SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, for Use of the Commission Only (as permitted by
rule 14a-6(c)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to e 240.14a-11(c) or c 240.14a-12
BioCryst Pharmaceuticals, Inc.
------------------------------
(Name of Registrant as Specified In Its charter)
Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined);
4) Proposed maximum aggregate value of transaction:
5) total fee paid:
|_| Fee paid previously with preliminary materials.
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
BIOCRYST PHARMACEUTICALS, INC.
2190 Parkway Lake Drive
Birmingham, AL 35244
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD
MAY 12, 1999
To the Stockholders:
Notice is hereby given that the Annual Meeting of Stockholders (the "Meeting")
of BioCryst Pharmaceuticals, Inc., a Delaware corporation (the "Company"), will
be held at The Harbert Center, 2019 Fourth Avenue North, Birmingham, Alabama on
Wednesday, May 12, 1999 at 3:00 p.m., Central Daylight Time, for the following
purposes:
1. To elect two (2) directors to serve for a term of three years and until their
successors are duly elected and shall be qualified.
2. To increase the number of shares available for issuance under the 1991 Stock
Option Plan by 400,000 shares to 3,400,000 shares.
3. To transact such other business as may properly come before the Meeting or
any adjournment thereof.
The Board of Directors has fixed the close of business on March 15, 1998 as the
record date for the determination of stockholders entitled to receive notice of
and to vote at the Meeting or any adjournment thereof. The Meeting may be
adjourned from time to time without notice other than announcement at the
Meeting, and any business for which notice of the Meeting is hereby given may be
transacted at any such adjournment. A list of the stockholders entitled to vote
at the Meeting will be open to examination by any stockholder, for any purpose
germane to the Meeting, during ordinary business hours, for a period of at least
ten (10) days prior to the Meeting at the principal executive offices of the
Company in Birmingham, Alabama.
A copy of the Company's Annual Report for the year ended December 31, 1998 is
enclosed, but is not deemed to be part of the official proxy soliciting
materials. Stockholders failing to receive a copy of the Annual Report may
obtain one by writing to the Secretary of the Company at the address stated
above.
Your attention is directed to the accompanying Proxy and Proxy Statement.
BY ORDER OF THE BOARD OF DIRECTORS
John A. Montgomery, Ph.D., Secretary
Birmingham, Alabama
April 2, 1999
ALL STOCKHOLDERS ARE INVITED TO ATTEND THE MEETING IN PERSON. WHETHER OR NOT YOU
PLAN TO ATTEND THE MEETING, PLEASE PROMPTLY DATE, SIGN AND RETURN THE ENCLOSED
PROXY. A POSTAGE PREPAID ENVELOPE IS PROVIDED FOR MAILING. A PERSON GIVING A
PROXY HAS THE POWER TO REVOKE IT. IF YOU ATTEND THE MEETING, YOUR PROXY WILL NOT
BE COUNTED WITH RESPECT TO ANY MATTER UPON WHICH YOU VOTE IN PERSON.
BIOCRYST PHARMACEUTICALS, INC.
2190 Parkway Lake Drive
Birmingham, AL 35244
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of proxies
by the Board of Directors (the "Board") of BioCryst Pharmaceuticals, Inc. (the
"Company") for the Annual Meeting of Stockholders of the Company to be held at
The Harbert Center, 2019 Fourth Avenue North, Birmingham, Alabama on Wednesday,
May 12, 1999 at 3:00 p.m., Central Daylight Time, and any adjournment thereof
(the "Meeting") and for the purposes set forth in the accompanying Notice of
Annual Meeting of Stockholders.
Any proxy given pursuant to this solicitation may be revoked by the person
giving it at any time prior to the voting thereof, by giving written notice to
the Company or by voting in person at the Meeting. All valid, unrevoked proxies
will be voted as directed. In the absence of any contrary directions, proxies
received by the Board will be voted FOR the election of all nominees for
director of the Company, FOR the proposal to increase the number of shares
available for issuance under the Company's 1991 Stock Option Plan and, with
respect to such other matters as may properly come before the Meeting, in the
discretion of the appointed proxies.
Only holders of record of the Company's common stock (the "Common Stock") as of
the close of business on March 15, 1999 (the "Stockholders") will be entitled to
notice of and to vote at the Meeting. At March 15, 1999, there were 14,987,032
shares of Common Stock outstanding. Each share of Common Stock is entitled to
one vote on all matters on which Stockholders may vote. There is no cumulative
voting in the election of directors. The presence, in person or by proxy, of a
majority of the outstanding shares of Common Stock of the Company is necessary
to constitute a quorum at the Meeting. Shares of Common Stock represented by a
properly executed and returned proxy will be treated as present at the Meeting
for purposes of determining the presence of a quorum without regard to whether
the proxy is marked as casting a vote for or against or abstaining with respect
to a particular matter. In addition, shares of Common Stock represented by
"broker non-votes" (i.e., shares of Common Stock held in record name by brokers
or nominees as to which a proxy is received and (i) instructions have not been
received from the beneficial owners or persons entitled to vote, (ii) the broker
or nominee does not have discretionary power and (iii) the record holder had
indicated that it does not have authority to vote such shares on that matter)
generally will be treated as present for purposes of determining the presence of
a quorum but as described below, such broker non-votes will not have any effect
upon the election of directors at the Meeting.
The affirmative vote of the holders of a plurality of the outstanding shares of
Common Stock of the Company present in person or represented by proxy at the
Meeting is necessary to elect the nominees for directors named in the Proxy
Statement. Accordingly, abstentions and broker non-votes with respect to the
election of directors will have no effect upon the election of directors at the
Meeting. The affirmative vote of the holders of a majority of the outstanding
shares of Common Stock of the Company present in person or represented by proxy
at the Meeting is necessary to increase the number of shares available for
issuance under the 1991 Stock Option Plan as described in the Proxy Statement.
Accordingly, abstentions and broker non-votes with respect to the proposal to
increase the number of shares available for issuance under the 1991 Stock Option
Plan will have the same effect as a vote against the proposal to amend the 1991
Stock Option Plan.
The proxy solicitation is being made primarily by mail, although proxies may be
solicited by personal interview, telephone, telegraph or letter. The Company
will pay the cost of this solicitation, including the reasonable charges and
expenses of brokerage firms and others who forward solicitation materials to
beneficial owners of the Common Stock. This Proxy Statement and the accompanying
form of proxy card are first being mailed to Stockholders on or about April 2,
1999.
1. ELECTION OF DIRECTORS
The Composite Certificate of Incorporation of the Company provides that the
number of directors shall be determined by resolution of the Board but shall
consist of not less than six (6) nor more than twelve (12) members.
1
The term of Dr. Lindsay A. Rosenwald, a director since 1991, expires in 1999,
and Dr. Rosenwald has declined to stand for reelection. The Board has by
resolution established the number of directors of the Company at nine (9). It is
proposed to elect two (2) directors to serve until the annual meeting of
stockholders in 2002 and until their successors have been duly elected and
qualified. Proxies cannot be voted for more than two persons. It is intended
that shares represented by the Board's proxies will be voted FOR the election of
the two persons listed for terms expiring in 2002:
Served as
Director
Name Age Position(s) with the Company Since
NOMINEES FOR TERMS EXPIRING AT THE ANNUAL MEETING OF STOCKHOLDERS IN 2002
William W. Featheringill 56 Director 1995
Joseph H. Sherrill, Jr. 58 Director 1995
The following persons shall continue to serve as Directors for the terms
indicated:
DIRECTORS WITH TERMS EXPIRING AT THE ANNUAL MEETING OF STOCKHOLDERS IN 2000
J. Claude Bennett, M.D. 65 President, Chief Operating
Officer and Director 1997
Zola P. Horovitz, Ph.D. 64 Director 1994
William M. Spencer, III 78 Director 1986
Randolph C. Steer, M.D., 49 Director 1993
Ph.D.
DIRECTORS WITH TERMS EXPIRING AT THE ANNUAL MEETING OF STOCKHOLDERS IN 2001
Charles E. Bugg, Ph.D. 57 Chairman, Chief Executive
Officer and Director 1993
John A. Montgomery, Ph.D. 75 Senior Vice President,
Secretary, Chief Scientific
Officer and Director 1989
Edwin A. Gee, Ph.D. 79 Director 1993
William W. Featheringill was elected a Director in May 1995. Mr. Featheringill
has served as Chairman and Chief Executive Officer, since June 1995, of
Electronic Healthcare Systems, a software company, and President, Chief
Executive Officer and director, since 1973, of Private Capital Corporation, a
venture capital management company. Mr. Featheringill was Chairman and Chief
Executive Officer of MACESS Corporation, which designs and installs paperless
data management systems for the managed care industry, from 1988 to November
1995. MACESS Corporation merged with Sungard Data Systems in late 1995. From
1985 to December 1994, Mr. Featheringill was the developer, Chairman and
President of Complete Health Services, Inc., a health maintenance organization
which grew, under his direction, to become one of the largest HMOs in the
southeastern United States. Complete Health Services, Inc. was acquired by
United HealthCare Corporation in June 1994. Mr. Featheringill is a director of
Citation Corporation.
Lindsay A. Rosenwald, M.D., has been a Director of the Company since December
1991. Dr. Rosenwald's term expires in 1999 and he has decided to not seek
reelection for another term. Dr. Rosenwald is President and Chairman of
Paramount Capital Investments, LLC, a medical venture capital and merchant
banking firm; President and Chairman of Paramount Capital, Inc., an investment
banking firm specializing in the health sciences industry; and, since 1994,
President of Paramount Capital Asset Management, Inc., a fund manager. From June
1987 to February 1992, he served in various capacities at the investment banking
firm of D. H. Blair & Co., where he ultimately became a Managing Director of
Corporate Finance and manager of their Health Care Services Group. He is
Chairman of the Board of Interneuron Pharmaceuticals, Inc., which he co-founded
in 1988, and a director of Neose Technologies, Inc., Sparta Pharmaceuticals,
Inc. and VIMrx Pharmaceuticals, Inc.
Joseph H. Sherrill, Jr., was elected a Director in May 1995. Mr. Sherrill served
as President of R. J. Reynolds ("RJR") Asia Pacific, based in Hong Kong, where
he oversaw RJR operations across Asia, including licensing, joint ventures and a
full line of operating companies from August 1989 to his retirement in October
1994. Prior management positions with RJR include Senior Vice President of
Marketing for R.J. Reynolds International,
2
President and Chief Executive Officer of R.J. Reynolds Tabacos de Brazil, and
President and General Manager of R.J. Reynolds Puerto Rico.
J. Claude Bennett, M.D., was named President and Chief Operating Officer in
December 1996 and elected a Director in January 1997. Prior to joining the
Company, Dr. Bennett was President of The University of Alabama at Birmingham
("UAB") from October 1993 to December 1996 and Professor and Chairman of the
Department of Medicine of UAB from January 1982 to October 1993. Dr. Bennett
served on the Company's Scientific Advisory Board from 1989-96. He also
continues to hold the position of Distinguished University Professor Emeritus at
UAB.
Zola P. Horovitz, Ph.D., was elected a Director in August 1994. Dr. Horovitz was
Vice President of Business Development and Planning at Bristol-Myers Squibb from
1991 until his retirement in April 1994 and previously was Vice President of
Licensing at the same company from 1990 to 1991. Prior to that he spent over 30
years with The Squibb Institute for Medical Research, most recently as Vice
President Research, Planning, & Scientific Liaison. He has been an independent
consultant in pharmaceutical sciences and business development since his
retirement from Bristol-Myers Squibb in April 1994. He serves on the Boards of
Directors of Avigen, Inc., Clinicor Inc., Diacrin, Inc., Magainin
Pharmaceuticals, Inc., Procept, Inc., Roberts Pharmaceutical Corporation and
Synaptic Pharmaceutical Corp. Dr. Horovitz is also Chairman of Magainin
Pharmaceuticals, Inc.
William M. Spencer, III, has been a Director of the Company since its inception.
Mr. Spencer, who is retired, is also a private investor in Birmingham, Alabama.
He served as Chairman of the Board of the Company from its founding in 1986
until April 1992. He co-founded and operated Motion Industries from 1946 through
its merger into Genuine Parts Company in 1976. He has founded several businesses
and has served on the Board of Directors of numerous private corporations.
Randolph C. Steer, M.D., Ph.D., was elected a Director in February 1993. Dr.
Steer has been active as a consultant to biotechnology and pharmaceutical
companies since 1989. Dr. Steer serves on the Board of Directors of Techne
Corporation.
Charles E. Bugg, Ph.D., was named Chairman of the Board, Chief Executive Officer
and Director in November 1993 and President in January 1995. Dr. Bugg
relinquished the position of President in December 1996 when Dr. Bennett joined
the Company in that position. Prior to joining the Company, Dr. Bugg had served
as the Director of the Center for Macromolecular Crystallography, Associate
Director of the Comprehensive Cancer Center and Professor of Biochemistry at UAB
since 1975. He was a Founder of the Company and served as the Company's first
Chief Executive Officer from 1987-1988 while on a sabbatical from UAB. Dr. Bugg
also served as Chairman of the Company's Scientific Advisory Board from January
1986 to November 1993. He continues to hold the position of Professor Emeritus
in Biochemistry and Molecular Genetics at UAB, a position he has held since
January 1994.
John A. Montgomery, Ph.D., has been a Director since November 1989 and has been
Secretary and Chief Scientific Officer since joining the Company in February
1990. He was Executive Vice President from February 1990 until May 1997, at
which time he was named Senior Vice President. Dr. Montgomery was a Founder of
the Company. Prior to joining the Company, Dr. Montgomery served as Senior Vice
President of Southern Research Institute ("SRI") of Birmingham from January 1981
to February 1990. He continues to hold the position of Distinguished Scientist
at SRI, a position he has held since February 1990.
Edwin A. Gee, Ph.D., was elected a Director in August 1993. Dr. Gee, who retired
in 1985 as Chairman of the Board and Chief Executive Officer of International
Paper Company, has been active as an executive in biotechnology, pharmaceutical
and specialty chemical companies since 1970. He is Chairman Emeritus and a
director of OSI Pharmaceuticals, Inc., one of the leading biotechnology
companies for the diagnosis and treatment of cancer.
Should any nominee be unable or unwilling to accept election, it is expected
that the proxies will vote for the election of such other person for the office
of director as the Board may then recommend. The Board has no reason to believe
that any of the persons named will be unable to serve or will decline to serve
if elected.
3
Committees of the Board
The Company has an Audit Committee (the "Audit Committee") consisting of Messrs.
Featheringill, Gee and Spencer, that is responsible for the review of internal
accounting controls, financial reporting and related matters. The Audit
Committee also recommends to the Board the independent accountants selected to
be the Company's auditors and reviews the audit plan, financial statements and
audit results. The Audit Committee held one meeting in 1998.
The Company has a Compensation Committee (the "Compensation Committee")
consisting of Messrs. Featheringill, Gee, Rosenwald and Spencer. The
Compensation Committee is responsible for the annual review of officer
compensation and other incentive programs and is authorized to award options
under the Company's 1991 Stock Option Plan. The Compensation Committee held one
meeting during 1998.
The Company has a Nominating Committee (the "Nominating Committee") comprised of
all outside directors with terms not expiring in the current year for which the
Nominating Committee will be nominating persons for election or re-election as
directors. The Nominating Committee held one meeting during 1998. The Nominating
Committee will consider nominees recommended in writing, including biographical
information and personal references, by stockholders to the same extent as
nominees recommended by management. Nominations for 2000 must be received by the
Nominating Committee by December 4, 1999.
During 1998, the Board held eleven (11) meetings. Each member of the Board
attended at least 75% of the meetings of the Board and of the committees of the
Board of which he is a member.
Director Compensation
Directors do not receive a fee for attending Board or committee meetings.
Outside directors are reimbursed for expenses incurred in attending Board or
committee meetings and while representing the Company in conducting certain
business. Individuals who first become non-employee Board members on or after
March 3, 1994, at the time of commencement of Board service, receive a grant of
options to purchase up to 40,000 shares (25,000 shares prior to May 15, 1997)
pursuant to the automatic option grant program under the Company's 1991 Stock
Option Plan, and, under the Company's 1991 Stock Option Plan, each non-employee
director, including those persons presently serving as directors, will receive
grants of options to purchase 40,000 additional shares of Common Stock every
four years while they continue to serve as directors. A special one-time grant
was given to those directors not scheduled to receive a periodic automatic
option grant at the conclusion of the 1997 Meeting so as to equalize the rate at
which they vest options with those directors scheduled to receive a grant at the
end of the 1997 Meeting. All current outside directors of the Company have
received options to purchase 25,000 shares of Common Stock. In May 1997, Messrs.
Featheringill and Sherrill received grants to purchase 7,500 shares and Messrs.
Horovitz, Rosenwald and Spencer received special one-time grants to purchase
3,750 shares. Options vest 25% after one year and 1/48 per month thereafter
until fully vested after four years, except that Dr. Gee's option, which was
granted prior to March 3, 1994, vested over a two-year period and the special
one-time grants vest over a two- or one-year period. Dr. Horovitz and Dr. Steer
also serve as consultants to the Company for a quarterly fee of $4,000 each.
Compensation Committee Interlocks and Insider Participation
The Compensation Committee consists of Mr. Featheringill, Dr. Gee, Dr. Rosenwald
and Mr. Spencer. There are no Compensation Committee interlocks.
4
2. Amendment to increase the number of shares available for issuance under the
1991 Stock Option Plan by 400,000 shares to 3,400,000 shares.
General
The Company's 1991 Stock Option Plan was originally adopted by the Board in
November 1991 and subsequently approved by the stockholders. Such plan was
amended and restated by the Board in February 1993, and such amendments and
restatement were approved by the stockholders on April 16, 1993. The Board
further restated such plan in its entirety on February 8, 1994 effective on such
date, subject to stockholder approval which was obtained on March 1, 1994. Also,
the Board amended such plan on August 18, 1994 and March 16, 1995, subject to
stockholder approval which was obtained on May 30, 1995. The Board further
amended the plan on March 3, 1997, subject to stockholder approval which was
obtained on May 14, 1997.
The 1991 Stock Option Plan contains two separate option grant programs: (i) a
discretionary option grant program (the "Discretionary Program"), under which
eligible individuals may, at the discretion of the administrator of the Plan,
which is now the Compensation Committee , be granted options to purchase shares
of Common Stock at an exercise price determined by the Committee at the time of
grant, and (ii) an automatic option grant program (the "Automatic Program"),
under which options to purchase shares of Common Stock at an exercise price
equal to 100% of the fair market value of the option shares (i.e., the last
reported sales price on the Nasdaq National Market) on the grant date will
automatically be granted to the non-employee members of the Board upon their
election or appointment. The options granted under the Discretionary Program may
be designated either as incentive stock options which are designed to meet the
requirements of Section 422 of the Code, or as non-statutory options. All grants
under the Automatic Program will be non-statutory options.
Up to 3,000,000 shares of Common Stock are presently authorized and reserved for
issuance under the 1991 Stock Option Plan. No individual may be granted stock
options for more than 1,000,000 shares over the remaining term of the 1991 Stock
Option Plan, excluding shares granted prior to the date that the Company was
first registered under Section 12 of the Securities and Exchange Act of 1934.
Shares will be made available for issuance under the 1991 Stock Option Plan
either from the Company's authorized but unissued Common Stock or from shares of
Common Stock reacquired by the Company, including shares purchased on the open
market. The shares of Common Stock subject to outstanding options which expire
or terminate prior to exercise may become the subject of subsequent option
grants under the 1991 Stock Option Plan. The Compensation Committee has the
authority to effect the cancellation of outstanding options under the 1991 Stock
Option Plan in return for the grant of new options for the same or a different
number of option shares. It is anticipated that the exercise price in effect
under any new option will be less than the exercise price in effect under the
canceled option.
Discretionary Program
The Discretionary Program is administered by the Compensation Committee. The
Compensation Committee has complete discretion to determine which eligible
individuals are to receive option grants under the Discretionary Program, the
number of shares subject to each such grant, the designation of the granted
option as either an incentive option or a non-statutory option, the vesting
schedule to be in effect for the option grant and the maximum term for which the
granted option is to remain outstanding. The individuals eligible to receive
option grants under the Discretionary Program are limited to key employees
(including officers and directors), independent contractors and consultants of
the Company or its parent or subsidiary corporations. Non-employee Board members
presently are only eligible to receive grants under the Automatic Program.
Under the Discretionary Program, the option price shall not be less than (i)
100% of the fair market value of the option shares on the grant date for
incentive stock options, and (ii) 85% of the fair market value of the option
shares on the grant date for non-statutory options. No option may be granted
with a term exceeding ten years; however, each such option may be subject to
earlier termination within a designated period following the optionee's
cessation of service with the Company. Options are not assignable or
transferable by the optionee except by will or the laws of inheritance following
the optionee's death. The optionee will not acquire any stockholder rights with
respect to
5
the option shares until the option is exercised and the purchase price is paid
for the shares of Common Stock. In the event the Company should be acquired,
whether by merger or asset sale (a "Corporate Transaction"), each option
outstanding at such time under the Discretionary Program will automatically
become exercisable for all of the option shares subject at that time to such
option, and may be exercised for any or all of such shares. However, an
outstanding option will not so accelerate if (i) such option is to be assumed by
the successor corporation or replaced by a comparable option to purchase shares
of the capital stock of the successor corporation or its parent, (ii) such
option is to be replaced by a comparable cash incentive program of the successor
corporation or its parent, or (iii) the acceleration of such option is subject
to other limitations imposed by the Compensation Committee or prior plan
administrator at the time of grant. Any unvested shares outstanding under the
Discretionary Program will automatically vest in full upon the effective date of
such an acquisition of the Company, unless such accelerated vesting is precluded
in whole or in part by the agreements evidencing the issuance of those unvested
shares. The Compensation Committee has the discretion to provide for the
immediate acceleration of any options assumed or replaced in the Corporate
Transaction, or the immediate vesting of any unvested shares subject to
repurchase rights that were assigned in the Corporate Transaction, upon the
subsequent termination of the optionee's service following the Corporate
Transaction.
The Compensation Committee also has full power and authority, exercisable in
connection with a hostile change in control of the Company (whether by a hostile
tender offer for more than 50% of the outstanding voting stock or a proxy
contest for the election of Board members or otherwise), to provide for the
automatic acceleration or one or more options outstanding under the
Discretionary Program so that each such option will become exercisable,
immediately prior to such change in control, for the total number of shares of
Common Stock at the time subject to such option. In addition, the Compensation
Committee may condition any such option acceleration upon the subsequent
termination of the optionee's service within a specified period following the
hostile change in control of the Company.
Stock appreciation rights may be granted in tandem with options granted under
the Discretionary Program. Such rights will allow the holders to surrender the
underlying options to the Company in return for payment, in cash or shares of
Common Stock, equal in amount to the excess of (A) the fair market value (on the
surrender date) of the number of vested shares for which the surrendered option
is at the time exercisable over (B) the aggregate exercise price payable for
such shares. Limited stock appreciation rights may also be granted to one or
more officers of the Company subject to the short-swing profit restrictions of
the Federal securities laws. In the event of a hostile takeover, each option
with such a limited stock appreciation right in effect for at least six months
may be surrendered to the Company, to the extent such option is exercisable for
vested shares, in return for a cash distribution from the Company equal to the
tender offer price per share of Common Stock at the time subject to the canceled
option, less the option exercise price for each such share.
Automatic Program
Under the Automatic Program, at present each individual who first becomes a
non-employee Board member after the date on which the Underwriting Agreement for
the initial public offering of the Company's Common Stock was executed (March 3,
1995) (the "Underwriting Execution Date"), whether through election by the
Company's stockholders or appointment by the Board, will receive, at the time of
such initial election or appointment, an automatic option grant with respect to
40,000 shares of Common Stock. Each option granted under the Automatic Program
will have an exercise price equal to 100% of the fair market value of the Common
Stock on the automatic grant date and a maximum term of 10 years, subject to
earlier termination upon the optionee's cessation of Board service. The grant
will become exercisable (i) for 25% of the option shares after one year from the
automatic grant date, and (ii) for 1/48th of the remaining option shares for
each month thereafter. However, the option will become immediately exercisable
for all of the shares at the time subject to such option in the event of an
acquisition of the Company by merger or asset sale or a hostile take-over of the
Company by tender offer for more than 50% of the outstanding voting stock or
proxy contest for Board membership.
In the event that more than 50% of the Company's outstanding voting stock were
to be acquired pursuant to a hostile tender offer, each automatic option grant
which has been outstanding for at least six months may be surrendered to the
Company, whether or not exercisable for vested shares, in return for a cash
distribution from the Company equal
6
to the tender offer price per share of Common Stock at the time subject to the
canceled option, less the option exercise price for each such share.
Other Provisions
In the event any change is made to the Common Stock issuable under the 1991
Stock Option Plan by reason of any recapitalization, stock dividend, stock
split, combination of shares, exchange of shares, or other change in corporate
structure effected without the Company's receipt of consideration, appropriate
adjustments will be made to (i) the maximum number and/or class of securities
issuable under the 1991 Stock Option Plan, (ii) the maximum number and/or class
of securities for which an individual may be granted options over the remaining
term of the 1991 Stock Option Plan, (iii) the number and/or class of securities
and price per share in effect under each outstanding option, and (iv) the number
and/or class of securities per non-employee Board member for which option grants
will subsequently be made under the Automatic Program.
The Board may amend or modify the 1991 Stock Option Plan at any time, provided
that no such amendment or modification may adversely affect the rights and
obligations of the participants with respect to their outstanding options or
unvested shares without their consent. In addition, no amendment of the 1991
Stock Option Plan may, without the approval of the Company's stockholders, (i)
materially increase the benefits accruing to participants, (ii) modify the class
of individuals eligible for participation or (iii) materially increase the
number of shares available for issuance, the number of shares for which
non-employee Board members may receive automatic option grants or the number of
shares for which any individual may be granted options over the remaining term
of the 1991 Stock Option Plan, except in the event of certain changes to the
Company's capital structure. The 1991 Stock Option Plan will terminate on
November 22, 2001, unless sooner terminated by the Board.
Description of Proposed Amendment
The Board has amended the 1991 Stock Option Plan, effective March 1, 1999 and
subject to approval by the Company's Stockholders at the Meeting, to increase
the number of shares of Company Common Stock authorized to be issued under the
1991 Stock Option Plan by 400,000 shares. The proposal would amend Section
1.V.A. of Article One of the 1991 Stock Option Plan in its entirety to read as
follows:
A. Shares of the Company's Common Stock shall be available for issuance
under the Plan and shall be drawn from either the Company's authorized but
unissued shares of Common Stock or from reacquired shares of Common Stock,
including shares repurchased by the Company on the open market. The
maximum number of shares of Common Stock which may be issued over the term
of the Plan shall not exceed 3,400,000 shares, subject to adjustment from
time to time in accordance with the provisions of this Section V. Such
authorized share reserve includes (i) the increase of 500,000 shares of
Common Stock authorized by the Board on February 8, 1994, (ii) the
increase of 500,000 shares of Common Stock authorized by the Board on
March 16, 1995, (iii) the increase of 1,000,000 shares of Common Stock
authorized by the Board on March 4, 1997 and (iv) the increase of 400,000
shares of Common Stock authorized by the Board on March 1, 1999 subject to
stockholder approval at the 1999 Annual Stockholders Meeting.
The number of shares awarded under the 1991 Stock Option Plan to the chief
executive officer and the four other most highly compensated officers of the
Company during the last fiscal year is described more fully under the caption
"Executive Compensation - Option Grants in 1998." The number of shares awarded
under the 1991 Stock Option Plan to the executive officers named in the Summary
Compensation Table, the Directors of the Company who are not executive officers
and the employees of the Company who are not executive officers during the last
fiscal year was 193,700, 120,000 and 181,700 respectively. Except as described
above under the caption "Automatic Program," non-employee Directors do not
receive option grants under the 1991 Stock Option Plan.
As of the date of this Proxy Statement, options to purchase 2,475,814 shares of
Common Stock have been granted and are outstanding under the 1991 Stock Option
Plan and 120,755 shares of Common Stock were available for future issuance under
the 1991 Stock Option Plan. The weighted average exercise price of the
outstanding options is
7
$7.62 per share.
The additional shares are needed to enable the Company to attract and retain
qualified personnel.
The Board of the Company recommends a vote FOR approval of the amendment to the
1991 Stock Option Plan.
Federal Income Tax Consequences
Recipients of incentive stock options will not realize income at the time of
grant. If an optionee does not dispose of shares purchased pursuant to the
exercise of an incentive stock option under Section 422 of the Code within two
years after the date of grant of such option or within one year after the date
such shares are transferred to him, (i) the optionee will be deemed to receive
no taxable income when the shares are transferred to him, but the amount by
which the value of the stock at the time of exercise exceeds the option price
will be an item of tax preference which may be subject to the alternative
minimum tax in the year in which the option is exercised, (ii) the Company (or
the optionee's employer corporation) can take no tax deduction as a business
expense on account of the transferred shares, and (iii) no amount other than the
option price is considered to be received by the Company for such shares. Any
gain or loss recognized upon the disposition of such shares by the optionee
after the two-year and one-year periods described above will be treated as
long-term capital gain or loss if the shares are a capital asset in his hands.
Recipients of non-statutory stock options, and recipients of incentive stock
options who disposed of shares purchased pursuant to the exercise of incentive
stock options within two years after the date of grant of such options or within
one year after the transfer of shares to the optionee, will not realize income,
nor will the Company (or the recipient's employer corporation) receive a
deduction, at the time of grant. Ordinary income will be realized by an optionee
upon exercise of a non-statutory stock option. The amount of such income will be
the difference between the option price and the fair market value of the shares
on the date of exercise. Such ordinary income will be taxed to the optionee at
the applicable individual marginal rate. The Company (or the optionee's employer
corporation) will be entitled to a deduction at the same time and in the same
amount as an optionee is considered to have realized ordinary income as
described above, subject to the condition that (i) such income constitutes
reasonable compensation for federal income tax purposes and (ii) the Company (or
the recipient's employer corporations) complies with applicable reporting
requirements with respect to the optionee under the code. When an optionee
disposes of shares acquired upon exercise of a non-statutory stock option, any
amount received in excess of the fair market value of the shares on the date of
exercise will be treated as capital gain if the shares are a capital asset in
the optionee's hands and will be long-term or short-term, depending on the
holding period of the shares. The holding period commences on the date of
exercise of the option. If the amount received on sale is less than the fair
market value on exercise, the loss will be treated as long-term or short-term
capital loss, depending upon the holding period of the shares. Special rules
apply with respect to the exercise of non-statutory stock options and the
disposition of shares so acquired by optionees who are subject to Section 16(b)
of the Securities Exchange Act of 1934.
8
EXECUTIVE COMPENSATION
The following table sets forth the annual and long-term compensation paid by the
Company during the 1998, 1997 and 1996 fiscal years to the Company's Chief
Executive Officer and each of the Company's four other most highly compensated
executive officers whose annual salary and bonus for the 1998 fiscal year
exceeded $100,000 (collectively, the "Named Executive Officers"):
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
------------------- Awards-Securities
Other Annual Underlying
Name and Principal Position Year Salary Bonus Compensation(2) Options
- --------------------------- ---- ------ ----- --------------- -------
Charles E. Bugg, Ph.D. 1998 $257,232 $50,000(1) $3,200 50,000
Chairman and 1997 244,992 50,000(1) 3,000 125,000
Chief Executive Officer 1996 212,808 50,000(1) 1,959 50,000
J. Claude Bennett 1998 229,248 0 0 45,200
President and Chief Operating 1997 220,008 0 0 35,000
Officer 1996 800 0 0 103,000
John A. Montgomery, Ph.D. 1998 156,312 0 0 22,100
Senior Vice President, Secretary 1997 150,000 0 0 37,000
and Chief Scientific Officer 1996 133,656 0 0 12,000
Ronald E. Gray 1998 123,672 0 2,473 5,500
Chief Financial Officer, Treasurer 1997 119,784 0 2,396 14,400
and Assistant Secretary 1996 109,088 0 1,959 5,400
John R. Uhrin 1998 137,500(3) 0 1,650 70,900
Vice President, Corporate 1997 0 0 0 0
Development 1996 0 0 0 0
- ----------
(1) Paid pursuant to Employment Agreements dated December 17, 1996 and
November 19, 1993 between the Company and Dr. Bugg. See "Executive
Compensation - Employment Agreements."
(2) Represents the Company contribution to the 401(k) Plan.
(3) Mr. Uhrin joined the Company in March 1998.
Employment Agreements
Charles E. Bugg, Ph.D., entered into a new three-year employment agreement with
the Company on December 17, 1996 for the years 1997, 1998 and 1999 (the "Bugg
Agreement"). Under the terms of the Bugg Agreement, Dr. Bugg will serve as
Chairman of the Board of Directors and Chief Executive Officer of the Company.
Dr. Bugg will receive annual compensation of $245,000 and a discretionary bonus
of $50,000. The Board may, in its discretion, grant other cash or stock bonuses
to Dr. Bugg as an award or incentive. Dr. Bugg is also entitled to all employee
benefits generally made available to executive officers. Dr. Bugg may, if he
desires, also hold positions at UAB, provided that he does not devote more than
ten percent of his time to such activities. The term of the Bugg Agreement is
for three years unless terminated (i) by the Company for cause or (ii) upon the
permanent disability of Dr. Bugg.
Dr. Bugg will receive, on the last day of each year during the term of the Bugg
Agreement, an additional option to
9
purchase a minimum of 25,000 shares of Common Stock of the Company under the
Company's 1991 Stock Option Plan. The exact number of shares will be determined
by the plan administrator, which is presently the Compensation Committee, based
on Dr. Bugg's performance and the results of operations of the Company during
such year. Under the Bugg Agreement and his previous employment agreement, Dr.
Bugg received an option to purchase 50,000 shares at the end of 1998, 75,000
shares of Common Stock at the end of 1997, 50,000 shares of Common Stock at the
end of 1996, 50,000 shares of Common Stock related to 1996 performance granted
in May 1997 after the 1991 Stock Option Plan was amended, 100,000 shares of
Common Stock at the end of 1995 and 1994 and 200,000 shares of Common Stock in
November 1993.
Dr. Bugg will receive an additional stock option to purchase 100,000 shares of
Common Stock under the Company's 1991 Stock Option Plan upon the Company's
submission to the FDA of any new drug application and another additional stock
option to purchase 100,000 shares of Common Stock under the Company's 1991 Stock
Option Plan upon the final approval by the FDA of each such new drug
application. The exercise price shall be the fair market value of the Company's
Common Stock on the date such additional stock option is granted. These
additional stock options will vest 25% one year after the date of issuance and
the remaining 75% will vest at the rate of 1/48 per month thereafter.
The options may be exercised immediately in the event of a merger or acquisition
of the Company. The options may be exercised within 24 months of Dr. Bugg's
death or permanent disability. In the event Dr. Bugg's employment is terminated
for cause he may exercise the options within three months of the date of such
termination to the extent such options were exercisable immediately prior to
such termination. In the event Dr. Bugg's employment is terminated for a reason
other than cause, death or permanent disability, the options then outstanding
shall become immediately exercisable in full.
All options granted to Dr. Bugg pursuant to the Bugg Agreement are intended to
qualify as incentive stock options as defined in Section 422 of the Internal
Revenue Code of 1986, as amended, except to the extent the portion of such
options which become exercisable in any year have an aggregate exercise price in
excess of $100,000. All options shall expire no later than ten years from the
date of grant.
J. Claude Bennett, M.D., entered into an employment agreement with the Company
on December 18, 1996 (the "Bennett Agreement"). Under the terms of the
Agreement, Dr. Bennett serves as President and Chief Operating Officer of the
Company. The Company also agreed to use its best efforts to cause Dr. Bennett to
be elected as a director of the Company. Dr. Bennett receives annual
compensation of $220,000. Dr. Bennett was also granted an option to purchase
100,000 shares of Common Stock of the Company. The Board may, in its discretion,
grant other cash or stock bonuses to Dr. Bennett as an award or incentive.
Options to purchase 45,200 shares of Common Stock were granted in 1998 and an
option to purchase 35,000 shares of Common Stock was granted in December 1997.
Dr. Bennett is also entitled to all employee benefits generally made available
to executive officers. Dr. Bennett may, if he desires, also hold positions at
UAB, provided that he does not devote more than ten percent of his time to such
activities. The term of the Bennett Agreement is for three years unless
terminated (i) by the Company for cause or (ii) upon the permanent disability of
Dr. Bennett.
10
Option Grants in 1998
The following table shows, with respect to the Company's Named Executive
Officers, certain information with respect to option grants in 1998. All of the
grants were made under the Company's 1991 Stock Option Plan. No stock
appreciation rights were granted during such year.
Potential Realizable
Value at Assumed
Annual Rates of
Stock Prices
Number of Appreciation for
Securities % of Option Term(1)
Underlying Total Exercise Option Term(1)
Options Options Price Per Expiration -------------
Name Granted Granted Share Date 5% 10%
---- ------- ------- ----- ---- -- ---
Charles E. Bugg, Ph.D. 50,000 10.1% $ 6.25 12/14/2008 $196,530 $498,045
J. Claude Bennett, M.D. 15,000 3.0 6.50 09/13/2008 61,317 155,390
30,200 6.1 6.25 12/14/2008 118,705 300,819
John A. Montgomery, Ph.D. 22,100 4.5 6.25 12/14/2008 86,866 220,136
Ronald E. Gray 5,500 1.1 6.25 12/14/2008 21,618 54,785
John R. Uhrin 45,000 9.1 7.75 03/01/2008 219,327 555,818
10,000 2.0 6.50 09/13/2008 40,878 103,593
15,900 3.2 6.25 12/14/2008 62,496 158,378
- ----------
(1) Amounts represent hypothetical gains that could be achieved for the
respective options at the end of the ten-year option term. The assumed 5% and
10% rates of stock appreciation are mandated by rules of the Securities and
Exchange Commission and do not represent the Company's estimate of the future
market price of the Common Stock.
Aggregate Option Exercises in 1998 and Year-end Option Values
The following table shows, with respect to the Company's Named Executive
Officers, the number and value of unexercised options held by the Named
Executive Officers as of December 31, 1998. No stock appreciation rights were
exercised during the 1998 fiscal year and no such rights were outstanding at the
end of that year.
Number of Securities
Underlying Values of Securities Underlying
Shares Unexercised Options Unexercised Options (1)
Acquired on Value ------------------- -----------------------
Name Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
---- -------- -------- ----------- ------------- ----------- -------------
Charles E. Bugg, Ph.D. 0 0 476,041 186,459 $664,375 $65,625
J. Claude Bennett, M.D. 0 0 68,812 122,388 15,375 43,275
John A. Montgomery, Ph.D. 0 0 113,750 56,850 256,750 25,950
Ronald E. Gray 0 0 71,337 20,963 122,250 7,500
John R. Uhrin 0 0 9,375 61,525 0 16,925
- ------------
(1) Amounts reflect the net values of outstanding stock options computed as the
difference between $7.00 per share (the fair market value at December 31, 1998)
and the exercise price therefor.
11
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
General
The Company's compensation program for executive officers is primarily comprised
of base salary, annual bonus (CEO only) and long-term incentives in the form of
stock option grants. Executives also participate in various other benefit plans,
including medical, dental, 401(k), life insurance, disability insurance and
vacation plans, generally available to all employees of the Company.
Compensation of executive officers of the Company was based upon individual
assessments of the amount of compensation required to attract individuals to
fill positions with the Company and motivate such individuals to focus on
achieving the objectives of the Company, but such determinations were made on an
individual basis and were not necessarily reflective of a systematic or
comprehensive survey of comparable salary levels within either the Company's
industry or the Birmingham, Alabama area. The Compensation Committee did,
however, compare salaries to those in the Biotechnology Compensation Survey
Report 1998 prepared by Radford Associates.
The Company strongly believes in tying executive and employee rewards directly
to the long-term success of the Company and increases in stockholder value
through grants of stock options. The Company also believes that the grant of
stock options should be reflective of the Company's success in meeting
objectives established for the Company by the Board and each individual
officer's ability to effect, and contribution toward meeting, such objectives.
The stock options awarded to the Company's executive officers in September 1998
and December 1998 were based on a subjective evaluation by the Compensation
Committee of the Company's achievement of objectives for 1998, including,
without limitation, signing a collaborative agreement for the Company's
influenza neuraminidase inhibitor, concluding a private placement of Common
Stock and making progress with respect to its clinical and basic research
projects, each individual officer's contribution to the Company's achievements
of its objectives and the Compensation Committee's subjective determination of
the appropriate level of stock options for persons holding the officer's
position with the Company. No specific relative weight was assigned to any of
the factors considered and, the Compensation Committee did not generally
consider the amount of options previously awarded to the executive officers in
determining the level of awards.
Chief Executive Officer
Charles E. Bugg, Ph.D., entered into a new three-year employment agreement with
the Company on December 17, 1996 for the years 1997, 1998 and 1999 (the "Bugg
Agreement"). Under the terms of the Bugg Agreement, Dr. Bugg will serve as
Chairman of the Board of Directors and Chief Executive Officer of the Company.
Dr. Bugg will receive annual compensation of $245,000 and a discretionary bonus
of $50,000. The Board may, in its discretion, grant other cash or stock bonuses
to Dr. Bugg as an award or incentive. Dr. Bugg is also entitled to all employee
benefits generally made available to executive officers. Dr. Bugg may, if he
desires, also hold positions at The University of Alabama at Birmingham,
provided that he does not devote more than ten percent of his time to such
activities. The term of the Bugg Agreement is for three years unless terminated
(i) by the Company for cause or (ii) upon the permanent disability of Dr. Bugg.
Dr. Bugg will receive, on the last day of each year during the term of the Bugg
Agreement, an additional option to purchase a minimum of 25,000 shares of Common
Stock of the Company under the Company's 1991 Stock Option Plan. The exact
number of shares will be determined by the plan administrator, which is
presently the Compensation Committee, based on Dr. Bugg's performance and the
results of operations of the Company during such year. Under the Bugg Agreement
and his previous employment agreement, Dr. Bugg received an option to purchase
50,000 shares of Common Stock at the end of 1998, 75,000 shares of Common Stock
at the end of 1997, 50,000 shares of Common Stock at the end of 1996, 50,000
shares of Common Stock related to 1996 performance granted in May 1997 after the
1991 Stock Option Plan was amended, 100,000 shares of Common Stock at the end of
1995 and 1994 and 200,000 shares of Common Stock in November 1993. In assessing
the performance of the Company and Dr. Bugg in determining the number of options
to be granted under his contract for 1998, the Compensation Committee relied
solely on a subjective evaluation of the Company's progress with respect to its
research projects and Dr.
12
Bugg's contribution toward these results. No specific criteria were utilized in
evaluating such performance, however, and no relative weight was assigned to any
specific factors considered. The Compensation Committee did not consider the
amount of options held by Dr. Bugg in determining the amount of options to be
awarded to him for 1998 under his contract. Such review in 1998 resulted in the
Compensation Committee granting Dr. Bugg an option to purchase 50,000 shares of
Common Stock at $6.25 per share in December 1998 for 1998's performance.
Section 162(m)
The Compensation Committee has reviewed all compensation programs for compliance
with Section 162(m) of the Code. Currently, options granted by this Committee
are exempt from the $1 million limit on deductibility of executive compensation
under the rules.
Members of the Compensation Committee
William W. Featheringill Edwin A. Gee, Ph.D.
Lindsay A. Rosenwald, M.D. William M. Spencer, III
13
Performance Graph FOR BIOCRYST
Indexed Comparision since IPO
[Graphic Omitted]
[The following table was depicted as a line graph in the printed material.]
Beginning Investment Investment Ending Ending Ending
Investment at at Investment Investment Investment
3/04/94 12/31/94 12/31/95 12/31/96 12/31/97 12/31/98
------- -------- -------- -------- -------- --------
BioCryst Pharmaceuticals, Inc. $ 100.00 $ 71.15 $ 142.31 $ 251.92 $ 107.69 $ 107.69
The Nasdaq Stock Market 100.00 96.10 135.92 167.15 205.06 288.26
Nasdaq Pharmaceutical Stocks 100.00 81.51 149.49 149.96 154.84 198.21
The Performance Graph for BioCryst measures the change in a $100 investment in
the Company's initial public offering, based on a price of $6.50 on March 4,
1994 and its month-end closing price thereafter. BioCryst's relative performance
is then compared with the CRSP Total Return Indexes for The Nasdaq Stock Market
(US) and Nasdaq Pharmaceutical Stocks.
14
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information regarding beneficial ownership of the
Company's Common Stock as of March 15, 1999 by (i) each director, (ii) each of
the Named Executive Officers, (iii) all directors and executive officers of the
Company as a group and (iv) each person known to the Company to be the
beneficial owner of more than five percent of the Company's Common Stock:
Amount and
Nature of Percent
Beneficial of
Name and Address Ownership (1) Class
- ---------------- -------------- --------
William W. Featheringill 2,619,468(2) 17.4%
100 Brookwood Place, #410
Birmingham, Alabama 35209
Johnson & Johnson Development Corporation 918,836(3) 6.1
One Johnson & Johnson Plaza
New Brunswick, NJ 08933
Charles E. Bugg, Ph.D. 568,998(4) 3.7
William M. Spencer, III 524,859(5) 3.5
Lindsay A. Rosenwald, M.D. 473,159(6) 3.1
Joseph H. Sherrill, Jr. 419,146(7) 2.8
John A. Montgomery, Ph.D. 150,838(8) 1.0
Ronald E. Gray 83,042(9) *
J. Claude Bennett, M.D. 82,515(10) *
Randolph C. Steer, M.D., Ph.D. 69,165(11) *
Edwin A. Gee, Ph.D. 34,165(11) *
Zola P. Horovitz, Ph.D. 28,750(11) *
John R. Uhrin 14,287(12) *
All executive officers and directors as
a group (12 persons) 5,068,392(13) 31.8
- ----------
(*) Less than one percent.
(1) Gives effect to the shares of Common Stock issuable within 60 days after
March 15, 1999 upon the exercise of all options and other rights beneficially
held by the indicated stockholder on that date.
(2) Includes 364,900 shares of Common Stock held by the Featheringill Family
Trust of which he is a beneficial owner and 31,146 shares of Common Stock
issuable upon exercise of stock options.
(3) Johnson & Johnson Development Corporation is a wholly owned subsidiary of
Johnson & Johnson and shares investment and voting power with Johnson & Johnson.
(4) Includes 498,955 shares of Common Stock issuable upon exercise of stock
options.
(5) Includes 28,750 shares of Common Stock issuable upon exercise of stock
options and 10,000 shares of Common Stock held by Mr. Spencer's spouse. Mr.
Spencer disclaims beneficial ownership of the 10,000 shares of Common Stock held
by his spouse.
(6) Includes 28,750 shares issuable upon exercise of stock options and 3,125
shares of Common Stock which Dr. Rosenwald holds jointly with his spouse. Also
includes 77,539 shares of Common Stock held by
15
Dr. Rosenwald's spouse individually and as custodian for their minor children,
as to which Dr. Rosenwald disclaims beneficial ownership. Dr. Rosenwald has
granted options to five individuals to purchase an aggregate of 15,950 shares of
Common Stock held by him at purchase prices ranging from $0.60 to $7.20 per
share.
(7) Includes 366,000 shares held in a Flint Trust for his benefit by his father
who serves as trustee with investment and voting power, 31,146 shares of Common
Stock issuable upon exercise of stock options, 10,000 shares of Common Stock
which Mr. Sherrill holds jointly with his spouse, 1,000 shares of Common Stock
held by Mr. Sherrill's son and 10,000 shares of Common Stock held by Mr.
Sherrill's spouse. Mr. Sherrill disclaims beneficial ownership of the 11,000
shares of Common Stock held by his spouse and son.
(8) Includes 118,750 shares of Common Stock issuable upon exercise of stock
options and 12,600 shares of Common Stock held by Dr. Montgomery's spouse. Dr.
Montgomery disclaims beneficial ownership of the 12,600 shares of Common Stock
held by his spouse.
(9) Includes 1,500 shares of Common Stock held by the retirement accounts of Mr.
Gray and his spouse and 73,904 shares of Common Stock issuable upon exercise of
stock options.
(10) Includes 78,227 shares of Common Stock issuable upon exercise of stock
options.
(11) Represents shares of Common Stock issuable upon exercise of stock options.
(12) Includes 12,187 shares of Common Stock issuable upon exercise of stock
options.
(13) See Notes (1) through (12).
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Act")
requires the Company's officers, directors and persons who beneficially own more
than 10% of a registered class of the Company's equity securities (collectively,
"Reporting Persons"), to file reports of ownership with the Securities and
Exchange Commission. Reporting Persons are required by the Act regulations to
furnish the Company with copies of all Section 16(a) forms they file.
Based solely on its review of the copies of such forms received by it, or
written representations from certain Reporting Persons that no Form 5s were
required for those persons, the Company believes that during 1998 its Reporting
Persons were in compliance with all applicable filing requirements, except that
Mr. Featheringill was late in filing his Form 4 for September.
CERTAIN TRANSACTIONS
Dr. Bugg, an executive officer and Director of the Company, is a Professor
Emeritus of UAB and is paid an annual stipend of $9,040 by UAB. Dr. Bennett, an
executive officer and Director of the Company, is a consultant to and
Distinguished University Professor Emeritus of UAB and is paid an annual stipend
of $12,500 by UAB Education Foundation. The Company paid approximately $877,000
to UAB in 1998 for conducting certain clinical trials, research and data input.
Dr. Montgomery, an executive officer and Director of the Company, is a former
executive officer of SRI. The Company paid approximately $209,000 to SRI in 1998
for certain research, laboratory rental and supplies. Dr. Montgomery is
currently a Distinguished Scientist at SRI and was paid approximately $6,482 by
SRI in 1998 for various consulting services unrelated to the services performed
by SRI for the Company.
In September 1998, the Company entered into a worldwide license agreement with
The R.W. Johnson Pharmaceutical Research Institute ("PRI") and Ortho-McNeil
Pharmaceutical, Inc. ("Ortho-McNeil"), both Johnson & Johnson companies, to
develop and market products to treat and prevent viral influenza. Under the
terms of the
16
agreement, the Company received an initial $6.0 million. The agreement provides
for additional potential milestone payments and royalties based on future sales
of licensed products. PRI and Ortho-McNeil are responsible for all development,
regulatory and commercialization expenses. The agreement is subject to
termination by PRI and Ortho-McNeil at any time and by the Company in certain
circumstances. In addition, Johnson & Johnson Development Corporation, another
Johnson & Johnson company, made a $6.0 million equity investment in the Company
in connection with signing the license agreement.
INDEPENDENT AUDITORS
The principal independent public accounting firm used by the Company during the
fiscal year ended December 31, 1998 was Ernst & Young LLP. It is currently
anticipated that Ernst & Young LLP will be retained as the principal accounting
firm to be used by the Company throughout the fiscal year ending December 31,
1999. The Company anticipates that a representative of Ernst & Young LLP will
attend the Meeting for the purpose of responding to appropriate questions. At
the Meeting, this representative will be afforded an opportunity to make a
statement if he or she so desires.
STOCKHOLDER PROPOSALS
Proposals of stockholders intended to be presented at the Company's 2000 Annual
Meeting of Stockholders must be received by the Company by December 4, 1999 to
be considered for inclusion in the Company's proxy statement relating to such
meeting.
A stockholder must notify the Company before February 17, 2000 of a proposal for
the 2000 Annual Meeting which the stockholder intends to present other than by
inclusion in the Company's proxy material. If the Company does not receive such
notice prior to February 17, 2000, proxies solicited by the Board of Directors
of the Company will confer discretionary authority upon the proxies for the
Board of Directors of the Company to vote upon any such matter.
OTHER MATTERS
Management does not intend to present to the Meeting any matters other than
those hereinbefore mentioned and does not presently know of any matters that
will be presented by other parties. If other matters should properly come before
the Meeting it is intended that the holders of the proxies will act in respect
thereto and in accordance with their best judgment.
GENERAL INFORMATION
Copies of the Company's Annual Report for the year ended December 31, 1998 were
mailed with this Proxy Statement. If you did not receive a copy, you may obtain
one from Ronald E. Gray, the Chief Financial Officer of the Company, without
charge, by persons who were stockholders beneficially or of record as of March
15, 1999.
BY ORDER OF THE BOARD OF DIRECTORS
John A. Montgomery, Ph.D., Secretary
Birmingham, Alabama
April 2, 1999
17
- --------------------------------------------------------------------------------
BIOCRYST PHARMACEUTICALS, INC.
PROXY FOR ANNUAL MEETING OF STOCKHOLDERS -- MAY 12, 1999
(This Proxy is Solicited by the Board of Directors)
The undersigned stockholder of BioCryst Pharmaceuticals, Inc. hereby appoints
Charles E. Bugg and John A. Montgomery, and each of them, with full power of
substitution, proxies to vote the shares of stock which the undersigned could
vote if personally present at the Annual Meeting of Stocholders of BioCryst
Pharmaceuticals, Inc., to be held at The Harbert Center, 2019 Fourth Avenue
North, Birmingham, Alabama, on May 12, 1999, at 3:00 P.M., Central Daylight
Time, or any adjournment thereof.
(To be Signed on Reverse Side)
Please Detach and Mail in the Envelope Provided
- --------------------------------------------------------------------------------
Please mark your
A |X| votes as in this
example.
Nominees: William W. Featheringill
Joseph H. Sherrill, Jr.
FOR all nominees at WITHHOLD
right (except as AUTHORITY
marked to to vote for all
the contrary) nominees at right
1. ELECTION
OF
DIRECTORS |_| |_|
(for terms as described in the Proxy Statement of the Company relating to
the 1999 Annual Meeting (the "Proxy Statement").
INSTRUCTION: To withhold authority for any individual members write that
nominee's name in the space provided below:
- --------------------------------------------------------------------------------
FOR AGAINST ABSTAIN
2. Proposal to increase the number of
shares of Common Stock of the |_| |_| |_|
Company available for issuance under
the 1991 Stock Option Plan by 400,000 shares, as described in the Proxy
Statement.
3. In their discretion, upon such other matters as may properly come before
the meeting.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE
PERSONS NOMINATED BY MANAGEMENT AS DIRECTORS AND FOR PROPOSAL 2.