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