SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Preliminary Proxy Statement
AVI BIOPHARMA, INC.
- --------------------------------------------------------------------------------
(Name of Registrant As Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
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/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
Amount Previously Paid:
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AVI BIOPHARMA, INC.
ONE S.W. COLUMBIA STREET, SUITE 1105
PORTLAND, OREGON 97258
April 30, 1999
Dear Shareholder:
You are cordially invited to attend the Annual Meeting of the Shareholders
of Record of AVI BioPharma Inc., which will be held on Wednesday, May 26, 1999,
at 9:00 a.m., local time, at the Oregon Museum of Science and Industry, 1945
S.E. Water Avenue, Portland, Oregon.
Details of the business to be conducted at the Annual Meeting are given in
the attached Proxy Statement. The Company's Annual Report on Form 10-KSB for the
year ended December 31, 1998, is also enclosed.
Whether or not you plan to attend the meeting, it is important that your
shares be represented and voted at the meeting. Therefore, I urge you to sign,
date, and promptly return the enclosed proxy in the enclosed postage-paid
envelope. If you decide to attend the Annual Meeting and vote in person, you
will, of course, have that opportunity.
On behalf of the Board of Directors, I would like to express our continued
appreciation for your interest in the affairs of the Company.
Sincerely,
Denis R. Burger, Ph.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
AVI BIOPHARMA, INC.
ONE S.W. COLUMBIA STREET, SUITE 1105
PORTLAND, OREGON 97258
NOTICE OF ANNUAL MEETING
TO BE HELD ON MAY 26, 1999
To the Shareholders of AVI BioPharma, Inc.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the shareholders of AVI
BIOPHARMA, INC. (the "Company") will be held on May 26, 1999, at 9:00 a.m. local
time, at the Oregon Museum of Science and Industry, 1945 S.E. Water Avenue,
Portland, Oregon, for the following purposes:
1. To elect five Group II Directors, each for a two-year term;
2. To ratify the appointment of Arthur Andersen LLP as independent auditors
for the Company for the year ending December 31, 1999; and
3. To transact such other business as may properly come before the meeting.
The Board of Directors has fixed April 5, 1999, as the record date for the
determination of shareholders entitled to notice of and to vote at the Annual
Meeting. Only shareholders of record at the close of business on that date will
be entitled to notice of and to vote at the Annual Meeting or any adjournments
thereof.
By Order of the Board of Directors
Denis R. Burger, Ph.D.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Portland, Oregon
April 30, 1999
AVI BIOPHARMA, INC.
ONE S.W. COLUMBIA STREET, SUITE 1105
PORTLAND, OREGON 97258
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON MAY 26, 1999
GENERAL
This Proxy Statement is furnished to shareholders of AVI BIOPHARMA, INC.
(the "Company") in connection with the solicitation by the Board of Directors of
proxies from the shareholders of record of the Company's outstanding shares of
Common Stock, .0001 par value (the "Common Stock"), for use at the Company's
Annual Meeting of Shareholders to be held on May 26, 1999, at 9:00 a.m. local
time, at the Oregon Museum of Science and Industry, 1945 S.E. Water Avenue,
Portland, Oregon, and at any adjournments or postponements thereof (the "Annual
Meeting").
At the Annual Meeting, shareholders will be asked to (i) elect five members
to Group II of the Board of Directors, each for a two-year term, (ii) ratify the
appointment of Arthur Andersen LLP as independent auditors for the Company for
the year ending December 31, 1999, and(iii) transact such other business as may
properly come before the meeting. This Proxy Statement, together with the
enclosed proxy card, is first being mailed to the Company's shareholders on or
about April 30, 1999.
SOLICITATION, VOTING AND REVOCABILITY OF PROXIES
The Board of Directors has fixed April 5, 1999, as the record date for the
determination of the shareholders entitled to notice of and to vote at the
Annual Meeting. Accordingly, only holders of record of shares of Common Stock at
the close of business on such date will be entitled to notice of and to vote at
the Annual Meeting, with each such share entitling its owner to one vote on all
matters properly presented at the Annual Meeting. On the record date, there were
approximately 3,408 beneficial holders of the 13,351,206 shares of Common Stock
then outstanding. The presence, in person or by proxy, of 51% of the total
number of outstanding shares of Common Stock entitled to vote at the Annual
Meeting is necessary to constitute a quorum at the Annual Meeting.
If the enclosed form of proxy is properly executed and returned in time to
be voted at the Annual Meeting, the shares represented thereby will be voted in
accordance with the instructions marked therein. EXECUTED BUT UNMARKED PROXIES
WILL BE VOTED (i) FOR THE ELECTION OF THE DIRECTORS NAMED IN THE PROXY AND (ii)
FOR RATIFICATION OF THE APPOINTMENT OF ARTHUR ANDERSEN LLP AS INDEPENDENT
AUDITORS FOR THE YEAR ENDING DECEMBER 31, 1999. The Board of Directors does not
know of any matters other than those described in the Notice of Annual Meeting
that are to come before the Annual Meeting. If any other matters are properly
brought before the Annual Meeting, the persons named in the proxy will vote the
shares represented by such proxy upon such matters as determined by a majority
of the Board of Directors.
The presence of a shareholder at the Annual Meeting will not automatically
revoke such shareholder's proxy. A shareholder may, however, revoke a proxy at
any time prior to its exercise by filing a written notice of revocation with, or
by delivering a duly executed proxy bearing a later date to, Secretary, AVI
BioPharma, Inc., One S.W. Columbia Street, Suite 1105, Portland, Oregon 97258,
or by attending the Annual Meeting and voting in person. All valid, unrevoked
proxies will be voted at the Annual Meeting.
1
AVI BIOPHARMA, INC. DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth certain information with respect to the
directors and executive officers of AVI BIOPHARMA, INC:
NAME AGE POSITION
- --------------------------------------------- --- ---------------------------------------------
President, Chief Executive Officer and
Denis R. Burger, Ph.D.(1).................... 55 Chairman of the Board
Vice President of Regulatory Affairs and
Gordon W. Duncan, Ph.D....................... 66 Clinical Development
Senior Vice President of Research and
Patrick L. Iversen, Ph.D..................... 44 Development and Director
Jeffrey L. Lillard........................... 51 Vice President and Director
Chief Operating Officer, Chief Financial
Alan P. Timmins(1)........................... 39 Officer and Director
Senior Vice President of Chemistry and
Dwight D. Weller, Ph.D.(1)................... 48 Manufacturing and Director
Nick Bunick(2)............................... 63 Director
Bruce L.A. Carter, Ph.D.(3).................. 54 Director
James B. Hicks, Ph.D.(3)..................... 52 Director
Joseph Rubinfeld, Ph.D.(2)................... 66 Director
- ------------------------
(1) Member of the Executive Committee.
(2) Member of the Audit Committee.
(3) Member of the Compensation Committee.
DENIS R. BURGER, PH.D. has served as President and Chief Executive Officer
of AVI BioPharma, Inc. since January 1996, as President and Chief Operating
Officer from 1992 to 1996, as Chairman of the Board of AVI BioPharma, Inc. since
1998, and as a Director since 1991. From 1992 to 1995, he was President and
Chief Operating Officer of AVI BioPharma, Inc. He co-founded Epitope, Inc., a
biotechnology company, and served as Chairman from 1981 to 1990. Dr. Burger has
also been a member of Sovereign Ventures, LLC, a biotechnology consulting and
merchant banking venture since 1991. Dr. Burger is a member of the Board of
Directors of SuperGen, Inc. and Trinity Biotech PLC. Dr. Burger held the
positions of Assistant Professor, Associate Professor and Professor at the
Oregon Health Sciences University ("OHSU") from 1969 to 1986. Dr. Burger
received a B.A. in Bacteriology and Immunology from the University of
California, Berkeley, and his M.S. and Ph.D. degrees in Microbiology and
Immunology from the University of Arizona.
GORDON W. DUNCAN, PH.D. has served as Vice President of Regulatory Affairs
and Clinical Development of AVI BioPharma, Inc. since 1997. From 1991 to 1996,
he was Vice President for Research and a Director of ProCyte Corporation, and
previously served as Vice President for Administration of Upjohn Laboratories
(now part of Pharmacia and Upjohn) for more than 20 years. He is a founding and
current director of the Program for Appropriate Technology in Health, a Senior
Project Officer with the Concept Foundation, and the Executive Vice President
and Chief Operating Officer for Women's Capital Corporation. Dr. Duncan received
a B.S. in Animal Husbandry from Cornell University and an M.S. and Ph.D. in
Physiology from Iowa State University.
PATRICK L. IVERSEN, PH.D. has served as Senior Vice President of Research
and Development and a director of AVI BioPharma, Inc. since 1997. From 1987
through 1997, Dr. Iversen was on staff at the University of Nebraska Medical
Center, most recently as a Professor in the College of Medicine. Dr. Iversen,
who has published extensively on antisense research and development,
additionally served as a
2
consultant to various pharmaceutical and biotechnology companies, including
GLAXO Inc., Innovir Pharmaceuticals, Lynx Therapeutics, and Isis
Pharmaceuticals, as well as to AVI BioPharma, Inc. Dr. Iversen holds a B.S. in
Biology from Westminster College and a Ph.D. in Biochemical Pharmacology and
Toxicology from the University of Utah, followed by post-doctoral work at the
Eppley Institute for Research in Cancer and Allied Diseases.
JEFFREY L. LILLARD, has served as Vice President and a director of AVI
BioPharma, Inc. since September 1998. From 1995 to 1998, Mr. Lillard was
Managing Officer of ImmunoTherapy Corporation. From 1993 to 1998, Mr. Lillard
was a director of ImmunoTherapy Corporation. From 1993 to 1995, Mr. Lillard was
President and Chief Executive Officer of ImmunoTherapy Corporation. From 1979 to
1993, Mr. Lillard was Chief Executive Officer of Clinetics Corporation, a
contract manufacturing firm serving the pharmaceutical and biopharmaceutical
markets with sterile parenteral services. Mr. Lillard received a B.S. degree
from Michigan State University in 1970.
ALAN P. TIMMINS has served as Chief Operating Officer and Chief Financial
Officer of AVI BioPharma, Inc. since October 1996, as Executive Vice President
and Chief Financial Officer since 1992, and as a director of AVI BioPharma, Inc.
since 1997. From 1981 to 1991, he served in a variety of positions at the firm
of Price Waterhouse LLP, most recently as a Senior Manager specializing in high
technology and emerging growth companies. Mr. Timmins received a B.B.A. in
Accounting and Management from the University of Portland and an M.B.A. from
Stanford University. He is a Certified Public Accountant.
DWIGHT D. WELLER, PH.D. has served as Senior Vice President of Chemistry
and Manufacturing since 1997, as Vice President of Research and Development of
AVI BioPharma, Inc. from 1992 to 1997, and as a director of AVI BioPharma, Inc.
since 1991. He joined the faculty of Oregon State University in 1978 as
Assistant Professor and was an Associate Professor in the Chemistry Department
from 1984 to 1992. Dr. Weller received a B.S. in Chemistry from Lafayette
College and a Ph.D. in Chemistry from the University of California at Berkeley,
followed by postdoctoral work in Bio-Organic Chemistry at the University of
Illinois.
NICK BUNICK has served as a director of AVI BioPharma, Inc. since 1992. Mr.
Bunick is the President and Chairman of the Board of three real estate
development companies and one investment management company. From 1987 to 1990,
he was a Vice President of In-Focus Systems, Inc., a company that specializes in
the design and manufacturing of flat panel display products. Mr. Bunick received
a B.S. in Business Administration and Marketing from the University of Florida.
BRUCE L. A. CARTER, PH.D. has been a director of AVI BioPharma, Inc. since
1998. From 1997 to 1998, Dr. Carter was a director of ImmunoTherapy Corporation
and a member of its Science Advisory Board from 1996 to 1998. He is Executive
Vice President and Chief Science Officer of Novo Nordisk A/S in Copenhagen,
Denmark and Seattle, Washington. From 1988 through 1993, Dr. Carter was
President and CEO of ZymoGenetics, Inc. of Seattle, a wholly owned Novo Nordisk
subsidiary. Prior to that he was the Head of Molecular Genetics for G.D. Searle
& Co. Dr. Carter serves on several Boards of Directors, including Virginia Mason
Hospital Research Center, Anergen, Inc., as well as Novo Nordisk A/S and
ZymoGenetics, Inc. Dr. Carter received his Ph.D. in Microbiology from the
University of London, where he was a member of Queen Elizabeth College. He
completed post-doctoral fellowships at the University of Edinburgh and the
University of Wisconsin. Subsequently he was Lecturer in Genetics at (and an
elected Fellow of) Trinity College, Dublin. In 1996 he was elected to the
Faculty of the University of Washington as Associate Professor of BioChemistry.
JAMES B. HICKS, PH.D. has served as a director of AVI BioPharma, Inc. since
1997. He has served as the Chief Executive Officer, Chief Scientist and a
director of Hedral Therapeutics, Inc., a biotechnology company, since its
founding in 1993. Previously, he was a founding scientist and a Senior
Scientific Director at ICOS Corporation from 1990 to 1993, and Director of the
PPG Industries/Scripps Joint Research Program at Scripps Clinic, as well as an
Adjunct Member of the Molecular Biology Department in the
3
Research Institute of Scripps Clinic from 1986 to 1990. From 1978 through 1986,
he was Senior Scientist and Lab Chief of the Delbruck Laboratory at Cold Spring
Harbor Laboratory. Dr. Hicks received his B.A. degree in Biology from Willamette
University and his Ph.D. in Molecular Biology from the University of Oregon,
followed by post-doctoral research at Cornell University.
JOSEPH RUBINFELD, PH.D. has served as a director of AVI BioPharma, Inc.
since 1996. He has served as Chief Executive Officer, President, Chief
Scientific Officer and a director of SuperGen, Inc. since its inception in 1991.
Dr. Rubinfeld was one of the four initial founders of Amgen, Inc. in 1980 and
served as Vice President and Chief of Operations until 1983. From 1987 to 1990,
he was Senior Director at Cetus Corporation. From 1968 to 1980, Dr. Rubinfeld
was employed at Bristol-Myers Squibb (formerly Bristol-Myers International
Corporation) in a variety of positions, most recently as Vice President and
Director of Research and Development. He received his B.S. in Chemistry from
C.C.N.Y., and his M.A. and Ph.D. degrees in Chemistry from Columbia University.
BOARD OF DIRECTORS MEETINGS AND COMMITTEES
During 1998, AVI BioPharma, Inc.'s Board of Directors held four (4)
meetings. Each incumbent director attended more than seventy-five percent (75%)
of the aggregate of the total number of meetings held by the Board of Directors
and the total number of meetings held by all committees of the Board on which he
served during the period that he served.
The Board of Directors has appointed a standing Audit Committee which,
during the fiscal year ended December 31, 1998, conducted no meetings. The
members of the Audit Committee currently are Nick Bunick and Joseph Rubinfeld,
Ph.D. The Audit Committee reviews the scope of the independent annual audit, the
independent public accountants' letter to the Board of Directors concerning the
effectiveness of AVI BioPharma, Inc.'s internal financial and accounting
controls and the Board of Directors' response to that letter, if deemed
necessary. The Board of Directors also has appointed a Compensation Committee
which reviews executive compensation and makes recommendations to the full Board
regarding changes in compensation, and also administers AVI BioPharma, Inc.'s
stock option plans. During the fiscal year ended December 31, 1998, the
Compensation Committee held one (1) meeting. The members of the Compensation
Committee currently are James B. Hicks, Ph.D., and Bruce L. A. Carter, Ph.D.
DIRECTOR COMPENSATION
Directors who are not employees of AVI BioPharma, Inc. receive a
nonqualified option to purchase 33,334 shares of Common Stock at an exercise
price equal to the fair market value of the Common Stock on the date of the
grant pursuant to AVI BioPharma, Inc.'s 1992 Stock Incentive Plan, which vest
over four years. In addition, each outside director receives $1,000 for each
Board meeting attended in person. Drs. Rubinfeld and Carter are reimbursed for
expenses of attendance at Board meetings.
SCIENTIFIC ADVISORY COMMITTEE
AVI BioPharma, Inc. has established relationships with a group of scientific
advisors with expertise in their respective fields that complement AVI
BioPharma, Inc.'s product research and development. The following individuals
serve on the Scientific Advisory Committee to AVI BioPharma, Inc.'s Board of
Directors:
CHRISTOPHER K. MATHEWS, PH.D. is Chairman of the Scientific Advisory
Committee. He is the Chairman of the Biochemistry-Biophysics Department at
Oregon State University. Dr. Mathews received a B.A. from Reed College and a
Ph.D. in Biochemistry from the University of Washington. He performed
postdoctoral work in Biochemistry at the University of Pennsylvania. Dr. Mathews
joined the Scientific Advisory Committee in 1994 and was a director of AVI
BioPharma, Inc. from 1991 to 1994.
4
STEVEN H. HEFENEIDER, PH.D. has been a staff immunologist at the Veterans
Administration Medical Center in Portland, Oregon since 1985 and Research
Associate Professor in the Department of Medicine at OHSU since 1987. He
received a B.S. in biology from the University of Oregon, an M.S. in genetics
from the University of Minnesota and a Ph.D. in Microbiology and Immunology from
OHSU in 1981.
DAVID J. HINRICHS, PH.D. is a Research Scientist at the Veterans
Administration Medical Center in Portland, Oregon and a Professor of
Microbiology and Immunology at OHSU. From 1976 to 1985 he was a Professor of
Microbiology at Washington State University. He received a Ph.D. in Microbiology
from the University of Arizona in 1967.
JEFFREY D. HOSENPUD, M.D. has been Chief of Cardiology and a Professor of
Medicine at the Medical College of Wisconsin in Milwaukee since 1994. Dr.
Hosenpud was Professor of Medicine and Head of the Cardiac Transplant Medicine
at OHSU from 1980 to 1994, and Medical Director for the Registry of the
International Society for Heart & Lung Transplantation since 1993. Dr. Hosenpud
completed his M.D. at the University of California, Los Angeles.
AVI BIOPHARMA, INC. EXECUTIVE COMPENSATION
SUMMARY OF CASH AND CERTAIN OTHER COMPENSATION
The following table provides certain summary information concerning the
compensation of AVI BioPharma, Inc.'s Chief Executive Officer and each of the
four (4) other most highly compensated executive officers of AVI BioPharma, Inc.
(the "named executive officers") for the fiscal years ending December 31, 1998,
1997 and 1996.
LONG-TERM
COMPENSATION
--------------
ANNUAL COMPENSATION SECURITIES
-------------------------------- UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS OPTIONS/SARS COMPENSATION
- -------------------------------------------------------- --------- ---------- --------- -------------- ---------------
Denis R. Burger, Ph.D................................... 1998 $ 240,400 $ 25,000 200,000 $ 7,250
President and Chief Executive 1997 216,650 25,000 100,000 3,558
Officer 1996 121,925 -- -- 2,443
Alan P. Timmins......................................... 1998 $ 175,400 $ 25,000 135,000 $ 4,662
Chief Operating Officer and Chief 1997 130,400 25,000 50,000 2,265
Financial Officer 1996 76,959 -- -- 2,262
Patrick L. Iversen, Ph.D................................ 1998 $ 150,400 -- 56,000 $ 851
Senior Vice President of Research 1997 39,634 -- 100,000 --
and Development 1996 -- -- -- --
Dwight D. Weller, Ph.D.................................. 1998 $ 150,400 -- 84,000 $ 3,925
Senior Vice President of Chemistry 1997 130,817 -- 50,000 2,412
and Manufacturing 1996 82,066 -- -- 2,412
Jeffrey L. Lillard...................................... 1998 $ 121,458 -- 50,000 --
Vice President 1997 -- -- -- --
1996 -- -- -- --
STOCK OPTIONS
The following table sets forth information concerning options granted to the
named executives during the year ended December 31, 1998, under AVI BioPharma,
Inc.'s 1992 Stock Incentive Plan.
5
OPTION GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZABLE VALUE AT
NUMBER OF ASSUMED ANNUAL RATES OF STOCK
SECURITIES APPRECIATION FOR OPTION
UNDERLYING PERCENT OF TOTAL EXERCISE TERM(3)
OPTIONS OPTIONS GRANTED PRICE PER -----------------------------
NAME GRANTED(2) EMPLOYEES IN 1998 SHARE EXPIRATION DATE 5% / 10%
- ------------------------------ ----------- ------------------- ----------- --------------- -----------------------------
John Beaulieu(1).............. 33,334 4.42% $ 3.81 08/24/2003 $ 35,088/$77,536
Denis Burger, Ph.D............ 200,000 26.49% 6.63 02/02/2008 $ 874,008/$2,176,552
Bruce Carter, Ph.D............ 33,334 4.42% 3.75 11/30/2008 $ 78,613/$199,222
Patrick Iversen, Ph.D......... 56,000 7.42% 6.63 02/02/2008 $ 244,722/$609,435
Jeffrey Lillard............... 50,000 6.62% 3.13 09/15/2008 $ 97,858/$248,374
Alan Timmins.................. 135,000 17.88% 6.63 02/02/2008 $ 589,955/$1,469,173
Dwight Weller, Ph.D........... 84,000 11.13% 6.63 02/02/2008 $ 367,083/$914,152
- ------------------------
(1) Mr. Beaulieu resigned from the Board of Directors on June 12, 1998.
(2) All options granted in 1998 for Mr. Carter become exercisable starting
August 31, 1999, with one-quarter of the options becoming exercisable at
that time with an additional one-quarter of the options becoming exercisable
on the first, second and third anniversary dates of August 31, 1999,
respectively. All options granted in 1998 for Mr. Lillard become exercisable
starting 12 months after the grant date, with one-quarter of the options
becoming exercisable at that time with an additional one-quarter of the
options becoming exercisable on the second, third and fourth anniversary
dates of the option grant, respectively. All options granted in 1998 for Mr.
Beaulieu became exercisable on September 24, 1998. All options granted in
1998 for Dr. Burger, Mr. Timmins and Dr. Weller became exercisable starting
on the grant date, with one-third being exercisable at that time with an
additional one-third of the options becoming exercisable on January 1, 1999
and January 1, 2000, respectively. All options granted in 1998 for Dr.
Iversen become exercisable starting January 1, 1999, with one-half of the
options becoming exercisable at that time with the remaining one-half of the
options becoming exercisable on January 1, 2000.
(3) The amounts shown are hypothetical gains based on the indicated assumed
rates of appreciation of the Common Stock compounded annually for a ten-year
period. Actual gains, if any, on stock option exercises are dependent on the
future performance of the Common Stock and overall stock market conditions.
There can be no assurance that the Common Stock will appreciate at any
particular rate or at all in future years.
6
OPTION EXERCISES AND HOLDINGS
The following table provides information, with respect to the named
executive officers, concerning the exercise of options during the year ended
December 31, 1998, and unexercised options held as of December 31, 1998.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-
SHARES OPTIONS AT DECEMBER 31, MONEY OPTIONS AT DECEMBER 31,
ACQUIRED ON VALUE 1998 EXERCISABLE/ 1998(3) EXERCISABLE/
NAME EXERCISE REALIZED(2) UNEXERCISABLE UNEXERCISABLE
- --------------------------------------- ----------- ----------- ----------------------- -----------------------------
John Beaulieu(1)....................... -- -- 33,334/-- $ 6,333/--
Denis Burger, Ph.D..................... -- -- 532,402/133,333 --/--
Bruce Carter, Ph.D..................... -- -- 17,640/33,334 559/8,334
Patrick Iversen, Ph.D.................. -- -- 25,000/131,000 --/--
Jeffrey Lillard........................ -- -- 28,350/50,000 899/43,750
Alan Timmins........................... -- -- 185,000/106,667 --/--
Dwight Weller, Ph.D.................... -- -- 172,017/56,001 --/--
Nick Bunick............................ -- -- 33,334/-- --/--
James Hicks, Ph.D...................... -- -- 8,333/25,001 --/--
Joseph Rubinfeld, Ph.D................. -- -- 16,667/16,667 --/--
- ------------------------
(1) Mr. Beaulieu resigned from the Board of Directors on June 12, 1998.
(2) The value realized is based on the difference between the market price at
the time of exercise of the options and the applicable exercise price.
(3) Represents the total gain which would be realized if all in-the-money
options held at December 31, 1998 were exercised, determined by multiplying
the number of shares underlying the options by the difference between the
per share option exercise price and the fair market value of $4.00 per share
at December 31, 1998. An option is in-the-money if the fair market value of
the underlying shares exceeds the exercise price of the option.
SECTION 16 REPORTS
Section 16(a) of the Exchange Act requires AVI BioPharma, Inc.'s directors
and officers, and persons who own more than ten percent (10%) of a registered
class of AVI BioPharma, Inc.'s equity securities, to file initial reports of
ownership and report of changes in ownership with the Commission. Such persons
also are required to furnish AVI BioPharma, Inc. with copies of all Section
16(a) reports they file.
Based solely on its review of the copies of such reports received by it with
respect to fiscal year 1998, or written representations from certain reporting
persons, AVI BioPharma, Inc. believes that all filing requirements applicable to
its directors, officers and persons who own more than ten percent (10%) of a
registered class of AVI BioPharma, Inc.'s equity securities have been complied
with for fiscal 1998.
STOCK OWNED BY AVI BIOPHARMA, INC. MANAGEMENT AND PRINCIPAL SHAREHOLDERS
The following table sets forth certain information regarding the ownership
of AVI BioPharma, Inc. Common Stock as of March 31, 1999, with respect to: (i)
each person known by AVI BioPharma, Inc. to beneficially own more than five
percent (5%) of the outstanding shares of AVI BioPharma, Inc. Common
7
Stock, (ii) each of AVI BioPharma, Inc.'s directors, (iii) each of AVI
BioPharma, Inc.'s named executive officers and (iv) all directors and executive
officers as a group.
SHARES BENEFICIALLY
OWNED
----------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER(1) PERCENT(1)
- ---------------------------------------------------------------------------------------- ---------- ----------
James E. Summerton, Ph.D.(2) ........................................................... 2,024,388 15.2%
2680 S.W. 3rd Street
Corvallis, OR 97333
Jeffrey L. Lillard(3) .................................................................. 1,053,070 7.9%
AVI BioPharma, Inc.
1 S.W. Columbia, Suite 1105
Portland, OR 97258
John A. Beaulieu(4)(5) ................................................................. 765,786 5.7%
4370 N.E. Halsey, Suite 233
Portland, OR 97213
Oregon Resource and Technology(4)(6) ................................................... 765,786 5.7%
Development Fund
4370 N.E. Halsey, Suite 233
Portland, OR 97213
Wayne Embree(4)(7) ..................................................................... 732,452 5.5%
4370 N.E. Halsey, Suite 233
Portland, OR 97213
Denis R. Burger, Ph.D.(8) .............................................................. 650,219 4.9%
AVI BioPharma, Inc.
1 S.W. Columbia, Suite 1105
Portland, OR 97258
Dwight D. Weller, Ph.D.(9) ............................................................. 482,447 3.6%
AVI BioPharma, Inc.
4575 S.W. Research Way, Suite 200
Corvallis, OR 97333
Alan P. Timmins(10) .................................................................... 251,158 1.9%
AVI BioPharma, Inc.
1 S.W. Columbia, Suite 1105
Portland, OR 97258
Nick Bunick(11) ........................................................................ 200,734 1.5%
AVI BioPharma, Inc.
1 S.W. Columbia, Suite 1105
Portland, OR 97258
8
SHARES BENEFICIALLY
OWNED
----------------------
NAME AND ADDRESS OF BENEFICIAL OWNER NUMBER(1) PERCENT(1)
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Patrick L. Iversen, Ph.D.(12) .......................................................... 77,900 *
AVI BioPharma, Inc.
4575 S.W. Research Way, Suite 200
Corvallis, OR 97333
Joseph Rubinfeld, Ph.D.(13) ............................................................ 25,000 *
AVI BioPharma, Inc.
1 S.W. Columbia, Suite 1105
Portland, OR 97258
Bruce L.A. Carter, Ph.D.(14) ........................................................... 17,640 *
AVI BioPharma, Inc.
1 S.W. Columbia, Suite 1105
Portland, OR 97258
James B. Hicks, Ph.D.(15) .............................................................. 16,667 *
AVI BioPharma, Inc.
1 S.W. Columbia, Suite 1105
Portland, OR 97258
All directors and officers as a group (10 persons)...................................... 2,788,625 20.9%
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* Less than one percent
(1) Beneficial ownership is determined in accordance with rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock subject
to options and warrants currently exercisable or convertible, or exercisable
or convertible within sixty (60) days of March 31, 1999, are deemed
beneficially owned and outstanding for computing the percentage of the
person holding such securities, but are not considered outstanding for
computing the percentage of any other person.
(2) Includes 727,154 shares held jointly or by others over which Dr. Summerton
exercises voting and investment power.
(3) Includes 510,246 shares subject to warrants and 28,350 shares subject to
options exercisable within sixty (60) days of March 31, 1999.
(4) The Oregon Resource and Technology Development Fund ("ORTDF") is an
investment fund established by the State of Oregon. ORTDF has contracted
with Cascadia Pacific Management, LLC to manage the assets of ORTDF. ORTDF
also has contracted with Cascadia Pacific Management, LLC to hold of record
equity investments of ORTDF for the benefit of ORTDF. Mr. Beaulieu and Mr.
Embree are the sole member managers of Cascadia Pacific Management, LLC.
(5) Includes 33,334 shares subject to options exercisable within sixty (60) days
of March 31, 1999, of which Mr. Beaulieu is the record owner. ORTDF is the
beneficial owner of all of the 33,334 options for which Mr. Beaulieu is the
record owner. Includes 732,452 shares of Common Stock issued to Cascadia
Pacific Management, LLC for the benefit of ORTDF.
(6) Includes 33,334 shares subject to options held of record by Mr. Beaulieu and
exercisable within sixty (60) days of March 31, 1999, and 732,452 shares
issued to Cascadia Pacific Management, LLC for the benefit of ORTDF. See
note 4 above.
(7) Includes 732,452 shares of Common Stock issued to Cascadia Pacific
Management, LLC for the benefit of ORTDF.
9
(8) Includes 34,434 shares held by Sovereign Ventures, LLC, a limited liability
company in which Dr. Burger is a general partner. Also includes 599,068
shares subject to options exercisable within sixty (60) days of March 31,
1999.
(9) Includes 247,634 shares held jointly or by others over which Dr. Weller
exercises voting and investment power, 200,017 shares subject to options
exercisable by Dr. Weller and 7,418 shares subject to options exercisable by
Dr. Weller's spouse within sixty (60) days of March 31, 1999.
(10) Includes 246,667 shares subject to options exercisable within sixty (60)
days of March 31, 1999.
(11) Includes 50,667 shares held jointly or by others over which Mr. Bunick
exercises voting and investment power. Includes 33,334 shares subject to
options exercisable within sixty (60) days of March 31, 1999.
(12) Includes 53,000 shares subject to options exercisable within sixty (60)
days of March 31, 1999.
(13) Includes 25,000 shares subject to options exercisable within sixty (60)
days of March 31, 1999.
(14) Includes 17,640 shares subject to options exercisable within sixty (60)
days of March 31, 1999.
(15) Includes 16,667 shares subject to options exercisable within sixty (60)
days of March 31, 1999.
10
CERTAIN TRANSACTIONS AND RELATIONSHIPS WITH AVI BIOPHARMA, INC.
James E. Summerton, Ph.D., the former President, former Chief Scientific
Officer, and a former director of AVI BioPharma, Inc., is the general partner of
Anti-Gene Development Group ("AGDG"), and was the general partner of NEU-GENE
Development Group ("NGDG"). AGDG was founded in 1981 and NGDG was founded in
1984 to own and fund AVI BioPharma, Inc.'s development of gene-targeted
therapeutics and NEU-GENE technology. NGDG and AGDG were combined in 1989, with
AGDG as the surviving entity. AVI BioPharma, Inc. entered into numerous research
and development contracts with AGDG and NGDG, all of which were completed or
were superseded by the Technology Transfer Agreement described below.
On February 9, 1993, the company and AGDG entered into a Technology Transfer
Agreement whereby effective May 19, 1993, AGDG conveyed all intellectual
property in its control related to antisense technology (the "Intellectual
Property") to AVI BioPharma, Inc. As part of the conveyance, AVI BioPharma, Inc.
tendered to AGDG for liquidation all partnership units received pursuant to an
exchange offer and received a 49.37 percent undivided interest in the
intellectual property. AVI BioPharma, Inc. then purchased the remaining
undivided interest in the Intellectual Property in consideration of payments of
4.05 percent of gross revenues in excess of $200 million, if any, sales of
products by AVI BioPharma, Inc. which would, in the absence of the Technology
Transfer Agreement, infringe a valid claim under any patent transferred to AVI
BioPharma, Inc. (the "Technology Fees"). AVI BioPharma, Inc.'s obligation to
make payments of the Technology Fees with respect to a particular product
terminates upon the expiration of all patents transferred to AVI BioPharma, Inc.
pursuant to the Technology Transfer Agreement related to that product.
Pursuant to a License and Option Agreement by and between AGDG and AVI
BioPharma, Inc. dated February 9, 1993 (the "License Agreement"), AVI BioPharma,
Inc. granted to AGDG a royalty-free nonexclusive license to use the Intellectual
Property for internal research and development and to sell small quantities of
products incorporating the Intellectual Property. In addition, if AGDG develops
any specific prototype products which incorporate any of the Intellectual
Property, AVI BioPharma, Inc. has the right to commercialize and market such
products in consideration of payments of 4.05 percent of gross revenues, in
excess of the $200 million exemption for all products utilizing the Intellectual
Property, to AGDG. If AVI BioPharma, Inc. elects not to commercialize the
proposed AGDG product or fails to meet certain product development milestones,
AVI BioPharma, Inc. is required to grant AGDG a license to develop and market
the proposed product (an "AGDG License"). AVI BioPharma, Inc. is entitled to
payments for the AGDG license but only if the proposed product incorporates
patented improvements developed by AVI BioPharma, Inc. to the Intellectual
Property. The amount of the license fee payable to AVI BioPharma, Inc. by AGDG
for products sold by AVI BioPharma, Inc. and covered by the Technology Transfer
Agreement. AGDG also has the right to obtain an exclusive royalty-free license
to use, develop, make, sell, distribute and sublicense products utilizing the
Intellectual Property at such time as AVI BioPharma, Inc. has less than ten (10)
full-time employees engaged in developing, testing or marketing products based
upon the Intellectual Property for a period of at least 180 consecutive days.
On January 20, 1997, AGDG and AVI BioPharma, Inc. amended the Technology
Transfer Agreement to reduce the Technology Fees arising from the sale of
diagnostic products from 4.05 percent to 2 percent and to remove the $200
million exemption with respect to sales of such diagnostic products. AVI
BioPharma, Inc. also granted to AGDG royalty-bearing licenses to make, use and
sell certain quantities of product derived from the Intellectual Property.
On June 8, 1998, the Company loaned $440,000 to Mr. Jeffrey L. Lillard, a
Vice President and Director, to assist Mr. Lillard with his relocation to
Portland, Oregon. This loan was (i) full recourse, (ii) interest-bearing at the
rate of nine and one-half percent (9 1/2%) per annum, (iii) secured by a
mortgage on Mr. Lillard's residence and a guaranty of Mr. Matthew L. Lillard,
and (iv) due March 31, 1999. The indebtedness of Mr. Lillard to the Company was
fully paid on March 31, 1999.
11
ELECTION OF AVI BIOPHARMA, INC. DIRECTORS
At the AVI BioPharma Annual Meeting, five (5) directors will be elected,
each for a two-year term. Unless otherwise specified on the proxy, it is the
intention of the persons named in the proxy to vote the shares represented by
each properly executed proxy for the election as directors of the persons named
below as nominees. The Board of Directors believes that the nominees will stand
for election and will serve if elected as directors. However, if any of the
persons nominated by the Board of Directors fails to stand for election or is
unable to accept election, the proxies will be voted for the election of such
other person as the Board of Directors may recommend.
Under AVI BioPharma's bylaws, the directors are divided into two groups with
Group I consisting of four (4) directors and Group II consisting of five (5)
directors. The term of office of one group of directors expires in each year,
and their successors are elected for terms of two years and until their
successors are elected and qualified. There is no cumulative voting for election
of directors.
INFORMATION AS TO NOMINEES AND CONTINUING DIRECTORS. The following table
sets forth the names of the Board of Director's nominees for election as a Group
II director and those directors who will continue to serve after the AVI
BioPharma Annual Meeting. Also set forth is certain other information with
respect to each such person's age at March 31, 1999, the periods during which he
has served as a director of AVI BioPharma and positions currently held with AVI
BioPharma.
DIRECTOR EXPIRATION OF
AGE SINCE TERM POSITIONS HELD WITH AVI BIOPHARMA
----------- ----------- ------------- ------------------------------------------
NOMINEES:
Denis R. Burger, Ph.D................... 55 1991 2001 President, Chief Executive Officer,
Director
Patrick L. Iversen, Ph.D................ 44 1997 2001 Vice President of Research and
Development, Director
Nick Bunick............................. 63 1992 2001 Director
Bruce L. A. Carter, Ph.D................ 54 1998 2001 Director
Jeffrey L. Lillard...................... 51 1990 2001 Vice President, Director
CONTINUING DIRECTORS:
James B. Hicks, Ph.D.................... 52 1997 2000 Director
Joseph Rubinfeld, Ph.D.................. 66 1996 2000 Director
Alan P. Timmins......................... 39 1997 2000 Chief Operating Officer, Chief Financial
Officer, and Director
Dwight D. Weller, Ph.D.................. 48 1991 2000 Senior Vice President of Chemistry and
Manufacturing, and Director
BOARD OF DIRECTORS COMMITTEES AND NOMINATIONS BY SHAREHOLDERS. The Board of
Directors acts as a nominating committee for selecting nominees for election as
directors. The Board will also permit shareholders to make nominations for the
election of directors, if such nominations are made pursuant to timely notice in
writing to AVI BioPharma's Secretary. To be timely, notice must be delivered to,
or mailed to and received at, the principal executive offices of AVI BioPharma
not less than 60 days prior to the date of the meeting.
See "AVI BIOPHARMA, INC. DIRECTORS AND EXECUTIVE OFFICERS" for biographical
information with respect to the Nominees and Continuing Directors and
"--Director Compensation" for certain information regarding compensation of
directors.
12
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT SHAREHOLDERS VOTE FOR THE
ELECTION OF ITS NOMINEES FOR DIRECTOR. If a quorum is present, AVI BioPharma's
Bylaws provide that directors are elected by a plurality of the votes cast by
the shares entitled to vote. Abstentions and broker non-votes are counted for
purposes of determining whether a quorum exists at the AVI BioPharma Annual
Meeting, but are not counted and have no effect on the determination of whether
a plurality exists with respect to a given nominee.
RATIFICATION OF APPOINTMENT OF AVI BIOPHARMA INDEPENDENT AUDITORS
The AVI BioPharma Board has appointed Arthur Andersen LLP to act as
independent auditors for AVI BioPharma for the fiscal year ending December 31,
1999, subject to ratification of such appointment by AVI BioPharma's
shareholders.
Unless otherwise indicated, properly executed proxies will be voted in favor
of ratifying the appointment of Arthur Andersen LLP to audit the books and
accounts of AVI BioPharma for the fiscal year ending December 31, 1999.
A representative of Arthur Andersen LLP is expected to be present at the AVI
BioPharma Annual Meeting and will be given an opportunity to make a statement if
he or she desires to do so and will be available to respond to appropriate
questions.
THE AVI BIOPHARMA BOARD UNANIMOUSLY RECOMMENDS A VOTE FOR THIS
PROPOSAL. The proposal must be approved by the holders of at least a majority
of the shares of AVI BioPharma Common Stock present in person or by proxy at the
AVI BioPharma Annual Meeting. Abstentions and broker non-votes are treated as
"no" votes in determining whether the proposal is approved. The proxies will be
voted for or against the proposal, or as an abstention, in accordance with the
instructions specified on the proxy form. If no instructions are given, proxies
will be voted for approval of the amendment to the Plan.
13
OTHER BUSINESS
As of the date of this Proxy Statement, the Company knows of no other
business that will be presented for action at the meeting. If any other business
requiring a vote of the shareholders should properly come before the meeting,
the persons named in the enclosed proxy form will vote in their discretion upon
such other matters.
DATE FOR SUBMISSION OF SHAREHOLDER PROPOSALS
Any shareholder proposal intended for inclusion in the proxy statement and
form of proxy relating to the Company's 2000 annual meeting of shareholders must
be received by the Company not later than December 31, 1999, pursuant to the
proxy soliciting regulations of the Securities and Exchange Commission (the
"SEC"). Nothing in this paragraph shall be deemed to require the Company to
include in its proxy statement or form of proxy for such meeting any shareholder
proposal which does not meet the requirements of the SEC in effect at the time.
COST OF SOLICITATION
The cost of soliciting proxies will be borne by the Company. In addition to
use of the mails, proxies may be solicited personally or by telephone by
directors, officers and employees of the Company, who will not be additionally
compensated for such activities. Such solicitations may be made personally, or
by mail, facsimile, telephone, telegraph or messenger. The Company will also
request persons, firms and companies holding shares in their names or in the
name of their nominees, which are beneficially owned by others, to send proxy
materials to and obtain proxies from such beneficial owners. The Company will
reimburse such persons for their reasonable expenses incurred in that
connection.
ADDITIONAL INFORMATION
A copy of the Company's Annual Report to Shareholders for the fiscal year
ended December 31, 1998 accompanies this Proxy Statement. The Company is
required to file an Annual Report on Form 10-KSB for its fiscal year ended
December 31, 1998 with the Securities and Exchange Commission (the "SEC"). The
SEC maintains a web site, WWW.SEC.GOV, that contains reports, proxy statements,
and certain other information filed electronically by the Company with the SEC.
Shareholders may obtain, free of charge, a copy of the Form 10-KSB, without
exhibits, by writing to Investor Relations, AVI BioPharma, Inc., One S.W.
Columbia Street, Portland, Oregon 97258 or visiting the Company's web site at
WWW.AVIBIO.COM.
14
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AVI BIOPHARMA, INC. PROXY
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of ANTIVIRALS INC., an Oregon corporation
(the "Company"), hereby appoints Denis R. Burger, Ph.D. and Alan P. Timmins,
or either of them, with full power of substitution in each, as proxies to
cast all votes which the undersigned stockholder is entitled to cast at the
Annual Meeting of Stockholders (the "Annual Meeting") to be held at 9:00 a.m.
local time, on Wednesday, May 26, 1999, at the Oregon Museum of Science and
Industry, 1945 S.E. Water Avenue, Portland, Oregon, and any adjournments or
postponements thereof upon the matters listed herein.
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- FOLD AND DETACH HERE -
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Please mark
your votes as /X/
indicated in
this example
1. To elect five members to the Company's Board of Directors. Directors
nominated are Dennis R. Burger, Ph.D., Patrick L. Iverson, Ph.D., Nick
Bunick, Bruce L.A. Carter, Ph.D., and Jeffrey L. Lillard
WITHHELD FOR ALL
FOR FOR ALL EXCEPT *
/ / / / / /
*Except:
----------------------------------------------------
2. To ratify the appointment of Arthur Andersen LLP as the Company's
independent auditors.
FOR AGAINST ABSTAIN
/ / / / / /
3. In their discretion, the proxies are authorized to vote upon such matters
as may properly come before the meeting or any adjournments or postponements
thereof.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD TODAY, USING THE ENCLOSED
ENVELOPE. THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. UNLESS DIRECTION IS GIVEN,
THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES LISTED IN PROPOSAL
1, FOR PROPOSAL 2, AND IN ACCORDANCE WITH THE RECOMMENDATIONS OF A MAJORITY
OF THE BOARD OF DIRECTORS AS TO OTHER MATTERS.
The undersigned hereby acknowledges receipt of the Company's Proxy Statement
and hereby revokes any proxy or proxies previously given.
Please sign below exactly as your name appears on this Proxy Card. If shares
are registered in more than one name, the signatures of all such persons are
required. A corporation should sign in its full corporate name by a duly
authorized officer, stating his/her title. Trustees, guardians, executors and
administrators should sign in their official capacity, giving their full
title as such. If a partnership, please sign in the partnership name by
authorized person(s).
Typed or Printed Name(s)
----------------------------------------------
Authorized Signature
--------------------------------------------------
Title or Authority, if applicable
--------------------------------------
Date
------------------------
If you received more than one Proxy Card, please sign and return all such
cards in the accompanying envelope.
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- FOLD AND DETACH HERE -
