SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange
Act of 1934
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/x/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ACCESS PHARMACEUTICALS, INC.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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4) Date Filed:
ACCESS PHARMACEUTICALS, INC.
2600 Stemmons Freeway, Suite 176
Dallas, Texas 75207
(214) 905-5100
April 13, 2005
To Our Stockholders:
You are cordially invited to attend the Annual
Meeting of Stockholders (the "Meeting") of Access
Pharmaceuticals, Inc. (the "Company") to be held on
Thursday, May 12, 2005 at 10:00 a.m., local time, at
the New York Athletic Club, 180 Central Park South,
New York, New York 10019, (212) 247-5100.
The Notice of Annual Meeting and the Proxy Statement
that follow describe the business to be considered
and acted upon by stockholders of the Company at the
Meeting. The Board of Directors of the Company
unanimously recommends that the stockholders of the
Company approve each of the proposals described in
the Proxy Statement. Please carefully review the
information contained in the Proxy Statement.
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, IT IS
VERY IMPORTANT THAT YOU MARK, SIGN, DATE AND RETURN
THE ENCLOSED PROXY CARD IN THE ENVELOPE PROVIDED AS
SOON AS POSSIBLE. IF YOU ATTEND THE MEETING, YOU
MAY REVOKE THE PROXY AT THAT TIME BY REQUESTING THE
RIGHT TO VOTE IN PERSON.
Sincerely,
/s/ Kerry P. Gray
- -----------------
Kerry P. Gray
President and CEO
ACCESS PHARMACEUTICALS, INC.
2600 Stemmons Freeway, Suite 176
Dallas, Texas 75207
(214) 905-5100
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held on May 12, 2005
PLEASE TAKE NOTICE that the Annual Meeting of
Stockholders (the "Meeting") of Access
Pharmaceuticals, Inc. will be held at the New York
Athletic Club, 180 Central Park South, New York, New
York 10019, on Thursday, May 12, 2005, at 10:00
a.m., local time, for the following purposes:
1. To elect two Class 1 Directors to hold office for
a term of three years and until their successors are
elected and qualified.
2. To consider and vote upon a proposal to establish
the Access Pharmaceuticals, Inc. 2005 Equity
Incentive Plan, pursuant to which an aggregate of
700,000 shares of our common stock may be granted
pursuant to the terms of such plan.
3. To consider and vote upon a proposal to amend our
Restricted Stock Plan to increase the total number
of shares of our common stock authorized for
issuance under that plan from 200,000 to 400,000 shares.
4. To consider and act upon a proposal to ratify the
appointment of Grant Thornton LLP as our independent
accountants for the fiscal year ending December 31, 2005.
5. To transact such other business as may properly
come before the meeting or any postponements or
adjournments thereof.
Stockholders of record at the close of business on
March 18, 2005, the record date for the Meeting, are
entitled to receive notice of, and to vote at, the
Meeting and any adjournment or postponement thereof.
Our Annual Report for the 2004 fiscal year
accompanies the Proxy Statement.
Information relating to the proposals described
above is set forth in the accompanying Proxy
Statement dated April 13, 2005. Please carefully
review the information contained in the Proxy
Statement, which is incorporated into this Notice.
Stockholders are cordially invited to attend the
Meeting in person. YOUR VOTE IS IMPORTANT. If you do
not expect to attend the Meeting, or if you do plan
to attend but wish to vote by proxy, please
complete, date, sign and mail the enclosed proxy
card in the return envelope provided addressed to
Access Pharmaceuticals, Inc., c/o American Stock
Transfer & Trust Co., 40 Wall Street, 46th Floor,
New York, New York 10005. Proxies will also be
accepted by transmission of a telegram, cablegram or
telecopy provided that such telegram, cablegram or
telecopy contains sufficient information from which
it can be determined that the transmission was
authorized by the stockholder delivering such proxy.
American Stock Transfer & Trust Company's fax number
is (718) 234-2287.
By Order of the Board of Directors,
/s/ Kerry P. Gray
- -----------------
Kerry P. Gray
President and CEO
Dallas, Texas
April 13, 2005
ACCESS PHARMACEUTICALS, INC.
2600 Stemmons Freeway, Suite 176
Dallas, Texas 75207
(214) 905-5100
__________________
PROXY STATEMENT
__________________
ANNUAL MEETING OF STOCKHOLDERS
To Be Held On May 12, 2005
This Proxy Statement is furnished by Access
Pharmaceuticals, Inc., a Delaware corporation (the
"Company"), to holders of its common stock, par
value $.01 per share (the "Common Stock"), in
connection with the solicitation of proxies by our
Board of Directors (the "Board") for use at our
Annual Meeting of Stockholders(the "Meeting"), and
at any and all adjournments or postponements
thereof. The Meeting will be held on Thursday, May
12, 2005 at 10:00 a.m., local time, at the New York
Athletic Club, 180 Central Park South, New York, New
York 10019. This Proxy Statement and the
accompanying form of proxy is first being sent to
holders of Common Stock on or about April 18, 2005.
Our mailing address and the location of our
principal executive offices are at 2600 Stemmons
Freeway, Suite 176, Dallas, Texas 75207, (214) 905-5100.
A Stockholder signing and returning the enclosed
proxy may revoke it at any time before it is
exercised by voting in person at the Meeting, by
submitting another proxy bearing a later date or by
giving notice in writing to our Secretary not later
than the day prior to the Meeting. All proxies
returned prior to the Meeting will be voted in
accordance with instructions contained therein or,
if no choice is specified for one or more proposals
in a proxy submitted by or on behalf of a Company
stockholder, the shares represented by such proxy
will be voted in favor of such proposals and in the
discretion of the named proxies with respect to any
other matters which may properly come before the Meeting.
At the close of business on March 18, 2005, the
record date for the Meeting, the number of our
outstanding shares of Common Stock that are entitled
to vote was 15,524,734. We have no other outstanding
voting securities. Each outstanding share of Common
Stock is entitled to one vote on each proposal set
forth in the enclosed proxy. A complete list of
Company stockholders entitled to vote at the Meeting
will be available for examination by any Stockholder
for any purpose germane to the Meeting at our
principal executive offices and at 399 Park Avenue,
New York, NY, 21st Floor, during normal business
hours, at least ten days prior to the Meeting. Our
Bylaws require that a majority of the shares
entitled to vote, present in person or by proxy,
shall constitute a quorum for the conduct of
business at the Meeting. Abstentions and broker non-
votes are counted as present for purposes of
determining the presence or absence of a quorum for
the transaction of business at the Meeting. For
purposes of determining the outcome of a vote,
abstentions are treated as shares present and
entitled to vote on Proposals 1-4. They are not
treated as shares voted for any director nominee in
Proposal 1 and are treated as shares voted against
Proposals 2-4. Broker non-votes are not treated as
shares present and entitled to vote on Proposals 1-4
and have no effect on the outcome of such Proposals.
Stockholders have the right to vote cumulatively for
the election of Directors. This means that in voting
at the Meeting, each Stockholder, or his proxy, may
multiply the number of his shares by two (the number
of directors to be elected) and then vote the
resulting total number of shares for a single
nominee, or distribute such votes on the ballot
among the two nominees desired. The proxies
submitted to the Board in response to this
solicitation may, at
1
the discretion of the proxy holder, cumulate the
votes of the shares the proxies represent. However,
the Board requires any Stockholder otherwise
electing to exercise his cumulative voting rights,
if voting in person, to so indicate prior to the
beginning of the Meeting or if voting by proxy given
to someone other than those designated by the Board
in the solicitation to so indicate on said proxy.
All expenses in connection with solicitation of
proxies will be borne by us. We will also request
brokers, dealers, banks and voting trustees, and
their nominees, to forward this Proxy Statement, the
accompanying form of proxy and our Annual Report for
the fiscal year ended December 31, 2004 to
beneficial owners and will reimburse such record
holders for their expense in forwarding solicitation
material. We expect to solicit proxies primarily by
mail, but Company directors, officers and regular
employees may also solicit in person, by telephone
or by fax.
The Board does not know of any matters which will be
brought before the Meeting other than those matters
specifically set forth in the Notice of Annual
Meeting. However, if any other matter properly comes
before the Meeting, it is intended that the persons
named in the enclosed form of proxy, or their
substitutes acting thereunder, will vote on such
matter in accordance with the recommendations of the
Board, or, if no such recommendations are made, in
accordance with their best judgment.
This Proxy Statement should be read in conjunction
with our Annual Report for the 2004 fiscal year,
including the financial statements and management's
discussion and analysis of financial condition and
results of operations for the 2004 fiscal year
contained therein.
Corporate Governance Matters
Corporate Governance Practices and Board Independence
The Board has adopted a number of corporate
governance documents, including charters for its
Audit and Finance Committee, Compensation Committee
and Nominating and Corporate Governance Committee,
corporate governance guidelines, a code of business
conduct and ethics for employees, executive officers
and directors (including its principal executive
officer and principal financial officer) and a
whistleblower policy regarding the treatment of
complaints on accounting, internal accounting
controls and auditing matters. All of these
documents are available on the Company's website at
www.accesspharma.com and a copy of any of them may
be obtained, without charge, upon written request to
the Company, c/o Investor Relations, 2600 Stemmons
Freeway, Suite 176, Dallas, Texas, 75207. The Board
has determined that a majority of its directors are
independent under applicable Securities and Exchange
Commission ("SEC") and American Stock Exchange
("AMEX") rules and regulations.
Stockholder Communications with the Board
The Board has established a process for stockholders
to send communications to it. Stockholders may send
written communications to the Board or individual
directors to Access Pharmaceuticals, Inc., Board of
Directors, c/o Chief Executive Officer, 2600
Stemmons Freeway, Suite 176, Dallas, Texas, 75207.
Stockholders also may send communications via email
to akc@accesspharma.com with the notation
"Attention: Chief Executive Officer" in the Subject
field. All communications will be reviewed by the
Chief Executive Officer of the Company, who will
determine whether such communications are relevant
and/or for a proper purpose and appropriate for
Board review and, if applicable, submit such
communications to the Board on a periodic basis.
2
Attendance of Directors at Annual Stockholder Meetings
All of the directors attended the 2004 annual
stockholder meeting. Although the Company currently
does not require directors to attend annual
stockholder meetings, it does encourage directors to
do so and welcomes their attendance. The Company
generally schedules a Board meeting in conjunction
with the Meeting and plans to continue to do so in
the future. The Company expects that directors will
attend annual stockholder meetings absent a valid
reason.
Nomination and Election of Directors
When seeking candidates for director, the Nominating
and Corporate Governance Committee may solicit
suggestions from incumbent directors, management or
others. After conducting an initial evaluation of a
candidate, the committee will interview that
candidate if it believes the candidate might be
suitable to serve as a director. The committee may
also ask the candidate to meet with Company
management. If the committee believes a candidate
would be a valuable addition to the Board and there
is either a vacancy on the Board or the committee
believes it is in the best interests of the Company
and our stockholders to increase the number of Board
members to elect that candidate, it will recommend
to the full Board that candidate's election.
Before nominating a sitting director for re-election
at an annual stockholder meeting, the committee will
consider the director's performance on the Board and
whether the director's re-election would be in the
best interests of the Company's stockholders and
consistent with the Company's corporate governance
guidelines and the Company's continued compliance
with applicable law, rules and regulations.
The Board believes that it should be comprised of
directors with diverse and complementary
backgrounds, and that directors should have
expertise that, at a minimum, may be useful to the
Company and may contribute to the success of the
Company's business. Directors also should possess
the highest personal and professional ethics and
should be willing and able to devote an amount of
time sufficient to effectively carry out their
duties and contribute to the success of the
Company's business. When considering candidates for
director, the Committee takes into account a number
of factors, including the following:
* Independence from management;
* Age, gender and ethnic background;
* Relevant business experience;
* Judgment, skill and integrity;
* Existing commitments to other businesses;
* Potential conflicts of interest;
* Corporate governance background;
* Financial and accounting background;
* Executive compensation background; and
* Size and composition of the existing Board.
The Nominating and Corporate Governance Committee
will consider candidates for director suggested by
stockholders by considering the foregoing criteria
and the additional information referred to below.
Stockholders wishing to suggest a candidate for
director should write to the Company, c/o Investor
Relations, 2600 Stemmons Freeway, Suite 176, Dallas,
Texas 75207 and include the following:
* The name and address of the stockholder and a statement
that he, she or it is a stockholder of the Company
3
and is proposing a candidate for consideration by
the committee;
* The class and number of shares of Company capital
stock, if any, owned by the stockholder as of the
record date for the annual stockholder meeting (if
such date has been announced) and as of the date of
the notice, and length of time such stockholder has
held such shares;
* The name, age and address of the candidate;
* A description of the candidate's business and
educational experience;
* The class and number of shares of Company capital
stock, if any, owned by the candidate, and length of
time such candidate has held such shares;
* Information regarding each of the foregoing
criteria the Board generally considers, other than
the factor regarding Board size and composition,
sufficient to enable the committee to evaluate the
candidate;
* A description of any relationship between the
candidate and any customer, supplier or competitor
of the Company or any actual or potential conflict
of interest;
* A description of any relationship or understanding
between the stockholder and the candidate; and
* A statement that the candidate is willing to be
considered and willing to serve as a director if
nominated and elected.
PROPOSAL 1
ELECTION OF DIRECTORS
Our Certificate of Incorporation and Bylaws
presently provide that our Board shall consist of
three to fifteen members, shall be divided into
three classes as nearly equal in number as possible,
and that each Director shall serve for a term of
three years and until his successor is elected and
qualified or until his earlier resignation, death or
removal. By resolution, the Board has set the number
of its members at seven. The term of office of one
class of Directors expires each year in rotation so
that one class is elected at each annual meeting of
stockholders for a three-year term. The Board
presently consists of seven members.
Members of each class serve a term of three years
until the respective annual meeting of stockholders
and election and qualification of their successors.
Dr. Link and Mr. Meakem are members of the Class 1
Directors with their terms set to expire upon the
Meeting. Mr. Duty and Dr. Howell are members of the
Class 2 Directors with their terms set to expire
upon the annual meeting of stockholders in 2006.
Messrs. McDade, Gray and Flinn are members of the
Class 3 Directors with their terms set to expire
upon the annual meeting of stockholders in 2007.
Each of our officers is selected by the Board for a
term of one year. There is no family relationship
among any of the directors or executive officers.
Nominees for Term Expiring at the Meeting (Class 1
Directors)
Dr. Link and Mr. Meakem are the members of the Class
1 Directors. Dr. Link has served as director since
1996 and Mr. Meakem has served as director since
2001. The terms of Dr. Link and Mr. Meakem expire at
the Meeting. If elected at the Meeting, all two will
serve for a term of three years expiring on the date
of the annual meeting of stockholders in 2008. The
terms of the other five Directors will continue as
indicated below.
Business and Experience of Nominees for Director
Max Link, Ph.D. has been one of our directors since
1996. Dr. Link is also a Chairman of the Audit &
Finance Committee of the Board and a member of the
Compensation Committee of the Board. He has held a
4
number of executive positions with pharmaceutical
and health care companies. Most recently, from March
2001 until August 2003, Dr. Link served as Chairman
and CEO of Centerpulse, Ltd. (now a part of Zimmer
Holdings, Inc.). From May 1993 until June 1994, he
served as Chief Executive Officer of Corange
Limited. Prior to joining Corange, Dr. Link served
in a number of positions with Sandoz Pharma Ltd.,
including Chief Executive Officer, from 1987 until
April 1992, and Chairman, from April 1992 until May
1993. Dr. Link currently serves on the board of
directors of six other publicly-traded life science
companies: Alexion Pharmaceuticals, Inc., Cell
Therapeutics, Inc., Celsion Corporation, Inc.,
Discovery Laboratories, Inc., Human Genome Sciences,
Inc., and Protein Design Labs, Inc. Dr. Link
received his Ph.D. in Economics from the University
of St. Gallen in 1970.
Mr. John J. Meakem, Jr. has been one of our
directors since 2001. Mr. Meakem is also a member of
the Audit & Finance Committee of the Board. Mr.
Meakem is a private investor with portfolio holdings
in innovative companies with a particular focus on
healthcare. Most recently Mr. Meakem served as
Chairman of the Board, President and Chief Executive
Officer of Advanced Polymer Systems, Inc. from 1991
to 2000. Prior to 1991, he was Corporate Executive
Vice President of Combe, Inc. and President of Combe
North America. Prior to 1970, Mr. Meakem was with
Vick Chemical Company, a division of Richardson
Merrell Drug Corporation, for ten years as Vice
President of Marketing, New Products & Acquisitions.
The nominees have consented to serve as our
Directors and the Board has no reason to believe
that either nominee will be unavailable for such
service.
The Board recommends a vote "FOR" the proposed
nominees to the Board and the enclosed proxy will be
so voted unless a contrary vote is indicated. Each
Director shall be elected by a plurality of the
votes cast by the holders of Common Stock present in
person or by proxy and entitled to vote at the
Meeting.
UNLESS OTHERWISE INDICATED THEREON, THE ACCOMPANYING
PROXY WILL BE VOTED FOR THE NOMINEES NAMED ABOVE.
HOWEVER, THE PERSONS DESIGNATED AS PROXIES RESERVE
THE RIGHT TO CAST VOTES FOR ANOTHER PERSON
DESIGNATED BY THE BOARD IN THE EVENT THE NOMINEES
ARE UNABLE OR UNWILLING TO SERVE.
Information With Respect to Directors Whose Terms
Continue and Executive Officers
Directors Whose Term Expires at the Annual Meeting
in 2006 (Class 2 Directors)
Mr. Stuart M. Duty has served as one of our
directors since November 2002. Mr. Duty is also a
member of the Audit & Finance Committee of the
Board. Mr. Duty is currently a Partner at Oracle
Partners, L.P. Prior to joining Oracle Partners,
L.P. he held senior healthcare investment banking
positions, most recently, from 1999 to 2001, as the
Co-Head of Healthcare Investment Banking at US
Bancorp Piper Jaffray. From 1993 to 1999 he was
Managing Director at NationsBank Montgomery
Securities. In addition to his investment banking
experience, Mr. Duty has worked in the biotechnology
industry in a business development capacity.
Stephen B. Howell, M.D. has served as one of our
directors since 1996. Dr. Howell is a Professor of
Medicine at the University of California, San Diego,
and director of the Cancer Pharmacology Program of
the UCSD Cancer Center. Dr. Howell is a recipient of
the Milken Foundation prize for his contributions to
the field of cancer chemotherapy. He has served on
the National Research Council of the American Cancer
Society and is on the editorial boards of multiple
medical journals. Dr. Howell founded DepoTech, Inc.
and served as a member of its board of directors
from 1989 to 1999. Dr. Howell served on the board of
directors of Matrix Pharmaceuticals from 2000 to
2002. Dr. Howell received his AB at the University
of Chicago and his MD from
5
Harvard Medical School.
Directors Whose Term Expires at the Annual Meeting
in 2007 (Class 3 Directors)
Mr. Herbert H. McDade, Jr. was elected to be one of
our directors in 1988, and was Chairman of the Board
until 2004. He is Chairman of the Compensation
Committee of the Board. In February 1989, he was
elected Vice-Chairman of the Board and Chief
Executive Officer and served in such positions until
1996. In June 1989, he was elected Chairman of the
Board and Treasurer in addition to his
responsibilities as Chief Executive Officer, and
from 1990 to January 1996 he was our President. In
addition, he also serves on the board of Discovery
Laboratories, Inc. From 1986 to 1987 he served as
Chairman of the board of directors and President of
Armour Pharmaceutical Co., a wholly-owned subsidiary
of Rorer Group, Inc. Prior to 1986 he served for
approximately 13 years in various executive
positions at Revlon, Inc., including from 1979 to
1986, as President of the International Division of
the Revlon Health Care Group. He was also previously
associated for twenty years in various executive
capacities with The Upjohn Company.
Mr. Kerry P. Gray has been our President and Chief
Executive Officer and a director since January 1996.
From June 1993 until January 1996, Mr. Gray served
as President and Chief Executive Officer of Access
Pharmaceuticals, Inc., a private Texas corporation.
Previously, Mr. Gray served as Vice President and
Chief Financial Officer of PharmaSciences, Inc., a
company he co-founded to acquire technologies in the
drug delivery area. From May 1990 to August 1991,
Mr. Gray was Senior Vice President, Americas,
Australia and New Zealand of Rhone-Poulenc Rorer,
Inc. Prior to the Rorer/Rhone Poulenc merger, he had
been Area Vice President Americas of Rorer
International Pharmaceuticals. Previously, from
January 1986 to May 1988, he was Vice President,
Finance of Rorer International Pharmaceuticals,
having served in that same capacity for the Revlon
Health Care Group of companies before their
acquisition by Rorer Group. Between 1975 and 1985,
he held various senior financial positions with the
Revlon Health Care Group.
Mr. J. Michael Flinn has served as one of our
directors since 1983. Mr. Flinn is Chairman of the
Board and a member of the Compensation Committee of
the Board. Since 1970, he has been an investment
counselor and was a consultant to the Operations
Group of United Asset Management. From 1970 to 1996
he was a principal with the investment counseling
firm of Sirach Capital Management, Inc. He assisted
in the management of pension, profit sharing,
individual, corporate and foundation accounts
totaling over $7.0 billion. He serves as a board
member of Lonesome Dove Petroleum.
Executive Officers
In addition to Mr. Gray, set forth below is the
business experience of our other executive officers.
David P. Nowotnik, Ph.D. has been Senior Vice
President Research and Development since January
2003 and was Vice President Research and Development
from 1998. From 1994 until 1998, Dr. Nowotnik had
been with Guilford Pharmaceuticals, Inc. in the
position of Senior Director, Product Development and
was responsible for a team of scientists developing
polymeric controlled-release drug delivery systems.
From 1988 to 1994 he was with Bristol-Myers Squibb
researching and developing technetium radiopharmaceuticals
and MRI contrast agents. From 1977 to 1988 he was with
Amersham International leading the project which resulted
in the discovery and development of Ceretec.
Mr. Stephen B. Thompson has been Vice President
since 2000 and our Chief Financial Officer since
1996. From 1990 to 1996, he was Controller and
Administration Manager of Access Pharmaceuticals,
Inc., a private
6
Texas corporation. Previously, from 1989 to 1990,
Mr. Thompson was Controller of Robert E. Woolley,
Inc., a hotel real estate company where he was
responsible for accounting, finances and investor
relations. From 1985 to 1989, he was Controller of
OKC Limited Partnership, an oil and gas company,
where he was responsible for accounting, finances
and SEC reporting. Between 1975 and 1985 he held
various accounting and finance positions with Santa
Fe International Corporation.
Officers and Directors
Our directors and executive officers are as follows:
Name Age Title
- ----------------------- ----- -----------------------------
J. Michael Flinn 71 Chairman of the Board
Kerry P. Gray 52 President, Chief Executive Officer, Director
Stuart M. Duty 40 Director
Stephen B. Howell, M.D. 60 Director
Max Link, Ph.D. 64 Director
Herbert H. McDade, Jr. 78 Director
John J. Meakem, Jr. 68 Director
David P. Nowotnik, Ph.D. 56 Senior Vice President Research & Development
Stephen B. Thompson 51 Vice President, Chief Financial Officer,
Treasurer
Meetings of the Board and Committees
The Board held a total of seven meetings during the
2004 fiscal year. The standing committees of the
Board are the Audit and Finance Committee, the
Compensation Committee and the Nominating and
Corporate Governance Committee. During the 2004
fiscal year, each Director attended at least 75% of
the aggregate of the total number of meetings of the
Board and all meetings held by all committees on
which the individual director served.
The Audit and Finance Committee presently is
composed of three directors, Max Link, Ph.D., Stuart
M. Duty and John J. Meakem , Jr., each of whom the
Board has determined is independent under applicable
SEC and AMEX rules and regulations. The Board has
determined that Dr. Link is qualified to be an
"audit committee financial expert" under applicable
rules and regulations of the SEC. The Audit and
Finance Committee is governed by a charter, which is
available on the Company's website at
www.accesspharma.com. and delegates to the Audit
and Finance Committee, among other things, the
responsibility to engage the independent auditors,
review the audit fees, supervise matters relating to
audit functions and review and set internal policies
and procedure regarding audits, accounting and other
financial controls. During the 2004 fiscal year, the
Audit and Finance
7
Committee met three times.
The Compensation Committee presently is composed of
three directors, Herbert H. McDade, Jr., J. Michael
Flinn and Max Link, each of whom the Board has
determined is independent under applicable AMEX
rules and regulations. Responsibilities of this
committee include approval of remuneration
arrangements for executive officers of the Company,
review and approval of compensation plans relating
to executive officers and directors, including
grants of stock options under the Company's 1995
Stock Awards Plan and 2000 Special Stock Option
Plan, and other benefits and general review of the
Company's employee compensation policies. The
charter of the Compensation Committee is available
on the Company's website at www.accesspharma.com.
During the 2004 fiscal year, the Compensation
Committee met two times.
The Nominating and Corporate Governance Committee is
composed of three directors, Stuart M. Duty, John J.
Meakem and Max Link, Ph.D., each of whom the Board
has determined is independent under applicable AMEX
rules and regulations. The Nominating and Corporate
Governance Committee is responsible for, among other
things, considering potential Board members, making
recommendations to the full Board as to nominees for
election to the Board, assessing the effectiveness
of the Board and implementing the Company's
corporate governance guidelines. The charter of the
Nominating and Corporate Governance Committee is
available on the Company's website at
www.accesspharma.com.
Compensation of Directors
Each director who is not our employee receives a
quarterly fee of $3,000 and $1,000 per quarter per
committee (aggregate for all committees) in which
he/she is a member. The Chairman of the Board is
paid an additional $1,000 per quarter and the
Chairman of each of the Audit and Finance and
Compensation Committee is paid an additional $500
per quarter. Each director will have $2,000 deducted
from their fee if more than one Board meeting is
missed and $1,000 deducted per committee meeting
missed. In addition, we reimbursed each director,
whether an employee or not, the expenses of
attending board and committee meetings. Each non-
employee director is also entitled to receive
options to purchase 12,500 shares of our common
stock on the date of each annual meeting of
stockholders and options to purchase 20,000 shares
of common stock when he/she is first appointed as a
director.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) ("Section 16(a)") of the Securities
Exchange Act of 1934, as amended, requires our
directors, executive officers and holders of more
than ten percent of a registered class of our equity
securities to file with the SEC initial reports of
ownership and reports of changes in ownership of
such securities. Directors, officers and 10% holders
are required by SEC rules to furnish us with copies
of all of the Section 16(a) reports they file.
Based solely on a review of reports furnished to us
during the 2004 fiscal year or written
representatives from our directors and executive
officers, none of our directors, executive officers
and 10% holders failed to file on a timely basis
reports required by Section 16(a) during the 2004
fiscal year, except for Messrs. McDade, Meakem and
Nowotnik, who each filed one late Form 4, reporting
one transaction each.
8
Executive Compensation
The following table sets forth the aggregate
compensation paid to our CEO and each of our other
executive officers whose aggregate salary and bonus
exceeded $100,000 for services rendered in all
capacities for the fiscal years ended December 31,
2004, 2003 and 2002.
Summary Compensation Table
--------------------------
Long-term
Annual Compensation Compensation Awards
----------------------- -------------------
Securities
Restricted Underlying All Other(4)
Name and Principal Position Year Salary(1) Bonus(2) Stock($)(3) Options(#) Compensation
- ---------------------------- ---- --------- -------- ----------- ---------- ------------
Kerry P. Gray 2004 $384,449 $ - $ - 100,000 $ 11,470
President and CEO 2003 366,848 130,000 - 140,000 10,837
2002 338,150 110,000(5) 105,000 160,000 9,713
David P. Nowotnik, Ph.D. 2004 $238,995 $ - - 25,000 $ 6,433
Senior Vice President 2003 226,530 24,154 20,412 35,000 6,042
Research and Development(4) 2002 212,001 20,142 19,960 50,000 5,648
Stephen B. Thompson 2004 $145,260 $ - $ - 15,000 $ 3,365
Vice President, 2003 138,030 14,704 12,474 20,000 3,918
Chief Financial Officer 2002 129,501 12,474 12,176 30,000 3,540
(1) Includes amounts deferred under our 401(k) Plan.
(2) Includes bonuses earned in the reported year but
paid in the following year.
(3) The value of all restricted stock for each named
individual at December 31, 2004 is: Mr. Gray -
$118,445; Dr. Nowotnik - $75,207; and Mr. Thompson - $45,847.
(4) Amounts reported for fiscal years 2004, 2003,
and 2002 consist of: (i) amounts we contributed to
our 401(k) Plan with respect to each named
individual, (ii) amounts we paid for group term life
insurance for each named individual, and (iii) for
Mr. Gray, premiums paid by us each year for life
insurance for Mr. Gray.
(5) Mr. Gray's 2002 bonus of $110,000 was deferred,
by election of the Compensation Committee and Mr.
Gray, until certain performance goals were met. The
primary goal of the Company's signing a licensing or
equity agreement at certain levels was met and the
bonus was paid in 2004.
9
Option Grants in the 2004 Fiscal Year
Individual Option Grants In Last Fiscal Year
--------------------------------------------
Number of Percent of Potential Realizable
Securities Total Options Value at Assumed
Underlying Granted to Exercise Annual Rates of
Options Employees in Price Expiration Stock Appreciation
Name Granted(#) Fiscal Year(1) $/Sh(2) Date For Option Term(3)
- --------------------- ---------- -------------- ------- -------- ------------------
5% 10%
--------- --------
Kerry P. Gray (4) 100,000 32% $5.85 1/23/14 $368,000 $932,000
David P. Nowotnik (4) 25,000 8% $5.85 1/23/14 $92,000 $233,000
Stephen B. Thompson(4) 15,000 5% $5.85 1/23/14 $55,000 $140,000
(1) Based on an aggregate of 314,200 options granted
to employees in the 2004 fiscal year, including
options granted to the named individual.
(2) The exercise price of each grant is the closing
price on the date of grant as quoted on AMEX.
(3) Potential realizable value is based on the
assumption that the price per share of our Common
Stock appreciates at the assumed annual rate of
stock appreciation for the option term. There is no
assurance that the assumed 5% and 10% annual rates
of appreciation (compounded annually) will actually
be realized over the term of the option. The assumed
5% and 10% annual rates are set forth in accordance
with the rules and regulations adopted by the SEC
and do not represent our estimate of stock price
appreciation.
(4) Mr. Gray, Dr. Nowotnik and Mr. Thompson's
options vest 25% after twelve months and the
remaining 75% vest 2.083% monthly commencing twelve
months from the date of grant and are exercisable in
full 48 months after the date of grant.
Option Exercises and Year-End Value Table
The following table includes the number of shares
covered by both exercisable and non-exercisable
stock options as of December 31, 2004. Also reported
are the values of "in-the-money" stock options which
represent the positive spread between the exercise
price of any such existing stock options and the
year-end price of our Common Stock.
The remainder of this page is intentionally left blank.
10
Aggregated Option Exercises In Last Fiscal Year And
Fiscal Year-End Option Values
----------------------------------------------------
Value of
Number of Securites Unexercised
Underlying Unexercised In-
Options The-Money Options
Number of at Fiscal ($) (1) at
Shares Year End Fiscal Year End
Acquired Value Exercisable/ Exercisable/
Name On Exercise # Realized($) Unexercisable Unexercisable
- ------------------- ------------- ----------- ----------------- ----------------
Kerry P. Gray - - 1,257,083/222,917 $936,000/$90,000
David P. Nowotnik, Ph.D. - - 201,146/ 58,854 $181,000/$28,000
Stephen B. Thompson - - 115,208/ 34,792 $103,000/$16,000
(1) On December 31, 2004, the closing price of our
Common Stock as quoted on AMEX was $3.54.
Equity Compensation Plan Information
The following table sets forth information as of
December 31, 2004 about shares of Common Stock
outstanding and available for issuance under our
existing equity compensation plans.
Number of securities
remaining available for
Number of securities future issuance under
to be issued upon Weighted-average equity compensation
exercise of exercise price of plans (excluding
outstanding options, outstanding options, securities reflected
Plan Category warrants and rights warrants and rights in column (a))
- ---------------- ------------------- ------------------- ------------------
(a) (b) (c)
Equity compensation
plans approved
by security holders
1995 Stock Awards
Plan 2,182,181 $3.76 129,780
2001 Restricted
Stock Plan 126,474 - 38,762
Equity compensation
plans not approved
by security holders
2000 Special
Stock Option Plan 500,000 $2.50 -
----------- ------- --------
Total 2,808,655 $3.37 168,542
=========== ======= ========
11
Compensation Pursuant to Agreements and Plans
Employment Agreements
We are party to an employment agreement with Kerry
P. Gray, our President and Chief Executive Officer,
which expires March 31, 2006 and which thereafter
may be automatically renewed for successive one-year
periods. Under this agreement, Mr. Gray is currently
entitled to receive an annual base salary of
$390,000, subject to adjustment by the Board. Mr.
Gray is eligible to participate in all of our
employee benefit programs available to executives.
Mr. Gray is also eligible to receive:
* a bonus payable in cash and Common Stock related
to the attainment of reasonable performance goals
specified by the Board;
* stock options at the discretion of the Board;
* long-term disability insurance to provide
compensation equal to at least 60% of his annual
base salary; and
* term life insurance coverage of $400,000.
Mr. Gray is entitled to certain severance benefits
in the event that we terminate his employment
without cause or if Mr. Gray terminates his
employment following a change of control. In the
event that we terminate the employment agreement for
any reason, other than for cause, Mr. Gray would
receive the salary due and his target bonus for the
remaining term of the agreement or 18 months,
whichever is longer. We will also continue benefits
for such period. In the event that Mr. Gray's
employment is terminated within six months following
a change in control or by Mr. Gray upon the
occurrence of certain events following a change in
control, Mr. Gray would receive two years salary and
his target bonus and his stock options shall become
immediately exercisable. We will also continue
payment of benefits for such period. The employment
agreement imposes upon Mr. Gray a covenant not to
compete with us for up to 18 months following the
termination date.
We are party to an employment agreement with David
P. Nowotnik, Ph.D., our Senior Vice President,
Research and Development, which expires November 16,
2005 and which thereafter may be automatically
renewed for successive one-year periods. Under this
agreement, Dr. Nowotnik is currently entitled to
receive an annual base salary of $241,980, subject
to adjustment by the Board. Dr. Nowotnik is eligible
to participate in all of our employee benefit
programs available to executives. Dr. Nowotnik is
also eligible to receive:
* a bonus payable in cash and common stock related
to the attainment of reasonable performance goals
specified by the Board;
* stock options at the discretion of the Board;
* long-term disability insurance to provide
compensation equal to at least $60,000 annually; and
* term life insurance coverage of $242,000.
Dr. Nowotnik is entitled to certain severance
benefits in the event that we terminate his
employment without cause or if Dr. Nowotnik
terminates his employment following a change of
control. In the event that we terminate the
employment agreement for any reason, other than for
cause, Dr. Nowotnik would receive the salary due for
six months. We will also continue benefits for such
period. In the event that Dr. Nowotnik's employment
is terminated within six months following a change
in control or by Dr. Nowotnik upon
12
the occurrence of certain events following a change
in control, Dr. Nowotnik would receive twelve months
salary and his stock options shall become
immediately exercisable. We will also continue
payment of benefits for such period.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee operates under a written
charter adopted by the Board and is responsible for
making all compensation decisions for the Company's
named executives including determining base salary
and annual incentive compensation amounts and
recommending stock option grants and other stock-
based compensation under our equity incentive plans.
Overall Objectives of the Executive Compensation Program
The purpose of our compensation plan is to attract,
retain and motivate key management employees. It is
our philosophy to pay our executives at levels
commensurate with both industry levels and
individual experience and performance. A primary
consideration in developing our executive
compensation programs is to link the long-term
financial interests of executives with those of the
Company and our stockholders. Throughout the 2004
fiscal year, the Compensation Committee reviewed
compensation for comparable organizations in order
to establish our total compensation program and to
recommend awards under our equity incentive plans.
Base Salary Program
It is our policy to establish salaries at a level
approximating the average of the competitive levels
in comparable companies in the bio-medical industry
and to provide annual salary increases reflective of
an executive's performance, level of responsibility
and position with the Company. Based on a review of
comparable organizations, Mr. Gray's base annual
salary for 2004 was established at $390,000.
Annual Incentive
Each year, the Compensation Committee evaluates the
performance of the Company as a whole, as well as
the performance of each individual executive.
Factors considered include Company development,
performance against objectives, advancement of our
research and development programs, commercial
operations, product acquisition, and in-licensing
and out-licensing agreements. The Compensation
Committee does not utilize formalized mathematical
formulas, nor does it assign weightings to these
factors. The Compensation Committee, in its sole
discretion, determines the amount, if any, of
incentive payments to be awarded to each executive
based on an individual's targeted incentive payment.
The Compensation Committee believes that analysis of
our corporate growth requires subjectivity on the
part of the Compensation Committee when determining
incentive payments. The Compensation Committee
believes that specific formulas restrict
flexibility. Based on this criteria, for the 2003
fiscal year Mr. Gray was awarded an annual incentive
payment of $130,000.
Stock Option Plans
In 1995, the Board adopted and our stockholders
approved our 1995 Stock Awards Plan, as amended. The
1995 Stock Awards Plan provides for the issuance of
up to a maximum of 2,500,000 shares of our Common
Stock to our employees, directors and consultants or
any of our subsidiaries. Options granted under the 1995
13
Stock Awards Plan may be either incentive stock
options or options which do not qualify as incentive
stock options. In 2000, the Board adopted the 2000
Special Stock Option Plan and Agreement (the "2000
Plan"). The 2000 Plan provides for the award of
options to purchase a maximum of 500,000 shares of
the authorized but unissued shares of our Common
Stock.
The stock option plans are administered by a
committee of at least three non-employee members of
the Board, chosen by the Board, and is currently
administered by the Compensation Committee. The
current members of the Compensation Committee are
Dr. Link, Mr. Flinn and Mr. McDade. The Compensation
Committee has the authority to determine those
individuals to whom stock options should be granted,
the number of shares to be covered by each option,
the option price, the type of option, the option
period, the vesting restrictions, if any, with
respect to exercise of each option, the terms for
payment of the option price and other terms and
conditions of each option.
Our non-employee directors, who include members of
the Compensation Committee, are eligible to receive
options under the 1995 Stock Awards Plan. Each non-
employee director is entitled to receive options to
purchase 12,500 shares of our Common Stock on the
date of each annual meeting of stockholders and
options to purchase 20,000 shares of Common Stock
when he/she is first appointed as a director.
Mr. Gray received option grants in the 2004 fiscal
year of 100,000. At December 31, 2004, we had
granted to Mr. Gray options under the 1995 Stock
Awards Plan and the 2000 Plan to purchase an
aggregate of 1,480,000 shares of Common Stock at a
weighted average exercise price per share of $3.52.
We also have a restricted stock plan, the 2001
Restricted Stock Plan, under which 200,000 shares of
our authorized but unissued Common Stock were
reserved for issuance to certain employees,
directors, consultants and advisors. The restricted
stock granted under the plan generally vests over
five years, 25% two years after the grant date with
an additional 25% vesting on the next three
anniversary dates. All stock is vested after five
years. At December 31, 2004 there were 161,238
shares granted and 38,762 shares available for grant
under the 2001 Restricted Stock Plan. At December
31, 2004 we had granted to Mr. Gray an aggregate of
52,841 shares of restricted stock under the 2001
Restricted Stock Plan of which 19,382 shares had vested.
Section 162(m)
Section 162(m) of the Internal Revenue Code of 1986,
as amended, currently imposes a $1 million
limitation on the deductibility of certain
compensation paid to each of our five highest paid
executives. Excluded from this limitation is
compensation that is "performance based." For
compensation to be performance based it must meet
certain criteria, including being based on
predetermined objective standards approved by
stockholders. In general, we believe that
compensation relating to options granted under the
1995 Stock Awards Plan and 2000 Plan should be
excluded from the $1 million limitation calculation.
Compensation relating to our incentive compensation
awards do not currently qualify for exclusion from
the limitation, given the discretion that is
provided to the Compensation Committee in
establishing the performance goals for such awards.
The Compensation Committee believes that maintaining
the discretion to evaluate the performance of our
management is an important part of its
responsibilities and inures to the benefit of our
stockholders. The Compensation Committee, however,
intends to take into account the potential
application of Section 162(m) with respect to
incentive compensation awards and other compensation
decisions made by it in the future.
Conclusion
14
The Compensation Committee believes these executive
compensation policies effectively serve the
interests of the stockholders. The Compensation
Committee believes that the various pay vehicles
offered are appropriately balanced to provide
increased motivation for executives to contribute to
our overall future successes, thereby enhancing the
value of the Company for the stockholders' benefit.
Herbert H. McDade, Jr., Chairman
J. Michael Flinn, Member
Max Link, Ph.D., Member
REPORT OF THE AUDIT AND FINANCE COMMITTEE
The Audit and Finance Committee of the Board
operates under a written charter adopted by the
Board in May 2001 and amended and restated by the
Board in January 2004, which charter is available on
the Company's website at http://www.accesspharma.com.
The members of the Audit and Finance Committee are Messrs.
Duty and Meakem and Dr. Link. The Company believes that
all members of the Audit and Finance Committee meet the
independence standards of Section 121(A) of the AMEX
listing standards. In accordance with its written
charter, the Audit and Finance Committee assists the
Board in fulfilling its responsibility for oversight
of the quality and integrity of the accounting,
auditing and financial reporting practices of the Company.
In discharging its oversight responsibility as to
the audit process, the Audit and Finance Committee
obtained from the Company's independent accountants
a formal written statement describing all
relationships between the accountants and the
Company that might bear on the accountants'
independence consistent with Independence Standards
Board Standard No. 1, "Independence Discussions
with Audit Committees." The Audit and Finance
Committee discussed with the independent accountants
any relationships that may impact their objectivity
and independence and satisfied itself as to that
firm's independence.
The Audit and Finance Committee discussed and
reviewed with the independent accountants all
communications required by generally accepted
accounting standards, including those described in
Statement on Auditing Standards No. 61, as amended,
"Communication with Audit Committees." In addition,
the Audit and Finance Committee met with and without
management present, and discussed and reviewed the
results of the independent accountants' examination
of the Company's financial statements.
Based upon the Audit and Finance Committee's
discussion with management and the independent
accountants and the Audit and Finance Committee's
review of the representation of management and the
report of the independent accountants to the Audit
and Finance Committee, the Audit and Finance
Committee recommended to the Board that the Company
include the audited consolidated financial
statements in its Annual Report on Form 10-K for the
2004 fiscal year for filing with the SEC. The Audit
and Finance Committee also recommended the
reappointment, subject to stockholder ratification,
of the independent accountants and the Board
concurred with such recommendation.
Max Link, Chairman
Stuart M. Duty, Member
John J. Meakem, Jr., Member
15
Compensation Committee Interlocks And Insider Participation
The members of the Compensation Committee of the
Board are Mr. McDade, Mr. Flinn and Dr. Link. The
Compensation Committee makes recommendations to the
Board regarding executive compensation matters,
including decisions relating to salary and annual
incentive payments and grants of stock options.
During the 2004 fiscal year, no executive officer of
the Company served as a member of the board of
directors or compensation committee of any entity
that has one or more executive officers serving as
members of the Board or our Compensation Committee.
Stockholder Return Performance Presentation
Set forth below is a line graph comparing our
cumulative stockholder return on our Common Stock
with the cumulative total return of the NASDAQ
Biotech Index and the Russell 2000 Index for the
five fiscal years commencing December 31, 1999. The
graph assumes an investment of $100 at the beginning
of the period.
Insert Graph
Total Returns Index for 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04
-------- -------- -------- -------- -------- --------
Access
Pharmaceuticals, Inc. $100.00 250.03 222.00 74.99 261.98 176.98
NASDAQ Biotech Index $100.00 122.98 103.05 56.35 82.12 87.14
Russell 2000 Index $100.00 96.97 99.47 79.09 116.47 137.82
The foregoing graph is based on historical data and
is not necessarily indicative of future performance.
16
Certain Relationships and Related Transactions
On October 12, 2000, the Board authorized a
restricted stock purchase program. Under the
program, our executive officers were given the
opportunity to purchase shares of Common Stock in an
individually designated amount per participant
determined by our Compensation Committee. A total of
180,000 shares were purchased by such officers at
$5.50 per share, the fair market value of the Common
Stock on October 12, 2000, for an aggregate
consideration of $990,000. The purchase price was
paid through the participant's delivery of a 50%-
recourse promissory note payable to us. Each note
bears interest at 5.87% compounded semi-annually and
has a maximum term of ten years. The notes are
secured by a pledge to us of the purchased shares.
We recorded the notes receivable of $990,000 from
participants in this program as a reduction of
equity in the Consolidated Balance Sheet. As of
December 31, 2004, principal and interest on the
notes was: Mr. Gray - $702,000; Dr. Nowotnik -
$351,000; and Mr. Thompson - $211,000. In accordance
with the Sarbanes-Oxley Act of 2002, we no longer
make loans to our executive officers.
Stephen B. Howell, MD. Dr. Howell, one of our
directors, also serves as a scientific consultant
pursuant to a consulting agreement with us that
provides for a minimum of ten days consulting during
2005 at a rate of $2,800 per month plus expenses.
Dr. Howell received warrants to purchase 10,000
shares of our Common Stock at $4.96 per share that
can be exercised until January 1, 2009; warrants to
purchase 15,000 shares of our Common Stock at $3.00
per share that can be exercised until January 1,
2008; and, warrants to purchase 30,000 shares of our
Common Stock at $3.00 per share that were
exercisable on or before February 1, 2005. During
2004, Dr. Howell was paid $58,000 in consulting
fees; during 2003 Dr. Howell was paid $60,000 in
consulting fees; and during 2002 Dr. Howell was paid
$55,000 in consulting fees. Dr. Howell's original
agreement with us expired January 31, 2005 but was
renewed and now expires February 28, 2006.
Security Ownership of Certain Beneficial Owners and Management
Based solely upon information made available to us,
the following table sets forth certain information
with respect to the beneficial ownership of our
Common Stock as of April 11, 2005 by (i) each person
who is known by us to beneficially own more than
five percent of our Common Stock; (ii) each of our
directors; (iii) each of our executive officers; and
(iv) all our executive officers and directors as a
group. Beneficial ownership as reported in the
following table has been determined in accordance
with Rule 13d-3 under the Securities Exchange Act of
1934, as amended. Except as otherwise indicated, the
holders listed below have sole voting and investment
power with respect to all shares of our Common Stock
beneficially owned by them. The address of each
holder listed below, except as otherwise indicated,
is c/o Access Pharmaceuticals, Inc., 2600 Stemmons
Freeway, Suite 176, Dallas, Texas 75207.
17
Common Stock Beneficially Owned
-------------------------------
Name Number of Shares(1) % of Class
- ---------------------------------------------- ------------------- ----------
Herbert H. McDade, Jr.(2) 87,257 1.0%
Kerry P. Gray (3) 1,546,181 9.1%
Stuart M. Duty (4) 20,000 *
J. Michael Flinn (5) 155,695 1.0%
Stephen B. Howell, M.D. (6) 155,695 1.0%
Max Link, Ph.D. (7) 72,000 *
John J. Meakem, Jr. (8) 100,000 1.0%
David P. Nowotnik, Ph.D. (9) 305,912 1.9%
Stephen B. Thompson (10) 173,022 1.1%
Heartland Advisors, Inc. (11) 1,715,300 10.9%
Larry Feinberg (12) 1,954,200 11.9%
All Directors and Executive Officers as a group
(consisting of 9 persons) (13) 2,631,404 14.9%
* Less than 1%
(1) Includes our Common Stock held plus all options
exercisable within 60 days of April 11, 2005
(2) Including presently exercisable options for the
purchase of 50,000 shares of our Common Stock
pursuant to the 1995 Stock Option Plan. Also
includes 1,000 shares of our Common Stock owned by
Thoma Corporation of which Mr. McDade is the
beneficial owner.
(3) Kerry P. Gray, 2600 Stemmons Freeway, Suite 176,
Dallas, Texas 75207, beneficially owns 236,181
shares of our Common Stock. Mr. Gray is known to be
the beneficial owner of more than five percent of
our Common Stock. Mr. Gray's ownership includes
presently exercisable options for the purchase of
1,310,000 shares of our Common Stock pursuant to the
1995 Stock Option Plan and the 2000 Special Stock
Option Plan.
(4) Mr. Duty is a partner in Oracle Partners, L.P.
Oracle Partners, L.P. and affiliates (Oracle
Institutional Partners, L.P., Oracle Investment
Management, Inc., Sam Oracle Fund, Inc., and Larry
N. Feinberg) are known to beneficially own an
aggregate of 1,945,200 shares of our Common Stock.
Mr. Duty disclaims beneficial ownership of all such
shares except to the extent of his pecuniary
interest therein.
(5) Including presently exercisable options for the
purchase of 70,000 shares of our Common Stock
pursuant to the 1995 Stock Option Plan.
(6) Including presently exercisable options for the
purchase of 52,084 shares of our Common Stock
pursuant to the 1995 Stock Option Plan and a warrant
to purchase 30,000 shares of our Common Stock at an
exercise price of $3.00 per share, a warrant to
purchase 10,000 shares of our Common Stock at an
exercise price of $4.91 per share, and a warrant to
purchase 15,000 shares of our Common Stock at an
exercise price of $3.00 per share.
(7) Including presently exercisable options for the
purchase of 22,500 shares of our Common Stock
pursuant to the 1995 Stock Option Plan.
(8) Including presently exercisable options for the
purchase of 55,000 shares of our Common Stock
pursuant to the 1995 Stock Option Plan.
(9) Including presently exercisable options for the
purchase of 218,333 shares of our Common Stock
pursuant to the 1995 Stock Option Plan.
(10) Including presently exercisable options for the
purchase of 125,417 shares of our Common Stock
pursuant to the 1995 Stock Option Plan.
(11) Heartland Advisors, Inc., 789 North Water
Street, Milwaukee, WI 53202, beneficially owns
1,715,300 shares of our Common Stock. Heartland is
known to be the beneficial owner of more than ten
percent of our Common Stock. William J. Nasqovitz, as
18
a result of his stock ownership of Heartland, could
be deemed to have voting and/or investment power
over the shares Heartland beneficially owns. The
information set forth in this footnote is based on a
Schedule 13G filed by Heartland on January 13, 2005.
(12) Larry N. Feinberg and affiliates, Oracle
Partners, L.P., Oracle Institutional Partners, L.P.,
Oracle Investment Management, Inc., and Sam Oracle
Fund, Inc., 712 Fifth Avenue, 45th Floor, New York,
NY 10019 are known to beneficially own more than ten
percent of our Common Stock. The information set
forth in this footnote is based on a Schedule 13D
filed by Mr. Feinberg on November 14, 2002. Includes
730,000 shares of our Common Stock issuable upon
conversion of Convertible Notes at a conversion
price of $5.50 per share. Mr. Duty, our director and
partner in Oracle Partners, L.P., disclaims
beneficial ownership of such shares except to the
extent of his pecuniary interest therein.
(13) Does not include Heartland Advisors, Inc. or
Larry N. Feinberg and affiliates.
PROPOSAL 2
APPROVAL OF THE 2005 EQUITY INCENTIVE PLAN
On January 21, 2005, the Board adopted, subject to
stockholder approval, the Access Pharmaceuticals,
Inc. 2005 Equity Incentive Plan (the "2005 Plan")
pursuant to which 700,000 shares of Common Stock
shall be available for issuance to employees of or
consultants to one or more of the Company and its
affiliates or to non-employee members of the Board
or of any board of directors (or similar governing
authority) of any affiliate of the Company. The
material features of the 2005 Plan are outlined below.
Purpose. The Plan is intended to encourage
ownership of Common Stock by employees, consultants
and directors of the Company and its affiliates to
provide additional incentive for them to promote the
success of the Company's business.
Administration. The Plan is administered by the
Compensation Committee of the Board of Directors
(the "Committee"). Subject to the provisions of the
Plan, the Committee has discretion to determine the
employee, consultant or director to receive an
award, the form of award and any acceleration or
extension of an award. Further, the Committee has
complete authority to interpret the Plan, to
prescribe, amend and rescind rules and regulations
relating to it, to determine the terms and
provisions of the respective award agreements (which
need not be identical), and to make all other
determinations necessary or advisable for the
administration of the Plan. In addition, the
Committee may delegate to an executive officer or
officers the authority to grant awards to employees
who are not officers, and to consultants, in
accordance with applicable Committee guidelines.
Eligibility. Awards may be granted to any employee
of or consultant to one or more of the Company and
its affiliates or to non-employee member of the
Board or of any board of directors (or similar
governing authority) of any affiliate. The maximum
number of shares issuable pursuant to awards under
the Plan may not exceed 700,000 to any one person in
any one calendar year.
Shares Subject to the Plan. The shares issued or to
be issued under the Plan are shares of the Company's
common stock, $0.01 par value (the "Common Stock"),
which may be authorized but unissued shares,
treasury shares, reacquired shares, or any
combination thereof. A maximum of 700,000 shares of
Common Stock have been reserved for issuance
pursuant to the Plan.
Types of Awards. Awards under the Plan include
Incentive Stock Options, Nonstatutory Stock Options,
Restricted Stock, Stock Appreciation Rights and
Stock Grants.
Nonstatutory Stock Options and Incentive Stock
Options (which are intended to meet the requirements of
19
Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code")) (together, "Stock Options")
are rights to purchase Common Stock of the Company.
Each Stock Option shall be evidenced by an
instrument in such form as the Committee shall
prescribe and shall specify (i) the exercise price,
(ii) the number of shares of Common Stock subject to
the Stock Option and (iii) such other terms and
conditions, including, but not limited to, the
method of exercise and any restrictions upon the
Stock Option or the Common Stock issuable upon
exercise thereof, as the Committee, in its
discretion, shall establish.
A Stock Option may be immediately exercisable or
become exercisable in such installments, cumulative
or non-cumulative, as the Committee may determine.
A Stock Option may be exercised by the participant
giving written notice to the Company, accompanied by
payment of an amount equal to the exercise price of
the shares to be purchased. The purchase price may
be paid by cash, check or, to the extent not
prohibited by applicable law and subject to such
conditions, if any, as the Committee may deem
necessary or desirable, by delivery to the Company
of shares of Common Stock, the participant's
executed promissory note, or through and under the
terms and conditions of any formal cashless exercise
program authorized by the Company. Unless the
Committee shall provide otherwise with respect to
any Stock Option, if the participant's employment or
other association with the Company and its
affiliates ends for any reason, any outstanding
Stock Option of the participant shall cease to be
exercisable in any respect not later than 90 days
following that event and, for the period it remains
exercisable following that event, shall be
exercisable only to the extent exercisable at the
date of that event. Notwithstanding the foregoing,
no Stock Option shall be exercisable after the tenth
anniversary of the date it is granted.
Incentive Stock Options may be granted only to
eligible employees of the Company or any parent or
subsidiary corporation, must have an exercise price
of not less than 100% of the fair market value of
the Company's Common Stock on the date of grant
(110% for Incentive Stock Options granted to any 10%
stockholder of the Company) and must have a term of
not more than ten years (five years in the case of
an Incentive Stock Option granted to any 10%
stockholder of the Company). In the case of an
Incentive Stock Option, the amount of the aggregate
fair market value of Common Stock (determined at the
time of grant) with respect to which Incentive Stock
Options are exercisable for the first time by an
employee during any calendar year (under all such
plans of his employer corporation and its parent and
subsidiary corporations) shall not exceed $100,000.
Awards of Restricted Stock are grants or sales of
Common Stock which are subject to a risk of
forfeiture. Each award of Restricted Stock shall be
evidenced by an instrument in such form as the
Committee shall prescribe, which instrument will
specify (i) the number of shares of Common Stock to
be issued to a participant pursuant to the award and
the extent, if any, to which they shall be issued in
exchange for cash, other property or services or any
combination thereof, and (ii) such other terms and
conditions as the Committee, in its discretion,
shall establish. Unless the Committee shall provide
otherwise for any Award of Restricted Stock, upon
termination of a participant's employment or other
association with the Company and its affiliates for
any reason during the restriction period, all shares
of Restricted Stock still subject to risk of
forfeiture shall be forfeited or otherwise subject
to return to or repurchase by the Company on the
terms specified in the award agreement.
Stock Appreciation Rights are rights to receive
(without payment to the Company) cash, property or
other forms of payment, or any combination thereof,
as determined by the Committee, based on the
increase in the value of the number of shares of
Common Stock specified in the Stock Appreciation
Right. Each award of a Stock Appreciation Right
shall be evidenced by an instrument in such form as
the Committee shall prescribe, which instrument
will specify (i) a "hurdle" price in an amount
determined by the Committee, (ii) the number of
shares of Common Stock subject to such award, and
(iii) such other terms and conditions as the
Committee, in its discretion, shall establish. A
Stock Appreciation Right may be exercised in
accordance with such written
20
instrument and at such time or times and in such
installments as the Committee may establish.
Unless the Committee shall provide otherwise with
respect to any Stock Appreciation Right, any
outstanding Stock Appreciation Right shall cease to
be exercisable not later than 90 days following a
participant's termination of employment or other
association with the Company and its affiliates.
Notwithstanding the foregoing, no Stock
Appreciation Right shall be exercisable after the
tenth anniversary of the date it is granted.
A Stock Grant is a grant of shares of Common Stock
not subject to restrictions or other forfeiture
conditions.
Transferability. Except as otherwise provided
herein, Stock Options and Stock Appreciation Rights
shall not be transferable, and no Stock Option,
Stock Appreciation Right or interest therein may be
sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated, other than by will or by
the laws of descent and distribution. All of a
participant's rights in any Stock Option or Stock
Appreciation Right may be exercised during the life
of the participant only by the participant or the
participant's legal representative. However, the
Committee may, at or after the grant of a
Nonstatutory Option provide that such Nonstatutory
Option or Stock Appreciation Right may be
transferred by the recipient to a family member;
provided, however, that any such transfer is
without payment of any consideration whatsoever and
that no transfer of a Nonstatutory Option or Stock
Appreciation Right shall be valid unless first
approved by the Committee, acting in its sole discretion.
Effect of Significant Corporate Event. In the
event of any change in the outstanding shares of
Common Stock through merger, consolidation, sale of
all or substantially all the property of the
Company, reorganization, recapitalization,
reclassification, stock dividend, stock split,
reverse stock split, or other distribution with
respect to such shares of Common Stock, an
appropriate and proportionate adjustment will be
made in (i) the maximum numbers and kinds of shares
subject to the Plan, (ii) the numbers and kinds of
shares or other securities subject to the then
outstanding awards, (iii) the exercise price for
each share or other unit of any other securities
subject to then outstanding Stock Options or Stock
Appreciation Rights (without change in the
aggregate purchase or hurdle price as to which
Stock Options or Stock Appreciation Rights remain
exercisable), and (iv) the repurchase price of each
share of Restricted Stock then subject to a risk of
forfeiture in the form of a Company repurchase
right. In the event of an acquisition (a) any then
outstanding Stock Options or Stock Appreciation
Rights shall accelerate 50% if not assumed by the
acquiring entity or replaced by comparable options
to purchase shares of the capital stock of the
successor or acquiring entity or parent thereof,
and to the extent not so assumed or replaced shall
then terminate to the extent not exercised and (b)
any then Restricted Stock shall accelerate 50% if
the Company's rights to reacquire such shares of
Restricted Stock on occurrence of the applicable
risk of forfeiture with respect to those shares are
not assigned to the acquiring entity. Upon
dissolution or liquidation of the Company, other
than as part of an acquisition or similar
transaction, each outstanding Stock Option or Stock
Appreciation Right shall terminate, but the
participant shall have the right, immediately prior
to the dissolution or liquidation, to exercise the
Stock Option or Stock Appreciation Right to the
extent exercisable on the date of dissolution or liquidation.
Amendments to the Plan. The Board of Directors may
amend or modify the Plan at any time subject to the
rights of holders of outstanding awards on the date
of amendment or modification, except where
stockholder approval is required under the Plan.
Summary of Tax Consequences. The following is a
brief and general discussion of the federal income
tax rules applicable to awards granted under the Plan.
For purposes of this summary, we assumed that no
award will be considered "deferred compensation" as
that term is defined for purposes of the federal
tax rules governing nonqualified deferred compensation
21
arrangements, Section 409A of the Code, or, if any
award were considered to any extent to constitute
deferred compensation, its terms would comply with
the requirements at that legislation (in general,
by limiting any flexibility in the time of
payment). For example, the award of a nonstatutory
option with an exercise price which is less than
the market value of the stock covered by the option
would constitute deferred compensation. If an
award includes deferred compensation, and its terms
do not comply with the requirements of the
legislation, then any deferred compensation
component of the award will be taxable when it is
earned and vested (even if not then payable) and
the recipient will be subject to a 20% additional tax.
Nonstatutory Stock Options. There are no Federal
income tax consequences to the Company or the
participants upon grant of Nonstatutory Stock
Options. Upon the exercise of such an Option, (i)
the participant will recognize ordinary income in
an amount equal to the amount by which the fair
market value of the Common Stock acquired upon the
exercise of such Option exceeds the exercise price,
if any, and (ii) the Company will receive a
corresponding deduction. A sale of Common Stock so
acquired will give rise to a capital gain or loss
equal to the difference between the fair market
value of the Common Stock on the exercise and sale dates.
Incentive Stock Options. Except as noted at the
end of this paragraph, there are no Federal income
tax consequences to the Company or the participant
upon grant or exercise of an Incentive Stock
Option. If the participant holds shares of Common
Stock purchased pursuant to the exercise of an
Incentive Stock Option for at least two years after
the date the Option was granted and at least one
year after the exercise of the Option, the
subsequent sale of Common Stock will give rise to a
long-term capital gain or loss to the participant
and no deduction will be available to the Company.
If the participant sells the shares of Common Stock
within two years after the date an Incentive Stock
Option is granted or within one year after the
exercise of an Option, the participant will
recognize ordinary income in an amount equal to the
difference between the fair market value at the
exercise date and the Option exercise price, and
the Company will be entitled to an equivalent
deduction, and any additional gain or loss will be
a capital gain or loss. Some participants may have
to pay alternative minimum tax in connection with
exercise of an Incentive Stock Option.
Restricted Stock. A participant will generally
recognize ordinary income on receipt of an award of
Restricted Stock when his or her rights in that
award become substantially vested, in an amount
equal to the amount by which the then fair market
value of the Common Stock acquired exceeds the
price he or she has paid for it, if any.
Recipients of Restricted Stock may, however, within
30 days of receiving an award of Restricted Stock,
choose to have any applicable risk of forfeiture
disregarded for tax purposes by making an "83(b)
election." If the participant makes an 83(b)
election, he or she will have to report
compensation income equal to the difference between
the value of the shares and the price paid for the
shares, if any, at the time of the transfer of the
Restricted Stock.
Stock Appreciation Rights. A participant will
generally recognize ordinary income on receipt of
cash or other property pursuant to an award of
Stock Appreciation Rights.
Stock Grants. A participant will generally
recognize ordinary income on receipt of a Stock
Grant equal to the value of the Common Stock
subject to such Stock Grant.
Although the foregoing summarizes the essential
features of the Plan, it is qualified in its
entirety by reference to the full text of the Plan
as approved.
22
The benefits or amounts received by or allocated to
each of (i) the officers listed in the Summary
Compensation Table, (ii) each of the nominees for
election as a director, (iii) all directors of the
Company who are not executive officers of the
Company as a group, (iv) all present executive
officers of the Company as a group, and (v) all
employees of the Company, including all other
current officers, as a group are not determinable.
UNLESS OTHERWISE INDICATED THEREON, THE
ACCOMPANYING PROXY WILL BE VOTED FOR APPROVAL OF
THE 2005 EQUITY INCENTIVE PLAN. YOUR BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR APPROVAL OF THE
2005 EQUITY INCENTIVE PLAN.
Proposal 2 will be approved upon the affirmative
vote of a majority of shares present in person or
represented by proxy at the Meeting and entitled to
vote on such proposal.
PROPOSAL 3
APPROVAL OF AMENDMENT OF RESTRICTED STOCK PLAN TO INCREASE
THE NUMBER OF SHARES ISSUABLE UNDER THE RESTRICTED STOCK
PLAN TO 400,000 SHARES
On January 21, 2005, the Board adopted, subject to
stockholder approval, an amendment to increase the
number of shares of Common Stock available for
issuance under the Company's 2001 Restricted Stock
Plan (the "Restricted Stock Plan") from 200,000 to
400,000. The material features of the Restricted
Stock Plan are outlined below.
Purpose. The purpose of the Restricted Stock Plan
is to advance the interests of the Company and its
stockholders by strengthening the ability of the
Company to attract, retain and motivate key
employees, directors, consultants and advisors of
the Company by providing them with an opportunity
to purchase shares of Common Stock and thus
participate in the ownership of the Company,
including the opportunity to share in any
appreciation in the value of such shares of Common
Stock.
Eligibility. Restricted stock awards may be
granted under the Restricted Stock Plan to
employees, directors, consultants and/or advisors
of the Company, as determined by, and in the
discretion of, the Compensation Committee.
Administration. The Restricted Stock Plan is
administered by the Compensation Committee, which
has and may exercise such powers and authority of
the Board as may be necessary or appropriate for it
to carry out its functions as described in the
Restricted Stock Plan. The Compensation Committee
is empowered to determine the persons to whom, and
the time or times at which, restricted stock awards
may be granted and the number of shares of Common
Stock subject to each Restricted Stock Award. The
Compensation Committee also has the authority to
interpret the Restricted Stock Plan, to determine
the terms and provisions of restricted stock awards
agreements and to make all other determinations
necessary or advisable for administration of the
Restricted Stock Plan.
Shares of Common Stock Subject to the Restricted
Stock Plan. Previously, the aggregate number of
shares of Common Stock that could be granted or
sold pursuant to restricted stock awards under the
Restricted Stock Plan was 200,000 shares (subject
to adjustment for, among other things, stock
dividends, stock splits and other distributions, in
accordance with the Restricted Stock Plan). If
Proposal 3 is approved by the stockholders of the
Company as set forth in this Proxy Statement, the
aggregate number of shares of Common Stock that may
be granted or sold pursuant to restricted stock
awards under the Restricted Stock Plan will be
400,000 shares (subject to adjustment).
23
Terms and Conditions of Restricted Stock Awards.
The Compensation Committee has the discretion to
determine and designate those persons who are to
receive restricted stock awards, and the number of
shares of Common Stock covered by each restricted
stock award. Each restricted stock award is
evidenced by a written agreement or instrument and
may include any other terms and conditions
consistent with the Restricted Stock Plan, as the
Compensation Committee determines. All shares of
Common Stock subject to restricted stock awards may
be issued or transferred by the Company for such
consideration (which may consist wholly of
services) as the Compensation Committee may
determine. Such shares may not be sold,
transferred or otherwise disposed of except to the
Company, until certain conditions contained in the
Restricted Stock Plan relating to forfeiture or
repurchase have been met or are removed, unless the
Compensation Committee determines otherwise.
Restricted Stock Awards are subject to forfeiture
or repurchase at their initial purchase price until
such time or times, and/or upon the achievement of
such predetermined performance objectives, as are
determined by the Compensation Committee. In the
event a holder of a restricted stock award ceases
to be an employee, director, consultant and/or
advisor, as applicable, of the Company, all shares
of Common Stock under the restricted stock award
that remain subject to restrictions at the time his
or her employment, directorship, consulting and/or
advising relationship terminates must be returned
to or repurchased by the Company at their initial
price, unless the Compensation Committee determines
otherwise.
UNLESS OTHERWISE INDICATED THEREON, THE
ACCOMPANYING PROXY WILL BE VOTED FOR APPROVAL OF
THE AMENDMENT OF THE RESTRICTED STOCK PLAN. YOUR
BOARD OF DIRECTORS RECOMMENDS A VOTE FOR APPROVAL
OF THE AMENDMENT OF THE RESTRICTED STOCK PLAN.
Proposal 3 will be approved upon the affirmative
vote of a majority of shares present in person or
represented by proxy at the Meeting and entitled to
vote on such proposal.
PROPOSAL 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT PUBLIC ACCOUNTANTS
The Board has appointed, subject to ratification by
Company stockholders at the Meeting, the accounting
firm of Grant Thornton LLP as our principal
independent public accountants for the fiscal year
ending December 31, 2005. Grant Thornton LLP has
served in this capacity since December 1998.
Representatives of Grant Thornton LLP expected to
be present at the Meeting and will have the
opportunity to make a statement if they desire to
do so and will be available to respond to
appropriate questions.
Audit Fees
The aggregate fees billed for professional services
rendered by Grant Thornton LLP for the audit of the
Company's annual financial statements for the
fiscal years ended December 31, 2004 and 2003 and
the reviews of the financial statements included in
the Company's reports on Form 10-Q for such fiscal
years totaled $72,000 and $39,000, respectively.
All Other Fees
24
The aggregate fees billed for all other services
rendered by Grant Thornton LLP for the fiscal years
ended December 31, 2004 and 2003 totaled $54,000
and $18,000, respectively. Such services consisted
of reviewing Form S-3 and attending the annual
meeting of stockholders and Audit Committee meetings.
Auditor Independence
The Audit and Finance Committee considered and
determined that the provision of services covered
under "All Other Fees" is compatible with
maintaining Grant Thornton LLP's independence in
determining whether to appoint Grant Thornton LLP
as the Company's independent auditors.
Policy on Audit and Finance Committee Pre-Approval
of Audit and Permissible Non-Audit Services of
Independent Accountants
The Audit and Finance Committee pre-approves all
audit and non-audit services provided by the
independent accountants prior to the engagement of
the independent accountants with respect to such
services. The Chairman of the Audit and Finance
Committee has been delegated the authority by the
Audit and Finance Committee to pre-approve the
engagement of the independent accountants when the
entire committee is unable to do so. The Chairman
must report all such pre-approvals to the entire
Audit and Finance Committee at the next committee
meeting. The Audit and Finance Committee approved
100% of the services listed under the preceding
captions "Audit-Related Fees," "Tax Fees" and "All
Other Fees."
UNLESS OTHERWISE INDICATED THEREON, THE
ACCOMPANYING PROXY WILL BE VOTED FOR THE
RATIFICATION OF GRANT THORNTON LLP. YOUR BOARD OF
DIRECTORS RECOMMENDS A VOTE FOR RATIFICATION OF THE
APPOINTMENT OF GRANT THORNTON LLP AS PRINCIPAL
INDEPENDENT ACCOUNTANTS FOR THE FISCAL YEAR ENDING
DECEMBER 31, 2005.
Proposal 4 will be approved upon the affirmative
vote of a majority of shares present in person or
represented by proxy at the Meeting and entitled to
vote on such proposal.
OTHER MATTERS
As of the date of this Proxy Statement, the Board
has no knowledge of any matters to be presented for
consideration at the Meeting other than those
referred to above. If (i) any matters not within
the knowledge of the Board as of the date of this
Proxy Statement should properly come before the
Meeting; (ii) a person not named herein is
nominated at the meeting for election as a Director
because a nominee named herein is unable to serve
or for good cause will not serve; (iii) any
proposals properly omitted from this Proxy
Statement and the form of proxy, subject to
applicable laws and our Certificate of
Incorporation and Bylaws, should come before the
Meeting; or (iv) any matters should arise incident
to the conduct of the Meeting, then the proxies
will be voted by the persons named in the enclosed
form of proxy, or their substitutes acting
thereunder, in accordance with the recommendations
of the Board, or, if no such recommendations are
made, in accordance with their best judgment.
STOCKHOLDER PROPOSALS FOR 2006 ANNUAL MEETING
The 2006 annual meeting of stockholders is expected
to be held on or about May 11, 2006. The Board will
make provisions for the presentation of proposals
submitted by eligible stockholders who have
complied with the relevant rules and regulations of
the SEC. We must receive such proposals no later
than December 13, 2005 to be considered for
inclusion in the Company's proxy statement and form
of proxy relating to that meeting. It is
anticipated that the 2006 annual meeting of
stockholders will be held on or about May 11, 2006.
25
FORM 10-K
Our Annual Report on Form 10-K for the 2004 fiscal
year is available without charge to each
stockholder, upon written request to the Company,
c/o Investor Relations, at our principal executive
offices at 2600 Stemmons Freeway, Suite 176,
Dallas, Texas 75207 and is also available on our
website at http://www.accesspharma.com.
EACH STOCKHOLDER IS URGED TO COMPLETE, DATE, SIGN
AND RETURN THE ENCLOSED PROXY CARD IN THE ENCLOSED
ENVELOPE PROVIDED FOR THAT PURPOSE AND ADDRESSED TO
ACCESS PHARMACEUTICALS, INC. c/o AMERICAN STOCK
TRANSFER & TRUST CO., 40 WALL STREET, 46TH FLOOR,
NEW YORK, NEW YORK 10005, A PROMPT RESPONSE IS
HELPFUL AND YOUR COOPERATION WILL BE APPRECIATED.
By Order of the Board of Directors,
/s/ Kerry P. Gray
- ------------------
Kerry P. Gray
President and CEO
26
ACCESS PHARMACEUTICALS, INC.
2600 Stemmons Freeway, Suite 176, Dallas, Texas 75207
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder, having received the
Notice of Annual Meeting of Stockholders and Proxy
Statement dated April 13, 2005, and revoking any
proxy heretofore given, hereby appoints each of J.
Michael Flinn, Herbert H. McDade, Jr. and Kerry P.
Gray, or any of them, Proxies of the undersigned
with full power of substitution, to cumulate votes
and to vote all shares of Common Stock of Access
Pharmaceuticals, Inc. which the undersigned is
entitled to vote at the Annual Meeting of
Stockholders to be held Thursday, May 12, 2005 at
10:00 a.m., local time, at the New York Athletic
Club, 180 Central Park South, New York, New York
10019, (212) 247-5100, or any adjournment thereof.
This Proxy when properly executed will be voted in
the manner directed herein by the undersigned
stockholder. If no direction is made, this Proxy
will be voted FOR each Director nominee listed in
Proposal 1 and FOR Proposals 2, 3 and 4.
In their discretion, the named Proxies are
authorized to vote on any other matters which may
properly come before the Meeting or any adjournment
thereof as set forth in the Proxy Statement.
(continued and to be signed on the reverse side)
The Board of Directors Recommends a vote "For" the
election of Directors and "For" Proposals 2, 3 and
4.
Please sign, date and return this Proxy promptly in
the enclosed envelope. Please mark your vote in blue
or black ink as shown here. /x/
1. Election of Directors:
[ ] FOR ALL NOMINEES Nominees:____ Max Link, PhD Class 1 - 3 Year Term
____ John J. Meakem, Jr. Class 1 - 3 Year Term
[ ] WITHHOLD AUTHORITY FOR ALL NOMINEES
[ ] FOR ALL EXCEPT
(see instructions below)
(INSTRUCTION: To withhold authority to vote for any
individual nominee(s), mark "FOR ALL EXCEPT" and
fill in the circle next to each nominee you wish to
withhold, as shown here: [ X ]
2. Proposal to establish the Access Pharmaceuticals,
Inc. 2005 Equity Incentive Plan, pursuant to which
an aggregate of 700,000 shares of our Common Stock
will issuable pursuant to the terms of such plan. For Against Abstain
[ ] [ ] [ ]
3. Proposal to amend our Restricted Stock Plan to
increase the total number of shares of our common
stock authorized for issuance under that plan
to 400,000 shares. For Against Abstain
[ ] [ ] [ ]
4. Proposal to ratify the appointment
of Grant Thornton LLP as our independent
accountants for the fiscal year ending
December 31, 2005. For Against Abstain
[ ] [ ] [ ]
PLEASE MARK, SIGN AND DATE BELOW AND RETURN THIS
PROXY PROMPTLY USING THE ENCLOSED ENVELOPE.
Proxies will also be accepted by transmission of a
telegram, cablegram or telecopy provided that such
telegram, cablegram or telecopy contains sufficient
information from which it can be determined that the
transmission was authorized by the stockholder
delivering such Proxy. Telegrams or cablegrams may
be addressed to American Stock Transfer & Trust Co.
at the address appearing on the attached envelope or
via telecopy at (718) 234-2287.
Shares Held: ___________
THIS PROXY IS SOLICITED ON BEHALF OF ACCESS
PHARMACEUTICALS, INC.'S BOARD OF DIRECTORS AND MAY
BE REVOKED BY THE STOCKHOLDER PRIOR TO BEING VOTED
AT THE 2005 ANNUAL MEETING OF STOCKHOLDERS.
Signature ____________________________ ________
Date
____________________________ ________
Signature if held jointly Date
NOTE: Please sign exactly as name or names appear on
this Proxy. When shares are held jointly each holder
should sign. When signing as attorney, executor,
administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in full
corporate name by duly authorized officer, giving
full title as such. If signer is a partnership,
please sign in partnership name by authorized
person.