SCHEDULE 14A (Rule 14a-101) INFORMATION REQUIRED IN PROXY STATEMENT SCHEDULE 14A INFORMATION Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934 Filed by the Registrant |X| Filed by a party other than the Registrant |_| Check the appropriate box: |_| Preliminary proxy statement |_| Confidential, For use of the |X| Definitive proxy statement Commission only (as permitted |_| Definitive additional materials by Rule 14a-6(e)(2)) |_| Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12 Titan Pharmaceuticals, Inc. (Name of Registrant as Specified in Its Charter) Titan Pharmaceuticals, Inc. (Name of Person(s) Filing Proxy Statement, if Other Than the Registrant) Payment of filing fee (Check the appropriate box): |X| No fee required. |_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. (1) Title of each class of securities to which transaction applies: __________________________________________________________________________ (2) Aggregate number of securities to which transaction applies: __________________________________________________________________________ (3) Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11:(1) __________________________________________________________________________ (4) Proposed maximum aggregate value of transaction: __________________________________________________________________________ (5) Total fee paid: __________________________________________________________________________ |_| Fee paid previously with preliminary materials: |_| Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the form or schedule and the date of its filing. (1) Amount previously paid: __________________________________________________________________________ (2) Form, Schedule or Registration Statement No.: __________________________________________________________________________ (3) Filing Party: __________________________________________________________________________ (4) Date Filed: __________________________________________________________________________ - ------------ (1) Set forth the amount on which the filing fee is calculated and state how it was determined. TITAN PHARMACEUTICALS, INC. 400 Oyster Point Boulevard Suite 505 South San Francisco, California 94080 ---------- NOTICE OF ANNUAL MEETING OF SHAREHOLDERS To be held August 30, 1999 ---------- To the Shareholders of Titan Pharmaceuticals, Inc. Notice is hereby given that the Annual Meeting of the Shareholders of Titan Pharmaceuticals, Inc. (the "Company") will be held on August 30, 1999 at 9:00 a.m. local time at the offices of the Company, 400 Oyster Point Boulevard, Suite 505, South San Francisco, California 94080. The meeting is called for the following purpose: 1. To elect a board of nine directors; 2. To approve the appointment of Ernst & Young LLP as the independent auditors of the Company; and 3. To consider and take action upon such other matters as may properly come before the meeting or any adjournment or adjournments thereof. The close of business on July 23, 1999 has been fixed as the record date for the determination of shareholders entitled to notice of, and to vote at, the meeting. The stock transfer books of the Company will not be closed. A list of the shareholders entitled to vote at the meeting may be examined at the Company's offices during the ten-day period preceding the meeting. All shareholders are cordially invited to attend the meeting. Whether or not you expect to attend, you are respectfully requested by the Board of Directors to sign, date and return the enclosed proxy promptly. Shareholders who execute proxies retain the right to revoke them at any time prior to the voting thereof. A return envelope which requires no postage if mailed in the United States is enclosed for your convenience. By Order of the Board of Directors, LOUIS R. BUCALO, M.D. President and Chief Executive Officer Dated: August 6, 1999 TITAN PHARMACEUTICALS, INC. 400 Oyster Point Boulevard Suite 505 South San Francisco, California 94080 ---------- PROXY STATEMENT ANNUAL MEETING OF SHAREHOLDERS ---------- This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors of Titan Pharmaceuticals, Inc. (the "Company") for the Annual Meeting of Shareholders to be held at the offices of the Company, 400 Oyster Point Boulevard, Suite 505, South San Francisco, California 94080 on August 30, 1999, at 9:00 a.m. and for any adjournment or adjournments thereof, for the purposes set forth in the accompanying Notice of Annual Meeting of Shareholders. Any shareholder giving such a proxy has the power to revoke it at any time before it is voted. Written notice of such revocation should be forwarded directly to the Secretary of the Company, at the above stated address. If the enclosed proxy is properly executed and returned, the shares represented thereby will be voted in accordance with the directions thereon and otherwise in accordance with the judgment of the persons designated as proxies. Any proxy on which no direction is specified will be voted in favor of the actions described in this Proxy Statement and for the election of the nominees set forth under the caption "Election of Directors." The approximate date on which this Proxy Statement and the accompanying form of proxy will first be mailed or given to the Company's shareholders is August 6, 1999. Your vote is important. Accordingly, you are urged to sign and return the accompanying proxy card whether or not you plan to attend the meeting. If you do attend, you may vote by ballot at the meeting, thereby canceling any proxy previously given. VOTING SECURITIES Only holders of shares of Common Stock, $.001 par value per share (the "Shares"), and the holders of shares of Series D Convertible Preferred Stock, $.001 par value per share (the "Preferred Shares"), of record at the close of business on July 23, 1999 are entitled to vote at the meeting. On the record date, the Company had outstanding and entitled to vote 15,396,518 Shares and 606,061 Preferred Shares. For purposes of voting at the meeting, each Share and each Preferred Share are entitled to one vote upon all matters to be acted upon at the meeting. A majority in interest of the outstanding Shares and Preferred Shares represented at the meeting in person or by proxy shall constitute a quorum. The affirmative vote of a plurality of the Shares and Preferred Shares so represented is necessary to elect the nominees for election as directors and the affirmative vote of a majority of the Shares and Preferred Shares so represented, excluding broker non-votes, is necessary to approve and ratify the appointment of Ernst & Young LLP, independent certified public accountants, as the independent auditors of the Company. Abstentions and broker non-votes are counted for purposes of determining the presence or absence of a quorum for the transaction of business. If a shareholder, present in person or by proxy, abstains on any matter, the shareholder's shares will not be voted on such matter. Thus, an abstention from voting on any matter has the same legal effect as a vote "against" the matter even though the shareholder may interpret such action differently. Except for determining the presence or absence of a quorum for the transaction of business, broker non-votes are not counted for any purpose in determining whether a matter has been approved. PRINCIPAL SHAREHOLDERS The following table sets forth, as of July 23, 1999, certain information concerning the beneficial ownership of the Shares by (i) each shareholder known by the Company to own beneficially five percent or more of the outstanding Shares; (ii) each director of the Company; (iii) each executive officer of the Company; and (iv) all executive officers and directors of the Company as a group, and their percentage ownership and voting power. Percent of Shares Shares Beneficially Beneficially Name and Address of Beneficial Owner(1) Owned(2) Owned - --------------------------------------- ------------- ------------ Louis R. Bucalo, M.D. ....................... 954,389(3) 6.2% Ernst-Gunter Afting, M.D., Ph.D. ............ 18,500(4) * Richard C. Allen, Ph.D. ..................... 281,707(5) 1.8% Victor J. Bauer, Ph.D. ...................... 45,476(6) * Sunil R. Bhonsle ............................ 374,202(7) 2.4% Eurelio M. Cavalier ......................... 7,500(4) * Robert E. Farrell ........................... 176,120(8) 1.1% Michael K. Hsu .............................. 46,118(9) * Hubert Huckel, M.D. ......................... 131,000(10) * Marvin E. Jaffe, M.D. ....................... 21,000(4) * Konrad M. Weis, Ph.D. ....................... 70,352(11) * Kenneth J. Widder, M.D. ..................... 33,737(12) * AMVESCAP plc ................................ 1,220,538(13) 7.9% 1315 Peachtree Street N.E c/o INVESCO Atlanta, GA 30309 BVF Partners LP ............................. 1,841,921(14) 12.0% All executive officers and directors as a group (12 persons) ................... 2,160,101 14.0% - ---------- * Less than one percent. (1) Unless otherwise indicated, the address of such individual is c/o Titan Pharmaceuticals, Inc., 400 Oyster Point Boulevard, Suite 505, South San Francisco, California 94080. (2) In computing the number of shares beneficially owned by a person and the percentage ownership of a person, shares of common stock of the Company subject to options held by that person that are currently exercisable or exercisable within 60 days are deemed outstanding. Such shares, however, are not deemed outstanding for purposes of computing the percentage ownership of each other person. Except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock. (3) Includes 654,158 shares issuable upon exercise of outstanding options. (4) Represents shares issuable upon exercise of outstanding options. (5) Includes 276,707 shares issuable upon exercise of outstanding options. (6) Includes 40,476 shares issuable upon exercise of outstanding options. (7) Includes 357,202 shares issuable upon exercise of outstanding options. (8) Includes 166,120 shares issuable upon exercise of outstanding options. (9) Includes 26,117 shares issuable upon exercise of outstanding options. (10) Includes 21,000 shares issuable upon exercise of outstanding options. Includes 100,000 shares held by a family partnership for which Dr. Huckel serves as general partner. (11) Includes 26,117 shares issuable upon exercise of warrants and outstanding options. (12) Includes 26,117 shares issuable upon exercise of outstanding options. (13) Represents shares held by a group of companies whose Parent Holding Company is AMVESCAP plc. (14) Includes 1,729,546 shares held by (i) Biotechnology Value Fund LP, for which BVF Partners LP serves as general partner and (ii) three investment accounts managed by BVF Partners LP. 2 ---------- The following table sets forth, as of July 23, 1999, certain information concerning the beneficial ownership of the Preferred Shares by the sole shareholder of the Preferred Shares and such shareholder's percentage ownership and voting power. Percent of Shares Shares Beneficially Beneficially Name and Address of Beneficial Owner Owned Owned - ------------------------------------ ------------- ------------ Novartis Pharma AG ........................... 606,061(1) 100% Lichtrasse 35 CH - 400 Basel, Switzerland - ---------- (1) Constitutes all of the outstanding Preferred Shares. The Preferred Shares are convertible into Shares at a conversion price of $7.50. Accordingly, upon conversion of the Preferred Shares, the Company will issue 666,667 Shares. Novartis Pharma AG may be deemed to beneficially own 4.4% of the Shares as of July 23, 1999. EXECUTIVE OFFICERS The following sets forth the names and ages of the executive officers of the Company, their respective positions and offices, and their respective principal occupations or employments during the last five years. Name Age Office ---- --- ------ Louis R. Bucalo, M.D. .......... 40 President, Chief Executive Officer and Director Sunil R. Bhonsle ............... 49 Executive Vice President and Chief Operating Officer Richard C. Allen, Ph.D. ........ 56 Executive Vice President Robert E. Farrell .............. 49 Executive Vice President and Chief Financial Officer LOUIS R. BUCALO, M.D. is a founder of the Company and has served as the Company's President and Chief Executive Officer since its inception. Prior to founding the Company, Dr. Bucalo was Associate Director of Clinical Research at Genentech, Inc. Dr. Bucalo graduated with honors from Stanford University School of Medicine and Harvard University. SUNIL BHONSLE joined the Company as Executive Vice President and Chief Operating Officer in September 1995. Mr. Bhonsle served in various positions, including Vice President and General Manager-Plasma Supply and Manager-Inventory and Technical Planning, at Bayer Corporation from July 1975 until April 1995. Mr. Bhonsle holds an M.B.A. from the University of California at Berkeley and a B.Tech. in chemical engineering from the Indian Institute of Technology. RICHARD C. ALLEN, PH.D., joined the Company as Executive Vice President in August 1995. From January 1995 until it was merged into Titan in March 1999, he also served as President and Chief Executive Officer of Theracell. From June 1991 until December 1994, Dr. Allen was Vice President and General Manager of the Neuroscience Strategic Business Unit of Hoechst-Roussel Pharmaceuticals, Inc. Dr. Allen holds a Ph.D. in medicinal chemistry and a B.S. in pharmacy from the Medical College of Virginia. ROBERT E. FARRELL joined the Company as Executive Vice President and Chief Financial Officer in September 1996. Mr. Farrell was employed by Fresenius USA, Inc. from 1991 until August 1996 where he served in various capacities, including Vice President Administration, Chief Financial Officer and General Counsel. His last position was Corporate Group Vice President. Mr. Farrell holds a B.A. from University of Notre Dame and a J.D. from Hastings College of Law, University of California. 3 ELECTION OF DIRECTORS At the meeting, nine directors will be elected by the shareholders to serve until the next Annual Meeting of Shareholders or until their successors are elected and shall qualify. It is intended that the accompanying proxy will be voted for the election, as directors, of the nine persons named below, unless the proxy contains contrary instructions. The Company has no reason to believe that any of the nominees will not be a candidate or will be unable to serve. However, in the event that any of the nominees should become unable or unwilling to serve as a director, the persons named in the proxy have advised that they will vote for the election of such person or persons as shall be designated by the Management. The following sets forth the names and ages of the nine nominees for election to the Board of Directors, their respective principal occupations or employments during the past five years and the period during which each has served as a director of the Company. Name Age Office ---- --- ------ Louis R. Bucalo, M.D.(1) ....... 40 President, Chief Executive Officer and Director Victor J. Bauer, Ph.D. ......... 64 Executive Director of Corporate Development and Director Michael K. Hsu(2) .............. 50 Director Hubert Huckel, M.D.(3) ......... 67 Director Marvin E. Jaffe, M.D.(2)(3) .... 63 Director Konrad M. Weis, Ph.D.(1) ....... 70 Director Kenneth J. Widder, M.D.(1)(3) .. 46 Director Ernst-Gunter Afting, M.D., Ph.D. .................. 56 Director Eurelio Cavalier ............... 66 Director - ---------- (1) Member of Executive Committee (2) Member of Audit Committee (3) Member of Compensation Committee LOUIS R. BUCALO, M.D., see biographical information set forth above under "Executive Officers." VICTOR J. BAUER, PH.D., has served as a director of the Company since November 1997. Dr. Bauer joined the Company in February 1997, and currently serves as Executive Director of Corporate Development. From April 1996 until its merger into Titan, Dr. Bauer also served as a director and Chairman of Theracell. From December 1992 until February 1997, Dr. Bauer was a self-employed consultant to companies in the pharmaceutical and biotechnology industries. Prior to that time, Dr. Bauer was with Hoechst-Roussel Pharmaceuticals Inc., where he served as President from 1988 through 1992. MICHAEL K. HSU has served as a director of the Company since March 1993. He is currently a General Partner of EndPoint Merchant Group, a Merchant Bank specializing in making investments into the healthcare and life science industries. Mr. Hsu has served as Director-Corporate Finance of National Securities Corp. from November 1995 through April 1998, and from November 1994 through October 1995 with Coleman & Company Securities in the same capacity. Mr. Hsu previously held various executive positions with Steinberg and Lyman Health Care Company, Ventana Venture Growth Fund, Asian Pacific Venture Group (Thailand) and D. Blech Life Science Ventures. HUBERT HUCKEL, M.D., has served as a director of the Company since October 1995. From 1964 until his retirement in December 1992, Dr. Huckel served in various positions with The Hoechst Group. At the time of his retirement, he was Chairman of the Board of Hoechst-Roussel Pharmaceuticals, Inc., Chairman and President of Hoechst-Roussel Agri-Vet Company and a member of the Executive Committee of Hoechst Celanese Corporation. He currently serves on the Board of Directors of Thermogenesis, Corp. and Gynetics, Inc. 4 MARVIN E. JAFFE, M.D., has served as a director of the Company since October 1995. From 1988 until April 1994, Dr. Jaffe served as President of R.W. Johnson Pharmaceutical Research Institute where he was responsible for the research and development activities in support of a number of Johnson & Johnson companies, including ORTHO-McNeil Pharmaceuticals, ORTHO Biotech and CILAG. From 1970 until 1988, he was Senior Vice President of the Merck Research Laboratories. He currently serves on the Boards of Directors of Chiroscience, plc, Immunomedics, Inc., Matrix Pharmaceuticals, Inc., and Vanguard Medica, plc. KONRAD M. WEIS, PH.D., has served as a director of the Company since March 1993. Dr. Weis is the former President and Chief Executive Officer of Bayer Corporation. Dr. Weis serves as a director of PNC Equity Management Company, Michael Baker Corporation, Visible Genetics, Inc. and Demegen, Inc. KENNETH J. WIDDER, M.D., has served as a director of the Company since March 1993. Dr. Widder is the former Chairman and Chief Executive Officer of Molecular Biosystems, Inc. Dr. Widder currently is a general partner of Windamere Venture Partners. ERNST-GUNTER AFTING, M.D., PH.D., has served as a director of the Company since May 1996. Dr. Afting has served as the President of the GSF-National Center for Environment and Health, a government research center in Germany, since 1995. From 1984 until 1995, he was employed in various capacities by the Hoechst Group, serving as Divisional Head of the Pharmaceuticals Division of the Hoechst Group from 1991 to 1993 and as President and Chief Executive Officer of Roussel Uclaf (a majority stockholder of Hoechst AG) in Paris from 1993 until 1995. EURELIO M. CAVALIER has served as a director of the Company since September 1998. From 1958 until his retirement in 1994, Mr. Cavalier was employed in various capacities by Eli Lilly & Co., serving as Vice President Sales from 1976 to 1982 and Group Vice President U.S. Pharmaceutical Business Unit from 1982 to 1993. Mr. Cavalier currently serves on the Boards of Directors of DataChem, Inc., ProSolv, Inc. and St. Vincent Hospital. He serves on the Advisory Board of COR Therapeutics and Indiana Heart Institute. Director Compensation During 1999, non-employee directors are entitled to receive annual options to purchase 10,000 shares of common stock vesting quarterly as fees for the Board of Directors meetings, and are reimbursed for their expenses in attending such meetings. Directors are not precluded from serving the Company in any other capacity and receiving compensation therefor. In addition, directors are entitled to receive options ("Director Options") pursuant to the Company's 1998 Stock Option Plan. In July 1998, each of the Company's current directors other than Dr. Bauer received Director Options to purchase 5,000 shares of common stock at an exercise price of $4.14 per share. Eurelio Cavalier received Director Options to purchase 10,000 shares of common stock at an exercise price of $2.47 per share when he joined the Board of Directors in September 1998. The Company is party to a consulting agreement with Dr. Afting pursuant to which he receives fees of $7,000 annually. The Company is party to a consulting agreement with Dr. Jaffe pursuant to which he receives fees of $35,000 annually. 5 Board Committees and Designated Directors The Board of Directors has an Executive Committee, a Compensation Committee and an Audit Committee. The Executive Committee exercises all the power and authority of the Board of Directors in the management of the Company between Board meetings, to the extent permitted by law. The Compensation Committee makes recommendations to the Board concerning salaries and incentive compensation for officers and employees of the Company and may administer the Company's stock option plans. The Audit Committee reviews the results and scope of the audit and other accounting related matters. The Board of Directors met four times during 1998 and also took action by unanimous written consent. The Executive Committee and the Compensation Committee each met one time and also took action by unanimous written consent, and the Audit Committee met one time. Each of the current directors of the Company attended at least 75% of the aggregate of (i) the meetings of the Board of Directors and (ii) meetings of any Committees of the Board on which such person served which were held during the time such person served. EXECUTIVE COMPENSATION The following summary compensation table sets forth the aggregate compensation awarded to, earned by, or paid to the Chief Executive Officer and to executive officers whose annual compensation exceeded $100,000 for the fiscal year ended December 31, 1998 (collectively, the "named executive officers") for services during the fiscal years ended December 31, 1998, 1997 and 1996: Summary Compensation Table Annual Compensation ----------------------- Name and Principal Position Year Salary Bonus --------------------------- ---- ---------- ----------- Louis R. Bucalo ............................ 1998 $243,100 $ 0 President and Chief Executive ............ 1997 $231,525 $58,721(1) Officer .................................. 1996 $210,000 $42,000 Sunil R. Bhonsle ........................... 1998 $194,800 $ 0 Executive Vice President and ............. 1997 $190,991 $68,370(1) Chief Operating Officer .................. 1996 $185,000 $ 9,250 Richard C. Allen ........................... 1998 $197,800 $ 0 Executive Vice President(2) .............. 1997 $193,984 $77,096(1) 1996 $185,000 $15,500 Robert E. Farrell .......................... 1998 $190,400 $ 0 Executive Vice President and ............. 1997 $186,665 $18,500 Chief Financial Officer .................. 1996 $ 53,958 $ 0 - ---------- (1) Bonuses pertain to fiscal year 1995 and were paid in 1997. (2) Dr. Allen also served as President and Chief Executive Officer of Theracell and President and Chief Operating Officer of ProNeura during these periods. Dr. Allen received his entire salary from Theracell. Dr. Allen's bonus included $20,000 paid by Titan. 6 Option Grants in Last Fiscal Year The following table contains information concerning the stock option grants made to the named executive officers during the fiscal year ended December 31, 1998. No stock appreciation rights were granted to these individuals during such year.