Executive Officer or the other executive officers may be made
periodically throughout the year by the Committee in the event
of achievement of other corporate goals and objectives, based on
criteria determined by the Committee as circumstances warrant.
The Committee believes that executive compensation should be
sufficient to attract and retain persons of exceptional quality
and to provide effective incentives to motivate and reward
executives for achieving the strategic, financial and scientific
goals essential to our long-term success and growth in
stockholder value. To this end, the Committee assesses executive
compensation by applying the following key principles: that
executive compensation should depend upon the Companys
performance and individual performance; that the interests of
executives should be closely aligned with those of stockholders
through equity-based compensation; and that compensation should
be appropriate and fair in comparison to the compensation
provided to executives within the biotechnology industry and by
other companies of our size and complexity.
Compensation
of Chief Executive Officer
The Committee has reviewed all components of
Mr. Berkles compensation, including salary, annual
cash incentives and long-term incentive compensation,
accumulated realized and unrealized stock option gains, the
dollar value to Mr. Berkle and cost to us of all perquisites and
other personal benefits, and potential severance and
change-in-control
scenarios. In 2005, Mr. Berkle received salary, cash bonus
and stock options. Based on this review, the Committee found
Mr. Berkles total compensation in the aggregate to be
reasonable and not excessive.
It should be noted that when the Committee considers any
component of the Chief Executive Officers total
compensation, the aggregate amounts and mix of all the
components, including accumulated (realized
20
and unrealized) option gains are taken into consideration in the
Committees decisions. In addition, it is the
Committees policy to make most compensation decisions in a
two-step process, as described below.
Our
Committee Meetings
At the first Committee meeting during the year, the Chief
Executive Officer and other executive officers proposed
compensation is presented, reviewed and analyzed in the context
of all the components of their total compensation. Members then
have additional time between meetings to ask for additional
information and to raise and discuss further questions. The
discussion is continued at a second Committee meeting, after
which a vote is taken.
Other
Section 162(m) of the Internal Revenue Code of 1986, as
amended (the Code), disallows a tax deduction to
public companies for certain compensation in excess of
$1 million paid to each of the Companys President and
Chief Executive Officer and its other most highly compensated
executive officers. The Company does not believe that
Section 162(m) will generally have an effect on the Company
because of the current and anticipated compensation levels of
its executive officers, including the President and Chief
Executive Officer. However, the Compensation Committee intends
to periodically review the potential consequences of
Section 162(m) and may structure the annual cash incentive
awards under the Companys annual incentive plan to comply
with certain exemptions available under Section 162(m) for
certain performance-based compensation.
Members of the Altus Pharmaceuticals Inc.
Compensation Committee
Jonathan D. Root, M.D.
Richard H. Aldrich
Stewart Hen
Manuel A. Navia, Ph.D.
REPORT OF
AUDIT COMMITTEE
The Audit Committee of the Board of Directors has furnished the
following report:
The Audit Committee assists the Board in overseeing and
monitoring the integrity of our financial reporting process,
compliance with legal and regulatory requirements and the
quality of internal and external audit processes. This
committees role and responsibilities are set forth in a
charter adopted by the Board, which is available on our website
at www.altus.com. This committee reviews and reassesses
our charter annually and recommends any changes to the Board for
approval. The Audit Committee is responsible for overseeing our
overall financial reporting process, and for the appointment,
compensation, retention, and oversight of the work of
Deloitte & Touche LLP. In fulfilling its
responsibilities for the financial statements for fiscal year
2005, the Audit Committee took the following actions:
|
|
|
|
|
Reviewed and discussed the audited financial statements for the
fiscal year ended 2005 with management and Deloitte &
Touche LLP, our independent registered public accounting firm;
|
|
|
|
Discussed with Deloitte & Touche LLP the matters
required to be discussed by the Public Company Accounting
Oversight Board (United States) Statement on Accounting
Standards (SAS) No. 61 (Communications
with Audit Committees) as amended by SAS 89 and SAS 90,
and
Rule 2-07
of
Regulation S-X; and
|
|
|
|
Received written disclosures and the letter from
Deloitte & Touche LLP regarding its independence as
required by Independence Standards Board Standard No. 1.
The Audit Committee further discussed with Deloitte &
Touche LLP the Audit Committees independence. The Audit
Committee also considered the status of pending litigation,
taxation matters and other areas of oversight relating to the
financial reporting and audit process that the committee
determined appropriate.
|
21
Based on the Audit Committees review of the audited
financial statements and discussions with management and
Deloitte & Touche LLP, the Audit Committee recommended
to the Board that the audited financial statements be included
in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2005 for filing with
the SEC.
Members of the Altus Pharmaceuticals Inc.
Audit Committee
Michael S. Wyzga
John P. Richard
Harry H. Penner, Jr.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Our records reflect that all reports required to be filed to
date pursuant to Section 16(a) of the Exchange Act have
been filed on a timely basis.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The following is a description of transactions that we entered
into with our executive officers, directors or 5% stockholders
since January 1, 2003. We believe that all of the
transactions described below were made on terms no less
favorable to us than could have been obtained from unaffiliated
third parties. All future related party transactions will be
approved by our audit committee.
Sales of
Securities
On May 21, 2004, Warburg Pincus, one of our principal
stockholders, and affiliated entities, purchased
7,413,222 shares of our Series C convertible preferred
stock at a price of $4.3147358 per share and warrants to
purchase 1,630,914 shares of our Series C convertible
preferred stock at an exercise price of $4.3147358 per
share, for an aggregate purchase price of $31,986,094. These
shares and warrants to purchase Series C convertible
preferred stock were converted into 3,263,251 shares of our
common stock and warrants to purchase 717,917 shares of
common stock at the time of our initial public offering. In
addition, in connection with that conversion, accrued dividends
on the shares of Series C convertible preferred stock of
$4,889,929 were converted into 325,995 shares of our common
stock. Warburg Pincus and its affiliated entities are entitled
to designate up to two individuals to our board of directors and
we have agreed to nominate and use our reasonable efforts to
cause Warburg Pincus designees to be elected.
Messrs. Hen and Leff are managing directors of Warburg
Pincus and are the current members of our board of directors
designated by Warburg Pincus.
On May 21, 2004, U.S. Venture Partners VIII, L.P., one
of our principal stockholders, and affiliated entities,
purchased 1,907,741 shares of our Series C convertible
preferred stock at a price of $4.3147358 per share and
warrants to purchase 419,704 shares of our Series C
convertible preferred stock at an exercise price of
$4.3147358 per share, for an aggregate purchase price of
$8,231,398. These shares and warrants to purchase Series C
convertible preferred stock were converted into
839,773 shares of our common stock and warrants to purchase
184,749 shares of common stock at the time of our initial
public offering. In connection with that conversion, accrued
dividends on the shares of Series C convertible preferred
stock of $1,258,389 were converted into 83,891 shares of
our common stock. Dr. Root is a general partner of U.S.
Venture Partners and is the current member of our board of
directors designated by U.S. Venture Partners.
On May 21, 2004, Nomura International plc, one of our
principal stockholders, and affiliated entities, purchased
1,140,570 shares of our Series C convertible preferred
stock at a price of $4.3147358 per share and warrants to
purchase 250,926 shares of our Series C convertible
preferred stock at an exercise price of $4.3147358 per
share, for an aggregate purchase price of $4,921,258. These
shares and warrants to purchase Series C convertible
preferred stock were converted into 502,071 shares of our
common stock and warrants to purchase 110,455 shares of
common stock at the time of our initial public offering. In
connection with that
22
conversion, accrued dividends on the shares of Series C
convertible preferred stock of $752,346 were converted into
50,156 shares of our common stock.
The holders of the above described shares of our convertible
preferred stock and warrants to purchase shares of our
convertible preferred stock are entitled to registration rights.
See Description of Capital
Stock Registration Rights, incorporated
herein by reference to our Registration Statement on
Form S-1,
Registration
No. 333-129037.
Director
and Executive Officer Compensation
Please see Management Compensation of
Directors for a discussion of options granted and payments
made to our non-employee directors. Please see the Summary
Compensation Table and Executive
Compensation Option Grants in Our Last Fiscal
Year for additional information regarding compensation of
our executive officers.
Employment
and Consulting Agreements
We have entered into an employment agreement with
Mr. Berkle, our President and Chief Executive Officer, and
into other agreements with our executive officers. For
information regarding these agreements, please refer to the
section entitled Executive
Compensation Employment Contracts, Termination
of Employment and
Change-in-Control
Arrangements and
Management Compensation of
Directors.
PROPOSAL NO. 1 ELECTION
OF DIRECTORS
The Board of Directors has voted to nominate Harry H.
Penner, Jr., Stewart Hen, and John P. Richard for election
at the Annual Meeting for a term of three years to serve until
the 2009 Annual Meeting of Stockholders, and until their
respective successors are elected and qualified. The
Class II directors (Jonathan S. Leff and Jonathan
D. Root) and the Class III directors (Manuel A. Navia,
Sheldon Berkle, and Michael S. Wyzga) will serve until the
Annual Meetings of Stockholders to be held in 2007 and 2008,
respectively, and until their respective successors have been
elected and qualified.
Unless authority to vote for any of these nominees is withheld,
the shares represented by the enclosed proxy will be voted
FOR the election as directors of Harry H.
Penner, Jr., Stewart Hen, and John P. Richard. In the event
that either nominee becomes unable or unwilling to serve, the
shares represented by the enclosed proxy will be voted for the
election of such other person as the Board of Directors may
recommend in his or her place. We have no reason to believe that
any nominee will be unable or unwilling to serve as a director.
A plurality of the shares voted at the Meeting is required to
elect each nominee as a director.
The Board of Directors recommends the election of Harry H.
Penner, Jr., Stewart Hen, and John P. Richard as directors,
and proxies solicited by the Board will be voted in favor
thereof unless a stockholder has indicated otherwise on the
proxy.
PROPOSAL NO. 2 INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed Deloitte & Touche
LLP, independent registered public accounting firm, to audit our
financial statements for the fiscal year ending
December 31, 2006. The Board proposes that the stockholders
ratify this appointment. Deloitte & Touche LLP audited
our financial statements for the fiscal year ended
December 31, 2005. We expect that representatives of
Deloitte & Touche will be present at the meeting, will
be able to make a statement if they so desire, and will be
available to respond to appropriate questions.
23
The following table presents fees for professional audit
services rendered by Deloitte & Touche LLP for the
audit of the Companys annual financial statements for the
years ended December 31, 2005, and December 31, 2004,
and fees billed for other services rendered by
Deloitte & Touche LLP during those periods.
|
|
|
|
|
|
|
|
|
|
|
2005
|
|
|
2004
|
|
|
Audit fees:(1)
|
|
$
|
788,873
|
|
|
$
|
130,500
|
|
Audit related fees:
|
|
|
|
|
|
|
|
|
Tax fees:(2)
|
|
|
13,500
|
|
|
|
21,500
|
|
All other fees:(3)
|
|
|
2,400
|
|
|
|
15,764
|
|
Total
|
|
|
804,873
|
|
|
|
167,764
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
Audit fees consisted of audit work performed as well as work
generally only the independent auditor can reasonably be
expected to provide, including $632,213 of costs associated with
the preparation and review of our Registration Statement on
Form S-1
relating to our initial public offering. |
|
(2) |
|
Tax fees consisted principally of assistance with matters
related to tax compliance and reporting. |
|
(3) |
|
All other fees in 2005 and 2004 consisted principally of various
accounting and tax consulting work. |
Policy on
Audit Committee Pre-Approval of Audit and Permissible Non-audit
Services of Independent Auditors
Consistent with SEC policies regarding auditor independence, the
Audit Committee has responsibility for appointing, setting
compensation and overseeing the work of the independent auditor.
In recognition of this responsibility, the Audit Committee has
established a policy to pre-approve all audit and permissible
non-audit services provided by the independent auditor.
Prior to engagement of the independent auditor for the next
years audit, management will submit an aggregate estimate
of services expected to be rendered during that year for each of
four categories of services to the Audit Committee for approval.
1. Audit services include audit work performed in
the preparation of financial statements, as well as work that
generally only the independent auditor can reasonably be
expected to provide, including comfort letters, statutory
audits, and attest services and consultation regarding financial
accounting
and/or
reporting standards.
2. Audit-Related services are for assurance and
related services that are traditionally performed by the
independent auditor, including due diligence related to mergers
and acquisitions, employee benefit plan audits, and special
procedures required to meet certain regulatory requirements.
3. Tax services include all services performed by
the independent auditors tax personnel except those
services specifically related to the audit of the financial
statements, and includes fees in the areas of tax compliance,
tax planning, and tax advice.
4. Other Fees are those associated with services not
captured in the other categories. The Company generally does not
request such services from the independent auditor.
Prior to engagement, the Audit Committee pre-approves these
services by category of service. The fees are budgeted and the
Audit Committee requires the independent auditor and management
to report actual fees versus the budget periodically throughout
the year by category of service. During the year, circumstances
may arise when it may become necessary to engage the independent
auditor for additional services not contemplated in the original
pre-approval. In those instances, the Audit Committee requires
specific pre-approval before engaging the independent auditor.
The Audit Committee may delegate pre-approval authority to one
or more of its members. The member to whom such authority is
delegated must report, for informational purposes only, any
pre-approval decisions to the Audit Committee at its next
scheduled meeting.
24
In the event the stockholders do not ratify the appointment of
Deloitte & Touche LLP as our independent registered
public accounting firm, the Audit Committee will reconsider its
appointment.
The affirmative vote of a majority of the shares voted
affirmatively or negatively on the matter at the Meeting is
required to ratify the appointment of the independent registered
public accounting firm.
The Board of Directors recommends a vote to ratify the
appointment of Deloitte & Touche LLP as our independent
registered public accounting firm, and proxies solicited by the
Board will be voted in favor of such ratification unless a
stockholder indicates otherwise on the proxy.
CODE OF
CONDUCT AND ETHICS
We have adopted a code of conduct and ethics that applies to all
of our employees, including our chief executive officer and
chief financial and accounting officers. The text of the code of
conduct and ethics is posted on our website at www.altus.com
and will be made available to stockholders without charge,
upon request, in writing to the Corporate Secretary at 125
Sidney Street, Cambridge, MA 02139. Disclosure regarding any
amendments to, or waivers from, provisions of the code of
conduct and ethics that apply to our directors, principal
executive and financial officers will be included in a Current
Report on
Form 8-K
within four business days following the date of the amendment or
waiver, unless website posting of such amendments or waivers is
then permitted by the rules of The Nasdaq Stock Market, Inc.
OTHER
MATTERS
The Board of Directors knows of no other business which will be
presented to the Annual Meeting. If any other business is
properly brought before the Annual Meeting, proxies in the
enclosed form will be voted in accordance with the judgment of
the persons voting the proxies.
STOCKHOLDER
PROPOSALS AND NOMINATIONS FOR DIRECTOR
To be considered for inclusion in the proxy statement relating
to our Annual Meeting of Stockholders to be held in 2007,
stockholder proposals must be received no later than
120 days prior to the date that is one year from this
years mailing date. To be considered for presentation at
the Annual Meeting, although not included in the proxy
statement, proposals must be received no later than not less
than forty-five (45) or more than seventy-five
(75) days prior to the first anniversary of the date on
which we first mailed our proxy materials for the preceding
years annual meeting; provided, however, that in the event
that the date of the annual meeting is more than thirty
(30) days before or more than thirty (30) days after
the anniversary date of the preceding years annual
meeting, notice by the stockholder to be timely must be so
delivered not earlier than the close of business on the
ninetieth (90) day prior to such annual meeting and not
later than the close of business on the later of the sixtieth
(60th) day prior to such annual meeting or the tenth (10th) day
following the day on which we make a public announcement of the
date of such meeting.
Proposals received after that date will not be voted on at the
Annual Meeting. If a proposal is received before that date, the
proxies that management solicits for the meeting may still
exercise discretionary voting authority on the proposal under
circumstances consistent with the proxy rules of the SEC. All
stockholder proposals should be marked for the attention of the
Office of the General Counsel, Altus Pharmaceuticals Inc., 125
Sidney Street, Cambridge, MA 02139.
Our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2005 (other than
exhibits thereto) filed with the SEC, which provides additional
information about us, is available on the Internet at
www.altus.com and is available in paper form to
beneficial owners of our common stock without charge upon
written request to Investor Relations, Altus Pharmaceuticals
Inc., 125 Sidney Street, Cambridge, MA 02139.
25
APPENDIX A
ALTUS
PHARMACEUTICALS INC.
Audit Committee
Charter
PURPOSE
The Audit Committee (the Committee) shall provide
assistance to the Board of Directors of Altus Pharmaceuticals
Inc. in fulfilling its responsibilities to the Companys
shareholders relating to the accounting and reporting practices
of the Company, the quality and integrity of the financial
reports of the Company and the audit process. The Audit
Committees primary duties and responsibilities are to
oversee that management has:
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Maintained the reliability and integrity of the accounting
policies, independent audit process and financial reporting and
disclosure practices of the Company;
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Established and maintained processes to assure that an adequate
system of internal controls is functioning within the
Company; and
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Established and maintained processes to assure compliance by the
Company with all applicable laws, regulations and corporate
policy.
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DEFINED
TERMS
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Board shall mean the Board of Directors of the
Company.
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Company shall mean Altus Pharmaceuticals Inc. and
its consolidated subsidiary.
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Financially Expert shall mean a person who has prior
employment experience in finance or accounting, requisite
professional certification in accounting, or any other
comparable experience or background which results in the
development of financial sophistication, including being or
having been a chief executive officer, chief financial officer
or other senior officer with financial oversight
responsibilities.
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Financially Literate shall mean the ability to read
and understand fundamental financial statements, including a
companys balance sheet, income statement and cash flow
statement.
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Independent Auditors shall mean a public accountant
which (a) satisfies the requirements set forth by
Rule 101 of the American Institute of Certified Public
Accountants (AICPA) Professional Standards,
(b) satisfies the requirements of the Independence
Standards Board (ISB), and (c) is a
registered public accounting firm as that term is
defined by the Sarbanes-Oxley Act of 2002.
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COMPOSITION
The Committee shall be comprised of three or more directors who
shall meet the independence and audit committee composition
requirements under any rules or regulations of NASDAQ and the
Securities and Exchange Commission (the SEC), and
shall be free from any relationship that, in the opinion of the
Board, would interfere with the exercise of his or her
independent judgment as a member of the Committee. In connection
with the Companys initial public offering, membership on
the Committee may be phased-in in accordance with NASD
Marketplace Rule 4350(a)(5) and
Rule 10A-3(b)(1)(iv)(A)
of the Exchange Act.
All members of the Committee shall be financially literate. At
least one member of the Committee shall be financially expert as
defined by applicable laws, rules, and regulations or guidance
issued by NASDAQ and the SEC.
A-1
The eligibility of a Director to serve as a member of the
Committee, including a determination of financial sophistication
and independence shall be determined by the Board in its
reasonable discretion. Members of the Committee shall be elected
by the Board, or the committee thereof responsible for
nominations of directors and shall serve until their successors
shall have been duly elected and qualified, or until the earlier
of their resignation, removal or death. If not elected by the
Board, the Chair of the Committee may be designated by majority
vote of the full Committee.
MEETINGS
The Committee shall meet as frequently as circumstances warrant,
but at least four times annually (which meetings may include the
quarterly meetings described below). The Chair of the Committee
shall be responsible for leadership of the Committee, including
determining the frequency of its meetings, preparing the agenda,
presiding over the meetings and reporting for the Committee to
the Board at its next scheduled meeting following a Committee
meeting. To foster open communication between the Board and
management, the Committee should meet separately at least once
annually with management and at least once annually with the
Companys independent auditors to discuss matters that the
Committee or each of these groups believes should be discussed
privately. The Audit Committee or its Chairperson, or the
Chairpersons designee, must meet with the Companys
independent auditors and management quarterly to review the
Companys financial statements and internal controls.
Members of the Committee may participate at meetings of the
Committee by video conference, tele-conference or other
electronic means.
RESPONSIBILITIES,
DUTIES AND AUTHORITY
To fulfill its responsibilities and duties the Committee shall:
Document
Review
1. Review annually the adequacy of this Charter. The
Committee shall recommend to the Board, as conditions warrant,
that the Board amend or supplement this Charter.
2. Review with representatives of management and the
independent auditors the Companys annual earnings
announcements prior to public release and the audited annual
financial statements prior to their filing as part of the Annual
Report on
Form 10-K.
After such review and discussion, the Committee shall recommend
to the Board whether such audited financial statements should be
included in the Companys annual report on
Form 10-K.
3. Meet quarterly with representatives of management and
the independent accounting firm to review the Companys
quarterly earnings announcements prior to public release and the
interim financial statements prior to their inclusion in the
Companys quarterly reports on
Form 10-Q.
The Committee will discuss with the independent auditors any
matters required to be communicated by the independent auditors
to the Committee or its Chairperson in connection with the
independent auditors review of the interim financial
statements of the Company. The Chairperson or another member of
the Committee designated by the Chairperson shall be available
to review with management, current disclosures regarding
material changes in the financial condition or operations of the
Company.
Independent
Auditors
1. Be directly responsible for the appointment,
compensation, retention and oversight of the independent
auditors including the evaluation of the performance of the
independent auditor. The auditors shall report directly to the
Audit Committee.
2. Pre-approve the engagement of the Companys
independent auditors for all audit, audit-related and non
audit-related services in accordance with the Companys
pre-approval policy.
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3. On an annual basis, review and discuss with the
Companys independent auditors all significant
relationships the independent auditors have with the Company to
determine the independent auditors independence.
4. Oversee the independence of the Companys
independent auditors by:
a) receiving from the Companys independent auditors
on a periodic basis (at least annually) a formal written
statement delineating all relationships between the
Companys independent auditors and the Company consistent
with Independent Standards Board (ISB) Standard
No. 1 (Independence Discussions with Audit
Committees); and
b) on a periodic basis (at least annually) reviewing and
actively discussing with the Board and the Companys
independent auditors any disclosed relationships or services
between the independent auditors and the Company or any other
disclosed relationships or services that may impact the
objectivity and independence of the independent auditors.
5. On a periodic basis (prior to earnings announcements or
the filing of
forms 10-Q
and form
10-K),
discuss with management and representatives of the independent
auditors the matters required to be discussed by the Public
Company Accounting Oversight Board (United States) Statements on
Auditing Standards (SAS) No. 61
(Communications with Audit Committees) as amended by
SAS 89 and SAS 90, and
Rule 2-07
of
Regulation S-X
as it may be modified or supplemented from time to time.
Financial
Reporting Process
1. Review with management and the independent auditors at
the completion of the annual audit:
(a) the Companys annual financial statements and
related footnotes;
(b) the independent auditors audit of the financial
statements and report thereon;
(c) any significant changes required, during the course of
the audit, in the independent auditors audit plan;
(d) any material difficulties or disputes with management
encountered during the course of the audit;
(e) any material correcting adjustments that have been
identified by the independent auditors in accordance with
generally accepted accounting principles and applicable laws,
rules and regulations; and
(f) any material off-balance sheet transactions,
arrangements, obligations (including contingent obligations),
and other relationships of the Company with unconsolidated
entities or other persons, which may have a material current or
future effect on the Companys financial condition, changes
in financial condition, results of operations, liquidity,
capital expenditures, capital resources, or significant
components of revenues or expenses.
2. Inquire of management, and the independent auditors
about key financial statement risk areas, the Companys
processes for identifying and assessing such risk areas and the
steps the Company has taken with regard to such risk areas.
Also, review and evaluate the Companys processes for
identifying and assessing key financial statement risk areas and
for formulating and implementing steps to address such risk
areas.
3. Consider the independent auditors reports and
judgments brought to the attention of the Committee about the
quality and appropriateness of the Companys accounting
principles as applied in its financial reporting. Also, review
and consider information received from the independent auditors
regarding all critical accounting policies and practices used by
the Company, all alternative treatments of financial information
within generally accepted accounting principles that have been
discussed with management of the Company, ramifications of the
use of such alternative disclosures and treatments, the
treatment preferred by the
A-3
independent auditors, and other material written communications
between the independent auditors and management, including any
management letter or schedule of unadjusted differences.
4. At least once each fiscal quarter, review with
management and the independent auditors their assessments of the
effectiveness of the Companys internal control over
financial reporting (including any annual report on internal
control and related matters required in the annual report to
stockholders), the resolution of any identified material
weaknesses in such internal control over financial reporting and
the assessments of such internal control over financial
reporting to be included in filings with the SEC or other
publicly available documents. Review with management and the
independent auditors as appropriate, their assessments of the
effectiveness of the Companys disclosure controls and
procedures as of the end of each fiscal quarter.
5. Establish procedures for (a) the receipt,
retention, and treatment of complaints received by the Company
regarding accounting, internal accounting controls, or auditing
matters; and (b) the confidential, anonymous submission by
employees of the Company of concerns regarding questionable
accounting or auditing matters.
Compliance
1. To the extent deemed necessary by the Committee, it
shall have the authority to engage outside counsel
and/or
independent accounting consultants to review any matter relating
to its responsibilities.
2. Review all related party transactions for potential
conflict of interest situations on an ongoing basis and any
transactions which must be approved by the Committee (or another
independent body of the Board) to the extent required by
applicable laws, rules, regulations and by NASDAQ.
3. Review with corporate officers, and where appropriate
the independent auditors, the Companys corporate
compliance program, any significant issues noted during the
implementation of such program and any significant changes
recommended in the scope of such program. The Committee shall
review and make recommendations to the Board regarding the code
of conduct/ethics adopted or to be adopted by the Board as
required by applicable laws, rules and regulations and by NASDAQ.
4. Review with the Companys legal counsel all legal
and regulatory matters brought to the attention of the Committee
that may have a material impact on the financial statements. The
Committee shall respond appropriately to any matters reported to
it by counsel, including reporting to the Board on such matters,
and adopting, as necessary, appropriate remedial measures or
sanctions, or recommending such action to the Board.
Reports
1. Prepare, in accordance with the rules of the SEC as
modified or supplemented from time to time, a written report of
the Committee to be included in the Companys annual proxy
statement, and receive the information to be provided by the
outside auditors for inclusion in the proxy statement, including
all fees relating to their services.
2. Report Committee actions to the Board with such
recommendations as the Committee may deem appropriate.
Other
1. Conduct or authorize investigations into any matters
within the Committees scope of responsibilities.
2. Retain, at such times and on such terms as the Committee
determines in its sole discretion and at the Companys
expense, special legal, accounting or other experts or
consultants to advise and assist it in complying with its
responsibilities set forth herein. The Committee shall have the
authority to engage
A-4
independent counsel, accountants, or other experts or advisers
as it determines necessary to carry out its duties, and the
Company shall provide for appropriate funding, as determined by
the Committee, for payment of compensation to any advisers
retained by the Committee under this paragraph.
3. Perform such other functions as may be required by
applicable laws, rules and regulations and NASDAQ, the
Companys Certificate of Incorporation and Bylaws, or by
the Board
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While the Committee has the responsibilities and powers set
forth in this Charter, it is not the duty of the Committee to
plan or conduct audits or to determine that the
Corporations financial statements are complete and
accurate and are in accordance with generally accepted
accounting principles. It is the responsibility of the
Corporations management to prepare consolidated financial
statements that are complete and accurate and in accordance with
generally accepted accounting principles, and it is the
responsibility of the Corporations independent accounting
firm to audit those financial statements. The Committees
responsibility in this regard is one of oversight and review.
The Committee does not provide any expert or other special
assurance as to such financial statements concerning compliance
with laws, regulations or generally accepted accounting
principles. The Committees authority, duties and
responsibilities are discharged through evaluating reports given
to the Committee, presentations made to the Committee and other
significant financial reporting decisions reported to the
Committee by management and the independent accounting firm.
A-5
ALTUS PHARMACEUTICALS INC.
125 SIDNEY STREET
CAMBRIDGE, MASSACHUSETTS 02139
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS
THURSDAY, JULY 27, 2006
THE BOARD OF DIRECTORS OF ALTUS PHARMACEUTICALS INC.
SOLICITS THIS PROXY
The undersigned, revoking any previous proxies relating to these shares, hereby acknowledges
receipt of the Notice and Proxy Statement dated June 13, 2006 in connection with the Annual
Meeting of Stockholders to be held at 10:00 a.m., local time, on Thursday, July 27, 2006 at the
Hotel @ MIT, 20 Sidney Street, Cambridge, MA 02139 and hereby appoints Sheldon Berkle and Jonathan
I. Lieber, and each of them (with full power to act alone), the attorneys and proxies of the
undersigned, with power of substitution to each, to vote all shares of the Common Stock of Altus
Pharmaceuticals Inc. registered in the name provided in this Proxy which the undersigned is
entitled to vote at the 2006 Annual Meeting of Stockholders, and at any adjournments of the
meeting, with all the powers the undersigned would have if personally present at the meeting.
Without limiting the general authorization given by this Proxy, the proxies are, and each of them
is, instructed to vote or act as follows on the proposals set forth in the Proxy.
This Proxy when executed will be voted in the manner directed herein. If no direction is made this
Proxy will be voted FOR the election of the directors and FOR the ratification of the selection of
Deloitte & Touche LLP as independent registered public accounting firm for the fiscal year ending
December 31, 2006.
In their discretion the proxies are authorized to vote upon such other matters as may properly come
before the meeting or any adjournments of the meeting.
If you wish to vote in accordance with the Board of Directors recommendations, just sign on the
reverse side. You need not mark any boxes.
1. Election of Class I Directors (or if the nominees are not available for election, such
substitutes as the Board of Directors may designate):
Proposal to elect Harry H. Penner, Jr., Stewart Hen, and John P. Richard as Class I Directors of
the Company.
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o FOR ALL
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o FOR ALL EXCEPT:
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o WITHHOLD VOTE |
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Please mark votes as in this example. |
The Board of Directors recommends a vote FOR Proposal 1.
2. Ratification of the selection of independent auditors for our fiscal year ending December 31,
2006.
Proposal to ratify the selection of Deloitte & Touche LLP as independent auditors for our fiscal
year ending December 31, 2006.
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o FOR
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o AGAINST
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o WITHHOLD VOTE |
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Please mark votes as in this example. |
The Board of Directors recommends a vote FOR Proposal 2.
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as
attorney, executor, administrator, trustee or guardian, please give full title as such.
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Signature:
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Signature:
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PLEASE CAST YOUR VOTE AS SOON AS POSSIBLE!