SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12
ALEXION PHARMACEUTICALS, INC.
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(Name of Registrant as Specified In Its Charter)
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(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:
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2) Aggregate number of securities to which transaction applies:
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pursuant to Exchange Act Rule 0-11:*
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4) Proposed maximum aggregate value of transaction:
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
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ALEXION PHARMACEUTICALS, INC.
25 SCIENCE PARK
NEW HAVEN, CONNECTICUT 06511
(203) 776-1790
November 13, 1997
Dear Fellow Stockholder:
You are cordially invited to attend the Company's Annual Meeting of
Stockholders to be held at 9:00 a.m., on Thursday, December 11, 1997, in the
Whitney Room at the Hotel Inter-Continental, 111 East 48th Street, New York, New
York 10017.
This year, you are being asked only to elect seven directors to the
Company's Board of Directors. In addition, I will be pleased to report on the
affairs of the Company and a discussion period will be provided for questions
and comments of general interest to stockholders.
We look forward to greeting personally those stockholders who are able to
be present at the meeting; however, whether or not you plan to be with us at the
meeting, it is important that your shares be represented. Accordingly, you are
requested to sign and date the enclosed proxy and mail it in the envelope
provided at your earliest convenience.
Thank you for your cooperation.
Very truly yours,
/s/ LEONARD BELL, M.D.
---------------------------------------
LEONARD BELL, M.D.
President, Chief Executive Officer,
Secretary and Treasurer
ALEXION PHARMACEUTICALS, INC.
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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New Haven, Connecticut
November 13, 1997
Notice is hereby given that the Annual Meeting of Stockholders of Alexion
Pharmaceuticals, Inc. will be held on Thursday, December 11, 1997, at 9:00 a.m.,
in the Whitney Room at the Hotel Inter-Continental, 111 East 48th Street, New
York, New York 10017 for the following purposes:
(1) To elect seven directors to serve for the ensuing year; and
(2) To transact such other business as may properly come before the Annual
Meeting or any adjournment thereof.
Stockholders of record at the close of business on November 13, 1997 will
be entitled to notice of and to vote at the Annual Meeting or any adjournment
thereof.
All stockholders are cordially invited to attend the Annual Meeting in
person. Stockholders who are unable to attend the Annual Meeting in person are
requested to complete and date the enclosed form of proxy and return it promptly
in the envelope provided. No postage is required if mailed in the United States.
Stockholders who attend the Annual Meeting may revoke their proxy and vote their
shares in person.
LEONARD BELL, M.D.
Secretary
ALEXION PHARMACEUTICALS, INC.
25 SCIENCE PARK
NEW HAVEN, CONNECTICUT 06511
(203) 776-1790
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PROXY STATEMENT
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GENERAL INFORMATION
PROXY SOLICITATION
This Proxy Statement is furnished to the holders of Common Stock, par value
$.0001 per share (the "Common Stock"), of Alexion Pharmaceuticals, Inc. (the
"Company") in connection with the solicitation by the Board of Directors of the
Company of proxies for use at the Annual Meeting of Stockholders to be held on
Thursday, December 11, 1997, or at any adjournment thereof, pursuant to the
accompanying Notice of Annual Meeting of Stockholders. The purposes of the
meeting and the matters to be acted upon are set forth in the accompanying
Notice of Annual Meeting of Stockholders. The Board of Directors is not
currently aware of any other matters which will come before the meeting.
Proxies will be mailed to stockholders on or about November 13, 1997 and
will be solicited chiefly by mail. The Company will make arrangements with
brokerage houses and other custodians, nominees and fiduciaries to send proxies
and proxy materials to the beneficial owners of the shares and will reimburse
them for their expenses in so doing. Should it appear desirable to do so in
order to ensure adequate representation of shares at the meeting, officers,
agents and employees of the Company may communicate with stockholders, banks,
brokerage houses and others by telephone, facsimile or in person to request that
proxies be furnished. All expenses incurred in connection with this solicitation
will be borne by the Company. The Company has no present plans to hire special
employees or paid solicitors to assist in obtaining proxies, but reserves the
option of doing so if it should appear that a quorum otherwise might not be
obtained.
REVOCABILITY AND VOTING OF PROXY
A form of proxy for use at the Annual Meeting of Stockholders and a return
envelope for the proxy are enclosed. Stockholders may revoke the authority
granted by their execution of proxies at any time before their effective
exercise by filing with the Secretary of the Company a written notice of
revocation or a duly executed proxy bearing a later date, or by voting in person
at the meeting. Shares of the Company's Common Stock represented by executed and
unrevoked proxies will be voted in accordance with the choice or instructions
specified thereon. If no specifications are given, the proxies intend to vote
the shares represented thereby for all listed nominees for director and in
accordance with their best judgment on any other matters which may properly come
before the meeting.
RECORD DATE AND VOTING RIGHTS
Only stockholders of record at the close of business on November 13, 1997
are entitled to notice of and to vote at the Annual Meeting or any and all
adjournments thereof. On November 13, 1997 there were 9,123,693 shares of Common
Stock outstanding; each such share is entitled to one vote on each of the
matters to be presented at the Annual Meeting. The holders of a majority of the
outstanding shares of Common Stock, present in person or by proxy and entitled
to vote, will constitute a quorum at the Annual Meeting. Abstentions and broker
non-votes will be counted for purposes of determining the presence or absence of
a quorum. "Broker non-votes" are shares held by brokers or nominees which are
present in person or represented by proxy, but which are not voted on a
particular matter because instructions have not been received from the
beneficial owner. Under applicable Delaware law, the effect of broker non-votes
on a particular matter depends on whether the matter is one as to which the
broker or nominee has discretionary voting authority under the applicable rule
of the New York Stock Exchange. With respect to the proposal to elect directors,
abstentions, broker non-votes and instructions on the accompanying proxy card to
withhold authority to vote for one or more nominees will result in the
respective nominees receiving fewer votes, however, the number of votes
otherwise received by the nominee will not be reduced by such action.
2
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information as of October 1, 1997
(except as otherwise noted in the footnotes) regarding the beneficial ownership
(as defined by the Securities and Exchange Commission (the "SEC")) of the
Company's Common Stock of: (i) each person known by the Company to own
beneficially more than five percent of the Company's outstanding Common Stock;
(ii) each director; (iii) each executive officer named in the Summary
Compensation Table (see "Executive Compensation"); and (iv) all directors and
named executive officers of the Company as a group. Except as otherwise
specified, the named beneficial owner has the sole voting and investment power
over the shares listed.
NUMBER OF SHARES PERCENTAGE OF
NAME AND ADDRESS BENEFICIALLY OUTSTANDING SHARES
OF BENEFICIAL OWNER(1) OWNED(2) OF COMMON STOCK
--------------------- ---------------- -------------------
BB Biotech AG
Vordergrasse 3
8200 Schaffhausen
CH/Switzerland(3) .............................. 935,782 9.3%
Collinson Howe Venture Partners
1055 Washington Boulevard, 5th Floor
Stamford, Connecticut 06901(4) ................. 747,491 8.2%
Biotechnology Investment Group, L.L.C.
c/o Collinson Howe Venture Partners
1055 Washington Boulevard, 5th Floor
Stamford, Connecticut 06901(5)(6) .............. 697,575 7.7%
United States Surgical Corporation
150 Glover Avenue
Norwalk, Connecticut 06856(7) .................. 824,087 9.1%
Mehta and Isaly Asset Management, Inc.
41 Madison Avenue--40th Floor
New York, NY 10010(8) .......................... 773,500 8.5%
Pioneering Management Corporation
60 State Street
Boston, MA 02109(9) ............................ 500,000 5.5%
Oak Investment Partners
c/o Oak Investment Partners V
One Gorham Island
Westport, Connecticut 06880(10) ................ 495,884 5.4%
INVESCO Global Health Sciences Fund
c/o INVESCO Trust Company
attn: Health Care Group
7800 E. Union Avenue, Ste. 800
Denver, Colorado 80237(11) ..................... 466,776 5.1%
3
NUMBER OF SHARES PERCENTAGE OF
NAME AND ADDRESS BENEFICIALLY OUTSTANDING SHARES
OF BENEFICIAL OWNER(1) OWNED(2) OF COMMON STOCK
---------------------- ---------------- ------------------
Timothy F. Howe(12) ............................................... 750,891 8.3%
Eileen M. More(13) ................................................ 519,284 5.7%
Leonard Bell, M.D.(14) ............................................ 334,850 3.6%
John H. Fried, Ph.D.(15) .......................................... 86,936 *
Stephen P. Squinto, Ph.D.(16) ..................................... 111,700 1.2%
David W. Keiser(17) ............................................... 89,800 *
Joseph Madri, Ph.D., M.D.(18) ..................................... 53,400 *
Louis A. Matis, M.D.(19) .......................................... 83,150 *
Max Link, Ph.D.(20) ............................................... 21,423 *
Leonard Marks, Jr., Ph.D.(21) ..................................... 11,900 *
Bernadette L. Alford, Ph.D.(22) ................................... 32,600 *
Directors and Executive Officers as a group (11 persons)(23) ...... 2,095,934 21.8%
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* Less than one percent
(1) Unless otherwise indicated, the address of all persons is 25 Science Park,
Suite 360, New Haven, Connecticut 06511.
(2) To the Company's knowledge, except as set forth below, the persons named in
the table have sole voting and investment power with respect to all shares
of Common Stock shown as beneficially owned by them, subject to community
property laws where applicable and the information contained in the
footnotes in this table.
(3) This figure is based upon information set forth in a Schedule 13D dated
September 8, 1997, filed jointly by BB Biotech AG and Biotech Target, S.A.
Includes 935,782 shares of Common Stock which are issuable upon conversion
automatically on March 9, 1998, or at the election of the holder at any
time after September 9, 1997, of the Company's Series B Preferred Stock.
Biotech Target, S.A., a Panamanian corporation, which purchased the Series
B Preferred Stock, is a wholly-owned subsidiary of BB Biotech AG. BB
Biotech AG is a holding company incorporated in Switzerland.
(4) Collinson Howe Venture Partners, Inc. ("CHVP") is a venture capital
investment management firm which is the managing member of Biotechnology
Investment Group, L.L.C. ("Biotechnology Group"), and is the investment
advisor to Schroders, Inc., Schroder Venture Limited Partnership ("Schroder
Partnership") and Schroder Ventures U.S. Trust ("Schroder Trust"). As such,
CHVP shares beneficial ownership of the shares listed above which include
(i) 697,575 shares, 21,052 shares, 16,842 and 4,210 shares of Common Stock
owned by Biotechnology Group, Schroders, Inc., Schroder Partnership and
Schroder Trust, respectively, and (ii) 7,812 shares issuable upon the
exercise of warrants owned by Schroders, Inc. Timothy F. Howe, a director
of the Company, is the Vice President and a stockholder of CHVP. As such he
has shared investment and voting power over the shares beneficially owned
by CHVP.
(5) Biotechnology Group is a limited liability company which invests in and
otherwise deals with securities of biotechnology and other companies. The
members of Biotechnology Group are (i) the managing member, CHVP, an
investment management firm of which Jeffrey J. Collinson is President, sole
director and majority
4
stockholder and Timothy F. Howe, a director of the Company, is a Vice
President and a stockholder, (ii) The Edward Blech Trust ("EBT"), and (iii)
Wilmington Trust Company ("WTC"), as voting trustee under a voting trust
agreement (the "Voting Trust Agreement"), among WTC, Biotechnology Group
and BIO Holdings L.L.C. ("Holdings"). The managing member of Biotechnology
Group is CHVP. Each of Citibank, N.A. ("Citibank") and Holdings has the
right pursuant to the Voting Trust Agreement to direct the actions of WTC
as a member of Biotechnology Group. WTC, as the member holding a majority
interest in Holdings, has the right to direct the actions of Holdings under
the Voting Trust Agreement. Citibank, pursuant to a separate voting trust
agreement among WTC, David Blech and Holdings, has the right to direct the
actions of WTC as a member of Holdings with respect to the rights of
Holdings under the Voting Trust Agreement.
(6) By virtue of their status as members of the Biotechnology Group, each of
CHVP and EBT may be deemed the beneficial owner of all shares held of
record by Biotechnology Group (the "Biotechnology Group Shares"). By virtue
of his status as the majority owner and controlling person of CHVP, Jeffrey
J. Collinson may also be deemed the beneficial owner of the Biotechnology
Group Shares. Each of CHVP, EBT and Jeffrey J. Collinson disclaims
beneficial ownership of any Biotechnology Group Shares except to the
extent, if any, of such person's actual pecuniary interest therein.
(7) Includes 166,945 shares of Common Stock purchased by United States Surgical
Corporation from the Company on September 30, 1997.
(8) This figure is based upon information set forth in a Schedule 13D/A dated
July 8, 1997, filed by a group consisting of Samuel D. Isaly, Viren Mehta
and certain entities affiliated with these individuals including
Pharma/Health, M and I Investors, Inc., Caduceus Capital, L.P., Caduceus
Capital Management, Inc. and Worldwide Heath Services Portfolio.
(9) This figure is based upon information set forth in a Schedule 13G dated
January 9, 1997, filed by Pioneering Management Corporation.
(10) Includes 408,571 shares owned by Oak Investment V Partners and 9,189 shares
owned by Oak Investment V Affiliates, two affiliated limited partnerships
(collectively, "Oak Investments"). In addition, Oak Investments' beneficial
ownership includes 78,124 shares which may be acquired upon the exercise of
warrants.
(11) Includes 31,250 shares which may be acquired upon the exercise of warrants.
(12) Consists of shares beneficially owned by CHVP (see footnote 4 above).
Includes 3,400 shares which may be acquired upon the exercise of options
which are exercisable within 60 days of October 1, 1997. Excludes 3,400
shares obtainable through the exercise of options granted to Mr. Howe which
are not exercisable within 60 days of October 1, 1997. Mr. Howe disclaims
beneficial ownership of shares held or beneficially owned by CHVP.
(13) Includes 23,400 shares of Common Stock which may be acquired upon the
exercise of options granted to Eileen More and 495,844 shares owned by Oak
Investments (see note 10). Excludes 3,400 shares obtainable through the
exercise of options granted to Ms. More which are not exercisable within 60
days of October 1, 1997.Ms. More is a General Partner at Oak Investments.
(14) Includes 176,250 shares of Common Stock that may be acquired upon the
exercise of options which are exercisable within 60 days of October 1, 1997
and 300 shares, in aggregate, held in the names of Dr. Bell's three minor
children. Excludes 308,750 shares obtainable through the exercise of
options granted to Dr. Bell which are not exercisable within 60 days of
October 1, 1997 and 90,000 shares held in trust for Dr. Bell's children of
which Dr. Bell disclaims beneficial ownership. Dr. Bell disclaims
beneficial ownership of the shares held in the name of his minor children.
(15) Includes 4,686 shares that may be acquired upon the exercise of warrants
and 10,900 shares that may be acquired on the exercise of options that are
exercisable within 60 days of October 1, 1997. Excludes 3,400
5
shares obtainable through the exercise of options granted to Dr. Fried
which are not exercisable within 60 days of October 1, 1997.
(16) Includes 55,000 shares of Common Stock which may be acquired upon the
exercise of options granted to Dr. Squinto which are exercisable within 60
days of October 1, 1997 and 4,200 shares, in aggregate, held in the names
of Dr. Squinto's two minor children of which 4,000 shares are in two trusts
managed by his wife. Excludes 85,000 shares obtainable through the exercise
of options granted to Dr. Squinto which are not exercisable within 60 days
of October 1, 1997. Dr. Squinto disclaims beneficial ownership of the
shares held in the name of his minor children and the foregoing trusts.
(17) Includes 47,500 shares which may be acquired upon the exercise of options
which are exercisable within 60 days of October 1, 1997 and 300 shares, in
aggregate, held in the names of Mr. Keiser's three minor children. Excludes
102,500 shares obtainable through the exercise of options granted to Mr.
Keiser, which are not exercisable within 60 days of October 1, 1997. Mr.
Keiser disclaims beneficial ownership of the shares held in the name of his
minor children.
(18) Includes 8,400 shares that may be acquired upon the exercise of options
which are exercisable within 60 days of October 1, 1997. Excludes 3,400
shares obtainable through the exercise of options granted to Dr. Madri
which are not exercisable within 60 days of October 1, 1997.
(19) Includes 65,000 shares of Common Stock which may be acquired upon the
exercise of options granted to Dr. Matis which are exercisable within 60
days of October 1, 1997 and 150 shares, in aggregate, held in the names of
Dr. Matis's three minor children. Excludes 85,000 shares obtainable through
the exercise of options, granted to Dr. Matis, which are not exercisable
within 60 days of October 1, 1997. Dr. Matis disclaims beneficial ownership
of the shares held in the name of his minor children.
(20) Excludes 3,400 shares obtainable through the exercise of options, granted
to Dr. Link, which are not exercisable within 60 days of October 1, 1997.
(21) Includes 10,900 shares which may be acquired upon the excise of options
which are exercisable within 60 days of October 1, 1997. Excludes 3,400
shares obtainable through the exercise of options granted to Dr. Marks,
which are not exercisable within 60 days of October 1, 1997.
(22) Consists of 32, 500 shares of Common Stock which may be acquired upon the
exercise of options granted to Dr. Alford which are exercisable within 60
days of October 1, 1997 and 100 shares held in the name of Dr. Alford's
minor child. Excludes 73,250 shares obtainable through the exercise of
options, granted to Dr. Alford, which are not exercisable within 60 days of
October 1, 1997.
(23) Consists of shares beneficially owned by Drs. Alford, Bell, Fried, Link,
Madri, Marks, Matis, Squinto, Mr. Keiser, Mr. Howe and Ms. More. Includes
90,622 shares of Common Stock which may be acquired upon the exercise of
warrants and 433,250 shares of Common Stock which may be acquired upon the
exercise of options which are exercisable within 60 days of October 1,
1997.
6
PROPOSAL--ELECTION OF DIRECTORS
Seven directors (constituting the entire Board) are to be elected at the
Annual Meeting. Unless otherwise specified, the enclosed proxy will be voted in
favor of the persons named below to serve until the next annual meeting of
stockholders and until their successors shall have been duly elected and shall
qualify. In the event any of these nominees shall be unable to serve as a
director, the shares represented by the proxy will be voted for the person, if
any, who is designated by the Board of Directors to replace the nominee. All
nominees have consented to be named and have indicated their intent to serve if
elected. The Board of Directors has no reason to believe that any of the
nominees will be unable to serve or that any vacancy on the Board of Directors
will occur.
The nominees, their ages, the year in which each first became a director
and their principal occupations or employment during the past five years are:
YEAR FIRST PRINCIPAL OCCUPATION DURING
DIRECTOR AGE BECAME DIRECTOR THE PAST FIVE YEARS
-------- --- --------------- ----------------------------
John H. Fried, Ph.D. .... 68 1992 Chairman of the Board of Directors of the Company since April 1992;
President of Fried & Co., Inc. since 1992; Vice Chairman of Syntex Corp.
from 1985 to January 1993 and President of the Syntex Research Division
from 1976 to 1992. (1)(2)
Leonard Bell, M.D. ...... 39 1992 President, Chief Executive Officer, Secretary and Treasurer of the
Company since January 1992; Assistant Professor of Medicine and
Pathology and Co-Director of the Program in Vascular Biology at the Yale
University School of Medicine from 1991 to 1992; Attending Physician at
the Yale-New Haven Hospital and Assistant Professor of the Department of
Internal Medicine at the Yale University School of Medicine from 1990
through 1992.
Timothy F. Howe ......... 39 1995 Principal of Collinson Howe Venture Partners, Inc. since 1990. (2)
Max Link, Ph.D. ......... 57 1992 Retired; Chief Executive Officer of Corange U.S. Holdings, Inc. from May
1993 to June 1994; Chairman of the Board of Sandoz Pharma, Ltd. from
1992 to 1993 and Chief Executive Officer of Sandoz Pharma, Ltd. from
1987 to 1992. (1)(2)
Joseph A. Madri,
Ph.D., M.D. ........... 51 1992 Chairman of the Company's Scientific Advisory Board since March 1992;
Faculty Member of the Yale University School of Medicine since 1980.
7
YEAR FIRST PRINCIPAL OCCUPATION DURING
DIRECTOR AGE BECAME DIRECTOR THE PAST FIVE YEARS
-------- --- --------------- ----------------------------
Leonard Marks, Jr., ..... 76 1992 Independent Corporate Director and Management Consultant since
1985.(1)(2) Ph.D.
Eileen M. More .......... 51 1993 General Partner of Oak Investment Partners since 1980.
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(1) Member of the Audit Committee of the Board of Directors.
(2) Member of the Compensation Committee of the Board of Directors.
Dr. Fried is a director of Corvas International Incorporated. Dr. Link is a
director of Protein Design Labs, Inc., Procept, Inc. and Human Genome Sciences
Inc. Dr. Marks is a director of Airlease Management Servicing, which is a
subsidiary of Bank of America, and Northern Trust Bank of Arizona. Ms. More is a
director of several high technology and biotechnology companies including Coral
Therapeutics, Inc., Pharmacopeia, Inc., Trophix Pharmaceuticals, Inc., Instream
Corporation and Teloquent Communication Corporation.
In February 1993, the Board formed an Audit Committee which was established
to review the internal accounting procedures of the Company and to consult with
and review the Company's independent auditors and the services provided by such
auditors. Drs. Fried, Link and Marks are the current members of the Audit
Committee. During the fiscal year ended July 31, 1997, the Audit Committee held
one meeting.
In February 1993, the Board formed a Compensation Committee which was
established to review compensation practices, to recommend compensation for
executives and key employees, and to administer the Company's 1992 Stock Option
Plan. Drs. Fried, Link, Marks and Mr. Howe are the current members of the
Compensation Committee. During the fiscal year ended July 31, 1997, the
Compensation Committee held one meeting.
During the fiscal year ended July 31, 1997, the Board of Directors held
seven meetings and acted by unanimous written consent in lieu of a meeting once.
Each director attended at least 75% of the meetings of the Board of Directors
held when he or she was a Director and of all committees of the Board of
Directors on which he or she served.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's executive officers
and directors, and persons who beneficially own more than ten percent of the
Company's Common Stock, to file initial reports of ownership and reports of
changes in ownership with the SEC. Executive officers, directors and greater
than ten percent beneficial owners are required by the SEC to furnish the
Company with copies of all Section 16(a) forms they file.
Based upon a review of the copies of such forms furnished to the Company
and written representations from the Company's executive officers and directors,
the Company believes that during fiscal 1997 all Section 16(a) filing
requirements applicable to its executive officers, directors and greater than
ten percent beneficial owners were complied with on a timely basis.
VOTE REQUIRED
The seven nominees receiving the highest number of affirmative votes of the
shares present in person or represented by proxy and entitled to vote, a quorum
being present, shall be elected as directors. Only votes cast for a nominee will
be counted, except that the accompanying proxy will be voted for all nominees in
the absence of
8
instruction to the contrary. Abstentions, broker non-votes and instructions on
the accompanying proxy card to withhold authority to vote for one or more
nominees will result in the respective nominees receiving fewer votes, however,
the number of votes otherwise received by the nominee will not be reduced by
such action.
THE BOARD OF DIRECTORS DEEMS "PROPOSAL--ELECTION OF DIRECTORS" TO BE IN THE
BEST INTERESTS OF THE COMPANY AND ITS STOCKHOLDERS AND RECOMMENDS A VOTE "FOR"
EACH NOMINEE.
EXECUTIVE COMPENSATION
The following table shows all the cash compensation paid by the Company as
well as certain other compensation paid during the fiscal years indicated to the
Chief Executive Officer of the Company and each of the four other most highly
compensated executive officers of the Company for such period in all capacities
in which they served.
SUMMARY COMPENSATION TABLE
LONG TERM
ANNUAL COMPENSATION COMPENSATION
-----------------------------------------------------------
FISCAL BASE OTHER OPTIONS
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (NUMBER OF SHARES)
--------------------------- ---- ------ ----- ------------ ------------------
Leonard Bell, M.D ................................. 1997 $213,404 $25,000 $ 1,983(1) 150,000
President, Chief Executive ...................... 1996 191,280 -- -- 75,000
Officer, Secretary and Treasurer ................ 1995 195,328 -- -- 180,000
David W. Keiser ................................... 1997 $157,642 $15,000 $ 1,892(1) 25,000
Executive Vice President and .................... 1996 151,580 4,000 -- 50,000
Chief Operating Officer ......................... 1995 151,580 -- -- 75,000
Louis A. Matis, M.D ............................... 1997 $138,423 $12,000 -- 22,500
Vice President of Research, ..................... 1996 133,100 4,000 -- 45,500
Immunobiology ................................... 1995 133,100 1,000 -- 82,500
Stephen P. Squinto, Ph.D .......................... 1997 $148,460 $12,000 -- 22,500
Vice President of Research, ..................... 1996 133,100 4,000 -- 45,000
Molecular Sciences .............................. 1995 131,158 -- -- 72,500
Bernadette L. Alford, Ph.D ........................ 1997 $150,801 $15,000 -- 22,500
Vice President of Regulatory .................... 1996 145,000 4,000 -- 45,000
Affairs and Project Development ................. 1995 129,417 -- $25,500(2) 35,000(3)
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(1) Represents the Company's matching contribution pursuant to its 401(k)
defined contribution plan.
(2) Represents cash paid to Dr. Alford in connection with her joining the
Company.
(3) Includes 15,000 options that were canceled in connection with the Company's
repricing of options which was approved by the Company's Board of Directors
during December 1994 and was consummated on May 1, 1995. The Board of
Directors, after examining comparable companies and consulting with
financial advisorsand certain large investors established the fair market
value of the Company's Common Stock during December 1994.
9
The following table sets forth information with respect to option grants in
Fiscal 1997 to the persons named in the Summary Compensation Table.
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE
VALUE AT ASSUMED
% OF TOTAL ANNUAL RATES OF
NUMBER OF OPTIONS STOCK PRICE
SECURITIES GRANTED TO MARKET APPRECIATION FOR
UNDERLYING EMPLOYEES IN EXERCISE OR PRICE ON OPTION TERM (3)
OPTIONS FISCAL YEAR BASE PRICE DATE OF EXPIRATION ------------------------
NAME GRANTED(#)(1) (2) ($/SH) GRANT DATE 5%($) 10%($)
---- ------------- ---- ------- ------ ----- ---------- ----------
Leonard Bell, M.D ............. 150,000(4) 44.5% $10.375 $10.375 04/01/07 $ 993,982 $2,504,574
David W. Keiser ............... 25,000 7.4 10.50 10.50 07/31/07 152,357 398,092
Louis A. Matis, M.D ........... 22,500 6.7 10.50 10.50 07/31/07 137,121 358,282
Stephen P. Squinto, Ph.D ...... 22,500 6.7 10.50 10.50 07/31/07 137,121 358,282
Bernadette L. Alford, Ph.D .... 22,500 6.7 10.50 10.50 07/31/07 137,121 358,282
- ----------
(1) Options vest in four equal annual installments commencing on the first
anniversary of the date of grant unless otherwise indicated.
(2) Based upon options to purchase 337,250 shares granted to all employees
during fiscal 1997.
(3) The 5% and 10% assumed rates of appreciation are specified by the rules of
the Securities and Exchange Commission and do not represent the Company's
estimate or projection of the future Common Stock price. There can be no
assurance that any of the values reflected in the table will be achieved.
(4) These options vest in three equal annual installments commencing on the
first anniversary of the date of grant.
The following table sets forth information with respect to (i) stock
options exercised in fiscal 1997 bythe persons named in the Summary Compensation
Table and (ii) unexercised stock options held by such individuals at July 31,
1997.
AGGREGATED OPTION EXERCISES
IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES
NUMBER OF UNEXERCISED VALUE OF UNEXERCISED,
OPTIONS HELD AT FISCAL IN-THE-MONEY OPTIONS AT
SHARES YEAR END FISCAL YEAR END($)(1)
ACQUIRED ON VALUE -------------------------- --------------------------
NAME EXERCISE(#) REALIZED($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
---- ----------- ----------- ----------- ------------- ----------- -------------
Leonard Bell, M.D ...................... 0 0 176,750 308,750 $823,983 $811,326
David W. Keiser ........................ 0 0 47,500 102,500 275,778 319,528
Louis A. Matis, M.D .................... 0 0 65,000 85,000 422,028 230,935
Stephen P. Squinto, Ph.D ............... 0 0 55,000 85,000 343,903 230,935
Bernadette L. Alford, Ph.D ............. 0 0 28,750 73,750 138,827 143,045
- ----------
(1) Based on the average of the high and low sale price of the Common Stock on
July 31, 1997 of $10.1875.
10
EMPLOYMENT AGREEMENTS
Dr. Leonard Bell, President, Chief Executive Officer, Secretary and
Treasurer of the Company, has a three-year employment agreement with the Company
which expires April 1, 2000. The agreement provides that Dr. Bell will be
employed as the President and Chief Executive Officer of the Company and that
the Company will use its best efforts to cause Dr. Bell to be elected to the
Board of Directors for the term of the agreement. Dr. Bell currently receives an
annual base salary of $250,000. The contract provides that if (i) Dr. Bell is
dismissed for any reason other than cause (as defined in the employment
agreement) or (ii) Dr. Bell terminates the employment agreement for certain
reasons including (a) certain changes in control of the Company, (b) Dr. Bell's
loss of any material duties or authority, (c) if the Chief Executive Officer is
not the highest ranking officer of the Company, (d) an uncured material breach
of the employment agreement by the Company and (e) the retention of any senior
executive officer by the Company, or an offer to pay compensation to any senior
executive of the Company that in either case is unacceptable to Dr. Bell, in his
reasonable judgment, then Dr. Bell shall be entitled to receive a lump sum cash
payment equal to Dr. Bell's annual salary then in effect multiplied by the
number of years remaining in the term of the employment agreement. In addition,
upon such termination, all stock options and stock awards vest and become
immediately exercisable and remain exercisable through their original terms. If,
upon the termination of the employment agreement on April 1, 2000, Dr. Bell
shall cease to be employed by the Company in the capacity of Chief Executive
Officer by reason of the Company's decision not to continue to employ Dr. Bell
as Chief Executive Officer at least on terms substantially similar to those set
forth in the existing employment agreement, then Dr. Bell will be entitled to a
severance payment equal to his annual salary during the final year of such
employment agreement.
Mr. David W. Keiser, Executive Vice President and Chief Operating Officer,
has a three-year employment agreement with the Company which commenced in July
1997. Mr. Keiser currently receives an annual base salary of $178,000.
Dr. Stephen P. Squinto, Vice President of Research, Molecular Sciences has
a five-year employment agreement with the Company which commenced in March 1997.
Dr. Squinto currently receives an annual base salary of $158,000.
Dr. Louis A. Matis, Vice President of Research, Immunobiology, has a
five-year employment agreement with the Company which commenced in December
1993. Dr. Matis currently receives an annual base salary of $158,000.
Under the employment agreements for each of Mr. Keiser and Drs. Squinto and
Matis, if any of them, respectively, is dismissed for any reason other than
cause (as defined in the employment agreement), death or disability, or if any
of them, respectively, terminates the employment agreement because of an uncured
material breach thereof by the Company, he shall be entitled to receive a lump
sum cash payment equal to the greater of (a) the annual salary for the remainder
of the then current year of employment and (b) six months salary at the annual
rate for the then current year of employment. In addition, upon such
termination, all stock options shall accelerate vesting such that the number of
such options vested on the day of termination shall be equal to the number of
such options vested if the executive were to have been continuously employed by
the Company until the date twelve months after the date of termination.
Dr. Bernadette Alford, Vice President of Regulatory Affairs and Project
Management, has been employed by the Company since September 1994. Dr. Alford
receives an annual base salary of $172,000 and, upon joining the Company,
received a bonus of $20,000 and temporary living expenses of $5,500 for the
first 12 months of her employment. The Company has agreed to purchase a life
insurance policy for $600,000 for Dr. Alford.
All the Company's employment agreements require acknowledgement of the
Company's possession of information created, discovered or developed by the
employee/executive and applicable to the business of the Company and any client,
customer or strategic partner of the Company. Each employee/executive also
agreed to
11
assign all rights he/she may have or acquire in proprietary information and to
keep such proprietary information confidential and also agreed to certain
covenants not to compete with the Company.
COMPENSATION OF DIRECTORS
Directors may be granted options to purchase Common Stock under the 1992
Stock Option Plan and the 1992 Outside Directors Stock Option Plan. During
February 1996, Drs. Fried, Link and Marks, independent members of the Board and
the members of the Company's audit and compensation committees, became entitled
to receive an annual accrued stipend of $25,000, $8,000 and $8,000,
respectively, which began to accrue on November 1, 1994. Per meeting fees were
paid in the amounts of $1,500, $750, and $750 to Drs. Fried, Link and Marks,
respectively. These per meeting fees were deducted from the accrued stipends
which were paid during 1996. Effective September 9, 1996, all non-employee,
non-Chairman members of the Board became entitled, with 75% attendance at Board
meetings, to receive an annual accrued stipend of up to $8,000. The Chairman of
the Board is entitled, with 75% attendance at Board meetings, to receive an
annual accrued stipend of up to $25,000. Per meeting fees are paid in the
amounts of $1,500 and $750 to the Chairman of the Board and non-employee members
of the Board, respectively. These per meeting fees are deducted from the maximum
annual accrued stipends which are to be paid in October of the following year.
Each of Drs. Fried, Madri, Marks, Link, Ms. More and Mr. Howe all attended at
least 75% of the meetings of the Company's Board and received their full annual
stipend.
The Company's 1992 Outside Directors' Stock Option Plan (the "Directors'
Option Plan") was adopted by the Board of Directors in August 1992 and approved
by its stockholders in September 1992. The Directors' Option Plan was amended in
November 1995. The Directors' Option Plan provides for the automatic grant of
options to purchase shares of Common Stock to directors of the Company who are
not officers, nor employees nor consultants of the Company or any of its
subsidiaries (other than the Chairman of the Board of Directors of the Company
who shall be eligible) ("Outside Directors"). Subject to the provisions of the
Directors' Option Plan, the Board has the power and authority to interpret the
Directors' Option Plan, to prescribe, amend and rescind rules and regulations
relating to the Directors' Option Plan and to make all other determinations
deemed necessary or advisable for the administration of the Directors' Option
Plan. No participant may participate in any determination of the Board
concerning options granted to such Participant under the Directors' Option Plan.
Under the Directors' Option Plan, each Outside Director receives an option
to purchase 7,500 shares of Common Stock on the date of his or her election to
the Board. In addition, on the date of the 1997 Annual Meeting of stockholders
and on the date of each subsequent annual meeting of stockholders at which a
director is reelected, such director, if he or she is still an Outside Director
on such date and has attended, either in person or by telephone, at least
seventy-five percent (75%) of the meetings of the Board of Directors that were
held while he or she was a director since the prior annual meeting of
stockholders, will be granted an option to purchase an additional 2,000 shares
of the Company's Common Stock. All options granted under the Outside Directors'
Plan will have an exercise price equal to the fair market value on the date of
grant. Options granted under the Outside Directors' Plan vest in three equal
annual installments beginning on the anniversary of the date of grant.
During fiscal year 1995, each non-employee director was granted
non-qualified stock options to purchase 6,800 shares of Common Stock pursuant to
the 1992 Stock Option Plan. In August 1992, each of Drs. Fried, Link and Marks
received an option to purchase 7,500 shares of Common Stock under the Directors'
Option Plan.
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The report of the Compensation Committee shall not be deemed incorporated
by reference by any general statement incorporating by reference this proxy
statement into any filing under the Securities Act of 1933, as
12
amended (the "Securities Act") or under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), except to the extent that the Company specifically
incorporates this information by reference, and shall not otherwise be deemed
filed under such Acts.
The Compensation Committee is currently comprised of four directors. As
members of the Compensation Committee, it is our responsibility to determine the
most effective total executive compensation strategy based on the Company's
business and consistent with stockholders' interests. Our specific duties entail
reviewing the Company's compensation practices, recommending compensation for
executives and key employees, the making of recommendations to the Board of
Directors with respect to major compensation and benefit programs, and
administering the Company's stock option plans.
Compensation Philosophy
The Company's overall compensation philosophy is to offer competitive
salaries, cash incentives, stock options and benefit plans consistent with the
Company's financial position. Rewarding capable employees who contribute to the
continued success of the Company plus equity participation and a strong
alignment to stockholder's interests are key elements of the Company's
compensation policy. One of the Company's strengths contributing to its success
is the strong management team--many of whom have been with the Company for a
significant period of time. The Company's executive compensation policy is to
attract and retain key executives necessary for the Company's short and
long-term success by establishing a direct link between executive compensation
and the performance of the Company by rewarding individual initiative and the
achievement of annual corporate goals through salary and cash bonus awards; and
by providing equity awards based upon present and expected future performance to
allow executives to participate in maximizing shareholder value.
In awarding salary increases and bonuses, the Compensation Committee did
not relate the various elements of corporate performance to each element of
executive compensation. Rather, the Compensation Committee considered whether
the compensation package as a whole adequately compensated each executive for
the Company's performance during the past year and executive's contribution to
such performance.
Under the Omnibus Budget Reconciliation Act ("OBRA") which was enacted in
1993, publicly held companies may be prohibited from deducting as an expense for
federal income tax purposes total remuneration in excess of $1 million paid to
certain executive officers in a single year. However, OBRA provides an exception
for "performance based" remuneration, including stock options. The Company
expects to keep "non-performance based" remuneration within the $1 million limit
in order that all executive compensation will be fully deductible. Nevertheless,
although the Committee considers the net cost to the Company in making all
compensation decisions (including, for this purpose, the potential limitation on
deductibility of executive compensation), there is no assurance that
compensation realized with respect to any particular award will qualify as
"performance based" remuneration.
Base Salary
Base salary represents the fixed component of the executive compensation
program. The Company's philosophy regarding base salaries is conservative,
maintaining salaries at approximately competitive industry average.
Determinations of base salary levels are established on an annual review of
marketplace competitiveness with similar biopharmaceutical companies, and on
internal relationships. Periodic increases in base salary relate to individual
contributions to the Company's overall performance, relative marketplace
competitiveness levels, length of service and the industry's annual competitive
pay practice movement. No specific performance targets were established for
fiscal year 1996, which was the base year for determining the salary increases
awarded during 1997. In determining appropriate levels of base salary, the
Compensation Committee relied in part on several biopharmaceutical industry
compensation surveys.
13
Bonus
Bonuses represent the variable component of the executive compensation
program that is tied to the Company's performance and individual achievement.
The Company's policy is to base a significant portion of its senior executives'
cash compensation on bonus. In determining bonuses, the Compensation Committee
considers factors such as relative performance of the Company during the year
and the individual's contribution to the Company's performance.
Stock Options
The Compensation Committee, which administers the Company's stock option
plans, believes that one important goal of the executive compensation program
should be to provide executives, key employees and consultants--who have
significant responsibility for the management, growth and future success of the
Company--with an opportunity to increase their ownership and potentially gain
financially from the Company's stock price increases. This approach ensures that
the best interests of the stockholders, executives and employees will be closely
aligned. Therefore, executive officers and other key employees of the Company
are granted stock options from time to time, giving them a right to purchase
shares of the Company's Common Stock at a specified price in the future. The
grant of options is based primarily on an employee's potential contribution to
the Company's growth and financial results. In determining the size of option
grants, the Compensation Committee considers the number of options owned by such
employee, the number of options previously granted and currently outstanding,
and the aggregate size of the current option grants. Options generally are
granted at the prevailing market value of the Company's Common Stock and will
only have value if the Company's stock price increases. Generally, grants of
options vest in equal amounts over four years and the individual must be
employed by the Company for such options to vest.
1997 Compensation to Chief Executive Officer
In reviewing and recommending Dr. Bell's salary and bonus and in awarding
him stock options for fiscal year 1997 and for his future services, the
Compensation Committee followed its compensation philosophy. Dr. Bell's annual
salary was increased to $250,000 in April 1997. For the 1997 fiscal year, Dr.
Bell received approximately 10.0% of his cash compensation in bonus. The
Compensation Committee recommended this salary and bonus in recognition of Dr.
Bell's achievements in establishing new commercial relationships, raising
additional capital for the Company and advancing the Company's research efforts.
In 1997, Dr. Bell was granted options to purchase 150,000 shares of the
Company's Common Stock at an exercise price of $10.375, the fair market value on
the date of grant, under the terms of the 1992 Stock Option Plan. The options
become exercisable in equal installments over three years on the anniversary
date of the date of grant. The Compensation Committee recommended this option
grant, to secure the long-term services of the Company's chief executive officer
and to further align the chief executive officer's compensation with stockholder
interests.
COMPENSATION COMMITTEE
JOHN H. FRIED, PH.D., TIMOTHY F. HOWE, MAX LINK, PH.D.,
AND LEONARD MARKS, JR., PH.D.
14
THE COMPANY'S PERFORMANCE
The following Stock Price Performance Graph shall not be deemed
incorporated by reference by any general statement incorporating by reference
this proxy statement into any filing under the Securities Act or under the
Exchange Act, except to the extent the Company specifically incorporates this
information by reference, and shall not otherwise be deemed filed under such
Acts. The following graph compares cumulative total return of the Company's
Common Stock with the cumulative total return of (i) the Nasdaq Stock
Market-United States, and (ii) the Hambrecht & Quist Biotechnology Index. The
graph assumes (a) $100 was invested on February 28, 1996 in each of the
Company's Common Stock, the stocks comprising the NASDAQ Stock Market-United
States and the stocks comprising the Hambrecht & Quist Biotechnology Index, and
(b) the reinvestment of dividends.
STOCK PERFORMANCE CHART
[GRAPHICAL REPRESENTATION OF DATA TABLE BELOW]
ALEXION NASDAQ STOCK HAMBRECHT & QUIST
PHARMACEUTICALS, INC. MARKET-(US) BIOTECHNOLOGY
2/28/96 100 100 100
4/30/96 108 108 95
7/31/96 73 98 83
10/31/96 121 110 92
1/31/97 147 125 97
4/30/97 106 114 84
7/31/97 127 145 95
9/30/97* 179 153 98
* The last date for which data is available.
15
RELATIONSHIP WITH INDEPENDENT AUDITORS
Arthur Andersen LLP have been the independent auditors for the Company
since the Company's inception and will serve in that capacity for the 1998
fiscal year. A representative of Arthur Andersen LLP will be present at the
Annual Meeting and will have an opportunity to make a statement if he desires to
do so, and will respond to appropriate questions from stockholders.
STOCKHOLDER PROPOSALS
All stockholder proposals which are intended to be presented at the 1998
Annual Meeting of Stockholders of the Company must be received by the Company no
later than July 17, 1998 for inclusion in the Board of Directors' proxy
statement and form of proxy relating to that meeting.
OTHER BUSINESS
The Board of Directors knows of no other business to be acted upon at the
Annual Meeting. However, if any other business properly comes before the Annual
Meeting, it is the intention of the persons named in the enclosed proxy to vote
on such matters in accordance with their best judgment.
The prompt return of your proxy will be appreciated and helpful
in obtaining the necessary vote. Therefore, whether or not you expect to attend
the Annual Meeting, please sign the proxy and return it in the enclosed
envelope.
By Order of the Board of Directors
LEONARD BELL, M.D.
Secretary
Dated: November 13, 1997
A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-K WILL BE SENT
WITHOUT CHARGE TO ANY STOCKHOLDER REQUESTING IT IN WRITING FROM:
ALEXION PHARMACEUTICALS, INC., 25 SCIENCE PARK, NEW HAVEN,
CONNECTICUT 06511, ATTENTION: PRESIDENT.
16
ALEXION PHARMACEUTICALS, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD ON DECEMBER 11, 1997
Leonard Bell, M.D. and David W. Keiser, and each of them, as the true and
lawful attorneys, agents and proxies of the undersigned, with full power of
substitution, are hereby authorized to represent and to vote all shares of
Common Stock of Alexion Pharmaceuticals, Inc. held of record by the undersigned
on November 13, 1997, at the Annual Meeting of Stockholders to be held at 9:00
a.m. on Thurday, December 11, 1997, at the Whitney Room at the Hotel
Inter-Continental, 111 East 48th Street, New York, New York 10017 and any
adjournment thereof. Any and all proxies heretofore given are hereby revoked.
WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED AS DESIGNATED BY THE
UNDERSIGNED. IF NO CHOICE IS SPECIFIED, THE PROXY WILL BE VOTED FOR EACH OF THE
NOMINEES FOR DIRECTOR LISTED BELOW.
1. Proposal--Election of Directors--Nominees are:
John H. Fried, Leonard Bell, Timothy F. Howe, Max Link, Joseph A. Madri,
Leonard Marks, Jr. and Eileen M. More.
FOR all listed nominees (except do not vote for the nominee(s) whose
name(s) appears(s) below): [ ]
WITHHOLD AUTHORITY to vote for the listed nominees. [ ]
------------------------------------------------------------------------
Discretionary authority is hereby granted with respect to such other matters as
may properly come before the meeting.
IMPORTANT: Please sign exactly as name appears below. Each joint owner
shall sign. Executors, administrators, trustees, etc. should give full title as
such. If signor is a corporation, please give full corporate name by duly
authorized officer. If a partnership, please sign in partnership name by
authorized person.
Dated _____________________________, 1997
-----------------------------------------
Signature
-----------------------------------------
Signature if held jointly
The above-signed acknowledges receipt of
the Notice of Annual Meeting of
Stockholders and the Proxy Statement
furnished therewith.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE.
