DEF 14A
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A
Proxy
Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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Check the appropriate box:
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Proxy Statement
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act
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(set forth the amount on which the filing fee is calculated and
state how it was
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GENTA
INCORPORATED
200 Connell Drive
Berkeley Heights, NJ 07922
908-286-9800
August 28,
2008
Dear Stockholder:
You are cordially invited to attend the 2008 annual meeting of
stockholders of Genta Incorporated on Monday, October 6,
2008 at 11:00 a.m., local time, at our Corporate Offices at
200 Connell Drive, Fifth Floor, Berkeley Heights, New Jersey
07922.
The accompanying notice of annual meeting of stockholders
outlines the matters to be brought before the meeting, and the
accompanying proxy statement discusses these matters in greater
detail. The notice and the proxy statement have been made a part
of this invitation.
Whether or not you plan to attend the meeting, we urge you to
complete, date and sign the enclosed proxy card and return it at
your earliest convenience. No postage need be affixed if you use
the enclosed envelope and it is mailed in the United States. You
may also vote electronically via the Internet or by telephone.
If you have any questions or need assistance in completing the
proxy card, please contact Investor Relations at the telephone
number above. The Board recommends that you vote in favor of
Proposal Two to approve the amendment of our Restated
Certificate of Incorporation, as amended, to increase the number
of authorized shares of the capital stock available for
issuance. If we do not amend the Restated Certificate of
Incorporation, as amended, we will be in default under the
securities purchase agreement, which would likely have a harmful
effect on the company, including the possibility of
bankruptcy.
We are providing a copy of our Annual Report on
Form 10-K
for the year ended December 31, 2007, as amended, with this
proxy statement. We are mailing this proxy statement and a form
of proxy on or about September 3, 2008.
Our Board of Directors and management look forward to seeing you
at the meeting.
Sincerely yours,
Raymond P. Warrell, Jr., M.D.
Chairman and Chief Executive Officer
GENTA
INCORPORATED
200 Connell Drive
Berkeley Heights, NJ 07922
908-286-9800
Notice of
Annual Meeting of Stockholders
August 28,
2008
The 2008 annual meeting of stockholders of Genta Incorporated, a
Delaware corporation, will be held on Monday, October 6,
2008 at 11:00 a.m., local time, at our Corporate Offices at
200 Connell Drive, Fifth Floor, Berkeley Heights, New Jersey
07922 for the following purposes:
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1.
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To elect five directors.
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2.
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To approve an amendment to our Restated Certificate of
Incorporation, as amended, to increase the total number of
authorized shares of capital stock available for issuance from
255,000,000, consisting of 250,000,000 shares of Common
Stock and 5,000,000 shares of Preferred Stock, to
6,005,000,000, consisting of 6,000,000,000 shares of Common
Stock and 5,000,000 shares of Preferred Stock.
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3.
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To transact such other business as may properly come before the
meeting.
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All stockholders are cordially invited to attend the annual
meeting. Attendance at the annual meeting is limited to our
stockholders and one guest. Only stockholders of record at the
close of business on August 25, 2008, the record date, are
entitled to notice of and to vote at the annual meeting.
YOUR VOTE IS IMPORTANT. WHETHER OR NOT YOU PLAN TO ATTEND THE
ANNUAL MEETING, WE URGE YOU TO VOTE ELECTRONICALLY VIA THE
INTERNET. YOU MAY ALSO COMPLETE, DATE AND SIGN THE ENCLOSED
PROXY CARD AND RETURN IT OR VOTE BY TELEPHONE.
By order of the Board of Directors,
Gary Siegel
Interim Corporate Secretary
YOU CAN VOTE IN ONE OF THREE WAYS:
(1) Visit the Web site noted on your proxy card to vote via
the Internet,
(2) Use the toll-free telephone number on your proxy card
to vote by phone, or
(3) Sign, date and return your proxy card in the enclosed
envelope to vote by mail.
TABLE OF CONTENTS
GENTA
INCORPORATED
200 Connell Drive
Berkeley Heights, NJ 07922
908-286-9800
This proxy statement contains information related to the 2008
annual meeting of stockholders of Genta Incorporated, a Delaware
corporation, to be held on Monday, October 6, 2008 at
11:00 a.m., local time, at our Corporate Offices at 200
Connell Drive, Fifth Floor, Berkeley Heights, New Jersey 07922,
and at any postponements or adjournments thereof. This proxy
statement and the enclosed proxy card are being mailed to our
stockholders on or about September 3, 2008. The
Companys Annual Report on
Form 10-K
for the year ended December 31, 2007, as amended, is being
mailed together with this proxy statement.
In this proxy statement, Genta, Company,
we, us and our refer to
Genta Incorporated.
VOTING AT
THE ANNUAL MEETING
Revocability
of Proxies
You can revoke your proxy at any time before it is exercised by
timely delivery of a properly executed, later-dated proxy
(including a telephone or internet vote), by delivering a
written revocation of your proxy to our Corporate Secretary, or
by voting at the meeting. The method by which you vote by proxy
will in no way limit your right to vote at the meeting if you
decide to attend in person. If your shares are held in the name
of a bank or brokerage firm, you must obtain a proxy, executed
in your favor, from the bank or broker, to be able to vote at
the meeting.
Voting
Rights
Only holders of record of our Common Stock at the close of
business on the Record Date are entitled to notice of and to
vote at the Annual Meeting. Each share of Common Stock is
entitled to one vote on all matters to be voted upon at the
Annual Meeting. The presence, in person or by proxy, of the
holders of a majority of the shares of Common Stock outstanding
on the Record Date will constitute a quorum for the transaction
of business. Abstentions and broker non-votes will be counted as
shares that are present for purposes of determining a quorum.
Broker non-votes occur when a nominee holding shares for a
beneficial owner does not have discretionary voting power on a
matter and has not received instructions from the beneficial
owner.
Only stockholders of record at the close of business on
August 25, 2008, the record date, are entitled to notice of
and to vote at the annual meeting, and at any postponements or
adjournments thereof. As of the record date,
36,760,558 shares of our Common Stock, par value $.001 per
share, were issued and outstanding, and 7,700 shares of our
convertible Series A Preferred Stock, par value $.001 per
share, were outstanding. Holders of our Common Stock are
entitled to one vote per share for each proposal presented at
the annual meeting. Holders of our Series A Preferred Stock
are not entitled to vote at the annual meeting.
For Proposal 1, the affirmative vote of a plurality of the
shares of Common Stock cast by the stockholders present in
person or represented by proxy at the Annual Meeting is required
to elect the nominees for election as Directors. Thus, broker
non-votes and withholding authority will have no effect on the
outcome of the vote for the election of Directors. Broker
non-votes are when shares are represented at the Meeting by a
proxy specifically conferring only limited authority to vote on
certain matters and no authority to vote on other matters.
Brokers do, however, have discretionary authority to vote shares
held in their name on this proposal, even if they do not receive
instructions from the beneficial owner.
For Proposal 2, the affirmative vote of a majority of the
outstanding shares of our Common Stock is required to approve
the amendment to our Restated Certificate of Incorporation, as
amended, to increase the total number of authorized shares of
capital stock available for issuance to 6,005,000,000,
consisting of
1
6,000,000,000 shares of Common Stock and
5,000,000 shares of Preferred Stock. Brokers may vote on
this proposal even if they do not receive instructions from the
beneficial owner; however, abstentions and broker non-votes will
have the effect of a vote against this proposal.
How to
Vote; How Proxies Work
Our Board of Directors is asking for your proxy. Whether or not
you plan to attend the annual meeting, we urge you to vote by
proxy as you can always change your vote at the annual meeting.
Please complete the proxy card by voting on the Internet,
calling the toll-free telephone number on the proxy card, or
complete, date and sign the enclosed proxy card and return it at
your earliest convenience. We will bear the costs incidental to
the solicitation and obtaining of proxies, including the costs
of reimbursing banks, brokers and other nominees for forwarding
proxy materials to beneficial owners of our capital stock.
Proxies may be solicited by our officers and employees, without
extra compensation, by mail, telephone, telefax, personal
interviews and other methods of communication. In addition, we
have retained Mellon Investor Services to act as our proxy
solicitor in conjunction with the annual meeting. We have agreed
to pay that firm $8,500 plus reasonable out of pocket expenses,
for proxy solicitation services.
At the annual meeting, and at any postponements and adjournments
thereof, all shares entitled to vote and represented by properly
executed proxies received prior to the annual meeting and not
revoked will be voted as instructed on those proxies. If no
instructions are indicated on a properly executed proxy, the
shares will be voted FOR each of the two proposals.
Questions
and Answers
Q. What am I voting on?
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Election of five Directors (Raymond P.
Warrell, Jr., M.D., Martin J. Driscoll, Christopher P.
Parios, Daniel D. Von Hoff, M.D. and Douglas G. Watson) for
a term ending at the next Annual Meeting of
Stockholders; and
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The approval of an amendment to our Restated Certificate of
Incorporation, as amended, to increase the total number of
authorized shares of capital stock available for issuance from
255,000,000, consisting of 250,000,000 shares of Common
Stock and 5,000,000 shares of Preferred Stock, to
6,005,000,000, consisting of 6,000,000,000 shares of Common
Stock and 5,000,000 shares of Preferred Stock.
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Q. Who is entitled to vote?
Only stockholders of record at the close of business on the
Record Date of August 25, 2008, are entitled to vote shares
held by such stockholders on that date at the Annual Meeting.
Each outstanding share entitles its holder to cast one vote.
Q. How do I vote?
Vote By Internet: Visit the Web site noted on
your proxy card to vote via the Internet
Vote By Mail: Sign and date the proxy card you
receive and return it in the enclosed stamped, self-addressed
envelope.
Vote By Telephone: If you are a stockholder of
record (that is, if you hold your stock in your own name), you
may vote by telephone by following the instructions on your
proxy card. The telephone number is toll-free, so voting by
telephone is at no cost to you. If you vote by telephone, you do
not need to return your proxy card.
Vote in Person: Sign and date the proxy you
receive and return it in person at the Annual Meeting. If your
shares are held in the name of a bank, broker or other holder of
record (i.e., in street name), you will receive
instructions from the holder of record that you must follow in
order for your shares to be voted. Telephone and Internet voting
will be offered to stockholders owning shares through most banks
and brokers.
Q. Can I access the proxy materials and transition
report on
Form 10-K,
as amended, electronically?
This Proxy Statement, the proxy card, and our Annual Report on
Form 10-K
for the period ended December 31, 2007, as amended, are
available on our website at www.genta.com.
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Q. Can I change my vote or revoke my proxy?
Yes. You may change your vote or revoke your proxy at any time
before the proxy is exercised. If you submitted your proxy by
mail, you must (a) file with the Corporate Secretary a
written notice of revocation or (b) timely deliver a valid,
later-dated proxy. If you submitted your proxy by telephone, you
may change your vote or revoke your proxy with a later telephone
proxy. A telephone vote may be changed by a later telephone vote
up until 11:59 PM EDT the night before the Annual Meeting.
Attendance at the Annual Meeting will not have the effect of
revoking a proxy unless you give written notice of revocation to
the Corporate Secretary before the proxy is exercised or you
vote by written ballot at the Annual Meeting.
Q. What is the process for admission to the Annual
Meeting?
If you are a record owner of your shares (i.e., your
shares are held in your name), you must show government issued
identification. Your name will be verified against the
stockholder list. If you hold your shares through a bank, broker
or trustee, you must also bring a copy of your latest bank or
broker statement showing your ownership of your shares as of the
Record Date.
Q. What constitutes a quorum?
The presence at the Annual Meeting, in person or by proxy, of
the holders of a majority of the shares of Common Stock
outstanding on the Record Date will constitute a quorum. On the
Record Date, there were 36,760,558 outstanding shares of
Common Stock entitled to vote at the Annual Meeting.
Abstentions and broker non-votes are counted for purposes of
determining whether a quorum is present at the Annual Meeting.
Q. What vote is required to approve each item?
The affirmative vote of a plurality of the votes cast at the
meeting by stockholders entitled to vote thereon is required for
the election of Directors. The affirmative vote of a majority of
the outstanding shares of our Common Stock is required for the
approval of an amendment to our Restated Certificate of
Incorporation, as amended, to increase the total number of
authorized shares of capital stock available for issuance from
255,000,000, consisting of 250,000,000 shares of Common
Stock and 5,000,000 shares of Preferred Stock, to
6,005,000,000, consisting of 6,000,000,000 shares of Common
Stock and 5,000,000 shares of Preferred Stock.
Q. What happens if I do not instruct my broker how to
vote on the proxy?
If you do not instruct your broker how to vote, your broker will
vote your shares for you at his or her discretion on routine
matters such as the election of directors or the charter
amendment.
Q. What are the recommendations of the Board of
Directors?
The Board of Directors unanimously recommends that the
stockholders vote:
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FOR the election of the five nominated Directors; and
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FOR the approval of an amendment to our Restated
Certificate of Incorporation, as amended, to increase the total
number of authorized shares of capital stock available for
issuance from 255,000,000, consisting of 250,000,000 shares
of Common Stock and 5,000,000 shares of Preferred Stock, to
6,005,000,000, consisting of 6,000,000,000 shares of Common
Stock and 5,000,000 shares of Preferred Stock.
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With respect to any other matter that properly comes before the
Annual Meeting, the proxies will vote as recommended by our
Board of Directors or, if no recommendation is given, in their
own discretion.
3
PROPOSAL ONE
ELECTION
OF DIRECTORS
At the 2008 annual meeting, five directors will be elected to
serve a one-year term expiring at the next annual meeting of
stockholders and until such directors successor shall have
been elected and qualified.
Our Board has nominated Raymond P. Warrell, Jr., M.D.,
Martin J. Driscoll, Christopher P. Parios, Daniel D. Von
Hoff, M.D. and Douglas G. Watson for election as directors
to serve until the 2009 annual meeting of stockholders. All
nominees are currently members of the Board.
Each nominee has expressed his or her willingness to serve as a
director if elected, and we know of no reason why any nominee
would be unable to serve. If a nominee becomes unavailable
before the election, the proxies may be voted for one or more
substitute nominees designated by the Board, or the Board may
decide to reduce the number of directors.
Set forth below is certain information with respect to each
nominee for director.
Nominees
for Election at the Annual Meeting
Raymond P. Warrell, Jr., M.D., 58, has
been our Chief Executive Officer and a member of our Board since
December 1999 and our Chairman since January 2001. From December
1999 to May 2003, he was also our President. From 1978 to 1999,
Dr. Warrell was associated with the Memorial
Sloan-Kettering Cancer Center in New York, where he held tenured
positions as Member, Attending Physician, and Associate
Physician-in-Chief,
and with the Joan and Sanford Weill Medical College of Cornell
University, where he was Professor of Medicine. Dr. Warrell
also has more than 20 years of development and consulting
experience in pharmaceuticals and biotechnology products. He was
a co-founder and chairman of the scientific advisory board of
PolaRx Biopharmaceuticals, Inc., which developed
Trisenox®,
a drug for the treatment of acute promyelocytic leukemia, which
is now marketed by Cephalon, Inc. Dr. Warrell holds, or has
filed, numerous patents and patent applications for biomedical
therapeutic or diagnostic agents. He has published more than 100
peer-reviewed papers and more than 240 book chapters and
abstracts, most of which are focused upon drug development in
tumor-related diseases. Dr. Warrell is a member of the
American Society of Clinical Investigation, the American Society
of Hematology, the American Association for Cancer Research and
the American Society of Clinical Oncology. Among many awards, he
has received the U.S. Public Health Service Award for
Exceptional Achievement in Orphan Drug Development from the FDA.
He obtained a B.S. in Chemistry from Emory University, a M.D.
from the Medical College of Georgia, and a M.B.A. from Columbia
University Graduate School of Business. Dr. Warrell is
married to Dr. Loretta M. Itri, President, Pharmaceutical
Development and Chief Medical Officer of Genta.
Martin J. Driscoll, 49, has been a member of our
Board since September 2005. Mr. Driscoll brings more than
twenty-seven years of executive experience in pharmaceutical
Marketing & Sales, Business Development and Commercial
Operations to the Genta Board. In March 2008, Mr. Driscoll
became Chief Executive Officer of Javelin Pharmaceuticals, Inc.
(AMEX:JAV) of Cambridge, Massachusetts where he had also served
as a director since 2006. Javelin is a specialty pharmaceutical
company that applies innovative proprietary technologies to
develop new drugs and improved formulations of existing drugs
that target current and underserved medical need in the pain
management market. Mr. Driscoll joined Javelin from Pear
Tree Pharmaceuticals, Inc., a development-stage company focused
on womens prescription healthcare products.
Mr. Driscoll was CEO of Pear Tree Pharmaceuticals from
September 2007 until March 2008. From August 2005 until
September 2007, Mr. Driscoll was President of MKD
Consulting Inc., a pharmaceutical management and
commercialization consulting firm, and a Partner at TGaS
Consulting, a pharmaceutical commercial operations benchmarking
firm. From July 2003 until August 2005, Mr. Driscoll was
Senior Vice President of Marketing and Sales at Reliant
Pharmaceuticals, a privately held company that markets a
portfolio of branded pharmaceutical products, where he was a
member of the Management Committee and an Executive Officer of
the Company. From 1983 to 1990, Mr. Driscoll held positions
of increasing responsibility at Schering Plough Corporation,
including most recently as Vice President of Marketing and Sales
for Scherings Primary Care Division. He previously served
as Vice President, Marketing and Sales, for the Schering
Diabetes Unit, and also for Key Pharmaceuticals, the largest
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Schering U.S. Business Unit. His experience includes
management of franchises that encompass oncologic,
cardiovascular, anti-infective, metabolic, CNS, pulmonary and
dermatologic products. At both Reliant and Schering,
Mr. Driscoll had extensive experience in the negotiation,
implementation and management of collaborations with other
companies. Prior to joining Reliant, from 2000 to 2002
Mr. Driscoll was Vice President, Commercial Operations and
Business Development at ViroPharma Inc., where he built the
first commercial Sales and Marketing operation, and was the
ViroPharma Chair for the ViroPharma/Aventis Joint Steering
Committee for their Phase 3 antiviral product collaboration.
Christopher P. Parios, 67, has been a member of
our Board since September 2005. Mr. Parios has more than
thirty-seven years of pharmaceutical industry experience,
including product development, marketing and promotion, strategy
and tactic development, and managing pharmaco-economic and
reimbursement issues. He has worked with many of the major
companies in the pharmaceutical industry including
Hoffmann-LaRoche, Ortho-McNeil, Pfizer, Novartis, Schering
Plough, Janssen, Ortho Biotech, and Bristol-Myers Squibb. For
the period 1997 to May of 2008, Mr. Parios was Executive
Director of The Dominion Group, an independent healthcare
consulting firm that specializes in market research, strategic
planning, and competitive intelligence monitoring. In this role,
he was responsible for the full range of market research,
consulting, and business planning activities to facilitate
informed business decisions for clients regarding product
development, acquisitions, product positioning, and promotion.
Mr. Parios continues to consult with the Dominion Group on
a part-time basis. Previously, Mr. Parios was President and
Chief Operating Officer of the Ferguson Communication Group, as
well as Vice Chairman of the parent company, CommonHealth USA, a
leading full-service communications resource for the healthcare
industry. Mr. Parios was a partner in Pracon, Inc., a
health-care marketing consulting firm from 1982 to 1991, and
helped engineer the sale of that firm to Reed-Elsevier in 1989.
Over a twenty-year period, Mr. Parios held progressively
senior positions at Hoffmann-LaRoche, Inc., most recently as
Director of New Product Planning and Regulatory Affairs
Management. This group established the project management system
for drug development at Roche and coordinated developmental
activities for such products as
Versed®,
Rocephin®,
Roferon®,
Accutane®,
Rimadyl®,
and
Tegison®.
Mr. Parios was also a member of the corporate team
responsible for domestic and international product and
technology licensing activities.
Daniel D. Von Hoff, M.D., F.A.C.P., 60, has
been a member of our Board since January 2000. Since November
2002, he has been Physician in Chief and Director of
Translational Research at Translational Genomics Research
Institutes (TGen) in Phoenix, Arizona. He is also Chief
Scientific Officer for US Oncology since January 2003 and he is
also the Chief Scientific Officer, Scottsdale Clinical Research
Institute since November 2005. Dr. Von Hoffs major
interest is in the development of new anticancer agents, both in
the clinic and in the laboratory. He and his colleagues were
involved in the beginning of the development of many of the
agents now used routinely, including: mitoxantrone, fludarabine,
paclitaxel, docetaxel, gemcitabine, CPT-11, and others. At
present, he and his colleagues are concentrating on the
development of molecularly targeted therapies. Dr. Von
Hoffs laboratory interests and contributions have been in
the area of in vitro drug sensitivity testing to
individualize treatment for the patient. He and his laboratory
are now concentrating on discovery of new targets in pancreatic
cancer. Dr. Von Hoff has published more than 531 papers,
129 book chapters, and more than 891 abstracts. Dr. Von
Hoff was appointed to President Bushs National Cancer
Advisory Board for June 2004 March 2010.
Dr. Von Hoff is the past President of the American
Association for Cancer Research, a Fellow of the American
College of Physicians, and a member and past board member of the
American Society of Clinical Oncology. He is a founder of
ILEXtm
Oncology, Inc. (recently acquired by Genzyme). He is founder and
the Editor Emeritus of Investigational New
Drugs The Journal of New Anticancer
Agents; and,
Editor-in-Chief
of Molecular Cancer Therapeutics.
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Douglas G. Watson, 63, has been a member of our
Board since April 2002 and was appointed Vice Chairman of our
Board and Lead Director in March 2005. From 1999 through the
present, Mr. Watson is the founder and has served as the
Chief Executive Officer of Pittencrieff Glen Associates, a
leadership and management-consulting firm. Prior to taking early
retirement in 1999, Mr. Watson spent 33 years with
Geigy/Ciba-Geigy/Novartis, during which time he held a variety
of positions in the United Kingdom, Switzerland and the United
States. From 1986 to 1996, he was President of Ciba
U.S. Pharmaceuticals Division, and in 1996 he was appointed
President & Chief Executive Officer of Ciba-Geigy
Corporation. During this ten-year period, Mr. Watson was an
active member of the Pharmaceutical Research &
Manufacturers Association board in Washington, DC.
Mr. Watson became President & Chief Executive
Officer of Novartis Corporation in 1997 when the merger of
Ciba-Geigy & Sandoz was approved by the Federal Trade
Commission. Mr. Watson is currently Chairman of the Board
of OraSure Technologies Inc., and Chairman of the Board of
Javelin Pharmaceuticals Inc. He also serves on the boards of
Dendreon Corporation and BioMimetic Therapeutics Inc.
The Board unanimously recommends that you vote
FOR the election of each nominee as director.
6
PROPOSAL TWO
APPROVAL OF AN AMENDMENT TO OUR RESTATED CERTIFICATE OF
INCORPORATION, AS AMENDED, TO INCREASE THE AUTHORIZED NUMBER
OF
SHARES OF CAPITAL STOCK AVAILABLE FOR ISSUANCE
The Board has unanimously approved an amendment to our Restated
Certificate of Incorporation, as amended, to increase the
authorized number of shares of capital stock from
255,000,000 shares to 6,005,000,000 shares and
recommends that our stockholders approve the proposed amendment.
The additional 5,750,000,000 shares of capital stock will
be designated as Common Stock with a par value of $0.001 per
share. Genta is currently authorized to issue
255,000,000 shares of capital stock, 250,000,000 of which
are designated as Common Stock and 5,000,000 of which are
designated as Preferred Stock.
The additional shares of Common Stock would have rights
identical to our Common Stock currently outstanding. Approval of
the proposed amendment and any issuance of Common Stock would
not affect the rights of the holders of our Common Stock
currently outstanding However, approval of the proposed
amendment and any issuance of Common Stock will increase the
outstanding number of shares of Common Stock, thereby causing
dilution in earnings per share and voting interests of the
outstanding Common Stock. In the event that the amendment is
approved and all shares under the convertible notes are
converted to Common Stock, there will be a large increase in the
outstanding number of shares of Common Stock, thereby causing
significant dilution in earnings per share and voting interests
of the outstanding Common Stock. As of the record date,
36,760,558 shares of our Common Stock were issued and
outstanding. The proposed amendment will not change the number
of shares of Preferred Stock authorized for issuance.
The number of shares currently authorized is not sufficient for
our existing commitments. On June 9, 2008, we placed
$20,000,000 of Senior Secured Convertible Notes due June 2010.
Holders of the Notes have the right, but not the obligation, for
the following 12 months to purchase in whole, or in part,
up to an additional $20,000,000 of Notes. The Notes are
convertible into shares of Genta common stock at a conversion
rate of 100,000 shares of common stock for every $1,000 of
principal. Accordingly, if the additional $20,000,000 of Notes
are issued in the 12 months following June 9, 2008, we
require 4,000,000,000 shares of common stock for the
conversion of these notes. In addition, interest on the notes
can be paid in either cash or shares of Common Stock.
Accordingly, we will require sufficient authorized shares of
Common Stock in order to have the option to pay interest with
shares of Common Stock. Under the terms of the securities
purchase agreement, we are required to reserve a number of
authorized but unissued shares of common stock equal to 125% of
the aggregate number of shares issuable upon conversion of the
Notes. The Notes include a covenant that that we will obtain
approval from our stockholders to increase our authorized shares
to be sufficient for the conversion of the Notes and for the
potential payment of interest in shares of Common Stock. The
Board recommends that you vote in favor of this Proposal to
approve the amendment of our Restated Certificate of
Incorporation, as amended, to increase the number of authorized
shares of the capital stock available for issuance. If we do not
amend the Restated Certificate of Incorporation, as amended, we
will be in default under the securities purchase agreement,
which would likely have a harmful effect on the company,
including the possibility of bankruptcy.
In addition to the number of shares required to be reserved
under the terms of the securities purchase agreement, our Board
believes that the authorized number of shares of Common Stock
should be increased to provide sufficient shares for such
corporate purposes as may be determined by our Board to be
necessary or desirable. These purposes may include, but are not
limited to, the following: expanding our business or product
lines through the acquisition of other businesses or products;
establishing strategic relationships with other companies;
raising capital through the sale of our Common Stock; and
attracting and retaining valuable employees by providing equity
incentives. Currently, we do not have any specific plans,
arrangements, understandings or agreements to issue shares in
connection with the foregoing prospective activities.
Once authorized, the additional shares of Common Stock may be
issued with approval of our Board but without further approval
of our stockholders, unless applicable law, rule or regulation
requires
7
stockholder approval. Stockholder approval of this proposal is
required under Delaware law and requires the affirmative vote of
the holders of a majority of the outstanding shares of our
Common Stock.
If this proposal number 2 is approved by our stockholders,
the notes may be converted into a significant number of shares
of our common stock. The following description of the
convertible note transaction we recently entered into describes
how many shares of stock the holders of the notes in the
transactions may convert such notes into and the impact such
conversion may have on our stockholders.
Description
of the Transaction
On June 5, 2008, we entered into a binding securities
purchase agreement (the Securities Purchase
Agreement) with certain institutional and accredited
investors, to place up to $40,000,000 of senior secured
convertible promissory notes (the Notes) with such
investors. On June 9, 2008, we placed $20 million of
such Notes (the Initial Closing).
The Notes bear interest at an annual rate of 15% per annum
payable at quarterly intervals in stock or cash at the
Companys option, and will be convertible into shares of
the Companys common stock at a conversion rate of
100,000 shares of common stock for every $1,000 of
principal; provided, however, at no time may the holder of a
Note convert such Note if such conversion would cause the holder
to beneficially own more than 4.999% of the then outstanding
shares of common stock of the Company. Until June 9, 2009,
the holders of the Notes have the right, but not the obligation,
to purchase in whole or in part up to an additional
$20 million of Notes (the Subsequent Closing).
The Company has the right to force conversion of the Notes in
whole or in part if the closing bid price of the Companys
common stock exceeds $0.50 per share for a period of 20
consecutive trading days. Each of Dr. Raymond Warrell, our
Chief Executive Officer and Chairman, and Dr. Loretta Itri,
our President, Pharmaceutical Development and Chief Medical
Officer, participated in the Initial Closing by purchasing
$1,950,000 and $300,000, respectively, of such Notes. The
remaining Board members independently discussed Dr. Warrell
and Dr. Itris participation in the transaction and
resolved that such participation will not interfere with
Dr. Warrell or Dr. Itris exercise of independent
judgment in carrying out their responsibilities in their
respective positions. Pursuant to the general security agreement
(the Security Agreement), the Notes are secured by a
first lien on all assets of the Company, subject to certain
exceptions set forth in the Security Agreement. The Notes
include certain events of default, including a requirement that
the Company obtain stockholder approval within a specified
period of time to amend its certificate of incorporation to
authorize additional shares of common stock.
Rodman & Renshaw, LLC, a wholly-owned subsidiary of
Rodman & Renshaw Capital Group, Inc. served as the
exclusive placement agent for the offering.
The Notes offered and the common stock issuable upon conversion
of the Notes have not been registered under the Securities Act
of 1933, as amended, or any state securities laws, and may not
be offered or sold in the United States absent an effective
registration statement or an applicable exemption from
registration requirements. The Notes and the shares of common
stock underlying the Notes do not have any registration rights
under the terms of the securities purchase agreement.
Each purchaser of the Notes represented that such purchaser is
an accredited investor and agreed that the
securities issued in the private placement bear a restrictive
legend against resale without registration under the Securities
Act. The Notes were sold pursuant to the exemption from
registration afforded by Section 4(2) of the Securities Act
and Regulation D thereunder.
8
Effect
of the Transaction on the Investors
Effect of
the Initial Closing on the Investors
The following table illustrates the beneficial ownership of the
Investors upon full conversion of the notes and interest shares
in the Initial Closing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial
|
|
|
|
|
|
|
Ownership of
|
|
|
|
|
|
|
Investors upon
|
|
|
|
|
Beneficial
|
|
full conversion of
|
|
|
|
|
Ownership of
|
|
notes and interest
|
|
|
Beneficial
|
|
Investors upon
|
|
shares in the
|
|
|
Ownership of
|
|
full conversion of
|
|
Initial Closing
|
|
|
Investors prior to
|
|
notes and interest
|
|
without respect
|
|
|
the Initial
|
|
shares in the
|
|
to limitations
|
|
|
Closing(1)(2)
|
|
Initial Closing(1)(4)
|
|
on conversion(5)
|
|
|
Number
|
|
(%)
|
|
Number
|
|
(%)
|
|
Number
|
|
(%)
|
|
Investors in Convertible Notes
|
|
|
1,267,812
|
(3)
|
|
|
3.4
|
%
|
|
|
40,593,626
|
|
|
|
52.6
|
%
|
|
|
2,031,267,812
|
|
|
|
98.2
|
%
|
Effect of
the Subsequent Closing on Investors
The following table sets forth the beneficial ownership of the
Investors prior to the Subsequent Closing and after the
Subsequent Closing in the event the Investors elect to exercise
their option and the Company consummates the subsequent closing.
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial
|
|
|
|
|
|
|
Ownership of
|
|
|
|
|
|
|
Investors after
|
|
|
Beneficial
|
|
Beneficial
|
|
the Subsequent
|
|
|
Ownership of
|
|
Ownership of
|
|
Closing
|
|
|
Investors Prior to
|
|
Investors after
|
|
without respect
|
|
|
the Subsequent
|
|
the Subsequent
|
|
to limitation
|
|
|
Closing(4)
|
|
Closing(4)
|
|
on conversion(5)
|
|
|
Number
|
|
(%)
|
|
Number
|
|
(%)
|
|
Number
|
|
(%)
|
|
Investors in Convertible Notes
|
|
|
40,593,626
|
|
|
|
52.6
|
%
|
|
|
40,593,626
|
|
|
|
52.6
|
%
|
|
|
4,046,267,812
|
|
|
|
99.1
|
%
|
The following footnotes shall apply to each of the foregoing
tables.
|
|
|
(1) |
|
For the purposes of the forgoing table, the calculation of
beneficial ownership assumes that the Subsequent Closing has not
occurred. |
|
(2) |
|
Ownership is based upon the number of outstanding shares of
common stock as of the record date. |
|
(3) |
|
Dr. Warrell has beneficial ownership of
1,156,794 shares and Dr. Itri has beneficial ownership
of 111,018 shares. |
|
(4) |
|
Ownership is based upon the sum of (a) the number of
outstanding shares of common stock as of the Record Date, and
(b) the total number of shares underlying all Notes issued
in the Initial Closing, assuming full conversion at the
conversion price. The beneficial ownership calculated herein is
subject to the cap on the Notes that prevent full conversion if
such conversion would cause each holder to beneficially own more
than 4.999% of the then outstanding shares of common stock of
the Company. |
|
(5) |
|
Ownership is based upon the sum of (a) the number of
outstanding shares of common stock as of the Record Date, and
(b) the total number of shares underlying all Notes issued
in the Initial Closing, assuming full conversion at the
conversion price, and including interest shares based on the
closing price of June 20, 2008 of $0.20 per share (assuming
interest shares are paid for the entire 2 year period the
notes may be outstanding with respect to the initial closing,
and assuming the Investors exercise their option on the first
anniversary of the closing date and interest shares are paid for
the duration of the second year, with respect to the subsequent
closing). The beneficial ownership calculated herein disregards
the cap on the Notes that would prevent full conversion if such
conversion would cause the holder to beneficially own more than
4.999% of the then outstanding shares of common stock of the
Company. |
9
Effect
of the Transaction on Existing Stockholders
Effect of
the Initial Closing on Existing Shareholders
The following table sets forth the dilutive effect on the
beneficial ownership of the existing stockholders (other than
the Investors) (the Existing Stockholders) upon full
conversion of the notes and interest shares in the Initial
Closing.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial Ownership of
|
|
Beneficial Ownership of
|
|
|
|
|
Existing Stockholders
|
|
Existing Stockholders
|
|
|
Beneficial Ownership of
|
|
upon full conversion of
|
|
upon full conversion of
|
|
|
Existing Stockholders
|
|
the notes and interest
|
|
the notes and interest
|
|
|
prior to the Initial
|
|
shares in the Initial
|
|
shares in the Initial
|
|
|
Closing(3)
|
|
Closing(4)
|
|
Closing(5)
|
|
|
Number
|
|
Percentage
|
|
Number
|
|
Percentage
|
|
Number
|
|
Percentage
|
|
Existing Stockholders (other than the Investors)(1)(2):
|
|
|
36,632,277
|
|
|
|
99.7
|
%
|
|
|
36,632,277
|
|
|
|
47.4
|
%
|
|
|
36,632,277
|
|
|
|
1.8
|
%
|
|
|
|
(1) |
|
For the purposes of the foregoing table, the calculation of
beneficial ownership assumes that the Subsequent Closing has not
occurred. |
|
(2) |
|
For purposes of clarification, the percentage represented by the
Existing Stockholders excludes any current and prior ownership
of the Investors, but includes all options, warrants and other
convertible securities held by the Existing Stockholders
exercisable within 60 days of the Record Date. |
|
(3) |
|
Ownership is based upon the number of outstanding shares of
common stock as of the Record Date and includes all options,
warrants and other convertible securities held by the Existing
Stockholders exercisable within 60 days of the Record Date. |
|
(4) |
|
Ownership is based on the sum of (a) the number of
outstanding shares of common stock as of the Record Date,
(b) the total number of options, warrants and other
convertible securities exercisable within 60 days of the
Record Date, assuming full conversion or full exercise at the
conversion price or exercise price, and (c) the total
number of shares underlying all Notes issued, and to be issued,
in the financing, assuming full conversion at the conversion
price. The beneficial ownership calculated herein is subject to
the cap on the Notes that prevent full conversion if such
conversion would cause the holder to beneficially own more than
4.999% of the then outstanding shares of common stock of the
Company. |
|
(5) |
|
Ownership is based on the sum of (a) the number of
outstanding shares of common stock as of the Record Date,
(b) the total number of options, warrants and other
convertible securities exercisable within 60 days of the
Record Date, assuming full conversion or full exercise at the
conversion price or exercise price, and (c) the total
number of shares underlying all Notes issued, and to be issued,
in the financing, assuming full conversion at the conversion
price, and including interest shares assuming issuance based on
the closing price of June 20, 2008 of $0.20 per share
(assuming interest shares are paid for the entire 2 year
period the notes may be outstanding with respect to the initial
closing). The beneficial ownership calculated herein disregards
the cap on the Notes that would prevent full conversion if such
conversion would cause the holder to beneficially own more than
4.999% of the then outstanding shares of common stock of the
Company. |
Effect of
the Subsequent Closing on Existing Stockholders
If the Investors elect to exercise their option and the Company
consummates the Subsequent Closing, then the Company will issue
up to $20 million of additional Notes to the Investors. The
additional Notes will be subject to the same terms and
conditions as the Notes issued in the Initial Closing. In the
event the Investors decide to convert these Notes or receive
interest shares in lieu of cash, the issuance of common stock in
connection therewith will have a significant dilutional affect
of the voting interests of Existing Stockholders. This issuance
would also have a dilutive affect on earnings per share and may
adversely affect the market price of our common stock.
10
The following table sets forth the dilutive effect of the
Subsequent Closing on the beneficial ownership of common stock
outstanding held by Existing Stockholders after the Subsequent
Closing:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beneficial Ownership of
|
|
Beneficial Ownership of
|
|
Beneficial Ownership of
|
|
|
Existing Stockholders
|
|
Existing Stockholders
|
|
Existing Stockholders
|
|
|
prior to the Subsequent
|
|
after Subsequent
|
|
after Subsequent
|
|
|
Closing(2)
|
|
Closing(3)
|
|
Closing(4)
|
|
|
Number
|
|
Percentage
|
|
Number
|
|
Percentage
|
|
Number
|
|
Percentage
|
|
Existing Stockholders (other than the Investors)(1):
|
|
|
36,632,277
|
|
|
|
47.4
|
%
|
|
|
36,632,277
|
|
|
|
47.4
|
%
|
|
|
36,632,277
|
|
|
|
0.9
|
%
|
|
|
|
(1) |
|
For purposes of clarification, the percentage represented by the
Existing Stockholders excludes any current and prior ownership
of the Investors, but includes all options, warrants and other
convertible securities held by the Existing Stockholders
exercisable within 60 days of the Record Date. |
|
(2) |
|
Ownership is based upon the number of outstanding shares of
common stock as of the Record Date and includes all options,
warrants and other convertible securities held by the Existing
Stockholders exercisable within 60 days of the Record Date. |
|
(3) |
|
Ownership is based on the sum of (a) the number of
outstanding shares of common stock as of the Record Date,
(b) the total number of options, warrants and other
convertible securities exercisable within 60 days of the
Record Date, assuming full conversion or full exercise at the
conversion price or exercise price, and (c) the total
number of shares underlying all Notes issued, and to be issued,
in the financing, assuming full conversion at the conversion
price. The beneficial ownership calculated herein is subject to
the cap on the Notes that prevent full conversion if such
conversion would cause the holder to beneficially own more than
4.999% of the then outstanding shares of common stock of the
Company. |
|
(4) |
|
Ownership is based on the sum of (a) the number of
outstanding shares of common stock as of the Record Date,
(b) the total number of options, warrants and other
convertible securities exercisable within 60 days of the
Record Date, assuming full conversion or full exercise at the
conversion price or exercise price, and (c) the total
number of shares underlying all Notes issued, and to be issued,
in the financing, assuming full conversion at the conversion
price, and including interest shares assuming issuance based on
the closing price of June 20, 2008 of $0.20 per share
(assuming interest shares are paid for the entire 2 year
period the notes may be outstanding with respect to the initial
closing, and assuming the Investors exercise their option on the
first anniversary of the closing date and interest shares are
paid for the duration of the second year, with respect to the
subsequent closing). The beneficial ownership calculated herein
disregards the cap on the Notes that would prevent full
conversion if such conversion would cause the holder to
beneficially own more than 4.999% of the then outstanding shares
of common stock of the Company. |
Effect of
an Event of Default and Noteholder Remedies
If an event of default occurs under the terms of the Notes, the
holders of the Notes may at any time at their option declare the
entire unpaid principal balance of such Note, together with all
accrued interest thereon, due and payable, and such Note shall
be accelerated; provided, however, that upon the occurrence of
an event of default, the holder may (a) demand the
redemption of such Note pursuant to Section 3.6(a) of such
Note (as described below), (b) demand that the principal
amount of the Note then outstanding and all accrued and unpaid
interest thereon be converted into shares of common stock at the
conversion price per share on the trading day immediately
preceding the date the holder demands conversion, or
(c) exercise or otherwise enforce any one or more of the
holders rights, powers, privileges, remedies and interests
under the transactions documents or applicable law.
Section 3.6(a) of the Notes provide for prepayment of the
Notes in connection with an event of default. The holder may
require the Company to prepay all or a portion of a Note in cash
at a price equal to the sum of (i) the greater of
(A) one hundred fifty percent (150%) of the aggregate
principal amount of such Note plus all accrued and unpaid
interest and (B) the aggregate principal amount of such
Note plus all accrued but unpaid interest hereon, divided by the
conversion price on (x) the date the Prepayment Price (as
defined below) is demanded or otherwise due or (y) the date
the Prepayment Price is paid in full, whichever
11
is less, multiplied by the Daily VWAP (as defined in the Note)
on (x) the date the Prepayment Price is demanded or
otherwise due, and (y) the date the Prepayment Price is
paid in full, whichever is greater, and (ii) all other
amounts, costs, expenses and liquidated damages due in respect
of such Note and the other transaction documents (the
Prepayment Price).
If the stockholders do not approve the increase in authorized
shares within 120 days of the Initial Closing date, the
Company will be in default and the above provisions apply.
Why We
Entered Into This Transaction
We entered into this financing in order to fund working capital,
research, product development, and general corporate purposes.
As disclosed in our Annual Report on
Form 10-K
for the period ended December 31, 2007, as amended, and our
Quarterly Report on
Form 10-Q
for the period ended March 31, 2008, we had a very high
level of uncertainty inherent in our business and in our
liquidity position.
Specifically, we indicated that we expected to run out of funds
in the second quarter of 2008. We underwent two reductions in
our workforce (in April and May 2008) and undertook a
number of additional steps to conserve cash. We were not
successful in licensing any of our pipeline products or in
finding a buyer for our marketed product
(Ganite®).
We also explored acquisition of or merger with other companies
that had more cash. In parallel, we spent considerable time
seeking investors in financial transactions that could be
concluded on terms more favorable to the Company. These efforts
were not successful.
For at least the last twelve months, the Board attempted to
pursue several strategic alternatives. However, at the time of
the financing, the only alternative to the June 2008 convertible
note financing was to file for bankruptcy.
Genta management and our Companys Board of Directors have
periodically reviewed and evaluated our business strategy and
strategic options, including potential financings, acquisitions,
and other strategic transactions in an effort to enhance
stockholder value. Over the past several years, the
Companys major goal has been to secure worldwide
regulatory approval of its lead oncology compound,
Genasense®.
On December 29, 2005, we completed submission of a New Drug
Application (NDA) to the U.S. Food and Drug Administration
(FDA) that sought approval for the use of
Genasense®
as treatment of patients with chronic lymphocytic leukemia
(CLL). On January 3, 2006, we submitted a Marketing
Authorization Application (MAA) to the European Medicines Agency
(EMEA) for the use of
Genasense®
as treatment for patients with advanced melanoma. During 2006,
we incurred a number of activities in expectation of a
commercial launch of
Genasense®,
including but not limited to, the hiring of personnel to support
these activities in manufacturing, sales, and marketing. On
December 15, 2006, we were notified by FDA that our NDA in
CLL was deemed non-approvable. As a consequence, on
December 20, 2006 we announced a major restructuring of the
Company and a commensurate reduction in workforce.
On February 2, 2007, we announced that we had completed the
final response to questions from the EMEA regarding the melanoma
MAA. On February 26, 2007, we announced that we would
appeal the FDA decision on the NDA for CLL. With both of these
applications pending, the Company raised $11 million in a
common stock offering on March 14, 2007 from our previously
effective shelf registration statement. Proceeds of this
financing were intended to support general corporate activities
while the regulatory applications were pending, to provide
support for ongoing clinical trials of
Genasense®,
and to fund other research. On April 23, 2007, we were
notified that the EMEA had a negative opinion of our
melanoma application, and this decision was upheld during an
appeal that we announced on July 19, 2007.
On August 13, 2007, we announced that we had initiated a
new Phase 3 trial of
Genasense®
in patients with advanced melanoma that we believe may secure
worldwide regulatory approval in this disease. Moreover, on
September 17, 2007 we announced that Genta had initiated
the first clinical trial with a new internally developed drug,
known as G4544. With these events, the Company accelerated its
plans to secure additional funding to support these and other
activities.
12
During the third quarter of 2007, we contacted at least nine
firms in an effort to pursue venture debt financing
for one or more of our products in amounts ranging from
$5 million to $30 million. While this effort appeared
initially promising, the Genta common stock price progressively
declined during this period, and the resultant decrease in
equity was cited by several of the potential investors that
ultimately declined to proceed with a transaction. In parallel,
we received two successive notices from NASDAQ that the Company
had failed to retain compliance with exchange rules regarding
minimum stockholders equity and minimum bid price, respectively.
During this period, we also met with two firms that specialized
in royalty-based financing; however, due to regulatory
uncertainties regarding the potential approval of our products,
these firms declined to proceed with a transaction. During the
fourth quarter of 2007, the Company engaged in discussions with
two additional firms, regarding establishment of an equity line
of credit, and Genta exchanged term sheets with one such firm on
a mechanism that potentially would have provided up to
$50 million in equity financing. However, this financing
was ultimately deemed non-viable by both parties for several
reasons. First, the low price of the Companys common
stock, combined with restrictions on the amount of funds that
could be raised in any particular time period, would not have
been sufficient to fund the Companys operations. Second,
this transaction would have required a new
S-1 filing,
a likely review by the Securities and Exchange Commission (SEC),
and a proxy solicitation to secure stockholder
approval all of which contributed to both a high
uncertainty of success and a potential closing date beyond which
the Company would have been insolvent.
During the fourth quarter of 2007, we met with three different
investment banks to explore various financing options, and on
November 28, 2007, we engaged Rodman and Renshaw
(Rodman) to assist the Company in securing such
funding. A registered direct offering from the Companys
remaining shelf registration statement was considered the most
desirable alternative. However, the Companys low common
stock price would have required a large discount in the offering
price, and it was believed that any such transaction would also
have required extensive warrant coverage. The bank further
indicated that, given the deteriorating investment climate in
the biotechnology sector, it was highly uncertain that such a
transaction could be completed in any event.
In December 2007, we explored possible convertible debt
financings, and we were proffered non-binding terms from three
firms, including Rodman. We exchanged terms sheets with two of
the firms; however, one firm elected to withdraw its term sheet,
citing the Companys deteriorating financial position.
Terms of the remaining term sheet would have potentially
provided up to $18 million in a convertible note. After
review and discussion with the Genta Board of Directors during
their quarterly meeting on December 18, 2007, negotiations
with the remaining firm continued and legal documents were
drafted and exchanged by counsel for both that firm and with
Genta. However, the final proposal would not have provided
sufficient funds in a timely fashion to continue the
Companys operations, and we terminated these discussions
in January, 2008.
On January 9, 2008, the Company became aware of a
transaction concluded by a comparable biotech company whereby
that Companys Chief Executive Officer (CEO) led a
syndicate of five investors that raised approximately
$26 million in a private placement of common stock with
extensive warrant coverage. We then instructed Rodman to explore
whether there was potential interest in a CEO-led transaction
for Genta. However, Rodman reported back that they were unable
to elicit interest in such a transaction at that time.
On January 15, 2008, FDA notified the Company that the
Agency was extending the time period for its review of our
appeal on the decision regarding the CLL NDA. On
February 13, 2008, the Company raised $3.1 million in
a registered direct offering of approximately 20% of the
Companys outstanding shares, which allowed us to continue
our Phase 3 trial in melanoma while we sought additional funds
to continue operations.
On March 17, 2008, we filed our
Form 10-K
for fiscal year 2007, which stated that we had received a
going concern notice from our auditors. The notice
of a going concern qualification was also reinforced
13
in a press release on March 20, 2008. In the
10-K, we
also explicitly warned that the Company faced the possibility of
bankruptcy if we were not able to secure additional funds.
During the first and second quarters of 2008, the Company
approached a number of other biopharmaceutical companies
regarding a possible merger
and/or
acquisition. In February 2008, Genta approached a company that
had recently sustained a major development setback but
nonetheless had retained substantial cash resources. Following
an initially favorable indication of interest, Genta entered
into confidentiality and initiated the diligence process with
this company during meetings in March 2008. However, the company
declined to move ahead due to continued regulatory uncertainty
regarding the approval of
Genasense®.
Other companies either declined to pursue discussions or dropped
out of discussions for similar reasons.
In March 2008, Genta was introduced to a large investment fund
that initially expressed an investment interest, but with the
understanding that its involvement would equate with a complete
recapitalization of the Company. Under confidentiality, we met
with a number of representatives from the fund; however, in May
2008 the principals of the firm declined to make the investment.
On March 17, 2008 we announced that FDA had declined our
appeal in CLL, although a potential regulatory path forward had
been clarified, and the Company indicated its intent to pursue
that objective. On April 7, 2008, we announced a further
reduction in our workforce.
On April 30, 2008, the Genta Board of Directors convened
via teleconference and were informed of the lack of success in
securing a merger or acquisition partner, and also that several
large companies had specifically indicated that they would have
no interest in a license or partnership for
Genasense®
absent formal regulatory approval. All of these factors combined
to increase the risk of bankruptcy.
Accordingly, on April 30, 2008, management met with
specialized bankruptcy counsel, and on May 2, 2008, we
formally engaged a law firm in Wilmington, Delaware to represent
the Companys interests in a potential bankruptcy filing.
During a teleconference with the Genta Board of Directors on
May 5, 2008, the Board was informed that we had paid an
initial retainer, and that upon advice of counsel, the Company
had commenced preparation of extensive materials required to
potentially file such action.
On May 6, 2008, pursuant to a decision by NASDAQ to de-list
the Company due to inadequate stockholders equity, we
announced that trading in our common stock would be transferred
to the over-the-counter market.
With continued deterioration in our financial condition and upon
advice of counsel, we re-approached the aforementioned
investment fund, as well as certain other parties, to inquire
whether there was interest in negotiating bridge financing and
participation in an auction of the Company under bankruptcy
pursuant to a possible 363 filing. Via
teleconferences on May 16, 2008 and May 20, 2008, the
Genta Board of Directors monitored discussions regarding these
potential transactions, as well as appropriate timing for a
potential bankruptcy filing.
An affiliate of the aforementioned investment fund expressed
interest in the 363 process, and we entered into confidentiality
with this company; however, after several weeks of discussion,
the affiliate declined to proceed with this transaction. With
one exception, all other parties who were approached with this
potential transaction in bankruptcy also declined to participate.
On April 2, 2008, we were informed by Rodman that there was
renewed interest in a possible transaction involving Genta with
several investors, so long as Gentas CEO participated in
the offering, and on April 4, 2008 we formally signed a
re-engagement letter with Rodman to evaluate that interest. A
potential $5 million term sheet involving issuance of
common stock with warrant coverage was drafted by Rodman and was
reviewed by the Company. At the prevailing price, the
contemplated transaction would have represented approximately
60% dilution of our common stock. However, the funds would have
been insufficient to continue our Phase 3 trial in melanoma, and
there ultimately proved to be no substantial investor interest
in concluding such a transaction.
14
On May 8, 2008, the Company released financial results for
the first quarter of 2008. At that time, we announced that in
order to conserve cash we were seeking a buyer for our marketed
product,
Ganite®,
and also that we had terminated an ongoing research program
involving c-myb antisense. We indicated in our
8-K filing
with the SEC and in our press release for the quarterly
statement that we expected to run out of funds in the second
quarter of 2008, and we further warned that we might need to
file for bankruptcy.
Together with Rodman, beginning in early April 2008 and
extending through the end of May 2008, Company management met
extensively with potential investors both in-person and by
teleconference. We shared only public information at these
meetings, and only shared non-public information if the
potential investor executed a confidentiality agreement. A major
objective of this effort was to identify a lead
investor who would agree to conduct extensive diligence on
the Company, who could bring in other potential investors, and
who would lead any subsequent negotiations on the terms of a
potential transaction.
This effort led to the identification of a potential lead
investor who on May 21, 2008 proffered terms of a
convertible note offering, including among other terms: several
tranches totaling up to $40 million; an initial tranche of
$15 million; an option for a second tranche of up to
$25 million; a requirement that Genta management fund at
least $2 million of the initial tranche; a conversion price
of $0.01 per share; and a coupon rate of 10%. On May 23,
2008, after extensive discussion, the Genta Board of Directors
provisionally approved this proposal during a teleconference.
The Company undertook to further negotiate the terms of this
transaction including, among other provisions, an increase in
total proceeds to $50 million and an increase in the
conversion price to $0.075 per share. However, these efforts
were unsuccessful, and the investor allowed the term sheet to
expire on the evening of May 23, 2008.
With expiration of the term sheet, the Company believed that an
imminent bankruptcy filing was the most likely consequence, and
the Genta Board of Directors convened via teleconference on
May 27, 2008 to discuss this process. Management had
previously met with three investment banks to consider
representation of the Company during a bankruptcy auction
process. The engagement of Rodman was approved for this purpose,
subject to satisfaction that this engagement would not
negatively affect any other effort to secure alternative
financing. The Board also authorized a further workforce
reduction.
On May 27, 2008, Rodman received a revised term sheet from
the previous lead investor for a convertible note offering that,
among other terms, provided for total potential proceeds and an
initial tranche of $34 million and $17 million,
respectively, increased the coupon rate to 15%, retained the
minimum requirement for Genta management participation at
$2 million in the initial tranche, and maintained the
conversion price at $0.01. Gentas Board of Directors
convened on May 30, 2008 to consider this proposal,
together with corporate counsel, the investment bank, and
counsel for the bank. The revised proposal, including all its
terms and the advisability of management participation, was
extensively discussed. After deliberation that reflected an
absence of alternatives to bankruptcy, including the absence of
a 363 partner to provide bridge financing to creditors, the
Board provisionally approved the financing proposal, subject to
final negotiations and closing conditions. Negotiations and
discussions ensued with the lead investor, other potential
investors, counsel for all investors, the investment bank,
counsel for the bank, and other parties.
On May 29, 2008, the Company pre-announced results of a
presentation that was scheduled for June 2, 2008, which
showed that responses in our Phase 3 trial of
Genasense®
in CLL were associated with a significant increase in patient
survival. We also announced that the Company had requested a
meeting with FDA to review these data, especially in view of the
outcome of the NDA appeal that was announced on March 17,
2008.
After concluding extensive negotiation with all potential
investors, the convertible note financing for total potential
proceeds of $40 million was approved and announced on
June 6, 2008. The Company announced the closing of the
initial tranche of $20 million on June 9, 2008.
The Board of Directors consulted with and was advised by their
financial advisor Rodman & Renshaw LLC; however, they
did not obtain a fairness opinion. Based upon their internal
discussions regarding strategic alternatives and advice from
their financial advisor, the Board of Directors determined that
the
15
June 2008 convertible note financing was fair and in the best
interests of the non-affiliated stockholders and the Board of
Directors unanimously approved the June 2008 convertible note
financing.
Without this financing, we could have been required to further
reduce spending and to markedly reduce our workforce, which
likely would have resulted in a halt to our clinical trials
program, in particular cessation of our Phase 3 trial of
Genasense®
in melanoma. The Company also faced the likely outcome of
bankruptcy if additional funds could not be secured to extend
our cash position through the balance of the second quarter and
beyond.
The adequacy of our financial reserves and liquidity are
essential for the operations of our Company.
We believe that proceeds of this financing, assuming all
closings, may be used as follows:
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an estimated $27 million to fund research and development
expenses, including, but not limited to, (i) an estimated
$13.5 million for the allocable portion of labor and
overhead (ii) an estimated $13.5 million expenses
incurred in connection with development of
Genasense®;
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an estimated $9 million to pay general corporate and
administrative costs; and
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an estimated $1 million to obtain and maintain patents.
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an estimated $3 million in investment banking fees and
expenses relating to the offering.
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This transaction is contingent upon securing stockholder
approval to increase the authorized number of outstanding
shares, as provided for in this proposal. Failure to approve
this proposal will likely lead to a default under the financing
agreements and may lead to bankruptcy of the Company.
The Board unanimously recommends that you vote
FOR the approval of the amendment to our Restated
Certificate of Incorporation, as amended, to increase the number
of authorized shares of capital stock available for issuance.
16
INTEREST
OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON
In connection with Proposal 2, we are requesting approval
to increase the total number of authorized shares of capital
stock available for issuance from 255,000,000, consisting of
250,000,000 shares of Common Stock and
5,000,000 shares of Preferred Stock, to 6,005,000,000,
consisting of 6,000,000,000 shares of Common Stock and
5,000,000 shares of Preferred Stock. We have requested this
approval in order to satisfy certain requirements of the June
2008 convertible note financing (as discussed in
Proposal 2). Each of Dr. Raymond Warrell, our Chief
Executive Officer and Chairman, and Dr. Loretta Itri, our
President, Pharmaceutical Development and Chief Medical Officer,
participated in the initial closing of the June 2008 convertible
note financing by purchasing $1,950,000 and $300,000,
respectively, of such notes.
OTHER
MATTERS
The Board does not know of any other matter that may be brought
before the annual meeting. However, if any such other matters
are properly brought before the meeting, the proxies may use
their own judgment to determine how to vote your shares.
MATTERS
RELATING TO OUR GOVERNANCE
The Board
and its Committees
The Board currently consists of five directors. They are Raymond
P. Warrell, Jr., M.D., Martin J. Driscoll, Christopher
P. Parios, Daniel D. Von Hoff, M.D., and Douglas G. Watson.
The Board has determined that, except for Dr. Warrell, all
of the members of the Board are independent
directors. Dr. Warrell is not considered independent,
as he is an executive officer of the Company.
The Board has an Audit Committee, a Compensation Committee, a
Nominating and Corporate Governance Committee and an Executive
Committee. The Board held eleven meetings during the year ended
December 31, 2007. The Audit Committee held six meetings
and the Compensation Committee held eight meetings. No formal
meetings were held by the Nominating and Corporate Governance
Committee, as the independent directors of the Board acted as a
whole on nominating and corporate governance matters. The
Executive Committee held three meetings during 2007. Independent
directors of the Board held three executive sessions at which
only independent directors were present. Each member of the
Board attended no fewer than 75% of the total number of meetings
of the Board and the committees of which he or she was a member.
Although we do not have a formal policy regarding attendance by
members of the Board at our annual meeting of stockholders, we
encourage directors to attend and historically more than a
majority have done so. All directors holding office at the time
were present at the 2007 annual meeting of stockholders.
Audit
Committee
The Audit Committee was established in accordance with
Section 3(a)(58)(A) of the Securities Exchange Act of 1934,
as amended. The Audit Committee currently consists of Martin J.
Driscoll, Christopher P. Parios and Douglas G. Watson.
Mr. Driscoll serves as Chairman of this Committee. Each
member of the Audit Committee is independent. The Board has also
determined that Mr. Watson fulfills the Securities and
Exchange Commission (SEC) criteria as an audit committee
financial expert. Pursuant to the Audit Committees charter
adopted by the Board, the purposes of the Audit Committee
include reviewing the procedures and results of our external
auditing functions, providing a direct communication link to the
Board from our external auditing staff and our Chief Financial
Officer and helping assure the quality of our financial
reporting and control systems. The Audit Committee has the sole
authority to retain and terminate the independent registered
public accounting firm that examines our financial statements. A
copy of this committees charter is available on our
website at www.genta.com.
17
Compensation
Committee
The Compensation Committee currently consists of Martin J.
Driscoll, Christopher P. Parios and Douglas G. Watson.
Mr. Watson serves as Chairman of this Committee. Each
member of the Compensation Committee is independent. The primary
purpose of the Compensation Committee is to review, on an annual
basis or more frequently as it deems appropriate, the
performance of our executive officers, review the amount and
form of compensation payable to our executive officers and
report to the Board on an annual basis, making recommendations
regarding compensation of our executive officers. In addition,
the Compensation Committee administers our equity compensation
plans. A copy of this committees charter is available on
our website at www.genta.com.
Nominating
and Corporate Governance Committee
The Nominating and Corporate Governance Committee currently
consists of Martin J. Driscoll and Daniel D. Von Hoff, M.D.
Mr. Driscoll serves as Chairman of this Committee. Each
member of the Nominating and Corporate Governance Committee is
independent. The purposes of the Nominating and Corporate
Governance Committee are to identify and recommend individuals
qualified for nomination to serve on our Board and its
committees, ensure that the performance of the Board is
reviewed, develop and recommend corporate governance principles
to the Board and ensure that an appropriate governing structure
with respect to the Board and its committees is in place so that
the Board can perform a proper review function. A copy of the
Nominating and Corporate Governance Committees charter is
available on our website at www.genta.com.
In assessing candidates as director nominees, whether
recommended by this committee or stockholders, the committee
considers the following criteria:
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Members of the Board should be individuals of high integrity and
independence, substantial accomplishments, and prior or current
association with institutions noted for their excellence.
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Members of the Board should have demonstrated leadership
ability, with broad experience, diverse perspectives, and the
ability to exercise sound business judgment.
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The background and experience of members of the Board should be
in areas important to the operation of the Company such as
business, education, finance, government, law, medicine or
science.
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The composition of the Board should reflect sensitivity to the
need for diversity as to gender, ethnic background and
experience.
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The Nominating and Corporate Governance Committee will consider
nominees recommended by stockholders. In order for a stockholder
to make a nomination, the stockholder must comply with the
advance notice provision of Section 14 in Article II
of our by-laws. The stockholder must provide a written notice
along with the additional information required by our by-laws to
our Corporate Secretary at our address listed on the top of page
one of this proxy statement. For notice to be timely, it shall
be delivered not later than the close of business on the
90th calendar day nor earlier than the close of business on
the 120th calendar day prior to the first anniversary of
the preceding years annual meeting; provided, however,
that in the event that the date of the annual meeting is more
than 30 calendar days before or more than 60 calendar days after
such anniversary date, notice by the stockholder to be timely
must be delivered not earlier than the close of business on the
120th calendar day prior to such annual meeting and not
later than the close of business on the later of the
90th calendar day prior to such annual meeting or the tenth
calendar day following the calendar day on which public
announcement of the date of such meeting is first made by the
Corporation.
Executive
Committee
The Executive Committee consisted of Raymond P.
Warrell, Jr., M.D., Martin J. Driscoll,
Christopher P. Parios and Douglas G. Watson.
Dr. Warrell serves as Chairman of this Committee. The
18
Executive Committee is empowered to review matters arising and
to advise management between regularly scheduled meetings of the
Board. The Executive Committee does not have the power and
authority in reference to (i) approving or adopting, or
recommending to the stockholders, any action or matter expressly
required by the Delaware General Corporation Law to be submitted
to the stockholders for approval or (ii) adopting, amending
or repealing any provisions of our by-laws.
Compensation
of Directors
Our non-employee directors receive $15,000 per year for their
services. In addition, under our
Non-Employee
Directors 1998 Stock Option Plan, non-employee directors
currently receive a grant of 4,000 stock options upon their
initial election to the Board and thereafter receive an annual
grant of 3,333 stock options coinciding with their annual
election to the Board. Non-employee directors receive an
additional $1,500 for each Board meeting attended in person or
$750 for each Board meeting attended telephonically.
Non-employee directors attending committee meetings receive
$1,000 for each in-person meeting or $750 for each meeting
attended telephonically. Non-employee directors receive $2,500
per day for Board or committee activities outside of normal
activities. The Lead Director and each non-employee Chairperson
of a Committee of the Board receive annual cash compensation of
$5,000 and a grant of 833 stock options coinciding with their
annual election to the Board.
The following table sets forth certain information regarding
compensation earned by the following non-employee directors of
the Company during the year ended December 31, 2007:
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Option
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All Other
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Fees earned
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awards
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Compensation
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Total
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Name
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($) (1)
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($) (2)
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($)
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($)
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Martin J. Driscoll
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$
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45,500
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$
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15,879
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$
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61,379
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Betsy McCaughey, PhD. (3)
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$
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18,750
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$
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4,933
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$
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23,683
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Christopher P. Parios
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$
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42,000
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$
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13,413
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$
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53,413
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Daniel D. Von Hoff, M.D.
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$
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26,500
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$
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4,933
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$
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31,433
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Douglas G. Watson
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$
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47,000
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$
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7,399
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$
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54,399
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(1) |
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Reflects the dollar amount earned during 2007. |
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(2) |
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Reflects the dollar amount recognized for financial statement
purposes for the year ended December 31, 2007, in
accordance with Statement of Financial Accounting Standards
No. 123 (Revised 2004), Share-Based Payment, effective
January 1, 2006, (FAS 123(R)) and thus, includes
amounts from awards granted prior to 2007 (See Note 16 to
the consolidated financial statements as set forth in our Annual
Report on
Form 10-K
for the year ended December 31, 2007). There can be no
assurance that the FAS 123(R) amounts will be realized. As
of December 31, 2007, each Director has the following
number of options outstanding: Martin J. Driscoll: 13,165; Betsy
McCaughey: 26,220; Christopher P. Parios: 10,666;
Daniel D. Von Hoff: 34,442; Douglas G. Watson:
27,330. |
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(3) |
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Dr. McCaughey resigned from the Board, effective
October 24, 2007. |
Stockholder
Communications to the Board
The Board has provided a process for stockholders to communicate
with our directors. Stockholders and other interested parties
who wish to communicate with our directors may address their
correspondence to the Board, to the non-employee directors or
any other group of directors or committee of the Board or to a
particular director, in care of our Corporate Secretary at our
address listed on the top of page one of this proxy statement.
Certain
Relationships and Related Transactions
Dr. Daniel Von Hoff, one of Gentas directors, holds
the position of Senior Investigator and Director of
Translational Research at the Translational Genomics Research
Institute (TGen), which provides preclinical testing services
under direction of and by contract to Genta. During 2007, TGen
performed services for
19
which it was compensated by Genta in the amount of approximately
$223,430. The Company believes that the payment of these
services was on terms no less favorable than would have
otherwise been provided by an unrelated party. In
the Boards opinion, Dr. Von Hoffs relationship
with TGen will not interfere with Dr. Von Hoffs
exercise of independent judgment in carrying out his
responsibilities as a Director of Genta.
The Company has set forth certain policies and procedures with
respect to the review and approval of related-party
transactions. Specifically, pursuant to the Companys Audit
Committee Charter, the Audit Committee is required to review and
approve any related-party transactions. In connection with such
review and approval, the Audit Committee may retain special
legal, accounting or other advisors and may request any officer
or employee of the Company or the Companys outside counsel
or independent auditors to meet with any members of, or advisors
to, the Audit Committee as well as perform any other activities
consistent with this charter, the Companys by-laws, and
governing law, as the Audit Committee or the Board deems
necessary or appropriate.
On June 5, 2008, we entered into a securities purchase
agreement with certain institutional and accredited investors to
place up to $40 million of senior secured convertible notes
with such investors. On June 9, 2008, we placed
$20 million of such Notes in an initial closing. Each of
Dr. Raymond Warrell, our Chief Executive Officer and
Chairman, and Dr. Loretta Itri, our President,
Pharmaceutical Development and Chief Medical Officer,
participated in the initial closing by purchasing $1,950,000 and
$300,000, respectively, of such Notes. The remaining Board
members independently discussed Dr. Warrell and
Dr. Itris participation in the transaction and
resolved that such participation will not interfere with
Dr. Warrell or Dr. Itris exercise of independent
judgment in carrying out their responsibilities in their
respective positions. In connection with the June 2008
convertible note financing and in accordance with the Audit
Committee Charter, the Audit Committee reviewed and approved the
June 2008 convertible note financing with Dr. Warrell and
Dr. Itri.
Code of
Ethics
The Board has adopted a Code of Ethics that applies to all our
directors and employees, including our principal executive
officer and principal financial officer. A copy of the Code is
currently available on our website at www.genta.com.
Listing
of our Common Stock
Effective May 7, 2008, we moved the trading of our common
stock from The NASDAQ Capital Markets to the
Over-the-Counter
Bulletin Board (OTCBB) maintained by Financial Industry
Regulator Authority (FINRA) (formerly, the National
Association of Securities Dealers). This action was taken
pursuant to receipt of notification from the NASDAQ Listing
Qualifications Panel that we had failed to demonstrate our
ability to sustain compliance with the $2.5 million minimum
stockholders equity requirement for continued listing on
The NASDAQ Capital Markets. On July 10, 2008, we received
notification from The NASDAQ Capital Market that The NASDAQ
Capital Market had determined to remove our common stock from
listing on such exchange. The delisting was effective at the
opening of the trading session on July 21, 2008.
EXECUTIVE
OFFICERS AND COMPENSATION
Executive
Officers
Our
executive officers are:
Raymond P. Warrell, Jr., M.D., 58, has
been our Chief Executive Officer and a member of our Board since
December 1999 and our Chairman since January 2001. From December
1999 to May 2003, he was also our President. From 1978 to 1999,
Dr. Warrell was associated with the Memorial
Sloan-Kettering Cancer Center in New York, where he held tenured
positions as Member, Attending Physician, and Associate
Physician-in-Chief,
and with the Joan and Sanford Weill Medical College of Cornell
University, where he
20
was Professor of Medicine. Dr. Warrell also has more than
20 years of development and consulting experience in
pharmaceuticals and biotechnology products. He was a co-founder
and chairman of the scientific advisory board of PolaRx
Biopharmaceuticals, Inc., which developed
Trisenox®,
a drug for the treatment of acute promyelocytic leukemia, which
is now marketed by Cephalon, Inc. Dr. Warrell holds or has
filed numerous patents and patent applications for biomedical
therapeutic or diagnostic agents. He has published more than 100
peer-reviewed papers and more than 240 book chapters and
abstracts, most of which are focused upon drug development in
tumor-related diseases. Dr. Warrell is a member of the
American Society of Clinical Investigation, the American Society
of Hematology, the American Association for Cancer Research and
the American Society of Clinical Oncology. Among many awards, he
has received the U.S. Public Health Service Award for
Exceptional Achievement in Orphan Drug Development from the FDA.
He obtained a B.S. in Chemistry from Emory University, a M.D.
from the Medical College of Georgia, and a M.B.A. from Columbia
University Graduate School of Business. Dr. Warrell is
married to Dr. Loretta M. Itri, President, Pharmaceutical
Development and Chief Medical Officer of Genta.
Richard J. Moran, CPA, 61, became our Senior Vice
President and Chief Financial Officer in September 2005 and
retired in February 2008. Mr. Moran brought extensive and
diversified finance experience from a long career with
Johnson & Johnson (J&J) and several of its
operating companies. He served as Chief Financial Officer, Vice
President Finance, and member of the U.S.A. Board of
Ortho Biotech from 1995 until 2002, and from 2000 to 2002
he assumed additional finance responsibility for the Ortho
Biotech Worldwide Board. In that role, he was responsible for
planning, preparation, management, compliance and controls of
the accounting and financial activities of this
$4.4 billion global business unit. From 2002 until his
retirement in 2004, he served as Director at J&Js
Corporate Headquarters, where he was charged with strategic
development and implementation of Sarbanes-Oxley
Section 404 compliance requirements at more than 350
worldwide locations with $45 billion in annual sales.
Mr. Moran previously served as Finance Group Controller for
J&Js International Cilag, Ortho Pharmaceuticals,
McNeil Pharmaceuticals (ICOM) Group from 1989 to 1994 during the
launch of
Eprex®
in 50 countries and
Procrit®
in the U.S., and he served as a Board member for both Cilag
Europe and the ICOM Group. From 1983 to 1988, Mr. Moran was
a Director of J&Js Corporate Internal Audit
Department. Mr. Moran is a member of the New Jersey Society
of Certified Public Accountants, the American Institute of
Certified Public Accountants, and has served as Chairman of the
Board and Treasurer of the American Red Cross of Somerset
County, NJ. Mr. Moran retired from Genta effective
February 29, 2008.
Gary Siegel, 50, joined Genta in May 2003 as
Director, Financial Services, was appointed Senior Director,
Financial Services in April 2004 and was appointed Vice
President, Finance in September 2007. During his tenure at
Genta, Mr. Siegel has been accountable for the
day-to-day
accounting and financial operations of the Company including
public and management reporting, treasury operations, planning,
financial controls and compliance. Mr. Siegel became an
executive officer of the Company and assumed the role of interim
Principal Accounting Officer, interim Principal Financial
Officer and interim Corporate Secretary, effective
February 29, 2008, while the Company searches for
Mr. Morans successor. Prior to joining Genta, he
worked for two years at Geller & Company, a private
consulting firm, where he led the management reporting for a
multi-billion dollar client. His twenty-two years of experience
in the pharmaceutical industry include leadership roles at
Warner-Lambert Company and Pfizer Inc., where he held positions
of progressively increasing levels of responsibility including
Director, Corporate Finance and Director, Financial
Planning & Reporting.
W. Lloyd Sanders, 47, assumed the position of
Senior Vice President and Chief Operating Officer in March 2008.
He had been our Senior Vice President, Commercial Operations
since October 2006. Mr. Sanders joined Genta in January
2006 as Vice President, Sales and Marketing. He has twenty years
of experience in the pharmaceutical industry. Prior to joining
Genta, Mr. Sanders was associated with Sanofi-Synthelabo,
and subsequently Sanofi-Aventis. From October 2004 through
January 2006, he was Vice-President, Oncology Sales for the
combined companies. In that role, he had key product sales
responsibility for
Eloxatin®
(oxaliplatin),
Taxotere®
(docetaxel),
Anzemet®
(dolasetron mesylate), and
21
ELITEK®
(rasburicase). He led the successful restructuring, integration,
deployment, strategic development, and tactical execution of the
merged companies sales forces. He was responsible for
national account GPO contracting strategy and negotiations, and
he shared responsibility for oncology sales training and sales
operations. From October 2002 through October 2004,
Mr. Sanders was Area Vice President, Oncology Sales. He led
the 110-member team that achieved record sales for an oncology
product launch with
Eloxatin®.
From 1987 until 2002, he held positions of progressively
increasing levels of responsibility at Pharmacia, Inc. (now
Pfizer), most recently as Oncology Sales Director, West/East.
Mr. Sanders holds a Bachelor of Business Administration
from Memphis State University.
Loretta M. Itri, M.D., F.A.C.P., 58, has been
our President, Pharmaceutical Development and Chief Medical
Officer since May 2003, prior to which she was Executive Vice
President, Pharmaceutical Research and Development and Chief
Medical Officer. Dr. Itri joined Genta in March 2001.
Previously, Dr. Itri was Senior Vice President, Worldwide
Clinical Affairs, and Chief Medical Officer at Ortho Biotech
Inc., a Johnson & Johnson company. As the senior
clinical leader at Ortho Biotech and previously at
J&Js R.W. Johnson Pharmaceutical Research Institute
(PRI), she led the clinical teams responsible for NDA approvals
for
Procrit®
(epoetin alpha), that companys largest single product. She
had similar leadership responsibilities for the approvals of
Leustatin®,
Renova®,
Topamax®,
Levaquin®,
and
Ultram®.
Prior to joining J&J, Dr. Itri was associated with
Hoffmann-La Roche, most recently as Assistant Vice
President and Senior Director of Clinical Investigations, where
she was responsible for all phases of clinical development
programs in immunology, infectious diseases, antivirals, AIDS,
hematology and oncology. Under her leadership in the areas of
recombinant proteins, cytotoxic drugs and differentiation
agents, the first successful Product License Application (PLA)
for any interferon product
(Roferon-A®;
interferon alfa) was compiled. Dr. Itri is married to
Dr. Warrell, our Chief Executive Officer and Chairman.
Compensation
Discussion and Analysis
The Compensation Discussion and Analysis Section described
herein includes reference to our 2007 Stock Incentive Plan,
which is subject to stockholder approval. This plan is not yet
approved and we have not included a request for stockholder
approval in this proxy statement.
Overview
of Compensation Program
The Compensation Committee, also referred to herein as the
Committee, of the Board of Directors has responsibility for
overseeing our compensation and benefit policies, evaluating
senior executive performance, and determining compensation for
our senior executives, including our executive officers. The
Committee ensures that the total compensation paid to executive
officers is fair, reasonable and competitive.
The individuals who serve as our Chairman of the
Board & Chief Executive Officer (CEO) and the Chief
Financial Officer (CFO) during 2007, as well as the other
individuals included in the Summary Compensation Table below,
are referred to as the executive officers.
Compensation
Philosophy and Objectives
Our compensation philosophy is based on our belief that our
compensation programs should: be aligned with stockholders
interests and business objectives; reward performance; and be
externally competitive and internally equitable. We seek to
achieve three objectives, which serve as guidelines in making
compensation decisions:
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Providing a total compensation package which is competitive and
therefore, enables us to attract and retain, high-caliber
executive personnel;
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Integrating compensation programs with our short-term and
long-term strategic plan and business objectives; and
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Encouraging achievement of business objectives and enhancement
of stockholder value by providing executive management long-term
incentive through equity ownership.
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Role of
Executive Officers in the Compensation Decisions
The Committee makes all compensation decisions regarding the
compensation of our executive officers. The CEO reviews the
performance of our executive officers and except for the
President, Pharmaceutical Development & Chief Medical
Officer (President), who is the spouse of the CEO, the CEO makes
recommendations to the Committee based on these reviews,
including salary adjustments, variable cash awards and equity
awards. The Committee can exercise its discretion in modifying
any recommended adjustments or awards to executives. With
respect to the President, the Committee in its sole discretion
determines the amount of any adjustments or awards.
Establishing
Executive Compensation
Compensation levels for our executive officers are determined
through comparisons with other companies in the biotechnology
and pharmaceutical industries, including companies with which we
compete for personnel. To determine external competitiveness
practices relevant to the executive officers, we review data
from two industry surveys of executive compensation: Radford
Biotechnology Compensation Survey and Organization Resources
Counselors (collectively, External Market Data). In addition, in
2007 the Committee retained Towers Perrin, a leading
compensation consultant with expertise in biopharmaceutical
industry compensation practices, to assist in its analysis of
executive compensation. Towers Perrin provided a third-party
perspective based on their extensive knowledge of the industry
and they advised the Committee of developments in the design of
compensation programs and provided benchmarks against which we
compare our total compensation packages. Towers Perrin conducted
a peer group analysis in order to weigh the competitiveness of
the Companys overall compensation arrangements in relation
to comparable biopharmaceutical companies. The peer companies
were: Allos Therapeutics, Ariad Pharmaceuticals, Avalon
Pharmaceuticals, Cell Genesys, Cell Therapeutics, Favrille, Hana
Biosciences, Introgen Therapeutics, NeoPharm, Pharmacyclics,
Poniard Pharmaceuticals, Spectrum Pharmaceuticals, Telik and
Vion Pharmaceuticals. These companies were selected for the peer
group because, like Genta, they were oncology focused, public
pharmaceutical companies with products in mid to late-stage
development.
It is the Committees objective to target total annual
compensation of each executive officer at a level between the
50th and
75th percentiles
for comparable positions. However, in determining the
compensation for each executive officer, the Committee also
considers a number of other factors including: an evaluation of
the responsibilities required for each respective position,
individual experience levels and individual performance and
contributions toward achievement of our business objectives.
There is no pre-established policy or target for the allocation
between either cash and non-cash or short-term and long-term
incentive compensation. Instead, the Committee determines the
mix of compensation for each executive officer based on its
review of the competitive data and its analysis of that
individuals performance and contribution to our
performance. In addition, in light of our stage of development,
considerable emphasis is placed on
equity-based
compensation in an effort to preserve cash to finance our
research and development efforts.
Other
Factors Considered in Establishing 2007 Compensation for
Executive Officers
Our potential products are in various stages of research and
development and limited revenues have as yet been generated from
product sales. As a result, the use of traditional performance
standards, such as corporate profitability, is not believed to
be appropriate in the evaluation of the performance of us or our
individual executives. The compensation of our executive
officers is based, in substantial part, on industry compensation
practices, trends noted (in the External Market Data, peer group
analysis and by Towers Perrin), as well as the extent to which
business and the individual executive officers objectives
are achieved. Such objectives are established and modified as
necessary to reflect changes in market conditions and other
factors. Individual performance is measured by reviewing whether
these objectives have been achieved.
23
Among the significant business objectives achieved during 2007
were initiation of the new Phase 3 AGENDA trial of
Genasense®
in patients with advanced melanoma; initiation of a first
clinical trial with a new oral drug (G4544) to treat bone
disease; execution of a supply and distribution agreement with
IDIS Limited, whereby IDIS will distribute
Ganite®
and
Genasense®
on a named patient basis and completion of a common
stock offering raising gross proceeds of approximately
$11 million.
The milestones described above enabled continued progress
towards the commercialization and development of
Genasense®
and small molecule therapy, and were considered carefully in
evaluating executive performance and making determinations
regarding executive compensation. Notably, however, three
significant factors warranted very substantial weight in
evaluating our business performance and in making executive
compensation decisions. These factors were: 1) our receipt
from the European Medicines Agencys Committee for
Medicinal Products for Human Use of a negative opinion regarding
our Marketing Authorization Application for the use of
Genasense®
plus chemotherapy for treatment of patients with advanced
melanoma; 2) our receipt from the Food and Drug
Administration (FDA) of notice that they had declined the
Companys initial appeal of the non-approvable notice from
the FDA for the New Drug Application for the use of
Genasense®
plus chemotherapy in patients with chronic lymphocytic leukemia;
and 3) our inability to raise additional operating capital
before the close of the fiscal year.
The Committee reviewed peer analysis data, the compensation
history of each executive officer including their annual salary,
cash incentive bonus and stock option awards. During the
Committees year-end 2007 meeting, the CEO,
Dr. Warrell, recommended that due to the Companys
failure to meet critical business and financial objectives (as
described above) that there not be any annual salary increases
and that there be no payment of any incentive bonuses for
executives and all other employees. Following discussion, the
Committee approved Dr. Warrells recommendation. The
Committee had previously determined in September 2007 that there
would be no year-end stock option grants for the executive
officers and the general employee population. See the section
below marked September 2007 Retention Stock Option
Grants for a further explanation of the decision to not
grant stock option awards based on 2007 performance.
Due to the Companys depressed stock price, the
equity-based long-term incentive compensation and total
compensation level (annual salary, incentive bonus and equity
based compensation) for each of the executive officers was below
the median
(50th percentile).
In general, however, the Committee believes that executive
compensation levels are otherwise reasonably competitive with
companies in the biotechnology and pharmaceutical industries
when taking into account: geographic location, relative company
size, stage of development, individual responsibilities and
experience, as well as individual and overall corporate
performance.
Elements
of Executive Compensation
Our compensation package for executive officers generally
consists of annual cash compensation, which includes both fixed
(annual salary) and variable (cash incentive bonus program)
elements; long-term compensation in the form of stock options
and other perquisites. The main components are annual salary,
cash incentive bonus and stock options, all of which are common
elements of executive compensation pay in general and throughout
the biotechnology and pharmaceutical industry.
Annual
Salary
We pay an annual salary to our employees and the executive
officers as consideration for fulfillment of certain roles and
responsibilities. Changes in annual salaries for executive
officers, if any, are generally effective at the beginning of
each year. As noted above, there were no annual salary increases
for 2008.
Determining
Annual Salary
Increases to annual salary reflect a reward and recognition for
successfully fulfilling the positions role and
responsibilities, the incremental value of the experience,
knowledge, expertise and skills the individual acquires and
develops during employment with us and adjustments as
appropriate based on external
24
competitiveness and internal equity. Prevailing competitive
market practices guide the percentage increases to annual
salary. Although the External Market Data indicated that the
trend for annual salary increases effective in 2008 was
approximately 4%, as noted above, there were no salary increases
made for the executive officers or any other employees due to
the performance of the Company in 2007. Notably, there was a 15%
reduction to Dr. Warrells base salary from $480,000
to $408,000 effective January 1, 2008. This reduction was
agreed to by the Committee and Dr. Warrell as part of the
negotiation that occurred in 2007 related to
Dr. Warrells amended 2006 employment agreement. The
rationale for this reduction was that the Company had yet to
achieve critical business and financial objectives and this had
to be reflected in the terms of Dr. Warrells amended
2006 employment agreement. The 2008 annual salaries for
Dr. Itri, Mr. Moran, Mr. Siegel and
Mr. Sanders are $467,500, $320,000, $210,000 and $285,000,
respectively. In order to conserve cash, on April 17, 2008,
Drs. Warrell and Itri agreed to indefinitely defer the cash
portions of their salaries, at least until the Company has
raised additional capital. These agreements may be rescinded by
Drs. Warrell and Itri at their discretion, and the cash
amounts due them shall be accrued for by the Company. On
February 29, 2008, Mr. Moran retired from Genta.
Cash
Incentive Bonus Program
Typically, we award cash incentive bonuses to employees,
including the executive officers, as a reward and recognition
for contributing to our achievement of specific annual business
objectives. All employees are eligible for a form of cash
incentive bonus, although payment of a cash incentive bonus is
made at an individual level each year contingent upon overall
performance of the company. However, as described under the
section Other Factors Considered in Establishing 2007
Compensation for Executive Officers, the business
performance of the Company was insufficient in 2007 to warrant
cash incentive bonuses to executive officers and all other
employees; consequently no cash incentive bonuses were paid.
Determining
the 2007 Cash Incentive Bonus Program Target
The target for the cash incentive bonus program award for the
CEO (forty percent of annual salary) and the President (thirty
percent of annual salary) is based on the terms of their
employment agreements as described below and the Committee
determines the annual target for the other executive officers
each year based on external competitiveness and internal equity.
Based on the External Market Data, the target amounts for
executive officers who were Senior Vice Presidents and Vice
Presidents were established at thirty percent and twenty-five
percent of annual salary, respectively. As noted above, there
were no cash bonuses paid to any of the executive officers for
2007 performance.
Equity-Based
Compensation
We grant equity-based compensation to employees, including
executive officers, to attract, motivate, engage and retain
highly qualified and highly sought-after employees. We grant
stock options on a broad basis to encourage all employees to
work with a long-term view. Stock options are inherently
performance-based because they deliver value to the option
holder only if the value of our stock increases. Thus, stock
options are a potential reward for long-term value creation and
serve as an incentive for employees who remain with us to
contribute to the overall long-term success of the business.
September
2007 Retention Stock Option Grants
In July 2007 the Company completed a 1:6 reverse stock split in
an attempt to increase the per share trading value of our common
stock in order to maintain our listing on the NASDAQ Global
Market. NASDAQ Global Market listing rules require that a
Companys stock have a $1.00 minimum closing bid price. The
reverse split resulted in an adjustment of all previous stock
option awards issued to executives and all other employees,
whereby the number of options held was reduced by a factor of
six, and the exercise price of the option was multiplied by a
factor of six. Subsequent to the 1:6 reverse stock split there
was a significant decline in our stock price. As a result, of
the reverse stock split and the declining stock price,
management believed that the incentive value of the previous
stock option awards was insufficient to retain our executive
officers and other employees. Following careful analysis which
included: 1) a review of
25
market trends, including consultation with Aon Radford
Consulting (a nationally recognized compensation consulting firm
with specific expertise in dealing with the equity issues of
biopharmaceutical companies); 2) consideration of the fact
that the 1998 Plan would be expiring in 2008; and 3) the
determination that the commitment and motivation of our
workforce would be vital to ongoing efforts to commercialize
Genasense®
and achieve other corporate objectives, management recommended
to the Committee that new stock option grants be issued to
executive officers and all employees under a new 2007 Plan. The
Committee then retained their own independent compensation
consulting firm, Towers Perrin, to evaluate managements
recommendation and advise the Committee. Following two
discussions with Towers Perrin to review their findings and
further discussions between the Committee and management, the
Committee approved the 2007 Stock Incentive Plan, contingent
upon shareholder approval in 2008, and approved stock option
grants for four of the five executive officers and all other
employees, all of which are subject to stockholder approval.
The stock option plan is subject to continued review by the
Board of Directors and must be approved by the stockholders. The
Board may, at its discretion, change the Plan prior to seeking
stockholder approval. The stock option plan has not yet been
submitted to stockholders for approval and thus has yet to take
effect.
In conjunction with the amendment and restatement of his 2006
employment agreement, Dr. Warrell received a stock option
grant of 2,400,000 shares at $1.39 per share.
Mr. Sanders and Mr. Siegel received stock option
grants of 300,000 and 175,000 shares, respectively, at
$1.39 per share. Dr. Itri received a stock option grant of
500,000 shares at $1.42 per share. Due to very specific and
critical financial objectives, in lieu of a stock option grant,
Mr. Moran received a grant of 60,000 restricted stock units
from the 1998 Plan, whose vesting was contingent upon
achievement of certain financial transactions and satisfactory
completion of certain financial and accounting services. Due to
certain financial transactions not being achieved, 40,000 of the
60,000 restricted stock units granted to Mr. Moran failed
to vest and were cancelled. The remaining 20,000 restricted
stock units may still vest upon satisfactory completion of
certain financial and accounting services through July 31,
2008, during which time Mr. Moran will be providing
consulting services to the Company.
Acquisition
Bonus Plan
The 2007 Plan is subject to stockholder approval. Consequently,
management recognized that until there was stockholder approval,
the risk of a potential change in control fully mitigated the
retention value of the stock option awards described above.
Therefore, in order to assure retention of our executive
officers and other employees prior to stockholder approval of
the September 2007 stock option awards, concurrent with
approving the 2007 Plan on September 17, 2007, the
Committee also approved an Acquisition Bonus Plan, which was
also approved by the Board of Directors. Under the program,
participants are eligible to share in a portion of the proceeds
realized from a change in control of the Company that occurs
prior to the earlier of (i) December 31, 2008 or
(ii) the approval by our stockholders of the 2007 Plan. On
September 27, 2007, executive officers and employees were
granted a number of units in the Acquisition Bonus Plan that
corresponded to the number of shares granted to them under the
September 2007 retention stock option grants, with the intent of
providing an incentive value under the Acquisition Bonus Plan
that was similar to the incentive value of the stock option
grants, once the 2007 Plan was approved by stockholders. Dr
Warrell, Mr. Sanders and Mr. Siegel received
2,400,000, 300,000 and 175,000 units, respectively with a
unit value of $1.39, and Dr. Itri received
500,000 units with a unit value of $1.42. To assure there
were was no duplication of benefits derived from the 2007 Plan
and the Acquisition Bonus Plan, all shares issued under the 2007
Plan terminate and cease to be outstanding in the event the
participant becomes entitled to receive a payment under the
Acquisition Bonus Plan. As noted above, Mr. Moran did not
receive a stock option award, and instead received restricted
stock units under the 1998 Plan; therefore, he was not a
recipient of an award under the Acquisition Bonus Plan.
26
Determining
the September 2007 Retention Stock Option Grants
In making the decision to make 2007 retention stock option
grants to executive officers, the Committee took into
consideration External Market Data, sought advice from their
independent consultant, Towers Perrin, and considered the
relative importance of retaining the existing executive
officers. Among the factors considered in determining the number
of shares issued to each executive was the Towers Perrin
peer group analysis finding that both the long-term incentive
value and total compensation value of each executives
total compensation was significantly below the median (or
50th percentile). The Committee also considered that the
award value of the initial grants made to the executive officers
at the time they were hired and all subsequent grants made based
on annual performance no longer had any incentive value because
those awards had post-reverse split strike prices significantly
above the current market value of our common stock. The size of
the stock option awards made to executive officers in September
2007 were based on the Committees determination that the
award should be at least equivalent to the size of an award that
would be necessary to recruit a comparable individual to replace
the executive officer. Coincident with making the retention
grants, the Committee considered whether or not there should be
year-end 2007 performance based equity grants, which would
ordinarily be granted in January 2008. However, based on the
fact that the September 2007 retention stock option grants were
larger than typical year-end grants and the proximity in time of
the September 2007 retention stock option grants to any
potential January 2008 awards (only four months), the Committee
determined that, irrespective of individual or corporate
performance, there would be no 2007 year-end equity-based
compensation for executive officers and all other employees and
advised them of that fact in September 2007.
Determining
The Timing And Exercise Price Of Equity-Based
Compensation
We have a longstanding practice, since January 2002, of having
the exercise price of a stock option grant coincide with the
closing price of our stock on the date of the grant. This
practice is intended to avoid a situation in which a stock
option grant is issued at an exercise price below the fair
market value of our stock on the date of the grant. In years in
which we issue performance-based grants, our practice has been
to make grants to employees and our executive officers during
the month of January; however, as stated above, no grants were
made in January 2008.
Regarding the September 2007 executive officer retention grants,
in order to assure that there would be no perception that one of
our executives stock option grants was delayed to achieve
a more favorable exercise price, the Committee prospectively
determined that for any grants made to executives, the exercise
price of the executives stock option grant would be at the
higher of the closing price of our stock on the date of the
grant or the exercise price of the retention stock option grants
issued to all other employees.
During August and September 2007, the Committee met on multiple
occasions to discuss the proposed September 2007 equity
retention program. In order to focus their discussions, they
determined that decisions about awards for Dr. Warrell,
Dr. Itri and Mr. Moran would be made separately from
the decisions made regarding the remaining executive officers
and all other employees. The September 2007 retention stock
option grants were issued on the same dates that the Committee
approved the grants. The grants were approved for
Mr. Sanders and Mr. Siegel on September 17, 2007;
consequently their grants were dated September 17, 2007 and
the exercise price of $1.39 per share corresponded with the
closing price of the Companys stock on September 17,
2007. Dr. Warrells grant was approved on
September 20, 2007; consequently his grant was dated
September 20, 2007. However, since on September 20,
2007, the closing price of our stock was $1.35 per share, in
accordance with the Committees terms for the grant (as
noted above), the exercise price of Dr. Warrells
grant was set at $1.39 per share, which corresponded with the
higher exercise price that other executives and all other
employees received for their September 17, 2007 grants.
Dr. Itris grant was approved on September 21,
2007; consequently her grant was dated September 21, 2007.
On September 21, 2007, the closing price of Gentas
stock was $1.42 per share, so the exercise price of
Dr. Itris grant was set at $1.42 per share. The
Committee made a determination regarding an equity award for
Mr. Moran on September 21, 2007; in lieu of a stock
option award, he received restricted stock units from the 1998
Stock Incentive Plan on September 21, 2007.
27
Option
Grant Date Coordination With The Release Of Material Non-Public
Information
We established the date of the Committee meetings and grant
dates in accordance with our policy, and do not determine these
dates based on knowledge of material non-public information or
in response to our stock price.
Retirement
Benefits
All employees are eligible to participate in the Genta
Incorporated Savings & Retirement Plan (Savings Plan).
This is a tax-qualified retirement savings plan, which allows
contributions by the employee of the lesser of 50% of their
annual salary or the limit prescribed by the Internal Revenue
Service to the Savings Plan on a before-tax basis. We will match
100% of the first 4% of pay that is contributed to the Savings
Plan and 50% of the next 2% of pay contributed. All
contributions to the Savings Plan as well as any matching
contributions are fully vested upon contribution. We provide
retirement benefits because retirement benefits are an integral
part of employee benefit programs within the biotechnology and
pharmaceutical industry.
Perquisites
Excluding our CEO and President, both of whom have employment
agreements that describe any perquisites that are part of their
compensation and are described below, none of our executive
officers have perquisites in excess of $10,000 in annual value.
Severance
Benefits
We have adopted a severance pay program for nearly all of our
employees, including executive officers, except for
Drs. Itri and Warrell, who are eligible for severance
benefits under the terms of their employment agreements as
described below. The severance pay program is intended to
preserve employee morale and productivity and encourage
retention in the face of the disruptive impact of an actual or
rumored workforce reduction or a change in control of our
company. In addition, for executives, the program is intended to
align executive and stockholder interests by enabling executives
to consider corporate transactions that are in the best
interests of the stockholders and other of our constituents
without undue concern over whether the transactions may
jeopardize the executives own employment.
These arrangements, like other elements of executive
compensation, are structured with regard to practices at
comparable companies for similarly-situated officers and in a
manner we believe is likely to attract and retain high quality
executive talent.
Although there are some differences in the benefit levels
depending on the employees job level, the basic elements
are comparable for all employees, except for Drs. Itri and
Warrell as noted above, and for Messrs. Sanders and Siegel,
as noted below:
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Double trigger. Unlike single trigger
plans that pay out immediately upon a change in control,
Gentas severance pay program requires a double
trigger a change in control followed by
an involuntary loss of employment within one year thereafter.
This is consistent with the purpose of the program, which is to
provide employees with financial protection upon loss of
employment.
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Covered terminations. Employees may be eligible for
payments, if there is either a workforce reduction or if within
one year of a change in control, their employment is terminated
without cause by the Company.
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4
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Severance payment. Subject to signing a release,
eligible terminated employees may receive severance.
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4
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Benefit continuation. Subject to signing a release,
basic health and dental insurance may be continued following
termination of employment.
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4
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Accelerated vesting of equity awards. Upon a change
in control, any unvested equity awards become vested.
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28
Potential
Payments Upon a Reduction in Force or Change in
Control
Drs. Itris and Warrells eligibility for severance
payments are described below, and the remaining executive
officers are also eligible for certain payments in the event of
their termination. In the event of their termination as a result
of a reduction in force or change in control, Mr. Sanders
and Mr. Siegel are eligible for up to twenty-four weeks of
severance paid on a bi-weekly basis equal to $131,538 and
$96,923, respectively. Mr. Sanders and Mr. Siegel are
also eligible to continue their health/dental benefits at the
Companys expense for up to four months, with an estimated
value of $7,116 each.
Deductibility
of Executive Compensation
As part of its role, the Committee reviews and considers the
deductibility of executive compensation under
Section 162(m) of the Internal Revenue Code, which provides
that we may not deduct compensation of more than $1,000,000 paid
to an individual. For 2007, the total amount of compensation
paid by us should be deductible and not affected by the
Section 162(m) limitation.
2008
Objectives and Executive Compensation Guidelines
Our business objectives for 2008 include: completing enrollment
of the phase 3 AGENDA trial of
Genasense®
in patients with advanced melanoma; obtaining a lifting of the
clinical hold on our newly licensed oral taxane, tesetaxel, a
late Phase 2 oncology product; and ongoing financing and
business development activities that will further the
development and commercialization of our products. At present,
the 2008 compensation guidelines are comparable to the 2007
guidelines with respect to the following: components of
compensation; anticipated salary adjustments; cash incentive
bonus targets and equity-based compensation. The Committee will
make adjustments if necessary based on their assessment of a
variety of factors including: industry trends; competitive
market data; business objectives and corporate performance.
Summary
Compensation Table
The following table sets forth certain information regarding
compensation earned by or paid to our Chief Executive Officer,
Chief Financial Officer and other executive officers
(collectively, the named executive officers) during
the years ended December 31, 2007 and 2006, respectively.
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Non-Equity
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Nonqualified
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Stock
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Option
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Incentive Plan
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Deferred
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All Other
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Salary
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Bonus
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Awards
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Awards
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Compensation
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Compensation
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Compensation
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Total
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Name and Principal Position
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Year
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($)
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($)
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($)
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($) (1)
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($) (2)
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Earnings ($)
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($)
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($)
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Raymond P. Warrell, Jr., M.D.
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2007
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480,000
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1,139,940
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|
|
|
|
|
|
|
41,096
|
(3)
|
|
|
1,661,036
|
|
Chairman and Chief Executive Officer
|
|
|
2006
|
|
|
|
460,000
|
|
|
|
|
|
|
|
|
|
|
|
2,743,824
|
|
|
|
50,000
|
|
|
|
|
|
|
|
40,462
|
(3)
|
|
|
3,294,286
|
|
Richard J. Moran
|
|
|
2007
|
|
|
|
320,000
|
|
|
|
|
|
|
|
10,463
|
|
|
|
29,100
|
|
|
|
|
|
|
|
|
|
|
|
17,261
|
(4)
|
|
|
376,824
|
|
Senior Vice President, Chief Financial Officer and Corporate
Secretary
|
|
|
2006
|
|
|
|
304,500
|
|
|
|
|
|
|
|
|
|
|
|
35,900
|
|
|
|
100,000
|
|
|
|
|
|
|
|
11,000
|
(4)
|
|
|
451,400
|
|
Gary Siegel
|
|
|
2007
|
|
|
|
196,846
|
|
|
|
|
|
|
|
|
|
|
|
32,007
|
|
|
|
|
|
|
|
|
|
|
|
11,250
|
(5)
|
|
|
240,103
|
|
Vice President, Finance
|
|
|
2006
|
|
|
|
183,750
|
|
|
|
|
|
|
|
|
|
|
|
46,778
|
|
|
|
66,500
|
|
|
|
|
|
|
|
11,000
|
(5)
|
|
|
308,028
|
|
Loretta M. Itri, M.D.
|
|
|
2007
|
|
|
|
467,500
|
|
|
|
|
|
|
|
|
|
|
|
459,201
|
|
|
|
|
|
|
|
|
|
|
|
21,836
|
(6)
|
|
|
948,537
|
|
President, Pharmaceutical Development and Chief Medical Officer
|
|
|
2006
|
|
|
|
445,200
|
|
|
|
|
|
|
|
|
|
|
|
979,852
|
|
|
|
|
|
|
|
|
|
|
|
19,848
|
(6)
|
|
|
1,444,980
|
|
W. Lloyd Sanders
|
|
|
2007
|
|
|
|
285,000
|
|
|
|
|
|
|
|
|
|
|
|
39,100
|
|
|
|
|
|
|
|
|
|
|
|
40,405
|
(7)
|
|
|
364,505
|
|
Senior Vice President and Chief Operating Officer
|
|
|
2006
|
|
|
|
245,000
|
|
|
|
|
|
|
|
|
|
|
|
36,250
|
|
|
|
78,000
|
|
|
|
|
|
|
|
33,579
|
(7)
|
|
|
392,829
|
|
|
|
|
(1) |
|
The amounts reflect the dollar amount recognized for financial
statement reporting purposes for the years ended
December 31, 2007 and December 31, 2006, respectively,
in accordance with FAS 123(R). These figures include amounts
from awards granted in 2003, 2004, 2005, 2006 and 2007.
Assumptions used in the calculations of these amounts for the
years ended December 31, 2005, 2006 and 2007, respectively,
are in Note 16 of the Companys Annual Report on Form
10-K for the
year ended December 31, 2007, as amended. There can be no
assurance that the FAS 123(R) amounts will be realized. |
|
(2) |
|
As described above, no payments were made for 2007 performance
under our cash incentive bonus program. |
29
|
|
|
(3) |
|
All other compensation for 2007 includes $6,000 for auto
allowance, $13,419 for long-term disability, (including $4,641
for income tax
gross-up),
$10,427 for life insurance, (including $3,592 for income tax
gross-up)
and $11,250 Company match to the 401(k) Plan. All other
compensation for 2006 includes $6,000 for auto allowance,
$13,003 for long-term disability, (including 4,506 for income
tax
gross-up),
$10,459 for life insurance (including $3,592 for income tax
gross-up)
and $11,000 Company match to the 401(k) Plan. |
|
(4) |
|
All other compensation for 2007 includes $6,011 for life
insurance, (including $2,011 for income tax
gross-up)
and $11,250 Company match to the 401(k) Plan. All other
compensation for 2006 includes $11,000 Company match to 401(k)
Plan. |
|
(5) |
|
All other compensation for 2007 includes $11,250 Company match
to the 401(k) Plan. All other compensation for 2006 includes
$11,000 Company match to the 401(k) Plan. |
|
(6) |
|
All other compensation for 2007 includes $6,770 for long-term
disability (including $2,161 for income tax
gross-up),
$3,816 for life insurance (including $1,315 for income tax
gross-up)
and $11,250 Company match to the 401(k) Plan. All other
compensation for 2006 includes $7,028 for long-term disability,
(including $2,421 for income tax
gross-up),
$1,820 for life insurance, (including $627 for income tax
gross-up)
and $11,000 Company match to the 401(k) Plan. |
|
(7) |
|
All other compensation for 2007 includes $4,497 for long-term
disability (including $1,235 for income tax
gross-up),
$24,658 relocation reimbursement (including $6,106 for income
tax
gross-up)
and $11,250 Company match to the 401(k) Plan. All other
compensation for 2006 includes $4,370 for long-term disability,
(including $1,108 for income tax
gross-up),
$19,459 relocation reimbursement (including $4,914 for income
tax
gross-up)
and $9,750 Company match to the 401(k) Plan. |
Grants of
Plan-Based Awards
The table below supplements the Summary Compensation Table with
details regarding 2007 plan-based awards, all of which have been
granted as of their respective grant date below. There are no
future payments pending based on 2007 performance or
compensation plans.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
|
|
|
All Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Option
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Awards:
|
|
|
|
|
|
Grant Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number
|
|
|
Number of
|
|
|
Exercise
|
|
|
Fair Value
|
|
|
|
|
|
|
Estimated Future Payouts Under
|
|
|
Estimated Future Payouts Under
|
|
|
of Shares
|
|
|
Securities
|
|
|
Price of
|
|
|
of Stock
|
|
|
|
|
|
|
Non-Equity Incentive Plan Awards (1)
|
|
|
Equity Incentive Plan Awards (2)
|
|
|
of Stock
|
|
|
Underlying
|
|
|
Option
|
|
|
and Option
|
|
|
|
Grant
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
Threshold
|
|
|
Target
|
|
|
Maximum
|
|
|
or Units
|
|
|
Options
|
|
|
Awards
|
|
|
Awards
|
|
Name
|
|
Date
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
(# shares)
|
|
|
(# shares)
|
|
|
(# shares)
|
|
|
(#) (3)
|
|
|
(#) (4)
|
|
|
($/sh)
|
|
|
($)
|
|
|
Dr. Warrell
|
|
|
9/20/07
|
|
|
|
0
|
|
|
|
192,000
|
|
|
|
288,000
|
|
|
|
0
|
|
|
|
150,000
|
|
|
|
225,000
|
|
|
|
0
|
|
|
|
2,400,000
|
|
|
|
1.39
|
|
|
|
(5
|
)
|
Mr. Moran
|
|
|
9/21/07
|
|
|
|
0
|
|
|
|
96,000
|
|
|
|
128,000
|
|
|
|
0
|
|
|
|
30,000
|
|
|
|
40,000
|
|
|
|
60,000
|
|
|
|
0
|
|
|
|
|
|
|
|
85,200
|
|
Mr. Siegel
|
|
|
9/17/07
|
|
|
|
0
|
|
|
|
52,500
|
|
|
|
73,500
|
|
|
|
0
|
|
|
|
20,000
|
|
|
|
30,000
|
|
|
|
0
|
|
|
|
175,000
|
|
|
|
1.39
|
|
|
|
(5
|
)
|
Dr. Itri
|
|
|
9/21/07
|
|
|
|
0
|
|
|
|
140,250
|
|
|
|
233,750
|
|
|
|
0
|
|
|
|
30,000
|
|
|
|
50,000
|
|
|
|
0
|
|
|
|
500,000
|
|
|
|
1.42
|
|
|
|
(5
|
)
|
Mr. Sanders
|
|
|
9/17/07
|
|
|
|
0
|
|
|
|
85,500
|
|
|
|
114,000
|
|
|
|
0
|
|
|
|
30,000
|
|
|
|
40,000
|
|
|
|
0
|
|
|
|
300,000
|
|
|
|
1.39
|
|
|
|
(5
|
)
|
|
|
|
(1) |
|
These columns show the range of payouts targeted for 2007
performance under the Genta Cash Incentive Bonus Program, which
would ordinarily be paid in January 2008; however, there were no
payments for 2007 performance. |
|
(2) |
|
These columns show the range of stock option awards targeted for
2007 performance under the 1998 Plan. For 2007, there were no
awards for 2007 performance. |
|
(3) |
|
This column shows the number of restricted stock units awarded
in 2007 under the 1998 Plan as part of the retention program.
See the section labeled September 2007 Retention Stock
Option Grants for an explanation of this award. |
|
(4) |
|
This column shows the number of stock options awarded in
September 2007 as part of the retention program under the 2007
Plan, which is contingent upon stockholder approval. See the
section labeled September 2007 Retention Stock Option
Grants for an explanation of this award. |
|
(5) |
|
We have not recognized compensation expense for grants of stock
options awarded in September 2007 as part of the retention
program. This is because the grants of these options under the
2007 Plan is contingent upon stockholder approval. As such, a
grant date as defined in FAS 123(R) has not occurred. |
30
Outstanding
Equity Awards as of December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventive
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
Plan
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Incentive
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
Market or
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
Payout
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
Market
|
|
|
Unearned
|
|
|
Unearned
|
|
|
|
|
|
|
|
|
|
Inventive
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Value of
|
|
|
Shares,
|
|
|
Shares,
|
|
|
|
|
|
|
|
|
|
Plan
|
|
|
|
|
|
|
|
|
Shares or
|
|
|
Shares or
|
|
|
Units or
|
|
|
Units or
|
|
|
|
|
|
|
|
|
|
Awards:
|
|
|
|
|
|
|
|
|
Units of
|
|
|
Units of
|
|
|
Other
|
|
|
Other
|
|
|
|
Number Of
|
|
|
Number Of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
Stock
|
|
|
Stock
|
|
|
Rights
|
|
|
Rights
|
|
|
|
Securities
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
That
|
|
|
That
|
|
|
That
|
|
|
That
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
Have
|
|
|
Have
|
|
|
Have
|
|
|
Have
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
Option
|
|
|
Not
|
|
|
Not
|
|
|
Not
|
|
|
Not
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Unearned
|
|
|
Exercise
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
|
Vested
|
|
|
Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Options (#)
|
|
|
Price ($)
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
|
(#)
|
|
|
(#)
|
|
|
Dr. Warrell
|
|
|
529,251
|
|
|
|
|
|
|
|
|
|
|
|
16.01
|
|
|
|
10/27/09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
132,313
|
|
|
|
|
|
|
|
|
|
|
|
16.01
|
|
|
|
02/14/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
47.81
|
|
|
|
01/01/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
82.20
|
|
|
|
01/25/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
47.17
|
|
|
|
01/28/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
166,667
|
|
|
|
|
|
|
|
59.28
|
|
|
|
05/16/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12,500
|
|
|
|
|
|
|
|
|
|
|
|
61.92
|
|
|
|
01/04/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
|
|
|
6,250
|
|
|
|
|
|
|
|
9.72
|
|
|
|
01/28/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
132,313
|
|
|
|
|
|
|
|
|
|
|
|
16.01
|
|
|
|
10/28/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
18,750
|
|
|
|
18,750
|
|
|
|
|
|
|
|
12.30
|
|
|
|
01/23/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55,560
|
|
|
|
111,106
|
|
|
|
|
|
|
|
12.96
|
|
|
|
03/31/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,167
|
|
|
|
12,500
|
|
|
|
|
|
|
|
2.74
|
|
|
|
01/12/07
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
441,000
|
*
|
|
|
1,959,000
|
*
|
|
|
|
|
|
|
1.39
|
|
|
|
09/20/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Moran
|
|
|
20,000
|
|
|
|
|
|
|
|
|
|
|
|
7.26
|
|
|
|
09/15/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
833
|
|
|
|
834
|
|
|
|
|
|
|
|
12.30
|
|
|
|
01/23/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,001
|
|
|
|
1,666
|
|
|
|
|
|
|
|
2.74
|
|
|
|
01/12/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
20,000
|
|
|
|
8,000
|
|
|
|
|
|
|
|
|
|
Mr. Siegel
|
|
|
2,333
|
|
|
|
|
|
|
|
|
|
|
|
60.30
|
|
|
|
05/22/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,167
|
|
|
|
|
|
|
|
|
|
|
|
61.92
|
|
|
|
01/04/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,667
|
|
|
|
|
|
|
|
|
|
|
|
15.00
|
|
|
|
06/30/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,250
|
|
|
|
417
|
|
|
|
|
|
|
|
9.72
|
|
|
|
01/07/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,250
|
|
|
|
1,250
|
|
|
|
|
|
|
|
5.64
|
|
|
|
04/04/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
833
|
|
|
|
834
|
|
|
|
|
|
|
|
5.40
|
|
|
|
04/15/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
833
|
|
|
|
834
|
|
|
|
|
|
|
|
11.10
|
|
|
|
09/19/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
833
|
|
|
|
834
|
|
|
|
|
|
|
|
12.30
|
|
|
|
01/23/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
208
|
|
|
|
625
|
|
|
|
|
|
|
|
4.62
|
|
|
|
12/01/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500
|
|
|
|
1,500
|
|
|
|
|
|
|
|
2.74
|
|
|
|
01/12/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
175,000
|
*
|
|
|
|
|
|
|
1.39
|
|
|
|
09/17/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dr. Itri
|
|
|
50,000
|
|
|
|
|
|
|
|
|
|
|
|
34.38
|
|
|
|
03/28/11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
6,667
|
|
|
|
|
|
|
|
|
|
|
|
82.20
|
|
|
|
01/25/12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
|
47.17
|
|
|
|
01/28/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
50,000
|
|
|
|
|
|
|
|
71.70
|
|
|
|
08/05/13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,333
|
|
|
|
|
|
|
|
|
|
|
|
61.92
|
|
|
|
01/05/14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,750
|
|
|
|
1,250
|
|
|
|
|
|
|
|
9.72
|
|
|
|
01/07/15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,167
|
|
|
|
4,167
|
|
|
|
|
|
|
|
12.30
|
|
|
|
01/23/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
14,351
|
|
|
|
68,982
|
|
|
|
|
|
|
|
9.54
|
|
|
|
07/27/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,084
|
|
|
|
6,250
|
|
|
|
|
|
|
|
2.74
|
|
|
|
01/12/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
500,000
|
*
|
|
|
|
|
|
|
1.42
|
|
|
|
09/21/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Mr. Sanders
|
|
|
8,333
|
|
|
|
8,334
|
|
|
|
|
|
|
|
10.86
|
|
|
|
01/16/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,250
|
|
|
|
3,750
|
|
|
|
|
|
|
|
2.74
|
|
|
|
01/12/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
300,000
|
*
|
|
|
|
|
|
|
1.39
|
|
|
|
09/17/17
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
|
|
|
* |
|
Stock options awarded in September 2007 as part of the retention
program under the 2007 Plan, which is contingent upon
stockholder approval. See the section labeled September
2007 Retention Stock Option Grants for an explanation of
this award. |
Option
Exercises and Stock Vesting in Last Year
There were no exercises of options or vesting of stock by the
named executive officers in the year ended December 31,
2007.
Employment
Agreements
Employment
Agreement with Raymond P. Warrell, Jr., M.D.
Pursuant to an employment agreement dated as of January 1,
2006 between Genta and Dr. Warrell that was subsequently
amended and restated and signed effective November 30,
2007, hereinafter referred to as the amended 2006 employment
agreement, Dr. Warrell continues to serve as our Chairman
and Chief Executive Officer. The amended 2006 employment
agreement has an initial term of three years ending on
December 31, 2010 and provides for automatic extensions for
additional one-year periods. Under the amended 2006 employment
agreement, Dr. Warrells $480,000 annual base salary
was reduced by 15% effective January 1, 2008; and he now
receives a base salary of $408,000 per annum with annual
percentage increases equal to at least the Consumer Price Index
for the calendar year preceding the year of the increase. At the
end of each calendar year, Dr. Warrell is eligible for a
cash incentive bonus ranging from 0% to 60% of his annual base
salary, subject to the achievement of
agreed-upon
goals and objectives.
Dr. Warrell received an initial option grant of 2,400,000
stock options under the 2007 Plan, subject to stockholder
approval, that has not yet been received, on September 20,
2007 with an exercise price of $1.39, of which
(a) 1,440,000 shares vest over a 40 month vesting
schedule (360,000 shares on the date of grant,
1,053,000 shares in 40 equal monthly increments of 27,000
each commencing on October 1, 2007 and the final
27,000 shares on December 31, 2010) and
(b) the remaining 960,000 shares vest upon our
achievement of specified milestones relating to the
Genasense®
product or its substantial equivalent. These milestones include
the following: (1) 480,000 shares will become
exercisable on the date the
Genasense®
product receives approval for any first indication in the United
States from the Food and Drug Administration (FDA) or any first
indication in Europe from the European Medicines Agency (EMEA),
(2) 480,000 shares will become exercisable on the date
that the total fair market value of all common stock of the
Company then outstanding first exceeds $350,000,000.
Dr. Warrell is also entitled to receive annual stock
options for the purchase of up to 225,000 shares of Common
Stock, depending upon the achievement of
agreed-upon
goals and objectives. Such options will become fully exercisable
upon a Trigger Event (i.e. the sale of
Genasense®
or our change in control). If a Trigger Event occurs during the
term of the amended 2006 employment agreement or within
12 months thereafter, Dr. Warrell will be entitled to
receive the stock option grants that he would have been entitled
to receive in respect of the calendar year in which the Trigger
Event occurs (assuming attainment of target levels
of performance on all goals and objectives for the year), and
such option will be fully vested and exercisable upon grant.
We may also, from time to time, grant Dr. Warrell
additional cash, stock options, equity
and/or other
long-term incentive awards in the sole discretion of our Board.
Dr. Warrell continues to be entitled to any and all medical
insurance, dental insurance, life insurance, disability
insurance and other benefit plans, which are generally available
to our senior executives. He is also entitled to receive
supplemental life insurance and supplemental disability
insurance, as well as premium payments for medical malpractice
insurance up to a maximum of $25,000 annually. The aggregate
amount of the benefits Dr. Warrell may receive are subject
to parachute payment limitations under Section 280G of the
Internal Revenue Code.
In the event Dr. Warrells employment is terminated,
he will be eligible for certain benefits whose value has been
estimated herein, but only to the extent that the benefit is not
otherwise provided to employees on a non-discriminatory basis.
In the event Dr. Warrells employment is terminated,
he will be entitled to receive his accrued but unpaid base
salary through his termination date, his accrued but unpaid
32
expenses, a lump sum payment of his accrued vacation days
(unless he is terminated by us for cause or he terminates his
employment without good reason (both defined in the amended 2006
agreement)), his accrued but unpaid cash incentive bonus, a lump
sum payment of his pro-rated cash incentive bonus for the year
of his termination, valued up to $163,200, (unless he is
terminated by us for cause or he terminates his employment
without good reason), and any other benefits due him in
accordance with applicable plans, programs or agreements. In
addition to the benefits listed in the preceding sentence, in
the event we terminate Dr. Warrells employment
without cause or Dr. Warrell terminates his employment for
good reason and he executes a release, Dr. Warrell will be
entitled to receive the base salary he would have received
during the twelve-month period following the date of
termination, valued at $408,000, for a total potential payment
of $571,200. If we terminate Dr. Warrells employment
in anticipation of our change in control or, if either party
terminates his employment upon a change in control or within
thirteen months following a change in control, Dr. Warrell
will instead receive a lump sum payment equal to two times his
annual base salary, valued at $816,000 and two times his target
bonus for the calendar year of termination, valued at $326,400,
for a total potential payment of $1,142,000. Dr. Warrell
will also receive immediate vesting of all stock options that
vest solely as a result of his continued employment. Finally, if
either party gives notice that they do not wish to extend the
amended 2006 employment agreement, Dr. Warrell will be
entitled to receive his accrued, but unpaid, base salary through
his termination date; his accrued, but unpaid, expenses; a lump
sum payment of his accrued vacation days; his accrued but unpaid
cash incentive bonus; a lump sum payment of his pro-rated cash
incentive bonus for the year of his termination, valued up to
$163,200; and any other benefits due him in accordance with
applicable plans, programs or agreements. If Dr. Warrell
gives notice that he does not wish to extend his amended 2006
employment agreement, he will also receive immediate vesting of
all stock options that would have vested during the 90 days
following his termination date, if such stock options vest
solely as a result of his continued employment. If we give
notice that we do not wish to extend Dr. Warrells
amended 2006 employment agreement, he will receive immediate
vesting of all stock options that vest solely as a result of his
continued employment.
Employment
Agreement with Loretta M. Itri, M.D.
Pursuant to an employment agreement dated as of March 28,
2006 between Genta and Dr. Itri and signed on July 27,
2006, Dr. Itri continues to serve as our President,
Pharmaceutical Development and Chief Medical Officer. The
employment agreement had an initial term of three years,
beginning March 28, 2006 and continuing through
March 27, 2009 and provides for automatic extensions for
additional one-year periods. The agreement provides for a base
annual salary of $445,200, which may be reviewed annually for
discretionary increases in a manner similar to our other senior
executives and an annual cash incentive bonus ranging from 0% to
50% of her annual base salary to be paid if mutually
agreed-upon
goals and objectives are achieved for the year. Dr. Itri
was also granted an incentive stock option to purchase
83,333 shares of our Common Stock at an exercise price of
$9.54 per share, of which 33,333 shares become exercisable
upon the first FDA approval of
Genasense®,
33,333 shares become exercisable upon approval by the EMEA
in Europe of
Genasense®
in any first indication and 16,666 shares become
exercisable over a period of approximately 32 months from
the grant date by means of (i) an initial amount of
1,850 shares to be exercisable and vest on the Date of
Grant, (ii) an additional amount of 14,344 shares in
31 equal monthly increments of 467 shares each, commencing
on August 1, 2006 and continuing on the first day of each
of the next successive 30 calendar months, and (iii) a
final amount of 467 shares on March 1, 2009. The
preceding reference to the number of shares granted takes into
account the 1:6 reverse stock split in July 2007. We may also,
from time to time, grant Dr. Itri additional stock options
consistent with the stock option guidelines applicable to our
other senior executives. Dr. Itri is entitled to any and
all medical insurance, dental insurance, life insurance,
disability insurance and other benefit plans, which are
generally available to our senior executives. She is also
entitled to receive supplemental life insurance and supplemental
disability insurance. The aggregate amount of the benefits
Dr. Itri may receive are subject to parachute payment
limitations under Section 280G of the Internal Revenue Code.
In the event Dr. Itris employment is terminated, she
will be eligible for certain benefits whose value has been
estimated herein, but only to the extent that the benefit is not
otherwise provided to employees on a non-discriminatory basis.
In the event Dr. Itris employment is terminated, she
will be entitled to receive
33
her accrued, but unpaid, base salary through her termination
date; her accrued, but unpaid, expenses; her accrued vacation
days; any earned but unpaid cash incentive bonus; and any other
benefits due her in accordance with applicable plans, programs
or agreements. In addition to the benefits listed in the
preceding sentence, in the event we terminate
Dr. Itris employment without good reason (as defined
in the employment agreement), due to a change of control, or
Dr. Itri terminates her employment for good reason (as
defined in the employment agreement), and she executes a
release, Dr. Itri will be entitled to receive a lump sum
payment equal to her current annualized base salary, valued at
$467,500 plus a pro-rated cash incentive bonus for the calendar
year of termination, valued up to $140,250, for a total
potential payment of $607,750, and each of her outstanding stock
options will immediately vest to the extent vesting depends
solely on her continued employment. Finally, if either party
gives notice that the employment agreement will not be extended,
Dr. Itri will be entitled to receive her accrued, but
unpaid, base salary through her termination date; her accrued,
but unpaid, expenses; her accrued vacation days; any earned, but
unpaid, cash incentive bonus; a pro-rated cash incentive bonus
for the year of her termination, valued up to $140,250, for a
total potential payment of $607,750; and any other benefits due
her in accordance with applicable plans, programs, or
agreements. If we give notice that we do not wish to extend
Dr. Itris employment agreement, she will also receive
immediate vesting of all stock options that would have vested
during the 90 days following her termination date, if such
stock options would have vested solely as a result of her
continued employment.
Compensation
Committee Interlocks and Insider Participation
None of the members of our Compensation Committee,
Mr. Watson, Mr. Driscoll and Mr. Parios, had any
interlock relationship to report during our year
ended December 31, 2007.
Compensation
Committee Report
The Compensation Committee evaluates and establishes
compensation for executive officers and oversees the
Companys management stock plans, and other management
incentive, benefit and perquisite programs. Management has the
primary responsibility for the Companys financial
statements and reporting process, including the disclosure of
executive compensation.
The Compensation Committee has reviewed and discussed the
Compensation Discussion and Analysis with management and based
on such review and discussions, the Compensation Committee
recommended to the Board of Directors that the Compensation
Discussion and Analysis be included in this proxy statement.
This report of the Compensation Committee on Executive
Compensation shall not be deemed incorporated by reference by
any general statement incorporating by reference this statement
into any filing under the Securities Act of 1933, as amended, or
under the Securities Exchange Act of 1934, as amended, except to
the extent the Company specifically incorporates this report by
reference, and shall not otherwise be deemed filed under such
Acts.
Members of the Compensation Committee
Douglas G. Watson, Chairman
Martin J. Driscoll
Christopher P. Parios
34
Equity
Compensation Plan Information
The following table summarizes the number of outstanding options
granted to employees and directors, as well as the number of
securities remaining available for future issuance, under our
equity compensation plans as of December 31, 2007.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of securities remaining
|
|
|
|
|
|
|
|
|
|
available for future issuance
|
|
|
|
Number of securities to be
|
|
|
Weighted-average
|
|
|
under equity compensation
|
|
|
|
issued upon exercise of
|
|
|
exercise price of
|
|
|
plans (excluding securities
|
|
Plan category
|
|
outstanding options
|
|
|
outstanding options
|
|
|
reflected in the first column)
|
|
|
Equity compensation plans approved by security holders
|
|
|
2,268,272
|
|
|
$
|
23.43
|
|
|
|
597,623
|
|
Equity compensation plans not approved by security holders
|
|
|
5,413,000
|
|
|
$
|
1.39
|
|
|
|
3,087,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
7,681,272
|
|
|
$
|
7.89
|
|
|
|
3,684,623
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35
REPORT OF
THE AUDIT COMMITTEE
The Audit Committee of the Board is currently composed of three
directors, each of whom is independent, and operates under a
written charter adopted by the Board. The members of our Audit
Committee are Martin J. Driscoll, Christopher P. Parios and
Douglas G. Watson. Mr. Driscoll serves as Chairman of this
committee. Among our other responsibilities, we recommend to the
Board the selection of the Companys independent registered
public accounting firm.
The Audit Committee has reviewed and discussed the consolidated
financial statements with management and Deloitte &
Touche LLP, the Companys independent registered public
accounting firm for the year ended December 31, 2007.
Management is responsible for the preparation, presentation and
integrity of the Companys financial statements; accounting
and financial reporting principles; establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act
Rule 13a-15(e));
establishing and maintaining internal control over financial
reporting (as defined in Exchange Act
Rule 13a-15(f));
evaluating the effectiveness of disclosure controls and
procedures; evaluating the effectiveness of internal control
over financial reporting; and evaluating any change in internal
control over financial reporting that has materially affected,
or is reasonably likely to materially affect, internal control
over financial reporting. Deloitte & Touche LLP is
responsible for performing an independent audit of the
consolidated financial statements and expressing an opinion on
the conformity of those financial statements with accounting
principles generally accepted in the United States of America,
as well as expressing an opinion on the effectiveness of
internal control over financial reporting.
During the course of 2007, management continued the process of
documenting, testing and evaluating the Companys system of
internal control over financial reporting in accordance with the
requirements of the Sarbanes-Oxley Act of 2002. The Audit
Committee was kept apprised of the progress of the evaluation
and provided oversight and advice to management during the
process. In connection with this oversight, the Committee
received periodic updates provided by management and
Deloitte & Touche LLP at each regularly scheduled
Committee meeting. At the conclusion of the process, management
provided the Committee with and the Committee reviewed a report
on the effectiveness of the Companys internal control over
financial reporting. The Committee also reviewed the report of
management contained in the Companys Annual Report on
Form 10-K
for the year ended December 31, 2007, as amended, filed
with the SEC, as well as Deloitte & Touche LLPs
Report of Independent Registered Public Accounting Firm included
in the Companys Annual Report on
Form 10-K,
as amended, related to its audit of (i) the consolidated
financial statements and (ii) the effectiveness of internal
control over financial reporting. The Committee continues to
oversee the Companys efforts related to its internal
control over financial reporting and managements
preparations for the evaluation in 2008.
The Audit Committee discussed with Deloitte & Touche
LLP the matters required to be discussed by Statement on
Auditing Standards No. 61, as amended, Communication
with Audit Committees and PCAOB Auditing Standard
No. 5, An Audit of Internal Control Over Financial
Reporting That Is Integrated with an Audit of Financial
Statements. In addition, Deloitte & Touche LLP
has provided the Audit Committee with the written disclosures
and the letter required by the Independence Standards Board
Standard No. 1, as amended, Independence Discussions
with Audit Committees, and the Audit Committee discussed
with Deloitte & Touche LLP their firms
independence.
36
Fees for
independent registered public accounting firm for years 2007 and
2006
Set forth below are the fees billed for services rendered by
Deloitte & Touche LLP in 2007 and 2006:
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2007
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2006
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Audit fees
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$
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333,500
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$
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383,500
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Audit-related fees
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Total Audit & Audit-related fees
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$
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333,500
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$
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383,500
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Tax fees
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All other fees
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Total fees
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$
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333,500
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$
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383,500
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Audit fees consist of fees billed for services rendered for the
audit of our financial statements, internal controls and review
of our financial statements included in our quarterly reports on
Form 10-Q
and services provided in connection with other statutory or
regulatory filings.
Audit-related fees consist of fees billed for assurance and
related services that are reasonably related to the performance
of the audit or review of our financial statements and not
reported under Audit fees. No such fees were billed in 2007 or
2006.
Tax fees consist of fees billed for professional services
related to the preparation of our U.S. federal and state
income tax returns and tax advice. No such fees were billed in
2007 or 2006.
The Audit Committee pre-approved all Audit-related fees. After
considering the provision of services encompassed within the
above disclosures about fees, the Audit Committee has determined
that the provision of such services is compatible with
maintaining Deloitte & Touche LLPs independence.
Pre-approval
policy of services performed by independent registered public
accounting firm
The Audit Committees policy is to pre-approve all audit
and non-audit related services, tax services and other services.
Pre-approval is generally provided for up to one year, and any
pre-approval is detailed as to the particular service or
category of services and is generally subject to a specific
budget. The Audit Committee has delegated the pre-approval
authority to its chairperson when expedition of services is
necessary. The independent registered public accounting firm and
management are required to periodically report to the full Audit
Committee regarding the extent of services provided by the
independent registered public accounting firm in accordance with
this pre-approval and the fees for the services performed to
date.
Based upon our discussion with management and the independent
registered public accounting firm and our review of the
representation of management and the report of the independent
registered public accounting firm to us, we recommended that the
Board include the audited consolidated financial statements in
the Companys Annual Report on
Form 10-K
for the year ended December 31, 2007, as amended, filed
with the SEC.
Deloitte & Touche LLP is not expected to attend the
Annual Meeting and has not asked for an opportunity to address
Stockholders.
Change in
Independent Auditors in 2008
On July 16, 2008, following an extensive review and
request-for-proposal process, the Companys Audit Committee
determined not to renew its engagement of Deloitte &
Touche LLP as the Companys independent registered public
accounting firm and dismissed them as the Companys
auditors. On July 16, 2008, the Audit Committee recommended
and approved the appointment of Amper Politziner &
Mattia, P.C. as the Companys auditors for the fiscal
year ending December 31, 2008, commencing immediately on
such date.
No accountants report issued by Deloitte &
Touche LLP on the financial statements for either of the past
two (2) fiscal years contained an adverse opinion or a
disclaimer of opinion, or was qualified or
37
modified as to uncertainty, audit scope or accounting
principles, except that Deloitte &Touche LLPs
report on the Companys consolidated financial statements
as of and for the year ended December 31, 2007 contained an
explanatory paragraph expressing substantial doubt as to the
Companys ability to continue as a going concern as a
result of recurring losses and negative cash flows from
operations.
During each of the fiscal years ended December 31, 2007 and
December 31, 2006 and the subsequent interim period from
January 1, 2008 through the Companys notice to
Deloitte & Touche LLP of its
non-renewal
on July 16, 2008: (i) there were no disagreements
between the Company and Deloitte & Touche LLP on
any matter of accounting principles or practices, financial
statement disclosure, or auditing scope of procedure, which
disagreement, if not resolved to the satisfaction of
Deloitte & Touche LLP, would have caused it to make
reference to the subject matter of the disagreement in
connection with its reports; and (ii) there were no
reportable events (as defined in
Item 304(a)(1)(v) of
Regulation S-K).
In addition, Deloitte & Touche LLPs reports on
the Companys financial statements for the past two years
did not contain an adverse opinion or a disclaimer of opinion,
nor were such reports qualified or modified as to uncertainty,
audit scope or accounting principles. Deloitte &
Touche LLPs reports on the Companys financial
statements did include an explanatory paragraph relating to the
Companys ability to continue as a going concern and the
Companys adoption of Statement of Financial Accounting
Standards No. 123 (Revised 2004), Share-Based Payment,
effective January 1, 2006, and Financial Accounting
Standards Board Interpretation No. 48, Accounting for
Uncertainty in Income Taxes an Interpretation of
FASB Statement no. 109, effective January 1, 2007.
During the Companys fiscal years ended December 31,
2006 and December 31, 2007 and the subsequent interim
period from January 1, 2008 through the engagement of Amper
Politziner & Mattia, P.C., the Company did not
consult with Amper Politziner & Mattia, P.C.
regarding the application of accounting principles to a
specified transaction, either completed or proposed; the type of
audit opinion that might be rendered on the Companys
consolidated financial statements, or any matter that was either
the subject of disagreement, as that term is defined in
Item 304(a)(1)(iv) of
Regulation S-K;
or a reportable event, as that term is defined in
Item 304(a)(1)(v) of
Regulation S-K.
A representative of Amper Politziner &
Mattia, P.C. is expected to attend the Annual Meeting, has
not asked for an opportunity to address Stockholders and will be
available to respond to appropriate questions.
Members of the Audit Committee
Martin J. Driscoll, Chairman
Christopher P. Parios
Douglas G. Watson
38
SECURITY
OWNERSHIP OF OFFICERS AND DIRECTORS
The following table sets forth, as of August 25, 2008,
certain information with respect to the beneficial ownership of
our Common Stock (the only voting class outstanding),
(i) by each director, (ii) by each of the named
executive officers and (iii) by all officers and directors
as a group.
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Amount and Nature of Beneficial Ownership
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Name and Address(1)
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Number of Shares(2)
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Percent of Class
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Raymond P. Warrell, Jr., M.D.
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1,928,294(3
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)
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4.999
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%
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Loretta M. Itri, M.D.
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1,932,518(4
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)
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4.999
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Richard J. Moran
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21,749(5
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*
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Gary Siegel
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11,916(6
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*
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W. Lloyd Sanders
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14,583(7
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*
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Martin J. Driscoll
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14,332(8
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*
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Betsy McCaughey, PhD (9)
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26,220(6
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*
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Christopher P. Parios
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9,333(6
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*
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Daniel D. Von Hoff, M.D.
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34,442(6
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*
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Douglas G. Watson
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37,330(10
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*
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All Directors and Executive Officers as a group
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4,030,717(11
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11.0
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%
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* |
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Less than one percent (1%). |
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(1) |
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The address of each named holder is in care of Genta
Incorporated, 200 Connell Drive, Berkeley Heights, NJ 07922. |
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(2) |
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Beneficial ownership is determined in accordance with the rules
of the SEC and generally includes voting or investment power
with respect to securities. Shares of Common Stock subject to
options exercisable within 60 days of August 25, 2008
or issuable on conversion of Senior Secured Convertible
Promissory Notes due June 9, 2010 are deemed outstanding
for computing the percentage of the person holding such
securities but are not deemed outstanding for computing the
percentage of any other person. Except as indicated by footnote,
and subject to community property laws where applicable, the
person named in the table has sole voting and investment power
with respect to all shares of Common Stock shown as beneficially
owned by them. |
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(3) |
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Consists of 91,615 shares of Common Stock and
1,065,179 shares of Common Stock issuable upon exercise of
currently exercisable stock options. Also includes
771,500 shares of Common Stock issuable upon the conversion
of Senior Secured Convertible Promissory Notes due June 9,
2010. Excludes 100,000 shares of Common Stock beneficially
owned by Dr. Warrells wife, Dr. Itri.
Dr. Warrell disclaims beneficial ownership of such shares. |
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(4) |
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Consists of 16,666 shares of Common Stock and
94,352 shares of Common Stock issuable upon exercise of
currently exercisable stock options. Also includes
1,821,500 shares of Common Stock issuable upon the
conversion of Senior Secured Convertible Promissory Notes due
June 9, 2010. Excludes 91,615 shares of Common Stock,
beneficially owned by Dr. Itris husband,
Dr. Warrell. Dr. Itri disclaims beneficial ownership
of such shares. |
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(5) |
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Consists of 1,666 shares of Common Stock, 83 shares of
Common Stock owned by Mr. Morans wife and
20,000 shares of Common Stock issued upon the vesting of
Restricted Stock Units on July 1, 2008. Mr. Moran
retired from the Company on February 28, 2008. |
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(6) |
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Consists of shares of Common Stock issuable upon the exercise of
currently exercisable stock options. |
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(7) |
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Consists of 5,000 shares of Common Stock and
9,583 shares of Common Stock issuable upon exercise of
currently exercisable stock options. |
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(8) |
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Consists of 2,500 shares of Common Stock and
11,832 shares of Common Stock issuable upon the exercise of
currently exercisable stock options. |
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(9) |
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Dr. McCaughey resigned from the Board, effective
October 24, 2007. |
39
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(10) |
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Consists of 10,000 shares of shares of Common Stock and
27,330 shares of Common Stock issuable upon the exercise of
currently exercisable stock options. |
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(11) |
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Consists of 127,530 shares of Common Stock and
1,310,187 shares of Common Stock issuable upon the exercise
of currently exercisable stock options. Also includes
2,593,000 shares of Common Stock issuable upon the
conversion of Senior Secured Convertible Promissory Notes due
June 9, 2010. |
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Although each of the Investors in the convertible note
transaction may elect to convert their notes into shares of our
common stock, no holder is deemed to be a beneficial holder of
5.00% or greater of our common stock due to the existence of a
provision in the convertible notes restricting each noteholder
from beneficially owning greater than 4.999% of our common stock.
SECTION 16(a)
BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires our directors and executive officers and
persons who own more than ten percent of our Common Stock to
file with the SEC initial reports of ownership and reports of
changes in ownership of our Common Stock.
To our knowledge based solely on a review of the copies of such
reports furnished to us and the reporting persons
representations to us that no other reports were required during
the year ended December 31, 2007, our directors and
officers complied with their respective filing requirements
under Section 16(a) on a timely basis, with the following
exceptions: W. Lloyd Sanders filed a Form 4 on
January 17, 2007 to report the grant of stock options on
January 12, 2007, Richard J. Moran filed a Form 4 on
September 27, 2007 to report the grant of restricted stock
units on September 21, 2007 and W. Lloyd Sanders filed a
Form 4 on April 15, 2008 to report the January 3,
2007 transfer of 53 shares that were formerly jointly owned
by Mr. Sanders and Mr. Sanders daughter to be
solely owned by Mr. Sanders daughter and to report
the transfer of 51 shares that were formerly jointly owned
by Mr. Sanders and Mr. Sanders son to be solely
owned by Mr. Sanders son.
HOUSEHOLDING
Some banks, brokers and other nominee record holders may be
participating in the practice of householding proxy
statements and annual reports. This means that only one copy of
our proxy statement or annual report on
Form 10-K,
as amended, may have been sent to multiple stockholders in your
household. We will promptly deliver a separate copy of either
document to you if you write or call us at the following address
or phone number: 200 Connell Drive, Berkeley Heights, NJ 07922,
(908) 286-9800.
If you want to receive separate copies of the annual report on
Form 10-K,
as amended, and proxy statement in the future, or if you are
receiving multiple copies and would like to receive only one
copy for your household, you should contact your bank, broker or
other nominee record holders, or you may contact us at the above
address and phone number.
STOCKHOLDER
PROPOSALS FOR NEXT YEAR
The deadline for submitting a stockholder proposal for inclusion
in the Companys proxy statement and form of proxy for the
Companys 2009 annual meeting of stockholders is
December 31, 2008.
Proposals of stockholders intended to be presented at the
Companys 2009 annual meeting of stockholders called for a
date within thirty days of June 16, 2009 and not included
in our proxy materials must comply with the advance notice
provision in Section 3 of Article I of our by-laws.
For notice to be timely, it shall be delivered not later than
the close of business on the 90th calendar day nor earlier
than the close of business on the 120th calendar day prior
to the first anniversary of the preceding years annual
meeting; provided, however, that in the event that the date of
the annual meeting is more than 30 calendar days before or more
than 60 calendar days after such anniversary date, notice by the
stockholder to be
40
timely must be delivered not earlier than the close of business
on the 120th calendar day prior to such annual meeting and
not later than the close of business on the later of the
90th calendar day prior to such annual meeting or the tenth
calendar day following the calendar day on which public
announcement of the date of such meeting is first made by the
Corporation.
All stockholder proposals should be directed to our Corporate
Secretary at our address listed on the top of page one of this
proxy statement.
ANNUAL
REPORT ON
FORM 10-K
We will provide without charge to each person solicited by this
proxy statement, on the written request of such person, a copy
of our Annual Report on
Form 10-K,
as amended, including the financial statements and financial
statement schedules, as filed with the SEC for our most recent
year. Such written requests should be directed to Gary Siegel,
our interim Principal Financial Officer, interim Principal
Accounting Officer and interim Corporate Secretary, at our
address listed on the top of page one of this proxy statement.
By order of the Board of Directors,
Raymond P. Warrell, Jr., M.D.
Chairman and Chief Executive Officer
Dated: August 28, 2008
41
The Board of Directors recommends a vote FOR all the director nominees listed below and FOR
Proposal 2.
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Please Mark Here
for Address Change or Comments |
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SEE REVERSE SIDE |
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FOR ALL NOMINEES |
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WITHHOLD |
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(except as marked to
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FROM ALL |
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the contrary) |
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NOMINEES |
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1. To elect directors.
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To withhold authority to vote for any nominee, write the number
preceding the nominees name on the line below.
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Withhold authority for: |
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Director Nominees: |
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01 RAYMOND P. WARRELL, JR., M.D. |
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02 MARTIN J. DRISCOLL
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03 CHRISTOPHER P. PARIOS
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04 DANIEL D. VON HOFF, M.D.
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05 DOUGLAS G. WATSON
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2. To approve an amendment to our Restated Certificate of
Incorporation, as amended, to increase the total number of
authorized shares of capital stock available for issuance from
255,000,000, consisting of 250,000,000 shares of Common Stock
and 5,000,000 shares of Preferred Stock, to 6,005,000,000,
consisting of 6,000,000,000 shares of Common Stock and 5,000,000
shares of Preferred Stock.
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FOR
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AGAINST
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Signature |
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Signature |
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Please sign exactly as your name(s) appears on your stock certificate. If signing as attorney, executor, administrator, trustee or guardian, please indicate the capacity in which signing.When signing as joint tenants, all parties to the joint tenancy must sign. When the proxy is given by a corporation, it should be signed by an authorized officer.
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5 FOLD
AND DETACH HERE 5
WE ENCOURAGE YOU
TO TAKE ADVANTAGE OF INTERNET OR TELEPHONE VOTING,
BOTH ARE AVAILABLE 24 HOURS A DAY, 7 DAYS A WEEK.
Internet and
telephone voting is available through 11:59 PM Eastern Time
the day prior to annual meeting day.
Your Internet or
telephone vote authorizes the named proxies to vote your shares in the same
manner
as if you marked, signed and returned your proxy card.
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INTERNET http://www.proxyvoting.com/gnta |
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TELEPHONE 1-866-540-5760 |
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Use the
Internet to vote your proxy. Have your proxy card in hand when you access
the web site.
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OR |
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Use any
touch-tone telephone to vote your proxy. Have your proxy card in hand when
you call.
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If
you vote your proxy by Internet or by telephone, you do NOT need to mail back
your proxy card.
To vote by mail, mark, sign and date your proxy card and
return it in the enclosed postage-paid envelope.
Choose MLinkSM for fast, easy and secure 24/7 online access to your future proxy
materials, investment plan statements, tax documents and more. Simply log on to Investor
ServiceDirect® at www.bnymellon.com/shareowner/isd where step-by-step instructions will prompt you
through enrollment.
You can view the Proxy Statement and the 2007 Annual Report
on Form 10-K on the Internet at www.genta.com
GENTA INCORPORATED
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON OCTOBER 6, 2008
The
undersigned stockholder of Genta Incorporated (the Company) acknowledges receipt of the
Notice of Annual Meeting of Stockholders and the Proxy Statement, each dated August 28, 2008, and
the undersigned revokes all prior proxies and appoints Raymond P. Warrell, Jr., M.D. and Gary
Siegel, and each of them, as proxies for the undersigned, each with full power of substitution,
to vote all shares of Common Stock of the Company which the
undersigned is entitled to vote at
the Companys Annual Meeting of Stockholders to be held at the
Gentas Corporate Offices at 200 Connell Drive, Berkaley
Heights, New Jersey, 07922, at 11:00 a.m., local time, on October 6,
2008 and at any postponement or adjournment thereof, and the undersigned authorizes and
instructs said proxies or their substitutes to vote as follows:
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY THE
UNDERSIGNED. IN THE ABSENCE OF DIRECTION, THIS PROXY WILL BE VOTED FOR ALL DIRECTOR NOMINEES
LISTED ON THE REVERSE SIDE OF THIS CARD, FOR PROPOSAL 2, AND IN ACCORDANCE WITH THE JUDGMENT OF
THE PROXIES, FOR OR AGAINST ANY OTHER MATTERS THAT MAY PROPERLY COME BEFORE THE ANNUAL MEETING AND
ANY POSTPONEMENT OR ADJOURNMENT THEREOF.
Receipt of the Notice of Annual Meeting, the Proxy Statement and the Companys Annual Report
on Form 10-K for the fiscal year ended December 31, 2007 accompanying the same is hereby
acknowledged.
PLEASE DATE, SIGN AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
(Continued and to be dated and signed on the other side.)
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Address Change/Comments (Mark the corresponding box on the reverse side) |
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You can now access your Genta Incorporated account online.
Access your Genta Incorporated stockholder account online via Investor ServiceDirect®
(ISD).
The transfer agent for Genta Incorporated, now makes it easy and convenient to get current
information on your shareholder account.
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View account status
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View payment history for dividends |
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View certificate history
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Make address changes |
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View book-entry information
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Obtain a duplicate 1099 tax form |
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Establish/change your PIN |
Visit us on the web at http://www.bnymellon.com/shareowner/isd
For Technical Asistance Call 1-877-798-7778 between 9am-7pm
Monday-Friday Eastern Time
****TRY IT OUT****
www.bnymellon.com/shareowner/isd
Investor ServiceDierct®
Available 24 hours per day, 7 days per week
TOLL FREE NUMBER: 1-800-370-1163