Antigenics Inc.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities
Exchange Act of 1934 (Amendment
No. )
|
|
|
Filed by the Registrant x
|
|
Check the appropriate box: |
Filed by a Party other than the
Registrant o
|
|
o Preliminary Proxy
Statement |
|
|
o Confidential, for Use
of the Commission only (as permitted by Rule 14a-6(e)(2) |
|
|
x Definitive Proxy
Statement |
|
|
o Definitive Additional
Materials |
|
|
o Soliciting Material
Pursuant to §240.14a-12 |
Antigenics 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.
o 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:
o Fee paid previously
with preliminary materials:
|
|
|
|
o |
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:
ANTIGENICS INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Our 2005 Annual Meeting of Stockholders will be held at 3 West
Club, 3 West 51st Street, New York, New York at
5:00 p.m., June 1, 2005 for the following purposes:
1. To elect Garo H. Armen, Ph.D., Tom Dechaene, Mark
Kessel and Alastair J.J. Wood, M.D. as directors to hold
office for terms of three years and until their respective
successors are elected and qualified.
2. To transact any other business that may properly come
before the meeting or any adjournment of the meeting.
Only stockholders of record at the close of business on
April 5, 2005 will be entitled to vote at the meeting or
any adjournment. A list of these stockholders will be open for
examination by any stockholder for any purpose germane to the
meeting for ten days before the meeting during ordinary business
hours at our principal executive offices at 630 Fifth Avenue,
Suite 2100, New York, New York 10111.
It is important that your shares be represented at the
meeting. Therefore, whether or not you plan to attend the
meeting, please complete your proxy and return it in the
enclosed envelope, which requires no postage if mailed in the
United States. If you attend the meeting and wish to vote in
person, your proxy will not be used. Many stockholders can vote
their shares on the Internet or by telephone. For Internet or
telephone voting, instructions are printed on your proxy
card.
|
|
|
By order of the board of directors, |
|
|
Paul M. Kinsella, Secretary |
Proxy Material Mailing Date: April 21, 2005
TABLE OF CONTENTS
|
|
|
|
|
|
|
Page | |
|
|
| |
|
|
|
2 |
|
|
|
|
|
10 |
|
|
|
|
|
10 |
|
|
|
|
|
13 |
|
|
|
|
|
16 |
|
|
|
|
|
16 |
|
|
|
|
|
17 |
|
|
|
|
|
19 |
|
|
|
|
|
21 |
|
|
|
|
|
21 |
|
|
|
|
|
22 |
|
|
|
|
|
23 |
|
|
|
|
|
23 |
|
ANTIGENICS INC.
630 Fifth Avenue, Suite 2100
New York, New York 10111
Telephone: (212) 994-8200
Proxy Statement
Our board of directors is soliciting your proxy for use at our
2005 Annual Meeting of Stockholders to be held at 5:00 p.m.
on Wednesday, June 1, 2005 and at any adjournments of the
meeting. This proxy statement and accompanying proxy are first
being sent or given to stockholders on or about April 21,
2005.
The principal business expected to be transacted at the meeting,
as more fully described in this proxy statement, will be the
election of four directors.
The authority granted by an executed proxy may be revoked at any
time before its exercise by filing with our Secretary a written
revocation or a duly executed proxy bearing a later date or by
voting in person at the meeting.
We will bear the cost of the solicitation of proxies, including
the charges and expenses of brokerage firms and others for
forwarding solicitation material to beneficial owners of stock.
In addition to the use of mails, proxies may be solicited by our
officers and employees in person or by telephone.
Only stockholders of record at the close of business on
April 5, 2005 will be entitled to vote at the meeting. On
that date, we had outstanding 45,564,652 shares of common
stock, $0.01 par value, each of which is entitled to one
vote. The presence at the meeting, in person or by proxy, of a
majority in interest of the voting capital stock issued and
outstanding and entitled to vote at the meeting will constitute
a quorum for the transaction of business. Abstentions and broker
non-votes will be considered present for purposes of determining
the presence of a quorum. Broker non-votes are proxies submitted
by brokers that do not indicate a vote for one or more proposals
because the brokers do not have discretionary voting authority
and have not received instructions from the beneficial owners on
how to vote on these proposals.
ELECTION OF DIRECTORS
We currently have ten directors. Our directors are divided into
three classes with each class being as equal in size as
possible. Each class of directors is elected for a three-year
term.
Four directors have been nominated for re-election to a term of
office expiring in 2008: Garo H. Armen, Ph.D., Tom
Dechaene, Mark Kessel and Alastair J.J. Wood, M.D. Unless
the enclosed proxy withholds authority to vote for these
directors or is a broker non-vote, the shares represented by
such proxy will be voted for the election of Garo H.
Armen, Ph.D., Tom Dechaene, Mark Kessel and Alastair J.J.
Wood, M.D. If any of these nominees is unable to serve,
which is not expected, the shares represented by the enclosed
proxy will be voted for such other candidate as may be nominated
by the board of directors.
Directors will be elected by a plurality of the votes cast by
the stockholders entitled to vote on the election of directors
at the meeting.
Below please find information about the nominees for director
and each other person whose term of office as a director will
continue after the meeting.
Nominees for Election as Directors
|
|
|
Name and Age |
|
Business Experience and Other Directorships |
|
|
|
Garo H. Armen, Ph.D.
Age: 52 |
|
Garo H. Armen is Chairman and Chief Executive Officer of
Antigenics Inc., the biotechnology company he co-founded with
Pramod Srivastava in 1994. From mid-2002 through 2004, he was
Chairman of the Board of Directors for the biopharmaceutical
company Elan Corporation plc. Dr. Armen also serves on the
Board of Directors of Color Kinetics Incorporated, a company
that designs, markets and licenses intelligent solid-state
lighting systems. Dr. Armen is also the founder and
President of the Children of Armenia Fund (COAF), a charitable
organization established in 2000 that is dedicated to the
positive development of the children and youth of Armenia. |
|
Tom Dechaene
Age: 44 |
|
Tom Dechaene has been a director since 1999. Mr. Dechaene
is a director of Anchor Partners Ltd., a London-based advisory
boutique focusing on Telecoms, Media & Technology
clients. From 2000 to 2002, Mr. Dechaene was the Chief
Financial Officer of SurfCast, Inc., a software development
company. He was with Deutsche Bank from 1991 through 1999, most
recently as a director in the Principal Investments Group within
the Equity Capital Markets division. Mr. Dechaene holds a
law degree from Ghent University, Belgium, a degree in Applied
Economics from the University of Antwerp and a M.B.A. from
INSEAD, France. |
2
|
|
|
Name and Age |
|
Business Experience and Other Directorships |
|
|
|
|
Mark Kessel
Age: 62 |
|
Mark Kessel has been a director since 2003. Mr. Kessel is
Chief Executive Officer and Managing Director of Symphony
Capital LLC. Symphony Capital manages a private equity fund
which invests in the clinical development of biopharmaceutical
products, and has served in such position since he co-founded
the company in 2002. From 1979 to 2001, Mr. Kessel was a
partner at the international law firm of Shearman &
Sterling and served as the firms managing partner from
1990 to 1994. Mr. Kessel received a bachelors degree
in economics from the City College of New York and a law degree
from Syracuse University. |
|
Alastair J.J. Wood, M.D.
Age: 58 |
|
Alastair J. J. Wood has been a director since 2004.
Dr. Wood is an associate dean, attending physician and
tenured professor of medicine and pharmacology at Vanderbilt
Medical School in Nashville, Tenn., where he has been a faculty
member for more than 20 years. A 2002 suggested nominee for
commissioner of the US Food and Drug Administration (FDA),
Dr. Wood served as a member of the FDAs
cardiovascular and renal advisory committee and the
agencys nonprescription drug advisory committee. He is
currently chair of the nonprescription drug advisory committee.
He has also been a member and chairman of the National
Institutes of Health study sections, and served in a similar
capacity for various philanthropic grant-giving bodies, having
acted as consultant to several pharmaceutical companies,
investors, venture capital funds and major academic
institutions. Dr. Wood was most recently the drug therapy
editor of The New England Journal of Medicine from 1992
through 2004, and is on the editorial boards of The New
England Journal of Medicine and Clinical Pharmacology and
Therapeutics. He is a member of many societies and has
received numerous honors, including election to membership of
The American Association of Physicians, The American Society for
Clinical Investigation, honorary fellowship of the American
Gynecological and Obstetrical Society, and fellowships of The
American College of Physicians, The Royal College of Physicians
of London, and The Royal College of Physicians of Edinburgh.
Dr. Wood received his medical degree from St. Andrews
University and Dundee Medical School in Scotland. |
3
|
|
|
Name and Age |
|
Business Experience and Other Directorships |
|
|
|
|
Directors with Terms Expiring in 2006 |
|
|
|
Gamil G. de Chadarevian
Age: 53 |
|
Gamil G. de Chadarevian has been a director since 1999.
Mr. de Chadarevian served as our Executive Vice President
International from 1998 to 2001. Until April 1998, he was
Managing Director of Special Projects at Alza International and
the Vice President of Corporate Development for Corange London
Limited, two pharmaceutical companies. Prior to 1992, he held
positions at Pasfin Servizi Finanziara SpA, GEA Consulenza and
Credit Suisse. He is also the founder and Lead Director of
OphthalmoPharma Ltd. and a co-founder of Ikonisys Inc. and
CambriaTech Holding SA. He serves on the advisory board of
Syntek Capital AG and Venture Valuation AG and is a
non-executive board member of Friends of San Patrignano,
Inc., a charitable organization. In Italy he is an advisor for
biotechnology to Sviluppo Italia, a government agency dedicated
to promoting Italian investment opportunities, and to Lay Line
Genomics SpA, a biotechnology company. Mr. de Chadarevian
received his degree from the University of Zurich in Switzerland. |
|
Margaret M. Eisen, CFA
Age: 50 |
|
Margaret M. (Peggy) Eisen is Chief Executive Officer and Chief
Investment Officer of EAM International, LLC which she founded
to provide corporate finance and asset management services to
entrepreneurs and wealthy individuals. Before forming EAM
International, Ms. Eisen was a Managing Director with a
boutique investment banking firm focusing on merger and
acquisition transactions of investment management firms. From
1995-2001, Ms. Eisen was Managing Director, North American
Equities at General Motors Asset Management. She was responsible
for GMAMs internally and externally managed publicly
traded equity and was a member of GMAMs Management Council
and Asset Allocation Committee. Prior to GMAM, Ms. Eisen
was Director of Worldwide Pension Investments for DuPont Asset
Management. Her previous experience included serving as Vice
President of Loomis Sayles & Company and Assistant Vice
President at Cowen & Company, following technology as
an analyst for both organizations. Ms. Eisen began her
career as a Program Manager and Contributing Editor for
International Data Corporation, a market research and consulting
firm specializing in the information technology industries.
Currently, Ms. Eisen is a member of the Board of Trustees
of the Columbia Acorn Family of mutual funds of Wanger Asset
Management and a Trustee of the Lehman Brothers/First Trust
Income Opportunity Fund and the Lehman Liquid Assets Trust. She
is also a member of the Investment Committee of the Board of
Trustees of Smith College. Ms. Eisen previously served as
Chair of the Institute for Financial Markets. Ms. Eisen
received her AB degree from Smith College, an M. Ed. From Lesley
College and earned an MBA with Distinction at Babson College.
She is a Chartered Financial Analyst. |
4
|
|
|
Name and Age |
|
Business Experience and Other Directorships |
|
|
|
|
Wadih Jordan
Age: 70 |
|
Wadih Jordan has been a director since March 2003.
Mr. Jordan is President of NearEast Pharma, a company
marketing pharmaceuticals in Near-East markets, and has served
in such position since 1996. From 1993 to 1995, Mr. Jordan
served as a Vice President of Cyanamid International, a
research-based life sciences company, and from 1976 to 1993
Mr. Jordan served as a Managing Director within Cyanamid
International. Since December 2003, Mr. Jordan has been a
Trustee of the Board of Directors of the Lebanese American
University, located in Beirut, Lebanon and incorporated under
the Board of Regents in New York State. Mr. Jordan received
a bachelors degree in agriculture at the American
University of Beirut, Lebanon, and a certificate in
international business from Columbia University. |
|
Directors with Terms Expiring in 2007
|
|
|
Noubar Afeyan, Ph.D.
Age: 41 |
|
Noubar Afeyan, Ph.D. has been a director since 1998.
Dr. Afeyan is Managing Partner and Chief Executive Officer
of Flagship Ventures, a leader in creating, funding and
developing new ventures in both life science and information
technology sectors. He is also a Senior Lecturer at the
Massachusetts Institute of Technologys Sloan School of
Management. Until August 1999, Dr. Afeyan was Senior Vice
President and Chief Business Officer of Applera Corp., a life
sciences company, (formerly PE Corp.). Until 1997,
Dr. Afeyan was the Chairman and Chief Executive Officer of
PerSeptive Biosystems, a leading firm in the bio-instrumentation
field that he founded in 1987 and led until its merger with PE
Corp. Dr. Afeyan has been a founding team member, investor
and active board member/advisor for several other high-tech
startups and currently serves on the board of Color Kinetics,
Inc., as well as several private companies. In addition, he is a
member of the Board of Governors of Boston University Medical
School, the Board of Advisors for the Whitehead Institute at
MIT, and the Advisory Council of the McGowan Institute for
Regenerative Medicine. He has authored numerous scientific
publications and patents. Dr. Afeyan earned his
undergraduate degree in Chemical Engineering from McGill
University in Montreal and his Ph.D. in Biochemical Engineering
from MIT. |
5
|
|
|
Name and Age |
|
Business Experience and Other Directorships |
|
|
|
|
Frank V. AtLee III
Age: 64 |
|
Frank V. AtLee III has been a director since 2002. From
December 2002 to May 2003, Mr. AtLee was Interim Chief
Executive Officer and President, as well as the Chairman of the
Board of Directors, of the new Monsanto Company, a multinational
provider of integrated technology-based agricultural products, a
position he has held since June 2000. Mr. AtLee is also on
the board of Nereus Pharmaceuticals Inc. Prior to becoming
Monsantos Chairman, he spent 28 years with American
Cyanamid before retiring as President and Chairman of Cyanamid
International. In his years with American Cyanamid,
Mr. AtLee had a broad range of responsibilities including
leadership of the worldwide medical business, marketing and
sales management in industrial chemicals, Vice President for the
companys agricultural division, worldwide leadership of
the organic chemicals division, Vice President of Lederle
Laboratories, and President of Cyanamids
Europe/Mideast/Africa division. Mr. AtLee is a native of
Richmond, Virginia who graduated from Lynchburg (VA) College
with a bachelors degree in biology and chemistry. He
served three years as an officer in the U.S. Marine Corps. |
|
Pramod K. Srivastava, Ph.D.
Age: 48 |
|
Pramod K. Srivastava has been a director since 1999.
Dr. Srivastava is the scientific founder of Antigenics, and
has served as Chairman of the Scientific Advisory Board since
inception. Dr. Srivastava is a Professor of Immunology at
the University of Connecticut where he holds an endowed chair in
cancer immunology and is the Director of the Center for
Immunotherapy of Cancer and Infectious Diseases.
Dr. Srivastava earned his Ph.D., in Biochemistry from the
Centre for Cellular and Molecular Biology, Hyderabad, India and
received his postdoctoral training at Yale University and the
Sloan-Kettering Institute for Cancer Research.
Dr. Srivastava serves on the Scientific Advisory Council of
the Cancer Research Institute, New York, and was a member of the
Experimental Immunology Study Section of the National Institutes
of Health of the United States Government from 1994 until 1999.
He has been inducted into the Roll of Honor of the International
Union against Cancer and is listed in several Whos Who
compilations. He is among the founding members of the Academy of
Cancer Immunology. Dr. Srivastava serves on the board of
directors of CambriaTech Holding S.A. |
Committees of the Board
We have four standing board committees: Audit and Finance,
Compensation, Corporate Governance, and Litigation. Our board of
directors has adopted charters for the Audit and Finance,
Compensation, and Corporate Governance committees. Copies of
these charters are available on our website at
www.antigenics.com. (No material on our website is part of this
proxy statement.)
6
During 2004, our Compensation Committee consisted of two
independent directors: Ms. Eisen (Chair) and
Mr. Jordan. Our Compensation Committee acts for the board
of directors with respect to our compensation practices and
their implementation. It sets and implements the compensation of
our executive officers, administers the 1999 Equity Incentive
Plan and the 1999 Employee Stock Purchase Plan and makes
recommendations regarding compensation of non-management
directors. Our Compensation Committee held four meetings in
2004. For more information about our Compensation Committee,
please read the Compensation Committee Report on Executive
Compensation. Effective as of January 1, 2005, the
Compensation Committee consists of three independent directors:
Ms. Eisen (Chair), Mr. Afeyan and Mr. Jordan.
During 2004, our Audit and Finance Committee consisted of three
independent directors (determined under the rules of
The Nasdaq Stock Market): Messrs. Dechaene (Chair) and
AtLee and Ms. Eisen. Our Audit and Finance Committee is
responsible for providing the board of directors with an
independent review of our financial health, controls and
reporting. Its primary functions are to select our independent
auditor, review the results of the annual audit and the
auditors reports, and assess the adequacy of our financial
controls and procedures. Our Audit and Finance Committee held
twelve meetings in 2004. Our board of directors has determined
that Mr. Dechaene is an audit committee financial expert,
as that term is defined in SEC regulations. For more information
about our Audit and Finance Committee, please read the
Report of the Audit and Finance Committee. Effective
as of January 1, 2005, the Audit and Finance Committee
consists of three independent directors: Messrs. Dechaene
(Chair) and de Chadarevian and Ms. Eisen.
For the period of January 1, 2004 through September 8,
2004, our Corporate Governance Committee consisted of
Messrs. AtLee (Chair) and Kessel. Effective
September 8, 2004, Dr. Wood joined the Corporate
Governance Committee and Mr. Kessel resigned from the
Committee. Our Corporate Governance Committee is responsible for
recommending to our board of directors policies regarding board
procedures, the process for annual evaluation of the performance
of the board, and issues of corporate responsibility. Our
Corporate Governance Committee also serves as our nominating
committee. A copy of the Corporate Governance Committee charter
is available on our website at www.antigenics.com. The Corporate
Governance Committee recommended the slate of director nominees
that has been proposed by the board of directors. The Corporate
Governance Committee also makes recommendations to the board
regarding the composition of board committees. Our Corporate
Governance Committee held five meetings in 2004.
Our Corporate Governance Committee uses multiple sources for
identifying and evaluating nominees for director positions,
including referrals from current directors and input from
third-party search firms. Third-party search firms we engage
typically assist us in identifying, assessing and recruiting
individuals. Candidates identified in this manner are evaluated
by the committee by reviewing the candidates biographical
information and qualifications and checking the candidates
references.
Our Litigation Committee consists of two members:
Mr. Kessel (Chair) and Mr. AtLee. The primary role of
the Litigation Committee is to oversee, and make decisions with
respect to, our involvement in litigation relating to our
initial public offering. Neither Mr. Kessel nor
Mr. AtLee served on our board of directors at the time of
our IPO.
Alastair J.J. Wood, M.D. is being nominated for election to
the board of directors for the first time. Dr. Wood was
appointed to the Board on September 8, 2004. Dr. Wood
was brought to the attention of the board of directors by
Mr. Kessel. Dr. Wood was then evaluated by the
Corporate Governance Committee. Upon the completion of our
Corporate Governance Committees evaluation, the committee
recommended that the board of directors elect Dr. Wood as
director.
Consideration of Director Nominees
Our Corporate Governance Committee, acting in its capacity as
our nominating committee, recommends candidates for nomination
to the board of directors. The committee is responsible for
reviewing with the board the appropriate personal
characteristics and professional competencies preferred
7
of board members who are expected to work together as a team to
properly oversee our strategies and operations. In general, all
directors are expected to possess certain personal
characteristics necessary to create a highly functional and
collegial board, which include personal and professional
integrity; practical wisdom and mature judgment; an inquisitive
and objective perspective; and time availability for performing
the duties of a director.
In addition, the board as a group is expected to encompass a
range of professional competencies relevant to overseeing our
business. These professional competencies include accounting and
financial literacy, industry knowledge, medical or scientific
knowledge and management experience. Finally, candidates should
be enthusiastic about service on our board and working
collaboratively with existing board members to create value for
all of our stockholders.
The Corporate Governance Committee does not have a formal policy
with regard to the consideration of director candidates
recommended by stockholders because it does not believe such a
policy is necessary given that no otherwise unaffiliated
stockholder has ever recommended a director candidate. If the
committee were to receive a recommendation for a director
candidate from a stockholder, however, the committee expects
that it would evaluate such a candidate using the criteria
described above for evaluating director candidates brought to
its attention through other channels.
Attendance at Board Meetings
The board of directors held ten meetings during 2004. Each
director attended at least 75% of all meetings of the board and
of all committees of the board on which he or she served.
Independent Directors
Our board of directors has determined that Noubar Afeyan, Frank
V. AtLee III, Gamil G. de Chadarevian, Tom Dechaene, Peggy
Eisen, Bill Jordan and Alastair J.J. Wood, M.D. are
independent under the rules of The Nasdaq Stock
Market. These independent directors meet regularly in executive
session. Mr. AtLee serves as Lead Director and chairs the
meetings of the independent directors.
Director Attendance at Annual Meetings
One of our corporate governance guidelines is that each director
who is up for election at an annual meeting of stockholders or
who has a term that continues after the meeting is expected to
attend the annual meeting of stockholders. Our board of
directors believes that such directors should miss annual
stockholder meetings only for reasons that would justify absence
from a regularly scheduled meeting of the board of directors.
Garo Armen, Frank V. AtLee III, Gamil G.
de Chadarevian, Tom Dechaene, Peggy Eisen, Bill Jordan,
Mark Kessel and Pramod K. Srivastava all attended our 2004
annual stockholders meeting.
Stockholder Communications with the Board
Any stockholder who wishes to communicate with the board of
directors may write to us at 630 Fifth Avenue,
Suite 2100, New York, NY 10111 Attention: Lead Director.
Depending on the subject matter, management will forward the
communication or a summary of its contents to the Lead Director,
the individual the board of directors has designated to receive
such correspondence. Management will determine the proper
response to materials of a commercial nature, which generally
will not be forwarded to the Lead Director. Complaints regarding
accounting, internal accounting controls and auditing matters
will be forwarded to the chair of the Audit and Finance
Committee. At regular meetings of the board of directors, the
Lead Director will review significant correspondence received
from stockholders.
8
Director Compensation
Employee directors do not receive any additional compensation
for their services on the board. Non-employee directors with the
exception of Dr. Srivastava, who is a consultant to the
Company, are eligible to receive the following compensation for
services as directors:
|
|
|
|
|
$20,000 Annual Retainer |
|
|
|
$10,000 Fee for service as Lead
Director |
|
|
|
$10,000 Fee for service as
Audit & Finance Committee Chair |
|
|
|
$ 6,000 Fee for service as
Audit & Finance Committee Member |
|
|
|
$ 7,500 Fee for service as
Compensation Committee Chair |
|
|
|
$ 5,000 Fee for service as
Compensation Committee Member |
|
|
|
$ 6,000 Fee for service as
Corporate Governance Committee Chair |
|
|
|
$ 3,000 Fee for service as
Corporate Governance Committee Member |
|
|
|
$ 6,000 Fee for service as
Litigation Committee Chair |
|
|
|
$ 3,000 Fee for service as
Litigation Committee Member |
The rates set forth above were effective in 2004 and are
expected to remain unchanged for 2005.
We also reimburse directors for reasonable travel and
out-of-pocket expenses in connection with their service as
directors.
Deferred Compensation
Our Directors Deferred Compensation Plan permits each
non-employee director to defer all or a portion of his or her
cash compensation until his or her service as director ends or
until a specified date. A director may credit his or her
deferred cash compensation to an interest bearing account, a
notional stock account, or a combination of both.
Stock Compensation
Directors also participate in Antigenics 1999 Equity
Incentive Plan. Under the option program for directors adopted
by the board, our non-employee directors receive stock option
grants as follows:
|
|
|
|
|
|
|
Initial Option Grant
|
|
|
25,000 shares |
|
|
Vesting over 3 years in equal installments |
Annual Option Grant
|
|
|
15,000 shares |
|
|
Vesting over 3 years in equal
installments(1) |
|
|
(1) |
Any unvested portion vests automatically on the last day of the
term of a director who does not stand for reelection at the end
of his or her term. |
In March 1995, we entered into a consulting agreement with
Dr. Pramod Srivastava, our Founding Scientist. This
agreement was scheduled to expire in March 2005 but was extended
for an additional one-year period until March 2006. This
agreement will automatically renew for additional one-year
periods unless we or Dr. Srivastava decide not to extend
the agreement. In 2004, we paid Dr. Srivastava $175,000 for
his consulting services, a cash bonus of $135,000 for services
performed in 2003 and granted him options to purchase
120,000 shares of our common stock. In January 2005 we paid
Dr. Srivastava $175,000 for consulting services performed
and to be performed in 2005. In addition, in 2005 the
Compensation Committee approved a cash bonus for
Dr. Srivastava of $135,000 for services performed in 2004,
and approved a stock option grant to him to purchase of
120,000 shares of our common stock.
9
STOCK PERFORMANCE GRAPH
The following graph shows the cumulative total stockholder
return on our common stock over the period from February 4,
2000 (the first trading day of common stock) to
December 31, 2004, as compared with that of the NASDAQ
Stock Market (U.S. Companies) Index and the NASDAQ
Pharmaceuticals Index, based on an initial investment of $100 in
each on February 4, 2000. Total stockholder return is
measured by dividing share price change plus dividends, if any,
for each period by the share price at the beginning of the
respective period, and assumes reinvestment of dividends.
COMPARISON OF CUMULATIVE TOTAL RETURN OF ANTIGENICS INC.,
NASDAQ STOCK MARKET (U.S. COMPANIES) INDEX AND
AND NASDAQ PHARMACEUTICALS INDEX
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2/4/00 | |
|
12/31/00 | |
|
12/31/01 | |
|
12/31/02 | |
|
12/31/03 | |
|
12/31/04 | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Antigenics Inc.
|
|
|
100 |
|
|
|
18.02 |
|
|
|
26.72 |
|
|
|
16.68 |
|
|
|
18.48 |
|
|
|
16.49 |
|
NASDAQ Stock Market (US)
|
|
|
100 |
|
|
|
58.16 |
|
|
|
46.13 |
|
|
|
31.90 |
|
|
|
47.69 |
|
|
|
51.90 |
|
NASDAQ Pharmaceutical Index
|
|
|
100 |
|
|
|
101.57 |
|
|
|
86.57 |
|
|
|
55.94 |
|
|
|
82.00 |
|
|
|
87.31 |
|
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee Report set forth below describes the
compensation philosophies and programs applicable to our
executive officers. The Compensation Committee consists entirely
of independent directors who are not officers or employees of
Antigenics.
General Philosophy
Our success in attaining our long- and short-term strategic
objectives will in large part be determined by our ability to
attract, motivate and retain executive officers with
demonstrated talent, managerial leadership skills and the
potential to grow with the organization. A competitive
compensation program is critical to our efforts. Our executive
compensation package consists of base salary, an annual
incentive bonus and long term compensation in the form of stock
options. In light of our stage of development and the importance
of achieving our long- and short-term strategic objectives,
considerable emphasis is placed on the annual incentive bonus
and equity-based compensation components of the total
compensation package. To attempt to ensure that our compensation
arrangements are competitive, the Compensation Committee
compares Antigenics compensation practices and levels
annually with those of other
10
biotechnology companies with which we compete for talent and
which are of comparable size and stage of development. The
Compensation Committee relies on published compensation survey
data as well as data available in proxy statements from a
selected peer group of companies in making these determinations.
Base Salary
Base salary levels are designed to recognize an individual
executives ongoing contribution, to reflect the individual
executives experience and responsibilities, and to be
competitive with market benchmarks. Increases in annual salaries
are based on evaluation of skill, effectiveness and leadership,
and by comparing how an individual has performed essential job
requirements against what was envisioned for the job. Salary
adjustments are also based on general market compensation
levels. The Compensation Committee does not use a specific
formula based on these criteria but instead makes the evaluation
of each executive officers contribution in light of all
such criteria.
Annual Incentive Bonus
In 2003 the Compensation Committee adopted an Executive
Incentive Plan (EIP). The purpose of the EIP is to provide
additional incentives for executive officers to contribute to
the success of the company. The plan provides significant
competitive incentive awards which relate directly to the
achievement of corporate objectives and individual performance
goals. This, in turn, is expected to promote the interests of
stockholders and enhance our ability to attract, motivate and
retain high performing executive officers. Target incentive
awards typically range from 30-50% of an executive
officers base salary. Funding for the target incentive
awards is based on the extent to which we achieve a
predetermined set of corporate objectives and milestones.
Individual awards are adjusted to reflect the individual
executive officers contribution to achieving these
corporate objectives and milestones.
Stock Options
We grant stock options to executive officers under our 1999
Equity Incentive Plan. Our stock option program is designed to
directly align the long-term financial interests of our
executive officers and our stockholders, to assist in the
retention of executive officers by providing meaningful
ownership interest in Antigenics that vests over time, and to
encourage our executive officers to think and act like owners of
the business. Antigenics has generally used a five-year vesting
period and a ten-year exercise period for stock option grants.
Beginning with grants made in February 2004 we changed the
vesting period from five to four years to be more consistent
with market practice. The exercise price for all stock options
granted in 2004 and so far in 2005 equaled the fair market value
of the common stock on the date of the grant.
We typically grant stock options to new executive officers when
they start employment and on an annual basis and upon promotions
to positions of greater responsibility. In determining the size
of an annual executive grant we consider the position level, the
degree to which the executives contributions impacted our
results in the past year, the importance of the executives
skills to our future success, the size of the executives
current equity position, and competitive market benchmarks.
Chief Executive Officer Compensation
Dr. Armen is eligible to participate in the same executive
compensation plans available to our other executive officers. In
determining Dr. Armens compensation for each of 2002,
2003 and 2004, the Compensation Committee applied the executive
compensation philosophy and programs described above. In January
2002, Dr. Armens salary level was increased to
$400,000. There was no change to Dr. Armens salary
level in 2003. In March of 2003, we paid Dr. Armen an
incentive bonus of $120,000, and the Compensation Committee
approved a stock option grant to purchase 75,000 shares of
our common stock, for services performed during 2002.
11
In 2004, we paid Dr. Armen an incentive bonus of $170,000,
and the Compensation Committee approved a stock option grant to
purchase 175,000 shares of our common stock, for
services performed in 2003. In addition, in January 2004,
Dr. Armens salary level was increased to $420,000. On
March 10, 2005, the Board of Directors ratified the
recommendation of the Compensation Committee and awarded
Dr. Armen an incentive bonus of $174,300 and a stock option
grant to purchase 300,000 shares of our common stock,
for services performed in 2004. In addition,
Dr. Armens salary level was increased to $440,000.
The Committee evaluated Dr. Armens performance by
considering various factors, including the breadth of
Dr. Armens responsibilities and progress made by us
toward our goals and strategic milestones.
|
|
|
By the Compensation Committee, |
|
|
Peggy Eisen (Chair) |
|
Noubar Afeyan, Ph.D. |
|
Bill Jordan |
12
EXECUTIVE COMPENSATION
Compensation of Our Executive Officers
The following table summarizes the compensation paid to or
earned during the fiscal years ended December 31, 2004,
2003 and 2002 by our chief executive officer and our four other
most highly compensated executive officers. We refer to these
persons as named executive officers.
Summary Compensation Table
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-Term | |
|
|
|
|
|
|
|
|
|
|
Compensation | |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
Annual Compensation | |
|
Shares | |
|
|
|
|
|
|
| |
|
Underlying | |
|
All Other | |
Name and Principal Position |
|
Year | |
|
Salary($) | |
|
Bonus($) | |
|
Options(#) | |
|
Compensation | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
Garo H. Armen, Ph.D.
|
|
|
2004 |
|
|
$ |
420,000 |
|
|
$ |
174,300 |
|
|
|
175,000 |
|
|
$ |
|
|
|
Chairman and Chief Executive Officer |
|
|
2003 |
|
|
$ |
400,000 |
|
|
$ |
170,000 |
|
|
|
75,000 |
|
|
$ |
|
|
|
|
|
|
2002 |
|
|
$ |
400,000 |
|
|
$ |
120,000 |
|
|
|
150,000 |
|
|
$ |
|
|
Russell H.
Herndon(1)
|
|
|
2004 |
|
|
$ |
325,000 |
|
|
$ |
104,000 |
|
|
|
50,000 |
|
|
$ |
|
|
|
President, Commercial Operations |
|
|
2003 |
|
|
$ |
325,000 |
|
|
$ |
65,000 |
|
|
|
50,000 |
|
|
$ |
|
|
|
|
|
|
2002 |
|
|
$ |
325,305 |
|
|
$ |
100,000 |
|
|
|
25,000 |
|
|
$ |
|
|
Peter
Thornton(2)
|
|
|
2004 |
|
|
$ |
130,769 |
(3) |
|
$ |
49,583 |
|
|
|
150,000 |
|
|
$ |
50,000 |
(4) |
|
Senior Vice President and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chief Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renu
Gupta, M.D.(5)
|
|
|
2004 |
|
|
$ |
284,423 |
|
|
$ |
117,000 |
|
|
|
75,000 |
|
|
|
|
|
|
Senior Vice President |
|
|
2003 |
|
|
$ |
42,308 |
|
|
$ |
30,000 |
|
|
|
125,000 |
|
|
$ |
|
|
Roman
Chicz, Ph.D.(6)
|
|
|
2004 |
|
|
$ |
112,115 |
|
|
$ |
39,750 |
|
|
|
150,000 |
|
|
$ |
|
|
|
Senior Vice President |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Mr. Herndon became President in January 2002 and President,
Commercial Operations in November 2003. |
|
(2) |
Mr. Thornton joined us in June 2004, and he entered into an
employment agreement with us on June 21, 2004.
Mr. Thornton is entitled to twelve (12) months
severance pay and continuation of certain benefits in the event
that he is terminated without cause (as defined in the
employment agreement), or he terminates his employment for good
reason (as defined in the employment agreement).
Mr. Thornton is also entitled to eighteen (18) months
severance if he is terminated without cause or he terminates his
employment for good reason following a Change in Control (as
defined in the employment agreement). |
|
(3) |
Includes $72,115 owed to Mr. Thornton by Antigenics
Therapeutics Limited, subsidiary of the Company, for services
performed in 2004. |
|
(4) |
Mr. Thornton was paid a $50,000 sign-on bonus at the
time he commenced working for us. |
|
(5) |
Ms. Gupta joined us in November 2003. |
|
(6) |
Mr. Chicz joined us in July 2004, and he entered into an
employment agreement with us on July 26, 2004.
Mr. Chicz is entitled to twelve (12) months severance
pay and continuation of certain benefits in the event that he is
terminated without cause (as defined in the employment
agreement) or he terminates his employment for good reason (as
defined in the employment agreement). Mr. Chicz is also
entitled to eighteen (18) months severance if he is
terminated without cause or he terminates his employment for
good reason following a Change in Control (as defined in the
employment agreement). |
13
2004 Option Grants
The following table contains certain information regarding stock
option grants during the twelve months ended December 31,
2004 by us to the named executive officers:
Option Grants in Last Fiscal Year
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Potential Realizable Value | |
|
|
Number of | |
|
Percent of | |
|
|
|
|
|
at Assumed Annual Rates | |
|
|
Securities | |
|
Total Options | |
|
Exercise | |
|
|
|
of Stock Price Appreciation | |
|
|
Underlying | |
|
Granted to | |
|
or Base | |
|
|
|
for Option Term(1) | |
|
|
Options | |
|
Employees in | |
|
Price | |
|
Expiration | |
|
| |
Name |
|
Granted(#) | |
|
Fiscal Year | |
|
($/Share) | |
|
Date | |
|
5%($) | |
|
10%($) | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Garo H. Armen, Ph.D.
|
|
|
175,000 |
(2) |
|
|
9 |
% |
|
$ |
10.18 |
|
|
|
3/2014 |
|
|
$ |
1,120,376 |
|
|
$ |
2,839,252 |
|
|
Chairman and Chief Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russell H. Herndon
|
|
|
50,000 |
(3) |
|
|
3 |
% |
|
$ |
8.13 |
|
|
|
12/2014 |
|
|
$ |
255,646 |
|
|
$ |
647,856 |
|
|
President, Commercial Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter Thornton
|
|
|
125,000 |
(4) |
|
|
7 |
% |
|
$ |
6.03 |
|
|
|
10/2014 |
|
|
$ |
474,029 |
|
|
$ |
1,201,283 |
|
|
Senior Vice President |
|
|
25,000 |
(5) |
|
|
1 |
% |
|
$ |
8.13 |
|
|
|
12/2014 |
|
|
$ |
127,823 |
|
|
$ |
323,928 |
|
|
and Chief Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renu Gupta, M.D.
|
|
|
25,000 |
(6) |
|
|
1 |
% |
|
$ |
5.86 |
|
|
|
10/2014 |
|
|
$ |
92,133 |
|
|
$ |
233,483 |
|
|
Senior Vice President |
|
|
50,000 |
(3) |
|
|
3 |
% |
|
$ |
8.13 |
|
|
|
12/2014 |
|
|
$ |
255,646 |
|
|
$ |
647,856 |
|
Roman Chicz, Ph.D.
|
|
|
125,000 |
(7) |
|
|
7 |
% |
|
$ |
7.27 |
|
|
|
7/2014 |
|
|
$ |
571,508 |
|
|
$ |
1,448,313 |
|
|
Senior Vice President |
|
|
25,000 |
(8) |
|
|
1 |
% |
|
$ |
8.13 |
|
|
|
12/2014 |
|
|
$ |
127,823 |
|
|
$ |
323,928 |
|
|
|
(1) |
The dollar amounts under these columns are the result of
calculations at rates set by the Securities and Exchange
Commission and, therefore, are not intended to forecast possible
future appreciation, if any, in the price of the underlying
common stock. For purposes of calculating potential realizable
values, we assume that the market price appreciates from this
price at the indicated rate for the entire term of each option
and that each option is exercised and sold on the last day of
its term at the appreciated price. |
|
(2) |
These options are exercisable as to 43,750 shares on each
of March 11, 2005, March 11, 2006, March 11, 2007
and March 11, 2008. |
|
(3) |
These options are exercisable as to 12,500 shares on each
of December 8, 2005, December 8, 2006,
December 8, 2007 and December 8, 2008. |
|
(4) |
These options are exercisable as to 31,250 shares on each
of October 1, 2005, October 1, 2006, October 1,
2007 and October 1, 2008. Mr. Thornton joined us in
June 2004, and he entered into an employment agreement with us
on June 21, 2004. Fifty percent (50%) of the unvested
options held by Mr. Thornton shall vest upon a Change in
Control (as defined in the employment agreement). One hundred
percent (100%) of the unvested options held by
Mr. Thornton shall vest in the event that within eighteen
(18) months of a Change in Control he is terminated without
cause (as defined in the employment agreement), or he terminates
his employment for good reason (as defined in the employment
agreement). |
|
(5) |
These options are exercisable as to 6,250 shares on each of
December 8, 2005, December 8, 2006, December 8,
2007 and December 8, 2008. Mr. Thornton joined us in
June 2004, and he entered into an employment agreement with us
on June 21, 2004. Fifty percent (50%) of the unvested
options held by Mr. Thornton shall vest upon a Change in
Control (as defined in the employment agreement). One hundred
percent (100%) of the unvested options held by Mr. Thornton
shall vest in the event that within eighteen (18) months of
a Change in Control he is terminated without cause (as defined
in the employment agreement), or he terminates his employment
for good reason (as defined in the employment agreement). |
|
(6) |
These options are exercisable as to 6,250 shares on each of
October 19, 2005, October 19, 2006, October 19,
2007 and October 19, 2008. |
|
(7) |
These options are exercisable as to 31,250 shares on each
of July 26, 2005, July 26, 2006, July 26, 2007
and July 26, 2008. Fifty percent (50%) of the unvested
options held by Mr. Chicz shall vest upon a Change in
Control (as defined in the employment agreement). One hundred
percent (100%) of the unvested options held by
Mr. Chicz shall vest in the event that within eighteen
(18) months of a Change in Control he is terminated without
cause (as defined in the employment agreement), or he terminates
his employment for good reason (as defined in the employment
agreement). |
|
(8) |
These options are exercisable as to 6,250 shares on each of
December 8, 2005, December 8, 2006, December 8,
2007 and December 8, 2008. Mr. Chicz joined us in July
2004, and he entered into an employment agreement with us on
July 26, 2004. Fifty percent (50%) of the unvested
options held by Mr. Chicz shall vest upon a Change in
Control (as defined in the employment agreement). One hundred
percent (100%) of the unvested options held by
Mr. Chicz shall vest in the event that within eighteen
(18) months of a Change in Control he is terminated without
cause (as defined in the employment agreement), or he terminates
his employment for good reason (as defined in the employment
agreement). |
14
Option Exercises and Year-End Option Values
The following table provides information about the number of
shares issued upon option exercises by the named executive
officers during the year ended December 31, 2004, and the
value realized by the named executive officers. The table also
provides information about the number and value of options held
by the named executive officers at December 31, 2004.
Aggregated Option Exercises in Last Fiscal Year and
Fiscal Year-End Option Values
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities | |
|
|
|
|
|
|
|
|
Underlying Unexercised | |
|
Value of Unexercised In-the- | |
|
|
|
|
|
|
Options at Fiscal | |
|
Money Options | |
|
|
Shares | |
|
|
|
Year-End(#) | |
|
at Fiscal Year End($)(1) | |
|
|
Acquired on | |
|
Value | |
|
| |
|
| |
Name |
|
Exercise(#) | |
|
Realized($) | |
|
Exercisable | |
|
Unexercisable | |
|
Exercisable | |
|
Unexercisable | |
|
|
| |
|
| |
|
| |
|
| |
|
| |
|
| |
Garo H. Armen, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
381,291 |
|
|
|
325,000 |
|
|
$ |
487,509 |
|
|
$ |
160,200 |
|
|
Chairman and Chief Executive Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russell H. Herndon
|
|
|
|
|
|
|
|
|
|
|
170,000 |
|
|
|
205,000 |
|
|
$ |
26,700 |
|
|
$ |
206,300 |
|
|
President, Commercial Operations |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Peter Thornton
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000 |
(2) |
|
$ |
|
|
|
$ |
561,000 |
|
|
Senior Vice President and Chief Financial Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Renu Gupta, M.D.
|
|
|
|
|
|
|
|
|
|
|
25,000 |
|
|
|
175,000 |
|
|
$ |
|
|
|
$ |
206,000 |
|
|
Senior Vice President |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Roman Chicz, Ph.D.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
150,000 |
(3) |
|
$ |
|
|
|
$ |
406,000 |
|
|
Senior Vice President |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Based on the difference between the option exercise price and
the closing price of the underlying shares of common stock on
December 31, 2004 as reported on the Nasdaq National Market
($10.12). |
|
(2) |
Mr. Thornton joined us in June 2004, and he entered into an
employment agreement with us on June 21, 2004.
Mr. Thornton is entitled to twelve (12) months
severance pay and continuation of certain benefits in the event
that he is terminated without cause (as defined in the
employment agreement) or he terminates his employment for good
reason (as defined in the employment agreement).
Mr. Thornton is also entitled to eighteen (18) months
severance if he is terminated without cause or he terminates his
employment for good reason following a Change in Control (as
defined in the employment agreement). In addition, fifty
percent (50%) of the unvested options held by
Mr. Thornton shall vest upon a Change in Control. One
hundred percent (100%) of the unvested options held by
Mr. Thornton shall vest in the event that within eighteen
(18) months of a Change in Control he is terminated without
cause or he terminates his employment for good reason. |
|
(3) |
Mr. Chicz joined us in July 2004, and he entered into an
employment agreement with us on July 26, 2004.
Mr. Chicz is entitled to twelve (12) months severance
pay and continuation of certain benefits in the event that he is
terminated without cause (as defined in the employment
agreement) or he terminates his employment for good reason (as
defined in the employment agreement). Mr. Chicz is also
entitled to eighteen (18) months severance if he is
terminated without cause or he terminates his employment for
good reason following a Change in Control (as defined in the
employment agreement). In addition, fifty percent (50%) of the
unvested options held by Mr. Chicz shall vest upon a Change
in Control. One hundred percent (100%) of the unvested options
held by Mr. Chicz shall vest in the event that within
eighteen (18) months of a Change in Control he is
terminated without cause or he terminates his employment for
good reason. |
15
COMPENSATION COMMITTEE INTERLOCKS AND
INSIDER PARTICIPATION
During 2004, our Compensation Committee consisted of
Ms. Eisen and Mr. Jordan. As of January 1, 2005,
the Compensation Committee consists of Ms. Eisen,
Mr. Afeyan and Mr. Jordan. None of our Compensation
Committee members is an officer or employee of Antigenics;
however, Dr. Armen, our Chairman and Chief Executive
Officer, has participated in compensation discussions with the
committee.
REPORT OF THE AUDIT AND FINANCE COMMITTEE
The Audit and Finance Committee of the board of directors
consists entirely of independent directors who are not officers
or employees of Antigenics. The board of directors has adopted a
written charter for the Audit and Finance Committee, the current
version of which is available on our website at
www.antigenics.com.
In the course of its oversight of our financial reporting
process, the Audit and Finance Committee of the board of
directors has (1) reviewed and discussed with management
our audited consolidated financial statements for the fiscal
year ended December 31, 2004, (2) discussed with
KPMG LLP, our independent registered public accounting
firm, the matters required to be discussed by Statement on
Auditing Standards No. 61, Communication with Audit
Committees, and (3) received the written disclosures and
the letter from the auditors required by Independence Standards
Board Standard No. 1, Independence Discussions with Audit
Committees, discussed with the auditors their independence, and
considered whether the provision of permissible nonaudit
services by the auditors is compatible with maintaining their
independence.
Based on the foregoing review and discussions, the Audit and
Finance Committee recommended to the board of directors that the
audited consolidated financial statements be included in our
Annual Report on Form 10-K for the year ended
December 31, 2004 for filing with the Securities and
Exchange Commission.
|
|
|
By the Audit and Finance Committee, |
|
|
Tom Dechaene (Chair) |
|
Gamil G. de Chadarevian |
|
Peggy Eisen |
16
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
As of December 31, 2004, we had invested $2,250,000 in a
limited partnership, AGTC. Our total capital commitment to AGTC
is $3,000,000. The general partner of the limited partnership is
AGTC Partners, L.P. Noubar Afeyan, Ph.D., who is one
of our directors, is the Chairman and Senior Managing Director
and CEO of Flagship Ventures, a partnership of funds including
AGTC and, until its dissolution during 2004, NewcoGen Group Inc.
In addition, Garo H. Armen, Ph.D. our chairman and chief
executive officer, was a director of NewcoGen Group Inc. prior
to its dissolution.
Founder Holdings, Inc., which, indirectly, remains a significant
stockholder of Antigenics, approved a stock option plan pursuant
to which our officers, directors, employees and consultants may
be granted options in the predecessor company. In accordance
with U.S. generally accepted accounting principles, options
granted under this plan are accounted for as compensation
expense by us and treated as a contribution to
stockholders equity.
We currently have a QS-21 license and supply agreement with
Neuralab Limited, a wholly owned subsidiary of Elan Corporation,
plc, for use of QS-21 with an antigen in the field of
Alzheimers disease. Garo H. Armen, Ph.D., our
Chairman and Chief Executive Officer, is a board member of Elan.
For the year ended December 31, 2004, no revenues were
earned under these agreements and accordingly, at
December 31, 2004, we had no amounts due to us under these
agreements.
In March 1995, we entered into a consulting agreement with
Dr. Pramod Srivastava, our Founding Scientist. This
agreement was scheduled to expire in March 2005 but was extended
for an additional one-year period until March 2006. This
agreement will automatically renew for additional one-year
periods unless we or Dr. Srivastava decide not to extend
the agreement. In 2004, we paid Dr. Srivastava $175,000 for
his consulting services, a cash bonus of $135,000 for services
performed in 2003 and granted him options to
purchase 120,000 shares of our common stock. In
January 2005 we paid Dr. Srivastava $175,000 for consulting
services performed and to be performed in 2005. In addition, in
2005 the Compensation Committee approved a cash bonus for
Dr. Srivastava of $135,000 for services performed in 2004,
and approved a stock option grant to him to purchase of
120,000 shares of our common stock.
In February 1998 we entered into a research agreement with the
University of Connecticut Health Center (UConn) to fund research
in Dr. Pramod Srivastavas laboratory at UConn.
Dr. Srivastava is a member of the faculty of the University
of Connecticut School of Medicine and one of our directors. The
research agreement was amended on December 30, 2003, to
extend the term to December 31, 2008 and calls for payments
to UConn totaling a minimum of $6,750,000, payable quarterly at
the rate of $337,500 (contingent on the continuing employment of
Dr. Srivastava by UConn). In return, we have an option to
obtain an exclusive license to new inventions (as defined in the
research agreement) subject to our payment to UConn of royalties
at varying rates upon commercialization of a product utilizing
technology discovered under the research agreement. In February
2005, the research agreement was further amended to agree to pay
to UConn an additional one-time payment of $135,000 for
additional costs associated with activities to be performed
under the research agreement in 2005.
In September 2004, we entered into a $60,000 one-year service
agreement with Techsoft, Inc. d.b.a Medical Systems and NG
Techsoft Pvt. for data management services. Navin Gupta is the
President and CEO of Techsoft, Inc. d.b.a Medical Systems,
Director and Chairman of the Board of NG Techsoft Pvt Ltd.
and is the spouse of Renu Gupta, our Senior Vice President of
Development. As of December 31, 2004, approximately $35,000
due under this agreement is included in accrued expenses. No
amounts were paid under this agreement for the year ended
December 31, 2004. In February 2005, we approved an
amendment to the Service Agreement to extend the services and
provide for additional payment for such service in excess of the
original $60,000.
17
On October 22, 2004, we executed a letter of intent with
Symphony Capital LLC for a potential transaction to provide
funding for certain of our research programs. Mr. Kessel,
one of our directors, is a managing director of Symphony Capital
LLC. During February 2005 this potential transaction was
terminated. During 2004, we made payments to Symphony Capital
LLC of $125,000 for development planning activities. At
December 31, 2004, we had accrued $159,000 due to Symphony
Capital LLC. During 2005, $196,000, related to such activities,
was paid to Symphony Capital LLC for activities up to
termination, including amounts accrued at December 31,
2004. Dr. Wood, another director, is a consultant to and
has a financial interest in Symphony Capital LLC.
18
PRINCIPAL STOCKHOLDERS
The following table sets forth certain information with respect
to the beneficial ownership of our stock as of April 6,
2005:
|
|
|
|
|
each person, or group of affiliated persons, who is known by us
to beneficially own more than 5% of the common stock; |
|
|
|
each of our directors; |
|
|
|
each of our named executive officers; and |
|
|
|
all of our directors and named executive officers as a group. |
Except as otherwise noted, the persons or entities in this table
have sole voting and investing power with respect to all the
shares of common stock beneficially owned by them, subject to
community property laws, where applicable.
The Percent of Class column below is based on
45,564,652 shares of our common stock outstanding as of
April 6, 2005. For purposes of the table below, we deem
shares of our common stock subject to options that are currently
exercisable or exercisable within 60 days of April 6,
2005, to be outstanding and to be beneficially owned by the
person holding the options for the purpose of computing the
percentage ownership of the person, but do not treat such shares
as outstanding for the purpose of computing the percentage
ownership of any other person.
19
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount and Nature of | |
|
Percent | |
Name and Address of Beneficial Owner(1) |
|
Title of Class |
|
Beneficial Ownership | |
|
of Class | |
|
|
|
|
| |
|
| |
Five percent beneficial owners
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Antigenics Holdings
L.L.C.(2)
|
|
Common |
|
|
11,154,274 |
(2) |
|
|
24.5 |
% |
|
Brad M. Kelley
|
|
Common |
|
|
5,546,240 |
|
|
|
12.2 |
% |
|
|
1410 Moran Rd.
|
|
Preferred |
|
|
31,620 |
(3) |
|
|
100 |
% |
|
|
Franklin, TN 37069-6300
|
|
|
|
|
|
|
|
|
|
|
|
Royce & Associates, LLC
|
|
Common |
|
|
2,613,324 |
|
|
|
5.7 |
% |
|
|
1414 Avenue of Americas
|
|
|
|
|
|
|
|
|
|
|
|
|
New York, NY 10019
|
|
|
|
|
|
|
|
|
|
|
Directors and Named Executive Officers
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Garo H. Armen, Ph.D.
|
|
Common |
|
|
810,041 |
(4) |
|
|
1.8 |
% |
|
Gamil G. de Chadarevian
|
|
Common |
|
|
1,674,623 |
(5) |
|
|
3.7 |
% |
|
Pramod K. Srivastava, Ph.D.
|
|
Common |
|
|
277,477 |
(2)(6) |
|
|
* |
|
|
Peter Thornton
|
|
Common |
|
|
5,000 |
|
|
|
* |
|
|
Noubar Afeyan, Ph.D.
|
|
Common |
|
|
192,946 |
(2)(7) |
|
|
* |
|
|
Russell H. Herndon
|
|
Common |
|
|
236,242 |
(8) |
|
|
* |
|
|
Roman Chicz, Ph.D.
|
|
Common |
|
|
|
|
|
|
* |
|
|
Renu Gupta, M.D.
|
|
Common |
|
|
25,000 |
(6) |
|
|
* |
|
|
Tom Dechaene
|
|
Common |
|
|
30,533 |
(6) |
|
|
* |
|
|
Frank V. AtLee III
|
|
Common |
|
|
26,900 |
(9) |
|
|
* |
|
|
Mark Kessel
|
|
Common |
|
|
25,067 |
(10) |
|
|
* |
|
|
Margaret M. Eisen
|
|
Common |
|
|
24,067 |
(10) |
|
|
* |
|
|
Wadih Jordan
|
|
Common |
|
|
19,067 |
(6) |
|
|
* |
|
|
Alastair J.J. Wood, M.D.
|
|
Common |
|
|
|
|
|
|
* |
|
|
All current executive officers and directors as a group
(14 persons)(2)
|
|
Common |
|
|
3,346,963 |
(11) |
|
|
7.3 |
% |
|
|
|
|
(1) |
Except as otherwise noted, the address of each stockholder is
c/o Antigenics Inc., 630 Fifth Avenue,
Suite 2100, New York, New York 10111. |
|
|
(2) |
Founder Holdings Inc. owns approximately 79% of the outstanding
members equity of Antigenics Holdings L.L.C. Antigenics
Holdings L.L.C. owns approximately 24.5% of our common stock.
Drs. Armen and Srivastava are managers of Antigenics
Holdings L.L.C. Dr. Armen is a director of Founder Holdings
Inc. The following individuals beneficially own the indicated
percentages of Founder Holdings Inc. outstanding common stock: |
|
|
|
|
|
Individual |
|
Percentage | |
|
|
| |
Garo H. Armen, Ph.D.
|
|
|
43.1 |
% |
Pramod K. Srivastava, Ph.D.
|
|
|
24.2 |
% |
Noubar Afeyan, Ph.D.
|
|
|
1.1 |
% |
|
|
|
The following individuals own the indicated percentage interests
in Antigenics Holdings L.L.C.: |
|
|
|
|
|
Individual |
|
Percentage | |
|
|
| |
Garo H. Armen, Ph.D.
|
|
|
13.6 |
% |
Pramod K. Srivastava, Ph.D.
|
|
|
6.2 |
% |
|
|
|
|
(3) |
Mr. Kelley owns 31,620 shares of our Series A
Convertible Preferred Stock, our only shares of outstanding
preferred stock. These shares have an initial conversion price
$15.81 and are currently convertible into 2 million shares
of our common stock. If Mr. Kelley had converted all
31,620 shares of Series A Convertible Preferred Stock
into shares of common stock as of April 6, 2005, he would
have held 7,546,240 shares of our common stock, or 15.9% of
the shares outstanding. |
|
|
(4) |
Includes 470,041 shares of our stock issuable upon exercise
of options currently exercisable or exercisable within
60 days of April 6, 2005. |
20
|
|
|
|
(5) |
Includes (a) 1,479,488 shares of our stock held by
Biovision, Inc., a corporation of which Mr. de Chadarevian
is the sole stockholder and (b) 158,135 shares of our
stock issuable upon exercise of options currently exercisable or
exercisable within 60 days of April 6, 2005. |
|
|
(6) |
Consists solely of shares of our stock issuable upon exercise of
options currently exercisable or exercisable within 60 days
of April 6, 2005. |
|
|
(7) |
Includes 187,946 shares of our stock issuable upon exercise
of options currently exercisable or exercisable within
60 days of April 6, 2005. |
|
|
(8) |
Includes 235,000 shares of our stock issuable upon exercise
of options currently exercisable or exercisable within
60 days of April 6, 2005. |
|
|
(9) |
Includes 22,400 shares of our stock issuable upon exercise
of options currently exercisable or exercisable within
60 days of April 6, 2005. |
|
|
(10) |
Includes 19,067 shares of our stock issuable upon exercise
of options currently exercisable or exercisable within
60 days of April 6, 2005. |
|
(11) |
Includes 1,463,733 shares of our stock issuable upon
exercise of options currently exercisable or exercisable within
60 days of April 6, 2005 and excludes the shares held
by Antigenics Holdings L.L.C. as described in footnote (2).
See footnotes (4) through (10). |
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION
PLANS
(As of December 31, 2004)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of Securities | |
|
|
|
|
|
|
Remaining Available for | |
|
|
Number of Securities to be | |
|
Weighted-average | |
|
Future Issuance under | |
|
|
Issued Upon Exercise of | |
|
Exercise Price of | |
|
Equity Compensation Plan | |
|
|
Outstanding Options, | |
|
Outstanding Options, | |
|
(Excluding Securities | |
Plan Category |
|
Warrants and Rights(1) | |
|
Warrants and Rights | |
|
Reflected in Column (a))(2) | |
|
|
| |
|
| |
|
| |
|
|
(a) | |
|
(b) | |
|
(c) | |
Equity compensation plans approved by security holders
|
|
|
5,633,358 |
|
|
$ |
9.53 |
|
|
|
4,121,509 |
|
Equity compensation plans not approved by security holders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
5,633,358 |
|
|
|
|
|
|
|
4,121,509 |
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
Includes (i) 2,197 options outstanding at a weighted
average exercise price of $68.91 assumed in connection with our
merger with Aronex Pharmaceuticals, Inc. in July 2001; and
(ii) 53,604 options outstanding at a weighted average
exercise price of $11.74 assumed in our merger with Aquila
Biopharmaceuticals, Inc. in November 2000. |
|
(2) |
Includes 204,980 shares that may be issued under our 1999
Employee Stock Purchase Plan. |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
COMPLIANCE
Our executive officers, directors and 10% stockholders are
required under Section 16(a) of the Securities Exchange Act
of 1934, as amended, to file reports of ownership and changes in
ownership of our securities with the Securities and Exchange
Commission.
Based solely on a review of the copies of reports furnished to
us, we believe that during our 2004 fiscal year, our directors,
executive officers and 10% stockholders complied with all
applicable Section 16(a) filing requirements other than:
(i) Dr. Gupta failed to timely file a Form 4 to
reflect her receipt of an option grant for 50,000 shares of
our common stock on December 8, 2004,
(ii) Mr. Herndon failed to timely file a Form 4
to reflect his receipt of an option grant for 50,000 shares
of our common stock on December 8, 2004,
(iii) Dr. Srivastava failed to timely file a
Form 4 to reflect his receipt of an option grant for
120,000 shares of our common stock on March 11, 2004,
(iv) Dr. Armen failed to timely file a Form 4 to
reflect his receipt of an option grant for 175,000 shares
of our common stock on March 11, 2004 and
(v) Dr. Wood failed to timely file a Form 4 to
reflect his receipt of an option grant for 25,000 shares of
our common stock on September 9, 2004. Each Form 4
listed above was filed with
21
the Securities Exchange Commission, but was not filed within the
two day time period provided for in Section 16(a).
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The firm of KPMG LLP, independent registered public accounting
firm, has audited our accounts since our inception and will do
so for 2005. Our Audit and Finance Committee has appointed KPMG
LLP to serve as our independent registered public accounting
firm for our fiscal year ending December 31, 2005.
Representatives of KPMG LLP are expected to attend the annual
meeting to respond to appropriate questions, and will have the
opportunity to make a statement if they desire.
Audit Fees
Fees incurred by us for professional services rendered by KPMG
LLP for the audit of the annual consolidated financial
statements, and of managements assessment of, and the
effective operation of, internal control over financial
reporting, included in our Annual Report on Form 10-K, for
the reviews of the consolidated financial statements included in
our Forms 10-Q and for comfort letters, consents and review
of registration statements were $357,500 for 2003 and $772,100
for 2004.
Audit-Related Fees
Fees paid to KPMG LLP for the audit of our 401(k) Retirement
Plan were $16,500 for 2003 and $22,500 for 2004.
Tax Fees
Fees paid to KPMG LLP associated with tax compliance and tax
consultation were $81,790 in 2003 and $84,290 in 2004.
All Other Fees
We paid no other fees to KPMG LLP for 2003 and 2004.
The Audit and Finance Committees policy is to approve all
audit and non-audit services provided by our independent auditor
prior to the commencement of the services using a combination of
pre-approvals for certain engagements up to predetermined dollar
thresholds in accordance with the pre-approval policy and
specific approvals for certain engagements on a case-by-case
basis. The Audit and Finance Committee has delegated authority
to the committee chair to pre-approve between committee meetings
services that have not already been pre-approved by the
committee. The chair is required to report any such pre-approval
decisions to the full committee at its next scheduled meeting.
22
STOCKHOLDER PROPOSALS
Assuming our 2006 Annual Meeting of Stockholders is not more
than 30 days before or 30 days after June 1,
2006, if you wish to bring business before the 2006 Annual
Meeting, you must give us written notice by March 17, 2006
(the date 75 days before the anniversary of the 2005 Annual
Meeting).
If you intend to bring such a proposal at the 2006 Annual
Meeting, and you would like us to consider the inclusion of your
proposal in our proxy statement for the meeting, you must
provide us written notice of such proposal prior to
December 29, 2005.
Notices of stockholder proposals should be delivered in writing
to Lead Director, Antigenics Inc., 630 Fifth Avenue,
Suite 2100, New York, New York 10111.
OTHER MATTERS
The board of directors does not know of any business to come
before the meeting other than the matters described in the
notice. If other business is properly presented for
consideration at the meeting, the enclosed proxy authorizes the
persons named therein to vote the shares in their discretion.
23
FORM OF PROXY CARD
ANTIGENICS INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
PROXY FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON JUNE 1, 2005
The undersigned stockholder of Antigenics Inc. (the Company) hereby appoints Garo H. Armen,
Ph.D. and Peter Thornton and each of them acting singly, the attorneys and proxies of the
undersigned, with full power of substitution, to vote on behalf of the undersigned all of the
shares of capital stock of the Company that the undersigned is entitled to vote at the Annual
Meeting of Stockholders of the Company to be held on June 1, 2005, and at all adjournments thereof,
hereby revoking any proxy heretofore given with respect to such shares.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED BY THE UNDERSIGNED
STOCKHOLDER(S). IF NO SPECIFICATION IS MADE, THIS PROXY WILL BE VOTED FOR ALL PROPOSALS. IN THEIR
DISCRETION, THE PROXIES ARE ALSO AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS AS MAY PROPERLY COME
BEFORE THE MEETING.
PLEASE SIGN AND MAIL THIS PROXY TODAY
(Continued and to be signed on reverse side.)
1
(REVERSE SIDE OF PROXY CARD)
Please date, sign and mail your
proxy card back as soon as possible!
Annual Meeting of Stockholders
ANTIGENICS INC.
June 1, 2005
|
x Please mark your votes as in this example |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
WITHHELD |
|
|
|
|
|
|
|
|
FOR |
|
from |
|
|
|
|
|
|
|
|
All nominees |
|
all nominees |
|
|
|
|
1.
|
|
Proposal to elect directors
|
|
o
|
|
o
|
|
Nominees:
|
|
Garo H. Armen, Ph.D. |
|
|
|
|
|
|
|
|
|
|
Tom Dechaene |
|
|
For, except withheld from the following nominee(s):
|
|
|
|
|
|
|
|
Mark Kessel
Alastair J.J. Wood, M.D. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mark here for o
Address Change
and Note on
Left |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SIGNATURE
|
|
DATE:
|
|
SIGNATURE (IF HELD JOINTLY)
|
|
DATE: |
|
|
|
Note:
|
|
Please sign exactly as name appears on stock certificate. When
shares are held by joint tenants, both should sign. When signing as
executor, administrator, trustee or guardian, please give full title
as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign
in partnership name by authorized person. |
2