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
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|X| Preliminary Proxy Statement |_| Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e)(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
TRIANGLE PHARMACEUTICALS, INC.
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(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
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|_| Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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(4) Date Filed:
[LOGO OF TRIANGLE PHARMACEUTICALS]
4 University Place, 4611 University Drive
Durham, North Carolina 27707
April 6, 2001
To the Stockholders of TRIANGLE PHARMACEUTICALS, INC.:
You are cordially invited to attend the Annual Meeting of the Stockholders
of Triangle Pharmaceuticals, Inc., to be held at The University Club, 3100 Tower
Boulevard, Durham, North Carolina 27707 on May 18, 2001 at 10:00 a.m.
Details of the business to be conducted at the Annual Meeting are given in
the attached Notice of Annual Meeting and Proxy Statement which you are urged to
read carefully.
If you do not plan to attend the Annual Meeting, please sign, date, and
return the enclosed proxy card promptly in the accompanying reply envelope. You
may also vote by phone or the internet by following the instructions on the
proxy card. If you decide to attend the Annual Meeting and wish to change your
proxy vote, you may do so automatically by voting in person at the Annual
Meeting.
We look forward to seeing you at the Annual Meeting.
David W. Barry, M.D.
Chairman and Chief Executive Officer
YOUR VOTE IS IMPORTANT
In order to assure your representation at the annual meeting, you are
requested to complete, sign and date the enclosed proxy card as promptly as
possible and return it in the enclosed envelope, to which no postage need be
affixed if mailed in the United States. You may also vote by phone or the
internet by following the instructions on the proxy card.
TRIANGLE PHARMACEUTICALS, INC.
4 University Place, 4611 University Drive
Durham, North Carolina 27707
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 18, 2001
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To the Stockholders of
TRIANGLE PHARMACEUTICALS, INC.
The Annual Meeting of Stockholders of Triangle Pharmaceuticals, Inc.,
Triangle, will be held at The University Club, 3100 Tower Boulevard, Durham,
North Carolina 27707 on May 18, 2001 at 10:00 a.m., the Annual Meeting, to
consider and vote upon the following matters, which are more fully described in
the accompanying Proxy Statement:
1. To approve the terms of the issuance on March 9, 2001 of 200,000
shares of Series B preferred stock, par value $0.001 per share, at a price
per share of $60.00;
2. To approve an amendment to our 1996 Stock Incentive Plan
increasing the number of shares of common stock reserved for issuance
under the plan by 1,500,000 shares in 2002 and 1,500,000 shares in 2003,
and increasing the number of shares for which options granted to
non-employee members of the Board of Directors under the Automatic Option
Program of the Plan are exercisable;
3. To elect three directors to the class of directors whose term
expires in 2004. The Board of Directors has nominated the following
persons for reelection at the Annual Meeting: Standish M. Fleming, Dennis
B. Gillings, Ph.D. and Henry G. Grabowski, Ph.D;
4. To ratify the appointment of PricewaterhouseCoopers LLP as
Triangle's independent accountants for the fiscal year ending December 31,
2001; and
5. To transact any other business that properly comes before the
Annual Meeting or any adjournment thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice. All stockholders of record at the close of
business on March 23, 2001 will be entitled to vote at the Annual Meeting and at
any adjournment thereof. The transfer books will not be closed. A list of
stockholders entitled to vote at the Annual Meeting will be available for
inspection at Triangle's offices.
By Order of the Board of Directors
R. Andrew Finkle, Secretary
April 6, 2001
YOUR VOTE IS VERY IMPORTANT, REGARDLESS OF THE NUMBER OF SHARES YOU OWN, PLEASE
READ THE ATTACHED PROXY STATEMENT CAREFULLY, COMPLETE, SIGN AND DATE THE
ENCLOSED PROXY CARD AS PROMPTLY AS POSSIBLE AND RETURN IT IN THE ENCLOSED
ENVELOPE. YOU MAY ALSO VOTE BY PHONE OR THE INTERNET BY FOLLOWING THE
INSTRUCTIONS ON THE PROXY CARD.
TRIANGLE PHARMACEUTICALS, INC.
4 University Place, 4611 University Drive
Durham, North Carolina 27707
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PROXY STATEMENT
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For the Annual Meeting of Stockholders
To Be Held
May 18, 2001
The enclosed proxy is solicited on behalf of the Board of Directors of
Triangle Pharmaceuticals, Inc., a Delaware corporation, for use at the annual
meeting of stockholders to be held on May 18, 2001, and at any adjournment or
postponement of the annual meeting. The annual meeting will be held at 10:00
a.m. at The University Club, 3100 Tower Boulevard, Durham, North Carolina 27707.
All stockholders of record on March 23, 2001 will be entitled to notice of and
to vote at the annual meeting. We intend to mail this Proxy Statement and the
accompanying proxy to stockholders on or about April 6, 2001.
The mailing address of the principal executive office of Triangle is 4611
University Drive, P.O. Box 50530, Durham, North Carolina 27717.
PURPOSE OF MEETING
The specific proposals to be considered and acted on at the annual meeting
are summarized in the accompanying Notice of Annual Meeting of Stockholders.
Each proposal is described in more detail in this Proxy Statement.
VOTING RIGHTS AND SOLICITATION
Voting
On March 23, 2001, the record date for determining stockholders entitled
to vote at the annual meeting, there were 46,363,918 shares of common stock
outstanding. In addition, on March 23, 2001, there were 200,000 shares of Series
B preferred stock outstanding. Each holder of common stock is entitled to one
vote per share on all matters brought before the annual meeting. Each holder of
Series B preferred stock is entitled to cast ten votes per share on all matters
brought before the annual meeting.
The holders of a majority of the stock issued and outstanding and entitled
to vote, present in person or by proxy, will constitute a quorum at the annual
meeting. Holders of 23,281,960 shares of common and preferred stock present in
person or by proxy will constitute a quorum at the annual meeting. Abstentions
and broker nonvotes will be counted for purposes of determining whether a quorum
is present at the annual meeting and abstentions will have the effect of
negative votes.
Revocability of Proxies
Any person giving a proxy has the power to revoke it at any time before
its exercise. You may revoke your proxy by filing with the Secretary of Triangle
Pharmaceuticals, Inc. at our principal executive office, 4 University Place,
4611 University Drive, Durham, North Carolina 27707, a notice of revocation or
another signed proxy with a later date. You may also revoke your proxy by
attending the annual meeting and voting in person.
Solicitation
We will bear the entire cost of solicitation, including the preparation,
assembly, printing and mailing of this proxy statement, the proxy and any
additional soliciting materials furnished to stockholders. We will provide
copies of solicitation materials to brokerage houses, fiduciaries and custodians
holding shares in their names that are beneficially owned by others so that they
may forward the solicitation materials to the beneficial owners. In addition, we
may reimburse these record holders for their costs of forwarding the
solicitation materials to beneficial owners. We may supplement this original
solicitation of proxies by mail by solicitation by telephone, telegram or other
means by our directors, officers, employees or agents. No additional
compensation will be paid to these individuals for these services. Except as
described above, we do not presently intend to solicit proxies other than by
mail.
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PROPOSAL 1
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APPROVAL OF THE TERMS OF THE PREFERRED STOCK FINANCING
On March 9, 2001, we completed a private placement of 200,000 newly issued
shares of Series B preferred stock, par value $0.001 per share, at a price of
$60.00 per share. The gross proceeds from the sale of the Series B preferred
stock were $12,000,000, with net proceeds to us of approximately $10,900,000.
The Board of Directors has adopted a resolution submitting to the
stockholders for their approval a proposal to approve the terms of the sale of
the Series B preferred shares. Each share of Series B preferred stock will
convert automatically into ten shares of common stock on the earlier of
stockholder approval or March 9, 2002, resulting in the issuance of a total of
2,000,000 shares of common stock. If the stockholders do not approve the terms
of the sale of the Series B preferred stock, the holders of the Series B
preferred stock outstanding will be entitled to receive a dividend of $5.00 per
share on March 9, 2002.
We intend to use the net proceeds from the sale of the Series B preferred
stock for general corporate purposes, including our drug development programs,
such as pre-clinical testing and clinical trials, the payment of license fees,
the costs of obtaining patent protection and other payments to licensors, the
potential acquisition of additional drug candidates, the development of a
commercial infrastructure and working capital.
Terms of the Preferred Stock Financing
The shares of Series B preferred stock were issued under purchase
agreements, each dated as of January 30, 2001. The shares of Series B preferred
stock have rights described in a Certificate of Designations, Preferences and
Rights which we filed and is now part of our Certificate of Incorporation. The
sale of the Series B preferred stock was made in a private placement to selected
qualified institutional buyers and accredited investors. The shares are
restricted and may not be transferred or sold, except as permitted by the
purchase agreements and pursuant to the registration of the shares of Series B
preferred stock or an available exemption from registration.
If the stockholders do not approve the terms of the sale of the Series B
preferred stock, each share of Series B preferred stock will remain outstanding
until March 9, 2002, at which time it will convert automatically into ten shares
of common stock, and the holders of the Series B preferred stock will be
entitled to receive a dividend of $5.00 per share. This dividend will be
payable, at our option, in cash or common stock. If we elect to pay dividends
with shares of common stock, the number of shares will be calculated using a
fixed price of $6.00 per share. Except for this conditional dividend, the
holders of the Series B preferred stock have no preferential rights to dividends
or distributions, including liquidating distributions, from us. Instead, the
holders of Series B preferred stock are entitled to receive pro rata
distributions with the holders of common stock on an as converted basis.
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Each holder of Series B preferred stock is entitled to ten votes per
share, voting together with the holders of common stock as a single class, on
all matters submitted to a vote of the stockholders on which only the votes of
holders of common stock will be considered. The holders of Series B preferred
stock have no special voting rights or special consent rights, except as may be
required by law.
Under the terms of each purchase agreement, we agreed to file a resale
registration statement with the Securities and Exchange Commission relating to
the sale of the common stock issuable upon conversion of the outstanding shares
of Series B preferred stock within 30 days after we receive requested
information from the purchasers after conversion of the Series B shares to
common stock. We agreed to prepare and file any amendments and supplements to
the registration statement that are necessary to keep the registration statement
effective until the earlier of two years after the effective date of the
registration statement or the date on which the purchasers may sell the common
stock without registration under Rule 144(k) under the Securities Act of 1933,
as amended.
Effect on Outstanding Common Stock
The issuance of the Series B preferred stock and the common stock issuable
upon the conversion of the outstanding shares of Series B preferred stock will
dilute the voting rights of each existing stockholder.
Vote Required
The affirmative vote of a majority of the holders of common stock
represented and voting at the annual meeting will be required to approve the
terms of the sale of the Series B preferred stock.
Recommendation of the Board of Directors
The Board of Directors unanimously recommends a vote FOR the approval of
the terms of the sale of the Series B preferred stock.
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PROPOSAL 2
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APPROVAL OF AMENDMENT TO THE 1996 STOCK INCENTIVE PLAN
You are being asked to approve an amendment to our 1996 Stock Incentive
Plan, the 1996 Incentive Plan, that will increase the maximum number of shares
of common stock authorized for issuance over the term of the 1996 Incentive Plan
by an additional 1,500,000 shares effective January 1, 2002 and an additional
1,500,000 shares effective January 1, 2003. In addition, the amendment will
increase the number of shares for which options are exercisable that are granted
to non-employee members of the Board of Directors under the Automatic Option
Grant Program. There are currently 5,699,829 shares of common stock authorized
for issuance over the term of the 1996 Incentive Plan.
In addition, the amendment to our 1996 Stock Incentive Plan increases the
number of shares covered by each automatic stock option grant to a non-employee
director as follows, effective for automatic grants made with respect to this
and future annual meetings of our stockholders: (A) upon the initial election or
appointment of a non-employee director, the director will receive an option to
purchase 7,500 shares, and an additional 7,500 shares for each full or partial
year of the term for which the director is elected or appointed, and (B) upon
the re-election of a non-employee director, the director will receive an option
to purchase 7,500 shares for each full or
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partial year of the term for which the director is re-elected. Currently, the
number of shares covered by each component of automatic grants is 2,000 rather
than 7,500 shares.
The Board of Directors believes that these share increases are necessary
in order to assure that we will have a sufficient reserve of shares of common
stock available in the future to utilize option grants and stock issuances for
purposes of attracting and retaining the services of key individuals essential
to our long-term success.
The 1996 Incentive Plan became effective when it was adopted by the Board
of Directors on August 30, 1996 and was subsequently approved by our
stockholders. The 1996 Incentive Plan serves as the successor to our 1996 Stock
Option/Stock Issuance Plan, the Predecessor Plan, and all outstanding options
under the Predecessor Plan have been incorporated into the 1996 Incentive Plan.
The amendments to the 1996 Incentive Plan which are the subject of this proposal
were adopted by the Board of Directors on March 6, 2001. The following is a
summary of the principal features of the 1996 Incentive Plan, as amended as
described in this Proposal 2. The summary is not a complete description of all
the provisions of the 1996 Incentive Plan. Any stockholder who wishes to obtain
a copy of the actual plan document may do so upon written request to the
Secretary at our principal executive offices in Durham, North Carolina.
Equity Incentive Programs
The 1996 Incentive Plan contains four separate equity incentive programs:
o a Discretionary Option Grant Program,
o a Salary Investment Option Grant Program,
o a Stock Issuance Program, and
o an Automatic Option Grant Program.
The principal features of each program are described below. The
Compensation Committee has the exclusive authority to administer the
Discretionary Option Grant and Stock Issuance Programs with respect to option
grants and stock issuances made to our executive officers and non-employee
members of the Board of Directors. With respect to all other participants, those
programs may be administered by either the Compensation Committee or a special
stock option committee, the Secondary Committee, comprised of two or more
directors appointed by the Board of Directors, or the Board of Directors may
retain the authority to administer those programs. The Compensation Committee
also has the exclusive authority to administer the Salary Investment Option
Grant Program. However, option grants under the Automatic Option Grant Program
are made in compliance with the express provisions of that program, and neither
the Compensation Committee nor the Secondary Committee nor the Board of
Directors will exercise any administrative discretion with respect to that
program. The term Plan Administrator, as used in this summary, will mean the
Compensation Committee, the Secondary Committee or the Board of Directors, to
the extent that entity is acting within the scope of its administrative
jurisdiction under the 1996 Incentive Plan.
Share Reserve
8,699,829 shares of common stock are reserved for issuance over the term
of the 1996 Incentive Plan, including the two 1,500,000-share increases which
form part of this Proposal 2.
The shares of common stock issuable under the 1996 Incentive Plan may be
drawn from shares of our authorized but unissued common stock or from shares of
common stock we reacquire, including shares repurchased on the open market.
Shares subject to any outstanding options under the 1996 Incentive Plan,
including options incorporated from the Predecessor Plan, which expire, are
cancelled or otherwise terminate prior to exercise will be available for
subsequent issuance. Unvested shares issued under the 1996 Incentive Plan that
we subsequently repurchase, at the option exercise or direct issue price paid
per share, will be added back to the share reserve and will be available for
reissuance. However, shares subject to any option
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surrendered in accordance with the stock appreciation rights provisions of the
1996 Incentive Plan will not be available for subsequent issuance. In addition,
shares of common stock withheld to pay the exercise price of an option or in
satisfaction of withholding taxes incurred on the exercise or the vesting of a
stock issuance will not be available for subsequent issuance under the 1996
Incentive Plan.
Eligibility
Our employees, non-employee members of the Board of Directors, consultants
and other independent advisors are eligible to participate in the Discretionary
Option Grant and Stock Issuance Programs. Executive officers and other highly
compensated employees are also eligible to participate in the Salary Investment
Option Grant Program, and non-employee members of the Board of Directors
automatically participate in the Automatic Option Grant Program.
No persons may receive options, separately exercisable stock appreciation
rights and direct stock issuances for more than 500,000 shares of common stock
in the aggregate for any calendar year.
As of January 31, 2001, executive officers, non-employee members of the
Board of Directors and approximately 165 other employees and consultants were
eligible to participate in the Discretionary Option Grant and Stock Issuance
Programs, 17 employees were eligible to participate in the Salary Investment
Option Grant Program, and the six non-employee Board members participate in the
Automatic Option Grant Program.
Valuation
The fair market value per share of common stock on any relevant date under
the 1996 Incentive Plan is the closing selling price per share on that date on
the Nasdaq National Market. However, if there is no closing selling price per
share on the date in question, the fair market value will be the closing selling
price for the last preceding date for which a quotation exists. On March 21,
2001, the closing selling price per share on the Nasdaq National Market was
$5.594.
As of January 31, 2001, 3,657,456 shares of common stock were subject to
outstanding options under the 1996 Incentive Plan and 1,096,444 shares remained
available for future issuance, not including the share increases which form part
of this Proposal 2. Through January 31, 2001, 16,235 shares of common stock have
been issued as direct stock grants under the 1996 Incentive Plan.
Discretionary Option Grant Program
Grants
The Plan Administrator has complete discretion under the Discretionary
Option Grant Program to determine which eligible individuals are to receive
option grants, when grants will be made, the number of shares subject to each
grant, the status of any granted option as either an incentive stock option or a
non-statutory option under the federal tax laws, the vesting schedule, if any,
to be in effect for the option grant and the maximum term for which any granted
option is to remain outstanding. We pay all expenses incurred in administering
the 1996 Incentive Plan.
Price and Exercisability
Each option will have an exercise price per share not less than 85% of the
fair market value per share of common stock on the option grant date. No option
may have a term in excess of ten years. Options generally become exercisable in
a series of installments over the optionee's period of service with us, although
other exercisability schedules are permitted.
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Holders of options may pay the exercise price in cash or in shares of
common stock. We may also establish a same-day sale program in which a
designated brokerage firm will effect an immediate sale of the shares purchased
under the option and pay over to us, out of the sale proceeds available on the
settlement date, sufficient funds to cover the exercise price for the purchased
shares plus all applicable withholding taxes.
When an optionee's period of service ends, the optionee usually will have
a three-month period of time in which to exercise any vested portion of
outstanding options. The Plan Administrator has complete discretion to extend
the period following the optionee's cessation of service during which he or she
may exercise outstanding options and/or to accelerate the exercisability or
vesting of those options. The Plan Administrator may accelerate vesting or
extend an exercise period at any time while the options remain outstanding,
whether before or after the optionee's actual cessation of service.
Stock Appreciation Rights
The Plan Administrator may grant tandem stock appreciation rights under
the Discretionary Option Grant Program that provide the holders with the right
to surrender their options for an appreciation distribution in amount equal to
the excess of (a) the fair market value of the vested shares of common stock
subject to the surrendered option over (b) the aggregate exercise price payable
for those shares. The appreciation distribution may, at the discretion of the
Plan Administrator, be made in cash or in shares of common stock.
In addition, we may grant officers and non-employee members of the Board
of Directors limited stock appreciation rights in tandem with their outstanding
options. These grants must comply with the short-swing profit restriction of the
Federal securities laws. Any option with a limited stock appreciation right may
be surrendered to us on the occurrence of a hostile tender offer for more than
50% of our outstanding shares, and the optionee will in return be entitled to a
cash distribution from us in an amount per surrendered option share equal to the
excess of (i) the highest reported price per share of common stock paid in the
tender offer over (ii) the option exercise price payable per share.
Cancellation/Regrant Program
The Plan Administrator has the authority to effect the cancellation of
outstanding options under the Discretionary Option Grant Program which have
exercise prices in excess of the then current market price of our common stock
and to issue replacement options with an exercise price based on the market
price of our common stock at the time of the new grant.
Salary Investment Option Grant Program
Grants
The Plan Administrator has discretion in implementing the Salary
Investment Option Grant Program for one or more calendar years and in selecting
the executive officers and other highly compensated individuals eligible to
participate in the program for those years. As a condition to participation,
each selected individual must, prior to the start of the calendar year of
participation, file with the Plan Administrator an irrevocable authorization
directing us to reduce his or her base salary for the upcoming calendar year by
an amount not less than $10,000 nor more than $50,000. Each individual whose
salary reduction authorization is approved by the Plan Administrator will be
granted an option under the Salary Investment Option Grant Program as soon as
possible after the start of the calendar year for which the salary reduction is
to be in effect.
Terms
Each option is subject to substantially the same terms and conditions
applicable to option grants made under the Discretionary Option Grant Program,
except for the following differences:
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o Each option is a non-statutory option.
o The exercise price per share will be equal to not less than
33 1/3% nor more than 66 2/3% of the fair market value of our
common stock on the option grant date, with the exact
percentage fixed by the Plan Administrator. The number of
option shares will be determined by dividing the total dollar
amount of the approved reduction in the optionee's base salary
by the amount by which the fair market value per share of
common stock on the option grant date exceeds the option
exercise price. As a result, the total spread on the option
(the fair market value of the option shares on the grant date
less the aggregate exercise price payable for those shares)
will be equal to the dollar amount of the reduction to the
optionee's base salary that will be in effect for the calendar
year for which the option grant is made.
o The option will become exercisable for the option shares in a
series of 12 successive equal monthly installments on the
optionee's completion of each calendar month of service in the
calendar year for which the salary reduction is in effect.
o Each option is exercisable after it becomes vested until the
earlier of (i) the expiration of the ten-year option term or
(ii) the expiration of the three-year period measured from the
date the optionee's service terminates.
Under the Salary Investment Option Grant Program, the Compensation
Committee granted options for an aggregate of 13,824 shares on January 4, 2000
at an exercise price of $8.66 per share, which was equal to two-thirds of the
fair market value per share on that date.
Stock Issuance Program
Shares may be sold under the Stock Issuance Program at a price per share
not less than 100% of their fair market value, payable in cash or through a
promissory note. Shares may also be issued as a bonus for past services, with no
cash outlay required of the participant.
Shares issued as a bonus for past services will be fully vested upon
issuance. All other shares issued under the program will be subject to a vesting
schedule tied to the performance of service or the attainment of performance
goals. The Plan Administrator, however, has the discretionary authority at any
time to accelerate the vesting of any and all unvested shares outstanding under
the Stock Issuance Program.
Automatic Option Grant Program
Grants
On the date that each non-employee member of the Board of Directors is
first elected or appointed as a non-employee Board member, we will make an
automatic option grant to that Board member, and on the date that each
non-employee Board member is re-elected to the Board of Directors, we will make
an additional option grant to that non-employee Board member. Each automatic
option grant will be a Non-Statutory Option. Each non-employee Board member will
receive an option upon his or her initial election or appointment as a
non-employee Board member for 7,500 shares plus an additional 7,500 shares for
each full or partial year of the term for which he or she was elected or
appointed. On each re-election, each non-employee Board member will receive an
additional option to purchase 7,500 shares for each full or partial year of the
term for which the non-employee Board member is re-elected to the Board of
Directors. There is no limit on the number of automatic option grants any one
director may receive over his or her period of service on the Board of
Directors, and non-employee Board members who have previously been in our employ
or who have otherwise received a stock option grant from us are eligible to
receive one or more annual option grants over their period of continued service
on the Board of Directors.
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Terms
Each option under the Automatic Option Grant Program will have an exercise
price per share equal to 100% of the fair market value per share of common stock
on the option grant date and a maximum term of ten years measured from that
grant date.
Provided the optionee continues to serve as a member of the Board of
Directors, the initial automatic option grant will vest and become exercisable
with respect to 7,500 shares on the day the non-employee Board member is first
elected or appointed to the Board of Directors and with respect to an additional
7,500 shares on the day immediately preceding the date of each subsequent annual
stockholders meeting until the automatic option grant is fully vested and
exercisable. Each subsequent automatic option grant will vest and become
exercisable with respect to 7,500 shares on the day immediately preceding the
date of each subsequent annual stockholders meeting until the automatic option
grant is fully vested and exercisable. No portion of any automatic option grant
will vest after the optionee has ceased to be a member of the Board of
Directors.
Each outstanding automatic option will become immediately exercisable for
all the shares subject to the option should any of the following events occur
while the optionee continues on the Board of Directors: (i) the optionee's death
or permanent disability, (ii) an acquisition of Triangle Pharmaceuticals by
merger or asset sale or (iii) a hostile take-over, whether effected through a
successful tender offer for more than 50% of our outstanding voting stock or
through a change in the majority of the Board of Directors as a result of one or
more contested elections. An optionee will have a 12-month period after he or
she is no longer on the Board of Directors to exercise his or her outstanding
automatic option grants for any or all of the option shares for which those
options are exercisable at the time the person ceases being on the Board of
Directors.
All options granted under the Automatic Option Grant Program include a
limited stock appreciation right which entitles the holder to surrender his or
her outstanding automatic options for a cash distribution in the event of a
hostile tender offer for more than 50% of our outstanding shares. The cash
distribution will be in an amount per surrendered option share equal to the
excess of (i) the highest reported price per share of common stock paid in the
tender offer over (ii) the option exercise price payable per share. No
additional approval of the Plan Administrator or the Board of Directors will be
required at the time of the actual option surrender or cash distribution.
Stock Awards
As of January 31, 2001, 16,235 shares of common stock were granted as
direct stock issuance under the 1996 Incentive Plan, 3,657,456 shares of common
stock were subject to outstanding options under the 1996 Incentive Plan and
1,096,444 shares remained available for future issuance, including 884,624
shares made available for future issuance upon the cancellation of previously
outstanding options but excluding the two 1,500,000 share increases which form
part of this Proposal 2. Through January 31, 2001, 929,694 shares of common
stock have been issued on the exercise of options granted under the 1996
Incentive Plan.
New Plan Benefits
The two 1,500,000 share increases described above become effective January
1, 2002 and January 1, 2003, respectively. The changes to the Automatic Option
Grant Program will become effective for automatic grants made with respect to
this and future annual meetings. As a result, no options have been granted in
reliance upon these increases which form Proposal 2.
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General Plan Provisions
Acceleration
In the event that we are acquired by merger or asset sale, generally each
outstanding option under the Discretionary Option Grant Program which is not to
be assumed or replaced by the successor entity will automatically accelerate in
full and terminate following closing of the transaction, and generally all
unvested shares under the Stock Issuance Program will immediately vest, except
to the extent our repurchase rights with respect to those shares are transferred
to the successor entity. In the event of a change of control other than a merger
or asset sale, the Plan Administrator may provide for automatic acceleration of
outstanding options on the termination of an optionee's service within a
designated period after the change of control. The Plan Administrator will have
complete discretion to grant one or more options under the Discretionary Option
Grant Program which will become fully exercisable for all option shares in the
event those options are assumed in the acquisition and the optionee's service
with us or the acquiring entity is subsequently terminated within a designated
period following an acquisition or hostile take-over. The Plan Administrator may
also provide for the automatic vesting of any outstanding shares under the Stock
Issuance Program upon similar terms and conditions.
Each option outstanding under the Salary Investment Option Grant Program
will automatically accelerate in the event of an acquisition or change in
control. Each outstanding option under the Salary Investment Option Grant
Program that is not exercised prior to a change in control will also be subject
to repurchase by us at a price equal to the amount by which the optionee's
salary was reduced in connection with the grant of that option.
The acceleration of vesting in the event of a change in the ownership or
control may be seen as an anti-takeover provision and may have the effect of
discouraging a merger proposal, a takeover attempt or other efforts to gain
control of Triangle.
Changes in Capitalization
In the event any change is made to the outstanding shares of common stock
by reason of any recapitalization, stock dividend, stock split, combination of
shares, exchange of shares or other change in corporate structure effected
without our receipt of consideration, appropriate adjustments will be made to
(i) the maximum number and/or class of securities issuable under the 1996
Incentive Plan, (ii) the number and/or class of securities for which any one
person may be granted stock options, separately exercisable stock appreciation
rights and direct stock issuances under the 1996 Incentive Plan per calendar
year, (iii) the number and/or class of securities for which grants are
subsequently to be made under the Automatic Option Grant Program to new and
continuing non-employee members of the Board of Directors and (iv) the number
and/or class of securities and the exercise price per share in effect under each
outstanding option under the 1996 Incentive Plan, including options granted
under the Predecessor Plan, in order to prevent the dilution or enlargement of
benefits.
Financial Assistance
The Plan Administrator may institute a loan program to assist one or more
participants in financing the exercise of outstanding options granted under the
Discretionary Option Grant Program or the purchase of shares issued under the
Stock Issuance Program. The Plan Administrator will determine the terms of any
loan program. However, the maximum amount of financing provided any participant
may not exceed the cash consideration payable for the issued shares plus all
applicable taxes incurred in connection with the acquisition of the shares.
- 9 -
Special Tax Election
The Plan Administrator may provide one or more holders of options or
unvested shares with the right to have Triangle Pharmaceuticals withhold a
portion of the shares otherwise issuable in satisfaction of the tax liability
incurred by those holders in connection with the exercise of those options or
the vesting of those shares. Alternatively, the Plan Administrator may allow
holders to deliver previously acquired shares of common stock in payment of the
tax liability.
Amendment and Termination
The Board of Directors may amend or modify the 1996 Incentive Plan in any
or all respects whatsoever, subject to any required stockholder approval under
applicable law or regulation. However, no amendment or modification may
adversely affect an outstanding award under the 1996 Incentive Plan without the
consent of the affected award recipient. The Board of Directors may terminate
the 1996 Incentive Plan at any time, and the 1996 Incentive Plan will terminate
automatically on August 30, 2006.
Federal Income Tax Consequences
Option Grants
Options granted under the 1996 Incentive Plan may be either incentive
stock options which are intended to satisfy the requirements of Section 422 of
the Internal Revenue Code or non-statutory options which are not intended to
meet those requirements. The Federal income tax treatment for the two types of
options differs as follows:
Incentive Stock Options. No taxable income is recognized by the optionee
at the time of the option grant, and no taxable income is generally recognized
at the time the option is exercised. However, holders of options may be subject
to alternative minimum tax obligations as a result of the exercise of their
options. The optionee will, however, recognize taxable income in the year in
which the purchased shares are sold or otherwise made the subject of
disposition. For Federal income tax purposes, dispositions are divided into two
categories: qualifying and disqualifying. A qualifying disposition occurs if the
sale or other disposition is made after the optionee has held the shares for
more than two years after the option grant date and more than one year after the
exercise date. If either of these two holding periods is not satisfied, then a
disqualifying disposition will result.
On a qualifying disposition, the optionee will recognize long-term capital
gain in an amount equal to the excess of (i) the amount realized upon the sale
or other disposition of the purchased shares over (ii) the exercise price paid
for the shares. If there is a disqualifying disposition of the shares, then the
excess of (i) the fair market value of those shares on the exercise date over
(ii) the exercise price paid for the shares will be taxable as ordinary income
to the optionee and we and the optionee will be required to satisfy the tax
withholding requirements applicable to the income. The optionee will recognize
any additional gain or loss on the disposition as a capital gain or loss.
If the optionee makes a disqualifying disposition of the purchased shares,
then we will be entitled to an income tax deduction, for the taxable year in
which the disposition occurs, equal to the excess of (i) the fair market value
of the shares on the option exercise date over (ii) the exercise price paid for
the shares. In no other instance will we be allowed a deduction with respect to
the optionee's disposition of the purchased shares.
Non-Statutory Stock Options. No taxable income is recognized by an
optionee upon the grant of a non-statutory option. The optionee will in general
recognize ordinary income, in the year in which the option is exercised, equal
to the excess of the fair market value of the purchased shares on the exercise
date over the exercise price paid for the shares, and we and the optionee will
be required to satisfy the tax withholding requirements applicable to the
income.
- 10 -
If the shares acquired upon exercise of the non-statutory option are
unvested and subject to repurchase by us in the event of the optionee's
termination of service prior to vesting in those shares, then the optionee
generally will not recognize any taxable income at the time of exercise but will
recognize ordinary income, as and when our repurchase right lapses, an amount
equal to the excess of (i) the fair market value of the shares on the date the
repurchase right lapses over (ii) the exercise price paid for the shares. The
optionee may, however, elect under Section 83(b) of the Internal Revenue Code to
include as ordinary income in the year of exercise of the option an amount equal
to the excess of (i) the fair market value of the purchased shares on the
exercise date over (ii) the exercise price paid for the shares. If the Section
83(b) election is made, the optionee will not recognize any additional income as
and when the repurchase right lapses.
We will be entitled to an income tax deduction equal to the amount of
ordinary income recognized by the optionee with respect to the exercised
non-statutory option. The deduction will in general be allowed for the taxable
year in which the optionee recognizes the ordinary income.
Stock Appreciation Rights
An optionee who is granted a stock appreciation right will recognize
ordinary income in the year of exercise equal to the amount of the appreciation
distribution. We will be entitled to an income tax deduction equal to the
appreciation distribution for the taxable year in which the optionee recognizes
ordinary income.
Direct Stock Issuance
The tax principles applicable to direct stock issuances under the 1996
Incentive Plan will be substantially the same as those summarized above for the
exercise of non-statutory option grants.
Deductibility of Executive Compensation
We anticipate that any compensation deemed paid by us in connection with
disqualifying dispositions of incentive stock option shares or exercises of
non-statutory options granted with exercise prices equal to the fair market
value of the option shares on the grant date or direct stock issuances will
qualify as performance-based compensation for purposes of Code Section 162(m)
and will not have to be taken into account for purposes of the $1 million
limitation per covered individual on the deductibility of the compensation paid
to some of our executive officers. Accordingly, we anticipate that all
compensation deemed paid with respect to those options will remain deductible by
us without limitation under Code Section 162(m).
Accounting Treatment
Option grants or stock issuances to employees and/or directors with
exercise or issue prices less than the fair market value of the shares on the
grant or issue date will result in a direct compensation expense to our earnings
generally equal to the difference between the exercise or issue price and the
fair market value of the shares on the grant or issue date. We will recognize
the compensation expense over the period that the option shares or issued shares
are to vest. Option grants or stock issuances at 100% of fair market value or
above generally will not result in any direct charge to our earnings. However,
we must disclose in our financial statements and related notes, the fair value
of those options and the impact those options would have upon our reported
earnings were the value of those options at the time of grant treated as
compensation expense. Whether or not granted at a discount, the number of
outstanding options may be a factor in determining our diluted earnings per
common share. Should one or more optionees be granted stock appreciation rights
which have no conditions upon exercisability other than a service or employment
requirement, then those rights will result in a compensation expense to our
earnings. Option grants or stock issuances that provide for vesting upon
attainment of performance objectives may result in additional compensation
expense.
- 11 -
Vote Required
The affirmative vote of a majority of the outstanding voting shares
present or represented and entitled to vote at the annual meeting is required
for approval of the amendments to 1996 Incentive Plan. Should stockholder
approval not be obtained, then neither the 1,500,000-share increase effective
January 1, 2002 nor the 1,500,000-share increase effective January 1, 2003 nor
the changes to the Automatic Option Grant Program will be implemented, and no
options will be granted on the basis of these amendments.
Recommendation of the Board of Directors
The Board of Directors unanimously recommends that stockholders vote FOR
the approval of the amendment to the 1996 Incentive Plan.
--------------------------------------------------------------------------------
PROPOSAL 3
--------------------------------------------------------------------------------
ELECTION OF DIRECTORS
Our Certificate of Incorporation provides for a classified Board of
Directors consisting of three classes of directors serving staggered three-year
terms, with each class consisting as nearly as possible of one-third of the
total number of directors. Our Bylaws provide for a Board of Directors
consisting of that number of directors as may be fixed from time to time by
resolution of two-thirds of the members of the Board of Directors or by
two-thirds of the stockholders at an annual meeting of stockholders. The Board
of Directors has set the number of directors at eight, with two classes
consisting of three directors and the third class consisting of two directors.
Three directors are to be elected at this annual meeting for a term expiring at
the 2004 annual meeting of stockholders or until their successors have been duly
elected and qualified.
The Board of Directors has nominated Standish M. Fleming, Dennis B.
Gillings, Ph.D. and Henry G. Grabowski, Ph.D. to stand for reelection to the
class of directors whose term expires at the 2004 annual meeting of stockholders
or until their successors are elected and have qualified. Each person nominated
for reelection has agreed to serve if elected, and management has no reason to
believe that any nominee will be unavailable to serve. In the event any of the
nominees is unable or declines to serve as a director at the time of the annual
meeting, the proxies will be voted for any nominee who may be designated by the
present Board of Directors to fill the vacancy. Unless otherwise instructed, the
proxy holders will vote the proxies received by them FOR the nominees named
below.
Nominees
The following table contains information regarding the nominees.
Year First Class
Elected Termination
Name Director Age Year Position
---------------------------- ---------- --------- ----------- --------
Standish M. Fleming 1995 53 2004 Director
Dennis B. Gillings, Ph.D. 1998 56 2004 Director
Henry G. Grabowski, Ph.D. 1998 60 2004 Director
- 12 -
Business Experience of Nominees for Election to Terms Expiring in 2004
Standish M. Fleming has served as a director of Triangle Pharmaceuticals,
Inc. since July 1995 and as chairman of the Audit Committee since June 1996.
Since April 1993, Mr. Fleming has been a general partner of Forward Ventures, a
venture capital firm. Mr. Fleming also served in an advisory position with
Forward Ventures from February 1992 through April 1993. Prior to that, Mr.
Fleming joined Ventana, a venture capital firm, in 1986 and served as a fund
manager from January 1990 through January 1992. Mr. Fleming received a B.A. in
English from Amherst College and an M.B.A. from the University of California,
Los Angeles. Mr. Fleming currently serves as a director of six privately-held
companies.
Dennis B. Gillings, Ph.D. has served as a director of Triangle
Pharmaceuticals, Inc. since May 1998. Dr. Gillings is Chairman of Quintiles
Transnational Corp., which he founded in 1982. Quintiles Transnational Corp. is
a provider of contract research, sales and marketing services to the
pharmaceutical, biotechnology and medical device industries. Dr. Gillings served
as a professor at the University of North Carolina at Chapel Hill from 1972 to
1988, and he currently serves on the University of North Carolina School of
Public Health Foundation Board. Dr. Gillings received a Diploma in mathematical
statistics from the University of Cambridge in 1967 and a Ph.D. in mathematics
from the University of Exeter, England, in 1972. Dr. Gillings is currently a
director of several privately-held companies, and the following publicly-held
companies: The Medicines Co., a biotechnology company and WebMD, a healthcare,
e-commerce services company.
Henry G. Grabowski, Ph.D. has served as a director of Triangle
Pharmaceuticals, Inc. since May 1998 and as a member of the Audit Committee
since June 1998. Dr. Grabowski has served as a professor in the Economics
Department, Duke University, since 1976 and as the Director of the Program in
Pharmaceuticals and Health Economics, Duke University, since 1983. Dr. Grabowski
is considered a leader in the field of, and has authored and co-authored
numerous books, monographs and articles concerning pharmaceutical regulation and
innovation. Dr. Grabowski has served as an advisor to numerous private and
public organizations, including the Institute of Medicine, the National Science
Foundation and the General Accounting Office. Dr. Grabowski is an adjunct
scholar at the American Enterprise Institute and he currently serves as
Associate Editor of the The Quarterly Review of Economics and Finance and the
Journal of Research in Pharmaceutical Economics. Dr. Grabowski received a B.S.
in engineering physics from Lehigh University in 1962 and a Ph.D. in economics
from Princeton University in 1967.
Business Experience of Continuing Directors with Terms Expiring in 2002 (Age)
Anthony B. Evnin, Ph.D. (60) has served as a director of Triangle
Pharmaceuticals, Inc. since November 1995 and as a member of the Compensation
Committee since August 1996. Since 1975, Dr. Evnin has been a general partner of
Venrock Associates, a venture capital firm. Dr. Evnin received an A.B. in
chemistry from Princeton University and a Ph.D. in chemistry from Massachusetts
Institute of Technology. Dr. Evnin is currently a director of several
privately-held companies and the following publicly-held companies: Caliper
Technologies Corp., a diagnostics company, GPC Biotech AG, a biopharmaceutical
company, and Sonic Innovations, Inc., a hearing aid company.
Arthur J. Higgins (45) has served as a director of Triangle
Pharmaceuticals, Inc. since August 1999. Mr. Higgins joined Abbott Laboratories
in August 1987, as division manager for pharmaceutical products in the United
Kingdom. Since then, he has held a variety of management positions, including
divisional vice president, international business development. In 1995, Mr.
Higgins was named divisional vice president, Pacific, Asia and Africa, and in
1996, was elected Vice President, Pacific, Asia and Africa operations, for the
international division. In February 1998, he was elected Senior Vice President,
Pharmaceutical Operations. Mr. Higgins received a B.S. in biochemistry from
Strathclyde University, Scotland.
- 13 -
Chris A. Rallis, J.D. (47) has served as a director of Triangle
Pharmaceuticals, Inc., a member of the Secondary Committee of the Board of
Directors and as President and Chief Operating Officer since March 2000, as
Executive Vice President, Business Development and General Counsel from August
1999 through February 2000, and as Vice President, Business Development, General
Counsel and Secretary from November 1995 through July 1999. Prior to joining the
Company, Mr. Rallis served in the following positions with Burroughs Wellcome:
Vice President, Planning and Business Development; Director, Planning and
Business Development; and Assistant General Counsel. During Mr. Rallis' tenure
at Burroughs Wellcome, his department was responsible for finalizing licensing
agreements with Emory University and Vertex Pharmaceuticals Incorporated, and a
consumer healthcare joint venture with Warner-Lambert Company. Mr. Rallis
received his A.B. degree in economics from Harvard College and a J.D. from Duke
University. Mr. Rallis is currently a director of Intelligent Therapeutic
Solutions, Inc., a privately-held information technology company.
Business Experience of Continuing Directors with Terms Expiring in 2003 (Age)
David W. Barry, M.D. (57) has served as Chairman of the Board and Chief
Executive Officer since July 1995 and served as our President from July through
September 1995. Dr. Barry has also been a member of the Secondary Committee of
the Board of Directors since June 1997. Prior to joining Triangle
Pharmaceuticals, Inc., Dr. Barry served as a member of the Board and as the
Director of Research, Development and Medical Affairs of Wellcome from May 1994
through May 1995. From May 1989 through May 1994, Dr. Barry served as Vice
President, Research, Development and Medical Affairs of Burroughs Wellcome. Dr.
Barry is considered a leader in the field of antiviral therapy and is one of the
co-inventors of AZT, the first drug to treat the human immunodeficiency virus,
HIV. Dr. Barry also directed the clinical development of the first selective
anti-herpes drug, acyclovir. Before joining Burroughs Wellcome in 1977, Dr.
Barry spent five years at the United States Food and Drug Administration in
various capacities, including Director of the Influenza Task Force of the Bureau
of Biologics and Acting Deputy Director of the Division of Virology at the
Bureau of Biologics. Dr. Barry received a B.A. in French literature from Yale
College and an M.D. from Yale University. Dr. Barry is currently a director of
Family Health International, a not-for-profit company engaged in the business of
family planning, Dynavax Technologies Corporation, a privately-held immune-based
therapies company and is Chairman of Intelligent Therapeutic Solutions, Inc., a
privately-held information technology company. Dr. Barry is a consultant to Life
Science Ventures GmbH, a European venture capital company, and is also Chairman
of the Inter-Company Collaboration on AIDS Drug Development, a pharmaceutical
industry consortium.
George McFadden (60) has served as a director of Triangle Pharmaceuticals,
Inc. since November 1995 and as a member of the Compensation Committee and Audit
Committee since August 1996. Since 1979, Mr. McFadden has served as a general
partner of McFadden Brothers, an investment company. Mr. McFadden received a
B.A. in business from Vanderbilt University and an M.B.A. from Columbia
University. Mr. McFadden is currently a director of three privately-held
companies, Washington, Inc., where he serves as Chairman of the Board,
Cryogenics Holdings, Inc. and Squaw Valley Corp.
Board Meetings and Committees
The Board of Directors met a total of seven times and acted by written
consent five times during the year ended December 31, 2000. Each director
attended at least 75% of the aggregate of (i) the total meetings of the Board of
Directors and (ii) the total number of meetings held by all committees of the
Board of Directors on which he served, with respect to the Board of Directors
meetings and committee meetings, respectively, held in that portion of 2000
during which the director was serving as a member of the Board of Directors.
We have a Compensation Committee currently composed of Dr. Evnin and Mr.
McFadden. The Compensation Committee acted by written consent ten times in 2000.
The Compensation Committee reviews and acts on matters relating to compensation
levels and benefit plans for executive officers and key
- 14 -
employees, including salary and stock options. The Compensation Committee is
also responsible for granting stock awards, stock options and stock appreciation
rights and other awards to be made under our existing incentive compensation
plans. To assist the Compensation Committee in administering benefit plans for
non-executive employees, the Board of Directors has designated a Secondary
Committee, which is currently composed of Dr. Barry and Mr. Rallis. The
Secondary Committee acted by written consent eight times in 2000.
We also have an Audit Committee currently composed of Mr. Fleming, Dr.
Grabowski and Mr. McFadden. The Audit Committee met five times in 2000. The
Audit Committee assists in selecting the independent accountants, designating
and monitoring the services they are to perform, maintaining effective
communication with those accountants and monitoring and reviewing internal
accounting procedures and controls.
Director Compensation
We reimburse our directors for all reasonable and necessary travel and
other incidental expenses incurred in connection with their attendance at
meetings of the Board of Directors. In addition, our 1996 Stock Incentive Plan,
the 1996 Incentive Plan, provides that each eligible non-employee director will
automatically receive an option to purchase 2,000 shares of common stock upon a
director's initial election or appointment to the Board of Directors and 2,000
shares of common stock for each full or partial year of the director's term,
measured from the date of each annual meeting of stockholders. For eligible
non-employee directors reelected to the Board of Directors, the 1996 Incentive
Plan provides for the automatic grant of an option to purchase 2,000 shares of
common stock for each full or partial year of the term to which the director is
reelected, measured from the date of each annual meeting of stockholders. If the
stockholders approve the amendment described on page 3 above, the shares covered
by each component of these grants will increase to 7,500 effective for automatic
grants made with respect to this and future annual meetings of our stockholders.
These options will have an exercise price equal to 100% of the fair market value
of our common stock on the grant date and will become exercisable in annual
installments after the completion of each full or partial year of service
following such grant.
Under this automatic option grant program, on May 18, 2000, our 2000
annual meeting of stockholders, Mr. McFadden, who was a non-employee director
reelected to the Board of Directors, received an automatic option grant to
purchase 6,000 shares. The exercise price per share in effect under this option
is $6.875, the fair market value per share of our common stock on the grant
date. Provided that Mr. McFadden continues to serve on the Board of Directors,
his 6,000 option shares become exercisable in successive increments of 2,000
shares on the day immediately preceding the date of each subsequent annual
meeting of stockholders until the automatic option becomes fully exercisable for
all of the option shares.
Under the 1996 Incentive Plan, each of the current non-employee directors
received, on June 24, 1997, an automatic option grant to purchase the following
number of shares: Dr. Evnin (2,667 shares), Mr. Fleming (1,334 shares) and Mr.
McFadden (4,000 shares). The exercise price per share in effect under each of
these options is $23.625, the fair market value per share of our common stock on
the grant date.
Vote Required
The three candidates for the class of directors whose terms expire at the
2004 annual meeting of stockholders receiving the highest number of affirmative
votes of the stockholders entitled to vote at the annual meeting will be
reelected directors of Triangle. Unless otherwise instructed, the proxyholders
will vote each returned proxy FOR the nominees named above, or for as many
nominees of the Board of Directors as possible. The proxyholders will distribute
these votes among the nominees in the manner as the proxyholders see fit.
- 15 -
Recommendation of the Board of Directors
The Board of Directors unanimously recommends a vote FOR the nominees
listed above.
--------------------------------------------------------------------------------
PROPOSAL 4
--------------------------------------------------------------------------------
RATIFICATION OF INDEPENDENT ACCOUNTANTS
We are asking stockholders to ratify the selection of
PricewaterhouseCoopers LLP as our independent accountants for the year ending
December 31, 2001. On the recommendation of the Audit Committee, the Board of
Directors has appointed PricewaterhouseCoopers LLP as independent accountants
for Triangle for the year 2001. The services PricewaterhouseCoopers will provide
for the 2001 fiscal year include the examination of Triangle's consolidated
financial statements, reviews of quarterly reports, services related to filings
with the SEC and consultation regarding tax returns. PricewaterhouseCoopers has
served as our independent accountants since our inception and is qualified to
continue to perform these services.
Vote Required
The affirmative vote of a majority of the stockholders represented and
voting at the annual meeting will be required to ratify the selection of
PricewaterhouseCoopers LLP. In the event the stockholders fail to ratify the
appointment, the Board of Directors will reconsider its selection. Even if the
selection is ratified, the Board of Directors, in its discretion, may direct the
appointment of a different independent accounting firm at any time during the
year if the Board of Directors believes that the change would be in Triangle's
and its stockholders' best interests.
Representatives of PricewaterhouseCoopers LLP will be present at the
annual meeting, will have the opportunity to make a statement and will be
available to respond to appropriate questions.
Recommendation of the Board of Directors
The Board of Directors unanimously recommends a vote FOR the ratification
and approval of the selection of PricewaterhouseCoopers LLP to serve as our
independent accountants for the year ending December 31, 2001.
- 16 -
PRINCIPAL STOCKHOLDERS
The following table contains information regarding the beneficial
ownership of our common stock as of January 31, 2001 by:
o each person known by us to beneficially own more than five percent
of our common stock,
o each of our directors and nominees for director,
o our Chief Executive Officer, the four additional most highly
compensated executive officers and a former executive officer and
o all directors and executive officers as a group.
Except as otherwise indicated:
o the persons named in the table have sole voting and investment power
with respect to all shares of common stock shown as beneficially
owned by them, subject to community property laws, where applicable
and
o the address of all stockholders listed in the table is: 4 University
Place, 4611 University Drive, Durham, North Carolina 27707.
Beneficial ownership is calculated pursuant to Rule 13d-3(d)(1) under the
Securities Exchange Act of 1934, as amended. On January 31, 2001, 38,639,938
shares of common stock were issued and outstanding.
Amount and Nature of
Beneficial Ownership
---------------------------
Common Stock
---------------------------
Name And Address Of Beneficial Owner Number Percent
--------------------------------------------------- ---------- -------
Abbott Laboratories (1) ........................... 6,642,244 17.2%
100 Abbott Park Road
Abbott Park, IL 60064-3500
Wellington Management Company, LLP (2) ............ 3,581,300 9.3%
75 State Street
Boston, MA 02109
T. Rowe Price Associates, Inc. (3) ................ 3,274,800 8.5%
100 East Pratt Street
Baltimore, MD 21202
David W. Barry, M.D. (4) .......................... 1,403,278 3.6%
George McFadden (5) ............................... 1,217,000 3.1%
745 Fifth Avenue
New York, NY 10151
Anthony B. Evnin, Ph.D. (6) ....................... 1,027,884 2.7%
30 Rockefeller Plaza
New York, NY 10112.
Standish M. Fleming (7) ........................... 871,563 2.3%
9255 Towne Centre Drive
Suite 300
San Diego, CA 92121
Dennis B. Gillings, Ph.D. (8) ..................... 16,000 *
4709 Creekstone Drive
Durham, NC 27703
- 17 -
Henry G. Grabowski, Ph.D. (9) ..................... 12,000 *
Duke University,
305 Social Sciences, Box 90097
Durham, NC 27708
Arthur J. Higgins (10) ............................ 6,642,244 17.2%
100 Abbott Park Road
Abbott Park, IL 60064
Chris A. Rallis, J.D. (11)(12) .................... 316,424 *
Franck S. Rousseau, M.D. (11)(13) ................. 148,416 *
George R. Painter, III, Ph.D.(11)(14) ............. 177,851 *
Anne F. McKay (15) ................................ 84,255 *
Carolyn S. Underwood (16) .......................... 185,892 *
801 Capitola Drive
Durham, NC 27713
All directors and executive officers
as a group (15 persons) (4)-(17) .............. 12,159,281 31.0%
========== ====
----------
* Less than 1%.
(1) Includes 4,000 shares of common stock issuable upon the exercise of
options beneficially owned by Arthur J. Higgins. Mr. Higgins, a director
of Triangle Pharmaceuticals, Inc., is a Senior Vice President of Abbott
Laboratories. Mr. Higgins disclaims beneficial ownership of the shares
beneficially owned by Abbott Laboratories. Excludes 1,300,000 shares of
common stock Abbott Laboratories purchased on March 1, 2001.
(2) These securities are owned by clients for whom Wellington Management
Company, LLP serves as investment advisor with shared power to vote the
securities.
(3) These securities are owned by various individual and institutional
investors which T. Rowe Price Associates, Inc., Price Associates, serves
as investment advisor with power to direct investments and/or sole power
to vote the securities. For purposes of the reporting requirements of the
Securities Exchange Act of 1934, Price Associates is deemed to be a
beneficial owner of such securities; however, Price Associates expressly
disclaims that it is, in fact, the beneficial owner of such securities.
(4) Includes 130,798 shares of common stock issuable upon the exercise of
options, 500,000 shares of common stock held by Barry Asset Partners,
L.P., a Georgia limited partnership of which Dr. Barry serves as a general
and limited partner, and 23,980 shares of common stock held by the Barry
Charitable Foundation, Inc., a charitable North Carolina corporation of
which Dr. Barry serves as President.
(5) Includes 4,000 shares of common stock issuable upon the exercise of
options. Also includes a total of 935,000 shares of common stock
beneficially owned by each of the following persons in the amounts
indicated: (i) 515,000 shares owned by a family trust under the will of
Alexander B. McFadden, (ii) 210,000 shares owned by three family trusts
for the benefit of Mr. McFadden's children, (iii) 85,000 shares owned by
Mr. McFadden's wife, and (iv) 125,000 shares owned by a former family
member as custodian for one of Mr. McFadden's children. Mr. McFadden
exercises shared voting and investment power with respect to all such
shares. Mr. McFadden disclaims beneficial ownership of these shares other
than to the extent of his pecuniary interest in the shares beneficially
owned by the family trust under the will of Alexander B. McFadden.
(6) Includes 4,667 shares of common stock issuable upon the exercise of
options. Also includes 653,561 shares of common stock beneficially owned
by Venrock Associates and 324,902 shares owned by Venrock Associates II,
L.P.. Dr. Evnin is a general partner of Venrock Associates and Venrock
Associates II, L.P. and consequently shares voting and investment power
with respect to all these shares. Dr. Evnin disclaims beneficial ownership
of these shares other than to the extent of his individual partnership
interest.
(7) Includes 5,334 shares of common stock issuable upon the exercise of
options. Also includes a total of 760,147 shares of common stock
beneficially owned by each of the following persons in the amounts
indicated: (i) 520,000 shares owned by Forward Ventures II, L.P., (ii)
233,663 shares owned by Forward Ventures III, L.P., (iii) 4,122 shares
owned by Forward II Associates, L.P., and (iv) 2,362 shares owned by two
family trusts. Mr. Fleming is a general partner of Forward II Associates,
L.P., which is the general partner of Forward Ventures II, L.P., and a
managing member of Forward III Associates, L.L.C., which is the general
partner of Forward Ventures III, L.P., and consequently shares voting and
investment power with respect to all these shares. Mr. Fleming disclaims
beneficial ownership of these shares other than to the extent of his
individual partnership and member interests.
(8) Includes 6,000 shares of common stock issuable upon the exercise of
options. Excludes 1,500,000 shares of common stock a subsidiary of
Quintiles Transnational Corp. purchased on March 1, 2001. Dr. Gillings is
Chairman and a significant shareholder of Quintiles Transnational Corp.
(9) Includes 6,000 shares of common stock issuable upon the exercise of
options and 6,000 shares of common stock held in a pension fund.
- 18 -
(10) Includes 4,000 shares of common stock issuable upon the exercise of
options and 6,638,244 shares of common stock beneficially owned by Abbott
Laboratories. Mr. Higgins is a Senior Vice President of Abbott
Laboratories, and disclaims beneficial ownership of the shares
beneficially owned by Abbott Laboratories.
(11) Excludes an aggregate of 5,708 shares of common stock purchased by
executive officers on the conclusion of the purchase interval, ending
February 28, 2001, under our employee stock purchase plan.
(12) Includes 110,887 shares of common stock issuable upon the exercise of
options. Also includes 500 shares held separately by Mr. Rallis' wife,
1,500 shares held by Mr. Rallis' wife as custodian for their children
under the Uniform Gift to Minors Act and 17,200 shares held by The Rallis
Richner Foundation, Inc., a charitable North Carolina corporation of which
Mr. Rallis serves as President. Mr. Rallis disclaims beneficial ownership
of the shares beneficially owned by The Rallis Richner Foundation, Inc.
(13) Includes 145,857 shares of common stock issuable upon the exercise of
options.
(14) Includes 91,401 shares of common stock issuable upon the exercise of
options. Also includes 8,500 shares held separately by Dr. Painter's wife.
(15) Includes 80,846 shares of common stock issuable upon the exercise of
options.
(16) Includes 500 shares held by Ms. Underwood as custodian for her son under
the Uniform Gift to Minors Act.
(17) Includes 634,357 shares of common stock issuable upon the exercise of
options.
- 19 -
EXECUTIVE OFFICERS
The executive officers of Triangle Pharmaceuticals, Inc. as of March 23,
2001 are as follows:
Name Age Position
------------------------------- --- -------------------------------------------------------------------
David W. Barry, M.D. ................. 57 Chairman of the Board and Chief Executive Officer
Chris A. Rallis, J.D. ................ 47 President, Chief Operating Officer and Director
Robert F. Amundsen, Jr., M.B.A. ...... 47 Executive Vice President and Chief Financial Officer
Paul A. Dreyer, M.B.A. ............... 51 Executive Vice President, Commercial Operations
R. Andrew Finkle, J.D. ............... 41 Executive Vice President, General Counsel and Secretary
Anne F. McKay ........................ 46 Executive Vice President, Drug Regulatory Affairs
George R. Painter, III, Ph.D. ........ 50 Executive Vice President, Research and Development
Franck S. Rousseau, M.D. ............. 43 Executive Vice President, Medical Affairs and Chief Medical Officer
David W. Barry, M.D. is Chairman of the Board and Chief Executive Officer.
See "Election of Directors" for a discussion of Dr. Barry's business experience.
Chris A. Rallis, J.D. is the President and Chief Operating Officer and a
director. See "Election of Directors" for a discussion of Mr. Rallis' business
experience.
Robert F. Amundsen, Jr., M.B.A. has served as Executive Vice President and
Chief Financial Officer since July 2000. Before joining Triangle, Mr. Amundsen
served for seven years at Covance Biotechnology Services, Inc., most recently as
Executive Vice President of Finance and Planning and Chief Financial Officer.
While at Covance, Mr. Amundsen played a key role in leading the company from
start-up to maturity, including the securing of financing and the direction of
Covance's strategic planning. In addition, Mr. Amundsen's financial experience
includes service as Senior Vice President of Finance and Administration and
Chief Financial Officer at Applied Bioscience International, Inc., and Vice
President of Finance and Administration and Chief Financial Officer at Pharmaco
Dynamics Research, Inc., and Controller at Tessco, Inc. Mr. Amundsen received
his B.A. from Dartmouth College and M.B.A. from University of Texas.
Paul A. Dreyer, M.B.A. has served as Executive Vice President of
Commercial Operations since October 2000, as Vice President, Marketing and Sales
from June 1999 through September 2000, and as Vice President, Sales from April
1998 through May 1999. Prior to joining Triangle, Mr. Dreyer had been at
GlaxoWellcome plc, Glaxo, as Group Director of Sales and Marketing in
Dermatology since August 1995. Mr. Dreyer was previously at Burroughs Wellcome
Co. for twenty-three years, where he held positions in Marketing, Sales and
Business Development. Mr. Dreyer received his B.A. from Rutgers College and
M.B.A. from Rutgers Graduate School of Management.
R. Andrew Finkle, J.D. has served as Executive Vice President, General
Counsel and Secretary since July 2000. Prior to joining Triangle, Mr. Finkle
served for four years as Vice President, Assistant General Counsel and Head of
Regulatory Affairs at Sterling Diagnostic Imaging, Inc./AGFA Corporation, a
former subsidiary of Bayer A.G. Mr. Finkle's legal experience includes eight
years as legal counsel to Societe Nationale Elf Aquitaine/PCS, Inc. and private
practice. Mr. Finkle's practice has concentrated on strategic business and
international transactions, mergers and acquisitions, FDA compliance and
intellectual property management. Mr. Finkle received his B.A. from Washington
and Lee University and a J.D. from the University of Virginia School of Law.
Anne F. McKay has served as Executive Vice President, Drug Regulatory
Affairs since October 2000, and as Vice President, Drug Regulatory Affairs from
October 1996 through September 2000. Prior to joining Triangle, Ms. McKay served
as Director of Regulatory Affairs with Medco Research, Inc. Prior to
- 20 -
that, Ms. McKay served as Director of Regulatory Affairs, North America, and
held various other regulatory positions during a 15-year tenure at Burroughs
Wellcome. Ms. McKay's department was responsible for providing support for
various FDA submissions, including the NDA submissions for AZT and acyclovir.
Ms. McKay received her B.S. in animal science from Michigan State University.
George R. Painter, III, Ph.D. has served as Executive Vice President,
Research and Development since August 1999, as Vice President, Research and
Development from July 1997 through July 1999, and as Vice President, Chemistry
and Technical Development of Triangle from January 1996 through June 1997. From
July 1995 through January 1996, Dr. Painter served as Director of Research
Process for Glaxo, and from June 1993 through July 1995, he served as Assistant
Director of Virology for Burroughs Wellcome. While at Burroughs Wellcome, Dr.
Painter led the international development of both an HIV protease inhibitor and
Coviracil(R)(emtricitabine), formerly known as FTC. Dr. Painter received a B.S.
in chemistry, an M.S. in physical chemistry and a Ph.D. in organic chemistry
from Emory University.
Franck S. Rousseau, M.D. has served as Executive Vice President, Medical
Affairs and Chief Medical Officer since August 1999, and as Vice President,
Medical Affairs and Chief Medical Officer from March 1997 through July 1999.
From 1995 through March 1997, Dr. Rousseau served as Associate Director,
International Antiviral Clinical Research for Glaxo. Prior to joining Glaxo, Dr.
Rousseau was Director of Infectious Diseases and HIV Clinical Research at
Wellcome France from 1993 through 1995. From 1990 through 1993, Dr. Rousseau was
a Clinical Research Physician with the French National Agency for Research
Against AIDS. Dr. Rousseau has been involved with the clinical development of
several anti-HIV drugs. Dr. Rousseau received the equivalent of a B.A. from the
University of Paris and his M.D. from the University of Paris, College of
Medicine.
- 21 -
EXECUTIVE COMPENSATION AND OTHER INFORMATION
Summary of Cash and Certain Other Compensation
The following table contains information concerning the aggregate
compensation we paid to our Chief Executive Officer, to the four additional most
highly compensated executive officers, Named Executive Officers, and to Carolyn
Underwood, a former officer of Triangle, for services rendered in all capacities
to Triangle for the years ended December 31, 1998, 1999 and 2000. The aggregate
amount of perquisites and other personal benefits, if any, did not exceed the
lesser of $50,000 or 10% of the total annual salary and bonus reported for each
Named Executive Officer and has therefore been omitted.
Summary Compensation Table
Long Term
Compensation
Annual -------------
Compensation Awards
---------------------------- -------------
Securities
Underlying All Other
Name and Salary Bonus Options/SARs Compensation
Principal Position Year ($) ($) (#) ($)(1)
------------------------------------ ---- ----------- ---------- --------------- ------------
David W. Barry, M.D .................. 2000 263,500 100,000 60,000 28,289(2)
Chairman and Chief 1999 250,950 170,000 50,000 26,111(2)
Executive Officer 1998 239,000 72,000 50,000 14,550
Chris A. Rallis, J.D ................. 2000 255,919 76,775 97,500 3,530
President, Chief Operating 1999 209,405 282,524(3) 30,000 3,375
Officer and Director 1998 193,000 95,628 23,000 2,220
Anne F. McKay ........................ 2000 172,301(4) 54,690 57,304(4) 3,281
Executive Vice President, Drug 1999 158,000(5) 92,400 29,862(5) 1,750
Regulatory Affairs 1998 145,000(6) 48,000 21,572(6) 1,000
George R. Painter, III, Ph.D ......... 2000 213,813 64,145 35,000 3,005
Executive Vice President, 1999 161,620(7) 105,150 38,416(7) 2,086
Research & Development 1998 122,000(8) 52,000 30,576(8) 1,822
Franck S. Rousseau, M.D .............. 2000 226,215 67,865 35,000 3,742
Executive Vice President, 1999 187,470(9) 111,775 35,223(9) 2,000
Medical Affairs and 1998 170,000(10) 55,000 25,058(10) 455
Chief Medical Officer
Carolyn S. Underwood (11) ............ 2000 183,283 90,055 20,000 36,710(12)
former Executive Vice 1999 194,215 108,988 32,937 105
President, Commercial 1998 179,000 69,749 23,000 421
Operations
----------
(1) Represents the amounts paid during 2000, 1999 and 1998 in the form of
premiums for individual life insurance policies for the benefit of the
Named Executive Officers and as matching 401(k) contributions in the
following amounts for the following Named Executive Officers: Dr. Barry,
$1,956, $1,863 and $1,000; Mr. Rallis, $2,000, $2,000 and $1,000; Ms.
McKay, $2,000, $1,750 and $1,000; Dr. Painter, $1,773, $1,881 and $1,000;
and Dr. Rousseau, $2,000, $2,000 and $455.
(2) Includes amounts paid by Triangle for income tax liabilities related to
life insurance premiums.
(3) Includes 6,235 shares of common stock granted to Mr. Rallis on June 25,
1999 under our Stock Issuance Program under the 1996 Stock Incentive Plan.
The fair market value per share on June 25, 1999 was $16.25.
(4) Excludes an aggregate of $10,000 of Ms. McKay's salary earned in 2000
allocated toward the acquisition of options to purchase 2,304 shares of
common stock under our Salary Investment Option Grant Program for $4.34
per
- 22 -
underlying share. The options were granted on January 4, 2000, were fully
vested as of December 31, 2000, and are exercisable at a price of $8.66
per share.
(5) Excludes an aggregate of $10,000 of Ms. McKay's salary earned in 1999
allocated toward the acquisition of options to purchase 2,237 shares of
common stock under our Salary Investment Option Grant Program for $4.468
per underlying share. The options were granted on January 29, 1999, were
fully vested as of December 31, 1999, and are exercisable at a price of
$8.938 per share.
(6) Excludes an aggregate of $15,000 of Ms. McKay's salary earned in 1998
allocated toward the acquisition of options to purchase 2,572 shares of
common stock under our Salary Investment Option Grant Program for $5.83
per underlying share. The options were granted on January 7, 1998, were
fully vested as of December 31, 1998, and are exercisable at a price of
$11.67 per share.
(7) Excludes an aggregate of $25,000 of Dr. Painter's salary earned in 1999
allocated toward the acquisition of options to purchase 5,594 shares of
common stock under our Salary Investment Option Grant Program for $4.468
per underlying share. The options were granted on January 29, 1999, were
fully vested as of December 31, 1999, and are exercisable at a price of
$8.938 per share.
(8) Excludes an aggregate of $50,000 of Dr. Painter's salary earned in 1998
allocated toward the acquisition of options to purchase 8,576 shares of
common stock under our Salary Investment Option Grant Program for $5.83
per underlying share. The options were granted on January 7, 1998, were
fully vested as of December 31, 1998, and are exercisable at a price of
$11.67 per share.
(9) Excludes an aggregate of $10,000 of Dr. Rousseau's salary earned in 1999
allocated toward the acquisition of options to purchase 2,237 shares of
common stock under our Salary Investment Option Grant Program for $4.468
per underlying share. The options were granted on January 29, 1999, were
fully vested as of December 31, 1999, and are exercisable at a price of
$8.938 per share.
(10) Excludes an aggregate of $12,000 of Dr. Rousseau's salary earned in 1998
allocated toward the acquisition of options to purchase 2,058 shares of
common stock under our Salary Investment Option Grant Program for $5.83
per underlying share. The options were granted on January 7, 1998, were
fully vested as of December 31, 1998, and are exercisable at a price of
$11.67 per share.
(11) Ms. Underwood's employment ended October 31, 2000.
(12) Includes payments made in 2000 under an agreement between
Triangle and Ms. Underwood.
Stock Options
The following table contains information concerning stock option grants
made to each of the Named Executive Officers during the year ended December 31,
2000. We granted options to acquire an aggregate of 1,309,210 shares of common
stock to our officers and employees in 2000. We did not grant any stock
appreciation rights to the Named Executive Officers during the year ended
December 31, 2000.
All options were granted under the 1996 Stock Incentive Plan. Unless
otherwise indicated, each option vests and becomes exercisable as follows: 25%
after 12 months of service from the date of the option grant, indicated by
footnote for each grant, and the remaining 75% thereafter in a series of
36-equal-monthly installments. Unless otherwise indicated, the shares subject to
each option will immediately vest in the event we are acquired by a merger or
asset sale, unless the options are assumed by the acquiring entity. The options
further provide that the shares subject to each option will immediately vest
even if options are assumed by the acquiring entity if the Named Executive
Officer's employment is terminated involuntarily, which includes a reduction in
the responsibilities of the Named Executive Officer, at any time within 12
months after the merger or asset sale.
Unless otherwise indicated, the exercise price per share of options
granted represented the fair market value of the underlying shares of common
stock on the dates the options were granted as determined by the Compensation
Committee of the Board of Directors. Optionholders may pay the exercise price in
cash or in shares of common stock valued at fair market value on the exercise
date or a combination of cash and shares or any other form of consideration
approved by the Board of Directors or the Compensation Committee. The fair
market value of shares of common stock is determined in accordance with
provisions of
- 23 -
the 1996 Stock Incentive Plan based on the closing selling price of a share of
common stock on the date in question on the Nasdaq National Market.
We provide no assurance to any Named Executive Officer or any other holder
of our securities that the actual stock price appreciation over the 10-year
option term will be at the assumed 0%, 5% or 10% levels or at any other defined
level. Unless the market price of the common stock does in fact appreciate over
the option term, no value will be realized from the option grants made to the
Named Executive Officers.
Option/SAR Grants In Last Fiscal Year
Individual Grants
-------------------------------------------------------- Potential Realizable Value at
Assumed Annual Rates of
Percent of Stock
Number of Total Options/ Price Appreciation for
Securities SARs Granted Option Term
Underlying to Employees Exercise or --------------------------------
Options/SARs in Fiscal Base Price Expiration
Name Granted Year (%) ($/Sh) Date 0%($) 5%($) 10%($)
------------------------------- ------------ -------- ------ ---------- --------- ------- -------
David W. Barry, M.D. .......... 30,000(1) 2.3 5.813 5/22/10 0 109,673 277,933
30,000(2) 2.3 5.563 12/18/10 0 104,956 265,980
Chris A. Rallis, J.D. ......... 50,000(3) 3.8 12.125 3/20/10 0 381,267 966,206
25,000(1) 1.9 5.813 5/22/10 0 91,394 231,611
22,500(2) 1.7 5.563 12/18/10 0 78,717 199,485
Anne F. McKay ................. 2,304(4) 0.2 8.660(5) 1/3/10 10,000(5) 28,836 57,735
15,000(1) 1.1 5.813 5/22/10 0 54,836 138,966
25,000(6) 1.9 9.063 10/18/10 0 142,492 361,102
15,000(2) 1.1 5.563 12/18/10 0 52,478 132,990
George R. Painter, III, Ph.D. . 20,000(1) 1.5 5.813 5/22/10 0 73,115 185,288
15,000(2) 1.1 5.563 12/18/10 0 52,478 132,990
Frank S. Rousseau, M.D. ....... 20,000(1) 1.5 5.813 5/22/10 0 73,115 185,288
15,000(2) 1.1 5.563 12/18/10 0 52,478 132,990
Carolyn S. Underwood .......... 20,000(1)(7) 1.5 5.813 1/31/01 0 73,115 185,288
----------
(1) Represents options granted on May 23, 2000 pursuant to our Discretionary
Option Grant Program. Each option vests and becomes exercisable as
follows: 50% after 12 months of service measured from the date of the
option grant and 50% after 24 months of service measured from the date of
the option grant.
(2) Represents options granted on December 19, 2000 pursuant to our
Discretionary Option Grant Program.
(3) Represents options granted on March 21, 2000 pursuant to our Discretionary
Option Grant Program.
(4) Represents options granted on January 4, 2000 pursuant to our Salary
Investment Option Grant Program. The options vested in 12-equal
installments over each month in 2000.
(5) Pursuant to our Salary Investment Option Grant Program, Ms. McKay
allocated an aggregate of $10,000 of her salary earned in 2000 toward the
acquisition of the options for $4.34 per underlying share, which amount is
equal to 1/3 of the fair market value of the underlying shares of common
stock on the date of grant. The options are exercisable at a price of
$8.660 per share, which amount is equal to 2/3 of the fair market value of
the underlying shares of common stock on the date of grant.
(6) Represents options granted on October 19, 2000 pursuant to our
Discretionary Option Grant Program.
(7) Vesting of options to purchase 10,000 of these shares was accelerated to
October 31, 2000 in connection with Ms. Underwood's amended employment
agreement.
- 24 -
Option Exercises and Holdings
The following table provides information concerning option exercises
during the year ended December 31, 2000 by the Named Executive Officers and the
value of unexercised options held by each of the Named Executive Officers as of
December 31, 2000. No stock appreciation rights were exercised during the year
ended December 31, 2000. Value of unexercised in-the-money options is defined as
the fair market price of our common stock at December 31, 2000 less the exercise
price of the option. On December 29, 2000, the closing selling price of a share
of our common stock on the Nasdaq National Market was $4.938.
Aggregated Option/SAR Exercises In Last Fiscal Year
and Fiscal Year-End Option/SAR Values
Number of Value of Unexercised
Unexercised Options In-the-Money Options at
Shares at FY-End (#) December 31, 2000
Acquired on Value -------------------------- --------------------------
Name Exercise (#) Realized Exercisable Unexercisable Exercisable Unexercisable
------------------------------- ------------ ---------- ----------- ------------- ----------- -------------
David W. Barry, M.D ........... -- -- 120,798 124,583 0 0
Chris A. Rallis, J.D ......... 20,000 $177,260 92,699 133,771 $ 84,650 0
Anne F. McKay ................. -- -- 77,216 84,427 0 0
George R. Painter, III, Ph.D .. -- -- 85,975 71,930 0 0
Franck S. Rousseau, M.D ....... -- -- 134,961 77,682 0 0
Carolyn S. Underwood .......... 67,500 $425,250 177,144 0 $325,821 0
Employment Contracts and Change of Control Arrangements
We renewed an employment agreement with Dr. David W. Barry, our Chairman
and Chief Executive Officer, as of November 23, 2000. This employment agreement
automatically renews from year to year, unless otherwise terminated. Pursuant to
the agreement, we employed Dr. Barry at a base salary of $263,500 per year for
the period ending December 31, 2000 and $320,000 per year for the period ending
December 31, 2001, subject to increase by our Board of Directors. We have also
agreed to provide to Dr. Barry any other benefits that are provided to our other
executive officers. Dr. Barry's employment is terminable at will by either us or
Dr. Barry. In the event we terminate Dr. Barry's employment for any reason or
Dr. Barry resigns at any time within two years of the date of the agreement, we
have agreed to continue to pay Dr. Barry's then-current base salary for a period
of two years and Dr. Barry has agreed that during the two-year period he will
not serve as the chairman, chief executive officer or president of, or
participate in or direct the development of drugs for the treatment of viral
diseases for, any for-profit business in the pharmaceutical industry that
competes in the United States with us. In addition, in the event that we
terminate Dr. Barry's employment without cause at any time within two years of
the date of the agreement, we have agreed to accelerate the vesting of any
unvested stock and/or options held by Dr. Barry. The agreement will terminate
automatically in the event of any change in control.
We have also entered into employment agreements with each of our officers,
including each Named Executive Officer. These employment agreements
automatically renewal from year to year, unless otherwise terminated. Each
officer is also eligible to participate in our retirement and welfare benefit
plans. The officer's employment is terminable at will by either us or the
officer. In the event we terminate the officer's employment without cause or we
elect not to renew the officer's term, we have agreed to continue to pay the
officer's then-current base salary for a period of eighteen months and to
accelerate by 12 months the vesting of unvested stock and/or options, subject to
the officer's agreement during the eighteen-month period not to engage in the
same or similar function area in any for-profit pharmaceutical business that
competes with us
- 25 -
in the field of HIV/hepatitis B within North America. In addition, in the event
that, within 12 months following a change in control, we terminate the officer's
employment without cause, the officer resigns for good reason, or we elect not
to renew the officer's term, we have agreed to continue to pay the officer's
then-current base salary for a period of two years and to accelerate totally the
vesting of any unvested stock and/or options.
All of the options awarded to the Named Executive Officers during the year
ended December 31, 2000 provide that the shares subject to each option will
immediately vest in the event we are acquired by a merger or asset sale, unless
the options are assumed by the acquiring entity. The options also provide that
the shares subject to each option will immediately vest even if the options are
assumed by the acquiring entity if the Named Executive Officer's employment is
terminated involuntarily, which includes a reduction in the responsibilities of
the Named Executive Officer, at any time within twelve months after the merger
or asset sale.
Compensation Committee Interlocks and Insider Participation
We established our Compensation Committee in June 1996. Its members are
Dr. Evnin and Mr. McFadden. Dr. Evnin is a general partner of Venrock Associates
and Venrock Associates II, L.P., both of which purchased preferred stock from us
as part of several private placement transactions completed during the years
ended December 31, 1995 and 1996. Mr. McFadden and several affiliated
individuals and entities also purchased preferred stock from us as part of these
financings.
Notwithstanding anything to the contrary contained in our previous filings
under the Securities Act of 1933, as amended, or the Securities Exchange Act of
1934, as amended, that might incorporate future filings, including this proxy
statement, in whole or in part, the following report of the Compensation
Committee and the performance graph on page 30 shall not be incorporated into
any future filings.
Compensation Committee Report on Executive Compensation
The Compensation Committee offers this report regarding compensation for
Triangle's executive officers and Chief Executive Officer.
General Compensation Policy
Triangle's primary objective is to maximize the value of its shares over
time. Accomplishing this objective requires Triangle to successfully develop and
market safe and effective drugs, primarily for the treatment of viral diseases.
The Compensation Committee, with this objective in mind, authorizes compensation
packages for executive officers designed to retain and attract top quality
management and to encourage them to contribute to the achievement of Triangle's
business objectives. In addition, the Compensation Committee attempts to
establish compensation packages that are comparable to the packages received by
executives of similar companies and reasonable in light of Triangle's
expenditures on its drug development programs.
Triangle compensates its executive officers with a combination of salary
and incentives designed to encourage efforts to achieve both its short-term and
long-term goals. The compensation structure attempts to reward both individual
contributions as well as Triangle's overall performance. Many traditional
measures of corporate performance, such as earnings per share or sales growth,
are less applicable to the performance of development stage pharmaceutical
companies, like Triangle's, than to mature pharmaceutical companies or companies
in other industries. As a result, in making executive compensation decisions,
the Compensation Committee evaluates other indications of performance, such as
the progress of Triangle in achieving milestones in the development of its drug
candidates, in obtaining rights to drug candidates and in raising the capital
needed for its operations.
- 26 -
The basic components of compensation packages for the executive officers include
the following:
o Base Salary
o Annual Incentives
o Long-term Incentives
o Benefits
Each officer's package contains a mix of these elements and is designed to
provide a level of compensation competitive with the compensation paid to
comparable officers of companies of similar size in similar industries. Based on
various surveys of executive compensation within Triangle's industry, the
Compensation Committee believes it achieved this level of aggregate executive
compensation during 2000. Triangle favors a compensation structure that aligns
the long-term interests of its executive officers with the interests of its
stockholders, and as a result places more weight upon long-term incentives in
the form of stock options than upon base salary and annual incentives.
Base Salary and increases in base salary are determined by both individual
and company performance and the salary levels in effect for companies of similar
size in similar industries. During 2000, the Compensation Committee sought to
set the base salaries of the officers of Triangle at a level around the 75th
percentile of the range of salaries of officers in comparable companies. In
addition, the Compensation Committee considered the following factors in setting
the base salaries for executive officers during 2000:
o Triangle's success in achieving milestones in the development
of its drug candidates
o in obtaining rights to drug candidates and in raising the
capital needed for its operations,
o any special expertise of a particular executive.
During 2000, the base salaries for the Named Executive Officers, excluding
Dr. Barry and Ms. Underwood, increased by an average of approximately 15.3% over
their annualized base salaries during 1999.
Annual Incentives in the form of cash bonuses are awarded by the
Compensation Committee based upon its evaluation of the performance of each
executive officer and the achievement of company goals during the year. In 2000,
annual incentive compensation awarded to the Named Executive Officers, excluding
Dr. Barry and Ms. Underwood, averaged approximately 30.0% of base salary and
totaled in the aggregate $263,475. The awards reflect the Compensation
Committee's objective to provide a level of compensation competitive with the
compensation paid to comparable officers of companies of similar size in similar
industries.
Long-Term Incentive compensation in the form of stock options is expected
to be the largest element of total compensation over time. Grants of stock
options are designed to align the long-term interests of each officer with the
interests of stockholders and to provide long-term incentives for the individual
officer to remain with Triangle. Stock options provide each officer with a
significant incentive to manage Triangle from the perspective of an owner with
an equity stake in the business. The size of the option grant to each officer is
based on the officer's current position and expected future contributions to
Triangle's business. Awards of stock options are designed to have an expected
aggregate exercise value over time equal to a multiple of salary which will
create a significant opportunity for stock ownership.
During 2000, the Named Executive Officers, excluding Dr. Barry and
including Ms. Underwood, were granted ten-year options to purchase an aggregate
of 242,500 shares of our common stock, excluding options to acquire 2,304 shares
of common stock granted to Ms. McKay under our Salary Investment Option Grant
Program. Of the 242,500 option shares granted, 50,000 were granted in March 2000
at an exercise price of $12.125 per share, 100,000 were granted in May 2000 at
an exercise price of $5.813 per share, 25,000 were granted in October 2000 at an
exercise price of $9.063 per share and 67,500 were granted in
- 27 -
December 2000 at an exercise price of $5.563 per share. The 100,000 option
shares granted in May 2000 vest over a two-year period as long as the Named
Executive Officer continues to be employed by us. The remaining options, other
than Ms. McKay's Salary Investment options, vest over a four-year period as long
as the Named Executive Officer continues to be employed by us. The options were
awarded by the Compensation Committee based on the milestones we achieved during
2000. The Compensation Committee also considered the total percentage of
outstanding shares beneficially owned by the Named Executive Officers as
compared to the stock ownership of similar officers at comparable companies. The
Compensation Committee believes that the option grants were at a level not
exceeding the 50th percentile of the range of option grants to officers in
comparable companies.
Benefits offered to executive officers serve as a safety net of protection
against the financial catastrophes that can result from illness, disability or
death. Benefits offered to executive officers are substantially the same as
those offered to all regular employees.
CEO Compensation
Dr. Barry's 2000 base salary of $263,500 represented an increase of
approximately 5% over his base salary during 1999. The cash bonus paid to Dr.
Barry decreased from $170,000 during 1999 to $100,000 during 2000. The amount of
Dr. Barry's base salary and cash bonus were below the average for chief
executive officers of comparable companies, reflecting the Compensation
Committee's objective, particularly in the case of Dr. Barry, of placing more
weight upon long-term incentives than upon base salary and annual incentives.
The Compensation Committee expects that the stock options granted to Dr.
Barry will represent the largest element of his compensation and provide a
direct link between Dr. Barry's compensation and the performance of Triangle.
During 2000, Dr. Barry received ten-year options to purchase 30,000 shares of
common stock at an exercise price of $5.813 per share. These options vest over a
two-year period as long as Dr. Barry continues to be employed by Triangle. Dr.
Barry also received ten-year options to purchase 30,000 shares of common stock
at an exercise price of $5.563 per share. These options vest over a four-year
period as long as Dr. Barry continues to be employed by Triangle. As with the
other Named Executive Officers, the options granted to Dr. Barry were awarded
based on the milestones achieved by Triangle Pharmaceuticals during 2000. The
Compensation Committee believes that the option grants were at a level around
the 25th percentile of the range of option grants to chief executive officers in
comparable companies. Additionally, the total percentage of outstanding shares
beneficially owned by Dr. Barry is above the median as compared to the stock
ownership of similar officers at comparable companies. It is the Compensation
Committee's judgment that Dr. Barry's scientific and management leadership is
extremely important to Triangle, and it is therefore essential to provide Dr.
Barry with a significant unvested stock ownership position.
COMPENSATION COMMITTEE
Anthony B. Evnin, Ph.D.
George McFadden
Audit Committee Report
Triangle's Audit Committee of the Board of Directors consists of three
non-employee directors that are considered independent under the NASDAQ National
Market independent director and audit committee listing standards. The current
members of the Audit Committee are Standish M. Fleming, Chairman, Henry G.
Grabowski, Ph.D., and George McFadden. The Board of Directors has adopted a
written charter for the Audit Committee, which is included as Appendix A to this
Proxy Statement.
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Management is responsible for the integrity of Triangle's internal control
environment and its financial reporting process. Triangle's independent public
accountants, PricewaterhouseCoopers LLP, are responsible for performing an
independent audit of Triangle's consolidated financial statements in accordance
with generally accepted auditing standards and for issuing a report on these
financial statements. The Audit Committee is responsible for overseeing and
monitoring these processes.
The Audit Committee held five meetings during calendar 2000, including
pre-issuance reviews of quarterly financial statements and press releases. The
Audit Committee believes Triangle management maintains an effective system of
internal control that results in the fair presentation of our financial
statements and the appropriate safeguard of corporate assets. Based on review
and ratification of the 2000 audit plan and discussion of the results of its
execution with management and PricewaterhouseCoopers, the Audit Committee
recommended to the Board of Directors that the audited financial statements be
included in Triangle's Annual Report on Form 10-K for the year ended December
31, 2000 filed with the Securities and Exchange Commission.
The audit committee and PricewaterhouseCoopers have discussed all matters
required by Statement on Auditing Standards No. 61, Communications with Audit
Committee. The Audit Committee has considered the compatibility of non-audit
services performed by PricewaterhouseCoopers and other pertinent information
regarding the accountant's independence and has determined the firm to be
appropriately independent from Triangle. Additionally, the Audit Committee has
received from PricewaterhouseCoopers written disclosure regarding its
independence as required by Independence Standards Board Standard No. 1,
Independence Discussions with Audit Committee.
Fees for the calendar year 2000 audit and related quarterly reviews are
approximately $60,000 of which approximately $30,000 has been billed through
December 31, 2000. Fees billed for other projects rendered by
PricewaterhouseCoopers for the calendar 2000 year were approximately $50,000.
These fees relate primarily to consultation on our tax returns and other tax
matters, assistance with 1933 Securities Act filings, audit of our 401-K
retirement plan and consultation on the contribution of assets to Intelligent
Therapeutic Solutions, Inc.
The Audit Committee of the Board of Directors of Triangle Pharmaceuticals, Inc.
Standish M. Fleming
Henry G. Grabowski, Ph.D
George McFadden
- 29 -
Performance Graph
The following graph compares total stockholder returns since we became a
reporting company under the Exchange Act to the Nasdaq CRSP Total Return Index
(Nasdaq Broad Index) for the Nasdaq Stock Market (U.S. Companies) and the Nasdaq
CRSP Pharmaceutical Index (Nasdaq Pharmaceutical Index). The total return for
each of our common stock, the Nasdaq Broad Index and the Nasdaq Pharmaceutical
Index assumes the reinvestment of dividends, although dividends have not been
declared on our common stock. The Nasdaq Pharmaceutical Index is made up of all
companies with the standard industrial classification Code 283 (category
description "Drugs"). The companies comprising the Nasdaq Pharmaceutical Index
are available upon written request to Investor Relations at our executive
offices. The stockholder return shown on the graph below is not necessarily
indicative of future performance and we will not make or endorse any predictions
as to future stockholder returns.
[MOUNTAIN GRAPH OMITTED]
Cumulative Total Return
-------------------------------------------------
December 31,
November 1, ------------------------------------
1996 1996 1997 1998 1999 2000
----------- ---- ---- ---- ---- ----
TRIANGLE PHARMACEUTICALS, INC 100 229 146 136 128 49
NASDAQ STOCK MARKET-US 100 106 130 183 341 205
NASDAQ PHARMACEUTICALS 100 103 106 136 254 316
- 30 -
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We have entered into employment agreements with each of our officers. See
"Executive Compensation and Other Information--Employment Contracts and Change
of Control Arrangements."
We entered into a number of agreements with direct or indirect
wholly-owned subsidiaries of Quintiles Transnational Corp., collectively,
Quintiles, under which Quintiles has rendered or agreed to render contract
services for us, including clinical monitoring, pre-clinical testing, drug
product formulation and packaging and central laboratory services. Dennis B.
Gillings, Ph.D., a director of Triangle, is the Chairman and a significant
shareholder of Quintiles Transnational Corp. We incurred approximately
$5,012,000 in development expenses for services rendered by Quintiles during
2000. In addition, on March 1, 2001, Q Finance, Inc., a wholly-owned subsidiary
of Quintiles Transnational Corp., purchased 1,500,000 shares of common stock
from us at $6.00 per share in a private placement with several other investors.
In August 1999, we completed a worldwide strategic alliance with Abbott
Laboratories, Abbott, relating to six antiviral compounds. Under the terms of
the alliance, we and Abbott will collaborate with respect to the clinical
development, registration, distribution and marketing of various proprietary
pharmaceutical products for the prevention and treatment of HIV and hepatitis B
virus. During 2000, Triangle incurred approximately $18,388,000 for development
services performed by Abbott, and recognized $7,294,000 of collaborative revenue
in association with our strategic alliance with Abbott. Abbott purchased
6,571,428 shares of our common stock at $18.00 per share, and will have the
right on or after June 30, 2002 to cause us to register those shares for resale
in the public market. In May 2000, Abbott exercised its rights under the terms
of a stockholder rights agreement to purchase 66,816 shares of our common stock,
resulting in net proceeds to us of $407,000. In addition, on March 1, 2001,
Abbott purchased 1,300,000 shares of common stock from us at $6.00 per share in
a private placement with several other investors. Arthur J. Higgins is a Senior
Vice President of Abbott and is a director of Triangle.
In the first quarter of 2000, we contributed intellectual property with an
appraised value of approximately $5.0 million and approximately $150,000 of
other assets to Intelligent Therapeutics Solutions, Inc., ITS, in exchange for
3,300,000 shares of ITS Series A preferred stock. David Barry, our Chief
Executive Officer and Chairman of the Board, and Chris Rallis, our President and
Chief Operating Officer and a member of the Board of Directors, are on the board
of directors of ITS and beneficially own shares of ITS common stock.
We have a policy that all material transactions between us and any of our
officers, directors, principal stockholders and other affiliates will be
approved in accordance with the Delaware General Corporation Law by a majority
of the Board of Directors, including a majority of the independent and
disinterested members of the Board of Directors, and will be on terms no less
favorable to us than we could obtain from unaffiliated third parties.
Our Second Restated Certificate of Incorporation eliminates, with a few
exceptions, directors' personal liability to us or our stockholders for monetary
damages for breaches of fiduciary duties. The Second Restated Certificate of
Incorporation does not, however, eliminate or limit the personal liability of a
director for (i) any breach of the director's duty of loyalty to us or our
stockholders, (ii) acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) unlawful payments of
dividends or unlawful stock repurchases or redemptions as provided in Section
174 of the Delaware General Corporation Law or (iv) for any transaction from
which the director derived an improper personal benefit.
Our Restated Bylaws provide that we will indemnify our directors and
executive officers to the fullest extent permitted under the Delaware General
Corporation Law, and may indemnify our other officers, employees and agents as
provided in the Delaware General Corporation Law. In addition, we have entered
into indemnification agreements with our directors and officers. The
indemnification agreements contain
- 31 -
provisions that require us to indemnify our directors and executive officers
against liabilities, other than liabilities arising from intentional or knowing
and culpable violations of law, that may arise by reason of their status or
service as our directors or executive officers or as directors or officers of
other entities to which they provide service at our request and to advance
expenses they may incur as a result of any proceeding against them as to which
they could be indemnified. We believe that these provisions and agreements are
necessary to attract and retain qualified directors and officers. We have
obtained an insurance policy covering directors and officers for claims that
directors and officers may otherwise be required to pay or for which we are
required to indemnify them, with a few exclusions.
As of the date of this proxy statement, there is no pending litigation or
proceeding involving any of our directors, officers, employees or other agents
as to which indemnification is being sought. We are not aware of any pending or
threatened litigation that may result in claims for indemnification by any
director, officer, employee or other agent.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act requires our officers and directors and
persons who own more than 10% of a registered class of our equity securities to
file reports of ownership and changes in ownership with the Securities and
Exchange Commission and the Nasdaq Stock Market and to furnish us with copies of
those reports.
Based solely on a review of the copies of reports furnished to us, or
written representations that no reports were required, we believe that, during
2000, all Section 16(a) filing requirements applicable to our officers,
directors and greater than 10% stockholders were satisfied, except that the
reporting by Anthony B. Evnin of the distribution of shares by Venrock
Associates II, L.P. and Venrock Associates was not reported on a timely basis.
- 32 -
DEADLINE FOR STOCKHOLDER PROPOSALS
Stockholder proposals that are intended to be presented at our annual
meeting of stockholders to be held in 2002 must be received by us no later than
December 8, 2001, in order to be included in the proxy statement and related
proxy materials.
In addition, if we have not received notice prior to February 21, 2002, of
any matter a stockholder intends to propose for a vote at the annual meeting of
stockholders to be held in 2002, then a proxy solicited by the Board of
Directors may be voted on that matter in the discretion of the proxyholder.
FORM 10-K
Enclosed with this proxy statement is a copy of our annual report on Form
10-K, including the financial statements and list of exhibits. You may request
an additional copy by writing to the attention of investor relations at our
executive offices which are located at 4 University Place, 4611 University
Drive, Durham, North Carolina 27707.
INFORMATION REQUIRED BY ITEM 13(A) OF SCHEDULE 14A IS HEREBY INCORPORATED
BY REFERENCE FROM THE COMPANY'S ANNUAL REPORT ON FORM 10-K.
OTHER BUSINESS
The Board of Directors knows of no other business that will be presented
for consideration at the annual meeting. If other matters are properly brought
before the annual meeting, however, it is the intention of the persons named in
the accompanying proxy to vote the shares represented on any additional matters
in accordance with their best judgment.
Dated: April 6, 2001 Order of the Board of Directors
R. Andrew Finkle, Secretary
- 33 -
APPENDIX A
AUDIT COMMITTEE CHARTER
I. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing the
financial information which will be provided to the shareholders and others, the
systems of internal controls which management and the Board of Directors have
established, and the Corporation's audit and financial reporting process.
The independent accountants' ultimate responsibility is to the Board of
Directors and the Audit Committee, as representatives of the shareholders. These
representatives have the ultimate authority to select, evaluate, and, where
appropriate, replace the independent accountants.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section IV of this Charter.
II. COMPOSITION
The Audit Committee shall be comprised of three or more independent
directors.
All members of the Committee shall have a working familiarity with basic
finance and accounting practices, and at least one member of the Committee shall
have accounting or related financial management expertise.
III. MEETINGS
The Committee shall meet on a regular basis and shall hold special
meetings as circumstances require.
IV. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties the Audit Committee shall:
1. Review this Charter at least annually and recommend any
changes to the Board.
2. Review the organization's annual financial statements and any
other relevant reports or other financial information.
3. Review the regular internal financial reports prepared by
management and any internal auditing department.
4. Recommend to the Board of Directors the selection of the
independent accountants and approve the fees and other
compensation to be paid to the independent accountants. On an
annual basis, the Committee shall obtain a formal written
statement from the independent accountants delineating all
relationships between the accountants and the Corporation
consistent with Independence Standards Board Standard 1, and
shall review and discuss with the accountants all significant
relationships the accountants have with the Corporation to
determine the accountants' independence.
5. Review the performance of the independent accountants and
approve any proposed discharge of the independent accountants
when circumstances warrant.
6. Following completion of the annual audit, review separately
with the independent accountants, the internal auditing
department, if any, and management any significant
difficulties encountered during the course of the audit.
7. Perform any other activities consistent with this Charter, the
Corporation's By-laws and governing law, as the Committee or
the Board deems necessary or appropriate.
PROXY CARD
TRIANGLE PHARMACEUTICALS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints David W. Barry and R. Andrew Finkle
jointly and severally, as proxies, with full power of substitution and
resubstitution, to vote all shares of stock which the undersigned is entitled to
vote at the annual meeting of stockholders of Triangle Pharmaceuticals, Inc. to
be held on Friday, May 18, 2001, or at any postponements or adjournments of the
annual meeting, as specified on the reverse, and to vote in his discretion on
any other business as may properly come before the annual meeting and any
adjournments thereof.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3 and 4.
UNLESS OTHERWISE SPECIFIED BY THE UNDERSIGNED, THIS PROXY WILL BE VOTED FOR
PROPOSALS 1, 2, 3 AND 4 AND WILL BE VOTED BY THE PROXYHOLDERS AT THEIR
DISCRETION AS TO ANY OTHER MATTERS PROPERLY TRANSACTED AT THE MEETING OR ANY
ADJOURNMENTS THEREOF. TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATIONS JUST SIGN BELOW, NO BOXES NEED BE CHECKED.
(PLEASE SIGN AND DATE ON REVERSE SIDE)
ANNUAL MEETING OF STOCKHOLDERS
TRIANGLE PHARMACEUTICALS, INC.
MAY 18, 2001
PROXY VOTING INSTRUCTIONS
SELECT ONE OF THE FOLLOWING:
Vote by Mail
Please date, sign and mail your proxy card in the envelope provided as soon as
possible.
Vote by Telephone (Touch-Tone Phone Only)
Please call toll-free 1-800-PROXIES and follow the instructions. Have your
control number and the proxy card available when you call.
Vote by Internet
Please access the web page at "www.voteproxy.com" and follow the on-screen
instructions. Have your control number available when you access the web page.
Your Control Number is ________________
DO NOT RETURN YOUR PROXY CARD
IF YOU VOTE BY TELEPHONE OR INTERNET
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
|X| PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
1. Issuance of Preferred Stock: To approve the terms of the issuance on March 9,
2001 of 200,000 shares of Series B preferred stock, par value $0.001 per share,
at a price per share of $60.00.
|_| FOR |_| AGAINST |_| ABSTAIN
2. Amendment of Stock Option Plan: To approve an amendment to our 1996 Stock
Incentive Plan increasing the number of shares of common stock reserved for
issuance under the plan by 1,500,000 shares in 2002 and 1,500,000 shares in
2003, and increasing the number of shares for which options granted to
non-employee members of the Board of Directors under the Automatic Option Grant
Program are exercisable.
|_| FOR |_| AGAINST |_| ABSTAIN
3. Election of Directors:
|_| Vote FOR all nominees at right (except as withheld in the space below)
|_| Vote WITHHELD from all nominees
Instruction: To withhold authority to vote for any individual nominee, check the
box "Vote FOR" and write the nominee's name on the line below.
__________________________________
NOMINEES:
Standish M. Fleming, Dennis B. Gillings, Ph.D. and Henry G. Grabowski, Ph.D.
will stand for reelection to the Board for terms to expire in 2004.
4. Ratification of Accountants: To ratify and approve the selection of
PricewaterhouseCoopers LLP as independent accountants for the fiscal year ending
December 31, 2001.
|_| FOR |_| AGAINST |_| ABSTAIN
CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING |_|
________________________ ___________________________
SIGNATURE OF STOCKHOLDER PRINTED NAME OF STOCKHOLDER
________________________ Dated: ______________, 2001
TITLE (IF APPROPRIATE)
Note: Please sign exactly as name appears on this proxy. If signing as attorney,
executor, administrator, trustee or guardian, please give full title as such,
and, if signing for a corporation, give your title. When shares are in the names
of more than one person, each should sign.