Group Structure and Shareholders
Group Structure
The Basilea group is composed of its parent company, Basilea Pharmaceutica Ltd. (“Basilea”),
BPh Investitionen Ltd. (“BPh”), a subholding company, Basilea Pharmaceutica China Ltd.
(“Basilea China”), a Chinese operating subsidiary held through BPh, and fully owned subsidiaries in Canada, Denmark, France, Germany, Italy, Spain, United Kingdom and the United States focussing on the future distribution of pharmaceutical products (collectively the “Company”).
The operating activities of the Company are focused on research, development and commercial operations of pharmaceutical products. Currently, there are no sales activities in the Company. The Company’s operating activities are directed by and primarily located within Basilea, with supporting activities carried out by Basilea China, as further described.
Basilea is operationally organized along core activities with a development function, headed by the Chief Development Officer, a research function, headed by the Chief Scientific Officer, commercial operations, headed by the Chief Commercial Officer, Finance and
Business Development, headed by the Chief Financial
Officer. These heads are members of the Management Committee. The Management Committee is led by the Chief Executive Officer. For further information on the
Management Committee, please refer to the section “Management/Members, Functions and Other Activities”.
Basilea is represented on the Board of Directors of its fully owned subsidiaries. In addition, there is a close cooperation related to the operations between Basilea’s research, development and commercial groups and its subsidiaries.
Basilea Pharmaceutica Ltd.
Basilea is located at Grenzacherstrasse 487, 4058 Basel, Switzerland, and Basilea’s shares were listed on the SWX Swiss Exchange on March 25, 2004, under the Swiss security number (Valorennummer)
1 143 244. The ISIN is CH 001 143 244 7. The Common Code is 018859220. The ticker symbol is BSLN. As of December 31, 2007, the market capitalization of Basilea amounted to CHF 2,104,380,999 (9,543,678 registered shares at CHF 1 per share). None of its shares are held by the Company.
Basilea Pharmaceutica China Ltd.
Basilea China is a wholly foreign owned enterprise (“WFOE”), founded May 29, 2002, and incorporated with limited liability under the laws of The People’s Republic of China, with a fully paid up registered capital of USD 7 million as of December 31, 2007. Basilea China is located in the Haimen Municipal Economic Zone, Jiangsu Province (north of Shanghai), People’s Republic of China. The subsidiary provides complementary services, primarily in the field of chemical synthesis research and development, in connection with Basilea’s research and development compounds. The shares of Basilea China are not listed on any stock exchange. All of its shares are held and controlled by BPh, a Swiss stock corporation with registered office at Zugerstrasse 76b in 6340 Baar, Switzerland. BPh has a share capital of CHF 131,950, divided into 10,150 fully paid-up registered shares with a par value of CHF 13 each, all held and controlled by Basilea.
As of December 31, 2007, the Company engaged approximately 250 employees (full-time equivalents).
For information on the non-listed companies belonging to the Company, please refer to note 5 (Shareholders’ Equity) to the Financial Statements.
Significant Shareholders
According to the share register, the shareholders shown on the following table held 3% or more of the shares and voting rights of Basilea as of December 31, 2007.
Basilea received a notification of shareholdings pursuant to article 20 of the Swiss Federal Act on Stock Exchanges and Securities Trading (“SESTA”) on March 23, 2007, from Mr. Hranov Bühler, Goldhaldenstrasse 37, 8702 Zollikon, indicating that he has reduced its shareholdings in
Basilea to less than 5%. The notification was published in the Swiss Official Gazette of Commerce (“Schweizerisches Handelsamtsblatt”) on March 29, 2007. Basilea received a notification of shareholdings pursuant to article 20 SESTA on March 23, 2007, from Varuma AG, Aeschenvorstadt 55, 4051 Basel, indicating that it has reduced its shareholdings in Basilea to less than 5%. The notification was published in the Swiss Official Gazette of Commerce on March 30, 2007.
On April 19, 2007, Basilea received a notification of shareholdings pursuant to article 20 SESTA from HBM BioVentures (Cayman) Ltd., Centennial Towers, Third Floor, 2454 West Bay Road, Grand Cayman, Cayman Islands (“HBM”), a subsidiary of HBM BioVentures AG, Grabenstrasse 25, 6340 Baar, indicating that HBM has reduced its shareholdings in Basilea to less than 5%. The notification was published in the Swiss Official Gazette of Commerce on April 26, 2007.
Basilea received a notification of shareholdings pursuant to article 20 SESTA on June 21, 2007, from Deutsche Bank AG, Branch Zürich, Uraniastrasse 9, 8023 Zürich, that Deutsche Bank AG, Branch Zürich, Uraniastrasse 9, 8023 Zürich, Deutsche Bank AG, Branch London, Winchester House, 1 Great Winchester Street, London EC2N 2DB, Great Britain, DWS Investments Schweiz, Uraniastrasse 9, 8023 Zürich, Deutsche Asset Management Investmentgesellschaft mbH, Mainzer Landstrasse 178-190, 60327 Frankfurt am Main, Germany, und DWS Investments Italy SGR S.p.A., via M. Gloia 8, 20124 Milan, Italy, all group companies of Deutsche Bank AG, Frankfurt am Main, Germany, indicating that as of June 15, 2007, the group has a shareholding of 605,371 registered shares corresponding to 6.6% of the voting rights. The notification was published on June 28, 2007.
On July 11, 2007, HBM notified Basilea that its shareholdings in Basilea is 8.9% corresponding to 468,929 registered shares equal to 3.9% voting rights and 5.1% in call-warrants. The notification was published in the Swiss Official Gazette of Commerce on July 18, 2007.
Basilea received the following notification on July 19, 2007, from one of its shareholders in accordance with Article 20 of the Swiss Federal Act on Stock Exchanges and Securities Trading: Fidelity International Limited, Kingswood Fields, Midfield Lane, Lower Kingswood, Tadworth, Surrey KT20 6RB, United Kingdom has notified
Basilea on July 19, 2007, that Fidelity International Limited, principal address located at Pembroke Hall, 42 Crow Lane, Hamilton, Bermuda, and its direct and indirect subsidiaries, with securities held in managed accounts of clients, have increased their total shareholdings in Basilea to 5.1% as of July 5, 2007, and how hold 468,929 registered shares of Basilea Pharmacutica Ltd. The notification was published in the Swiss Official Gazette of Commerce on July 25, 2007.
Basilea received a notification of shareholdings pursuant to article 15 and 20 SESTA on August 3, 2007, from Deutsche Bank AG, Branch Zürich, Uraniastrasse 9, 8023 Zürich, that in accordance with article 15 para. 5 of the Ordinance on Stock Exchange and Securities Trading the group is newly composed of Deutsche Bank AG, Branch Zürich, Uraniastrasse 9, 8023 Zürich, Deutsche Bank AG, Branch London, Winchester House, 1 Great Winchester Street, London EC2N 2DB, Great Britain, DWS Investments Schweiz, Uraniastrasse 9, 8023 Zürich, Deutsche Asset Management Investmentgesellschaft mbH, Mainzer Landstrasse 178-190, 60327 Frankfurt am Main, Germany, all group companies of Deutsche Bank AG, Frankfurt am Main, Germany, and that the group has a shareholding of total 8% corresponding to 704,382 registered shares equal to 7.7% voting rights and long calls/covered warrants reflecting 23,445 registered shares or 0.3% voting rights The notification was published on August 10, 2007.
Basilea received a notification of shareholdings pursuant to article 15 and 20 SESTA on August 30, 2007, from Deutsche Bank AG, Branch Zürich, Uraniastrasse 9, 8023 Zürich, that the group is newly composed of Deutsche Bank AG, Branch Zürich, Uraniastrasse 9, 8023 Zürich, Deutsche Bank AG, Branch London, Winchester House, 1 Great Winchester Street, London EC2N 2DB, Great Britain, Deutsche Bank AG Frankfurt am Main, Taunusanlage 12, 60325 Frankfurt am Main, DWS Investments Schweiz, Uraniastrasse 9, 8023 Zürich, Deutsche Asset Management Investmentgesellschaft mbH, Mainzer Landstrasse 178-190, 60327 Frankfurt am Main, Germany, all group companies of Deutsche Bank AG, Frankfurt am Main, Germany, and that as of August 30, 2007, the group has shareholdings of total 7.5% corresponding to 640,961 registered shares equal to 7% of voting rights and calls/covered warrants reflecting 43,617 registered shares or 0.5% voting rights. The notification was published on September 7, 2007.
On October 1, 2007, Deutsche Bank AG, Branch Zurich, Uraniastrasse 9, 8023 Zurich, notified Basilea that the group as described above has reduced its shareholdings below 5% voting rights. The notification was published on October 5, 2007.
Fidelity International Limited, Kingswood Fields, Midfield Lane, Lower Kingswood, Tadworth, Surrey KT20 6RB, United Kingdom has notified Basilea Pharmaceutica Ltd. on December 4, 2007, that Fidelity Management & Research LLC („FMR“), principal address located at 82 Devonshire Street, Boston, MA 02109, USA, and its direct and indirect subsidiaries, with FMR as the parent holding company of Fidelity Management & Research Company („FMRCO“), and Fidelity Management Trust Company („FMTC“), as well as Pyramis Global Advisors Trust Company LLC („PGATC“) and Pyramis Global Advisors LLC („PGALLC“) that are both indirect wholly-owned subsidiaries of FMR; have total shareholdings in Basilea Pharmaceutica Ltd. of 3.3% corresponding to 298,836 registered shares of Basilea Pharmaceutica Ltd. The shareholdings are held by FA DIVERSIFIED INTERNATIONAL, FA MID CAP II FD, SELECT PHARMACEUTICALS, VIP III MID CAP PORTFOLIO, managed by FMRCO and ING DIVERSIFIED MID CAP T2212, PYRAMIS SEL INTL SM CAP (T1056), METLIFE INTL STOCK T50432, SST BOA FL SLCT INTL SM T50818, managed by FMTC as well as CDP QUEBEC T55293, PYRAMIS SLCT INTL SM CP T55105 managed by PGALLC. The notification was published on December 12, 2007. Deutsche Bank AG, Frankfurt am Main, Zurich Branch, P.O. Box 7370, 8023 Zürich has notified Basilea Pharmaceutica Ltd. on December 7, 2007, that the shareholder group consisting of Deutsche Bank AG, Frankfurt, Theodor-Heuss-Allee 70, 60486 Frankfurt and, and Deutsche Asset Management Investmentgesellschaft mbH, Mainzer Landstrasse 178-190, 60327 Frankfurt, has purchase positions pursuant to Art. 10 para. 3 a SESTO-SFBC of 395,908 registered shares corresponding to 4.3% of voting rights as well as sale positions pursuant to Art. 10 para. 3 b SESTO-SFBC corresponding to 8.9% of voting rights. The sales positions consist of 150,000 share sale rights corresponding to 150,000 underlying shares or 1.6% of voting rights and 56,103,408 granted conversion or purchase rights corresponding to 669,754 underlying shares or 7.3% of voting rights. The notification was published on December 14, 2007.
On December 14, 2007, Roche Holding AG notified
Basilea that it has reduced its shareholdings of 1,157,205 registered shares corresponding to 12.6% voting rights by 50,000 registered shares to new 1,107,205 registered shares corresponding to 12.1% voting rights. The notification was published in the Swiss Official Gazette of Commerce on December 27, 2007.
Basilea disclosed that as of December 14, 2007, it has sale positions of 1,443,596 granted share purchase rights consisting of 1,443,596 employee share option rights (according to the employee stock option plan of the company) which entitled to purchase 1,443,596 registered shares of Basilea at a ratio of 1:1. These 1,443,596 employee share option rights correspond to 15.8% of voting rights. The notification was published on December 28, 2007.
HBM BioVentures (Cayman) Ltd., Centennial Tower, 3rd Floor, 2454 West Bay Road Grand Cayman, Cayman
Islands, a fully owned subsidiary of HBM BioVentures AG, Grabenstrasse 25, 6340 Baar, Switzerland, notified Basilea on December 20, 2007, that it holds purchase positions corresponding to 997,190 registered shares with 10.9% of voting rights. These purchase positions consists of 302,190 registered shares (3.3% of voting rights), 17,000,000 call options (corresponding to 2.3% of voting rights; BSLOD SW; ISIN: CH0028814660), 2,500,000 call options (corresponding to 0.6% of voting rights; BSLW SW; ISIN: CH0027968053), 22,600,000 call options (corresponding to 3.1% of voting rights; BSLDU SW; ISIN: CH0028814678) and 150,000 put options (corresponding to 1.6% of voting rights; DB-BSLN; OTC-traded). Issuer: Deutsche Bank; Underlying share: Registered shares of Basilea; ratio: 1:1; Strike Price:
CHF 240; Expiry date: March 20, 2008; Type: European Style). The notification was published on January 4, 2008.
HBM BioVentures (Cayman) Ltd., Centennial Tower, 3rd Floor, 2454 West Bay Road Grand Cayman, Cayman
Islands, a fully owned subsidiary of HBM BioVentures AG, Grabenstrasse 25, 6340 Baar, Switzerland, notified on December 21, 2007, that it holds purchase positions of
Basilea corresponding to 768,843 registered shares with 8.4% of voting rights. These purchase positions consist of 336,343 registered shares (corresponding to 3.7% of voting rights), 22,600,000 call options (corresponding to 3.1% of voting rights; BSLDU SW; ISIN: CH0028814678) and 150,000 put options (corresponding to 1.6% of voting rights; DB-BSLN; OTC-traded); Issuer: Deutsche Bank; Underlying share: Registered shares of Basilea; ratio: 1:1; Strike Price: CHF 240; Expiry date: March 20, 2008; Type: European Style). The notification was published on January 7, 2008.
The numbers of shares and ownership percentages in the table above reflect the situation as per December 31, 2007, taking into account changes in share capital caused by the capital increase and the exercise of options during 2007 and the indications on significant shareholdings reflected in note 10 to the Financial Statements pursuant to article 663c CO.
Cross-Shareholdings
No cross-shareholdings existed as of December 31, 2007.
Capital Structure and Shares
Share Capital
The share capital of Basilea as of December 31, 2007, amounted to CHF 9,543,678, consisting of 9,543,678 registered shares with a par value of CHF 1 per share. The share capital is fully paid up. As of December 31, 2007, the Company did not hold any shares of Basilea.
Authorized Capital and Conditional
Capital
As of December 31, 2007, total authorized capital amounts to CHF 660,000 and total conditional capital amounts to CHF 2,856,463.
On April 12, 2005, the ordinary shareholders’ meeting approved authorized capital in the amount of CHF 540,000, valid until April 12, 2007, which was entered into the Commercial Register of Basel-Stadt on April 14, 2005. On March 7, 2007, the ordinary shareholders’ meeting approved to extend the authorized capital in the amount of CHF 540,000 (540,000 registered shares with a par value of CHF 1 each), and approved additional authorized capital in the amount of 1,500,000 (1,500,000 registered shares with a par value of CHF 1 each), both valid until March 7, 2009, which was entered into the Commercial Register of Basel-Stadt on the same day. The timing as well as the terms and conditions of the issuance of new shares under these two categories of authorized capital are to be set by the Board of Directors. The Board of Directors is entitled to exclude the preferential subscription right (”Bezugsrecht”) of shareholders for the authorized capital in the amount of CHF 540,000 if the capital increase is made for the purpose of granting an interest to strategic partners, or for the acquisition of business undertakings, a participation in business undertakings, participations, products or license rights for the development, manufacturing or distribution of products in the area of pharmacy, biology or diagnostics. Unused preferential subscription rights of both categories of authorized capital are at the disposal of the Board of Directors, who may place them at market conditions.
On March 21, 2007, the additional authorized capital in the amount of 1,500,000 was reduced by the amount of 1,200,000 to 300,000 due to the capital increase of CHF 1,200,000 (1,200,000 registered shares with a par value of CHF 1) in an offering of 1,200,000 shares to existing shareholders and in a global offering. The preferential subscription right has been honoured. On March 26, 2007, the additional authorized capital was further reduced by the amount of 180,000 to 120,000 (180,000 registered shares with a par value of CHF 1) due to the exercise of the over-allotment option in the offering.
Furthermore, shareholders approved to increase the conditional capital of up to CHF 3,234,635 (3,234,635 registered shares with a par value of CHF 1 each), to be fully paid up, in the ordinary shareholders’ meeting of March 7, 2007. CHF 2,594,635 of the conditional capital are reserved for the exercise of option rights granted under the Company’s stock option plan at a strike price to be set by the Board of Directors, and CHF 640,000 are reserved for the exercise of option or conversion rights granted to the holders of options or bonds in connection with new bonds or similar debt instruments that would be issued by Basilea or one of its subsidiaries, and for which the Board of Directors is entitled to set the conditions. The preferential subscription rights of shareholders are excluded under the conditional capital. The prior subscription right of shareholders (”Vorwegzeichnungsrecht”) is granted for the portion of CHF 640,000, but its exercise is limited to three working days. The minimum issue price for shares issued in connection with bonds or similar debt instruments has to amount to at least CHF 75 per share. Relating to bonds or similar debt instruments connected with conversion or option rights for which the prior subscription right is withdrawn, the option rights may be exercised only during a maximum period of seven years, and the conversion rights only during a maximum of ten years.
In 2007, 378,172, in 2006, 349,004, and in 2005, 55,548 registered shares with a par value of CHF 1 per share were issued under the conditional capital in connection with the exercise of stock options under Basilea’s stock option plan.
Any shares issued under the authorized or conditional capital are subject to the transfer restrictions set forth under “Limitations on Transferability of Shares and Nominee Registrations” (see below).
Changes in Capital
In 2007, Basilea increased its share capital by CHF 1,380,000 (1,380,000 registered shares with a par value of CHF 1 per share) in connection with an offering to existing shareholders honouring the preferential subscription rights and in a global offering of the shares which had not been subscribed by existing shareholders.
In addition, in 2007, 378,172, in 2006, 349,004, registered shares and in 2005 55,548 registered shares were issued as a result of the exercise of stock options under Basilea’s stock option plan.
For further information on changes in capital in 2007, 2006, and 2005, including changes in reserves and retained earnings, please refer to the Consolidated Statement of changes in Shareholders’ Equity as well as note 12 (Shareholders’ Equity) to the Financial Statements, and note 6 (Share Capital, Authorized Capital and Conditional Capital) to the Financial Statements of Basilea. Please also refer to the Consolidated Statement of changes in Shareholders’ Equity included in the Annual Reports 2006 and 2005 for information on changes in equity in 2006 and 2005.
Shares
Basilea has only one class of shares (registered shares) and the par value of Basilea’s shares is CHF 1 per share. Each share is fully paid up and carries one vote and equal dividend rights, with no special privileges.
Participation and Profit Sharing Certificates
Basilea has not issued any participation or profit sharing certificates.
Limitations on Transferability of Shares and Nominee Registrations
Basilea’s shares are not certificated since its IPO. Shareholders are not entitled to request printing and delivery of share certificates, but Basilea may, in its sole discretion, decide to print and deliver share certificates. Any shareholder may, however, at any time request Basilea to issue a confirmation regarding its shareholding, but such confirmation is not a negotiable instrument.
The transfer of shares occurs through an entry in the books of a bank or depository institution following an assignment in writing by the selling shareholder and notification of such assignment to Basilea by the bank or the depository institution.
A transfer of shares further requires that a shareholder files a share registration form in order to be registered in the share register of Basilea with voting rights. Failing such registration by the deadline set from time to time by the Board of Directors, a shareholder or usufructuary (“Nutzniesser”) may not vote at, or participate in a shareholders’ meeting, but is still entitled to receive dividends and other rights of financial value. No exemptions were granted from the above restrictions in 2007.
According to article 5 of Basilea’s Articles of Incorporation, a purchaser of shares will be recorded in Basilea’s share register as a shareholder or usufructuary with voting rights if the purchaser discloses its name, citizenship or registered office, respectively, and address, and gives a declaration that it has acquired the shares in its own name and for its own account. According to the nominee regulation enacted by the Board of Directors, a person or legal entity not explicitly stating in its registration request that it will hold the shares for its own account (”nominee”) may be entered as a shareholder in the share register with voting rights for shares up to a maximum of 3% of the outstanding nominal share capital, provided such nominee enters into a nominee agreement with Basilea. Shares held by a nominee that exceed this limit are only registered in the share register with voting rights if such nominee declares in writing to disclose name, address, and shareholding of any person or legal entity for whose account the nominee is holding 0.5% or more of the outstanding nominal share capital. The limit of 3% shall apply correspondingly to nominees who are related to one another through capital ownership or voting rights or have a common management or are otherwise interrelated.
Basilea’s Articles do not further limit the transferability of shares. A qualified majority of at least two-thirds of the share votes represented as well as the majority of the par values of shares represented at a shareholders’ meeting are required for resolutions on transfer restrictions of Basilea’s shares. For further information on the registration in the share register, please refer to the section “Registration in the Share Register”.
Shares may only be pledged by written pledging agreement to the bank that administers the book entries of such shares for the account of the pledging shareholder. Basilea does not need to be notified of such pledging.
Convertible Bonds and Options
For information on the stock option plan for directors, management and employees, and on the number of options granted thereunder, please refer to note 11 ”Stock-Based Compensation” to the consolidated Financial Statements included in this Annual Report.
As of December 31, 2007, there were no convertible bonds of the Company outstanding.
Board of Directors
Members, Functions and Other Activities
The following table sets forth the name and terms of the current members of the Board of Directors:
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Mr. Werner Henrich
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Dr. Andreas Wicki |
Dr. Anthony Man
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Prof. Peter van Brummelen
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A description of each member’s nationality, business
experience, education and activities is outlined below:
Werner Henrich, Chairman, was born 1943 and is a French citizen. He has an education as a chemist and European patent attorney. He worked for F. Hoffmann-La Roche Ltd. (“Roche”) in Basel for more than 30 years. Mr. Henrich held various
positions at Roche including Head of Global Intellectual Property and Pharmaceutical Licensing for more than 12 years. He was also a member of the Roche Pharmaceutical Division Executive Board. In this function Mr. Henrich was responsible for intellectual property activities of all Roche divisions and for major pharmaceutical transactions including research collaborations, patent settlements, licensing-in and -out as well as product acquisitions. From February 2001 to October 2001, Mr. Henrich acted as CEO of Basilea. He retired from Roche in November 2003. Mr. Henrich has a wide experience in the pharmaceutical industry both with start-ups and large pharmaceutical companies. Mr. Henrich is also a member of the board of directors of Actelion Ltd., Allschwil and Addex Pharmaceuticals Ltd., Geneva, Swiss biopharmaceutical companies listed on the SWX Swiss Exchange. He acts as a consultant for several biopharmaceutical companies on a part-time basis.
Andreas Wicki, Vice-Chairman, was born in 1958 and is a Swiss citizen. He holds a Master of Science and a PhD in chemistry and biochemistry from the University of Berne. Dr. Wicki is a successful healthcare entrepreneur and investor in the pharmaceutical and biotechnology industries. He was CEO of Clinserve AG and ANAWA Holding AG, two European Clinical Research Organisations. Dr. Wicki currently serves as CEO of HBM Partners AG, the investment advisor of the life science investment company HBM BioVentures AG. He is also a board member of HBM BioVentures (Cayman) Ltd. Furthermore, Dr. Wicki is on the board of directors of Buchler GmbH, MDS Pharma Services Switzerland AG, and HBM Partners AG.
Peter van Brummelen was born in 1943 and is a Dutch citizen. He has an MD and a PhD from the University of Leiden (The Netherlands). After military service and training in internal medicine, he worked at the University Hospital of Leiden in various staff positions in internal medicine and nephrology. In 1979, he did a fellowship in Cardiology at the University Hospital in Basel. His main research interest was in cardiovascular disease and clinical pharmacology. He has (co-)authored more than 200 publications and book chapters. In 1986, he was appointed professor of medicine at the University of Leiden. He joined
Roche in 1988, where he became Therapeutic Area Head Cardiovascular Diseases and worldwide Head of Clinical Pharmacology. In these functions he contributed to the successful
development of various new drugs in different therapeutic classes. In 1990, he was appointed professor of medicine at the University of Basel. He was also actively involved in several projects to rationalize drug development, and he was a founder of the European Course in Pharmaceutical Medicine (ECPM), where he is still a Member of the Steering Committee. Since 1996 he has acted as Vice President Clinical Operations at Solvay Pharmaceuticals and later as Executive Vice-President Research and Development of Yamanouchi Europe until his retirement in May 2003. Prof. van Brummelen is on the board of Bioxell S.p.A., Segrate, Italy, a company listed on the SWX Swiss Exchange, Diatos S.A., Paris, and IQ Corporation BV, The Netherlands. Prof. van Brummelen is currently an independent consultant to the pharmaceutical industry.
Walter Fuhrer was born in 1940 and is a Swiss citizen. He is an independent senior consultant in drug discovery with more than 25 years broad experience in conducting and managing medicinal chemistry and drug discovery. After completing a PhD in organic chemistry at the Eidgenössische Technische Hochschule (ETH) in Zürich in 1973, he joined Ciba-Geigy AG (later Novartis AG) where he held different positions in medicinal chemistry and in research management both in Switzerland and in the United States. As Head of Cardiovascular Chemistry he was heavily involved in the discovery and development
of Diovan®, a new blockbuster antihypertensive drug. After heading the Central Research Laboratories of Ciba-Geigy AG for five years (until the merger with Sandoz) he then served as Head of Operations and Planning in Novartis’ Oncology
Research until 2001. Dr. Fuhrer has served as reviewer on “The Journal of Medicinal Chemistry” and is presently a member of the editorial board of “Current Opinions in Drug Discovery and Development”.
Gottlieb Keller was born in 1954 and is a Swiss citizen. He studied law and economics and received his Doctor of Law degree from the University Basel in 1980. He subsequently received his admission as attorney-at-law (1981) and as notary public in Basel (1984, not practicing). He started his professional career in 1984 at the Roche’s Corporate Law Department. In 1989, Dr. Keller was named Head of Business Development and Pharma Marketing Services of Hoffmann-La Roche AG, Grenzach- Whylen, Germany. In 1992, he was promoted to Assistant to the Chairman of the Board of Directors of Roche Holding Ltd. In 1996, he became Head of Human Resources at Hoffmann-La Roche AG, Grenzach-Whylen, and Chairman of the Executive Board of Roche Deutschland Holding GmbH, and was appointed Secretary to the Board of Directors of Roche Holding Ltd., and Corporate Compliance Officer of the Roche Group in 1999. In 2003, he was named Member of the Corporate Executive Committee of the Roche Group and Head of Corporate Services and Human Resources of Roche. Dr. Keller is President of the Board of Crocodil AG, and member of the Board of the International School of the Basel Region AG as well as Acting Committee Member of the VSUD (Verband Schweizerischer Unternehmen in Deutschland) and of the Chamber of Commerce Germany-Switzerland. In addition, Dr. Keller is a member of the Fritz Gerber Foundation for talented young people, member of the Board of Trustees of the Paul Sacher Foundation, Board member of SGCI Chemie Pharma Schweiz and of economiesuisse.
Daniel Lew was born in 1948 and is a Swiss citizen. He is a Professor of Medicine at the University of Geneva Medical School and Chief of the Service of Infectious Diseases, Department of Internal Medicine at the Geneva University Hospitals. He obtained his MD degree from Geneva University in 1976 and specialized in infectious diseases both in Geneva and then subsequently at Harvard Medical School and Massachusetts General Hospital in Boston, Massachusetts, United States. He is a recipient of numerous scientific awards and grants for his research work. Professor Lew lectures widely, acts both as reviewer and editor for several major scientific journals, and is author of many publications on neutrophil function, bacterial pathogenesis and drug resistance.
Claude Schreiner was born in 1942 and is a French citizen. He studied Economics at the University of Strasbourg (France) and has extensive experience in business and commerce. He started his career at Roche in 1966 and held various positions in the Pharma Division as well as in the Vitamins & Fine Chemicals Division at the Head Quarters in Basel. In 1978 he was appointed Head of the Vitamins & Fine Chemicals Division of Roche in France and subsequently General Manager of Roche’s main agrochemicals company, La Quinoléine S.A. In1990, Mr. Schreiner became Head of the Roche Vitamins & Fine Chemicals Division for Western Europe and later General Manager of Roche France. In 2001 he took over as Head of Western European Pharma Operations and became a Member of the Roche Pharma Division Executive Committee. Mr. Schreiner has retired from Roche at the end of May 2007 but he still holds various board memberships in affiliated companies of Roche Holding Ltd, Basel, in Europe.
Anthony Man, Chief Executive Officer, MD, FRCP, was born in 1956, is a Swiss citizen and holds an honor’s degree in biochemistry in addition to a medical degree. He is an elected Fellow of the Royal College of Physicians (UK). Dr. Man has over 20 years international pharmaceutical industry experience and has developed in numerous successful products particularly in oncology. He has held a variety of senior positions spanning pre-clinical development to registration and commercialization while at Lederle, Roche, Ciba-Geigy AG, and Novartis AG. As Chief Development Officer at Basilea from 2001 to 2003, he built up the drug development organization and advanced all key development products through their major milestones. In April 2003, Dr. Man was appointed as Chief Executive Officer.
Ronald Scott, Chief Financial Officer, was born in 1955 and is a Swiss citizen. Mr. Scott obtained undergraduate and graduate degrees in planning with emphasis in finance. Prior to joining Basilea, he worked for nine years at Roche in management positions in Pharmaceutical Finance, Licensing, and the Roche Corporate Finance Mergers and Acquisitions group. His assignments included managing Roche’s call, primary and secondary offerings on Genentech; Roche’s biotechnology investment portfolio; acquisitions and divestitures. Prior to joining Roche, Mr. Scott worked for Prudential Investment Corporation in the United States as director in Prudential’s Finance and International Business Development Units, managing divestitures and joint venture transactions.
Dr. Man, CEO of Basilea, and Mr. Scott, CFO of Basilea, are executive members of the Board of Directors. Neither Dr. Man nor Mr. Scott is member of any of the Board Committees. All other members were non-executive board members in 2007.
Mr. Henrich, Chairman of the Board, acted as CEO of Basilea from February 2001 to October 2001. None of the other non-executive members of the Board of Directors served in the management of Basilea or any of its subsidiaries since inception of Basilea. In addition, Mr. Henrich and Mr. Schreiner acted as a consultant to Basilea in 2007.
There are contractual relationships existing between
Basilea and Roche, represented by Dr. Keller. Basilea has entered into a manufacturing agreement in 2006 and has an agreement with respect to certain of its research molecules that allows Roche to opt-in on such compounds in exchange for milestone payments and potential future royalties. Basilea is currently not pursuing those
research molecules for which Roche has opt-in rights.
There are no other significant business connections between non-executive members of the Board of Directors and Basilea or any of its subsidiaries. For further information, please refer to note 17 “Related Party Transactions” to the Financial Statements.
Elections and Terms of Office
Basilea’s Articles provide for a Board of Directors consisting of between one and eleven members. Members of the Board of Directors are appointed and removed exclusively by shareholders’ resolution. Their term of office is up to three years, re-election being allowed. According to the Articles, elections are made by rotation in such a way that the term of office of about one third of the members of the Board of Directors may expire every year. The current composition of the Board of Directors, as shown above, does not fully reflect this requirement, but the Company aims at achieving the goal. The Chairman and the Vice-Chairman of the Board of Directors are designated by the Board of Directors.
According to the current organizational regulations of Basilea (“Organizational Regulations”) enacted by the Board of Directors, each member of the Board of Directors shall resign effective as per the ordinary shareholders’ meeting immediately following completion of his or her 70th year of age, even if the term of office has not yet expired. Newly elected members enter into the term of their predecessors.
Changes in the Board of Directors
Werner Henrich and Andreas Wicki were re-elected as members of the Board of Directors, each for a term of three years, at the ordinary shareholders’ meeting on March 7, 2007. Peter Friedli did not stand by for re-election and his term expired at the ordinary shareholder’s meeting on March 7, 2007. Claude Schreiner was elected as a new member of the Board of Directors on March 7, 2007, for a term of three years.
For an overview of the years of first election and of expiry of the current terms of each member of the Board of Directors, please refer to the chart.
Internal Organization and Areas of
Responsibility
Responsibilities of the Board of Directors
The Board of Directors is entrusted with the ultimate direction of Basilea and the supervision of management. The Board of Directors’ non-transferable and irrevocable duties include to ultimately manage the corporation and to issue the necessary directives, to determine the organization, to organize the accounting system, the financial controls as well as the financial planning and to appoint, recall, and ultimately supervise the persons entrusted with the management and representation of
Basilea. Furthermore, these duties comprise the responsibility for the preparation of the annual report and the shareholders’ meeting, the carrying out of shareholders’ resolutions and the notification of the judge in case of over indebtedness of Basilea.
In addition or specification of these duties, the Board specifically retains certain main decision-making competencies, including setting the strategy and short- and long-term goals of Basilea; all M&A transactions as far as no shareholder approval is required; decisions on annual budgets; the general direction of research and development (e.g. therapeutic areas covered, areas of priority and third party co-operations); general policies in relation to personnel matters, including basic principles related to benefit and incentive plans; certain communication tasks towards shareholders and the public as required by applicable laws and regulations; and general policies on outsourcing versus internal functions for manufacturing, sales and marketing.
According to the Organizational Regulations, resolutions of the Board of Directors are passed by way of simple majority. To validly pass a resolution, more than half of the members of the Board of Directors must attend the meeting. No quorum is required for confirmation resolutions ("Feststellungs-beschlüsse") and adaptations of the Articles in connection with capital increases pursuant to articles 651a, 652g and 653g of the Swiss Code of Obligations.
Chairman of the Board of Directors
The Chairman of the Board calls, prepares, and chairs the meetings of the Board of Directors. The Chairman also chairs the shareholders’ meetings. He supervises the implementation of the resolutions of the Board of Directors and generally supervises the CEO and his Management Committee, who regularly reports to the Chairman on the meetings of the Management Committee and on all important matters of the Company. The Chairman is also entitled to attend the meetings of the Management Committee. In urgent matters that do not allow for the Board of Directors to take resolutions in time, the Chairman is entitled to take decisions that fall within the competencies of the Board of Directors. The Vice-Chairman of the Board of Directors exercises the powers of the Chairman in the Chairman’s absence.
Board Committees
The Board of Directors established an Audit Committee and a Compensation Committee in 2003. The tasks and responsibilities of these Committees are set forth in the Organizational Regulations. These Committees make proposals to the Board of Directors in their areas of responsibilities while the resolutions are passed by the Board of Directors. The Board determined to retain nomination responsibilities for the full Board of Directors.
The Audit Committee consists of Andreas Wicki (Chairman), Peter van Brummelen, Walter Fuhrer, and Claude Schreiner, who all are non-executive members of the Board of Directors. The Audit Committee assists the Board of Directors in fulfilling its duties of supervision of the management. It is responsible for the guidelines of Basilea’s risk management and internal control system, and the review of their adequacy and effectiveness, the review of the compliance, the assessment of the external auditors’ quality and work and the review of their audit plans, the monitoring of the independence of external auditors (including the authorizing of nonaudit services by the auditors and their compliance with applicable rules), the proposal of new auditors, if necessary, to the Board of Directors, the review of annual and interim financial statements, the review of the audit results, and the monitoring of the implementation of the findings by the Management Committee. The Audit Committee is at all times authorized to inspect the books and records of Basilea and to request information from and meetings with all management bodies and employees of Basilea as well as its external auditors.
The Audit Committee held three meetings at the offices of Basilea in 2007, each with a duration of approximately one-half day. The main topics at these meetings were the review of the year-end financial statements and Annual Report 2006; the review of the half-year financial statements 2007; the review of the annual budget 2008; risk management and the scope of the external audit 2007. The CFO was present at all Audit Committee meetings to report to the Audit Committee. In addition, the external auditors were present at two Audit Committee meetings in 2007 to report on the findings of the audit 2006 and the half-year review 2007. The respective recommendations of the Audit Committee were then further discussed for approval or modification by the full Board of Directors.
The Compensation Committee consists of Werner Henrich (Chairman), Daniel Lew and Claude Schreiner, who all are non-executive members of the Board of Directors. The Compensation Committee assists the Board of Directors in compensation-related matters. It provides the Board of Directors with recommendations on the compensation of the members of the Board of Directors and of the Management Committee, the policies for the compensation of the Management Committee and Basilea’s other employees, and the basic principles for the establishment, amendment and implementation of Basilea’s stock option plan.
The Compensation Committee held four meetings in 2007 each with a duration of one or more hours. The main topics at these meetings included the review of the 2006 achievements versus the planned corporate objectives and determination of the performance-related bonus pool; the annual general salary increases; the grant of options; and the general remuneration of members of the Management Committee and employees. The CEO was present at a portion of all Compensation Committee meetings. The respective recommendations of the Compensation Committee were then further discussed for approval or modification by the full Board of Directors.
Working Methods of the Board of Directors and its Committees
According to the Organizational Regulations, the Board of Directors must hold at least four meetings per year. When required, the Board of Directors holds ad hoc meetings or telephone conferences to discuss specific issues or passes resolutions by way of circulation.
In 2007, the Board of Directors held 8 meetings with an average duration of half to two-thirds day. Except for two meetings, all were held at the offices of Basilea and with two of them held by telephone conference. The overall attendance rate (in person or by phone) was 99%.
The members of the Management Committee report to the Board of Directors at each board meeting on the status of operations, especially related to the progress of clinical development, commercial operations and research programs as well as the status of drug supply and licensing activities. In addition, an update is given at board meetings on the status of the Company’s share price development.
The Board Committees report about their Committee meetings to the full Board of Directors at the board meeting following the relevant Committee meeting. Any resolutions on matters assigned to the Committees are taken by the Board of Directors on the basis of recommendations of the relevant Committee.
Responsibilities of the Management Committee
In accordance with the Articles and the Organizational Regulations, the Board of Directors has delegated all areas of management of Basilea that are not reserved by law, the Articles or the Organizational Regulations, to the Board of Directors (see section “Responsibilities of the Board of Directors”), to the CEO, and the Management Committee reporting to the CEO. The main duty of the CEO with the assistance of the Management Committee is to operationally manage the Company, to implement the strategies and other decisions of the Board of Directors, to make proposals to the Board of Directors regarding matters constituting decision-making competencies of the Board of Directors, to set the operative focus and priorities as well as to procure the necessary resources.
Information and Control Instruments of the Board of Directors
The Board meetings are the Board of Directors’ main platform to supervise and control the management. At each board meeting, the CEO and CFO report on the financial, business, research, and development status, with a particular focus on the main risks of the Company related to its key value drivers, respective measures taken and related strategic proposals. The Board of Directors from time to time also calls upon further members of the Management Committee and management to attend board meetings for reporting purposes.
In addition, management provides a monthly report to the Board of Directors on the status of operations and other issues that may be requested by the Board of Directors. The main components of this monthly report are the status of commercial operations, development and research programs as well as the status of the drug supply activities. Furthermore, management provides a monthly financial report to the Audit Committee including an unaudited consolidated balance sheet, profit and loss statement and statement of cash flows for the respective month. The financial report further includes comparisons of actual versus budget numbers.
The audited consolidated financial statements for the previous financial year are provided to the Audit Committee for their review at the end of January/beginning of February of each year. The consolidated interim financial statements for the half-year are provided to the Audit Committee at the end of July/beginning of August of each year. The financial statements are then recommended by the Audit Committee to the full Board of Directors at its subsequent meeting.
Furthermore, around November of each year, upon recommendation of the Audit Committee, the Board of Directors approves the annual budget of the Company for the following year. The Audit Committee reviews any budget changes as may occur from time to time related to strategic changes or opportunities. In the event the Audit Committee recommends any changes to the budget, the Board considers and may determine to approve such budget changes consistent with the strategy of the Company.
The Board of Directors additionally requests the auditors to issue a written report on any of their findings with respect to internal controls as a result of their audit procedures.
Management
Members, Functions and Other Activities
The Management Committee comprises certain executives including the CEO. Under the responsibility of the CEO and the supervision of the Board of Directors, it conducts the operational management of the Company pursuant to the Organizational Regulations and provides reports to the Board of Directors under the direction of the CEO at least on a monthly basis. Under the direction of the CEO, the Management Committee focuses on the corporate goals, budget, portfolio review and risk management, and as needed on organizational structure, corporate policies and corporate strategies. In addition, regular operational management meetings for the different functions are held. These operational management meetings, chaired by the responsible Management Committee member, mainly focus on significant operational issues concerning execution of goals, budget,
resources, new business proposals, and priorities. The participants of these management operational meetings are key people on a managerial level, the CEO, and Management Committee members as required.
The following table sets forth the name, date of appointment and position of the current members of the Management Committee. In addition, a short description
of each member’s nationality, business experience,
education and activities is outlined below.
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Dr. Anthony Man |
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Dr. Ingrid Heinze-Krauss |
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Mr. Ronald Scott |
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Mr. Hans Christian Rohde |
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Prof. Jutta Heim |
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Dr. Rienk Pypstra |
For information on Anthony Man, Chief Executive Officer, and Ronald Scott, Chief Financial Officer, please refer to the section “Board of Directors”.
Jutta Heim, Chief Scientific Officer, is a German citizen, and holds a PhD in biology from the University of Tuebingen. Jutta Heim is also a professor in Biotechnology at the University of Basel. She has over 25 years experience of research and drug discovery in Switzerland and the United States. She served in a variety of senior managerial and scientific expert positions for Ciba-Geigy AG and Novartis AG in the areas of cardiovascular, oncology, biotechnology, molecular biology and molecular genetics. Prior to joining Basilea in 2004 Professor Heim was a member of the Novartis Research Management Board and led the central Lead Discovery Center with worldwide screening responsibilities. Professor Heim is also a member of the Supervisory Board of Evolva AG, Allschwil and of SpinX Technologies SA, Geneva.
Ingrid Heinze-Krauss, Chief Technology Officer, is a German citizen, holds a PhD in organic chemistry from the University of Freiburg, Germany, and was a fellow at the University of Massachusetts, USA. She joined Basilea in 2001 and built up the supply chain management group. Prior to joining Basilea she held a series of managerial positions in Pharma Research at Roche, including Area Head Medicinal Chemistry in Antibacterial
Research and R&D project management.
Rienk Pypstra, Chief Development Officer, is a Dutch citizen, and holds a Medical Degree and a MBA from the University of Leuven, Belgium. Following a period of medical practice, he worked in increasingly senior positions at Eli Lilly, SmithKline Beecham and GlaxoSmithKline in Brussels, London and Philadelphia. He has over 15 years of clinical development and medical governance experience with drug candidates, investigational drugs and marketed products. He joined Basilea in 2003 and has been Chief Development Officer since 2004.
Hans Christian Rohde, Chief Commercial Officer, Danish citizen, holds a Master of Science from the University of Copenhagen, August Krogh Institute, Sports Physiology and Education. In addition, he holds a MBA from the University of Birmingham. He has over 19 years of international experiences in the pharmaceutical industry. He has held operational and strategic positions in sales, marketing and general management across multiple therapeutic areas both in Europe and in the United States. His pharma and Biotech experience was gained with Syntex Danmark A/S, Novo Nordisk A/S and Biogen Inc. Prior to joining Basilea he was Head of Global Therapeutic Area Reproductive Health with Merck Serono SA, Geneva.
Management Contracts
There are no management contracts between Basilea and any third parties.
Former Activities for the Company
Changes in Management Committee
The Management Committee was reduced from thirteen to six members in 2007. This change was made to strengthen the decision making process and to optimize the support for the commercialisation of the investigational drugs which are currently in the procedure of registration.
Dr. Cornelia Blaettchen, Head of Business Development & Licensing, Ulrich Eisenring, Corporate Counsel and Secretary to the Board, Heidi Hagenbuch, Head of Human Resources, Prof. Jeff Shen, General Manager of
Basilea Pharmaceutica China Ltd., Dr. Dietrich Stüber, Head of Internal Services, Dr. Lutz Wevelsiep, Head of Regulatory Afffairs and Dr. Barbara Zink, Head of Corporate Development will continue their line function responsibilities outside the framework of the Management Committee. Hans Christian Rohde was appointed as new member of the Management Committee in 2007. Nicolas Benedict, former Head of Commercial Strategy and Operations, left the Company in 2007. For further information on former activities for the Company and Changes in the Management Committee, please refer to the section “Board of Directors/Members, Functions and Other Activities” and “Management/Members, Functions and Other Activities”.
Compensation, Shareholdings and Loans
Content and Method of Determining the Compensation and Share Option Program
The compensation of the members of the Board of Directors and of the Management Committee is set and reviewed annually by the Board of Directors, based on recommendations of the Compensation Committee in accordance with Basilea’s compensation policies.
The compensation of the members of the Management Committee includes a base salary, as well as a bonus and stock options. The bonus and the stock options are based on personal and company performance. The bonus is calculated as a percentage of the base salary whereby the maximum is determined in the employment contract. The range of bonuses is between 25% and 40% of the base salary, whereby two members of the Management Committee have a guaranteed minimum bonus of 20% of their base salary provided that a bonus is distributed by Basilea. In addition, Basilea contributes to the pension plan and maintains certain insurances for death and invalidity.
The Board of Directors decides annually, considering the recommendations of the Compensation Committee, on the total amount of bonus to be granted based on the achievement of the Company goals set by the Board of Directors annually. These Company goals are related to the key value drivers of the Company, such as successful completion of clinical trials, providing drug supply for clinical trials, identification of clinical candidates and financing these activities. In a second step, the individual bonus for members of the Management Committee is determined by the Board of Directors upon recommendation of the Compensation Committee based on the individual performance and management’s respective contribution to achieving the Company’s goals.
The compensation of the members of the Management Committee and the members of the Board of Directors is reviewed yearly by the Compensation Committee. As part of this review, the Compensation Committee considers compensation packages at comparable companies in the industry based on the experience of the Committee members and publicly available information such that the Company remains competitive in its sector. This review forms the basis for the recommendation of the Compensation Committee to the Board.
The compensation package for non-executive board members consists of a fixed annual monetary compensation, a compensation based on meeting attendance and engagement in board committees as well as stock options. In addition, Basilea reimburses Director’s out-of-pocket expenses related to their engagement as members of the Board. The non-executive board members obtain a fixed annual compensation for their board membership of CHF 25,000. Furthermore, each non-executive board member obtain a meeting fee of CHF 5,000 per meeting attended whereby the maximum cumulated meeting fee paid per year is limited to CHF 25,000. In addition, each non-executive board member acting as a member of the Audit or Compensation Committee obtains an annual one-time Committee fee of CHF 5,000. The Chairman of the Board of Directors receives a fixed annual compensation of CHF 37,500, an annual Committee fee of CHF 7,500 and a meeting fee of CHF 7,500 per meeting attended whereby the maximum cumulated meeting fee paid is limited to CHF 37,500.
Executive members of the Board of Directors do not obtain any compensation for their participation in the Board of Directors.
For further information on compensation and shareholdings, please refer to note 9 to the Financial Statements.
Shareholders Participation
Voting Rights and Representation Restrictions
Voting rights may be exercised only after a shareholder has been recorded in Basilea's share register ("Aktienbuch") as a shareholder or usufructuary ("Nutzniesser") with voting right. No exceptions from these restrictions were granted in 2007.
At shareholders' meetings, shareholders can be represented by proxy by a third party who does not need to be a shareholder.
Subject to the registration of shares in the share register within the deadline set from time to time by the Board of Directors before shareholders' meetings, Basilea's Articles do not impose any restrictions on the voting rights of shareholders. Specifically, there is no limitation on the number of voting rights per shareholder. For further infor mation on the conditions for registration in the share register (including in relation to nominees) and for attending and voting at a shareholders' meeting, please refer to the sections "Limitations on Transferability of Shares and Nominee Registrations" above and "Registration in the Share Register" above.
A shareholder resolution with a qualified majority of at least two-thirds of the share votes represented as well as the majority of the par values of the shares represented at a shareholders' meeting are required for the creation of shares with privileged voting rights.
Statutory Quorums
There is no provision in the Articles requiring a quorum for shareholders' meetings.
According to article 11 of the Articles, resolutions generally require the approval of the absolute majority ("absolutes Mehr") of the share votes represented at the shareholders' meeting. Shareholders' resolutions requiring such a majority include amendments to the Articles (subject to the
exceptions below), elections of members of the Board of Directors, elections of the auditors and the group auditors , approvals of the annual report, the annual financial statements and consolidated financial statements of the Company, decisions regarding dividends, decisions to discharge the members of the Board of Directors and the management from liability for matters disclosed to the shareholders' meeting, and the ordering of an independent investigation into specific matters proposed to the shareholders' meeting ("Sonderprüfung").
Pursuant to article 12 of the Articles, a resolution passed at a shareholders' meeting with a qualified majority ("qualifiziertes Mehr") of at least two-thirds of the share votes represented as well as the majority of the par values of the shares represented at a shareholders' meeting are required for: (i) changes in Basilea's purpose; (ii) the creation of shares with privileged voting rights; (iii) restrictions on the transferability of registered shares; (iv) an authorized or conditional capital increase ("genehmigte oder bedingte Kapitalerhöhung"); (v) an increase of capital out of equity ("Ka pitalerhöhung aus Eigenkapital") against contributions in kind ("Sacheinlage") or for the purpose of an acquisition of assets ("Sachübernahme") and the granting of special benefits; (vi) the limitation or withdrawal of preferential subscription rights; (vii) the change of the registered offices of Basilea; and (viii) the dissolution of Basilea without liquidation (e.g. through merger). In addition, amendments of the clauses of the Articles of Basilea on transfer restrictions, on the conversion of registered shares into bearer shares as well as amendments to the clause relating to such additional items requiring a qualified majority also require the qualified majority mentioned before.
The shareholders' meeting may at any time convert registered shares into bearer shares or bearer shares into registered shares through an amendment of the Articles .
Convening of Shareholders' Meetings and Agenda Items
The shareholders' meeting is the supreme institution of Basilea. Under Swiss law, the ordinary shareholders' meeting takes place annually within six months after the close of the business year. Shareholders' meetings may be convened by the Board of Directors or, if necessary, by the auditors. The Board of Directors is furthermore required to convene an extraordinary shareholders' meeting if so requested in writing by holders of shares representing at least 10% of the share capital of Basilea, setting forth the items to be included on the agenda and the proposals. Shareholders representing shares with a par value of at least CHF 100,000 have the right to request in writing that an item be included on the agenda of the next shareholders' meeting, setting forth the item and the proposals. According to article 7 of the Articles, the request to put an item on the agenda has to be made at least 45 days prior to the shareholders' meeting. Extraordinary shareholders' meetings can be called as often as necessary, in particular, in all cases required by law.
Shareholders' meetings must be convened by publishing a notice in the Swiss Official Gazette of Commerce ("Schweizerisches Handelsamtsblatt") at least 20 days prior to such meeting. In addition, holders of registered shares may be informed by a letter sent to the address indicated in the share register.
Registration in the Share Register
The Board of Directors determines the relevant deadline for registration in the share register giving the right to attend and to vote at the shareholders' meeting ("Stichtag"). Such deadline is published by Basilea in the Swiss Official Gazette of Commerce and the Company's website, usually in connection with the publication of the invitation to the shareholders' meeting. In case that such deadline for the ordinary annual shareholders' meeting is already determined by the Board of Directors prior to the printing of the Annual Report, it will also be included in the Annual Report.
In 2007, the deadline for registration in the share register in order to participate and to vote at the ordinary shareholders' meeting of March 7, 2007, was February 23, 2007, i.e. 13 days before the shareholders' meeting. It is Basilea's intention regarding future shareholders' meetings that this timeframe will not change significantly.
The registration deadline for the ordinary shareholders' meeting to be held on March 19, 2008, has been determined to be March 7, 2008.
Basilea has not enacted any rules on the granting of exceptions in relation to these deadlines. No exceptions were granted in 2007, and the Board of Directors does not anticipate to grant any exceptions related to the shareholders' meeting on March 19, 2008.
For further information on the registration in the share register, please refer to the section "Limitations on Transferability of Shares and Nominee Registrations".
Changes of Control and
Defense Measures
Duty to Make an Offer
The Articles contain no provision which would rule out the obligation of an acquirer of shares exceeding the threshold of 331/3% of the voting rights to proceed with a public purchase offer (opting-out provision pursuant to article 22 para. 2 and 3 SESTA), or which would increase such threshold to 49% of the voting rights (opting-up provision pursuant to article 32 para. 1 SESTA).
Clauses on Changes of Control
Basilea’s stock option plan contains provisions in respect of changes of Basilea’s shareholder base. In case of a change of control over Basilea (defined as a change of control event triggering a mandatory public purchase offer according to applicable stock exchange provisions), all unexercised stock options of all option holders, including, but not limited to stock options held by members of the Board of Directors and of the Management Committee, vest and become exercisable. The related remaining term of the stock options would be reduced proportionally in such an event.
Furthermore, upon a change of control, the provisions of the stock option plan cannot be changed to the detriment of their holders and Basilea will hold the option holders harmless for any income taxes or social security contributions that are due or may become due related to early vesting, exercise or exercisability of stock options. These provisions would also apply to stock appreciation rights under Basilea’s stock option plan.
Upon a change of control, the periods of notice applicable to all employment contracts of Basilea become twelve months in the event of termination.
No other change of control provision exists for the benefit of members of the Board of Directors or of the Management Committee.
Auditors
Duration of the Mandate and Term of Office of the Lead Auditor
The statutory and group auditors of Basilea are PricewaterhouseCoopers AG, Basel, Switzerland. PricewaterhouseCoopers AG has held the function of statutory auditor since inception of Basilea on October 17, 2000, and acts as group auditor since 2002. The lead auditor of Basilea since inception of Basilea is Mr. Ralph R. Reinertsen.
Auditing Fees
In 2007, PricewaterhouseCoopers AG and its affiliates charged the Company auditing fees in the amount of CHF 138,210.
Additional Fees
In 2007 PricewaterhouseCoopers AG and its affiliates charged the Company auditing fees in the amount of CHF 125,485.
Control Instruments of the Auditor
The Audit Committee of the Board of Directors assumes the task of supervising the auditors. The Audit Committee meets with the external auditors at least once a year to discuss the scope and the results of the audit and to assess the quality of their services.
In 2007, the Audit Committee met with the auditors twice to discuss the scope and results of their year-end audit for 2006, the scope of the 2007 audit as well as the results of their review of the half-year financial statements per June 30, 2007.
Information Policy
Basilea publishes financial results on a biannual basis in form of an Annual Report and a Half-year Report (Interim Report). In addition, Basilea informs shareholders and the public regarding the Company’s business through press releases, conference calls, as well as roadshows. Where required by law or Basilea’s Articles, publications are also made in the Swiss Official Commercial Gazette.
The Annual Report, usually published no later than in April of the following year, and the Interim Report, usually published in August, are both announced by press release. Basilea intends to publish more precise information about the release date of the Annual Report on its website (www.basilea.com) in January of the respective year, and June for the Interim Report of the respective half-year.
Annual Reports may be in printed form to all registered shareholders upon their disclosure. Upon disclosure,
Annual Reports, Interim Reports, and press releases can be obtained free of charge in either German or English language versions upon request, and are also made available on the Company’s website at www.basilea.com. The Company’s website, which is the Company’s permanent source of information, also provides other
information useful to investors and the public, including information on the Company’s development and research programs as well as contact information.
It is the Company’s policy not to release explicit earnings projections, but it will provide general guidance to enable the investment community and the public to better evaluate the Company and its business prospects for
future performance. The Board of Directors has issued a disclosing policy to ensure that the investors will be informed in compliance with the requirements of the SWX Exchange.
The Company’s investor relations department is available to respond to shareholders’ or potential investors’ queries under investor_relations@basilea.com or via post at Basilea Pharmaceutica Ltd., Investor Relations, P.O. Box, CH-4005 Basel, Switzerland.
Additional inquiries may also be made by phone at
+41 61 606 1111 or Investor Relations at
+41 61 606 1233.
Insider Policy
The Board of Directors issued an insider policy, which was reviewed and amended in 2006 in order to prevent insiders from benefiting from confidential information. The policy defines guidelines on how to deter corporate insiders from making use of confidential information. The Board of Directors has established blocking periods to prevent insiders from trading during sensitive periods.
Ethical Business Conduct
The Company is committed to the highest standards of ethical business conduct. As a pharmaceutical company, the Company is operating in a highly regulated business environment. Strict compliance with all legal and health authority requirements, as well as requirements of other regulators, is mandatory. The Company expects that its employees, contractors and agents (“Personnel”) shall observe the highest standards of integrity in the conduct of Company’s business. The Code of Conduct sets forth Company’s policy embodying the high standards of business ethics and integrity required of all Personnel when conducting business affairs on behalf of the Company. The Company is committed to complying with the spirit and letter of all applicable laws and regulations where the Company engages in business.
